Rimasia Capital Partners, L.P. v. Oldham, Li & Nie Solicitiors (A Firm)

HCMP 188/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 188 OF 2009

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Coram : Before Master C. Chan in Chambers

Date of Paper Disposal: 29 April 2009

Date of Decision: 29 April 2009

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D E C I S I O N

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1.The Defendant applies for an order for security for costs in this proceeding on two grounds (a) the Plaintiff has wrongly described its place of residence and (b) it is a foreign entity.

2.From what I understand, the Defendant does not pursue the (a) ground leaving behind the 2^nd ground for us to consider.

3.The main contention is whether the Plaintiff is ordinarily resident in Hong Kong.  Rightly pointed out by the Plaintiff the most relevant authority on that issue is the Court of Appeal decision in the case of Insurance Co of the State of Pennsylvania v Grand Union Insurance Co Ltd and another [1988] HKC 200 where Cons VP at 204B states:

“…we have come to the conclusion that so far as the application of O.23 r.1 to a limited company is concerned, the proper construction of ‘ordinary resident’ should be by reference to where the central management and control abides.”

4.As far as I understand, the Plaintiff carries on business in Hong Kong with an investment team.  To support its argument, the Plaintiff in its submission refers me to paragraph 2 of the 2^nd Affidavit of Mr. Lester Lim who avers:

“The management and control of the business is, and since I began working for the Plaintiff in February 2005 always has been, located in Hong Kong.  The individual who controls the management of the Plaintiff is Mr. Lim Wei, who is described by Mr. Richard Healy in his 2^nd Affidavit as the Plaintiff’s Managing Partner.”

5.The Defendant was the former solicitor of the Plaintiff and used to handle the legal matter on its behalf.  They should know where the management and control lies.  I find no evidence to rebut the averment by the Plaintiff.  I rule that the Plaintiff is not ordinarily resident outside the jurisdiction of Hong Kong.

6.The Defendant argues that residence is not the only point for consideration and asks me to take into consideration the issue of difficulty in enforcing the costs order.  He refers me to two cases.  First is Jollymex N.V. v Jollybaby International Ltd. [2007] HKEC 585 where Saw J makes the decision resting on the following undisputed facts: (a) the plaintiff is ordinarily resident out of the jurisdiction; (b) the plaintiff has no assets in the jurisdiction; and (c) an order for security for costs is usually granted against the non-resident plaintiff if the plaintiff cannot clearly demonstrate that it has a high degree of probability of success at trial.  I have ruled earlier that the Plaintiff is not ordinarily resident outside the jurisdiction of Hong Kong and this is the distinction that the present case is different from Jollymex.

7.The other case I am referred to is Izumo Mokko Co. Ltd v TS Lines Ltd [2007] 2 HKLRD 363 where His Honour Judge Lok has to consider whether an order for security for costs is discriminatory and unjustified.  After reading the whole judgment I agree with the learned editor’s observation in the head notes: “Other than the fact that Ps were foreign corporations, the court did not know anything about Ps.”  In this case the Defendant must have known a lot more about his former client.  However, I agree that enforcement is a factor I have to bear in mind when I consider all the circumstances of this case.

8.In this case the Plaintiff, a former client of the Defendant, by originating summons issued under section 67 of the Legal Practitioners Ordinance, prays for the Defendant’s bill of fees, charges and disbursements be referred to the Taxing Master to be taxed.  The Defendant opposed it on various grounds which, I consider, amount to at least an arguable case for the defence.  The Plaintiff has, for some practical reasons, made payment into court a sum of HK$249,024 as security for the Defendant’s claimed outstanding amount of fess, charges and disbursements.  The Defendant now applies for an order for security for its costs of the present proceedings by means of paying into court a further sum of HK$340,000.

9.I have examined the Defendant’s Skeleton Bill of Costs for that purpose.  I find the estimated costs grossly excessive.  It is a relatively simple case.  I would have considered that the amount of costs on party and party basis should be around HK$250,000.

10.As I have said, enforcement is one of the issues I have to consider.  The Plaintiff is one of the former clients of the Defendant which, I have no evidence to show or even allegation, is unable to pay the costs.  The whole emphasis of the Defendant’s submission is on the corporate structure of the Plaintiff resting on the assumption that the Plaintiff is unable to satisfy the Defendant’s costs at the end of the proceedings.

11.The total amount submitted for taxation is HK$1,640,638.  In the event that the amount is taxed off by one-sixth the Plaintiff will get its costs.  I am fully aware that the taxation of those bills will be on a solicitor and client basis which is very generous with statutory presumptions in favour of the Defendant, but I still cannot say that such event is unlikely to happen.

12.Further, since the implementation of Civil Justice Reform I have to consider the underlying objectives of the Rules, one of which is to promote a sense of reasonable proportion and procedural economy in the conduct of proceedings (Order 1A rule l(c)).  I find that the parties have gone completely out of proportion of the relief claimed: eleven affidavits have been filed between the parties amounting to 80 pages with 354 pages of exhibits.  The court should try to facilitate settlement of the disputes (Order 1A rule 1(e)).  Requiring payment of costs into court will definitely not achieve that purpose.

13.For the reasons given above, I dismiss the Defendant’s application.

14.I also make an order nisi for costs of this application that the Defendant pays the Plaintiff’s costs of this application (including all costs reserved and disbursements) assessed by me in the sum of $40,000.  This order nisi shall become absolute unless written application is made to vary it within 14 days of this decision.

15.My comments on the Plaintiff’s Statement of costs are those as follows:

(a)    It is a simple application.

(b)   Travelling expenses are overhead expenses not allowed.  I do not consider the photocopying charges on the Plaintiff’s side would amount to $1,000.

(c)   The time for attendance on client and on the other side is excessive.

(d)   Preparation of Documents does not require such long time.

(e)    The solicitor in charge is familiar with the proceedings and should not require 7.5 hours in performing items D2 and D3.

(f) It is not necessary to require a senior solicitor to attend a call-over before a master.

Messrs. Robertsons for the Plaintiff.

Messrs. Oldham, Li & Nie for the Defendant.