Taigo Ltd v. China Master Shipping Ltd

HCCT 22/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDING

NO. 22 OF 2010

____________

____________

BETWEEN

____________

Before: Hon Saunders J in Chambers

Date of Hearing: 9 June 2010

Date of Decision: 9 June 2010

Date of Reasons for Decision: 17 June 2010

_________________________________

REASONS FOR DECISION

_________________________________

1.I heard this application for leave to appeal against an award by arbitrators made on 20 March 2010, 9 June 2010, when, without calling upon the counsel for the Respondent to reply, I dismissed the application with reasons to be delivered later. These are my reasons.

2.The arbitration was in relation to a dispute arising from a charter-party, made on 1 April 2008, by which the owners, China Master Shipping, chartered the vessel “Hua Wan”, initially, to Guangxi Qinzhou Tago Import & Export Trading Company Ltd.  Subsequently, on 16 October 2008, Guangxi and the applicants, Taigo, entered into a novation agreement, with Taigo stepping in and replacing Guangxi.

3.The arbitration was conducted by two experienced arbitrators from the Panel of Arbitrators of the Hong Kong International Arbitration Centre.  Both were experienced shipping men.

4.The principles to be applied when considering an application for leave to appeal against an award are well settled, and are set out in Swire Properties Ltd & Ors v Secretary for Justice (2003) 6 HKCFAR 237, with the essential principles being sent out by Bokhary PJ at para 31.

5.The arbitration proceeded on the basis of a “documents only” arbitration, by which the arbitrators considered the documents, and witness statements filed by the parties pursuant to directions.  There was no cross‑examination of the parties.

6.Counsel for the applicant submits that the applicant “reluctantly” agreed to the procedure which the applicant said was undertaken at the respondent’s “insistence”.  Whether the procedure was reluctantly agreed to, or was undertaken at the insistence of one side is entirely irrelevant.  The simple fact is that the applicant agreed to the “documents only” procedure, and took no exception to the directions for witness statements.  Further, on 16 October 2009, the Tribunal reminded the parties that the Tribunal had no power to impose a “documents only” basis on the parties.  Any suggestion that the summary procedure was forced upon the applicant is plainly without foundation.  It is simply not open to the applicant now to complain about the procedure.

7.Counsel for the applicant submits that a finding made by the Tribunal against the existence of what was described as the 1^st misrepresentation, is be a finding that can be characterised as so bizarre that no arbitrator could have made it, and that there was simply no evidence or reason for the finding to be made.

8.The allegation before the Tribunal was that the misrepresentation was either negligent or fraudulent.  That is a serious allegation and it was for the applicant to prove to the satisfaction of the Tribunal that such a representation was made.  Mr Maurellet is quite right in his submission that the essence of the complaint by the applicant is that the applicant was found to have failed to establish an allegation on the facts, and now seeks to overturn a factual finding on the part of the Tribunal.

9.In order to justify leave to appeal, counsel sought to challenge four reasons given by the arbitrators to find that there was no motive on the part of the respondent to offer a guarantee of profit on the charter-party, that finding being central to the conclusion that there was no misrepresentation.  The reasons given by the arbitrators were reasons that were perfectly open to the arbitrators to reach, and I cannot say that the arbitrators were obviously wrong, let alone acting so unreasonably as to have reached a bizarre finding, in giving those reasons.  It is right that arguments may be made the other way, but that is not the test.

10.In particular the arbitrators were criticised for finding that a profit guarantee representation was “inherently impossible or highly improbable”.  It was said that that was not the proper test.  It is always open to a tribunal judging fact, particularly when giving consideration to alleged oral representations, to measure the likelihood that the representations alleged were made, against the probability that such representations might be made: see Tradepower (Holdings) Ltd v Tradepower (HK) Ltd [2010] 1 HKLRD 675, per Litton NPJ at para 140.  Mr Maurellet is correct when he says that the Tribunal’s statements accord with a layman’s common sense.

11.The criticism by counsel for the applicant of the format of the respondent’s witness statement is unjustified.  The submission that was no evidence from the respondent is fallacious.  Neither parties’ witness statement was under oath, neither witness statement was in the form of an affidavit.  Neither were required to be either on oath, or in the form of an affidavit.  The parties agreed upon the procedure, and agreed upon the absence of cross-examination, and the applicant cannot now complain about that procedure.

12.The application amounts to nothing more than a challenge to a factual finding which went against the Applicant.  The basis for to leave to appeal was not established.  The application was dismissed.

13.In A v R (Arbitration: Enforcement) [2009] 3 HKLRD 389, Reyes J demonstrated that following CJR the usual rule as to costs on an unsuccessful application for leave to appeal against an arbitrators award would be indemnity costs.  In Wing Hong Construction Co Ltd v Tin Wo Engineering Co Ltd, unreported, HCCT 13/2010, 3 June 2010 I agreed with that decision.  So it is not necessary, to justify indemnity costs, for it to be established that the case has special and unusual features.

14.Counsel for the Applicant puts before me the decision of the Court of Final Appeal in Karaha Bodas Company LLC v Pertamina, unreported, FACV 6/2008, 6 February 2009.  The decision is a ruling on costs in which the plaintiff sought indemnity costs.  The Court of Final Appeal recorded that the plaintiff sought to justify indemnity costs by arguing that the case had special and unusual features.

15.The decision is a decision prior to CJR, and does not reflect the new approach to be adopted.  For the reasons given in Wing Hong, para 7, I am satisfied that the appropriate rule now in failed applications for leave to appeal an arbitrators award is that costs should be on an indemnity basis.

16.There will be an order nisi is that the Applicant must pay the Respondent’s costs of and incidental to the application, to be taxed on an indemnity basis.

Ms Chyvette Ip leading Mr Jeffrey Chau, instructed by Messrs Or & Lau, for the Applicant

Mr Jose-Antonio Maurellet, instructed by Messrs Blank Rome, for the Respondent