LAM LIN also known as LAM WUN YUN AND ANOTHER v. LAM LOK YIU AND ANOTHER

HCA 1895/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1895 OF 2009

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BETWEEN

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D E C I S I O N

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1.  This is an application by the 2^nd defendant by summons dated 28 November 2012 for the $500,000 paid into court by the plaintiffs on 15 September 2009, 22 September 2009 and 5 November 2009, to be paid out to the 2^nd defendant’s solicitors, alternatively, the said sum of $500,000 paid into court by the plaintiff be paid out to the 2^nd defendant’s solicitors as secured judgment creditor pursuant to the Order of Yam J made on 6 November 2009 for part payment of the outstanding unpaid costs.

Background

2.  This case was started by the plaintiffs in September 2009.

3.  On 4 September 2009 the plaintiffs applied by way of Notice of Motion for an interlocutory injunction against both defendants. That application was amended by Recorder B Yu on 11 September 2009 such that the application was by way of summons instead of Notice of Motion.  The amended application was then adjourned for argument.

4.  At the adjourned hearing before Sakhrani J, the plaintiffs undertook to pay HK$200,000 into court within 3 working days and a further HK$100,000 within 14 days as fortification of their undertaking as to damages.

5.  On 20 October 2009, the plaintiffs took out a further summons for another interlocutory injunction in relation to another property against the 2^nd defendant.  Deputy High Court Judge L Chan (as he then was) adjourned the application together with the earlier application for interlocutory injunction.  At the hearing before Deputy Judge L Chan, the plaintiffs further undertook to pay a further HK$200,000 into court within 13 days as fortification of their undertaking as to damages.

6.  The above sums being fortification of the plaintiffs’ undertaking as to damages and totalling $500,000 were paid into court by the plaintiffs on 15 September 2009, 22 September 2009 and 5 November 2009.

7.  On 6 November 2009, Yam J granted the interlocutory injunctions to the plaintiffs and at the same time made the following orders as to fortification:

“(2) The plaintiffs will:-

(a) (i) on or before 25^th September 2009 pay the sum of HK$500,000;

(ii) on or before 7^th December 2009 pay a further sum of HK$500,000;

(iii) on or before 6^th January2010 pay a further sum of HK$500,000 to Messrs Cham & Co who shall stakehold the said sums pending the determining of the trial and/or until further Order of the Court. Within 3 working days of the payments of the said sums, the Plaintiffs shall notify the Defendants in writing together with copies of valid receipts duly issued by Messrs Cham & Co.

(b) the aforesaid total sum of HK$1,500,000 paid by the Plaintiffs to fortify the undertaking shall be apportioned as HK$600,000 for the 1^st Defendant and HK$900,000 for the 2^nd Defendant, should the Court order that the Plaintiffs should pay anyone of them by way of damages and/or costs.”

8.  On 27 November 2009, the plaintiffs’ solicitors (Messrs Cham & Co) notified the other parties of the payment of HK$500,000 to them on 26 November 2009 and on 30 December 2009, the plaintiffs’ solicitors notified the other parties of the further payment of HK$500,000 to them on 30 December 2009.

9.  On 13 February 2012, judgment was entered against the plaintiffs and the plaintiffs’ claims were dismissed.  Costs were ordered to be borne by the plaintiffs in favour of both defendants.  The costs taxed in this matter exceed $1 million to each of the 1^st and 2^nd defendants respectively.

10.  By 19 September 2012, the 1^st defendant had been paid HK$600,000 by Messrs Cham & Co as stakeholders of the HK$1,000,000 paid by the plaintiffs.  On 7 November 2012, the 2^nd defendant was paid the balance of HK$400,000 by Messrs Cham & Co from the moneys held by Messrs Cham & Co as stakeholders.

11.  On 28 November 2012, the 2^nd defendant took out the present summons in relation to the HK$500,000 paid into court by the plaintiffs as fortification of their undertaking.

The disputed issue

12.  This application of the 2^nd defendant is opposed only by the 1^st defendant.  The plaintiff has no objection to the application by the 2^nd defendant.

13.  It is therefore appropriate to deal with the contention of the 1^st defendant before coming to the submissions by the plaintiffs and the 2^nd defendant in so far as the disputed issue goes.

1^st defendant’s stance

14.  The position of the 1^st defendant is that the $500,000 held in court should be split $250,000 each to the 1^st defendant and the 2^nd defendant.

15.  The basis for this contention by the 1^st defendant is that the Order made by Yam J on 6 November 2009 did not include the $500,000 which had been paid into court prior to 6 November 2009.  The reason for so saying by the 1^st defendant is that the Order of Yam J specifically provided for the entire sum of HK$1.5 million to be paid to Messrs Cham & Co as stakeholders, therefore it could not have included the $500,000 which had been paid into court.

Plaintiff’s stance

16.  The plaintiffs have no objection to the payment out of the HK$500,000 held by the court to the 2^nd defendant.

17.  The stance the plaintiffs in so far as the construction of the various orders for fortification goes is that firstly, the date for the first $500,000 in the Order of Yam J being 29 September 2009 was long past the date of the hearing before Yam J which was 6 November 2009 therefore that first $500,000 must logically relate to the sum already paid into court.

18.  Secondly, it was submitted by the plaintiffs that during the hearing before Yam J, the parties had already made known to Yam J that there had been a payment of $500,000 into court by the plaintiffs which payment was made by way of fortification of the plaintiffs’ undertaking therefore Yam J must have known of same.

19.  Moreover, it was submitted that during the hearing, Yam J had referred to “a further sum of $1 million by way of fortification” thus it was understood by all concerned that the total amount of fortification being $1.5 million had taken into account the initial payment of $500,000 into court.

20.  It was conceded by the plaintiffs that in the Order of Yam J, there appears to be an error to the effect that the first sum of $500,000 was also stated to be stakeheld by Messrs Cham & Co when that money had already been paid into court.  The plaintiffs put this down to an error of the plaintiffs’ solicitors when drafting the order and that error was not picked up when the order was approved by the clerk to the judge.

21.  Finally, the apportionment of the total amount of the $1.5 million fortification (being $600,000 to the 1^st defendant and $900,000 to the 2^nd defendant) showed that in the mind of Yam J, that was the total amount of the fortification of the undertaking and which therefore must have included the initial $500,000 already paid into court.

22.  Ultimately it was submitted that Yam J only had in mind to order a further $1 million as fortification of the plaintiffs’ undertaking and that Yam J’s Order made on 6 November 2009 had taken into account the $500,000 already paid into court.

2^nd defendant’s stance

23.  It was submitted by the 2^nd defendant that the Order of Yam J made on the 6^th November had already taken into account the undertaking given by the plaintiffs for the first HK$500,000 being fortification of their undertaking.

24.  The 2^nd defendant says that since the 1^st defendant has already received $600,000 from the stakeheld moneys by Messrs Cham & Co, and that the 2^nd defendant has only been paid $400,000 from the stakeheld moneys by Messrs Cham & Co, the 2^nd defendant is entitled to the $500,000 held in court so pursuant to the apportionment made by Yam J of the total amount of the $1.5 million fortification of the plaintiffs’ undertaking for damages and/or costs.

25.  Based on that apportionment by Yam J apportioning $900,000 to the 2^nd defendant, it is submitted by the 2^nd defendant that it’s position is akin to that of a secured creditor in respect of the $500,000 paid into court whereas the 1^st defendant having already received its apportioned $600,000 is in no better position than that of an unsecured creditor.

Decision

26.  In coming to a decision in this matter I had to revert to the recording of the hearing before Yam J on 6 November 2009 to determine whether the total amount of the fortification ordered by Yam J in the amount of HK$1.5 million included the initial amount of HK$500,000 or whether the HK$1.5 million ordered by Yam J was in addition to the initial amount of HK$500,000.

27.  I have also had sight of the notes taken by Yam J in respect of the hearing on 6 November 2009.

28.  From both the recording of what was said in chambers during that hearing and from the notes of Yam J there can be no doubt of the following matters:-

(a) Yam J was told and was fully aware that prior to the hearing on 6 November 2009 before him, the plaintiffs had already paid $500,000 into court as fortification of their undertaking;

(b) The defendants were asking for a further sum of $1 million to be paid by the plaintiffs to top up the amount of the fortification already made;

(c) When Yam J ordered the amount of the fortification to be topped up to $1.5 million, Yam J must have had in mind the initial $500,000 already paid into court by the plaintiffs.

29.  Having heard the recording of what transpired at that hearing and having had sight of the notes of Yam J in respect of that hearing, I have no doubt that the amount of HK$1.5 million ordered by Yam J included the initial amount of HK$500,000 paid by the plaintiffs as fortification of their undertaking given.

30.  This is further confirmed by the fact that Yam J then apportioned the total amount of fortification in the ration of $600,000 to the 1^st defendant and $900,000 to the 2^nd defendant.

31.  In the circumstances, I accept the submission of the plaintiffs and the stance taken by the plaintiffs in its entirety and there can be no question of splitting the $500,000 paid into court as suggested by the 1^st defendant in this application.

32.  The 1^st defendant has already received in full the $600,000 apportioned by Yam J.  To date the 2^nd defendant has only received $400,000 from the $1 million stakeheld by Messrs Cham & Co.  Therefore based on the apportionment made by Yam J, the 2^nd defendant is entitled to the $500,000 now in court.

33.  Accordingly, there will be order in terms of the summons taken out by the 2^nd defendant and the $500,000 now standing in court will be paid out to the 2^nd defendant through its solicitors in part satisfaction of the costs order made against the plaintiffs at trial and in favour of the 2^nd defendant pursuant to the apportionment made by Yam J in his order on 6 November 2009.

Costs

34.  This application could have been dealt with by consent of the parties but for the objection raised by the 1^st defendant.

35.  Having decided against the 1^st defendant on this application, there would be a costs order nisi that the 1^st defendant is to pay to the plaintiffs and the 2^nd defendant their costs of this application and the hearing on 13 December 2012 to be taxed if not agreed.