Chung Fai Engineering Co Ltd v. Anpoint Engineering Ltd

HCCT 1/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO. 1 OF 2004

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BETWEEN

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Before: Deputy High Court Judge To in Court

Dates of Hearing: 12-16 December 2005

Date of Judgment: 14 March 2006

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J U D G M E N T

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introduction

Background

1.This is an action for breach of contract brought by a sub-sub-contractor (“the Plaintiff”) against its superior sub-contractor, Anpoint Engineering Limited (“Anpoint”) for costs of work done in four building projects, of which W Hing Construction Company Limited was the principal contractor and Anpoint was its sub-contractor.  Both Anpoint and W Hing are subsidiaries of a public company CIG listed on the Hong Kong Stock Exchange.  The Plaintiff is a small incorporated company carrying on engineering business employing less than ten staff. 

2.The Plaintiff is claiming a total sum of $1,649,899.90 of which $108,750 was for balance of contract fee due under a building project at St Thomas Apostle Church at Tsing Yi (the “Church Project”) and the remaining amount of $1,541,149.90 were costs of variation works under the Church Project and three other building projects in Tseung Kwan O, namely: an industrial building (the “Industrial Building Project”), the HOHCS Woo Ping Memorial Care and Attention Home (the “C&A Home Project”) and the Yan Hing Engineering Building (the “Yan Hing Project”).  Anpoint admits liability for the outstanding contract fee due under the Church Project but puts up a counterclaim for defective work in the same project in the amount of $270,690.  In respect of the Plaintiff’s claim for variation works, Anpoint has not filed any specific defence but puts the Plaintiff to strict proof.

3.The four projects were completed in 1998/1999, though it is now disputed whether the rectification work in respect of the Church Project were completed.  Mr William Lee of Anpoint and Mr K F Chan of the Plaintiff nevertheless went into a protracted final account negotiation from 2000 through to 2001.  They last met on 4 October 2001 during which Mr Chan thought they had reached agreement on the final accounts of the four projects in the total sum of $1,358,956.40.  He wrote a letter dated 6 October 2001 to Anpoint seeking Anpoint’s confirmation.  However, Anpoint replied on 15 October 2001 that the discussion between Mr Lee and Mr Chan was on the quantities of works only and that the final accounts had still to be agreed.  In his evidence in Court, Mr Lee reiterated that the negotiations were limited to discussions on quantities of works only.  But, according to his evidence, not a single item of difference in quantities between him and Mr Chan was ever resolved.  It is obvious that the protracted discussion was but Anpoint’s design to delay settling the final accounts with the Plaintiff.

4.The issues raised in this case are, firstly, in relation to all variation works, whether the alleged variation works had been duly authorized, executed and the value of the variation works and, secondly, in relation to the Church Project whether the defective work had been rectified by the Plaintiff, and if not, Anpoint’s costs in carrying out the remedial work.  These are all factual issues which have to be resolved on experts’ evidence and on the credibility of the parties’ witnesses.

Credibility

5.The Plaintiff called one factual witness, Mr K F Chan who is a director and project manager of the Plaintiff in respect of the four projects.  Anpoint called two factual witnesses, Mr William Lee and Mr So Chi Kong.  Mr Lee was Anpoint’s project manager responsible for the four projects.  When he joined Anpoint in May 1998, the four projects had been completed except for the remedial work in respect of the Church Project.  However, he was involved in discussing the final accounts of the four projects with Mr Chan.  He reported directly to the directors of Anpoint in respect of the four projects.  Mr So is a project director of Anpoint and Mr Lee’s supervising officer but he was not involved in the four projects at all as he joined Anpoint in January 2000 after the four projects had been completed by the Plaintiff.  Obviously, Mr So’s evidence has little, if any, bearing on the matters in dispute.  The major dispute on the evidence is between Mr Chan on behalf of the Plaintiff and Mr Lee on behalf of Anpoint.

6.A peculiar feature in this case is the lack of project documentation from the parties, such as specifications and drawings, architects’ instructions, the final accounts prepared by the project consultants etc, which could have assisted Anpoint and the Court in determining if the variation works had been properly authorised and in assessing their quantities and value.  According to Anpoint, the project documents were lost when moving its office.  Hence, Anpoint took the peculiar position of putting the Plaintiff to strict proof without admitting liability for any of the variation works.  The Plaintiff had to proof its case based on the limited project documents in its possession.  Although the Plaintiff had made various attempts to retrieve the relevant information from the architects, quantity surveyors and employers of the four projects, those attempts failed because of W Hing’s refusal to cooperate.  However, in the course of discovery, when Anpoint was asked to produce project documents which could have helped to establish the extent of variation works, Anpoint only adduced those which could further its counterclaim for defects but not those which could support the variation works on the excuse that the project documents had been lost due to lapse of time and the removal of its office. 

7.According to Mr Lee, he was not aware of the loss of the project documents until he read the affirmation of one of his engineers produced in the course of discovery in November 2002.  His allegation was surprising.  He was the project manager and the man in charge of the four projects.  If discovery was required, he must be the one to be consulted for production of documents.  Yet, his evidence was when litigation was at the doorsteps and discovery was called for, he was by-passed and an engineer filed an affirmation averring that the project documents were lost without prior consultation with him or without his prior knowledge.  Furthermore, under cross-examination, he said that the documents were kept in his office and he had access to the project documentation when dealing with the final accounts of the Plaintiff and when he prepared records of quantities in 2000/01 and had a final discussion with Mr Chan in October 2001.  He refused to pin point the time when he first became aware of the loss of the project documentation. The Plaintiff’s action was commenced in December 2001.  Mr Lee must have known about the pending litigation and the importance of preserving the project documents.  His answer was unconvincing as though he had something to hide.  On the other hand, according to Mr So, it was Mr Lee who informed him about the loss of the project documents.  This cast more doubts on the veracity of Mr Lee’s evidence.  The loss of project documents is inexplicable in view of the pending litigation. Even if the documentation had been lost, Anpoint could have easy access to the copies kept by W Hing because apart from being Anpoint’s principal contractor, W Hing was an associated company of Anpoint sharing the same office and some common staff including Mr Lee himself.  In addition, Anpoint could also have obtained copies from the project consultants through W Hing.  Anpoint could have no difficulties in determining the Plaintiff’s claims without resorting to litigation and could have put forward a positive case instead of putting the Plaintiff to strict proof.  The persistence by Anpoint and W Hing in such uncooperative attitude in discovery, Anpoint’s selective discovery of documents which support its counterclaim, Anpoint’s failure to put forward a positive defence under circumstances when it could have done so with relative ease and the evasiveness of Mr Lee about the loss of documentation enable me to draw the adverse inference against Anpoint that it was concealing the truth and Mr Lee was instrumental to that design: see Tullett & Tokyo International Securities Ltd and APC Securities Company Ltd [2001] 2 HKLRD 356 at 365-366, per Le Pichon JA.

8.As between Mr Chan of the Plaintiff and Mr Lee of the Defendant, I consider Mr Chan forthcoming and frank, while Mr Lee evasive and inconsistent.  Mr Lee prepared records of quantities in 2000/01 and had a final discussion with Mr Chan in October 2001 while litigation was commenced in December 2001.  Yet he could have allowed such important project documents to go astray and refused to answer even when he first became aware of the loss of documentation.  While he asserted in his witness statement that the new defect lists in respect of the Church Project dated 17 April 2001 had been immediately forwarded to the Plaintiff and that he had also given telephone calls to Mr Chan about the same, he said in his evidence under cross-examination that he did not know if his colleagues and sub-ordinates had sent the defect list to the Plaintiff or not.  On the contrary, on the defect list was a written instruction to the project manager of W Hing to keep the defect list confidential to the Plaintiff.  Furthermore, Mr Lee own handwritten remarks on a number of payment certificates of W Hing also betrayed him.  He recommended payment of a number of vouchers on the basis that they were for additional works caused by lack of maintenance which the employer had agreed to pay.  Now he and Anpoint turned around and alleged that these were not additional works but remedial work caused by the Plaintiff’s defective work which the Plaintiff refused to rectify despite repeated reminders.  Mr Lee’s evidence is utterly inconsistent with the contemporaneous documents.  This casts serious doubt on the credibility of Mr Lee and the bona fides of the defence.  Another example of his incredibility is that while he asserted under cross-examination that he would not be permitted to see payment documents by W Hing’s project manager, his recommendation on W Hing’s payment certificates show that he was a common staff of W Hing and Anpoint that he had authority to recommend payment.  I consider Mr Lee incredible.  Where his evidence differs from that of Mr Chan’s, I prefer Mr Chan’s evidence and reject Mr Lee’s.

The experts’ evidence and the approach to the experts’ evidence

9.One expert witness was called by each party to the dispute.  The two experts were able to reach substantial agreement as to the costs of the variation works in issue.  They were also able to reach a fair amount of agreement as to which of the alleged variation works executed by the Plaintiff had been properly authorised by Anpoint or W Hing.  

10.There were altogether forty-eight items of works involved in this claim.  These could be categorised into six categories as follows:

Category A -  The experts agreed that instruction had been issued for the works, that the works were executed and the quantities and value of the works.

Category B - The experts agreed that instruction had been issued for the works, but were unable to agree to the quantities and value of the works.

Category C - The experts agreed that instruction had been issued for the works, but were unable to verify the scope or quantity because of insufficient information.  They were able to agree on the value of the works based on the quantities as pleaded by the Plaintiff.

Category D - The experts were unable to agree whether instruction had been issued for the works, but were able to agree on the quantities and value of the works.

Category E -  The experts were unable to agree whether instruction had been issued and could not verify the scope and quantities because of insufficient information.  They were able to agree on the value of the works based on the quantities as pleaded by the Plaintiff.

Category F -  The experts agreed that they were not able to determine whether instruction had been issued or they were not able to assess liability. 

11.In view of the substantial agreement between the experts, the dispute in this case lies within a very narrow compass which would have to be resolved on the basis of the credibility of Mr Chan and Mr Lee with the experts providing the evidence on quantum.  I shall take a broad brush approach when assessing the evidence and in making finding of fact.  For reasons as explained in Paragraphs 7 and 8 and my assessment of credibility of Mr Lee and Mr Chan, I shall resolve in favour of the Plaintiff on issues in respect of which the experts were unable to arrive at agreement due to lack of documentation by drawing adverse inference against Anpoint.  Where the experts could not agree on scope of work or quantities or the value of the works, I shall place reliance on the agreement reached between Mr Chan and Mr Lee in October 2001.

12.On the above categorisation, there was no dispute that the works under Categories A, B and C were all covered by instructions and were therefore variation works.  On the face of the architect’s instructions, they were expressly described as “Architect’s (Variation) Instruction”.  The Plaintiff is therefore entitled to claim payment under Clause (b) of the respective agreements in respect of the four projects.  Even if the additional works fell outside the scope of the four agreements, they were works requested by Anpoint, the Plaintiff is entitled to recover by way quantum meruit: see Keating on Building Contracts, 7^th Edn at paragraphs 4-24 and 4-25.

13.As for Categories D and E, the Plaintiff’s expert opined that there were sufficient project documentations adduced by the Plaintiff to show that these works were covered by instructions.  But Anpoint’s expert argued otherwise.  As for Category F, both experts agreed that they were unable to determine whether instructions were issued based on existing project documentation.  However, in their oral evidence, both experts agreed that if the main contracts including specification and drawings; the architect’s instructions and the final accounts prepared by the project consultants were available, the ambiguities could be resolved.  This is the type of case the Court is entitled to take a broad brush approach and draw adverse inference against Anpoint for its failure to produce project documentation.   In addition, there are three additional reasons which justify the drawing of that inference.  Firstly, the majority of the works which fall within these categories were variation works for the Church Project and it can be seen from the project architect’s letter dated 2 February 1999 that there was a practice of issuing verbal variation instructions instead of formal architect’s instructions.  Secondly, the sum of $830,689.88 assessed for mechanical ventilation and air conditioning installation (“MVAC”) works in W Hing’s Building Services Variation Summary for the C&A Home Project shows that the range of $513,648 to $660,729 assessed by the experts for all the Categories A to F works under that project is more or less correct.  Thirdly, the total sum assessed by the experts for all Categories A to F items in the range of $980,648.50 to $1,148,729.50 is also in line with the sums agreed between Mr Lee and Mr Chan on 4 October 2001.  Accordingly, I find as a fact that all the works claimed by the Plaintiff were covered by appropriate architect’s instructions and even if they were not within the scope of the contract, the Plaintiff is entitled to recover on a quantum meruit.  The outstanding issue is on the question of quantum, i.e. quantities and value of the works.

14.The experts were in agreement as to quantities and value of works in Category A and Category D.  They were also in agreement as to the value of the works in Category C and Category E based on the quantities pleaded by the Plaintiff.  Having made the finding that all the works were covered by instructions, the quantities and value of the works in Category D were effectively in the same category as those in Category A.   Taking the same broad brush approach and drawing adverse inference against Anpoint for its failure to produce project documentation and for the same reasons as those in the preceding paragraph, I draw the inference that the quantities as pleaded by the Plaintiff in respect of the works in Categories B, C, E and F were correct.  For these reasons, I consider the quantities and value of the works in Categories A, C, D, E and F were agreed between the experts.  But the quantities and value of the works in Category B were not agreed between the experts even on the basis that the quantities of the works in these categories are as pleaded by the Plaintiff.  The agreed value of the works in Category A was between $544,520 and $593,663, that in Category C was $112,673, that in Category D was $50,387, that in Category E was between $153,977.50 and $174,977.50 and that in Category F was $99,801. 

15.My task is to assess the precise value of the works in Categories A and E within the range as agreed between the experts and to assess the value of the works in Category B based on the evidence of the experts.

the industrial building project

16.The Plaintiff’s claim under this project was $288,558.90 in respect of ten items of works contained in eight variation quotations.  Five of the items were Category A works totalling $74,800, two were Category C works in the amount of $112,673, one was a Category D item in the amount of $5,800 and two were Category E works in the amount of $52,700.  The value of these works was not in dispute between the experts.  Accordingly, I award the Plaintiff the full amount of $245,973 under this project.

The Church Project

The Plaintiff’s claim

17.The Plaintiff claims twelve items of variation works in the amount of $269,293.  Anpoint sets up a counterclaim in an almost identical amount.  Three items were works under Category A in the amount of $18,500.  One item was in Category D and one in Category E in the amount of $4,250 and $94,277.50 respectively.  The remaining seven items were works in Category F in the total amount of $83,940.  The value of these items was agreed as between the experts.  The Plaintiff’s claim in respect of variation works is therefore revised down to $200,967.50.  In addition, the Plaintiff is entitled to be paid $108,750 being outstanding contract fee which is not in dispute.  Accordingly, I award the Plaintiff $309,717.50 against Anpoint.

The counterclaim

18.Apart from the value of Anpoint’s counterclaim, the Plaintiff’s liability remains to be determined.  The burden of proof must be on Anpoint.  Anpoint claims the costs of sixteen items of rectification work.  It is common ground that after completion of the works in the Church Project, the employer’s consultant in mechanical and electrical engineering, Richmond Consulting Engineers (“Richmond”) issued a defect list dated 7 June 2000 to the Plaintiff.  According to the Plaintiff, upon receipt of the defect list on 9 June 2000, it carried out a joint site inspection with staff of W Hing and identified the defects and duly rectified all the defects mentioned in the list by 30 June 2000.  The Plaintiff also reported completion of rectification work on 2 August 2000 and thereafter it heard no more complaint from Anpoint suggesting that the defects had been rectified to the satisfaction of Anpoint and the consultant.  On the other hand, it was Mr Lee’s evidence that the rectification work was never satisfactory, the automatic mechanism of the air conditioning system never worked and that the system had to be operated manually.  Mr Lee said he had made continuous complaints to the Plaintiff but his complaints were ignored.  Anpoint also relied on a defect list contained in Richmond’s letter dated 17 April 2001.  However, it is most curious that on that letter was a note addressed presumably to the project manager of W Hing, Mr Alan Chu, to “keep this as confidence to C Fai (i.e. the Plaintiff)”.  This supports the Plaintiff’s evidence that it never received any further complaint since reporting completion of rectification work on 2 August 2000.  It also explains why that defect list was not pleaded in the original Defence and Counterclaim filed on 28 December 2001.  There was no explanation from Anpoint why it wished to keep the complaint confidential to the Plaintiff.  Perhaps, the explanation lies in that at that stage, as admitted by Mr Lee under cross-examination, Anpoint and W Hing thought rightly or wrongly, that the works were not defective work but additional works for which they could have a claim against the employer and they wished to execute the ludicrous works to the exclusion of the Plaintiff.  This is borne out by Mr Lee’s own recommendations made on many of W Hing’s payment certificates that the works were additional works caused by lack of maintenance and the employer agreed to pay for the additional works.  On one of those certificates, Mr Lee wrote that the works were additional works to be paid for and he estimated that the employer would be charged $374,400 for the works at a cost of approximately $210,000 to $220,000 inclusive of labour and material.  Mr Lee insisted the rectification work had been carried out but suggested that for some reasons W Hing could not claim the costs of work from the employer.  However, Mr Lee’s evidence was not supported by any project document and his evidence was only based on what he heard from Mr Ken Lau, Anpoint’s quantity surveyor. 

19.The upshot of these incontrovertible evidence was that Anpoint’s counterclaim was nothing but a mala fide claim.  The evidence proved on a strong balance of probability that Anpoint had not informed the Plaintiff of Richmond’s defect list dated 17 April 2001, that Anpoint and W Hing never considered the so called defects as defective work requiring rectification but as additional works for which they can invoice the employer and they decided to exclude the Plaintiff from performing the additional works.  In view of the above, whether the works were defective were irrelevant as Anpoint had not required the Plaintiff to carry out any rectification work.  Even if the works were defective, Anpoint could not make any counterclaim against the Plaintiff.  On the evidence, Anpoint has not established any of the sixteen items of claim were expenses incurred by W Hing for rectifying the defects.  Though in view of the above conclusion it is not necessary for me to do so, I shall nevertheless deal with some of those claims to illustrate Anpoint’s lack of evidence in support of the counterclaim.

20.Item (1) – Richmond complained about defective insulation of refrigerant pipe.  W Hing’s certificate of payment was for replacing insulation of chilled water pipe, an obviously different item.  The certificate also included the costs of installing anti-solar cover for the refrigerant pipe.  Anti-solar cover is a form of protection as distinct from insulation.  It is a desirable item to be installed as it protects the insulation and improves the aesthetic appearance of the building but it was not an item included in Richmond’s defect list.  Without the support of project documentation, Anpoint has also failed to show that the Plaintiff was in breach of contractual obligation to install anti-solar cover for the refrigerant pipe.  The fact that Anpoint thought these were additional works supports the inference that the Plaintiff’s failure to install anti-solar cover was not a piece of defective work.

21.Items (11 and 12) – These are claims in relation to two invoices from Empro totalling $31,000 for rectification work on MCCB board which was related to electrical installation system but not MVAC system, only for which the Plaintiff was responsible.  Mr Lee admitted in evidence that he did not know whether the MCCB board was within the Plaintiff’s scope of work, yet he included it as an item of counterclaim.  This was so despite the opinion of the Plaintiff’s as well as Anpoint’s experts that the works were related to electrical installation system and had nothing to do with the MVAC part of Richmond’s defect list dated 7 June 2000.  According to W Hing’s payment certificate, the works were additional works.  This shows the mala fides of Anpoint’s counterclaim.

22.Item (5) – This is perhaps the strongest of Anpoint’s counterclaim.  The defect was the Plaintiff’s failure to provide voltmeter and ammeter to chiller plant control panel.  The defect first appeared in Richmond’s defect list dated 7 June 2000.  Mr Chan’s evidence was that he had subsequently installed the voltmeter and ammeter and reported completion via his letter of 2 August 2000.  A similar defect was quoted in Richmond’s defect list dated 17 April 2001.  In reliance of that defect list, Anpoint claims $11,500.  According to the Plaintiff’s expert, the reasonable cost was about one-third of the amount of claim.  He agreed that the defect referred to in Richmond’s defect list dated 7 June 2000 and that dated 17 April 2001 may be the same defect.  He also suggested that the chiller control panel may be a different panel.  The instructions on the defect list of 7 June 2000 were slightly different from those on the defect list of 17 April 2001.  The former requested “voltmeter and ammeter to be provided” while the latter requested “ammeter and voltmeter for chiller control panel shall be added” suggesting provision of an additional set of meters.  Thus, the Plaintiff’s expert’s opinion may well be correct as there were a number of chillers and compressors.  There may be a number of chiller plant control panels or Richmond may be requesting an additional set of meters for separate circuits within the same panel.  Given the unfavourable view I formed of Mr Lee’s credibility and Anpoint’s mala fides as a whole, I find that the Plaintiff had provided one set of meters to the chiller plant control panel as identified by H Wing’s staff during the joint site inspection and the request for additional set of meters had not been referred to the Plaintiff.  Anpoint bore the burden of proof.  In the absence of project documentation in support of Anpoint’s claim, I cannot be satisfied that Anpoint has established the Plaintiff’s liability to provide an additional set of meters or that the Plaintiff had not installed the set of meters which it was required to provide under the defect list of 7 June 2000.  The counterclaim also bears the hallmark of gross inflation.  It is unlikely that an experienced contractor in the field would have agreed to install the meters at three times what the expert considered as reasonable.  I reject the counterclaim as fictitious and grossly inflated.

23.Conclusion – For reasons as stated in Paragraph 19, there is no need for me to consider the remaining twelve items of counterclaim.  The counterclaim was made mala fide and was unsupported by evidence.  Accordingly, Anpoint’s counterclaim is dismissed.

the C&a Home Project

24.The Plaintiff’s claim is for $935,073 under twenty-two variation quotations and one revision of structural plan.  Fifteen of these twenty-three items of works are Category A works.  The experts agreed that the value of these fifteen items of works was in the range of between $438,160 and $487,303.  The experts reached total agreement except for two items, namely VQ-42 and the revised duct routing due to revision in architectural plan for which no variation quotation was issued.  There were three items in Categories D and F totalling $40,337 and $15,861 for which the experts were in agreement as to the value of the works.  There were two items in Category B for which no agreement on their value could be reached.  These were VQ-16 and VQ-22.

VQ-42

25.This variation quotation was in relation to relocation of twelve twin condensing units from the main roof to the various platforms in the void.  Initially, the experts agreed $19,000 was a reasonable sum.  That agreement was reached on the basis that a special hoisting block had to be erected on the roof first and the condensing units were then hoisted down to the appropriate floor and installed.  But subsequently Anpoint’s expert had second thoughts about the nature of work involved.  He thought that temporary works such as scaffolding and gantries would have been provided by the main contractor and available on site for use by sub-contractors.  He also argued that the description of work in the variation quotation was to “provide labour to deliver A/C outdoor unit on A/C platform” and did not include any reference to temporary works.  Hence, he thought $2,600 was reasonable on the basis of eight units at the rate of half a man-day per unit.  It is not known why he changed the quantities from twelve units to eight.  On a pro-rata basis, the cost for transporting twelve units under his formula would be $3,900. 

26.I do not consider there was any basis for Anpoint’s expert to assume that scaffolding and gantries would be available.  Even if gantries were available, there was no basis to assume that they were available at the position where the units were to be hoisted down and installed.  I consider his assessment unrealistic.  Again Anpoint’s failure to produce project documents enabled adverse inference to be drawn against it.  I adopt the sum of $19,000, which the experts had formerly agreed on more reasonable basis as appropriate.

Revised duct routing

27.The sum suggested by the Plaintiff’s expert and Anpoint’s expert were respectively $60,935 and $30,467.  To cut the experts’ arguments short, the sum was assessed by applying a certain formula mutually accepted by the experts to an invoice amount containing a similar item of work and two other items which W Hing received from its employer.  The experts differed because the Plaintiff’s expert excluded only one of the other items but not both.  There was no evidence as to the value of the other item.  Anpoint’s expert conveniently suggested that the value of the subject work should be reduced by half to allow for the other item.  I consider that is the best assessment which could be made.  Hence, I allow $30,467 in respect of this item of work.

VQ-16

28.Under the original design, the condensation drain pipes were mounted onto the internal wall and connected to the waste water system in the nearby toilet.  The contract rate was $29,700 at $75 per metre.  The variation works required that the horizontal drain pipes be embedded in concrete while the vertical drain pipes were to be installed on the outside surface of the external wall.  The Plaintiff’s expert estimated the additional cost involved to be $72,098.  This included labour costs inclusive of overtime allowance of $44,800, supervision costs of $31,000, testing costs of $4,800 and material costs of $7,920.  Anpoint’s expert was of the opinion the value of the variation was either zero or a small saving.  He saw no justification for supervision costs and overtime costs.  He argued that concealed pipe work would not have to be fixed as neatly as surface mounted pipe work and could be installed quicker.  He also argued that operatives fixing vertical pipe work on the external wall could do so in a continuous manner climbing up or down the scaffold without having to walk from floor to floor.  Having regard to the nature of the work as contracted and as varied, I agree in essence with the opinion of Anpoint’s expert.  However, I consider there must be a slight increase in labour as a result of the additional caution required in working on the scaffold and the difficulties in transporting materials.  I consider an allowance of 25% of the cost of labour in the original contract price a very generous estimate of the cost of the variation work and that the value as assessed by the Plaintiff’s expert excessive.  I estimate the cost of labour in the original contract price to be $17,906 by deducting from the original contract price of $29,700 net of 15% E&P costs the costs of materials of $7,920 (i.e. $29,700 ÷ 115% - $7,920).  Accordingly, I assess the costs of variation work inclusive of 15% E&P costs to be $5,148 (i.e. $17,906 x 25% x 115%).

VQ-22

29.Both experts agreed that this variation quotation comprised of two groups of works, conveniently described as Group A works and Group B works and that the value of these groups of works were $19,290 and $25,840.  The Plaintiff had lodged a claim only for Group A works.  The disagreement between the experts was whether the Plaintiff had also performed the Group B works.  The Plaintiff’s expert opined that according to the evidence the Plaintiff had completed both groups of works but had omitted reporting and invoicing for the Group B works and hence the value of this variation quotation should be $45,130.  However, Anpoint’s expert considered it odd that the Plaintiff would have forwarded a variation quotation based only on Group A works if the instruction included both groups of works.  Both groups of works were covered by instructions.  According to the Plaintiff’s expert’s opinion, both groups of works had been carried out.  This is an obvious case of the Plaintiff’s omission in reporting and invoicing for the works.  Accordingly, I find that the value of this variation quotation to be $45,130.

Total cost of variation works

30.I have assessed the value of VQ-16, VQ-22, VQ-42 and the cost of the revised duct routing to be $5,148, $45,130, $19,000 and $30,467 respectively.  Accordingly, I assess the total costs of Category A works and Category B works in dispute to be $454,560 and $50,278 respectively.  The cost of Category D and Category F works are not in dispute, they were $40,337 and $15,861 respectively.  Hence, the Plaintiff is entitled to a total of $561,036 in respect of the variation works under the C&A Home Project.

the yan hing project

31.The Plaintiff claims a total of $48,225 as cost of variation works in respect of this project.  There were two items of Category A works, the cost of which was agreed to be $13,060.  There was another item of Category E works for which the experts were unable to agree.  The variation works included erecting working platform, working at height to dismantle the ductwork installed and to re-install them with two 45 degree bends.  The works had to be executed with care so that the dismantled duct work could be re-used.  The Plaintiff’s expert considered 30 man-days work required, while Anpoint’s expert considered 8 man-days adequate.  Both experts have shown to be unduly cautious in favour of their respective clients.  I consider awarding an average figure would cancel out the experts’ bias.  Thus on the basis of 19 man-days labour at $750 per man-day and the cost of the two bends at $1,500 plus 15% E&P cost, the cost of the variation works is assessed to be $18,112.50 (i.e. ($750 x 19 + $1,500) x 115%).  Accordingly, I award the Plaintiff the sum of $31,172.50 in respect of the variation works under this project.

conclusion

32.For the above reasons, the Plaintiff is entitled to the cost of the variation works and the outstanding contract fee under the four projects in the following amounts :

(1)	The Industrial Building Project	$245,973.00
(2)	The Church Project	$309,717.50
(3)	The C&A Home Project	$561,036.00
(4)	The Yan Hing Project	$31,172.50
		$1,147,899.00

33.Accordingly, I enter judgment in favour of the Plaintiff in the total sum of $1,147,899.00 with interest at judgment rate from the date of issue of the writ.  The Defendant’s counterclaim is dismissed.  I also make a costs order nisi that the Defendant shall pay the Plaintiff’s costs on both the claim and the counterclaim, to be taxed if not agreed.

Mr David Tsang, instructed by Messrs Philip Tsui & Co., for the Plaintiff

Mr Jerry M S Chung, instructed by Messrs Leung, Chan & Pang, for the Defendant