EUGENE JAE-HOON OH v. KATE GASKELL RICHDALE

CACV 222/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 222 OF 2005

(ON APPEAL FROM HCSD 1 OF 2005)

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REASONS  FOR  DECISION

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Hon Tang JA (giving the reasons for decision of the Court):

1.  This is the respondent’s application for security for the costs of the applicant’s appeal against the order of Deputy Judge Gill refusing to set aside the Statutory Demand dated 23 December 2004.  The Statutory Demand demanded payment of $58,872.55 of which $52,000 was costs ordered to be paid by the applicant to the respondent, and $6,872.55 accrued interest. 

2.  The basis of the application is the impecuniosity of the applicant.  The applicant is a solicitor and a partner in Eugene J H Oh & Co.  It is clear from 1^st affidavit of Au Kam Ying Grace (the affidavit) that the firm has been running at a loss in the years 2001/2002, 2002/2003 and 2003/2004.  During those years the applicant drew no salary.  For the year 2004/2005, he drew $200,000 and Grace Au has said that the profit and loss situation has improved.  The only evidence of means is the affidavit.  The applicant has not made an affidavit.

3.  According to the respondent, she and her husband have incurred costs of approximately HK$7.3 million and they are accruing on a daily basis.  Such costs include about HK$3.2 million in respect of the applicant’s unsuccessful personal injuries claim and HK$2.5 million in the Malicious Prosecution Action up-to-date.  Costs orders have been made in favour of the applicant & her husband in those proceedings.

4.  In CACV 162 of 2003, Rogers VP ordered security in the sum of $700,000 against the applicant.  Such security, in the form of a bank guarantee, has been provided by the applicant.  The applicant, who appeared in person before me, relied on this, as evidence that he is not impecunious.

Assets and ability to pay

5.  The applicant says he can pay the amount claimed.  In the 2^nd affidavit of Au Kam Ying Grace (the 2^nd affidavit), she said at para. 11:

“…the (appellant) has enough asset to satisfy legal costs for the purpose of this appeal.  Nothing needs to be said further about the proceedings and they are irrelevant.”

6.  I believe the ability of the applicant to pay must be viewed against his overall assets and liabilities.  As can be seen from the costs orders made against him, he has substantial liabilities.  The assets referred to in the 2 affidavits of Grace Au do not appear to be sufficient to cover them.  Nor am I prepared to act on the affidavits, when Mr Oh has chosen not to go on oath and tell me what assets and liabilities he has or may have.  That he may have the means to day to pay the sum demanded is not a sufficient answer.  What I have to consider is whether he would be in a position to do so if he were ordered to pay the costs of the appeal.  It is not known when the appeal would be heard.  If costs were ordered to be taxed, it would be sometime before the applicant could be made to pay the costs of the appeal.  As I have said, in the absence of satisfactory evidence of the applicant’s means and liability, I am satisfied that “there is reason to believe that he will be unable to pay the costs (of the applicant) if ordered to do so”.

7.  The applicant relied on the following additional submission.

8.  It is said that his poor financial state was caused by the respondent.  I do not believe that is correct.  I am entitled to proceed on the basis that the claims which the applicant have brought against the respondent are unmeritorious, so that if as a result of them the applicant has become impecunious that is not the fault of the respondent.

9.  Mr Oh also relied on the merit of the appeal.  Whilst I accept that the applicant has arguable grounds of appeal, it is not a case where a successful outcome is certain. 

10.  The Deputy Judge said in para. 8 of his decision.

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I accept that, is this case, the (appellant) does have what amounts to a counterclaim or set-off which needs the relatively modest amount that is the subject of the statutory demand.”

11.  It is not clear whether the Deputy Judge was of the view that those counterclaims or set offs were genuine or serious cross claims.  In any event, given that the applicant’s personal injurious claim has been dismissed and his malicious prosecution claim struck out, the Court of Appeal may well come to the conclusion that the applicant has no genuine cross claim.  If that be the case it is highly probable that the statutory demand would not be set aside.

Quantum

12.  The security I have ordered was $100,000.  I did so on the basis that the appeal is a relatively simple one.