WONG YU HING v. TONG PAK WING

IN THE COURT OF APPEAL

1995, No. 16
(Civil)

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J U D G M E N T

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Liu, J.A.:

1. The plaintiff and the defendant are neighbours in the vertical sense. Seepage of water was detected. It is the plaintiff's claim that the defendant was responsible for the water seepage and the damage caused thereby.

2. The plaintiff put into action an investigation as to the real cause of the seepage. Correspondence was exchanged between the plaintiff and the defendant but the communication came to naught. It is sufficient to refer only to the dates of the letters in question without making any reference to their contents. I have in mind the two letters dated 9 August 1994 from the plaintiff's solicitors to the defendant on arbitration and appointment of arbitrator; then the letter in reply by the defendant's solicitors to the plaintiff's solicitors dated 31 August 1994; that was followed by a letter from the plaintiff's solicitors to the defendant's solicitors dated 19 September 1994; the defendant's solicitors replied on 22 September 1994. On 17 October 1994, the plaintiff's solicitors wrote to the defendant's solicitors in the following terms:-

"... if your client refuses to agree to the appointment of a sole arbitrator, we have instructions to appoint Mr Simon Law as our arbitrator and to apply to court for an appointment of an arbitrator on your behalf pursuant to the Arbitration Ordinance. The latter course will of course not be needed if you agree to the appointment of a sole arbitrator or proceed to appoint an arbitrator pursuant to Clause 17 of the Deed of Mutual Covenant prior to the expiration of the further 10 days our client is prepared to wait."

3. The defendant remained obstructive. His counter-proposals were not followed up. After a slight extension, the plaintiff instituted proceedings by an originating summons. With an amendment to it, the parties came before Bewley J who duly appointed an arbitrator on behalf of the defendant but offered the defendant an opportunity to substitute an arbitrator of his own choice. The judge also granted costs against the defendant on an indemnity basis. The defendant feels aggrieved, hence this appeal. In obedience to the order of Bewley J pending appeal, the defendant substituted his own arbitrator. Arbitration proceedings have been on foot. We are told that the arbitration award is awaiting the onslaught of our raining season.

4. In this appeal, the defendant applies to set aside the judge's order, both as to the appointment of the arbitrator and as to costs.

5. As for the letter of 17 October 1994, the defendant seeks to argue before us that the same did not constitute a notice under s.12(1)(c) of the Arbitration Ordinance. The intended argument of the defendant does not fall within the ambit of his Notice of Appeal. The application made on behalf of the defendant to amend his motion has been refused.

6. Two points remain for the consideration of this Court. First, it is argued that the disputes between the plaintiff and the defendant did not come within the Deed of Mutual Covenant (DMC). We have been referred to clause 8 and clause 17 of the DMC. Suffice it for me to say that clause 8 clearly includes nuisance caused by one occupant to another of the same building. The relevant part of clause 8 reads:-

"(c) use or cause or suffer or permit to be used the floor .......... of which he is entitled to the exclusive use, occupation and enjoyment or any part thereof .......... and shall not do or cause or suffer or permit to be done anything therein or thereupon which may create unnecessary noise of (sic.) which may be or become a nuisance, annoyance or inconvenience to the occupiers of the other parts of the said building ..........."

7. Turning to the clause 17, it provides that the parties may proceed to arbitration with respect to "the rights, duties or liabilities of any person" under the DMC.

8. The disputes between the parties to this appeal are, in my view, proper matters within the four corners of the agreement to arbitrate embodied in clause 17 of the DMC.

9. The second point taken by Mr Chain on behalf of the defendant is on s.12(1)(c) the effect of which is pruned down by the ending phrase in sub-section (1)"as if he had been appointed by consent of all parties". Mr Chain has mounted a great many attacks at the ambit of s.12(1)(c) by reason of these concluding words. Whatever these qualifying words at the end of sub-section (1) were intended to or may achieve, they would not, in my view, affect the rights of the parties to seek an appointment from the court nor the court's power to entertain their application and appoint an arbitrator.

10. Insofar as s.12(1)(c) is material to this appeal, it suffers from no obscurity. S.12(1)(c) clearly enables the court to intervene:-

"where a party .......... is required or is at liberty to appoint .......... an arbitrator and does not do so;"

11. That is precisely the situation we face here. The language of s.12(1)(c) is plain. It clearly applies.

12. There is, in my view, no substance in the submissions made on behalf of the defendant in this appeal. I would dismiss it.

13. I turn next to costs. From the letters I have referred to, it is clear that the defendant had adopted an uncooperative and obstructive attitude. The nature of the arguments advanced for the consideration of Bewley J also reflected the defendant's utter unreasonable conduct of the proceedings, clearly with a view to continuing to irritate the plaintiff but not to seeking a fair resolution of any genuine disputes between them.

14. In all the circumstances, the order for costs on an indemnity basis awarded by Bewley J is not contrary to principle nor can the judge's discretion be said to have been wrongly exercised. I would not be prepared to disturb the order of the judge for costs on an indemnity basis against the defendant. This appeal is doomed to failure from start to finish. It seems to have been conceded that it would serve no practical purpose. Counsel has intimated that even if the defendant should succeed on this appeal, the appointment of the arbitrator and the arbitration proceedings would not be interfered with. I would order that costs of this appeal be likewise awarded against the defendant in favour of the plaintiff on an indemnity basis.

Godfrey, J.A.:

15. I agree that we must dismiss this pointless appeal.

16. The defendant appellant has argued that the dispute between the parties is not as to whether there is a nuisance but as to what causes the nuisance; and has submitted that that dispute is not a dispute as to any matter mentioned in clause 8(a) of the Deed of Mutual Covenant. But in my judgment, a dispute as to whether the defendant has suffered anything to be done in his premises which may be or become a nuisance to the plaintiff, which this is, is clearly a dispute within the ambit of clause 8(a). Accordingly, the plaintiff is entitled to have that dispute decided by arbitration, pursuant to the provisions of clause 17 of the Deed of Mutual Covenant.

17. The defendant further argued that the plaintiff was not entitled to ask for any relief under the provisions of clause 12 of the Arbitration Ordinance, Cap. 341, which confers a power upon the court in certain cases to appoint an arbitrator and which is the power the judge below exercised. This argument was based on a difference between the closing words of s.12(1) on the one hand and s.12(2) on the other hand.

18. Under s.12(1) an arbitrator appointed by the court is to have "the like powers to act in the reference and make an award as if he had been appointed by consent of all parties". Under s.12(2), such an arbitrator is to have "the like powers to act in the reference and make an award as if he had been appointed in accordance with the terms of the agreement". Is this a significant difference for present purposes? In my judgment, it is not.

19. Under s.12(1), the arbitrator appointed by the court, although not appointed in accordance with the terms of the agreement, is to have the like powers to act as if he had been appointed by consent of all the parties; such consent of course would have produced the same result as an appointment in accordance with the terms of the agreement.

20. S.12(2) on the other hand is concerned with the case where the person who is to appoint the arbitrator under the terms of the arbitration agreement is not a party but some other person; and it is this which, in my judgment, explains the difference in language between the two sub-sections. It makes no difference to the result in the instant case and so, as I have said, I agree that this appeal must be dismissed for the reasons given by my Lord, Liu, JA.

21. As to the costs below, like my Lord, Liu, JA, I see no reason to hold that the judge erred in principle in making an order for indemnity costs against the defendant, and like him I, too, would be prepared to make an order for the plaintiff respondent's costs of this appeal to be taxed and paid by the defendant appellant upon the same basis. The defendant has from first to last been extremely pig-headed, or badly advised, or both. There is no reason why the plaintiff should be out of pocket as a result. There is nothing further I can usefully add.

Nazareth, V.-P.:

22. I agree with my Lords and only add the following.

23. Section 12(1)(c) of the Arbitration Ordinance has a literal or ordinary meaning that is perfectly clear. It says that:-

"..... where a party or an arbitrator is required or is at liberty to appoint, or concur in the appointment of, ... an arbitrator and does not do so; ...

any party may serve the other parties ... with a written notice to appoint ... an arbitrator, and if the appointment is not made within 7 clear days ... the Court ... may, on application by the party who gave the notice, appoint an arbitrator, ... who shall have the like powers to act in the reference and make an award as if he had been apointed by consent of all parties."

But Mr Chain, for the appellant, says that that plain meaning should be rejected primarily because the words "as if he had been appointed by consent of all parties" contrast with the words "as if he had been appointed in accordance with the terms of the agreement" which appear at the end of s.12(2). That plain difference, he says, points to an intention in para.(c), read in the context of the whole of s.12, to apply only where an arbitrator is actually appointed by the party concerned. I do not accept that. The difference in those words seems to me to be accounted for by the reason pointed to by Godfrey JA. It is far from any credible justification for distorting the plain meaning of s.12(1)(c).

24. However, Mr Chain also submits that paras. (a), (b) and (d) of s.12(1) would be rendered wholly unnecessary by the wide literal construction which he contends against. I cannot say I am persuaded.

25. Mr Chain submits in addition that this wide interpretation tends to absurdity because it provides for a range of no less than 16 permutations and combinations. Again, I am not persuaded that these result in any absurdity. In the result, there seems to me to be no good reason advanced why the plain meaning of s.12(1)(c) should not prevail.

26. As to costs, like my Lords, I can see no justification for interfering with the discretion of the judge. I agree that the appeal should be dismissed with costs upon the indemnity basis and so order.