FREE FORM CONSTRUCTION CO LTD v. SHINRYO (HONG KONG) LTD

HCCT 7/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 7 OF 2008

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J U D G M E N T

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1.  On 21 January 2008 Free Form filed a Notice of Motion seeking leave to appeal against the Arbitrator’s Interim Award dated 2 January 2008.  Free Form did not file any affidavit in support of the Motion.  The Motion was listed to be heard before me today for 15 minutes (the estimated time specified in the Motion). 

2.  By Summons taken out yesterday, Free Form now belatedly applies for leave to file a 1st Affirmation of Au Sui Cheong dated 27 March 2008 in support of the Motion.  The question is whether I should grant such leave.

3.  I do not think that it would be right to grant leave for the reasons which I set out below.

4.  First, I believe that the course of action taken here amounts to an abuse of procedure.

5.  It is normally bad practice, often amounting to an abuse of process, to file a Motion or Summons (whether originating or interlocutory) without a supporting affidavit.  A respondent to any such application is entitled to know of the facts and matters said to support such application at the earliest opportunity.

6.  In the case of applications for leave to appeal against an arbitration award, it seems to me to be not just bad practice, but an abuse, to file a holding Motion or Summons without any supporting affirmation.  Appeals against an arbitration award must be made promptly within a short time, 21 days, after an award is published.  This is because parties resort to arbitration as it is supposed to be speedier and less expensive than conventional litigation as a means of resolving disputes.  There is thus all the more reason here why a given party should know as soon a possible where he stands in relation to a published award.

7.  Note, in this connection, that RHC Order 73 Rule 5 (which imposes the 21-day limit for appeals) states in paragraph (5) that a Notice of Originating Motion:-

“must state the grounds of appeal or application and, where the appeal or application is founded on evidence by affidavit, ... a copy of every affidavit intended to be used ... must be served with that notice.”

8.  To my mind, the present application is tantamount to an application to extend the time for lodging a Motion seeking leave to appeal against an award.  Such leave should, in principle, only be given in exceptional circumstances and then only for compelling reason.

9.  Second, the Interim Award having been published on 2 January 2008, the time for filing a Motion would have expired on 23 January 2008.  The application to file an Affirmation out of time is therefore more than 2 months late.  There does not appear to me to be any good excuse for such delay in the present case.

10.  In a 2nd Affirmation Au (a director of Free Form) says that he was informed by his legal advisors of the 21-day time limit.  The delay (according to Mr. Au) is due to the late collection of the Award (on 18 January), a late decision by Free Form’s board to appeal (on 21 January), and late settlement of Au’s 1st Affirmation by counsel (on 26 March).

11.  It does not seem to me that Free Form took the deadline seriously.  It apparently believed (possibly on the advice of its legal consultants), wrongly in my view, that it could “preserve” the time limit simply by filing a bare Motion without supporting Affirmation.  Acting on bad advice from lawyers and difficulties in getting busy counsel to settle an affidavit are simply not good reasons for failing to comply with Court deadlines.

12.  Third, Mr. Bernard Wu (appearing for Free Form) suggests that there is no prejudice to Shinryo in the late application.  He submits that the present 15-minute hearing before me was, in any event, unlikely to have been more than a call-over at which directions for the filing of affidavits would simply have been made.  I cannot agree with that.

13.  Shinryo is prejudiced in at least 2 ways.

14.  To begin with, Shinryo has been kept in the dark for more than 2 months as to the facts and matters said to be relevant to Free Form’s appeal.  It would accordingly have been unable fully to take stock of its situation over that period and assess where it stood in relation to the Interim Award.  That is contrary to the spirit and intent behind recourse to arbitration.

15.  Further, I do not think that it can be assumed that the application for leave could not have been dealt with within the time allotted this morning.  For example, within (say) 14 days, Shinryo could have filed an affidavit in response to any affirmation lodged by Free Form at the time of issuing its Motion.  Free Form would then have had ample time in which to put in a reply affirmation long before the hearing today.

16.  Having perused such filed evidence and taken account of any written skeletons, this Court could have then readily dealt this morning with the question of leave.  In practice leave to appeal against arbitration awards is rarely granted.  In recognition of this fact, it is this Court’s custom to rule quickly, at the earliest possible opportunity, with a minimum of flurry, on the question of leave.  It is hoped that such custom enables the parties to know where they stand early and thereby forestalls unnecessary expense and delay in the enforcement of an award.

17.  The late filing of an Au’s 1st Affirmation has rendered it impossible to proceed in such an expedited manner.  The result is that, through no fault of its own, Shinryo is left in the dark for much longer about the status of its Interim Award.

18.  Fourth, contrary to Mr. Wu’s submission, I do not think that the proposed motion has any appreciable prospect of success.  The application for leave lacks merit.

19.  To see why, consider the ways in which the Motion says that the Arbitrator (Mr. Peter Clayton SC, an experienced construction lawyer) erred:-

“(1)	the Arbitrator erred in finding that due diligence was assessed against the obligation to complete within the original contract period and, if EOT granted under Clause 6.2 of the Sub-Contract, the extended period (paragraph 3.17 of the Interim Award);
(2)	the Arbitrator erred in finding that there was no obligation on the Respondent to update the Mater Contract master programme based on which due diligence was to be assessed (paragraph 3.23 of the Interim Award);
(3)	the Arbitrator failed to give any or sufficient consideration to and make finding in respect of the 13 delaying events as stated in paragraph 3.30 of the Interim Award;
(4)	the Arbitrator erred in finding that the implied terms pleaded at paragraphs 4 of Statement of Claim and 5.4 of the Reply and Defence to Counterclaim did not affect the due diligence obligation (paragraphs 3.18 and 3.118 of the Interim Award); and
(5)	he Arbitrator erred in finding that the Applicant was obliged to give written notice for any delay due to inclement weather (paragraph 3.77 and 3.78 of the Interim Award).”

20.  In relation to the 1st alleged ground, the Arbitrator held that on the authorities “due diligence is to be assessed against the obligation which is to be achieved”.  The obligation being “to complete within a certain period of time,” where there is no entitlement to EOT, it followed (the Arbitrator reasoned) that “the original period remains the requirement”.  Such conclusion does not seem to me to be seriously (or even obviously) wrong.

21.  In relation to the 2nd alleged ground, the Arbitrator held that, “[h]aving heard the evidence,” he did not think it was necessary for Shinryo to produce an updated master programme.  It was only where there was a revised approved programme that there was an obligation on Shinryo to provide it to Free Form.  Otherwise, subject to any entitlement to EOT, the completion dates by which due diligence was to be measured remained the same.  Again that conclusion seems difficult to fault.  It is neither seriously nor obviously wrong.  Further, insofar as evidence is concerned, it appears to concern questions of fact (which are not susceptible to judicial review) rather than of law.

22.  As for the 3rd alleged ground, that appears to concern questions of fact (namely, whether certain events did or did not cause actual delay).  Such questions cannot be the subject of an appeal to this Court.

23.  As for the 4th alleged ground, the Arbitrator held that “the implied terms relied on by Free Form do not, in the light of the EOTs [to which the Arbitrator considered Free Form entitled] affect the due diligence obligation”.  This again appears to relate to a question of fact (namely, whether (if at all) in light of accepted EOTs Free Form failed to exercise due diligence).  In any event, the conclusion does not strike me as either seriously or obviously wrong.

24.  Finally, on the 5th alleged ground, the Arbitrator read Clause 6.2 of the Sub-Contract.  That requires written notice “as a condition precedent” to the Sub-Contractor’s right to an EOT.  Not surprisingly, the Arbitrator concluded on the basis of Clause 6.2 that Free Form was “obliged to give written notice”.  But such obligation “did not arise in respect of delays which occurred prior to the execution of the Sub-Contract on 23 July 2004”.  Free Form not having given notice for any delay due to inclement weather, it could not be entitled to weather-related EOTs for any day after 22 July 2004.  I see nothing seriously or obviously wrong in this conclusion.

25.  For the foregoing reasons, Free Form’s application to adduce a late Affirmation is dismissed.  Free Form’s Motion being a bare document unsupported by a proper affirmation, the Motion is also dismissed.  I shall now hear the parties on costs.