SINO TRIFONE LTD v. FOND EXPRESS LOGISTICS LTD AND ANOTHER

HCMP 2366/2012 AND HCMP 2367/2012

HCMP 2366/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 2366 OF 2012

(ON AN INTENDED APPEAL FROM HCCL NO. 21 OF 2011)

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(Heard together)

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J U D G M E N T

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Hon Fok JA (giving the Judgment of the Court):

1.  In these two related commercial list actions (HCCL 20/2011 and HCCL 21/2011), the plaintiff shippers claimed against the 2^nd defendant freight forwarders for damages for mis-delivery of various consignments of garments. The basis of the claim for mis-delivery was simple, namely that, on arrival of the goods in the USA, they were released by the 2^nd defendant to the buyer’s customs broker without production of original bills of lading.

2.  By his Judgment handed down on 28 September 2012, Mr Recorder Jat SC entered summary judgment under O.14 in favour of the plaintiffs against the 2^nd defendant as claimed in each action with interest and costs.

3.  The 2^nd defendant wishes to appeal. However, a series of unfortunate events has dogged that intention.

(1)  First, the 2^nd defendant’s solicitor thought leave to appeal against the judgment in each action was required. However, by virtue of O.59 r.21(1)(a) and r.21(2)(a), that was not the case since the judgments under O.14 were judgments to which s. 14AA(1) of the High Court Ordinance (Cap. 4) does not apply.

(2)  Secondly, mistakenly thinking the 2^nd defendant needed to apply for leave to appeal, the 2^nd defendant’s solicitor in any event missed the 14-day time-limit for such an application.  Instead of applying by summons for leave to appeal by 12 October 2012, the application was not made to the Recorder until 15 October 2012.

(3)  Thirdly, despite having been informed by the Recorder’s clerk that leave to appeal was not required, on 24 October 2012, the 2^nd defendant issued a summons in this Court seeking an extension of time to apply for leave to appeal and leave to appeal.

(4)  Fourthly, being a final judgment, the correct time-limit for filing a notice of appeal was in fact 28 days from the date of the Judgment, namely 26 October 2012.  However, no notice of appeal was filed within that time-limit.

The applications before the Court

4.  There are now two applications by the 2^nd defendant in each action before this Court:

(1)  First, a summons in each action dated 24 October 2012 seeking an extension of time to apply for leave to appeal and leave to appeal.

(2)  Secondly, a summons in each action dated 28 November 2012 seeking (a) leave to withdraw the summons dated 24 October 2012 and (b) an extension of time to appeal against the Judgment.

5.  The applications to withdraw the summonses dated 24 October 2012 are not opposed by the plaintiffs but they ask for costs, which we shall deal with at the conclusion of this judgment.

6.  The remaining applications are for an extension of time to appeal.  It is not in dispute that the delay here was inexcusable and that it is therefore incumbent on the 2^nd defendant to demonstrate a real prospect of success on the merits of the intended appeals: see Secretary for Justice v Hong Kong & Yaumati Ferry Co Ltd [2001] 1 HKC 125 at p. 129I.

Real prospect of success?

7.  In contending that it meets the necessary threshold for an extension of time, the 2^nd defendant relies on various grounds.

Defects in pleading in HCCL 21/2011

8.  First, it is contended that there is a technical defect in the pleadings in HCCL 21/2011 in that the statement of truth in respect of the plaintiff’s amended statement of claim, on which the summary judgment is based, is defective.  The amended statement of claim, amended without leave pursuant to O.20 r.3, is dated 15 May 2012 and is accompanied by a statement of truth which reads:

“I, Leung Wai Lim, Solicitor for the Plaintiff, believe that the amendment to the Statement of Claim made on 15^th May 2012 are [sic] true.”

9.  That statement of truth followed immediately after the original statement of truth, in which the manager of the plaintiff asserted a belief that “the facts stated in this Statement of Claim are true” but which was deleted in the amended statement of claim.

10.  It is said, on behalf of the 2^nd defendant, that this offends the rules (relevantly O.41A r.2, commented on in Hong Kong Civil Procedure 2013 Vol. 1 at Note 41A/2/3 on p. 823) and Practice Direction (namely PD 19.3).

11.  Strictly, of course, the new statement of truth should have asserted a belief in the truth of the facts stated in the amended statement of claim and not merely in the amendment to that pleading and the earlier statement of truth should not have been deleted.

12.  But we do not agree that the defect is one which gives rise to a ground of appeal with any prospect of success.  The court has the power under O.41A r.2(3) to direct that a pleading need not be verified by a statement of truth if it considers it is just to do so in a particular case.  The Recorder would have been fully justified in dispensing with the need for a fresh statement of truth here.  The facts stated in the original statement of claim had already been verified by a statement of truth (albeit that was wrongly deleted by the amendment) and the amendment to the statement of claim was of a minor clerical nature and was limited to correcting the number of bills of lading involved in the claim from 14 to 5.  It made no difference to the substance of the underlying claim or the amount of the claim.

13.  Further, the court has power under O.2 r.2 to correct irregularities and the Recorder would have been fully justified if, instead of dispensing with the need for a fresh statement of truth, he had permitted the application to proceed on a suitable undertaking of the plaintiff to make a further statement of truth in proper form in respect of the amended statement of claim.

14.  It is then said, on behalf of the 2^nd defendant, that the plaintiff’s O.14 summons was defective in that it sought “final judgment in this action against the 2^nd Defendant for the amount claimed in the Statement of Claim with interest and costs” whereas in fact the application should have been for the amount claimed in the amended statement of claim.

15.  Again, we do not consider that this gives rise to a ground of appeal with any prospect of success.  It was not a point raised before the Recorder, nor in the draft grounds of appeal sought to be relied upon, and, in any event, it is a point devoid of any merit.

16.  Note 14/1/6 on p. 243 of the White Book reads:

“Amendment of statement of claim and summons – If any defect in the statement of claim is discovered before issue of a summons, such issue should be delayed until after amendment has been effected thereto. In these circumstances, the summons, to avoid confusion, should refer to the ‘amended’ statement of claim.

            If the defect is only discovered after issue and service of the summons, this should be corrected by using, if possible, the entitlement to effect an amendment to the statement of claim without leave under O.20, r.3 or by consent of the parties under O.20, r.12. If amendment to the statement of claim can thus be effected, then leave to amend the summons itself should thereafter be sought to refer to the ‘amended’ statement of claim unless that amendment is immaterial to the claim on which judgment is sought. …”

17.  The O.14 summons in HCCL 21/2011 was issued on 15 May 2012, the same day the statement of claim was amended.  As we have already indicated, the amendment to the statement of claim did not amend the amount of the claim, which remained the same in the amended statement of claim as before, namely US$208,553.72, and it was plainly immaterial to the claim on which judgment was sought.  In any event, given the trivial nature of the technical defect, the Recorder would have been fully justified in granting leave to the plaintiff at the hearing to amend the summons and to dispense with service, thereby curing any defect.

Defects in pleading in HCCL 20/2011

18.  Next, it is contended that the O.14 summons in HCCL 20/2011 is defective in that it sought “final judgment in this action against the 2^nd Defendant for the amount claimed in the Amended Statement of Claim with interest and costs”.  There is no amended statement of claim in this action and so, it was said, the Recorder was wrong to enter judgment on a non-existent pleading and with a pending amendment to the plaintiff’s claim.

19.  This is, with respect, also a bad point and, in any event, not one taken below.  Nor is it taken in the draft grounds of appeal sought to be relied upon. It is plain that the reference to an amended statement of claim in the summons was simply a clerical error.  In this case too, the defect could have been cured in the manner described in paragraph 17 above.  If anything, the mistake appears to suggest that the amendment to the statement of claim in HCCL 21/2011 was effected before the issue of the O.14 summonses and that, by pure clerical error, reference was made to an amended statement of claim in the summons in HCCL 20/2011 rather than in the summons in HCCL 21/2011.

Error of law or fact?

20.  Moving on from these unmeritorious and technical objections, the 2^nd defendant contends that the Recorder ought to have held that there are real triable issues and so given leave to defend.  It was said that there was evidence that the plaintiffs gave their express consent to the 2^nd defendant to release cargoes to the end-buyer without production of the original bills of lading.  For this reason, it was contended that the Recorder erred in law in holding that the facts of the present case were “strikingly similar to those in Star Line Traders Ltd v Transpac Container System Ltd HCAJ 180 of 2008 (unrep, Reyes J, 4 September 2009)” since that was a case which turned on acquiescence alone and not consent.

21.  The Recorder dealt squarely with this argument in the following paragraphs of his Judgment:

“15. I disagree. The evidence filed on behalf of the 2^nd Defendant shows, at its highest, that Kai Min had consented to the first shipment being released without the original bills of lading. That could be due to a variety of reasons: for example, Kai Min might have already received payment from Malcolm but the original bills were still in transit. Further, even if Kai Min had consented to that shipment being released without presentation of the original bills of lading, it does not follow that it must have consented to subsequent deliveries without the original bills. It would appear that Malcolm (and San Simeon) must have honoured its payment obligations to Kai Min so that there was no need for Kai Min to make any complaint. But that could not amount to a representation to the 2^nd Defendant that it could deliver future shipments without presentation of the original bills of lading.

16. In relation to Sino Trifone, there is not even evidence of consent. Mr Fan accepts that there is no evidence that Sino Trifone and Trilefone were connected. However, he argues that Mr Wong was the common link and I can infer a continuing practice which followed him from Trilefone to Sino Trifone. I am unable to accept that submission. There is nothing to show that what Mr Wong might have said to Mr So in December 2007 could be attributed to Sino Trifone, when the latter was not incorporated until almost 2 years later.

17. I also note that the email dated 7 September 2007 produced by Mr So indicates that at the time, Mr Wong (on behalf of Trilefone) agreed to the release of the goods without presentation of the original bills of lading because Trilefone had received payment for the goods in question.  That explains why Mr Wong (on behalf of Trilefone) was prepared to release the goods to Malcolm on that occasion.  But there is no evidence from the 2^nd Defendant that either Plaintiff had received payment in respect of the shipments in question.”

22.  Save in one respect, which we shall deal with below, we respectfully agree with the Recorder.  The 2^nd defendant’s evidence only goes as far as alleging that the plaintiffs had accepted the first shipment being released without production of the original bills of lading and not that they had agreed the practice alleged by the 2^nd defendant would apply to future transactions.

23.  The exception relates to the last clause of paragraph 16 because the Recorder was mistaken in saying that the plaintiff in HCCL 21/2011 was not incorporated until almost 2 years after the date of the alleged conversation. Its certificate of incorporation shows that it was in fact incorporated on 6 November 2007 and so about a month before the alleged conversation.

24.  The 2^nd defendant contends that this demonstrates that the Judgment is based on a wrong finding of fact and so it should not be allowed to stand.

25.  We do not agree with this contention.  It is true that the Recorder was mistaken about the timing of the conversation in relation to the incorporation of the plaintiff in HCCL 21/2011.  However, this does not alter the fact that the 2^nd defendant’s evidence about the alleged practice only relates to the first shipment of goods and not future shipments.  In any event, as the Recorder rightly observed, the terms of the e-mail dated 7 September 2007 do not support the alleged practice for the reason stated in paragraph 17 of the Judgment.

Conclusion

26.  For these reasons, we are not satisfied that the 2^nd defendant has shown that the intended appeals enjoy a real prospect of success and so the applications for an extension of time to appeal are dismissed.

27.  It was not disputed that the 2^nd defendant must pay the plaintiffs the costs of the summonses dated 24 October 2012 and 28 November 2012.

28.  We propose to conduct a gross sum assessment of those costs.  On the broad brush basis appropriate to such assessment, we summarily assess the plaintiffs’ costs of the summonses dated 24 October 2012 and 28 November 2012 in the sum of HK$105,000.  Such costs are to be paid by the 2^nd defendant to the plaintiffs within 7 days of today’s date.