Kin Cheong Electrical Engineering Co v. The Tak Ming Co Ltd

CACV000030/1968

IN THE SUPREME COURT OF HONG KONG

(APPELLATE JURISDICTION)

CIVIL APPEAL NO. 30 OF 1968

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Coram: Rigby, S.P.J., Blair-Kerr & McMullin, JJ.

Date of Judgment: 6 March 1969

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JUDGMENT

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1. On the 13th July, 1966 the appellant company, which owned the Tak Ming School, entered into two separate written contracts with the respondents, a firm of contractors, to carry out the installation of certain electrical equipment at a sixteen storey building at Sai Yee Street Kowloon the premises of which were to house the Tak Ming School. These two written contracts, which were introduced in the evidence as Exhibits A and B, are very imprecisely worded and it is no doubt due to that fact that the dispute arise which has resulted in the legal proceedings culminating, in this appeal.

2. Exhibit A is expressly restricted to the installing of electrical fittings at the main switch room of the Tak Ming School. The only precise specification appearing there in refers to a German made 1,000 Amp. main switch. The cost of this work is stated as $12,260. On the date of completion of all the work in the Switch Room 50% of this price was to be paid and the remaining 50% after electricity became available. Throughout the proceedings it has been common ground between the parties that this was a lump sum contract and that the respondent company would, therefore, become entitled to payment only upon the complete performance in accordance with the written agreement.

3. The second contract Exhibit B relates to the installation of a wide variety of electrical equipment of all sorts throughout the building, but it suffers from a similar vagueness in that it mostly restricts itself to giving the unit prices for individual items which are to be installed and in many instances it would be very difficult to determine from these written terms how many of each individual units are required. In the case of this contract also, 50% of the cost of the installation was to become payable upon the completion of the work on the first eight floors and 50% upon the completion of the work on the remaining floors.

4. It was the case for the respondents in the trial court that they had effectively completed all necessary works under both contracts and they claimed for the balance of payment thereunder; it being admitted that under Contract A they had received a payment of $5,000 on account and, under Contract B, a sum of $57,000. Their claims, therefore, were, under Contract A the balance of $7,260, and, under Contract B, $32,031.60. They also claimed an additional sum of $3,620.00 in respect of additional works carried out by them at the request of the appellants subsequent, as they maintained, to the due completion of work under the principal contracts.

5. At the conclusion of the hearing the learned trial judge, notwithstanding the voluminous body of evidence which had taken some seven days to adduce, without reserving for further consideration, gave judgment for the respondents in the amounts claimed under Contracts A and B and, in addition, he gave judgment in the sum of $3,000 in respect of the claim for additional work. The appellants' counterclaim for $37,000; in respect of work allegedly carried out by another contractor to supply deficiencies in the plaintiffs' work, was dismissed. Counsel for the appellants in this court has not sought to pursue the counterclaim which was, indeed, specifically abandoned by Mr. Lee who appeared as counsel for the plaintiffs in the court below, and the appeal has proceeded purely upon the basis that the learned trial judge misdirected himself on certain matters relating to the evidence adduced on behalf of the plaintiffs' in the court below.

6. Having heard the arguments advanced on both sides in this appeal it does not seem altogether surprising that the learned trial judge found himself in a position to dismiss the defendants' case as summarily as he did. Mr. Litton had a difficult case to argue and he did so with admirable conciseness. As to Contract A his argument went as follows:-

7. Contract A, being a lump sum contract, payment thereunder could not be due until it had been fully completed. It had not been completed in accordance with the written terms, firstly, because those terms specified a switch of 1,000 Amp. whereas a switch of 500 Amp. only had been installed; and, secondly, because the learned trial judge imagined that this was the only deficiency in performance of that contract whereas the scope of it embraced works of a very much wider character. These works, according to Mr. Litton, included wiring incidental and subsidiary to the installation of the switch and other switch room fittings. In this connection he pointed to the first letter of complaint, dated 16th January, from the Tak Ming School to the electrical company. In that letter some six complaints were made, the principal of which is the complaint that the main switch installed was smaller than the one specified in the contract. The other complaints relate mainly to the fact that the wiring to the upper floors from the Main Switch Room is lighter in quality than the wiring that would have been necessitated by the installation of the 1,000 Amp. switch. He pointed also to the fact that in the original reply to this letter dated 18th January, the respondents state categorically that the electrical installations have been completed in accordance with the contract but that, notwithstanding this allegation, on the 21st of February they wrote once again to the appellants proposing that they be permitted to resume and complete the work following upon the break down of negotiations in respect of a joint inspection of the premises. Again, he drew our attention to a passage in the evidence given by P.W.3 Tse Kee which appears upon pages 16 and 17 of the original record and which, he maintains, amounts to an admission that Contract A included wiring to connect the main switch with each floor. He pointed out also that the invoice, Exhibit C.1, which covers the work done in the Main Switch Room, refers not only to the installation of the switch but also to: "all necessary busbar chambers, main and sub-main cables, sub-main switches and distribution fuse board."

8. I cannot see that there has been any misdirection by the learned trial judge on these matters. Mr. Ching has drawn our attention to the fact that the wording of Exhibit A specifically refers to "fittings at main switch room of Tak Ming School." There is nothing either in the invoice Exhibit C.1 nor in the passage from Tse Kee's evidence to which I have referred which goes any considerable way towards proving that wiring and incidental equipment throughout the entire building were to be included in the category of work undertaken by the respondents under Contract A. Mr. Ching's answer to this contention is clearly the right one viz: that Exhibit A does envisage wiring and fittings additional to the actual main switch but that such fittings and other incidental installations are restricted to such necessary equipment as would complete the installations within the main switch room only. It seems in the highest degree unlikely that the parties ever intended that the vast proliferation of subsidiary wiring, switches etc. throughout the entire building connected with the main switch should be included in work for which the stipulated price was $12,260. The suggestion, therefore, which appears at paragraph four of the memorandum of appeal, that the learned judge had failed to consider that the respondents were in breach of contract by supplying defective wiring and wiring not of contract description is beside the mark as far as Contract A is concerned.

9. With regard to Contract B Mr. Litton's principal complaint is that there was no adequate evidence put before the trial judge to show that the works set out in the various invoices supplied by the respondents to the appellants had ever been done. He summarised this argument by saying that the respondents had sought to prove their case in the court below by producing invoices, but they had been unable to prove the performance of the work referred to therein. These invoices were produced at the trial and became Exhibits C.1 to 14. It is agreed that all of them referred to works allegedly done under Contract B with the exception of invoices C.3 and C.13, which are in identical terms, and which relate to the installation of the main switch and other switch room equipment. It has not been denied by the appellants that these invoices were supplied or that they purport to give details of work carried out in the periods stated therein. The contents of invoices C.7, 8, 9, 10 and 11 are not in dispute and it is admitted by the appellants that the works detailed therein had been done. Originally Mr. Lee, for the appellants, attempted to argue that the work under Contract B was also to be regarded in the nature of a lump sum job. This argument was correctly stigmatized by the trial judge as impossible in view of the patent fact that the contract itself merely gave a blueprint of prices and descriptions of materials which, in practice, was amplified by instructions given to the electrical engineers as the job went on. There is, therefore, no fixed ceiling or figure applied to the work or materials to be supplied at the date of signing the contract. The plain fact also is that the appellants did pay large sums of money on account of work done and details of which were given under certain of these invoices. Mr. Litton wisely did not attempt to resurrect this lump sum argument. In the proceedings before us he based his main argument squarely on the proposition that it had been incumbent upon the respondents in the court below to show exactly what they did and what the price of each individual item amounted to. It was for them, in other words, to make their case and they must show strict proof of everything for which they claimed. That is a perfectly acceptable proposition and, if it were the case that the plaintiffs in the court below had sought to prove their case simply by putting in a list of invoices without further evidence relating thereto, it would be difficult to avoid the conclusion that the learned trial judge had misdirected himself, as the appellants' claimed, on the burden of proof.

10. In support of his contention Mr. Litton drew our attention to various passages in the evidence of Mr. Martin Fong P.W.1 and Mr. Tse Kee P.W.3. He pointed, firstly, to a passage which appears at page 205 of the first book of the original record at which Mr. Fong says that he got the information set forth in invoice No.461 from Tse Kee who was the foreman. He then points to a passage from the evidence of Tse Kee which appears on pages 2, 3 and 4 of the second book of the record in which the witness first of all said that he supervised the carrying out of the work up to 10th September 1966, and thereafter that Mr. Fong was in charge. These two witnesses, therefore, seemed to be passing the responsibility to each others. Mr. Ching, however, drew our attention to subsequent passages in the evidence of Mr. Tse which appear to resolve this inconsistency. On page 4 of the record he was asked to explain why he had originally said that he was concerned with the contract only up to September, 1966 and he replied "That was because I had been the man looking after the job at first so it was I who was more clear about it. I finished supervising the work in the month of September, 1966 - I mean that my work and Mr. Fong's work became separated after that date - before September I went to the site every day to see the workmen starting work and I would stay on at the site to supervise the work; I also collected money. Mr. Fong joined the firm early in September 1966; my duty then changed; my duty were confined to supervising the start of the work each day and checking on completion. I saw each invoice made out by Mr. Fong and we agreed then - he read them out to me - I do not read English." This makes it clear that Fong and Tse were both concerned throughout in checking the work.

11. Far more important than this evidence, however, was the subsequent evidence of Mr. Tse in which he stated that he and a Mr. Chung of the appellants' school had made joint checks of the work done as it proceeded. This evidence appears on pages 8 and 9 of the original record. It would appear that Mr. Tse would prepare a list of works which had been completed and show it to Mr. Chung and they would then go and check on the spot to see if the list was accurate. It was from lists of this sort that the invoices were made out, and this was never disputed in the course of the evidence. When, in due course, Mr. Chung, the principal of the appellant school, gave evidence, he said (page 22 of the original record "I tried to make payments which would not exceed what work was done, but actually we never checked what work was done. The "Mr. Chung" referred to by Mr. Tse Kee is Mr. Chung Sing who was employed by the defendant company. I heard Mr. Tse say Mr. Chung had made checks. I did not exactly give him instructions to do so. We had three clerks in the General Affairs Department. Mr. Chung was one, all of them should take care of the work carried out at the site." There were several other passages to which our attention was drawn by Mr. Ching but these are sufficient of themselves to dispose of the argument that the respondents were relying solely upon the production of invoices without reference to any evidence proving actual work done. What the plaintiffs, in the court below, were doing was, therefore, perfectly permissible: they were introducing evidence of a documentary nature giving details of work done and supplementing and substantiating that evidence by the spoken testimony of persons who could say that that work was in general carried out and who could say, moreover, that it was carried out in consultation, from time to time, with persons in positions of responsibility in the defendants' school. That was surely sufficient prima facie proof of the doing of the work detailed in the invoices. The respondents could scarcely be expected to produce every workman who drove a nail into a wall or turned a screw in a piece of wood. With that body of evidence before the court it was incumbent upon the defendants to attack the invoice items in detail and to put forward workmen or other persons who could give positive evidence that items claimed for had never been done or installed. No such evidence was forthcoming and, although it was attempted at one stage to suggest that the work done by the new contractor brought on to the site in February was work which should have been performed under the two contracts by the respondents, there is a total failure upon the record of the evidence to correlate any work done by the subsequent contractor with items left undone by the respondents.

12. Reverting to the first contract, the learned trial judge would appear to have been clearly right when he said that the only matter of substance alleged against the performance of the contract by the respondents was the installation of a switch of half the amperage of the switch actually referred to in the contract document. He took the view that, in all the circumstances as disclosed upon the evidence, this was not a factor which would entitle him to say that there had not been substantial compliance with the contract. That is patently so. It would appear, in any event, that the suggestion that the switch should be 1,000 Amp. instead of 500 Amp. came originally from the respondents and that Mr. Chung of the Tak Ming School accepted their view of that matter. A wiring diagram was prepared by Tse Kee which embodied the 1,000 Amp. lay out and this was later rejected by Mr. Fong, who joined the company somewhat after the contract had been signed, because he reckoned that the 500 Amp. switch would, in fact, be safer in view of the expected load upon the electrical installation at the school. His evidence was to the effect that he cleared this change in the size of the switch with Mr. Cheng; and some support is lent to this idea by the very fact that Mr. Cheng himself was neutral on the question of the switch and was apparently prepared to accept the opinion of his electrical experts from the outset. There was evidence from an Electrical Inspector Mr. Noronha, that a 500 Amp. switch was sufficient and that there was no other school of the sort in Hong Kong which utilised a 1,000 Amp. switch.

13. In view of all this evidence the trial judge was clearly right in coming to the conclusion that substantially the Tak Ming School had acquired an installation in its switch room of the type which it intended to acquire at the time it entered into the contract Exhibit A. Accordingly, the only reduction which they could expect to receive was that accorded to them by the trial judge who made an allowance of $900 in respect of the difference in price between the 500 and the 1,000 Amp. switch.

14. As regards Contract B it is of course true that the respondent firm did not complete the whole installation of electrical equipment as envisaged originally under Contract B. That contract was, of its nature, indefinite in scope and it is clear that they were prevented from doing so by reason of the dispute which arose. The evidence was that they had ceased work in February because they had not been paid in full under invoices already submitted. It was at that time, too, that the appellants had decided to have a joint inspection to see what work had been done and had at that very time already introduced another contractor to complete the work. It was, therefore, taken out of the power of the respondents to complete the work even had they been willing to do so and no joint inspection was ever held. What they were doing, therefore, in the action in the court below was, not to maintain that they had completed everything that they had undertaken to do on the Contract B, but that they had completed a considerable body of that work and had not been paid for it and have not been permitted to complete the rest. There might have been more substance in the appellants' defence originally had it been made plain upon the evidence that wiring of a certain calibre and description was required under Contract B and that it had not been supplied owing to the supply of a switch in the main switch room which was itself too small. No such proposition appears to have been clearly advanced and no sufficient evidence was ever produced to show that such was the state of affairs. Indeed the whole suggestion as to the improper quality of the wire came from the most curious sources having been first mooted, apparently, by a lift man and later by some unnamed teacher at the school who had, allegedly, some experience in matters electrical. It was apparently upon such dubious and insubstantial grounds that the appellants interrupted the work in the way that they did. Mr. Ching has informed us (and it does not appear to have been challenged) that the original switch of 500 Amp. and the wiring connected therewith have never, in fact, been replaced and, so far as he is aware, are still in use at the present moment. Moreover, the uncontradicted evidence of Mr. Fong was to the effect that it would be safer to use the 500 Amp. switch, and this would appear to agree with the evidence given by Mr. Noronha.

15. The final claim made by the respondents in the court below concerned certain additional work for which invoices were never submitted. It was Mr. Fong's evidence that invoices were not submitted for this work because his firm did not entirely finish the work. It was accepted by Mr. Litton that this work, if performed at all, would come under the heading of Contract B, being work concerned with the installing of various forms of electrical equipment. His main criticism of the learned judge's finding on this matter was that there was no adequate evidence at all to show just what had been done. It is clear that the learned trial judge was less satisfied with the evidence on this score than with the evidence in relation to Contracts A and B. Nevertheless, he accepted Mr. Fong's evidence that the total value of this work done, and for which no invoices were submitted, came to a little over $3,000. There is no doubt that this was the least satisfactory part of the original claim, but in view of the clear fact the learned trial judge, who had the opportunity of seeing the various witnesses, had come to the conclusion that the plaintiffs' witnesses were substantially telling him the true story he was, in my view, justified in accepting as accurate this rough figure put before him by the man who was most closely concerned to see the carrying out of that work. The evidence could certainly have been clearer and more detailed, but upon page 213 of the record Mr. Fong says that after the 22nd of December his firm did a great deal of work for the defendant company and installed a quantity of wiring and sockets for the Conference Room on the 11th floor and also main wiring for the lift and wiring for the water-pump and some temporary lighting for the roof-top. He also states at page 216 of the record that the charges made were in strict accordance with the unit prices given in the contract Exhibit B and where no unit price was given the unit price charge would be one mutually agreed between themselves and the defendant. This evidence also was unchallenged.

16. I cannot find that the learned trial judge has misdirected himself in relation to the evidence on any of the matters raised before us on this appeal. In my view, therefore, the appeal should be dismissed, with cost to the respondents.

Judgment handed down

Representation:

(Note: Rigby, S.P.J. & Biair Kerr J. Concur.)

Litton (Sanuel Soo & Co.) for Appellants.

C. Ching (H.H. Lau & Co.). for Respondents.