Wo Hing Construction Co. Ltd. v. Yue Hing Land Investment Co. Ltd.
Read the full judgment text of HCCT52/2001 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 26 June 2002 before Hon Burrell J in Chambers.
Construction and Arbitration Law — Arbitration agreement — Validity and scope — Whether arbitration clause in consultant’s letter applies to disputes beyond fees — Held: such an arbitration agreement exists covering broader scope of disputes. — Arbitration Ordinance Cap.341 s.6(1) — Control of Exemption Clauses Ordinance Cap.71 s.15(1) — Applicability to consumer contracts — Whether defendant was dealing as consumer — Held: defendant acted in course of business as residential developer, thus not a consumer, so arbitration agreement enforceable. — Procedural outcome: application by architect-engineer for stay of proceedings granted. The defendant did not successfully rebut the presumption that the arbitration clause governs the dispute. The 1999 letter merely varied fee arrangements and did not revoke arbitration. Court recognized that jurisdictional disputes are for the arbitral tribunal. Order granted to stay proceedings pursuant to arbitration agreement.
Legal issues: Existence and scope of arbitration agreement · Applicability of section 15(1) of Cap.71 to arbitration enforcement
Outcome: Application for stay of proceedings granted under section 6(1) of Cap.341
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HCCT000052/2001 HCCT52/2001 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS ------------------------
------------------------ Coram: Hon Burrell J in Chambers Date of Hearing: 24 June 2002 Date of Decision: 26 June 2002 --------------------- D E C I S I O N --------------------- 1.This is an application by the Third Party to stay proceedings between itself and the defendant, pursuant to section 6(1) of the Arbitration Ordinance, Cap.341. 2.The action between the plaintiff (the main contractor in a substantial residential development) and the defendant (the developer) has been settled. There is no question therefore of there being parallel proceedings in court and in arbitration. The Third Party was the architect and engineer, against whom the defendant seeks to be indemnified for its liability to the plaintiff. 3.If the Third Party can establish that a valid arbitration agreement exists between the parties and that such agreement applies to the circumstances of this case, then the matter must be stayed for arbitration. The existence of an arbitration agreement 4.The Third Party relies on its letter to the defendant dated 14 January 1991. It said :
The defendant countersigned the letter. 5.The defence submit that this is merely a confirmation of an appointment but not the letter of appointment itself. They further submit that the letter then goes on to deal with the fee structure and that any arbitration agreement in it, relates solely to the matter of fees and not to any wider matters arising out of the appointment "as architects ...". The letter concludes with the arbitration provision :
6.In this application, the first burden on the Third Party is to show that there is at least an arguable case that an arbitration clause within the wider consultancy agreement (i.e. not merely concerning the level of fees) exists. I am satisfied that they have satisfied this burden. In my judgment, the defence argument that the words "This is to confirm that you have appointed us ..." should not be construed as the appointment must fail because, firstly this is the only evidence of the appointment and secondly it is a technical and unattractive argument. I am satisfied that the letter is prima facie evidence of the consultancy agreement, which is not limited to the question of fees and other related matters. It follows that the arbitration clause covers such disputes as may arise from the appointment of the Third Party as architect and engineer to the project. 7.The defence argument continues that, in any event, a letter was written by them, in January 1999 which supercedes any earlier provision for the parties to arbitrate and, effectively, revokes it making it inoperative. The 1999 letter states :
8.Again, I accept the Third Party's submission concerning the proper approach to this letter. I am satisfied that they have discharged the burden on them to show they have a prima facie case (to be determined by the arbitrator) that this letter merely supercedes the earlier fee arrangements and does not supercede the earlier consultancy appointment or the arbitration agreement that was included in it. Put simply it is a letter of fee variation not arbitration revocation. The arbitral tribunal may rule on its own jurisdiction. This court is satisfied that these particular points on jurisdiction should properly be placed before the arbitrator, because I am satisfied that a valid arbitration agreement exists which (subject to the defence's final submission below) applies to the disputes presently existing between the parties. Conduct of Exemption Clauses, Cap.71 9.The defence submit that in view of section 15(1) of Cap.71 the arbitration provision, even if existing and valid, cannot be enforced on them. The Third Party's application is based on section 6(1) of the Arbitration Ordinance. Section 6(1) is subject to section 6(3). Section 6(3) makes section 6(1) subject to section 15 of Cap.71 which provides :
10.Potentially, this gives rise to a number of points. However, the Third Party, simply submits that section 15(1) has no application because it is plain and obvious that the defendant is not "dealing as consumer" which section 15(1) requires. The expression "dealing as consumer" is defined by section 4 of Cap.71 as :
11.Section 4(3), once again, puts the burden of proof on the Third Party. In my judgment the Third Party, in this application, has amply discharged that burden, without the need for recourse to further affirmations, to prove that the defendant either did make the contract in the course of business or held himself out as doing so (section 4(1)(a)). It is open to the Third Party to point to :
12.As far as the pleadings are concerned, the defendant in its defence, admits that it was a company incorporated in Hong Kong which carried on business as a developer of residential premises and was the employer of the development in question. If more is need the defence affirmation is littered with facts, allegations and information which is consistent with such a position. In short, I find the defendant cannot rely on section 15 of Cap.71 to escape the mandatory stay in favour of arbitration. 13.For the above reasons, I grant this application for a stay pursuant to section 6(1) of Cap.341. It has been possible to state the reasons with comparative brevity due to the succinct and helpful submissions made by Ms Liza Cruden for the Third Party and Mr Andrew Hart for the defendant. There will be an order in the terms of the Third Party's summons dated 4 April 2002.
Representation: Mr Andrew Hart of Messrs Barlow Lyde & Gilbert, for the Defendant Ms Liza Jane Cruden, instructed by Messrs Koo & Partners, for the Third Party |