TO HO SUM EDDY v. SHEENLUXE DEVELOPMENT LTD

HCCT 34/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 34 OF 2008

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J U D G M E N T

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I. INTRODUCTION

1.  Faced with imminent bankruptcy proceedings arising out of an Arbitration Award made in August 1999, Mr. To belatedly seeks to set aside the Award and Findlay J’s Order of October 1999 granting leave for the Award to be enforced as a Judgment of this Court.

2.  Mr. To claims never to have received notice of the Award nor of Findlay J’s Order until recently.  He says that he was unaware of the arbitration proceedings at the time when they were afoot.  Further, despite Sheenluxe having sent 4 letters to Mr. To’s address between 12 July 2007 and 15 May 2008 in relation to a statutory demand and bankruptcy proceedings consequent upon the Award, Mr. To claims not to have received such letters and so to have remained ignorant of the Award.

3.  Mr. To says that he did not know about the Award until he received a letter in relation to the bankruptcy proceedings on or about 16 May 2008.  It was only then (Mr. To suggests) that he could take defensive action.  This action was in the form of a Motion dated 3 July 2008 to set aside the Award and Findlay J’s Order.

4.  The issue before me is whether I should allow Mr. To’s Motion out of time.

II. BACKGROUND

5.  By an Agreement dated 13 May 1995 Mr. To and Sheenluxe agreed jointly to erect 2 blocks of 3-storey houses on 2 of 3 lots of land then owned by Mr. To (Lots 2855, 2856, and 2857 in DD 130).

6.  Agreement cl. 17 provided as follows:-

“(a)  Any notice required to be given hereunder shall be deemed to have been validly given if it is in writing and addressed to the party to whom the notice is given or his Solicitors and delivered at or sent by facsimile transmission (fax) or by ordinary prepaid post to such party or his Solicitors at the address above given or the last known business address or its registered office or such other addresses as may from time to time be notified in writing to the other of them or their respective Solicitors.

(c)  Any notice delivered personally shall be deemed to have been given at the time of such delivery.  Any notice despatched by letter postage prepaid shall be deemed to have been given 48 hours after posting.  Any notice sent by fax shall be deemed to have been given at the time of despatch.”

7.  Agreement cl. 18 contained an arbitration agreement in these terms:-

“In case any dispute or difference shall arise between the parties hereto touching or relating to the said Development or any other matter or thing arising under this Agreement, the same shall be referred to a single arbitrator in accordance with the provisions of the Arbitration Ordinance in Hong Kong or any statutory modification or re-enactment of it for the time being in force.”

8.  In the Agreement, Mr. To gave his address as “Ground Floor, No.68 Tsing Chuen Wai, Nam Tei, Tuen Mun, New Territories, Hong Kong” (the Address).

9.  Disputes having arisen between the parties, in 1997 Sheenluxe sued Mr. To in High Court Action No. 3483 of 1997.

10.  On 11 February 1998, upon Mr. To’s application, Findlay J stayed the High Court proceedings to arbitration.

11.  On 5 November 1998 George Y. C. Mok & Co. (GM) (Sheenluxe’s then solicitors) served a Notice to Arbitrate and a Statement of Claim on Kitty So & Tong (KST) (Mr. To’s then solicitors).

12.  On 17 November 1998 KST wrote to GM that as of that date KST no longer had instructions to act for Mr. To.

13.  On 21 November 1998 GM sent copies of the Notice to Arbitrate and Statement of Claim by hand and by registered post to the Address.  In its cover letter, GM stressed that such despatch was “without prejudice to our due and proper service upon you through your solicitors the Notice of Arbitration and the Statement of Claim on 5 November 1998”.

14.  On 3 December 1998, by Order of Master Ho, KST came off the record as solicitors for Mr. To.  KST served a copy of Master Ho’s Order on the Address by ordinary post.  On 14 December 1998 KST told the Hong Kong International Arbitration Centre that it had no further instructions to act for Mr. To.

15.  On 13 January 1999 Mr. Fred Kan was appointed as Arbitrator.  He directed that all notices and documents be served on Mr. To by prepaid ordinary post at the Address.

16.  On 14 May and 4 June 1999 the Arbitrator heard the matter.  Notices of the hearing were served on Mr. To at the Address but he appeared at neither hearing.

17.  By his Award of 3 August 1999 the Arbitrator awarded a total of $2.2 million to Sheenluxe as damages for breach of the Agreement by Mr. To.  The Arbitrator also awarded interest from 4 March 1999 at the judgment rate until payment.

18.  On 14 August 1999 the Arbitrator sent the Award by post to the Address.

19.  On 8 October 1999 Findlay J made his Order that the Award be enforceable as a Judgment of this Court.  That Order was reflected in a Judgment dated 8 November 1999.

20.  On 18 January 2000 Sheenluxe obtained a charging order absolute in relation to Lot 2857.

21.  On 12 July 2007 Leung Chan & Pang (LCP) (Sheenluxe’s present solicitors) wrote to Mr. To at the Address, noting that Sheenluxe was attempting to serve a statutory demand on Mr. To personally.

22.  On 4 February 2008 Sheenluxe petitioned for Mr. To’s bankruptcy.

23.  On 29 February 2008 LCP wrote to the Address to inform Mr. To that a petition had been filed as a result of Mr. To’s failure to comply with Sheenluxe’s statutory demand.  The letter noted that there was difficulty in serving the petition on Mr. To personally.

24.  On 1 April 2008 LCP wrote a similar letter to that sent on 29 February 2008.  That letter was mailed to the Address.

25.  Copies of the Petition were eventually served on Mr. To at the Address by ordinary post under cover of a letter dated 16 April 2008. This was done pursuant to an Order of Master Ho dated 11 April 2008.

26.  On 16 May 2008 LCP wrote to the Address informing Mr. To of a hearing of the petition on 28 May 2008.  It is this letter alone which Mr. To claims to have received.

27.  On 7 July 2008 the bankruptcy proceedings were adjourned pending the determination of Mr. To’s Motion to set aside the Award and Findlay J’s Order.

III. DISCUSSION

28.  Mr. To’s application coming some 9 years after the event is plainly long out of time.

29.  Normally, a dissatisfied party has only 21 days after an arbitration award has been obtained to apply to set it aside.  See Order 73, Rule 5.

30.  The Court has a jurisdiction to extend the deadline.  But it should only do so for cogent reason.  There must be finality to litigation once an award has been made or a judgment delivered.  The longer the delay, the more stringently will the Court consider an application to extend time to set aside an award or judgment and the less likely the Court will be to grant the application.  See Chiu Sin Chung v. Yu Yan Yan, Angela [1993] 1 HKLR 225 (Keith J).

31.  Here, given years of delay, the Court is entitled to look at the application with a degree of scepticism.  The Court can ask itself whether it is credible that, despite every attempt by Sheenluxe to notify Mr. To over the years of the arbitration and its aftermath, Mr. To nonetheless did not know anything until May 2008.

32.  Mr. To admits to residing at the Address at all material times.  He blames the postal service for his lack of notice.

33.  According to Mr. To, prior to 2006 postal service in the New Territories was in a “very poor and unsatisfactory condition”.  The postman (Mr. To says) simply left mail for his village in an open “post box” at the Wah Kee Store.

34.  It was up to villagers (such as Mr. To) to go to the Store to sort through the deliveries in the post box and pick up mail destined for them.  As a result of this system, mail could easily be lost or picked up by the wrong person.  Moreover, unclaimed mail would not necessarily be returned to the post office as no one at the Store would know whether or not mail was left unclaimed.

35.  Since 2006 Mr. To says that the situation has improved.  Group letter boxes were erected at the Store, with each villager being assigned a postal box having a lock and key.  Nonetheless, Mr. To says that loss of mail remains “quite common”.

36.  Mr. Albert Li (appearing for Mr. To) submits that, in those circumstances, Mr. To’s account of being unaware of the arbitration and subsequent proceedings is credible.  I regret, however, that I cannot accept Mr. To’s explanation as satisfactory.

37.  Consider the sheer volume of documents that Mr. To alleges never reached him at the Address.  At the very least there are the following documents: GM’s letter of 21 November 2008; the letter appointing Mr. Kan as Arbitrator; 2 notices of the hearings before the Arbitrator on 14 May and 4 June 1999 respectively; the Award; Findlay J’s Order; and the letters of 12 July 2007, 29 February 2008, and 1 and 16 April 2008.

38.  It may just be possible that one or two documents sent to the Address went missing as a result of the arrangements described by Mr. To.  But I do not find it plausible that all of the numerous documents sent by Sheenluxe or its solicitors between 21 November 1998 and 16 May 2008 have been waylaid.  Mr. To’s case of not having received a single one of the foregoing documents stretches credulity too far.

39.  I note that the letters of 12 July 2007, 29 February 2008 and 1 and 16 April 2008 were sent after 2006.  By then, even on Mr. To’s account, the system of mail delivery had improved with the introduction of villagers’ personal letter boxes.  In those circumstances, it is even more difficult to believe that all 4 letters should have failed to reach Mr. To.

40.  In my judgment, Mr. To must have received notice and been aware of the Award and its consequences some time ago.  The likelihood then is that he deliberately waited to take action until the eve of the hearing of Sheenluxe’s bankruptcy petition. In those circumstances, there is simply no basis for exercising any discretion which the Court has to extend time.  To my mind, there was nothing irregular in the way that the Award was obtained.

41.  I am fortified in my conclusions by reference to the Agreement.

42.  By cl. 17, Mr. To undertook the risk of notices (relating (say) to any arbitration notice pursuant to cl. 18) becoming mislaid if posted to the Address.  So long as notices in relation to a cl. 18 arbitration were sent (as they were) to the Address, then such should be deemed adequate notice in accordance with cl. 17.

43.  I have not lost sight of the fact that Mr. To now alleges that he was fraudulently induced to sign the Agreement by misrepresentations of Mr. Wong Yu Choi of Sheenluxe or Ms. Tang Kam Yin of GM.  Mr. To claims that, although he signed the Agreement, he does not understand English and so relied on what Mr. Wong or Ms. Tang told him about the Agreement.

44.  But in law, an arbitration agreement is deemed to stand independently from the rest of a contract.  Mr. To was prepared to invoke cl. 18 to stay Sheenluxe’s original action to arbitration.  He must presumably have accepted the validity of at least the agreement to arbitrate in cl. 18, including anything in cl. 17 touching upon the implementation or mechanics of such agreement to arbitrate.

IV. CONCLUSION

45.  Mr. To’s application for an extension of time to set aside the Award and Findlay J’s Order is refused.  His motion to set aside the Award and Findlay J’s Order is dismissed.