RICOH HONG KONG LTD v. WALLBANCK BROTHERS SECURITIES (HONG KONG) LTD

HCMP 2228/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 2228 OF 2015

(ON AN INTENDED APPEAL FROM DCCJ NO 2454 OF 2013)

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REASONS FOR JUDGMENT
AND
DECISION ON COSTS

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Hon Lam VP (giving the Reasons for Judgment and Decision on Costs of the Court):

1.  On 25 June 2015, Judge A Li gave judgment in the sum of $72,020.40 in favour of the Plaintiff after trial. The judge found the Defendant liable for outstanding charges under 2 printing service agreements. Though the case was contested (with Mr Phil Chan, a director and chief executive officer of the Defendant acting as its authorized representative at the trial, and incidentally he was also a practising solicitor), the Defendant did not adduce any viva voce evidence at the trial (notwithstanding the filing of substantial witness statement by Mr Chan) which lasted for 5 days. In light of that, the judge had no difficulty in rejecting the defence case in which serious allegations of fraud, deception, fraudulent misrepresentation were advanced. The judge also rejected the defence of breach of implied duty of reasonable care and skill.

2.  The Defendant applied for leave to appeal from the judge.  The judge refused leave on 1 September 2015.  The Defendant renewed the application for leave before us.

3.  Comparing the papers lodged before the judge in support of the application for leave to appeal and those filed in the proceedings before us, it is fair to say that the application as presently formulated (with the involvement of Mr Lam, who did not appear below) is much more intelligible and focused.  Judging from the materials we have seen, Mr Lam must have done a great service for the Defendant and we are also grateful for his assistance.

4.  It is also fair to say that the main arguments now advanced by Mr Lam were not taken at the court below.  Hence, in respect of the following arguments which are plainly facts and evidence sensitive, they are not open to the Defendant on appeal because of the principles discussed in Flywin Co Ltd v Strong Associates Ltd (2002) 5 HKCFAR 356 and Lehmanbrown Ltd v Union Trade Holdings Inc HCMP 977 of 2015, 17 June 2015.  In the latter case, this court said at [10]:

“ Whilst the Court of Appeal obviously has power to entertain new points in an appeal, it is also clearly and firmly established that new points which are fact sensitive or otherwise affect the course of evidence or conduct of the case at the hearing below should not be allowed. Though this principle is usually applied in situations where the new points necessitate further evidence to be adduced, it is not confined to such scenarios. Very often, the raising of new point by one party may lead to the other party raising counter arguments and the consideration of such counter arguments may involve factual assessment in a different light from that undertaken by the court below. Sometimes, it may involve a different weighing of factors in the exercise of discretion. Alternatively, the other party may embark on a different course of forensic conduct if the new point were taken earlier. The appellate court, in considering whether the new point would be entertained, is entitled to take these matters into account in order to avoid unfairness to the other party.”

5.  We have read the judgment of Ribeiro PJ in Paquito Lima Buton v Rainbow Joy Shipping  Ltd (2008) 11 HKCFAR 464 and we do not think anything said in that judgment contradicts what has been said in the cases discussed at paragraph 4 above.  We accept that this court is not bound by any concession of counsel on point of law and a pure point of law can be permitted to be taken on appeal.  But we are also of the firm view that the present case does not come within that category.

6.  In the present case, we are of the view that Mr Lam’s Grounds 2 and 3 are not open to the Defendant by reason of the principles mentioned at paragraph 4 above.  On Ground 2, as the authorities show, assuming that the dicta of Lord Reid in White and Carter v McGregor [1962] AC 413 at 431 could arguably be engaged, the burden is on the Defendant to advance a case of lack of legitimate interest or unreasonableness on the part of the Plaintiff to keep the contract alive.  As Ms Gwilt submitted in the written submissions of the Plaintiff, this issue had not been pleaded, raised, investigated or argued at the court below.  Also as further submitted by her, the context of the present case is similar to Fuji Xerox (Hong Kong) Ltd v Vigers Hong Kong Ltd CACV 311 of 2006, 27 March 2007 in which the Court of Appeal had rejected the same line of argument.

7.  On Ground 3, if the argument based on Clause 32 is in substance nothing more than what had been canvassed below under the under of breach of implied term of reasonable care and skill, the judge found that there was no evidence to support such a defence, see §§76 and 82 of the judgment.  We have also considered the documentary evidence highlighted by Mr Lam and we do not think they could support any case of misrepresentation.  Insofar as it is an argument going beyond the rejected defence (as contended by Mr Lam at the hearing before us), it is again an issue not pleaded, not raised and not properly investigated below, and as such cannot form the basis of an appeal.  The factual basis for asserting that there was a breach of this clause had not been pleaded and as a result the trial could not provide a fair occasion for a debate on such issues.  It is not good enough that Mr Chan had made a side reference to clause 32 in the closing submissions after evidence were closed.

8.  Ground 1 is also a point not taken below.  In any event, it is a point without merit.  Clause 6.3 of the agreements entitled the Plaintiff to withhold part of its services when the Defendant defaulted in the payment of charges.  Clause 8.1 makes it clear that the charges were to be paid without deduction.  It does not lie in the mouth of the Defendant to complain about the lack of pleading of Clause 8.1 when it fails to advance a proper case along Ground 1 in its own pleadings.  There was ample evidence to support the judge’s finding that the Defendant continued to use the photocopying machines after its purported repudiation of the agreements.  We agree with the submission of Mr Lui that the Plaintiff was entitled to charge for the contract sums in these circumstances.

9.  Ground 4 has no merit as the assessment of evidence in light of the telephone recording is a matter of the judge and Mr Lam was unable to pinpoint any palpable error warranting the interference by the Court of Appeal, see China Gold Finance Ltd  v CIL Holdings Ltd CACV 11 of 2015, 27 November 2015.

10.  Ground 5 alleged actual or apparent bias on the part of the judge and it relates to Mr Chan’s complaint against the judge in another case and he raised the same with the judge in the course of this trial.  We have read the transcripts on the relevant exchange.  Throughout the discussion, though Mr Chan tried to raise the matter a number of times (and it was Mr Chan who brought up the matter, not the judge who had repeatedly said that it was irrelevant to the trial), the judge had acted properly by telling Mr Chan that as a litigant Mr Chan had the right to make a complaint and such complaint would be handled by the Chief District Judge.  The judge further intimated repeatedly that he would not be affected in his decision of issues in the trial by the fact that Mr Chan had made such a complaint.  At no point did the judge make any pejorative or other inappropriate comments in the whole exchange.  The present case is completely different from the situation in IO of Finance Building v Bright Hill Management Consultants Co Ltd [2010] 3 HKLRD 1.   

11.  With respect to Mr Lam, there is simply no reasonable basis for advancing a ground of appeal based on actual or apparent bias.

12.  Ground 6 challenges the award of indemnity costs by the judge.  In the circumstances of the present case, we are of the view that the judge was perfectly entitled to order the Defendant to pay the costs of the Plaintiff on indemnity basis for the reasons he gave at §94 of the judgment.

13.  None of the grounds advanced on behalf of the Defendant has any reasonable prospect of success and we do not see any other reasons in the interest of justice for leave to be granted.  We therefore dismissed the Defendant’s application for leave to appeal.  We are also of the view that this unmeritorious application should not have been brought.  Bearing in mind the amount involved, the costs incurred for the purpose of this application and an appeal (if leave were to be granted) is obviously disproportionate.  The manner in which the Defendant prepared for this application also contributed to the substantial increase in costs: instead of filing bundle containing necessary documents for this application, the Defendant has filed 5 bundles.  Though Mr Lam’s submissions are succinct and to the point, those who prepared the bundles should have been more circumscribed.  We order the Defendant to pay the Plaintiff’s costs on indemnity basis.  Having considered the statements of costs and the submission of Mr Lam, we fix the costs at $171,637.00.