Hung Lee Decoration Engineering Ltd v. David Decoration Ltd
Read the full judgment text of DCCJ 3226/2021 on BabelCite. This District Court judgment was delivered on 17 December 2025.
1. This is the trial of a claim for unpaid fees for work done in respect of two renovation projects where the plaintiff was engaged as a sub-sub-contractor by the defendant (as sub-contractor) to carry out painting and plastering works at:-
Cites 10 cases
|
DCCJ 3226/2021 [2025] HKDC 2002 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 3226 OF 2021 --------------------------------------------- BETWEEN
---------------------------------------------
------------------------- JUDGMENT -------------------------
A. INTRODUCTION 1.This is the trial of a claim for unpaid fees for work done in respect of two renovation projects where the plaintiff was engaged as a sub-sub-contractor by the defendant (as sub-contractor) to carry out painting and plastering works at:-
2.As the claims for the two projects are governed by separate agreements with no substantial overlapping facts, I shall deal with them separately in this judgment. B. THE CITYGATE PROJECT B1. The Undisputed Background 3.At all material times, Hip Hing Construction Co, Ltd (“HHCL”) was the main contractor for the Citygate Project. The employer was Newfoundworld Project Management Ltd (the “Citygate Employer”). 4.Originally, the relevant works were contracted out to another sub-sub-contractor which failed to fully complete the works. The plaintiff was subsequently brought in to complete the remaining works. 5.On 14 March 2019, the defendant entered into an agreement with the plaintiff to engage the plaintiff as a sub-sub contractor to carry out certain painting and plastering works for a sum of $3,180,000 (the “Citygate Agreement”). The scope of work to be carried out was specified in a schedule (“Citygate Schedule”) which set out a list of work items containing the work description, location, quantities and the unit cost for each item. 6.The plaintiff was given access to the Citygate worksite on or about 21 March 2019. 7.On the 30th day of each month from March to September 2019, the plaintiff had issued a total of 7 bills of payment (the “Monthly Bills”) to the defendant. On each occasion, after the plaintiff had signed a pro forma payment declaration provided by the defendant (the “Payment Declarations”), the defendant would make payment as follows:-
8.It is also not disputed that, handwritten revisions (the “Handwritten Revisions”) were made by the defendant to apply deductions to the sums claimed in the Monthly Bills to signify the amount that the defendant agreed to pay. 9.Certificates of Practical Completion was issued for Lot 2 and Lot 11 on 2 and 29 June 2019 respectively. B2. The Parties’ Respective Cases 10.In short, the plaintiff’s claim concerns 3 categories of additional works (“Additional Works”) which were carried out:-
11.Insofar as there was no agreement on the sum payable for any of the Additional Works performed at the request of the defendant, the plaintiff claims that it was an implied term of the Citygate Agreement that the price of any such works shall be determined by reference to the market price (the “Implied Term”)[1]. 12.In total, the plaintiff claims that the defendant is liable for an outstanding sum of $2,253,953.60 after taking into account the payments previously made:-
13.The defendant’s position is that it is not liable for any further sum. Its main objections are:-
B3. Analysis 14.I shall deal with the issues in the following order:-
B4. The Citygate Agreement 15.The key provision[2] on payment is Clause 5, which is set out in full as follows:-
16.It is also clear that:-
B5. Whether the Citygate Agreement was “all inclusive” in respect of the items set out in the Citygate Schedule 17.This is a question on the proper construction of Clause 5. 18.The principles on the construction of contracts are trite, see: Jumbo King Ltd v Faithful Properties Ltd & Others (1999) 2 HKCFAR 279, 296D-I; Sinoearn International Ltd v Hyundai-CCEC Joint Venture (2013) 16 HKCFAR 632 at §77; Fully Profit (Asia) Ltd v Secretary for Justice (2013) 16 HKCFAR 351 at §15. In short, the focus is on giving effect to what a reasonable person would understand of the words used in their natural or ordinary meaning, having regard to the agreement as a whole and the context. 19.In her submissions, Ms Tina Mok, counsel for the defendant argued that Clause 5 provides for payment on a lump-sum basis (as opposed to re-measurement basis) so that the plaintiff is only entitled to the contractually agreed sum without additional payment for completion of the works. The unit prices provided in the Citygate Schedule would only apply in the case of variation orders (ie works performed outside the original scope). In support, she also relied on Clause 4 which provides that there should not be any situation of omission of work or quotation (“…並沒有「不包」或「漏報價」之情況出現…”). 20.In construing the term “lump sum” as used in a construction contract, it is necessary to have regard to the agreed scope of work, see: Wah Sung Construction & Piling Limited v Cheerwide Limited [2024] HKCFI 45 at §§86 to 92 per Keith Yeung J. As noted by the learned Judge, a lump sum contract with a widely defined scope of work (eg to build a house) would be different from a lump sum contract where the scope of work is defined in exact terms (eg to execute so many cubic metres of excavation). In the former case, the contractor has no entitlement to additional payment for all necessary works carried out to complete the house without extra payment but in the latter, the contractor’s contractual obligations are only limited to the extent as provided by the defined scope. The use of the term “lump sum” would have to be qualified to such work/quantities as the contractor is contractually obliged to do. 21.Applying the same approach, although Clause 5 describes the Citygate Agreement as a “Lump Sum Fixed Price Contract”, this has to be read together with the other provisions in Clause 5:-
22.Hence, with respect to the items set out in the Citygate Schedule, the plaintiff’s contractual obligations for entitlement to the fixed sum are limited to the agreed quantities as set out therein. In other words, the plaintiff cannot claim any additional remuneration for works carried out in the agreed items up to the agreed quantities even if it has incurred additional expenses in doing so. In my view, this is also how the term “no omission” (「不包」或「漏報價」) as used in Clause 4 should be understood. 23.However, insofar as any work of the agreed items was carried out in excess of the agreed quantities (ie Additional Works A), the plaintiff should be entitled to remuneration in addition to the contract sum. As expressly provided in Clause 5, the pricing of such additional work should be based on the unit prices in the Citygate Schedule. B6. Whether payment for variation orders is subject to PQS Approval 24.The defendant also argues that PQS Approval is a precondition to payment for any works performed outside the scope of the Citygate Agreement. With respect, I disagree. 25.In my judgment, the proper construction of the pricing mechanism for variation orders under Clause 5 is as follows:-
26.The above interpretation is consistent with the view expressed by Deputy District Judge Walker Sham in Choi Kei Limited v David Decoration Limited [2024] HKDC 1737. The case coincidentally involved a claim by another sub-sub-contractor against the same defendant with respect to the same Citygate Project. Further, the payment provision in Choi Kei Limited is identical to Clause 5 of the Citygate Agreement in the present case. 27.In Choi Kei Limited, the defendant unsuccessfully raised a very similar argument as in the present case that any payment for additional work outside the original scope of work was subject to PQS Approval. In that case, PQS Approval was not required where the parties had agreed to the final chargeable amounts (eg where a quotation had been signed by the parties or agreed at a previous site meeting) (§§39-44). 28.In any event, as a matter of fact, the defendant has failed to prove that it had actually carried out the exercise of obtaining PQS Approval:-
B7. Implied Term 29.I shall now consider the issue of the existence of the Implied Term. The plaintiff would need to rely on the Implied Term for payment in the event that there is no agreement by the parties on the unit price of the additional work (either (i) by the parties reaching an actual agreement; or (ii) in the absence of actual agreement, where the price quoted by the plaintiff was accepted by the PQS). 30.It is trite that a term may be implied into a contract if the following requirements are met:-
See: Kensland Realty Ltd v Whale View Investment Ltd & Another (2001) 4 HKCFAR 381 at §23 (Bokhary PJ), referring to BP Refinery (Westernpoint) Pty Ltd v Shire of Hastings (1978) 52 ALJR 20 at p 26. 31.In the present case, I am satisfied that the Implied Term exists[9]:-
B8. Approach to assessment – General observations 32.Before analysing each category of Additional Works and the individual items therein, I make my general observations as follows:-
B9. Additional Works A (Items 1-15) – Works exceeding original quantities 33.In light of my findings above, the plaintiff is entitled to remuneration at the contractual unit rates set out in the Citygate Schedule for the work done concerning the items set out in the Citygate Schedule in excess of the stipulated quantities. 34.I also reject the defendant’s argument that the plaintiff is not entitled to be paid for the excess quantities because conditions for variation orders in Clause 5 were not satisfied as there was no change in the architectural drawings or there was no instruction from the plaintiff to complete the excess quantities:-
35.It remains to be considered whether the plaintiff had carried out the Additional Works A in the quantities claimed in order to establish its entitlement to be paid under the Implied Term. 36.I note that the defendant has not pleaded any positive case as to the excess quantities done by the plaintiff for the work items in the Citygate Schedule[13] claimed under Additional Works A. In the Joint Table[14] submitted by both parties pursuant to my direction, the defendant’s position is that there was no excess quantity at all except Item 8 of the Joint Table, which both parties agreed to be valued at $1,200. 37.The excess quantities claimed by plaintiff are generally supported by contemporaneous measurement notes/drawings and/or the Monthly Bills dated 30 June 2019 and 30 July 2019, which recorded total and excess quantities of work completed. 38.Notably:-
39.After considering the evidence as a whole, I am satisfied that the plaintiff has carried out the works of the excess quantities claimed in Additional Works A and is entitled to the sum of $586,351.50 as claimed. B10. Additional Works B (Items 16-39) – Works outside original scope B10.1 Items 16-19, 21-22, 29-30 – Agreed items 40.For these work items, there is no disagreement between the parties as to the defendant’s liability to pay and the amounts payable under each item. 41.The total amount payable for these items are as follows:-
B10.2 Item 20 – Rework of GRG troughs sealer and painting according to item no. 2 of Site Instruction 1718/SI/HL/004 (Lot 2 L4) 42.It is not disputed that the item was carried out as additional work for which the defendant should be liable to pay. However, the applicable unit rate and the quantities of the work completed were disputed:-
43.As Handwritten Revisions were made by the defendant in the 5th and 7th Monthly Bills on this item, I am not satisfied that there was any agreement between the parties as to the quantity or the unit rate. 44.In the absence of any agreement, I am unable to assess the quantities performed based on available evidence, even if reliance is placed on the Implied Term that the plaintiff should be entitled to a reasonable sum:-
45.Accordingly, I am not satisfied that the plaintiff has discharged its burden of proof on this item. I accept the defendant’s case and assess the value to be $2,800. B10.3 Items 23-25 – Work done under Site Instruction No 1718/SI/HL/007 46.The plaintiff’s position is that these items were additional works carried out pursuant to the defendant’s request as evidenced by Site Instruction No 1718/SI/HL/007. 47.The defendant does not dispute that these works were carried out. However, the defendant’s objection is that these items were part of the original scope of work in items 2, 3 and 10 of the Citygate Schedule. 48.Items 23 to 25 are the subject of item no.2 of Site Instruction No 1718/SI/HL/007 which required ceiling work to be redone (“重做”) for the 24-hour pedestrian walkway on L1 floor of Lot 11 due to an express instruction from the Citygate employer and the PQS. In the absence of any allegation that the previous work was defective, the logical inference is that such reworking of the ceiling is additional work outside the scope of the Citygate Agreement. 49.It follows that I have to assess the reasonable value of the works performed based on the Implied Term:-
50.According, I accept the plaintiff’s case and assess the value of items 23 to 25 as follows:-
B10.4 Items 26-28 – Work done on Lot 2 L2, L3 & L4 51.While the defendant did not dispute that work was carried out for items 26 to 28 and that the plaintiff was obliged to carry out such works, it argued that they were already included in items 2, 3 and 5 of the Citygate Schedule and no additional payment should be made. 52.On a balance of probabilities, I am satisfied that items 26 to 28 were outside the original scope of work:-
53.It remains for me to assess the value of these items to the extent that such value is agreed or can be reasonably ascertained from the evidence:-
B10.5 Item 31 – Lift lobby ceiling (Lot 11 lift lobbies on G/F, L1, B1, L9) 54.It is common ground that item 31 is an additional item for which payment should be made. Parties also agree that the unit rate is $260 per m2. The only difference is the quantity of work performed. The plaintiff claimed 711 m2 whereas the defendant’s was 213 m2. 55.Based on the relevant Monthly Bill dated 30 September 2019 which was prepared according to the plaintiff’s measurements, I prefer the plaintiff’s case:-
56.Accordingly, I assess the value of item 31 to be $260 x 711 m2 = $184,860.00. B10.6 Item 32 Plastering and papering of ceiling access (Item no 1 Site Instruction No 1718/SI/HL/004 (Lot 2 L3) and Item no 1 of Site Instruction No 1718/SI/HL/005 (Lot 2 Toilets on Ls, L3, L4)) 57.It is common ground that Site Instructions were issued for these works (which were then carried out by the plaintiff) and that the applicable unit rate is $850. The defendant’s objection is that the work was covered by Items 1 and 5 of the Citygate Schedule. 58.I am of the view that item 32 is outside the original scope of work:-
59.I assess the value of item 32 as follows:-
B10.7 Item 33 - Plastering and painting of gypsum board for touch up work 60.It is not disputed that the work was carried out and no positive objection was advanced by the defendant on this item, save that the plaintiff is put to strict proof of the quantity done. 61.On the relevant Monthly Bill dated 30 September 2019, the defendant has indicated its acceptance of the sum of $84,150 claimed by the plaintiff by adding a tick next to the item. Hence, I find that the value of this item was agreed to be $84,150. B10.8 Items 34 to 39 – Ceiling access/positioning works 62.It is not disputed that these works were carried out. It is also not disputed that the applicable unit rate is $850. The defendant’s objection is that these works were included in items 1 and 5 of the Citygate Schedule. 63.I am prepared to allow the plaintiff’s claims for items 34, 38 and 39 only:-
64.For the remaining items 35 to 37, even if I were to assume in favour of the plaintiff that these items were outside the original scope, I am unable to find that the parties had agreed on the value of the items or assess the reasonable value based on available evidence:-
B10.9 Conclusion on Additional Works B 65.Based on the above, the plaintiff is entitled to a total sum of $1,455,486.50 for Additional Works B. B11. Additional Works C (Items 40-53) – Additional Labour 66.It is not seriously disputed that no additional remuneration is payable where labour is engaged for:-
67.On the other hand, based on the Implied Term found above, insofar as additional labour is engaged: (i) upon the request of the plaintiff or HHCL for overtime work (i.e. without any delay caused by the plaintiff); or (ii) for additional work which have not already been assessed or charged, the plaintiff should be entitled to payment. 68.The main objection raised by the defendant is that the overtime charges were caused by the plaintiff’s own failure to engage sufficient manpower to complete the agreed works on time. I reject this allegation:-
B11.1 Items 40 to 42 – Overtime works specifically agreed by the parties 69.The plaintiff’s claims for these items are supported by instant messages between the plaintiff and the defendant whereby the unit rate of $800 per man-day and the number of workers to be engaged for night work (開夜) were specifically agreed. This was also confirmed by Mr Stephen Chow in cross-examination. There would have been no need for the parties to specifically discuss and reach this agreement if the overtime work was included in the original scope or that the defendant was not obliged to separately pay for the additional labour costs. 70.Accordingly, I assess the value of items 40 to 42 as follows:-
B11.2 Item 43 – Work on Lot 11 Fire gate on L4 and L5 under items no 1-2 of Site Instruction No 1718/SI/HL/009 71.This item is supported by a Site Instruction. The quantity claimed for carrying out the work (32 man-days) is also supported by the plaintiff’s notes (with a daily breakdown of the work performed) the accuracy of which was not challenged. There is also no overlap with items in Additional Works A and B. Therefore, the defendant is prima facie liable to pay a reasonable sum for this item by reason of the Implied Term. 72.As already discussed above, I do not accept the plaintiff’s objection that the overtime cost was caused by the plaintiff’s failure to complete the works with sufficient manpower in time, as it is only a bare assertion without any credible supporting evidence. 73.What remains in dispute is the unit rate of $1,650 per man-day claimed by the plaintiff. As submitted by Mr Law, the fact that the defendant had crossed out the rate of $1,700 proposed by the plaintiff for this item in its request for payment and replaced it with a figure of $1,650[18] must mean that this unit rate was accepted by the defendant as the appropriate rate for this work item. 74.Accordingly, I assess this item in the sum of $52,800 (being $1,650 x 32 man-days). B11.3 Item 44 – Works under Nos 1 & 4 of Site Instruction No 1718/SIHL/002 75.These works were performed pursuant to a Site Instruction. I do not accept that this item has been settled as the description of this item does not correspond with item 9 of Monthly Bills as argued by the defendant. In fact, the description of the works in the relevant Site Instruction made it clear that it was additional work as a result of (i) temporary removal of doors by HHCL (No 1); and (ii) misalignment of glass panels[19] which required painting and plastering works to be redone (No 4). 76.Hence, I assess the value of the item as follows:-
B11.4 Item 45 – Work under Site Instruction No 1718/SI/HL/011 for Lot 11 Levels 6 & 7 77.These works were performed pursuant to a Site Instruction. I reject the defendant’s argument that this item was already settled under item 21 of the Monthly Bills as the works were performed on different levels of Lot 11. The description of the work involved is also markedly different. The Site Instruction described the work done as opening ceiling hatches for air-conditioning and reinstallation of gypsum boards whereas item 21 of the Monthly Bills referred to ceiling works. 78.Based on the unchallenged contents plaintiff’s notes, I assess the value of this item to be $23,100 (being $1,650 x 14 man-days). B11.5 Items 46, 51 and 53 – Alleged defective works 79.For these items, the defendant argued that no payment should be made because the works were carried out for rectification of defects. 80.I disagree. The allegation of defective work is a bare assertion not supported by evidence. It is also not apparent from the Site Instructions that the defects were caused by the plaintiff and hence the plaintiff should be paid for carrying out additional remedial works:-
81.Applying the unit rate of $1,650 and based on the plaintiff’s notes with breakdown of work, I assess the value of the works as follows:-
B11.6 Items 47 to 50 – Overtime costs caused by alleged failure by the plaintiff to engage sufficient manpower 82.Each of these works were performed pursuant to a Site Instruction. The only objection advanced by the defendant is that the work was caused by the plaintiff’s failure to engage sufficient manpower. For reasons canvassed above, this argument is rejected. 83.Applying the same approach I adopted for previous items above, I allow the plaintiff’s claims as the quantity claimed is supported by the plaintiff’s notes which contain particulars of quantity of labour engaged for the items at the agreed rate of $1,650 as follows:-
B11.7 Item 52 – Work for grinding concrete finishing, plastering and painting of concrete ceiling according to Site Instruction No 1718/SI/HL/023 (Lot 2 rear corridor between L1 and L2) 84.It is not disputed by the defendant that it is liable to pay for this item as additional work. The parties’ difference is in assessment of the amount payable. 85.I prefer the plaintiff’s case:-
B11.8 Conclusion on Additional Works C 86.Based on the above, the plaintiff is entitled to a total sum of $396,400 for Additional Works C. B12. The Payment Declarations 87.On each occasion before obtaining payment, the plaintiff signed a Payment Declaration prepared by the defendant which contained the following wording:-
88.Ms Mok argues that, even if the plaintiff is entitled to any further payment, by signing the Payment Declarations, the plaintiff is debarred from claiming such further sum on the following grounds:-
89.The first argument is bad as a matter of law as it is well established that an agreement to accept part payment (without more) is not binding on the creditor for lack of consideration, see: Bank of China (Hong Kong) Ltd v Cosan HCA 1600/2004 (unreported, 18 August 2006) at §§49-50 (Sakhrani J) which was upheld on appeal: CACV 331/2006 (unreported, 11 May 2007) at §§25-26 (Yuen JA). 90.As for the second argument, the defendant only pleaded the Payment Declarations in §5 of its Amended Defence as follows:-
91.I agree with Mr Law that it is not open to the defendant to raise an estoppel point as it was not adequately and specifically pleaded. 92.First, I disagree with the submission of Ms Mok that it was only necessary for the defendant to plead the Payment Declarations as a matter of fact. As required under O 18 r 8 of the Rules of the District Court (Cap 336H) (“RDC”), a defendant is required to (amongst others) plead specifically any matter which he alleges makes any claim of the opposite party not maintainable or which if not specifically pleaded, might take the opposite party by surprise. Under the commentary of the equivalent rules from the Rules of the High Court (Cap 4A) in Hong Kong Civil Procedure 2025, vol 1 at §18/8/15, estoppel is mentioned as one of the matters which need to be specifically pleaded:-
93.Second, the defendant has failed to plead any reliance on the alleged promise or representation. In any event, there is no evidence of any such reliance. 94.Hence, the second ground is untenable. 95.I also do not consider the third ground to be valid:-
96.Accordingly, the defendant is not entitled to rely on the Payment Declarations to avoid liability for payment. B13. Set-off 97.The defendant also argues that any sum awarded to the plaintiff should be subject to set off in view of the following loss and damages suffered by the defendant due to the plaintiff’s breach of the Citygate Agreement:-
98.I am not satisfied that the “set-off” has been properly pleaded, as the defendant has failed to plead in its Amended Defence the terms of the Citygate Agreement were said to be breached by the plaintiff and how such terms were breached. Even though the matter was raised in the witness statements and cross-examination, as emphasised by Ma CJ in Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663 at §21:-
99.In my view, the defendant should not be allowed to run a case of “set off” where the plea is wholly inadequate as this is unfairly prejudicial to the plaintiff. 100.In any event, in closing submissions, I requested Ms Mok to identify the provisions she relied upon and she informed me that she relied upon Clauses 6, 10, 11 and 12 for the safety violations. She was not able to point to any provision in respect of the charge for the Site office. 101.The clauses identified by Ms Mok do not assist the defendant’s case:-
102.Apart from the lack of any contractual basis for charging a sum of $20,000 for use of the site office, it also appears that the charge was not related to the plaintiff as it was levied on 12 March 2019, which was 9 days before the plaintiff was given access to the Citygate site. 103.Accordingly, I reject the “set off” defence. B14. Conclusion on the Citygate Project 104.As it is argued by the defendant that some of the work items claimed by the plaintiff were already settled[21], in my view the appropriate approach is to arrive at the net sum payable by the defendant by calculating the total sum that the plaintiff is entitled to receive (ie the contractual sum plus the sums assessed under Additional Works A, B & C) and deduct the same by the payments already made by the defendant as follows:-
C. THE JESSVILLE PROJECT C1. The Undisputed Facts 105.The defendant is a sub-contractor of the Jessville Project with the main contractor being Paul Y Construction Co Ltd (“PYCL”). The employer of the Jessville Project was Samsbury Investments Limited. The Architect was WCWP International Limited (“WCWP”). 106.On or about 9 May 2019, the plaintiff and the defendant entered into a written agreement for sub-contracting part of the painting works of the Jessville Project to the plaintiff for the contract sum of $823,000 (the “Jessville Agreement”). Similar to the Citygate Agreement, a schedule setting out the scope of the plaintiff’s work with applicable rates and quantities was annexed to the Jessville Agreement (the “Jessville Schedule”). The works were to be carried out at three locations, namely:-
107.The plaintiff was given access to the Jessville worksite on or about 10 May 2019. 108.Between July 2019 to July 2020, a total payment of $586,387.50 was made by the defendant to the plaintiff for the Jessville Agreement. C2. The Parties’ Respective Cases 109.The plaintiff’s case is that it is entitled to (i) the outstanding portion of the contract sum; and (ii) payment for additional works carried out by oral instructions or Site Instructions to the plaintiff (“Additional Works D”) as follows:-
110.As to its entitlement to be paid for Additional Works D, the plaintiff relies upon Clause 5 of the Jessville Agreement (which is identical to Clause 5 of the Citygate Agreement) and the same Implied Term as formulated for the Citygate Agreement. 111.The defendant’s case is that the plaintiff is not entitled to any additional sum for the following reasons:-
C3. Jessville Agreement – The Issues 112.Similar to the approach taken for the Citygate Agreement, I shall consider the main issues concerning the Jessville Project in the following order:-
C4. Whether the Jessville Agreement provides for the “pay when paid” condition precedent? 113.As a starting point, my analysis of the construction of Clause 5 and the Implied Term of the Citygate Agreement would also apply to the Jessville Agreement. In other words, the plaintiff is entitled to be paid the agreed value for additional works performed outside the original scope of work as defined in the Jessville Schedule. In the absence of any agreement, the plaintiff is entitled to a reasonable sum. 114.Hence, what remains to be considered is the effect of Clause 7 which contains the following wording:-
115.In my judgment, Clause 7 does not lend support to the “pay when paid” principle as contended by the defendant. 116.In Sze Fung Engineering Limited v Trevi Construction Limited [2025] HKCA 278, the Court of Appeal considered whether the following payment term (at §18) gave rise to a similar condition precedent as now argued by the defendant:-
117.In giving the judgment of the court, Anthony Chan J (as he then was) held that it was not a “pay when paid” provision. The learned judge emphasised that:-
118.In the present case, the use of the term “back to back” (背對背方式) is even more ambiguous than the term as used in Sze Fung Engineering as it is subject to a number of qualifications in Clause 7:-
119.In the absence of clear and unambiguous wording, the defendant is also unable to point to any matter in the relevant factual matrix or context which would support the existence of the condition precedent as contended. In fact, the alleged “back to back” payment and “pay when paid” arrangements were not mentioned in the defendant’s witness statements at all. 120.In any event, as pointed out by Mr Law, the defendant has not pleaded that it had not received the relevant payment from PYCL. 121.Accordingly, I reject the defendant’s argument that payment under the Jessville Agreement is subject to the “pay when paid” principle. C5. Additional Works D (Items 54-66) 122.My general observations on the assessment of quantum for the Citygate Project (see §32 above) also largely apply to the assessment for the Jessville Project. Again, I place greater weight on the contemporaneous documentation which I regard as more reliable than the evidence from the witnesses. C5.1 Items 61, 63, 64 - Undisputed items both as to liability and value 123.The parties are in agreement that these items are payable in the following amounts:-
C5.2 Items 60 and 66 – Items where applicable unit rates were in dispute 124.For items 60 and 66, the defendant did not dispute liability or the quantities but argued that a lower unit rate should be applied. 125.For item 60, According to the Scott Schedule, the defendant accepts the plaintiff’s unit rate of $230 per m2 as the starting point but argued that a 11.4% discount should be applied. In the absence of any credible explanation as to why such a discount is justified, I prefer the plaintiff’s case and assess the value of the item to be $1,219.00 ($230 x 5.3 m2). 126.For item 66, the plaintiff relied upon the Monthly Bill which showed its proposed unit rate of $3,500. However, this rate was not found in the Jessville Schedule and there was otherwise no supporting evidence or explanation from the plaintiff’s witnesses as to how this rate was arrived at. The work was performed pursuant to Site Instruction 202062401 which was not adduced in evidence. Given the lack of evidence, the plaintiff has failed to discharge its burden of proof and I assess the value of the item based on the defendant’s proposed rate to be $3,200 ($3,200 x 1 unit). C5.3 Items 54-59, 62 and 65 – Work done on G/F and 1/F of the Jessville Manor 127.For these items, the defendant argued that they were included in the original scope of work in the Jessville Schedule and no extra payment should be made. 128.For items 54-56, the defendant claimed that these works were included under items S3/1 and S3/9 of the Jessville Schedule which concerned work done at the Clubhouse of the Jessville Tower. Yet, items 54 to 56 were in fact related to works performed on G/F and 1/F of the Jessville Manor as reflected in the layout plans and calculations in support of the plaintiff’s claim[23]. 129.By claiming that the items fall within specific items in the Jessville Schedule, the defendant has also effectively conceded that the agreed unit rates in the corresponding items in the Jessville Schedule would be reasonable for assessing these works. The quantities claimed by the plaintiff are also equalled to or exceeded the measurements made by the plaintiff which are supported by contemporaneous records[24]. Hence, I accept the plaintiff’s claim on items 54 to 56 as follows:-
130.For items 57 to 59, defendant alleged that these works were included under items S6/26 164, 166 & 167 of the Jessville Schedule and therefore no further payment should be made. I disagree:-
131.On the assessment of the value of items 57 to 59:-
132.Hence, I assess the value of items 57 to 59 as follows:-
133.For item 62, I am not satisfied on the available evidence that the plaintiff has proven that the item (which concerned plastering and painting on the ceiling of the corridor on G/F and 1/F of the Jessville Manor) is outside the original scope of work[29], which refers to ceiling works within the Jessville Manor. Hence, no sum is awarded. 134.For item 65 which relates to painting of plastering and roof windows, in the absence of supporting evidence for the unit rate and the quantity claimed, I do not award any sum for this claim even if it amounted to additional work outside the scope of the Jessville Schedule. C5.4 Conclusion of assessment of Additional Works D 135.Based on the above, the plaintiff is entitled to a total sum of $149,355.00 for Additional Works D. C6. Set-off based on defective work quality 136.It remains to be considered whether the defendant is entitled to any set-off against the plaintiff’s claim on account of defective work quality. 137.According to the defendant’s case, it has incurred a loss of $305,500 for poor workmanship and defective work and it hence entitled to set off this sum against the plaintiff’s claim. 138.Apart from the witnesses’ evidence, I have also considered the relevant documentary evidence including the following:-
139.I reject the set-off defence for the following reasons:-
C7. Conclusion on Jessville Project 140.Based on the analysis above, the plaintiff is entitled to the following sum for the Jessville Project:-
D. DISPOSITION 141.By reason of the above, I order that judgment be entered for the plaintiff in the sum of HK$2,493,771.10[30], with interest at the HSBC prime rate + 1% from the date of the writ (ie 12 July 2021) up to the date of judgment, and at judgment rate thereafter. 142.As the plaintiff has prevailed on the vast majority of its claims and taking a broad brush approach, I make an order nisi that the defendant do pay the plaintiff’s costs of the action (including any costs reserved) with certificate for counsel, to be taxed if not agreed. 143.Finally, it remains for me to express my gratitude to Mr Law and Ms Mok, especially for their diligence in preparing the Joint Table which is of great assistance to the court in the assessment of quantum.
Mr Paul Law, instructed by Raymond Lam & Associates, for the plaintiff Ms Tina Mok, instructed by Fan Wong & Tso, for the defendant [1] Amended Statement of Claim, §6. [2] For completeness, it is noted that, although there are references (eg at Clauses 3 and 4) to the need to comply with the terms of the main contract with HHCL (“Main Contract”) and the master programme of the Citygate Agreement, the Main Contract has never been disclosed in these proceedings and the defendant had not put forward any explanation as to how this would assist its case. There is no evidence that the scope of the relevant work in the Main Contract is any different from that set out in the Citygate Schedule. [3] Most of the units are measured in square metres. [4] Where there is no actual agreement of the unit price or the [5] See §5 of the Amended Defence which claims that the plaintiff’s works were assessed by the defendant and the PQS to be no more than HK$3,510,434.40. [6] Executive Director (行政董事) of the defendant. [7] At §2(3). This contradicts the defendant’s pleaded case in its Amended Defence at §5, see footnote 4 above. [8] An assistant project director (助理項目董事) of the defendant. [9] In light of my finding on the existence of the Implied Term, it is not necessary to consider the plaintiff’s alternative claim of unjust enrichment. [10] Shareholder and director of the plaintiff. [11] The plaintiff’s person in charge of the Citygate Project. [12] ie item 1 of the Citygate Schedule. [13] ie Items 5, 8, 9 and 10 of the Citygate Schedule which are also referable to Items 1-15 of the Scott Schedule. [14] In addition to the Scott Schedule submitted by the parties pursuant to the order by Registrar M Soong dated 8 March 2023, a Joint Table was submitted by the parties setting out their respective positions and documents relied upon. Both the Joint Table and the Scott Schedule share the same item numbers. Unless otherwise stated, a reference to an item number in this judgment shall a reference be to the item number in the Joint Table/Scott Schedule. [15] Although the plaintiff has adduced an expert report on quantum, the expert did not attend trial to confirm the accuracy of the contents of his report. It was agreed at trial that the report was inadmissible. [16] Unlike other items of the Monthly Bills where the defendant would revise the quantities claimed to indicate its disagreement. [17] Appearing as items 25 to 27 of the said Monthly Bill. [18] As admitted by Mr Lee in cross-examination. [19] There is no suggestion that this was caused by the plaintiff’s fault. [20] English translation: “Party A (ie the defendant) did not owe any costs of materials or wages to Party B (ie the plaintiff). All funds were received without any sum in arrears. Party B declare and confirm that it has received from Party A the payment for the above-mentoned project and today [Date] accepted payment in the sum of $[Amount] (see annexed page for details), such payment being the amount payable for the above-mentioend project with no default or non-payment after submission of bills”. [21] See items 5, 16-22, 29-31, 44-45, and 52 of the Joint Table. [22] English translation: “Party A [ie the defendant] shall make back to back payment in accordance with the main contract, either based on the monthly progress of works or pursuant to any other quotation duly signed by Party A …. Before any payment for the work is released, Party B [ie the defendant] must declare and submit payroll records for all workers engaged under this subcontract to demonstrate that no wage arrears exist. When applying for interim payment, Party B shall produce the material acceptance certificates, delivery notes for construction materials, workers’ payroll records, company invoices and receipts, together with a detailed list of completed work items, all of which shall be submitted to Party A for approval.” [23] They were described as “coloured working plan and summary of work done on G/F and 1/F of the Jessville House” in the trial bundles. These plans also correspond to the ceiling plans of G/F and 1/F of the Jessville Manor at [F/1163-1164] of the trial bundles. [24] The defendant has not been able to point out any measurements errors in those records. [25] Item 21 of the Monthly Bills. [26] Referred to as “燈槽斜面” in item 22 of the Monthly Bills. [27] Item 23 of the Monthly Bills. [28] For item 59, the plaintiff agreed that the rate of $230 per m2 should apply. [29] Items S6/26 166 & 167. [30] Being the total sum it is entitled to under the Citygate Project and the Jessville Project. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment