LINFIELD LTD v. TAOHO DESIGN ARCHITECTS LTD AND OTHERS

HCCT 68/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 68 OF 2001

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TABLE OF CONTENTS

Appendix: List of Abbreviations

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J U D G M E N T

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I. INTRODUCTION

1. This action concerns a luxury development known as "The Belvedere" at 51 Plantation Road on the Peak. Linfield¹ is the owner of the Property, which consists of 6 houses. TDA was the architect, PCL the main contractor, MML the nominated stone-cladding sub-contractor, and GWA the RSE for the Property. Linfield claims that the Defendants breached their contractual or common law duties in the design and building of the Property. As a result, Linfield says that it ended up with a substandard development. Linfield has many complaints. Some are that the limestone cladding of Houses 1 to 6 was wholly unsuited to Hong Kong weather conditions and in any event was ineptly fixed to the external walls of the Property; that reinforcement bars in the concrete works of Houses 1 to 6 were left exposed or with insufficient cover and thereby undermined the structural integrity of the Property; and that there was no proper waterproofing of the Property's podium. In a separate action, Linfield has sued BHP on like grounds.

2. Construction of the Property was initially completed around the first half of 1998. It was Linfield's intention to hold the Property for long-term investment purposes and to rent out Houses 1 to 6. It started to lease individual houses in about May 1998. However, between December 2000 and April 2002, repairs were carried out to remedy the defects alleged by Linfield. By this action, Linfield seeks to recover against the Defendants the cost which it incurred in repairing the defects which it attributes to the Defendants' breaches. The total sum claimed under this first head is $37,709,144.61. Linfield also claims the rental which it says that it lost through being unable to lease houses pending completion of repair work. An additional sum of $42,139,629.00 is claimed under this second head. Linfield's total claim is therefore $79,848,773.61.

3. Linfield's actions against TDA, PCL and BHP have been stayed to a consolidated arbitration which is not currently anticipated to take place until 2005. But the stay has not meant that TDA, PCL and BHP have played no role in the trial of this action. This is because in these proceedings GWA has sought contribution or indemnity against TDA, PCL, MML and BHP for any liability to Linfield on the part of GWA. BHP has itself served contribution and indemnity notices on TDA, PCL, and MML for any amount which BHP might be liable to GWA. On the eve of trial the Court was informed that TDA was insolvent and the liquidators of TDA did not propose to appear in the action. The Court was also told by MML through its solicitors Messrs. Deacons that MML had decided not to defend the action. Accordingly, the trial of these proceedings was only attended by representatives of Linfield, GWA, BHP and PCL.

II. BACKGROUND

A. The parties enter into contracts: February to December 1994

4. Sing Kee is a family-owned investment company of which Mr. Lu was and remains the managing director. On 4 February 1994 Mr. Lu approached his friend Dr. Ho, a noted architect and principal of TDA, for advice on the development of a property. In April 1994 Sing Kee established Linfield as a wholly-owned subsidiary for property development activities. On 20 April 1994 Linfield acquired from Shell the land on which the Property is situated. Linfield's original intention was to build 5 Western-style townhouses on the land. At the time, as part of its conditions for sale, Shell retained an option to buy back one house. After Shell informed Mr. Lu at the end of 1994 that it did not intend to exercise the option, Linfield revised the design for its proposed development from 5 to 6 houses.

5. On 11 May 1994 Mr. Lu had discussions with Mr. Nick Brooke, the Senior Partner of BHP, about the provision by BHP of development and project management services in connection with the construction of the Property. Negotiation over terms followed. This negotiation later culminated in the signing of a formal agreement between Linfield and BHP.

6. By letter to Sing Kee dated 3 March 1994 GWA outlined a scope of services and terms of appointment in connection with GWA's proposed appointment as structural and geotechnical engineer for the Property. The letter stipulated:-

"1. Services

1.1 Scope of work will include the duties and responsibilities of the Registered Structural Engineer for the project, including submission of plans and negotiation with all Government Authorities.

1.2 Preparation of structural design including ongoing discussion with the Architect, the Building Services Engineer and Cost Consultants to make amendments to meet client's requirement.

1.3 Preparation and submission of superstructure plans to Government for approval.

....

1.7 Periodical site supervisions engineer level staff as required for normal projects.

1.8 Attendance of design, coordination and site meetings. Meeting with BLD.

....

2. Terms of Engagement

2.1 Fees

The fee for the above mentioned services will be a lump sum of HK$550,000.00 (HK$300,000.00 for structures, HK$250,000.00 for geotechnics).

....

B.O.O. Class C full time site supervision if required by Building Authority will be charged at HK$36,000.00 per month. Class A senior site supervision will be charged at $18,000.00 per month...."

Acting on Sing Kee's behalf TDA accepted GWA's proposals by fax dated 12 May 1994. On 26 August 1994 Mr. Lu formally signed a copy of the letter on Sing Kee's behalf to signify acceptance of its terms.

7. On 9 June Dr. Ho and Mr. Wong signed a copy of Form BA4 to confirm their respective appointments as AP and RSE for Linfield's project.

8. On 6 July 1994 BHP and Linfield signed a Development Consultancy and Project Administration Agreement and Conditions of Engagement. The Memorandum of the BHP Agreement provided as follows:-

"1. The Client [Linfield] agrees to engage the Development Consultant and Project Administrator [BHP] subject to and in accordance with the Conditions of Engagement attached hereto and the Development Consultant and Project administrator agrees to provide the services recorded in Appendix A subject to and in accordance with the said Conditions of Engagement.

2. The Development Consultant and Project Administrator shall act as the agent of the Client, and be responsible for the administration, management and co-ordination of the Project.

3. The Development Consultant and Project Administrator shall:

a) Communicate to the Consultants the requirements of the Client's Brief.

b) Monitor the progress of design work.

c) Monitor and regulate programme and progress,

d) Monitor and use his reasonable endeavours to co-ordinate the efforts of all Consultants, advisers, contractors and suppliers directly connected with the Project.

e) Monitor the cost and financial rewards of the Project.

....

6. The Development Consultant and Project Administrator shall not be responsible for:

a) Any forecasts of financial viability unless prepared by him.

b) The Consultant's design and technical co-ordination thereof.

c) The advice or recommendations that may be provided by any Consultant or adviser appointed by the Client which is independent of the Development Consultant and Project Administrator.

7. No liability shall attach to the Development Consultant and Project Administrator either in contract or in tort or otherwise for loss, injury or damage sustained as a result of any defect in any material or the act, omission or insolvency of any person other than the Development Consultant and Project Administrator and the Development Consultant and Project Administrator shall not be liable to indemnify the Client in respect of any claim made against the Client for any such loss, injury or damage.

....

9. The date of commencement of this Agreement shall be [6/7/94].

....

12. For the avoidance of doubt the obligations, liabilities and responsibilities of the Development Consultant and Project Administrator are as expressly stated herein. No additional obligations, liabilities or responsibilities whatsoever shall be implied...."

9. Appendix A of the Conditions to the BHP Agreement stated that BHP's "development consultancy" duties would include the following:-

"1. General

a) Acting as the Client's guide and advisor throughout the conceptual and schematic design stages in regard to all matters of a real estate nature which may have a bearing on the design, cost, feasibility and eventual marketability of the project.

b) Advising on the make-up of the consultancy team and on the respective roles of the various consultants to be employed in order to achieve the proper programming and co-ordination of the project, and the negotiation and agreement of the terms and conditions of any contracts to be entered into with such Consultants.

2. Design Review

a) Scrutiny of the conceptual design in terms of marketability and future maintenance and upkeep.

b) Advising on the choice of materials in terms of market acceptability and ongoing maintenance and in terms of overall cost benefit....

4. Project Monitoring

a) Throughout the duration of the project carefully to monitor the progress in terms of financial, technical and programme performance and to submit regular written monthly reports.

b) At an early stage, to identify and, working closely with the consultancy teams, to propose solutions to potential problems and to assist with the resolution of such problems to ensure the timely completion of the project.

c) To assist in the review of construction cost estimates, the preparation of contract documentation, the award of tenders and the evaluation of contractor's claims."

10. Further, according to Appendix A, BHP's "project administration" responsibilities included the following:-

"2. Consultancy appointments

2.1 Advise the Client on the need for and make recommendations for the appointment of other consultants by the Client.

....

2.4 Determine with the Client the limit of the authority of the architect to issue instructions without obtaining the Client's or the Project Administrator's prior approval.

2.5 Advise the Client on the need for and appointment of a clerk of works and other site supervisory staff.

2.6 Monitor the performance of Consultants, clerk of works and contractors in the performance of their duties and the discharge of their responsibilities.

3. Brief design and quality control

3.1 Co-ordinate with Consultants the preparation of the design brief. Amplify the design brief as necessary during design development. Incorporate any changes and obtain Client authorization. Issue to Consultants.

3.2 Establish the responsibilities of Consultants, contractors and sub-contractors.

3.3 Report scheme design proposals prepared by Consultants to Client.

3.4 Report preferred components, drawings and specifications prepared by Consultants to the Client and obtain approval. Arrange amendments, if required, and submit final proposals to Client for approval.

3.5 Check that Consultants review buildability and technical design of proposals with specialist contractors.

3.6 Establish procedures for checking compliance with designs and specifications and monitor standards of workmanship and materials.

3.7 In conjunction with Consultants, advise on the need for quality assurance schemes, defects insurance and product guarantees.

9. Contract procedures

....

9.3 With the Consultants, prepare list of tenderers, conduct interviews, if required, and obtain approval from the Client.

9.4 Arrange with Consultants tender analysis; obtain clarification of ambiguities and prepare tender report. If necessary, arrange interview of tenderers. Prepare tender award recommendation and obtain instructions from the Client...."

11. By letter dated 8 July 1994 to GWA, Linfield authorised GWA to issue instructions to the project's geotechnical engineer "[p]ending the conclusion and signing of the formal Consultancy Agreement for engineering services". Linfield agreed to meet any costs provided such were necessary for the development of the site. Linfield concluded its letter by looking forward to the formal signing of a formal consultancy agreement.

12. On 28 July 1994 BHP suggested to TDA that PCL be removed from the shortlist of tenderers for the demolition contract relating to the Property's substructure. BHP stated that it was making this recommendation because it had "experienced difficulty in conducting contracts with [PCL] in the past".

13. TDA formally submitted a proposal to Sing Kee for the provision of architectural services on 2 August 1994. TDA's scope of services included preparation of general building plans for submission to the Buildings Department, coordinating with consultants for the preparation of structural plans for Building Department Approval, periodic site inspections during construction, and the issue of a defects list. By way of detailed conditions of agreement TDA's submission incorporated the terms of the "Agreement between Client and Architect published by the Hong Kong Institute of Architects (latest edition)". Sing Kee signed a copy of TDA's proposal letter on 25 January 1995.

14. On 23 December 1994 GWA wrote to DLS, Quantity Surveyors for the project, about reservations as to PCL's capability for the site formation works. GWA recommended against inclusion of PCL in the tender list for such works. By fax of the same date to TDA, Mr. Angus Chan of BHP noted that BHP did not concur with GWA's comments on PCL. TDA then wrote to Mr. Joseph Kong of BHP to voice strong objection to inviting PCL to tender for the site formation works. TDA believed that PCL lacked the capacity and experience to undertake the difficult work involved. The following day (24 December 1994) GWA again wrote about its doubts as to PCL. PCL's largest previous contract experience on site formation and filing was only for works worth $2 and 3 million, whereas the value of Linfield's site formation contract was $30 million. GWA wrote a further negative assessment of PCL's abilities as a site formation contractor on 20 February 1995. Ultimately, although PCL put in the lowest tender for the site formation works, the contract was awarded to Gammon.

B. Choice of limestone: January 1995 to July 1996

15. The Buildings Department approved the building plans for the project on 9 January 1995.

16. On 27 February 1995 BHP confirmed to TDA that Linfield wished to proceed with a residential development of 6 (instead of 5) houses. BHP instructed TDA to proceed with the necessary design work or submissions occasioned by the change of intention.

17. At this point Mr. Lu started to consider an appropriate stone to use as cladding for Houses 1 to 6. The use of stone had originally been suggested by Dr. Ho who produced samples for Mr. Lu to examine. Dr. Ho recommended limestone and gradually this sedimentary stone became the preferred cladding material because (as Mr. Lu observed in evidence) "it had a softer appearance and texture than granite and was less common than granite and would thus tend to give the Property a distinctive look". Mr. Lu had ambitions for the Property. He envisaged it as embodying a degree of refinement, discrimination and taste setting it apart from other high class developments. It was "to be something very special, probably the best in Hong Kong".

18. On 14 March 1995, (along with Dr. Ho, Mr. Patrick Chan and Ms. Kirkwood of TDA) Mr. Lu, his sister Daphne and his wife Carol visited 6 Perkins Road, Jardines Lookout, to view a property (then under construction) which employed limestone cladding. Dr. Ho drew Mr. Lu's attention to fossils in the limestone and the inherent beauty of the material. Mr. Lu acknowledged that limestone had a "softer feel" than granite and from then onwards Mr. Lu and his wife gradually became converts to the idea of using limestone for the Property's cladding.

19. On 30 May 1995 GWA wrote to Sing Kee to vary the terms of GWA's engagement as structural and geotechnical engineer so as to reflect the inclusion of a 6th house in the project. GWA's scope of services remained the same. But fees were amended to provide for a lump sum of $300,000 over the $550,000 previously agreed. Sing Kee signed its acceptance on 27 June 1995.

20. Since the Perkins Road visit, Mr. Lu had asked architect friends of his about the use of limestone for the Property. Most did not have experience in the stone. This was not surprising. At the time limestone was not in common use in Hong Kong for cladding. Mr. Lu had also seen other Hong Kong buildings (one in Tai Hang Road) which made use of stone cladding. He was, however, unhappy with the colour of the stone that he saw. The stone used did not produce the "feel" which he wanted for the Property. Mr. Lu noted that the Tai Hang Road building had patches of stain on the external wall, but he was told that was due to the fact that sealant coating had been improperly applied.

21. Sometime in the autumn of 1995 TDA presented Linfield with a shortlist of types of limestone to select. Mr. Lu was partial to Pear de Chassagne Banc 13-08 ("Chassagne"). Unfortunately, he was told that not enough of that type of limestone was commercially available for use in the Property. The second choice was Charmot, but Mr. Lu was not wholly satisfied by the colour of the Charmot samples provided to him. The search for an appropriate limestone therefore continued.

22. In light of the information, some non-committal, which he had been receiving from his acquaintances about the use of limestone for cladding, on 10 November 1995 Mr. Lu met with Ms. Kirkwood and Mr. Joseph Kong to discuss the choice of stone. Mr. Lu queried whether limestone was after all suitable for use in Hong Kong and (if it was) whether it was appropriate as far as initial and maintenance costs were concerned. Mr. Joseph Kong accordingly asked TDA by a letter dated 23 November 1995 to provide the following information to enable Linfield to assess the practicality of using limestone:-

(1) Country of origin.

(2) Name of suppliers.

(3) Type of warranty that will be provided by suppliers.

(4) Type of surface treatment to be applied to the limestone.

(5) Laboratory test report of limestone's tensile and compressive strengths.

(6) Thickness of cladding to be used.

(7) Method of fixing and maintenance.

(8) Appropriate costs estimates for the supply and installation of limestone cladding for 6 houses.

(9) Alternative external finishes.

Although Mr. Joseph Kong asked TDA to reply "as soonest possible", it appears that no response was ever received. Instead, as Mr. Lu pointed out in evidence, none of his consultants expressed any concern with the then ongoing design of the Property on the assumption that limestone would be used as cladding.

23. Mr. Lu freely confesses (and I accept) that in those days he knew next to nothing about stone cladding, much less about limestone. He relied on his consultants to advise him if there was any problem, technical or otherwise, about using limestone for cladding in Hong Kong. In the absence of any caution from his advisers, Mr. Lu was simply concerned with the aesthetic qualities of the proposed stone material, namely, whether any particular limestone had a suitable colour, appearance and texture for houses of the nature which Linfield wished to erect.

24. On 20 December 1995 DLS invited tenders for superstructure works at the Property. PCL was among the companies invited to tender. The Tender Specification included Technical Specifications dealing with stone cladding, but the tender did not identify the precise stone to be used for cladding.

25. Discussions over the appropriate stone continued. In early 1996 Dr. Ho mentioned to Mr. Lu that he had a friend who was an expert in the stone field and could tell Linfield everything that it wished to know about stone. Dr. Ho wanted to introduce Mr. Lu to this person and a meeting was therefore arranged.

26. On 11 January 1996 DLS issued Addendum 1 to the superstructure tender documents. This specified Chauvigny Marbrier limestone as external cladding. Linfield had selected this stone after browsing through a catalogue compiled by Rocamat (one of the world's leading stone suppliers). Mr. Lu also had in mind Mr. Joseph Kong's advice that Chauvigny Marbrier was denser than Chassagne and that denser and stronger stones were preferable.

27. On 7 February 1996 the Buildings Department approved the superstructure works for Houses 1 to 5. It was then envisaged (as in fact transpired) that the superstructure would be built in 2 phases, the first comprising Houses 1 to 5 and the second House 6.

28. Mr. Lu met with Dr. Ho and his stone expert friend on 13 February 1996. The expert turned out to be Mr. Tabar, MML's managing director. Mr. Lu had been expecting a "professor" of stone and was surprised to find that Mr. Tabar was a contractor wishing to market MML's services to Linfield. Although Mr. Tabar showed Mr. Lu and his wife a variety of different stones which MML could supply, he did not say much about the properties of different stones nor discuss their strengths and weaknesses as cladding material. After the meeting Mr. Tabar made 3 proposals for the supply of stone material. One was to use Chauvigny Marbrier, another to use SJ Claire, the third to use granite. Granite was rejected because it would have involved modification of the design being prepared by Dr. Ho. It would not have been possible to use granite for the elaborated moulding designs envisaged by Dr. Ho for the Property. Mr. Tabar noted that the Peninsula Hotel (for which MML had been the contractor) employed SJ Claire and pressed the 2nd proposal accordingly. But Mr. Lu thought that SJ Claire was too light in colour. Mr. Lu's preference thus remained firmly with Chassagne.

29. Mr. Tabar said that he had a source in France from which sufficient Chassagne for Linfield's purposes could be obtained. He proposed that Mr. Lu and his wife travel to Paris to see the stone. Mr. Tabar offered to pay tickets and accommodation for the trip. Mr. Lu declined the offer of tickets and lodging but agreed to go to France at Linfield's own expense.

30. At a project meeting on 29 February 1996 BHP requested DLS to provide a standard nominated subcontract document for stone works and windows for the purpose of obtaining quotations from stone and window suppliers.

31. On 19 March 1996 Linfield decided that the stonework for the Property would be re-tendered as a nominated sub-contract and the main contract tenderers for the superstructure works would be informed accordingly. The stonework package in the main contract would be replaced with a prime cost sum. The NSC appointed would be required to provide Linfield with a performance warranty and bond.

32. Between 23 and 26 March 1996 Mr. Lu and his wife visited Paris with Mr. Joseph Kong. They were met there by Dr. Ho and Mr. Tabar. The group visited several quarries, including those of Rocamat. In the course of that trip, on one late afternoon, Mr. Lu and Dr. Ho were strolling ahead of Mrs. Lu and Joseph Kong. Mr. Lu asked Dr, Ho whether limestone generally was a suitable material for the Peak given the stone's high porosity (a characteristic which Mr. Lu had learned about from Mr. Joseph Kong). Dr. Ho responded in the affirmative, stressing that limestone was a natural material. Dr. Ho pointed out that the Cathedral of Notre Dame in Paris was made of limestone and had been standing for hundreds of years with minimal maintenance. Since Dr. Ho's answer seemed logical, Mr. Lu accepted the explanation. With the benefit of hindsight, Mr. Lu now realises that Dr. Ho failed to say that Notre Dame Cathedral is made from limestone blocks, in contrast to the thin veneer limestone cladding which it was proposed to fix mechanically to the concrete external walls of the Property. Therefore, that Notre Dame Cathedral has stood for hundreds of years in the northern climates of Paris, constituted little assurance that thin veneer cladding in the sub-tropical environment of Hong Kong would endure for as long.

33. The visit to France did not resolve the question of the choice of stone. Mr. Lu instead came back with a shortlist of candidate limestones: Vilhonneur B5, Vilhonneur MB, Chauvigny and SJ Claire. The prospective NSCs could at least be asked to price these stones. It was envisaged that the Chauvigny and Vilhonneur could be provided by Rocamat through its Hong Kong installing agent Man Shing, while MML could supply SJ Claire.

34. By letter to BHP dated 27 March 1996 TDA analysed the results of the tender for the superstructure works. The 2 lowest tenders came from CCECC ($96,941,885 after adjustment) and PCL ($100,854,784 after adjustment). TDA recommended (at §6.1):-

"Technically, there is little difference between the two lowest tenderers for the Architectural, Structural and E & M works. Our recommendation must therefore be based on the matter of price and programme. CCECC offer both the lowest price and shortest construction period."

GWA made a similar recommendation of CCECC in its tender analysis provided to BHP on 28 March 1996.

35. On 2 April 1996 DLS issued a tender addendum which specified Charmot as the external cladding material. On the following day by another addendum, contractors were asked to tender for cladding on the basis of further alternatives: Vilhonneur B5, Vilhonneur MB and SJ Claire. No choice of stone had actually been made. Charmot was merely specified for the purpose of obtaining prices.

36. On 3 April 1996 TDA on behalf of Linfield sent a letter of intent in relation to the appointment of PCL as main contractor for the superstructure works. PCL had by then agreed to reduce the tender amount to $96,654,784.40. Although TDA and GWA had recommended CCECC over PCL, Linfield awarded the contract to PCL on Mr. Joseph Kong's suggestion. BHP was closer to Mr. Lu than Dr. Ho at the time. Mr. Lu acted on Mr. Joseph Kong's advice because he thought that BHP was more likely than the other consultants to give Linfield its honest opinion. PCL obtained possession of the site where Houses 1 to 5 were to be built on the same day.

37. On 18 April 1996 tenders for the stone work were opened. Markway had the lowest tender, followed by MML and then Rocamat. None was wholly satisfactory for one reason or other. For example, Mr. Lu queried the quality of Markway's workmanship. Nor was Mr. Lu happy with the stone types for which tenders had been received. MML was asked to price for use of Chassagne. This was in part because MML claimed that it had a source for Chassagne with adequate supply. MML backed its claim by producing a fax from Ets Yelmini-Artaud SA in Jura certifying that the latter company could supply blocks of Chassagne B11 "for an approximatively quantity of 100 M3 or 5 000 sq M" within 6 months of an order. MML also recommended a limestone identified as Corton (Pierre de St Julien). Rocamat was asked in turn to review its tender to see where savings could be made.

38. By now the lack of decision on the award of the stone works contract was placing the construction programme for the Property in jeopardy. At a project meeting on 23 May 1996 BHP informed Linfield that a decision had to be made before 28 May 1996 if the project completion date was to be met.

39. On 23 May 1996 Marbres du Boulonnais (Markway's stone supplier) faxed Sing Kee to suggest that Chassagne was "probably not the best alternative as it always contains crystal lines, which can be large (4/5 millimeters wide) and sometime dark". It thought that Beaulieu B3 or Beaulieu B5 might be better. Samples were provided to Markway to show to Mr. Lu. By a further fax dated 3 June 1996 Marbres du Boulonnais observed that Beaulieu B3 and B5 were "among the hardest French limestone, and even mostly used in Europe for traffic flooring".

40. On 28 May 1996 Mr. and Mrs. Lu met with Ms. Kirkwood to examine the options for stone cladding. At this stage 3 stones were under consideration: Charmot from Rocamat, Forjone from Markway and Chassagne Beige Banc 2 from MML. Despite this, Mr. Lu's real preference remained for Chassagne. However, he was not confident that MML could deliver a sufficient quantity of that stone.

41. Mr. Joseph Kong warned Linfield that MML had a bad reputation. According to Mr. Joseph Kong, MML had been late on some projects and its performance unsatisfactory. Under Mr. Joseph Kong's urging then, Mr. Lu agreed to enter into an agreement with Asia Marble as NSC for the stone works.

42. On 5 June 1996 Mr. Lu (on the basis of Mr. Joseph Kong's advice) authorised BHP to appoint Asia Marble as NSC for a revised amount of about $24.3 million. This step was taken out of urgency, so as not to delay the construction programme for the Property. In fact Mr. Lu had doubts over the quality of Asia Marble's craftsmanship. These doubts stemmed from remarks by Dr. Ho to the effect that Asia Marble were unable to produce single corner pieces and instead had to stick 2 stone pieces together at an angle. This (Dr. Ho felt) was not ideal from an aesthetic viewpoint. Indeed, as far as Dr. Ho was concerned, MML apart, none of the stone suppliers being considered by Linfield were any good.

43. MML did not give up trying to obtain the stone work contract. Mr. Tabar met with Mr. and Mrs. Lu, Dr. Ho, Ms. Kirkwood and Mr. Angus Chan on 21 June 1996. Mr. Eric Au and Ms. Fiona Lam of DLS were also present. Mr. Tabar suggested that Mr. Lu visit France to inspect the proposed stone materials once more. It was also decided at the meeting that MML would prepare structural calculations in relation to the stone works for submission to the Building Department. These calculations were urgently needed. GWA was not present at this meeting.

44. Influenced by Mr. Joseph Kong's comments about MML, Mr. Lu was reluctant to go to France. But Dr. Ho lobbied hard to persuade Mr. Lu to consider MML's appointment as stone contractor. At around midnight on 30 June 1996 Dr. Ho sent Mr. Lu a lengthy fax in which he outlined a way forward. Dr. Ho discerned that there was "mistrust" between Mr. Lu and Mr. Tabar, but he did not believe that there was any basis for such feeling. Dr. Ho believed that "technically speaking, there is no problem of Tabar's ability to perform a good or even an excellent job". Dr. Ho assured Mr. Lu of this. Indeed, unless MML supplied enough of the chosen stone and installed the same properly according to design and specification, there was no obligation to pay. Thus, Dr. Ho advocated a meeting between the parties and taking up Mr. Tabar's offer to go to France "immediately to select and to place an order of the limestone of your choice on the spot in your presence". If this was done, Mr. Lu "will be sure what and where you are getting your limestone". If all that could be done within the week, the original time schedule could be met without posing difficulties for the main contractor.

45. Mr. Lu thus agreed to visit France again. He also became inclined to appoint MML as NSC. Sing Kee inquired of Rocamat whether it was prepared to supply MML with Charmot (the stone specified by Addendum No. 2 to the tender) even though MML was not its Hong Kong agent. By fax dated 2 July 1996 Rocamat confirmed that it was prepared to do so. A letter confirming award of the NSC to MML was sent by TDA on 4 July 1996. The contract amount was $23,900,000, including a provisional sum of $2,000,000 for contingencies. About 65% of the NSC amount represented the cost of the stone to be used. MML thanked Linfield for the award on 5 July 1996. By a letter dated 13 August 1996 PCL formally awarded the sub-contract for the supply and installation of stone work at the Property to MML. MML signed a copy of this letter on 24 September 1996.

46. On 14 June 1996 MML signed a Warranty in Linfield's favour in the following terms:-

"We [MML] (The Sub-Contractor) warrant that in consideration of your nominating us as Sub-Contractor for the Sub-Contract Works:-

(a) We will carry out complete and maintain the Sub-Contract Works in accordance with the terms of the Sub-Contract.

(b) We have exercised and will exercise all reasonable skill and care in:-

(1) the design of the Sub-Contract Works insofar as the Sub-Contract Works have been or will be designed by us; and

(2) the selection of materials and goods for the Sub-Contract insofar as such materials and goods have been or will be selected by us.

(c) We will comply with and satisfy the performance specification or requirement insofar as such performance specification or requirement is included or referred to in the tender documents and/or our Tender as part of the description of the Sub-Contract works.

(d) ....

(e) Nothing in our Tender shall operate to exclude or limit our liability for breach of the warranties set out herein.

(f) We will obtain a suitable performance bond (terms to be in accordance with the specimen attached as Appendix 'A' to Form of Tender) in favour of the Employer. This bond shall be duly executed under seal by an approved Insurance Company or Bank, acknowledging that the Insurance Company or the Bank is jointly and severally bound with us to the Employer in the sum of 10% of Sub-Contract Sum (rounded up to the nearest thousand dollars) against breach of the warranties hereof. The performance bond shall be extended if the Contract Period of the Main contract is extended or a delay occurs. The said Insurance Company or Bank shall be released from the Bond on the issue, under the Main Contract, of the Certificate of Practical Completion."

47. In the meantime concrete works for the superstructure of Houses 1 to 5 were being carried out by PCL under the supervision of TDA and GWA. Throughout, TDA was severely critical of PCL's work. For example, by letter to PCL dated 9 July 1996 Ms. Kirkwood pointed out that there were a number of areas of defective concrete casting by PCL and PCL's workmanship was not of the requisite quality. In a similar vein GWA repeatedly complained about PCL's work. For instance, in a memo dated 9 July 1996 Mr. Pisano (GWA' Resident Engineer) advised that the reinforcement quality of PCL's steelwork was below standard and site drainage was found to be lacking. A letter from TDA to PCL (copied to BHP and GWA) of 31 July 1996 observed:-

"We record our concern that construction of the structural work on site does not comply with the structural drawings. Furthermore, the work for these areas appeared to have had gone ahead despite repeated reminders from the resident engineer of non-compliance.

The contractor shall submit his method statement for rectifying the works and bear responsibility for any time and cost implications involved."

48. On 11 July 1996 Mr. and Mrs. Lu together with Mr. Joseph Kong and Dr. Ho travelled to France where they met Mr. Tabar. Linfield paid the air fares of its consulting team, but Mr. Tabar paid for hotel accommodation. On the final day of the visit, Bastille Day 14 July 1996, Mr. Tabar took the party to a warehouse owned by Marbres du Boulonnais. The factory manager showed Linfield's representatives for the first time a limestone known as Poiseul B5. Mr. and Mrs. Lu found the stone's colour and texture pleasing. Mr. Lu asked Dr. Ho whether the material was suitable for the Property. Dr. Ho asked Mr. Tabar. A discussion ensued in French between Mr. Tabar and the factory manager which Mr. Lu could not understand. Shortly after, Dr. Ho said that the material was suitable.

49. On the spot Mr. and Mrs. Lu decided to use Poiseul B5. Dr. Ho confirmed this decision in a fax dated 16 July 1996. An Architect's Instruction dated 12 August 1996 formally confirmed the substitution of Poiseul B5 for Charmot.

C. The course of construction from July to September 1996

50. By an Architect's Instruction dated 15 July 1996 TDA confirmed that aluminium window frames would be substituted for the UPVC frames specified in the tender. The aluminium windows were to be in accordance with specifications previously issued, but with the deletion of the thermal performance requirement.

51. At a meeting on 17 July 1996 among MML, GWA and TDA, it was decided that MML "would supply all typical fixing details and calculations including the fixing detail for solid stone columns and the clad tie beam to the head of the columns". The calculations would be submitted to GWA for checking as RSE before the end of July for onward submission to the Buildings Department. In the event MML did not provide structural calculations to GWA until about early September 1996.

52. The 17 July meeting was also told that the first shipment of Poiseul B5 would take place at the start of August and TDA would arrange to inspect the consignment in France prior to shipment. A consignment of 9 crates of limestone (246.91 sq m) was shipped on 9 August 1996 and a Certificate of Acceptance of Quality was issued by Dr. Ho on 11 August 1996.

53. On 29 July 1996 the Buildings Department approved the superstructure works for House 6.

54. By a letter dated 30 July 1996 Linfield appointed Mr. Shum as clerk of works starting from 7 August 1996 at a salary of $24,000 per month. Mr. Shum's job was to monitor the works at the Property. He was employed by Linfield but acted under TDA's direction.

55. In early September 1996 MML submitted shop drawings for the stone cladding works to TDA. Copies of the drawings were also supplied to PCL. On 19 September 1996 MML supplied Structural Stone Works Drawings and a current Drawing List to GWA for its information.

56. Criticism of PCL's work continued. At a meeting on 23 August 1996 more defective concrete work was reported and PCL was advised to use smaller vibrators. PCL undertook to confirm the steps needed to improve the quality of its concreting. PCL also acknowledged that there had to be better supervision of its workers and their workmanship. Nonetheless, despite PCL's assurances, Mr. Pisano observed on 30 August 1996 that, upon inspection, only one small vibration rod was available for compaction in connection with concreting for Houses 1 and 2. Mr. Pisano concluded that "[t]he recurrence of said situation will not be tolerated and subsequent concrete pours will not be allowed to commence". On 30 August 1996 Mr. Pisano noted that PCL had ignored GWA's request that all exposed concrete had to be protected during the first stage of hardening from premature drying due to sunshine, dry wind or rain. Yet further on 30 August 1996 Mr. Pisano expressed "growing concern" to Mr. Tin of PCL about the poor quality of the formwork being used for concreting. Mr. Pisano asked Mr. Tin to instruct his staff to adhere to minimum periods of time for removal of formwork. Mr. Pisano additionally stressed the importance of ensuring that complete and accurate records were taken of the time elapsed between hydration and discharge of concrete. Following an inspection of House 4 level 2/2A, Mr. Pisano refused to allow concreting to take place until 10 errors (relating (among other things) to incorrect spacing of vertical bars) were corrected. On 11 September 1996 problems were also detected in relation to House 4 level 3 which led to concreting being held back. Further, as at 12 September 1996, Mr. Pisano discerned no sign of improvement in the quality of formwork for House 3. All the foregoing correspondence between GWA and PCL was copied to TDA and BHP.

57. PCL plainly were experiencing serious project management problems. Thus, on 4 September 1996 Mr. Greg Wong wrote to PCL thus:-

"We are deeply concern and disappointed about your project management team's effect for this captioned project. We strongly feel that there is communication and miscommunication problems among your management team. Numerous discussions/ meetings were held to resolve field problems/ queries over the last few weeks. However, these queries (which have been resolved) were again raised by other staff of your management team during site meetings. It is obvious that if 'better' communication between your project team were carried out, then the above situations will not arises."

Mr. Pisano also raised the problem of communication among PCL's staff. He wrote on 12 September to Mr. Tin:-

"Despite previous verbal and written instruction not to do the addition of water by your concreting workers was observed during the casting of House 3 level 2A (441.60 mpd). It may be that your workers have a problem with communication and understanding simple instruction, in which case it may be advisable to replace them with coherent site staff.

Instruct your staff that no means of adding water (e.g. hose pipe) should be in the area of concreting during each pour. If this practice continues concreting works will be stopped."

At a meeting on 20 September 1996 Mr. Shum reported that there was insufficient labour on site, formwork and steel fixings had to be improved, and there was delay on PCL's programme. On 26 September 1996 Ms. Kirkwood wrote to PCL thus:-

"It would appear that our previous instructions and concerns raised with regards to poor quality of workmanship and untidy site arrangement have been totally ignored. These matters have been raised on a number of occasions and no improvements are being made. This is totally unacceptable and will not be tolerated further.

We request your reply by return with confirmation that you will take immediate steps to improve and maintain site activities to an acceptable standard."

D. The structural calculations

58. On 1 October 1996, having checked the same, GWA submitted MML' structural calculations and drawings for the stone work and anchoring at the Property to the Building Authority for approval. Much of the trial focused on whether GWA were negligent in their checking of MML calculations. I will consider the parties' submissions on the matter in Section III of this Judgment. But it is convenient to describe the calculations submitted by GWA to the Building Authority in some detail at this stage.

59. The calculations were prepared for MML by P. C. Lam. They are handwritten. An unnumbered initial sheet and sheets 1 to 13 are dated 14 August 1996, sheets 14 to 17 are dated 28 August 1996, sheets 18 to 23 are dated 29 August 1996, sheets 24 and 25 are dated 27 August 1996. GWA's submission includes further sheets which appear to have been separately prepared by P C Lam. Of these later sheets, 3 are dated 16 September 1996, 3 are dated 26 September 1996 and the last is an undated typed sheet with Poiseul B5 technical data (stated to be derived from "French tests according to French Standards").

60. There are 2 cover sheets. One entitled "Structural Calculations of Granite Cladding and Anchoring for Proposed Building Located at 51 Plantation Rd, Mid Levels, Hong Kong" is dated 16 August 1996 and bears a P C Lam fax legend dated 30 August 1996. Presumably MML received the initial batch of 25 sheets from P C Lam under cover of this sheet. The top most cover sheet is entitled "Structural Calculations of Granite and Anchoring" and is on paper bearing GWA's logo. GWA thus added its own cover to the P C Lam document before submitting the same to the Building Authority.

61. The initial sheet to the calculation contains the following information:-

"Design criteria:

1) Design Wind Load & Conforming to Code of Practice o Wind Effects Hong Kong 1983.

2) Deflection of GMS [Galvanised Mild Steel] angle support due to dead load - 1 mm

Allowable stresses:

1)	Allowable stresses for Steel Grade 43 (Use of Steel 1987)
	Yield strength	250 N/mm2
	Bending	150 N/mm2
	Tension	150 N/mm2
	Shear	92.5 N/mm2
	Bearing	181.5 N/mm2
	Modulus of Elasticity	200.000 N/mm2
	Density	78.5 kN/m3
2)	Allowable stresses for stainless steel fixing pin
	Yield strength	205 N/mm2
	Bending	123 N/mm2
	Shearing	76 N/mm2
	Bearing	153.75 N/mm2
3)	Allowable stresses of Granite
	Bending	4.50 N/mm2
	Shear	0.90 N/mm2
	Bearing	11.7 N/mm2
	Safety factor	3.0
	Density	23.84 kN/m2
4)	M10 HSA Expansion Bolt by Hilti
	Tcap = 5.8 kN"

62. It should be observed that MML's Shop Drawing SS-01 dated 16 September 1996 gives under the heading "ALLOWAB[L]E STRESS OF LIMESTONE TO BE AS FOLLOWS:" precisely the same figures cited as "Allowable stresses of Granite" in the structural calculations. I also note in passing that the structural calculations take into account the fact that the shop drawings show a number of ways of fixing stone panels to the external walls of Houses 1 to 5. Thus, for example, Shop Drawing SD-03 pictures a Type 1 fixing whereby a panel is held in place by 2 pins each on its left and right hand sides and 2 more pins at the quarter points of its upper side. In a Type 2 fixing a panel is held by 2 pins on each of its left and right hand sides. In a Type 3 fixing the panel is held by 2 pins at the quarter points of its top and bottom sides. Types 1, 2 and 3 panels were the most common fixing styles used on Houses 1 to 5².

63. I highlight one calculation on Sheet 7 for more detailed discussion below:-

"Calculation of Granite

[Diagram of a Type 2 fixing]

Design Load: 3.5 x 1.4 = 4.9 kN/m²

Consider 1 m strip:

∴ W [wind load] = 4.90 kN/m

= 4.90 N/mm

From cantilever:

[Diagram]

M [moment]	=	4.90 (350)2	=	300.125 N/mm
		2

t_req'd [thickness required]

From simply supported:

[Diagram]

M	=	4.9 (700)2	=	300.125 N/mm
		8
			(same as cantilever moment. O.K.)
			Use of 30 mm thk granite is ok."

64. Although by 14 August 1996 Linfield had decided to use Poiseul B5 limestone, the structural calculations constantly refer to "granite cladding". The error is made not just in the typed cover pages of the document but in the handwritten sheets as well. GWA says that this was a "typographical error". Although that may seen a curious suggestion because the calculations are handwritten rather than typed out, I accept that the word "granite" was probably used in error and was not amended through simple oversight.

65. The last sheet includes the following information:-

"DESCRIPTION

COLOR: Light beige, with rich and warm shade.

...

TECHNICAL DATA

...

Density	2.43	tons/m3
Porosity	9.8	in %
Sound Speedness	4.910	m/s
Capillary Ratio	1.2	-
Abrasion Test	28.2	min
Compression Breaking Load	103.4	N/mm2
Anchor Tie Test	1 500	N"

E. The course of construction from October 1996 to October 1997

66. MML was ready to start the stone work for Houses 1 to 5 on 16 October 1996. But the project had experienced delay in concreting work, so that not all houses were ready to be handed over to MML. For example, at a meeting on 17 October, GWA noted that PCL "still had not rectified the concrete wall³ being poured for incorrect thickness since last site meeting". This (GWA advised) "might affect the stone installation works". Mr. Shum notes in the margin to the minute that chipping work to rectify the incorrect thickness was in progress. It was instead decided that the houses would be made available to MML one at a time in accordance with a programme to be provided by PCL.

67. A principal focus of this trial has been on the substantial hacking off done to the concrete walls of Houses 1 to 5. In particular cases this hacking off led to the exposure of the underlying reinforcement bars or, at any rate, to a reduction of the concrete cover to the same. Left unremedied, the exposure of rebars or the depletion of their cover can impair the structural integrity and durability of concrete walls. For the purposes of later discussion, I will catalogue in this section the various hacking off situations as they arose on the project.

68. On 22 October 1996 MML wrote to PCL that, as measured at ground floor level, the concrete walls on numerous elevations of House 3 had been cast in excess of specification, the excesses ranging from +80 to -39 mm. MML followed up with a more detailed alignment survey of concrete measurements for Houses 1 to 4 by a fax dated 24 October 1996. The survey showed wall spans at several elevations were of specification at ranges of +64 to -58 mm (House 1), +67 to -34 mm (House 2), +39 to -74 mm (House 3) and +42 to -58.6 mm (House 4). PCL acted on MML's survey by hacking off concrete where the same exceeded the +15 mm tolerance allowed by the Technical Specification. But where the concrete was short of the specified dimension, MML did not require PCL to do anything.

69. By a fax dated 31 October 1996 to Ms. Kirkwood, PCL advised that in accordance with TDA's instruction the 50 mm thick enlarged concrete surface of the external wall of the servants' toilets and the internal wall adjacent to the kitchen staircase in Houses 1 to 5 were being chiselled away to comply with the relevant architectural drawings.

70. Minutes of a meeting on 1 November 1996 record the following:-

"Rectification to wall thickness at garden door Contractor reported that the taking down and rebuilding has not commenced. This area will be isolated for the waterproofing works. PCL have proposed hacking off the additional 50 mm thickness. GWA stated that 35 mm cover to the reinforcement must be maintained. PCL will make their proposal by Thursday 7th November.

It was noted upon site inspection that hacking off had been carried out and that the reinforcement is exposed.

It is recorded that this matter has been minuted for several months with the onus on PCL to resolve in good time and to the acceptance and satisfaction of the consultants.

Stonework

Setting out has commenced and drilling works are due to start on the 10th November. PCL stated that they had resolved with the stonework contractor that the current updated master programme can be achieved."

71. By a fax dated 6 November 1996 Mr. Pisano wrote to PCL:-

"As mentioned in site meeting No.15, once the chiselling to enlarged concrete areas of BW 2C-2B-2B of House 1, 2 & 3 respectively, has been completed the RE will inspect the remedial works.

The RE must be completely satisfied that 25 mm clear cover will be provided before any further works can commence."

The walls were the same as those mentioned in the fax to Ms. Kirkwood referred to above. An inspection on 1 November 1996 did not find any exposed reinforcement bars following chiselling. On 7 November 1996 PCL provided for GWA's approval the following method statement for repairing the chiselled surface:-

"1. To set out the locations of the enlarged conc. surface outside the servant's toilet in accordance with the structural and architectural drawings.

2. To chisel away the 50 mm thick extra conc. surface with hand tools.

3. To take down and clear away all the loose concrete, dust etc. from the chiselled surface.

4. To check and inspect the surface by RE.

5. To apply the Sika Top 122HB, the conc. repair mortar, to the chiselled surface in accordance with manufacturer's specification after the inspection and obtaining the approval of RE. (The catalogue of Sika Top 122HB is attached for reference)."

A meeting on 14 November 1996 records that the concrete wall had been completed and inspected by the RSE.

72. PCL completed its concrete works for Houses 1 to 5 by 15 November 1996. Minutes of a meeting on that day also record that the hacking off of the wall thickness by the garden door had been completed and "resifix" applied. The minute also states: "Contractor has submitted this method statement but it has not been formally approved." The method statement was formally approved by GWA by a fax to PCL dated 7 December 1996.

73. On 6 December 1996 the Building Authority approved the proposed "Fixing Details for Granite Cladding" in relation to Houses 1 to 5. At this point, given the references to "granite cladding" in the structural calculations submitted by GWA, the Building Authority was labouring under the impression that granite and not limestone was to be used in Houses 1 to 5.

74. At a meeting on 13 December 1996 PCL advised that all waterproofing works on Houses 1 to 5 had been completed and testing had commenced. Some remedial work (PCL pointed out) had started where leaks had occurred around formwork bolt holes. The clerk of works was monitoring the testing, which would continue after drilling and waterproofing of stonework fixings.

75. On 8 January 1997 the Building Authority consented to the carrying of "Fixing Details for Granite Works" in connection with Houses 1 to 5.

76. On 5 February 1997 the Building Department inspected the concrete work in Houses 1 to 5.

77. On 4 March 1997 Mr. Pisano wrote to Mr. Tin as follows:-

"Upon inspection of the site it has come to me attention that throughout house 1 to 5 areas of concrete have been 'cut chase'. You are reminded that all treated areas will require two inspections, one inspection once the preparation work has been completed and one when the remedial work has been completed."

78. In the real world, concrete cannot be truly flat. There are bound to be small variations (whether surface protrusions or declivities) along a concrete surface. What happened was that as MML was installing stone panels to the external walls of Houses 1 to 5, MML was discovering that it was not always possible to keep the panels in proper alignment. The stone panels themselves were not completely even in length and width. Further, the anchor bolts to which the stone panels would be attached were of relatively fixed dimensions. The anchor bolts could not be readily lengthened or shortened to take account of inevitable variations along the concrete surface. To enable the stone panels to be positioned in some reasonably aesthetic alignment, MML would therefore instruct PCL to hack off parts of the concrete walls of Houses 1 to 5. Mr. Pisano noticed this hacking off in the course of his inspection work and sent off the fax just quoted as a result.

79. Mr. Tin's oral evidence on the nature of the remedial work referred to by Mr. Pisano was confused. At different stages in his cross-examination Mr. Tin both claimed that before 30 October 1997 hacking off to accommodate MML's stone panels had and had not resulted in reinforcement bars becoming exposed. At one point in his cross-examination Mr. Tin suggested that remedial work to hacked off areas consisted entirely of applying Vandex. At another point Mr. Tin said that the same remedial work included the application of Sika Top concrete mortar. Mr. Tin explained that he understood the expression "cut chase" in Mr. Pisano's fax to be referring only to hacking off. If so, it seems to me more likely that, apart from the limited incident mentioned above, at the time of Mr. Pisano's fax hacking off had not been found to have caused reinforcement bars to become exposed.

80. At this point the remedial work envisaged by Mr. Pisano required the application of Sika Top to restore appropriate cover for the reinforcement bars embedded within the concrete walls of Houses 1 to 5. I do not read Mr. Pisano as referring simply to the application of Vandex, rather he seems to have been referring to using Sika Top in accordance with the method statement mentioned above. As will be seen below, where later hacking off led to the exposure of reinforcement bars, the application of Sika Top was not by itself a feasible repair. The Sika Top would have simply restored cover which it had been thought necessary to hack off in the first instance so as to allow MML to align its stone panels. That situation called for another method statement which would provide adequate cover for rebars without increasing the hacked off thickness of the relevant concrete walls. If the hacking off referred to by Mr. Pisano in March 1997 had led to exposed rebars, I doubt that Mr. Pisano would simply be writing in the way that he did without calling for a further method statement from PCL.

81. The minutes of a meeting on 7 March 1997 state:-

"PCL are having to carry remedial work to concrete external dining room walls to suit the stone work installation. There is some inaccuracy of setting out possibly due to bowing of the framework. Approval from GWA head office to be given to concrete remedial works. PCL to confirm reapplication of waterproofing. C of W will inspect."

This is further evidence of the need to hack off to enable MML to align its stone panels. It shows that PCL had to obtain approval from GWA for remedial work. The passage further shows that waterproofing with Vandex was a separate consideration from remedial work with Sika Top. Finally, the minutes highlight the clerk of works's responsibility to inspect the remedial works.

82. By letter to MML dated 14 May 1997 TDA confirmed that MML would undertake the following tasks:-

"1. Walling stones with veins will be taken off and replaced.

2. Cracked/broken walling stones which have been repaired and installed will be taken off and replaced.

3. Grey colour slabs will not be installed.

4. The installers will be instructed not to hang any such stones."

83. MML's stone work required more and more hacking work to be done. Stone installation work was threatening to delay completion of Houses 1 to 5. A meeting dated 14 May 1997 records the following:-

"Problems with the concrete structure now being raised as installation is proceeding. PCL stated they have 4 labourers assigned to do the hacking off work and will complete all that is marked up within the next two days.

PCL stated that any further adjustment works needed will require 2 days notice for arrangements and can provide more labour as required and will complete in a reasonable time. If works are required immediately then NSC may hack off only after notifying CofW but must undertake to assume responsibility for the water proofing. PCL must notify CofW of completion of hacking off for inspection and again for inspection of waterproofing rectification."

A meeting dated 16 May 1997 contains the following minute:-

"PCL & MML agreed to a joint survey to mark out all areas, where hacking off of concrete is required."

A joint survey to check and mark up areas requiring hacking off was scheduled as a matter of urgency. Following the survey the minutes of a meeting on 12 June 1997 state:-

"MML can commence to the entire of houses 1-5. All cut chase concrete has been marked up and PCL are in the process of finishing this work. It is hoped that any further cut chase concrete will be minimal"

A meeting on 27 June 1997 similarly expressed the hope that "any further cut chase work ... will be minor". The same meeting noted that "[i]nstallation is not at this moment being held up".

84. On 21 May 1997 PCL provided Sing Kee with a guarantee of its waterproofing works in the following terms:-

"We hereby guarantee the whole of our waterproofing works as included in the Contract against failure of watertightness for a period of FIVE (5) years from date of this guarantee, and shall at our own cost make good all defective works which are due to sub-standard materials and/or workmanship for the waterproofing works. This guarantee does not cover

a) Consequential damages caused by our defective works.

b) Defects which are caused by structural movement, defective window frame and/or works not part of this Contract and which affect the waterproofing works."

85. On 17 July 1997 TDA applied to the Building Authority for consent to the commencement of superstructure works for House 6 (Phase II of Linfield's project).

86. In around early May 1997 MML submitted calculations for the cladding of House 6 to GWA for checking and forwarding on to the Buildings Department. Upon checking those calculations, GWA noticed that the calculations referred to granite rather than limestone cladding. On 5 August 1997 Mr. Behrouzi faxed Mr. Tabar as follows:-

"Please find enclosed our comments on your proposed submission of House 6 cladding:

(1) All design calculations indicate GRANITE cladding; however, all cladding is made of limestone! In this respect, kindly forward to our office specification and/or test results that indicate the allowable stresses for limestone as used in your calculations. Also ensure that submission calculations do not indicate granite.

(2) Revise drawings to allow for stairbeams (SS19 & SS22). Refer to architectural working drawings for location of beams.

(3) Rotate section E-E in drawing SD-09 by 90 clockwise."

Following a revision by MML, GWA submitted the calculations for House 6 to the Building Authority on 30 August 1997. Although the calculations now referred to limestone cladding, the allowable stresses for limestone in the calculations were precisely the same as those set out in the earlier calculations (expressed to be for granite cladding) for Houses 1 to 5. As I have stated, GWA's case is that references to "granite" in the earlier submission was a typographical error and the data originally submitted was intended to refer to the allowable stresses for limestone.

87. In September 1997 Mr. Joseph Kong resigned from BHP. Mr. Lu, however, was anxious that as much as possible Mr. Joseph Kong remained as BHP's representative on the construction of the Property. Following discussion between Mr. Nick Brooke and Mr. Lu, it was agreed that Mr. Joseph Kong would continue to spend his evenings and weekends working on Linfield's project while working full-time on some other employment. Nonetheless, from that time onwards, Mr. Joseph Kong became less and less engaged with the work on the Property.

88. Hacking continued to be an issue. On 2 September 1997 MML wrote to PCL that:-

"Concrete hacking to external wall, especially for House 1 and 5 is outstanding. The affected areas have been marked almost one month."

The minutes of a meeting on 16 September 1997 record that hacking off for Houses 1, 2 and 4 was complete, but work on the towers to Houses 3 and 5 remained to be done by 18 September 1997. By this stage the then target date of 29 September 1996 for completion of the stonework could not be met. It was hoped that completion would be on 14 October 1997 and an Occupation Permit ("OP") inspection could take place on 20 October 1997. However, the hacking off at House 5 remained to be done as of 24 September 1997. It was not until a meeting on 30 September 1997 that hacking off was thought, wrongly, to be complete.

89. On 16 September 1997 Mr. Behrouzi wrote to Mr. Tabar:-

"As you know, the phase II cladding drawings have been submitted to BD several weeks ago. The structural engineer has contacted is and informed us of his concern of the use of limestone in House 6; while the approval letter for House 1-5 shows granite. I have since clarified for him that the approval letter for House 1-5 was typed incorrectly and that the stone has always been limestone (as clearly indicated in the drawings). However, he seems very concerned about the properties, chemical composition, manufacturer, structural strengths, capacity etc. of the limestone and would like every detail of the stone reported to him. Therefore we request that you compile the required data (possibly including the stone specs. as well) and submit to our office as soon as possible. If you need any further information please call me at 2512-8003."

90. On 24 September 1997 GWA forwarded information on Poiseul B5 supplied by Marbres du Boulonnais through MML. The Technical Data provided was as follows:-

Density	23.84	tons/m3
Porosity	9.8	in %
Sound Speedness	4.910	m/s
Capillary Ratio	1.2	-
Abrasion Test	28.2	mm
Bearing	11.7	N/mm2
Bending	4.5	N/mm2
Shear	0.90	N/mm2"

This was similar to the figures in the structural calculations.

91. On 22 October 1997 application was made for an occupation permit for Houses 1 to 5. PCL certified in the application that the houses had been "erected in accordance with the Buildings Ordinance and Regulations". Mr. Wong in turn certified that the houses had been "erected in accordance with the plans approved by the [Building Authority ... and is, in my opinion, structurally safe". Dr. Ho signed a certificate to a like effect as Mr. Wong.

92. On 27 October 1997 MML wrote to PCL:-

"We have dully noted that the OP inspection is scheduled to take place on 5-11-97.

As you know, we are working at the site on the elevations at the moment. We will complete the work where the scaffolding is in place, and the hacking of the walls which were wrongly casted in the beginning are hopefully corrected.

Unfortunately, we are unable to complete the work as programmed lately, as hacking is still needed and as you have not erected the scaffolding where it is needed and requested by us.

We will prepare a list of all the concrete hacking work still outstanding and will fax the list."

93. Throughout this period Mr. Lu was becoming concerned about the slow progress of the project. He was applying pressure on Linfield's consultants and contractors to complete the work to enable Linfield to secure tenants for Houses 1 to 5 as soon as possible. He would not have been happy from the repeated postponement of the OP inspection date due to delays in the stone works.

94. Mr. Lu's frustration was such that Dr. Ho was prompted to write a personal letter dated 27 October 1997 which began:-

"I do understand you are very worried about the slow progress of work on site. Perhaps, you even feel I and my office is not working hard enough to speed up work. I fully sympathize with your feelings. Besides, you are also under pressure from your father as well as you plan to market the houses before Christmas.

....

In addition to our continuous effort in pushing for faster and proper completion of works on site, I would like to have a meeting in our office at 4:30 pm Tuesday 28 October 1997 with you, Progress, Tabar and Eric Au. The meeting is to clarify all the problems that have caused delay and to formulate last minute tasks for all parties concerned for speed completion of the work...."

In Dr. Ho's view the delays on site were due to PCL:-

"5. Two major causes for the delay on site during the last few months when the stone work was being carried out are:

a. Poor site management and overall coordination by Progress resulting in inadequate working conditions and arrangements on site for the stone work.

b. Poor workmanship of Progress resulted in inaccurate concrete works such as, uneven building surface, uneven levels of floor and stair. To put all these right again before the stone work can start causes much delay and inconvenience all parties concerned. Very early on we complained to Progress on the poor quality of their shuttering for the concrete and warned, them of the accuracy which they must attain in order to suit the stone work cladding. The tolerances to which the buildings have been constructed appear to fall far below those of normal building practice."

95. Having considered the calculations submitted by GWA, on 30 October 1997 the Building Authority approved Linfield's proposal in respect of "Fixing Details for Limestone Cladding (House 6)". The approval was subject to conditions, including the following:-

"10. Under item 6 in section 17(1) of the Buildings Ordinance, prior to the consent application for the cladding works, you are required to substantiate/ submit the following to the satisfaction of the Building Authority:

(a) substantiate the allowable material strength of the proposed limestone and the designed factors of safety (i.e. FOS = 3) by the corresponding strength tests prepared by a recognised testing laboratory. The test reports should be submitted to this Department for consideration.

(b) submit the relevant material catalogue giving product description information and the supplier's quality assurance certificate/ document to ensure the quality control of his products.

11. Prior to the consent application for the cladding works, you are reminded to submit the relevant documents for the substantiation of the use of 'DALLAGES' as surface treatment to the limestone cladding, as stated in Notes 14 of the drawing no.SS-18 now approved."

96. A Fire Safety Inspection was conducted on 26 September 1997. The OP inspection took place on 31 October 1997.

F. The course of construction from October 1997 to April 1998

97. The OP inspection did not mean that construction work was over. On the contrary, once the inspection was over, the scaffolding that had been removed from Houses 1 to 5 was re-erected for the purposes of further work, including stone work.

98. Mr. Tin said in evidence that only the stone cladding to the level 3 area of Houses 1 to 5 remained to be put up. He denied that stone panels were taken down for further work. But it is plain from the photographic evidence and from Mr. Tin's subsequent answers to questions in cross-examination that such denial was untenable. In Houses 1 to 5 stone panels were certainly removed and further work (including hacking off) was done by MML and PCL in connection with the installation of cladding..

99. Further, an inspection on 30 October 1997 found that reinforcement bars had been exposed in the course of the hacking off of concrete. The extent of the problem of exposed reinforcement bars was then unknown. The exposed reinforcement bars discovered had not been treated with Sika Top to restore the requisite protective cover.

100. A meeting on 7 November 1997 noted the circumstance of exposed reinforcement bars as follows:-

"MML stated that hacking off works were still needed being carried out on House 1 and to the stair from level 3 dressing room on all houses. Areas of hacking off were inspected. Extensive hacking off has already been carried out, particularly on house 5. There is real concern over the exposed reinforcement bars and the remedial work being carried out. TDAL have already taken photographs. GWA took more at the meeting. TDAL will be writing to PCL on the matter."

An inspection took place on the same day to assess the problem of exposed rebars.

101. PCL was instructed to state how it proposed to repair the exposed reinforcement bars found. PCL replied to GWA in a fax dated 10 November 1997 that it would remedy the problem as follows:-

"(1) cut chase concrete groove behind the reinforcement bar to push the bar backwards in order to maintain 15 mm cover (minimum).

(2) apply 'Sika Top 122' repair mortar (catalogue attached) to cover the bar reinforcement.

Record photo(s) for your inspections would be arranged before we proceed the step (2)."

102. On 10 November 1997 TDA instructed the clerk of works to prepare detailed records of inspections of PCL's repair work:-

"As requested please provide:

....

3. Records of inspections of making good hacking off works: mortar repairs complete and waterproofing reapplied.

Unless the above can be substantiated we have no other course of action than to instruct Progress in the removal of stone for inspection since we are already aware of areas where this work appears incomplete only because the stonework has not been fully installed."

103. On 13 November 1997 there was an inspection of exposed reinforcement bars in the "external wall and internal staircase" of House 5 prior to the application of repair mortar.

104. On 14 November 1997 Dr. Ho wrote to PCL as follows:-

"We refer to the site visit on 30th October 1997 with Dr. Ho and our Ms. Tain Kirkwood and further inspection with the Engineer of Greg Wong & Associates of 7th November 1997.

Concrete Works

It is recorded that with the considerable hacking off works which have been carried out exposing the reinforcing bars, we suspect the structural and water proof integrity of the external walls has been compromised to an unacceptable degree.

It is noted that many of the exposed bars are rusting and that repair mortar has not been applied not waterproofing redone in several areas. Where walls are now covered by stonework, we have no idea of the underlying condition of the concrete walls and therefore reserve the right to instruct the removal of stonework for inspection and further rectification and any further resultant problems shall remain your responsibility.

We have enclosed sample photographs which clearly shows how uneven the concrete surface is.

Windows

It has been notified to you previously our dissatisfaction with the very poor workmanship of the windows and window installation:

(1) Hacking off around the window frames has given a poor quality surface for sealant to adhere to. It is recorded that the seal in several areas is broken, missing or not adhering. The application of the sealant is haphazard and very messy. Waterproof mortar is not substantial or of adequate thickness. We doubt the integrity of the water proofing around the windows.

(2) Many if not all frames are damaged to some degree. None of the glass is properly sealed, many cover strips and glazing beads are missing or damaged.

There is considerable rectification and replacement work needed to the windows which require your careful supervision.

You are advised that any leaking of these windows in the future will remain wholly your responsibility.

A set of record photo graphs is attached, these only give a few examples and include some of the joiner work defects internally. Further photographs will be taken. These matters need your close and urgent attention and action."

105. Stonework and hacking off work thus continued. The minutes of a site meeting on 26 November 1997 record that "[s]equencing of working allowing for stone installation to be concurrent with hacking off is being worked out between MML and PCL".

106. The OP was issued on 27 November 1997.

107. By letter dated 27 November 1997 TDA pointed out that misalignment of concrete had been noticed in House 6. PCL was instructed to check all structural dimensions and wall alignments so as to obviate the serious problems which occurred on Houses 1 to 5. Nonetheless, in a fax dated 6 December 1997 Ms. Kirkwood wrote of the need for PCL to carry out rectification work as "considerable misalignment has been noted". In the same fax Ms. Kirkwood instructed:-

"Further PCL must notify of commencement of any hacking work and the areas involved. These must be photographed to demonstrate that remedial work is adequately done: preparation of any steel work exposed, application of sika repair mortar, waterproofing work. We ask that you will take & prepare such photo records and submit these to us."

She repeated the instruction in a fax sent 4 days later:-

"As discussed over the telephone today, please can you put together a comprehensive set of photographs of all the areas of hacking works to demonstrate if PCL have fulfilled all the requirements for remedial works to reinforcement and the waterproofing before the stonework was fixed.

Please include all the remaining areas and any further work which may be carried out."

108. On 4 December 1997 MML wrote to PCL to complain about hacking and waterproofing of concrete work. Mr. Tabar wrote:-

"On many elevations, a large proportion of the walls had to be hacked off, as the concrete presented huge bumps, to allow space for the stone to be installed. However, the hacking was performed by your casual workers who sometimes hacked off so deep into the concrete that they actually damaged the concrete structure. As a consequence the metal reinforcement bars were exposed in many areas and, instead of re-coating with concrete and waterproofing these exposed bars, you just sprayed a very light waterproofing paint and requested us to proceed with out installation of stone wall panels, ultimately covering the damaged concrete walls.

....

We ... would like to address this problem at this date, stating the following points.

....

D) We do not take any responsibility for future exposed metal bars staining behind our stone wall cladding because they have been left without concrete coating/proper waterproofing and ultimately generating stains that will leak onto and stain our stone cladding.....

Moreover, we would like to point out that in addition to many obstructions and delays by yourselves in the handing over of the site to us for our stone work, due to your poor concrete casting requiring constant hacking, we hereby wish to record that hacking and waterproofing is still outstanding in many areas."

109. PCL denied MML's allegations by letters dated 6 and 8 December 1997.

110. A concerted effort was being made to complete all works for Houses 1 to 5 by 15 December 1997. Linfield was applying pressure on its consultants and on PCL to meet that deadline. Linfield was insisting that all scaffolding be removed from House 4 by around 6 December 1997 so as to enable the house to be shown to potential tenants. When 6 December proved impossible, Linfield attempted to have MML confirm a 9 December 1997 finish date for stone cladding at House 4.

111. On 15 December 1997 PCL submitted some photos of remedial work on exposed rebars to GWA. The photos show the application of Sika Top to the exposed part of rebars at House 2, level 3, wall 17; House 5, level 3, wall 17 and level 3 to roof, wall 19. There were other areas of exposed bars. GWA chased up for photos of repairs to these, but they were never produced. The few photos supplied show that Sika Top was not applied to the hacked off concrete areas surrounding the exposed parts of the rebars. Thus, where hacking off had exposed only some but not all of a particular set of reinforcement bars, that part immediately adjacent to the exposed portion would not have been pushed back into a groove and would not necessarily have had sufficient cover restored to it.

112. On 16 December 1997 GWA wrote to BHP thus:-

"While on a site visit on 7th November, 1997 (with Mr. Johnny Tin (PCL), Mr. Simeon Shum (Clerk of Works), Ms. Tain Kirkwood (TDA) and our Mr. Pouyan Behrouzi (GWA)), we discovered that hacking on the external face of the walls was taking place in order to make it possible to install the stone cladding. We immediately demanded that PCL provide us with a structural rectification proposal for our approval, since none had been issued to is for this before the hacking began. PCL then issued a proposal to rectify the hacked areas (and any further areas not yet hacked) by applying repair mortar Sika Top 122 to protect the exposed steel bars from weathering while maintaining a minimum 15 mm cover (see attached fax from PCL dated 10th November, 1997). This proposal is acceptable to us since it will ensure that the reinforcement bars will receive the necessary cover to protect them from weathering.

As long as this rectification proposal has been carried out properly, the concrete will not be adversely affected by the hacking. We have instructed PCL and the Clerk of Works to submit photos of all hacked areas that have been prepared prior to application of the repair mortar (i.e. concrete and reinforcement bars cleared of all loose debris and dust). As of today, we have not yet received those photos. We have also checked on some of the completed areas to ensure that the repair mortar has been applied as per the manufacturer's specifications (see attached fax dated 10th November, 1997 for specification) and have found that the proposed method statement has been followed according to specification.

We hope that the preceding explanation clarified our position on the structural effects to the concrete works as a result of the hacking."

113. On 17 December 1997 GWA further clarified its position on the hacking off works and repair to exposed reinforcement bars. A meeting on that day records the following:-

"GWA [Mr. Behrouzi] stated the repair mortar sika 122 not applied sufficiently on House 1-5. Hacking and repairs only observed half way through the process, no notice having been given to the Engineer. The record photographs then requested only cover these areas observed. GWA stated that there are outstanding photographs still to be submitted of [some] of the observed areas. Anything further must also be submitted as record photograph.

GWA stated they cannot be responsible for areas already covered which if not or inadequately repaired may lead to future water leakage or rust staining. PCL stated all areas had been repaired. Following inspection of one area of house 5, PCL must now remove the stone and redo the areas of exposed bars adjacent to dressing room windows.

PCL stated they will be fully responsible for any future leakage and staining and all required remedial work. The client [Mr. Lu] stated that areas should be checked and rectified now to prevent future inconvenience to tenants. Stone work will need to be removed at the Main Contractor's expense."

The meeting ended with PCL stating that it would proceed "immediately with all outstanding hacking and waterproofing works".

114. On 18 December 1997 MML forwarded to TDA the results of tests carried out by Testconsult on 5 specimens of Poiseul B5 limestone. The tests showed an average flexural strength of 7.1 MPa (specimens having been immersed in water of 20( C for 48 hours before testing) and an average compressive strength of 87 MPa (specimens again having been immersed in water of 20(C for 48 hours before testing). In a fax of the next day, MML noted that Testconsult could not carry out a shear test for limestone as in Testconsult's experience there was no standard test for shear.

115. On 20 December 1997 Dr. Ho as AP applied for the Building Authority's consent to commence the "Fixing of Limestone Cladding Phase II House 6". The application included copies of Testconsult's results, a product description of Poiseul B5 from Marbres du Boulonnais and instructions on the treatment of the limestone with Dallages.

116. Mr. Lu was not satisfied with Mr. Joseph's Kong's performance in the period after resignation from BHP. Mr. Joseph Kong's attendance on the project was inevitably reduced and Mr. Lu did not feel that he was devoting sufficient attention to the construction of the Property. After discussion with Mr. Nick Brooke, Linfield terminated BHP's involvement on the project by letter dated 29 December 1997. Termination took effect from the end of the year.

117. On 5 January 1998 Linfield appointed Mr. Lim as Resident Architect for the project. Among Mr. Lim's duties were the following:-

"(1) to make sure that the main contractor and the sub-contractor carry out their work properly and efficiently according to the contract;

(2) to make sure that the main contractor and the sub-contractor are carrying out their work are up to the qualities standard expected;

(3) to make sure that the main contractor in the sub-contractors maintain effective and efficient management of their respective works;

(4) to make sure that the main contractors and the sub-contractors maintain productive and smooth co-operation;

(5) to make daily report of the progress of work on site carried out by different trades and submit the said report to the Project Architect (Ms. Tain Kirkwood) and the Client daily;

(6) to inform the Project Architect immediately should there be any instructions to be issued to the contractors so that issuance of Architect's Instruction will be centralised from the Architects office to avoid possible confusion."

118. On 16 February 1998 GWA submitted to the Building Authority revised structural calculations for the fixing details of House 6. These revised calculations had been forwarded to GWA by MML. The main amendments arose from the revision of the allowable bending stress from 4.5 down to 2.37 N/mm3. An allowable bending stress of 4.5 N/mm3 coupled with the factor of safety of 3 stipulated by the original calculations implies a flexural strength of 13.5 N/mm3. However, Testconsult's results only supported an average flexural strength of 7.1 N/mm3 (1 MPa = 1 N/mm3). Dividing that latter figure by 3 yields an allowable stress of 2.37 N/mm3. For this reason, the lower allowable stress was used in the structural calculations for House 6. Nonetheless, the amended calculations concluded that, even with the lower allowable stress figure, the thickness of 30 mm per stone panel posited by MML's original cladding design for Houses 1 to 5 remained valid.

119. A joint inspection of House 6 took place on 24 February 1998. The inspection considered (among other topics) the hacking work which was taking place at House 6 in order to allow MML to install its stone panels. On 26 February 1998 MML faxed PCL that "because of incompletion of concrete hacking, water-proofing and inadequate spacing for stone return to window", MML could not commence stone work on 15 February 1998 as originally intended but had to wait for PCL to finish the requisite work.

120. On 16 March 1998 the Buildings Department indicated that, before it would consent to the cladding works to House 6, it required (among other things) a "live mock up test to be carried out for the shear to demonstrate that the stone panels can withstand three times the shear load assumed in the structural calculations".

121. On 8 April 1998 Linfield took possession of Phase I, but "subject to completion and rectification of all outstanding and defect works in a timely manner".

G. Practical completion to remedial work: April 1998 onwards

122. Some time in early 1998 Mr. Lu had noticed that there were cracked stones on the facade, podium and poolside terraces. Many facade stones were inconsistent in colour and improperly fixed and aligned. There were also gaps between the stone sills and window frames of Houses 1 to 5. In addition, a number of stone panels also showed visible epoxy repair. He asked MML to replace the stones, but this did not happen.

123. On 29 April 1998 Linfield advised its consultants that Axiom had been appointed as project manager for the entire project.

124. On 27 May 1998 Hong Kong Curtain Wall Testing Centre Ltd. released a report on the shear test conducted on a limestone panel for House 6. The results were satisfactory. The stone panel (length: 1,294 mm; width: 1,006 mm) was subjected to cyclic pulse wind pressures up to maximums of +4.375 kPa (that is, 125% of a design pressure of 3.5 kPa) and -6.125 kPa (that is, 125% of a design pressure of -4.90 kPa).

125. On 24 June 1998 Linfield received a written complaint about significant water seepage experienced by tenants since they moved into House 2. The problem of water leakage in the Property, especially through windows of Houses 1 to 5, was one which persisted despite repeated efforts at addressing the same.

126. On 26 June 1998 GWA wrote to Linfield seeking additional consultancy fees totalling $425,340. The request was amended to $301,430 on 1 August 1998. This revised fee was agreed by Linfield on 10 August 1998.

127. The Building Authority consented to the fixing details for the stone cladding to House 6 on 27 June 1998.

128. At around this time Mr. Lu noticed other problems with Houses 1 to 5. Many corner stones were in two rather than one piece as MML had previously promised. Stone panels were stained. A significant number appeared to have mould growing on them. Mr. Lu became worried that the mould might grow into the joints between stones and cause the joints to expand and crack the adjoining stones. Again he spoke to MML. MML said it would replace the problem stones. But this did not happen.

129. On 28 July 1998 Dr. Ho resigned as AP and Architect for the project. For some time Dr. Ho had been asking Linfield for additional fees to compensate TDA for the much greater time spent on the project than Dr. Ho had originally anticipated. Linfield not having agreed, Dr. Ho felt he could no longer continue. On 4 August 1998 Dr. Ho was persuaded to withdraw his resignation upon payment of an additional fee of $1,996,778.

130. In October and November 1998 Mr. Lu took photographs of the stained stone panels which he had noticed. He sent the pictures to Mr. Hartog, a stone cladding expert and principal of BDAP recommended to Mr. Lu by Mr. Michael Snarey of Stanton Hillier Parker in Sydney. Initially, Mr. Hartog responded by a fax dated 2 October 1998. There Mr. Hartog commented on the respective roles of an architect and main contractor in the design of a stone cladding system for a project. The fax ended: "We [Mr. Hartog and his colleague Mr. McKenzie] question the wisdom of selecting a stone which requires frequent treatment to maintain its appearance and surface integrity."

131. Mr. Hartog visited the Property with Mr. McKenzie between 1 and 6 December 1998. At the time Mr. Hartog questioned the suitability of the stone. This prompted Mr. Lu to commission BDAP to investigate the stone cladding and associated problems (especially water ingress) at the Property.

132. On 17 December 1998 PCL, Mr. Wong and Mr. Ho respectively certified that the building works for Phase 2 had been completed and applied for an OP for House 6.

133. Mr. Hartog and Mr. McKenzie prepared a report dated 20 January 1999 based on their inspection of the Property. The report is a long one. I will not attempt to summarise it. Among it recommendations and conclusions, the following give a flavour of the report's tenor:-

(1) "We recommend that Linfield seek, as a matter of urgency, a copy of all engineering calculations and design validations submitted to Taoho Design by Michelangelo Marble Limited. If the specified calculations were not submitted, or are found to be inadequate, Linfield should commission independent testing of stone samples and expert engineering analysis of the cladding design. Testing and analysis should be based on nominal panel and support configurations and worst-case combinations of dimensional tolerances, off-centre pin holes, misaligned pins and inadvertent load-shedding through plated steel washers, shims and bands of epoxy resin."

(2) "We consider the likelihood of catastrophic failure of the cladding in service, for instance the sudden collapse of one or more panels during storm winds, is low. Continuous perimeter joint seals of Tremco Dymonic would have the unintended benefit of distributing distressing forces from isolated unstable panels to all abutting panels. It is more likely that spalling will first occur around fixings without noticeable displacement of the panels. Any chips or spalls found near the base of walls should be retained and labelled and their locations recorded. In the long term, a complete survey and subsequent monitoring of all distress around fixings will be necessary. Linfield and its legal advisors should consider instructing Michelangelo Marble and/or the head contractor to conduct additional and more comprehensive wind pressure tests which accurately replicate the range of deviations from and undocumented modifications to the fixing details shown in shop drawings and/or tested in May 1998."

(3) "Mechanical fixings and surrounding stone must be considered to act in concert. BDAP+JTCW is at present unable to confirm the design capacity of typical angle brackets and dowel pin fixings used at 51 Plantation Road was calculated on the basis of project-specific criteria and verified by testing prior to widespread use on site. However, it is unlikely that the load-bearing capacity of 5 mm thick stainless steel angle brackets and 10 mm diameter Hilti anchors shown in shop drawings will be exceeded. It is the bending, tensile and shear capacity of the limestone itself which has been, and will continue to be, exceeded, as is evident from consistent patterns of cracking and spalling."

134. On 18 March 1999 MML was denied access to Houses 1 to 4 and not permitted to carry out rectification work there.

135. On 19 March 1999 Linfield wrote to Dr. Ho, instructing him to desist from issuing any Certificates of Making Good Defects in respect of the Main Contract Works in light of Mr. Hartog's observations. Mr. Lu appended a list of defects (as drawn up by Mr. Hartog) to Linfield's letter.

136. On 18 May 1999 a meeting took place among Mr. Lu, Mr. Hartog, Dr. Ho, Mr. Mui of Axiom and Mr. Yiu of TDA at the Property. MML was unable to attend the meeting. There was debate over whether the cladding was "unsafe". Dr. Ho did not think so. He suggested that, if Linfield genuinely believed that the cladding was unsafe as alleged by Mr. Hartog, tenants should be told to evacuate immediately. Among the other topics discussed was the safety factor of 3 used in the structural calculations. In Mr. Hartog's view a factor of safety of between 7 to 12 was applicable depending on the nature and character of the stone used. Dr. Ho disagreed and asserted that 3 was the only safety factor required by the Buildings Department. Dr. Ho clearly did not get along with Mr. Hartog. Nonetheless, it was agreed that BDAP and TDA would consult with a fa?ade expert in Ove Arup Hong Kong on the question. Linfield accordingly commissioned AFE to test out and report on the Poiseul B5 employed on the project.

137. By letter dated 31 May 1999 MML rejected BDAP's allegations that the its stone work was defective.

138. A meeting on 25 June 1999 dealt (among other matters) with the question of staining on the stone panels. MML stressed that the stains were natural to limestone and caused by environmental factors. It maintained that regular cleaning by Linfield was the only solution. Waterproof coating could improve the stone's resistance to environmental impacts, but would not obviate the need for maintenance.

139. By letter dated 3 July 1999 PCL in turn denied liability for defects pointed out by BDAP.

140. On 27 August 1999 TDA wrote to PCL to complain about the large proportion of windows in the Property which were leaking seriously during the recent periods of heavy rain. The windows (TDA noted) "have never been repaired to our satisfaction despite repeated reminders" since the time of completion. Other contractors would now be asked to rectify the problem at PCL's cost.

141. There was joint inspection of Houses 3 and 5 on 24 September 1999. Dr. Ho, Mr. Hartog and representatives of AFE were present (among others). In the course of the inspection, stone cladding was removed, enabling closer examination of the fixing system behind. Small pieces of stone (about 15 mm diameter) were found on the lawn of House 3. These may have been blown off from the fa?ade of one of the houses by a recent typhoon.

142. Mr. Hartog reported his views to Mr. Lu in a letter dated 4 October 1999. The letter, among others contains an attack on the professionalism of Dr. Ho and the competence of MML. It includes the following comments:-

(1) "At the 18 May inspection I suggested that a slot for an undocumented bracket may have been cut as far as 25 mm into panels nominally 30 mm thick. The representative of Taoho Design Architects declined to respond. However TDA has subsequently argued that the occurrence of halo-stains commonly originate from contaminants falling onto brackets. TDA's opinion was forcefully reiterated in its report of the removal of a single panel from Apartment 3 on 24 June. In my responses to TDA's report, I noted that those orchestrating the demonstration had overlooked the opportunity to examine the wall cavity immediately above and to the sides of the panel. The current removal of stone around ground floor windows on Apartment 5 strongly suggests that physical evidence supporting BDAP+JTCW's explanation, and confirming further deviations from the design illustrated in MML's shop drawings, may have been visible only centimetres from the small area selectively uncovered and observed by TDA and MML on 24 June. I am now more convinced that the exercise of 24 June was a sham. While rejecting BDAP+JTCW's explanation for recurrent and worsening staining, TDA and its associate MML have yet to offer their own explanation. The evidence in support of BDAP+JTCW's initial speculation is meanwhile mounting."

(2) "It is my view that Taoho Design Architects accepted a generous fee to provide a comprehensive service during construction and then expended negligible time addressing the compliance of construction and quality of workmanship in the elements known to be prone to defects with expensive consequences; windows and facade waterproofing. This is consistent with plausible comments made from time to time about Dr. Taoho; he is regarded as an excellent conceptual designer with an uneven record in contract administration and poor knowledge of construction materials and detailing."

(3) "How else are we to explain Dr. Taoho's attitude to the explicit specification and later complete omission of resilient cushions between stone and stainless steel brackets. to the deletion of specified backing rods under Dymonic seals, the excessive use of epoxy resin, the seemingly ad hoc embedment of brackets in epoxy-filled slots around window openings revealed during preparation for the current remedial works and so on? What evidence of Michelangelo Marble's competence in exterior thin stone cladding did Taoho have in 1996 when he so effusively recommended the company. As far as I aware, MML had by that time completed some interior stonework. Why did Taoho place such importance on the need for L-shaped corner panels? Rocamat states that it was never asked to do so and would have cautioned against the practice. How did Taoho manage to overlook the substitution of site-applied silicone sealant for the extruded synthetic rubber gaskets that are common components of the window system supplied by Alcon? How did the architect manage to overlook perimeter sealing of hundreds of metres of snap-on cover channels that have no essential waterproofing function but now retain water and fine silt against the sills? Why did the architect fail to notice irregularities in the window test report submitted by the window manufacturer? My guess is that TDA does not have appropriately experienced staff, or else that such staff disdain examination of shop drawings, close review of test reports and visits to building sites. Nevertheless, the architects' terms of engagement required it to guard the client against the very defects now so widespread at The Belvedere."

(4) "The party most responsive for the poor performance of the windows is Taoho Design Architects. Notwithstanding that TDA may be absorbing the costs of its attendance at meetings and of other work associated with rectification, Linfield and its advisors should recognise the conflicts of interest that confront the architect. TDA has no interest in attributing responsibility or in uncovering evidence that allows others to attribute responsibility. It probably seeks an expedient short-term solution that directs attention away from its own performance. Above all, an architect who permitted windows to be installed without continuous flashings and gasket seals, with misplaced setting blocks, inverted pressure plates, site-applied silicone seals and so on, should be no more than a distant observer of remedial work specified, detailed, inspected and approved by others."

143. Mr. Hartog followed up with another letter on 6 October 1999 which concluded:-

"The calculation sheets for Houses 1 to 5 are dated variously as 14, 28 and 29 August 1996. The cover sheet is dated 16 August 1996. The sheets were faxed by P. C. Lam & Associates Ltd. on August 30 1996. It thus appears that the engineering consultant engaged by Michelangelo Marble Ltd. was, in mid-to-late August 1996, checking decisions on bracket and stone thickness which had already been made by MML. Shop drawings D-18, dated 31 July 1996, shows 30 mm thick limestone and a typical angle-bracket which almost completely fills a panel joint noted as 6 mm wide. There is nothing improper in a contractor making estimates, based on its experience or industry practice, before engineering validation of the design. It now remains for us to identify and compare the critical values (1) assumed by MML, (2) provided by the French stone supplier, (3) used by P C Lam & Assoc. in its calculations, (4) reported by Testconsult after the work was underway, (5) measured by Marc Heinlein, and (6) determined by Arup Facade Engineering to be sufficient for the work as executed, taking into account the known deviations from the design documented in the shop drawings. Unfortunately, the engineer's reliance on a safety factor of 3.0, the variability of test results reported by Marc Heinlein and the ad hoc modifications tend to confirm my original suspicion that the work of Michelangelo Marble Ltd. was based on misconstrued rules-of-thumb and expediency rather than basic engineering principles. I [re]main convinced that Taoho Design Architects bears most responsibility through its lack of diligence in evaluating MML's work before, during and since stone-fixing at The Belvedere. BDAP+JTCW will take no further action until the opinion of AFE is formally reported."

144. Mr. Hartog sent a detailed fax criticising the windows and glazing used on the Property on 10 October 1999.

145. Mr. Lu met with Mr. Hartog and Mr. Snarey in Sydney on 19 October 1999. Mr. Lu asked Mr. Hartog to send another fax expanding on matters discussed at the meeting. The fax includes more attack on TDA, including personal criticism of Dr. Ho. For example, Mr. Hartog states:-

(1) "Unfortunately, Dr. Tao Ho did not recognise his limitations and those of his firm. He did not hesitate to accept a generous fee for a range of services TDA has clearly failed to provide. He did not recommend the engagement of an expert on stone cladding. He overlooked serious inconsistencies in the test report on windows. On the basis of our two meetings and his diverting correspondence, I suspect that he does not easily defer to the opinions of others, even in fields where he has little knowledge. He overcomes a personal lack of knowledge of building technology by bombast. He is unlikely to employ and encourage self-confident juniors or peers whose specific skills complement his own. The reported role of Tain Kirkwood in your project and the self-conscious deference shown by John Yiu on 18 May suggest that Tao Ho does not highly value skills other than those he personally professes. It was Tim Phillips who related that Tao Ho's reputation as a talented designer is not matched by TDA's performance in detailing, specifying and contract administration."

(2) "It is telling that Dr. Tao Ho has not sought to repudiate any of BDAP+JTCW's criticisms by sound technical arguments. He relies on name-dropping, the supposed praise of parties distant from the project, vague references to some mysterious 'Hong Kong code of practice', my supposed lack of familiarity with Hong Kong's peculiarly undemanding standards of workmanship, dismissal of BDAP+JTCW's opinions as being 'outside the contract', an almost bizarre claim that only his own 'reasonable satisfaction' is valid, and, ultimately, appeals to Christian forbearance accompanied by threats to cause you further damage. He poses as the wronged party. He insists, contrary to your abundant evidence, that he has worked diligently to safeguard your interests (recall, however, how effusively he promoted Michelangelo Marble and sought to convince you that it could execute a 'good and even excellent' job. How diligently did he investigate MML's competence before making that unwarranted recommendation?). I intend no disrespect in suggesting that Tao Ho recognised you as a neophyte client more than usually dependent on his advice and unlikely to recognise or even suspect derelictions of his and TDA's professional duty. He has exploited that situation, even to threaten to further devalue your interest."

(3) "I believe your interests are best served by removing Tao Ho Design Architects from the scene in a way that puts it on notice that it will be held responsible for a substantial part of your losses. Linfield has more than enough evidence to dismiss TDA for incompetence. Geoffrey Chan [of JSM] may be prepared to extend that to professional negligence, fraud, fraudulent concealment and misrepresentation. You can then engage someone who truly represents your interests and has the skills to devise appropriate remedies and, in so doing, accumulate overwhelming evidence of TDA's incompetence. You need take no deliberate action to impugn TDA's reputation; in Hong Kong, the word will soon get around. You might even find some sympathetic allies, fellow victims of TDA. The same applies to the defects problems, particularly after the water damage of early September. I believe it is better to get on with retrieving the situation without the risk that Tao Ho will exploit it to your disadvantage. Accept that the buildings have significant problems and announce that you are dedicated to their complete remedy, albeit without the questionable skills and input of TDA, as finances and access permit. That at leat makes you immune from Tao Ho's threats and his insistence that he must run the show. Meanwhile, continue to gather evidence of the poor performance of TDA and Progress. If timing and circumstances permit, Peter McKenzie and I are prepared to come to Hong Kong to document and test viable solutions that will make the buildings marketable. As we cautioned on Tuesday evening, that will involve stripping the limestone, comprehensive window repairs and recladding with a different stone (most likely granite) and complex decorative elements that may not need to be made of stone."

Mr. Hartog sent a further fax in similar vein on 21 December 1999.

146. Defects, in particular leaking windows and problematic stone work, continued to beset the Property. On 5 January 2000 Mr. Lu sent the following e-mail to AFE, urging them to produce their report as soon as possible:-

"I refer to our meeting on April 17 when you told me the final report will be available on 28 April. As mentioned before, I am under tremendous pressure to rectify the defects as soon as possible and without your report, we are not in the position to proceed. I would be grateful if you can confirm when the report will be ready. Each month's delay is costing me $250,000 per house. The tenants are also threatening me of moving out. Please therefore do not delay this matter unnecessarily."

147. AFE finished its report ("the 1st AFE Report") on 12 May 2000. The 1st AFE Report was prepared by Mr. Tim Phillips of AFE. Samples of the limestone panels used in the Property were sent to Corived SRL in Italy for testing. The tests showed a mean flexural strength (combining 5 dry and 5 wet sample results) of 5.49 MPa with mean modulus of rupture (combining 5 dry and 5 wet sample results) of 6.4 MPa. Mean compressive strength of 5 dry samples was 81.3 MPa (perpendicular to rift) and 82.15 MPa (parallel to rift) with figures of 68.03 MPa and 70.75 MPa respectively for wet samples. In terms of factor of safety, the report suggested that a factor of safety of 6 should have been used when calculating allowable flexural strength of the stone and a factor of safety of 8.4 should have been used when checking stresses at anchorage point. Based on Corived's results, the 1st AFE Report made the following recommendations:-

"1. The panels with a factor of safety of less than 6 (for bending) and less than 8.4 at anchorage locations, should be replaced.

2. Replace the panels which already show signs of failure.

3. Since the replacement of panels is a costly and time consuming business, it is not considered necessary to replace all of the areas which are installed incorrectly, ie with epoxy adhesive, but to identify those which derive their strength entirely from the an adhered connection and replace those. This quantity is not known.

4. Monitoring of the limestone in place is recommended which will allow the replacement of panels as they fail. A stock of replacement limestone should be procured and maintained as the failure is predominantly seen as being in stress bands about every 4 rows of panels.

It should be noted that the panels which are secured by epoxy adhesive will be difficult to replace and some damage may be done to adjacent panels. A wastage percentage of around 25% should be anticipated, unless experience of stone replacement to date shows otherwise."

148. At around this time Mr. Lu instructed Mr. Kenny Kong of DCL to carry out a condition survey of the Property to identify the extent of defects, including problems with the stone cladding. Mr. Kenny Kong's advice in due course was that some 80% of the stone cladding had to be replaced if defects were to be rectified. Accordingly, Mr. Kenny Kong believed that it was more cost effective to demolish and replace the entire cladding system.

149. At a meeting on 11 July 2000 (attended by Mr. Lu, Mr. Hartog, Mr. Snarey and Mr. Job of AFE among others) there was a discussion as to whether to adopt a newly designed fixing system for granite cladding to remedy the defects in the Property. The following were noted in relation to the facade:-

(1) "Although the original cladding calculations were based on granite, the RSE had advised that BD approvals were based on drawings submitted instead of calculations, hence, should a heavier material is to be adopted for stone cladding, re-submission to Buildings Department would be required."

(2) "It had been observed and confirmed that the existing cladding had not been built in accordance with approved shop drawings. Both AFE and LK [Liu Kwong & Associates Ltd.] remarked that the existing approved fixing method is common in local practice and that had the existing cladding been erected in accordance to the approved drawings, the said cladding would ave been sufficient with minor adjustments. PH disagreed and suggested that a new fixing system should be adopted."

150. On 22 August 2000 Linfield decided to go ahead with the rectification of existing defects in the stone work of the Property by overhauling the limestone cladding completely and using granite instead. Linfield further decided to vacate all tenants before commencement of remedial works and to rectify all problems at the Property at the same time. DCL was appointed as project manager of the works. TDA, GWA and MML were informed accordingly.

151. Pat Davie was awarded the main contract for remedial works in November 2000. It took possession of Houses 1 to 5 on 16 November 2000 and House 6 on 1 July 2001. Remedial work on House 6 was completed on 4 February 2002, rectification of Houses 1 to 5 on 21 May 2002.

H. Prelude to litigation

152. By a letter dated 4 September 2001 Sing Kee "absolutely" assigned the "full benefit" of its agreement with GWA dated 26 August 1994 (including all rights of action) to Linfield. A copy of the assignment was provided to GWA's solicitors by letter dated 18 January 2002.

153. In March 2004 AFE issued a "Report on the Usage of Poiseul Beige Limestone" ("the 2nd AFE Report"). The report was prepared for Linfield by Mr. Miglio. It analysed the result of tests on sample limestone panels chosen by Mr. Miglio during an inspection visit of the Property between 16 and 19 July 2001. The tests were carried out by BRE in December 2001.

154. The 2nd AFE Report states that the tested samples were chosen and classified by reference to the absence or presence of stylolites. The latter are "natural features that are apparent as sinuous slightly darker lines in the stone, and may sometimes have the appearance of irregular fractures or veins". Stylolites are "typically closed tight, but can be open or clay filled in which case they may form potential planes of weakness within the stone". The limestone was classified as Types I, II or III as follows:-

"Where there were relatively few stylolites and they appeared to lie sub-parallel to the face of the panel, the stone was classed as Type I. Where the stylolites were more frequent and tended to cut obliquely across the thickness of the stone, outcropping in areas across the face, the stone was classed as Type II, Where the stylolites cut more directly across the thickness, the stone was classed as Type III."

155. In terms of designing for the thickness of cladding made from Poiseul B5, the 2nd AFE Report comments as follows:-

"Guidance on the assessment of thickness can be found in several sources but is perhaps best explained in the UK Building Research Establishment IP 7/98. This sets out the basic framework for the calculation based on the parameters described above.

On this basis, the data generated by the testing recently completed at the BRE can be used to review the acceptability of the 30 mm thickness suggested by Taoho Design. In addition, from this data it will be possible [to] back analyse the acceptability of the thickness by calculation of the factor of safety for each stone. At this point however, it may be instructive to consider the meaning of the term 'factors of safety'.

A review of the flexural strength data for the intact Poiseul Beige (Type 1 and 2) shows that the average (mean) strength can be calculated as 7.4 MPa. However, this average does not reveal the range in the strength values obtained; the lowest value was only 2.8 MPa and the highest 10.8 MPa. While some degree of spread of results is to be expected this range in values is quite high, even for limestone.

Clearly it would not be sensible to carry out a design based simply on the mean strength of the stone as much lower values are clearly possible. To allow for this material variability, the required strength for a stone (as determined by the calculations on size loads etc) is multiplied by a factor, which represents the unreliability or variability of the strength data. This factor is known as the 'factor of safety'. The BRE IP 7/98 indicates that when using the average bending strength for a stone a factor of safety of 6 should be assumed."

156. That is not to say that a factor of safety of 3 will never be acceptable. According the 2nd AFE Report, it may be used in a design, but only where characteristic (as opposed to mean) flexural strength is employed in calculations. More particularly, the 2nd AFE Report explains:-

"The only circumstances where we consider a factor of safety of 3 would have been acceptable would have been on the basis of a detailed knowledge fo the strength characteristics of the stone (for further details refer to Guide to the selection and testing of stone panels for external use (1997) by the UK Centre for Window and Cladding Technology (CWCT)). Having tested a sufficient number of samples to be representative of the stone the analysis is not based on the mean (or average) strength value but on the 'lowest expected value' or 'characteristic strength'. In broad terms this approximates to the mean (average) strength minus twice the standard deviation. Around 95% of the strength values that occur would be greater than this 'lowest expected value'. This statistical approach already takes into account a significant amount of material variation and the factor of safety adopted can therefore be reasonably reduced. Only under these circumstances would a factor of safety of 3 be reasonable. However, the whole basis of this approach is that there is a statistically meaningful set of appropriate test data upon which to assess the material variability, There is no evidence that Michelangelo Marble had any such test data specific to the Poiseul.

In the absence of such test data we are left to infer that Michelangelo Marble assumed a strength value for Poiseul Beige based on a typical strength for any limestone and applied a factor fo safety of 3 to this number for the purposes of their analysis. There is no validity in this approach and any reasonably competent engineer would have known that it was a fundamentally flawed analysis upon which to determine the thickness of stone."

157. By letter dated 4 June 2004 Sing Kee again notified GWA that "the benefit of the agreement [between Sing Kee and GWA] has been assigned by this company to Linfield Limited".

I. Letting history of Houses 1 to 6

158. House 1 was let from 15 June 1998 to 14 December 2000 at a rent of $325,000 exclusive of rents and management. It was vacant from December 2000 to April 2002 for remedial work. There had been an offer from a Mr. Thomas Pacconi to rent House 1 for 3 years at $200,000 per month inclusive of rates and management fees. Linfield accepted the offer and received 1 month's deposit. But just before the tenancy was to commence, Mr. Pacconi changed his mind. Linfield had spent the 1 month deposit (which was forfeited as a result of the tenant's breach) on repainting and re-fitting the interior of House 1. In August 2002 a person offered to rent the premises for $200,000 but backed out. Between February and December 2003 Mr. Lu lived in the house (while maintaining his home at Grenville House) for marketing reasons, in order to convey the impression that the development had tenants. Mr. Lu was prepared to move out of House 1 at a moment's notice, if a prospective tenant expressed an interest in living there. Since 15 January 2004 House 1 has been under a 2 year lease (following a rent-free licence period from 3 to 14 January 2004) for a monthly rental of $230,000 (inclusive of rates and management fee).

159. House 2 was leased from 11 May 1998 to 10 November 2000 at a rent of $320,000 (exclusive of rates and management fee). The house was unoccupied from December 2000 to April 2002 while remedial works were carried out. Since then, despite Linfield's efforts, the premises have not been let and are now on sale.

160. House 3 was leased out (following a rent-free licence period of 23 March to 14 April 1998) for a period running from 15 April 1998 to 14 April 2000 at a rent of $250,000 (exclusive of rates and management fee). The tenant exercised a break-clause in July 1999. The premises have been vacant since then. There was an offer in July 2002 to lease the premises for 2 years from 1 October 2002 at $150,000 per month exclusive of management fees. The offer was made "subject to contract" and was never confirmed by the prospective tenant. There were offers to rent House 3 at $180,000 (inclusive of rates and management fees) for 2 years from 1 October 2003 and at $150,000 (inclusive as well) for 2 years from 1 November 2003. Both offers were rejected as too low.

161. House 4 was rented out from 26 June 1998 to 25 June 2000 at a rent of $250,000 (exclusive of rates and management fee). The house was deliberately kept vacant between July and December 2000, pending the start of remedial work. After repair work was completed in April 2002, the house was leased for the period from 21 May 2002 to 20 May 2004 at a rent of $203,500 (inclusive of rates and management fees).

162. House 5 was leased out for a period from February 1999 to February 2001 at a rent of US$40,000 per month (inclusive of management fees, but exclusive of rates). The tenant exercised a break clause in May 2000. The house was deliberately kept vacant from that time until the start of remedial work in December 2000. Following completion of repairs in April 2002, House 5 was leased for the period from 1 February 2003 to 31 January 2005 at a rent of $180,000 (exclusive of rates and fees).

163. House 6 was leased from June 1999 to June 2001 at a monthly rent of $200,000 (exclusive of rates and management fees). It was vacant from July to December 2001 for repair work. It was leased out for a period from 1 September 2003 to 31 August 2005 at $110,000 per month (exclusive of rates and management fees). Linfield rejected an offer to rent House 6 from December 2001 to September 2003 at $180,000 per month exclusive of rates and management fees. The offer was "subject to contract" and, despite attempts by Linfield at negotiation, was not confirmed by the prospective tenant.

J. Linfield's complaints

164. Linfield contends that MML and GWA made unrealistic assumptions in submitting or approving the design and accompanying calculations for the limestone cladding system employed at the Property. A reasonably competent engineer (Linfield says) would have realised that in the real world the design could simply not be built. These lapses on the part of MML and GWA were exacerbated by the fact (according to Linfield) that in executing the design MML's workers were incompetent and careless, while GWA failed to undertake any proper supervision or inspection of MML's work. If GWA had properly supervised MML and inspected its work, it would have seen at an early stage that limestone panels of 30 mm thickness were wholly unsuited to the project and, in any event, MML was not installing the panels with the requisite degree of workmanship in accordance with the contractual specification.

165. Linfield further says that GWA negligently proceeded on the basis of certain assumptions in approving MML's design. I quote some assumptions as stated by Mr. Hartog (Linfield's expert) in his expert report and contrast them with the realities that were discovered on site at the time of DCL's detailed survey.

(1)	(a)	Assumption: "That dowel pins are centred exactly in the width of stone panels".
	(b)	Reality: Dowel pins were found in many instances to have been eccentrically positioned in stone panels. There were misaligned holes. In some cases workers had cut large slots in the limestone panels, widening pre-bored dowel holes, but leaving large cavities which were simply filled with epoxy resin to an unknown extent.
(2)	(a)	Assumption: "That stone panels are not less than 30 mm thick, notwithstanding the permissible tolerance of +/- 2 millimetres specified by the architect."
	(b)	Reality: Stone panels were of variable thicknesses with rebates often being chiselled out in order to facilitate alignment of panels with angle brackets.
(3)	(a)	Assumption: "That in the course of installation of limestone panels, dowel pin holes are not overdrilled, belled or positioned against holes previously mislocated and made redundant."
	(b)	Reality: Pin holes were drilled in the wrong places or over-drilled. Pin holes did not correspond with angle brackets.
(4)	(a)	Assumption: "That dowel pins are in constant and uniform contact with and bear against limestone, or through thin sleeves of epoxy resin to limestone, over their full embedded length and for half their circumference."
	(b)	Reality: Epoxy was erratically applied. Eccentric pin holes meant that there was no consistent contact between epoxy and limestone even where epoxy was used.
(5)	(a)	Assumption: "That 5 mm diameter dowel pins are sufficiently parallel to and aligned within previously drilled 6 mm holes so as to prevent highly concentrated point contact between the ends of pins and surrounding stone."
	(b)	Reality: Dowel pin holes were improperly drilled or enlarged, so that there were concentrated points of contact between pin and limestone.
(6)	(a)	Assumption: "That 50 mm long dowel pins project equal distances above and below horizontal legs of angle brackets, such that the lengths of embedment in bottom and top edges of limestone panels are approximately (50-6)/2 = 22 mm."
	(b)	Reality: Dowel pins projected over unequal distances.
(7)	(a)	Assumption: "That limestone in wedges of influence inboard and outboard of dowel pins has a uniform shear stress of at least 0.9 MPa, i.e., that strength is not locally reduced by flaws, stylolites and damage during installation.
	(b)	Reality: MML made use of large numbers of panels with stylolites and flaws.
(8)	(a)	Assumption: "That the dead load of panels bears on angle-brackets rather than on the upper ends of dowel pins or on epoxy resin spilled from holes as panels are lowered over the pins and daubs of resin."
	(b)	Reality: Because pins were badly installed and use of epoxy erratic, the dead load of numerous panels did not necessarily bear on the angle bracket.
(9)	(a)	Assumption: "That bottom edges of panels bear directly on a high proportion of the theoretical 75 mm x 22.5 mm opposing surfaces of angle brackets rather than on irregular, narrow and unpredictable knife-edge areas around the perimeters of those surfaces."
	(b)	Reality: Numerous panels bore down on knife edge areas around the perimeters of the angle brackets.
(10)	(a)	Assumption: "That gravity loads in the most common panel support configuration are resisted wholly and symmetrically by pairs of bottom-edge fixings and that superimposed loads are equally shared by four fixings."
	(b)	Reality: This was not possible where, as here, pins of numerous panels were badly fixed.
(11)	(a)	Assumption: "That angle-bracket fixings are capable of being adjusted so that the bearing surfaces are parallel to the bottom edges of limestone slabs in notionally horizontal planes both parallel and perpendicular to the wall surface."
	(b)	Reality: MML did not position the panels in such a manner. The angle brackets were of fixed length and not susceptible to any significant adjustment.
(12)	(a)	Assumption: "That expansion anchors attaching limestone elements to concrete walls are typically located at mid-height of vertical legs of angle brackets."
	(b)	Reality: This was not always the case.
(13)	(a)	Assumption: "That rigid embedment of dowel pins in epoxy resin allows thermal and moisture expansion and contraction of limestone panels without contributing to local shear stresses and without causing overstress or gradual loss of strength in limestone around pin-fixings.
	(b)	Reality: There was little scope for thermal movement of the panels. This appears to have resulted in spalling in many panels around the area where the dowel pin was rigidly embedded with epoxy.
(14)	(a)	Assumption: "That the cladding system illustrated in the [MML] shop drawings precludes foreseeable mechanisms and paths by which gravity loads may be inadvertently transmitted between abutting panels."
	(b)	Reality: MML's shop drawings did not preclude the actual errors catalogued here.

166. Linfield also criticises GWA's acceptance of a factor of safety of 3 for the design of the cladding system and GWA's and MML's failure to test the allowable flexural and shear stresses of Poiseul B5 prior to submitting the structural calculations for the fixings to Houses 1 to 5 to the Building Authority.

167. In the next section, I consider whether Linfield's criticisms of GWA and MML are valid.

III. DISCUSSION

A. MML's liability

168. By its Warranty to Linfield MML agreed to exercise all reasonable care in the design of the stone works and the selection of stone panels for cladding. MML also undertook to comply with the Technical Specification. In my view MML failed to meet its contractual obligations.

169. In relation to the stone cladding works, Mr. Kong's survey of the Property revealed the following problems:-

(1) There were extensive cracks in the cladding stones used for Houses 1 to 6. In some cases clumsy attempts had been made to repair cracks or broken areas with epoxy.

(2) Joints between stone panels were filled with irregular epoxy plugs.

(3) Joint widths were inconsistent.

(4) Washers, newspapers and timber were embedded in the joints between numerous stone panels.

(5) Contrary to Technical Specification cl.6.5.13 plastic cushions were not installed in the joints between stone panels.

(6) There were unused anchor bolt holes in the concrete behind the stone cladding which had not been plugged.

(7) Irregular-sized angle brackets had occasionally been used as fixtures for some stone panels.

(8) In some instances cladding had been fixed over exposed reinforcement bars in the concrete. MML had not insisted that PCL remedy the exposed reinforcement bars before cladding was placed.

(9) There was "halo staining" on the cladding inside the lightwells of Houses 1 to 6 and on some external walls.

170. In relation to individual stone panels and their dowel pins, Mr. Kong also found the "realities" catalogued in Section II.J of this Judgment.

171. Still another problem was the presence of mould and fungus on the exterior of the stone cladding.

172. Mr. Kong's overall subjective impression was that, at the time of DCL's survey of Houses 1 to 6, approximately 90% of the external cladding which MML installed at the Property, suffered from one or more of 4 defects: cracking, breakage, crazing (hairline cracks following a particular direction or describing some discernable shape) and mould.

173. The problems just described, taken as a whole, establish that MML's workmanship was seriously deficient. The mould and fungus additionally suggest that thin veneer cladding made from Poiseul B5 was not fit for Hong Kong's environment.

174. Although Linfield selected Poiseul B5 for the Property, by Technical Specification cl.6.5.4.1 the choice was subject to MML's obligation to test the stone supplied and confirm its suitability in the environmental conditions of Hong Kong. Prior to installation of cladding on Houses 1 to 5, MML never seems to have commissioned a laboratory to carry out tests on Poiseul B5 samples as required by the Technical Specification. MML appears to have relied on generic data provided by Marbres du Boulonnais as to the physical properties of Poiseul B5. But the fact that Poiseul B5 was not appropriate to Hong Kong's sub-tropical environment is manifest from the fact that, within a few months of installation, the stone even when treated with sealant showed signs of fungus and mould.

175. Mr. Houghton for BHP submits that "[r]elatively little effort seems to have been put into either cleaning [the stone cladding] or the re-application of the same sealant [that is, Dallages], or trying out a different sealant". Mr. Houghton suggests that, had serious efforts been made to clean or treat the Poiseul B5, the mould and fungus problem would have been solved. I do not think that this is right. Linfield made strenuous efforts to surmount the problem of mould and fungus, both by re-applying Dallages and trying out alternative sealant coatings. Linfield's attempts proved abortive. The parties concluded that, given the environment at the Peak, mould and fungus staining on the Poiseul B5 cladding was inevitable and the problem could only be minimised at best by regular, potentially expensive, cleaning.

176. Even if Poiseul B5 was suitable for Hong Kong's environment, MML's method of installing stone panels was negligent. The problems just mentioned above were all too common examples of poor workmanship by MML. It appears that MML made little attempt to reject patently unsound stone panels. Instead, perhaps as a result of the pressures of complying with a tight work programme, MML incorporated defective panels indiscriminately into the cladding at the Property. MML installed panels in which stylolites were prevalent to an extent that made them inappropriate and possibly unsafe to use as cladding. MML also used panels with breakages (often ineptly glued back with epoxy) when it should have rejected those panels for aesthetic and safety reasons. Due to the poor selection of stone panels and bad workmanship, cracking, spalling and halo staining were widespread in the cladding system at the Property.

177. The 4 December 1997 letter from MML to PCL mentioned above suggests that MML was fully aware that it was wrongly covering up exposed reinforcement bars with stone cladding. In the letter MML acknowledges that the exposed rebars might lead to the staining of the Property's stone panels, but MML blames PCL for the situation and argues that such blame absolves MML of liability. Exposed rebars can undermine the long-term structural integrity of a building. Regardless of which party was at fault for the exposed rebars, a responsible sub-contractor in MML's position ought not knowingly to have installed panels over exposed rebars, but should instead have required the problem to have been remedied before proceeding any further. Putting up panels over exposed rebars despite a risk that the aesthetic appearance of Houses 1 to 6 would be compromised with stains, was not consonant with MML's obligations to use reasonable care and competence in carrying out work.

178. I therefore conclude that MML is liable to Linfield for breach of MML's Warranty. I shall return at the end of this Judgment to consider the measure and quantum of Linfield's damages against MML.

B. Linfield's locus to sue GWA in contract and tort

179. I turn to the more difficult question of whether GWA is liable to Linfield.

180. As a preliminary issue, Mr. Carolan argues for GWA that there was no valid legal assignment to Linfield of Sing Kee's contractual rights against GWA. Immediately before the writ was served, GWA had not had notice of Sing Kee's assignment dated 4 September 2001. By Law Amendment and Reform (Consolidation) Ordinance (Cap.23) ("LARCO") s.9, notice is necessary to complete a legal assignment. Prior to service of the writ, there having been no notice to GWA, Sing Kee's assignment (Mr. Carolan says) can only have been valid in equity. But (Mr. Carolan points out) Sing Kee's assignment was unsupported by consideration moving from Linfield. Accordingly, Mr. Carolan doubts whether the assignment can be valid even in equity. In any case, if an equitable assignment is assumed, Linfield would still not be entitled to sue GWA in its own name, but must join Sing Kee as a party. Since Linfield has not joined Sing Kee as a party and since the limitation period for GWA's liability has expired, Linfield (Mr. Carolan concludes) has no title to sue GWA in linfield's own name as assignee of Sing Kee's rights.

181. I disagree. First, LARCO s.9 does not require consideration for there to be a valid legal assignment. Second, LARCO s.9 does not require any particular form of notice of an assignment. Service of the writ by Linfield constituted sufficient notice of Sing Kee's assignment. This is because the material facts of Sing Kee's assignment were mentioned in §1 of the generally-endorsed writ. Mr. Carolan cites Compania Colombiana de Seguros v. Pacific Steam Navigation Co. [1965] 1 QB 101 for the proposition that notice of an assignment must be given before service of a writ if a plaintiff is to sue as a legal assignee. But I do not see anything in Roskill J's judgment in Compania Colombiana which supports such contention. The question whether or not a writ could itself constitute notice of an assignment was not in issue in Compania Colombiana.

182. As a subsidiary point, Mr. Carolan argues that, since Sing Kee is effectively assigning a "bare right to litigate", then even if there had been notice within the terms of LARCO s.9, there could still be no proper assignment. It is not possible (Mr. Carolan says, citing Compania Colombiana) to assign a bare right to sue for damages.

183. I disagree. The relevant rule is not as dogmatic as Mr. Carolan submits. The correct principle was stated by Lord Roskill in Trendtex Trading Corporation v. Credit Suisse [1982] AC 679 (HL), at 703F-G:-

"The court should look at the totality of the transaction. If the assignment is of a property right or interest and the cause of action is ancillary to that right ir interest, or if the assignee had a genuine commercial interest in taking the assignment and in enforcing it for his own benefit, I see no reason why the assignment should be struck down as an assignment of a bare cause of action or as savouring of maintenance."

184. Here Linfield is not only the owner of the Property, it is also a wholly-owned subsidiary of Sing Kee. In the early days of the project when Mr. Lu was first putting together a team of consultants to advise on the development of the Property, he dealt with GWA through Sing Kee. The initial contact on the project having been through Sing Kee, GWA addressed its contract proposals to Sing Kee. Subsequently, Sing Kee's management decided to acquire the Property from Shell through Linfield. Correspondence on the Property with GWA continued to be with Sing Kee as that had been the conduit for original negotiations. But all consultants (including GWA) understood that their services were being provided in practical terms to Linfield as the owner of the Property. The parties (including Mr. Wong and GWA) treated Sing Kee and Linfield as synonymous. Sing Kee's contract with GWA was in effect an agreement to provide Linfield with the benefit of GWA's services (see, for a similar contract, Panatown Ltd. v. Alfred McAlpine Construction Ltd. [2000] 4 All ER 97, at 151c). In those circumstances, Linfield must certainly have had a genuine commercial interest in being assigned Sing Kee's rights against GWA. If there was an assignment of a bare right to litigate, such assignment is legally enforceable and does not infringe the law against maintenance and champerty.

185. Accordingly, Linfield's action in contract as Sing Kee's assignee is validly constituted at law.

186. That is not the end of the question of title. Mr. Carolan has raised a final interesting argument. He says that, even if Sing Kee's assignment is valid at law, Linfield cannot derive any practical advantage from the assignment. This is because Sing Kee could only have assigned whatever rights of action it may have had against GWA. But Sing Kee (Mr. Carolan submits) had no rights of action against GWA. To have a proper cause of action Sing Kee must establish that it suffered loss from GWA's conduct as RSE. Sing Kee could not have sustained loss, because it had no interest in the Property. If GWA caused damage, such damage would have been sustained by Linfield, not Sing Kee. Linfield (Mr. Carolan reasons) cannot recover its own damages under the guise of enforcing Sing Kee's rights.

187. I disagree with the submission.

188. First, all parties conducted themselves throughout as if Sing Kee and Linfield were interchangeable. GWA, for example, routinely accepted payments of its fees from Linfield as well as Sing Kee. When seeking additional fees, GWA wrote on 26 June 1998 to Linfield, not Sing Kee. In his examination Mr. Wong explained that this was because everyone else had been treating Sing Kee and Linfield as interchangeable and Mr. Wong had been "brainwashed" into doing likewise. I infer from this that, although formally in a contract relationship with Linfield's parent, GWA fully realised that it was providing services for Linfield's benefit and GWA knew that Linfield was relying on GWA to provide professional advice and services of the nature and scope stipulated in GWA's agreement with Sing Kee.

189. In those circumstances, a "special relationship" in the sense explained in Hedley Byrne & Co. v. Heller & Partners [1964] AC 465 existed between Linfield and GWA. Linfield was thus entitled to sue GWA for any breaches of the duty of reasonable care owed to Linfield at common law by reason of such special relationship. The decision of the House of Lords in Murphy v. Brentwood District Council [1991] 1 AC 398 (which did not involve a "special relationship" arising from direct reliance in the Hedley Byrne sense) does not militate against this conclusion. Linfield's legal rights against GWA are therefore not limited to such contractual rights of suit as Sing Kee may have assigned, but include Linfield's own right at common law. Following Hedley Byrne, this latter right of suit against GWA would allow recovery by Linfield for "pure economic loss".

190. Second, Panatown suggests (without conclusively deciding) the possibility of a contractual right of action on the following "broad ground": Where A contracts with B for B to provide services for C's benefit and B fails to provide such services to C, A may be able to sue B for substantial damages for loss of A's "performance interest". The measure of A's damages against B would be the cost to A of providing the agreed services to C. See, for example, Panatown at 109b-113a (Lord Clyde); 143b-148j (Lord Jauncey); and 151b-f (Lord Browne-Wilkinson). There is an ongoing debate whether, to trigger the broad ground, A should be obliged to provide C with what B undertook to provide or whether A must account to C for any damages recovered. But to the extent that the broad ground is valid, Sing Kee would have a cause of action against GWA in contract for substantial damages. The damages would reflect the fact that Sing Kee's interest in GWA's performance was compromised by GWA's failure to render the promised services to Linfield. The legal assignment would have transferred to Linfield, Sing Kee's rights of suit under the broad ground.

191. I can assume here that what was identified as the broad ground in Panatown is valid as a matter of law and that the assignment operated to transfer to Linfield a cause of action in connection with the loss of Sing Kee's performance interest. There is no need finally to decide the validity of the broad ground as a legal proposition. This is because, given my conclusion on the existence of a special relationship between Linfield and GWA, it does not matter whether Linfield has an additional right of suit under the broad ground. The scope of the GWA's duty to Sing Kee and the measure of damages recoverable under the broad ground would not significantly differ from the scope of the common law duty of care. It also seems to me that on the facts of the present case the measure of damages consequent upon a breach either duty would be similar, if not identical.

C. Scope of GWA's duties at common law and in contract

192. Having decided that Linfield has title to sue, I consider the scope of GWA's duty. I begin by examining GWA's duty under the law of tort.

193. The starting point for defining the duty of care which GWA owed to Linfield as RSE must be a consideration of the Buildings Ordinance (Cap.123) ("BO") and its subsidiary legislation as they stood at the time when GWA was engaged as a consultant. The role of RSE has evolved since the mid-1990s. For the purposes of this action, the Court needs to establish what an RSE's duties were at the time of GWA's engagement. In the analysis which follows I shall refer to the BO and its subsidiary legislation as they were at the time of GWA's contract with Sing Kee.

194. BO s.4 provided:-

"(1) Every person for whom building works ... are to be carried out shall appoint:-

(a) an authorised person as the coordinator of such building works ...; and

(b) a registered structural engineer as a consultant to the authorised person on the structural elements of such building works or street works if so required under this Ordinance.

....

(3) Any authorised person and any registered structural engineer appointed or nominated under subsection (1) ... shall:-

(a) supervise the carrying out of the building works ... in the prescribed manner;

(b) notify the Building Authority of any contraventions of the regulations which would result from the carrying out of any work shown in any plan approved by the Building Authority in respect of the building works ...; and

(c) comply generally with this Ordinance.

(4) A structural engineer may not be appointed as a consultant under subsection (1)(b) unless he is registered in the structural engineer's register."

It is apparent from BO s.4(1)(b) that the RSE's responsibility was confined to the structural elements of relevant building works.

195. Building (Administration) Regulations ("B(A)R") s.12(2) provided:-

"Subject to paragraph (3), all foundation plans, structural details and calculations required under regulations 8(1)(d) and (i) and 9(f)⁴ shall be prepared and signed by a registered structural engineer, and his signature shall be deemed to be his assumption of all responsibility for the plans, structural details or calculations, as the case may be.

This provision emphasised the point just made on an RSE's duty. An RSE did not become responsible for the entirety of plans submitted to the Building Authority but (apart from foundation plans which are not of concern here) only for the structural details of such plans.

196. Taken in isolation, cladding was at the time of Linfield's project regarded as a non-structural element of a building. The word "cladding", for example, was defined by Building (Construction) Regulations ("B(C)R") s.37 as "a facing or architectural decoration additional to the external walls of any building". Cladding, however, must be fixed or secured to the external walls of buildings. It is the fixing or interface between an external wall (a load bearing structure) and cladding (a load) that is of concern to the RSE. The RSE needs to ensure that the external wall and fixing are strong enough as structures to bear the load of any cladding (including wind load transferred to the building through the cladding and its fixing system) without collapsing. Thus, while cladding of itself may be of little interest to an RSE, the structural integrity of the system by which cladding is fixed to the wall of a building must be of concern to the RSE.

197. That an RSE was responsible for fixing details of any plans relating to cladding submitted to the Building Authority was made clear from PNAP 59 (entitled "Cladding"). The May 1994 version of that note current at the time of GWA's engagement as RSE stated in §3:-

"Where cladding is to be affixed to any building, details of the thickness, strength, durability, fixings and sequence of support should be submitted for approval by the Building Authority. Failure to do so may result in delay or refusal to grant an occupation permit when the building is completed."

A contrast can be drawn with PNAP 59 as it now stands. The March 2003 version of PNAP 59 is wider in scope. In addition to provisions on fixtures and anchors for cladding, that practice note stipulates:-

"6. Stone cladding is a natural material. The mechanical properties, physical properties and chemical properties can vary considerably between different types and grades of stones. Tests on stone cladding panels are required to be carried out to verify the characteristic strengths adopted in the design and to form part of quality assurance during construction. The characteristic strengths shall be not less than three times that of the designed strengths used.

7. When stone cladding is to be used, the following tests are required to be carried out for each type of stone:-

(a) flexural strength test of dimension stone to ASTM C880 - Standard Test Method for Flexural Strength of Dimension Stone or to BS EN12372 - Natural Stone Test Methods, Determinations of Flexural Strength under Concentrated Load or to other appropriate equivalent standards; and

(b) strength test of individual stone anchorage to ASTM C135 - Standard Test Method for Strength of Individual Stone Anchorages in Dimension Stone or to other appropriate equivalent standards.

8. As limestone is highly susceptible to acid rain and may deteriorate quickly when being used as exterior cladding material, in addition to paragraph 7 above, aged strength testing to simulate weathering due to extreme temperature change and extreme moisture content change should be carried out for limestone cladding to demonstrate that the residual flexural and anchorage capacities are not less than 80% of those obtained in the standard tests specified in paragraph 7. The aim of aged strength testing is to simulate the conditions in which limestone panels are fully saturated and return to their driest conditions and to stimulate the critical temperature changes during their intended design life.

9. At least 4 test specimens are selected at random from batches of stone delivered to site for each of the test specified in paragraphs 7 and 8.

10. The test should be carried out by or under the direction and supervision of a testing agency independent of the supplier of the stone cladding. The test results should be certified by the testing agency, and endorsed by the authorized person or registered structural engineer to confirm that the test results have reached the required characteristic strengths adopted in the design. No consent for the commencement of the stone cladding works will be given until the test reports specified in paragraphs 7(a), 7(b) and 8 for each type and grade of stone, selected randomly either from the first batch of stone delivered to site or from the blocks of sones at the quarry that are to be used on the proposed project, have been submitted and found to be satisfactory by the Building Authority."

In the intervening years between 1994 and 2003 the best practice expected of an RSE has evolved. The Building Authority's guidelines have shifted from an RSE being only concerned with the integrity of a fixing system in 1994 to the RSE (or AP) now having to ensure that stone panels destined for use as cladding are tested in relation to certain mechanical, physical and chemical properties.

198. The RSE's responsibility for the structural elements of building works provides the key for analysing the scope of the RSE's duty in relation to supervision.

199. BO s.4(3) imposed a duty on the AP and RSE to "supervise". BO s.9 additionally provided for the appointment of a registered contractor for the building works. According to BO s.9(3), the registered contractor so appointed shall:-

"(a) give continuous supervision to the carrying out of the building works ...;

(b) notify the Building Authority of any contravention of the regulations which would result from the carrying out of the work shown in any plan approved by the Building Authority in respect of the building works...; and

(c) comply generally with the provisions of this Ordinance".

There is accordingly a "three-pronged approach" (using the terminology coined by GWA's counsel) to supervision under the BO. There is supervision by the AP, the RSE and the registered contractor. While there may be some overlap in the ambit of supervision by each of the three, their several responsibilities are complementary.

200. The RSE being responsible for structural elements, his duty of supervision must go towards ensuring that works relating to the structural elements of a building are properly carried out. This was clear from B(A)R s.37(2) which stated:-

"Where a registered structural engineer has been appointed in respect of such works, the registered structural engineer shall be responsible for such periodical supervision of the structural works and shall make such inspections of the same as may be necessary to ensure that they are being carried out in general accordance with the provisions of the Ordinance and regulations and with the plans approved in respect thereof by the Building Authority and with any order made or condition imposed, pursuant to any provision fo the Ordinance or regulations in that behalf, by the Building Authority."

201. Consequently, as RSE, GWA's role was to ensure that the concrete structure of the Property could transmit the loads imposed on the building properly and safely to the ground. That would involve GWA first examining the design of Houses 1 to 6 and satisfying itself as to structural details of that design, including satisfying itself that structural walls and fixings were of adequate thickness or strength to withstand designated loads. In addition, GWA was statutorily obliged to exercise all reasonable care through supervision to ensure that the structural elements of the relevant works were built in accordance with approved plans.

202. Ms. Cheng SC for Linfield submits that the above analysis should be carried further. She refers to B(A)R s.18A which provided:-

"Where plans of any building works ... are submitted to the Building Authority for his approval there shall be submitted, together with the plans, a certificate, which shall be in the specified form, by the authorised person or by the registered structural engineer, as the case may be, who prepared the plans or under whose supervision the plans were prepared, that:-

(a) the plans were prepared by him or under his supervision or direction; and

(b) to the best of his knowledge and belief the plans comply in all respects with the Ordinance and the regulations made thereunder."

Ms. Cheng says that, since GWA signed its name on MML's drawings and calculations for the stone cladding to be used at the Property, it follows from B(A)R ss.12(2) and 18A that GWA assumed full responsibility for every detail in MML's design and calculations.

203. If Ms. Cheng means that, by checking and approving MML's drawings, GWA guaranteed that the same were free from error, I think that her submission goes too far. For example, the reference in B(A)R s.18A to the plans complying with the BO and its subsidiary regulations to the best of an RSE's "knowledge and belief" points to the real issue being whether in checking and approving a set of plans an RSE has taken all reasonable care to satisfy himself that the plans and drawings submitted are proper and adequate. One asks: "Proper and adequate in respect of what aspects?" The answer must be guided by the analysis just carried out: "Proper and adequate in respect of the structural details depicted on such plans, such structural details being the province of the RSE under the BO". In other words, the question is whether the RSE has taken all reasonable care to see that the structural details contained in drawings checked and approved by him will result in the construction of a structurally safe building, rather than one which would constitute a structural hazard.

204. In contrast, GWA's counsel would limit GWA's common law duty owed as RSE to Linfield to ensuring that no physical damage (as opposed to pure economic loss) is caused to a person (including a property owner) as a result of structural weakness in a building. GWA's counsel argue that Linfield has no tortious claim against GWA either for the costs incurred in putting right structural defects in the Property or for any other form of pure economic loss (such as loss of rental).

205. If the situation were that of a third party who suffered economic loss as a result (say) of a structure collapsing and preventing the 3rd party from conducting some profitable business, I would be prepared to accept on the basis of Murphy v. Brentwood that the 3rd party has no claim for pure economic loss. But where (to the knowledge of GWA) Linfield has relied on GWA's due performance of its duties as RSE, Hedley Byrne constrains me to hold that Linfield may recover for pure economic loss and not merely economic loss consequential upon physical damage. Accordingly, I do not think that GWA's common law duty was as limited as GWA's counsel contend.

206. Consider now Linfield's contractual rights against GWA in consequence of Sing Kee's legal assignment. This can be dealt with shortly. As I have already said, it does not seem to that there should be a substantial difference between Linfield asserting a right at common law and Linfield suing for damage to Sing Kee's performance interest under the relevant contract. By cl.1 of its contract with Sing Kee, GWA agreed to perform the work of an RSE as set out in the BO. This is precisely the duty owed to Linfield at common law discussed above. If Linfield fail to establish a breach of GWA's common law duty, it follows that it will also fail in respect of any assigned contractual rights.

207. I now examine whether GWA has breached its obligations as RSE for the project.

D. Linfield's claims against GWA

208. Linfield's complaints against GWA can be broken down into 3 broad areas:-

(1) Failure to advise Linfield in relation to the inadequacies of MML's design of the stone cladding system.

(2) Failure properly to supervise the concrete and cladding works for Houses 1 to 6.

(3) Miscellaneous criticisms such as the failure to advise on the inclusion of a movement joint in the podium.

I begin by discussing the first 2 areas of complaint in general terms. I shall then comment on the specific Particulars of Claim alleged against GWA in the Schedule to the Amended Statement of Claim. In that section, I shall deal with the miscellaneous criticisms which I have classified as Linfield's third broad area of complaint.

D.1 Choice of stone and design of the stone cladding system

209. GWA played no role in the choice of Poiseul B5. GWA was not invited to France, was not invited to visit the various properties employing limestone cladding which Mr. Lu inspected before selecting Poiseul B5, and was not sent details of the types of stone under consideration by Linfield until after the Poiseul B5 had been purchased and cut and a first shipment despatched to Hong Kong. I do not think that GWA can be blamed for the selection of Poiseul B5.

210. After the Poiseul B5 was chosen for the Property's stone cladding, it was noted at a stone work meeting on 17 July 1996 (attended by Mr. Behrouzi for GWA) that MML would prepare calculations and drawings for the stone cladding fixings. This confirmed what had previously been decided by Linfield (in the absence of GWA) on 21 June 1996 even before the Poiseul B5 had been chosen. GWA did not receive the calculations until around September 1996. Up to that point, I do not see how GWA can be faulted in connection with the choice of stone.

211. Linfield can realistically only criticise GWA for approving MML's calculations and drawings, instead of querying or rejecting the same. Linfield's complaints thus focus on GWA's failure to do one or more of the following when reviewing MML's calculations:-

(1) Insist that samples of the Poiseul B5 supplied be taken and tested to determine the stone's physical properties, in particular its flexural and shear strengths;

(2) Question MML's use of an FOS (based on mean strength) of 3 instead of 6; and,

(3) Reject MML's design as "not buildable" in practice.

212. On testing, it seems to me that GWA were entitled to rely on the data provided with MML's calculations. As appears from the initial sheet thereof, MML's calculations were predicated on allowable bending and shear stresses of 4.50 N/mm² and 0.90 N/mm² respectively. The calculations posit an FOS of 3. This means that MML's design was premised on the use of stone with flexural strength of 13.50 N/mm² (4.50 N/mm² x 3) and shear strength of 2.70 N/mm²(0.90 N/mm² x 3). I do not think that GWA was obliged to require or initiate independent laboratory tests verifying such flexural and shear strengths when reviewing MML's calculations.

213. I accept here the evidence of Mr. Watkins, GWA's expert. Mr. Watkins pointed out that the calculations were being checked in advance of construction. GWA could assume that there had been or would be quality control tests by MML to ensure that stone of the characteristics stipulated in the calculations was actually delivered. Mr. Watkins accepted that, if the figures in the calculations struck an RSE as obviously wrong, he ought to raise queries. But Mr. Watkins believed that the data in MML's calculations appeared to be of the correct order of magnitude.

214. Mr. Fred Ng, Linfield's expert, suggested that MML's data was so obviously wrong that alarm bells should have rung with GWA. But Mr. Fred Ng could not substantiate this point. He could not articulate why a flexural strength of 13.50 N/mm² was out of line with normal expectation. Indeed, Linfield's own evidence from Mr. Hartog shows that there are French limestones which exhibit flexural strengths of the magnitude identified in MML's drawings.

215. I think that it was reasonable as a matter of practice at the time and within the terms of the then PNAP 59 for an RSE to take as given such data supplied by a sub-contractor (especially a specialist stone cladding sub-contractor such as MML). This conclusion is reinforced by reference to Technical Specification cl.6.5.4.1. That provision imposed a duty of testing the stone to be used on MML. I do not think that it was incumbent on GWA, in the absence of any indication that MML had plucked figures out of thin air, to suspect that MML's data was erroneous or other than the results of testing. GWA's role was not to act as a guarantor of the performance by MML of every one of its obligations under the Technical Specification.

216. Even if I am wrong in this, I do not see that Linfield's case would be assisted on the facts. There would still be a problem of causation.

217. Ms. Cheng says that, if (instead of approving MML's calculations) GWA had caused tests of Poiseul B5 to be carried out, GWA would have discovered that the flexural strength of Poiseul B5 was substantially below 13.50 N/mm² Given that panel thickness is a function of the flexural strength of the stone used, GWA (Ms. Cheng says) ought then to have realised that the MML's design stone panel thickness of 30 mm was inadequate.

218. But when the Building Authority requested, in connection with the application for approval of the fixing details of the cladding to House 6, that the flexural strength of 13.50 N/mm² be supported by laboratory test results, samples of Poiseul B5 were in fact tested⁵. The tests showed a mean flexural strength of 7.60 N/mm². That is a lower figure than 13.50 N/mm². Nonetheless, if that lower figure were plugged into MML's calculations, the stone panel thickness of 30 mm would still be valid.

219. Tests were therefore actually carried out and those tests did not falsify the calculations in relation to stone panel thickness. The cladding of House 6 continued on the basis of 30 mm thick stone panels and, unsurprisingly, no one saw a need to revise the already approved calculations for the fixing details of Houses 1 to 5.

220. It is consequently difficult to see how (even if valid) Linfield's criticism of any failure by GWA to insist on tests in or about September 1996 can have been causative of loss to Linfield. If tests had been taken, they could well have produced results such as those generated by Testconsult and matters would most likely have proceeded as they in fact did.

221. Ms. Cheng has argued that the tests by Testconsult were inadequate. For example, she suggests that too few samples were tested and contends that something akin to the BRE tests which formed the basis of the 2nd AFE Report should have been conducted. Thus, a larger number of stone panel samples divided into Type I, II and III categories depending on the presence of stylolites ought to have been tested.

222. Ms. Cheng's submission seems to me to be one made with the benefit of hindsight. No cogent expert evidence was adduced to explain rigorously why the Testconsult results were flawed. For example, by way of comparison even the current PNAP 59 only refers to the taking of 4 test specimens. Nothing is said in PNAP 59 about division into Types I, II and III panels. Corived admittedly tested more samples (10) than Testconsult, but even Corived did not divide the samples into Type I, II and III specimens. Why then was it unreasonable for GWA to be satisfied with the Testconsult results and not require a much grander experiment to be conducted? Further, I seriously doubt the practicality of Ms. Cheng's suggestion. In September 1996, when it was recognised as vital that the approval of the Building Authority to the fixing details be obtained as soon as possible, would it have been possible for GWA to insist on full-blown sampling and testing of the nature conducted by BRE for the 2nd AFE Report, when only the first consignment of stone for use on the project had just been despatched from France in August 1996?

223. Ms. Cheng submits that MML's calculations dealt inadequately with shearing failure at the dowel pins. Had MML examined that mode of failure more conscientiously, it would have found that its design was inadequate. Proper consideration of shearing failure at the dowel pin would have meant conducting tests similar to those undertaken by Mr. H. K. Ng (another of Linfield's experts) and analysed in his report. That report shows (according to Ms. Cheng) that in terms of shear strength at the dowel pins a significant number of stone panels would have not have met the criterion of an FOS of 6 (based on mean strength). Ms. Cheng says that GWA should have focused on this when reviewing MML's design and calculations.

224. On shear strength at the dowel pins, GWA's counsel refer to Mr. H. K. Ng's cross-examination wherein he acknowledged that his tests did not measure actual shear strength. Given Mr. Watkins' evidence (which I accept) that, based on the Corived test results for compressive strength and modulus of rupture, the mean shear strength of the Poiseul B5 panels should be in the order of 6.0 MPa (or a characteristic value of about 3.0 MPa), Mr. H. K. Ng's "shear strength" of 1.445 MPa is most likely understated. It follows, since Mr. H. K. Ng's analysis of the FOS for individual panels depends on the shear strength figure used in calculation, that the various FOS derived by him for specific stone panels are likely to be lower than the FOS which one obtains if actual shear strength of Poiseul B5 had been used in one's equations. I do not think that it is logically an answer to this to assert (as Ms. Cheng does) that, whether or not Mr. H. K. Ng's "shear strength" represents actuality, Mr. H. K. Ng calculated his "shear strength" using the same assumptions as those MML made. In my view, the most that can be said of Mr. H. K. Ng's evidence is that it is inconclusive as a critique of MML's design.

225. More generally on FOS, I am unable to conclude that GWA acted negligently or unreasonably in accepting an FOS of 3. I believe that the use of an FOS of 3 was appropriate.

226. The literature cited by Mr. Hartog as necessitating use of higher FOS relates to generalised stone (that is, stone whose characteristics have not been ascertained). If in contrast one is dealing with stone with specified characteristics, an FOS of 3 ought to have been acceptable. Here (as I have held) GWA was entitled to assume that tests had been or would be carried out by MML on the Poiseul B5 to see that the stone panels installed exhibited the characteristics specified in the calculations.

227. I am supported in my view the cross-examination of Mr. Hartog on Day 15:-

"Q:	I do not think we need to worry too much about the detail, but the point is this, is it not, that when looking at specific stone properties in limestone, a factor of safety of 3 may be appropriate?
A:	Yes.
Q:	I think that you accept that, and indeed your report accepts that as well, that in specific instances where you know the characteristics of the stone, you can use properly a factor of safety of 3?
A:	With the durability factor takin into account in here, but it is not a point I made in my report.
Q:	The Arup March 2004 report also accepts that same concept, does it not? Have you considered that report?
A:	Yes, but it addresses quite different loading conditions from what was in the design.
Q:	We can come to the detail of the Arup report, but it was the concept that I was referring to. Maybe we had better look at it. Bundle E20, please, at page 374. At page 374, they say:

'The only circumstances where we consider a factor of safety of 3 would have been acceptable would have been on the basis of a detailed knowledge of the strength characteristics of the stone...'

A:	Yes.
Q:	So they recognise the concept that a factor of safety of 3 is acceptable if you know the strength characteristics of the stone?
A:	Yes.
Q:	The Buildings Department also accept it, based on the characteristic strength of the stone, do they not?
A:	Is that a reference to PNAP 59 as currently...?
Q:	It is.
A:	I accept that if 'characteristic strength' means the statistical concept, it would seem to be that they do accept it as the minimum for stone. I am not certain that they accept is as the minimum necessarily for limestone.
Q:	That is an argument, Mr. Hartog.
A:	Well, I have to see PNAP 59. You are asking me to make a generalisation, which I cannot make until I see the document.
Q:	Very well, it is at bundle C2 at page 548-5.
....
Q:	Paragraph 6 of the last sentence:

'The characteristic strengths shall not be less than 3 times that of the design strengths used.'

A:	Yes.
Q:	Do you accept before that the BD accept a factor of safety of 3 based on characteristic strength?
A:	Yes."

In light of such exchange and given what even now is said to constitute good practice by the latest PNAP 59, I find it difficult to fault GWA for approving in 1996 structural calculations based on an FOS of 3 in relation to stone said to have certain specific characteristics. I note that, albeit grudgingly, Mr. Fred Ng accepted that the use of an FOS of "not less" than 3 was justifiable in terms of the current PNAP 59.

228. On the question of buildability, I do not accept Linfield's criticism of GWA. Essentially, Linfield complains that GWA approved MML's drawings when GWA ought to have realised that the design required such precision of workmanship that in practical terms few (if any) contractors could comply with it. Linfield stops short of saying that the design was impossible to build. Linfield merely says that the assumptions listed in Section II.J of this Judgment were unrealistic and impractical ones to make. GWA (Linfield contends) ought to have realised that MML was likely to make a mess of it (as MML in fact did).

229. I do not see how it formed any part of GWA's duty as RSE to advance a view as to the likelihood or otherwise of a specialist stone contractor such as MML being able to erect cladding in accordance with its design. Matters might have been different if the structural design was an obvious physical impossibility, but that is not the case here. As Ms. Cheng accepts, MML's design was physically possible. It was only that the drawings gave little room for error. But, if MML had contractually undertaken to perform work to such degree of precision, it was not GWA's role to say in September 1996 that MML could not conceivably deliver what it had undertaken. If MML's workmanship fell below the requisite mark, that would be MML's fault, not GWA's.

230. Moreover, I believe that there is a logical difficulty with Linfield's argument. Assume that MML's design had been more tolerant of error. Even then a contractor could still cut corners in foreseeable ways. There could still be rebates carved on the backs of stone panels, careless drilling of holes into stone panels, botched applications of epoxy and thousands of other anomalies, just because a contractor is under time pressure and cannot be bothered to make the effort to get things right.

231. If Linfield is correct, GWA would have to anticipate likely defaults on the part of a particular contractor and insist that MML re-design to rule out the possibility of such carelessness. Where would the process stop? Any design can be bungled and bungled in a myriad of foreseeable ways. When would an RSE be able to say "enough is enough" and a design is "practically buildable" in the sense of having minimal prospect of being bungled by even an inept contractor? It seems to me that the way in which an employer best guards against shoddy building work is by selecting a reputable contractor capable of executing the requisite design. The process is not the other way around. It is not the role of an RSE to ensure that a design is capable of being executed by a particular contractor.

D.2 Supervision

232. Linfield's criticism of GWA for lack of proper supervision concerns 2 general areas:-

(1) Supervision of concrete works, in particular the failure to ensure that:-

(a) hacked off areas were properly treated so that adequate concrete cover was restored; and,

(b) exposed reinforcement bars in the Property's concrete walls were properly repaired; and,

(2) Supervision of the putting up of the cladding system.

In essence Linfield argues that had GWA supervised properly, hacking off would not have had to be so extensive, reinforcement bars should not have been exposed, and MML's many workmanship defects would have been corrected at a much earlier stage. Therefore, the fact that significant hacking off had to be done, that reinforcement bars were exposed and left unremedied, and that the cladding put up by MML had many defects, shows (Linfield reasons) that on the balance of probability GWA was not properly supervising the structural works at the Property.

233. On hacking off and exposed rebars, I accept Mr. Watkins' evidence of the practice commonly followed in Hong Kong. During Mr. Manzoni's examination-in-chief on Day 17, Mr. Watkins stated the following:-

"Q:	I want to deal, please, with hacking off, if I may briefly. First of all, is hacking off of concrete common in Hong Kong?
A:	It is.
Q:	How do contractors do it?
A:	Normally, they either adopt handtools which are traditional handtools, that is chisel and hammer. But more recently it has been for common for them to use what is known as a Kango hammer, which is a small hand-held pneumatically operated chisel.
Q:	Can you help me with this: to what extent does the RSE become involved in the process of hacking off?
A:	Generally, he does not become involved.
Q:	Why is that?
A:	Generally, it is because when hacking off is taking place, it is because it is an excess of concrete that has meant that hacking off has to take place.
Q:	The word 'generally' he does not become involved implies that on some occasions he may become involved?
A:	Yes, he does.
Q:	In what sort of situation would that be?
A:	That would be on occasions where either the reinforcing steel becomes visible or where he is informed that the cover to the reinforcing steel is to be reduced below the design cover.
Q:	In those circumstances when he does become involved, what is the normal practice for an RSE and how does he deal with the issues that you have just identified?
A:	Normally, he would expect that the contractor would be required to provide a method statement for repairing the areas of concrete where there are either visible bars or substandard cover.
Q:	So he would expect them to provide a method statement, and what happens then? Let us say they provide a method statement. What does he do?
A:	In the first place, he would obviously review that method statement, and if it was acceptable, then the work would go ahead.
Q:	To what extent would he have to supervise the carrying out of the work pursuant to the method statement?
A:	Normally, it would be a question that the contractor would be asked to mark out the areas that are of concern, and then it would not be a matter for the RSE himself or his representative to deal with but for the supervisor on site to observe the area that has been broken out and then the finalised repair.
Q:	I perhaps should have asked you at a slightly earlier stage -- you have told us that he does not normally get involved but there are some circumstances in which he does, and those circumstances are when there is reduced cover and there are exposed reinforcement bars, as I understand your evidence?
A:	Yes.
Q:	How would the engineer know about the existence of those circumstances?
A:	That would normally be because he has been informed by the contractor of the existence of these areas, because at the time, it is most likely that the structure would be complete or at least that section of the structure would be complete, because it is the following trades that are giving rise to the need for such hacking."

234. Later, in cross-examination by Ms. Cheng on Day 19, Mr. Watkins said the following:-

"Q:	So first of all, the first thing to ascertain is whether the concrete cover complies with the approved drawings, which is 25 mm. That is the first step when hacking off takes place. The RSE or his resident engineer should do?
A:	It is not normally that way around, because the structure is complete, I think, at that stage. Therefore, we are talking about -- right, we have finished the structure. Essentially, the resident engineer, if he is still there, is not actually looking at that structure.
	Therefore, any following trades which affect that structure -- the onus is the other way around. The onus is definitely on the contractor to come to the resident engineer or the RSE, if there is not a resident engineer, and say, 'I need to do this.' Sometimes it is to cut a hole for service penetrations. Sometimes it is to cut chases so that you can put electrical conduits or the like. Sometimes it is for hacking, as in this case.
	But the onus I believe is the other way around. We have a completed structure, and it is the contractor's role to inform in the first place.
....
Q:	Fair enough. So during the repair, the RSE should be there on site making sure that the cover is adequately provided?
A:	I would not expect the RSE to be there on site --
Q:	But someone from his office?
A:	I would not actually expect someone from his office to be there. I would expect actually any of the supervisors on site -- this is the sort of task that os given typically to the clerk of works.
Q:	If the resident engineer is on site, should the resident engineer at least do some spot checks on what this clerk of works was checking?
A:	Well, the difficulty that I see -- and I have come across this before -- is that I do not think that it is necessarily for the resident engineer to in any way check what the clerk of works does, because in many cases it is the clerk of works who is in the senior role, if you can describe it in those terms, because the clerk of works is normally someone with greater experience than the resident engineer and he is the one with, shall we say, direct contractual linkage to the architect.
	The resident engineer has a roundabout way of going to the architect. As I say, by way of experience and by way of contract procedures, the clerk of works is sometimes thought of as the more senior of the two figures on site. But obviously this depends on the ages, the relative ages of the people concerned and their actual experience. I have been in the same situation myself many years ago now, where I would not have dreamt, as the resident engineer, of overseeing the clerk of works.
	It may be that one of my seniors would do so, but not necessarily as the resident engineer."

235. Mr. Fred Ng declined to criticise GWA in relation to exposed rebar. Repeatedly asked by Mr. Manzoni on this, Mr. Fred Ng replied as follows on Day 14:-

"Q:	You do not actually deal with this and you do not criticise the supervision of exposed reinforcement bar and their repair in your report?
A:	That is true. Not at all.
Q:	Do I understand from that and that it is your evidence that you do not make any criticism against GWA nor their supervision of this defect?
A:	Absolutely not, no, no criticism, because I --
Q:	You make no criticism?
A:	I have not treated this area.
HIS LORDSHIP:
	Is there any particular reason why you have not treated this area?
A:	I do not -- your Lordship, I did not go into the repair side.
HIS LORDSHIP: Thank you.
MR. MANZONI:
	In relation to the original exposure of the rebar, again as I understand your report, you do not criticise GWA in relation to what they did at all when it was discovered or in relation to the discovery of it?
A:	Two questions, two statements. Not involved -- I was not involved.
Q:	No, I understand you were not involved. Do you criticise GWA in any way for failing to discover exposed rebars?
A:	No. I have not commented on that area.
Q:	In paragraph 4.15 of your report, you refer to the full-time supervision not being required, but you say that GWA would have a competent scheme to provide qualified periodic supervision, and you say:
	'... this may not be the case as exemplified by defects such as honey combing ... after discovering the first instance of such honeycombing, GWA should immediately...'
	Then you set out various things.
A:	That is what I did say, yes.
Q:	In your evidence-in-chief you were asked if one replaced 'honeycombing; with 'exposed reinforcement bar', your answer would be the same?
A:	No.
Q:	It would not be, and would your answer be, as I understand it from the evidence that you have just given me, that you still do not make any criticism of GWA in relation to exposed rebar?
A:	Not specifically, no."

236. On the issue of hacking, Mr. Fred Ng was vague as to the precise basis on which he was critical of GWA's supervision. The following exchange also took place on Day 14:-

"Q:	So do I understand therefore that you do not actually criticise GWA in relation to the hacking off of concrete?
A:	No, not particularly on just hacking off the concrete, but they should be there to carry out the supervision.
Q:	Let us go back to your previous sentence in this paragraph.
	'If adequate supervision were provided, the works of both PCL and MML would have been properly co-ordinated with the stone cladding installation suitably sequenced with PCL's concreting works...'
	What do you mean by that?
A:	'If adequate supervision were provided, the works of both PCL' -- talking about PCL first -- 'and MML would have been properly co-ordinated...'
	I mean, they should know what sort of surface MML would want, because MML here is the nominated subcontractor on the stone, on the limestone. They should have been properly co-ordinated.
Q:	Let us just understand it. Are the concrete works poured before or after the stone cladding or during --
A:	Day one when they were pouring the concrete to the building.
Q:	So it happens before the stonework then, does it?
A:	Before the stonework, before the stonework contractor moves in.
Q:	When did he move in?
A:	After the frame was completed.
Q:	So what supervision and co-ordination goes on during the pouring of the frame that you are referring to here?
A:	In construction work practice, the programme has to be drawn out and agreed by all parties, consultants and contractors, and including the subcontractors as well. In this case, the nominated subcontractor -- they should have co-ordinated well before the pouring of the concrete.
Q:	I do not think we are talking about programme, Mr. Ng. We are not talking about programme here.
A:	No, I am not talking about programme. You said co-ordination. I am talking about co-ordination.
Q:	So exactly what co-ordination do you say should have been done at the time of the pouring of the concrete?
A:	At the time, to make sure that the surfaces are to be put up -- to be made buildable by MML in this case.
Q:	SO that is a question of tolerances, is it?
A:	It must be.
Q:	So are you saying that the original building should never have been allowed, or the original out of alignment should never have been allowed; is that what you are saying?
A:	A utopia situation, that is right, yes. A properly constructed frame should not have those sorts of problems.
HIS LORDSHIP:
	Could I just clarify, Mr. Ng: the transcript records you as saying 'a Utopia situation'. That is what you mean, a Utopia situation?
A:	That is what I meant, yes, perfect.
HIS LORDSHIP: A perfect situation?
A:	Perfect situation, that is right.
HIS LORDSHIP:
	The sort of situation that you do not encounter in ordinary life?
A:	That we seldom encounter on site, to be fair.
HIS LORDSHIP: Thank you.
Q:	Going back a page to page 21, in the same paragraph 4.14, you say:
	'... despite the various remedial works required of the concrete, stone cladding, et cetera, during the course of construction, I could not find evidence of increased frequency of supervision on site from the RSE or the RSE representative,'
	Let me just be clear: in relation to the concrete, the various remedial works that you are referring to, could you identify those for me, please, and tell me exactly what you are referring to?
A:	Hacking back, the problems in the windows, and areas with debris found in the bottom of -- in certain areas of completed concrete; not forgetting the honeycombing situations.
Q:	We will come on to honeycombing in a minute. Those are defects. What remedial works are you talking about?
A:	Hacking back --
Q:	Sorry, the remedial work of hacking back?
A:	I mean, to start with, hacking back, and then the application of an extra layer of a protective layer, if they found deficiencies in the concrete cover.
Q:	Precisely when do you say GWA should have increased the frequency of supervision?
A:	During the course of their supervision, talking about GWA, their supervision and inspection during construction.
Q:	When?
A:	Any time.
Q:	When?
A:	Any time.
Q:	Mr. Ng, when should the increase in the frequency of supervision have started?
A:	Once they noticed there were problems, if they noticed the problems, they should increase their supervision. They should make a judgment to go there more frequently, you know, pay attention to formwork, pay attention to the covers.
Q:	When do you say, in terms of time, date -- at what date do you say GWA should have increased the frequency of their supervision?
A:	It took them several months to complete the frame. I would have thought that at certain stages justified or pinpointed by GWA.
Q:	Mr. Ng, it is a simple question. You have made a statement in your expert report that GWA should have increased the frequency of supervision.
A:	A very general statement here.
Q:	Yes.
A:	Opinion.
Q:	That is what you are saying, is it not?
A:	That is my opinion.
Q:	When should they have done it?
A:	At all times.
Q:	Right from the beginning, is that right?
A:	Absolutely, yes, whenever they found -- whenever they noticed problems.
Q:	That is not right from the beginning, is it, Mr. Ng?
A:	Oh, it could be.
Q:	Let us be absolutely clear as to what your evidence is. I want to know the date. I will take it within a few weeks or possibly a month, but I want to know when you say GWA should have increased their supervision frequency?
A:	When they noticed there were problems on site.
Q:	Now when do you say that was?
MS CHENG:
	This is not a memory test. He has given the schematic answer. If he needs to look at the documents, no doubt Mr. Manzoni should allow him to look at the document --
HIS LORDSHIP:
	So far, the witness has not asked to look at the documents. I think Mr. Manzoni is perfectly entitled to ask Mr. Ng to be precise.
	Mr. Manzoni?
MR. MANZONI: I am obliged.
	When do you say that GWA noticed that there were problems on the site?
A:	I cannot give you a definitive answer to this one, Mr. Manzoni.
Q:	Can you identify with precision the problems that you are referring to?
A:	You mean areas?
Q:	The problems that you are referring to.
A:	The window openings to start with.
Q:	Let us look at the window openings. At what point in terms of the construction of the these windows should GWA have increased their supervision.
A:	The first window, the first window on the lower floor, when it was constructed, they should have noticed the problems. That is when.
Q:	And should they have noticed that because of their original obligation or because of an increased level of supervision was required of them?
A:	The answer is, I disagree, no.
Q:	It was a question, Mr. Ng --
A:	Because were are all working on supposition here. I was not involved with the programming, neither was I exposed to the stages. My comment here, if it warrants that sort of explanation, is entirely up to your opinion, of course, but I have said quite clearly, Mr. Manzoni, that I do not know the date. If you want to hammer me for the date, I cannot tell you.
HIS LORDSHIP:
	I think Mr. Manzoni would be happy if you were to specify the particular event that you say triggers the obligation to inspect more frequently. We can find out the date of that event on our own, but you must be able at least, Mr. Manzoni suggests, to identify the event that triggers the obligation, the duty, the good practice to inspect more frequently?
A:	That is very helpful, your Lordship. I did say one area -- the windows.
HIS LORDSHIP: Mr. Manzoni?
MR. MANZONI: I think that I will leave it there."

237. I have quoted extensively from the transcript of Mr. Fred Ng's cross-examination on hacking off in order to demonstrate the vagueness of the complaint being advanced against GWA on that topic. Mr. Fred Ng does not complain about there having been hacking. To have expected perfect alignment of concrete walls would have been (in his opinion) a Utopian scenario. Instead Mr. Fred Ng says that GWA should have increased supervision if and when it noticed that there were problems. He faults GWA because he does not perceive any increased level of supervision. It is unclear how increased supervision by the RSE in unspecified circumstances could have led to any different outcome. Indeed, it is unclear precisely what level of "increased" supervision (hourly, daily, weekly, etc.) is envisaged.

238. In any event, Mr. Fred Ng's opinion appears to me to be divorced from any factual context. What specific problems did he have in mind which ought to have led to "increased" supervision by GWA? In answer Mr. Ng repeatedly referred to "the problem with the windows". But he never spelled out on what basis GWA was responsible as RSE for the windows of the Property⁶. At the end, Mr. Ng's view is no more than a vague statement of general principle. That cannot take analysis far. Without more specific observations from Mr. Fred Ng as to how GWA failed to observe the good practice of an RSE in the actual situation in which GWA found itself, I am unable to say that GWA failed to act as a reasonably professional RSE in the way it actually supervised the concrete works.

239. I would make 4 more general observations on the concrete work at the Property.

240. First, as GWA's counsel are at pains to stress, GWA's supervision does not guarantee a result. It does not guarantee that the Property's walls, once constructed, will be structurally adequate. Even conscientious periodic supervision may fail to spot defects in the work of an incompetent concrete works contractor. What is significant in this case is that no one has suggested that the concrete walls of the Property are structurally unsound. On that basis alone, Linfield must face an uphill task in making out a case that GWA was negligent in its periodic supervision of the concrete works and caused loss as a result.

241. Second, the real problem appears not to have been hacking off of concrete. A method statement was prepared to deal with that particular problem and PCL was specifically reminded by GWA of the need for 2 inspections of remedial work to hacked off areas where concrete cover had to be restored. The real difficulty was where hacking off led to the exposure of reinforcement bars.

242. Although previously there may have been instances of exposed reinforcement bar (possibly, for example, in November 1996, in the garden wall area), these were isolated incidents and had been remedied. It was only during inspections in late October and early November 1997 that it was noticed that there were exposed reinforcement bars beyond those treated in the past.

243. The extent of the problem of exposed reinforcement bars at the time of its discovery in late 1997 and thereafter, is unclear. The evidence suggests that the problem, although it existed, was not widespread. Thus, the photographs of exposed rebars in the trial bundle are few. It is known that a total of 584 m² of concrete was repaired as part of the remedial work by Pat Davie. That 584 m² comprises areas of spalling, hollowness, insufficient cover, rough concrete and exposed rebar. There is no breakdown of the areas of each of the latter concreting defects. Nonetheless, considered in conjunction with the photographs, the area of exposed rebar could not have been so great.

244. Whatever the extent of exposed rebars, Linfield says that periodic supervision ought to have picked up the fact that there was exposed rebar behind the cladding being put by MML. I do not think that would have been the case.

245. In my judgment, the exposed reinforcement bars detected in October and November 1997 were symptomatic of the pressure PCL and MML were facing from September 1997 onwards to complete the erection of the cladding in time for the OP inspection. As a result of that pressure, hacking off was hurriedly done by PCL, exposing reinforcement bars on occasion. Once hacked off, an area would straightaway be handed over to MML. MML, although fully aware (as mentioned above) of the presence of exposed reinforcement bars, did not insist on the relevant areas being properly treated with cement mortar, but simply proceeded to put up stone panels. MML did not regard the treatment of the exposed rebars as its responsibility. In such circumstances, it is difficult to see how periodic supervision, no matter how conscientious, would necessarily have detected the areas of exposed rebar unless GWA happened to come by just before MML covered up the relevant part of the concrete wall. Once a stone panel was put up, the area behind it would not be visible and any exposed rebar there could easily escape detection.

246. Third, Linfield criticises GWA for failing to obtain from PCL a complete set of photographs evidencing all repair work done to exposed rebars since the discovery of the problem in October and November 1997. Why (Linfield asks) did GWA not press for the photographs?

247. But GWA made it clear at Site Meeting No.54 on 17 December 1997 with (among others) PCL, TDA, MML and Mr. Lu present that a complete set of photographs had not been provided and, as far as GWA was concerned, repair mortar had not been sufficiently applied to Houses 1 to 5⁷. GWA then pointed out that (in contrast to what Mr. Watkins said was the usual practice in Hong Kong) the contractor had only informed GWA of hacking and repairs "half way through the process". GWA further mentioned the consequences of "future water leakage or rust staining" if repairs were not now effected to concrete areas already covered by stone panelling. It therefore seems that, far from shirking responsibilities, GWA gave a full report and warning to Linfield of the defects in PCL's concrete works, including exposed reinforcement bars.

248. At the meeting on 17 December 1997 Mr. Lu could not have been under any illusions as to the problem. That he was fully aware of the existence of exposed rebars and the risk posed by them is in any event shown by a letter dated 4 December 1997. There Mr. Lu wrote to PCL:-

"You and your staff always promise to finish certain work 'by tomorrow'. I am tired of hearing the same empty statement. I saw many photos of the concrete walls with rusty steel bars on the surface. I will hold you fully accountable for any water leakage and damage to the stonework caused by such poor workmanship in the future. The site is like a garbage dump with rats running around. This is intol[e]rable."

249. Fourth, complaint is made about the existence of honeycombing, embedded timber and unplugged anchor and bolt holes in the concrete. On honeycombing and embedded timber, these do not seem to have been prevalent. I doubt that even increased supervision would necessarily have picked them up. Similarly, there may have been instances of unfilled and unplugged tie-bolt holes. It is unclear how extensive the this problem was. Mr. Hartog only cited one instance to his knowledge. I do not think that isolated examples support a conclusion that GWA's supervision of concrete works was inadequate or negligent. As to unused anchor holes left unplugged on concrete walls, again I do not think that proper supervision would necessarily have noticed this. A replacement anchor hole would be drilled next to a rejected one and a stone panel would be fixed over the rejected bolt hole as soon as the replacement anchor position was ready. A supervisor, unless present just before an unplugged hole was covered by a stone panel, would not spot the anomaly.

250. In summary, in light of the 4 observations just made and given that Linfield's own expert advances no substantive criticism in relation to exposed rebars and does not condescend to particulars as to when or how GWA failed to supervise sufficiently in accordance with the good practice expected of an RSE, I am unable conclude that GWA acted unreasonably or negligently in the discharge of its duties as RSE.

251. I now more briefly consider supervision in relation to the erection of cladding generally. Linfield says that GWA was responsible for supervision of the installation of the stone panels.

252. Linfield's counsel point to the condition in the Building Authority's approvals of the fixing details for the cladding systems to Houses 1 to 6 that "qualified site supervision" be provided. More precisely, the condition typically imposed was as follows:-

"Qualified site supervision of the cladding works including fabrication, erection and examination of the structural elements/ fixings, by an experienced and competent person, should be provided to ensure that the works are carried out in accordance with the plans approved and that the required standards are complied with."

253. There is a debate between Linfield and GWA as to whether "qualified site supervision" had to be provided by GWA or whether it was enough to comply with the condition for there to be supervision by (say) a clerk of works or a resident architect. I do not think that I need to decide that dispute conclusively. The condition relates to "structural elements/fixings" and GWA accepts that, independently of the condition imposed by the Building Authority, GWA had a duty as RSE under the BO to engage in periodic supervision of the erection of structural elements (including fixings).

254. In their closing submissions, Linfield's counsel initially focus on 3 complaints in relation to the stone cladding system. Having discussed those matters, Linfield's submissions then list out other specific breaches. I shall make observations in this section on the 3 initial criticisms made. I consider the specific breaches alleged in the next section of this Judgment.

255. First, Linfield's counsel argue that GWA failed to ensure through supervision that the concrete surfaces of the Property's external walls were flat so that angle brackets could lie squarely on them without the use of shims (which were not provided for in MML's drawings). This is in essence a criticism relating to the hacking off of concrete to enable stone panels to be properly aligned. I have dealt with this above.

256. Second, Linfield's counsel refer to the employment of undersized angle brackets. Linfield's counsel say, following Mr. Hartog, that there were numerous undersized angle brackets spread around the site. But "numerous" is imprecise and impressionistic. There are between 8,000 and 10,000 angle brackets per house on the Property. What is "numerous" may therefore still only be a small proportions of the large number of angle brackets used on site. I do not think that I can deduce anything in relation to GWA's discharge of its duty of supervision from Mr. Hartog's general remark.

257. Third, Linfield's counsel criticise GWA for failing to ensure through supervision that dowel pins were vertically inserted into the pin holes of stone panels. On this I agree with GWA's counsel that the complaint relates to MML's workmanship and not to a matter of structural detail for which GWA had responsibility.

258. Before moving on to deal with specific breaches alleged by Linfield, by way of a general comment, I should state my view that, just as I cannot find fault with GWA's supervision of concrete works, it seems to me that no complaint against GWA in relation to the supervision of the fixing of the cladding to the Property can be substantiated. I reject Linfield's submission that GWA as RSE was responsible for supervising the fabrication or cutting of the stone panels, the drilling of holes into the same or the selection of particular panels for use as cladding.

D.3 Specific breaches ⁸

(1) Failure to advise on the appointment of a specialist consultant [B2.1]

259. I do not think that GWA had a duty to advise on the engagement of a specialist structural engineer in the circumstances of this case. In approving MML's calculations, I do not believe that GWA fell below the standard of competence required of an RSE. The task of reviewing MML's calculations was not beyond GWA's competence.

(2) Inadequate FOS of 3 [B2.2-2.4]

260. This has been discussed above.

(3) Thermal movement and installation tolerances [B2.5]

261. Linfield suggests that GWA ought to have noticed that MML's design did not allow for thermal movement and should have rejected the design on this basis.

262. This complaint goes towards the "buildability" of MML's design. For the reasons discussed above, I do not think that designing for buildability (whether in terms of thermal movement or otherwise) formed part of GWA's responsibility for structural detail. But, even if that last view is wrong, for the reasons given below, the breach would still not be made out.

263. This complaint appears to relate to 3 matters:-

(1) MML's use of epoxy to fix dowel pins in their designated holes in a stone panel.

(2) MML's failure to use plastic cushions in between stone panels.

(3) MML's failure to provide for sufficient space between stone panels to allow for lateral expansion of the stone.

I do not think that any of the 3 matters form a basis for faulting GWA.

264. On the first matter, a difficulty with using epoxy to fix a pin in a hole is that the epoxy might then hold the stone panel so rigidly in place as to hinder thermal movement. Mr. Hartog suggested that it would have been better to hold stone panels in place through the use of dowel pins inserted into nylon sleeves. But, as Mr. Manzoni has submitted, the evidence suggests that MML's proposed method of fixing was commonly used in Hong Kong at the time. It may not be the best method and a nylon sleeve may have been a superior alternative, but the material before me does not go so far as to suggest that an epoxy fitting was a negligent design at the time.

265. On the second matter, Technical Specification cl.6.5.13 provided for the use of plastic cushions between stone panels. MML simply did not install these. Had the Technical Specification been followed there ought to have been sufficient room to cater for thermal expansion between stones. I do not think that GWA can be liable for not rejecting a design which could well have been adequate had plastic cushions been placed as stipulated in the Technical Specification.

266. On the third matter, there may be substance in Mr. Watkins' tentative suggestion that, from an engineering perspective, thermal movement is more likely to cause bowing of a stone panel rather than outward expansion at its edges. Indeed, if there were thermal movement, Mr. Watkins believed that it would be a "very small part of a millimetre". Mr. Hartog stressed a need to design for thermal expansion. But Mr. Hartog being an architect rather than an engineer, I am far from certain that in light of the Technical Specification MML's design was negligent.

(4) Failure to make allowance in the design for predictable planes of weakness in angled limestone panels [B2.6]

267. This allegation goes towards the choice of stone for angled panels. Poor choice of stone led to cracking of corner panels. I do not think that the choice of particular stone panels for use in the cladding was within GWA's sphere of responsibility.

(5) Failure to select appropriate type of material -- Poiseul B5 thin veneer not suitable for Hong Kong [B2.7]

268. This has been discussed above.

(6) Lack of buildability of the dowel pins as the fixing mechanism [B2.10]

269. See above on buildability and the use of epoxy rather than nylon sleeves to fix dowel pins in stone panel holes.

(7) Design not permitting non-destructive replacement of stone panels [B2.11]

270. I do not think that this was within GWA's responsibility. It does not relate to structure. MML's fixing system was one in common use in Hong Kong. In the circumstances here, GWA cannot be blamed for approving a commonly-used design. The evidence in any event suggests that in any given area of cladding some (but perhaps not all) panels could be removed without destruction.

(8) Failure to provide sufficient concrete cover to reinforcement bars [C1.1]

271. See the discussion on exposed rebars above.

(9) Failure to construct and remove concrete formwork properly, resulting in formwork timber being left embedded in the concrete of the structure [C1.2]

272. This does not appear to have been prevalent. I do not think that the allegation is sufficient of itself to suggest negligence of supervision on GWA's part. In any event, the evidence is to the contrary. There were repeated warnings by Mr. Pisano to PCL about the poor quality of the latter's concrete formwork.

(10) Failure to make good unused anchor bolt holes [C1.4]

273. See the discussion above.

(11) Failure to protect steel reinforcement bars which were exposed along the top edges of the concrete balustrade and parapet walls [C1.5]

274. See the discussion on exposed rebars above.

(12) Failure to properly construct the window openings, resulting in openings being widened by jack hammering, exposing reinforcement and failure to reinstate the structure surrounding the window openings following jack hammering [C1.6 and 1.7]

275. I do not believe that the setting out of windows formed part of GWA's responsibilities. On exposure of reinforcement bars, see above.

(13) Failure to make allowance for joints between the podium and caisson wall [C1.8]

276. Although Mr. Manzoni challenged Mr. Fred Ng on this, Ms. Cheng did not pursue this suggestion with Mr. Watkins in cross-examination. The allegation is not made out.

(14) Failure to construct the structure using waterproof concrete [C1.9]

277. I do not think that this allegation involves GWA's responsibilities as RSE.

(15) Failure to test the stone cladding in accordance with the specifications prior to supply and installation and related failures in supervision [C2.1]

278. This has been discussed above.

(16) Supervision relating to stone panels [C2.2 to 2.6]

279. See general comments above.

(17) Failure to install stone cladding correctly by using epoxy to secure stones or foreign materials as permanent elements of the stone installation [C2.7]

280. The allegation is that GWA made unjustifiable assumptions regarding the buildability of the design. Essentially, it is suggested in this particular that GWA should have anticipated that MML would cut corners by using epoxy to glue together broken stones or by using foreign material (for instance, washers, newspapers, timber) rather than plastic cushions in the areas between stone panels. For the reasons already given, I do not think the criticism is tenable.

(18) Angle bracket fixings and pins rigidly grouted into slots leading to 'pop-out' fractures [C2.8]

281. See the sections above on buildability and the use of epoxy rather than nylon sleeves to fix dowel pins in stone panel holes.

(19) Failure to design adequately and install angle bracket facings in plane resulting in asymmetrical contact between the stone edges and brackets [C2.9]

282. This concerns buildability and design assumptions. It may also relate to hacking off of concrete. See comments above on these topics.

(20) Failure to install resilient sparing shims or cushions [C2.10]

283. It is difficult to see how periodic supervision would necessarily have detected this unless an inspector happened to come at the precise moment when plastic cushions should have been installed.

(21) Lack of provision of adequate tolerances for dowel pins being located too close to the machine edges of cantilevered decorative elements of stoneworks [C2.12]

284. This concerns buildability and design assumptions. See comments above.

(22) Failure to provide stable support to the key stones, parapets, etc. [C2.13]

285. I do not think that this allegation involves GWA's responsibilities as RSE. There was little (if any) exploration of this complaint at the trial.

(23) Tack welds being used as opposed to fillet welds and lack of corrosion protection to welds at various locations [C2.14 and 2.15]

286. I do not think that this allegation involves GWA's responsibilities as RSE.

D.4 Conclusion on GWA's liability

287. For the reasons I have given in the preceding sections, I do not believe that there has been any breach of the duty of care which GWA as RSE owed to Linfield either at common law or as Sing Kee's assignee.

E. Liability of BHP and PCL for contribution

288. Given my conclusion in relation in GWA's case, it is unnecessary to decide whether BHP or PCL are liable to make contribution. The contributory proceedings should therefore be dismissed.

289. It is tempting, given the evidence which the Court has heard, to determine the question of the liability of BHP and PCL to make contribution in the event that I am wrong in holding that GWA has not been in breach. But I think that such course would be undesirable since there are ongoing arbitration proceedings wherein Linfield's claims against BHP and PCL have yet to be adjudicated. In such circumstance, it would be better if I said as little as possible on whether (in my view) BHP and PCL would be liable to Linfield to make contribution in respect of "the same damage" if I had found GWA to have been in the wrong. In finding that GWA is not liable and in dismissing the contributory proceedings brought by GWA and BHP to cover the contingency of their being found liable, I should not be taken to have in any way decided whether BHP or PCL have breached any contractual or common law duty owed to Linfield.

F. Linfield's damages against MML

290. That leaves the question of the quantum of Linfield's damages against MML. Linfield claims $42,139,629 ("Sum A") against MML. Sum A represents loss of rental said to have been incurred in consequence MML's defective stone cladding before, during and after the period of remedial work to Houses 1 to 6. Linfield also claims various sums representing the cost of remedial work. Those sums include the amount of $23,478,547.44 ("Sum B"), the total adjusted cost (for example, net of the cost of granite) of replacing external limestone cladding with granite

291. On loss of rental, Linfield relies on the evidence of Mr. C. K. Lau. Mr. Lau breaks down loss of rental into 3 periods: before repair from September 1999 to November 2000 ($4,771,955), during repair from December 2000 to April 2002 ($21,920,083) and during a period of marketing following repair ($15,447,592). Although I accept that lost rent due to Houses 1 to 6 being out of the market during repair work was probably a foreseeable head of contractual damage at the time of MML's entry into its Warranty to Linfield, in my judgment Linfield's claim in this respect is over-inflated.

292. Thus, for instance, by all accounts the rental market for luxury properties between 1998 and 2000 was a difficult one. The Court must be careful not to attribute to MML's breach the effects of the Asian financial crisis and the dramatic fall in demand for deluxe units such as Houses 1 to 6. Mr. Lau's model does not take sufficient account of the real possibility that, even if there had been no need for remedial work on the Property, one or more Houses would not have found tenants in any case.

293. Further, Mr. Kong stated in Court that remedial work was prolonged by some 6 months due to problems with the contractor. According to Mr. Kong, repairs might also have begun a little earlier. The scheduled repair period for Houses 1 to 5 was 7 months and 4 months concurrently for House 6. In the event the period of remedial works ran for some 17 months for Houses 1 to 5 and 7 months for House 6. The delay in the remedial works cannot be attributed to MML. Linfield would instead have a claim in liquidated damages in respect of such delay.

294. Given the above considerations, I prefer the evidence of Mr. Williams. He gave evidence for BHP, but was cross-examined by Ms. Cheng. His evidence was adopted by GWA. In my view, Mr. Williams convincingly argues that, Houses 1 to 6 having been re-marketed as new after their repair, the inability of the units to fetch high rents is symptomatic of prevailing market conditions, not the result of stigma attaching to the Property by reason of the repairs. Mr. Williams notes that the potential tenants for Houses 1 to 6 declined significantly post-1997 as a result of less generous corporate rental allowances.

295. Mr. Williams ventured 3 alternative scenarios to take account of his views. Those scenarios also factor in the longer time taken for the remedial works. GWA's counsel pressed the virtues of scenario 1 upon me. This assumed that Houses 2 and 3 continued vacant after repair due to market conditions. On this scenario, lost rent would be about $10.86 million. Mr. Williams himself preferred scenario 2 which produces a loss in rental of $15.9 million as the most realistic scenario. In light of that evidence, I should also choose scenario 2 as the best estimate of Linfield's likely lost rental due to MML's breach. I accordingly award $15.9 million under this head instead of Sum A.

296. As for cost of repair, I accept that it made sense to replace the entire cladding system, rather than simply repair defective limestone stone panels. I come to this conclusion because of the prevalence of MML's defective workmanship throughout Houses 1 to 6. I also bear in mind the intractable presence of mould and fungus and the fact that, due to stylolites, there was significant cracking and spalling among the stone panels chosen by MML for use in Houses 1 to 6. Seen in this light, the decision to replace the stone panels with granite seems reasonable. In my view, in carrying out such decision, Linfield was not guilty of a failure to mitigate.

297. I would therefore award damages under the head of repair cost in the amount of Sum B.

298. Linfield claims other sums by way of rectification costs. But those amounts do not seem to be attributable to MML's breach. For instance, there are claims (among others) for window repair works in the amount of $1,943,967.72; for waterproofing works to the Property's superstructure in the amount of $2,537,894.91; for concrete repair works in the sum of $927,826.86; and for "interior remedial works (except granite)" for the amount of $4,048,568.19. None of these claims derive directly from MML's failure properly to install the external cladding works.

299. Damages for the amount of $39,378,547 (that is, Sum B + $15.9 million rounded down to the nearest dollar) are awarded to Linfield in respect of MML's breach of its Warranty.

G. Expert evidence

300. Before concluding this Judgment, I should say a few words about some of the expert evidence. Expert evidence played a crucial part in the determination of liability in these proceedings. On the whole I have preferred the evidence of the experts called by GWA and BHP to those called by Linfield.

301. Mr. Hartog gave evidence on the condition of the stone panels at the Property following their installation by MML. He also commented on the nature of limestone and stylolites. I found such evidence helpful. But, beyond such general topics, I found Mr. Hartog's evidence less helpful. His report was long and rambling. It was not easy to discern his principal points among a forest of words. Substantial parts of the report seemed more in the nature of advocating a particular position, instead of impartially assessing an expert issue. This was cause of great concern to me. I considered that, since he had played a significant part in the events leading to Linfield's decision to replace the cladding system and commence proceedings against TDA (going so far in correspondence with Mr. Lu as to ascribe fraud on the part of Dr. Ho), Mr. Hartog's views had to be treated with much caution when assessing the rights and wrongs of the various parties.

302. Mr. Fred Ho's evidence struck me as largely assertive, rather than reasoned. I felt that he was inclined to be more partisan than impartial. I did not find his evidence impressive. On the whole, I preferred the evidence of Mr. Watkins, who was more balanced and ready to concede points against the interests of GWA when it seemed reasonable and appropriate to do so.

303. A significant part of the trial was occupied with a consideration of a back analysis in Mr. Watkins' Supplementary Report of the strengths of individual stone panels used in the Property. I regarded such analysis as being submitted by GWA in support of an argument that, even if GWA had been negligent in approving MML's design and calculations, such failure would not have justified the replacement of the whole cladding system. At most, had a rigorous analysis been conducted (as Linfield contended at trial ought to have been), it would only have shown (according to Mr. Watkins) that 177 panels (1.5%) failed to meet a FOS of 6 (based on mean strength).

304. Mr. Watkins' analysis depended the following assumptions (among others):-

(1) That the Testconsult, Corived and BRE results could be amalgamated to form a pool of 51 samples;

(2) That, assuming a normal distribution, in the equation x_k = x_m - kσ (where x_k is the characteristic flexural strength of a stone, x_m the mean strength, and σ the standard deviation of a sample of test results), the constant k could be taken to be equivalent to 1.64; and,

(3) That the position of Houses 1 to 6 was such that the external panels of each house would be subject to certain specified wind pressures and suctions.

Mr. Fred Ng challenged assumptions (1) and (2), but accepted assumption (2) without qualification.

305. Despite Mr. Fred Ng's acceptance of assumption (2), Ms. Cheng cross-examined Mr. Watkins on the basis that assumption (2) was wrong and k should be taken as 2.07. Mr. Watkins accepted that, based on a strict reading of the British Standards Institution's Guide to Statistical Interpretation of Data (BS 2846: Part 3: 1975; ISO 3207-1975) one should use k = 2.07, but he thought that the use of 1.64 was the conventional approach.

306. Although it is unnecessary for me to determine the validity of Mr. Watkins' analysis in light of my conclusions, I note the following:-

(1) I do not think Mr. Fred Ng's criticism of the polling of test results would assist Linfield. If only the BRE results are pooled (as AFE itself seems to have done), there is in fact a higher mean strength and the resulting calculations would be more favourable to GWA's case.

(2) In light of Mr. Ng's acceptance of k = 1.64, I do not think that I can fault Mr. Watkins' analysis for not proceeding on the basis of k = 2.07. It appears that this is an area where engineers can reasonably have different views as to the conventional or practical approach to take.

(3) I accept Mr. Watkins' assumptions on wind loads. I do not think that they were unreasonable assumptions to make.

307. I have already mentioned my reasons for preferring Mr. Williams' evidence over that of Mr. Lau.

308. Mr. Mann's evidence on the cause of water leakage into the Property was brief and to the point. I entirely accept it.

309. GWA's counsel complain about the inclusion of the 2nd AFE Report in the trial bundle. This document was in essence an expert report prepared at Linfield's instruction in contemplation for use at trial to advance Linfield's case. However, its author was not put forward by Linfield as a witness and not subjected to cross-examination. For those reasons, I have treated this document with circumspection. Despite being critical of the report, GWA's counsel relied on some points made there when such supported GWA's case. I therefore do not think that one should ignore the report altogether. Nonetheless, I did not think that I could accord significant weight to the views advanced therein.

IV. CONCLUSION

310. There will be judgment for Linfield against MML in the amount of $39,378,547. The damages claimed against MML were not definitively particularised until July 2004. I therefore do not believe that it is appropriate to award interest from the date of the writ until date of judgment. Interest is to run on the amount from date of judgment at the judgment rate until payment.

311. Linfield's claim against GWA is dismissed.

312. GWA's contribution claims against TDA, PCL, MML and BHP are dismissed. BHP's contribution claims against PCL and MML are dismissed. BHP obtained judgment on liability against TDA in default of discovery by TDA of any documents. The trial was effectively also the hearing of BHP's case on quantum against TDA. BHP not being liable for contribution, it obtains no quantum from TDA.

313. There will be a Costs Order Nisi in the following terms:-

(1) PCL is to have its costs of BHP's claim against PCL. PCL's own costs are to be taxed if not agreed. I shall refer below to such taxed costs as PCL's costs.

(2) There will be no costs order in respect of BHP's claims for contribution or indemnity against TDA and MML.

(3) BHP is to have its costs of GWA's claim against BHP. BHP's own costs are to be taxed if not agreed. I shall refer below to such taxed costs as BHP's costs. In addition to payment of BHP's costs, GWA is to indemnify BHP against the amount of PCL's costs.

(4) There will be no costs order in respect of GWA's claims for contribution or indemnity against TDA and MML.

(5) GWA is to have its own costs of Linfield's action against GWA. GWA's own costs are to be taxed if not agreed. I shall refer below to such taxed costs as GWA's costs. In addition to payment of GWA's costs, Linfield is to indemnify GWA against the amounts of PCL's costs and BHP's costs respectively.

(6) Linfield is to have the costs of its action against MML, such costs to be taxed if not agreed.

(7) Sub-§(5) has the consequence that Linfield will bear PCL's and BHP's costs. Such result will be without prejudice to any argument by Linfield in these proceedings that, consequent on the outcome of Linfield's arbitration against PCL and BHP, Linfield should be entitled fully to recoup those costs from PCL and BHP.

314. The parties have liberty to apply in relation to my Order as a whole.

APPENDIX

LIST OF ABBREVIATIONS

1 The main abbreviations used here are defined in the List of Abbreviations appended to this Judgment.

2 In the case of House 6, Type 1 fixings were akin to Type 3 fixings for Houses 1 to 5.

3 This seems to be a reference to the "enlarged concrete area" outside the servants' toilets.

4 B(A)R ss.8 and 9 refer to prescribed plans. For the purposes of this case, the only relevant provision is s.8(i) which calls for "plans showing structural details, together with one set of structural calculations for the structural works".

5 Ms. Cheng argues that there is no evidence as to the origin of the samples used by Testconsult. But no one queried the bona fides of the Testconsult results at the time and it seems to me highly speculative to say that samples were drawn from stones other than the Poiseul B5 delivered to Hong Kong for use on the project.

6 Mr. Fred Ng did not clarify the connection between hacking off and leaking windows. GWA neither set out the windows nor checked their setting out. The latter job is typically the responsibility of a clerk of works. As far as leakage through the Property's windows is concerned, I accept the evidence of BHP's expert, Mr. Mann, that there were 2 primary causes of water ingress. First, there was inadequate sealing of the gaps between the concrete wall and windows of the Property. Window openings in the concrete were too wide for the units installed in them. Second, there was a lack of detailing in respect of the flashings that should have been fixed around each window opening. Neither cause appears to me to be attributable to GWA.

7 There is no evidence of exposed rebars in House 6, although some hacking off was done to the concrete walls there.

8 For ease of reference, I provide the reference number given to a particular complaint in Linfield's Particulars of Claim.