LING DAI HONG v. WONG YU CHO ROLLY

CACV 198/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 198 OF 2012

(ON APPEAL FROM HCA NO. 1007 OF 2011)

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REASONS FOR DECISION

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1.  There were two summonses before the court. The first was the plaintiff’s summons dated 26 October 2012 applying for security for his costs in the defendant’s appeal herein. The second was the defendant’s summons dated 28 November 2012 applying to strike out the plaintiff’s application and for orders that amount effectively to entering judgment against the plaintiff for the sum of $7,000,000. At the conclusion of the hearing, I granted the plaintiff’s application and dismissed the defendant’s summons with costs of both applications to the plaintiff. I also gave time for the defendant to put in written objections to the plaintiff’s Statement of Costs for summary assessment. My reasons for the decision on the two summonses and on the summary assessment of the plaintiff’s costs appear below.

HCA1007/2011

2.  On 17 June 2011, the plaintiff commenced HCA1007/2011 claiming against the Defendant the sum of HK$1,050,000 together with interest and costs.  It is the plaintiff’s case that the amount claimed represents a loan of $1,000,000 he made to the defendant on 11 September 2009 and agreed interest of $50,000 (at 5% per annual for one year). 

3.  The defendant does not dispute having received $1,000,000 from the Plaintiff.  His defence as appeared by the pleading is that there was an agreement that, instead of demanding repayment, the plaintiff was at liberty to select from among the collection of antiques at a museum owned or operated by the defendant, one or more item of the same value.  It was also pleaded that the plaintiff had chosen a Ming Dynasty stone Buddha (“Ming Buddha”), the price for which was agreed at HK$8,000,000.  The $1,000,000 owed by the defendant would be used as the deposit for the Ming Buddha and the plaintiff would pay the balance of $7,000,000 within one year.  The defendant therefore denied being liable to repay the 1oan and further counterclaimed against the plaintiff for the unpaid balance of $7,000,000, damages and costs.

4.  On 10 October 2011, the plaintiff applied for summary judgment.

5.  In the affirmation opposing the application, the defendant contended that the $1,000,000 was the plaintiff’s initial investment in a Buddhism meditation cultural centre that the defendant had planned to set up and operate.  The defendant further contended there was an oral agreement made on about 10 October 2009 for the sale of the Ming Buddha by the defendant to the plaintiff at $8,000,000, with the $1,000,000 initial investment made by the plaintiff would be the deposit with the balance of $7,000,000 to be paid as soon as possible. 

6.  The defendant also applied to amend his Defence and Counterclaim to plead these new contentions.

7.  The summary judgment application was heard by Master Ng.  In a carefully considered judgment handed down on 30 March 2012, the Master entered summary judgment for the plaintiff for $1,050,000 together with interest and cost.  The Master was of the view that the defence and the defendant’s new contentions were inherently implausible and incapable of belief and failed to raise any arguable defence or triable issue.  The Master also refused leave to amend the Defence and Counterclaim.  

8.  By a Notice of Appeal dated 12 July 2012, the defendant sought to appeal against the Master’s judgment out of time.  On 23 August 2012, M Chan J dismissed the application with costs to the plaintiff.  The judge was of the view that the defendant had no good reason for his delay in appealing and that his intended appeal had no prospect of success.

9.  By a Notice of Appeal dated 7 September 2012, the Defendant appeals to the Court of Appeal against the order of M Chan J.

Applicable legal principles on application for security for costs

10.  The legal principles governing applications for security for costs are well settled.  Order 59 rule 10(5) of the Rules of the High Court, Cap 4A provides that the Court of Appeal may in special circumstances order such security to be given for the costs of an appeal as may be just.  Impecuniosity on the part of the appellant and difficulty in enforcing costs order may amount to special circumstances justifying the making of an order for security for costs.  Once a respondent has demonstrated there are special circumstances for ordering security for costs, the appellant will have to demonstrate countervailing factors that would militate against the making of such an order: Chung Kau v. Hong Kong Housing Authority & Others [2004] 2 HKLRD 650.

The application for security for costs

11.  The plaintiff’s application for security for costs is made on the basis of the defendant’s impecuniosity.  The materials before the Court show that the defendant had on repeated occasions stated in his affirmation and court papers that he had no money or asset other than a Buddha statue, namely, the Ming Buddha.  In opposing the application, the defendant denies he is impecunious. He claims he has a valuable asset, namely, the Ming Buddha and that it has a value in excess of $8,000,000.  He has, however, put forward no objective evidence to support this assertion.  On the other hand, the garnishee proceedings to enforce the summary judgment have produced no result.  The defendant further fails to comply with the Statutory Demand based on the summary judgment and a bankruptcy petition has been issued by the plaintiff to enforce the judgment (HCB 7588/2012).  I am satisfied that the plaintiff has established that the defendant is impecunious.

12.  The plaintiff also points to the defendant’s conduct in the litigation below and in the appeal and submits that if the defendant fails in his appeal, he will take steps to hinder and/or obstruct the enforcement of adverse costs order made against him.  I agree with the submission.  Subsequent to the order of M Chan J refusing leave to appeal against Master Ng’s judgment out of time, the defendant filed another notice of appeal against the summary judgment.  This was struck out by Deputy Judge Sakhrani on 2 November 2012.  The defendant further commenced another action (HCA 2075/2012) against the Plaintiff, which is identical to the counterclaim and the proposed amended counterclaim in HCA 1007/2011, for which leave to amend had been refused by Master Ng.  All these demonstrate that the defendant is prepared to take all sorts of steps to avoid meeting the consequences of court orders that are adverse to him.

13.  I next turn to the merits of the Defendant’s intended appeal to see whether it amounts to countervailing factors militating against the making of an order for security for costs.  As this is not an occasion to embark upon a detailed analysis of the grounds of appeal, I need only make three points :

(1) In dismissing the defendant’s application for leave to appeal out of time, M Chan J was exercising her discretion.  It is trite law that an appellate court will not readily interfere with a judge’s exercise of discretion.

(2) The majority of the matters stated in the Notice of Appeal are repetitions of the arguments advanced before Master Ng and M Chan J.

(3) Master Ng had in her judgment given careful and detailed analysis of the defendant’s case and arguments and also an assessment of his evidence (including those set out in his affirmation and his proposed Amended Defence and Counterclaim).  M Chan J was in full agreement with the Master’s analysis, reasoning and conclusion.

14.  Looking at all the materials before the court, I am not persuaded that the defendant’s appeal enjoys a reasonable prospect of success, not to say a high prospect of success as the defendant sought to argue.  I am of the view that the defendant has failed to establish countervailing factor that militate against the ordering of security for costs.

15.  The plaintiff asks for security in the sum of $105,050.  Having considered the skeleton bill provided, I consider $100,000 is a reasonable amount.  The defendant asks for 90 days to provide the security.  This is too long a period.  I will allow 60 days in which to provide the security.

16.  Applying the normal rule of costs follow event, I also order that the defendant pays the plaintiff the costs of the application.

The defendant’s summons

17.  It follows from the order I made on the plaintiff’s summons for security for costs that paragraph 1 of the defendant’s summons which seeks to strike out the plaintiff’s summons has to be dismissed.

18.  As to paragraphs 2 and 3 of the defendant’s summons, they seek a declaration that the plaintiff is in breach of the alleged oral agreement to purchase the Ming Buddha and for judgment be entered against the plaintiff for $7,000,000 together with interest and costs.  I note that Master Ng had in her Judgment concluded that the defendant’s claim that on the alleged oral agreement is not bona fide and incapable of belief.  Leaving aside the merits, it is plain that the relief sought in paragraphs 2 and 3 of the defendant’s summons are matters which a single Judge of the Court of Appeal has no power to deal with.

19.  The defendant’s summons is in short misconceived and has to be dismissed with costs to the plaintiff.

Summary assessment of costs

20.  The plaintiff asks to have his costs of the two applications summarily assessed.  The amount claimed under the Statement of Costs is $39,933.33.  The defendant, in his List of Objections, raises objections to the hourly rate of the solicitors, VT and AS, the amount of time they spent and also the amount of counsel fee.  He says the costs should be assessed at $11,750. 

21.  I do not accept the objections on the hourly rate of VT and AS (Item A4); they are both in line with the rates usually allowed on taxation for solicitors of the same seniority.  I also consider the brief fee for counsel (Item E1) to be reasonable.  The amounts claimed for court attendances and effecting service (Items B2 & B3) are not excessive.  As to the time incurred on attendance on client by emails (Item C1), they are for communications between the solicitors and the plaintiff.  The defendant’s objection that his computer was in repair is irrelevant.  Likewise, the solicitor’s attendance at the court hearing (Item D4) is not a repetition as it is necessary for instructing solicitor to be present even though counsel has been briefed to argue the case. In respect of the time incurred on other attendances (Items C2 to C4) and professional work (Items D1 to D3), I   agree that there should be some adjustment to the time spend on attendances on client and the defendant (Items C1 and C2), preparing the hearing bundle and the drafting of the supporting affirmation (Item D1). I reduce 15 minutes of AS and 45 minutes of VT.  Accordingly, the total amount of costs allowed is $36,308.33 (i.e. $39,933.33 - $625 - $3,000).

Orders

22.  Accordingly, the orders on the two summonses before the court are as follows:

(1) The defendant shall within 60 days from the date of the order (i.e. 5 December 2012) provide security for the plaintiff’s costs of the appeal herein by paying into court the sum of HK$100,000.

(2) Pending compliance with paragraph (1) above, all further proceedings in the appeal be stayed.

(3) In the event the defendant fails to provide security for costs as provided in paragraph (1) above, the appeal shall, without further order, stand dismissed with costs to the plaintiff to be taxed if not agreed.

(4) The defendant’s summons is dismissed.

(5) The defendant pays the plaintiff the costs of the two applications assessed at $36,308.33.