Read the full judgment text of HCCT 13A/1989 on BabelCite. This HIGH COURT judgment was delivered on 31 October 1991 before The Hon. Mr. Justice Kaplan.
Construction Contract — Oral Subcontract — Incorporation of Main Contract Terms — Liability for Subcontractor Defaults — Implied Terms — Programme Variation — Backcharges — Split Preliminaries Agreement. This case concerns an oral subcontract between Dillingham (main contractor) and Grand Choice (subcontractor) for the HKIS expansion project without a written contract. The court examined whether the subcontract incorporated terms of the main contract between HKIS and Dillingham; it held no incorporation by express or implied terms due to lack of necessity and reasonableness. The court considered if Dillingham agreed to indemnify Grand Choice against losses or to control the formwork subcontractor Ho Yee Kee, rejecting these claims for insufficient certainty and evidence. Grand Choice was held responsible for Ho Yee Kee’s defaults. The alleged contractual programme submitted by Grand Choice was not binding or altering the master programme. Regarding payment, the court allowed certain variation claims by Grand Choice at figures supported by expert evidence but rejected claims for extra formwork attributed to subcontractor delays or acceleration requests. Dillingham’s backcharges for materials and additional expenses were assessed with some charges disallowed due to insufficient proof or overlap with preliminary split agreement. The judgment clarifies the strict approach to implication of terms in oral subcontracts, liabilities related to subcontractors introduced by main contractors, and contractual consequences of undocumented agreements on programmes and financing arrangements in large construction projects. Costs, order forms, and concrete payment allocations reflect the factual and evidential matrix surrounding performance, defective works, and project management responsibilities.
Legal issues: Whether Grand Choice was bound by the terms of the Main Contract · Whether Dillingham, through Mr. Corlett, agreed to indemnify Grand Choice against losses · Whether Dillingham agreed to 'control' the subcontractor Ho Yee Kee · Liability of Dillingham for introduction and instructions to engage Ho Yee Kee · Whether Grand Choice’s June Programme was an agreed sub-contract programme altering the project master programme · Liability of Dillingham for additional formwork costs from Ho Yee Kee’s additional payment and acceleration requests · Liability of Dillingham for additional formwork due to appointment of replacement subcontractor N.Y. Nam · Whether Dillingham liable to Grand Choice for extra formwork due to programme changes or acceleration · Effect and conditions of split preliminaries agreement · Appropriateness of backcharges for material costs and additional expenses
Outcome: Grand Choice entitled to some variation payments but not to extra formwork costs related to Ho Yee Kee’s defaults; majority of Dillingham’s backcharges upheld with some disallowed; claims for acceleration and certain material costs disallowed.