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HCA 1057/2013
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IN THE HIGH COURT OF THE
C HONG KONG SPECIAL ADMINISTRATIVE REGION C

COURT OF FIRST INSTANCE

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ACTION NO 1057 OF 2013
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BETWEEN
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MARCUS PRAETORIUS 1st Plaintiff
G JULIA ANNE STEPHENSON 2nd Plaintiff G

CERATEC INTERNATIONAL (HK) LIMITED 3rd Plaintiff

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CERATEC HOLDINGS LIMITED 4th Plaintiff
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and
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HEAD ARCHITECTURE AND DESIGN LIMITED Defendant
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and
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BARRY DARREN WILSON trading as INITIATIVES Third Party
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Before: Deputy High Court Judge Le Pichon in Chambers
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Dates of Written Submissions: 12, 20 and 29 September 2016

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Date of Decision: 6 October 2016 P

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DECISION R

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1. This is Ceratec International (HK) Ltd (“International”) the

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3 plaintiff’s application for leave to appeal from this court’s dismissal of
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C its appeal from an order of Master Chow dated 26 October 2015 (“the Chow C

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order”) requiring International and Ceratec Holdings Ltd, the 4 th plaintiff D
(“Holdings”) to provide security of $700,000 to the 1 defendant (“Head”).
st

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2. On 9 July 2016, Au-Yeung J ordered that the leave application

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be dealt with on the papers. Accordingly the hearing fixed for 29 September
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2016 was vacated.

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3. The factual background is fully set out in §§1 – 10 of the
I Reasons for Decision dated 13 May 2016 to which reference should be I

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made. J

K 4. In dismissing the appeal, this court held that (1) the liability K

of International and Holdings under the Chow order was joint and
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several; (2) there was credible evidence of International’s inability to pay;
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(3) the sanctioned payment made should not have been disclosed; (4) as a

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general rule, a sanctioned payment should not be disclosed even where N
there is an admission of liability (as in KJM Industries Ltd v JPM
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Resources [2005] 4 HKC 100) unless the payment in overtopped the

P amount of security that otherwise would have been ordered; (5) it would P
be wrong to equate a payment in by a party with admission of up to the
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amount paid in; and (6) in any event, if the sanctioned payment was a
R consideration to be taken into account, it would not result in a different R

outcome.
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Whether leave application made out of time

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5. Head raised a jurisdictional objection.

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D 6. On 9 May 2016, the day of the Decision, International D

received notice of a legal aid application made by the third party Barry
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Darren Wilson trading as Initiatives (“Wilson”). The present summons
F was taken out on 29 June 2016, more than seven weeks after the F

Decision. Head submitted that as the leave summons was not taken out
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within the 14-day period pursuant to the rules, the application is out of
H time and the court has no jurisdiction to entertain it. H

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7. International’s position is that the legal aid notification led to
J the 42-day automatic stay pursuant to section 15 of the Legal Aid J

Ordinance (Cap 91) such that the 14-day period to apply for leave to
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appeal did not commence until the expiration of the 42-day period on
L 20 June 2016. Accordingly the leave application was made within time. L

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8. It is necessary to set out a rather complicated and unusual
N procedural history so far as it relates to Wilson. The following is a N

chronological account:
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(1) On 14 June 2013, the plaintiffs issued a writ naming Wilson

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as the 2 defendant.
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(2) On 25 June 2014, Wilson acknowledged service but without

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prejudice to his rights to dispute the validity and service of R
the writ which were expressly reserved.
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(3) On 5 September 2014, Wilson took out a summons for an
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order declaring that the writ had not been duly served on him. T

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B (4) Pending the determination of Wilson’s summons under (3), B

on 28 October 2014, Head served a contribution notice on
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Wilson pursuant to Order 16, rule 8 of the Rules of the High
Court.
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(5) On 10 November 2014 Head issued a summons for
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directions on the contribution proceedings.

F (6) On 27 May 2015 on Wilson’s summons under (3) above, F

Master Hui made an order declaring that the writ had not
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been duly served on Wilson.

H (7) On 2 October 2015, Master Hui gave directions in relation to H

the contribution proceedings.

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(8) On 8 October 2015 Head applied for leave to issue a third
J party notice against Wilson “to supersede” its contribution J

notice dated 28 October 2014.

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(9) On 27 November 2015 Master Ho made a consent order that
L leave be given to Head to issue a third party notice on Wilson. L

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(10) On 30 November 2015 Head issued a third party notice on M
Wilson.
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(11) On 5 May 2016, a legal aid memorandum dated 4 May 2016
O was filed in court of Wilson’s application but it seems copies O
were not served on the parties till 9 May 2016.
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9. Head’s argument is based on a distinction between the main

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action and a third party action. The submission is that the only action to
R which Wilson was and is a party is the third party action and not the main R

action.
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10. The writ issued well over three years ago has not been
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served on Wilson. Its validity has never been extended by an order of
C the court. In the rather unusual circumstances of this case Wilson, while C

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a third party in the third party action between Head and himself, is not a D
party in the main action.
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11. I accept that section 15 of the Legal Aid Ordinance (“the

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Ordinance”) should be liberally interpreted. Nevertheless, on the rather
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unusual facts of this case, it is difficult to see the automatic stay under the

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Ordinance and regulations made under it should apply when Wilson was H
not involved in the security for costs application proceedings.
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12. If the rationale of an automatic stay is to do justice between J
the parties to the action, it is difficult to see how International could be
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said to be affected by Wilson’s legal aid application which has no bearing

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on and does not impinge upon or affect the security for costs application L
and subsequent proceedings flowing from that order. Any automatic
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stay to which Wilson is entitled as a result of his legal aid application has
N no impact at all on the security for costs proceedings. N

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13. Accordingly, there appears to be merit in Head’s submissions

P that the application was made out of time. P

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14. But if I am wrong and the court does have jurisdiction to

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entertain International’s application, as will become apparent, it will R
make no difference to the outcome.
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The grounds of appeal

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15. The arguments put forward essentially repeat those already

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made on the last occasion. I have reconsidered the Reasons but see no
D reason not to stand by them. D

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16. I do not accept that the law concerning relevance of
F sanctioned payments in the context of a security for costs application F

requires clarification by the Court of Appeal. In any event, that matter is

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best decided by the Court of Appeal itself.
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17. The threshold point does not raise any question of law.
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Rather, it turns on the weight to be attached to the evidence before the
J court. J

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18. Finally, it is said that the Chow order breaches natural justice
L as it could potentially affect the 1st and 2nd plaintiffs who were not parties L

to the security for costs application when there is an issue for trial as to
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whether the 1 plaintiff has effectively assigned his causes of action to
N Holdings. N

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19. In arguing that the Chow order should be interpreted as
P imposing separate and not joint and several liability, International P

highlighted the fact that if liability were joint and several, then should the
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security ordered not be paid, the entire action would be dismissed even as
R against the 1st and 2nd plaintiffs who were not parties to the security for R

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costs application. If natural justice had been a concern, International S
would have asked for a variation of the Chow order to limit its scope of
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application to International and Holdings. That it never did.

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20. As a practical matter, it is inconceivable that the 1st and

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nd
2 plaintiffs would want to proceed with the action when they have no
C legal title to the site, that having been transferred to Holdings on C

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10 October 2008 and according to §§28 and 31 of the Statement of Claim, D
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on 27 May 2013 the 1 plaintiff also assigned to Holdings all rights of
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action etc and all claims against Head in connection with the

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unauthorised building works. F

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21. It will be seen that the point now raised is irrelevant and

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academic: the requisite security has been paid and Holdings has not H
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appealed. In those circumstances, it is difficult to understand how the 1
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and 2nd plaintiffs will be adversely affected.

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Conclusion
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22. For those reasons, I see no possible basis for granting leave.
L Accordingly, leave to appeal is refused and International’s application L

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dismissed with costs to Head. M

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P (Doreen Le Pichon) P

Deputy High Court Judge

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R Written Submissions by Mr Julian Cohen, instructed by R

Haley Ho & Partners, for the 3rd plaintiff
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Written Submissions by Mr Calvin Cheuk, instructed by
Simmons & Simmons, for the defendant
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