VINTECH CO. LTD. v. RADIO-HOLLAND HONG KONG CO. LTD.

HCMP 1353/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 1353 OF 2002

(ON APPEAL FROM DCCJ NO. 5706 OF 2001)

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J U D G M E N T

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Hon Rogers VP:

1. This is an application for leave to appeal. The application is made out of time but, as the arguments have gone, I will deal with that point later. However, this Court is not disposed to give leave to appeal and I will briefly give my reasons.

2. The application is in respect of an assessment of damages which was handed down in a judgment on 14 December 2001 by Deputy Judge Anthony Kwok, after summary judgment had been given to the plaintiff. The plaintiff had brought this action against the defendant in respect of the sale of some 30 radars which were to be used on fishing boats in the PRC, and, as both parties had in contemplation, the radars were to be sent to the Mainland and sold by the plaintiff's customer there.

3. The Deputy Judge assessed the damages as $8,049 for the plaintiff's actual loss of profits, plus $150,000 liquidated damages paid by the plaintiff to its own customer in the PRC, namely, Zhanwei Red Sea Fishing Boat Services Co. Ltd.

4. On this application, two major points are taken. The first is that, under clause 9 of the contract, it is provided, according to the uncertified plaintiff's translation, "That this contract consisted of two copies, each possessed one copy, effected from the date of certification from the certification authority, the effective date is 28 February 2001." The defendant's translation is similar. The relevant part is "This contract shall become effective upon certification by the certifying authority and expires after 28 February 2001."

5. The point taken on behalf of the defendant is that the plaintiff has not shown that either of the two copies which are in existence bear certification by the certification authority. The Judge refused to deal with this point because, in effect, he said it was taken too late. He said, at page 44 of his judgment:

"Finally, at the end of the final submission, the Defendant raised the point that the agreement was not properly certified. This point had never been raised before and no mention was ever made in their skeleton submission. The Plaintiff was caught by surprise as no issue was ever taken by the Defendant. In my judgment, the Defendant was barred from taking a technical point like this at the final stage of the hearing. I agree with the plaintiff's submission that the agreement is binding and that explained why they have to comply with it by paying $150,000."

6. In my view, no basis has been shown for differing from the Deputy Judge's view in this respect. This Court has looked, as far as possible, at the Judge's handwritten notes of the evidence, but it does not seem that this matter was fully explored in evidence. There were questions put as regards the fact that there were two copies of the contract, but quite how certification takes place and what is effected by certification is completely unknown.

7. In my view, the Judge's approach is correct. This is a matter which should have been drawn to the parties' and the Court's attention prior to the hearing, if it was to be taken. There were affidavits filed on each side in respect of the inquiry as to damages and the point should have been raised then. This may well have been a situation where evidence would have had to have been given as to how certification took place and what was the effect if certification did not take place, and so on and so forth.

8. Indeed, even on the plaintiff's uncertified translation, there is, at the top of the page, a translation which reads "date of certification". Whether or not that is a proper translation of what the document said, one does not know; however, it is a separate date from when the contract became effective, which was approximately a fortnight later.

9. The other point taken as a ground upon which leave to appeal should be given is that the sum of $150,000 was awarded on the basis that that was the amount which the plaintiff has paid to its customer Zhanwei. It is said that this is clearly a penalty and, for that reason, it would be irrecoverable under Hong Kong law and the defendant should not be in jeopardy of having to pay it, and that, for this purpose, PRC law should be taken to be the same as Hong Kong law.

10. In my view, this argument really falls down at the first hurdle because the Judge, having heard the evidence, came to the conclusion that he did at paragraph 39 of his judgment:

"Thus, in my judgment, one simply cannot look at the plaintiff's own loss of profit in isolation and seek to compare this with the sum of $150,000 compensated to Zhanwei."

11. He reached that conclusion on the basis that he did not think it was excessive, having said that it might well have been a reasonable contemplation of the parties that the units would be sold at $20,000 per unit and not, as suggested by the defendants in their evidence, at $16,000 to $17,000 per unit. If the radar units were sold at that price, the loss of profit of $150,000 in respect of 30 radar units would clearly be there.

12. In my view, the Judge's approach cannot be faulted. For my part, I do not think it is necessarily exorbitant to contemplate that for equipment of this sort which will be sold in parts of the PRC where it may not be readily available, 30 per cent profit is necessarily excessive. I would think that possibly it may well be in line with the sort of profit that would be expected and might actually be slightly lower than the normal run of profits.

13. For these reasons, I do not consider that there are sufficient merits in the appeal to warrant giving leave to appeal. In any event, as Mr Coleman very straightforwardly pointed out, there are considerable difficulties with regard to the timing of this application. Although the application for leave to appeal was made to the Judge below in time, even the application to the single judge which should have been made 14 days later was six days out of time, but when it came to renewing this application, which should have been done within seven days of the refusal of leave by the single judge, the defendant was 48 days out of time. Although it is said that lengthy consideration had to be given by the client because, doubtless, the costs of appealing to the Court of Appeal are considerable in relation to the amount at stake, which is $150,000, the other side of that coin is that those sorts of decisions ought really, as a business matter, be taken quickly and cannot be left too long.

14. I leave aside whether, if the case really had merits, I would have been disposed to have extended time but, in the circumstances of this case, I would not be prepared to extend the time for making the application for leave to appeal.

Hon Le Pichon JA:

15. I agree.