ELF LUBRICANTS HONG KONG LTD v. THE OWNERS AND/OR DEMISE CHARTERERS OF THE SHIP OR VESSEL "HAI NAN NO. 1" AND THE OWNERS OF THE SHIP OR VESSEL "HE FA"

CACV 1947/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1947 OF 2001

(ON APPEAL FROM HCAJ 322 OF 1998)

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Admiralty action in rem against the ship or vessel "TAI YANG HE" and
the four ships or vessels listed in the schedule annexed to the Writ

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J U D G M E N T

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Application for security for costs

1. The plaintiffs had separately obtained judgment in rem against the owners of two ships. When another ship i.e. "He Fa" belonging to the same owners arrived in Hong Kong, it was arrested by one of the plaintiffs and a writ of fi fa was also issued by the other plaintiffs to enforce the judgments they had obtained against the owners.

2. Mr. Yang Jinbo ("Mr. Yang") claimed to be the true owner of He Fa. He paid into court HK$1,193,400 as security to free the ship from arrest. He then challenged the arrest and attachment of the ship and sought the return of the money paid into court. The application was dismissed by Waung J. Mr. Yang has lodged an appeal against that decision. The appeal will be heard in June 2002. The plaintiffs now apply for security for costs of the appeal and also security for the costs below.

Costs of the appeal

3. Under O.59 r.10(5), the Court of Appeal may in special circumstances order security for costs to be given for the appeal. Special circumstances include where the appellant is a resident out of the jurisdiction and there is no asset within the jurisdiction to enforce the costs order that may be made against him in the event his appeal is dismissed. Mr. Yang is a resident of the Mainland. There is no evidence that he has any asset in Hong Kong which may be enforced upon. Mr. Yang used to be represented by a firm of lawyers. A notice to act in person was received by the court yesterday. He did not turn up today at the hearing of this application.

4. This is clearly an appropriate case to order security for costs of the appeal. The question is how much security should be ordered. The total estimated costs of both appeals are HK$295,000. The plaintiffs are asking for HK$147,500 for each of the appeals. The appeals are estimated for one and half days. Considering the issue that had been identified in the judgment, this may well be an over-estimate. In my view the appropriate costs order for the appeals should be HK$180,000 for both appeals.

Security for costs below

5. As for the costs below the plaintiff had previously applied for security in the sum of US$287,830. US$153,000 was ordered by the court. The judgments that were obtained were :

1) For the first case (HCAJ 322/1998) : US$43,546.45 with interest. The costs were HK$93,000;

2) For the second case (HCAJ 199/2000) : US$40,751.36 with interest. The costs were HK$50,000.

The plaintiffs stated that the costs ordered are insufficient to cover the claims plus interest and costs. There is an estimated shortfall of about US$70,000 for both cases.

6. Mr. Baker, solicitor for the plaintiffs, informed the court that the shortfall represents both interest and costs. No particulars were given as to how much of the shortfall is by way of costs. However, in my view this is irrelevant because I consider that I do not have jurisdiction to order security for costs of the hearing below. O. 59 r.10(5) is specific. It deals with security for costs of the appeal. There is no provision for ordering security for the costs below as well. No authority is cited for the existence of an inherent jurisdiction to make such an order. In my view to order such security is contrary to the general right of an appellant to appeal. The only recognized exception is that imposed by O.59 r.10(5).

7. Mr. Baker in his written submission referred to the case of Gulf Azoz Shipping Co. Ltd. & Others v. Idisi & Others (decision of the English Court of Appeal transcript dated 19 December 2000). This case does not support such an application. The reference to "past costs" in that case were those incurred in seeking permission to appeal. Neither is the case of Procon (Great Britain) Ltd. v. Provincial Building Co. Ltd. [1984] 1 W.L.R. 557 helpful. The ordering of security for the "costs already incurred" remains to be part of the costs of the first instance hearing which was what the court was concerned with in that case.

Conclusion

8. Accordingly, the only order I would make is that Mr. Yang is required to pay security for the costs of appeal. This will be in the form of payment into court of HK$180,000 for the appeals within 21 days. The appeals are stayed until the condition is fulfilled. In default of payment in, the appeals are dismissed together with costs to the plaintiffs. Costs of the present application will be to the plaintiffs as well.