Kenworth Engineering Ltd v. Nishimatsu Construction Co Ltd

HCCT000025/2004

HCCT 25/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS LIST
ACTION NO. 25 OF 2004

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Coram: Hon Reyes J in Chambers

Date of Hearing: 15 May 2004

Date of Judgment: 15 May 2004

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J U D G M E N T

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I. Background

1.By a Notice of Motion ("the Notice") dated 29 March 2004 the Applicant ("Kenworth") seeks leave to appeal against the 7th Interim Award ("the 7th Award") dated 8 March 2004 of Mr James Findlay OBE QC ("the Arbitrator"). The Notice also applies by way of further or alternative relief for one or more of Orders to the effect that:-

(1) the Arbitrator give reasons for the 7th Award;

(2) the 7th Award be remitted to the Arbitrator for reconsideration; or,

(3) the Arbitrator be removed for misconduct.

2.There are current arbitration proceedings between Kenworth and the Respondent ("Nishimatsu"). Those proceedings concern alleged breaches of a Nominated Sub-Contract ("the Sub-Contract") dated 24 July 1996 relating to building work for the Ground Transportation Centre ("GTC") at Chek Lap Kok Airport.

3.By a Main Contract dated 25 June 1996 the Airport Authority ("the AA") engaged Nishimatsu to carry out construction at the GTC. By the Sub-Contract Nishimatsu sublet certain building work under the Main Contract to Kenworth. Kenworth performed the Sub-Contract work between February 1996 and May 1998. Kenworth alleges that in May 1998 Nishimatsu wrongly terminated the Sub-Contract and evicted Kenworth from the GTC site. Nishimatsu disputes this.

4.The arbitration commenced in June 2002. Pursuant to the arbitration agreement in the Sub-Contract, the Arbitrator was appointed by the Hong Kong International Arbitration Centre ("HKIAC") on 3 September 2002. Trial is scheduled for June 2004. By his 1st Interim Award dated 23 October 2002 the Arbitrator specified that the arbitration was to follow the HKIAC Rules ("the Rules").

5.In May 2003 Nishimatsu requested further and better particulars of Kenworth's Statement of Claim ("SOC"). Particulars came in July 2003. Various particulars simply stated that information would be supplied after discovery and exchange of witness statements and expert reports. This did not satisfy Nishimatsu. It applied for an Order that further and better particulars be provided pursuant to its Request ("the Request"). By a 4th Interim Award ("the 4th Award") the Arbitrator ordered Kenworth to provide better particulars of certain SOC paragraphs. The 4th Award stated that, in default of compliance, Kenworth would be barred from adducing a case on those parts of the SOC for which it had failed to provide the requisite particulars. Kenworth did not appeal against the 4th Award.

6.Kenworth provided further particulars by amending the SOC. By a 6th Interim Award the Arbitrator gave leave to amend without prejudice to any contention by Nishimatsu that the Amended Statement of Claim ("AMSOC") failed to provide the information ordered by the 4th Award. Nishimatsu later sought a declaration that certain particulars ordered by the 4th Award had not been provided and accordingly Kenworth be prevented from bringing claims based on the unparticularised paragraphs.

7.By the 7th Award the Arbitrator held that Kenworth could not present a case in respect of AMSOC §§26A, 28 and 43 and Amended Schedule 4 §20. Kenworth now wishes to appeal against that decision.

II. Discussion

A.1 Leave to appeal

8.Mr Griffiths SC (appearing for Kenworth) accepts that the present case is a "one-off" situation. Following Swire Properties Ltd v. Secretary for Justice (2003) 6 HKCFAR 236, to qualify for leave to appeal Kenworth must show that the Arbitrator was "obviously wrong" on a question of law.

A.2 AMSOC §26A and Schedule 4 §20

9.AMSOC §§26 and 26A plead as follows:-

"The Claimant commenced the execution of the Sub-Contract Works in February 1996 and proceeded with the same in accordance with the terms of the Sub-Contract Agreement. ... By reason of the late completion of the structures of the Station and the Terminal Building Access Structure, the commencement of the Sub-Contract Works was delayed. By reason these delays, the Respondent sought and was entitled to an extension of time in respect of Key dates KD8 and KD9 under the Contract to 2 January 1999 and 24 November 1998 respectively. In accordance with clause 15.1 and the Sub-Contract Completion Schedule of the Sub-Contract Agreement, the Claimant was obliged to complete the Sub-Contract Works within such times as would enable the Respondent to achieve the revised Key Dates KD8 and KD9 respectively.

Further or alternatively, because of the matters which resulted in the respondent's entitlement to an extension of time as set out in paragraph 26 above, the Claimant [Kenworth] was delayed in the execution of the Sub-Contract Works by circumstances or occurrences in respect of which the Respondent was entitled to receive an extension of time under the Contract and the Claimant gave no less than 134 notices of delaying events which were liable to cause delay to the completion of the Sub-Contract Works or parts thereof, particulars of which are set out in the Amended schedule 2 hereto. Such notices were updated by the Claimant from time to time and copies of the latest updated notices in respect of the notified events are attached in Bundle B hereto. If the Claimant were obliged to complete the Sub-Contract Works within such times earlier than the times referred to in paragraph 26 above, which is denied, pursuant to clause 17.1(a) of the Sub-Contract Agreement, the Respondent would have been obliged to grant such extension consistent with the extension of time to which the Respondent was entitled under the Contract such that the Claimant would only be obliged to complete the Sub-Contract Works within such time as would enable the Respondent to achieve the revised Key Dates KD8 and KD9 referred to in paragraph 26 above."

10.The 7th Award states (at pp. 3-4):-

"At the time my fourth interim award was made, the Claimant's allegations in paragraph 26 of the statement of claim regarding an entitlement to an extension of time were based on 134 notices of delays and disruptions particulars of which were said to be set out in Schedule 2 to the statement of claim. These particulars were inadequate, and the Claimant never suggested otherwise. It is not open to the Claimant to argue now that the particulars were adequate. Further particulars were ordered by me. These particulars have not been supplied. Instead, the Claimant amended its statement of claim to rely on extensions of time granted to the Respondent. These allegations are difficult to understand. Firstly, the allegation is that 'the commencement' of the sub-contract works were delayed. Then, the Claimant says, 'by reason of these delays' the respondent obtained an extension of time, and, in effect, the Claimant is entitled to the same extension of time. That, apparently, is the Claimant's main allegation here, but it does not give any details at all of any delays by the Claimant in respect of which it is entitled to an extension of time. The amended statement of claim then goes on to allege 'further or alternatively' that the Claimant was delayed, but gives no better particulars of these delays than previously, in respect of which I held, without any demur from the Claimant, were inadequate. In the Claimant's submissions, it talks of a primary and secondary case. I can see only one case -- that there were delays in the execution of the sub-contract works and the Claimant is entitled to the same extension of time in respect of these delays as the respondent. The inadequacy of the particulars of the alleged delays remains and has not been cured by the amended statement of claim. The fact that the Respondent obtained an extension of time to which the Claimant is also entitled is not the Claimant's sole basis of its case. It is also based on the allegation that the Claimant was in fact delayed, and the respondent wants to know details of these delays. I found that the Respondent was entitled to know these details, it is still entitled to know these details on the Claimant's amended case and the Claimant has not supplied them.

Accordingly, the Claimant may not present a case based on allegations of actual delay set out in paragraph 26A of the amended statement of claim. The new allegation that the Claimant is entitled to the same extension of time as was granted to the respondent is unaffected by this. I do not state any view on whether proof that the Claimant was entitled to an extension, without proof of any actual delay suffered by the Claimant, helps it."

11.Request 2.3(b) sought particulars of each Notice of Delay mentioned in SOC §26 (and now pleaded in AMSOC §26A) (for example, what delay was caused, how the delay was caused, the contract provision giving rise to an extension of time, the material facts of any event relied upon). Request 2.3(c) asked for particulars of amounts claimed as "prolongation" or "other Costs" in the original Schedule 2 (for example, a breakdown of each sum and how the costs were caused by the events and delays relied upon).

12.SOC Schedule 2 was amended in AMSOC. Amended Schedule 2 pleads 137 events (column 2), cites the date of the event (column 3), the provision relied upon (usually either cl. 17.1(a) and (c)) (column 4), provides a description of the event and how it is alleged the same "was liable to cause delay" (column 5), and identifies affected activities by a code number (column 6). Amended Schedule 2 contrasts with the old Schedule 2 which merely pleaded the 137 events with their date and alleged prolongation and other costs incurred.

13.The Arbitrator does not in the 7th Award state why the new information in columns 4, 5 and 6 of the revised Schedule 2 do not satisfy Request 2.3(b). My perusal of the revised Schedule 2 suggests that adequate particulars of the sort required by Request 2.3(b) and (c) were provided through the amendment of the SOC.

14.As for Request 2.3(c), at 7th Interim Award pp. 4-5 the Arbitrator states:-

"In request 2.3(c), the respondent asked for particulars of the Claimant's case regarding allegations of prolongation and other costs. The Claimant's claim, as amended, is now some $20 million, $13 million of which relates to claims by 'Wo Hing' and 'GEE'. The Claimant's amended case is that payments to these persons amounting to $13 million were claimed by them and 'were agreed to by the Respondent and allegedly paid direct' to them by the Respondent. How claims by the Claimant's subcontractors paid by the respondent can now be a claim by the Claimant against the respondent is not pleaded. It is very difficult to understand the Claimant's case on this claim of $13 million, but, whatever, its case, it has not supplied the particulars ordered and so it may not present a case based on these allegations. As to the other alleged costs of about $7 million, the Claimant purports to give the ordered particulars in Schedule 4E of the amended statement of claim. These particulars do specify how each sum and element is calculated in an accountancy sense, but they do not, which is more important, specify 'how each cost claimed was caused by the events and delays relied upon', which is what I ordered. If the Claimant cannot present a case on actual delays, I do not know how it is able to present a case for prolongation costs based on those delays.

Having not supplied the particulars ordered by me, the Claimant cannot present a case for these prolongation costs."

15.If I am right and Kenworth has now adequately particularised its case on the 137 delaying events, the Arbitrator's reasoning that the Claimant cannot present a case for prolongation costs based on actual delay is invalid. According to AMSOC §26A the delays particularised in Amended Schedule 2 result in Kenworth becoming entitled to a period of extension equivalent to further time granted by the AA to Nishimatsu under the Main Contract. AMSOC Amended Schedule 4 §20 and Schedule 4E thereto claim that Kenworth incurred prolongation costs of $7,336,387.10 by reason of extended site and head office overheads covering a period of delay from October 1997 to May 1998. In my judgment that last pleading is sufficient to tie down the prolongation cost of $7,336,387.10 to the delay alleged by Kenworth.

16.As for the additional $13 million mentioned by the Arbitrator, AMSOC Amended Schedule 4 §20 pleads that Nishimatsu agreed that such sum represented the prolongation and disruption costs sustained by Kenworth's subcontractors. Nishimatsu says that it has paid that amount directly to Kenworth's subcontractors. Kenworth disputes that payment has been made. If Kenworth is right in this and Kenworth consequently remains liable to its subcontractors for such sum arising out of the delay pleaded in AMSOC §26A, Kenworth claims to be entitled to receive that amount from Nishimatsu. I therefore have doubts that the Arbitrator was right in the 7th Award to dismiss Kenworth's case as wholly untenable. Regardless of whether Kenworth's case on the $13 million is or is not likely to succeed, it seems to me on first impression to have been sufficiently particularised such that Nishimatsu should know the nature of the case it has to meet.

17.Mr Whitehead SC (appearing for Nishimatsu) submits that whether adequate particulars have been provided is not a question of law, but one of fact which is not susceptible to appeal under Arbitration Ordinance (Cap. 341) ("AO") s. 23(2). I disagree. Whether or not pleaded particulars accurately reflect what actually happened obviously involves a determination of fact. But whether or not pleaded particulars (regardless of their validity as matters of fact) are adequate to sustain a case is a different question. One gauges adequacy of particulars by reference to the case which a claimant wishes to advance. There are at least 2 considerations. First, one has to determine whether the particulars are sufficient (if proved by evidence) to establish the material elements of a claimant's cause of action. Second, one has to assess whether the particulars are sufficiently precise to enable a respondent to know the case which he has to meet. Both considerations appear to me to be issues of law.

18.Accordingly, I think that the Arbitrator was obviously wrong in law to disallow Kenworth from presenting a case on AMSOC §26A. I would grant leave to appeal in respect of AMSOC §26A. Kenworth's claim in connection with the paragraph is alleged to be worth $20,336,387.10 (that is, $7,336,307.10 + $13,000,000). The amount constitutes a substantial part of Kenworth's total claim of over $115,000,000. Whether or not Kenworth is able to advance a case on AMSOC §26A would therefore "substantially affect the rights of one or more parties to the arbitration agreement" (see Arbitration Ordinance (Cap. 341) s. 23(4)).

A.3 AMSOC §28

19.AMSOC §28 pleads:-

"By 28 February 1998, as confirmed in the Project Manager's Interim Payment Certificate No.420/026 dated 27 March 1998 [C048-055], out of a total Cost Centre Value of HK$199,653,160.00 (inclusive of variations), the Claimant was entitled to be paid and/or had completed over 95% thereof in the value of more than HK$191,448,299.72 even when the payment for Cost Centre 30.6, 30.7, 30.8 & 30.9 had been suspended under clause 66.4(a) of the General Conditions of the Contract [C053]."

20.Request 2.5 asked Kenworth to specify every activity that it claims to have completed by 28 February 1998.

21.Mr Griffiths submits that Interim Certificate No.420/026 is simply being deployed as evidence that Kenworth had completed at least 95% of the relevant works as on a certain date and Kenworth is thus entitled to be paid at least 95% of the certified value as at that date. Mr Griffiths argues that:-

"[i]t may, or may not, prove in the end to be wrong to do so, but if this is its [Kenworth's] case it cannot be prevented from presenting it because the Arbitrator thinks that it should formulate it differently, which is the effect of his 7th Interim Award".

22.I agree. Given that the Interim Certificate is merely evidence of Kenworth's entitlement to 95% of certified value, I doubt (but express no final or fixed view) that particulars of the specific activities which according to Kenworth are comprised within that 95%, would be that helpful at trial. Instead, an analysis of what specific activities the Interim Certificate was purporting to certify as having been completed whether in whole or in part as at the certain date may be more useful.

23.Mr Whitehead stresses that there was no appeal against the 4th Award, including the Arbitrator's order that Kenworth answer Request 2.5. He argues that the Notice should not be used to get around that fact. Particulars of the activities completed ought to have been provided and Mr Griffiths' submission effectively amounts to an admission that no such particulars have been provided. The consequence of being barred from reliance on AMSOC §28 therefore follows automatically.

24.Although as a general principle Kenworth should not be allowed by the Notice to circumvent a failure to appeal against the 4th Award, I do not think that the matter is so straightforward in respect of AMSOC §28. Conventionally, a claimant must plead the material facts supporting his cause of action. He should plead those material facts with sufficient particularity to enable a defendant to know the case which has to be met. But a claimant is not required to plead evidence. Nor is it normal to see particulars in a statement of claim of the evidence on which one will rely at trial. The Interim Certificate being solely a piece of evidence, I doubt that particulars should have been ordered of its contents in the first place. Particulars were nonetheless ordered. My difficulty is that I do not see how it can be said that a pleading of evidence is inadequately particularised such that one should be barred from relying on the very piece of evidence which one did not have to plead (or particularise) in the first instance. Thus, it seems to me, regardless of the fact that particulars of the 95% have not been proffered, it cannot be said that the pleading of the Interim Certificate figure of 95% is so inadequate that reliance on it must not be permitted.

25.Accordingly, in my judgment, it was obviously wrong for the Arbitrator as a matter of law to bar Kenworth from presenting a case based on the Interim Certificate pleaded in AMSOC §28. Since the Interim Certificate would (if it constituted valid evidence at trial) support a substantial part of Kenworth's claim against Nishimatsu, I believe that the requirement in AO s. 23(4) is met. I would give leave to appeal in respect of AMSOC §28.

A.4 AMSOC §43

26.AMSOC §43 reads as follows:-

"Nevertheless, the Claimant proceeded with the execution of the Sub-Contract Works with the Special Measures required by the Employer particulars of which so far as they concern fire services installation, are given in Schedule 2A hereto. However, further delays and disruptions were caused by the Employer and/or the Respondent, particulars of which are set out in Schedule 3 hereto, Schedule 9 to the Statement of Reply and Defence to Counterclaim and Schedule 3A hereto and copies of the instructions issued by the Project Manager and/or the Respondent which further delayed and disrupted the execution of the Sub-Contract Works are attached in Bundle D hereto and Bundle S to the Statement of Reply and Defence to Counterclaim. The instructions listed in Schedule 3 hereto and Schedule 9 to the Statement of Reply and Defence to Counterclaim are variations and additional works for which the Claimant is entitled to be paid under the terms of the Sub-Contract. These variations and/or additional works caused delay and/or disruption as set out in Schedule 3 hereto, Schedule 9 to the Statement of Reply and Defence to Counterclaim and Schedule 3A hereto in respect of which the Claimant was entitled to an extension of time pursuant to clause 17.1(a) and/or clause 17.1(c) of the Sub-Contract Agreement. The delay and disruption caused by these instructions rendered it impossible for the Sub-Contract Works to be completed by 31 May 1998."

27.According to Mr Griffiths, the thrust of AMSOC §43 is to meet Nishimatsu's contention that after March 1998 Kenworth remained slow in progressing its work and this justified termination of the Sub-Contract. Kenworth would not be able to defend itself against this aspect of Nishimatsu's claim if it were barred from relying on AMSOC §43 at trial.

28.Request 2.9(d)(i)-(iii) asked for particulars of each instruction listed in Schedule 3 (why the instruction entitles Kenworth to relief, when the instruction was executed; what delay or disruption was caused).

29.In the 7th Award at pp. 5-6 the Arbitrator stated:-

"Under request 2.9, the Respondent asked for particulars of special measures and instructions relied upon by the Claimant. In my fourth interim award, I ordered that these particulars be supplied. The Claimant did not provide these particulars in the ordinary form so one could see readily whether or not the particulars had been supplied. Instead, the Claimant substantially amended paragraph 43 of the statement of claim. I have tried hard to correlate the particulars supplied by the Claimant with the particulars I ordered to be supplied, without any great degree of success. If those particulars are there, they are obscure and difficult to identify. For example, the amended statement of claim says that 'Special Measures ... particulars of which so far as they concern fire services installation are given in Schedule 2A'. When one looks up Schedule 2A, one sees only a long list of 'working time'. This does not, by a long stretch, provide any particulars of the special measures. I do not see why I and the Respondent should seek to divine the Claimant's case under this paragraph. In my view, far from clarifying its case by the amendments, the Claimant has confused things further. Whereas, under the unamended paragraph, the Claimant simply claimed that there were special measures and delays and disruptions were caused by instructions, the amendments now allege that the instructions were variations and additional works for which the Claimant is entitled to be paid and for which the Claimant is entitled to an extension of time. I am left confused and unclear as to what the Claimant's case is under this paragraph and I am not surprised that the Respondent feels the same way. The Claimant has caused this uncertainty and must bear the consequences. The Claimant's amendments and additions to its pleadings do not satisfy me that it has provided the particulars that I ordered in my fourth interim award. The Claimant may not present a case based on the allegations in this paragraph."

30.As to the further particulars sought of the instructions in Schedule 3, such appear to me to have been furnished in the new Schedule 3A. The Arbitrator does not refer to that schedule in the 7th Award and gives no explanation why the detail apparent there is insufficient.

31.Mr Griffiths submits that in his comments on "special measures" the Arbitrator misunderstood the new Schedule 2A introduced by AMSOC. The "long list of 'working time'" to which he referred were precisely Kenworth's particulars for special measures. Kenworth simply intends to refer to special measures in the form of overtime work and additional labour and supervisory staff. That (Mr Griffiths says) should have been clear from Schedule 2A.

32.While I sympathise with the Arbitrator's observation that Kenworth's pleadings may be far from elegant, the issue is not felicity of expression but whether (however awkwardly) Kenworth has adduced sufficient particulars. I think that, insofar as overtime and additional staff are the only special measures relied on, Kenworth has adequately particularised its case by setting out in Schedule 2A the extra hours involved.

33.There is a further problem in relation to AMSOC §43 and special measures. The Arbitrator barred Kenworth from presenting any case at all in respect of AMSOC §43. This is despite the fact that the Arbitrator only ordered particulars of AMSOC §43 under Request 2.9(d)(i)-(iii) in connection with Schedule 3. But AMSOC §43 pleads other matters apart from those encompassed by Schedule 3. Why should Kenworth not be able to present a case on those other matters?

34.Pursuant to Rules §17.1 Kenworth sought clarification from the Arbitrator on whether the 7th Award was intended to bar reliance on parts of AMSOC §43 unconnected with Schedule 3. The Arbitrator replied as follows:-

"Request 8

Under this request, the Claimant seeks clarification of my seventh interim award in relation to paragraph 43 of the amended statement of claim. I have to confess that I overlooked the fact that no order was made in respect of request for particulars 2.9(a), (b) and (c). So, to the extent that my seventh interim award precludes the Claimant from presenting a case to support the allegations in paragraph 43, other than those relating to Schedule 3, it is wrong. The Claimant did not provide the required particulars relating to Schedule 3 and the decision to preclude evidence in respect these allegations is right. Accordingly, although I cannot change my award, I trust that the Respondent will recognise my error and raise no objection to evidence to support the other allegations in paragraph 43."

35.Mr Whitehead recognises that the Arbitrator erred at least in preventing reliance on those parts of AMSOC §43 unconnected with Schedule 3. Nishimatsu has by its solicitors written to say that it will not rely on the Arbitrator's error. Nevertheless, Mr Whitehead suggests that the mistake is not one of law but a matter of fact which is outside the ambit of AO s. 23.

36.I think that the Arbitrator was obviously wrong in disallowing Kenworth from relying on AMSOC §43 whether as a whole or in part. I have already expressed my view that the adequacy of particulars is a question of law. I accept what Mr Griffiths says about the consequences of disallowing Kenworth from putting up a case in terms of AMSOC §43. Consequently, the situation falls within AO s. 23(4). I would therefore grant leave to appeal in respect of AMSOC §43.

A.5 AMSOC §61(i)

37.AMSOC §61 pleads:-

"As a result of the matters referred to, the Claimant is entitled to and seeks the following remedies against the Respondent:-

(i) payment of the sum of HK$100,090,997.80 pursuant to clauses 20, 21 and 27.2 of the Sub-Contract Agreement particulars of which are set out in Amended Schedule 4 and Schedules 4A-4E hereto; ..."

38.In the 7th Award at pp. 6-7, the Arbitrator stated:-

"In my fourth interim award, I ordered the Claimant to supply further particulars of allegations in paragraph 61 and Schedule 4 of the statement of claim. The Respondent says these particulars have not been supplied. Again the Claimant has chosen, not to provide the particulars in the ordinary way, but to make substantial amendments to the statement of claim. In this respect, I have, not without some difficulty, been able to follow the somewhat convoluted course by which the Claimant has chosen to supply the particulars. Although the manner in which the Claimant has elected to provide the particulars is not easy to follow, I am satisfied that the Claimant has substantially complied with my fourth interim award. As to the valuations of work alleged to have been done by the Claimant, the Claimant says that it relies solely on the Project Manager's valuations and not any independent valuation of its own. This case is not entirely clear on the Claimant's pleadings, but I accept this and the Claimant will be bound by it. The Claimant may present a case based on the allegations in this paragraph."

39.Kenworth requested clarification from the Arbitrator of this part of the 7th Award. In such request Kenworth pointed out that, in addition to valuations of the Project Manager's Instructions, it was claiming the value of variations instructed by Nishimatsu and had set out its case in detail in Schedule 4A. The Arbitrator replied that:-

"In my fourth interim award, I ordered, amongst other things that the Claimant provide particulars of 'the basis of valuation of each and every alleged variation'. In its submissions in relation to my seventh interim award, the Claimant said that it 'relies upon the Project Manager's valuations of the relevant variations. [It does not independently seek to demonstrate the valuation of these variations.' In my seventh interim award, I said that the Claimant would be held to this. The claimant now seeks to say that it did not intend to mean that 'relevant variations' and 'these variations' referred to a;; variations alleged, but only those instructed by the Project Manager. The Claimant did not provide any particulars of 'the basis of valuation of each and every alleged variation'. That is why I said that it would be allowed to rely on the Project Manager's valuations. If the Project Manager has not valued a variation, the Claimant is not allowed to present a case based 'independently' on its own valuation. That is what my seventh interim award means, and I think this is clear."

As Mr Griffiths points out, it is plain from the latter answer that the Arbitrator had not noticed Schedule 4A when making the 7th Award. There Kenworth had given particulars of valuations instructed by Nishimatsu. Accordingly, the Arbitrator's conclusion that Kenworth had failed to provide particulars of every variation alleged is obviously wrong.

40.Mr Whitehead accepts that the Arbitrator has made a mistake here. He notes that Nishimatsu has written to Kenworth to say that it will not rely on the Arbitrator's error. He suggests, however, that this is not a mistake of law but one of fact which is outside the scope of AO s. 23. I have already given my view on this last submission.

41.The valuations of variations instructed by Nishimatsu amount to $7,714,630. This is a significant sum in the scale of Kenworth's claim. I am therefore minded to give leave to appeal in respect of AMSOC §61(i).

A.6 Miscellaneous grounds for leave

42.In light of my conclusions, it is unnecessary for me to consider the other grounds on which Mr Griffiths relies in his Skeleton to found Kenworth's application for leave to appeal. These grounds are that:-

(1) the Arbitrator should have given Kenworth an opportunity to make oral submissions in relation (especially) to AMSOC §61 and Schedule 4 if (as stated in the 7th Award) the Arbitrator found anything in Kenworth's case difficult to follow; and,

(2) the Arbitrator had no power to debar a party from presenting a case as a result of a failure to provide particulars.

43.I do not express any final view on the validity or otherwise of those grounds. But I will say that I am inclined to agree with Mr Whitehead that, in giving the Arbitrator "the widest discretion allowed by law to conduct the proceedings so as to ensure the just, expeditious, economical, and final determination of the Dispute", Rules §5.1 was conferring the powers allowed to an arbitrator both by the AO and at common law.

B. Alternative reliefs sought

44.In light of my conclusion in Section II.A I do not think that it is necessary or appropriate for me to remit the 7th Award back to the Arbitrator for reconsideration or the statement of reasons.

45.I have so far granted Kenworth leave to appeal. Even if were of the view that the ensuing appeal should be granted, in my view an Order that the Arbitrator be removed for misconduct as sought by Kenworth is unwarranted.

46.Mustill and Boyd, The Law and Practice of Commercial Arbitration in England (2nd ed.) states (at p. 530):-

"The fact that the Court is given a wide power to remove the arbitrator in cases of misconduct does not mean that the power will be freely exercised. An arbitrator may commit errors -- even serious errors -- in the course of the reference, and yet remain perfectly able to carry the arbitration to a successful conclusion once his mistakes have been pointed out. Justice requires that in such a case the arbitrator should be left in office, rather than that the parties should suffer the delay and expense of beginning the arbitration afresh. The remedy is therefore likely to be confined to those cases where the arbitration simply cannot be allowed to continue with the particular arbitrator in office -- either because he has shown actual or potential bias or because his conduct has given serious ground for destroying the confidence of one or both parties in his ability to conduct the dispute judicially or competently."

47.Mr Griffiths says that Kenworth has lost confidence in the Arbitrator. This is because "the errors that have been made suggest both a lack of understanding of the pleaded case and care in his deliberations and, as a consequence, a disturbing disregard for the rights of Kenworth in respect of [its] claim which are of considerable value/importance".

48.To my mind, the Arbitrator who was formerly the Hong Kong High Court Judge in charge of the Construction and Arbitration List remains "perfectly able to carry the arbitration to a successful conclusion once his mistakes have been pointed out". The pleadings (as the Arbitrator points out in the 7th Award) are complex and not easy to follow. I have no doubt that, once any errors have been pointed out to the Arbitrator, he will be able to proceed with the arbitration with impartiality and all due care and diligence. As Mr Griffiths himself observed in the course of his submissions, even Homer can nod. I do not believe that any error by the Arbitrator in gauging the sufficiency of Kenworth's particulars demonstrates any incompetence or careless disregard of Kenworth's rights. I do not think that there has been misconduct. I therefore refuse to order the Arbitrator's removal.

III. Conclusion

49.Leave to appeal is granted in respect of the Arbitrator's order preventing Kenworth from adducing a case in relation to AMSOC §§26A, 28 and 43 and Amended Schedule 4 §20.

50.As far as the 2 mistakes by the Arbitrator accepted by Nishimatsu are concerned, I do not see much point in using up time and money in remitting the 7th Award back to the Arbitrator for correction. The Arbitrator did not think that he had jurisdiction to correct the error in relation to AMSOC §43 which he realised he had made. I am not sure that this is correct. For example, the Arbitrator might have power (I put it no more strongly) to correct the slip under AO s. 19. Nonetheless, it appears to me more expedient straightaway to allow the appeal in relation to the 2 errors which it is accepted the Arbitrator made.

51.I will now hear counsel on consequential orders, including directions as to how the other matters for which leave to appeal has been granted should be dealt with.

Representation:

Mr John Griffiths SC and Mr Jonathan Harris, instructed by Messrs Deacons, for the Applicant

Mr Robert Whitehead SC, instructed by Messrs Masons, for the Respondent