RANGER F & B SERVICE LTD v. LO YEE NOK

DCCJ 3216/2022

[2026] HKDC 299

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3216 OF 2022

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DECISION

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Introduction

1.  The Plaintiff commenced this action on 19 August 2022.  With leave to set down granted on 14 July 2025, the 4-day trial is scheduled to commence on 26 May 2026. 

2.  By a summons dated 4 August 2025, the Defendant seeks an order that the Plaintiff do provide security for costs in the sum of $500,000 to cover the period from the date of the order onwards to the conclusion of the trial.  This is my decision on the Defendant’s application.

Background

3.  The Plaintiff is a limited company incorporated in Hong Kong with a share capital of $10,000.  Mr Luk Chung Lim holds 70% of the shareholding in the Plaintiff and is its director.  Between 1 March 2017 and 27 May 2022, the Plaintiff employed the Defendant to work at its restaurant named Crispy Bistro in Sai Ying Pun.

4.  During his employment, the Defendant was instructed to perform the following duties: providing food and beverages to the customers, billing for the food and beverages, keeping the restaurant tidy and purchasing necessary grocery.

5.  By reason of the following incidents, the Plaintiff claims that the Defendant has acted in breach of his employee duties:-

(1)  The Plaintiff alleges that in the period between 1 January 2020 and 27 May 2022, there were around 160 occasions where the Defendant deliberately or unreasonably failed to collect payments for the beverages consumed or ordered by persons in Crispy Bistro, and those persons included the Defendant’s friends and acquaintances.

(2)  Furthermore, the Plaintiff alleges that during the same period, there were around 50 occasions where the Defendant and his friends dirtied the restaurant which necessitated additional cleaning.

6.  The Defendant contends that the Plaintiff allows its employees and alumni to consume food and beverages in Crispy Bistro for free.  Mr Luk himself would bring friends to the restaurant without billing them, and he would occasionally instruct the staff to give out free drinks to customers.  More importantly, Mr Luk once demanded in January 2022 the Defendant to pay the Plaintiff $10,000 for the unpaid bill incurred by the Defendant’s friends from 1 January 2020 to 1 January 2022, and the Defendant already settled this payment on 24 May 2022.

7.  The Defendant also counterclaims against the Plaintiff for outstanding wages in the sum of $58,094.

Applicable Principles

8.  The application is made pursuant to section 905 of the Companies Ordinance (Cap 622)  which provides that:-

“(1)  This section applies where—

(a)  a company is a plaintiff in an action or other legal proceedings; and

(b)  it appears, by credible testimony, to the court having jurisdiction in the matter that there is reason to believe the company will be unable to pay the defendant’s costs if the defendant succeeds in the defence.

(2)  Without limiting the powers of the court under any other Ordinance, the court may—

(a)  require sufficient security to be given for those costs; and

(b)  stay all proceedings until the security is given.”

9.  DHCJ Grace Chow has in the recent case AHS Device Hong Kong Ltd v VT Zero Ltd [2026] HKCFI 642 at §12 (with reference to Hon Ng J’s decision in Sunni International Ltd v Kao Wai Ho Francis [2021] 1 HKLRD 841)  summarised the relevant principles as follows:-

(1)  The Court’s jurisdiction under section 905 is engaged once it has been established that the plaintiff company will be unable to meet an adverse costs order.  The Court has a discretion whether to order security for costs having regard to all the circumstances of the case.

(2)  Security for costs may be ordered if there is credible testimony that there is reason to believe that the plaintiff company will be unable to pay the defendant’s costs if the defendant succeeds in the defence.  The fact that a plaintiff is in liquidation is prima facie evidence that it is unable to pay such costs, unless evidence to the contrary is given.

(3)  While the Court may have regard to all the circumstances of the case, including merits, it is not the function of the Court to make a “preliminary run” at deciding the ultimate success or failure of the claim.  The Court should not delve into the respective merits of the parties’ case unless it can clearly be demonstrated one way or other that there is a high probability of success or failure.  The threshold of demonstrating the probability of success is very high.

(4)  Other circumstances which might be taken into account in deciding whether or not to grant security for costs include whether the application is being used oppressively so as to stifle a genuine claim, whether the plaintiff’s want of means has been brought about by the defendant’s conduct and delay in making the application.

Plaintiff’s Ability to Meet Adverse Costs Orders

10.  Mr Perlman Sam, counsel for the Defendant submitted that it would suffice for the Defendant to point to surrounding circumstances or adduce some credible evidence from which it can reasonably be inferred that the Plaintiff would be unable to meet adverse costs orders.  It would then be up to the Plaintiff to adduce such evidence as it thinks fit to demonstrate its financial means.  I accept this general proposition to be correct. 

11.  Mr Sam then relied on the following matters to argue that the Plaintiff would be unable to pay the Defendant’s costs should the Court rule in favour of the Defendant at trial.  First, the Plaintiff was set up only for the restaurant business and has no other business.  Second, even if the Plaintiff has other businesses, those businesses are trivial if not sham, and they are highly inconsequential.  Third, the Plaintiff has no valuable assets.

12.  I agree with Mr Sam that the jurisdiction under section 905 of the Companies Ordinance is engaged, as there is credible evidence from which it can be inferred that the Plaintiff would not be able to pay the Defendant’s costs if ordered to do so. 

13.  The Plaintiff only has a share capital of $10,000, and there is no evidence suggesting that it owns any other substantial assets.  The Plaintiff has produced its bank statements only for a few months in 2024, and even in those selected statements, the largest credit balance it had at one point was only in the sum of $64,926.61.  No bank statement from 2025 has been produced to show the more updated financial status of the Plaintiff.

14.  The Defendant deposed that having worked for Mr Luk for six years, he knew that the Plaintiff was set up only to carry on the restaurant business in Crispy Bistro, which was closed on 19 June 2022. 

15.  Mr Luk countered that by saying the Plaintiff was still carrying on other businesses such as catering, food business-related online system and research and development for food business.  However, in its solicitors’ letter dated 16 July 2025, the Plaintiff could only provide six items of revenue between March and September 2024 (in the sum of $72,500, $9,677, $50,137.04, $3,000, $49,800 and $7,500 respectively).  The invoices that the Plaintiff has produced were all issued in 2022 to 2024.  There is no evidence showing that the Plaintiff is engaged in any business in 2025.

Court’s Discretion

16.  Although the jurisdiction under section 905 of the Companies Ordinance is engaged, having considered all the circumstances of the case, I would exercise my discretion to dismiss this application.

17.  Although according to the well-established principles and practice, I should not embark on a mini-trial to determine the merits of the parties’ case, I would observe that the Plaintiff’s claim is bona fide and not a sham.  In this regard, it suffices for me to refer to the representations given by the Defendant himself in the Labour Tribunal on 26 September 2022 in LBTC 2155/2022 (where the Defendant herein claimed against the Plaintiff herein for arrears of wages, and which has been transferred to the District Court and consolidated with this action).

18.  In that hearing, the learned Presiding Officer was informed by Mr Luk representing the Plaintiff herein that the Plaintiff was suing the Defendant in this action for $290,000 as unpaid drinks.  When being inquired whether he disputed the Plaintiff’s allegation, the Defendant said he had not fully paid for the drinks and that he was owing the Plaintiff money, although he would dispute the quantum.  The relevant exchanges are extracted below:-

“申索人: 誒，責任上，我覺得 – 我有啲嘢需要同佢去拗撬囉。

…

申索人: 唔係，我係畀唔足錢囉，我可以咁講囉。

官: 畀唔足錢，即係你應該係承認有爭佢錢㗎喇，不過個數係幾多啫。

申索人:  誒，可以咁講囉。”

19.  Notably, the Defendant did not tell the Presiding Officer that the liability was settled by his payment of $10,000 on 24 May 2022.  I note that the Defendant has in his Amended Defence and Counterclaim as well as his 2^nd supplemental witness statement attempted to explain why he uttered the above answers.  This would be a matter for the trial judge to resolve, but for present purpose, the representations demonstrate that the Plaintiff’s claim is bona fide and that the Defendant did concede that some money was due to the Plaintiff.  Making an order against the Plaintiff now may mean that its bona fide claim will not be adjudicated upon, and this is one relevant matter I can take into account in the exercise of my discretion: see Eric Edward Hotung v Ho Yuen Ki HCA 857/2011 (unreported, 25 May 2016)  at §25.

20.  Another relevant factor that I take into account is the inordinate and inexplicable delay on the Defendant’s part in seeking security for costs. In this connection, Hon Ng J has stated the following principles regarding delay in Chung Ying Building Materials Co Ltd (In Liq)  v Chow Wai Lam William [2025] 3 HKLRD 577 at §§20-23:-

(1)  Although an application for security for costs may be made at any stage of the proceedings, it should be made as promptly as possible and it should not be made too late or too close to the trial, since unless there is a reasonable explanation for the delay, it may be refused.

(2)  Whilst delay itself is not a bar to an application for security for costs, it is a relevant consideration, particularly when it causes prejudice to the plaintiff.

(3)  In refusing a late application for security, the Court is entitled to take into account the fact that the defendant has indicated in its timetabling or listing questionnaire that no further interlocutory applications would be taken out.

(4)  Late application for security for costs, in particular when the trial is imminent, per se constitutes very real prejudice to a plaintiff, since the plaintiff is being put in a position of having little or no choice but to put up the security in order not to abandon and waste all the work done and costs incurred in preparing for trial.

21.  In Miumi International Food Company Ltd v Chan Ka Chung [2025] HKCFI 5970, DHCJ Grace Chow held at §27 that faced with a late application for security for costs, it was not necessary for the plaintiff to adduce actual evidence that delay had resulted in prejudice, because a requirement late in the proceedings to source additional funds for security for the other side’s costs must be real prejudice.

22.  In the present case, the Defendant’s application made on 4 August 2025 is self-evidently late.  It was taken out only after the Court granted leave to the parties to set this case down for trial, and the trial is only a little more than three months away from this hearing.  Worse still, in all previous timetabling and listing questionnaires (the latest one being the listing questionnaire dated 7 July 2025), the Defendant never indicated that he intended to apply for security for costs. 

23.  This is similar to the factual matrix in Jigme Tsewang Athoup also known as Jigme Rinpoche v Brightec Limited HCA 1693/2011 (unreported, 20 October 2014), where DHCJ Lok (as Hon Lok J then was)  refused the application for security for costs and stated the following at §14:-

“14.  … Although the security for costs application was taken out 3 months before the PTR date as opposed to 5 days in Waddington Ltd, the 1^st and 2^nd defendants, through their solicitors, had confirmed in the listing questionnaire dated 4 November 2013 that they did not intend to take out any further interlocutory applications.  Further, the trial will, as from the date of the hearing, commence in about 3 months’ time.  The delay in the making of such application will constitute a very real prejudice to the plaintiff as he has to raise substantial fund in the limited time before the trial.”

24.  Mr Sam for the Defendant argued that there was no delay on the Defendant’s part because he was only seeking security for costs covering the period from the date of the order onwards and the application was “forward-looking”.  Mr Linus Li appearing for the Plaintiff argued that such a submission, if accepted, would lead to abuse.  I agree.  If this proposition were correct, then essentially all defendants could tactically wait until their cases were set down for trial and then make a “forward-looking” application for security for costs to catch the plaintiffs off guard. 

25.  Mr Sam then sought to justify the timing of the application by saying that after the parties’ mediation in August 2024, the Plaintiff needed to amend its pleadings which eventually led to its amendment application made on 4 November 2024 and consequential amendment of pleadings and filing of supplemental witness statements.  I do not agree that this can explain the delay.  The main amendment introduced in the Amended Statement of Claim was merely the plea that the Defendant admitted liability in a hearing in LBTC 2155/2022 (which I mentioned above).  This would in no way significantly alter the complexion of the Plaintiff’s case that could justify the Defendant’s late application for security for costs. 

26.  It was also submitted on the Defendant’s behalf that he could provide a reliable estimate of legal costs to be incurred only after the amendments to pleadings were made and after the supplemental witness statements were filed.  I do not agree.  As stated above, the Plaintiff’s pleadings amendments were anything but substantial; in fact even after the amendments the Amended Statement of Claim is only six-page long.  The Defendant could well have made reasonable estimates as to the length of the trial and the costs to be incurred, and did not have to wait until the case was formally set down for trial. 

27.  The Defendant prayed reliance on Cornelis Pieter Alexander Van De Riet v KD Concept Ltd [2024] HKDC 1256 and the cases discussed therein for the observation that if a party makes an application for security for costs too early, he may be reproached because he cannot forecast accurately how long the trial will take and how much it will cost.  This may certainly be true in some cases where the dimensions of the claims are more fluid.  However, the Plaintiff’s claim here is very straightforward, whether before or after the amendments to the pleadings.  In any event, even if the Defendant considered it prudent to wait until he completed his 2^nd supplemental witness statement, he cannot explain why he did not indicate in his listing questionnaire dated 7 July 2025 that he would seek security for costs, other than faintly suggesting that it was a “mistake”.

28.  The Defendant also said that he did not find it necessary to seek security for costs earlier because he could afford the legal costs incurred so far in the sum of $483,100 with his own savings, but the estimated costs to be incurred for the trial in the tune of $670,820 is another matter.  I cannot understand why the Defendant would find it necessary to seek protection only in relation to the costs to be incurred, when the quantum is not much different from the costs already incurred.  I do not accept it as a good reason for the delay in his application.

29.  For the aforesaid reasons, I do not consider that the Court’s discretion should be exercised in the Defendant’s favour in granting his application.

Disposition

30.  I hereby dismiss the Defendant’s summons dated 4 August 2025.  I make an order nisi that the Plaintiff’s costs be paid by the Defendant, to be taxed if not agreed.