SARAS GOPI v. BINA DEEGAN

HCA 3075/2015

[2025] HKCFI 5441

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3075 OF 2015

________________________

(By Original Action)

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(By Counterclaim)

_________________

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D E C I S I O N

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Introduction

1.  The entire original action and the counterclaim as between Ms Bina Deegan (the plaintiff by counterclaim) and her mother, Ms Saras Gopi (the 1^st defendant by counterclaim) have been disposed of. I shall call these two parties “Bina” and “Mother” respectively.

2.  What is left is the counterclaim as between Bina and her brother, Mr Subash Gopi (the 2^nd defendant by counterclaim). I shall call the latter “Subi” in this decision.

3.  It is common ground that the only live issue in the counterclaim is Bina’s claim in respect of Industrial & Technical Entrepreneurs Limited, a company incorporated in Hong Kong (“ITEHK”).

4.  Bina’s pleaded case is as follows:

(1)  Since late 1998, she held one of the two shares in ITEHK.

(2)  ITEHK owned a property at 14^th Floor, 131 Sung Chiang Road, Taipei, Taiwan.

(3)  In about July 2007, Subi wrongfully misappropriated her one share to himself by forged signatures without her knowledge or consent.

(4)  She has suffered loss as a result.

(5)  She claims reliefs including account of profits and/or damages.

5.  On the other hand, Subi’s pleaded case is that:

(1)  There has been in place a family arrangement under which Bina was to hold the share as nominee only, and the share was to be transferred to the original owner at a later stage.

(2)  The transfer of the one share in 2007 was effected with the knowledge of Bina.

(3)  In any event, the Taipei property was not owned by ITEHK, but by another entity in Taiwan.

6.  The relevant pleas can be found in the re-amended defence and counterclaim at paras 72 to 77, the re-amended reply and defence to counterclaim at paras 29 to 32, and the rejoinder and reply to re-amended defence to counterclaim at paras 16 to 18.

7.  Before the court today are two summonses:

(1)  the summons taken out by Bina dated 5 December 2024 for specific discovery; and

(2)  the summons taken out by Subi dated 29 April 2025 also for specific discovery.

Legal principles

8.  The rules governing specific discovery under Order 24 are well established. I refer to the commentary in Hong Kong Civil Procedure 2025 at 24/7/2 and 24/8/1.

Bina’s summons

9.  Bina seeks three categories of documents, all concerning the Taipei property.

10.  According to Bina, the property is the only asset which ITEHK owns as far as she knows. In 2024, she discovered from public records that the property had been sold on or around 25 June 2021 for the sum of NT$84.5 million (approximately US$2.6 million). She therefore now seeks documents regarding the Taipei property as they are directly relevant to the quantification of her damages claim.

11.  Category 1 seeks ownership and title deeds to the Taipei property. The scope of this category has been narrowed down by Bina in the course of today’s hearing. I will come back to this point later.

12.  Category 2 seeks transaction documents relating to the sale.

13.  Category 3 seeks documents and in particular bank transfer documents showing receipt of consideration from the sale. Again, this category has been cut down to confine to documents within the time period of around 25 June 2021.

14.  For category 1, a previous order was made on 13 May 2021 against Subi for discovery of documents relating to the sale and purchase of the Taipei property in 1989.

15.  Mr Justin Ho, appearing with Ms Celeste Chan for Bina, submits that Subi’s compliance with that order has been piecemeal and incomplete. In view of the recent sale, Bina has to take out another discovery application seeking a wider class of documents concerning the property.

16.  I agree with the submission that Subi’s compliance with the above order is not satisfactory.

17.  Previously, Subi claimed in his affirmations that the documents ordered were lost due to typhoon damage or “not with lawyers, mortgage bank or the Taiwan Land Registry”. I quote from para 27 of his 6^th affirmation:

“The documents concerning the sale and purchase of the ITE Taiwan office are not within my possession, custody or control. As mentioned previously, many documents were destroyed as a result of typhoon damage. I also confirm that documents are not with lawyers, mortgage bank or the Taiwan Land Registry.”

18.  Notwithstanding this previous confirmation, Subi filed his 3^rd supplemental list of documents just last week disclosing a purchase contract dated 27 March 1989 in respect of the Taipei property. According to Subi, this document was obtained only recently by him from Baker & McKenzie in Taiwan. This purchase contract comes squarely within the ordered category, but it is not disclosed until more than four years after the order was made.

19.  This recent discovery by Subi casts serious doubt over his earlier affirmation that the documents were not in his possession, custody or control, and seems to undermine his unqualified confirmation that the documents ordered were not “with lawyers”. Therefore, in my view, it is open to Bina to seek discovery under category 1.

20.  Now, Mr Ho accepts that there is an overlap between category 1 and the previously ordered category, and that those documents which come within the previously ordered category should now be carved out from category 1. I shall proceed with my discussion on that basis.

21.  For the three categories, I am satisfied that Bina has established a prima facie case of existence, possession and relevance. The public records relied on by Bina have been exhibited as evidence before the court. The fact that the recent sale had gone through supports Bina’s position that the documents now sought exist and are in the possession of Subi. They are also plainly relevant to the issue of quantum.

22.  There is no serious or meaningful opposition put up by Mr Andrew Hart, of Messrs Hart Giles, who acts for Subi in the counterclaim. Jurisdiction to order discovery is therefore established. It is then for Subi to show why disclosure is not necessary for the fair disposal of the counterclaim or for saving costs. On this, nothing has been said by Mr Hart. Therefore, Bina’s discovery application as narrowed down should be granted.

Subi’s summons

23.  Subi seeks 35 items of documents under three categories. It is plain that the request should be rejected.

24.  For category 1, there is a dispute as to whether, as drafted, the wording covers only the 28 items, mainly emails and letters, listed in the summons, or it seeks generally all documents during the period from 1988 to 2016 regarding ITEHK.

25.  I consider that, objectively interpreted, the wording of category 1 raises a request generally for all documents within that period and in relation to ITEHK, with the 28 items given as examples. See the words at the end of the description: “including in particular”.

26.  That said, however, I accept Mr Ho’s submission that apart from the 28 emails listed, Subi has failed to establish a prima facie case of existence. The time period in question spans over 28 years. The general description refers to “all documents” and “communications” generally. Mr Hart has not been able to articulate any basis to say that these documents exist. Hence, insofar as Subi is seeking documents other than the 28 items under category 1, that request should be refused.

27.  Returning to the 35 discrete items listed in the summons, I would say the following.

28.  First, Subi accepts that 21 out of the 35 items are identical to the items sought in a failed discovery application made by Subi in December 2022. The decision dismissing that application can be found at [2023] HKCFI 2666. There is no reason why these requests should be allowed to be re-opened. For the record, these items are items 1 to 7, 18 to 19, 21 to 28, 32 to 35.

29.  Second, 25 out of the 35 items have already been disclosed in either Bina’s or Subi’s lists of documents. To make a further order for discovery against Bina serves no purpose and is therefore unnecessary. There is simply no justification put forward by Subi for further disclosure. For the record, these items are items 1 to 20, 23, 25 to 28.

30.  Third, the remaining items not covered above, namely items 29 to 31, relate to Mother’s mental capacity. Mr Hart submits that these documents are relevant to potential issues surrounding the discontinuance of the original action and the counterclaim concerning Mother and Bina.

31.  But those issues, if any, have nothing to do with ITEHK. The documents now sought are plainly irrelevant to the issue of quantum of Bina’s claim, which is the sole issue remaining in dispute in this counterclaim.

Conclusion

32.  For the above reasons, I allow Bina’s discovery application and make an order in terms of her summons, save that categories 1 and 3 should be narrowed down as discussed above[1]. I dismiss Subi’s summons.

33.  This case was directed to be docketed to a judge due to the estimated trial length under Practice Direction 5.7. As the dispute now remaining is a narrow one with no apparent complexity, I would direct that the counterclaim be reverted back to master for case management. Parties should restore the CMS hearing before a master within 14 days.

(Submissions re costs)

34.  This is my decision on costs.

35.  Bina do have costs of both summonses, including all reserved costs, with a certificate of one counsel, summarily assessed at $360,000, payable by Subi on or before 19 November 2025.

36.  An indemnity costs order is justified. I take into account the following:

(1)  For both summonses, the affirmations filed by Subi (which, according to Mr Hart, were drafted by Subi himself) are lengthy, unfocused, and repetitive. The contents revolve around the merits of Bina’s counterclaim, rather than the merits of the discovery summonses. The bulk of the affirmations are therefore irrelevant to the discovery applications. The time spent by Bina and the court to review them are simply wasted for no practical purpose.

(2)  For Subi’s summons, requests for a lot of the items have been dismissed previously. Subi’s attempt to re-open them is abusive conduct and leads to a waste of parties’ time and also a waste of the court’s resources.

37.  Hence, the indemnity costs order.

Mr Justin Ho and Ms Celeste Chan, instructed by MinterEllison LLP, for the plaintiff (by counterclaim)

Mr Andrew Hart, of Hart Giles, for the 2^nd defendant (by counterclaim)

Appendix

IT IS ORDERED that: -

1.  The 2^nd defendant (by counterclaim) do within 28 days from the date hereof file and serve an affidavit identifying all documents within the classes specified in Schedule A hereto which are or which have at any time been, in the possession, custody or power of the 2^nd defendant (by counterclaim), and if not now in his possession, custody or power when he parted with each such document and what has become of them.

2.  There be inspection of all documents or classes of documents referred to in the affidavit to be filed pursuant to paragraph 1 above within 7 days thereafter.

Schedule A

HCA 3075/2015

[2023] HKCFI 2666

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3075 OF 2015

_________________

BETWEEN

(By Original Action)

_________________

BETWEEN

(By Counterclaim)

_________________

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DECISION

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1.  I dismiss the discovery application taken out by Subi[1] for two reasons.

2.  First, I find that the summons is an abuse of the court’s process. Since from the beginning when it was taken out up to now, there is clearly no intention on the part of Subi to genuinely pursue and argue the application.

3.  Secondly, in any event, there are no merits in the substantive application itself.

4.  In respect of my finding that there is an abuse of the court’s process, I refer to the following matters.

5.  The application was taken out in December 2022 whereas the original request for documents was made in September 2021. I accept the submission of Bina[2] that it is an attempt on the part of Subi to retaliate against Bina as a result of her own discovery application which was decided in May 2021[3].

6.  I have been informed that on three occasions before that May 2021 hearing, in his timetabling questionnaires, Subi had confirmed that he had no discovery application to make. Yet after the order against him was made in May 2021, he came up with a request for documents in September. However, he did not take out a formal application until five months later, that is December 2022. There is no explanation why there was such a long delay between his original request and the formal application.

7.  And when one looks at his supporting affirmation, he in fact said that the summons was taken out as it would otherwise be “inequitable for [Bina] to request such extensive discovery without having to provide her own discovery on similar and related issues”. That is the reason that he has put forward himself to support his discovery application. Plainly, this is not a good reason.

8.  In any event, in his supporting affirmation, he has failed to address the requisite elements for a specific discovery application. He has failed to address the existence, relevance, possession, and necessity of the documents sought or his reasons for discovery sought. I refer to paras 25 and 26 of his 5^th affirmation. He has given no idea as to why he says that these documents sought were in existence, in possession of Bina, are relevant or necessary. Para 26 of the affirmation is incomprehensible.

9.  So when one takes into account the timing of the discovery application and the quality of the evidence which Subi adduces to support the application, there is clear ground to say that the application was not taken out genuinely to seek discovery but as retaliation against Bina’s own discovery application.

10.  Moving on with time, I have earlier today found that the late filing of the stay application and the application for interim stay is an abuse of the court’s process and the purpose of those two applications are to derail the hearing of, among other things, the discovery summons today.

11.  Subi’s solicitor has not lodged any written skeleton submissions. And that is in violation of the requirement of the Practice Directions. Subi is the applicant in this application. The fact that he has failed to lodge a skeleton argument to support his application is very telling.

12.  On the whole, when one looks at the chronology of events from around the time when the court made the order in favour of Bina in May 2021 up to today, I think I can safely conclude that the discovery application had been taken out not because Subi genuinely wanted to pursue the discovery application but it is a retaliatory step in view of Bina’s own discovery application.

13.  In any event, there is no merit in the substantive application. And I would dismiss the discovery application for that reason also.

14.  The evidence in support of the discovery application is lacking and the documents sought for are wide ranging and oppressive.

15.  Mr Justin Ho, who appears for Bina, has lodged detailed written submissions, and there is really no meaningful opposition on the part of Mr Hart to argue otherwise. I would accept Mr Ho’s submissions in full. As a result, I come to the conclusion that there is no merit in the substantive application taken out by Subi.

(Submissions on costs)

16.  This is my order on costs. Bina do have costs of the discovery application, including all reserved costs, to be taxed on an indemnity basis if not agreed.

Mr Justin Ho, instructed by MinterEllison LLP, for the plaintiff (by counterclaim)

Mr Andrew Hart, of Hart Giles, for the 2^nd defendant (by counterclaim)

HCA 3075/2015

[2021] HKCFI 1588

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3075 OF 2015

_________________

_________________

_______________

DECISION

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1.  It is plainly in the interest of all the parties that the present discovery applications taken out by Bina[1] should be dealt with as expeditiously as possible and should not be allowed to hold up the further progress of this action. First, Mother[2] is now 96 years old and it is most desirable that the trial should take place as soon as possible and during her lifetime. Second, the action was commenced in December 2015. It is now more than 5 years after the commencement. Witness statements have not yet been exchanged.

2.  Having discussed with counsel, in exercise of my case management power, I shall adopt the following approach to deal with the fairly long list of items disputed by the parties.

3.  On an item-by-item basis, counsel will make submissions.  I shall proceed to make a ruling for that item straightaway, with brief reasons given.

4.  I will call a transcript of the hearing for the parties’ records.  If necessary, I will reduce the ruling parts into a written decision, perhaps with some minor alteration so that the written decision will make sense to its readers.

[Following the agreed approach, parties made submissions and the court made rulings in respect of each item. The rulings are reproduced below.]

THE FIRST SUMMONS

Schedule A, item 1 – Saras’ UK Wills and related Codicils created and/or executed in the period 1999 to 2010 including but not limited to those dated 30 September 1999, 10 December 2005, 2007 and 2010

5.  In respect of item 1 in Schedule A, I would allow discovery.  I am satisfied that the document requested is relevant to the jewellery claim.  However, I am not satisfied that it is relevant to the funds claim.  The reason is that it does not appear to be the Mother’s pleaded case that she made or entered into the arrangement because she did not have enough funds or assets available to meet her needs.  That is not the case that Bina would have to meet at trial.  Therefore relevance is not made out as far as the funds claim is concerned.

6.  In respect of the argument on privilege, in this case, on the materials before me, in particular the evidence of Bina which is not challenged in Mother’s affidavit evidence and also the email written by the UK solicitor at page 286 in bundle B1, it seems that the daughter had in fact participated in the communication between Mother and the UK solicitor quite fully and not as at a limited extent as submitted by Mr Whitehead.  And therefore, for that reason, Mother cannot assert privilege against Bina.

7.  Lastly, I do not accept the submission that the Pratt[3] decision is applicable to the present case.  Here, we are talking about the communication between Mother and the UK solicitor, and Bina’s role is to assist the Mother in the process. There is no document generated by Bina in that sense and therefore it is a very different factual scenario from the situation in Pratt and the principle discussed in Pratt therefore does not apply.

Schedule A, item 2(a) – All written advices (including attendance notes of meetings, calls and advice), correspondence, letters, email and/or memoranda passing between Saras and/or Subi and Murray Hallam of Messrs Withers, Solicitors, London from June 1999 to to-date in relation to Saras’ estate planning, UK assets, UK Wills and codicils and UK tax position

8.  In respect of item 2(a), I will grant discovery.  I am satisfied that relevance is established in relation to the funds claim.  In the pleaded case of Bina, it says Mother sought advice on estate planning and as a result entered into the arrangements.  Therefore, the email or the correspondence referred to under this item would help to advance Bina’s case or might help to advance Bina’s case.  Therefore, relevance is established.

Schedule A, items 2(b), (c) and (d)

Schedule A, item 2(b) – All written advices (including attendance notes of meetings, calls and advice), correspondence, letters, email and/or memoranda passing between Saras and/or Subi and Chris McGowan, Accountant, London in the period 2013 to to-date in relation to Saras’ estate planning, UK assets, UK Wills and Codicils, UK tax position including Saras’ UK tax returns and correspondence with Her Majesty’s Revenue (“HMRC”)

Schedule A, item 2(c) – All written advices (including attendance notes of meetings, calls and advice), correspondence, letters, email and/or memoranda passing between Saras and/or Subi and Lubbock Fine, Accountants, in the period January 1998 to February 2013 in relation to Saras’ estate planning, UK assets, UK Wills and Codicils, UK tax position including Saras’ UK tax returns and correspondence with HMRC

Schedule A, item 2(d) – All written advices (including attendance notes of meetings, calls and advice), correspondence, letters, email and/or memoranda passing between Saras and/or Subi and King and King, Accountants, London in the period 2006 – 2009 in relation to Saras’ estate planning, UK assets, UK Wills and Codicils, UK tax position including Saras’ UK tax returns and correspondence with HMRC

9.  By consent of the parties, I grant discovery in respect of items 2(b), (c) and (d).

Schedule A, item 3 – Saras’ Indian Wills and related codicils including but not limited to that witnessed by Manual Thomas and Narayan Radhakrishnan created or executed by Saras on or around 28 February 2008

10.  In respect of item 3 of schedule A, I allow discovery.  The Indian will is plainly relevant to the issue of the beneficial ownership of the Cuffe Castle property.  The will itself is not a privileged document. 

11.  And as far the statement in Mother’s affirmation is concerned, she said that there is no such documentation in her possession, custody or control.  That is not sufficient discovery.  The general rules would require Mother to state, if the document is no longer with her, when she parted with the document and what has become of the document.

Schedule A, items 5(a) to (d)

Schedule A, item 5(a) – All Account Statements, transfer documents, correspondence and/or instructions in relation to the AIB Accounts 323/00608943/01 and 323/00608943/02 and the joint account 323/00614433 for the period of 2006 to December 2010

Schedule A, item 5(b) – All Account Statements, transfer documents, correspondence and/or instructions in relation to the SCB Account for the period of 1996 to January 2013

Schedule A, item 5(c) – All Account Statements, transfer documents, correspondence and/or instructions in relation to the Britannia Account for the period of January 2013 to to-date

Schedule A, item 5(d) – All Account Statements, transfer documents, correspondence and/or instructions in relation to the NWB Account for the period January 2013 to to-date

12.  In respect of items 5(a), (b), (c) and (d), I refuse to order discovery.  I am not satisfied that relevance in the Peruvian Guano sense has been made out by Bina.  As far as the actual transfers are concerned, it is for Mother to make out the case.  It is not for Bina now to seek documents to help advance Mother’s case.  In any event, the crux of the issue is the reason why these transfers were made.  On this point, the parties are putting forward conflicting versions.  I am not satisfied that just by looking at the bank statements, it would help to advance Bina’s case or damage the Mother’s case.  Hence, relevance is not established.

Schedule A, item 6 – All title Deeds, Certificates of Ownership and/or transfer, sale or disposition or mortgage of the Cuffe Castle property including Nominee forms filed in favour of Bina in the period 2000 and 2012 together with all correspondence in relation thereto

13.  In respect of item 6, I would order discovery of this category save that the reference to “all correspondence” should be taken out.  I am satisfied that the documents are relevant to the issue, first of all, of the legal ownership of the Cuffe Castle property prior to 1995.  It also relates to the overall question as to the beneficial ownership of the property, particularly, these nominee forms filed in 2000 and 2012.  These are relevant to the issue of ownership and they ought to be disclosed. 

Schedule A, items 7 and 8

Schedule A, item 7 – All Agreements for the lease of, and dealings with the Cuffe Castle Property in the period 2000 to to-date and all correspondence in relation thereto including but not limited to that with the Cuffe Castle Housing Society and with Sunil Sachdev

Schedule A, item 8 – All receipts for rent paid in respect of the Cuffe Castle Property for the period 2000 to to-date and deposited with Dena Bank, Mumbai and/or other Banks in India

14.  I order discovery under items 7 and 8.  These documents are clearly relevant to the issue of quantum.  There is no order for a split trial.  Hence, Bina is quite entitled to ask for damages at the trial.

Schedule A, item 9 – All Standard Chartered Bank and HSBC Bank statements relating to the sales proceeds of Baguio Villa property and transfers thereof

15.  I refuse discovery under item 9 for the same reason I have refused discovery for item 5.

Schedule A, items 11(a) to (g)

Schedule A, item 11(a) – Copies of all pleadings and affidavits filed by Saras in HCA 4966 of 1988

Schedule A, item 11(b) – Copies of all pleadings and affidavits filed by Saras in HCA 4967 of 1988

Schedule A, item 11(c) – Copies of all pleadings and affidavits filed by Saras in HCA 5881 of 1988

Schedule A, item 11(d) – Copies of all pleadings and affidavits files filed by Saras in HCA 6039 of 1988

Schedule A, item 11(e) – Copies of all pleadings and affidavits files filed by Saras in CACV 27 of 1989

Schedule A, item 11(f) – Copies of all pleadings and affidavits files filed by Saras in High Court Miscellaneous Proceedings No 89 of 2236

Schedule A, item 11(g) – Copies of all pleadings and affidavits files filed by Saras in High Court Miscellaneous Proceedings No 90 of 0308

16.  I would order discovery of items 11(a) to (g). These items of documents are clearly relevant to the jewellery claim.  And I also accept Bina’s submission that it would be for the Mother to explain when she parted with these documents and what has become of them.  The exercise of perhaps approaching the former solicitors could not be oppressive and should be done.

Schedule A, items 13(a) to (d)

Schedule A, item 13(a) – Share transfer instruments executed in 2007 in relation to the purported transfer of shares in Industrial & Technical Entrepreneurs Limited (“ITE”) from Bina to Subi and from Rashme Gopi to Saras

Schedule A, item 13(b) – Share transfer instruments executed in 2012 in relation to the purported transfer of shares in ITE from Saras to Subi

Schedule A, item 13(c) – Bought and Sold Notes executed in 2007 in relation to the purported transfer of shares in ITE from Bina to Subi and from Rashme Gopi to Saras

Schedule A, item 13(d) – Bought and Sold Notes executed in 2012 in relation to the purported transfer of shares in ITE from Saras to Subi

17.  But now I take into account the fact that these are very isolated and discrete documents – we are not talking about tens of pages – and this goes to the very core of the counterclaim in relation to the transfer.  Therefore, for that reason, if we fast-forward to the trial that is hopefully going to take place soon, I think the trial judge would also prefer to see these documents as these form the very basis of the counterclaim.

18.  So that would be my ruling for items 13(a) to 13(d).  I would hold that these documents are relevant and would be helpful to the trial judge when determining the counterclaim made by Bina.

Schedule A, items 13(e) and 14

Schedule A, item 13(e) – Correspondence with ITE’s auditors, accountants and Company Secretary relevant to the transfer and the Inland Revenue and Stamping Office in Hong Kong concerning the said transfers

Schedule A, item 14 – All Statutory Books, Annual Reports, Annual Accounts and Auditor’s Reports of ITE from 1988 to to-date

19.  In respect of items 13(e) and 14, I would order discovery of the audited financial statements of ITE from 2007 to now, and I would refuse discovery of the rest of the items.

Schedule B (the first summons) and Schedules B and C (the second summons)

20.  In respect of schedule B in the first summons and schedules B and C in the second summons, I order discovery save for items 25 and 37 in Schedule C.  Among the items sought, there are these redacted documents that have previously been disclosed.  While the burden is on the applicant to show that the redaction is not properly made, in the present case, there is only this bare assertion on the part of the Mother’s side to say that they are private information, confidential information or privileged.  There is really no room for the other side to assess, and in fact for the court to assess, whether that is right or not. 

21.  In respect of the further documents sought, which are referred to in the previous lists of documents or affidavits, there seems to be no serious dispute as to relevance.  No valid objection has been raised, and therefore I order discovery. 

THE SECOND SUMMONS

Schedule A, items 3 and 4

Schedule A, item 3 – All Account Statements of SCB Joint Account no 447-1-104613-4 maintained by Saras and Bina from July 2008 to December 2012

Schedule A, item 4 – All Account Statements of Standard Chartered Bank accounts nos 447-1-097721-5, 447-1-987077-4 and 447-5-018574-3 between July 2008 and December 2012

22.  In line with my ruling on the equivalent items in the first summons, I would refuse discovery of items 3 and 4.

Schedule A, items 1 and 2

Schedule A, item 1 – Tax returns and all accompanying financial statements (including but not limited to balance sheets, inventories of properties and profit and loss statements) of Industrial and Technical Entrepreneurs Limited, Taiwan Branch (Taiwanese registration no. 23111555) (“ITE Taiwan”) filed by ITE Taiwan at the Taxation Administration, the Ministry of Finance, Republic of China from 2007 to 2014

Schedule A, item 2 – All documents relating to the sale & purchase (including but not limited to transfer and registration documents) of the ITE Taiwan office located at the 14^th Floor, 131 Sung Chiang Road, Taipei, Taiwan (“Taiwan Property”) from GTI Taiwan to ITE Taiwan in or around 1989

23.  For items 1 and 2, they both relate to the ITE claim.  And in line with my ruling on the equivalent items in the previous summons, I would grant discovery for the same reasons. 

Schedule A, item 5 – All correspondence and documents between Saras and/or Subi and Cuffe Castle Co-Operative Housing Society from 1975 to to date

24.  I will refuse item 5 in respect of the correspondence and documents sought for the same reason that I refused the discovery of correspondence in the equivalent item in the first summons. 

[Parties made submissions on costs]

ORDERS

25.  I make an order in terms of the two discovery summonses, except that (a) paragraph 4 of the first summons be deleted; (b) the schedules to the summonses should be amended to reflect the rulings which I have made in the course of today’s hearing; and (c) paragraph 5 of both summonses be amended so that Bina should only have half of the costs of the summonses. 

26.  The reasons for my costs decision are as follows. 

27.  The hearing of the summonses has been necessitated by the Mother’s opposition to the items sought.  But in substance, orders have been made in respect of the majority of these items.  However, given that a fair number of concessions have been made by Bina and a number of rulings made against her, I will apply a discount on the costs and Bina should only be entitled to half of the costs of the summonses.

HCA 3075/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3075 OF 2015

________________________

________________________

________________________

RULING

________________________

Introduction

1.  When giving judgment on Mrs Deegan’s application for security for costs, I said that interlocutory applications in family disputes tend to be contested with the tenacity normally reserved for the trial of the action.  That has turned out to be true about the issue on which the court has now been asked to rule.  That is whether the form of the charge over Mrs Gopi’s property in London which Mrs Gopi has offered will enable Mrs Deegan to enforce the charge if Mrs Gopi fails to comply with any order for costs which may be made against her.  The parties did not object to me determining the issue on the basis of their written submissions, and this is my ruling on that issue.

Three preliminary points

2.  Three preliminary points should be made.  The first is that charging the plaintiff’s property to the defendant is not the usual way of providing security for a defendant’s costs.  There are two reasons for that.  First, providing security for costs in that way is liable to cause problems.  There may be uncertainty over the true value of the property.  It may take some time for the security to be realised.  And if the property has to be sold in order to realise the security, there may be arguments over whether it was sold at a fair price.  Secondly, in most cases, it will be unnecessary. If a plaintiff wants to raise the money by charging his or her property rather than paying money into court, the most obvious way to do that is to obtain a bank guarantee for the appropriate sum and for the guarantee to be secured by a charge over the property in favour of the bank: see the observations of Longmore LJ in AP (UK) Ltd v West Midlands Fire and Civil Defence Authority [2001] EWCA (Civ) 1917 at [13] and [33].  However, this was a case in which Mrs Gopi’s counsel asked the court for the security to be provided by a charge over her property in London, and although Mrs Deegan’s solicitor made the point that it was not the usual way in which security for costs was provided, he did not object to the security being provided in that way in this case.

3.  Having said that, no form of security is more easily enforceable than money paid into court.  All that is needed is an order for its payment out of court.  But contrary to what Mrs Deegan’s solicitors contend, that does not mean that a charge over Mrs Gopi’s property should put Mrs Deegan in no worse position than she would have been in had security been provided by a payment into court.  Nor does it mean that enforcing any charge over Mrs Gopi’s property should be just as easy.  It will never be, and to say that it should be is inconsistent with their agreement for the security to be provided by such a charge.  It may well be, to quote from Stephenson Harwood’s letter of advice (as to which see para 6 below), that Mrs Deegan would be “materially better protected” by money paid into court than a charge over Mrs Gopi’s property, but since her solicitor agreed (albeit reluctantly) to the security taking the form of a charge, Mrs Deegan cannot now go back on that.  Having said that, the charge still has to be capable of being enforced without too much difficulty or the need for further litigation. 

4.  The second preliminary point is this.  Both sides were confident that the terms of the charge could be agreed.  That was why the parties proposed that the order I should make would not set out the terms of the charge, save to provide that its terms were to be agreed within 14 days.  I was content to go along with that, though (a) Mrs Gopi still had the option of providing the security by making a payment into court, and (b) I gave the parties liberty to apply in case they were unable to agree the terms of the charge.  In the event, the parties were unable to agree the terms of the charge, and it was pursuant to this liberty to apply that Mrs Gopi has brought the issue back to court.

5.  An unscrupulous litigant in Mrs Deegan’s position could scupper Mrs Gopi’s ability to provide security by a charge over her property by simply refusing to agree whatever terms Mrs Gopi’s solicitors proposed.  Accordingly, and in order to give effect to the agreement of the parties that security could be provided by a charge over Mrs Gopi’s property, the order I made has to be treated as subject to a condition that Mrs Deegan’s consent to such terms as Mrs Gopi’s solicitors proposed should not be unreasonably withheld.  In these circumstances, the outcome of this application will turn on the reasonableness of the terms proposed by Mr Gopi’s solicitors.

6.  The third preliminary point relates to the advice which the parties have received from solicitors in the UK.  Withers have given advice to Mrs Gopi, and Stephenson Harwood have given advice to Mrs Deegan. There is no direct evidence whether they are the parties’ solicitors in the UK, or whether they were simply instructed by the parties’ solicitors in Hong Kong to provide independent advice.  To be on the safe side, I have treated the advice they have given, not as expert evidence, but as submissions adopted by whichever party the advice was given to.

The proposed charge

7.  The charge which Mrs Gopi’s solicitors have offered is in the form of a form prescribed by the Land Registry of England and Wales for a legal charge of a registered estate.  The form is Form CH1.  By it Mrs Gopi covenanted to pay to Mrs Deegan those of Mrs Deegan’s costs (a) which were incurred up to when the action was set down for trial and (b) which were ordered to be paid by Mrs Gopi to Mrs Deegan by the Court of First Instance, up to a maximum of $2,000,000.00.  The performance of that obligation was secured by a charge on Mrs Gopi’s flat in Maida Vale, London.  If no such payment was made within six months of the date of any relevant order for costs, Mrs Deegan could immediately exercise her power of sale under the charge.

A deed of charge?

8.  Mrs Deegan’s solicitors contend that the court’s order contemplated that the charge would be created by means of a deed of charge.  A number of reasons have been advanced in support of that contention, but they boil down to three things:

(i) In Hong Kong, a charge is created by a deed of charge.  There is no equivalent of Form CH1.

(ii) Form CH1 is appropriate for use by persons or institutions who lend money to the chargor, as it describes the chargor as the borrower and the chargee as the lender.  It is therefore inappropriate for it to be used in a case in which a charge is created to secure another form of debt.  What the order had therefore contemplated was a bespoke deed of charge, tailored to secure the type of prospective debt which Mrs Gopi might incur.

(iii) At the time of the court’s original order for security for costs, the parties’ solicitors in Hong Kong were unaware of the practice in England and Wales of using Form CH1 to create a charge over property.  Its use could therefore not have been contemplated in the present case.

9.  All this misses the point.  The court did not have in mind, one way or the other, the means by which the charge should be created — and I should know since it was I who made the order.  I just left it to the parties to agree the terms of the charge, and that included the means by which the charge should be created.  It may be that Form CH1 is commonly used for commercial lending — and even then only in the UK. And it may be that Mrs Deegan’s solicitors had in mind a bespoke deed of charge.  But none of that that means that Mrs Gopi’s counsel or solicitors had turned their minds, when the nature of the security was being discussed in court, to the form which a charge should take.  In any event, Form CH1 operates as if it is a deed of charge.  The box in the form which deals with the execution of the document refers to the form being signed by both the chargor and the chargee “as a deed”.

Third party rights

10.  At the original hearing, the court was told that Mrs Gopi’s flat was unencumbered.  Mrs Deegan’s solicitors say that this was one of the reasons why they were content for security for her costs to be provided by a charge over the flat.  At one stage, it looked as if what the court had been told had been incorrect: the CH1 initially prepared on Mrs Gopi’s behalf referred to a “second legal mortgage”.  But it was later said that this had been an error, and Mrs Deegan’s solicitors do not dispute that.  However, although the flat is unencumbered, Mrs Deegan’s solicitors have expressed concern about someone other than Mrs Gopi who spends time at the flat.  Indeed, it is claimed that someone known as Amar lives in the flat with Mrs Gopi, and has done so for five years.  Mrs Deegan knows that this is so, she says, because of the “numerous occasions” when she herself stayed in the flat in recent years.  Amar has been described by Mrs Deegan variously as a companion or a housekeeper.  Mrs Gopi disputes that.  Her solicitors have said that only Mrs Gopi lives in the flat, and that a “nurse carer” (presumably Amar) only stays overnight occasionally.  That is not quite what Withers originally said, which was that Amar is employed as a nurse and stays at the flat five nights a week, though Withers subsequently said that Amar only visits the flat during the day, and that “if she stays overnight it is only on an occasional basis”.

11.  Stephenson Harwood point out that neither a copy of Amar’s contract of employment nor a copy of the statement setting out the terms of her employment have been produced (despite the existence of the latter being a requirement under English employment law), nor have there been produced copies of Amar’s itemised pay statements or evidence that Mrs Gopi has paid employers’ national insurance contributions to the Revenue.  Indeed, Stephenson Harwood have not found anyone with Amar’s full name on the register held by the Nursing and Midwifery Council.  Having said all that, Amar’s status is not something I can resolve on an application of this kind, even though it is relevant to the nature of any rights which Amar might have acquired in the flat.

12.  If Amar is merely Mrs Gopi’s employee, she will have no more than a licence to occupy the flat for the purpose of carrying out her duties, and this licence can be terminated relatively easily.  On the other hand, if Amar really is Mrs Gopi’s companion living with her in the flat, it may be open to her to claim that she has some interest in the flat.  The example given by Stephenson Harwood is that on Mrs Gopi’s death, Amar might claim that Mrs Gopi had promised her the flat in return for looking after her in her old age.  Such a promise would give Amar an interest in the flat: see Gillett v Holt [2001] Ch 210 and Thorner v Major [2009] 1 WLR 776.  The effect of section 29(2)(a)(ii) of, and para 2 of Schedule 3 to, the Land Registration Act 2002 is that such an interest would rank in priority to the charge, with the result that the charge would be ineffective in providing security for Mrs Deegan’s costs.

13.  None of this might happen, of course, but the possibility that it could is something which gives rise to a legitimate concern on Mrs Deegan’s part about the suitability of the charge as security for her costs.  Having said that, though, that concern can be met, as Stephenson Harwood acknowledge, by Amar postponing any interest she may have in the flat to that of the charge.  Mrs Gopi is prepared to request Amar to do that. Although Withers say that this is unnecessary in view of the true nature of Amar’s status, Mrs Gopi is willing, “as a gesture of good will”, to ask Amar to do that once Amar has taken legal advice on the matter.  It is noteworthy that it is not asserted on Mrs Gopi’s behalf that Amar has agreed to postpone any interest of hers in the flat to that of the charge, but the execution of a deed of postponement by Amar following independent legal advice would dispose of any concerns about the utility of the charge as an acceptable form of security.  The order I propose to make will be subject to a condition dealing with that.

14.  There is one other relevant consideration here. It is said that Mrs Gopi is in the habit of using “family arrangements” to defeat creditors’ rights.  In the circumstances, Mrs Deegan’s solicitors want Mrs Gopi to warrant on oath that no such family arrangements exist which might jeopardise the enforceability of the charge.  That request has been made three times: in Mrs Deegan’s solicitors’ letter of 23 February 2017, in Stephenson Harwood’s letter of advice and in the written submissions filed on behalf of Mrs Deegan.  The reasonableness of that request has not been addressed by Withers or by Mrs Gopi’s solicitors.  If there are no such family arrangements in place, Mrs Deegan loses nothing by giving an appropriate warranty to that effect.  If there are such family arrangements in place, it is questionable whether the charge represents sufficient security at all.  Again, the order I propose to make will be subject to a condition dealing with that.

Other concerns

15.  A number of other concerns have been expressed about the charge.  I deal with them in turn.

16.  Date of repayment.  The charge cannot be enforced until six months have elapsed since any relevant order for costs was made.  It is contended that this is too long. I do not agree.  There may have been some merit in that suggestion if Mrs Deegan had to make an application to the court for the enforcement of the charge.  But clause 9.5.1 of the charge provides that Mrs Deegan’s power of sale arises as soon as the six months has elapsed without referring to any need on her part to make an application to the court.  I therefore assume that no such application needs to be made for the charge to be enforced.  On that footing, a period of six months for Mrs Gopi to pay the costs is not unreasonable, bearing in mind that in the absence of agreement those costs will have to be taxed in the meantime.

17.  The costs of enforcement.  The charge does not address the cost of its enforcement.  That is because its enforcement is governed by section 105 of the Law of Property Act 1925, which provides that the costs of such enforcement are to be assessed on the standard basis.  Withers assert that the assessment of such costs on the standard basis is “the general rule when a charging order is enforced”, whereas Stephenson Harwood say that “[a]ny properly advised chargee requires a clause in the charge enabling it to get its enforcement costs paid on an indemnity basis”.  That makes sense to me, especially in a case such as this where Mrs Deegan’s solicitor’s agreement to the security being provided by a charge on Mrs Gopi’s flat was something of an indulgence.  The order I propose to make will be subject to a condition dealing with that.

18.  The costs covered by the charge.  Clause 9.1.4 of the charge defines any relevant order for costs as “an order for the payment of the costs incurred by [Mrs Deegan] … upon completion of the trial of [the] action and after taxation of such costs unless the amount of such costs are otherwise agreed by [Mrs Gopi]”.  Stephenson Harwood’s concern relates to the words “upon completion of the trial”.  They say that their effect is that the costs of an appeal, or costs following a notice of discontinuance, or in connection with applications for orders for an interim payment or for a payment on account of costs, would not be secured. The concern about the costs of an appeal is misconceived.  The only costs for which security was ordered were those costs incurred by Mrs Deegan up to the date on which the action is set down for trial.  The same is true of the costs incurred in connection with applications for orders for an interim payment or for a payment on account of costs.  If the costs of such applications are incurred before the action is set down for trial, those costs are secure (provided that the limit of £2,000,000.00 for all Mrs Deegan’s costs up to the date of setting down is not exceeded), but not if they are incurred after that.  So far as the costs (presumably of the action) in the event of Mrs Gopi discontinuing her action are concerned, I am uncertain what Stephenson Harwood’s concern actually is.  Withers think that the concern is that the costs will not have arisen following the conclusion of the trial, and that the words “upon completion of the trial” therefore exclude those costs.  If that is Stephenson Harwood’s concern, it is easily remedied by the words “upon completion of the trial of [the] action” being replaced by “following the conclusion of the action”. Unsurprisingly, Mrs Gopi is agreeable to that, and the order I propose to make gives effect to that.

19.  Restrictions on disposal.  Form CH1 contains a box (which can be included in the charge or not) in which the “borrower” can state that it applies to enter the standard form of restriction on the disposal of the property (or the creation of a further charge over the property) in the proprietorship register.  The standard form is Form RX1.  No such statement was made by Mrs Gopi in the proposed charge.  Stephenson Harwood make the point that in these circumstances Mrs Gopi could dispose of the flat, or create a further charge over the flat, without Mrs Deegan’s consent.  Indeed, Stephenson Harwood point out that the charge does not even contain an undertaking by Mrs Gopi that she will not do either of these things.  All that is true, but it is beside the point.  Once the charge has been registered with the Land Registry, Mrs Gopi will not be able to dispose of the flat free of Mrs Deegan’s charge, or create a further charge over the flat which would have priority over Mrs Deegan’s charge. So neither the completion of Form RX1 nor an undertaking not to dispose of the flat is necessary.  Mrs Deegan’s charge over the flat retains its utility as security for her costs.

20.  Priority searches.  The charge over Mrs Gopi’s flat will be valueless if it is disposed of or further charged prior to the charge’s registration.  Stephenson Harwood make the point that Mrs Gopi has not offered a priority search to deal with this eventuality.  That is so, but if Mrs Deegan’s concern about this is a real one (rather than one raised only for the purpose of persuading the court that a charge over the flat does not provide Mrs Deegan with sufficient security for her costs), there is nothing to prevent her solicitors from conducting such a search themselves.

21.  Inspection of the flat.  Stephenson Harwood say that it is common for a property to be inspected before a charge over it is granted to ensure that no-one else is in occupation of the property (who might have rights in respect of it) and that the property is in a satisfactory condition.  No such inspection has been offered.  The answer to that is that no such inspection has ever been sought by Mrs Deegan’s solicitors, there is no suggestion that anyone other than Amar is living in the flat (despite the access which Mrs Deegan claims to have to the flat) and there is no suggestion that the condition of the flat is anything other than satisfactory.

22.  Forfeiture. Should a lessee be in breach of its repairing covenant, it is possible that the landlord will seek to forfeit the lease.  Stephenson Harwood voice that concern here.  That presupposes that Mrs Gopi is a lessee of the flat rather than its owner.  I assume that to be the case, though it has never been spelled out. However, Withers say that it is the landlord who is responsible for any structural repairs to the flat, and that Mrs Gopi is liable only for its maintenance and decoration.  Withers deny that Mrs Gopi is in breach of any repairing covenant in the lease, and it must be remembered that forfeiture is usually the remedy of last resort for a landlord, bearing in mind the many steps which a landlord must take before the lease can be forfeited.  It must also be remembered that the lessee can apply for relief against forfeiture — which will invariably be granted if the breach of covenant has been remedied in the meantime.  In the circumstances, the risk of forfeiture is too remote for it to affect the adequacy of the charge as security for Mrs Deegan’s costs.

Conclusion

23.  For these reasons, I have concluded that the terms of the charge proposed by Mrs Gopi (with the words “upon completion of the trial of [the] action” in clause 9.1.4 being replaced by “following the conclusion of the action”) will enable Mrs Deegan to enforce the charge without too much difficulty or the need for further litigation if Mrs Gopi fails to comply with any orders for costs until the action has been set down for trial, up to a maximum of $2,000,000.00, on condition that, within 28 days of this ruling,

(i) Amar executes a deed of postponement whose effect is to postpone any interest which she may have in the flat to that of the charge,

(ii) Mrs Gopi files an affidavit in which she deposes that there are no family arrangements of which she is aware which might jeopardise the enforceability of the charge, and

(iii) Mrs Gopi undertakes to the court through her solicitors that she will pay Mrs Deegan’s costs of enforcing the charge on the indemnity basis.

24.  At present I see no reason why Mrs Deegan should not be required to pay the bulk of Mrs Gopi’s costs relating to the issues which this ruling has addressed.  It is true that the language of clause 9.1.4 has to be altered in one minor respect, but I did not regard that as necessary.  It is also true that I have only approved the charge proposed by Mrs Gopi subject to certain conditions, but I have rejected most of the objections raised on behalf of Mrs Deegan.  In particular, I have rejected the core point made on her behalf that Form CH1 was inappropriate, and that what was required was a deed of charge.  My current thinking is that the fairest order to make is that Mrs Deegan must pay to Mrs Gopi 60% of her costs incurred in respect of the issues which this ruling has addressed, limited to those costs incurred from 14 days after the draft charge was first sent to Mrs Deegan’s solicitors for their approval, those costs to be taxed if not agreed, but not to be paid until the conclusion of the action.  I make an order nisi to that effect.

25.  I conclude with two observations.  First, I was left with the distinct impression that Mrs Deegan’s solicitors regretted agreeing to the security being provided by a charge over Mrs Gopi’s flat, and they therefore took every point which was available to them, however unmeritorious the point might be, to persuade the court to resile from what the parties had agreed, and to revert to the usual order that security for costs be provided by a payment into court.  The difficulty with that is that the court was obliged to give effect to what the parties had agreed, provided that it provided Mrs Deegan with sufficient security for her costs.  Secondly, the resolution of the issue to which this application relates has resulted in the expenditure of very considerable legal costs, which many people would think were wholly disproportionate to the minor issue at stake.  The parties would, I think, be well advised to think long and hard before engaging in costly skirmishes which will only result in further depleting family assets.

HCA 3075/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 3075 OF 2015

______________________

______________________

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J U D G M E N T

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1.  This is an application for security for costs.  If the evidence filed in support of, and in opposition to, the application is anything to go by, the application has been made and resisted as if it was a state trial.  That is not all that surprising.  The case relates to a dispute between mother and daughter, and experience tells us that interlocutory applications in family disputes tend to be contested with the tenacity normally reserved for the trial of the action.

2.  The plaintiff is Saras Gopi.  She is the mother of the defendant, Bina Deegan.  Mrs Deegan defends her mother’s claim and counterclaims against her as well.  Mrs Deegan’s application for security for costs is based on the fact that her mother lives in London.  It is said on Mrs Deegan’s behalf that Mrs Gopi has tried to conceal where she lives, for example, by asserting that she is a Hong Kong permanent resident.  I am not in a position to judge whether Mrs Gopi has deliberately tried to give the court a different impression, but the fact is that Mrs Gopi does not dispute that she is ordinarily resident out of the jurisdiction.  The issue therefore is how the court’s undoubted discretion under Ord 23 r 1(1)(a) of the Rules of the High Court should be exercised.

3.  An order for security for a defendant’s costs may only be made if “having regard to all the circumstances of the case, the court thinks it just to do so”.  There is no inflexible rule or practice that a plaintiff resident abroad will be ordered to give security for costs.  But it has correctly been said that

“...it is the usual, ordinary or general rule of practice of the courts to require the foreign plaintiff to give security for costs, because it is ordinarily just to do so”: see Hong Kong Civil Procedure 2017 (“the White Book”) at para 23/3/4.

The reason why it will ordinarily be just to do so is because of the difficulty which a defendant will usually encounter in enforcing any order for costs in its favour against a plaintiff who has little or no assets in Hong Kong.

4.  The question therefore is whether it is just for security for costs to be ordered in this case.  The right balance needs to be struck between giving Mrs Deegan at least some confidence that any order for costs in her favour will be met, and ensuring that Mrs Gopi is not treated in an inappropriately oppressive way.

5.  I start by summarising, as briefly as I can, the parties’ respective cases.  Mrs Gopi makes two claims.  The first relates to some jewellery (“the jewellery claim”). The jewellery was deposited in a safe deposit box in London many years ago in her daughter’s name.  Mrs Gopi claims that the jewellery belongs to her.  Her daughter claims that she owns the jewellery, which she says was given to her by her parents as gifts in anticipation of, or upon, her marriage.  Mrs Gopi’s other claim relates to funds in various bank accounts in the joint names of the two of them (“the funds claim”).  Mrs Gopi claims that the funds belong to her, and were held in accounts in their joint names so that her daughter would be able to use the money to look after her.  Her daughter claims that the funds belong to her, and that they represent

(a)   part of the proceeds of sale of a flat owned by her, and

(b)   lifetime gifts from her mother which amounted to more money than her mother needed for herself, and which her mother was prepared to give away to reduce the tax payable on her death.

6.  Mrs Deegan’s counterclaim has five limbs.  The first relates to some of the jewellery. Mrs Deegan claims that these pieces of jewellery were removed from the safe deposit box by her mother in 2014, and she seeks its return.  Her mother claims that this jewellery is in her daughter’s possession already, and it includes some pieces of jewellery which belong to her.  The next limb of the counterclaim relates to the return of sums totalling £100,000.00 which Mrs Deegan claims she lent to her mother (“the loan claim”).  Her mother claims that these were not loans at all but remittances made to her by her daughter at her request from the money which was to be used to look after her.  The third limb of the counterclaim relates to a share in a property company which Mrs Deegan claims was transferred to one of her brothers as a result of her signature on the relevant instrument being forged (“the share claim”).  The fourth limb of the counterclaim relates to what is alleged to be the unlawful transfer of a property in India into Mrs Gopi’s name (“the property claim”).  The final limb of the counterclaim is a claim for damages for sexual assault on Mrs Deegan whilst she was a child by a driver for whom Mrs Gopi is alleged to be vicariously liable (“the assault claim”).

7.  I have summarised the parties’ claims and counterclaims because the merits of the parties’ respective claims will sometimes be relevant on an application for security for costs.  To quote again from the White Book for a correct summary of the law, this time at para 23/3/3:

“If the case of the plaintiff is genuine and strong, no order for security [will] be granted... On the other hand, an order for security [will] usually be granted if the plaintiff cannot clearly demonstrate that it has a high degree of probability of success at trial.”

The text correctly goes on to caution against treating the hearing of the application for security for costs as a mini-trial of the action.  It reads:

“[The merits are] to be approached in a broad-brush manner, and the court is not to embark on an assessment exercise as though it were considering an application for summary judgment under O. 14... It is not the function of the court, when faced with an application for security for costs, to make a ‘preliminary run’ at deciding the ultimate success or failure of the claim.”

Indeed, the text correctly refers to what the parties should not do:

“Parties should not attempt to go into the merits of the case unless it can clearly be demonstrated one way or another that there is a high degree of probability of success or failure.”

8.  In these circumstances, I have looked at the parties’ respective claims and counterclaims in the impressionistic way suggested by the authorities.  The outcome of this case will unquestionably depend on whose oral evidence the court accepts at trial, and I am simply not in a position to form any judgment about how the factual disputes between the parties are likely to be resolved. I do not accept the contention made on behalf of Mrs Deegan that her mother’s claims appear improbable.  But the other side of the coin is that I cannot say that Mrs Gopi has demonstrated that she has a high degree of probability of success at trial.  That is realistically accepted by Mrs Gopi’s legal team. She might win.  She might not.  In those circumstances, I go back to the passage in the White Book to which I have already referred:

“an order for security [for costs will] usually be granted if the plaintiff cannot demonstrate that it has a high degree of probability of success at trial.”

9.  So what are the countervailing arguments?  It is not said in this case that an order for security for costs would stifle a genuine claim.  No doubt that is because Mrs Gopi is relatively well off, and can afford to pay into court such sum by way of security as she might be ordered to pay.  Of some significance, of course, is that Mrs Deegan, though a defendant to her mother’s claim, is also in the position of a plaintiff on her counterclaim.  That is the first of the two significant points made on behalf of Mrs Gopi.

10.  The principles which should be applied when security for costs is sought against a plaintiff against whom the defendant has made a counterclaim were considered by Yam J in Ai Zhong v Metrofund Ltd [2010] 1 HKLRD 213 at [22].  I trust that I will be forgiven for not setting out that passage here in its entirety, though I note that Yam J thought that it would be helpful to inquire who is what he described as “the real attacker” in the case.  For me, an equally important consideration is whether an order for security for costs “would effectively be tantamount to providing security to the defendant for the prosecution of its counterclaim”: see the White Book at para 23/3/3.  It is correctly said that “the court should be slow to exercise its discretion to order security against a plaintiff” in such a situation.  The rationale for that is explained in what follows:

“If the claim and counterclaim or cross-claim raise essentially the same issues which will have to be fully litigated anyway, then it may in all the circumstances be unjust to order security for costs against the plaintiff. To order security in such circumstance may prevent the plaintiff from pursuing his claim when he will still have to litigate the same issues in defending the counterclaim.”

11.  In fact, there is only some overlap between the claims and counterclaims.  There is, of course, no overlap in respect of the share claim, the property claim and the assault claim.  There is some overlap in respect of the funds claim and the loan claim, but that overlap only arises because Mrs Gopi’s defence to the loan claim relies on the same agreement as the one on which the funds claim is based.  On Mrs Deegan’s case, there is no link at all between the two claims. The only other overlap is in respect of the jewellery claim and that part of the counterclaim which relates to jewellery.  However, that overlap is limited to the pieces of jewellery which Mrs Deegan claims were removed from the safe deposit box by her mother in 2014.  It may be that some, indeed much, of the evidence relied on by both sides will be relevant to both claims, but the overlap in respect of the claims themselves, as opposed to the evidence relied upon to support those claims, is relatively small.  In the circumstances, I do not think that the existence of the counterclaim, and the extent to which the claims and counterclaims overlap, make it inappropriate in this case for an order for security for costs to be made.

12.  The final consideration which I need to address relates to the enforceability of any order for costs which might be made in Mrs Deegan’s favour.  That is the second of the two significant points made on Mrs Gopi’s behalf.  It is accepted by Mrs Gopi’s legal team that she has no assets in Hong Kong against which any order for costs could be enforced.  The law here again is correctly summarised in the White Book at para 23/3/4:

“The court is properly entitled to take into account the ease of enforcement of an order for security in the jurisdiction where the plaintiff is ordinarily resident...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.”

To the extent that Mrs Gopi has assets in India, arrangements for the reciprocal enforcement in India of orders of the Hong Kong courts are in place.  But to the extent that Mrs Gopi has assets in England and Wales, there are no arrangements in place for the reciprocal enforcement of orders of the Hong Kong courts in England and Wales, even though there is, of course, a common law system in England and Wales similar to that in Hong Kong. So to enforce any award for costs in her favour in England and Wales, Mrs Deegan would have to issue fresh proceedings, relying on the judgment of the court in Hong Kong and then enforcing any judgment given in those proceedings.

13.  I turn to such evidence as there is about Mrs Gopi’s assets in India and in England and Wales.  Mrs Gopi’s only assets in India which have been identified are five bank accounts and a property in the joint names of her and one of her sons.  The only assets which she has identified in England and Wales are a flat in London and three bank accounts.  With the exception of two of the bank accounts in India, Mrs Gopi has not revealed what the credit balances in the bank accounts are, or what her interest in the properties is worth, or whether they are unencumbered.  Her counsel says that no criticism has ever been made before now about the absence of proper disclosure of the value of her assets.  But the fact is that an application for security for costs will always focus on the value of the plaintiff’s assets, and they are things which are within the plaintiff’s knowledge and unlikely to be known about by the defendant.

14.  It is said on behalf of Mrs Deegan that Mrs Gopi has a track record of taking such steps as she can to defeat the claims of her creditors.  I am not in a position to judge that, because it assumes that various adverse findings will be made against Mrs Gopi at the trial of the action, and I am not prepared to make that assumption.  Having said that, though, there is unfortunately so much animosity between the parties in this case that Mrs Gopi might be tempted to put such assets which she has beyond the reach of her daughter.  The fact is that the court should not ignore the practical realities of a dispute of this kind. Moreover, this application for security for costs is seeking to protect Mrs Deegan against not being able to enforce an order for costs in her favour at the end of the trial which is still a long time off.  Anything can happen to Mrs Gopi’s assets in that time.  All in all, therefore, although it may be possible for Mrs Deegan to enforce any order for costs made in her favour, that is no more than a possibility, and in any event the enforcement of orders made in Hong Kong against overseas assets could well be a costly exercise.  In the circumstances, I do not think that these considerations should deter me from making an appropriate order for security for costs.

15.  But what is the appropriate order in this case?  Three points need to be made. First, since it is argued on behalf of Mrs Deegan, and I agree, that there is very little overlap between the claims and the counterclaims, it follows that the sum which Mrs Gopi should be ordered to provide by way of security should not include the costs of the loan claim, the share claim, the property claim and the assault claim.  Otherwise, the order would be tantamount to requiring Mrs Gopi to provide security to her daughter for the prosecution of the counterclaim.  A skeleton bill of costs prepared by Mrs Deegan’s solicitors does not exclude those costs.

16.  Secondly, the skeleton bill of costs (which covers the period up to the date of setting down) includes expenditure on items which may not be incurred, for example, it includes the costs of applications for specific discovery, for further and better particulars and for letters of request for the taking of evidence abroad.  Although Mr Morrison for Mrs Deegan assures me that those applications will be made, you never know with certainty in litigation what is going to happen.  Thirdly, the skeleton bill of costs, is pitched at a level greater than I think the bill would be taxed at, including, for example, the solicitors’ hourly rates.  It is completely inappropriate for me to subject the bill to an item by item analysis.  Everyone agrees that nothing but a broad-brush approach is appropriate.  Applying such an approach, I think that I should order Mrs Gopi to provide her daughter with security for costs in the sum of $2,000,000.00. Subject to any further submissions on the topic,  I propose to stay all proceedings on the claim until that security is provided.  I shall hear from the parties how that security should be provided.