XCHRX CHEUNG SHUI MING v. JEFORD INDUSTRIES LTD.

IN THE COURT OF APPEAL OF THE HIGH COURT

1997, No. 90
(Civil)

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J U D G M E N T

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Liu, J.A.:

1. This is an application by the respondent for security for costs of the appeal. The claim and cross-claim arose from a collision between two vehicles, one driven by the 2^nd appellant as servant or agent of the 1^st appellant and the other by the respondent. It is the consensus that the 2^nd appellant has little role to play in the application I have to entertain today. The case before Her Honour Judge Chu, as she now is the Deputy Registrar, was wholly devoid of complexities. Both drivers, the 2^nd appellant and the respondent, claimed to have crossed the junction with a green light in his favour. One of them must be wrong. The trial judge heard the evidence, embarked on an evaluation and preferred that of the respondent. She found against the 2^nd appellant. Judgment was given by the District Judge, as she then was, against the appellants in the sum of $90,375 and costs. The judgment has not been satisfied. Levy of execution has not been successful. Not even costs of the action heard before the trial judge has been paid.

2. After repeated requests from the respondent, execution of the judgment debts on the 1^st appellant company was attempted but failed because the property at the registered address of the 1^st appellant was not in the name of the 1^st appellant and another company laid claim to the movables inside the registered address.

3. The 1^st appellant feels aggrieved by the determination of the trial judge and a Notice of Appeal has been filed. Hearing of the appeal has been fixed for 5 February 1998. The grounds in the Notice of Appeal are monumentally unhelpful. They read:

"(a) the learned judge had erred in law in the exercise of her discretion and the said judgment was therefore irregular in nature; and

(b) further or alternatively, the learned judge had erred by failing to pay heed and/or sufficient heed to the Defence and Counterclaim of the 1^st and the 2^nd Defendants and by failing to dismiss the same in the said judgment."

4. The 1st appellant applied to the trial judge for leave to appeal. Leave was granted. What transpired before the trial judge is related by Mr Li, counsel for the respondent: whilst the trial judge observed, in granting leave, that the omission to formally dismiss the Counterclaim might arguably be an irregularity, she was unimpressed by the grounds of appeal which she described as unconvincing.

5. It is quite unnecessary for this court to express any further view on the grounds of appeal. They speak or rather they do not speak for themselves. One matter which perhaps should be noted is that the papers before the judge were in a shamble. There was no agreed bundle for trial. The plaintiff's bundle was late. The bundle of pleadings was incomplete and defective. Not even the Reply and Defence to Counterclaim was included. It was not unsurprising that the less than satisfactory preparation was a source of irritation. The trial judge described the defendant's case as follows:

"The Defendants counterclaim against the Plaintiff for damages occasioned by the same accident, alleging negligence on the part of the driver of the Plaintiff's car"

The issue was plain enough. The allegations and counter-allegations were diagonally opposite. There is every reason to believe that the Defence and Counterclaim was just the reverse side of the same coin in all respects, on facts and pleadings. By allowing the claim, the Defence and Counterclaim must have been accordingly refuted. It is inconceivable how the omission to formally dismiss the Counterclaim could adversely affect the decision of the trial judge. This court has not been supplied with a copy of the Defence and Counterclaim. Neither counsel has in his possession a copy of that document in the course of their submissions. No substantive point is taken by either counsel before me today on the Defence and Counterclaim.

6. Coming back to the application for security for costs, the judgment has not been paid and execution has not been successfully levied. The respondent seeks to rely on two main grounds. First, his belief through his solicitors that the 1^st appellant company is impecunious. Both parties agree that the role of the 2^nd appellant driver is minimal in the instant application. Secondly, the respondent would, in the circumstances, likely face difficulty in recovering the costs of the appeal, if awarded.

7. Counsel for the 1^st appellant draws heavily from implications of what has been said on the status of his client. It is said that the 1^st appellant is an international catering group, serving neighbouring areas. It is submitted that the affidavit evidence is wholly inadequate to ground the belief held by the respondent and his solicitors of the impecuniosity of the 1^st appellant. Counsel for the 1^st appellant maintains, no doubt on instructions, that the company is not financially unsound and that all awards would be settled after appeal. The reasons given for not paying the judgment debts are not, to say the least, easy to follow. To begin with, it is argued that the erroneous decision is manifest. Reference has been made to the grounds of appeal, and I need say no more. It is further maintained that payment of the judgment debts is being prudently withheld because "in the premises, the 1^st appellant insists not to pay the judgment sum together with costs to the respondent pending the outcome of the appeal". (See para. 10 of the affirmation of Mak Wai-ling filed on 2 December 1997). I have to say I admire at least the conviction with which the 1^st appellant displays full confidence in the appeal it prosecutes.

8. Having been unable to obtain payment of the judgment debts, the respondent proceeded to seek cross-examination of the directors of the 1^st appellant company. For procedural non-compliance, cross-examination of those directors was not conducted. The respondent has still not been paid up-to-date. The 1^st appellant is not prepared to disclose any of its assets. It is simply determined not to honour a "bad" judgment debt. Therefore, the respondent's efforts will continue to be frustrated. This is an unusual attitude.

9. The 1^st appellant's refusal to pay could not have been truly motivated by a plainly wrong decision. The trial judge had observed that the grounds of appeal were unconvincing. If the decision had really been blatantly wrong and the error unmistakenly obvious, the trial judge would have granted a stay, but she did not on the 1^st appellant's application for leave to appeal out of time. For the robust view the 1^st appellant holds, what it boils down to is this : it was a flat refusal by the 1^st appellant to pay its judgment debts.

10. The respondent's requests for payment have been resolutely ignored. His attempts to obtain satisfaction have wholly been frustrated. The 1^st appellant has been taking all these maneuvers just for a mere $90,000 liability. Counsel for the 1^st appellant seeks to impress this court by "justice and fairness". It takes very little to see where in fact justice and fairness lie. The 1^st appellant has had this case tested before the trial judge. It is dissatisfied and claims to have been wronged by a judicial blunder which must not be dignified by a voluntary payment of the sum adjudged before it is soon overturned by the combined wisdom of three Justices of Appeal. If the 1^st appellant should fail in its appeal, it would most likely assume the same stance because it would feel equally if not more disillusioned by the piling of another judicial blunder on a judicial blunder. It is not difficult to visualise its distraught in which the 1st appellant would likewise resist or delay enforcement of an order for costs made in the appeal.

11. At page 1006 of the 1997 White Book, marginal reference 59/10/19, the following passage appears:

"Recently security for costs orders have been made where it has been established that there would be undue delay or expense in enforcing an order for the costs of the appeal".

At page 1007, marginal reference 59/10/21, another passage can be found:

"The Court of Appeal will order security for costs upon proof (or in some cases upon a presumption) that the respondent will be likely to encounter undue delay or be put to undue expense in enforcing any order for costs in respect of the appeal".

12. The court's power to award security for costs of the appeal is largely a discretionary one. In all the circumstances and for the reasons I have given, the application of the respondent should be granted.

13. Nothing is said about the estimated costs in the sum of $97,445. I would grant the respondent's application in terms of the application. As the application is resisted, subject to what counsel have to say, I would further order that the 1^st appellant to pay the respondent the costs of this application.