CHAN MAN SHUN v. SZE CHING LOK

CACV 47/2019

[2021] HKCA 2

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 47 OF 2019

(ON APPEAL FROM HCA NO. 1170 OF 2014)

_________________

BETWEEN

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___________________________

DECISION ON

ASSESSMENT OF COSTS

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Hon Chu JA giving the decision of the Court:

1.  On 18 November 2020 this Court handed down our judgment^[1] dismissing the defendant’s notice of motion applying for leave to appeal to the Court of Final Appeal against our earlier judgment of 11 June 2020.  We also ordered the defendant to pay the plaintiff the costs of the notice of motion to be summarily assessed.

2.  Pursuant to our directions^[2], the plaintiff had on 1 December 2020 filed a statement of costs for summary assessment.

3.  The defendant, however, had not put in any statement of objection within the 14 days’ period stipulated in our directions^[3].  We will proceed on the basis that the defendant does not wish to put in a statement of objection.

4.  We have considered the plaintiff’s statement of costs.  We have two observations.

5.  First, the plaintiff’s written submission in opposition to the application for leave to appeal to the Court of Final Appeal was signed off by his solicitors.  The statement of costs also did not include any fee charged by counsel.   In these circumstances, on party-and-party basis, the plaintiff’s solicitors’ costs for communication with counsel (item C3) is to be disallowed.

6.  Second, the defendant’s application is a short and simple application.  On party-and-party basis of assessment, the time spent on communication with client (item C1) should be reduced.

7.  Having regard to the above and taking a broad brush approach, we assess the plaintiff’s costs on the application to be paid by the defendant in the sum of HK$28,000.

Kelvin Cheung & Co for the plaintiff.

The defendant, unrepresented, acted in person.

CACV 47/2019

[2020] HKCA 921

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 47 OF 2019

(ON APPEAL FROM HCA NO. 1170 OF 2014)

_________________

_______________

___________________________

JUDGMENT

____________________________

Hon Chu JA giving the judgment of the Court:

1.  On 11 June 2020, this Court (Cheung and Chu JJA) handed down our judgment ordering the defendant to provide security for the plaintiff’s costs in this appeal in the sum of $150,000 by making payment into court within 30 days, in default of which the appeal shall stand dismissed with costs.[1]   

2.  On 3 July 2020, the defendant filed a notice of motion applying for leave to appeal to the Court of Final Appeal against this Court’s judgment.  The application is opposed by the plaintiff.

3.  The defendant lodged a written submission on 4 September 2020 to support his application.  The plaintiff lodged his written submission on 9 October 2020.   Despite an extension of time given by the Registrar of Civil Appeals, the defendant has not put in a reply submission.

4.  Having considered the notice of motion and the parties’ written submissions, we see no reason to depart from the usual practice of determining applications for leave to appeal to the Court of Final Appeal on paper without an oral hearing.  We have therefore proceeded to determine the defendant’s application on the basis of the materials before us.

5.  Since the filing of the notice of motion, upon the defendant’s failure to provide the security for costs as ordered, this appeal was dismissed on 13 July 2020.  The plaintiff’s costs of this appeal was also summarily assessed on 2 September 2020[2].

6.  Section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap. 484, provides that leave to appeal to the Court of Final Appeal may be granted 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 Court of Final Appeal for decision.

7.  In the notice of motion, the defendant put forward the following as matters to be considered in the intended appeal:

(1)  There are strong and cogent evidence showing the debt had been settled in the presence of witness(es).  The decision of the trial judge[3] (“the Judge”) was unreasonable, being based on speculations and preconceived views on credibility. 

(2)  The defendant was born and grew up in Hong Kong.  He is not a foreigner.  It is unreasonable to order security for costs when the defence is supported by reasons.

8.  The defendant advanced the following arguments in his written submission^[4]:

(1)  There are “merits and extreme injustice” in the following aspects of the case:

(a)  The Judge ignored material evidence given by the defendant’s witnesses, Mr Kwan and Mr Hung, with regard to the payment by the defendant to the plaintiff of $1 million cash in November 2013 as settlement of the whole matter.

(b)  The Judge was not even-handed in his assessment of the evidence.  He found fault with the defendant’s witnesses over trivial inconsistencies and ignored serious inconsistencies in the plaintiff’s evidence.

(c)  The Judge was biased in favour of the plaintiff and he failed to question the many suspicious conduct of the plaintiff.  On the other hand, he held a prejudice against the defendant because he felt that the defendant was well educated and had some legal knowledge.

(d)  The Judge was biased against the defendant in that: (i) he considered Mr Hung’s evidence to be of no particular help to the defendant’s case, despite his evidence about making available $1 million cash on the day of the settlement; (ii) he had no basis to query how the defendant managed to get out of the financial difficulty and the credit crunch within a short period of time; (iii) he disregarded the issue of the plaintiff’s signature on the settlement agreement; and (iv) he seemed to be concerned about the authenticity of the copy settlement agreement, but after the trial finished and before judgment was handed down, the defendant had written to inform the court that the original of the settlement agreement had been found, to which the Judge did not reply.

(2)  Public interest is engaged in that the Judge and the judicial system only focus on procedures and technicality, but fail to heed serious injustice, matters of logic, truth and facts.

(3)   The plaintiff’s solicitors acted unfairly to deprive the defendant of his legitimate rights.  The defendant was born and grew up in Hong Kong, is a responsible professional individual (not a company), has never been bankrupted, and an executive committee member of a reputable organization.  The appeal has strong and cogent grounds and more than 50% chance of success.  The plaintiff’s solicitor did not provide a breakdown of the amount of security sought in his first affirmation in support of the application.  The assertion that the defendant was impecunious was based on speculations and baseless.

(4)   Even though a trial judge has the advantage of seeing and listening to witnesses giving evidence, the appellate court is not prevented from overturning his decision if the inferences of fact he made are wrong or inherently improbable.

9.  The plaintiff’s principal arguments in opposing the application are that the defendant’s arguments are irrelevant to the application and that the intended appeal does not involve any question of great general importance.

10.  Evidently, the arguments raised by the defendant all relate to the circumstances of his case and the application for security for costs.  In a nutshell, the defendant contended that, by reason of his personal circumstances and the merits of his defence and/or his appeal against the Judge’s judgment, he should not have been ordered to provide security for the plaintiff’s costs in this appeal, and the order made by this Court has deprived him of his right to appeal.

11.  These arguments do not constitute proper grounds for an appeal to the Court of Final Appeal.  Importantly, no question of great general importance as required by section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance has been identified.    Nor is there any such question apparent to us from the matters raised in the notice of motion and the defendant’s written submission.

12.  Further, for the reasons given in our judgment, the arguments that it is unreasonable or improper to order the defendant to provide security are unarguable.  In an application for security for costs of the appeal, it is immaterial that the appealing party is an individual and not a corporation.  Neither is it relevant that the appealing party is resident in Hong Kong and not a foreigner.  It is settled law that impecuniosity of the appealing party amounts to special circumstances whereby the Court may order security be given for the costs of an appeal.  In this regard, we note that the defendant now seeks to dispute the plaintiff’s case that he is impecunious.  However, he has not put forward any substantial ground or an indication of his financial position, whether in opposing the application for security for costs or in this application for leave to appeal.   Regarding the merits of the appeal, notwithstanding the various points made by the defendant, they do not demonstrate that the appeal has such high chance of success that security should not be ordered.

13.  As to the defendant’s complaint that he has been deprived of the right to appeal, it has to be borne in mind that the defendant has already had the issues concerned determined in the court below, and it is prima facie an injustice to the other party to allow the appeal to the Court of Appeal to proceed without security for costs being furnished in circumstances where he will be unable to enforce against the defendant any order for costs that may be made by the Court of Appeal: see Hong Kong Civil Procedure 2020 Vol. 1 para. 59/10/25. 

14.  There is also no basis for granting leave on the “or otherwise” limb under section 22(1)(b).

15.  As the statutory threshold for granting leave to appeal has not been met, we refuse the application and dismiss the notice of motion.  Applying the normal rule of costs follow event, the defendant having failed in the application should pay the plaintiff the costs of the application, with the amount to be summarily assessed.

16.  In conclusion, we make the following orders:

(1)  The notice of motion is dismissed

(2)  The defendant pays the plaintiff the costs of the notice of motion to be summarily assessed.

(3)  The plaintiff to lodge and serve within 14 days from the date of this judgment a statement of costs for summary assessment.

(4)  The defendant to lodge and serve within 14 days thereafter a statement in opposition, if any.

CACV 47/2019

[2020] HKCA 731

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 47 OF 2019

(ON APPEAL FROM HCA NO. 1170 OF 2014)

_________________

_______________

___________________________

DECISION
ON
ASSESSMENT OF COSTS

____________________________

Hon Chu JA giving the decision of the Court:

1.  By our judgment handed down on 11 June 2020[1], we ordered the defendant to provide security for the plaintiff’s costs in this appeal in the sum of $150,000 by making payment into court within 30 days, and made no order as to the costs of the application.  We further ordered that in default of the defendant giving security as ordered, this appeal will stand dismissed out of court without further order with costs of the appeal to be paid by the defendant to the plaintiff.

2.  The defendant failed to provide the security as ordered.  This appeal has accordingly been dismissed, and the defendant is liable to pay the plaintiff the costs of this appeal.

3.  Pursuant to our directions given on 28 July 2020, the plaintiff had provided a statement of costs of the appeal for summary assessment.  By letter dated 18 August 2020, the defendant gave notice that he objected to the costs claimed by the plaintiff.

4.  Before giving our assessment of the plaintiff’s costs, several points of principle have to be made:

(1) The basis of the assessment is party-and-party such that costs that are proper and necessary will be allowed.

(2) The costs to be assessed are the costs of the appeal, but excluding the costs of the application for security for costs.

(3) The application for security of costs was made at an early stage of the appeal, before the case was set down.

(4) As noted in our judgment, the defendant’s appeal is primarily a challenge of the trial judge’s assessment of credibility and finding of fact.  The plaintiff’s legal team in the appeal was involved in the trial below and should therefore be familiar with the papers and issues involved.

5.  Bearing the above in mind, we find the amount claimed for the attendances by the litigation clerk (B2), and communications with client (C1) and counsel (C3) to be on the high side.  Since the plaintiff has not filed a respondent notice or any document in the appeal, other than in the security for costs application, we do not see the basis for including photocopying charges for 500 pages (B1) as well as counsel fee for drafting (E1) as inter partes costs.

6.  Having regard to the above and taking a broad brush approach, the plaintiff’s costs of the appeal is summarily assessed at $46,000.    

CACV 47/2019

[2020] HKCA 458

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 47 OF 2019

(ON APPEAL FROM HCA NO. 1170 OF 2014)

_________________

_________________

_____________

JUDGMENT

_____________

Hon Chu JA giving the judgment of the Court:

Introduction

1.  This is the plaintiff’s application that the defendant provides security for his costs in this appeal in the sum of $300,000 or such other sum as the Court shall deem fit.  The defendant opposes the application.  Both parties have filed affirmations and lodged written submissions.

2.  Having considered the papers, we are of the view that it is appropriate to deal with the application based on the written submissions only without an oral hearing, pursuant to Order 59 rule 14A(1) of the Rules of the High Court, Cap. 4A.

The application for security for costs

3.  On 31 January 2019, the defendant filed the Notice of Appeal to appeal against the judgment of Deputy High Court Judge Joseph Kwan given in HCA 1170 of 2014 on 4 January 2019, ordering the defendant to pay the plaintiff $3,600,000 together with interest and costs of the action.  The appeal has yet to be listed for hearing. 

4.  On 7 August 2019, the plaintiff’s solicitors wrote to the defendant requesting him to provide security for the costs of the appeal in the sum of $300,000.  The letter did not enclose any skeleton bill of costs.  Nor did it provide the quantification or basis for the requested amount.  The letter asked the defendant to make a counter-proposal if the quantum was not agreeable to him.  The defendant did not respond to the letter.  On 2 September 2019, the plaintiff took out the present summons.

5.  The principal ground on which the plaintiff makes the present application is that the defendant is impecunious and that it will be difficult and expensive to enforce a costs order against him if his appeal was unsuccessful.  The plaintiff also contends that the appeal lacks merit.

Relevant legal principles

6.  Under Order 59 rule 10(5) of the Rules of the High Court, the Court of Appeal may, in special circumstances, order that security be given for the costs of an appeal as may be just.  It is settled practice to require security for costs to be given by an appellant who would be unable through impecuniosity to pay the costs of the appeal, if unsuccessful, or where the respondent would encounter difficulties or delay in recovering his costs from the appellant in the event the appeal was unsuccessful. The court, however, has a discretion and is entitled to consider other relevant factors such as the strength of the appeal to determine whether or not it would be just to order that security for costs be provided.  Once a case of impecuniosity is demonstrated, it is generally up to the appellant to demonstrate countervailing factors militating against an order being made: See Chung Kau v. Hong Kong Housing Authority & Others [2004] 2 HKLRD 650 and Hong Kong Civil Procedure 2020 Vol.1 paras.59/10/26 and 59/10/27.

Impecuniosity of the defendant

7.  In contending that the defendant is impecunious, the plaintiff relies on the following matters:

(1)  The defendant had applied for legal aid in HCA1170/2014;

(2)  The defendant was unrepresented throughout;

(3)  The defendant failed to pay the costs previously ordered against him (not the costs of the action), even though it was only a small sum of $5,750; and

(4)  At the trial, the defendant had repeatedly told the Judge that he had financial difficulties.  In particular, the defendant said he had borrowed money from Mr Lui on several occasions in order to sustain his hostel business.  

8.  In his affidavit opposing the application, the defendant said nothing about his financial position.  He did not deny the plaintiff’s contention that he was impecunious. Nor did he dispute the matters relied on by the plaintiff (see [7] above).  In fact, he complained in [3] of the affidavit that the present application was a strategic move by the plaintiff to deprive him of his right to appeal at a time when his financial situation was at a low point.  The defendant also stated in [12] that he had applied for legal aid in this appeal on 8 October 2019.    

9.  In the written submission lodged on 22 November 2019, the defendant said that he was not 100% sure he was liable to pay the plaintiff $5,750 as he did not recall seeing an order or any document to this effect and the plaintiff’s solicitors had not made a demand for it.  It was further said that the plaintiff was wrong to speculate that he was insolvent. 

10.  On the materials before the court, we are satisfied that the plaintiff has demonstrated that the defendant is impecunious, and/or he will encounter difficulties or delay in recovering his costs of the appeal from the defendant if the appeal were to be dismissed.  We are satisfied that the plaintiff has made out a case of special circumstances for requiring security for costs to be provided.

Merits of the appeal

11.  It is evident from the Judgment that the crucial issue underlying the disputes and the main issues is the credibility of the parties and their witnesses, and also the veracity of the oral and documentary evidence.  The Judge had the benefit of seeing and hearing the witnesses and examining the evidence.  The Judge accepted the plaintiff’s evidence and case as credible, and doubted the evidence of the defendant and his witness and the evidence he adduced.  He rejected the defendant’s case as inherently improbable.  On this basis, he found against the defendant on the three issues to be tried and entered judgment for the plaintiff.

12.  The notice of appeal contained a total of 13 grounds of appeal, which are primarily challenges against the factual findings made by the Judge and the adverse inferences he drew against the defendant.  It did not, however, set out the basis of the challenges.  On 18 February 2019, the Registrar of Civil Appeals directed the defendant to provide a succinct and focused summary in table form setting out the specific parts of the Judgment that the defendant sought to challenge.  On 25 March 2019, the defendant filed a 15-page table that challenged almost all of the Judge’s finding of facts as well as the Judge’s assessment of the credibility of the witnesses and the veracity of their evidence.

13.  We are not satisfied that the defendant has demonstrated that his appeal has a high chance of success that we should not order security against him.

Security to be ordered

14.  We next consider the amount of security to be ordered.  Both in the pre-application letter to the defendant and in the plaintiff’s affirmation in support of the application, there was no itemised estimate of the anticipated costs of the appeal.  Despite an amount of $300,000 was sought, no breakdown was given for it.  At the direction of the Court, the plaintiff’s solicitors made an affirmation on 31 December 2019 exhibiting a skeleton bill of costs.     

15.  The skeleton bill came to a total of $299,700.  It has included the costs of the present application for security for costs. The solicitors’ costs for the application (Part 1) is $45,950. The amount of counsel fee for the application cannot be ascertained because there is no breakdown for counsel fee (Part 6, item (a)).

16.  We have considered the items in the bill of costs.  We note that while the defendant had filed lengthy documents in the appeal and in the present application which will require time to peruse and consider, the present application and the appeal are not complex and do not raise difficult points of law.  The papers involved in the appeal would have all been considered in the trial below. Likewise, a fair amount of the arguments advanced by the defendant had been canvassed at the trial.  Taking the matter in the round, we are of the view that the appropriate amount of security to be ordered is $150,000. 

Costs of this application

17.  The usual rule is that costs will follow the event so that the successful party will usually be awarded the costs of the application. In this application, however, we will make no order as to the costs of the application.  Our reasons are twofold.  First, when the plaintiff wrote to the defendant to request for security for costs, an itemised estimate of the costs was not supplied to the defendant.  A such, the defendant had not been afforded a proper opportunity to consider the request before an application was made to the court.  Second, when the plaintiff filed the present application, his supporting affirmation also did not exhibit an itemised estimate.  Had it not been for the subsequent affirmation of the solicitor exhibiting the skeleton bill of costs, the Court would have been reluctant to consider and grant the application: see Hong Kong Civil Procedure 2020 Vol.1 para.59/10/35.           

Disposition

18.  The orders we make are as follows:

(1)  The defendant shall within 30 days from the date of handing down of this judgment give security for the plaintiff’s costs of this appeal in the sum of HK$150,000, by making payment into court of the said sum;

(2)  Until the defendant has given the security ordered in (1) above and notice thereof is given to the solicitors for the plaintiff (such notice to be given on the same day as the lodgement is made), all proceedings in this appeal are to be stayed;

(3)  In default of the defendant giving security as ordered in (1) above, this appeal do (upon the solicitors for the plaintiff certifying such default to the Registrar of High Court) stand dismissed out of this court without further order;

(4)  In the event that the appeal is dismissed in the circumstances provided for in (3) above, the defendant shall pay the plaintiff the costs of this appeal, such costs to be taxed if not agreed; and

(5)  There is no order as to the costs of the plaintiff’s application for security for costs.