Chun Wo sues for $335 million for additional work and expenses
It should have been a piece of cake.
When you’re to build a huge statue of one of the most important Chinese deities, no less than the Goddess of Mercy Guan Yin herself, what could possible go wrong?
After all, wouldn’t the statue be emanating good vibes all round?
For mid sized contractor Chun Wo Holdings (0711), the prospects for divine intervention from Guan Yin in its fight to get paid for building it must surely be remote.
In a stock exchange notice issued last Friday, Chun Wo said its subsidiary Chun Wo Building Construction issued a writ of summons at the High Court against its client, BVI registered company Metta Resources.
Chun Wo is seeking outstanding payments totalling HK$335 million for work carried out at a new landmark at Ting Kok in Tai Po district, the Tsz Shan Monastery with its huge Guan Yin Statue overlooking the Plover Cove.
Indirectly, a subsidiary of developer giant Cheung Kong (Holdings) (0001), controlled by Hong Kong’s richest man Li Ka-shing, is also caught up in the proceedings.
The notice said that disputes arose in mid-2013 over the main contract with Chun Wo demanding an outstanding sum of about HK$335 million “representing additional works performed, and additional costs incurred”.
A spokeswoman for the public relations firm acting for Chun Wo said as legal proceedings had started the contractor could not offer further comment.
She did say though that Chun Wo had negotiated with its client many times on the outstanding sums with no success.
The dispute received widespread attention in the local press the next day with Apple Daily splashing the story on its front page.
Quoting the contents of the writ, Apple Daily said one of the private dormitories that was reserved for Li Ka-shing had received special treatment.
This included installing bullet-proof windows and anti-blast protection to the floors, walls and ceilings.
After Li attended a consecration in November last year, Chun Wo was instructed to replace all the floor tiles in the temple halls because Cheung Kong top management was unhappy with the quality of work on the existing floor tiles.
However after placing an order for new floor tiles from Sweden and before the floors were delivered to Hong Kong, Chun Wo was removed from the project.
Other mishaps included a lighting system that obstructed the fire sprinkler system that stalled the project by 122 days due to delay in getting government approval and damage to a podium by heavy cranes deployed to transplant four large trees at Cheung Kong’s insistence despite warnings by Chun Wo.
Cheung Kong was quoted in the Chinese press as saying that it believed Chun Wo had been paid according to the contract and that quality of work and progress were the causes of the dispute.
It said Metta Resources for its part incurred “huge losses” due to the delay in completion and would file a counter-claim.
Chun Wo submitted a tender of HK$423 million in December 2010 for the project which was to be monitored by Cheung Kong Property Development, a project management subsidiary of Cheung Kong (Holdings) according to its 2012 annual report.
An occupation permit was issued on 29 August 2012.
According to Chun Wo’s website, the contract started in February 2011 with a contract completion date of March 2012.
The works included building a 76 metre high bronze statute of the Chinese goddess of mercy Guan Yin complete with a temple complex with dormitory blocks, a car park podium with temple, lecture hall, canteen and offices,
External works consisted of covered walkways, internal roads, gates and landscaped gardens.
In the writ, Chun Wo is claiming payment of the HK$335 million or an alternative sum to be assessed by the High Court and an additional sum due to a nominated subcontractor.
In addition, Chun Wo is seeking a declaration by the court that Chun Wo be relieved from any obligation of completing any outstanding instructions from representatives of Metta by reason of repudiation of the main contract.
Land Registry records show that the registered owner of the land on which the monastery and statue project was built is Heung Hoi Ching Kok Lin Association 2003 Limited.
Records in the Companies Registry show that Metta’s two registered directors are also directors of Heung Hoi Ching Kok Lin.
In July 2008 Lands Department executed a private treaty grant for a term of 50 years for a plot of land north of San Tau Kok Village in Tai Po for temple use on payment of a land premium of HK$71.2 million.
In August 2011, Chinese newspaper Apple Daily ran a story saying Li Ka-shing would have his final resting place at the monastery.
Companies Registry records show that Tsz Shan Monastery Limited, which runs the monastery, is wholly owned by Heung Hoi Ching Kok Lin and that its board of directors include Li and his son Victor Li Tsar-kuoi.
Construction of the project proceeded after Li had made a donation of HK$1 billion from his charity fund.