RICOH HONG KONG LTD v. WALLBANCK BROTHERS SECURITIES (HONG KONG) LTD

DCCJ2454/2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2454 OF 2013

--------------------

--------------------

----------------------------------

REASONS FOR DECISION

-----------------------------------

1. This is an application made by the defendant for leave to appeal to the Court of Appeal against a judgment I handed down on 25 June 2015 in this case (“the Judgment”) and for stay of proceedings pending the determination of the defendant’s application.

2. At the hearing on 1 September 2015, I dismissed the defendant’s two summonses with costs.  I said I would provide my reasons for the decision in due course.  Here are the reasons.

DISCUSSION 

The defendant’s application for leave to appeal

3. The principles on leave to appeal to the Court of Appeal have been succinctly summarized by Fok JA (as he then was) in Wing Tat Haberdashery Co Ltd v Elegance Development and Industrial Co Ltd [2011] 5 HKC 474 at paras 5-7.  These principles are trite and have been consistently applied by this Court and other Courts in the past.

4. In short, they are:-

(1)  According to section 63A of the District Court Ordinance, Cap 336, which was introduced as part of the Civil Justice Reform, leave to appeal shall not be granted unless the Court is satisfied that the appeal has a “reasonable prospect of success” or there is some other reason in the interests of justice that the appeal should be heard.

(2)  The test whether an appeal has a reasonable prospect of success under the new statutory provision is the same test as applied before the amendment to Cap 336, namely, whether the applicant for leave can show that he has “an arguable case with reasonable chance of success of appeal”: see Leong JA in Ma Bik Yung v Ko Chuen [2009] 3 HKC 359 at para 5.

(3)  The test corresponds with the relevant leave test in section 14AA(4) of the High Court Ordinance, Cap 4 for the grant of leave from a decision of the Court of First Instance to the Court of Appeal in interlocutory matters: see SMSE v KL [2009] 4 HKLRD 125.

The defendant’s proposed grounds of appeal

5. I agree with Miss Angela Gwilt, counsel for the plaintiff, that the draft grounds of appeal prepared by the defendant amount to an appeal against the fact findings made by this Court as contrast to an appeal on matters of law.  As observed by Bokhary PJ in Ting Kwok Keung v Tam Dick Yuen [2002] 3 HKLRD 1:

“…where the Court of Appeal is satisfied that the conclusion reached by the trial judge on the facts was plainly wrong, it should intervene. If the Court of Appeal is not so satisfied, it should defer to the trial judge’s conclusion even if in some doubt as to its correctness.” (emphasis added)

6. In Bank of China (Hong Kong) Ltd v Tsang Sheung Bun [2013] 5 HKLRD 62, the Court of Appeal cited with approval the recent judgment of the UK Supreme Court in McGraddie v McGraddie [2013] 1 WLR 2477, in which the Supreme Court allowed an appeal from the Inner House of the Court of Session that had reversed findings of fact made by the trial judge.  In the judgment of Lord Reed JSC (with whom all the other members of the court agreed), he quoted with approval at paras 3 and 4 statements from a case of the US Supreme Court and a case of the Canadian Supreme Court:

“The rationable for deference to the original finder of fact is not limited to the superiority of the trial judge’s position to make determinations of credibility. The trial judge’s major role is the determination of fact, and with experience in fulfilling that role comes expertise. Duplication of the trial judge’s efforts in the court of appeals would very likely contribute only negligibly to the accuracy of fact determination at a huge cost in diversion of judicial resources. In addition, the parties to a case on appeal have already been forced to concentrate their energies and resources on persuading the trial judge that their account of the facts is the correct one; requiring them to persuade three more judges at the appellate level is requiring too much. As the court has stated in a different context, the trial on the merits should be the “main event” … rather than a “tryout on the road”… For these reasons, review of factual findings under the clearly erroneous standard – with its deference to the trier of fact – is the rule, not the exception.” (Anderson v City of Bessemer (1985) 470 US 564 at 574 to 575)

“The trial judge has sat through the entire case and his ultimate judgment reflects this total familiarity with the evidence. The insight gained by the trial judge who has lived with the case for several days, weeks or even months may be far deeper than that of the Court of Appeal whose view of the case is much more limited and narrow, often being shaped and distorted by the various orders or rulings being challenged.” (Housen v Nikolaisen [2002] 2 SCR 235 at §14)

7. I have to agree with the plaintiff’s counsel that the defendant’s allegations as contained in the submissions of its director Mr Phil Chan,  as well as the draft grounds of appeal which were attached to the leave to appeal summons, come nowhere close to demonstrate that the fact findings made by this Court in the Judgment was “plainly wrong”.

8. One salient feature about this case which occurred is that during the trial the defendant had elected not to give evidence and chosen to keep silent even though when its defence was based on the very serious allegations of fraud and other breaches of duties on the part of the plaintiff.  Although the burden of proof in a civil case generally lies throughout with a plaintiff, in choosing not to produce any positive evidence or to call any witnesses to testify at the trial to rebut the evidence produced by the plaintiff on the material matters, I consider it was open, if not the remaining option left, for this Court to draw adverse inferences against the defendant: see Ng Choi Sang v Chu Yu Tim [2009] 4 HKLRD 747 at pp 757-759 and Kao Lee & Yip v Koo Hoi Yan [2003] 3 HKLRD 296 at para 34.

Grounds 1, 2, 3, 5 and 10

9. In my judgment, there was no real substance in the above draft grounds of appeal.  They are matters of fact which this Court was entitled to draw inferences and made rulings on, in particular in the absence of any positive evidence produced by the defendant: see paras 37-39 of the Judgment.

Ground 4

10. The defendant submits that I was wrong in refusing leave for the defendant to appeal against the striking out application made by the defendant based on the ground that the agreement was one of rental nature and that I should not allow the trial to proceed without amending paras 3 and 5 of the statement of claim. 

11. In my view, this is not a valid appeal ground at all.  If the defendant was dissatisfied with my previous ruling on the striking out application, the proper cause for the defendant to take was to appeal against that interlocutory decision in the Court of Appeal and not to “tag” this along as a potential ground of appeal against the Judgment after a full trial.

Grounds 6 and 7

12. I agree with Miss Gwilt that it is unclear what is being advanced by the defendant under these two grounds. Insofar as I can see, they are merely repeating submissions that had been made before me at the trial.  In any event, they are matters which the defendant had deliberately chosen not to put in any positive evidence to establish its case at the trial and therefore it is now no use crying over that decision.

Ground 8

13. This ground is based on the alleged failure on the part of the plaintiff in mitigating its losses by refusing to repossess the two machines from March 2011 onwards.  Yet again, I consider there is no substance in this ground. 

14. Not only the defendant had consciously chosen not to call any evidence to rebut the allegations made by the plaintiff, there was also the contemporaneous documentary evidence which clearly demonstrates the defendant’s continuous use of the two photocopiers after it had purported terminated the agreements from March 2011 onwards.  The evidence was, to say the least, overwhelming.  What the defendant is now trying to do is to re-open the issues on fact through the proposed appeal, which is clearly something not permissible as a matter of law or practice. 

Ground 9

15. Again, it is not clear what the defendant is trying to advance under this proposed ground of appeal.  I simply fail to understand the basis on which the allegation is made and why the defendant considers my findings on fact were flawed when I held that the agreements were for the provision of service based on the use of those 2 machines. I do not see anything wrong with that finding and I do not understand what the defendant is trying to say where I had gone wrong. 

Grounds 11 - 13

16. These grounds are based on my finding that the defendant, by choosing not to give evidence in this case, had failed to show how it was being induced to act on the alleged untrue and negligent misrepresentation and how the defendant had suffered loss or damage as a result: see para 70 of the Judgment.  In my view, these are all matters of fact which a trial judge is entitled to draw adverse inferences against a party who had failed to produce any positive evidence to establish its own pleaded case.  I do not see any merit based on such ground.

Ground 14

17. Regrettably, very serious and totally unfounded allegations had been made against this Court by an officer of the Court.  However, in my view, like the defendant’s case at the trial and the present draft grounds of appeal, they contain absolutely no substance and totally devoid of any merit.

Grounds 15 and 16

18. This deals with the evidence of the only witness called by the plaintiff which the defendant now says is not reliable and his evidence is irrelevant and incredible.  Again, with respect, this is a matter of finding for the Court to decide and it is not for the defendant, who had failed to produce any positive evidence at the trial, to now challenge this finding.  Again, the proposed appeals based on these two grounds are totally devoid of merits.

Ground 17

19. This is based on the challenge of an allegation that this Court was wrong in law and in fact in holding that there was no breach of implied duties owed by the plaintiff to the defendant.  Again, this is a matter of finding of fact and I simply do not see any basis for the defendant to take this appeal off the ground: see paras 78-83 of the Judgment.

Ground 18

20. This is in relation to the costs order I made for the trial.  As the trial judge of the case, I have a wide discretion on matters in relation to costs.  I consider the order I made against the defendant was an appropriate one.  I do not see the defendant has any real ground of substance in appealing against an indemnity costs order I made, particularly after taking into account of the appalling conduct and behaviour of the defendant throughout these proceedings: see para 94 of the Judgment.

Ground 19

21. This purported ground of appeal which is based on the alleged bias and lack of impartiality of this Court, which, in my view is completely scandalous and without any foundation.  It is regrettable that an officer of the Court, which Mr Chan, the sole director and shareholder of the defendant is, chose to use such strong and inappropriate language in the draft grounds of appeal.

22. However, if one looks beyond the highly emotive language employed by Mr Chan, there is really no substance on this alleged ground. 

Additional grounds of appeal 1

23. I agree with the plaintiff’s counsel that if there is any abuse of proceedings in this case, it is the defendant who had committed the abuses by raising the same allegations in both SCTC 47383/2012 where he is the claimant as well as in DCCJ 2454/2013 where he is the defendant.  Again, there is no merit in such so-called additional grounds of appeal 1.

Additional Grounds of Appeal

24. Again, this ground is not only repetitive but contain of no real substance.

Conclusion on merit of the proposed appeal

25. In conclusion, for the aforesaid reasons, I consider that the defendant’s proposal appeal is totally devoid of merit and contains no real substance at all.  I do not see the intended appeal has any reasonable prospect of success and I therefore had dismissed the defendant’s application at the hearing on 1 September 2015.

Costs Order

26. I also ordered costs of the application to be paid on an indemnity basis, simply for the reason that this intended appeal, like the wild and unfounded allegations made by the defendant (which was not proved by any evidence) at the trial, consists of no real substance and completely devoid of merit.  It was a complete waste of the Court’s time and waste of judicial resources.  In my view, it borders on being an abuse of the process of this Court.  Therefore, I ordered the costs of this application to be made on an indemnity basis against the defendant.  In this respect, I have been reminded by the plaintiff’s counsel of the recent CFA case of Sun Crown Trading Ltd v Holyrood Ltd (CFA), unreported, FAMV 27/2014, 15 October 2014 at paras 4, 5, 7 and 12 where the CFA held that where in “the applicant’s real complaint was not one of law or principle but of the decision of fact”, the application (as is the present application), is considered in “so obviously hopeless that it should not had been made at all”, costs on indemnity basis should be awarded in such a case. 

27. I consider that the above description fitted in perfectly with the intended appeal of the defendant in this case.  I therefore regard an order of costs on indemnity basis is the only appropriate order that the Court should make in the circumstances.  I had summarily assessed the costs on such basis at $53,400.

Defendant’s summons for stay of proceedings

28. I have been informed that prior to the defendant in issuing the summons for stay, it had already settled the judgment sum plus interest to the plaintiff and it also allowed the plaintiff to collect the two photocopying machines from its premises.  Therefore, it is not clear which part of proceedings the defendant applied to this Court to stay.

29. On this matter, I again agree with the plaintiff’s counsel that the legal principles governing the ground of a stay of execution are well established.  Order 58 rule 3 of the RDC states that “an appeal does not operate as a stay of proceedings in which the appeal is brought”.  The guiding principle is that the Court does not make a practice of depriving a successful party of the fruits of his litigation and locking up the funds to which he is prima facie entitled: see Hong Kong Civil Procedure 2015 para 59/13/1 at p 1105. 

30. In Star Play Development Ltd v Bess Fashion Management Co Ltd [2007] 5 HKC 84, a decision of Ma J (as the Chief Justice then was), where at paras 9(6) and (8) of the judgment the Chief Justice had the following to say:

“(6) The existence of merely an arguable appeal cannot by itself amount to sufficient reason to justify a stay. It can be put this way: the existence of an arguable appeal (that is, one with reasonable prospects of success) is the minimum requirement before a court would even consider granting a stay. In other words, however exceptional the circumstances may be otherwise justifying a stay of execution, if the court is not convinced that there exist arguable grounds of appeal, no stay will be granted…

(8) In most cases, the court will not be dealing with the extreme situations I have referred to.  Often, it will be faced with simply the existence of an arguable appeal.  Hence, it becomes necessary for the appellant to provide additional reasons as to why a stay is justified…”

31. At para 7 in the same case, the learned Chief Justice also stated that:

“7. In other words, unless the defendant can justify a stay of execution, one will not be ordered. The practice of the court is that justification can be demonstrated only if good reasons exist.”

32. In this case, the defendant has not stated the grounds in applying for a stay of proceedings.  Since I found the grounds of appeal are utterly devoid of merit, in my judgment, there is simply no basis for ordering a stay of proceedings pending appeal in this case.  That summons was also dismissed by me with costs be to the plaintiff on an indemnity basis.  I had summarily assessed the costs of this summons at HK$15,000 at the end of the hearing.

33. Therefore, the costs of those two summonses had been summarily assessed by me at a total sum of HK$68,400 at the end of the hearing.  I ordered the defendant to pay that sum to the plaintiff forthwith.