WILLIAM THOMSON v.ROLAND JOHN JEANS AND ANOTHER

HCMP 333/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 333OF 2015

(ON AN INTENDED APPEAL FROM DCCJ NO. 3388 of 2005)

________________________

________________________

_______________

JUDGMENT
_______________

Hon Lam VP (giving the Judgment of the Court):

1. In this matter, the Plaintiff seeks leave to appeal against the judgment of Deputy District Judge Lai of 19 September 2014 in dismissing his claim against the 2^nd Defendant, a firm of solicitors. The judge, after trial, concluded that the money paid by the Plaintiff (who was a person interested in investing into a company which was a client of the 2^nd Defendant) into the client’s account of the 2^nd Defendant did not give rise to an obligation on the part of the latter not to release the same to the client of the 2^nd Defendant. Leave to appeal was sought from the judge and it was refused on 26 January 2015.

2. The Plaintiff applied for leave from this court by a summons of 9 February 2015, essentially relying on the same grounds which had been canvassed before the judge when leave was sought before him.  Counsel for the Plaintiff put before us a set of skeleton submissions of the same date to support the application.

3. The application was opposed by the 2^nd Defendant and counsel for the 2^nd Defendant prepared a set of skeleton submissions of 23 February 2015 in opposition to the application.

4. On 13 February 2015, the 2^nd Defendant issued a summons seeking security for costs.

5. On 17 February 2015, solicitors for the Plaintiff issued a summons seeking an amendment as to the paragraph dealing with costs in the summons of 9 February 2015.

6. On 18 February 2015, the Chief Judge directed that the summonses of 13 and 17 February 2015 be dealt with in such manner as the court shall direct either at the same time as or after the disposal of the application for leave to appeal.

7. On 23 February 2015, the 2^nd Defendant wrote to the court to clarify that the application for security for costs is in respect of the application for leave to appeal and request the summons for security for costs to be dealt with before any hearing for the disposal of the application for leave to appeal.

8. The Plaintiff has yet to respond to the application for security for costs in terms of evidence and submissions.

9. Having read the submissions of the parties, the draft notice of appeal, the judgment of the judge below and his decision on refusing leave, we are minded to decide the application for leave on the basis of written submissions only.  In such circumstances, whilst we can understand the request of the 2^nd Defendant in the letter of 23 February 2015, we do not deem it appropriate to give further directions on the application for security for costs (with the attendant costs being incurred thereon in terms of further works on the same) before we give our decision on the leave application.

10. Though we accept that this court does have jurisdiction to grant order on security of costs in the context of a leave application, one must have regard to the underlying objectives in Order 1A and the sense of proportionality in deciding whether such an application should be entertained.  Nowadays, a substantial portion of applications for leave in this court are being dealt with on paper.  As they are meant to be a filtering process, such leave applications should be determined through a process which is prompt and procedurally economical.  In our view, as far as leave applications to this court is concerned, interlocutory applications (including applications for security for costs) should only be entertained in exceptional circumstances.  The 2^nd Defendant referred to the decision of Ribeiro PJ in AXA Versicherung AG v Hong Kong Housing Authority (2006) 9 HKCFAR 98.  In that case, His Lordship granted an order for security for costs in respect of an application for leave to appeal to the Court of Final Appeal. With respect, the context of the application is different.  As we have mentioned, applications for leave to appeal before this court are required by the rules to be commenced and considered initially as paper applications. Until the court directs that the matter be listed for oral hearing, there will not be any such hearing.  In cases where matter can be disposed of without any oral hearing, it is likely to be disproportionate both in terms of time and costs to entertain an application for security for costs.  On the material before us, we do not see any exceptional circumstances warranting the entertainment of the application for security for costs at this stage.

11. Turning to the merits of the leave application, the crux of the substantive issue is whether the circumstances surrounding the Plaintiff’s payment of the sum into the 2^nd Defendant’s client account can give rise to an obligation on the part of the 2^nd Defendant to treat it as money being held by way of escrow or stake-holding.  Mr Chain, counsel for the 2^nd Defendant, drew our attention to the recent authority of the English Court of Appeal in Challinor v Juliet Bellis [2015] EWCA Civ 59 reversing the decision of Hildyard J at first instance.  The first instance judgment was relied upon by the Plaintiff before the judge.

12. Having reviewed the relevant circumstances (as set out in the judgment and the submissions of the parties), we agree with Mr Chain that there is no basis in the present case for this court to reverse the judge’s finding that the 2^nd Defendant did not have knowledge that the Plaintiff only intended to pay the money into its client’s account by way of an escrow arrangement.  We do not think it is wrong for the judge to start from the prima facie position that moneys held in a solicitors’ client account were held by the solicitors in favour of their client.  The objective circumstances relied upon by Ms Chan (counsel for the Plaintiff), in our view, are not sufficient to point otherwise. 

13. Therefore, we do not see a reasonable prospect of success in the Plaintiff’s intended appeal.  Nor do we see any other reasons why leave should be granted in the interest of justice.

14. We shall dismiss the application for leave to appeal.  In light of that, it is not necessary for us to make any substantive order on the summonses of 13 and 17 February 2015.

15. We also order the Plaintiff to pay the 2^nd Defendant’s costs of the application for leave.  In their statement of costs, the 2^nd Defendant asked for $85,735 which includes a sum of $25,000 as counsel fees for oral hearing.  There is no oral hearing.  In view of our remarks above on application for security for costs, the costs of preparation of the summons of 17 February and the supporting affidavit for the application for security for costs ($8,000) should also be deducted.  We shall therefore fix such costs at $52,735 which we regard as reasonable.