Hanson Jay & Associates Ltd v. The Attorney General on behalf of the Government of Hong Kong

CACV000034/1989

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BETWEEN

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Coram: Hon. Cons, V-P Clough & Penlington, JJ.A.

Date of hearing: 18 May 1989

Date of delivery of judgment: 30 May 1989

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J U D G M E N T

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Cons, V-P delivered the judgment of the Court:

1. This is an appeal by Hanson Jay & Associates Limited, a Company which carries on the practice of architects

2. In 1985 the Company was commissioned by Government with regard to building works contemplated at Mount Kellett Road on the Peak. The arrangement is described in an affidavit by the Company's solicitors as a "Consultancy Agreement" and appears to have provided for the Company to prepare detailed designs, drawings, calculations and so on, liaising where necessary with public utilities and other authorities.

3. The Agreement was not carried to its conclusion. Government decided not to carry on with the project and in September 1987 sold the land on which it had been intended to erect the buildings. The previous month it had terminated the Consultancy Agreement with the Company.

4. Since then the government has paid part of the moneys which the Company claims had become due to it under the Agreement. There is a dispute as to the balance which has been referred to arbitration. By its Statement of Case in the arbitration proceedings the Company advanced its claim under four beads ?

1.    Fees for work done on a time charge basis, supported by a 73 page schedule which set out in detail the instructions given, the dates on which the instructions were carried out, and the level of authority of the person by whom that was done, i.e. principal architect, senior architect or draftsman. The charges for each were different. The total sum claimed was based on the total hours worked in the various categories.

2. An amount due under a particular clause of the agreement which provided that in the event of cancellation of the agreement after certain documents had been prepared with regard to bills of quantities, a percentage payment should be made in accordance with the estimated cost of the building work at the planned date for tenders.

The two further heads covered claims of a minor nature. They have since been settled sand play no part in this appeal.

5. Government, by its own Statement of Case in answer, supplemented by Further and Better Particulars, rejected the Company's claim under head 1 as comprising work which had been done either in error or without instructions or had been executed by persons of inappropriate qualifications; further that the time said to have been spent to carry out the various works was excessive or unreasonable. In support of the last suggestion reference was made to the report of an "independent expert architect" instructed by Government. The claim under head 2 was said as a matter of construction of the agreement, to have been misconceived.

Order 73 rule 11 provides -

"11. (1) In any arbitration proceedings any party to the reference may at any time pay into court a sum of money in satisfaction of any claim against him under the reference."

On the 7th December last year Government took advantage of the rule and paid money into court specifying, in compliance with paragraph (4) of the same that the payment was made "in satisfaction of all the matters in dispute in respect of which the claimant claims". Letters from Government indicated that the sum offered had been reached by reference to the report of the independent expert architect. This approach was not satisfactory to the Company, for the architect had come to his conclusion by a form of "reverse engineering", i.e. by taking the finished drawings and assessing how long in his opinion each should have taken to be completed. His report could not therefore be matched against the schedule of instructions which the Company had annexed to its Statement of Case.

6. By a summons of the 12th January the Company sought from the Court an order to amend the notice of payment in accordance with rule 11(5). This provides -

"(5) Where a single sum of money is paid into court under this rule in respect of two or more matters in dispute, then, if it appears to the Court that any party to the arbitration proceedings in embarrassed by the payment, the Court may order the party making payment to amend the notice of payment so as to specify the sum paid in respect of each matter in dispute."

7. It is conceded that the Company is entitled to an order apportioning the payment in between head 1 and head 2. This had not been requested at any stage prior to the appeal, all involved having accepted that the payment in was attributable entirely to head 1, and that Government was making no offer in respect of bead 2. The only question which had I been addressed below was whether there should be am apportionment within head 1. However, prompted perhaps by observations from the Bench and to avoid any possible subsequent misunderstanding, counsel for the Company thought it wise to make a further application in this respect.

8. Rule 11 of Order 73 and the succeeding rules in the Order, are, we are told, unique to Hong Kong. They appear to he taken from Order 22 which relates to payments into and out of court in civil actions. Order 73 rule 11(5) is thus identical to Order 22 rule 1(5), save that the words "matters in dispute" are substituted for the words "causes of actions". It has been suggested that the former phrase is capable of a wider interpretation than the latter. Although there may be contexts in which that is so - as to which we express no decided opinion, - we are content to treat them in the present context as having the same connotation. In Bovis Construction (South Eastern) Limited v. Greater London Council 28 June 1985 reported only in Lexis, the English Court of Appeal concluded that in circumstances in some respects similar to the present each variation of the building contract constituted a separate cause of action. By analogy we are satisfied that each instruction in, the Company's schedule constituted a separate matter in dispute. But it does not necessary follow that apportionment will be ordered to that extent. It is a matter of the court's discretion.

9. The Master exercised the discretion in favour of the Company. He made an order that -

"1. The Defendant do specify the sum that was paid into Court in respect of each instruction listed in the Appendix 2 of the Plaintiff's Statement of Case (`toted 29th February 1988."

10. On appeal to the High Court Mayo J. set the order aside. Hence this appeal.

11. It is apparent that even should the Company succeed on the appeal it would not be content with an order, in the terms of the Master. It wants the order to include the payment made earlier by the Government, i.e. prior to the initiation of the arbitration proceedings. In this respect the Company has no choice. Without that information to build upon, an apportionment of the payment in alone would be valueless.

12. In our view the Court has no jurisdiction to make such an order. Rule 11(5) applies only to moneys paid into court. We do not accept the argument, but faintly put, that the words "sum paid" in the last complete line of the subrule are apt to cover moneys other than the actual payment in. It is true that the order in Bovis did include moneys paid earlier, but they were by way of an interim payment made under an order of the Court. For this there is express authority in order 29 rule 16.

13. This conclusion is sufficient to dispose appeal. There is no point in making an order which would impose considerable hardship on the Government yet confer nothing of value on the Company. But in deference to the able arguments advanced by both sides we should add that apart from this we would have exercised our discretion in the same way as did the judge below. The embarrassment alleged is the inability to make a considered decision without reference to the individual instructions. It is not, as in Bovis, question of competing groups of claims, nor, bearing in mind the amount of the payment, is there any one single instruction to which it could possibly alone refer. The payment would have to be related to the whole number; in the particular circumstances we do not think that that that would have been a reasonable course to order.

14. For these reasons we allow the appeal to the extent that the Respondent shall amend its notice of payment in to specify the sums paid in respect of head 1 and head 2 of the Statement of Case, but no further.

Representation:

John Scott (M/s Masons & Marriott) for Appellant

S.P. O'Sullivan Crown Solicitor for the Respondent