Liu Zuo Bin v. Liu Ying Ting and Another

HCA 37/2024

[2025] HKCFI 3097

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 37 OF 2024

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DECISION

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I. Background

1.This is the hearing of the 1^st and 2^nd Defendants’ (respectively “D1” and “D2”, collectively “Ds”)  application by summons dated 7.1.2025 for security for costs in this action, costs already incurred and estimated costs up to and inclusive of the exchange of witness statements (“the Summons”).  

2.As relevant background:

2.1The Plaintiff, Liu Zuo Bin (“P”)  and D2 are husband and wife.  D1 is the daughter of P and D2.  For the purposes of this Summons, there is no dispute that P is ordinarily resident out of the jurisdiction. 

2.2The action relates to the property known as Flat B on 11^th Floor (including balcony and utility platform pertaining thereto and private lift lobby)  of Tower 2 of Victoria Harbour, Phase 1B of Victoria Harbour Development, No 133 Java Road, Hong Kong (“the Property”). 

2.3Parties also dispute on the ownership of the 深圳太陽生物科技股份有限公司 (“深圳太陽”), 深圳國鼎泰和投資有限公司 (“深圳國鼎泰和”)  and 多方控股有限公司 (“多方控股”)  (collectively, “the Mainland Companies”), which is the subject matter of their litigations in the Courts of Mainland, People’s Republic of China (“PRC”).  

(a)  P says they were started and operated by P from scratch and formed part of P’s businesses carried on by him, and the shares thereof are beneficially owned by P and held on trust by Ds (directly or indirectly). Ds deny P’s allegations.  

(b)  Judgment has been handed down in the PRC litigation on 31.3.2025, whereby P appears to have lost in claiming ownership and/or beneficial ownership over the Mainland Companies[1]. Such judgment is currently subject to appeal by P.  

2.4The Property was bought in P’s name in 2018 (“the Initial Purchase”), and was at all material times held under the name of P until September 2023.  Parties dispute on the source of funding and ownership for the purchase:

(a)  P says the funds used were profits generated from his businesses and the Mainland Companies;

(b)  Ds say D1 paid for the acquisition of the Property as well as expenses, maintenance and/or discharge of mortgage thereto.  Ds say the Property was purchased in the name of P to take advantage of the first-time purchaser lower scale ad valorem stamp duty, and it was the common intention of parties that P shall hold the Property on trust for D1 with D1 being its sole beneficial owner (“the Common Intention”).  Ds plead a case of common intention constructive trust and/or resulting trust. 

2.5A Power of Attorney dated 2.2.2023 (“the POA”)  was executed, under which D1 was appointed as attorney of P and D2 to sell inter alia the Property.  The validity and/or circumstances of execution of the POA is at the core of parties’ disputes:

(a)  P says he was told that the whole purpose of the POA was to allow D1 to rent out the Property on behalf of P.  It was never explained to him, nor did he intend for, the POA in fact authorises D1 to sell the Property.

(b)  Ds say that the POA was executed pursuant to the Common Intention.  On 25.10.2021, P was sued by 深圳市同泰創新投資發展有限公司(“Shenzhen Tong Tai”). Ds’ pleaded case is that D1 had intended to have D2 replace P as the registered owner so that the Property would not be “wrongly subject to any potential enforcement processes” by Shenzhen Tong Tai, and P agreed to this.  The POA was executed for the purpose of authorising D1 to sell the Property to D2. 

2.6On 11.9.2023, D1 (as attorney of P based on the POA)  executed on behalf of P:

(a)  a Provisional Agreement of Sale and Purchase to sell the Property to D2 for the consideration of HK$60 million (“the PSPA”);

(b)  an assignment to assign the Property to D2 (“the Assignment”).  

2.7It is undisputed that P never received the stated consideration of HK$60 million for the PSPA and/or the Assignment from Ds.

(a)  P says this shows the PSPA and/or the Assignment were invalid and stand to be set-aside and/or declared null and void as no consideration ever passed from Ds;

(b)  Ds say this was because the Property always belonged to D1, and P is not entitled to the stated consideration. 

3.Against the above background, parties’ main areas of dispute include inter alia the following:

3.1The source of funding for the Purchase of the Property and the beneficial ownership of the Property at the time of the Initial Purchase;

3.2Whether the Common Intention existed;

3.3The validity and/or enforceability of the POA, the PSPA and/or the Assignment.

II.  Legal Principles

4.The principles regarding application for security for costs under O 23 r 1(1)(a)  of the Rules of the High Court (Cap 4A)  (“RHC”)  are not in serious dispute between parties, albeit each place slightly different emphasis on the different facets of the principles.  

4.1Security is not to be ordered as of course from a foreign plaintiff.  Security is to be ordered if, having regard to all circumstances of the case, the court thinks just to do so. [2]

4.2The court’s powers under O 23 r 1 RHC are discretionary.  The court has to strike a balance between what would be too oppressive to the plaintiff and what would give the defendant a measure of security.  

4.3It is prima facie unjust that a foreign plaintiff, who is more or less immune against costs if he is unsuccessful, should be allowed to proceed without making funds available within the jurisdiction, against which any costs order against him may be executed.  

4.4Merits of a plaintiff’s claim may be a relevant consideration, but this is to be approached in a broad-brush manner.  

(a)  It is not the function of the court to make a preliminary run at deciding the ultimate success or failure of the claim and parties shall not attempt to go into the merits of the case unless it can be clearly demonstrated that the plaintiff has a high degree of probability of success[3] or a “very high probability of success”[4].

(b)  If the facts are likely to be sensitive to oral evidence, going into the merits of the case is to be deplored unless the merits are clear.  

(c)  At the oral hearing, counsel for parties both invited me to assess the merits of P’s claim by examining the pleaded case of the parties.  The principles of examining the pleaded case of the parties to evaluate P’s probability of success in a security for costs application is set out in Kaefer AG v Winfield Marine Services Co Ltd [2020] 3 HKLRD 721, §§24-37: the parties’ pleadings is to be taken at their face value – it will be assumed that everything stated in the pleadings will eventually be proven as true, and no adverse inference would be drawn from the lack of documentary evidence in support. 

4.5In cases of impecuniosity, and where the plaintiff asserts that an order for security would stifle the claim, the onus is on the plaintiff to show it is unable to raise the amount of security from other sources or means. [5]

4.6The court will also take into account matters such as ease of registration and/or enforcement of a costs order in the foreign jurisdiction where the plaintiff is ordinarily resident in.[6]

4.7As regards quantum, the court has unfettered discretion to order such amount as it thinks just taking into account all circumstances and adopting a broad-brush approach, and not by a line-by-line evaluation of the bill of costs. [7]

III.  Analysis

5.The analysis for the Summons can conveniently be categorized into the following limbs:

5.1Merits of the case;

5.2Impecuniosity of P and/or stifling of P’s claim;

5.3Ease of registration and/or enforcement;

5.4Quantum.

A.  Merits

6.P’s main argument against the Summons lies in this limb.  P says his claim has a high likelihood of success looking just on the pleadings and/or the indisputable facts, because:

6.1Since the Property was purchased in 2018, it has always been registered under P’s name and he was the legal owner of the Property.  Relying on Stack v Dowden [2007] 2 AC 432 therefore, P says the starting point is that equity follows the law, and therefore P is prima facie also the beneficial owner of the Property;  

6.2Ds have not produced any evidence to prove the alleged Common Intention, such as any trust document or contemporaneous record;  

6.3The alleged Common Intention is inherently unlikely because the scheme to evade stamp duty obligations was “tainted by illegality” and would not have been agreed by P;  

6.4Had the Common Intention existed, there would have been no need for D1 to use the convoluted method of procuring P to sign the POA and for D1 to execute the PSPA and the Assignment at a later date.  D1 could have simply procured P to execute sale directly.  This goes to show the inherent weakness of Ds’ allegation of the existence of the Common Intention. 

6.5As it is undisputed that P never received the consideration of HK$60 million as stated in the PSPA, P would be entitled to either damages or rescission of the PSPA and/or the Assignment for the wrongful assignment and/or sale of the Property which beneficially belonged to P. 

7.P relies on his pleaded case that the Property is under his sole name.  Since the starting point is that equity follows the law, P was therefore the sole beneficial owner of the Property, and as Ds admit no consideration was in fact paid by D2 to P for the purported purchase of the Property, the Property should revert to P and the PSPA and/or Assignment should be set-aside. 

8.Of course, P’s case must be evaluated against the defendant’s defence.  The question is whether, on the pleadings, the defendant’s defence can “water down” the plaintiff’s claim. See: Kaefer AG v Winfield Marine Services Co Ltd (supra), §28.

9.Ds’ submission on merits is that the issues in this action – including whether the Common Intention existed, the source of funding for purchase of the Property and/or payments related thereto, beneficial ownership of the Property, and the validity of the POA and the sale of the Property – involve significant factual disputes, which could not be resolved by the court without receiving viva voce evidence. Ds’ case is that D1 was the beneficial owner of the Property at the time of purchase under a common intention constructive trust and/or resulting trust. Ds pleaded that:-

(1)  there was an agreement between D1 and her parents (ie P and D2)  that the Property and another property would be purchased in the parents’ names in order to take advantage of the first-time purchaser lower scale ad valorem stamp duty[8];

(2)  there was a Common Intention that while P would acquire the legal title to the Property, P would hold it on trust for D1 as the sole beneficial owner[9]; and

(3)  D1 paid for the acquisition of the Property, for its maintenance and upkeep, and paid for and discharged the mortgage of the Property[10].

10.In his Reply, P pleaded that the funds used for purchasing the Property “came from” the Mainland Companies which “went into” D1’s bank account(s), and such funds should belonged to P beneficially, because the shares in the Mainland Companies were held by D1 and D2, directly or indirectly, on behalf of P.[11]

11.At the hearing of this Summons, Mr Oh for P invited me to look at the merits of the case by examining the pleadings only, an approach to which Mr Lai for Ds agreed.  Given the consent of the parties, this is the approach I will primarily adopt. 

12.As stated, in determining an application for security for costs, unless it can be demonstrated that the case of a party has a high degree of success, it is generally not right for the Court to judge the merits of the case on paper.[12]  Adopting the approach in Kaefer AG by taking the pleadings at their face value and assume the facts pleaded therein are true, I do find that Ds’ defence does water down P’s claim.  In my view, on the materials before me, P has not demonstrated a very high probability of success such that an in-depth evaluation of merits is warranted in considering whether an order for security for costs should be granted. 

13.First, whilst “equity follows the law” is indeed the starting point, it is only a presumption, and it is a rebuttable one. For example, it may be rebutted by the agreement and Common Intention between D1, D2 and P, in accordance with which D1 is the beneficial owner, if eventually proven. See: Stack v Dowden, supra, §§69, 123-124. It may also be rebuttable by existence of a resulting trust, where someone other than the legal owner contributed to the purchase price of the Property.

14.Second, P’s Reply regarding the source of funds is not a complete answer to Ds’ pleaded case of constructive or resulting trust. In particular:

14.1As noted at paragraph 2.3 above, there is ongoing litigation in the PRC as to the ownership of the Mainland Companies.[13]  At this stage, it is far from clear whether P can ultimately succeed in claiming beneficial interest over the Mainland Companies.  

14.2Further, it is trite law that a company has its separate legal entity, and assets held by the company are not (without more)  to be treated as assets beneficially belonging to the sole shareholder and/or owner of company. See: Salomon v Salomon [1897] AC 22. Even if one assumes P owns the Mainland Companies beneficially, it is still not to be assumed that those companies’ funds, transferred to D1’s account, belonged to P beneficially.  Questions such as the purpose and/or nature of the Mainland Companies’ transferring into D1’s bank account, whether the funds were intended for P’s or D1’s use and benefit are matters which have to be answered in due course. 

14.4Thus, P’s pleading in his Reply that the funds “came from” the Mainland Companies and “went into” the D1’s bank account(s)  does not provide a complete answer to Ds’ case of constructive or resulting trust.  Instead, it provides potential basis and/or support to Ds’ case that the purchase money for the Property did in fact come from D1’s bank account(s)  and/or D1.  

15.As such, looking at just the pleadings and undisputed facts, Ds’ case based on inter alia the Common Intention cannot be dismissed as improbable at this stage.  Conversely, it cannot be said that P’s case that the Property beneficially belonged to P at the time of the Initial Purchase has a very high probability of success. 

16.Given the importance of the issue of source of funds for the Initial Purchase which lies at the core of dispute between parties, I went on to explore the relevant evidence filed by parties on the matter, bearing in mind that this is not a mini-trial nor a “preliminary run” of the case in line with the approach in China Medical Technologies Inc. (in liquidation)  v Wu Xiaodong & Ors [2022] HKCFI 3237 at §26.  The evidence however was far from clear:

16.1For the purposes of their litigation in the PRC, Ds adduced a heavily redacted bank statement of an HSBC bank account under the name of D1 (the “Redacted Bank Statement”).  This was then exhibited to P’s affirmation in opposition to this security for costs application.[14]  

16.2The Redacted Bank Statement showed that D1, by multiple cashier orders dated between January to December 2018, transferred out approximately HK$96 million, which appeared to have been payments to the relevant handling law firm(s)  for the Initial Purchase. 

16.3The Redacted Bank Statement did go to show that the funds used for the Initial Purchase in 2018 come from and/or pass through D1’s bank account.  However, due to the redactions, the source or trail of funding was not shown.  

16.4Ds admitted in their affirmation in reply that they do possess the unredacted version of the Redacted Bank Statement.[15]  Despite Ds’ reference to an unredacted version, P did not seek specific discovery of the unredacted version. 

17.Given the above, on the evidence before me, it is neither possible nor appropriate to comment on the merits of the parties’ respective cases on the source of funding for the Property.  Our judicial system is an adversarial one.  If neither party at this stage adduced (or caused to be adduced)  the unredacted version of the Redacted Bank Statement, consistent with the approach adopted in Kaefer, I shall not draw any adverse inference from the lack of documentary evidence.  It thus remains the case that, from the evidence presented before me, the source of the purchase money for the Property remains unclear.  Consequentially, the beneficial ownership of the Property at the time of the Initial Purchase also remains unclear. 

18.Once it cannot be said that P has a very high probability of success in proving he beneficially owns the Property at the Initial Purchase, the remaining issues will not get P over the hurdle.  This is because even if the POA, the PSPA and/or the Assignment were set-aside, the Property may still belong beneficially to D1.  In any event, such remaining issues (including as listed below)  are matters which cannot be decided summarily from the materials before me given how they are facts and evidence sensitive:  

18.1The existence or non-existence of the Common Intention, the circumstances, and what was communicated and/or agreed between parties at the material time of the Initial Purchase;  

18.2The intention, purpose, reasonableness and/or necessity in, and circumstances surrounding, P’s execution of the POA;

18.3The intention, purposes, reasonableness and/or necessity in, and circumstances surrounding, D1’s use of the POA to execute the sale and/or assignment of the Property to D2.

19.To summarise:-

(1)  On pleadings, the source of the purchase money for the Property at the Initial Purchase is unclear.  In particular, it is not clear whether it came from the Mainland Companies, and if so, whether such funds beneficially belonged to P or Ds.  

(2)  Therefore, by looking purely at the pleadings (which the parties have asked me to do), there is something in the pleaded facts which points to D1 being possibly the payor of the purchase price.  

(3)  There is no clear evidence to negate (2)  above.  

(4)  Further, facts and circumstances regarding the Common Intention, the Initial Purchase and/or the POA cannot be determined from the materials before me. 

20.In light of the above, despite the valiant efforts by Mr Oh, I find that P has not shown a high probability of success or a genuine and strong claim such that an order for security for costs must be refused.  

B.  Assets for enforcement/Impecuniosity of P and/or stifling of P’s claim

21.The principles regarding relevance of impecuniosity in an application for security for costs are well settled:

21.1The traditional approach of the court in the exercise of discretion to order security for costs is this: unless there are other considerations to show that ordering security would be unjust, prima facie the discretion should be exercised in favour of ordering security against a foreign plaintiff, as it is just to do so.  However, while it is common for orders for security for costs to be made on little more than the fact of residence outside the jurisdiction, there is no inflexible rule that a foreign plaintiff has to provide security.[16]  The court is to have regard to all circumstances of the case, and consider whether it is just to order security for costs.[17] 

21.2Where a plaintiff is ordinarily resident out of the jurisdiction and has no fixed assets in the jurisdiction, the court would be inclined towards making an order to provide for security for the costs of the defendant.[18]  

21.3In case of plaintiff’s alleged impecuniosity and/or allegation that an order for security would stifle the plaintiff’s claim, the onus is on the plaintiff to show that he is unable to raise the amount of security from other sources or by other means.[19]

22.It is not disputed that P is ordinarily resident out of jurisdiction. It is also not disputed that P does not own any bank account of significant value readily available for enforcement, whether inside or outside Mainland China.  I now examine the assets which P relies on in resisting security for costs, as well as P’s argument that an order for security for costs will stifle his claim. 

B1.  The Property

23.The only asset within jurisdiction identified and relied on by P to resist the security for costs application is the Property, which is the subject matter of the present action.  

24.P argues that it was Ds who deprived him of the Property which led him to commence these proceedings.  It would be unfair if Ds were allowed now to use P’s lack of assets locally to oppressively demand for security for costs.  P also says that he is entitled to rely on the Property because he has a substantial likelihood of succeeding in his claim.  In gist, P is arguing that because P has a substantial chance of success on the merits, he can demonstrate that it was the wrongful conduct of Ds which caused his impecuniosity.  

25.As stated above, it is not the function of the court to make a preliminary run at deciding the ultimate success or failure of the claim, unless it can be clearly demonstrated that the plaintiff has a high degree of probability of success.  I have also already found that P has failed to demonstrate such high degree of probability, whether looking at only the pleadings or by considering the evidence as well. 

26.The courts have previously warned against the circularity of this kind of argument.  In Sunni International Ltd v Kao Wai Ho Francis [2021] 1 HKLRD 841 at §39, Peter Ng J cited and applied this statement of Rogers VP in Sunchase International Group (China)  Ltd v Vincor Group of Companies (Investment)  Ltd, §6:  

“The next point taken by Mr Wong was that the Judge should have taken into account that the impecuniosity of the plaintiffs was caused by the defendants. That, it seems to me, is a matter which could only be decided once it has been decided that the plaintiffs have a good claim and that ends up being a circular argument.”

27.It is only where the finding of a causal link between the plaintiff’s impecuniosity and the defendant’s conduct does not involve a consideration of merits and does not require a finding that the defendant was to blame or liable for the plaintiff’s impecuniosity that such an argument could stand in resisting an order for security for costs. See: Sunni International Ltd v Kao Wai Ho Francis (supra), §35; Hong Kong Civil Procedure (“HKCP”), Volume 1, §23/3/3. 

28.On the facts, P’s allegation that D1’s sale of the Property to D2 wrongfully deprived P of the said Property which caused his lack of local assets depends, in the first place, on whether P’s claim that he was the sole legal and beneficial owner of the Property can be made out.  This requires a consideration of the merits.  As I have already found that P does not have a strong case on merits from the materials before me, I am unable to find that P’s alleged deprivation of the Property and impecuniosity is caused by any wrongful conduct on the part of Ds. As such, reliance on the Property as property available for costs enforcement purposes is misplaced.

B2.  P’s assets in Mainland China

29.In P’s affirmation in opposition to this Summons, he identified and relied on 3 assets in Mainland China:

(1)  Villa 101 of Xichen, Baoan, Shenzhen (“Villa 101”);

(2)  Villa 102 of Xichen, Baoan, Shenzhen (“Villa 102”); and

(3)  Shareholding in the Maindland Companies, which is allegedly subject to a preservation order of a PRC court obtained by P in the PRC litigation between P and Ds.  

30.In reply, Ds’ argue that none of these assets are of a fixed or permanent nature.  Ds relies on the principle that in order to resist a security for costs application, a plaintiff must have substantial property within the jurisdiction which is of fixed and permanent nature and can certainly be available for costs.  Ds submit that this requirement must also apply if the property is situated outside jurisdiction.  I agree with Ds’ submissions.  

31.In Li Ming & Others v Liu Yiu Keung & Others [2023] HKCFI 884 at inter alia §§14-19, with regard to the shares in a private company which the plaintiff relied on in resisting that security for costs application, the Honourable K Yeung J considered inter alia that there was uncertainty as to their beneficial ownership and there were ongoing lawsuits over the control and ownership of that private company.  For these reasons it was held that the shares do not qualify as substantial assets of a fixed and permanent nature. 

32.For Villa 101:

32.1it is now accepted by the parties that it is registered under the name of D2.[20]

32.2P says that he has commenced divorce proceedings against D2 in the PRC and that he will be awarded at least 50% of Villa 101.

32.3Ds say that P has not sought any property division order in those proceedings, and refer to expert evidence on PRC law that it is likely that P would get less than 50% of D2’s assets. 

32.4Clearly, even if P has made a claim for Villa 101 – which is currently not under his name – in the divorce proceedings in the PRC, there is still much uncertainty as to whether and to what extent he would ultimately get the property. It is therefore not property which is readily available to satisfy any costs order. 

33.For Villa 102:

33.1it is not disputed that it has already been auctioned and sold at RMB 39,397,008 under a preservation order obtained by Shenzhen Tong Tai against P.  There is therefore nothing to suggest it is now an asset of P, let alone of a fixed and permanent nature.  

33.2P alleges that he has a right to sue 深圳國鼎泰和 and 多方控股for indemnity for the transaction price of Villa 102.  However, this is a chose in action which at least appears uncertain, and is not an asset readily available for enforcement of a costs order. 

34.As to the shareholding in the Mainland Companies, it is not disputed that the shares are currently held directly or indirectly in Ds’ name.  The beneficial and/or actual ownership of the Mainland Companies is the subject matter of ongoing litigation between P and Ds in the PRC.  Without going into the details, it is sufficient to note the following:

34.1P’s claim in the PRC litigation is that the shares in 深圳太陽 are held by Ds, either directly or through 深圳國鼎泰和 and 多方控股, on behalf of P.

34.2In a judgment dated 31 March 2025, the PRC court ruled against P, inter alia, in respect of the ownership of the shares of 深圳國鼎泰和. ^[21]

34.3P has launched an appeal against that decision.

35.From the above, P’s case that the shares in 深圳太陽 belong to him is far from certain.  There are ongoing mainland proceedings where the parties are hotly disputing the beneficial ownership of the Mainland Companies, including the holding companies of 深圳太陽.  The shares therefore cannot qualify as substantial assets of a fixed and permanent nature belonging to P.  

36.Therefore, I conclude that none of the assets relied upon by P are of such a nature that is readily available to satisfy a costs order such that an order for security could be resisted. 

B3.  Stifling of P’s claim

37.P further argues that insolvency or poverty of the plaintiff is no ground for requiring him to give security.  P submits that because it is shown that P has no readily available assets to fund security for costs, an order for security would most likely stifle P’s claim. 

38.It is trite that where a plaintiff claims that an order for security for costs would stifle his claim, he should be candid with the court as to his financial resources as he carries the burden of adducing credible evidence to show in truth it is at least more likely than not funds are not available from any source to provide or support security.  He should give cogent and compelling explanation of the reasons why he would be unable to put up security and would therefore be forced to abandon these proceedings: Long Hai Hong v Chan Yu Lydia (HCMP 3179/2013, 10/8/2016)  per DHCJ Marlene Ng (as her Ladyship then was)  at §93.  

39.In his evidence in opposition, P has failed to give any information about his financial resources beyond the properties and/or assets referred to above.  Noticeably, he is silent as to whether he is able to raise the fund from other sources to put up security.  

40.P relies on the fact that he still owes a judgment debt of over RMB 160,000,000 to Shenzhen Tong Tai which remains outstanding after Villa 102 was auctioned and sold.  However, I am unable to conclude from this fact alone that P has no other assets to fund the present action.  The fact that a debtor owes sizeable judgment debts to creditors which he has yet to repay does not necessarily mean such debtor has no assets nor means to repay if he wishes to do so. 

41.As such, I find that P has failed to discharge the burden of adducing credible evidence to show that an order for security would have a stifling effect on P’s claim.  

C.  Ease of registration and/or enforcement

42.Finally, P relies on the existence of the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region.  It is argued that there would be little difficulty in enforcing a costs order granted by a Hong Kong court against P’s assets in the mainland.  

43.As I have already found that P has not identified any certain and readily available assets in PRC for satisfying a costs order, the existence of a reciprocal enforcement regime and/or ease or difficulty in enforcing a costs order under that regime are irrelevant for present purposes.  

44.Having considered all the circumstances of the case, including (i)  that P was not able to show a high degree of probability of succeeding in his claim such that an evaluation of the merits is warranted, and (ii)  P has no identifiable substantial assets within jurisdiction or in Mainland China for enforcement against, (iii)  P has not given cogent and compelling explanation of the reasons why he would be unable to put up security and (iv)  in light of the undisputed fact that P is ordinarily resident outside jurisdiction, I consider it is just that P be ordered to put up security for costs.  

D.  Quantum of Security

45.Regarding quantum of security:

45.1the court has unfettered discretion to order such amount as it thinks just taking into account all circumstances of the case and adopting a “broad-brush” approach and not by a line by line evaluation of the bill of costs.  See: Wang Hsuan Han v Cathay Pacific Airways Ltd (supra), §5.

45.2“sufficient” security or security that in all the circumstances of the case is just does not mean complete security.  That a plaintiff may have a strong and genuine claim (albeit not strong enough to resist the application itself)  is relevant. See: HKCP, Vol. 1, §23/3/32. 

46.Ds seek security for costs in the amount of HK$850,780.00, in which, included:

46.1HK$355,980.00 being for costs already incurred;

46.2HK$494,800.00 being for costs likely in the future to be incurred up to witness statement stage, excluding interlocutory application(s).

47.Taking a broad-brush approach, I do find that the amount sought is on the high side, including in the following aspects:

47.1It was stated that partner of P’s solicitors admitted in 2005 had spent and/or was expected to spend similar, equivalent and sometimes more hours than the associate of the firm on certain items.  This included matters such as preparation of documents, perusal of documents etc.  A reasonable discount should be made to reflect the fact that it is usually expected for the associate in the firm to assist in such work.  

47.2A large area of dispute (and number of papers involved)  between parties is on the ownership of the Mainland Companies, which Ds say may be relevant to the ownership of the Property.  However, the dispute over ownership of the Mainland Companies was already the subject matter in the PRC litigation.  As such, a reasonable discount should be made to reflect the likely overlap and the costs already spent in the PRC litigation. 

47.3I accept counsel for P’s submission that the stated amount of time for taking instructions to prepare for witness statements appears to be on the high side given the core of the dispute is still on the Initial Purchase of the Property and the later execution of the POA, which do not appear to be too complicated. 

47.4Further, I bear in mind also that a major reason for the uncertainty regarding the source of funds of the Initial Purchase was due to the heavy redactions (thusfar without any stated basis)  made to the Redacted Bank Statement by Ds.  Whilst P’s case did not meet the threshold of “very high probability of success”, it cannot be said to be weak or not genuine by any measure. 

48.Taking a broad-brush approach and in exercise of my unfettered discretion, I assess the amount of security for costs to be provided to be at HK$550,000.  

IV  Disposition and Costs

49.As for costs:

49.1Costs should follow the event.  As Ds are successful in their application, costs of this application shall be paid by P to the Ds.  

49.2Ds filed a statement of costs for summary assessment seeking costs of this application at HK$509,758.00.  

49.3In a similar manner to the bill for the claim for security for costs, the time stated for work done for the application seems to be on the high side, and areas where the partner of the firm alone handled the work without assistance of the associate.  Further, Ds’ case at its core was not complicated, and the principles involved are not complex.  A reasonable discount should be made.  

49.4I make costs order nisi for costs of this application be paid by the Plaintiff to the 1^st and 2^nd Defendants, with certificate for counsel, summarily assessed at HK$320,000.

50.Given the above, I make the following orders:

50.1The Plaintiff shall pay into court the sum of HK$550,000 as security for the 1^st and 2^nd Defendants’ costs in this action for costs already incurred and estimated costs up to and inclusive of the filing and/or exchanging of witness statements within 28 days from the date of this Order;

50.2Pending the Plaintiff’s provision of such security, all further proceedings in this action be stayed;

50.3The 1^st and 2^nd Defendants be at liberty to apply for further security for costs. 

50.4On a nisi basis, costs of this application be paid by the Plaintiff to the 1^st and 2^nd Defendants, with certificate for counsel, summarily assessed at HK$320,000.  

51.Last but not least, it remains for me to thank Mr Oh and Mr Lai for their helpful assistance given to the Court.  

Mr Nicholas Oh, instructed by Li & Partners, for the Plaintiff

Mr Lai Chun Ho instructed by Charles Chu & Kenneth Sit, for 1^st and 2^nd Defendants