Wo Hing Engineering Ltd. V Tyco Engineering & Construction (Hong Kong) Ltd.

CACV001120B/2000

CACV 1120/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 1120 OF 2000

(ON APPEAL FROM HCCT NO. 40 OF 1999)

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Coram: Hon Rogers VP, Le Pichon JA and Ma J

Date of Ruling: 28 October 2002

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R U L I N G

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1.This is an application under the slip rule to amend the order of the court dated 17 April 2002 and in particular paragraph 1(3) thereof which reads:

"The Defendant shall pay the Plaintiff further damages to be assessed by the Court below based on actual figures by applying the formula that the Plaintiff is entitled to 3% of the contract price plus any shortfall arising between actual costs incurred and 97% of the contract price."

2.This matter has been brought back before this court by notice of motion dated 30 July 2002. It has been occasioned by difficulties which arose in the court below on the interpretation of the order. In view of difficulties in reconvening the court with the counsel concerned, the parties have agreed that this matter be dealt with on paper following written submissions.

3.The background to this case is set out in the judgment of Le Pichon JA with which the other members of the court agreed. In brief, the plaintiff was a subcontractor in respect of works to be carried out for a lump sum of $80 million. The defendant became a sub-subcontractor and it was agreed that the plaintiff would be entitled to 3% of the contract price. The defendant did not complete the works and the plaintiff completed the works. The question then arose as to the extra costs involved over and above the contract price. At paragraph 10 of the judgment it was stated:

"Applying that principle to the facts of this case, had Tyco not been in breach, at a minimum, Wo Hing would have received 3% of the contract sum i.e. $2.4 million. If extra costs have had to be incurred in order to complete the contract, whether the cost of engaging a subcontractor to carry out the work or doing the work itself, as a matter of principle, Wo Hing is entitled to recover such additional costs."

Later in paragraph 11 when dealing with the question as to whether the plaintiff would be entitled to a profit of 10% on the project it was stated:

"But the fact that Wo Hing elected to perform the work itself did not, ipso facto, entitle it to earn a profit. In my judgment, what it is entitled to recover (apart from the 3%) would include any additional costs incurred: for, to that extent, it would have been out of pocket and should be reimbursed in order to be made whole."

4.The intention of the court was therefore clear. Unfortunately, in attempting to encapsulate that concept in a formula it was said:

"Expressed as a formula, Wo Hing is entitled to 3% of the contract price plus any shortfall arising between actual costs incurred and 97% of the contract price."

What was overlooked was that this formula did not encapsulate the intention of the court. The intention of the court in the passages quoted in paragraph 3 above was clear. It was that Wo Hing would be entitled to its contracted profit plus any extra costs. Those extra costs should have been calculated on the basis of the contract price since the 3% had already been taken into account. The words "97% of" in paragraph 1(3) were inserted into the formula in error. That error is obvious on reading the judgment. In the circumstances of this case it is appropriate to amend the order under the slip rule as an accidental slip under Order 20 rule 11 and of the Rules of the High Court. This court therefore orders that the order of 17 April 2002 be amended by deleting the words "97% of" in paragraph 1(3).

Representation:

Mr Peter Graham, instructed by Messrs Deacons, for the Plaintiff/Respondent

Mr Peter Clayton, instructed by Messrs Denton Wilde Sapte, for the Defendant/Appellant