The Jardine Engineering Corporation Limited v. Wharf Properties Ltd.(Formerly Harbour City Ltd.)

Case No.

Court

Date—

Judge—

Case Document

100%Judiciary

CACV000028A/1985

IN THE COURT OF APPEAL

1985 No. 28

(Civil)

BETWEEN

THE JARDINE ENGINEERING CORPORATION LIMITED

and

WHARF PROPERTIES LTD. (Formerly Harbour City Ltd.)

Coram: Hon. McMullin, V.-P., Silke & Kempster, JJ.A.

Date of Hearing: 18th - 20th September 1985

Date of Judgment: 20th September 1985

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JUDGMENT

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Kempster, J.A.:

1. On 28th January of this year Rhind, J. made orders on two applications. In the first the plaintiffs, The Jardine Engineering Corporation Limited, had sought summary judgment for monies they said were due and owing to them by the defendants under a building contract relating to Harbour City, Kowloon. In the second the defendants, Wharf Properties Limited, had sought a stay of the proceedings so that what they claimed to be a dispute between the parties could go to arbitration as earlier agreed. The learned judge declined to enter summary judgment in the plaintiffs' favour and gave the defendants unconditional leave to defend. He then stayed the proceedings.

2. Thereafter the plaintiffs filed a Notice of Appeal against both orders. In part that appeal was misconceived. because no appeal lies from the grant by a judge of the High Court of unconditional leave to defend. The defendants, having seized on this aspect of the matter, moved this Court to strike out the appeal as a whole and that application was refused on the 6th of March. While the parties remain bound by the finding that a triable issue or triable issues exists or exist as. between them in relation to the relevant contract the question as to whether or not, mutatis mutandis, a dispute exists properly remains the subject of appeal albeit all of us may well be moving in the realm of semantics. In the absence of a dispute, which would not be constituted by an unarguable contention advanced by one of the parties, there was no jurisdiction to stay even if, as Mr. Lane who appears for the defendants suggests, the Court as opposed. to the arbitrator might have no power to reopen the decision on the material point given by the architect on 6th June 1984 pursuant to the arbitration clause in the contract. To the terms of that clause, 105 of the General Conditions, we now turn. The material sub-clauses read:

"(1)	If any dispute or difference shall arise between the Employer or the Architect and the Contractor in connection with or arising out of the Contract or the carrying out of the Works whether during the progress of the Works or after their com-pletion and whether before or after the termination abandonment or breach of the Contract it shall be referred to and settled by the Architect who shall state his decision in writing and shall give notice of the same to the Employer and to the Contractor.
(2)	Such decision in respect of every matter so referred shall be final and binding upon the Employer and upon the Contractor until the end. of the Period of Maintenance and shall forthwith be given effect to by the Contractor who shall proceed with the Works with all due diligence whether or not notice of dissatisfaction is given by him or by the Employer as hereinafter provided.
(3)	If the Architect shall fail to give such decision for a period of ninety days after being requested to do so or if either the Employer or the Con-tractor is dissatisfied with any such decision of the Architect then and in any such case either the Employer or the Contractor may within ninety days after receiving notice of such decision or within ninety days after the expiration of the first named period of ninety days as the case may be require that the matter shall be referred to the decisions of a single arbitrator in accordance with and subject to the provisions of the Arbitration Ordinance or any statutory modification thereof for the time being in force and any such reference shall be deemed to be a submission to arbitration within the meaning of such Ordinance but if the Architect has given a decision and has given notice thereof as aforesaid within a period. of ninety days as aforesaid. and no notice of dissatisfaction has been given either by the Employer or by the Contractor within a period of ninety days from receipt of such notice thereof the "decision of the Architect shall remain final and binding upon the Employer and the Contractor.
(4)	Such arbitrator shall have full power to open up review and revise any decision opinion direction certificate or valuation of the Architect and neither party shall be limited in the proceedings before such arbitrator to the evidence or arguments put before the Architect for the purpose of obtaining his decision above referred to."

Those provisions are sufficiently wide, we think, and this is the judgment of the Court, to allow the arbitrator to consider any sustainable point of difference arising out of the contract save as to whether or not a contract existed at all

The next material clause is 54:

"The Contractor (being the plaintiffs) shall commence. the Works on Site within the period named in the Tender after the receipt by him of an order in writing to this effect from the Architect, and shall proceed with the same with due expedition and without delay except as may be expressly sanctioned or ordered by the Architect. The Contractor shall not commence the Works without such order in writing."

It is arguable that there was thus conferred on the plaintiffs a right to receive an order requiring them to commence work on the site and correspondingly, that there was imposed on them an obligation not to do so until they had received such an order. A great deal of time has been spent below and. before us in attempting to construe this clause on the footing that its provisions were apt to trigger the running of time for the purposes of computing liquidated damages. It is at least arguable that the running of time is governed rather by clause 57:

"Subject to any requirement in the Appendix to the Form of Tender or the Specification as to Completion of any Section of the Works before completion of the whole, the whole of the Works shall be completed within the time stated in the Tender calculated from the last day of the period named in the Tender as that within which the Works are to be commenced or such extended time as may be determined in accordance with the provisions of Clause 59."

The latter clauses dealt in the usual way with variations ordered or required by the architect.

The material parts of the tender read as follows:

"2.

We (the plaintiffs) undertake if our Tender is accepted to commence the Works within 14 days of receipt of the Architect's Order to commence and to complete and deliver the whole of the Works comprised in the Contract within 500 days calculated from the last day of the aforesaid period in which the Works are to be commenced.."

"Works" are defined in clause 1(1)(x) as including all materials to be supplied and all works to be executed in accordance with the Contract.

3. No order specifically purporting to be made pursuant to clause 54 was ever given by the defendants to the plaintiffs who none the less claim to have entered on to the site and there to have commenced work on 27th September 1982. What the defendants did write to the plaintiffs was, and it is a critical document, a letter dated 1st March 1982:

"	We are pleased to advise you that we have been instruct by the Client (the defendants) to inform you of their acceptance of your tender for the Engineering Works in connection with the Building Services Unit.
	The accepted tender sum is HK$13,204,870.00 which is made up as shown on Appendix I. -
	We are preparing the Contract Documentation for signature between yourselves and Harbour City Ltd. and in the meantime you are instructed to proceed with the ordering of all materials. -"

It was acknowledged by the plaintiffs' letter dated 3rd March under the heading Acknowledgement of Letter of Intent" and in that acknowledgement the plaintiffs stated: " - Ordering of materials is commencing forthwith..." Having regard to the definition of "Works" to which we have just alluded we are satisfied that an arguable issue also;. arises as to whether the letter of lst March 1982 triggered the running of time within the meaning of clause 57 of the General Conditions and paragraph 2 of the Form of Tender. If it indeed had that effect time for purposes of calculating liquidated damages would have begun to run 14 days after 2nd March 1982. The significance of this is that the plaintiffs have claimed the unpaid balance of their contract price, save where no certificate has been issued in which regard they seek a declaration, and argued before Rhind, J., as they have argued before us, that on no basis whatsoever should or can a deduction for liquidated damages be made for what the defendants allege was a failure to meet the time limitation of 500 days calculated exactly or approximately in accordance with the provisions just read. Arguable issues raise matters of dispute.

4. These findings go beyond and may render academic the substantive paragraph of the Substituted Notice of Appeal which reads:

"On a proper construction of clause 54 that clause conferred no right upon the Plaintiffs to receive an order to commence works on site; therefore, there was no right which the Plaintiffs could waive and consequently the learned judge was wrong in finding that the defence of waiver gave rise to a dispute or difference between the parties capable of reference to arbitration."

Albeit we have found the existence of such a right arguable. They do uphold as arguable the contention in additional ground (I) of the Respondents' Notice to the effect "that the letter dated 1st March 1982 from the consultating engineer to the Appellants was a proper notice under the contract to commence the works." It follows that the defendants succeed in this appeal.

5. It is somewhat paradoxical that by letter dated 5th September 1984 the plaintiffs themselves gave notice to the defendants that they submitted to arbitration "the dispute which has arisen concerning the proper ascertainment of the date for completion of the works and your entitlement, if any, to deduct liquidated damages for sums otherwise due to us under the contract". But, perhaps by analogy with the man who wears braces as well as a belt or the attitude of the Roman God Janus or of a well-known character in "Pilgrim's Progress" the plaintiffs were concerned to prepare for all eventualities and to keep all options open.

6. We would not wish to part with this appeal without indicating that the rather laconic terms of our decision in no way do justice to the careful and detailed submissions made to us by counsel or to the way in which they have dealt with the questions put to them; for all of which we are grateful. Since the parties have agreed that any matter found to be in dispute is to be determined by an arbitrator it would not be proper in the present context to give any indication as to the way in which we think the matter should ultimately and possibly after the reception of oral evidence be determined.

(M. Kempster)

Justice of Appeal

Representation:

Mr. Adrian Bell (Masons & Marriott) for plaintiffs

Mr. William Lane (McKenna & Co.) for defendants