Wing Fai Construction Co Ltd (in Liquidation) v. Cheng Kit Yin Kelly and Others

CACV 249/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 249 OF 2010

(ON APPEAL FROM HCA NO. 833 OF 2004)

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BETWEEN

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Before: Hon Le Pichon JA in Chambers

Date of Hearing: 2 March 2011

Date of Decision: 2 March 2011

Date of Handing Down Reasons for Decision: 3 March 2011

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REASONS FOR DECISION

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Hon Le Pichon JA:

1.This was an application for security for costs by the fourth and fifth defendants (“the defendants”) in an appeal by the plaintiff from a judgment dated 19 October 2010 of Poon J. An order to provide security for costs in the sum of $200,000 was made, such sum to be paid within 21 days. My reasons appear below.

2.The plaintiff is a company in liquidation.  In October 2010, the judge refused its application for leave to pay out of time security for costs that had been ordered in December 2005 and struck out the action for want of prosecution.  The plaintiff’s appeal from the judgment is due to be heard on 1 April 2011.

3.On the basis of the materials placed before the court, I am satisfied that the plaintiff is impecunious.  I do not consider that the fact that some 18 months ago the liquidator recovered $1.8 million assists when the court has no information as to the current financial condition of the plaintiff.

4.The only countervailing factor militating against making an order for security was the defendants’ delay in applying for security for costs.  The notice of appeal was filed on 15 November 2010.  On 20 December 2010, the defendants applied for security by letter to the plaintiff.  The plaintiff declined the request on 22 December 2010.  The notice of hearing was issued on 5 January 2011 but the defendant did not take out its summons for security until 16 February 2011, a delay of six weeks.

5.Mr McCoy SC acknowledged and regretted the inexcusable delay on the part of those instructing him in taking out the summons but submitted that the plaintiff had been put on notice and there was nothing to suggest that the defendants would or had changed their minds.  Mr Bowers who appeared for the plaintiff referred to A Co v K Ltd [1987] 3 All ER 377 for the proposition that such applications to the Court of Appeal must be made with the “maximum possible expedition”.  Those observations were made in the context of an application made within 14 days of the appeal itself when the appeal had been set down 14 months previously.

6.I agree that applications for security for costs must be made promptly but in exercising its discretion, the court is to have regard to all relevant circumstances.  In the present case, the plaintiff could not have been taken by surprise given the earlier written request.  It is inconceivable that the defendants would have second thoughts about seeking security since they had succeeded in a strike out.  The court also needs to consider the strength of the appeal.  The fact that there has been delay in making the application is a relevant and important consideration but it is not necessarily conclusive or dispositive.

Mr Kevin Bowers, of Messrs Reed Smith Richards Butler, for the Plaintiff/Respondent

Mr Gerard McCoy SC & Ms Kim Rooney, instructed by Messrs Lily Fenn & Partners, for the 4^th & 5^th Defendants/Applicants