Leighton Contractors (Asia) Ltd v. Stelux Holdings Ltd
Read the full judgment text of HCCT 29/2004 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 10 September 2004 before Hon Reyes J.
Arbitration — Construction contract disputes — Extension of time (EOT) entitlement under standard form building contract, cl.23 — Whether entitlement requires actual delay or mere likelihood suffices — Whether Arbitrator erred in rejecting parties' agreed time slice delay assessment method without further submissions — Allegations of technical misconduct — The High Court refused leave to appeal the Arbitrator's interim award, holding the Arbitrator reasonably construed cl.23 to require actual delay or a finding that delay was likely when the information was necessary. Leighton's claim for EOT due to late tender information was rejected on factual findings that the information was not necessary at the time and did not cause delay. The court endorsed the Arbitrator's reasoned preference for one expert's time slice approach over another's, rejecting claims of technical misconduct. Costs in favor of Stelux were ordered against Leighton. Outcome: Appeal refused; costs awarded to Stelux.
Legal issues: Interpretation and application of Main Contract cl.23 on EOT entitlement · Requirement to consider 'likely delay' separately · Alleged technical misconduct in rejecting the time slice delay method without further submissions
Outcome: Leave to appeal refused; Arbitrator not found seriously wrong or guilty of technical misconduct.
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HCCT 29/2004 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO. 29 OF 2004 ____________
____________ BETWEEN
____________ Before: Hon Reyes J in Chambers Date of Hearing: 2 September 2004 Date of Judgment: 10 September 2004 _______________ J U D G M E N T _______________ I. Introduction 1.Stelux was the Employer and Leighton the Main Contractor on a building construction project. Disputes between them were referred to arbitration. Leighton now seeks leave to appeal against the Interim Award ("the Award") dated 24 March 2004 of Ms. Gladys Li SC ("the Arbitrator"). Alternatively, Leighton asks that the Award be set aside and the Arbitrator removed for technical misconduct. 2.Leighton contends that the Arbitrator erred in 3 respects:-
3.The principles governing the grant of leave to appeal are well-known. I recently summarised them in Hong Kong Institute of Education v. Aoki HCCT 109/2003, 12 March 2004 (at §12). If a dispute is a one-off matter, I must discern an obvious error in an award. Where a dispute arises out of a standard clause or a matter of general public importance, I must look to see whether there has been a serious error. II. Discussion A. Arbitrator's view that activities must cause actual delay 4.The Main Contract was based on the Standard Form of Building Contract, Private Edition -- Without Quantities, 1986 1st RICS Edition. Entitlement to EOTs was governed by cl.23. 5.Clause 23 provides:-
6.There is no dispute that cl.23 is a standard form clause. 7.Leighton's main case was that certain events caused actual and not merely theoretical delay. Leighton posited 4 causes of critical delay and several causes of concurrent delay. The Arbitrator found that none of the acts or omissions alleged by Leighton caused actual delay. 8.In particular, Leighton alleged that Stelux caused critical delay by releasing tender information for MVAC and electrical sub-contract works late. The Arbitrator found that the information was indeed provided later than it should have been according to the original programme. But she held that such lateness could not have delayed the completion of works. 9.The information was required for the award of the superstructure MVAC and electrical sub-contracts. On the date when it originally ought to have been provided, Leighton was still involved in substructure works. Even by the time that the information had been provided and the MVAC and electrical subcontracts awarded, Leighton was only just ready to start (and had not yet commenced) construction of the basement slab. 10.It accordingly seems to me that the Arbitrator reasonably concluded that the late information could not have caused actual delay. 11.However, Mr. Westbrook SC (for Leighton) refers to Appendix B §28 of the Re-Amended Points of Claim ("RAPOC"). That pleads:-
12.Mr. Westbrook argues that cl.23 does not limit a contractor to EOTs only where relevant events have delayed completion. Looking prospectively by standing in the Architect's shoes at "time slices" over the project's history, if the Arbitrator thought that an event was "likely to cause delay", she should have granted Leighton an EOT. The EOT should be allowed even where, with hindsight, it is clear that the event did not in fact delay completion. 13.I do not believe that the Arbitrator was seriously wrong in her construction of cl.23 and her application of the clause to the facts. On the contrary, I believe that her conclusion on Leighton's non-entitlement to EOT was probably right. 14.Clause 23(2)(f) refers to Leighton "not having received in due time necessary instructions" and to Leighton requesting instructions on a date reasonably close to when "necessary .. to receive" information. Whether information is provided in "due time" or is "necessary" when requested, can only be determined by reference to the state of the works at the time when information is requested or provided. 15.If Leighton was still working on the substructure when it requested tender information from Stelux, the information could not then have been necessary. Due to Leighton's own substantial delay, there was ample time for the information to be provided much later, even after the original programme date. On the facts found by the Arbitrator, the tender information can neither have been "necessary" when requested by Leighton nor out of "due time" when provided by Stelux. 16.Further, the criterion in cl.23(2) that "the completion of the Works is likely to be ... delayed" requires some finding of a causal link between Stelux' late submission of information and potential delay to the completion date of the works. It is not enough for Leighton to show that information was provided late. Leighton must also show that, on the date (say) when the information ought originally to have been provided, delay to completion was "likely". 17.But the Arbitrator found that substructure works were so delayed that it obviously did not matter if tender information was given later than first envisaged. She said:-
In the actual circumstances of the case, looking prospectively from the time of Stelux' initial failure to provide information, Stelux's failing could not be causative of delay. The late information could not cause actual delay, having regard to the state of the works at the time when the information ought to have been furnished originally. 18.In light of those considerations, it is hard to see how cl.23(2)(f) could apply on the facts as found by the Arbitrator. The construction contended by Mr. Westbrook on "likely delay" just does not arise. 19.The Arbitrator reasoned thus:-
She was undoubtedly aware of the words "likely to be ... delayed" in cl.23. She simply thought that consideration of the meaning of those words did not arise, given "the events which Leighton has pleaded as entitling it to an extension of time" and given her findings on those pleaded events. 20.I am thus unable to find obvious or serious error in the Arbitrator's reading of cl.23 and its application to the facts. B. Arbitrator's failure to consider likely delay 21.This ground of appeal is the reverse side of the criticism just discussed. 22.As already mentioned, the Arbitrator touched on Leighton's alternative case. She rejected the possibility that delay to completion was likely to be caused by the failure to provide tender information. That was not possible on the facts as found by her. On the other hand, as to Leighton's main pleaded case on actual delays having resulted, it was not relevant for her to consider whether delay was likely to be caused. 23.I do not find any serious error in the Arbitrator's approach in this respect. C. Rejection of experts' approach to delay 24.The time slice method examines progress at different stages of a project. At each stage the analysis looks forward in time and asks whether relevant events are likely to cause delay in the future. The method endeavours to assess entitlement to EOTs without recourse to hindsight. 25.Mr. Westbrook complains that the Arbitrator wholly rejected the time slice methodology employed by the parties for assessing delay. The parties (Mr. Westbrook says) not only accepted that the method was apposite, but also spent considerable resources on their experts' presentations. The Society of Construction Law Delay and Disruption Protocol describes the time slice method as the "most thorough method of analysis, although it is generally the most time-consuming and costly when performed". How then (Mr. Westbrook asks) could the Arbitrator have dismissed the method as being of merely "limited assistance"? 26.Mr. Westbrook contends that the Arbitrator's rejection of the agreed method constituted a radical and surprising departure from both sides' argument. The Arbitrator should at least have allowed the parties the chance to be heard orally before dismissing time slice analysis. By not giving the parties an opportunity to make submissions on the matter, the Arbitrator was guilty of technical misconduct. 27.I disagree with Mr. Westbrook. 28.The Arbitrator found against Leighton on actual delay. She further held that, given Leighton's pleaded case and the facts as found by her, she did not have to concern herself with "likely delay" under cl.23. In those circumstances, it is not surprising that the Arbitrator found time slice methodology of little help. Stressing prospective delay regardless of actual delay, time slice methodology would have been of limited relevance on Leighton's pleadings of delay and the Arbitrator's findings of fact. 29.In any event, it is wrong to say that the Arbitrator wholly ignored time slice methodology. 30.The analysis pressed by Mr. Menyhart (Leighton's expert) focused on the prospect of delay resulting from an event at a given time, regardless of whether in retrospect the event had actually caused delay. The Arbitrator rejected Mr. Menyhart's analysis entirely. 31.In contrast, the Arbitrator found the evidence of Mr. Foan (Stelux' expert) more helpful. He also used "time slice" methodology. But his approach was different in focus. The Arbitrator observed that Mr. Foan:-
32.It is true that the Arbitrator found obscurities in Mr. Foan's evidence. Further, in light of her findings on Leighton's pleaded case, the Arbitrator believed that the time slice section of Mr. Foan's report was of limited assistance. The simple point is that the Arbitrator did not reject the method wholesale. To the extent that she thought relevant to the dispute before her, she preferred Mr. Foan's evidence to that of Mr. Menyhart. 33.I do not see how the Arbitrator's approach can be faulted. 34.That the parties had adduced "time slice" evidence and had incurred great expense in so doing, cannot bind the Arbitrator's construction of cl.23 or her application of the clause to the facts. 35.The Arbitrator heard both sides' expert and made up her mind on how much weight to place on their reports. She was not bound to tell the parties, after having heard the experts, that she thought that time slice analysis was of little value. Least of all was she under an obligation to summon the parties for further submissions as to why she should find time slice analysis to be more helpful than she thought. III. Conclusion 36.Leave to appeal is refused. In my judgment the Arbitrator was neither seriously wrong nor guilty of technical misconduct. 37.There will be an order nisi that Stelux is to have the costs of Leighton's leave application, such costs to be taxed if not agreed.
Mr. Simon Westbrook SC, instructed by Messrs. Mallesons Stephen Jaques, for the Applicant Mr. John Scott SC, instructed by Messrs. Masons, for the Respondent |