DUNHAM-BUSH INDUSTRY SDN PHD AND OTHERS v. KLN CONTAINER LINE LTD

HCAJ 60/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO 60 OF 2015

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D E C I S I O N

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Introduction

1.  There is before this Court the Defendant's application for security for costs under RHC O 23 r 1 on the basis that the Plaintiffs are foreign Plaintiffs.  Liability to give security is not disputed and has never been. The only two issues which require this Court's determination are the quantum of security and the form of security.

2.  As far as quantum is concerned, the Defendant asks for HK$344,000 odd up to discovery.  This amount consists of costs before action, costs from the service of the Writ until the present application as well as future costs up to discovery.  To put this figure into perspective, the Plaintiffs' claim, which is a simple cargo claim, is for the sum of US$33,000 odd, or around HK$260,000.  The Defendant says its maximum liability should be US$500. 

3.  It is trite law that the Court has a complete discretion whether to order security and it will act in light of all relevant circumstances.  The Court may order any amount up to the full amount claimed by way of security, provided that it is more than a nominal sum.  Further, it is not bound to order a substantial sum: Major Vantage Limited v Wallem Shipping (Hong Kong) Limited unrep, HCCL 5/2013, 11 December 2013, at paragraph 8.

4.  It is well‑known that after the CJR, the Court should actively manage cases to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings.  This Court will be acting against the spirit of the CJR if it were to allow a defendant to obtain security for such an amount as to deter a plaintiff from prosecuting a genuine claim.

5.  Having considered the Defendant's skeleton bill of costs, the complexity of the case and the amount of the claim, this Court agrees with Mr Horton for the Plaintiffs that the amount claimed is wholly excessive.  In the view of this Court, sufficient security up to discovery should be HK$130,000.

6.  As for the form of security, the Defendant seeks payment into Court which is usually the most convenient way of providing security, although it is not the only mode of security permissible.  Security could in principle be provided by way of undertaking to pay costs, by payment into court, by bond, by charge or otherwise: Hong Kong Civil Procedure 2017 Vol 1 at 23/3/27 to 23/3/30.  There is no express limitation on the mode of security in RHC O 23 r 1(1) as such.

7.  The Plaintiffs had in correspondence and in their affidavit evidence offered an appropriate letter of undertaking from their solicitors.  In my view, that is an acceptable form of security, given the modest sum this Court has ordered and the size of the firm in question.

8.  I will leave it to the parties to work out the wording of the letter of undertaking.  In the absence of agreement, the parties can come back to Court and for that purpose, there shall be liberty to apply.  The proceedings shall be stayed until the security ordered is provided.