Pacific Andes Enterprises (Bvi) Ltd (in Liquidation) and Others v. Ng Joo Siang and Others

HCA 688/2019

[2019] HKCFI 2862

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 688 OF 2019

________________________

BETWEEN

________________________

_________________________________

DECISION

_________________________________

Introduction

1.By 2 separate summonses (“the Summonses”), both filed on 7 August 2019, the 1^st, 2^nd, 4^th to 18^th Defendants (“Ds”) separately applied for security for costs in the sums of (1) HKD 4,058,931 for the 1^st, 4^th & 6^th Defendants; and (2) HKD 6,301,660 for the 2^nd & 7^th to 18^th Defendant, ie for an aggregate sum of HKD 10,360,519, against the Plaintiffs (“Ps”), on the ground that Ps were all insolvent corporations currently in liquidation.  Ps contested the Summonses and asked for their dismissal. 

2.I heard the Summonses substantively today.  My decision is to make the following orders: -

(1) Ps do pay HKD 4,058,931 into Court as security for the costs of the 1^st, 4^th & 6^th Defendants within 14 days from today;

(2) Until Ps strictly comply with paragraph (1) above, this action, as against the 1^st, 4^th & 6^th Defendants, be stayed;

(3) Should Ps fail to comply with paragraph (1) above, this action be dismissed forthwith without further order, and Ps do pay to the 1^st, 4^th & 6^th Defendants all costs of this action including all costs previously reserved, to be taxed if not agreed;

(4) Ps do pay HKD 6,301,660 into Court as security for the costs of the 2^nd & 7^th to 18^th Defendants within 14 days from today;

(5) Until Ps strictly comply with paragraph (4) above, this action, as against the 2^nd & 7^th to 18^th Defendants, be stayed;

(6) Should Ps fail to comply with paragraph (4) above, this action be dismissed forthwith without further order, and Ps do pay to the 2^nd & 7^th to 18^th Defendants all costs of this action including all costs previously reserved, to be taxed if not agreed;

(7) Ds be at liberty to apply for further security at any time; and

(8) Ps do pay the costs of the Summonses, summarily assessed by me with Certificate for Counsel at HKD 155,000 for the 1^st, 4^th & 6^th Defendants and HKD 155,000 for the 2^nd, 7^th to 18^th Defendants, to Ds, forthwith.

(Collectively, “the Decision”)

3.My reasons for the Decision are as follows.

Background Facts

4.This is a case with some unfortunate procedural history. Ps appear to have done a remarkably large number of things wrong.

5.By way of example, on 16 April 2019, Ps went before a judge of this Court and asked for a Mareva injunction on an ex parte and without notice basis, only to find themselves completely unable to explain the sums claimed by them, or how they were arrived at. 

6.I read the transcript. At one point, Ps appear to have pulled a figure of USD 600 million out of nowhere. When pressed by the judge as to what that was, this was the somewhat shocking reply: -

“Yes, sir. Of the $600 million, sir, I understand that I don’t think, sir, that the liquidators have provided me with specific information and support.”

7.Leaving aside why it was that His Lordship was being called “sir” (as opposed to “My Lord”), it is astonishing how Ps did not seem to know what they were doing and were completely unable to adduce useful evidence in any useful way. There were a lot of bold and unparticularized assertions, but no useful evidence. His Lordship ended up dismissing the application, citing, “the unsatisfactory state of the evidence” as one of the reasons.

8.An inter partes injunction application has now been taken out by Ps, and it is scheduled to be heard substantively on 20 February 2020, with 2 full days reserved. 

9.Another problem with Ps’ conduct is the way Ps drafted their Statement of Claim. Ds considered Ps’ case to be unparticularized. Ds sought an unless order directing Ps to provide further and better particulars of their Statement of Claim. That application has now been scheduled to be heard substantively on 11 December 2019, with 2 hours reserved.

10.It is against this background that Ds appear before me to ask for an order directing Ps to pay HKD 10,360,519 into this Court as security for Ds’ costs of dealing with Ps.

Ds’ Submissions

11.Mr James Wood, Counsel for Ds, submits, inter alia, that (1) Ps are currently in liquidation so I can assume they would be unable to pay for Ds’ costs in the event of Ds’ winning the whole action, unless Ps come up with some cogent evidence to the contrary; (2) Ps made bare assertions that they had sufficient assets, but provided no particulars or documentary evidence, so I should reject the assertions; (3) Ps and their liquidators (“the Liquidators”) are all based in the BVI and Singapore, beyond the reach of this Court, so it would ordinarily be just to order security for costs; and (4) Ps have never established their case has a high probability of success.

Ps’ Submissions

12.Mr Look-Chan Ho, Counsel for Ps, submits, inter alia, that (1) Ds’ request for security “fails in limine” since Ps have assets in Hong Kong which “amply exceed the amount of security demanded”; and (2) the Liquidators are willing and prepared to undertake that assets sufficient to cover the security demanded by Ds will not be removed from Hong Kong pending the final resolution of this action.

My View

13.In gist, I agree with Ds’ submissions that ordering security for costs in this matter is plainly just, reasonable and appropriate.

14.Firstly, Ps’ unparticularized assertions that they have assets is with respect entirely unhelpful. A corporation can have substantial assets, but yet remains hopelessly insolvent, because its liabilities greatly exceed its assets. Ps’ affidavit evidence is, most remarkably, silent on Ps’ current and future liabilities. Since Ps had a full opportunity to file evidence but did not make good use of it, I agree with Mr Wood, Counsel for Ds, that I can assume, for the purposes of this hearing, that Ps, being in liquidation, would be unable to pay for Ds’ costs in the event of Ds winning the whole action.

15.Secondly, Ps’ assertions that the Liquidators can undertake to keep assets within Hong Kong are also with respect unhelpful. For a start, the Liquidators all reside out of the jurisdiction. If the Liquidators are in contempt in Hong Kong for breach of undertaking, but they refuse to come to Hong Kong to face contempt proceedings, what are Ds supposed to do?

16.Thirdly, Ps keep repeating the word “fraud” in a meaningless manner. Save and except the Liquidators’ opinion that there was a fraud, Ps never placed any evidence of fraud before me.  I agree with Mr Wood, Counsel for Ds, that Ps never established their case has a high probability of success, or indeed any prospect of success whatsoever.

17.Fourthly, while the amount claimed by Ds as security for costs may appear astronomical at first sight, having carefully examined the bills of costs exhibited by Ds, it does appear to be justified in the circumstances of this case. Ps never even bothered to challenge the question of quantum on affidavit. I am satisfied, on the special facts of this case, that I should order security in the exact amount sought.

Costs

18.Costs should follow the event. Ds are the winners vis-à-vis the Summonses. The costs of the Summonses should be paid by Ps to Ds.

19.On the question of Certificate for Counsel, in my judgment it was reasonable, necessary and proper for both sides to engage Counsel to argue the Summonses, given the quantum of security sought by Ds. Both Counsel had been helpful to this Court.

20.On the quantum of costs vis-à-vis the Summonses, Ds claimed HKD 168,815 (for the 1^st, 4^th & 6^th Defendants) and HKD 332,550 (for the 2^nd, 7^th to 18^th Defendants) respectively. I examined each item claimed by Ds, and also the final figures.

21.I allow Counsel’s Fees in full. For the other sums claimed, I take the view that some of them are slightly excessive. Taking a broad-brush approach in assessing quantum of costs, I consider a total figure of HKD 155,000 for the 1^st, 4^th & 6^th Defendants, and a total figure of HKD 155,000 for the 2^nd, 7^th to 18^th Defendants, to be fair and reasonable.

Final Remarks

22.I do thank both Counsel for their most able assistance.

Mr Look-Chan Ho, instructed by Kobre & Kim, for the Plaintiffs

Mr James Wood, instructed by Robertsons for the 1^st, 4^th to 6^th Defendants and instructed by Lipman Karas for the 2^nd, 7^th to 18^th Defendants