Lai Ting Kwong v. Wui Loong Scaffolding Works Co Ltd

DCCJ 1748/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.1748 OF 2014

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JUDGMENT

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1.In 2013, the defendant was a scaffolding subcontractor to aconstruction project at Block Bof St. Paul’s Hospital (“the project” and “thehospital”) whereas the plaintiff was sub-subcontractor from the defendant on the project.

2.By its re-amended counterclaim, the defendant sued the plaintiff for alleged failure since 27 Dec 2013 to complete the works of the scaffolding sub-contract between the two on the project (“the contract”) and the alleged losses thereby occasioned[1].

3.By its counterclaim to counterclaim, the plaintiff complained of defendant’s alleged late payment of 3^rd interim payment of the project made on 21 Dec 2013, whose punctual settlement by 20 Dec 2013 was allegedly of the essence of the contract. The said alleged breach, it was said, entitled the plaintiff to terminate the contract on 25 Dec 2013 and to counterclaim defendant for alleged losses so caused.

Background

4.The following background facts are either admitted or not disputed on the pleadings or on the evidence before me and I find them proven.

5.The plaintiff has been scaffolding sub-subcontractor to the defendant for years prior to the subject dispute in Dec 2013.

6.At the material times in Dec 2013, the plaintiff was sub-subcontractor to the defendant on a number of sites and projects, including the hospital on the project.

7.The plaintiff took over from a previous defendant’s sub-subcontractor which left the project in late Aug 2013 when scaffolding was erected up to 8/F of the hospital (which had 25 floors).

The written contract

8.In respect of the project, the plaintiff and Mr So Yu Shing (蘇汝成) (“Mr So”), the managing director of the defendant, had signed on a typewritten contract in defendant’s letterhead dated 23 Sept 2013 (“the written contract”), but works under the contract had begun earlier on 13 Sept 2013.

9.The written contract was a schedule of rates contract, with the total contract sum to be arrived at by measuring the works done and had them calculated against unit rates specified therein.

10.Part A thereof sets out the unit rates for variouserection of scaffolding items A1-A8 while part B sets outdaywork rate of $1,300/day for the hospital.

11.Six remark clauses are found at the bottom of the written contract. Among others, clause 3 reads:“一切違規被罰， 被罰金額加百分之十五爲行政費，在承判人帳內扣除。”and clause 6 reads:“承判人於每月月初交上月糧單，糧款於 15-20 日支付。”

Progress payments

12.It is common ground that, as the works of the contract progressed, the plaintiff would from time to time submit interim payment applications to defendant, whose site agent and surveyor would assess and certify the value of works done by plaintiff before defendant approve and issue sub-contractor payment certificate. On each certificate so issued, the defendant would retain 10% of the value of approvedscaffolding works done as retention money.

First payment

13.The plaintiff had submitted to defendant 1^st interim payment application dated 3 Oct 2013 for such works done on 6/F of the hospital in the month of Sept 2013.

14.After assessment, the defendant issued payment No.1 dated 15 Oct 2013 certifying that a sum of $46,783 (net of 10% retention in sum of $2,454) was due and payable from it to plaintiff. The defendant approved such payment on 21 Oct 2013 and settled it by depositing a cheque of the said sum dated 19 Oct 2013 into plaintiff’s account on 21 Oct 2013.

Second payment

15.The plaintiff also submitted to defendant a 2^nd interim payment application dated 4 Nov 2013for such works done on 8/F & 9/F of the hospital in the month of Oct 2013.

16.After assessment, the defendant issued payment No.2 dated 15 Nov 2013 certifying that a sum of $125,147 (net of 10% cumulative retention in sum of $14,337 and net of previous payment) was due and payable from it to plaintiff. The defendant approved such payment on 19 Nov 2013 and settled it by way of a cheque drawn in plaintiff’s favour in sum of $120,000 dated 25 Nov 2013.

Third payment

17.The plaintiff later submitted to defendanta 3^rd interim payment application dated 30 Nov 2013 for such works done on 9/F to 13/F of the hospital in the month of Nov 2013.

18.After assessment, the defendant issued payment No.3 dated 21 Dec 2013 certifying that a sum of $127,246.2 (net of 10% cumulative retention in sum of $26,025.8 and net of previous payments) was due and payable from it to plaintiff. The defendant did not approve such payment until 21 Jan 2014.

Plaintiff’s collection of the cheque

19.But, on 21 Dec 2013, the plaintiff had come to defendant’s office at Aberdeen. Hemet a female accounting staff of defendant surnamed Lai (“Ms Lai”) and collected from Ms Lai a cheque No.224863 drawn by defendant in his favour dated 21 Dec 2013 in sum of $130,621.2 (“the cheque”). The cheque was cleared by plaintiff on 23 Dec 2013.

20.On first day of trial, counsel for plaintiff, Mr Samson Hung (“Mr Hung”), conceded(and plaintiff also confirmed in chief) that the cheque was drawn and given by defendant to plaintiff as payment for the 3^rd interim payment application.

Plaintiff stopped work

21.Starting from latest 27Dec 2013, the plaintiff no longer arranged his workers to work at the hospital for the project.

Day-workers employed by defendant

22.The defendant had found, and had paid for, day-workers to carry out scaffolding works for the project in Dec 2013 and Jan 2014. They belonged to 3 teams of workers (“the 3 teams”), namely:-

1) those led by Mr Chan Chun Kit from 30 Dec 2013 to 27 Jan 2014 (“Chan’s team”) for 47.5 day work at the rate of $1,400/day and paid $66,500 in total;

2) those led by Mr Leung Chi Ching from 8 Jan 2014 to 25 Jan 2014 (“Leung’s team”) for 80 day work at the rate of $1,400/day and paid $112,000 in total; and

3) defendant’s own day-workers from 2 Jan 2014 to 29 Jan 2014 (“defendant’s team”) and paid $66,278.55 in total.

23.It was not until 8 Feb 2014 that defendant found a new sub-subcontractor who was prepared to charge at the same rate as that of plaintiff for the project. This new sub-subcontractor was one Mr Leung Wing Cheong (“Cheong”) who was formerly a worker or subcontractor for plaintiff. Cheong also brought other former plaintiff’s workers to work for the defendant.

Fourth payment

24.The plaintiff had submitted to defendant a 4^th interim payment application dated 31 Dec 2013 for such works done from 14/F to 18/F of the hospital in the month of Dec 2013.

25.After assessment, the defendant issued payment No.4 dated 15 Jan 2014 certifying that a sum of $143,487 (net of 10% cumulative retention in sum of $39,888.8 and net of previous payments) was due and payable from it to plaintiff.

26.The defendant approved the said sum of $143,487 in payment No.4 on 21 Jan 2014. But the plaintiff was never paid by defendant on this 4^th payment.

27.Instead, the defendant had paid Cheong and other 5 former workers of plaintiff who had worked on the project a total sum of $144,300 by way of defendant’s cheques all dated 29 Jan 2014.

Retention money held up

28.And, so far, the defendant had not returned to plaintiff such retention money of the contract held up by it.

29.On 19 Feb 2014, plaintiff’s solicitors had written to defendant demanding it to release to plaintiff all retention money of the contract, and of another contract, held up by it.

Head of defendant’s claims

30.By its re-amended counterclaim, defendant seeks to recover:-

1) costs of engaging day-workers in total sum of $244,778.55 (the defendant would give credit of $53,422 for such scaffolding costs originally payable to plaintiff under the contract);

2) administration fee at 15% of item 1 in sum of $36,717; and

3) overpayment of $813 paid to plaintiff’s workers who had worked for the project (due to defendant making payments of $144,300 to Cheong and 5 former workers of plaintiff).

Head of plaintiff’s claims

31.After plaintiff abandoned its claim for 3^rd interim payment on 1^st day of trial (as it was conceded to have been paid by the cheque on 21 Dec 2013), his remaining claims in counterclaim to counterclaim are for:-

1) retention money on 3^rd interim payment in sum of $26,025.80;

2) 4^th interim payment in sum of $160,735; and

3) loss of profit on the contract estimated at $100,000.

Analysis

32.Only plaintiff and Mr So gave evidence before me. Both adopted their witness statements as their evidence in chief. But such evidence of Mr So in his witness statement about alleged trade practice had been expunged before his adoption.

33.I have carefully and fully considered all evidence, submissions and authorities before me.

34.I bear in mind such approach of assessing evidence which counsel for defendant Mr Ivan Cheung (“Mr Cheung”) reminded me of. With that in mind, I proceed to resolve the following main issues between the parties.

Contract partly written & partly oral

35.The defence contends that the contract consisted of the written contract only but plaintiff suggested that it was made partly so written and partly orally by way of conversation between plaintiff and Mr So on 23 Sept 2013.

36.I find for plaintiff on this issue as Mr So agreed with Mr Hung on this point under cross-examination.

Settlement on 15^th to 20^th day of the month

37.This issue relates to construction of clause 6 of the written contract. Mr Cheung submitted that it provides for defendant’s settlement of payment within 15 to 20 days after plaintiff’s submission of payment application at the beginning of each month. Mr Hung however submitted that it provides for defendant’s settlement of payment between the 15^th and 20^th day of the month of the payment application.

38.I agree with Mr Hung or plaintiff’s construction of clause 6 for the following reasons.

39.On its ordinary meaning, one finds clause 6 ambiguous. It does not say clearly that interim payment would be paid “within” 15-20 days of submission of application using the Chinese word of “內” after them. Neither does it make it clear “15日” and “20日” means 15^th and 20^th day of the month by qualifying words of, say, “該月” before these words. Given that the written contract, Mr So agreed, was drafted by defendant, such ambiguity should, I agree with Mr Hung, be construed against defendant.

40.Indeed, the first sentence of clause 6 refers to the beginning of the calendar month and that supports, I think, the words of “15-20日” in the 2^nd sentence to be equally so construed by reference to the calendar month.

41.In so far oral evidence is required to be considered on this issue, I prefer and accept plaintiff’s evidence on this issue and reject such contrary evidence of Mr So, and came to the same finding too.

42.I find it inherently implausible for Mr So to agree to an alleged settlement period (an alleged range of 15 to 20 days after submission of payment application) shorter than defendant’s normal approval and making payment period of 21 days (3 weeks) as alleged by him at para 13 of his witness statement.

Settlement time of payment not of the essence

43.It was contended by plaintiff that settlement time of payment application was, or had been made, of the essence of the contract such that late payment entitled plaintiff to terminate the contract.Such contention was disputed by defendant.

44.For the applicable law, Mr Hung, and Mr Cheung, referred me to s.11 of Law Amendment and Reform (Consolidation) Ordinance, Cap.23, and Chitty on Contracts, 32th Edition, Vol.1, para 21-011 to 21-014 at pp.1591-1596.

45.In short, the position at equity prevails over that of common law. Time is not of the essence of a particular clause of contract save and except in the following 3 cases.

46.They are: a) where the parties have expressly stipulated in their contract that time fixed for performance must be exactly complied with, or that time is to be “of the essence”, b) where the circumstances of the contract or the nature of the subject matter indicate that fixed date must be exactly complied with, and c) where time was not originally of the essence of the contract, but one party has been guilty of undue delay, the other party may give notice requiring the contract to be performed within a reasonable time[2].

47.All 3 bases are relied upon by plaintiff.

48.It is alleged that time was of the essence of the contract as a result of a) oral term allegedly agreed upon by plaintiff and Mr So; b) necessary implication from the circumstances of the contract; and c) alleged notice given by plaintiff to Mr So at their alleged meeting at defendant’s office on 15 Dec 2013.

49.I will deal with each basis in turn below.

50.First, in assessing the alleged oral term agreed upon, it is pertinent to notice the wordings of clause 6. It makes no reference to “punctual payment”, “late payment”, “termination of contract”, “time of the essence” or words to similar effect.

51.Had defendant persuaded plaintiff to come to its assistance on the project, and were plaintiff so concerned about defendant’s delayed payments and specifically required insertion of clause 6 into the written contract and agreed for settlement time of payment to be of essence of the contract as alleged by plaintiff, I find it most unlikely for clause 6 to remain in its current wordings. The parties, and the plaintiff in particular, could have it easily amended (if necessary, by handwritten amendments) to make it clear that time of payment was of the essence of the contract. I do not believe that plaintiff could have overlooked that the current wordings of clause 6 was insufficient for his alleged specific purpose as he claimed in re-examination.

52.Secondly, the so-called circumstances of the contract relied upon by plaintiff amount to no more than, I think, his concern about delayed payment on the part of defendant and its possible adverse effect on the plaintiff. It does not suffice, in my view, to make time of settlement essence of the contract.

53.Thirdly, regarding alleged notice given by plaintiff to Mr So on 15 Dec 2013, plaintiff’s oral evidence on this point materially varied, I note, from his pleaded case.

54.In cross-examination and re-examination, plaintiff claimed to have only told Mr So that “his workers would stop work in a few days” if defendant fail to pay him and said nothing about “termination of the contract on 25 Dec 2013”. However, para 11 of defence to re-amended counterclaim pleaded that plaintiff gave notice to defendant that should payment had not been made in accordance with the essential condition, plaintiff would exercise his right to terminate the contract on 25 Dec 2013.

55.Hence, I do not accept plaintiff’s evidence that he had given such alleged notice to defendant as he claimed.

56.In any event, the law only provides for notice to be given to demand or fix performance within a reasonable time after the other party was guilty of delay in performance and time is not of the essence in the first place. By 15 Dec 2013, defendant had not been late in 3^rd interim payment as the deadline was 15^th to 20^th day of Dec 2013. Plaintiff’s alleged notice on 15 Dec 2013, if I accept his evidence at all, is, I think, premature and ineffective at law.

57.I therefore find defendant’s settlement time of plaintiff’s payment applications not of the essence of the contract.

Plaintiff not entitled to terminatefor late 3^rd payment

58.Accordingly, despite the cheque was paid to plaintiffone day after its contractual payment deadline of 20 Dec 2013, such late payment from defendant did not, I think, enable plaintiff at law to terminate the contract as he did by not sending workers to work on the project as from 25 Dec 2013.

59.In support of that, Mr Cheung cited para 8-256 at p.666 of Chitty on Contracts: Hong Kong Specific Contracts, 4^th (2014) Edition, where the learned authors pointed out “Repudiation will not be lightly inferred. In respect of a contractor’s actions,… a refusal to carry out work will evince an intention to no longer be bound by the contract… In respect of an employer’s actions,… Generally, a failure to pay does not give rise to a right to suspend work but this depends on the circumstances (italics supplied)”.

60.I agree with the above statement of the law.

61.Indeed, I also find it incredible for plaintiff to decide to accept defendant’s alleged repudiation of the contract in the way he did when the payment was only one day late.

62.The suggestion by plaintiff that he at that time did not know that the cheque was tendered as payment of 3^rd interim payment cannot, I think, be accepted.

63.Mr Cheung had in his cross-examination taken plaintiff to documents showing the state of accounts of each other projects he had with defendant at the material time and demonstrated that a payment of such size of the cheque could only be for the project and no others.

64.Indeed, plaintiff admitted that, by Jan 2014, apart from the project, all outstanding payments for all other projects he had with defendant had been settled. His suggestion that he only knew shortly before this trial that the cheque was payment for 3^rd interim payment of the project is self-contradictory. His claim is further contradicted by his solicitors’ letter dated 19 Feb 2014 when they demanded for return of retention money and not payment of 3^rd interim payment for the project.

65.Granted that plaintiff collected on 21 Dec 2013 from Ms Lai an unsigned No.3 payment certificate in sum of $127,246.20 in respect of the project and no other payment certificate from other projects, I am satisfied that plaintiff knew full well on 21 Dec 2013 that the cheque was tendered as payment for 3^rd interim payment on the project and for no other projects.

66.Were plaintiff so serious about late payment of even one day late, one begs to ask why he did not accept defendant’s repudiation on the same day of 21 Dec 2013 or shortly afterwards, but only on 25 Dec 2013 or 4 days later and accepted in the way he did by conducts of pulling workers away from the hospital.

67.Plaintiff, one imagines, could have formally notified or informed defendant about his termination of the contract on 25 Dec 2013 but he never did that. He claimed in box to have orally informed Ms Lai about such intention on 21 Dec 2013 but there is no explicit record of such in his witness statement. I reject plaintiff’s evidence to that effect.

68.All in all, I do not believe late payment of 3^rd interim payment had anything to do with plaintiff not sending workers to work at the project as from 26 Dec 2013.

Plaintiff in breach for failure to complete

69.It was at first Mr So’s evidence that plaintiff had stopped work at the hospital completely as from 21 Dec 2013. By phone calls from 21 to 23 Dec 2013 and by letter dated 24 Dec 2013, defendant, it was pleaded, demanded plaintiff to carry out additional scaffolding works for the project on or about 27 Dec 2013. By another letter dated 2 Jan 2014 to plaintiff, defendant allegedly notified plaintiff that it had arranged day-workers to carry out additional scaffolding works on the project on 27 Dec 2013 on an urgent basis.

70.But plaintiff denied receiving such calls or the said letter(s) dated 24 Dec 2013 or 2 Jan 2014.The makers of such calls and the sender of those letters were not called by defendant before me. Their making and dispatch are thus not proved.

71.Moreover, plaintiff’s case that its workers did continue working at the hospital until 25 Dec 2013 was, Mr So conceded at the end, proven by 4^th interim payment application with details of day-works done on 23, 24 & 25 Dec 2013, which application was later approved by Mr So himself. I am therefore satisfied that plaintiff’s workers did continue working at the hospital until 25 Dec 2013.

72.But, according to details provided in the 4^th interim payment application and evidence of Mr So I accepted, such day-works plaintiff’s workers carried out on 23, 24 & 25 Dec 2013 were done on peripheral areas of the project on basement, 1/F to 2/F, 10/F to 13/F and not on 19F & 20/F of the hospital as it should be in line with the main progress of the works.

73.I accept from Mr So that should scaffoldings be not erected on 19/F and 20/F as the main progress of the project required, there was risk of “scaffolding collapse” in the circumstances then prevailing, despite such risk was not spelt out clearly by Mr So in his witness statement.

74.In addition, by plaintiff’s own admission that he did not arrange workers to work at the hospital as from 26 Dec 2013 onwards, he was plainly, and I find he was, in repudiatory breach of the contract as from 27 Dec 2013 as defence pleaded (see para 59 above for the law), which repudiation defendant accepted by finding other day-workers to take over plaintiff’s workers’ place to continue scaffolding works required for the project at the hospital.

Plaintiff’s claims

Loss of profit

75.In view of my finding above that it was the plaintiff who was in breach of the contract, this claim must fail and I so find, let alone there is, I think, no evidence to prove the alleged loss. The claimed amount of $100,000 is, I think, entirely speculative.

Refund of retention money

76.At his closing address, Mr Cheung abandoned any reliance of implied term and indicated that his defence here is one of common law. At common law, the plaintiff, he submitted, must makefull performance before he is entitled to the retention money. As plaintiff had failed to complete the contract, all retention money held up by defendant is to be forfeited.

77.Mr Cheung cited to me Hoenig v Isaacs [1952] 2 All ER 176, 181B-C where Denning LJ said:

“It is, of course, always open to the parties by express words to make entire performance a condition precedent. A familiar instance is when the contract provides forprogress payments to be made as the work proceeds, but for retention money to be held until completion. Then entire performance is usually a condition precedent to payment of the retention money, but not, of course, to the progress payments. The contractor is entitled to payment pro rata as the work proceeds, less a deduction for retention money. But he is not entitled to the retention money until the work is entirely finished, without defects or omissions (italics added)”.

78.Mr Cheung added that there could not be any issue of penalty as plaintiff does not earn the retention money until entire performance is tendered.

79.Mr Hung disagreed and asserted that there was no such condition precedent in the contract. It was never expressly agreed upon nor pleaded as an implied term as such.

80.On this issue, I agree with Mr Cheung. He was supported by authority he cited. The purpose of taking retention money is, no doubt, to ensure full performance. By agreeing to provide for retention money, the parties, I think, have made entire performance condition precedent for payment of retention money. And I concur with Mr Cheung that there cannot be any issue of penalty to arise here.

81.As such condition precedent has not been fulfilled by plaintiff, he was, I find, not entitled to the retention money and I so find for their forfeiture to defendant.

Fourth payment

82.It was pleaded by defendant at para 3A(ii) of amended defence to counterclaim to counterclaim that the 4^th interim payment was settled and paid by defendant to Cheong & other 5 workers of plaintiff in total sum of $144,300 for and on behalf of plaintiff for scaffolding work done at the hospital.

83.As Mr Hung rightly pointed out and I agree, defendant was no party to employment contract between plaintiff and the above workers of plaintiff. As Mr So acknowledged in box and I find, defendant had no authority or consent from plaintiff to set off the 4^th interim payment by paying wages to the above workers.

84.In reply, Mr Cheung submitted that, on the evidence before me, there was an implied request to defendant from plaintiff for payment of wages to the above workers such that it was entitled to set off the total sum of $144,300 against 4^th payment of $143,487 resulting in an overpayment of $813 it sought return from plaintiff.

85.He cited Chitty on Contracts, 32th Edition, Vol.1, para 29-118 at p.2181, where it was said that a voluntary payment may be recoverable where the circumstances justify the inference of an implied request by the defendant to make the payment; and, although a voluntary payment to a third person, which in fact benefits the defendant cannot normally create an obligation upon which the defendant to indemnify the payer, if it can be shown there was some necessity for the obligation to be assumed, then the law will grant him a right of reimbursement if it is just and reasonable to do so.

86.He further cited para 29-122 at p.2184 where it is said that: -

“The courts have often inferred from the circumstances an implied request by the defendant to the claimant to make the payment, especially where the money paid by the claimant was in discharge of a liability which the claimant had undertaken at the defendant’s instance, or by his authority. Lord Greene MR has said: “…if a person knows that the consideration is being rendered for his benefit with an expectation that he will pay for it, then if he acquiesces in its being done, taking the benefit of it when done, he will be taken impliedly to have requested its being done, and that will import a promise to pay for it.”

87.Mr Hung complained that such a plea had not been properly pleaded. But I think material facts for the same have been pleaded for it to be open to defendant.

88.Mr Hung went on to submit that it remains not open to defendant for that, on Mr So’s evidence, he had not verified with plaintiff (or from any record to check) the outstanding amount of wages due to the above workers from plaintiff but just relied on the words of Cheong that both Nov and Dec 2013 wages were outstanding and assumed that a daily rate of $1,300 was appropriate, when plaintiff on his evidence disputed that Nov 2013 wages were due to the above workers and Cheong was never called to prove the said allegations. Indeed, so much wages were paid to the above workers that defendant demanded an overpayment of $813 from plaintiff.

89.Mr Cheung countered to point out, on plaintiff’s evidence, he knew of defendant making payment of wages to the above workers and that was the reason why plaintiff’s solicitors in their letter dated 19 Feb 2014 did not demand 4^th interim payment from defendant on top of retention money held up.

90.I am not persuaded by Mr Cheung’s arguments. While plaintiff had acquiesced in defendant making wages payment to the above workers, I cannot find he took benefit in them after it was done. He never e.g. declined to pay the above workers on account of such payment already given by defendant. Indeed, he insisted to have paid them the Nov 2013 wages and I cannot resolve such dispute without hearing Cheong and the other workers. In the circumstances, I do not feel able, or find it just or reasonable, to infer an implied request from plaintiff to indemnify defendant for such wages payment in full, to the extent of refunding overpayment of $813 to the defendant.

91.As such, the plaintiff is, I think, entitled to be paid his 4^th interim payment submitted to defendant. While Mr So agreed with Mr Hung it was worth $160,725 by comparing cumulative works done on payments Nos.3 & 4, as retention money needed to be provided for in payment No.4 and plaintiff was, as I find above, not entitled to retention money, I agree with Mr Cheung that plaintiff is only entitled to $143,487 payable under payment No.4.

Result of plaintiff’s claims

92.The plaintiff fails on loss of profit and refund of retention money on his counterclaim to counterclaim but succeeds to recover 4^th interim payment in the sum of $143,487.

Defendant’s claims

Day-workers claim

93.This head amounts to $244,778.55 by way of total amount the defendant had paid the 3 teams. Its breakdown and particulars are found in answer to plaintiff’s request for further & better particulars of amended defence & counterclaim filed 15 May 2015 (“1^st particulars”) and another answer to plaintiff’s request for further & better particulars filed 29 Sept 2015 (“2^nd particulars”).

94.Defendant, it is pleaded, is prepared to give credit for the sum of $53,422 for such scaffolding costs originally payable to plaintiff under the contract. Their breakdown and particulars are set out at para 48 & 49 of witness statement of Mr So.

95.In response, Mr Hung first submitted that the defendant had failed on the evidence to establish that all such scaffolding works undertaken by the 3 teams for 19/F–20/F of the hospital were exactly works that the plaintiff was contractually bound to perform under the contract (“replacement works”) and further that such replacement works should be charged at $244,778.55 in total as alleged.

96.Mr Hung went on to submit that the defendant had also failed on the evidence to prove that that plaintiff would be paid $53,422 under the contract as alleged by Mr So at para 48 & 49 of his witness statement for such replacement works to give credit for.

97.As a result, he submitted, defendant had not on the evidence made good its alleged loss and alleged credit for this head of claim, and no award should be given on this head.

98.In support of his submission at para 95 above, Mr Hung pointed out that the nature of scaffolding works in work card/attendance records (工卡紀錄) of the 3 teams included not only “erection (搭)” of scaffoldings within Part A of the written contract, but also “demolition (拆), removal (清), transportation(運) and repair (修)” of scaffolding outside the said written contract[3] which plaintiff could refuse to perform (Mr So agreed under cross-examination that it does not so provide for e.g. “demolition” of scaffoldings, which was to be separately negotiated and agreed by the parties as the project makes it progress).

99.Mr So sought, I note, to explain the above by saying that the work cards themselves had not clearly stated the nature of scaffolding works, which was stated more clearly in the applications for day-works. And defendant’s answers to requests of the 2nd particulars, he said, did not give the whole picture either.

100.I think requests Nos.2, 7 & 12 of the 2^nd particulars were not themselves very clear to tell the reader what they demanded by way of answer. The simple single-word answer of “confirm” to each of them verified by one Mr Woo, executive director of defendant, did not, I accept, give the whole picture. The work cards did not do that either.

101.Looking at day-work applications for works on the project to start respectively on 8 Jan 2014 and 25 Jan 2014 for Leung’s team, the respective reasons stated therein are “加大…搭…” and “搭…”. That seems to suggest that the scaffolding work in question was “erection” in nature as Mr So explained.

102.However, contrary to such applications, in payment certificates Nos.1 & 2 to Leung’s team with periods ending respectively 27 Jan 2014 and 10 Jun 2014 prepared by defendant’s surveyor and approved by defendant’s directors, work type was put down as “demolition of scaffolding” for the project.

103.In view of the contents of these payment certificates, I am not satisfied on the balance that such works done by Leung’s team were replacement work for which plaintiff could be held liable for.

104.In comparison, in payment certificates Nos.1 & 2 to Chan’s team with periods ending respectively 15 Jan 201[4]sic and 31 Jan 201[4]sic prepared by defendant’s surveyor and approved by defendant’s directors, work type, I note, was put down as “erection of scaffolding” for the project. That of course were works plaintiff was contractually bound to perform under Part A of the written contract.

105.As for such work done by defendant’s team, absent other supporting evidence, I am equally not satisfied on balance of probabilities that their works were replacement work for which plaintiff could be held liable for.

106.Mr Hung on his same submission at para 95 above further pointed to the absence of record of measurement done by defendant’s surveyor, as Mr So admitted, of the extent of scaffolding work completed by the 3 teams.

107.Mr So had, Mr Hung stressed, agreed that for any work on the project outside items A1 to A8 of the written contract, if they were to be done by plaintiff’s workers, they could and should be charged by way of day-work at the lower rate of $1,300/day under item B1 of the written contract.

108.By the very nature of day-work, it is, I think, not surprising that measurement of the extent of works done was not carried out by defendant’s surveyor after the conclusion of works so long records were kept of the number of days and number of workers to complete the works in question. Absence of such measurement record does not, I think, prevent proof of works done by Chan’s team being replacement work plaintiff should be held responsible for.

109.Mr So gave evidence that works by Chan’s team were scaffolding works done on 19/F – 20/F of the hospital on the project after plaintiff failed to complete it and the documentary evidence supported that they were done for the project for the relevant period of time. The plaintiff had not seen fit to challenge or dispute all these evidence and I accept them accordingly.

110.Granted that such works done by Chan’s teams were “erection of scaffolding” within Part A of the written contract and that there is nothing before me to show that any of them was outside item A1 to A8 such that a lower daily rate of $1,300/day was applicable by virtue of item B1 thereof, I am satisfied on balance that all day-works carried out by Chan’s team in total sum of $66,500 paid by defendant was replacement work recoverable from plaintiff.

111.For his submission at para 96 above, Mr Hung referred to evidence of Mr So in the box that the calculations at para 48 of his witness statement were made by defendant’s surveyor (who was not called) and that he had no personal knowledge of them.

112.Mr So further agreed under cross-examination that scaffolding to lifts Nos.13 & 14 at para 48(4) of his witness statement was not within Part A of the written contract.

113.On general principles of contract, I agree with Mr Cheung that the burden lies on plaintiff i.e. the defaulting party to prove the amount that he should be given credit for, and not vice versa.

114.As such, I take such sums particularized at para 48 of Mr So’s witness statement as defendant’s admission which this court could act upon, unless plaintiff proves otherwise that they are inaccurate or insufficient.

115.But, save for attacking such costs in sum of $9,754 for lift scaffolding at para 48(4) of Mr So’s witness statement, which objection is, I accept, valid, plaintiff did not see fit to challenge the remaining items, their figures or calculations, as admitted by defendant. As such, I see no reason but to act on them.

116.Therefore, for his head of claim, I think defendant should give credit to plaintiff in the sum of $43,668 i.e. ($53,422 - $9,754). Hence, I give judgment for defendant against plaintiff for his head in sum of $22,832 i.e. ($66,500 - $43,668).

Administrative fee

117.For this head, the defendant contended that it is entitled to chargeadministration fee at 15%onsuch costs ithad incurred in order to rectify or repair any loss or damage it suffered as a result of breaches of the contract by plaintiff. Hence it claims $36,717 at 15% of $244,778.55 it pursues by way of day-workers claim.

118.Mr Cheung made it clear in his closing that the basis for this claim is implied term of the contract. He accepted that, properly construed, clause 3 is, as submitted by Mr Hung,confined to fines imposed by the authorities for breaches of safety regulations. Mr Hung opposed implication of such additional term into the contract.

119.I am afraid I disagree with Mr Cheung. Such a term is not, I think, reasonable or equitable. The contract is, I think, effective without it such that business efficacy does not demand its implication into the contract. Neither does it go without obvious saying. I agree with Mr Hung that such a term should not find its place in the contract.

120.For the above reasons, I dismiss defendant’s claim for administrative fee. As such, I find it unnecessary to deal with parties’ additional submissions on penalty.

Result of defendant’s claims

121.Defendant’s claim for administrative fee fails while I award it $22,832 for its day-workers claim. Its overpayment claim also fails as I rule against its defence to plaintiff’s claim for 4^th payment.

Disposition

122.Accordingly, I give judgment in favour of the defendant on its re-amended counterclaim in the sum of $22,832. I also give judgment in favour of the plaintiff on his counterclaim to counterclaim in the sum of $143,487.

123.After setting-off their respective awards, I order the defendant to pay the plaintiff the net sum of $120,655, together with interest thereon at judgement rate from 20 Jan 2014 until the date of this judgment, and thereafter at judgment rate until payment.

124.Both Mr Cheung and Mr Hung agreed in the above scenario that the sum of $169,548 defendant paid into court on 4 Feb 2016 should be paid out to plaintiff and I so order.

Costs

125.And I make a costs order nisi that the defendant do pay the plaintiff costs of both re-amended counterclaim and the counterclaim to counterclaim, such costs to be taxed if not agreed and there be certificate for counsel for this trial.

126.In the absence of either party taking out any summons to vary such costs order nisi within 14 days of this judgment, the same shall become absolute and effective.

127.Finally, I wholeheartedly thank Mr Hung and Mr Cheungfor their valuable assistance at this trial.

Mr Samson Hung, instructed by Simon S.M. Kwok & Co, for the plaintiff

Mr Ivan Cheung, instructed by Chiu, Szeto & Cheng, for the defendant