TECHNIC CONSTRUCTION CO LTD v. MCKENNA & CO (a firm)

CONSTRUCTION LIST NO. 9 OF 1990

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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JUDGMENT

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1. I have before me a summons dated 30 October 1990 by which the Defendants seek certain further and better particulars of the Statement of Claim on the basis that some of the answers already provided by the Plaintiffs are not sufficient answers to the request.

2. The Plaintiffs are a construction company who were awarded a contract by the Hong Kong Government to build the Prince of Wales Hospital in Shatin.  Disputes arose between the Plaintiffs and Government and an arbitration ensued. The result of the arbitration was not satisfactory from the Plaintiffs' point of view and they now seek to recover damages against the Defendants who were their solicitors in the arbitration. I hasten to add that the claim is not based upon the actual conduct of the arbitration where the Plaintiffs were represented by distinguished Construction Counsel. What is alleged, in essence, is that the Defendants never subjected the Plaintiff's original claim to any proper analysis and that had they done so they would have noticed certain fallacies in it which would have, or should have, put them on notice that the claim was both excessive and suspect and that it ought to be recast. It is alleged that when the points of claim were settled by Counsel, the Defendants instructed Counsel to use the initial claim document as the basis of the claim to be advanced in the arbitration.

3. In January 1984, Government paid into court the sum of $20 million in full and final satisfaction of the Plaintiffs' claims. It is alleged that by this time the Defendants had not taken any effective steps to remedy the allegedly defective advice which they had given concerning the substance of the claim. It is alleged that, as at the date of the payment in, "McKenna was unable except by guesswork, to form any view of the true value of Technic's claim."

4. It is then alleged that the Defendants advised the Plaintiffs not to accept the payment into court which advice the Plaintiffs accepted.

5. Paragraph 16 of the Statement of Claim alleges that the advice was negligent and some 11 pages of particulars of negligence are then given.

6. Later in 1984, Government offered $33 million and it is alleged that the Defendants advised non-acceptance which advice was again is followed. It is then alleged that the advice was negligent and in paragraph 22 of the Statement of Claim, some 12 pages of particulars of negligence are given.

7. In or about February 1985, the Government paid an additional $10 million into court increasing the sum in court to $30 million. It is alleged that the Defendants advised non-acceptance and paragraph 28 of the Statement of Claim alleges that this was negligent and 3 pages of particulars follow.

8. Paragraphs 35, 36 and 37 of the Statement of Claim alleged damage as a consequence of the negligence pleaded respectively in paragraphs 16, 22 and 28.

9. Further and better particulars of the Statement of Claim running to 37 pages, all settled by leading Counsel, were supplied on 21 September 1990. By letter dated 17 October 1990 from the Defendants' solicitors, it was stated that the Defendants were entitled to a reply to a number of the particulars where the Plaintiffs had not, so it is  alleged, answered the request in accordance with its terms.

10. Requests 1 and 26 referred to in the letter of the 17 October are no longer being pursued.

Request 8(i)(a)

11. The first particular of negligence pleaded in paragraph 16 reads thus :

"Assuming, prior to advising Technic not to accept the first payment in, that Technic would recover a sum significantly in excess of $20 million."

12. The Defendants want to know what is meant by significantly in excess of $20 million. The Plaintiff's  reply is that they rely on the assumption and that it is not material to their case at this point to quantify the value of the claim. It is alleged that "the negligence consisted in making the said assumption at a time when McKenna had neither knowledge nor means of knowledge of the value of Technic's claim."

13. Mr. Merry, who appeared for the Plaintiffs, made it clear in argument that the issue here was the assumption itself. It is denied and thus has to be proved. If the assumption is not proved, then the Plaintiffs will not be able to rely upon it. It is not alleged that the assumption was necessarily wrong, only that as a matter of fact it was made.  In the light of this it will, so he says, add nothing to the case for the Plaintiffs to have to specify a figure which is not part of their case.

14. Mr. Clayton for the Defendants submitted that the Defendants are entitled to know the case they have to meet. Of course, he is right. In so far as Request 8(i)(a) is concerned, he does know the case he has to meet. The assumption was either made or it was not made and it seems to matter little whether it was an assumption that they would recover $30 million or $130 million. The Plaintiffs' case is that if the assumption had not been made but instead the claim had been scrutinised, its defects would have become apparent and the claim would have been recast. The Plaintiffs have to establish this at trial and I do not see how the particulars sought would add or detract from this point.

15. I should add that what has been requested are particulars of negligence and not particulars of causation and much of Mr.Clayton's argument centered around causation. The Defendants will, of course, be able to mount all their arguments on causation at trial. However, before one gets to the question of causation, one has to consider whether any and if so what allegations of negligence have been made out. The Plaintiffs have pleaded their allegations of negligence, and if they proved them then the question of causation has to be gone into.

16. It seems to me that the Plaintiffs' case on this point is clearly pleaded and to order the Plaintiffs to answer any more than they have is unnecessary and will not assist. I therefore do not order these particulars to be given.

Request 8(i) (b)

17. This request is a variation of that under (a). It attempts to get the Plaintiffs to specify whether they are alleging that on a 12 month delay period they would not have recovered more than $20m and if so stating the sum with particulars of the component parts, if not so specifying then stating the nature of the Plaintiffs case that the Defendants were negligent in making the assumption.

18. Again in my judgment this is an attempt to tie the plaintiffs down to a case which they are not making. They have said that the assumption was negligent because the Defendants had neither knowledge nor the means of knowledge of the value of the plaintiffs claim. If this is not proved at trial then the Plaintiffs will not be able to rely upon it.

19. I should add that what has been requested are particulars of negligence and not particulars of causation. The Defendants will naturally be able to make all their points on causation at trial.

20. It seems to me that the Plaintiffs case on this point is clearly pleaded and that the whole request under paragraph 8 is unnecessary and will not assist. I therefore refuse to order the plaintiffs to give these particulars.

Request 8(ii)

21. This request is also refused for the same reason as that set out under 8(i). The Plaintiffs will have to establish as a fact that the Defendants based their advice to the Plaintiffs on a minimum delay period of 12 months when Counsel's original forecast of the prospects of success, made it desirable to assess the value of the Plaintiffs' claim by reference to a minimum period of 10 months. If they cannot establish this, then the point goes. If they do establish this point, then the question of causation falls to be considered together with any other allegations of negligence that they may have been proved. The answer to this request states "Technic was being given from the outset too rosy a picture of the prospects".  The Defendants know precisely what case they have to meet on this score.

Request 11

22. This request is identical to request 8(1) but relates to the advice not to accept the offer of $33 million. This answer refers back to paragraph 16. For the reasons set out in relation to request 8(i), this is also refused.

Request 15(i) (ii) and (iii)

23. The relevant paragraph is as follows :

"Ignored the fact that Technic had recouped some of its additional expenses for site overhead incurred during the period of prolongation in that payments made to Technic for variation work included an element for site overheads."

24. The request wants full particulars of each variation which allegedly included some of the additional expenses claim in the site on-costs. It also requests in respect of each of the variations under what certificate payment was made. Further it requests details of the expenses included in the claim for site on-costs allegedly recouped.

25. Mr. Merry says that the Plaintiffs are not seeking to go into the calculation. All that is being alleged is that had the Defendants scrutinised the claim they would have come across errors, such as these and would have seen that the claim was fundamentally flawed and advice thereon would have been sought from Counsel. All the Plaintiffs have to prove, says Mr. Merry is that no credit was given.  If this cannot be established, then the point goes. Implicit in this is that on the documents available to the Defendants they did see, or should have seen, that there was or had been some recoupment. I also note that the Plaintiffs state that it is not possible to identify each variation because on the advice of the Defendants, the Plaintiffs entered into a settlement with Hong Kong Government by which they received $1 million for the entire final account. I do not see how an answer to the request will assist the Defendants in knowing the case they have to meet and as I have said all arguments on causation are open to them at trial.

Request 18

26. The relevant paragraph reads as follows :

"Failing ... prior to advising Technic not to accept the said oral offer of settlement, to scrutinise and consider whether the heads or components of Technic's claims were recoverable in law, whether the method of calculation of each head or component of each claim was proper and sanctioned by law ... had McKenna scrutinised or considered these matters adequately, McKenna should have realized and advised Technic accordingly that;"

27. The request is :

"Give full particulars of the site on-costs which it is alleged would on that basis of the 12-month delay period have been recoverable; including full particulars of each component thereof and how the same is calculated."

28. The answer states :

"It is unnecessary for the purposes of Technic's case to calculate site on-costs on the basis requested. What is relied upon is McKenna failure to adopt a sufficiently critical approach to or to appreciate the deficiencies of McKenna new heads of claim, all in the respects pleaded in this paragraph."

29. This request is refused by parity of reasoning with, for example, request 15. It is a failure to scrutinise the claim prior to advising non-acceptance of the settlement that is the complaint here. It seems wholly unnecessary to force the Plaintiffs to give the particulars requested when lack of scrutiny is the complaint.

Request 19

30. This is refused for the same reasons set out in request 18.

Request 27

31. This is refused on the same basis as requests 8(i) and (ii).

Request 30(i)

32. This is refused on the same basis as requests 8(i) and (ii).

33. In stating that the above requests are refused, I mean, of course, that in the circumstance, the answers already given were adequate in that the Defendants have been made aware of the case they have to meet under each of the relevant paragraphs.

34. Mr. Merry made it clear to me that the Plaintiffs wish to present their case in the simplest possible form and are prepared in that regard to accept the approach that leading Counsel eventually advised upon. The complaint was that had McKenna not been negligent, leading Counsel would have given this advice, having laid down the correct approach at a much earlier stage, with the result that Technic would have accepted one or other of the payments in or the oral offer. On that basis, it said, they have lost the opportunity of taking the money out of court or the amount of the offer and have incurred substantial costs as from that date.

35. I must add finally that, subject to any application to amend the pleadings, the Plaintiffs will be restricted to presenting their case to the way in which their case has been pleaded, particularized and outlined to me by Mr. Merry.

36. I propose to make a costs order nisi in favour of the Plaintiffs.