Credit Control Centre (HK) Ltd v. Fame Sure Ltd

Case No.CACV 119/1999

Court

Court of Appeal

Date19 May 1999

Judge—

Case Document

100%

CACV000119/1999

CACV119/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 119 OF 1999

(ON APPEAL FROM HCA 1005 OF 1996)

BETWEEN
	CREDIT CONTROL CENTRE (HK) LIMITED	Plaintiff
	AND
	FAME SURE LIMITED	Defendant

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Coram: Hon Nazareth V-P in Chambers

Date of Hearing: 19 May 1999

Date of Judgment: 19 May 1999

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JUDGMENT

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Nazareth V-P:

1. This is an application by the plaintiff/respondent for security for costs in the sum of $346,300 or such other sum as the Court thinks just for the costs to be incurred by the respondent in the appeal and that this be provided within 7 days from the day of the order.

2. The application is made under O59 r10(5):

"The Court of Appeal may, in special circumstances, order that such security shall be given for the costs of an appeal as may be just."

It is made upon the basis of the impecuniosity of the appellant company, Fame Sure Limited. This is a shelf company, which the plaintiff says, has no funds. This basis is recognised as one which the court can accept as special circumstances.

3. The application is resisted upon two grounds primarily. These are:

(1)	That the appellant has a meritorious case; and
(2)	That its impecuniosity has been produced by the wrongful act of the plaintiff respondent.

It need only be said that this claim in this case was in relation to the sale and purchase of some car parking spaces and completion did not take place. The matter went before Deputy Judge Z.E. Li in the Court of First Instance. He has given a judgment of great clarity in which the issues and decisions are quite clear.

4. In submitting that the plaintiff has meritorious grounds, Ms Phillis Loh for the respondent to this application, the defendant below, submits that all the respondent has to demonstrate are real and substantial grounds. She relies upon paragraph 59/10/39 of the Supreme Court Practice 1999 which says:

"The appeal does not have to be bound to succeed, but to satisfy the merits test for the exercise of the residual discretion the grounds of appeal must be 'real and substantial' ('Lord Aldington v Watts) ..."

However, when one looks to see what are these "real and substantial" grounds, they apparently come to the following which appears in paragraph 4 of Mr Kwan's latest affidavit:

"I am also legally advised and do verily believe that the Appellant has good grounds of lodging the appeal herein. I seek leave to refer to the Grounds of Appeal set out in the Notice of Appeal herein, in which it was clearly shown that the learned judge erred in certain well-established area of law and also in his finding of facts, he had reached conclusions which were against the weight of the evidence or were simply not supported by any evidence."

Ms Loh submits that the principal ground relevant there is that the judge's conclusion was against the weight of the evidence. The judge dealt with this aspect of the matter carefully. He recognised that funds were available but that nonetheless the steps one would have expected the defendant and his legal advisers to take were simply not taken. No documents were prepared; no requisitions were made. Simply on the basis that there were cars on the parking spaces and apparently some rental agreements in place, the defendant appears to have concluded that the contract could not be completed.

5. I cannot accept that this ground can be regarded as a real and substantial ground. It does not seem to me that the defendant can be regarded as having demonstrated any sort of merits were of that description or identifying any real and substantial grounds.

6. That I would have thought sufficient to dispose of the defendant's contentions before me, but I will proceed to address the other matter raised. This was that the impecuniosity of the defendant arose from the wrongful act of the plaintiff. As Mr Benjamin Chain pointed out, this point is entwined with the merits. However that may be, it is not without relevance that in an earlier affidavit of Mr Kwan himself, he points to the difficulties caused by the downturn in the market place which caused him cash flow problems. It does not seem to me that ground can be accepted in the way it was accepted in the authorities referred to before me. Simply to make the bare allegation that if the defendant's case succeeds, that will demonstrate that the inability of the defendant to provide security has resulted from the wrongful act of the plaintiff cannot be good enough. It seems to me that the claim should have some substance to it. In the light of the foregoing and moreover having looked at the judgment, I am not able to accept this submission also.

7. Finally, Ms Loh submits that there is no dispute here about the impecuniosity of the defendant because that is the basis upon which the plaintiff/respondent has applied for security. It has to be explained here that the case of the plaintiff has all along been that it is Mr Daniel Kwan who has funded the defendant, the shelf company, and indeed the proceedings on that basis. In this respect Mr Chain relies upon another passage in the Supreme Court Practice 1999, i.e. paragraph 59/10/39, which provides that:

"The approach which the Courts adopts is that, if one of the heads of special circumstances is established and the appellant is able to furnish security for costs (either from his own resources or with financial assistance from someone else), then security should be ordered. The view taken is that, if the appellant can furnish the security, then he should be ordered to do so in fairness to the respondent, and there is no good reason for invoking the residual discretion."

Here, Mr Chain submits that there is no reason why Mr Kwan should not be regarded as being able to provide the security. In that regard I have to say that Mr Kwan's affidavit is certainly not anything like an affidavit of means with which the courts dealing with this sort of matter are usually provided. He simply states without any supporting facts or figures that he is unable to provide the amount claimed as security.

8. In the result, I have no difficulty in coming to the conclusion that the proper order I should make is that security should be provided. The only question remains of what the amount should be.

9. What has been asked for, as I have already said, is the amount of $346,300. In support of that in the ordinary way, the respondent has exhibited a draft bill of costs. I have looked at this and considered it in the light of the knowledge of the case which I have gleaned from reading the judgment and hearing counsel submission. It seems to me that the amount claimed is a little too high. I do not subscribe to any sort of principle or practice of automatic scaling down by a third or whatever, but having looked at the figures and having seen what is involved, it seems to me that the amount must be substantially reduced. The security I would order is a sum of $250,000. It remains to ascertain from counsel what manner and in what time it should be provided.

	(G.P. Nazareth)
	Vice President

Representation:

Mr Benjamin Chain (M/s Yun & Co) for the Plaintiff

Ms Phillis Loh (M/s Josip Ma & Co) for the Defendant