High Court holding that a foreign plaintiff – with no assets or presence within the Hong Kong jurisdiction – has “a high probability of success” for the purpose of defeating a claim for security for costs 

On 16 May 2023, The Honourable Mr Justice Wilson Chan handed down a written decision dismissing Grand Network Technology Limited’s (“GNT”) appeal against the dismissal of its application or security for costs against a foreign plaintiff XY, LLC in XY, LLC v Jesse Zhu (also known as Jia-Bei Zhu and Jessie Jia-Bei Zhu) and Grand Network Technology Limited [2023] HKCFI 1317. This is a rare case in which a foreign plaintiff with no assets or presence within the Hong Kong jurisdiction has successfully defeated a defendant’s application for security for costs.  

The context of GNT’s application for security for costs – and its appeal – is a long-standing dispute that has been the subject of extensive litigation in the Courts of British Columbia, Canada and Hong Kong.  

At issue before the Court was whether, for the purpose of defeating an application for security for costs, XY, LLC has a “high probability of success” in this action against GNT. This threshold has been described by the Court as “very high indeed” and is to be established without the need for the Court to conduct a “mini-trial” or make a “preliminary run” at deciding the ultimate result of an action.  

The Court agreed with submissions made on behalf of XY, LLC that it has a high probability of success in this action against GNT, having regard to and agreeing with earlier findings made by (1) the High Court in November 2015 in relation to GNT’s unsuccessful application to discharge the exceptional remedy of a Chabra injunction successfully obtained by XY and (2) a decision of the Court of Appeal in December 2016 dismissing GNT’s appeal against that earlier decision of the High Court. The Court noted that although the threshold in question before the Court of Appeal was different, the “the findings… are enough to lead to the conclusion that the plaintiff has a high probability of success against GNT in this action” (§31).  

The Court also considered that XY, LLC’s position is strengthened by the fact that there are substantial costs orders granted in favour of XY, LLC against GNT and that these costs orders are available for a set-off in case costs is awarded against XY, LLC in this action.  

GNT has applied for leave to appeal to the Court of Appeal. A further update is to follow. 

Mark Side, Partner, and associates Sharina Mahtani and Ling Meng of TDW’s Dispute Resolution team and Ernest Ng of Parkside Chambers represented XY, LLC at both first instance before a Master and the appeal before Chan J. 

Mark Side, Sharina Mahtani and Ling Meng

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