HONG KONG BALANCE INTERNATIONAL TRADING & LOGISTICS CO., LTD v. KWOK YIK HUNG and NG KWOK WAI trading as ALPHA HEALTHCARE & TECHNOLOGY COMPANY

CAMP 136/2024, [2025] HKCA 283

On appeal from [2024] HKDC 322

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 136 OF 2024

(ON AN INTENDED APPEAL FROM DCCJ NO 3716 OF 2021)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  This is the plaintiff’s renewed application for leave to appeal against the judgment of Deputy District Judge Ebony Ling in DCCJ 3716/2021 dated 8 March 2024 ([2024] HKDC 322) (“Judgment”).

2.  After a four-day trial, the judge dismissed all of the plaintiff’s claims. On 11 July 2024, the judge dismissed the plaintiff’s application for leave to appeal against the Judgment for the reasons set out in her decision ([2024] HKDC 1106) (“Leave Decision”). On 24 July 2024, the plaintiff issued the present summons in CAMP 136/2024 to seek leave to appeal from the Court of Appeal. The grounds of the proposed appeal set out in the draft notice of appeal (“Draft NOA”) annexed to the present summons are the same as those considered by the judge in the Leave Decision.

3.  Having considered the papers and the submissions on both sides, we exercise our power to determine this application on paper without an oral hearing, pursuant to Order 59 rule 2A(5)(a).

Background and the Judgment

4.  As the background and respective cases of the parties have been set out in detail in the Judgment ([1] to [6] for the background; [16] to [45] for the plaintiff’s case; and [46] to [69] for the defendants’ case), it is not necessary for us to repeat the details in full.

5.  It suffices for us to highlight the following aspects of the parties’ dispute and the evidence relating to it. The underlying facts, and the issues for determination before the judge, were straightforward.

6.  The action concerns the plaintiff’s claim against the defendants for repudiatory breach of three contracts regarding the sale of N95 masks. The gist of plaintiff’s complaints is the defendants’ failure to deliver the masks. The defendants averred in their defence that they have duly performed the First Contract, and denied having entered into the alleged Second and Third Contracts with the plaintiff. Thus, the existence and circumstances of these contracts are matters of contention between the parties.

7.  During the trial, the judge heard evidence from Deng Hanyu (“Deng”), a shareholder and director of the plaintiff and the only person involved in the plaintiff’s business and trading activities at the material times, as well as from both defendants, Ng Kwok Wai (“Ng”) and Kwok Yik Hung (“Kwok”). Ng and Kwok are partners trading in the firm name of Alpha Healthcare & Technology Company (“Alpha Healthcare”).

8.  The judge rejected the plaintiff’s version of events, finding that Deng’s evidence was inconsistent with the plaintiff’s pleaded case and contemporaneous evidence. For the detailed reasons set out at [72(a)] to [72(aa)], the judge also found his evidence incredible, unreliable and unbelievable. In contrast, the judge found the defendants’ evidence supported by contemporaneous evidence and found them honest and credible witnesses. Accordingly, the judge dismissed the plaintiff’s claim.

9.  The judge’s findings are set out in [93] to [131] of the Judgment.

10.  On the First Contract, the judge made these salient findings:

a.  The contracting parties were Alpha Healthcare and Deng himself, not the plaintiff. Thus, the plaintiff has no locus to sue under the First Contract ([93] to [94] of the Judgment).

b.  On 7 April 2020, Alpha Healthcare delivered Batches 1 and 2 to Deng when Timothy Chan (“Chan”; the account manager of Alpha Healthcare) informed him that 45 cases of masks had arrived, and Deng asked Chan to leave the same in Alpha Healthcare’s warehouse ([95] of the Judgment).

c.  Regarding Batch 3, there was no contract between Alpha Healthcare and either Deng or the plaintiff, as there was evidence showing Deng’s intention to purchase Batch 3 from another entity known as Enduro Development Company Ltd (“Enduro”). Moreover, the judge also found on the defendants’ evidence that they had not sold Batch 3 to Deng or the plaintiff ([97] to [98] of the Judgment).

d.  Alpha Healthcare had performed the First Contract and did not breach the same ([100] of the Judgment).

11.  On the Second Contract, the judge’s salient findings are:

a.  On 4 August 2020, Alpha Healthcare, by issuing invoice number IV20080314 dated 3 August 2020 to the plaintiff, extended an offer to sell 300 cases of masks. The terms of acceptance were clearly delineated, requiring the plaintiff to remit the stipulated deposit of HK$211,500 to Alpha Healthcare in the manner prescribed in the invoice ([101] and [103] of the Judgment).

b.  On the same day, unbeknown to the defendants, Deng effected a transfer of HK$211,500 to the personal bank account of Chan, who was Alpha Healthcare’s account manager at the time. The crux of the matter hinges upon whether Chan possessed actual or apparent authority to accept payment on behalf of Alpha Healthcare ([104] to [105] of the Judgment).

c.  Contrary to the plaintiff’s case, Chan had no actual and/or apparent authority to accept payment on Alpha Healthcare’s behalf. Consequently, Alpha Healthcare had not received any payment from either Deng or the plaintiff under the alleged Second Contract ([117] of the Judgment).

d.  Furthermore, Deng had failed in his duty to make requisite enquiries with Alpha Healthcare when he was put on notice that Chan lacked the authority to receive monies on behalf of Alpha Healthcare ([118] of the Judgment).

e.  In conclusion, the plaintiff had not validly accepted the defendants’ offer as set forth in invoice IV20080314 dated 3 August 2020. Thus, the parties had not entered into the alleged Second Contract ([121] of the Judgment).

12.  On the Third Contract, these are the judge’s salient findings:

a.  It was not until 18 December 2020 that Alpha Healthcare extended an offer to sell 300 cases of masks to the plaintiff. This offer was set out in an invoice numbered IV20082608 and back-dated to 26 August 2020. The terms of acceptance explicitly required the plaintiff to remit the stipulated deposit to Alpha Healthcare in the manner prescribed in the invoice ([122] of the Judgment).

b.  On 25 August 2020, unbeknown to the defendants, Deng transferred HK$134,250 to Chan’s personal bank account. This sum was notably less than the required deposit of HK$176,250. The judge expressly rejected Deng’s account that the parties had agreed to a reduction in the deposit amount ([124] to [125] of the Judgment).

c.  As in the case of the alleged Second Contract, Chan had neither actual nor apparent authority to accept payment on behalf of Alpha Healthcare. Consequently, Alpha Healthcare had not received any payment from either Deng or the plaintiff under the alleged Third Contract ([127] of the Judgment).

d.  Deng had failed in his duty to make requisite enquiries with Alpha Healthcare when put on notice that Chan lacked the authority to receive monies on behalf of Alpha Healthcare ([128] of the Judgment).

e.  In conclusion, the plaintiff had not paid the relevant deposit to the defendants and, therefore, had not validly accepted the defendants’ offer. The parties had not entered into the alleged Third Contract ([130] to [131] of the Judgment).

Legal principles

13.  Pursuant to section 63A(2) of the District Court Ordinance, Cap 336, leave to appeal may only be granted if the Court of Appeal is satisfied that the intended appeal has a reasonable prospect of success or that there are some other reasons that the intended appeal should be heard. Reasonable prospect involves the notion that the prospect must be more than “fanciful” without having to be “probable”.

14.  Given that the Judgment is based upon the judge’s findings of primary facts, there is a high threshold for the plaintiff to surmount in order to challenge the judge’s conclusions.

15.  The applicable principles concerning appeals against findings of fact made by a primary judge are well settled. The Court of Appeal would not disturb the findings of fact of the trial judge unless they were shown to be plainly wrong. In the absence of palpable errors in the judge’s consideration of the evidence, it would not interfere with the assessment of evidence and the weight the trial judge attached to a particular piece of evidence. It is a misuse of the appellate process to place before the Court of Appeal submissions which, in substance, are (or should be) submissions advanced by way of closing submissions at the trial after the judge has heard all the evidence. With the recognition of the rationale for appellate restraint, there is also a greater appreciation of the need to exercise restraint in respect of findings of secondary facts based on inference drawn from findings of primary fact (China Gold Finance Ltd v CIL Holdings Ltd, CACV 11/2015, 27 November 2015, at [11] to [22]).

16.  Further, as explained in Cheung Yuk Ying Engracia v Macgregor Isabella [2023] 3 HKLRD 164, at [28]:

“28. It is well established that the Court of Appeal is not entitled to interfere with the trial judge’s findings of primary fact unless it is satisfied, even though it does not have the advantages of receiving the evidence at first hand, that the judge’s conclusion on the facts is plainly wrong. Often, as in the present case, the appellate court examines excerpts of the evidence without ‘a panoramic vista of the evidence as a whole’; it sees ‘a selected series of stills, rather than the complete film’. Even if there is a transcript of the entire trial, the impression left on the judge by witnesses ‘in their demeanour, in their manner, in their hesitation, in their nuance of their expressions, in even the turns of the eyelid … can never be reproduced in the printed page’. The facilities enjoyed by the trial judge go beyond the ability to watch the witnesses’ demeanour. Even reading the transcripts at length cannot give the appellate court the same immersion in the atmosphere of the trial. The judge has observed ‘the drift and conduct of the case’ and ‘has impressed upon him by hearing every word the scope and nature of the evidence in a way that is denied to any court of appeal’. Accordingly, to succeed in this appeal the plaintiff had to meet the heavy burden of demonstrating that despite these advantages enjoyed by the judge but not by this court, we can nevertheless be satisfied that the conclusion of fact he has reached is not one that is reasonably open to him on the evidence.” (Citations omitted)

17.  With these principles in mind, we turn to consider the proposed grounds of appeal raised by the plaintiff.

Grounds of appeal

18.  The proposed grounds of appeal in the Draft NOA effectively seek to challenge the judge’s factual findings and her evaluation of the evidence. The same grounds of appeal had been canvassed before the judge, who had explained in the Leave Decision why she considered they were not reasonably arguable.

19.  The two proposed grounds of appeal may be broadly stated as follows:

a.  The judge failed to consider adequately or at all the WhatsApp messages exchanged between Deng and Chan during the period from 14 March 2020 to 29 January 2021, and the invoices issued by the defendants, which would establish the existence of the First, Second, and Third Contracts between the plaintiff and the defendants. (“Ground 1”)

b.  The judge erred in failing to consider, analyse, and place weight on the contemporaneous evidence (ie the WhatsApp messages and the invoices) and inherent probabilities in their course of dealing context, and conversely, in placing too much weight upon her assessment of the character of the witnesses. The judge erred in holding Deng an unreliable and incredible witness, and Ng and Kwok as credible and reliable witnesses. (“Ground 2”)

Analysis

20.  We find no basis to say that the judge was plainly wrong in her findings as alleged. The intended grounds of appeal are misconceived and have no reasonable prospects of success.

Ground 1

21.  With respect to the alleged failure to consider WhatsApp messages between Deng and Chan and invoices issued by the defendants, it is apparent from the Judgment that the judge had addressed and analysed the plaintiff’s evidence, including the WhatsApp messages and the invoices. The judge has meticulously set out how she made references to these WhatsApp messages and relevant invoices throughout the Judgment in [6], [10] and [20] of the Leave Decision.

22.  Further, in the Leave Decision, the judge has explained the basis of her rulings on the First, Second, and Third Contracts, as well as her dismissal of the plaintiff’s contentions in the Draft NOA. The judge has provided a thorough explanation of her analysis and demonstrated a careful consideration of the evidence. We agree with her comprehensive reasoning. It is noteworthy that many of the contentions in the Draft NOA appear to be bare assertions unsupported by evidence.

23.  More specifically, we consider that the judge correctly focused on the plaintiff’s locus to sue under the First Contract, and came to the view that Deng (not the plaintiff) was the contracting party to the First Contract. Contrary to the plaintiff’s contention that the defendants reissued the invoice for the First Contract (or Batch 1) to the plaintiff rather than Deng, thus giving the plaintiff the locus to sue, the judge found that the contracting parties for the First Contract were Alpha Healthcare and Deng. This conclusion was reached after considering Deng’s own admission during cross-examination ([72(r) to (t) of the Judgment]). The judge clearly had the plaintiff’s case in mind but ultimately dismissed it. We see no basis to disturb her findings.

24.  There is no basis to disturb the findings of fact in [101] to [103] of the Judgment that by sending the invoice numbered IV20080314 dated 3 August 2020 to the plaintiff, Alpha Healthcare had offered to sell 300 cases of masks to the plaintiff under the terms stated on the invoice and that such offer could be accepted by the plaintiff by paying the stipulated deposit to Alpha Healthcare.

25.  In respect of the contention that Chan had the authority to receive payment into his personal bank account on behalf of Alpha Healthcare, it is a non-starter. For the reasons in [115(c)] to [115(e)] of the Judgment, it is open for the judge to conclude there was no holding out by the defendants to Deng or the plaintiff that Chan had the authority to accept payment on behalf of Alpha Healthcare, still less to accept payment into his personal bank account.

26.  On the alleged Third Contract, paragraphs 1(13) to (15) of the Draft NOA appear to be a re-run of the argument set out in paragraphs 15 to 18 of the plaintiff’s opening submissions at the trial, which is simply impermissible.

27.  No palpable errors of the analysis and reasoning in the Judgment have been shown, Ground 1 has no merits at all. Leave to appeal should not be granted on this ground.

Ground 2

28.  Ground 2 relates to the judge’s rejection of Deng’s evidence. In the plaintiff’s written submissions, the plaintiff contended that the judge had made three errors: (i) she erred in finding that the invoices were fresh offers; (ii) she erred in finding that Deng’s evidence is incredible; and (iii) she erred in concluding that Chan lacked authority to accept payment on behalf of the defendants. The closing submissions of the plaintiff at the trial were repeated.

29.  It is well‑established that the advantage of the trial judge in seeing the witnesses applies not only to credibility and findings of primary facts, but also to the judge’s evaluation of the facts and the relative weight. In the absence of any cogent reason, the plaintiff has not discharged the heavy burden of demonstrating that despite the advantage enjoyed by the trial judge but not by the appeal court, we can be satisfied that the conclusions of fact made by the judge is not reasonably open to her on the evidence.

30.  For the reasoning set out in the Judgment regarding the offers made by Alpha Healthcare, the manner of acceptance, and Chan’s lack of authority to receive payment on behalf of Alpha Healthcare, there is nothing inherently improbable or unorthodox about treating the invoices as offers.

31.  Ground 2 is plainly unarguable.

Disposition

32.  The intended grounds of appeal are misconceived and there are no reasonable prospects of success. We also do not see any other reason in the interests of justice why the proposed appeal should be heard. The plaintiff’s application for leave to appeal is dismissed.

33.  As this application is wholly without merit, we further order that no party may request the determination to be reconsidered at an oral hearing inter partes, pursuant to Order 59 rule 2A(8).

34.  There is no reason why the costs of this application should not follow the event. We make an order nisi that the plaintiff do pay the defendants’ costs of this summons.

35.  We have considered the defendants’ statement of costs for summary assessment. We bear in mind that the application for leave to appeal was made to the judge on the same grounds and the defendants are represented by the same team of lawyers throughout. The defendants claimed a sum of $57,864.33. We consider the amount reasonable and would allow it in full.

36.  The costs order nisi and gross sum assessment will be made absolute if no application for variation is made by any party within 14 days of the handing down of this judgment.

The plaintiff’s litigation conduct in this application

37.  Two matters in the plaintiff’s conduct of this application warrant attention. They relate to the plaintiff’s written submissions and the contents of the application bundle.

38.  Despite clear stipulation in paragraph 8 of Practice Direction 4.1 that a written statement in support of an application for leave to appeal to the Court of Appeal should not exceed five pages save otherwise directed by the court, the statement prepared by counsel for the plaintiff extends to thirteen pages.

39.  The application bundle contains unnecessary materials, including the respective parties’ opening and closing submissions from the trial below, as well as documents such as invoices and packing slips.

40.  Despite requisitions by the Registrar of Civil Appeals concerning the application bundle (the Registrar waived the irregularity in respect of the page limit of the plaintiff’s submissions, as the defendants had by then lodged their statement in opposition), the plaintiff’s solicitors replied by letter dated 30 August 2024 claiming that all the documents are directly relevant and essential for this court’s full appreciation of the merits of the leave application.

41.  No prior permission was sought to exceed the prescribed page limit, nor was any explanation proffered as to why it might be warranted to exceed the limit, before the submissions and bundles were lodged. We fail to see how the opening and closing submissions in the court below and documents such as invoices and packing slips could be of material assistance in the present application.

42.  We reiterate the importance of complying with the requirements in Practice Direction 4.1. As provided in paragraph 9 of the Practice Direction, an application bundle put together by indiscriminate inclusion or reproduction of bundles used below will be returned unread with costs consequence. Non-compliant submissions will also be returned to the party concerned unread with costs consequence (CWG v MH [2014] 1 HKLRD 838, at [9] to [11]). Procedural irregularities would not be lightly waived in future.