NATUZZI SPA v. DECORO LTD

HCA 1702/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1702 OF 2001

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R U L I N G

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1.  This is my ruling on the security for costs, or rather the further security for costs application. 

2.  At the beginning I think it should be noted that this is an application made in the course of the trial.  As I mentioned in the course of argument I take the view that it requires good reasons to justify the court to entertain such an application.  Because the case has already been on trial the court should not lightly embark on any interlocutory application, including security for costs application. 

3.  The reason being that, firstly, to entertain such an application would entail a risk that the trial be disrupted.  Even like the present case where the trial has been adjourned part heard, there is still the problem that if a security for costs application, or further security for costs application is entertained, parties will have to devote part of their resources to deal with such application and the court will have to find time to deal with that application.  In the event that there is disagreement with the court’s ruling on the matter, the other party might like to take that on appeal, and this would cause severe problems as regard the continuation of the trial in the meantime.

4.  Although that does not arise in the present circumstances, further problem would arise when the paying party has not got the immediate means to come up with the amount ordered by the court. 

5.  In the present context the trial will be restored in a few weeks time on 14 August.  Obviously, if there is going to be any interlocutory appeal with regard to my ruling on security for costs that will cause immense problems.  On the other hand, as Miss Kendal pointed out, it is clearly envisaged in the previous orders that there are scopes for further security, and given that there have been a number of changes in the circumstances, I am prepared to exercise my discretion to consider the present application.

6.  To some extent the Plaintiff accepts that there should be a further security but the amount is in dispute.  Bearing in mind what I have said with regard to the limited scope that the court should entertain further security for costs application in the course of the trial, I am not prepared to entertain any additional items which should have already been covered previously. 

7.  In regard to the work which is said to be stemming from circumstances occurred since the last order for security, a number of principles should be noted: first, parties agree that in dealing with these applications the court should adopt a broad brush approach as the court is not to embark on any mini-taxation although the usual practice is for a skeleton bill to be included.  Hence I am not going to go through an item by item consideration. 

8.  Second, when the court orders security, the court would not provide and parties should not expect 100 per cent security even though the bill is prepared on a party to party basis.  Very often the court will award security with a discount. 

9.  Third, I think Mr Hoy is correct to refer to circumstances how new materials came to be adduced by way of evidence in this trial.  This is particularly relevant with regard to the question of additional statements, or works relating to the additional statements of Mr Brook and Mr Gervais and Mr Ricci. 

10.  On that particular aspect, having carefully considered Mr Hoy’s submissions, I am of the view that as far as the price list and the patent documents are concerned, although they can be said to be documents of the Defendant, I accept the Defendant’s explanation as to why Defendant had not previously thought them to be of much relevance for the purpose of this trial until the Plaintiff sought to produce them by way of evidence. 

11.  On the other hand, I think the Defendant should have been aware of what has been communicated between Mr Ricci and Mr Scarati by way of emails.  Even though Mr Ricci said he had not retained copies of these emails in his computer, I am of the view that he should not be taken by surprise when the plaintiff sought to adduce these emails by way of evidence.

12.  And in respect of item (d) in annexure 2 to Miss Kendall’s written submissions, I will not give the full amount of the security as set out under that particular item.  Instead I will discount it by way of one-third. 

13.  As regards the other items, (a), (b) and (c), the court will not take the full figures suggested by the Defendant, but I am prepared to use the Plaintiff’s figures for present purposes.

14.  Turning to the works relating to closing submissions, I do not consider the fact that counsel now think they need more time to prepare for closing submissions and negotiate a fees with the Defendant for that purposes is by itself a good reason for the court to entertain a further security for costs application.  I say this without prejudice to whatever arguments that may be advanced at a later stage in taxation of costs, if matters come to that stage, whether fees paid to counsel for preparation of closing submissions is a recoverable item by way of taxation on party and party basis.  But as far as an application for further security for costs in the course of the trial is concerned, I do not think it is appropriate for the court to exercise its discretion to order that. I will however give allowance for the production of the videotapes in respect of the sofas.

15.  After adding up all the figures and rounding it up, I propose to order $2.5 million by way of further security.

(Discussion re costs)

16.  I think the usual rule should apply, so the Defendant will be have to pay the Plaintiff’s costs of this application in any event.