MAN SANG ENGINEERING CO LTD v. HUNG WAN CONSTRUCTION CO LTD

HCCT24/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO.24 OF 2006

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D E C I S I O N

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1. This is a plaintiff’s application under Order 24, rule 7 for further discovery.  In the original summons there were seven categories of documents.  Since issuing the summons the issues between the parties have been narrowed as a result of : (a) the plaintiff informing the defendant and the court that it will not pursue Items 2, 4, 6 and 7 (this was done well in advance of the hearing) and (b) the plaintiff amending the terms of Items 1, 3 and 5 (this was done at the hearing).

2. The items which remain in dispute are :

Item 1

The cover page of the instructions and their assessments passing between the defendant and the employer and/or Messrs C.S. Toh & Sons under the main contract concerning the instructions to have additional works to the original scope of the sub-contract works as marked or referred to on the defendant’s facsimile date 7 January 2006.

Item 3

All documentary evidence/records passing from the defendant to Messrs C.S. Toh & Sons and the employer concerning the loss and expenses claims for prolongation period (in connection with and including those letters referred in Messrs C.S. Toh & Sons dated 10 July 2001, 19 April 2002, 20 June 2002, 22 October 2002, 7 November 2002, 20 December 2002 and 30 December 2002).

Item 5A

All the defendant’s interim payment applications and the interim payment certificates (including all measurement, breakdown or supporting documents enclosed thereof) between the employer/architect/quantity surveyor and the defendant which related to the sub-contract works disclosing :

1)         the “% complete” in respect of all trades including its calculation; and

2)         the scope and assessment of work done and variation works under the sub-contract.

Item 5B

The following parts of the final account :

1)       Appendix A; and

2)       Supplemental Deed mentioned in Item 6.

3. The plaintiff was a “steel and metal work” sub-contractor to the defendant who was the main contractor in a substantial residential project in Tin Shui Wai.  The employer was the Hong Kong Housing Authority.

4. In short, Item 1 concerns the instructions to carry out variation works between the main contractor and the employer.  Item 5 concerns the payment applications between the main contractor and the employer.  Item 3 concerns the question of prolongation costs between the main contractor and the employer.

5. The defendant’s position in relation to Items 1 and 5 is that they have complied sufficiently with their discovery obligations.  Documents have been provided.  However, various parts of those documents have been edited or concealed because they are not relevant.

Item 1

6. Under Item 1, the defendant says that the “covered-up” parts related to : (a) other sub-contracts (the plaintiff was merely one of a multitude of sub-contractors) and (b) build-ups of the quantities and rates between itself and the employer.

7. The plaintiff, through its counsel, Mr Jerry Chung, conceded that because of the age of this contract (it goes back almost 10 years) the plaintiff has mislaid some of its documentation and this application, in part, was a request for documents to fill the gaps in its own case.

8. Given that : (a) the documents requested refer to matters not directly concerned with the plaintiff’s contract with the defendant; (b) the information requested can be ascertained from other documents (such as the as-built drawings); and (c) the request is in the nature of a wide “fishing” exercise designed to repair the plaintiff’s own case, I dismiss the request under Item 1.

9. I am satisfied that the defendant has discovered sufficient relevant documentation to enable the court to resolve the issue concerning the reasonableness of the plaintiff’s claim for the variation works under its contract.

Item 5

10. As with Item 1, the defendant has not ignored this request.  The issue is whether or not the purported compliance is sufficient.  Once again the contents of documents relating to other trades and other sub-contracts has been concealed.

11. I do not propose to set out which documents have in fact been discovered.  They are considerable and I accept that the defendant has made a genuine and conscientious attempt to discover all that it regards as relevant.

12. However, I will accede to the plaintiff’s summons in two very specific regards.  I allow Items 5A(1) (the “% complete” figure) and Item 5B(1) (Appendix A to the final account).  By this I do not intend to impose new onerous obligations on the defendant.  It is intended to be narrow and specific.  I believe they are documents which may “fairly lead” the plaintiff in a proper and relevant “chain of inquiry” (for example, the issue of delay).  However, this does not give the plaintiff a “right to roam” through all the payment applications unrelated to their own sub-contract.

Item 3

13. The issue here is somewhat different.  Whereas for Items 1 and 5, the defendant submit they have made sufficient discovery, in Item 3 they accept that they have not made any discovery.  They submit that the plaintiff is not entitled to any documents under this category.

14. By its amendment of Item 3, made at the hearing of the summons, the plaintiff narrowed its scope and made it less of a fishing expedition.

15. In short, in its counterclaim against the plaintiff for prolongation costs, the defendant has given credit for $2.2 million, being the sum it has received from the employer in relation to the prolongation issue.

16. The plaintiff seeks discovery of the underlying documents relating to this credit to assess its reasonableness and the propriety of its acceptance by the defendant.

17. I think this is a relevant issue and I allow Item 3 but in more specific terms, namely, “                   The applications and supporting documents made by the defendant to Messrs C.S. Toh & Sons dated 10/7/01, 19/4/02, 20/6/02, 22/10/02, 7/11/02, 20/12/02 and 30/12/02.”

18. Both Mr Chung for the plaintiff and Mr Geoffrey Shaw for the defendant made submissions in relation to costs at the hearing.  I therefore make this final order on costs.

19. The totality of the plaintiff’s application contained a strong “fishing” element.  The amendment of the summons was only made at the conclusion of the hearing to which Mr Shaw’s succinct response was “better but still opposed”.  The original draft was undoubtedly too wide in many of its terms.

20. However, the plaintiff has not gone away empty handed.  It seems to me to be a case in which “no order as to costs” is the fairest to both parties.  I so order.