OLENA PONOMAROVA v. NORTHCROFT HONG KONG LTD

HCA 156/2022

[2023] HKCFI 956

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 156 OF 2022

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J U D G M E N T

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A.  INTRODUCTION

1.  This is the defendant’s appeal against Master D To’s Order dated 30 December 2022, whereby the defendant’s application for security for costs was dismissed.

2.  By summons filed on 3 May 2022 (the “Summons”), the defendant sought security for costs of the proceedings in the sum of HK$250,000. The sum sought represents a substantial discount from the total costs (being costs already incurred and estimated future costs)[1] shown on the defendant’s skeleton bill of costs.

3.  In summary, the defendant seeks security for costs on the ground that:

(1)  The plaintiff is a foreign plaintiff;

(2)  There is no evidence that the plaintiff has any assets within the jurisdiction;

(3)  The defendant has a meritorious defence; and

(4)  Therefore, if the defendant succeeds in defending the claim, it will be very difficult and costly to enforce any judgment for costs against the plaintiff.

B.  BACKGROUND

4.  By way of background, by an Employment Contract dated 22 July 2019 (“Employment Contract”), the plaintiff was employed by the defendant as the Business Development Project Manager for the period from 10 September 2019 to 9 September 2020.

5.  In this action, the plaintiff claims against the defendant for:

(1)  Certified information about previous employment normally provided to the employee in Hong Kong, when the employment contract is terminated lawfully;

(2)  Damages for breach of employment contract and unlawful termination; and

(3)  Damages to her reputation caused in tort.

6.  The defendant’s case is straightforward:

(1)  Under the Employment Contract, it was stipulated that the period of employment was from 10 September 2019 to 9 September 2020.

(2)  On 4 October 2019, which was around a month after the start date of employment, the plaintiff finally obtained a work permit effective from 4 October 2019 to 4 October 2020.

(3)  Despite having obtained the work visa on 4 October 2019, the plaintiff never reported for or perform any duty.

(4)  On 9 October 2019, the plaintiff requested Mr Lai, the director of the defendant, to issue a letter for the plaintiff to open a bank account. As a result, the defendant issued the letter as requested on 10 October 2019 and the plaintiff collected the same. However, the plaintiff still did not report to duty.

(5)  Accordingly, by failing to perform her work duties, the plaintiff was in repudiatory breach of the Employment Contract which the defendant accepted the repudiation and terminated the Employment Contract on 17 October 2019.

C.  RELEVANT LEGAL PRINCIPLES

C1.  Appeal against Master’s decision

7.  In this appeal, this court deals with the defendant’s application for security for costs by way of a rehearing and is not in any way fettered by the previous exercise of discretion by the Master: see Hong Kong Civil Procedure 2023 Practice Note 58/1/2.

C2.  Security for costs

8.  The principles on ordering security for costs against foreign plaintiffs have been succinctly summarised by DHCJ Burns SC in the recent case of Drimmer v Hongkong Seiyo International Company Ltd [2023] 1 HKLRD 373, paragraphs 15-18:

(1)  An order for security will usually be granted if the foreign plaintiff with no assets within jurisdiction cannot demonstrate that there is a high degree of probability that he will succeed on its claim at trial.

(2)  In respect of a plaintiff who is ordinarily resident out of Hong Kong with no assets within jurisdiction, the starting point is that the court would usually exercise its discretion to order security for costs to be given, in the absence of any circumstances as would make it unjust to do so.

(3)  Where a foreign plaintiff wants to rely on the merits of his case to resist a security for costs application, he would need to show, without embarking upon a detailed analysis of the merits, that he has a high probability of success. The threshold for establishing this is “very high indeed”.

(4)  The practice of going into the merits of the case in a security for costs application is to be deplored, unless it can be clearly demonstrated one way or the other there is a high probability of success or failure.

D.  DISCUSSION

9.  In the present case, I am satisfied that the plaintiff is ordinarily resident out of jurisdiction. She is a resident of Ukraine and is currently staying in Hong Kong on the strength of her visa.

10.  Secondly, the plaintiff has not adduced any evidence to show that she has any assets in Hong Kong.

11.  Thirdly, having considered the submissions of both parties, I am of the view that the plaintiff has failed to show that she has a high probability of success in establishing her case that there was an unlawful termination of the Employment Contract. Indeed, the plaintiff in her oral submissions realistically stated that the “conspiracy” alleged against the defendant is very hard to prove, and the defendant’s case turns on the credibility of Mr Lai.

12.  In respect of the plaintiff’s tortious claim for damages caused to her reputation, it is difficult to see how such damages can be claimed without first proving that there was a breach of the Employment Contract on the part of the defendant.

13.  Finally, there is no evidence that the plaintiff’s claim will be stifled, if security for costs is ordered.

E.  CONCLUSION

14.  For the reasons set out above, I would allow the defendant’s appeal and make an order in terms of the Summons, as follows:

(1)  The plaintiff is to pay the sum of HK$250,000 into court within 28 days from the date of this Order as security for the defendant’s costs of this action up to and including the trial;

(2)  Until the said security is provided, this action be stayed;

(3)  In default of the security being provided, this action shall stand dismissed without further order, with the costs of this action be paid by the plaintiff to the defendant, to be taxed if not agreed; and

(4)  There be a costs order nisi that the plaintiff is to pay the costs of the Summons and the appeal to the defendant, to be taxed if not agreed.