GLOBAL SUPPLY SERVICES LTD v. CHAN FU KIT AND ANOTHER

HCA 2557/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2557 OF 2006

____________________

____________________

____________________

J U D G M E N T

____________________

1. This is the Defendants’ application for security for costs in respect of the whole action.  The Plaintiff does not contest that it has to give security but disputes the amount and the timetable for payment.

2. On quantum, the Defendant makes the following submission:

	(a)	the amount must be reasonable not to stifle the Plaintiff’s claim
and	(b)	the amount of $909,600 suggested by the Plaintiff is excessive.

3. The factors I am asked by the Plaintiff to consider relevant to my decision on quantum are (a) the assessment should be made on party and party basis, (b) the fee-earner’s charge out rate is high, (c) more delegation of work should be made to junior staff, (d) the counsel fee of $300,000 for a 4-day trial is high and (e) the Defendants’ costs of conducting counterclaim should not be taken into consideration.

4. I have taken the above factors into account (but without making any reference to the letters marked “without prejudice save as to costs” and their attachments) and assess the Defendants’ costs for defending the case to be around the sum of $570,000.

5. I note the Plaintiff’s argument that in awarding the amount and the manner of payment I must have due regard to all circumstances of the case.  The Plaintiff is a private limited company with a paid-up capital of $100.  It claims to have liquid cash of about $306,000.

6. I agree that my order must not be so oppressive to stifle the claim of the Plaintiff.  However, I must balance between the Defendants’ right to have their costs protected and the Plaintiff’s right to prosecute his claim.

7. I make the following order:

	(a)	The Plaintiff shall pay into court a total sum of $570,000 as security for the Defendants’ costs for the whole action up to the end of trial in the following manner:
		(i)	$250,000 within 21 days hereof;
	and	(ii)	$320,000 within 14 days after leave to set the case down has been granted;
	(b)	If the Plaintiff fails to make any of the above payments in the aforesaid manner, proceeding in respect of the Plaintiff’s claim against the Defendants shall be stayed;
and	(c)	costs of this application be to the Defendants in any event.

8. My decision on costs is made after considering all the correspondences including those “without prejudice save as to costs” and the written submissions.  I find that the Plaintiff has been very evasive and has not made any concrete proposal to avoid the application for security for costs being taken out.  It is only in the counsel submission that an offer for payment has been made.  Further, I do not agree with the Plaintiff’s submission that the Defendants have failed to provide the materials necessary for consideration: the draft estimate of costs and disbursement has set out the main items and it is self-explanatory.