CHOW SING YUET ELTON v. CARRY EXPRESS INVESTMENT LTD

CACV 5/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 5 OF 2011

(ON APPEAL FROM HCCT NO. 18 OF 2007)

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1.  This is an application by the respondent for security for the costs in this appeal.

2.  The appeal is against a judgment of Saunders J given on 20 December 2010.  The Judge dismissed the appellant’s claim against the respondent with costs.  Additionally, the appellant was earlier adjudged liable for the costs arising from the adjournment of the trial.

3.  The appellant is an architect and structural engineer and an Authorised Person.  His claim in the action was for certain professional fees rendered by him pursuant to a formal written agreement dated 5 March 1991 whereby the defendant appointed the appellant’s firm to be project consultant for a project in the Mid-levels.

4.  At trial, the Judge upheld the respondent’s plea of limitation in respect of the appellant’s claim.  He held that the appellant’s cause of action had accrued from April 1996 or at the latest from February 1998, so that the claim by writ issued on 20 March 2007 was statute barred by reason of section 4(1)(a) of the Limitation Ordinance, Cap. 347.

5.  The basis of the respondent’s application for security for costs of the appeal is that the appellant is impecunious and there is therefore a risk that the respondent will be unable to recover the costs of the appeal in the event that the appeal is dismissed.  The respondent has conducted a litigation search in respect of the appellant which has brought to light four previous occasions on which the appellant has been sued.

6.  It is well established that the fact an appellant is impecunious does not lead automatically to an order that security for costs must be provided.  The court is entitled to consider other relevant factors such as the strength of the appeal to determine whether or not it would be just to order security for costs to be provided: see Chung Kau v Hong Kong Housing Authority & Ors [2004] 2 HKLRD 650 at §14(1).

7.  In the present case, the appellant points out that the costs orders against him below have not yet been taxed and so there is no current liability on his part to pay those costs to the respondent.  In any event, as against those untaxed costs, it is accepted by the respondent that it has a liability to pay to the appellant the costs in respect of an application to amend the defence which were assessed on a gross sum basis at HK$225,180.

8.  Whilst these points in respect of the untaxed costs and the costs due to the appellant are well made, the fact remains that the appellant accepts that he is impecunious.  His answer though is that his impecuniosity arises from the wrongful acts of the respondent in failing or refusing to pay his fees, the subject matter of the action.  He argues that an order for security for costs against him would have the effect of stifling his appeal.

9.  I do not, however, find this argument to be convincing in the light of the lengthy period of time before the appellant commenced his action against the respondent.  It would be surprising if this project was his only professional engagement in the relevant period and so there must be some question as to whether the entirety of the appellant’s financial condition has been caused by the respondent’s failure to pay his outstanding fees.  It is also relevant to note that the appellant has been legally represented so far in these proceedings and is not in receipt of legal aid.

10.  Furthermore, where an appellant contends that security should not be awarded because it would prevent him pursuing his appeal, he has to satisfy the court not only that he is unable to furnish security of the costs from his own resources but also that he is unable to raise the money elsewhere.  The onus of proof is on him on this issue.  In assessing whether he could raise money elsewhere, the court adopts the same rigourous approach as in the Order 14 case of York Motors v Edwards [1982] 1 WLR 444 at 449 and 450.  Here, I am not satisfied that the evidence filed by the appellant, which in substance amounts merely to a bare assertion of inability to raise money elsewhere, is sufficient to discharge that onus.

11.  The next argument advanced by the appellant in opposition to the application for security for costs is that the appeal has a strong chance of success.

12.  As was held in Chung Kau v Hong Kong Housing Authority & Ors (at §14(3)), where the merits of the appeal appear to go strongly one way or the other, this may, by itself, be a decisive factor on the issue of whether to order security for costs.

13.  The appellant argues that the merits of the appeal are strong because: there was no dispute as to the quantum claimed by the appellant; the appellant lost on the technical ground of time limitation; and, except the facts concerning the time when the appellant’s cause of action accrued, the Judge’s findings of fact were in favour of the appellant.

14.  On the issue of limitation, the appellant contends that the Judge was wrong because there was an express timetable for the payment of the appellant’s fees and the respondent’s obligation to pay would only arise when the stipulated milestones were reached.  The appellant contends that those milestones had not been reached in 1996 or 1998 and that it was only in 2006 when the appellant accepted the respondent’s repudiation of contract that his cause of action against the respondent arose.

15.  Whilst I do not say that the appeal is devoid of merit, I am not persuaded that the merits of the appeal are so strong that this provides a decisive factor in the exercise of my discretion on the issue of security for costs.  I note that in paragraph 6 of the judgment, the Judge summarised the contractual provisions for payment, which included a condition that the first tranche of the professional fees would be paid on the date of the approval for building plans.  In paragraph 61 of the judgment, the Judge noted that by 10 February 1996, the building plans, RC structural plans and foundation plans had been approved by the Buildings Authority and that approval comprised the condition precedent to the entitlement of the appellant to the first of the five tranches of payment of his professional fees under the contract.  When the appellant submitted his invoice for payment on that date, he sought payment of only two thirds of the sum that was due.

16.  In the circumstances, in accordance with the guidance laid down in Chung Kau v Hong Kong Housing Authority & Ors, I look to see if there are any other factors to tilt the balance against an order for security for costs.  In my judgment, there are no such factors present and I conclude that it would be appropriate to order security for costs of the appeal.

17.  The respondent seeks an order for security in the sum of HK$571,000 and has provided a skeleton of costs in support.  The appellant questions the reasonableness of instructing Senior Counsel for the appeal.  However, it is to be noted that the appellant himself instructed three counsel to appear at trial and the names of all three appear on the notice of appeal.  The skeleton bill is, of course, an estimate and there is a possibility it would be reduced if subject to taxation.

18.  In the exercise of my discretion, I propose to make an order that the appellant provide security for the respondent’s costs of the appeal in the sum of HK$475,000.

[Argument as to costs.]

19.  There will be an order that the costs of the application be to the respondent in any event.