G v. M

HCCT 36/2009

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 36 OF 2009

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BETWEEN

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J U D G M E N T

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I. INTRODUCTION

1.  The Applicant G engaged the Respondent M as contractor to carry out construction works. Disputes between G and M led to arbitration pursuant to a clause in their contract. The Arbitrator issued his “Final Award Save as to Costs” on 8 July 2009. By Originating Summons dated 20 August 2009, G applied to set aside the Award. M has applied by Summons dated 9 September 2009 to strike out G’s Originating Summons as vexatious and an abuse of process.

II. COURT PRACTICE ON APPLICATIONS SUCH AS THIS

2.  This is the initial hearing of G’s Originating Summons. An appointment of 30 minutes has been obtained for this hearing.

3.  In a recent Judgment in a chambers hearing not open to the public, I summarised the practice of the Construction and Arbitration List in relation to initial 30 minute hearings. What I set out in that Judgment bears repeating by way of reminder to users of the Construction and Arbitration List.

4.  The Court’s practice is to dispose of as much as possible of applications for leave to appeal against an Award or applications to set aside an ex parte Order for the enforcement of an Award during an initial 30 minute application.

5.  The Court’s practice is consistent with the underlying objectives of Civil Justice Reform. But it is also consistent with commercial expectation and the Court’s supportive role in the arbitration process. The Court has to ensure that its procedures enable Awards to be promptly enforced without unnecessary delay. Otherwise, the value of arbitrations as a speedy means of resolving disputes will be undermined.

6.  A 30 minute initial hearing should not be treated by parties as a simple call-over for directions. There is no point in wasting time giving directions for the filing of further affidavits, if the evidence filed by an Applicant in support of a Summons discloses no arguable grounds for appealing against an Award or setting aside an Order for the enforcement of an Award. During an initial 30 minute appointment, the Court is entitled to scrutinise an Applicant’s supporting affidavit to see whether a case to appeal an Award or set aside an enforcement Order is made out. If there is a case, the Applicant (if it has not already had the chance to do so) should be permitted to file a final affidavit dealing with points raised in a Respondent’s affidavit. On the other hand, if an Applicant’s supporting affidavit discloses no viable case, then in the interests of saving time and cost the Court can dispose of the relevant Summons even in an initial 30 minute hearing.

7.  The practice which I have just summarised is what will be followed today.

III. DISCUSSION

8.  In this case, G’s application is fraught with difficulty. I believe that the difficulties are fatal to G’s Originating Summons.

9.  First, RHC Order 73 Rule 5 provides that where it is sought to set aside or appeal against an Award, a Summons “must be served within 30 days after the award has been made and published to the parties”. Although the Court may have jurisdiction to extend the time limit, the use of the word “must” in Order 73 Rule 5 is well-nigh peremptory. At the very least, it means that there has to be compelling and cogent reason for the Court to extend the 30 day limitation. If an Award is to be challenged, application should be made promptly so that the question of an Award’s validity is not left hanging indefinitely. The Court will only extend the time limit to set aside an Award or appeal against it in exceptional circumstances.

10.  Here G has not bothered to explain in its Originating Summons or evidence in support why the application to set aside or appeal against the Arbitrator’s Award has been brought nearly 2 weeks after the deadline in Order 73 Rule 5. No application to extend the time limit is made. There is accordingly no material on which I can exercise any discretion which I might have to extend the 30 day limitation. On that basis alone, I would dismiss G’s Originating Summons.

11.  Second, by its application, G makes a litany of complaints. For example, G apparently queries the process by which the Arbitrator was appointed. G alleges private telephone contacts between itself and the Arbitrator in advance of the arbitration. During those contacts, the Arbitrator is said by G to have expressed the view that G’s case had no merits. G complains about what happened during a joint site inspection. G also criticises alleged irregularities during the substantive arbitration, including the Arbitrator’s failure to have the proceedings tape recorded; the Arbitrator’s direction that expert evidence was unnecessary; the Arbitrator’s refusal to allow G’s request for specific discovery; and the Arbitrator’s refusal to rule on G’s Counterclaim due to G’s failure to put up security for costs.

12.  But G’s allegations here are similar to those which G previously advanced in a Motion dated 13 March 2009. On that occasion, G raised the allegations in an eleventh-hour bid to stop the Arbitration from commencing on 30 March 2009 as scheduled. G’s Motion sought to remove the Arbitrator.

13.  At the time of its Motion, G asked for an interim stay of the Arbitration pending resolution of the Motion. I refused a stay. Later, by consent, directions were given in April 2009 for the disposal of G’s Motion. Those directions required G to file affidavit evidence in reply to M’s evidence by 13 May 2009. The directions also adjourned the substantive hearing of the Motion sine die with liberty to restore. G did not file affidavit evidence on 13 May 2009 or afterwards. Instead, the Motion appears to have gone to sleep or to have been abandoned by G.

14.  G gives no explanation in its present Originating Summons why the 13 March 2009 allegations have been resurrected in new proceedings. There is no explanation why G failed to file evidence in reply on 13 May 2009 in connection with its Motion. Nor does G mention anything about its intentions in relation to pursuing its Motion.

15.  It is an abuse to complain of precisely the same matters in two proceedings. G nowhere seeks to excuse or justify such conduct. It seems to me that the previous (possibly abandoned) attempt to raise the same allegations constitutes a separate ground for dismissing G’s Originating Summons.

16.  Third, in accordance with usual practice, M applied ex parte for an Order that the Award be enforceable as a Judgment of this Court. I granted leave for the Award to be so enforceable by an Order Nisi dated 5 August 2009. The Order gave 14 days from the date of service of the Order for G (if it wished) to set aside the ex parte Order for enforcement. G’s Originating Summons is one day off the 14 day deadline imposed by my ex parte Order.

17.  Civil Justice Reform looks to substance rather than form. Therefore, before striking out G’s Originating Summons, given that the application is only one day from the deadline in my ex parte Order, I should consider whether the Originating Summons raises any viable ground for refusing enforcement of the Award. In other words, even though out of time as an application to set aside or appeal against the Award, can the Originating Summons be treated as an application by G to set aside my ex parte Order?

18.  I do not think that I can treat the Originating Summons in that way.

19.  Four of the grounds raised by G in the Originating Summons can be dismissed straightaway as hopeless. Those grounds are the Arbitrator’s decision not to have the proceedings recorded; the Arbitrator’s refusal to allow expert evidence; the Arbitrator’s refusal to allow specific discovery; and the Arbitrator’s refusal to proceed with the hearing of G’s Counterclaim in light of G’s failure to pay security for costs as ordered by the Arbitrator. The 4 grounds all relate to one-off procedural decisions which are firmly within the discretion of an Arbitrator. G may be unhappy with those decisions. The mere fact that G does not agree with those decisions would not be sufficient basis to refuse enforcement. Indeed, if this were a valid application for leave to appeal against the Award, there is nothing in G’s supporting evidence to suggest that the Arbitrator was so obviously wrong as a matter of law in what he decided that the Award should somehow be set aside on the basis of any of the 4 grounds.

20.  The Originating Summons complains that the Arbitrator was not validly appointed. It is alleged that the Arbitrator was proposed by M’s then solicitors, but that G’s solicitors never agreed to the Arbitrator’s appointment. G’s allegation is difficult to follow or accept. Thus, for instance, consider G’s affidavit evidence in support of its March 2009 Motion. G there deposes: “Since [M’s] then solicitors had been pressing for the appointment of the arbitrator so hard, the Applicant [G] raised no objection to the appointment of the Arbitrator.” In light of such admission by G, I see no substance to the claim of an alleged invalidity in the Arbitrator’s appointment.

21.  It is true that in its affidavit evidence in support of the Originating Summons, G asserts: “In fact, the Applicant ... had never agreed to the appointment of the Arbitrator and the objection had been raised throughout the arbitration proceedings...” But it is hard to square this denial with what has plainly been stated by G in its March 2009 application. No explanation for the contradiction has been given in the evidence filed in the present Originating Summons.

22.  That leaves G’s allegations of unilateral communication and bias on the part of the Arbitrator.

23.  In its evidence in support of the Originating Summons, G deposes that on 3 April 2008 the Arbitrator called T (G’s director). T being out of office at the time, T says that T returned the Arbitrator’s call that evening. The Arbitrator is alleged to have told T that G’s case had no merits and G “should not defend at all”. T claims to have recorded the conversation with the Arbitrator in an English memo immediately after the telephone call.

24.  In actuality, the memo fairly read does not bear out G’s claims of bias. The memo is itself written in unclear language. It appears to be interspersed with parenthetical remarks setting out T’s views on various aspects of the case.

25.  As far as I can see from the memo, all that the Arbitrator wished to do when he called earlier was to inform G that it should collect certain documents issued by the Arbitrator. The Arbitrator may also have asked for a particular document (an Architect’s Payment Certificate) to be sent to him. This last is not wholly clear from T’s memo.

26.  What seems to have primarily happened, however, is that T used the occasion of her alleged “return call” to harangue the Arbitrator about aspects of G’s case. From the memo, the Arbitrator appears to have been embarrassed by T’s tirade (which the Arbitrator may not have expected when he took T’s call). The Arbitrator appears to have warned T that, being an Arbitrator as opposed to a mediator, he could not entertain unilateral submissions over the telephone from T.

27.  Consequently, I do not see the memo as any substantial evidentiary basis on which I can refuse enforcement of the Award on account of bias.

28.  I note that by a letter to the parties dated 9 October 2007 the Arbitrator made full disclosure of the conversation with T.

29.  G also cites an incident during a joint site inspection in July 2007. There the Arbitrator is alleged to have said that “since [G] had owed [M] money, [G] was bound to lose”. No further details are given.

30.  This last incident is again scant basis for the exercise of any discretion against enforcement of the Award. The parties were jointly represented at the site inspection. The Arbitrator (for instance) could robustly have been warning G that there was every likelihood that G owed M something for work done. Judges and arbitrators often make such observations at a hearing in the hope of getting a party to focus realistically on the prospects of its case. Without more, I do not think that G’s evidence could amount to bias. On G’s evidence, I see no prospect for this ground as a basis for refusing enforcement of the Award.

IV. CONCLUSION

31.  There is no merit to G’s Originating Summons, either taken on its own terms or as an application to set aside my ex parte enforcement Order. The Originating Summons is dismissed. It also follows that the ex parte enforcement Order should now become absolute.