XCHRX SUNDART (M & E) LTD. v. AMEC ELECTRICAL AND MECHANICAL ENGINEERS LTD.

1999, No. CT 62

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. I have a summons before me by which, read liberally, the defendant seeks an order that the plaintiff provide certain further and better particulars of its amended statement of claim.

2. The defendant was a subcontractor in relation of some construction works. The plaintiff was the defendant's subcontractor in respect of three subcontracts. In its amended statement of claim, the plaintiff pleads provisions of the contracts, including clauses that -

1. require the plaintiff to comply with written instructions of the defendant relating to variations;

2. require the amount in respect of the variation to be calculated according to the agreed rates, or, if they are no applicable rates, require the plaintiff to provide calculations, purchase orders or invoices;

3. require the plaintiff to tell the defendant of the cost implication of the instructions, and provide a cost estimate;

4. say that no variation shall be made without the receipt of written instructions from the defendant or written confirmation of verbal instructions; and

5. the additional costs must be agreed with the defendant's quantity surveyor;

6. the plaintiff shall act only on the instructions of the defendant.

3. There is a companion sub-clause of those pleaded by the plaintiff, but not mentioned by it. This says that day-work sheets shall only be used when specifically instructed or approved by the defendant, and these must be signed by the defendant's authorised staff.

4. The plaintiff pleads that it carried out variation works "pursuant" to the contracts, and it gives a list of these in an attachment. Alternatively, the plaintiff claims on the basis the reasonable value of the work instructed and accepted by the defendant. It claims the sum of over $5 million.

5. In its amended defence and counterclaim, the defendant pleads compromise, but also pleads that the plaintiff is not entitled to be paid because the plaintiff did not comply with the clauses of the contracts that I have already outlined.

6. The defendant requested further and better particulars of the amended statement of claim. The plaintiff replied to this request, but the defendant is not satisfied with some of these replies.

7. In particular, the defendant wanted to know if the plaintiff alleged that, in respect of each of the variations, a written instruction was issued by the defendant to the plaintiff. In response to this, strangely in view of the contractual provisions pleaded by the plaintiff itself and its allegation that the variations were done "pursuant" to these contracts, the plaintiff said the request did not relate to the plaintiff's pleaded case. In my view, it certainly did. Nevertheless, the plaintiff provided voluntary particulars, giving in an appendix "references to instructions which were either given by the defendant directly or by the defendant copying to the plaintiff instructions given to it by the main contractor, the architect and/or the M & E consultant.". The appendix does give references to instructions, and these are identified variously as -

1. architect's instructions;

2. the main contractor's instructions;

3. the plaintiff's confirmation of defendant's verbal instructions;

4. the consultant's instructions;

5. the defendant's instructions; or

6. "other forms of instructions from the defendant such as verbal instructions, instruction by way of shop drawings, etc".

8. The defendant also asked whether the amounts claimed in respect of the variations were calculated according to the agreed rates, and, if not, whether the plaintiff provided calculations, purchase orders or invoices.

9. The plaintiff's answer is that contract rates were used "where applicable", otherwise "comparable and/or star rates were used". In answer to the request as to whether calculations, purchase orders or invoices were provided, the plaintiff says this "is not part of the plaintiff's pleaded case." But, of course, it is. The plaintiff concedes that not all the rates were agreed rates. The plaintiff pleads the contractual term that says that, where the rates were not agreed, calculations, purchase orders or invoices must be provided in support.

10. The defendant asked about whether the plaintiff complied with the clause relating to providing cost implications and cost estimates. Again, the plaintiff says this is not part of its pleaded case. I do not understand why it says this. It pleads that it was bound to do this.

11. The defendant requested particulars of the agreement of the quantity surveyor to the amount claimed. Here, also, the plaintiff says this is not part of its pleaded case. Again, it was certainly part of its pleaded case

12. The defendant asked for particulars about the use of day work sheets, and the answer to this was that this also was not part of the plaintiff's pleaded case. This is so, but it does plead that its claims are made under the contract, and this provision is undoubtedly part of the contracts.

13. The last particular requested by the defendant relates to how the amounts claimed are calculated. The response to this is to refer the defendant to an appendix in which the calculations are, in my view, adequately shown.

14. Mr Coleman points out that the assessment of the amounts claimed in respect of a number of the variations is not in dispute. This is so, but Mr Shaw says that these agreed assessments relate to quantum not liability; if the defendant is liable, this is the agreed amount, but that liability is still an issue on the pleadings. I accept that this is so.

15. There is no escaping the fact that the plaintiff's primary claim on the basis of its amended statement of claim is that all the variations were carried out in accordance with the contracts, but it appears from the further and better particulars supplied by it that its case is that the variations "were carried out and completed by the plaintiff at the request and instruction of the defendant and that the works were accepted by the defendant. The plaintiff should therefore be paid in respect of the works either under the subcontract agreements or, alternatively, in quantum meruit." That, coupled with the statements that requests relating to compliance with the clauses of the contracts do not relate to the plaintiff's pleaded case and other particulars already given, indicates clearly to me that the plaintiff's real case is that some of the variations were carried out in terms of the contracts, but others were not, and the claim in respect of those that were not is made on the basis of quantum meruit. Now it seems to me that the defendant is entitled to be told, clearly and unequivocally, which claims are said to be in terms of the contracts, and to give particulars of compliance with those contracts, and which are not in terms of the contracts, but are based on restitution, in which case particulars of compliance with the contracts need not be given, but, perhaps, other particulars should be supplied. If things are left as they are, the defendant does not know the case it has to meet in respect of each alleged variation, the plaintiff is not bound, the defendant does not know how to prepare for trial, and costs at trial will be wasted by investigating whether or not a claim is in compliance with the contracts when this may not be necessary.

16. The defendant is entitled to be faced with a case that says, in clear terms, this and that work was done in accordance with the contracts, and these are our allegations that will establish this, but, in respect of these other claims, we cannot show they were done in strict compliance with the contracts, and we claim on the basis of work done for and accepted by the defendant on a quantum meruit.

17. Accordingly, I find that the defendant is entitled to the particulars sought, save those sought by request 25. However, it seems to me that it would be a better and neater course if the plaintiff were to re-examine its case and decide which claims it can support as claims under the contracts, which must be left to a quantum meruit claim, and plead its case accordingly. In the result, I order that the plaintiff supply the further particulars, other than those in answer to request 25, within 28 days, or, within that time, seek leave to amend or replace its statement of claim so that the deficiencies identified in this judgment are removed.

18. As to costs, it seems to me that the appropriate order is that the plaintiff pay the defendant's costs of, and occasioned by, this application. I make an order nisi accordingly.

19. I have another summons before me by which the plaintiff seeks an order for discovery of documents. Until the issues between the parties are clarified, I do not think it would be appropriate to order discovery. I adjourn this summons until the pleadings are finalised.