LI LAP WAI v. LEE TIN CHOI also known as LI TIN CHOI AND ANOTHER

HCA 2287/2014

[2018] HKCFI 1610

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2287 OF 2014

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R E A S O N S   F O R   D E C I S I O N

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The proceedings

1.  This is an appeal against a decision of the Master refusing to order security for costs.  At the hearing, following the submissions of counsel for the appellant, (the 1^st defendant), I dismissed the appeal with reasons to follow.  These are my reasons.

2.  Before dealing with the substantive appeal it was necessary to deal with an application by the plaintiff to admit further evidence, an affirmation exhibiting a registered valuer’s report of the valuation of a parcel of land owned by the plaintiff in Tai Po.  I admitted the affirmation with reasons to follow.  These are my reasons.

The application to admit further evidence

3.  The only evidence before the Master from the plaintiff was an affirmation dated 14 September 2017, from the plaintiff’s solicitor asserting to the fact that, in addition to being the owner of the property in dispute, he was the registered owner of a parcel of land in Tai Po.  The affirmation exhibited a copy of a land search of the property, and made an assertion, unsubstantiated, that the value of the property was more than sufficient to meet the costs in the proceedings for which the plaintiff might be liable.  The affirmation also asserted that the solicitor was:

“informed by the plaintiff and verily believe that he has been maintaining various bank accounts in Hong Kong with considerable deposits.”

There was no evidence to substantiate that assertion.

4.  The Master dismissed the application for security for costs.  The 1^st defendant filed an appeal against that decision.  Subsequently, on 9 May 2018, the plaintiff filed a summons for leave to file a further affirmation.  The affirmation sought to respond to a number of matters and exhibited a valuation report by a registered valuer asserting the value of the Tai Po land at HK$1.2 million.

5.  On 1 June 2018, the solicitors for the 1^st defendant wrote to the plaintiff’s solicitor suggesting that the summons for leave to file the further affirmation ought to be heard before the substantive appeal summons and that accordingly the appeal summons ought to be adjourned.  There was no reply to that letter.  Notwithstanding two months passing since they had received the summons to file a further affirmation, the 1^st defendant took no further steps.

6.  At the hearing before me Mr Liu was unable to assert to any prejudice by the late filing of the affirmation, although he said that his solicitors wished to file an affirmation from another valuer in reply.  He had no instructions as to whether or not that valuation report would be likely show a lower or higher valuation as the solicitors had merely obtained quotes to obtain the report. 

7.  In my view, it is not necessary, in the circumstances of an application for security for costs, to obtain a valuation from a registered valuer in respect of property that may be available to meet costs.  The court will necessarily take a broad view of the plaintiff’s assets, and accordingly an assessment of the value of the land by a real estate agent would be sufficient.  It is quite unnecessary to go to the expense of registered valuer’s reports.  In those circumstances there was no adequate explanation for a delay on the part of the 1^st defendant in responding to the plaintiff’s affirmation.

8.  However, when I indicated that I was willing to adjourn the matter for that valuation report counsel for the 1^st defendant elected to proceed to have the matter heard immediately.

9.  In the absence of any prejudice I gave leave for the filing and reading of the plaintiff’s affirmation.

The application for security for costs

10.  The writ, with an indorsement of claim, was filed on 12 November 2014.  A statement of claim was filed on 9 September 2015.  An amended statement of claim was filed on 13 June 2016.  A re-amended statement of claim was filed on 18 September 2017.  A re-re-amended statement of claim was filed on 21 May 2018.

11.  It was clear from the filing of the amended statement of claim on 13 June 2016 that the plaintiff was ordinarily resident out of the jurisdiction, and accordingly liable to an application for security for costs pursuant to Order 23, Rules of the High Court (Cap 4A).

12.  However, no application for security for costs was made until 15 August 2017, 10 months after a clear assertion on the part of the plaintiff that he ordinarily resided out of the jurisdiction. 

13.  Furthermore, it is clear from the pleadings that this is a dispute between half-brothers, members of an extended family, who both share a father. The circumstances are such that the plain inference is that the 1^st defendant would have known or, at least, believed it likely, that the plaintiff was ordinarily resident out of the jurisdiction.  There was no assertion on the part of the 1^st defendant to the contrary.

14.  Numerous steps were taken between the parties in the conduct of the proceedings following the issue of the writ.

15.  In the present case it cannot be said that there is a high degree of probability of success at trial for the plaintiff.  Actions between family members over “ting” rights in the New Territories are invariably complicated and can rarely be said to be clear. 

16.  However, one factor in this case stands out.  An essential allegation on the part of the plaintiff is that a power of attorney signed by him was signed with the name of the attorney blank, and that without his knowledge, subsequently, the 1^st defendant’s name was inserted, and the power used to transfer the property to the 2^nd defendant, the 1^st defendant’s wife.  That is, in any circumstances, an extraordinarily suspicious circumstance.  Furthermore, the plaintiff’s evidence, unchallenged, is that he had already given a power of attorney, specific to the property, to someone else.  There was simply no need for the plaintiff to give a power to someone else. 

17.  Witness statements have been exchanged, and a statement from the witness to the power of attorney confirms that the power of attorney was signed by the plaintiff with the name of the attorney blank. 

18.  There is accordingly a strong inference that fundamental planks in the plaintiff’s case are established, even if there is more to establish.

19.  By delaying the filing an affirmation as to the valuation of the property the plaintiff has in Hong Kong, and failing to exhibit bank statements which might establish the deposits he holds in Hong Kong, the plaintiff has been less than candid.  However the valuation now filed establishes what I am satisfied is substantial property in Hong Kong. 

20.  In the exercise of the discretion to order security for costs delay is always a relevant factor.

21.  In the present case the 1^st defendant waited through the filing of the statement of claim on 9 September 2015, the defence on 15 October 2015, the amended statement of claim on 13 June 2016, and the amended defence on 13 October 2016, before making a request for security for costs on 14 November 2016.  That request, made two years after the writ was filed, was not followed up at all. 

22.  On 20 December 2016 the reply to the amended defence was filed.  In January and February 2017, lists of documents were exchanged.  On 22 June 2017, the 1^st defendant made a request for further and better particulars.  That was answered on 16 August 2017. 

23.  It was not until 15 August 2017, the day before the answer to the request for further and better particulars, that the 1^st defendant issued its summons for security for costs.

24.  The chronology described, and the delays on the part of the 1^st defendant in pursuing any entitlement for security for costs, bear all the hallmarks of a defendant who is using the application to delay the proceedings.  I have no doubt that if the 1^st defendant was genuinely concerned about the issue of costs he would have made his application soon after the filing of the amended statement of claim on 13 June 2016, which made plain the plaintiff’s ordinary residence out of the jurisdiction.

25.  I am satisfied that the plaintiff is ordinarily resident out of the jurisdiction.  I am satisfied that he has substantial assets in the jurisdiction which will enable him to meet any order for costs should the action fail.

26.  Although it cannot be said that the plaintiff has a “high probability of success” in the proceedings, fundamental planks establishing a quite extraordinary situation are not in dispute.  The plaintiff, in my view, has a real chance of success in these proceedings.

Conclusion

27.  In the whole of those circumstances I exercised my discretion against the grant of an order for security for costs and dismissed the appeal.

The appeal against costs below

28.  The Master summarily assessed costs on the summons for security at $130,000.  He did so after examining a statement of costs for summary assessment which sought $335,461.  Mr Liu said that the usual order for costs in a case such as this was $100,000.  Nothing was said to substantiate that assertion.  The Masters are highly experienced in the assessment of costs. 

29.  I saw no reason to justify a departure from the experience of the Master and dismissed the appeal against costs.

Costs on the appeal

30.  On a summary assessment of the costs on the appeal Mr Liu took no objection to an order against the 1^st defendant for $100,000.

31.  The application to admit the further evidence, while successful, sought an indulgence.  Mr Cheung did not oppose, and Mr Liu was content with, an order in favour of the 1^st defendant against the plaintiff in the sum of $80,000.