LI WING FUNG v. LI CHUN

CACV 185/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 185 OF 2000

(ON APPEAL FROM HCA NO. 12694 OF 1996)

______________

_______________

J U D G M E N T

_______________

1. On 12 April, Mr Recorder Kwok SC delivered judgment in an action relating to the financing of a joint venture in Hebei. He gave judgment for the Plaintiff against the Defendant in sums totalling US$549,000.00 together with the costs of the action. The Defendant is appealing to the Court of Appeal. The Plaintiff now applies for security for his costs of the appeal. He does so on two grounds. The first is that the Defendant is impecunious. If the appeal fails, and if the Defendant is ordered to pay to the Plaintiff the Plaintiff's costs of the appeal, he will, so it is said, be unable to do so. The second ground is that even if the Defendant is not impecunious, the evidence suggests that he will be reluctant to pay the Plaintiff's costs if ordered to do so, and the Plaintiff may therefore be put to undue delay and expense in enforcing any order for costs made in his favour.

2. The evidence on which the Plaintiff relies to establish the impecuniosity of the Defendant or the Defendant's unwillingness to pay is

(i) his failure to pay the judgment debt so far;

(ii) the fact that bankruptcy petitions have been issued against him by his other creditors twice in the last year, though they were eventually either withdrawn or dismissed; and

(iii) the fact that a bankruptcy petition has been presented by the Plaintiff, the debt being the judgment debt in the action.

I am satisfied that the evidence relied upon by the Plaintiff is sufficient to raise either an inference of impecuniosity on the part of the Defendant (to use the language of Baggallay LJ in Farrer v. Lacy, Hartland & Co. (1885) 28 Ch. D. 482 at p. 485), or an inference of unwillingness on the part of the Defendant to pay such as to call for a response from the Defendant. No evidence has been filed by the Defendant in response. I accept that the evidence relied upon to establish the impecuniosity of the Defendant could be said to be consistent with an unwillingness to pay as much as an inability to pay, but if the Defendant has assets he should have said so, and in any event an unwillingness to pay is the second ground upon which security is sought. For these reasons, this is in my opinion an appropriate case for an order for security for costs.

3. However, the estimated bill of costs which has been exhibited does not take into account the incidence of taxation, despite the statement in the Supreme Court Practice 1999, Vol. 1, p. 1070, that the estimated bill of costs "should not show solicitor and own client costs, but should set out the costs which could reasonably be expected to be allowed on a taxation on the standard basis". In my opinion, a more realistic figure for the Plaintiff's costs, taking into account what the Plaintiff is likely to recover on taxation, is the sum of $145,000.00. I therefore direct that all proceedings in the appeal be stayed until the Defendant pays the sum of $145,000.00 into court as security for the Plaintiff's costs of the appeal. I further direct that if the Defendant fails to pay that sum into court by 4.00 p.m. on 7 November, his appeal be dismissed, and the Defendant be ordered to pay the Plaintiff's costs of the appeal to be taxed if not agreed. I give the Defendant liberty to apply for an extension of time to provide the security if he finds himself in genuine difficulty in raising the $145,000.00 by 7 November.