XCHRX LEUNG YIN t/a LEUNG YIN CO. v. CHEUNG KONG (HOLDINGS) LTD.

1995, No. A6540

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. This is an application for security for costs by the defendant.

2. The main question to be decided is whether the plaintiff is ordinarily resident in Hong Kong. But, the plaintiff's means is also one of the considerations for the court.

3. The plaintiff had taken out a writ against the defendant who was a land developer. The writ alleged that the defendant agreed with the plaintiff to pay the plaintiff commission if the plaintiff facilitated the owner of certain land to enter into a joint venture with the defendant for development. It was agreed that the commission would be a percentage of the value of the development. Through the negotiation of the plaintiff, the defendant subsequently agreed with the landowner on a joint venture to develop the land but subject to contract. However the defendant failed to pay the plaintiff the commission the plaintiff said he was entitled to.

4. The plaintiff was able to raise sufficient money for his legal costs at the beginning of the proceedings. Until the plaintiff's application to strike out the part of the defence, which application failed, the plaintiff was able to afford the legal expenses. Subsequent to that stage of the proceedings, the plaintiff applied for legal aid and was granted a legal aid certificate on 1st March 1996. An order for the costs incurred prior to the grant of the legal aid certificate had been made by the court. The security for costs sought by the defendant in the present application was for the costs incurred prior to the grant of the legal aid certificate. Mr Mok, counsel for the defendant submitted that this was not more than $700,000. Indeed, what was sought by the defendant was a sum of not more than $700,000 as security for the costs already incurred.

5. On the issue of whether the plaintiff was ordinarily resident out of the jurisdiction, it is agreed that the burden is on the defendant to show this was so. It is also agreed that this is a question of fact. Evidence was called and the plaintiff was cross-examined. The evidence before the court shows that since 1983, the plaintiff was desirous of settling in Canada. Subsequently he immigrated to Canada. He purchased a house as his home and place of abode in Canada. He removed his family to Canada. For a while thereafter, the plaintiff still maintained a fast food business in Hong Kong. He also still retained his tenancy in respect of certain apartment in Hong Kong but the evidence is that he retained it for the use of his fokkis in fast food business, the management of which he had delegated to his fokkis.

6. His purpose of retaining his tenancy in those premises was to ensure he had a place to stay when he occasionally came back to Hong Kong for short stays. The premises were subject to rent control and the plaintiff knew that when the landlord repossessed them for redevelopment he would be entitled to compensation. The plaintiff's purpose of retaining the tenancy was also with a view to the compensation likely arising when the premises were developed. Thus, the fact that he retained his tenancy in Hong Kong does not mean that he retained his residency in Hong Kong.

7. It is the plaintiff's evidence that he sold all his assets in Hong Kong and repaid all his debts to the bank and invested the only sum that remained in a home in Canada when he emigrated and thereafter, he established his own tailor business there although it eventually closed because of lack of business. He explained that he needed to establish that business because his status for immigration into Canada was entrepreneur. It would appear that he had relinquished all ties with Hong Kong when he did so.

8. It is a fact that he came back to Hong Kong in 1995 but that was for a specific purpose i.e. for the purpose of the subject transaction and negotiation thereof in Hong Kong. In the course of negotiation, he gave his address in Canada as his contact address. When the matter came to a stage that the plaintiff believed that the transaction was favourably concluded between the parties and that he had played his part contributing to its conclusion and would be entitled to his commission, he left the matter to the management of his son who was then in Hong Kong. He returned to Canada.

9. On his own evidence, the plaintiff went back to Canada for his operation because his health records were there. He spent more than half of his time in Canada. His son and daughter were there and although he had separated from his wife, he still retained his home and resided there when he was in Canada.

10. The test as to residency must be a degree and fact gauged objectively on how he organise his life - voluntarily and for a settled purpose.

11. My finding as a matter of fact is that the plaintiff had chosen Canada as his home and had up rooted from Hong Kong. He might be in Hong Kong occasionally but on such occasions he was here temporarily. He might be entitled to permanent residency in Hong Kong by reason of his birth or previous residency, his home is not in Hong Kong. He is ordinarily resident out of the jurisdiction of Hong Kong and he is not at the same time ordinarily resident in Hong Kong.

12. The plaintiff has no assets in Hong Kong. According to him, his only asset in Canada is his half share in the Can.$328,000 home there. There is no evidence to the contrary. He is not impecunious. His asset in Canada is sufficient to meet the costs already incurred in these proceedings by the defendant. To order security for costs would not stifle his action since he is able to meet such security and his legal aid certificate would enable him to continue the proceedings. The fact that the costs in respect of which the present application is made had already been incurred and ordered and the fact that future costs are well protected because the plaintiff is in legal aid, will make no difference to the present application. There is no authority that in such circumstances, no security for costs should not be ordered. The object of an order for security is to protect the defendant (Raebburn v. Andrews (1814) 9 LR QB 118) from having to go overseas to enforce the costs at the end of the day.

13. In all the circumstances of the case, this is a proper case for me to exercise my discretion to order security for costs. It is therefore ordered that the plaintiff do within a period of one month from the date of this order give security for costs in the sum of $650,000 whereas in the mean time the action shall be stayed. The costs of this application shall be to the defendant in any event.