Sam Woo Bore Pile Foundation Ltd v. China Overseas Foundation Engineering Ltd

FAMV No. 21 of 2007

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION 

MISCELLANEOUS PROCEEDINGS NO. 21 OF 2007 (Civil)

(ON APPLICATION FOR LEAVE TO APPEAL FROM
CACV No. 113 of 2006)

_______________________

Between:

_______________________

Appeal Committee: Mr Justice Bokhary PJ, Mr Justice Chan PJ and Mr Justice Ribeiro PJ

Date of Hearing and Determination: 31 May 2007

Date of Handing Down Reasons: 8 June 2007

_______________________

D E T E R M I N A T I O N

_______________________

Mr Justice Ribeiro PJ:

1.On 31 May 2007, we dismissed the application for leave to appeal with costs.  We now hand down our reasons.

2.Leave was sought to appeal to the Court from the decisions of Reyes J[1]  and the Court of Appeal[2] striking out the applicant’s claim for payment under a civil engineering sub-contract.

3.Mr Russell Coleman SC, appearing with Ms Queenie Ng for the applicant, submits in the first place that an appeal is as of right since, in striking out the claim, the courts below necessarily finally decided the issue of construction said to arise.  That submission must be rejected. 

4.To come within section 22(1)(a) of the Court’s statute, the appeal must be from a final judgment of the Court of Appeal.  The test for finality is the “applications test”, namely, that determination of the application leading to the judgment to be appealed from must finally dispose of the action or finally determine the relevant issue, whichever party succeeds on the application.  A striking-out application fails that test.  Its dismissal leaves everything in contention.  That approach was consistently adopted for leave to appeal to the Privy Council. [3]  It has remained the approach to leave to appeal to this Court.[4]  It is unusual for a final appellate court to entertain appeals as of right and, as has previously been pointed out,[5] the Court is not in favour of enlarging that jurisdiction.

5.Alternatively, the applicant submits that points of law of great general or public importance arise in the appeal, being points relating to the true construction of the Hong Kong Government Standard Method of Measurement (“SMM”) for Civil Engineering Works which are in widespread use in Hong Kong.[6]

6.The applicant contracted with the respondent to drive a total of 64 pile shafts and to install cast-in-situ concrete piles in the seabed as part of the Lantau Expressway project.  Each pile shaft had to be properly secured or “toed-in” into the bedrock at a certain depth depending upon site investigations and the Engineer’s requirements.

7.It was a re-measurement contract and the parties expressly agreed that the method of re-measurement should be in accordance with the SMM, save expressly stated otherwise.  Particular Preambles to the Bills of Quantities set out the SMM method of re-measurement to be used in relation to the toeing-in of cast-in-situ concrete piles.  Two such provisions are important.  First, §9.09 prescribes that the units of measurement for extra over for toeing-in should be “number”, that is, the number of piles concerned.  Secondly, §9.14 (Group IX), dealing with “Itemisation”, prescribes as follows:

Separate items shall be provided for cast-in-situ concrete piles in accordance with General Principles paragraphs 3 and 4[7] and the following:

1.    Extra over for toeing-in not exceeding 0.50m in depth. 

2.    Extra over for toeing-in exceeding 0.50m but not exceeding 1.00m in depth and so on in steps of 0.50m.

8.If the parties had carried out their indicated intention of adopting the SMM approach to re-measurement by adopting those provisions, this dispute would not have arisen.  Separate Bills of Quantities (“BQ”) items would have provided for the extra over amount payable for the number of pile shafts which had to be toed-in at a depth deeper than the specified minimum in steps of 0.50m of such additional depth.

9.Bedrock conditions over stretches of seabed may obviously vary.  A hypothetical example of what might have been required of the 64 piles in the present case (taking the specified minimum depth into the bedrock as 1.50m), may be as follows:

(a)      Of 64 piles: 4 might be satisfactory at the minimum depth of 1.50m, but 60 might need to be driven up to 0.50m beyond the minimum of 1.50m;

(b)     Of those 60 piles, 30 might need to go to up to 0.50m deeper than 2.0m;

(c)     Of those 30, 10 might need to go up to 0.50m beyond 2.50m;

(d)     Of those 10, 2 might need to go up to 0.50m beyond 3.0m; and

(e)      None might need to go any deeper.

With BQ items drawn up in accordance with §§9.09 and 9.14, there would be no difficulty.  For each itemised depth band, one would multiply the number of piles concerned by the dollar rate and thereby value the additional work done at each depth.

10.However, that is not how the BQ items were drawn up in the present case, which is why the present dispute arises.  There was no separate itemisation for each 0.50m step or depth band.  And there was no specification of a dollar rate for each such depth band.  There was only a single BQ item in the following terms:

Description	Quantity	Unit	Rate $	Amount $
Extra over 1500 mm	48	nr	36,000	1,728,000.00
diameter vertical
pile shaft for toeing-
in to bedrock 1.50 m
in depth (min.)” [8]

11.The “description” column stipulates that the minimum depth of toeing-in required is a depth of 1.50m into the bedrock.  “Minimum” has its ordinary meaning so that, for instance, where a sloping bedrock surface is encountered, the pile must be driven into not less than 1.50m of bedrock at the lower end of the downward slope.  This would mean that more than 1.50m of bedrock will have to be penetrated at the upper end of the slope.

12.Since the BQ item describes itself as dealing with “extra over” in relation to a stipulated minimum depth and specifies a $36,000 rate for the same without suggesting that this is limited to additional work to any particular depth, the courts below correctly construed this as a provision (perhaps unusual in a re-measurement contract) which fixed the extent of additional payments available for this item of work.

13.Mr Coleman did not seek to argue for rectification of the contract or that there was some basis for implying a term which would somehow convert the BQ items in question into graduated, separately itemised extra over provisions dealing with additional work done in steps of 0.50m of depth.  Instead, he boldly submitted that the Court could somehow arrive at that result by a simple process of contractual interpretation by giving prominence to the fact that the contract was a re-measurement contract.   The Court should, he argued, treat the $36,000 figure in the BQ item as laying down a rate of payment for each 1.50m of depth into the bedrock, and so by extrapolation, a dollar rate of $12,000 for each step of 0.50m of depth to make it compatible with §9.14 of the Particular Preamble.  But that is not what the BQ item says on any reading and such a result would require a wholesale re-writing of the BQ terms agreed.

14.It follows that this is a one-off case.  Standard provisions were available to be adopted and were indeed referred to in the Particular Preamble to the parties’ own Bills of Quantities, but were not in fact used.  Such provisions are in general circulation and there is no difficulty about their operation.   The present case therefore raises a case-specific problem and not any point of law of great general or public importance.  Secondly, the applicant was able to point to no viable legal mechanism whereby the Court might arrive at the result it desires.  There are therefore no reasonable prospects of success on appeal.

Mr Russell Coleman SC and Ms Queenie WS Ng (instructed by Messrs Hau, Lau, Li & Yeung) for the applicant

Mr Chua Guan Hock SC (instructed by Messrs Ho & Ip) for the respondent

[1] HCCT 76/1996; 21 February 2006.

[2] Rogers VP, Le Pichon JA and Chu J, CACV 113/2006; 24 October 2006.

[3] First Pacific Bank Ltd v Robert H P Fung [1990] 1 HKLR 527 at 529.

[4] Wai Hung Stationery Co v HKSAR [1998] 2 HKC 229 at 231; B+B Construction Ltd v Sun Alliance and London Insurance Plc [2001] 1 HKLRD 1 at 4; and Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip Co Ltd (2003) 6 HKCFAR 222 at 231, §26.

[5] Chao Keh Lung v Dong Xia (2004) 7 HKCFAR 260 at 263.

[6] Reference was made to the 1988 and the 1992 editions which, for the purposes of this case, were materially identical.  We refer to provisions in the 1992 edition in this Determination.

[7] These General Principles are not presently relevant.

[8] The other BQ item, relating to 16 pile shafts, was in otherwise identical terms.