BANK OF CHINA (HONG KONG) LTD v. COSAN LTD AND OTHERS

CACV 331/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 331 OF 2006

(ON APPEAL FROM HCA NO. 1600 OF 2004)

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BETWEEN

  BANK OF CHINA (HONG KONG) LIMITED Plaintiff
  and  
  COSAN LIMITED 1st Defendant
  KWAN HIN CHU 2nd Defendant
  KWAN HIN KEE 3rd Defendant

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Before: Hon Tang VP and Chu J in Court

Date of Hearing: 28 February 2007

Date of Judgment: 8 March 2007

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J U D G M E N T

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Hon Tang VP (giving the judgment of the Court):

1. The 2nd defendant is appealing the judgment of Sakhrani J, who dismissed his appeal against the order for summary judgment against him bythe Master, in the sum of over $6.2 million, of which approximately $5.6 million was the principal.

2. On 29 January 2007, Rogers VP ordered security for costs in the appeal in the sum of $153,000.

3. This is the 2nd defendant’s appeal from the order of Rogers VP.

4. One of the principal grounds of appeal is that the 2nd defendant’s substantive appeal has substantial merits. However, lack of merits is not essential to the grant of security, though,depending on the circumstances of the particular case, if the merits are strong, that might be a circumstance which tip the balanceagainst ordering of security. See Hong Kong Civil Procedure 2007, 59/10/35.

5. The 2nd defendant who appeared in person submitted that in ordering the security, Rogers VP had misunderstood the decision of this courtin CACV 120 of 2005, unreported, 8 February 2006, which was written in Chinese. At the hearing before Rogers VP, the 2nd defendant appeared in person and the plaintiff had provided to the court a translation of a summary of that decision. However, the2nd defendant submitted that Rogers VP might not have understood the effect of that judgment, in particular paras. 29 and 30.

6. But the principles under which summary judgments may be given are well known and can be found in judgments written in English aswell as judgments which are written in Chinese. CACV 120 of 2005 was a decision which turned on its facts. In that case, this courtdecided, by a majority, that having regard to the factual disputes in that case, a trial was necessary. It does not follow thaton the facts of the present case, a trial is necessary. Here, having considered the documents and read the carefully prepared judgmentof Sakhrani J, we must say that there is great force in Rogers VP’s observation that the defence raised by the 2nd defendant is untenable.

7. But this is not the occasion to decide the merits of the substantive appeal. For the present purpose, it is sufficient for us tosay that this is not a case where the merits are such that security should not be ordered.

8. The 2nd defendant does not contend that he is impecunious. He submitted, however, that the plaintiff has failed to prove that his financialcircumstances are such that either he would be unable to pay the costs of the appeal, or the plaintiff would be likely to encounterundue delay or be put to undue expense in enforcing any order for costs in respect of the appeal.

9. On the basis of the information contained in the 3rd affirmation of Lee Wai-ho, a bank officer, filed on behalf of the plaintiff on 24 November 2006, we are satisfied that special circumstancesexist which make the order of security appropriate. The 2nd defendant holds an Australian passport. He is retired. It appears that he has an income of about $272,000 a year. The plaintiffhas not been able to locate any assets of the 2nd defendant within the jurisdiction. There is no evidence of the 2nd defendant’s means.

10. Thus, circumstances exist on the basis of which the court may order security for costs.

11. Rogers VP, in exercise of his discretion, ordered security. That being the case, this court is not entitled to interfere with theexercise of discretion, except on the well-known grounds upon which exercise of discretion can be interfered with. See Hong KongCivil Procedure 2007, 59/14/26.

12. No such ground exists. This applies as much to the decision to order security as to the quantum.

13. Moreover, on the fact of the present case. If this court is required to exercise its discretion, we would similarly have orderedsecurity and in a similar amount.

14. The application is therefore dismissed.

15. We make an order nisi that the plaintiff is to have the costs of this application, such costs to be taxed if not agreed.

(Robert Tang)
Vice-President
(Carlye Chu)
Judge of the Court of First Instance

Mr Godfrey Lam, instructed by Messrs Tsang, Chan & Wong, for the Plaintiff.

The 2nd Defendant, in person, present.