THE INCORPORATED OWNERS OF MILLION FORTUNE INDUSTRIAL CENTRE v. JIKAN DEVELOPMENT LTD. AND ANOTHER

CACV 381 & 503/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NOS. 381 & 503 OF 2001

(ON APPEAL FROM HCA NO. 14915 OF 1998)

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J U D G M E N T

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Hon Rogers VP:

1. This is an application for leave to appeal to the Court of Final Appeal. There is no resistance to the grant of leave to appeal. The only question between the parties is as to the amount of security that should be ordered. Security can be ordered up to an amount of $400,000. In this case there are two defendants, who are separate companies, and the amount which is sought from each defendant is only $200,000. That, despite Miss Lo's careful and thorough argument, and taking us through some of the figures, I am not convinced is in any way out of order. In my view the costs on the appeal, if it goes to the Court of Final Appeal, are likely to be very much more than a total of $400,000. I have no hesitation in saying that I think that the figure sought by the plaintiffs is fair and reasonable in the circumstances.

2. The point that is put by Mr Ho and Miss Lo is that security should not be ordered because the defendants are impecunious. The position of the 1st defendant is that it has some property in the way of land but that this is not available to it partly because there are injunction orders against its use.

3. That is not perhaps surprising. According to the affidavit evidence, very shortly after judgment was handed down in the court below on 9 February, the 1st defendant charged all its landed properties, which are its major assets of any value, to its associated companies and its solicitors. The net effect is that there is a judgment sum owing of over $4,400,000; there are costs which are said to be owing by the 1st defendant of $2,315,000 and the 2nd defendant owes the plaintiff some $674,000 for the costs of the action. And this, of course, does not take into account, as I understand, the costs of this appeal.

4. In those circumstances, it is not surprising that the plaintiff has taken action to try and do what it can to preserve its position. Mr Ho advances the argument that the defendants have a reasonable argument on the appeal; well, so be it. But both defendants are commercial companies and they must abide by commercial rules. It is quite clear to me, looking at this from the point of view of the plaintiff, that should the plaintiff succeed in the Court of Final Appeal, it has literally no hope of getting either the judgment sum or its costs, which have now mounted up to a considerable amount.

5. The 2nd defendant is a management company and our attention has been directed to the accounts for the year 2000 and 2001. In the year 2000 it managed to make some profit. The accounts for the year ending 31 March 2001, show that it made a loss. There does not seem to be much hope of any recovery in that respect.

6. In those circumstances the plaintiff having succeeded in the court below and succeeded in this case, it seems to me it would be wholly wrong to allow this appeal to go to the Court of Final Appeal without some protection for the plaintiff. If the defendants wish to pursue their appeal they are no doubt going to incur expenses themselves, and it seems to me only just that they should safeguard the plaintiff, at least to some extent, in respect of the costs and, therefore, this court is minded to order security in the sum of $200,000 for each defendant.

Hon Le Pichon JA:

7. I agree.

Hon Stone J:

8. I agree.

(Discussion as to draft minutes of order prepared by counsel for the 1st defendant)