SUPER KEEN INVESTMENTS LTD. v. GLOBAL TIME INVESTMENTS LTD.

CACV 285/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 285 OF 1998

(ON APPEAL FROM HCCT NO. 71 OF 1997)

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J U D G M E N T

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Liu, JA:

1. These applications are all about security for costs. The Third Party lost the action. The Plaintiff has the benefit of a judgment against the Third Party. The Defendant is, so to speak, sandwiched in between. The Third Party appeals, so has the Defendant ex abundanti cautela. In the slightly involved appeal proceedings, the Plaintiff seeks security for costs from the Third Party in the region of $1.8 M and the Defendant likewise applies for $1.48 M. I have the advantage of the well-structured skeleton arguments. The resistance of Mr Miu on behalf of the Third Party can be shortly stated:

In the light of the market trend, it is more than probable that pending these appeals the value of the property, subject-matter of dispute in the action and appeals, may well rise above a comfortable level so as to cater for the Plaintiff's and the Defendant's respective claims against the Third Party. It is further submitted that the Third Party incurred, in all innocence, the legal liability found against it in the judgment. Mr Miu also presses upon us that the impecuniosity of the Third Party was brought about by the alleged action of the Defendant. These features could be otherwise contested on the basis that a surge in market value of the property is speculative and that the court should focus on legal liability, not moral blame. Lastly, but it is not in any way conceded, the Defendant was responsible for the financial predicament of the Third Party.

2. Financial capability of a limited company is to be judged by potentials beyond the assets within its immediate reach. That is economics. That brings me to the real crux of the matter and it is: for impecuniosity in these applications for security for costs, not only would the Third Party have to establish circumstances for demonstrating that it is not in a position from its own resources to pay the security sought but also that it is not able to obtain financial assistance elsewhere for meeting it. So says the White Book, Marginal Reference 59/10/39 at p. 1069 of Volume 1 of the 1999 White Book.

3. It is not a matter in dispute that the Third Party limited company has made no assertion on affidavit or otherwise here that it is impossible to procure financial aid from an outside source. This court has a residual discretion and there seems to be no justification for this court, in the circumstances, not to exercise its residual discretion in favour of the Defendant and the Plaintiff.

4. That is the narrow compass within which these applications for security for costs should be considered. In the result, the Third Party should be called upon to pay $1.8 M to the Plaintiff and $1.45 M to the Defendant as security.

5. I allow the applications. The Plaintiff and the Defendant both being content with their own allotment of security, I order that the Third Party to pay into court within a time to be discussed $3.25 M as security for costs for the Defendant and the Plaintiff in the ratio I have just stated. I, therefore, allow these applications in terms with the modified allotted sums as security for costs.

(Submissions on "Stay")

6. The applications are granted in terms of the applications of both the Plaintiff and the Defendant except for the interim stay of the Third Party's appeal. It is suggested that the appeal of the Defendant should likewise be stayed but no application has formally been placed before this court. It is true that the Defendant's appeal is being prosecuted simply because of the Third Party's appeal but nonetheless that appeal would proceed. For this reason, it would be difficult for the Third Party to prepare the appeal continued to be pursued by the Defendant with a pause in the preparation of its own appeal. That would cause, as I see it, problems. I would not order that the Third Party's appeal be stayed for the time being. The applications of the Plaintiff and the Defendant have, of course, asked for the Third Party's appeal to be struck out if no payment of security for costs as ordered by this court is made.

(Submissions on "Date and Mode of Payment")

7. I have pronounced the portion payable to the Defendant and that payable to the Plaintiff by way of security for costs and I have pronounced the total amount to be paid into court by the Third Party as such: the Third Party is to pay into court that sum on or before 10 July 1999; liberty to apply be granted to each of the three parties before me today with respect to the mode of payment-in, in cash, by bank guarantee or other means acceptable by the parties or the Registrar. I have said that otherwise the applications be allowed in terms with costs of both applications be costs against the Third Party with a certificate for two counsel in the case of the Plaintiff.

(Arguments on Costs)

8. I have heard submissions belatedly advanced by Mr Miu on behalf of the Third Party on the question of costs with the leave of this court. Matters prayed in aid by counsel for the Third Party are not strikingly conducive to this court ordering no security. The applications are allowed primarily on the absence of any evidence from the Third Party to show that financial assistance for payment of security for costs could not be procured "from someone else". On that alone, the resistance of the Third Party was doomed to failure from start to finish. I cannot find any good reason for departing from the orders for costs that I have proposed. I confirm the orders.