KONE ELEVATOR (HK) LTD v. CONSTRUCTION INDUSTRY COUNCIL

DCMP 4552/2022

[2024] HKDC 365

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 4552 OF 2022

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DECISION

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1.  In this statutory appeal under section 57 of the Ordinance,[1]the appellant (KONE) sought to cancel or reduce the levy assessed by the respondent (CIC). After trial, I dismissed KONE’s appeal and confirmed the levy (“the Judgment”).

2.  By a summons dated 27 December 2023, KONE applied for leave to appeal (“the Application”). The Application is opposed by CIC.

3.  By consent, the Application was set down for paper disposal with written submissions. I am grateful for:

(a)  The submissions in support dated 27 December 2023 of KONE’s counsel, Ms Audrey Eu SC leading Mr Yeung Ming Tai. It should be noted that they were not the trial counsel.

(b)  The submissions in opposition dated 29 January 2024 of CIC’s counsel, Mr Abraham Chan SC leading Mr Harrison Cheung.

(c)  The submissions in reply dated 15 February 2024 of KONE’s counsel.

Overview of the grounds of appeal

4.  It is trite that no leave should be granted unless either the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard: section 63A of the District Court Ordinance, Cap 336.

5.  The draft Notice of Appeal accompanying the summons (“the draft Notice”) contains 4 grounds of appeal which are said to base on the “reasonable prospect of success” limb.

(a)  Ground 1 relates to Issue 3 at trial, namely, whether the operations covered by the Payment Notice amount to “construction operations” for the purposes of the Ordinance. (see paras 21(c) & 90-110 of the Judgment)

(b)  Ground 2 is based on KONE’s contention that there was no “authorized person” appointed for and no commencement or completion in relation to the operations concerned, which was discussed in paras 87-88 of the Judgment.

(c)  Ground 3 concerns the meaning of “stage or part of any construction operations” in section 40(1), which was discussed at paras 61(b) & 76-89 of the Judgment.

(d)  Ground 4 relates to my ruling on Issue 4, namely, whether the operations identified by items 1.1.2, 1.2.2 and 1.5 in the statement attached to the MTRC Certificate fall within the definition of “construction operations”. (see paras 21(d) & 111-137 of the Judgment)

6.  KONE also invokes the “some other reason in the interests of justice” limb in its submissions.[2] (Ground 5)

7.  On an overview, I think it is fair for CIC to say that the arguments advanced by KONE in the Application are essentially a rehash of KONE’s arguments at trial. Those arguments were rejected and KONE has not really identified any errors in the court’s reasoning. I append below a table setting out the discussions in the Judgment corresponding to the repeated arguments.

Paragraph reference in the draft Notice	Relevant discussion in the Judgment
1(2)	paras 95-101
1(3)	paras 102-103
1(5) & 1(8)	paras 104-110
1(6)	paras 119 & 133-136
1(9)	paras 76-86
2(1)	paras 87-88
2(2)-2(4)	paras 61(b) & 76-89
3(1)-3(3)	paras 61(b) & 76-89
4(1)	paras 51-60
4(2)	paras 111-137
4(3)	paras 113-117 & 137
4(4)-4(6)	paras 118-137

8.  In the ensuing paragraphs, I shall not repeat my reasoning in the Judgment but focus on the new or supplemental arguments of KONE.

Ground 1

9.  In para 1(1) of the draft Notice, KONE criticizes the court for failing to adopt a “strict approach” when construing Schedule 1. It is apparent from the authorities cited that KONE principally relies on the following judicial statements for its contention:[3]

“A subject is only to be taxed upon clear words, not upon ‘intendment’ or upon the ‘equity’ of an Act ...” (per Lord Wilberforce of the House of Lords in WT Ramsay Ltd v IRC [1982] AC 300 at 323C)

“… in the context of tax legislation it is necessary to consider the legal analysis with the utmost precision, so that the taxpayer shall not become liable to tax unless that is clearly and unequivocally the effect of the statutory provisions.” (per Evans LJ of the Court of Appeal in Ingram (executors (the estate of Lady Ingram) v IRC [1997] 4 All ER 395 at 414f)

10.  In The Collector of Stamp Revenue v Arrowtown Assets Ltd (2003) 6 HKCFAR 517 at para 2, the Court of Final Appeal warned:

“… There has been a tendency to treat judicial statements in some of the cases as laying down a rigid code-like approach. This has given rise to unnecessary confusion and complication.”

11.  Speaking of the decision of the House of Lords in Ramsay, the former Chief Justice said this (at para 3):

“It is important to return to the roots of the Ramsay approach. In essence, the approach applies the purposive approach of statutory interpretation to tax statutes, particularly relief and exemption provisions therein. And it involves a realistic analysis and assessment of the facts and the transactions in question. These are the fundamentals which must be borne in mind when considering the application of the Ramsay approach to tax avoidance schemes.” [4]

12.  And Ribeiro PJ commented in the same vein (at para 31) that:

“The opposing, and in my respectful opinion, preferable, view is that the Ramsay principle does not espoused any specialized principle of statutory construction applicable to tax legislation, whatever its language, but continues to assert the need to apply orthodox methods of purposive interpretation to the facts viewed realistically…”.

13.  The speech of Lord Wilberforce in Ramsay relied on by KONE is an acknowledgement of the need for a purposive interpretation (per Ribeiro PJ at paras 14-16). I do not think the judicial statement from Ingram espoused any other principle of statutory construction.

14.  In the present case as shown in the Judgment, I construed the Ordinance purposively and analyzed the facts and circumstances of the case realistically. I agree with CIC that there is no basis for KONE to say that the court had applied a wrong approach.

15.  As regards lifts and escalators, KONE has tried hard to confine the application of section 1 of Schedule 1 to subsection (d) which is concerned with “supply and installation of fittings and equipment in any buildings, or other structures forming part of land” and to avoid the application of the other subsections. At the trial, it referred to the legislative history of the Ordinance (see para 93 of the Judgment); invoked the maxim generalibus specialia derogant (see para 102(d) of the Judgment); and drew a distinction between “building works” and “equipment” (see para 102(a) of the Judgment). Presently, it reiterates the application of the maxim (para 1(3) of the draft Notice); submits that the omission of the word/phrase “maintenance” or “repair and maintenance” from subsection (d) was deliberate (para 1(7) of the draft Notice; para 4 of KONE’s submissions in reply); and argues that there is a distinction between “the larger structures listed in subsection (c) and the smaller installations such as lift or escalator” and “other structures forming part of the land listed in subsection (d)” (para 1(4) of the draft Notice).

16.  As I endeavored to explain in para 103 of the Judgment, the subsections should be read disjunctively and together they bring out the full flavor of the definition. The fact that “lift or escalator” is enumerated in subsection (d) as an example of “fittings and equipment” is no indication that it may not come under the other subsections such as subsection (c).

17.  More specifically, subsection (c)(i) covers inter alia “… repair, maintenance … of … any buildings or other temporary or permanent structures forming, or to form, part of land”. Insofar as a lift or escalator forms part of a building or is a structure forming part of land, there is no reason why its repair and maintenance is not caught by the subsection in terms of the plain meaning of the text. It is not KONE’s case that the lifts and escalators covered by the Payment Notice do not form part of a building or are otherwise not structures forming part of land. The reference to the legislative history (at paras 95-101) and English authorities (at paras 104-110) in the Judgment served to confirm the correctness of such interpretation.

18.  It is not apparent from the legislative material relied upon by KONE in the Application (ie the speech of the Secretary for Education and Manpower at the second reading of the Construction Industry Levy (Miscellaneous Amendments) Bill 2003, see the extract below) that the legislature drew a distinction between “larger structures” and “smaller installations” or that there was any legislative intention to single out any particular aspect of E&M works (such as repair and maintenance[5]) to be excluded from the scope of levy:

“To extend the coverage of the levy, the current definition of ‘construction works’ under the Industrial Training (Construction Industry) Ordinance (ITCIO) and the Pneumoconiosis (Compensation) Ordinance (PCO), which specifically excludes E&M works, will be replaced by a new definition of ‘construction operations’ in the Bill, which will encompass E&M works.”

19.  As the Chief Justice reiterated in para 11 of Chan Keen (quoted in para 23 of the Judgment), a purposive approach does not allow the court to disregard or distort the plain meaning of the text and read the provision in any manner it wants.

20.  On the other hand, whether “minor changes or additions to any installation listed in subsection (d)” (para 1(6) of the draft Notice) or the extreme examples cited by KONE in argument such as “repairing a pipe or changing a light bulb” (para 4(2) of KONE’s submissions in reply) would be caught by subsection (g) would depend on the nature of the operations and whether it comes within the terms of the definition. And even if it does, there is an exemption from levy if the total value of the operations does not exceed the statutory threshold (para 27 of the Judgment). There is nothing absurd about the statutory scheme.

21.  As to para 1(8) of the draft Notice, I agree with CIC that absent any clear and materially relevant reasons for distinguishing them, statutory provisions and authorities in other jurisdictions are helpful reference points. It is not enough for KONE to complain that the English Act was promulgated with a different legislative purpose without explaining why the difference matters for present purposes.[6]

22.  In para 1(9) of the draft Notice, KONE complains that the court “failed to have regard to the expert evidence adduced by KONE (when the expert was not cross-examined nor was there contrary expert evidence from CIC) or to the industry practice that maintenance of lift or escalator is not normally assessed or subject to levy.”[7] I take it that KONE is referring to the Affirmation of Lau Sin Yan filed in support of the statutory appeal.[8]

23.  Mr Lau is the Senior Manager, Contracts of KONE. He handles KONE’s contracts and related administrative matters including matters concerning Construction Industry Levy (paras 1-2 of Lau’s affirmation). It is his evidence that:

(a)  There is a “practice of trade in the lift and escalator industry” to divide the services provided by lifts or escalators contractors into three categories. Whilst it is “generally accepted” that the first two categories (ie “provision and installation” and “modernization”) may be chargeable with levy, “it was not the practice of the trade that the 3^rd category ie provision of services for periodic maintenance and repair of lifts and escalators should be liable for levy by CIC.” (paras 4-6 of Lau’s affirmation)

(b)  “[I]t is common practice within the trade that maintenance contracts for lifts and escalators or the like do not come within the scope of ‘Construction Operation[s]’ under section 1(c) of Schedule 1…”. (para 7 of Lau’s affirmation)

(c)  “If the contract was in relation to provision of periodic maintenance and repair to existing lifts and escalators, it is a practice within the trade (including KONE and other lifts and escalators contractors) that contractors would not return any form to CIC.” (para 8 of Lau’s affirmation)

(d)  “As far as I know, I understand that other contractors in the lifts and escalators industry adopt the same position.” (para 9 of Lau’s affirmation)

24.  In response, CIC submitted the Affirmation of Kwok Piu Sing Patrick. Mr Kwok is the Manager – Finance of CIC. The scope of his work includes budgeting, financial planning and analysis, levy processing and other general financial management duties (para 4 of Kwok’s affirmation). According to him:

“27. I crave leave to refer to paragraphs 3 to 10 of Lau’s Affirmation. I disagree that there are any purported ‘practice of the trade that the 3^rd category ie provision of services for periodic maintenance and repair of lifts and escalators should be liable for levy by CIC’.

28. In fact, according to the records of the Council, there have been many cases in which levies and/or surcharges have been imposed on services for periodic maintenance and repair of lifts and escalators. Amongst them, major contractors are involved and they have continued to submit prescribed Levy Forms to the Council and paid levy on the maintenance and repair works on lifts and escalators since 2008.

29. Further and in light of the above, there is no such purported ‘common practice within the trade that maintenance contracts for lifts and escalators or the like do not come within the scope of ‘Construction Operation[s]’ under section 1(c) of Schedule 1 of [the Ordinance].’ In any event, I am advised by [CIC]’s legal advisers and verily believe that whether or not maintenance and/or repair of lifts and escalators fall within the scope of paragraph 1(c) of the Schedule 1 to [the Ordinance] is a legal matter and a matter of statutory interpretation, and that the answer must be in the affirmative.”[9]

25.  As foreshadowed by para 29 of Kwok’s affirmation, whether or not maintenance of lifts and escalators is within the scope of section 1(c) of Schedule 1 is a matter of statutory construction. KONE consented to a trial without oral evidence or cross-examination of the deponents (para 41(d) of the Judgment) and that was how the issue was argued before me. It is wrong for KONE now to contend that Mr Lau’s evidence or the “industry practice” alleged by him was uncontradicted or that the court failed to have regard to such evidence.

26.  In any event as noted in paras 95-101 of the Judgment, E&M works was previously exempted from levy by legislation rather than any “industry practice”. The law was changed in 2004 and thereafter, whether maintenance of lifts and escalators is chargeable with levy can only be determined by a faithful construction of the relevant provisions. It cannot be dictated by expert evidence or “industry practice” as suggested by KONE.

Arguments in Grounds 1 and 2 relating to appointment of “authorized person”

27.  KONE complains that the court “ought to have regard to the expert evidence as adduced by KONE (when the expert was not cross-examined and when there was no contrary expert evidence from CIC) and industry practice that no authorized person is required for maintenance of lift or escalator ...” (para 2(2) of the draft Notice) and that the court’s interpretation of section 1 of Schedule 1 “will lead to absurd results such that minor changes or additions to any installation listed in subsection (d) amount to construction operations requiring the appointment of authorized persons and the charge of levy” (para 1(6) of the draft Notice). (emphasis added)

28.  It argues that the court “ought to read the Building[s] Ordinance Cap 123 with the Ordinance for the requirement to appoint an authorized person in case of construction operations, building works and street works as defined in Schedule 1” (para 2(1) of the draft Notice) and puts forward a totally new definition of “construction operations”: “‘Construction operation[s]’ should only be limited to work that requires the appointment of AP to perform the statutory duty under the relevant ordinances (such as Buildings Ordinance) or to monitor the work in view of its scale and complexity.” (para 7 of its submissions in reply)

29.  All these are premised on KONE’s contention that section 66 mandates the appointment of an “authorized person” for all construction operations.

30.  First, it must be noted that the point was only raised at the trial by KONE’s counsel after the filing of CIC’s closing submissions.[10] It was otherwise not explored in evidence. That prompted CIC’s counsel to object to the late submission of a new point in closing argument.[11] The court nonetheless entertained the argument, as the other provisions of the same ordinance (eg section 66) is part of the context upon which the court should construe the Ordinance.

31.  Even then, KONE’s trial counsel’s submission was premised not on any expert evidence or industry practice but on their contention that “there has been no evidence as to appointment of an AP, say for example, any notice of appointment submitted by MTRC to the Respondent. Nor any evidence that an AP has given any s.34 notice to the Respondent in respect of the Contract has been adduced”.[12]

32.  Secondly, with respect, KONE’s contention is based on a misreading of the definition of “authorized person” in section 2(1) and the requirements of section 66.

33.  Under section 2(1),

“[A]uthorized person, in relation to construction operations, means—

(a) the authorized person appointed or nominated under section 4 of the Buildings Ordinance (Cap 123) in respect of the construction operations; or

(b) if no authorized person is appointed under that section, the person appointed in accordance with section 66 in respect of the construction operations;…”. (emphasis added)

34.  And section 66 is in these terms:

“66. Appointment of authorized persons

(1) If the Government is the employer in respect of any construction operations, a person shall be appointed by or on behalf of the Government to perform the functions of an authorized person.

(2) In any other case, the employer in respect of any construction operations shall, if no authorized person is appointed under section 4 of the Buildings Ordinance (Cap. 123), appoint a person to perform the functions of an authorized person.

(3) For the purposes of enabling the Council to perform its functions under Part 5, an employer to whom subsection (2) applies shall, before the commencement of the construction operations, supply to the Council, in a form specified by it, the name of the person appointed under that subsection and the name of the contractor in respect of the construction operations.

(4) A person who fails to comply with subsection (2) or (3) commits an offence and is liable on conviction to a fine at level 1.

(5) Subsection (3) applies only if—

(a) the construction operations are carried out under a term contract; or

(b) it is reasonably estimated that the total value of the construction operations exceeds the amount specified in Part 1 of Schedule 5.” (with my emphasis)

35.  By contrast, section 4(1)(a) of the Buildings Ordinance requires “… every person for whom building works or street works are to be carried out shall appoint an authorized person as the co-ordinator of such building works or street works …” (emphasis added). And according to the definition in section 2(1) of that ordinance, “authorized person” in that context means “a person whose name is on the authorized persons’ register kept under section 3(1) …”.

36.  Thus for non-Governmental construction operations (such as the present case), the requirement of the Ordinance is to appoint either an “authorized person” under section 4 of the Buildings Ordinance or a person to perform the functions of an authorized person. There is no requirement that the person appointed under the second limb must be an “authorized person” registered under the Buildings Ordinance. It is wrong for KONE to suggest that there is a requirement to appoint an “authorized person” for every construction operations.

37.  As to what are “the functions of an authorized person”, one turns to section 4(3) of the Buildings Ordinance:

“4. Appointment and duties of authorized person, registered structural engineer or registered geotechnical engineer

…

(3) Any authorized person, … appointed or nominated under subsection (1) or (2) shall—

(a) supervise the carrying out of the building works or street works, as the case may be, in accordance with the supervision plan;

(b) notify the Building Authority of any contravention of the regulations which would result from the carrying out of any work shown in any plan approved by the Building Authority in respect of the building works or street works; and

(c) comply generally with this Ordinance.”

38.  In Emden’s Construction Law Hong Kong, the learned editor commented at para XI [403] that:

“The primary obligation of the Authorised Person is the supervision of the building works.”[13]

39.  In the present case, it was the expert evidence of Mr Chan that: “Property owners are required to engage the service of a registered contractor (‘RC’) to provide periodic maintenance work to lifts and escalators.” (para 79(b) of the Judgment)

40.  The general duties of an RC (or more specifically Registered Lift Contractor or Registered Escalator Contractor) are stipulated in sections 16 and 47 of the Lifts and Escalators Ordinance, Cap 618 as well as Divisions 2 and 6 of the Lifts and Escalators (General) Regulation, Cap 618A.

41.  Under section 145 of the Lifts and Escalators Ordinance, the Director of Electrical and Mechanical Services “may issue any code of practice that in [his] opinion is suitable for providing practical guidance in respect of any matter concerning the safety of lifts or escalators…”. The 2021 edition of the Code of Practice for Lift Works and Escalator Works provides this guidance on the functions of RCs:

“3.3.5 An RC undertaking lift works or escalator works is required to ensure that the works are carried out safely and properly. To properly discharge the duties, RCs are required to follow the safety related requirements as stipulated in Part 4 and Part 5, and they are required to also –

(a) establish a system of work so as to ensure that the works be carried out in accordance with the requirements of the Ordinance;

(b) conduct risk assessment to identify safety and health hazards associated with the works, formulate and implement necessary safety measures, including relevant method statements for implementation of the safety measures, and provide effective equipment, including personal protection equipment (PPE), and tools for carrying out the works;

(c) provide adequate training and instructions to the workers for them to carry out the works properly and in a safe manner. The RC is obliged to retain training records of his workers and to regularly review the competency of workers, in particular in occasions when a worker is deployed to undertake new tasks;

(d) provide the workers with all the necessary information, including the related layout drawings, method statements, findings of risk assessment related to the works with the identified safety hazards and the corresponding mitigation measures, instructions specific to the works, and corresponding manuals issued by the manufacturer of the lift or the escalator; and

(e) supervise the works to ascertain that the measures are taken and instructions are followed.”[14]

42.  Thus, the general duties of an RC do encompass coordination and supervision of the lift works or escalator works[15] concerned in accordance with the Lifts and Escalators Ordinance.

43.  It is sufficient for present purpose to identify the wrong footing of KONE’s contention and point out the similarities between the functions of an authorized person and the duties of an RC. Since the point was not fully argued[16] and may be fact-sensitive,[17] it would not be right for me to come to a conclusion as to whether there was compliance with section 66(2) in this case. Be that as it may, the above should be said on this important aspect of the Ordinance to clear up any misunderstanding.

44.  Lastly, the new definition of “construction operations” proposed by KONE in the Application, confining the term to “work that requires the appointment of AP”, must be rejected as the confinement is not supported by the plain meaning of the text.

Ground 3

45.  In paras 3(1) & 3(2) of the draft Notice, KONE complains that the court ought to have regard to (i) “the industry meaning of the terms ‘stage’ or ‘part’” and (ii) “the expert evidence adduced by KONE (when the expert was not cross-examined and there was no contrary expert evidence from CIC)”, citing the English authority of TUI UK Ltd v Griffiths [2023] UKSC 48 in argument.[18] This complaint relates to Mr Chan’s expert evidence, the gist of which is recounted in para 79 of the Judgment.

46.  KONE’s complaint must be considered against the following background:

(a)  It is clearly stated in the Decision that “the Objections Board was of the view that the opinions made available by Mr Chan Kwok Keung were not relevant as he was not considered an expert qualified to give opinions from legal perspectives on the subject.”[19] In spite of that, KONE consented to a trial without oral evidence.

(b)  CIC maintained the same stance at trial.[20] There was no application by KONE to call Mr Chan.

47.  In para 70 of TUI UK Ltd v Griffiths, the UK Supreme Court explained that the basis of the general rule in civil cases requiring a party to challenge by cross-examination the evidence of any witness of the opposing party on a material point which he or she wishes to submit to the court should not be accepted is one of fairness. In the circumstances of this case as highlighted above, it would lie ill in the mouth of KONE to assert that it was unaware of the objections to Mr Chan’s evidence or that the trial was being conducted unfairly against it.

48.  As explained in paras 80-82 of the Judgment, I did not require Mr Chan’s assistance in construing the Ordinance. In any event, Mr Chan’s bold assertion of opinion equating new build and A&A Works with maintenance of lifts and escalators is admittedly without basis. This is one of the exceptions to the general rule noted by the Supreme Court at para 63 of TUI UK Ltd v Griffiths. As the general law stands:

“Experts give evidence and do not decide the issue… Even where such testimony is received, the trial of fact, judge or jury, retains the power of decision. A court is entitled to reject an expert report, even where it was uncontroverted, if it is little more than a bare assertion.”[21]

49.  Lastly, KONE complains in para 8 of its submissions in reply that, “On the ground of fairness, if the Court does not accept the technical or industry meaning suggested by KONE’s expert, KONE should be alerted and be given an opportunity to respond.”

50.  Contrary to KONE’s contention, the point was actually brought up by the court on 25 August 2023 and dealt with by the parties in oral closing argument. In gist,

(a)  The court enquired: “Why should I regard ‘stage or part’ as a technical point … I mean technical words? Shouldn’t it be an ordinary English usage?”

(b)  KONE’s trial counsel responded: “Because it is used in the context of ‘construction operations’ in the Ordinance. And that is why they should have a technical meaning.”

(c)  CIC’s counsel contributed: “The only quick point is expert meaning – it would only be relevant if there was evidence on an expert meaning at all at the time of the enactment of the legislation, which is not what this evidence purports to do anyway. It’s just talking about now.”

(d)  And the court rounded off the discussion: “… at the end of the day, even if you’re right that there is this uncontradicted expert evidence before the court, I do not have to accept it wholesale.” To which, KONE’s trial counsel replied: “Oh of course…”.

There is thus no merit in KONE’s complaint.

Ground 4

51.  In para 4(1) of the draft Notice, KONE complaints that the court “erred in placing the onus on KONE to convince [the court] that those items of work did not amount to construction operations when the onus should be on CIC to show why a levy should be charged.”

52.  KONE’s concerns over burden of proof was extensively debated at trial (see paras 51-60 of the Judgment). The Judgment is testament to the fact that the court based its decision on the evidence and not on the burden of proof. KONE’s stubbornness over the issue is unwarranted. As the Court of Appeal lamented in para 19 of Blendoran, “[t]o focus on the burden of proof issue without paying any or any sufficient regard to the factual findings and the cogency of the evidence to support those findings is to look at the matter back to front…” (para 57 of the Judgment).

53.  In para 4(2) of the draft Notice, KONE argues that it has discharged its evidential burden in any event and given evidence as to why items 1.1.2, 1.2.2 and 1.5 did not amount to construction operations. It criticizes that the court “was wrong to assume the role of an expert and find against KONE on such items when CIC has not cross-examined KONE, nor adduced contrary evidence. It is unfair to KONE not to be given any opportunity to further explain in cross examination or to rebut any misunderstanding that the court might have as to those items.” This time, the complaint relates to Mr Wong whose evidence is recounted in paras 113 and 118 of the Judgment.[22]

54.  In the Judgment, I commented that:

(a)  Mr Wong did not explain what “full load test” was in relation to items 1.1.2 and 1.2.2. (para 114 of the Judgment)

(b)  The supporting documents adduced by Mr Wong did not support the amount of reduction claimed under item 1.5. (paras 121-124 of the Judgment)

(c)  Mr Wong simply asserted without elaboration that the variation orders in item 1.5 had nothing to do with repair and maintenance of lifts or escalators. (paras 125-136 of the Judgment)

55.  Three points should be made in answer to para 4(2) of the draft Notice:

(a)  It does not take an expert to realize the deficiencies (both qualitatively and quantitatively) in Mr Wong’s evidence.

(b)  The Objections Board rejected Mr Wong’s evidence and took the view that “full load tests and variation orders should be construed as integral parts of the maintenance work and thus should be subject to levy” (see the Decision at p 169 of Bundle B). Notwithstanding that, KONE consented to a trial without oral evidence.

(c)  In its opening submissions, CIC forewarned that (i) items 1.1.2 and 1.2.2 “must ‘form an integral part of’ and/or are for ‘rendering complete of’ the repair and maintenance work pursuant to section 1(g) of Schedule 1”;[23] (ii) in relation to item 1.5, “[t]he burden is on [KONE] in this appeal to adduce evidence on the nature of the maintenance works carried out by it in order to demonstrate why these extra services were not integral to, preparatory to, or for rendering complete, such maintenance services. It cannot simply be a matter of assertion, as it presently is”;[24] and (iii) “[i]n all, [KONE] has not come close to discharging its burden to show how the extra services were not integral to, preparatory to, or were for rendering complete the maintenance services it provided to MTR.”[25] KONE did not respond to such warnings by calling Mr Wong.

56.  Given the deficiencies in Mr Wong’s evidence, the court turned to the other documentary evidence (see section I of the Judgment). It is wrong for KONE to contend that “there is no prima facie case that any levy is payable”[26] (see paras 117 & 120 of the Judgment). There is no substance in KONE’s criticism.

57.  Probably with a view to make up for the deficiencies in Mr Wong’s evidence, KONE now suggests that:

(a)  Having regard to section 2 of Schedule 1 or to sections 23, 24, 53 and 54 of the Lifts and Escalators Ordinance, Cap 618, the court “ought to have found the full load tests to be work relating to advice or consultation within the meaning of section 2 of Schedule 1 rather than construction operations.” (para 4(3) of the draft Notice)

(b)  “[S]tandby services” or “[s]upply labour provided by KONE for the replacement of lighting for standby services” and “crowd control for standby services” related to “MTRC’s ordinary management and did not amount to construction operations.” (paras 4(4) & 4(5) of the draft Notice)

(c)  “Other items such as padlock, object identification system, LED Advertisement Panels or step riser trial” were “optional or non regular items that related to MTRC’s ordinary management or marketing and did not amount to construction operations.” (para 4(6) of the draft Notice)

58.  That has prompted CIC to complain yet again that KONE only “purport[s] to clarify (or assert) for the first time what the full load tests and the works under the variation orders were actually for. These are entirely new arguments and are not premised on any existing evidence before the Court. On that basis alone they ought to be rejected outright.”[27]

59.  I agree with CIC that KONE should not be allowed to raise new points in this Application without evidential basis. In Flywin Co. Ltd v. Strong & Associates Ltd (2002) 5 HKCFAR 356 at para 38, the Court of Final Appeal explained:

“Where a point is taken at trial, the facts pertaining to it are open to full investigation at the evidence-taking stage of the litigation. That is as it should be. Therefore where a party has omitted to take a point at the trial and then seeks to raise that point on appeal, the position is as follows. He will be barred from doing so unless there is no reasonable possibility that the state of the evidence relevant to the point would have been materially more favourable to the other side if the point had been taken at the trial.”

60.  As mentioned before, Mr Wong did not explain what “full load tests” entailed and the two manuals adduced by him contained no definition. There was no evidence, no submission and no suggestion that “full load tests” were “work relating to advice or consultation within the meaning of section 2 of Schedule 1” and section 2 of Schedule 1 was not even referred to in argument.

61.  The late reference by KONE to sections 23, 24, 53 and 54 of the Lifts and Escalators Ordinance does not begin to explain how “full load tests” can be regarded as “work relating to advice or consultation within the meaning of section 2 of Schedule 1”.

62.  Whilst Mr Wong did say that some of the works under item 1.5 were “extra services requested by MTR Corporation Limited” or “additional service requested by MTR”,[28] it was not his evidence that they related to “MTRC’s ordinary management” or “MTRC’s ordinary management or marketing”. In any event, there is evidence that KONE provided such services under and in accordance with the Subject Contract which was a contract for maintenance services for lifts and escalators.

63.  KONE has so far refused to adduce the Subject Contract in evidence.[29] It is not open to it now to argue that item 1.5 went beyond the terms of the Subject Contract or that the Subject Contract covered services unrelated to maintenance of lifts and escalators such as “ordinary management” or “marketing”.

Ground 5

64.  It is apparent from the above that KONE has yet again reframed and reargued its objections. There is no merit in its latest arguments.

65.  Notwithstanding KONE’s claims that “[t]his is the first case of its kind”, that there may be “extra cost or even penal consequences”, that “[t]he Judgment has far reaching consequences for other contractors or property owners”, and that “[t]his appeal is of ‘complexity, novelty and public importance’”,[30] I do not see any reason in the interests of justice that the appeal should be heard.

Conclusion

66.  For all these reasons, the Application is dismissed.

67.  There be an order nisi that KONE do pay CIC the costs of the Application to be taxed if not agreed with certificate for two counsel.