ELIZABETH HARRINGTON v. CAP GEMINI ERNST & YOUNG HONG KONG LTD.

HCCL 10/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO.10 and No.61 OF 2002

-------------------------

-------------------------

-------------------------

J U D G M E N T

-------------------------

The Application

1. This is an application for security for costs pursuant to the defendant's summons dated 14 August 2002.

2. No offer of any amount of security has been made, and the matter is contested both as to liability and quantum.

The Argument

3. The fundamental issue in dispute in this case is whether a binding contract of employment was entered into between the parties. It is common ground that no formal contract was ever signed, and as part of her relief the plaintiff seeks specific performance to compel the execution of a written contract, thereby enabling her to pursue a claim based upon a two year fixed term of employment. Mr Carolan, who appears for the defendant on this application, has informed me that the plaintiff's damages claim, if successfully established, is worth in the region of US$2 million.

4. Mr Kemp, who appeared on behalf of the plaintiff, took issue both as to the defendant's entitlement to security for costs, and, if he was held to be wrong on his primary stance, as to the quantum sought.

5. He urged the court not to exercise its discretion to impose security for costs in the particular circumstances of this case. Whilst he accepted that the plaintiff was resident in the United States, he emphasised her continuing connection with Hong Kong in terms of her frequent visits and ongoing client activities, and the fact that she retained bank accounts here.

6. Mr Kemp submitted that this was a very particular case. It was, he said, not an inflexible rule that a plaintiff resident abroad should provide security for costs, and he pointed out that, but for the acts of wrongful conduct of which complaint was made in the claim, the plaintiff now would be ordinarily resident in Hong Kong. Thus to require security for costs from the plaintiff in such circumstances would be "akin to allowing the alleged wrongdoer to exact a premium from its victim who is seeking redress", citing in this context the judgment of Le Pichon J (as she then was) in Re Greater Beijing Region Expressways Limited (No.3) [2000] 3 HKC 608.

7. Mr Kemp further suggested that where, as here, the plaintiff is an individual and the defendant is a substantial business entity, that the balance of justice enured in her favour, and he also maintained that this application for security was being employed oppressively in order to stifle a genuine claim, citing in this instance the large (and unjustified) initial figure for security mooted by the defendant, albeit this figure subsequently has been considerably reduced.

8. I am unable to find a case of oppression here. Whilst the defendant no doubt would like to be rid of this claim, and indeed has not been hesitant to employ available procedural argument (vide the initial Labour Tribunal jurisdictional point (now resolved), together with the instant application), there is no evidential basis before me upon which a judgment may be made as to the potential stifling of a claim by means of the present application; indeed, there is no evidence whatever before me as to the plaintiff's personal circumstances. Nor at this early stage am I able to discern where "the balance of justice" lies, whilst Mr Kemp does not go so far as to suggest that this is one of those cases where the merits manifestly are all in his client's favour so that this is a 'must win' situation.

9. Which brings me back to the main thrust of his argument, which for convenience I will label the 'wrongdoer premium' point. Whilst this has a certain forensic attraction, it seems to me to fail, and fail clearly. With respect, the Greater Beijing Expressways decision is clearly distinguishable on its facts - the successful argument in that case being that security should not be imposed by reason of the very conduct complained of in the petition which had resulted in the change of residence of the company to residence outside Hong Kong.

10. In the present case, however, there is no question but that Ms Harrington now is ordinarily resident in the United States, and has so been since her departure from Hong Kong and her retirement from employment with Pricewaterhouse Coopers, subsequent to which she entered into negotiations (which she says came to fruition) regarding employment with the defendant. Accordingly I am unable to see why the undoubted fact that she would be in Hong Kong if the present dispute with the defendant had not arisen has anything to do with it; if indeed she was currently employed by the defendant there would be no dispute, and any consideration of security for costs would not arise.

11. At the end of the day, therefore, this strikes me as a 'bootstraps' argument which does not succeed. The court thus is thrown back onto general principles. As Mr Carolan pointed out, the 2002 Practice (see M/N 23/3/6) notes that "security will not be required from a person permanently residing out of the jurisdiction, if he has substantial property, whether real or personal, within it...the property must be of a fixed and permanent nature, which can certainly be available for costs...". And in this case, Mr Carolan submitted, there was no evidence of this nature whatever. All that had been condescended to was passing reference in argument to bank accounts, absent particulars, which was plainly insufficient. Nor was he reassured by Mr Kemp's suggestion that Ms Harrington's frequent visits to clients in Hong Kong would give the defendant ancillary procedural options (such as, for example, a 'stop notice') in terms of unsatisfied costs orders.

12. Viewed in the round I discern no reason why this case should be treated other than within the ambit of the normal rules governing security for costs, which procedure merely aims to provide a measure of comfort to a potentially successful defendant on risk as to recovery of costs, although it must be stressed that such comfort is not without limits, the security to be ordered being no more than a fund situate within the jurisdiction which is readily available for recovery of the defendant's taxed costs.

13. It follows, therefore, that in the exercise of my discretion I order that security for costs is to be provided. I turn briefly to consider the element of quantum.

14. As was made clear during the hearing, having decided the question of principle I propose at this stage only to make an order for security up to and including the completion of discovery.

15. I have been taken through the correspondence between the parties' solicitors. The present state of play appears to be that Mr Kemp's position is that the defendant's revised bill is excessive and duplicatory, and that a just figure to provide for security should be in the range of $60-70,000 - in fact in his excellent skeleton argument he posits a sum of $69,124, which is the result of his reworking of the defendant's revised bill.

16. For his part Mr Carolan notes that the revised appropriate figure had been calculated at $155,827, to which now should be added, he submitted, an additional sum of approximately $40,000 to take into broad account the costs of the present disputed hearing. He therefore sought a sum of in or around $200,000 for the initial stage up to and including discovery.

17. The quantum element of security for costs is not a matter for precise calibration and necessarily attracts a 'broad brush' approach. I have considered the relevant material against the backdrop of Mr Kemp's criticisms. At the end of the day I have to grasp the nettle and pick a sum which in all the circumstances strikes me as fair and reasonable in the circumstances of the case.

18. After reviewing the papers, my conclusion is that the plaintiff is to provide the sum of $125,000 by way of security for costs up to the completion of discovery, such sum also to take into account the costs of the present application. I so order. Absent agreement as to the furnishing of an appropriate bank guarantee, such sum is to be paid into court, to be held in an interest-bearing account, within 28 days of the date of this judgment. There is to be no interim stay of proceedings pending the provision of such security, but if and in so far as such sum be not provided within the stipulated period, there will be a stay of proceedings in these actions pending further order.

19. As to the costs of this application, the position as I understand it is that the plaintiff has resisted the application for security throughout, and that no offer has been or is on the table. In the circumstances the costs of this application must be to the defendant in any event, such costs to be taxed if not agreed. I make an order nisi to this effect.