Yield Sun (Companies Secretaries) Ltd v. Shui Hing Investment Co Ltd and Another

HCA010159/1983

IN THE HIGH COURT OF JUSTICE

BETWEEN

Coram: Hon. Mantell J. in Chambers

Date of Hearing: 10 April, 1984.

Date of Delivery of Decision: 10th April, 1984.

___________

DECISION

___________

1. This is an application for security for costs by the defendants to four actions now consolidated in each of which the plaintiff is different. In each case, the plaintiff is a company with paid-up capital of $2. In those circumstances, the defendants ask for security as provided for under S.357 of the Companies Ordinance.  Miss Loh who appears for the plaintiffs, having been given an adjournment to file affidavit evidence to show that the company's assets were greater than appeared as a result of company searches, has not done so and now does not resist the making of an order for security in the form of bank guarantees. What she does question, however, is the amount of the security which, in the first instance, was claimed at just over $400,000.

Now   I have read the pleadings in this case and I have to do the best I can to make an assessment of the issues involved and the difficulty of those issues and I have come to the conclusion that this is a case in which it will probably be found not to have been reasonable or necessary to instruct leading counsel. It seems to me that the questions of fact and law raised on the pleadings are well within the competence of experienced junior counsel such as has appeared before me on behalf of the defendants in this application. Miss Loh may be right in saying that it could take less but I think at the very most the action will last a total of five days. I think it right to come to my assessment of the proper figure for security on the basis that the case will last five days and it will involve the instructing of junior counsel only. I bear in mind, as was very properly brought once again my notice, the judgment of the Court of Appeal in England in the Procon case and in particular the words of Lord Justice Cumming-Bruce at page 18 of the transcript of the judgment, in which, the learned Lord Justice criticized the statement of principle contained in the White Book with regard to the fixing of the amount of security and in particular that there is no basis for fixing a sum of two thirds of the estimated party and party costs. But he does say this:

"If security is sought at the very early stage in the proceedings, the court ordering security will be faced with a situation in which a solicitor or his clerk has made an estimate of the costs likely in the future to be incurred and probably the costs already incurred, or paid, will be a very small fraction of the security that the applicant is seeking. At that stage one of the features of the future of the action, which is relevant, is the possibility that the action may be settled - perhaps quite soon. In such a situation it may well be sensible to make an arbitrary discount of costs estimated as the probable future costs, but whether one third is likely in any given case to be a sensible discount, and whether any discount at all should be made, will depend on the view of the court on consideration of all the circumstances.

That seems to me to leave the court with a very wide discretion in the exercise of which the aim should be to provide in the proper case a sum by way of security which the court considers at the time of the application sufficient to indemnify the defendants on a party and party basis for the likely costs to be incurred in the action and it is on that basis that I have approached the question of amount. I think, having regard to everything that has been said to me, that an allowance by way of security of $8,000 on the brief to junior counsel would be a proper allowance and with refreshers of $4,000 a day over four days makes a total for counsel's fees in the action of $24,000. I also think it right to allow something in relation to settling of pleadings and affidavits in the action. I have not, for the purposes of ordering security, taken into account the costs of the application for security itself. The figure I have allowed for those interlocutory matters in relation to counsel's fees is $10,000. The figure which I am prepared to order by way of security in relation to solicitors' profit costs is by necessity an arbitrary one. I do not set out to tax the solicitors' bill at this stage and I propose to allow $20,000 in all. That makes a total of $54,000 which I propose to order by way of security divided between the four plaintiffs. That means that each plaintiff will provide security in a form satisfactory to the defendants in the sum of $13,500 and the action will be stayed until such security is provided. Against the event of there being a question as to whether or not the form of security is satisfactory, I will give liberty to apply. Costs of today and the adjourned hearing to he the defendants in any event.

(C.B.K. Mantell)

Judge of the High Court

Representation:

Miss E. Loh of Loh & Co. for Plaintiff.

R. Sujanani instructed by Ip, Ku & Stoppa for Defendants.