Brand Farrar Buxbaum Llp. v. Samuel-rozenbaum Diamond Ltd
Read the full judgment text of HCA 5191/1998 on BabelCite. This High Court CFI judgment was delivered on 11 November 2003 before Master Kenneth Wong.
Civil procedure – security for costs – Order 23, rule 1 of the Rules of the High Court – whether Execution Summons seeking leave to execute judgment debt against a non-party director personally is "an action or other proceeding" such that the respondent is a "defendant" for the purpose of applying for security – distinction between interlocutory applications and proceedings in the nature of an action – whether foreign plaintiff – whether plaintiff changed address during course of proceedings to evade consequences of litigation – exercise of discretion to order security – broad-brush assessment of quantum of security – default judgment against diamond-trading companies – American law firm plaintiff – allegation that first judgment debtor was never a body corporate – judgment debt of US$92,919.60 plus interest – Master Woolley's earlier order setting aside oral examination of Mr. Ilan Samuel as director of SRDL – Mr. Ilan Samuel's application for security for costs of the Plaintiff's Execution Summons – held that the Execution Summons was a proceeding in the nature of an action deciding substantive rights, so Mr. Samuel was a "defendant" under Order 23, rule 1 – held that the Plaintiff was a foreign American law firm ordinarily resident out of the jurisdiction, satisfying the threshold under Order 23, rule 1(a) – held that Order 23, rule 1(d) was not made out because the Plaintiff had ceased business in Hong Kong before the Execution Summons was issued – balancing exercise under Keart Developments Ltd v Tarmac Construction Ltd (as approved in Wing Hing Provision v Hanjin Shipping) carried out – Plaintiff's bare and unsupported assertion of financial weakness rejected – Plaintiff's case on the merits not shown to have a high degree of probability of success because of doubt whether Order 45 and Order 49B, rule 1 would support execution against Mr. Samuel personally if SRDL had never existed – security ordered in the sum of HK$150,000 by way of payment into court or other mode within 42 days – Execution Summons stayed pending provision of security – costs of the application awarded to Mr. Ilan Samuel with certificate for counsel in any event after determination of the Execution Summons.
Legal issues: Whether Mr. Samuel is a "defendant" under Order 23, rule 1 of the Rules of the High Court for the purpose of applying for security for costs · Whether the Plaintiff is a foreign plaintiff ordinarily resident out of the jurisdiction under Order 23, rule 1(a) · Whether Order 23, rule 1(d) was satisfied — change of address during proceedings to evade consequences of litigation · Whether the discretion to order security for costs should be exercised in Mr. Samuel's favour · Quantum of security for costs
Outcome: Mr. Samuel's application for security for costs of the Plaintiff's Execution Summons was allowed; the Plaintiff was ordered to furnish security in the sum of HK$150,000 and the Execution Summons was stayed pending provision of such security. Costs of the application were awarded to Mr. Ilan Samuel with a certificate for counsel.
Cites 1 case
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HCA005191E/1998 HCA 5191/1998 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 5191 OF 1998 _________________________ BRAND FARRAR BUXBAUM LLP. v. SAMUEL-ROZENBAUM DIAMOND LTD
_________________________ Coram: Master Kenneth Wong in Chambers Dates of Hearing: 17 and 25 October 2003 Date of Handing Down Reasons for Decision: 11 November 2003 _______________________ REASONS FOR DECISION _______________________ Application 1.There was before me a Summons taken out by Mr. Ilan Samuel ("Mr. Samuel") on 25 July 2003 for security for costs incurred and to be incurred by him in another Summons issued by the Plaintiff (the Judgment Creditor) on 21 July 2003 for leave to issue execution against Mr. Samuel and for oral examination of him, not in the capacity as a director or officer of the Defendants (the Judgment Debtors) but as a judgment debtor himself. On 25 October 2003, I allowed Mr. Samuel's application and reserved the reasons for the decision, which I now give. 2.This case has a complicated history. I shall set out below only those events which are relevant to the present application:-
Grounds of the Application 3.In the present Summons, it was stated that the application was made under Order 23, rule 1 of the Rules of the High Court and the inherent jurisdiction of the Court. At the hearing, Mr. José-Antonio Maurellet, Counsel for Mr. Samuel told the Court that he did not rely on the inherent jurisdiction of the Court. In respect of Order 23, rule 1, Mr. Maurellet said he relied on Order 23, rule 1(a) ("that the plaintiff is ordinarily resident out of the jurisdiction") and Order 23, rule 1(d) ("that the plaintiff has changed his address during the course of the proceedings with a view to evading the consequences of the litigation"). 4.Of course, the proof of rule 1(a) or rule 1(d) meets the threshold of granting the security only. Having had the jurisdiction, I need to pay regard to all the circumstances of the case. If I think it just to do so, I may then order the security to be furnished. I have drawn parties' attention to the case of Wing Hing Provision, Wine & Spirits Trading Co. Ltd. V. Hanjin Shipping Co. Ltd. [1998] 4 HKC 461. Parties agree that I should follow the relevant principles summarized in Keart Developments Ltd. V. Tarmac Construction Limited & Anor. [1995] 3 All ER 534 at 539-540 and cited with approval by Mr. Justice Godfrey JA at 464 of the Wing Hing case, which are reproduced as follows:-
Is Mr. Samuel a "defendant" under Order 23, rule 1? 5.The Plaintiff raised a more fundamental challenge to Mr. Samuel's application, which was that Mr. Samuel was not even "a defendant to an action or other proceedings in the Court of First Instance" within Order 23, rule 1. If this was correct, Mr. Samuel had no locus to make the application at all. 6.The strongest challenge as I can see on this argument is the reliance on a passage in paragraph 23/3/2, Hong Kong Civil Procedure 2002:
7.In a nutshell, the argument was:-
8.I reject the argument for the following reasons:-
9.Therefore, in my view, Mr. Samuel is a "defendant" under Order 23, rule 1. The Plaintiff: Foreign Plaintiff? 10.At one stage, the Plaintiff sought to suggest that this was the same issue to be decided in another Summons taken out by the Claimant dated 23 July 2003 for leave to execute against Mr. David C. Buxbaum ("Mr. Buxbaum") for costs of the interpleader proceedings ordered against the Plaintiff, "who was at all material times a partner of the Plaintiff". And the material times according to that Summons were respectively (1) 15 October 2002, the date of the Order of Mr. Justice Ma, (2) 28 November 2002, the date of the Order of Mr. Justice Sakhrani and (3) 17 December 2002, the date of another Order of Mr. Justice Sakhrani. I rejected this suggestion. For the purpose of security for costs, the Court was concerned with the present status and residence of the Plaintiff and not its status and residence at any time in the past. 11.In his affirmation filed with this Court on the Plaintiff's behalf recently on 9 August 2003, Mr. Buxbaum deposed (at paragraph 2) as follows:
12.In the evidence exhibited by Mr. Samuel, the business registration record of the Plaintiff showed that it has ceased the business in Hong Kong on 21 January 2003, whereas a letter from the Law Society to Mr. Samuel's solicitors showed that the Plaintiff ceased practice on 30 June 2003 and its "contact" address (not business address) is a residential address in Hong Kong. 13.In another affirmation filed belatedly on 23 October 2003 (which parties agreed that I could look at it de bene esse), Mr. Buxbaum deposed further on the status of the Plaintiff at paragraph 4(a):
14.The evidence was overwhelming: that the Plaintiff was an American law firm and has no business in Hong Kong. I was satisfied that the Plaintiff is a foreign plaintiff. 15.This finding sufficiently gave me the jurisdiction to consider whether discretion should be exercised to grant security for costs. For completeness sake I express the view that the evidence however cannot demonstrate on balance of probability that the Plaintiff changed its address (in effect it ceased business) during the course of proceedings with a view to evading the consequences of the litigation under Order 23, rule 1(1)(d). This is because firstly the present proceedings in the present context refer to the Execution Summons, which was issued on 21 July 2003, but long before that in January 2003 the Plaintiff had ceased business (and the practice ceased on 30 June 2003). As such its address was not changed "during the course of proceedings". Secondly, there is simply insufficient evidence produced to me showing, whether objectively or subjectively, the intention of the Plaintiff, in ceasing business, was to avoid the consequence of the present proceedings. Discretion to allow security 16.After looking at all the relevant circumstances, I was satisfied that security should be given by the Plaintiff, for the following reasons:-
Quantum 17.I followed the practice of this Court as set out in paragraph 23/3/32 of Hong Kong Civil Procedure 2002 in estimating Mr. Samuel's costs on a broad-brush approach. Looking at the skeleton bills submitted by Mr. Samuel's solicitors, many items were in my view excessive. I have also considered that the amount ordered should be proportional to the judgment debt at stake (which was US$92,919.60 plus interest). Bearing all these factors in mind, I took the view that HK$150,000 is a just sum of which security should be furnished. Result 18.After hearing parties on the terms of the order, I made the following order:-
Representation: Mr. Simon Woo instructed by Messrs. Weir & Associates for the Plaintiff Mr. José-Antonio Maurellet instructed by Messrs. Tai, Tang & Chong for Mr. Ilan Samuel |
Cases cited in this judgment
Further hearings and rulings under HCA 5191/1998