Buildtech Ltd v. Hung Wan Construction Co Ltd

HCMP 154/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 154 OF 2012

(ON AN INTENDED APPEAL FROM DCCJ NO 1385 OF 2008)

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BETWEEN

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Before: Hon Yeung VP and Kwan JA

Date of Decision: 16 February 2012

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DECISION

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Hon Kwan JA (giving the decision of the Court):

1.This is the defendant’s application for leave to appeal to the Court of Appeal from an order made by HH Judge HC Wong on 16 December 2011 in the first pre-trial review of an action in the District Court (DCCJ 1385 of 2008). The judge is the trial judge of the case which is scheduled to start on 20 March 2012 with four days estimated. The order being the subject of the intended appeal relates to the framing of an issue for trial made under the case management powers of the trial judge pursuant to Order 18 rule 22 of the Rules of the District Court, which provides as follows:

“At any stage of the proceedings the Court may direct the parties to prepare a statement of the issues in dispute or, if the parties are unable to agree the statement, may settle the statement itself.”

2.As the order was made in a pre-trial review, the judge did not give a reasoned decision for making it. A reasoned decision was given when the judge refused to grant leave to the defendant to appeal to the Court of Appeal on 11 January 2012. The defendant renewed its application to the Court of Appeal by the summons in the present proceedings on 20 January 2012 and sought a stay of execution of the order pending the disposition of the intended appeal.

3.The plaintiff has filed written submissions of its counsel as its statement of opposition on 3 February 2012.

4.The second pre-trial review has since taken place before the judge on 10 February and the judge has granted an “unless” order against the defendant regarding discovery by 17 February and the filing of witness statements by 24 February. In view of these orders and the imminent trial dates, and as the issues sought to be raised on appeal are relatively simple, it is appropriate to determine this application on paper without a hearing.

5.The principles for granting leave to appeal to the Court of Appeal are well established. I quote from the latest statement on this given by the Chief Judge in厦門新景地集團有限公司 formerly known as 厦門市鑫新景地房地產有限公司 v. Eton Properties Limited & Ors, HCMP 13, 15, 18 & 21/2012 on 14 February 2012, para 9:

“No leave to appeal should be granted unless the threshold test of reasonable prospect of success is satisfied, or (which is not relevant to the present case) there is some other reason in the interests of justice why the appeal should be heard: section 14AA(4), the High Court Ordinance (Cap 4). But the court still retains a discretion whether to grant leave even if the threshold test is satisfied. This is particularly so in relation to an intended appeal against a case management decision. In relation to such an intended appeal, this court rarely intervenes save in exceptional circumstances. As Kwan JA reiterated in the recent case of Mimi Kar Kee Wong Hung v Severn Villa Limited, HCMP 2192/2011, 12 January 2012, para 31, it need hardly be emphasized that generally, an appellate court will not interfere with a judge’s exercise of discretion unless the judge has misunderstood the law or the evidence or the exercise of his discretion was plainly wrong such that it was outside the generous ambit within which a reasonable disagreement is possible. In relation to case management decisions, the intended appellant must show that the judge “has gone clearly wrong and made orders which will clearly involve an injustice or an inability for the trial court to carry out its task”, or if the judge “erred in principle or the order was irrational having regard to the issues that had to be resolved”. It is of great importance that this court does not descend to micro‑managing cases pending before the court below.”

6.Applying the above principles, the defendant has a very high hurdle to surmount for leave to be granted in this situation.

7.I turn to the relevant background matters which may be stated as follows.

8.The plaintiff was the defendant’s sub-contractor for the supply of gondolas. It sued on a settlement agreement alleged to be made orally in May 2003, by which the defendant agreed to pay the plaintiff $700,000 after the defendant received payment from its employer, the Hong Kong Housing Authority (“HKHA”). The defendant admitted it had received payment from HKHA for the omission of the gondolas from the project but denied that any oral settlement agreement was made with the plaintiff. It also raised a limitation defence.

9.There was no agreement between the parties on the statement of issues in dispute. This was decided by the judge at the first pre-trial review in favour of the plaintiff by ordering that the plaintiff’s statement of issues should stand as the issues of dispute at the trial. The issues framed were as follows:

(1)     whether or not there was a Settlement Agreement made between the parties in May 2003;

(2)     whether the defendant has continued to fail and refuse to pay the plaintiff despite the fact that the defendant received payment from HKHA; and

(3)     the amount received by the defendant from HKHA.

10.The defendant sought to appeal against the inclusion of issue (3) in the statement of issues.

11.Two broad grounds are raised in the proposed appeal. Firstly, it is contended that issue (3) is irrelevant is res judicata. Secondly, it is contended that in any event issue (3) is irrelevant to the issue in dispute between the parties.

12.I will deal with the arguments on res judicata first. These arguments are founded on (1) the decision of HH Judge M Chan on 19 February 2009; and (2) the decision of Master B Mak on 25 November 2010.

13.The defendant apparently seeks to rely on issue estoppel here. For issue estoppel to apply, there must be a distinct determination of the court on an issue in sufficiently clear and precise terms, and the decision on the issue must be a final decision. In respect of the exercise of discretion in an interlocutory matter, this does not give rise to res judicata. Further, the rules relating to res judicata in interlocutory matters are less stringent than those generally applicable. See Re Chime Corp Ltd (No. 2) [2003] 2 HKLRD 945 at paras 18 to 24; Mullen v. Conoco Ltd [1998] QB 382 at 396D to G; and Chu Hung Ching v. Chan Kam Ming & Ors [2001] 1 HKC 396 at 402D to E.

14.The application before Judge Chan on 19 February 2009 was an appeal against an order of a master for specific discovery. The judge allowed the appeal in part and refused to order discovery of correspondence and documents between the defendant and HKHA. In paragraph 2 of her reasoned decision, the judge stated that “the plaintiff accepts that the only issue for trial is whether or not there was a Settlement Agreement made between the parties in May 2003.” The defendant latched on to this and submitted that was the only issue in dispute and the documents relating to issue (3) are contained within the documents which Judge Chan had held were not directly relevant to the defined issue and were not required to be disclosed.

15.This argument is misconceived. The decision of Judge Chan was made in the exercise of a judicial discretion whether to order specific discovery. It was not meant to fetter the discretion of the trial judge to frame issues in dispute pursuant to the power given under Order 18 rule 22, where it is regarded appropriate to frame further or subsidiary issues to assist in the resolution of the central issue. The discovery that the defendant is now required to give, in the light of issue (3), is only in respect of documents that showed the amount which HKHA agreed to pay and did pay the defendant for the omission of the gondolas, and this is of a much narrower scope than that which was rejected by Judge Chan. It is clear from the legal principles set out above that res judicata does not apply.

16.As for the order made by Master B Mak on 25 November 2010, this was in an application for further and better particulars of the defence by the plaintiff regarding the date on which the defendant received payment from HKHA and the amount that the defendant received from HKHA. No reasoned decision was given by the master. Again, this was a decision given in the exercise of a judicial discretion not to order particulars where the court is of the opinion that the order is not necessary either for disposing fairly of the cause or matter or for saving costs, see Order 18 rule 12(3B) of the Rules of the District Court. It is not enough for the applicant merely to show that the particulars sought are relevant, for relevance is not the proscribed test (Hong Kong Civil Procedure 2012, Vol 1, para 18/12/66). The master’s decision does not give rise to res judicata.

17.The question of relevance of issue (3) was addressed by the judge in the reasoned decision she gave in refusing leave to appeal. The judge had considered carefully the arguments made on both sides, the issues in dispute and the witness statements filed on both sides and decided to order issue (3) as proposed by the plaintiff because she found it “essential to ascertain the motive for settling the plaintiff’s loss at the relevant time and for the relevant amount and what led to the agreement to settle, if there was indeed a settlement”. She was also convinced that “the background information would assist the court to see the full picture of what was happening in April to May 2003 and to determine whose version is more credible”.

18.Nothing in the arguments of the defendant has shown that the judge was wrong, let alone plainly wrong, in allowing issue (3) to stand in the exercise of her discretion as the trial judge. There is no basis for the Court of Appeal to interfere with her case management powers. 

19.For the above reasons, the defendant’s summons for leave to appeal and stay of execution pending appeal is dismissed. It is appropriate to order under Order 59 rule 2A(8) of the Rules of the High Court that no party may under rule 2A(7) request the determination to be reconsidered at an oral hearing inter partes.

20.As this application for leave to appeal should never have been renewed before this court, I would make an order nisi that the defendant is to pay the plaintiff’s costs of this application forthwith, on an indemnity basis, with a gross sum assessment. I would direct the plaintiff to submit a skeleton bill within 14 days hereof and the defendant do have leave to respond within seven days thereafter.

Mr Osmond Lam, instructed by Mayer Brown JSM, for the plaintiff (respondent)

Haley & Co, for the defendant (applicant)