Read the full judgment text of HCCT000002/1991 on BabelCite. This HIGH COURT judgment was delivered on 31 July 1991 before Kaplan, J. in Chambers.
Building contract dispute involving subcontract for electrical works where plaintiffs seek payment under certified interim certificates. Central issues include interpretation of 'pay when paid' clause, absence of architect's certificate for delay and consequential entitlement to liquidated damages, and whether contractual provisions exclude the defendants’ Common Law right of set off. The court examined established authorities from local and UK jurisprudence on the effect of architect certification as a condition precedent to liquidated damages claims, and the requirements for clear express exclusion of Common Law set off rights by contract. The ex turpi causa defence was rejected on lack of illegality or immorality. Given the existence of arbitration clause and arguable legal and factual disputes, the court declined summary judgment and granted defendants unconditional leave to defend with a stay of proceedings for arbitration under s.6 of Arbitration Ordinance, Cap. 341. The judgment underscores the complex interplay between contract terms and Common Law rights, and adherence to agreed dispute resolution processes. Costs for interlocutory applications were awarded to the defendants on a costs order nisi. This ruling ensures all contentious issues will be decided by the arbitrator, safeguarding procedural fairness and respecting party autonomy in dispute resolution.
Legal issues: Pay when paid provision and meaning of 'receipt of payment' · Condition precedent of architect’s certificate for liquidated damages claim · Exclusion of Common Law right of set-off by contract · Stay in favour of arbitration under contract’s arbitration clause · Application of ex turpi causa defence · Leave to defend under O.14 for other reasons for trial
Outcome: Defendants granted unconditional leave to defend; proceedings stayed in favour of arbitration;