KEN FORWARD ENGINEERING LTD v. WEL TIME HONG KONG LTD

CACV 321/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 321 OF 2002

(ON APPEAL FROM HCCT 47 OF 2002)

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REASONS FOR DECISION

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Hon. Cheung J.A. (giving the reasons for decision of the Court) :

1. We had dismissed the applicant's application for leave to appeal to the Court of Final Appeal. We now give the reasons for our decision.

The proceedings

2. An arbitration award was made against the applicant on 1 March 2002.

3. It is common ground between the parties that the application for leave to appeal against the award under Section 23 of the Arbitration Ordinance (Cap. 341) should be lodged by 25 March 2002.

4. The application for leave to appeal was only lodged on 14 May 2002 which was two days short of being eight weeks out of time.

5. In the application the applicant asked for leave to appeal out of time.

6. Burrell J. refused the application. This Court (Mayo V.P. and Kwan J.) rejected the applicant's appeal against the decision of Burrell J.

Leave to appeal to the Court of Final Appeal

7. The applicant now seeks leave to appeal to the Court of Final Appeal.

The delay

8. Although the arbitration award was available for collection on 1 March 2002, it was only collected by the applicant on 24 April 2002. The explanation given was that it did not have funds to pay for its half share of the fees of the arbitrator. The fee was HK$697,200. The applicant was responsible for half of it.

9. The evidence revealed that the applicant had been awarded a sum of money in respect of another arbitration award that was made in its favour. The applicant received this sum on 3 April 2002. The cheque was cleared on 8 April 2002. The applicant paid its share of the fees on 9 April 2002. The respondent only paid its share on 24 April 2002. It was then that the applicant was able to collect the arbitration award.

The new evidence

10. On the appeal the applicant asked for leave to adduce fresh evidence. The new evidence was concerned with the negligence of the applicant's then solicitors in not advising it that the time of appeal would start to run from the publication of the award on 1 March 2002 and not from its date of collection. The applicant was only made aware of this on 15 May 2002, one day after the application had been made. Earlier on 25 April 2002 the representative of the applicant was advised by its former solicitors that it had 21 days to appeal against the award.

11. This Court refused to admit the evidence on the ground that as apparent from the transcript of the proceedings before Burrell J., the applicant and his counsel were fully aware of this matter at the time of hearing before Burrell J. but had chosen to proceed with the application solely on the basis of the applicant's impecunosity.

12. As to the merits of the appeal, this Court held that Burrell J. was correct not to grant extension of time to appeal to the applicant. Appeal from an arbitration award is on a point of law. The applicant relied on four grounds seeking to demonstrate that the arbitrator was wrong. They were all rejected by this Court. The first was concerned with waiver. The second was in respect of the ambit of the arbitration. The third was on the re-design issue. The fourth was on the delay and disruption issue.

13. This Court held that none of these grounds appeared to have any prospect of success. This being the case this Court held that Burrell J. had rightly exercised his discretion not to grant time to the applicant.

Appeal as of right?

14. The applicant now argues that it is entitled as of right to appeal against the decision of this Court because the arbitration award was for the sum of about HK$17 million. It was related to liquidated damages. As the matter now stands, the applicant has or has effectively lost the appeal against the award.

15. We disagree. Our earlier decision was an interlocutory judgment dealing with the question of extension of time to appeal. Although it was the intention of the applicant to set aside an arbitration award in excess of $1 million, this was not a matter that was in issue before this Court. The issue was simply whether extension of time to apply for leave to appeal should be granted or not. The decision was not final because it would not have the effect, whatever the result of the application, of finally disposing of the controversy between the parties : see B + B Construction Ltd. v. Sun Alliance and London Insurance Plc. [2001] HKLRD 1.

Great general or public importance?

16. The applicant further argues that the matter is one of great general or public importance.

17. First, it concerns general principles in relation to arbitration proceedings. We disagree. The one and only issue is on the extension of time. General principles concerning arbitration are simply not the issue before this Court.

18. Second, the applicant argues that the principles concerning the admission of new evidence and the exercise of discretion on extension of time ought to be examined by the Court of Final Appeal.

19. We also disagree. The principles in these areas are well established. The Ladd v. Marshall principle is still the governing law. In relation to the extension of time to appeal against an arbitration award, the principle is also well established in cases such as Kwan Lee Construction Co. Ltd. v. Elevator Parts Engineering Co. Ltd. [1997] 1 HKC 97 and Wong Pik Ling Kitty v. Crowe Insurance Group (HK) Ltd. [2001] 1 HKC 233. The applicant has not demonstrated that there has been new development which merits the consideration by the Court of Final Appeal. The issue is simply one concerning the exercise of discretion. It is one affecting the position of the immediate parties rather than the general public.

"Or otherwise" ground

20. The applicant finally argues that leave should be granted on the "or otherwise" ground. It is argued that the judgment is demonstrably wrong and grave injustice would result if the Court of Final Appeal does not put matters right.

21. The applicant obviously has to show exceptional circumstances before it can invoke this ground. The exceptional circumstances are that the solicitors who had not advised the applicant properly of the appeal period was the same solicitors who had acted for it at the hearing before Burrell J.

22. At the hearing, the applicant was initially represented by a solicitor. Counsel was only instructed to appear for the applicant in the middle of the application when the respondent's leading counsel had nearly finished her submission. The applicant's counsel submitted that while the solicitor might be aware of the time limit of seeking leave to appeal, it did not necessarily mean that the applicant would have known of it unless it had been "instructed by his solicitor that that was the case." Counsel then proceeded to argue the application on the basis of impecunosity of the applicant.

23. If the applicant's allegation against its former solicitors is correct, then arguably its position would not be protected at the hearing before Burrell J. because it was represented by the same solicitors and the position taken by counsel should not be held against the applicant.

24. However, this Court had also considered the merits of the appeal against the arbitration award and came to view that the applicant did not have any real prospect of success. This being the case the decision of this Court cannot be said to be manifestly wrong which requires the intervention of the Court of Final Appeal.

Conclusion

25. The application was accordingly dismissed with costs to the respondent.