KWAN CHUI KWOK YING AND ANOTHER v. TAO WAI CHUN AND OTHERS

CACV 296/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 296 OF 2006

(ON APPEAL FROM HCMP nO. 2996 OF 1990)

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(THIRD PARTY PROCEEDINGS)

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DECISION

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1.  This case concerned the estate of the late Mr Kwan Kai Ming who had two wives, two concubines and sixteen children.

2.  The 2^nd plaintiff and 6^th to 15^th defendants are children of the first wife.

3.  The 1^st plaintiff was the second wife who had no child.

4.  The 1^st defendant was a concubine and the 2^nd to 5^th defendants are her children.

5.  The 16^th defendant is the son of the other concubine who predeceased the Mr Kwan.

6.  The present dispute related to the 6^th and 15^th defendants in the Third Party Proceedings only.

7.  Succinctly put, the 6^th defendant sought to challenge the 15^th defendant’s legitimacy.

8.  On 4 May 2007, Deputy Judge To in the High Court found that the 6^th defendant was making up a false case against the 15^th defendant on documents that he knew were false.

9.  The judge concluded that viewed through the eyes of the 15^th defendant, the litigation was adverse. The judge further concluded that the 6^th defendant conducted the proceedings in a hostile, scandalous, vexatious, malicious and oppressive manner, which justified an award of costs on an indemnity basis against him.

10.  The judge disqualified the 6^th defendant from having his own costs paid out of the estate of Mr Kwan. The judge further ordered the 6^th defendant to bear the costs of the 15^th defendant (in connection with a trial in 1994 before P Chan J [as he then was] and the appeal to the Court of Appeal in 1995) on an indemnity basis after discounting that part of the costs that the 15^th defendant had unreasonably incurred.

11.  By a Notice of Appeal dated 29 August 2006, the 6^th defendant sought to reverse the costs orders of Deputy Judge To and to get costs against the 15^th defendants. The two-day appeal will be heard on 11-12 of December 2007.

12.  On 19 September 2007, the 15^th defendant seeks security for costs of the appeal against the 6^th defendant on the basis that he will be unable to pay the 15 defendant’s costs should his appeal be unsuccessful. It is suggested that a reasonable amount for the security is $1 million.

13.  The 15^th defendant contends that the 6^th defendant is in dire deficit financial state in the light of his living expenditure, after pointing out that he is now aged 73, retired with no sign of saving and is unrepresented. It is emphasized that the 6^th defendant had already incurred costs of up to $14 million.

14.  The 6^th defendant denies the allegation of impecuniosity against him. He claims to have substantial investment in Chinese companies, but due to the need to keep secret, he is unable to disclose the nature and extent of his investment.

15.  The 6^th defendant also alleges that the delay in applying for security is an attempt to prevent him from pursuing his appeal, as it is difficulty for him to raise $1 million within a short time. The 6^th defendant emphasizes that he should be allowed to argue his appeal in December 2007 when the whole truth will come out.

16.  Order 59 rule 10(5) empowers the Court to order security for the costs of an appeal in special circumstances and it is well established that impecuniosity on the part of the appellant, without more, is a sufficient cause for ordering security for costs against him.

17.  There is no dispute that the 6^th defendant has already incurred a large amount of costs that he has not yet paid. The 6^th defendant admits to have difficulties in raising money for his legal costs within a short time.

18.  There is no indication that the 6^th defendant has any property or assets that the 15^th defendant can turn to for costs should the appeal by the 6^th defendant turn out to be unsuccessful.

19.  The 6^th defendant’s suggestion that he has substantial investment in the Mainland, but he is unable to disclose the nature and extent of his investment is not a valid reason for not ordering him to furnish security for costs.

20.  If the 6^th defendant indeed has substantial assets as he claims, an order for security of costs will not prejudice him.

21.  On the information available to this court, there is a good reason to conclude that the 15^th defendant will encounter difficulties in terms of delay and expenses in enforcing any order for costs should the 6^th defendant’s appeal be unsuccessful.

22.  The court has also considered the merits of the 6^th defendant’s appeal and other matters raised by him. It is neither necessary nor desirable for the court to express to strong or definite a view of the merits of the appeal, however, the court is not persuaded that there is sufficient reason not to order the 6^th defendant to furnish security for costs of the appeal.

23.  Having perused the estimated bill of costs, I am of the view that a reasonable amount for the security of costs is $400,000. The issues in the appeal only concern the question of costs.

24.  I order the 6^th defendant to furnish security for costs of the appeal in the sum of $400,000 by making payment into court within 28 days, failing which his appeal will be dismissed forthwith with costs to be taxed if not agreed. Until the 6^th defendant makes payment into court aforesaid, the appeal will be stayed.

25.  If the 6^th defendant complies with the order of security for costs, the costs of this application will be costs in the cause of the appeal.

26.  The costs of the application exclude the costs of preparing the 435 pages of bills of costs (exhibit KTOD-2 to the affirmation of the 15^th defendant dated 18 September 2007) as those documents are completely unnecessary for the disposal of the application.