Read the full judgment text of HCCT000001/1992 on BabelCite. This HIGH COURT judgment was delivered on 22 December 1992 before The Hon. Mr. Justice Kaplan.
Construction Law—Nominated Sub-contractors—Entitlement to payment for loss and expense caused by delay—Relationship to Main Contract—Extensions of time granted to Main Contractor and Sub-contractors—Whether terms of Main Contract incorporated into Sub-contracts—Implied terms—Whether Main Contractor in breach of Sub-contract—Declarations sought regarding recoverability of delay costs. The case concerns a complex hospital construction project in Hong Kong involving a Main Contract between Shimizu Corporation and the Hong Kong Government and multiple Sub-contracts with nominated contractors for specialist trades. Delays were granted extensions of time under the Main Contract to the Defendant, but Plaintiffs claim compensation for loss and expense resulting from the delays. The court examined the construction of contracts, the incorporation of Main Contract terms into Sub-contracts, and implications of terms necessary for business efficacy. Applying established legal principles (B.P. Refinery, The Moorcock, Wells, Mackay v Dick), the court declined to read into the Sub-contracts terms granting Sub-contractors equivalent rights to the Main Contractor's loss and expense claims (Implied Terms B and D), and refused broad incorporation or strained construction to fill gaps. Instead, the court found an implied term (Implied Term E) preventing the Main Contractor from hindering or preventing the Sub-contractor from carrying out works in accordance with the Sub-contract, breach of which permits damages for loss and expense. Extensions of time do not preclude damages claims. The court granted declarations based on breach of implied term E and the principle in Wells, allowing Sub-contractors to claim damages for loss and expense caused by delay due to the Defendant's breach, protecting the allocation of financial risk between parties and the Government. Declarations were refused based on construction and incorporation arguments and other implied terms considered unnecessary to imply. The judgment clarifies the contractual relationship and remedies between Main Contractors and Nominated Sub-contractors in complex construction projects involving extensions of time and delay costs. Orders for declarations and costs to follow upon further submissions.
Legal issues: Whether Sub-contractor can claim loss and expense in addition to extensions of time · Implication of terms relating to Sub-contractor's rights to loss and expense · Whether Implied Term E should be enforced to compensate Sub-contractors · Whether the court should adopt construction or incorporation to fill lacunae in contract
Outcome: Declarations granted based on breach of implied term E and Wells principle; declarations based on construction, incorporation and implied terms B and D refused except for Implied Term E; declaration 7(d) refused for lack of agreed facts.