SWIRE PROPERTIES LTD AND OTHERS v. THE SECRETARY FOR JUSTICE

FACV No. 13 of 2002

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

FINAL APPEAL NO. 13 OF 2002 (CIVIL)

(ON APPEAL FROM CACV NO. 1058 OF 2001)

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J U D G M E N T

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Chief Justice Li:

1. I agree with the judgment of Mr Justice Bokhary PJ.

Mr Justice Bokhary PJ:

Introduction

2. Subject to any exclusion agreement, the High Court (as I will refer to the Court of First Instance of the High Court) has a discretion to grant leave to appeal to it from a domestic arbitral award on any question of law that could substantially affect the rights of one or more of the parties. Section 23 of the Arbitration Ordinance, Cap.341, so provides. The appeal now before this Court is from a decision of the Court of Appeal affirming a decision of the High Court refusing such leave. Extensive arguments have been addressed to us on the question of how our courts ought to approach the exercise of the discretion by which such leave is granted or refused. Before dealing with that, I will begin by outlining the material circumstances of the present case.

3. On 15 January 2001 Sir Christopher Staughton ("the Arbitrator") made a reasoned award ("the Award") in a domestic arbitration upon a claim by the Government against five companies in the Swire group. Then on 9 February 2001, with the consent of the parties, the Arbitrator made and published an addendum to the Award. But this appeal does not turn on anything contained in that addendum.

4. The five companies which I have just mentioned have throughout been referred to collectively as "Swires". That is how I will refer to them. Dissatisfied with the Award, Swires applied to the High Court for leave to appeal to that court on a question of construction ? and therefore of law ? arising out of the Award. Swires contended that the Arbitrator had erred on that question of law and that his error thereon had adversely affected their rights to a substantial extent. On 7 May 2001 Burrell J refused leave to appeal. And on 11 June 2002 the Court of Appeal (Rogers VP and Le Pichon and Yeung JJA) dismissed Swires's appeal against that refusal. By leave of the Court of Appeal, Swires now appeal to this Court in a final attempt to obtain leave to appeal to the High Court from the Award.

5. A sum of about $4.5 billion appears to be at stake. For, as we shall see in greater detail in due course, the Arbitrator declared that Swires were liable to pay premium and premium interest to the Government. And by one estimate, the premium and premium interest payable may well eventually be assessed at about $3 billion and $1.5 billion respectively if the Award stands. All of that is financially significant. What is legally significant is that the question of the correct approach to be adopted under s.23 of the Arbitration Ordinance has never reached this Court before. This is the first time that the Court of Appeal has granted leave to appeal to us from a decision of its upholding a refusal by the High Court of leave to appeal from an arbitral award. It may well prove to be the last time, too, now that we have had an opportunity to deal with the correct approach under s.23.

6. Shortly stated, the background to the dispute which led eventually to the arbitration is as follows.

Background

7. There used to be a dockyard at Quarry Bay. Swires's Taikoo Shing project consists of a residential and commercial redevelopment of that dockyard. The land so redeveloped ("the Land") is an aggregation of the parcels of land held by Swires from the Government under four leases ("the Leases") granted during the years 1907 to 1940. The Leases had been Crown leases prior to the 1 July 1997 handover but are now Government leases.

8. Originally the Leases contained no contractual restriction on development. Development of the Land was therefore governed solely by the relevant legislation of general application. But on 12 December 1975 the Leases were varied by four deeds of variation ("the Deeds of Variation") executed on that date. On the face of the Deeds of Variation development of the Land was contractually restricted. Residential development was restricted to a maximum of 8,972,400 sq ft of gross floor area ("gfa"). Non-industrial and non-residential development ? which effectively means commercial development ? was restricted to a maximum of 3,642,912 sq ft of gfa. It is unnecessary to detail the other terms of the Deeds of Variation. As one would expect with any bargain, there was give and take on both sides. For example, Swires surrendered certain marine rights to the Government but gained a filtered water supply at Government expense.

9. By 1985 much if not almost the whole of Taikoo Shing had been built. Many if not most of the completed premises had been sold. Some of them were retained by Swires. The blocks which came to be called Horizon Gardens were being built. But there was a problem. The Taikoo Shing project called for 10,288,400 sq ft of residential gfa. This meant (10,288,400- 8,972,400) 1,316,000 sq ft more residential gfa than permitted on the face of the Deeds of Variation. Unless it was solved this problem could have led to, among other difficulties, objections to title by purchasers of pre-sold premises. So Swires negotiated with the Government for the necessary increase of 1,316,000 sq ft of residential gfa ("the Residential Increase").

10. By a letter dated 6 November 1985 from Mr R. Nissim, the District Lands Officer for Hong Kong North, the Government indicated that it would be agreeable to the Residential Increase provided that there was a decrease of commercial gfa. Eight months later the Government clarified its position. By a letter dated 23 June 1986 from Mr Nissim, it offered Swires the Residential Increase in return for a premium of $178 million and a reduction of 1,974,000 sq ft of commercial gfa. This figure of 1,974,000 was reached by treating two square feet of residential gfa as equivalent in value to three square feet of commercial gfa. Two-thirds of 1,974,000 is 1,316,000, which is the size of the Residential Increase. By a letter dated 25 June 1985, Swires rejected the Government's offer contained in Mr Nissim's letter of 23 June 1986. But three months later Swire Properties Ltd, being one of the five companies to which I refer collectively as Swires, executed a deed and undertaking ("the Deed and Undertaking"). This document is undated, but it is common ground that it was executed on or shortly before 26 September 1986.

11. Various matters are referred to in the recital to the Deed and Undertaking. These include: the restriction which the Deeds of Variation appear to put on how much residential development can be built on the Land; briefly why the Residential Increase was considered necessary; and the letters of 6 November 1985 and 23 and 25 June 1986. Paragraph 9 of this recital stated that:

"The [Director of Buildings and Lands ('the Director')] has agreed to give such consent in writing in consideration of Swire Properties Limited ('Swire') ... giving this Undertaking to inter alia pay the premium of $178 million or such other sum which is finally determined to be payable for such consent and Swire has agreed to give this Undertaking in manner hereinafter appearing."

12. The undertaking given by Swire Properties Ltd in the Deed and Undertaking reads:

"In consideration of [the Director] giving consent in writing under the said four Deeds of Variation to increase the total Gross Floor Area of the buildings designed and intended for residential purposes on the Taikoo Shing Estate Lands, from 8,972,400 square feet to 10,288,400 square feet, we undertake to pay the premium of $178 million or such other sum as is agreed between Swire and Government and to procure a modification of the said Deeds of Variation to stipulate the new residential and the commercial Gross Floor Area in so far as they apply to those part of the Taikoo Shing Estate Lands still in our ownership and which could still be developed, by the erection of residential and commercial units."

13. By a letter dated 26 September 1986 to Swire Properties Ltd, Mr Nissim, writing on the Director's behalf, said that the original of the Deed and Undertaking was being kept in his safe. Mr Nissim also said:

"You have requested my consent to an increase in the residential gross floor area permitted under the Crown leases as varied by four deeds of variation in respect of the above mentioned development.

I confirm that the condition imposed by me on the giving of such consent having been satisfied, I consent to an increase in the residential gross floor area from 8,972,400 square feet to 10,288,400 square feet which increase comprises the nine blocks of residential flats known as 'Horizon Gardens'."

It is obvious that Mr Nissim was referring to the execution of the Deed and Undertaking when he said in this letter that the condition imposed by the Government for its consent to the Residential Increase had been satisfied.

The arbitration

14. The Taikoo Shing project continued and was eventually completed. But a dispute arose between the parties over the implementation of the arrangements into which they had entered. By a deed dated 21 December 1998 ("the Deed of Submission to Arbitration") they submitted that dispute to arbitration. So this was an ad hoc arbitration.

15. As far as the premium payable for the Residential Increase is concerned, Swires contended that it was $151 million rather than $178 million. The Government was content to limit its claim under this head to $151 million. And the Arbitrator accordingly awarded $151 million under this head. Swires do not seek ? and have never sought ? leave to appeal from this part of the Award. What they seek ? and have throughout sought ? is leave to appeal from the part of the Award relating to breach of commercial gfa restriction.

16. The issue of breach of commercial gfa restriction is the subject-matter of clause 6 of the Deed of Submission to Arbitration. This clause provides that Swires would be obliged to pay premium and premium interest to the Government if the commercial gfa built on the Land exceeded any restriction which had been in force and effect immediately prior to the development which exceeds that restriction. Swires had built 3,271,795 sq ft of commercial gfa on the Land. Was this a breach of commercial gfa restriction? In the arbitration, Swires argued that building 3,271,795 sq ft of commercial gfa on the Land was within their entitlement. The Government argued that Swires had exceeded their entitlement by building that much commercial gfa on the Land.

17. These rival arguments call for some explanation. Swires's argument may be said to have consisted of two points. The first (which I will call "the 7.7 million sq ft point") ran thus. The limit of 3,642,912 sq ft of commercial gfa set by the Deeds of Variation was ineffective. Swires were actually entitled to the 7.7 million sq ft of commercial gfa permitted under the Buildings Ordinance, Cap. 123. They were so entitled by virtue of a right to rectification of the Deeds of Variation or by virtue of a collateral contract with, an estoppel against or a waiver or acquiescence by the Government. Swires's second point (which I will call "the no reduction point") ran thus. Even failing the 7.7 million sq ft point, Swires would still have been acting within their entitlement in building 3,271,795 sq ft of commercial gfa. This was because the Deed and Undertaking did not reduce the 3,642,912 sq ft of commercial gfa permitted by the Deeds of Variation.

18. The Government countered both of Swires's points by arguing thus. The Deeds of Variation effectively restricted the amount of commercial gfa that could be built on the Land to 3,642,912 sq ft. The Deed and Undertaking had the effect of reducing that by what had been proposed in Mr Nissim's letter of 23 June 1986, namely 1,974,000 sq ft of gfa. That restricted Swires to (3,642,912-1,974,000) 1,668,912 sq ft of commercial gfa. So by building 3,271,795 sq ft of commercial gfa, Swires exceeded that restriction by (3,271,795-1,668,912) 1,602,883 sq ft of gfa.

19. Rejecting Swires's argument, the Arbitrator declared that Swires "are liable for premium and premium interest to the Government pursuant to clause 6 of the Deed of Submission to Arbitration". As to the extent by which commercial gfa had been exceeded, the Arbitrator said this (in paragraph 118 of the Award): "The extent of the excess is, as it seems to me, (1) the sum of 1,626,371 square feet set out in paragraph 99 less (2) the 23,488 square feet remaining in paragraph 97 but plus (3) the amount of further redevelopment (if any) carried out at Mount Parker House and Citiplaza 1 as also mentioned in paragraph 99." The paragraphs to which the Arbitrator there referred are paragraphs of the Award. There is no need to go into them. The difference between 1,626,371 and 23,488 is 1,602,883. This is the figure which I mentioned at the end of the preceding paragraph of this judgment.

20. The Deed of Submission to Arbitration made provision for how the amount of any premium payable was to be determined if the parties were unable to reach agreement thereon through negotiations. In that event, it provided, such amount would be determined by experts (as expert determiners or valuers and not arbitrators). And in the Award the Arbitrator said: "This Award is FINAL as to what it decides, subject only to the provisions of the Arbitration Ordinance. At the request of the parties I RESERVE for myself the power to make a further Award or Awards in relation to costs (including the costs of this Award), and interest, and the Relevant Date as defined in the Deed of Submission to Arbitration, and all other matters which I may in the future be required to decide pursuant to the said deed." The "Relevant Date" is defined in the Deed of Submission to Arbitration to mean "in relation to any breach of a Commercial GFA Restriction which is found to have been committed by [Swires] (as determined by the Arbitrator and in terms of any Award), the date upon which the relevant Commercial GFA Restriction was broken (as so determined)".

21. In addition to the Arbitrator's declaration in respect of commercial gfa, there is his declaration that $151 million is due to the Government from Swires in respect of the Residential Increase. But as I have said, Swires do not seek ? and have never sought ? leave to appeal from any part of the Award other than the part relating to breach of commercial gfa restriction.

The application to the judge

22. When applying to Burrell J for leave to appeal from the Award, Swires did not pursue the 7.7 million sq ft point. And they recast the no reduction point so as to turn it into what I will call "the premium option point". The gist of the premium option point was that Swires had an option to pay a premium rather than suffer a reduction of 1,974,000 sq ft of commercial gfa. It would appear that at one stage of the negotiations in the mid-1980s there had been a proposal for a premium of $400 million without any reduction of commercial gfa. And it was Burrell J's understanding that Swires were arguing before him that they had an option to pay a premium of $400 million instead of paying a lesser premium but suffering a reduction of commercial gfa. Looking at Swires's Originating Notice of Motion, one sees that the question of law on which they asked Burrell J for leave to appeal from the Award was whether the Arbitrator had erred in law in holding that they were contractually bound to suffer a reduction of the commercial gfa which they were entitled to build under the Leases and Deeds of Variation.

The appeal to the Court of Appeal

23. Having failed to obtain leave from Burrell J to appeal from the Award on that question of law, Swires then went to the Court of Appeal. And there they sought leave to appeal from the Award on what the Court of Appeal saw as a different question of law. Rogers VP, with whose judgment Le Pichon JA was content simply to agree, said that the argument put forward on Swires's behalf was "that [they] had an obligation to procure modifications of the Deeds of Variation namely to sacrifice 1.9m sf gfa of commercial development but that there was no immediate obligation on [them] to surrender the 1.9m sf gfa, such obligation would only arise once there was settlement of the dispute between [them] and the Government as to whether [they] were entitled to 7.7m sf gfa of commercial development or only 3.6m sf gfa". Whether the Arbitrator had erred in failing to so hold was the question of law which the Court of Appeal understood to be the one on which Swires asked it for leave to appeal from the Award.

Outline of the rival arguments on construction advanced in the present appeal

24. In their printed case, Swires give the following outline of their argument to this Court on the question of construction ? and therefore of law ? on which they seek leave to appeal from the Award:

"All that was promised and agreed by the terms of [the Deed and Undertaking] was that in return for [the Government's] formal consent for additional residential development at Horizon Gardens, [Swire Pacific Ltd] (1) as the substantial parent company of the 5th Appellant (then named Taikoo Shing Developments Limited) would pay $178 m. or whatever sum was eventually agreed to be the premium payable for that consent, and (2) in due course, when called upon to do so, would procure itself and the other land proprietors to execute deeds of modification to [the Deeds of Variation] under seal to stipulate new limits for residential and commercial development after those new limits had been agreed with [the Government] (or presumably, otherwise determined)."

25. The Government resists the appeal on the principal basis that the Arbitrator's construction is obviously right or at least not obviously wrong. In addition, the Government also resists the appeal on a number of other bases, which I will identify later.

The approach to the exercise of the discretion: generally

26. How ought our courts to approach the exercise of the discretion by which leave to appeal from a domestic arbitral award on a question of law is granted or refused? The Law Reform Commission's recommendation which led to the enactment of s.23 of the Arbitration Ordinance was made in its Report on Commercial Arbitration dated 11 December 1981. (This was five months after the House of Lords gave its decision in The Nema [1982] AC 724 on 16 July 1981).

27. There has never been any difference between our statutory regime and the one in England under the Arbitration Act 1979 as far as leave to appeal from an arbitral award to the High Court is concerned. As far as such leave is concerned, therefore, our statutory regime is the same as the one which governed the position in England at the time of the House of Lords' decisions in The Nema and The Antaios [1985] AC 191.

28. Before the 1 July 1997 handover our courts (acting pursuant to the decision of the Privy Council in de Lasala v. de Lasala [1980] AC 546 at p.558C) accorded to House of Lords decisions on English legislation that we copied "the same practical effect as if they were strictly binding". Thus the Nema-Antaios guidelines (by which I mean the guidelines laid down in The Nema and reinforced in The Antaios) were followed by our courts. For example, they were followed by the Court of Appeal in Attorney General v. Technic Construction Co. Ltd [1986] HKLR 541 and In re PT Dover Chemical Co. and Lee Chang Yung Chemical Industry Corp [1990] 2 HKLR 257.

29. Before dealing with those two decisions of the Court of Appeal, it is necessary to explain two expressions used in them. These are the expressions "one-off" and "standard". Construction being a matter of law, a question of law arises whenever the true construction of a contract is in dispute. Some of these disputes will be "one-off" disputes. A "one-off" dispute, as Lord Donaldson MR put it in The Kelaniya [1989] 1 Lloyd's Rep. 30 at p.32, is a dispute "in which the general market and the Commercial fraternity has no interest". The resolution of a "one-off" question of construction merely affects the rights and liabilities of the parties to the contract concerned. It will be of no general legal interest. But where the true construction of a standard clause is in dispute, the resolution of the question of construction involved will be a matter a general legal interest ? sometimes great general legal interest.

30. The headnote of the report of the PT Dover case says that it did not follow the Technic case. What that is meant to indicate is this. In the Technic case (at p.548G-H) Roberts CJ, giving the judgment of the court, said that "it is the task of a judge, before whom an application for leave is made, to categorize a dispute either as a one-off dispute or as a standard dispute". But subsequently in the PT Dover case (at pp 262C-264C) Hunter JA (basing himself on the decisions of the Court of Appeal in England in Aden Refinery Co. Ltd v. Ugland Management Co. Ltd [1987] QB 650 and Ipswich Borough Council v. Fisons Plc [1990] Ch 709) saw the correct approach differently from how it had been seen in the Technic case. Hunter JA, with whose judgment the other members of the court in the PT Dover case agreed, said that categorizing the dispute was not the correct approach. Instead, he said, the correct approach was to locate the dispute's position in a scale at the top of which, where the presumption of finality was the strongest, were "one-off" disputes. Despite this difference between the Technic and PT Dover cases, what the Court of Appeal sought to do in each case was the same, namely to follow the Nema-Antaios guidelines as it understood them.

31. At the risk of over-simplification, one might say that what Lord Diplock said in The Nema comes to essentially this: leave should not normally be given in "one-off" disputes unless the arbitral tribunal's construction is "obviously wrong"; but leave can sometimes be given in "standard clause" disputes as long as there is at least "a strong prima facie case" that the arbitral tribunal's construction is wrong. Summaries have their merit. But over-simplification is not a risk that ought to be run in this context. So I propose to quote the whole of the passage from Lord Diplock's speech in The Nema which I have in mind. It appears at pp 742H-743F:

"Where, as in the instant case, a question of law involved is the construction of a 'one-off' clause the application of which to the particular facts of the case is an issue in the arbitration, leave should not normally be given unless it is apparent to the judge upon a mere perusal of the reasoned award itself without the benefit of adversarial argument, that the meaning ascribed to the clause by the arbitrator is obviously wrong. But if on such perusal it appears to the judge that it is possible that argument might persuade him, despite first impression to the contrary, that the arbitrator might be right, he should not grant leave; the parties should be left to accept, for better or for worse, the decision of the tribunal that they had chosen to decide the matter in the first instance. The instant case was clearly one in which there was more than one possible view as to the meaning of the 'one-off' clause as it affected the issue of divisibility. It took two days' argument by counsel before the learned judge to satisfy him that the arbitrator was wrong on this and upon the interdependent question of frustration, four days' argument before the Court of Appeal to convince them that the judge was wrong and the arbitrator right and over three days' argument in trying to persuade this House to the contrary, even though it was not found necessary to call upon the respondent to address us on the merits. Even apart from the reasons special to this case mentioned at the outset, which led Mocatta J. and Donaldson J. to conclude that it was a case in which no court would grant leave to appeal from the arbitrator's award, it is in my view typical of the sort of case in which leave to appeal on a question of construction ought not to be granted.

For reasons already sufficiently discussed, rather less strict criteria are in my view appropriate where questions of construction of contracts in standard terms are concerned. That there should be as high a degree of legal certainty as it is practicable to obtain as to how such terms apply upon the occurrence of events of a kind that it is not unlikely may reproduce themselves in similar transactions between other parties engaged in the same trade, is a public interest that is recognised by the Act particularly in section 4. So, if the decision of the question of construction in the circumstances of the particular case would add significantly to the clarity and certainty of English commercial law it would be proper to give leave in a case sufficiently substantial to escape the ban imposed by the first part of section 1 (4) bearing in mind always that a superabundance of citable judicial decisions arising out of slightly different facts is calculated to hinder rather than to promote clarity in settled principles of commercial law. But leave should not be given even in such a case, unless the judge considered that a strong prima facie case had been made out that the arbitrator had been wrong in his construction; and when the events to which the standard clause fell to be applied in the particular arbitration were themselves 'one-off' events, stricter criteria should be applied on the same lines as those that I have suggested as appropriate to 'one-off' clauses."

32. In The Antaios at pp 203H-204B Lord Diplock ? whose view was accepted by the other Law Lords, just as it had been in The Nema ? said:

"My Lords, I think that your Lordships should take this opportunity of affirming that the guideline given in The Nema [1982] A.C. 724, 743 that even in a case that turns on the construction of a standard term, 'leave should not be given ... unless the judge considered that a strong prima facie case had been made out that the arbitrator had been wrong in his construction,' applies even though there may be dicta in other reported cases at first instance which suggest that upon some question of the construction of that standard term there may among commercial judges be two schools of thought. I am confining myself to conflicting dicta not decisions. If there are conflicting decisions, the judge should give leave to appeal to the High Court, and whatever judge hears the appeal should in accordance with the decision that he favours give leave to appeal from his decision to the Court of Appeal with the appropriate certificate under section 1(7) as to the general public importance of the question to which it relates; for only thus can be attained that desirable degree of certainty in English commercial law which section 1(4) of the Act of 1979 was designed to preserve."

33. As is well known, the Arbitration Act 1979 has been replaced by the Arbitration Act 1996. Section 69(3) of the 1996 Act, which lays down statutory criteria replacing the Nema-Antaios guidelines in England, provides that:

"Leave to appeal shall be given only if the court is satisfied((a) that the determination of the question will substantially affect the rights of one or more of the parties, (b) that the question is one which the tribunal was asked to determine, (c) that, on the basis of the findings of fact in the award((i) the decision of the tribunal on the question is obviously wrong, or (ii) the question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and (d) that, despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the court to determine the question."

Item (c) of this section obviously reflects the recommendation made in para. 288 of the February 1996 Report of the Departmental Advisory Committee on Arbitration Law chaired by Saville LJ (now Lord Saville of Newdigate). In this paragraph the Committee recommended as follows:

"The test we propose is whether, in the ordinary case, the Court is satisfied that the decision of the tribunal is obviously wrong." ... Where however "the matter is one of general public importance, the test is less onerous, but the decision must still be open to serious doubt."

34. The 1996 statutory criteria and the Nema-Antaios guidelines were compared and contrasted by the Court of Appeal in England very recently. This was in the case of CMA SA v. Beteilingungs-KG MS "Northern Pioneer" [2003] 1 WLR 1015. Giving the judgment of the court, Lord Phillips of Worth Matravers MR observed (at p.1025B-C) that the statutory criteria are strongly influenced by the Nema-Antaios guidelines, but do not follow them entirely, and "open the door a little more widely to the granting of permission to appeal than the crack that was left by Lord Diplock". That last observation is based on the words "at least open to serious doubt" in s.69(3)(c)(ii) of the 1996 Act. These words, the Master of the Rolls said (at p.1039F-G):

"... impose a test which is broader than Lord Diplock's requirement that permission to appeal should not be given 'unless the judge considered that a strong prima facie case had been made out that the arbitrator had been wrong in his construction'. Section 69(3)(c)(ii) is consonant with the approach of Sir John Donaldson MR in The Antaios [1983] 1 WLR 1362."

35. Since the dispute concerned in the present case is of the "one-off" type, the disposal of the present appeal does not require a decision as to what approach our courts ought to adopt where other types of dispute are concerned. But lest I otherwise create an impression to the contrary, I should say this. The absence of a statutory provision like s.69(3)(c)(ii) of the 1996 Act does not render irrelevant a serious doubt as to an arbitral award's correctness on a question of law of general public importance or the construction of a standard clause. It is open to us to take the view that such a doubt is normally a good reason for the High Court to exercise its discretion in favour of granting leave to appeal from an arbitral award. Taking that view would be no more than preferring one line of judicial thinking to another on the true effect of a statutory provision which we do have. In other words, it would be no more than preferring the thinking of Sir John (later Lord) Donaldson MR and those who agreed with him to that of Lord Diplock and those who agreed with him. As Lord Phillips of Worth Matravers MR said (at p.1039G-H in the CMA SA case), that particular guideline of Lord Diplock's "was calculated to place a particularly severe restraint on the role of the commercial and higher courts in resolving issues of commercial law of general public importance". I see no reason to hide the fact that I do not think that s.23 of the Arbitration Ordinance can have the effect of imposing that restraint on our courts.

36. As to the approach which he adopted in the present case, Burrell J said:

"The Hong Kong case which lays down the applicable test is [the PT Dover case], the 'PT Dover' test. The burden placed on the applicant varies depending on the nature of the issue. Both sides in this case agree that this is a 'one-off' issue which means that leave should only be granted if the applicant can show that the arbitrator was plainly wrong, or 'so obviously wrong as to preclude the possibility that he might be right'. Lord Donaldson in The Kelaniya [1989] Lloyd's Rep p 32 described it as follows 'The court will only intervene if it can be demonstrated quickly and easily that the arbitrator was plainly wrong'. The presumption of finality is at its highest when the issue is a 'one-off' issue, the parties had agreed to an ad hoc arbitration and the applicant's chose a legally qualified arbitrator of the highest calibre. Such is the position in this case."

And he was of the view that Swires "have not reached nor have they threatened the required threshold before [the High Court] would grant leave to appeal".

37. When the present case reached the Court of Appeal, Mr Michael Thomas SC for Swires referred to the decision of the Court of Appeal of New Zealand in Gold and Resource Developments (NZ) Ltd v. Doug Hood Ltd [2000] 3 NZLR 318. Rogers VP said this about that case:

"In my view, this appeal must fail. Sight should not be lost of the fact that this is an appeal against the exercise of a discretion by the judge below. The judge below correctly set out the law and applied it correctly. In this respect Mr Thomas reserved, for possible argument in another court, the argument that the test that should be applied in Hong Kong was not that set out in PT Dover case but was one to be gleaned from the decision in Gold and Resource Development (NZ) Limited v. Doug Hood Limited [2000] 3 NZLR 318. The test applied in that case appears to have been one as to whether the argument was 'very strongly arguable'. The subtlety of the distinction between the two tests would be entirely lost whether on the arguments in the court below or in this court. The arguments would have failed in both courts on either test. There is, in my view, no basis for disturbing the exercise of Burrell J's discretion."

38. In this Court, Swires have advanced the argument which Mr Thomas had reserved in the Court of Appeal. This is the argument that some test easier to meet than the one followed in that court's decision in the PT Dover case ought to be applied. Mr Thomas left this argument to Mr Paul Shieh SC. In advancing it Mr Shieh placed heavy reliance on the Gold and Resource case.

39. The statutory regime with which the Court of Appeal of New Zealand was concerned in the Gold and Resource case appears to be very similar to the one under s.23 of our Arbitration Ordinance. For the key provisions of the New Zealand statutory regime were these:

" (1) ... any party may appeal to the High Court on any question of law arising out of an award -

(a) If the parties have so agreed before the making of that award; or

(b) With the consent of every other party given after the making of that award; or

(c) With the leave of the High Court.

(2) The High Court shall not grant leave under subclause (1)(c) unless it considers that, having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more of the parties."

A further illustration of the similarity between our statutory regime, the English one under the 1979 Act and the New Zealand one is to be found in Trustees of Rotoaira Forest Trusts v. Attorney General [1998] 3 NZLR 89. In that case Elias J (as the present Chief Justice of New Zealand then was) cited the P T Dover case as well as English cases.

40. In the Gold and Resource case the Court of Appeal of New Zealand, in a judgment given by Blanchard J for the court, laid down guidelines on how the discretion by which leave to appeal from an arbitral award on a question of law ought to be granted or refused once the condition that the question could substantially affect the rights of the parties was met. These guidelines appear at pp 333-335 of the report of that case. The guideline on which Mr Shieh laid particular stress is the first one, which is expressed thus (at p.333):

"The Court should consider in a preliminary way ... the strength of the argument that there has been an error of law and the nature of that point. If it is a one-off point, in the sense that it is unlikely to occur again and cannot be seen as having any precedent value, either generally or to the parties on another occasion, then unless there are very strong indications of error leave should rarely be given. In other cases, the Court will be looking for a somewhat less stringent assessment. In those cases a strongly arguable case would normally be required for leave to be granted. The existence of conflicting decisions will also be relevant.

We have put the matter in this way not to indicate any basic departure from The Nema guidelines but because we are not comfortable with the conclusory way in which Lord Diplock expressed himself in stating when leave ought to be given in respect of an alleged one-off error of law. To say that the Judge must be persuaded that the award is 'obviously wrong' seems to us, with respect, to be inappropriate. Plainly the House of Lords in The Nema considered that the granting of leave in respect of an alleged one-off error should not be a common event, but, while that can be accepted, we think it is better to say that what must be shown, on a preliminary view, is that the applicant has a very strongly arguable case that the arbitral tribunal has erred in law. So, instead of speaking of a 'strong prima facie case that the arbitrator was wrong' or 'obviously wrong', which are only labels intended to indicate that there is a high or very high threshold, we would, without intending any lowering of the barrier faced by an applicant for leave, substitute a test of a strongly or very strongly arguable case."

41. Mr Shieh advanced a number of points. One of the things for which he argued is the adoption of a "strongly arguable case" test for a case like the present one. But it is to be observed that for a "one-off" dispute, which is what the present case concerns, the guideline favoured by the Court of Appeal of New Zealand is "a very strongly arguable case" (Emphasis supplied). It is also to be observed that that guideline was not intended by the Court of Appeal of New Zealand to lower "the very high threshold" set by the "obviously wrong" guideline laid down by the House of Lords in The Nema. The word "very" was used by the Court of Appeal of New Zealand for a reason. It was used to distinguish between "one-off" disputes of little or no precedent value from disputes of precedent value. This raises the question whether there is more than a single test to be derived from s.23 of the Arbitration Ordinance.

42. Before addressing that question, I would observe that whether or not one actually adopts their use of the word "arguable", the Court of Appeal of New Zealand's use of that word is instructive. For it serves as a useful reminder that, however high the test or threshold, the context is still only one of whether there is to be an appeal rather than one of how the appeal, if there is to be an appeal, is to be decided after full argument.

43. Once it arises, the High Court's discretion to grant leave to appeal from a domestic arbitral award on a question of law is free from express fetter. But it must be exercised in conformity with the purpose of the statute conferring it. This purpose involves a strong inclination to hold people to their choice of arbitration. But this inclination does not attribute to parties an unqualified willingness, or impose on them an absolute obligation, to accept errors of law. Nor does it ignore the important public interest which is served by the courts authoritatively developing the law and bringing uniformity to the understanding of standard clauses. Where a question of law of general public importance or the construction of a standard clause is involved, I think that our courts should normally grant leave to appeal from an arbitral award when, but only when, there is at least a serious doubt as to its correctness. This caters for the public interest to which I have just referred. As it seems to me, the concept of serious doubt is the naturally apposite one. Certainty (i.e. freedom from serious doubt) on these matters is obviously in the public interest.

44. The position is different where the construction of a "one-off" clause is in question. Conceptually I do not consider it necessary to analyse this difference as one which, strictly speaking, creates more than one test or threshold under what is after all a single statutory discretion free from any express fetter. The difference is a practical one. It goes to the exercise of the discretion in a particular sort of situation. And it springs naturally from the fact that where a "one-off" clause is concerned, the statutory policy inclination to hold people to their choice of arbitration is not to any extent off-set by a countervailing public interest.

45. In regard to "one-off" clauses, Mr Iain Milligan QC for the Government argued for the retention in Hong Kong of the approach under which the court asks itself whether the arbitral tribunal's construction appears to be obviously wrong. He pointed to its wide acceptance in major common law jurisdictions around the world. In this connection, I should mention that this aspect of the law does not appear to have come before the High Court of Australia. But it is instructive to look at three decisions of the Court of Appeal of New South Wales (Qantas Airways Ltd v. Joseland & Gilling (1986) 6 NSWLR 327, Promenade Investments Pty Ltd v. State of New South Wales (1992) 26 NSWLR 203 and Natoli v. Walker (CA 40351/93, 26 May 1994)) and at one decision of the Appeal Division of the Supreme Court of Victoria (Leighton Contractors Pty Ltd v. Kilpatrick Green Pty Ltd [1992] 2 VR 505). Looking at those cases, it would appear that the Australian experience has been that something akin to the Nema-Antaios approach to "one-off" clauses is preferable to a looser approach.

46. Where the construction of a "one-off" clause is involved, I think that our courts should normally grant leave to appeal from an arbitral award when, but only when, the arbitral tribunal's construction appears to be obviously wrong. Then, but only then, would it normally be just and proper to permit an appeal in a "one-off" case. I would add that, having regard to the speed and finality at which arbitration is aimed, it is to be expected that a refusal by the High Court of leave in a "one-off" case would normally prove difficult to upset on appeal.

47. Of course none of the foregoing is to deny that each case ? whether it concerns a question of law of general public importance, the construction of a standard clause or the construction of a "one-off" clause ? will have its own particular features bearing upon the discretion to grant or refuse leave to appeal from an arbitral award.

48. Before leaving this part of the case, I should mention the point which Mr Shieh developed on the foundation of the statement by Robert Goff J (as Lord Goff of Chieveley then was) in The Oinoussian Virtue [1981] 1 Lloyd's Rep. 533 at 538 that "the difference between arbitrator and Judge is not one of competence or experience, but of function". Without otherwise commenting on that case, I would simply say that I regard Mr Shieh as right in his submission that the fact of an arbitrator being an eminent lawyer in no way lessens a court's duty to give proper consideration to whether or not leave to appeal from his or her award should be granted. But, as Mr Milligan rightly pointed out, the fact of an arbitrator being a competent lawyer does preclude one factor that sometimes weighs in favour of granting leave to appeal from an arbitral award. This is the factor that arises where the parties choose an arbitrator for expertise in a field other than law, and then a question of law crops up in the arbitration. It does not arise in the present case.

Where the question of law is a new one

49. One particular feature of a case may be that the question of law on which leave to appeal from an arbitral award is sought had not been canvassed before the arbitral tribunal. In England today s.69(3)(b) of the 1996 Act provides that leave to appeal from an arbitral tribunal's award on a question of law shall be given only if the High Court is satisfied "that the question is one which the tribunal was asked to determine". But our s.23, like s.1 of the 1979 Act, empowers the High Court to grant leave to appeal from an arbitral award on "any question of law arising out of the award". (Emphasis supplied).

50. The English practice on new questions under s.1 of the 1979 Act is discussed in Mustill & Boyd: The Law and Practice of Commercial Arbitration in England, 2nd (1989) where this is at p.609:

"1 The fact that the point was not argued before the arbitrator is not an absolute bar to an appeal. It has to be borne in mind that it is not always possible during the course of argument at a hearing to forecast how the facts will be found and how one should argue the law in relation to them.

2 The fact that the point was not argued must, however, be taken into account in the exercise of the discretion to give or to refuse leave to appeal.

3 Where the failure to argue the point below has had the result that all the necessary facts are not found, this will be a powerful factor against granting leave.

4 Even in such a case it may in very special circumstances be right to remit the award for further facts to be found with a view to granting leave, but this would probably be very unusual.

5 If all the necessary facts have been found, the judge should give such weight as he thinks fit to the failure to argue the point before the arbitrator. In particular, he should have regard, on the one hand, to whether the new point is similar to points that were argued, perhaps a variant of one of those points or a different way of putting it, or, on the other hand, whether it is a totally new and different point."

51. In the context of litigation, the cardinal rule on new points was stated thus by this Court in Flywin Co. Ltd v. Strong & Associates Ltd (2002) 5 HKCFAR 356 at p.369B-C:

"Where a point is taken at the trial, the facts pertaining to it are open to full investigation at the evidence-taking stage of the litigation. That is as it should be. Therefore where a party has omitted to take a point at the trial and then seeks to raise that point on appeal, the position is as follows. He will be barred from doing so unless there is no reasonable possibility that the state of the evidence relevant to the point would have been materially more favourable to the other side if the point had been taken at the trial."

Finality is an objective of litigation and, even more so, of arbitration. So it is only in very rare and exceptional cases that an arbitral award would be remitted for facts to be found on a new question of law with a view to granting leave to appeal on that question.

Giving reasons

52. There is one further matter of law to be mentioned before I revert to the circumstances of the present case. Lord Diplock said in The Antaios at p.205H that "save in the exceptional case in which he does give leave to appeal to the Court of Appeal ..., a judge ought not normally to give reasons for a grant or refusal ... of leave to appeal to the High Court from an arbitral award". In the present case Burrell J referred to that statement by Lord Diplock and said: "However, there have been many changes and developments in arbitration law and procedure since 1985 and I consider it to be a better practice, in Hong Kong at least, to give brief reasons particularly ... where leave is being refused". In my view, this is a matter on which this Court should provide the learned judges of the High Court with guidance.

53. Not long after Burrell J's decision (which was given on 7 May 2001) the Court of Appeal in England gave judgment in North Range Shipping Ltd v. Seatrans Shipping Corp. [2002] 1 WLR 2397 (on 26 March 2002). The effect of that judgment was summarised by Lord Phillips of Worth Matravers MR in the CMS SA case. At p.1027D-E in the CMS SA case the Master of the Rolls said that the effect of the judgment in the North Range Shipping case is that a judge who refused permission to appeal to the High Court from an arbitral award was required by virtue of article 6 of the Convention scheduled to the Human Rights Act 1998 to "give sufficient reasons to enable the losing party to understand why the judge had reached his decision, although ... such reasons could be very short". That article provides, among other things, that everyone is entitled to a fair hearing in the determination of his or her civil rights. Such a guarantee of fairness is also to be found in article 10 of the Hong Kong Bill of Rights, the whole of which Bill of Rights is entrenched by article 39 of our constitution the Basic Law.

54. Strasbourg jurisprudence was extensively discussed in the North Range Shipping case. It was even more extensively discussed in English v. Emery Reimbold & Strick Ltd [2002] 1 WLR 2409 (another decision of the Court of Appeal in England on the duty to give reasons, albeit not in the context of refusing leave to appeal from an arbitral award). I will refer to two Strasbourg cases. In X v. Federal Republic of Germany (1981) 25 DR 240 the European Commission of Human Rights saw no violation of article 6 of the European Convention on Human Rights 1950 in the Federal Court's practice of not giving reasons for refusing to accept an appeal. And in Webb v. United Kingdom (1997) 24 EHRR 73 the Commission saw no violation of that article in the Privy Council's practice of not giving reasons for refusing special leave to appeal.

55. By the time a case reaches any appellate court, it will have been ventilated in the lower court or lower courts. So the appellate court's refusal of leave to appeal without giving reasons would not involve a party losing in the judicial system without ever having been told by any court why he lost. But that is of course precisely what would be involved if the High Court did not give reasons for refusing leave to appeal from an arbitral award. Such a situation would be different from a situation in which an intermediate appellate court refuses leave to appeal without giving reasons. And it would be poles apart from a situation in which a final appellate court refuses leave without giving reasons. In my judgment, article 10 of our Bill of Rights has the result in Hong Kong which the Court of Appeal in England held in the North Range Shipping case that article 6 of their Convention has in England. A Hong Kong judge who refuses leave to appeal to the High Court from an arbitral award should give his reasons, although only very briefly, for such refusal. The constitutional imperative for this is at least as strong here as it is in England.

The Arbitrator's construction of the Deed and Undertaking

56. Reverting to the circumstances of the present case, I will now address the issue between the parties on the effect of the Deed and Undertaking. The Arbitrator, as he said in para. 90 of the Award, saw this as "the most difficult issue in the whole case". Ultimately he accepted the Government's argument that the effect of the Deed and Undertaking was to reduce the amount of commercial gfa that could be built on the Land so as to restrict commercial development thereon to (3,642,912-1,974,000) 1,668,912 sq ft of gfa. He said:

"93. It is tolerably clear what that provision meant in respect of residential development: it was to be increased from 8,972,400 to 10,288,400 square feet, so as to cover the amount that had in fact been built. We know that this increase of 1,316,000 square feet is mathematically equal to two thirds of 1,974,000, which was the reduction in commercial development which Mr Nissim had proposed. Why then did the Deed and Undertaking not state that figure?. It seems to have been at pains not to do so.

94. A possible explanation is that the parties did not want to be too precise as to what the remaining figure for commercial development was. As has been shown, there had been uncertainty and vacillation as to the commercial limit. [Swires's] concern at this stage was to resolve the problem of residential development, to obtain an unimpeachable title to Horizon Gardens so that the flats could be let. It seems to me entirely plausible that the parties deliberately abstained from stating what the revised commercial limit was, in order to avoid having to resolve a problem which did not need to be resolved for the time being.

95. After anxious consideration I conclude that the 1,974,000 square feet reduction in commercial development was to be made under the Deed and Undertaking. I read the obligation of Swire Properties Ltd as one to procure the residential limit to be increased to 10,288,400 square feet, and the commercial limit to be changed to (whatever it was before - 1,974,000) square feet."

57. It will be observed that those paragraphs do not mention the figure of 1,668,912. But as one sees from para. 8.3 of Swires's printed case, the Arbitrator's finding which they attack is his findings of "a new reduced limit on commercial development of only 1.6 msf (i.e. 3.6 msf less 1.9 msf) which is what the Arbitrator has found". (Emphasis supplied). On the footing set out in the paragraphs of the Award which I quoted above, the Arbitrator arrived at his conclusion (stated in para. 118 of the Award which I quoted earlier) that Swires were in breach of Commercial GFA Restriction.

The construction for which Swires contends

58. Mr Thomas submitted that he can make good his attack on the Arbitrator's construction of the Deed and Undertaking even if the onus on him is to make it appear that that construction is obviously wrong.

59. Essentially, Mr Thomas attacked the Arbitrator's construction by setting against it the rival construction for which he argued on Swires's behalf. This rival construction runs essentially thus. All that was undertaken by the Deed and Undertaking is that Swire Pacific Ltd:

(i) would pay the Government $178 million or whatever sum was eventually agreed to be the premium payable for the Residential Increase; and

(ii) would in due course, when called upon to do so, procure itself and the other land proprietors to execute deeds modifying the Deeds of Variation under seal to stipulate new limits for residential and commercial development after those limits had been agreed with the Government or otherwise determined.

The Government's arguments

60. Mr Milligan's principal argument is that the Arbitrator's construction is obviously right or at least not obviously wrong. In addition to that, Mr Milligan advanced a number of other arguments. Mr Milligan's first subsidiary argument ? I use the word "subsidiary" for want of a better word and not to denigrate the argument ? is that the question of law involved in Mr Thomas's argument on the construction of the Deed and Undertaking was raised for the first time when the case reached the Court of Appeal. And Mr Milligan submitted that by that time it was too late to raise that question. Mr Milligan's next subsidiary argument is that, properly analysed, that question does not substantially affect the rights of the parties. And Mr Milligan's final subsidiary argument is that Mr Thomas's argument on construction depends on material which is extraneous to the Award and therefore open to objection for the reasons given by the Court of Appeal in England in The Barenbels [1985] 1 Lloyd's Rep. 528 at p.532.

61. Each of Mr Milligan's subsidiary arguments were developed in some detail. And, also in some detail, Mr Thomas replied to each of them.

Obviously wrong?

62. But what I propose to do now is this. I will assume without deciding that Mr Thomas can overcome all of Mr Milligan's subsidiary arguments. On that assumption, I will put the merits of Mr Thomas's argument on construction against the merits of the Arbitrator's construction. And on that footing, I will consider whether it appears that the Arbitrator's construction is obviously wrong.

63. The Arbitrator, as I have noted, found the construction issue the most difficult issue in the whole case. It was pleaded by the Government ? and admitted by Swires in their pleadings ? that: "The new residential and commercial gross floor area to which the Deed and Undertaking referred comprised [(i) the Residential Increase and (ii)] a commensurately reduced commercial gross floor area, for the purposes of sub-clause 1(1)(b) of the Deeds of Variation, of 1,668,912 square feet (i.e., decreased by 1,974,000 square feet from 3,642, 912 square feet)." Why then, wondered the Arbitrator as we have seen, did the Deed and Undertaking not state that figure of 1,974,000?

64. We have seen the Arbitrator's reference (in para. 94 of the Award quoted above) to "uncertainty and vacillation". Mr Thomas argued that such uncertainty and vacillation should not have been seen by the Arbitrator merely as a plausible reason why the parties abstained from stating what the new limit on commercial gfa was. The Arbitrator should instead, Mr Thomas argued, have seen such vacillation as the obvious reason why no such limit was to be made under the Deed and Undertaking. Even if that is a view which the Arbitrator could have taken, it does not mean that it is a view which he was obliged to take. So let me continue.

65. At one stage Mr Thomas appeared to be emphasing that only Swire Properties Ltd, and not the other companies to which I refer collectively as "Swires", executed the Deed and Undertaking. But in their pleadings Swires admit the paragraph in the Government's pleadings which avers that it was on behalf of those other companies as well as on its own behalf that Swire Properties Ltd covenanted and undertook as it did under the Deed and Undertaking. As Mr Milligan succinctly put it, agency is admitted.

66. Another of Mr Thomas's arguments ran thus. He pointed out that at the time when the Deed and Undertaking was executed, almost 1,668,912 sq ft of commercial gfa had already been built on the Land. And he further pointed out that, as the Government knew, much more commercial development on the Land was in the pipeline. Therefore, argued Mr Thomas, it is inconceivable that Swires could have intended ? and it is likewise inconceivable that the Government could reasonably have understood them to have intended ? unreservedly to acknowledge or bind themselves to a new reduced limit on commercial development of only 1,668,912 sq ft of gfa.

67. But there is a problem with that argument of Mr Thomas's. Where lease conditions restrict the development of land held from the Government to something less than what is permissible under the Buildings Ordinance, such conditions are often modified upon the payment of a modification premium. This is a practice which has been in existence for a very long time. It was well known to developers and their advisers at the time material to the present case and, indeed, even before then. All of this is within the common experience of our courts. Construing the Deed and Undertaking to mean that it set a limit of 1,668,972 sq ft of commercial gfa is not the same as saying that Swires could never under any circumstances build more commercial gfa than that on the Land. All that such a construction would mean is that they could not do so without paying a modification premium. Moreover it can happen that a person, especially if in urgent need of something, would agree to certain terms hoping that he will be able to negotiate a fresh contract on more favourable terms later on. He takes a chance. And unless he manages to negotiate fresh terms and thus achieve a novation, he remains bound by the original terms.

68. Mr Thomas also argued that it would be surprising, if it had been the purpose and intent of the Deed and Undertaking to set a reduced limit of 1,668,972 sq ft of commercial gfa, not to find that clearly stated by express words. There is something in that. But how far does it take Swires? Prominent among the things which experience has taught judges and arbitrators alike is the fact that even experienced parties advised by competent lawyers sometimes omit to spell things out clearly in their contracts. The reasons for this are many and varied. And the consequences depend on the circumstances.

69. There was a matrix of fact in which the Deed and Undertaking had to be construed. Even if one were to ? not that I would ? take the factual matrix of a contract as something narrower than what Lord Hoffmann famously spoke of in Investors Compensation Scheme Ltd v. West Bromwich Building Society [1998] 1 WLR 896 at pp 912H-913E, the factual matrix in the present case would still be vast. The whole panorama was before the Arbitrator ? and vividly, too, since he received all the evidence at first-hand. The search was not for an antecedent agreement later embodied in the Deed and Undertaking. Rather was the search for the true meaning and effect of the Deed and Undertaking construed with due regard to all the circumstances including the commercial reality of the situation at the material time.

70. Swires was in urgent need of the Residential Increase. And for that the Government had shown an interest in exacting a price in terms of a premium and a reduction in commercial gfa. By executing the Deed and Undertaking, Swires got what it urgently needed from the Government. What did the Government get in return? As to that, the Arbitrator's construction seems, if anything, more in tune with commercial reality than the rival construction for which Mr Thomas argued on Swires's behalf. At any rate, the Arbitrator's construction does not appear to be obviously wrong. That, even on its own, is dispositive of the appeal in the Government's favour without any need to reach a conclusion on any of the subsidiary bases on which Mr Milligan has resisted the appeal. Nothing which I have said is meant to cast doubt on the correctness of the Court of Appeal's view that Mr Thomas's question is open to objection as a new question. What I have said is that the question would not avail Swires even if it were not open to that objection.

Result

71. Accordingly, I would dismiss the appeal. As to costs, I would make an order nisi (to become absolute within 21 days in the absence of a written application containing reasons for some other costs order) that the orders for costs below stand, and that the costs of this appeal be to the Government against Swires.

Mr Justice Chan PJ:

72. I agree with Mr Justice Bokhary PJ's judgment.

Mr Justice Clough NPJ:

73. I agree with Mr Justice Bokhary PJ's judgment.

Sir Anthony Mason NPJ:

74. I agree with Mr Justice Bokhary PJ's judgment.

Chief Justice Li:

75. The Court unanimously dismisses the appeal and makes the order nisi as to costs set out in the judgment of Mr Justice Bokhary PJ.