Kwan Lee Construction Co Ltd v. Elevator Parts Engineering Co Ltd
Read the full judgment text of CACV 127/1996 on BabelCite. This Court of Appeal judgment was delivered on 14 November 1996 before Litton, V.-P., Mayo, J.A. and Patrick Chan, J..
Arbitration – leave to appeal – time extension – Order 73 r5(2) Rules of the Supreme Court – when is an award 'made and published to the parties' – arbitrator's refusal to deliver award except on payment of fees – The Archipelagos [1979]2 LLR 289 followed – discretion to extend time under Order 3 r5 – whether merits of appeal relevant to time point – s.23 Arbitration Ordinance – limited right of appeal on questions of law – Pioneer Shipping v. BTP Tioxide ('The Nema') [1982] AC 724 – finality in arbitral proceedings – s.22A(1)(a) Arbitration Ordinance – arbitrator's discretion to award interest on sum paid before award – whether underlying debt required – 'pay-when-paid' clause – admission of liability by payment – whether award bad in law ex facie – appeal allowed by majority – time extended for notice under s23(3) – order nisi that each party bear its own costs
Legal issues: When is an arbitration award 'made and published to the parties' under Order 73 r5(2) RSC · Proper approach to time extension application—whether merits of appeal relevant · Whether explanation required for delay in applying for extension of time · Scope of arbitrator's discretion to award interest under s.22A(1)(a) Arbitration Ordinance · Whether the arbitrator's award was bad in law ex facie
Outcome: Appeal allowed by majority (Litton V.-P. and Patrick Chan J.; Mayo J.A. dissenting). Judge's order refusing leave to appeal set aside.
Cited by 6 cases
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IN THE COURT OF APPEAL 1996, No. 127 - Headnote - Arbitration Ordinance - When is an award "made and published to the parties" in terms of Order 73 r5(2) Rules of the Supreme Court? - Construction of identical words in The Archipelagos [1979]2 LLR 289 followed - Discretion to give leave to appeal against an arbitrator's award under s23(3) Arbitration Ordinance - Guidelines in Pioneer Shipping v. BTP Tioxide ("The Nema") [1982] AC 724 considered - Scope of arbitrator's discretion to award interest under s22A(1)(a) considered. Observations on Judge's discretion to extend time to appeal under s23(3) Arbitration Ordinance - Whether consideration of the "merits" of the question of law under appeal relevant. IN THE COURT OF APPEAL 1996, No. 127
------------------------------------------------------- Coram: Hon Litton, V.-P., Mayo, J.A. and Patrick Chan, J. Date of hearing: 24 October 1996 Date of handing down judgment: 14 November 1996 ---------------------- J U D G M E N T ---------------------- Litton, V.-P.: 1. I invite Mayo JA to deliver the first judgment. Mayo, J.A.: 2. This is an appeal from an order of Sears J when he declined to grant leave to the applicant to appeal from an Award made by Mr T.J. Cleary as an Arbitrator on 30 April 1996. 3. It is evident from the perfunctory reasons given by the judge that the compass of this appeal is narrow. 4. The applicant filed its notice of originating summons seeking the said leave on 30 May 1996. Time for making the application expired on 21 May 1996 by virtue of Order 73 Rule 5. It was therefore out of time. No separate application was made for leave to rectify this situation. However during the course of the substantive hearing this matter was addressed. As a result of this there was no affidavit evidence before the court providing an explanation as to why the application had not been made timeously. 5. Indeed the respondent has filed a respondent's notice opposing the appeal on the ground that the judge had been unable to exercise the discretion reposed in him to grant an indulgence to the applicant as there was no material upon which it could be based. 6. At the hearing before the judge Mr Shaw the solicitor representing the applicant cited to the judge the case of The Archipelagos [1979]2 Lloyds Rep 289 where the court had been prepared to grant an extension of time on the ground that the solicitor having the conduct of the case had been abroad during the period when time had been running. Sears J inquired whether Mr Shaw had been away at the relevant time and he replied in the affirmative. However as he did not have his diary with him he was unable to advise the judge exactly when he had been abroad. 7. He later informed the court that he had been away from 9 to 20 May. Sears J however was not prepared to vary his order. 8. It would appear that the main problem which has arisen in this case is that when the Arbitrator delivered his award he informed the parties that he was only prepared to provide a copy of the award if payment of his fees was forthcoming. 9. The respondent had already deposited $50,000 with the Arbitrator in this connection. The applicant had not done so. 10. The total fees being claimed amounted to $187,550.00. A balance of $137,550.00 remained outstanding and it was this balance which was being demanded by the Arbitrator. 11. Part of the relief being sought by the applicant is the setting aside of the order for costs which was made by the Arbitrator on the ground that he had been guilty of misconduct in ordering costs in that sum. 12. Be that as it may the respondent did pay the balance of the moneys demanded to the Arbitrator on 18 May and a copy of the Award was provided to the appellant on 20 May. 13. There are four grounds of appeal. They are that the judge exercised his discretion on an erroneous basis and failed to take into account.
14. It is convenient first to consider the question of the delay in lodging the appeal. 15. Mr Scott QC for the appellant submitted that having regard to the short period of time for lodging an appeal the court should now reconsider the question of what amounted to publication of an Award. He argued that it was unsatisfactory in a case such as the present one for publication to be deemed to have taken place when in reality his clients did not have any knowledge of the contents of the Award. 16. Parker J considered the implications of time running from the date of actual publication of an Award at 293 of the Archipelagos
17. I can see no valid reason to apply a construction of the rule along the lines proposed by Mr Scott. 18. The next question which has to be considered is whether an explanation has to be furnished for non-compliance with a time requirement and whether there was sufficient evidence before Sears J to enable him to exercise his discretion in favour of the applicant assuming that he was minded so to do. 19. Mr Scott argued that if reliance was placed upon correspondence exchanged between the parties which had been exhibited to affidavits there was sufficient evidence to enable the judge to draw an inference for the reasons for the delay. 20. Mr Coleman for the respondent disagreed. He contended that it was not enough for an applicant to simply provide a chronology or timetable of all of the relevant intervening events. His authority for this was a passage from the judgment of Balcombe LJ at page 1256 of Savill v. Southend Health Authority [1995] 1 WLR 1254
21. Although this analysis of the law cannot entirely be reconciled with the views expressed by Nazareth JA as he then was at 97D of Technalloy Chemical Corp. v. International Merona Ltd. [1993]2 HKC 94 I have no doubt in the circumstances of the present application that some form of explanation was required of the appellant. 22. On the face of it it was fairly obvious that the reason why the applicants had not actually read the report until the 20 May was the necessity of first effecting payment of the outstanding fees being claimed by the Arbitrator. 23. However there was no evidence to the effect that payment of the fees would constitute any financial embarrassment. 24. Clearly the applicants solicitors were fully aware that the Award was available for collection. Presumably there was also an awareness that time for lodging an appeal started to run from receipt of Notice that the Award had been published. 25. Although we know that Mr Shaw the solicitor having the conduct of the matter left the Territory on a business trip from the 10th to 19th May we do not know whether he left any instructions with anyone in his firm as to how the matter should be dealt with. Indeed we don't know what if any instructions he had from his clients in this connection. 26. What does however appear to be clear is that it is wholly unsatisfactory that the court should be requested to grant an indulgence to the applicants when all that is known is that time is running against the applicant and there is a total lack of information as to what they were doing in such a situation. 27. In my view in the absence of any exceptional circumstances the judge was fully justified in making the order he did. 28. That then leads to the next question which concerns the overall merits of the appeal. It is however necessary to consider this in the context of the application as a whole as the exercise of the said discretion would to an extent be governed by the merits of the appeal. 29. Mr Scott argued that the prospects of his clients success on the appeal were excellent. He referred to the Arbitrator's 1st Finding in the award which reads as follows.
30. He said that when this was read in conjunction with the accompanying letter it was difficult to see how the appeal would not be successful. 31. The letter was in fact dated the 19th October 1995 and contained a statement to the effect that the payment was being made on a without prejudice basis. 32. It is necessary to consider the background in some detail. The claim the subject of the Arbitration was a sub-contractor's claim for work performed for a contractor and clause 11(b) of the relevant contract provided that payment to the sub-contractor would be made on the contractor being placed in funds by the employer. 33. The invoice for the work was dated 4 March 1991 and one of the issues between the parties was whether the contractor had already been placed in funds. An alternative contention was that the contractor had been tardy in pressing their claim for payment in respect of the relevant work. 34. So far as the payment in October 1995 was concerned the letter in question had been preceded by another letter enclosing a cheque for $455,000 which had not included a stipulation that the payment was being made on a without prejudice basis. The cheque which had been enclosed had been dishonoured when presented for payment. According to the applicant this had been on account of the fact that the contractor had reneged on its promise to place the applicant in funds which would be made available to meet the cheque. 35. Some guidance upon whether all of these matters could be considered as questions of fact or not can be gained from the passage from the speech of Lord Diplock on 742 of Pioneer Shipping v. B.T.P. Tioxide [1982] AC 724 at 742:
36. The outcome of all of this is to indicate that it is not necessarily the case that either party was virtually certain to succeed on the Arbitration. 37. The Arbitration had already been set in motion when this exchange of correspondence took place. 38. After the payment had been made the question then arose as to what if any interest was payable. By virtue of s22A of the Ordinance the Arbitrator was seized of this issue. Indeed as it has transpired this issue and the costs were the sole outstanding issues dealt with in the Award. 39. When Sears J considered the application for leave he would no doubt have carefully weighed all of the matters referred to in s23 of the Ordinance. In particular he would have been mindful of the requirement in s23(4) that no leave should be granted unless it could be demonstrated that the determination of the question of law concerned could substantially determine the rights of one of more of the parties to the Arbitration. 40. Having regard to the fact that the remaining outstanding issue was whether the interest of HK$28,297.26 should be payable it is difficult to see how the discretion reposed in the judge could be exercised in favour of the applicant. 41. For all of these reasons in my view this appeal should be dismissed and an order nisi of costs should be made in favour of the respondent. P. Chan, J.: 42. I have read the judgment of the Vice-President in draft. I agree with the reasons given by him. 43. Since we are disagreeing with the learned judge, I should also briefly make the following two points. First, it is unfortunate that the learned judge seemed to have relied only on the absence of explanation for the delay and did not express any views on the merits of the case. One is therefore left in doubt whether he had given proper consideration to them when he exercised his discretion in refusing leave. Second, it is of course important to maintain as much as possible finality in arbitral proceedings. It is, however, equally desirable to ensure that arbitration is trusted and respected as a means of resolving commercial disputes. The arbitrator here did not make any specific finding on all but one of the points raised by the parties and the only reason he gave for making his award is, in my view, clearly questionable. In the circumstances of this case, I think this is a matter which not only substantially affects the rights of the parties but would also have caused sufficient concern for the court to grant leave to appeal. 44. For the reasons given by my Lord the Vice-President, I too would allow the appeal and make the orders as proposed by him. Litton, V.-P.: Introduction 45. There are, as I view the case, two major hurdles which the appellant (Kwan Lee) must surmount in order to succeed. The time point 46. First, the time point. Under Order 73 r5(2) of the Rules of the Supreme Court, Cap 4 the notice must be served, and the appeal entered, within 21 days after the award has been made and published to the parties. By letter dated 30 April 1996 the Arbitrator notified the parties that he had, on that day, "made and published" his award in writing and it could be obtained at his office on payment of the balance of his fees amounting to HK$137,550. On 30 May 1996 the appellant sought leave by an originating motion to appeal. If the award was "made and published" on 30 April 1996, in terms of Order 73 r5(2), then the appellant was 8 days late. The proper exercise of the judge's discretion, to extend the time for lodging the appeal, then comes into issue. The limited right of appeal 47. The second major hurdle is the limited right of appeal under s23 of the Arbitration Ordinance: The court's jurisdiction is limited by ss(2) to questions of law arising out of the award, and by ss(4) which reads:
48. In considering this question, the court must bear in mind the observations of Lord Diplock in Pioneer Shipping v. BTP Tioxide ("The Nema") [1982] AC 724 at 739H to the effect that in weighing the rival merits of finality and meticulous legal accuracy, the tide of judicial opinion has turned in favour of finality in arbitral proceedings, at any rate in those cases which do not involve exposing arbitrators to a temptation to depart from settled principles of law. Proper approach to the time point 49. In dealing with this appeal, an important matter is the proper approach to the time point. Should it be considered in isolation, without considering what ultimately might be the question of law involved if leave to appeal should be given (as was apparently the judge's approach in this case), or should the time point be looked at more broadly, embracing the prospective merits of the appeal? If the latter be the correct approach, then the judge erred, for he rejected Kwan Lee's application without regard to the substantive questions of law involved. 50. What happened in the lower court was this: When Kwan Lee's solicitor went before the judge on 10 June 1996, he sought orally an extension of time for lodging the appeal: that is to say, to enlarge the period prescribed by Order 73 r5(2) so that the originating motion taken out on 30 May 1996 could be heard. The court's jurisdiction to extend time, as conferred by Order 3 r5, is as broad as it can come and, in the exercise of that discretion, the court would, generally-speaking, have some regard to what might ultimately be in issue. The court is not required to examine closely the possible issues, and if the delay has caused prejudice to the opposite party, that may by itself be enough: see Note 3/5/1 Vol 1 Annual Practice (1997) regarding the broad and discretionary exercise of this jurisdiction in England. In this case the 8 days' delay has caused no prejudice. There was no explanation for the delay, beyond the fact that Kwan Lee's solicitors did not have the award in their hands until the day before the 21 days limited for lodging the application expired, and the solicitor's explanation that for part of that period he was absent from Hong Kong on business. The delay in obtaining the award was because both parties were apparently unhappy over the amount of fees demanded by the arbitrator. This, presumably, carried little weight before the judge. On the other hand, there was a great deal of material on affidavit on the "merits". In so far as the judge appears to have turned his face from the question of law involved and decided the issue solely by the finding: "there is no explanation for the delay": he was, in my view, in error. It therefore falls upon this court to exercise the discretion afresh. Was the originating motion out of time? 51. It is the respondent's case that the expression in Order 73 r5(2) "made and published to the parties" is a term of art which has been part of the legal vocabulary concerning arbitration awards for a long time; it means: when the arbitrator informs the parties that the award has been made and is ready for collection, with or without the prior payment of fees. 52. In The "Archipelagos" [1979]2 LLR 289 Parker J examined the law in this regard extensively. At that time the period for appeal was six weeks. He traced the origin of the expression "made and published to the parties" back to a statute IX and X William III, Cap 15 and he examined the case law based by analogy upon that statute. He considered instances where the arbitrator has required an exorbitant fee to be paid before the award would be delivered to the parties and concluded that the expression meant the time when the arbitrator gave notice that "it might be had on payment of his charges, whether reasonable or not": see p292. 53. In my judgment, there is no justification for the courts in Hong Kong to give to the same expression a different meaning. Where an arbitrator refuses to deliver his award except on payment of the fees demanded by him, the parties are not without redress. Pursuant to s21(1) of the Arbitration Ordinance, the court may, on an application for the purpose, order the arbitrator to deliver the award to the applicant on payment into court of the fees demanded and further order that the fees demanded be taxed. 54. Admittedly, the period of 21 days under Order 73 r5(2) is extremely short. Where a party has taken reasonable steps to protect its right - such as taking out an application under s21(1) of the Arbitration Ordinance - and finds itself hard up against the time limit of 21 days, the court would obviously be inclined to be lenient in giving an extension of time for lodging the notice of appeal. 55. Here, the appellant's solicitors appear to have taken a somewhat leisurely attitude to the time limit. The solicitor in charge of the matter was apparently away from Hong Kong for part of the time preceding the making of the application on 30 May 1996 and that was the reason given to the judge why time ran out. No efforts were apparently made for another solicitor in the firm to deal with the matter in his absence. The time limit of 21 days under Order 73 r5(2) is meant to be obeyed. A party who disputes the arbitrator's fees and is therefore unable to obtain the award should apply to the court for an order under s21(1). To sit back, waiting for the opposite party to pay the fees and obtain the award is not the best way to seek an indulgence from the court. There is, however, this to be said in the appellant's favour. Both parties appear to have considered the arbitrator's fees excessive and both were reluctant to tender the balance of the fees demanded by the arbitrator in order to obtain the award. And, of course, until the award is in the parties' hands, they would not know if they might exercise the right of appeal. 56. Although, in the event, the application was late by only 8 days, the judge was certainly entitled to view the application to extend time with some disfavour. In these circumstances, how should the discretion be now exercised by this court? In my judgment, it cannot, as earlier explained, be exercised in isolation and some regard must be had to the facts giving rise to the question of law said to be involved in the appeal. Background facts 57. Kwan Lee was the main contractor and the respondent (Elevator) the lift sub-contractor in relation to a development in Shatin. On 9 May 1994 the architect issued his interim payment certificate certifying that the sum of $455,000 was payable in respect of the sub-contract works. 58. The contract between the parties contained what is known as a "pay-when-paid" clause in these terms:
59. It is Kwan Lee's case that it has never been paid by the employer and it has therefore withheld payment to Elevator. Elevator does not accept that Kwan Lee has not been paid. The arbitration proceedings 60. By letter dated 7 March 1995 Elevator's solicitors gave notice to Kwan Lee referring the dispute to arbitration in these terms:
61. For the purposes of this appeal, although the notice of arbitration does not expressly refer to a claim for interest and costs, it should be assumed that the reference was broad enough to include those two matters. 62. Kwan Lee did not concur with Elevator to appoint an arbitrator and eventually an arbitrator, Mr T.J. Cleary, was appointed jointly by the President of the Hong Kong Society of Architects and the Chairman of the Royal Institution of Chartered Surveyors. This was on 17 August 1995. 63. Before the arbitrator had fixed a date for a preliminary meeting, Kwan Lee wrote to Elevator a letter dated 15 September 1995 as follows:
64. The cheque was post-dated 4 October 1995 and was dishonoured, the reason given by Kwan Lee being that the employer had failed to pay. Ultimately, the sum of $455,000 was received by Elevator after Kwan Lee had placed sufficient funds in his account to meet the cheque. 65. At the same time Kwan Lee wrote to Elevator's solicitors a letter as follows:
66. On the same day Kwan Lee wrote another letter to Elevator's solicitors, copied to the Arbitrator, as follows:
67. The statement "there is now no dispute and/or difference to refer to arbitration" was incorrect. Although the notice of arbitration dated 7 March 1995 made no specific reference to the claim for interest and costs, the reference in that notice to "your obligation to make payment ... in the amount of HK$455,000" could be said to include a claim flowing from Kwan Lee's alleged wrongful failure to pay, that is, interest and costs. Moreover, in correspondence, the solicitors had made it clear that Elevator was pursuing its claim for interest and costs, and acceptance of the cheque for $455,000 was only in partial satisfaction of its claim. 68. The position, therefore, was that there was (at least arguably) a dispute concerning Kwan Lee's obligation to pay interest and costs which was within the jurisdiction of the arbitrator to determine. 69. There was some correspondence between the arbitrator and the parties, leading up to a preliminary meeting held on 27 November 1995. Written submissions were made. In essence, Elevator's submissions can be summarised as follows:
70. In paragraph 4.2.6 of its submission dated 9 January 1996 the solicitors for Elevator said:
Arbitrator's jurisdiction to award interest 71. Section 22A(1) of the Arbitration Ordinance provides:
72. As can be seen, subsection (1)(b) is a separate and distinct basis for awarding interest from subsection (1)(a). In the present case, if the arbitrator had proceeded to make an award in Elevator's favour in the sum of $455,000 as claimed, he could have awarded interest on that sum under subsection (1)(b). But, before the arbitrator made his award, that sum was paid. Did the arbitrator then have jurisdiction to make an award of interest under subsection (1)(a)? On a plain reading of subsection (1)(a) the answer must be Yes: the two conditions in that subsection - the principal sum was the subject of the reference and it was paid before the award - were clearly satisfied. 73. The existence of jurisdiction under subsection (1)(a) is one thing, it's proper exercise is a different matter. The arbitrator must exercise his discretion judicially; he cannot just pluck a figure out of the air. The award of interest is "on any sum which is the subject of the reference": What if the sum were, in truth, not payable by the respondent to the arbitration: that is, the respondent had, in reality, no obligation to pay that sum, but had, say, been pressured by extraneous circumstances, or commercial expediency, into paying? Would a purported exercise of jurisdiction under subsection (1)(a) have been lawful? 74. To answer this question, the nature of interest as such must be examined. 75. At common law book debts did not carry interest, but it might be payable in consequence of the usage of particular trades etc: see Lord Herschell LC in London, Chatham & Dover Railway Co. [1893] AC 429 at 437-8. In that case, the House of Lords re-affirmed the common law rule that, statute apart, interest could not be given by way of damages for detention of the debt, even though the debt was undoubtedly due and owing. In 1984, that rule was again re-affirmed by the House of Lords : see President of India v. La Pintada Compania [1985] AC 104. 76. But, of course, statute has intervened in this regard. In England, Lord Tenterden's Act was passed in 1833 and by s28 of that statute (Civil Procedure Act 1833) the jury was empowered to allow interest "upon all debts or sums certain payable at a certain time or otherwise ... or on any inquisition of damages .... " Other statutes have since followed: for instance s3 of the Law Reform (Miscellaneous Provisions) Act 1934. In Hong Kong, s48 of the Supreme Court Ordinance empowers the High Court, in proceedings for the recovery of debts or damages to include interest on any judgment for such debt or damages. 77. But, it goes without saying, the award of interest is upon a debt unpaid, and for which judgment is given. Section 48 of the Supreme Court Ordinance does not authorize an award of interest where, before judgment (but after the commencement of proceedings), the debt is paid: which is the situation in the present case. This is what Lord Brandon in his judgment in President of India v. La Pintada Compania at 122-C has referred to as a "case 2" situation. 78. In arbitration proceedings, arbitrators now have such a jurisdiction: But does it mean that they can award interest without any underlying debt, without a finding that there is in truth a debt owed? In my judgment the answer must be No. That would be to extend the jurisdiction of arbitrators beyond all known legal principles. 79. On the facts of the case before the arbitrator, to establish liability to pay interest on the sum of $455,000, there must be at least one of the following bases:
80. It is difficult to see how, if all three factors were absent, the arbitrator could nevertheless award interest to Elevator. The implication of law is that, unless a contrary intention appears in the agreement to arbitrate, an arbitration is to be conducted according to legal principles: see Halsbury's Laws of Hong Kong Vol 1 para 25.104 Arbitration. There is no legal principle to the effect that the right to claim interest is free-standing, irrespective of the underlying debt. However wide the discretion under s22A(1)(a), it cannot authorise the arbitrator to award interest if there is no underlying debt. 81. Elevator's solicitors submitted to the arbitrator that, in this case, Kwan Lee could have paid the $455,000 into court, pursuant to Order 73 r11. That is perfectly correct. But it did not follow that, because Kwan Lee did not use that procedure, the tender of payment to Elevator was ipso facto an admission of liability. Elevator's solicitors said at para 4.2.5 of their written submissions dated 9 January 1996:
82. It is not clear what they meant by the assertion that a party could not make an "unbinding" payment. As a legal proposition, that was clearly wrong. Whether a payment "binds" or not is a matter of legal consequence, following upon a proper evaluation of the nature of the party's act. It would be right to say that, generally speaking, when a debt is discharged by payment of the exact sum, and nothing else were said, the proper inference is that the payment constituted an admission of liability. But here in paying that sum, Kwan Lee said (in its letter of 19 October 1995):
83. In no sense can this be said to be an "unqualified payment". Elevator was right to contend that the payment did not extinguish its claim for interest, but wrong to submit that the payment constituted an admission of liability for the underlying debt. 84. To award interest on the $455,000 the arbitrator had, in accordance with fundamental legal principles, to find an obligation to pay that sum. The award 85. On 30 May 1996 the arbitrator made and published his award. It was not a reasoned award. Nevertheless, the arbitrator's finding - the only finding capable of sustaining the award - was as follows:
86. The award focussed purely on the fact of payment. It made no mention of the correspondence which preceded the payment: correspondence which made it quite clear that (rightly or wrongly) Kwan Lee was asserting that it had no obligation to pay. 87. As I view the matter, this is one of those (perhaps rare) instances where the award, ex facie, is bad in law: no person acting judicially and properly instructed as to the relevant law could have come to this determination: see Lord Diplock in Pioneer Shipping v. BTP Tioxide [1982] AC 724 at 742B-E. Conclusion 88. Having reached this point, what is the proper order for this court to make? As mentioned earlier, there were three bases upon which the arbitrator was invited by Elevator's solicitors to determine the reference: the "admission - of - liability" point - point (iii) above - rested upon foundations of sand. It was illusory. Although the award was not a reasoned award, there is no suggestion that the arbitrator had based his determination upon any other points, that is points (i) and (ii) above. Indeed, upon the affidavits before the court, there was no material upon which he could have done so. 89. Of course, it must be borne in mind that this is not the hearing of the appeal itself against the award. We are simply entertaining an appeal against the judge's refusal to give leave to appeal out of time. The point as regards Kwan Lee's alleged admission of liability has not been fully argued before us. Nothing said earlier can therefore be taken as a final determination of the issue. 90. What is the proper order to make in these circumstances? This court cannot ignore the fact that the award of interest was computed only from the date of the arbitration notice (7 March 1995) until payment on 20 October 1995; the amount involved is only about $28,000. The requirements of s23(4) of the Arbitration Ordinance - limiting the power of the court to intervene only where the question of law could substantially affect the rights of the parties - are not to be lightly brushed aside. It is not as if the appeal, if it should proceed, would determine a point of law of great and general importance: such as the proper construction of clause 11(b) in the standard form of contract: the "pay-when-paid" clause. The appeal will, if it succeeds, only establish the accuracy of legal reasoning in relation to a "one-off" situation, involving no one other than the immediate parties to this dispute: whether Kwan Lee, in making payment on 20 October 1995, had admitted liability to pay. 91. In these circumstances, should finality prevail? It would be tempting to say Yes. But what then are the consequences? To do so would be to allow an award to be enforced when it appears to have no legal basis whatever to sustain it. This would be to debase the entire arbitral process and, in the long run, to shake parties' confidence in arbitrations generally. The appeal itself will not involve much explanation of underlying material. The point of law is self-evident. 92. I would allow the appeal, set aside the judge's order, and order that time be extended to enable a notice under s23(3) to be lodged within 10 days of today's date. Kwan Lee is, to a large extent, the author of its own misfortune. The time limit of 21 days was allowed to pass without even an application to extend time being lodged. The judge had no affidavit before him explaining why time was allowed to pass in that way. It is perhaps not surprising that the judge dealt with the application by tersely dismissing it. I would, in allowing the appeal, make an order nisi that each party should pay its own costs. 93. The result is that, by a majority, the appeal is allowed and the order of this court is the one I have proposed above.
Representation: Mr John Scott QC (Mckenna Minter Ellison) for Applicant/Appellant Mr Russell Coleman (Masons) for Respondent/Respondent |
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