TAMANG TIKARAM v. TONG KEE CO LTD AND OTHERS

CACV 87/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL No. 87 of 2015

(ON APPEAL FROM HCPI 19/2013)

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REASONS  FOR JUDGMENT

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Hon Cheung JA:

1. I agree with Yuen JA’s Reasons for Judgment.

Hon Yuen JA:

2. This is an application by the defendants for security for costs of an appeal by the plaintiff against the judgment of Deputy High Court Judge Paul Lam SC on 1 April 2015.  At the conclusion of the hearing, we ordered the plaintiff to pay security for costs for the appeal within 28 days in the sum of $270,000 and also the costs of the application assessed on a gross sum basis at $50,000.  My reasons appear below.

Background

3. The plaintiff was an aluminium formwork erector.  In July 2011 (when he was 36 years old) he injured his ankle (a minimally displaced fracture of the right medial malleolus) when he fell from a stool in an accident at a construction site. 

4. The plaintiff was in hospital for 3 days. He did not require an operation and his foot was just put in a cast.  After his discharge from hospital, he was given sick leave until 18 April 2012.  He received 19 sessions of physiotherapy between 22 September 2011 and 10 January 2012, and 17 sessions of occupational therapy between 30 January 2012 and 2 April 2012.

5. He did not resume his previous work but from July 2012 began to work as a security guard.

6. Having received employees’ compensation of $277,000, he sued the defendants in an action in the High Court for common law damages.  He was legally aided.

Judgment

7. After a 5-day trial, the learned deputy judge handed down judgment on 1 April 2015.  He found that the defendants were liable and that the plaintiff was not contributorily negligent. 

8. As for damages, the judge assessed damages as follows:

-    pain and suffering and loss of amenities	$200,000.00;
-    loss of earnings and MPF benefits	$400,653.75;
-    loss of earning capacity	$250,000.00;
-    other special damages	$ 9,600.00;
Gross total:	$860,253.75
Less: Employees compensation received	$277,000.00
Net total:	$583,253.75

9. Importantly, the judge dismissed the plaintiff’s claims for loss of earnings based on his allegation that he could not resume his former work as a formwork erector, which paid more than his current work as a security guard.

10. The judge gave an order nisi that the defendants pay the plaintiff’s costs of the action on the High Court scale.  However this order nisi was subsequently replaced by a mixed order as to costs, whereby the plaintiff was ordered to pay half of the defendants’ costs after 3 February 2015 (including all costs reserved) on an indemnity basis on the High Court scale.  Those costs included the trial costs, with experienced counsel instructed on both sides.  

11. The plaintiff lodged an appeal against the Judgment.  His application for legal aid for the appeal has been rejected. 

12. The grounds of appeal set out in the Notice of Appeal essentially challenges the judge’s finding that the plaintiff was able to resume his previous work. 

Application for security for costs of appeal

13. The plaintiff’s appeal gave rise to the defendants’ application for security for costs of the appeal, on the ground of the plaintiff’s impecuniosity, which is generally recognized as a “special circumstance” under Order 59 rule 10(5) of the Rules of the High Court. 

Principles

14. The relevant principles governing applications for security for costs of an appeal have been summarized by the Court of Appeal in Chung Kau v Hong Kong Housing Authority and Others [2004] 2 HKLRD 650 thus:

“The relevant principles, in particular the treatment of impecuniosity as a special circumstance, are summarised in Hong Kong Civil Procedure 2004 Vol. 1 at pp.855-856 paras. 59/10/28 - 59/10/29. In this context, however, I would emphasize the following:

(1) The fact that an appellant is impecunious does not lead automatically to an order that security for costs must be provided. The court is entitled to consider other relevant factors such as the strength of the appeal to determine whether or not it would be just to order that security for costs be provided.

(2) That said, as a matter of practice, once an applicant for security can demonstrate that impecuniosity (or some other factor such as difficulty or expense in enforcing a costs order) exists, while the court retains an overall discretion whether or not to make the order, it would then generally be up to the party resisting the application for security to demonstrate countervailing factors which would militate against such an order being made. A common countervailing factor to resist applications for security are the merits of an appeal.

(3) On a consideration of the merits of the appeal, while a detailed examination is not required (or desirable, even if possible on the materials before the court at this stage), the court should form some sort of preliminary, even instinctive, view. Where the merits appear strongly one way or the other, this may, by itself be a decisive factor. Thus, an appeal which is very strong would often be a very good reason not to order security. The converse of course also applies. A hopeless appeal may even by itself justify an order for security. However, if the court takes the view that the appeal could really go either way, then generally it will look to the existence of any other factors to tilt the balance, in the absence of which, security will be ordered. This is of course on the assumption that a factor such as impecuniosity has already been demonstrated”.

Discussion

15. Applying the above principles to the present case, the first matter to be examined was whether the defendants have shown that the plaintiff is impecunious. 

16. In his affirmation made on 1 December 2015, the plaintiff accepted that he has no savings and owns no property.  He makes around $14,000 to $15,000 a month.  He is married and has two children aged 21 and 19.  Even assuming in his favour that he does not have to support his wife and children, it is not likely that he would be able to pay the costs of the appeal should he be unsuccessful.

17. The plaintiff said in his affirmation that “other than the above award I have no other meanings [means] of satisfying an application for security for costs of the said Appeal”.  The award plus interest amounted to about $626,000.

18. However that sum is not to hand.  The plaintiff has said “the award will be paid ... to Legal Aid and they will hold it until all costs matters are settled.  I am informed that this will take quite some time”.  Given that the mixed order for costs requires the plaintiff to pay half the costs of both sides’ legal representatives (including experienced counsel) for the 5-day trial on an indemnity basis on the High Court scale, there would be a substantial depletion in the sum of $626,000 even when it is to hand.

19. It is clear from the above that if the plaintiff were to fail on appeal, it is unlikely that the defendants could recover their costs of the appeal.  The award (even with interest) would be depleted substantially by the mixed costs order, and there is no discrete appeal challenging that order. 

Merits of the Plaintiff’s appeal

20. Applying the principles set out in Chung Kau, the next stage is to see if there are countervailing factors (the merits of the appeal) which would militate against an order for security being made.

21. Essentially the appeal is a challenge to the judge’s finding of fact that the plaintiff could have returned to his previous work and thus suffered no loss of earnings at all after October 2013.  The judge made this finding based on a joint medical report which he had analysed with care.  At this stage (a detailed examination of the merits not being necessary or desirable - see Chung Kau), it was clear that the plaintiff’s case is not that strong that the court should exercise its discretion against ordering for security for costs. 

Estimate of costs

22. As for the estimate of costs, the defendants have sought a sum of $406,600.  In view of the relative simplicity of the proposed appeal, there could be a downward adjustment in the number of hours billed by the solicitors leaving the defendants with an estimate of say $270,000 which would be a reasonable estimate of the costs involved in the appeal (excluding this application for security for costs).

Order

23. The plaintiff was ordered to pay $270,000 into Court within 28 days from the date of the order as security for the costs of and occasioned by his appeal, and until such security is given, the appeal shall be stayed, and in default of the security being furnished within the time aforesaid, the appeal shall stand dismissed without further notice or order, with costs of the appeal to be taxed if not agreed and paid by the plaintiff to the defendants.  The plaintiff was also ordered to pay the costs of the application for security for costs assessed on a gross sum basis at $50,000.