Po Hio Chua v. Hang Seng Bank Ltd
Read the full judgment text of CACV 146/2008 on BabelCite. This Court of Appeal judgment was delivered on 23 September 2008 before Yuen JA and Barma J.
Civil procedure – security for costs – plaintiff ordinarily resident out of the jurisdiction – Order 23 of the Rules of the High Court – whether plaintiff has high probability of success – whether order would stifle genuine claim – exercise of discretion – fresh evidence on appeal – indemnity costs – appeal from HCCL 14/2007 – plaintiff claimed HK$1 million time deposit made in August 1986 with defendant bank, attempted withdrawal 20 years later in March 2007 – defendant disputed authenticity of Advice of Deposit, relied on absence of records in TMD and CDS systems, alleged December 1986 remittance, presumptive proof of payment from prolonged lack of demand, and limitation – Stone J ordered security of $500,000 within 21 days, failing which proceedings stayed – plaintiff appealed and sought to adduce third affirmation as fresh evidence – whether plaintiff's draft second affirmation gave impression of being a person of substance – whether plaintiff had high probability of success – whether security order would stifle claim – whether plaintiff candid about financial resources – whether quantum of $500,000 should be reduced – held: summons for fresh evidence dismissed with costs, no explanation for failure to adduce evidence below and third affirmation raised further credibility issues – plaintiff had not been candid regarding financial position – no error in Stone J's assessment of prospects of success given substantial factual and limitation defences – plaintiff could not resile from earlier counsel's acceptance that quantum was around $500,000 – appeal dismissed as entirely without merit – costs to defendant on indemnity basis.
Legal issues: Whether to grant leave to adduce fresh evidence on appeal regarding alleged inability to pay security · Whether Stone J erred in assessing the plaintiff's probability of success for the purpose of ordering security for costs · Whether the amount of security for costs should be reduced from $500,000 · Basis of costs on the appeal
Outcome: Appeal dismissed; summons for leave to adduce fresh evidence dismissed with costs.
Cited by 6 cases · Cites 3 cases
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CACV 146/2008 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 146 OF 2008 (On Appeal from HCCL No. 14 of 2007) ___________________________ BETWEEN:
___________________________ Before: Hon Yuen JA and Barma J in Court Date of hearing and judgment: 23 September 2008
------------------------------------ JUDGMENT ----------------------------------- Hon. Yuen JA (giving the judgment of the court): 1.This is an appeal from a decision of Stone J given on 18 April 2008 ordering the Plaintiff who is ordinarily resident outside Hong Kong, to pay security for costs in the sum of $500,000 within 21 days of his order, failing which all further proceedings in HCCL 14 of 2007 would be stayed until further order. 2.The Notice of Appeal was lodged on 23 May 2008. Less than a week before the hearing of the appeal today, on 17 September 2008 the Plaintiff issued a summons for leave to adduce additional evidence at the hearing, being the 3rd affirmation of the Plaintiff annexed to the summons. 3.We dealt with that summons first today, and after hearing the submissions of the Plaintiff’s counsel and considering the contents of the 3rd affirmation, we dismissed the summons with costs to the Defendant and proceeded to deal with the appeal. Background - Plaintiff’s case 4.It may be helpful to summarize briefly the background of the case. The Plaintiff is a Filipino-Chinese businessman, now in his early 80's. He claims that in August 1986 he and his wife (who died in 1992) deposited a sum of HK$1 million with the Defendant bank in a time deposit for one month, maturing on 21 September 1986, as evidenced by an Advice of Deposit. He attempted to withdraw the sum in March 2007, some 20 years after the deposit was made. The Defendant refused to pay and hence he instituted proceedings for the sum of $1 million, with interest at the contractual rate, and costs. Defendant’s case 5.The Defendant does not admit the authenticity of the Advice of Deposit. More importantly, the Defendant says that:
Application for security for costs 6.On 15 November 2007 the Defendant applied for security for costs under Order 23 of the Rules of the High Court on the ground that the Plaintiff is ordinarily resident out of the jurisdiction. The sum sought was about $838,000. The application was supported by an affirmation made by the Defendant’s solicitor filed on 15 November 2007. Plaintiff’s response 7.On 19 December 2007 the Plaintiff’s solicitor filed an affirmation in opposition to the application. It was not disputed that the Plaintiff is ordinarily resident out of the jurisdiction but the application for security for costs was opposed on the ground that the Plaintiff had “a high possibility of success” (para. 29). 8.It was not asserted that if the Plaintiff were required to pay security for costs, he would not be able to pay it and that his claim would be stifled. On the contrary, a draft 2nd affirmation of the Plaintiff, the Chinese version of which was signed by the Plaintiff, was exhibited as “LHH-1". In a section headed “my previous and current financial condition”, the Plaintiff said the following:
Principles on security for costs 9.It is well-established that security for costs from a foreign plaintiff is not automatic, and the court would consider what is just in all the circumstances, a major matter for consideration being whether the plaintiff can show that he has a high probability of success, and (in an appropriate case) taking into account whether the order would stifle a genuine claim (Hong Kong Civil Procedure 2008 vol.1 §23/3/3). Hearing before Stone J 10.When the matter went before Stone J, the Plaintiff opposed the application for security for costs on the basis that he had a high probability of success and that the sum sought was excessive, complaining about the fees for senior counsel. 11.The judge considered the “particular circumstances” of this case and rejected the Plaintiff’s argument that he had a high probability of success. However he accepted the Plaintiff’s contention that senior counsel was not required and accordingly reduced the sum to $500,000. 12.It was only when the judge was asking the Plaintiff’s counsel about the time of payment that the Plaintiff’s counsel announced his instructions that the Plaintiff was “unable to pay the 500,000 due to his financial difficulties” (Transcript p.207B-C). The Plaintiff’s counsel offered the sum of $100,000 instead. 13.When the judge inquired whether there were any allegations in the affirmation of inability to pay, the Plaintiff’s counsel accepted that there was none, nor were there any such arguments in his skeleton submissions (Transcript p.207E, 207 I). Indeed, when counsel for the Defendant referred the judge to the Plaintiff’s statement which asserted that he had houses, land and savings, the Plaintiff’s counsel confirmed to the court that he was “not running” the impecuniosity argument (Transcript p.208 B-F) 14.In those circumstances, as the judge succinctly put it, the Plaintiff was “out of court” in arguing for a reduction of the security on the ground of financial difficulties since there was no mention of it in the affirmations or skeleton (Transcript p.207J-K). 15.Accordingly the judge ordered that the Plaintiff provide security for costs in the sum of $500,000 within 21 days, failing which all further proceedings in the action would be stayed until further order. Appeal 16.The Plaintiff has not made payment but has lodged a Notice of Appeal for an order that Stone J’s order be set aside, or alternatively that the amount of security be “substantially reduced”. Principles on appeal from exercise of discretion 17.The principles to be applied in an appeal from the exercise of a judge’s discretion are well-known. An appellate court should not interfere with the exercise of a judge’s discretion unless he has erred in law or has misapprehended a material fact, or has taken into account some matter which he should not have taken into account, or has left out of account some matter which he should have taken into account, or if the decision was so plainly wrong that it must have been reached by a faulty assessment of the weights of the different factors which have to be taken into account (cf Alltrans Express Ltd v CVA Holdings Ltd [1984] 1 WLR 394, applied in Lakhan v Wu Wing Tat [1987] 3 HKC 54) Assessment of probability of success 18.Before this court, the Plaintiff’s counsel (who did not appear below) has argued that the judge has erred in failing to have proper regard to the Plaintiff’s prospects of success and the paucity of the defence. However as can be seen from the Transcript and the Reasons for Decision, the judge was well aware of the Plaintiff’s case and the Defendant’s defence. We agree with the judge’s assessment that the Plaintiff’s case did not enjoy such a high probability of success that security for costs should not be ordered. It is inappropriate for us to go into the merits in detail at this stage. Stifling of claim 19.As we have said, it was not argued before the judge that the Plaintiff’s financial circumstances were such that an order of security would stifle his claim. The Plaintiff however wishes to take that point now and has filed the summons for leave to adduce fresh evidence on appeal so that he can do so. Summons for leave to adduce fresh evidence 20.Although the conditions of Ladd v Marshall [1954] 1 WLR 1489 do not apply to the present proceedings as there has not been a trial or hearing on the merits, in exercising its discretion whether to accept fresh evidence, an important factor for this court to take into account is the reason why the evidence was not adduced in the court below (Po Kwong Marble Factory Ltd v Wah Yee Decoration Co Ltd [1997] HKLRD 1341, Hong Kong Civil Procedure 2008 vol.1 §59/10/16). 21.However the Plaintiff’s 3rd affirmation does not explain why, when he adduced evidence in his draft 2nd affirmation about his assets, he did not also disclose (as he now alleges) that his 4 houses and the piece of land cannot be “sold easily”, or that the piece of land could only be realized on resumption, or that he relied on the money in the “Special Peso Savings Plan” for his daily living expenses. These are all matters that were within the Plaintiff’s knowledge, or would have been within his knowledge had he made appropriate inquiries before he made his response to the Defendant’s application for security for costs. On the contrary, looking at the Plaintiff’s draft 2nd affirmation, the impression he was trying to give was that he was a person of substance. 22.In any event, considering the 3rd affirmation, it appears to pose a number of questions as well. As an example, the Plaintiff had asserted that his 4 houses were worth about HK$3.6 million. In the 3rd affirmation the Plaintiff says that he and his sons would have nowhere to live if he sold the houses (or presumably, any one of them). And yet in the draft 2nd affirmation, the Plaintiff had said that his son Johnny had emigrated to Canada, and thus clearly was not living in house No.176. Also in the draft 2nd affirmation, the Plaintiff alleged that he was living in both houses No. 176 and No.182 - no explanation has been given as to why one person needs two houses. 23.Clearly the Plaintiff has not been completely candid with the court as to his financial resources even now. It is well-established that if a plaintiff alleges that an order for security for costs would stifle his claim, the burden is on him to adduce credible evidence to demonstrate that “in truth it is at least more likely than not that funds are not available from any source to provide or support security” (Flender Werft AG v Aegean Maritime Ltd [1990] 2 Lloyd’s Rep 27, quoted in Dragages et Travaux Public v Hong Kong Chinese Insurance Co Ltd [1993] 1 HKC 617). Given the state of the evidence in the 3rd affirmation and the failure to explain why the evidence was not adduced earlier, we see no reason why the Plaintiff should be permitted to adduce the 3rd affirmation as fresh evidence on appeal, or to change his stand from the one he had taken before Stone J ordered him to pay security for costs. Amount of security 24.Finally we see no reason to gainsay the judge’s assessment of the amount of security. At the hearing, the objection to the draft bill of costs made by the Plaintiff’s then counsel was in respect of fees for senior counsel (Transcript p.204D) and no objection was made to the remainder of the bill in the sum of $500,000. When the judge asked “So you say, if, which is denied, we have to pay security for costs up to and including exchange of witness statements, it should be 500,000”, counsel’s answer was “Yes, around about 500,000” (Transcript p.205A-F). Nothing could be clearer and it is simply not open to the Plaintiff now to renege on that position. 25.It is not acceptable for the Plaintiff’s counsel now to argue that despite his predecessor’s acceptance of the quantum of costs (subject only to senior counsel’s fees), the judge nevertheless should have insisted on examining the draft bill, whether on a line by line basis or a broad brush approach. It is the responsibility of a litigant‘s legal advisers to advance such points as they think necessary in the interests of their client. Order 26.In the circumstances, this appeal is entirely without merit and we would dismiss it. 27.Having heard the parties on costs, we see no reason to depart from the usual rule that costs should follow the event and having regard to the hopeless nature of this appeal, we would order that the costs be taxed on an indemnity basis and be paid by the Plaintiff to the Defendant.
Mr Simson Chu instructed by HH Lau & Co for the Plaintiff (Appellant) Mr M C Law instructed by JSM for the Defendant (Respondent) |
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