WEST COAST INTERNATIONAL TRADING LTD t/a DANDELION FINE ARTS v. CHELESA ART CO LTD

HCA 1636/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1636 OF 2010

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D E C I S I O N

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INTRODUCTION

1.  This is the plaintiff’s “renewed” application for expert evidence directions.  It is a “renewed” application because the plaintiff has earlier sought, and obtained (on 10 January 2014), from the registrar such directions.  In a decision handed down on 30 April 2014, the defendant’s appeal against the said direction was allowed (and the directions were set aside) (“Apr 2014 decision”).  As the court of appeal rightly observed in its judgment dated 3 September 2014 (on appeal from the Apr 2014 decision), the Apr 2014 decision was almost entirely based on the manner in which the plaintiff’s case was pleaded (para 7 thereof).

2.  The plaintiff’s pleadings have since been amended (the statement of claim in April 2015 and the reply in June 2015).

3.  The background leading to this action has been summarized in the Apr 2014 decision (para 2 to 6 thereof).

4.  Unless otherwise expressly so stated, the same abbreviations used in the Apr 2014 decision will be used below.

THE PLAINTIFF’S PLEADED CASE

5.  Below is a summary of the plaintiff’s latest pleaded case:

(a)   the plaintiff is a painting and artwork trader and is the owner of the 4 paintings the subject-matter of this action (collectively “the plaintiff’s paintings”);

(b)   the defendant has wrongfully converted the plaintiff’s paintings to its own used and/or detained them;

(c)   3 of the plaintiff’s paintings have by now been returned to the plaintiff (collectively “the returned paintings”);

(d)   the only painting still not recovered is the now disputed painting (this is related to “the 2^nd Painting” by the parties in the pleadings);

(e)   the defendant has thereby caused loss and damage to the plaintiff for which the plaintiff is entitled to compensation and/or the return of the 2^nd Painting.

6.  The loss suffered by the plaintiff is set out in the latest pleading as follows:

(1)   value of the 2^nd Painting if it is ultimately not recovered;

(2)   loss of use of the plaintiff’s paintings for the periods during which they were wrongfully detained (see also para 7 below);

(3)   in relation to sub-para (2) above, the basis of calculation is:

(a)   the rental income obtainable during the said periods; or

(b)   the amount of “interest on capital” obtainable during the said periods.

7.  The plaintiff’s pleading further alleges that:

(a)   in relation to the 1^st Painting, it was purchased by the defendant on 16 February 2007 and was returned to the plaintiff on 2 November 2010;

(b)   in relation to the 2^nd Painting, it was purchased by the defendant on 12 March 2007 and was not returned;

(c)   in relation to the 3^rd Painting, it was purchased by the defendant on 5 June 2007 and was returned to the plaintiff on 2 September 2010;

(d)   in relation to the 4^th Painting, it was purchased by the defendant on 12 February 2007 and was returned on 11 July 2007.

THE EXPERT DIRECTIONS SOUGHT

8.  This application (taken out in January 2015) seeks in effect the following expert directions:

(1)   an inspection, and non-destructive examination, of the now disputed painting for the purpose of providing the following expert opinion:

(a)   in relation to the plaintiff’s paintings, their respective market value and rental value as at the following dates: the date of the defendant’s purchase, the date of the defendant’s sale, (the 2^nd Painting and the now disputed painting) the date of writ herein and the date of the report;

(b)   in relation to the returned paintings, their respective market value and rental value as at the dates of their return;

(c)   in relation to the now disputed painting, whether it was painted by the Chinese contemporary painter Chen Yifei;

(2)   the plaintiff be at liberty to disclose and adduce such expert opinions provided a report of such opinion be served on the defendant within 28 days from the said date of inspection and examination;

(3)   the defendant be at liberty to disclose and adduce such expert opinions (in response) provided a report of such opinion be served on the plaintiff within 28 days thereafter;

(4)   the plaintiff be at liberty to disclose and adduce such expert opinions in reply provided a report of such opinion be served on the defendant within another 28 days thereafter;

(5)   the said experts shall be made available for cross-examination at trial.

The expert opinion referred to in sub-para (1)(a) and (b) above is called “the valuation opinion” and the related reports “the valuation reports”; the expert opinion referred to in sub-para (1)(c) above is called “the authenticity opinion” and the related reports “the authenticity reports”.

(a)   Relevant legal principles

9.  The admissibility of expert evidence is, similar to other pieces of evidence, dependent first and foremost on relevance.

10.  “Relevance” in the context of expert evidence, however, has more than one meaning.  Hence, it was said in Annabell Kin Yee Lee and Others v Lee Wing Kim (May Lee) HCA 9522/1997 (22 November 2001):

“As to the relevant test for determining whether expert evidence is to be received, Evans-Lombe J in Barings plc (in liquidation) & Anor v. Coopers and Lybrand & Ors LEXIS Transcript 9 February 2001 at para.44 observed that this involves a two stage test, the first stage being whether the evidence is admissible as ‘expert evidence’ for the purpose of section 58 of the Evidence Ordinance, Cap.8, and the second stage is whether the evidence is relevant, in the sense of being helpful, to any decision that the court has to arrive at. It is pointed out (at para.45) that :

‘ ... “expert evidence” is admissible under [section 8 of the Evidence Ordinance] in any case where the Court accepts that there exists a recognised expertise governed by recognised standards and rules of conduct capable of influencing the Court's decision on any of the issues which it has to decide and the witness to be called satisfies the Court that he has a sufficient familiarity with and knowledge of the expertise in question to render his opinion potentially of value in resolving any of those issues. Evidence meeting this test can still be excluded by the Court if the Court takes the view that calling it will not be helpful to the Court in resolving any issue in the case justly. Such evidence will not be helpful where the issue to be decided is one of law or is otherwise one on which the Court is able to come to a fully informed decision without hearing such evidence.’” (para 16 thereof)

11.  I have borne the above in mind when determining this application.  Consideration also has been given to the Annabell Lee decision (para 13 to 16 thereof) and Ko Chi Keung v Lee Ping Yan Andrew [2001] 2 HKC 63.

(b)   Valuation experts

12.  The plaintiff clarified during the hearing it does not intend to adduce new expert evidence in this regard.  If leave is granted now, the plaintiff will adduce the same valuation reports previously adduced pursuant to the registrar’s order (which, as stated above, was set aside by the Apr 2014 decision earlier).

13.  The defence does not oppose the grant of leave as such.  But the defendant contends that part of the claim lacks the proper basis.  The claim based on rental values is not supported by any evidence of:

(a)    the existence of such rental market in Hong Kong (the defence expert report states that there is no such market while the plaintiff’s expert report does not refute this);

(b)   the plaintiff’s intention to hire out the plaintiff’s paintings.

14.  The plaintiff argues that it can do so, even if there be no rental market, relying on decisions such as:

(1)   The Owners of the Steamship “Mediana” v The Owners, Master and Crew of the Lightship “Comet” [1900] AC 113;

(2)   Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd [1952] QB 246;

(3)   Beechwood Birmingham Ltd v Hoyer Group UK Ltd [2011] QB 357.

15.  The “Mediana” decision concerned a damaged lightship belonging to a harbor board.  The board deployed another lightship to replace the damaged one.  The House of Lord awarded damages against the negligent defendant based on the out-of-pocket expenses as well as damages for the loss of service of the damaged lightship.  The court said:

“It appears ... that the expense of having [the substitute] ship ready instead of having to look for a ship when the emergency occurs, or rather a part of that expense, must properly fall upon the person who has been guilty of running down the lightship” (p 122).

16.  The Strand decision concerned the detention of a chattel which was hired out in the plaintiff’s ordinary business.  Conflicting observations have been made by the court:

“I have added these latter words [which should referred to ‘which the plaintiff, as part of his business, hires out to users’] because I do not wish in this so far uncharted field to go beyond the facts of the case” (emphasis supplied) (p 252);

“If a wrongdoer has made use of goods for his own purposes, then he must pay a reasonable hire for them, even though the owner has in fact suffered no loss. It may be that the owner would not have used the goods himself, or that he had a substitute readily available, which he used without extra cost to himself. Nevertheless the owner is entitled to a reasonable hire” (emphasis supplied) (p 254).

17.  The Beechwood decision, on the other hand, concerned general damages awarded on the basis of loss of use of the damaged vehicle during its repair period.  On appeal, the court of appeal concluded, under this head, damages should be based on the interest and capital employed in neutering the damaged vehicle (and any depreciation) during the repair period.  The court observed:

“Since the decision of the House of Lords in the Owners of Steam Sand Pump Dredger, No 7 v Owners of SS Greta Holme (The Greta Holme) [1897] AC 596, it has been clear that damages may be recovered for loss of use of a non-profit-earning chattel, whether or not a replacement is provided for the damaged chattel. ... ” (para 33 thereof).

18.  Extending the above principles to this action, it is at least arguable:

(a)   the rental value;

(b)   the interest on the capital employed,

of the plaintiff’s paintings is claimable for the periods when they were lost, even though:

(1)   there may in fact be no available rental market;

(2)   the plaintiff might not have any particular intention as to the precise use for the plaintiff’s paintings.

19.  The words “at least arguable” are in italics because the conclusion does not mean that the plaintiff will necessarily succeed in such a claim at trial; it is only that the claim has sufficient potential relevance to justify it to be adduced as evidence at trial.

(c)   Authenticity experts

20.  I do not agree that, whether or not the now disputed painting was in fact painted by Chen Yifei, is in itself a relevant issue.  The plaintiff only claims ownership over the 2^nd Painting, which in its pleading is described as:

“畫的焦點為一中國式拱橋，普遍見於陳逸飛 ‘水鄉’ 畫系列中。畫家將它放在圖畫的中間靠右位罝 (從觀賞者的角度)。在畫的左前方，有一長堤，上面畫有一隻白色的鵝，堤後有些房屋，河上有一隻艇位於中間靠左下方。畫家描繪的是江南水鄉在帶有薄霧中的陽光下景色。畫用木框裱起。”

(para 1(b), Re-Re-Amended Statement of Claim)

On the other hand, the plaintiff describes the now disputed painting as:

“... the Defendant ... had obtained a painting ... allegedly being [the 2^nd Painting] ... However, after examination of this painting and images thereof, the Plaintiff is sure that this is not and could not be the 2^nd Painting ... the [now disputed painting] firstly does not tally with the description of the 2^nd Painting ... and more importantly, is not an authentic painting by CHEN Yifei but a counterfeit” (para 11A Re-Re-Amended Statement of Claim);

“The scenery depicted in the image of the [now disputed painting] did not even come close to the scenery of the 2^nd Painting” (para 5(3), Re-Re-Re-Amended Reply to Re-Re-Re-Amended Defence).

21.  It is thus the plaintiff’s own case it was never the owner of the now disputed painting (irrespective of the identity of its painter and/or its monetary worth).

22.  Such being the case, it cannot logically be part of the plaintiff’s case that it can seek its return, or that the return of the now disputed painting can constitute a valid defence to the loss of the 2^nd Painting.

23.  On the part of the plaintiff, therefore, the authenticity of the now disputed painting is irrelevant.

24.  The defendant, on the other hand, maintains that the chattel it purchased from Yeung was the now disputed painting (para 8B, Re-Re-Re-Amended Defence).  It also denies that it ever purchased (or possessed), converted or detained, the 2^nd Painting (para 14(1A), 15 and 19, Re-Re-Re-Amended Defence).

25.  Thus, the authenticity of the now disputed painting should not be a relevant part of the defence case either.

26.  Insofar as it is contended that the authenticity of the now disputed painting can assist to determine the veracity of the defence case relating to the now disputed painting, it is an attempt to adduce evidence concerning credibility.  As such, it is a piece of evidence intended to contradict a collateral matter.

27.  As regards collateral matters, the author of Phipson on Evidence (2013) 18^th Ed observed:

“A party may not, in general, impeach the credit of his opponent’s witness by calling witnesses to contradict him as to matters of credit or other collateral matters, and his answers thereon will be conclusive. This rule is not absolute” (para 12-46 thereof).

Bias of a witness has been held in various cases to constitute an exception to the above: Thomas v David (1836) 7 C&P 350; R v Edwards (1991) 93 Cr App R 48, 56. Ultimately the matter is one for the judge’s discretion.

28.  The 2^nd Painting is pleaded by the plaintiff to be worth $4.2 million whereas the defendant pleads that it acquired the now disputed painting for RMB850,000.  These chattels are hence said to be of substantial monetary worth.

29.  With that in mind, the credibility of the defendant’s acquisition of the now disputed painting seems to be worthy of more thorough examination.  For that reason, and not without reluctance, I will give leave to the plaintiff to adduce authenticity opinion.

30.  The defence also objects to this part of this application on the ground that the tests proposed by the plaintiff cannot determine a painting’s authenticity.  It is not for the court to decide for a party how it should prepare the evidence necessary for its own case.  Giving leave to adduce expert evidence does not of itself guarantee the court will accept at trial the expert in fact possesses the necessary expertise, or that the expert’s opinion is valid and should be relied upon, or other matters which are evidentiary in nature.

CONCLUSION

31.  An order will be made along the relief sought in this action (see also para 8 above).  The formal order is to be drawn up later to reflect that decision.

32.  However:

(a)   instead of para 8(4) above, the parties’ respective expert be at liberty to reply within 28 days to the reports provided earlier, such reply be set out in tabular form (similar to a “Scott’s Schedule”);

(b)   para 8(5) above is to be considered after all the reports have been provided.

OTHER MATTERS

33.  The parties’ written submissions also mentioned various other points.  These have not been expressly set out or dealt with above.  This is so only because of the need to balance between the length of the decision and its comprehension.  It does not mean those other points are thought to be irrelevant (or have been overlooked).  To avoid doubt, those other points have also been considered.

COSTS ORDER

34.  The significance of the valuation opinion and the authenticity opinion, and the manner in which these opinions will be presented and determined, are only known after trial.  For these reasons, the parties sensibly agree that the costs of this application should be reserved.