William Thomson v. Roland John Jeans and Another

DCCJ 3388 & 3389/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3388 OF 2005

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BETWEEN

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IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3389 OF 2005

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Coram : Deputy District Judge Grace Chan in Chambers (Open to Public)

Date of Hearing : 3 January 2012

Date of Decision : 3 January 2012

Date of Handing Down of Reasons for Decision : 5 January 2012

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REASONS FOR DECISION

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1.Before me is an application of the 2nd Defendant, a firm of solicitors in Hong Kong, for security for costs in the sum of $288,795 each in DCCJ 3388/2005 and DCCJ 3389/2005 (collectively the “Actions”) pursuant to Order 23 rule 1 of the Rules of the District Court (“RDC”). At the end of hearing, I allow the 2nd Defendant’s application and order each Plaintiff of the Actions to pay $80,000 as security into Court with reasons to be handed down. The following are my reasons.

Background Facts

2.The basic facts of the Actions are very much alike and can be briefly summarized in the following.

3.The 1^st Defendant was the director and shareholder of Wanchai Bierkeller Limited (“Company”) which main business was a restaurant and a bar. The 2^nd Defendant was the solicitors of the 1^st Defendant and the Company.

4.In late 2003 and early 2004, the 1^st Defendant met Mr. William Thomson (“Thomson”), the plaintiff of DCCJ 3388/2005 and Mr. Hans-Juergen Boewe (“Boewe”), the plaintiff of DCCJ 3389/2005 (collectively “Plaintiffs”) on separate occasions and invited them to invest into the Company. It was alleged that the 1^st Defendant made certain representations to the Plaintiffs, as a result of which Thomson and Boewe, at the oral request and direction of the 1^st Defendant, respectively paid $500,000 and $250,000 to the 2^nd Defendant for subscription of shares of the Company.

5.The Plaintiffs alleged that the shares of the Company were never allotted to them and a shareholder agreement never signed. Further, in or about January 2005, the Company went into voluntary winding-up.

6.The Plaintiff thus commence these actions against both the 1^st and 2^nd Defendants for return of the money paid respectively by them on the grounds of money had and received because of a total failure of consideration, or alternatively, wrongful conversion or misappropriation. 

Late Filing of the Plaintiffs’ Affidavits

Submission from Parties

7.Neither Plaintiff has themselves prepared an affidavit in reply to the affidavit of the 2^nd Defendant. Instead, they rely on the Affidavit of John Ip, the handling solicitors of their case, and the Affirmation of Lam Fung Yan, senior clerk to the Plaintiffs’ solicitors, filed in respect of each Action (collectively “Affidavits”).

8.Before parties go into the substantial argument on the application, Ms. Cheung, Counsel for the 2^nd Defendant, submits that the Affidavits should not be received by this Court because they were filed out of time and the 2^nd Defendant was seriously prejudiced as a result of such late filing. She refers me to Wise Union Industrial Limited v Hong Kong Science and Technology Parks Corporation, HCAL 12/2009 to support her argument that in the post-CJR [Civil Justice Reform] era, a late application to introduce new evidence has a fairly high threshold to pass.

9.Mr. Remedios, Counsel for the Plaintiffs, says in reply that the Plaintiffs are apologetic to the late filing of Affidavits and in causing this undesirable situation. But he submits that no actual prejudice has been caused to the 2^nd Defendant, as it does not see it necessary to ask for time to file an affidavit in reply or to adjourn the hearing for better preparation of their submission and argument. He further points out that Wise Union Industrial Limited  (supra) is decided in the context of a judicial review; and even if this Court takes the view that the principles stated therein  is applicable to the Actions,  he argues that the Plaintiffs have provided “satisfactory explanation” regarding the delay.

Discussion

10.The present summons was taken out by the 2^nd Defendant on 19^th October 2011. The Affidavit of Ian De Witt in support of the summons was also filed and served on the same day. Thus, the Plaintiffs effectually became aware of the 2^nd Defendant’s allegations and grounds of the summons as early as 19^th October 2011.

11.By an Order made by Registrar Lee on 3^rd November 2011, the deadline for the Plaintiffs to file and serve their affidavits in reply should fall on 24^th November 2011; and the deadline for the 2^nd Defendant to file and serve its affidavit in reply would be 8^th December 2011. The said Order of Registrar Lee also provides that no further affidavits without leave of the Court should be filed.

12.However, the Affidavit of John Ip (in relation to DCCJ 3389/2005) was not served on the 2^nd Defendant until 23^rd December 2011 by fax (which is 4 weeks and one day late) and not filed until 24^th December 2011 (which is 4 weeks and two days late).  The Affidavit of John Ip (in relation to DCCJ 3388/2005) was not served on the 2^nd Defendant until 28^th December 2011 (which is almost 5 weeks late). The Affirmations of Lam Fung Yan (in relation to both Actions) was filed on 30^th December 2011, Friday, at 4.30 p.m. (which is 5 weeks and one day late).

13.I must reiterate that parties to litigation have a duty to adhere strictly to the time table set down by the Court, especially since the implementation of the Civil Justice Reform (“CJR”). Thus the late filing of the affidavit evidence by the Plaintiffs should in no way be commended.

14.Further, by late filing of the Affidavits and asking this Court to allow the Affidavits in, the Plaintiffs are actually seeking the indulgence of the Court. When that is sought, the Plaintiffs have the burden of providing a satisfactory and acceptable explanation for the delay, devoid of which indulgence is unlikely to be granted in their favour.

15.Here, the explanation advanced by the Plaintiffs is that they are both working abroad and travelling between places which have made it difficult for  their solicitors to communicate with and take instructions from them. And after instructions were given, sufficient time should be allowed for drafting and confirming of the Affidavits.

16.I do not find the explanation propounded by the Plaintiffs a satisfactory one. First, I think Ms. Cheung is right in pointing out to me that though the time allowed by Registrar Lee for the Plaintiffs to file and serve their affidavits in reply is 21 days from 3^rd November 2011, the Plaintiffs actually have more than 21 days to give instructions to their solicitors and prepare an affidavit in reply because the affidavit evidence of the 2^nd Defendant was served on the Plaintiffs as early as 19^th October 2011.

17.Secondly, with today’s advancement in telecommunication such as smart phones, emails and computers, I find it really difficult to envisage that the Plaintiffs’ solicitors would encounter any real hindrance or difficulty in communicating with the Plaintiffs. As I have mentioned in the hearing, the Plaintiffs were well aware of the 2^nd Defendant’s summons as early as 19^th October 2011 and should have taken timely, if not swift, response by giving instructions to their solicitors. The fact that they are abroad makes the need to act swiftly more important and necessary in the circumstances. If the Plaintiffs decided that their work should take precedence over a Court order, as obviously is the situation here before me, then it would be the Plaintiffs themselves to bear the consequences of their choice.

18.Thirdly, even if instructions were not available until 19^th December 2011, it remains unsatisfactorily answered why the Plaintiffs would take another 4 days to prepare and confirm the Affidavits of John Ip and more than 10 days to prepare and confirm the Affirmations of Lam Fung Yan.

19.On the prejudice argument, I am also with Ms. Cheung that Andrew Cheung J (as he then was) in Wise Union Industrial Limited (supra) was stating a general view on introducing new evidence out of time in post-CJR era at §9 of his Judgment:

“Talking about prejudice, I do not accept that in this new era, the fact that the innocent party can ask for an adjournment (even if one that is to be paid for by the other side) would mean that there is no prejudice. In my view, at least nowadays, an adjournment itself is a prejudice. Equally, the fact that a party, not wanting to lose a hearing date, refrains from asking for an adjournment, does not mean that there is no prejudice. The unenviable position that such a party finds himself in is in itself a prejudice.” (emphasis added)

20.All in all, I am of the view that the Plaintiffs are unable to provide a satisfactorily explanation for their delay in filing the Affidavits. Due to the late  filing of the Affidavits, the 2^nd Defendant is deprived of the chance to file an affidavit in reply, as provided and allowed under the Order of Registrar Lee. The fact that the 2^nd Defendant does not seek an adjournment today does not mean that there is no prejudice.  The unenviable position that such a party finds himself in, as Andrew Cheung J (as he then was) mentioned in his Judgment, is in itself a prejudice.

21.I conclude that the Affidavits should not be allowed to put in.

The Application

22.In case my above analysis was wrong and the Affidavits should have been allowed to put in, I would deal with the 2^nd Defendant’s summons as follows.

23.To support its application, the 2^nd Defendant has filed the affidavit of Ian Roger De Witt, one of its partners.

24.The basis of the 2^nd Defendant’s application is three-folds. First, the 2^nd Defendant says that the Plaintiffs are ordinarily resident out of the jurisdiction, as the Listing Questionnaire filed by the Plaintiffs stated that “the Plaintiff is currently working abroad”.

25.Secondly, there is good reason to believe that the Plaintiffs do not have sufficient assets within the jurisdiction to pay the costs of the 2^nd Defendant if ordered to do so.

26.Last but not least, the Plaintiffs’ claim against the 2^nd Defendant is devoid of merits. And having regard to all the circumstances of the case, it is just for security to be provided.

The Plaintiffs’ Opposition

27.Mr. Remedios has fairly conceded in his skeleton argument that Boewe is currently employed by an equipment solutions company outside Hong Kong. He is thus ordinarily resident abroad and has no assets within the jurisdiction (see §§14 and 33 of the Plaintiffs’ skeleton argument).  

28.As to Thomson, Mr. Remedios refers me to the Affidavit of John Ip deposing that Thomson is only temporarily resident in Bahrain for the past 2 years pursuant to a construction project. Mr. Remedios submits that Thomson should be considered ordinarily resident in Hong Kong mainly because (1) he has lived in Hong Kong since 1993; (2) he is a director and shareholder of a Hong Kong company known as United Land Network Technologies Limited (“United Land”); (3) through United Land, a residential unit was reserved for his own use; (4) he maintains a bank account with the HSBC in Hong Kong; (5) once the construction project in Bahrain completes, he has every intention to return to Hong Kong.

29.Further, Mr. Remedios points out that the Affidavit of John Ip has disclosed that Thomson has assets in Hong Kong. Through United Land, Thomson was in management and control of a property known as Flat 5A and part of the Rooftop of Yue Tak House, 7-11 Pokfulam Road, Hong Kong (“Property”). The Property is divided into 5 cubicles, 4 of which are currently rented out at a profit. One cubicle is reserved for Thomson’s own use and occupation. Thomson is also a creditor of United Land in the sum of $395,000, a loan made to United Land for the purchase of the Property. If the 2^nd Defendant wished to enforce any costs order against Thomson, the 2^nd Defendant could take out garnishee proceedings against United Land which is the owner of the Property.

30.Both Plaintiffs, Mr. Remedios further says, have a sufficiently meritorious claim against the 2^nd Defendant and thus security for costs should not be ordered.

31.On the other hand, if security should be ordered, the Plaintiffs dispute the quantum of the security. The Plaintiffs argue that the estimated costs are overlapping and excessive in the sense that 10 individuals, including Counsel, partner, solicitors, trainee solicitors and clerks are allegedly involved in such simple cases. Mr. Remedios submits that $50,000 should be the appropriate security should I deem it fit to allow the 2^nd Defendant’s application.

Issues

32.In view of the above, the main issues for determination are:

(1)  Is Thomson ordinarily resident outside the jurisdiction?

(2)  Whether Thomson has assets within the jurisdiction?

(3)  Whether the Plaintiffs’ claim has a high degree of probability of success against the 2^nd Defendant?

(4)  What should be the amount of security of costs to be ordered if this Court allows the application of the 2^nd Defendant?

Is Thomson Ordinarily Resident outside the Jurisdiction

33.Ms. Cheung refers me to Izumo Mokko Co. Ltd. v T.S. Lines Ltd. [2007] 2 HKLRD 363 in which HH Judge Lok (as he then was) quoted Godfrey J (as he then was) in The Walt Disney Company v Disney Property Agency, HCA 7289/1992 that if a plaintiff is a foreign corporation, prima facie it is liable to be ordered to give security for costs. But I do not find this case particularly helpful in determining whether Thomson is ordinarily resident outside the jurisdiction.

34.Counsel on both sides have not referred to me any particular case(s) that set out the relevant test or consideration to be taken into account in determining whether a person is ordinarily resident outside the jurisdiction. But I have myself found that the case of Re Wong Lei Kwan Joanne also known as Wong Lei Kwan Joanna, ex-parte Bank of China (Hong Kong) Limited, [2009] 3 HKLRD 173 is helpful to me because Barma J has in that case summarized succinctly the test of ordinary residence at §16 of his Judgment:  

“It was, I think, common ground that the test of ordinary residence established in Levene v Inland Revenue Commissioners [1928] AC 217, Inland Revenue Commissioners v Lysaght [1928] AC 234 and R v Barnet L.B.C. ex parte Shah [1983] 2 AC 309 was accurately summarised by Cheung J (as he then was) in Lau San Ching v Apollonia Liu (1995) 5 HKPLR 23, in the following terms:-

(1) Ordinary residen[ce] is not a term of art in English law.

(2) In their natural and ordinary meaning the word “ordinarily resident” mean “that the person must be habitually and normally resident here, apart from temporary or occasional absences of long or short duration”. The significance of the adverb “habitually” is that it recalls 2 necessary features mentioned by Viscount Sumner in Lysaght, namely residence adopted voluntarily and for settled purpose.

(3)   The decision in each of the decided cases depended upon its own particular facts …

(4)   A person could be ordinarily resident in two countries at the same time…

(5)   Unless it can be shown that the statutory framework or the legal context in which the words are used required a different meaning, “ordinarily resident” refers to a man’s abode in a particular place or country which he has adopted voluntarily and for settled purposes as part of the regular order of his life for the time being, whether or short or long duration.

(6)   …

(7)   There are two, and no more than two, respects in which the mind of the person is important in determining ordinary residence.  The residence must be voluntarily adopted.  Enforced presence … may be so overwhelming a factor as to negative the view (sic) to be where one is.

There must be a degree of settled purpose. … All that is necessary is that the purpose of living where one does has a sufficient degree of continuity to be properly described as settled.

(8)   The legal advantage of adopting the natural and ordinary meaning is that it results in the proof of ordinary residence which is ultimately a question of fact depending more upon the evidence or matters susceptible of objective proof than upon evidence as to state of mind.  If there can be proved a regular, habitual mode of life in a particular place, the continuity of which has persisted despite temporary absences, ordinary residence is established provided only it is adopted voluntarily and for a settled purpose.

(9)   The “real home” test is wholly inconsistent with the natural and ordinary meaning of the words as construed by the House of Lords in the two tax cases, it is an unhappy echo of domicile….” (emphasis added)

35.In Re Wong Lei Kwan Joanne, Barma J has also considered the provisions of section 2(6) of the Immigration Ordinance (Cap. 115), which provides:

“For the purposes of this Ordinance, a person does not cease to be ordinarily resident in Hong Kong if he is temporarily absent from Hong Kong. The circumstances of the person and the absence are relevant in determining whether a person has ceased to be ordinarily resident in Hong Kong. The circumstances may include –

(a) the reason, duration and frequency of any absence from Hong Kong;

(b) whether he has a habitual residence in Hong Kong;

(c) employment by a Hong Kong based company; and

(d) the whereabouts of the principal members of his family (spouse and minor children).

36.I am of the view that the general principles stated by Barma J are applicable to the application before me. And after considering all evidence and the authorities quoted above, I am of the view that Thomson cannot be regarded as ordinarily resident of Hong Kong due to the following reasons.

37.First and foremost, Thomson has not himself provided any affidavit evidence. It is true that there is the Affidavit of John Ip. However, it is not clear in the said Affidavit whether Thomson has stayed dominantly in and adopted Hong Kong as his abode voluntarily and for settled purpose since 1993 when he first came to work in Hong Kong. The Affidavit is silent on how many years Thomson continued to reside and work in Hong Kong between 2000 and 2009. The Affidavit simply says “for some years”.  In my view, there is simply insufficient evidence on the face of the affidavit evidence to prove that Thomson has a sufficient degree of continuity in Hong Kong to be properly described as “settled”.

38.It is equally not clear from the affidavit evidence that ever since Thomson left Hong Kong to work in Bahrain, has he returned to Hong Kong from time to time or during holidays? If a person is ordinarily resident in Hong Kong, but for work purpose, has to go abroad for a certain period of time, it is more likely than not that he would “return” to Hong Kong whenever possible or during holidays. I take the view that this is one of the objective indications to show if a person adopts Hong Kong for settled purpose. Yet, no such evidence is eminent from the affidavit.

39.With no evidence that Thomson was ever in Hong Kong since or about 2009, Thomson would be absent from Hong Kong for a continuous period of at least 3 years by mid-2012 when the construction project expects to be completed. Such duration and continuity of absence raise a serious doubt in my mind if Thomson has taken up Hong Kong as his place of abode voluntarily for settled purpose.   

40.This doubt is further escalated by the fact that Thomson does not seem to have a habitual residence in Hong Kong. It is true that in the Affidavit of John Ip, it is deposed that one cubicle of the Property is retained for Thomson’s own use and occupation since its purchase in 2000. Yet, when Thomson asked for a receipt of $500,000 from the 2^nd Defendant in or about 2004, he did not provide the address of the Property to the 2^nd Defendant, but an address known as 2/F 119 San Wai Village, Pui O, Lantau Island. The inconsistency is never explained.

41.The fact that Thomson has a permanent Hong Kong identity card and bank account with the HSBC is, in my view, non-conclusive and irrelevant evidence to show that he is ordinarily resident in Hong Kong: Chan Ker Chi Paul v Super Zone Investment Ltd. [1994] 2 HKC 679

42.On balance, I find that Thomson is ordinarily resident outside the jurisdiction.

Whether Thomson has Assets within the Jurisdiction

43.I should be brief on this issue because it is clear to me that Thomson cannot prove to my satisfaction that he personally has assets in Hong Kong.

44.Mr. Remedios submits to me that the assets of Thomson have two folds. First, he owns 50% shares of United Land, which paid up capital amounts to $10,000. Second, he is a creditor of United Land because he has advanced $395,000 to United Land when it purchased the Property in 2000.

45.I think it is pertinent for me to say that Thomson and United Land are two separate and distinct legal entities in the eyes of the law. The fact that United Land owns the Property does not automatically avail to Thomson for his personal use any income generated from the Property. Pausing here, one has to note also that according to the annual returns provided in the Affidavit of John Ip, Thomson is not even the majority shareholder of the Company. He owns an equal amount of shares with Ma. Delara Unsay. A dead-lock situation on any decision made in respect of United Land, such as sale of the Property to repay the alleged loan to Thomson, is not at all moon-shining.

46.Then there is the alleged advancement of loan in the sum of $395,000. Apart from this bare oral assertion, concrete evidence such as a loan agreement, board minutes or loan payment records were not provided.

47.Further, it is held in Re Charter View Development Limited, HCCW 45/2006 by Kwan J (as she then was) that “shares in private companies are not satisfactory, because it cannot be said that they would certainly be available for costs. The value of shares in such private companies is difficult to ascertain on the available evidence, if not doubtful, and it is uncertain if a buyer could readily be found for such shares.” (emphasis added)

48.It was also deposed in the Affidavit of John Ip that Thomson holds a HSBC integrated bank accounts. But Ms. Cheung points out that the content and amount of funds in the bank account is unknown and bank accounts in Hong Kong cannot ordinarily be regarded as assets of a fixed and permanent nature: Hoogland v Lin, HCA 657/2007 (per Chung J). I agree with Ms. Cheung on this point.

49.I would further say that the submission made by Mr. Remedios on the garnishee proceedings is, with respect, an illusory argument. Putting Thomson’s case on assets at his highest, all I have before me is that United Land owns the Property, to which any garnishee proceedings cannot readily touch on. Yet apart from the Property, it is not eminent from the Affidavit of John Ip if United Land owns any other assets or cash which can be subject to garnishee proceedings.

50.That said, I would conclude that the affidavit evidence does not show that Thomson has sufficient real assets within the jurisdiction to satisfy the 2^nd Defendant’s costs should the latter won the case.

Whether the Plaintiffs’ Claim has a High Degree of Probability of Success against the 2^nd Defendant

51.Counsel on both sides have referred me to Lau Shun Fu v Lau Wai Ping, DCPI 833/2006 in which HH Judge Thomas Au (as he then was) said this in §8:

“In exercising the discretion, the Court may take into account of the merits of the plaintiff’s claim. If, without going into any detailed examination of the merits, the plaintiff can clearly show that its claim has a high degree of probability of success at trial, the Court generally will not order security for costs: Hong Kong Civil Procedure 2007, para 23/3/3, p. 415, and the cases cited therein.” (emphasis added)

52.It is thus clear that the burden is on the Plaintiffs of these Actions to show that their claim has a high degree of probability of success at trial.

53.In so discharging of their duty, the Plaintiffs are bound by their pleadings. In the Statement of Claim or Amended Statement of Claim (as the case may be), both Plaintiffs have pleaded mainly 2 causes of action against the 2^nd Defendant, namely money had and received because of a total failure of consideration, or alternatively, wrongful conversion or misappropriation (see §§11 and 12 of the Amended Statement of Claim of DCCJ 3388/2005 and §§11 and 12 of the Amended Statement of Claim of DCCJ 3389/2005).

54.It is pleaded by both Plaintiffs that the 2^nd Defendant was at all material times the solicitors appointed by the 1^st Defendant to prepare legal documentation, such as a shareholder’s agreement, and handle the secretarial work of the Company. It is also pleaded by the Plaintiffs that their money was paid to the 2^nd Defendant at the oral request and instructions of the 1^st Defendant. The role of the 2^nd Defendant, even in the Plaintiffs’ pleaded case, is limited.

55.The Plaintiffs complain in their pleadings that a shareholder’s agreement was never signed and the share certificates were never physically given to them, but one must not lose sight of the fact that FTI Consulting, the Liquidators of the Company, has stated in its letter dated 18^th October 2011 that both Plaintiffs were recognized as the shareholders of the Company.

56.Without going into detailed examination of the merits of the Actions but due to the matter aforesaid, it seems to me that the Plaintiffs, at least at this stage, have failed to show to me that they would have a high degree of probability of success in respect of the causes of action mentioned in §53 above.

57.On the other hand, both Plaintiffs allege, through the Affidavit of John Ip, that they have pleaded in the Statement of Claim or Amended Statement of Claim as well as Reply or Amended Reply (as the case may be) that their claim against the 2^nd Defendant is also based on fiduciary duty and/or duty of the 2^nd Defendant as the bailee to Thomson not to release his money without his consent or authority.

58.Mr. Remedios has fairly accepted that the words “bailee” or “stakeholder” does not appear in the body of the pleadings. But he submits to me that it is sufficient for the pleadings to contain material facts without stating the legal result. It is open to the pleader to present and argue any legal consequence stemming therefrom: see In re Vandervell’s Trust (no.2) (1974) 1 Ch. 269, 321G-322G per Lord Denning.

59.It is pertinent for me to point out that the case of In re Vandervell’s Trust (no.2) is a pre-CJR case. Since the CJR, parties are required to plead their case and facts with sufficient particularity: see Order 18 of the RDC, in particular Order 18 rules 7, 8, 12 and 15 and the cases cited therein.

60.It is quite clear from the Plaintiffs’ pleadings that no sufficient positive facts have been provided on the allegation of bailee and/or stakeholder and/or fiduciary duty. The Plaintiffs, without properly amending their pleadings, are forbidden to advance such new allegation through the back door by way of an affidavit.

61.In view of the above analysis, I conclude that the Plaintiffs have not shown to my satisfaction that their claim has a high degree of probability of success at trial.

What should be the amount of security of costs

62.The 2^nd Defendant gives an estimation of cost incurred up to the pre-trial review in the sum of $288,795 in each Action. But Ms. Cheung in her submission has readily conceded to delete the costs under items (2) to (4).  She has also conceded that the hourly rate of the various solicitors handling the Actions should be reduced to District Court scale (instead of High Court scale). After the revision, the total costs claimed up to the pre-trial review for each Action is $145,664.

63.I note, as Mr. Remedios has also pointed out, the 2 estimated bills (“Bills”) of costs are identical.

64.Mr. Remedios submits that notwithstanding the duplication and overlapping of the issues and facts of the Actions, the 2^nd Defendant has purported to have assigned and anticipates to assign 10 individuals to work on each action, including 1 Counsel, 2 partners, 3 assistant solicitors, 2 trainee solicitors, 2 clerks. That I agree.

65.Further, I am loathe to say that given the facts and issues of both Actions are substantially alike, if not the same, as well as the relatively simplicity of issues as disclosed in the present pleadings, I am surprised to find the estimated costs as claimed or anticipated in the Bills, even after the same have been revised during the hearing.

66.One has also to bear in mind that the estimated costs now appeared in the Bills do not even cover up to the trial.

67.It is abundantly clear to me that the estimated costs in the Bills are excessively high. For example, the 2^nd Defendant claims Mr. Ian De Witt, admitted in 1989, took 12.9 hours in each Action to review the Statement of Claim and draft the Defence. This is on top of an additional 4 hours spent by another partner, admitted in 1991 and a clerk filing Acknowledgment of Service, requesting time extension and liaising with the Liquidation. Another example is the preparing of the list of documents. The 2^nd Defendant claims a total of 6 hours was spent by 1 partner and 1 solicitor in each Action for such preparation. Yet from the Court file, only one List of Documents was filed by the 2^nd Defendant in each Action.

68.Due to the matters aforesaid, I am of the view that, for the purpose of this application, a security for costs in the sum of $80,000 in each Action would be a more appropriate and just figure and I will so make the Order.

Costs of this Application

69.The 2^nd Defendant has, pursuant to the order of Registrar Lee, prepared a statement of costs of this application. The 2^nd Defendant claims $55,539.50 to cover the costs of this hearing. Ms. Cheung says that for the purpose of quick disposal of the costs matter, she is prepared to accept $45,000.

70.Mr. Remedios, however, is adamant in saying that the costs of the application should not be more than $35,000.

71.I will simply give the following observations on the 2^nd Defendant’s statement of costs of the Actions.

72.The hourly rate claimed in respect of the assistant solicitor, trainee solicitors and clerk is of the upper end of the relevant level of the District Court costs scale. Given their seniority and comparatively non-complicated nature of these Actions, the hourly rate should be reduced.

73.The costs for manual preparation of the hearing bundle should be adjusted to reflect that the Amended Statement of Claim in DCCJ 3389/2005 was wrongly and unnecessary inserted into the hearing bundle of DCCJ 3388/2005.

74.The preparation of documents by the assistant solicitor is alleged to be 7.2 hours for each Action. I take it to mean the affidavit of Ian De Witt. But since the affidavits of Ian De Witt in both Actions are basically the same, I am of the view that spending 14.4 hours (7.2 hours x 2) for preparing less than 5.5 pages of affidavit in each Action is grossly excessive.

75.In view of the above observations, I will give a broad brush approach and tend to agree with Mr. Remedios. I will thus give a gross assessment on costs of this hearing in the sum of $35,000 for each Action.

Conclusion

76.Accordingly, I will make an Order that the Plaintiffs do each pay a sum of $80,000 in Court within 28 days from today as security for the 2^nd Defendant’s costs up to the pre-trial review in each respective Action.

77.The proceedings in both Actions be stayed until such security ordered is given.

78.I also order that the Plaintiffs do pay the costs of the 2^nd Defendant in this application forthwith, such costs is summary assessed to be $35,000 in each Action.

79.The hearing bundles of both Actions are to return to the 2^nd Defendant for re-use. Only the content pages and the Bills (as revised) should be kept in the Court file for records purposes.

Mr. Jose Remedios instructed by Messrs John Ip & Co for both Plaintiffs

Ms. Elizabeth Cheung instructed by Messrs Tanner De Witt for the 2^nd Defendant