PO HIO CHUA v. HANG SENG BANK LTD

HCCL 14/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 14 OF 2007

----------------------

----------------------

------------------------------------------------

REASONS  FOR  DECISION

------------------------------------------------

The application

1. By summons dated 15 November 2007 the solicitors for the defendant herein, the Hang Seng Bank, made application for security for costs “in such amount and in such terms as the court may direct” on the basis that the plaintiff is ordinarily resident out of the jurisdiction.

2. The application was backed by an affirmation of one Billy Yick Chung Lam sworn on 15 November 2007, and was responded to by the plaintiff in a compendious affirmation of one Lau Hoi Hing, the plaintiff’s solicitor, at paragraphs 25 to 29 thereof.

3. As I understood this position, the gravamen of the objection to the provision of security for costs was that this is a simple and non-complicated case, with a claim of “merely HK$1 million”, and that in the circumstances the application for security was “oppressive”.  In addition, objection was taken to the Bill of Costs prepared by the defendant for this application, and in particular voiced objection to the desire of the defendant bank to instruct leading counsel at the trial. 

4. At the conclusion of the hearing of the application, on 18 April 2008, the Court decided the application upon the evidence before it, and ordered that (1) that the plaintiff do within 21 days of this order provide security for the defendant’s costs in this action up to and including exchange of witness statements by way of payment into court of the sum of HK$500,000; (2) unless the plaintiff do pay such sum within the period so specified, all further proceedings be stayed until further order; (3) the costs of and occasioned by the application be to the defendant, to be taxed if not agreed; (4) there be liberty to apply in case of non-payment.

5. By letter dated 2 September 2008, the solicitors for the defendant, Messrs JSM, wrote to the court and requested that formal Reasons for Decision be delivered by the court consequent upon this hearing.

6. Accordingly, these are those brief Reasons.

The argument

7. At the hearing the plaintiff was represented by two counsel, Mr Dickson Fong and Mr Henry Fung, whilst the defendant was represented by Mr MC Law.

8. The thrust of the argument as propounded appeared to be that security is not to be ordered as of course from a foreign plaintiff, but only if the court thinks it just to make such an order.

9. Thus, it was submitted, the court should consider the circumstances of each case, which was said to be “simple and uncomplicated”, involving a claim of “merely HK$1 million”, and that the present application was “oppressive” to the plaintiff; in addition, the plaintiff made complaint about the Bill of Costs submitted in support of the application.

10. It was further said that the plaintiff is “just a businessman” who deposited a sum of money in a reputable Hong Kong bank, and now simply sought its withdrawal; unfortunately the answer emanating from the defendant bank was that no record of such deposit could be located, and thus the plaintiff had no option but to commence legal proceedings, and further that the application to seek a substantial sum in security for costs was a tactic to ‘stifle’ the defendant’s claim.

Reasons for Decision

11. Given that it was not in dispute but that the plaintiff ordinarily was resident out of the jurisdiction – in fact, this expressly was admitted on affirmation – then prima facie the jurisdictional basis for the application was established, subject always to the court’s discretion in light of other factors in the case.

12. The ‘other factors’ prayed in aid appeared to be that, in effect, this was an ‘open and shut’ case: the plaintiff had a deposit slip, the bank had provided no evidence to show withdrawal, and thus this was a straightforward claim admitting of little doubt at trial. Hence, it was said, it would be wrong to require security for costs in the circumstances; in fact, it was pointed out that originally this case had been a candidate for summary judgment, but the court had indicated on a ‘call over’ hearing that it would be highly unlikely in the circumstances to grant such summary relief, and thus the plaintiff was obliged to go to trial – but nevertheless he should not be ordered to furnish security.

13. The ‘high probability of success’ argument put forward by Mr Fong for the plaintiff was rejected.

14. It seemed to me that this is an wholly unusual case. 

15. The plaintiff has an Advice of Deposit, into a joint account held with his late wife, from the defendant bank dated 21 August 1986; this was an advice as to a time deposit for the sum of HK$1 million, the maturity date of which was 21 September 1986 (see Statement of Claim, para 4).

16. It is pleaded that after such deposit the plaintiff never had received any further letters or statements from the defendant bank “from August 1986 to present” in relation to this deposit, and the next event, in point of time, apparently was a demand made on the defendant by the plaintiff “for a return of the deposit, by means of a Time Deposit Withdrawal/Revision Form dated 30 March 2007” (vide paragraph 6 of the pleading), that is almost 20 years later.

17. It is also pleaded (at paragraph 9 of the Statement of Claim) that the defendant bank had responded that it had no record of any such deposit, and that by letter from the defendant dated 7 July 2007, it was said on behalf of the defendant not only that there was no such record, but that the only conclusion that the bank could draw was that the deposit had been repaid, that any claim would in any event be time barred, and that the defendant refused to pay the claim now made upon it.

18. I am informed that the trial is going to be hotly contested by the bank, and I am also told that it is envisaged that expert evidence will be called on behalf of the bank as to the reasonableness of banking practice regarding the non-retention of records after the passage of 20 years. 

19. I would also add that I have been told by counsel for the defendant that the bank feels so strongly about this case, and its ramifications for the industry, that it intends to instruct leading counsel, to which the court expressed the view that the case did not merit leading counsel, and that any further application for ‘top up’ security would make no allowance for the type of fee leading counsel would be likely to charge.

20. However, this is to depart from the main point, which is that this application was resisted solely on the basis of the line of cases which tend to show – albeit every case obviously is ‘fact sensitive’ – that this was a ‘very high probability of success’ action, notwithstanding that in order fairly to judge this case the court must of necessity resort to the use of inference on the basis of such evidence, both factual and expert, as is to be adduced at trial.

21. Accordingly, in the very particular circumstances the court declined to accept that this was, in effect, a ‘must win’ action, and thus that the cases relied upon to defeat the security for costs application when the jurisdictional basis otherwise was established did not assist the plaintiff in successfully resisting any order for security.

22. As is its usual practice, upon deciding that in principle security was to be reduced, the court proceeded to consider the bill of costs as put forward, and did so on its usual ‘broad brush’ basis; clearly, the sum thus ordered in security for costs up to and including the filing of witness statements must and will be taken specifically into account when and if any further application for additional security is made, and I repeat the observation that any additional security will not be given on the basis of the instruction of leading counsel on, if I may respectfully say so, such a relatively small claim, which is right on the cusp of the High Court jurisdiction.

23. Thus, after fixing upon the sum of HK$500,000, and at the stage wherein the court was considering the usual riders to any such order, namely ‘how soon such payment was to be made’, ‘in what form’, and the issue of ‘interim stay’ pending the furnishing of the sum in security as thus ordered, Mr Fung (second junior for the plaintiff), whom I understand had been delegated to deal only with the quantum aspect, informed the court that the instruction that he had been given – I apprehend upon the court now having decided upon the sum in question – was that “my client is unable to pay the $500,000 due to his financial difficulties”, and that counsel was “further instructed that he is willing to pay the $100,000”.

24. The court then confirmed with counsel that there had been no impecuniosity alleged in the affirmation evidence filed on behalf of the plaintiff, and declined to enter into any form of ‘bargaining’ as to the amount, which by that stage had been decided, with only correlative practical matters to be settled.

25. Mr Fung also confirmed with the court that there had been no mention of inability to pay security within the plaintiff’s skeleton argument either, upon which this court took the firm view that if there was no evidence it would not take this matter into account, counsel also noting that “it seems there is a problem of having the instruction on payment from those instructing me”.

26. Notwithstanding that the court thus declined to consider further the allegation of impecuniosity, Mr Law for the defendant, saw fit to inform the court that, to the contrary, there was evidence from the plaintiff “to the effect that he has got houses. He has got land. He has got savings in the Philippines”, and thus there could be no question of such alleged impecuniosity on the part of the plaintiff.

27. Somewhat oddly, in response to the court’s question that impecuniosity thus was not available to be argued, Mr Fong then confirmed, that “Yes, well, we are not running that”.

28. At the end of the day, therefore, the court took the view that this was not one of those circumstances in which it would be minded to exercise its discretion not to order security when otherwise, on the admitted facts, there was no dispute but that the defendant’s application fell within the terms of Order 23, rule 1. 

29. The court also took the view that this application for security was not made in a bid to ‘stifle’ an otherwise legitimate and ‘very strong/high probability of success’ claim, and that in the very unusual circumstances the case for security for costs was made out, subject always to an eye being kept firmly on the issue of quantum.

30. Accordingly, the court exercised its discretion to make Order in the terms outlined herein (at paragraph 4).