SAM WOO BORE PILE FOUNDATION LTD v. CHINA OVERSEAS FOUNDATION ENGINEERING LTD

cacv 113/2006

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 113 of 2006

(on appeal from HCCT NO. 76 of 1996)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  I agree with the reasons given by Le Pichon JA.

Hon Le Pichon JA:

2.  This was an application by the plaintiff for leave to appeal to the Court of Final Appeal from the order of this court dated 24 October 2006 dismissing the plaintiff’s appeal from the order of Reyes J striking out parts of the plaintiff’s claim relating to “extra over for toeing-in of piles” into bedrock.  Leave was refused for reasons to be given in writing later which we now do.

3.  The background facts sufficiently appear from the judgment of this court and I do not propose to repeat them here.

As of right

4.  This was the first ground relied on by the plaintiff and turned on whether the order below (confirmed by this court) made on the strikeout application of the defendant was interlocutory or final.  The first matter to note is that the order made below and confirmed by this court was to strike out part of the plaintiff’s claim.  It was not an order made under Order 14A.

5.  The two tests which historically have been propounded for deciding whether a judgment is final or interlocutory, namely ‘the application test’ and ‘the order test’, are well known.  The former involves an examination of the nature of the application to say whether the order would, whether it failed or succeeded, determine the whole action.  The latter looks at the nature of the order made by the court below rather than the nature of the application and if the order finally disposes of the rights of the parties it is final.  It is evident that it is important that there be clarity and certainty as to which of the tests is applicable from the perspective of litigants as well as the public interest in the efficient deployment of judicial resources.

6.  It is well settled that in Hong Kong as in England the ‘application test’ applies and that an order for the striking out of an action for disclosing no reasonable cause of action under Order 18 rule 19 has always been regarded as interlocutory.  See the determination of the Appeal Committee of the Court of Final Appeal (Litton ACJ, Ching and Bokhary PJJ) in Wai Hung Stationary Co & others vHKSAR & others [1998] 2 HKC 229 at 231F-G and (Li CJ, Bokhary and Chan PJJ) in B+B Construction Ltd v Sun Alliance and London Insurance PLC [2001] 1 HKLRD 1 at 4E-F where it was explained that the reason why a striking out order was interlocutory was because such an order would not have the effect of finally disposing of the cause or matter if the outcome was in favour of one party and not the other.  I do not read the later decision of the Court of Final Appeal in Shell Hong Kong Ltd v Yeung Wai Man [2003] 3 HKLRD 62 (which concerned Order 14A) as in any way departing from or jettisoning the ‘application approach’, at any rate, so far as summary judgment and strikeout applications are concerned.

7.  For these reasons, I consider that the plaintiff is not entitled to appeal to the Court of Final Appeal under section 22(1)(a) of the Court of Final Appeal Ordinance.

Questions of great general or public importance

8.  Two such questions are said to arise:

“1. Whether in every re-measurement construction contract the description of items in the Bills of Quantities is, by its inherent nature, subject to the provisions of the Standard Method of Measurement (“the SMM”) and/or the “Special Method of Measurement” commonly called “the Particular Preamble to the Bills of Quantities” (“the Particular Preamble”) such that description of any item in the Bills of Quantities is not capable of ‘overriding’ the provisions of the SMM and/or the Particular Preamble.

2 What is the proper meaning to be attributed to the use of the word “min” (being short for “minimum”) as widely used in commercial contracts and/or documents in particular in the construction industry such as in the drawings and/or in the present case in a description of work in the Bills of Quantities, for example as in the current relevant contract in the descriptive phrase “extra over 1500mm diameter vertical pile shaft for toeing-in to bedrock, 1.5m in depth (min.)”:

(1)    does it mean that the risk, and the attendant expense, of the work identified as goes beyond the minimum specified has been placed upon the contractor or other performing party, such that contractors or other performing parties shall have to consider the risk introduced by the used word “min” (which meaning, it will be submitted, is not the proper construction of the contractual provisions as a whole, is contrary to the current practice of the construction industry, and lacks commercial sense)?; or

(2)    does it mean (in such a context) a description of one of the requirements of the work to be performed in that work performed to anything less than the stated “min” or minimum would not be acceptable, such that the contractor has the obligation to demonstrate that it has achieved the “min”, such as here (by way of example only) the minimum toeing-in required, but that work required to be performed beyond the stated minimum will fall to be accounted for and/or recompensed in accordance with the re-measurement provisions of the contract?; or

(3)    does it mean that the word “min” is nothing more than a mere description of one of the requirements of the work to be performed by the contractor or other performing party?”

BQ descriptions, SMM and Particular Preamble

9.  So far as the first question is concerned, Mr Coleman SC who appeared for the plaintiffs submitted that the effect of the judgment is that in a re-measurement construction contract a [Bill of Quantities (“BQ”)] description can override provisions of the SMM and/or the Particular Preamble and whenever a BQ description does not follow the SMM, the BQ description can override SMM.

10.  The premise of the submission was that the judgment of this court laid down general principles of construction involving the interrelationship of BQ descriptions, SMM and Particular Preamble.  On any fair reading of the judgment, I do not consider that one could reasonably arrive at that conclusion.  This court was construing a particular contract relating to the project in question.  Special condition 1(j) was of central importance in the interpretation of the subcontract entered into by the parties.  I cannot see that the proper interpretation of this subcontract can be said to be of general application to other contracts unless they be identical in all material respects.  The subcontract in question was tailor-made and it is misleading and simply wrong to suggest that it was in any way ‘standard form’.

11.  It would appear that Mr Coleman also considered that the judgment supported the following propositions:

“If there is any item in the BQs not drafted or prepared in accordance with the SMM and, unless there is any specific provision dealing with the same in the Particular Preamble of the relevant contract, the BQ item is said to have an error or omission.  Whenever there is error or omission contained in any BQ item, it shall be corrected in accordance with the relevant provisions of the SMM (or any overriding provisions in the Particular Preamble of that contract).”

12.  Again, that submission has no valid basis.  In the subcontract under consideration, the effect of special condition 1(j) when read together with item 4 in BQs 5 and 10 is that the SMM provisions are not followed with regard to extra over for toeing-in into bedrock.  That was not dependent on there being any Particular Preamble.  Mr Coleman’s first proposition is accordingly incorrect.  As to his second proposition, quite simply, whether and, if so, how any “error or omission” is to be addressed must again depend on the terms of the particular contract.

Interpretation of ‘min’

13.  This court dealt with the significance of the drawings provided to all tenderers before the tenders were submitted and, in particular, of notes 6 to 8 in paragraphs 8 to 9 of its judgment.  It is against that factual matrix and the terms of the subcontract that the expression “1.5m in depth (min)” was construed.

14.  The plaintiff relies, inter alia, on an article appearing in the Surveyor’s Times by JB Molloy of James R. Knowles (Hong Kong) Limited.  Ironically, it transpires that in 1995, Mr Molloy had rendered advice on the effect of the subcontract to the defendant and came to a view that is entirely consistent with what this court has held, namely, that the phrase “1.5m in depth (min)” in the BQs meant that the risk of a greater depth of toeing-in fell on the subcontractor.  This necessarily undermines his more recent views as expressed in the Surveyor’s Times which, in any event, were based on the Government Standard Form of Civil Engineering Contract rather than the subcontract.

15.  I do not doubt that the manner in which the subcontract has been construed by this court is of a matter of importance to the plaintiff but that cannot be transmuted into a matter of great general or public importance.

Hon Chu J:

16.  I agree.