Property Dynasty Ltd v. Bank Julius Bär & Co. Ag Aka Banque Julius Baer & Cie Sa, Banca Julius Baer & Co Sa, Bank Julius Baer & Co Ltd

HCCL 1/2023

[2023] HKCFI 1293

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO 1 OF 2023

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D E C I S I O N

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1.This is the application of the Defendant (“Bank”) for security for costs against the Plaintiff (“PDL”).

2.There is no issue on PDL’s liability to provide security for the Bank’s costs. The only dispute concerns the appropriate quantum of security.

3.This is in fact an application to increase the security already paid into court by PDL. By the order of Master D Ho made by consent on 12 August 2020, a sum of HKD3.5 million had been paid into court by PDL as security for the Bank’s costs up to and including the exchange of witness statements.

4.It was said by the Bank that further security is justified by PDL’s amendments to the Statement of Claim (the Amended Statement of Claim was filed on 2 September 2022) and the nature and scale of this case. Further security in a sum in excess of HKD10.375 million is being sought to cover the Bank’s costs up to and including the exchange of expert reports[1].

5.On any view, the amount of additional security sought is extremely high, if not unrealistic. In support of this application, a 5-page bill of costs is put forward. Despite the complaint of PDL, no breakdown has been provided for the estimated items. In short, the bill of costs is not an informative document and the court is left in a puzzle on, eg, why the supplemental discovery required/will require vast number of man hours to work on and why 5 lawyers were/will be required for the task. Simply referring to the number of documents involved does not necessarily resolve the puzzle. Much will depend on the nature of the documents and their relevance to the issues of this case.

6.It should not be overlooked that, given that this action has been on foot for 4 years, a fair degree of familiarity had been gained by the Bank’s team of lawyers. The amount of work required must be explained with regard to such familiarity. There is no such explanation.

7.I accept that the amendment to the Statement of Claim would increase the costs of the Bank. There appears to be 2 main amendments which were said to be costs inflationary. In respect of the first, the 26 instances of misrepresentation set out in the new Schedule 5 were all based on telephone recordings provided by the Bank. It would be surprising if these contemporaneous recordings were not carefully considered by the Bank well before they were relied on by PDL.

8.Secondly, the 4 alternative bases of assessment of loss and damage advanced in the amended pleading are likely to be the subject matter of expert evidence. On the other hand, this court had already indicated to the parties that no direction for expert evidence will be given unless and until the expert issues are approved by the court. Further, the court will have to be satisfied why single joint expert should not be instructed instead of separate experts. In the premises, section E of the bill which covers the costs of quantum experts at nearly HKD3.5 million will have to be substantially revised, if not taken out.

9.Apart from overplaying the complexity introduced by PDL’s amended pleading and supplemental discovery, the bill of costs before the court suggests that the Bank had ignored the dicta of the Court of Appeal made in Wong Chung Chi v Yuilley Building Materials Co Ltd [2019] HKCA 949, §35 :

“In light of the above misgivings we have on the skeleton bill, we are not prepared to rely on the skeleton bill in assessing the amount of security. Solicitor who put forward grossly inflated bill and advised his client to seek unrealistic amount as security for costs should not be surprised if the court takes a robust approach in fixing the amount of security without attaching weight to a bill prepared by him.”

10.Taking a robust view of the quantum of additional security, I assess it at HKD3 million.

11.In the premises, I order that :

(1)  The Plaintiff do provide additional security for the Defendant’s costs in this action up to and including the determination by the court on expert evidence in the sum of HK$3,000,000 by payment into Court, to be placed in an interest-bearing account and the interest thereon to be accrued to the credit of the Plaintiff, within 14 days from the date hereof;

(2)  Should the Plaintiff fail to provide the said security for costs within the time limit as set out in paragraph (1) above, this action be dismissed with costs without further order;

12.As regards the costs of this application, PDL had made an open offer of HKD3 million of additional security in response to the Bank’s request on 24 March 2023, prior to the filing of this application. The Bank accepted that in these circumstances it must bear the costs of this application, and I order that the costs of and occasioned by this application be paid by the Bank to be taxed if not agreed.

Mr Douglas Lee of Lee & Yik Lawyers, for the Plaintiff

Ms Natalie So, instructed by Herbert Smith Freehills, for the Defendant