Taching Petroleum Co, Ltd v. Meyer Aluminium Ltd

CACV 477/2020, CACV 478/2020,
CACV 621/2020 and CACV 622/2020
(Heard together)

[2021] HKCA 294

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 477 OF 2020 AND 621 OF 2020

(ON APPEAL FROM CTA 1/2018)

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BETWEEN

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AND

CIVIL APPEAL NO 478 OF 2020 AND 622 OF 2020

(ON APPEAL FROM CTA 2/2018)

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BETWEEN

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(Heard together)

Before: Hon Poon CJHC and Lam VP in Court

Date of Hearing: 5 January 2021

Date of Judgment: 5 January 2021

Date of Reasons for Judgment: 11 March 2021

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REASONS FOR JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

Introduction

1.In these appeals, Meyer Aluminium Limited (“Meyer”) the Defendant in both sets of proceedings seeks to overturn the interlocutory decisions of 29 May 2020 of the Competition Tribunal[1] in: (i) refusing to grant leave to amend the Points of Defence to expand Meyer’s pleas of collusion (the subject matters of CACVs 477 and 478/2020); and (ii) refusing leave to Meyer to adduce expert evidence on quantum of damages at the trial of these proceedings (the subject matters of CACVs 621 and 622/2020[2]).    

2.The background and history of the proceedings (including the two High Court actions HCA 1929/2017 and HCA 1069/2018 from which the two competition cases in CTAs 1 and 2/2018 emanated) were set out in the judgment of G Lam J of 17 May 2018 [2018] HKCFI 1074 and the Reasons for Decision of the Au-Yeung J as the Deputy President (“the Deputy President”) of the Tribunal of 12 September 2018 [2018] HKCFI 2095 and [2018] HKCT 4 and her Decision of 22 February 2019 [2019] HKCFI 515 and her Decision of 29 May 2020 [2020] HKCT 2.

3.The applications for amendments and for expert evidence were made on 6 December 2019 after close of pleadings, discovery and exchange of witness statements.  In the next section, we shall discuss the relevant procedural history of the proceedings which, as we shall see, have great significance in these appeals.    

4.There were other interlocutory applications brought by Meyer which were dismissed by the learned Deputy President.  Leave to appeal in respect of such decisions were refused: see the Decision of the Deputy President of 27 August 2020 [2020] HKCT 7 and the Reasons of Judgment of this Court of 3 December 2020 [2020] HKCA 1005.

5.After hearing counsel, we dismissed all the appeals.  Here are our reasons for dismissing the appeals.

The subsidiary nature of the proceedings in the Tribunal

6.The present sets of proceedings before the Tribunal originated from the two High Court actions in which Taching[3] and Shell[4] brought respective claims against Meyer for the unpaid price of industrial diesel supplied to the latter.  Meyer relied on alleged contraventions of the first conduct rule under the Competition Ordinance Cap 619 (“the Ordinance”) in the collusion between Taching and Shell as defences. 

7.Taching applied for summary judgment in HCA 1929/2017 which came before G Lam J on 16 March 2018.  In the judgment of 17 May 2018, the learned judge granted Meyer conditional leave to defend.  Pursuant to Section 113(3) of the Ordinance, he also transferred “the allegation of contravention of the first conduct rule” to the Competition Tribunal.

8.According to paragraph 45 of the judgment of G Lam J of 17 May 2018, the court only transferred “the allegation of contravention of the first conduct rule” to the Tribunal.  In other words, the Tribunal only has jurisdiction to determine whether there has been contravention of the first conduct rule.  As regards the other issues in the defence raised by Meyer in HCA 1929/2017, including whether the contravention (if established) can constitute a defence of set-off and if it can, the quantum of such set-off, or a defence of illegality, they remain issues to be determined in the High Court action by the Court of First Instance.

9.It is also clear from the allusion by the judge to the defence case at various parts[5] of that judgment that the allegation of contravention was the allegation of collusion between Taching and Shell with no other parties being involved.  Paragraph 33 of the judgment summed up the position of the defence case on collusion as follows:

“ 33. Furthermore, the defendant’s case is not that all suppliers of industrial diesel colluded in price across the board against all purchasers, but only that the plaintiff and Shell colluded against the defendant.  In essence, the defendant alleges that the plaintiff and Shell, the defendant’s only two suppliers, had got together and decided to increase their prices for diesel sold to the defendant over and above what other suppliers in Hong Kong were charging and over and above what the plaintiff and Shell were charging other purchasers.” 

10.A defence was filed by Meyer in HCA 1929/2017 on 19 October 2018.  The substantive parts of the defence are at paragraphs 3 to 6:

“ 3. It is admitted that the Plaintiff has delivered industrial diesel to the Defendant as pleaded in paragraph 2 and that a demand letter has been issued for the alleged outstanding amount as pleaded in paragraph 4. However, the Defendant avers that the Plaintiff is not entitled to claim the alleged outstanding amount (or any part thereof) from the Defendant because the Plaintiff and one Shell Hong Kong Limited (“Shell”) (another supplier of industrial diesel to the Defendant) have contravened the First Conduct Rule under Section 6 of the Competition Ordinance (Cap 619) (“the Ordinance”) by way of making and/or giving effect to an agreement, and/or engaged in a concerted practice of price fixing with the object of preventing, restricting or distorting competition in Hong Kong.

4. The particulars of the said contravention have been set out in paragraphs 2 to 17 of the Points of Defence in Taching Petroleum Company, Limited v Meyer Aluminium Limited CTA 1/2017. Those paragraphs are adopted herein.

5. By reason of the aforesaid matters, the relevant agreement for the supply of industrial diesel between the Plaintiff and the Defendant is tainted with illegality and unenforceable as against the Defendant.

6. Further or in the alternative, the said anti-competitive conducts of the Plaintiff and Shell have caused injury to the Defendant thereby rendering the Plaintiff and Shell jointly and severally liable to pay damages to the Defendant as a consequence of the breach of the First Conduct Rule.  The Defendant is entitled to set off the damages suffered as a result from any sum that is due to the Plaintiff (which is denied).”

11.Though there was no summary judgment application in HCA 1069/2018 by Shell, Au-yeung J made an order on 7 September 2018, mirroring the transfer in HCA 1929/2017, transferring the allegation that Taching and Shell had colluded in price fixing in breach of the first conduct rule in that action to the Tribunal[6].

12.Prior to the transfer, Meyer had already filed a defence in HCA 1069 of 2018.  It is plain from that defence that the allegation of collusion was, like the allegation in the Taching action, collusion between Taching and Shell only.

13.By virtue of the terms of the transfer, whether the allegation (if established in the Tribunal) constitutes a defence of set-off or illegality remain as issues to be determined in HCA 1069/2018 by the Court of First Instance.

14.At the same hearing of 7 September 2018, CTA 1/2018 was also listed before Au-Yeung J (as the Deputy President of the Tribunal).  The Tribunal gave consideration to whether Meyer should be required to file Originating Notice of Application (“ONA”) in the Tribunal proceedings in accordance with Rule 74(1) of the Competition Tribunal Rules.  It was decided that ONA was not necessary.  The reasons were given at paragraphs 12 and 13 of the Reasons for Decision of 12 September 2018 [2018] HKCT 4, which identified the scope of the transfers and the nature of the transferred proceedings:

“ 12. Firstly, as Mr Lee and Ms Lui (counsel for Meyer) indicated, Meyer had no relief to seek, not even for a declaration. The defence filed in response to the Shell Action did not even contain a counterclaim. There would thus be no relief for Meyer to seek in the ONA.

13. The Allegation was the only matter transferred. The Tribunal is only required to find whether such allegation is substantiated or not. Upon the making of the relevant “decision” or “finding” on the Allegation, the CFI will take over and decide the rights of the parties through further proceedings. See s 119 and 149 CO.”

15.The Tribunal further highlighted the scope of the transfer and the nature of the proceedings in the Tribunal at paragraphs 20 and 21:

“ 20. The true nature of transferred proceedings is for trial of competition issues as preliminary issues.  The Competition Appeal Tribunal (“CAT”) in the United Kingdom in Agents’ Mutual Ltd v Gascoigne Halman Ltd [2017] CAT 22 at [12], stated that:

‘ [12] We consider the appropriate analogy in this case to be the determination of a preliminary issue. The effect of the Transfer Order was to transfer the Competition Issues from the High Court to the Tribunal, which the Tribunal determined as if they were preliminary issues. The unusual feature of the present case is that the preliminary issues (i.e. the Competition Issues) have been determined in the Tribunal, whilst all other issues (i.e. the non-Competition Issues) remain for determination in the Chancery Division.’

21. Competition issues are special issues that require the determination by a specialist tribunal.  Upon resolution of the special issues, the original action can continue with its normal course in the CFI.”

16.Hence, the proceedings in the Tribunal continued in tandem with the two High Court actions and they were all case managed by the Deputy President.  On 22 February 2019, the Deputy President directed that the trials of all four sets of proceedings shall take place before the same judge at the same time. 

17.By 2 summonses of 6 December 2019 taken out in CTA 1/2018 and CTA 2/2018 respectively, Meyer applied for leave to adduce expert evidence on, amongst other things, whether it has suffered loss and damage as a result of the collusion between Taching and Shell and the quantum of damages. 

18.By 2 further summonses of 6 December 2019 taken out in CTA 1/2018 and CTA 2/2018 respectively, Meyer applied for leave to amend the Points of Defence.    

19.Meyer did not make any applications in the two High Court actions seeking similar relief.

20.These four summonses were heard by the Deputy President on 10 and 16 January 2020.  Since the applications were only made in the context of CTA 1 and 2/2018, the two High Court actions were not listed at those hearings.  It is therefore clear that the Deputy President could not have exercised and did not exercise any jurisdiction of the Court of First Instance under the High Court actions in making her decisions on 29 May 2020.

21.At this juncture, we need to examine the nature of the transferred proceedings in the context of statutory regime under the Ordinance.  For present purposes, the following features in the statutory context have important bearings. 

22.Firstly, it is a special (if not unique) feature in the statutory regime in Hong Kong that the Ordinance provides for very limited scope for private actions to be brought in respect of allegations of contravention of the conduct rule.  Part 6 of the Ordinance relates to enforcement actions which can only be brought by the Commission.  Part 7 of the Ordinance covers private actions and, subject to what we shall say in respect of allegations being raised as a defence, it only permits follow-on actions to be brought by a private party in respect of loss and damages suffered as a result of any “act that has been determined to be a contravention of a conduct rule”, see Section 110(1) and (3). 

23.In other words, there has to be a determination on the nature of the act (by the Tribunal or courts) as contravention before a private party can bring a follow-on action. 

24.Section 108 precludes any person from bringing any proceedings independently of the Ordinance in respect of a cause of action based on contravention of a conduct rule.

25.At the legislative stage, the original bill includes provisions under Part 7 for standalone actions to be brought by private person.  However, during the legislative debate, such provisions were removed.  It is therefore a clear legislative policy that in general a private party cannot bring a claim for contravention of the conduct rule other than a follow-on action.

26.Secondly, the Ordinance draws a distinction between the bringing of a claim based on contravention of the conduct rule and the running of a defence based on such allegation.  The Ordinance allows allegations based on contravention of the conduct rule to be raised as a defence to other claims litigated in the Court of First Instance[7].  Thus, Section 113(3) of the Ordinance expressly provides for the transfer of such allegation (raised as a defence) by the Court of First Instance to the Tribunal. Section 142(1)(d) of the Ordinance confers jurisdiction on the Tribunal to hear and determine allegations of contraventions of the conduct rules raised as a defence. 

27.Section 113(3) and Section 142(1)(d) refer specifically to transfer in respect of “the allegations” of contravention as opposed to the entire underlying proceedings in the Court of First Instance.  Thus, the transfer is limited in scope and the Court of First Instance cannot transfer the whole case to the Tribunal and the Tribunal has no jurisdiction to hear the High Court actions other than the parts that are so transferred.

28.In the present cases, G Lam J and Au-Yeung J made the respective transfer orders in the 2 High Court actions pursuant to Section 113(3).  They carefully identified the scope of the transfer and limited the same to the allegations of contravention of the conduct rule.  In this regard, we respectfully agree with the analysis of the Deputy President on the nature of transferred proceedings in paragraphs 20 and 21 of the Reasons for Decision of 12 September 2018 [2018] HKCT 4 (cited at [15] above).

29.In consequence, the transferred proceedings to be heard by the Tribunal must be regarded as subsidiary to the 2 High Court Actions and the jurisdiction of the Tribunal is circumscribed by the terms of the transfer.  The proceedings in Tribunal do not have any independent existence.  The Deputy President was correct in holding on 12 September 2018 that there was no originating process in the Tribunal.  

30.We also reiterate our view at paragraphs 8 and 13 above that the other issues pertaining to the defence of set-off and illegality raised by Meyer remain to be adjudicated by the Court of First Instance, not the Tribunal.  That was also the view taken by the Deputy President as set out in paragraph 13 of her Reasons for Decision of 12 September 2018 [2018] HKCT 4.

31.It follows from the above analysis that:

(a) As the proceedings in the Tribunal do not have a life of their own, the scope of the alleged collusion must be circumscribed by the defences filed in the High Court actions.  The Points of Defence cannot go beyond the pleaded case of Meyer in those defences.  As we have seen, the allegations are confined to collusion between Taching and Shell;

(b) The allegations transferred to the Tribunal are also confined to allegations of collusion between Taching and Shell;

(c) As accepted by Mr Lee (appearing with Ms Lui and Mr Tse for Meyer) Meyer cannot at this stage bring any claim against Taching or Shell for alleged contravention of the conduct rule.  Thus it is confined to the running of the defences in the two High Court actions based on such allegations.  In other words, Meyer cannot bring any counterclaim to sue for damages arising from such allegations (even assuming such damages exceed the claims of Shell and Taching);

(d) Meyer cannot manoeuvre the proceedings in the Tribunal in such a way so as to advance an additional claim based on contravention of the conduct rule which goes beyond the defences pleaded in the High Court actions. Such attempt would tantamount to the bringing of a claim (as opposed to the proper conduct of the defence in the High Court actions) and it is precluded by Section 108 of the Ordinance; and

(e) Such attempt is also objectionable on the ground that it goes beyond the scope of the transfer as prescribed in the respective orders of G Lam J and Au-Yeung J which conferred jurisdiction on the Tribunal in the present instances. 

32.Hence, the applications by Meyer were doomed to fail because:

(a) As regards the amendment applications, Meyer did not make any corresponding applications to amend its defences in the High Court actions and the disputed amendments (as we shall elaborate below) went beyond the scope of the allegations of collusion between Shell and Taching transferred to the Tribunal; and

(b) As regards the expert evidence applications, the issues of damages and quantum did not form part of the allegations transferred to the Tribunal and therefore they are issues to be determined by the Court of First Instance in the context of the 2 High Court actions.  Meyer did not issue summons in the High Court actions and pursued such applications before the Tribunal erroneously.

33.Mr Lee did not dispute our analysis on the limited scope of the transferred proceedings.  He had to accept (and he did accept) that applications should have been made in the Court of First Instance. However, he submitted that these were just irregularities and he submitted that this Court has the power to grant such relief as the four sets of proceedings had been case-managed by the Deputy President.

34.With respect, we do not accept that these were only matters of irregularities.  As we explained above, these are matters going to the jurisdiction of the Tribunal.  According to our analysis, the Tribunal did not have the jurisdiction to entertain these applications of Meyer.

35.Further, at the hearing in January 2020, the High Court actions were not listed before the Deputy President as the summonses were issued only in the context of CTA 1 & 2/2018.  The Deputy President only sat as the Tribunal in the hearings and her decisions were given in the context of the proceedings in the Tribunal.  The jurisdiction of Her Ladyship as a judge sitting in the High Court actions was not invoked. 

36.As we shall elaborate below, had the applications been made in the High Court actions instead of the Tribunal proceedings, the court would have to assess the matters differently.  At least, there were some considerations which could have bearing on how the discretions should be exercised in such contexts as opposed to how the applications were considered by the Tribunal. 

37.Since these appeals are only appeals from the decisions of the Tribunal, it is not possible for this Court to exercise the power of the judge sitting in the Court of First Instance in the context of the two High Court actions.  It is not correct for Mr Lee to contend the defects were curable by amending the headings in the relevant summonses.

38.On these bases alone, the appeals fall to be dismissed.  In addition, we are also of the view that the appeals cannot succeed for the reasons given below.

The amendment appeals: CACVs 477 and 478/2020

39.The Deputy President set out the Applicants’ basis for the amendment applications at paragraphs 4 to 6 of the Decision of 29 May 2020.  In gist, Meyer pointed to two clauses in the agreement between Taching and its supplier Sinopec (which was disclosed to Meyer by discovery) and alleged that it could lead to a suspicion of collusion involving more participants than Taching and Shell alone. 

40.The crux of the disputed amendments was the additional phrase (underlined) as in the following part of the Points of Defence:

“ at least since 2002, the Plaintiff, Shell and/or other suppliers and/or other facilitating third parties have colluded by way of directly, fixing, maintaining or controlling their respective Net Unit Prices for the supply of industrial diesel in Hong Kong …”

41.In short, some further unidentified parties were added to the colluding arrangement.  Similar wordings were added at various parts of the Points of Defence.

42.These amendments sought to expand the scope of the alleged collusion because as the Deputy President noted at paragraphs 89 and 90 of the Decision of 29 May 2020:

“ 89. The pleaded case of Meyer is that the collusion took the form of fixing Net Unit Prices and exchange of information in private between Taching and Shell who were competitors.  Price fixing and exchange of information in private were, by their nature, a restriction on competition by object.  The only pleaded collusive conduct was the parallel conduct of Taching and Shell in making identical adjustments to their respective Current List Prices, which resulted in identical Net Unit Prices they charged Meyer in 118 instances. This is confirmed with the benefit of Meyer’s witness statements.

90. Accordingly, as pleaded,

(1) It was a two-party collusion.  No other market players were involved, be they oil majors or otherwise.

(2) There is no allegation of any communications or reciprocal contacts between Taching and Shell.

(3) The only pleaded basis for the alleged collusion remains unchanged in the Disputed Amendments, notwithstanding completion of extensive discovery and the exchange of detailed witness statements from all parties.

(4) The alleged significant differences between the Net Unit Prices charged by Taching and Shell, as compared to that of another supplier is not itself a matter relied upon by Meyer as collusive conduct.  It was only what led Meyer to investigate and discover the alleged collusion.”

43.Such expansion should also be viewed in light of the stance of Meyer before G Lam J as noted by the learned judge at paragraphs 8(5) and 35 to 37 of the judgment of 17 May 2018.  The Applicant’s case of collusion between Taching and Shell (those were the only suppliers to the Applicant) was based on the allegation that their prices matched each other but at the same time substantially exceeded the prices charged by other suppliers in the market.  Meyer failed to notice the difference because it failed to “shop around”.

44.Thus, without the amendments, Meyer’s allegations against Taching and Shell were founded upon price matchings between the two of them and absence of adequate explanation for such phenomenon, particularly in light of substantial price differences with other suppliers in the market.

45.With the amendments, Meyer sought to make significant changes to its allegations.  Because of the lack of the necessary particulars, the amendments bring in great uncertainties as to the basis of the allegations of collusion:

(a) By the addition of some unidentified third parties (apparently some playing a different role than that of suppliers) to the alleged collusion, it is no longer a case based on price matchings;

(b) Though Mr Lee referred to the two clauses in the Taching-Sinopec agreement as the evidential basis for the amendments, it is entirely unclear as to how the alleged collusion could be established when there is no suggestion that there were price matchings with the other unidentified suppliers;

(c) It is also wholly unclear as to how this new case relates to the original case of Meyer on price matchings (assuming that Meyer does not abandon such original case).  There is no information on the prices charged by those other unidentified suppliers on industrial diesel and, if their prices were substantially different (as appeared to be the case as put on behalf of Meyer before G Lam J), how the collusion worked in light of the price matchings between Taching and Shell on the one part and the availability of same product from those other suppliers at a substantially lower prices in the same market;

(d) It is also wholly unclear as to how Shell could be said to be colluding with Taching or some unidentified other parties when Shell was not privy to the Taching-Sinopec agreement; and

(e) The two clauses in the agreement in question related to the exchange of information and promotion of market in the vertical relationship between Taching as retailer and Sinopec as wholesaler.  It is wholly unclear as to how that could give rise to the inference that there was collusion between Taching, Shell and some other unidentified suppliers in a horizontal relationship in the retail market of industrial diesel.   

46.We have no hesitation in rejecting Mr Lee’s submission that these were just minor amendments.  In light of the above observations, it is plain that by the amendments Meyer is advancing a substantially new case which, as presently formulated, is seriously defective and embarrassing for want of necessary particulars.  With respect, the so called elucidations at paragraph 15 of Mr Lee’s reply submissions only consisted of general assertions and provide no answer whatsoever to the embarrassing defects identified above.

47.In this respect, we are in agreement with the analysis of the Deputy President at paragraphs 108 to 130 of the Reasons for Decision of 29 May 2020. We also agree with the approach of the Deputy President at paragraphs 94 to 100. Notwithstanding the submissions of Mr Lee, we do not accept that the Deputy President erred in principle in assessing the application for amendment in the way she did. 

48.Moreover, as we stated above, the applications for amendment should first be made in the High Court actions coupled with applications for the transfer of the expanded allegations to the Tribunal.  Had such applications been made, in addition to the considerations which the Deputy President had taken on board and the defects identified by us at paragraph 45 above, the court would also have to examine to what extent such proposed amendments is necessary for the resolution for the disputes in the defences of set-off and illegality.  In particular, as we have raised with counsel in the course of the hearing of the appeals, for the purposes of these defences, comparing a collusion between Shell and Taching on the one hand and a collusion between Shell, Taching and some unidentified other suppliers and third parties, we have difficulties in seeing any difference in terms of the sustainability of the defences.  It is not Meyer’s case that Taching was in any event acting in collusion with these other parties even if Shell was not involved.  Meyer’s case remains that Shell and Taching were parties to the collusion.  Mr Lee was unable to give us any satisfactory reply to this question.

49.If the additional allegations did not contribute materially to the defences, given the serious defects and the complications they would instil into the preparation of the actions (as Mr Lee did not disavow the possibility of Meyer seeking further discovery and filing of further evidence if the amendments were allowed), the court should assess whether such amendments should be allowed at this stage when it is expected that the trials are to be take place in mid-2021.

50.Mr Lee repeatedly said that the clauses in the Taching-Sinopec agreement gave rise to a reasonable suspicion on the part of Meyer of possible collusion of Taching and Shell with some third parties.  With respect, it is the duty of a pleader to assess whether there is a proper basis to support the proposed amendments.  Suspicion or possibility of collusion were not enough to support such pleas.  The obvious defects identified at paragraph 45 above are clear indicia that those advising Meyer failed to think the matter through before putting forward such a drastic change to Meyer’s case on collusion.

51.Mr Lee also laid emphasis on the generosity that the court and tribunal should accord to a complainant of contravention of conduct rule.  We must say that there are limits to such generosity.  For the reasons given by the Deputy President, we are of the firm view that such generosity should not be extended to allow the disputed amendments with so many serious defects to be advanced at this stage of the proceedings. 

52.We also agree with the submissions of Ms Sit SC (appearing with Mr Chan for Shell) and Ms Lam (appearing with Ms Xu for Taching) that in general the indulgence afforded by such generosity only applies to the position prior to discovery: see Bord Na Mona Horticulture v British Polythene Industries [2012] EWHC 3346 (Comm) at paragraph 73; Toshiba Carrier UK Ltd v KME Yorkshire [2012] EWCA Civ 1190 at paragraph 32; Secretary of State for Health v Norton Healthcare Limited [2004] EWHC 609 (Ch) at paragraph 21.  The present cases have gone well beyond that stage.

53.The generosity has to be balanced against the unfairness and prejudice that might occasion to the other side if they were required to defend a competition claim without knowing what case they have to meet and what issues their experts need to address: see Sel-Imperial Ltd v The British Standards Institution [2010] EWHC 854 at paragraphs 17 and 18; Swain-Mason v Mills & Reeve LLP [2011] 1 WLR 2735 at paragraphs 72 and 73.  As noted by Deputy President at paragraph 97 of the Reasons for Decision of 29 May 2020, the principle discussed in Perak Pioneer Ltd v Carrian Holdings Ltd CACV 59/1985, 13 June 1985, are apposite in the present circumstances.  As illustrated by the facts of that case, such principle is not confined to situations where amendments were only applied for at trials. 

54.Whilst the above guidance should not be applied inflexibly (after all it is a matter of discretion to be exercised in light of all the circumstances of the case) and there could be cases where the evidence obtained through discovery gives rise to a strong and cogent demand for reconstitution of a competition claim in the interest of justice, we do not consider the discovery of the Taching-Sinopec agreement in the present cases come within such scenario.

55.The Deputy President was correct in dismissing the applications for leave to amend in respect of the disputed amendments.    

The expert evidence appeals

56.As discussed above, the proper forum for Meyer to seek to have leave to adduce expert evidence on damages and quantum is the Court of First Instance in the context of the High Court actions.  We only wish to make some observations as follows.

57.The Deputy President has expressed the view in the Tribunal[8] that there could not be any set-off at this stage in light of the statutory regime under the Ordinance which only allows follow-on actions to be brought after a determination that there have been conducts contravening the conduct rules.  That must be true as far as proceedings in the Tribunal are concerned.

58.However, as we held above, the Tribunal has no jurisdiction in the present proceedings to address if set-off should be available in the context of the High Court actions.  It is a matter for the Court of First Instance.  As further elaborated below, the Court of First Instance has to consider the question of set-off by addressing these sub-issues:

(a) As there is no express provision for conferring private right other than follow-on action, whether a contravention of the conduct rule under the Ordinance can give rise to cross-claims by Meyer against Taching and Shell on the basis of common law principles concerning breach of statutory duty;

(b) Whether there is an implied abrogation by the Ordinance of the common law cause of action by way of cross-claim as a defence;

(c) If a cross-claim for contravention of the conduct rule is sustainable in law, whether the common law criteria for equitable set-off can be satisfied in accordance with the test in Geldof Metaalconstructie NV v Simon Carves Ltd [2010] EWCV Civ 667; [2010] 4 All ER 847; and

(d) The damages suffered by Meyer as a result of such contravention and the quantum thereof.    

59.These sub-issues only need to be determined if Meyer makes good its case of contravention of the conduct rule against Taching and Shell in the proceedings in the Tribunal. 

60.In granting leave to appeal on 20 November 2020[9], we held that it was arguable that set-off is available notwithstanding the statutory regime.  The primary issue is whether the common law right of equitable set-off has been abrogated by the statutory regime under the Ordinance. In the absence of any express abrogation, the question is whether the prerequisite for the bringing of a follow-on action under Section 110, read together with the bar against the bringing of private action based on allegations of contravention under section 108 necessarily implied that the right of equitable set-off in a High Court action (as opposed to the proceedings in the Tribunal) is abrogated even though there are references to “defence based on contraventions of conduct rule” under Sections 113 and 142.   

61.At paragraph 209 of the Reasons for Decision of 29 May 2020, the Deputy President placed reliance on the principle that there cannot be any set-off unless the claim of a defendant has fallen due at the commencement of the action.      

62.Before us, Mr Lee cited some authorities (which apparently were not cited before the Deputy President) to contend that under common law there could be some flexibility in that regard: Safa Ltd v Banque du Caire [2000] 2 Lloyd’s Rep 600; Burton v Mellham Ltd [2006] 1 WLR 2820.  The limits of such flexibility is not very clear.  Mr Lee referred us to Derham on the Law of Set-off paragraphs 4.65 and 4.66.   

63.In our judgment, there is another way of considering the matter: the primary issue should be whether the equitable right of set-off has been impliedly abrogated by the Ordinance.  If such right has not been abrogated, then the accrual of the right is arguably not to be dictated by the time when a private party could advance a follow-on action.  Rather, the question is whether the breach of the conduct rule could give rise to a claim in private law based on breach of statutory duty.  If such cause of action is viable in law, it would have been accrued when such breach resulted in damages suffered by Meyer. 

64.Under the common law, the right of equitable set-off should be governed by the test discussed by Rix LJ in Geldof Metaalconstructie NV v Simon Carves Ltd [2010] EWCV Civ 667; [2010] 4 All ER 847, viz, was the cross-claim based on contravention of the first conduct rule so closely connected with the Plaintiffs’ claims in the two High Court actions that it would be manifestly unjust to allow them to enforce payment without taking into account the cross-claim.

65.As we observed above, these are questions for the Court of First Instance.  Since these issues have yet to be canvassed in that forum and such arguments have not been raised before the Deputy President, we do not consider it appropriate for us to determine the same in these appeals when it is not necessary for us to do so.  For this reason, we have not heard oral submissions from Ms Sit and Ms Lam on the same. 

66.In terms of an application to file expert evidence on damages and quantum, there is also another case management possibility.  Assuming an application for expert evidence on damages and quantum is made in the Court of First Instance, it is open to the court to adjourn that application until the Tribunal made a determination of the allegations.  Adoption of such option may entail the splitting of the trials in the High Court actions.  The court could still address sub-issues (a) to (c) and issues on illegality in the trials taking place at the same time of the trials in the Tribunal proceedings.  If the Tribunal found against Meyer or if the court ruled against Meyer on these sub-issues and the defence of illegality, judgments can be given in the High Court actions.  On the other hand, in the event of determinations in favour of Meyer in the Tribunal and in the Court of First Instance (except on the issue of illegality), the court would have to hold the second part of the trials to consider the quantum of set-off.   

67.We have not heard submissions on that option and these are again matters of case management of the High Court actions for the Court of First Instance.  It is therefore not right for Mr Lee to assume that the Tribunal would exercise the discretion in the same way as did the Court of First Instance.  This Court cannot speculate what would have been the outcome had there been no procedural mistake on the part of Meyer in issuing the expert evidence summons in the Tribunal instead of the Court of First Instance.

Mr Kenneth KH Lee, Ms Nana Lui and Mr William Tse, instructed by Robertsons, for the defendant in all cases (Meyer)

Ms Catrina Lam and Ms Cherry Xu, instructed by Herbert Tsoi & Partners, for the plaintiff in CACV 477/2020 and CACV 621/2020 (Taching)

Ms Eva Sit SC and Mr Joshua Chan, instructed by Clifford Chance, for the plaintiff in CACV 478/2020 and CACV 622/2020 (Shell)