Udl Kenworth Engineering Ltd. v. Pollard Construction Co. Ltd.
Read the full judgment text of HCCT 121/1999 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 31 January 2000 before Hon Burrell J in Chambers.
Arbitration — stay of proceedings — arbitration clause in sub-contract — whether taking out summons for security for costs repudiates arbitration agreement — whether a dispute exists for stay under s.6 Cap.341. Plaintiff sued defendant for breach of sub-contract claiming $1,353,768. Defendant applied to stay proceedings pending arbitration based on arbitration clause. Defendant also applied for security for costs. Court held defendant did not repudiate arbitration agreement by applying for security for costs as it had consistently sought stay. Following Tai Hing Cotton Mill Ltd v. Glencore Grain Rotterdam, a dispute exists as defendant did not admit the sum claimed. Plaintiff’s Order 14 summary judgment summons dismissed; defendant’s stay application granted; defendant withdrew security for costs summons. Orders including costs to defendant granted.
Legal issues: Repudiation of arbitration agreement by security for costs summons · Existence of a dispute under Arbitration Ordinance s.6
Outcome: Defendant's application to stay proceedings granted; plaintiff's summary judgment summons dismissed; defendant's security for costs summons withdrawn.
Cited by 1 case · Cites 1 case
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HCCT000121/1999 HCCT121/1999 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO.121 OF 1999 -------------
-------------- Coram : Hon Burrell J in Chambers Date of Hearing : 26 January 2000 Date of Decision : 26 January 2000 Date of Reasons for Decision : 31 January 2000 ------------------------------------------- REASONS FOR DECISION -------------------------------------------- 1. There are three summonses before the court. Chronologically they are, firstly, the plaintiff's summons for summary judgment pursuant to Order 14 dated 24 September 1999. Secondly, the defendant's counter-summons for the proceedings to be stayed for the purposes of referring the case to arbitration dated 27 September 1999. Thirdly, the defendant's summons for security for costs dated 16 December 1999. After preliminary arguments on the proper order in which the summonses should be heard, the application for a stay was heard first. At the conclusion of the hearing, I gave the court's decision that the application for a stay would be granted. I now give brief reasons. 2. The plaintiff has sued the defendant for breach of a sub-contract in the sum of $1,353,768 for electrical and mechanical works carried out at the KCRC station at Fanling. The sub-contract contains an arbitration clause, the relevant part of which states :-
3. As I understand it, Mr Chiu, who appeared for the plaintiff, makes two submissions in support of his argument that this clause does not apply. Firstly he contends that because the defendant took out a summons in December 1999 for security for costs in the plaintiff's case generally and particularly with regard to its Order 14 summons, the defendant has repudiated the arbitration agreement and/or has evinced an intention no longer to be bound by the arbitration clause. Secondly, and alternatively, the defendant has not shown that a dispute exists between the parties and therefore the matter cannot be referred to arbitration. Both submissions must fail and I will deal with each briefly. 1. Repudiation of the arbitration clause by virtue of taking out an Order 23 summons 4. Mr Chiu submits that because the defendant is asking for security for costs in the High Court action, they are demonstrating a desire to be a party to a court hearing in which the judge will have to consider, amongst other things, the relative merits of the plaintiff's and the defendant's cases in order to decide whether or not to order security. Even though, the argument continues, the defendant's summons for a stay was the first step taken by it in a prompt response to the plaintiff's Order 14 summons and even though the defendant's first affirmation dated 3 November 1999 was to seek the plaintiff's consent to a stay (which predates its Order 23 summons by six weeks) and even though the purpose of the Order 23 summons was to protect the defendant's position on costs in the High Court should the stay be refused, Mr Chiu maintained that the mere taking out of the summons should be construed as an unequivocal demonstration of an intention not to pursue the arbitration. 5. There can be no doubt in my judgment that the defendant has taken all the proper steps expeditiously and in the correct order. I find no merit in the plaintiff's argument. It is plain and unarguable that the defendant has consistently expressed and maintained its intention to arbitrate. It cannot be said that the 16 December 1999 Order 23 summons extinguishes, affects or even dilutes that intention. 2. No dispute? 6. Since the amendment of s.6 of the Arbitration Ordinance, Cap.341, the law on this issue is clearly stated in Tai Hing Cotton Mill Ltd v. Glencore Grain Rotterdam BV & Anor. [1996] 1 HKC 363 at p.373 :
By s.6(1) of Cap.341 :-
Article 8(1) of the Model Law reads :-
7. The law is that there is a dispute until the defendant admits the sum is due and payable. There is an abundance of evidence that the defendant does not admit the sum claimed. There is no evidence that it does admit it. 8. In a forlorn attempt to persuade the court that the definition of "a dispute" was defined too narrowly, Mr Chiu, for the plaintiff, referred the court to authorities which pre-dated the Tai Hing decision and which were decided on different considerations which have no application to the issue to be resolved in this case. He then went on to argue that if the notion of "a dispute" should be defined more widely, then the court should consider whether the defendant had an arguable defence and if not, there was no dispute and the stay application should be refused and the Order 14 summons allowed. 9. This court does and must apply the Tai Hing authority which deals with the Arbitration Ordinance as it now is. That being the case, there is no room for argument. There is simply no basis for the plaintiff's contention that there are no grounds upon which the court should refer the matter to arbitration. 10. I heard the parties also on two consequential matters. Firstly the effect of this decision on the appropriate orders in all three of the summonses before the court. Secondly, the proper order as to costs. Orders to dispose of the remaining summons 11. As far as the Order 23 summons is concerned, the defendant very properly applied to withdraw it. There is no further need for it in the High Court proceedings. 12. As far as the Order 14 summons is concerned, I agree with Mr Harris for the defendant that it should be dismissed. Mr Chiu suggested I should consider giving conditional leave to defend. The logic of this proposal was difficult to discern given that there was no cause to defend in the High Court proceedings following my decision on the stay application. Costs 13. I was asked by Mr Harris to award indemnity costs on the stay application and the Order 14 summons. He also asked the court to assess the costs at a future hearing to be scheduled for that purpose. I decline both of these requests. His request for indemnity costs was not without substance but on balance I consider it not to be a case which merits such an order. The final orders are therefore as follows :
Representation: Mr M. C. Chiu, instructed by Messrs Joseph C. T. Lee & Co., for the Plaintiff Mr Jonathan Harris, instructed by Messrs Liu, Szeto & Partners, for the Defendant |
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