OPTIMUM ENGINEERING LTD v. SO CHI SHING AND ANOTHER

HCA 1717/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1717 OF 2002

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ASSESSMENT OF DAMAGES

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1. This is an assessment of damages consequent to an interlocutory judgment granted in default of a notice of intention to defend from the defendants. The plaintiff is claiming against the 1st and 2nd defendant for damage for breach of a sub-contract for wet trade and a supplemental contract made between the plaintiff and the 1st defendant, on the premise that the 1st defendant was a party to the sub-contract and supplemental contract while the 2nd defendant was a transferee of the business of the 1st defendant.

2. The plaintiff has called one witness Mr. Leung Yiu Keung who was the technical manager in the employ of the plaintiff and in charge of the project that involved the defendants. He gave evidence that he already dealt with the 2nd defendant on the works under the sub-contract when he first joined the plaintiff in January 2001. The sub-contract with the 1st defendant was terminated on the 21st July 2001, with the agreement of the 2nd defendant, who was then behind in his work and payment of wages to his workers. The damage claimed consists of the price paid for the works under the sub-contract that were outstanding at the time of the termination, the wages paid to the workers of the 2nd defendant on the 2nd defendant's behalf, the claim handling charges consequent upon injuries to the 2nd defendant, liquidated damage for the delay and price for urgent remedial works caused by the negligence of the 2nd defendant. Since the defendants were absent at the hearing, the evidence of the plaintiff was uncontested.

3. The plaintiff produced photographs to show the works that were outstanding at the time of termination and invoices for the price that the plaintiff has paid therefor other than for works carried out by the plaintiff's own workers for which the plaintiff claimed compensation at the rate of $800.00 per man day. The claim for the uncompleted work amounted to $1,125,498.20.

4. The plaintiff produced awards from the Labour Tribunal for outstanding wages of 12 workers of the 2nd defendant with the plaintiff and the main contractor named as defendants. The plaintiff had to pay the amount awarded as the plaintiff was bound under the Employment Ordinance to satisfy the same. These payments amounted to $84,620.00.

5. The plaintiff produced 6 debit notes for handling charges for lodging claims to its insurer at the rate of $5,000.00 each pursuant to the term thereon set out in the sub-contract, amounting to $30,000.00. However two of these were for injuries occurring subsequent to the termination of the sub-contract, namely on the 25th August 2001 and 15th September 2001 respectively.

6. The plaintiff claimed for liquidated damage at the rate of $3,000.00 per day for 15 days although the delay, according to the plaintiff's evidence was longer. This was despite the evidence of the plaintiff that the plaintiff did not have to pay any liquidated damage for delay under its own contract although it did some extra work for the owners.

7. The plaintiff produced invoices which were said to have been settled for remedial works to damage to properties caused by the 2nd defendant's negligence which the 2nd defendant would have been liable under the sub-contract. These payments amounted to $214,700.00.

8. It is settled law that notwithstanding its claim for liquidated damage the plaintiff can also pursue at the same time its claim for unliquidated damage for breaches outside the ambit covered by the liquidated damage. Since the liquidated damage only covered delay in completion of the work but does not cover the additional costs for uncompleted works, I therefore allow the claim of $1,125,498.20 for uncompleted works. Similarly, the claim for the costs of remedial works in the sum of $214,700.00 is allowed.

9. It is also trite law that courts would implement the intention of the parties in the case of liquidated damage by holding a claimant to be entitled to recover the stipulated sum on breach, without requiring proof of actual damage and irrespective of the amount, if provable of the actual damage. I also allow the claim for liquidated damage in the sum of $45,000.00.

10. Two of the injuries for which handling charges are claimed only occurred after the termination of the sub-contract with the 2nd defendant. Despite the persuasive argument advanced by Mr. Wong, counsel for the plaintiff, that injuries were inevitable in a construction site and such injuries occurred only as a result of the breach of the defendants in completing the works in time, I am not convinced that such damage flows directly from the breach of the defendants as accidents resulting in injuries could be caused by the neglect of the precautionary measures by workers or the failure by the employer to enforce precautionary measures or provide a safe working place. To agree with the argument that the injuries were foreseeable at the time of the breach of sub-contract or flowed directly therefrom would tantamount to condoning the neglect of employers to provide a safe working place for workers in a construction site or workers to follow the precautionary measures. The defendants cannot be held liable for these two handling charges. The other handling charges are allowed and these amounted to $20,000.00 instead of $30,000.00 as claimed.

11. The contract sum for the works under the sub-contract and supplemental contract amounted $3,420,700.00 of which $3,167,751.00 has been paid to the defendants, leaving a sum of $252,949.00 unpaid which the plaintiff has to give credit to the defendants.

12. In view of the evidence from the plaintiff that the 2nd defendant was already involved in the works as early as January 2001 and the 1st defendant has entered into the contract, I find that both defendants are jointly liable to the plaintiff to the same extent.

13. I therefore award to the plaintiff damages in the sum of $1,236,869.00 with costs and certificate for counsel.