Pharmakon International Laboratory Ltd. v. Lotus Architects Ltd.
Read the full judgment text of HCCT106/1999 on BabelCite. This HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE judgment was delivered on 10 January 2000 before Hon Burrell J.
Arbitration — Appeal against award — Leave to appeal principles — Arbitration Ordinance Cap. 341 s.23 — Interpretation of contract terms concerning fee calculation when services partially provided — Standard form contract Clause 3.3.8 — Whether contract letter contained an agreed cost limit — Application of Nema guidelines setting high threshold for leave to appeal one-off questions of law — Court affirms arbitrator's interpretation that letter contained only an estimated budget, not agreed limit — Applicant failed to show arbitrator was plainly or obviously wrong — Leave to appeal refused — Costs awarded to Respondent.
Legal issues: Leave to appeal arbitration award
Outcome: Leave to appeal refused; application dismissed.
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HCCT000106/1999 HCCT106/1999 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO.106 OF 1999 -------------
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-------------- Coram: Hon Burrell J in Chambers Date of Hearing: 6 January 2000 Date of Judgment: 10 January 2000 ----------------------- J U D G M E N T ----------------------- 1. By a Notice of Originating Motion dated 3 November 1999, the applicant seeks leave to appeal an arbitration award made by Mr Philip Nunn on 11 October 1999 pursuant to section 23 of the Arbitration Ordinance, Cap.341. 2. The appeal, if leave is granted, would be concerned with how certain fees should be calculated when only partial service has been provided. It is not necessary for me to give a detailed background to the dispute. I find myself able to give a decision on this motion by applying the basic principles in leave applications to appeal arbitrators' awards. Counsel for both parties agree what those principles are. 3. Mr Coleman, for the applicant, correctly submitted that where leave to appeal to the court is sought, there is a presumption in favour of finality and against granting leave. However, that presumption is to be reviewed on a sliding scale. At one end of the scale are questions of law arising in "one off" cases giving rise to no question of construction or involving peculiar or special facts or in which the general market and the commercial community has no interest. At the other end of the scale are questions arising from standard form contracts, relating to events which are likely to recur and which have given rise to a question of law, decided or to be decided by non-legal arbitrators. 4. Mr Bartlett submitted on the respondent's behalf, also correctly, that the principles are well settled and embodied in the "Nema" guidelines (as per Lord Diplock in Pioneer Shipping Ltd v. BTP Tioxide, The Nema [1982] AC 724), namely, where the question of law in relation to which leave is sought is a one-off question because e.g. it depends upon construction of a non-standard contractual term or upon application of a legal principle to an unusual set of facts, leave will not normally be given unless it is apparent to the court upon a mere perusal of the reasoned award itself that the arbitrator was plainly or obviously wrong. The court must also bear in mind the observations of Lord Diplock in the Nema that, save in circumstances such as those mentioned above, the parties should be left to accept, for better or for worse, the decision of the tribunal that they had chosen to decide the matter in the first place. 5. In this case, leave to appeal will not be granted. On the sliding scale to which Mr Coleman refers, I find it is not at the end he submits. I accept Mr Bartlett's submission that, at best it is a "one off" case which does not merit intervention by an appellate court. 6. Putting the matter briefly, the arbitrator's decision centres on whether or not a contract letter between the parties should be construed as containing an "agreed cost limit" because if it did it would be that "agreed cost limit" which would apply to Clause 3.3.8 in the standard form contract which provided as follows :-
7. The arbitrator's first task therefore was to interpret the contract letter, not the standard form contract. The letter plainly gave rise to a "one-off" situation between these two parties only and did not give rise to "questions arising from standard form contracts generally". The question was, what, if anything, was "the most recent cost limit agreed" in this case? He found that the letter in question did not contain any agreed cost limit. It merely contained an estimated budget which should not and could not be construed as an agreed limit. 8. That being the case, this application for leave is plainly at the other end of the sliding scale contended by Mr Coleman. 9. In these circumstances, leave will only be granted if the applicant can show the arbitrator was plainly or obviously wrong in concluding that the original contract letter should not be construed as containing an agreed costs limit. The arbitrator's conclusion that it could not be so construed cannot be faulted. He said :-
10. It is worthy of note also that the reference to "HK$80 million" in the letter is in the following context - "The Budget for the construction is about $80 million excluding manufacturing equipment". (emphasis added) 11. In short, the applicant's case on this leave application must fail unless it can show that the arbitrator was plainly and obviously wrong in construing the letter in the way he did. Having found that it has failed to discharge that burden, no further issues fall to be determined on this application and it is dismissed. 12. For the sake of completeness, even if this had been a case, as submitted by Mr Coleman, at the other end of the scale, I would have come to the same conclusion because those matters already referred to above, in addition to further matters dealt with by the arbitrator, would have led this court to the conclusion that the applicant had failed to establish a strong prima facie case that the arbitrator was wrong. 13. I finally make an order nisi that the costs of this application be the respondent's.
Representation: Mr Russell Coleman, instructed by Messrs Johnson, Stokes & Master, for the Applicant Mr Jeremy J. Bartlett, instructed by Messrs Wilkinson & Grist, for the Respondent |