XCHRX SOUTH CHINA MORNING POST PUBLISHERS LTD. v. BINNIE BLACK & VEATCH HONG KONG LTD.

1999, No. CT33

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. In 1992, the applicant relocated its premises to Tai Po. The building housing its premises was custom-built, and the respondent was employed by the applicant as consulting engineer. After the building was complete, the applicant complained that the despatch bay floor slab was defective in that its load bearing capacity was insufficient. The applicant blamed the respondent for this defect, and, in accordance with arbitration clause in the written contract between them, commenced arbitration proceedings. The arbitrator found against the applicant. The applicant now applies for leave to appeal against what it says were errors of law by the arbitrator.

2. A contract between the parties provided for the services to be provided by respondent. In this respect, it is sufficient to say that the arbitrator found that the respondent did not have "a required duty to specify design loadings but, rather, to design to suit the usage which has been supplied by the Client." Clause 4 of the contract provided that the respondent "shall exercise all reasonable skill, care and diligence in the discharge of the services agreed to be performed by it.". Clause 5 is as follows -

5. INFORMATION TO BE SUPLIED TO BINNIE

5.1 The Client shall supply to Binnie, without charge and in such reasonable time as not to cause delay or disruption to Binnie, all necessary and relevant data and information in the possession of the Client, and such assistance as may be reasonably required.

5.2 The Client shall give his decision on all matters properly referred to him for decision by Binnie in such reasonable time as not to cause delay or disruption to Binnie.

3. The arbitration clause is in a usual form. It concludes that "In the absence of manifest error the decision of [the arbitrator] upon the matter in dispute shall be final and binding.".

4. It is convenient to deal with the third question firstly. It is posed by the applicant in this way - "What is the proper construction of paragraph 10.6.6 of the ACI Code?".

5. The ACI Code is a code produced by the American Concrete Institute. This code is not a law binding on the parties or the arbitrator. Nor does it form any part of the contract between the parties so that they would be bound by it, and the arbitrator bound to apply it. It was not used by the respondent, or anyone else involved in the project, for the purpose of designing the slab. It is, I think, best looked at as one would look at a textbook or practitioners' guide in this area. It is no more than a view that the experts and the arbitrator were free to accept or reject. In other words, the code should be treated as part of the expert evidence, and, as such, for the arbitrator to interpret. I do not think it is for me, a layman in this area, to look again at this evidence, and decide whether or not the arbitrator was right in his treatment of it.

6. But, in case I am wrong in that approach, I have looked at what the arbitrator did in relation to the Code, and, as far as I am able to exercise a judgment on this technical subject, I have come to the conclusion that I agree with him. Or, at least, I am certain that I cannot come to the conclusion that he is clearly, obviously or manifestly wrong.

7. The title of the code is "Building Code Requirements for Reinforced Concrete", and it is a report by the American Concrete Institute Committee. Paragraph 10.6.6 reads -

Where flanges of T-beam construction are in tension, part of the flexural tension reinforcement shall be distributed over an effective flange width as defined in 8.10, or a width equal to 1/10 the span, whichever is the smaller. If the effective flange width exceeds 1/10 the span, some longitudinal reinforcement shall be provided in the outer portions of the flange.

8. Mr Pennicott, and Mr Pepper, the expert who gave evidence for the applicant before the arbitrator, want to read paragraph 10.6.6 as saying that only the reinforcement in 1/10 of the span should be counted in calculating the strength of the beam and, therefore, the adequacy of the slab. But, as, in my view, the arbitrator correctly found, this is not what the paragraph says. What the arbitrator found was - "[The paragraph] gives no guidance of the effective flange width, indeed it adopts, by reference, the §8.10 definition and addresses only the location of part (my emphasis) of the flexible tension reinforcement. It does not, as Mr Pepper suggested . . . limit the zone into which the main flexural reinforcement can be spread. . . I construe the Code so as to allow an effective flange width of 3200mm. together with the steel contained within that width.".

9. The arbitrator does not say so, but his interpretation is reinforced by the second sentence of paragraph 10.6.6. Here, the effective flange width did exceed 1/10 span, and some longitudinal reinforcement was provided in the outer portion of the flange; that is, that portion that exceeded 1/10 span. That sentence can be construed only as being solidly against the interpretation proposed by Mr Pennicott and Mr Pepper. The provision cannot be saying that, where the flange exceeds 1/10 span, reinforcement must be provided in the outer portion, but it should then be ignored.

10. Counsel are agreed that, if I were to come to the conclusion that leave to appeal should not be granted on this question, the other two questions fall away because a successful appeal on the other two questions would not help the applicant. Nevertheless, in case this matter goes further, I will give my views on the other questions.

11. The first two of other questions are posed in this way -

Was [the applicant] as a client/employer obliged to inform [the respondent], a professional consultant, of a matter relevant to the latter's duty/obligation of which, ex hypothesi, [the respondent] ought to have knowledge?

Alternatively, whether [the applicant] as a client/employer was entitled to rely on [the respondent], a professional consultant, to carry on the latter's duties and obligations having regard to the matters of which, ex hypothesi, [the respondent] had or ought to have knowledge?

12. The questions are difficult to understand, and admit of giving no useful answer. When one reads the phrase "ex hypothesi", the first question that springs to mind is "On what supposition?". There is no answer to that; no thesis is proposed. Ignoring the unstated thesis, the answer to the questions is - "It depends on the circumstances.", but that is not very helpful. In the context of this case, the questions could, perhaps, be better rephrased in this way - "Was the respondent in breach of its duty to exercise all reasonable skill, care and diligence, where it had no duty to specify design loadings but, rather, to design to suit the usage which had been supplied by the applicant, but it had, or ought to have had, from sources other than the applicant, some knowledge of that usage, and it failed to apply that knowledge?"

13. Even phrased in this more specific way, the answer does not help the applicant because the only answer must be - "That depends on all the circumstances, including, amongst other things, an assessment of the scope of the respondent's duty, whether, on the evidence, a breach was established, the reliability of the sources of the respondent's information, and whether or not it was reasonable for the respondent to rely on that information, which was not supplied by the applicant who had a duty to supply it." Although, of course, the arbitrator must proceed to make his decision on the basis of the law, the question itself is, essentially, a question of fact, and entirely a matter to be decided by the arbitrator without interference by this court.

14. Even if one were to approach the matter as one of law, I have to say, that, after reading the arbitrator's award, I cannot disagree with him. Certainly, I cannot say that he was so clearly, obviously or manifestly wrong so as to justify the granting of leave to appeal.

15. The arbitrator found that the respondent "was not at liberty to rely on anything which was no more than an implied, deduced, suggested, notional or possible usage. It was entitled under the terms of its engagement to firm and timeous information.". The arbitrator came to this conclusion after a careful examination of the evidence. He was clearly of the view that the respondent had not been told in terms sufficiently clear to be acted upon what usage the applicant intended. That is a conclusion, which is one of fact, with which it is impossible to disagree. The arbitrator points out that the respondent was not able to design for more than the applicant required because the respondent was under a duty to design economically; indeed, as the arbitrator says, economy was important to the applicant.

16. The respondent wrote what Mr Pennicott calls "two crucial letters" in February 1993. These letters were written to the project manager, who was the applicant's agent for communication between the applicant and the respondent. The first letter is dated 2 February 1993. It spoke of the proposed sizes of columns, slabs and beams. It then said - "This sizing is based on the following assumed design live loads." There followed the assumption that the live loads for the floor which we are concerned would be 7.5 kPa. The letter then said - "These design loadings should be confirmed by the client.". On 8 February 1993, the respondent wrote a similar letter to the project manager saying - "This sizing is based on the following assumed design live loads which should be confirmed by the client.", and again 7.5 kPa was assumed for the relevant floor.

17. The applicant did not confirm the assumptions mentioned, but did not disagree with them. In fact, the respondent designed to a higher tolerance of 10 kPa on the insistence of the Building authority because this was the figure "commonly adopted in the design of buildings which are accessed by vehicles."

18. Where, as here, a professional engineer makes proposals regarding design, says that these proposals are based on certain assumptions regarding the client's usage of a building, draws these assumptions specifically to the attention of the client, more than once, and the client does not say that the assumptions are mistaken, or in any other way alert the engineer to the possibility that they may be mistaken, I believe the engineer is entitled to proceed on the basis that the client is content with those assumptions. And this is so even if the engineer asks that the assumptions be confirmed by the client. There is no magic in taking instructions from a client; there is no need for these to follow a certain formula. It is as clear as can be that the respondent was saying in essence - "This is the way I intend to proceed. These are my assumptions. Please consider them." Asking a client to confirm the assumptions did not require a letter or a telephone call to say expressly - "Your assumptions are confirmed." The respondent was entitled to conclude that the applicant had considered the assumptions, especially in the light of its duty to supply details of its intended usage, and was content with them. Silence, in this context, was equivalent to assent. At least, silence can be the equivalent of assent, and whether or not it is, in any given set of circumstances involved in an arbitration, is a matter for the arbitrator.

19. In all this, I find that I cannot disagree with the findings of the arbitrator.

20. The last question posed by the applicant reads -

Was [the respondent], a professional consultant, who sought specific confirmation of a matter relevant and important to their commission, entitled to proceed despite not having received confirmation alternatively were [the respondent] entitled to assume that lack of confirmation meant assent?

21. I think what I have already said disposes of this aspect of the matter. The answer again is - "That depends on the circumstances.", and those circumstances are solely the province of the arbitrator, but, in any event, I agree with his conclusion.

22. Each of the questions has attached to it the question - "Was the Arbitrator's decision such that no reasonable arbitrator could have reached the same?". I believe what I have said before indicates that the answer to those questions is - "No.", or, at least, not clearly "Yes.", and so leave to appeal cannot be granted here either.

23. In the result, I must refuse the application for leave to appeal, and I do so.

24. The costs should, on what I know, follow the event. I make an order nisi that the applicant pay the costs of this application.