UNISON PROJECTS CO LTD v. AHL DESIGN WORKSHOP LTD

HCCT 37/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 37 OF 2010

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BETWEEN

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J U D G M E N T

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THIS DISPUTE

1.  This is an acrimonious dispute between a subcontractor and a main contractor.  It involves construction work at the secondary school campus of the French International School ( "FIS ") at Blue Pool Road, Happy Valley—in fact an extension to comprise a new 7^th floor of the school.

2.  This was not a new relationship: the plaintiff previously had been engaged by the defendant to do a separate job at the FIS primary school campus in Jardine’s Lookout.

3.  The plaintiff, Unison Projects Company Limited ( "Unison "), is a Hong Kong building contractor specializing in structural steel works.

4.  The defendant, AHL Design Workshop Limited ( "AHL "), incorporated in Hong Kong, is an architectural design and project management company.

5.  In or about May 2008 the defendant was engaged by FIS as its design and build contractor to carry out certain extension works to the FIS secondary school premises, this contract ( "the Main Contract ") being contained in a written agreement dated 23 May 2008 between the defendant and FIS, as subsequently varied by a written agreement dated 12 January 2010, a variation necessitated in light of a revised design as approved by the Buildings Department ( "BD ").

6.  In November 2009 AHL subcontracted part of the Main Contract works to Unison : the scope of these works was to include the supply and installation of structural steelworks to frame a new one-storey structure, together with the installation of an aluminium  "Kalzip " roof—this being the proprietary name of a patented technique for the installing and securing of such roof. 

7.  In gist, what thus was happening was the building of an additional floor, the 7^th floor, upon the existing 6^th floor roof—hence erection of a new one‑storey structure.

8.  It is a matter for debate as to what was, or what was not, included in that subcontract.  Nor did the course of the subcontractual relationship run smooth, in particular over late payment by AHL to Unison for the work done as the works progressed.

9.  In the event, matters came to a head on the evening of 26 April 2010, when Unison withdrew its labour from site and suspended the subcontract works, leaving part of these works outstanding.

10.  This payment impasse was not resolved, and on the evening of 28 May 2010 Unison says that it attempted to return to site to re‑commence the works—an assertion the probity of which AHL disputes.

11.  As matters transpired, Unison never returned to site to complete the works—AHL having employed other contractors to finish what had been left undone—and the issue of Unison’s involvement was placed beyond doubt when, on 18 June 2010 Unison visited the site to remove its plant and equipment, subsequently also collecting its remaining plant on 30 July 2010.

12.  This set the stage for the present litigation, the broad shape of which is that the subcontractor /plaintiff claims for unpaid works it carried out prior to leaving the site, whilst the main contractor/ defendant maintains it is out of pocket for having had to complete/remedy that which it says the subcontractor plaintiff had left undone, and thus counterclaims for the sums thus alleged to have been incurred.

13.  On 16 July 2010 Unison issued a Writ endorsed with Statement of Claim wherein it claimed, inter alia, the sum of $8,336,831.86.

14.  By Amended Statement of Claim dated 4 November 2010 this claim was revised to $8,426,961.09, as itemized in detail in Appendix C of this amended pleading.

15.  On 18 November 2010 AHL filed a Defence and Counterclaim, the latter being in the sum of $5,208,184.79, and on 15 December 2010 Unison filed its Reply and Defence to Counterclaim.

16.  Hence the battle lines were drawn, and the matter proceeded to trial.

THE FRAMEWORK OF THE CASE

17.  At the outset of this hearing the court was presented with a List of Issues which the parties wished to be the subject of decision.  This list had been the subject of compilation by/agreement between counsel for each side, who told the court that they were content that the judgment herein should follow the sequence of this list in terms of the twin heads of liability and quantum.

18.  Accordingly, in this judgment I proceed to determine the various matters canvassed in this list of issues and sub‑issues, adopting the numeration therein appearing.

THE EVIDENCE

19.  There was the usual significant accumulation of documentation in this case, amounting to some 23 box files of paper covering every conceivable aspect of this dispute and of the plaintiff’s time on site; I have little doubt but that cumulative copying charges run into the tens of thousands of dollars and, as usual, a significant proportion of this accumulated paper was not required.

20.  In addition there was viva voce evidence, both factual and expert.

21.  In terms of factual evidence, the plaintiff led two witnesses: Mr Yu Bahadur  "Kaji " Gurung and Mr Christopher James Howard, formerly a Project Manager with Unison.

22.  On the other side the defendant relied solely on the factual evidence of Miss Ann Lui, owner and director of AHL.

23.  Since the evidence of Mr Gurung dealt primarily with relatively undisputed background matters leading to the events the subject of the present dispute, it followed that the real evidential battleground lay between the respective accounts of Mr Howard and Miss Lui.

24.  As a matter of general approach, where the two accounts of what had transpired were directly in conflict, I am the more comfortable in preferring the evidence of Mr Howard, who in demeanour was as calm and measured in approach as Miss Hui tended to be (or gave the appearance of being) intransigent and obdurate. 

25.  I also have come to the conclusion that the overall evidence tends to show that in its conduct of this job AHL was less organized and efficient than was Unison; in short, after reviewing all the evidence I have come to the conclusion that Mr Howard was correct in his assessment, proffered to the court at the end of his evidence, that this job had proved rather too much for the administrative capability of AHL, the end result of which were the disputes which have arisen between AHL and Unison.

26.  As a matter of general approach I have (as might be expected) attached very considerable weight to contemporaneous documentation, of which there is a great deal, albeit the substance thereof was not always consonant with the post‑facto evaluation of the position, which tended to represent a perception of the case when viewed through the self-serving prism occasioned by adversarial litigation.

27.  As to the expert evidence placed before the court, this was divided into two parts:

(1)  the quantity surveyors, the plaintiff calling Mr Sunny Zhi‑Yuan Pang; and

(2)  the defendant responding with Mr Peter Tang Lim Kit.

28.  In addition, the reports of two experts on ‘programming’ were put into evidence absent the makers being called, the plaintiff here relying upon the report of Mr Nicholas Huf, and the defendant relying on that of Mr Peter Tang, wearing a different expert ‘hat’; Mr Tang, however, was not cross-examined on his ‘programming’ evidence, counsel on each side being content to allow each report on this aspect to speak for itself.  In the event, I have not found these ‘programming’ reports to have been of assistance.

THE AGREED ISSUES: LIABILITY

1.   What are the terms of the subcontract, which subcontract was evidenced by Unison’s quotation dated 5 November 2009, as amended by AHL on 12 November 2009?

29.  There is no doubt that there was a subcontract in existence between Unison and AHL—indeed the defendant’s opening specifically states that  "there is no dispute that a binding contract was concluded at or around this juncture [5 November 2009] "—although early in her oral evidence Miss Lui appeared willing to cast doubt on this contention, just as initially (and rather oddly) she was disinclined to accept that AHL was a main contractor, maintaining that she was simply a designer and project manager, albeit under questioning from the court ultimately she did accept that AHL was acting  "as if " it was a main contractor (it emerged that for the purpose of this job and for its dealings with the BD, AHL had  "borrowed " the name of a friendly contractor which was registered with/approved by the BD).

30.  For the avoidance of doubt, however, I record that this case  has proceeded upon the basis that this was, and is, in substance a dispute between main contractor and subcontractor, and I deal with it on this basis.

31.  However there remains contention is as to the terms of the subcontract, and in this regard there are four (originally five) sub‑issues requiring decision: I deal with them hereunder.

(i)  What are the payment terms under the subcontract?

32.  The plaintiff’s case is unequivocal: Unison says that the subcontract was formed on the basis of the 5 November 2009 quotation, as amended and countersigned by the defendant on 12 November 2009, together with the seven drawings supplied by the defendant to the plaintiff on 30 July 2009, the 13 drawings similarly supplied on 19 August 2009, and by a letter dated 13 August 2009 (a letter from the BD to AHL confirming  "that your submission [for the new extension to the 7^th floor] is fundamentally acceptable and may be approved ").

33.  The defendant accepts that there was agreement as to how the subcontract sum should be apportioned in terms of interim payments (that is, as to what percentage of the subcontract sum would be become payable upon the events specified therein), but that this is as far as it went.

34.  For my part I am in little doubt that both parties worked on the basis of the 5 November quote and the drawings, and I find as a fact that the quotation and the drawings (as supplemented by BD approval) constituted terms of the subcontract.  It seems to me that the doubt sought to be raised by the defendant as to when the percentage sums were to be paid amounts to little more than a forensic diversion, that it was crystal clear what was to happen, and when, and that both parties obviously had proceeded on this basis. 

35.  I appreciate that the subcontract contained the legend  "to be discussed and re‑confirmed " but the short point is that, in my judgment, the parties practically accepted and agreed these stage payments as set out in the 5 November quote. 

36.  To argue otherwise, it seems to me, is to fly in the face of the practical reality—which if I may say so, appeared to be Miss Lui’s initial mindset when giving evidence, given her obvious reluctance in cross‑examination to accept even the most basic and self‑evident propositions, and to decline to accept at face-value the plain content/import of contemporaneous documents.

37.  The short, and, it seems to me ineluctable point, is that the payment mechanism as adumbrated in the 5 November quotation anticipated that which actually occurred, as the plaintiff had issued no less than 5 invoices in accordance with this mechanism.  So whilst Miss Lui may genuinely believe (or now may have convinced herself so to believe) to the contrary, the reality on the ground bespeaks a different story.

38.  This finding as to the stage payment of the relevant percentages—as delimited in the quotation of 5 November 2009—necessarily impacts upon the consequent analysis in this case, and in particular the raison d’etre for Unison departing the site on 28 April 2010, leaving its subcontracting work undone.

(ii)  Whether there is an obligation on Unison to pay liquidated damages, and if so, on what terms?

39.  Mr Yeung, counsel for the defendant, has made it clear that it is not the defendant’s case that there was a term under the subcontract that the plaintiff was liable for liquidated damages, but that the defendant’s case is that the plaintiff nevertheless remains liable for loss and damage as a result of its delay in the completion of the subcontract. 

40.  Thus, he argued, by reason of the plaintiff’s delay the progress of the works under the Main Contract was delayed from 1 September 2010 to 15 October 2010, amounting to 44 days delay, and in consequence, therefore, FIS, the employer, had deducted $440,000 (44 days x $10,000 per day) from the defendant’s entitlement under the Main Contract — thus, the defendant now was seeking indemnity from the plaintiff for this specific sum, there being cogent documentary evidence to show that FIS had deducted $440,000 from the payment otherwise due to the defendant under the Main Contract.

41.  For the plaintiff, Mr Wong countered with the contention that it cannot have been in the contemplation of the parties to the subcontract that the plaintiff should indemnify the defendant in respect of the delay beyond the completion date of 1 September 2010 as set out in the Supplementary Main Contract, which was executed only after the plaintiff had withdrawn its labour from site on 26 April 2010. 

42.  Prior to that date, he said, the operative contract between the employer and the defendant was the Main Contract, and it is clear in the circumstances that FIS did not intend to hold the defendant to the completion date of 31 December 2009 therein set out; nor, he said, was there any evidence showing that Unison’s works actually caused delay for which liquidated damages were payable, since the revised completion date under the Main Contract was 1 September 2010, and there is evidence that the Occupation Permit was refused for reasons unrelated to the subcontract works.

43.  I make no comment on the reasons for the OP refusal (although on the evidence I entertain some doubt as to whether delay on behalf of AHL was not in some part a reason for the delay in obtaining the OP from the Buildings department), and in the present context there is some attraction in Mr Wong’s argument.

44.  I appreciate, on the other hand, validity within Mr Yeung’s submission for AHL that, prior to the conclusion of the subcontract in November 2009, the plaintiff knew, or ought to have known, that liquidated damages would be levied under the Main Contract in the event of delay, and that the issue of liquidated damages had been raised during the course of the works (which fact cannot be gainsaid), albeit there is no contemporaneous comment/reaction from Unison on this particular issue, and, as earlier I have observed, I am unconvinced that the element of delay in the obtaining of the OP from the Buildings Department could not in some degree be attributed to AHL’s own administrative shortcomings.

45.  I have not found the issue of LD’s an easy conclusion to draw, but after a degree of hesitation, I am disinclined to find that AHL has discharged the burden of proving to the requisite standard that Unison is obliged to pay the entire sum of $440,000 in liquidated damages as now claimed by AHL.

46.  However, in light of my subsequent finding as to the lack of justification for Unison remaining offsite for as long as it did prior to ‘attempting’ a return to work, I nevertheless consider that some element of liquidated damages should be payable, and doing the best that I can upon the basis of the evidence (and argument) before me, ultimately I am prepared to award AHL the sum of $200,000.00 under this head.

(iii)  Whether there is an obligation on the part of Unison to provide a 10 year warranty for the structural steelwork and roofing system?

47.  This specific requirement does not appear in the quotation evidencing the subcontract.

48.  The evidence on the point is that in the period May to June 2010 FIS had requested such a warranty from AHL, and had asked AHL to confirm such agreement with the employer’s understanding on the issue: see the FIS letter to AHL dated 26 May 2010, wherein Mr Grelon of the Executive Committee (which oversaw these works on behalf of the employer) says that  "we would like to remind you that EXCO would expect to receive a 10 year warranty covering all structural steel works involved in the extension works ".

49.  Mr Howard had no direct knowledge of the origin of this issue, but Miss Lui said that there was a requirement under the Main Contract to provide 10 year warranties for structural steelwork and the roofing system, and said also that during a tender meeting for the Main Contract, Mr Livermore of the plaintiff’s then-management (who was not called in this trial) was told of this requirement, that he had agreed it on behalf of the plaintiff, and that this knowledge and agreement are evidenced by Minutes of a Design Contract Site Programme meeting dated 12 March 2010 wherein Item 13 is recorded as  "Warranty details for Kalzip and FAS required by AHL " with the corresponding ‘Action’ column indicating that this was a matter for Unison.

50.  In his own evidence Mr Howard fairly agreed that it was the usual practice that a warranty would be provided for roof cladding and bearing works, and he also accepted that the plaintiff was obliged to comply with BD requirements, which I understand required such a warranty over the steel.  However, whilst he agreed that in principle a warranty should be provided, Mr Howard noted that there was a dispute as to whether such warranty should be for a 50 year period or for 10 years, and in this connection I accept his evidence that only a 10 year warranty was, and would have been, realistic as a commercial proposition.

51.  In addition Mr Yeung argues that it had been the parties’ practice in their dealings with each other that a warranty requirement would not expressly be stated in the quotation, citing the parallel example of a warranty for bearing installation to cater for the element of  expansion underneath the steel columns.

52.  It seems to me that the preponderance of the evidence on this issue demonstrates that the plaintiff indeed had agreed to provide such warranty, and whilst Mr Wong objected on the basis of a lack of consideration, I am unconvinced that this argument is sound; accordingly I am minded to hold that, other things being equal, the provision of a 10 year warranty was required to be furnished by the plaintiff consequent upon such agreement, and it seems to me not to matter a great deal whether this result enures from a large and liberal construction of the subcontract or whether this is a discrete collateral agreement.

53.  What conspicuously was not developed in argument, however, was whether such a requirement to provide such warranty could survive in principle in the situation which arose whereby the plaintiff did not complete the steel works it had substantially erected, and when these works were completed (as was the case) by other subcontractors in lieu of the plaintiff, which maintains that it was not allowed back onto site by AHL in order to complete the works.

54.  Looking at the matter in the manner in which it was argued, wherein monetary compensation was advanced as an alternative solution, it seems to me that the way out of this logical impasse is to consider the monetary level appropriate to compensate for the lack of a warranty, which was the approach adopted by Mr Yeung, albeit (as will become apparent in the forthcoming quantum assessment), I do not accept the sum as claimed by the defendant in this context.

(iv)  Does the  "Rev.1 Draft Programme " ( "the Programme ") sent by Unison to AHL on 19 November 2009 form part of the subcontract?

55.  Mr Yeung points out that during cross‑examination Mr Howard accepted that at the time of issue this revised Programme was intended to form part of the subcontract, with Mr Howard also accepting (had matters not transpired as in fact they did) that the plaintiff could have completed the subcontract works by the completion date as shown in the Programme, namely 2 April 2010. 

56.  In support of his position Mr Yeung also notes that the Minutes of a meeting dated 12 March 2010 show that [at Item 14]  "UPL confirmed that their anticipated completion date was early April, although minor flashing works may continue after this date ".

57.  However, Mr Howard also said, and I see no reason not to accept this evidence, this completion date had been revised to 29 April 2010, citing in this regard Progress Report No 7 dated 7 March 2010 wherein adjacent to the legend ‘Revised Contract Dates’ appears ‘9 Nov 09 – 29 April 10’, and that this was reflected within the draft progress bar chart dated ‘08-03-10’, wherein the last date as indicated was 29 April 2010.

58.  Accordingly it seems to me that the correct answer to this sub-issue as posed is ‘yes, as amended’ to reflect a subcontract finishing date of 29 April 2010.  I so hold.

(v)  Employee’s Compensation issue

59.  I include this only to record that there had been an issue with regard to an accident which had occurred to a Mr Leung Fuk Tai on 30 December 2009 on the FIS site, and by a document signed by counsel, undated but handed to the court on 24 February 2011, it was agreed that  "the plaintiff (Unison) is to be indemnified by the defendant (AHL) in the agreed amount of HK$400,000 in respect of DCEC 1357 of 2011 and is to be further indemnified by the defendant (AHL) " regarding the employee’s common law damages claim together with his legal costs.

60.  This document speaks for itself, and it now is agreed that this result formally should be made part of this court’s order consequent upon this trial.

2.  Whether or not AHL was in breach of the payment terms under the subcontract?  If so, whether or not Unison was entitled to suspend the subcontract works on 26 April 2010?

61.  The finding under this head is a primary issue in this case, and one which has prompted fierce debate during this trial. 

62.  First, the objective facts: it is not in dispute that Unison left the site on 26 April 2010, leaving all its tools and equipment behind including its containerized site office.  It is also not in dispute that Unison never actually got back onto site once it ‘downed tools’ on 26 April 2010. 

63.  It is said by Unison that an attempt to return to work was made, with four workers, on the evening of 28 May 2010.  Mr Howard’s evidence on the point (which I accept) was that he followed up a couple of hours afterwards only to discover that his workers had not been permitted entry into the site, but whatever the plaintiff’s real intention (a matter addressed below), its workers clearly did no further work, a fact which is undisputed.

64.  I do not think that the basic mathematics can be gainsaid.  The hard fact is that, at the time Unison left site, by 22 April 2010 AHL had received all it was entitled to under the Main Contract save for 10%, made up substantially by retention monies, and yet I am told by counsel for Unison that Unison then had outstanding some $7 million out of the total subcontract sum of $25-odd million, AHL apparently having proffered what seems to be the incorrect excuse that it was waiting for payment from the employer—although in fairness it also should be noted that AHL does seem to have been concerned about the timeous progress of the roof works.

65.  So Unison indeed was owed money under the subcontract, and I find that AHL then was in breach of the payment terms as they existed under the subcontract.  This conclusion, therefore, is responsive to the first question posed within Issue 2.

66.  However, given that AHL then was in breach of such payment terms, this begs the correlative question as to whether Unison thus was entitled to suspend (as it did) the subcontract works on 26 April 2010, and thereafter to conduct itself in the manner that it did?

67.  On this aspect, counsel are at opposite ends of the spectrum.

68.  Mr Yeung, for AHL, firmly says that, absent any express provision in the subcontract (and there was none in the instant case), there exists no general right at common law for the plaintiff qua subcontractor to suspend works due to non-payment, citing in this regard the cases of Lubenham v South Pembrokeshire District Council (1986) 33 BLR 39, as affirmed by the Hong Kong Court of Appeal in Creatiles Building Materials Co Ltd v To’s Universe Construction Co Ltd [2003] 2 HKLRD 309.

69.  On the other hand, Mr Wong for Unison relies on Wui Du Development Co Ltd v Tak Yuen Construction Co Ltd, HCCT 40 of 1998, judgment dated 9 November 1999, and Alan Auld Associates Ltd v Rick Pollard Associates & anr [2008] BLR 419 as suggesting the converse position.

70.  I am not sure that the matter is as cut and dried as both counsel now represent it to be, nor, if I may say so, do I consider that this fundamental issue has been explored in argument as fully as it merited.

71.  Subsequently tracing the matter through from the contemporaneous correspondence—a tedious task, but one which regrettably is necessary in this case—the chronicled history of events reveals a surprising vacillation and lack of certainty on the part both of Unison and AHL when it came to grasping the ‘contractual termination nettle’: in short, both parties clearly were attempting to ‘play it safe’ whilst, it seems to me, keeping a wary eye on how their actions would play in potential litigation.

72.  The sequence of relevant correspondence begins on 26 April 2010 by a letter of that date from Unison to AHL, for the attention of Miss Lui, wherein Unison’s grievance as to non-payment of its 12 February 2010 invoice (in the sum of $7,074,262.24) is aired, and which notes that earlier assurances given by AHL that a cheque in the sum of $4 million had been prepared and would be awaiting collection on 26 April 2010 turned out to be unavailable; this letter concludes in the following terms:

 "It is with regret that Unison’s relationship with AHL has sunk to this point, and that we now feel this step has to be taken [suspension of work]. We sincerely hope that payment for the full amount of the outstanding balance can be made so that Unison’s work on this project can continue. "

73.  On the same day, 26 April 2010, a response from AHL/Miss Lui states, inter alia, that a cheque for $4 million was waiting to be picked up once confirmation was received that  "you will have the following outstanding work have completed ", with such works being listed out.  The letter adds:

 "We want to have a contractor that will work diligently and carry out their work professionally and not every time threaten their client to stop work…we have been very generous to Unison as you have missed all your committed deadline dates… construction work is a team work…please provide us your dates and we will provide you the cheque. "

74.  In the evening of the same day, at 19:35 hours, Miss Lui sent an email to Mr Howard, stating, inter alia, that  "we only want to see work progress on site and we both get payment " and that tomorrow AHL would be sending  "the outstanding work list from both the construction and submission aspect ".

75.  However at 08:58 hours the following day, 27 April 2010, Mr Howard responded thus:

 "I’m afraid that this issue is now out of my hands—the decision to remove our labour from site was made by the senior management. You need to talk directly with Tony [Potter] with regard to this, but from the letter sent to you I believe the senior management are expecting full payment before we return to site.

I received your voice mail last night in which you mentioned that a cheque would be available today—can you confirm the value of this payment please.  Hopefully we can get this show back on the road as soon as possible. … "

76.  On the same day, at 10:32 hours, Miss Lui responded by email, noting that she was preparing a letter to Unison, and stating that:

 "… if your staff move out from site then means UNISOJN (sic) will not carry out the remain (sic) work and we will employ others to do your outstanding work all delay and additional work incurs will be at your risk and cost. … "

77.  Mr Howard replied on 27 April that:

 "… clearly we would like to complete the project with you, but I have been told that I can go no further without payment of the outstanding monies. … "

and later that day:

 "This is a Catch-22 situation Ann—without payment I have been told not to do any more work, so a completion date would depend on when we came back to work… "

78.  Miss Lui then wrote to Mr Tony Potter, General Manager of Unison, asking for commitment to have all outstanding works completed by 7 May 2010 and making it clear she was concerned about delay, and in turn this stimulated a letter dated 28 April from Mr Potter wherein he says, inter alia, that he feels that the correct way forward is for AHL, as Project Managers,  "to bring this issue to the attention of LFIS and request that they release funds to pay the contractors what they are owed. Unfortunately during yesterday’s meeting you have rejected this option… ", this letter concluding:

 "The decision to remove our workers from site was not made easily or quickly. We are disappointed that our relationship with AHL has reached this low point, but feel that AHL’s inflexibility has left us no other recourse. Once again we request that AHL pays its outstanding monies to us so that we can continue work on the project. "

79.  A further email from Mr Howard of 6 May 2010 to Mr Avrillon, head of the FIS Executive Committee, tasked with this new building suggests that Mr Avrillon was to contact AHL  "to see if they will change their position " and says that Unison are  "keen to get this sorted out and finish the project… ".

80.  In light of these exchanges there seems to be no doubt as to what then was happening—or more precisely, what then was not happening—on the ground, and it was not long before lawyers became involved.

81.  I do not intend to rehearse this correspondence in detail, not least because neither of the solicitors then involved presently are instructed in this case.

82.  Suffice to say that M/s Blank Rome, then acting for Unison, fired the opening salvo by letter to AHL dated 12 May 2010 complaining that out of an invoiced total of some $23.741 million Unison had received  "only HK$16.995 million ", namely 67% of the contract sum when  "the contract is 93% completed ", and stated in terms that  "non payment of Unisons invoice is a serious breach of the Agreement by AHL ", that Unison did not dispute that some works remained to be completed and certain documents have yet to be submitted, and that  "Unison have every intention of completing its obligations under the Agreement ".

83.  Deannie Yew & Associates, at that time the solicitor for AHL, responded on 17 May 2010 putting its client’s side of the case, and denying failure to make outstanding payment, alleging that the cheque for $4 million had been ready to be picked up but that Unison  "elected to abandon the works on 26 April 2010 ".  The letter continued:

 "Your client’s abandonment of the Works on 26 April 2010 and its failure to resume works despite your client’s repeated requests and demands have evinced a clear intention on your client’s part that it no longer wishes to be bound by the Agreement and the same have constituted a repudiatory breach on your client’s part. ",

and notified that  "our client has already engaged others to undertake some of the defective and outstanding works left behind by your client "; it then states that unless AHL received unequivocal confirmation within seven days that Unison will immediately resume the works  "our client will have no alternative but to accept your client’s repudiation of the Agreement forthwith ".

84.  It is worth observing at this stage that no such repudiatory acceptance appears ever to have been made on behalf of AHL, as indeed Mr Yeung, counsel for AHL, has stressed in closing argument.

85.  In any event, M/s Blank Rome responded in detail on 20 May 2010 to what was termed AHL’s  "revisionist " version of events, denying any alleged repudiatory breach and offering on behalf of Unison to proceed and complete the works on the basis that the sum of $4 million would immediately be forthcoming, and that the remaining outstanding amount (of approximately $3.4 million) was to be payable on completion of the outstanding works which were  "of a relatively minor nature ".

86.  It appears that there was telephone contact between the solicitors, M/s Blank Rome noting, in its letter dated 27 May 2010, that the promised $4 million cheque was not available, and stating  "it appears clear that your client does not wish to pay our client for work it has executed ", and that Unison would now consider  "further action to enforce its rights ".

87.  On the same day AHL’s solicitors wrote to say, inter alia, that  "our client does not accept any pre‑conditions and your client is requested once again to resume the works without further delay ", which in turn was followed by two further letters from Unison’s solicitors.

88.  The first, dated 31 May 2010, rehearses the incident on Friday, 28 May 2010 wherein a Supervisor and three labourers  "attempted to proceed with the works " but were asked to leave the site, further complains about missing equipment, and concludes:

 "Your client’s conduct amounts to a repudiatory breach of the agreement which is accepted by our client. We are now advising our client concerning its legal rights with a view to pursuing a claim against your client. "

89.  However on the same day, 31 May 2010, (and rather oddly), M/s Blank Rome for Unison wrote a second letter:

 "We refer to our first letter dated 31 May 2010. On the instructions of our client we hereby withdraw the first letter. "

90.  Confusion further was compounded by the response of AHL’s solicitor, variously asserting project delay, that the outstanding works were not of a  "relatively minor nature ", giving AHL’s version of what had happened on site on 28 May when AHL had purported to return to work, disputing as an  "afterthought " Unison’s alleged desire to return to work, and asserting:

 "Your client’s allegation that it intended to resume works without first consulting our client about the available/remaining works is plainly unbelievable. Should your client have any genuine intention to carry on with the outstanding and defective works (if there are still any remained on site), your client’s project team should immediately contact our client without further delay. "

91.  This letter also states that AHL has engaged a professional quantity surveyor:

 "… to undertake independent assessment on the final account under the Agreement… "

and that:

 "… we reveal after setting off the loss and damages suffered by our client due to your client’s delay and abandonment of the Works … the amount payable to your client will be much smaller than [the interim payment of $4 million]. "

92.  Eventually the tortuous history of the relationship between AHL and Unison was finally brought to an end via an email from Mr Howard to Miss Lu :

 "Ann

We would like to visit the FIS site on Thursday this week (17^th June) to remove the container, plant and tools… "

and it is this act of removal from site which has been characterized by Mr Wong, counsel for Unison, as his client’s acceptance by conduct of AHL’s repudiatory breach of the subcontract.

93.  When viewed against this factual backdrop, I do not consider that Unison was permitted, at law, simply to ‘down tools’—in what undoubtedly was a commercial ‘power‑play’—and to walk away on an indeterminate basis pending payment for what it allegedly was owed; in fact, history records that it remained off site for some 32 days [26 April to 28 May 2010] without moving to terminate the subcontract within a reasonable period.

94.  In my view the correct analysis is that alluded to by Findlay J in Wui Fu Development Co Ltd v Tak Yuen Construction Co Ltd, op. cit, wherein (at page 9) the learned judge expressed the opinion that  "withholding of a substantial sum legitimately due to a contractor would be unreasonable ", and thus that a contractor in this situation would not be acting unreasonably in determining the contract—by which I take him to mean that a clear failure to pay under a subcontract can amount to a repudiatory breach which can be accepted by the contractor and the contract thereby brought to an end.  As Findlay J observed:

 "…it would be totally unreasonable to expect a contractor not being paid a large sum undeniably due to him to continue with the works and, in effect, finance the employer’s building operations to an extent beyond that contemplated by the contract. "

95.  In this connection the commentary in Keating, 8^th ed, at p 208, para 6-067, helpfully observes:

 "If the innocent party does not elect to accept the repudiation but affirms the contract, the defaulting party may continue to rely on the terms of the contract, including any agreed damages or cancellation clause, unless on its true construction any term excluding or limiting his liability was not intended to cover the kind of breach which has been committed. There is a middle ground between acceptance of repudiation and affirmation of the contract during the period when the innocent party is making up his mind what to do. If he does nothing for too long, there may come a time when the law will treat him as having affirmed. If he maintains the contract in being for the moment, while reserving his right to treat it as repudiated if the other contracting party persists in his repudiation, then he has not yet elected… " (emphasis added)

96.  From the foregoing it seems to me that the correct analysis in this case is as follows: In answer to the second question within Issue 2, Unison was entitled to suspend the works on 26 April 2010; equally however, in my view it was not entitled simply to sit idle for such a lengthy period without moving either to affirm the contract (and thus return to work) or alternatively moving to accept AHL’s repudiatory breach (by virtue of AHL’s non-payment).

97.  As matters stood, AHL simply was left in limbo by Unison, which situation in my view cannot be justified, and whilst Mr Yeung does not put his case on this basis (indeed the defendant’s pleading avers that at all material times the subcontract remained extant), it strikes me that the legal consequence of what in fact happened is that AHL’s hiring of substitute workers—from, it appears, in or around mid-May 2010 (vide AHL’s solicitor’s letter dated 17 May 2010)—effectively constituted practical acceptance of a contractual breach on the part of Unison in not returning timeously to site after its initial suspension of the works. 

98.  For present purposes I do not have to define what was a reasonable period for Unison to make up its mind whether to affirm or to accept AHL’s repudiation, given that on any basis in my judgment the period between 26 April and mid‑May 2010 was too long for no decision to have been made, and for the situation simply having been permitted to ‘drag on’ until an apparent attempt was made, out of the blue and entirely unflagged in correspondence or by any form of advance warning, to purport to return to site on 28 May 2010.

3.  Whether or not Unison was prevented by AHL to resume the Subcontract Works at the end of May 2010?

99.  I have accepted Mr Howard’s factual assertion that in fact four workers were dispatched to site on 28 May 2010 with the instructions to attempt to return to work, and that when Mr Howard arrived a couple of hours later, he ascertained from these workers that they had not been permitted onto site in order to achieve this. 

100.  I have no reason to disbelieve Mr Howard that this situation  occurred qua physical fact, nor that his personal understanding and instruction as issued to him by his superiors at Unison had been to supervise the return to site and to resume work.

101.  However, it is equally clear, from Mr Howard’s evidence, that he personally had had no direct knowledge whatever of the taking of the ‘decision’ on the part of Unison management (which, he said, would have been taken by Mr Livermore and/or Mr Fraser) to return to site, and I confess I find this whole episode problematic and counter‑intuitive.

102.  The real oddity is that there was no letter and/or notice of any form from Unison to AHL about its intention to return to work after such a lengthy period away, and once again Mr Howard—who seems to have been at the mercy of events decided at a higher level within Unison—had no knowledge/insight into why there had been no such communication.  The difficulty is compounded by the fact that the court has had no opportunity to hear from Unison senior executives at the time (whom I am told remain in Hong Kong albeit now in the employ of rival firms), and in these circumstances it is open to the court to draw such adverse inferences as deemed appropriate.

103.  Mr Yeung for AHL submitted, in my view with justification, that this situation of an apparent ‘return to site’ represented little more than an ‘after-thought’.  He noted that by 28 May 2010 the plaintiff already had been off‑site for one month, and already had been informed that the defendant had begun to engage other contractors to undertake unfinished works. Counsel also observed that all along the plaintiff had insisted that unless it received payment from the defendant it would not return to site, and that it made no sense for the plaintiff’s management apparently to have had a change of heart and suddenly to have decided to resume work absent any notification whatever, particularly since the defendant, through its solicitors, specifically had asked for such notification.

104.  I agree.  In my view the circumstances of this alleged intention to return to work are such that the plaintiff’s action cannot be taken at face‑value.

105.  In my judgment the so‑called ‘return to site’ was no more than a ‘cosmetic’ event, I suspect performed on legal advice with an eye to forthcoming litigation, and thus I find as a fact that there was no genuine intention on the part of Unison to return to site and to recommence work on 28 May 2010.

106.  It follows that, absent such intention, it cannot properly be said that Unison was ‘prevented’ by the defendant from resuming the subcontract works, although as I have said factually I have no doubt that the four Unison workers who had been dispatched to the site were indeed turned away and were not permitted entry; in the circumstances, and without any prior notification of the position to AHL, in my view it would have been surprising had the situation been otherwise.

4.  Whether or not Unison is liable to pay additional costs in completing works left by it?

107.  For Unison Mr Wong argued that his client was not so liable; this argument was advanced on the basis that the defendant was in breach by persistently failing to make payment and by preventing the plaintiff from resuming the contract works.

108.  However, in light of the findings thus far made, this hypothesis no longer holds good, since I have held that the plaintiff was in breach not in the initial step of suspending the works, but in failing either to return timeously having failed to accept such breach or to move timeously to terminate the subcontract.

109.  If this analysis be correct, it must follow that the plaintiff is liable to pay the costs incurred by the defendant in completing the works which were left unfinished by the plaintiff.

5.   Whether or not Unison is liable to pay additional acceleration costs in completing the project?

110.  On behalf of Unison Mr Wong advanced a like argument as advanced for Issue 4 above.

111.  However, it seems to me that conceptually the answer to this question similarly must be ‘yes’.

112.  I accept the contention that it must have been foreseeable on the part of the plaintiff that if the plaintiff failed to complete by the agreed subcontract works completion date of 2 April 2010 (as to which there appears to be no dispute), that there would be a ‘knock on’ effect in terms of progress under the Main Contract, and therefore that the defendant would need to incur additional sum to accelerate the progress of the subcontract works.

6.   Whether or not Unison is liable for liquidated damages of $440,000 deducted by FIS under the Main Contract?

113.  This appears to be a duplication of Issue 1(ii) above.

7.   Whether or not Unison is liable to pay the additional costs in providing a 10 years warranty for the structural steel works and roof cladding system at $2.4 million and $1.5 million respectively?

114.  This is a difficult matter fairly to resolve.

115.  Whilst there is no specific contractual provision therefor, it is clear that the subcontract formed part of the Main Contract works, and that the structural steel works as completed by the plaintiff had to be accepted by the employer, FIS; clearly also BD requirements needed to be met in this regard.

116.  In his evidence on the point Mr Howard agreed with the proposition that it was the plaintiff’s usual practice that a warranty would be provided for roof cladding and bearing works; in the latter context, Mr Howard specifically accepted that such a warranty was required, and told the court that it was only possible to obtain a bearings warranty for 10 and not for 50 years, as the defendant had demanded.

117.  It seems to me that it is difficult for the plaintiff validly to object in principle to the provision of such warranty; I appreciate, of course, that the works in question were not finally completed by them, but the fact remains that the option was available to the plaintiff to return to work prior to the employment of other subcontractors, and this opportunity was not taken.  I note further that minutes of a Meeting dated 12 March 2010, attended by Mr Howard and Miss Lui, reveal the plaintiff’s knowledge of this requirement,  Item 13 thereof stating  "Warranty details for Kalzip and FAS required by AHL " with the corresponding ‘Action’ column designating Unison’s responsibility.

118.  Mr Wong’s response to this claim, valued as he put it  "at a whopping $3.9 million ", is that this claim is  "hopeless " on the present state of the evidence, and that at best the defendant is entitled to nominal damages only.  He points to the fact that there has been no formulation of the terms of the warranty as now sought, and that the provision of a monthly inspection valued at a cumulative $30,000, which is the case as now put forward by Miss Lui for AHL, is not what is required for a warranty of this nature.

119.  I agree with Mr Wong in terms of his comments on the broad issue of quantum: it seems to me that this present claim is very significantly inflated and based on evidence the sum total of which is that Miss Lui apparently has paid ‘inspection charges’ for one month, nor is it clear precisely what is the basis of these charges of $20,000 and $10,000 respectively; moreover only two invoices have been produced, namely for routine inspection of the steel structure and the steel cladding for February 2011.  Nor do I accept Miss Lui’s extrapolated 10 year estimate, or see any reason why there should be 12 separate monthly inspections, as now is asserted, although I can  understand an argument pressing for, say, a tri‑annual inspection.

120.  Doing the best that I can, under this head I consider that for inspection over a 10 year period (which I find would have been the outer limit of any warranty) the sum of $900,000 is not inappropriate nor unreasonable.

121.  Accordingly I so order.

8.   Whether or not AHL had detained, converted, damaged and/or destroyed any of Unison’s properties, plant and equipment?

122.  As I understand the position, two items initially were in dispute under this head.

123.  However, one item of equipment, the  "Kalzip " machine (the purpose of which was physically to join the seams in the roof) went missing from site during the plaintiff’s absence; this has been agreed, and for this the defendant is to pay the plaintiff the sum of $20,000.

124.  This then leaves one issue, which is whether the defendant is liable to pay for the charges of the plaintiff’s supplier of two tower scaffolds, such charges to include prolonged rental costs and lost/damaged components.

125.  Subject to a liability ruling, the parties have agreed quantum at $9,234.00.

126.  Mr Yeung argues that the scaffolds would have been required to complete the remaining works in any event, and that neither Mr Howard nor the plaintiff’s quantum expert included rental costs in the evaluation of outstanding works, the defendant had not claimed for the provision of scaffolds as part of its ‘additional costs’ claim, and that there was no delivery/inspection record available from the plaintiff to substantiate this claim.

127.  Nor, so far as I can see, has this item been subject to mention in the plaintiff’s detailed closing submissions.

128.  In the circumstances I am unsatisfied that this aspect of the case has been proved to the required standard, and accordingly I disallow it.

9.  Whether or not Unison is liable for substandard or defective works as asserted by AHL?

129.  The sole claim under this head is for damage to the school premises due to excessive vibration: cracks appeared on the floor and wall in Room 106, the specific location and detail of these cracks being recorded in site photographs.

130.  This aspect also appears to have been discussed during a Project Co‑ordination Meeting on 30 March 2010, wherein Item 5.9 reads:  "AHL and UP agreed to monitor the crack in room 106 and would carry out remedial work during summer holiday ", the corresponding ‘Action’ column indicating  "AHL/UP ".

131.  Mr Howard’s evidence on this aspect was helpful and refreshingly frank.  Whilst he did not accept liability as such, he fairly did accept that at the material time the only works on site which could have caused the vibration sufficient to cause the cracks was the steelworks then being carried out by the plaintiff, although he did also suggest that settlement might have been to blame.

132.  In his closing submission Mr Wong for the plaintiff asserted that there was little evidence on the issue, and that there simply was no evidence that the vibration was excessive, nor that there had been any departure from the approved method statement.

133.  On this issue the overwhelming inference, I think, is that the plaintiff’s works did cause the vibration which in turn caused the cracks, and on the balance of probabilities I so find and hold that the plaintiff is liable under this head.

THE AGREED ISSUES: QUANTUM

10.  Seven issues for decision

134.  The parties accept that the starting point for the quantum assessment is the overall contractual value of the subcontract, namely $25,331,403 plus the sum agreed for variations, namely $154,653.75, which produces the total figure of $25,486,056.75.

135.  From this figure must be deducted the amount of previous payments made to the plaintiff in the sum of $16,995,674.89, which means that the sum total the subject of the present quantum argument is $8,490,381.86.

136.  Adjustments will have to be made to this latter figure depending on the court’s finding on seven distinct quantum issues, as per the List of Agreed Issues; to this end, the parties usefully have prepared a Schedule to assist the court.

(i)  Quantification of the value of the outstanding Subcontract Works up to the suspension of works on 26 April 2010

137.  This represents a major element of disagreement in this debate.

138.  The plaintiff says that the value of the works left undone on site when it departed (in fact never to return) on 26 April 2010 amounts to either a ‘primary assessment’ of Mr Sunny Pang, the plaintiff’s expert, in the amount of $294,619, or his ‘alternative assessment’ in the amount of $427,559.10.

139.  The defendant, via its expert witness Mr Peter Tang, comes to a very significantly higher figure; Mr Tang has assessed the value of the outstanding works at $2,824,398 (rounded down to nearest dollar).

140.  As counsel agree, whichever route the court chooses under this head depends in large part upon whether the ‘Resources Approach’ adopted by Mr Pang for the plaintiff is adopted, or whether the ‘Percentage Approach’ utilized by Mr Tang is considered the more appropriate.  Naturally, counsel on each side of the fence prays in aid the methodology, and resultant figure, which is the more advantageous for his case, given always that the appropriate sum must be deducted from the agreed starting point of $25.486 million.

141.  Mr Pang fairly told the court in evidence that he was not an engineer, and thus solely he had relied upon the resources assessed by Mr Howard in order to calculate the value of the outstanding works under the subcontract.

142.  Mr Yeung submitted, in my view correctly, that the consequence of this approach and the valuation arising was of little assistance to the court, because in essence what he had done was no more than to provide  "mechanical calculation services " instead of expressing his professional opinion, and he pointed out also that he had accepted that  "the timing of carrying out of structural steelworks is outside my area of expertise "—hence his reliance upon Mr Howard’s labour resources estimation.  Moreover, said Mr Yeung, Mr Pang had made no attempt to do any measurements of his own, despite having access to drawings and photographs, whilst (and putting to one side Mr Howard’s questionable expertise in this area), Mr Howard also had admitted that in his estimation he had included only direct labour costs without making any allowance for other items such as plant, equipment, site supervision and project management which would have been required for the completion of the contract works.

143.  Counsel for AHL used the example of the installation of Staircase ST2 as a means of illustrating the differing results obtained by Mr Pang when applying a pure ‘resources’ approach [$12,000] as against a comparable rates approach [$24,000].  Mr Yeung also noted that Mr Pang had accepted that if there had been a detailed Bill of Quantities, he would have used the conventional approach to measure the quantities and then apply the relevant unit rate to the quantities as measured, but that the reality was that Mr Pang had had access to the shop drawings and BD drawings, which would have enabled appropriate measurement to take place, and that Mr Pang’s reason for not so doing—the absence of joint measurement records—was unsatisfactory, when the extent of the outstanding works readily could be ascertained from documents and photos.

144.  I am in broad agreement with these criticisms. 

145.  On the other side of the ‘expert fence’ Mr Tang, for AHL, considered that the use of area was a reasonable indicator in order to reflect the work done in the absence of a detailed measurement on weight, and he had used the BD drawings as a starting point to measure the plan area.  He had also taken into account various other factors, such as the differing complexity of the staircase works, and had adopted an approach which, he maintained, was appropriate to give the true value of the outstanding works based on the prices as had been agreed between the parties; by comparison, the use of the pure ‘resources’ approach, even were the raw data to be accurate, could only provide the direct cost of the outstanding works, but not the value of the outstanding works including risk and profit.

146.  In his exercise, Mr Tang had measured the total floor area of the structural coverage, consisting of beams and columns, thereby providing an average area coverage figure; as to the plan area of the three staircases, he had divided this by the total floor area in order to obtain a relevant steelwork percentage, thereafter making corresponding adjustments to the details and scope of the particular staircases.  Whilst Mr Tang did accept that steel normally was measured by weight, he maintained that this fact did not preclude the use of the alternative methodology.

147.  I have found the issue of competing methodologies a difficult question to confront, but at the end of the day I am persuaded that the approach of Mr Tang is to be preferred, given its logical and analytical basis. 

148.  I bear in mind in particular in this context Mr Pang’s frank acceptance during cross‑examination that he is not an engineer who is in a position independently to assess the resources required in these works, and that he had relied solely upon the resources assessment of Mr Howard to calculate the value of the outstanding works under the subcontract.

149.  If this be correct, then Mr Tang’s figure of $2,824,398 is the starting point; I have to say, however, that this appears to me to be on the high side, and in the circumstances I am minded to reduce this sum to $2,500,000.

150.  It remains only to observe that it has been confirmed by counsel that AHL no longer pursues any claim in relation to surplus materials.

(ii)  Amount of abortive work

151.  Quantum of $6,892 has been agreed under this head, subject to a finding on liability.

152.  The ‘abortive’ works are said to arise from re-design work in relation to Staircase No 2, wasted costs on 28 May 2010 when it is asserted that the plaintiff attempted to resume work, and costs incurred for the retrieval of the plaintiff’s property from site on 30 July 2010.

153.  Notwithstanding the quantum agreement, I cannot see that this head has any sound basis.  As to the staircase, on the evidence before me I am not satisfied that any additional work was performed, as to the ‘attempted resumption’ I earlier have found that this was ‘cosmetic’ only, whilst the retrieval of property from site would have been incurred in any event had the plaintiff completed the work, and not left site as it did.

154.  It follows, therefore, that under this head I make no award.

(iii)  Replacement costs for plant and equipment

155.  In the event the only remaining item under this head was the plaintiff’s claim for the loss of the  "Kalzip " machine, now agreed between counsel at $20,000.

156.  Accordingly this sum is to be included in favour of Unison in the final computation.

(iv)  Charges for two tower scaffolds

157.  Once again, thanks to the common sense of counsel this item has been agreed at $9,234.00, subject to a finding on liability.

158.  Not a great deal was said at trial about this element of the case.

159.  The plaintiff’s position is that this is in respect of charges for two tower scaffolds which unnecessarily were kept at site and were used by the defendant until 30 July 2010.

160.  In effect, this is a claim for wrongfully prolonged rental costs.

161.  The defendant says that these scaffolds would have been required by the plaintiff to complete the remaining works in any event, that Mr Howard and the plaintiff’s quantum expert, Mr Pang, had not included these rental costs in their evaluation of the outstanding works, and that the defendant has made no claim for the provision of scaffolds as part of its claim for additional costs in completing the works left undone by the plaintiff.  A subsidiary argument mounted by Mr Yeung is that there is no ancillary evidence in the form of a delivery/inspection record.

162.  I do not consider that this element of the claim has been made out by the plaintiff, and accordingly I disallow it.

(v)   Additional costs for completing the Subcontract Works

163.  In substance this head concerns some items of unfinished work which the defendant, AHL, says that it was required to pay other contractors in order to complete the job in the plaintiff, Unison’s, absence. 

164.  Mr Wong for the plaintiff points out, this claim is only of relevance if the court has come to the view, which it now has, that in departing the site and in not returning within a reasonable time, the plaintiff is in contractual breach.

165.  Remarkably there is a huge differential in the two quantum experts’ views on this element of the case.

166.  For the plaintiff Mr Pang arrives at a ‘Nil’ assessment whilst for the defendant Mr Tang arrives at the figure of $953,905 (rounded down to the nearest dollar).  This sum is the result of subtracting Mr Tang’s assessed value of the actual costs of the outstanding works by other contractors (namely East Gain and Firm) employed for the purpose [$3,778,303.97] minus his figure for the value of the outstanding works left under the plaintiff’s uncompleted subcontract, namely $2,824,398.19.

167.  In his observations on this head, Mr Wong for Unison makes the points that the defendant’s expert, Mr Tang, has not assessed the reasonableness of the various quotations, which cumulatively form the overall figure of $3.778 million.

168.  He also argues that with regard to the claim for provision of impact testing for an I-beam, plus test report, that the defendant  "has not controverted " the plaintiff’s case that the mill certificate was provided and that the test report was compliant, and as to the claim for the supply and installation of the Fall Arrest System Works, he further notes the differences between the quotation produced by the plaintiff in support of its claim and the receipt as issued.

169.  I have examined the items—helpfully set out in Mr Yeung’s closing submission—and consider (and so hold) that the three ‘East Gain’ and six ‘Firm’ quotations were for work relevant to the outstanding works left behind by the plaintiff.  I also bear in mind that the plaintiff’s expert made no assessment in regard to these items.

170.  On the basis of the documentary and viva voce evidence before the court I accept that works were done to the unfinished three staircases and steel roof, and that the works were as detailed in East Gain’s quote dated 10 May 2010 and were paid for, as per receipts dated 13 May 2010 and 12 November 2010: [Item 1: $1,791,400].

171.  I further allow the item relating to the purchase of a steel member as per East Gain’s quotation of 30 August 2010 and receipt [Item 2: $20,280] and for weld testing on site and submission of relevant test reports, receipts dated 9 June and 12 November 2010 [Item 3: $54,080].

172.  So far as the other replacement contractor, Firm, is concerned, these are Items 4, 5, 7, 8, 10, and 11, in the cumulative claimed sum of $1,427,721.47.

173.  Having reviewed these items, the evidence underpinning them, and Mr Yeung’s submissions thereon, I allow Item 4 [in sum of $498,500], Item 5 [in the amount of $67,000 only], Item 7 is disallowed as having not been proved to the requisite standard, Item 8 is allowed [in the sum of $61,331.47], Item 10 is allowed [in the sum of $75,000], and Item 11 is disallowed as having not been proved to the requisite standard.

174.  This, then, produces a cumulative figure under this head of ‘Additional Costs for Completing the Subcontract Works’ of $2,567,591 (rounded down to the nearest dollar).

175.  If this approach be correct, it follows that the amount due to the defendant under this head is $67,591 ($2,567,591 - $2,500,000).

(vi)  Additional costs for acceleration

176.  Once more there is a signal divergence of views as to this assessment: for the plaintiff Mr Pang suggests a ‘Nil’ assessment, and for the defendant Mr Tang produces a figure of $1,513,636.33.

177.  There is some commonality of view among the two experts that there was insufficient information in relation to details of acceleration enabling them accurately to assess the cost under this head.

178.  After reflecting on the two reports, and on the submissions made in this regard, I have decided to make some award under this head, but not to the extent of that which is now claimed, which I consider excessive in the circumstances.  I am also concerned (although this was unargued) that this head of claim may represent, in part at least, an element of duplication with items under head (5) above.

179.  The claim mounted by Mr Yeung for AHL under this item amounts to the sum represented by Mr Tang’s assessment.

180.  I have perused the supporting quotations underpinning Mr Tang’s proposed figure, namely Items 2, 3, 4, 6, 7, 7A, 7B and 8; these are estimates only, and in the circumstances I am prepared to award 70% of the sum claimed, that is, $1,059,545.00 (rounded down to nearest dollar).

(vii)  Rectification costs of defective and/or substandard works carried out by Unison

181.  Under this head Mr Pang assesses ‘Nil’, whilst Mr Tang for AHL assesses $169,050.

182.  It is common ground between counsel that the only item of relevance here is a claim for damage caused by excessive vibration, resulting in a crack or cracks in the structure of the school.

183.  As earlier noted, in evidence Mr Howard was frank enough to tell the court, and I accept, that the only probable reason for the appearance of the crack(s)—in Rooms 106 and 311—requiring rectification could have been the steel installation works carried out by Unison.

184.  I also accept the argument that these rectification works involved removal of school equipment, chiseling and breaking ground, and relaying of floors and floor mats.

185.  The relevant quote by Firm is for the sum now claimed, $147,000, which in the circumstances I allow; in this connection I disallow Mr Tang’s additional 15%  "administrative mark-up ".

11.  Programming issues

186.  Having earlier held that the Programme formed no part of the subcontract between Unison and AHL, strictly there is no necessity to go further and consider the potential  "delaying events " specified on counsels’ list of agreed issues.

187.  However, if and in so far as I be wrong in this primary conclusion, on these two sub‑issues I believe that the correct findings would have been as follows:

(i)  after considering the evidence/submissions, I would, I think, have favoured Mr Pang’s view as to a 2.5 day delay caused by restricted working on 12 Saturdays, and have declined to accept Mr Tang’s opinion as to a ‘Nil’ delay; and

(ii)  there is little doubt in my mind, having heard and reflected upon the evidence on the issue, that the late finalization of the required number and location of the rainwater downpipes is a matter to be laid at the defendant’s door, which on the face of the documents consistently declined to accept the cogent drainage analysis on the issue provided by Unison’s staff, and that Mr Pang’s view of a 15 day delay is to be preferred to Mr Tang’s ‘Nil’ assessment. 

OVERALL FINANCIAL RESULT

188.  The foregoing findings/analysis of the agreed issues produces, therefore, the following position, utilizing the approach represented in the tabular schedule as put forward in final submission (all figures rounded down to nearest dollar):

	Description	Amount
1.	Sub-contract sum	$25,331,403
2.	Variations (no dispute)	$154,653
	Less:
3.	Value of outstanding works to date of suspension on 26 April 2010	($2,500,000)
	Add:
4.	Abortive works	Nil
5.	Replacement cost for plant ( "Kalzip " machine: no dispute)	$20,000
6.	Charges for tower scaffolds	Nil
	Less:
7.	Liquidated damages: Main Contract	($200,000)
8.	Additional costs in completing Unison’s unfinished works	($67,591)
9.	Additional acceleration costs	($1,059,545)
10.	Rectification costs	($147,000)
11.	Steel warranty/roof cladding equipment	($900,000)
12.	Previous payments made (undisputed)	($16,995,674)
		-----------------
	Total:	$3,636,246
		===========

189.  In my judgment, therefore, the defendant is indebted to the plaintiff in the sum of $3,636,246.

ORDER

190.  There is to be judgment for the plaintiff against the defendant in the sum of $3,636,246.

191.  There is to be an Employee’s Compensation indemnity granted by the defendant to the plaintiff in terms of the formal agreement as signed by counsel and handed to the court on 24 February 2012.

192.  Interest is to run on the sum of $3,636,246.00 from the date of the writ herein to the date hereof at the rate of 1% above HIBOR from time to time prevailing, and thereafter upon the said sum from the date hereof until payment at the judgment rate from time to time prevailing.

193.  As to costs, I have been asked to make an order nisi.  In the circumstances of this case I take the view that it is appropriate to adopt a ‘global’ approach which identifies the party which has been successful overall, after the court has passed upon the constituent elements both of the plaintiff’s claim and the defendant’s counterclaim. 

194.  On this basis, there is to be an order nisi (to be made absolute within 14 days from the date hereof unless application be made to vary the same within that period) in the following terms:

Save that (i) there is to be no order as to costs of the experts’ reports upon ‘programming’ issues;and

save that (ii) that the plaintiff is to pay the defendant’s costs of the expert evidence as to the quantity surveying quantum issues,

the defendant is to pay the plaintiff its costs of this action, such costs, if not agreed, to be taxed and paid upon the High Court scale.