MOULIN GLOBAL EYECARE HOLDINGS LTD (IN LIQUIDATION) AND OTHERS v. OLIVIA LEE SIN MEI

CACV 109/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 109 OF 2009

(ON APPEAL FROM HCA NO. 167 OF 2008)

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BETWEEN

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D E C I S I O N

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1.  This is an application for security for costs on an appeal. The appeal is an interlocutory appeal.

2.  What happened in the court below was that the statement of claim was struck out and the judge did not give leave to amend and, in so saying, he said:

“Whilst I have been able to strike out the action on what is a clean point of law as to the effect of Bye-law 166 in relation to the 1st Plaintiff and in respect of the remaining Plaintiffs on the basis that on any view of the facts, there is no prospect whatever of concluding the Defendant could be said to be a shadow director of theirs, the same clearcut analysis on the papers is not possible in respect of causation and on Mr Jarvis’ consideration of the various claims and their bases.”

3.  What the judge did was he said, “Look, there is a simple point here, a simple point of law.” That is the sort of thing that is suitable to strike out an action. Wading into the facts for two and three days is not suitable for a strike-out action and I think that matter is clear.

4.  In this case we have a case which has been struck out on a simple and clear point of law and now there is an appeal about that. Now the Defendant comes along and says two things. First of all, it says that the Plaintiff, which is in liquidation, is impecunious; and secondly, it says it is going to cost an awful lot of money to come to this court; and I will deal with those things separately.

5.  In respect of that, Miss Chan, who appears this morning on behalf of the Defendant, has somewhat trailed her coat by saying that, to begin with, the liquidators were very unforthcoming and that that has necessitated this application. But then, when it has come down to it, the liquidators have come along and said, and they are liquidators of some experience, that the current cash position of the 1st Plaintiff and the 2nd Plaintiff is healthy and then they set it out. There is a total that the Official Receiver had at 31 July 2009 of $16,128,841.89, and one of the liquidators exhibits a copy of the relevant bank statements together with the Official Receiver’s ledger accounts confirming the balances.

6.  Then he goes on to say:

“Although substantial distributions have already been made to the Moulin Group creditors and the most valuable element of the remaining estate is the interest of Moulin and MGET in two fully controlled solvent subsidiaries which will yield approximately HK$225 million for Moulin and $168 million for MGET, the solvent subsidiary holding these funds is Offer High Investments Limited (‘Offer High’) which was incorporated by the Liquidators and is controlled by me via another Moulin Group company, Ample Faith Investments Limited.”

7.  So on that basis, the liquidators have come along and said, “Look, we’ve got plenty of money for all this, and what is more, we have already made substantial distributions to creditors, so that should there be any downfall in all of this, we’re good for the money.”

8.  So really, the basis for coming to court has, in my view, gone. But I have to add some comments on the application for security for costs.

9.  The skeleton bill of costs has been put at $3,786,400 for an appeal on a strike-out application of something which the judge said was a clean point of law. I have to say that this is beyond anything which I would contemplate as coming anywhere near reasonable. It is far too excessive and reflects badly, I regret to say.

10.  The breakdown for that is $600,000 brief for leading counsel, on top of $300,000 for him for drafting, conference calls, conference and correspondence and a $200,000 two-day refresher fee, which will, of course, be wasted, because in this court I doubt whether the case would go beyond one day anyway; and $150,000 for his air tickets and so forth. But of course, it does not stop there. Then we have a local leading counsel and he sees fit to charge almost exactly the same. He cuts down on the conference and telephone calls by $100,000 in his generosity, but the rest of it is the same. Then we have junior counsel and there, of course, that is two-thirds of what each of the leading counsel is charging.

11.  These figures are, in my view, way beyond the pale. In a case like this, it must be possible to instruct a reasonable leading counsel, perfectly competent to do a clean strike-out case on a point of law, for $300,000 and no more and that is generous. There can be no need for 2 leading counsel on a strike-out application.

12.  So if I were going to grant security for costs in this case, it would have been no more than about $450,000 or $500,000 and that would have been generous. I hope that when this case goes to taxation, if it ever does, the taxing master will pay some heed to the indications that I have been trying to give that these figures are just beyond anything that any court should contemplate as being reasonable.

13.  I dismiss this application.