Yiu Wing Construction Co. Ltd. v. Ryoden Engineering Co. Ltd.
Read the full judgment text of HCCT62/2001 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 20 December 2001 before Hon Burrell J in Chambers.
Construction and arbitration — Appeal against arbitrator’s award — Pay-when-paid clause — Partial payment and deductions — Whether arbitrator plainly wrong in factual findings — Right to set-off delay damages without architect's certificate — Costs order made without submissions — Arbitration Ordinance Cap.341 ss.23–25 — P.T. Dover Chemicals test for appeals — Edwards v. Bairstow test for error of law — Arbitration conducted on documents only before experienced counsel arbitrator. Ryoden Engineering claimed full payment under interim certificates; Yiu Wing made partial payments citing delay-related deductions. Arbitrator found Yiu Wing had been paid by employer according to 'pay when paid' clause and no entitlement to delay damages due to absence of admitted liability or certification. Costs awarded to Ryoden without further submissions. High Court held that disputed findings were factual and properly made; no basis to overturn for error of law; refusal of leave to appeal affirmed with costs to respondent.
Legal issues: Arbitrator’s factual findings on payment under a pay-when-paid clause · Right to set-off for delay without architect’s certificate · Costs and opportunity to make submissions
Outcome: Leave to appeal refused with costs
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HCCT000062/2001 HCCT62/2001 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: 17 December 2001 Date of Decision: 20 December 2001 --------------------------- D E C I S I O N --------------------------- 1.This is an application for leave to appeal against an arbitrator's award. The award, dated 27 July 2001, followed a "documents only" arbitration, before Mr Anthony Houghton. It concerned a claim by the sub-contractor, "Ryoden", for full payment under two interim payment certificates, whereas the main contractor "Yiu Wing" had only made partial payment. 2.Mr Geoffrey Shaw for Yiu Wing concedes that the issue on appeal is a "one-off" issue (as described in the P.T. Dover Chemicals case [1990] 2 HKLR 257) and that the arbitration was heard by a lawyer, Mr Houghton being an experienced counsel in this field. He therefore faces a steep gradient on the uphill task ahead of him. In short he must demonstrate to this court that the arbitrator was "so obviously wrong as to preclude the possibility that he might be right". 3.The grounds of appeal as set out in the notice of originating motion are as follows :
4.Each of the three grounds above commence with the words "The arbitrator erred in law ...". Only matters of law are appealable. Mr Simon Westbrook, SC submits, first of all, that in truth this is an attempt to appeal findings of fact, which have been dressed up as findings of law. 5.Mr Shaw's contention is that if a finding of fact has been made for which there was no evidential basis then, as a matter of law, the finding should not have been made. In the present case, I consider the complaints set out in paragraphs 4 and 5 above, do involve matters of fact only. The line between law and fact is often a difficult line to draw. Often, it is not a line at all, but a grey area involving mixed law and fact. If I am right that these are purely findings of fact, no more need be said. The issues would be unappealable and the application dismissed. 6.However, as the line between law and fact is sometimes blurred and it is arguable that Mr Shaw's complaints are of a type described by Lord Radcliffe in Edwards v. Bairstow [1956] AC 36 :
a safer course for this court to adopt is to consider the submissions in full and decide the application on its merits. 7.I now turn therefore to each of the three complaints. (1) Pay when paid clause 8.The arbitrator made two findings of law on this issue, neither of which are being appealed. Firstly he decided that clause 11(b) (the "pay when paid" clause) only obliged the main contractor to pay the sub-contractor within 14 days after receipt of payment (as opposed to within 14 days of certification). On this question he found in favour of Yiu Wing's submissions. Secondly, he decided that "receipt of payment" did not mean mere transfer of money but also included situations where a set off had been made or other deductions had been made by the employer. On this question he found in favour of Ryoden's submission. 9.He then went on to find as a fact that Yiu Wing had been "paid" by the employer and was therefore obliged to pay Ryoden in full on the interim certificate. He prefaced his decision by saying "In the circumstances it seems clear to me that the Respondent has been 'paid'... ". Mr Shaw submits that there was no evidence as to which "circumstances" made it "clear". 10.In my judgment Mr Shaw's submissions taken at their highest fall well short of demonstrating that the arbitrator was plainly and obviously wrong in making the finding that he did. 11.Yiu Wing's case was that there was no evidence that the employer had made any deductions or set off. Reliance is placed on the statement in the Quantity Surveyor's certificate which stated that the certificate was issued "without prejudice to the right of the Employer to claim at a future date Liquidated and Ascertained Damages ... ". The submission being that as its right to claim LAD in the future was mentioned it may be inferred that no set off had been made at the time of the certificate. 12.Even taken in isolation I do not think that this submission could be sufficient to persuade a court that the arbitrator was plainly wrong. The point being made is further diluted by the following observations relied on by Ryoden.
13.In all the circumstances it is not difficult to understand why the arbitrator was clear in his own judgment that as a matter of fact, Yiu Wing had been "paid". (2) Counterclaim 14.Yiu Wing claimed a set off against the monies claimed. The basis of the set off was Ryoden's liability for delaying the progress of the works. For Yiu Wing to have such a claim under the contract they had to have an architect's certificate in support. It was common ground that no such certificate had been issued. The legal issue was therefore whether or not Yiu Wing had a common law right to set off. 15.The arbitrator's approach was to assume the legal issue in Yiu Wing's favour (that the common law right to set off survived in spite of the absence of an architect's certificate) but then went on to decide, as a matter of fact, that Yiu Wing had done no more than merely assert a potential future entitlement to damages for delay by Ryoden. Ryoden had never denied the fact of delay but had never admitted responsibility for it. Future arbitrations may well decide the issue. For present purposes however the arbitrator's decision cannot, in my judgment, be faulted. Once again, it is far short of being obviously wrong. In essence the decision recognizes that full payments on interim certificates provide the life blood for sub-contractors. The blood supply should not be halted by mere unparticularized assertions of a claim for delay, the liability for which has never been admitted. (3) Costs 16.Mr Shaw submits that Yiu Wing's submissions on matters of law were largely successful and he thus had an argument for a costs order other than the one determined by the arbitrator. His complaint is that he was denied the opportunity of making submissions as to costs. 17.The problem with this ground of appeal is that, as a matter of fact, Ryoden succeeded in getting every dollar it asked for. On the question of quantum it was 100% successful. 18.I accept that it might have been preferable to have invited further written submissions on costs however, it must be observed that the prospects of persuading the arbitrator to make a different order from the one he made are indeed remote. 19.The parties had agreed on a documents only arbitration. They entrusted the issues to an experienced arbitrator. Their complaint now, that the failure to invite submissions before ordering costs to follow the event was plainly wrong, must also fail. 20.For all the above reasons leave to appeal is refused with costs of the application to the respondent.
Representation: Mr G. Shaw of Messrs Deacons, for the Applicant Mr Simon Westbrook, SC, instructed by Messrs Mallesons Stephen Jaques, for the Respondent |