Kone Elevator (HK) Ltd v. Construction Industry Council

CAMP 64/2024, [2024] HKCA 1124

On appeal from [2023] HKDC 1216

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 64 OF 2024

(ON AN INTENDED APPEAL FROM DCMP NO 4552 OF 2022)

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BETWEEN

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DECISION

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Hon Poon CJHC (giving the decision of the Court):

1.By a certification dated 18 February 2022, the MTR Corporation Limited (“MTRC”) certified that a sum of HK$4,759,277.22 was payable to the appellant for work done during the period ending 31 October 2021 under a contract for maintenance services for lifts and escalators (“the Contract”). By a notice dated 20 June 2022, the respondent notified the appellant that a levy assessed at HK$504,738.00 under section 40(1) of the Construction Industry Council Ordinance (“the Ordinance”)[1] was payable in respect of construction operations as identified by reference to the Contract.[2] The appellant objected to the levy.

2.The Objections Board rejected the appellant’s objections under section 56, whereupon the appellant appealed to the District Court pursuant to section 57. By a judgment dated 30 November 2023,[3] HH Chief District Judge Justin Ko (“the Judge”) dismissed the appeal. Upon the Judge’s refusal to grant leave to appeal,[4] the appellant renews the application before this Court.

3.Having considered the parties’ written submissions, we consider it appropriate to determine the application on paper pursuant to Order 59, rule 2A(5) of the Rules of the High Court.[5] We now hand down our decision.

4.Under section 63A(2) of the District Court Ordinance,[6] leave to appeal will only be granted if the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard. The appellant relies on both limbs.

5.In the draft notice of appeal, the appellant complains that:

(1) the Judge erred in his construction of “construction operations” in section 1 of Schedule 1, leading to his holding that the Contract fell within the definition of “construction operations”;

(2) the Judge failed to take into account the fact that no authorized person was appointed by the MTRC for the Contract and there was no commencement or completion of construction operations for the assessment of the levy by failing, among other reasons, to read the Ordinance with the Building Ordinance for the requirement to appoint an authorized person in case of construction operations as defined in Schedule 1 and the un-contradicted expert evidence on industry practice that no authorized person is required for maintenance of lift or escalator and such work is not normally assessed and there is not normally any requirement for notice of commencement or completion;

(3) the Judge erred in law in holding that the meaning of “stage” or “part” of any construction operations should be “divisions of a whole” by referring to their dictionary meaning when he ought to have regard to their industry meaning as stated in the un-contradicted expert evidence, and accordingly erred in rejecting the appellant’s contention that section 40(1) was inapplicable or there was no completion; and

(4) the Judge erred in law in holding that items 1.1.2 (Full Load Test) and 1.2.2 (Full Load Test) and 1.5 (work for variation orders) on the MTRC certificate fell within the scope of the levy, by, among other reasons, placing the onus on the appellant to prove that those items did not amount to construction operations when the burden should be on the respondent to show why a levy should be charged.

6.We have considered the parties’ written submissions. For present purposes, we need not dwell on them.

7.In our view, leave to appeal on the limb of interests of justice on the first three complaints should be given for the following reasons:

(1) Those complaints raise important issues on statutory interpretation.

(2) This is the first case on the scope of the levy charged under section 40 since the amendment to the Industrial Training (Construction Industry) Ordinance[7] in 2004, the predecessor of the Ordinance. The interpretation issues are likely to have far-reaching implications across the industry for contractors and property owners. Moreover, the Penumoconiosis and Mesothelioma (Compensation) (Assessment of Levy) Regulations[8] also refers to the definition of “construction operations” under the Ordinance. Same interpretation issues identified here may also arise in that context.

(3) The appellant’s submissions on the interpretation issues are reasonably arguable.

(4) In the circumstances, consideration by the Court of Appeal of the interpretation issues are plainly in order.

8.As to the last complaint, we are satisfied that there is reasonable prospect of success in the point that the Judge erred in reversing the onus on the appellant as contended. We are prepared to grant leave on that limb subject to one caveat.

9.In respect of items 1.1.2 and 1.2.2, the appellant submits that the Judge ought to have found that they were related to advice or consultation, rather than construction operations. However, as the Judge observed in refusing leave, it is a new point on which no evidence or submission had been advanced before him. Similarly, in respect of item 1.5, the appellant contends that they did not amount to construction operations but related instead to MTRC’s ordinary management or marketing. Again, as pointed out by the Judge, it is not the appellant’s evidence that those items related to MTRC’s ordinary management or marketing. We agree with the Judge that the appellant should not be allowed to raise those new points without proper evidential basis.

10.In conclusion, subject to what we said at [9], we will grant the appellant leave to appeal. The costs of the present application will be in the cause of the appeal.

Ms Audrey Eu SC and Mr Yeung Ming Tai, instructed by Ip, Kwan & Co, for the appellant

Mr Abraham Chan SC and Mr Harrison Cheung, instructed by Deacons, for the respondent