Gurkhas Construction Limited v. Craft Façade Tech (Hong Kong) Company Limited (formerly known as EFT-Craft Company Limited)

At a glance

Parties

Gurkhas Construction Limited (plaintiff) v. Craft Façade Tech (Hong Kong) Company Limited, formerly EFT-Craft Company Limited (defendant)

Case no.

DCCJ 5399/2020; [2021] HKDC 1166

Court

District Court of the Hong Kong Special Administrative Region, Deputy District Judge Liza Jane Cruden (in Chambers)

Forum and rules

Stay application under section 20 of the Arbitration Ordinance, Cap. 609 (Article 8 UNCITRAL Model Law); arbitration clause refers to HKIAC Arbitration Rules, place of arbitration Hong Kong

Treaty

Contract clause: Clause 14 (Dispute Resolution) of the defendant's General Terms and Conditions, incorporated into the purchase orders

Sector

Construction; labour supply

Outcome

Action stayed and the plaintiff's claim referred to arbitration (15 October 2021).

Amount

Claimed: HK$1,492,753.80 plus interest. Costs order nisi: the plaintiff pays the defendant's costs of the Summons on an indemnity basis, with certificate for counsel.

The dispute

The plaintiff supplied skilled labour to the defendant, a building contractor, for an external façade renovation project at the Peak Galleria. It did so under four purchase orders. The plaintiff sued for HK$1,492,753.80 allegedly due on five invoices. It based the claim on a settlement set out in a letter of 6 April 2020, which the defendant's director Grant Craft countersigned on 11 May 2020. That letter provided for payment by 30 September 2020 and for the non-exclusive jurisdiction of the Hong Kong courts. The defendant denied that any binding settlement was made. Among other things, it relied on the fact that no certified board resolution had been provided. It also raised set-off and counterclaims under the purchase orders, and applied to stay the action in favour of arbitration under the clause in its General Terms and Conditions. The plaintiff argued that the settlement was a new cause of action with no arbitration clause, that its jurisdiction clause pointed to the courts, and that the General Terms and Conditions applied only to purchases of materials.

Key holdings

1. There is at least a plainly arguable prima facie case that the General Terms and Conditions were incorporated into each purchase order. Each order stated that the enclosed terms formed part of it, and the orders were signed, chopped and returned. Clause 14 is therefore an arbitration agreement between the parties. ¶ 27
2. A dispute exists because the defendant made no clear and unequivocal admission of both liability and quantum. On a stay application, the court does not evaluate the merits of the defence. ¶¶ 29–30
3. Clause 14 is construed in line with the presumption in favour of one-stop adjudication. It covers disputes over a settlement reached through the amicable-settlement step that Clause 14(b) itself requires. The court would not attribute to the parties an intention to have two sets of proceedings. ¶¶ 44–46, 52
4. A settlement that creates a new cause of action is not in itself a bar to arbitration under the clause in the underlying contract. The court followed Sonact Group v Premuda and distinguished Pilecon v Mightyhon. ¶¶ 59–66
5. The non-exclusive Hong Kong jurisdiction clause in the April Letter can operate in parallel with the arbitration clause. It may fix the supervisory court or serve for enforcement. It is not a clear waiver of the arbitration clause, and it is not an agreement "otherwise" under Clause 14(c). ¶¶ 82–88
6. Any question of whether the plaintiff elected to sue on the settlement is for the arbitrator to decide. The claim falls, at least prima facie, within Clause 14. The action is stayed and the claim referred to arbitration, with an order nisi that the plaintiff pay the defendant's costs on an indemnity basis. ¶¶ 89, 93–96

Procedural history

1. 6 April 2020The plaintiff's former solicitors send the letter setting out the settlement terms. Grant Craft countersigns it for the defendant on 11 May 2020.
2. 30 September 2020The payment deadline under the April Letter passes without payment.
3. 26 November 2020The defendant issues a Summons to stay the proceedings in favour of arbitration.
4. 9 August 2021Hearing of the Summons.
5. 15 October 2021Decision: the action is stayed and the claim referred to arbitration, with a costs order nisi on an indemnity basis.

Tribunal, counsel and experts

Decided by

• Liza Jane Cruden Judge, District Court of the Hong Kong Special Administrative Region

For the claimant

Deacons

For the respondent

Bryan Cave Leighton Paisner LLP

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Keywords

• stay of proceedings
• Arbitration Ordinance Cap. 609 section 20
• Model Law Article 8
• settlement agreement
• incorporation by reference
• one-stop adjudication
• non-exclusive jurisdiction clause
• scope of arbitration clause
• arising out of or in connection with
• multi-tier dispute resolution
• new cause of action
• Sonact Group v Premuda
• Tommy CP Sze v Li & Fung
• HKIAC
• construction labour
• Peak Galleria
• set-off
• election

Summary generated with AI from the published documents — refer to the award for the authoritative text.