XCHRX HONG KONG SCAFFOLD BUILDING CONTRACTOR CO. LTD. v. ON LEE GENERAL CONTRACTORS LTD.

1998 ,CL No.1

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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J U D G M E N T

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1. This is an application under Order 14 for final judgment against the defendant in the sum of $147,052.85. The claim is for work done and materials supplied under an agreement and "additional variation of work made at the request of the defendant".

2. According to the plaintiff's evidence, the agreement was entered into on 8 October 1990 and incorporated the terms of a quotation dated 26 September 1990. The plaintiff says that, by incorporating the quotation into the agreement, certain work of maximum quantities was to be done for a fixed price of $610,000, if the actual work was in excess of these maximum quantities, this would be calculated at unit prices given in the quotation subject to a discount, and certain additional work would be done at the agreed unit prices. The plaintiff says that the maximum quantities of work was done to the satisfaction of the defendant's site supervisor, and the additional work was also so done at a price of $189,967. It is also said that, at the request of the defendant, the plaintiff undertook certain variations, and this work, for which $32,552,40 is due, was done to the satisfaction of the defendant's supervisor. There was also a variation of a price for which $9,240 is due to the plaintiff. This latter amount is not disputed by the defendant, but the defendant says it has been paid. Indeed, the defendant says that the plaintiff has been overpaid by reason of an administrative error in the defendant's office.

3. The amount due is calculated by the plaintiff as follows -

4. The plaintiff's case is based on the contention that the agreement of 8 October 1990 incorporated the terms of a quotation dated 26 September 1990. Mr Tang argues that this incorporation is achieved by clause III of the agreement. This reads -

"These works are according to the quotation of [the plaintiff] dated 26 September 1990 and to properly complete on a lump sum basis. The works of this contract include all necessary zinc sheet, timber posts, bamboos, bamboo ties etc. materials."

5. It is not obvious to me that this clause means that, in spite of the contract providing comprehensively for the scope of the works for which the lump sum is charged, this scope of works is limited to the maximum quantities stated in the quotation, and that additional work was to be done by the plaintiff at the rates stated in the quotation, without the need for authorised variations. I do not understand why the plaintiff makes the allegation that lump sum covers only work to the extent of the maximum quantities stated in the quotation. The plaintiff does not seem to have acted on the basis of re-measuring this work, and making a claim for work over and above these maximum quantities. As far as I can see, no claim is made on this basis.

6. In any event, it seems to be that the contract has been carefully drawn to cover all the work to be done by agreement. I cannot, at this stage, see any room under the contract for an argument that, if the plaintiff has miscalculated the amount of work required in its quotation, it is entitled to recalculate and charge more for the quantities over that mentioned in the quotation. And, in my view, any additional work was permissible only under a properly agreed variation. It seems to me that the contract goes to some lengths to avoid the use of the arguments advanced by the plaintiff. It says "Works have been estimated in detail to include labour and materials for" the lump sum, and "The subcontractor has studied clearly in detail the plans and specifications of the works and then tender his price".

7. Mr Tang seeks to show that what the plaintiff contends is what the parties understood the agreement to mean by demonstrating that the defendant paid for additional work accordingly. This evidence, proceeding mostly on two receipts for payment issued by the plaintiff itself, is equivocal.

8. Insofar as the plaintiff may rest its case on authorised variations, and its evidence is ambivalent about this, there is nothing to say that the defendant's case that the site supervisor, although authorised to certify work done, was not authorised to agree variations, is not arguable.

9. In any event, the defendant's case is that the work the plaintiff says was additional, outside the scope of works provided for in the agreement, is not so, but is, in fact, mostly covered by that scope. This may or not be so, but it is certainly not clear that this argument is untenable. That is an issue that can be settled only by trial. Those items that the defendant says are not covered by the scope of works specified in the agreement are minor, were not authorised variations, and are covered by what the defendant has already paid.

10. The defendant also alleges a set off or counterclaim, but there is no need to go into this. The defence to the claim that the defendant has advanced is sufficient to defeat the application for summary judgment.

11. I had thought, during argument, that the defendant's case was one that, although entitling it to leave to defend, was such that leave should perhaps be made conditional upon payment into court. Having studied the documents and evidence in the light of the submissions made to me, I do not think this is the case. I believe that the defendant's case, in answer to the basis on which the plaintiff has put its case, is more than insubstantial. Accordingly, I find that the defendant should have unconditional leave to defend, and I grant this.

12. The defendant has suggested that this is a case that should never have been brought, and, on that basis, the plaintiff should pay the costs. I do not believe that this is the case. I order that costs be in the cause.