Re Chin Wai Kay Geordie

CACV 118/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 118 OF 2011

(ON APPEAL FROM HCB NO. 7469 OF 2010)

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Before: Hon Fok JA in Chambers

Date of Hearing: 7 October 2011

Date of Decision: 7 October 2011

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D E C I S I O N

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1.This is an application by the respondent for security for costs of an appeal.

2.The proceedings below where bankruptcy proceedings, the respondent (whom I shall refer to as the petitioner) having presented a bankruptcy petition against the appellant (whom I shall refer to as the debtor).

3.The basis of the petition was that the debtor had acted in a way which fulfilled the criteria set out in s. 20L(1)(b) of the Bankruptcy Ordinance, Cap. 6, in that the information contained in the statement of affairs or other documents supplied by the debtor under sections 20 to 20K of the Ordinance was false or misleading in material particulars or contained material omissions.

4.By his judgment dated 9 June 2011, Deputy High Court Judge Coleman SC found the petitioner’s allegations made out and, in the exercise of his discretion, made a bankruptcy order against the debtor.

5.This appeal is brought as of right, the debtor having filed his notice of appeal against the judgment below on 6 July 2011.

6.A request in correspondence for the provision of security for costs of the appeal having failed to produce any result, the petitioner issued the present summons seeking security for costs of this appeal.

7.The relevant principles governing applications for security for costs of an appeal are well-known and were not in dispute on this application.  They have been conveniently summarised by the Court of Appeal in Chung Kau v Hong Kong Housing Authority and others [2004] 2 HKLRD 650 and, in determining this application, I shall apply those principles.

8.The basis of the application for security for costs is that the debtor is impecunious and that there is a risk, in the event the appeal is unsuccessful, that the petitioner will not be able to recover his costs of the appeal.  Given the fact that the judgment below resulted in the making of a bankruptcy order against the debtor, there can be little doubt that the debtor’s impecuniosity is sufficiently established.

9.As is made clear in Chung Kau at §14(1), the fact an appellant is impecunious does not lead automatically to an order that security for costs must be provided.  The court is entitled to consider other relevant factors such as the strength of the appeal to determine whether or not it would be just to order security for costs to be provided.

10.As to the merits of the appeal, whilst I am satisfied that the arguments intended to be advanced on behalf of the debtor in support of the appeal are certainly not hopeless, I do not think the merits of the appeal are so strong that I should exercise my discretion against making an order for security for costs.

11.In the circumstances, I look to see if there are any other factors to tilt the balance, in the absence of which security will be ordered.

12.In my view, there are no such factors.

13.It was suggested that, if the court were to make an order for the provision of security for costs, this would have the effect of stifling the appeal.  However, as is made clear in Hong Kong Civil Procedure (2011 Ed.) Vol. 1 at Note 59/10/29 (on p. 1054):

“… where an insolvent or impecunious appellant is not legally aided for the appeal, it is no bar to the award of security for costs by the Court of Appeal that he does not have the money and therefore the security order will have the effect of preventing him from pursuing his appeal; on the contrary that is inherent in most applications for security on the grounds of insolvency or impecuniosity.”

14.In any event, I am not satisfied that the evidence of the debtor is sufficient to discharge the onus on him to demonstrate that he is unable to furnish security by raising the money elsewhere.

15.I therefore conclude it would be appropriate to order security for costs of the appeal.

16.As to the amount of security, the skeleton bill exhibited to the petitioner’s affirmation calculates the costs of the respondent on the appeal as being $212,583.

17.Allowing for the possibility that, upon taxation, a portion of those costs would be reduced, I propose to make an order that security for costs in the sum of HK$150,000 be provided.

18.I therefore order that the debtor do within 28 days pay HK$150,000 into court as security for the costs of and occasioned by the appeal, and that until such security is given, the appeal be stayed, and that in default of the security being furnished within the period of 28 days, the appeal stand dismissed without further notice or order, with costs of the appeal to be taxed if not agreed and paid by the debtor to the petitioner.

[Argument on costs]

19.Since the petitioner previously sought security for costs in correspondence and the debtor did not offer any sum by way of security, it seems to me that costs of this summons must follow the event and I so order.

20.The costs of the application shall be paid by the debtor to the petitioner to be taxed, if not agreed.

Mr Tony Ko, instructed by Messrs Tang, Tso & Lau, for the Debtor/Appellant

Miss Virginia Lee of Messrs Y.C. Lee, Pang, Kwok & Ip, for the Petitioner/Respondent