NEW WORLD HARBOURVIEW HOTEL CO LTD AND OTHERS v. ACE INSURANCE LTD AND OTHERS

HCA 46/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 46 OF 2007

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BETWEEN

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D E C I S I O N

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1.  Leave to appeal is refused for the reasons below.

2.  First, in case there is any doubt, let me state that the Plaintiffs’ prospects on their appeal against my Judgment of 8 April 2010 (the Judgment) on preliminary issues strike me as poor.

3.  Second, my Order of 17 June 2010 (the Order) against which appeal is sought concerns case management. Case management decisions are eminently within the discretion of the trial judge. They are only subject to appeal in exceptional cases. This is not an exceptional case.

4.  Third, as noted in the Judgment, the understanding among the parties was that the Court’s answers to the preliminary issues should enable the parties to narrow the scope of any investigation into the quantum of the Plaintiffs’ losses due to the SARS outbreak. The Plaintiffs, while not consenting to the hearing of preliminary issues, did not dissent from that approach when the Defendants applied for such hearing.

5.  As a matter of principle, it does not seem right for the Plaintiffs now to contend, simply (as far as I can see) because they have lost on 4 out of 5 of the preliminary issues, that any trial on quantum should await the outcome of their appeal against the Judgment. The approach which the Plaintiffs now advocate is not how the Court and the parties effectively decided to proceed at the outset.

6.  Fourth, the Plaintiffs’ reasons for their proposed appeal against the Order do not strike me as meritorious.

7.  For example, it is said that in December 2008 the Plaintiffs’ experts (PWC) prepared reports on the Plaintiffs’ losses based on dates earlier than the 27 March 2003 date stipulated in the Judgment. Substantial re-calculations (it is alleged) will have to be done.

8.  But the greater must include the lesser. If losses are to be calculated from a later date (and for a shorter period) than that originally supposed by the Plaintiffs, it is unclear to me why PWC could not simply deduct from their original calculations those losses attributable to the period before 27 March 2003 or attributable to the time following the lapse of 180 days from 27 March 2003. I do not understand why PWC must re-invent the wheel. Why is PWC not simply able to start from what it has originally done?

9.  Much is made about the fact that the Plaintiffs have already spent $6 million in the course of instructing PWC. It is claimed that PWC took 18 months to compile its original report. Much is made about the 55 lever arch files comprising the original report.

10.  It is said that it will take at least 3 months (90 days) to trim the original report to focus on the more modest loss period which has resulted from the Judgment. It is said that such exercise would cost about $3 million.

11.  All that is difficult to accept at face value. The $3 million estimate, coming on top of an alleged $6 million already spent, strikes one as exorbitant. No real explanation was given in the Plaintiffs’ affidavit evidence at the time when the Order was made as to why paring down the original report to something more modest and manageable should cost so much or take such time.

12.  An explanation of sorts has now belatedly been proffered in the Affidavit of Mr. John Donker filed on 28 June 2010 in support of the application for leave to appeal against the Order. I stress that the Affidavit was not before the Court when the Order was made.

13.  Mr. Donker states that the Plaintiffs’ time estimate is due to fact that PWC personnel involved in the compilation of the original report “all have existing commitments to other PWC clients”. Of the 4 key managerial level staff involved in the original report, 2 are committed to other clients until the end of this month, one was committed until the end of last month, while one is available (albeit not fully) from this month. Mr. Donker says that it will therefore not be possible to comply with the 56 day deadline in the Order. That deadline expires on 12 August 2010.

14.  That seems to be a basis for applying for an extension of the 56 day period in the Order. Such type of application is a usual happenstance in any given case. It is not an exceptional basis justifying the grant of leave to appeal against a case management decision. I note that, apart from a direction that time is not to run pending the appeal against the Judgment, no application for an extension of time stipulated in the Order for the preparation of expert reports has been made.

15.  Fifth, the Order is asserted to be unjust. It is said that much is at stake for the Plaintiffs and there is no need to rush.

16.  I disagree. On the contrary, I see little (if any) merit in the proposed appeal against the Order.

17.  If the Judgment is wrong in some way so that the loss period is longer than that which I have found, the result will merely be that the Plaintiffs are owed more. If a trial on quantum proceeds on the basis of the Judgment and awards the Plaintiffs x, a successful appeal against the Judgment will mean that the Plaintiffs become entitled to some amount greater than x. In the meantime, the Plaintiffs will at least have received x.

18.  On the other hand, the Defendants are entitled to know the extent of their liability at the earliest possible stage. They should not have the question of the quantum of their liability hovering over them for an indefinite period while the Plaintiffs go about an appeal. This is especially so given the principle stated in my third point above.

19.  I am not just thinking here of an appeal to the Court of Appeal. No doubt if the Plaintiffs fail at that level, the Plaintiffs will seek to go to the Court of Final Appeal. On the Plaintiffs’ logic then, we will never (as I pointed out when making the Order) get to a trial of quantum in any reasonably foreseeable time. The question of an uncertain quantum will instead hang over the Defendants (despite their victory in the Judgment) for an uncertain time. That I believe would be unfair and unjust.

20.  I have assumed that a trial on quantum based on the Judgment will precede a determination on appeal (either by the Court of Appeal or the Court of Final Appeal). But consider an opposite scenario.

21.  Assume that, before the trial of quantum takes place, the Court of Appeal allows the appeal and accepts the Plaintiffs’ basis of calculating damages. In that case, the Plaintiffs would be ready to adduce their original PWC report as expert evidence at short notice. It is the Defendants which may be at a disadvantage under this scenario. The Defendants may not be able immediately to produce a revised expert report incorporating the Plaintiffs’ basis. But it is the Defendants which, despite this risk, are prepared to proceed to a determination of quantum on the basis of the Judgment as soon as possible.

22.  In those premises, even if the Plaintiffs should eventually be proved right at some time in relation to the Judgment, there is no real unfairness or injustice to them in now proceeding in the manner sketched out in the Order.