B.S.C. INTERIOR CONTRACT AND ENGINEERING CO LTD v. SHINTA LTD

HCCT97/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION

PROCEEDINGS NO. 97 OF 2003

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Dates of Hearing : 19–26 May and 27 August–5 September 2008

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J U D G M E N T

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1. The defendant (“Shinta”) is a company within the Cheung Kong group.  It was the developer of a substantial residential development being built in Tsing Yi in the late 1990s.  The plaintiff (“BSC”) was a nominated sub-contractor responsible for the installation of the kitchens in all the residential units, of which there were 1,474.  The main contractor was a company called Boldwin Construction Ltd (“Boldwin”). 

2. An important factor to keep in mind about kitchen installation in a major project is that, ideally, and as a matter of common sense, it should be done towards the end of the development.  Other sub-contract works such as plastering, air-conditioning, plumbing, glazing, electrical, etc. should be done before the kitchen units are installed.

3. In this project because Boldwin’s management as main contractor was poor (a fact which is generally agreed by both parties to this action) and co-ordination between other sub-contractors was lacking the situation on site at the time when BSC should have been commencing its installations was chaotic.  BSC’s managing director Mrs Jenny Lau gave a graphic description of how bad it was.  Witnesses for Shinta did not disagree.

4. BSC’s claim against Shinta has arisen in the following way.  In late 1998 and mid-1999, deadlines were approaching.  The 1998 deadline was for the Occupation Permit inspection and Fire Services inspection, the mid-1999 deadline was for the scheduled date for the completion of the project and the handover of the flats to the developer for sale to individual purchasers.  BSC knew that if they commenced or continued to install kitchens into units which were not ready other sub-contractors would come in afterwards and damage would surely be caused to their cabinets, sinks, etc.  When such damage occurred they would have to go in and repair the damage, usually by removing the damaged units and installing new units.  In the event this happened in many units on more than one occasion.  The most extreme example quoted by BSC was of repairs being done because of damage being inflicted by other sub-contractors in a single unit on five separate occasions.

5. This claim is for the value of such repair work undertaken by BSC.

6. BSC commenced work in November 1998.  BSC was alive to the problem from the outset.  Their sub-contract was with Boldwin.  They were concerned that the costs of repair work for damage caused by other sub-contractors was outside the contract they had with Boldwin.  BSC was willing to install cabinets ahead of other contractors but only if they knew they would get paid for repairs to the damage which would inevitably occur.  They considered such repairs to be additional works.

7. BSC had no faith in Boldwin.  They did however have a very good business relationship with Cheung Kong and had had so for 20 years.  They had been nominated by Shinta to become Boldwin’s sub-contractor.  BSC’s claim against Shinta is based, simply, on verbal assurances given to them that they would be properly reimbursed for all repair work.  The assurances were given in November 1998 and at meetings in March 1999 and June 1999.  The first two assurances were given by Mr David Mok, Shinta’s project manager; the June 1999 assurance was given by Mr Davy Chung, a senior executive of Cheung Kong.  BSC says that they would not have undertaken the repairs without these assurances.  They were not prepared to place any reliance on either Boldwin’s ability or willingness to pay. 

8. Shinta’s defence is based, equally simply, on their evidence that no such assurances were ever given.  They say that BSC’s claim (they do not dispute that substantial repair works were necessary and were done) should always have been against Boldwin and Boldwin alone.  There was no written contract between BSC and Shinta.

9. Both parties have a secondary argument should their primary submissions fail.  BSC claim that if it is found that the alleged assurances were not given they are nonetheless entitled to reimbursement from Shinta on a quantum meruit basis under the legal principles of restitution.  Shinta say that even if some assurances were given they cannot be the basis of a claim because of a lack of consideration and/or lack of intention to create legal relations.

10. Their primary cases however both turn on the purely factual issue of what, if anything, was said by Shinta’s representatives by way of a promise or assurance that they would ensure that BSC was paid for the repair work.

Value of the claim

11. Before considering the evidence surrounding the alleged assurances in more detail it is appropriate to comment on the value of the claim in context.  It was a very large project, 1,474 flats in six tower blocks.  Boldwin’s final account exceeded $1 billion.  BSC’s final account with Boldwin was $44 million.

12. The initial value of the claim against Shinta was approximately $9 million.  BSC have, since the conclusion of the experts’ reports, reduced their claim to about $5 million.  Shinta’s expert values the claim at about $2 million.  The origin of the claim goes back 10 years.  Paper work has inevitably built up over this 10-year period.  Both parties have engaged the services of experienced leading counsel (Mr Benjamin Yu SC for BSC and Miss Teresa Cheung SC for Shinta).  The original trial estimate was 6 days, in fact 14 have been necessary.  The experts’ evidence has cost over $1 million.  (By quoting this figure I imply no criticism of the experts themselves.  Both Mr Patrick O’Neill for BSC and Mr James Humphrey for Shinta produced helpful and comprehensive reports and analyses.  They did no more than they were instructed to do.)  Sadly, the costs of the claim will have surpassed its value some time ago. 

13. It is plain therefore that both parties have contested this action, and have felt unable to compromise it, because of matters of principle.

DECISION

14. The evidence satisfies me on a balance of probabilities that assurances were given by Shinta representatives which constituted a verbal contract.  BSC then carried out all necessary repair work confident in the knowledge that they would be paid for it.

15. My reasons for this decision will be divided into three sections :

(i)  What were the assurances?

(ii)  Shinta’s arguments against their having been given and BSC’s answers to those arguments in respect of each of the three meetings.

(iii)  Consequential matters.

(i)      What were the assurances?

16. In both the Statement of Claim and in Mrs Jenny Lau’s written statements the assurances, as alleged, are given in Chinese.  The assurances relied on stem from two meetings, one held on 2 March 1999, the other on 16 June 1999.  However, an earlier assurance given in November 1998 also forms part of BSC’s evidence.

17. In the March 1999 meeting it is alleged that Mr David Mok, project manager, said :

“You just do it.  Time is pressing for me to deliver the units.  Anyway you will be reimbursed, even if it is to deduct money from payments to Boldwin.”

18. In the June 1999 meeting Mr Davy Chung of Cheung Kong is alleged to have said :

“Now the units have to be delivered.  Flat owners have to enter the premises.  Therefore the work has to be completed.  Mrs Lau, you continue to help us with the repair works.  No matter how much, you just do it for us.  Certainly I will have a way to pay you money.”

19. No specific words are recalled in relation to the November 1998 meeting.  However it is part of BSC’s case that Mr David Mok urged BSC to continue installations in spite of patently unsuitable site conditions and gave them comfort that the inevitable repair works would be paid for.  BSC trusted Shinta and on that basis, continued work.

20. It is a fact that no one from BSC made any contemporaneous notes of exactly what was allegedly said.  Mrs Lau’s first record of the statements was several years after the event.  It cannot be a verbatim recollection.  What is important is that the essential ingredients of the assurances have been correctly remembered.  As will be seen, I find that Mrs Lau had every reason to remember the substance of the promise.  It was made to ensure the work of kitchen installation progressed.  I am sure that work would not have progressed without it.

21. The common intent and meaning was that the repairs would be done and BSC would be free of the anxiety of not knowing how it would be paid for.  Mrs Lau and BSC were not concerned where the money eventually came from.  Shinta was giving the promise and Shinta would be responsible for ensuring that the promise was kept.  BSC knew it was a promise they were able to keep.  Whether, ultimately, the cheque in payment was signed by Boldwin or Shinta was no concern of BSC’s.  Boldwin was within Shinta’s contractual control.

22. Shinta, on the other hand, at the material time, was facing a serious problem.  They had a less than satisfactory main contractor, who in turn was failing to coordinate a number of sub-contractors, all of whom had their own issues arising from the delay on site.  The property market was in serious decline and any failure to have the flats ready for completion on the specified day could lead to individual flat purchasers rescinding their sale and purchase agreements.  I am sure that when BSC voiced their concerns about the repair work and stated that they would not do it unless they knew they would be paid for it, Shinta’s attitude would not have been to say “not our problem, if Boldman don’t pay you you will have to sue them.”  If that attitude had been voiced it would have brought the kitchen installations to a standstill.

23. Thus, although the exact words used may have been lost through the passage of time, the nature and effect of them has not.  My assessment of the witnesses on both sides has led me to this conclusion.  The assurance may not have been as clear cut as Shinta effectively saying “you can forget about Boldman, from now on the contract for repair work is between you and me” but rather Shinta was making a promise and therefore Shinta was accepting responsibility to ensure that BSC would not be doing repair work on a charitable basis.  Where the oral evidence conflicted on these issues I have made a clear preference for the testimony from BSC’s witnesses.  In coming to this conclusion I emphasise the following :

(a)      I found Mrs Jenny Lau to be an impressive and reliable witness.  I have no doubt she valued BSC’s long standing working relationship with Cheung Kong.  She was willing, nonetheless, to put her principles and strong belief in the assurances that were given ahead of the risk of jeopardising that business relationship.  Her answers to questions were clear and straightforward.  Her rejection of the contention that BSC only pursued Shinta for the money after Boldman went into voluntary liquidation in October 2001 was convincing.  Her evidence that “we would not have done the work without Shinta’s promise” is at the core of her case and I believe it to be true.

(b)     Also impressive were her two project mangers, Mr Peter Tang (up to early 1999) followed by Mr Eric Hui.  They also gave clear evidence about the effect and meaning of the assurances given.  I reject the suggestion made by Shinta that these witnesses and Mrs Lau may have misinterpreted words amounting to no more than vague encouragement to start installations as being legally binding promises.

(c)     In contrast, neither Mr David Mok nor Mr Davy Chung left any impression on the court that BSC’s evidence could have been either wrong or mistaken.  Both had the habit of embarking or lengthy answers to simple questions.  Often the answers were not only lengthy but also were not directed at the question.

(d)     I do not blame Mr Chung for saying that he did not recall matters on a number of occasions.  The meeting in question, was, after all, over nine years ago.  However, his inability to recall matters often came after lengthy responses which, as with Mr Mok, had not addressed the question.

(e)      Mr Chung’s witness statement contained the remark that it would have been “beyond common sense” to have given the alleged assurance.  It seems to me however that, given the factual matrix at the material time, it would have been an assurance that commended itself to common sense.

(f)      Mr Chung’s evidence was also weakened by one particular feature.  When giving oral testimony he offered as an explanation for not giving any assurance that it would have been beyond his authority to do so.  He suggested that any such assurance would have had to have been approved by Cheung Kong’s “Tender Committee” beforehand.  It is noteworthy that this explanation was brand new.  It had not been mentioned in any correspondence, pleading, witness statements or written submission.

(ii)     The competing submissions as to whether assurances had been given in respect of each of the three meetings

(1)     The 17 November 1998 meeting

24. It is Shinta’s case that the reason for this meeting was to discuss a revised programme which reassessed the number of units to be installed each day.  The meeting was between Boldwin and BSC.  Mr David Mok said that the issue of damage and repair work was not even mentioned at this meeting.  They point to BSC’s letter following the meeting, dated 25 November, which only deals with programming matters and does not refer to repair work or assurances.  It is also a recurring theme of Shinta’s case that from November 1998 onwards BSC continued, on paper, to make its claim against Boldwin.  They also rely on evidence given by Peter Tang (BSC’s project manager) that David Mok had said, at the meeting, no more than that photographs of the damage should be taken as a record and a claim made in due course (without saying against whom).  In short Shinta argued that BSC had read too much into what might have been said at the meeting.

25. However, in the context of the “appalling” site conditions at the time and the “chaos” between sub-contractors and the “unique” situation in which BSC found itself I prefer and adopt BSC’s evidence and submissions thereon.  In particular :

(a)      The situation on site was largely due to the poor management of Boldwin.  This was not disputed.  Neither was it disputed that as early as September 1998 BSC had refused to install kitchens for the obvious reason that they would get damaged if they did so.  In an important letter written by BSC to Shinta in December 1999 BSC records and recalls that :

“… we had been repeatedly persuaded by Mr David Mok to install kitchens despite the site conditions.”

(b)     The site conditions did indeed prompt revisions of the programming.  The number of units per day was doubled to 40 by late October.  Early attempts to comply with this target led to the inevitable damage being caused.  Evidence from checklists and photographs confirm the situation.

(c)     On 16 November 1998, the day before the meeting, BSC received a fax from Boldwin to install kitchens on 75 particular floors (15 in each tower; 5 at the bottom, 5 at the top and 5 in the middle) specifically with the Occupation Permit and Fire Services inspections in mind.  Prior to receiving the fax, on the same day, there had been another programme revision increasing the daily unit installation to 60.

(d)     Thus at the time of the meeting BSC had conflicting instructions.  Moreover, documentary evidence (which I accept from Mrs Jenny Lau) showed that even if BSC concentrated on the 75 designated floors 77% of the units were not ready for kitchen installation.  It is, in my judgment, overwhelmingly probable that in such circumstances the issue of inevitable damage to units if premature installation was undertaken and discussions as to payment for repairs would have been raised at the meeting on the 17^th.

(e)      As to the meeting itself, I think Mr David Mok has failed to remember fully what was said during the approximately 45 minutes of its duration.  Mr Peter Tang’s recollection is more reliable.  He remembers it being “a boost in confidence”, “a shot in the arm”.  Such feelings would not have been felt if Shinta had merely said “take photos so you can make a claim later” (or words to this effect).  It is inherently probable that the boost in confidence stemmed from Shinta’s acceptance of the responsibility to ensure that BSC would ultimately be paid.  Peter Tang also remembers that BSC worked extremely hard thereafter.  It is unlikely that they would have done so for Boldwin.

(2)     Meeting on 2 March 1999

26. It is Shinta’s case that Mrs Lau and Eric Hui (the new project manager) merely turned up unannounced at David Mok’s office on 2 March 1999 in order to discuss a defects list dated 26 February.  David Mok’s evidence was that he only told BSC to make a claim under its sub-contract with Boldwin, in relation to the continuing damage that was occurring, and no more.  Shinta makes the following points : David Mok would have had no authority to make any promises; it is unlikely that Mrs Lau or Eric Hui could have remembered the exact words used in the meeting; the correspondence which followed the meeting was not about the promise or assurance but concerned a warning from Shinta to BSC about liquidated damages. 

27. Once again, I prefer BSC’s evidence and analysis about what was actually happening on site which led up to the March meeting, in particular :

(a)      Shinta’s argument concerning David Mok’s authority is again, new.  David Mok’s witness statements run to a remarkable total of 227 pages (excluding exhibits) in which he fails to raise any issue of his authority.

(b)     In support of his contention that Mrs Lau and Eric Hui had merely turned up at his office without an appointment, David Mok relied on the fact that Shinta had sent BSC the letter threatening liquitated damages.  In fact that letter was not received by BSC until after the meeting.  More convincing was Eric Hui’s evidence that upon becoming the project manager and upon returning to the site after Chinese New Year 1999 he was most concerned about the continuation of the unacceptable situation which had prevailed since November 1998.  A meeting was called to, inter alia, discuss the problem on site.

(c)     It is inherently likely that because the problem had been getting worse not better and because no payment had yet been made in relation to the November 1998 assurance (not that any had been requested) BSC would have, nonetheless, sought a renewal of the assurance.  The passage of time was worsening the situation, not improving it. 

(d)     Given the uniqueness of BSC’s situation and the honest concerns of Mrs Lau and Eric Hui, it does not surprise me they had a reasonably accurate recollection of what was said.  Neither does it surprise me that given Shinta’s wider problems with its main contractor and the knock-on problems with a variety of sub-contractors that David Mok’s memory has failed him.

(e)      BSC’s failure to put the assurance in writing in correspondence that followed the meeting is adequately answered by the fact that BSC were not concerned where the money ultimately came from.  It was safe and proper to let the usual contractual relationship’s continue on paper when they had the comfort of a promise from the developer whom they had every reason to trust.  I further accept that BSC had been and was continuing to work as efficiently and as hard as possible as a result.  

(3)     Meeting on 16 June 1999

28. It is Shinta’s case that this meeting (which was attended by other sub-contractors as well as BSC) was called because of the poor progress on site and to inform the sub-contractors that they could be replaced and that tenders had been put out to that, possible, end.  In support of their contention that no assurance or promise was made by Mr Davy Chung at the meeting they point, largely, to the events following the meeting.  For example, that BSC continued, on paper, to pursue its claim for the repair work against Boldwin.  Shinta argues that BSC’s contention that it sent its claim first to David Mok on 8 November 1999 and only followed it up with a copy of the claim to Boldwin on the next day, at David Mok’s request, is not borne out by contemporaneous documents.  BSC continued to claim against Boldwin and only asked Shinta for “its assistance” in its claim against Boldwin.  Shinta also submits that BSC’s case against them only really begins in earnest after Boldwin went into provisional liquidation in October 2002.  Shinta thus claim that BSC have reconstructed conversations from the 1999 meetings three years after the event.  

29. This aspect of the evidence involved consideration of many letters and documents.  The thrust of the argument remains the same throughout, namely, if BSC are relying on a verbal promise made in 1999 why was it not, specifically, put in writing until three years later at a time when it had finally become obvious that no money was going to come from Boldwin?  Shinta invites the court to analyse the post-meeting documentation when seeking the answer to the question, was the promise made? 

30. BSC focus rather on the events at the time as providing the evidence that the answer to that question is in the affirmative.  In particular :

(a)      David Mok agreed that there was considerable pressure on Shinta to hand over the completed flats to the purchasers on time.  The property market was falling and the financial consequences of a late completion would have been dire. 

(b)     He also agreed that BSC had been a co-operative sub-contractor throughout the troubled project.  Given the hitherto good relationship it is very unlikely that BSC could have been threatened with the possibility of being replaced by a new sub-contractor in June 1999.  

(c)     The same cannot be said of other sub-contractors.  BSC were ready willing and able to carry out the installations.  Shinta had no sustainable complaints about BSC’s workmanship.  BSC’s position was more likely to be protected by Shinta, not threatened by them. 

(d)     The cost of reimbursing BSC for its repair work would have been insignificant when compared with the financial consequences of the flats not being ready on time.  But for BSC’s repair work it is very likely that the flats would not have been ready. 

(e)      Mrs Lau’s evidence concerning the June meeting was cogent and logical.  In this case I can either rely on the evidence of honest witnesses testifying about actual events, actual meetings and actual statements made or I can attempt to piece together what might or might not have been said at the meetings by drawing inferences from the choice of words in subsequent correspondence.  I consider the former to be the safer course. 

(f)      But I do not ignore the correspondence.  BSC can point to correspondence in support of its position.  Letters dated December 1999, June 2001 (both before Boldwin’s liquidation) and January 2003 do refer to the assurances.  Moreover, the criticism levelled at BSC for not putting the promise into writing at the time can, similarly, be levelled at Shinta for not recording a denial of the assurances made in these letters. 

(g)     Given that I accept Eric Hui’s evidence that a claim was indeed submitted to David Mok and therefore to Shinta on 8 November 1999 and that David Mok requested BSC to continue with the formality of following the contractual route, namely through Boldwin, further reliance by Shinta on BSC’s letters to Boldwin is misplaced. 

(iii)  Consequential matters

31. Had the court found that BSC had not proved to the required standard that the oral promises had been made Mr Yu would then have relied on the second alternate limb to BSC’s claim, namely restitution on a quantum meruit basis regardless of any evidence relating to the three meetings.  I shall deal with this very briefly at the conclusion of this section.  

32. First, it is necessary to deal with Shinta’s alternate position which is that even if some assurances were given they should not bind the defendant because of lack of consideration and/or a lack of an intention to create legal relations. 

(a)     Consideration?

33. Miss Cheng submits that in carrying out the repair work BSC was doing no more than it was contractually required to do and relies on the authority of Stilk v. Myrick (1809) 2 Camp 317 that an agreement to carry out what was already contracted for is not good consideration. 

34. I am satisfied that had Shinta never been involved in this dispute and had BSC made a successful claim against Boldwin it would have been for payment under a variation to the contract.  It was extra work which had become necessary because of unforeseen circumstances (i.e. major damage caused by a variety of other sub-contractors).  BSC had refused to do the repairs without a new promise which formed a fresh agreement.  The benefit to Shinta is obvious and sufficient consideration follows as a result. 

(b)     Contractual intent?

35. Miss Cheng submits that at best the statement’s relied on are unclear and vague.  They should be regarded as words of “comfort” and no more. 

36. I disagree.  At the material times in March and June 1999 the urgency of the situation was clear.  BSC’s position was simple; no promise, no work.  They in fact worked on.  There can be no doubt that the key to the work continuing was what was said to them at the meetings.  Neither side could have been under any illusion or misunderstanding about that at the time. 

37. BSC’s alternate claim was in restitution.  Had I found against BSC on the crucial matters of fact relating to the assurances I would nonetheless have given judgment in their favour based on a quantum meruit assessment.  In a nutshell, I would have found that, although there was no contract with Shinta the doctrine of privity would not have prevented them from being reimbursed by Shinta.  The reasons being that : (a) the works were outside the contract with Boldwin and (b) they benefited Shinta.  

38. The value of the claim on a quantum meruit basis would have been precisely the same as the damages due to BSC for breach of the oral promise.  I now turn to the question of quantum. 

Quantum

39. Regardless of the disproportionate cost of the expert evidence, its quality cannot be gainsaid.  Both experts, through their comprehensive reports and oral evidence have rendered considerable assistance to the court. 

40. In respect of over 10,000 items (such as sinks, taps, cabinet doors, cabinet drawers, muntins, work surfaces, etc.) numerous questions have been addressed including : was it actually damaged? was it actually repaired? was it damaged more than once, if so was it repaired more than once? how long did it take to repair? how long should it have taken to repair? what did it cost to repair? what should it have cost to repair? and so on. 

41. Ultimately a joint statement was prepared which listed the areas of disagreement and the quantum of those disagreements.  I shall now make a decision in relation to each of those areas.  On certain matters it is not be possible to give an accurate figure for the damages consequent upon my decision.  It will be necessary therefore for the parties to do the final arithmetic in light of the following quantum decisions. 

(1)     Quantities of units

42. The joint statement provides quantum assessments based on three different figures.  9,748 is the lowest figure and is based on schedule referred to as “A2 tick sheets”.  The tick sheets were prepared on several occasions but only recorded the damage on a particular day.  They were helpful and detailed, but not conclusive as to the totality of the damage. 

43. The next figure was 11,260 which represented an extra 1,512 items.  This figure is also gleaned from the tick sheets and included repairs which were done between the preparation of two sets of tick sheets.  I am satisfied it is a safe figure to start with.  However I think it is still too low.  It seems to take no account of the fact that in some instances repeated damage would have led to repeated repairs.  Accepting also that there is a real risk that the plaintiff’s figure of 12,437 is too high my approach is to make a small increase to the 11,260 figure to acknowledge that at least some damage would have had to have been repaired more than once.  

44. I will add a separate figure for sinks and mixers.  The joint report (Item XI) gives a separate figure for sinks and mixers.  My figure for quantities of units is therefore net of sinks and mixers.  I think that 11,500 is a reasonable figure.  

(2)     Labour time

45. Both experts gave their opinions as to the time needed to do every item of repair work.  Both counsel agreed that the court is not required to consider each job e.g. dismantling a broken cabinet door and putting in a new one, and state the time needed to do it.  Even the experts’ assessments was largely subjective and the court is neither qualified, able or willing to say that a particular job should take, say, 25 minutes rather than 40.  

46. Furthermore, on certain aspects of the issue I preferred Mr O’Neill’s approach on others I preferred Mr Humphrey’s.  However, on this particular issue it would be too messy to decide that some jobs be quantified on the “O’Neill” method and others on the “Humphrey” method. 

47. Overall, I regarded Mr O’Neill’s approach as not unreasonable and I adopt it.  I found his explanations for each assessment of time to be acceptable.  He discussed the necessary work with people on site. 

(3)   Material rates

48. There were three sub-issues under this heading. 

(i)      Chipboard

49. Mr O’Neill, during the trial submitted a supplementary statement which further reduced his assessment for this item.  He used two invoices from different suppliers and produced a median figure.  The more expensive supplier was “Annovati”, the cheaper one was “Karat”.  I agree with Mr Humphrey that the Annovati prices should have been ignored.  There was no evidence that the more expensive material was actually used once the damage started to occur.  Karat’s unit rate should be adopted. 

(ii)     Wastage

(iii)    Vertical transportation on site

50. There were relatively minor differences between the experts on the effect on these two matters on the “Material Rates” figures.  For the purpose of final recalculation I direct that 33% be the appropriate percentage for wastage.  On the question of vertical delivery I agree that Mr O’Neill’s approach results in too generous a figure.  Mr Humphrey also makes a valid point that the original tender did not make a separate allowance for this.  It was included.  However, we are concerned with additional work and therefore something should be allowed.  I direct that $4 per piece is put into the equation (which is Mr Humphrey’s nominal figure for each small item).  

(4)   Material quantities

51. The amount in issue under this heading was not substantial.  It concerned how many new parts would be necessary when carrying out a particular repair job.  In other words, if item A had been broken did that mean that new items A and B (and maybe C as well) might have to be re-installed.  In my judgment Mr O’Neill’s approach was slightly unrealistic.  He took the view that (for example) whenever A was damaged, a new B and a new C would always be required. 

52. I preferred Mr Humphrey’s approach which, generally speaking, was that if A was damaged a competent and careful repair man would only need to replace A and no more.  Mr Humphrey’s assessment should be adopted.  

(5)     Sinks and mixers

53. It is agreed that some of the sinks and mixers were damaged.  The difficulty is in ascertaining how many.  It is clear that the evidence in support of BSC’s brief schedule concerning the number of sinks and mixers which were damaged (or replaced) is lacking.  The invoices produced do not specify that they were purchased for the purpose of replacement.  The “A2 tick sheets” do not deal with sinks and mixers.  Out of over 300 sinks being claimed BSC point to photographic evidence in relation to 95.

54. The claim is for 326 sinks and 308 mixers.  I accept that these figures have not been simply invented but bearing in mind that BSC’s original total claim appears to have been somewhat inflated, these figures for sinks and mixers should be treated with caution.

55. In my judgment, in reality, more sinks would have been damaged than is evidenced by photographs.  They were not made of metal and would have been vulnerable to damage by other contractors.  I consider it reasonable to allow 50% of the claim for sinks and mixers.

(6)     Mark up

56. If a mark-up is allowed, then the experts agree that 13% should be the appropriate percentage. 

57. The disagreement is twofold, first, whether it should be allowed at all as a matter of principle and secondly, if so, is 8% for office overheads, (Mr O’Neill’s figure) appropriate. 

58. Shinta argues that the claim is merely for reimbursement of costs and therefore no profit element should be included.  In my judgment, although the claim uses the word “cost” it is over-simplistic to reject any element of profit on that basis.  The reality is that the claim is akin to a variation.  It is the valuation of additional works specifically requested by Shinta.  A percentage for profit is therefore appropriate. 

59. By the same token something should be allowed for office overheads.  The experts disagree as to whether the office overheads have been adequately proved.  However Mr Humphrey agrees that 13% would be an appropriate total percentage once the principle is established.  I therefore consider it a fruitless exercise to debate whether a particular percentage could have been or should have been proved. 

60. I agree that 13% be adopted. 

61. I now leave it to the parties to agree a final figure.  I have not been addressed on the question of interest.  I hope and expect the parties will be able to agree on that matter as well.  There will be judgment for the plaintiff in a sum to be agreed and with interest to be agreed together with a costs order nisi in the plaintiff’s favour.