LX v. CWC, the Administratrix of the Estate of WTFP

FCMP 171/2019

[2021] HKFC 58

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FAMILY COURT

MISCELLANEOUS PROCEEDINGS NO. 171 OF 2019

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DECISION

(SECURITY FOR COSTS)

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Application

1.  This is a hearing of the Respondent (“R”)’s summons dated 10 September 2020 applying for security for costs in the sum of $215,217.50 (or such other sum as the Court shall think just), which application was opposed by the Applicant (“A”).

2.  R was represented by Mr. Esmond Wong, and A by Mr. Arthur Au, both of counsel.

Background

3.  The Deceased passed away in Hong Kong on 12 June 2018, leaving R as her surviving spouse together with 5 adult children.  R became the Administratrix of the Deceased’s estate by virtue of a grant of Letters of Administration issued to her on 3 October 2019.

4.  On 4 September 2019, A issued an originating summons against the estate of the Deceased, claiming that she was being maintained by the Deceased when they were cohabitating in the Mainland before his death.  She now claims for financial provision from the estate a monthly sum of RMB15,630 payable until her death, or alternatively, a lump sum of RMB7,502,400, both under section 4 of the Ordinance. 

5.  On 12 December 2019, two of the children of the Deceased filed their affirmations in opposition to A’s application for financial provision.  On 10 September 2020, R has also issued her summons for security for costs against A on the ground that she was ordinarily resident out of Hong Kong.  There is in fact no dispute that A has all along been a resident of the Mainland and she has never lived in Hong Kong on a permanent basis.

6.  The summons was returnable on 26 February 2021, which was also the date originally fixed for the FDR hearing.  As A had difficulty in coming to Hong Kong due to the public health situation, I have decided to adjourn the FDR hearing and make use of that date to hear the parties’ arguments on the security for costs summons instead.  After hearing counsel’s submissions, decision was reserved to be handed down, which I now do.

The Law

7.  An application for security for costs is governed by Order 23 of the Rules of District Court, Cap. 336H (“RDC”), and the relevant rule to the present application is rule 1 (1)(a):

“Security for Costs

1.  Security for costs of action, etc. (O. 23, r. 1)

(1)  Where, on the application of a defendant to an action or other proceeding in the Court, it appears to the Court—

(a)  that the plaintiff is ordinarily resident out of the jurisdiction; or

(b)  …

(c)  …

(d)  …

then if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant’s costs of the action or other proceeding as it thinks just.

(2)  …”

8.  At the hearing, I was referred by counsel to the case of Lim Yi Shenn v. Wong Yuen Yee[1] in which the legal principles on security for costs have been discussed by Mr. Recorder Horace Wong SC after considering various authorities on the subject.  At paragraphs 23-24 of the Judgement, the learned Recorder stated the positions as follows:

“23. The words of the Vice-President cited above reflects the traditional approach of the Court to the exercise of the discretion under O.23 r.1(1)(a): unless there are other considerations to show that ordering security would be unjust, prima facie the discretion should be exercised in favour of ordering security against a foreign plaintiff, as it is just to do so (see, Walt Disney Co v Disney Property Agency (unrep., HCA 7289/1992, [1993] HKLY 814), per Godfrey J). The reasoning being, as Parker LJ observed in the case of Berkeley Administration Inc v McClelland [1990] 2 QB 407, 418F:

… it is, I accept, common for orders to be made on little if anything more than fact of residence outside the jurisdiction, but this is because it is also commonly the case that it is obvious from the pleadings that enforcement of any judgment for costs in the event of the plaintiff’s action being dismissed would be difficult and costly to enforce.

24.  However, while it is common for orders for security for costs to be made on little more than the fact of residence outside the jurisdiction, it is plain from the wordings of O.23 r.1(1)(a) that there is no inflexible rule that a foreign plaintiff has to provide security.  There is a discretion to exercise, and there may very well be consideration in a given case that makes it unjust to order security against a foreign plaintiff.”

9.  It is abundantly clear that the court is exercising a discretion in granting (or not granting) an order for security for costs.  But the prima facie position is that such an order should be granted against a foreign plaintiff unless there are considerations justifying otherwise.

10.  If a plaintiff is claiming that such an order for security would stifle his claim, the burden is on him to adduce credible evidence to show that funds are not available from any source to provide or support security: per Yuen JA in Po Hio Chua v Hang Seng Bank Limited[2], at §23.

11.  The same principles were further stated in Bart William Jozef Bost v Jerry Teng Mei Sheng & Anor[3] in which Barma J (as he then was) stated at §§33-34 of the judgment that:

“33. The Petitioner’s final argument against the provision of security was that to require him to provide security would be to stifle his claim, as he would be prevented from pursuing it due to his inability to put up security if ordered. In order to resist the provision of security on this ground, it is necessary for a plaintiff to do more than simply assert that he is not in a position to provide security. Generally, it will be necessary for him to provide the court with reasonably detailed information as to his resources, and to show not only he is unable to meet any order for security from his own resources, but also he is unable to raise funds from other sources, whether through commercial borrowing, or from other backers.

34. In this case, the Petitioner has done no more than to assert his own impecuniosity.  He has provided no evidence as to his financial position, whether in the form of bank statements or other material.  Nor has he explained why he would not be able to raise funds from any other source to meet an order for security that might be made…. In these circumstances, a much more cogent and compelling explanation of the reasons why he would be unable to put up security and would therefore be forced to abandon these proceedings is required from the Petitioner.  None having been provided, I am not satisfied that an order of an appropriate level of security would necessarily result in the Petitioner’s claim being stifled.” (underline being added)

12.  It is also important to note that for an application for security for costs, the court will not make a preliminary run on the merits of the case: per Rogers VP in Sunchase Internal Group (China) Ltd & Ors v Vincor Group of Companies (investment) Ltd & Ors.[4], at §5 therein; unless it is a case of high probability of success one way or the other: per DHCJ Leung in J. S. P. Pacific Limited (in liquidation) v Ngan Chung Por & Ors.[5], at §15 of the Judgment.

13.  I shall bear the above principles in mind when I come to consider the present application of R.

Discussion

14.  There is no dispute that at all material times, A was a resident of the Mainland and therefore, was not ordinarily resident in Hong Kong. Therefore, prima facie, R is entitled to have an order for security for costs against A, unless there are factors justifying otherwise: Lim Yi Shenn v. Wong Yuen Yee, supra.

15.  In his submissions, Mr. Au for A submitted that there are indeed countervailing factors justifying against the granting of an order for security in the present case.

High Probability of Success

16.  According to Mr. Au, if the court is satisfied that A’s case against the estate is genuine and strong, and thus enjoying a high probability of success, no order for security for costs should be granted against her, citing: HKCP (2021), paragraph 23/3/3. 

17.  In supporting his submission that A’s case is one of enjoying a high probability of success, Mr. Au refers this court to the affirmations of 2 of A’s witnesses, namely WWCW (Bundle A/48) and YCH (Bundle A/53).  Both witnesses affirmed to the close relationship and status of cohabitation between A and the Deceased.  Mr. Au has specifically referred to the following evidence of the 2 witnesses which arguably would prove such a close relationship and the Deceased’s substantial contribution in money or money’s worth towards the reasonable needs of A:

(1)  The Deceased requested WWCW not to disclose A’s relationship with him, fearing that R might sue him for divorce.

(2)  The Deceased, WWCW, WWCW’s wife and A would go out for grocery and apparel shopping, dine out and karaoke entertainment.

(3)  The Deceased and A were known to be a couple living together.

(4)  The Deceased purchased a vehicle for A.

(5)  The Deceased intended to pass a property in Shenzhen to A upon his death.

My Views

18.  In considering the evidence of the witnesses, I have to remind myself that they are presently in the form of affirmation evidence only.  Whether the witnesses’ evidence could come up to proof under cross examination is yet to be seen.

19.  More importantly, one of the most important disputed issues in A’s application for financial provision is whether the Deceased had maintained A and her daughter before his death.  Out of the 5 points referred to by counsel in paragraph 17 above, I do not think they can be regarded as clear and unequivocal evidence of maintenance by the Deceased. 

20.  For sub-paragraph (2) in paragraph 17 above, the Deceased might have gone out with A to buy grocery or for a meal together, but there is no evidence that he had paid on behalf of A on those occasions. 

21.  For sub-paragraph (4) concerning the purchase of a car, according to YCH (Bundle A/54, paragraph 3):

“3…. The Deceased had bought a car for the Applicant, so that the Applicant could take the Deceased to hospital.”

YCH’s evidence is that the car was purchased so that A could take the Deceased to the hospital.  There was never any evidence that the car purchased, if there was indeed one, was in the form of maintenance or as a gift to A. 

22.  For sub-paragraph (5) about the passing of a property to A upon the Deceased’s death, it is not evidence on maintenance being provided by the Deceased before his death.

23.  As to the other points raised by counsel, they might be regarded as evidence of a close relationship between A and the Deceased, but they are not even close in proving that the Deceased had maintained A and her daughter during his life time.

24.  Based on the 2 witnesses’ evidence as described above, there is simply no direct evidence on the payment of financial provision by the Deceased towards the maintenance of A.  In the circumstances, I cannot be satisfied that A’s claim for financial provision can be regarded as enjoying a high probability of success.

Stifling of A’s Claim and her Impecuniosity?

25.  Another submission of Mr. Au is that the ordering of security for costs would stifle A’s valid and genuine claim.  It is indisputable that if such a ground is raised, the onus is on A to prove her impecuniosity.

26.  But as rightly pointed out by Mr. Wong for R, there is simply no information or evidence on A’s financial situation at all. If one should search through A’s supporting affirmation to the claim for financial provision (Bundle A/42-46), there was some reference to the financial needs of A and her daughter, amounting to a monthly sum of RMB15,630. However, it was totally silent on A’s personal and financial circumstances, like her present occupation, marital status, personal assets and financial resources. There was no information on her bank accounts.  There was no explanation on how she could have maintained herself and daughter without the Deceased’s financial contribution after his death.  Even in her unsigned and unsworn 2^nd Affirmation (Bundle B/1-6), which was supposed to be prepared specifically for this application for security for costs, no such information of A’s financial circumstances was given.

27.  I am afraid that A’s submission that her application for financial provision would be stifled due to her impecuniosity simply fails.

Reciprocal Enforcement of Judgment in the Mainland

28.  It was submitted by Mr. Au that there was no evidence that R would have difficulty in enforcing any judgment on costs against A in the Mainland should she be successful in defending A’s claim. Therefore, there was no need for such an order for security to be made for R’s protection.

29.  It is to be noted that the HKSAR and the Supreme People’s Court of the People’s Republic of China has signed the Arrangement on Reciprocal Recognition and Enforcement of Civil Judgments in Matrimonial and Family Cases by the Courts of the Mainland and the Hong Kong Special Administrative Region (“the Reciprocal Arrangement”) back on 20 June 2017. The Department of Justice is now in the process of enacting the Reciprocal Arrangement into local legislations.  It is noted that Article 3(2) of the Reciprocal Arrangement governs the types of Hong Kong cases to be covered:

“Article 3 A civil matrimonial and family case referred to in this Arrangement:

(1) …

(2) in the case of the HKSAR, means:

1. a decree absolute of divorce granted under Part III of the Matrimonial Causes Ordinance (Chapter 179 of the Laws of Hong Kong);

2. a decree absolute of nullity granted under Part IV of the Matrimonial Causes Ordinance (Chapter 179 of the Laws of Hong Kong);

3. an order made under the Matrimonial Proceedings and Property Ordinance (Chapter 192 of the Laws of Hong Kong) for maintenance pending the determination of a suit;

4. a maintenance order made under the Guardianship of Minors Ordinance (Chapter 13 of the Laws of Hong Kong), the Separation and Maintenance Orders Ordinance (Chapter 16 of the Laws of Hong Kong), or Part II or Part IIA of the Matrimonial Proceedings and Property Ordinance (Chapter 192 of the Laws of Hong Kong);

5. an order for transfer or sale of property made under the Guardianship of Minors Ordinance (Chapter 13 of the Laws of Hong Kong), or Part II or Part IIA of the Matrimonial Proceedings and Property Ordinance (Chapter 192 of the Laws of Hong Kong);

6. an order made under the Married Persons Status Ordinance (Chapter 182 of the Laws of Hong Kong) with respect to property; -

7. an order made under the Matrimonial Proceedings and Property Ordinance (Chapter 192 of the Laws of Hong Kong) for the alteration of maintenance agreements during the lives of the parties;

8. an adoption order made under the Adoption Ordinance (Chapter 290 of the Laws of Hong Kong);

9. a declaration regarding the parentage, legitimacy or legitimation made under the Matrimonial Causes Ordinance (Chapter 179 of the Laws of Hong Kong), or the Parent and Child Ordinance (Chapter 429 of the Laws of Hong Kong);

10. an order in relation to custody made under the Guardianship of Minors Ordinance (Chapter 13 of the Laws of Hong Kong), the Separation and Maintenance Orders Ordinance (Chapter 16 of the Laws of Hong Kong), or the Matrimonial Proceedings and Property Ordinance (Chapter 192 of the Laws of Hong Kong);

11. a custody order made in respect of a minor child who has been made a ward of court;

12. a non-molestation, ouster or re-entry order made under the Domestic and Cohabitation Relationships Violence Ordinance (Chapter 189 of the Laws of Hong Kong) and an order made under the Domestic and Cohabitation Relationships Violence Ordinance varying or suspending the execution of a custody or access order made in respect of a minor child. “

It is quite clear that under Article 3(2) of the Reciprocal Arrangement, an application for financial provision under the Ordinance is not included.  Therefore, even after the passage of the local legislations which will only happen sometime in the future, an order under the Ordinance cannot be enforced in the Mainland under the Reciprocal Arrangement.  In the circumstances, I have no doubt in my mind that, any order to be obtained by R in the present case will face tremendous difficulty in terms of enforcement in the Mainland. 

Quantum of the Order for Security

30.  In Mr. Au’s submissions, the amount of $215,217.50 being claimed as security for R’s costs was challenged as being excessive and unreasonable.  Despite all those attacks, there was no submission on the appropriate amount of security should such an order is to be granted by this court.

31.  In considering the issue of quantum, this court is not prepared to embark on a mini-taxation of the security claimed. But by taking a broad brush view of the matter, I do not regard the sum of security as claimed can be regarded as excessive or unreasonable.  It is well known that litigation costs in Hong Kong is not cheap, even at the District Court level.  Furthermore, in view of the rather unsatisfactory state of disclosure as far as A’s finances are concerned, further interlocutory applications for discovery cannot be ruled out.  This will certainly increase R’s costs to be incurred.  In the circumstances, I am prepared to order a round-up figure of $200,000 as security for the costs of R in this action.  

Orders

32.  After considering all the circumstances of the case and based on the above reasons, I hereby grant the following orders in respect of R’s summons:

(1)  A shall pay a sum of HK$200,000 into court within 28 days from the date of this order as security for R’s costs in this action; and

(2)  All further proceedings be stayed until security is given by A as ordered above.

Costs

33.  Costs to follow event. R succeeded in the application for security for costs and should have the costs of the summons, including all costs reserved, if any.  I note that both parties have instructed counsel and after considering the nature of the application and the assistance rendered, I will also grant a certificate for counsel.  The quantum of the costs order is to be taxed on a party to party basis if not agreed.

[1] [2012] 3 HKLRD 505

[2] CACV 146/2008 (unreported, 23 September 2008)

[3] HCCW 141/2007 (unreported, 20 June 2011)

[4] [2004] 1 HKLRD 731

[5] HCA 2000/2011 (unreported, 17 April 2014)