Tung Po Decoration Engineering Ltd v. Great Bright Engineering Ltd
Read the full judgment text of DCCJ 4853/2020 on BabelCite. This District Court judgment was delivered on 2 July 2024.
1. This is a trial of an action for outstanding payments in respect of fitting-out works conducted at the construction site of Nos 310-310C, Un Chau Street (“ Site ”).
Cites 6 cases
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DCCJ 4853/2020 [2024] HKDC 1086 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 4853 OF 2020 --------------------------------------- BETWEEN
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--------------------------- JUDGMENT --------------------------- INTRODUCTION 1.This is a trial of an action for outstanding payments in respect of fitting-out works conducted at the construction site of Nos 310-310C, Un Chau Street (“Site”). BACKGROUND 2.Unless otherwise stated, the following facts are either uncontroversial or beyond dispute as they are supported by unchallenged contemporaneous documents. 3.The present dispute arose from a construction project at the Site (“Project”) to which Po Shing Construction Ltd (“Po Shing”) was the main contractor. 4.Insofar as the interior fitting-out works under the Project are concerned, Pinn Work Ltd was engaged[1] as the consultant, who then engaged[2] Wang Hing Interior Design Company Ltd (“Wang Hing”) as the contractor. Among all the fitting-out works, Wang Hing contracted those relating to the following areas (“Relevant Works”) to the Defendant:-
5.Before October 2019 (and perhaps in around November 2018), the Defendant sub-contracted the Relevant Works to Tunghoi Construction Material Ltd (“Tunghoi”) in accordance with the unit rates stipulated in the Schedules of Quantities and Rates provided by Rider Levett Bucknall Limited, the surveyor of the Site (“RLB Schedules”). At the time when the Defendant engaged Tunghoi, the Relevant Works were taken charge of by Mr Au Kwok Ming (區國明) (“Mr Au”) and Mr Lam Wing Hong (林永康) (“Mr Lam”). 6.In about October 2019, Tunghoi was unable to perform all the Relevant Works and, through the introduction of Mr Lam,[3] the Defendant agreed that the Plaintiff should take up the Relevant Works which remained unperformed by Tunghoi at the Site (“Unperformed Works”). At that time, the persons who operated the Plaintiff’s business were principally Mr Li Ka Lok (李嘉樂) (“Mr Li”) and his wife (“Mrs Li”), in particular:-
7.At the material times, the Defendant’s representatives at the Site were Mr Cheung Wah Hang, Ricky (張華亨) (“Ricky”) and Mr Cheung Siu Ming (張肇銘) (“Ming”).[4] 8.The contract between the Plaintiff and the Defendant (“Contract”), which was made orally,[5] contained, inter alia, the following terms:-
9.Among the Unperformed Works, the Plaintiff was required to provide and install a set of stainless steel letterboxes at the Entrance (“Letterboxes”), which were ordered by the Plaintiff from Lai Fai Metal Products Company Limited (“Lai Fai”) in about November 2019 and the same was delivered on 2 January 2020. 10.There is no dispute that the Plaintiff did conduct the Unperformed Works at the Site. In addition, some additional or variation works which are not contained or stipulated in the RLB Schedules (“VO Works”) had been performed by the Plaintiff under the Project. 11.In assessing the progress of completion, the Plaintiff would prepare hand-written records on the progress and the same would be typeset into a progress table in Excel format (進度表) (“Work Records”).[6] During a certain time interval, the Plaintiff would submit a payment application form (“PAF”) together with an updated Word Record to the Defendant for payment. In this regard, a dispute exists as to whether the Defendant has confirmed the Plaintiff’s progress in the Work Records. 12.According to the Plaintiff, the following PAFs have been submitted to the Defendant in request for payments since December 2019:-
13.The Defendant has made payments in respect of the 1st and 2nd PAFs on about 9 and 19 December 2019 respectively, but without admission that the 1st and 2nd PAFs were properly lodged or received. The Defendant, however, did not make any payment in respect of the 3rd PAF. In particular, the Defendant has produced a different version of 3rd PAF of which both the applied sum and the contents of the Work Record attached thereto were significantly different. 14.On 4 January 2020, Mr Li left the Site after a dispute with Ricky and never returned (“1.04 Event”). The parties were in divergence as to the subject matter of the dispute during the 1.04 Event. In gist, the Plaintiff alleged that it was due to Ricky’s refusal to make payment under the 3rd PAF, while the Defendant alleged that it was due to the quality of the Plaintiff’s works and in particular the defects of the Letterboxes. At the material time, the responsible person for Lai Fai (the supplier of Letterboxes) was one Mr Yam (任偉仲) (“Mr Yam”). 15.It is undisputed that, by the time Mr Li left the Site, the Plaintiff’s works were not fully completed.[7] However, it is the Plaintiff’s pleaded case that “over 99%” of the works has been completed as of 4 January 2020.[8] 16.On 7 and 9 January 2020, attempts have been made by the Plaintiff to resolve dispute with the Defendant but without success. However, the Plaintiff claimed that in a meeting on 17 January 2020 (“1.17 Meeting”) allegedly attended to by Mrs Li, Ms Leung (梁曉琪)[9] (“Ms Leung”), Mr Lam, Ricky and Ming at a local restaurant (茶餐廳) near the Site, the Defendant had agreed to or confirmed the followings after cross-checking the 3rd PAF and the Work Record:-
17.According to the Defendant, the completion of the works was accepted by the Owner on 20 January 2020, the possession of the Site was handed back to it on the same day. THE CLAIM & COUNTERCLAIM 18.The Plaintiff claimed outstanding sum for the works performed as of 4 January 2020 under the Contract or, alternatively, on quantum meruit basis. 19.It is perhaps of relevance, for it will help understanding the basis of the Plaintiff’s claim, to state that the total amount of the Plaintiff’s contractual claim in the sum of HK$818,953.10 was purportedly deduced from the following formula (“Plaintiff’s Formula”):-
20.The Plaintiff’s Formula was composed by or formulated on the basis of the following elements and facts:-
21.Under the counterclaim (which was also pleaded as a defence of set-off), the Defendant claimed against the Plaintiff for the followings:-
ISSUES IN DISPUTE 22.Despite the numerous controversies between the parties and the issues stated in the Agreed List of Issues filed by the parties, the material issues which call for the Court’s determination at trial are in essence:-
WITNESSES 23.At trial, the Court has heard evidence from the following witnesses tendered by the parties:-
PRELIMINARY MATTER 24.The trial of this matter was originally fixed for 5 days. 25.By a consent summons dated 10 October 2023 (taken out less than a month before commencement of the trial), the Plaintiff applied to file and serve, inter alia, 4 additional witness statements. The consent summons was ordered in terms on 16 October 2023. 26.Among the 4 witness statements, two of them (namely, Ms Leung and Mr Yam) were made by witnesses who were newly introduced by the Plaintiff since the pre-trial review. 27.As for the remaining two witness statements, they were further statements made by Mr and Mrs Li primarily for the purpose of tendering several schedules in compliance with the directions given at the pre-trial review hearing. They also sought to give further details and information as to the works completed by the Plaintiff and the quantification of damages. 28.Despite the introduction of two new factual witnesses and the expansion of scope of evidence, neither party has attempted to re-fix the trial or updated the Court with any new time estimation before the commencement of the trial. It was only until the third day of the trial that the parties’ counsel informed the Court that 2 more days would be required. The trial eventually took up to 9 days, with the evidence from the Defendant’s witnesses being taken on 3 non-consecutive days all of which over-running beyond the normal Court hour. 29.In my view, when new evidence is being introduced at the eleventh hour before trial, it is incumbent upon counsel to make realistic update and evaluation on the trial length, and to make timely proposal to the Court as to any new trial arrangement well before commencement of the hearing. It would not be conducive to a smooth and fair trial for the parties to simply shy away from the matter hoping that the Court would give leniency to the parties when the trial overruns. The way this matter was handled is unsatisfactory and should not be repeated in future. PLAINTIFF’S CLAIM Right to Payment (A) Substantial performance 30.There is no dispute that the Plaintiff’s works were not fully completed by the time Mr Li left the Site on 4 January 2020. The Plaintiff’s case is, however, that it should be entitled to payment since the contracted works have been “substantially performed”. 31.It is trite that where a builder under a lump-sum contract fails to perform some of the agreed works, the builder can recover nothing for the work which was actually completed despite the fact that the other party may have received substantial benefit therefrom, subject to the doctrine of “substantial performance”: Chitty on Contracts (35th ed), §25-030. The doctrine is also applicable to a contract to perform work in consideration of payment of different sums for different parts of the work: Willimas v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1, at 8D-10E and Keating on Construction Contracts (11th ed), §4-027. 32.The Defendant did not seek to argue that the doctrine had been excluded by an express provision of the Contract or that the doctrine itself was questionable as a matter of legal principle, see for example: Chitty on Contracts (35th ed), §25-031. The Defendant only took issue on whether there was “substantial performance”, the onus of proof lying upon the Plaintiff. 33.The general principle of substantial performance has been set out in Hoenig v Isaacs [1952] 2 All ER 176 as follow:-
34.In determining whether there was substantial performance of the works, the Court would consider:-
(B) Whether there was substantial performance 35.In relation to the issue of substantial performance, the Plaintiff’s case is that:-
Plaintiff’s Case in ARDCC – Completion of “Over 99%” 36.Having considered the parties’ evidence, I hold that the Plaintiff has failed to establish that it had completed “over 99%” of the works on 4 January 2020 for the following reasons:-
37.In the circumstances, the crucial point in deciding whether there was substantial performance of the Plaintiff’s works would be whether the work progress had been allegedly agreed by the Defendant in the 1.17 Meeting. 1.17 Meeting (A) Defendant’s stance 38.The Defendant’s stance towards the 1.17 Meeting is two-folded, namely:-
39.Having considered the parties’ evidence, I find in favour of the Defendant that no agreement was reached in the 1.17 Meeting that the Plaintiff’s works had been completed by “over 90%”. For this reason, it is unnecessary for me to make any finding on the existence of the 1.17 Meeting. It suffices for me to set out only the reasoning of my ruling on the second point hereinbelow. (B) No agreement reached in 1.17 Meeting 40.The Plaintiff’s pleaded case is that, in the 1.17 Meeting, it was agreed that over 90% of the works had been completed on or before 4 January 2020. According to Mrs Li’s witness statement, it was Ricky and Ming who agreed to the completion progress on the Defendant’s behalf. 41.When being asked during cross-examination under what circumstances the said ‘agreement’ was reached in the 1.17 Meeting, the following evidence was given by Mrs Li:-
42.Even taking Mrs Li’s evidence to the highest, I am unable to form the view that, by refraining from expressing disagreement to Mrs Li’s suggestion, Ricky had acquiesced or even agreed to Mrs Li’s suggestion that the Plaintiff’s progress of completion was over 90%. Reading Mrs Li’s evidence in the proper context, it is obvious that the reason why Ricky did not indicate any disagreement on the spot was because he needed to take time to verify the degree of completion, which could not be done or confirmed during the 1.17 Meeting. 43.The other Plaintiff’s witness, Ms Leung, claimed that an agreement had been reached in the 1.17 Meeting. Given the material inconsistency between her evidence and that of Mrs Li during cross-examination, I have no alternative but to reject Ms Leung’s evidence in this respect. Indeed, as admitted by Ms Leung, she was only a bystander and had taken no part in the discussion during the 1.17 Meeting. I find that Mrs Li’s evidence would be inherently more cogent than hers when its comes to the terms of the discussion. 44.In any event, insofar as it was suggested that Ricky and Ming had confirmed that the degree of completion was over 90% by going through all the items in the 3rd PAF in the 1.17 Meeting, I find this to be incredible for the following reasons:-
45.The 1.17 Meeting ended without any written record of the ‘agreement’ reached. Ms Leung’s evidence was that the 3rd PAF marked with progress of completion was retained by Ming when the meeting concluded. In my view, it would be improbable for Mrs Li not putting down on record (perhaps through a WhatsApp message, which she was accustomed to use as a means of communication) about the ‘agreement’ reached shortly after the 1.17 Meeting but to wait until about 18 March 2020 when the Plaintiff’s solicitors issued one of their pre-action letters to the Defendant, particularly in view of the fact that:-
46.For the above reasons, I reject the Plaintiff’s evidence that an agreement had been reached in the 1.17 Meeting that the Plaintiff’s works had been completed by over 90% as of 4 January 2020. Amount Payable Upon Completion (A) Relevance of the issue 47.Given my findings above that the Plaintiff had failed to establish its pleaded case that the Contract had been substantially performed to “over 90%” or “over 99%” as of 4 January 2020, it would appear to be unnecessary for me to find what was the amount payable to the Plaintiff upon completion since one the elements of the Plaintiff’s Formula (ie the percentage of completion) has fallen away. 48.However, having considered the Plaintiff’s pleaded case and Mrs Li’s evidence, I am of the view that the amount payable to the Plaintiff upon completion remains a relevant issue even though the Plaintiff has failed to establish its claim under the Plaintiff’s Formula. This is because:-
(B) Different versions of 3rd PAF and Work Record 49.The Plaintiff’s case on the amount payable upon completion was principally premised upon the Work Record attached to the 3rd PAF referred to in Mr and Mrs Li’s witness statements[15] (“P’s 3rd PAF”). The Work Record provided that the total amount which the Plaintiff should be paid upon completion of the works was:-
50.The Defendant denied having received P’s 3rd PAF. However, the Defendant had produced another version of 3rd PAF in Ming’s supplemental witness statement (“D’s 3rd PAF”),[16] which was prepared by Ming on instructions from Mr Lam, and the same was passed to Ricky but no approval had yet been obtained. The Work Record enclosed to D’s 3rd PAF purportedly showed that upon completion the Plaintiff would be entitled to:-
51.In light of the conflicting evidence, the first question that I have to determine is whether P’s 3rd PAF should be received by the Court. (C) Nature of 3rd PAF 52.According to the Plaintiff’s pleaded case and Mr Li’s witness statement, the procedure for preparation of PAFs was as follow:-
53.Pausing here, it is noticeable that if the site inspections took place after the Work Records were typeset, then the production of a typeset Work Record per se does not necessarily mean that the same has been agreed or approved by the Defendant. The critical issue would be whether the items stated in Work Record had been checked against through site inspection by the parties’ representatives. 54.In this regard, it was Mr Li’s evidence in Court that all the payment applications (which necessarily included the 3rd PAF) were mainly handled by Mr Lam, who would provide the relevant hand-written documents and submit the same to Ming, the person admittedly in charge of type-setting for the Defendant. While Mr Lam would send the hand-written document to Mr Li for confirmation before the same was submitted to Ming, Mr Li frankly admitted that he would only have a brief look of the final figure without verification of the items therein. Mr Li also mentioned that Mr Lam would be responsible for liaising with Ming to verify the Work Records and obtain approval from the Defendant. 55.The role of Mrs Li in payment applications was even more limited than Mr Li. Her knowledge about how and when a payment application would be made solely came from Mr Li. This is not surprising given that her job duty in the Plaintiff mainly involved assisting Mr Li to process the Plaintiff’s books and accounting only. 56.In light of the uncontroversial facts above, it would appear that no weight could be given to the evidence of Mr and Mrs Li as to whether the contents of P’s 3rd PAF were agreed or approved by the Defendant. This is because neither of them was responsible for preparing P’s 3rd PAF and had no direct knowledge of the items and figures stated therein. Most importantly, neither of them gave evidence as to whether the contents of P’s 3rd PAF had been checked against during any site inspection. The most relevant evidence, if any, would be that of Mr Lam, who presumably should have prepared the hand-written documents and attended any site inspection with Ming to verify the contents of the Word Records. 57.In the alternative, even assuming that the site inspections took place before the Word Records were typeset (which seemed to be unsupported by any evidence), Mr Lam’s evidence remained highly relevant as there was no direct evidence showing that P’s 3rd PAF was a product of any site inspection (eg that it was sent by Ming to Mr Lam after an inspection). 58.Mr Lam, however, was not called or subpoenaed to give evidence at trial. There was also no witness statement prepared by him. There was simply no evidence from Mr Lam as to how the Work Record attached to P’s 3rd PAF was prepared and whether its contents had been verified by any site inspection before it was produced by Mr and Mrs Li in their witness statements. (D) Omission to call Mr Lam 59.Regarding the situation of an uncalled witness relating a particular issue in civil proceedings, the following applicable principles have been summarized in Ip Man Shan Henry v Ching Hing Construction Co Ltd (No 2) [2003] 1 HKC 256 at paragraph 155:-[17]
60.The Plaintiff has not provided any explanation as to why Mr Lam was not called to give evidence at trial. It was only until cross-examination that Mr Li said that he had lost contact with Mr Lam for 2 to 3 years although he had attempted to contact him through phone call and WhatsApp message but without success. In my view, Mr Li’s explanation is not plausible for the following reasons:-
61.On the other hand, by producing documentary evidence that D’s 3rd PAF was sent by Ming to Mr Lam in the afternoon of 3 January 2020 (and that the same had been sent to Ricky for approval), the Defendant had shown a prima facie case that P’s 3rd PAF was not prepared by Ming. Although D’s 3rd PAF was only produced on 31 October 2023 (less than a week before trial), there could be no dispute that it was sent by Ming to Mr Lam at 5:23 pm on 3 January 2020 hence its authenticity could not be seriously challenged. 62.In the circumstances, the Court is entitled to draw an inference from the omission to call Mr Lam that his evidence, even if adduced, would not have helped the Plaintiff’s case. See: Li Sau Keung v Maxcredit Engineering Ltd & Anor [2004] 1 HKC 434, paragraph 28. 63.In any event, the Plaintiff has failed to discharge its burden in showing that, on a balance of probabilities, the contents of P’s 3rd PAF was produced by Ming or had been confirmed by the Defendant. This was fortified by the evidence of Mr Li who, when being cross-examined: (a) was unable to confirm that P’s 3rd PAF was the one which was actually submitted, while (b) agreeing that it was possible that D’s 3rd PAF was the one actually submitted. 64.The Plaintiff took issue with the absence of certain items of VO Works[18] from D’s 3rd PAF, while it claimed that it had completed or at least provided the materials for the items therein[19] and performance of certain items were undisputed by the Defendant.[20] The Plaintiff argued that the discrepancy suggested that P’s 3rd PAF should be preferred. I am not persuaded by this argument for the following reasons:-
65.Further, as Ming pointed out in his supplemental witness statement, there were certain items in P’s 3rd PAF which were reportedly having achieved progress were in fact non-existent when the relevant Work Record was allegedly prepared. This further supports the improbability of the Plaintiff’s suggestion that P’s 3rd PAF had been verified by the Defendant. 66.For the above reasons, I find that the Plaintiff has failed to establish that the contents of P’s 3rd PAF have been verified or agreed by the Defendant. I will attach no weight to P’s 3rd PAF and its Work Record for the items of work and the total price of the works stated therein. (E) D’s 3rd PAF 67.Despite my rejection of P’s 3rd PAF, an outstanding issue remained as to whether the contents of D’s 3rd PAF (in particular the Work Record attached) had been verified by any site inspection, or was D’s 3rd PAF merely a document typeset by Ming from Mr Lam’s handwritten record without being verified at all? 68.According to the Plaintiff’s evidence, the alleged site inspections confirming the contents of the Work Records were attended by Mr Lam and Ming. As analyzed above, the absence of evidence from Mr Lam not only meant that there was no evidence from the Plaintiff to support the existence of those site inspections, but the Court could also draw such inference that even if Mr Lam were to give evidence, his evidence would not be helpful in proving the existence of those inspections. It would also be open to the Court to take this into account in considering whether to accept the Defendant’s evidence that no such inspection had been conducted by the parties. 69.In my view, there is ample reason for me to accept the Defendant’s evidence that D’s 3rd PAF had not been verified by the Defendant. I do not intend to repeat my entire reasonings above regarding the implication brought by the absence of Mr Lam’s evidence. It suffices for me simply to point out that if D’s 3rd PAF had been verified by any site inspection, it would best be proved by the evidence of Mr Lam, and in the absence of his evidence, the Court would be quite entitled to infer that the very existence of this inspection was questionable. 70.In the premises, I find in favour of the Defendant that D’s 3rd PAF was merely a document submitted to Ricky for approval only. Although D’s 3rd PAF was type-set by Ming, its contents were neither agreed by the Defendant nor verified by any site inspection. I will also attach no weight to D’s 3rd PAF and its Work Record for the items of work and the total price of the works stated therein. Other Evidence of Amount Payable on Completion (A) Schedule prepared by Ming 71.In his witness statement, Ming has produced a Schedule of Completion (工程完成度紀錄表) prepared by him (“Ming’s Schedule”) with reference to the RLB Schedules setting out his own observation on the degree of completion and the defects observed. It is notable that under Ming’s Schedule:-
72.On Ming’s Schedule, the first question is whether I should give any weight to it, given that the Court will usually derive assistance from expert evidence in the interpretation of what amounts to a fair commercial rate under a quantum meruit claim: Chitty on Contracts (Hong Kong Specific Contracts) (6th ed), §8-191 and 陳紹銘 對 黃國雄及另一人 DCCJ 2002/2010 (HH Judge R Yu, 24 September 2013, unreported), paragraphs 89-92. 73.Having considered the particular circumstances of the case and the authorities cited by the parties, I am of the view that Ming’s evidence is admissible for the following reasons:-
74.I will therefore consider Ming’s Schedule by giving it due weight when deciding what would be the sum of the Unperformed Works payable to the Plaintiff upon completion. Furthermore, insofar as there is any controversy on the scope of work between Ming’s Schedule and the Defendant’s observations, I prefer the former since Ming was the one who had the direct knowledge of the works performed and would be in the best position to provide the Court with the relevant evidence. (B) The Work Schedule 75.Pursuant to an order by Deputy Judge Michelle Lam dated 4 September 2023, the parties have jointly prepared a schedule setting out, inter alia, the scope of works which allegedly had been and had to be performed by the Plaintiff, as well as the parties’ respective stances (and reasons for adopting those stances) on those work items (“Work Schedule”).[21] 76.The Work Schedule is in substance a “Scott Schedule”, which is a special form of pleadings: Hong Kong Civil Procedure 2024 (Vol 1), §18/12/41 and Atkin’s Court Forms Hong Kong (Issue 101), §302. In my view, the parties’ stances in the Work Schedule shall be binding on them as the Work Schedule carries the effect of pleadings. 77.Under the Work Schedule, the Defendant has quite fairly made concessions to a number of work items on both Unperformed and VO Works. Hence, for those items which have been conceded unconditionally,[22] I intend to award the Plaintiff, where evidence is available, the corresponding sums under those items. 78.I will therefore consider the Work Schedule when deciding whether an item of works and its price has been agreed by the parties. I will also take the Defendant’s stances therein in considering whether sufficient evidence has been shown to justify a particular claim. (C) Summary of Stances 79.The Plaintiff’s counsel has categorized the items in Ming’s Schedule by reference to the Work Schedule and summarized them (together with those in P’s and D’s 3rd PAF) in a document enclosed in its closing submissions titled “Summary of Parties’ Respective Stances on Contract Sum by Items” (“Summary of Stances”). The Defendant did not take any specific issue with the contents of the Summary of Stances. In any event, the Summary of Stances is not in itself any evidence but only a document summarizing the figures in the parties’ 3rd PAFs and Ming’s Schedule, though it would be very helpful in simplifying the quantum calculation exercise. Computation of Quantum (A) Works conceded by Defendant under Work Schedule 80.According to the Summary of Stances, a total of 27 items have been conceded by the Defendant unconditionally under the Work Schedule for falling within the Plaintiff’s scope of works, among which were 14 items of Unperformed Works and 13 items of VO Works. Of these items:-
81.In the circumstances, I hold that the total prices of the agreed Unperformed and VO Works should be HK$165,520 (HK$149,520 + HK$16,000). (B) Works disputed by Defendant under Work Schedule 82.As for those items of Unperformed and VO Works which were not admitted by the Defendant under the Work Schedule, the burden rests on the Plaintiff to show the amount payable by way of credible evidence. That would also entail showing that they were/had to be performed and their fair market prices. 83.With the above in mind, I will make the following findings on the disputed items under the Work Schedule:-
84.I find that the total amount of the disputed works which the Plaintiff would be entitled to be paid upon completion is HK$780,480 (HK$6,400 + HK$745,200 + HK$19,880 + HK$9,000). 85.Taking into account all the work items involved, the total amount of those works which would be payable upon completion is therefore HK$946,000 (HK$165,520 + HK$780,480). Deductions (A) Overview 86.Under the Statement of Claim (“SOC”), the Plaintiff acknowledged that credit should be given to the Defendant on the followings:-
(B) Partial Settlement 87.The Defendant did not dispute the amount of the Partial Settlement[28] but alleged that the following two additional payments should also be deducted from the sum awarded to the Plaintiff as advancement made to the Plaintiff:-
88.The Plaintiff conceded that credit should be given to the two sums above although they should be regarded as the Defendant’s Expenses: ARDCC, paragraph 18(4). In light of the Plaintiff’s position under pleadings, it is not necessary for me to resolve the difference, nor the Defendant’s allegation that the first sum was a loan made to Mr Li. It suffices to say that these two sums shall also be deducted from the award to the Plaintiff. (C) Defendant’s Expenses 89.The Defendant’s Expenses were itemized in the SOC as follow:-
90.Save for the amount for ceiling works as stated item (5) above, the Defendant did not express any dispute over the amount of the Defendant’s Expenses under the Amended Defence and Counterclaim (“ADCC”). It was however claimed that the following additional expenses should also be deducted from the sum awarded to the Plaintiff:-
91.The Plaintiff accepted that it should be responsible for items (2), (5) and (6) above but disputed the rest. (i) Lichen wall (HK$20,500) 92.In gist, the Defendant’s case was that the pattern of the specific model of lichen wall supplied by the Plaintiff (at HK$2,400/m2) failed to satisfy Wang Hing and the Plaintiff had agreed to replace it with the model specified by the designer (at HK$4,000/m2). 93.Defendant’s claim was based on a quotation of HK$4,000/m2 allegedly agreed by the Plaintiff. However, the only evidence supporting the said quotation was an email to one “Jayden Lam” (whose capacity was unknown) dated 19 June 2017, in which no particular was given as to the particular model of “moss tile” quoted. 94.Further, it is inherently implausible that the Plaintiff would agree purchasing the material at HK$4,000/m2 as alleged by the Defendant, since the material costs alone would have substantially exceeded the entirety of the Plaintiff’s quote for the lichen wall. There was no evidence showing why the Plaintiff would accept this seemingly disadvantageous arrangement. 95.For these reasons, I find that the Defendant has failed to prove that this item was deductible from the Plaintiff’s claim. (ii) Marbles for lobby concierge table (HK$6,272) 96.The Defendant’s case was that marble materials had to be re-ordered as a result of the Plaintiff’s mistake in making wrong measurement of the dimensions of the lobby concierge table. 97.Apart from Ricky bare assertion, the Defendant has not referred the Court to any evidence supporting its allegation. I find that the Defendant has failed to establish that this item was deductible from the Plaintiff’s claim. (iii) Timber veneer (HK$55,000) 98.The Defendant’s case was that it had placed order on behalf of the Plaintiff to order 55 pieces of timber veneer and was therefore entitled to be reimbursed. 99.The Defendant provided evidence that it had issued cheques (although not in the exact total sum of HK$55,000) purporting to purchase timber veneer. However, apart from Ricky own assertion, there was no evidence that the timber veneer was sourced on behalf of the Plaintiff or it was the latter’s duty to provide the timber veneer. 100.Indeed, the Defendant’s case appears to be inconsistent with a WhatsApp message sent by Ricky on 20 December 2019 in which he said “木皮55塊比你們多時仍未見出現 … [怎]麼交貨”. In my view, the message is more consistent with the Plaintiff’s case that it was not responsible for supplying the timber veneer apart from providing the finishing works. 101.I find that the Defendant has failed to show that this item was deductible from the Plaintiff’s claim. (iv) Ceiling Works (HK$80,000) 102.The Plaintiff’s dispute only relates to the amount of the ceiling works (in which the Plaintiff claimed that only HK$50,000 should be deductible). 103.According to Ricky’s evidence, the Defendant has paid a total sum of HK$80,000 to a company called Diss Engineering Co in the following manner:-
104.In support of Ricky’s allegation, the Defendant has produced two confirmation documents signed by the contractor on 2 and 31 January 2020. It is apparent from those documents that the Defendant has paid a total sum of HK$80,000 both by way of cheques and cash on those occasions. 105.In the premises, I find that the Defendant has shown that this item (to the extent of the difference of HK$30,000) should be deductible from the Plaintiff’s claim. Amount of Plaintiff’s Claim 106.In summary, I find that the amount to which the Plaintiff would be entitled upon completion is HK$946,000. Such sum, however, shall be subject to deduction of the following items:-
107.Taking into account the deductible items above, the net sum which the Plaintiff would be entitled to upon completion is HK$374,884.10. 108.However, the aforesaid sum is only a sum which would have been payable to the Plaintiff upon completion, which in fact never happened. Prior to completion of the works on 20 January 2020, various follow-up and rectification works were allegedly performed at the Site. Costs of the relevant follow-up and rectification, which were allegedly borne by the Defendant, formed part of the Defendant’s set-off and counterclaim. 109.In the premises, I will allow the Plaintiff’s claim in the sum of HK$374,884.10, subject to any set-off by the Defendant’s counterclaim being proven. SET-OFF FROM DEFENDANT’S COUNTERCLAIM General 110.Under the counterclaim, the Defendant sought against the Plaintiff for:-
111.The Plaintiff denied liability, claiming that it was not in repudiation. For some of the items sought in the counterclaim, the Plaintiff further argued that it should not be liable to them by reason of the nature of those items. Overpayment (A) Overview of amounts overpaid 112.Under the ADCC, the amount of Overpayment was arrived at in the following manner:-
(B) Worth of works completed by the Plaintiff 113.It is perhaps more convenient for me to conclude this head of claim by disposing of this item first. 114.The Defendant relied on the assessment in Ming’s Schedule that the worth of the Unperformed Works finished by the Plaintiff on 4 January 2020 was HK$322,655. 115.Ming’s Schedule contains two categories of information, the first category being the items of contractual works and their respective prices under RLB Schedules (hence the total sum payable upon completion); the second category being Ming’s assessment of the degree of completion of the works (hence the estimated value of the works finished). 116.As I have stated above, the first category of information was primarily factual in nature, since Ming only needed to confirm whether a particular item was within the scope of the Plaintiff’s works. The same cannot be said about the second category, which required the exercise of an objective assessment based on the status of a particular work on 4 January 2020. 117.I do not accept Ming’s assessment on the degree of completion of the works. 118.At the material time of the assessment, Ming was a staff of the Defendant and had to report to Ricky. He was also called by the Defendant as a factual witness whose evidence was subject to vigorous challenge. I have seriously doubt about his impartiality when it comes to an assessment of which the result will dictate the amount of the Plaintiff’s claim. This is particularly so when:-
119.Having rejected Ming’s evidence, the Defendant will have no evidential basis to support its case on the worth of the Plaintiff’s works completed. 120.On the other hand, I have found that the total amount payable to the Plaintiff for its works upon completion should be HK$946,000. Further, as I shall find below, the costs of follow-up and rectification of the Plaintiff’s unfinished works is in the sum of HK$158,506. The actual worth of the Plaintiff’s works as suggested by these two figures is HK$787,494 (HK$946,000 – HK$158,506), which has far exceeded the sum and the disbursement paid by Defendant. 121.For this reason, I reject the Defendant’s counterclaim for Overpayment. Repudiatory Damages (A) The alleged repudiation 122.The Defendant has in ADCC referred to various events in support of its claim that the Plaintiff was in breach of the Contract, but only relied on the following event taking place at the Site on 4 January 2020 in support of the Plaintiff’s repudiation at trial (“Repudiatory Event”):-
123.The Plaintiff denied the aforesaid Repudiatory Event, claiming that:-
(B) What happened during the 1.04 Event? 124.Both parties provided different versions of evidence as to what happened during the 1.04 Event. In my view, it would be convenient to begin with the undisputed or indisputable events on the day in question:-
125.In deciding which version of the parties’ cases should be received, it is perhaps desirable to begin by looking at the different reasons provided by the parties as to why Mr Li left the Site on 4 January 2020:-
126.After considering the parties’ evidence and their respective submissions, I find the Plaintiff’s version to be inherently incredible and I prefer the version propounded by the Defendant. 127.First, I see no credible reason as to why the Defendant would, as alleged by the Plaintiff, refuse making payment at all without pointing to any concrete mistake made by the Plaintiff. This is because:-
128.Second, as observed by Mr So, there was a heated dispute between Mr Li and Ricky concerning the Letterboxes during the 1.04 Event. Mr Li also agreed that the issue of the defective Letterboxes had been brought up during the meeting. Surprisingly:-
129.Two matters may immediately be noted:-
130.Third, objective evidence tends to suggest that Mr Li’s evidence regarding the dispute on the Letterboxes was inherently implausible:-
131.On the other hand, I find that the Defendant’s version to be more credible:-
132.For the above reasons, I find that the Plaintiff to be in repudiation of the Contract when Mr Li left the Site on 4 January 2020. The repudiation was accepted by the Defendant on 7 January 2020 when the Plaintiff was no longer permitted to enter the Site (even though the instruction came from Po Shing). 133.During his oral evidence, Mr Li has mentioned that he left the Site because of the poor attitude displayed by Ricky (involving the using of foul language) during the 1.04 Event. This matter was neither pleaded by the Plaintiff nor mentioned in any of its witnesses’ statements. In any event, it is not a valid ground for the Plaintiff to abandon the works before completion, to which the Plaintiff would likewise be held in repudiation of the Contract. (C) The Repudiatory Damages 134.As a result of the Plaintiff’s repudiation, the Defendant should be entitled to damages. In this regard, the Defendant counterclaims against the Plaintiff for the following items:-
(i) Disbursement by the Defendant (HK$200,622) 135.This item has overlapped with the Defendant’s Expenses dealt with above. (ii) Workmen wages (HK$234,525) 136.The Defendant claimed that a total sum of HK$234,525 had been incurred for wages of workmen to complete the outstanding works of the Plaintiff from the evening of 4 January 2020 onwards falling within the “final works phase”.[32] 137.In support of its claim, the Defendant has produced certain records of payment of salaries to the workers. These records added up to a figure of over HK$340,000. Clearly, some of these records are irrelevant to the Defendant’s claim under this head. 138.In his witness statement, Ricky stated that the sum of HK$234,525 was verified (此為經最後核算之數額). However, there was no evidence as to how this sum was verified. The absence of such evidence is particularly telling on the accuracy of the claimed figure in light of the following:-
139.The Defendant bears the burden of showing that these payments were incurred or caused by the Plaintiff’s repudiation of the Contract. In my view, the Defendant has failed to do so. 140.Despite the Defendant’s failure to discharge its onus, I shall nonetheless hold that a total sum of HK$65,900 should be borne by the Plaintiff as the same had been conceded by Mrs Li for being relevant to the outstanding works left by the Plaintiff at the Site falling within the “final works phase”.[33] 141.In the premises, I hold that the Defendant is entitled to damages in the sum of HK$65,900 under this head. (iii) Staff costs to supervise completion (HK$72,000) 142.The Defendant’s case is that a sum of HK$72,000 was incurred for engaging Ricky, Ming and one Mr Au to supervise the “final works phase”. 143.Nevertheless, among the payment records provided by the Defendant:-
144.I also agree with the Plaintiff’s submission that since it could not be reasonably distinguished whether the supervising works provided by the Defendant’s staff related only to the outstanding works left by the Plaintiff, a discount of 31.20% should, in the circumstances of the case, be applied.[34] 145.In the premises, I therefore hold that the Defendant is entitled to supervising staff costs during the “final works phase” in the sum of HK$15,756 (ie (HK$2,500 + HK$48,000) x 31.20%) under this head. (iv) Wang Hing’s costs to supervise completion (HK$24,000) 146.The Defendant claimed that an extra supervising charge had been collected by Wang Hing from the Defendant. 147.Apart from Ricky’s own assertion, the Defendant has failed to refer to any other evidence in support of its case. I find that the Defendant has failed to discharge its burden in proving its claim. 148.I dismiss the Defendant’s counterclaim under this head. (v) Staff costs to follow up defects (HK$40,500) 149.The Defendant claimed that Ming was specifically engaged to supervise the following up of defects during the “defect rectification phase” (ie 21 January 2020 onwards). The Defendant relied on a payment record which showed that a sum of HK$40,500 was purportedly paid to Ming on 29 May 2020 and the same was acknowledged by Ming. 150.The Plaintiff opposed this claim on the ground that the payment records lacked particulars of the service provided. 151.I find that the Defendant has established its claim under this head both by reason of Ricky’s evidence and the payment record provided. In my view, it would not be unreasonable for someone to be engaged to follow up the defect rectification, as this was what the Plaintiff had to perform under the Contract. On the other hand, the Plaintiff has not provided any evidence that the said works had not been provided by the Defendant. 152.In the premises, I find that the Defendant is entitled to the sum of HK$40,500 under this head. (vi) Costs of materials (HK$40,350) 153.According to the Defendant’s pleaded case, this head of claim composed of:-
154.The Defendant has provided invoices issued by Lai Fai showing that these sums were in fact incurred after 4 January 2020. I also accept Ricky’s evidence that these sums were incurred for the purpose of completing the outstanding works left by the Plaintiff. 155.The Plaintiff’s argument in respect of the Defendant’s claim was primarily about the irrationality of the claim. In my view, the crucial issue is whether these repair works and materials were within the scope of the Plaintiff’s works and whether they were incurred as a result of the Plaintiff’s repudiation. In my view, the answers to both questions are ‘yes’. 156.As to the wall lamp, the Plaintiff advanced a further argument that the Plaintiff’s scope of works did not involve the supply of material, since the amount of the lampstands had exceeded the quote made by the Plaintiff in respect of the whole item of works. In my view, the Plaintiff has ignored the clear wordings under page 3/15 of the RLB Schedule that the Plaintiff should be responsible for the supply and installation of the light fittings, including “all necessary fitting and fixing accessories”. 157.For the above reasons, save for the costs of ordering elevator panel (of which the sum was forgone at trial), I hold that the Defendant is entitled to its counterclaim in the total sum of HK$36,350 (HK$13,000 + HK$5,500 + HK$5,400 + HK$12,450). (vii) Costs of materials incurred by Mr Lam (HK$16,711.30) 158.Save for Ricky’s own assertion, the Defendant did not provide any evidence in support of this claim. Further, Ricky also agreed under cross-examination that there was no document or photo showing that any of these materials were used for the works contracted to the Plaintiff. 159.I find that the Defendant has failed to establish its claim and I dismiss the Defendant’s counterclaim under this head. (viii) Costs of ordering new Letterboxes (HK$75,000) 160.This part of the claim was forgone by Ricky at trial. As a result, the Defendant’s counterclaim under this head is dismissed. (ix) Metal works of stainless steel wall (HK$82,000) 161.This part of the claim was forgone by Ricky at trial. As a result, the Defendant’s counterclaim under this head is dismissed. (D) Summary 162.In summary, I find that the Defendant is entitled to Repudiatory Damages from the Plaintiff in the total sum of HK$158,506, particulars of the sum are:-
(E) Retention Money 163.Although the issue of whether the Retention Money should be retained was not specifically pleaded by the Defendant, for clarity purpose perhaps I shall also deal with it briefly. 164.Normally, retention money should be payable to the contractor when the work is entirely finished and without defects or omissions: Hoenig v Issacs (supra). 165.As stated above, the Plaintiff failed to remedy defects and the Defendant was awarded damages arising from follow-up and rectification of the Plaintiff’s works. In this situation, the Retention Money should be applied to offset this kind of costs: Force Way Engineering Limited v The Incorporated Owners of Grand Court DCCJ 3216 of 2016 (HH Judge Winnie Tsui, 19 December 2017, unreported), at §§207, 213-214, §§207, 213-214. For this reason, the Retention Money has become a non-issue. Conclusion 166.In the circumstances, I will allow the Defendant’s counterclaim in the sum of HK$158,506. DISPOSAL 167.Accordingly, I enter judgment:-
168.The Defendant’s award shall be set off against the award to the Plaintiff. After setting-off, the balance of the Plaintiff’s award is HK$216,378.10. 169.I also award interest on the balance of the Plaintiff’s award in the claim (after deducting the Defendant’s award in the counterclaim) at judgment rate from the date of the issue of the writ until payment. 170.Although the Defendant succeeded partially in its counterclaim, the Plaintiff is the substantive winner of the action. I will therefore make an order nisi that costs of the action and the counterclaim be to the Plaintiff to be taxed if not agreed, with certificate for one counsel. Unless either party applies to vary the same, such order shall become absolute after 21 days from today.
Ms Catherine Wong and Mr Billy Mok, instructed by Ho, Tse, Wai & Partners, for the Plaintiff Mr Ivan Lee, instructed by Yung, Yu, Yuen & Co, for the Defendant [1] Through another company called Smart Team Properties Ltd (“Employer”). [2] Through a designer company called Interior Contract International Ltd (“ICIL”). [3] There is no dispute that Mr Lam had a personal relationship with Mr Li, although the parties differed as to the nature of the relationship. Mr Lam has ceased to work for Tunghoi since January 2019. [4] According to Ming, he only took charge of the Project on 11 November 2019. [5] Save for the unit rates of the Unperformed Works, which would be governed by the RLB Schedules. [6] According to the Plaintiff, each of the Work Records would contain particulars as to: (a) quantities and unit rates of each item; (b) contractual amount that the Defendant should pay to the Plaintiff upon full completion of the works; (c) percentage of completion of each item as the Defendant would then have assessed or agreed; and (d) the amount that the Defendant should pay to the Plaintiff by reference to the percentage of completion stated. [7] To the extent that they were not 100% completed. [8] Paragraphs 12(4) and 14(2) of the Amended Reply and Defence to Counterclaim (“ARDCC”). [9] Who was allegedly a friend of Mrs Li. [10] See: paragraph 26 of Mr Li’s witness statement. [11] The site engineer of Po Shing. [12] The date of joint inspection walk was mis-typed as ‘2 December 2020’ by TCA in its letter to Po Shing dated 3 January 2020. See: email from TCA to Po Shing of 3 January 2020. [13] Assuming the version used in the 1.17 Meeting was P’s 3rd PAF. [14] Paragraph 3(2) [15] See: “Exhibit 4” to Mr Li’s witness statement and “Annex 3” to Mrs Li’s witness statement. [16] See: “Annex F2” to Ming’s supplemental witness statement. [17] The Plaintiff refers to the English Court of Appeal decision in Wisniewski v Central Manchester Health Authority [1998] PIQR P324 for the same proposition. [18] From VO-043 onwards. [19] In particular, the bathroom door stainless steel frame, black mirror steel ceiling and the main entrance signboards. [20] Namely, VO-053 to VO-055 (black mirror steel ceiling at lift lobby, gym room and function room). [21] The work items stated in the Work Schedule are items enlisted in the Work Record attached the P’s 3rd PAF. They are composed of items of Unperformed Works set out in RLB Schedules as well as VO Works. [22] As opposed to items which the Defendant conceded conditionally, eg by stating “Y，但不認同價錢” [23] Set out in p 11 of the Summary of Stances. [24] pp 2-3 of Summary of Stances. [25] pp 4-9 of Summary of Stances. [26] p 12 of Summary of Stances. [27] p 10 of Summary of Stances. [28] Save for a negligible difference of $0.90 in respect of the sum $72,672.90 and the date of its payment. [29] This item overlaps with the Defendant’s claim for Partial Settlement, to which credit should be given. [30] Mr Li said in his witness statement that “張先生藉詞表示不滿東寶的工作，但沒有實質說出東寶有任何出錯”. [31] See: paragraphs 17(e) and (f) of ADCC and paragraph 13(2)(c) of ARDCC [32] ie from the evening of 4 January 2020 to midnight of 20 January 2020. [33] See: paragraph 4 of Appendix 1 attached to Mrs Li’s supplemental witness statement. [34] The discount rate of 31.20% was derived from paragraph 38(f) of the Plaintiff’s closing submissions as the approximate proportion between the payment for workers’ wages incurred to remedy the Plaintiff’s breach comparing to the total amount purportedly paid by the Defendant. In my view, this ratio should also serve as a reasonable indicator of the proportion of other costs and expenses incurred by the Defendant arising from the Plaintiff’s breach during the “final works phase”. [35] This item was forgone by the Defendant at trial. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under DCCJ 4853/2020