Silver King China Limited v. Huy Yun Shiu and others

At a glance

Parties

Silver King China Limited (plaintiff) v. Huy Yun Shiu (D1), The Incorporated Owners of No. 67A Waterloo Road (D2) and Kong Shum Union Property Management Company Limited (D3)

Case no.

DCCJ 3960/2021; [2022] HKDC 301

Court

District Court of the Hong Kong Special Administrative Region, His Honour Judge MK Liu (in Chambers)

Forum and rules

Court application to stay proceedings under s.20 Arbitration Ordinance (Cap. 609) / Article 8 UNCITRAL Model Law; New York Convention Article II

Treaty

Arbitration clause in Clause 16 of the Deed of Mutual Covenant (DMC) of the building

Sector

Real estate; building management

Outcome

Stay granted: proceedings stayed and the dispute referred to arbitration (8 April 2022).

Amount

Costs on an indemnity basis against the plaintiff, summarily assessed at HK$150,000 (to D2 and D3) and HK$130,000 (to D1).

The dispute

Silver King China Limited owns the ground, first and second floors of No. 67A Waterloo Road, Kowloon. It sued the owner of the third floor (D1), the building's incorporated owners (D2) and its management company (D3). The claims concerned water leakage since about December 2019 and unauthorised building works. They were based on the Deed of Mutual Covenant (DMC), the Building Management Ordinance, the Buildings Ordinance, negligence and nuisance, and the plaintiff sought injunctions and damages. D2 and D3, supported by D1, applied to stay the action in favour of arbitration under Clause 16 of the DMC. The plaintiff opposed the stay on five grounds: D3 was not a party to the clause; the claims fell outside it; the clause could not be performed with several parties; a stay would deny the public's right to information; and D2 and D3 had not complied with Order 12 rule 8.

Key holdings

1. Clause 16 refers to the Arbitration Ordinance 1963, but the court read it as referring to the arbitration ordinance in force when the dispute arises. That is the current Arbitration Ordinance (Cap. 609), in force since 1 June 2011. ¶ 12
2. It is plainly arguable that Clause 16 binds the management company (D3). The plaintiff's own pleading says D3 acts as D2's agent and is bound by the DMC, and the plaintiff must be bound by its pleaded case. ¶¶ 20–23
3. All the claims are prima facie within Clause 16. This covers the claims under the DMC, the duties under ss.34H and 34I of the Building Management Ordinance (deemed terms of the DMC), and the negligence and nuisance claims, which rest on the same facts. ¶¶ 24–25
4. The clause can still be performed although there are several parties. If the parties cannot agree on an appointment procedure, ss.13 and 24 of the Arbitration Ordinance apply and the HKIAC would secure the appointment. ¶¶ 28–31
5. Public policy does not bar the stay. Under s.7(1), the Hong Kong Bill of Rights Ordinance binds only the Government and public authorities. None of the parties is one, and an arbitrator is not a public authority. No law prevents the mandatory stay from operating. ¶¶ 34–35
6. The defect in the acknowledgment of service under Order 12 rule 8 was cured by amendment. In any event, it was only an irregularity under Order 2 rule 1 and caused the plaintiff no prejudice. ¶¶ 37–39
7. The court found this a clear case for a stay, so indemnity costs follow. D1 is also a successful party and gets costs, because the summons covered him. ¶¶ 43–47

Procedural history

1. 18 August 2021The plaintiff issued the writ of summons with a statement of claim.
2. 30 August 2021Solicitors for D2 and D3 wrote that the claim should go to arbitration under Clause 16 of the DMC.
3. 3 September 2021D2 and D3 took out the summons for a stay and a reference to arbitration.
4. 19 October 2021Call-over hearing: D1 stated his support for the stay and obtained leave to file evidence and submissions.
5. 7 April 2022D2 and D3 took out a second summons to amend their acknowledgment of service; the court allowed it at the hearing.
6. 8 April 2022Decision: stay granted, dispute referred to arbitration, indemnity costs against the plaintiff.

Tribunal, counsel and experts

Decided by

• MK Liu Judge, District Court of the Hong Kong Special Administrative Region

For the claimant

V. Hau & Chow

For the respondent

K.Y. Leung & Carina Chen · Paul CK Tang & Chiu

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Keywords

• stay of proceedings
• referral to arbitration
• Arbitration Ordinance Cap. 609 section 20
• Article 8 UNCITRAL Model Law
• New York Convention Article II
• deed of mutual covenant
• Building Management Ordinance
• incorporated owners
• property management company
• non-signatory
• multi-party appointment of arbitrators
• HKIAC
• Hong Kong Bill of Rights
• public policy
• indemnity costs
• water leakage
• unauthorised building works

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