GPI INTERNATIONAL LTD v. GENERAL CREATION INTERNATIONAL LTD

CACV 140/2004

 IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 140 OF 2004

(ON APPEAL FROM HCA NO. 10212 OF 2000)

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J U D G M E N T

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Hon Rogers VP:

1.  Mr Maurellet, in this case, has put forward his arguments, mainly on paper, which this Court has read.  He has been succinct and to the point in his submissions but, regrettably, I cannot see any way to allowing this appeal.  It is an appeal against an order for security for costs. 

2.  The claim in this case was a claim in respect of payment for batteries which had been delivered.  There was a counterclaim which exceeds the claim by a large amount, on the basis that the batteries were defective to the extent that they would not hold a charge when charged or recharged.  The Plaintiff succeeded in obtaining judgment on its claim in 2001.  Execution of that judgment was stayed, pending the counterclaim. 

3.  In December 2003, the Plaintiff came to learn of the fact that the Defendant, which is a Hong Kong company, had filed Bankruptcy Proceedings under what is called Chapter 11, in Kingsport, Tennessee in the United States of America.  Unfortunately, the Defendant thought that that would operate as an automatic stay of the Hong Kong proceedings, but it did not.  The Plaintiff, not unnaturally, then became slightly concerned that if the counterclaim were to proceed and the Plaintiff were to succeed on that, the Plaintiff might not recover any costs, simply because of the Defendant’s own admitted insolvency.  Therefore, an application was made before the Master for security for costs.

4.  On that application, because the Defendant was under the delusion that these proceedings had been stayed, there was no attendance on behalf of the Defendant.  It would seem that, after a suitable period had elapsed to allow the attendance of the representative on behalf of the Defendant, the Master informed the Plaintiff’s solicitor that, in his view, the Plaintiff had made out grounds for seeking security but was concerned about the amount.  Then there was a short discussion about the amount and the amount that the Plaintiff sought was reduced.  From that, various matters followed which do not directly concern this Court but are the reason why these proceedings have now reached this Court on an appeal from this basic order as to security for costs.

5.  In my view, unfortunately, I see no grounds, either on merit or otherwise, for disturbing the order for security for costs below.  I have to say that it is an order which I would have made in the circumstances had I been there.  That is not, of course, the correct test because, on a matter of the exercise of judicial discretion, this Court does not operate on that basis but looks to see whether there are grounds for disturbing the exercise of discretion.  Whilst I see no such grounds, I take that shortcut because it cuts through any argument. 

6.  I can see no basis for disturbing the order for security for costs and, therefore, in my view, this appeal has to be dismissed.

Hon Le Pichon JA:

7.  I agree.