Read the full judgment text of HCCT90/1999 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 18 April 2002 before Ms Recorder G. Li, SC.
Construction and arbitration proceedings concerning a subcontract for electrical works between WENDEN ENGINEERING SERVICE COMPANY LIMITED (plaintiff) and LEE SHING YUE CONSTRUCTION COMPANY LIMITED (defendant). The plaintiff subcontracted works under government term contracts at discounted rates and sought contractual reimbursement for loss under clause 2(c) of the subcontract agreement dated 31 August 1998. The issues included the proper construction of clause 2 concerning reimbursement obligations, the timing and condition precedent of payment, the existence of implied terms limiting reimbursement upon subcontracting, whether the plaintiff’s claim was premature pending final account certification, and whether the defendant was entitled to withhold certification and payment. The Court held that the obligation to compensate for loss was conditional upon reasonable certification by the Main Contractor, and payment on a back-to-back basis was not unqualified or unconditional. No implied term disentitling reimbursement upon subcontracting was found. The claim was not premature as loss could be ascertained prior to final account, particularly given the plaintiff’s sub-subcontracting arrangements ensuring loss. The defendant was not entitled to refuse to certify or pay reimbursement given the evidence and conduct. Judgment was given to the plaintiff for $14,320,353.00 with outstanding sums to be assessed by a Master. Costs were awarded to the plaintiff. The decision clarifies contractual interpretation in construction subcontracts relating to reimbursement for losses, the function and timing of certification of loss, and the interplay between subcontractor arrangements and main contract payments.
Legal issues: Construction of clause 2 of the Agreement regarding reimbursement · Prematurity of plaintiff's claim due to ascertainment of total price · Whether the defendant could refuse certification and payment of reimbursement
Outcome: Plaintiff is entitled to judgment for $14,320,353.00 with outstanding balance to be assessed by a Master; plaintiff is entitled to costs.