LAI SIU WAI LOUIS lawful attorney of 譚翠好 v. HO KING YIN EDWIN AND OTHERS

DCCJ4041/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4041 OF 2011

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DCCJ 1276/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1276 OF 2012

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DECISION

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Introduction

1. This is the application of the defendants of both actions by summons dated 29 September 2014 for security for costs (“the application”) against the same plaintiff. The plaintiff opposes the application.  At the beginning of the hearing, it has been agreed by the parties that if the application is granted, the quantum of the security for costs should be HK$532,845.  Therefore, the only issue for this court to determine is whether security for costs should be ordered against the plaintiff in both actions.

The factual background

2. For the purpose of this application, the factual background of the two actions can be briefly stated.  The plaintiff, Mr Lai Siu Wai Louis (“Mr Lai”) is the lawful attorney of Madam Tam Chui Ho (“Madam Tam”) who is the registered owner of a piece of land in the New Territories.  On the land, a security room and an iron gate (collectively referred as “the management facilities”) were erected.

3. Madam Tam leased the land together with the management facilities to a company called Golden Years Investment Ltd (“Golden Years”), which managed a development called Queen’s Park which is located adjacent to the land.  Golden Years used the management facilities to provide security service to the residents of Queen’s Park.

4. In or about July 2011, a management dispute occurred between the owners of Queen’s Park and Golden Years.  On 1 August 2011, the Owners Committee of Queen’s Park (“the Owners Committee”) issued a three-month notice to Golden Year to terminate its services. On 13 August 2011, the defendants of DCCJ 4041/2011 (who were members of the Owners Committee) installed a lock on the door of the security room.  On 18 August 2011, the Owners Committee resolved to terminate the services of Golden Years with immediate effect.  On 19 August 2011, the Owner Committee engaged workers to carry out works at the management facilities.  Security guards employed by the Owners Committee expelled the plaintiff when he tried to enter the land.

5. On 21 October 2011, the plaintiff commenced the action of DCCJ 4041/2011 against the members of the Owners Committee seeking, among other reliefs, a declaration that the defendants had been in wrongful possession of the management facilities which were erected on the land.

6. On 14 November 2011, the Incorporated Owners of Queen’s Park (“the IO”) was incorporated.  On 17 April 2012, the plaintiff commenced the action of DCCJ 1276/2012 against the IO seeking the same reliefs for the same reasons as DCCJ 4041/2011.

The application

7. The defendants of both actions make the application on the following grounds:-

(1)   the plaintiff, Madam Tam, is ordinarily resident out of Hong Kong; and

(2)   the plaintiff has changed her address during the course of the   proceedings with a view to evading the consequences of the litigation.

The law

8. The power to order security for costs comes from Order 23, rule 1 of the District Court Rules where it provides:-

“1.—(1) Where, on the application of a defendant to an action or other proceeding in the Court, it appears to the Court—

(a) that the plaintiff is ordinarily resident out of the jurisdiction, or

(b) that the plaintiff (not being a plaintiff who is suing in a representative capacity) is a nominal plaintiff who is suing for the benefit of some other person and that there is reason to believe that he will be unable to pay the costs of the defendant if ordered to do so, or

(c) subject to paragraph (2) that the plaintiff’s address is not stated in the writ or other originating process or is incorrectly stated therein, or

(d) that the plaintiff has changed his address during the course of the proceedings with a view to evading the consequences of the litigation,

then if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant’s costs of the action or other proceeding as it thinks just.

(2)  The Court shall not require a plaintiff to give security by reasons only of paragraph (1)(c) if he satisfies the Court that the failure to state his address or the mis-statement thereof was made innocently and without intention to deceive ”

9. The onus is on the defendants to prove that the plaintiff is ordinarily resident out of the jurisdiction.  The question is one of fact and of degree; it does not depend upon the duration of the residence, but upon the way in which a man’s life is usually ordered, and it contrasts with occasional or temporary residence: Hong Kong Civil Procedure 2015, Vol.1, para. 23/3/4.

10. Security will not be required from a person permanently residing out of the jurisdiction, if he has substantial property, whether real or personal, within it.  However, the property must be of a fixed and permanent nature, which can certainly be available for costs: Hong Kong Civil Procedure 2015, Vol.1, para. 23/3/6.

11. A major matter for consideration is the likelihood of the plaintiff succeeding.  In exercising its discretion, the court may take into account the merits of the plaintiff’s claim. If the case of the plaintiff is genuine and strong, no order for security would be granted.  However, the court should not embark on a detailed examination of the merits of the case.  It is not the function of the court to make a preliminary run at deciding the ultimate success or failure of the claim: Hong Kong Civil Procedure 2015, Vol.1, para. 23/3/3.

Discussion

12. There is no dispute that Madam Tam is not ordinarily resident of Hong Kong and she has no permanent address in Hong Kong.  The plaintiff opposes the application on the grounds that:-

(1)   Madam Tam has substantial immovable property in Hong Kong;

(2)   the plaintiff did not change her address with a view to evading     the consequences of the litigation; and

(3)   the plaintiff’s claim is genuine and strong, and is highly likely to succeed.

13. I shall deal with the plaintiff’s grounds one by one.  The first ground is that Madam Tam has substantial assets in Hong Kong.  It is not in dispute that Madam Tam owns certain landed property in Hong Kong.  The several pieces of land registered under her name all situated adjacent to Queen’s Park (collectively referred to as “the land”).  What is in dispute is the value of the land.  Both parties engaged experts to conduct valuation and the results cannot be more different. According to the expert of the plaintiff, Goldrich Planners & Surveyors Ltd (“Goldrich”), the total estimated value of the land is HK$2,320,000 as at 19 November 2014.  On the other hand, the expert of the defendant, RHL Appraisal Limited (“RHL”), opined that the land is only of nominal value of HK$1.

14. The main reason for such different valuation is that the land (in particular Lot No.2787 Section B Sub-section 3) was subject to several Deeds of Right of Way and undertaking granted to nearby property owners.  It is the opinion of Goldrich that although the granting of right of way will affect the value of the land, nevertheless, the land still has good development potential and market value. In the contrary, RHL is of the opinion that the development potential of the land is significantly restricted by the granting of right of way to various parties.  Further, as the owner of the land has to maintain the right of way and an emergency vehicular access road, it is almost impossible to build any small houses on the land.  Therefore, RHL is of the opinion that the market value of the land could be zero.

15. Considered the reasoning of both experts, I prefer the opinion of RHL than Goldrich.  There is no doubt that the land could be of substantial value, if there is a willing buyer in the market.  However, with all the rights of way granted to various parties, I agree with RHL that the development potential of the land is seriously affected.  In the report of Goldrich, it was suggested that small houses can be built on the land if the ground floor and the first floor are reserved for passage.  I find these suggestions unrealistic and I do not believe there will be buyer readily in the open market who will be interested to develop the land in such manner. 

16. That is not to say that the land is of no or only nominal value.  Given time, there may be buyer in the market who is interested to purchase the land.  However, the main consideration of this court is whether the foreign plaintiff has assets in the jurisdiction to pay the costs of the defendant if the plaintiff is unsuccessful in the claim.  Considered all the circumstances, the answer must be no.  The land will not be readily available for costs, because it may be very difficult, if not impossible, to find a buyer in the market who is willing to pay a substantial amount to buy the land with all those restrictions.

17. Base on the above analysis, I am not satisfied that the plaintiff has substantial fixed assets in the jurisdiction readily available for costs.

18. The defendants also make the application on the ground that the plaintiff changed her address during the course of the proceedings with a view to evading the consequences of the litigation.  My short answer is that the plaintiff is represented by solicitors and therefore she is entitled to use the address of her solicitors as her address.  It does not matter if she has changed her other address during the course of the proceedings.  In any event, I do not find that the defendants have proved that any change of address was done to evade the consequences of the litigation.  I do not find this ground can support the application of the defendants.

19. Though I found that the plaintiff does not have substantial assets in Hong Kong, nevertheless, if I find that her claim is genuine and strong, and is highly likely to succeed, I should not order security against her.  Without embarking on a preliminary trial of the merits of the case, I find that the plaintiff does have a reasonable good claim against the defendants in both cases.  I find the plaintiff’s claim to be genuine and reasonable but at this stage, I would not go so far as to say that the claim is highly likely to succeed.

20. It is not in dispute that the management facilities are located on the land owned by the plaintiff.  Therefore, if the plaintiff was expelled from the management facilities by the defendants, on the face of it she does have a reasonable cause of action in trespass.  On the other hand, it is the defendants’ case that the management facilities were erected by Golden Years on behalf of the owners of Queen’s Park and they formed part of the common facilities of Queen’s Park under its Deed of Covenant and Management Agreement.

21. Though the defendants might encounter difficulty to justify the act of expelling the plaintiff from the management facilities, the defendants might have an arguable defence on the trespass claim and they may be able to establish they have the right to access and use the management facilities.  Though it was Golden Years who entered into tenancy agreement with Madam Tam, it is at least arguable that Golden Years was entering into tenancy agreement on behalf of the defendants. Therefore, even though Golden Years was no longer the manager of Queen’s Park, it is arguable that Madam Tam is still bound by the tenancy agreement and the defendants still have the right to access and use the management facilities. It will be a fact-finding exercise for the trial court that involves serious dispute of facts.  Without embarking on a detailed examination of all the relevant facts, it is difficult to say for sure that the plaintiff is highly likely to succeed.

22. Base on the above analysis, I am of the view that it is an appropriate case where the court should exercise the discretion to order the plaintiff to give security for costs for the defendants. 

Order

23. I shall now make an order in the following terms:-

(1)   The plaintiff shall within 28 days from the date of this decision    provide security for costs for the defendants of both cases in the sum HK$532,845 to be paid into court, failing which the plaintiff’s claim be dismissed;

(2)   Further proceedings be stayed except for the implementation of    this order;

(3)   Costs order nisi that the costs of this application be to the defendants, to be taxed if not agreed, with certificate for counsel.  This order nisi shall become absolute in the absence of any    application for variation within the next 14 days.