XN000022-1996-12-18 — Page 33

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Disputes between main contractors and subcontractors

Following is a question by the Hon Ngan Kam-chuen and a reply by the Secretary for Works, Mr Kwong Hon-sang, in the Legislative Council today (Wednesday):

Question:

It is learnt that in July this year, the developer of a construction site in Tai Po terminated the contract with the contractor for alleged delays in the construction work. The contractor subsequently went into liquidation, and the subcontractors were thus unable to reclaim payments on wages and materials amounting to over $30 million. In this connection, will the Government inform this Council:

(a)

(b)

Answer:

Mr President,

End

(a)

(b)

of the channels with which the subcontractor can lodge complaints or claims for compensation if he is in dispute with the contractor or the developer; and

whether there is any legislation requiring a contractor to notify, within a certain period of time following receipt of a notice of termination of contract from the developer, the subcontractor to cease work?

For a construction project, whether for private or public works, sub- contractors and main contractors negotiate and enter into private contracts between them. Contractual disputes between sub-contractors and the main contractors are private commercial/contractual matters which arise in any form of business and are settled in accordance with the terms of their contracts. These are private matters between the various private parties and Government does not intercede.

The subject matter involves the liquidation of the main contractor, in respect of which the appointed liquidator would apply the relevant statutory provisions of the Companies Ordinance (Cap. 32). Any debts and compensation owed to any of the entitled parties must be taken care of under the rules of the above Ordinance.

There is no legislation requiring a contractor, following receipt of a notice of termination of contract from the developer, to notify his sub- contractors to cease work. Such matters would normally be dealt with in the contracts between the main contractor and the sub-contractors.

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