HCA 1974/2009
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1974 OF 2009
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BETWEEN |
| | CHIU HSIUNG (屈雄) | 1st Plaintiff |
| | LIU WEN-HUI (劉文慧) | 2nd Plaintiff |
and |
| | WANG CHAO HUANG (王朝煌) | 1st Defendant |
| | CHEN SHU CHUAN (陳森隆) | 2nd Defendant |
| | WONG KIN (黃健) | 3rd Defendant |
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| Before: Hon Anthony Chan J in Chambers |
| Date of Hearing: 8 October 2013 |
| Date of Decision: 21 October 2013 |
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D E C I S I O N
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1. On 23 September 2013, this court gave a decision declining the 3rd defendant’s further application for security for costs (“Decision”). This is a similar application on the part of the 1st defendant.
2. First and foremost, it is most unfortunate that these applications, which are based upon the same ground and have no distinguishing feature save for one (see below), have not been heard together. One of the consequences for having two hearings on similar applications is the prospects of inconsistent findings. Even if the applications are heard by the same tribunal, such possibility cannot be avoided because the arguments advanced by the parties may not entirely overlap. It is trite that litigation must be conducted in such manner to avoid the possibility of inconsistent findings.
3. Further, the way in which these applications have been conducted has resulted in wastage of resources, both of the court and at least that of the plaintiffs by having to deal with 2 hearings.
4. I should set out a brief chronology of these further applications. The 3rd defendant’s application was taken out on 30 July 2013. The one of the 1st defendant was issued on 27 August 2013. On 6 September 2013, after a date had been fixed for the hearing of the 3rd defendant’s application, the plaintiffs’ solicitors wrote to the solicitors of the 1st and 3rd defendants asking for their consent that their applications be heard together. That letter stated as follows:
“As you are aware that one of the grounds our clients will rely on in opposing the 3rd Defendant’s Summons and the 1st Defendant’s Summons is that our clients have a good and genuine claim. As such, in order to avoid the possibilities of inconsistent findings by different Judges which may embarrass the Court and for better use of the resources of the Judiciary, we propose that the 3rd Defendant’s Summons and the 1st Defendant’s Summons should be heard together before a bilingual Judge as soon as possible before trial …” [emphasis added]
5. Regrettably, the 3rd defendant declined the invitation, whereas the 1st defendant did not reply to the letter.
6. I was told by Mr Wong, who appeared for the 1st defendant, that the 1st defendant was not aware of the 3rd defendant’s application before the plaintiff’s said letter was received. However, the 1st defendant then proceeded to fix a date for the hearing his application fully aware of the issue of inconsistent findings. Equally regrettable, contrary to the suggestion in their letter, the plaintiffs failed to take any further action to have the two applications disposed of at the same time.
7. In the Decision, the 3rd defendant’s application was rejected on 3 grounds, namely, (a) there was no adequate justification for making a further order for security in light of a previous consent order by which security for costs was provided; (b) there was insufficient evidence that the existing security was inadequate; and (c) the plaintiff has a genuine and strong case.
8. Like the 3rd defendant’s application, this application is made on the ground that the existing security has been rendered inadequate by reason of the adjournment of the trial. The circumstances of the adjournment had been summarised in paras 2 to 4 of the Decision. The only additional information I have been provided by Mr Wong is that due to the unavailability of the learned Recorder, the trial could only be resumed after 13 months in the event that it was not completed within the originally allotted 6 days.
9. The only distinguishing feature between this application and that of the 3rd defendant is that the amount of security provided under the previous consent order is considerably lower, HK$120,000 as opposed to HK$600,000. However, as accepted by Mr Wong, the court would not normally go behind a consent order to investigate why certain agreement was reached. There could be a variety of reasons for the lower amount of security, eg, the involvement of the 1st defendant in this action. This feature is only relevant on issue (b) (see para 7 above), which I will deal with below.
10. Very sensibly, Mr Wong had focused his submissions on addressing the 3 issues identified above. In respect of issue (a), Mr Wong relied heavily on the authority of Solomo Waknine & Anr v Ming Cheung Manufacturing Co Ltd& Ors, CFI, [1985] HKLR 84 and submitted that a fresh estimate on the length of trial would constitute adequate justification for further security notwithstanding the consent order.
11. I have some misgivings over whether the argument would lead to an inconsistent finding by this court in light of the Decision. Mr Wong sought to persuade this court that it should not hesitate to deal with the argument by reason of the fact that Solomo was not cited to this court previously.
12. Turning to Solomo, first of all, that authority fortifies the view taken in the Decision that the residual discretion in making further orders for security for costs notwithstanding the existence of a consent order which provided for such security should be exercised sparingly – see p 85A-B.
13. In respect of the ratio of Solomo, I believe that it was encapsulated at p 85F and I would endeavour to formulate it as follows. Where a consent order for security for costs had been made on the basis of a time estimate for the trial, circumstances may arise which justify a further order for security to cover the additional costs of a trial which will exceed the estimate. In other words, it is a facts sensitive decision. With respect, Solomo is consistent with the Decision (see paras 6 and 7 of the Decision).
14. In this application, Mr Wong did not seek to dispute the fact that the parties were jointly responsible for the adjournment of the trial.
15. When one looks closer at the facts of Solomo, it can be seen that whilst the parties there were jointly responsible for a trial estimate which turned out to be over optimistic by a wide margin, the plaintiff in that case was apparently at fault by, inter alia, not having discharged his discovery obligations.
16. I do not believe that Solomo assists the 1st defendant’s case. The facts of that case are different.
17. In this case, given the joint responsibility over the adjournment, the fact that an adjournment is a normal risk of litigation and that security for costs should not be treated as an indemnity for the costs of the applicant, I am of the view that there is no adequate justification to make a further order for security in this case. In other words, I see no distinction between this application and that of the 3rd defendant, and for the same reasons there is no adequate justification to exercise the discretion to make a further security for costs order.
18. In respect of issue (b), I accept that prima facie the amount of security in place appears to be clearly insufficient for an 11-day trial. However, there is a problem with the approach of the 1st defendant on this issue. It is contended by him that the HK$120,000 provided under the consent order do not even cover the fees incurred to date for counsel’s service. An extra HK$1 million is being sought under this application. There is no attempt to demonstrate how much additional costs will be incurred by reason of the additional length of the trial.
19. In Solomo, the costs of 4 days were ordered under the further security to reflect the increase of 4 days to the length of trial. I believe that is the correct approach in an application of the present type. The evidence relied upon by the 1st defendant is inconsistent with the correct approach and this application should be declined for this reason as well.
20. As regards issue (c), Mr Wong submitted that the merit of this case is insufficiently clear such that this court ought not to consider the same in this application. This brings to the forefront the issue of inconsistent findings (see para 7 above).
21. The further written submissions which the parties were required to file with the court on the issue of inconsistent findings are not helpful. It is, however, common ground that there is no issue estoppel against the 1st defendant given that he was not involved in the 3rd defendant’s application.
22. I reject Mr Wong’s submission on the merits. I believe that the strength of the plaintiffs’ case is apparent from looking at these matters with common sense and from the documentary evidence.
23. Further, I take the view that it is an abuse of process for the 1st defendant to have (i) put the court in an invidious position of possibly making inconsistent findings and (ii) advanced the same argument with no attempt to distinguish his case from that of the 3rd defendant.
24. For these reasons, this application is rejected. The 1st defendant ought to be penalised with a heavier costs order for not agreeing to a consolidated hearing of the 2 applications. However, I bear in mind the unreasonable refusal of the 3rd defendant to a consolidated hearing and it is the 3rd defendant who should bear the lion share of the responsibility. The 3rd defendant has escaped the consequence of his unreasonable action because this court was not informed of the matter at the time of hearing his application. In these circumstances, I make the usual order that the costs of this application be paid by the 1st defendant to the plaintiffs to be taxed if not agreed.
25. A copy of this decision should be sent to the previous solicitors of the 3rd defendant, who is now acting in person.
| (Anthony Chan)
|
| Judge of the Court of First Instance |
| High Court |
Mr Dennis Law, instructed by D S Cheung & Co, for the plaintiffs
Mr Kenneth Y F Wong, instructed by Oldham, Li & Nie, for the 1st defendant