CHAN SHUN KEI t/a CHAN SHUN KEI CONSTRUCTION WORKS v. HONG KONG CONSTRUCTION (HONG KONG) LTD

HCCT 2/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 2 OF 2011

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1.  On 7 February 2014 this court handed down its judgment on all liability issues in this action. Contrary to original hopes and expectations the parties thereafter have been unable to agree many quantum issues. It has therefore been necessary to schedule and hear this quantum trial.

2.  A helpful Scott schedule has been prepared which lists 104 quantum issues, divided into seven categories.  79 have been agreed and 25 remain in dispute.  At the commencement of the trial on liability the plaintiff claimed $38 million and the defendant counterclaimed $3 million.  In other words there was $41 million between the parties.  At the commencement of the quantum trial the plaintiff is claiming $5,915,721 and the defendant counterclaims $2,428,757.  In other words there is $8,344,478 between the parties.

3.  All contra charges and previous payments are agreed.  The final analysis comes down to:

		Plaintiff	Defendant
A.	Sub-contract sum	$24,078,405	$15,733,927
B.	Value of disputed items to the plaintiff	$15,697,620 (approx.)	$7,474,150 (approx.)
C.	Contra charges	$11,012,000	$11,012,000
D.	Previous payments	$7,150,683	$7,150,683
E.	Amount due (A-(C+D))	$5,915,721	-$2,428,757

4.  At the quantum trial I have had the benefit of two expert witnesses’ testimonies.  Mr Cheung Tat Tong, a director of Asia & Associates, was called by the plaintiff and Mr Raymond Chu Wai Keung, a director of the Sweett Group, was called by the defendant.  Both experts had spent many, many hours on this case before the liability trial and since.  Their reports, including exhibits, ran to thousands of pages.  Every effort has been made to assist the court and both have approached their respective tasks with a high degree of professionalism and expertise.

5.  In a case such as this, where many of the outstanding issues cannot be resolved because of different approaches being taken by the two experts, for example, differences in methodology and principle, and where the two experts are equally impressive as witnesses, the court’s task becomes even more difficult than usual.

6.  There are some instances where, initially, both approaches seem reasonable and persuasive, and yet result in a significantly different final figure.  What should the court do?

7.  In every one of the disputed items Mr Cheung suggests one figure and Mr Chu (unsurprisingly) suggests a lesser one.  It seems to me that there are three possible outcomes.  Firstly, the court should endeavour to decide on one figure or the other, based on the evidence.  Secondly, if the evidence does not justify a simple choice of one or the other, then an interim figure may be selected, again, based on the evidence.  Thirdly, and as a last resort, where neither expert has persuaded the court of the merits of their approach to the exclusion of the other, split the difference.  Hopefully, this third option should only apply where the difference is relatively small.  The parties themselves have agreed to “split the difference” on a number of the items, presumably because they consider it to be a fair compromise.  If a fair decision cannot be reached on the evidence then a fair compromise is the only alternative.

8.  The main difference is the methodology for measuring the works.  A key issue in the liability trial was whether the plaintiff was entitled to rely on the “Blue & Yellow” drawings as the basis of their claim.  For the reasons given I decided that they were not. I determined that the plaintiff’s 2003 final account was a more reliable basis.  In their revised calculations the experts have again used different methods.  Mr Chu has, whenever possible, used the 2003 final account. Mr Cheung has not always done so.  Mr Cheung has increased the 2003 final figures to reflect work which the plaintiff is likely to have done but not claimed for in 2003.

9.  The reason advanced, on behalf of the plaintiff, for the probability that work was done but not claimed for is primarily the shortage of time and documents available to Mr Alan Law who prepared the final account for the plaintiff.

10.  My judgment in relation to this difference in methodology is as follows.  The liability judgment states that the 2003 final account is likely to be more reliable than the Blue & Yellow drawings.  It does not follow that it is the final arbiter of the plaintiff’s claim.  It is the best starting point for arriving at the plaintiff’s true claim but it may be deficient for the reasons advanced by Mr Yeung for the plaintiff.  In particular Mr Yeung submits that, in general, works done between 28 February 2002 and 13 June 2002 were not properly reflected in the final account.

11.  I shall now deal with each of the six categories of disputed items.  In each case the parties simply need to know how much the plaintiff should be paid.  I have had the advantage of the same counsel and solicitors for each party as in the liability trial.

VALUE OF SUB-CONTRACT WORKS 

12.  There are three items under this heading.  The first two are for works up to 28 February 2002, the third is for works after 1 March 2002.  The differences are as follows:

		Plaintiff	Defendant
(a)	Remaining earthworks	$2,620,694	$1,037,738
(b)	Remaining drainage	$4,228,875	$3,705,480
(c)	St Christopher’s Head	$1,081,305	$192,143

(a) Remaining earthworks

13.  The quantity of earthworks excavated by the plaintiff in this project was a matter of considerable debate.  There is no doubt that the records needed to produce a true and accurate figure are incomplete.  In the final account the plaintiff wrote the following:

“… for excavation and filling of earthworks the quantities were normally determined by the Contractor’s survey or agreed between the Contractor and sub‑contractor on site. Unfortunately our copies of the agreed record had been destroyed in a fire within the site boundary on 10.3.2002. In the assessment we have to base on the quantities determined by you in I.P. Certificate No. 7.”

14.  In his report Mr Cheung stated:

“… there was no initial nor final record survey drawings, the measurement on the quantities of the earthworks cannot be done.”

15.  IPC No 7 (referred to above) covered the work up to 29 January 2002.  The plaintiff’s excavation work did not stop there but there is a clear lack of survey information or truck load information to accurately assess the quantity.

16.  In the absence of adequate records Mr Cheung adopted a fresh approach.  From the engineer’s (Maunsells or ‘MCAL’) relevant IPC (No 35) he subtracted SCG’s final account (Shanghai Construction Group Ltd, the contractor who the plaintiff replaced in June 2001).  This produced a figure of $2,620,694.  The amount that the plaintiff had claimed in its final account was $1.18 million.

17.  Mr Chu observed that even if this method is appropriate one should not subtract SCG’s claim from the engineer’s IPC, rather one should subtract the engineer’s own IPC at the material time.  Thus if IPC No 27 is subtracted from IPC No 35 a figure of $1,596,007 results.

18.  Mr Chu further criticizes the use of IPC No 35 as a starting point in any event.  Being the project engineer’s certificate it was not confined to the R&D works undertaken by the plaintiff.  Mr Chu had used IPA’s 1 and 2 as the basis of his calculations, which he regarded as sufficient.

19.  As a starting point for the resolution of this particular dispute I am satisfied that the plaintiff’s claim in its final account was probably deficient.  The question is, by how much?

20.  In my judgment Mr Cheung’s method produces a figure which is unrealistically high.  It suggests that after January 2002 a further $1.4 million worth of excavation was completed by the plaintiff (at a time when more sub‑contractors were being engaged) over and above the $1.18 million worth which had been done beforehand.

21.  In an attempt to decide on a figure based on recognized methodology rather than an arbitrary compromise I accept Mr Cheung’s method but reject his use of the SGA final account figure. I accept that IPC No 27 is a fairer figure to subtract.  This produces a figure of $1,596,007 which, I accept, may still be flawed but nonetheless, in my judgment, represents a fair and reasonable amount.  It is also close to the median figure between Mr Chu’s $1.037 million and Mr Cheung’s original figure in his first report of $2.131 million.

(b) Remaining drainage works

22.  After deductions for two variation orders, about which there is no dispute, the difference between the experts on this item (by far the largest in dispute) is $523,395.  The only explanation for the difference lies in the accuracy of the measurements done by each expert. Unsurprisingly, each expert claims their figures to be the more reliable.  If there has been human error, it has either been in the use of a scaled ruler (Mr Cheung) or in the input of data into an electronic device (Mr Chu).  It is not a dispute in which the court can become usefully embroiled.  Mr Cheung made the helpful and sensible suggestion to “split the difference”.  It is precisely the sort of item which merits such an approach so as to reach a fair compromise.  Accordingly, the figure for this item will be $3,967,178.

(c) St Christopher’s Head

23.  “St Christopher’s Head” describes a particular length of the project, between two chainage points numbered 2670 and 2940.  The issue is simply how much R&D works did the plaintiff complete within this stretch.  Mr Cheung opines it should be paid $1,081,305 whereas Mr Chu’s figure is $192,143.  There are two sub‑issues:

(i) Did the plaintiff complete all the works along that stretch (Mr Cheung says it did) or only at three selected areas?

(ii) Did the plaintiff install the pre‑cast profile barriers or not?

24.  (i)  Mr Chu’s assessment is based on his evidence that the plaintiff only submitted records for works at three manhole locations.  In the absence of further records the plaintiff cannot be paid any more.  Mr Yeung on behalf of the plaintiff, however, points to other evidence indicating that it would be wrong to limit the payment to only those three manholes.  The first claim was by letter dated 6 June 2002 stating “we submit details of the above works for your settlement” which on a daywork basis came to $395,549.  He also referred to daywork records of work done at sites other than the three manholes relied on by Mr Chu.  The work for which $395,549 was claimed was done between 4 and 22 April 2002. However daywork records also show work done after that period.

25.  In my judgment it would be wrong to confine the plaintiff’s payment merely to the three manholes identified by Mr Chu.

26.  Neither can I agree that there is sufficient evidence to support the claim that they completed all of the works.  Other sub‑contractors were on site at this time.  The plaintiff’s request for payment in June 2002 was for labour only on a daywork basis.  No claim for plant or materials is included.  I consider that a reasonable minimum amount is the amount claimed, $395,549.

27.  (ii)  Pre‑cast concrete profile barriers.  There are daywork records proving that the plaintiff did work in May 2002 (after the preliminary R&D work claimed for above) described, in Chinese, as “lifting profile barrier”.  Mr Cheung is satisfied that this means the plaintiff completed the installation.  Mr Chu disagrees and has allowed nothing.  In support he further points to the fact that no procurement records could be found to show that any barriers had been delivered to the plaintiff for them to install.  Mr Cheung counters by saying that the procurement records are far from complete.

28.  A decision has to be made.  In my judgment there is sufficient evidence that the plaintiff completed some of the installations.  The description in Chinese very likely refers to more than mere “lifting”.  A single contractor is likely to have performed each individual task from beginning to end.  However, in the time period supported by the daywork records (up to early May 2002) the volume of work completed could not have been particularly great.

29.  It is noted that in his first report Mr Chu allowed a sum of $109,136 for construction of profile barriers at this site, which he withdrew in his supplemental report.  I consider it fair to add this figure to the $395,549 in (a) above.  The total for St Christopher’s Head is therefore $504,685.

VARIATIONS

30.  The valuation of variation falls into two sub‑categories, those ordered by the project engineer, MCAL and those ordered by the defendant.

(a) MCAL variations

31.  The experts disagree on 12 variations. Each has been the subject of examination and cross‑examination.  I agree with the preliminary criticism made of Mr Cheung’s approach to this issue.

32.  Generally speaking Mr Cheung has valued the plaintiff’s claim on what the plaintiff had been instructed to do.  For example, if the engineer instructed a certain quantity of work Mr Cheung valued it and awarded it.  This was consistently done even though the plaintiff’s claim in the final account was consistently less, even though there were other sub‑contractors on site and even though documentary evidence in support was lacking.

33.  I now briefly comment on each valuation.

(i) SC/63/010

34.  The question here is how many “mountings” for the road light columns had been built.  The engineer instructed nine, the plaintiff claimed nine, MCAL certified six, the defendant certified four. Mr Cheung valued nine, Mr Chu valued four.  Mr Chu gave the plaintiff the benefit of the doubt and added one to the defendant’s figure.  By a similar token I shall add one to MCAL’s figure and allow seven.  This produces a figure of $82,728.

(ii) SC/63/036

35.  This is a VO in relation to the profile barriers.  The question is how many metres?

36.  Mr Cheung conceded that his original valuation, based solely on the engineer’s instructions, is unsustainable.  He reduced his measurement from 820m to 750m.  However the defendant’s IPC (up to February 2002) was only 344m and the plaintiff’s final account figure was also 344m.  Did the plaintiff omit any?  Did it fail to claim for work done after February 2002?  It is unlikely because the plaintiff’s own figure in its IPA was 250m and this increased to 344m in its final account.  On the other hand 344m is the figure already relied on by the defendant in its IPC up to February 2002.  Out of an excess of caution I will make a token increase to the plaintiff’s final account figure to recognize the probability of work being done after 1 March 2002 and the likelihood that it was not all documented.  I allow 413m which represents an increase of 20% and a final figure of $470,291.

(iii) SC/68/059

37.  This again is a question of measurement of profile barriers.  Mr Cheung again does not look beyond the engineer’s instructions in support of his figures of 196m.  The plaintiff claimed 80m up to February 2002 but reduced that claim to 40m in its final account.  It is not clear why.  In my judgment the high water mark for this item is the 80m certified by the engineer up to February 2002.  I consider it reasonable and accept this figure which produces a sum of $97,600.

(iv) SC/68/061

38.  This variation relates to more “mountings” as in (i) above.  The engineer instructed five, Mr Cheung submits that five is the appropriate number.  The best evidence is that two were completed being the number appearing in the defendant’s IPC and final account and the engineer’s IPC.  $23,637 is allowed.

(v) SC/63/008

39.  This concerns the value of certain abortive works, if any.

40.  Mr Chu in his first report allowed $53,309 under this heading and yet reduced it to zero in his supplemental report on the basis that he could not find any contemporaneous records and the fact that the plaintiff made no claim in its July 2001 IPC.

41.  I consider it safe to rely on a plan, relied on by the plaintiff, confirming that various pipework was indeed removed from this area.  Moreover, Mr Chu’s decision to revalue the claim from $53,309 to zero is unlikely to reflect the situation accurately.  The plaintiff’s final account was for $100,795.  That is the figure I allow.

(vi) SC/68/049

42.  The issue here is whether the plaintiff carried out the work at all (sign gantry footings).  Mr Cheung has again valued the engineer’s instructions.  However, the engineer did not certify any payment to the plaintiff and neither did the defendant in either its interim or final certificates.  The evidence that the plaintiff did this work is inadequate.

(vii) SC/68/052

43.  The plaintiff has proposed to split the difference on this item, I agree, $23,868.

(viii) SC/68/071

44.  The issue is, again, whether or not the plaintiff did this work (sign gantry footings).  Mr Cheung has valued the engineer’s instructions.  However, it is not in the plaintiff’s interim or final account.  It is not in the defendant’s interim or final certificate and it is not in the engineer’s certificate at the material time.  Mr Yeung invites the court on this (and other) items to place reliance on Mr Alan Law’s evidence in the liability trial in which he said that all works instructed by the defendant had been substantially completed. Mr Law’s statement was non‑specific and carries little weight in the quantum trial where specific items are being strongly challenged by the defendant.  The evidence in support of this variation having been done by the plaintiff is insufficient.

(ix) SC/68/091

45.  Again, the issue is what work the plaintiff did (abortive drainage work), if any.  The plaintiff claims $144,099. Mr Chu acknowledges the probability that some work was done and values it at $35,000 in line with the plaintiff’s final account.  In my judgment this is a variation in which it is safe to find that work was done and it is likely that the defence assessment is a bare minimum.  I consider a figure for pipework may be safely added to the $35,000 for earthwork.  I award $70,000 less 3.95%, $67,235.

(x) SC/68/096

46.  This is another claim for abortive drainage work.  The high water mark of the plaintiff’s claim is the item in IPA 8 (February 2002) which sets out the work to be done.  I consider it unlikely that the plaintiff would have in fact carried out the work given that there is no corresponding item in either the defendant’s interim or final account, neither was it certified by the engineer.  The most that can safely be awarded is the figure claimed for earthwork in the plaintiff’s final account, $28,000 ($26,894) plus an agreed figure of $14,144 for “other works”.  The combined figure under this variation is $41,038.

(xi) SI-97i

47.  This work is for “the removal and disposal of existing flat channel at THB inland and NAB inland”.  The dispute is over the appropriate rate to be applied.  The difference is substantial.  If Bill No 9 is used the rate is $572m³.  If the correct rate is that of Bill No 3, $218m³ is the appropriate figure.

48.  Mr Cheung’s argument is that Bill No 9 was the correct bill for the NAB works (North Access Bridge).  Indeed it is, however Mr Chu states that this work was not connected to the “bridge” works and that “NAB” merely identified the location.  The works in question were valued under Bill No 3 in all other payment applications and certificates.  I am persuaded that this was not “bridge” work but work done in the vicinity of the bridge.  Applying $218 m³ the correct figure is $51,666.

(xii) SC/63/032

49.  This concerns the construction of concrete drawpits.  The work was done, the dispute concerns the appropriate rate.  The experts agree on a remeasurement figure of $140,548.  However by adopting Mr Cheung’s rate a further $188,937 is payable under the engineer’s variation instructions.  Mr Cheung, in his supplemental report, explains why the construction works in this particular variation are more complicated and more expensive and why standard rates should not apply.  I accept that these drawpits were of a different design involving extra work and additional materials.  I consider the extra claim, in the sum of $188,937 to be made out.

(xiii) SC/68/075

50.  This is a variation order for revised drainage layout.  Mr Chu assessed it at $257,048 for both the remeasurement works and the MCAL variations.  Mr Cheung’s assessment was $305,246.

51.  The plaintiff proposes splitting the difference between Mr Cheung’s figure and Mr Chu’s overall figure (of which the MCAL variation is $58,971).

52.  Where such a proposal results in what I consider to be a fair compromise I am prepared to adopt it.  The resulting figure is $281,147.

53.  The sums allowed under the above MCAL variations are:

(i)	$82,728
(ii)	$470,291
(iii)	$97,600
(iv)	$23,637
(v)	$100,795
(vi)	$0
(vii)	$23,868
(viii)	$0
(ix)	$67,235
(x)	$41,038
(xi)	$51,666
(xii)	$188,937
(xiii)	281,147	Total:	$1,428,942

54.  The final issue under the heading of MCAL variations is the item called the Geotextile and Armour Rock claim.  This merits separate consideration to which I turn later.  I shall now deal with the defendant’s variation orders.

(b) The defendant’s variations

55.  There are five in dispute.

(i) SC/63/021

56.  There are three sub‑items in this variation. The total difference is between $155,593 (Mr Cheung) and $23,597 (Mr Chu).  For the first sub‑item the plaintiff proposes to split the difference.  I agree.  Moreover, the issue in the second sub‑item is the same.  I therefore split the difference for that item as well.  The third sub‑item is more problematic.  It is for $98,982.  Mr Chu says it is a duplicated item and allows nothing.  Mr Cheung disagrees.

57.  It is worthy of note that in two later instances, 3(b) and 6(b), the plaintiff concedes there has been a duplication for significantly large amounts.  Here, in (i)(c) I accept Mr Cheung’s explanation and allow $98,982.  The sums in this variation are therefore $18,209 + $21,894 + $98,982 = $139,085.

(ii) SI-97(b)

58.  There are two sub‑items in this variation for temporary drainage works.  The dispute concerns quantities only.  In both instances Mr Cheung adopts a much higher figure of 716 whereas Mr Chu adopts the figures in the defendant’s final account, 223 and 264 respectively. Mr Cheung’s figures coincide with the original claim based on the Blue & Yellow drawings and are unacceptably high.  Mr Yeung submits that even the plaintiff’s final account figures of 318 and 359 could be on the low side because they represent measurements only up to the end of February 2002.  It does not explain however why any post February 2002 work was not included in the 2003 final account.  I am prepared to accept that some post February work was probably unclaimed, but not very much.  I will add 10% to the plaintiff’s final account.  The quantities are therefore 350 and 395 respectively.

59.  A further re‑calculation on a pro‑rata basis results in slightly different figures (for example $109,943 or $118,940 for item 2(a)). Splitting the difference in each case the final amounts are $114,441 + $527,282 = $641,723.

(iii) SC/63/007

60.  It is now agreed that item (iii)(b) is zero.  It is further proposed that the disputed sums under (iii)(a) should be split as the difference is relatively small and is a dispute based on quantities only.  I agree with the proposal and allow $219,160.

(iv) SC/68 090

61.  The parties have agreed to split the difference for this variation.  $27,820 is allowed.

(v) SC/68/098

62.  The only item in dispute in this variation is the claim by the plaintiff for $21,262 for overtime.  The balance of the claim for $112,532 is agreed (by splitting the difference).  Mr Yeung, in his final submission, points to sufficient evidence to support the overtime claim. The final figure is therefore $133,794.

(vi) MWO/033

63.  $108,341 is now agreed.

(vii) S1-97a

64.  This is a measurement dispute concerning longitudinal joints.  The plaintiff claimed 1040m in its final account.  Mr Cheung’s supplemental report suggests that 1160m is the correct figure.  The plaintiff again proposes a split.  Again, I regard this as a sensible compromise. The figure is $172,845.

65.  The defendant’s variations will therefore be allowed in the following sums:

(i)	$139,085
(ii)	$641,723
(iii)	$219,160
(iv)	$27,820
(v)	$133,794
(vi)	$108,341
(vii)	$172,845	Total:	$1,442,768

                    

(c) Geotextile and armour rock claim

66.  This is an MCAL variation but is treated as a separate item. 

67.  Paragraph 89 of the judgment on liability reads as follows:

“…In my judgment Mr Law has given a credible account of why extra cash was necessitated and I am satisfied the plaintiff has discharged its burden of proof for this item. The balance of 40% is due plus any further sums deemed reasonable by the quantum experts.”

68.  Mr Yeung’s analysis of the present situation as stated in his final submission is correct:

“In other words, the 60% certified in the interim payment for geotextile laying and removal of armour rock has been reflected in the previous payments of $7,150,683.80 received from the Defendant. In the final account exercise, the total sum (i.e. 100% of the value of work then agreed between the Plaintiff and the Defendant) shall be included in the valuation of MCAL’s Variation SC/68/087 (plus any further sums deemed reasonable).

The Plaintiff’s claim was set out in his letter dated 23 November 2001 which covers the additional cost for laying geotextile and removing amour rock.”

69.  The issue to be decided is whether or not any sum can be reasonably added to the claim of $1,436,175 arising out of the costs of the work and the valuation of other works done within MCAL’s variation SC/68/087 (the variation which includes the geotextile and amour rock claim).  I am not persuaded by the plaintiff’s submissions that the sum can be reasonably increased.

70.  Mr Cheung’s claim for a much higher rate is difficult to accept.  Also, his claim for overlapping of the geotextile sheets is excessive and unnecessary according to my understanding of the manufacturer’s recommendations.  Whilst I accept that some extra working space needed to be created for the execution of this variation I prefer Mr Chu’s evidence that the costs thereof had already been included.

71.  This issue, at trial, resulted in detailed analysis of substantial facts, figures and argument.  In my judgment it can safely be disposed of by concluding that Mr Cheung’s original figure, $1,436,175, should stand but not be increased.

(d) Works at WA1

72.  This also is treated as a separate item but is a defendant’s variation (SC/068/100).  In item (b) above (at page 7) the starting point for splitting the difference was Mr Chu’s calculation less SC/68/100WA1.  That amount, according to the Scott schedule, is $311,094. I therefore add it to this item.

73.  The issue concerns the interpretation of the “March agreement” upon which I found in the plaintiff’s favour in the liability trial.  Both experts now acknowledge the existence of the “March agreement” but apply it differently to the data which results in a dispute over the correct payment figure.

74.  The key sentence in the plaintiff’s letter of 29 March 2002 states “These daywork would be paid as extra items over the original BQ items which would also be measured and paid for”.  What Mr Chu did was to re-measure all the works completed under “WA1” with normal BQ rates and allowed for an additional daywork for the overtime works.  I regard this as the correct and logical approach, also consistent with industry practice. It avoids the criticism of “double recovery” which is the result of Mr Cheung’s approach.

75.  Including the drainage item the appropriate figure here is $844,261.

MISSING ITEMS

76.  The parties have agreed to split the difference on this issue, $910,220 is agreed.

AUDIT AND ADJUSTMENTS

77.  This is a novel item.  Mr Chu has conducted a final exercise.  He has counter checked all the figures claimed by the plaintiff in its final 2003 account to see whether there are contemporaneous documents, particularly material procurement records to support whether the plaintiff actually completed those works or not. 

78.  Where documents are missing neither side can explain why.  Mr Chu has proceeded on the basis that they did not exist. In any event Mr Chu’s calculation results in a submission by the defendant that a further $696,502 should b deducted from the plaintiff’s entitlement.

79.  Whilst no challenge is made to Mr Chu’s calculations based on the figures, or rather the absence of figures, the question to be addressed is, should this item be allowed at all.

80.  I have decided that it should not, for two reasons.  Firstly, the defendant has always said that the 2003 final account should form the basis of the plaintiff’s entitlement.  In the liability trial I accepted that basis.  I consider that it should indeed be the basis, for better or worse.  Secondly, I described this item at the outset as a “novel” item.  That description is based on Mr Cheung’s evidence that he has never seen an ‘Audit and Adjustment’ item in a final account assessment in his 30 years experience as a quantity surveyor.  Even though this may be a particularly unusual case, I attach weight to his evidence.

FINAL SUMMARY OF CLAIM AND COUNTERCLAIM

81.  Following the numbering in the final revised Scott Schedule the adjusted figures due to the plaintiff, having deducted those sums by which, in each of the disputed items, the plaintiff has failed to prove its full claim, are as follows:

		Claim		Judgment
A1.	Sub‑Contract Works up to 28 February 2002 (items 1‑5)	$9,024,164		$7,737,778
A2.	Sub‑Contract Works after 1 March 2002 (items 6‑8)	$1,891,272		$1,314,650
B.	MCAL Variations (items 9‑50)Geotextile (item 51)	$5,474,332 $1,763,910		$4,003,504 $1,436,175
C.	HKC Variations (items 52‑94) “WA1” (item 95)	$3,818,772 $1,195,732		$3,099,028 $844,261
D.	Missing Items (items 96‑100a)	$910,220 $2,4078405		$910,220 $19,345,616
	Plaintiff’s entitlement Less agreed Contra charges Less agreed previous payments			$19,346,470 $11,012,000 $7,150,683
				$1,182,933

82.  The counterclaim is dismissed and there will be a judgment for the plaintiff in the sum of $1,182,933 plus interest (to be agreed) at prime rate plus 1% from the date of the writ, namely, 28 June 2004.

COSTS

83.  Due to time constraints the parties were invited to make final written submissions on costs so that this judgment’s decision on costs would not be on a nisi basis.

84.  The reason the trial was split into liability and quantum trials was also, partially, due to time issues.  It was agreed by all, at the commencement of the trial in January 2014, that the 10 days reserved (with two extra days for opening and closing submissions) was plainly insufficient to deal with both liability and quantum.

85.  Contrary to hopes and expectations the parties were unable to agree quantum after the liability judgment was handed down on 7 February 2014.  It was then necessary to fix a four day quantum trial.

86.  The proper costs order is not a straightforward matter to resolve.  The general principles to be applied, from Re Elgindata Ltd (No 2) (1993) 1 AER 232, are these:

“The principles are these. (1) Costs are in the discretion of the court. (2) They should follow the event, except when it appears to the court that in the circumstances of the case some other order should be made. (3) The general rule does not cease to apply simply because the successful party raises issues or make allegations in which he fails, but where that has caused a significant increase in the length or cost of the proceedings he may be deprived of the whole or part of his costs. (4) Where the successful party raises issues and makes allegations improperly or unreasonably, the court may not only deprive him of his costs but may order him to pay the whole or part of the unsuccessful party’s costs.”

87.  As the litigation has unfolded the liability and quantum issues have become both separate and separable.  I propose to make an order in relation to the liability trial and a separate order in relation to the quantum trial.  There was virtually no overlap between them on matters of evidence, witnesses or issues.

(a) Liability trial

88.  It must be recognized that the defendant was successful on the ‘Yellow & Blue drawings’ issue which had a huge impact on the value of the plaintiff’s claim (in round terms, from $30 million down to $10 million).  On the other hand the plaintiff succeeded on some smaller, but nonetheless important issues.

89.  I disregard the plaintiff’s refusal to ‘Admit Facts’ at the pre-trial review stage in November 2013 as a relevant factor.

90.  My costs order on the liability trial should reflect the fact that the defendant was the more successful party but I disagree with Mr Lam’s submission of a pro‑rata percentage approach to costs.  He submits that, in general, if a party wins 80% of the case it should get 80% of its costs.  I do not agree.  In some cases it should get 100% of its costs, in others less.  The broader picture should be considered when exercising the court’s discretion.

91.  My order is that the defendant is entitled to 50% of its costs from the plaintiff, to be taxed if not agreed, and that the plaintiff’s own costs be taxed in accordance with Legal Aid Regulations.  There will be a certificate for two counsel.

(b) Quantum trial

92.  The issues, of which there were many, went both ways.  In monetary terms the plaintiff’s claim was further eroded but, on the other hand, the defendant’s counterclaim resulted in nothing at the end of the day.  Of the two parties the plaintiff was the more ready to split the difference on quantum issues, so as to save time.

93.  Moreover, although the plaintiff has only been awarded a fraction of its original claim, it still had to come to court to get it.  I have not been informed of any sanctioned offers from the defendant.

94.  The order on the quantum trial and preparation is that the plaintiff is entitled to 50% of its costs, to be taxed if not agreed, and the plaintiff’s own costs be taxed in accordance with Legal Aid Regulations.  There will be a certificate for two counsel.

(c) Outstanding costs orders

95.  The outstanding costs orders are as follows.  In (i) and (ii) the original order was “costs reserved”.  In (iii) and (iv) the original order was “costs in the cause”:

(i) 2 November 2011 (a directions hearing):

     No order as to costs.

(ii) 14 March 2014 (a pre‑trial review):

     No order as to costs.

(iii) 29 June 2012 (application for split trial):

     Costs to be included in my order on the liability trial.

(iv) 12 September 2012 (application for further and better particulars):

     Cost to be included in my order on the liability trial.

96.  Finally, I have been greatly assisted in this trial by the high level of professionalism from all concerned, counsel, solicitors and expert witnesses, on both sides.