Read the full judgment text of HCCT 000016/1991 on BabelCite. This High Court CFI judgment was delivered on 15 July 1993 before The Hon. Mr. Justice Kaplan.
Civil procedure – security for costs – application under s.357 of the Companies Ordinance and O.23 r.1(b) of the Rules of the Supreme Court – subcontract terminated – performance bond claim – counterclaim by subcontractor – whether counterclaim goes beyond defensive proceedings – whether credible evidence of inability to pay costs – exercise of discretion – quantum of sufficient security – main contractor claiming on bond against insurance company following alleged default of subcontractor – no direct claim by main contractor against subcontractor – subcontractor raising substantial counterclaim for unlawful determination of subcontract and sums allegedly withheld – whether jurisdiction under s.357 of the Companies Ordinance engaged where company is in substance a Plaintiff in a cross claim – failure by company to disclose financial position – unsatisfied judgment creditors – assignment of rights to bank – controlling individual not a director or shareholder – whether security for costs would stifle a genuine claim – whether application is oppressive – whether ordering a sum less than that claimed is permissible – overlap between claim and counterclaim – held: jurisdiction under s.357 engaged as Multi Sky is in substance maintaining a cross claim – held: credible evidence of inability to pay costs established – held: counterclaim is bona fide and not a sham – held: sufficient security is to be assessed by reference to the overlap between claim and counterclaim and the section means sufficient not complete security – application granted in the sum of HK$750,000 with 21 days to comply in cash or by bank guarantee, failing which the counterclaim is to be stayed – costs order nisi in favour of the Plaintiff.
Legal issues: Whether security for costs may be ordered under O.23 r.1(b) and s.357 of the Companies Ordinance against Multi Sky · Whether there is credible testimony that Multi Sky would be unable to pay the Plaintiff's costs if unsuccessful on the counterclaim · Whether to exercise discretion to order security for costs and the appropriate amount
Outcome: Application for security for costs against Multi Sky Ltd (2nd Defendant) granted in the sum of HK$750,000, to be deposited in cash or by bank guarantee within 21 days, failing which Multi Sky's counterclaim is to be stayed until the security is provided. Costs order nisi in favour of the Plaintiff.
Cited by 1 case