NEW PRIVATE FORM OF NOMINATED SUBCONTRACT By Gregory Tung W: http:www.jrk.com.hk E: gregory.tungjrkn

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NEW PRIVATE FORM OF NOMINATED SUB-CONTRACT By
Gregory TungW http//www.jrk.com.hkE
gregory.tung_at_jrknowles.com
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• Clause 1 definitions of terms

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• Clause 2 combines Green form Clauses 1 and 3

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• Same problems regarding incorporation of main
  contract terms remain

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• Paras 1039 to 1042 of
• Emdens Construction Law Vol 1

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• Clause 3 NSCs obligations include organize and
  co-ordinate

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• Clause 4 changes Green form Clause 5

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• Main contractor is responsible for care of the
  sub-contract works

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• Under Green form, there is no express provision
  deals with the question of protection of
  sub-contract works

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• Now is same as the Hong Kong Government Form of
  Sub-Contract (deals with this matter in Clause
  13). The main contractor is responsible except
  insofar as the damage arises from the
  sub-contractors negligence.

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• Materials on site etc,
• they are at NSCs risk

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• NNSC Clauses 4(1) and 22 do not sit well.
• NNSC Clause 4(1) the main contractor is not
  responsible for care of the Sub-Contract works if
  the loss and damage arise from Excepted Risks.
• NNSC Clause 22.2 NSC shall be responsible for
  restoration of lost or damaged Sub-Contract works
  except for those covered by CAR, by Excepted
  Risks or by Main Contractors/Employers default.
  
• So who is responsible for damages caused by
  Excepted Risks?

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• If damages to Sub-Contract works are not covered
  by CAR, NSC is responsible for restoration under
  NNSC Clause 22.2.
• NNSC Clause 22.4(2) limits NSCs recovery for
  damages covered by CAR to its share under CAR.
• Contrary to NNSC Clause 4(1), NNSC Clause 22
  puts NSC to take care of the Sub-Contract works.

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• NNSC Clause 14.1 says the quantity and
  quality of work included in the Sub-Contract Sum
  shall be deemed to be that set out in the
  Sub-Contract Bills
• Change in billed quantities variation
• The clause is not an optional clause which in
  itself does not cater for situation where the
  sub-contract is let on specification and drawings.

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• Clause 23 two alternative treatments regarding
  completion of sub-contract works

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Subcontractor's duties obligations Progress
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To suit MC progress of works
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Harsh arrangement
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To compromise practicality
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Cases
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Subcontractor's duties obligationsCases on
Progress
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Subcontractor's duties obligations Cases on
Progress
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Tridant v. Mansion, 15 June 2000, HCCT 3 66 of
1996
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Tridant v Mansion

• KGJV (Main Contractor) To build in Guangzhou
• Tridant (To conform Main Contractors programme)
• (ME)
• Mansion
• (PD FS)

(back to back) to confirm Tridants and Main
Contractors programme
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Court decision in Tridant case
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Kitsons Sheet Metal case
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Kitsons Sheet Metal (1989) 47 BLR 82
BAA Management contract, V.O. include
change of sequence TWC Matthew Hall
(Defendant) (Installation and insulation of
pipes/ducts) Refer to contracts between BAA and
TWC and between TWC and Matthew Hall Clause
18(1) plus 6th Schedule - Complete as per
defendants order Kitsons (Plaintiff) (Insulat
ion)
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Court decision in Kitsons
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Failure to completeCausation
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Failure to complete Causation
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NNSC Cl 24 / Green Form Cl 8(a)
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Law on causation concurrent delay
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Keating
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Devlin

• The one constitutes breach suffices

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Dominant cause

• Which delay has greater effect?

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Burden of proof

• To prove other's delay much greater than your
  breach

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Tortious solution

• Event materially caused delay suffices

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Emden
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Practical Legal Guide to FIDIC
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Failure to completeRemoteness of damages
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Failure to complete Remoteness of damages
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Loss must not be
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Hadley v. Baxendale
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Keating Whether S/C normally knows of LD in MC
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Keating Settlement of claim
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• Clause 24 governs damages for delay in completing
  the sub-contract works, viz NSC is liable to the
  main contractor for its loss and damages and LD
  incurred which are caused by the sub-contractors
  failure to complete.

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• Clause 25 deals with EOT.
• Two notices required (28 28 days)

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• Clause 28 deals with NSCs claim for loss and
  expense but unlike the Green form, it now covers
  those caused by the main contractors breach.

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• Notice requirement.
• Condition precedent.

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• Clause 33.1(7) still a pay when paid clause with
  14 days . Of the Contractor receiving payment
  from the Employer.

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• Set Off

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• Chinney v Po Kwong Marble (2003)

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• Clause 33.13 late payment carries interest

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• Clause 33.14 late payment entitles to suspension
  of works

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• Clause 33.9 to 33.11
• conclusiveness of the final certificate

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• Clause 34 surety

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• Clause 37 now provides for NSCs determination

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• Clause 41 main contractors set off subject to
  pre-condition of serving notice by special
  delivery at least 7 days before deduction

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TYPES OF SET OFF

• There are 5 types of set off
• 1.      Abatement
• 2. Legal or Common Law set off
• 3.      Equitable set off
• 4.      Set off under the Contract
• 5.      Statutory set off

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ABATEMENT

• With building contracts, the defendant does not
  need to set off (by a cross-action) the amount
  of damages he has sustained, but simply to defend
  himself by showing how much less the value of the
  claimants claim is by deducting the damages
  caused by the claimants breach.

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LEGAL OR COMMON LAW SET OFF

• B Hargreaves Ltd v Action 2000 Ltd (1992)
•  
• Plaintiff wanted to set off for work which had
  been omitted or not carried out correctly.
•  
• The Court of Appeal held that a set-off in common
  law is only available where the claims on both
  sides are in respect of liquidated debts or money
  demands which could readily and without
  difficulty be ascertained and that the claim
  which the defendant sought to set off were not
  liquidated debts but were claims which could only
  be ascertained by litigation or arbitration.

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EQUITABLE SET OFF

• Dole Dried Fruit v Trustin Kenwood (1990)
•  
• The test of whether a cross-claim can be relied
  as equitable set off is whether it is so closely
  connected with the claim that it would be
  manifestly unjust to allow the claim without
  taking into account the cross-claim.
•  
• Hanak v Green (1958)
•  
• Employer claimed damages for failure to complete
  properly. Contractor entitled to set off for
  additional work outside the Contract on quantum
  meruit.

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STATUTORY SET OFF

• For example Section 323 of the Insolvency
• Act 1986
• and
• Section 212 of the Companies Ordinance
• Cap 32

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CONTRACTUAL SET OFF

• Parties are free to agree any terms of set-off,
  including any exclusion of right of set off.
•  
• For example, the arrangement under NNSC Clause
  41. 

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CONTRACTUAL SET OFF

• See further
• Dawnay v Minter (1971)
• Gilbert Ash v Modern Engineering (1973)
• Pilecon v Mightyton (1991)
• Ryoden Engineering v Paul Y Construction (1991)
• Steward Gill v Horatio Myer (1992)
•  

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CONTRACTUAL SET OFF

• Where the contractual right of set-off is for the
  deduction of a cross-claim, this right is
  available (irrelevant of the Contract) under
  Common Law or Equitable set off.
•  
• However, in the absence of an express power in
  the Contract, set off can NOT (normally) be made
  against another unconnected contract between the
  parties.

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CONTRACTUAL SET OFF

• See further
• Paul Y Construction Co Ltd v AG of Hong Kong
  (1992)
• Anglian Building Products Ltd v WC French
  (Construction) Ltd (1972)

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• Clause 42 dispute resolution
• At request of either party, Architect has to
  refer dispute to designated representatives. If
  not resolved, mediation, then arbitration.
• Certificate final and binding under main contract
  is also final and binding on sub-contract.
• Clause 43 name borrowing