JUNSA DEVELOPMENT LTD v. K.B. CHAU & CO. (a firm)

JUNSA DEVELOPMENT LTD v. K.B. CHAU & CO. (a firm)

The prerequisite under s.357 was satisfied because Junsa was a shell company with no assets or business and credible evidence it could not pay defendants' costs; the court exercised its discretion to order security after balancing potential injustice and found no evidence Junsa could not obtain funds from its shareholders or backers and that unwillingness of some shareholders to fund litigation is not a defense; therefore the Master's security orders (HK$850,000 to Appearance; HK$1,000,000 to Vigers and Mr Fong; HK$700,000 to K.B. Chau & Co.) were upheld and the appeals dismissed.

Citation
JUNSA DEVELOPMENT LTD v. K.B. CHAU & CO. (a firm)
Parties
Plaintiff (hca5173/1998); 2nd Defendant (hca9036/1998): Vigers Hong Kong Limited; Defendant (hca5173/1998); Plaintiff (hca9036/1998); Plaintiff (hca4486/2001): Junsa Development Limited; 1st Defendant (hca9036/1998); Landlord: Appearance Estate Limited; 3rd Defendant (hca9036/1998): Fong Tse Kin; Defendant (hca4486/2001); Third Party (consolidated Action): K.B. Chau & Co. (a firm)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
28 April 2003
Case Number
HCA4486/2001
Procedural Posture
Consolidated Civil Actions Involving Contract, Misrepresentation and Negligence; Application Under Companies Ordinance for Security for Costs / Decision on Appeal Against Master's Orders for Security for Costs (order Made 14 Jan 2003); Judgment on Appeal by Deputy High Court Judge (28 Apr 2003)
Outcome
Appeals dismissed; Master's orders for security for costs upheld
Legal Topics
Security for Costs, Misrepresentation, Rescission, Professional Negligence, Agency/commission
Source Language
EN
Company Law Civil Procedure Contract Law Tort (negligence) Land Use/planning Security for Costs Misrepresentation Rescission +2 more

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Parties

Vigers Hong Kong Limited

Plaintiff (hca5173/1998); 2nd Defendant (hca9036/1998)

Junsa Development Limited

Defendant (hca5173/1998); Plaintiff (hca9036/1998); Plaintiff (hca4486/2001)

Appearance Estate Limited

1st Defendant (hca9036/1998); Landlord

Fong Tse Kin

3rd Defendant (hca9036/1998)

K.B. Chau & Co. (a firm)

Defendant (hca4486/2001); Third Party (consolidated Action)

Procedural Posture

Consolidated Civil Actions Involving Contract, Misrepresentation and Negligence; Application Under Companies Ordinance for Security for Costs / Decision on Appeal Against Master's Orders for Security for Costs (order Made 14 Jan 2003); Judgment on Appeal by Deputy High Court Judge (28 Apr 2003)

Legal Issues

  1. 1 Whether s.357 Companies Ordinance prerequisite (company unable to pay defendant's costs) is satisfied
  2. 2 Whether the court should exercise its discretion to order security for costs and the appropriate quantum
  3. 3 Whether the security orders would unjustly stifle the plaintiff company's claims

Ratio Decidendi

The prerequisite under s.357 was satisfied because Junsa was a shell company with no assets or business and credible evidence it could not pay defendants' costs; the court exercised its discretion to order security after balancing potential injustice and found no evidence Junsa could not obtain funds from its shareholders or backers and that unwillingness of some shareholders to fund litigation is not a defense; therefore the Master's security orders (HK$850,000 to Appearance; HK$1,000,000 to Vigers and Mr Fong; HK$700,000 to K.B. Chau & Co.) were upheld and the appeals dismissed.

Court Disposition

Appeals dismissed; Master's orders for security for costs upheld

Orders

  • Junsa Development Limited ordered to provide security for costs to Appearance Estate Limited in the sum of HK$850,000 payable up to and including trial
  • Junsa Development Limited ordered to provide security for costs to Vigers Hong Kong Limited and Mr Fong Tse Kin in the sum of HK$1,000,000 payable up to and including trial