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DCCJ 930/2004
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 930 OF 2004
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BETWEEN
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GLOBAL BRIGHT ENGINEERING LIMITED |
Plaintiff |
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and |
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CWF PILING & CIVIL ENGINEERING
COMPANY LIMITED
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Defendant |
__________
Coram : Her Honour Judge H.C. Wong in Court
Dates of Hearing : 12-25, 21-23 September 2005, 11 November 2005
Date of Handing Down Judgment : 7 April 2006
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JUDGMENT
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1. The Plaintiff in this action claims against the Defendant for the sum of $368,780.31 being the balance of payment due for work done by the Plaintiff after deduction of materials supplied by the Defendant to the Plaintiff.
2. The Plaintiff is and was a company incorporated with limited liabilities carrying on the business as a building contractor in Hong Kong. The Defendant is and was an incorporated company carrying on the business as a civil engineering contractor. It is the main contractor of a project known as “Site Formation and Foundation (House) and Slope Stabilization, Site Formation, Foundation and Superstructure (Access Road) at 30 Peak Road – R.B.L. 204, Hong Kong” (“the main contract”).
3. Under an agreement in writing dated 2nd September 2002 the Defendant appointed the Plaintiff as its sub-contractor to carry out the supply and installation of soil nails which formed part of the works under the main contract (“the soil nail works”).
4. By a second agreement in writing contained in the Plaintiff’s quotation dated 19 October 2002, the Defendant agreed to appoint the Plaintiff as its sub-contractor to carry out the supply and installation of mini-piles which formed part of the works under the main contract (“mini-pile works”).
The Plaintiff's claim
5. It is the Plaintiff’s case that it had carried out the soil nail works and the mini-pile works under the said two agreements and the total value of the work done was $3,290,561.64. The Plaintiff now claims against the Defendant the sum of $368,780.31 being the balance of the work done for $3,290,561.64 less the agreed contra charges of $999,880.00 and the previous settlement of payment of HK$1,921,901.23.
6. It is not disputed that the Defendant had settled the sum of $1,921,901.23. The Defendant counterclaims against the Plaintiff for failing to carry out and to complete the sub-contract works in accordance with the express and implied terms of the sub-contracts. The Defendant counterclaims against the Plaintiff for liquidated damages under the main contract due to the delay caused by the Plaintiff and due to the Plaintiff’s failure to rectify the defective mini-pile works and for the remedial work done to the defective soil nail heads, and extra site management costs in the total sum of $929,512.67. As to the Plaintiff’s claim, the Defendant denies that it owed the Plaintiff any outstanding balance for the work done on the said sub-contracts.
The Issues
7. The issues in this case are:
1) what is the total value of the Plaintiff’s work done?
2) whether the Defendant is entitled to claim contra charges against the Plaintiff.
3) If yes, what are the contra charges.
The Defendant's counterclaim
8. It is the Defendant’s case that the Plaintiff’s invoices were subject to detail measurements and calculations to establish a final account for the work done after deduction of the Defendant’s contra charges. It therefore claimed the Plaintiff’s works should be re-measured and denied that the Plaintiff is entitled to the balance of $368,780.31 as claimed. Furthermore, the Defendant claimed that it is entitled to deduct contra charges against the Plaintiff because of the Plaintiff’s defective mini-pile works. It claimed that rectification work was carried out by the Plaintiff in part and the remaining rectification work was completed by another sub-contractor appointed by the Defendant. The Defendant further claimed that the Plaintiff had wrongfully suspended the soil nail works on 20th June 2003 because the Plaintiff claimed that the Defendant had failed to make payments. Although the Plaintiff resumed the soil nail works on 2nd July 2003, the Defendant claimed that it had nevertheless resulted in delay of the completion of the main contract. The Defendant also claimed that on 23rd July 2003, the Plaintiff had informed the Defendant that it was no longer able to complete the concreting of the soil nail heads under the soil nail works contract because of lack of resources, it was therefore agreed between the parties that another sub-contractor would be appointed to complete the concreting work. The Defendant further claimed that the Plaintiff had misinformed the Defendant that all the soil nail works except 86 numbers of soil nail heads had been completed on 28th July 2003. The Defendant subsequently discovered in October 2003 that the Plaintiff had left out 3 soil nail heads and it had requested the Plaintiff to carry out the work but the Plaintiff failed to do so.
9. Consequently, the Defendant counterclaims against the Plaintiff for
1) liquidated damages incurred due to the delay completion of the main contract caused by the Plaintiff;
2) the Defendant’s costs increase due to the delay caused by the Plaintiff;
3) costs of rectifying the Plaintiff’s defective works;
4) extra site management and supervision cost incurred due to the Plaintiff’s wrongful suspension of this sub-contract work; and
5) costs of material purchased by the Defendant on the Plaintiff’s behalf for the soil nail works and the mini-pile works and the rectification works.
The Plaintiff's case
10. It is the evidence of Mr. Ho Wing Fu, Stephen, the director of the Plaintiff company that the Plaintiff had been a piling sub-contractor of the Defendant for about ten years. In mid July 2002, the Defendant requested the Plaintiff to submit a quotation for the soil nail works at 30 Peak Road, Hong Kong. Upon the acceptance of a revised quotation by the Plaintiff, the Defendant informed the Plaintiff to commence the soil nail works in early August 2002. The work was performed according to the drawings and specifications laid down by the Defendant.
11. The Defendant prepared an offer letter dated 2nd September 2002 which the Plaintiff duly signed on 6th September 2002. This letter formed the basis of the soil nail works agreement (“the 1st agreement”). It is not disputed that the parties agreed that the Plaintiff would complete the work within 70 calendar days from 1st August 2002 to 10th October 2002. It was agreed that the Plaintiff would invoice the Defendant on the 15th and 30th day of each month. Payments would be made upon the acceptance of work done by the engineer within 30 days of invoice. So far as the materials were concerned, the Plaintiff would issue a purchase order to the Defendant who would then place an order with the suppliers and payment would be settled by the Defendant directly. It was agreed that the costs of materials paid by the Defendant would be deducted as contra charges from the contract price.
12. The Plaintiff claimed that it was agreed that the procedure for testing of the soil nail works would involve the Plaintiff supplying grout cube and steel samples of piling and soil nailing to one Goodvale Laboratory & Research Ltd. and that the testing work would be carried out by one Pull Out Service Engineering Co. And that these two testing companies would subsequently submit testing reports on the quantity and quality of completed soil nails, test nails and piles and deliver them to the Plaintiff. The Plaintiff would then send the originals to the Defendant for its further submission to the Buildings Department.
13. It is Mr. Ho’s evidence that on or about 17th October 2002, the Plaintiff was requested to submit their tender quotation in respect of the mini-pile works. The Plaintiff delivered its quotation on 19th October 2002, it was amended at the end of October 2002 and agreed to by the parties that the Plaintiff would install 26 vertical mini-piles, 27 raking mini-piles for the sum of HK$1,199,451.10.
14. Mr. Ho claimed that in mid September 2002, the Defendant informed the Plaintiff to suspend the soil nail works due to sudden changes of the construction location of the soil nails and that the actual number of soil nails had to be ascertained before further work could be carried out. Mr. Ho claimed that by the end of October 2002, 345 soil nails and 20 test nails had been completed. He claimed that the Goodvale Laboratory & Research Ltd. test reports for work done between 8th August 2002 and 29th October 2002 supported the Plaintiff’s claim. Furthermore, the test reports of Pull Out Service Engineering Co. also testified that between 15th August 2002 and 4th November 2002, 20 test nails had been completed. Mr. Ho claimed that the parties then agreed at the time of completion of the soil nail works that the time of completion set out in Clause 8 of the soil nail agreement would no longer apply. In early May 2003, the Defendant informed the Plaintiff the soil nail works could be resumed and consequently the remaining soil nail works were completed in late July 2003.
15. As to the mini-pile agreement, the Plaintiff commenced work on the mini-piles on 4th November 2002 and completed all the work on the mini-piles on 22nd January 2003. The work was based on a set of drawings and specifications supplied by the Defendant to the Plaintiff. The Plaintiff claimed that according to the drawings and specifications on the mini-piles, no centraliser and spacers were required in the installation of steel bars of the mini-piles. The Plaintiff claimed that was why it did not charge for the supply of centraliser and spacers as a result; however, the Plaintiff did, in order to centralise the drill holes, install centralisers for the steel bars inside the rock socket. The Plaintiff further claimed that the Defendant had monitored the whole process of drilling and installation of mini-piles. The cutting off levels of all mini-piles were also calculated and monitored by the Defendant and according to the on-site instructions of the Defendant, each mini-pile was installed at the required length instructed.
16. In mid March 2003, the Defendant requested the Plaintiff to install additional mini-piles and a number of anchor mini-piles for the Defendant. A quotation was submitted by the Plaintiff on 22nd March 2003 and accepted by the Defendant. Pursuant to the additional mini-pile agreement, the Plaintiff installed 2 mini-piles and 5 anchor mini-piles and other ancillary works on or about 28th April 2003. Mr. Ho further claimed that invoices for mini-pile works and anchor mini-pile works were issued and accepted by the Defendant between 18th November 2002 and 1st August 2003. It is the Plaintiff’s case that up to 1st August 2003, the accumulated value of mini-pile work done for the Defendant was $1,199,451.10 and the value of anchor mini-pile work done was $236,090.54. However, the Defendant had only settled part payment in respect of the mini-pile and additional mini-pile agreements.
17. Due to the Defendant’s failure to settle payment for the work done invoiced by the Plaintiff, the Plaintiff suspended work on the soil nail works on or about 20th June 2003. On 27th and 28th June 2003, at a meeting between the Plaintiff and the Defendant’s representatives, it was orally agreed that the Plaintiff would resume the soil nail works immediately and the Defendant would pay all the outstanding invoices within 10 days. Consequently, the Plaintiff resumed the soil nail works on 28th June 2003. The Plaintiff completed all the soil nail works in or about late July 2003. However, the Defendant only settled two payments on 9th July 2003, they were invoices No. 507-02-06(K) to 533-02-06(T) in the sum of $41,466.00 and invoices No. 507-02-06(K) to 533-02-06(T) in the sum of $25,467.22.
18. On 23rd July 2003, the Plaintiff was informed by the Defendant that due to other construction works at the site including slope cutting, drainage constructions and wire mesh coating, the Defendant failed to make the site available for the Plaintiff to install the remaining soil nail heads. The Plaintiff agreed that the Defendant would arrange for another sub-contractor already at the site to perform the concreting of soil nail heads at the rate of $150.00 per head and this amount would be deducted from the amount due to the Plaintiff by the Defendant. The aforesaid agreement was confirmed in writing by a letter from the Plaintiff to the Defendant dated 25th July 2003.
19. As to the mini-pile works under the mini-pile agreement, the Defendant had requested rectification work to be done in respect of the pile heads to mini-piles CP4-P2, CP4-P3, CP6-P2, CP24-P2, CP20-P1, CP22-P1 and CP12 under two letters dated 21st August 2003 and 29th August 2003. The Plaintiff claimed that these were not within the scope of the mini-pile agreement between the parties. However, the Plaintiff, in order to maintain a good business relationship with the Defendant, undertook and completed the works requested on or before 17th October 2003.
20. Furthermore, the Plaintiff claimed it did in respect of the soil nail agreement, further performed rectification work on J14 and J16 of the soil nails on or before 11th October 2003 as requested by the Defendant.
21. The last two payment certificates approved by the Defendant were payment certificates No. 11 and 12 covering the Plaintiff’s invoices of 10th February 2003 to 12th June 2003. The Plaintiff agreed and accepted the total amount of contra charges as stated on the payment certificates to be deducted. According to Mr. Ho, the Defendant did not raise any complaint in respect of the soil nail works, mini-pile works and anchor mini-pile works until 12th November 2003 after the Plaintiff pressed the Defendant for payment of the outstanding account. It was only then, for the first time, the Defendant complained of the Plaintiff’s delay of completion and defects in the work undertaken by the Plaintiff. Mr. Ho further claimed that the Defendant made unfound excuses in order to avoid paying the outstanding charges for the work performed by the Plaintiff.
The Defence's Case
22. Mr. Lee Chi Wang, Billy gave evidence on behalf of the Defendant. Mr. Lee was the project manager of the Defendant. Mr. Lee admitted and agreed that the 1st agreement on the soil nail works and the 2nd agreement on the mini-pile works were entered after negotiations between him and Mr. Ho.
Wrongful Suspension by the Plaintiff of Soil Nail Works
23. According to Mr. Lee, the Plaintiff suspended the soil nail works on 20th June 2003 without prior notice to the Defendant. The Defendant demanded that the Plaintiff to urgently complete the sub-contract works. On 26th June 2003, the Plaintiff replied by letter that its suspension of soil nail works was due to the Defendant’s failure to settle invoices from 10th February 2003 to 15th May 2003 and demanded settlement of all sub-contract payments in respect of the contract work. The Defendant denied at the time there were any outstanding payments. Mr. Lee claimed that the Plaintiff had failed to take into account the cost of materials purchased by the Defendant on the Plaintiff’s behalf which would be deducted from the work done by the Plaintiff. As the cost of materials had not been deducted up to 5th February 2003, the Defendant considered there should not be any payment outstanding to the Plaintiff in June 2003. The Defendant believed the Plaintiff had been overpaid at the early stages of the sub-contract. Mr. Lee claimed that it was not until mid June 2003 that the value of the Plaintiff’s work done had reached a positive balance after taking into account the cost of the materials and services. Upon Mr. Lee’s promise to pay the positive balance to the Plaintiff in the next payment certificate, the Plaintiff resumed the soil nail works on 2nd July 2003. It is the defence’s case that the amount due to the Plaintiff up to mid June 2003 after deduction of accumulated material costs, deduction of the retention money and previous payments, there was a positive value due to the Plaintiff of $66,933.22. Consequently, Mr. Lee certified the payment of the sum of $66,933.22 under payment certificates No. 11 for soil nails and No. 12 for mini-piles. Mr. Lee maintained the Plaintiff had no reason to suspend the soil nail works on 20th June 2003. And because of the suspension in June of the soil nail works, the Plaintiff incurred extra site management and supervision costs during the suspension. The Defendant claimed it is entitled to set off from the Plaintiff’s claim, the costs of extra site management and supervision.
The Defendant’s Payment Certificates
24. Mr. Lee claimed that even though the Defendant issued corresponding payment certificates to the Plaintiff’s invoices, they were not evidence of satisfactory completion of the sub-contract work. He further claimed that the payment certificates did not state that he or the Defendant had duly accepted the quality and quantity of the Plaintiff’s completed sub-contract work. The work was subject to re-measurement.
Final Account of the Sub-contracts
25. Mr. Lee claimed that in respect of the value of the sub-contract work under the two agreements they were assessed upon re-measurement of the 2 sub-contracts to be $3,244,861.61. The total amount comprised of $1,838,020.00 for the soil nail works and $1,406,841.61 for the mini-pile works respectively as evidenced in payment certificates No. 13 (page 373 of the bundle) and No. 14 (page 417 of the bundle). It is Mr. Lee’s evidence that the $3.244 millions odd value of work done did not include any deductions, so upon deductions of the contra charges, the Defendant no longer owed the Plaintiff any money.
26. The Defendant claimed against the Plaintiff that because of the Plaintiff’s delay due to defective mini-pile works, there was a delay to the conclusion of the main contract. The Plaintiff had therefore exposed the Defendant to liquidated damages. The Defendant further claimed that the Plaintiff due to its failure to carry out remedial works to the defective mini-piles had caused the delay of 29 days to the completion of the main contract.
Defective Mini-pile Works
27. The Defendant claimed that after the Plaintiff’s completion of the installation of mini-piles in early May 2003 the Defendant began preparation for loading tests of selected mini-piles CP18-P1 and CP10-P3 on 15th May 2003. In the course of preparation work for the pile caps, Mr. Lee found the steel bars of some mini-piles had been installed without any centralizers and spacers. The centralizers and spacers should have been used to keep sufficient cover and space between each steel bar so that the mini-pile strength could be maintained. The Defendant claimed that the installation of spacer to be a contract requirement. Furthermore, on the drawing E1-17B it had been specified that a 20x5mm thick mild steel bar spreader was required. According to Mr. Lee, the spreader would serve the same function as the spacer. The sketches in the drawing No. E1-17B stipulated that the spreader or spacer should be attached. No. E1-17B further specified a minimum spacing of 28 mm between each steel bar and the casing so that sufficient cover could be attained. Mr. Lee claimed that the requirement could be satisfied by the installation of centralizers, although an alternative means to maintain the 28 mm minimum spacing may be adopted. It is the Defendant’s case that if the Plaintiff failed to install the centralizers or use other means to maintain the 28 mm minimum spacing the mini-piles would be defective. The absence of centralizers or spreaders would cause the steel bars inside the mini-piles to squeeze together and be in contact with the steel casing. Mr. Lee claimed that this was what happened to the mini-piles completed by the Plaintiff relying on the exhibited photographs taken of the defective mini-piles (pages 434 to 440) as evidence.
28. Mr. Lee further claimed that another defect occurred in the mini-pile works: there was a difference of over 1500 mm between the top levels of the individual steel bar and the pile head in some of the piles. He claimed that the parties had agreed on site at the beginning of the mini-pile works that the range should be between 150 mm to 300 mm.
29. The defects mentioned above were found in a number of mini-piles during the Defendant’s excavation work to construct the pile caps between August to October 2003. The Plaintiff was requested to carry out remedial measures under Clause 7 of the 1st Agreement. Mr. Lee claimed that these defects in the mini-piles had been reduced in writing in his letter to the Defendant dated 1st December 2003. And before the issue of the December letter, the Defendant had written to the Plaintiff requesting the Plaintiff to carry out the rectification works by fax on 21st August 2003 and 29th August 2003.
30. The Defendant claimed that despite repeated requests and demands, the Plaintiff was unable to carry out remedial work in a timely manner and had only deployed one part-time supervisor and one worker using hand tools to carry out the rectification works. As a result, the Defendant had no alternative but to deploy its own resources to rectify the defective mini-piles on behalf of the Plaintiff. The Defendant claimed the Plaintiff had been in breach of Clauses 2 and 7 of the 1st Agreement that the Plaintiff had failed to exercise reasonable skill and care in carrying out the mini-pile works.
31. The Defendant’s work in the construction of mini pile caps could not be proceeded with until the defects of the mini-piles had been rectified. The Defendant’s pile cap works were consequently delayed and the main contract master programme was further delayed as a result.
32. The Defendant claimed there were 23 defective mini-piles that required rectification out of which 14 required extensive remedial work to be done. As these defects were not discovered all at the same time but intermittently, the Defendant could only rectify one pile at a time. It took two calendar days to complete the remedial works for each defective mini-pile due to the requirement of mobilization of resources. The Defendant claimed the total delay caused by the Plaintiff therefore was 29 days.
33. It is Mr. Lee’s evidence that the original date for completion of the main contract was 17th May 2003 and the date of practical completion certified by the architect’s certificate of practical completion was 4th November 2003 (page 451 of the bundle). There was therefore a total overrun of contract period of 171 calendar days. The architect by a letter dated 25th August 2004 allowed the extension of the contract completion date to 8th October 2003 (a total of 142 days). Consequently, the extra 29 days of overrun period according to the Defendant was caused by the Plaintiff’s defective works which required rectification and the delay due to the suspension of work in June 2003.
34. The Defendant claimed under Clause 22 of the main contract, the Defendant was liable to pay liquidated damages at the rate of HK$20,000.00 per day for each day of delay of completion (page 457 of the bundle). As the Defendant had to pay liquidated damages to the employer in the sum of $20,000 per day for 29 days under the main contract, the total sum of liquidated damages the Defendant was exposed to due to the delay was $580,000.00. The Defendant therefore demanded liquidated damages as general damages due to the delay caused by the Plaintiff, the sum of $580,000.00.
35. It is Mr. Lee's evidence that because of the Plaintiff’s delay in completion, the Defendant was compelled to retain its project team to stay on site 29 days longer than was necessary. Consequently, the Defendant incurred additional costs during the extended period including (1) payment to site staff; (2) maintenance of site accommodation and facilities; (3) maintenance of general site plants and equipment; (4) extension of insurance policy and (5) the Defendant's head office overheads.
36. It is Mr. Lee's evidence that the site staff included the following: Mr. Lee as the project manager; a site agent; a site engineer; a land surveyor; a site safety officer; 2 chainmen; 2 general labourers, for the 29 days extension. Their salaries came to $163,096.00.
37. The Defendant further claimed maintenance of site accommodation and site facilities, the total costs came to $7,233.36 for the 29 days of extended period. They consisted of: telephone charges for 29 days $415.73; internet charges $129.06; rental of site car $4,750.00; stationery $950.00; portable toilet $388.59; waste disposal services $600.
Maintenance of General Site Plants and Equipment
38. The Defendant claimed the sum of $9,783.13. This item included rental of generator at $3,625.33 and diesel costs at $6,157.80, a total of $9,783.13.
Extension of Insurance Policy and Bond
39. The Defendant claimed employees' compensation insurance and contractor’s all risk policy covering the extended period at a total of $34,652.48. It consisted of the employee's compensation policy of $28,725.13 and the contractor's all risk policy at $5,927.35.
The Defendant’s under-recovered head office overheads
40. The Defendant claimed the sum of $74,836.25 under this head. This amount was calculated based on dividing the total head office overheads at tendering stage of the Defendant by the total turnover. The Defendant's counsel called it the Emden’s Formula which was reputed to be a widely accepted calculation method in the construction industry for the assessment of the head office overheads.
41. In conclusion, the Defendant claimed under the head of prolongation cost for 29 days, the sum of $289,601.22.
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Particulars
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| 1. |
payment to site staff |
$163,096.00 |
| 2. |
maintenance of site accommodation and site facilities |
$7,233.36 |
| 3. |
maintenance of general site plants and equipment |
$9,783.13 |
| 4. |
extension of insurance policy |
$34,652.48 |
| 5. |
under-recovered head office overheads |
$74,836.25 |
| |
Total |
$289,601.22 |
42. It is Mr. Lee’s evidence that the Defendant is further entitled to recover from the Plaintiff under the sub-contract contra charges for the following items:
Contra Charge No. 1 – Material and Services provided by the Defendant to the Plaintiff
43. The parties agreed the charges for the building materials and services supplied by the Defendant to the Plaintiff would be deducted from the sub-contract payment. Materials supplied by the Defendant to the Plaintiff included cement, scaffold tubes and clamps, couplers and tape threading, rebar for soil nail heads and reinforcement. Services ordered for the Plaintiff by the Defendant included tests for mini-pile driving machine and rental of grab lorry. It is Mr. Lee's evidence that the charges and costs of these items were all certified and deducted in the payment certificates certified by Mr. Lee himself.
44. Particulars for materials and services supplied by the Defendant to the Plaintiff on the Plaintiff's behalf are as follows:
| 1. |
cement supplied by Wealth Bridge Trading Company Limited |
$154,151.00 |
| 2. |
scaffold tubes and clamps supplied by Hong Kong Scafform Suppliers Limited |
$123,954.00 |
| 3. |
couplers, taper threading supplied by Kwong Fai Steel (HK) Ltd. |
$648,778.10 |
| 4. |
rebar for soil nail heads supplied by Tung Shing Metalwares Steel |
$30,375.00 |
| 5. |
concrete for soil nail head supplied by Ken On Concrete Company Ltd. |
$23,976.00 |
| 6. |
steel pipe supplied by Sumikin Bussan International (HK) Ltd. |
$84,450.00 |
| 7. |
test and examination with certificate of mini-pile driving machine supplied by Loong Sang Company Limited |
$900.00 |
| 8. |
rental of grab lorry supplied by Lapland Transportation Limited |
$4,200.00 |
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|
__________ |
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Total of Contra Charge No.1: |
$1,070,784.10 |
Contra Charge No. 2 – Concreting Soil Nail Heads
45. It is Mr. Lee's evidence that the Plaintiff after completing the grouting works on the soil nails on 8th July 2003 failed to make any progress in the construction of soil nail heads consisting of excavation, installation of GMS plate, U-bar and concreting. On or about 23rd July 2003, Mr. Lee claimed that Mr. Ho of the Plaintiff informed him that the Plaintiff did not have enough resources to complete all the concreting work of the soil nail heads. At that stage Mr. Ho had confirmed to Mr. Lee that there were 86 soil nail heads yet to be concreted. It was agreed between Mr. Lee and Mr. Ho that the Defendant would engaged another sub-contractor to take up and complete the concreting work of the remaining soil nail heads. In the 25th July 2003 letter, the Plaintiff agreed that the Defendant would engage a sub-contractor to complete the soil nail head work at the cost of $150 for soil nail head. For the purposes of the concreting of the remaining soil nail head the Defendant engaged another sub-contractor Kin Wa Engineering Limited to finish the work on the Plaintiff’s behalf. Ken On and Pioneer Concrete (HK) Limited supplied the concrete for the concreting work to be completed. As a result, the concreting work at $150 per soil nail head totalled $12,900; while the cost of concrete supplied by Pioneer was $1,560.60, the total contra charge No. 2 amounted to $14,468.60.
Contra Charge No. 3 – Concreting of Additional 3 Soil Nail Heads
46. The Defendant claimed that at the final stages of site clearance in early October 2003 the Defendant found 3 more soil nail heads which had not been concreted. He therefore wrote a letter to the Plaintiff on 12th November 2003 requesting the Plaintiff to complete the concreting works on the 3 outstanding soil nail heads. The Plaintiff failed to do so and the Defendant had to carry out the work at the rate of $150 per soil nail and the costs of the concreting for the 3 additional soil nail heads came to $450.
Contra Charge No. 4 – Remedial Works for Defective Mini-piles
47. The Defendant claimed that the Plaintiff failed to install the mini-piles in compliance with the drawings and specifications under the sub-contract. Consequently remedial works had to be carried out for the engineer’s approval. Due to the Plaintiff’s failure to provide sufficient resources for the rectification of these defective mini-piles, and to avoid further delay, the Defendant applied its own resources and arranged for the rectification work to be performed on the Plaintiff’s behalf.
48. The Defendant claimed the following costs were incurred:
1. welding supplied by Kam Lee Metal Engineering and Kam Lee Hardware Engineering Company.
2. breaker and backhoe supplied by Dragon Construction Company.
3. labour – Kin Wa.
4. crane supplied by Chi Shing Crane Transportation Company Limited.
5. generator supplied by Wing Chung Machinery Company.
6. grab lorry supplied by Lapland.
7. metal and tools supplied by Multi-Supplies.
49. The Defendant apportioned the costs of the rectification work on the mini-piles at $117,441.89.
Contra Charge No. 5 – Safety Penalty
50. The Defendant claimed that it required all its sub-contractors to maintain the highest level of safety during the course of the sub-contract works. Under the safety schedule of the letter of intent to its sub-contractors supplied to the Plaintiff, the Plaintiff well knew the details of the safety policy of the Defendant. The Defendant claimed that the Plaintiff had violated 4 of the safety rules and therefore became liable to fines set out in the safety schedule.
(a) Violation of Safety Rules on 8th August 2002
51. It is the Defendant’s case that the Plaintiff site workers violated rules set out in the safety rules on 8th August 2002 by placing acetylene cylinders horizontally on the ground. In spite of an improvement notice dated 10th August 2002 to the Plaintiff, the Plaintiff failed to rectify the violation of the safety rule. The Plaintiff was notified by a violation notice dated 24th August 2002 that the penalty of $1,000 had been imposed.
(b) Violation of Safety Rule No. 2 on 25th August 2002
52. On 8th August 2002 Mr. Lee found the Plaintiff had set up the working platform improperly and improvement notice dated 10th August 2002 was issued to the Plaintiff. At a subsequent inspection on 25th August 2002 by Mr. Lee, the Plaintiff still failed to rectify the violation, therefore a violation notice dated 6th September 2002 was issued to the Plaintiff notifying the Plaintiff that a fine of $1,000 would be imposed for violation of Safety Rule No. 6.
(c) Violation of Safety Rule No. 1 on 23rd and 27th September 2002
53. Mr. Lee said that he found at the site safe inspection on 8th August and 26th August 2002 that one of the Plaintiff’s worker failed to wear a safety helmet and 2 of its workers did not wear safety belts and independent lifeguard ropes when working on the slope. Improvement notices were sent on 10th and 29th August 2002 notifying the Plaintiff to ensure its workers should wear personal protective equipment. Mr. Lee found at the 2nd inspection on 23rd and 27th August 2002 the Plaintiff’s workers still failed to comply with the requirement. A violation notice was issued on 5th October 2002 notifying the Plaintiff that the penalty in the sum of $3,000 was imposed for violation of Safety Rule No. 1.
(d) Violation of Safety Rule No. 1 & 6 on 6th and 9th October 2002
54. On 23rd September 2002 Mr. Lee found the Plaintiff had
failed to set up the working platform properly, it was installed without sufficient fencing and its workers were not wearing personal protective equipment such as safety belts. An improvement notice was sent to the Plaintiff on 27th September 2002 reminding the Plaintiff to improve the safety measures of its workers. At a second site inspection on 9th October 2002, Mr. Lee found the Plaintiff had failed to comply with the requirement. On 6th November 2002, he issued a violation notice to the Plaintiff imposing a fine of $5,000 for the violation of Safety Rule No. 1 and No. 6.
(e) Violation of Safety Rule No. 6 on 18th July 2003
55. Mr. Lee claimed that during an inspection on 2nd and 14th May 2003, he found the steel working platforms on the slope had not been set up properly and the fencing provided was not sufficient. He issued an improvement notice on 19th May 2003 to the Plaintiff. At the site inspection on 18th July 2003, he found the Plaintiff still failed to install the fencing to the steel working platforms, he therefore issued a violation notice on 25th July 2003 to the Plaintiff imposing a fine of $3,000 for violation for Safety Rule No. 6.
56. The total amount of the contra charges in respect of the aforesaid site safety penalty was $13,000.
Summary of Contra Charge Nos. 1 – 5
57. The total amount of the contra charges to be deducted from the Plaintiff’s account according to the Defendant is HK1,216,144.59.
| |
Particulars
|
|
| 1. |
materials and services provided by the Defendant for the Plaintiff |
$1,070,784.10 |
| 2. |
concreting soil nail heads on behalf of the Plaintiff |
$14,468.60 |
| 3. |
concreting 3 additional soil nail heads |
$450.00 |
| 4. |
remedial works for Plaintiff’s defective mini-piles |
$117,441.89 |
| 5. |
safety penalty |
$13,000.00 |
| |
Total contra charges Nos. 1 to 5 |
$1,216,144.59 |
Extra Site Management Cost due to Plaintiff’s Wrongful Suspension of Soil Nail Works
58. The Defendant claimed against the Plaintiff for the delay of 12 calendar days between 22nd June 2003 and 1st July 2003 due to suspension of the soil nail works during which time the Defendant was obliged to keep the site safe and tidy. The cost of the extra management was $4,484.16. Such cost included general labourer for cleaning and tidying up the site debris, site safety officer to ensure safety of the site and the site engineer to check the Defendant’s site. The Defendant claimed that the time involved for the general labourer to work at the site was 4 hours each day, for the site safety officer 2 hours each day and for the site engineer 2 hours each day. For the 9 working days excluding Sunday and the 1st July public holiday, the cost was $4,484.16.
Retention Money
59. The Defendant claimed that it is entitled to withhold the sum of $162,243.08 unless and until the certificate of making good defects had been issued according to the verbal agreement of the parties. The Defendant claimed that the certificate of making good defects under the main contract had not been issued at the time of the issue of the writ.
The Expert Report
60. The Defendant produced an expert report from Mr. Manohar Lal Khanna on the issues of quantum. The Plaintiff did not object to the production of Mr. Khanna’s report. It is Mr. Chik’s submission that the Plaintiff had no objections so far as production of Mr. Khanna’s report is concerned and would leave the matter to the Court whether to accept Mr. Khanna’s report on quantum wholly or in parts should the Court find that the Plaintiff to be liable on the counterclaim.
Findings
61. On the basis of Mr. Chik's concession not to challenge the Defendant’s expert report on the issues of quantum and leaving the matter to the Court, there is no reason for the Court not to adopt the calculations and the quantum assessed by Mr. Khanna in his report.
62. It is not disputed that the Plaintiff did receive a total payment for the work done on the Defendant's instructions to the value of $1,921,901.23. These payments were settled upon the approval of various payment certificates by the Defendant.
63. The Plaintiff claimed that it had completed soil nail works to the value of $1,855,020, mini-piles work to the value of $1,199,451.10 and anchor mini-piling work to the value of $236,090.54. In total they came to $3,290,561.64. The Defendant, on the other hand, valued the work done by the Plaintiff under the sub-contracts at $3,244,861.61. Mr. Khanna, after analyzing the work performed by the Plaintiff and the rate agreed by the parties and assessed by Mr. Khanna himself, valued the work done by the Plaintiff to be worth $3,243,174.74. This figure is $1,687.14 less than the Defendant's valuation of the work performed by the Plaintiff and $47,387.17 less than the Plaintiff’s own valuation.
64. Mr. Khanna's findings of the aforesaid figure is subject to 2 items: (1) On the basis that CP2 – P2 pile is a raking pile and not a vertical pile, the rate of $470 per meter should apply rather than the lower figure HK$460 per meter. In which case the value of the Plaintiff's work on this item would be $60,967 rather than the Defendant's valuation of $60,606, there is a difference of $361; (2) whether the quantity of couplers was included in item 6 of the table. In Mr. Khanna's assessment, this is the item of anchor mini-piling works supply and fixture. The value calculated by Mr. Khanna was 367.20 kilogram x $457 per kilogram = $1,678.10. The total after inclusion of the aforesaid two items is:
$3,243,174.47 + $2,039.10 = $3,245,213.57.
For the purposes of the Plaintiff's claim, I accept this to be the value of the contracts of works as there were no expert evidence to the contrary.
65. As to the Defendant's counterclaim items, they are as follows.
(a) Wrongful suspension of soil nail works by the Plaintiff from 20th June 2003 to 1 July 2003 (total 12 days)
66. Payment Certificates Nos. 11 (page 305) and 12 (page 337) showed that both had been prepared, certified and approved on 18th June 2003 by the Defendant. The Defendant's witness Mr. Lee agreed that after the deduction of costs of materials and previous payments to the Plaintiff the total sum of $66,973.22 was due to the Plaintiff up to mid June 2003. Therefore, when the Plaintiff suspended work on 20th June 2002 in protest of the Defendant’s failure to settle its invoices, the Plaintiff had a reasonable cause for doing so. The Defendant, on the other hand, claimed that the previous payments to the Plaintiff failed to take into account contra charges for the materials, therefore, upon the Plaintiff’s tendering of invoices between February and June 2002, the Defendant did not consider the Plaintiff was entitled to any payment. It was only after the Plaintiff suspended work on 20th June 2003 that the Defendant held a discussion with Mr. Ho and agreed that a payment of $66,933.22 was due to the Plaintiff. After the meeting took place on 27th and 28th June 2003, the Plaintiff resumed work. The Defendant disputed the actual date of resumption of work. In any event, within a few days of the Plaintiff’s resumption of work, the Defendant paid to the Plaintiff the outstanding sum after deductions of retention money, the sum of $61,000 odd.
67. The Plaintiff was therefore correct in pointing out to the Defendant that it had failed to make payments certified under payment certificates Nos. 11 and 12 approved on 18th June 2003 by the Defendant. I find the Plaintiff's suspension of work was not without good reason and the Defendant’s claim of 12 days delay because of the Plaintiff’s suspension of soil nail works therefore cannot stand.
(b) Failure to proceed with soil nail head work (15 calendar days 9th July 2003 to 23rd July 2003)
68. The Plaintiff claimed that in mid-September 2003, the Defendant instructed the Plaintiff to suspend the soil nail work due to certain changes of construction location of the soil nails and the actual numbers to be ascertained. The Plaintiff was told to wait for further instructions. It was the evidence of Mr. Ho that by the end of October 2002, 345 soil nails and 22 test nails had been duly completed and these were accepted by the Defendant. The Plaintiff claimed therefore because of the above agreement the time-table stipulated for completion of the soil nail work no longer applied. Work resumed in May 2003 and by late July 2003 all soil nail works were duly completed
69. It is, however, the Defendant's evidence that after the Plaintiff completed the grouting works for the soil nails work on 8th July 2003 the Plaintiff failed to proceed with the soil nail head work which involved excavation, installation of GMS plate, U-bar and concreting despite repeated demands. Eventually, on 23rd July 2003, the Plaintiff's Mr. Ho reached an agreement with the Defendant's Mr. Lee that the Plaintiff would only carry out the excavation, installation of GMS plate and U-bar but would not perform concreting work of the remaining soil nail heads. The parties agreed that another sub-contractor of the Defendant’s would finish the work of concreting of the remaining soil nail heads at $150 per soil nail head. The Defendant therefore claimed that not only the $150 per soil nail head should be deducted as contra charges, the delay from 9th July to 23rd July 2003, a total of 15 calendar days should be added to the claim of delay of completion of the sub-contract work. This, however, was not raised at the time of the parties’ agreement on 23 July 2003. The parties had only agreed that the costs of the concreting work should not exceed $20,000.
The Plaintiff's fraudulent or negligent report on completion of soil nail head work from 6th August to 11th October 2003 (67 calendars in total).
70. The Defendant claimed that the Plaintiff had informed the Defendant on 28th July 2003 that the Plaintiff had completed all soil nail works except for 86 soil nail heads. The Defendant therefore obtained another sub-contractor to complete the concreting of the remaining 86 soil nail heads. The work was done by the Kin Wa Engineering Limited between 30th July to 5th August 2003. It was not until the site clearance in early October 2003 that the Defendant's site supervisor discovered there were 3 soil nail heads not yet completed. The Defendant therefore demanded the Plaintiff to complete the 3 outstanding soil nail heads immediately but the Plaintiff failed to take action. The Defendant had to obtain Kin Wa to finish the concreting work on the 3 outstanding soil nail heads. The work was completed by Kin Wa on 11th October 2003. The Defendant therefore claimed that there was a delay of 67 days because of the failure to report the 3 outstanding soil nail heads.
72. I find this claim of 67 days delay to be too remote. Throughout this period, the Defendant’s other contractors were in full operation at the site. If there were any delay at all, it would only be the time it took to concrete the 3 soil nail heads.
Failure to carry out remedial works on the Plaintiff's substandard mini-piles (29 working days in total)
72. It is the Defendant’s claim that after the Plaintiff completed the installation of mini-piles in early May 2003, the Defendant discovered on 15th May 2003 when preparing the loading test for mini-piles CP18 – P1 and CO10 – P3 that the steel bars of the mini-piles had been installed without the centralizers and spacers. As a result of the absence of the required centralizers and spacers, the steel bars were squeezed together and came into contact with the steel casing. This affected the integrity and strength of the mini-piles. The Defendant further found that contrary to the parties’ agreement there was a difference of more than 1500 mm between the top levels of some of the steel bars and the pile heads. It is the Defendant's case that the requirement of spacers is a contractual requirement clearly specified on the contract drawing No. 17B. The Defendant claimed that similar defects were found in other mini-piles during excavation. At the Defendant’s request to remedy the defects, the Plaintiff failed to send sufficient resources to rectify the defective steel bars and mini-piles thus the progress of the main contract had been delayed. In order to minimize the delay, the Defendant had to deploy its own resources and labour to rectify the 23 defective mini-piles discovered. Out of the 23 mini-piles, 14 were more serious and required more work.
73. It is the Defendant’s case that each defective mini-pile remedial work took 2 working days for they were discovered one by one, as a result, there were delay of 29 days in order to rectify all the mini-piles. I find this rather difficult to accept, in order to minimize delay, the remedial work would have been done in one go rather than on an ad hoc basis when each defective pile was discovered. An experienced site foreman would have run a check of all mini piles once the first one was found to be defective. If all defective piles were remedied at the same time, the time it takes to repair each may well have taken ½ day only as suggested by the Plaintiff.
Exposure to liquidated damages under the main contract due to the Plaintiff’s delayed completion of the sub-contract work
74. It is the Defendant's case that original completion date of the main contract was 17th May 2003 but the actual date of completion certified by the architect was 4th November 2003. The architect by a letter dated 25th August 2004 and the annexure of extension of time claimed for outstanding tree-felling permit, and inclement weather, allowed a total of 142 days of extension of time. This extension of time consisted of 122 days granted for the delay issuance of the tree-felling permit and 22 days for inclement weather. Thereby the contract completion day was extended to 8th October 2003 (page 453 – 455 of the Bundle).
75. The Defendant’s claim therefore is for the delay of the main contract completion between 8th October to 4th November 2003. 4th November 2003 being the certified practical completion of the works by the architect (page 451). The Defendant claimed the fine under the main contract for each day of delay of completion was $20,000, under this item therefore the Defendant claimed against the Plaintiff for the total sum of $580,000.
76. The Defendant however admitted that under the main contract, the Defendant reached a settlement with the employer that the Defendant would not pursue the prolongation claim in the sum of $1,338,049.01 submitted to the architect, in return, the employer would waive the imposition of 15 days liquidated damages under the main contract. However, the Defendant claimed that it was still liable to liquidated damages of 14 days delay under the main contract amounting to $280,000 instead of the claim of 29 days. The Defendant claimed that the settlement was a commercial settlement between the employer and the Defendant as the main contractor. The Defendant claimed that the Plaintiff is still liable and is not exempted for causing the 29 days delay in the completion of the main contract work because of the Plaintiff’s failure to remedy the defective mini-piles causing the delay.
77. It is the Plaintiff's Defence on the Counterclaim that first of all, the soil nail works was interrupted because the site at 30 Peak Road had only one point of access, it was both the entrance and exit to the site. Furthermore, the site not being a large site, and as the Defendant had over 10 subcontractors working at the site, the sub-contractors were not allowed to conduct their work all at the same time. Due to the access difficulties, the Plaintiff had to move its plants and equipment from time to time away from the site to make room for other subcontractors to complete their work. The situation was complicated by the delay in the Defendant’s tree-felling permit in March 2003. The tree-felling permit was necessary because some of the piling works could only be done after the trees were removed upon the issue of the tree-felling permit.
78. It is also not disputed that other than the soil nail works no formal agreement had been signed by the parties for the mini-pile works and the anchor pile works. There was no specific agreement as to the completion date. The Plaintiff claimed that it had no knowledge of the contents of the main contract as the Plaintiff was brought in at a late stage to perform the soil nail works, while the mini-pile works and anchor pile works were additional works subsequently included, hence, there were no agreement as to the date of completion of the mini-pile works and the anchor pile works. It further had no knowledge of the employer’s main contract completion date. The Defendant’s expert Mr. Khanna concluded, other than the soil nail works contract, there were no agreed completion date for the mini-pile and anchor pile works, but according to the practice of the trade, work had to be completed within a reasonable time. As to what is a reasonable time, there was no evidence adduced by either the Plaintiff or the Defendant.
79. On the basis that the architect made a fair assessment based on the circumstances of the performance of the main contract and the application for extension of time assessment report, the architect allowed 142 days of extension of time to be reasonable and acceptable to the employer. Therefore, the total period of delay of completion of the main contract should be between the permitted extension of the contract completion date of 8th October 2003 and the date of practical completion of the works certified by the architect (page 451) i.e. 4th November 2003. The Defendant claimed that he had to compensate the employer for a 14 days delay, with the liquidated and ascertained damages at $20,000 per day, amounting to $280,000. The Defendant produced a statement of final account in support of his claim of the 14 days actual delay as proof of the final accounts of the main contract between the employer, the architect and the main contractor. I am satisfied that the Defendant did have to bear at the end of day 14 days delay of the main contract work for which the employer was entitled to liquidated damages in the sum of $280,000.
80. I agree with Mr. Khanna's observation that out of various periods of delay and considering the cause of the delay, the most important delay was due to the remedial works on the defective mini-piles. I find the so-called wrongful suspension of the soil nail works between 20th June 2003 and 1st July 2003 (12 days) that the Defendant claimed against the Plaintiff to be unsubstantiated, the cause of delay was due to the Defendant failing to settle the invoices for payment under payment certificates Nos. 11 and 12. As to the failure to complete the soil nail head work, the alleged delay between 9th June 2003 and 23rd July 2003, the Plaintiff and Defendant reached an agreement and the Defendant took up immediate or almost immediate measures by obtaining one of its existing sub-contractors to complete the concreting of the soil nail heads. There may have been a delay in the Plaintiff’s completion of this part of the contract, but the delay was not extensive.
81. As to the Plaintiff’s negligent or so-called fraudulent report of completion of soil nail works that it was only in early October 2003 when the Defendant discovered 3 soil nail heads had not been concreted. I find the Defendant’s claim for 67 days delay to be unreasonable because the work of concreting the 3 soil nail heads took the Defendant less than 1 week to complete. The Defendant mitigated its loss by immediately requesting the Plaintiff to complete the work and when the Plaintiff failed to take it up the Defendant quickly employed one of its existing sub-contractors to complete the work. As to the defective work in the mini-piles, indeed, the photographs exhibited in the bundle showed mini-piles with steel bars squeezed together to one side, this is strong evidence of the Plaintiff’s poor workmanship. The Plaintiff claimed that it did use centralizers and spacers even though they were not included in the instructions on the drawings. I find this not to be true. It must be understood based on the Exhibit P-2 drawings, which specified there should be a space of 28 mm between the bars. It was incumbent upon the Plaintiff to make sure that the drawings should be strictly adhered to and the photographs exhibited clearly showed that certain mini-piles had not been constructed in compliance with the requirements on the drawings.
82. For the aforesaid reasons, I am satisfied the Defendant suffered actual loss due to the delay caused by the Plaintiff which in turn delayed the completion of the main contract. I am satisfied that the remedial work to the mini-piles was the main cause of the delay and since the Defendant had compensated the employer for the 14 days delay amounting to $280,000, I will allow the recovery of this item of claim against the Plaintiff.
Additional costs due to delay caused by the Plaintiff’s failure to rectify defective mini-piles
83. Based on the findings that the Plaintiff did fail to comply with the specifications on the drawings on exhibited P-2 in some of the mini-piles, I accept that work had to be done to rectify the defective mini-piles. The Defendant claimed 29 days work had to be undertaken to rectify the defects because they were repaired as and when each was discovered. Other than the costs required to engage another sub-contractor to do the rectification work, the Defendant incurred expenses and costs to retain staff and maintain the site during the period rectification work was underway. These included the following:
| 1. |
payment to site staff |
$163,096.00 |
| 2. |
maintenance of site accommodation and miscellaneous site facilities |
$7,233.36 |
| 3. |
maintenance of general site plants and equipments |
$9,783.13 |
| 4. |
extension of insurance policy |
$34,652.48 |
| 5. |
under-recovered head office overheads |
$74,836.25 |
| |
Total |
$289,601.22 |
84. As the Plaintiff accepted the calculations by Mr. Khanna without challenging any of these items, I accept the quantifications made by Mr. Khanna with the exception of the ‘under-recovered head office overheads’. I do not accept that the Defendant’s head office was set up only to carry out this contract at 30 Peak Road and had no other project work during those 29 days or that the office would have closed but for those 29 days of delay completion. There was no such evidence adduced, therefore, I would disallow this item of claim. As for the site maintenance, I am not convinced that each of the 14 more seriously defective mini piles would have taken 2 days to repair, if they were done all at one go, the work would have been more efficiently executed and the time taken would have been much reduced. The Plaintiff claimed it would take only ½day to repair each pile. I will allow 14 days for the repair of the 23 defective piles. I allow the sum of costs due to delay caused by the Plaintiff’s failure to rectify the defective mini-piles at $(289,601.22 – 74,836.25) x 14/29= $103,679.64.
Contra Charge 1 - materials and services provided by the Defendant to the Plaintiff
85. The Plaintiff accepted the contra charges for materials and services supplied by the Defendant in the sum of $999,880.10. On the other hand, the Defendant’s own calculations of materials supplied and services rendered was a total sum of $1,070,784.10. According to Mr. Khanna’s assessment after checking the invoices for charges on materials, he valued the contra charges under this head to be $1,026,613.10.
Contra Charge No. 2 – concreting soil nail heads
86. The Plaintiff did not dispute that 86 soil nail heads were not concreted by the Plaintiff and it agreed to contra charges for the work done by another sub-contractor of the Defendant at $150 per soil nail head. The work was performed and the charges were $12,900.00. On top of the cost of the work, there should be included the charges for the supply of the concrete. Mr. Khanna valued the concrete cost to be $1,432.20. The document exhibited by the Defendant showed that it had paid $1,364 concrete charges to the sub-contractor Kin Wa who did the concreting work. The Defendant claimed 15% administrative cost on top of the cost of the concrete, Mr. Khanna allowed only 5%, therefore, the concrete charges came to $1,432.20 only. The award under this item is $1,432.20.
Contra Charge No. 3 – concreting of additional 3 soil nail heads
87. 3 further soil nail heads were found in October 2003 to require concreting. This work was done by Kin Wa and completed on 11th October 2003 at a total cost of $450.
Contra Charge No. 4 – remedial works for defective mini-piles
88. Following my findings above, the Plaintiff is liable to the Defendant for the rectification work. While the Defendant claimed the sum of $117,441.89, Mr. Khanna's assessment and valuation of the work done was $104,148.90.
Contra Charge No. 5 – safety penalty
89. The Defendant claimed the Plaintiff had violated site safety rules on 5 occasions and the total of 6 violation fines was $13,000. This item appeared in the payment certificates and were apparently not challenged by the Plaintiff at the time of their issuances. I accept this sum should be deducted as contra charges.
Costs of site management due to delay between 23 June – 1 July 2003
90. The Defendant claimed extra site management cost due to the Plaintiff’s wrongful suspension of soil nail works between 23rd June to 1st July 2003. As explained above, my reason for disallowing this item is on the ground that the delay was not due to the fault of the Plaintiff. The Defendant and the Plaintiff should have sat down and worked out exactly what were the contra charges of the work done by the Plaintiff and calculated the outstanding sum due to the Plaintiff as of 18th June 2003. Unfortunately the Defendant did not do so until 27th June 2003, 4 days after the Plaintiff's suspension of work on 23rd June 2003. In any event, the Plaintiff did resume work before the sum of $61,000 was paid to the Plaintiff by the Defendant. On this basis, I disallow this item of claim against the Plaintiff.
Retention Money
91. The parties disputed whether there should be a sum of retention money and if the retention money should be deducted. Regardless whether there were any written terms in the contract documents of the soil nail works or oral agreement at the time of quotation as to whether the Defendant as the main contractor was entitled to withhold retention money, clearly, it is a practice in the construction business that retention money is usually withheld before the defects liability period expired. It is Mr. Khanna's view that the retention money is usually withheld for a period of 12 months after the date of practical completion of the work. In the main contract, the architect certified the date of practical completion of work to be 4th November 2003, the 12 months period of defects liability expired on 3rd November 2004. It is clear that the defects liability period had expired by 3rd November 2004; there is, therefore, no reason for the Defendant to hold on to this sum of money and refuse to return it to the Plaintiff who is entitled to be paid after the 12 months defects liability period expired. This is particularly so when the Defendant had already made a claim against the Plaintiff for contra-charges, repair of defects charges, costs and compensation due to the delay in completion caused by the Plaintiff.
Conclusion
92. I am satisfied that the Plaintiff's work done amounted to a value of $3,245,213.57 based on the assessment of Mr. Khanna whose expert report had not been challenged by the Plaintiff. The contra charges plus liquidated damages for delay in the completion of the main contract work of 14 days and the additional costs due to delay caused by the rectification of defective mini-piles add up to a total of $1,542,223.80 less previous payments of $1,921,901.23, the balance comes to $218,911.46. This sum is reached after taking into account of the Plaintiff’s claim.
Summary
| Value of work done |
|
$3,245,213.57
|
| Less: |
liquidated damages for delay |
$280,000.00
|
|
| |
to the completion of main |
|
|
| |
contract work |
|
|
| |
Additional costs due to delay in rectification of defective mini-piles |
$103,679.64
|
|
| |
Contra-charges |
|
|
| |
No. 1 materials and services |
$1,026,613.10
|
|
| |
No. 2 concreting soil nail heads |
$14,332.20
|
|
| |
No. 3 concreting additional 3 |
$450.00
|
|
| |
SNH |
|
|
| |
No. 4 remedial works for defective mini-piles |
$104,148.90
|
|
| |
No. 5 safety penalty |
$13,000.00
|
|
| |
Sub total |
|
$1,542,223.80
|
|
| |
|
|
$1,702,989.77
|
| Less: |
previous payments |
|
$1,921,901.23
|
|
| |
|
|
$218,911.46
|
93. The Plaintiff is therefore liable to the Defendant on the counterclaim in the sum of $218,911.46.
Interests
94. Interest on the said judgment sum of $218,911.46 at half judgment rate from date of writ to date of judgment and thereafter at full judgment rate.
Costs
95. Costs to follow the event. The Defendant having succeeded on its counterclaim shall recover its costs, to be taxed if not agreed, with certificate for counsel.
| |
( H.C. Wong )
District Court Judge |
Parties : Mr. Kenneth Chik instructed by Messrs. Ho, Lo & Yeung for the Plaintiff.
Mr. Jerry Chung instructed by Messrs. Leung, Chan & Pang for the Defendant.
|