Read the full judgment text of CACV 125/2011 on BabelCite. This 高等法院上訴法庭 judgment was delivered on 24 May 2012 before Hon Tang VP, Kwan and Fok JJA.
Construction contracts — Sub-contract termination — Clause 17.1(e) requires 7 days’ written notice of termination to allow removal of staff and equipment, not to remedy breach — Termination notice valid if it specifies termination taking effect after the notice period — Stratech’s refusal to remove tokens programmed to disable AVRS held repudiatory, persistent breach — ATAL entitled to terminate under clause 17.1(e) and at common law — AMS and KMS software were Custom Programs obliging provision of source codes — Variations held to be incomplete at termination, only nominal value awarded — Stratech’s hardware maintenance obligations did not include hardware maintenance fees — Maintenance personnel expenses awarded based on expert evidence — Interest awarded from Statement of Claim date within trial judge’s discretion. Facts: ATAL main contractor for Immigration Dept ‘e-Channel’ system, Stratech subcontractor; disputes over payments and contract performance; termination in 2006; trial judgment awarded damages to ATAL. Main issues: The Court of Appeal refined the construction of the termination clause 17.1(e), upheld validity of termination notice, agreed Stratech was in breach by refusing to remove tokens, confirmed the source code obligation, and accepted quantum assessments. Outcome: Appeal allowed only to reduce damages by $4.7M; other grounds dismissed; costs mostly awarded to ATAL. Orders: Two-thirds of appeal costs to ATAL; damages reduced by $4.7M.
Legal issues: Construction and validity of termination notice under clause 17.1(e) · Validity of termination by reason of Stratech’s persistent breach with refusal to remove tokens · Obligation of Stratech to provide source codes for AMS and KMS software · Value and classification of disputed works as variations · Whether Stratech was liable for hardware maintenance fees · Assessment and quantum of maintenance personnel expenses damages · Award of interest on damages from date of Statement of Claim
Outcome: Appeal allowed in part to reduce damages by $4,700,000 for hardware maintenance fees; otherwise the appeal is dismissed; cross-appeal by ATAL dismissed; Stratech ordered to pay two-thirds of ATAL’s appeal costs, to be taxed if not agreed, with a certificate for two counsel
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