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HCCT 42/2021
[2023] HKCFI 2505
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 42 OF 2021
______________
| BETWEEN |
|
|
|
PERPETUAL WEALTH
(HONG KONG) LIMITED |
Plaintiff |
|
And |
|
|
BE SOLUTIONS COMPANY LIMITED |
1st Defendant |
|
YU PUI SZE |
2nd Defendant |
|
TSE YIU MO
(also known as BILLY TSE) |
3rd Defendant |
______________
| Before: |
Hon K Yeung J in Court |
| Date of Hearing: |
31 August, 4-6, 11-13, 15 September 2023 |
| Date of Judgment: |
29 September 2023 |
____________________
JUDGMENT
____________________
A. Introduction
1.Parties’ disputes concern the agreements reached and undated between September 2017 and July 2018 (the “Agreements”) whereby the plaintiff (“P”) engaged the 1st defendant (“D1” or “Be Solutions”, the 2nd defendant (“D2”) being at the material time D1’s sole director and shareholder, and the 3rd defendant (“D3”) its project manager, and collectively “Ds”) to carry out decoration works (the “Works”) at 11th Floor, Rykadan Capital Tower, No. 136 Hoi Bun Road, Kowloon (“Rykadan Capital Tower”, and the “11/F Property”). The Works included the use and installation of marble of certain descriptions and qualities (the “Marbles”). As things turned out, the quality and installation of such Marbles would become the focal points of the parties’ disputes. P claims that they were defective. A number of causes of action have then been pleaded. Ds on the other hand claim that P has failed to pay them the balance of the contract sum for the Works.
2.This is the trial of their disputes.
3.Ms Cyndi Ho appeared for P. On the first day of the trial, Ms Nicole Chui appeared for D1, and Mr Ernest Ng appeared for D2 and D3. During the subsequent part of the trial, they appeared together for D1. I will later explain the reasons for the change.
B. The Parties
4.In respect of P:
(a) P is a limited company incorporated in Hong Kong. It carries on property and capital investment business;
(b) On 23 May 2017, the 11/F Property was assigned to P. The stated consideration is HK$128,000,000 (Pt);
(c) The 11/F Property has been its registered office;
(d) Mr Qi Tao (“Qi”) has been P’s director and sole shareholder;
(e) Qi is also the sole director and sole shareholder of another company called Sun Create Richly Holdings (Asia) Limited (“Sun Create”);
(f) Earlier on 10 September 2014, Sun Create was assigned 12th Floor of Rykadan Capital Tower (the “12/F Property”). The stated consideration is HK$118,650,000 (Pt);
(g) Mr Yeung Tat Man (“Yeung”, or “Man Gor” as has been referred to by the parties) has been Qi’s Personal Assistant;
(h) Mr Lee Man Hon (“Jacky Lee”) has been an Administrator Officer of P.
5.In respect of Ds:
(a) D1 is a limited company incorporated in Hong Kong. Its carried on business of interior design and construction works for decoration;
(b) D2 and D3 are wife and husband;
(c) D2 was at the time of the Agreements and the Works the sole director and sole shareholder of D1. She ceased to be a director from 5 September 2020, and ceased to be a shareholder from 14 October 2020;
(d) D3 was the Project Manager of the Works together with D2.
C. Undisputed facts
6.It is common ground that D1 was pursuant to the Agreements engaged by P to renovate its newly acquired 11/F Property. The Works included the installation of the Marbles.
7.It is also common ground that D1 had submitted a number of quotations in relation to the Works. The very first one was dated 7 August 2017 (“Q/1st”)[1]. It was followed by several subsequent ones, which were dated 30 August 2017 (“Q/R1(2)”)[2], 11 September 2017 (“Q/R2”), 19 September 2017 (“Q/R3”) and 21 September 2017 (“Q/R4”, and collectively the “Earlier Quotations”)[3]. They cumulated towards the one dated 22 September 2017[4] that was executed by both sides (the “22/9/2017 Quotation”). The 22/9/2017 Quotation was subsequently updated by the ones dated 27 April[5] and 31 July 2018[6] (the “27/4/2018 Quotation” and “31/7/2018 Quotation” respectively). The Agreements were comprised thereby.
8.The Agreements (see in particular the 22/9/2017 Quotation) in 8 sections itemized the Works under the following topics:
(a) Section A – 11 items of preparatory and demolition works;
(b) Section B – 32 items of water and electrical works;
(c) Section C – 6 items of ceiling works;
(d) Section D – 26 items of floor, door and wall works;
(e) Section E – 2 items of furniture works;
(f) Section F – 7 items of others;
(g) Section G – 5 items of Works carried out by nominated contractors of the building; and
(h) Section H – 4 items of items purchased by client.
9.The Works itemized in Section D included the installation of the Marbles. The 4 specific items that are in dispute are “Item d15”, “Item d18”, “Item d23” and “Item d26” (and will be referred to below as such, and collectively the “Disputed Items”). They are specified in the 22/9/2017 Quotation as follows[7]:
“d15「提供及安裝18mm 厚西班牙米黃800x800 牆身雲石(雲石價格為@$1200-1400/平方米)**項目包括防水塗料，切割，無縫車邊及拋光打磨等加工費用**」
d18「提供及安裝招牌牆西班牙米黃100mm 直徑半圓牆身雲石(約2600mmH)(雲石價格為@$1200-1400/平方米)**項目包括防水塗料，切割，車邊及拋光打磨等加工費用**」
d23「提供及安裝18mm 厚西班牙米黃900x900 地台雲石 (雲石價格為@$1200-1400/平方米)**項目包括防水塗料，切割，無縫車邊及拋光打磨等加工費用**」
d26「雲石枕頭位置提供及安裝維修生口」”
10.The 22/9/2017 Quotation contains a number of Remarks. The most relevant ones are:
“**最終工程造價須按照客人確定之物料，設計及現場實際呎吋有所調整”
“**雲石乃天然之產品，色澤及紋理會略有差異，相片及石材樣版只供參考之用”
11.It is also common ground between the parties that:
(a) On about 15 September 2017, a meeting was held between inter alios Qi, Yeung and D3 in Shenzhen (the “Shenzhen Meeting”);
(b) On 21 November and 7 December 2017, inter alios Yeung and D3 went on 2 joint visits to Yunfu in the Mainland for Yeung to choose the marbles to be used for the Works (the “1st Joint Visit” and “2nd Joint Visit” respectively, and collectively the “2 Joint Visits”);
(c) On 10, 16 and 27 March 2018, inter alios Yeung and Mr Chan Pan Tai Benny (“Ar Bun”) of Ka Yu Marble Engineering Company Limited (“Ka Yu”) attended a processing factory in Shenzhen to inspect the processing of the Marbles (the “Inspections”);
(d) What happened during those meetings, visits and inspections are in dispute.
D. The pleadings and parties pleaded case
12.The current set of pleadings comprises:
(a) P’s Re-amended Statement of Claim (original Statement of Claim dated 8 October 2018, amended in January 2019, and re-amended in October 2019 (“RASOC”);
(b) The Amended Defence and Counterclaim of D1 and Defence of D2 and D3[8] (“AD&CC/D1”);
(c) D1’s Answers to P’s Request for Further and Better Particulars (“D1/F&B”);
(d) D1’s Voluntary Answers to P’s Request for Further and Better Particulars (“D1/VF&B”);
(e) Amended Defence of D2 and D3 (“ADef/D2&D3”); and
(f) P’s Re-amended Reply and Defence to Counterclaim of D1 (“RAReply” or “RAR&D” as appropriate).
13.P’s pleaded case may be summarized as follows:
(a) Ds had made to it 3 sets of misrepresentations (the “1st Marble Representations”, the “2nd Marble Representations”, the “3rd Marble Representations”, and collectively the “Representations”):
a. The 1st Marble Representations[9] are pleaded in the following terms:
“2C. On or around 15th September 2017, [Qi]… and [Man Gor]… met with, inter alios, [D2] and [D3] in Shenzhen with a view to engaging [D1] to fit out the [11/F Property] to discuss the scope and specification of the fitting-out works, so that [D1] could submit a quotation to [P] (‘the Meeting’). [P] expressly informed [D3] that:-
2C.1. the marble layout of the lobby of the [11/F Property] should follow the same design and layout as the [12/F Property]; and
2C.2. the highest grade and top quality marbles should be used.
2D. During the Meeting, [D3] orally confirmed and represented to [P] that they would provide a quote with the aforesaid specifications, and would use Grade ‘A’ Crema Marfil (Spain) (西班牙米黃) (‘the 1st Marble Representation’).”
b. The 2nd Marble Representations[10] are pleaded in the following terms:
“4. On 6th December 2017, after a previous unsuccessful joint visit on 21st November 2017, Man Gor together with, inter alios, [D3] went to a marble factory in Yunfu, Guangdong, PRC to select the lot of marble to be used for, inter alia, Items d15 and d23 of the Agreements (‘the Joint Visit’). During the Joint Visit, and at the inspection of a certain lot of marble (‘the Lot’), [D3] made the following representations:-
4.1. the Lot was Grade ‘A’ Crema Marfil (Spain) (西班牙米黃);
4.2. the Lot was taken from the same quarry and the same block;
4.3. the Lot was sufficient to cover the surface area specified in Items d15 and d23 of the Agreements with the same consistent quality; and
4.4. in any event, to ensure that the same consistency with the Lot, a sample marble of 285mm x 250mm from the Lot (‘the Sample’) would be given to [P] to compare with the final product to ensure that [P] could check against the Sample with the installed marble in terms of origin, type and grade.
(collectively, ‘the 2nd Marble Representation’)”
c. The 3rd Marble Representations[11] are pleaded in the following terms:
“8A. By June 2018, upon the [P’s] repeated complaints that many of the marble tiles installed at the [11/F Property] (‘the Installed Marble Tiles’) did not correspond to the Sample in terms of colour and pattern, [D3] explained to [P] that the different patterns observed in the Installed Marble Tiles were due to natural variation within a series or type of natural marble but not because of the difference in the origin, type and grade of the Installed Marble Tiles vis-a-vis the Sample (‘the 3rd Marble Representation’).”
(b) As can be seen from the above, the Representations concerned principally the grading, origin and quality of the Marbles, or why they did not correspond to the Sample. P says that it had been induced thereby to enter into the Agreements, or at least certain parts thereof;
(c) The Marbles subsequently used and supplied were defective, and were of grade and quality lower than those of the Samples;
(d) Without knowing the problems, P had paid D1 HK$11,835,196.25, leaving an outstanding sum of HK$2,360,939.75;
(e) P has pleaded a number of causes of action, all 4 against D1, and only the one based on conspiracy against also D2 and D3:
(i) Against D1:
a. Breach of the Agreements[12]:
i. in the sense that D1 had provided Marbles of inferior quality, which did not correspond with the Samples in terms of origin, type and grade, were not of merchantable quality, and were of poor workmanship. As a result of those breaches, D1 had repudiated the Agreements which repudiation P had accepted. D1 had failed to complete the works. In order to mitigate its losses, P has engaged Summit Marble Co Ltd (“SMC”) to identify and make a report on the defects, and to rectify D1’s breaches by carrying out repairs and supplying marbles that correspond with the Sample (the “Alleged Rectification Works”). The costs and expenses are particularized at HK$9,422,798[13];
ii. I record that in the course of her oral opening, Ms Ho confirmed that the particulars of breach have been pleaded under §12 of the RASOC, and P’s case is confined to it;
iii. P also claims reduction of contract sum due to downward adjustment of certain items of the Works, the total amount of which is particularized at HK$1,587,000[14] (the “Reduction Claim”);
b. Fraudulent misrepresentation[15]:
i. As can be seen above, and as confirmed by Ms Ho in the course of her oral opening, P’s case is that the Representations were and had become terms of the Agreements;
ii. P’s claim on fraudulent misrepresentation in that sense overlaps substantially with P’s claim based on breach of the Agreements;
iii. For those reasons, Ms Ho confirmed during her oral opening that P’s cause of action based on fraudulent misrepresentation would no longer be pursued;
c. The tort of deceit:
i. P’s pleaded case is that the Representations made by D1 through D3 were false, or Ds being reckless as to their truth, and the Representations being intended to be relied upon, hence amounting to tortious deceit against P[16];
ii. I record that despite the pleadings, Ms Ho in the course of her opening acknowledged that the pleaded deceit is also premised upon the existence of the Representations, overlaps with but is in fact more difficult to be proven compared with the other claims. She confirmed that deceit would no longer be pursued;
(ii) Against all Ds:
a. conspiracy to defraud and/or injure by unlawful means;
b. I record however that upon this Court seeking assistance from Ms Ho on the law, and in particular whether there could be an actionable conspiracy amongst D1, D2 (who at the material time was the sole director and shareholder of D1) and D3 (who is D2’s spouse), Ms Ho in the course of her oral opening acknowledged the inherent weakness of this cause of action, and that upon further instructions having been taken, she formally withdrew the same;
(iii) In summary, despite the pleadings, what remain being pursued by P are Breach of the Agreements and the related Reduction Claim.
14.D1’s case may be summarized as follows:
(a) In respect of its defence, and so long as remaining relevant:
(i) It denies any breach of the Agreements, and in particular:
(1) D1 denies having made the Representations;
(2) Differences in colour and pattern inevitably exist in the natural form of marbles. The choice of the Marbles was a matter for D1, the quality of which D1 could not and did not warrant. D1 had ordered the same quality of marble as specified in the Agreements. P had further inspected the Marbles on multiple occasions;
(3) D1 did not repudiate the Agreements. It was P which did. P had agreed to grant extensions of time for D1 to carry out remedial works, first to 15 August 2018 and then to 20 August 2018. P unilaterally terminated the Agreements before the agreed extended deadline and on 10 August 2018 demanded D1 and its staff to leave the 11/F Property while they were in the course of carrying out remedial works[17];
(ii) The alleged loss and damage arising out of the alleged downward adjustment are not admitted, and P is put to strict proof of the same;
(b) In respect of its counterclaim:
(i) D1 repeats its defence[18];
(ii) It avers that it has fully discharged its obligations under the Agreements in that[19]:
(1) it has carried out the Works in accordance with the terms of the Agreements;
(2) it was ready, willing and able to carry out the remedial works, and was in the course of doing so until P’s unilateral termination of the Agreement when P ordered D1’s workmen to leave the 11/F Property on 10 August 2018;
(iii) D1 counterclaims against P (1) outstanding payment due under the Agreements, in the total sum of HK$2,300,769.75, and (2) the deposits paid by D1 to the management office of Rykadan Capital Tower in relation to the Works, in the sum of HK$48,304[20] (the “Deposits”);
15.In P’s RAR&D, and principally:
(a) P denies that the Agreements had been extended to 20 August 2018[21];
(b) In respect of the Counterclaim, P:
(i) repeats the RASOC and the RAReply and deny D1’s Counterclaim[22];
(ii) pleads alternatively a set-off[23].
16.In respect of D2 and D3:
(a) The contents of ADef/D2&D3 are materially the same as those of AD&CC/D1. D2 and D3 in effect adopt the defence of D1. They deny having made the Representations, and deny the existence of the conspiracy;
(b) Upon the cause of action of conspiracy having been withdrawn, D2 and D3 are no longer being sued personally. I on the first day of the trial formally dismissed P’s claim against them with costs;
(c) Mr Ng sought an order that those costs be taxed on an indemnity basis. Whilst Ms Ho accepted that P should bear those costs, she objected to them being assessed on an enhanced basis;
(d) I directed that D2 and D3’s application for indemnity costs be adjourned, to be dealt with and considered together with the costs of the remaining part of the action between P and D1;
(e) I record that on 23 August 2023, D2 and D3 took out a summons (the “Summons”) returnable on the first day of this trial for security for costs against P. Having heard Mr Ng and Ms Ho, and for reasons I gave orally in court (primarily on the absence of sufficiently credible evidence suggesting that P will be unable to pay any costs that may be ordered against it), I dismissed the same. However, on the facts of the application, I ordered that costs of the Summons be in the cause of the trial. Upon dismissing P’s claim against D2 and D3, I ordered that the costs of the Summons be borne by P as part of the costs of the trial, on a party and party basis, to be taxed if not agreed;
(f) After dismissal of P’s claim against D2 and D3, Mr Ng remained in the trial for D1, with Ms Chui as co-counsel.
E. The Agreed List of Issues
17.Despite certain initial difficulties and misunderstanding, a list of issues with 10 issues has been agreed and updated by P and D1 (the “Agreed Issues”). I will consider them in turn below.
F. The witnesses
18.P has called as factual witnesses Yeung and Jacky Lee, which has given one witness statement each (“Yeung/WS” and “Lee/WS” respectively).
19.For D1:
(a) D1 has called as factual witnesses D2 and D3, who have also given one witness statement each (“D2/WS” and “D3/WS” respectively);
(b) It has called Mr John Lam Kwong Sang (“John Lam”) as the liability expert, who has prepared an expert report dated 26 June 2023 (“Expert Report”).
20.In respect of the expert evidence, I record the following matters:
(a) Leave to adduce expert evidence was first granted by Mimmie Chan J in September 2021. The experts which P and Ds were allowed to call were respectively Mr Chan Kin Pun Ben (“Ben Chan”) and John Lam. Steps to be taken by the experts were also set out in that Order, including joint visit within 28 days, preparation of joint photograph album, joint labelling of the Marbles, joint report etc;
(b) By the time of the Pretrial Review, none of those steps had been completed;
(c) Rather, by summons of 28 June 2023, P sought leave to appoint another expert to replace Ben Chan, on the basis that Ben Chan had refused to act as P’s expert;
(d) No draft expert report was at that stage placed before the court;
(e) Primarily on the lateness of the application and the prejudice that Ds might suffer, I during the Pretrial Review refused P’s application. I also refused leave to file late any expert report on quantum. I instead granted Ds leave to file and serve John Lam’s Expert Report within 7 days from the date of the order;
(f) In the end, there remains only leave for D1 to call John Lam as the expert on liability.
G. The credibility of witnesses
G.1. The legal principles
21.I have been cited Ip Fung Kuen v Sam Kee Forzen Meat Company Limited (HCA 1897/2009, 6 April 2016) at §§65-67. I remind myself when considering a witness’ credibility of the importance of considering the inherent likelihood or unlikelihood of the witness’ evidence, the consistency of the witness’ evidence with undisputed or undisputable evidence, with contemporaneous conduct and documents, the internal consistency of the witness’ evidence amongst their witness statements and with pleadings, and any material change of case. I need to consider the totality of the evidence. I remind myself that lies themselves do not necessarily mean that the entirety of that witness’ evidence is to be rejected. I warn myself against attaching undue weight on demeanour, though demeanour is obviously relevant when considering credibility.
22.I apply the above. And having considered the totality of the evidence, I state my views on the credibility and reliability of the witnesses as follows.
G.2. Yeung and Jacky Lee as witnesses, and analysis of their evidence
23.I have considered Yeung’s evidence. For the following main reasons, I do not accept Yeung to be a truthful or reliable witness:
(a) As said, Yeung has been Qi’s personal assistant. He was earlier involved in the renovation of the 12/F Property. He was further directed by Qi to monitor the progress of the Works at the 11/F Property on Qi’s behalf and to assist Jacky Lee. He had been directed by Qi to pay particular attention to the Marbles;
(b) I find Yeung’s evidence to be inherently improbable, inconsistent with contemporaneous documents, and is self-contradictory;
(c) Yeung says that Qi wanted the quality of the Marbles to be better than those installed at the 12/F Property. He claims further that Qi wanted Grade A marble to be used, which should not have any dark spots which those installed at the 12/F Property had. He says that that was important to Qi;
(d) Yeung says[24] that in July and August 2017 he invited quotations from contractors for the Works. The contractors included D1 and another one called June Décor). He says at §7 of Yeung/WS that:
“I showed all the contractors the marbles installed at the [12/F Property], told them that we would use Garde [sic.] ‘A’ marbles which should not have any dark spots like the marbles installed at the [12/F Property] and asked them to include their fees for supplying and installing the Garde [sic.] ‘A’ marbles in their fee quotations or budget proposals if they could supply such marbles. I recall [D3] orally told me that he could supply Grade ‘A’ marbles which would be better than the marbles installed at the [12/F Property] so I invited him to submit a fee quotation …”
(e) Yeung further claims and that the use of Grade A marble had been repeated to and by Ds many time subsequently, including by Ds as part of the 1st and 2nd Marble Representations;
(f) The claimed use of Grade A marble is a theme important to all 3 sets of the Representations;
(g) Despite the alleged importance attached to the use of Grade A marble, such alleged intended use, or even the term “Grade A”, has not been recorded or referred to in any contemporaneous documents. This is my view is inherently most improbable, to the extent of being incredible;
(h) Those contemporaneous documents include the Agreements and the Earlier Quotations, minutes of parties’ meetings, WhatsApp messages, emails, a letter issued on 10 August 2018 by Messrs Ho Tse Wai on P’s behalf[25] demanding D1 and its workmen to leave the 11/F Property forthwith (the “Demand to Leave Letter”), and the Writ with general indorsement issued shortly afterwards on 14 August 2018. In particular:
(i) Grade A was not mentioned in the Agreements or any of the Earlier Quotations. For Items d15, d18 and d23, the quotations and Agreements only specify the use of Crema Marfil (Spain), but not the grading. For Item d26, only the use of marble was specified, without specifying even the use of Crema Marfil (Spain)[26];
(ii) It is noted that the contents of the Earlier Quotations had been modified as the negotiations went along. There had been some 5 revisions before the 22/9/2017 Quotation. At least in respect of Item d24, the grading of the marble to be used was expressly specified (namely 玉石級[27]). The thickness of some of the Marbles had also been changed upon P’s request. In contrast, there is no record that P had ever even requested the use of Grade A marble to be recorded or reflected in the Earlier Quotations or the Agreements;
(iii) The timing of the submission of those quotations in the context of P’s case is also important. P alleges that the 1st Marble Representations were made on around 15 September 2017 during the Shenzhen Meeting. D3 is alleged to have represented, I repeat, that “they would provide a quote with the aforesaid specifications, and would use Grade ‘A’Crema Marfil (Spain)”. Yet, when Q/R3 was submitted on 19 September 2017, there was still no reference to Grade A Crema Marfil (Spain) or that those that would be used should be of Grade A. It is absolutely incredible that P would have raised no objection to that if Yeung’s evidence were truthful, but then proceeded nonetheless to execute the 22/9/2017 Quotation shortly afterwards (which itself also contained no reference to the Crema Marfil (Spain) being of Grade A);
(iv) In the above regard, Ms Ho relies on one remarks in Q/R3, that “以上報價按照客人12樓之平面圖紙、設計及用料作出預算報價”. But that does not explain the absence of any express mention of Grade A Crema Marfil (Spain) in Q/R3 despite the specific request made allegedly during the Shenzhen Meeting held just several days earlier, or all subsequent contemporaneous documents. It should also be noted that P’s case is that Qi was not satisfied with the quality of those marbles used on the 12/F Property because of dark spots in them;
(v) The quotation submitted by June Décor[28] also made no reference to the marbles being required to be of Grade A;
(vi) P and Ds held regular meetings in respect of the Works. Some 10 sets of minutes of such meeting have been produced (the “Minutes”). Yeung accepted during cross-examination that he had received all of them. The term Grade A or their use was not referred to in any of the Minutes;
(vii) Parties formed a WhatsApp group in relation to the Works (the “WhatsApp Group”). Members of the group were Yeung, D2, D3, Jacky Lee and Simon Chan. Simon Chan was a go-between at the early stage who introduced Ds to P. In those extensive messages produced[29], there was no mention of the term Grade A or their requested use;
(viii) By emails of 23 and 24 July 2018[30], D2 emailed to inter alios Yeung and Jacky Lee two 初步驗收報告 (Preliminary Completion Inspection Reports) prepared after the inspections that took place on 21 and 23 July 2018. Certain of P’s complaints in relation to the Works were recorded in those reports. However, the term Grade A marble, their requested use or any complaint of D1’s failure to use the same were not;
(i) The only documents before me which make any reference to the grading of the Marbles is a quotation dated 8 December 2017 issued by Ka Yu to D1[31] and the related invoice of 22 December 2017[32] (the “Ka Yu Quotation and Invoice”). They were issued by Ka Yu. They were issued some 3 months after the execution of the 22/9/2017 Quotation. The term used was not Grade A (or 甲級), but “特級”. They do not even start to explain the absence of reference of Grade A in all the contemporaneous documents, or the inherent improbability shown thereby. I reject Ms Ho’s submissions that that it is “a piece of cogent and strong contemporaneous documentary evidence to demonstrate that P did not intend to use ordinary Crema Marfil (Spain) marble but those of premium quality”[33];
(j) Yeung says that he, together with inter alios D3, twice attended a marble factory called Tu Sheng Shi Cai (途胜石材) at Yunfu in the Mainland (the “途胜”) to pick the marbles to be used for the Works (i.e the 2 Joint Visits). None was picked during the 1st Joint Visit. According to him, during the 2nd Joint Visit, he managed to choose one lot of marbles to be used. What happened during the 2nd Joint Visit is important according to P’s case. It was during that 2nd Joint Visit when the 2nd Marble Representations were allegedly made. Yeung describes in §§19 to 21 of Yeung/WS what he says happened:
“19. During the Joint Visit, and at the inspection of a certain lot of marble (‘the Lot’), I was shown some marble slabs that matched the aesthetic requirements of Mr. Qi. I recall that I specifically asked [D3] whether the Lot was of Grade ‘A’ and top-quality and whether the Lot itself was enough to cover the areas as specified in the Agreements.
20. In response, [D3] made the [2nd Marble Representations] …
21. Believing the 2nd Marble Representation was true, I confirmed with [D1] through [D3] that [D1] should supply and use the Lot for Items d15 and d23 of the Agreements. Upon the confirmation, Ar Bun then immediately asked a worker in the factory to cut out a piece of marble of 285mm x 250mm from the Lot (i.e. the Sample) and gave the Sample to me. After my return to Hong Kong, I informed Jacky of the 2nd Marble Representation and passed the Sample to Jacky.”
(k) However, during cross-examination, Yeung changed his evidence several times as to whether he had during that 2nd Joint Visit confirmed the use of the chosen lot, whether the Lot he had chosen was to be used for the entire floor or just Items d15 and d23, and whether the chosen lot hence had anything to do with Items d18 and d26. At one stage, he even accepted that he was not sure as to the accuracy of that paragraph, but at a later stage claimed that he was simply confused. Given the significant changes and swings of his evidence in those regards, I do not accept that explanation of his;
(l) There is also no contemporaneous document recording the provision of the Sample, or any complaint that the Marbles subsequently installed did not correspond with it. Nor is there any mention of any of the Representations in the contemporaneous documents. The first time they appear was when P re-amended its Statement of Claim in October 2019. The absence of any such documentary record and is inherently most improbable if Yeung’s evidence on the provision of Sample and the alleged making of the Representations were truthful;
(m) His evidence as to how he and Jacky Lee obtained Ben Chan’s oral opinions on the alleged defects of the Marbles is also inconsistent and conflicting. At §36 of Yeung/WS, and with reference to §38 of Lee/WS, he claims that it was Jacky Lee who got Ben Chan’s opinions on 9 August 2018, and that Jacky Lee then informed him of the same. Yeung goes on in that same paragraph to claim that on 10 August 2018, he and Jacky Lee confirmed Ben Chan’s opinions by making queries with marble vendors in Mong Kok. But when under cross-examination, Yeung claimed that he had in fact himself asked Ben Chan to examine the Marbles. He claimed that he did that within 1 week after 10 August 2018, after Jacky Lee had told him about Ben Chan’s oral opinions. Yeung claimed that he wanted to consult Ben Chan again to confirm. He claimed that he did that alone, and that Ben Chan told him that whilst the Marbles were Crema Marfil (Spain), they were not of Grade A, but Grade B and Grade C, and that they were not from the same lot or quarry as the Sample was. That evidence is clearly important. But Yeung has failed to mention that in his witness statement. When asked as to why he did not do so, he said that he could not give any answer (答你唔到);
(n) Further, when Yeung was cross-examined as to why various matters were not pleaded in the General Indorsement of the Writ and the original version of the Statement of Claim (in particular the 1st and 2nd Marble Representations), he again simply replied, and repeatedly, that he could not answer (答唔到).
24.I have also considered Jacky Lee’s evidence. Principally for the inherent improbability, inconsistencies and contradictions outlined below, I also do not find him to be a reliable witness:
(a) Jacky Lee adopted Lee/WS as his evidence in chief with no modification;
(b) The contents of Lee/WS are on its face consistent with Yeung/WS in so far as they overlap. The required use of Grade A Crema Marfil (Spain) is also an important theme. In particular, he says in his witness statement[34] that Yeung told him that during the Shenzhen Meeting on around 15 September 2017, “[D3] orally confirmed and represented to Mr Qi and Man Gor that [Ds] would provide a fee quotation with the aforesaid specifications, and would use Grade ‘A’ Crema Marfil (Spain)”. He further gives evidence on P’s claims of fraudulent misrepresentation and deceit, that “I verily believe that the 1st Marble Representation made by [D1] (through [D3]) was false and/or reckless and/or made without reasonable grounds for belief in their truth”[35], and that “I also verily believe that the 1st to 3rd Marble Representations (individually and collectively) made by [D1] (through [D3]) to [P] was false or reckless as to their truth, and intended to be relied upon, thereby amounting to a tortious deceit against [P]”[36];
(c) I have stated my observations above on the inherent improbability of Yeung’s evidence in the light of the absence of any reference in the contemporaneous documents to Grade A Crema Marfil (Spain) or the Marbles being required to be of Grade A. In so far as Jacky Lee also alleging that P had requested D1 to use Grade A Crema Marfil (Spain) and that Ds had promised to do the same, which is clearly what he is saying in Lee/WS, I reiterate those same observations made above;
(d) His evidence given in the course of cross-examination however fundamentally contradicts the above and Yeung’s evidence that it was him (Yeung) who requested the use of Grade A marble. In particular, having been referred to the contemporaneous documents outlined above, and having been pointed out to him that they contain no reference to Grade A marble or Grade A Crema Marfil (Spain), Jacky Lee volunteered the evidence that in fact, at the stage when quotations for the Works were sought, he, Yeung and Qi had no idea and concept about any Grade A, B or C, and that they had only asked for the best marbles to be used without specifying the grading[37]. He further agreed to the suggestion put to him that P had in fact from start till end never required D1 to use any Grade A (or 甲級) marble, and that D1 had never said to P that D1 would use Grade A marble;
(e) Jacky Lee has never said so or made such clarifications in his witness statement;
(f) At §24 of Lee/WS, Jacky Lee claims that D3 attended the 11/F Property in around June 2018 “upon my repeated complaints”. He also says in that paragraph that (1) he complained to D3 about non-conformities with the Sample, and (2) upon those complaints D3 made the 3rd Marble Representations. It was pointed out to him during cross-examination that there was no record of such complaints during that period in any of the WhatsApp messages, Minutes, or emails. Jacky Lee then claimed that all his complaints were made orally. Given the frequency of all the various forms of written communication between the parties, I find the absence of any written record inherently most improbable if such alleged repeated complaints had indeed been made. At one stage during cross-examination, he said that he was not certain about the contents of that paragraph. Then he said that the 2 things did happen, but that he was only not sure as to the time. As to why the complaint of non-conformities and 3rd Marble Representations were not pleaded until the Statement of Claim being re-amended, Jacky Lee simply said that he was not clear why or he did not have any impression;
(g) His evidence in relation to the engagement of the loss adjuster Toplis and Harding is self-conflicting. I will discuss that aspect of his evidence further when I deal with the Reduction Claim below;
(h) Jacky Lee’s evidence about he and Yeung having been prevented from inspecting the Marbles or the Inspections, or having been restricted to inspecting no more than 60m2 despite requests, is also inconsistent with Yeung’s evidence, who said during cross-examination that there were no such restrictions.
G.3. D2 and D3 as witnesses
25.I have considered the evidence of D2 and D3.
26.D2 gave evidence first. She adopted D2/WS, which in turn adopts various paragraphs from D3/WS, which D2 confirms are true and accurate.
27.D2’s evidence is inherently probable, materially consistent with contemporaneous documents and conduct, and does not suffer from any material inconsistencies. She was not shaken at all by cross-examination, and was forthcoming and spontaneous in her answers. One example is when she was cross-examined with reference to one recorded conversation she had with Ar Bun on 14 May 2018. She was recorded to have said that “佢[38]問我啊嘛，佢話因為呢輪慢左/咁大家都知咩事啦”. She was cross-examined as to what she meant by “咁大家都知咩事啦”. D2 gave her answer spontaneously, that it was because P had failed to pay D1 an instalment which had become due. Her evidence is confirmed by the contemporaneous documents.
28.I have considered D3’s evidence. In gist:
(a) Simon Chan introduced the project to D1. He first met Yeung on 3 July 2017;
(b) He was adamant that Yeung did not during that initial meeting specify the use of Crema Marfil (Spain), not to mention any Grade A Crema Marfil (Spain). Nor did Yeung at that stage ask the design in the 12/F Property to be followed, but simply asked D1 to submit its own design. D3’s version is supported by contemporaneous documents. In the Q/1st (dated 7 August 2017), the use of Crema Marfil (Spain) was not mentioned at all. On 16 August 2017, Simon Chan forwarded to D3 an email from Yeung to Simon Chan of 7 August 2017[39]. It was only in that email when Yeung said that “我司管理層最後決定採用跟現在12樓完全一樣的裝修設計、用料及報局，煩請給我們新的報價。”
(c) After receipt of that email, D3 on 17 and 21 August 2017 met inter alios Yeung twice. During those meetings, Yeung did not mention or specify that Grade A Crema Marfil (Spain) had to be used. D3 was adamant that P had never made that request, that he (D3) had never heard of any Grade A Crema Marfil (Spain), and that he had never given any promise to use them;
(d) D1 then submitted Q/R1(2) (30 August 2017). Therein, Crema Marfil (Spain) was quoted to be use for Items d15, d18 and d23. The use of any Grade A Crema Marfil (Spain) was not mentioned;
(e) D3 met Qi for the first time during the Shenzhen Meeting in mid-September 2017. Qi only met them briefly. Qi did not ask for the use of the best quality marble. He (D3) did not make the 1st Marble Representations;
(f) Further quotations were submitted. That was due to changes requested by Yeung. Ultimately, the 22/9/2017 Quotation was signed. Throughout the negotiation process, P, whether through Qi, Yeung or Jacky Lee, had never requested the use of the best quality or Grade A Crema Marfil (Spain);
(g) D1 engaged Mr Chui Kwong Wai (“Wai Gor”) and his company Kong Wai Decorating Eng as the main contractor. Through the introduction of Wai Gor, Ar Bun and his company Ka Yu were engaged as the marble sub-contractor. The Section G Works were undertaken by Sundart (M&E) Ltd (“Sundart”), the nominated contractor of the management office of Rykadan Capital Tower;
(h) To facilitate communication, D2 formed the WhatsApp Group on 24 October 2017;
(i) On the choice of the Marbles:
(i) D3 describes how during the 2 Joint Visits, he and Yeung (amongst others) visited a number of marble factories at Yunfu. On both dates, Yeung got some samples. Those chosen on the first occasion were not approved by Qi. Those chosen at 途胜on the second occasion ultimately met Qi’s approval;
(ii) D3 did not make the 2nd Marble Representations;
(iii) Ms Ho attacks D3’s evidence on the manner in which the 2 Joint Visits were carried out (that they had no pre-planned factories to visit but entered those which publicized the sale of Crema Marfil (Spain)), and his denial of having given Yeung any advice on the choice of marbles). She submits that the only reasonable explanation for D3 and Ar Bun to accompany Yeung to Yunfu was to assist him to select marbles. I do not accept those submissions;
(iv) During cross-examination, when the proposition was suggested to him, D3 denied Yeung having confirmed the use of any particular lot during the 2nd Joint Visit. He said that Yeung only did so after he had come back to Hong Kong and upon approval from Qi. He also denied the provision of the Sample. He said that if that had happened, the Sample would have been properly cut and framed, recorded, and mentioned in the Minutes. There had been none. It also would not have been an irregular piece of marble which the Sample is. The Sample also had not been taken to 11/F Property for comparison with the bulk, and he has never seen it;
(v) D3 refers to §12 of Minutes of 17 November 2017, that “施工方須先安排與客方到雲石場睇石，確保石材供應商有客方要求之雲石。施工方與石材供應商簽署合同後客方會安排支付第二期工程款”. At §37 of D3/WS, D3 says that “根據[P]的要求，及由於更換雲石需花費一大筆額外金錢會為Be Solutions 招致損失，所以Be Solutions、[D2]和我一直都堅守由[P]挑選雲石這個原則”. D3 says that adopting that principle, he did not during those visits offer any recommendation or advice on the choice of marbles;
(vi) D3’s evidence is in my view inherently probable;
(vii) He summarizes these aspects of his evidence at §46 of D3/WS that:
“(1) 根據11樓物業裝修工程合約，BE Solutions 並不會供應所需的雲石。BE Solutions 也不會挑選雲石，有關工程所需要的雲石都是由[Yeung]代表[P]在雲石廠親自挑選再由施工方訂購。由始至終BE Solutions都只有責任從有信譽的供應商挑選一系列有適當品質的材料，再由[P]去檢驗和核准使用由供應商所供應的材料。再者[P]也清楚知道BE Solutions的業務為室內設計及裝修工程，而不是製造或銷售雲石；
(2) 在挑選及訂購雲石的過程中，從來沒有任何人提過送到11 樓物業工程現場的整批雲石的品質會與在雲石廠所見的樣本相符；”
(j) The Marbles are Crema Marfil (Spain). He describes how the Marbles were inspected pre-laid by P’s representatives during the Inspections at the processing factory, how they were further inspected pre-laid after deliveries but before installation, and after installation. Every time Yeung asked for change or any tile not be used, D1 and Wai Gor complied;
(k) He was cross-examined about Inspections during the 3 visits to the processing factory. He accepted that he was not there. But he said that if Yeung and Jacky Lee had in fact been restricted in the inspections despite requests, D1 would have been sacked well before;
(l) He said during cross-examination that given the expensive process of installation, dismantling and re-mounting, which would be involved if Yeung or P required any mounted marble to be changed, D1 and Wai Gor simply had no motivation for not allowing P and Yeung full opportunity to inspect the Marbles before installation. His evidence is inherently probable, and has a clear ring of truth to it;
(m) He describes in some details how the Marbles were installed, and parties’ discussions in the process;
(n) He denies having made the 3rd Marble Representations;
(o) He describes how D1 and its staff were ordered to leave the 11/F Property on 10 August 2018;
(p) He concludes at §87 that:
“總的來說，在整個11樓物業裝修工程的過程中，BE Solutions與及其所有人員、判頭及工人都有小心和謹慎地依11樓物業裝修工程合約和[P]的指示進行所有工程，反而是[P]到現在還未有依11樓物業裝修工程合約支付所有有關款項予BE Solutions。”
29.I find D3’s evidence to be inherently probable, consistent with and supported by contemporaneous documents and conduct, consistent both internally and with other evidence, clear, detailed, and coherent. He is not shaken at all by cross-examination, and was forthcoming and spontaneous in his answers.
30.For the above reasons, I find both D2 and D3 to be honest, truthful and reliable witnesses. I accept their evidence. In particular, in case of conflict, I prefer their evidence to the evidence of Yeung and Jacky Lee.
31.For record, whilst I have only highlighted above specific evidence of the witnesses’ evidence, I have considered the totality of the evidence before reaching my conclusions on their respective credibility.
G.4 The Expert
32.As I have explained above, John Lam is now the only expert on liability before this Court.
33.In respect of his evidence, I record 2 matters:
(a) Immediately before John Lam started his oral evidence, Ms Ho confirmed that his expertise is not in dispute. I have considered his resume. I rule and accept that he is qualified to give evidence as an expert;
(b) At the end of Ms Ho’s cross-examination of John Lam, noting the absence of any challenge that the Marbles are indeed Crema Marfil (Spain), I sought Ms Ho’s confirmation that there is indeed no challenge in that regard, and that the only challenge goes to the existence of the grading of Crema Marfil (Spain), and whether the Marbles are of Grade A Spanish Crema Marfil. Ms Ho confirmed that that is indeed P’s position.
34.John Lam opines, materially, as follows:
(a) John Lam was when in chief referred to Yeung’s evidence that before he (John Lam) conducted his inspections in preparation of the Expert Report, P had engaged one Ben Chan’s company (i.e. SMC) to carrying out some rectification and polishing works, so that the defects created by D1 could no longer be detected. John Lam did not accept that. He referred to the quotation of SMC dated 18 October 2018 for “西班牙米黃地台及牆身打磨拋光、晶面處理”[40]. He said that he did not know whether those works had been done. He explained however that even if they had been, the alleged defects pleaded in §§10 and 10B of the RASOC could not have been removed;
(b) John Lam explains and confirms that there is no formal grading system of marble tiles in Hong Kong;
(c) The term “Grade A” is often used as a trade description by marble distributors, suppliers, or retailers for construction projects. Grading may be used as a trade description by distributors, suppliers or retailers as a method to “market” the stone to purchasers to facilitate sales and material selection. They may take into account the colour, inherent patterns and the amount of wastage (in short, the less wastage there is, the more “marketable” and “desirable” it is to purchaser);
(d) However, there is no objective standard/grading system. Ultimately, the purchaser should decide on the acceptance of the marble by way of visual impact provided by the marbles, including the overall aesthetic/appearance, and potential wastage due to less desirable aspects of the marble;
(e) From a professional standpoint, the Quality Assurance (QA) process listed below (which is common trade practice in Hong Kong) should be more of a determining factor as to whether the marble selection and purchase process was properly carried out, which process includes:
(i) Submission of samples for the client’s selection and consideration;
(ii) Client’s acceptance of the sample and factory visit to inspect marble’s quality;
(iii) Client’s confirmation on the marble’s quality and selection of the lot of marbles;
(iv) Client’s confirmation and placing order of the lot of marbles;
(v) Marbles being processed and cut in accordance to sizes as required by the design;
(vi) Marbles being pre-laid to confirm aesthetics/appearance prior to installation;
(vii) Delivery and installation;
(viii) Rectification works (including replacement, changing tiles, polishing, touch ups etc);
(ix) Final confirmation / approval by the lead architect;
(f) During cross-examination, he clarified that point (ix) is not dependent on the existence of any “lead architect”. The spirit is the carrying out of inspection and rectifications;
(g) The so-called “grading” is hence used for trading descriptions/marketing purposes only. Each marble has a unique aesthetic appearance. All attributes contribute to the overall visual appearance of that marble;
(h) It is impossible to determine whether the Sample or the Marbles installed in the 11/F Property were of “Grade A”, as there is no official or objective grading of marbles;
(i) Marble is a natural product and will contain natural variation in colour tone, clouding pattern and vein. Marble cannot be (and should not be) uniform. It is therefore important that during the purchase and installation process, the owner/architect/designer should note the natural variations brought to the overall aesthetics of the property, instead of giving a homogenous appearance to the interior by using homogenous tiles, which is impossible to achieve for natural marble;
(j) A sample used in any project is only to give a general perception of the color tone and clouding pattern of the larger marble slab, where the sample is cut from;
(k) The “Defects” pleaded in §§10 and 10B of the RASOC are neither installation defects nor defects in quality of marble. Any “Defects” which may be found on the Installed Marble Tiles are minor and can be remedied through rectification works;
(l) He has carried out inspections. He concludes that the Marbles tiles installed in the 11/F Property were of merchantable quality and correspond with the Sample. He does not find any issues with regards to workmanship by D1. He does find some minor filler patches on the Marbles, which may be caused during processing process, however, these minor hairline crack or filler patches can be remedied by way of rectification works. It is common practice for rectification works to be carried out by contractors after marbles have been installed;
(m) I will set out and discuss further parts of his evidence as appropriate below.
35.I have considered the cross-examination of John Lam. I have considered specifically Ms Ho’s cross-examination and criticism that he only carried out visual test when considering the question of alleged mouldiness, when he knew that P’s complaints included mouldiness inside the coating. I accept John Lam’s evidence to the effect that what tests to carry out involved planning and remoteness, else there would be no end to the inspections and tests. In my view, none of the points taken, in the absence of any expert evidence to the contrary, affects the reliability and validity of his opinions. I accept his opinions.
G.5. Adverse inferences
36.Before reaching my views above, I have considered in the round Ms Ho’s submissions, relying on Wisniewski v Central Manchester Health Authority [1998] PIQR P324 and Kao Lee & Yip v Koo Hoi Yan & Others [2003] 3 HKLRD 296, that an adverse inference against D1 should be drawn regarding the matters stated in §72 of her written submissions.
37.For the following reasons, I refuse to do so:
(a) Adverse inferences may only be drawn where a person without explanation fails to call as a witness a person who might reasonably be expected to give direct evidence on the matters in question;
(b) Neither D2 nor D3 has been cross-examined as to why Ar Bun was not called. They have not been offered any reason to explain why. It is unfair for P now to seek to invite this court to draw adverse inference from Ar Bun’s non-attendance;
(c) The matters stated in §72 of Ms Ho’s written closing are in any event open issues: that P intends to challenge Au Bun’s evidence and would “apparently” have a series of questions for him in relation to the Ka Yu Quotation and Invoice, that there was a great difference in volume between the marbles purchased by Ar Bun and those delivered to Hong Kong, that “the receipt numbers of the Two Yunfu Receipts are suspicious”, and that Ar Bun was the only person who attended the Inspections. Ms Ho has with due respect failed to even make clear what inferences she is seeking to invite this Court to draw;
(d) Further, as warned by Ma J in Kao Lee & Yip at §34, whereas adverse inferences may more easily be drawn against the party who did not call the relevant witness, and favourable inferences can more confidently be drawn:
“This is of course providing that the rest of the evidence allows such inferences to be drawn and that such evidence is credible in the first place.”
(e) The rest and totality of the evidence in my view show that P’s case, and in particular P’s case as to whether Grade A had been specified, is so incredible that the Ma J’s warning in Kao Lee & Yip applies. I add that in respect of the details of the Inspections, should this court find that this is not a case of sale by samples, which this Court as explained below will, the related issue as to whether D1 had had any reasonable chance to inspect falls away.
(f) Mr Ng in his written closing also invites this Court to draw certain adverse inferences against P from its failure to call Qi. On the facts of this case, this court can reach its findings without resorting to the drawing of any adverse inference from Qi’s absence. But if necessary, I would have. I will not however dwell on this matter, as I do not rely on any in reaching my findings.
H. Agreed Issue 1
38.I now turn to the Agreed Issues.
39.I say immediately that while the issues are agreed, on my findings of facts as set out above and below, a lot of the sub-issues are not or no longer engaged. I do not in the circumstances see the need to deal with each and every one of them.
40.Agreed Issue 1 asks the following:
“1. Correspondence with Marble described under Agreements:-
(a) what are the obligations of D1 in relation to items d15, d18, d23 and d26 (‘提供及安裝…’) under the Agreements;
(b) what was the description of the Marble in Items d15, d18, d23 and d26 as pleaded in RASOC §3.2;
(c) whether D1 has made the following representations to P:-
(i) the 1st Marble Representation as pleaded in RASOC §2D;
(ii) the 2nd Marble Representation as pleaded in RASOC §4; and
(iii) the 3rd Marble Representation as pleaded in RASOC §8A;
(d) if the answer to 1(c) is yes, whether there was any trade practice of grading of Crema Marfil (Spain) marbles in Hong Kong;
(e) whether D1 used Marble that corresponds with the description in terms of quality, colour and pattern as set out in RASOC §3.2”.
41.Agreed Issue 1 is raised by §12.1 of the RASOC. It pleads that:
“[D1] provided the Inferior Marble Tiles which did not correspond in quality, colour and pattern as described under the Agreements as set out under paragraph 3(2)[41] hereinabove”.
42.I have set out in full Items d15, d18, d23 and d26 as set out in the Agreements. §3.2 of the RASOC simply reproduces those.
43.For the reasons and discussions set out in Section G above, I reject Yeung and Jacky Lee that D1 (whether through D2 or D3) has made any of the Representations (1st, 2nd or 3rd). I stress and repeat the absence of any documentary support of their existence. As Mr Ng as submitted[42], which submission is supported by the evidence, “[there] was no mention of ‘Grade A’, the ‘Sample’ or the 3 [Representations] in any of the documents prior i.e. quotations, meeting minutes, completion inspection reports, WhatsApps [sic.], emails, [the Demand to Leave Letter], the Writ, the Statement of Claim or the Amended Statement of Claim.” I accept D3’s evidence that he has not.
44.Indeed, it is Jacky Lee’s evidence upon cross-examination that P had in fact from start till end never required D1 to use any Grade A (or 甲級) marble, and that D1 had never said to P that D1 would use Grade A marble.
45.There is nothing in the Agreements which expressly suggests that the Crema Marfil (Spain) to be used should be of Grade A or the highest quality.
46.I accept John Lam’s evidence that there is no formal grading of marble tiles in Hong Kong. It is impossible to determine what Grade A entails, as there is no official or objective grading of marbles. Whilst the term Grade A is used, it is only by distributors, suppliers or retailors as a method to market the stone to purchasers to facilitate sales and material selection.
47.I reject Yeung and Jacky Lee’s evidence that they or Qi had requested the use of Crema Marfil (Spain) of the highest quality. I accept D3’s evidence that P had not. Such a requirement was not stated in the Agreements.
48.The Agreements only provided, in respect of the Disputed Items, for the supply of Crema Marfil (Spain) of certain thickness and dimensions. There were no stipulations on their quality, colour or pattern.
49.The Marbles supplied and installed were indeed Crema Marfil (Spain). Ms Ho accepts that. The evidence in any event supports that.
50.Ms Ho refers to the remark in the Agreements that “以上報價按照客人12樓之平面圖紙、設計及用料作出預算報價”. But as has been pointed out above, it is not in dispute that the Marbles were indeed Crema Marfil (Spain). It is not P’s pleaded case that the Marbles failed to correspond with those used in the 12/F Property in terms of quality, colour and pattern. Quite the contrary, P’s case is that Qi was not satisfied with the quality of those marbles because of dark spots in them.
51.Indeed, Yeung accepts that there is nothing which suggests that the Marble installed by D1 were at variance with those specified in the Agreements.
52.P has failed to prove §12.1 of the RASOC.
53.On the evidence, I am able to make the positive finding in D1’s favour that the Marbles used by D1 indeed corresponded with the descriptions in the Agreements.
I. Agreed Issue 2
54.Agreed Issue 2 is in the following terms:
“ 2. Breach of s.16(2) Sales of Goods Ordinance (Cap. 26) (“SOGO”):-
(a) whether s.16(2) SOGO applies to the Agreements;
(b) if so, whether D1 breached s.16(2) SOGO as the Marble was not of merchantable quality:-
(i) whether the defects pleaded at RASOC §§10 and 10B were installation defects, processing defects, defects in quality of the marbles or whether they reflected variations inherent in marble;
(ii) depending on the answer to 2(b)(i) above, whether D1 was in breach of the Agreements.”
55.This issue is raised by §12.3 of the RASOC. It pleads that:
“[D1] was in breach of Section 16(2) of SOGO as the Inferior Marble Tiles provided by [D1] were not of merchantable quality”.
56.Section 16(2) of SOGO stipulates that:
“Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition—
(a) as regards defects specifically drawn to the buyer’s attention before the contract is made; or
(b) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal; or
(c) if the contract is a contract for sale by sample, as regards defects which would have been apparent on a reasonable examination of the sample.”
57.One dispute between the parties concerns whether section 16(2) of SOGO applies on the facts to the Agreements: whether the marbles were “supplied (供應)” (which is the statutory wording) by D1 under the Agreements, noting amongst other factors that according to the Agreements, D1’s contractual obligation was to “提供及安裝” the Marbles. The dispute hence goes to whether the Agreements were contracts of sale of the Marbles, or contracts of service.
58.At this stage, I assume in P’s favour that the Agreements were contracts of sale so that section 16(2) applies.
59.Even with the application of section 16(2) assumed, the question remains whether there is evidence to the requisite standard that the Marbles used for the Disputed Items were not of merchantable quality.
60.For the following reasons, I am of the view that there is none:
(a) Alleged defects are pleaded in §§10, 10A and 10B of the RASOC;
(b) P has adduced no expert evidence in any attempt to substantial them;
(c) In §10A, P pleads and refers to Yeung’s WhatsApp messages of 6 August 2018 in the WhatsApp Group. To start with, what was shown in the photographs are not clear. I also accept D3’s evidence that “[D2]和我即時趕到現場，向Jacky解釋了所謂銹跡其實是石根，然後一行人便挑出出現所謂銹跡的地方並由[Ar Bun]和工人即時進行打磨以解決問題”[43];
(d) In relation to §10B of the RASOC, the contents are based upon certain alleged oral opinions of Ben Chan who subsequently refused to act as P’s expert, and has not been called to substantiate his alleged oral opinions;
(e) Despite having submitted quotations, Toplis and Harding have never been engaged;
(f) Certain photographs said to be been taken by Toplis and Harding have been produced. Some of those photographs show certain comments written on some post-it notes. But with the authors not called, and as D2 said under cross-examination, those photographs or the comments on the post-it notes could not be understood. D2 also said, which I accept, that a lot of those post-it notes were not there when D1 was ordered to leave the 11/F Property on 10 August 2018, and were applied afterwards;
(g) At §14 of the RASOC, P pleads that:
“In order to mitigate its losses and damages, [P] has engaged a third party, [SMC], to identify and made make a report on the Inferior Marble Tiles (‘SMC Report’), and to rectify [D1’s] breaches of the Agreements by carrying out repairs and supplying marble tiles corresponding to the Sample (‘the Rectification Work’)”;
(h) The SMC Report has neither been discovered nor produced;
(i) The particulars of the Alleged Rectification Works are purportedly provided in §15 of the RASOC;
(j) At §15.1 of the RASOC, P pleads and seeks “Costs of replacement based on the Chinese Quotation dated 31st July 2018”, in the sum of HK$5,867,520;
(k) The alleged “Chinese Quotation” has neither been discovered nor produced. There is nothing which shows how the sum of HK$5,867,520 was arrived at;
(l) Yeung and Jacky Lee in fact both confirmed during cross-examination that the Marbles in fact had not been replaced;
(m) §15.1 is entirely unfounded;
(n) In §§15.2 to 15.9, various further items are pleaded and claimed, as follows:
|
15.2 |
Costs of site preliminaries for replacement work |
HK$500,000 |
|
15.3 |
Damage to existing works to facilitate the dismantling of installed marble tiles |
HK$350,000 |
|
15.4 |
Repairs to damage occasioned to existing works |
HK$200,000 |
|
15.5 |
Dismantling of installed works and debris removal |
HK$585,000 |
|
15.6 |
Escalation factor for inflation – 15% |
HK$1,125,378 |
|
15.7 |
Defects rectification |
HK$279,400 |
|
15.8 |
Temporary repairs |
HK$998,500 |
(o) Whether in terms of they having been undertaken or on quantum, those items are not supported by any document;
(p) Specifically, §§15.2 to 15.5 are all premised upon the Marbles having been replaced, as Ms Ho accepted during her oral closing. In the absence of any replacement, §§15.2 to 15.5 are also entirely unfounded;
(q) It necessarily follows that the inflation factor for those items (§15.6) is also unfounded;
(r) In respect of “Defects rectification” (§15.7) and “Temporary repairs” (§15.8), no particulars have been given as to what defects had been rectified, or what repairs had been temporarily made;
(s) Amongst the documents before this court, there are only 2 quotations from SMC. One was for installation of 226 sq ft of marble, in the amount of HK$22,600 only[44]. The other one is the quotation of 18 October 2018 mentioned above[45]. None of them tallies the figures pleaded in §§15.1 to 15.8. No agreement between P and SMC has been produced; nor is there any no evidence of any payment by P to SMC;
(t) Again, as I have mentioned above, Yeung claimed during cross-examination that before John Lam conducted his inspections in preparation of the Expert Report, P had engaged SMC to carrying out some rectification and polishing works. He was however not able to give any details of those Alleged Rectification Works, when they were alleged carried out, or what had been rectified. He was only able to say that some “simplified” (精簡) rectification works had been done;
(u) I repeat that there is no evidence of any payment by P to SMC;
(v) On the evidence, I find that P has failed to prove that any rectification works had been done by SMC, or at all;
(w) Yeung and Jacky Lee had in the course of D1’s performance of the Agreements raised some specific problems in relation to the Marbles. There were further those matters raised upon the completion inspections that took place on 21 and 23 July 2018. Ds also acknowledged them. But those are specific issues which D1 had dealt with or was in the process of dealing with (see below). Yeung and Jacky Lee’s evidence on any alleged defects otherwise lacks particulars, and specifically lack particulars as to the scale of the alleged defects;
(x) As D3 said under cross-examination which I accept, the Works involved more than 2,000m2 of marble. The marbles which P had complained about are of very small proportion, probably less than 0.1% or even 0.05%;
(y) There is further positive evidence from John Lam that the Marbles were of merchantable quality, that those “Defects” pleaded in §§10 and 10B are neither installation defects nor defects in quality of marble, and that any “Defects” which may be found on the Installed Marble Tiles are minor and can be remedied through rectification works. The carrying out of rectifications is one of the QA steps;
(z) As I will deal with further below, whilst it is in dispute as to whether the completion date of the Agreements had been extended further to 20 August 2018, it is common ground that the completion date of the Agreements had first been agreed upon to be on 21 July 2018, and then by agreement extended at least to 15 August 2018. P by the Demand to Leave Letter of 10 August 2018 ordered D1 to leave the 11/F Property forthwith. That was at a stage when D1 could still have time to carry out rectification works. The material terms of that letter are as follows (with original emphasis):
“We are instructed to demand you, which we hereby do, to suspend from carrying out the further and/or remedial works forthwith and on or before 14th August 2018 at 12:00 noon, to undertake to compensate all our client’s loss and damages to be assessed. Otherwise, our client shall institute legal proceedings against you to recover the same as well as all legal costs and disbursement incurred by our client in connection therewith.
We further demand you and all your agents/workmen to leave the Property forthwith as our client has revoked the license and permission for you to stay in the Property.”
(aa) There is no reliable evidence that D1 could not have finished any remaining rectification works by the extended deadline of 15 August 2018. Yeung’s subjective belief in that regard, which Ms Ho seeks to rely on, is in my view entirely unreliable.
61.On the evidence, P’s case pleaded in §12.3 of the RASOC fails, even if section 16(2) of SOGO applies.
62.On the evidence, I am further able to make the positive finding in D1’s favour that the Marbles were of merchantable quality.
63.The above renders it unnecessary to consider in detail the application of section 16(2). But if necessary, and for the following reasons, I would have held that the Agreements were not contracts of sale of the Marbles, but ones of contracts for work and labour, so that section 16(2) is not applicable to them:
(a) In Robinson v Graves [1935] 1 KB 579[46], Greer LJ at page 587 observed that:
“… If you find, as they did in Lee v. Griffin, that the substance of the contract was the production of something to be sold by the dentist to the dentist’s customer, then that is a sale of goods. But if the substance of the contract, on the other hand, is that skill and labour have to be exercised for the production of the article and that it is only ancillary to that that there will pass from the artist to his client or customer some materials in addition to the skill involved in the production of the portrait, that does not make any difference to the result, because the substance of the contract is the skill and experience of the artist in producing the picture.
For these reasons, I am of opinion that in this case, the substance of the matter was an agreement for the exercise of skill and it was only incidental that some materials would have to pass from the artist to the gentleman who commissioned the portrait …”
(b) I have further been referred to Benjamin’s Sale of Goods (11th ed.) wherein it is explained at §1-046 that:
“Where work or skill is involved over and above what goes into the making of the goods delivered, it is possible and often correct to view the contract as substantially one for work or services. A doctor or veterinary surgeon who supplies medicines does so as an incident to a contract for professional services, which include diagnosis and advice over and above any work in the making up of the medicine …”
(c) In Mak Ping Kui trading as Yet Hing Knitting Garment Factory v Millionice Limited trading as Blessings Trading Company (HCA 940/1998, 25 April 2001) Cheung J (as Cheung JA then was) at §40 observed that:
“This topic is not free from controversy. However, I think a good summary can be found in Halsbury’s, Laws of England, 4th Edn, Vol.41, at para.603 :
‘603. Contract of sale distinguished from contract for work and labour. A contract of sale of goods must be distinguished from a contract for work and labour. The distinction is often a fine one. A contract of sale is a contract the main object of which is the transfer of the property in, and the delivery of the possession of, a chattel as such to the buyer. Where the main object of work undertaken by the payee of the price is not the transfer of a chattel as such, the contract is one for work and labour. The test is whether or not the work and labour bestowed end in anything that can properly become the subject of sale. Neither the ownership of the materials, nor the value of the skill and labour as compared with the value of the materials, is conclusive, although such matters may be taken into consideration in determining in the circumstances of a particular case whether the contract is in substance one for work and labour or one for the sale of a chattel.’ ”
(d) The learned Judge then reviewed a number of authorities. Having done so, His Lordship concluded in §49 as follows:
“In the present case, the final products that were supplied by the plaintiff to the defendant, were the garments. The work they had been done had ended in something that obviously can be the subject of sale. The defendant's emphasis is on the material supplied by it to the plaintiff to make the garments. However, the ownership of the materials is not conclusive in determining the nature of the sale. I think Mr Yau was clearly right when he said that what the defendant was interested in this case was not the fabrics or processed fabrics but the finished garments. It was not interested in how or the sequence in which the sewing or cutting work was performed but in the final product and its finished quality. This is very different from the contract of painting a house or dry cleaning a suit. In my view, this is clearly a contract for sale of goods.”
(e) One see, using the 22/9/2017 Quotation as an example, that at the top left hand corner of the first page thereof [47], the Works are specified expressly as “項目:設計及裝修工程”. It has 8 sections. Those sections together contain nearly 100 items (even ignoring those subsequently added). Marbles were only used in some of the items, eve in respect of those items in Section D. The Disputed Items are only 4. The Agreements and the Works hence covered far more than those that related to the Marbles and the Disputed Items;
(f) For each of the Disputed Items, the sale of the marble materials was not separately quoted. The material costs, in a range, were included in an overall price together with the costs of the installation works[48]. The Marbles were separately purchased from 途胜. The installation costs accounted for a substantial portion of the agreed costs for the Marbles. The provision of the Marbles was not a single act of transfer of property or delivery, but involved a process of selection, cutting, processing, arrangement, pre-laid inspections, installation, polishing, rectifications etc. I note Qi’s apparent interest in the Marbles. But they remained only several items of an overall project of fitting out. As D2 said during cross-examination which I accept and see sense, every aspect of the Works was important;
(g) Overall, I am of the view that the main object of the Agreements was not the transfer of the property in, or the delivery of the possession of, the Marbles as chattels. The works, skill and labour endowed did not in my view end in the installed Marbles properly becoming any subject of sale. The overall substance of the Agreements was to fit out the 11/F Property. The Agreements were in my view not contracts of sale of the Marbles, but for the work skill and labour for the fitting out of the 11/F Property.
J. Agreed Issue 3
64.Agreed Issue 3 is in the following terms:
“3. Breach of s.17(2) SOGO: -
(a) whether s.17(2) SOGO applies to the Agreements;
(b) if so, whether D1 breached s.17(2) SOGO as the Marble did not correspond in quality with the Sample in terms of origin, type and grade and/or were not free from defects rendering them unmerchantable.”
65.This issue is raised by §12(2) of the RASOC.
“[D1] was in breach of Section 17(2) of SOGO as the Inferior Marble Tiles provided by [D1] did not correspond in quality with the Sample in terms of origin, type and grade, and/or were not free from defects rendering them unmerchantable;”
66.Section 17(2) of SOGO stipulates that:
“In the case of a contract for sale by sample—
(a) there is an implied condition that the bulk shall correspond with the sample in quality;
(b) there is an implied condition that the buyer shall have a reasonable opportunity of comparing the bulk with the sample;
(c) there is an implied condition that the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample.”
67.Given the dispute as to whether the Agreements were contracts of sale, parties are also in dispute as to whether section 17(2) of SOGO applies.
68.Again I assume at this stage in P’s favour that it does.
69.On the facts, and for the reasons set out in Section G above, I reject Yeung’s and Jacky Lee’s evidence that D1 had provided the Sample to P during the 2nd Joint Visit. I accept D3’s evidence that he had not. I accept also D3’s evidence that he had not made any of the Representations, and in particular (and relevant for the present discussion), the 2nd Marble Representations. I repeat also the salient facts that none of the contemporaneous documents records such alleged provision, or any complaint of alleged non-conformity with the Sample.
70.On the facts, and irrespective of the applicability of section 17(2), this is not a case of sale by sample.
71.Further and in any event:
(a) I repeat my observations above that if necessary, I would have held that the Agreements were contracts for work and labour, so that section 17(2) of SOGO has no application;
(b) But even if section 17(2) of SOGO applies, as section 17(1) of SOGO stipulates:
“A contract of sale is a contract for sale by sample where there is a term in the contract, express or implied, to that effect.”
(c) There is no express term in the Agreements to that effect. The terms of the Agreements as set out in §10 above in fact point to the contrary;
(d) As explained by John Lam, in fact also accepted by Yeung and Jacky Lee, and as is obvious, marbles are natural materials. Each piece is unique. Yeung was the one who chose the Marbles to be used. There is simply no basis for the implication of any implied term to the effect that the Agreements are for sale of the Marbles by the Sample.
72.Still further, there is John Lam’s evidence and opinion that the Installed Marbles Tiles correspond with the Sample. I accept his evidence and opinion in this regard.
73.On multiple fronts, P’s case as pleaded in §12.2 of the RASOC fails.
74.Upon the above findings, there is no need for this Court to consider whether P have had reasonable inspection of the Marbles. Ms Ho accepts this. But if necessary, I would have held that it had had:
(a) The Marbles were chosen by Yeung during the 2nd Joint Visit, and confirmed after return, as described by D3;
(b) Yeung and Jacky Lee attended the processing factory and carried out the Inspections on 3 separate occasions;
(c) I reject Jacky Lee’s evidence that he and Yeung were in any way restricted in the Inspections. Yeung’s evidence during cross-examination is that they were not;
(d) Yeung accepted that every time when any of the Marbles were delivered to site, he got notified. I accept D3’s evidence that P had full opportunity to inspect the Marbles pre-laid, and even after they had been installed. I accept the evidence of both D3 and John Lam that D1 simply had no motivation to prevent P from having full inspection.
K. Agreed Issue 4
75.Agreed Issue 4 is in the following terms:
“4. Breach of s.5 Supply of Service (Implied Terms) Ordinance (Cap. 457) (“SSITO”):-
(a) whether s.5 SSITO applies to the Agreements; and
(b) if so, whether D1 breached s.5 SSITO by failing to carry out its services relating to items d15, d18, d23 and d26 of the Agreements with reasonable care and skill.”
76.Agreed Issue 4 is raised by §12.4 of the RASOC, as follows:
“[D1] and/or its workers and/or its agents failed to carry out its services as set out under paragraph 3(2) hereinabove with reasonable care and skills and hence in breach of Section 5 of [SSITO]”.
77.There is no dispute that section 5 of the SSITO is applicable to the Agreements.
78.Section 5 of the SSITO stipulates that:
“In a contract for the supply of a service where the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill.”
79.I repeat my observations made in Section I above, which are equally applicable.
80.There is further John Lam’s positive expert opinion[49], that:
“During inspection, I find generally the Installed Marble Tiles were cut with tidy edges, properly grouted, cleaned and polished, and there was no panel misalignment. Some repair works were noted on the marble which was acceptable and matches the aesthetic appearance generally. However, a few minor defects can still be observed such as minor hairline crack noticed by touching and some filler with non-compatible colour which affects appearance. The repair works that had been carried out show that marble installation services were carried out with reasonable care and skill as there were follow up / rectification works after installation.”
81.P’s claim as pleaded in §12.4 of the RASOC fails.
82.On the evidence, I am able to make the positive finding in D1’s favour that the statutory implied term under section 5 of the SSITO has been complied with.
L. Agreed Issue 5
83.Agreed Issue 5 is in the following terms:
“5. Non-completion of works agreed to be provided in Agreements:-
(a) what is the agreed deadline for completion between the parties (‘Agreed Deadline’);
(b) whether D1 has completed the Works on 21 July 2018 as pleaded in ADCC §32(a) and if so, the consequences thereof;
(c) whether D1 is responsible for providing the Authorised Subcontract Works and if so, whether D1 failed to complete the same by the Agreed Deadline;
(d) whether D1 failed to complete other renovation works under the Agreements by the Agreed Deadline.”
84.Upon clarifications this Court sought during closing submissions, counsel agreed that the breath and controversy of this issue has been substantially reduced, as follows.
85.There are provisions in the Agreements governing the completion date.
86.Those terms however remain relevant only as background. The reason is that according to P’s pleaded case, admitted by Ds, that parties had by a collateral agreement agreed that the Works would be finished on or before 21 July 2018[50].
87.Yeung accepted that all the Marbles had by 18 June 2018 been installed[51]. What remained were works like polishing, rectification etc.
88.Yeung was referred to the QA process explained by John Lam. He accepted that steps 1) to 7) had been carried out. He said that some rectification works in the context of step 8) had been taken out. Final confirmation (step 9) did not take place as D1 was order to leave on 10 August 2018.
89.On 21 and 23 July 2018, 2 completion inspections were conducted.
90.At §12.5 of the RASOC, P simply asserts, with no particulars, that:
“[D1] failed to complete the Authorized Subcontract Works and other renovation works as agreed to be provided in the Agreements.”
91.Ms Ho frankly acknowledges that there is no evidence in support of that assertion. At §65 of her written closing, she simply submits that:
“Without further evidence on which particular part(s) of the Authorised Subcontract Works had yet to be completed, P relies on §12.5 of RASOC … to contend that D1 failed to complete the Authorised Subcontract Works and other renovation works as agreed to be provided in the Agreements.”
92.It goes without saying that what have only been pleaded do not amount to evidence.
93.Yeung in fact accepted during cross-examination that there is no document which shows that by those dates, the Works at Section G of the Agreements (i.e. works carried out by the designated contractors of the building) had not been completed.
94.P has failed to prove §12.5 of the RASOC.
95.The original agreed completion date had been extended by agreement. As can be seen from the email of 1 August 2018 from Jacky Lee, to inter alios D2 and D3[52], Jacky Lee confirmed that the completion date was postponed to 15 August 2018 to give D1 time to carry out remedial works, and that P would carry out another completion inspection between 16 and 22 August 2018. In that same email, Jacky said that “如有個別項目需要額外時間請先經電郵通知確認”.
96.By email of 10 August 2018[53], D2 recited the meeting that took place the day before and stated that parties had agreed upon a further extension to 20 August 2018. There was no email suggesting any disagreement from P.
97.On 10 August 2018, P via the Demand to Leave Letter demanded D1 and its workmen to leave the 11/F Property forthwith. That was 5 days ahead the extended completion date.
98.The above being the facts that are either agreed or beyond dispute, which I in any event find, there is in fact no need for this court to resolve the dispute as to whether there had been a further extension to 20 August 2018. There was further no need for this court to decide whether time was of the essence of the Agreements. Counsel accepted this during their closing submissions.
99.On the evidence, I am able to find further that by 21 July 2018, D1 had substantially completed the Works. What were yet to be done were rectifications works which D1 was prevented by P from doing when D1 was ordered to leave the 11/F Property on 10 August 2018, at a time when there was at least 5 more days to go before the agreed extension expired.
100.On the evidence, and if necessary, I would also have found that parties had further extended the completion date to 20 August 2018. I accept D2 and D3’s evidence in that regard.
M. Agreed Issue 6
101.Agreed Issue 6 is in the following terms:
“6. Whether D1 committed repudiatory breach of the Agreements:-
(a) If the answer to any of Issues 1 to 5 are yes, whether they constitute repudiatory breach of the Agreements, and in relation to Issue 5, whether time was of the essence in the Agreements.
(b) If D1 committed repudiatory breach, whether this was accepted by P.”
102.Given my conclusions and views on the issues above, I am of the view that D1 has committed no breach of the Agreements. A fortiori, D1 has committed no repudiatory breach of the Agreements.
103.Given the fact that the completion date had been extended to at least 15 August 2018, whether time was of the essence of the Agreements is, on the evidence before me, and accepted by counsel, no longer in issue.
N. Agreed Issue 7
104.Agreed Issue 7 is in the following terms:
“7. Whether P is entitled to claim HK$9,422,798 for Rectification Work listed in RASOC §15 (if any).”
105.I repeat my findings above. I have concluded that D1 has committed no breach of the Agreements. It follows that P is not entitled to claim any of the Alleged Rectification Works.
106.In any event, I repeat Section I above. I repeat in particular the evidence that the Marbles have not been replaced, so that §§15.1 to 15.6 of the RASOC are unfounded. I repeat further that §§15.7 and 15.8 are unparticularisd. I repeat my findings that P has failed to prove that any Alleged Rectification Works had been done by SMC, or indeed by any contractor.
107.P hence has in any event failed entirely to prove that the Alleged Rectification Works had in fact been done, or their value.
108.I answer Issue 7 in the negative.
O. Agreed Issue 8
109.Agreed Issue 8 is in the following terms:
“8. Whether P is entitled to claim a downward price adjustment of HK$1,587,000 for Items c1, c3, d15, d22 and d23 of the Agreements based on cl. 2 of the 1st Quotation (if any).”
110.P’s Reduction Claim is pleaded at §16-18 of the RASOC. “Particulars of Adjustment” are pleaded in §17. They relate to Items c1, c3, d15, d22 and d23 of the Agreements. The alleged resulting “Particulars of Loss and Damages” are pleaded in §18.
111.In Lee/WS §47 to 51, Jacky Lee gives evidence on the Reduction Claim. He alleges that “subsequent to the commencement of this case, and after engaging the services of a loss adjuster, we discovered that there has been a serious overcharge in relation to the Agreements and the materials actually installed on site …”[54]. He confirmed during cross-examination that that loss adjuster was in fact Toplis and Harding. He further claims in Lee/WS[55] that “I confirm that I was present when the loss adjuster was measuring the Property and in his preliminary report, it was reported as follows …” (emphasis added). He then purports to set out the measurement done by Toplis and Harding in relation to Items c1, c3, d15, d22 and d23.
112.To start with, P has failed to disclose and produce that alleged “preliminary report”.
113.Jacky Lee was during cross-examination referred to a letter from the Toplis and Harding dated 13 September 2018[56]. The letter sets out their scope of services and the fee proposed for their engagement. According to that letter, and under the heading Scope of Work, the measurement proposed by Toplis and Harding to be taken on site was to be “strictly related to marble tile installation work only”.
114.Items c1, c3 and d22 in fact had nothing to do with the installation of marble tiles.
115.Upon the above having been pointed out to him, Jacky Lee then changed his evidence and accepted that Toplis and Harding would not have said anything about those 3 items.
116.In addition, and as confirmed by Ms Ho in the course of her opening, Toplis and Harding were ultimately not engaged to prepared any final report.
117.Jacky Lee accepted during cross-examination that there is nothing which shows that P has suffered the alleged loss particularized in §18 of the RASOC.
118.P has failed to adduce any objective and reliable evidence in support of the Reduction Claim.
119.On the other hand, I accept D2 and D3’s evidence that the Works had substantially been completed by 21 July 2018. What were left might be some rectification works, which D1 was prevented from finishing upon it and its workers being ordered to leave the site on 10 August 2018. That was also accepted by Jacky Lee during cross-examination.
120.At §63 of her written closing, Ms Ho submits that:
“It is not in dispute that P did not engage the service of Toplis and Harding to prepare any Assessment Report as stated in its letter dated 13 September 2018 issued to P’s former solicitors. Without further evidence on how the measurement of Toplis and Harding was carried out for Items c1, c3, d15, d22 and d23 of the Agreements, P relies on §50 of [Lee/WS] [B/14/263] that he was present when Toplis and Harding was measuring the 11/F Property and he has personal knowledge about the measurement result.”
121.I have ruled that Jacky Lee is not a reliable witness. Even assuming that he was really present when Toplis and Harding took the measurements, his evidence on the details of those measurements could not be reliably received. I observe further that no records of those measurements have been disclosed.
122.I dismiss P’s Reduction Claim.
123.During cross-examination, Ms Chui put to Jacky Lee that the preliminary report prepared by Toplis and Harding was not produced because its contents did not support P’s case. It was further put to him that Toplis and Harding was not engaged to prepare the final report as that would not have supported P’s case. I have decided to dismiss the Reduction Claim unaided by any adverse inferences that might be drawn from the above facts. If necessary, I would have drawn them, which are in my view amply supported by the primary facts.
P. Agreed Issue 9
124.Agreed Issues 9 and 10 relate to D1’s Counterclaim. Agreed Issue 9 is in the following terms:
“9. If the answer to any of Issue 6 is no, whether P breached the Agreements by terminating the Agreements on 10 August 2018 (‘Unilateral Termination’) and preventing D1 from returning to the Working Site on 11 August 2018.”
125.I repeat my conclusions on Agreed Issue 6 above. In my view, P breached the Agreements by terminating the same on 10 August 2018 and preventing D1 from returning to the 11/F Property on 11 August 2018.
Q. Agreed Issue 10
126.Agreed Issue 10 is in the following terms:
“10. If the answer to Issue 9 is yes, whether D1 is entitled to claim HK$2,349,073.75 calculated as:-
(a) the outstanding payment of HK$2,360,969.75 due under the Agreements;
(b) the fit out deposit of HK$48,304 paid on P’s behalf to the Management Office of Rykadan Capital; and
(c) D1 giving P credit amounting to HK$60,200 for works which were uncompleted due to P’s Unilateral Termination.”
127.Based on my findings and conclusions on the Agreed Issues above, D1 is clearly entitled to be paid the balance of the contract sum.
128.According to the 31/7/2018 Quotation[57], the final contract sum was HK$14,196,136.
129.By 10 August 2018, D1 had substantially completed the Works. What were left were some rectifications, which D1 was prevented by P from doing by demanding it and its workers to leave the 11/F Property. I have set out the material terms of the Demand to Leave Letter above.
130.It is not in dispute that P had only paid D1 HK$11,835,166.25. The 5th and 6th payments under the Agreements have remained unpaid.
131.According to Keating on Construction Contracts (11th ed.):
“The employer impliedly agrees not to hinder or prevent the contractor from carrying out its obligations in accordance with the terms of the contract.” (§3-078)
“Where the contract work has been partly carried out and the contract is brought to an end by the employer’s repudiation, the contractor is entitled to be paid the value of the work done at contract prices, and to claim in addition, damages, the measure of which is normally the loss of profit on the unfinished balance.” (§9-060)
132.D1 gives P credit for some uncompleted items, in the total amount of HK$60,200.
133.In respect of the Deposits:
(a) Yeung agreed that because P had terminated the Agreements, D1 could not get them back from the management office;
(b) Jacky Lee also accepted that P was the one who was obliged to pay those Deposits, that D1 had paid them on its behalf, and that as P had unilaterally terminated the Agreements on 10 August 2018, it had failed to file Annex 9 annexed to the Owners’/Occupiers’ Hand Book and Fit Out Guide issued by the management office for return of the same;
(c) In any event, and as submitted by Mr Ng, which I accept, D1 has the right against P for reimbursement of the Deposits – see Bowstead & Reynolds on Agency (22nd ed.),§7-057;
(d) P is hence liable to D1 for the same.
134.For the above reasons, I allow D1’s counterclaim in the total sum of HK$2,349,073.75 as calculated above.
R. Overall disposition
135.For the above reasons, this Court:
(a) as recorded above, has dismissed P’s claim against D2 and D3;
(b) dismisses P’s claim against D1; and
(c) allows D1’s Counterclaim against P in the total sum of HK$2,349,073.75, and grants Judgment in favour of D1 against P to that effect.
136.I make the following orders nisi (“Orders Nisi”):
(a) Interest order nisi, that the Judgment in favour of D1 against P shall carry interest at the rate of prime plus 1% from 16 January 2019 when D1 filed its Counterclaim, till the date of this Judgement, and after which at judgment rate till payment;
(b) Costs order nisi, that P shall pay D1’s costs of and occasioned by its defence and counterclaim in the action, with certificate for 2 counsel on those occasions when 2 were involved, to be taxed if not agreed;
(c) Any party who seeks any variation of the above be granted liberty to make application by letter (with submissions) to this court within 14 days from the date of the Judgment, response within 14 days thereafter, and reply within 7;
(d) The timetable in (c) above applies also to D2, D3 and P in respect of D2 and D3’s application for indemnity costs against P, which application will be considered together with any application for variation of the Orders Nisi.
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(Keith Yeung) |
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Judge of the Court of First Instance |
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High Court |
Ms Cyndi Ho instructed by M.C.A. Lai Solicitors LLP, for the Plaintiff
Mr Ernest Ng (except on 31 August 2023) and Ms Nicole Chui, instructed by Keith Lam Lau & Chan, for the 1st Defendant
Mr Ernest Ng (on 31 August 2023 only), instructed by H Y Leung & Co, for the 2nd and 3rd Defendants
[1] [D1/898-908].
[2] The one dated 29 August 2017 (D1/913-921, “Q/R1(1)”) was not submitted.
[3] [D1/923-931, 935-942, 945-951 and 955-961].
[4] [D1/971-977].
[5] [D2/1157-1166].
[6] [D3/1498-1504].
[7] [D1/974].
[8] Although named as such, D2 and D3 have subsequently filed their own Defence.
[9] Pleaded in §§2C and 2D of the RASOC.
[10] §4 of the RASOC.
[11] §8A of the RASOC.
[12] §§11 to 15.
[13] §15 of RASOC.
[14] §§16 to 18.
[15] §§19 to 21.
[16] §§22 to 24
[17] §§15 to 17, and 27 to 28 of the AD&CC/D1.
[18] §31 of the AD&CC/D1.
[19] §32 of the AD&CC/D1.
[20] as particularized at§33 of the AD&CC/D1.
[21] §§12 to 14 and 23 of the RAR&D.
[22] §§25 and 26 of the RAR&D.
[23] §27 of the RAR&D.
[24] §7 of Yeung/WS.
[25] [C/762-763].
[26] Though I note D2’s evidence that given the nature of Item d26, the marble to be used should be the same as the other marble used in the room.
[27] [D1/974].
[28] [C/535-540], Items 2.3.7, 2.3.8 and 2.3.10 at [C/536].
[29] Which cover the period between 24 October 2017 and 15 August 2018, at [D4/1602-1762], some 160 pages of screenshots.
[30] [D3/1461-1472].
[31] [D2/1024].
[32] [D2/1030].
[33] §29 of her written closing.
[34] §10.
[35] §52.
[36] §54.
[37] The other 2 requirements being referencing 12/F Property and the price.
[38] Accepted by D2 to be Jacky Lee.
[39] [D1/909].
[40] [C/534].
[41] Ms Ho has clarified that it should mean §3.2.
[42] §5 of his written closing.
[43] §73 of [D3/WS].
[44] [C/533], in relation to only one of the rooms.
[45] [C/534].
[46] Which was applied by Deputy High Court Judge Kent Yee in Tang Chin Luen & Anor v Cool Wedding Ltd (HCSA 68/2015, 1 November 2016).
[47] [D1/971].
[48] Which included, as cited above, “防水塗料，切割，無縫車邊及拋光打磨等加工費用”.
[49] §25.44 of the Expert Report, [B/469].
[50] §22(2) of the AD&CC/D1.
[51] See the Minutes of the meeting on 4 July 2018, §9, [D3/1399].
[52] [D3/1547].
[53] [D3/1547].
[54] §49.
[55] §50.
[56] [C/543-544].
[57] The last page of the same, at [D3/1504].
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