HCCL000036/1984

CL-36 of 1984

Commercial Law - The Standard Form of Building Contract, 1976 Private Edition (with
Quantities), for use in Hong Kong, Conditions 15 and 30 - Whether the Employer is obliged to
set aside retention monies in a separate trust fund for the benefit of the Main Contractor - When
the Employer is entitled to make deductions from retention monies.

__________

By virtue of Condition 30 in the Standard Form of Building Contract, 1976 Private

Edition (with Quantities), for use in Hong Kong, the Main Contractor was granted an interim
mandatory injunction forcing the Employer to set aside retention monies deducted under interim
certificates in a separate trust fund for the benefit of the Main Contractor. (Rayack Construction
Ltd. v. Lampeter Meat Co. Ltd. 12 B. L. R. 30 followed).
The Employer could not be excused from its obligation to set up such a trust fund
on the basis of any alleged entitlement on its part to make deductions in respect of the Main
Contractor's failure to make good defects specified in a Schedule of Defects issued by the
Architect pursuant to Condition 15, because the Main Contractor disputed that it was in breach
of Condition 15, and the Employer's entitlement was still unsub-stantiated.

CL-36 of 1984

IN THE SUPREME COURT OF HONG KONG

HIGH COURT
______

BETWEEN

CONCORDE CONSTRUCTION COMPANY LIMITED Plaintiff

and
 -2-

COLGAN COMPANY LIMITED Defendant

(By Original Action)

______

AND BETWEEN

COLGAN COMPANY LIMITED Plaintiff

and

CONCORDE CONSTRUCTION COMPANY LIMITED 1st Defendant

and

HSIA &ASSOCIATES (A FIRM) 2nd Defendant

and

RANKINE & HILL (A FIRM) 3rd Defendant

and

ALLIANCE CONTRACTING COMPANY LIMITED 1st Third Party

and

PLASTEEL HONG KONG LIMITED 2nd Third Party

and

TAI HING ELECTRICAL COMPANY LIMITED 3rd Third Party

______

Coram: Hon. Rhind, J. (In Open Court)

Date : 23. 5. 84
 -3-

_______________
JUDGMENT
_______________

The application before me is concerned with whether an Employer under the

Standard Form of Building Contract, 1976 Private Edition (with Quantities), for use in Hong
Kong is obliged to set aside retention monies in a separate trust fund for the benefit of the Main
Contractor, and if so, the circumstances in which the Employer can make deductions from that
trust fund in his own favour.
As this is a matter which is likely to be of general practical interest to the
construction industry in Hong Kong, I have adjourned my ruling on the summons before me
into open Court.
The only parties directly involved in the proceedings before me are the plaintiff and
the defendant to the original action. That pair entered into a building contract together on the
24th March 1981. The plaintiff was the Main Contractor, whilst the defendant was the
Employer.
Their agreement was in the Standard Form of Building Contract for use in Hong
Kong issued under the sanction of the Hong Kong Institute of Architects, the Royal Institution
of Chartered Surveyors (Hong Kong Branch) and the Society of Builders, Hong Kong, 1976
Private Edition (with Quantities). Under that agreement, Hsia & Associates were appointed as
"the Architect". The works provided for under the contract were the construction and
completion of a block of flats on a site owned by the Employer at 67, Repulse Road, Hong
Kong, at the Contract Sum of HK$50,875,670.49.
In the usual way, the contract provided that the Employer should pay the Main
Contractor under Interim Certificates issued by the Architect. Those certificates were to be
issued at monthly intervals and honored by the Employer 14 days from presentation. It was
provided that the amount of retention money was to be 10% of certified value, but subject to a
limit for the Retention Fund of HK$1,773,283.52 plus the Retention Fund held in respect of
nominated sub-contractors which had a maximum of HK$653,900. Thus, the overall maximum
Retention Fund in respect of both the Main Contractor and nominated sub-contractors amounted
to HK$2,427,183.52.
The provisions about certificates and payments are to be founded in Condition 30 of
the Conditions annexed to the Articles of Agreement. As that Condition is of considerable
importance for the purposes of the present application I set out the relevant parts of it:-
 -4-

"30(1) At the Period of Interim Certificates named in the appendix to these

Conditions the Architect shall issue a certificate stating the amount due to the
Main Contractor from the Employer, and the Main Contractor Shall, on
presenting any such certificate to the Employer, be entitled to payment therefor
within the Period for Honoring Certificates named in the appendix to these
Conditions. Interim valuations shall be made whenever the Architect to be
necessary for the purpose of ascertaining the amount to be stated as due in an
Interim Certificate.

(2) The amount stated as due in an Interim Certificate shall, subject to

any agreement between the parties as to stage payments, be the estimated value
of the work properly executed and of the materials and goods delivered to or
adjacent to the Works for use thereon up to and including a date not more than
seven days before the date of the said certificate less any amount which may be
retained by the Employer (as provided in sub-clause 30(3) of this Condition) and
less any installments previously paid under this Condition. Provided that such
certificate shall only include the value of the said materials and goods as and
from such time as they are reasonably, properly and not prematurely brought to
or placed adjacent to the Works and then only if adequately protected against
weather or other casualties.

(3) The Employer may retain the percentage of the total value of the
work, materials and goods referred to in sub-clauses (2) and (2)(A) of this
Condition which is named in the appendix to these Conditions as Percentage of
Certified Value Retained. Provided always that when the sum of the amounts so
retained equals the amount named in the said appendix as Limit of Retention
Fund or that amount as reduced in pursuance of clause 16(f) and/or clause 27(e)
of these Conditions, as the case may be, no further amounts shall be retained by
virtue of this sub-clause. The amount of retention under any sub-contract with a
Nominated Sub-Contractor shall be determined by the Architect, but if no
Percentage or Limit of sub-contract retention has been determined the
Percentage shall be the same as the Percentage in the main contract and the
Limit shall bear the same proportion to the Sub-Contract Sum as the Limit under
 -5-

the main contract bears to the Main Contract Sum excluding all amounts
included therein in respect of Nominated Sub-Contract works.

(4) The amount retained by virtue of sub-clause (3) of this Condition

shall be subject to the following rules: -

(a) The Employer's interest in any amounts so retained shall be fiduciary

as trustee for the Main Contractor (but without obligation to invest),
and the Main Contractor's beneficial interest therein shall be subject
only to the right of the Employer to have recourse thereto from time
to time for payment of any amount which he is entitled under the
provisions of this Contract to deduct from any sum due or to become
due to the Main Contractor.

(b) On the issue of the Certificate of Practical Completion the Architect

shall issue a certificate for one moiety of the total amounts then so
retained and the Main Contractor shall, on presenting any such
certificate to the Employer, be entitled to payment of the said
moiety within the Period for Honouring Certificates named in the
appendix to these Conditions.

(c) On the expiration of the Defects Liability Period named in the

appendix to these Conditions, or on the issue of the Certificate of
Completion of Making Good Defects, whichever is the later, the
Architect shall issue a certificate for the residue of the amounts then
so retained and the Main Contractor shall, on presenting any such
certificate to the Employer, be entitled to payment of the said
residue within the Period for Honouring Certificates named in the
appendix to these Conditions.

(6) So soon as is practicable but before the expiration of three months

from the end of the Defects Liability Period stated in the appendix to these
Conditions or from completion of making good defects under clause 15 of these
Conditions or from receipt by the Architect of the documents referred to in
 -6-

paragraph (b) of sub-clause (5) of this Condition, whichever is the latest, the
Architect shall issue the Final Certificate. The Final Certificate shall state:-

(a) The sum of all amounts previously certified, and

(b) The Contract Sum adjusted as necessary in accordance with the

terms of these Conditions,

and the difference (if any) between the two sums shall be expressed in the said
certificate as a balance due to the Main Contractor from the Employer or to the
Employer from the Main Contractor as the case may be. Subject to any
deductions authorised by these Conditions, the said balance as from the
fourteenth day after presentation of the Final Certificate by the Main Contractor
to the Employer shall be a debt payable by the Employer to the Main Contractor
or as the case may be as from the fourteenth day after issue of the Final
Certificate shall be a debt payable by the Main Contractor to the Employer."

On the 6th December 1982, the Architect issued a Certificate of Practical

Completion. Under Condition 15, that purported to have the effect of setting the Defects
Liability Period of 12 months running. As Clause 15 assumed considerable importance in the
application before me, I will set it out in full:-

"15(1) When in the opinion of the Architect the Works are practically
completed, he shall forthwith issue a certificate to that effect and Practical
Completion of the Works shall be deemed for all the purposes of this Contract to
have taken place on the day named in such certificate.

(2) Any defects, shrinkages or other faults which shall appear within the
Defects Liability Period stated in the appendix to these Conditions and which are
due to materials or workmanship not in accordance with this j Contract or to
typhoon(s) occurring before Practical Completion of the Works, shall be specified
by the Architect in a Schedule of Defects which he shall deliver to the Main
Contractor not later than fourteen days after the expiration of the said Defects
Liability Period, and within a reasonable time after receipt of such Schedule the
 -7-

defects, shrinkages and other faults therein specified shall be made good by the
Main Contractor and (unless the Architect shall otherwise instruct, in which case the
Contract Sum shall be adjusted accordingly) entirely at his own cost.

(3) Notwithstanding sub-clause (2) of this Condition the Architect may

whenever he considers it necessary so to do, issue instructions requiring any defect,
shrinkage or other fault which shall appear within the Defects Liability Period
named in the appendix to these Conditions and which is due to materials or
workmanship not in accordance with this j Contract or to typhoon(s) occurring
before Practical Completion of the Works to be made good, and the Main
Contractor shall within a reasonable time after receipt of such instructions comply
with the same and (unless the Architect shall otherwise instruct, in which case the
Contract Sum shall be adjusted accordingly) entirely at his own cost. Provided that
no such instructions shall be issued after delivery of a Schedule of Defects or after
fourteen days from the expiration of the said Defects Liability Period.

(4) When in the opinion of the Architect any defect, shrinkages or other
faults which he may have required to be made good under sub-clauses (2) and (3) of
this Condition shall have been made good he shall have been made good he shall
issue a certificate to that effect, and completion of making good defects shall be
deemed for all the purposes of this Contract to have taken place on the day named in
such certificate.

(5) In no case shall the Main Contractor be required to make good at his
own cost any damage by typhoon(s) which may appear after Practical Completion
of the Works, unless the Architect shall certify that such damage is due to injury
which took place before Practical Completion of the Works."

The Occupation Permit followed on the 14th December 1982.

Prior to the Certificate of Practical Completion on the 6th December 1982, the
Employer had paid the Main Contractor a total of HK$41,810,000. under seventeen Interim
Certificates. By that stage, the limit of HK$2,427,183.52 for the Retention Fund had already
been reached.
 -8-

When Interim Certificate No.18 came to be issued on the 20th December 1982, it
was for a sum of HK$1,110,000. That Certificate has never been honoured. Nor has Certificate
No.19, dated the 21st February 1983, which was for an amount including the release of one
moiety of the Retention Fund.
After the Defects Liability Period expired on the 6th December 1983, the Architect
delivered a Schedule of Defects to the Main Contractor. That Schedule of Defects was
delivered on the 20th December 1983, and it called on the Main Contractor to make good the
scheduled defects before the 7th January 1984. That direction from the Architect has not been
obeyed by the Main Contractor.
Meanwhile on the 19th March 1983, the Main Contractor had commenced the
present action against the Employer, claiming, inter alia, the amounts still unpaid under Interim
Certificates Nos. 18 and 19. In addition, the Main Contractor also claims HK$293,504.01 in
respect of monies allegedly due for site formation, and HK$7,366,927.99 in respect of alleged
disruption and delay caused by the Employer in relation to the building works.
In its Defence and Counterclaim, the Employer seeks to hold the Main Contractor
responsible for at least HK$2,082,049 worth of alleged defects in the building. As pointed out
on the Employer's behalf before me, the alleged cost of putting the alleged defects right comes
to an amount not far different from the Retention Fund. In addition, the Employer claims other
substantial amounts. In particular, the Employer disputes that practical completion has ever
taken place, and on that basis, claims over HK$7 million under Condition 22 as liquidated
damages for delayed completion. There is a further sum of over HK$11 million claimed for lost
rental opportunities, and a figure of HK$174,000 for compensation paid to tenants as the result
of alleged defects in the building.
By its Reply to the Defence and Counterclaim, the Main Contractor makes it clear
that it disputes any liability to the Employer in respect of defects. Those items in the Schedule
of Defects which are its responsibility will be made good within a reasonable time, so the Main
Contractor pleads, and it goes on to say it intends to complete them in accordance with its
contractual obligation. The Main Contractor does not accept that all the defects in the
Architect's Schedule of Defects are its responsibility, nor does it accept that only allowing it
until the 7th January 1984 to make good the defects was reasonable.
By the present summons, which was filed on the 9th April 1984 the Main
Contractor seeks the following relief:-
 -9-

"1. A mandatory injunction until after trial of this action or further order,
ordering that the Employer:

(a) do forthwith pay the sum of HK$2,427,183.52 being retention monies

referred to in Condition 30; and

(b) in respect of Interim Certificates (certifying future retention monies) to be

presented after the date hereof, do immediately upon presentation of such
Interim Certificates pay such future retention monies:

into a separate bank account hereinafter referred to, the Employer there -
after to stand possessed of such sums in such account as trustees thereof to
apply the same in accordance with the trust specified in condition 30(4)(a)
of the Conditions.

2. An Order that the Employer, for the purposes of the payments and the trust
referred to in Paragraph 1 hereof do:

(a) forthwith upon making of this Order cause to be opened a separate bank
account to be designated "Concorde Construction Company Limited Trust
Account";

(b) forthwith upon the opening of such account inform the Main Contractor by
letter signed by a proper officer of the Employer, disclosing full particulars
of the said bank account including the name in which the same is
maintained and the number thereof and the name, branch, and address of
the bank maintaining the same; and

(c) forthwith upon receipt of all bank statements and other communications of
whatsoever nature touching upon or concerning the said bank account
furnish true copies of the same to the solicitors of the Main Contractor.

3. An injunction restraining until after trial or further order, the Employer by

its Directors, Officers, Servants, or Agents or any of them or otherwise
 -10-

howsoever from applying the trust monies as and when paid into a separate bank
account otherwise than in accordance with the said trust.

4. That the costs of this application be to the Main Contractor in any event."

In order to underpin that summons, a further application has been made to me on the
Main Contractor's behalf that the prayer of the Statement of Claim should be amended by
adding the following paragraphs: -

"(10A) A Declaration that the Employer is obliged forthwith to pay the sum
of HK$2,427,183.52 being retention monies together with all future
retention monies as and when they are certified under the Agreement
into a separate bank account and to stand possessed of the same to be
applied only in accordance with the trust specified in condition
30(4)(a) aforesaid.

(10B) A mandatory injunction that the Employer do forthwith pay the sum
of HK$2,427,183.52 being retention monies together with all future
retention monies as and when they are certified under the Agreement
into a separate bank account and to stand possessed of the same to be
applied only in accordance with the trust specified in Condition
30(4)(a) as aforesaid.

(10C) An injunctionrestraining the Employer by its Directors, Officers,

Servants or Agents or any of them or otherwise howsoever from
applying the trust monies as and when paid into such separate bank
account otherwise than in accordance with the said trust."

To anyone familiar with the case of Rayack Construction Ltd. v. Lampeter Meat Co.
Ltd.,(1) the application now made on the Main Contractor's behalf for this amendment and
consequential relief will have a familiar ring. That case concerned the J.C.T. Standard Form of
Building Contract, 1963 Edition (1977 revision), Private Edition, which in all material respects,

(1) 12 B.L.R. 30
 -11-

for present purposes, is identical to the contract now being considered by the Court. A
difference of no consequence is that in Rayack the builder is referred to simply as "the
Contractor" instead of "the Main Contractor".
It was held in that case that Condition 30(4) (a) imposed on the Employer a clear
obligation to appropriate and set aside in a separate trust account the sums retained under
Condition 30(3). Two important passages reveal the effect of that judgment and the reasoning
behind it. At page 37, this is what the Judge had to say:-

"In my judgment, condition 30(4), construed in the context of the articles of

agreement as a whole, does impose an obligation on an employer to appropriate
and set aside as a separate trust fund a sum equal to that part of the sum certified
in any interim certificate as due in respect of work completed which the
employer is entitled to retain during the defects liability period. Unless
condition 30(4) is construed as imposing such an obligation, it cannot, as I see it,
have any practical operation. Further, condition 30(4) refers to 'the Con-tractor's
beneficial interest therein', and the predicated beneficial interest could only
subsist in a fund so appropriated and set aside."

Then at page 38 there is the following:-

"If sub-clauses (3) and (4) of condition 30 are read together, it is in my judgment
clear that the purpose of the provisions for retention under the terms of condition
30(4)(a) is to protect both employer and contractor against the risk of insolvency
of the other. The employer is protected by his right to retain a proportion of the
sum certified as due in respect of work done against the risk that claims in
respect of any failure to carry out the architect's instructions or in respect of
delay or other breaches of the contractor's obligations will, in the event of the
contractor's insolvency, rank as unsecured debts. The contractor is protected by
the provisions of condition 30(4)(a) against the risk that his claim for payment of
monies retained by the employer will similarly rank as an unsecured debt, save
only for the lien conferred by the proviso to condition 26(2). Thus, both are
protected if and to the extent that the employer carries out his obligation to set
aside as a separate trust fund a sum equal to the retention monies. The
contractor must be exposed to some degree of risk jeopardy if that is not done. It
 -12-

would in my judgment be wrong that he should continue to be exposed to this

risk until the trial of the action."

True, I am not bound by that decision, nor am I bound by the decisions in Re Arthur
Sanders Ltd.(2) and in Re Jartay Developments Ltd.(3) which followed it. However, as the
principle in the Rayack case commends itself to me as good sense which produces a fair result I
consider it should be followed in Hong Kong when construing the Standard Form of Building
Contract for use here. The result will be that a contractor here will be able to insist upon the
employer setting aside retention monies in a separate trust fund for the benefit of the contractor.
In the case before me, the Main Contractor was entitled to insist that as retention
money was held back by the Employer under each of the Interim Certificates, it should have
been paid into a separate trust account. This has not been done, and the question now arises
whether there is anything special about the circumstances of the case before me which could
have the effect of excusing the Employer from fulfilling the obligation imposed upon him by
Condition 30(4)(a) to set up such a trust fund.

It will be observed from the terms of Condition 30(4)(a) that the Employer has the
right of recourse to the trust fund in order to deduct money due from the Main Contractor.
If in fact there is money now due from the Main Contractor to the Employer, it
would be utterly pointless for the Court to order the Employer to set up a trust of the retention
monies, but then to allow him to withdraw money from that fund under the recourse provision.
In such circumstances, it would obviously be far more sensible to short-circuit the whole
process, and to hold that although the Employer, strictly speaking, should have set aside the
retention monies in a trust fund as the Interim Certificates were paid, it would, nonetheless, be
futile to order that now, if, on paying the money into the trust fund the Employer could
withdraw it immediately.
According to the Employer, the matters relied on by it in its Defence and
Counterclaim are such as to give rise to a right of recourse for amounts which exceed the
retention money. In particular, the amount the Employer claims for defects would by itself
come close to extinguishing the trust fund.
I do not think that an employer is entitled to have recourse to the trust fund of
retention monies simply on the strength of his own belief that he has a good claim which

(2) 17 B.L.R. 125

(3) 22 B.L.R. 134
 -13-

entitles him to such monies. The Court cannot countenance a situation where the Employer
would, in effect, be the judge in his own cause and able to say when he would make deductions
from the retention monies. Allowing the employer to free the retention monies from the trust
whenever the employer claimed entitlement to a set-off would drive a coach and horses through
the whole system of protection which Condition 30(4)(a) seeks to set up.
As a matter of common sense, the employer can only be permitted to deduct
substantiated claims for liquidated amounts from the retention monies. How the employer will
substantiate his claims depends on the circumstance. The best sub-stantiation of all will be
where the contractor admits that money is due to the employer. In those circumstance it is
clearly right, that the employer should have immediate recourse to the trust money.
Whether the employer's entitlement will be sufficiently sub-stantiated when he has
the backing of the Architect's Certificate that money is due to the employer is a matter on which
I would prefer not to reach a decision until the point has been fully argued before me, if and
when it arises.
Certainly, the Employer has an arguable case, judging from the material so far
before the Court, but, nonetheless, its contentions about the Main Contractor's responsibility for
defects and in relation to the other disputed matters are "speculative", in the sense that it is a
matter for speculation whether the Employer will ultimately succeed in proving its contentions.
In the Rayack case, the Court would not allow what it described as a "speculative" set-off to
defeat the contractor's request that the retention monies should be set aside as a separate trust
fund.
Injunctions, are never granted as of right. That is elementary. However, as pointed
out in Redland Bricks Ltd. v. Morris(4) at 664, they are granted "as of course" in certain familiar
situations which keep recurring. In my view, an injunction should normally be granted "as of
course" to force an Employer to set up a trust fund of retention monies where Condition
30(4)(a) applies, and where there are no substantiated heads of deduction to which the
Employer is entitled to have resort.
As the Redland Bricks Ltd. case shows, the Courts are reluctant to grant some types
of interim mandatory injunction, and, in some situations, will only do so where the plaintiff
shows a very strong probability upon the facts that grave damage will accrue to him in the
future. The type of situation covered by the Redland Bricks Ltd. approach is one where the
defendant is called upon to carry out positive remedial work, as for example, where a

(4) (1970) A.C. 653

 -14-

mandatory injunction is sought to force a defendant to erect a barrier to prevent a threatened

land-slip. That type of interim mandatory injunction is very different from the one sought here,
and clearly different principles will apply.
The mere fact that the words "mandatory injunction" are used does not have the
effect of putting the Court in a strait-jacket which deprives it of the necessary flexibility to do
justice in the instant case before it. American Cyanamid Co. v. Ethicon Ltd.,(5) the leading case
on injunctions, has recognised at page 511F that there may be "special factors" which can affect
the balance of convenience, an approach which gives the Courts flexibility in deciding whether
to grant or withhold injunctions. How the Redland Bricks Ltd. approach is not of universal
application in deciding whether or not to grant mandatory injunctions is apparent from such
cases as De Falco v. Crawley Borough Council.(6) There the Court had this to say:-

"I have no doubt therefore that the court may properly exercise its discretion to
grant a mandatory injunction on an interlocutory application in an appropriate
case. In considering what principles should govern the exercise of this
discretion, I do not think much assistance is to be derived from authority. In
particular I am satisfied that the principles expounded by Lord Diplock in
American Cyanamid Co. v. Ethicon Ltd. governing the grant of prohibitory
injunctions on interlocutory applications have no relevance to the case we are
considering. A dispute between an applicant who claims entitlement to be
provided with accommodation, and a local authority who dispute that
entitlement, exhibits sufficiently unusual features to make a comparison even
with other types of litigation where a mandatory injunction may be granted on an
interim application difficult and possibly misleading. I think the appropriate
principles can only be derived from a consideration of the likely consequences to
the parties to such a dispute of granting or withholding relief."

In deciding whether to grant or refuse an interim injunction the principle which

commends itself to me most of all is the one to be found in Cayne v. Global Natural
Resources(7) where it was held that the Court should approach the case on the broad principle of

(5) (1975) 1 All E.R. 504

(6) (1981) 1 All E. R. 913
(7) (1984) 1 All E. R. 225
 -15-

what it can do in its best endeavour to avoid injustice, and to balance the risk of doing an
injustice to either party.
The attraction of granting an interim mandatory injunction for the purpose of setting
up a trust fund where Condition 30 applies is that it forestalls the risk of injustice to the Main
Contractor if the Employer becomes insolvent, while at the same time protecting the Employer
against the defaults or insolvency of the Main Contractor through the device of retention
money. The contention on behalf of the Employer that it would suffer an injustice if it turned
out ultimately that money was due from the Main Contractor was met by the countervailing
argument which could be advanced for the Main Contractor to the effect the Main Contractor
can also suffer an injustice if it turns out ultimately that there is a sum due to it from the
retention monies. The beauty of Condition 30 is that it preserves the position of both the
Employer and the Main Contractor, pending the resolution of disputes between them.

Based both on general principles and on the particular authority of the Rayack case,
no obstacle stands in the way of the Court to hinder the issue of a mandatory injunction for the
purpose of enforcing compliance with the Employer's obligation to set up a trust fund of
retention monies pursuant to Condition 30.
That the Employer has not been shown to be in financial difficulties in the present
case is no answer to the Main Contractor's demand that a trust fund should be constituted. It
can equally be said that there is no evidence to show that the Employer is financially sound.
The Court simply has no information, whether favourable or adverse, on the Employer's
financial health. In such circumstances, the Main Contractor is entitled to seek the protection
afforded to him by Condition 30(4)(a). It is ridiculous to suggest that the Main Contractor can
only insist on the trust being set up if it can adduce evidence of some shakiness in the
Employer's financial position. If the Main Contractor had to wait till such evidence was
forthcoming it would often by then be too late to take steps which would result in the fund being
secured. Rather than requiring the Main Contractor to show that the horse is showing signs of
bolting, the Courts allow it to take steps to have the stable door shut while there is still no
suggestion of anything being amiss. In asking for a trust fund to be set up, the Main Contractor
is merely acting prudently.
In granting equitable relief such as a mandatory injunction, the Court will not come
to the aid of those it regards as unworthy of its assistance. This idea embodied in the maxim :
"He who comes to Equity must come with clean hands."
 -16-

It was submitted on the Employer's behalf that the Main Contractor's hands could
not be regarded as sufficiently clean, because he had not complied with the Architect's Schedule
of Defects within the time and to the extent specified by the Architect. It hardly lies in the
mouth of the Employer, however, to start complaining about those who do not obediently
follow the Architect's directions when it suited the Employer, it disregarded the Architect's
Certificates, and now the Main Contractor is doing the same. Challenging an Architect's
Certificate does not cruse dirt to adhere to the hands of a party so doing, in my opinion. As
Architect's Certificates are not conclusive, I see no reason why Equity should withhold its
favours from one who embarks on such a challenge.
In view of the foregoing, I allow the Main Contractor to make the amendments it
seeks to the prayer of its Statement of Claim and grant a mandatory injunction together with the
other orders sought by paragraphs 1, 2 and 3 of the summons.
I will now hear the parties as to costs.

(J.J. Rhind)
Judge of the High Court

Representation:
Mr. Ribeiro (instructed by Masons & Marriott) for the plaintiff/applicant
Mr. Ronny K.W. Tong (McKenna & Co.) for the defendant