12. If the defendant wins the case, his legal costs may be recovered from the plaintiff. What can the defendant do if he is worried that, in the event of defeating the plaintiff’s claim, the plaintiff would be unable to meet any order for legal costs made at the trial?

In such a case, the defendant may consider making an application for the plaintiff to provide security for costs pursuant to Order 23 of the Rules of the High Court (Cap. 4A) or the Rules of the District Court (Cap. 336H).

If the application is granted, the plaintiff will generally be required to pay a specified sum of money into court (similar to a deposit) within a specified period. Normally, the proceedings will be temporarily halted until the plaintiff complies with the order for the payment of security for costs. The court may include a provision that if security is not given within the time specified, the action will be automatically dismissed without further order.

In the event of the defendant being successful in defeating the plaintiff’s claim, the money paid by the plaintiff can be used to settle the defendant’s legal costs.

The defendant can rely on any of the following grounds to make the application:

the plaintiff is ordinarily resident out of Hong Kong;
the plaintiff, not being a plaintiff who is suing in a representative capacity, is a nominal plaintiff who is suing for the benefit of some other person and there is reason to believe that he will be unable to pay the costs of the defendant if ordered to do so;
the plaintiff’s address is not stated in the writ or other court documents or is incorrectly stated there (unless the court is satisfied that the failure to state the address or the misstatement was made innocently and without intention to deceive);
the plaintiff has changed his address during the course of the proceedings with a view to evading the consequences of the litigation; or
if the plaintiff is a limited company registered in Hong Kong or a company incorporated outside Hong Kong, the defendant can use section 905 of the Companies Ordinance (Cap. 622) – i.e. “if it appears on credible testimony that there is reason to believe that the company will be unable to pay the costs of the defendant if successful in his defence”.

The defendant must first prove that one of the specific legal grounds (listed above) exists. Even if a ground is proven, the court will only make the order if, having regard to all circumstances, it thinks it is just to do so.

When deciding if an order is “just”, the court balances the risk of injustice to both parties. Key factors include:

Merits of the case: If the plaintiff has a “genuine and strong” case with a high probability of success, the court may refuse security.
Stifling a claim: The court will be reluctant to order security if the amount is so high that it would unfairly prevent (stifle) a plaintiff with a meritorious claim from reaching the court.
Property within jurisdiction: If a foreign plaintiff has substantial, fixed, and permanent assets in Hong Kong (like real estate) that can be reached by judicial process, security is usually not required.
Ease of enforcement: The court considers whether a Hong Kong costs order can be easily enforced in the plaintiff’s home country (e.g., through reciprocal enforcement arrangements).
Delay and conduct: Whether the defendant delayed making the application or caused the plaintiff's impecuniosity.

This application is made in chambers (not in open court) by means of a summons. Before making this application to the court, the defendant should send a written request to the plaintiff asking for the security payment. The defendant should prepare an affidavit/affirmation to support the application.

However, no affidavit/affirmation is necessary if the grounds upon which the defendant relies is the fact that the plaintiff is ordinarily resident out of Hong Kong and that fact is stated on the writ. The summons or affidavit/affirmation should indicate the amount of security required, and a skeleton bill of costs (a detailed list of all the relevant items) should be prepared to show how that amount is made up.

Although this application may be made at any stage of the proceedings, it should not be made too late or too close to the trial. This is because any delay may count against the defendant when the court considers the application.