Pacific Construction Ltd v. Sunnic Engineering Ltd

HCA 428/2024
HCA 491/2024
HCCT 42/2025
(dealt with together)

[2025] HKCFI 2394

HCA 428/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 428 OF 2024

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____________________

AND

HCA 491/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 491 OF 2024

____________________

____________________

AND

HCCT 42/2025

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 42 OF 2025

(transferred from HCA 1420/2024)

____________________

(dealt with together)

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D E C I S I O N

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Introduction

1.I have before me three actions, namely HCA 428/2024 (“428 Action”), HCA 491/2024 (“491 Action”), and HCCT 42/2025 (“42 Action”) (collectively, the “Actions”). Briefly, the parties involved and their respective roles in the Actions are as follows:

(1)  Pacific Construction Limited (太平洋建築有限公司) (“Pacific”) is the Plaintiff in the 428 Action and the 3^rd Defendant in the 491 Action.

(2)  Sunnic Engineering Limited (實力工程有限公司) (“Sunnic”) is the Defendant in the 428 Action, the Plaintiff in the 491 Action, and the Defendant in the 42 Action.

(3)  Judea Construction Company Limited (進強建築有限公司) (“Judea”) is the 1^st Third Party in the 428 Action and the Plaintiff in the 42 Action.

(4)  Ng Sui Keung (吳瑞強) (“Ng”) is the 2^nd Third Party in the 428 Action and the 1^st Defendant in the 491 Action.

(5)  Yip Tat Wing (葉達榮) (“Yip”) is the 2^nd Defendant in the 491 Action.

2.Upon the applications made by Sunnic on 19 August 2024, Master Maurice Lam made an Order on 4 September 2024 for, inter alia, the 428 Action and 491 Action to be tried together, including the third parties proceedings therein, before the same Judge, or one after another, or any issues in dispute in whatever sequence as the Trial Judge may deem fit, and for evidence to be deemed mutually admissible (“4 September Order”).

3.Subsequently, on 17 February 2025 by way of Summons, Judea and Ng also sought for the 42 Action to be “tried together with the 428 Action (including the third parties proceedings therein) and the 491 Action before the same Judge, or one after another, or any issue in dispute in whatever sequence as the Trial Judge may deem fit”, and for the evidence to be deemed mutually admissible (the “Hearing Together Summons”). The Hearing Together Summons was opposed, and the matter was directed for paper disposal by this court, with submissions served in April and May 2025.

4.Upon directions from this Court dated 19 May 2025, further submissions were filed by the parties to elaborate on the precise directions sought for the disposal of the Actions.

Background of the Actions

5.The project in which the parties were concerned relates to a tender offered by the Architectural Services Department (“ASD”) of Contract No SS H511 – for construction of a Community Hall-cum-Home Affairs Enquiry Centre in Cheung Chau (“Project”). Sunnic’s tender offer was eventually accepted by the ASD on 18 May 2021, and was engaged as the Main Contractor of the Project. The final lump sum price of the Main Contract between ASD and Sunnic was HK$146,079,335.

6.On or around 18 May 2021, by a letter of agreement, Sunnic sub-contracted the management of the Project to Judea (“Management Sub-Contract”) for a lump sum fee based on the Main Contract price. Ng was appointed as a Project Manager under the Management Sub-Contract, and was responsible for liaising with ASD as a representative of Sunnic, and for supervising the contractors on the site. The full extent of the parties’ respective responsibilities under the Management Sub-Contract is the matter of contention in the 42 Action.

7.Also on 18 May 2021, Ng provided a personal guarantee to Sunnic, guaranteeing the performance of Judea’s duties and obligations under the Management Sub-Contract.

8.Sunnic as Main Contractor then sub-contracted the land piling works of the Project to Pacific, via a letter of agreement signed between the parties on 13 August 2021 for a lump sum of HK$5,514,250 (the “Land Piling Sub-Contract”). The Land Piling Sub-Contract was signed by Mr Ip Kwok Lam on behalf of Sunnic, and by Yip on behalf of Pacific.

9.Disputes arose and the Writs for the 428 Action, 491 Action and 42 Action were issued on 7 March 2024, 15 March 2024 and 18 July 2024 respectively. Notably, on 6 February 2025, a mediation session was held for the Actions collectively, but it ended without agreement between the parties.

HCA 428/2024

10.In gist, the following claims and counterclaims are made by Pacific and Sunnic.

11.Pacific claims against Sunnic for outstanding sums based on the following alleged agreements:

(1)  The parties allegedly agreed on the final account of the Land Piling Sub-Contract to be HK$6,049,107 (the “Final Account”), giving an amount of HK$3,414,107 being due to Pacific after deducting the previously received payments. The Final Account was signed by Ng, and according to Pacific, Ng had the authority to bind Sunnic in this regard.

(2)  In about January 2023, there was an alleged oral agreement between Pacific and Sunnic for Pacific to carry out certain pipe pile works, which oral agreement was negotiated and agreed between Ng and Yip (“Pipe Pile Agreement”). Pacific claims that Ng had the authority to bind Sunnic in relation to the purported Pile Pipe Agreement, and further claims that an outstanding sum of HK$1,679,340 is due from Sunnic for works carried out by Pacific under the Pile Pipe Agreement.

(3)  In or about June 2022, there was an alleged written agreement between Pacific and Sunnic, for Sunnic to hire a crane from Pacific for a monthly hiring fee of HK$110,000 (inclusive of operator) for use at the Project site, which agreement was allegedly made between and signed by Ng and Yip (“Crane Hire Agreement”). The total outstanding hiring fees under the purported Crane Hire Agreement are HK$930,077, and Pacific claims that Ng had the authority to bind Sunnic in relation to the Crane Hire Agreement.

The Final Account, the Pipe Pile Agreement and the Crane Hire Agreement are referred to collectively as the “Purported Agreements”.

12.It is Sunnic’s Defence that Ng was not authorized by Sunnic to agree to or sign the Purported Agreements, and that as a result, Sunnic is not liable to make the above payments sought by Pacific.

13.Furthermore, Sunnic counterclaims against Pacific for breach of the Land Piling Sub-Contract by claiming that Pacific had (inter alia) failed to proceed with the works diligently, and by causing delay in the completion of works. Sunnic alleges that as a result, it suffered losses and damages which are to be assessed. On its part, Pacific claims that it was Sunnic which had delayed the carrying out of the relevant works under the Land Piling Sub-Contract.

14.On 28 March 2024, Sunnic served Third Party Notices on Judea and Ng, seeking indemnity.

(1)  As against Judea, Sunnic claims that:

i.    Judea had allegedly undertaken that it would indemnify Sunnic against any claims, losses and damages arising from and in connection with any non-compliance of the Land Piling Sub-Contract made between Pacific and Sunnic.

ii.   As Sunnic had paid Judea a total sum of HK$6,771,150.82 for the purposes of making payment to Pacific for the work done under the Land Piling Sub-Contract, Sunnic claims that Judea is in breach of the Management Sub-Contract in not paying Pacific in full for its work done. Alternatively, it claims that Judea is in breach of a common law duty owed to Sunnic to make payment to Pacific.

iii.  Sunnic is accordingly entitled to be indemnified by Judea for Pacific’s claims for the sum of HK$3,414,107 (or other amount found due) under or in relation to the Land Piling Sub-Contract.

(2)  As against Ng, Sunnic claims that:

i.    In the event that Ng is found by the Court to be an agent of Sunnic in regards to the Purported Agreements, Sunnic claims that Ng had exceeded his authority given by Sunnic to deal with Pacific, and is liable to Sunnic for damages arising out of his breach.

ii.   Further, in the event that Sunnic is liable to Pacific, Sunnic seeks an indemnity from Ng in respect of Pacific’s claims and the costs of this action, or for contribution from Ng with regard to Pacific’s claims for outstanding sums under the Purported Agreements.

15.On the basis of the pleadings filed in the 428 Action, the issues in dispute are (inter alia):

(1)  With regard to the Purported Agreements, whether Ng was authorized by Sunnic to negotiate and/or sign in a capacity which would bind Sunnic to the outstanding sums that Pacific is claiming;

(2)  The existence and/or validity of the Purported Agreements, in particular the Pipe Pile Agreement;

(3)  Whether there was breach of and delay in the execution of the Land Piling Sub-Contract, which led to delay in the completion of the Project; and if so, the party responsible for this delay and the damages resulting therefrom;

(4)  The scope of and the parties’ respective duties under the Management Sub-Contract, and in particular, the extent of performance and the authority of Judea and Ng under the Management Sub-Contract, and Ng’s liability as guarantor for Judea’s due performance.

HCA 491/2024

16.In the 491 Action, Sunnic claims against:

(1)  Ng for causing loss to Sunnic by unlawful means, as Ng’s signatures on the Purported Agreements are alleged to be unauthorized and amounted to forgery and are unlawful;

(2)  Ng, Yip and Pacific for conspiracy by unlawful means, that Ng and Yip had allegedly conspired to cause Sunnic to pay additional payments to Pacific as the beneficiary; and

(3)  Pacific for breaches of the Land Piling Sub-Contract, comprising (inter alia) Pacific’s failure to proceed with the works diligently and its delay in completion of the works under the Land Piling Sub-Contract.

17.On the face of the pleadings filed in the 491 Action, the issues in dispute, some of which overlap with 428 Action, are (inter alia):

(1)  With regard to the Purported Agreements, whether Ng was authorized by Sunnic to negotiate and/or sign in a capacity which would bind Sunnic to the outstanding sums that Pacific is claiming;

(2)  The existence and/or validity of each of the Purported Agreements, in particular the Pipe Pile Agreement;

(3)  Whether Ng intended to cause loss to Sunnic when the Purported Agreements were signed;

(4)  As to the conspiracy claim, whether Yip and Pacific were aware that Ng had no authorization to sign the Purported Agreements, and whether the alleged overt acts were sufficient for a conspiracy;

(5)  Whether there was breach of and delay in the completion of the Land Piling Sub-Contract which were attributable to Pacific, and whether the alleged damages were sustained by Sunnic.

HCCT 42/2025

18.For clarity, it should be noted that the 42 Action was previously listed as HCA 1420/2024, but was subsequently transferred to the Construction and Arbitration List.

19.In the 42 Action, Judea claims against Sunnic for:

(1)  Sunnic’s wrongful and repudiatory breach of the Management Sub-Contract (made between Sunnic and Judea) by unilaterally taking over the Project including the overall site management, supervision and coordination thereof; removing Ng as the Project Manager; and excluding Ng from the Project entirely.

(2)  Judea further claims that there were other wrongful and repudiatory breaches of the Management Sub-Contract on the part of Sunnic, by its failure to account for and make interim payments to Judea in accordance with the Management Sub-Contract.

(3)  It claims that as a result, it was entitled to terminate the Management Sub-Contract in November 2023.

(4)  Judea’s losses and damages sustained as a result of Sunnic’s repudiatory breach are said to include: (i) due and outstanding interim payments; (ii) set-up costs and expenditures incurred for the Project; (iii) prolongation costs sustained as a result of delay in the completion of the Project; (iv) costs for additional works; and (v) loss of profit.

20.By way of counterclaim, Sunnic claims in the 42 Action that it was Judea which was in repudiatory breach of the Management Sub-Contract, as it had delayed the appointment of subcontractors and suppliers of materials, and delayed preparation of submissions for ASD approval for works, and had further signed documents in Sunnic’s name without authority. Sunnic denies that it had excluded Ng or Judea from the management of the Project, and that it had only become involved to assist Ng and Judea when they failed to perform their duties. Sunnic claims that it is entitled to damages from Judea as it had incurred costs in doing Judea’s work when it failed in performance, and denies that Judea is entitled to any prolongation costs as claimed since these were occasioned by Judea’s own failure or delay in the performance of its duties under the Management Sub-Contract.

21.As each of Judea and Sunnic alleges the other to be in repudiatory breach of the Management Sub-Contract, the main document of relevance is the Management Sub-Contract. To determine the party at breach, the Court will have to assess the parties’ acts and omissions in light of their agreed terms.

22.The relevant issues in dispute in the 42 Action include, inter alia:

(1)  The construction of the Management Sub-Contract and the scope of the parties’ duties thereunder;

(2)  Whether Sunnic did unilaterally take over the management, supervision, and co-ordination of the Project, as alleged, to the effect that it excluded Judea’s participation in the Project;

(3)  Whether Sunnic was in repudiatory breach of the Management Sub-Contract;

(4)  Whether Judea neglected performance of and/or was in breach of its contractual duties under the Management Sub-Contract;

(5)  The state of the final account of the Project, as Judea claims that Sunnic failed to pay Judea’s fees which were based on the Main Contract sum, and was on back-to-back certification basis under the Main Contract. This includes consideration of the state of the Final Account for Pacific’s works under the Land Piling Sub-Contract (at least).

Discussion

23.It is trite, that the Court has a wide and unfettered discretion under Order 4 rule 9 RHC to order two or more causes or matters to be tried at the same time, or one immediately after the other, or to order any of them to be stayed until after the determination of any other of them. The Court must be satisfied that it would be proper and expedient to make such an order having regard to all the relevant circumstances (Chan Shing Lam v Winscore International Ltd [2021] HKCFI 3563 at §12). Para 4/9/7, Hong Kong Civil Procedure 2025 states:

“Depending on the order the Court has made under O4 r9(1), tailored Court directions should be given to give effect to the order for the purpose of an expeditious and fair trial. Examples include for a true consolidation, directions should be given on preparation of consolidated pleadings or on which set of pleadings should be used. If two actions are to be tried together or one after another before the same judge, they remain to be two separate actions, which should include directions that the evidence of these two actions are to be mutually admissible or on the order of trial or any consequential directions. Inappropriate directions will not save costs and time for the trial. Quite the contrary, the proceedings will be unduly lengthened and time and costs will be wasted (Wong Yuen Shun Kwong Wah Hong Ltd v Siu Siu Kam (HCA 3205/2000 and 2159/2001, [2006] HKEC 617); Beckton International Ltd v Ooi Lean Choo (HCA 1945 and 2304/2014, [2017] HKEC 1660)).”

Tailored court directions should be issued to give effect to the Order, for the purpose of an expeditious and fair trial.

24.In deciding whether actions should be tried together, or one after another, some relevant considerations were set out in China Health Group Limited & Others v Li Zhong Yuan & Others [2021] HKCFI 3806 at §13:

“(3) Where there was “substantial overlapping of issues and parties” it was desirable that the disputes in the different actions to be resolved on one occasion and by the same judge.

(4) The question of whether actions should be tried together or one after another had to be approached from the perspective of case management rather than principles of law; the Court is primarily concerned with savings of time and costs, and also with the avoidance of unnecessary delay, undue complexity and overloading of issues. In considering “the practical implications of trying the actions together”, relevant factors include, inter alia, the additional time needed to address further issues, the adoption or admission of the evidence of witnesses in subsequent trials, the risk of losing reserved trial dates and the different stages the actions had reached before going to trial.” (Emphasis added)

25.Furthermore, in making case management decisions, the Court is primarily concerned with the saving of time and costs and also with the avoidance of unnecessary delay, complexity and overloading of issues and the inconvenience of having experts and witnesses repeating their evidence (Hong Kong Civil Procedure 2025, at para 4/9/2).

26.By the 4 September Order, the Master already ordered that the 428 Action and the 491 Action, including the third party proceedings therein, should be tried together, so there can be no dispute that he was satisfied that there are common issues arising in those proceedings.

27.In gist, Counsel for Judea and Ng submits that an order should be made for the 42 Action, in the same terms as the 4 September Order for the 428 Action and the 491 Action, as the Actions are all concerned with the same background and transactions and involve overlapping matters and issues, such that there will be a huge saving of time and costs, and inconsistent findings can be avoided. Counsel submits that the Actions all concern the same course of dealings arising out of the Management Sub-Contract and relate to a common issue on the final account of payments between Judea and Sunnic, such that there will be the same factual witnesses for Judea and Sunnic, including Ng and Mr Ip Kwok Lam of Sunnic.

28.In opposition, Counsel for Sunnic submits that (i) there are no common issues among the Actions, and only limited common parties and evidence; (ii) the Actions are at different procedural stages and the application for the Hearing Together Summons could have been made at an earlier time; and (iii) there would be no time and costs savings, rather, more time and costs would be incurred if the application is granted.

29.Bearing in mind the observations made in para 4/9/7 of Hong Kong Civil Procedure 2025, and the fact that there should be directions  aimed at the true saving of costs and time and an effective trial, the Court invited the parties and Judea and Ng, as the applicants in particular, to define the precise and particular directions which they consider can best achieve an economical and effective trial of the issues in dispute in the Actions, ie how the Actions should be tried together, whether there should be issues which should be dealt with first, the order of the calling of witness, and the order of submissions.

30.In response, Counsel for Judea and Ng only repeated that the Actions should be tried together before the same judge, that the evidence in the Actions should be mutually admissible, and that full access to pleadings should be given to all parties, who should submit an agreed set of case management directions. Alternatively, Judea and Ng seek simply an order that the Actions “be tried before the same judge and be heard at the same time or immediately one after the other as the trial judge may direct”.

31.At this stage when Judea and Ng seek the order for the Actions to be heard together, I consider that it is imperative on them to precisely formulate the directions to be sought, to demonstrate that it would be expedient to have the Actions tried together for the purpose of an expeditious, costs-saving and effective trial. In view of the many issues raised and the different parties involved in the Actions, there might be a waste of resources, time and costs if  the Actions were simply directed to be “heard together”, without further consideration of the issues which require determination together, and the witnesses who will be giving evidence on such common issues.

32.I have given due consideration to the argument made by Counsel for Sunnic in opposition to the application, that the 42 Action relates to the alleged breach and repudiation of the Management Sub-Contract only, to which only Sunnic and Judea are parties. Whether Sunnic had taken over the site and the management of the Project and excluded Judea’s role, allegedly in breach of the Management Sub-Contract whereby management had been delegated to Judea, and whether Judea had neglected its performance of its contractual duties to necessitate Sunnic’s involvement, are the main issues for determination in the 42 Action.

33.However, both Judea and Sunnic claim in the 42 Action that they are entitled to damages for the other’s breach, which breach includes the alleged delay in the completion of the Project. Sunnic claims that the delay was caused by Judea’s delay in appointing critical subcontractors and suppliers, and in preparing submissions for approval by ASD, all in breach of its duties under the Management Sub-Contract. Judea on its part claims that it is entitled to prolongation costs for the delay in completion of the Project, and that it had to carry out additional work as a result of the delay. These are the same issues of delay raised by Sunnic (1) by way of counterclaim against Pacific in the 428 Action; and (2) in Sunnic’s third party proceedings against Judea and Ng in the 428 Action; as well as (3) in the 491 Action against Pacific.

34.Factual evidence on the progress of Pacific’s works under the Land Piling Sub-Contract, when Pacific commenced works, and when the works under the Land Piling Sub-Contract and the Project were completed are all relevant to the claim of Judea having allegedly delayed its appointment of subcontractors and suppliers, and the impact of such delay on the progress of the Project. No doubt there will be expert evidence on delay, whether the delay was critical, the effect of such delay on the Project completion, and whether the delay was attributable to Pacific, and to Judea in its performance under the Management Sub-Contract.

35.The evidence in the 428 Action should also shed light on Judea’s performance under the Management Sub-Contract, and whether it had performed its duties thereunder. The state of the Final Account under the Land Piling Sub-Contract would also be relevant to the account between Sunnic and Judea as to the fees payable to Judea under the Management Sub-Contract, which is one of the issues to be determined in the 42 Action.

36.Therefore, although Sunnic sought to emphasize the fact that Pacific, Yip and Ng, who are parties in the 428 Action and the 491 Action, are not parties to the 42 Action, their factual evidence on progress and delay may well be relevant to the issues for determination in the 42 Action. Pacific and Yip are neutral as to whether the Actions should be tried together, or separately, or one after the other.

37.By virtue of the common issues arising in the 42 Action, having the Actions heard by the same judge, together or one after the other, would have the benefit of avoiding the risk of inconsistent findings on delay, and on damages as a result of delay. Time and costs can be saved if duplication in the hearing of such evidence can be avoided.

38.Although Counsel for Sunnic has pointed out that witness statements have already been served in the 428 Action and the 491 Action, it may be overly optimistic for Counsel to state that those actions are now ready to be set down for trial. Despite issues of delay having been raised in the pleadings filed in the 428 and 491 Actions, no directions have yet been made for expert evidence, and it is inconceivable that the Court can decide on the technical issues in dispute without the benefit of expert evidence. If an order is made for the Actions to be tried by the same judge, and heard together or one after the other, the parties and their legal representatives can give careful consideration to the issues raised in all the Actions, and apply for expert directions to deal with all the issues together, rather than to have separate experts in the Actions to deal with the same question of critical paths and delay in the Project. When all the issues in dispute are considered together, it is expected that Counsel for all the parties will be in a position to submit further directions as to the orders of the calling of factual and expert witnesses, the sequence of the issues to be heard, and can also decide on whether Counsel has to attend all the days when factual and expert witnesses are to be heard and cross-examined.

39.At this stage, taking a common-sense approach with the objective of expediency aimed at securing a manageable and effective trial in mind, and considering all the relevant circumstances, I am inclined to exercise this Court’s discretion to order the 42 Action to be heard by the same judge, after the witnesses and evidence have been heard in the 428 Action and the 491 Action, or after the issues in the 428 Action and the 491 Action (including the third party proceedings therein) have been disposed of - in such manner as the trial judge may deem fit, and subject to what the trial judge may direct otherwise at the pre-trial review. There will be a direction for the evidence to be deemed mutually admissible in the 42 Action, 428 Action and 491 Action.

40.Although the Hearing Together Summons was made 5 months after the Defence and Counterclaim was filed for the 42 Action, I do not consider this to be totally unreasonable or to be a hurdle, bearing in mind the parties’ continued efforts in negotiation (ie via mediation) in the interim months, and balancing this alleged delay with the interests of securing a cost- effective trial.

Conclusion

41.With the objective of ensuring effective case management, and viewing the overall circumstances, I make the directions set out in paragraph 39 above.

42.The costs of the application (including any costs reserved) will be in the cause.