PERPETUAL WEALTH (HONG KONG) LTD v. BE SOLUTIONS CO LTD AND OTHERS

HCA 1905/2018

[2021] HKCFI 2539

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1905 OF 2018

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REASONS FOR DECISION

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1.  On 14 August 2018, the Plaintiff instituted these proceedings, seeking damages for misrepresentation relating to and breach of a contract for the 1^st Defendant’s supply of marble and provision of incidental services in the renovation of the Plaintiff’s property (“Contract”). The Plaintiff complains (in essence) of defects in the marble supplied, misrepresentation as to the quality of the marble and the price or value of the marble, and damages as a result of the Defendants’ alleged misrepresentation and breach of implied terms of the Contract, that the marble to be installed and supplied would correspond to the sample approved by the Plaintiff, and/or would be of merchantable quality.

2.  In their defence, the Defendants deny that the alleged representations had been made, deny that they were responsible for the choice of the marble supplied, and deny that there was any defect in the marble supplied as complained of, or that there was any agreement that the marble would correspond to the alleged or any sample.

3.  Pleadings were closed and the parties obtained directions from the Master as to the further conduct of the action.  These included leave for the parties to adduce expert evidence on defects and on the quantum of damages.  The 1^st Defendant then applied to transfer the action to the Construction List.  This was opposed by the Plaintiff, and when the application came before the Construction Court, various directions relating to the transfer were made.  These included the direction for the parties to confer and agree on single joint experts to be appointed on the issues of defects and on quantum of damages as identified by the parties, and on which the Master gave leave to adduce expert evidence.

4.  On 9 June 2021, the parties submitted some of the directions on expert evidence for approval by this Court, but they were not able to agree on the identity of the single joint experts.  The Plaintiff maintained that leave should be granted to both parties to call separate experts of their own on the issue of liability.

5.  On further directions made by the Court, written submissions on the question of whether there should be separate or joint experts, and the identity of the experts, were filed, and a hearing was fixed for 26 August 2021 for the parties to be heard and for directions for trial to be finalized.

6.  At the commencement of the hearing on 26 August 2021, this Court made preliminary observations on the subject of expert evidence. The Court indicated that having considered the nature of the dispute on the alleged defects in the marble, the Court was prepared to grant leave to the parties to appoint separate experts on the issue, but there was no justification for separate experts to be called on quantum and that the parties should confer and agree on the identity of the single joint expert (“SJE”) on quantum, and to confirm the identities of the separate experts on defects if SJE cannot be agreed.  The Court expressed reservations as to the expertise of the experts proposed. The Court also sought clarification on the essence of the Plaintiff’s claim as to the defects alleged, whether they related to defects in installation of the works, or if they related to defects in the pattern or coloring of the marble pieces.  The Court further expressed queries and concerns as to the questions which the parties had framed for the experts.

7.  The objective of the Court is to ensure that unnecessary time and costs should not be wasted on expert evidence which may not be either relevant, or helpful to the Court in the effective trial of the real issues in dispute between the parties as identified in the pleadings.  Expert evidence can only be adduced with leave of the court, and upon the court being satisfied as to the necessity of the expert evidence, the relevance of the questions to be answered by the expert(s), and the timetable and manner of the exchange of expert reports. It is not the practice of the Construction Court to give directions for expert evidence on piecemeal basis.  If the questions for the expert are not properly framed, the expertise and qualifications of the suitable candidate cannot be identified.  If the issues in dispute cannot be properly identified, the questions for the expert cannot be accurately and usefully formulated.  Only when the issues in dispute have been clearly identified can the Court assess whether expert evidence is appropriate and necessary, and if yes, whether separate experts are to be appointed instead of single joint experts.

8.  As this Court has repeatedly emphasized to parties in cases on the Construction List, there have been more than enough cases of trials being unduly prolonged and distracted, and the costs of preparation for trial being wasted unnecessarily as a result of prolix, and very often unnecessarily complicated, and at times unuseful, expert reports.  Single joint expert evidence is preferred and has been used as the starting point for expert directions by the Construction Court for some time.  From experience, evidence involving single joint experts assists in narrowing the scope of the issues in dispute, shortens the trial, facilitates settlement of issues and often leads to global settlement of the action.

9.  Despite having given the parties sets of the standard directions for exchange of expert evidence reports, and having given ample time to the parties to confer and attempt to agree on the identity of the SJE on quantum, the parties could not narrow their disputes on the proposed directions after having spent over 90 minutes in discussion.  If parties cannot agree on matters in dispute, the Court can of course determine the disputed matters but the directions sought must be properly formulated by the party seeking them, and the other party must be given a fair opportunity to consider and address them.  When the hearing resumed on 26 August 2021, the Plaintiff at the last minute produced a revised set of questions to be answered by the experts on defects and on quantum.

10.  As the Court was not satisfied that the parties and their legal advisers had taken the time to properly consider: (1) the real issues in dispute as identified in the pleadings; to (2) formulate the proper questions to be answered by the experts to assist in the Court’s resolution of the real issues in dispute for trial; and to (3) identify the candidates with the necessary expertise to answer the questions; this Court refused to give any directions on 26 August 2021 for expert evidence to be adduced at trial.  It remains for the parties and their legal advisers to properly consider the above matters before any party applies for leave to adduce expert evidence, with all the properly formulated directions proposed set out in the application.

11.  The Court would highlight the fact that on the pleadings, the issues in dispute include (at the least):

(1)  whether there was an agreement that the marbles supplied would correspond with any sample;

(2)  whether there was any specification or agreement to use Grade A Crema Marfil (Spain) marble;

(3)  whether there was any trade practice of grading of Crema Marfil (Spain) marble in Hong Kong;

(4)  whether there can be a sale by sample of marble, what conditions this requires and what can be shown from a sample of marble,

(5)  whether the marble supplied and installed was designated and approved by the Plaintiff, or the Defendants;

(6)  whether the defects pleaded at paragraphs 10 and 10B of the Re-Amended Statement of Claim (“SOC”) (“Defects”) were installation defects, processing defects, or defects in quality of the marble;

(7)  whether the Defects and patterns of the marble installed reflected natural variations inherent in marble, or were defects;

(8)  whether the Defects can show: (i) that the marble installed did not correspond with any alleged sample, or (ii) a lower grade or quality of marble;

(9)  what was the reasonable price of the marble supplied and installed;

(10)  whether the 1^st Defendant’s services of installation of the marble (as pleaded in paragraph 12.4 of the SOC) were carried out with reasonable care and skill;

(11)  what were the reasonable costs of repairing and rectifying the Defects.

In framing the questions to be answered by the experts, the above issues should be taken into consideration to ensure that any expert evidence to be adduced would be of assistance to the Court in deciding the issues for determination at trial.

12.  As indicated at the conclusion of the hearing, trial dates are to be fixed forthwith in this action, in accordance with PD 6.1. The milestone dates will serve as the guideline in the Court’s consideration of all future interlocutory applications to be made.

13.  Practitioners should all be reminded of their duties to the Court in furthering the underlying objectives of the Rules and of the Civil Justice Reform, to increase the cost effectiveness of any practice and procedure to be followed, to promote procedural economy in the conduct of proceedings, and to facilitate settlement of disputes. These call for practitioners to be sensible and reasonable in their conduct of proceedings, and it should go without saying that they should in all cases be properly prepared in good time before any contested hearing, so that costs and the Court’s time are not wasted.