Read the full judgment text of HCCT 26/2008 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 14 July 2009 before Hon Reyes J.
Contract Law — Construction Contracts — Nominated Sub-Contractor — Existence of Contractual Relationship — Breach of Warranty to Perform on Time — Damages for Delay — Quantum of Damages. The HONG KONG HOUSING AUTHORITY (the Authority) sued ROTEGEAR CORPORATION LIMITED (Rotegear) for breach of contract in respect of delayed and substandard electrical works at a construction project managed by Main Contractor Nishimatsu. The court held there was a direct contract between the Authority and Rotegear despite Nishimatsu's role, based on objective consideration of the Form of Tender and correspondence. Rotegear breached its warranty to complete works diligence according to the project timetable, leading to justified termination by Nishimatsu. Extensive contemporaneous correspondence demonstrated serious delays, inadequate manpower, and failure to procure materials. Rotegear’s arguments that no direct contract existed or that termination was wrongful were rejected. Damages were assessed based on the cost of engaging replacement subcontractors and additional supervisory costs. After evaluating the competing expert reports, damages were awarded at $8,784,880 with interest. Costs were ordered against Rotegear. The judgment confirms the enforceability of contracts between an employer and nominated subcontractor and the importance of timely performance and mitigation of losses through replacement contracts.
Legal issues: Existence of direct contractual relationship between the Authority and Rotegear · Breach of contract by Rotegear · Excessiveness of damages claimed
Outcome: Judgment for the Authority against Rotegear for breach of contract; damages assessed at $8,784,880; interest awarded; costs awarded to Authority.