LIGGARS LTD v. DC FINANCE (HOLDINGS) LTD AND ANOTHER

CACV 183/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 183 OF 1998

(On appeal from HCA No. A11787/1997)

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J U D G M E N T

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Godfrey, J.A. :

Introduction

1. This is an application for security for costs in what is (essentially) the mortgagor's appeal in a mortgagee's action for payment and possession of certain property in Des Voeux Road West, Hong Kong. The judgment under appeal was given on 18 June 1998 by Mr. Robert Ribeiro, S.C. sitting as a Recorder of the Court of First Instance of the High Court.

The mortgagor's defence

2. The only defence to the action appears to have been illegality. The mortgage, so the appellant says, is unenforceable and the principal debt and interest accordingly irrecoverable. The issue is whether the mortgagee was a money lender to whom the Money Lenders Ordinance, Cap. 163 applies.

The judgment below

3. Liggars Limited, the appellant mortgagor ("the appellant") asked the judge to declare that the Loan Agreement upon which the action was brought was illegal and unenforceable by reason of the provisions of that Ordinance. The judge was unimpressed by the argument for the appellant and rejected it. He said :-

"I have reached the firm conclusion that the argument ..... is unsustainable."

The application for security

4. Universe Link Industries Limited, the respondent mortgagee ("the respondent") asking together with its associated company DC Finance (Holdings) Limited for security for costs of the appeal, points out that the appellant is a company registered in the British Virgin Islands. It is not registered as an overseas company carrying on business in Hong Kong under the local Companies Ordinance, Cap. 32. Nevertheless, the appellant's business is that of developing property in Hong Kong; and indeed, the appellant goes so far as to say that for this reason it ought not to be regarded as resident outside the jurisdiction. The respondent also submits that the appellant is unlikely to be good for the costs of the appeal. The only asset which the appellant seems to have, so far as the material before me goes, is the property the subject matter of the proceedings, the value of which appears to be less than the accrued debt and costs, amounting at present to a total of in excess of HK$682 m. No payments have been made under the judgment, and possession of the property has not been delivered to the respondent. There is evidence, from the appellant itself, that it has had difficulty in finding funds for the appeal, and that certainly suggests that it will be even less likely to be able to find funds for the respondent's costs of the appeal if the appellant is unsuccessful.

The appellant's response

5. The appellant submits that if the application made by the respondent for security for its costs of the appeal is granted, it will operate to stifle the appeal. That may, or may not, be so. There is little evidence before me to show what precisely the appellant has done or might be able in the future to do to raise funds for the prosecution of its appeal. The representation of the appellant in the courts below has always been at a very high level, and there has obviously been money coming from somewhere to enable the appellant to fend off the respondent's claim in the proceedings.

Conclusion

6. In all the circumstances, I conclude it would be appropriate to order the appellant to give security for costs, which I shall fix at HK$500,000. I shall leave counsel to consider and agree how the security is to be given. If the security is not given within 14 days from today, the appeal will stand dismissed. The respondent will have its costs of this application but I shall disallow the costs of the copying of the exhibits bundle which is unnecessarily excessive in size. If the respondent's solicitors wish to charge their own client for the costs of this unnecessary photocopying then I shall insist that my interlocutory remarks about its uselessness are drawn to the attention of the client.