EVER HARVEST TOBACCO AND LIQUOR BONDED WAREHOUSE LTD v. FORCE 8 CELLARS LTD

HCMP 914/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 914 OF 2009

(ON AN INTENDED APPEAL FROM DCCJ NO. 1945 OF 2007)

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REASONS FOR JUDGMENT

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Hon Tang VP:

1.  Under O. 59 r. 2A(1) an application for leave to appeal must be made inter partes if the proceedings in the court below are inter partes.  However, the application may be dealt with by a single justice of appeal or by the Court of Appeal consisting of two justices of appeal (which is defined as including a judge of the Court of First Instance sitting in the Court of Appeal).  The defendant’s application for leave to appeal was dealt with by me alone without an oral hearing.

2.  By a decision dated 7 May 2009 (“the decision”), I refused leave to appeal.  That was in HCMP 743/2009.  I also made an order under O. 59 r. 2A(8) that the defendant may not:

“… request the determination to be reconsidered at an oral hearing inter partes.”

3.  Since the application was dealt with by a single justice of appeal, a party aggrieved may make a fresh application to the Court of Appeal: O. 59 r. 2C(1).  The fresh application is not an appeal.  The matter would then be dealt with by a court consisting of at least two justices of appeal.

4.  The Court of Appeal consisting of two Justice of Appeal may dispose of the application without an oral hearing.  In that event, subject to O. 59 r. 2A(8), the party aggrieved may

“… request the Court of Appeal to reconsider the determination at an oral hearing”.

However, under O. 59 r. 2A(8) the court may order that no party may request an oral hearing.

5.  The fresh application took the form of a new High Court miscellaneous proceedings, namely, HCMP 914/2009.  The application should have been made in the original proceedings, i.e. HCMP 743/2009. 

6.  I turn to deal with application for leave.  I will not repeat what I have said in my earlier decision.

7.  Mr Wilson Leung, for the defendant, essentially repeated the submissions made in his skeleton submission dated 17 April 2009. 

8.  His main complaint is that the learned judge had wrongly held that the Written Agreement had been completely replaced by an oral agreement.  But the judgment has to be read in context.  The main contention between the parties at trial was whether the parties had entered into an oral agreement which was pleaded in para. 5.1 of the Reply and Defence to Counterclaim and set out in para. 6 of my earlier decision.

9.  After trial, the learned judge had found the defence evidence regarding the oral agreement to be wholly incredible.  He accepted without hesitation the evidence given on behalf of the plaintiff.  This is what Mr Liang of the plaintiff has said in his witness statement filed on 2 January 2008 of para. 26:

“26.   Accordingly, Laura and I orally agreed (‘the Oral Agreement’) for the duty paid wines, that first, from the outset of November 2005, the Plaintiff, instead of providing the warehousing service to the Defendant as per the Agreement, would only rent out the Warehouse to the Defendant to store its wines at HK$8,000 a month, and other than delivery of the wines, the Plaintiff would not provide other services to the Defendant (i.e. stock counting, packing, unpacking, placing, sorting of the wines etc., would be handled by the Defendant) and second, as for delivery of the wines, the Plaintiff would follow the Defendant’s instructions to pick up and deliver the wines and would charge the Defendant in this regard.”

10.  That is a primary finding of fact and I can see no basis upon which it could be overturned. 

11.  Mr Leung submitted that:

“In sum, the Judge’s finding was manifestly contrary to:

(1) The contemporaneous documents;

(2) Ever Harvest’s own pleadings in the Small Claims Tribunal and District Court;

(3) The consistency between the charges made in the Disputed Invoices and the based rates stipulated in the Written Agreement; and

(4) Inherent probabilities.”

12.  None of these is seriously arguable.  For example, it is said that it is not correct to say that the defendant had paid the total charges at $8,000 per month for the period 8 October 2005 to 8 January 2006 without protest.  It is said that by the defendant’s solicitors’ letter dated 20 June 2006, the defendant did protest the invoice.  But the invoice for $24,000 was dated 31 December 2005 and paid in January 2006.  Moreover, in their former solicitors, Minter Ellison’s letter of 10 March 2006, that invoice was referred to without any protest or adverse comment.  Mr Leung also submitted that this invoice is not clearly supportive of the plaintiff’s case on oral agreement because the storage charge of $8,000 per month might have been based on the rates agreed under the Written Agreement and not a flat rate.  There was no evidence that if the charges had been computed in accordance with the Written Agreement the storage charges would have been $8,000 per month.  Indeed, in Minter Ellison’s letter of 20 June 2006 they complained that:

“Ever Harvest has simply charged a flat rate of HK$8,000/month for the 3 months from 8 October 2005 to 8 January 2006. … The correct charges should be calculated as follows:

HK$90/cbm x 50 cbm x 3 months = HK$13,500.00.”

13.  Mr Leung also relied on the fact that the absence of a timely protest was explained by Ms Budlong in her witness statement and repeated in the pleadings which were drafted by her.  But her evidence was rejected by the learned judge.

14.  In relation to the counterclaim, it is said that the defendant had made numerous other counterclaims apart from Wealth Zone Bonded Management Limited’s (“Wealth Zone”) storage charges:

“… most notably, in respect of Ever Harvest’s failure to provide adequate warehousing and delivery services. These other counterclaims, it is submitted that, were wrongly dismissed by the Judge as a result of his finding on the Oral Agreement.”

15.  But such counterclaim also depended on the credibility of Ms Budlong and the absence of the oral agreement. 

16.  In Mr Leung’s first skeleton submission, he submitted:

“19.   A separate part of Force 8’s counterclaim related to the fact that its wines were wrongfully retained by Ever Harvest from 7 February 2006 to late March 2006 …”

A footnote referred to paras. 22 to 35 of the Defence and Counterclaim.  I have not found paras. 22 to 35 easy to understand.  But they were part of the defence, the counterclaim only started at para. 55.  In para. 56:

“The Defendant counterclaims the amount of HK$716,961.93 and additional costs and interests, particulars of the grounds for which and the manner in which it is calculated are set out as follows …”

The calculation was set out in para. 60(b)2.  Each of these items has been dealt with by the learned judge.  So not only were paras. 22 to 35 of the Defence and Counterclaim not part of the counterclaim, no particulars had been given in respect of such loss, if any.

17.  The defendant’s heads of loss were set out in the solicitor’s letter of 20 June 2006, which was incorporated by reference into the Defence and Counterclaim.  Mr Leung submitted that items 14, 17 and 20 relate to the wrongful retention.  But all three items have been dealt with by the learned judge in his judgment at paras. 35, 38 and 41 respectively.  So far as item 14 is concerned, the learned judge said that the claim is incredible.  He also said:

“35.   Item 14 is based on Smartone Telephone bill … The total … is $6,502.27, but the Defendant is claiming for $4,384.60.  So some of the telephone calls must have nothing to do with the Plaintiff.  But it cannot be distinguished which telephone calls are related to the Plaintiff …”

The burden of proof was on the defendant which it has failed to discharge.

18.  Regarding item 17 the learned judge said, it was a bare allegation and there was no factual evidence to support the claim.  As for item 20, he said:

“41.   … The Defendant has not adduced sufficient factual evidence to support this claim. The Defendant has not adduced evidence to show that the Plaintiff was at fault.”

19.  Mr Leung submitted that the learned judge has failed to deal with the claim for legal fees in para. 62 of the Defence and Counterclaim.  The learned judge said in his decision refusing leave to appeal at para. 23:

“23.   Under item ii, Invoice 943754 (dated 15 November 2006) was a demand note issued by Minter Ellison.  The value is $68,230.  That demand note merely bears the description ‘50-5165736 – Ever Harvest Tobacco and Liquor Bonded Warehouse Limited Contact: Laura Budlong’, and nothing else.  It is in fact a bill charging the Defendant.  It is a demand for legal fee for services rendered to the Defendant by Minter Ellison.  So the demand of $68,230 is a demand for the legal fee already spent by the Defendant.  It is in the same nature as item iv.  It should be considered under the ambit of ‘costs’.”

20.  It is obvious that the learned judge was not satisfied with the evidence adduced. In any event, the costs would be recoverable as costs (subject to taxation) if the counterclaim had succeeded. 

21.  For the above reasons, I refused leave to appeal.

22.  Mr Brian Wong for the plaintiff asked for indemnity costs.  On the basis that the defendant had unnecessarily asked for an oral hearing.  It has since been clarified that the defendant had not asked for an oral hearing, we do not believe this is a case for costs otherwise than on the usual party and party basis.

Hon Chu J:

23.  I agree for the reasons given by the Vice President that leave to appeal should be refused with costs to the defendant on party-and-party basis.

24.  Pursuant to our direction made at the conclusion of the hearing, the defendant had lodged a statement of costs for summary assessment under O. 62 r. 9A, and the plaintiff had made written comments on it.  The defendant asks for a total sum of $66,242.  I am of the view that the amount claimed should be subject to the reductions below.

Item B1

25.  Under item B1, the defendant claims photocopying charges of $3,812 for 953 pages of documents. This represents a charge of $4 for each page of photocopied document. It is not clear what are the documents involved. Under Item 1A Part 1 of the First Schedule to O. 62, photocopying of documents is only allowed at $1 per page. Hence, if merely for photocopying, the amount to be allowed would only be $953.

26.  If, contrary to what was stated in the statement of costs, the item is for the preparation and copying of documents in the defendant’s bundle, Item 1A, Part 1 of the First Schedule to O. 62 only allows $4 per page for the first set of bundle, and for subsequent sets, the amount allowed is $1 per page. Further, the defendant’s bundle comprises less than 100 pages and items 3 and 4 have already been included in the plaintiff’s bundle.

Item C

27.  Under item C, the defendant claims three hours of the handling solicitors’ time for communications with the plaintiff, client, counsel and the court.  The present set of proceedings was preceded by HCMP 743/2009, the costs of which had already been awarded to the defendant.  The present action was commenced on 14 May 2009, less than two weeks to the hearing on 3 June 2009.  In the circumstances, it is excessive on party-to-party basis to spend three hours on communications. A total of one hour would be appropriate.

Item D

28.  Under item D, the defendant claims five hours of the handling solicitor’s time for preparation of documents (two hours), reading documents (1 hour), preparation for the hearing (one hour) and attending the hearing (one hearing). 

29.  For the reasons stated in paragraph 27 above and having regard to the fact that the handling solicitor has been admitted for more than 10 years, the time spent on preparing and reading documents and preparing for hearing (items D1 to D4) is excessive. They should be allowed at two hours. Together with the one hour for attending the hearing, the total time allowed under item D should be 3 hours.

30.  On the basis of the reductions indicated above, the amount of the defendant’s costs to be allowed is $47,500.

Hon Tang VP:

31. I agree.