Haikou Century Harbor City Estates Limited v CCCC Second Harbor Engineering Company Limited in respect of dispute over Ocean Engineering Construction Project

Last update time:2019-10-20 20:20:44

Haikou Century Harbor City Estates Limited v CCCC Second Harbor Engineering Company Limited in respect of dispute over Ocean Engineering Construction Project

 

 

Case No.: (2017) Q72 MC No.151

Cause of action:  Dispute over Ocean engineering construction project

Sea area involved: N/A

Date:  19 September 2017

 

 

Gist

 

  1. Contract, which is duly concluded according to law, binds the parties. Each party to the contract shall fulfill its obligations as agreed and shall not unilaterally change or rescind the contract.
  2. Upon completion of the construction project, the owner of the project shall timely arrange for project acceptance inspection as per the construction drawing, specification, national regulation and standard for constructional acceptance and quality. Should the construction pass the acceptance inspection, the owner of the project shall pay the contract price as agreed and accept the construction project.
  3. Litigant shall provide evidence supporting its claims or rebutting the opponent’s claims, unless otherwise specified by law. If a party concerned fails to provide evidence or the evidence provided is insufficient to prove its claims before the judgement is rendered, the adverse consequence shall be borne by the party on whom the burden of proof lies.

 

Applicable laws

 

  1. Article 8, Paragraph 1 in Article 279 of the Contract Law of the People’s Republic of China
  2. Paragraph 1 in Article 64 of the Civil Procedure Law of the People’s Republic of China
  3. Article 90 of Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China

 

 

 

Basic facts

 

On 15 January 2010, the Claimant Haikou Century Harbor City Estates Limited and the Defendant CCCC Second Harbor Engineering Company Limited concluded the Contract for the Construction of the Firefighting Trestle Bridge in the Bund Center of Haikou, under which the Defendant is the contractor to the construction of the firefighting trestle bridge in the Bund Center of Haikou and reinforcement of the berm with a lump sum contract price of RMB26,800,000. In case of significant change to the design, the contract price shall accordingly be increased or decreased by taking 93% of the comprehensive unit price of the bidding quotation as basic price. During the performance of the contract, the original high piled beam-slab structure was changed to riprap protection structure. The construction was completed on 20 January 2011 and passed the acceptance inspection. On 7 June 2012, with the verification by a third-party price auditing institute, Shanghai Chengjiehua Engineering Cost Consulting Co., Ltd., both parties signed and stamped on the Construction Project Cost Settlement Report confirming that the construction settlement price was RMB30,036,620.85. From 24 March 2010 to 8 January 2014, the Claimant had paid the Defendant RMB26,139,564 with an outstanding amount of RMB3,843,056.85. On 21 December 2015, the Defendant and a third party, Hainan Luhang Construction Engineering Co., Ltd., concluded an Agreement on Transfer of Creditor’s Rights under which the creditor’s right of RMB3,843,056.85 enjoyed by the Defendant was transferred to the said third party.

 

In addition, it’s found that the original shareholders of the Claimant were Shanghai Lvzhou Garden Estates Co., Ltd. (taking up 80% of the shares) and Guosheng company (taking up 20% of the shares). In November 2015, the Claimant’s shareholders were changed to Huoerguosi Rui Hong Equity Investment Company Limited (taking up 80% of the shares) and Guosheng company (taking up 20% of the shares), and the legal representative was also changed from Xue Jianming to Zhang Chaofeng. Due to disputes between the original shareholders, Guosheng company filed a lawsuit against Shanghai Lvzhou Garden Estates Co., Ltd. before Haikou Intermediate People’s Court in February 2016. In that case, Haikou Intermediate People’s Court appointed Hainan Huide Consulting Co., Ltd. to appraise the construction cost for the Bund Center Project including the construction project in this case. The Defendant in this case as the contractor of the contraction project did not participate in the said legal proceedings.

 

The Claimant, Haikou Century Harbor City Estates Limited requested the Defendant to return the construction payment in an amount of RMB11,790,241 and bear the court fees in this case.

 

Reasoning

 

The effective judgment holds:

 

The focal dispute in this case is whether it’s factually and legally grounded for the Claimant to request the Defendant to return the overpaid construction payment amounting RMB11,790,241.

 

The Contract for the Construction of the Firefighting Trestle Bridge in the Bund Center of Haikou signed by and between the Claimant and the Defendant is valid and effective, thus the parties to the contract shall fully perform their respective obligations under the contract as agreed. The construction project in question was completed and passed the acceptance inspection. Upon the verification by a third-party price auditing institute, both parties jointly signed the Construction Project Cost Settlement Report confirming that the construction settlement price was RMB30,036,620.85. The settlement between the parties complied with the law and the Construction Project Cost Settlement Report signed by the parties with mutual consent was legally binding on both parties. The Claimant shall pay the construction price in an amount of RMB30,036,620.85 as agreed. As of this date, the Claimant had paid the Defendant RMB26,139,564 with an outstanding payment of RMB3,843,056.85 but not any overpayment. The Auditing Report and Appraisal Opinion (correction) provided by the Claimant in proving the overpricing of the construction cost and the overpayment of RMB11,790,241 was not admitted by this Court due to the illegality of such documents in respect of their sources and forms. To say the least of it, even this Court appoints as applied by the Claimant appraisal institute to evaluate the construction costs, the appraisal opinion could not overturn the effective settlement report signed by both parties with mutual consent. For this reason, this Court clearly reject the Claimant’s application for appraisal on the construction costs.

 

With valid and effective settlement agreed by both parties, the Claimant raised argument of overpricing and unconscionability and requested the Defendant to return the overpaid construction payment, which in effect is a claim for withdrawal of the agreed settlement and changing the construction price to RMB14,403,323. If the Claimant could prove the overpricing and unconscionability, as a company with qualification in real estate development and operation, it shall be aware of its right to revoke the contract on 7 June 2012 when the settlement of the construction price was carried out by the parties. However, the Claimant filed this case before this Court on 8 October 2016 when the time limit for exercising the right to revoke the contract as provided by law had already expired.

 

In conclusion, it lacks factual and legal ground for the Claimant to claim that it had made overpayment in an amount of RMB11,790,241 and requested the Defendant to return the said sum, and such claims are not be supported by this Court.

 

Judgement

 

Claims by Haikou Century Harbor City Estates Limited were overruled.

(This judgment was sustained by the second instance court)