WONG SEE YIN v. TIN WAN TUNG AND ANOTHER

CACV 160/2016

[2019] HKCA 301

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 160 OF 2016

(ON APPEAL FROM APPLICATION TO SET ASIDE A

STATUTORY DEMAND NO. 11 OF 2016)

_______________

_______________

_____________________

J U D G M E N T

_____________________

Hon Yuen JA (giving the Judgment of the Court):

Background

1.1.   On 7 November 2018, this court gave judgment (“the Judgment”) dismissing the appeal of the Applicant Wong See Yin against the Decision of Anthony Chan J made on 29 June 2016 (“the Decision”) refusing to set aside 2 Statutory Demands (“the SDS”) served on him on 4 March 2016. 

1.2.   The SDS were based on 2 Allocaturs for costs ordered against Mr Wong in favour of Full Pacific Development Ltd (“FPD”) and Tin Wan Tung.

-   FPD was the plaintiff in HCA1801/2010 in which the defendants were Mr Wong and two companies in liquidation, Matrix Wealth Ltd (“MW”) and Fully Fortune Asia Ltd (“FFA”), both of which had been controlled by Mr Wong.  

-   Mr Tin was the plaintiff in HCA167/2011, the defendants being the same as in FPD’s action.  

2.  By the time the appeal came before us in October 2018, Wilson Chan J had on 25 May 2018 given judgment in HCA1801/2010 and HCA167/2011 against Mr Wong. Although Mr Wong had filed a Notice of Appeal against that judgment on 19 June 2018 in CACV238/2018, there was no order for stay of execution.  Accordingly, for reasons set out in detail in the Judgment, we held that there was no longer an existing counterclaim which could form the basis of Mr Wong’s application to set aside the SDS.  

Application for leave to appeal to the CFA

3.  On 4 December 2018, Mr Wong filed a Notice of Motion for leave to appeal the Judgment to the Court of Final Appeal. 

4.  Section 22(1)(b) Hong Kong Court of Final Appeal Ordinance Cap. 484 provides that an appeal shall lie to the Court of Final Appeal (“CFA”) at the discretion of this court or the CFA if the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the CFA for decision.

5.  Mr Wong has set out the following questions in the Notice of Motion:

“Q1: The correct legal principle(s) and approach(es) to be applied to the question of and to what extent, in view of Justice, whether the Order(s) and/or Judgment(s) obtained by fraud(s) related to the HCA 167/2011 and HCA 1801/2010 (“CMP”), [including] but not limited to the Judgments and/or Orders .

(a)   dated 26/4/2013of Hon. J. Louis Chan for the interlocutory proceedings of CMP resulting in the Allocaturs;

(b)   the Order dated 29/6/ 2016of Hon. J. Anthony Chan for dismissing the set aside of Statutory Demands (“SD”) based on such Allocaturs in the CALL-OVER hearing;

(c)   the Order dated 11/8/2017of Hon. J. To for HCCW 250/2016 and HCCW 251/2016;

(d)   the Order dated 25/5/2018of Hon. J. Wilson Chan for the CMP;

(e)   the Order dated 7/11/2018of various JA of Court of Appeal for CACV 160/2016 and/or other action(s) or proceedings ((a) to (e) collectively called “the said Orders”),

   should be set aside and/or the executions of the said Orders should be automatically stayed by Court(s) until the final and conclusive results of the CMP and/or the CACV 238/2018 appealed against CMP to avoid the party suffering from litigation(s) and/or Order(s) initiated and/or obtained by false documents, false Statement of Claim (“SOC”), false Answer(s) to Further and Better Particulars (“Answers to F & BP”) and false Statement(s) of Truth annexed to SOC and the Answers to F & BP lodged to Court(s) by Tin Wan Tung and/or So May Kin and/or their related parties which constituted fraud and/or contempt of court under Order 41A rl to r10 (esp r9) of the Rules of High Court (Cap 4A), and to what extend the Court shall set aside or stay and/or initiate to set aside or stay the Order or Judgement obtained by fraud to protect the affected party or to avoid using false documents / false statements / false Statement of Claim / false Statement of Truth to obtain Court Order or Judgment to safeguard the interest(s) and fairness for the party or parties in litigation(s) or Public Interest or the Integrity of the Court(s)?

Q2:   The correct legal principle(s) and approach(es) to be applied to the question of and to what extent, in view of the fraud(s) and issue(s) mentioned in Q1, whether (a) the bona fide cross-claim which appears to be equal or exceeding the amount of the SD or the costs orders should be deemed to be valid or existing as the said Orders should be invalidated due to fraud(s) with substantial evidences filed to Court(s) (which include false SOC, false F & BP and the false Statement(s) of Truth) and no time bar to rehearing or application of setting aside of the said Orders, or (b) the Judgment of the Appeal in CACV 160/2016 should be pended until and unless the final and conclusive result(s) of the Appeal(s) of the said Orders including but not limited to CACV 238/2018 or the issue(s) of fraud(s) be properly handled?

Q3:   The correct legal principle(s) and approach(es) to be applied to the question of and to what extent, in view of the Public Policy and the interest(s) of the litigant(s) and/or safeguarding the Public Fund, whether the Court(s) should allow Tin Wan Tung concealing the transfer of asset and/or proper reporting to Social Welfare Department and/or the information or documents from Social Welfare Department but obtained the said Orders and benefited from the said Orders by fraud(s), without altering or set aside the said Orders resulting in the party / parties suffering from concealment(s) and/or unfairness?

Q4:   The correct legal principle(s) and approach(es) to be applied to the question of and to what extent, in [view] of the Appeal CACV 160/2016 is to appeal to set aside the Order date 29 June 2016 when Anthony Chan J heard HCSD I l of 2016 (“A. Chan Order”), the bona fide cross-claim which appears to be equal or exceeding the amount of the SD or the costs orders (“the cross-claim validity”) should be valid in 2016 as CMP had not been heard in 2016 but Anthony Chan J incorrectly not determining the cross-claim validity before him in 2016, render the Appeal CACV 160/2016 against the then incorrectly judged A. Chan Order to be [sustainable] based on the situation that the Court of Appeal incorrectly considered the time frame for [determining] the cross-claim validity to be the situation or status 2018 which is incorrect?

Q5:   The correct legal principle(s) and approach(es) to be applied to the question of and to what extent, in view of the irregularity, fraud(s), reasonableness, fairness and equity, whether (a) the Order 59 Rule 13(1)(a) should not be applied to the said Orders obtained by frauds and the counterclaims of the Applicant should be deemed prevailing, and (b) the potential proceedings leading to the Order of bankruptcy of Wong See Yin resulting in shifting the CACV 238/2018 appeal for trustee to consider, should be disallowed or not?

Q6:   The correct legal principle(s) and approach(es) to be applied to the question of and to what extent, in view of the irregularity, fraud(s), reasonableness, fairness and equity, whether the fair and just test and/or the reasonableness test and/or equity test and/or other test(s) or principle(s) should be applied overriding the test(s) or principle(s) applied in the Judgment dated 7 Nov 2018 for CACV 160/2016.”

6.1.   On 6 December 2018, Master Au Yeung gave directions to the effect that Mr Wong’s submissions included in the Notice of Motion be treated as his written submissions. 

6.2.   On 20 December 2018, the respondents’ solicitors wrote to the Registrar of Civil Appeals requesting that the court dismiss the Notice of Motion for lack of merits and indicating that to save time and costs, they would not be filing any submissions. 

6.3.   On 24 December 2018, Mr Wong wrote a letter to the court submitting that as the respondents had not filed any submissions, his application for leave to appeal to the CFA should be granted. In that letter he also enclosed:

(a)   a summons issued in HCA1801/2010 and HCA167/2011 on 14 December 2018 by the liquidators of FFA requesting (amongst other things) that execution of Wilson Chan J’s orders be stayed for directions to be sought from the Companies Court “in relation to” the judgment in those actions and the deeds of transfer relating to the properties the subject-matter of that judgment; 

(b)   a summons issued in HCCW250/2016 (FFA’s winding up proceedings) requesting (amongst other things) that execution of Wilson Chan J’s orders be stayed for the liquidators to seek legal advice on their rights and duties to sign the deeds of transfer.

Mr Wong said that these documents were important for the court to know about recent developments in the proceedings.

Discussion

7.  Mr Wong was made bankrupt on 21 January 2019 (from which he has filed an appeal on 18 February 2019) but this does not affect his locus in his application to appeal our Judgment as the application to set aside the statutory demands was part of the bankruptcy process.

8.  In relation to Mr Wong’s submissions in his letter of 24 December 2018, it is clear from the letter dated 20 December 2018 from the respondents’ solicitors that they object to the Notice of Motion.  The fact that they did not take advantage of their right to file submissions in opposition does not mean that they consent to the grant of leave, and even if it did (which it did not), it does not mean that the court is bound to exercise its discretion to grant leave.

9.  Further, the fact that another party to the actions before Wilson Chan J has applied for a stay of execution of the orders vis-a-vis that party does not affect Mr Wong’s situation.  In any event, by a Consent Summons filed on 1 March 2019, the court ordered that the liquidators do transfer the properties to FPD and Mr Tin respectively and dismissed the rest of the liquidators’ summons.  

10.  Finally, looking at the questions in the Notice of Motion, we do not consider that any are questions of great general or public importance, nor do we see any reason to give leave under the “otherwise” limb.

Order

11.  For these reasons, we would dismiss the Notice of Motion with costs to the respondents which we would summarily assess at $38,000 in total.  Mr Tin’s own costs are to be taxed in accordance with Legal Aid Regulations.  

CACV 160/2016

[2018] HKCA 799

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 160 OF 2016

(ON APPEAL FROM APPLICATION TO SET ASIDE A

STATUTORY DEMAND NO. 11 OF 2016)

_______________

_______________

___________________

J U D G M E N T

___________________

Hon Yuen JA:

1.  This is an appeal from a Decision of Anthony Chan J made on 29 June 2016 (“the Decision”) refusing the application of Mr Wong See Yin (“Mr Wong”) to set aside 2 Statutory Demands (“the SDS”) served on him on 4 March 2016.

2.  Mr Wong filed a Notice of Appeal from the Decision on 25 July 2016.

3.  There were also 2 summonses¹ to adduce fresh evidence which we considered de bene esse.  Those summonses were issued in August 2017.  The materials sought to be adduced have been mostly overshadowed by the event of Wilson Chan J’s Judgment in HCA1801/2010 and HCA167/2011 given on 25 May 2018 which is referred to below.   

Background

4.  To understand the present Judgment, it is necessary to set out the background of the relevant disputes briefly.

5.1.   Mr Wong is a certified public accountant. 

5.2.   Mr Tin Wan Tung (“Mr Tin”) was the owner of a flat (Flat 27) of a building in Kwun Tong.  The property was free of incumbrances. 

5.3.   A company by the name of Full Pacific Development Ltd (“FPD”), which was controlled by Mr Pong Park Kaw (“Mr Pong”) was the owner of another flat (Flat 17) in the same building.  That property was also free of incumbrances. 

5.4.   Mr Donovan Chan Chuen Keung (“Mr Chan”) was the owner of another flat (Flat 24) in the same building.  However his property was subject to mortgage.  

The Representations

6.1.   According to Mr Tin and Mr Pong², at the end of 2007 and before 24 January 2008, Mr Wong made various representations³ to them which may be summarized as follows:

(1)   Mr Wong would set up an asset management company (“the ASM”) with a net asset value of HK$10 million;

(2)   Mr Tin and FPD could invest in the ASM by injecting their respective properties at a nominal value of $800,000 each, for which they would each be allotted 8% of the shares in the ASM; the injection of those properties would facilitate the ASM’s raising of finance from banks and listing on the Singapore Stock Exchange; 

(3)   the ASM would be listed on the Singapore Stock Exchange in 1 year’s time;

(4)   after such listing, the ASM could help Mr Tin and FPD raise monies for their construction projects on the mainland and/or Hong Kong;

(5)   after the injection of properties, Mr Tin and Mr Pong could continue to occupy Flats 27 and 17 respectively rent-free.

6.2.   Mr Chan was present but did not take further part after it was found that he had a low credit rating and his property was already subject to mortgage. 

6.3.   Mr Wong denied he made those misrepresentations.  He alleged that on the contrary, it was Mr Tin and Mr Pong who had deceived him into thinking they were people of financial substance.

Agreements

7.  On 24 January 2008, a document was signed by each of Mr Tin and FPD (“the Vendors”) whereby their respective properties were agreed to be sold to Matrix Wealth Ltd (“MW”), a company controlled by Mr Wong, for $800,000, and 8% of the shares in that company were to be transferred to each of the Vendors.  There was no reference to rent-free occupation, but according to the Vendors, Mr Wong re-assured them that his representations were still valid and need not be included in the document.

8.  The Vendors then entered into agreements for sale and purchase dated 7 March 2008 of their respective properties to MW.  Both vendors and purchasers were represented by the same firm of solicitors.  Mr Tsang Chiu Wing (“Mr Tsang”), a clerk of that firm, was responsible for handling the transactions.  According to Mr Tin and Mr Pong, the transactions were dealt with quickly, and the explanation given by Mr Tsang was cursory.  In the part provided for “Tenancy Agreement” in both Sale and Purchase Agreements, there was written “NIL”.

Assignments

9.  By assignments dated 17 March 2008, the two properties were assigned to Fully Fortune (Asia) Ltd (“FFA”), another company controlled by Mr Wong, with MW as confirmor.

Mortgage

10.1.   On 13 June 2008, FFA mortgaged the two properties to HSBC. 

10.2.   On 9 November 2009, FFA mortgaged the two properties to Wing Lung Bank after discharging the HSBC mortgage. 

10.3.   On 2 August 2010, FFA mortgaged the two properties to Dah Sing Bank after discharging the Wing Lung Bank mortgage.  The mortgage to Dah Sing Bank remains undischarged⁴.  In fact, the bank has commenced Order 88 proceedings in DCMP2538/2016⁵.  DCMP2538/2016 was transferred to the High Court and became HCMP78/2017.  On 23 May 2017, Dah Sing Bank obtained monetary judgment of $1.7 million odd against FFA and Mr Wong, and its claim for possession was adjourned to a date to be fixed before the trial judge of HCA167/2011 and HCA1801/2010 for further directions.

Tenancy Agreements

11.  Meanwhile in September 2008, Mr Wong requested the Vendors to sign tenancy agreements in respect of the respective properties that Mr Tin and Mr Pong had continued to occupy.  According to Mr Tin and Mr Pong, he told them that they did not actually need to pay rent, but that it was an accounting requirement, and that if they did not sign the agreements, the ASM could not be incorporated or raise finance for the Vendors’ projects.  Mr Tin and Mr Pong thereupon each signed a tenancy agreement dated 4 September 2008 whereby FFA purportedly let Flat 27 to Mr Tin and Flat 17 to Mr Pong respectively, for a term of 2 years from 1 October 2008, at $6,500 pm.  No rental deposit was paid. 

Subsequent events

12.  More than a year since the assignment of the two properties, no ASM with a net asset value of $10 million had been set up by Mr Wong; there was no listing in Singapore or elsewhere; neither Mr Tin nor FPD had been allotted any shares in an ASM; and no finance had been provided for Mr Tin’s and FPD’s projects.    

HCA1801/2010 and HCA167/2011 (the consolidated action)

13.1.   On 9 December 2010, FPD issued a writ against Mr Wong, MW and FFA in HCA1801/2010.

13.2.   On 31 January 2011, Mr Tin issued a writ against the same defendants in HCA167/2011.

13.3.   On 4 December 2013, these two actions were consolidated.  The causes of action included fraudulent, reckless and/or negligent misrepresentation, total failure of consideration and unjust enrichment.  

14.  The trial, which took 16 days, was heard before Wilson Chan J earlier this year.  Mr Tin, Mr Pong and Mr Chan gave evidence for the plaintiffs, as did Mr Wong for the defendants, and other witnesses were called by either side.  FFA and MW did not participate at the trial as they had been wound up on 11 August 2017⁶.

Judgment in the consolidated action

15.1.   In a Judgment dated 25 May 2018 (“the Judgment in the consolidated action”), the judge gave judgment for the Vendors.  He found Mr Tin⁷, Mr Pong⁸ and Mr Chan⁹ to be truthful witnesses, whereas Mr Wong was defensive, evasive and not credible¹⁰, and his evidence was “often confusing, contradictory and always changing; so little weight should be given”¹¹. 

15.2.   For reasons set out in his detailed judgment, the judge found that the representations made by Mr Wong were false and were likely to have induced a reasonable person in the position of Mr Tin and Mr Pong (for FPD) to enter into the 24 January 2008 documents¹² and its precursor¹³, the Agreements for Sale and Purchase, and the Assignments.  He further found that the false representations were made fraudulently¹⁴. 

15.3.   Having considered the viva voce evidence of Mr Tsang, the judge also found the documents prepared by the solicitors’ firm had been explained and signed quickly, and the explanation of the documents could not have been thorough¹⁵.

15.4.   The judge also rejected as illogical Mr Wong’s evidence regarding the execution of the tenancy agreements¹⁶.

16.  In conclusion, the judge gave the following relief (among other things):

-   declaratory relief that FFA was holding the Vendors’ respective properties as bare trustee;

-   declaratory relief that the Vendors were the sole legal and beneficial owner of their respective properties and in actual possession and occupation of the same;

-   rescission of the two documents dated January 2008, the Agreement for Sale and Purchase and the Assignment for each of the properties;

-   an order that the defendants do all such necessary acts and execute all such necessary documents so as to transfer the legal and beneficial title of the properties to Mr Tin and FPD respectively;

-   an order that Mr Wong indemnify each of the Vendors against losses incurred arising from the mortgage to Dah Sing Bank and various legal proceedings¹⁷;

-   finally, and importantly for the purposes of this appeal, the defendants’ counterclaim against each of the Vendors be dismissed.

CACV238/2018

17.  On 19 June 2018, Mr Wong filed a Notice of Appeal against the Judgment in the consolidated action.

18.  The liquidators of MW and FFA have not filed a notice of appeal against the Judgment in the consolidated action. 

The SDS

19.  The present appeal (CACV160/2016) is however concerned with Anthony Chan J’s Decision in respect of the SDS.

20.1.   On 26 April 2013, Louis Chan J had made an order in both actions (not yet consolidated) that costs be paid by Mr Wong forthwith in favour of Mr Tin and FPD in respect of certain interlocutory proceedings.  There was no appeal from this order. 

20.2.   The bills of costs were taxed on 28 April 2014.  Mr Wong’s application for review was refused on 25 November 2014¹⁸. Allocaturs, in the case of Mr Tin in the sum of more than $560,000 and in the case of FPD, in the sum of more than $300,000, were issued on 2 March 2016.

20.3.   Mr Wong’s summons to stay the execution of the costs orders and an appeal against costs were dismissed by Wilson Chan J on 17 January 2017.

21.1.   Meanwhile, on 4 March 2016, Mr Tin and FPD had issued the two SDS against Mr Wong in the sum of the respective Allocaturs.

21.2.   On 18 March 2016, Mr Wong applied to set aside both SDS.  Essentially, he invoked Rule 48(5) Bankruptcy Rules which provides that the court may set aside an SD if the debtor appears to have a counterclaim, set-off or cross demand which equals or exceeds the amount of the debt specified in the SD.  

22.  The application to set aside the SDS was fixed for a call-over hearing on 29 June 2016.

The judge’s decision in the application to set aside the SDS

23.  Anthony Chan J, whilst acknowledging that it was a call-over hearing, nevertheless held that full arguments had been ventilated before the court.  He noted that the debts arose from court orders which the bankruptcy court will generally not look behind, and dismissed the application to set aside the SDS. 

24.  However it would appear that the judge did not consider whether Mr Wong had at that time a bona fide cross-claim based on substantial grounds which equals or equals the amount of the costs orders. This was a ground to set aside an SD under Rule 48(5)(a) Bankruptcy Rules, and it was, with respect, incorrect for the judge to think that this issue could be left for argument at the hearing of the petition¹⁹. Indeed this was the reason why the Court of Appeal dismissed²⁰ the Vendors’ application for security for costs of this appeal.

25.  Meanwhile on 9 September 2016, a bankruptcy petition²¹ was served.  Subsequently Ng J adjourned the hearing of the petition pending the Judgment in the present appeal. 

Appeal

26.  Mr Wong’s submissions to this court boil down to one argument - that he still has a bona fide and substantial counterclaim equal to or exceeding the sums in the SDS²², because he has appealed Wilson Chan J’s order dismissing the counterclaim.  He submits that the SDS should be set aside or stayed pending the hearing of his appeal.

Discussion

27.  It is clear that this appeal must be dismissed.  When Anthony Chan J was dealing with the application to set aside the SDS, there was still an existing counterclaim which the judge should have considered before dismissing the application.  However the situation now is that after a 16 - day trial in which viva voce evidence was received on disputed facts, the counterclaim has been dismissed after a trial on the merits.  The order dismissing the counterclaim is final unless and until it is overturned on appeal.  The Rules of Court expressly state that the filing of an appeal from a judgment or order does not generally operate as a stay of that judgment or order: Order 59 Rule 13(1)(a) Rules of the High Court.  No stay has been obtained by Mr Wong.  If, in due course Mr Wong is made bankrupt, the appeal against Wilson Chan J’s Judgment may still be pursued if his trustee in bankruptcy so decides.  But unless and until there is such an order overturning the dismissal of the counterclaim, there is no existing counterclaim which can form the basis of Mr Wong’s application to set aside the SDS.

Order

28.  The appeal should be dismissed with costs.  As Mr Tin was legally aided, his costs should be taxed in accordance with Legal Aid Regulations.  As a matter of completeness I would add that both summonses to adduce fresh evidence were primarily to keep the court apprised of events which occurred after Anthony Chan J’s Decision, although some of the documents may not, strictly speaking, have been necessary or relevant.  That being the case, I would make the order sought in both summonses, but make no order as to the costs of those summonses.

Hon Kwan JA:

29.  I agree with the judgment of Yuen JA.

Hon Au J:

30.  I agree with the judgment of Yuen JA.

CACV 160/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 160 OF 2016

(ON APPEAL FROM APPLICATION TO SET ASIDE

STATUTORY DEMAND NO. HCSD 11 OF 2016)

_______________

_______________

J U D G M E N T

_______________

Hon Poon JA (giving the Judgment of the Court) :

1. Pursuant to the costs orders of L Chan J dated 26 April and two allocaturs issued by Master K Lo dated 2 March 2016 after taxation, the applicant is adjudicated to pay costs to (a) the 1^st respondent in the sum of HK$560,527.07 in respect of HCA 167/2011; and (b) the 2^nd respondent in the sum of HK$306,434.11 in respect of HCA 1801/2010. When the applicant did not pay up, the respondents served a statutory demand on him in March 2016. The applicant then applied to set aside the statutory demand, which was dismissed by A Chan J (“the Judge”) summarily on 29 June 2016. The applicant appealed. On 22 August 2016, the 1^st and 2^nd respondents took out the present summons applying for security for costs of the appeal in the sum of HK$400,000.

2. Pursuant to the court’s directions, the respondents lodged their submissions in support of their application on 23 September 2016; the applicant lodged his submissions in opposition on 30 September 2016; and the respondents lodged their reply submissions on 6 October 2016.  The applicant wrote further on 7 October 2016 to respond to the respondents’ reply submission.  The application is to be disposed of on paper, which we now do.  And we can dispose of it shortly.

3. The respondents apply for security for costs on the ground that the applicant is impecunious and they are likely to encounter undue delay and be put to undue expense in enforcing any costs order against the applicant.

4. In opposing the respondents’ application for security for costs, the applicant argues, among other things, that he has a cross-demand in the two High Court Actions against the respondents which exceed the amount of costs, the subject matter of the statutory demand.  He complains that the Judge erred in not setting aside the statutory demand on that basis. He therefore says he has a good chance of success in his appeal.

5. At [3] of his decision, the Judge noted that the applicant’s ground of setting aside the statutory demand was that he had a cross-claim against the respondents.  He then went on to dismiss the application, saying that :

“ However, it is reasonably well-established that the court will not look behind a judgment or order at the stage of the Statutory Demand.”

6. While it is well-settled that that the court will not go behind a judgment or order giving rise to the judgment debt at the stage of statutory demand, where an applicant seeks to set aside a statutory demand on the ground that he has a bona fide cross-claim based on substantial grounds which exceeds the amount of the judgment debt, the court will have to examine the issue and make a determination.  It would appear from [3] that the Judge had not given separate or proper consideration to the applicant’s argument on cross-claim when dismissing the application.

7. The respondents in their submissions on the present application have not dealt with this aspect of the applicant’s grounds of appeal and arguments in opposing the application for security for costs.

8. At the stage of an application for security for costs, it is neither necessary nor desirable to undertake a detailed examination of the applicant’s case on cross-claim.  We need not express any definitive view on whether he will in the end succeed in establishing a cross-claim based on substantial grounds.  However, having regard to paragraphs 6 and 7 above, we are of the view that our discretion should be exercised against making an order for security for costs against the applicant on his appeal.

9. Accordingly, the respondents’ summons is dismissed with costs to the applicant.

10. On quantum, we have considered the applicant’s skeleton bill of costs dated 29 September 2016.  We summarily assess his costs of this application at the sum of HK$5,000.00 and order the 1^st and 2^nd respondents to pay the same to the applicant forthwith.