Chun Wo Building Construction Ltd v. Metta Resources Ltd

HCCT 29/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 29 OF 2013

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D E C I S I O N

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1.There are 3 issues to be determined.  Firstly, there are disagreements over the pre-judgment interest start dates.  The differences between the parties have been helpfully set out in a table in para 3 of Chun Wo’s[1] skeleton argument. 

2.In respect of the “VO claims by amendment”, I agree with Metta’s submission that it was not in a position to consider those claims before they were properly made by way of re-amendment to Chun Wo’s pleading on 16 December 2015.  The pre-judgment interest for these claims, in the total sum of HK$3,952,395.43, should run from that date.   

3.As regards the award for “design input” of HK$3,000,000, I am also persuaded by Metta’s argument that the claim was fraught with difficulties.  The quantification put forward at the trial was no better than a “guesstimate”, which was reduced substantially by the court.  The burden was on Chun Wo to make a proper claim for the design input, without which it is difficult to see that it has been unjustly kept out of the HK$3,000,000.  There should be no pre-judgment interest for this award. 

4.The disputes concerning IPC 28 and 29 can be dealt with together.  They were due respectively on 18 May and 6 June 2013. Chun Wo asks for pre-judgment interest to run from the due dates.  The only argument of substance advanced by Metta concerns its entitlement to LD, which was upheld by the court at HK$9,700,000.  There was a Certificate of Non-completion issued by HYA in respect of MS-1 on 2 May 2012.  I agree with Metta that it should be entitled to the HK$9,700,000 on 29 August 2012 at the latest, which was the actual completion of MS-1.  However, Metta’s evidence was that at the material times it had made a decision not to make any deduction to the interim payments to Chun Wo on account of the LD. 

5.I am persuaded by Mr Clayton SC, appearing for Chun Wo with Mr Wong, that in light of the finding by the court that the contractual machinery had broken down due to the interference by Metta, the court ought not look behind the certificates.  It can be said, Mr Clayton suggested, that Chun Wo’s payment entitlement was seriously under certified, and the abeyance of the LD claim should be viewed in that light.  

6.In the premises, I agree that the pre-judgment interest for both IPC 28 and 29 should run from their respective due date. 

7.For completeness, I do not believe that the diminution of contract sum due to defective work is relevant because it only arose from ERI-MC-897 which was issued on 2 July 2013.  Further, I do not believe that the diminution should attract interest because it went to set off part of the contract sum which Chun Wo would otherwise be entitled.  In so far as the contra charges are concerned, the total sum is relatively small. 

8.The 2^nd issue concerns the appropriate costs order for the action.  First of all, as pointed out by Mr Chan, appearing for Metta, the defective work issues had to be ventilated for purposes of the diminution of contract sum on which Metta had succeeded. Whilst the clarity of the pleadings on the diminution claim can be criticised, it was clearly an issue set out in para 33 of the List of Factual Issues.  Chun Wo did not accept its liability over the defects, and the matters had to be litigated in the course of the trial. 

9.The trial was a particularly difficulty one for reasons already set out in the Judgment dated 19 August 2016 (Judgment).  The court did not agree with the conduct of this action by either side.  Both sides had failed on many of their contentions.  In the circumstances of this case, I see no sufficient reason to adopt for the present purpose the approach where a costs order is made on the basis that some of the issues were fought and lost. 

10.That said, however, it is right that Metta had only succeeded in an alternative claim on the defects and the extent of success was, in monetary terms, roughly 20% of its defect claim. 

11.In the premises, it would not be right to simply allow Metta the costs of its Counterclaim.  Bearing in mind the issues litigated at the trial and adopting a reasonably broad brush approach, I award Chun Wo 70% of its costs of this action to be taxed if not agreed, and I make no costs order in respect of the Counterclaim.  Such an order would reflect the fact that Chun Wo is the overall winner and that Metta had won on the diminution issue. 

12.On the question of certificate for counsel, the complexity of this case was such that at least 3 counsel was justified.  I do not believe that having 4 was unreasonable.  Indeed, both sides were represented by 4 counsel.  I grant a certificate for 4 counsel.

13.Finally, there are arguments over the of delivery of the off-site materials the payment for which formed part of the judgement obtained by Chun Wo.  Chun Wo insists that the delivery has to be paid for, whereas Metta says that it should have been included in the payment for such materials.  I have to say that I see some force in Metta’s contention in so far as delivery to Site is concerned. 

14.However, the trial had been concluded.  The only outstanding issues are interest, costs and certain calculations (see paras 390-391 of the Judgment).  There is no pleading in relation to the delivery charges.  I fail to see the basis on which the court is asked to adjudicate on this dispute, and I decline to do so. 

15.I shall hear the parties on the costs of this hearing.

Mr Peter Clayton SC and Mr Jonathan Wong, instructed by J Chan, Yip, So & Partners, for the Plaintiff

Mr Anthony HK Chan, instructed by Hogan Lovells, for the Defendant