W M CONSTRUCTION LTD v. GOLDEN CHOICE ENTERPRISES LTD

HCA 1927/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1927 OF 2011

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JUDGMENT
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1.  The plaintiff in this action claims the balance of the price of a contract carried out by it for the defendant joint venture company at a site in Sai Kung involving the construction of some small houses.

2.  A dispute involving the members of the joint venture led to the plaintiffs being prevented from having access to the site and therefore being unable to complete the contract.  No fault attaches to the plaintiff in this regard.

3.  The claim is for the difference between the contract price, less the cost of work which could not be carried out, plus the cost of extra work beyond the contractual works.  The net figure claimed is just over $3.4 million.

4.  The defence, such as it is, virtually conceded the merit of the plaintiff’s claim.  It admits that the plaintiff could not get access to the site to complete the agreed works and blames the plaintiff for not having the balance of its claim certificated by the architect, who also was unable to gain access so as to inspect the work and duly certificate the claim.

5.  It is well over two years since I made an order providing for an assessment of the work done and the valuation of it by an independent architect on behalf of both parties.  In a short decision I also criticised the form of the defence filed by the solicitors for the defendant.  It was repetitive, rambling and verbose and in fact disclosed no real defence on the merits.  It did the defendant company no service.

6.  Those solicitors ceased to action in May of this year (2015) and since then the defendant company has been on its own, somewhat adrift.  No director has sought leave to act on its behalf.

7.  When the papers came back before me a little while ago I noted that it was estimated to be a seven‑day trial.  That was a gross overestimate and I accordingly reduced it to a three‑days.  I had noted that the order of Madam Justice Bebe Chu provided that the architect’s joint report should stand as evidence without calling the maker.

8.  Furthermore nothing had emerged to cause me to change my opinion that the plaintiff was bound to succeed in its claim, albeit that the amount recoverable was about half of that claimed, in view of the valuation by the architect.

9.  If the action had continued the outcome was inevitable with, as a consequence, a considerable waste of cost and court time.  I therefore decided that it should be listed for Mention at 10 am on Wednesday 4 November 2015.  When called on, no one appeared for the defendant company.  Counsel appeared instructed by the plaintiff’s solicitors.

10.  It was clear that the defendant had not responded to recent letters from the plaintiff’s solicitors and had similarly not replied to the court’s last two letters.  Although I was minded there and then to enter judgment for the plaintiff, I decided, having discussed the situation with counsel for the plaintiff, to leave the case listed for trial starting on 5 November 2015, the next day, in case anyone from the defendant appeared.  It was to be listed with a direction that no witnesses were to attend.

11.  Today, 5 November 2015, the defendant company did not attend in any shape or form and so I entered judgment for the plaintiff for the sum of $1,650,238HKD being the lower of the two valuation figures of the architect, with costs to be taxed.  Interest on this sum will be at the rate of five percent from the date of issue of the writ to the date of judgment ie today, and thereafter at the judgment rate of eight percent.

12.  I make it clear that had the plaintiff proceeded by way of summons for judgment under Order 14 after the valuation report from the jointly instructed architect was available, I would have made such an order in favour of the plaintiff then.  That course would have achieved a not insignificant saving in costs.

13.  Yesterday Mr Kwong for the plaintiffs had told me of the sanctioned offer contained in a letter dated 31 July 2015 and would be seeking an order for indemnity costs subsequent to that date.  However the defendant had been without legal representation since early May this year and I am not satisfied that it, through its director, would have understood the full implications of this letter.  In any event the likely taxed costs will be out of proportion to the nature of the case.  Therefore I decline to make any order on the strength of that letter.

HCA 1927/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1927 OF 2011

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BETWEEN

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DECISION

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1.  The plaintiff is a construction company and the defendant is a joint venture company established for the purpose of erecting nine small houses at a site at Wong Chuk Wan, Sai Kung in the New Territories.

2.  The defendant contracted with the plaintiff for the building of those houses for a sum of HK$10,880,000.  Another company, Ben Yeung Project Consultant Limited, was engaged as architect for the development.  There is a dispute as to whether the architect was the agent of the plaintiff or of the defendant.

3.  During the course of the contract, the plaintiff alleges that it was instructed to omit certain works but carry out additional works.  Its claim against the defendant is for the balance due on the contract as adjusted by the variations and additions.  The net sum claimed is HK$3,401,136.  It represents work done which has not been certified by the architect.  It is claimed that since February 2009, the defendant has prevented the plaintiff from gaining access to the site and carrying out any further work.  As a consequence, the plaintiff claims that the defendant has repudiated the contract, which repudiation the plaintiff has accepted.  In answer, the defendant alleges that it too has been ousted from the site as the result of a dispute between the parties to the joint venture, and is not therefore in a position to allow the plaintiff or the architect access to the site.  It denies that it instructed the plaintiff to carry out variation or additional works.

4.  The defence is a rambling, repetitive document, I regret to have to say, but the upshot is that the defendant contends that he is in more or less the same impotent state as the plaintiff.

5.  Against this stalemate, the plaintiff has taken out a summons under essentially Order 29 Rule 7A and section 42(2) of the Rules of the High Court to obtain leave to enter and inspect the site and, perhaps more pertinently, for the architect, whosever agent he may be or may not be, to enter for the purposes of certification of the disputed work.  It is also under the original contract due to carry out certain works once the certificates of compliance have been given.

6.  There is also a background of litigation involving the properties built on the site which came before Mr Justice Louis Chan in Hong Kong Miscellaneous Proceedings HCMP1760/2009, in which his judgment was delivered on 13 August 2010.  I have read this judgment.  It involved a number of lots of land, but the ones concerned in this action are those in schedule 1 of the judgment, viz Lots 281, 283-286, and Lot 85D, all in DD258.

7.  The action was brought by the defendant in this action and one of its joint venture partners against the other joint venture partner and 17 other defendants, being the registered owners of the lots of land which featured in that litigation, 17 lots in all, of which six or more are common to this piece of litigation of which I am having to consider but a single aspect.

8.  There appears to be some inconsistency in the number of houses erected or to be erected on the six lots - six houses in the other action and nine houses in this.  That is not likely to be material as far as the matter which comes before me is concerned.  Order 29 Rule 7A(2) provides for the service of a summons seeking an order under section 42(2)(a) in respect of property which is the subject matter of proceedings but which is not in the possession of any party to the proceedings on the person against whom the order is sought personally as well as every party to the proceedings.

9.  I am satisfied that this has been done. It is in the interest of both parties that the means of achieving a necessary stage in resolving this dispute should be provided.

10.  All the non-parties have now given consent to the plaintiff’s application.  The plaintiff’s affirmation indicates that the houses are unoccupied, so there will be no disruption to the owners. It is estimated that one day will afford sufficient time for the necessary assessment.

11.  Although the plaintiff has indicated that it wishes to instruct a particular architect, in my view, an architect must be appointed as the independent architect providing an impartial expert report for the benefit of both parties and the court.

12.  I therefore order that such an independent architect be appointed to do that by agreement between the parties.  If the parties cannot agree, they will have to return to the court for the court to decide which architect or who should be appointed as the independent architect to achieve that event.

13.  As far as the costs are concerned, an application is made for costs to be in the cause, and that seems to me to be the appropriate decision, and indeed, Ms Chong for the defendant I think is in agreement and certainly does not oppose it.

Mr Alan Kwong, instructed by Hui & Lam, for the plaintiff

Ms Chong Mendy, of Lo, Wong & Tsui, for the defendant