Colvinsan Ltd v. Herbert Kees Ltd

HCA002111/1976

IN THE HIGH COURT OF HONG KONG

Action No. 2111 of 1976

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Coram: Mr. Commissioner LIU, Q.C. in Chambers

Date of Judgment: 19th October, 1977.

On appeal from Registrar's Order dated 3rd October, 1977.

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DECISION

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1. In this case, the Plaintiff company claims against the Defendant company on certain alleged defects in goods sold by the Defendant to the Plaintiff. It is claimed that the defective goods have been rejected and sold at a considerably lower price than the intended resale price thereof by the Plaintiff.

2. After close of pleadings in April, 1977, the Defendant saw fit to issue a summons seeking payment by the Plaintiff of security for costs as a litigant resident out of jurisdiction. It is common ground that the Plaintiff is ordinarily resident in the United Kingdom out of the jurisdiction of Hong Kong. That fact, as properly pointed out by counsel for the Plaintiff, has been no secret from beginning to end as the Plaintiff's U.K. address was specifically endorsed on the Writ of Summons issued on the 7th October 1976.

3. The Defendant's summons for security for costs came up before the learned Registrar on the 27th of April and was then adjourned to a date to be fixed. It is also a fact that the Defendant made no effort in having the summons heard until the 3rd of October 1977. Lest I should be taken as being incomplete, I ought to add that the Defendant did apply for a date to be fixed on the 23rd of September.

4. Having heard submissions advanced on behalf of as well the Defendant as the Plaintiff, the learned Registrar dismissed the Summons for security for costs on the 3rd of October 1977, and that dismissal has brought about the present appeal.

5. The Law is well established and is not a matter of controversy between the Plaintiff and Defendant: It is not disputed that under Order 23 Rule 1 RSC to which the Defendant has confined itself on this appeal, the usual ordinary or general rule of practice of the Courts is to grant an order for security for costs to be furnished by a foreign Plaintiff, but to-day that usual ordinary rule of practice is no longer inflexible. A Court must take into consideration, in the exercise of its judicial discretion, all the circumstances of the case. The matter under consideration is therefore within a very narrow compass.

6. As I see it: one of the facets to be borne in mind is the apparent dilatoriness of the Defendant in reviving the application for security for costs some five months after the initial appearance before the learned Registrar. Solicitor for the Defendant has offered an explanation in his reply to the submissions of counsel for the Plaintiff on this appeal. It is sought to establish that it was not obvious to the Defendant that the Plaintiff was truely dedicated to the prosecution of this action until the filing of the List of Documents; thus in effect the Defendant was, so runs solicitor's argument, motivated by an assuring step taken by the plaintiff in having its summons for security for costs heard. It is not suggested by solicitor for the Defendant that the Plaintiff has at any time been inactive in the prosecution of this action; nor has it been canvassed before this Court that it had not been just as desirable for the Defendant to have the summons for security for costs brought to an early conclusion. In my view, the dilatoriness of the defendant, in finally having the summons for security for costs disposed of, has not been satisfactorily explained. Obviously, this is not vital to the Defendant's application. This is no more than one of the circumstances to be taken into consideration by the learned Registrar and this Court on appeal which is to be heard de novo.

7. I turn next to consider the other matters. It is permissible for the Court in dealing with a summons for security for costs to take cognizance of the prospects of success of the parties to the action. The Plaintiff's claim is straight-forward and supported by a survey report, although all the material allegations have been denied seriatim. The Defendant has notice of the rejection, notice of the re-sale price and notice of the survey report. Of course, bare denials of these allegations do not per se suggest that there is a strong prima facie presumption that the defence will fail. The defence in this case has joined issue with the Plaintiff on its various allegations, and, as rightly submitted by solicitor for the Defendant, there are bona fide issues to be tried. But then the Defendant also relies on certain matters in its Counter-claim against the Plaintiff: The Defendant claims against the Plaintiff on certain alleged contractual obligations. The Plaintiff alleges in its Reply that no obligations could arise from those other intended contractual relationship without a further confirmation by the Plaintiff upon delivery, inspection, approval and acceptance of samples. The Plaintiff maintains that no such confirmation was ever given to the Defendant and that no samples have been dispatched by the Defendant to the Plaintiff. There is no further answer from the Defendant who is naturally not obligated to file any further pleadings, but one would expect the Defendant to touch upon this averment in their affidavits in support of the application for security for costs. The Reply of this case was filed on the 7th January 1977, and this Summons was not finally disposed of by the learned Registrar until the 3rd of October, 1977. It would appear from the documents in this case that the prospects of success of the Defendant's counter-claim are questionable. Furthermore, the manner in which the Defendant's counter-claim is framed does in a way reflect the weakness of its primary answer or opposition to the claims of the Plaintiff.

8. And lastly but not least, I have also given consideration to the information of the structure of the Plaintiff company as furnished by the Defendant. In the confidential financial report on the Plaintiff, exhibited and referred to in the affidavit of Mr. Mutimer filed herein on the 29th September 1977, the Plaintiff company is said to be a company with not insubstantial commercial involvments and, according to the Banker's report, the directors of which are considered to be respectable and trustworthy. It is not to be overlooked that the Plaintiff company is a U.K. based company. Any costs awarded against the Plaintiff company would be more likely recoverable than from a company resident in other dubious territories.

9. For all these reasons, I take the view that security for costs should not be ordered against the Plaintiff and that in the exercise of my discretion there is no justification in the circumstances for me to abide by the usual ordinary rule of practice.

10. In conclusion, this appeal must be dismissed with costs. Certificate for counsel.

Representation:

Mr. Van Bunsen instructed by Messrs. H.H. LAU for Plaintiff.

Mr. Stevens of Messrs. J.S.M. for Defendant.