COLMAT CONSTRUCTION AND ENGINEERING CO LTD v. MINMETALS CONDO (HONG KONG) ENGINEERING CO LTD

HCCT 36/2018
HCCT 37/2018
(consolidated)

[2021] HKCFI 2184

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 36 OF 2018

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BETWEEN

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AND

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 37 OF 2018

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BETWEEN

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(consolidated pursuant to the Order made by the Honourable Madam Justice

Mimmie Chan dated 6 July 2018 and HCCT 36/2018 being the leading action)

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J U D G M E N T

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Background

1.  The West Kowloon Cultural District has been under development and construction for some years.  This dispute arises out of the construction of the Xiqu Centre (“Centre”), which was one of the projects completed on the development.

2.  Hip Hing Engineering Co Ltd was the main contractor (“MC”) for the construction of the Centre.  The Defendant was MC’s sub-contractor, under a contract made between MC and the Defendant on about 16 May 2016, and referred to as the JSSC 3 Contract (“Subcontract”), for fitting out works to the plaza balcony, the ceiling and the covered plaza and front of house area of the Centre.  Under the Subcontract, the Defendant was to design and construct the fitting out works to the plaza balcony (“Schedule 3 Works”), the plaza ceiling (“Schedule 4 Works”) and the covered plaza and ground floor to 2^nd floor front of house area (“Schedule 5 Works”).

3.  In mid-2015, for the purpose of contracting out the works under the Subcontract (“Subcontract Works”), the Defendant invited tenders and sent to the Plaintiff a set of the tender documents and drawings which the Defendant had received from MC.  In response, the Plaintiff submitted its revised tender by letter dated 16 October 2015, for undertaking the designated Subcontract Works for the sum of HK$26,654,489 (“Tender”).  A Final Best Offer Form was submitted by the Plaintiff on 20 October 2015, whereby the Tender was revised with a discount, rendering the price of the designated Subcontract Works to be $26,194,000.  The Tender with the revised price was accepted by the Defendant, as the Defendant confirmed by its letter dated 22 October 2015, which letter was received by the Plaintiff on 27 October 2015.  By the said letter of 22 October 2015, the Defendant instructed the Plaintiff to commence works from 27 October 2015.  Thereafter, the formal contract for the designated Subcontract Works was signed by the Defendant on 29 September 2016 and by the Plaintiff on 7 October 2016 (“Contract”).

4.  On the Plaintiff’s pleaded case (paragraph 9 of the Statement of Claim), the relevant contract between the Plaintiff and the Defendant was entered into as a re-measurement subcontract.  The Plaintiff had submitted the Tender with its priced bills of quantities, which bills were priced in accordance with the tender drawings provided by the Defendant, and the priced bills formed part of the Contract between the Plaintiff and the Defendant.

5.  Paragraph 9 of the Statement of Claim was admitted by the Defendant, save and excepting that according to the Defendant, the documents which formed part of the agreement between the parties were contained in the Contract signed on 7 October 2016.

6.  It is not in dispute that as the subcontractor of MC, the Defendant was responsible to design and construct the fitting out works referred to as the Schedule 3 Works, Schedule 4 Works and Schedule 5 Works.  Under the Contract, however, the Plaintiff was not responsible for the design of the Schedule 3 Works and Schedule 4 Works.  The Plaintiff was only responsible for the construction of these Schedule 3 and Schedule 4 Works, and for the construction and design of the Schedule 5 Works.  This is not in dispute.

7.  The present proceedings were brought by the Plaintiff to recover what it claims to be amounts which are outstanding and due to be paid by the Defendant to it, for the works carried out under the Contract, including additional and variation works carried out.  On the Plaintiff’s case, an outstanding amount of $19,341,097.88 is due under the Contract, or as damages on quantum meruit basis. In defence, the Defendant claims that the Plaintiff is not entitled to additional payments as the works claimed fall within the scope of the Contract. It further counterclaims for the costs of rectifying defective works carried out by the Plaintiff, works not completed by the Plaintiff, and for amounts which had been overpaid to the Plaintiff.

8.  The issues for determination at trial turn on the scope of the works under the Contract, which in turn depends on the governing conditions of the Contract and the construction of the relevant provisions; and the valuation of the claims for sums due.

The governing Contract

9.  The parties’ dispute focuses on the reference made in the Contract to the annexures said to be included as documents comprising the Contract.  The Contract signed on 29 September and 7 October 2016 respectively was a simple two-page Chinese document, but included voluminous documents bound together as Annexures 2 to 4. It is commonplace, when construction work is undertaken and is subcontracted out, for the subcontract to include a term which states that the subcontractor undertaking the works agrees to observe and be bound by the terms and conditions of the main contract, and that such terms form part of the subcontract, coupled with an acknowledgment by the subcontractor that it has been provided with a copy of the terms and conditions of the main contract and that it has read the same.  There is no such provision contained in the Contract between the Plaintiff and the Defendant in this case.

10.  The Contract only contains a section which reads:

“Contract documents include the following items:

(1) Annexure 1: bills of quantities

(2) Annexure 2: drawings and technical specifications

(3) Annexure 3: safety regulations and table of levies

(4) Annexure 4: program”

11.  There is no dispute that Annexure 2 comprises a disk, which was labeled “Contract Drawings and Technical Specification”, and that the contents of the disc were not just the contract drawings, but included the tender documents for the Subcontract between MC and the Defendant, and in particular the Conditions of Tender, Form of Tender, Conditions of Sub-Contract, Special Conditions of Sub-Contract, General Specifications, Technical Specifications, Specification Preliminaries and the Schedules of quantities and rates.

12.  In essence, the Defendant claims that all these documents included in the disc form part of Annexure 2 to the Contract, and were part of the conditions of the Contract which bind the Plaintiff.  On its part, the Plaintiff claims that the Contract comprises simply the documents named and included, and that for Annexure 2, only the drawings and the Specifications which were applicable to the Plaintiff’s works under the Contract are relevant to and form part of the Contract.

13.  The Defendant relies on the fact that all the documents named in the Annexures (including the disc) were sent to the Plaintiff, after the Plaintiff’s tender for the works subcontracted out by the Defendant had been accepted by the Defendant, and they were all bound together.  There is no dispute that Annexure 1 of the Contract included the bills of quantities and Schedules 3, 4 and 5.  Schedule 3, in referring to the fitting out works to the plaza balcony, refer to the tender drawings as well as the Particular Specifications. These in turn refer to the related Project Specifications.  It was argued on behalf of the Defendant that the tender documents were all inter-related and formed an integral part of the Contract.

14.  Reference in a contract to another document, or terms contained in that document, may not by itself be sufficient to render the other document to form part of the contract.  The reference must be such as to make the term/terms in the other document part of the contract.  This is illustrated by the cases on incorporation of an arbitration clause by reference to a document which contains the arbitration clause relied upon (Astel-Peiniger Joint Venture v Argos Engineering & Heavy Industries Co Ltd [1995] 1 HKLRD 300).  The question of incorporation is one of construction of the contract, and that turns on examining the language used in the contract against the relevant background in order to ascertain the intention and understanding of the parties, as reasonable and commercial persons, from the language they used.

15.  In Hudson’s Building and Engineering Contracts (14^th ed) para 9-066 to 9-067, the learned editors referred to incorporation of the terms of a main contract into a subcontract, as follows:

“As in other areas of commerce, the exchange of documents which lead up to the conclusion of a sub-contract frequently contain references, often in terms lacking precision, showing that some other identifiable document or set of contract terms are to apply to the subcontract. In construction sub-contracts these usually take two principal forms, namely references to a part or all of the main contract itself (or to the Main Contractor’s obligations under it, which, by implication if not expressly, the Sub-contractor undertakes to perform) on the one hand, and secondly references, often garbled and inaccurate, to some known and publicly available set of documents or standard form which is intended should constitute the formal sub-contract conditions.

The incorporation of relevant main contract terms can give rise to considerable difficulties, where the incorporation is loosely expressed in the most general words and without any precise or careful consideration of the consequences. Each case must be separately considered to determine the precise purpose and extent to which it is desired to incorporate the term or terms of the main contract. It follows from the absence of privity between the Employer and the Sub-contractor that, without incorporation, the terms of the main contract, even though well known to both parties, cannot bind the Sub-contractor. This will be very much a question of interpretation on a case-by-case basis of often informal documentation in an endeavor to ascertain the parties’ objective intentions to be derived from the language used.

The Standard Form Sub-contracts routinely require the Sub-contractor to observe the main contract terms and conditions as far as they relate and apply to the subcontract works.

As a matter of first principle and in the light of the usual real-time intentions of sub-contracting parties, doubtful or ambiguous references to main contract documents or terms are much more likely to be aimed at the technical descriptions of the subcontract work to be found in the drawings, specifications or bills of quantities of the main contract rather than at the contractual or legal provisions in the main contract documentation, it is submitted.

Even where the main contract conditions are incorporated, the sub-contract conditions will generally take precedence over the main contract conditions on any point where there is some irreconcilable difference between the two on a point expressly addressed in the sub-contract.”

16.  The above principles were considered and applied in the case of Sunbond Engineering Limited v Konwall Construction & Engineering Co Ltd HCCT 15/2003, 25 May 2004, and in Yun Kwan Construction Engineering Limited v Shui Tai Construction Engineering Company Limited [2019] HKCFI 1841.

17.  The Contract refers to “Main Contract Works” (總工程) and there is dispute as to whether this refers to the Main Contract between MC and the Employer, or the Subcontract between MC and the Defendant.  Read as a whole, I consider that the term “Main Contract Works” (總工程) as used and defined in the Contract refers to the works undertaken by the Defendant under its own agreement with MC, namely the Subcontract.  As Counsel for the Plaintiff pointed out, the recitals to the Contract refer to the prices tendered by the Defendant for the works when “Main Contract Works” are defined.  These “Main Contract Works” as defined in the Contract can only be referring to the Subcontract, and the Defendant’s tender therefor.

18.  Although the recitals to the Contract refer to the Main Contract Works, namely the Defendant’s works undertaken in relation to the Centre, and refers to the fact that the Plaintiff had had the reasonable opportunity to review the contents of the Defendant’s contract (save and excepting the Defendant’s prices in the schedules for the tender), there is no provision made in the Contract for the Plaintiff undertaking that it will perform the Contract in accordance with either the Main Contract between the Employer and MC, or the Subcontract between MC and the Defendant, or be bound by the terms and conditions of either such contracts.  The only relevant provision is that the Plaintiff should coordinate with the Defendant’s progress of works and practical arrangements for works under the Defendant’s contract with the MC.  Other than that, I do not accept that mere references made in the Contract that liquidated damages payable by the Plaintiff were to be in accordance with the conditions of the Defendant’s contract are sufficient to incorporate all those conditions into the Contract.

19.  As for the clause in the Contract referring to retention money, which is relied upon by Counsel for the Defendant, that clause sufficiently sets out the parties’ rights and obligations as to how and when payments are to be deducted and released.  The reference that the Plaintiff has the duty to comply with clause 21 of the Special Conditions of the Subcontract, which deals with the contractor’s removal of plant and material from the site, is insufficiently clear to incorporate into the Contract the entire Special Conditions and General Conditions of the Subcontract.

20.  With regard to the reference made in the Contract, that the documents of the Contract (“合約文件”) include the 4 Annexures, if there is any ambiguity in these provisions and references, the Contract should be construed against the Defendant (whose document the Contract is) and the reading less favorable to the Defendant should be adopted. The disc sent as Annexure 2 contained numerous documents, including the Conditions and Special Conditions of the Subcontract, but the disc was sent with the clear marking in English “Contract Drawing and Technical Specification”.  As there is dispute and ambiguity as to whether the other contents of the disc form part of the Contract, I accept the submissions of the Plaintiff that only the contract drawings and the technical specifications have been incorporated in the Contract.

21.  There is in fact no particular content or document in the disc which is called “Technical Specification”.  There are however “General Specification”, “Technical – General Trade Specification”, “Technical – Particular Specification” and “Specification Preliminaries”.  All these set out the details and general requirements of the work to be carried out under the Subcontract.  All these specifications can fall under the general description of “Technical Specification” of the works to be carried out under the Subcontract, if they are relevant to the Schedule 3 Works, Schedule 4 Works and Schedule 5 Works which were sub-contracted to, and to be carried out by, the Plaintiff under its Contract with the Defendant.

22.  The Plaintiff does not in fact dispute that PS A17.3 of the Particular Specifications (“PS A17.3”) applies to its work under the Contract.  As Counsel for the Defendant highlighted, paragraph 1.1 of PS A17.3 of the Particular Specifications for Architectural Metalwork states that it should be read in conjunction with all other related Project Specifications.  The Schedules refer to the Particular Specifications, the Specification Preliminaries refer to the Schedules, and the General Specifications refer to the Specification Preliminaries.  They can only be understood when read together, particularly when the Schedules and unit rates use abbreviations which are explained in the Specification Preliminaries.

23.  It makes reasonable sense, that the Plaintiff and the Defendant as reasonable businessmen understood, and agreed at the time when the Contract was signed and when the Annexures were sent and received, that the rates and descriptions of work set out in the bills of quantities including the Schedules (ie Annexure 1), the drawings and the specifications (Annexure 2) would all be part of the Contract, for necessary reference as to how the work under the Contract was to be performed and paid for.  Without any clear provision that the terms and conditions of either the Main Contract or the Subcontract applied to the Contract, and that the Plaintiff and Defendant agreed to be legally bound by such terms, I reject the Defendant’s contention that the Plaintiff is bound by the General Conditions or Special Conditions of the Subcontract between the Defendant and MC.  On my construction of the Contract as a whole, all the Specifications included in Annexure 2 form part of the terms of the Contract as to the work to be carried out thereunder.

24.  In my view, this is a classic example of a party purporting by vague terms to make inaccurate and garbled references to sets of documents comprising the Main Contract and the Subcontract in this case, and these ambiguous references should be rejected as due incorporation of those documents into the Contract between the Plaintiff and the Defendant.  What is required should be a carefully expressed intention to incorporate, in clear and precise terms, the conditions which are to have contractual effect in the parties’ relationship.  I cannot find such clear intention from the language used in the Contract.  A contracting party should be clear as to the terms which bind it to the agreement, and should not be left in doubt as to the legal consequences this carries.  Nor should its counterparty be able to rely on a bundle of documents randomly sent, and to pick and choose, after the event, which documents to rely on, on the basis of vague and garbled language used at the time of the agreement.

Nature of the Contract

25.  There is no dispute on the pleadings (paragraph 9 of the Statement of Claim and paragraph 10 (c) of the Amended Defence and Counterclaim), that the Contract is a remeasurement contract, and that the Plaintiff’s priced bills of quantities formed part of the Contract.

26.  This means that the Plaintiff undertook to install the works specified under the Contract at the price of $26,194,000 agreed, subject to adjustments being made to the price on the basis of the works carried out being measured on “as built” basis.  Since the bills of quantities and the rates specified therein form part of the Contract, reading the Contract as a whole, my construction is that the rates in the bills and Schedules should be applied to value the work built whenever applicable, unless no similar work is set out or contained in the Schedules such that the rates set out in the bills cannot be applied, or if it would be unreasonable to apply the rates to the variation in question.  For this contention, Counsel for the Plaintiff relies on para 5-029 of Hudson’s Building and Engineering Contracts (14^th ed):

“It is self-evident that, theoretically, work might be called for as a variation in order to obtain the advantage of the Contractor’s prices or of their presence on site which could not, by reason of its nature, extent or timing, be fairly regarded as a variation or change within the contemplation of the variation or changes clause.  Thus, in a case where the quantities and locations of work were so different from those described in the contract schedules that a provision applying those prices, or such prices as the Engineer might fix, to the varied work was held to be invalidated, and reasonable prices substituted, a US court stated that the usual “scope” of variation clauses:

‘is limited by the subject-matter and intention of the parties when it was made, to such modifications of the work contemplated at the time of making the contract as to not radically change the nature or cost of the work or materials required. For all other work and materials required by the alterations, the contractors may recover the reasonable value, notwithstanding the agreement.’

Such work is often described in the UK as “outside the contract” or “outside the scope of the contract” (that is, of its variation or changes clause).  In the US it is frequently described as being outside the “the general scope” of the contract (as opposed to the “agreed scope”, which latter will include variations or changes which can be properly ordered under the clause).”

27.  At para 5-030 of Hudson’s, the learned editors also stated:

“Whether additional or omitted work which has been ordered is of the character contemplated by the contract, and so within the conditions of the contract relating to the power to order variations, or whether on the other hand it is outside the contract, will depend in each case on the nature of the work in the terms of the contract.”

28.  Hudson’s referred, at paragraph 5-031, to the older authorities (Thorn v London Corp (1876) 1 App Cas 120, and Pepper v Burland (1792) 1 Peake NP 139) on the extent to which a contractor may value its work on quantum meruit basis, and concluded that whenever it is possible to trace and identify the work which has been ordered outside the scope of a variation clause, together with its consequential effects, it is only the work outside the scope of the contract which may be separately valued on a cost or reasonable basis, but observed that even in such a case, the original contract prices will at least be evidence of what a reasonable price is, until the contrary is proved.

29.  The first question raised for determination in this case, whether the additional work ordered by the Defendant is of the character contemplated by the Contract, and so within the scope and conditions of the Contract, depends on the nature of the work and the terms of the Contract.  The second question of how a variation is to be valued, and whether the rates specified in the Contract are to be applied, is also a question of construction of the Contract and the provisions made in the Contract for the work, turning on the nature of the work within the original scope of the Contract and how that is to be priced, and contrasting same with the nature of the work as varied, to determine whether the original pricing method is applicable and reasonable.

The disputed claims

30.  The Plaintiff claims for payment on the basis that there had been variations of the works, or additional works, which it had been instructed by the Defendant to carry out and which was outside the original scope of the work under the Contract.

31.  Some of the variations are disputed by the Defendant as to liability, on the basis that they fell within the scope of the Contract, and had been included in the Contract price.  Other variations are disputed only on quantum, as to how they should be assessed.  For the claims made in respect of Q050, 054 and 055, the dispute is whether the additional steel members provided should be measured according to the weight of the steel provided, or by the unit rates set out in the Schedules, which are based on the flat area in terms of square metres.

32.  Pursuant to the directions of the Court, the parties had prepared for trial a detailed Scott Schedule, which summarizes the claims made by the Plaintiff for payment, the Defendant’s defence to each of the claims, and the parties’ respective contentions on each claim, by reference to the pleadings filed, the witness statements exchanged and the evidence adduced at trial including the expert’s reports, the documentary evidence and the witnesses’ testimony at trial.  Both parties were content for their submissions to be made on the basis of the Schedule, and for the Court to rely on the Schedule for the submissions made.  References below are to the claims referred to in the Schedule.

Q050, 054 and 055

33.  These represent the largest item of claim in monetary terms.

34.  According to the Plaintiff, it was required to provide steel members for the ceiling and balustrade of the plaza on the ground, 1^st and 2^nd floors. The Plaintiff claims that it is entitled to additional payment due to the Defendant requesting larger size members, which led to an increase in the quantities of steel required by the larger size.  The Plaintiff’s evidence is that whenever the size of the steel members required for the works was not specified in the tender drawings, its obligation was to supply the members in compliance with the General Design Requirements under paragraph 6.1 of PS A17.3 (of the Particular Specification) (“PS A17.3”), which referred to components being designed to meet or exceed the specified performance requirements of local weather, acoustical and fire safety requirements and conditions and structural requirements.  On that basis, the Plaintiff had priced the tender and the Contract, using a size of 50×50×4 mm for the sub-frame major member, and this was based on the Plaintiff’s experience and its belief that such a size would achieve the requisite performance required under the Specifications, by reference to the designs and requirements employed in other projects similar to the design in question for the Centre.  The Plaintiff also relies on the fact that the size of 50×50×4 mm was also adopted for the strip ceiling at another location of the Centre (CMP-16), which size had been approved by the Buildings Department.  The drawings, calculations and instructions issued by the Defendant in December 2015 adopted instead steel members of 150×150×10 mm in thickness, which were much bigger.  The Plaintiff claims that this was a case of “over design” by the Defendant, as the size provided for by the Plaintiff was sufficient for the requirements specified, and that the changes made by the Defendant entitled the Plaintiff to claim additional payment for the variations.  On the Plaintiff’s case, it is entitled to payment according to the weight of the steel members supplied.

35.  On the Defendant’s pleaded case, the Plaintiff’s duties and obligations are provided for in various Contract documents.  According to the Final Best Offer made by the Plaintiff and accepted by the Defendant, the Contract was clearly stated to be a “Remeasurement Contract based on Flat Area”.  In the context of quantifying the Plaintiff’s claim for additional payment, the Defendant claims that the Plaintiff is only entitled to measurement of the works as built, and according to the flat area in square meters.

36.  Clause 4 of the Specification Preliminaries states the method of measurement of the works under the Contract, and it is clear from that and the abbreviations used in the schedule of rates that square meters were to be used in the measurement of the relevant works for the ceiling and balustrade in Schedule 3 and Schedule 4.  There is no dispute that there is NO change in the flat area measured in square metres.

37.  The Defendant’s case, which Counsel has emphasized throughout, is that as expressly stated in PS A17.3 and in the Notes to the Schedules, the drawings (included in Annexure 2) which form part of the Contract set out “generic design principles and intentions only”.  The exact details of the Plaintiff’s obligation of design and construction are stated to be in accordance with the Performance Specification and subject to the final approval of the Contract Administrator, Structural Engineer and the Buildings Department.  On behalf of the Defendant, Counsel contended that the Plaintiff had tendered for the Contract, with the knowledge and understanding that the drawings were to be further developed, and that the works under the Contract were to be constructed based not simply on the tender drawings, but in accordance with the final design as developed and approved by the Contract Administrator, the Structural Engineer and the Buildings Department.

38.  Clause 1.4 of PS A17.3 expressly provides for architectural metalwork under the Contract, as follows:

“The work of this Section is performance-based, and shall be developed, tested and guaranteed to comply with the design intentions indicated on the Drawings, Building Information Model (BIM), specified performance criteria and requirements, and relevant statutory and project requirements. Drawings indicate generic design principles and intentions only. Compliance with any and all local statutory regulations, government submissions, and compliance with applicable building codes, regulations, frameworks, standards, etc, are the sole responsibility of JSSSC3 (ie Joint Selected Sub-Contractor 3). JSSC3 is not entitled to any claims against time and cost for any differences between details provided by the Employer in JSSC3 Sub-Contract Documents and that of the final approved design. It is the sole responsibility of JSSC3 to design, engineer, supply, fabricate and install a statutory compliant design according to the design intent indicated in JSSC3 Sub-Contract Documents.”

39.  Clause 19.8 (a) of PS A 17.3 also provides:

“JSSC3 shall prepare and submit 7 sets of detail shop drawings (including calculation) for Contract Administrator’s approval. Note that Contract Administrator’s drawings illustrate design intents and are diagrammatic.”

40.  There is no dispute that JSSC3 refers to the Defendant, under the Subcontract between MC and the Defendant.

41.  Nor is there dispute that under the Contract, the Plaintiff was only responsible for the installation of the Schedule 3 and Schedule 4 Works, but was responsible for the design as well as installation of the Schedule 5 Works, for which it was to submit shop drawings, 3D drawings and structural calculations.  The Defendant explained that this was made clear in the “Quotation Clarification” of the Plaintiff’s Final Best Offer.

42.  The bills of quantities for the Contract works form part of the Contract documents, and this is not disputed by the Plaintiff.  The Notes to Schedule 3, for the fitting out works to the plaza balcony, expressly provide as follows:

“1. The whole of the fitting out works as shown on the Drawings and/or as described in this Schedule are merely given as an indication of the design intent and the extent of which to be constructed. The complete systems/works shall be designed and constructed by the Sub-Contractor based on the Performance Specification and as shown on the Drawings, all in conformity with the statutory requirements.

…

3. The fixing and connection details shown on the drawings are indicative only of the general requirements of the fitting out works only.  The exact details are to be designed, engineered and constructed by the Sub-Contractor, all in accordance with the Performance Specification and subject to the approval of the Contract Administrator, Structural Engineer and Buildings Department.”

43.  For the fitting out works to the plaza ceiling, the Notes to Schedule 4 are in identical terms as those for Schedule 3 set out above.

44.  I have found that the Particular Specifications which relate to the Plaintiff’s work under the Contract form part of the Contract.  As such, the Plaintiff is bound by the detailed description and requirements set out in the Specifications, including the provisions of PS A17.3, that the drawings only indicate generic design principles and intention, that the Plaintiff’s responsibility is to install a design according to the design intent, and that it is not entitled to any claim for cost in respect of any differences between the details provided in the contract documents and those of the final approved design.  The Schedules forming part of the Contract also make it clear that the Schedule 3 and Schedule 4 Works must be in accordance with the final approved design.

45.  From the fact that the drawings and description in the Schedules at the time of tender merely give an indication of the design intent and the extent of the construction, it goes without saying and the implication is that the Employer through the Contract Administrator and Structural Engineer would be entitled to give further instructions on the exact details to be designed, engineered and constructed by the Defendant as Sub-Contractor under the Subcontract and, in turn, by the Plaintiff as the Defendant’s subcontractor.

46.  The significant point is that, as Counsel for the Defendant further pointed out, neither the tender drawings nor the description of works in Schedule 3 and Schedule 4 in fact contain any reference to steel member size, nor to the structural design of the steel members.  They only specified that such members were “as required per loading”.  Counsel explained that no specified dimensions were contained in the tender drawings, because it was contemplated and provided for in the Notes and the Specifications that the drawings would be subject to further development.

47.  I accept these submissions of the Defendant.  If the final design approved by the Contract Administrator and the Structural Engineer for the Employer, and by the Buildings Department, was for the member size of 150×150×10 mm in thickness, that is the design to be installed by the Plaintiff. The fact that the 50×50×4 mm size was approved for another part of the design for the Centre, is neither here nor there, when it was NOT approved for the presently disputed location in question.

48.  I also accept the submissions of the Defendant, that the Plaintiff’s tender for the Contract did not specify that the price was for steel members of the size of 50×50×4 mm, and there is no evidence that this was the basis on which the Plaintiff’s tender was accepted, or that the Defendant had agreed to the size of 50×50×4 mm being used as the basis of the Contract price.

49.  The Plaintiff contended that it was unnecessary or unreasonable for the Defendant to use steel members of 150×150×10 mm in thickness, as the 50×50×4 mm members complied with the design requirements and the specifications, in that they could support the aluminum panels; could achieve the typhoon-proof function contemplated; and had been approved by the Buildings Department.

50.  There is no expert evidence to support the Plaintiff’s claim that the larger size was unnecessary, or that the smaller size complied with the design requirements.  However, I reject the “unnecessary/over-design” argument as there is nothing in the Contract conditions which require the design for construction to be reasonable, or to be confined to the minimum standards, or to what was necessary.  The Plaintiff was to carry out works in accordance with the final design which was approved, not only by the Buildings Department, but by the Employer through the Contract Administrator and the Structural Engineer. As the Defendant highlighted, and I agree, the Notes to the Schedules made it clear that the works shown in the drawings and as described in the Schedules were merely given as an indication of the design intent and the extent of which to be constructed.  The details of the works required to be designed, engineered and constructed by the Plaintiff in this case were all to be subject to the approval of the Contract Administrator, Structural Engineer and Buildings Department.

51.  It is not necessary to make a finding as to whether the Plaintiff and Defendant had agreed on the Collateral Agreement relied upon by the Defendant as its alternative case.  According to the Defendant, the Collateral Agreement was made between the Plaintiff and the Defendant, at meetings held during the tendering stage of the Contract, on 18 May, 18 September and 20 October 2005.  The Defendant claims that the parties agreed that the Defendant would be responsible for the design of the Schedule 3 and Schedule 4 Works, which would be further developed until a final approved design was achieved, and that the Plaintiff was to price the Contract on that basis and after taking the requirements stipulated in the Contract documents into account.  The Defendant argued that by virtue of the Collateral Agreement, the Plaintiff accepted the risk of constructing the works in accordance with the design development, and that it was not entitled to any additional payment by virtue of any changes made in the course of such design development.

52.  In my view, the Collateral Agreement only expressed and/or reinforced the provisions of PS A17.3, that the Plaintiff would not be entitled to any claims against time and cost for any differences between the details provided by the Employer in the Subcontract documents and that of the final approved design.

53.  In my judgment, therefore, the Plaintiff was obliged under the Contract to execute the works as instructed by the Defendant under the disputed variation orders, and the question is how the disputed variation orders should be assessed for payment.  The Plaintiff claims that because the Contract was tendered on the basis of the smaller 50×50×4 mm size, it is entitled to quantify its claim on the basis of the weight of the additional quantity of steel for the larger 150×150×10 mm members.

54.  I reject the Plaintiff’s contention.  As the Defendant rightly pointed out, the Plaintiff’s Final Best Offer Form for the Contract clearly states that the Contract is one for remeasurement on flat area.  Under “Quotation Clarification”, the Plaintiff’s Final Best Offer Form expressly states that “There should be no cost implication for this sub-contract are under Remeasurement Contract based on Flat Area”.  There is no dispute that there was no change in the flat area affecting the works in question.  As explained in the Specification Preliminaries, the relevant units of measurement adopted square meters, and for the frame system in Schedule 3 (including the supporting framework and the supporting framework and sub-frames), they were provisionally measured as 80 m² and were to be re-measured, on completion, on the same basis of the flat area, at the rate of $748 per square metre.

55.  It is also pertinent that clause 4.4 of the Specification Preliminaries expressly states that the unit rates in the schedule of quantities and rates were to be used for the purpose of ascertaining the price of any variations under the Contract, for calculating the amount of interim payments as well as for remeasurement of any provisional quantities.

56.  Nowhere has it been demonstrated that the Plaintiff had employed the size of 50×50×4 mm in its tender for the size of steel members to be used in the Contract work, or that its tender was on the basis of the weight of the steel members to be supplied, such that a different method of measurement should be used for the steel members concerned.

57.  The valuation made by the single joint expert appointed in this case (“Expert”) was only made on the assumption that the tender drawings adopted 50×50×4 mm as member size, which I have rejected.

58.  There is no contractual basis for the Plaintiff to claim measurement of its works by weight, instead of by flat area.  Its claim that “remeasurement based on flat area” (as stated in paragraph 2 i of the Final Best Offer Form) only applies to the design-and-build aspect of the Schedule 5 Works, and not to the Schedule 3 and Schedule 4 Works, has no basis.  There is no such qualification in the Quotation Clarification set out in the Plaintiff’s Final Best Offer Form, when it would have been simple for the Plaintiff to specify such an exclusion, if that had indeed been its intention. 

59.  To conclude, I reject the Plaintiff’s claims for payment both on liability and on quantum.

VO1

60.  According to the Schedule which sets out the parties’ respective cases, the Plaintiff simply claims that the Defendant had issued a variation, instructing the Plaintiff to prepare the Building Information Modeling (“BIM”) for the ceiling for Level of Development (“LOD”) 300, 350, 400 and 500. It quantifies its claim at $67,000.

61.  The Defendant has referred to Particular Specification PS G1.2.  This sets out the scope of works and the general requirements of such work, and refers to the BIM which the contractor is required to build and develop throughout the contract period, in collaboration with the MC and the sub-contractors. Paragraph 1.1 of PS G1.2 states that the contractor and subcontractors have to continuously update and submit works including the 3-D BIM models, from the date of the award of the contract until the completion of an as-built 3-D BIM model(s).  The Defendant claims that the submission and preparation of the BIM was within the Plaintiff’s scope of work under the Contract, and that revised BIM models had been submitted by the Plaintiff from time to time, and checked and reviewed by the Defendant from time to time.

62.  On the limited submissions made and the evidence presented, I am not satisfied that the Plaintiff is entitled to the payment claimed.  Even if the instruction was a variation (and this has not been shown), it is for the Plaintiff to prove its valuation and to substantiate its claim, which the Plaintiff has failed to do.

Q017A

63.  The Plaintiff’s claim is for $4,097,611.08, as payment for changing the cement board ceiling to aluminum strip ceiling for the Front of House Area, on the ground, 1^st and 2^nd floors.  There is no dispute that this constitutes a variation of works under the Contract, and the dispute relates only to how the claim relating to the supply and installation of the steel frame is to be valued.

64.  The Defendant relies on Clause 4.4 of the Specification Preliminaries, which refers to the schedule of quantities and rates (“SOR”) for the tendered works.  Clause 4.4 states that the unit rates in the SOR will be used for the purpose of ascertaining the price of variations.  The Defendant’s valuation of the disputed item is $5,615,637.08 (119,481.64kg x $47/kg), which uses the rates specified in Schedule 5 as the basis of calculation.

65.  The Plaintiff claims that the rates specified in Schedule 5 are not applicable, since clause 4.4 of the Specification Preliminaries do not form part of the Contract.  I have already found that all the Specifications included in Annexure 2 to the Contract form part of the Contract as they only make sense and can be understood when they are read together.  Clause 4.4 of the Specification Preliminaries therefore applies and the unit rates in Schedule 5 should be used to ascertain the price of the variations claimed by the Plaintiff.

66.  Schedule 5 relates to the ceiling finishes to the covered plaza and the Front of House area.  It provides for a cement board suspended ceiling system, comprising a ceiling suspended below the concrete soffit, of 2,520 m² at a unit rate of $1,059/ m² (SOR 5/4/30).

67.  The Defendant explained that as the ceiling suspended below the concrete soffit comprises both the steel frame and the cement board, to arrive at the rate for the steel frame only, the Defendant deducted the rate for the cement board, estimated at $300/ m², to derive the rate of $759/ m² ($1,059/ m² - $300/ m²).  It then allowed a discount of 25% for any potential additional cost, to produce a final rate of $759/ m² x (1+25%) = $945/ m².  The area was then measured at 2,520 m², and applying the rate of $945/ m², the amount calculated is $2,391,480.

68.  The Expert valued the disputed item in his report by using the weight instead of the area.  In cross-examination, he accepted that the unit rates in the Schedules should generally be adopted as the basis of valuation, but he did not do so in his report in this case because the tender drawings did not specify the size of the members, and he considered that he had no alternative but to use the weight instead of the area as the basis of his valuation.  When it was explained to him that the unit rates in the Schedules extend to design development, and are applicable to works described in the final approved design, the Expert agreed that the Defendant’s approach to valuation should be adopted.

69.  I accept that clause 4.4 of the Specification Preliminaries applies, such that the rates in Schedule 5 should be adopted for ascertaining the value of the variation.  I also accept the explanation and the basis of the Defendant’s valuation of $2,391,480.

Q002C

70.  This claim relates to the supply and installation of the 4 mm thick aluminum belly ribbon at location CMP-7.  The claim involves 3 parts or items, namely the supply and installation of (A) the frame system, (B) the 4 mm thick aluminum plate with top stiffener, and (C) the modification of the existing steel frame.  There is no dispute that this was a variation, and the issue is on quantum.

71.  Clause 4.4 of the Specification Preliminaries applies to the valuation.

72.  The Expert’s valuation, based on the assumption that the tender drawings were based on 50×50×4 mm member size, as opposed to the final approved design, is not applicable.  On the basis of the Plaintiff’s evidence, that the construction at CMP-7 was not more difficult than the construction at CMP 6, 8 and 9, the Expert agreed that it would be reasonable to adopt the unit rates set out in the Schedules for CMP 6, 8 and 9.

73.  The Defendant’s valuation at $502,880 is accordingly accepted for sub-item (A).

74.  In relation to the valuation of sub-item (B), the Plaintiff claims that its earlier agreement on the valuation of $2,214,000 was on the basis that the entire sum of $4,378,485 would be accepted for all the 3 sub-items.  The Expert has now assessed sub-item (B) individually at $2,968,000.  I allow this independent assessment made by the Expert.

75.  For sub-item (C), the Expert noted in his report that the Plaintiff had not produced any supporting documents or evidence to substantiate its claim.  There were no modification details and no attendance records to show the number of workers involved for the works.

76.  Irrespective of whether or not the Contract contains any term governing the method of submission and substantiation of claims for payment, when an unresolved dispute comes before the Court for determination, the burden is on the Plaintiff to produce adequate evidence and documents to substantiate the payment claimed which is disputed.  In the absence of such substantiation, I will not allow the claim.

Q003

77.  The Defendant does not dispute that it instructed the Plaintiff to modify the plaza ceiling panels for LED lighting installation.  The Plaintiff claims that this constitutes a variation of works for which it is entitled to additional payment.  However, according to the evidence of the Defendant’s witness, the relevant works were instructed because it was part of the Plaintiff’s scope of work under the Contract to supply and install the lighting supporting frame and to accommodate the LED lighting in accordance with the tender drawings (drawing No P01-4-A-DE493.1 rev 00) and shop drawing No PO1-HHMM-A-LA2202 rev 3, but that the Plaintiff had failed to carry out these works.

78.  There was no evidence from the Plaintiff to contradict the Defendant’s claim, and I disallow this item.

Q 006A

79.  The Plaintiff claims that it was instructed to prepare bending and shear strength testing for the dry condition cement board.  The Defendant claims that its instruction was for the Plaintiff to prepare “bending strength testing” of the cement board, but what the Defendant did was a “shear test report”, which was different to the instruction.  It claims that the Plaintiff is not entitled to payment.

80.  The Expert’s report confirmed that the report produced by the Plaintiff did not contain any result of bending strength testing, and there was insufficient detail to justify the amount claimed.

81.  On such evidence, the claim is not allowed.

Q 007B

82.  Part A of this claim concerns the preparation of Buildings Department drawings, shop drawings, 3-D drawings and calculations for the 3 mm thick curved aluminium panels for the strip ceiling (“Panels”).  The Plaintiff claims that it was instructed in December 2016 to carry out these additional works outside the scope of the Contract and should be entitled to additional fees.

83.  The work involved, together with the work involved in Q 017A, arose from the Contract Administrator’s instruction for the metal strip ceiling.  These instructions included a drawing (No P01-4-A-DE 474 rev 2) which clearly showed that it was necessary to carry out a detailed design of the 3 mm Panels for the strip ceiling instructed.  The Defendant claims that the detailed design of the Panels should have been included in the detailed design for the metal strip ceiling (for which the Plaintiff had been paid design fees under Q 017A), but the Plaintiff failed to do this and instead separately prepared the drawings and submissions for the Panels, thereby incurring additional costs.  The Defendant claims that the Plaintiff should not be entitled to any further additional payment for a “double handling” of the same instructions, caused by the Plaintiff’s own omission to include the Panels in the drawings for the ceiling.

84.  The Plaintiff has not adduced any explanation or evidence in answer to the Defendant’s claim.  It only relies on the fact that its claim for additional payment was included in the interim payment certificate, and that the Defendant should be bound thereby.

85.  I reject this basis of the Plaintiff’s claim.  Interim payment applications, interim assessments and interim payments are not final, and do not bind the parties as to quality or amount (Keating on Construction Contracts, 10^th ed 2016, para 5-015), unless there is clear provision to the contrary.  Interim certificates only provide provisional estimates of the sum to which the contractor is entitled by way of installment payments.  If the final amount is disputed, the contractor’s entitlement must be established.

86.  On the evidence, I am not satisfied that the Plaintiff is entitled to Part A of its claim.

87.  There was originally dispute as to the proper assessment of the Plaintiff’s claim for the supply and installation of the Panels themselves, but according to the Revised Schedule, this has now been agreed at $1,581,075.40.

Q 007

88.  Related to the above claim is the Plaintiff’s claim for additional costs incurred to revise the 3-D drawings, shop drawings and BD amendment for the strip ceiling, “due to E&M services to change of ceiling zone and design of the steel frame”.  The dispute is on the proper assessment of the claim.

89.  The Defendant claims that the Plaintiff only submitted the revised shop drawing, and no other documents, and that the claim should be assessed at $6,000 on the basis of the Expert’s valuation for the revised drawing.  The Expert pointed out in his report that he was not provided with any details of what comprised the alleged BD submission for which payment is claimed by the Plaintiff and further, that there was no evidence presented to him of the Plaintiff’s preparation of the revised 3-D drawings.  His valuation of the Plaintiff’s claim at $34,000 was only made on the assumption that the Plaintiff had completed all the other drawings and submissions.  However, as there is no evidence from the Plaintiff as to the work allegedly done and the drawings allegedly revised and submitted (apart from the shop drawing), I can only allow the sum of $6,000 for the shop drawing.

Q 010,15 & 22

90.  The Plaintiff claims the additional costs of providing labour for transporting, loading and unloading materials to the construction site, during the months of June, July and August 2017.  It claims that these costs had to be incurred because the storage area had to be relocated from within the site of the Centre to the adjacent 810B site, which constituted a variation, in that the costs of transporting materials from outside the site to the area within the site where work had to be carried out were not contemplated at the time of the tender and the Contract.  On the Plaintiff’s case, the 810B site was a temporary storage area designated by the Defendant in June 2017, and the relocation of the storage area from the site of the Centre to the 810B temporary site was a variation.  Additional workers were required to transport the materials from 810B site to the construction site, sometimes on overtime basis after 5:30 pm.

91.  The Defendant relies on clause 8.4 (a) and 16.1 (a) of the Special Conditions of the Subcontract (“Special Conditions”), to claim that the Plaintiff is not entitled to any additional payment.  Clause 8.4 (a) of the Special Conditions states that the Sub-Contractor shall be deemed to have allowed for “all extra costs” in its rates, which are not limited to the extra costs of any inconvenience caused by disturbance of the regular progress of the works, and including all extra costs for additional supervision, plant, labour, out of sequence working and overtime working arising from the compliance with the main contractor’s program or any amendments thereto.  Clause 16.1 (a) of the Special Conditions further states that the rates for the Sub-Contract works shall be deemed to include all cost of necessary materials, conveyance and delivery to site, transportation, unloading, and storing for the execution of the Sub-Contract works.

92.  I have found that the Special Conditions of the Subcontract have not been incorporated into the Contract.

93.  Even if the storage of materials at the 810B site and the necessity to transport materials from that site to the location of the Contract works at the Centre should constitute a variation, the Defendant’s evidence is that first, the Plaintiff was only required to unload the materials once, at the 810B site or any other temporary storage area within the site of the Centre.  When the materials were required for installation, the Defendant had provided a crane lorry and crane driver, at no cost to the Plaintiff, for transporting and delivering the materials to the location required for work.  It would not be necessary for the Plaintiff to incur any additional cost of loading or unloading.

94.  What is material, however, is that it is for the Plaintiff to substantiate its claim for the additional costs alleged, of transporting the materials from the 810B site to the site of the Centre, and for the days in question, at the times in question for seeking overtime payment.  Although Mr Dickson Lam of the Plaintiff claimed in his evidence that the Plaintiff could only transfer materials from the 810B site to the project site after 5:30 pm, this is not borne out by the contemporaneous documents since the Plaintiff’s claim included normal working hours for the transport.  The Plaintiff accepts that the 810B site provided temporary storage for all contractors, and not just for the Plaintiff.  The Defendant pointed out that other contractors were able to and did transport materials between the 810B site and the project site during normal working hours.  It is for the Plaintiff to justify the need to work overtime.

95.  The Defendant also relies on clause 7.10 of the Specification Preliminaries, which I have found to be part of the Technical Specifications incorporated as part of the Contract documents.  Clause 7.10 states that the contractor shall at its own expense supply all necessary and additional labour for night work and overtime as may be required to comply with the program of the main contractor, and to complete the work so as not to cause any delay to the Main Contract works or the work of other subcontractors.  On its face, this would apply to the Plaintiff’s claim for the cost of providing labour to work overtime, after 5:30 pm, for the purpose of transporting materials from the temporary storage site.

96.  The Defendant claimed that the Plaintiff could have transported the materials during normal working hours, and further could have used the crane and lorry provided by the Defendant for the transportation without costs, instead of claiming 3 to 4 hours overtime each day for the transportation.  On the Defendant’s case, the Plaintiff had arranged for transportation after 5:30 pm for its own purposes, as it did not have sufficient manpower to carry out installation work and transportation at the same time.  The Defendant also claimed that in June 2017, the temporary storage area within the site of the Centre had become available and the Defendant had instructed the Plaintiff to directly transport the materials to the Centre instead of to the 810B site, and that transportation to the 810B was no longer necessary after June 2017.

97.  It is for the Plaintiff to justify and substantiate its claim, for transportation during normal working hours as well as for overtime transportation, and in the latter case, to explain why the work was carried out after normal working hours.  On the evidence of the Expert, the Plaintiff has failed to produce any particulars or labour record to substantiate its claim in respect of the number of mandays employed, and the extent of the work involved. The Expert accordingly was not able to assess whether the labour resources claimed by the Plaintiff were reasonable.  His estimate was made only on the assumption that the claimed quantity can all be justified, and if the Court should accept that the Plaintiff’s work had indeed been done.

98.  In the absence of any satisfactory explanation from the Plaintiff as to why it did not use the crane and driver services provided by the Defendant, why the workers had to work after 5:30 pm on the days claimed, and without any justification as to the number of workers involved, it is not appropriate to employ the overtime rates assessed by the Expert.  His opinion and assessment was on the assumption that the claimed quantity can be justified, but there is no such justification.  The claims made by the Plaintiff under this head are disallowed.

Q 023, 024, 033, 034, 037 and 053

99.  These are claims for overtime labour costs arising from works other than the transfer of materials between the 810B site and the project site.  The same arguments are made as to entitlement.  There is the same issue of lack of substantiation and proof of the costs allegedly incurred.

100.  In the absence of any supporting evidence, the claims are not allowed.

Q 012

101.  This is the Plaintiff’s claim for the costs of additional work and modification work for the connection between members E and F for the CMP 9 steel frame in the plaza ceiling area.  There is no dispute that this is a variation of works and the issue is on the quantification of the claim.  The Plaintiff claims that it had completed 50% of the work and claims 50% of the quoted price for the work, which was $966,000 according to its quotation dated 14 July 2017.  According to the Defendant, however, the Plaintiff had only completed 15% of the work and the Defendant had to engage other contractors to carry out the outstanding works as well as to rectify the defective works of the Plaintiff.

102.  The Expert valued the claim at $242,472.90, but on the basis that the Plaintiff had completed 50% of the work.  However, the Expert was not able to verify the quantities claimed by the Plaintiff as to the work done, since the drawings sent by the Plaintiff to the Expert to answer the Expert’s queries were unclear.  The Expert pointed out that the Plaintiff did not explain what kind of labour it had employed to carry out the work, nor how the work was carried out.  The work for which the charges are sought to be made were the drilling of holes for the steel members, cutting steel brackets and fine tuning the angle degree of steel cleats to achieve the 3-D model.  As the Expert is one on quantum, it would not be for him to opine as to whether the work had been completely carried out, or carried out properly.

103.  It has to be emphasized again that it is for the Plaintiff to establish its claim of entitlement, by evidence and not by making bare assertions as to what work it had carried out, or what expenses it had incurred.  Such evidence as is produced will be considered by the Court in the context of each individual claim, having regard to the nature of the claim made, the complexity and nature of the disputed work involved, and the particulars and evidence available.  If it cannot be established to the Expert nor to the Court that the Plaintiff had completed the works for which payment is claimed, and incurred the costs it claims, then there is no basis for this Court to allow the claim on the basis of assumptions and deductions.

Q 14A

104.  The remaining dispute on this item relates to the valuation of the admitted variation of works for designing and supplying the aluminium panels for the hanger wall.  The valuation of the framing system has been agreed.

105.  The Expert explained in his report that although the Plaintiff referred to drawing number DE-506 to support its measurement, the Expert considered that the extent of the hanger wall was unclear from the drawing.  The Plaintiff and the Defendant relied on different measurements, but neither provided any measurement breakdown to verify their quantities.  The Expert pointed out that the BIM model of the ceiling provided to him did not provide the dimensions or size of the hanger panels.  The Expert made initial measurements on assumptions as to the extent of the hanger wall from drawing DE-56.  However, the Defendant later explained to the Expert that drawings P01-HHMM-A-LA 5001 and P01-HHMM-A-DE 5001 should be referred to for the extent of the hanger wall, and further, that the aluminum panels in question were flat, and not of “single curve” as alleged by the Plaintiff.  The Plaintiff has not referred to any evidence to contradict this claim of the Defendant.

106.  I therefore allow the Expert’s valuation on the basis of the rates for flat aluminum panels, and using the calculated area of 139.48 m² on the basis of the drawings referred to by the Defendant.  This gives a valuation of $516,208.16.

Q 016

107.  This is the Plaintiff’s claim for the additional costs involved for works instructed to modify the balustrade steel frame for the 1^st and 2^nd floors.  There is no dispute that this is a variation of works, but on quantum, the Plaintiff has provided no particulars or documents to substantiate its claim for payment.  The Expert pointed out that there was no breakdown of the claimed number of mandays, and no particulars of the buildup of the claimed rate.  The Plaintiff’s answer to the Expert’s queries was that the quantities were based on the “estimated required mandays” for the modification work.  According to the Expert, there were no attendance or daily labour records produced, no information on the extent of the modification works required, how the works were carried out, or the location of the work.  The Expert was hence unable to assess the reasonableness of the mandays claimed, nor the value of the work claimed.

108.  On such evidence, the Plaintiff’s claim is disallowed.

109.  As explained in the earlier part of this Judgment, interim payments and provisional assessments are not conclusive nor binding (Keating on Construction Contracts (10^th ed), para 5-015).  The draft final accounts relied upon by the Plaintiff were and remained drafts, were not finally agreed and are not binding on the Defendant.

Q 019

110.  This relates to the Plaintiff’s claim for additional labour costs for modifying the steel frame for the plaza ceiling panels.  According to its quotation, the Plaintiff seeks payment of $525,000.  However, as in the case of the previous claim Q 016, the Plaintiff has provided no details or documents to substantiate its claim.

111.  According to the Expert, the Plaintiff’s claim is based on the number of mandays estimated for the work involved on 70 pieces of ceiling panels.  However, the Plaintiff had not provided any evidence on the extent or content of the modification work required, and it was not possible for the Expert to assess the reasonableness of the rates claimed for the number of days claimed.  As the Expert pointed out, the Plaintiff only estimated the number of mandays required, and its estimate was an assumption, rather than being based on any actual work records.

112.  The Plaintiff’s claim for $491,977.50 cannot be substantiated.

113.  The Defendant’s case is that by its records, only 18 steel members were involved in the work, such that approximately 30 ceiling panels could have been involved, instead of 70 panels as alleged by the Plaintiff.  On its case, only $126,508.50 can be allowed, at the rate assessed by the Expert.

114.  I will allow this claim at $126,508.50.

Q 020

115.  The Plaintiff’s claim for the costs of dismantling and reinstalling the steel ceiling subframe for the installation of smoke curtains has the same defects as the foregoing claim.

116.  Its quotation for the variation is on an estimate of 10 mandays required for the work, but the Plaintiff did not provide any evidence such as labour records to substantiate the claim.  The Expert provided his opinion on the daily rates of metal workers (assumed by him to be involved for the work), but pointed out that there is no evidence or explanation from the Plaintiff as to the kind of tools required for inclusion on top of the labour rate.  The Expert explained that whereas the cost of hand tools is not normally added, the costs of welding machines or electric cutters required for the work could be allowed.

117.  The Defendant claims that only nuts and bolts were required for the work involved, and that these costs should not be included in addition to the labour rate.  As the Plaintiff has failed to establish that any tools other than hand tools were required and employed for the work, I will only allow the sum of $126,508.50.

Q 021

118.  This relates to the Plaintiff’s claim for the additional costs of carrying out rectification works for the steel angle brackets connected to the subframe and the ceiling panels, to ensure that the distance from the edge of the panel to the fixed point of the bracket was 900 mm.  The Plaintiff claims that this distance was not required under the Contract, such that the work was a variation.

119.  The Defendant claims that the instructions for the works were given because the Plaintiff had not installed the brackets in accordance with the drawings Nos PO1-HHM-A-LA 2201 rev B and rev G (07) dated 12 January 2016 and 27 February 2017 respectively, which drawings clearly indicated that the distance from the edge of the panel to the fixed point of the brackets was 900 mm.  The Plaintiff’s evidence is that it had based its work on the 3D drawings/model provided by the Defendant, instead of the 2D drawings dated 12 January 2016 and 27 February 2017, which 3D drawings had indicated a smaller distance of 450 mm instead of 900 mm.

120.  I accept the evidence of the Defendant’s Mr Chris Yeung, that although 3D drawings had been shown to the Plaintiff at the first tender meeting, he had made it clear to the Plaintiff that all details and components for the Plaintiff’s work must be by reference to the 2D drawings, because the approval by the Buildings Department was on the submission and basis of the 2D drawings, and not the 3D drawings.  The final as-built drawings were based on the approved drawings, and on Mr Yeung’s evidence, all components and works on site had to comply with the approved BD drawings.  Mr Yeung also explained that the Defendant had no duty under the Contract to supply 3D drawings to the Plaintiff, and that in any event, it was for the Plaintiff to carry out its works in accordance with the design as developed and as amended and approved, which was what the Contract required.  I also accept the submissions of Counsel for the Defendant, that if there was indeed any discrepancy between the 2D drawings and the 3D drawings/model, then it was for the Plaintiff to seek clarification before the works were carried out.

121.  As the Plaintiff’s work did not comply with the drawings, the instructions to correct such work should be at its own costs.  The claim is not allowed.

Q 030

122.  This claim relates to the Defendant’s instructions to supply and install an aluminum plate of 3 mm thick around the void area for the 1^st floor and 2^nd floor of the balustrade area.  The Defendant denies that this was a variation, claiming that the work was within the scope of the Contract.  At paragraph 87 (a) of the Amended Defence and Counterclaim, the Defendant pleads that the relevant drawing showing the details of the work should be drawing No P01-4-A-DE451.  The drawing refers to “GMS Bent Plate by JSSC3”, there being no dispute that “JSSC3” is a reference to the Defendant as MC’s Subcontractor.

123.  In the Amended Reply and Defence to Counterclaim, the Plaintiff referred to its letter to the Defendant dated 23 April 2018.  In that letter, the Plaintiff referred to drawing P01-4-A-DE451.1, which indicates “GMS Bent Plate by JSSC2” instead.  The Plaintiff’s case is that the drawing DE451.1 demonstrates that the relevant work was to be carried out by another contractor, and not the Defendant under its Subcontract with MC (which was in turn subcontracted to the Plaintiff).  The other drawing referred to by the Plaintiff in its letter of 19 April 2018, P01-3-DE451.1, also shows “GMS Bent Plate by JSSC2”.

124.  There was no explanation by Mr Yeung when he was cross-examined on this. Nor did Counsel for the Defendant address this in Closing, there being no reference in the Schedule to Counsel’s submissions on drawing DE451.1.

125.  I can only assume that drawing DE451.1 was a revision of the drawing DE451, and accept that the instruction constituted a variation of the scope of the Plaintiff’s work under the Contract.

126.  In the Expert’s report, he referred to the drawings referred to respectively by the Plaintiff and the Defendant, and pointed out that even if the Plaintiff’s work should be as shown in No P01-4-A-DE451, the detail in the drawing shows a “GMS” bent plate, whereas the Plaintiff claims for payment on the basis of aluminum bent plate having been instructed and supplied.  The Expert pointed out that this would be a replacement of the GMS plate and hence an adjustment in value is appropriate.  On the Expert’s valuation, this claim was assessed at $92,130, and is allowed.

Q 035

127.  The Plaintiff claims, and the Defendant does not dispute, that the Plaintiff was instructed to replace the 1^st floor balustrade steel post, and that such replacement was carried out.  The work was necessitated by the amendment to the 3-D drawings/model.

128.  The Defendant claims, however, that it had not instructed the Plaintiff to replace the U-channels for the balustrade.  It also claims that the Plaintiff never supplied to it any documentation showing that the U-channels had been supplied and installed (paragraph 98 (a) of the Amended Defence).

129.  There is no dispute that the balustrade was installed, as instructed.  Having considered the work and the photographs relied upon, I can accept that the replacement of the U-channels was part and parcel of the replacement of the balustrade, as modified and as instructed by the Defendant.

130.  The Expert explained in his report that the Plaintiff’s claim (according to its quotation) was based on the weight of the U-channels installed, at 808.59 kg.  The Expert pointed out that the Plaintiff had not supplied any details of its measurement, nor of the breakdown of the rate charged.  However, the Expert referred to the drawings which showed the location of the relevant channels, and considered that the weight claimed by the Plaintiff was within a reasonable range.  The Expert assessed the reasonable rate for the work to be $45/kg, and on that basis assessed the valuation claim at $36,386.55, which I will allow.

Q 026, 036, 049

131.  These relate to the Plaintiff’s costs of renting the “scissor platform” and the cherry picker (“Platform Equipment”) to carry out, at a height, the installation of the ground floor metal strip ceiling, during the period from September 2017 to November 2017.  The Plaintiff also claims the labour costs for the installation.

132.  The Defendant’s case is that it had not instructed the Plaintiff to rent the Platform Equipment.  Under the Subcontract, MC provided scaffolding for the Plaintiff’s work in question in accordance with the program for the works on the site.  The time allowed for installation of the original ceiling panels at the location was 179 calendar days, and as evidenced by site memos and emails issued by MC, the Plaintiff had been instructed to commence the installation of the steel frame for the strip ceiling, but the Plaintiff had fallen behind schedule and was not able to carry out the necessary work within the scheduled program.  The scaffolding provided by MC was dismantled in accordance with the work program, before the Plaintiff was in a position to carry out the relevant work.

133.  The Defendant had instructed the Plaintiff to carry out mitigation measures in order to catch up with the progress of the installation works for the strip ceiling on the ground floor.  However, the Defendant claims that it was not entitled to claim the rental costs of the Platform Equipment which the Plaintiff had incurred as a result of its own delay and inability to work in accordance with the program and within the time when MC’s scaffolding was made available for the relevant work.

134.  The Defendant relies on clauses 16.1 (g) and 36.8 of the Special Conditions of Sub-Contract, as well as clause 6.4 of the Specification Preliminaries, to claim that the costs of renting the Platform Equipment are included in the Contract price.  Clause 16.1 (g) of the Special Conditions states that the Sub-Contract price and rates for the Sub-Contract works are deemed to include all cost of necessary materials, and in particular scaffolding, and all labour for the execution of the works.  Clause 36.8 provides that the Sub-Contractor should be responsible for erecting and maintaining the working platforms for the necessary work, and states that no scaffolding or working platform or the like shall be provided by MC.  I have already held that the Special Conditions of the Sub-Contract do not apply to the Contract between the Plaintiff and the Defendant.

135.  However, the Specification Preliminaries are part of the Technical Specifications which form part of the Contract documents.  Clause 6.4 of the Specification Preliminaries states that the contractor is to supply all plant, tools, implements, and scaffolding for the execution of the works under the Contract.  Clause 7.10 of the Specification Preliminaries further requires the contractor to supply, at its own expense, all necessary and additional labour for nightwork and over time, as may be required to comply with MC’s program and to complete the work so as not to cause delay.

136.  The Plaintiff further claims that the works for the “strip ceiling”, and for which the Platform Equipment was rented, was not within the scope of the Contract which only required work for the “plaza ceiling”.  As such, the provision of the Platform Equipment for the strip ceiling was not for work within the Contract scope, and should constitute a variation.

137.  In this respect, the Defendant’s case and evidence is that the areas for the installation of the strip ceiling were made available for the Plaintiff’s work, and that if the Plaintiff had been able to adhere to the work program for the installation of the plaza ceiling, it could have had access to the scaffolding provided by MC for the works to be executed at the locations required.

138.  I accept the Defendant’s submissions and evidence, that if the Plaintiff had executed its works for the strip ceiling in accordance with the work program and during the time instructed by MC and the Defendant (by reference to the site Memos stated 7 October and 28 December 2016 and 16 May 2017), the installation of the strip ceiling could have been carried out by using the scaffolding available on site.  As evidenced by the site records, the Plaintiff’s delivery of the strip ceiling panels was late, and could not be installed before the scaffolding provided by MC was dismantled in accordance with the work program, and the Plaintiff had to use the Platform Equipment instead.  If it was the Plaintiff’s own inability to adhere to the work program which it was required to comply with, it cannot seek to claim any costs incurred for procuring the Platform Equipment or the additional labour costs required to make up for the delay.

139.  The Plaintiff’s claims under Q 026, 036 and 049 are not allowed.  Further, on quantum, it is the evidence of the Expert that the Plaintiff did not provide any invoice to support its claim for the cherry picker in respect of the period from 4 September to 3 October 2017.

Q 039

140.  The Plaintiff claims the costs of dismantling and reinstalling the steel frame at the 1^st floor NE location for air duct installation.  The Defendant claims that the costs had been included in the Plaintiff’s claim Q 028.  The latter covers the costs of dismantling and reinstalling the “strip ceiling”, whereas Q 039 covers the dismantling and reinstalling of the steel frame, which is separate.

141.  I accept the Plaintiff’s claim, and the Expert’s assessment that the rate for metal workers for the work is reasonable at $1,300/manday, on the basis of the labour attendance records given in the Plaintiff’s letter of 25 November 2017.  The Expert allowed an additional 15% as overheads and profit.  However, since the Defendant’s case is that the only tools involved for the work are nuts and bolts, and there is no evidence to establish that other tools were employed, I disallow the add-on of 10%.  This gives an assessment of $15,697.50.

Q 040

142.  There is no dispute on liability.  According to the Expert, the Plaintiff provided the labour records for the period in question, concerning the Plaintiff’s works in dismantling and reinstalling the steel frame and panels at the 1^st floor SW location.  The Plaintiff did not provide supporting documents on the location or the work carried out, nor the tools employed.  Bearing in mind the description of the work of dismantling and reinstalling, I will allow the Expert’s assessment on the basis of metal workers being involved using nuts and bolts only, giving a valuation of $41,860.

Q 046

143.  The Plaintiff claims that it had provided additional workers to chip the existing concrete surface to install the balustrade steel brackets.  The Defendant denies that it had instructed the Plaintiff to carry out the work.  It also claims that the Plaintiff had never supplied any documents or photographs which can show the area where the concrete had been chipped off, and denies that the work had been carried out.

144.  According to the Expert, the Plaintiff provided the daily attendance records to show that 12 mandays had been spent in carrying out the work concerned, but there was no information or documents to show the exact location where the work was carried out.  From the daily attendance records, the workers had carried out work described as chipping concrete, welding of brackets and measurement.  Considering the information provided in the attendance records and in the quotation, I am prepared to accept that the work had been carried out as described at the location of the 1^st floor balustrade.  According to the Expert, the reasonable rate for a rock breaking driller is $1,800/manday, and his assessment for the work is $24,000, which I am prepared to allow.

Q 048

145.  The Plaintiff claims that there were omissions and additions to its work under the Contract as a result of the change of design of the lighting trough for the balustrade at the ground to 2^nd floors of the plaza, and that it is entitled to costs of $1,900,325 as a result of the changes.

146.  Although I accept the Defendant’s submissions, that the tender drawings only indicated the design intentions, and that the details of the works which were required to be constructed by the Plaintiff under the Contract were all to be subject to the approval of the Contract Administrator, Structural Engineer and Buildings Department, and in accordance with the final approved drawings and details, the Contract is on “as built” and remeasurement terms.  This necessarily means that the Plaintiff is entitled to be paid on the basis of the work actually built in accordance with the final and revised drawings, and being measured at the rates provided for the work under the Contract.

147.  My understanding of the Expert’s report (paragraphs 5.47.1 to 5.47.38) is that he had examined the original drawings and the revised drawings for the works in question, and had measured the work installed in accordance with the revised drawings and details, to the best of his abilities on the basis of the drawings and information provided by the parties in support of their respective assessment.  The Expert explained that in the absence of measurement details which justified the parties’ respective measurement of the length of the light trough, he employed the quantities used in SOR 3/8/24 and 3/825, but according to the Expert, more fixings were involved, and the girth of the cladding was increased, as a result of the revised design of the light trough.  The Expert’s opinion is that the revised design involved more steel angles and an additional light trough covered plate, and he assessed the total quantity of the steel members to be 29.80 kg/m.  The Expert then used the Contract unit rates for the aluminium light trough for his measurement of the girth, and valued the items covered by the additional and revised work at $1,900,325.35.  This I consider to be the Expert’s fair measurement of the as-built work involved, and allow this valuation.

Contra Charges CC 03, 05, 07, 09, 10, 21 and 24

148.  These and the following contra charges are sought to be imposed by the Defendant, representing charges incurred as a result of its need to engage third party contractors to carry out works which the Defendant claims were necessitated by the Plaintiff’s failure to carry out its work in accordance with the Contract.

149.  According to the Defendant’s evidence, for CC 03, 05, 07, 09, 10, 21 and 24, these charges had to be incurred because, firstly, the Plaintiff failed to provide adequate protection for the steel materials delivered to the site, with the result that the steel was tainted with stain and dirt, in breach of the conditions of the Contract.  Secondly, because of the Plaintiff’s failure to provide adequate protection for the steel materials when they were being loaded and unloaded, the materials were scratched.  Thirdly, some of the steel materials delivered by the Plaintiff were not painted as required under the Contract, or were not painted to the sufficient thickness in accordance with the Contract.  In particular, the Plaintiff did not carry out touch-up painting after “JAM” high friction bolts were installed.  As a result, a third party contractor had to be engaged to carry out the relevant work, at a cost of $831,750.

150.  The Plaintiff denies that it had any contractual duty to paint the relevant steel materials, and denies that it was in breach of the Contract in failing to carry out the works complained of by the Defendant.

151.  I have already found that the Special Conditions do not form part of the Contract, and accordingly, clauses 5.16 and 5.17 of the Special Conditions (imposing express obligations on the contractor to provide and maintain adequate protective and security measures for all delivered materials, and to replace all scratched or damaged works at its expense) do not apply.

152.  However, the Technical Specifications and the Particular Specifications do form part of the Contract documents, and the Defendant relies on clauses (4) and (8) of the Technical - General Trade Specification, and Table 15.7A of the Particular Specifications, which applies to specifications for “structural steel work” under the Contract.  PS.S15.1.61A relates to “preparation and painting of new surfaces”, and provides for the paint systems required for the various steelwork elements under the Contract.  Table 15.7A shows that painting is required for the corrosion protection system in respect of all internal steelwork, and for exposed as well as covered external steelwork.  The Table refers to the architectural specifications for finishes required for visually exposed structural steel work, and for the demarcation of the internal and external areas.  The Table further sets out matters such as the durability required for the painted system of internal and external steelwork, the need for galvanized elements, and the extent of the additional galvanizing.

153.  Clause (4) of the Technical - General Trade Specification (“Trade Specification”) specifies that whether or not “painting” is specified for steelwork, the subcontractor is responsible for the cost and labour required for the application of a primer to all galvanized material, and that all non-galvanized ferrous metal should include the application of a rust inhibitor and primer, in accordance with the Specifications and the drawings.  Clause (8) states that the subcontractor is responsible for providing the labour and materials to effect all protective measures for finished items of work, and that during the construction period, if “any steel work” should be scratched, damaged or dented, the subcontractor shall be responsible to rectify or replace the same to the satisfaction of the Architect, irrespective of the cause of such damage.

154.  In particular, clause (8) of the Trade Specification requires the subcontractor to clean each welded end, and to apply a rust inhibitor or primer.

155.  Mr Lam of the Plaintiff agreed in cross-examination that it was part of the Plaintiff’s contractual duties to secure protection of the steel work.  He only disputed that it was within the scope of the Plaintiff’s work under the Contract to carry out the touch-up painting instructed.  The Plaintiff highlighted the fact that cleats were not provided by the Plaintiff under the Contract (and clause 1 c of the Final Best Offer Form expressly provides that steel cleats were to be supplied and installed by the Defendant instead).  According to Mr Lam, the Plaintiff's scope of work under the Contract should not include touch-up painting for cleats which were not supplied or installed by the Plaintiff.

156.  The Defendant relies on the fact that it only seeks to impose contra charges on the Plaintiff in respect of those cleats which had been welded and installed by the Plaintiff.  According to the Expert’s report, the Defendant apportioned the contra charges amongst the different subcontractors which had welded or installed the metalwork, but as the Defendant had given no details of how the allocation of mandays and labour charges was made, the Expert was unable to assess the reasonableness of the apportionment, on the basis of the records provided.  According to paragraph 173 of the Amended Defence and Counterclaim, one-third of some of the charges is sought to be imposed on the Plaintiff, but again, with no particulars.

157.  In respect of the touch-up painting works required for the connection spot of the high friction bolts, Mr Lam of the Plaintiff accepted under cross-examination that the inherent nature of the bolts requires the connection spot to be left blank during fabrication at the factory, and for touchup painting to be carried out at the spot, after connection on site.  He also accepted that the screwing on or installation of the high friction bolts form part of the Plaintiff’s scope of work under the Contract.  His evidence is only that it was the Defendant which used the high friction bolts in its design, and that it was MC which required painting of the connection spot, and there was no requirement in the BD drawings for touch-up painting.  Mr Lam also disputed whether it was necessary to apply paint to the ends of the high friction bolt to prevent corrosion.  However, there is no evidence that the manufacturing catalogue for the high friction bolts dispenses with the need for protective painting, as Mr Lam suggested.

158.  Having considered the requirements of the Specifications for the steelwork, which include protective measures including painting being applied, and the requirement for welding ends to be cleaned and for anti-corrosive substance to be applied to the ends, I accept the submissions made on behalf of the Defendant, that the nature of the high friction bolts requires the ends to be painted in order to be protected against corrosion, and that all the metal surfaces have to be painted as part of the “corrosion protection system” specified in Table 15.7A, and as part of the Plaintiff’s responsibility under the Contract to install these bolts.

159.  The Plaintiff alleged in the correspondence that the steel members were dirty because they were placed in the external open storage area, due to the limitation of storage space.  It claims that the surface of the steel members was easily damaged or scratched in the course of the internal transportation from the temporary storage area to the site of the Centre.  It is inherently probable, as the Defendant alleges, that if adequate protective measures had been provided by the Plaintiff, the dirt, scratching or damage could have been avoided.  In any event, under clause (8) of the Trade Specifications, the Plaintiff has to bear the cost of repairing or replacing any damaged or dented steel supplied, irrespective of the cause of such damage.

160.  Although I find that the Plaintiff is liable for the cost of the painting work instructed by the Defendant to rectify the defective or uncompleted work of the Plaintiff, I accept the evidence of the Expert and of the Plaintiff, that the Defendant has not demonstrated the part of the painting costs actually attributable to those cleats which had been welded by the Plaintiff.  The burden is on the Defendant to establish that it is entitled to deduct the expenses claimed against the Contract sum payable to the Plaintiff. In the absence of satisfactory evidence to substantiate the reasonableness of its claim, I will only allow the portion of the expenses which the Plaintiff had been prepared initially to agree, namely, at $87,328.25.

CC 08, 11 and 20

161.  These contra charges represent the costs incurred by the Defendant in engaging a contractor to carry out work which the Plaintiff had allegedly failed to execute, or failed to execute properly, or had notified the Defendant that it was not in a position to execute.  The works concern defects in the steel frame, including loosely or inadequately torqued high-strength fiction grip bolts, deformed washers and brackets, installation of members of an incorrect size, incorrectly drilled steel brackets, etc.

162.  The Plaintiff denies that there were defective works and claims that the rectification works instructed by the Defendant were unnecessary.  It also claims that it had informed the Defendant that it would not be in a position to execute the works instructed, because they were outside the scope of their work under the Contract.

163.  The Expert in this case was only appointed for his opinion on quantum issues, to assess the value of the works at the appropriate or reasonable rates. The Expert is not in a position to opine on the quality of the works, and whether the works were defective.

164.  As it is the Defendant which claims that the Plaintiff is liable for the relevant costs of rectification, the burden is on the Defendant to establish its claim to the satisfaction of the Court, by independent evidence and not by bare assertions, made by the Defendant or by parties not called to give evidence and be cross-examined.

165.  In this respect, the only evidence produced by the Defendant and furnished to the Expert and to the Court relates to the rates of payments made to workers, and the mandays spent, to carry out various works such as the modification of the high friction bolts, the replacement of the washers, the installation of the steel frame, and “bracing”.  There is no evidence that these works were necessitated because of defects in the works, and no evidence as to how they were defective, and had to be replaced.  The Defendant claims that the defects had been found by its resident site staff, or the consultants of the Project.  There is no direct evidence on these defects from the members of staff or consultants, notwithstanding that liability is disputed, and had been disputed by the Plaintiff since the service of pleadings and witness statements. The Expert’s assessment is only on the assumption that the work was within the Plaintiff’s contractual duties, that the relevant and allegedly defective steel members had to be replaced, and that the allocation of the Plaintiff’s responsibilities in respect of the daywork records were all correct.  The Expert expressly pointed out that even for his assessment on quantum, he had not been provided with information on the extent of the steel members to be replaced, or the full extent of the works required.

166.  There is no basis for the Court to assume that all the defects reported by the site staff and consultants were properly attributable to the fault of the Plaintiff.  The Defendant claims that brackets of an incorrect size had been installed, that bolts had been loosely or inadequately torqued, that steel brackets had been incorrectly drilled, or insufficient distances from the panel edge had been provided, but there is no evidence of these apart from the claim made in paragraph 296 of the witness statement of Chris Cheng of the Defendant, by reference to instructions or notices of contra-charges issued.   Even though photographs were attached to the relevant site memos, the Court cannot assess from the photographs themselves whether all the complaints made by the Plaintiff were justified.  The fact that the Defendant had issued to the Plaintiff a notice to deduct charges for works, and the fact that another contractor had issued invoices for payment of work done, even work which would coincide with the type of work and/or or in the location of the Plaintiff’s work under the Contract, and time spent by the contractor on such work, is not sufficient evidence that the Plaintiff had failed to carry out its work. Nor is it evidence that the work was carried out by the other contractor because of defects in the Plaintiff’s work.  The Court is not in a position, by mere reference to the drawings, to decide whether or not the dimensions of the Plaintiff’s work installed were correct, or if the bolts had been loosely or inadequately torqued, or if the distance between the relevant works complied with the drawings and specifications, as alleged.  At most, the photographs show some of the more obvious defects, such as visible gaps in the ceiling panel, but not all the photographs show defects which are obvious to a layman. Even if liability can be established, the Expert pointed out that there was no information provided to him on the details of the work required to be carried out by the third party contractor, so he was not able to assess the reasonableness of the resources used and claimed.

167.  The only claim I am prepared to accept on the available evidence is that relating to the rectification works for the deformed washers, which is the subject of CC 08.  Mr Lam of the Plaintiff claims that the washers were deformed at the end of the tightening process, despite the fact that the workers had used a wrench which had been supplied by the manufacturer to tighten the washer.  Mr Lam suggested in his evidence that there might have been some inherent defect in the washer or the wrench supplied, and that the deformation could not have been avoided.

168.  Mr Lam’s evidence is not credible.  It appears from his testimony that the wrench was controlled by the force applied by the operator.  I agree with Counsel for the Defendant, that if the worker operating the wrench had applied the proper force and with care, the washer could not have immediately become deformed, as Mr Lam appeared to suggest.  According to the Defendant’s witness, the Plaintiff’s workers had also used a wrench or tightener other than the model supplied by the manufacturer of the washer.  In any event, I reject the evidence that the deformation of the washer in the process of the worker tightening same was unavoidable, and that it is more probable that the deformation of the washer was due to the ineffective operation of the wrench by the Plaintiff’s workers.

169.  The Expert’s report pointed out (at paragraph 8.3.31.3) that there were 84 sets of deformed washers.  I will only allow the contra charge for these washers, at the average daily wages of metal workers engaged in the public sector construction projects as published by the Census and Statistics Department.

170.  On the evidence, I also allow the Defendant’s claim, that steel members were cut for the Plaintiff at the site, when such fell within the Plaintiff’s scope of work under the Contract.  In cross-examination, Mr Lam did not dispute the records made at site (as evidenced by a cutting list) that various lengths of steel members had been cut and that these were within the scope of the Contract.  He only claimed that it was in order to speed up progress of the Plaintiff’s work that the Plaintiff and the Defendant had agreed that the steel members would be delivered to the site first, and be cut and painted there, instead of this being carried out at the plant.  The cost involved and assessed by the Expert is not clear from the Schedule.

CC 18, 19, 23

171.  The Defendant seeks payment for completion of works which were not duly completed by the Plaintiff in accordance with the Contract and the work program. The Defendant’s case is that during the course of the Contract, the Plaintiff suffered financial difficulties and was not able to provide adequate manpower to carry out the Contract works, and that there was substantial delay.  This is evidenced by the contemporaneous site records which recorded the lack of progress and of the Plaintiff falling behind the work program, with instructions and site memos issued to the Plaintiff to carry out the outstanding and delayed works.

172.  The Plaintiff did not dispute the contents of the above contemporaneous documents.  Nor did it dispute the fact that the Defendant had engaged a contractor (“Attiworks”) to carry out works which fell within the scope of the Contract.  From the correspondence and as maintained in the Plaintiff’s witness statements and the pleadings, the Plaintiff only claimed in its letter of 3 February 2018, and in the witness statement of Mr Lam Dik Shuen, that the work on the entrance ceiling was not within the Plaintiff’s scope of works under the Contract, such that it should not be responsible or the work carried out by Attiworks in that regard.

173.  The Plaintiff’s assertion that Attiworks’ workers were unskilled and had taken unnecessarily long time to carry out the works, and that the time spent was unreasonable, is not supported by any further evidence.  Whether the rates charged and time spent are reasonable can be assessed and valued by the Expert.

174.  There is no answer from the Defendant’s witnesses as to the claim, that the work on the entrance ceiling was outside the scope of the Contract.  Nor is there any reference in the Schedule to any evidence in that respect.  For lack of substantiating evidence, I disallow the costs relating to Attiworks’ charges to that extent.

175.  As for the Expert’s assessment of the costs of Attiworks’ works, his report referred to the records provided by the Defendant, including the Defendant’s letter of 28 December 2017 with highlighted plans showing the work allegedly outstanding and to be carried out by Attiworks, photographs and daywork records.  The Expert pointed out that the Defendant did not provide information on the details of the work required to complete the allegedly outstanding works, and that he was not able to assess the reasonableness of the resources used and claimed.

176.  In light of the dispute as to the reasonableness of the time spent by Attiworks, and in the absence of clear information and details of the work required to assist the Expert’s assessment of the reasonableness of the resources used, I will only allow the Expert’s valuation on the basis of the amount calculated from the highlighted drawings (his 2^nd alternative valuation in paragraph 8.4.22 of the report), at $837,534.89.  If this amount includes the work for the entrance ceiling which has not been established to the satisfaction of the Court, a further deduction of any amount included should be made.

CC 04

177.  There is no dispute that the Plaintiff had the duty under the Contract to supply PPG paint for steel frames.  The only dispute is on the amount to be reimbursed by the Plaintiff for the paint purchased by the Defendant.

178.  The Expert examined the documents provided by the Defendant and was satisfied that the documents showed the purchase of paint, for the total sum of $134,556.40.  I therefore allow this amount.

CC 12

179.  The Defendant claims a sum of $196,806.66, being the costs required to place a replacement order for 300×300 hollow sections for the hanger wall, because those sections which were supplied by the Plaintiff were said to be substandard, and did not comply with the Specifications of the Contract.  The Plaintiff denies that the materials it supplied were substandard, as alleged.

180.  There is no evidence at all that the material supplied by the Plaintiff were substandard, and did not comply with the relevant Specifications, apart from the Defendant’s bare and unsubstantiated assertions of non-compliance.  Nor is there any expert evidence on the quality of the goods supplied.  It has to be repeated that the Expert was only appointed to give evidence on his valuation of the quantum of the parties’ claims, and the Expert does not profess any expertise to opine on liability which is dependent on an assessment of the quality and nature of the materials supplied by the Plaintiff.

181.  In the absence of any substantiating evidence, the Defendant’s claim is not allowed.

C14

182.  The Defendant seeks to impose charges of $53,450 for the paint purchased for the baffle ceiling, hanger walls and entrance ceiling, which the Defendant had to paint and which falls within the scope of the Plaintiff’s work under the Contract.

183.  The Plaintiff claims that as the painting was not within its scope of work, it was entitled to refuse carrying out the additional work which was a variation, and that it should not be responsible for completing works or rectifying defects not caused by its breach or default.

184.  No detailed submissions were made in Closing by either party.

185.  As I have held, under the Contract, the design was stated to be not finalized, and to be further developed, and the Plaintiff was required to install the works in accordance with the final approved drawings and design.  It was hence the contractual obligation of the Plaintiff to install the works in accordance with such change of design as a result of the development of the theme indicated in the appended drawings.  If the work was sufficiently different in kind from the work specified in the Schedules, and cannot properly be regarded as necessary work ancillary to the described items, the Plaintiff may argue that some different rates or price may be applicable, and claim for variations.  On the Defendant’s case, the Contract and the price covered the Plaintiff’s supply and installation of the entire ceiling system, which included and required painting.  The Plaintiff has not shown how the installation of the baffle ceiling, hanger walls and entrance ceiling fell outside the scope of the Contract, such that it was entitled to refuse to carry out the works, as contended.  If the work had to be installed, then it was part of the Plaintiff’s obligations to paint the work in accordance with the Specifications.

186.  The contra charge is allowed on the evidence available.

CC 22

187.  According to the pleadings, the witness statement of Chris Cheng of the Defendant and the Schedule, the Plaintiff had the duty under the Contract to supply cement boards for the works, but had failed to supply sufficient cement boards, such that the Defendant had to incur $8,750 for the purchase of same. 

188.  The Defendant has not produced or referred to any evidence as to the quantities of cement board that were actually required under the Contract. There is only the allegation that the Plaintiff “did not supply enough” of the boards.  In the absence of any sufficient evidence to substantiate its claim, this contra charge is not allowed.

Additional works carried out by the Defendant on the Plaintiff’s behalf

189.  In paragraphs 227 to 230 of the Amended Defence and Counterclaim, the Defendant seeks contra charges of a total sum of $1,881,018, representing the costs of engaging third-party contractors to carry out works to rectify or complete substandard, defective and/or outstanding works of the Plaintiff (“Additional Defective/Outstanding Works”).

190.  In Counsel’s Closing Submissions, the Defendant relies on the Expert’s valuation of its claim, which is largely similar to the amount claimed in the Amended Defence and Counterclaim.  It was submitted on behalf of the Defendant that if its claim should not be allowed in full, the Court should “do justice to the best it can in light of the available evidence”.

191.  The breakdown of the sum of $1,881,018 and the particulars of the Additional Defective/Outstanding Works by reference to the notices (CC/P15009/25R1, CC/P1509/26 and CC/P15009/27R1) are for “provision of labour to rectify defects and carry out outstanding works”, and the “supply of stainless steel handrail and aluminum panels”.

192.  I have considered the Expert’s report on the Additional Defective/Outstanding Works, and I find the evidence on the alleged defects and the alleged outstanding works to be totally inadequate.  The observations made in paragraph 103 above of this Judgment are repeated as they are applicable to the Defendant’s claim for the alleged costs for the Additional Defective/Outstanding Works.  The Expert was not in a position to make a fair assessment of the Defendant’s claim, as his quantification was only on the basis that the Court should find in favour of the Defendant: that the relevant works had been carried out, that payment had in fact been made by the Defendant, and that the Plaintiff is responsible under the Contract in respect of the Additional Defective/Outstanding Works.  The Expert cannot opine on whether the works were indeed defective or outstanding and were required.  At paragraph 10.9, the Expert expressly stated:

“The liability of the Plaintiff, if any, for the Additional Defective/Outstanding Works is a matter for the Court. My valuations in this Section are all made on the assumption that the Plaintiff is found liable for such works as claimed unless otherwise stated.”

193.  To illustrate the shortcomings in the supporting evidence, and the qualifications made to the Expert’s assessment, the following matters are highlighted.  At paragraph 10.17 of the report, the Expert referred to the Defendant’s claim (item 1 (P)) and the site memo which simply asserted that the aluminium panels were “not compliant”, and that additional materials had to be purchased and rectification works carried out.  There is no evidence and no particulars provided by the Defendant, of how the panels failed to comply with the Contract requirements.  At paragraph 10.53, the Expert pointed out that there were no daywork records for the relevant works.  At paragraph 10.55, the Expert explained that although photographs and markup drawings were provided by the Defendant, the location of the relevant work, the area of quantities of the work, the area of each number of the panels allegedly rectified, the resources used in the time required for the alleged rectification works were all unclear, and the Expert could not assess whether the amount charged by the Defendant was reasonable.  At paragraph 10.57, the Expert observed that the assessment of $934,400 for the works in question was dependent on the Court finding that the Defendant had in fact paid for the works.  At paragraph 10.70, the Expert highlighted the fact that he was not able to count the number of panels relied upon by the contractor, and further, that there were no daywork records.  The location of the work, the area or quantities of the work, the area of each number of the panels allegedly rectified, the resources used in the time required for the work were likewise unknown.  In other parts of the report, the Expert repeated the fact that there were no payment records for the amount claimed by the Defendant.  At paragraph 10.89, the Expert pointed out that there were no details on the cladding panels allegedly supplied and installed by the third party contractor, and the Expert was uncertain as to which Contract items the work related.  At paragraphs 10.97 and 10.105, the Expert again highlighted that he was not provided with information which showed the size and dimensions of the alleged Additional Defective/Outstanding Works. These observations are repeated throughout section 10 of the Expert’s report. The Court has not been referred at trial to any additional evidence.

194.  In light of such inadequate evidence to substantiate the claims of the Plaintiff’s breach of contract and of the expenses incurred by the Defendant, I fail to see how the Court can fairly accept the Expert’s highly qualified assessment.  It is the Defendant’s burden to prove by clear and cogent evidence at trial its entitlement to claim for the costs allegedly incurred as a result of the Plaintiff’s breach of the Contract.  I regret that it has fallen short of such standard and the Court cannot, as suggested by Counsel, do justice if it has to speculate on and assume the correctness of the Defendant’s claims and assertions.  The contra charges under this head are disallowed.

Conclusion

195.  In this Judgment, the Court has allowed some of the claims made by the parties and disallowed others.  There have also been items which have been agreed by the time of closing submissions.  The parties should agree and submit, within 21 days of the handing down of this Judgment, for approval by the Court a draft judgment order which sets out the parties’ respective entitlement to the sums claimed in the original action and by counterclaim, with written submissions on costs.  These submissions on costs are confined to not more than 3 A4 pages for each party, of double spacing in clearly legible 14 point or larger typeface (font style: Times New Roman).