香港法下的律师费担保(Security for Costs: Protecting the Defendant)
香港法下的律师费担保
【按: 诉讼中原告有一个程序优势，被告一般被迫应诉，否则会缺席判决。但律师费担保是被告武器库中非常重要的一个武器，一般可以迫使没有实力的原告撤诉或者被迫与被告和解。据统计，2017年伦敦国际仲裁院批准了32%的律师费担保申请。】
Security for Costs: Protecting the Defendant
By: Robertsons
In civil proceedings, the Hong Kong Courts can order a Plaintiff (or a party who finds itself in the position of a plaintiff e.g. a counter-claiming Defendant) to make a payment into Court as security for the Defendant’s costs. While a Plaintiff can actively choose whether to commence an action or not, a Defendant, on the other hand, is compelled to participate. The rationale for asecurity for costs order is essentially to protect the interests of theDefendant in case the Plaintiff loses the action and cannot afford to pay theDefendant’s costs. This article will review when a Defendant should make anapplication for security for costs and highlight the Court’s complete discretionin granting security.
Grounds forApplication
A Defendant canapply for security for costs if: -
The Plaintiff is ordinarily resident outside of the jurisdiction;
The Plaintiff is a nominal Plaintiff suing for the benefit of another and there is reason to believe that the Plaintiff does not have the means to pay;
The Plaintiff’s address is incorrectly or not stated in the writ, unless the Plaintiff satisfies the court that the failure to do so or the misstatement was innocent and without any intention to deceive; or
The Plaintiff has changed addresses during the proceedings with a view to evade the consequences of the litigation.[1]
Court’sDiscretion
Whilst theDefendant may have successfully proved one of the above scenarios, it is notmandatory for the Court to order security to be given. Instead, the Court willexercise its discretion having regard to all the circumstances of the case asit thinks just to do so. In exercising its discretion, theCourt will balance the potential injustice to the Plaintiff if he is preventedfrom pursuing a legitimate claim by an order of security, against the injusticeto the Defendant if no security is ordered and the Defendant cannot recover hiscosts.
In consideringwhether to grant an application for security for costs, the Court will usuallyhave regard to the following factors: -
A Plaintiff’s prospect of success. Typically, the more likely the Plaintiff is to succeed in the action, the less likely it is that the Court will order security to be given; [2]
Whether the Defendant has an arguable defence to the Plaintiff’s claim;
The Plaintiff’s impecuniosity;
Whether an order for security (if granted) would stifle the Plaintiff’s claim; and
Whether there was any delay in making the application.
No factor isconsidered in isolation and neither is conclusive per se, rather the Court inexercising its discretion will take into account the cumulative effect of thevarious factors to ascertain whether to make an order for security of costs.
Plaintiff is aLimited Company Incorporated in Hong Kong
The Court canalso make an order for security to be given by a Hong Kong limited company ifit appears to the Court, by way of a credible testimony, that there is reasonto believe that the company is unable to pay the costs of the Defendant.[3] Anapplicant must be able to show that the company would not beable to meet its debt when an order for costs is made against it, as opposed to maynot be able to.
Amount ofSecurity
Similarly, theamount of security that is awarded is discretionary. In exercising itsdiscretion as to the quantum of security to be ordered, the Court shall giveregard to all the circumstances of the case as it thinks just and, particularlywhere the security is sought at a very early stage of the proceedings, theCourt will take into account the prospects of the parties reaching asettlement.[4] Moreover,security for costs is not exclusively confined to future costs and can alsoinclude costs that have already been incurred by the respondent.
To assist the Courtto decide on quantum of security, it is the applicant’s duty to providematerials to the Court, usually by way of a statement of costs or bill ofcosts, that will enable the Court to come to a view as to the amount ofsecurity to be given. A failure to do so can result in no order as to securityfor costs being made, notwithstanding that the applicant had successfullyestablished a right to the same.[5]
Conclusion
It is advisablethat the applicant should write to the respondent to make a request forsecurity before making an application and, if the request is declined, he isencouraged to make an application for security for costs as promptly as possible.If the Court orders security to be given, the proceedings will usually bestayed pending the provision of security. In the event that the respondentfails to give security within the prescribed time, the Court can also dismissthe proceedings.
For anyenquiries related to this article, please contact Rio Lau at(rio@robertsonshk.com).
[1] Rules of the High Court (Cap. 4A) & Rules ofthe District Court (Cap 336H), Order 23 Rule 1.
[2] Michael Chen Kan Huang and Another v Peter Lit Ma[2006] HKEC 1353.
[3] Companies Ordinance (Cap. 622), Section 905(1).
[4] Procon (Great Britain) Ltd. V Provincial BuildingCo. Ltd and Another [1984] 1 W.L.R 557.
[5] Pete (Dr.) Fashions Co. Ltd. v C&C TextilesCorp [1997] HKLY 557.