China Harbour Engineering Co Ltd v. The Secretary for Justice of the HKSAR

cacv 138/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 138 of 2006

(on appeal from HCCT NO. 44 of 2004)

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BETWEEN

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Before: Hon Le Pichon JA, Sakhrani and A Cheung JJ in Court

Date of Hearing: 4 September 2007

Date of Judgment: 4 September 2007

Date of Handing Down Reasons for Judgment: 6 September 2007

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REASONS FOR JUDGMENT

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Hon Le Pichon JA:

1.This is an application for leave to appeal to the Court of Final Appeal under section 22(1)(b) of the Court of Final Appeal Ordinance.  At the conclusion of the hearing leave was refused with reasons to be handed down later which we now do.

2.The plaintiff’s action was for damages for breach of contract arising out of the fact that the contract was not awarded to the plaintiff.  As stated in paragraph 13 of the judgment of this court, the single question for determination on the appeal was the meaning of a “conforming” tender in the relevant contractual documents and this turned on a single issue only, namely the true construction of SCT 2, specifically, whether the word “may” in the last sentence of SCT 2 means “must” (“the construction point”).

3.The plaintiff accepts that since its claim is for unliquidated damages it is not entitled to appeal as of right under section 22(1)(a).

4.Although the notice of motion raises points that are said to be of great general or public importance, the only point argued on appeal was the construction point.  Since that point was specific to the contract in question, turning on the particular terms of the Government tender, it does not and cannot give rise to any question of great general or public importance.

5.The notice of motion raises other points that are said to be of great general or public importance.  They are set out in paragraph 2 (a) and (b) of the notice of motion as follows:

“ (a)	In competitive tenders sought by the Hong Kong Government in the public sector, what is the true meaning of the expression “conforming tenders” in the context of the Government’s undertakings that “only those conforming tenders will be considered” and “The successful tender will be selected based on the overall mark of the conforming tenders (the “Conforming Issue”)?
(b)	In competitive tenders sought by the Hong Kong Government in the public sector, what was the nature and extent of the Government’s duty (or implied duty) under the process contract to act “openly, fairly, and equally”:-
	(1)	Could the Government be said to have acted “fairly and equally”, when it compared a tender which complied with an express condition of the process contract with other tenders which did not so comply (the “Fairness Issue”)?
	(2)	Could the Government be said to have acted “openly”, when it disregarded an express condition of the process contract without proper notification to all the tenderers (the “Openness Issue”)?”

6.When analysed, those other points are not separate and independent of the construction point and all turn on the construction of SCT 2 and the meaning of a “conforming” tender.  In the circumstances I take the view that they do not raise matters of great general or public importance.

7.So far as the granting of leave under the “or otherwise” limb is concerned, Mr Wong SC who appeared for the plaintiff submitted that because the contract was a billion-dollar contract, the preponderance of objective facts points to the conclusion that the threshold of $1 million “was likely to be exceeded”.  As will become apparent, the test as formulated is not sufficient.  It has to be shown that it can be said that “as a matter of the utmost probability” or even of “virtual certainty” the threshold would be exceeded.

8.The plaintiff seeks as damages “the gross return” which it would have recovered had it been awarded the contract and alternatively damages for losing the chance of being awarded the contract.  Given the way in which the plaintiff’s claim for damages has been framed, neither the decision of the Review Body mentioned in paragraph 42 of the judgment of Burrell J nor the evidence relating to the costs for preparing the tender is relevant.  As the parties had agreed on a split trial for liability and damages, there has as yet been no discovery relating to damages.  Although the plaintiff has filed evidence for the purposes of this application to show the likely quantum of damages and criticises the defendant for not filing evidence in response, I do not consider that it would be appropriate for this court to conduct a “mini trial” as to quantum at this stage.  Accordingly there is no basis upon which this court could reach any conclusion as to the amount of damages involved, much less that there was any “virtual certainty” or “utmost probability” of the threshold being exceeded.  It would follow that the court’s discretion under the “or otherwise” limb is not engaged.

9.Even assuming (contrary to my view) that it can be said that as a matter of the utmost probability, or even of virtual certainty, that the damages ultimately awarded will exceed the threshold amount, it would not necessarily follow that the discretion should be exercised.  In Chao Keh Lung v Don Xia (2004) 7 HKCFAR 260 at 263H-J the Appeal Committee rejected the submission that the discretion should be exercised unless the grounds of appeal “have no realistic prospects of success”.  Mr Wong submitted that the test would be met if it could be shown that “there must be at least reasonable prospects of success”.  For my part, I see little practical difference between that formulation and the submission that the Appeal Committee rejected in Chao Keh Lung.  As explained by Ribeiro PJ at 263H-I:

“The words “or otherwise” are found in section 22(1)(b) in the context of the Ordinance laying down, as the usual condition of granting discretionary leave, the high threshold requirement that the appeal should involve a question of great general or public importance.  The construction contended for would wholly subvert that requirement.”

10.Moreover, the granting of leave to appeal under the “or otherwise” ground is “an exceptional course”.  See per Bokhary PJ in Hui Yiu Wing v The Regional Council, unreported, 24 September 2002, FAMV 16 of 2002.  In any event, this case (which does not involve any question of great general or public importance) is not one that would merit the exercise of the discretion by this court in favour of the plaintiff.

Hon Sakhrani J:

11.I agree.

Hon A Cheung J:

12.I agree.

Mr Ronny Wong SC, Mr Kenneth C K Chow & Ms Anny Chak, instructed by Messrs Huen & Partners, for the Plaintiff/Applicant

Ms Teresa Cheng SC & Mr Douglas Lam, instructed by Department of Justice, for the Defendant/Respondent