MING KEE SHIPPING SERVICE (FAR EAST) CO LTD v. CHINA LIGHT POWER & POWER CO LTD

IN THE HIGH COURT OF HONG KONG SAR

COURT OF FIRST INSTANCE

-----------------

---------------------------------------------------

REASONS FOR JUDGMENT

---------------------------------------------------

1. At the conclusion of the Defendant's application for security for costs, I dismissed the application with costs and said I would give my reasons later. I now hand down my Reasons.

2. The Action was commenced in September 1995 by the Plaintiff against the Defendant for breach of a contract whereby the Plaintiff was to transport transformers to the Defendant's substation. The Plaintiff did part of the work but was then dismissed by the Defendant and complicated technical reasons were advanced by the Defendant to justify dismissing the Plaintiff and not paying the Plaintiff any of the contractual sum of some $800,000 odd.

3. The litigation had been protracted. Eventually in April 1997 the Action was set down for trial which was thereafter fixed to start on 17th November 1997 (5 days reserved). The Trial duly started on the 17th November 1997 before me and by the end of the 4th day of Trial (20th November 1997), the trial had to be adjourned, as the first witness could not carry on and it was obvious that some 12 more days would be required for the trial. The Trial was therefore adjourned to new trial dates to be fixed in agreement with the diaries of counsel. There were disputes between the parties on the new dates and eventually the matter came before me for directions on 23rd December 1997 when I fixed the resumed dates of Trial for 2nd March to 20th March 1998. It will be seen that up to 23rd December 1997 there was no request by the Defendant for security for costs or even any mention by the Defendant of any contemplated application for security for costs.

4. By Summons dated 13th February 1998 returnable before me on 19th February 1998, the Defendant seeks an order from the Court that the Plaintiff provide security for costs in the sum of $1.846 million and that pending such provision of security for costs, the Action be stayed. The application is supported by the Third Affidavit of Charles Cook filed the 13th February 1998 in which he relied on a report dated 12th February. 1998 from an inquiry agent on the financial position of the Plaintiff.

5. At the hearing before me, Miss Lau opposed the application on a number of grounds, namely that:-

1. no credible case had been made out of the inability of the Plaintiff to pay the costs and

2. The application came too late.

In my judgment, Miss Lau is correct in her two objections

6. So far as the lateness of the application is concerned, there can be no doubt that this application could have been made and should have been made a long time ago. We are now one working week away from the resumed hearing and there is simply to my mind, no excuse for such late application. Application for security for costs ought to be made as early as possibly and it must be extremely rare for application to be made after a trial has already started. But this is a case after the trial was adjourned and even after new dates had been fixed, no immediate application was made for security for costs. The Plaintiff must have conducted its affairs on the basis of a trial going ahead without security for costs and had funded the litigation on that basis. There had been no such radical changes of circumstances, which to my mind justify this late late application for security for costs and on that basis alone I would dismiss the Defendant's application for security for costs.

7. But I do so also for the additional reason that there is insufficient credible evidence to convince me that the Plaintiff will be unable to pay the Defendant's costs. The inquiry agent had been largely unsuccessful in obtaining much financial information about the Plaintiff but that is not the same thing as proving that the Plaintiff is impecunious. There is at least no dispute that the Plaintiff is still very much in business, and the evidence adduced before me at the Trial showed that the Plaintiff were working on projects in hand. The Plaintiff has been able and continues to rent large premises of 10,000 sq. ft. and further was and is able to fund this expensive litigation, which by the skeleton bill of the Defendant suggests the quantum of such funding to be in the order of over one million dollars. I agree with Miss Lau that the evidence placed before the Court on the financial position of the Plaintiff is sketchy, of poor quality and insufficent specially having regard to the lateness of the application. I am therefore not satisfied that the Plaintiff will be unable to pay the costs of the Defendants.

8. The Summons of the Defendant is therefore dismissed with costs.