Chris Au v. Steve Yoon Soo Kim
Read the full judgment text of HCA 1285/2014 on BabelCite. This High Court CFI judgment was delivered on 22 April 2016.
1. This is an application by the Defendant ( “ D ” ) by way of Summons dated 18 November 2015 seeking security for costs against the Plaintiff (“P”) under Order 23 rule 1 RHC for the reason that P is ordinarily residing outside the jurisdiction.
Cites 10 cases
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HCA 1285/2014 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO 1285 OF 2014 _____________________
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________________________ D E C I S I O N ________________________ THE APPLICATIONS 1.This is an application by the Defendant (“D”) by way of Summons dated 18 November 2015 seeking security for costs against the Plaintiff (“P”) under Order 23 rule 1 RHC for the reason that P is ordinarily residing outside the jurisdiction. 2.The parties are legally represented.[1] FACTUAL BACKGROUND 3.The factual background is derived from D’s written submissions, which are not disputed by P. 4.D and P, together with two other acquaintances, played a total of 33 poker games during the period of 7 April 2008 to 25 November 2008. 5.P claims that each of the 33 poker games played between the four players constituted a separate gaming contract between the four players. 6.P claims that D is indebted to P to the sum of HK$ 7,208,550 after D’s cumulative losses in the 33 poker games as recorded in an alleged ledger. 7.D denies liability to the claims made by P. D’s main lines of defence are as follows:
8.P commenced the present proceedings against D on 9 July 2014 for the total sum of HK$ 7,208,550. 9.P originally provided the address of “Flat 18D, Block 26, Baguio Villa, Pok Fu Lam, Hong Kong” in the writ of summons. 10.Subsequently, P changed his address to “100 beach road #24-01, Singapore 189702” in his witness statement dated 21 July 2015. In the affirmation filed by the P, he changed his address to “Flat A, 13/F, Top View Mansion, 10 Canal Road West, Wanchai, Hong Kong”. 11.D filed his defence and counterclaims against P for the sum of HK$ 513,000.00 in relation to certain shareholdings in a company and a car belonging to D which P has confiscated from D in purported settlement of the poker debts. 12.On 28 October 2015, D made the present application for security for costs against P. 13.Witness statements and supplemental witness statements have since been exchanged between the parties. D’S GROUND IN SUPPORT OF THE APPLICATION 14.In support of his allegation that P is ordinarily residing outside the jurisdiction, D relies upon the following facts[2]:
15.D also says that P has no assets in Hong Kong and his financial situation is murky, relying upon the following facts[3]:
16.D also says that P has no assets in Singapore. It is not shown what assets P has in Singapore which could be used by D to satisfy any judgment or costs order against P. P has provided no information in this respect. The Singapore Company search shows that he does not directly own any shares in any Singapore companies.[4] D should not be subject to extra costs and burden to enforce any order for costs against P if D succeeds. 17.D also relies upon the evidence or opinion of Zervo J in another legal proceeding that P was in financial difficulty and that he was of low commercial morality.[5] 18.Finally, short of saying that it was a wagering contract for the poker games unenforceable in law, D says that gaming is strictly regulated under HK laws and must be conducted in accordance with the provisions under the Gambling Ordinance and the evidence is largely contained in voluminous emails sent between the parties at the time. The details are murky and its contents are open to interpretation.[6] 19.The above are the grounds upon which D relies in support of this application. THE RELEVANT LEGAL PRINCIPLES 20.The legal principles are trite. I had set out the relevant principles in my previous similar decision in Xu Xiu Zhi (許秀志) vs Wong Yuk Choi (王旭初) & Another (unreported, HCA 1525/2012, 14 October 2014), which I set out here:
DISCUSSION Inadmissible evidence 21.Perhaps it is convenient here to state the position of this Court in the evaluation of the evidence before it, following the relevant legal principles. D has raised substantial materials from HCA 183/2014 where Zervos J had made some findings and passed bad remarks about the character of P. This is not permissible as held in Sun Legend Investments Ltd. v Ho Yuk Wah David and Others(2011) 14 HKCFAR 541 at §58 by Litton NPJ:
I shall therefore attach no weight to the evidence and those submissions. Ordinary residence in Hong Kong 22.P submits that he was born in Hong Kong and he has a Hong Kong Identity Card. This cannot be conclusive evidence that he is ordinarily resident in Hong Kong. The Court must look at all the circumstances. 23.P says that he had been continuously residing in Hong Kong and paid tax from 1997 to 2010.[7] This begs the question where he resided and whether he paid his tax since 2010 up to date. From the evidence before this Court, there is evidence showing that P has been residing in Singapore between 2010 up to March 2016. In his own affidavit, P says that his wife has given birth to a baby and will be moving back to Hong Kong in March 2016. When one looks at the travelogue of P, one finds that P had only come to Hong Kong occasionally, staying here for one or a couple of days, then returned back to Singapore. 24.P said that he worked in Singapore. But he has been carrying on business in Hong Kong. This is what his counsel submits on his behalf: “At the same time as he was working on the launch of Ku De Ta, he continued to have business ongoing in Hong Kong. For example, he was personally involved in the negotiation and finalising of the tenancy of the now CÉ LA VI restaurant at California Tower in Central, Hong Kong in 2011 and 2012. He came back to Hong Kong on a monthly basis to attend to his business (and to keep in touch with his friends and families).” 25.This is evident that he resided in Singapore where he worked and only came back to Hong Kong on a monthly basis to attend his business and to keep in touch with his friends and families. The ordinary residence was, during this period of time, in Singapore. 26.Despite the fact that he said that he had opened Catalunya Hong Kong in 2013; he sold his stakes in Ku De Ta Singapore in 2014; he has been focusing on both Catalunya Singapore and Hong Kong, and he has plans to expand his business further to other parts of Asia (other than Hong Kong and Singapore); since around 2014, he has formed and has been working on launching a new Spanish restaurant concept in Hong Kong called BILBAO, which will open later in Hong Kong in a well-established 5-star hotel[8]; P will become the sole director and shareholder of BILBAO, there is simply no evidence of his residence in Hong Kong until 2015 in Wan Chai. See paragraph 14(h) supra. This P has not disputed. 27.P explains that he has entered into a tenancy agreement on 17 December 2015 for two years for a flat in Wan Chai as his family home, the reason being that he has decided to move back from Singapore to Hong Kong for residing and working.[9] This shows his intention to stop travelling between the two cities and live in Hong Kong. This piece of evidence looks flimsy as compared to the other circumstances as stated above, much less favourable when the tenancy was created after this application for security for costs against him by D. 28.It is unnecessary to deal with the arguments on D’s attacks on P’s ordinary residence in Hong Kong in paragraph 15 of P’s written submissions. Given the fact that P admitted that he only continuously resided in Hong Kong from 1997 to 2010, it cries out loud for P to show to this Court that he was an ordinary resident from 2010 to 2015, such evidence will be assessed as to whether he had the intention of residing in Hong Kong ordinarily. 29.To say that P has clearly maintained a substantial connection with Hong Kong, both business and personal, is not sufficient to show that he has been ordinarily resident in Hong Kong. Connection may be expressed in many forms such as residence, correspondence, having shareholdings or other tangible forms whereas “ordinary residence” within the context of Order 23, rule 1 RHC has to be defined in accordance with the authorities. See paragraph 20 above. Physical presence in the nature of permanent residence is important in this respect. 30.Alternatively, P submits that it is established that a person can be an ordinary resident of two places (Reg. v. Barnet L.B.C., ex parte Shah [1983] 2 AC 309 (HL) at 342). Thus, even if the Court finds that there is sufficient evidence to support D’s allegation that P ordinarily resides in Singapore, that does not conflict with the fact that P is at the very least also ordinarily resident in Hong Kong in the light of the circumstances.[10] 31.The case referred to in Shah was on tax. The Court of Final Appeal has said in Vallejos Evangeline B. that the interpretation of “ordinary residence” is highly dependent on the context of the statutory framework in which the phrase is found. In the analysis of the meaning of “ordinary residence” within the context of Order 23, rule 1, it is difficult to envisage that one can properly claim ordinary residence of two places. P has not set out the relevant statutory provisions under which the court had come to such conclusion. This legal submission will not render useful assistance in support of P. 32.D’s burden of proof is on the balance of probabilities. I find that D has succeeded in proving that P is ordinarily resident outside the jurisdiction under Order 23 rule 1, RHC. As such, it remains for me to consider whether I should exercise the discretion to order P to provide security for D’s costs under O 23, r 1. Hui Yin Sang & others. Discretion – enforcement 33.P submits that in the event that the Court finds that P does not ordinarily reside in Hong Kong but in Singapore only, the Court is entitled to consider the ease of enforcement of an order for security in Singapore. See: Giuseppina Tagliani v Lee Wai Ying Elvis [2006] 2 HKC 194 and Lim Yi Shenn v Wong Yuen Yee & Ors[2012] 4 HKC 102 at §§61-63. 34.P also suggests that if the plaintiff is resident in a jurisdiction which has a common law system similar to that in Hong Kong (like Singapore), and there is an arrangement for the reciprocal enforcement of judgments between Hong Kong and that jurisdiction (as between Hong Kong and Singapore), more evidence about the difficulties in enforcing a judgment may be required before the court exercises its discretion to order security for costs (see Izumo Mokko Co Ltd v T S Lines Ltd [2007] 3 HKC 296 at §20 per H H Judge Lok (as he then was), cited in Hong Kong Civil Procedure 2016, Vol 1, §23/3/4). P submits that D has failed to put forth such evidence in support of his application, relying further upon Lim Yi Shenn that the court would reject that the enforcement of costs would further increase the costs to enforce the costs order and cause delay. 35.However, these two authorities have not thoroughly considered the decision of the Court of Appeal in Montgomery Ward & Co Incorporated v Evergo Trading Company Limited and Evergo Holdings Company Limited (unreported, CACV 32/1996, 31 May 1996) where Nazareth VP held at paragraph 8:
36.In Lim Yi Shenn, the court considered that the authority above should not fetter his discretion under O 23, r 1 RHC, which is not disputed. It is only trite that the Court of Appeal decision takes precedence over the other two cases cited to me above. P argues that the Court of Appeal judgment has not taken into consideration the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap 319. Because of the convenience of enforcing judgments in Singapore, there should not be extra costs for enforcement of the costs order. This is obviously not the reality. D will certainly require extra costs to instruct the lawyers in Singapore to enforce the order. Yet, as according to D, P has not been able to show that he has any assets in Singapore, rendering the enforcement of the costs order futile. In such a way, O 23, r 1 will be rendered useless for D even if P is proved to be ordinarily resident outside the jurisdiction. Discretion – proceeds of sale under litigation 37.P submits that in any event, P’s entitlement to the substantial amount of S$33.75 million (equivalent to about HK$183.87 million) in proceeds,[11] even if the exact amount which P is entitled to is currently a subject of dispute in HCA 183/2014, is sufficient proof that P will be able to pay D’s costs in the event that D succeeds at trial. 38.D argues that such proceeds were frozen by a court order, which is not disputed by P. In the circumstances, the proceeds simply cannot be used for payment of D’s costs. It simply cannot be used to substitute for the security for D’s costs. Discretion – merits of P’s case 39.P relies upon the strength of his merits in this action against D and submits that he has a strong case against D. It is only trite that the court should not assess the merit of the matter at the interlocutory proceedings. See Sunchase International Group (China) Ltd & Others v Vincor Group of Companies (Investment) Ltd & Others[2004] 1 HKRLD 731 at 733. The fact that it is a wagering contract will not assist P on this issue. Discretion – D is a real attacker 40.P relies upon Ai Zhong v Metrofond Ltd [2010] 1 HKLRD 213 to say that since D has a counterclaim, the court should not make an order for security because if D proceeds with his counterclaim, P will use his claim for defence and the costs for the claim will also be incurred. 41.D has, through his counsel, undertaken that if P’s claim is struck out or dismissed for being unable to pay the security for costs, D will not proceed with the counterclaim or take out separate proceedings for his counterclaim here. 42.That may make provision for this Court. However, one must look at the real issues here in the Counterclaim. D is asking for return of the shares and his car, which P has admitted taken from D for setting off D’s debt. D has also pleaded that he adopts the counterclaim as a defence in paragraph 25 of the Defence and Counterclaim. In reality, even if D were to proceed with his Counterclaim, P has already made the admissions in the pleadings. P will be unable to raise the issues in the main action for res judicata. This factor is simply too remote for this Court’s consideration. 43.Having considered the above circumstances, I find that D has proved that P is ordinarily resident outside the jurisdiction within the meaning of O 23, r 1 RHC. There is nothing that appears unjust to make an order for security for costs in favour of D. As such, I shall make an order accordingly. 44.As to the quantum for the security, which D has included in the bundle of documents, they amount to $3,996,650. P opposes, saying that the rates charged by the professionals are high. This Court should adopt a broad brush approach in the assessment of the amount for security, bearing in mind that there is a possibility of settlement between the parties without a trial and that P is not to indemnify D’s costs at this stage. On a broad brush approach, the amount of security for costs is $2,000,000 up to the stage of the end of the trial, with liberty to apply. COSTS AND ORDER 45.As to costs, they should follow the event (with counsel’s certificate) and are to be summarily assessed under O 62, r 9A RHC at $190,000 to be paid by P to D within 28 days from the date hereof. 46.This Court shall now make an order in terms as follows:
CASE MANAGEMENT 47.By consent, Case Management Conference be adjourned to 10:30 am on 2 November 2016 for 4th Case Management Conference; 48.Costs of the Case Management Conference be in the cause (15 min)
Mr John Hui, instructed by Oldham, Li & Nie, for the plaintiff Mr Dennis Kwok, instructed by DLA Piper Hong Kong, for the defendant [1] See at the end of this Decision [2] §17 of written submissions; [3] §§18-23 of written submissions [4] §24 of written submissions; [5] §§25-28 ibid [6] §§34 & 35 ibid [7] §12 of written submissions; [8] CA 2nd §34; see also Exhibit CA-9 for a copy of the Management Agreement entered by BilBao Management Limited and a hotel group [9] CA 1st §§9-10 [A/68-69]; CA 2nd §§46-49; see also Exhibit CA-1 for the tenancy agreement [B/43-47] [10] §17 of written submissions; [11] CA 1st §15 [A/70] | |||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCA 1285/2014