Mark Wiemer v. Hang Seng Bank Ltd

CACV 222/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 222 OF 2011

(ON APPEAL FROM HCSD NO 6 OF 2010)

________________________

________________________

________________________________

REASONS FOR DECISION

________________________________

1.This is an application for security for costs in an appeal brought by Mr Mark Wiemer, who acted in person throughout.

2.Mr Wiemer applied to set aside a statutory demand served on him by the Hang Seng Bank Limited for over $9 million. The debt demanded was a judgment debt obtained by the bank against the borrower company (of which Mr Wiemer is a shareholder and director) and Mr Wiemer as the surety. The application to set aside the demand was made on the ground that he has a bona fide cross claim against the bank for damages for negligence that is sufficient to extinguish the judgment debt. It is alleged that the bank was negligent and in breach of its duties as mortgagee in exercising its right to sell the mortgaged property and had sold the property at a gross undervalue.

3.Barma J gave judgment on 21 September 2011 dismissing the application and made an order authorising the bank to present a bankruptcy petition against Mr Wiemer.

4.Mr Wiemer appealed against the judgment on 17 October. The bank took out the present summons for security for costs of the appeal on 11 January 2012, having sought security from Mr Weimer by letter but to no avail.

5.In opposition to this application, Mr Wiemer made two affidavits on 26 January 2012 and on 24 April 2012. He also made oral submissions at the hearing.

6.The bank applied for security on the ground that Mr Wiemer is impecunious and there is a risk, in the event his appeal is unsuccessful, that the bank will not be able to recover from him the costs it will incur in opposing his appeal. The bank pointed to the fact that it had served a statutory demand on Mr Wiemer for the judgment debt, which has never been satisfied. In his application to set aside the demand, Mr Wiemer did not suggest at any time he was in a position to pay the debt. Costs were awarded against him when Barma J dismissed his application. In December 2011, the bank’s solicitors demanded him to pay its costs of the application in the sum of $134,743. No payment has been made by him. The bank’s assistant recovery manager has deposed that to the knowledge of the bank, Mr Wiemer has no substantial assets in Hong Kong. He made no submission on the amount of the security sought by the bank or the time for payment, and indicated to the court that he will not provide any security.

7.I am satisfied on the evidence before me that Mr Wiemer is impecunious.

8.It is well established that the Court of Appeal has power to order security for costs of an appeal where there are special circumstances rendering it just to do so and that the impecuniosity of the appellant is a special circumstance. The fact that an appellant is impecunious does not lead automatically to an order for security. 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. Once impecuniosity has been demonstrated, it is generally up to the party opposing the application to demonstrate counterveiling factors militating against an order being made. A common counterveiling factor is the merit of an appeal. In considering the merits of an appeal for this purpose, a detailed examination is neither required nor desirable, all that is needed is a preliminary view. Where the merits appear to go strongly one way or the other, this may, by itself, be a decisive factor. If the court takes the view that the appeal could go either way, then generally it will look to the existence of any other factors to tilt the balance, in the absence of which security will be ordered (Chung Kau v Hong Kong Housing Authority & Ors [2004] 2 HKLRD 650 at 656 para 14).

9.Mr Wiemer contended that this application is discriminatory against him as a litigant in person and was brought to rob him of his chance of a fair and just appeal hearing of which he is entitled. There is no basis for this contention. In deciding whether to award security for the costs of an appeal, the court takes into account the fact that the appellant has already had the dispute determined in the court below, and that it is prima facie an injustice to allow an appeal to proceed without security being furnished in circumstances where the respondent will be unable to enforce against the appellant any order for costs made by the Court of Appeal if the appeal fails (Hong Kong Civil Procedure 2012, Vol 1, para 59/10/25). An order requiring an appellant to provide security for costs as a condition for his appeal to be heard is not a violation of his right of access to a court. It is a proportionate means employed in the interests of a fair administration of justice (Tolstoy Miloslavsky v United Kingdom (1995) 20 EHRR 442 at paras 59, 61 to 66).

10.Mr Wiemer argued that he has a strong and compelling case with overwhelming facts to establish that the bank was negligent and in breach of its duties as mortgagee. As mentioned earlier, I need only form a preliminary view of his prospect of success on appeal for present purpose. His complaints against the bank are set out in paragraphs 9 and 10 of the judgment of Barma J. He alleged that the bank did not put any real effort into selling the property.

11.As noted by the judge, the account given by the bank regarding the steps taken to sell the mortgaged property (set out in paras 14 to 18 of the judgment) was not challenged by Mr Wiemer. The judge considered the evidence and held there is no substance in any of the complaints made by Mr Wiemer, for the reasons given in paras 20 to 34 of the judgment.

12.Mr Wiemer challenged the judge’s findings claiming that his case is a “political matter” owing to the possible repercussions arising if the court were to find against a bank in this kind of situation. He contended that the judge was wrong to hold that the bank had not failed to take reasonable measures to solicit interest from potential buyers and to put up the property for sale by auction. He argued that the judge was wrong to reject the methodology adopted by his valuer in the valuation he relied on.

13.In his Notice of Appeal and his affidavit filed in opposition of the present application on 24 April 2012, he sought to rely on new evidence in his appeal, which he said he would not disclose at this time. He said he would also be providing as new evidence a valuation report from a large company made at that time showing the true value of the property.

14.In the court below, Mr Wiemer had made three affirmations setting out his complaints as to the way in which the sale of the property was carried out by the bank. He also relied on an affirmation of one Mr Lee King Leong Roger and two valuation reports prepared by Allied Surveyors Limited. His third affirmation was made some eight months after he filed his application to set aside the statutory demand. The principles on the admission of further evidence on appeal are well established. Further evidence would not be admissible unless three conditions are satisfied: (1) it could not have been obtained with reasonable diligence for use in the proceedings below; (2) it would probably have an important influence on the result of the case, though it need not be decisive; and (3) it must be apparently credible though it need not be incontrovertible (Ladd v Marshall [1954] 1 WLR 1489).

15.I have considerable reservations if Mr Wiemer could satisfy all three conditions for leave to be given to adduce new evidence on appeal. On my preliminary assessment of the merits, I do not think his appeal has a sufficiently good chance of success to justify exposing the bank to the injustice of being unable to enforce against him any adverse costs order if his appeal fails. As there is no factor to tilt the balance, it would be appropriate to exercise my discretion to order security be furnished for the costs of this appeal.

16.The bank seeks security in the amount of $125,000. Having considered the skeleton bill, I think an appropriate amount to be provided as security is $90,000.

17.I have made the following orders:

(1)  the appellant do within 28 days from the date of this order give security for the respondent’s costs of this appeal by payment into court in the sum of $90,000;

(2)  until such security is provided, all proceedings in this appeal are to be stayed;

(3)  in default of the payment of security for costs as ordered above, upon the respondent’s solicitors certifying such default to the Registrar, this appeal do stand dismissed out of this court without further order;

(4)  in the event this appeal is dismissed in the circumstances provided for above, the appellant do pay to the respondent its costs occasioned by this appeal, such costs to be taxed if not agreed; and

(5)  the costs of this application be costs in the appeal.

The applicant (appellant) appeared in person

Miss Eva Sit, instructed by Messrs Li, Kwok & Law, for the respondent