BANK OF CHINA (HONG KONG) LTD v. WENLOY LTD AND ANOTHER

cacv 427/2006

in the high court of the

hong kong special administrative region

court of APPEAL

civil appeal no. 427 of 2006

(on appeal from HCA 997/2004)

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D E C I S I O N

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1.  This is an application for security for costs in respect of an appeal by the 2nd Defendant from a judgment of some $1,942,270.52 with interest.

2.  The ground upon which the application is made is that, first of all, the 2nd Defendant is impecunious and the chances of the Plaintiff recovering the costs, should it be successful on the appeal, is limited and, secondly, that the grounds of appeal do not show merit.

3.  The application was adjourned on the first occasion because although the Plaintiff said in affirmations that the 2nd Defendant was impecunious, the background material was not presented to the court.  It is clear that a statutory demand for the amount outstanding on the judgment was served on 16 February of this year.  The 2nd Defendant says that application is being made to set that aside but it has not been set aside and I see at the moment little basis for doing so.  The other material put before the court does establish that the 2nd Defendant is likely to have little or no assets and at any rate the Plaintiff may have difficulty in recovering any costs should it be successful.

4.  I then turn to the question of the merits because one does not order security for costs against an individual even if he is impecunious if he would appear to have merits to his appeal.  I do not wish to say any more about it at this stage but I regret to say I do not see sufficient merits in this appeal to make it appropriate not to order security for costs on this occasion.  In view of the fact that there will be an appeal coming up should the security be provided, it is better that I say little more about it.

5.  The order that I propose to make is that the 2nd Defendant do on or before 25 June 2007 give security to answer costs in case any shall be awarded to be paid by the 2nd Defendant to the Plaintiff by making lodgement in court of the sum of $155,000 by cash or banker’s draft or by provision of a bank guarantee of the like amount, which guarantee shall have been approved by the Registrar.  Until such lodgement be made and notice thereof given to the Registrar and to the solicitors for the Plaintiff, such notice to be given on the same day as the lodgement is made, all proceedings in the said appeal be stayed.

6.  In default of the 2nd Defendant making such lodgement as aforesaid within the time specified above or within such further time as the court may for special reasons allow, the said appeal do, upon the solicitors for the Plaintiff certifying such default to the Registrar, stand dismissed out of this court without further order. 

7.  In the event that the appeal is dismissed in the circumstances provided for above, the 2nd Defendant do pay to the Plaintiff its costs occasioned by the said appeal, such costs to be taxed and the costs of this application be costs in the appeal.