CIVL6074: RIGHTS, LIABILITIES AND CLAIMS IN CONSTRUCTION

CONTRACTS

2019/20 SEMESTER 2

Extended Assignment

INSTRUCTIONS

1. For students who have enrolled for CIVL6074 in 2019/20 academic year, this extended
assignment would REPLACE the written examination as originally stated in the course
description form and/or other documents.
2. This extended assignment accounts for 70% of the total mark.
3. The due date of the extended assignment is 25 May 2020 (Monday), 9:00 am (Hong
Kong time).
4. The extended assignment should be submitted through Moodle Turnitin under the course
name CIVL6074_2A_2019.
5. No late submission is allowed.
6. Answer BOTH Questions A and B. All questions carry equal marks, i.e. 50 marks each.
7. The submission should be in Microsoft Word format and NO MORE THAN 4 single-sided
A4 pages for each question (excluding the title page and references). The font size shall be
of 12 point, while single line spacing should be used. The submission shall be properly
referenced.
8. The submission should begin with a title page with your UID and course title clearly shown.
9. Plagiarism will result in heavy penalty.

QUESTION A

In Wui Fu Development Co Ltd v Tak Yuen Construction Co Ltd (1999), it was remarked in the
judgment that: “… it would be totally unreasonable to expect a contractor not being paid a
large sum undeniably due to him to continue with the works and, in effect, finance the
employer’s building operations to an extent beyond that contemplated by the contract”.

(a) Discuss the above with reference to any rights or remedies of a contractor in stopping works
on non-payments by the employer, during the execution of a construction contract with
usual provisions for interim payments. [26 marks]

(b) Discuss and illustrate with 2 examples of the circumstances of non-payment that one of
which may AND one of may not bring about a right to stop works. Advise what the
contractor should do in each of the 2 examples. [24 marks]
Question B

Shinugo is the developer of a piece of land in Chengdu, PRC. He engaged a Hong Kong
consultant for architectural, building services and structural engineering services. The
consultant advised Shinugo to use the HKIS/HKIA Standard Form of Contract 2006 Edition
without any amendment as the construction contract terms. Shinugo accepted the advice and
entered into a main contract with Con & Skid for the construction of the development. With
the knowledge of the Architect, Con & Skid engages a number of domestic specialist sub-
contractors for building services works. The sub-contracts all used the Blue Form of the Hong
Kong Construction Association as the conditions of contract.

Shinugo made payments in accordance with the interim payment certificates issued by the
Architect. Con & Skid was late in its super-structure works and on Day 800 the Architect issued
a letter stating that the works ought reasonably to have been completed by Day 700, the original
date of completion, and that it would not be completed by then but that it would be 100 days
late on the basis of the current progress rate. Thereafter Shinugo withheld payments as
liquidated damages for 100 days delay.

Con & Skid then withheld payments from each of the building services sub-contractors on the
basis that it had not been paid by the Employer. This continued for some months. Then Con &
Skid went into liquidation. Workers on the site had not been paid for nearly 6 months.

(a) You are the representative of one of the specialist sub-contractors, draft a Notice of
Arbitration, outlining the legal and factual basis of the claim. [16 marks]

(b) Can you suggest how the dispute resolution clauses in the contracts can be drafted to
minimize or avoid the above unfair situations from arising? [17 marks]

(c) What arrangements can be put in place, including but not limited to legislative measures,
for security for payment to be enhanced? [17 marks]

~ END OF EXTENDED ASSIGNMENT BRIEF ~