YESLAND LTD AND OTHERS v. CHINA FURNITURE CITY LTD

 CACV 39/2006 & CACV 229/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 39 OF 2006

(ON APPEAL FROM HCA NO. 2091 OF 2004)

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BETWEEN

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CIVIL APPEAL NO. 229 OF 2006

(ON APPEAL FROM HCA NO. 2091 OF 2004)

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(Consolidated by the Order of Hon Yeung JA dated 13 October 2006)

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REASONS  FOR  DECISION

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1.  The defendant’s application for leave to appeal to the Court of Final Appeal has been set down for hearing on 6 June 2007.

2.  By a summons dated 11 April 2007, the plaintiffs applied for security “for the plaintiffs’ costs of the defendant’s application for leave to appeal to the Court of Final Appeal (“the application”) in the sum of HK$340,000.00, or such other sum as this Honourable Court may think fit”.

3.  The application for security was heard and dismissed on 4 May 2007 with costs to be taxed if not agreed, with reasons to be provided later.  These are my reasons.

4.  Mr Joe Chan of Messrs F Zimmern & Co, solicitors for the plaintiffs, submitted that there is jurisdiction to make an order for security in respect of the costs of the application for leave to appeal to the Court of Final Appeal.  He relied on both O. 59 r. 10(5) and section 357 of the Companies Ordinance, Cap. 32.

5.  He referred me to note 59/1/1A in the Hong Kong Civil Procedure 2007, where under “stages in the progress of an appeal” – there is a reference to appeal to the Court of Final Appeal.  He also submitted that section 357 applied to an appellant in an appeal.

6.  I am satisfied that even if I have jurisdiction, I would in the exercise of my discretion, dismiss the application.  So, it is not necessary for me to decide either point.  They have not been adequately argued before me.

7.  In Mr Joe Chan’s skeleton submissions, the amount of security asked for was $341,606.  All but about $55,000 of that sum was made up of the difference between costs the plaintiffs had actually incurred and the security ordered by Woo V.P.

8.  The defendant was unrepresented but Mr Wong Pak-sum, a director who appeared for the defendant, complained that the defendant had not been given notice of the intended application for security and referred to 59/10/37 that:

“The respondent should first apply to the appellant by letter and to the court only if no reasonable offer is made, otherwise the costs of the application may not be allowed.”

9.  Although the defendant contended that it could not afford to provide any security, I would not rule out that possibility had the plaintiffs asked for a reasonable sum, the defendant might have agreed to provide it since after all, the defendant had earlier provided security in the sum of $170,000 when its financial situation was little better.

10.  The costs involved in this application, with Mr Joe Chan charging an hourly rate of $3,500, would have been considerable and, I believe, disproportionate to the costs which are likely to be incurred in the application for leave to appeal to Court of Final Appeal.  For the purpose of this application, the plaintiffs have produced a box file of 233 pages, which included two supporting affirmations and exhibits running to about 170 pages.  Moreover, this application was given priority in the listing on the insistence of the plaintiffs in order that it could be heard in sufficient time before the hearing for leave to appeal to Court of Final Appeal.

11.  The court should encourage litigants to exercise common sense in these matters.  The solicitors and clients’ costs involved in this application is likely to be as much as or a substantial part of the costs of the application for leave.  Valuable court time has been taken up.  The application was for a grossly exaggerated amount.  Although the application asked as an alternative for “such other sum as this Honourable Court may think fit” that would not justify an inflated application in the first place.  So in the exercise of my discretion, I dismissed the application.