SUEN WAH LING t/a KONG LUEN CONSTRUCTION ENGINEERING CO v. CHINA HARBOUR ENGINEERING CO (GROUP)

cacv 336/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 336 of 2006

(on appeal from HCCT NO. 2 of 2006)

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REASONS FOR JUDGMENT

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Hon Rogers Acting CJHC:

1.  This was an appeal from a judgment of Reyes J given on 29 August 2006 whereby he dismissed the applicant’s application to set aside an arbitration award dated 28 December 2004.  At the conclusion of the hearing, this court dismissed this appeal with costs with reasons to be given in writing.

Background

2.  The application before the judge was that the arbitration award should be set aside because the arbitrator had acted in breach of the rules of natural justice and the implied obligation of an arbitration tribunal to appear impartial and to act fairly and that the arbitrator had misconducted himself and that there had been a real likelihood that the arbitrator could not or would not act fairly in determining the issues in the arbitration.  Although it might appear from the wording of the notice of motion that the applicant sought to set aside the arbitration award on the basis of actual or real bias, it is made clear in argument that the only bias which is alleged is apparent bias.

3.  The judge below dismissed the application primarily because the application had been made way out of time.  Furthermore, the judge said that if there had been no delay he might have been sympathetic to the applicant’s substantive case on apparent bias but he did not go on to consider the matter in any detail because he considered that the position on delay was conclusive.

The facts

4.  In June 1999 the arbitrator had advised the applicant on matters concerning two contracts of the Provisional Airport Authority which had been made with main contractors.  There appears to have been a single conference which was attended by the applicant in the arbitrator’s chambers together with a trainee solicitor.  Thereafter the arbitrator received no further instructions as counsel on behalf of the applicant and heard nothing further about the matter.  Some four months later in October 1999 a writ was issued against the respondent in relation to the work carried out under those contracts.  The arbitrator was not involved in any way in that.  There was then an application for a stay in favour of arbitration.

5.  It was not until some 40 months after the conference that, apparently, somebody in the applicant’s employment telephoned the arbitrator and indicated that his services as an arbitrator were required.  There is no dispute between the parties that the arbitrator had no recollection whatsoever that he had previously advised the applicant in relation to the claim and that it was not until the applicant sought to set aside the arbitration award on the basis of bias that he did so become aware.  It is accepted that since the arbitrator commenced practice as counsel in 1990 he had been involved in “hundreds” of construction disputes and advising on various matters in relation to claims.  One might add that arbitrations involving claims in relation to work on the airport were seemingly thriving for a long period.

6.  The arbitration was heard in March 2004 and the award was published on 28 December 2004.  There was an amended award on 17 January 2005.  The very next day, notice of originating motion HCCT 8 of 2005 was issued on behalf of the applicant seeking to set aside the arbitration award, in part on the basis of bias.  On 19 May 2005, solicitors who were then acting for the applicant issued a summons seeking leave to vacate the hearing of the originating motion which had been fixed for 2 June 2005 and leave “to wholly discontinue” the action with costs against the applicant to be taxed if not agreed.  That order was duly made.  From the contemporaneous documents produced by the applicant himself it might be a legitimate conclusion that that had been done on the applicant’s instructions because he was advised to do so at the time when he was being asked to pay some quarter of a million dollars costs on account.

7.  Be that as it may it is the applicant’s case that he did not become aware of the discontinuance until 2 June 2005.  It might be observed that although the applicant made complaint about his former solicitors to the Law Society, the Law Society has indicated that it intends to take no action on the matter.  That step was, of course, at no cost to the applicant.  It might also be observed that the applicant has shown no indication of bringing a civil claim against the former solicitors, something that might have been expected had they jeopardised the applicant’s interests by acting contrary to instructions.

8.  Meanwhile on 3 May 2005 the respondent had been granted leave by Reyes J to enforce the amended award in proceedings HCCT 27 of 2005.  On 31 May 2005 the solicitors who had been acting for the applicant filed a notice of intention of the applicant to act in person.

9.  There were then applications by the applicant for legal aid.  It is not entirely clear what those applications entailed but they were refused on the merits and so was an appeal which was refused on 18 August 2005.

10.  On 14 September 2005, the applicant took out an application which was heard on 18 October 2005 by Tang JA (as he then was).  The application sought leave to appeal out of time against the order which had been made on 23 May 2005.  Tang JA pointed out that if there were grounds to set aside that order the applicant should apply to the Court of First Instance and not to the Court of Appeal.  He went on to point out that even if the action had been discontinued without the applicant’s consent that had been done with leave and there was nothing to preclude the applicant from starting fresh proceedings, apart from the fact that applications under section 23(2) of the Arbitration Ordinance, Cap. 341 were required under Order 73 rule 5(2) to be commenced within 21 days after the award had been made and published to the parties.

11.  On 20 October 2005 the applicant, then acting in person, took out a summons to seek leave to restore the hearing in HCCT 8 of 2005.  There was an adjournment when solicitors were instructed on behalf of the respondent and the matter was eventually fixed to be heard on 13 January 2006 but it was vacated when the summons was withdrawn the previous day by solicitors who are now acting on behalf of the applicant.  These proceedings were commenced on 18 January 2006.

This appeal

12.  The judge’s judgment was a matter of exercise of judicial discretion.  As Mr Tong SC, who appeared on behalf of the respondent, pointed out it is therefore incumbent on the applicant to demonstrate a material error.  The only material error sought to be relied upon was that it was suggested that the judge had approached the matter on the basis that what was alleged was actual or real bias as opposed to apparent bias.  In my view that must be wrong.  Paragraphs 9 and 16 of the judgment make it abundantly clear that the judge was well aware that the application was made on the basis of apparent bias.

13.  The test for apparent bias which was set out in the case of Locabail (UK) Limited v Bayfield Properties Ltd [2000] QB 451 at 477-478 was approved by the Court of Final Appeal in Deacons v White and Case Limited Liability Partnership and others (2003) 6 HKCFAR 322.  That test is:

“The court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased.  It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility, or a real danger, the two being the same, that the Tribunal was biased.”

14.  In my view, the matter is simply answered by the fact that the arbitrator was ignorant of the fact that he had previously advised the applicant in conference.  That advice in any event does not appear to have been extensive.  In those circumstances I cannot imagine that the notional fair-minded and informed observer could conclude that there was any danger of the arbitrator being biased.  The arguments which have been deployed in this case that there may be some subconscious bias are fanciful.

15.  I would go further and say that although suggestions were made that the arbitrator had acted improperly and had not properly checked his previous files I see no cause in this case for him to have done so.  He had been approached by the parties to act as arbitrator.  On the face of the matter he was entitled to assume that the parties considered that he was an appropriate person to act as arbitrator.  The matter goes further because apparently when the hearing of the arbitration commenced he did raise the question as to whether the applicant looked familiar to him and he was told that there had been no previous connection.

16.  I have considered the question of apparent bias to a greater extent than might otherwise have been necessary because I see no merit in it whatsoever.  The merits of the case are, however, one of the ingredients which the court may take into account in deciding whether to extend time.

17.  I can see no fault of the judge either in his apprehension of the facts or in his decision which would give rise to this court interfering with his decision.  There is no doubt, as Mr Tong pointed out, that arbitration awards are intended to be dealt with swiftly and to be final.  If any challenge is to be made as to the arbitration award it has to be made promptly.  In this respect the judge was justified in saying that “By any yardstick, the procedural history of this matter has not been propelled by any sense of urgency.”

18.  Although Miss Ng, who appeared on behalf of the applicant, sought to stress that one step had been taken soon after another, the fact remains that steps were taken and then applications were withdrawn at the last minute.  Even when it was suggested in the decision of 18 October 2005 that a separate application could be made that was not followed until after further months had passed.  Although some sympathy is always accorded to those acting in person, it has to be remembered that this matter is a commercial dispute.  In that context applications for legal aid are somewhat unusual.  Furthermore, the necessity for an application for legal aid is by no means clear.  The applicant is now represented by solicitors and in the court below had instructed senior and junior counsel.  That scarcely is an indication of penury.  The application for legal aid itself caused delay.  In the circumstances, it provides little justification for that delay.

19.  For these reasons I saw no merit in this appeal whatever.

Hon A Cheung J:

20.  I agree.