REDLAND PRECAST CONCRETE PRODUCTS (CHINA) LTD v. AES STEEL MOULD (HONG KONG) LTD

CAMP 229/2021

[2021] HKCA 1229

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 229 OF 2021

(ON AN INTENDED APPEAL FROM HCCT NO 20 OF 2018)

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REASONS FOR DECISION

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Hon G Lam JA (giving the Reasons for Decision of the Court):

1.  This is the plaintiff’s application for leave to appeal against Mimmie Chan J’s decision dated 11 May 2021 refusing to permit the plaintiff to adduce an expert report (“Decision”).[1] The judge had herself refused leave to appeal on 21 June 2021.[2] A rolled‑up hearing before us was directed so that if leave was granted, the appeal would also be heard at the same time. At the end of the hearing we dismissed the application for leave with costs on the indemnity basis which we summarily assessed. These are our reasons for doing so.

2.  By a sub‑contract evidenced or contained in the plaintiff’s letter to the defendant dated 28 March 2014, the defendant undertook to design, supply and deliver steel formwork and hydraulic system at the plaintiff’s yard in Dongguan, Guangdong Province, for casting or otherwise constructing precast viaduct segments, which the plaintiff had in turn undertaken to supply for a construction project in Hong Kong.

3.  In the action, the plaintiff alleges that the defendant breached the sub‑contract in that, inter alia, the steel formwork and hydraulic system supplied contained defects, which are enumerated in a schedule annexed to the statement of claim.  The plaintiff says that despite complaints, the defendant failed to replace the defective products.  As a result, the plaintiff had to commission the fabrication of replacement formwork and system and suffered loss in the amounts of approximately HK$2 million and RMB 2.7 million.  The plaintiff claims damages for such loss, as well as the return of three advance payments to the defendant in the sums of HK$500,000, HK$700,000 and HK$1 million respectively.

4.  The defendant denies that the products it supplied were defective and denies liability to repay the advance payments.  It counterclaims against the plaintiff for the unpaid balance of invoiced amounts in the sum of approximately HK$1.36 million, and another HK$568,000 for additional works requested by the plaintiff.

5.  The action was commenced in November 2015, and transferred to the Construction and Arbitration List in 2018.  On 19 November 2019, the judge issued directions giving leave to the parties to adduce evidence from a single joint expert (“SJE”) on the questions of defects and quantum respectively.  Joint instructions were issued on 18 December 2019 to the SJE on defects, Mr Kimmy Chan, a chartered civil engineer by profession.  The questions on which the SJE was asked to answer are as follows: “(a) Whether the Steel Formwork System, which comprised the Steel Mould and Hydraulic System, as designed, supplied and delivered by the Defendant suffered from the defects as set out in the Schedule of Defects (‘Defects’) annexed to the Re‑Re‑Re‑Amended Statement of Claim; (b) What were the causes of the Defects, if any; (c) What were the causes of the defects or failure of the Precast Viaduct Segments which the Plaintiff had allegedly made good and/or replaced”.

6.  Mr Chan produced his report on defects on 13 January 2020 (“SJE Report”).  The trial was to start in February 2020, but was adjourned due to the general adjournment of court proceedings caused by the pandemic.  In March 2020, the trial was re‑scheduled to commence on 27 September 2021, with 12 days reserved. Almost a year later, on 19 February 2021, the plaintiff issued a summons for leave to appoint its own expert on defects, Mr Eric Chiu, annexing a draft expert report prepared by him.

7.  A supporting affirmation made by Mr Lau, a director of the plaintiff, was filed on 4 March 2021.  He said that he found that the conclusions or opinions in the SJE Report were drawn upon unsubstantiated grounds and some of them were even without any grounds at all.  At the time, as the trial was imminent, the plaintiff intended to deal with those issues concerning the SJE Report by way of cross‑examination at the trial.  Given that the trial had been re‑fixed, the plaintiff decided to ask Mr Chiu to review the SJE Report.  Mr Chiu started preparing his own report in June 2020 but did not complete it until February 2021.  Mr Lau concluded by saying that Mr Chiu’s report would assist the court in determining the issues between the parties.

8.  The plaintiff’s summons was heard before the judge on 11 May 2021.  The grounds for the application as advanced by counsel were that the SJE Report was “largely founded upon the parties’ unpleaded case”, that the SJE’s conclusions were unsustainable, that he had referred to irrelevant matters or documents, and that he had not referred to relevant facts in the witness statements when expressing his opinion.  As such, it was said, the SJE Report would not be of assistance to the court at trial.  In comparison, Mr Chiu’s report was detailed and referred to facts and matters in the witness statements.

9.  Dismissing the summons, the judge gave broadly these reasons: (1) the issues raised by the plaintiff concerning the SJE Report did not warrant permitting the plaintiff to adduce its own expert report; (2) there are various steps and actions open to the plaintiff so that it will not be prejudiced simply because of the (alleged) deficiencies in the SJE Report; (3) the plaintiff was guilty of a lengthy delay, without good reasons, in making its application and had failed to deal with its concerns via suitable alternatives such as giving further instructions to the SJE and seeking clarification from him; the defendant would be prejudiced if the application was allowed; and (4) there are questions as to whether Mr Chiu is or appears to be wholly independent from the plaintiff.

10.  The approach adopted by this Court towards challenges of case management decisions is well established.  In Xiamen Xinjingdi Group Co Ltd (厦門新景地集團有限公司) v Eton Properties Ltd & others (HCMP 13, 15, 18 & 21 of 2012, 14 February 2012), Cheung CJHC stated:[3]

“ No leave to appeal should be granted unless the threshold test of reasonable prospect of success is satisfied, or (which is not relevant to the present case) there is some other reason in the interests of justice why the appeal should be heard: section 14AA(4), the High Court Ordinance (Cap 4). But the court still retains a discretion whether to grant leave even if the threshold test is satisfied. This is particularly so in relation to an intended appeal against a case management decision. In relation to such an intended appeal, this court rarely intervenes save in exceptional circumstances. As Kwan JA reiterated in the recent case of Mimi Kar Kee Wong Hung v Severn Villa Limited, HCMP 2192/2011, 12 January 2012, para 31, it need hardly be emphasized that generally, an appellate court will not interfere with a judge’s exercise of discretion unless the judge 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. In relation to case management decisions, the intended appellant must show that the judge ‘has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task’, or if the judge ‘erred in principle or the order was irrational having regard to the issues that had to be resolved’. It is of great importance that this court does not descend to micro‑managing cases pending before the court below.”

11.  That a party challenging a case management decision faces a high hurdle has been repeatedly emphasised: see, for example, Yang Foo‑Oi v Wai Wai Chen [2019] HKCA 49; NPYJ v SMRC [2020] HKCA 832.  This is particularly so here as Mimmie Chan J, as the judge in charge of the Construction List, had been dealing with all the interlocutory matters in the case since its transfer to that list in 2018, and had also, as the designated trial judge, conducted a case management conference and the pre-trial review as well as the expert directions hearings. 

12.  The plaintiff has raised seven potential grounds of appeal against the judge’s decision but none of them in our view provides a valid reason for interfering with the decision of the judge.

13.  The first two grounds attack the judge’s view that the plaintiff has failed to demonstrate sufficient grounds for adducing its own expert report in addition to the SJE’s opinion.  In particular, it was submitted that the test is whether there are “not fanciful” reasons for the plaintiff to call another expert notwithstanding an SJE has been appointed, and that the fact that there is a materially different opinion from an expert of the same level of expertise as the SJE is such a “not fanciful” reason.  We are unable to accept this submission.  The reason for the party concerned to want to put forward a second expert report (and it is unnecessary to decide whether it has to be a non‑fanciful reason or a good reason) is simply one of many factors to be considered in the exercise of the court’s discretion, which is ultimately guided by the interests of justice and the underlying objectives of the procedural rules as set out in Order 1A rule 1 of the Rules of the High Court (Cap 4A): Daimler AG v Leiduck (re: expert evidence) [2014] 3 HKLRD 56, §§33‑34; Dennis Kwok Hon Ming v Poon Sui Cheong Albert & others (HCMP 1526/2013, 29 December 2017), §§15‑20.  The presence of such reason is not conclusive.  The “test” suggested by the plaintiff would mean that a litigant could always adduce its own expert evidence, despite the appointment of an SJE, so long as he could find an expert who took a materially different view.  That does not seem to us to be correct.

14.  There is nothing wrong for the judge to say that the mere fact that there is an opinion from another expert which is materially different from the SJE’s opinion is not, in itself, a good enough reason.[4]  Nor did the judge simply stop there, as she recognised that there were, on the plaintiff’s submissions, deficiencies in the SJE Report, and proceeded to deal with this reason for requiring a second report.[5]

15.  The plaintiff also submitted that the judge erred in taking the approach that in the Construction List, no party would be allowed to adduce a second expert report after an SJE had been appointed.  We do not think this is a fair reading of the Decision.  What the judge actually said was:

“ Single joint expert evidence is preferred and has been used as the starting point for expert directions by the Construction Court. It is not useful to refer to cases in which separate experts, or further experts after the engagement of single joint experts, have been allowed. Each case must be decided by reference to its own individual circumstances, depending on the issues in dispute, the stage at which the matter has to be considered, the reasons relied upon and the overall fairness to the parties.”[6]

Other than pointing out that the court in the Construction List has in practice adopted single joint expert evidence as the starting point for expert evidence directions, we do not think that the judge has suggested that any different principles in substance apply in construction cases to the question of whether further expert evidence in addition to the SJE’s opinion should be allowed.

16.  Under Ground 3, the plaintiff submitted that the judge erred in thinking that there were options open to the plaintiff other than adducing a second expert report.  In particular, the plaintiff relied heavily on its allegation that the SJE Report is based on “unpleaded matters”.  It was said that seeking clarifications from or putting questions to the SJE with reference to unpleaded matters will be of no assistance to the court at trial, and that the exercise will anyhow not be a cost‑effective one. Further, it was submitted that the problem is one caused by the SJE himself, and excluding his opinion on the basis it is founded upon unpleaded matters would nevertheless be prejudicial to the plaintiff as there would not be any expert evidence available.

17.  It appears that what the plaintiff meant by saying that the SJE’s opinions were based on or referred to unpleaded matters is that the SJE has attributed certain alleged defects to causes or factors not contended for by either party.  For example, in the draft notice of appeal the plaintiff referred to the SJE’s opinion that the defects in the formwork system were due to “the Plaintiff’s improper usage or handling of the Formworks … under a demanding production schedule”, which, the plaintiff said, is not the pleaded case of either party. 

18.  In answer to this argument, the first point to note, as submitted by Ms Cheng SC for the defendant, is that the criticism here that the SJE has wrongly strayed outside the pleadings is misconceived. The SJE’s task is to give his true and honest opinion on the question put to him, namely, what were the causes of the defects, based on the facts and materials provided.  An expert, still less a joint expert, is not an advocate for either party.  He is not bound to choose between the rival contentions of the adversaries, pleaded or otherwise.  If, based on the materials provided, his considered opinion is that a specific defect was due neither to the cause alleged by the plaintiff nor to that suggested by the defendant but to a third cause, he is not only free but duty‑bound to say so. 

19.  In respect of the example given, there is no suggestion that the SJE has formed his opinion on the basis of any facts other than those provided to him by the parties.  Whether or not his opinion reflects one or the other party’s pleaded case is not his concern.  The SJE’s opinion was that a cause of some of the defects was the plaintiff’s improper usage or handling of the formworks as it had sought but failed to achieve a one‑day cycle for the production of segments.  As Ms Cheng pointed out, the defendant has in fact pleaded in relation to certain alleged defects that they were caused by the plaintiff’s improper assembling or installation or mishandling of the formworks (see, for example, items A13, A14, A18, A21, A25, A29, A32, A34 and A41).

20.  We do not see why seeking clarification from or putting questions to the SJE (either before trial or during cross‑examination) in relation to the matters objected to by the plaintiff will be impossible or of no assistance to the court as the plaintiff contends.

21.  In the course of his oral submissions for the plaintiff, Mr Anson Wong SC criticised the SJE Report for being overly brief and lacking in explanation of the reasons and bases for the expert opinions, in contrast to Mr Chiu’s report which, he submitted, contained more relevant details and would be of greater assistance to the court.  As to this, three points may be made.  First, as Ms Cheng pointed out, this is not a ground mentioned in the draft notice of appeal; nor does it seem to us to have been taken before the judge.  Secondly, one would have thought that the simple and logical response to this alleged deficiency would have been to ask the SJE to give fuller and better explanation of his reasoning — a step which the plaintiff inexplicably failed to take.  Thirdly, in light of the very short time in which the SJE Report had to be prepared, it would be unfair to compare its level of detail with Mr Chiu’s report especially when the SJE had not been invited to elaborate upon his opinions.

22.  Despite the plaintiff’s criticism of the SJE Report, Mr Chiu was not instructed specifically to respond to it.  His instructions were simply to answer the three questions set out in the expert evidence directions.  Mr Chiu’s report does not, as a result, engage with the SJE Report and does not even make a single reference to it.  Such an approach is unlikely to be of assistance to the court: Chevalier (Construction) Co Ltd v Tak Cheong Engineering Development Ltd [2011] 2 HKLRD 463, §5.

23.  Nor is the scope of Mr Chiu’s report confined to the points in respect of which the SJE’s opinions were, on the plaintiff’s case, based on unpleaded matters.  In the SJE Report, Mr Chan expressed the opinion that some of the complaints were not in fact defects, and that some of those that were defects were caused by the plaintiff such as by improper usage or handling, while some others could properly be attributed to the defendant.  Despite that the so‑called “unpleaded matters” are raised only in relation to some of the items, Mr Chiu was instructed to and made a report that covers the entirety of the 128 defects alleged in the statement of claim.

24.  For these reasons, we consider that Ground 3 has no merit.

25.  The fourth intended ground of appeal concerns the issue of delay, which appears to have been the main concern of the judge. In the Decision, the judge said this in relation to the timing:

“ 14. The main consideration is the delay. If the Plaintiff had made its application, in March 2020 when the original trial dates had to be adjourned, the Court might have been more susceptible to granting leave. However, despite having received the SJE Report in January 2020, and having been made aware of what it regarded as the inadequacies of the SJE Report, the Plaintiff did not apply to the Court to consider its application for leave to appoint its own expert until February 2021. There have been no good reasons to justify this delay. In the interim between March 2020 and February 2021, the Plaintiff could have raised its concerns with both the Defendant and Mr Chan, and sought the Defendant’s agreement as to whether the Plaintiff could appoint its own expert before the trial should resume. I have not been referred to any evidence that any such attempts had been made. Instead, with only 5 months to trial, the Defendant was served with a lengthy report and appendices, to consider the options open to it with regard to the new report on defects. This is not in accordance with the CJR objectives of procedural economy, expeditious dealing with the case, cost‑effectiveness of practice and procedure, fairness, or facilitating settlement of disputes. The Plaintiff instead proceeded to appoint its expert in March 2020 and the expert took the leisure and liberty of 10 months to prepare the report before service on the Defendant. The 10 months could have been spent by the Plaintiff in conferring with the Defendant on suitable alternatives, including preparing further instructions to Mr Chan, and seeking clarification from him. This is a prime example of the Plaintiff failing to take steps to properly prepare for trial until the last months.

15. Five months between granting leave to adduce further expert evidence and commencing trial is not, from experience and taking into consideration the issues in dispute in this case, a reasonably fair timetable for the Defendant to consider Mr Chiu’s report, to engage another expert if that is what the Defendant decides to do, and to prepare the documents required for trial.  It is obviously undesirable to adjourn and delay the trial again.  The Plaintiff’s application does have impact on milestone dates, and there is prejudice to the Defendant if it should be required to make these last minute preparations before the trial commences.  I do not consider that giving leave to the Plaintiff to adduce expert evidence at this stage, for the reasons it relies on, will be just or fair to the Defendant, when the Plaintiff itself has sat on its application for 12 months.”

26.  There is no answer to the judge’s criticisms of the plaintiff’s inaction prior to February 2021.  Contrary to the plaintiff’s submission, this is highly relevant to whether there had been culpable delay on its part. 

27.  The plaintiff submitted that the judge erred because, inter alia, the defendant would not suffer any real prejudice that could not be compensated by an appropriate costs order.  As this submission recognises, the question of fairness has to be assessed from both the plaintiff’s and the defendant’s points of view.  It would be unfair to allow the plaintiff to adduce a second expert report here without affording the defendant an equivalent opportunity to consider commissioning and adducing its own expert report.  The experts also need to have an opportunity of conferring together and narrowing down and justifying their differences.  But the plaintiff had conducted itself in such a way as to leave insufficient time for these purposes before the scheduled trial dates (bearing in mind that there are 128 particulars of alleged defects in total, and that Mr Chiu’s report itself runs to 192 pages (excluding appendices) and took him 8 months to prepare).  The judge considered that the trial would have to be adjourned again if the plaintiff’s application was allowed — a conclusion that the plaintiff has not challenged before us.

28.  Quite apart from the fact that there is no exceptional circumstance to justify adjourning the trial which is a milestone date (see Order 25 rule 1B), we do not accept the plaintiff’s assertion that the defendant would not suffer any prejudice from a further adjournment of the trial.  To say that the defendant is mainly a defending party is not the full picture.  The defendant has a counterclaim for an amount that is substantial albeit lower than the quantum of the plaintiff’s claims. But even if the defendant were purely defending, further postponement of the trial that had already been adjourned from February 2020 to September 2021, no doubt for another substantial period of time, would itself be prejudice: Wise Union Industries Ltd v Hong Kong Science and Technology Parks Corp (HCAL 12/2009, 21 September 2009), §9.

29.  Grounds 5, 6 and 7 relate to the question of Mr Chiu’s apparent lack of independence.  The plaintiff submitted that the judge erred in holding that Mr Chiu’s involvement with the plaintiff (in particular his role as the plaintiff’s representative in mediation with the defendant) gave rise to a real danger of bias on his part as an expert.  It was submitted that there was no evidence to suggest that Mr Chiu’s opinion was influenced by his access to privileged and confidential information disclosed during mediation.

30.  The judge did not rule that Mr Chiu’s expert evidence was inadmissible on the ground of his connection with the plaintiff.  There was no summary determination of its admissibility, contrary to the plaintiff’s submission.  Nor did the judge find that Mr Chiu’s opinion had actually been influenced by that connection or by any privileged information he had thereby obtained.  The defendant was however concerned that Mr Chiu had acquired privileged information from the parties (particularly the defendant) from his involvement in the mediation, and that he might have used or been influenced by such information in forming his opinion as an expert.  The judge cannot in our view be faulted for thinking that this concern was not fanciful. 

31.  As a result, the judge considered that even if Mr Chiu’s report was admitted, where it differed from the SJE Report, the court might well prefer the SJE’s opinion having regard to Mr Chiu’s prior connections with the plaintiff, which would mean that all the forensic steps relating to Mr Chiu’s evidence could well be a waste of time and resources.  We do not see any error of principle in the judge’s view.  We disagree with the plaintiff’s submission that the only questions are whether the expert has disclosed his potential conflict of interests and whether his opinion is truly independent and impartial.  The connections that an expert has with a party and the apparent interest he has in the outcome, even if insufficient to preclude him from giving evidence, are relevant factors that may affect the weight to be placed on his evidence.

32.  The judge did not say that the trial judge would definitely prefer the SJE Report to Mr Chiu’s evidence, but she was plainly entitled to take this possibility into account in deciding whether leave should in all the circumstances be given for the plaintiff to adduce Mr Chiu’s report.

33.  Finally, the plaintiff complained against the judge’s allusion to expert shopping.[7] It was submitted that there was no evidence to suggest that the plaintiff appointed Mr Chiu in order to obtain a more favourable expert opinion.  The fact, however, is that Mr Chiu had extensive connections with the plaintiff as set out in his own report,[8] and that the plaintiff delayed making any application and raising any concern about the SJE Report with the defendant or the court until after obtaining Mr Chiu’s report, whose content was favourable to the plaintiff.  The judge was in our view entitled to observe that this seems to suggest (“smacks of”) expert shopping, without actually making the finding that the plaintiff had subjectively engaged in expert shopping.

34.  For these reasons, we refused leave to appeal. Since this was in our view a wholly unmeritorious application made close to the trial to challenge what is quintessentially a case management decision, an order for indemnity costs was warranted: see Li Xiao Yun v China Gas Holdings Ltd (CACV 38/2013, 11 March 2013), §18.

[1]   [2021] HKCFI 1342.

[2]   [2021] HKCFI 1757.

[3]   at §9.

[4]   Decision, §9.

[5]   Decision, §§10-12.

[6]   Decision, §8.

[7]   Decision, §21.

[8]   Decision, §17.