OLDHAM, LI & NIE, SOLICITORS v. WONG LIN CHOOI

CACV 319/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 319 OF 2005

(ON APPEAL FROM DCCJ NO. 5076 OF 2004)

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D E C I S I O N

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1.  The plaintiff are solicitors, who have obtained summary judgment against the defendant in the District Court, for unpaid fees in the sum of $208,661 and interest and costs.  Leave to appeal was given by Yuen JA on 28 September 2005.

2.  This is the plaintiffs’ application for security for costs.  In the supporting affidavit of Mr Oldham, the plaintiff initially asked for security in the sum of $400,000, which included costs incurred below.  Mr Coleman, who appeared for the plaintiff, has rightly confined this application to the costs of the appeal.  He submitted that security in the sum of $180,000 to $200,000 would be appropriate.

3.  He relied on the fact that the defendant was resident out of the jurisdiction.  He relied on the letter dated 28 September 2005, from the defendant’s solicitors to the plaintiff which stated:

“As you know our client does not reside in Hong Kong and we are unable to arrange her to accept service of the statutory demand.”

4.  Moreover, I was told by Mr Kwan, who appeared for the defendant, that she was unable to make an affirmation in respect of this application because she was out of Hong Kong, and that the defendant’s solicitors could only contact her through her husband’s secretary.  The affirmation filed on her behalf was made by Ms Lau of her solicitors.  I am afraid it is equivocal on the residence of the defendant.  In the circumstances, the plaintiff has satisfied me that the defendant is resident out of Hong Kong.

5.  Residence out of Hong Kong is a special circumstance which could support an order for security for costs.  The fact that the plaintiff would be likely to encounter undue delay or be put to undue expense in enforcing any order for costs in respect of the appeal is another special circumstance, see High Court Civil Procedure 2004, para. 59/10/30.  Mr Kwan made the point that the plaintiff has no difficulty in contacting the defendant.  That may be so, but that does not mean that the plaintiff will not suffer significant delay or expense if the plaintiff needs to enforce an order for costs against her.

6.  There was exhibited to Ms Lau’s affirmation, a land search which shows that the defendant is registered as a joint owner of a valuable property in Hong Kong (“the property”).  Mr Kwan has informed me that the other joint owner is the mother of the defendant.  It is also shown that the property is unencumbered.  However there is no evidence from the defendant that she has any beneficial interest in the property.  Mr Kwan submitted that in the absence of evidence to the contrary, I should assume that she holds the joint tenancy beneficially.  Depending on the circumstances that may be a reasonable course to take, however, in the circumstances of this case, I would hesitate to so assume.  Mr Kwan also relied on the fact that because the defendant is a deemed shareholder in certain shares in Dynamic Global Holdings Ltd, a listed company, she should be taken as being beneficially interested in those shares.  I do not believe that argument to be correct.  The fact that she is deemed to have a family interest in her husband’s shares for the purpose of Part XV of the Securities and Futures Ordinance, Cap. 571, does not mean that she has any beneficial interest in those shares.  This mistake, coupled with the equivocal nature of Ms Lau’s affirmation and the absence of any statement by the defendant that she has any beneficial interest in the property, have convinced me that I cannot safely assume that the defendant has any beneficial interest in the property.  In any event, as a joint tenant, her interest would terminate on her earlier death. 

7.  Moreover, I believe enforcement of any order for costs against the property would not be straight forward.

8.  Mr Kwan has also argued that the defendant has strong merits.  She has been given leave to appeal, but I do not regard her appeal to be so strong that it would be appropriate for me to refuse security on that ground.

9.  This is not a case where the defendant cannot provide any security.  It is obvious having regard to the way that the litigation has been conducted, that more than money is involved in this litigation.

10.  In all the circumstances, I believe I should order security.  However, I would fix the amount of security at $150,000.  I would order that the defendant do on or before 22 November 2005 give security to answer costs in case any shall be awarded to be paid by the defendant to the plaintiff by making lodgement in court of the sum of $150,000 by cash or banker’s draft or by the provision of a bank guarantee of the like amount which guarantee shall have been approved by the Registrar; and until such lodgement be made and notice thereof given to the Registrar and to the solicitors for the Plaintiff (such notice to be given on the same day as the lodgement is made) all proceedings in the said appeal are to be stayed.

11.  In default of the defendant making such lodgement as aforesaid within the time specified above or within such further time as the court may, for special reasons, allow, the said appeal do, upon the solicitors for the Plaintiff certifying such default to the Registrar, stand dismissed out of this court without further order.

12.  In the event that the appeal is dismissed in the circumstances provided for above, the defendants do pay the plaintiff its costs occasioned by the said appeal, such costs to be taxed.

13.  As noted above, initially the plaintiff sought security for a much larger amount, which included the costs incurred below.  That was only abandoned by Mr Coleman in his skeleton submissions.  The defendant’s opposition to the plaintiff’s application was understandable.  So in the circumstances, I would make an order nisi that the costs of the application be costs in the appeal.