Implication of Contract from Conduct: the New Case

Appeal – appeal against findings of fact – dismissed
Inspiring Investments Ltd v Chun Hu Hing, CACV 208/2018, 22 April 2020, CA (Cheung and Au JJA and Godfrey Lam J)
[2020] 2 HKLRD 959, [2020] HKCA 209

The court have clarified the different concepts of “implication of a contract from conduct” and “a contract formed partially oral and partially in writing”

“38. In our view, the plaintiff’s submission evinces a confusion of two different concepts.  The question dealt with in Shanghai Tongji is the finding of a contract, not formed orally or in writing, but implied by conduct.  The law accepts that in certain cases, which are unusual, a contract may be inferred from conduct, where the conduct of one party may properly be understood objectively to constitute the offer to enter into a contract and the conduct of the other party may likewise be understood to constitute an acceptance of that offer: see The Aramis [1989] 1 Lloyd’s Rep 213, 224 and Allied Marine Transport Ltd v Vale Do Rio Doce Navegacao SA (“The Leonidas D”) [1985] 1 WLR 925, 936, both cited in Shanghai Tongji, at §§37 & 40 respectively.  But the court will not imply a contract on that basis lightly.  In order to do so it must be satisfied that the conduct is unequivocally referable to the contract contended for.  It is not enough if the conduct relied upon is capable of constituting an offer or acceptance as the case may be (Shanghai Tongji, §§38, 48).

39.  This, as it seems to us, is not what the plaintiff is contending or can contend for, as it has not advanced below any case of contract implied by conduct, nor has it pleaded the conduct that unambiguously constituted the offer and acceptance respectively.  The pleaded case and the case run below is that the Sale of Shares Agreement was made partly orally and partly in writing, not one to be implied from conduct.

40.  Implying a contract from conduct is quite different from a case where a disputed contract is said to have been formed orally, or partly orally and partly in writing, and the party contending for the contract seeks to rely on the parties’ conduct as the basis for inferring, as a fact, that the parties have orally said what they are alleged to have said based on which the contract is to be found.  This would simply be an exercise of fact‑finding by inference.  It is on this basis that we approach the plaintiff’s submissions.”

For full text of the judgment, click here.

Costs on Indemnity Basis: New Case Leung Wing Sze Wins v Li Oi Lam

Costs – application for leave for appeal – misconceived grounds of appeal – alleged issues of law badly framed and unarguable – indemnity costs awarded against applicant plaintiffs

Leung Wing Sze Wins v Li Oi Lam, DCCJ 2022/2014, 24 April 2020, DC (Judge Wong King Wah in Chambers)
[2020] 2 HKLRD 989, [2020] HKDC 238

Court makes the following observation on the issue of indemnity of costs:-

55.  It is trite that the question of costs is a matter of discretion of the court taking into consideration of all the circumstances of a case including conducts of the parties, see: O.62 r.5 RDC. In the Court’s judgment, the principles set out in Town Planning Board (No. 2) (supra), cited with approval in Leung Chun Kwong (supra) and Poon Cho-ming (supra), are not inconsistent[11] with those previously established in Choy Yee Chun v Bond Star Development Limited[12] and Sung Foo Kee Limited v Pak Lik Company (a firm)[13]. In fact, Town Planning Board (No. 2) (supra) has expressly stated it will be undesirable to set any limit on the scope of the special or unusual features under which the court should award indemnity costs, see: [4(c)] paraphrased in [50] above; and [16] – [17] of Town Planning Board (No. 2) (supra).

56.  In Sung Fook Kee Limited (supra), the CA considered indemnity costs should appropriately be granted in cases with special or unusual features, including

(i)  cases where there was deception or underhand conducts;

(ii)  litigation that was ill-advised or stupidly or bitterly conducted;

(iii)  cases conducted in such a way where a sense of considerable injustice could be felt if costs had been whittled away down to the costs on a standard basis;

(iv)  cases brought with ulterior motive or for an improper purpose;

(v)  cases conducted in bad faith or as a personal vendetta;

(vi)  cases conducted in an improper or oppressive manner; and

(vii)  cases that have caused costs to be incurred irrationally or out of proportion as to what is at stake.

57.  The CA in Choy Yee Chun (supra), after approving the principles set out in Sung Foo Kee Limited (supra), accepted the granting of indemnity costs against the appellant a correct exercise of discretion in respect of his bogus claim, with the appellant colluded with witnesses to pursue an entirely false defence, intended to exert pressure on the respondent to pay as much compensation as possible.

58.  In Huge Dragon Corporation Limited v The Incorporated Owners of Lung Mun Oasis[14], the CA considered what constitutes appropriate circumstances for award of an indemnity costs must be fact-sensitive. It was decided proceedings which should never have been brought or defended but the party nevertheless unreasonably and unjustifiably persisted might be visited with indemnity costs[15].

59.  Turning specifically to the present leave application, it is obvious from the above that the Ps have dressed up issues relating to findings of facts as issues of law. As said, the Ps also failed totally to pinpoint any misapprehension of evidence resulting in the alleged errors in the findings of fact. It is simply a repetition of the argument and assertion which have been advanced before this Court, and been rejected.  

60.  Further, the alleged issues of law are, with respect, badly framed and un-arguable. In respect of some grounds, they are advanced on the basis of a twisted, and thus misunderstood meaning of the said judgment. Some are based on a wrong understanding of the law. Those grounds are misconceived and should never have been raised.

61.  Taking the example of jurisdiction, the Ps relied on Cheung Chi Wai (supra). It is patently obvious that the case concerns the TMO, not the CO. The discussion of the whole judgment was devoted to whether the District Court has jurisdiction over TMO. Nothing regarding the CO was touched upon. Yet this case was relied on by Ps’ counsel. It is a wholesale repetition of what has been submitted and rejected at trial. The problem is that there is no elaboration or submission of any sort that helps expand any principle which one can distil from that case to the copyright issue.

62.  Another example is the misconceived meaning of justification in the context of defamation. The adoption of the said misconceived meaning in the draft notice of appeal and submission is, with respect, unacceptable and surprising. This Court cannot help forming a view that the leave application is vexatious with Ps’ counsel desperately coming up with all sorts of grounds that they could ever think of for the Ps to pursue after the Ds. They are totally misleading and is an affront to the Court.

63.  It has to be remembered that this is a leave to appeal application. The parties have already had the benefit of one round of thorough and extensive submission at the conclusion of trial. Further, they now have the benefit of the said judgment which should help focus the issues. From the above discussion, it is obvious the Ps could hardly frame any question which entitles them to take the matter further to the CA. In other words, the leave application should never have been brought. The grounds of appeal are so devoid of merit, unarguable, based on distorted understanding of the said judgment and vexatious. This Court considers it fair to make a robust costs order on indemnity basis as a deterrence to this kind of groundless application.

Full text of the judgment, please click here