CHEUNG KEE FUNG CHEUNG CONSTRUCTION CO., LTD v. PERMANENT INVESTMENT CO., LTD

HCCT 26/2019

[2019] HKCFI 2595

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 26 OF 2019

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D E C I S I O N

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1.  By her order dated 10 May 2019, Madam Justice Mimmie Chan made provision for the enforcement of an interim award made by a sole arbitrator, Mr Paul Barrett. (The interim award was dated 6 March 2019, as corrected on 10 April 2019).

2.  The relief (given under section 84 of the Arbitration Ordinance (Cap. 609) (the “AO”)) and RHC Order 73, rule 10 included an order as to the payment of HK$5,038,264.40 from the respondent to the applicant.  There were also some orders relating to the date of substantial completion of the works in question and to a surety bond given for those works.  I shall refer to the order dated 10 May 2019 as the “Enforcement Order”.

Setting aside application

3.  By a summons dated 29 May 2019, the respondent seeks to set aside the Enforcement Order on two grounds, namely:

(a)  Failure by the applicant to make full and frank disclosure in its affidavit made in support of the ex parte application which led to the Enforcement Order. 

(b)  Other grounds as set out in the respondent’s supporting affidavit.

4.  At the hearing of this summons, Mr Eric Chung, appeared for the respondent.  Mr Simon Westbrook SC appeared for the applicant.

Application for leave to appeal (HCCT 27/2019)

5.  I was advised that in separate proceedings, the respondent has sought leave to appeal against the above award (pursuant to AO, Schedule 2, section 6).  That application was made in HCCT 27/2019, filed on 9 May 2029, the day prior to the date of the Enforcement Order.  I shall refer to this application as the “Appeal Application”. 

Order 73, rules 10(6) and 10A

6.  The relevant rules for the setting aside application that is before me are set out below.

7.  Order 73, rule 10(6) provides as follows:

“ Within 14 days after service of the order made under paragraph (4) or, if the order made under paragraph (4) is to be served out of the jurisdiction, within such other period as the Court may fix, the debtor may apply to set aside that order, and the settlement agreement, award, order, direction or emergency relief shall not be enforced until after the expiration of that period or, if the debtor applies within that period to set aside the order made under paragraph (4), until after the application is finally disposed of.”

8.  The timelines in Order 73, rule 10(6) have been followed in this case.

9.  We then come to Order 73, rule 10A, which is in these terms:

“ Where a debtor has applied under rule 10(6) to set aside an order made under rule 10(4), the Court may, either of its own motion or on an application made by the creditor, and if, having regard to all the circumstances of the case it thinks it just to do so, impose such terms, as to giving security or otherwise, as a condition of the further conduct of the application, as it thinks fit.”

Inter partes correspondence

10.  Quite sensibly, the parties tried to reach a compromise concerning the Enforcement Order, in light of the Appeal Application. There was some “to and fro” between the parties’ solicitors (in open correspondence) in May of this year.  It reached the point where the respondent’s solicitors, by a letter dated 24 May 2019, proposed the following terms:

(a)  The respondent shall pay a sum of HK$5,038,264.40 into court within 28 days from the date of the order to be made herein.

(b)  There be a stay of execution of the Enforcement Order until after the final disposal of the respondent’s appeal against the corrected interim award dated 10 April 2019 made by Mr Paul Barrett.

(c)  The time for the respondent to apply to the court to set aside the Enforcement Order be extended for 14 days from the date of the final disposal of the respondent’s appeal referred to in paragraph (b) above.

(d)  Costs of and incidental to this application be in the cause.

11.  These terms were agreeable to the applicant in principle but the applicant proposed an additional term, relating to the related surety bond.  That additional term was not accepted by the respondent and the efforts to avoid the need for a hearing foundered at that point.

Discussion

12.  As I see the position, the starting point here is AO, section 84(1).  The claimant was entitled to and did commence enforcement proceedings. Leave of the court being required, the matter went before Madam Justice Mimmie Chan, as noted above. 

13.  Acting in her discretion, the judge made the Enforcement Order the terms of which, to me, are unobjectionable.   Paragraph 1(i) of the Enforcement Order is drawn from paragraph 827(1) of the arbitrator’s interim award.   Paragraphs 1(ii) and (iv) of the Enforcement Order are drawn from paragraph 788 of the award (I accept Mr Westbrook’s submission that it is material that paragraph 788 of the award is said to set out declaratory relief and that it is appropriate that these declarations were included in the Enforcement Order).

14.  There was a minor issue as to whether paragraph 1(iii) of the Enforcement Order was properly drawn from the award but to avoid that dispute (which in any event does not appear material), Mr Westbrook helpfully proposed that this paragraph could simply be removed from the Enforcement Order.  

15.  I have considered the arguments set out in the parties’ affidavits and affirmations filed in advance of this hearing, together with Mr Chung’s written submissions.  And I have noted Mr Chung’s reliance on the English decision of Middlemiss and Gould (a firm) v Hartlepool Corp [1972] 1 WLR 1643.  However, in the face of what is plainly a conventional Enforcement Order, I have seen nothing in these materials that would lead me to think otherwise than as set out in §12 and 13 herein.  Nor have I seen anything that concerns me regarding the alleged failure by the applicant to make full and frank disclosure.  These allegations have no substance.  

16.  This being so, and noting what the parties explored (albeit unsuccessfully) in inter partes correspondence, I shall order as follows:

(a)  The sum of HK$5,038,264.40 be paid into court by the respondent within 21 days of the date hereof, to be held pending final determination of the respondent’s application for leave to appeal in HCCT 27/2019.

(b)  There shall be a stay of execution of paragraph 1 of the Enforcement Order pending final determination of the respondent’s application for leave to appeal in HCCT 27/2019.

(c)  By consent, paragraph 1(iii) of the Enforcement Order dated 10 May 2019 shall be deleted.

17.  Given these orders, it is appropriate that I dismiss the respondent’s summons to set aside the Enforcement Order. 

Costs

18.  Since the respondent has failed in its application to set aside the Enforcement Order, and given that security has been ordered, I make a costs order nisi that the respondent shall pay the costs of the setting aside application.