REM ASSETS LTD v. MIR INVESTMENTS LTD AND ANOTHER

CACV 201/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 201 OF 2008

(ON APPEAL FROM HCA NO. 626 OF 2008)

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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 a case which is slightly unusual, if I can put it that way.  The 2nd defendant takes the view that he does want to reimburse the plaintiff its money, but he does take exception to the way in which this action has been founded, which is a claim in fraud.  He says he has not been guilty of fraud.  I have some sympathy with somebody who is accused of fraud.  They may be negligent, they may have lost money.  Many people have lost money in the last few months.  But I understand the 2nd defendant’s position.

2.  The importance of that is that in the relevant contract there is a jurisdiction clause and the jurisdiction clause is that any proceedings under the contract should take place in the BVI.  That has been got round in this case on the basis that the action is one for fraud.  Well, whether that succeeds or not I do not know and it is not for me to say.  However, this case has not proceeded.  Now there is an appeal from the decision of the judge that the action should not be stayed here in favour of the BVI.  One of the reasons I think that that is quite a sensible decision is because, even if there is a BVI jurisdiction clause, the fact that the matter is heard here I do not consider should prejudice the defendants.

3.  So when I come to look at this application for security for costs I do approach it on the basis that the 2nd defendant is probably impecunious and cannot afford the security for costs.  But I also look upon it on the basis that the sooner this case is finished the better.  Apart from anything else, the 2nd defendant himself is under a prohibition order, which is something, as I have indicated before, I regard as a matter which is in itself not particularly desirable because very often, particularly if a person is impecunious, there is not much point in keeping him or her in Hong Kong if they have no any money in the first place.  But it seems to be the case that people are kept in Hong Kong interminably.  They are kept in circumstances where living must be very difficult because they cannot get employment.

4.  So be all that as it may, in my view the fact that the defendant is impecunious does not take the matter into the realm of an appellant that has a meritorious case which should be heard: first and foremost, because this is satellite litigation which, in my view, should not go ahead, and the action should be disposed of as quickly as possible with as little as possible of these interlocutory skirmishes; and secondly, I am not convinced that this Court would see any merit in setting aside the judgment of the Court below, which is a matter of discretion.

5.  So in those circumstances I propose to order security for costs of $150,000.  But, as already indicated in the course of argument, I do not propose to give the successful plaintiff its costs.  I am going to make no order as to costs.  It is for this reason.  This appeal, first of all, was set down in September, but a date was given in October.  But it was not until 24 December, which was just last week, that the application for security for costs was made with the appeal coming up in early February.  In the meantime the 2nd defendant had prepared all the appeal bundles; and they are massive.  So there is a lot of money that has been wasted.  That, to my mind, is quite unacceptable. 

6.  The excuse has been proffered that the plaintiff’s solicitors were acting for other people who have other claims.  That is totally irrelevant as far as this case is concerned.  If the solicitors have too much work they should not have taken on that much work.  There is no excuse that a solicitor is overworked and cannot get on with it.  It was the most obvious thing to do in this case, to make an application for security for costs.  I propose, therefore, to prevent the solicitors obtaining any costs for today.

7.  Normally I give a party 28 days, but in view of the February date I am going to say on or before 24 January, give security to answer any costs to be paid by the 2nd defendant to the plaintiff in the sum of $150,000, and the appeal be stopped until such lodgment be made and notice thereof be given to the Registrar and to the solicitors for the plaintiff. 

8.  In default of the 2nd defendant making such lodgement as aforesaid within the time specified above, or when such further special reasons, the said appeal do (upon the solicitors for the plaintiff certifying such default to the Registrar) stand dismissed.

9.  In the event that the appeal is dismissed in the circumstances provided for above, there be no order as to costs of the appeal, and the costs of this application, and there be no order as to costs of this application.

10.  The application for security for costs was made late.  If the security is not provided the order that I shall make is that there shall be no order of costs for this appeal because costs have been wasted by the late application which has been made.