T v. LEE WAI YING ELVIS

   HCPI 878/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

PERSONAL INJURIES ACTION NO.878 OF 2003

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

BETWEEN

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

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

R U L I N G

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

1.  The defendant applies under Order 23, rule 1 of the Rules of the High Court for security for costs, on the ground that the plaintiff is ordinarily resident out of the jurisdiction.

2.  The defendant is a plastic surgeon. On 21 August 2000, at the Baptist Hospital in Kowloon, he carried out a cosmetic laser resurfacing procedure (“the operation”) to the plaintiff’s face. She claims that the defendant was negligent in carrying out the operation, as a result of which she suffered permanent lesions to the face as well as psychological trauma and depression. She claims damages in the region of $7.6 million.

3.  The plaintiff does not dispute that she is now not ordinarily resident in the jurisdiction of Hong Kong. She was resident and employed here at the time of the operation but became unemployed in November 2000. She moved to Singapore, where she now resides when she found employment there in June 2004. She was in receipt of legal aid but her certificate was discharged on 10 December 2004. She appealed unsuccessfully against the discharge, and made a further application which was also unsuccessful. The defendant now seeks security for costs from 10 December 2004 up to and including the trial. The skeleton bill exhibited by the defendant’s solicitor amounts to $2,071,962.

4.  There are two issues, the first being whether security should be ordered at all, and the second being, if security should be ordered, what is the appropriate figure?

5.  The principles governing the ordering of security for costs against a non‑resident plaintiff were usefully summarised, by reference to the English and Hong Kong authorities, by Deputy Judge Carlson in Elecvision Inc. v. Achiever Industries Ltd [2003] HKLRD 60, at paragraphs 9 and 10. Put briefly, it is prima facie unjust that a foreign plaintiff, who is more or less immune against costs if he is unsuccessful, should be allowed to proceed without making funds available within the jurisdiction, against which any costs order against him may be executed. However, the court has a general discretion to award or refuse security having regard to all the circumstances of the case.

6.  The principles by which the court should exercise that discretion were summarised in Keary Developments Ltd v. Tarmac Construction Ltd[1995] 3 All ER 535, by Peter Gibson J at pp.539h‑540j and adopted by the Court of Appeal in Wing Hing Provision, Wine & Spirits Trading Co. Ltd v. Hanjin Shipping Co. Ltd [1998] 4 HKC 461, at 464A‑F. They are :

“(1)  The court has a complete discretion to order security, and accordingly it will act in the light of all the relevant circumstances.

(2)  The possibility or probability that the plaintiff company will be deterred from pursuing its claim by an order for security is not without more a sufficient reason for not ordering security.

(3)  The court must carry out a balancing exercise.  On the one hand it must weigh the injustice to the plaintiff if prevented from pursuing a proper claim by an order for security.  Against that, it must weigh the injustice to the defendant if no security is ordered and the defendant finds himself unable to recover costs from the plaintiff in due course.

(4)  In considering all the circumstances, the court will have regard to the plaintiff company’s prospects of success.  But it should not go into the merits in detail unless it can clearly be demonstrated that there is a high degree of probability of success or failure.

(5)  The court may order any amount up to the full amount claimed by way of security, provided that it is more than a simply nominal sum; it is not bound to order a substantial amount.

(6)  Before refusing to order security on the ground that it would unfairly stifle a valid claim, the court must be satisfied that, in all the circumstances, it is probable that the claim would be stifled.  There may be cases where this can properly be inferred without direct evidence.  The court should consider not only whether the plaintiff company can provide security out of its own resources to continue the litigation, but also whether it can raise the amount needed from its directors, shareholders or other backers or interested parties.  It is for the plaintiff to satisfy the court that it would be prevented by an order for security from continuing the litigation.”

7.  In Wing Hing, security was sought against a corporate plaintiff under section 357 of the Companies Ordinance but the principles for exercise of the discretion apply, mutatis mutandis, where an application is made under Order 23.

8.  The defendant’s solicitor in his affidavits in support of the application refers to the merits of the plaintiff’s claim and says in effect that the plaintiff does not have a good case. The plaintiff for her part says that she has a bona fide strong case. Counsel for the plaintiff, Mr Bharwaney, did not seek to argue that the plaintiff has a high probability of success; he said that he stopped just short of that. In view of this Mr Lam for the defendant, though he had set out lengthy written arguments that the plaintiff could not demonstrate a high probability of success, did not pursue those arguments in detail. Since neither side seeks to demonstrate that there is a high degree of probability of success or failure I will not go into the merits in detail.

9.  In brief the plaintiff’s case is that she told the defendant that she had a history of herpes simplex, a recurrent viral infection; that which commonly produces “cold sores” round the lips. The defendant advised her to take Valtrex, an anti‑viral drug for about two days before the operation to prevent recurrence of the infection. He did not give her a prescription. She was in hospital for a foot operation from 14 to 20 August 2002 and she obtained a prescription from her orthopaedic surgeon. She took the drug from the evening of 18 August 2002. After the operation, there was a reactivation of the herpes simplex. Despite her complaints, the defendant did not conduct any test to diagnose the cause of her symptoms, and she was not treated properly.

10.  The defendant’s case is that he advised the plaintiff to take Valtrex three times daily for two days before and three days after the operation. Since he had no stock, he advised her to get it from the orthopaedic surgeon; he communicated with that surgeon and he also reminded the plaintiff to take the drug. After the operation he did not detect any outbreak of herpes simplex. No further test or treatment in this respect was necessary.

11.  There is obviously a factual issue on the question of prescription and there is also an issue as to whether there ever was a recurrence of the herpes. The plaintiff’s experts say, it appears, that her present condition was consistent with her having had a herpes infection but the defendant’s experts, particularly by reference to some photographs taken by the defendant on 8 September 2000 which show the plaintiff with smooth, reddened skin, rather than crusting, blistering or erosion say that it is unlikely that there was any post-operative herpes infection. There are also issues regarding the generally accepted practice regarding the use and length of use of anti‑virals post‑operatively. There are also issues regarding the plaintiff’s psychiatric health; her psychiatric expert says that she suffered depression as a result of the operation, but the defendant’s expert takes the view that she has in any event a borderline personality trait, recurrent depression and a body dysmorphic disorder.

12.  It appears to me that the case could go either way. There is no high probability either way. Given the approach of the parties, who take more or less this same view, I think it best to leave the merits of the case out of the reckoning.

13.  The defendant’s main argument on the issue of whether security should be ordered is quite simply that the plaintiff is non‑resident. Mr Bharwaney however says that since the plaintiff was resident when the cause of action arose, she was then entitled as of right to access to the courts under Article 35 of the Basic Law. The fact that she has since become non‑resident should not mean that she loses that right. If that is not so, he says, the fact of former residence should be taken into account in the balancing exercise. He further argues that the fact that there is a reciprocal enforcement arrangement between Singapore and Hong Kong means that it is relatively simple for the defendant, if successful, to enforce a costs order, and this too may be taken into account in the balancing exercise, as it was by Waung J in World Fuels (Singapore) Ltd v. The Owners of MV Liberty Container, HCAJ 153/2003.

14.  I do not see that being required to give security for costs is equivalent to being deprived of access to the courts. It may in practical terms mean that the claim is stifled, but that is another question, to be considered below. Nor do I see that a formerly resident but presently non‑resident plaintiff should be in any different position from that of one who was always non-resident; the purpose of the order, if made, is the protection of the defendant by making available a fund against which a costs order can be executed. There is also the fact that, while in Hong Kong, the plaintiff had legal aid, which would afford some protection to the defendant but that protection no longer applies.

15.  I accept that the fact of the reciprocal enforcement agreement may be taken into account in the balancing exercise. It is true that in Aeronave S.p.A. v. Westland Charters Ltd[1971] 1 WLR 1445, Lord Denning MR held at page 1449 that if there had been such an agreement between Great Britain and Italy, it would not have been a ground for refusing security, and indeed it is not argued that it is a ground for refusing security here; but that does not mean that the reciprocal agreement cannot be taken into account in the balancing exercise of deciding whether or not it is just to order security.

16.  The plaintiff says that if security is ordered, her claim will be stifled. This is a question which goes both to whether security should be ordered, and to quantum if it is ordered.

17.  The plaintiff is a well‑qualified Italian lady with a First Class Honours Degree in Economics from a university in Rome and an MBA from the London Business School. She says that she worked for an international accounting firm in Rome from 1988 to 1993, and thereafter for banks and financial institutions in London, Singapore and Hong Kong. In the 1990s she married a Singaporean Chinese man but they were subsequently divorced. She was transferred to Hong Kong in 1999. After being unemployed from November 2000, she started work for ING Bank NV in Singapore on 1 June 2004.

18.  The plaintiff claims, inter alia, that because of her pain, facial disfigurement and depression she was unable to obtain employment up to the date of the Statement of Damages, i.e. 1 September 2003. She says that she was unable actively to job‑hunt until 2003 when, after a series of laser treatments, she regained a close‑to‑normal appearance. In the meantime she had medical and psychological treatment in Hong Kong, Singapore, Italy and the USA on which she expended a considerable amount of money.

19.  Now the plaintiff says that she is earning S$13,500 per month plus benefits. She has made a divorce settlement by which she will receive a lump sum of S$122,500 plus the transfer of the husband’s share in the matrimonial home. The house is in negative equity; it is worth about S$650,000 but the outstanding mortgage loan is about S$668,651. The plaintiff intends to redeem the first mortgage and re‑mortgage the house; she says that this will leave her with a cash balance of S$38,849 from the lump sum payment. Together with her bank balance and a credit line, she will then have a total of $S74,849, equivalent to HK$344,133, and a house worth S$650,000, mortgaged to secure a loan of S$585,000. Servicing the loan will cost S$4,000 per month; another substantial outgoing is S$4,000 per month towards her legal fees; and she has listed various other monthly outgoings.

20.  The plaintiff further says that her own family cut her off when she married and in any event her parents are retired high school teachers. She cannot obtain financial or moral support from them, although her in‑laws are prepared to lend her $40,000 for her legal fees.

21.  The defendant argues that the plaintiff has not made full and frank disclosure of her income and assets and her evidence should therefore not be accepted. In particular, counsel says that the plaintiff told one of her doctors a different story both about her what her relatives did, and her relations with them. She has not given detailed disclosure of her monthly outgoings, nor has she disclosed her income prior to and after the operation, but before she went to Singapore to work.

22.  I am not impressed by this. The plaintiff told her doctor that her parents were college professors rather than high school teachers, but this makes no difference; neither category is well paid, in any country. In any event they are old; the father was born in 1921 and the mother in 1939 and they will now be pensioners. It is true that the plaintiff did not say in her affidavit, as she told the doctor, that her sister is a lawyer; but again, this is not significant. Not all lawyers are rich, in common law jurisdictions, and I do not suppose that the situation in Italy is any different. As to the relationship, it is true that the plaintiff told the doctor that she had had a reconciliation with her mother, but given the other factors, it is still difficult to see how she could get any real assistance from her family. As to the plaintiff’s non‑disclosure of her income before she went to Singapore, I really cannot see that this can be held against her. She was out of work for a long time; she went overseas for treatment; it is reasonable to infer that whatever money she had would be depleted if not exhausted by the time she found her present employment. In any event, as Mr Bharwaney remarked, the plaintiff is not a judgment debtor, to be cross‑examined on her means. That may yet come, if the defendant gets a costs order; but it is not yet.

23.  I do not see any reason not to accept the plaintiff’s evidence of her means, and I accept it accordingly. I also accept that she will be unable to raise any money from friends and relations apart from the S$40,000 which she says her in-laws will put up, to fund her litigation.

24.  It is for the plaintiff to satisfy me that she will be unable to raise the amount needed for security, not only from her own resources, but also from what she can get from her friends and relations. I am satisfied that she cannot raise the $2.7 million which the defendant now seeks and that if an order were made for security in that sum, it would stifle her claim. However, it does appear that she could put up $300,000. That would not stifle her claim.

25.  On the question of whether security should be ordered, we have, on the one hand, the defendant’s entitlement to some sort of protection against the non-resident plaintiff’s immunity against costs; he had some, from the Legal Aid Fund, but then when the plaintiff ceased to reside in Hong Kong, and her certificate was discharged, he lost it. By the same token, of course, he gained a tactical advantage in being able to apply for security; even if an order for security does not stifle an opponent’s claim it makes it that much harder to pursue.

26.  The defendant may have some personal protection, in that he is probably covered by professional indemnity insurance but I do not think that that can be taken into account; the insurer will, at the end of the day, be subrogated and will look to recover any costs awarded.

27.  On the other hand we have the plaintiff, who, like many another personal injury plaintiff is really not much good for any order of costs which might be made if she loses her case. She has lost her legal aid, so she has to fund her own litigation, and to that extent she is worse off, and, as I have noted, tactically at a disadvantage.

28.  The personal injury plaintiff is not in any special category, for security for costs; see Lauria v. Le Salon Orient (Hong Kong) Ltd & Anor [1996] 3 HKC 157. But part of the plaintiff’s claim is that she could not get work for a long period, because of the her injuries caused by the defendant’s negligence, so that her present impecuniosity is caused at least in part by the defendant’s actions. That can be taken into account; see Wing Hing, above, and Owners of the Fishing Vessel Nan Ao 33066 v. The Owners and/or Demise Charterers of the Ship or Vessel “Silver Dawn”, unrep., Civil Appeal No.171 of 1992.

29.  We also have the fact that the plaintiff works for a major international bank and resides in Singapore, so that it will be relatively easy to enforce any order for costs against her, for what that is worth, given that her own net worth is not great.

30.  Finally we have the amount sought, i.e. $2.7 million, based on a 10‑day trial. That, the plaintiff says, is an inflated figure, and I think it probably is, at any rate on the solicitors’ time charged for. By contrast the plaintiff’s solicitor’s skeleton bill comes to only about $600,000 but that assumes a 4‑day trial. I can well see the trial lasting for 10 days, given the number of expert witnesses the parties propose to call, so even if the skeleton bill were taken as being inflated, and an element of taxation allowed for, one might properly order security, if security were appropriate of $1.8 million. The figure which the plaintiff could put up, if so ordered is only $300,000.

31.  I have considered whether, since the plaintiff could only give security for a small percentage of the defendant’s probable costs, it is worth ordering security at all. However on balance it seems to me that it must be. The figure is not a nominal one; and on the authority cited above I can order any sum, up to the amount claimed, and am not bound to order a substantial amount.

32.  On balance, I think that, notwithstanding the factors in the plaintiff’s favour, it would not be just to leave the defendant unprotected, so security should be ordered. On the question of how much to order, it is clear to me that I should order no more than the $300,000 which the plaintiff says she can put up.

33.  It has been suggested that a split trial be ordered. I do not think that is necessary or that it would make a lot of difference to the question of costs. Nor do I think that there is any point in ordering security to be given for costs up to the date of setting down; all that means is that the parties will have to come back thereafter and incur more costs.

34.  I have not heard any argument as to whether the plaintiff should, instead of paying money into court, be required to provide a bank guarantee. This is a viable alternative, and I do not see that the plaintiff should be precluded from taking it if she can.

35.  I will accordingly order that the plaintiff do within 28 days from the date of the Order to be make herein give security for the defendant’s costs in this action, up to the sum of $300,000, by way of payment into court or by way of a bank guarantee to the satisfaction of the Registrar. All further proceedings be stayed pending the provision of such security. Costs (nisi) be to the defendant in any event.