Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

Chun Wo Building Construction Ltd. v China Merchants Tower Co. Ltd.

Judgment Cited authorities 1 Cited in Precedent Map Related
Vincent
Judgment Date20 January 2000
Subject MatterConstruction and Arbitration Proceedings
Judgement NumberHCCT107/1999
CourtHigh Court (Hong Kong)
HCCT000107/1999 XCHRX CHUN WO BUILDING CONSTRUCTION LTD. v. CHINA MERCHANTS TOWER CO. LTD.

HCCT000107/1999

HCCT107/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO.107 OF 1999

-------------------------------

BETWEEN
CHUN WO BUILDING CONSTRUCTION LTD Applicant
AND
CHINA MERCHANTS TOWER CO. LTD 1st Respondent
AND BETWEEN
CHUN WO BUILDING CONSTRUCTION LTD Applicant
AND
CHEVALIER (HK) LTD 2nd Respondent
AND BETWEEN
CHUN WO BUILDING CONSTRUCTION LTD Applicant
AND
CERBERUS HONG KONG LTD 3rd Respondent

-------------------------

Coram: Hon Burrell J in Chambers

Date of Hearing: 13 January 2000

Date of Judgment: 20 January 2000

-------------------------

J U D G M E N T

-------------------------

1. This is an application by Chun Wo Building Construction Ltd (the applicant) who seeks an order that three arbitrations in which it is involved be heard together pursuant to s.6B of the Arbitration Ordinance, Cap.341.

2. The first arbitration arises out of a construction contract between the applicant as the main contractor and China Merchants Tower Co. Ltd as the employer (the 1st respondent).

3. The second arbitration arises out of a contract between the applicant and one of two nominated subcontractors, Chevalier (HK) Ltd (the 2nd respondent).

4. The third arbitration arises out of a contract between the applicant and the other nominated subcontractor, Cerberus Hong Kong Ltd (the 3rd respondent). All the contracts relate to the same development. The two subcontracts were for air-conditioning and fire safety installations respectively.

5. The 1st respondent opposes the application on the ground that the applicant has failed to show sufficient commonality of issues to be determined. The 2nd respondent opposes on the ground that the application is premature and should be adjourned because the issues have not yet sufficiently crystallized for the court to be able to determine whether or not there is sufficient commonality. The 3rd respondent does not oppose the application and consents to concurrent hearings.

6. Section 6B of Cap.341 provides as follows :-

"(1) Where in relation to two or more arbitration proceedings it appears to the Court-

(a) that some common question of law of fact arises in both or all of them, or

(b) that the rights to relief claimed therein are in respect of or arise out of the same transaction or series of transactions, or

(c) that for some other reason it is desirable to make an order under this section,

the Court may order those arbitration proceedings to be consolidated on such terms as it thinks just or may order them to be heard at the same time, or one immediately after another, or may order any of them to be stayed until after the determination of any other of them."

7. This confers a discretion on the court but the discretion should not automatically be exercised merely because there is some commonality of issues however small. The applicant must show sufficient commonality. In Dickson Construction Co. Ltd v. Schindler Lifts (HK) Ltd, CA 125/92, Nazareth JA said :-

"We do not find it necessary to review the relevant evidence and submissions further. Whilst there clearly were common issues of fact and law, which was not disputed, there were also very significant issues of fact and law which were not common. In referring to 'the insufficiency of the factual and legal connection between the two arbitrations', we have no doubt that the judge was referring to the extensive lack of commonality between the issues of fact and of law in the two arbitrations notwithstanding that there was some commonality of such issues."

8. The principal factors which are relevant to the court's determination and which were advanced one way or the other by counsel in this application are as follows :-

1. The terms for payment under the subcontracts were "back to back" with the terms in the main contract. Clause 11 (to which I shall refer later) is common to all three. One of the two main issues between all the parties is the question of delay, namely, was there delay giving rise to liquidated damages, if so, how much and who was responsible for it? Mr Pow, for the applicant, contends these issues are inter-related. Mr Shaw, for the 2nd respondent, submits they are not. He submits that any issues of delay in the main contract are not relevant to arguments about delay in the subcontracts. It is not necessary to recite his argument further because one thing is clear, namely, that the parties do not agree on the proper legal effect of the material terms concerning the question of delay in their respective contracts. To this extent, there are clearly common issues in the legal argument on the question of delay. Mr Pow submits there is a claim of indemnity between all parties. He argues that if the applicant is liable to the 1st respondent and the applicant successfully argues that the 2nd and 3rd respondents are liable to him, then the 2nd and 3rd respondents would be liable to indemnify the applicant. In my judgment, the fact that Mr Shaw may not agree with this is not the point. It is one of the matters which the arbitrator will have to determine.

2. As with many construction disputes, much will depend on the architect's evidence and the certificates he issued. It is the same architect in all three sets of proceedings. The proceedings, taken together, are two subcontracts flowing from a main contract. They can and should be regarded as the same series of transactions about which it would be desirable and sensible for the architect to give evidence on one occasion only.

3. In the main action between the applicant and the 1st respondent, the respondent is firstly counterclaiming about $30 million in liquidated damages for delay. Its second counterclaim relates to alleged defects. It counterclaims specific defects against the applicant only but also unspecified defects generally. The 2nd and 3rd...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT