Read the full judgment text of HCCT 56/2006; HCCT 3/2007 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 30 June 2011 before Hon Reyes J.
Construction and arbitration proceedings between ATAL TECHNOLOGIES LIMITED and STRATECH SYSTEMS LIMITED concerning a subcontract for automated border clearance systems. Disputes arose over performance delays, payment timing, software source code provision, use of AVRS tokens to disable the system, and related damages. The High Court considered whether ATAL validly terminated Stratech for breach including wrongful use of tokens. It held that refusal to fully comply with certain instructions due to withholding of letter of credit was insufficient to justify termination within 5 days, but use of tokens threatening AVRS shutdown was repudiatory and justified termination. Damages awarded to ATAL totaled approximately HK$8.72 million, reflecting costs of termination, replacement systems, and delayed deliveries after deflations for excessive claims. On source code issues, AMS and KMS were deemed custom programs necessitating source code delivery, whereas AVRS was contractor software licensed to ATAL and Government, negating infringement claims. Economic duress was found relating to payments made late under token threat, but payments deemed valid unless avoided, which ATAL did not do. Defamation claims by both parties failed due to inadequate pleadings and availability of fair comment. Costs were apportioned mostly in favor of ATAL and Mr. Poon, with interest orders on damages. Application for security for costs on appeal was dismissed.
Legal issues: Termination entitlement · Assessment of damages for termination · Obligation to remove tokens · Entitlement to damages for AVRS replacement · Source code provision obligation · Entitlement to recover AMS and KMS replacement costs · Interpretation of 'acceptance' for payments · Consequences of advance payments · Stratech's duty to continue performance despite ATAL's breach · Assessment of damages for temporary CCTV installation · Payment entitlement for variations work · Copyright infringement claim · Defamation claim
Outcome: Damages awarded to ATAL against Stratech in the net amount of approximately $8,720,000; interest awarded; partial costs to ATAL and Mr. Poon; defamation claims by both parties failed.
Cited by 6 cases