Siu Pang Fai t/a Kam Pang Civil Engineering Company v. Charmwood Development Ltd and Another

Read the full judgment text of DCCJ 1117/2022 on BabelCite. This District Court judgment was delivered on 25 August 2023.

1. On 19 April 2022, the plaintiff issued a specially indorsed Writ of Summons against the 1 st and 2 nd defendants (the “Writ”). In its Statement of Claim, the plaintiff alleged that he and the 1 st defendant entered into 2 sub-contracts with reference numbers CD-2016/003 and CD-2016/011 dated 24 September 2016 and 13 January 2017 respectively (hereinafter referred to as “Contract-003” and “Contract-011” respectively). The Contract-003 and Contract-011 concerned foundation works of houses and c

Cited by 1 case · Cites 5 cases

Case No.DCCJ 1117/2022[2023] HKDC 1168
Court
District Court
Date25 Aug 2023
Judge
Case Document
100%Judiciary

DCCJ 1117/2022

[2023] HKDC 1168

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1117 OF 2022

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BETWEEN

  SIU PANG FAI trading as
KAM PANG CIVIL ENGINEERING COMPANY
(蕭鵬輝經營的金鵬土木工程公司)
Plaintiff

and

  CHARMWOOD DEVELOPMENT LIMITED
(湛滙發展有限公司)
1st Defendant
  YICK HING CONSTRUCTION COMPANY LIMITED
(益興建築有限公司)
2nd Defendant

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Before: Deputy District Judge David Chan in Chambers (Open to public)
Date of Hearing: 18 August 2023
Date of Decision: 25 August 2023

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DECISION

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BACKGROUND

The original Statement of Claim

1.On 19 April 2022, the plaintiff issued a specially indorsed Writ of Summons against the 1st and 2nd defendants (the “Writ”). In its Statement of Claim, the plaintiff alleged that he and the 1st defendant entered into 2 sub-contracts with reference numbers CD-2016/003 and CD-2016/011 dated 24 September 2016 and 13 January 2017 respectively (hereinafter referred to as “Contract-003” and “Contract-011” respectively). The Contract-003 and Contract-011 concerned foundation works of houses and clubhouse at Fraser Village, Tai Shu Ha Road West, Yuen Long, New Territories (“FV Project”). The plaintiff claimed that he was owed a sum of HK$1,410,787 under the FV Project, covering the period from 29 January 2018 to 24 March 2018. This was supported by a Revised Settlement of the sub-contract works under Contract-011 dated 24 March 2018 (“Updated Settlement for the FV Project”)[1].

2.In addition, there was an agreed gratuity in the sum of HK$150,000 payable by the 1st defendant to him[2], as Contract-011 was terminated upon mutual agreement. Such payment was evidenced by the Agreement of Termination of sub-contract works under Contract-011 dated 24 March 2018 (“Termination Agreement for Contract-011”)[3].

3.Apart from the above, there was a claim for HK$523,400 owed for the balance of work done and material supplied under the sub-contract in the Ching Ying Road Project (“CYR Project”). This was supported by a Revised Settlement of sub-contract works dated 13 August 2018 (“2nd Updated Settlement for the CYR Project”)[4].

4.Notwithstanding that contracts for the FV Project were signed with the 1st defendant, the plaintiff alleged that it was caused by the promise of Mr Yuen Chung Yuen (“Mr Yuen”), the sole controller, shareholder and director of the 1st and 2nd defendants. Under such promise, the 2nd defendant would be liable to pay for all the work done and materials provided by the plaintiff under both the FV Project and CYR Project (the “Oral Promise”). In performance of the Oral Promise, the 2nd defendant had paid the plaintiff a total of HK$700,000.

5.The plaintiff alleged that the 1st defendant was used by the 2nd defendant as a vehicle to evade the liability of the latter owed to the plaintiff.

6.Based on the above, the plaintiff claimed under the Statement of Claim a total sum of HK$2,084,187 against the 1st and 2nd defendants.

Stay application

7.After the Writ was served on the 1st and 2nd defendants, Acknowledgments of Services were filed on 4 May 2022. They were followed by a Summons filed on 29 June 2022, under which the 1st and 2nd defendants applied for a stay of action, on the basis that Contract-003 and Contract-011 contained agreements that the disputes should be referred to arbitration (the “Stay Summons”)[5]. The Stay Summons was supported by the affirmation of Mr Yuen filed on 29 June 2022 (“Yuen’s 1st Affirmation”). This was followed by the plaintiff’s affirmation in opposition of the Stay Summons filed on 27 September 2022 (“Plaintiff’s 1st Affirmation”), and an affirmation in reply from Mr Yuen filed on 19 January 2023 (“Yuen’s 2nd Affirmation”).

Amendment of the Statement of Claim

8.On 30 December 2022, the plaintiff took out an application for leave to amend the Writ, in particular, the Statement of Claim indorsed therein (the “Amendment Summons”). A draft copy of the Amended Statement of Claim was attached thereto, which is the same filed by the plaintiff after leave to amend was granted by the Master.

9.I shall say a few words about the Amended Statement of Claim at this juncture, as it will become apparent later on in this Decision that the contents of it are relied upon by the 1st and 2nd defendants in this appeal.

10.In the Amended Statement of Claim, more facts and particulars were given to the plaintiff’s claims. More importantly, the CYR Project mentioned in the Statement of Claim is fully ventilated[6].

11.It is said that the plaintiff and the 2nd defendant reached an agreement for the CYR Project sometime between mid-2016 and late-2016. Under it, the plaintiff would provide construction works and services at a site known as TMLT 423, Area 48, Castle Peak Road, So Kwun Wat, Tuen Mun, New Territories (“CYR Project Agreement”). The plaintiff says that the CYR Project Agreement was evidenced by written quotations issued to the 2nd defendant, the work orders issued by the staff of the 2nd defendant to the plaintiff, together with some written remarks made by the staff of the 2nd defendant on the quotations once the construction works were completed by the plaintiff.

12.In addition, the existence of the CYR Project Agreement, and the sum owed under it to the plaintiff, was evidenced by the 2nd Updated Settlement for the CYR Project. It is supplemented that there was an earlier Updated Settlement for the CYR Project dated 24 March 2018 (“1st Updated Settlement for the CYR Project”)[7]. The plaintiff alleges that these documents were issued by the 1st defendant to him, either acting on behalf of the 2nd defendant, or acting in its own capacity. Come what may, they confirmed the fees owed to the plaintiff under the CYR Project, i.e., HK$523,400. Moreover, the 2nd Updated Settlement for the CYR Project expressed that the said sum would be paid to the plaintiff no later than 31 December 2018.

Stay Summons and Amendment Summons

13.Both the Stay Summons and Amendment Summons were adjourned for argument before Master on 10 February 2023. After hearing the parties on these applications, the Master: (1) granted leave for the plaintiff to amend his Writ and Statement of Claim; and (2) dismissed the Stay Summons. In a nutshell, the learned Master refused to stay the whole action, as there was nothing to show that there was an arbitration clause in the CYR Project Agreement.

14.Unhappy with the decision on the Stay Summons, the 1st and 2nd defendants now appeal against it. A Notice of Appeal was filed on 23 February 2023.

15.The 1st and 2nd defendants also filed a summons (“New Evidence Summons”) seeking to adduce another affirmation from Mr Yuen (“Yuen’s 3rd Affirmation”). In it, Mr Yuen exhibited a written agreement for the CYR Project dated 16 July 2016 (the “Written CYR Project Agreement”), which contains an arbitration agreement at clause 19. In support of the New Evidence Summons, Mr Yuen filed an affirmation on 15 March 2023 (“Yuen’s 4th Affirmation”) to provide the reasons as to why such written agreement was not previously produced. The plaintiff filed his affirmation in opposition to the New Evidence Summons on 30 June 2023 (“Plaintiff’s 2nd Affirmation”).

16.Pausing here, for Plaintiff’s 2nd Affirmation, the plaintiff has filed a Summons on 3 July 2023, seeking retrospective leave from this Court to file and serve the same. Although it was not dealt with at the hearing of the appeal on 18 August 2023, I see no reason not to allow the application. For completeness sake, I will include an order to this effect at the end of this Decision.

THIS APPEAL

17.The appeal and the New Evidence Summons came before me on 18 August 2023. At the hearing, the plaintiff was represented by counsel Mr Tommy Cheung (“Mr Cheung”). The 1st and 2nd defendants were represented by counsel Mr Simon Wong (“Mr Wong”). I note Mr Wong was not the counsel for the 1st and 2nd defendants at the hearing before the Master.

18.I shall first deal with the New Evidence Summons.

NEW EVIDENCE SUMMONS

19.The legal principles for leave to adduce new evidence in an appeal against Master’s decision are trite. All 3 conditions laid down in Ladd v Marshall[8] have to be satisfied[9]. They are:

(1) that the evidence could not have been obtained with reasonable diligence for use at the hearing below; (“1st Condition”)

(2) the evidence must be such that, if given, it would probably have an important influence on the result of the case, though it need not be decisive; (“2nd Condition”) and

(3) the evidence must be such as is presumably to be believed. (“3rd Condition”)

1st Condition

20.There is no question that the Written CYR Project Agreement was created before the Stay Summons was filed. Mr Yuen explained that the same was not adduced at the time due to the poor drafting of the Statement of Claim. Mr Yuen complained that, with the lack of particulars, and with the description of the CYR Project being so brief and vague, it would be impossible for the 1st and 2nd defendants to locate the relevant documents. And with only Contract-003 and Contract-011 being particularised in the Statement of Claim, it was the 1st and 2nd defendants’ believe that the plaintiff’s claims were only over the FV Project.

21.With the CYR Project Agreement being clearly described and supported by particulars in the Amended Statement of Claim, the 1st and 2nd defendants are finally able to understand the plaintiff’s claim under it. Hence, they are now in the position to adduce the Written CYR Project Agreement.

22.I do not accept these explanations.

23.First, although I agree that the Statement of Claim was poorly drafted, and there was a lack of particulars and insufficient description as to the CYR Project, it was pleaded nonetheless, and distinct from the FV Project. The claim under the CYR Project was also separated from those claimed under Contract-003 and Contract-011[10]. I do not see how a reasonable reader of the Statement of Claim would not be able to differentiate one from the other. At the very least, it should alert the reader that there could be a claim concerning works at Ching Ying Road, and investigation about it could and should be conducted to understand what it was about.

24.Second, the CYR Project was again mentioned in the Plaintiff’s 1st Affirmation. In it, he had expressly stated that there was no written agreement for the CYR Project, thus there could not have been any arbitration clause applicable to his claim under this head[11]. The 2nd Updated Settlement for the CYR Project and the quotations issued for the same were exhibited. In the 2nd Updated Settlement for the CYR Project, it was clearly stated that it related to a sub-contract for construction work at Ching Ying Road, and the involvement of Senword Investment Limited (“Senword”) as a third party. The titles of the quotations referred to the road expansion project at Ching Ying Road. Again, I do not see how the plaintiff’s claim based on the CYR Project could have escaped the attention of a reasonable reader of these documents.

25.Curiously, the above was never answered by Mr Yuen in Yuen’s 2nd Affirmation. He had clearly read the 2nd Updated Settlement for the CYR Project, as it was referred to in §13 of Yuen’s 2nd Affirmation.

26.Third, shortly after 30 December 2022, when the Amendment Summons with the draft Amended Statement of Claim attached were filed and served, any ambiguity or vagueness of the plaintiff’s claim under the CYR Project in the Statement of Claim would have been made clear.

27.Based on the above, I find that the 1st and 2nd defendants, and their legal representatives, should have been able to identify or understand that the plaintiff’s claims included those under the CYR Project, and with reasonable diligence, the Written CYR Project Agreement together with the other related documents that they now seek to adduce under the New Evidence Summons, could have been retrieved and adduced by them prior to the hearing before the Master on 10 February 2023. The 1st Condition is therefore not satisfied.

28.My ruling on the 1st Condition suffices to dispose of the New Evidence Summons. The application is dismissed.

29.Assuming that I were wrong on the above ruling, I shall, in the following sections, proceed to discuss on the 2nd and 3rd Conditions.

2nd Condition

30.I am of the view that this condition is satisfied. The Written CYR Project Agreement does contain an arbitration clause under which the disputes (liability and quantum) of the parties must be mediated or arbitrated[12]. Such clause would engage the discussions of whether the plaintiff’s claim under the CYR Project should also be stayed for arbitration.

3rd Condition

31.I am also of the view that this condition is satisfied. Although in the Plaintiff’s 2nd Affirmation he had doubted the authenticity of the Written CYR Project Agreement, such suspicion was based on his recollection that he did not sign any written contract relating to the CYR Project. However, this is on the face of it contradicted by his signature on the Written CYR Project Agreement. There is no expressed allegation that his signature on the same was forged[13]. In Plaintiff’s 2nd Affirmation, he could only point to the Written CYR Project Agreement not having his company’s chop affixed on it. This, in my view, is neither here nor there. I can see from the 2nd Updated Settlement for the CYR Project, a document that the plaintiff relies on in his claims under the FV Project, not having his company chop on it as well.

Summary on the New Evidence Summons

32.As said, this application is dismissed due to the 1st and 2nd defendants’ failure to satisfy the 1st Condition. But for such failure, I would have allowed the application.

STAY SUMMONS

33.On the assumption that the Written CYR Project Agreement could be admitted as evidence for this appeal, and on the basis that Contract-003, Contract-011 and the Written CYR Project Agreement all contained arbitration clauses, I shall consider whether this action should be stayed in favour of arbitration.

34.But first, I shall remind myself that an appeal from a master to a judge under O. 58, r. 1(1) of the Rules of the District Court (the “RDC”) is by way of an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him for the first time, save that the party appealing, even though the original application was not by him but against him, has the right as well as obligation to open the appeal[14].

35.As to the principles applicable to a stay application for arbitration, they are well established.Section 20 of the Arbitration Ordinance, Cap. 609 (“AO”), gives effect to Article 8 of the UNCITRAL Model Law. Once the conditions of Article 8 are satisfied, a stay of the legal action is mandatory[15].

36.In considering whether to stay an action pursuant to section 20(1) of the AO, the Court would ask 4 questions[16]:-

(1) Is there an arbitration agreement between the parties? (“Question 1”)

(2) Is the arbitration agreement capable of being performed, in the sense that it is not null and void, inoperative or incapable of being performed? (“Question 2”)

(3) Is there in reality a dispute or difference between the parties? (“Question 3”)

(4) Is the dispute or difference between the parties within the ambit of the arbitration agreement? (“Question 4”)

37.The onus is on the applicant for stay to demonstrate a prima facie case that the parties were bound by an arbitration clause, and unless the point is clear, the court should not attempt to resolve the issue and the matter should be stayed in favour of arbitration, as it is for the tribunal to decide first on its jurisdiction[17].

Question 1

38.My answer to this question is “yes”. There should be no doubt about this after reading clauses 16 in Contract-003 and Contract-011, and clause 19 of the Written CYR Project Agreement. There are arbitration agreements between the plaintiff and the 1st defendant.

39.There remains the question of whether the 2nd defendant would be bound by it, which is hotly disputed by Mr Cheung in his submissions. However, it is the plaintiff’s pleaded case that these contracts were really between the plaintiff and the 2nd defendant, with the 1st defendant possibly acting on behalf of the 2nd defendant when entering into them. Moreover, there is his accusation that the 2nd defendant had used the 1st defendant to avoid liability owed to the plaintiff. If that were true, then the 2nd defendant, being a disclosed principal[18], should be bound by, and entitled to the benefit of, the terms of the contracts signed on behalf of it by its agent (i.e., the 1st defendant)[19], including the arbitration clauses.

Question 2

40.Not much is said by the plaintiff and Mr Cheung on this question, save the assertion that all the rights and obligations under Contract-011 should cease to take effect by the Termination Agreement for Contract-011. Hence, the arbitration clause in Contract-011 is null and void, inoperative or incapable of being performed.

41.I agree with Mr Wong that such argument is misconceived. The concept of separability is given effect by Article 16(1) of UNCITRAL Model Law (which is in turn given effect by section 34 of the AO). An arbitration clause is to be treated as a distinct and separate agreement independent of the other terms of the contract. Its validity is not affected by the fact that the contract is invalid or did not come into existence or has become ineffective[20].

42.My answer to Question 2 is therefore “yes”.

Question 3

43.The general principle under this question is that, a dispute will exist unless there is a clear and unequivocal admission not only of liability but also of quantum. No longer is it required that there should be a substantial or arguable defence to the claim brought by a plaintiff in the action[21].

44.Mr Yuen said that the 1st and 2nd defendants had received complaints since September 2017 regarding the defects and poor workmanship relating to the works performed by the plaintiff. For this reason, the 1st and 2nd defendants could counterclaim for the loss and damage, and use the same to set-off the plaintiff’s claim, and they intend to, and are ready to do so, via arbitration.

45.The plaintiff counters this by reference to the Updated Settlement for the FV Project, the Termination Agreement for Contract-011, and the 2nd Updated Settlement for the CYR Project. He says that these documents contained the 1st and 2nd defendants’ clear and unequivocal admission of liability and quantum of his claims under the FV Project and CYR Project.

46.For the reasons below, I disagree with Mr Cheung’s submissions. But before giving my reasons, I should mention that, when perusing the Updated Settlement for the FV Project, I noticed that when it remarked on the balance of the plaintiff’s project fees, it included a term which said that it would be performed in accordance with “Appendix A, item 5”. The Termination Agreement for Contract-011 also contained a similar term, but this time the balance of the project fees would be performed in accordance with “Appendix I, item 5”. I thus query whether these appendices would have any effect on the answer to Question 3.

47.At the appeal hearing, I raised my query with counsel. With the agreement from Mr Cheung, Mr Wong obtained copy of the said appendices and tendered them to the court as exhibits “D-1” and “D-2” respectively. As one can see below, these documents turn out to be pivotal to the 1st and 2nd defendants’ case under this head.

48.In the Updated Settlement for the FV Project, there were neither words expressing admission of the 1st defendant that it or the 2nd defendant would be liable for the sum recorded therein, nor were there expressed denials of such liability and quantum. But when one takes into account of exhibit “D-1”, the plaintiff’s assertion is annihilated. The title and contents of Appendix A repeatedly referred to the calculations of the plaintiff’s fees under the FV Project being “initial” as at the date of 28 January 2018. Hence, when one then read the Updated Settlement for the FV Project, the amount mentioned therein was nothing more than an updated balance of the project fees on 24 March 2018, after certain deductions due to interim payments were made. Moreover, item 5 of Appendix A provided that the balance of the project fees, including the retention money, in the sum of HK$1,910,787, would be paid after 4 conditions were satisfied, namely: (1) full completion of the works under the FV Project; (2) no issue on the quality of the plaintiff’s works was found; (3) the relevant governmental departments having inspected and given their approvals; and (4) occupation permits were issued. Surely, when these conditions remained unsatisfied at the material time, the Updated Settlement for the FV Project could not be seen as the defendants giving their clear and unequivocal admission on both liability and quantum.

49.As to the Termination Agreement for Contract-011, the plaintiff relies on it to claim the remaining gratuity of HK$150,000 that the 1st defendant had agreed to pay under clause 6. However, it was also stated therein that such remaining gratuity would be payable after occupation permits were received. And when reading this with exhibit “D-2”, the same sequence of events under item 5 of Appendix A would need to happen before occupation permits would be issued. Of importance is the condition that there should be no issue on the quality of the plaintiff’s works[22]. Again, with these conditions yet to be satisfied at the time when the Termination Agreement for Contract-011 was created, I cannot accept that the defendants gave their clear and unequivocal admission on both liability and quantum via such document.

50.At the hearing, Mr Cheung argued that the balance of HK$99,000.81 representing the retention money and final adjustment payable under Contract-011, had been paid by the defendants to the plaintiff. As such payment was made subject to item 5 of Appendix I, it could show that the conditions had been satisfied. I disagree. Mr Yuen has not given any explanation as to why such balance was paid, when it was paid, and by whom it was paid. In particular, nothing is said by him that the conditions had been satisfied, and when they were satisfied. Moreover, there is no evidence to show that the HK$99,000.81 was paid at the same time when the Termination Agreement for Contract-011 was created, for this court to draw the inference that the said conditions were already satisfied at that time. Hence, I could not accept the Termination Agreement for Contract-011 as a document which conveyed the defendants’ clear and unequivocal admission of both liability and quantum.

51.Regarding the 2nd Updated Settlement for the CYR Project, although it involved the same exercise of updating the balance of project fees after certain sum had been deducted, it seems more favourable to the plaintiff’s case as there was a deadline imposed on the payment. However, the payment was expressly made subject to the final calculations between the 1st defendant and Senword. Existence of such condition, at the very least, defeat the plaintiff’s assertion that there was clear and unequivocal admission of the quantum under the 2nd Updated Settlement for the CYR Project.

52.For these reasons, the answer to Question 3 is “yes”.

Question 4

53.My answer to this question is also “yes”. As I have highlighted in the above, Contract-003, Contract-011, and the Written CYR Project Agreement, all contained arbitration clauses in wide terms. The dispute raised in Yuen’s 1st Affirmation would be caught by them.

Summary on the Stay Summons based on section 20 of AO

54.For the reasons above, I am satisfied that the action should be stayed and referred to arbitration based on section 20 of the AO.

Stay under section 48(5) of the District Court Ordinance, Cap. 336 (“DCO”) and/or case management power under O.1B, r.1(e) of the RDC

55.As said, if not for the dismissal of the New Evidence Summons, I would have stayed the whole action for arbitration pursuant to section 20(1) of the AO.

56.Even if I were not to stay the whole action based on that provision, the Stay Summons also include a request for this court to exercise the power and discretion under section 48(5) of the DCO and O.1B, r.1(e) of the RDC to stay part of the action generally. And in the exercising of such power and discretion, I am to take into consideration of the underlying objections and duties respectively under O1A, r.1 and r.4 of the RDC. In particular, O.1A, r.4(2)(e) provides that active case management includes encouraging the parties to use alternative dispute resolution procedure if the court considers appropriate, and facilitating the use of such procedure. In view of the discussions above, I see no reason not to stay the plaintiff’s claims based on the FV Project, and refer them for arbitration.

57.What remains is for this court to consider whether the claim under CYR Project should also be stayed for the same purpose. Mr Cheung urged this court not to, citing that the claims under FV Project and CYR Project have no connection, and are distinct from each other. Mr Wong argued otherwise, saying that there is overlapping of factual and legal issues.

58.In my view, there are some common questions of facts that should be resolved together. For example, as I have set out in the above, the plaintiff’s case against the 2nd defendant is that it was the true party to the contracts under both the FV Project and CYR Project. His believe stemmed from the Oral Promise given by Mr Yuen. Finding on this would have an impact on, if the plaintiff was entitled to payments, whether the 1st defendant or the 2nd defendant or both should be liable for the same, under both the CYR Project and FV Project. And evidence would be coming from the same witnesses, i.e., Mr Yuen and the plaintiff. Surely, having both this court and the arbitrator separately dealing with the same question might lead to conflicting rulings, which is certainly undesirable.

59.Moreover, having parties involved at the same time in both this action and the arbitration would defeat the objectives to increase costs effectiveness. It is a burden to have the parties splitting their time, efforts and costs between 2 proceedings; it will be a task especially daunting for the plaintiff taking into account his health conditions as reported in Plaintiff’s 1st Affirmation.

60.Mr Cheung emphasised on how referring the matter to arbitration would deny the plaintiff from the legal aid which he is receiving under this action. I am not sure this factor alone is sufficient to override what I have said in §§58 and 59 above. Come what may, I shall not consider only the plaintiff’s financial difficulty but turn a blind eye to the defendants’ exposure to 2 sets of legal costs they would incur in this action and in arbitration.

61.I share Mr Cheung’s concern that the defendants may simply be delaying the matter by asking for a stay and refer the matter to arbitration. Even though Mr Yuen alleged that there were complaints about the defects and poor workmanship found in the works of the plaintiff since September 2017, the defendants have yet commenced arbitration to pursue any claim for loss and damage against the plaintiff. I have considered staying this action subject to the defendants commencing arbitration against the plaintiff. However, upon further consideration, adopting such course would be placing too much trust on the defendants taking prompt action when the above history tends to show that they could not be trusted in this regard. I thus prefer to put the ball directly in the plaintiff’s court by simply referring the matter for arbitration.

CONCLUSION

62.Relying on what I said in §§16 and 32 above, retrospective leave be granted for the plaintiff to file and serve Plaintiff’s 2nd Affirmation; and the New Evidence Summons be dismissed.

63.Based on the above reasons, I would exercise the discretion under section 48(5) of the DCO and O.1B, r.1(e) of the RDC, to stay the whole action and refer the plaintiff’s claims herein to arbitration. The 1st and 2nd defendant’s appeal is therefore allowed, and the order of the Master dated 10 February 2023 is set aside.

64.For the costs of the New Evidence Summons, including the plaintiff’s application for retrospective leave to file the Plaintiff’s 2nd Affirmation, I shall make an order nisi that they should be paid by the 1st and 2nd defendants to the plaintiff on party and party basis, to be taxed if not agreed, with certificate for counsel. The plaintiff’s own costs for these applications shall be taxed in accordance with the Legal Aid Regulations.

65.As to costs of this appeal, the Stay Summons, and the hearing before the Master on 10 February 2023, I shall make an order nisi that they should be paid by the plaintiff to the 1st and 2nd defendants, to be taxed if not agreed, with certificate for counsel. At the appeal hearing, both Mr Cheung and Mr Wong agreed that such costs should be taxed on indemnity basis, and I so order. I shall add that the plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.

66.I thank Mr Cheung and Mr Wong for their assistance.

  ( David Chan )
  Deputy District Judge

Mr Tommy Cheung, instructed by W.K. To & Co., assigned by the Director of Legal Aid, for the plaintiff

Mr Simon Wong, instructed by Huen & Cheung, for the 1st and 2nd defendants


[1]   Document titled《分判工程結算更新》at p. 100 of the Hearing Bundle.

[2]   Being balance of a HK$300,000 gratuity.

[3]   Document titled《終止分判工程合約協定書》at p. 102 of the Hearing Bundle.

[4]   Document titled《分判工程結算更新(1)》at p. 104 of the Hearing Bundle.

[5]   Clauses 16 of Contract-003 and Contract-011.  These clauses read:-

“16.  仲裁機制

任何問題(包括金錢或責任),可透過調解或仲裁解決。”

[6]   Although the name “CYR Project” was changed to “Tuen Mun Project”, for consistency, I would continue to use the abbreviation of “CYR Project” in this Decision.

[7]   This document has not been adduced as evidence in Plaintiff’s 1st Affirmation, and is not included in the Hearing Bundle.

[8]   [1954] 1 WLR 1489

[9]   See Hong Kong Civil Procedure 2023, Vol 1, §58/1/3, at pp 1214-1215.

[10]   See §2 of the Statement of Claim.

[11]   At §9.

[12]   Identical to clauses 16 of the Cotract-003 and Contract-011.

[13]   If there was the allegation that his signature was forged, the 1st and 2nd defendants would have to establish a prima facie case that the arbitration agreement exists. See Hong Kong Civil Procedure 2023, Vol 3, §U1/20/9, at p 49.

[14]   Hong Kong Civil Procedure 2023, Vol 1, §58/1/2, at p. 1214

[15]   See Lin Ming v Chen Shu Quan [2012] 2 HKLRD 547, at §25.

[16]   Summarised by The Hon K. Yeung J in the case of 李明實 & Others v Ace Lead Profits Limited & Anor [2022] HKCFI 3342, §33.

[17]   See Kinli Civil Engineering Ltd v Geotech Engineering Ltd [2021] 6 HKC 524, at §7, adopted by K Yeung J in李明實case at §34.

[18]   Pursuant to the Oral Promise alleged by the plaintiff, reproduced in §4 of this Decision.

[19]   See Chitty on Contracts, Hong Kong Specific Contracts, Vol. 1, 7th Ed, §1-049, at p. 25.

[20]   See Cathay Pacific Airways Limited v Hong Kong Air Cargo Terminals Limited (unreported, HCA 6714/2000, DHCJ Gill, 7 March 2002) at §26; see also a more recent case of T v TS [2014] 4 HKLRD 772, §§21 and 24, at pp. 779-780.

[21]   See李明實 case at §57, adopting Tommy CP Sze & Co v Li & Fung (Trading) Ltd & Ors [2003] 1 HKC 418, at §§50-51.

[22]   Items 4 of both the Appendix A and Appendix I revealed that the 1st defendant would perform some remedial works on behalf of the plaintiff, and the plaintiff agreed that the costs for these remedial works would amount to HK$130,000. Such admission by the plaintiff may lend credence to the defendants’ complaints about the defects and poor workmanship of the plaintiff’s works. See §44 of this Decision.