Cs v. Hkr

CACV 76/2025, [2026] HKCA 1142

On Appeal From [2024] HKCFI 3366 &

[2025] HKCFI 611

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 76 OF 2025

(ON APPEAL FROM CONSTRUCTION AND ARBITRATION

PROCEEDINGS NO 72 OF 2024)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

1.This is the Plaintiff’s appeal against the order of Madam Justice Mimmie Chan dated 22 November 2024 dismissing the Plaintiff’s application for leave to appeal against an Amended Interim Award on Liability and Quantum published on 27 May 2024 (“the Award”) by Mr Bernard Wu (“the Arbitrator”) in an arbitration between the Defendant as claimant and the Plaintiff as respondent.

BACKGROUND

2.The basic facts of this case have been set out in the Award and his Amended Reasons for Award (“the Reasons”) forming part of the Award.  We do not propose to set them out again in this judgment.  The brief summary below should suffice for the purpose of disposing of the present appeal.

3.The Plaintiff was the main contractor for one of the works packages (“the Main Contract Works”) of the Hong Kong-Zhuhai-Macau Bridge Project pursuant to a contract dated 28 May 2012 (“the Main Contract”) awarded by the Highways Department (“HyD”) of the Government of the HKSAR as the employer.

4.Prior to the award of the Main Contract, the Plaintiff invited the Defendant to submit a quotation for certain marine works items (“the Subcontract Works”) which were to form part of the Main Contract Works.  The Subcontract Works included reclamation works to be carried out on the eastern coast of Chek Lap Kok Island behind a new permanent seawall (to be constructed).  The Defendant submitted its revised quotation for the Subcontract Works to the Plaintiff on 17 December 2011.  A number of subcontract tender interviews were held between representatives of the Plaintiff and the Defendant prior to the award of the Main Contract.  One such subcontract tender interview took place on 2 April 2012.  On 25 April 2012, a “Pre-bid Agreement” was signed, and the Plaintiff agreed to engage the Defendant as the marine works subcontractor in the event that it was awarded the Main Contract by HyD.

5.On 28 May 2012, HyD awarded the Main Contract to the Plaintiff.  On 29 May 2012, the Plaintiff informed the Defendant that it had been awarded the Main Contract, and the commencement date would be 31 May 2012.  The Plaintiff also instructed the Defendant to prepare for the execution of the Subcontract Works pending the preparation of a formal subcontract.

6.As a matter of fact, the formal subcontract between the Plaintiff and the Defendant was not signed until 7 November 2013 (“the Subcontract”), after works had been commenced by the Defendant since around July 2012.  It is not in dispute that the Subcontract is a “remeasurement contract”.

7.The Defendant submitted its draft final account statement to the Plaintiff on 19 August 2019.  The parties disagreed on the amounts due and payable to the Defendant in respect of various items of works which were eventually referred to arbitration for determination.  The disputes relevant for the present purpose relate to two issues, namely:

(1)  the amounts that the Defendant is entitled to be paid for the “sand fill” portion and the “public fill” portion of “Type A fill” used in the reclamation works (“the Sand Fill Issue”); and

(2)  whether the Arbitrator’s award in favour of the Defendant under BQ Item 19 and Extra Works Item 20 gives rise to a double recovery in respect of the same quantity of rockfill (“the Double Recovery Issue”).

8.The Sand Fill Issue arose in the following circumstances:

(1)  Under the Subcontract –

(a)  The terms and conditions, specifications and drawings under the Main Contract were applicable to the Subcontract mutatis mutanda, unless the same were in conflict with the provisions of the Subcontract[1].

(b)  The Defendant agreed, in respect of the Subcontract Works, to observe, perform and abide by all obligations and provisions of the Main Contract which the Plaintiff was obliged to observe, perform and abide by[2].

(c)  The Defendant agreed to abide by and carry out all instructions, orders and decisions issued by the Plaintiff and those issued by the “Engineer” under the Main Contract and confirmed by the Plaintiff in writing[3], and to execute the Subcontract Works in accordance with the instructions of and programme stipulated by the Plaintiff’s on-site representatives[4].  The Defendant also agreed to carry out construction according to the Plaintiff’s latest construction drawings and construction sequence and arrangement[5].

(2)  As part of the reclamation works, the Defendant was required to deposit fill material for the formation of land behind a temporary working platform (“TWP”) and subsequently a seawall constructed thereon on the eastern coast of Chek Lap Kok Island up to the level of +2.50mPD[6].

(3)  A Construction Drawing No 4809-RC-2034 (“the Construction Drawing”) issued by HyD, which the Plaintiff issued to the Defendant on 19 December 2012, provided that “Type A fill” was to be used as the deposit fill material.  Note 1 on that drawing states as follows –

“To maximize the use of public fill, Type A fill (sand fill with public fill) will be adopted for filling below +2.5mPD. The actual use of public fill will depend on the settlement design, site progress, and availability of filling materials, etc. In any case, the Type A fill should contain no more than 30% of public fill.”

(4)  The parties were in dispute as to the composition of the Type  A fill which should be used by the Defendant.  According to the Plaintiff, the Defendant was obliged under the Subcontract to maximize the use of public fill in the reclamation to 30%, absent special circumstances which did not arise.  We shall refer to the specific contractual provisions that the Plaintiff relies upon later in this judgment.  On the other hand, the Defendant says that it was entitled to use sand fill for the reclamation by reason of a specific agreement that it had reached with the Plaintiff prior to the award of the Main Contract.  The practical difference between the parties lies in the fact that sand fill is substantially more expensive than public fill[7].

(5)  For the reclamation from the seabed up to the level of +1mPD, the parties were agreed that 100% sand fill was used as the deposit fill material as required by the Main Contract, but they disagreed on the actual quantity of sand fill used (to the extent of 2,754.55 m³).

(6)  The major difference between the parties concerned the deposit fill material that should be used, and was in fact used, by the Defendant in the reclamation from +1mPD up to +2.5mPD –

(a)  The Defendant’s primary position was that it was entitled to charge for 233,699 m³ of sand fill used[8].

(b)  While maintaining the Defendant’s primary position, the Defendant’s expert (Mr Nie) also made an alternative assessment based on the Plaintiff’s position that public fill had been deposited below +2.5mPD, and the alternative assessment was on the footing that 30% of the deposit material was public fill and the balance 70% was sand fill[9].

(c)  On the other hand, the Plaintiff’s case was that the Defendant should be permitted to charge only 15,809.29 m³ of sand fill so that the overall quantities of sand fill and public fill used by the Defendant for the reclamation works from the seabed to +2.5mPD would be in the ratio of 70% to 30%, in view of the Defendant’s obligation to maximize the use of public fill.

9.The Arbitrator accepted the alternative assessment provided by Mr Nie.  In summary, the Arbitrator found that:

(1)  The Defendant had proposed to the Plaintiff at a tender meeting on 2 April 2012, prior to the award of the Main Contract, to use sand fill as Type A fill, and the Plaintiff accepted that proposal[10].

(2)  The parties agreed that 100% sand fill was used beneath +1mPD.  The difference between the parties was what material was used for the reclamation from +1mPD to +2.5mPD[11].

(3)  Based on the joint survey records[12]: (i) the total quantity of sand fill used below +1mPD was 294,739 m³, and (ii) the total quantity of Type A fill used between +1mPD and +2.5mPD was 233,699 m³.

(4)  The Type A fill used in the reclamation from +1mPD to +2.5mPD was neither 100% sand fill nor 100% public fill[13].

(5)  The Type A fill used for the reclamation works from +1mPD to +2.5mPD should comply with the “maximum 30% public fill” requirement[14]. Mr Nie’s alternative assessment was preferable, ie 70% of sand fill and 30% of public fill for the deposit fill material used in the reclamation from +1mPD to +2.5mPD[15].

(6)  The amount that the Defendant was entitled to be paid for the Type A fill used in the reclamation works from the seabed to +2.5mPD should be computed as follows –

(a)  sand fill (at the rate of HK$150 per m³): HK$150 x [294,739 + (233,699 x 70%)]; and

(b)  pubic fill (at the rate of HK$47 per m³): HK$47 x (233,699 x 30%)[16].

10.The question of law which the Plaintiff seeks leave to appeal in respect of the Arbitrator’s determination in respect of BQ Item 17 Claim is as follows:

“… what was the requirement, in the light of the Environmental Permit and HKR’s subcontract obligations, for the use of public fill in the reclamation deposited by HKR from the seabed (generally taken at minus 2.0mPD) to +2.5mPD and, consequently, the extent of HKR’s entitlement to be paid for the public fill portion and the sand fill portion within the overall Type A fill.”[17] (“Question 1”)

11.The Double Recovery Issue arose in the following circumstances:

(1)  BQ Item 18 relates to “Size 10 to 37.5mm, rockfill for temporary working platform (material supplied by Sub-contractor)”[18].  The Arbitrator made an award of $73,649,250 in favour of the Defendant, based on the quantity of 490,995 m³ at the rate of $150 per m³[19].

(2)  BQ Item 19 relates to “Remove 10 to 37.5mm, rockfill for temporary working platform for construction of seawall”[20], and provides for the rate of HK$60 per m³.  The Arbitrator accepted Mr Nie’s evidence that the quantity of rockfill involved was 324,858 m³, and thus the Defendant was entitled to be paid $19,491,480 ($60 x 324,858)[21].

(3)  Extra Works No 20 relates to the “[t]he 40mm Rockfill at CH +0550 to CH +2070 in place of sand fill”[22] in the reclamation works.  In the arbitration, one of the disputes between the parties concerned the 23,059 m³ of the rockfill deposited after 31 October 2013 (“the Subject Rockfill”) –

(a)  The Plaintiff contended that the Subject Rockfill was removed from the TWP and redeployed and reused as sand equivalent for the reclamation works[23]. Since the Defendant had already been paid for the Subject Rockfill used for the construction of the TWP under BQ Item 18, the Defendant was not entitled to be paid for the same material under Extra Works No 20.

(b)  On the other hand, the Defendant, while accepting that the Subject Rockfill was “reused” material[24], argued that there was no factual foundation for the Plaintiff’s expert (Ms Je)’s view that the materials removed from the TWP had been redeployed or reused as the Subject Rockfill[25].

(4)  The Arbitrator accepted the Defendant’s argument, and held that Ms Je’s view that the materials removed from the TWP had been redeployed or reused as the Subject Rockfill had no factual basis[26].

(5)  In view of the Defendant’s acceptance that the Subject Rockfill was reused material which belonged to the Plaintiff, the Arbitrator deducted the material cost (at the rate of $50 per m³), and assessed the Defendant’s entitlement under Extra Works No 20 in the sum of $2,305,900 [($150 - $50) x 23,059][27].

12.The Plaintiff now argues that there was double recovery under BQ Item 19 and Extra Works No 20 by the Defendant, and seeks leave to appeal in respect of the following question of law:

“Whether it is lawful to award the same subject matter twice (albeit at different rates), resulting in a double-recovery in favour of one party (here, HKR).”[28] (“Question 3”)

Pausing here, it may be noted that the issue raised under Question 3, namely, double recovery under BQ Item 19 and Extra Works Item 20, was not an issue raised by the Plaintiff in the arbitration for determination by the Arbitrator.

THE DECISION

13.On 24 June 2024, the Plaintiff issued an originating summons seeking leave to appeal against the Award in respect of 4 questions.  Only Questions 1 and 3 referred to at §§10 and 12 above are relevant for the present purpose.

14.By her written decision dated 22 November 2024 (“the Decision”), the Judge refused to grant leave to appeal.

15.In respect of Question 1, the Judge held that:

(1)  Question 1 substantially affected the rights of the parties[29].

(2)  Question 1 was not one of general importance, and hence the “obviously wrong” test should be applied[30].

(3)  Question 1 was a question which the arbitral tribunal was asked to decide in the arbitration, because one of the questions submitted to the tribunal for determination was whether there had been incorporated into the Subcontract the obligation for “public fill to be used whenever possible” (as specified in the Main Contract), and for the “maximization of the use of suitable public fill”.  That was a mixed question of fact and law which would inevitably require the tribunal to consider the relevant terms and conditions governing the contractual obligations of the Defendant with regard to the use of public fill, the proportion to be used in its works, and the legal effect of such terms and conditions[31].

(4)  Question 1 was nothing more than a challenge to the Arbitrator’s findings of fact, disguised as a purported error of law, for the following reasons –

(a)  The Arbitrator found that, notwithstanding the Environmental Permit requirements, the Plaintiff was not entitled to contend that Type A fill had to be 30% public fill because the Plaintiff had already agreed at the tender meeting that Type A fill would be 100% sand.  The Arbitrator considered that such agreement was reflected by the Plaintiff’s change of description of BQ Item 17 from “Type A fill to +2.5mPD” to “Sand fill (material supplied by Sub-contractor) in the Subcontract booklet”.

(b)  The Arbitrator accepted the evidence of the Defendant that as a result of the exchange between the parties as to the type of material they were proposing under Type A fill and the price therefor, the Defendant had proposed 100% sand to be used, and such proposal had been accepted by the Plaintiff.

(c)  The Arbitrator rejected the Plaintiff’s argument that Note 1 of the Construction Drawing required the maximization of public fill at 30% overall in the reclamation, finding that it was the Plaintiff which was responsible for the settlement design and to instruct the Defendant to use the appropriate percentage of the two fills, but the Plaintiff had never done so.

(d)  The court was not entitled to interfere with the above factual findings of the Arbitrator[32].

(5)  It would also appear that on the question of whether the obligation to maximize the use of public fill had been incorporated into the Subcontract, the tribunal answered it by construing the obligation in the manner set out at §48 of the Reasons, and finding that (even if the obligation had been incorporated) there was no breach by the Defendant of such obligation[33].

(6)  The Arbitrator’s conclusion was neither “obviously wrong”, nor (if the Judge was wrong on the applicable test) “open to serious doubt”[34].

(7)  Accordingly, leave to appeal on Question 1 was refused[35].

16.In respect of Question 3, the Judge held that:

(1)  Question 3 substantially affected the rights of the parties[36].

(2)  Question 3 as formulated was not one which the tribunal was asked to decide in the arbitration.  The Plaintiff had never raised the issue of double recovery prior to the making of the Award.  When the Plaintiff later sought to correct the Award under the “slip rule” on the ground that there had been double recovery, the Defendant objected on the basis that this was a “new submission that blatantly [violated] the rules of the Arbitration, as it [was] not permitted to introduce such submissions at this stage”.  The Arbitrator agreed with the Defendant’s submission, and refused to correct the relevant part of the Award[37].

(3)  In any event, on a proper reading and understanding of the Award, there was no overlap of the rate for Extra Works No 20 and the rate for BQ Item 19.  It was the Defendant’s case in the arbitration that the former was concerned with “the deposition cost and the rate for the formation of the rockfill” and BQ Item 19 was concerned with measuring the quantity for “excavating the rock fill”, whereas the Plaintiff’s submission was that the rate of BQ Item 19 should apply for Extra Works No 20 as well.  The Defendant’s submission was apparently accepted by the Arbitrator, with the result that Extra Works No 20 was an award for “deposition cost, without any element of excavation”.  It could not readily be seen that the Arbitrator’s decision was either “obviously wrong” or “open to serious doubt”[38].

(4)  Accordingly, leave to appeal on Question 3 was refused.

THE LEAVE DECISION

17.By a written decision dated 7 February 2025 (“the Leave Decision”), the Judge granted the Plaintiff leave to appeal against her earlier decision of 22 November 2024 in respect of Questions 1 and 3.

18.In respect of Question 1, the Judge considered that it was reasonably arguable that the tribunal’s decision on that question was in substance a matter of construction of the Subcontract, its provision and the drawings, and the parties’ obligations thereunder, and that the intended appeal was not merely against the Arbitrator’s finding of fact as to what the parties had agreed as a result of their meetings and discussions.  The Judge also took the view that it was reasonably arguable that the Arbitrator decided Question 1 as to whether the parties had agreed on the maximum use of sand, but failed to consider the effect of the Subcontract provisions and the drawings, and whether or how these could be affected by the tender meeting discussions. On this footing, it was reasonably arguable that the tribunal had erred in law, and the decision of the tribunal could be said to be obviously wrong[39].

19.In respect of Question 3, the Judge considered that it was reasonably arguable that if the Award and the amount allowed thereunder actually resulted in the Defendant obtaining double recovery, the tribunal erred in law and the determination would be one that was out of conformity with the only correct answer or lay outside the range of possible correct answers, and could be made the subject of an appeal on a question of law arising from the Award[40].

20.Pursuant to the leave to appeal granted by the Judge, the Plaintiff served a Notice of Appeal dated 14 February 2025 challenging the Judge’s conclusions in the Decision in respect of Questions 1 and 3.

DISCUSSION

Relevant principles

21.It is common ground that the provisions of Schedule 2 to the Arbitration Ordinance, Cap 609, apply to the arbitration between the Plaintiff and the Defendant in the present case.

22.Section 5 of Schedule 2 makes provisions for an appeal against an arbitral award on a question of law:

(1)  Under s 5(1), subject to s 6, a party to arbitral proceedings may appeal to the court on a question of law arising out of an award made in the arbitral proceedings.

(2)  Under s 5(3), the court must decide the question of law which is the subject matter of the appeal on the basis of the findings of fact in the award.

23.Section 6 of Schedule 2 provides for leave to appeal against an arbitral award on a question of law.:

(1)  Under s 6(1), an appeal under s 5 on a question of law may not be brought by a party to arbitral proceedings except – (a) with the agreement of all the other parties to the arbitral proceedings, or (b) with the leave of the Court of First Instance of the High Court.

(2)  Under s 6(2), an application for leave to appeal must – (a) identify the question of law to be decided, and (b) state the grounds on which it is said that leave to appeal should be granted.

(3)  Under s 6(4), leave to appeal is to be granted only if the court is satisfied of three conditions, namely, (a) the decision of the question will substantially affect the rights of one or more of the parties, (b) the question is one which the arbitral tribunal was asked to decide, and (c) on the basis of the findings of fact in the award – (i) the decision of the arbitral tribunal on the question is obviously wrong, or (ii) the question is one of general importance and the decision of the arbitral tribunal is at least open to serious doubt.

24.The principles for granting leave to appeal have been set out by the Judge at §§2 to 7 of the Decision, and are not in dispute. In summary:

(1)  The application for leave to appeal on a question of law arising out of an award is a filtering process.

(2)  In carrying out this filtering process, the court gives effect to the policy embodied in the Arbitration Ordinance, whereby the interests of finality are placed ahead of the desire to ensure that the arbitrator’s decision is strictly in accordance with the law.  Some examination of the merits takes place, but the examination is summary in nature.  The exercise is discretionary throughout, and the mesh of the filter is fine: Finelvet AG v Vinava Shipping Co Ltd (The “Chrysalis”) [1983] 1 WLR 1469, at 1474E-F per Mustill J (as he then was).

(3)  The arbitrator’s process of reasoning can be divided into three stages.  First, the arbitrator ascertains the facts.  This process includes the making of findings on any facts which are in dispute. Second, the arbitrator ascertains the law.  This process comprises not only the identification of all material rules of statute and common law, but also the identification and interpretation of the relevant parts of the contract, and the identification of those facts which must be taken into account when the decision is reached.  Third, in the light of the facts and the law so ascertained, the arbitrator reaches his conclusion.  It is only the second stage of the process which is the proper subject matter of an appeal on law: Finelvet AG, at 1475A-E.

(4)  The onus is on the applicant to demonstrate, quickly and easily, without meticulous argument, that the decision of the tribunal is “obviously wrong”, or “at least open to serious doubt” (depending on which limb of s 6(4)(c) is applicable).  On either test, the threshold is high.  See Chun Wo Construction & Engineering Co Ltd v The Hong Kong Housing Authority [2018] HKCFI 147, at §§12-13 per Mimmie Chan J.

(5)  The assessment of whether the decision of the tribunal is at least open to serious doubt can be subjective, and different judges can reasonably come to different views: Maeda Kensetsu Kogyo Kabushiki Kaisha (also known as Maeda Corporation) and China State Construction Engineering (Hong Kong) Limited v Bauer Hong Kong Limited, HCMP 1342/2017, 4 September 2017, at §18 per Lam VP (as he then was).

(6)  In a matter concerning the construction of a document, the court dealing with the application for leave to appeal may have a different view as to the possible meaning of a provision, but it does not follow from that, that the meaning ascribed by the tribunal to that provision is “obviously wrong” (§7 of the Decision).

25.It should also be borne in mind that although the Judge has granted leave to appeal, the present appeal is an appeal against an exercise of discretion by the Judge.  Accordingly, the usual principles governing an appeal against discretion is applicable.  This Court should not intervene in the Judge’s decision unless she has erred in law or approach, or has failed to take into consideration relevant matters or has taken into consideration irrelevant matters, or her decision is plainly wrong.

Question 1

26.§§1 to 4 of the grounds of appeal relate to Question 1.  In substance, they boil down to one point, namely, that by reason of various provisions of the Subcontract (read together with the Main Contract) and some other documents, the Defendant was under an obligation to use public fill in the reclamation “whenever possible”, subject to an upper limit of 30%. This means that the Defendant had a positive obligation to use 30% of public fill, absent a contractual basis not to do so, and such obligation overrode the oral agreement entered into by the parties prior to the award of the Main Contract[41].

27.The contractual provisions and the documents that the Plaintiff argues give rise to the Defendant’s obligation to maximize the use of public fill in the reclamation “whenever possible”, subject to an upper limit of 30%, include:

(1)  §1.31F(4) of Section 1 (General) of Part 14 (Construction Specification) of the Main Contract: “The Contractor shall devise his Works Programme for the maximization [of] use of suitable public fill and provide adequate resources to implement the Works … The Contractor shall take priority to use suitable public fill for the Works.  The Contractor shall justify, in writing, the needs for the use of materials other than suitable public fill for the endorsement by the PFCC and the Supervising Officer.  Under any circumstance, the Contractor is not entitled to additional payment and time for the use of other alternative materials instead of suitable public fill in any circumstances.”

(2)  §6.09(14) of Section 6 (Earthworks) of Part 14 (Construction Specification) of the Main Contract: “Recycled fill materials, defined as suitable public fill and those materials in Clause 6.09(16), shall be used whenever possible, as imported granular fill, sub-base and rock fill materials for the Contract.”

(3)  §6.09(20) of Section 6 (Earthworks) of Part 14 (Construction Specification) of the Main Contract: “Type A fill material shall consist of sand fill … and public fill … in compliance with the relevant requirements of Environmental Impact Assessment Report and/or Environmental Permit (including its associated variations).”

(4)  §21.12(9) of Section 21 (Marine Works) of Part 14 (Construction Specification) of the Main Contract is to the same effect.  It states: “Type A fill material shall consist of sand fill … and suitable public fill … in compliance with the relevant requirements of Environmental Impact Assessment Report and/or Environmental Permit (including its associated variations).”

(5)  §3.12 of Environmental Permit No.:EP-352/2009/A: “Not more than 30% public fill shall be used for reclamation filling below +2.5mPD, unless otherwise agreed by the Director.”

(6)  The Construction Drawing, Note 1: “To maximize the use of public fill, Type A fill (sand fill with public fill) will be adopted for filling below +2.5mPD.  The actual use of public fill will depend on the settlement design, site progress, and availability of filling materials, etc.  In any case, the Type A fill should contain no more than 30% of public fill.”

28.If these provisions and documents stand alone, the Plaintiff would have a strong argument to say that the Defendant was under a contractual obligation to maximize the use of public fill in the reclamation works, up to the limit of 30% (although not necessarily in the ratio of 70% of public fill to 30% of sand fill).  However, the above provisions and documents do not stand alone.  The Arbitrator found that there was a specific oral agreement reached between the Plaintiff and the Defendant at the tender meeting on 2 April 2012 that the Defendant was entitled to use 100% sand as Type A fill under BQ Item 17[42]. Although that oral agreement was made prior to the award of the Main Contract (and therefore prior to the making of the Subcontract), it was reflected in the Bills of Quantities which was expressly made part of the Subcontract documents (see Item 6 of §15 of the Special Conditions of Subcontract).  A copy of the Bills of Quantities was also annexed to the Subcontract as Appendix 4.  The Arbitrator found that, because of this agreement, the Plaintiff changed the description of BQ Item 17 from “Type A fill to +2.5mPD” in the Pre-bid Agreement to “Sand fill (material supplied by Sub-contractor)” in the Subcontract booklet[43].

29.In substance, the Arbitrator found that the oral agreement made on 2 April 2012 was part of, or had been incorporated into, the Subcontract.  The Plaintiff’s submission that the oral agreement was inconsistent with the written terms of the Subcontract is beside the point. There is no principle of law which requires that all the terms of a construction contract (or subcontract) must be in writing, or that such a contract cannot be partly oral and partly written.  The Arbitrator’s finding that there was a specific oral agreement reached by the parties concerning the use of sand as Type A is a finding of fact.  By virtue of s 5(3) of Schedule 2 to the Arbitration Ordinance, the court must decide the question of law on the basis of the findings of fact in the award. In view of this finding of fact by the Arbitrator, the Arbitrator’s decision that the Defendant was not under a contractual obligation to maximize the use of public fill to the extent of 30% in the reclamation works cannot, in our view, be said to be “obviously wrong” or “open to serious doubt”.  There is no suggestion by the Plaintiff that, absent the alleged obligation on the part of the Defendant, the Arbitrator was wrong to have assessed the Defendant’s entitlement to be paid for the reclamation works (i) from the seabed to +1.0mPD on the basis of 100% of sand fill, and (ii) from +1.0mPD to +2.5mPD on the basis of 30% of public fill and 70% of sand fill.

30.The Judge was entitled to take the view that the Plaintiff’s argument on Question 1 is nothing more than an impermissible challenge to the Arbitrator’s finding of fact.  It was also open to the Judge to take the view that the Arbitrator’s conclusion was not “obviously wrong” or “open to serious doubt”.  We see no basis to intervene in the Judge’s exercise of discretion to refuse to grant leave to appeal in respect of Question 1.

Question 3

31.§§5 to 7 of the grounds of appeal relate to Question 3, and can be disposed of briefly.

32.The Plaintiff’s argument proceeds on the basis that 23,059 m³ of rockfill that had been deposited as part of the TWP by the Defendant and paid for under BQ Item 18 were reused (as sand equivalent) in the reclamation at CH +0550 to CH +2070.  The Plaintiff argues that the “excavation, transportation and deposition” of the rockfill formed part of the scope of works under Extra Works No 20, and the scope of works for BQ Item 19 also included the “excavation, transportation and depositing” of the same material, and thus there is a complete overlap of the two items and the Arbitrator had allowed double recovery in respect of the reuse of 23,059 m³ of rockfill[44].

33.The validity of the Plaintiff’s argument depends on the true nature of the scope of works under BQ Item 19 and Extra Works No 20.  As pointed out by the Judge, the Arbitrator apparently accepted the Defendant’s case that Extra Works No 20 was an award for the “deposition” cost, without any element of excavation[45], while BQ Item 19 was concerned with measuring the quantity for “excavating” the rockfill only[46]. On that footing, there was no overlap between the 2 items.

34.While it is possible for different views to be taken as regards the true nature of the scope of works under BQ Item 19 and Extra Works No 20, as mentioned at §24(6) above, the mere fact that there could be different views on the true construction of a document does not lead to the conclusion that the tribunal’s conclusion was “obviously wrong” or “at least open to serious doubt”.  The Judge took the view that it could not readily be seen that the Arbitrator’s decision was either “obviously wrong” or “open to serious doubt”.  In the context of an appeal against an exercise of a discretion by the Judge, the question that this Court has to answer is whether the Judge was plainly wrong in coming to that view.  We are not satisfied that the Plaintiff has successfully crossed this high threshold.

35.Having reached the above conclusions, it is not necessary to consider the Respondent’s Notice dated 7 March 2025, save to point out that, as argued by the Defendant at §7 of the Respondent’s Notice, the Arbitrator expressly rejected the Plaintiff’s case that the Subject Rockfill came from the rockfill removed from the TWP, holding that it had no factual support or basis.  The rejection of this underlying premise means that the Plaintiff’s argument of double recovery by the Defendant under BQ Item 19 and Extra Works Item 20 cannot even get off the ground.  For this reason as well, leave to appeal in respect of Question 3 ought to be refused.

DISPOSITION

36.The Plaintiff’s appeal is dismissed, and the Judge’s order dated 22 November 2024 dismissing the Plaintiff’s originating summons filed on 24 June 2024 seeking leave to appeal against the Award of the Arbitrator is affirmed.

37.We further make an order nisi that the Plaintiff shall pay the Defendant’s costs of this appeal (including the costs reserved by the Judge when granting leave to appeal), to be taxed if not agreed.  The above costs order nisi shall become absolute unless an application is made to vary the same within 14 days from the date of this judgment.

Mr Peter Clayton SC, instructed by Pinsent Masons, for the Plaintiff

Mr Anthony Chan SC leading Mr Solomon Lam, instructed by Wong & Lawyers, for the Defendant