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HCCT 30/2018
[2018] HKCFI 2280
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO 30 OF 2018
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IN THE MATTER of the Arbitration Ordinance (Cap 609) |
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and |
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IN THE MATTER of an Arbitration |
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| BETWEEN |
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P |
Plaintiff
(Respondent in the Arbitration) |
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M |
Defendant
(Claimant in the Arbitration) |
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Before: Hon Mimmie Chan J in Chambers
Date of Hearing: 7 August 2018
Date of Decision: 9 October 2018
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D E C I S I O N
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1. This is an application made by P to challenge parts of an Interim Award dated 11 April 2018 (“Award”) made by an arbitrator, on the ground of serious irregularity, under section 4 (2) (b) and/or 4 (2) (c) and 4 (3) (c) of Schedule 2 of the Arbitration Ordinance Cap 609 (“Ordinance”). P seeks an order to set aside the challenged parts of the Award, or declaring that the said parts of the Award to be of no effect. The grounds relied upon are that the arbitral tribunal had exceeded its powers, or alternatively had failed to conduct the arbitral proceedings in accordance with the procedure agreed by the parties. P seeks in the alternative an order to set aside the Award under Article 34 (2) (ii) of the Model Law, on the ground that it had been denied a reasonable opportunity to present its case in the arbitration.
2. P had engaged M as its main contractor to carry out construction works. The parties entered into a construction contract (“Contract”). The Contract incorporates an arbitration agreement which provides for domestic arbitration. Accordingly, Schedule 2 of the Ordinance (“Schedule 2”) applies to the arbitration agreement.
3. Disputes arose under the Contract, and M as claimant commenced 2 arbitrations against P as respondent, which were consolidated (“Arbitration”). The claims made by M were for its financial entitlements under the Contract, including claims for loss and expense. After a hearing in November 2017, the Award was published, whereby the tribunal ordered P to pay to M a total sum of HK$6,246,535.16 for loss and expense, plus interest. This amount has been paid into court.
4. The disputed parts of the Award relate to a sum of HK4,002,919.58 representing M’s site expenses and overheads for the period from 1 October 2013 to 8 March 2014, and a sum of HK$1,628,926.38 representing M’s extended CAR and EC insurance costs for the period from 1 October 2013 to 8 March 2014, making a total sum of HK$5,631,845.96 (“Disputed Amount”).
Whether there was serious irregularity
5. P claims that the tribunal exceeded its powers and/or failed to conduct the arbitration in accordance with the procedure agreed by the parties, by finding in the Award that M’s letter of 30 September 2013 (“September Letter”) and its email dated 20 November 2013 attaching a breakdown of costs (“November Breakdown”) constituted notification of M’s claims for site overheads and insurance costs, pursuant to and as required by GCC clauses 27 and 28 of the Contract (“GCC 27 and 28”), so as to entitle M to claim for and recover the Disputed Amount. P claims that the tribunal made such finding, notwithstanding the fact that M had never claimed in the Arbitration that any notice of claim had ever been given, or was relied upon by M.
6. In its Statement of Defence and Counterclaim served in the Arbitration, P had pleaded that M had failed to give any notice of its loss and expense claim, as required under GCC 27 and 28, that such notice was a condition precedent under the Contract, and that M’s claim for its loss and expense was deemed to be waived under the express provisions of GCC 27 and 28. This pleading was denied in M’s Statement of Reply and Defence to Counterclaim, with the following averment:
“Save to the extent that it consists of admissions paragraph 39 is denied, (M) avers that (P) has waived and/or is estopped from relying upon any notice provisions in respect of its entitlements for direct loss and expense because of the delay and disruption to the Works.”
7. Senior Counsel for P highlighted the fact that in the course of making opening submissions, M had been asked by P and the tribunal to explain its case on notice. In answer, M had confirmed that “there was no need for a notice” in respect of its claim, but that if there was a need for notice, then there was waiver or estoppel (pages 21 - 26 of the transcript of the hearing). This was confirmed in M’s Supplemental Opening submissions, served at the request of the tribunal to amplify its case. On the issue of notices of the loss and expense claims, M again asserted that M is not required, pursuant to GCC 28.1(2), to give notices either for its claims for the cost of extended insurance, or for the site and head office overheads, as these were instructed as a variation. M only asserted, in the alternative, that P had waived any requirement to give notices under GCC 28, or is estopped from asserting M’s failure to give such notices. It referred to various facts and matters on which it relied, to support the claim of waiver and estoppel.
8. In its Closing Submissions, M maintained its claim (in paragraph 334) that it was not required to give notices for claims for an additional payment for the cost of extended insurance, site overheads and head office overheads, relying on GCC 28 (2). This provides that no notice was required from the contractor, in the case of an architect’s instruction in so far as that instruction is subject to a valuation. It claims in the alternative (paragraph 337) that P had waived the requirement for notices under GCC 28.
9. In P’s Closing Submissions, it referred to a schedule of list of issues, in which P highlighted that M had not given any notice pursuant to GCC 28, and emphasized that M did not allege that it had done so. This was neither...
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