MAEDA KENSETSU KOGYO KABUSHIKI KAISHA also known as MAEDA CORPORATION AND ANOTHER v. BAUER HONG KONG LTD

CACV 301 /2019

[2021] HKCA 653

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 301 OF 2019

(ON APPEAL FROM HCCT NO 4 OF 2018)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  This is the defendant’s application for leave to appeal to the Court of Final Appeal against the judgment of this court handed down on 16 October 2020 (“CA Judgment”; [2020] 5 HKLRD 328). I will refer to the defendant as “Bauer” and the plaintiffs as “the JV”.

2.  Mimmie Chan J granted leave to the JV to appeal on two questions of law arising out of the awards of the arbitrator, Sir Vivian Ramsey QC in the 823B Arbitration between the parties.  On 9 April 2019, she handed down her judgment (“Judgment”) allowing the appeal in respect of one of the questions, holding that the arbitrator’s construction of clause 21.2.1 of the Sub-Contract between the JV and Bauer was wrong in law and hence his decision that Bauer had complied with this provision was erroneous.  Bauer appealed to the Court of Appeal with leave granted by the judge.  By the CA Judgment, we upheld the judge and Bauer’s appeal was dismissed.

3.  As the only matter for resolution in the appeal was the proper construction of clause 21.2.1, the ambit of the appeal is very narrow.

4.  In summary, the courts held that the wording in clause 21.2.1 is clear and unambiguous, by which notice is required to be given of “the contractual basis” of the intended claim within the stipulated period.  There is no dispute that the notice provision must be strictly complied with as a condition precedent to any entitlement to a claim for additional payment under clause 21.  On a proper construction of clause 21.2.1, Bauer was precluded from amending or substituting the stated contractual basis (based on a “Variation or Sub-Contract Variation”, under clause 21.1.6) by making its claim on a different contractual basis (based on “any circumstances or occurrence as a consequence of which the Contractor is entitled to additional payment or loss and expense under the Main Contract”, ie a “like rights” claim, under clause 21.1.1), outside the 28 days of the relevant notice given under clause 21.1.

5.  The Judgment and the CA Judgment turned on the application of well-established principles of construction to the particular language of the contractual provisions and neither judgment broke any new ground.

The notice of motion

6.  Bauer issued a notice of motion on 13 November 2020 seeking leave to appeal to the Court of Final Appeal on the basis that the intended appeal involves questions of great general or public importance. It also invoked the ‘or otherwise’ limb.

7.  The paragraph numbered as “1” purports to contain the questions of great general or public importance.  It has 4 sub-paragraphs numbered (1) to (4); sub-paragraph (1) has sub-sub-paragraphs (a) to (c) and sub-sub-paragraphs (i) to (vi).  The court is left to work out in these sub-paragraphs and sub-sub-paragraphs which are the questions said to be of great general or public importance. This is most unsatisfactory.

8.  The notice of motion should clearly identify and properly formulate questions that meet the criteria of section 22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, Cap 484.  It should not include arguments or factual materials or allegations seeking to support the contention that the questions are of great general or public importance.  The proper place for arguments and contentions is the skeleton submissions to be served by the applicant under paragraph 3 of Practice Direction 2.1.

9.  In future, a notice of motion that does not comply with the requirements in paragraph 2 of Practice Direction 2.1 would be returned to the applicant with a direction that a proper notice of motion should be prepared and the costs of the non-compliant notice of motion would be disallowed.

Questions of great general or public importance

10.  I will first identify the questions in the notice of motion said to be questions of great general or public importance.

11.  Sub-paragraph (1) seeks to raise a broad question of “what is the proper construction of clause 21.2.1”.  The three sub-sub-paragraphs (a) to (c) that follow do not set out or add anything to the contents of the broad question in (1).  Instead they set out background materials to support the contention that the questions in the intended appeal are of great general or public importance^[1]. I will put them to one side and return to them.

12.  The questions pertinent to the construction of clause 21.2.1 are in sub-sub-paragraphs (i) to (vi).  I do not propose to set them out. They are based on the arguments on construction raised on appeal^[2], and were dealt with in the CA Judgment^[3]. These questions would be grouped together as “questions relating to construction”.

13.  Sub-paragraphs (2) to (4) are concerned with whether the arbitrator’s construction of clause 21.2.1 is a mixed question of law and fact and, on the premise that it is, what should be the threshold for an appellant to succeed against the arbitrator’s determination of the construction of this provision.  These questions would be grouped under “the issue of mixed question of law and fact”.  This issue was raised on appeal^[4] and addressed in the CA Judgment^[5].

14.  For leave to appeal to be given, an important consideration is that the questions in the intended appeal are reasonably arguable.  This is not an invitation to the applicant to re-argue his grounds and contentions which had been canvassed in the appeal.  He is required to show sufficient merits to warrant embarking on a further appeal, notwithstanding that his arguments have been rejected by the Court of Appeal.  There is no template for this exercise.

15.  This has not been shown to our satisfaction, both for the “questions relating to construction” and “the issue of mixed question of law and fact”.

16.  For the “questions relating to construction”, I have mentioned earlier that both courts have found the meaning of the contractual provision to be clear and unambiguous.  In the two submissions served by Bauer, there is no or no serious attempt to engage with the reasoning in the CA Judgment in order to demonstrate that the contrary position adopted by Bauer is reasonably arguable.  What was done was to cite in the footnotes a series of blogs, case notes and articles in the construction and legal communities commenting on the Judgment and CA Judgment.  Bauer’s solicitors stated^[6] that these online articles, 16 in total, are “not, in themselves, authorities” but provided copies of them in a bundle “for the benefit and easy reference of the Court”.  This is not helpful, as there is no mention in the skeleton submissions of any analysis or critical discussion in these articles that would provide support for the construction advocated by Bauer.  Nor is it helpful to submit that the CA Judgment is “pro-employer”, “interventionist”, of “the most draconian and chilling effect” and to resort to hyperboles, without the backing of proper reasons and analysis. 

17.  As for the “the issue of mixed question of law and fact”, it was contended that the arbitrator’s construction was premised on his finding of fact that “to expect a party to finalise its legal case within the relatively short period and be tied to that case through to the end of an arbitration is unrealistic”^[7] and hence his determination on the proper construction of clause 21.2.1 was a mixed question of law and fact.  To successfully appeal against the arbitrator’s determination, the threshold test should be that the determination was outside the permissible range of solutions open to the arbitrator.

18.  The Court of Appeal held that the arbitrator’s statement as quoted above is merely a statement of opinion, not a finding of fact.  In any event, any challenge as to whether this is a statement of opinion or a finding of fact is relevant only to the present parties and cannot be regarded to be a question of great general or public importance.  The arguments whether a question of contractual interpretation is a question of law or a mixed question of law and fact has been raised by Bauer in its previous application for leave to appeal to the Court of Final Appeal.  For the reasons given in the judgment of the Court of Appeal (Maeda Kensetsu Kogyo Kabushiki Kaisha (Maeda Group) v Bauer Hong Kong Ltd [2020] HKCA 768, §§10 to 16), it is well settled in Hong Kong that questions of contractual construction are treated as questions of law and leave to appeal to the Court of Final Appeal should not be given for such questions.

19.  Bauer prayed in aid the affirmation of the JV’s solicitors dated 1 February 2018 in the JV’s application for leave to appeal from the arbitrator’s award on a question of law to the Court of First Instance, as well as the decision of Mimmie Chan J on 30 August 2018 granting leave to the JV to appeal, to make the point that there are similar notice provisions in contracts of civil engineering used widely in Hong Kong and elsewhere.  The threshold test for granting leave to appeal under section 6(4)(c)(ii) in Schedule 2 of the Arbitration Ordinance, Cap 609 is that “the question is one of general importance and the decision of the arbitral tribunal is at least open to serious doubt”.  For leave to appeal to be granted to appeal to the Court of Final Appeal, it is not sufficient that this question of construction has been recognised to be of “general importance” in an application for leave to appeal under the Arbitration Ordinance^[8].

20.  For the above reasons, I decline to give leave to appeal on the questions said to be of great general or public importance.

‘Or otherwise’ limb

21.  It was contended in paragraph 2 of the notice of motion that leave to appeal should be granted on the ‘or otherwise’ limb on three grounds: (1) the intended appeal involves questions of great general or public importance; (2) a substantial sum of around $22 million is involved; and (3) the CA Judgment usurped the role of the Tribunal, in this instance a highly specialised and suitably qualified arbitrator selected by the parties^[9].

22.  The practice of the Court of Appeal is to defer to the Appeal Committee of the Court of Final Appeal in deciding whether to grant leave on the ‘or otherwise’ limb.  In any event, I do not think the three grounds would constitute exceptional circumstances for leave to be granted on this basis.

Conclusion and costs

23.  The notice of motion is dismissed for the above reasons. Bauer is ordered to pay the JV’s costs of this application.

24.  Having considered the JV’s statement of costs for summary assessment, the costs of the JV are assessed at $323,280. The costs incurred in the preparation of the statement of costs are disallowed pursuant to Practice Direction 14.3 paragraph 13.