YIP WIK ARIC v. KO CHUN HAY, KELVIN

CACV 607/2020

[2021] HKCA 545

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 607 OF 2020

(ON APPEAL FROM HCSD NO. 30 OF 2019)

_________________

_______________

_____________

JUDGMENT

_____________

Hon Chu JA giving the judgment of the Court:

Introduction

1.  This is the respondent’s application that the applicant provides security for his costs in this appeal in the sum of HK$185,670.  The applicant does not oppose to providing security for costs of the appeal, but disagrees with the amount sought by the respondent. Both parties have lodged written submissions.

2.  Having considered the papers, we are of the view that it is appropriate to deal with the application based on the written submissions only without an oral hearing, pursuant to Order 59 rule 14A(1) of the Rules of the High Court, Cap. 4A.

HCSD 30/2019

3.  In this appeal, the applicant seeks to appeal against the order of Linda Chan J made on 30 October 2020 dismissing his application to set aside a statutory demand served on him by the respondent[1].

4.  The statutory demand is in respect of a debt in the sum of HK$2,125,000, being the unpaid balance of a loan owed by the applicant.  The applicant’s grounds for setting aside the statutory demand were: (1) the debt was disputed on substantial ground; (2) the respondent holds security in respect of the debt which equals or exceeds the amount of the debt; and (3) the loan was made under agreements that were illegal, being in contravention of the Money Lenders Ordinance, Cap. 163.  

5.  The Judge found against the applicant on all the grounds and dismissed the application.  She further ordered the applicant to pay the costs of the application summarily assessed at HK$92,000.

6.  As the applicant’s objection to the present application is solely on the quantum of the security to be ordered, it is not necessary to go into the details of the Judge’s reasons for her decision.  It is sufficient to observe that no complex or difficult issues of fact or law is involved.  

The application for security for costs

7.  On 13 November 2020, the applicant filed the Notice of Appeal to appeal the Judge’s decision.  The appeal has yet to be listed for hearing. 

8.  On 27 November 2020, the respondent’s solicitors wrote to the applicant’s former solicitors requesting for security for the costs of the appeal in the sum of HK$185,670, and enclosing a draft skeleton bill of costs. 

9.  Not having received a response from the applicant, the respondent issued the present summons on 9 December 2020 together which was supported by an affirmation made by his solicitor.  The ground on which the present application is made is that the applicant is impecunious and the respondent will encounter undue delay and put to undue expense to enforce a costs order against him if his appeal was unsuccessful. 

Quantum of the security to be ordered

10.  As mentioned above, the sole issue in the present application is the amount of security to be ordered.      

11.  The skeleton bill is in the total sum of HK$185,670. It is only in respect of the costs of the appeal, and does not include the costs of the present application for security for costs.  The respondent has separately put in a statement of costs for the latter in support of his argument that the costs of the present application should be paid by the applicant forthwith.  We will deal with this below. 

12.  The applicant’s objections to the quantum of the skeleton bill of costs relate to: (1) the amount of time claimed by the handling solicitor for the preparation and perusal of documents and skeleton submissions; (2) the involvement of two solicitors at the hearing of the appeal; and (3) the amount of counsel fee.  Mr Man, for the applicant, argued that the subject matter of the appeal was simple and did not entail the amount of time and costs stated in the bill of costs.  It was also said that there was duplication in the work done or to be carried out.  He suggested that HK$100,000 would be an appropriate amount to be ordered. 

13.  Ms Wong, for the respondent, argued in the reply submission that the applicant should not have taken an item-by-item approach and that the estimate in the skeleton bill of costs was realistic, fair and bore a logical correlation to the complexity of the appeal.  It was further suggested that in light of the applicant’s past litigation conduct, some room should be allowed to cater for addition costs involved in dealing with any unexpected conduct of the applicant.

14.  While we agree that security for costs application is not an occasion for a detailed, minute scrutiny of the skeleton bill of costs, we do not consider the points raised in Mr Man’s written submission fall into that category.  Since the applicant takes issue with the quantum claimed, it is only proper that he identifies aspects of the skeleton bill that he considers to be not justified or excessive.  Indeed, when deciding on the quantum to be ordered, the Court will also look at, and where appropriate comment on, the propriety, justification and reasonableness of individual items in the skeleton bill before forming a view on the amount of security to be ordered. 

15.  In the present case, it does not appear to us, from reading the Judge’s Reasons for Decision and the Notice of Appeal, that the appeal is complex or involves difficult questions of law.  We believe the papers involved in the appeal would have all been considered in the trial below and most, if not all, the arguments in the appeal would have been canvassed at the trial. 

16.  We also do not accept the submission that the Court should somehow enlarge the quantum to be ordered on the assumption that the applicant will behave improperly in the conducting the appeal.

17.  We have considered the items in the skeleton bill of costs for the appeal.  We are of the view that on a party-and-party basis, the time claimed by the solicitor, notably for communicating with client and counsel and for preparing and perusing documents (Items 1 to 3, 7, 8, 11 and 12) as well as counsel’s brief fee (Item 14) are on the high side.  Further, in general only one fee earner is allowed for attendance at the appeal hearing (Item 13).  Taking a broad brush approach, we agree that HK$120,000 is an appropriate estimate of the costs of the appeal.

Costs of the application for security for costs

18.  The respondent asks that the costs of the present application be paid by the applicant forthwith.  The applicant has made no specific submission on this.  In his written submission, Mr Man suggested that the parties should engage in discussions on the quantum of the security to be ordered.  We have not heard from the parties, and we assume there has been no, or no successful, discussions. 

19.  We consider that the costs of this application should be paid by the applicant forthwith.  In coming to this view, we have taken into account the fact that the applicant did not respond to the respondent’s letter requesting for security for costs, which necessitated the application to court, and it is only in counsel’s written submission that it was indicated that the challenge is confined to the amount of the security to be ordered. 

20.  The respondent has put in an amended statement of costs for gross sum assessment.  The amount claimed is HK$88,262.  We have considered the amended statement and have the following comments:

(1)  It is a simple and straightforward application involving very few papers and no oral hearing.  The 247-pages application bundle is uncalled for.  The hearing bundle only needs to include the summons, the supporting affirmation (and exhibits), the notice of appeal and the Judge’s Order and Reasons for Decision, which are just 30 pages in total.  The inclusion of the papers and written submissions in the action below are unnecessary.  Accordingly, a significant portion of the costs of preparation of the application bundle and the photocopying charges (Items B1 and B2) are to be disallowed.

(2)  Given the simple and straightforward nature of this application, on a party-and-party taxation, the time for communications with client and counsel (Items C1 and C4), and the time spent on the supporting affirmation (Items D2 and D3) and perusing counsel’s submission (Item D4) are not justified. 

(3)  For the same reason, counsel fees (Items E1 and E2) are on the high side. 

21.  Taking the matter in the round, we assess the respondent’s costs of the application for security for costs at HK$45,000. 

Disposition

22.  The orders we make are as follows:

(1)  The applicant shall within 28 days from the date of handing down of this judgment give security for the respondent’s costs of this appeal in the sum of HK$120,000, by making payment into court of the said sum;

(2)  Until the applicant has given the security ordered in (1) above and notice thereof is given to the solicitors for the respondent (such notice to be given on the same day as the lodgement is made), all proceedings in this appeal are to be stayed;

(3)  In default of the applicant giving security as ordered in (1) above, this appeal do (upon the solicitors for the respondent certifying such default to the Registrar of High Court) stand dismissed out of this court without further order;

(4)  In the event that the appeal is dismissed in the circumstances provided for in (3) above, the applicant shall pay the respondent the costs of this appeal, such costs to be summarily assesses or taxed if not agreed; and

(5)  The respondent’s costs of the application for security for costs summarily assessed at HK$45,000 be paid by the applicant forthwith.