YICK TAT DEVELOPMENT CO (a firm) v. YUNG CHUNG YIU

CACV 66/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 66 OF 2011

(ON APPEAL FROM HCA 1590 OF 2007)

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BETWEEN

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D E C I S I O N

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1.  This is the defendant’s application for security for costs of the appeal lodged by the plaintiff against the judgment of Deputy High Court Judge Au-Yeung which is scheduled to be heard on 14 October 2011.

2.  The special circumstances relied upon by the defendant in support of the application is that the defendant will be likely to encounter undue delay or undue expenses in enforcing costs orders of the appeal if he is successful in the appeal.

3.  The facts which supported this application are

1)  The difficulty already encountered by the defendant in enforcing the taxed costs order of the trial below.

2)  The conduct of the plaintiff.  Miss Chow who was one of the partners of the plaintiff, had despite having allegedly withdrawn from the partnership prior to the trial below, given evidence at the trial on behalf of the plaintiff without disclosing her withdrawal from the partnership.  The other partner before the withdrawal is Sure Power Developments Limited (‘Sure Power’) whose directors included Miss Chow and Mr. Ng who now appeared on behalf of the plaintiff.  No explanation was given by Miss Chow or Mr. Ng why there was this withdrawal from partnership. Miss Chow continues to be the secretary of Sure Power.  A new partner who replaced Miss Chow is Legal Wealth Creation Limited (‘Legal Wealth’) whose shareholders are Mr. Ng and a secretarial company.  The share capital of Legal Wealth is HK$1.

4.  The only explanation given by the plaintiff for not paying the taxed costs below is that it feared that it may not be able to recover the amount from the defendant if it is successful in its appeal. However, no application has been made to stay the execution of the judgment below nor any offer made to pay the taxed costs into court pending the appeal. The plaintiff has not shown on affidavit that it has any assets in Hong Kong. Any assets outside the jurisdiction may entail problems with enforcement. 

5.  In my view the defendant has made out a case for possible problems with enforcement of the costs order if successful on appeal.

6.  The Court, of course, has to consider the merit of the appeal as well.  The Judge has given detailed reasons for striking out the plaintiff’s claim.  I am not satisfied that the plaintiff has shown that it has a high chance of success in the appeal which may justify a refusal by the Court in making the order for security for costs.  Accordingly, security for costs must be ordered against the plaintiff. 

7.  The defendant asked for HK$165,250.  While counsel’s fee of HK$70,000 for the appeal is reasonable, the estimated solicitors’ costs must be adjusted downwards.  I will order the plaintiff to pay HK$120,000 into Court within 14 days.  Pending payment in, the appeal is stayed.  In default of payment in, the appeal will be dismissed with costs to the defendant. 

8.  Costs of the present application will be in the cause of the appeal which is assessed at HK$72,000 consisting of HK$42,000 for counsel’s fees for attendance and drafting and the rest for solicitors’ costs.