XCHRX RE KWONG HING INTERNATIONAL (HOLDINGS) LTD.

HCCW 409/99

Headnote

Application for security for costs - O. 23, r. 1 R.H.C. gives the court an unfettered discretion on the question of security for costs. Where the application is not made in good time, security for costs is not necessarily confined to future costs. No reason in this case why security should be confined to future costs.

HCCW409/99

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMPANIES WINDING UP PROCEEDINGS

NO. 409 OF 1999

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J U D G M E N T

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1. The Petitioner seeks to wind-up Kwong Hing International (Holdings) Limited ("the company") based on a statutory demand made on the company to pay the sum of US$627,264.00 with interest which remains unpaid.

2. This is an application by the company for an order that the Petitioner do give security for the company's costs in this Petition in the sum of HK$490,000.00 such sum to be paid into Court on or before 12th October 1999 and that all further proceedings be stayed until the giving of the security.

3. The Petition was filed on 10th May 1999. On 23rd July 1999, the dates for the hearing of the Petition were pencilled in for 5th and 6th October 1999 in the Court's diary to be heard by Ribeiro J. However, as the correspondence shows, those dates were never confirmed to the Clerk of the Court. By late September 1999, it was discovered that the pencilled in dates were never firm dates and that, in fact, they had not been fixed for the hearing of the Petition.

4. On 29th September 1999, a date was in fact fixed for the hearing of the Petition. This was fixed for hearing on 13th October 1999.

5. On the following day, that is on 30th September 1999, this summons for security for costs was issued by the company's solicitors. It was through no fault of the company that the Petition could not proceed to a hearing on 5th and 6th October 1999.

6. The company's solicitors first requested security for costs from the Petitioner's solicitors in June 1999. There was no response to that request.

7. On 8th September 1999, the company's solicitors renewed the request for security for costs and submitted a skeleton bill of costs to the Petitioner's solicitors. On 9th September 1999, the Petitioner's solicitors replied stating, inter alia, that they were seeking instructions and asking the company's solicitors not to issue a summons for the time being while instructions were sought. No substantive reply to the request was made until after the summons was issued.

8. I do not consider that in the circumstances there has been such delay on the part of the company in making the application so as to debar the company from applying for security for costs. Delay is a factor to be taken into account. However, I must also bear in mind that on 9th September 1999, the company's solicitors were asked by the Petitioner's solicitors to refrain from issuing the summons while instructions were being sought.

9. Whether or not security for costs should be ordered is a matter for the court's discretion. The Petitioner is a foreign company resident in the Mainland. As a matter of discretion, it is the usual or ordinary or general rule of practice to require the foreign Petitioner or foreign Plaintiff to give security for costs because it is ordinarily just to do so. The Court has to consider all the circumstances of the case.

10. Both sides have addressed me on the merits of the Petition and the opposition to the Petition. The Petition is based purely on non-payment of the sum set out in the statutory demand. The company denies that it is a debtor of the Petitioner or that there is a debt due to the Petitioner.

11. Having heard the various submissions, this is not, in my view, the type of case where it can be clearly demonstrated that the Petitioner has a very high probability of success. I am satisfied that the Court should not, therefore, embark on a detailed examination of the merits of the Petition on this application.

12. I have been referred to a letter dated 4th October 1999 from Sloma & Co., the Petitioner's Mainland lawyers through whom the Petitioner's solicitors have been taking instructions from the Petitioner. They point out that because of the National Day holidays they are unable to take instructions from the Petitioner until next week, i.e. the week commencing 11th October 1999. Also, approval has to be sought for remitting foreign currency to Hong Kong. This would normally take 21 days. The effect of this would be that the funds for any security could not be remitted to Hong Kong before 13th October 1999.

13. I bear in mind that security for costs was first requested in June 1999 and again on 8th September 1999 with a skeleton bill of costs. On 9th September 1999, the Petitioner's solicitors said they were taking instructions. I would have expected them to have done so expeditiously. In my view, Sloma & Co. should have sought and obtained instructions as to security for costs from the Petitioner without delay and also made preparations for seeking approval of foreign currency remittance to Hong Kong well before the National Day holidays. The reasons put forward in the said letter dated 4th October 1999 from Sloma & Co. are not sufficient reasons, in my view, for refusing an order for security for costs. I fail to see why the Petition would be stifled.

14. In the exercise of my discretion, I consider that it is proper to order security for costs in this case. It may be that because of this the Petition will have to be adjourned but such adjournment need not be long.

15. As to the quantum of security, it was submitted by counsel for the Petitioner that as the application was not made in good time the security should be limited only to future costs. Hong Kong Milling Co., Ltd. v. Arnhold, Karberg & Co. (1909 4HKLR 249) was referred to in this context.

16. The observations in that case were obiter, in my view, and that case was well before the Rules of the Supreme Court came into effect in Hong Kong. The provisions of the present O. 23 r. 1, Rules of the High Court provide that:

"...... if, having regard to all the circumstances of the case; the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant's costs of the action or order proceeding as it thinks just."

These words, in my view, give the court an unfettered discretion as to the application for security for costs. Of course, it depends on the circumstances of each case as to how much security should be ordered. And as Keith J. (as he then was) said in Anderson & Another and Huang Kuang Yuan & Others (1997 HKLRD 1360 at 1366), security for costs is not necessarily confined to future costs. In the circumstances of this case, I see no reason why the security to be ordered in this case should be confined only to future costs.

17. As to quantum, the Court is, of course, not bound to order security in the full amount claimed. I have considered the skeleton bill of costs. Without going into the items set out therein in detail, it seems to me that sufficient security would be in the sum of $350,000.00. This sum should be paid into Court.

[After hearing submissions]

18. The sum of $350,000.00 as security for the company's costs in the Petition is to be paid into Court within 28 days from today. And I also make an order that all further proceedings be stayed until security is given. The costs should follow the event. These should be paid by the Petitioner to the company in any event.