CHUN WO FOUNDATION LTD v. DORRO PROPERTIES LTD

HCCT84/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO.84 OF 2000

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J U D G M E N T

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1. The plaintiff (“Chun Wo”) is a piling contractor.  The defendant (“Dorro”) is a property developer.  In 1999, Dorro awarded the piling contract for a residential development (a 17-storey block of flats at 148–150 Nga Tsin Wai Road, Kowloon) to Chun Wo.  The contract price was $1,537,022.00.  In the course of the works carried out by Chun
Wo, it made three interim payment applications.  The first was paid, the second and third were not.  Chun Wo’s claim is for the unpaid balance, represented by the second and third applications plus retention money, which amounts to $973,831.40 plus interest. 

2. Chun Wo’s case, in a nutshell, is that it built the piles in accordance with the contract, no remedial works were necessary either to the piles or the pile cap (Chun Wo’s contract was for the piles only, it did not include the pile cap works), the building is now supported by the piles it built, the architect certified the works were substantially completed on 31 January 2000, the site had been handed over to Dorro on 18 January 2000, the Building Authority (“BA”)approved the work, no complaints were made during the defects liability period and, accordingly, the payment applications should have been met.

3. Dorro’s case is that the payment applications (PF-2 and PF-3) are not binding, the piling works had not been carried out properly, the site had not been handed over on 18 January 2000 and therefore the defects liability period had not started to run.  Dorro says that the failure to carry out the works properly resulted in 141 days delay for which they are entitled to claim 141 x $10,000.00 per day liquidated damages.  Chun Wo, on the other hand, says there is no entitlement to liquidated damages because there are no valid provisions in the contract for applications for extension of time, therefore time is at large, therefore the obligation on Chun Wo was to complete the works within a reasonable time, which they did.  If there was any delay, which is denied, they say it was no more than 8 days.

4. Dorro’s counterclaim does not stop at 141 days liquidated damages.  It also claims a further 176 days delay after the date on which it claims the site was handed over (5 April 2000) or further damages arising out of loss of rental from the completed development and loss of opportunity to sell the development when the market was falling.

THE TRIAL

5. The trial, which is for a claim of under HK$1 million, lasted 13 days.  From a costs point of view that statistic is unfortunate.  However, it is not a criticism because, once it became apparent that the parties, despite their best endeavours, were unable to resolve their differences, construction cases necessarily involve numerous complex issues.  This case has been no exception.  Counsel, however, Mr Nicholas Cooney for Chun Wo and Mr Gary Soo for Dorro, have dealt with matters expeditiously and succinctly.  Time has not been wasted.  If any criticism is merited, it is that the number of experts on the witness list was excessive, eight in total.  Six were called, two were agreed during the trial.

6. The outcome of the trial depends, almost entirely, on the court’s findings of fact.  A number of separate issues require a determination.  Those determinations can only be made as a consequence of the court’s acceptance and/or preference of one side or the other’s factual and expert witnesses.

7. I will make those determinations on an issue by issue basis, as follows.  It will first, however, be helpful to set out the key events which form the framework of the dispute.

KEY EVENTS (A) IN RESPECT OF THE CLAIM AND (B) IN RESPECT OF THE COUNTERCLAIM

(A)   The claim

8. On 19 July 1999, Chun Wo’s tender was accepted. 

9. On 25 July 1999, a firm called “Mannars Chan” executed the “setting out” work for the pile locations.  Thus, Chun Wo’s contract was to drive the piles at locations “set out” by Mannars Chan.  It was not Chun Wo’s task to determine where the piles should be driven.

10. On 4 August 1999, Chun Wo commenced work.  (The contract was in fact signed on 9 September 1999.)  The original contract was for 49 piles, two were added by way of a variation on 9 August 1999, making 51 in total.

11. On 30 September 1999, Chun Wo submitted the “as-built” pile drawing record and plans to the architect (“Master Union”).  This date signifies the completion (according to Chun Wo) of Phase I of the contract, namely the driving of a trial pile followed by the 51 piles in position.  Chun Wo’s interim payment application was submitted on 24 September 1999.  This is PF-2, the first unpaid application.

12. On 5 November 1999, the BA required a load test on pile no. 20 and a pile integrity test (“PIT”) on 5 piles.  Upon the architect’s instruction to do the same, on 9 November 1999, Phase II of the contract began (according to Chun Wo) i.e. the loading test phase.

13. On 15 November 1999, the load test was done. 

14. On 23 December 1999, the PIT was done (according to Chun Wo).  Both were carried out by an independent firm called “Foundation Techniques Ltd”.  As Phase II only concerned the loading test and not the PIT Chun Wo made its payment application (PF-3) on 29 November 1999.  The architect issued payment certificates for PF-2 on 12 January 2000 and for PF-3 on 13 July 2000.

15. The PIT report was submitted on 30 December 1999 and approved by the BA on 31 January 2000.  31 January became the certified date of substantial completion according to the architect and the BA.  Chun Wo, however, claim it should be 18 January 2000 being the date they claimed that the vacant site was actually handed over to Dorro.  Dorro, on the other hand, claim the site was not handed over until an on-site meeting on 5 April 2000.  Dorro claim the defects liability period never started to run.  Chun Wo’s case is that it started to run from either 18 January or 31 January 2000 and therefore ended on either 18 July or 31 July 2000, at which point the 5% retention money became due.

16. The meeting on site on 5 April 2000 was convened because Dorro had not accepted the site on 18 January 2000 because, inter alia, of three minor defects and because it had not received Chun Wo’s as-built record plan of the pile locations.  Chun Wo maintained that it was under no obligation to provide the plan because they had not set out the site, Mannars Chan had done that.  Nonetheless, they agreed to attend the site meeting on 5 April.  Chun Wo handed over their record plan, on a “without prejudice” basis.  Dorro, therefore, claim that the site was handed over as from that date.

17. Between April and July 2000, there were disputes between the parties and Master Union concerning extension of time applications and the payment certificate for PF-3.  On 13 July 2000, Master Union certified the third application was due for payment less $80,000.00 for 8 days delay.

18. Between July and September 2000, disputes between Dorro and Master Union continued.

(B)   Counterclaim

19. On 14 September 2000, Mr Tsang, the defendant’s main witness as to fact at trial and a director of Dorro, inspected the site and formed the view that some of the piles may be off-set.

20. On 2 November 2000, Dorro instructed a firm of surveyors, Andrew Lau & Associates (China) Ltd (“ALA”) to prepare an as-built survey plan of the pile location so as to compare it with the plan handed by Chun Wo to Dorro on 5 April 2000.

21. On 27 November 2000, Chun Wo was informed that the ALA plan indicated that 34 of the piles were offset by more than the 50mm tolerance permitted by the contract.

22. On 13 December 2000, Chun Wo, having denied any responsibility for the alleged offsets on the basis that : (a) they had not “set out” the site; and (b) even if the ALA plan was correct, all that would be required was minimal amendments to the pile cap design, complained that they were unable to investigate if any amendment to the pile cap design was necessary because they had been refused sight of the pile cap design drawings.  Chun Wo’s position, based on its own calculations and re-checking, was that no remedial works to the pile cap design was required.

23. On 29 January 2001, Master Union resigned as the architect for the project. 

24. On 20 June 2001, five months later, “Wong and Cheng” were appointed as the new Registered Structural Engineer (“RSE”) for the project.  For the next 12 months, three amendments to the pile plans, pile cap plans and two amendments to the excavation and lateral support (“ELS”) plans were submitted to the Buildings Department (“BD”).

25. On 5 June 2002, Wong and Cheng reported that the piles as built were suitable for the commencement of the superstructure.  BA’s consent for the commencement of the ELS works was given on 25 June 2002 and BA’s consent for the commencement of the pile cap works was given on 25 September 2002.  The 17-storey building superstructure was then commenced.

THE ISSUES

26. Although both counsel agreed as to what factual and legal matters were at the crux of the case, they differed as to how those factual and legal matters should be framed in terms of “issues”.  Mr Soo started with the question “was Chun Wo’s work defective?” whereas Mr Cooney started with the question whether the piling works had been substantially completed, and if so when, thereby triggering an obligation on Dorro to pay.  Whether or not the works were defective were, on either case, an issue which came later and formed the basis of the counterclaim.  Mr Cooney’s framing of the issues was the correct and logical approach.  The claim and counterclaim should be considered separately.  It would be possible for Chun Wo to be entirely successful in its claim and for Dorro to be entirely successful in its counterclaim.  Under the claim the issues are :

(1)   Were the works substantially completed?

(2)   If so, when?

(3)   Should Dorro have paid Chun Wo?

(4)   If so, when and how much?

(5)   Should liquidated damages be deducted, or was time at large?  This is a matter of law. 

(A)    CLAIM

(1)   Substantial completion

27. In my judgment, this issue can be answered simply and briefly.  The architect was satisfied that the works had been substantially completed on 31 January 2000.  The contractual definition of substantial completion was “satisfactory completion of the works and of all tests required by the Engineer and/or the Building Authority of the works”.  Both loading tests (as required by the contract) and PIT (not required by the contract) had been satisfactorily carried out.  The BA acknowledged its satisfaction on 31 January 2000.

28. Dorro also acted as if there had been substantial completion of the works.  It’s only complaints, as at 18 January 2000, were that three minor tasks (unrelated to piling) had not been done and that Chun Wo had not given them a piling survey plan.  The three minor matters were attended to the same day.  Dorro instructed the architect to apply for pile cap consent on 9 February 2000.  Dorro changed the locks on site during February and March and also arranged for steel channels to be delivered to the site in the same period.  The only outstanding dispute was the delivery of the plan.  That dispute is irrelevant to whether the works had been completed.  It is only relevant to when they were completed (the next issue).

29. A final factor which has no bearing on whether substantial completion had been achieved is the alleged existence of unknown defects in the piling at the time.  That issue is confined to the counterclaim.  It concerns the events of late 2000 and 2001.  However, as at January 2000, all the “boxes had been ticked” for Dorro’s obligation to pay Chun Wo the contract price for the works.  The next question is when was substantial completion?

(2)   When?

30. There are only three possible dates, 18 January, 31 January or 5 April 2000.  The first date is when Chun Wo vacated the site; the second date is when the architect certified completion; the third date is when Dorro says they accepted the vacant site.  Dorro refused to sign a document on 18 January 2000 purporting to record the handover.  They knew the site was empty that day.  Their refusal was based on the three minor tasks already referred to (immediately attended to) and the absence of the survey plan.

31. Because of the dispute over the survey plan, a meeting on site was arranged on 5 April 2000.  At that meeting Chun Wo handed over the survey plan on a “without prejudice” basis.  They maintained their belief that they were under no contractual obligation to provide such a plan but did so to facilitate payment of the outstanding monies due.  Dorro first requested a survey plan on 18 January 2000.  Their only other written request, prior to the 5 April meeting, was on 8 March 2000.  Chun Wo’s obligation under the contract was to “keep a record of … (e) actual position of pile as constructed … and submit (same) to AP/RSE each week …” (Technical Specification 18).  Chun Wo’s contention that this did not require them to provide Dorro with their survey plan is further supported by the fact that it was Mannars Chan and not Chun Wo who actually set out the positions for the piles to be driven.  The plan in question (Chun Wo’s survey plan of the as-built piles) had been submitted to and accepted by the BA as per its contractual obligations.

32. Also at the handover meeting on 5 April, a note was signed by all parties.  There was considerable evidence at trial about this note.  There were two versions of it.  Dorro’s version was that the note typed in advance of the meeting by Chun Wo’s managing director’s (Mr Ricky Law) secretary, stated that the “… site has been handed over to the employer”.  On Chun Wo’s version, a sentence in manuscript, written by Ricky Law, has been added stating that “The site is available for handover on 18-1-00 and Dorro has accepted the conditions”.  The note is undated.  The issue was when Ricky Law added the manuscript.  He said it was before it was signed by Mr Ho for Dorro.  Mr Ho said he had never seen Chun Wo’s version, implying it must have been added after the meeting and unknown to Dorro.

33. I find it unnecessary to resolve this issue.  It has some relevance to credibility but the issue of when the handover actually took place does not depend on it.  Even basing my finding on the Dorro version of the note, I am satisfied that the handover took place in January and not in April.  All the evidence points away from April.  Dorro’s version of the note says “… has been handed over …”, i.e. past tense.  Dorro was aware the site was vacant and the minor tasks completed by the end of January 2000.  They changed the locks and conducted themselves generally as if Chun Wo were no longer in possession of the site.

34. I accept the evidence of both Mr John Molloy and Mr Nicholas Huf, two of the plaintiff’s expert witnesses, whose evidence favours 31 January 2000 as the relevant date. 

(3)   Dorro’s obligation to pay.  When and how much?

35. For the answer to this question, I turn to, and rely on and accept, the evidence of Mr John Molloy, the plaintiff’s expert quantity surveyor.  The Q.S. expert report had been prepared by a Ms Louise Popplewell, a member of Mr Molloy’s firm.  She did not give evidence, but Mr Molloy was able to confirm her findings.

36. Based on the following findings :

(a)	The 2 additional piles were variations.
(b)	The PIT was not a variation.
(c)	The architect erroneously only certified 80% of the cost of the piling works as due at the time of the second payment certificate.  He should have certified 100% at that time.  The contract does not provide for part certification.  In fact the architect certified 100% at the time of the third certificate.  There seems to be no good reason why he did not so certify earlier.  In my judgment, based on Mr Molloy’s evidence, he should have done.
(d)	Payment should have been made 14 days after the architect’s certificate.
(e)	The retention money fell due on 31 July 2000, there having been no notification of defects during the six-month defect liability period.
(f)	Interest should run at the rate of prime plus 1% from the dates of due payment (i.e. 14 days after certification).

The sums therefore payable (subject to section 4 infra) under the contract were $628,400.34 on 26 January 2000 (PF-2), $278,575.96 on 27 July 2000 (PF-3) and $66,851.10 on 14 August 2000 (retention money) together with interest, to be calculated, at prime plus 1%.

(4)   Is Dorro’s liability less because of liquidated damages?

37. Two issues arise here.  Firstly, did Dorro have any entitlement at all, under the contract, to make any deductions for liquidated damages?  Secondly, if so, how much?  So as to address all the relevant sub-issues, it is convenient to deal with these two questions in reverse order.

(a)   What is Dorro’s theoretical maximum entitlement to liquidated damages?

38. I am satisfied, based on the whole of the evidence but particularly that of Mr Nicholas Huf, the plaintiff’s programming expert witness, the answer to this question is $80,000.00.

39. The question of delay will be re-visited in the counterclaim issues.  At this stage it is sufficient to make the following findings.

40. It was an 80-day contract.  However, as a result of the accepted revised tender programme it was acknowledged that the contract was in three phases and the three phases did not follow each other immediately each phase had been completed.  Phase I was “trial pits and piling works” (50 days); Phase II was “loading test” (20 days); and Phase III was “removal of plant and delivery of vacant possession” (10 days).

41. Dorro’s contention is that, but for minor concessions, Phase III should be completed 80 days after Phase I starts.  This contention is roundly rejected by Mr Huf.  

42. I accept Mr Huf’s evidence.  Each phase is defined by an “event” for its commencement date.  The “event” is not the end of the previous phase.  Gaps between phases, for example, for tests and waiting for BA approval, are contemplated.

43. He opined also, and I agree, that if one phase overruns but another phase underruns, it is the final net period that counts.  For example, if Phase I took 60 days, Phase II took 15 days and Phase III took 5 days, the final target has been achieved within time.

44. Phase I overran by 2 days because of the agreed variation to add 2 extra piles to the contract works (51 piles were driven instead of the original 49).

45. Phase II overran by 8 days.  A detailed recital of the actual dates is unnecessary for the purpose of this judgment.  The issue is not the length of the overrun but the reason for it.  There is no real issue as to what caused the overrun — it was the carrying out of the PIT as requested by the BA.  Mr Huf suggests, and I agree, that the time taken for the PIT should not be counted in Phase II.  Only if it is counted does Dorro achieve its theoretical entitlement to 8 days liquidated damages at $10,000 per day.

46. However, the contract was only specific about loading tests not integrity tests.  It was reasonable that Chun Wo did not anticipate a request from the BA for integrity testing.  I am satisfied that the reason for the integrity tests stemmed from the “short piling scandal” which was highly newsworthy at the time.  The testing under the contract was, impliedly, for load bearing capacity, locations and plumbness of the piles.  Integrity testing tested the depth of the piles.  This was outside the scope of works as contemplated by the contract.

47. In any event, Phase III took a maximum of 1 day.  Chun Wo thereby earned 9 days credit in the overall calculation.

48. In short, Dorro’s claim for even $80,000 liquated damages fails.  The maximum sum of the days taken in each phase is 81 days (52 + 28 + 1) of which 2 should be deducted for the agreed variation of the 2 extra piles.

(b)   In any event, was time at large thereby nullifying Dorro’s entitlement to a liquidated damages claim?

49. This issue is a question of law.

50. Clause 7 of the contract provides for liquidated damages if the contractor fails to complete within time.  However, there is no provision in the contract for extensions of time.  Mr Cooney submits that any liquidated damages claim is invalidated if there is no provision for extensions of time.  Mr Soo submits that the parties conducted themselves as if extensions of time could be applied for and granted (which is what did happen).  He argues that an extension of time clause should be implied into the contract.  However, the defendant’s pleaded case is silent as to such an implied term.

51. Mr Cooney argues that in circumstances where Dorro prevented completion within time and where time could not, under the contract, be extended to take account of such acts of prevention, time is rendered at large.

52. As it happens, because of my earlier findings of fact, it is not necessary to resolve this matter.  However, for the sake of completeness, I will do so, briefly.

53. It is factually correct that three events occurred, which were beyond Chun Wo’s control, and which were prompted by Dorro or the architect, which prevented completion within time.  They were : (i) the 2 extra piles variation, (ii) the requirement to carry out a PIT, and (iii) Dorro’s agreement to extend Phase I by 14 days whilst the architect submitted the piling report to the BD.  Although an extension of time application was made (and granted), it was not made in accordance with any contractual provision.

54. By its letter to the architect dated as early as 3 May 2000, Chun Wo made it clear that, because of acts by Dorro, and because of the terms of this particular contract (or lack of them) it regarded time as being at large.  I agree.

55. In such circumstances Chun Wo must show that they completed the contract within a reasonable time.  It is sufficient, at this stage, merely to state, aided by the cogent and helpful evidence from Mr Huf, that they did so. 

56. Thus far, therefore, Chun Wo’s claim (as quantified in paragraph 36, supra) remains 100% in tact.  I now therefore turn to the counterclaim, which deals with events later in time, to determine whether Dorro have made out its claim that Chun Wo’s works were later shown to be defective which required remedial work and which put Dorro to considerable cost both in time and money.

(B)   COUNTERCLAIM

57. Stripped of the numerous sub-issues, the key issues which fall for determination are :

(1)	Has Dorro proved that the location of the piles as built by Chun Wo were outside the tolerances permitted by the contract?
(2)	If they were, did they constitute ‘defective’ works?
(3)	If so, did the offset piles necessitate remedial works?
(4)	If so, did the remedial works delay completion of the piling works (including the pile cap works and the ELS works)?
(5)	If so, what loss, if any, flowed?

(1)   Were Chun Wo’s piles within acceptable tolerances?

58. The factual conflict here, is between Chun Wo’s survey plan which was handed to Dorro at the site meeting on 5 April 2000 and the ‘Andrew Lau (“ALA”) plan’ commissioned by Dorro in November 2000.  The former shows the piles to be within the 50 mm tolerance permitted by the contract.  (It should be noted here that a more usual tolerance for piles such as these is 75 mm.  It was therefore a stricter requirement than usual.)  The latter shows 34 piles out of tolerance.  The worst example being 342 mm offset.

59. Dorro’s case is that : (a) the pile locations did not conform to the requirements of the contract and (b) their dislocation resulted in remedial works being required.  The onus of proof is on Dorro.

60. In reaching my conclusion that Dorro has failed in this aspect of its counterclaim I have taken into account the following matters.

(i)   Timing :

61. The Chun Wo plan was prepared at the time, the ALA plan was about a year later.

62. The Chun Wo works followed the setting out done by Mannars Chan.  I heard from three witnesses from Chun Wo who were involved with the work actually done, including Mr Ricky Law, the managing director.  They impressed me.  They appeared to be honest and competent.  This is particularly important because Dorro allege, based on suspicion only, that the Chun Wo plan was “made up”.  This is a serious allegation which I reject.  The two surveys clearly produce different results but to explain the difference by an allegation of fabrication by Chun Wo is unworthy.  The allegation that Chun Wo managed to get the approval of both the architect and the BA of their “made-up” plan and thereby compromise the structural integrity of a 17-storey building is unsustainable.

(ii)   Reasons for differences

63. There are a number of unknown factors which could explain the differences in the two surveys.  Different equipment was used to carry out the surveys.  Chun Wo used certified calibrated tape measures, ALA used a theodolite.  The use of different equipment involved the use of different control points.  Different people did the surveys.  It is impossible to say if human error crept in and if so, by how much and by whom.  The condition of the site in November 2000 must have been different from its condition a year earlier.  Control points and pile markers may have been damaged by plant and machinery or may have shifted in extreme inclement weather, which is a feature of Hong Kong in the summer months.

64. The accumulation of imponderables, combined with the acceptance of Chun Wo’s honesty and competence, must result in a conclusion that the mere existence of the ALA plan does not prove the inaccuracy of the Chun Wo plan.

(iii)   Dorro’s grounds for ‘suspicion’

65. Mr Tsang, for Dorro, commissioned the ALA report after the expiration of the defects liability report because he suspected the piles may be offset.  He said in evidence, and I accept, that he was very experienced.  He formed his suspicions in about September 2000 which was the first time he had been to the site since Chun Wo had left.  His project manager, who had made weekly visits whilst Chun Wo had been on site, also ceased weekly visits after January 2000.

66. Mr Tsang based his suspicion and consequent lack of confidence in Chun Wo’s work on his own observation of the pile lay-out and the existence of voids around some of the pile tops themselves.  The defendant’s original expert witness on this issue was Mr Lai Hoi Leung.  Mr Lai, for undisclosed reasons, was unwilling to give evidence.  He was replaced at the last minute by Mr So Kin Shing.  Mr Lai took photographs of the pile tops in November 2001, another year later.  Dorro’s case was that the piling may not have been carried out competently because the method statement for filling in with sand at surface level after the pile driving may not have been done properly or at all.

67. Against this is the evidence from the plaintiff’s witnesses as to what actually happened at the time.  Twenty of the 51 piles had to be pre-bored.  This is because in 20 cases rock or other obstructions had to be bored through or cleared and the pile re-set and re-driven.  There is no doubt that this was done.  It is also a fact that tons of sand were purchased, delivered to the site within time and paid for.  I have no doubt either that the sand was used in accordance with the method statement.

68. The more likely explanation for the existence of voids a year or two years later, is weathering and settlement.  The original work was supervised by the architect; no comment about voids was made by Mr Ho when he was on site for the purposes of a handover on 18 January and 5 April 2000.  The first complaint was many many months later.

69. Finally, to put the matter in context, Mr Molloy estimated the actual cost of the grouting required to fill the voids that were noted later, at under $10,000.

(iv)   The pile integrity test

70. Another issue, tabled by Dorro in support of their contention that Chun Wo’s works were defective, questions whether Chun Wo ever carried out the PIT at all or, if it did, whether it was done properly.

71. On this issue I again find that Dorro’s expressed lack of confidence in Chun Wo is, at best, misplaced; at worst, contrived.  Dorro’s suspicion is based firstly, on the fact that the test was not witnessed by the BA and secondly, that some pile heads, when inspected two years later, did not appear to have been “smoothed off” sufficiently as a pre-requisite of conducting a PIT.

72. Once again these suspicions are in the face of compelling evidence of what actually happened.  An independent accredited firm called Foundation Techniques Ltd carried out the test and was paid.  Their report was submitted to the BA and acknowledged.  Chun Wo witnesses gave evidence of the necessary smoothing off of the pile tops.

73. To conclude, the answers to issues (1) and (2) as set out on page 20 of this judgment are (1) No and (2) No.

(2)   As a result of Chun Wo’s as built piles, were remedial works necessary?

74. This issue involved a considerable amount of structural engineering expert evidence.  Three preliminary observations should be made.

75. Firstly, Chun Wo’s expert witness on this matter was Dr Chan Wan To.  I found his evidence to be utterly convincing and reliable being, as it was, at all times fair and measured.  Secondly, it is acknowledged that some remedial work was ultimately carried out.  This was to the pile cap, not the piles.  The issue is whether Dorro has proved that the remedial works flowed from Chun Wo’s defective works.  It is interesting to keep the time scale in my mind in this context.  This is because it is part of Chun Wo’s defence to the counterclaim that Dorro knew their development was in a falling property market.  Dorro, it is said, proceeded very slowly because, it is suggested, they were hoping for and waiting for an up-turn in the market.  Almost three years elapsed between the completion of the piles and the superstructure works getting under way.  Mr Tsang’s “suspicions” were first voiced a year later.  Dorro and the architect, Master Union, got involved in disputes which led to Master Union’s resignation in early 2001.  Master Union had been both the architect and the RSE/AP but a further five months passed before a new RSE, “Wong and Cheng” was appointed and longer still before a new architect “Wong & Tai” was appointed.  Over the same period (in fact a total of 21 months from August 1999 to May 2001) Dorro were negotiating and corresponding with the Lands Department about the premium payable for the development.

76. Whilst this may be consistent with a suspicion or belief that Chun Wo’s work was defective it is also consistent with Dorro deliberately stringing the whole project out for as long as possible.  Ultimately blaming Chun Wo for need to do remedial work was, it was submitted by Chun Wo, part of their overall approach.  Not paying Chun Wo was a necessary part of that approach.

77. Thirdly, no criticism is made of the new consultant engineers, Wong & Cheng, appointed in mid 2001.  They were responsible for, inter alia, the amendments to the pile cap.  It is of considerable significance that Mr Sung Kee Cheong, a director of Wong & Cheng, gave evidence (willingly in answer to a subpoena) as part of and in support of the plaintiff’s case.

78. Much of the evidence concerned various amendments which were submitted to the BA for approval and consent to commence works for the piling, pile cap and excavation and lateral support (ELS) works.  At the end of the saga Chun Wo’s piles, as built, were used and minor amendments were made to the pile cap.  A strap beam was added to the pile cap at F5 and a ‘drag wall’ was built.

79. In issues of structural engineering a court is often faced with a plethora of plans, graphs, computer print-outs, equations and other data.  The purpose of being taken through all the scientific evidence is to get to a final point.  The court is escorted along the route in order to get to the destination.  It is the destination which matters.  There are occasional investigations down side roads which turn out to be culs-de-sac.

80. At the destination in this case I found the following :

(a)	Mr Sung, from Wong & Cheng, was the witness “on site” for the events from mid 2001 onwards.  He was a reliable witness.  In summary, his evidence was that in the three piling amendments (from which flowed pile cap design amendments) the revisions to general building plans and structural plans were not caused by the pile locations.  In respect of the first amendment he wasn’t completely sure about this but he did confirm that the revision to the loading schedules were not caused by the pile locations.  Dorro’s case that the pile locations was the initial cause of all the amendments was not made out.
(b)	The high water mark of Dorro’s case was that strap beams were added to pile cap F5.  The question therefore is, was that necessary solely because of Chun Wo’s pile locations?  The evidence fell well short of answering that question in the affirmative.  F5 was a pile cap resting on a group of three piles.  The distribution of the loading among the three piles could not be discerned.  In the amendments the pile locations did not change but the loading schedules and general building plans did.  It cannot be denied that the strap beams at F5 may have been necessary in part, or even wholly, because of the pile location but conversely it can never be said with any conviction that it was solely due to the pile location.  It may have been necessary entirely because of the pile location, it may have been partly because of the pile location or the pile location may have had no relevance whatsoever.
(c)	Of the 51 piles Dorro’s case is aimed at just one pile cap supporting three piles.
(d)	Chun Wo conducted its own checks and produced their own calculations which formed the basis of their conclusion that no remedial work was necessary because of the pile locations.  Those calculations were criticized, through their expert witness Mr So Kin Shing.  All Chun Wo’s checking calculations were produced.  No criticism was made of them except in respect of those for pile caps F6, F8 and F9.  In respect of the others computer print-outs were produced.  However Chun Wo relied on a single page of hand written calculations for F6, F8 and F9.  To the inexpert eye it was impossible to see how this page either related to F6, F8 and F9 or confirmed the integrity of the piles at those pile cap locations.  However Dr Chan was particularly helpful in this regard.  Mr So eventually conceded that the single page was sufficient to deal with F8 and F9.  Dr Chan went further.  I accepted his evidence that F6 (which supported only a single pile) was included.  Apart from the sound scientific reasoning advanced by Dr Chan, it is unreal to think that Chun Wo, tasked with checking the adequacy of their own piling for the purposes of litigation, would omit F6 for no apparent reason.
(e)	Mr So, whose experience, expertise and conscientiousness is beyond question, had the disadvantage of being called in to replace Mr Lai at the eleventh hour.  I found his approach to be overcritical, often on matters which were not directly related to the key issues.  He seemed reluctant to make any concessions, even where such concessions would have had no adverse effect on the thrust of his evidence.  For example, on three occasions in his report he stated that an offset in a pile “shall” affect the pile load bearing capacity.  Upon further questioning about this he declined, at first, to amend it to “may”.  However it transpired that what he meant was that an offset pile was certain to “affect” the loading bearing capacity in some way, but that way could be either adverse or not adverse.  Only when the word “adverse” was added was he willing to change “shall affect” into “may adversely affect”.  Chun Wo’s case always conceded that offset piles could affect matters but always denied any suggestion that it would, which is what Mr So appeared to be saying in his report by use of the word “shall”.  In fact he was not going that far at all.
	To summarize, Dorro’s claim that the remedial works were caused by Chun Wo’s defective piling fell well short of being proved on the balance of probabilities.  For the sake of completeness I can say that even if Chun Wo had been charged with the task of satisfying the court that remedial works were not necessary as result of their piling they would have succeeded in doing so.

3.   Liability for delay arising out of remedial works

81. In view of my findings above, I need only deal with this issue for the sake of completeness, and therefore, briefly.

82. I have already dealt with the issue of delay during the contract works.  As to the question of liability for delay to the commencement of the pile cap works, that cannot be held against the plaintiff because I have determined Chun Wo was not in breach of contract.

83. It is nonetheless a worthwhile exercise to consider the delays which actually occurred and investigate the reasons.  Some of these matters have already been touched on; however, by way of a concluding observation, when the following factors are viewed together, it becomes fanciful to think that Chun Wo should be liable for years of liquidated damages and/or years of loss of rental incomes and/or loss of property value in a falling market.

(i)	After January 2000, eight months passed before Mr Tsang visited the site.
(ii)	Thereafter another two months passed before Dorro instructed Andrew Lau.
(iii)	Chun Wo was not asked to check its figures until 27 November 2000.  Chun Wo responded within 10 days.  Chun Wo did the best they could in this regard faced with Dorro’s unreasonable refusal to provide Chun Wo with its pile cap design proposals.
(iv)	Chun Wo was not involved in the dispute between Dorro and Master Union.  It had no power to control the delay that that dispute caused.
(v)	After Master Union resigned five months passed before a new RSE was appointed and seven months before a new architect was appointed and nine months before an application was made to the BA for the superstructure contractor (New City Construction) to carry out the ELS works — a necessary pre-requisite to the pile cap amendment works.
(vi)	The negotiations over the premium went back and forth for almost two years.  Dorro eventually agreed to pay a premium which was almost the same amount that had been offered early.  About $8 million was eventually paid in July 2001.  $8,230,000 has been proposed by the Lands Department in May 2000.  On two occasions Mr Tsang asked for an extension of time to consider an appeal against the Lands Department’s premium assessment.  On one occasion he gave as a reason for needing more time that he needed to discuss the matter with other directors of the company.  The only other director was his wife.
(vii)	Dorro was very slow in submitting the SSSP (a site safety plan), monitoring check points and a defects survey.  Contrary to the defendant’s contention, the evidence showed that these were critical to the commencement of the ELS works.  BA consent was only granted after they were submitted in June 2002.  Dorro had known they were both necessary and required for at least nine months prior to their submission.

84. Even if Chun Wo had been at fault none of these matter could be laid at their door.

(4)   Loss?

85. In view of all the above this issue is entirely academic.  There is no need to address it.  I only observe that the optimum point of Dorro’s counterclaim is that : (i) the value of the property fell by about $40 million between January 2001 and August 2003 and/or that (ii) rental income of $580,000 a month was lost.  These figures should be viewed in context.  The facts are that Dorro still owns the building, it is now worth 60% more than it was worth in August 2003 and it is standing on Chun Wo’s piles.  Dorro’s patent desire to ride out the falling market has been successful.  Their attempt to claim enormous losses from their piling sub-contractor has not.

86. There will be a judgment on the claim in accordance with paragraph 36 of this judgment with costs to the plaintiff.  The counterclaim is dismissed with costs to the plaintiff.  I have considered carefully Mr Cooney’s claim for indemnity costs but I refuse it.  The application for indemnity costs was not hopeless but is, nonetheless, rejected.