Read the full judgment text of HCCT 10/2007 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 15 June 2007 before Hon A Cheung J.
Construction law — Arbitration — Appeal under s.23(2) Arbitration Ordinance — Standard form sub-contract (HKCSAF) vis-à-vis specific liquidated damages clause in letter of acceptance — Whether clause 3.4 and 2.4 excluding liquidated damages clause — Contract construction principles — Rectification — Standard of proof for rectification claim. Penta-Ocean Construction Co Ltd and CWF Piling & Civil Engineering Co Ltd contested an interim arbitral award rejecting Penta's claim for liquidated damages for delayed completion under item 6 of the letter of acceptance. The arbitrator held clause 3.4 of the standard form sub-contract prevailed, negating the liquidated damages clause, and rejected an alternative rectification claim. The Court held clause 3.4 only covered losses caused by consequential breach of the main contract and did not exclude the liquidated damages clause, which represented parties' specific genuine pre-estimate of loss. The Court further found the arbitrator erred applying a criminal standard of proof (“beyond reasonable doubt”) in rectification, instead the civil balance of probabilities standard applies with attention to evidential specifics. The appeal was allowed, the award remitted with guiding opinions on these legal points. Costs were awarded to Penta. The judgment clarifies the coexistence of specific liquidated damages clauses and standard form contractual provisions, and proper evidential standards in rectification claims in arbitration appeals.
Legal issues: Construction of clauses 2.4 and 3.4 and item 6 · Rectification of contract documents
Outcome: Appeal allowed; interim award remitted to arbitrator for reconsideration with Court’s opinions on questions of law.
Cites 2 cases