HCA 1285/2014
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 1285 OF 2014
_________________________
| BETWEEN |
| | CHRIS AU | Plaintiff |
| | and | |
| | STEVE YOON SOO KIM | Defendant |
_________________________
| Before: Deputy High Court Judge Marlene Ng in Chambers |
| Date of Hearing: 1 August 2016 |
| Date of Handing Down Decision: 25 November 2016 |
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D E C I S I O N
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I. INTRODUCTION
1. The plaintiff (“P”) was/is a businessman. The defendant (“D”) claimed P (a) held himself out as an investor in and/or business associate of an entertainment venue known as Privé, and (b) was the managing director, majority controlling shareholder and operator of a restaurant called Dakota Prime (“Dakota Prime”) that had since closed business in late 2009 or early 2010. P agreed both Privé and Dakota Prime were among the businesses he ran in Hong Kong at the time. As for D, he claimed to be an American lawyer who came to Hong Kong in/about 2003 to work at a lawfirm until December 2008. D was (and he claimed he still is) a shareholder in Dakota Prime (“DP Shareholding”).
2. P claimed P and D became friends (and maintained a personal/ social relationship) since they met in/about late 2004 or early 2005 to play poker, and P, D, David Kim (“Kim”) and Jonathan Hwang (“Hwang”) constituted the 4 players (“Players”) who in 2008 met regularly to play games of poker (“Games”). But D claimed the Players were mere acquaintances even though P invited D to invest in Dakota Prime which D did. P claimed the DP Shareholding was applied towards a HK$250,000 part-payment / set-off against D’s alleged indebtedness to P under the Gaming Contracts referred to in paragraph 4 below.
II. PLEADINGS
3. P claimed the Players played 33 Games from April to November 2008 with wagers made on credit and each Player’s overall winnings/losses recorded in a ledger (“Ledger”) updated by a Player and double-checked by other Players after each Game. P agreed not all Players attended every Game and sometimes 1-2 players had to leave early, but the remaining 2-3 Players might still play. P claimed the Ledger contained material details of the Games,[1]and after each Game D emailed to the Players the latest updated version of the Ledger[2] that set out each Player’s total winnings/losses at the end of each Game and his cumulative net position (and any Player who left early would have checked the Ledger before he left). D denied he created/kept the Ledger (which he claimed was unclear and incomprehensible) and/or the Players double-checked its contents/ entries after each Game.
4. P claimed the 33 Games were lawful/enforceable oral gaming contracts (“Gaming Contracts”) whereby the Players understood/agreed that by playing each Game they would abide by the relevant rules and make/ receive payment according to winnings/losses, and D so understood/agreed by his receipt/acceptance of cash payments under the “pay-to-play” terms recorded in the Ledger. P further claimed that after deducting D’s part-payments his cumulative losses were HK$8,544,250, but the other Players were in winning positions with P up by HK$7,208,550. On 9 July 2014, P commenced the present action against D to claim for the outstanding sum of HK$7,208,550 with interest/costs.
5. D denied P’s claim. D averred (but P denied) they met several times in/about early October 2008 to play card games, but D did not consent/agree to any gambling and/or did not suffer the losses P alleged. D averred the Gaming Contracts (if any) had no binding legal effect (as the Players did not intend to create any binding contract(s) or contractual obligations) or alternatively each Player’s overall winnings/losses recorded in the Ledger did not create binding contractual obligations (as the Players never had the intention to honour/settle their losses by making full payment according to various rules laid down and agreed among the Players). As a result of words/conduct of the Players (including P), it became clear to D by September/October 2008 (a) the Players (including P) never had any real intention to honour/settle their full losses as recorded in the Ledger, (b) the Players (including P) never intended the card games played on social occasions to give rise to binding legal obligations for settlement of losses and/or (c) the figures recorded in the Ledger were mere “scores” with no binding legal effect among the Players. Further alternatively, the terms/ rules of the alleged Gaming Contracts were so unclear/uncertain there could be no binding contractual arrangements and/or obligations between the Players (including P vis-à-vis D).
6. D claimed that if the alleged card games and/or winnings/losses recorded in the Ledger did create binding contractual obligations among the Players (which D denied), as a result of the conduct of the Players (including P), ie their repeated breaches of the relevant rules and their refusal to honour/settle their losses by September/October 2008, D was entitled to and did treat the Players (including P) as having repudiated their contractual obligations (if any), and any contract(s) and/or contractual obligations among the Players (if any) had come to an end. Further, on 1 October 2008 or thereafter D accepted such repudiation by declining to participate in any further games until there was settlement in accordance with the agreed rules/ promises (which acceptance of repudiation was re-affirmed after P further failed to honour the final extension). Hence, (a) no contractual obligations (new or otherwise) arose/existed among the Players (including P vis-à-vis D) after September/October 2008 and/or (b) P was estopped from claiming against D the sums based on the Ledger and/or other sums alleged to have been incurred as a result of the card games or otherwise.
7. P disagreed, and claimed it was implied under the Gaming Contracts that payment would have to be made within a reasonable time which in the relevant context meant immediate payment after each Game, and there was no formal variation of such term even though the Players at times breached such implied term and discussed proposals for payment to be made. Since D knowingly chose to (a) continue to play until the last Game under the Gaming Contracts in November 2008, (b) update the Ledger, (c) acknowledge his understanding that enforceable debts had incurred, and (d) accept/make payments under the “pay-to-play” terms when he was winning/losing, D had elected to affirm continuation of the Gaming Contracts and waived any right to rely on breaches by other Players to avoid paying losses he suffered from playing the Games that he chose to play under the Gaming Contracts.
8. But D complained that since/about 11 August 2008, P, Kim and Hwang created a side ledger that apparently recorded wagers, winnings and losses among the 3 of them whereby they pooled their winnings/losses to D’s exclusion (“Side Ledger”). D claimed that in late September 2008 Hwang revealed the Side Ledger to him, and in/about late October 2008 Hwang showed D some emails among him, P and Kim that discussed how in light of the Side Ledger they could play together against D.[3] P denied any Side Ledger and denied knowledge of any correspondence between D and Hwang, but even if there were any Side Ledger (which P denied), D knew of it by September 2008 but continued to play the Games until November 2008, so D had waived any right to rely on the Side Ledger to avoid liability to pay winnings owed to P under the Gaming Contracts.
9. By his Amended Defence and Counterclaim filed on 7 October 2015, D counterclaimed against P (“Counterclaim”) as follows:
(a) On/about 10 February 2009, P unilaterally seized the DP Shareholding (for which D had invested HK$250,000 by way of remittance to P on 30 July 2008) and had since withheld all dividends, payments and interest accrued and/or arising therefrom that were due and payable to D, so P held such dividends, payments and interests on trust for D and was liable to account for the same.
(b) In/about September 2008, D remitted HK$13,000 to P to acquire spare parts for the Porsche car (“Car”) registered under D’s name, but P never delivered the spare parts, and on/about 12 December 2008 unilaterally seized and converted the Car (estimated market value of HK$250,000) without D’s consent/ authority, and refused to deliver up possession of the same.
(c) D counterclaimed for HK$513,000 or further/alternatively (i) an order to account for the DP Shareholding, (ii) a declaration that all monies, dividends, payments and/or interest accrued from the DP Shareholding were/are held on trust by P for D and P was liable to account for all profits and/or to make good all losses, (iii) an order for delivery up or assignment of the DP Shareholding and aforesaid trust assets to D or as D might direct, (iv) an order for payment by P to D of all monies found due upon taking of accounts and making of inquiries, (v) damages and equitable compensation, (vi) interest/costs, or “[alternatively], without admission of liability, [D] will seek to set off as much of his counterclaim in satisfaction of [P’s] claim herein (whether on a legal or equitable basis)”.
10. P denied D’s counterclaim, and claimed (a) the DP Shareholding (HK$250,000) and the sum of HK$14,000 were applied towards part-payments / set-offs against D’s indebtedness due to P under the Gaming Contracts, (b) the Car was consensually transferred to P and applied towards a HK$150,000 part-payment / set-off against D’s indebtedness due to P under the Gaming Contracts, and (c) D made a wire transfer of HK$65,000 to P on/about 21 December 2008 for the same purpose.
III. SUMMONS
11. On 31 July and 10 August 2015, D’s solicitors DLA Piper Hong Kong (“DLAP”) wrote to P’s solicitors Oldham, Li & Nie (“OLN”) for P’s agreement in principle to give security for D’s costs. On 19 August 2015, OLN asked for the amount of security sought. On 7 October 2015, Registrar Lung (“Registrar”) directed D to apply for security for costs (if so advised) within 21 days thereof. On 14 October 2015, DLAP gave OLN D’s breakdown of the security sought, but there was no reply.
12. On 28 October 2015, D filed a summons for security in the sum of HK$3,996,650 for D’s costs in the present action up to the conclusion of trial, and for orders that (a) until such security was given all proceedings against D be stayed, (b) in the event P failed to give security in the manner as ordered by the court P’s action against D be dismissed with costs to D to be taxed if not agreed, and (c) costs of the application be to D (“Summons”). D filed the affirmation of D’s solicitor Wong Chun Ho Jonathan and 2nd and 4th affidavits of D on 28 October 2015, 1 February 2016 and 19 April 2016 respectively in support of the Summons. P filed his 1st affirmation in opposition on 8 January 2015 (“1st P Aff”) and was granted leave to rely on his 2nd affirmation dated 21 March 2016 (“2nd P Aff”). As regards the status of the present action, witness statements and supplemental witness statements had been exchanged between the parties.
13. D applied for security for costs out of concern that P would be unable to pay his costs if he were successful in his defence on the basis that (a) P was ordinarily resident out of jurisdiction (ie in Singapore), (b) P had either incorrectly stated his address in the Writ of Summons or had changed his address during the course of the proceedings, and (c) there were no assets of P that could be identified. Ground (b) was not pursued at the hearing of the Summons before the Registrar on 22 April 2016 (“Registrar Hearing”).
14. P made 3 points in answer: (a) P was ordinarily resident in Hong Kong as (i) he was born in Hong Kong, (ii) he has substantial personal and business connections with Hong Kong, (iii) he never “uprooted” and re-located himself to Singapore even though he spent the last few years in Singapore to work on the launch of a business project and (iv) as a matter of law P as a natural person might be resident in more than 1 jurisdiction, say, in both Hong Kong and Singapore, (b) a Hong Kong judgment on costs could be easily enforced in Singapore as a result of reciprocal enforcement arrangements between the 2 jurisdictions, which must be given due weight and which militated against an order for security for costs, and (c) in view of the Counterclaim D was in fact the “real attacker” and the court should not exercise its discretion to award security for costs in D’s favour.
15. At the Registrar Hearing, the Registrar granted the following order in respect of the Summons (“Order”):
(a) P do within 35 days from the date thereof pay into court the amount of HK$2,000,000 as security for D’s costs in the present action up to the conclusion of trial with liberty to apply;
(b) until such security is given all further proceedings against D be stayed;
(c) costs of the Summons (with certificate for counsel) be to D summarily assessed at HK$190,000 payable within 28 days thereof.
On the same day, Registrar Lung handed down his reasoned decision for the Order (“Decision”).
IV. APPEAL
16. On 6 May 2016, P filed Notice of Appeal to Judge in Chambers (“Appeal”) to set aside the Order and to seek costs of the Appeal and of the Summons against D to be taxed if not agreed. The Appeal was returnable before this court on 1 August 2016 (“Appeal Hearing”).
17. It is trite that an appeal from the master to judge in chambers is dealt with by an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time. The judge will give the weight it deserves to the previous decision of the master; but he is in no way bound by it.[4]
18. For the purpose of the Appeal, Mr Hui, counsel for P, maintained the 3 points set out in paragraph 14 above. He also accepted there was a bona fide claim and a bona fide defence in this action, so there was no need to delve into the merits of P’s claim or D’s defence[5] save for considering whether D was a “real attacker” by reason of the Counterclaim.
V. STAY OF EXECUTION
19. On 27 May 2016, P filed a summons for stay of execution of the Order pending determination of the Appeal with costs of the application to be in the cause of the Appeal (“Stay Summons”). The Stay Summons was returnable at the same time as the Appeal Hearing. At the Appeal Hearing, I made no order in respect of the Stay Summons, and further ordered P to pay costs of and occasioned by the Stay Summons to D in any event to be taxed if not agreed (“Stay Order”). But I pause to note the sealed copy of the Stay Order stated:
“1. No order is made in relation to the Summons;
2. No order as to costs of the Summons for the Plaintiff; and
3. Costs of and occasioned by the Summons be paid by the Plaintiff to the Defendant in any event, to be taxed if not agreed.”
Such sealed copy order did not reflect the order made by this court, and items 2-3 therein were inherently contradictory. I therefore (a) grant leave under the slip rule for D to amend the sealed copy of the Stay Order to remove item 2 and re-number item 3 as item 2, and (b) direct D to file and serve the amended Stay Order within 7 days from the date hereof.
VI. LEGAL PRINCIPLES: SECURITY FOR COSTS
20. Order 23 rule 1(1)(a) of the Rules of the High Court (“RHC”) provides that where the plaintiff is ordinarily resident out of the jurisdiction, the court may order security for costs if having regard to all the circumstances of the case it is just to do so. In such an application, the ordinary residence of the plaintiff was of fundamental importance as a plaintiff ordinarily resident in Hong Kong could not be ordered to provide security for costs, no matter how impecunious he was, and no matter how likely he was at risk of the defendant not being able to recover costs from him if he failed in his action.[6]
21. The onus was on the defendant to prove that the plaintiff is “ordinarily resident” out of the jurisdiction. In Vallejos & anor v Commissioner of Registration, Ma CJ said it would be an error to think that “ordinary residence” can only have a single meaning whatever the factual and legal context, and “the approach to the meaning of the term “ordinary residence” in each case is conditioned by the content and legislative purpose of the statute in question, applied in differing factual contexts”. [7] In the context of Order 23 of the RHC, Fok JA in Hui Yin Sang v Tsoi Ping Kwan explained as follows:[8]
“The purpose of ordering security for costs against a plaintiff ordinarily resident outside the jurisdiction is to ensure that a successful defendant will have a fund available within the jurisdiction of this court against which it can enforce the judgment for costs. It is not, in the ordinary case, in any sense designed to provide a defendant with security for costs against a plaintiff who lacks funds. The risk of defending a case brought by a penurious plaintiff is as applicable to plaintiffs coming from outside the jurisdiction as it is to plaintiffs resident within the jurisdiction.
(Per Sir Nicholas Browne-Wilkinson VC (as he then was) in Porzelack KG v Porzelack (UK) Ltd [1987] 1 WLR 420, p.422H – cited in Akai Holdings Ltd v Ernst & Young (2009) 12 HKCFAR 376, para.14).”
22. In the context of Order 23 rule 1(1)(a) of the RHC, the question of “ordinary residence” is one of fact and degree; it does not depend upon the duration of the residence, but upon the way a man’s life is usually ordered, and it connotes a degree of continuity being required, and contrasts with occasional or temporary residence.[9] The phrase “ordinarily resident” should be construed according to its ordinary and natural meaning, and that a person is ordinarily resident in a place if he habitually and normally resides lawfully in such place from choice and for a settled purpose, apart from temporary or occasional absences, even if his permanent residence or “real home” is elsewhere.[10] When determining whether a plaintiff is “ordinarily resident” outside the jurisdiction, it does not necessarily matter that the plaintiff has spent significant amounts of time abroad. One has to consider the reasons for the absence from the jurisdiction and whether the plaintiff has “up-rooted” and relocated him- or herself abroad. A holder of a Hong Kong identity card is not necessarily ordinarily resident within Hong Kong.[11]
23. For the purposes of security for costs, a plaintiff who was formerly resident in Hong Kong (at the time of the alleged cause of action arose) but who is no longer resident should not be in any different position to that of a plaintiff who has always been non-resident.[12] There is also no res judicata from the finding of the Registrar in the first instance because (a) the question of whether a plaintiff is ordinarily resident out of jurisdiction for the purpose of Order 23 rule 1 of the RHC is to be determined at the time of the application, and (b) the decision of the Registrar at the first instance that the plaintiff was not ordinarily resident in Hong Kong was based on the evidence then before him.[13] However, I pause to note that for the purpose of the Appeal P did not make any application for leave to place further evidence before this court.
24. It is also trite that the power to order security is discretionary and the court should have regard to all the circumstances of the case.[14] It is necessary to consider what is just,[15] but even if there is no inflexible or rigid rule, as a matter of discretion it is common that the court will require a foreign plaintiff to give security for costs because it is ordinarily just to do so.[16] The aforesaid discretion under Order 23 rule 1(1) of the RHC as to what is just “having regard to all the circumstances of the case” (my emphasis) is unfettered. Difficulty of enforcement abroad is merely one factor to be considered. Not only is it not conclusive, it is not the only factor to focus upon.
25. For example, security may not be required from a person residing out of jurisdiction if he has substantial property, whether real or personal, within it,[17] “but ...... the property must be of a fixed and permanent nature, which can certainly be available for costs[18] ...... or at any rate such as common sense would consider to be so[19] ...... and such person must show it is so available[20] ......”[21] Further, the court is entitled to take the impecuniosity of the personal plaintiff into account even though such factor is not of itself enough to confer on the court jurisdiction to order security. Recorder H Wong SC in Lim Yi Shenn said as follows:[22]
“54. The English cases ...... have been clear that in the exercise of the Court’s discretion, it is entitled to, and should, take into account matters relating to the status of the plaintiff, including his impecuniosity. I need only refer to the decision of the English Court of Appeal in Thune v London Properties Ltd [1990] 1 WLR 562, where Bingham LJ (as he then was) held:
‘In approaching that question it cannot be too emphatically stated that the impecuniosity of a personal plaintiff is never of itself enough to confer on the court a discretion to order security. ...... But I am for my part firmly of opinion that it is a matter which the court may, and in a proper case should, consider in exercising a discretion where power to make an order is established. ......’
55. I agree with what Bingham LJ said in the case of Thune and would hold that this continues to represent the law in this jurisdiction.
56. Accordingly, in exercising my discretion in the present case, I do not consider that my discretion is in any way inhibited and if there had been evidence concerning the status and financial ability of the plaintiff, I would have taken the same into account.” (my emphasis)
VII. ORDINARY RESIDENCE
26. As seen from the analysis below, I agree with the Registrar that for the purpose of Order 23 rule 1(1)(a) of the RHC, P is ordinarily resident outside the jurisdiction in Singapore and not ordinarily resident in Hong Kong.
27. Personal history P and his 4 siblings were born in Hong Kong. P moved to the United States with his family when he was about 7 years old, and was educated up to tertiary level there. P claimed he made particular efforts to learn about the legal systems in Hong Kong and PRC as part of his studies at the University of Hong Kong in 1993 because he intended to return to live in Hong Kong. After doing business and having his own lawfirm in New York for 3 odd years, P moved to Hong Kong as (according to him) Hong Kong was his birthplace/home and he preferred to be surrounded by Chinese people/culture.
28. Stay in Hong Kong P lived in Hong Kong from 1997 to 2010 and was a taxpayer. P said he married his 1st wife (a Hong Konger) in 1999, and they lived in Happy Valley. They divorced in/about 2001 in Hong Kong. For about 3 years from 1998 to 2001 P lived/worked in Hong Kong, and was employed as Vice President of Asia Operations, Vice President for Legal, Secretary and Chief Operating Officer for oCen Communications’ Hong Kong office. oCen Communications Pte Ltd was a Singaporean company with its company address in Singapore,[23] and P was its director from 14 November 2000 to 12 March 2001.
29. P claimed he lived in Tuen Mun when P first met D in late 2004 or early 2005,[24] and moved to Mid-Levels (“Mid-Levels Address”) in/about 2006.[25] From 2002 to 2006 P continued to live in Hong Kong with his then girlfriend (Hong Konger). During that time P was unemployed, but he started to get involved in the restaurant business by assisting in his friends. In 2007 P married his then girlfriend, and they continued to live at the Mid-Levels Address. In 2008 they separated, and when the tenancy of the Mid-Levels Address expired P moved to Pokfulam (“Pokfulam Address”) where he stayed from 2008 to 2010.[26]
30. The registered owner of the Pokfulam Address was a Hong Kong company, but P was neither its shareholder nor director. P did not dispute he did not own the Pokfulam Address. D suggested the term of any lease for the Pokfulam Address would not have been more than 3 years,[27] but P said it was common for people in Hong Kong to enter into residential tenancy agreements for tenancy term of 3 years or less to ensure flexibility in view of rental fluctuations and high property prices.
31. Businesses in Hong Kong P claimed that in 2006 he started his own business in Hong Kong, and founded the food and beverage group, Privé Group, that held had a portfolio of restaurants, nightclubs and other food and entertainment establishments in Hong Kong. P claimed the Privé Group’s business flourished under his management, and from 2006 to 2009 various restaurants and food outlets were launched, including Privé, Easy Kitchen, Koi Sushi, Thai Curry House, The Cheesecake Café and Dakota Prime. The Privé Group was still in existence in Hong Kong, but P no longer held any stake in it.
32. Ordinary residence in Hong Kong P claimed he was an ordinary resident in Hong Kong before he moved to Singapore in 2010. Even though P did not purchase any residential property and moved residences according to personal preferences and business needs, (a) he was a permanent Hong Kong resident with Hong Kong identity card and passport, and (b) before 2010 he had stayed in Hong Kong for over 13 years. I agree with Mr Hui that the fact P rented residential premises for tenancy terms of 3 years or less of itself might not demonstrate P was not ordinarily resident in Hong Kong.
33. However, I find it significant that in 2014 P chose to adopt the Pokfulam Address as his address in the Writ of Summons (“WoS”) in the present action when even on his own case (a) his tenancy of the Pokfulam Address expired more than 3 years ago in 2010 and (b) he left Hong Kong for Singapore in early 2010. It was only later in his witness statement dated 21 July 2015 that he gave a Singapore address. In light of (a)-(b) above, I cannot accept P’s explanation that his address did change in the course of the proceedings, but “they were normal relocations of [his] living places only”. In my view, P plainly no longer lived at the Pokfulam Address in 2014, and no explanation was forthcoming from P as to why he gave such address in the WoS. This would be part of “all the circumstances” to be considered in deciding whether to order security for costs.
34. Further, in my view, whilst paragraph 32(a) above was a relevant factor it was non-conclusive in showing whether P was presently ordinarily resident in Hong Kong, and likewise for paragraph 32(b) above the relevant time for considering P’s ordinary residence was at the time of the application (see paragraph 23 above).
35. Going to Singapore Of more significance was P’s admission that he moved to Singapore in 2010 for business reasons, and that “[he has] been physically residing in Singapore most of the time of the past few years”. In 2011, P and his 2nd wife divorced under FCMC14072/2008. On 7 July 2015, OLN wrote to DLAP stating that “...... [P] resides overseas”. As alluded to in paragraph 33 above, P’s witness statement dated 21 July 2015 gave his address as “100 beach road #24-01, Singapore 189702 ......” (“1st SG Address”), presumably his business address rather than his residential addresses (see paragraph 42 below).
36. I note that time and again the 1st and 2nd P Affs sought to emphasise P’s permanent home and permanent place of residence were in Hong Kong. In my view, this is not the proper test for “ordinary residence” as a person can be ordinarily resident in one place even though he views his permanent place of residence elsewhere (see paragraph 22 above). The fact P went to Singapore for business purpose and/or he might not stay there indefinitely would not necessarily contradict D’s allegation that P left Hong Kong for Singapore for a settled purpose. Lord Scarman in R v Barnet London Borough Council ex p Shah at p 344 said as follows:
“And there must be a degree of settled purpose. The purpose may be one; or there may be several. It may be specific or general. All that the law requires is that there is a settled purpose. This is not to say that the “propositus” intended to stay where he is indefinitely; indeed his purpose while settled, may be for a limited period. Education, business or profession, employment, health, family or merely love of the place spring to mind as common reasons for a choice of regular abode. And there may well be many others. 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.” (my emphasis)
37. But P insisted he went to Singapore for business reasons and disagreed he went there for a settled purpose, and he further claimed to be still ordinarily resident in Hong Kong given his significant business/personal connections here as evident from (a) the frequency of his return to Hong Kong in the last few years and (b) the expansion of his businesses in Singapore to Hong Kong. Mr Hui submitted that due to P’s ordinary residence in Hong Kong prior to 2010, the burden was on D to satisfy the court that after 2010 P uprooted and re-located himself for a settled purpose.
38. In my view and as discussed below, the tenor of the evidence was that P moved to Singapore by choice for settled purpose to live/work there and to develop his business there. There was no evidence that when P left for Singapore in 2010 he maintained any residence in Hong Kong (whether rented or owned) and/or had any on-going or operating business in Hong Kong. P did not dispute Dakota Prime closed business in late 2009 or early 2010. P no longer held any stake in the Privé Group, and according to P’s profile on the website LinkedIn as of 18 January 2016, he was “CEO at Privé Group” from January 2007 to April 2009. On the other hand, Iconic Locations Singapore Pte Ltd (“Iconic Locations”) was registered on 13 August 2009, and P (who went to Singapore in 2010) became its director on 15 January 2010. Iconic Entertainment Pte Ltd (“Iconic Entertainment”) was registered on 15 April 2010, and P became its director on the same day. As seen below, both of these companies operated a restaurant / club lounge called Ku De Ta (later re-branded as CÉ LA VI) in Singapore. Plainly, P’s move to Singapore was a planned one to launch/operate Ku de Ta there. In my view, there was no substantial evidence to show when P moved to Singapore in 2010 he was, as Mr Hui submitted, “a typical Hong Kong businessman who operates a regional business in Asia” (my emphasis). The overall picture was that in 2010 P uprooted himself to leave Hong Kong for “settled” purpose to develop his business in Singapore, and (as seen below) it was only when such business in Singapore matured that steps were taken to expand to Hong Kong.
39. Since 2010 P lived/worked in Singapore for 6 years. He spent substantial time in Singapore to develop his restaurant and food businesses (and as seen below he only made brief stops whenever he visited Hong Kong). The director search on P by Gray Page dated 27 and 28 January 2016 (“Director Search”) revealed P was a director of various companies in Singapore[28] most of which had their company address at the 1st SG Address and were engaged in the food business. Even though (as seen below) P expanded his Singapore businesses to Hong Kong in 2011-2013, I am of the view P had shifted his personal/business base to Singapore: (a) the Hong Kong businesses were extensions of his core business base in Singapore, (b) he became a Singapore permanent resident, and (c) his family was there, ie he got married again and recently had a child in Singapore. In my view, P had sufficient degree of continuity to be properly described as having settled in Singapore after 2010, and he was ordinarily resident in Singapore despite occasional visits to Hong Kong on business.
40. This was in fact how P viewed his own status in July 2015 since OLN (P’s solicitors) stated in its letter to DLAP that P “resides” overseas, and P gave the 1st SG Address (ie his business address in Singapore) as his address for his witness statement. Mr Hui submitted these matters should be given little weight because (a) OLN’s letter was sent for the purpose of seeking time indulgence for exchange witness statements as OLN needed time to take P’s instructions to finalise his statement “given [P] resides overseas”, and “residence” was not the same as “ordinary residence”, so OLN’s letter did not amount to any admission that P was ordinarily resident outside Hong Kong for the purpose of Order 23 rule 1(1)(a) of the RHC, and (b) it was natural for P to give the 1st SG Address in his witness statement as “[P] spent much time in Singapore for work”.
41. In my view, even if these 2 matters might not amount to direct admissions of P’s “ordinary residence” in Singapore, they were plainly relevant evidence of how P and his solicitors viewed his owned status, ie that he resided and worked in Singapore where he admittedly spent much time, and he did not point to any residential and/or business address for himself in Hong Kong in July 2015. This was also bolstered by how his former solicitors (who acted for him in HCA183/2014) viewed his status in 2015 (see paragraph 92 below).
42. Singapore residential addresses There was also other evidence to show that P’s connections were with Singapore. The Director Search revealed P had so arranged his affairs as to give his residential addresses in Singapore at “1 Newton Road, #12-02, Newton One, Singapore (307943)” (“2ndSG Address”) and/or “11C Balmoral Road, #06-02, The Oliv, Singapore (259798)” (“3rdSG Address”) for business purpose.
43. P admitted he did not buy any residential home in Singapore but instead he moved around according to personal preferences and business needs. But he argued this was irrelevant to the issue at hand. In my view, this is not without some significance. Although P did not buy any residential home in Singapore, he also did not live at a hotel there. He must have rented or licensed the 2nd and/or 3rd SG Addresses as his residential home in Singapore. Even on P’s case, notwithstanding his assertions of business/ personal connections with Hong Kong, there was no evidence he either bought/rented any residential flat for his alleged “frequent visits” to Hong Kong until 17 December 2015 (ie after a period of almost 5 years since he left Hong Kong for Singapore in 2010 and after commencement of the present action).
44. Permanent resident of Singapore As explained above, P was a Singapore permanent resident which I accept was different from citizenship, so P had a blue-coloured identity card (whilst Singapore citizens had pink‑ coloured ones). P said he did not have a Singapore passport and did not intend to apply for one, so he never intended to abandon Hong Kong as his ordinary residence. He still used his HKSAR passport (and, where necessary, Singapore re-entry permit that was valid for 5 years) for travel in/out of Singapore. P’s re-entry permit was to expire on 8 June 2016, but P did not seek leave to place evidence before this court as to its renewal status at the Appeal Hearing on 1 August 2016 even though P claimed the Singapore government had power not to renew his re-entry permit.
45. It is necessary to remind again that the relevant criterion is not permanent residence, nationality or citizenship, and ordinary residence can be for settled purpose of limited duration. Although the fact P travelled on HKSAR (not Singapore) passport and was not a Singapore national/citizen were of themselves neutral points, P’s efforts to secure a Singapore re-entry permit must be considered in its relevant context. In my view, the fact P took the step of securing such re-entry permit that was valid for 5 years and attached importance to ease of return to Singapore by virtue of such re-entry permit to facilitate his involvement in his businesses in Singapore certainly went some way to show P regarded Singapore as his ordinary residence. It must also not be forgotten that his wife and child were in Singapore.
46. P tried to brush this aside by saying the only reason he applied to be a permanent resident of Singapore was for business convenience otherwise he would have to renew his employment visa every 2 years. P said the Ku De Ta business project involved large foreign investment of millions of dollars and employed over 300 staff, so P thought the Singapore government would review his business project/plans more favourably if he as the founder, CEO and director of the BVI company Kudeta Limited (“Kudeta BVI”) that ran Ku De Ta (later re-branded as CÉ LA VIE) in Singapore through Iconic Locations and Iconic Entertainment (and hence the person-in-charge of the Ku De Ta business project) was a permanent resident of Singapore. I find such assertions lent weight to the view that P lived/worked in Singapore for the settled purpose of launching and carrying on his food and entertainment businesses there.
47. I agree P’s status as a permanent resident of Singapore was not conclusive that P was not ordinarily resident in Hong Kong, but it was clearly relevant that P chose to leave Hong Kong where he resided for 13 years to Singapore to live/work and to carry on business there and then to acquire permanent resident status to facilitate his businesses in Singapore, which must add weight to the continuity of his connections to Singapore, especially when his personal/business connections to Hong Kong after 2010 were at best tenuous.
48. LinkedIn profile D claimed P’s profile on the website LinkedIn as of 18 January 2016 showed him to be “CEO at Catalunya Singapore”, “Director of CÉ LA VI” from September 2009 to the present and “CEO at KU DÉ TA Singapore” from August 2009 to May 2014. P’s only relevant experience related to his business in Hong Kong in such profile was dated around 7 years ago when he was shown as “CEO at Privé Group” from January 2007 to April 2009.
49. P claimed this unofficial and unreliable online resource (ie which profile he had not used or updated for a long time) gave an untrue picture of his businesses/connections with Hong Kong. But I note with interest that P did not deny he was able to update his LinkedIn profile, but only claimed he did not do so for a long time. The above profile showed it was updated to at least “May 2014”, and yet there was no mention of P’s role in Catalunya Hong Kong (a matter I will return to below but it suffices to note here no explanation was forthcoming from P, which in turn raised question as to his alleged involvement in Catalunya Hong Kong).
50. Ku De Ta Singapore P said he went to Singapore in 2010 to work on the launch of Ku De Ta (later re-branded as CÉ LA VIE) in Singapore. P and other investors held their interests in Kudeta BVI either through Retribution Limited or Essence Investments Limited.[29] P claimed that as person-in-charge he had to be involved in Ku De Ta’s daily operations/business until it could fully function and operate properly, but he did not plan to be involved in such business in the long run and he always intended to sell his stakes therein after establishing Ku De Ta’s reputation as a world class restaurant. Eventually some shares of Kudeta BVI were sold in January 2013 to the LVMH Group’s private equity investment arm L Capital Investments Ltd (“L Capital”) at a valuation of S$95,000,000 to which P claimed he was entitled to S$33,750,000 (equivalent to HK$183,870,000) in the sale proceeds, but the deal did not formally close until January 2014. P’s involvement in Iconic Locations and Iconic Entertainment ended when the deal closed in early 2014.
51. Ku De Ta Hong Kong P claimed “[at] the time, [he] was personally involved in the negotiation and finalizing of the tenancy of the now CÉ LA VI restaurant at California Tower in Central, Hong Kong in 2011 and 2012. ......” But it was Kudeta BVI (and not P) who wholly owned the CÉ LA VI restaurant in Hong Kong, and P did not say what other role he played (if any) in launching/operating the CÉ LA VI restaurant in Hong Kong apart from negotiating its tenancy. All that was said was P travelled to Hong Kong on a monthly basis to keep in touch with friends/families and to attend to his businesses in Hong Kong. He also claimed to borrow a friend’s property in Kam Tin (“Kam Tin Address”) to stay when he was in Hong Kong. D’s alleged regular visits to Hong Kong was nothing much more than bare assertions as P did not produce direct evidence of the same, eg his passport or his Immigration Department entry/exit records for the relevant period, and the secondary evidence he placed before the court (see paragraphs 52-56 below) did not bear out his allegations.
52. Travelogue P produced emails, flight confirmations and itineraries to show how frequent he had flown to Hong Kong since 2010. I agree with D that flight itineraries did not necessarily represent flights taken as reservations might be cancelled. But from the disclosed materials DLAP prepared a travelogue of P’s flights (arrivals/departures between Singapore and Hong Kong) for the material period (“Travelogue”) to which Mr Hui did not raise objection. The Travelogue showed that when P was allegedly negotiating/finalising the tenancy for the CÉ LA VI restaurant in Hong Kong in 2011/2012, he came to Hong Kong on the following occasions:
| Year | Travel to Hong Kong |
| 2011 | once in October (from Paris), once in November (from Singapore), and once in December (from Los Angeles) |
| 2012 | once in January 2012 (from Singapore), twice in June (from London and Singapore), once in September (from Singapore), once in October (no supporting documents), and once in November (Singapore) |
But for the relevant period, there was no information on flights out from Hong Kong except for 13 April 2012 and 5 June 2012, so it was only clear that P flew from London to Hong Kong on 2 June 2012 and then from Hong Kong to Singapore on 5 June 2012 (ie stay in Hong Kong for 3-4 days).
53. The records for 2013 were no better:
| Year | Travel to Hong Kong |
| 2013 | thrice in March (ie (a) from Bangkok to Hong Kong on 5 March 2013 and from Hong Kong to Dubai on 6 March 2013, (b) 19 March 2013 – no supporting documents, and (c) from Singapore to Hong Kong on 31 March 2013), once in November (ie from Singapore to Hong Kong on 5 November 2013 and from Hong Kong to Singapore on 8 November 2013) |
The picture was incomplete because there were 2 flights out from Hong Kong to Singapore on 12 August and 8 September 2013 with no information as to when P came to Hong Kong. Anyway, the available records did not show P came to Hong Kong every month.
54. In 2014, the Travelogue showed P came to Hong Kong in January (3 days), March (3 days), August (1 night), September (1 night) , November (1 night) and November (2 nights). There was a flight to Hong Kong from Singapore on 12 November 2013, but there was no information when P left (but it would not have been a long stay as he again flew from Singapore to Hong Kong on 24 November 2013). There were also a flight out of Hong Kong on 10 May 2014 (but unclear when P arrived) and a flight to Hong Kong on 14 May 2014 (with no supporting documents and it was unclear when P left).
55. As regards 2015-2016, although there were references to flights to Hong Kong from January to August, there were no supporting documents except for the flight from Singapore to Hong Kong on 20 July 2015 (with no information as to when P left Hong Kong). There was greater clarity from the records for the period in/after September 2015:
| Month | Travel to Hong Kong |
| September | 8th (2 nights), 22nd (1 night), 24th (unknown when left Hong Kong) |
| October | 22nd (2 nights) |
| November | 9th (1 night), 26th (1 night) |
| December | 27th (2 nights) |
| January | 6th (1 night), 18th (1 night) |
| February | 18th (1 night) |
56. In my view, the Travelogue (based on P’s own evidence) did not show P travelled to Hong Kong every month (at least in 2011-2014). What the Travelogue clearly demonstrated was that P was mainly based in Singapore and only visited Hong Kong now and then for a couple of days each time before returning to Singapore.
57. Catalunya Singapore P claimed that when he was working on establishing the name of Ku De Ta, he also founded a Spanish restaurant called Catalunya in Singapore (“SG Catalunya”) in 2011, which became a first class restaurant that won awards. It was run by Catalunya Singapore Pte Ltd (“SGC Co”), a Singapore company of which he was a director. P’s LinkedIn profile recorded he was CEO of SGC Co.
58. Catalunya Hong Kong P claimed that as SG Catalunya created its name in Singapore he planned to expand “Catalunya” to other parts of Asia, and the first place for such plan was Hong Kong as this was his home and place of permanent residence. Following the successful launch of SG Catalunya, P started liaising with investors and worked on this project since early 2012. Catalunya Hong Kong opened in Wanchai, Hong Kong (“Oi Kwan Rd Address”) in 2013 (soft opening in/about mid-April 2013) (“HK Catalunya”), and was in operation since then. HK Catalunya was operated by Catalunya Limited (“HKC Co”) (incorporated as Giant Progress Limited on 18 March 2010 and changed its name on 9 May 2012), and was a sister restaurant of SG Catalunya with some staff members of the former seconded from the latter.
59. Mr Hui submitted P’s early involvement in the HK Catalunya project since early 2012 showed P had been maintaining business connections with Hong Kong. In my view, the Travelogue exploded such suggestion, and the evidence pointed to P’s maintenance of his core businesses in Singapore such that steps to branch out to Hong Kong did not make him ordinarily resident here.
60. In my view, the evidence before me fell short of supporting P’s claim that he had strong business connections with Hong Kong as he was the founder and beneficial owner of HKC Co and main operator of HK Catalunya. First, P was not shown to be director, secretary or shareholder of HKC Co on its annual return dated 18 March 2015 (“2015 Annual Return”), and there was no objective evidence to show P’s direct ownership in HKC Co or alleged beneficial ownership of HK Catalunya or HKC Co. P claimed he held his interest in HKC Co through a BVI company called Prime Mark Group Limited (“Prime Mark”) which held 40% of the issued shares in HKC Co, but he would not reveal the shareholding structure of Prime Mark due to commercial confidentiality requirements. According to the 2015 Annual Return, the remaining 60% of the issued shares in HKC Co was held by 3 BVI companies, 1 Seychelles company and a Jeong Joseph Chu. I agree with D that P’s claimed interest in HKC Co via Prime Mark was a bare assertion, but even if P had some interest in HKC Co via Prime Mark the extent of his interest out of the 40% shareholding held by Prime Mark was unknown (and it would at best be an overall minority interest). In face of the 2015 Annual Return, I am not satisfied there was sufficient countervailing evidence to show P had meaningful or substantial interest in HKC Co. Such evidence fell far short of showing P was the beneficial owner of HKC Co.
61. Turning to the operations of HK Catalunya, P suggested the 2015 Annual Return showed the only natural director was his trusted business partner Gerald Li Hong Yan (“Li”), so “[he] do not feel necessary to be a director of [HKC Co] when [ Li] is in charge of the management of [HK Catalunya]. He assists [P] with the daily operation in [HK Catalunya] while [D is] more involved in the daily management of [SG Catalunya]”. But P did not clarify and explain the beneficial ownership of the other corporate director Guu Chego Ltd (BVI company), and in the absence of such explanation there was little objective evidence to show Li was solely in charge of HK Catalunya. P also claimed he and Li agreed that Li would report to P and regularly seek his instructions on the management/operation of HK Catalunya by email/telephone, but the 3 email correspondence on HK Catalunya’s shareholder updates that P disclosed were in fact sent by Li to Li and/or to “Jero” and printed by “Anson Douglas” and “Vivien Wong” with nothing to show P to be a recipient. Such evidence also fell far short of showing P was the main operator of HK Catalunya or, as Mr Hui suggested, P “was and is nevertheless actively involved in the operation of [HK Catalunya]”.
62. Mr Hui was constrained to suggest HK Catalunya and HKC Co had connections with P because (a) HK Catalunya and SG Catalunya shared the same business name, (b) HK Catalunya’s Oi Kwan Rd Address (as shown on its website) was also the address of Bilbao Management Limited (“Bilbao”) which P claimed was wholly owned by him. I will deal with Bilbao below, but the fact HK Catalunya and SG Catalunya shared the same business name did not mean P was therefore ordinarily resident in Hong Kong.
63. D reminded that even if P were associated with HK Catalunya, the business of HK Catalunya and/or HKC Co was established/continued since May 2012 when P was already residing in Singapore after his move there in 2010, so the expansion of such business to Hong Kong could not serve as proof of P’s alleged intention to move from Singapore to Hong Kong. On the other hand, P claimed that after he sold his stakes in Kudeta BVI in 2014, he focused on both SG and HK Catalunya, and as it was common nowadays for people to move around the world for business/work and “Catalunya” being an international business venture, he could not see how his continued business involvement in SG Catalunya would affect the fact he was ordinarily resident in Hong Kong. P claimed that if/when he were to expand his business to other parts of Asia in future, he would have to spend an extensive period of time somewhere else, just like what he did for the launch of Ku De Ta in Singapore in 2010.
64. I am not persuaded by P’s arguments. The Travelogue did not show P spent “extensive time” in Hong Kong to launch HK Catalunya in 2012-2013. Even on P’s own case, he was admittedly more involved in SG Catalunya, and the fact he monitored any branch business in Hong Kong (as he alleged) from his core base in Singapore via trusted business partner stationed in Hong Kong did not make him ordinarily resident in Hong Kong. This was echoed in his LinkedIn profile (that was updated to May 2014) that stated he was the CEO of SG Catalunya without mention of any role in HK Catalunya or HKC Co. In my view, P’s alleged connection to Hong Kong was at best tenuous, and insufficient to show he was ordinarily resident in Hong Kong.
65. Other business in Hong Kong P claimed that apart from HK Catalunya he planned to launch further restaurants and food outlets in Hong Kong. He said since about 2014 he worked on launching a new Spanish restaurant concept in Hong Kong called BILBAO, and he had struck a deal to open such restaurant in a 5-star hotel in Hong Kong later in year. P claimed Bilbao entered into a management agreement with a hotel group (“Management Agreement”) in which Bilbao would be in charge of the operation/management of the BILBAO restaurant.
66. Although P claimed that under the Management Agreement Bilbao was required to procure P as the manager of the BILBAO restaurant, he declined to disclose any further details of the agreement as the terms were said to be confidential. The redacted copy of the Management Agreement disclosed by P only revealed Bilbao (a Hong Kong company having its registered office at the Oi Kwan Rd Address) as a contracting party (ie the manager), the recitals and the signature by Li and Ip Pui Yu (company secretary) on behalf of the manager.
67. P claimed Li was the sole director of Bilbao (which had not started operations yet), but this would be changed before the restaurant opens for business as Bilbao’s company secretary was then arranging the necessary Companies Registry forms and other documents to effect the change of Bilbao’s directorship/shareholding to be completed within the coming month (as from the 2nd P Aff in March 2016) whereupon P would become Bilbao’s sole director/shareholder. In this respect, P produced (a) an undated written resolution of Li as Bilbao’s director to accept/approve the transfer of 1 share to P, (b) a confirmation by Li and P that no agreement was signed other than the bought and sold notes for such transfer of share, and (c) undated instrument of transfer and bought and sold notes for such transfer of share signed by Li and P (who gave his address as the Wanchai Address referred to in paragraph 70 below).
68. Mr Hui suggested this showed the centre of gravity was moving closer to Hong Kong. I am not persuaded by D’s arguments. The terms of the Management Agreement were shrouded in secrecy, and the redacted copy of the agreement did not support P’s bare assertion that Bilbao was required to procure P as the manager of the BILBAO restaurant. I bear in mind Mr Hui’s emphasis that I should be concerned with the current state of affairs at the Appeal Hearing rather than at the Registrar Hearing, but no attempt was made to adduce evidence before this court as to the completion of the necessary process for transfer of share in Bilbao from Li to P which according to P should have been achieved before the Appeal Hearing. Be that as it may, when the whole circumstances were taken into account, the transfer of share in Bilbao from Li to P (subject to completion) did not change the clear picture that P’s core business base remained in Singapore with some expansion to Hong Kong that he managed/operated through his partner/associates in Hong Kong and that he monitored from Singapore with occasional visits to Hong Kong. His family was in Singapore and he spent the bulk of his time there. In my view, the Management Agreement did not show P was thereby ordinarily resident in Hong Kong.
69. I am unable to agree with Mr Hui’s submissions that P remained ordinarily resident in Hong Kong and did not cease to be so “because he has to attend to business dealings in another city, especially when he still has business ongoing in Hong Kong”. In my view, in 2010 P had uprooted himself from Hong Kong and went to live/work in Singapore for settled purpose. The Ku De Ta project was probably large on his mind then, but in time P’s variety of food businesses grew in Singapore, he had family and child there, and he spent significant time to work/live there too. There was sufficient continuity of stay in Singapore that he was ordinarily resident there. I also find P did not become ordinarily resident in Hong Kong again after his departure for Singapore. He claimed to have brought the CÉ LA VI and Catlaunya businesses to Hong Kong. But I have expressed concerns about the quality of the evidence as to his alleged closed connections to Hong Kong via such business expansions, but in any event the picture was that he maintained his core personal/business base in Singapore, and branch business forays to Hong Kong were made with interests (if any) held via corporate holdings and trusted business partner, and operations managed by telecommunications, occasional brief visits but mostly by local operators. Indeed, P said at the time of the 2nd P Aff he had reliable business partners to assist him with his businesses in Hong Kong, so it was possible that he might spend more time in Singapore as compared to Hong Kong to take care of his businesses there in the near future. P was not ordinarily resident in Hong Kong.
70. Wanchai Address It was after (a) DLAP wrote to OLN on 31 July 2015 to request for security for costs and (b) after P filed the Summons on 28 October 2015 that P filed the 1st P Aff to reveal that on 17 December 2015 he entered into a tenancy agreement to rent a residential flat in Wanchai (“Wanchai Address”) for a term of 2 years from 1 January 2016 to 31 December 2017 at a monthly rental of HK$15,500 with payment of security deposit of HK$31,000 (“Wanchai TA”). P claimed he entered into the Wanchai TA because he “decided to move back from Singapore to Hong Kong for residing and working”. Nevertheless, P signed the 1st P Aff before a notary public in Singapore on 4 January 2016. P explained he “habitually and normally reside in Hong Kong” by the time of the 1st P Aff, but he was in Singapore until early January 2016 “for arranging [his] business back to Hong Kong”.
71. D believed the Wanchai TA was non-conclusive in showing whether P was ordinarily resident in Hong Kong. Mr Kwok, counsel for D, went further to submit that it was self-serving as it was made 2 months after D filed the Summons, and P’s adoption of the Wanchai Address in the 1st P Aff was artificial. Mr Kwok reminded that although the 1st P Aff appeared to suggest that P had plans to move back to Hong Kong (which was the first time D heard of this), the fact remained (and this was despite such alleged plans and the Wanchai TA) P still signed the 1st P Aff in Singapore and there was no clear evidence he actually moved back to Hong Kong at the time of the 1st P Aff or thereafter. There was no evidence of the following, say, by way of contracts/bills/receipts: (a) utilities services for such address, (b) shipment of personal belongings from Singapore to Hong Kong, and (c) acquisition of furniture and other amenities to equip a home for habitation, and no evidence that P’s wife had come to Hong Kong. There was simply no evidence that P moved into the Wanchai Address to live there in contra-distinction to having signed the Wanchai TA.
72. On the contrary, P’s family (wife and child) was in Singapore, his work in food businesses (not just SG Catalunya) were in Singapore, and the Travelogue showed that in the last quarter of 2015 and early 2016 he spent just 1-2 nights a month in Hong Kong. It is difficult to understand P’s claim (which I reject) that he “habitually and normally reside in Hong Kong” by the time of the 1st P Aff (ie 4 January 2016) when the Travelogue showed he spent 2 nights in December 2015, 2 nights in January 2016 and 1 night in February 2016 in Hong Kong, and when his wife in Singapore was expected to give birth to their child in March 2016.
73. Thus, Mr Hui was constrained to submit it was inherently unlikely for P to pay a monthly rent of HK$15,500 simply to avoid a security for costs application. But it must not be forgotten that the Wanchai TA was made after the Summons was filed, and one would expect P (who had legal experience) to be astute to preserve (and in due course present) evidence of payment of the security deposit and rent, but there was simply no evidence before me of such payments. In any event, even if P actually stayed at the Wanchai Address when he was in Hong Kong, I agree with D that given his fleeting visits here his stay at the Wanchai Address appeared to be no more than a substitute for hotel accommodation. I am not convinced the Wanchai TA demonstrated P’s “intention to stop travelling between the two cities and live in Hong Kong”.
74. Family The lack of evidence as to indicia of occupation at the Wanchai Address might be explained by P’s evidence in the 2nd P Aff that “[he anticipates] that the move back to Hong Kong will happen gradually as [his] wife just gave birth to [their] child in Singapore in early March 2016. [He believes] it is prudent to reduce the amount of travel and hassle for them for the meantime.” But P claimed that in the long run he P expected he would be spending more time in Hong Kong as he was looking into expanding his businesses in Hong Kong and he had some concrete plans in place to make that happen, so he had started to make plans for re-location and making a more permanent move back to Hong Kong. He claimed his first step was to enter into the Wanchai TA, which would save costs as P foresaw he and his family would spend more time in Hong Kong and it would be unreasonable to stay at hotels every time he returned to Hong Kong. P claimed he was also looking into purchasing a family home in Hong Kong so that his family would move back to Hong Kong permanently, and whilst residential property prices remained very expensive in Hong Kong, it seemed they were declining and would likely decline further in the coming months, so P believed it was reasonable to adopt a wait-and-see approach before he entered the market.
75. In my view, this showed that although P said he would move back to Hong Kong in January 2016, he had not done so even by March 2016. His family (wife and child) was still in Singapore, and plainly he had not re-located back to Hong Kong. As explained above, P’s evidence stopped at March 2016. If P had moved back to Hong Kong since then (eg he returned with his wife and child to live at the Wanchai Address), it would not have been difficult for him to adduce such evidence for the Appeal Hearing. Whatever plans P might have “in the long run”, it did not alter the fact that the overall evidence before the court (and notwithstanding the Wanchai TA) he was ordinarily resident in Singapore and not in Hong Kong, and he had not moved back to Hong Kong. P’s brief stays in Hong Kong so far were not for settled purpose and did not have sufficient degree of continuity.
76. Summary In light of the above, I find that at the time of the Appeal Hearing P was not ordinarily resident in Hong Kong but ordinarily resident in Singapore.
77. Dual residency Lord Scarman in R v Barnet London Borough Council ex p Shah[30] said the decision in each case depends on its own particular facts, but noted from a 19th century bankruptcy case In re Norris[31] that 1 person could be ordinarily resident in 2 countries at the same time, which is an important factor distinguishing ordinary residence from domicile. The Registrar in paragraph 31 of his Decision distinguished R v Barnet London Borough Council ex p Shah on the ground that such case concerned tax, and held that “[in] the analysis of the meaning of “ordinary residence” within the context of Order 23, rule 1, it is difficult to envisage that one can properly claim ordinary residence of two places. P has not set out the relevant statutory provisions under which the court has come to such conclusion. This legal submission will not render useful assistance in support of P”.
78. Mr Hui submitted that the principle of dual ordinary residence is applicable to a security for costs application. Barma J (as he then was) recognised such principle in the bankruptcy context in Re Wong Lei Kwan Joanne, ex p Bank of China (Hong Kong) Ltd.[32] It was approved in a security for costs context in William Thomson v Tanner De Witt (a firm).[33] In Melvin Waxman v Li Fei Yu & ors[34] both parties to a security for costs application agreed that a person can be an ordinary resident in more than 1 place. Mr Hui submitted that Tugendhat J in Mustafa Ontulmus & ors v Sir Ian Collett & ors approved the principle that “a person may reside at more than one place and indeed in more than one jurisdiction” in a security for costs application.[35] But the conditions for security for costs under Civil Procedure Rules 25.13(2)(a) was “the claimant is – (i) resident out of the jurisdiction, but (ii) not resident in a Brussels Contracting State ......”, thus the criterion was “residence” and not “ordinary residence”. However, Tugendhat J did refer to Lloyd J’s observations in Grace v HMRC[36] as follows (with references omitted): ...... (viii) Just as a person may be resident in two countries at the same time, he may be ordinarily resident in two countries at the same time ......”
79. It is unnecessary for me to consider the interesting legal question of whether there can be dual ordinary residence for the purpose of Order 23 rule 1(1)(a) of the RHC although I can see the force of Mr Hui’s submissions. This is because I have come to the conclusion that P was not ordinarily resident in Hong Kong at all irrespective whether he was or was not ordinarily resident in Singapore. I have considered all the circumstances and concluded P had uprooted himself from Hong Kong and had not returned to Hong Kong for any settled purpose.
VIII. DISCRETION
80. I have found P did not ordinarily reside in Hong Kong but in Singapore only. Mr Hui submitted that the court is entitled to consider the ease of enforcement of an order for costs in Singapore.[37] The burden rests squarely on the defendant to show it is just to require the plaintiff to provide security, but the plaintiff can discharge his evidential burden by showing there is an available regime which provides for reciprocal enforcement of judgments in the foreign jurisdiction.[38] There was no dispute Hong Kong and Singapore had arrangements for reciprocal enforcement of judgments. That said, the existence of such regime for reciprocal enforcement between Singapore and Hong Kong is not conclusive against the granting of security,[39] but is a relevant factor to be taken into account in all the circumstances.
81. Hong Kong Civil Procedure 2017 provides as follows:[40]
“...... In Giuseppina Tagliani v. Lee Wai Ying Elvis, the court also considered that the existence of an agreement for the reciprocal enforcement of judgments (in this case between Hong Kong and Singapore) was a factor that the court could take into account in exercising its discretion on an application for security for costs. If the plaintiff is resident in a jurisdiction which has a common law system similar to that in Hong Kong, and there is an arrangement for the reciprocal enforcement of judgments between Hong Kong and that jurisdiction, more evidence about the difficulties in enforcing a judgment may be required before the court exercises its discretion to order security for costs (Izumo Mokko Co. Ltd v. TS Lines Ltd (above), and Lim Yi Shenn v. Wong Yuen Yee (above)). Such evidence may comprise showing that it will be necessary to incur additional cost and suffer delay in having to instruct foreign lawyers to enforce the judgment, seeking to locate assets abroad against which to execute and/or showing that some means of execution or enforcement available in Hong Kong may not be readily available in the overseas jurisdiction (see Re All Our Kids Hong Kong Ltd (unrep., HCCW 141/2007, [2011] H.K.E.C. 815). ......”
82. Since there was no dispute there were reciprocal arrangements between Singapore and Hong Kong for the enforcement of judgments, the burden is on D to show that nonetheless it would be just to require P to provide security. Mr Kwok submitted there might be substantial obstacles in the enforcement of judgment on costs as (a) extra costs and delay would be caused by the enforcement of any Hong Kong cost order in Singapore as Singapore lawyers would have to be instructed for such purpose, (b) there might be delay as P used 3 different addresses in Singapore, (c) P might contest the enforcement application on various grounds (eg by arguing that enforcement of any judgment in D’s favour would be contrary to public policy in Singapore) which would further add to extra costs and delay, and (d) difficulty might arise in locating the assets of P in Singapore.
83. In respect of paragraph 82(a) and (c) above, Mr Hui submitted that D (like the defendants in Lim Yi Shenn) did not file evidence to show that despite substantial reciprocity between Singapore and Hong Kong there existed some special difficulties/burdens for enforcement in Singapore which he would not encounter if the enforcement was done in Hong Kong.
84. In Lim Yi Shenn, Recorder H Wong SC decided it was not just in that case to make order for security after (a) taking into account Singapore is an English speaking country, has a common law system and no exchange control to delay transfer to Hong Kong of any proceeds of enforcement that might be obtained by the defendants in Singapore, (b) noting there was no evidence to suggest impecuniosity on the part of the plaintiff or any particular risk of his not being financially able to meet any costs order made by the Hong Kong court, (c) considering the fact that the defendants would have to instruct a foreign lawyer to be “a matter of minor importance given the considerations mentioned above”, and (d) thinking the chance of the plaintiff to set aside registration in Singapore of a costs order made by a Hong Kong court to be “nothing but a fanciful possibility”.
85. In paragraphs 35-36 the Decision, the Registrar distinguished Taglianiv Lee Wai Ying Elvis[41] and Lim Yi Shenn by suggesting they failed to thoroughly consider the decision of the Court of Appeal in Montgomery Ward & Co, Incorporated v Evergo Trading Company Limited & anor[42] where Nazareth VP held that as a matter of discretion it is common that the court will require a foreign plaintiff to give security for costs because it is ordinarily just to do so as “it is not right that [a successful defendant who obtains an order for his costs] should have to go to a foreign country to enforce the order”, and reminded that “the Court of Appeal decision takes precedence over the other 2 cases cited to [him]”. The Registrar found that “D will certain require extra costs to instruct the lawyers in Singapore to enforce the order” but “P has not been able to show he has any assets in Singapore, rendering the enforcement of the costs order futile. In such a way, O 23, r 1 will be rendered useless for D even if P is proved to be ordinarily resident outside the jurisdiction”.
86. I am not persuaded that Taglianiand Lim Yi Shenn on the one hand and Montgomery Ward & Co, Incorporated are irreconcilable. The latter makes the general point that where there are no factors weighing either way then as a matter of discretion security should be ordered because it is just to do so. Taglianiand Lim Yi Shenn make the point that where there is reciprocal enforcement of judgment, it is not conclusive but is a relevant factor to be taken into account as part of all the circumstances in the exercise of the discretion.
87. I agree with Recorder H Wong SC in Lim Yi Shenn that in the absence of evidence otherwise, the fact that the defendants would have to instruct a foreign lawyer to enforce any Hong Kong costs order in Singapore is not a significant matter given the reciprocal arrangements and commonality of the legal systems of both jurisdictions, and Mr Kwok was unable to pinpoint any substantial basis that P might rely on to dispute a Hong Kong costs order in potential enforcement proceedings in Singapore.
88. Mr Hui sought to reinforce the above points by citing Atal Technologies Limited v Stratech Systems Limited[43] and Tronic International Pte Ltd v Topco Scientific Co Ltd & ors[44] which concerned security for costs on appeal. It is unnecessary for me to consider these authorities in light of my views in paragraphs 86-87 above, but in any event I have reservations about the relevance of these authorities to the issue at hand. I agree with Recorder H Wong SC at pp 126-127 in Lim Yi Shenn who placed little reliance on Atal Technologies Limited (and I assume in the same vein Tronic International Pte Ltd) because:
“70. ...... the Court of Appeal is concerned with the question of whether there are ‘special circumstances’ that make it just to order security for the costs of an appeal. This is a jurisdiction different from that provided under O 23 r 1, and as noted by the learned editors of Hong Kong Civil Procedure 2012 (see, 59/10/25), while cases decided on O 23 may provide some guidance in relation to the exercise of the court’s discretion in deciding whether to award security for the costs of an appeal, ‘caution must be exercised when seeking to rely on a case decided on O 23 as the basis for resisting the award of security for the costs of an appeal to the Court of Appeal’. The principles governing the award of security for costs at the Court of Appeal stage are ‘wider and stricter’ than those applicable to the award of security for costs in the court below. ......”
89. But I am not persuaded that the matters in paragraph 87 above were sufficient to tip the balance in P’s favour. Mr Hui submitted there was no evidence of evasion or intention to deceive on the part of P. But as explained in paragraph 33 above, P did not provide any or any cogent explanation as to why he would adopt the Pokfulam Address (which tenancy expired in 2010) as his address in the WoS in 2014. Further, I have rejected P’s attempt to suggest the Wanchai Address was where he habitually and normally resided by the time of the 1st P Aff when according to the available evidence he at best stayed there for 1-2 nights a month. This gives rise to concern that P was not shy in throwing up obscuration in D’s way on the issue of costs. It did not bode well for straightforward enforcement of any Hong Kong costs order against P in Singapore.
90. D engaged Target On-line Financial Ltd to undertake a full search on P in Hong Kong and further writ search in respect of P, which revealed the following pieces of litigation:
(a) on 27 July 2015, Eversheds sued P in DCCJ3442/2015 for HK$604,808.00, which according to the Statement of Claim (“SoC”) endorsed on the WoS was for balance of invoices for services rendered in HCA183/2004;
(b) on 3 August 2015, Howse Williams Bowers[45] sued P in HCA1748/2015 for HK$406,252.31,which according to the WoS was for outstanding fees for legal services to P pursuant to relevant engagement letter and invoices;
(c) on 21 December 2015, Herbert Smith Freehills sued P (ie 1st defendant in HCA183/2014) and Retribution Limited (ie 3rd defendant in HCA183/2014) in HCA3030/2915 for the sums of HK$6,213,608.26 (against P and Retribution Limited) and HK$1,235,755.15 (against P) in respect of legal services provided pursuant to relevant engagement letter agreement and bills in respect of HCA183/2014.
91. D noted at least 3 lawfirms had claimed against P for substantial outstanding amounts for legal services provided to P in HCA183/2014, which suggested P was likely to be in financial difficulties and had a habit of non-payment of legal fees, and which in turn heightened D’s concern that P would be unable to pay D’s costs in the event he succeeded in his defence and was awarded a costs order in his favour. P said such contentions were untenable as DCCJ3442/2105 and HCA1748/2015 had been discontinued, and as these cases had not undergone trial it could not be said that P had a habit of evading payment of legal fees. However, I note no attempt was made to place evidence before this court as to the status or outcome of HCA3030/2915 which made a significant claim of over HK$7,000,000 against P. Further, the fact 3 different lawfirms resorted to litigation to recover legal fees were at the very least not an ordinary situation, and if they did not smack of evasion they at least spoke of difficult relations with the client over legal costs, which again did not bode well for straightforward enforcement. Mr Kwok reminded that P had been involved in other litigation in Hong Kong some of which appeared to be still pending, which put a further shade of uncertainty on P’s financial position.
92. There is another interest facet to the 3 pieces of litigation commenced in 2015 and referred to in paragraph 90 above. The WoS in DCCJ3442/2015 gave the 1st SG Address as P’s address, and paragraph 2 of the SoC pleaded “[P] is a Hong Kong Permanent Resident who is understood to reside at [the 1st SG Address]” (my emphasis). The WoS in HCA1748/2015 gave the 1st SG Address as P’s address. In HCA3030/2015 Herbert Smith Freehills gave the 1st SG Address as P’s address, and paragraph 2 of the SoC pleaded that P “is a businessman running businesses in Asia, including Singapore and Hong Kong. He is the holder of Hong Kong Identity Card No P******(*) and ordinarily resident in Singapore” (my emphasis). I bear in mind the plaintiffs in those cases were P’s former solicitors and must have taken P’s instructions when they acted for him. Their view of P’s residence or ordinary residence supported my conclusion above.
93. Turning back to paragraph 82(b) and (d) above, D claimed that even if there were no difficulties in enforcing any Hong Kong costs order against D in Singapore (which D denied), the 1st and 2nd P Affs failed to address on what assets P had or would likely have in Singapore, if at all, to satisfy any costs order that might be made against him in the present action. The Director Search showed P did not directly own any shares in the Singapore companies of which he was a director and/or other Singapore companies, and P did not own the 1st, 2nd and 3rd SG Addresses.
94. Mr Hui submitted this was a red-herring. He submitted that the rationale for an order to place funds within the jurisdiction as security for costs is to provide a convenient remedy to alleviate the defendant’s difficulty in enforcement of a local costs order and not to protect the defendant against the plaintiff’s lack of funds. Since the reciprocal arrangements between Hong Kong and Singapore posed no difficulty for P to enforce any Hong Kong costs order in Singapore, it served no purpose to grant any order for security.
95. For the reasons explained in Lim Yi Shenn citing Thune v London Properties Ltd[46] (see paragraph 25 above), I disagree. Bingham LJ in Thune gave 7 reasons why the impecuniosity of the personal plaintiff was a matter the court should take into account. Several of those reasons were discussion of various authorities, but it would be useful to note the following observations by Bingham LJ:
“...... 1. In considering ‘what, in all the circumstances of the case, is the just answer... in balancing the respective interests of the plaintiff and the defendant so as to produce that result which is most fair, it is in my view irrational to exclude from consideration a matter which is of major importance to one of them, perhaps on the facts not less important than ease of enforcement. 2. Since heads (b), (c) and (d) of rule 1(1) are all concerned, to a greater or lesser extent, with the risk that the defendant may not be paid his costs if successful... it would be strange to treat this matter as altogether irrelevant in the exercise of a discretion established by virtue of paragraph (a). 3. In Bank Mellat v Helliniki Techniki SA [1984] QB 291, the financial position of the plaintiff was treated as a factor relevant, not in any real sense to establishing jurisdiction, but to the exercise of discretion. ...” (my emphasis)
Further, ease of enforcement overseas of a local order for costs is not conclusive (see paragraphs 80-81 above).
96. Here, there is simply no available information as to P assets (if any) in Singapore. The 1st and 2nd P Affs were silent on the subject, and there would be real risk of difficulty in enforcement in Singapore even if D were able to secure a Hong Kong costs order. Plainly, this must be a relevant matter in the exercise of discretion. There is added concern that on 12 June 2015, Iconic Locations (ie new purchaser) issued WoS out of the High Court of the Republic of Singapore against SGC Co. According to the SoC, Iconic Locations claimed against SGC Co for various debts in the sum of S$1,136,024.74, which D claimed raised further question over whether P and/or his main business were commercially sound.
Mr Hui submitted that even if the exact amount to which P was entitled was subject to litigation, it was sufficient proof of P’s ability to meet any costs order should D succeed at trial.
98. I cannot see how this would aid P in resisting the Summons. P admitted there was litigation (ie HCA183/2014 and HCA2063/2015) between him and other shareholders of Kudeta BVI as to what percentage of the proceeds (which after transfer to Retribution Limited were frozen by injunction) was owned by whom, so it was uncertain what his entitlement would be (if at all). Of even more concern was the fact P and other investors held their interests in Kudeta BVI either through Retribution Limited or Essence Investments Limited.[47] It was unclear whether it was P personally or the corporate entities (eg Retribution Ltd) that were entitled to any part of the proceeds. Still further, although P claimed he still retained 45% of Kudeta BVI shares, he did not say whether he was a direct shareholder or held such shares through corporate entities. I agree with Mr Kwok it was highly unclear whether P could still retain such shares by the end of the litigation, and in any event Kudeta BVI was a BVI company so its shares would not regarded as assets of a fixed and permanent nature in Hong Kong.
99. Mr Hui was constrained to suggest that P was a shareholder of Bilbao, and that it was most unlikely P would not have assets here given his heavy involvement in businesses in Hong Kong. I have already made observations on Bilbao which I adopt without repeating here. For the present purpose, it is more significant to note there was no evidence before this court as to Bilbao’s returns under the Management Agreement. But even if Bilbao would have some profits, it still would not have assisted because the profits belonged to Bilbao and not to P. In any event, the court cannot speculate and assume P had assets within the jurisdiction to satisfy any costs order that might be made in D’s favour.
100. In my view, the overall circumstances discussed above (and the further consideration discussed in Part IX below) suggest that it will be just to order security against P.
IX. REAL ATTACKER
101. Mr Hui submitted this court should not exercise its discretion to grant security for costs in D’s favour because D was the “real attacker” by reason of the Counterclaim. I note from paragraph 41 of the Decision that D had given an undertaking to the court that if P’s claim is struck out or dismissed for being unable to pay the security ordered by the court, D will not proceed with the Counterclaim or take out separate proceedings in respect of his claim under the Counterclaim (“Undertaking”).
102. There was no dispute over the legal principles summarised by Yam J in Ai Zhong v Metrofond Ltd:[48]
“(a) The Court has a discretion in all applications for security for costs, and it is not a question of merely considering whether the claim and counterclaim arise out of the same issue of fact but a question of “what is fair and just in all the circumstances”. ......
(b) Application for security for cost should be refused if it will prevent the plaintiff from pursuing its claim but in the course of defending the counterclaim all the same matters would be canvassed as would be canvassed if the plaintiff were to pursue its claim. ......
(c) Application should also be refused when the cost incurred by the defendant for the purposes of the defence might equally and perhaps preferably be regarded as costs necessary to prosecute the counterclaim. ......
(d) The existence of a counterclaim out of the same matters as that in the plaintiff's claim per se does not affect the court's ability to order security for costs against the plaintiff. ......
(e) It is pertinent to ask whether in the particular case the counterclaim is a cross-action or operates as a defence, that is to say merely operates as a defence. ......[49]
(f) In determining the question in (e), the most important factor to consider is whether “the claim by the plaintiffs and the cross-claim by the defendants - raise essentially the same issues and are going to be fully litigated anyway so far as one can tell”. ......
(g) In determining the question in (e), the marked discrepancy in size between the amount claimed in the action and the very much greater amount claimed by the cross-claim is also a relevant factor. ......
(h) A defendant should not be required to give security for costs if he is only defending himself from the plaintiff's claim. ......
(i) When both the plaintiff and defendant can be viewed as attackers, the treatment of both parties in security for costs should be the same. ......”
103. In Success Wise Ltd v Dynamic (BVI) Ltd,[50] Recorder Yu SC explained the principle in terms of whether the counterclaimant could be regarded in substance as an “attacker”, which term was coined by Ma J (as he then was) in Brand Farrar Buxbaum LLP v Samuel Rozenbaum Diamond Ltd.[51] “If he is as much an ‘attacker’ as the plaintiff and it is merely fortuitous who started proceedings first, it would be a factor which should point the court towards treating both claimant and counterclaimant in the same way as far as security is concerned.”
104. Mr Hui submitted the Undertaking was inadequate as explained by DHCJ Woo in Apex Engineering & Contracting Limited:
“23. In the case where there is a counterclaim which is over and above a proper defence, insofar as the defendant drops the offensive portion of it over and above his defence to the claim, the rule of barring security for costs should not properly apply. But if the defendant only agrees to his counterclaim that exceeds his defence to be stayed in case the plaintiff’s claim is stayed by reason of the latter’s failure to comply with the order for security for costs, which means that the conditionally stayed counterclaim can or will be revived upon the plaintiff’s compliance with the order and the defendant in such an event is allowed to pursue his counterclaim against the plaintiff, it will offend the rule that the court will not order security in favour of an attacking defendant. The situation would be very different if the defendant agrees to drop his counterclaim altogether and only maintains his set-off as a defence.” (my emphasis)
105. In my view, it could not be said that D was the “real attacker”. First, the Counterclaim against P was for a much smaller amount (ie about $520,000) than P’s claim against D (ie about HK$7,200,000). Secondly, the Counterclaim arose out of P’s claim as P appropriated the DP Shareholding, Car and D’s remittance of HK$13,000 as purported part payment of the debt which P alleged was due to him under the alleged Gaming Contracts. Thirdly, given the significant difference between the value of P’s claim and D’s Counterclaim, there is nothing in the Counterclaim which would be over and above a proper defence of set-off. Mr Hui submitted that apart from the DP Shareholding, Car and D’s remittance of HK$13,000 D also counterclaimed for account and inquiry, declaration, damages, and other reliefs set out in paragraph 9(c)(i)-(vi) above that were cross-claims exceeding the defence of set-off. But on proper analysis, these were merely consequential reliefs (rather than independent cross-claims) that naturally followed from D’s counterclaim in respect of P’s seizure of the DP Shareholding. For example, if it were held that P’s seizure of the DP Shareholding was wrongful, then obviously P must account for, say, dividends earned by the DP Shareholding during the period of such seizure and/or pay damages for any detriment to the DP Shareholding caused by reason of such seizure. But, again, given the significant disparity between the value of P’s claims and D’s Counterclaim in the present action, any damages, equitable compensation and/or payment of monies found due upon accounts/inquiries would go to the defence of set-off.
106. Mr Hui next argued that in order to resolve the issues under D’s Counterclaim, the parties would have to litigate all the same issues under P’s claims against D pursuant to the Gaming Contracts because D’s entitlement to the return of the sum of HK$513,000 depended on his liability or otherwise to pay P pursuant to the Gaming Contracts, so the validity of the Gaming Contracts and the parties’ respective entitlement thereunder had to be determined in any event.
107. Mr Hui suggested the present case was analogous to Arko Ship Leasing Limited & anor v Winsmart International Shipping Limited & anor[52] where G Lam J said:
“15. The main issue ...... is central to both the action and the counterclaims. Even if the action is stayed, it seems to me clear from the plaintiffs’ Reply and Defence to the Counterclaim of the 2nd defendant that the same principal factual issues will have to be determined on the counterclaims ......
......
17. ...... the costs incurred by the 2nd defendant in defending the action might equally be regarded as costs which it had to incur to prosecute its counterclaim. It would not be just to order security for costs ......”
But Mr Hui did not refer to paragraph 16 of the judgment in which the learned judge also considered the following in the exercise of his discretion in declining to grant security for costs:
“...... although it seems that the 2nd defendant’s claim will be unlikely to exceed the 2nd plaintiff’s claim, there is no such disparity in the amounts as to suggest that the 2nd defendant is not properly regarded as an attacker in its own right. For all I know, even if the plaintiffs had not brought the action, the 2nd defendant would have made a claim against them. There is no suggestion, as there was in Winghing Investments Ltd v Lee Hoi Wing, CACV378/2005, 28 February 2006, §22, that the counterclaim would not be proceeded with if the plaintiffs’ claim was dismissed.”
108. Here, there was obvious and significant disparity in the amounts claimed by P and counterclaimed by D to suggest that D was not the “real attacker”. Further, I do not have the comfort that D would have made the Counterclaim even if P had not brought the action. For one thing, P had left the jurisdiction and it was no small matter for a personal claimant to pursue a claim in Singapore. For another, the DP Shareholding, Car and remittance were seized in late 2008 and early 2009, and D had not commenced any legal proceedings for the same until the Counterclaim filed quite a few years later in 2015. Still further, D did give the Undertaking (although this is not a matter which materially affected my decision).
109. I bear in mind that existence of a counterclaim out of the same matters as that in the plaintiff’s claim per se does not affect the court’s ability to order security for costs against the plaintiff, and ultimately the exercise of discretion is not merely to see whether the claim and counterclaim arise out of the same issue of fact but “what is fair and just in all the circumstances”. In the particular circumstances of this case, in considering the question of “what is fair and just in all the circumstances”, I agree with the Registrar that the court should accede to D’s application for security for costs against P.
X. QUANTUM
110. A party was only entitled to sufficient (and not complete) security that would be just in all the circumstances, and not necessarily on full indemnity basis. What constitutes sufficient security depends on the circumstances of each case.[53] It was for the party seeking security to place materials before the court to enable the court to come to a view on the quantum to be ordered as security for costs. It has been said that if an applicant fails to provide a properly itemised bill of costs with the necessary breakdown for each item, the judge may use his own experience to decide on the amount to be ordered as security for costs.[54] But in Hero Rich International Limited v Benefun International Holdings Limited & ors[55] the court went further and held that when faced with an unhelpful (and especially overly ambitious) skeleton bill, it is entitled in an appropriate case to dismiss the application for security on this ground alone. In my view, this must be a consideration of last resort.
111. D sought security for costs in the sum of HK$3,996,650 up to the conclusion of trial and provided a breakdown (“Breakdown”) divided into Part A (costs already incurred by D in relation to his previous solicitors Kennedys who acted for D from July 2014 to June 2015 – HK$690,500), Part B (costs already incurred by D in relation to instructions to DLAP from June 2015 to October 2015 – HK$1,613,250), and Part C (estimated future costs to be incurred by D – HK$1,692,900). However, the Registrar only awarded HK$2,000,000 as security for costs up to the stage of the end of trial with liberty to apply. Mr Kwok did not seek to challenge such award. In the circumstances, the question before me was whether the quantum of HK$2,000,000 (rather than HK$3,996,650) would be fair and just.
112. D claimed the factual details of the present case were not simple. P alleged there were 33 Games, and D’s defence referred to different rules of settlement agreed among the Players at different times, different types of games that were played, various broken promises of settlement made by the Players, and the Side Ledger by the Players (including P) that excluded D. He claimed his legal advisors had to take detailed instructions from him and to review extensive documentary evidence (including about 200 emails) and gather materials from various sources. There was also a third party discovery application in October 2015 against Merrill Lynch (Asia Pacific) Limited to seek documents relevant to D’s case in respect of the Side Ledger, eg email communications on specific dates among P and other Players (except D) which necessitated extra time/expense. D also suggested that the legal issue raised by P’s claim, ie the enforcement of the alleged Gaming Contracts, had not attracted prior judicial attention and raised a novel point in this jurisdiction, so D particularly required careful advice by his legal advisors.
113. On the other hand, P complained that the Breakdown was overly ambitious, and suggested that (a) some items of professional work should/could have been handled by associate(s) and trainee solicitor(s) rather than partner(s) and associate(s), (b) charges for professional fees should be calculated according to standard High Court hourly rates, and (c) time spent by partner, assistant solicitor and trainee solicitor for DLAP in preparing witness statements and ancillary work was excessive (which ran up in total to HK$1,009,200 that was even more than the costs estimated for a 6-day trial, and which was on top of costs incurred by DLAP’s predecessor in the sum of HK$332,000). However, I note these criticisms were made against the Breakdown, and Mr Hui did not articulate how the reduced amount awarded by the Registrar was not fair and just.
114. Taking a broad brush approach, I consider security in the sum of HK$2,000,000 awarded by the Registrar to be appropriate. Such an award recognises (a) the laborious task of gathering and understanding instructions in relation to the alleged Games, Ledger and Side Ledger, and of going through documentary evidence to put forward the fullness of D’s case and to defend P’s claim, and (b) the concerns over appropriate professional delegation of work, potential duplication of professional work, and appropriate charge rates. In coming to this view, I also bear in mind the need to grant sufficient and not necessarily complete security.
XI. CONCLUSION
115. In the circumstances, the Appeal is dismissed. There is no reason why costs should not follow event. I therefore grant a costs order nisi that P shall forthwith pay D costs of and occasioned by the Appeal to be summarily assessed.
116. D had already lodged/served his statement of costs. I therefore make the following directions in relation to the summary assessment of costs in respect of the Appeal:
(a) P do within 14 days from the date hereof lodge and serve succinct summary of objections of not more than 2 pages in respect of P’s statement of costs (“Objection Summary”);
(b) if no application is made to vary the costs order nisi within 14 days from the date hereof (and even if no Objection Summary was lodged/served as prescribed), the summary assessment of costs will be by paper disposal (unless otherwise directed);
(c) if application is made to vary the costs order nisi within 14 days from the date hereof, the party seeking variation of the costs order nisi do within 14 days from the date hereof fix a date with the Listing Clerk for the hearing of the application for variation of the costs order nisi and summary assessment of costs before me in chambers (open to the public) on a date not before 28 days from the date hereof with half hour reserved.
| | (Marlene Ng)
Deputy High Court Judge |
Mr John Hui, instructed by Oldham, Li & Nie, for the plaintiff
Mr Dennis Kwok, instructed by DLA Piper Hong Kong, for the defendant
[1] P claimed the Ledger contained details of inter alia the date of each Game, Players attending each Game, winnings/losses and “pay-to-play” cash payments, but D claimed the Ledger did not contain particulars of, say, the time/duration of the card games, the Player(s) who attended which card game on which date, which Player(s) left early and who continued to play on, and the Players’ wagers and winnings/losses
[2] P acknowledged the Ledger did not record every wager made in the course of each Game and/or if a Player left early and such Player’s time of departure
[3] D claimed this meant he was in effect playing against 3 Players acting collectively as a “banker” (as each of them would gain more than their individual winnings as a Player) contrary to the purpose of the card games (with each Player playing for his own individual winnings/losses on equal basis)
[4] see Hong KongCivil Procedure2017 Vol 1 para 58/1/2 at p 1084
[5] see Lim Yi Shenn v Wong Yuen Yee & ors [2012] 4 HKC 102, 108-112
[6] see Lim Yi Shenn at p 108
[7] [2013] 2 HKLRD 533, 545-546
[8] [2012] 2 HKLRD 1085, 1099
[9] see Re Greater Beijing Region Expressways Ltd (No 3) [2000] 3 HKC 608, 624
[10] see R v Barnet London Borough Council ex p Shah [1983] 2 AC 309, 343-344 and Mustafa Ontulmus & ors v Sir Ian Collett & ors [2014] EWHC 294 (QB) para 10
[11] see Hong Kong Civil Procedure 2017 Vol 1 para 23/3/4 at p 563
[12] see Hong Kong Civil Procedure 2017 Vol 1 para 23/3/4 at pp 563-564
[13] see Eric Edward Hotung & anor v Ho Yuen Ki & ors HCA857/2011, Chow J (unreported, 27 April 2016) para 20
[14] see Wing Hing Provision, Wine & Spirits Trading Co Ltd v Hanjin Shipping Co Ltd [1998] 4 HKC 461 and Hong Kong Civil Procedure 2017 Vol 1 para 23/3/4 at p 564
[15] see Po Hio Chua v Hang Seng Bank Limited CACV146/2008 (unreported, 23 September 2008) para 9 and Lim Yee Shenn at p 124
[16] see PT Graha Multimulia Cemerlang v Silver Tech Enterprises Ltd HCCW 883/2004, Kwan J (as she then was) (unreported, 1 March 2005), Tsang Yee Mui v The Personal Representatives of Mak Chik Wing, the Deceased & anor HCA 2606/2006, Chu J (as she then was) (unreported, 21 July 2008) citing Montgomery Ward & Co, Incorporated v Evergo Trading Company Limited & anor CACV 32/1996 (unreported, 31 May 1996), Mark Clinton Sharp v Wong Chi Lik, Steven & anor HCA2215/2009 (unreported, 3 November 2009), Lim Yee Shenn at pp 112-113, and Hong Kong Civil Procedure 2017 Vol 1 para 23/3/4 at pp 564-565
[17] see Renondo v Chaytor & anor (1879) 4 QBD 453, 457, Hamburger v Poetting (1882) 47 LT 249 and Hong Kong Civil Procedure 2017 Vol 1 para 23/3/6 at p 566
[18] see Ebrard v Gassier (1884) 28 Ch D 232
[19] see In the matter of applications by the Appollinaris Company, Limited, for the registration of trade marks (1891) 8 RPC 137
[20] see Sacker v Bessler & Co (1887) 4 TLR 17
[21] see Hong Kong Civil Procedure 2017 Vol 1 para 23/3/6 at p 566
[22] at pp 122-123
[23] oCen Communications Pte Ltd was involved in retail sale of computer hardware/ accessories and computer software
[24] P produced insurance statement and internet service confirmation addressed to him at such address in 2005
[25] P produced a police summons addressed to him at such address in 2007
[26] P produced letters from Inland Revenue Department addressed to him at such address in 2009/2010
[27] the land search records of the Pokfulam Address did not reveal registration of any lease
[28] ie Iconic Locations (registered on 13 August 2009), Iconic Entertainment (registered on 15 April 2010), Catalunya Pte Ltd (registered on 20 September 2011), Au Chocolate Pte Ltd (registered on 9 November 2011), Tony’s Pizza Pte Ltd (registered on 16 August 2013) and VLV Pte Ltd (registered on 28 March 2014)
[29] see Komal Patel & ors v Chris Au & ors HCA183/2014 & HCA2063/2015, Zervos J (unreported, 14 January 2016) para 20
[30] [1983] 2 AC 309, 342
[31] (1884) 4 TLR 452
[32] [2009] 3 HKLRD 173, 179
[33] DCCJ3388/2005, DDJ Grace Chan (unreported, 3 January 2012) pars 34-36
[34] HCA1973/2012, Master K Lo (unreported, 20 March 2015) para 27
[35] [2014] EWHC 294 (QB) at para 14
[36] [2009] EWCA Civ 1082 at para 6
[37] see Tagliani v Lee Wai Ying Elvis [2006] 2 HKC 194, 200 and Lim Yi Shenn at pp 124-125
[38] see Lim Yi Shenn at p 125
[39] see Lim Yi Shenn at p 126
[40] Vol 1 para 23/3/4 at p 565
[41] [2006] 2 HKC 194
[42] CACV 32/1996 (unreported, 31 May 1996)
[43] CACV125/2011 (unreported, 8 November 2011)
[44] CACV235/2013 (unreported, 20 June 2014)
[45] as evident from a judgment by Zervos J dated 10 November 2015 in HCA183/2014, Howse Williams Bowers acted for P in that action at some stage around 9 September 2015
[46] [1990] 1 WLR 562
[47] see Komal Patel & ors v Chris Au & ors HCA183/2014 & HCA2063/2015, Zervos J (unreported, 14 January 2016) para 20
[48] [2010] 1 HKLRD 213, 221-222
[49] see Apex Engineering & Contracting Limited v Hong Kong Switchgear Limited HCA1188/2010, DHCJ Woo (unreported, 20 November 2012) para 22
[50] [2006] 1 HKC 149, 155-156
[51] [2003] 1 HKLRD 600
[52] HCAJ 213/2009, G Lam J (unreported, 23 December 2013)
[53] see Hong Kong Civil Procedure 2017 Vol 1 para 23/3/32 at pp 575-576
[54] see Sunchase International Group (China) Ltd & ors v Vincor Group & Companies (Investment) Ltd & ors [2004] 1 HKLRD 731, 734
[55] HCA1433/2009, Recorder Jat SC (unreported, 11 November 2009)