BLU ENERGY DRINK (ASIA) LTD v. CHAMPION IN LTD (WHY CLUB)

DCCJ 274/2016

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 274 OF 2016

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DECISION

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1.  This is the plaintiff’s application for leave to appeal against judgment of 5 April 2017 out of time. The plaintiff has been acting in person and the defendant was absent in this hearing. I am satisfied that the defendant has been informed of this hearing and the hearing was proceeded in the absence of the defendant.

Appeal Out of Time

2.  Section 63(1) of the District Court Ordinance, Cap 336 (the “Ordinance”) provides that :-

“Subject to subsection (3), an appeal can, with leave of a judge or the Court of Appeal, be made to the Court of Appeal from every judgment, order or decision of a judge in any civil course or matter.”

3.  Section 63A(2) of the Ordinance provides that:-

“Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that –

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

4.  Order 58 r 2(4)(b) of the Rules of the District Court (“RDC”) provides that:-

“An application for leave to appeal must be made to a judge or to a master in the case of an appeal under paragraph (2), within in the case of an appeal from a judgment, order or decision (other than in interlocutory judgment, order or decision) of a judge, 28 days from the date of the judgment, order or decision.”

5.  In the plaintiff’s inter-parte summons of 8 May 2017 (mis-stated as 8 May 2016), the application for leave was made out of time.  In the supporting affirmation of Mr Itzhak Nahoom of 8 May 2017, it did not give reasons why the application was made out of time.

6.  The date of judgment was 5 April 2017.  The last day to file the application for leave was 3 May 2017.  The plaintiff was 5 days late in making the application for leave to appeal.  During the hearing when Mr Nahoom was asked for the reasons of the delay, he stated that:-

(1) He was acting for the plaintiff in person in this action throughout.

(2) He was aware of the deadline for asking application for leave to appeal within 28 days from the date of judgment about 10 days after the judgment was handed down.

(3) He was travelling abroad with his family after the judgment was handed down.

(4) He stated that there was an “innocent miscalculation” of the time for making the application.

7.  In Secretary for Justice v Hong Kong & Yaumatei Ferry Co Ltd [2001] 1 HKC 125, the plaintiff applied to extend the time for serving a notice of appeal and its solicitor explained that on the basis that the appeal was against a final judgment, the notice of appeal was filed and served within 28 days of the sealing of the order.  There was no explanation as to how the mistake arose or the reasons given as to the erroneous conclusion that the order was a final order.  The Court of Appeal held that the absence of any explanation of how the applicant’s solicitor came to think that the time for filing the notice of appeal was 28 days rather than 14 days made the solicitor’s conduct inexcusable.  Where the delay was inexcusable, the party seeking an extension of time must show a real prospect of success on merits.

8.  The plaintiff did not explain why the application for leave to appeal was not filed within time when Mr Nahoom was already aware of the deadline to do so was within 28 days from the date of judgment.  Mr Nahoom and his family being away from Hong Kong did not prevent the plaintiff from filing the notice of appeal before or after his departure from Hong Kong.  I find that the plaintiff’s failure to apply for leave out of time inexcusable.  I do not think there is any substance on the excuse of “innocent miscalculation” of deadline.  Accordingly, the plaintiff must show a real prospect of success on merits and if the plaintiff fails to do so, no leave to appeal shall be granted.

Grounds of Appeal

9.  In this hearing, the plaintiff put forward the following reasons:-

(9.1) The defendant signed contract (“Contract”) with the plaintiff that the defendant failed to order minimum amount quantity of the energy drinks (“Product”).  They were in breach of contract.

(9.2) The defendant did not take part at trial. Their failure to appeal in total showed that they did not put any hopes on success rate in the defence.

(9.3) The plaintiff refused to take part in mediation. This was because before trial, the defendant only put in insulting offers.

(9.4) The judgment only refer to matters written in the Contract.  The plaintiff’s business did not allow the plaintiff to write in the Contract any penalty or breach of Contract.  Therefore, the plaintiff could not state the punishment for the defendant’s failure to order minimum order quantity.

(9.5) The cases referred to in the judgment were different to the present case.

(9.6) On quantum, the claim for storage charges and the disposal of the Product were not stated in the statement of claim and the witness statement, because these did not happen until short time before trial.  The plaintiff was unable to work out the calculation before the loss actually occurred.

Breach of Contract

10.  I can summarily deal with paragraphs 9.1, 9.4 and 9.5 together. 

11.  According to the wording of the Contract, the plaintiff was to supply the Product to the defendant when the latter placed orders with the former.  The Contract only mentioned the amount of rebate to be paid by the plaintiff to the defendant for a period of 2 years as an example.  There was nothing in the Contract to state that the defendant had to place minimum order quantity within 2 years, failing which the defendant must compensate the losses of the plaintiff. 

12.  In my judgment I found that on the proper construction of the Contract signed between the parties, there was no breach of Contract on the part of the defendant, because the contract did not state any termination.  Further, the contract did not state any consequence on the part of the defendant for its failure to place the minimum order quantity, apart from the fact that the defendant would not be entitled to rebate.  I found that the wording of the Contract did not support the plaintiff’s contention that the defendant had to place minimum order quantity for 2 years. The plaintiff failed to prove its claim.

13.  In this application, the plaintiff did not put forward any arguments that the findings on the Contract were erroneous.  If it was the conscious choice of the plaintiff in not stating the true intention and consequence in the Contract, I did not see any reasons to depart from the conclusion reached in the judgment.

14.  In the judgment, references have been made to a few previous decisions.  Those cases bear resemblance in the material aspects to the Contract in this case.  Although Mr Nahoom tried to distinguish the facts in those cases from the present one, I am not persuaded that the reasoning in those cases would not be applicable in the present case.

Defendant’s Absence

15.  As to paragraph 9.2 above, the plaintiff alleged that the defendant did not attend trial and it showed that the defendant did not have any faith in their defence.  There is no merits in this submission.  The plaintiff has the burden of proof to prove its claim even though the defendant was absent at trial.  The defendant’s absence did not assist the plaintiff in proving its claim.

Mediation

16.  As to paragraph 9.3 above, the plaintiff’s reference to the plaintiff’s refusal to take part in mediation, or its pre-mediation negotiations with the defendant have no relevance to this application for leave to appeal.

Claim for Loss

17.  As to paragraph 9.6, it is noted that the plaintiff tried to argue in the application that the claim for loss of storage charges and the disposal of the product were not set out in the statement of claim and the witness statement, because the plaintiff was unable to finalise the calculation.  According to the basic principles of pleadings, the plaintiff is required to set out the basis of its claim in the statement of claim, so that the other side would know precisely what the case they were to meet.  The plaintiff’s case for the loss of storage was that it was a trade practice for one cubic metre of storage for one month would cost $240.  Even though the amount was not ascertained or not yet incurred, the plaintiff was required to set out the calculation and basis of its claim in the statement of claim.

18.  In the supporting affirmation for this application, it was stated that:-

“The judge reached his decision based on “Word Game” in the contract and neglected to consider the damage caused to the plaintiff.  The plaintiff requests that the Court re-assess the damage caused to the plaintiff and not base the decision purely on the layout and wording in the contract, which is clearly an agreement between the 2 sides.”

19.  The plaintiff’s claim is for breach of the Contract.  The Court must examine the wording in the Contract to ascertain the intention of the parties, and whether there was any breach of the terms of the Contract as alleged, and if so, the extent of loss and damages suffered by the plaintiff.  The Court has to satisfy itself that the plaintiff’s claim against the defendant is proven as alleged in the statement of claim.

20.  The onus of proof is on the plaintiff to prove its loss as stated in the statement of claim and in order to do so, the plaintiff shall discharge its burden to adduce evidence to support its claim for both the breach of contract and the claim for the amount of its loss.  It was held in the judgment that the plaintiff failed to prove its claim on the Products’ arrival, storage and disposal, amongst other things, and hence the claim for loss was not proven.  The plaintiff’s present application did not seek to argue that based on the evidence, how the judgment could be concluded differently.

Conclusion

21.  As the plaintiff’s application was made out of time, I am not satisfied that the plaintiff has shown a real prospect of success in an appeal.

22.  If I were wrong that the plaintiff has in fact given an excuse for delay to apply for leave out of time, I shall consider the plaintiff’s application according to Section 63A(2) of the Ordinance.  I am not satisfied that the appeal has any reasonable prospect of success.  Nor is there some other reason in the interests of justice why the appeal should be heard.

23.  The plaintiff’s application for leave to appeal out of time is dismissed.  The normal rule is to order costs to follow the event.  However, the defendant has received the Notice of Hearing but has chosen not to appear in this hearing.  I make an order nisi that there be no order as to costs in this application.   This order on costs should become absolute after 14 days from the date of decision if there is no application to vary the same.