Read the full judgment text of HCCT 42/2021 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 28 March 2022 before Hon K Yeung J in Chambers.
Procedure — Security for costs — Companies Ordinance Cap 622 s.905 — Counterclaiming defendant — Whether security can be ordered against counterclaiming defendant — Threshold test under s.905 whether company unable to pay costs — Genuine business presence and asset evidence — Crabtree principle and Hutchison Telephone test on counterclaim nature — Plaintiff PERPETUAL WEALTH (HK) Ltd sued BE SOLUTIONS COMPANY Ltd (D1) for decoration contract disputes involving defective marble supplies and related claims of misrepresentation and conspiracy — D1 counterclaimed for outstanding payments — Plaintiff applied for security for costs — Evidence showed D1 was a nominal capital company with no real office or business presence, meeting s.905 threshold of inability to pay — However, counterclaim was held to be defensive and closely linked to plaintiff’s claim, not an independent cross-action — Court followed authorities that security should not be ordered if counterclaim is essentially a defence — Application refused to avoid unfairly prejudicing defendant’s right to defend — Costs ordered in defendant’s favour to be assessed on papers. The case clarifies the application of s.905 CO on security against counterclaiming defendants and the importance of assessing the true nature of counterclaims in such applications.
Legal issues: Security for costs against counterclaiming defendant under s.905 CO · Threshold for s.905(1)(a) CO regarding inability to pay costs
Outcome: Plaintiff’s application for security for costs against 1st Defendant refused
Cited by 1 case · Cites 2 cases