TACHING PETROLEUM CO LTD v. MEYER ALUMINIUM LTD

CTA 1/2018 &
CTA 2/2018
[2020] HKCT 7

IN THE COMPETITION TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COMPETITION TRIBUNAL ACTION NO 1 OF 2018

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BETWEEN

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AND

IN THE COMPETITION TRIBUNAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COMPETITION TRIBUNAL ACTION NO 2 OF 2018

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BETWEEN

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(Heard Together)

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D E C I S I O N

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Introduction

1.  By a decision dated 29 May 2020 (“the Main Decision”), this Tribunal, amongst others:

(1) Disallowed the Disputed Amendment under the Amendment Summonses as against Taching and Shell (“the Amendment Decision”);

(2) Granted limited leave to adduce expert evidence on the Parallism Issue on 4 matters as against Taching and Shell (“the Expert Evidence Decision”);

(3) Dismissing the Redaction Summons as against Shell (“the Redaction Decision”); and

(4) Dismissing the Shell FBP Summons (“the FBP Decision”).

2.  Meyer intends to appeal against these Decisions.  It seeks a direction that no leave to appeal is required in respect of the Amendment Decision and the Expert Evidence Decision.  It accepts that leave to appeal is required for the Redaction Decision and FBP Decision.

Legal principles

3.  Appeals against interlocutory decisions of the Tribunal are governed by s.155 of the Competition Ordinance, Cap 619 (“CO”) and rule 44 of CTR.  They mirror the requirements in s.14AA of the High Court Ordinance (“HCO”) and Order 59, rule 21 of the Rules of the High Court (“RHC”). 

4.  The test for determining whether a decision is interlocutory in nature is the “application approach”, ie whether the determination of the application finally determines the whole action or a crucial issue that goes to the root of the case.  The crucial issue must be one that finally determines an issue on the substantive rights between the parties, ie an issue on the merits as opposed to the procedural steps for bringing or preparing a case before it is presented to the court for final determination on the merits: Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip Co Ltd & Anor (2003) 6 HKCFAR 222, §§26-31, Chan PJ; Bright Shipping Ltd v Changhong Group (HK) Ltd [2019] 2 HKLRD 220, at §§7-11, Lam VP.

5.  Leave to appeal may be granted if the Tribunal is satisfied that the appeal has a reasonable prospect of success (first limb) or if there is some other reason in the interests of justice why the appeal should be heard (second limb): s.155(4) CO.

6.  A reasonable prospect of success under the first limb is one which is greater than fanciful, without having to be probable: SMSE v LK [2009] 4 HKLRD 125, at §17, Le Pichon JA; Wynn Resorts (Macau) Settlement Agreement v Mong Henry, HCA 192/2009, 10 August 2009, at §18, per Chu J (as she then was).

7.  When dealing with appeals against case management decisions, the first limb is satisfied if it can be shown that the Tribunal has erred in principle, has clearly gone wrong, or that the order was irrational having regard to the issues that had to be resolved.  Even if this threshold is satisfied, the Tribunal retains a discretion to refuse leave in the interests of procedural economy and proportionality: Wong Kar Gee Mimi v Severn Villa Ltd [2012] 1 HKLRD 887 (“Mimi Wong”), §§31 and 30. 

8.  Kwan JA (as she then was) states that the applicant faces “a very high hurdle” in having to show that the judge below has “misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible”: Mimi Wong, at §31; LYAG v YSG (YX), HCMP 802/2016, 14 November 2016, at §§27-28, Chu JA.

9.  Leave is normally granted under the second limb where the question is one of general principle, decided for the first time; or there is a question of importance upon which further argument or a decision of the Court of Appeal would be to the public advantage: Hong Kong Civil Procedure 2020, Vol 1, §59/2A/4.

The Amendment Decision

10.  Under rule 44(1)(a) and (2) (i) (ii) of CTR, “an appeal lies as of right against a decision “refusing to allow … an amendment to a … defence to add new issues or defence.”  There is no dispute that no leave is required to appeal against the Amendment Decision, which sought to add new issues or defence.  I make a direction accordingly.

The Expert Evidence Decisions

11.  Meyer contends that no leave to appeal is required in respect of the Expert Evidence Decision because that Decision effectively struck out the set-off defence of Meyer.

12.  That contention is misconceived because:

(1) It is well established that a decision on leave to adduce expert evidence is an interlocutory case management decision and leave is required to appeal: LYAG v YSG (YX), §28, Chu JA.

(2) There was no strike-out application before the Tribunal and the Tribunal did not strike-out the set-off defence.

(3) The Expert Evidence Decision was not a decision that determined in a summary way the substantive rights of a party within the meaning of r.44(1)(a) and (2)(a) of the CTR.  The fact that the Expert Evidence Decision may have the practical effect of constraining Meyer’s future conduct of its defence does not alter its interlocutory nature: Bright Shipping, at §14, Lam VP.

Accordingly, leave to appeal is required.

13.  Meyer admits that the Tribunal has correctly identified the test for allowing expert evidence to be adduced in §156 of the Main Decision but complains that the Tribunal appeared to have lost sight of the low threshold test when coming to its decision.

14.  With respect to Mr Lee, the threshold test for adducing expert evidence is not a low one. The Tribunal has to consider if the expert evidence would be relevant and necessary to the just resolution of the issues: Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd [2018] HKCA 408, at §§9-12, Lam VP, Kwan and Barma JJA.

15.  The court will not allow expert evidence simply on the basis that the court cannot rule out a possibility of such evidence being relevant and helpful.  The modern judicial approach is for the court, at an interlocutory stage, to exercise its discretion to exclude expert evidence if it takes the view that it is not useful to the just resolution of the dispute: LYAG, at §33, per Chu JA.

16.  Meyer seeks to challenge the Main Decision refusing leave to adduce expert evidence on the following issues:

(1) Market definition issue;

(2) “Economic circumstantial evidence of collusion” issue; and

(3) Damages issue.

17.  In §§26-28 of its skeleton submission, Meyer conflated issues (1) and (2).  What Meyer propounds in §§26-28 are not relevant to the identification of the relevant market (which is not in dispute) but structural and behavioral characteristics of the relevant market. The Tribunal has already given leave to adduce expert evidence on those characteristics in §285(3) of the Main Decision. 

18.  Market definition involves identification of the products and the geographical area covered by the market: Competition Commission’s Guideline on the Second Conduct Rule, §2.2 (which applies principles of market definition to the First Conduct Rule) and §2.6. This is not in issue in the present case.  Mr Lee has cited a few other paragraphs from the same Guideline.  That does not put in issue something not in issue.

19.  On issue (2), it appears that Meyer’s complaint is directed at the decision to disallow expert evidence on the Parallelism Issue other than the 4 matters on which the Tribunal has granted leave.  In other words, apart from those 4 matters, Meyer wishes to ask the experts to give opinions on the ultimate question of “whether the uniformity in the pricing mechanism and adjustments of Taching and Shell between January 2011 and June 2017 could better be explained on the hypothesis of collusion or on the hypothesis of independent conduct.”

20.  Taching submits that the framing of expert questions should generally avoid answering the ultimate question to be determined by the court: MG Charter Ltd v Beijing Caissa International Travel Service Co Ltd [2020] HKCFI 67, §5, DHCJ William Wong SC. 

21.  On the other hand, Meyer contends that under s.58(1) and (3) of the Evidence Ordinance, expert evidence is admissible on any relevant matter, which includes an issue in the proceedings.  Those sections abrogate the rule that expert evidence on the ultimate issue should be excluded: Peace Mark (Holdings) Ltd (In Liquidation) & Anor v Chau Cham Wong Patrick & Ors, (unreported), HCA 2371/2009, 2 November 2017, Anthony Chan J, at §17.

22.  However, Anthony Chan J went on to say that the issue is not whether it is permissible for expert evidence to intrude upon the ultimate question.  It is an issue of admissibility.  If the court is fully able to answer the ultimate question without assistance, then such evidence is not admissible as being irrelevant or unhelpful: Peace Mark, at §18.

23.  The question posed by Meyer in paragraph 19 is for the Tribunal to answer, if at all.  In any event, the ultimate question is whether there was an agreement or concertation, a question of fact for which no expert evidence is required except to the limited extent allowed.

24.  The lengthy submission of Meyer is but a rehash of the arguments before the Tribunal.

25.  On the damages issue, the Expert Evidence Decision did not hold that the defence of set-off is not available under CO.  What the Expert Evidence Decision did was to apply an established principle stated in Hong Kong Civil Procedure 2020, Vol 1, §18/17/2-3 to hold that Meyer did not have something to seek to set off against Taching and Shell’s claims at the date of commencement of the action, having regard to the statutory scheme under the Competition Ordinance.  That principle was conceded by Meyer as recorded in a prior decision of the Tribunal (§212 of the Main Decision).

26.  Meyer submits that a claim for the future exercise of discretionary relief based on existing facts which, once exercised, would place the claimant under a monetary obligation to the defendant, is capable of being relied upon as an equitable set-off.  The fact that at the date the set-off is asserted, the claimant cannot be said to be under any liability to the defendant, and any such liability is contingent on a court subsequently choosing to exercise a broad statutory discretion in a particular way is not a necessary bar to the defence of set-off: Albion Energy Limited v Energy Investments Global BRL [2020] EWHC 301, at §§54-56.  This argument was not advanced before the Tribunal: §219(7) of the Main Decision.

27.  The lengthy arguments of Meyer are but a re-hash of the arguments before the Tribunal. There is nothing to show that the Tribunal had erred in principle or that the Expert Evidence Decision was irrational.

Redaction Decision

28.  Rule 24(3) CTR requires the Tribunal to address its mind to specific matters before ordering discovery, recognizing that discovery in competition cases do frequently involve confidential information.  Mimi Wong deals with the procedure for determining irrelevance.  Neither rule 24(3) nor Mimi Wong make relevant what is irrelevant.

29.  Mimi Wong applies to complex commercial or intellectual property cases in the Court of First Instance involving confidential information.  There is no reason why the same principle should not apply to discovery involving confidential information in the Tribunal. There is nothing to show that the legislature intended otherwise when drafting rule 24(3) CTR.

30.  Shell did not make a bare assertion of irrelevance but with reasons – that the redacted information related to other fuel types and customers of other sectors.  The fact that Shell disclosed some irrelevant information to show the sense of a document did not mean that it waived its position on irrelevance as regards other documents.

31.  Disclosure of irrelevant price sensitive information under compulsion is fundamentally wrong as it is unnecessary for the fair disposal of the proceedings within the meaning of rule 24(3) CTR.  Applying Mimi Wong does not go beyond rule 24(3).  The fact that there is a confidentiality ring does not assist Meyer.

32.  Section E of Meyer’s submission is largely rehash of the arguments before the Tribunal.  There is no suggestion that the Tribunal erred in law.  The complaints of Meyer are directed at the way the Tribunal exercised its discretion.  It is not shown that the Tribunal was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible.

FBP Decision

33.  There is no assertion that the Tribunal erred in law.  Meyer’s arguments were rehash of those before the Tribunal. They fall far short of showing that the Tribunal’s decision, which was a case management decision, was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible.

Second limb – question of general importance

34.  The Main Decisions on interlocutory matters do not raise any question of general and public importance.  The fact that some of these issues are litigated in the Tribunal for the first time do not mean that they are of general and public importance.

35.  Meyer has purported to identify some questions of general and public importance in §§102.4-102.8 of the Meyer-Shell submission.  With respect, they are questions for the trial than for interlocutory matters.  §§102.9-102.10 concerning the applicable test for allowing redactions in competition proceedings and whether the Tribunal is bound by what Mr Lee calls the “straight-jacket approach” in GE Capital and Mimi Wong are not questions of general and public importance.  There are established principles which govern exercise of discretion by the Tribunal.

Conclusion

36.  I give a direction that no leave to appeal is required for the Amendment Decision but leave is required for the Expert Evidence Decision.  Meyer fails under both the first and second limbs of the test for granting leave to appeal.  I therefore dismiss the applications for leave to appeal. 

37.  On a nisi basis, costs of these applications should be to Taching and Shell, to be borne by Meyer, with certificates for 2 counsel.

38.  The leave application against the Amendment Decision and Expert Evidence Decision involve the same issues as regards Taching and Shell.  Meyer has lodged 2 sets of substantial written submissions which completely overlap in respect of those 2 Decisions.  The written submissions as a whole also re-run a lot of arguments at first instance.

39.  Moreover, Meyer lodged 10 bundles in respect of each leave application against Taching and Shell.  Needless to say, the contents overlapped.  I am unable to see why the bundles used at first instance could not be re-used.  Effectively, only one new bundle containing the 2 summonses for leave to appeal and the Main Decision needs to be produced for both leave applications.  I do not see how wasteful copying of documents can assist the Tribunal in the determination of the leave application. 

40.  In the event Meyer succeeds in its appeal on the Amendment Decision (or any appeal over which it successfully gets leave from the Court of Appeal), I do not see why the costs of preparing a set of duplicitous submission and 19 unnecessary bundles should not be borne by Meyer in any event.  I draw this to the attention of the Court of Appeal.

41.  I thank counsel for their assistance.