BANK OF CHINA (HONG KONG) LTD v. FU MING KONG MICHAEL FIRST CHINA TRADING LTD AND ANOTHER

cacv 240/2005

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 240 of 2005

(ON APPEAL FROM HCA NO. 7769 OF 2000 AND
HCMP NO. 3909 OF 2000 (CONSOLIDATED))

HCA 7769/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7769 OF 2000

AND

HCMP 3909/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 3909 OF 2000

BETWEEN

(By Original Writ of Summons and Order to carry on)

(Consolidated pursuant to the Order of Master Wong
dated 28^th September 2001)

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D E C I S I O N

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1.  This is an application for security for costs.  It is against a company and it is against a personal defendant.  As has been drawn to my attention in a recent judgment which I gave also on security for costs, I said that where there was a litigant in person who is impecunious, there may be a difficulty in granting security for costs because to grant security for costs on the basis of impecuniosity against an individual when the court has come to the conclusion that it cannot dismiss the merits of the appeal, would be to deny the appellant the right of appeal and that is a serious matter and I would be very reluctant to do it. 

2.  However, in this case, I regret to say I see absolutely no merit in this appeal.  There were original grounds which were filed by the appellant in person.  These have been replaced by a new notice of appeal and that notice of appeal really turns on one simple question, namely that the Plaintiff was unable to produce the original mortgage document at trial.

3.  Two solicitors were called.  One was an assistant solicitor who really did not handle the file very much but was given the file to do something very minor whilst the handling solicitor was on leave.  She gave very frank evidence.  She said that she really could not remember what happened because she only had to do something which seems to me to have been very minor and very secretarial or ministerial with regard to the file while the other solicitor was on leave.  But the solicitor handling the file did explain that the file was kept in the proper place in the solicitor’s office and when he got back from leave, it simply was not there; it could not be found; they tried to look for it and, unfortunately, the whole litigation file which included the mortgage document, was missing so the file had to be reconstructed from the court documents. 

4.  That is where the case is.  Unfortunately, the original document has been lost.  The judge accepted that evidence.  I see no grounds whatever for appealing against that finding. 

5.  Then when one comes to consider the Defendant’s case, unfortunately, it lacks any merit at all because the Defendants are not disputing that there was a mortgage; they are not disputing the terms of the mortgage; they are not disputing even, as I understand it, the validity of the mortgage.  All they want to see is the original document and are somehow trying to play on a combination of statutory provisions and so forth simply because this litigation file has been lost in the solicitor’s office.  That, I am afraid, is simply not the law.

6.  The other ground of appeal was that the judge below had ordered indemnity costs.  Having looked through the file and read the various judgments that are in it and seen what has transpired and, indeed, considered some of the transcripts, I am afraid that I have every sympathy with the judge and I do not see any ground of appeal there either. 

7.  In my view, if the Defendants are impecunious by ordering security for costs which I think is justified in this case, I am only doing them a favour if the appeal does not go ahead because all they would be doing is running up further costs on the appeal and I say that as bluntly as I can. 

8.  I make the order in the form that I usually do that is to say:

(1)     The Defendants do on or before 19 November 2005 give security to answer costs in case any shall be awarded to be paid by the defendants to the plaintiff by making lodgement in court of the sum of $350,000 by cash or banker’s draft or by the provision of a bank guarantee of the like amount which guarantee shall have been approved by the Registrar; and until such lodgement be made and notice thereof given to the Registrar and to the solicitors for the Plaintiff (such notice to be given on the same day as the lodgement is made) all proceedings in the said appeal are to be stayed. 

(2)     In default of the defendants making such lodgement as aforesaid within the time specified above or within such further time as the court may, for special reasons, allow, the said appeal do, upon the solicitors for the Plaintiff certifying such default to the Registrar, stand dismissed out of this court without further order.  

(3)     In the event that the appeal is dismissed in the circumstances provided for above, the defendants do pay the plaintiff its costs occasioned by the said appeal, such costs to be taxed.

(4)     The costs of this application be costs in the appeal.