Total Market Ltd v. Crosby Wealth Management (Hong Kong) Ltd
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HCA 2168/2008 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CIVIL ACTION NO. 2168 OF 2008 ____________________ BETWEEN
____________________ Coram: Before Madam Registrar Au-Yeung in Chambers Date of Hearing: 16 July 2009 Date of Judgment: 27 July 2009 ______________________________ REASONS FOR DECISION ______________________________ 1.This is an application for expert directions on quantum only. The General Principles 2.A summons (or case management summons) applying for expert directions should contain a list of issues for the intended expert to answer. If both parties want expert directions, they should endeavour to agree the issues. If they cannot agree, the court will determine the issues to be put to an expert after considering the parties’ submissions. 3.The advantages of a list of issues are many:
Failure to prepare or consider the list of issues will cause wastage of time and costs. Background of Case 4.The Plaintiff sued the Defendant, a provider of investment advisory and asset management services,for breach of contract in wrongfully trading in securities on its behalf (described as “the Error Trade” in the list of issues). The Plaintiff suffered loss – being the additional payments for the Error Trade, loss in interest income that it could have otherwise earned and additional costs for unwinding the remaining securities minus amounts received. The Defendant claimed that the Plaintiff knew or ought reasonably to have known of the Error Trade but affirmed or failed to countermand the trading. It failed to mitigate its loss despite numerous opportunities to do so. The Summonses 5.The Plaintiff took out a summons for expert directions in such terms that parties should first exchange provisional expert reports on the calculation of the Plaintiff’s loss on a without prejudice basis. The experts will then meet on a without prejudice basis and prepare a joint report indicating those parts of their evidence on which they are, and those on which they are not, in agreement. The signed reports will be exchanged within 14 days of the meeting of the experts. 6.The Defendant also took out a summons, for leave to appoint a joint expert to provide a report setting out his calculation of the quantum of the Plaintiff’s loss on the basis put forward by each party in its pleading. Alternatively, each party is to appoint one expert to provide that report. 7.Both summonses have not set out the list of issues that the expert is required to address. After various exchanges, the final points of dispute between the parties are as follows:
Whether Expert Evidence Is Required At All 8.The Defendant has obtained preliminary advice from its own expert who informed them that no expert evidence is required, as the market price of the subject securities can be easily obtained from a financial advisory broker. The calculation of loss of the Plaintiff can be done by ascertaining the market price(s) of the securities and applying a known formula. As for loss of interest, the interest rates can be obtained from the Plaintiff’s bank, and applied to the notional bank balances in the Plaintiff’s bank account. 9.The Plaintiff accepts that the market price of securities can be easily ascertained but would want expert evidence on the proper calculation of the loss. The monthly statements provided by the Defendant are very difficult to comprehend. The amount comprised the whole of the Plaintiff’s portfolio. As for the loss of interest, the interest rate might well be obtained from the Plaintiff’s bank. However, an expert’s assistance is still required for accurate calculation of the Plaintiff’s loss, e.g. in applying different interest rates compounded on different notional bank balances on different dates. Mr. Chin queries whether or not parties can do this calculation manually. The Plaintiff’s preliminary expert calculation ran up to 7 pages just for one unwinding date on 17 September 2008. 10.Having heard the submissions, I agree with the views of the Plaintiff. Engagement of an expert to calculate the quantum is justified rather than leaving the parties to do the calculation manually. Issues to Be Addressed by the Expert(s) 11.The list of issues (“Issues (A) to (H)”) is as follows:
12.The Plaintiff does not agree to Issues (B), (C), (D) and (F), alleging that they have not been pleaded. 13.I have read the Defence. In paragraph 20 of the Defence, it was pleaded that notice of the Error Trade has been given by the Defendant and the Bank to the Plaintiff by way of the Banks’ Statement of Investments on 1 December 2007. In paragraph 21, it was pleaded that between 23 November 2007 and 7 January 2008, the Plaintiff had unconditionally affirmed the Trade. The Defendant relied upon, amongst others, an email on 6 December 2007 wherein the Defendant advised the Plaintiff of, inter alia, the Trade and invited the Plaintiff to “take profit”. The prices of the underlying securities on 3 and 6 December 2007 were expressly pleaded. These cover Issues (B) & (C). 14.In paragraph 23, it was pleaded that on 3 January 2008 and monthly thereafter, the Defendant and the Bank again gave notice to the Defendant of the Trade, and its cost and position on the Defendant’s accounts, by the Statements. In paragraph 24, the Defendant repeats paragraph 19 of the Defence which effectively says that the Plaintiff should have countermanded the Trade and mitigated its loss. The price of the underlying securities as at 3 January 2008 was pleaded in paragraph 30. These cover Issue (D). 15.In paragraph 32, the Defendant pleaded that the Defendant and the Bank gave notice to the Plaintiff of its continuing obligations under the Trade by email dated 13 February 2008, which the Plaintiff asked by email to be restated as 100 securities per day, to which the Plaintiff agreed by email. The price of the underlying securities as at 13 February 2008 was pleaded in paragraph 33. The Defendant repeated its paragraph 19 of the Defence in respect of the notice given in paragraph 32, again to say that the Plaintiff should have countermanded the Trade and mitigated its loss. These cover Issue (F). 16.I am satisfied that the Defendant has pleaded Issues (B), (C), (D) and (F). All of Issues (A) to (H) may be put to the expert. Single Joint Expert to Be Appointed? 17.Each party proposes to appoint its own expert. The Plaintiff proposes to call an expert on forensic accounting, namely Pricewaterhouse Coopers. The Defendant proposes to call an expert on accounting, namely, Deloitte & Touche Financial Advisory Services Ltd. Each party wants to appoint its named expert to be the SJE should the Court see fit to appoint one. 18.Having considered the issues, the securities prices and interest rates should not be controversial. The formula for calculation of the value of securities is not in dispute. The expert evidence is much a mathematical exercise. I am of the view that an SJE will be sufficient for this case. I have not been told the difference between a forensic accountant and an accountant. I will direct the appointment of an accountant. Costs 19.Had the parties been better prepared, much time in court could have been saved. One party suggested that no expert was needed after a summons for appointment of expert was taken out. The list of issues were not drawn up until the Court so directed. Although stated to be agreed, one party disputed that agreement. The ultimate order is quite different from what each party proposed in its summons. The hearing was longer than necessary. Each party needs to bear some responsibility. There should be no order as to costs of the first hearing. Costs for this hearing should be in the cause and the time limited to half an hour, for taxation purpose. Conclusion 20.I direct as follows:
Mr. M. Chin of Messrs. Sidley Austin for the Plaintiff Mr. B. Ng of Messrs. Simmons & Simmons for the Defendant |