Wai Yip Hin v. Wong Po Kit

CACV 336/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 336 OF 2008

(ON APPEAL FROM HCPI 56 OF 2005)

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BETWEEN

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Before : Hon Cheung JA in Chambers

Date of Hearing : 20 February 2009

Date of Decision : 20 February 2009

Date of Reasons for Decision : 24 February 2009

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REASONS FOR DECISION

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Security for costs of appeal

1.The plaintiff successfully obtained judgment from Sakhrani J against the defendant for the sum of $260,000.  The claim arose out of injuries sustained by the plaintiff when he was hit on the head by the defendant who was his instructor in a Kendo lesson.  Kendo is a Japanese martial art practised with a bamboo sword. 

2.The defendant lodged an appeal against the judgment.  The appeal is scheduled to be heard on 27 March 2009.  The plaintiff applied for security for costs of the appeal in the sum of $570,000 against the defendant.

Special circumstances

3.The Court may on special circumstances order an appellant to provide security for the costs of the appeal. 

Difficulties in enforcement

4.It has been held by the English Court that the categories of special circumstances are not closed and if the conduct of the appellant demonstrates that the respondent may have difficulties in enforcing the costs order, then the Court may consider imposing security for costs against the appellant.  Such conducts may be demonstrated by the appellant trying to evade payment of the judgment or costs order that had been made against him in the court below.  In the unreported English decision of Don King Productions Inc. v. Warren and others, judgment of the English Court of Appeal (Civil Division) dated 19 November 1998 Robert Walker L. J., following the approach of Mr Registrar Adams of the English Court of Appeal in the case of Clansmen Sporting Club Ltd (t/a St. Andrews Sporting Club of Glasgow) and Another v. Robinson dated 1 April 1996, stated that

‘Security for costs is very much a practical matter and not a paper exercise.  The court is entitled to look not only at net wealth as shown by the balance sheet, but also at the practicalities of extracting costs from an unsuccessful appellant.’

5.Para. 59/10/30 of The Hong Kong Civil Procedure 2009 Vol. 1 also stated that

‘The Court of Appeal will order security for costs upon proof (or in some cases upon a presumption) that the respondent will be likely to encounter undue delay or be put to undue expense in enforcing any order for costs in respect of the appeal (A Bank v. B, unreported, 1996).  Examples of security being ordered under this new head of special circumstances are: where the nature of the only asset(s) available to meet the costs of the appeal is such that enforcement may be expensive or protracted (e.g. shares in a private company or an appellant’s undivided share in a house where the person entitled to the other share is not a party to the appeal), or where the appellant’s conduct indicates that he is likely to resist enforcement of any costs order.’

My view

6.The rationale for imposing security for costs of the appeal is to ensure that a successful respondent to an appeal would be able to recover his costs from the security in the event that the appeal is dismissed.  Proceeding on such a basis, then clearly the ambit of special circumstances should not be confined only to the traditional ones like that of impecuniosity of the appellant.  The likely problem of recovering the costs in the light of the existing difficulties of enforcing court orders due to the evasion by the appellant is a relevant factor to be taken into account in terms of special circumstances. 

Difficulties in enforcing judgment

7.The plaintiff claimed that he has encountered difficulties in enforcing the judgment against the defendant : the defendant ignored his request for payment despite demands.  Further the plaintiff was required to commence enforcement proceedings against the defendant by obtaining an order for oral examination dated 26 November 2008.  A statutory demand dated 2 December 2008 was served on the defendant on 3 December 2008. 

8.The plaintiff was further unable to locate the defendant at the addresses stated in the business registration particulars of his business.  The plaintiff had instructed a private investigator to locate the defendant.  When the private investigator telephoned the defendant, the defendant refused to disclose his business address.  After the defendant had mistakenly believed that he had hung up the telephone, the investigator overheard him saying that he intended to cut his business telephone and to continue to evade the plaintiff. 

Present situation

9.As to the alleged difficulty in enforcing the judgment, as it turned out, there was a dispute between the parties after the judgment was given as to whether the judge had ordered interest against the defendant.  Although the clerk of the judge had informed the plaintiff that the matter should be dealt with by way of further application, the plaintiff did not make such an application before the judge to clarify the position. 

10.Whatever might have happened in terms of enforcement and also what the defendant said after the telephone conversation, the fact remains that the defendant who is pursuing the appeal as of right had paid up the judgment sum on 31 December 2008.  This is inconsistent with the act of a person who is determined to evade enforcement proceedings against him.  The plaintiff was further able to serve the order for examination personally on the defendant at Queen Elizabeth Stadium where he taught Kendo lessons.  Although it is said that the plaintiff may not be able to locate the defendant once he ceases to teach there, the fact remains that the defendant is a Hong Kong resident, has carried on business for many years in Hong Kong and is the President and Chief Instructor of the Hong Kong Kendo Association. 

11.On the facts of this case I am not convinced that special circumstances have been demonstrated.  This being the case, it is not necessary for me to consider the merits of the defendant’s appeal to see whether the discretion should be exercised or not.

Conclusion

12.Accordingly the application was dismissed with costs to the defendant.

Mr. Douglas Lam, instructed by Messrs Jimmie Wong & Henry Wai, for the Plaintiff

Mr. Y. L. Cheung, instructed by Messrs Ho, Tse, Wai & Partners, for the Defendant