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Two Hong Kong cases in which a minimum amount of liquidated damages was
prescribed are Arnhold & Co. v Attorney-General of Hong Kong (1989) 47 BLR
129 and Philips (Hong Kong) v Attorney-General of Hong Kong (1990) 50 BLR
122. In both cases, the liquidated damages provision, which also had a sliding
scale proportionate to the value of the works taken over, was held to be void for
uncertainty. See also the English decision in Bramall and Ogden referred to
above.
English courts will generally interpret a liquidated damages clause strictly against
the Employer seeking to rely upon it. However, if, on the one hand, the Employer
is endeavouring to avoid the clause in order to claim his actual damages or if, on
the other hand, the Contractor is advancing the clause as a limitation upon his
liability, the courts' approach might well change.
47.2 Clauses such as this have caused difficulty in the past because of the
difficulty of ascertaining the value of the part handed over: see for example
Bramall and Ogden v Sheffield City Council (1983) 29 BLR 73. One solution that
has been adopted is for the certifier to specify the value of the part taken over,
which specified value is deemed to be the value for the purposes of the clause.
Such arguments are unlikely to make much impact in jurisdictions without the
sensitivity of the English courts to penalties.
Under clause 60.3(a), the Engineer is given the power to determine the relevant
proportion of work handed over in relation to the release of retention monies. A
similar provision here would have reduced the scope for dispute as to the value
of the part.
For a comment on extensions of time for "part of the Works" see Clause 44.1
(Extension of time for completion).
Although the changes to this clause for the 4th Edition are mainly matters of
vocabulary, item (c) of sub-clause 48.2 is entirely new. The obligation in sub-
clause 48.3 to complete outstanding work "with due expedition" is also an
innovation.
In contracts where the Contractor is given the task of designing any part of the
Works, clause 7.2 (Permanent Works designed by Contractor) adds an additional
requirement to those set out in the current clause before substantial completion
is certified, namely, to submit and have approved by the Engineer operation and
maintenance manuals and as-built drawings.
48.2 Alternative (c) is new to this edition and covers the (presumably rare)
situation where the Employer takes permanent occupation of an area which is
incomplete beyond merely requiring reinstatement of surfaces. It does not fit
conveniently into clause 48.2 because of the reference to "the procedure set out
in Sub-clause 48.1" which deals with completion and satisfaction.
This clause seems to proceed on the assumption that the Employer has a right to
take over any part of the works whether complete or incomplete. Whereas in
some contracts, early possession must be with the agreement of the Contractor,
there is no corresponding requirement here. Clause 42.1 (Possession of Site and
access thereto) deals with the giving of possession to the Contractor but does
not deal with the Employer's re-entry. Clause 47.2 (Retention of liquidated
dmages), which deals with the reduction in liquidated damages where parts are
taken over by the Employer, is also silent. The only reference to the Contractor's
If the Employer causes delay by his occupation, clause 44.1 (Extension of time
for completion) item (d) "any delay, impediment or prevention by the Employer"
may apply but if the contract allows such occupation or the Contractor has
agreed to it, the Engineer may refuse.
A Taking-Over Certificate for a Section or part triggers the release under clause
60.3 (Payment of retention money) of a proportionate amount of retention.
However, it has no relevance to the final release of retention or the grant of a
Defects Liability Certificate under clause 62.1 as these both refer to the expiry of
the last Defects Liability Period.
This clause does not relate back to the procedure at clause 48.1 and is not
initiated by a notice or request by the Contractor. Thus the Engineer has power
to take over part of the works whether or not the Contractor wishes to lose
possession of it and whether or not the Employer wishes to take occupation. It is
difficult to see that the Engineer would exercise his discretion under this clause in
any other fashion than at the request of and pursuant to the interest of the
Employer but this would seem to run counter to clause 2.6 (Engineer to act
impartially).