BANK OF CHINA (HONG KONG) LTD v. COSAN LTD AND OTHERS

cacv 331/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 331 of 2006

(on appeal from HCA NO. 1600 of 2004)

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D E C I S I O N

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1.  This is an application for security for costs pending appeal.  The appeal is from a judgment of Sakhrani J, given in August of last year.  The judge there was hearing an appeal from the Master who gave summary judgment against the 2nd Defendant.  The total sum of the judgment ordered by the judge was something over $6.2 million, of which $5.6 million was the capital sum.  The plaintiff’s claim against the Defendant was in respect of money owing on a loan and the 2nd Defendant was a guarantor.

2.  In a very careful and detailed judgment, the judge demonstrated, to my mind with great conviction, that the defence which had been raised by the 2nd Defendant was simply untenable.

3.  The 2nd Defendant wishes to appeal and it does seem that there are grounds for considering that he would be unable to pay the debt, and there must be grave doubts that he might not be able to pay the costs on the appeal, if the appeal were unsuccessful.

4.  In this case, having considered the merits of the appeal, unfortunately and having come to the conclusion that the appeal has little or, indeed, no merit, I consider that this Court should grant security for costs.

5.  The order that I propose to make is that the 2nd Defendant do, on or before 12 March 2007, give security to answer costs in case any shall be awarded, to be paid by the 2nd Defendant to the Plaintiff by making lodgement in court of the sum of $153,500 by cash or banker’s draft, or by 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 lodgement is made, or proceedings in the said appeal to be stayed.

6.  In default of the 2nd 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.

7.  In the event that the appeal is dismissed in the circumstances provided for above, the 2nd Defendant do pay the Plaintiff its costs occasioned by the said appeal, such costs to be taxed.

8.  The costs of this application be costs in the appeal.