HONG KONG INSTITUTE OF EDUCATION v. AOKI CORPORATION

HCCT74/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO.74 OF 2002

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D E C I S I O N

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1. The applicant and respondent are currently involved in two sets of arbitration proceedings. They are the only parties in those proceedings. The same arbitrator, namely Mr John Blackburn QC, has been appointed for both. On 29 August 2002, he made certain directions in respect of both arbitrations. Firstly, he set out a timetable for the service of pleadings. The timetable is similar but not identical for each arbitration. Secondly, he made the following direction in respect of both arbitrations :

" Without prejudice to any application for a determination of any preliminary issue or question by way of interim award, the final hearing in this reference will take place during the 5 week period from 15 September 2003. The duration of the hearing will be fixed by later direction."

2. By this application, the applicant seeks an order, which the arbitrator does not have power to make, under section 6B(1) of Cap.341. Section 6B(1) provides as follows :

" (1) Where in relation to two or more arbitration proceedings it appears to the Court

(a) that some common question of law or fact arises in both or all of them, or

(b) that the rights to relief claimed therein are in respect of or arise out of the same transaction or series of transactions, or

(c) that for some other reason it is desirable to make an order under this section,

the Court may order those arbitration proceedings to be consolidated on such terms as it thinks just or may order them to be heard at the same time, or one immediately after another, or may order any of them to be stayed until after the determination of any other of them."

3. I have been advised, in the course of this application, that if the two arbitrations were heard separately but consecutively the five weeks provided for would be sufficient time although one arbitration might last a little longer than the other. Thus, as the situation presently stands, the arbitrations will follow one immediately upon the other and should be completed within five weeks.

4. By this application therefore, if section 6B(1) is applicable they will be either consolidated or heard together, as contended for by the applicant, or, if it not applicable, they will be heard one immediately after the other, as contended for by the respondent.

5. In Linfield Limited v. Brooke Hillier Parker, HCA7693/2000, Ma J (as he then was) made the following observation concerning the application of section 6B(1) with which I agree and adopt :

" There is therefore a three stage process that the court undertakes in determining applications under section 6B(1). These stages can be summarised by asking the following questions : -

(1) Stage 1 : Are there two or more arbitration proceedings in existence?

(2) Stage 2 : If so, in relation to those arbitration proceedings, do any or more of the factors specified in sub-paragraphs (a)-(c) of section 6B(1) apply?

(3) Stage 3 : If the answers to the above are yes, are there any other relevant considerations or factors that go to the court's discretion whether or not to make the order sought?"

6. I make two additional comments. Firstly, it is not necessary when considering stage 2 to consider sub-paragraphs (a), (b) and (c) of section 6B(1) in relation to each ground as a separate self-contained exercise. Secondly, when considering sub-paragraph (b) namely :

"does it appear to the court that the rights to relief... are in respect of or arise out of the same transaction or series of transactions,"

an over narrow approach should be avoided. It is not the relief claimed which has to appear to be the same, but the rights to that relief. Thus, Rhind J in R.v. Shui On Construction Co. Ltd v. Schindler Lifts (HK) Ltd [1986] HKLR 1177 observed that an order under section 6B(1) could be made even before the pleadings in the arbitrations had been closed. If there is a sufficiency of commonality the court may make an order. Even though there may be significant factual differences, if these differences are plainly outweighed by the common factors then, again, the court may make an order. It may well be that if an order is made on this basis, it will have been under sub-paragraph (c) namely that "it is desirable to do so" because of an accumulation of relevant considerations.

7. In my judgment, this is just such a case. Mr T. Hill, on behalf of the respondent, has carefully pointed out differences. Differences in the terms of the two contracts, differences in the timing of performance and chronology of events and differences in the issues to be resolved. These differences are noted but I am satisfied that they are outweighed by the similarities and common features to such an extent that the discretion should clearly be exercised in the applicant's favour.

8. Examples of such factors, upon which Mr D. Boyle, who appears for the applicant, relies and with which the court agrees, are as follows :

(a) One arbitrator has been appointed to hear both arbitrations.

(b) The chosen arbitrator is most experienced and highly regarded. Any fear that issues relating to one contract or the other, or evidence relating to one issue or another, may become confused is ill founded.

(c) The learned arbitrator has already directed that both arbitrations be heard within a five-week period. This is as far as he could direct without saying that they be heard together.

(d) The arbitrations concern two contracts between the same parties (and no other parties). In respect of both the employer, the main contractor, the architect, the engineer, the mechanical engineer, the quantity surveyor and the project manager are the same.

(e) They are both substantial. The value of the first (referred to as "package B") was worth over $0.25 billion and the second ("packages C and D") over $0.5 billion.

(f) Although there are some differences in the terms of the contracts they are in the same form and have many similarities.

(g) Both contracts relate to buildings on the same educational campus at Tai Po. The first, called "Package B", is the Amenities and Indoor Sports buildings and the Director's lodge. The second, "Packages C and D" is for buildings such as student hostels, staff quarters and headquarters.

(h) The works themselves at the respective sites commenced at similar times in early 1996. At that time only package B was awarded to this respondent. However this respondent took over packages C and D in August 1997 after the termination of the original contractor.

(i) The arbitrations are presently running in tandem and the legal representatives are the same for both, and always have been. The timetable for pleadings is not identical but the respective dates are within weeks of each other.

(j) If heard together there is likely to be a saving of time and cost. There is no direct evidence to this effect but it is a matter of common sense.

(k) A number of likely factual witnesses have been identified. They tend to be "management level" witnesses of, at least, three different nationalities. Eight have been identified by the applicant, as likely to give relevant evidence in respect of both contracts. It is desirable, if appropriate, for them to give their evidence on one occasion rather than two.

(l) The applicant's expert witnesses (one quantity surveyor and one building surveyor) are the same for both contracts. The respondent's position is likely to be the same.

(m) The issue of delay is common to both arbitrations. Not surprisingly, the individual events which allegedly caused delay differ in each arbitration, in each contract and on each site. The facts of each application for an extension of time will obviously be different. However, the factual witnesses, the expert witnesses and the arguments about principles and methodology of calculating delay are common to both. The nature of the pleaded defence is also similar.

(n) Both arbitrations have a counterclaim for loss and expense arising out of prolongation. On this issue an alleged "agreement" is pleaded which is common to both arbitrations.

(o) Again, although the factual background is different, both arbitrations give rise to issues concerning measurement and valuation. Again, the witnesses are the same for both.

(p) Finally, the learned arbitrator will hear the same factual and expert witnesses and apply the same principles of law when considering the allegations of defective workmanship under both contracts. Naturally, separate determinations will have to be made but, taking an overall view of the matter, this does not mean that separate arbitrations should be heard.

9. I am thus satisfied that there is a sufficiency of commonality in the transactions, the issues and the proceedings to merit an order that the two arbitrations be heard at the same time and I so direct. It is always open to the learned arbitrator, as master of his own tribunal, to make such directions as he deems necessary to ensure that the proceedings are heard smoothly and fairly. Mr T. Hill, correctly, asked the court, at the end of the day, to do a balancing act. I have endeavoured to do so.

10. I make a costs order nisi in the applicant's favour on this application.