YEUNG WAI YUNG t/a WAI HOP CONSTRUCTION ENG v. BOLTON CONSTRUCTION CO LTD

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 16822 OF 1999

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REASONS FOR DECISION

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1. These are brief reasons for judgment given in the defendant's favour on 19 January 2000 on its application to stay HCA16822/1999 proceedings pursuant to s.6 of the Arbitration Ordinance, Cap.341 and judgment dismissing the plaintiff's application for judgment to be entered in its favour for part of the sum claimed.

2. The plaintiff served a Statement of Claim dated 26 October 1999 for $890,468.00 for works done and materials supplied. On 9 December 1999 the defendant issued its summons for a stay invoking the arbitration clause in the subcontract between the parties. The defendant also included a counterclaim in which it sought to set off the sum of $1,266,232.00 in extinction of the plaintiff's claim. In addition, paragraph 3(iii) of the Defence stated :-

"Pursuant to the subcontract, the Defendant subsequently issued, inter alia, the following Works Orders to the Plaintiff under which but for the Defendant's counterclaim herein, the amounts of the balances which would otherwise be payable to the Plaintiff are as follows:- (total, $287,865.00)"

3. Originally the plaintiff's submission as outlined in the skeleton argument dated 18 January 2000 made two points. The first point, which it is unnecessary to recite herein because it was abandoned on the day of the hearing, was misconceived as it relied on pre-1996 law and paid no heed to s.6 of the Arbitration Ordinance, Cap.341 and Article 8(1) of the Model Law.

4. What remained was the contention that the scope of the Arbitration Clause did not extend to the sum of $287,865.00 because the applicant had failed to show that a dispute existed in relation to this sum. It was conceded that the balance of the claim and the amount of the counterclaim were in dispute.

5. In order even to get the argument above ground level it must be shown that there had been an admission by the Defence. Paragraph 3(iii) contains the words "but for ..." and "would otherwise be payable...". The court does not construe these as admissions in the context of the overall picture. Put simply, arising out of the one and only subcontract between these parties a dispute exists as to what one party is liable to pay the other following works done and materials supplied by the plaintiff. The question is, does such a dispute fall within the scope of the arbitration clause. The clause states as follows :-

6. To suggest that a relatively small portion of the sums in dispute should be separated off either by judgment being entered or by an order for a payment into court and then refer the balance to arbitration, when the so-called "admission" in relation to the relatively small portion is plainly conditional on the outcome of the defendant's defence of set-off is both unrealistic and misconceived.

7. These are the reasons for the decisions made at the conclusion of the hearing. In addition, there will be an order as to costs in the defendant's favour on both summonses.