FIRST LASER LTD AND ANOTHER v. FUJIAN ENTERPRISES (HOLDINGS) CO LTD AND ANOTHER

CACV 396/2025, [2026] HKCA 564

On Appeal From [2025] HKCFI 1940

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 396 OF 2025

(ON APPEAL FROM HCMP NO. 1077 OF 2024)

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JUDGMENT

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Hon Anthony Chan JA (giving the Judgment of the Court) :

1.  This is the Defendants’ application for security for costs in the sum of HK$5,210,100 in respect of the Plaintiffs’ appeal against the judgment of DHCJ MK Liu (“Judge”) dated 15 May 2025[1].

2.  Having considered the materials, we take the view that this application can be dealt with on paper pursuant to Order 59, rule 14A(1) of the Rules of the High Court, Cap 4A (“RHC”).

A brief procedural history

3.  The 1^st Plaintiff is a company incorporated in Macau and is under the control of the 2^nd Plaintiff, a resident of Macau.  The 1^st Defendant was incorporated in Hong Kong and is a window company of the Fujian Provincial People’s Government. The 2^nd Defendant was also incorporated in Hong Kong and is the nominee of the 1^st Defendant.

4.  In 2001, the 1^st Plaintiff brought proceedings in Hong Kong against the Defendants for breach of contract.  This eventually reached the Court of Final Appeal (“CFA”) in 2012, which ordered an issue concerning restitution under the contract be remitted to the trial judge for determination.  Subsequently, the Defendants successfully appealed the trial judge’s restitution judgment before the Court of Appeal, after which the 1^st Plaintiff applied for leave to appeal to the CFA.  On 21 November 2023, the Appeal Committee of the CFA dismissed the 1^st Plaintiff’s leave application.

5.  On 20 June 2024, the Plaintiffs commenced an action in the Mainland against the Defendants (“Mainland Action”).  On 25 June 2024, the Plaintiffs sought a Mareva injunction to restrain the Defendants from disposing assets in Hong Kong up to the value of USD 34.41 million pending the determination of the Mainland Action.  An interim-interim injunction was granted in favour of the Plaintiffs on 28 June 2024.  On 5 August 2024, the Defendants applied for an anti-suit injunction (“ASI”) to restrain the Plaintiffs from taking any further step in the Mainland Action. 

6.  On 15 May 2025, the Judge dismissed the Plaintiffs’ application for a Mareva injunction[2] and allowed the Defendants’ ASI application against the Plaintiffs. 

7.  On 12 June 2025, the Plaintiffs filed a Notice of Appeal against the Judgment of 15 May 2025.  On 2 July 2025, the Defendants filed a Respondent’s Notice and applied for security for costs of the appeal.  Despite the directions given by the Registrar of Civil Appeal, the Plaintiffs have not filed any evidence in response to the security for costs application, nor any submission to oppose the same.

Applicable principles

8.  Under Order 59, rule 10(5) of the RHC, the Court of Appeal may, in special circumstances, order that security shall be given for the costs of an appeal as may be just.  The principles regarding the Court’s exercise of the discretion in ordering security for costs of appeal were summarised in Unique Realty Ltd & Anr v Hong Kong Real Estate Agencies General Association Ltd & Ors [2025] HKCA 473 at §6 and Re Dragon Seafoods Ltd [2024] HKCA 966 at §§28-29 :

(i)     “Special circumstances” referred to in the rule which justify the ordering of security include cases of insolvency or impecuniosity and difficulty or expense of enforcing an adverse costs order.

(ii)     In discharging the burden of demonstrating that the appellant is impecunious, it is unnecessary to produce conclusive evidence of the appellant’s lack of means.  It is sufficient for the applicant for security for costs to point to the surrounding circumstances or adduce some credible evidence that the appellant will be unable to pay his costs.

(iii)     The fact that the appellant is resident abroad is prima facie proof that there will be difficulty or expense in enforcing a costs order.

(iv)     The Court however retains a residual discretion not to order security if the appellant can demonstrate sufficient countervailing factors which would militate against such order being made.

(v)     A common countervailing factor to resist applications for security is the merits of an appeal.  On consideration of the merits of the appeal, while a detailed examination is not required, the Court should form some sort of preliminary, even instinctive view.

Discussion

9.  On the evidence before us, it is indisputable that the 1^st Plaintiff has failed to discharge its obligation over a substantial amount of taxed costs and interest owed to the Defendants, which indicates the unsatisfactory financial position of the Plaintiffs.  We are satisfied that the Defendants will likely encounter undue delay or be put to undue expenses in enforcing a costs order in respect of the appeal given that the 1^st Plaintiff is a company incorporated in Macau and the 2^nd Plaintiff is a Macanese, both of whom have no asset in Hong Kong.  We find that “special circumstances” exist in the present case for the Court to exercise its discretion to order security for costs.

10.  As to countervailing factors, the Plaintiffs did not file any evidence or lodge any submission to oppose this application or to demonstrate the merits of their appeal.  In any event, the grounds of appeal consist mainly of complex legal arguments and do not per se demonstrate the merits of the appeal.  We find no countervailing factors to militate against the making of an order of security for costs in the present case.

11.  Turning to quantum of security, it was held in Thapa Hari Bahadur v Paramount Engineering & Manpower Services Ltd & Ors [2022] HKCA 1516 at §40 that the Court normally takes a broad-brush approach and estimates the amount of security based on the costs to be paid on a party and party basis.

12.  The Defendants seek security in the sum of HK$5,210,100. It is difficult to understand why the two handling solicitors would need to spend 134 hours and 213.5 hours respectively on the appeal given its scope and the involvement of two senior counsel.  We also consider that for a one-day appeal, the counsel fee estimates are excessive, particularly when the two senior counsel were involved in previous proceedings and are familiar with the matter.  Taking a broad-brush approach, we consider it appropriate to allow the sum of HK$2,000,000 as security for the Defendants’ costs.

13.  We see no reason why costs should not follow the event, and we award the costs of this application to the Defendants.  Having considered the Defendants’ statement of costs, we summarily assess the costs at HK$100,000.

Disposition

14.  For the reasons aforesaid, we make an Order as follows :

(i)     The 1^st and 2^nd Plaintiffs do provide security for the 1^st and 2^nd Defendants’ costs of this appeal by paying into Court the sum of HK$2,000,000 within 28 days from the date of this Judgment.

(ii)     The 1^st and 2^nd Plaintiffs’ appeal is stayed until the aforesaid sum is paid.

(iii)    In default of payment, the appeal will be dismissed forthwith without further order with costs of the appeal to the 1^st and 2^nd Defendants.

(iv)    The 1^st and 2^nd Defendants to have the costs of this application, summarily assessed at HK$100,000.

 

[1] [2025] HKCFI 1940.

[2] The interim-interim Mareva injunction granted on 28 June 2024 was also discharged.