Wing Fat Building Construction Ltd v. C. Y. Hon Consultants Ltd
Read the full judgment text of DCCJ 1192/2021 on BabelCite. This District Court judgment was delivered on 8 January 2024.
1. This is a dispute arising from the performance of the professional service provided by a quantum expert to a Main Contractor involved in an arbitration between the Main Contractor and the Employer in respect of the construction works carried out in Tuen Mun, New Territories (“the Site”).
Cites 4 cases
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DCCJ 1192/2021 [2024] HKDC 10 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 1192 OF 2021 ---------------------------------------
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------------------------ JUDGMENT ------------------------ Introduction 1.This is a dispute arising from the performance of the professional service provided by a quantum expert to a Main Contractor involved in an arbitration between the Main Contractor and the Employer in respect of the construction works carried out in Tuen Mun, New Territories (“the Site”). 2.The plaintiff was the Main Contractor for the site formation and foundation works at the Site (“the Works”). In May 2018, the plaintiff engaged the defendant as its quantum expert in an arbitration between the plaintiff and the Employer of the Site. 3.However, without completing the expert service, the defendant unilaterally resigned from its position as the quantum expert of the plaintiff and refused to provide further expert service for the Arbitration. The plaintiff therefore purported to accept the defendant’s repudiation and terminated the defendant’s expert service. Upon the said termination, the plaintiff engaged a replacement quantum expert to continue with the outstanding expert service for the Arbitration, additional costs were thereby incurred by the plaintiff. 4.In the present action, the plaintiff claims against the defendant for the additional costs incurred as a result of the defendant’s breach of the service agreement. By way of defence, the defendant contended that its resignation at the time was caused by the wrongful act of the plaintiff and was therefore justified. It further counterclaims for (a) loss of interest due to the plaintiff’s delay in the release of interim payments during the course of the service and (b) loss of business due to the institution of the present proceedings. Background 5.The Plaintiff was and still is a Registered General Building Contractor and a Registered Specialist Contractor for site formation and foundation works. It was at the material time the Main Contractor for both the site formation and foundation works at the Site. 6.The defendant presented as a consultant offering various professional services in construction-related works, such as in dispute resolution or as a cost consultant and/or expert witness. According to the defendant’s pleaded case, Mr Hon Chi Yi, Ludwig (“Mr Hon”) is the sole owner of the defendant. Mr Hon is a qualified Quantity Surveyor and a RICS (HK) Registered Expert Witness.[1] Mr Hon’s CV also indicates that he has been listed as a HKIA/HKIS Arbitrator since 2014. 7.In May 2017, the plaintiff commenced an arbitration against the Employer to recover the outstanding payments for the Works performed (“the Arbitration”). 8.Mr Lok Wai Kei, Neville (of the plaintiff) was at all material times in charge of the Works on site. As the Plaintiff was required to adduce quantum expert evidence in the Arbitration, Mr Lok approached Mr Hon in early May 2018. Eventually, he agreed to engage Mr Hon as the plaintiff’s quantum expert in the Arbitration. The expert service to be provided by Mr Hon was to be paid on a time basis at an hourly rate of HK$2,000. A formal service agreement was signed between the parties on 25 May 2018, in which Mr Hon was specified as the person providing the required expert service. 9.Subsequently, at the suggestion of Mr Hon, the plaintiff further engaged Ms Charlotte Liu (“Ms Liu”) to act as the Quantum Expert Assistant to Mr Hon at an hourly rate of HK$1,000. A supplemental service agreement covering the service of Ms Liu was signed on 29 May 2008. At the hearing, the original service agreement and the supplemental agreement were collectively referred to as the “May Agreement”. 10.By a Procedural Order dated 11 June 2018, the arbitrator directed, inter alia, that:
11.Mr Hon proceeded with the expert work accordingly. From 26 May 2018 to 30 June 2018, four interim invoices (I-WF-01 to I-WF-04) with a total sum of HK$430,500 were issued by the defendant. The said invoices were settled by the plaintiff in June and July 2018. It is however worth mentioning that the defendant now complains about delay in the settlement of the invoices, for which the defendant counterclaims for the corresponding loss of interest. 12.On 31 July 2018, the defendant issued a further invoice of HK$292,500 (I-WF-05) for the service provided during the month of July 2018. 13.Upon receipt of I-WF-05, Mr Lok (acting on behalf of the plaintiff) re-negotiated the May Agreement with Mr Hon. On or about 19 August 2018, they eventually reached a further agreement to provide the entire quantum expert service required under the Arbitration at a lump sum fee of HK$580,000 (the “August Agreement”). The August Agreement superseded the May Agreement[2]. Hence, the agreed lump sum fee covers Mr Hon’s expert service work that had been performed up to that point and the further work as may be required in the Arbitration (save and except any extra work as may be required because of the Employer’s amendment to its Defence and Counterclaim in the Arbitration). Thus, the agreed lump sum fee includes the fees paid to the defendant under I-WF-01 to I-WF-04. 14.The following terms of the August Agreement are relevant:
15.Between September and November 2018, the defendant issued three further invoices (I-WF-06 to I-WF-09) with a total sum HK$149,500. These invoices were also settled in full by the plaintiff (although not within seven days from the invoice date). 16.Hence, by November 2018, the lump sum fee of HK$580,000 for the provision of the quantum expert service under the August Agreement was fully paid by the plaintiff. 17.Meanwhile, the Arbitrator issued further Procedural Orders postponing the schedule for the preparation of expert evidence. Eventually, by Procedural Order No 8 dated 16 May 2019, the deadlines for the exchange of the Final Expert Report, joint meeting of experts and submission of Joint Experts Report were set on 1 July 2019, 15 July 2019 and 15 August 2019 respectively. 18.On or about 1 July 2019, Mr Hon completed his final report. A certain number of joint expert meetings were then held during the month of July 2019. 19.In the morning of 28 July 2019, by way of WhatsApp messaging, Mr Hon notified Mr Lok that he had been attacked by a dog on 27 July 2019, and as a result his right palm was seriously injured. Because of the hand injury, Mr Hon indicated that he could not write or type for at least two weeks, and it might be up to a month. 20.Between 28 July 2019 and 30 July 2019, Mr Hon and Mr Lok continued to communicate through WhatsApp, trying to explore ways to complete the remaining expert work by the scheduled deadlines. Mr Lok proposed to find someone to write or type for Mr Hon. Mr Hon disagreed. Mr Lok also requested Mr Hon to provide a medical certificate so that the plaintiff could apply to the Arbitrator for an extension of time. 21.The following are extracts of the relevant WhatsApp exchanges between Mr Hon and Mr Lok between 27 July 2019 and 30 July2019, which are contained in the agreed bundle of which the authenticity of the records are admitted:
22.Eventually, on the morning of 30 July 2019 (at 9:08 am), Mr Hon tendered his resignation from the role of quantum expert in which Mr Hon stated he resigned due to personal reasons and with immediate effect. Mr Lok did not accept Mr Hon’s resignation. By way of a return email[3], Mr Hon said: “Please note, your unacceptable will not stopping me from resigning. Further, I’ll refund those fees in arrears, if any. Shall advise the amount in due course.” 23.No medical certificate was therefore provided by Mr Hon on 30 July 2019 for applying for an extension of time for the submission of the Joint Expert Report. 24.Between 30 July 2019 and 26 August 2019, there was a further exchange of emails and letters between Mr Lok and Mr Hon regarding Mr Hon’s resignation. As can be seen from the said correspondences, during that period, the plaintiff successfully obtained from the arbitral tribunal an extension of time for the submission of the Joint Expert Report (as originally requested by Mr Hon), and the plaintiff was trying to get Mr Hon to continue with the remaining expert service in the Arbitration. The following contemporaneous documents are relevant and of significance:
25.Pok Oi Hospital granted no further sick leave after 22 August 2019. Additionally, under the last sick leave certificate dated 15 August 2019 issued by the hospital, no date was set for Mr Hon to return for follow-up treatment. 26.By a letter dated 27 August 2019 from the plaintiff to the defendant, the plaintiff purported to accept the defendant’s repudiation and terminate the August Agreement.
27.The facts set out above are either admitted by the parties on pleadings or clearly stated in the contemporaneous documents, which are agreed upon by the parties (at the hearing) to be authentic for the purpose of these proceedings. They are, therefore, not in dispute. 28.The only factual issue between the parties regarding termination is whether there were any telephone conversations between Mr Hon and Mr Lok on 28 July 2019 and 29 July 2019, in which Mr Lok instructed Mr Hon to find someone to perform the remaining expert work on Mr Hon’s behalf and to complete the same by the original deadline without any extension of time.[7] The defendant contended that there were such telephone conversations, which (the defendant contended) amounted to an act of prevention on the plaintiff’s part. The plaintiff, however, denied and asserted that all communications between them during the said period were made by either text messages or recorded voice messages through WhatsApp. In cross-examination, Mr Lok however did not rule out there might be telephone conversations with Mr Hon at that time but insisted that he gave no instruction as Mr Hon alleged. The Parties’ cases 29.It is the plaintiff’s case that the defendant’s resignation tendered on 30 July 2019 and the subsequent refusal to resume the expert service amounted to a repudiatory breach of the August Agreement. And by its letter dated 27 August 2019, the plaintiff accepted the defendant’s repudiation and thereby terminated the August Agreement. 30.Upon termination, the plaintiff engaged a replacement quantum expert, KCI Management Consultancy Limited (“KCI”), to continue with the remaining expert service and sought the corresponding leave of the Arbitrator for such replacement. Additional costs were thereby incurred. 31.In the present action, the plaintiff, therefore, seeks damages against the defendant in respect of the additional costs incurred and interest. 32.The defendant was not legally represented in this action. At the hearing, Mr Hon represented the defendant. It is not easy to ascertain from its Defence what the defendant’s case regarding termination really is. Doing the best I can, the defendant’s contention seems to be as follows:
33.The issues for determination are therefore:
Witnesses 34.There were only two factual witnesses called at the hearing, namely Mr Lok for the plaintiff and Mr Hon for the defendant respectively. 35.Mr Lok has prepared one witness statement in which he described the circumstances in which the May Agreement and August Agreement were entered into, details of his discussions with Mr Hon via WhatsApp between 27 July 2019 and 30 July 2019, as well as the subsequent exchange of correspondences (both by emails and formal letters) between the plaintiff and the defendant leading to the issue of the termination letter dated 27 August 2019. 36.Mr Lok’s witness statement also covers the engagement of KCI (as the replacement quantum expert) to continue with the remaining expert service work after 27 August 2019, the corresponding costs incurred by the plaintiff and the extra fees charged by the Arbitrator. Subject to a downward adjustment to the total additional costs incurred, Mr Lok adopted his witness statement as his evidence in chief. 37.As I mentioned above, most of the facts relevant to the question of termination are not in dispute; the only issue is whether there were telephone conversations between Mr Lok and Mr Hon on 28 July and 29 July, as asserted by Mr Hon. In that regard, Mr Lok was adamant that he gave no such instruction, whether during the telephone conversation with Mr Hon (if any) or in the WhatsApp messages. He repeatedly emphasized that he merely explored with Mr Hon the possibility of finding someone to help with the typing work. As to the suggestion of getting Mr Hon’s daughter to assist, it was raised for Mr Hon’s consideration; it was not an instruction as Mr Hon contended. 38.I find Mr Lok an honest and reliable witness. He was forthcoming and did his best to assist the court. His evidence aligns with contemporaneous documents and other documentary records, and he remained unshaken upon cross-examination. Despite what the plaintiff has pleaded in paragraph 9(5) of its Reply and Defence to Counterclaim, he frankly admitted that he actually had telephone conversations with Hon. Nevertheless, he insisted he did not instruct Mr Hon to perform and complete his service by the original deadline (ie without any extension of time). 39.I am, however, unimpressed by Mr Hon. His evidence is inherently improbable and contradicted by the agreed contemporaneous records. He tended to evade/sidestep straightforward cross-examination and changed his position upon persistent questioning. I will further elaborate when I deal with the various issues below. Hence, to the extent that Mr Hon’s evidence is inconsistent with that of Mr Lok’s, I would prefer that of Mr Lok. Termination of the August Agreement 40.It is common ground that Mr Hon suffered severe injury to his right palm on 27 July 2019, and Mr Hon has duly informed the plaintiff. Further, the plaintiff does not take issue with Mr Hon’s assertion that he was at the time unable to write or type because of the said injury. 41.Mr Hon asserted that, despite his injury, Mr Lok did not seek an extension of time for serving the Joint Expert Report, and during the telephone conversations on 28 July and 29 July 2019, instructed him to find someone else and/or his daughter to assist with the expert work. The said instruction has left him with no choice but to resign on 30 July 2019. It was denied by Mr Lok. 42.Plainly, such evidence must be carefully scrutinised in light of the totality of the contemporaneous documents (see Eu Asia Engineering Ltd v Wing Hong Contractors Ltd, unrep, HCCT 16/1990, 23 December 1991, per Kaplan J at p 9 (3rd para)). 43.In Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513, Deputy High Court Judge Thomas Au (as he then was) further observed (at §53) that in assessing the credibility of a party’s case on a particular issue, the court should take into consideration the following:
44.I have set out above the relevant contemporaneous WhatsApp messages between Mr Hon and Mr Lok in the agreed documents. From these undisputed records, it is plain that, given that Mr Hon’s injury only rendered him unable to write or type, Mr Lok at the material times merely requested Mr Hon to get someone (including possibly Mr Hon’s daughter) to help with the typing, not someone to express expert opinion on Mr Hon’s behalf. The following WhatsApp exchange between the parties in the late evening of 29 July 2019, in my view, can leave no room for misinterpretation:
45.These text messages clearly demonstrate that Mr Lok only enquired with Mr Hon as to whether or not he could find someone to help with the writing or typing work, and subject to Mr Hon providing the corresponding medical certificate, he was willing and prepared to apply for an extension of time for the service of the Joint Expert Report (as Mr Hon had requested). 46.Had Mr Lok instructed as Mr Hon now alleges, as a matter of human nature, Mr Lok would not have sent those messages as he did. It is also inconceivable that Mr Hon did not find it necessary to respond to those WhatsApp messages in such circumstances. 47.Further, it is to be noted that the said text messages were among the last messages sent out by Mr Lok to Mr Hon before Mr Hon tendered his resignation by email in the morning (at 9:08 am) of 30 July 2019. It represents Mr Lok’s latest position at the time, which remained the same all along. 48.Besides, I also note that in Mr Hon’s resignation email, he made no reference to the alleged instruction from Mr Lok. Instead, he said he resigned due to personal reasons. I am therefore not convinced that Mr Lok had ever given such instruction as contended by Mr Hon. 49.It is commonplace in both litigation and arbitration that the original timetable fixed for filing or service of documents in the proceedings would have to be extended for one reason or another. Extension of time would usually be allowed, especially when the failure to comply with the original schedule was due to medical or health reasons of the person concerned, like the present one. Typically, documentary proof, eg sick leave or medical certificate, has to be provided in support of the application for extension. Thus, it was reasonable for Mr Lok to ask for a medical certificate from Mr Hon for the purpose of applying for an extension of time. I cannot understand why Mr Hon refused to provide such a medical certificate but, instead, tendered his resignation at the time. 50.In these circumstances, I find Mr Hon’s resignation on 30 July 2019 unjustified and constituted a breach of the August Agreement. 51.It follows that the Defendant’s Act of Prevention Defence must fail. 52.By way of a return email on 30 July 2019, Mr Hon’s resignation was rejected by Mr Lok. At the hearing, Mr Hon accepted that the August Agreement was not terminated on 30 July 2019. The August Agreement, therefore, remained in existence. 53.After 30 July 2019, the parties continued their discussions regarding the possible resumption of Mr Hon’s expert service for the Arbitration. 54.On 7 August 2019, Mr Hon provided Mr Lok with two sick leave certificates issued by Pok Oi Hospital covering the period from 27 July 2019 to 15 August 2019. Consistent with Mr Lok’s intention shown in text messages, upon receipt of the sick leave certificates, Mr Lok immediately applied to the Arbitrator for an extension of time. On the following day, an extension of one month (ie up to 15 September 2019) was granted for the service of the Joint Expert Report. Notably, the extent of extension obtained was what Mr Hon originally asked for. Mr Hon was informed of the extension on 16 August 2019. 55.From the evidence, there was no relevant communications between the parties in August 2019 other than the emails and letters referred to in paragraph 24 above. What transpires from those emails and letters exchanged during the period are that:
56.At the hearing, when being asked by this court what exactly was the outstanding expert work at that stage, Mr Hon said his Final Expert Report had been submitted, joint expert meetings had been conducted, what remained to be completed were holding further discussion with the Employer’s quantum expert on a few more items and the preparation of the Joint Expert Report. 57.When being further questioned about the logistics for the preparation of the Joint Expert Report, Mr Hon revealed that the quantum expert for the Employer had offered or agreed to produce a draft Joint Expert Report for Mr Hon’s comment and agreement. In light of Mr Hon’s answer, the issue with writing or typing raised by Mr Hon at the time appears unreal. This then begged the question: what really prevented Mr Hon from attending further joint expert meetings with the Employer’s expert to discuss the remaining few items of work and to review and provide comment (if any) on the draft Joint Expert Report (which would be prepared by the Employer’s expert)? In answer, Mr Hon raised for the first time that because of the injury, he was mentally incapable of performing such work. This was not mentioned by Mr Hon in any contemporaneous text messages, emails or formal letters. If this latest claim was genuine, I cannot think of why this was not mentioned in any of the contemporaneous correspondences in which the defendant asserted the legitimacy of Mr Hon’s resignation and withdrawal of his expert service under the August Agreement. Mr Hon gave no credible explanation. 58.Further, this new allegation was not pleaded in the Defence and Counterclaim, nor was it mentioned in Mr Hon’s witness statement. 59.Moreover, considering the thoroughness of the content and the points made in the letters drafted by Mr Hon in August 2019 and their level of detail, I find Mr Hon’s claim that he was not mentally capable of performing expert work during that period unconvincing. I, therefore, do not accept his latest evidence. 60.I further observed that as of 23 August 2019 (when Mr Hon was physically able to resume work), with the extension of time up to 15 September 2019, there remained more time for Mr Hon to complete the remaining expert work than what he had under the original deadline when he sustained the injury. Hence, there cannot be any argument that Mr Hon could not resume work because there wasn’t sufficient time to complete the remaining work by the new deadline. 61.In paragraph 28 of DCC, the defendant refers to the plaintiff’s letter dated 17 August 2019 and asserts that the plaintiff forced the defendant to choose between ceasing the work or continuing with the expert service without any extension of time. Mr Hon also highlighted this part of the defendant’s case in his oral Opening. 62.However, when being cross-examined by Mr Cheung, counsel for the plaintiff, as to where it was stated in the plaintiff’s letter that there was “no chance/no option for applying any extension of agreed time frame for the expert services, as proposed by the Defendant.”, Mr Hon admitted that there were no such wordings in the letter. Again, no explanation was given by Mr Hon as to why the defendant took that position in the first place. 63.When it was further pointed out by Mr Cheung that the defendant had actually been notified of the extension of time granted, Mr Hon sidestepped the question and claimed that Mr Lok said words to that effect during the telephone conversations between 28 July and 30 July 2019. Even if what Mr Hon claimed was true (which I do not accept), it still does not explain why, despite the extension obtained (which Mr Hon was aware of at the time), the defendant still took the stance as pleaded. 64.When Mr Hon was further asked by Mr Cheung why he did not put to Mr Lok the defendant’s case as pleaded in paragraph 28 of DCC, he said that he was not giving evidence at the time and he was not familiar with the court rules. In view of Mr Hon’s extensive qualifications about dispute resolution[13], in particular, he has been a professional arbitrator and quantum expert since 2014. I find Mr Hon’s answer most unbelievable. 65.Further, when asked by the court why he could not get someone to type for him, surprisingly, Mr Hon said it was not feasible because to do so would give rise to an “issue of confidentiality”. While Mr Hon never explained what he meant, he seemed concerned with possible breach of confidence if he engaged someone to do the typing work for him. I find Mr Hon’s suggestion that an expert must do his own typing in performing the expert service in an arbitration unconvincing, to say the least. In the end, he admitted that there was no such restriction imposed by the Arbitrator. 66.Regarding the Scope of Service Defence, it is very difficult to see any real scope for the argument that the defendant’s scope of service does not include the preparation of the expert final report, attending the joint expert meeting, preparation of the joint expert report or giving evidence at the arbitration hearing. 67.It is Mr Lok’s unchallenged evidence that Procedural Order No 2 dated 11 June 2018 containing the expert directions for submission of expert reports, conducting joint expert meetings and giving expert evidence at the arbitration hearing, was passed to Mr Hon during the negotiation which led to the execution of the August Agreement. Under the August Agreement, the defendant agreed to perform all necessary expert services required under the Arbitration at a lump sum fee of HK$580,000. As a matter of construction or by implication, the said work in my view should form part of the expert scope of service under the August Agreement. 68.Mr Hon (in my view quite rightly) did not pursue this argument at the hearing or in his written closing submissions. Had Mr Hon taken such a point, I would have rejected it without hesitation. 69.In light of the above discussion, I find, as a matter of fact, that
70.I further hold that the defendant’s (Mr Hon’s) failure and/or refusal to resume the expert service after 22 August 2019 amounted to repudiation of the August Agreement. And by the plaintiff’s letter dated 27 August 2019, the August Agreement was terminated by the plaintiff. As a matter of law, the plaintiff is entitled to recover the loss and damage suffered as a result from the defendant. Loss and damage suffered by the plaintiff 71.It is trite that in a contract to perform services, the measure of damages is the additional costs incurred by the innocent party in completing the outstanding services abandoned by the defaulting party unless it would be unreasonable for the innocent party to do so in the circumstances. See Chitty on Contracts, 35th ed Vol 1 §30-45:
72.In the present case, it was not only reasonable but necessary for the plaintiff to engage a replacement quantum expert to complete the outstanding Joint Expert Report as soon as possible so as not to delay the arbitral proceedings. Costs of the replacement expert – KCI 73.In that regard, it is Mr Lok’s evidence that upon termination of the August Agreement, the plaintiff proceeded to seek quotations from different quantum experts; three quotations were received, and KCI was the lowest bidder. 74.The tenderers have taken time to review the existing documents (including Mr Hon’s work) before quotation could be provided for the remaining expert service work. KCI was formally engaged on 8 October 2019 to replace Mr Hon as the plaintiff’s quantum expert in the Arbitration. 75.According to KCI’s invoices, it had commenced work on 3 October 2019 before the formal agreement was executed. I don’t find this to be objectionable. 76.Because of KCI’s engagement to complete the outstanding expert service, a total cost of HK$428,925 was incurred by the plaintiff. The costs incurred are supported by invoices and timesheets issued by KCI, with details on the actual time spent and the corresponding work performed[14]. The plaintiff also provided copies of the payment records in support. 77.Mr Lok stated that KCI had reviewed Mr Hon’s work, and for completing the remaining expert work, they would have adopted those parts of Mr Hon’s work, which they found agreeable. Mr Lok further testified that if KCI ignored Mr Hon’s work and started the expert work afresh, the cost to be incurred would have been much higher. In cross-examination, Mr Hon also agreed that it was reasonable for KCI to adopt such an approach. 78.As to the costs incurred, the defendant merely asserted in its pleading that the plaintiff failed to prove it had used its best endeavours to mitigate its loss[15], no particulars was provided in support of such plea. 79.The legal principles regarding “mitigation” are succinctly set out in Chitty on Contract, 35th ed Vol 1 §30-098:
80.As a matter of principle, the onus of proof of the claimant’s failure to mitigate is on the defendant. Chitty on Contracts 35th ed Vol 1 §30-100:
81.In the present case, the defendant was not able to point to any steps that the plaintiff ought to have taken in mitigation in the circumstances which it failed to take. Thus, the mitigation point cannot be taken seriously. In fact, under cross-examination, Mr Hon admitted that he was not able to tell whether the additional cost of KCI incurred was reasonable or not. 82.Mr Hon, in his written Closing, submits that he had completed 95% of the expert service at the time of termination and went on to opine that a reasonable cost to complete the outstanding should be around 10% of the total costs, which (he submits) is about HK$60,000. 83.First, there is no evidence adduced by the parties on the percentage completion of the expert service achieved at the time of termination. Mr Hon has no basis for making such a submission. Besides, as a matter of common sense, KCI would have to study all the relevant documents in the Arbitration, perform its own analysis of the quantum issues in question, review and consider Mr Hon’s work before deciding whether Mr Hon’s work could be adopted, and if so which part(s) are to be adopted etc. These are inevitably duplicated work and do not necessarily depend on the amount of work left behind by Mr Hon. 84.As to Mr Hon’s opinion on the reasonable cost to complete, it is not even supported by his own evidence. In cross-examination, Mr Hon admitted that he was not in a position to form a view as to whether or not the costs incurred by KCI were reasonable. Mr Hon’s submissions are therefore rejected. 85.Upon considering Mr Lok’s evidence regarding the circumstances in which KCI was engaged and the expert service performed, I am satisfied that the plaintiff has acted reasonably in the circumstances. As nothing suggests that the corresponding costs incurred were unreasonable, I allow the amount claimed in full in my assessment below. Additional fees charged by the Arbitrator 86.Other than the additional cost arising from the engagement of KCI, the Arbitrator also charged additional fees for the time spent on dealing with (a) the plaintiff’s application for extension of time for the service of the Joint Expert Report, and (b) the plaintiff’s subsequent application for leave to replace Mr Hon. The total sum charged by the Arbitrator was HK$40,029, being 12.13 hours at HK$3,300 per hour. The Arbitrator also provided the corresponding breakdown showing the time spent on each task. 87.I am of the view that the Arbitrator’s fee for dealing with the plaintiff’s application for an extension of time in early August 2019 did not arise out of the defendant’s breach of the August Agreement. It is therefore not recoverable by way of damages. By reference to the breakdown provided by the Arbitrator[16], the amount to be excluded is HK$2,706, being 0.82 hours[17] at HK$3,300 per hour. 88.The balance representing the time spent on dealing with the plaintiff’s application for replacement of quantum expert is HK$37,323, which I allow. 89.It follows that the total additional costs incurred by the plaintiff resulting from the defendant’s breach is HK$466,248. The defendant’s counterclaim Loss of business 90.The defendant pleaded that due to the plaintiff’s wrongful commencement of the present action, it has lost a potential expert appointment and suffered an income loss. As to the quantum of loss, the defendant adopted the same lump sum fee of HK$580,000 agreed under August Agreement for this counterclaim. 91.Mr Cheung submits that the defendant failed to establish a valid cause of action for this claim; I agree. The defendant has not cited any authorities in support of this claim. Even if the defendant has any entitlement under this head (which I do not agree with), I see no sensible reason for the adoption of the same lump sum fee under the August Agreement as the defendant’s loss. 92.In any event, the defendant adduced no evidence in support of the alleged loss. 93.Lastly, given my adjudication on the issue of termination and the plaintiff’s entitlement to damages above, it was indeed proper for the plaintiff to commence the present action against the defendant. 94.For the above reasons, this claim has no legal basis. It therefore ought to be dismissed. Loss of interest 95.Clause 4.2 of the August Agreement provides that:
96.Before the termination of the August Agreement, the defendant had issued seven invoices to the plaintiff, namely I-WF-01 to I-WF-04 and I-WF-06 to I-WF-08. The defendant contended that the plaintiff failed to settle I-WF-03 to I-WF-08 within 7 days from the respective dates of the invoices; the extent of delay ranges from 3 to 25 days. By applying HSBC’s Best Lending Rates at the time, the defendant assessed its total interest loss due to plaintiff’s delay in settling the invoices concerned at HK$818.25, which it claims. The detailed calculation for the amount claimed is set out under paragraph 41 of the DCC. 97.Regarding the dates of the invoices and the corresponding dates of payment, those for I-WF-01 to I-WF-04 are admitted by the plaintiff on pleadings and thus not in dispute. In respect of I-WF-06 to I-WF-08, although not expressly admitted, they were not seriously disputed by the Plaintiff at the hearing. 98.As a general rule, unless the contracting parties make an express provision for the payment of interest, late payment of a debt does not carry interest, nor are damages available under common law for simple late payment. 99.However, in Sempra Metals Ltd v Commissioners of Inland Revenue [2008] 1 AC 561, it was held by the House of Lords that in principle, it is always open to a claimant to plead and prove his actual interest losses caused by late payment of a debt. Chitty on Contract 35th ed Vol 1 para 30-288 to 30-291. Sempra Metals was applied in Hong Kong in the case of Joe Zhixiong Zhou and Saif Partners II L P & Another (unreported, HCCL 16/2016, 14/02/2018) [2018] HKCFI 357 (at §§204 and 205):
100.Coming back to the defendant’s interest claim, here, the defendant has pleaded particulars of the alleged loss. However, the defendant adduced no evidence to prove it has suffered any actual loss of interest, let alone at HSBC’s Best Lending Rates. I am therefore not satisfied that the defendant has suffered interest loss as alleged. Conclusion 101.For the reasons set out above, I give judgment in favour of the plaintiff against the defendant in the sum of HK$466,248 with interest at prime rate(s) plus 1% from the date of commencement of this action to date of judgment and thereafter at judgment rate(s) until payment. 102.The defendant’s counterclaim is dismissed. 103.Following the above event, I further make an order nisi that the costs of this action be to the plaintiff to be taxed, if not agreed, with certificate for counsel. Unless any party applies to vary within 14 days, this order nisi shall become absolute without further order of the court.
Mr Ivan Cheung, instructed by Cedric & Co, for the plaintiff The defendant being represented by its director, Mr Hon Chi Yi, Ludwig [1] C/3-10 [2] Paragraph 16 of the Statement of Claim (“SOC”) and paragraph 17 of the Defence and Counterclaim (“DCC”) [3] dated 30 July 2019 at 11:52 am [B/90] [4] B/85 [5] Procedural Order No. 9 dated 8 August 2019 [B/99-100] [6] See email of Mr Hon on 16 August 2019 at 12:24 pm [B/103] [7] DCC paragraphs 26.4 to 26.7, Reply paragraphs 9(4) and 9(5) [8] DCC paragraphs 20 and 21 [9] DCC paragraphs 26.3 to 26.11 and 27 [10] DCC paragraphs 28 and 29 [11] DCC paragraph 34 [12] DCC paragraphs 40 to 42 [13] See Mr Hon’s CV [D/3-10] [14] B/122-141 [15] DCC paragraph 34 [16] B/119 [17] which is the total time spent by the Arbitrator on 8 August 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment