LEIGHTON CONTRACTORS (ASIA) LTD AND ANOTHER v. THE DEMISE CHARTERERS OF THE SHIP OR VESSEL “JIN LONG 381” AND OTHERS

HCAJ150/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 150 OF 2010

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BETWEEN

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JUDGMENT

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1.  This is an assessment of damages which is undertaken pursuant to an Order of Reyes J of 12 July 2011.

2.  The 1^st plaintiff is the main contractor and the 2^nd plaintiff is the employer under a contract for the construction of mooring dolphins (“MD”) which are used in connection with the fueling of tankers at Tap Shek Kok. 

3.  The 1^st defendant is the demise charterer of the Jin Long 381 vessel.  The 2^nd defendant is the owner. 

4.  On 25 September 2008 the vessel allided with one of the MDs causing some structural damages.  

5.  The MD damaged was MD6. 

6.  On 17 September 2010 the plaintiffs issued a writ claiming damages against the defendants. 

7.  The claim was based upon the negligent navigation of the master of the vessel. 

8.  The defendants have accepted liability for this claim. However they dispute the quantum of damages claimed, hence this assessment of damages. 

9.  The parties have however now succeeded in agreeing a number of items being claimed as damages.  The total of the agreed amount was $1,589,243. 

10.  Accordingly I purpose confining myself to the remaining items which are still in dispute. 

(1) ITEMS B3 AND 5 OF THE SUMMARY OF THE COSTS OF RECONSTRUCTION OF THE DAMAGED MD6

11.  These items related to the removal storage and dismantling of walkways 13 and 14 and their transportation back to MD6. 

12.  Mr Simon Bennett, the commercial manager of the 1^st plaintiff, gave evidence concerning this. 

13.  He is an experienced Quantity Surveyor and was in charge of quantity surveying and insurance matters related to this project.

14.  In his evidence he gave an overall description of the nature of the work which had to be undertaken. 

15.  MDs are connected together by steel walkways. 

16.  At the time of the allision the walkways for MD6 had not yet been installed. 

17.  They were temporarily being stored on a barge. However more permanent storage had to be provided for the duration of the repair work. 

18.  According to Mr Bennett the most satisfactory way of storing the walkways which would be attached to MD6, that is walkways 13 and 14, would be to lash them to one of the other MDs.  

19.  The work involved in lashing the walkways to the other MD was in some respects similar to the work required to install them permanently to a MD. 

20.  For this it would be necessary to hire a heavy lifting barge both for the initial lashing procedure and again to hire it for the unlashing of walkways and transporting them for their installation to MD6 after the repairs had been undertaken to it. 

21.  Generally I was impressed by Mr Bennett as a witness and found him to be truthful and not prone to exaggeration.

22.  I accept that the estimates of time that he made were realistic having regard to the nature of the work to be undertaken.  

23.  It is significant that the defendants did not call any evidence which cast doubt on the accuracy of the estimates and opinions expressed by him. 

24.  However Mr Hingorani for the 2^nd defendant submitted that the time claimed for the use of the heavy lifting barge was clearly excessive.  The time being claimed being 6 days. 

25.  Mr Hingorani referred to the invoice which was produced as evidence in relation to the exercise which was undertaken in February which indicated that the heavy lifting barge used on that occasion had only been hired for 1 day.  

26.  Mr Hingorani suggested that the operation which had been undertaken had been essentially similar to the operation presently being claimed for.  The reason for not including the February operation in the claim was that the installation of the walkways would have had to be undertaken initially as part of the main contract for the installation of the MDs.  To include the February operation in the claim would have led to a duplication in the claim. 

27.  Mr Bennett in his evidence explained that the invoices in relation to this could not be traced and accordingly he had had to place reliance upon his recollection of the work which had been undertaken.

28.  One of the matters he had referred to was the disparity between the theoretical time estimated to perform work and the actual time that it took bearing in mind all of the matters which can arise unexpectedly. 

29.  In addition to this I am by no means convinced that it is a valid exercise to simply compare the February work with the work which is now being claimed for. 

30.  Having regard to the overall circumstances and my assessment of Mr Bennett as a witness I am satisfied that the adjusted amount of $255,886 is sufficiently vouched for to enable me to assess damages under this head in this amount. 

31.  In coming to this conclusion I have also borne in mind the evidence of Mr O’Brien a Chartered Loss Adjuster that he would have been prepared to agree the amount if an insurance policy had covered the risk.  It is to be noted that he was not cross-examined by Mr Hingorani.

(2) ITEM B7

Use of launches

32.  Of necessity, the calculation made by Mr Bennett is somewhat arbitrary.  

33.  What he has done is to base his calculation on the basis of the use of one launch over a period of 9 months and then divide the figure in half.  

34.  Mr Hingorani objected to this approach.  He based his objection to what he claimed to be the contractual obligation between Tai Lee the subcontractor and the 1^st plaintiff. 

35.  He contended that under the subcontract Tai Lee was obligated to provide for the transportation of workers.  This being the case, the 1^st plaintiff should have required Tai Lee to pay for the hire of the launches. 

36.  Mr Alder for the 1^st plaintiff did not accept this.  He argued that if clause 15 of the conditions attached to the contract was read in its correct context the provision relating to transportation should not include transportation from the shore to the MD or the jetty.  Clauses 13 to 18 are in this form :

“13. The normal working hours of the Site shall be from 8:00am to 6:00pm Mondays to Saturdays except statutory holidays, the Sub-Contractor should submit an accurate daily record of all resources employed upon the Site.

14. Unless the Contractor gives written permission no workmen will be allowed to live on the Site.

15. The Sub-Contractor is responsible for movement of personnel to and from the work sites. The Contractor shall not be responsible for any delay, or cost due to or in relation to the transportation provisions provided by the Sub-Contractor or others. The works are in confined space, in tide affect areas and over water and all submissions, approvals and works shall be undertaken in compliance with the relevant Authority requirements.

16. Due to limited available parking, a vehicle permit access control procedure is in force for this project. The Sub-Contractor shall be restricted in the number, if any, of parking locations and spaces in which he maybe allowed to park, other than for delivery of goods. The Sub-Contract is required to adhere to this procedure at all times. Access for any vehicle is not guaranteed.

17. The Contractor shall provide access to the Site for the Sub-Contractor as far as is practicable. No delay or additional costs shall be payable in the event that access is restricted, unless recoverable under the Main Contract.

18. The Contractor shall provide security at the main entrances. The Sub-Contractor shall be responsible for the security and protection of his own goods, until certification and acceptance of the Works by the Engineer is achieved.”

37.  Over and above this it is evident from the pricing schedule for the associated works for the reconstruction of the MD that it was the 1^st plaintiff who was required to provide transportation for the movement of personnel from the landside to the MD. 

38.  I accept that this provision would take priority over Condition 15 attached to the contract.  

39.  During cross-examination Mr Bennett outlined all of the respective visits which would have had to be made by different personnel and I am satisfied that the plaintiff has made good their claim.  This is for $42,000 per month for 9 months divided by 2, which equals to $189,000.  

(3) OVERHEADS

40.  The final matter I was required to determine was the 1^st plaintiff’s claim for overhead expenses amounting to $790,156. 

41.  Mr Hingorani’s complaint in respect of this item was that it was formulated on a similar basis to a claim being made for breach of contract and thus included within the overhead an element of profit for the 1^st plaintiff.  

42.  This was not permissible.  As can been seen from the introduction to this judgment the plaintiffs’ claim is based in tort on the negligent navigation of D2’s vessel. 

43.  While it was permissible to include a profit element for the work undertaken by Tai Lee it could not be included in the 1^st plaintiff’s claim for compensation. 

44.  In view of the difficulty in undertaking a filleting exercise of a number of disparate items I invited Counsel to attempt to reach a compromise figure. 

45.  In a constructive and helpful manner, Counsel succeeded in doing this.  They agreed that the 1^st plaintiff should be entitled to 23% of the amount they were claiming. 

46.  23% of $790,156 amounts to $181,736. 

47.  To summarise :

	$
Items initially agreed	1,589,243
B3 and 5	255,886
B7	189,000
Overheads	181,736
Total	$2,215,865

(4) INTEREST

48.  It was agreed by the parties that interest should be payable from the date of the incurring of each item which was payable at the rate of 6%.  Mr Alder advised me that he would be preparing a spreadsheet indicating the dates when these items became payable and that he would seek the agreement of Mr Hingorani.  There will be liberty to apply. 

(5) COSTS

49.  I make an order nisi that the plaintiffs will have their costs which in the absence of agreement will be taxed.  They will include costs of the summons dated 20 May 2011.