Lee Charles Goon Lok v. Lee Kwok Ching and Others

HCA 2366/2015

[2025] HKCFI 3088

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2366 OF 2015

________________________

BETWEEN

________________________

________________________

DECISION

________________________

I. INTRODUCTION

1.Before me is the 1^st, 2^nd 4^th and 5^th Defendants’ (the “Defendants”)  application for security for costs against the Plaintiff by Summons filed on 11 February 2025.

2.The background and parties’ respective cases have been set out in my Decision handed down on 9 June 2025 refusing the Plaintiff’s application for amendment to pleadings and for additional evidence ([2025] HKCFI 2444).  There is no dispute that both sides have arguable cases, and that it is therefore not appropriate for me to go into the details of the merits here.

II.   GROUNDS IN OPPOSITION

3.The grounds in opposition to “liability to pay security for costs” are:-

(1)  Inordinate delay without credible explanation, given that the matter was set down for trial on 6 January 2025 and the trial dates were fixed on 18 February 2025.  The PTR shall take place on 6 February 2026 and the trial on 6 May 2025 with 13 days reserved; and

(2)  The Plaintiff has assets within Hong Kong, namely, his shares in the 4^th Defendant and the dividends thereon, already declared and to be declared.

III.   THE INORDINATE DELAY

4.For the inordinate delay, in the Writ of Summons issued back on 13 October 2015 (almost a decade ago), the Plaintiff was already stated to be resident in the US.  Although his address has apparently changed subsequently as appears from the witness statements, it must be clear to the Defendants that the Plaintiff has since 2015 been out of jurisdiction.   To this, the Plaintiff advanced a few explanations:-

(1)  They can only be certain of the Plaintiff’s ordinary residence out of Hong Kong after the filing of witness statements and expert opinions in April 2023;

(2)  They can only be certain of the length of the trial after the exchange of witness statements and expert opinions in April 2023; and

(3)  They were not certain if the Plaintiff would really like to proceed with the trial in the light of the Plaintiff’s various interlocutory applications and failure to set down the matter for trial.

5.The first reason is not a good reason.  The Writ of Summons is sufficient at least to show a prima facie case that the Plaintiff is ordinarily resident out of jurisdiction.  If the application for security for costs were made promptly enough and if somehow the Plaintiff would, apparently contrary to the Writ of Summons, come and say that the address in the Writ was wrong, or that despite the address in the Writ of Summons, he was ordinarily resident within Hong Kong, then the Plaintiff would have his consequence.  The so-called uncertainty about the Plaintiff’s ordinary residence in such circumstances cannot be a good reason for the delay.   In any event, the exchange of witness statements and expert opinions took place in April 2023.  There is no good reason why the Defendants would have to wait for more than one and a half year to make the present application.  I note that the Defendants suggest that the change of circumstances that allegedly necessitate the present application took place in August 2024 that made clear to the Defendants that substantial costs would be incurred, but substantial costs must have already been incurred by April 2023, and I cannot see why no application was made by then. 

6.The second reason is not a good reason. Security for costs is usually applied for at the close of pleadings.  At that stage, parties and the Court cannot be certain about the length of the trial, but still it is very usual to order security for costs up to the witness statements at that stage.

7.The third reason is not a good reason. As said, security for costs is usually applied for at the close of pleadings.   No one can be certain whether there would be trial at that stage.

8.In any event, certainty about the Plaintiff’s address, about the length of trial and about the Plaintiff’s intention to proceed to trial is not a necessary requirement for security for costs. 

9.All in all, there is no good reason for the delay.

10.That said, very often, for late application for security for costs, the Court may order security for costs after certain stage.  In the present case, the trial is almost a year away, and further, the Plaintiff is appealing by Notice of Appeal served on 2 July 2025 against this Court’s aforesaid decision.  I can see that there can still be much costs to be incurred.

IV.   ASSETS WITHIN JURISDICTION

11.As regards assets within jurisdiction, the assets the Plaintiff claims to have are the shares in the 4^th Defendant, a private company in Hong Kong, and dividends declared and to be declared on the shares.  It is trite that in general, shares in private company are not good enough for security for costs, although I should still take it into account where appropriate.  As for the dividends declared, they are cash only, and for dividends to be declared, it is so uncertain to constitute assets for the present purpose.  In any event, the dividends may well be paid to an overseas account given that the Plaintiff is ordinarily resident out of Hong Kong.  All that said, there is an amount of HK$3,280,000 dividends unclaimed due and owing to the Plaintiff.  I disagree with the Defendants’ argument that the dividends could be set off by the loans more than 6 years ago, as it is trite that the cause of action of a loan accrues immediately upon the advancement, a legal position different from the English position altered by their Limitation Act.  In other words, this amount is available for the Defendants for costs, and the Plaintiff offers an undertaking “not to do anything to realise, deal with, dispose of, encumber, or request payment of, the unclaimed dividends and any dividends to be declared on his shares in the 4^th Defendant until the satisfaction of costs order made against the Plaintiff (if any)  or further order of the Court”.  In this regard, I refer to Li Ming & Ors v Liu Yiu Keung & Ors [2023] HKCFI 884 at §§19, 44-49, 54 per K Yeung J.

V.   PREJUDICE TO THE PLAINTIFF

12.As regards prejudice to the Plaintiff, I note that there is no evidence from the Plaintiff that he would not be able to pay the security for costs (claimed by the Plaintiff to be more than HK$8,400,000)  or that he would have to abandon the claim because of any financial difficulty.  In this regard, I notice also that the Plaintiff’s Notice of Appeal is settled by the second most senior member of the Inner Bar. Therefore, it seems to me that the Plaintiff should have little financial difficulty.

VI.   CONCLUSION

13.Having considered the above, I am satisfied that the right way to exercise my discretion is to order security for costs incurred and to be incurred after 11 February 2025.

14.I shall now assess the quantum.

15.I shall only assess Stages (4)  and (5)  of the skeleton bill of costs prepared by the Defendants, as the only stages of costs incurred or estimated to be incurred after 11 February 2025.

16.The total sum the Plaintiff claims is approximately HK$4,450,000 including Senior Counsel’s fee.  Given that it is a 13-day trial, I assess it to be HK$2,800,000 on a broad-brush approach.

17.This amount is less than the HK$3,280,000 dividends.  

18.Therefore, there is no need for me to order the Plaintiff to pay the security for costs at this stage.

19.I think in the circumstances, the appropriate order to make is no order shall be made on the summons upon the Plaintiff’s aforesaid undertaking.  

20.Having considered counsel’s submissions, I shall also make no order as to costs.

Mr Tony HH Chow, instructed by Fu and Cheng, for the Plaintiff

Mr Jeff Yau, instructed by ONC Lawyers, for the 1^st, 2^nd, 4^th and 5^th Defendants