WANG HSUAN HAN v. CATHAY PACIFIC AIRWAYS LTD

HCA 1019/2022

[2024] HKCFI 386

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1019 OF 2022

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DECISION

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INTRODUCTION

1.  By summons filed on 21 March 2023 (“the Summons”), the defendant applied for security for costs in the sum of $726,510.

2.  On 20 July 2023, a Master made the following orders:

“1. The plaintiff do on or before 5 September 2023 pay into Court the sum of $300,000 as security for the defendant’s costs incurred and to be incurred in this action up to and inclusive of the adjourned hearing of the Case Management Summons fixed for 19 September 2023 on the ground that the plaintiff is ordinarily resident out of the jurisdiction and it is just to order the plaintiff to give security;

2. All further proceedings in this action be stayed pending the payment of the aforesaid security for costs by the plaintiff; and

3. Costs of this application be paid by the plaintiff to the defendant summarily assessed at $82,250 payable forthwith.”

(“the Decision”).

3.  This is the plaintiff’s appeal against the Decision[1]. In her Notice of Appeal to a Judge in Chambers filed on 20 July 2023 (“Notice of Appeal”), she asked that the Decision be set aside, and the following orders be made:

(1)  There be no order as to the costs of the Summons;

(2)  The plaintiff do pay security for costs in the sum of $5,000 only.

4.  It is trite that such an appeal is dealt with by way of an actual rehearing of the application which led to the order under appeal, and the Judge treats the matter as though it came before him for the first time. The Judge will give the weight it deserves to the previous decision of the Master, but he is in no way bound by it. The Judge in chambers is in no way fettered by the previous exercise of the Master’s decision. (Hong Kong Civil Procedure 2024, Volume 1, paragraph 58/1/2).

LEGAL PRINCIPLES ON SECURITY FOR COSTS

5.  The applicable legal principles on security for costs have been summarised by B Chu J in Hannelore de Lasala-Debring v Ernest Ferdinand Perez de La Sala (HCMP 1029/2013, unreported, 8 July 2015), as follows:

“5. Order 23 rule 1 RHC provides, among other things, that where a plaintiff is ordinarily resident out of the jurisdiction, then if, having regard to all circumstances of the case, the court thinks just to do so, it may order the plaintiff to give such security for the defendant’s costs of the action as it thinks just.

6. The court’s powers under Order 23 rule 1 RHC are discretionary. It has been said that where a plaintiff is ordinarily resident out of the jurisdiction and has no fixed assets in the jurisdiction, the court would be inclined towards making an order to provide for security for the costs of the defendant.

7. It was further held in Tagliani v Lee Wai Ying Elvis [2006] 2 HKC 194 by Deputy Judge Muttrie that: ‘it is prima facie unjust that a foreign plaintiff, who is more or less immune against costs if he is unsuccessful, should be allowed to proceed without making funds available within the jurisdiction, against which any costs order against him may be executed’.

8. Although the merits of a plaintiff’s claim may be a relevant consideration in deciding whether security should be ordered, this is to be approached in a broad-brush manner. It is not the function of the court to make a preliminary run at deciding the ultimate success or failure of the claim and parties shall not attempt to go into the merits of the case unless it can be clearly demonstrated that the plaintiff has a high degree of probability of success.

9. In Lim Yi Shen v. Wong Yuen Yee [2012] 3 HKLRD 505, Recorder Horace Wong SC has cautioned against forming any view on the merits simply on paper, especially if the facts are likely to be sensitive to oral evidence, and he held that the threshold of demonstrating probability of success in the context of a security for costs application is ‘very high’, and that the practice of going into the merits of the case in such application is ‘to be deplored’ unless the merits are clear.

10. Similarly, although the Court will also consider whether the defendant has an arguable defence, this should also be approached in a broad-brush manner rather than embarking on an assessment exercise as though it were considering an application for summary judgment.

11. In cases of impecuniosity, and where the plaintiff asserts that an order for security would stifle the claim, the onus is also on the plaintiff to show that it is unable to raise the amount of security from other sources or by other means.

12. In exercising its discretion to order security for costs under Order 23 rule 1(1) RHC where the plaintiff is ordinarily resident out of the jurisdiction, the court will also take into account matters like the ease of registration and enforcement of a costs order in the foreign jurisdiction.

13. As regards quantum of security, the court has unfettered discretion to order such amount as it thinks just taking into account all circumstances of the case and adopting a ‘broad-brush’ approach and not by a line by line evaluation of the bill of costs.”

DISCUSSION

The plaintiff’s liability to pay security for costs

6.  In both the Notice of Appeal and her skeleton argument, the plaintiff suggested that she should only be ordered to pay security for costs in the sum of $5,000. Thus, on the face of it, it appears that she does not dispute her liability to provide security for costs.

7.  Having said that, she had made a number of points in her skeleton argument in support of her assertion that it was unreasonable for the defendant to apply for security for costs.

8.  In light of the plaintiff’s vague stance, I would consider the defendant’s application afresh as follows.

9.  First of all, it is clearly undisputed that the plaintiff is ordinarily resident out of the jurisdiction. Order 23 rule 1(a) of the Rules of the High Court (“RHC”) is therefore engaged, and the Court has jurisdiction to make an order of security for costs if it thinks just to do so.

10.  In this regard, the plaintiff alleged that the fact that she is ordinarily resident out of the jurisdiction was caused by the defendant. With respect, this allegation is irrelevant for the present purpose. The RHC does not concern why the plaintiff is ordinarily resident out of the jurisdiction.

11.  Secondly, the plaintiff does not dispute that she has no substantial asset in Hong Kong. On this matter, the plaintiff has provided some reasons as to why it is reasonable that she has not purchased any land property in Hong Kong. Again, I am of the view that the reason why she has no asset within the jurisdiction is irrelevant. What is relevant as far as this application is concerned is that there is no asset within the jurisdiction which the defendant may enforce against in the event the defendant obtains a cost order against her.

12.  Thirdly, there is no reciprocal enforcement of judgments between Hong Kong and Taiwan, and this means it will be more difficult for the defendant to enforce any cost order made by the Hong Kong Court against the plaintiff in Taiwan.

13.  Fourthly, I do not accept that the plaintiff can clearly demonstrate that she has a high degree of probability of success at the trial. It is at least arguable that her claim that her employment relationship with the defendant has not been validly terminated is contradicted by the Release Agreement which the parties entered into on 20 September 2021.

14.  Fifthly, while the plaintiff suggested that she shall pay $5,000 to $10,000 into Court as security for costs, she did not go so far as to say that that was the only range of amount that she could afford. Even if that was actually what she meant, she has not adduced any evidence to prove that she is unable to raise a higher amount of security from other sources or by other means.

15.  By reasons of the aforesaid, I am of the view that it is just for the Court to make an order of security for costs against the plaintiff.

Quantum of security

16.  It is trite that the amount to be ordered is in the discretion of the Court.

17.  The defendant asked for security in the sum of $609,610. A skeleton bill of costs had been lodged in support.

18.  In my view, the amount of security claimed is on the high side. Adopting a broad-brush approach, I am of the view that the amount of security should be fixed at $300,000.

The plaintiff’s appeal on costs of the Summons

19.  The plaintiff also appealed against the cost order made by the learned Master. She suggested in the Notice of Appeal that the Court should have made no order as to cost. In the plaintiff’s skeleton argument, she went even further, and submitted that the defendant should be ordered to pay her costs of the Summons. With greatest respect, in light of the result of the Summons, such submissions are totally unmeritorious and should be rejected.

ORDER

20.  As far as the order which should be made, with respect to the learned Master, I am of the view that it is not enough for the Court to order that the action shall be stayed pending the plaintiff’s payment into Court. The order should also provide that the action be dismissed in the event the plaintiff fails to make such payment within the period allowed[2].

21.  Although my conclusion on the appropriate amount of security is as same as that decided by the learned Master, the defendant accepted that it is appropriate for this Court to allow another period of time for the plaintiff to make payment into Court despite the time originally given by the learned Master had long expired. This is because this is a rehearing of the Summons, and more importantly, it will be provided in the order (which was not provided in the Decision) that the plaintiff’s claim will be dismissed upon her failure to make payment. As a matter of fairness, now that it has been made clear to the plaintiff about the serious consequence of non-payment, she should be given a further chance to comply with the order of security for costs.

22.  I therefore make the following orders:

(1)  The plaintiff do provide security for the defendant’s costs of this action up to and including the following Case Management Summons hearing in the sum of $300,000 by paying the same into Court by 4pm on 19 March 2024.

(2)  Until such payment is made and notice thereof given to the Registrar and to the solicitors for the defendant (such notice shall be given by the plaintiff on the same day as the payment is made), all proceedings in this action are to be stayed.

(3)  In default of the plaintiff making such payment as aforesaid within the time specified above or within such further time as the court may for special reasons allow, the action herein against the defendant do, upon the solicitors for the defendant certifying such default to the Registrar, stand dismissed without further order.

(4)  In the event that the action against the defendant is dismissed in the circumstances provided for above, the plaintiff do pay to the defendant its costs of the action (including all costs reserved), such costs to be taxed if not agreed.

COSTS

23.  Costs should follow the event. As the plaintiff has failed to set aside the Decision, she shall bear the defendant’s costs of the appeal.

24.  This appeal was initially fixed to be heard on 28 September 2023 (“the Original Appeal Hearing”). By a document dated 9 September 2023, the plaintiff asked that the Original Appeal Hearing be vacated and adjourned to a date after 18 December 2023, as she had been newly employed by another airline and she was unable to obtain leave within her probation period.

25.  Upon receipt of the plaintiff’s request, this Court asked for the defendant’s view on 14 September 2023.

26.  By letter dated 15 September 2023, the defendant objected against the plaintiff’s application for adjournment. Be that as it may, this Court granted an adjournment on 19 September 2023 and ordered that the Original Appeal Hearing be re-fixed.

27.  The defendant argued that costs occasioned by the adjournment should be borne by the plaintiff. Given the fact that the adjournment was caused solely by the plaintiff, as a matter of principle, I see no reason why the plaintiff should not be ordered to bear the costs of adjournment. I will assess such costs together with the costs of the appeal.

28.  The defendant’s costs of the appeal (and of the costs of the adjournment) be summarily assessed pursuant to Order 62 rule 9A(1)(a) of the RHC at $61,874. The plaintiff shall pay such costs no later than 27 February 2024.