Read the full judgment text of HCCT 33/2019 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 5 May 2021 before Hon G Lam J in Chambers.
Security for costs — Construction dispute involving supply of aluminium system formwork — Plaintiff, a Mainland company, sues for unpaid amounts totalling about $24.9 million; defendant counterclaims for about $74.4 million alleging breaches and defects. Defendant applied for security for costs under RHC Order 23. Initially, the defendant relied heavily on its counterclaim, which raised intertwined and substantial damages issues exceeding plaintiff’s claim, generally militating against ordering security. However, at the hearing, defendant abandoned the counterclaim and asserted only a defence, fundamentally altering the position—defendant ceased to be an attacker and was merely defending itself. The court held that in these circumstances security for costs is appropriate despite the plaintiff being a Mainland company outside jurisdiction, as reciprocal enforcement agreements are not yet operational. The court exercised discretion to order security for costs of $600,000, representing costs up to witness statements and expert reports, excluding past costs due to defendant’s own delay and last-minute abandonment. The defendant was ordered to pay the costs of the security application, and to amend its pleadings accordingly. This case highlights the importance of the defendant’s position as attacker or defender on security applications and illustrates judicial approach to abandonment of counterclaims for tactical purposes.
Legal issues: Whether security for costs should be ordered after abandonment of defendant’s counterclaim
Outcome: Order for security for costs in the amount of $600,000 made against the plaintiff; defendant to pay costs of the security for costs application
Cites 6 cases