AXA VERSICHERUNG AG v. THE HONG KONG HOUSING AUTHORITY

FAMV No. 3 of 2006

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

 MISCELLANEOUS PROCEEDINGS NO. 3 OF 2006 (Civil)

(ON APPLICATION FOR LEAVE TO APPEAL FROM
CACV No. 85 of 2005)

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Between:

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D E C I S I O N

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Mr Justice Ribeiro PJ:

1.  This is an application by the Hong Kong Housing Authority (“the Authority”) for security for the costs of an application for leave to appeal to the Court of Final Appeal brought by AXA Versicherung AG (“AXA”) due to be heard by the Appeal Committee on 1 March 2006, which is next Wednesday. 

2.  AXA is a German corporation carrying on business as an insurer in Koln, in Germany. 

3.  On 16 December 2004, the Authority obtained Orders from Reyes J for leave to join AXA as a defendant in certain existing Hong Kong proceedings and for leave to serve the Writ and Statement of Claim (in their relevant amendments) upon AXA in Germany (HCCT 39/2001). 

4.  The proceedings in question had been brought by the Authority against B+B Construction Co Ltd (a Hong Kong company in liquidation) and two other Hong Kong parties.  Details of those proceedings and of the basis for making the orders for joinder and for leave to effect foreign service are not presently material.

5.  AXA has sought to set aside the order giving leave to serve outside the jurisdiction.  On 7 February 2005, Reyes J dismissed that application.   AXA’s appeal to the Court of Appeal (CACV 85/2005, Tang JA and Sakhrani J) was dismissed on 5 October 2005.  Its application to that court for leave to appeal to the Court of Final Appeal was dismissed on 20 December 2005.

This application

6.  What is now pending is AXA’s application next Wednesday to the Appeal Committee for leave to appeal to the Court of Final Appeal.  The Authority is today seeking security for the costs of that application.

7.  Section 46(2) of the Court’s statute materially provides as follows:

“In an application for leave to appeal ......any order for security for costs or for the dismissal of an application ...... for default in furnishing security so ordered, may be made or given at any time by a single permanent judge.”

8.  It is therefore plain that there is power, exercisable by a single permanent judge, to make the order sought by the Authority. 

9.  The Authority submits that an order for security ought to be made because the applicant is a foreign corporation which does not submit to the jurisdiction of the Hong Kong courts, so that the Authority is likely to encounter undue delay and expense if it should have to enforce in Germany any costs order made in its favour in the leave application.  Security for the costs of the intermediate appeal in the sum of $385,000 was in fact provided by AXA.

10.  These are plainly grounds which normally justify the grant of security for the costs of an appeal, at the intermediate level.  They apply with at least equal cogency in the present context.

11.  In correspondence, AXA sought to resist the giving of security on the ground that there was no jurisdiction to make such order.  That view is erroneous in the light of s 46(2) of the Court’s statute. 

12.  At this hearing, AXA has emphasised the absence of practical precedent for the making of such an order.  It submits that security should only be ordered at the hearing of the leave application and as a condition of giving leave to appeal.  With respect, that suggestion is misconceived.  The security sought is directed at the leave application and if ordered, would be a condition for permitting that application to proceed.  The submission proceeds on the unjustified assumption that leave to appeal will be granted.  It is precisely because of a risk that the application may fail that the application for security is made beforehand.  The fact that few if any other examples of such an application being made or successful can be found is, with respect, neither here nor there.

13.  I am satisfied that in principle, the Authority has made out a good case for security for the costs of the pending application for leave to appeal. 

14.  The parties have agreed that in this eventually the amount of security which ought to be furnished is in the sum of HK$250,000.

15.  I will accordingly order that the applicant provide security for the application for leave to appeal in the sum of $250,000 to be paid into court within 5 days from today’s date and that, in default, the application be dismissed without further order.  I will also order the costs of this application to be paid by AXA to the Authority to be taxed if not agreed.