YING KWONG CONSTRUCTTON CO v. ATTORNEY GENERAL

bjbj HCMP000510/1981 An arbitration clause in a PWD Building Contract shut out matters exclusively reserved for the Architect - Government was estopped by conduct and/or by record from raising and relying on these matters as "excepted matters" - Invalid exercise of a power under a wrong clause could not be given effect to by treating the same as if it had been correctly exercised under the right clause. IN THE HIGH COURT Miscellaneous Proceedings 1981 No. 510 IN THE MATTER OF PUBLIC WORKS DEPARTMENT CONTRACT NO. 702 OF 1975 IN THE MATTER OF THE ARBITRATION ORDINANCE BETWEEN YING KWONG CONSTRUCTION COMPANY Claimants THE ATTORNEY GENERAL Respondent ----------------- Coram: Liu, J. in Court. Date of Judgment: 13th June, 1981 ----------------- JUDGMENT ----------------- A Special Case was stated for the opinion of the court pursuant to section 23 of the Arbitration Ordinance. The questions posed for the consideration of the court are five. A dispute arose under a Public Works Department Contract No. 72 of 1975 entered into between the Government of Hong Kong and the Claimants, whereby the Claimants agreed to complete sub-structure works on a Government site at Borrett Road in accordance with the contract documents. After the signing of the said Contract, the Claimants took possession of the Government site and commenced work. In the course of foundation excavation, it was alleged that some 2,438.71 cubic metres of rock had to be excavated and removed. The issue may be shortly put as follows: " Whether the contract rate for foundation excavation should be adjusted when rock is encountered." The centre core of disagreement stemmed from Bill of Quantities No. 2, page 1, paragraph F (hereinafter referred to as "2/1F"), which provides: " The rates for all excavations and subsequent disposal shall include for:- Excavating in any type of level or sloping ground whatsoever. NOTE : In the case of excavation for removal of obstructions, inspection of piles, and caissons:- 'Extra over excavation' will be paid for breaking out and clearing away brickwork or masonry, plain or reinforced concrete, or boulders or solid rock which shall be defined as rock which in the opinion of the Architect can be removed only by the use of wedges or pneumatic drills. The quantity of such items measured shall be either the net quantity actually executed, or a quantity based on a maximum overall size on plan of 6'0" x 6'0" per pile (or diameter plus 8" for caissons), whichever is the least." The Claimants sought additional payment for the excavation of rock encountered at the Government site, but their claim was rejected. The exchange of correspondence leading up to the Architect's decision made under Clause 117 of the General Conditions of the said Contract is chronologically set out below: By a letter dated 18th April, 1979, the Claimants wrote to the Chief Architect of the Architectural Office, Public Works Department in the following terms: " We are in dispute over the question of 'extra over excavation' for rock. Your decision, pursuant to clause 117 of the Conditions of Contract is hereby requested." In a reply dated 24th April, 1979, the Chief Architect announced his decision as follows: " It is clear from Item 2/1F that you are only entitled to an extra over excavation rate for rock where such rock was encountered in caissons. That is my decision pursuant to clause 117 of the Conditions of Contract." It would be convenient here to reproduce Clauses 115, 116 and 117 in the General Conditions of the said Contract: "115.(1) In the case of any question arising as to any of the following matters (hereafter called 'the excepted matters') - as to the true intent and meaning of the Drawings, Specification and Bills of Quantities; as to the Quality of materials and workmanship; as to the method or means (including any question as to what Constructional Plant should be provided and used by the Contractor) by which the Works or any part thereof should be executed; as to the measurement of the Works, the Architect shall state his decision thereon in writing and the Architect's said decision shall be final and binding upon the parties; provided that the Architect shall have power to cancel any such decision (whether made by him or his predecessor as Architect) and to substitute any other decision therefor. (2) In making or cancelling any such decision or substituting any other decision therefor the Architect shall act as an expert from his still and knowledge as an architect and not as an arbitrator as described in clause 116. 116. (1) In measuring, valuing, deciding or certifying the Architect is not intended to act as arbitrator but as an architect acts by his skill and from his knowledge of the facts and incidents connected with the Works and in so far as any facts are not within his own knowledge the Architect shall be at liberty to inform himself by inquiry of such person or persons as he may consider necessary. (2) The Architect shall at all times be considered to be in possession of all facts necessary for him to form his own opinion, make his measurements or valuations, give his decisions and orders, make his requisitions or give or refuse his certificate and he shall be at liberty to certify at such times and in such manner as in his discretion he may think proper and he shall not be bound to give any reason for or any particulars of his certificate or any reason for his not certifying. SETTLEMENT OF DISPUTES 117. (1) If any dispute or difference shall arise (save only as to excepted matters as defined in clause 115) between Government or the Architect and the Contractor in connection with or arising out of the Contract or the carrying out of the Works, whether during the progress of the Works or after their completion and whether before or after the termination, abandonment or breach of the Contract, it shall be referred to and settled by the Architect who shall state his decision in writing and shall give notice of the same to Government and to the Contractor. (2) Such decision in respect of every matter so referred shall be final and binding upon Government and upon the Contractor until the end of the Period of Maintenance and shall forthwith be given effect to by the Contractor who shall proceed with the Works with all due diligence whether or not notice of dissatisfaction is given by him or by Government as hereinafter provided. (3) If the Architect shall fail to give such decision for a period of ninety days after being requested to do so or if either Government or the Contractor is dissatisfied with any such decision of the Architect then and in any such case either Government or the Contractor may within ninety days after receiving notice of such decision or within ninety days after the expiration of the first named period of ninety days, as the case may be, require that the matter shall be referred to the decision of a single arbitrator in accordance with and subject to the provisions of the Arbitration Ordinance or any statutory modification thereof far the time being in force and any such reference shall be deemed to be a submission to arbitration within the meaning of such Ordinance but if the Architect has given a decision and has given notice thereof as afore-said within a period of ninety days as aforesaid and no notice of dissatisfaction has been given, either by Government or by the Contractor, within a period of ninety days from receipt of such notice thereof the decision of the Architect shall remain final and binding upon Government and the Contractor. (4) Such arbitrator shall have full power to open up, review and revise any decision, opinion, direction, certificate or valuation of the Architect and neither party shall be limited in the proceedings before such arbitrator to the evidence or arguments put before the Architect for the purpose of obtaining his decision above referred to. (5) The award of the arbitrator shall be final and binding on the parties. (6) Such reference except as to the withholding by the Architect of any certificate or the withholding of any portion of the Retention Money under clauses 98 and 100 to which the Contractor claims to be entitled or as to the exercise of the power of the Architect to give a certificate under clause 106 shall not be opened until after the completion or alleged completion of the Works unless with the written consent of Government and the Contractor: Provided always that - the giving of a certificate of completion under clause 68 shall not be a condition precedent to the opening of any such reference; and no decision given by the Architect in accordance with the foregoing provisions shall disqualify him from being called as a witness and giving evidence before the arbitrator on any matter whatsoever relevant to he dispute or difference so referred to the arbitrator as aforesaid." Ninety days from the Architect's decision given on the 24th April 1979 expired on the 21st July, 1979. On the 31st July, 1979, the Claimants' then solicitors communicated with a Crown Counsel in the Attorney General's Chambers. The Claimants' contention was reventilated on an extended front with a request "to reconsider and admit (their) client's claim". On the 8th September, 1979, the Legal Department replied in these terms: " On the 24th April, the Chief Architect made a decision on the disputes pursuant to clause 117 of the Conditions of Contract. His decision was that your client was only entitled to an extra over excavation rate for rock where such rock was encountered in caissons. Your client had 90 days in which to give notice of dissatisfaction with the Architect's decision and after such notice the matter would have gone to arbitration. No such notice was given and therefore by virtue of clause 117 (3) of the contract the decision of the Architect shall remain final and binding. This being the case the Architect is not prepared to reconsider or admit your client's claim." By a further letter to the Legal Department dated the 25th September, 1979, solicitors presently representing the Claimants were labouring under the misapprehension that an action could be brought against Government under the said Contract for the extra excavation of rock, and they wrote again threatening litigation: "We must first of all say that we regret that the Architect is not prepared to consider this matter. We do, of course, appreciate that the Architect considers that our clients are not entitled to the further payments claimed. However, we have obtained the opinion of Mr. David Gardam, Q.C., upon the effect of the various provisions of the contract which are in dispute and we propose to proceed on the basis of the advice given in that opinion. Your refusal to submit to arbitration, if it amounts to that, leaves our client with no alternative but to litigate the matter through the courts. Accordingly, we are preparing a writ and will serve the same up - on you within the course of the next week or so." That letter drew the following response from the Legal Department dated the 3rd October, 1979: "My instructions are that the Architect is not prepared to reconsider your client's claim nor to go to arbitration. It is my opinion that under the terms of clause 117 of the contract he is entitled to do this. I note from your letter that you have counsel's opinion 'upon effect of the various provisions of the contract which are in dispute'. I believe that the only dispute that we have is in the meaning of the phrase 'excavating in any type of level or sloping ground whatsoever', contained in section No. 2 of the Preambles para. F." The situation was reasonably clear: The Claimants sought and obtained a decision from the Architect under Clause 117. Upon the expiration of the 90 days' period prescribed for lodging a notice of dissatisfaction with a view to arbitration, the Claimants through their solicitors invited reconsideration on further grounds submitted. The Claimants' invitation was not favourably received, and on behalf of Government the Legal Department asserted that in the absence of any notice of dissatisfaction given under Clause 117(3), the Architect's decision was final and binding. The Legal Department reiterated the terms of Clause 117 and maintained that the Architect was justified in refusing the invited reconsideratian. By an Originating Summons filed on the 20th February 1980, pursuant to section 29 of the Arbitration Ordinance the Claimants applied for an extension of time "to give notice requiring a dispute arising out of and in connection with the works carried out under the Contract referred to in the Architect's decision of the 24th day of April 1979 to be referred to the decision of an arbitrator". In as well the affidavits in support as in the affidavits in opposition, the Court was then left in no doubt that the real controversy arose from a decision given by the Architect under Clause 117 of the said Contract. Indeed, in the affidavits in opposition filed on behalf of the Legal Department, reference was expressly made to a "clearly defined issue." There was some lack of concensus as to what transpired in the conversation outside Judge's Chambers on the 24th March 1980, but what is tolerably clear was that whilst Mr. Tristram for the Crown was somehow desirous of "reserving his rights", it was not unequivocally conveyed to or understood by legal representatives of the Claimants as a reference to Clause 115. Government had not itself served any notice of dissatisfaction on the Architect's decision given under Clause 117. In fact, Government had called in aid Clause 117(3) for its finality binding on the Claimants. Against that background and in the generalities of no special significance to the Claimants' legal advisers, Government allowed an order to be made by Silke, J, on the 24th March 1980 under the said Originating Summons, whereby time was extended to the Claimants for serving a notice of dissatisfaction for arbitration. The learned Judge could never have proceeded on section 29 of the Arbitration Ordinance unless "a dispute (had arisen) to which the (arbitration) agreement (applied)". Section 29 of the Arbitration Ordinance reads as follows: " 29. Where the terms of an agreement to refer future disputes to arbitration provide that any claims to which the agreement applies shall be barred unless notice to appoint an arbitrator is given or an arbitrator is appointed or some other step to commence arbitration proceedings is taken within a time fixed by the agreement, and a dispute arises to which the agreement applies, the Court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and notwithstanding that the time so fixed has expired, may, on such terms, if any, as the justice of the case may require, but without prejudice to the provisions of any enactment limiting the time for the commencement of arbitration proceedings, extend the time for such period as it thinks proper." Section 29 applied if (1) there was an agreement to refer future disputes to arbitration, (2) the arbitration agreement provided that any claims to which it applied should be barred unless a step to commence arbitration was taken within a prescribed time and (3) a dispute had arisen to which the agreement applied. I propose to deal first with question (v) in this Special Case: " Whether the Respondent (Government) by his actions are estopped from saying that the claim cannot be referred to an Arbitrator under Clause 117." The Claimants relied on estoppel by conduct and estoppel by record. As for conduct which was said to have raised the estoppel, emphasis was laid on the Claimants' letter dated 18th April 1979 seekingadecision under Clause 117, the Architect's decision in response given on the 24th April 1979 under the same clause, the Legal Department's letter dated 8th September 1979 taking advantage of Clause 117(3) which rendered the Architect's decision final and binding in the absence of any notice of dissatisfaction, a further letter dated 3rd October 1979 from the Legal Department reiterating the justification for the Architect's refusal to reconsider the matter under Clause 117(3) and on Government's stance in not appealing against the Architect's decision but allowing an order dated the 24th March 1980 to be made by Silke, J. on the fundamental basis that there existed a dispute under the Arbitration Clause fit for consideration under section 29 of the Arbitration Ordinance. Further, Government had concurred in the appointment of the arbitrator and submitted to arbitration. Not until its Defence filed in September 1980 as ordered by the arbitrator did Government for the first time categorically seek to rely on Clause 115. The Claimants had incurred substantial litigation costs in pursuing their remedy. They had appointed an arbitrator and undertaken to pay $25,000, being one half of his estimated remuneration. As for estoppel per rem judicatam, the order for extension of time granted by Silke, J. on 24th March 1980 was tendered as having the effect of a res judicata. What was contemplated by Mr. Tristram before the making of the order for extending time was not explicitly conveyed to counsel for the Claimants. With hind sight, it would seem that Mr. Tristram must have intended to reserve more than just his inalienable right to contest on the merits before the arbitrator, otherwise the mention of a reservation would have been redundant and meaningless. On the other hand, if Mr. Tristram had not accepted before Silke, J. the decision as being one made under Clause 117, it would have been inexcusably imprudent of him to acquiesce in the learned judge acting on what was or was considered to be a false premise, particularly when the application before Silke, J. was a step preliminary to the onset of arbitration. Once Mr. Tristram suffered jurisdiction to be seized of and an order granted on an assumed or admitted state of affair, an irretrievable stand was or must be considered as having been taken. The order for extension could not otherwise have been urged by counsel for Government nor made by the Court. That a dispute had arisen under Clause 117 went to the very root of the extension granted. To the learned Judge, at the time of his said order, only "one clearly defined issue" was before the Court, namely whether the Claimants were entitled to be paid for excavation of rock. There was then no or no known challenge that the matter in the decision was not an "excepted matter", and Silke, J. could not have acted on section 29 of the Arbitration Ordinance except with reference to a decision on a matter within Clause 117. Mr. Tristram elaborated that he was minded to argue before the arbitrator that it was truly an "excepted matter" outside Clause 117, but Counsel was then quite unaware and seemed even unconvinced to-day that the authority or jurisdiction of an arbitrator had to be decided exclusively by the Court. In Heyman v. Darwins Ltd.(1), Lord Porter observed that generally it was the function of the Court to determine an arbitrator's jurisdiction. In Christopher Brown Ltd. v. Gennossenschaft Oesterreichischer(2), Devlin, J., as he then was, outlined the proper approach of arbitrators: " The arbitrators cannot determine their own jurisdiction." It is clear that at the beginning of any arbitration one side or the other may challenge jurisdiction of the arbitrator. It is not the law that arbitrators, if their jurisdiction is challenged or questioned, are bound immediately to refuse to act until their jurisdiction has been determined by some court which has power to determine it finally. Nor is it the law that they are bound to go on without investigating the merits of the challenge and to determine the matter in dispute, leaving the question of that jurisdiction to be held over until it is determined by some court which had power to determine it. They might then be merely wasting their time and everybody else's. They are not obliged to take either of those courses. They are entitled to inquire into the merits of the issue whether they have jurisdiction or not, not for the purpose of reaching any conclusion which will be binding upon the parties - because that they cannot do - but for the purpose of satisfying themselves as a preliminary matter whether they ought to go on with the arbitration or not. If it became abundantly clear to them, on looking into the matter, that they obviously had no jurisdiction as, for example, it would be if the submission which was produced was not signed, or not properly executed, or something of that sort, then they might well take the view that they were not going to go on with the hearing at all. They are entitled, in short, to make their own inquiries in order to determine their own course of action, and the result of that inquiry has no effect whatsoever upon the rights of the parties." One may be forgiven for not being conversant with this principle. If Mr. Tristram had been, it would have been highly frivolous of him to withhold the issue of lack of authority from Silke, J. only to have the same reventilated, after an objection shall have been taken as to the arbitrator's jurisdiction, before another judge. What seems to be more important in this case is not what was intended but what was in fact reasonably known to one's adversary and understood by the learned Judge. Mr. Mills-Owens categorically stated that Clause 115 was never within his contemplation as an issue before Silke, J. who had to be satisfied with the existence of a dispute arising from the arbitration clause, Clause 117 before he could even begin to consider exercising his judicial discretion under section 29 of the Arbitration Ordinance. By conduct, Government must have chosen to be irrevocably bound by the Architect's decision as a decision under Clause 117 when it sought to take advantage of Clause 117(3) and rely on its finality after the expiration of the period prescribed for serving a notice of dissatisfaction. If the Architect's decision was or was held out to be conclusive upon one party, it must conceivably be conclusive upon both. To the Claimants, Government's subsequent conduct culminating in the appointment of an arbitrator put all beyond any shadow of a doubt. As for estoppel per rem judicatam, Government is bound by the order of Silke, J. founded on the fundamental premise that the matter for the Architect's decision was one within Clause 117. The arbitrator's jurisdiction is always wholly consensual. The estoppel raised by the Claimants may be legalistically put either as confirming jurisdiction on the arbitrator or conferring authority or being estopped or not being permitted to approbate or reprobate. Ultimately, the short point is whether or not Government has at any time irrevocably accepted the fact that the arbitrator is to have jurisdiction or authority over the matter. In my judgment, Government has irreversibly accepted the arbitrator's authority and it is no longer open to Government to disturb the fait accompli. Finally, on estoppel per rem judicatam, suffice it for me to refer to the oft-quoted authorities. In Henderson v. Henderson(3), where on reference to a Master of the Supreme Court of Newfoundland, monies were found due to the next of kin from A on account taking in respect of his late father's estate under his control. The suit included claims on a partnership account and a private account, but the Master was not, however, presented with these other accounts pleaded. The Newfoundland decree made an the sums so found due by the Master was expected to compute what was due "upon all the accounts in question in the pleadings including the partnership and private account." When A was sued in England on the amounts so found due in Newfoundland, he sought to rely on these other accounts and claimed the balance against the estate. He was disallowed to reopen the subject by reason that "the whole of the matters were in question between the parties, and might properly have been the subject of adjudication in the suit before the Supreme Court of Newfoundland." At p.115 Sir James Wigram V.C. observed: " Where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward the whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest but which was not brought forward, only because they have from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to the point upon which the Court was actually required by the parties to form an opinion and pronounced a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time." In this case, Silke, J. "was actually required by the parties to form an opinion" on the matter decided by the Architect as one arising out of the arbitration agreement in Clause 117 "and to announce a" decision. The next case is Hoystead v. Commissioner of Taxation(4), where the Full Court in Australia allowed six separate tax deductions to six beneficiaries on the footing that each was a joint owner. In the next taxation year, the Commissioner of Taxation granted only one deduction on the ground that the six beneficiaries were not in fact joint owners. In the case previously before the Australian Full Court, it was not a matter of decision that the beneficiaries were joint owners but a matter of admission. It was held "that the Commissioner was estopped, since although in the previous litigation no express decision had been given whether the beneficiaries were joint owners, it had been assumed and admitted that they were, the matter so admitted was fundamental to the decision then given." At p.165, in the only speech delivered, Lord Shaw expressed the following view of the Judicial Committee: " In the opinion of their Lordships it is settled, first, that the admission of a fact fundamental to the decision arrived at cannot be withdrawn and a fresh litigation started, with a view to obtaining another judgment upon a different assumption of fact; secondly, the same principle applies not only to an erroneous admission of a fundamental fact, but to an erroneous assumption as to the legal quality of that fact. Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the Court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted litigation would have no end, except where the legal ingenuity is exhausted. It is a principle of law that this cannot be permitted, and there is abundant authority reiterating that principle. Thirdly, the same principle - namely, that of setting to rest rights of litigants, applies to the case where a point, fundamental to the decision, taken or assumed by the plaintiff and traversable by the defendant, has not been traversed. In that case also a defendant is bound by the judgment, although it may be true enough that subsequent light or ingenuity might suggest some traverse which had not been taken. The same principle of setting parties' rights to rest applies and estoppel occurs." Then at p.168, the learned Law Lord continued: " But the respondent maintained with much elaboration that an analysis of the first judgment pronounced by the Full Court showed that the grounds of that judgment, which it was maintained were erroneous in law, proceeded upon an admission that Mr. Campbell's children were joint owners; and he founded strongly upon such statements from the Bench as that of Starke J., already quoted, that attention had not been directed to the question of joint ownership in the debates in the former case." It might be sufficient to say, in answer to the entire argument on this head, that whether the point as to joint ownership depended upon admission of fact upon evidence led or upon argument upon construction of a statute, that is, as already stated, nothing to the point in considering the question of estoppel. There would be no quieting of litigation unless the judgment was taken as it stands." At p.170, before Lord Shaw cited with approval the locus classicus hereinbefore quoted in the judgment of Sir James Wigram, V.C. in Henderson v. Henderson, he extracted from the formidable array of authority the following conclusion: It is seen from this citation of authority that if in any Court of competent jurisdiction the decision is reached, a party is estopped from questioning it in a new legal proceeding. But the principle also extends to any point, whether of assumption or admission, which was in substance the ratio of and foundamental to the decision." Another Privy Council decision stands in equal prominence. It is the case of Vat Tung Investment v. Dao Heng Bank Ltd.(5), where a property was sold by the bank to the appellant in the exercise of its mortgagee's power of sale. The appellant mortgaged the same property to the bank to finance the purchase. When the appellant defaulted on payment of mortgage interests, the property was sold to the second respondent by the bank again in the exercise of its mortgagee's power of sale. In a High Court Action No. 969 of 1961 in Hong Kong, the appellant sued the bank on an allegation that in truth he took the original sale to himself as a trustee of the bank and that it was thus a sham. In Action 969, the bank counterclaimed for loss on the resale to the second respondent. There was no pleading challenging the resale to the second respondent who was not a party to Action 969. The appellant lost his Action 969, but the bank succeeded in its counterclaim. In a subsequent High Court Action No. 534 of 1972, the appellant alleged that the sale to the second respondent was void or voidable as being fraudulent by reason that in truth the second respondent represented the bank's interest. The claim of the appellant was ordered to be struck out on the ground that there was no compelling reason why that contention could not have been advanced in Action 969. The Judicial Committee confirmed the order. At p.589F, in the single speech of the Committee delivered by Lord Kilbrandon, the observation of McMullin J., as he then was, was quoted in extenso with emphasis on his conclusion set out below: " It was, to my mind, so clearly a matter necessary and proper to be litigated at the same time with all the other issues between the parties that it would have been wholly wrong for the judge in chambers to have permitted the amendment." On the same page, Lord Kilbrandon continued in H: " The second question depends on the application of a doctrine of estoppel, namely res judicata. Their Lordships agree with the view expressed by McMullin J. that the true doctrine in its narrower sense cannot be discerned in the present series of actions, since there has not been, in the decision in No. 969, any formal repudiation of the pleas raised by the appellant in No. 534, Nor was Choi Kee (second respondent), a party to No. 534, a party to No. 949. But there is a wider sense in which the doctrine may be appealed to so that it becomes an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings." In Khan v. Guleccha International Ltd.(6), at p.266b Brightman L.J. had this to say: " The only sensible approach of the law, in my view, is to treat an issue as laid at rest, not only if it is embodied in the terms of the judgment, or implicit in the judgment because it is embodied in the spoken decision, but also if it is embodied in an admission made in the face of the court or implicit in a consent order." Thus, the doctrine of estoppel as reasserted in the case of Hoystead(4) applies not only to what it is expressly decided but also to what it is assumed and admitted, but fundamental to the decision. The line of demarcation between what is fundamental to the decision and what is merely incidental or collateral may often be ill-defined. One must inquire with "unrelenting severity" whether the issue on which the estoppel was sought to be founded is "so fundamental to the substantive decision that the latter cannot stand without the former. Nothing less than this will do." See Spencer Bower and Turner, The Doctrine of Res Judicata, 2nd Edition (1969), pp 181, 182. In Gleeson v. J. Wippell & Co. Ltd.(7), Megarry V.C. assimilated the principles underlining an application to strike out pleadings with the doctrine of estoppel: " What is before me is a summons by Wippell to strike out the indorsement on the writ, the statement of claim, and the reply. The application is made under RSC Ord. 18, r 19(1)(b) ('frivolous or vexatious') and (d) ('otherwise an abuse of the process of the court'), and under the inherent jurisdiction. The central care of the application is, of course, that as in the Denne action it had already been decided that the Wippell shirt did not infringe the plaintiff's copyright, it is frivolous, vexatious and an abuse of the process of the court for the plaintiff to seek to litigate all over again what has already been decided against her. This contention naturally led into territory entitled res judicata, estoppel per rem judicatam, issue esstoppel, and what, for want of a better name, was called quasi res judicata. The last expression, I should say, was treated during the argument as being a label, inelegant but of convenient brevity, for the wider sense in which the dactrine of res judicata can be appealed to, where, although there is no mandatory bar to the proceedings on the footing of res judicata or issue estoppel, there is a discretionary bar under the jurisdiction to strike out the proceedings as being an abuse of a process of the court: see Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd." In Yat Tung Investment Co. Ltd.(5), the substratum of an extended doctrine of estoppel or quasi res judicata was founded on a failure to advance a contention which was "so clearly a matter necessary and proper to be litigated at the same time" even without "any formal repudiation of the pleas" and in the absence of a further party directly involved. Silke, J. 's assumption of jurisdiction under section 29 of the Arbitration Ordinance stemmed necessarily from the implicit concession of there being a dispute to which the artibration agreement embodied in Clause 117 applied. In the instant Case, it was more than a matter left unlitigated. It founded the very basis for the order, without which Silke, J. could not have invoked section 29 of the Arbitration Ordinance. The learned judge was "actually required by the parties" to seize jurisdiction of the application, and he could not have obliged unless the Court was satisfied with or assured of the subsistence of a dispute to which Clause 117 applied. That the Architect's decision was one under Clause 117 referable to arbitration was decidedly fundamental to and essential for the exercise of the judicial discretion under section 29. Not only were the same parties involved, but the order of Silke, J. was a step taken in the implementation of the same arbitral agreement. There is ample room for res judicata, in its narrower sense, to apply. The Claimants need not call in aid the doctrine in its wider sense. Failure to suppress an attempted reventilation of the same issue would be no less than lending countenance to what would virtually amount to an abuse of a court process. Government must, in these circumstances, be debarred from raising Clause 115 at a subsequent stage of the same proceedings commenced pursuant to Clause 117. In conclusion, my answer to the last question is in the affirmative. Government cannot be permitted to retract from their implicit concession made before Silke, J. of a fact and the legal quality of that fact. It would be more convenient to dispose of question (iv) before I proceed to consider the other questions in this Special Case: Question (iv) is: "Whether, if the aforementioned matters are "excepted matters" as defined by the said Clause 115, the Respondent (Government) has waived his rights to rely on the said Clause 115." It is well said in Spencer Bower on Estoppel by Representation 2nd Edition para. 303: " If by words, or by conduct or inaction, he represents to the other party litigant his intention to adopt one of the two alternative and inconsistent proceedings or positions, with the result that the latter is thereby encouraged to adopt or persevere in a line of conduct which he otherwise would have abandoned or modified, or to change tactics from which he otherwise would never have deviated, the first party is estopped, as against his antagonist, from resorting afterwards to the course or attitude which, of his free choice, he has waived or discarded." Putting it more positively, the opinion of the court is now sought as to whether Government has waived its rights to object to an "excepted matter" being considered under Clause 117. What is termed a waiver of an objection is generally allied with a procedural irregularity, but insofar as waiver is equated with estoppel as envisaged in para. 303 of Spencer Bower or as neatly put in Henderson v. Henderson(3), Question (iv) needs no separate answer from that to Question (v). My answer to it is simply in the affirmative. It would be quite unnecessary to dwell on the remainder of this Special Case at any great length, and it is no discourtesy that I do not propose to labour every point in counsel's very full arguments. I pass then to consider Question (i): " Whether the matters pleaded by the claimants in their Points of Claim are 'excepted matters' as defined in Clause 115 of the said Contract". (3) 3 Hare 100 at p. 118 per Sir James Wigram, V.C.: "The plaintiffs were not compelled to take such a decree, but, having taken it, they are bound by the consequences, and must be taken to have waived any disadvantage to themselves which would result from it. As a general rule, the Architect is not expected to resolve matters of legal interpretation of a contractual document, but Clause 115 is an exceptional provision which has no parallel in other jurisdictions. Its sub-clause (2) refers to Clause 116 which confines the Architect's primary functions to facts, but in contrast Clause 115 expressly empowers the Architect to decide on the "true intent and meaning" of the Bills of Quantities. That is a question of construction. We are concerned with a Bill of Quantities. It was not denied that the Architect might legitimately consider under Clause 115 whether "2/1 F" provided for rock encountered in substructure excavation. The contention was not so much whether rack excavation was inclusive or exclusive of the contract rate in "2/1 F", but that the item was entirely omitted in Bill No. 2 of the Bills of Quantities and must therefore be treated as a variation under Clause 9 and separately paid for by Government. It was argued that since a Clause 9 variation was not within the purview of Clause 115, the matters pleaded by the Claimants were thus not "excepted matters". The basis of the Claimants' argument was quite involved, and, as I understand it, emanated from No. 1 of the Bills of Quantities under the heading of "preliminaries". It is stated in 1/11A of Bill No. 1 that all the Bills of Quantities have been prepared in accordance with the principles in the "Standard Method of Measurement". Second Edition. At p. 1 paragraph 1 of "1. - General Principles" in the "Standard Method of Measurement", it is provided that work which by its nature cannot be accurately measured shall be described in the Bills of Quantities as provisional. In paragraph 2, the "Standard Method of Measurement" is said to be "a definition of principle rather than an inflexible document", and "in particular and exceptional cases the Surveyor is expected to use his discretion and to adopt special methods, provided the principles of measurement laid down are observed and the intention is made clear to the estimator". At p.9 of the "Standard Method of Measurement" under the heading "III - EXCAVATOR", paragraph 1(a)(ii) requires a preamble item to be given with sufficient particulars "stating that the description of each item of excavation shall be held to include for excavating in any ground encountered, getting out excavated materials by any means necessary, all levelling or grading and remming of bottoms, trimming sides, planking and strutting and any extra excavation required therefor". Paragraph 1(b) further provides that "where practicable the nature of the soil shall be described." It was contended that Bill No. 2 of the Bills of Quantities, "2/1 F" in particular, failed to describe the nature of the soil and omitted to specify what was to be inclusive in each itemized rate for excavation. These omissions, so ran the argument of the Claimants, were visibly reflected in the provision for extra over excavation in the Bill for caissons (Bill No. 6 of the Bills of Quantities 6/6A and B) and the silence in the Bill for substructure (Bill No. 3 of the Bills of Quantities). In conclusion, the Claimants contended that "2/1 F" was a topographical as opposed to geological reference, in which extra over excavation for rocks in the substructure formation had been inadvertently omitted. Question (i) defies a simple answer. A Bill of Quantities is generally to be construed by the Architect under Clause 115, and what is left unprovided for therein may be treated as a variation by the Architect under Clause 9. The interpretation of the "true intent and meaning" of a Bill of Quantities is evidently an "excepted matter" within the exclusive jurisdiction of the Architect and, as it seemed to be accepted in argument, an omission dealt with as a variation by the Architect under Clause 9 is not. It would follow from such assumed dichotomy that the Architect's decision in respect to a variation under Clause 9 is liable to be reviewed by an arbitrator under Clause 117. The controversy was debated within a very narrow compass viz. whether extra over excavation of rock was, expressly or impliedly, provided for in "2/1 F". The short point at issue was whether "2/1 F" had dealt with or omitted such extra rock excavation; if it had been so dealt with, the parties were prepared to consider it as an "excepted matter" under Clause 115, but if it had been omitted, it was treated as falling outsider Clause 115 and to be settled under Clause 117 as a dispute over a general clause in terms of Clause 9. Whether or not "2/1 F" in Bill No. 2 fails or omits to make provision for any extra over excavation of rock is essentially a question of its extent and scope closely allied with its "true intent and meaning". Thus, the Architect must first determine if "2/1 F" does contain such an alleged omission as an "excepted matter" under Clause 115 subject to no review. If the Architect should take the view that an item has indeed been omitted, then he may have to proceed to Clause 9 for rectifying the error by treating it as a variation for valuation in accordance with Clause 74 guided by Clauses 90 and 92. In the absence of any decision on the "true intent and meaning" of "2/1 F" in Bill No. 2, the Architect need not proceed to consider whether or not it is to be treated as a variation under Clause 9. Question (i) as framed, insofar as it is in quest of any omitted item for extra over excavation of rock, is primarily an Architect question and not one for the arbitrator. The Architect's decision on that will be final. If Question (i) were to be resolved, it must be dealt with on the hypothesis that the Architect had decided on an omission. If the Architect were to form the view, on true construction of "2/1 F", that there is no item omitted (that is to say, the rate for foundation excavation is inclusive of rock) his decision would be conclusive under Clause 115, and no arbitrator question could arise, and in that event the arbitrator could not even state it in his Special Case. I would refuse to be drawn into the realm of a hypothetically academic exercise before an Architect's decision of there being such an omission is reached under Clause 115 favourable to the Claimants. Furthermore, counsel's arguments were, in the main, focussed on whether "2/1 F" contained any omission as regards extra over excavation of rock, which is an Architect question. Whether Clauses 9 and 74 were or could themselves be "excepted matters" was not made a live issue in these proceedings. The parties seemed to have resigned themselves to the notions that Clause 9 was outside Clause 115 and that Clause 115 and Clause 9 fell into distinct separate compartments. For these reasons and the fact that this involved question is one more technical than legal, it would not be right for me to offer any answer to Question (i) save for an observation that the Architect must first decide as an "excepted matter" under Clause 115 if there is any omission in "2/1 F" for extra over excavation of rock. Question (ii) reads as follows: " If the matters pleaded by the Claimants are 'excepted matters' as defined in Clause 115 of the said Contract, whether the Architect has given a decision to the Claimants under Clause 115." Authorities(8) were cited to illustrate the principle that true legal relationship was "to be determined by law and not the label which the parties chose to put on it". These cases emphasized that the expression of intention might be overriden by the relationship created by the terms of the written agreement. It is still a cardinal rule that the courts should be reluctant to put upon clearly expressed words a construction different from that which they import; nor has it ever been suggested that any deliberate but wrongful exercise of a power which fails for want of authority may be treated as if it had been properly exercised so as to clothe it with jurisdiction. Here what was unequivocally intended was an exercise of a power under Clause 117. If in fact no decision could have been validly made under Clause 117 on the matter referred to the Architect by reason of it being an "excepted matter". the Architect could not be deemed to have made an effective decision under an appropriate clause. The principle evolved from the cases cited by Counsel for the Respondent would not permit the step taken and decision made deliberately under one clause to be treated as if it had been taken or made under a completely different clause. The Architect had intended to give a decision under Clause 117. He had never anticipated involking Clause 115. There is no warrant for imputing a different intention to the Architect merely because what he had intended was, for the purpose of the present argument, a nullity. The answer to Question (ii) must be "No". Question (iii): "If the matter treated by the Claimants in their Points of Claim are 'expected matters' as defined in Clause 115 of the said Contract, whether the Claimants are entitled to payment for the excavation in rock by virtue of Clause 6 of the said Contract". At p.p. 34 to 36 of The International Civil Engineering Contract by I.N. Duncan Wallace, a very similar clause is under consideration. A slightly different version appears at p.38 of Abrahamson's Engineering Law and the I.C.E. Contracts, 1970 Edition. I would prefer the analysis given by Mr. Duncan Wallace, Q.C. on a clause almost identical in terms with those in our Clause 6. I would be inclined, if I could be called upon to consider this question, to follow Mr. Duncan Wallace's view that "only ambiguities or discrepancies affecting the physical work to be undertaken by the contractor (i.e. in the technical documents describing the work as opposed to the conditions themselves)" are to be dealt with by the Architect under our Clause 6. However, it is for the Architect to decide under Clause 115 the "true intent and meaning" of the Bills of Quantities, which must include any ambiguities or discrepancies therein. It would follow that only after the Architect's decision of there being such ambiguities and discrepancies under Clause 115 could he, in a proper case, resort to his power of issuing fresh instructions upon explanations and adjustments made by him and certifying additional reasonable payment. It would seem that the contract rate for rock in substructure excavation falls beyond the ambit of any ambiguities or discrepancies affecting the physical work undertaken by the Claimants and that Clause 6 does not extend to the rate claimed for extra over excavation of rock under the said Contract. Again, at least at the inception this is an Architect question which, if decided against a construction of ambiguities and discrepancies, will be conclusive. Even if any of the matters could eventually be arbitrated, the stage has not reached for the arbitrator to legitimately state this question in his Special Case for the opinion of the Court. For these and similar reasons given in Question (i), I would refrain from encroaching on the authority of the Architect by expressing any concluded view on Question (iii). Finally, the questions posed for the opinion of the Court are specifically answered as follows: Question (i): The matters pleaded in the Points of Claim are at least initially "excepted matters" by reason of their being connected with the scope and extent or the true intent and meaning of Bill No. 2 of the Bills of Quantities. The Architect has not made any decision under Clause 115 on these alleged omissions, and the remainder of the question can only be hypothetical on matters which were not fully broached and on which I would prefer to express no opinion. Question (ii): The answer is "No" Question (iii): The answer seems to be "No", but no concluded view need be expressed. Question (iv): No separate answer is called for in addition to that given to Question (v). Question (v) as supplemented by Exhibit "E": the answer is "Yes". (B. Liu) Judge of the High Court Representation: Mr. Mills-Owens, Q.C. with Mr. William Lane instructed by Denton, Hall and Burgin for Claimants Mr. Tristram, counsel for Respondent Miscellaneous Proceedings No. 510 of 1981 Date of Hearing: 13th ,14th, 15th and 18th May 1981 Date When Judgment Was Debivered: 13th June, 1981 ORDER: Special case dealt with in terms of judgment. Questions disposed of accordingly. Costs be costs in the cause of the reference to the arbitrator or other-wise assesed and awarded by the arbitrator as the circumstances require certified for 2 counsel. Respondent be at liberty to apply for leave by letter. Cases Cited by Counsel for Claimant but not mehtioned in the Judgment 1. Arbitration Ordinance S.29 Cap. 341 Ismail v Polish Ocean Lines [1976] 2 WLR 477 at p. 478 D & p. 583 B/C Greenhalgh v Mallord [1947] 2 AER 255 Chiu Ming Sun v Michael Ma Wing & others H.C.A. 7013/80 Spencer Bower on Estoppel by Representation. Second Edition P. 305 Charles RiCkards Ltd v. Oppenhcon [1950] 1 KB 616 The International Civil Engineering Contract by Abrahamson 4th Ed. p. 410 The International Civil Engineering Contract by Duncan Wallace p. 34 Abrahamson - Engineering Law and I.C.E. Contracts. 4th Ed p. 206 Watson v. Healy Lands Ltd [1965] NZLR 511 Charles Richards Ltd v. Appenheim [1950] 1 KB 616 Woodhouse v. Nigerian Produce [1972] A.C. 741 Cases Cited by Counsel for Respondent but not mentioned in the Judgment 1. Ferguson v. Dawson [1976] 3 AER 817 ReMeadows v. Kenworthy (1896) unreported. Hudson's Building & Engineering Contracts 10th Ed. p. 443 & p. 444 The International Civil Engineering Contract by Duncan Wallace. p. 34 Ambiguities or Discrepuncies. p. 36 Abrahanson - Engineering Law 4th Ed. p. 206 Besseler Waechter Glove & Co. v. South Derwent Coal Co. [1938] 1 KB 408 Chitty on Contracts Para. 1382, 24th Ed. Watson v. Healy Lands Ltd [1965] NZLR 511 Woodhouse Ltd v Nigerian Produce Marketing Co. Ltd [1972] A.C. 741 Farguarson v Morgan [1894] 1Q.B. 552 Dutton v Sneyd Bycars Co Ltd [1920] 1 KB 414 Rex v Fulhum Rent Tribunal Ex Parte Zerek [1951] 2 KB 1 at p. 10 Halsbury's Laws of England Volume 16 4th Ed. para 1530 Spens v Inland Revenue Comrs [1970] 3 AER 295 at p. 301 (d) Spencer Bower and Turner on Res Judication p. 101 para. 125 White Book Volume 2 p. 1108 Actual cases cited in the Judgment 1. Heyman v Darwins Ltd [1942] A.C. 356 at p. 393 Christopher Brown Ltd v Gennossenschaft Oesterreichischer [1954] 1 Q.B. 8 at p.12 Henderson v Henderson 3 Hare 100 Hoystead v Commissioner of Taxation [1926] A.C. 155 Yat Tung Investment v Dao Heng Bank Ltd [1975] A.C. 481 Khan v Golecha International Ltd [1980] 2 AER 259 Gleeson v. J. Wippell & Co. Ltd. [1977] 3 AER 54 at p. 58. (c) AddiscombesGarden Estate, Ltd. v Crabbe [1957] 3 AER 563 Ferguson v Dawson [1976] 3 AER 817 (Angela LAU) Clerk to Hon. LIU, J. Representation: (1) [1942] A.C. 356 at p.393 (2) [1954] 1 Q.B. 8 at p.12 (3) 3 Hare 100 (4) [1926] A.C. 155 (5) [1975] A.C. 481 (6) [1980] 2AER 259 (4) [1926] A.C. 155 (7) [1977] 3 AER 54 at p.58c (5) [1975] A.C. 481 (3) 3 Hare 100 (8) Addiscombe Garden Estates, Ltd. v. Crabbe [1957] 3 AER 563 Ferguson v. Dawson [1976] 3 AER 817 PAGE PAGE PAGE - &`#$ HCMP000510/1981 YING KWONG CONSTRUCTTON COMPANY v. THE ATTORNEY GENERAL Normal.dot Judiciary Hong Kong SAR Microsoft Word 9.0 Judiciary Hong Kong SAR Judiciary Hong Kong SAR HCMP000510/1981 YING KWONG CONSTRUCTTON COMPANY v. THE ATTORNEY GENERAL Title Microsoft Word Document MSWordDoc Word.Document.8 HCMP000510/1981 YING KWONG CONSTRUCTTON COMPANY v. THE ATTORNEY GENERAL Normal.dot Judiciary Hong Kong SAR Microsoft Word 9.0 Judiciary Hong Kong SAR Judiciary Hong Kong SAR HCMP000510/1981 YING KWONG CONSTRUCTTON COMPANY v. THE ATTORNEY GENERAL Title