REDLAND PRECAST CONCRETE PRODUCTS (CHINA) LTD v. AES STEEL MOULD (HONG KONG) LTD
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HCCT 20/2018
[2022] HKCFI 1731
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO 20 OF 2018
____________________
| BETWEEN | ||
| REDLAND PRECAST CONCRETE PRODUCTS (CHINA) LIMITED | Plaintiff | |
| and | ||
| AES STEEL MOULD (HONG KONG) LIMITED | Defendant |
____________________
| Before: | Hon Mimmie Chan J in Court |
| Dates of Hearing: | 27-30 September 2021, 4-7 October 2021 and |
| 18 February 2022 | |
| Date of Judgment: | 10 June 2022 |
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J U D G M E N T
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Background
1. Under a Subcontract which is evidenced by and/or contained in a letter from the Plaintiff to the Defendant dated 28 March 2014 (“Subcontract”), the Defendant undertook to design, supply and deliver to the Plaintiff a steel formwork and hydraulic system (“Formwork System”). The Formwork System was to be delivered to the Plaintiff’s yard in Dongguan on the Mainland, for the casting and construction of precast viaduct segments (“Segments”) which the Plaintiff had undertaken to supply and deliver for the Liantang/Heung Yuen Wai Boundary Control Point project (“Project”). The main contractor for the works under the Project was Chun Wo Construction & Engineering Co Ltd (“Main Contractor”) and the employer was the Civil Engineering and Development Department (“Employer”), with AECOM Asia Co Ltd as the Project Engineer/Consultant (“Engineer”).
2. The dispute between the parties in these proceedings concern the alleged breach by the Defendant of its obligations under the Subcontract, as to whether the Formwork System it designed and produced was defective, in not being able to produce precast concrete viaduct segments, in the manner and of the quality or standards specified under the Subcontract.
3. The Formwork System, in layman’s simplified terms, comprised a system of huge steel moulds, including the bottom mould, side mould, bulkhead mould, internal mould, and their incidental supporting systems and trolley, to enable and facilitate the match-cast manufacture of viaduct segments.
4. There is no dispute as to the scope of works specified under clause 2 of the Subcontract. This was for the supply of 6 sets of steel formwork and hydraulic system for viaduct segment Type W1, W2, W3, W4, N1 and N2. The formwork Type W3 was stated to be an optional item of the Subcontract. A unit price of HK$976,846 corresponding thereto could be deducted from the contract sum upon the issue of a notification from the Plaintiff within 15 days from the date of signing of the Subcontract. The design fee for the Formwork System included shop drawings and calculations, and ICE Certification for the design. The scope of work included supervision for the Formwork System installation and assembly at the Plaintiff’s yard in Dongguan.
5. Clause 2 of the Subcontract expressly states:
“This Sub-Contract Works (sic) includes design, supply and delivery of steel formwork and hydraulic system for precast viaduct segment to the Contractor’s yard in Dongguan PRC in accordance with the contract drawings and specification as listed in the attached Appendix A and B respectively.”
Appendix A are contract drawings and requirements which had been provided to the Defendant at the tendering stage.
6. The Subcontract is stated in clause 3 to be a fixed price contract, not subject to adjustment for price fluctuation.
7. Clause 5 of the Subcontract sets out the Defendant’s responsibilities. The Plaintiff highlighted the provisions of clauses 5.3 and 5.9, as follows:
“5.3 The Sub-Contractor shall design and fabricate the necessary supporting frames for setting up steel formwork at the Contractor’s yard. The Sub-Contractor shall also provide sufficient manpower, supervisor, plant and equipment for the setting up and assembly of the steel formwork and hydraulic system once delivered to the Contractor’s yard.
…
5.9 The Sub-Contractor shall maintain the good conditions of moulds due to wear and tear in the normal circumstances of viaduct segments production to the satisfaction of the Contractor.” (Emphasis added)
8. Appendix B to the Subcontract sets out the Technical Specifications and Special Requirements (“Technical Specifications”) of the contract. Clause 1.1 states:
“1. 乙方按合同規定，以甲方提供的產品圖紙及要求，進行預製混凝 土節段橋樑匹配生產的全套模具、設備及配套裝置的設計；包括ICE簽認、材料、製造、防銹油漆、運輸、裝拆指導、生產調試及監督。乙方負責設計缺陷的更改工作及往後產生的所有費用。
(Pursuant to the contract, [Defendant] shall, in accordance with segments’ drawings and specifications as provided by [Plaintiff], (design) the entire set of Moulds, apparatus and supporting devices/equipment for production of precast viaduct segment units; this includes ICE certification, material, manufacturing of the Formworks, anti-rust painting, transportation, instructions for assembling and disassembling of Formworks, production testing and supervision. [Defendant] shall be responsible for alteration works due to defects in such design and all consequential costs incurred.)”
9. Clause 1.2 of the Technical Specifications sets out the standards for the flatness or evenness of the moulds:
“2. 範本面平整度要求按香港GS標准F5等級，空隙≤0.5mm，拼接處必須有防漏膠條。
(The flatness/evenness of the Moulds shall comply with Hong Kong GS’s standard of F5 standard, with gaps (in the Moulds) to be less than or equal to 0.5mm and joints (of the Moulds) must be sealed with sealing strips.)”
10. The precision requirements of the moulds are set out in clause 1.3 of the Technical Specifications, and these are for an allowable tolerance of (inter alia) 1mm in respect of the horizontal and vertical baselines for the side panels of the moulds.
11. Under clause 4.3 of the Technical Specifications, the Defendant was required to provide, “for installation of the moulds”, installation drawings, installation procedures and instructions for disassembling the moulds. The Plaintiff highlights that the Defendant was stated in clause 4.4 to be responsible for ensuring on-site installation of the formwork to be in place, and to instruct workers of the Plaintiff in the operation and installation of the moulds.
12. Clause 5 of the Technical Specifications provides for the Subcontract price. Clause 5.2 to 5.4 state:
“2. 本合同乙方依照甲方所提供相關資料確定模具的數量和組裝方案，要求模具需全部覆蓋Viaduct Segment所有的預製件款式產品。模具為6套，包括鋼結構和油壓系統，其中模具W3為選擇性，可以取消。
(Under this contract, [Defendant] shall, in accordance with relevant information provided by [Plaintiff], ascertain the number of Moulds and assembling plan, it is also a requirement that the Moulds shall cover the production of all types of Viaduct Segment. There will be 6 sets of Moulds (including Steel Structure and Hydraulic System), and W3 Mould is optional and can be cancelled.)
3. 每套模具於送貨前，在乙方廠內拼裝給甲方檢查合格。
(Before delivery of each set of Moulds, [Defendant] shall assemble the Moulds at its factory for [Plaintiff’s] inspection and approval)
4. 本合同價格包括模具設計書及圖紙、ICE簽認、材料、製造、防銹油漆、運輸、裝拆指導；並提供技術人員在甲方廠內負責生產調試、監督及維修等工作。
(The Contract sum includes the Formworks’ design specification and drawings, ICE certification, material, manufacturing of the Mould, anti-rust painting, transportation, instructions for assembling and disassembling of the Moulds; [Defendant] shall also provide technicians at [Plaintiff’s] yard for production testing, supervision and repairing works.)”
13. Appendix C to the Subcontract is section 38 of the Particular Specification of the Main Contract (“PS 38”). The Plaintiff seeks to rely on section 38.02, 38.03 and 38.18 which set out the alignment control of the segmental structures, tolerances for the match cast precast concrete box units, and the qualities required for the forms for precast segmental construction. They are as follows:
“38.02 (2) ......
For precast segmental construction using short bed casting techniques, precision surveying systems shall be provided so that levels and horizontal alignment are measured to an accuracy of +/-0.3mm. ……
38.03 Individual match-cast segments shall be manufactured with the following tolerances :
Web thickness ± 5mm
Top flange thickness + 10mm to 0mm
Bottom flange thickness + 5mm to 0mm
External overall dimension ± 5mm
Length of match-cast units 0mm to - 10mm
Diaphragm dimensions ± 5mm
In accordance with the requirements for alignment control, external dimension shall be measured and used as a basis for adjustment of subsequent matches requirements, such that cumulative error does not exceed the stated tolerance at any construction stage.
38.18 All side, bottom, inside, and bulkhead forms for precast segmental construction shall be constructed of steel unless use of other materials is approved by the Engineer.
Forms shall be of sufficient thickness, with adequate external bracing and stiffeners, and shall be sufficiently anchored to withstand the forces due to placement and vibration of concrete. Internal bracing and holding devices in forms shall be limited to captive bolts in webs or tie rods inside. PVC pipes which can be removed from the concrete surface to permit patching following form removal. Joints shall be designed and maintained for mortar tightness.
…….”
14. The Plaintiff further relies on terms being implied into the Subcontract (as pleaded in paragraph 5 of the Re-re-re-re Amended Statement of Claim (“SOC”). It pleads that pursuant to the implied terms of the Subcontract, the Defendant should carry out the Subcontract works using all proper skill and care, and that the works carried out should be reasonably fit for the purpose under the Subcontract. There is no express pleading as to what the purpose of the Subcontract was, but Counsel argued that this was for the production or fabrication of all the segments for the Project which were 1,403 in number, and hence the Formwork System or moulds should attain the level of durability to render same fit for production or fabrication of the 1,403 segments.
15. The Plaintiff’s case is that the Defendant was in breach of the Subcontract, in that the Formwork System designed, supplied and delivered by the Defendant was defective, and that no or insufficient assembly instructions and/or insufficient technician had been provided at the Plaintiff’s casting yard to carry out tests, adjustments, supervision, maintenance and repairing works. The Plaintiff claims that as a result of the defects, it had to incur costs for repairing or making good the defective viaduct segments, replacing and re-casting some items, modifying and/or repairing the defective Formwork System, and had to procure a new set of formwork and hydraulic tools, all of which costs it claims from the Defendant, in addition to damages such as idling costs incurred. Sums of approximately HK$2 million and RMB 2.7 million are claimed from the Defendant, together with a claim for return of advance payments of HK$2.2 million made.
16. The defects complained of by the Plaintiff and as pleaded were particularized in the Scott Schedule (“Schedule”) directed by the Court to be filed, which Schedule was used in the course of the trial, and in Counsel’s opening and closing submissions. There was a total of 128 itemized claims of defects in the Schedule (“Scheduled Claims”), and 3 claims for repayment of advanced payments made to the Defendant. The Schedule set out and reflected the parties’ respective case on the evidence, and Counsel’s submissions on each of the Scheduled Claims.
17. In gist, the Defendant denies that it was responsible for the defects alleged, which were either not defects or had been caused by the Plaintiff’s own fault and/or misuse or mishandling of the Formwork System. It counterclaims for unpaid sums of HK$1.36 million and costs of additional works in the sum of HK$568,000.
18. As early as on 19 November 2019, the Court granted leave for expert evidence to be adduced, on defects and quantum. Mr Chan was appointed as the single joint expert (“SJE”) on liability, and Mr Battersby was appointed as the SJE on quantum. Expert reports have been filed. The Plaintiff found fault with the SJE report of Mr Chan, and applied in February 2021 for leave to adduce its own expert’s report on defects. That application was dismissed by the Court, for the reasons set out in this Court’s decision of 11 May 2021. The Plaintiff’s appeal was likewise dismissed on 19 August 2021. It was particularly pointed out in the decisions of the Courts that it was open to the Plaintiff to apply to cross-examine the SJE and in any event to seek any clarification and explanation from Mr Chan in relation to any of the matters he had dealt with in his report, and which the Plaintiff considered to be inadequate, or unclear.
19. At the commencement and in the course of the trial, the Plaintiff withdrew 114 of the Scheduled Claims, and also withdrew the claims for repayment. Counsel for the Plaintiff further informed the Court and Counsel for the Defendant on the first day of trial that the Plaintiff would not be calling either of the SJE to give evidence, or to answer any questions which the Plaintiff may have in relation to the SJE reports.
20. References below to the items of defects are to the disputed itemized claims in the Schedule.
21. To summarize the claims which are being pursued by the Plaintiff, they fall into 3 categories:
(1) Those relating to alleged deformation of the bottom soffit panels of the metal formwork, which include sinking curvature, uneven surfaces of the panels and distortion of the grooves or lines of the panels. The Plaintiff claims that these defects were caused by the Defendant’s faulty design and construction, and that as a result of the cumulative effect of the defects found, the Plaintiff had to acquire additional bottom formwork for the WH, WS 1, WS 2, NH and NS types (the A, B, C, D and E Scheduled Claims).
(2) Those relating to the hydraulic system and the hydraulic jacks, which necessitated repair costs, the replacement of 8 pieces of segments and the need to acquire 2 additional sets of hydraulic tools (the G Scheduled Claims).
(3) Those relating to defects in the geometry cart (the H Scheduled Claims).
Items A41, A47, B13, B19, C7, C8, D8, D14, E8, E12
22. This is a series of claims made by the Plaintiff, as to the severe deformation of the bottom soffit panels of the metal formwork, which include sinking curvature, uneven surfaces of the panels and distortion of the grooves or lines of the panels, which the Plaintiff claims were defects caused by the Defendant’s faulty design and construction.
23. The Plaintiff explained that the defect in the Defendant’s design is the inadequacy and insufficiency of the support for the bottom soffit panel, which results in deformation of the panel. The Plaintiff claims that the width of the supporting frame for the bottom soffit panel (5,500 mm) is smaller than the width of the bottom soffit panel itself (5,648 mm), resulting in insufficient support for the 2 edges of the bottom soffit panels. All types of the moulds in question share the same common feature. The design drawings show the bottom soffit panels as consisting of an upward curved feature to give curvature shape to the segment in the groove line. The lack of support for the edges of the bottom soffit panels (or the overhanging) prompted the sagging and hence deformation of the curvature and the groove line. The Plaintiff’s case is that due to such design error, all types of the bottom soffit panels suffered from defects of deformation, and the defect in the moulds/formwork affected the evenness of the surface of the cast segment, leading to set back grooves. The result is that the segments cannot achieve the F5 requirement prescribed under clause 1.2 of the Technical Specifications.
24. It goes without saying that for technical claims such as these made in the proceedings herein, the Court lacks the necessary expertise to form a conclusion as to whether or not the defects claimed did exist. Unless the defects are all clear and obvious to the naked eye of an untrained person, it is inevitable that the Court will have to look to and rely on expert evidence. Although it is trite that the Court is not bound to follow and accept the conclusions made by an expert called in the proceedings, there must nevertheless be sufficient basis before such expert evidence can be rejected by the Court - either as not being borne out by the evidence available, or because the expert’s view cannot be rationalized or supported by the expert’s analysis.
25. In this case, the SJE appointed expressed his opinion that of the 128 alleged defects which are the subject of the Scheduled Claims, only 43 items could be properly described or considered as defects. However, not all of the defects identified were attributable to the Defendant, as the SJE found no evidence that they were defects caused by the inherent inadequacy of the Defendant’s design of the formwork. He considered that some of the defects were caused by the Plaintiff’s improper usage or mishandling of the formwork in the production process under a demanding time schedule, and others were caused by lack of proper maintenance aggravated by the demanding production process.
26. As the Court of Appeal pointed out in the Decision of 19 August 2021, whether or not the causes found by the SJE were the causes pleaded by either party does not prohibit the SJE to point out his true and honest opinion on what he found to be the cause of the defects complained of, as indeed that was his duty so to do. Nor is the Court entitled to ignore the SJE’s expert opinion on such cause, simply because it was not the parties’ pleading.
27. In relation to the claim of deformation and the sinking curvature of the bottom soffit panels, the SJE considered that there was no evidence of deficiency in the Defendant’s design and fabrication of the formwork, but the defects complained of may have been caused by mishandling, or lack of regular maintenance.
28. The SJE on liability, Mr Chan, is a chartered civil engineer, an accredited Project Manager in engineering and construction contracts, and had experience in the design and construction of multi-disciplinary projects in civil engineering and building structures since 1981. He had extensive experience in Hong Kong, Mainland China, Singapore and Canada, in technical and contractual capacities. Mr Chan had been the Senior Resident Engineer of various highway, suspension bridges and viaduct bridges projects in Hong Kong.
29. In reaching the conclusions made in the SJE report, Mr Chan had examined the contract documents including the contract specifications of the Subcontract, as well as the drawings, photographs, reports and other documents supplied by the parties. On that basis, he formed the view that there were no design defects, and that the defects complained of were not caused by any deficiency in the formwork.
30. Counsel for the Plaintiff reiterated that the deformation and deterioration in the bottom soffit panels were caused by the lack of support and the width of the supporting frame being smaller than the width of the panels. The Plaintiff criticized the SJE for not having given proper consideration to the Plaintiff’s case of insufficient support and the difference in the width, and in Court questioned why the SJE had rejected the Plaintiff’s said argument.
31. The Plaintiff has consistently refused to accept the SJE’s conclusions, that the defects complained of were not caused by any design failure. This was despite the fact that the contract specifications and drawings had all been provided to the SJE who must have considered them. Despite the Plaintiff’s criticisms of the SJE conclusions, and despite the reminders given by this Court on different occasions, and by the Court of Appeal in August 2021, the Plaintiff never sought to seek clarification from Mr Chan, eg as to why the alleged widths and the alleged insufficiency of support did not have any bearing on Mr Chan’s conclusions stated in his report. This Court can only conclude from the Plaintiff’s dogged refusal to seek clarification from the SJE, or to cross-examine the SJE, that even the Plaintiff did not consider the widths and the insufficient support it complained of were the causes of the alleged defects, to constitute breach of contract on the Defendant’s part, and that there is no good ground to reject the SJE’s evidence.
32. In any event, and as this Court pointed out at the time of the Plaintiff’s closing, it was grossly unfair to both the SJE and the Defendant, for the Plaintiff to advance its criticisms and to pursue its own case on the technical or other cause of the defects, without having given the opportunity to the SJE to explain his views and for the Defendant to respond thereto if the SJE should be minded to accept the Plaintiff’s arguments. There was simply no excuse for the Plaintiff in this case not to follow the usual procedure adopted, for seeking clarification from the expert first, and then if necessary, by amplification and cross‑examination at trial.
33. To support its claim of defects and of the Defendant’s breach of the Subcontract, the Plaintiff sought generally to rely on the fact that there had been either correspondence exchanged, or other evidence of rectification works being carried out by the Defendant at the request of either the Plaintiff or the Project Engineer. In relation to the claim of deformation, for example, the Plaintiff relied on the fact that the Plaintiff’s inspection report dated 4 May 2015 recorded the deformation of one corner of the WH type of bottom soffit panel, and further, that rectification work had been carried out as recorded in the Defendant’s emails.
34. However, the fact that complaints had been made of the existence of an alleged defect, and the fact of rectification works having been carried out, are not evidence of the cause of the defects. The inspection reports and correspondence relied upon by the Plaintiff did not record why there was deformation - which is the issue in dispute. The deformation might have been caused by other factors, such as mishandling by the Plaintiff on site, or lack of maintenance, as pointed out by the SJE as a possible cause. Nor was any witness called by the Plaintiff from either the Main Contractor, or the Engineer, to elaborate on the inspection reports and the rectification works, and to explain the cause of the defects complained of.
35. The documents and general correspondence relied upon by the Plaintiff as to the existence of the alleged defects, therefore, cannot reliably be treated as evidence which discredits the SJE’s technical and expert finding, or to form sound basis to justify the Court’s rejection of the technical view of the SJE. As this Court sought to emphasize at the hearing, the alleged defects complained of by the Plaintiff are not matters which the Court can judge by mere visual examination, even if examination of the massive segments was ever possible.
36. In its defence, the Defendant sought to rely on the fact that the formwork produced by the Defendant had to comply with the stringent tests and inspections of, and approval by, the Plaintiff as well as the Main Contractor and the Employer’s representatives such as the Engineer, before full scale production could even commence under the Subcontract. The Defendant’s preliminary shop drawings had been submitted and were finally approved by the Plaintiff pursuant to clause 5.4 of the Subcontract. A set of the updated shop drawings were submitted by the Defendant before the parties proceeded to manufacture the Formwork.
37. The Defendant was required under clause 2 d) of the Subcontract to submit a certification by an independent checking engineer (“ICE”) of its design and calculation (to verify the structural integrity of the formwork), and this was duly done on 22 April 2014. The Defendant emphasized that on-siteinspection of the formwork by the ICE was not necessary, as this had been specifically excluded in the Defendant’s quotation, and it was for the Plaintiff to make its own arrangements for on-site inspection and ICE checking. The Formwork was set up in the Defendant’s factory for inspection and checking by the Plaintiff, the Main Contractor and the Project Engineer before delivery to the Plaintiff’s yard. Trial assembly of the formwork at the Plaintiff’s site was carried out by the Plaintiff, under the supervision of the Defendant, all in accordance with clauses 4.4 and 5.4 of the Subcontract. The Defendant further highlighted the fact that installation at the Plaintiff’s yard was not included in the scope of works, this being only an “optional” item which was not adopted by the Plaintiff. Assembly drawings and instructions manuals had been provided by the Defendant to the Plaintiff. The Plaintiff’s witness accepted in cross‑examination that the procedures stipulated in the Particular Specification, for design approval, inspection of the manufactured formwork and trial production of the segments, had all been complied with to the satisfaction of the Main Contractor and the Project Engineer.
38. In this regard, clause 5.4 of the Subcontract expressly states that the approval by the Plaintiff of the shop drawings and materials does not release the Defendant’s liability under the Subcontract for the quality and performance of the steel formwork and the hydraulic system. The Plaintiff’s approval per se cannot mean that the Formwork System produced must be free from defects. However, I accept that clauses 4.3 and 4.4 of the Technical Specifications only impose obligations on the Defendant in relation to installation of the moulds, and to ensure on-site installation of the moulds and formwork to be in place. The Defendant has highlighted in its evidence that contractually, it was not involved in the process of the casting or concreting of the segments from the moulds.
39. As evidence of the fact that the formwork produced had no inherent or design defects, the Defendant further relied on the fact that after the 5 sets of the formwork moulds had been delivered, they were put into normal production in March 2015, as recorded in the minutes of meetings and evidenced by the weekly production reports. Emphasis was made of the fact that out of the total 1,403 pre-cast concrete segments produced for the Project, 93.5% were produced from the Formwork System supplied by the Defendant. Only 90 segments (as pleaded) were produced with the new set of WH formwork acquired by the Plaintiff from the other supplier (“ZJ”), which new set was allegedly to replace the Defendant’s defective sets. The Defendant highlighted the fact that contrary to what was claimed by the Plaintiff, the ZJ set of formwork was used to produce standard segments, and not the non-standard or more difficult type as alleged by the Plaintiff’s witness. According to the Defendant, the evidence clearly shows that the additional formwork and hydraulic tools procured by the Plaintiff from ZJ were not in fact to replace those supplied by the Defendant on the ground that they were faulty or defective, but were actually used to supplement the Defendant’s sets.
40. In this respect, it is to be highlighted that Counsel for the Plaintiff did not pursue to argue, at closing, that the Formwork System was not fit for the purpose of producing viaduct segments.
41. As part of the background, the Defendant pointed out that at the outset, when the Defendant was asked to submit its quotation, the Plaintiff had asked the Defendant to propose the suitable number of formwork to be used, for producing the required number of precast segments for the Project. After considering the information provided and based on its experience, the Defendant had tendered and proposed to use 6 sets of the Formwork System. However, the Plaintiff chose to delete one set, and acquired 5 instead of the Defendant’s tendered 6 sets of the formwork moulds, at a saving in costs of HK$976,864. On the Defendant’s case, this put pressure on the production schedule and increased the production burden and turnout volume of segments for the 5 instead of the 6 sets proposed. That was the reason why the Plaintiff’s production of the segments fell behind schedule, and why there was “over use” of the formwork produced by the Defendant, finally leading to the acquisition of an additional set of formwork from ZJ.
42. Further, the Defendant’s case is that the reduced number of the Formwork System and the tight production schedule had effect on the time available for carrying out normal maintenance to keep the Formwork System in good condition, in that the time for maintenance was shortened, and extinguished in the most extreme case.
43. There is support from the SJE report, when Mr Chan referred to and explained the typical flowchart of the segment production cycle, and the planning of such cycle to achieve a one-day cycle in segment production. Mr Chan stated:
“The flow of the production sequence should be very smooth， without any hiccup in each step of the process.
In order to meet the demanding production requirements, and to keep up the progress with a limited Nos. of Steel Moulds, it is likely to lead to the lack of proper replenishing of the Moulds and lack of maintenance of the Formworks as a whole.
It is noted that the Plaintiff strived to achieve the one-day cycle (for production of standard Segments) for the sake of economy and efficiency of segment production, but did not succeed for this project. The average Nos. of Segments produced was approx. 2.5 to 3 each working day for the 6 Nos. Moulds (before the deployment of the additional mould and components). It may be caused by the less desirable turnaround time of the mould usage. However, it is almost certain that the Plaintiff had attempted to handle the moulds in the shortest time. This may cause in occurrence of Defects under exacerbated wear and tear of the Formworks, e.g. the distortion/deformation or bursting of the Moulds in the latter stage of Segment production.”
44. Exacerbated wear and tear of the formwork was hence considered by the SJE as one of the possible causes of the defects found. Mr Chan further stated at page 452 of his report that the causes of the defects after trial assembly of the MH type mould was “mainly the improper usage and lack of maintenance under the demanding production program requirements, while the number of moulds deployed (ie notably in particular the numbers of bottom moulds which facilitate the efficient transport of the cast segments) was inadequate”.
45. Mr Chan concluded that if the formwork had been under proper usage and proper maintenance, most of the defects complained of would not have occurred (apart from the aesthetic defects regarding non‑compliance with the F5 finish).
46. The expert is entitled, and duty bound, to give his opinion on the cause for a defect, whether or not such cause was pleaded by any party. A party seeking to rely on the expert’s evidence may consider amending its pleading, but in this case, it is not for the Defendant to positively assert the cause of the defects complained of by the Plaintiff. It is sufficient for the Defendant to deny that the Formwork System was defective, and to deny that the defects complained of were caused by any breach of contract on its part – as it has amply done in the Defence. It is for the Plaintiff to prove the cause of the defects as alleged, and that the defects were the result of the Defendant’s breach.
The question of mishandling and maintenance
47. Mr Chan pointed out in his report that one cause of the deformation of the panels could have been mishandling, or lack of regular maintenance, and that the Plaintiff should be asked to explain whether regular maintenance had been carried out.
48. In relation to maintenance, the Plaintiff relies on clause 5.9 of the contract, which requires the Defendant to “maintain the good condition of moulds due to wear and tear in the normal circumstances of viaduct segments production to the satisfaction of (the Plaintiff)”. If the defects were the result of improper maintenance, the Plaintiff claims that the Defendant should be liable for breach of its contractual duty under clause 5.9.
49. For item B13, for example, the Plaintiff claims that there was severe deformation of the panels, uneven surfaces and distortion of set back grooves or lines. The Defendant claims that these and other defects complained of by the Plaintiff were caused by the workers’ misuse and mishandling of the Formwork System. There is evidence of the Plaintiff’s workers having cut the long tie-bar which forms an integral part of the Formwork System into 3 pieces, which were then reconnected by steel hooks and welding. The Plaintiff’s witness, Mr Lai, admitted in cross-examination that this was done for convenience of work, and that the Plaintiff had not consulted the Defendant before adopting such move. Mr Lai further admitted that it was his guesswork, that such cutting of the tie bars would not cause any deformation of the Formwork, and that he had not carried out any calculations (nor was he qualified) to verify this.
50. There is also evidence of the workers’ failure to tighten the bolts at the bottom formwork. This, according to the Defendant’s witness (Mr Yuan) would cause part of the secondary bottom formwork at the junction with the main bottom formwork to “jerk up”. Without ascertaining the real cause for the deformation of the bottom formwork, the Plaintiff’s workers had simply cut away the fixing bolts at the bottom formwork, to enable the raising of the secondary soffit panel. The Defendant had complained that this was boorish treatment of the Formwork System, which had caused damage. Further, the Defendant’s evidence is that although the design drawings indicate that the secondary bottom formwork should be supported by 4 inclined props and 2 vertical supports, only 2 inclined props were installed to support the secondary bottom soffit panel – as shown in the photographs submitted in evidence. The Plaintiff’s witness confirmed in cross-examination that the concrete segment above the soffit panel shown in the photograph had been freshly cut, and that the props had to be removed for dismantling the formwork and that the inclined supports had to be removed in order to lower the secondary soffit panel. However, Counsel for the Defendant pointed out that the specifications of the contract provided for the formwork to be dismantled only after the newly cast segment had gained sufficient strength, and that the secondary soffit panel only had to be lowered when the newly cast segment was shifted from the wet cast position to the match cast position, as clearly shown in the Defendant’s design drawings.
51. Further evidence of the mishandling and lack of experience of the Plaintiff’s workers was found in and corroborated by the Defendant’s inspection report dated 25 August 2015, which referred to the workers of the Plaintiff having placed 2 timber posts on the bottom formwork in the same direction as the supporting steel members. According to the Defendant, this caused uneven distribution of the loading forces onto the bottom formwork, and led to the subsequent deformation of the same.
52. All these questions of operation in the production process require the technical expertise and experience of an expert in the field, to decide which version of the parties’ evidence is to be accepted. A case can be put to a skilled tribunal for expert determination, but this is not the choice of the parties to these proceedings. Without the necessary expertise, the Court cannot decide that the SJE’s evidence, on mishandling being a cause of the defects, can be reliably rejected.
53. The Defendant referred to its email of September 2015, and the photograph appended thereto, which showed that after the concreting works, the Plaintiff’s workers had not cleared out the residue cement paste from the gap between the primary and the secondary bottom formwork, which aggravated the excessive gap width. The Defendant’s email of 15 June 2015 also recorded that the Plaintiff’s workers had not replaced the oil in the hydraulic system for more than 9 months, and that no maintenance work had been carried out, which led to problems in the operation of the hydraulic system. The Defendant had replaced a new oil box with new engine oil on 9 June 2015, to ensure that the Formwork System could be operated properly.
54. The Plaintiff emphasized that it was the Defendant’s duty under the contract to maintain the moulds to the satisfaction of the Plaintiff, and further, that it was for the Defendant to give the necessary instructions and supervision to the Plaintiff in the course of production.
55. More generally on the issue of the Defendant’s alleged duty of supervision and instruction, clause 4.4 of the Technical Specifications states that the Defendant should be responsible for “ensuring on-site installation of the formwork” and for instructing/guiding the Plaintiff’s workers on “operation and installation of the moulds”. Clause 5.4 of the Technical Specifications also provides that the contract sum includes “instructions for assembling and disassembling of the moulds”, and also that the Defendant should provide technicians at the Plaintiff’s yard “for production testing, supervision and repairing works”. Whilst there is clearly a duty imposed on the Defendant in relation to the installation, assembly and disassembly of the moulds at the Plaintiff’s site, I do not consider that read in the entire context of the Subcontract, clauses 4.4 and 5.4 of the Technical Specification are sufficiently wide to impose on the Defendant a duty to supervise the casting process or its details, or to attend to round-the-clock or daily check or supervision on site of the operation of the moulds in the segment production/concreting process. The obligation of instruction is to give instructions on the operation and installation of the moulds. That does not entail on-site instructions. Nor does the contractor’s duty to supervise call for its continuing presence at the site, whilst manufacture from the moulds is carried out.
56. The Defendant’s case is that it had in fact given all the necessary training to the Plaintiff, and that after production process had started, it had continued to give instructions to the Plaintiff’s workers, at least before the Defendant was ousted and refused access to the Plaintiff’s sites, but the Plaintiff and its workers repeated the same mistakes in their handling of the moulds in the production process, as they all lacked the necessary experience and skills in the operation of the Formwork System and in the production of the segments. In the context of the hydraulic system in particular, the Defendant claims that it had already provided to the Plaintiff the user manual for the hydraulic jack, and this stated that hydraulic oil had to be replaced after 6 months, and thereafter, to be replaced once every year. The Defendant emphasized that this was actually common knowledge to those with experience in operating hydraulic systems, but the Defendant had replaced the oil box in June 2015, when it detected the lack of maintenance on the part of the Plaintiff. It is also the Defendant’s case that it had complied with all requests made by the Plaintiff for its service and assistance under the Subcontract, irrespective of whether it was the Plaintiff, or the Defendant, which had caused the problem encountered. This was until the Plaintiff refused to give the Defendant access to the casting yard, and took away all the cameras and mobile phones of the Defendant’s employees who had tried to enter the casting yard in November 2015. The Defendant emphasized that it was not able thereafter to gain any information from the Plaintiff as to any work carried out by the Plaintiff in maintaining the production with the Formwork System supplied by the Defendant, or any problems encountered in the course of the Plaintiff’s use of the Formwork System.
57. I also accept the Defendant’s submissions, that its duty of maintenance under clause 5 of the Subcontract is restricted to maintenance of the condition of the moulds due to wear and tear and normal use in the production process, and does not extend to any damage due to mishandling or failure to follow the instructions of the Defendant or as contained in the drawings.
58. Bearing in mind the SJE’s expert opinion, that the defects were not the result of any design fault, and on the evidence adduced by the Defendant of mishandling by the Plaintiff’s representatives and workers, I am unable to find that the Plaintiff has proved, on a balance of probabilities, that the defects they complained of were due to the Defendant’s breach of its obligations under the Subcontract. All the questions raised by Counsel for the Plaintiff, as to how the SJE’s conclusion as to improper usage and mishandling being the cause of the defects was unclear, and should not be accepted, and all the claims made by the Plaintiff, that the SJE had not considered various alleged matters, should all have been raised with the SJE. It is not just a fact‑finding exercise by the Court, as Counsel for the Plaintiff argued. Whether the facts referred to by the Defendant as amounting to mishandling, or misuse, contributed in any way to the deformation and deficiencies as alleged, and whether the SJE had taken into consideration the factors contended by Counsel for the Plaintiff to be relevant to the cause of the defects, require expert knowledge and understanding of the design of the Formwork System and of the intricate production process ‑ which the Court lacks. It is simply not possible for the Court to decide, for example, whether the uneven loading pressure put on the bottom formwork soffit panel by the timber posts could cause the deformation complained of. This is a matter which the SJE might have clarified if he had simply been asked to do so. Other than using guesswork ‑ which is not the proper approach ‑ the Court cannot decide these disputed technical issues, and must rely on expert opinion. Simply applying common sense, however, one would expect that for a contract providing for the design of the Formwork System for production of the massive segments to the degree of precision specified, there must have been a more sophisticated manner of operating the formwork and the hydraulic system, instead of using timber posts and cutting the bolts to raise the secondary soffit panel, which was what the Plaintiff’s workers had done, when technical problems were encountered.
59. What is more telling is that according to the SJE on quantum, regardless of whether the Defendant should be liable for the defects in the formwork complained of by the Plaintiff, the reasonable costs of rectifying the defects in all the WH, WS1, WS2, NH, and NS formwork and in the bulkhead, were only RMB 167,333.40. There was simply no reasonable justification for the Plaintiff to acquire the additional sets of replacement Formwork System, at the costs of HK$1,435,700 (A41 and A47) and HK$620,630 (B19, C18, D14 and E12).
G claims
60. The itemized claims under G relate to alleged defects in the hydraulic system, and the claims under H relate to the hydraulic cart which is part of the support for the hydraulic system. The hydraulic system is for the adjustment or repositioning of the formwork, and assists the separation process of the match cast segment and the newly cast segment. The hydraulic jack is supposed to be adjustable, and is used for or enables rotating and/or repositioning the match cast segment to the designated position and/or specified angle.
61. From my understanding of the “Summary of the Plaintiff’s claim and Quantum SJE Assessment” submitted by Counsel for the Plaintiff on 29 September 2021 (“Plaintiff’s Summary”), the Plaintiff claims RMB 1,040,000 as the costs of re-casting 8 segments (claims made under G15), and the further costs of acquiring 2 additional sets of hydraulic tools at RMB 200,000 (G16), all by reference to the defects itemized as G3 and G11, G6 and G9, G8 and G7 and G10. The quantum SJE’s assessment of the costs of reconstructing the 8 segments are RMB 162,621.68.
G3, G7 and G11
62. Of all the Scheduled Claims, only G3, G7, G11 and H3 were considered by the liability SJE to be defects attributable to the Defendant’s fault. G3 relates to leakage of hydraulic oil, G7 relates to the inability of the ram jack to return to its original level and G11 relates to snapping of the hydraulic oil pipes. The SJE expert on liability agreed that they were likely to be defects which were caused by the Defendant. However, the costs of rectifying the G3, G7 and G11 defects could not be individually assessed by the quantum SJE for lack of information from the Plaintiff as to its loss or expenses.
63. If the quantum SJE had not been able to assess any reasonable costs because of the lack of supporting documents from the Plaintiff, that is entirely the fault of the Plaintiff which carries the burden of proof in any case, and no sum can be allowed by the Court.
G6, G8, G9-10, G15-17
64. These claims on the hydraulic system include the Plaintiff’s complaint that the support frame for the bottom panel could not be jacked up due to the hydraulic jacks’ lack of sufficient power (G6), the hydraulic jack not being able to achieve a leveling precision within a limit of 1 mm (G8), the retraction of the ram jacks (G9), and the raising and lowering of the ram jacks being difficult to control (G10). As a result of these defects, the Plaintiff claims repair costs of the hydraulic system, in the sum of RMB 43,160 (G17). The plaintiff also claims that it was as a result of these and other defects in the hydraulic system that 8 pieces of concrete segments had to be re-cast, at the cost of RMB 1,040,000 (G15) and 2 additional sets of hydraulic tools had to be acquired as replacement for the defective tools, at a cost of RMB 200,000 (G16).
65. The Defendant claims that the capacity of the hydraulic jacks was sufficient to support the concrete segments and the bottom soffit panel, and that the defects complained of under G6 resulted from the Plaintiff’s mishandling. The Plaintiff’s response is that notwithstanding the Defendant’s reliance on the capacity of the hydraulic jacks, there is no evidence from the Defendant as to the capacity of the hydraulic jacks or that it accorded with the contractual capacity.
66. The SJE on liability stated his opinion that G6, G8, G9 and G10 were not defects. Apart from the SJE’s expert opinion, the Court has no other evidence and lacks the expertise to conclude whether the capacity of the hydraulic jack was adequate, or was in any way non‑compliant with the contractual specifications, and whether there was mishandling in the operation of the entire system which caused the malfunctioning complained of. Although the SJE had stated, in relation to G9, that his opinion (that the said claim was not a defect) was subject to the Plaintiff being able to adduce evidence of “malfunctioning regardless of maintenance”, I regret that without the SJE having been called to clarify whether the factual evidence available from the parties constituted sufficient evidence of malfunctioning to be attributable to the fault of the Defendant, the Court is not in a position to decide, on the basis of the factual witnesses’ evidence: whether the nuts or bolts of the hydraulic jacks should be fastened whilst adjusting the position of the bottom soffit panels, or whether the hydraulic jacks were for adjustment rather than for sustaining the weight of the bottom soffit panels and the cast segments (as the Plaintiff claims), and generally, whether the manner of the Plaintiff’s operation of the Formwork System including the hydraulic system constituted “mishandling” to have contributed to the malfunctioning complained of. The Court can only rely on the SJE’s expert opinion, that the defects complained of do not constitute a breach of the design and contract specifications, nor of the duties of the Defendant thereunder. Contrary to the submissions of Counsel for the Plaintiff, it is not for the Defendant to adduce evidence of its compliance with the contract standards (such as the capacity of the hydraulic jacks), as the onus and burden remain on the Plaintiff, to prove the Defendant’s breach of contract to the satisfaction of the Court.
67. Having failed to prove that the defects complained of were the result of the Defendant’s breach, there is no basis to allow the Plaintiff’s costs of repair, nor its costs to acquire the replacement tools.
68. Specifically, G8 concerns the leveling precision which the Plaintiff claims the hydraulic jacks are required to achieve under the Subcontract, within a limit of 1mm. The Defendant denies that there was such a precision limit, and the SJE on liability had sought clarification from the Plaintiff as to whether the 1mm was a requirement imposed in addition to the contractual scope, which clarification the Plaintiff did not appear to have provided to the SJE.
69. At trial, Counsel for the Plaintiff referred to and relied on section 38.02 (2) of the Particular Specification to the Main Contract, which states that “for pre-cast segmental construction using short bed casting techniques, precision surveying systems shall be provided so that levels and horizontal alignment are measured to an accuracy of +/‑ 0.3mm”. Counsel argued that the SJE had not considered this contractual provision when he opined that G8 was not a defect, and pointed out that the 0.3mm specified in the Subcontract terms is even lower than the 1mm requirement specified by the Plaintiff.
70. However, I accept the submissions made by Counsel for the Defendant, that section 38 of the Particular Specification does not on its face apply to the claim made as to the alleged defect in the hydraulic jacks.
71. The complaint made under G8 is contained in paragraph 422 of the witness statement of the Plaintiff’s Mr Lai, where he explained that the hydraulic system had to be sensitive, and that the hydraulic jack had to achieve a precision level of 1mm. The Defendant denied that this precision level was a contractual requirement.
72. Section 38 of the Particular Specification, relied upon by the Plaintiff, relates to precast segmental construction, and section 38.02 makes provision for “alignment control of segmental structures”. The section states:
“38.01 Precast segmental construction shall conform to other relevant Sections of the Particular and General Specification. The requirements of Section 38 shall take precedence.
38.02 (1) The Contractor shall construct the superstructure such that, on completion, it conforms to the requirements of the specified geometry. Full allowance shall be made for deflections and rotations due to all permanent loads, the permanent prestress and all time dependent movements such as creep and shrinkage. Contractor method and sequence of construction shall be taken into account.
(2) The Contractor shall submit to the Engineer for approval a Geometric Control Plan which shall be a method statement to demonstrate how the alignment of the completed structure will be achieved. The Plan shall indicate in detail how the survey is to be performed and the Contractor’s actions proposed to assure proper erection of the structure to achieve the long term final grade shown in the Contract. The Plan shall provide for regular monitoring of the superstructure deflections and shall include procedure to be utilized should the span, as erected, deviate from the predicted alignment.
The Contractor shall check the spatial alignment of the structure, as specified in the Geometry Control Plan, and shall maintain a record of all geometric checks and of all adjustments and corrections made. All surveying shall be performed at a time that will minimize the influence of temperature.
For precast segmental construction using short bed casting techniques, precision surveying systems shall be provided so that levels and horizontal alignment are measured to an accuracy of +/‑0.3mm. Careful checks of both measurements and computations of geometry shall be made by the Contractor before moving units from their casting position. Computed coordinates of all sections cast shall be completed before casting a new unit. In addition to the computed as built casting curves for vertical and horizontal deflections, a cumulative twist cure shall be computed using the measured cross slopes of the individual units as a check on the extrapolated deflections. In computing set up elevations in the match-cast process, priority shall be given to correcting twist errors by proper counter-rotation. The unit in the match cast position shall not be subjected to a stress inducing twist.
38.03 Individual match-cast segments shall be manufactured with the following tolerances:
Web thickness 5mm Top flange thickness +10mm to 0mm Bottom flange thickness +5mm to 0mm External overall dimension 5mm Length of match-cast units 0mm to -10mm Diaphragm dimensions 5mm In accordance with the requirements for alignment control, external dimension shall be measured and used as a basis for adjustment of subsequent matches requirements, such that cumulative error does not exceed the stated tolerance at any construction stage.” (emphases added)
73. Section 38.02 (2) therefore provides for alignment of the completed structure and require surveying systems to be in place for measuring and ensuring that levels and horizontal alignment are measured to an accuracy of +/-0.3 mm. Tolerances of the match-cast segments to be manufactured are in turn set out in section 38.03 (with regard to thickness, external overall dimension, length of the units, etc).
74. I accept the submissions of Counsel for the Defendant, that section 38.02 (2) and the 0.3mm referred to therein are not applicable to the adjustment of the up and down movement of the formwork, nor to the function/operation of the hydraulic jack, and that the SJE therefore did not consider section 38.02 to be relevant to the claims made in G8. In any event, the Plaintiff did not call the SJE to clarify what the Plaintiff claimed he had ignored.
75. I see no basis not to accept the SJE’s conclusion, that G8 is not a defect attributable to the Defendant’s breach of contract.
76. In any event, there is no individual claim of costs or damages made in respect of G8. On the basis of the quantum SJE’s assessment of the reasonable costs of rectifying the 7 defects identified by the Plaintiff, on the assumption that all the defects in the hydraulic system were attributable to the Defendant (which is rejected by the SJE on liability), I do not accept that the recasting of the 8 segments was reasonably justified. Nor do I accept that the Plaintiff’s acquisition of the additional hydraulic tools was reasonably justifiable as a result of the defects in the hydraulic system produced by the Defendant.
G15
77. In the particular context of G15, the Plaintiff’s claim is that as a result of defects in the hydraulic system and at the geometry cart, the separation process could not be carried out smoothly and properly, and this had led to damage to the segments when they were cast. The Plaintiff claims that 8 concrete segments were damaged in the separation process and were rejected by the Main Contractor. The claim under G15 is for the costs of replacing and recasting the 8 pieces of damaged concrete segments.
78. In this respect, the Defendant highlighted the fact that before the additional set of hydraulic tools had been acquired by the Plaintiff (on the purported basis of replacing the defective tools provided by the Defendant), and put to use on 23 May 2016, 716 segments had already been successfully produced solely by using the Formwork System produced by the Defendant. Counsel for the Defendant argued that this was the best evidence of the fact that there was no systematic problem in using the Formwork System in the separation of the match cast units, and that the occasional problems which arose were due to problems other than the quality of the Formwork System, such as the inadequate skills of the workers operating the separation process, and the quality of the concrete used in the casting of the segments.
79. The Defendant pointed out that the Plaintiff had never informed the Defendant of the incident of the alleged damage occurring in the process of the separation of the match cast segments, and the Defendant had not been permitted to inspect the damaged segments so as to identify the reason or cause of the alleged damage. It was only after the commencement of these proceedings that the Defendant was made aware of the incidents of damage.
80. The Defendant further highlighted the fact that in the usual course of the Plaintiff’s operations at its casting yard, it was necessary for Non-conformance Reports (“NC Reports”) to be issued for each and every incident in which quality problems were involved. The Plaintiff only disclosed the corresponding NC Reports for 4 incidents, and these only contained a description of the damage, but not the associated corrective and preventive action plans which identify the reasons for the damage and the measures to be implemented to avoid recurrence of the problem. The Defendant argued that the Plaintiff was deliberately withholding the actual cause of the damage which had allegedly given rise to the need to recast the damaged segments.
81. For the damaged segment no AD10WU3 (“AD10”), the Defendant drew attention to the fact that it was included in the same NC Report covering 2 other damaged segments, AB9ED1 and AD4D2 (“AB9 and AD4”) which, according to the Plaintiff’s witness, were damaged by the Plaintiff’s own machinery in an area where the pre-cast segments were stored. The Defendant pointed out that there was nothing in the NC Report which identified that AD10 was damaged for a reason different to how AB9 and AD4, which were included in the same NC Report, were damaged. It was argued for the Defendant that as it is normal to group together quality problems according to the same or similar cause or reason, so that the same corrective and preventive action plan could be formulated, it is more likely than not that AD10 was damaged in the nearby plant, as opposed to its being damaged in the process of separating the match cast unit, as alleged by the Plaintiff.
82. The Defendant further pointed out that concrete segments AD10WU1, U2, U3 (ie AD10), U4 and U5 were cast in sequential order on 15, 18, 23, 26 and 28 June 2015, about 6 months before the publication of the NC Report disclosed by the Plaintiff. If AD10 had really been damaged when it was separated from its match cast segment AD10WU2, the damage should have been discovered immediately or soon after the separation process, and there was no reason why the Main Contractor had to wait 6 months to issue the NC Report. Counsel argued that this cast strong doubt on the claim that the segment was damaged in the separation process, as opposed to its having been damaged during storage in the yard, which was the case for AB9 and AD4, the 2 segments included in the same NC Report.
83. The Defendant also pointed out that if AD10/U3 had indeed been damaged when it was a wet cast unit, the correct action would have been to recast the same segment again, using the undamaged U2 as the match cast piece, and that the Plaintiff’s claim of having to recast U3, U2 and U1, with U4 as the match cast segment, was implausible. According to the Plaintiff’s witness, as a result of U3 being found to be non‑conforming, segments of the entire section of the bridge (from AD10WU1 to U10) had to be re-cast because of the requirement of match-casting, but to mitigate its loss, the Plaintiff decided to use an inverted sequence of casting, using U4 as the match-cast segment, and re‑casting only U3, U2 and U1 instead of all the 7 segments.
84. The Plaintiff’s case is that for the 2 segments AD8D1 and AC8K0, they were damaged during the separation process when the 2 segments were acting as the match cast piece. Counsel for the Defendant highlighted that no problem had been identified when these 2 concrete segments were cast, and when they were separated as the wet cast piece from the match cast piece. It was when the 2 segments were used as the match cast piece, at a time when the concrete in the segments had been hardened, that they were allegedly damaged in the separation process. On behalf of the Defendant, counsel argued that if there was any damage in the separation process, it would have been more natural for the weaker, wet cast segments to have been damaged, and the Plaintiff’s case is dubious and incredible.
85. In any event, the opinion of the SJE on the rejected segments is as follows:
“There were 2 main causes of the rejection by the Main Contractor, the non-compliance of F5 finish of the exposed concrete surface of the segments and breakages of concrete and shear keys. The non-compliance of F5 finish was likely caused by existence of numerous poker marks, discoloration, blemishes, etc. apparently as a result of impact of vibratory probes during the concrete casting process and the concrete mix itself, rather than the leaked oil stains which could be removed by grinding of the exposed concrete surface (for these failed 4 Nos. Segments).
The non-compliance of F5 finish (of these rejected Segments) was caused by the concrete breakages, not the leaked oil stains which could be removed by grinding the concrete surface.
Notwithstanding the above, it is quite unusual in this case that the Formworks warranted so much attention in its quality issues, except those relating to the aesthetics, i.e. the F5 finish requirements of the concrete surface, are much more rampant. The broken concrete slab and shear keys are more likely caused by the improper concrete casting or a hasty de‑moulding process, rather than the inherent Defects of the Formworks. This was no surprise to warrant the Consultant and the Main Contractor's serious attention and issued NCRs for the Defects to ensure remedial actions.
According to the descriptions of Non-conformities as depicted in the NCRs, the rejection of the 4 Nos. Segments (which were replaced together with the other 4 Nos. match-cast ones) were not caused by the deficiencies of the Hydraulic System. The concrete breakages were more likely caused by improper de-moulding after concrete casting for a hasty turnaround in the Plaintiff's operation, in the light of a demanding production schedule.”
86. There is no sufficient evidence to justify the Court’s rejection of the SJE’s opinion, that the broken concrete slab and shear keys were more likely caused by improper concrete casting, or a hasty demolding process. The Plaintiff’s criticisms of the SJE’s conclusions were never put to the SJE for him to clarify or explain. As the Court of Appeal pointed out, it is the duty of an expert to give his opinion on the cause of defects, based on his experience and on matters he had noted from the materials and information supplied to him, and his opinion is not to be confined by the pleadings as to what might be the more likely cause. As I have emphasized in the other parts of this Judgment, it remains the Plaintiff’s burden to establish its pleaded claims on the basis of the defects complained of, and it is not the duty of the Defendant to allege and prove the cause of the defects.
87. As also stated in the earlier parts of this Judgment, correspondence and documents on the existence of damage found, by the Plaintiff or by the Main Contractor, only show the existence of damage but not the cause. Documents recording or referring to remedial work having been carried out by the Defendant only show that work had been carried out, irrespective of the cause of the defect. Even if the Main Contractor had referred to any non-compliance with the contractual requirements, that remains the opinion of the Main Contractor and its representatives, and no one from the Main Contractor or the Employer was called to give any expert evidence. The cause of the damage, defect or alleged non-compliance with the Subcontract are the issues at the core of the dispute in these proceedings.
88. On all the available evidence, and giving due regard to the only expert’s specialist opinion, I am not satisfied that the Plaintiff has established, on a balance of probabilities, that the defects were caused by the Defendant’s breach of its contractual duties.
G16
89. The claim under G16 for the costs of acquiring the additional sets of hydraulic tools, as a result of the alleged defects in the hydraulic system, is not allowed as the Defendant’s liability for the disputed defects has not been established.
G17
90. This seeks repair costs of the hydraulic system, of RMB 43,160. The Schedule refers to a sum of RMB 43,160. According to the Plaintiff’s Summary and Appendix D to the quantum SJE’s report (at A5/1048 of the trial bundle), the assessment of RMB 43,160 represents the costs relating to G14 (hydraulic jacks), which claim of defect has been withdrawn in the finalized Schedule.
91. Counsel for the Plaintiff explained that the costs claimed under G17 were occasioned by the defects in G3 and G11 – which were accepted by the SJE on liability as defects. The receipts produced to the SJE are for nominal sums which total RMB43,160, but it is not obvious which of the receipts relate to which of the items G3, G11 and H2 (referred to in the Plaintiff’s Summary). According to Appendix D to Mr Battersby’s report, and paragraph 439 of Mr Lai’s witness statement, the assessed costs relate to work on the jacks (which claim is not accepted by the SJE on liability). To the extent that the costs relating to G3 and G11 can be identified and can be agreed between the Plaintiff and the Defendant, the sums attributable to the repair of G3 and G11 are allowed. To the extent that they cannot be agreed, I will only allow, on broad brush approach, a sum of RMB28,000.
H2
92. The claim made under H2 is that the ram jacks of the hydraulic jacks on the geometry cart to the support frame for the bottom panel was obstructed by the secondary soffit panel, due to the height of the jack. The claim is explained in paragraphs 470 to 485 of the statement of the Plaintiff’s Mr Lai. In essence, he claimed that the hydraulic jack on the geometry cart had been changed (to a “double acting/two-way” hydraulic jack) by the Defendant in around November 2014/January 2015, and that the changed jack was higher or larger, such that it could not pass through the space beneath the bottom soffit panel. The Defendant claimed that the obstruction had been created because the Plaintiff had failed to put in place the fixed bulkhead to or at the designated level. It further claimed that it was the Plaintiff which had insisted on the change in the hydraulic jack. The Plaintiff claimed that it had asked for the “double acting” jack because the original jacks were themselves defective, in not being able to pass through the space beneath the bottom soffit panel, and that in any event it was the duty of the Defendant to supply a jack fit for casting the precast concrete segments. The Plaintiff further claimed that there is no evidence that the Defendant had warned or advised the Plaintiff that the double acting hydraulic jacks requested by the Plaintiff might cause collision with the other elements of the mould system.
93. The SJE on liability did not consider that the claims made under H1 (withdrawn by the Plaintiff by the time of trial) and H2 to be defects attributable to the Defendant’s breach. In pursuing the claim made under H2, Counsel for the Plaintiff sought to argue that the SJE failed to appreciate that replacement of the double acting jacks was not an additional requirement instructed by the Plaintiff, but was a remedial action to rectify the defective hydraulic jacks. However, since the expert did not consider that there was any defect in the jacks, obviously he would not consider the remedial action as alleged to be attributable to the Defendant. The Plaintiff did not seek any clarification or explanation from the SJE, which could simply have been done, and there is insufficient basis and evidence for this Court to reject the SJE’s evidence.
94. In any event, on the Plaintiff’s own evidence, it took simple measures to rectify the alleged defect under H2 (referred to at paragraphs 480 and 484 of Mr Lai’s witness statement), incurring costs of RMB 1,120. These costs are nominal even if any defect and breach of contract on the part of the Defendant can be established.
H3
95. This is one defect which the SJE considered to be attributable to the Defendant’s fault. It relates to defective wheels of the geometry cart, and the costs claimed are RMB 38,000.
96. The Defendant claimed that it had actually replaced the wheels, but this is denied by the Plaintiff, which claims that there is no record of the Defendant’s alleged replacement.
97. The Plaintiff relies on a receipt dated August 2016, in relation to the costs it had paid for the provision of 12 sets of wheels, and for the repair of 6 tracks.
98. The Defendant challenged the receipt relied upon by the Plaintiff as evidence of the costs which the Plaintiff had incurred in relation to the defective wheels, pointing out that the defects in the wheels were discovered in 2015, but that the receipt was dated 2016.
99. The Plaintiff explained that the date of the receipt does not represent the date when the work was carried out. However, the receipt in question was stated to be for 12 sets of wheels for the remade bottom formwork and for repairing 6 sets of tracks, as opposed to being 4 sets of wheels for the geometry cart (said by Mr Lai to be the actual replacement). I would envisage any supplier/repairer invoicing and issuing receipts for its costs to be exact and precise in identifying the work carried out. With all the discrepancies, I am not satisfied that Mr Lai’s explanation is adequate to show that the receipt does relate to the work for the wheels in question, and the claim is not allowed.
Conclusion
100. The Plaintiff’s claims made in this action have either be withdrawn, or have not been shown to the satisfaction of the expert and the Court to have been caused by or result from the Defendant’s breach of the Subcontract. Nor has the Plaintiff proved its loss and expense as a result of any breach established. The only claims I have allowed are RMB28,000. This is negligible, compared with the original claim made in the Statement of Claim, of HK$4,255,430 and RMB2,730,006.40.
101. Save for the sum of RMB28,000, the Plaintiff’s claims are accordingly dismissed, with costs to the Defendant.
Counterclaim
102. In its Counterclaim, the Defendant sought payment of the balance of the sum payable to it under the Subcontract, of HK$1,361,933.20. It also seeks payment for additional work carried out at the Plaintiff’s request, as particularized in and evidenced by the Purchase Orders and invoices it had issued to the Plaintiff between March 2014 and May 2015, in the total sum of HK$568,110.
103. The Plaintiff’s defence to the Counterclaim relies on its claims of the Defendant’s breach of the Subcontract, which have been dismissed.
104. In relation to the additional works carried out by the Defendant, the Plaintiff claims that such work was within the scope of and included in the Subcontract, that there was a total failure of consideration for the additional works, and further, that the agreement for such additional works was made under a mutual mistake of the parties, that the additional works were not part of the Subcontract.
105. The claim of mutual mistake can be rejected outright, since there is no evidence that the Defendant was under the same alleged mistake.
106. By the time of closing, Counsel for the Plaintiff only sought to rely on clauses 1.1 and 5.2 of Appendix B to the Subcontract, to argue that the additional works fell within the scope of the Subcontract.
107. Clause 1.1 states that the Defendant shall, in accordance with the drawings and specifications as provided by the Plaintiff, design “the entire set of moulds, apparatus and supporting devices/equipment for production of pre-cast viaduct segments”.
108. Clause 5 (2) provides that the Defendant shall, in accordance with the relevant information provided by the Plaintiff, ascertain the number of moulds and assembling plan, and that “it is also a requirement that the moulds shall cover the production of all types of viaduct segment”.
109. There is no dispute that, as evidenced by the contemporaneous correspondence between the parties, the Plaintiff had requested the provision of the works (eg additional soffit tables, and specified accessories), for which the Defendant had issued price quotations at the Plaintiff’s specific request and/or the Plaintiff had issued and signed purchase orders, and then invoices had been issued by the Defendant, all without dispute from the Plaintiff. I accept the submissions made for the Defendant, that these constitute agreements made between the Plaintiff and the Defendant for the work to be carried out at the price stated.
110. The only witness who gave evidence for the Plaintiff was not involved in any of the Plaintiff’s liaison with the Defendant, when the Plaintiff issued further instructions to the Defendant for the work described in the correspondence emanating from the Plaintiff, for which the Defendant was asked to provide quotations of the costs involved, and in relation to which Purchase Orders were issued by the Plaintiff.
111. As Counsel for the Defendant pointed out, the moulds, apparatus and supporting devices covered by clause 1.1 and 5.2 can only be the set of moulds and devices as designed by the Defendant in accordance with its tender and the set of drawings submitted to and approved by the Plaintiff. The Defendant cannot be bound to supply additional devices, assessories and parts as a result of further instructions or changes requested in the design. There is no claim, and no evidence, that any of the Defendant’s additional work was related to the repair or replacement of parts and accessories which are attributable to the Defendant’s faulty design, or other breach of its obligations under the Subcontract. The construction of clause 1.1 and 5.2, as contended by the Plaintiff, would mean that the Plaintiff had the right to ask, for example, for additional and unlimited numbers of bottom formwork, apart from the 2 sets for each set of the Formwork System included in the tender and the approved drawings, at no additional costs, so long as the additional formwork are required for producing the segments. That will make no commercial sense for the subcontractor.
112. I am not satisfied that the additional work can be said to fall within the scope of the Subcontract. I also reject the claim that there was a failure of consideration, when the Plaintiff had duly received the benefit of the additional work and items supplied by the Defendant.
113. For the above reasons, I allow the Counterclaim in its entirety, and it follows that the Plaintiff must pay to the Defendant the costs of the Counterclaim.
114. The parties are to file submissions on the interest to be allowed on the sum awarded to the Defendant. The submissions are confined to no more than 3 A4 pages of double line spacing (in 14 font, font style: Times New Roman) for each party, to be filed and served within 14 days of the handing down of the Judgment.
115. Unless application for variation of the costs orders nisi made under paragraphs 101 and 113 above is made within 14 days, the orders shall be made absolute.
| (Mimmie Chan) Judge of the Court of First Instance High Court |
Ms Queenie WS Ng and Mr Matthew WW Cheung, instructed by KH Lam & Co, for the plaintiff
Mr Vincent Li, instructed by Lui & Law, for the defendant