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Shell Hong Kong Ltd v Meyer Aluminium Ltd

Judgment Cited authorities 9 Cited in Precedent Map Related
Vincent
Judgment Date11 March 2021
Neutral Citation[2021] HKCA 294
Judgement NumberCACV622/2020
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV477/2020 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)

_________________________

BETWEEN

TACHING PETROLEUM COMPANY, LIMITED Plaintiff
and
MEYER ALUMINIUM LIMITED Defendant

_________________________

AND

CIVIL APPEAL NO 478 OF 2020 AND 622 OF 2020

(ON APPEAL FROM CTA 2/2018)

_________________________

BETWEEN

SHELL HONG KONG LIMITED Plaintiff
and
MEYER ALUMINIUM LIMITED Defendant

_________________________

(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

________________________

REASONS FOR JUDGMENT

________________________

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.’

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