Lau Sung Cheung Trading As Artisan Electrical Engineering Co v. Pacificplan Interiors Ltd
Read the full judgment text of DCCJ 4239/2022 on BabelCite. This District Court judgment was delivered on 9 July 2026.
1. This action concerns the disputes between a contractor (the Defendant) and its sub-contractor (the Plaintiff) over some sub-contracted works including payments.
Cites 18 cases
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DCCJ 4239/2022 [2026] HKDC 1155 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 4239 OF 2022 -------------------------------
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------------------------------- JUDGMENT ------------------------------- I. INTRODUCTION 1.This action concerns the disputes between a contractor (the Defendant) and its sub-contractor (the Plaintiff) over some sub-contracted works including payments. II. PLAINTIFF’S CLAIM 2.The Plaintiff Mr Lau Sung Cheung (“Mr Lau”) was a sole proprietor acting as a contractor for interior electrical works in the trading name of Artisan Electrical Engineering Company (“Artisan”). The Defendant was a company acting as a contractor for interior design and renovation works. 3.In March to April 2021, the Defendant engaged the Plaintiff as contractor for the interior electrical works at 5/F, 1 Chun Yat Street, Innopark, Tseung Kwan O (“5/F Project”). The Plaintiff issued 2 quotations for the works for the 5/F Project (collectively “5/F Project Quotations”), namely:-
which were confirmed by Mr 鄭河山 (“Shane Cheng”) as a representative for the Defendant. As a result, the Plaintiff and the Defendant reached an agreement that the Plaintiff shall be paid a total sum of HK$1,303,100 for the works for the 5/F Project. The 5/F Project Quotations further set out the timetable for payment, namely (a) 40% before commencement of works as deposit; (b) 30% when half of the works has been finished; (c) 20% when the rest of the works has been finished; and (d) 10% two weeks after the completion of works. The Plaintiff finished the works for the 5/F Project in March to April 2021. 4.Between November 2021 and April 2022, the Defendant engaged the Plaintiff as sub-contractor for the interior electrical works at Gammon Technology Park, Chun Yat Street (“Gammon Project G/F Sub-Contract”). The Plaintiff issued a quotation for such works for the costs of HK$1,902,520 (“12/3/2021 Quotation”), which was signed and accepted by Shane Cheng as representative for the Defendant in September 2021. The 12/3/2021 Quotation set out the timetable for payment, namely (a) 40% before commencement of works as deposit; (b) 30% when half of the works has been finished; (c) 20% when the rest of the works has been finished; and (d) 10% two weeks after the completion of works. 5.Moreover, between September 2021 and February 2022 (presumably), the Plaintiff as replacement worker (代工) carried out works for the Gammon Project G/F Sub-Contract. The Plaintiff issued 2 quotations for such works, namely (a) quotation dated September 2021 for the costs of HK$93,000 at the construction site (“September 2021 Quotation”), and (b) quotation dated 13 February 2022 for the costs of HK$193,600 at the Technology Park (“13/2/2022 Quotation”), both of which were accepted by Shane Cheng as representative for the Defendant. 6.The total costs of the works undertaken by the Plaintiff for the Gammon Project G/F Sub-Contract as agreed with the Defendant was therefore HK$2,189,120. 7.The total costs agreed for the 5/F Project and the Gammon Project G/F Sub-Contract was HK$3,492,220. Between March 2021 and April 2022, the Defendant paid the Plaintiff various sums at irregular intervals as payments for the costs of the 5/F Project and the Gammon Project G/F Sub-Contract, and the total amount paid was HK$2,437,000, and the outstanding amount owed by the Defendant to the Plaintiff was HK$1,055,220 (“Outstanding Payment”). 8.On 23 May 2022 and 12 July 2022, the Plaintiff went to the Defendant’s office for meeting, during which he demanded the settlement of the Outstanding Payment, but the Defendant did not pay and/or refused to pay the whole or any part of the Outstanding Payment. The Plaintiff proceeded to instruct his solicitors to issue a demand letter dated 26 August 2022 (“Demand Letter”), but Mr Jacky Lam (“Lam”) as representative for the Defendant replied the Plaintiff by letter and WhatsApp, denying that the Defendant was liable to pay the Plaintiff any sum. 9.The Plaintiff therefore sues the Defendant for the Outstanding Payment of HK$1,055,220 and interests. III. DEFENDANT’S DEFENCE AND COUNTERCLAIM 10.In about March or April 2021, the Plaintiff was engaged by the Defendant as its sub-contractor for carrying out and completing the interior electrical works of the 5/F Project. Paul Y Construction Company Limited was the Main Contractor who directly engaged the Defendant as its lower-tier contractor. 11.Upon the Defendant’s invitation, through its then Project Manager Shane Cheng, the Plaintiff provided the 8/3/2021 Quotation and the 6/4/2021 Quotation for the 5/F Project, and the Defendant, through its representative, signed the same as acknowledgement, but it is denied that the contents of the said quotations were adopted as agreed and confirmed as alleged. The said quotations were estimated sums only, which were subject to actual measurement and assessment of the works done (實量實度), but not on any lump sum or fixed price basis. 12.In respect of the 8/3/2021 Quotation, the whole payment term as proposed thereunder was crossed out by the Defendant (through its Quantity Surveyor Lam) and superseded by adding the handwritten special conditions stipulating實量實度，連工包料，中期糧款支九留一, meaning (a) subject to the actual remeasurement and assessment, (b) the rates are inclusive of material costs and labour costs and (c) the progress payment is subject to 10% retention (collectively “the Special Conditions”). The Defendant contends that the Special Conditions were commonly used terms in the trade and the construction industry. In addition, the Defendant (through Lam) added the discount factor by adding the handwritten words 折扣 79900, and so the original estimated sum totalling HK$779,900 became HK$700,000, and the Defendant through Mr Lam also wrote “$700,000” and stamped its company chop thereon. The revised 8/3/2021 Quotation with the Special Conditions and discounted price had been duly given on site by Shane Cheng and Mr Eric Cheng (“Eric Cheng”, the Defendant’s Assistant Project Manager) to the Plaintiff, by which the Plaintiff confirmed with the contents thereof orally and subsequently by commencement of works in about March 2021. The Defendant further avers that it was the parties’ agreement and/or mutual understanding and/or trade practice and common usage in the industry, and based on parties’ previous cooperation experience that the Special Conditions would also be applicable to any further and/or additional and variation works (if any) arising from and/or relating to the 5/F Project as an express or implied term, and the same basis shall be equally applicable and binding upon any future works for the 5/F Project. 13.The 6/4/2021 Quotation was provided by the Plaintiff at the Defendant’s invitation, through Shane Cheng, for additional and variation works of the 5/F Project (“VO Works”). The parties well knew that by reason of agreement and/or mutual understanding and/or trade practice and common usage in the industry and based on parties’ previous cooperation experience, the same terms of the 5/F Project including the Special Conditions would apply. Though putting down his signature, Shane Cheng expressly informed the Plaintiff that his role was only to confirm the items and quantities of the VO Works that had been done (as demonstrated by the ticks on “quantities” for individual items of VO Works), and he made clear, and the Plaintiff understood, that (i) the actual measurements of the VO Works done and (ii) the unit rate(s) must still be subject to the assessment and approval by the Defendant’s Quantity Surveyor based on market rate(s). 14.The measurement and assessment in relation to those works under the 8/3/2021 Quotation was HK$700,000, and the VO Works under the 6/4/2021 Quotation was HK$372,720, and the total sum was HK$1,072,720. Retention of sums is no longer required for the final account. The Defendant also denies the alleged timetable for payment in respect of the 5/F Project as pleaded by the Plaintiff. 15.In relation to the Gammon Project G/F Sub-Contract, on or about 20 April 2021, the Defendant and its sub-contractor Kin Wah Contracting Limited (“Kin Wah”) entered into a contract for the E&M electricity works for the construction of 6-storey production block on a 2-storey podium for tenants’ future M&E installation space, landscape deck, shared warehouse, logistics and other facilities, basement plantrooms and carparks, footbridge for linking to adjacent building, external and landscaping works for development of IE 2.0 Project C Advanced Manufacturing Centre, and the Seawater District Cooling System at Tseung Kwan O Industrial Estate, New Territories for the Employer Hong Kong Science and Technology Parks Corporation, while Gammon Construction Limited (“Gammon”) was the Main Contractor and the Defendant was the sub-contractor for interior works. As Kin Wah did not have sufficient labourers to carry out the sub-contracted works and the progress was unsatisfactorily slow, in or around July or August 2021, the Defendant invited the Plaintiff to help carry out the interior electricity and LED lighting system works for the G/F of the Gammon Project (which had not commenced at all). Upon a series of discussion and a site inspection, the parties formed an oral agreement, ie the Gammon Project G/F Sub-Contract, with the following terms:-
16.The Gammon Project G/F Sub-Contract also contained the following implied terms:-
17.In the premises, save it is admitted that the 12/3/2021 Quotation, the September 2021 Quotation and the 13/2/2022 Quotation were received, and that the signature of the Defendant’s representative was for the purpose of acknowledgement only, it is specifically denied that the contents of the said quotations were agreed and confirmed as alleged. In particular:-
18.Hence, the Defendant denies that there was any consent or agreement that the Plaintiff was entitled to receive the sum of HK$2,189,120 under the 5/F Project and the Gammon Project G/F Sub-Contract. The Defendant admits that a total amount of HK$2,437,000 was paid to the Plaintiff on 13 occasions, but those payments were made upfront and on interim basis to provide incentive to the Plaintiff to work harder, while pending and subject to the Defendant’s remeasurement and assessment, and the adjustment of the final account with the Plaintiff, and also without prejudice to the Defendant’s counterclaim. 19.The Defendant alleges that the Plaintiff acted in breach of the Gammon Project G/F Sub-Contract. Since in about late March 2022, the Plaintiff only deployed about 3 to 5 labourers at the site when the works were only about 75% to 80% complete, and so the works fell a lot behind schedule while defects had also been found. Since in about early April 2022, the Plaintiff had failed and/or refused to carry out any works at the site. Despite the Defendant’s repeated requests and/or demands through Eric Cheng since early April 2022, the Plaintiff had still failed and/or refused to continue the works at the site. On about 20 April 2022, after having received the interim payments in the sum of HK$159,000 and HK$141,000 respectively, the Plaintiff in his telephone conversation with Eric Cheng of the Defendant made it clear that he had already abandoned the site completely and would refuse to carry out any works, thereby leaving the defective works and outstanding works behind, despite Eric Cheng’s specific request for the Plaintiff to resume work. On about 27 April 2022, Eric Cheng by WhatsApp message communicated with the Plaintiff’s representative (nicknamed 肥仔) but the latter confirmed that the Plaintiff had abandoned the G/F site and would not return to resume work. 20.The Plaintiff’s initial suspension of works, followed by complete abandonment of the site and clear decision not to resume any works amounted to repudiatory breach of the Gammon Project G/F Sub-Contract and/or evinced his clear intention not to be bound by the said sub-contract. In about late March 2022, the Defendant started to engage replacement sub-contractors, namely Kin Wah and World Luck Engineering (HK) Limited (“World Luck”). Since the Plaintiff’s complete abandonment of the site on about 20 April 2022 or alternatively 27 April 2022, the Defendant was entitled to and did accept the Plaintiff’s repudiatory breach by engaging the said sub-contractors to carry out and complete the outstanding works and remedy the defects on daywork basis. Alternatively, the Defendant has accepted the Plaintiff’s wrongful repudiation by filing the Defence and Counterclaim. 21.The Plaintiff’s defective works and/or works of poor quality included:-
22.By reason of the Plaintiff’s abandonment of the site, thereby leaving behind the defective works and outstanding works, the Plaintiff had not completed the works in 12/3/2021 Quotation, the September 2021 Quotation or the 13/2/2022 Quotation. The Defendant’s measurement and assessment of the actual works done by the Plaintiff under the Gammon Project G/F Sub-Contract is HK$987,550.00, and the contra charges against the Plaintiff is HK$627,362.00, plus 15% administration charge at HK$94,104.30 in accordance with clause 32 of the Kin Wah Written Sub-Contract, totalling HK$721,466.30. The Plaintiff’s entitlement is therefore HK$266,083.70. The Defendant is entitled to withhold 10%, ie HK$26,608.37, and thus the Plaintiff is only entitled to HK$239,475.33 for the Gammon Project G/F Sub-Contract. 23.The Defendant counterclaims for HK$1,124,804.67, being the total amount payable under the 5/F Project and the Gammon Project G/F Sub-Contract (ie HK$2,060,270.00), minus the total interim payments made (HK$2,437,000.00), minus contra charges with 15% administration charge (ie HK$721,466.30), and minus 10% retention (ie HK$26,608.37). IV. PLAINTIFF’S REPLY AND DEFENCE TO COUNTERCLAIM 24.The Plaintiff admits that the 8/3/2021 Quotation, submitted at the invitation of Shane Cheng, set out the scope of the interior electrical works of the 5/F Project including the suggested unit rates and estimated quantities and the estimated price of HK$779,900. Nonetheless, the payment term was crossed out and the Special Conditions were added without the consent of the Plaintiff. The Defendant applied its company chop only upon the terms as printed on the said quotation and the discounted price of HK$700,000. In fact, the Plaintiff never agreed with the Special Conditions, whether orally or by commencement of works in about March 2021. 25.The Plaintiff admits that the 6/4/2021 Quotation, submitted at the invitation of Shane Cheng, set out the scope of the variation and additional works for the 5/F Project. The Special Conditions did not apply to the VO Works. The Plaintiff denies that payments under the 5/F Project was subject to actual measurement and assessment of the works done (實量實度). 26.The Plaintiff admits that the scope of the Gammon Project G/F Sub-Contract was the interior electricity and LED lighting system works on G/F, which had been orally agreed by the parties. The Plaintiff further admits that the works on G/F had not been completed at all because the Defendant did not pay costs according to oral agreement but instead engaged other contractors without informing the Plaintiff. Also, before the contract, the Defendant gave a copy of Kin Wah’s quotation dated 3 August 2021 to the Plaintiff, but it was agreed that only the 1-page quotation from Kin Wah dated 20 August 2021 would be relied upon by the Plaintiff to collect costs from the Defendant. Moreover, the Defendant never informed the Plaintiff that the works had to be completed before 1 April 2022. 27.Turning to the Gammon Project G/F Sub-Contract, before the commencement of works in November 2021, Shane Cheng had represented the Defendant to sign and accept the 12/3/2021 Quotation in terms of the unit prices and total prices. The Plaintiff refutes the allegation regarding slow work progress and denies that the Defendant could refuse to pay based on the Kin Wah Written Sub-Contract. The Plaintiff denies actual measurement and assessment of the works done (實量實度). 28.The Plaintiff further denies having received any request, demand and/or warning regarding the works done for the 5/F Project or the Gammon Project G/F Sub-Contract. At the end of March 2022, the Plaintiff informed the Defendant’s representative that (a) the Defendant was in arrears of the costs to the Plaintiff; (b) if the Defendant continued to fail its payment, the Plaintiff would cease the works; and (c) if the Defendant paid, the Plaintiff would continue to finish the Gammon Project. In 2021 when the Plaintiff commenced the works, there were around 10 labourers, and after Chinese New Year in Hong Kong, since the works were almost completed the Plaintiff employed 3 to 5 labourers, but still there was no delay caused to the work progress. The Plaintiff avers that almost 95% of the works had been completed, and the remaining 5% works was outstanding since the Defendant had not provided the necessary lightings (燈片). In early April 2022, the Plaintiff suspended works due to the Defendant’s continuous failure to pay, and in a few days’ time the Defendant engaged third parties for the works without informing the Plaintiff. Eventually the Plaintiff stopped the works for the Gammon Project G/F Sub-Contract. 29.The Plaintiff denies that there were defective or outstanding works. Neither was there any notice, request, demand, warning or complaint regarding defects. To the contrary, the Plaintiff had used its best endeavours to complete the works including the installation of cables, lightings and ceilings. 30.The Plaintiff also denies that payment of costs under the projects was based on interim basis. Also, the Plaintiff denies owing any duty to provide sufficient information or substantiation to the Defendant for measurement or assessment, and in any event the Plaintiff invited the Defendant’s Quantity Surveyor for site inspection but that invitation was declined. Further, the Plaintiff had never received any reminder or warning regarding slow progress or poor quality of works, and therefore the Plaintiff did not have any or any sufficient time to provide information or substantiation to the Defendant or Gammon for consideration. V. ISSUES 31.Pursuant to the Order made by DDJ Anthony Chow at the Pre-Trial Review hearing on 21 October 2025, parties were required to lodge an agreed chronology and a joint and agreed List of Issues on or before 16 December 2025. 32.Regrettably, parties failed to comply with the said order, and went on to lodge their respective chronology and list of issues pursuant to another paragraph of the said order. In his written opening submissions, the Plaintiff submitted that a draft chronology and a draft list of issues were sent to the Defendant on 9 December 2025 but the Defendant had no intention to agree on the said drafts. In its written opening submissions, the Defendant did not seek to explain parties’ failure to reach an agreement on the contents of the said documents. 33.Whilst it is trite that triable issues are distilled from the pleadings, a joint and agreed list of issues definitely assists the Court in ascertaining the case and position of the parties at trial, including matters which are undisputed or indisputable and matters which are disputed and require determination. Clearly, the parties failed to comply with the said order. Neither did the parties attempt to explain the reasons for such failure. Indeed, the said order further provided that if any party is in breach of or unable to comply with any of the directions, that party shall report to the Court as soon as practical with detailed reasons. Obviously, the parties failed to do so. 34.Having considered the pleadings and the respective lists of issues of the parties, this Court has distilled the following triable issues:-
VI. TRIAL 35.The trial took place on 6 to 9 and 12 January 2026. (A) Factual Witnesses 36.The Plaintiff had two factual witnesses, namely the Plaintiff Lau Sung Cheung himself and Mr Yu Kam Cheung (“Yu”). 37.The Plaintiff (PW1) established and began operating Artisan in 2014. He has had over 30 years of experience in electrical and mechanical engineering, and has been a registered electrical engineer (licensed engineering: AO) with the Electrical and Mechanical Services Department. 38.Yu (PW2) was a foreman of the Plaintiff. Nonetheless, during his examination-in-chief on the second day of the trial, Yu failed to adopt his only witness statement filed on 31 October 2023. As a result, Mr Eric Chau Hin Chung, Counsel for the Plaintiff, took instructions and informed the Court that the Plaintiff would not call Yu as his factual witness. As Yu had already taken his oath, this Court adjourned the matter for parties to consider how to proceed with the matter. On the third day of trial, Mr Chau submitted, and Mr Billy N P Ma, Counsel for the Defendant, accepted, that Yu should simply complete his testimony by not adopting his witness statement and not being subject to cross-examination. In effect, Yu’s witness statement did not become part of the evidence. This Court formally made an order that Yu’s witness statement including the annexures thereto be expunged from the trial bundle and shall not be admissible as evidence. 39.In his oral closing submissions, Mr Chau submitted that the Defendant could still have cross-examined Yu despite no adoption of his witness statement as evidence-in-chief, citing Hong Kong Civil Procedure 2026, Volume 1, rubric 38/1/5. In my view, this is not a fair criticism. It was clear to parties that the Plaintiff had decided not to call Yu as a factual witness, but since he had already taken his oath the parties agreed to ‘complete’ his testimony by going through the motion. Plainly, Mr Ma agreed not to cross-examine Yu only because of such understanding. 40.The Defendant called two factual witnesses, namely Mr Lam Ming Ki Jacky (ie Lam) and Eric Cheng. 41.Lam (DW1) was the Defendant’s Deputy Director. He has had over 20 years of experience as quantity surveyor in interior design, architecture A & A works, BD minor works, renovation and refurbishment in Hong Kong. Lam had worked for the Defendant for about 11 years before his resignation 1 year ago. 42.Eric Cheng (DW2), the younger brother of Shane Cheng, joined the Defendant in July 2021 as Assistant Project Manager for the Gammon Project. In about May 2023, he resigned. (B) Expert Witness 43.Turning to expert evidence, HHJ G Chow, by her Order by Consent made on 21 August 2024, granted leave to the parties to adduce expert evidence on trade practice and quantum in relation to the following issues:-
44.However, only the Defendant called Mr Leung Siu Hong Ken (“Mr Leung”) as expert witness, while the Plaintiff did not call any expert witness. 45.Mr Leung (DW3) has had 45 years of experience as quantity surveyor and construction cost consultant in private practice. He has testified in the High Court and the District Court as expert. VII. ASSESSMENT OF FACTUAL EVIDENCE AND CREDIBILITY 46.The principles applicable to fact-finding and assessment of credibility are well-established and not disputed by the parties. 47.The Plaintiff relied on Joint and Several Trustees of the Property of Yeung Wing Sing v Yeung Wing Sing [2021] HKCFI 2018, where Recorder Yvonne Cheng SC (as she then was) adopted (at paragraph 26) the approach set out by DHCJ Eugene Fung SC (as he then was) in Hui Cheung Fai v Daiwa Development Limited HCA 1734/2009, unreported, 8 April 2014) at paragraphs 77-83: -
48.The Plaintiff also relied on Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corporation Ltd [2007] 3 HKLRD 439 at 480J-481H, where Stock JA (as he then was) stated that comparison with contemporaneous documentation is always an aid to reliability of oral testimony, unless there is reason to believe that the documentation is contrived or materially incomplete, and the truth can best be tested by reference to contemporaneous documentation where it exists, or to its absence where one would expect it to have been created, as well as to inherent probabilities, having regard to all the facts that are known. 49.The Defendant cited Lee Fu Wing v Yan Paul Po Ting [2009] 5 HKLRD 513 in which DHCJ Au (as he then was) set out (at paragraph 55) the following considerations for assessment of credibility:-
50.It is also trite that people lie for many reasons, and a lie does not necessarily render the entirety of the witness’ evidence to be rejected, and the actual case may remain good irrespective of the lie. 51.As apparent from my findings below, the evidence, and therefore the credibility, of the Plaintiff and Eric Cheng is important for the resolution of the issues of the agreed oral terms of the 5/F Project and the Gammon Project G/F Sub-Contract, whether the Plaintiff failed or refused to carry on and eventually abandoned the works of the Gammon Project G/F Sub-Contract, and whether the Defendant had requested the Plaintiff to return to work. 52.Lam admitted under cross-examination that his main duty was to handle documents in the office and he only went to the site if necessary, for example he went to the site of the 5/F Project before commencement and after completion of works. Matters which Lam had firsthand knowledge were mainly his consideration of the various quotations received from the Plaintiff and the assessment of the actual works done by the Defendant’s Quantity Surveyor including his demand to the Plaintiff for contract drawings for the purpose of assessment. He did not have personal knowledge regarding Shane Cheng’s oral representations to the Plaintiff when the terms of the 2 projects were discussed, or the terms orally agreed by the Plaintiff, or whether Shane Cheng and/or Eric Cheng gave a copy of the Kin Wah Written Sub-Contract to the Plaintiff, or what happened on site, or whether the Plaintiff informed Eric Cheng unequivocally of his abandonment of the works of the Gammon Project G/F Sub-Contract. Putting aside his hearsay evidence about what Shane Cheng had told the Plaintiff to which I generally give no weight for reasons not attributable to him as set out below, despite the Plaintiff’s heavy criticisms on the truthfulness and real purpose of the Quantity Surveyor’s assessment of the 12/3/2021 Quotation, I find Lam’s evidence credible, reliable and straightforward. 53.In relation to Eric Cheng, despite the Plaintiff’s cross-examination including whether the Kin Wah Written Sub-Contract was provided to the Plaintiff and whether there were outstanding works for the Gammon Project G/F Sub-Contract in late March or early April 2022, I find him to be a truthful, credible and reliable witness. 54.Turning to the Plaintiff, I reject his evidence including the following aspects:-
55.In the premises, I find the Plaintiff incredible and unreliable generally. Unless otherwise expressly stated, insofar as there are discrepancies between the Plaintiff’s evidence on one part and Eric Cheng’s evidence and Lam’s evidence on the other part, I prefer the latter. VIII. ISSUES 1, 2 AND 4 – AGREED TERMS FOR THE 5/F PROJECT (A) Issue 1 56.Issue 1 concerns the terms agreed for the original works of the 5/F Project, and the relevant document is the 8/3/2021 Quotation. 57.The only version of the 8/3/2021 Quotation adduced at trial is annexed to and marked as “LMK-1” to Lam’s Witness Statement. The said quotation was issued in the letterhead of Artisan, and addressed to the Defendant with Shane Cheng as the contact person. The said quotation set out the items of works, quantities, unit prices and total prices. The grand total price was HK$779,900. The printed payment terms were that 40% shall be paid as deposit before commencement of works, 30% shall be paid upon the completion of half of the works, 20% shall be paid upon completion of the works, and the final 10% shall be paid two weeks after the completion of works. Nonetheless, the said payment terms were crossed out in handwriting, and the terms “實量實度，連工包料” and “中期款款支9留1” can be seen next to them instead, again in handwriting. Further, handwritten words of “折扣 (79900)” and “$700,000” can be seen below the grand total price of HK$779,000. The quotation bore the company chop of the Defendant but no signature of any person. 58.The Plaintiff testified in-chief that around the end of February or the beginning of March 2021, Shane Cheng invited him to undertake the 5/F Project by Artisan. Shane Cheng sent him the relevant drawings for the 5/F Project via WhatsApp, informing him of the projects and works to be carried out. Shane Cheng also informed the Plaintiff that the 5/F Project had to be completed within approximately 1 month from the time Artisan officially took site possession. 59.The Plaintiff prepared the 8/3/2021 Quotation based on the drawings provided by Shane Cheng and sent the same to Shane Cheng via email. Before the commencement of the 5/F Project, Shane Cheng notified the Plaintiff that the Defendant had agreed to the contents of the 8/3/2021 Quotation. 60.Lam testified in-chief that upon the Defendant's invitation, through its then Project Manager Shane Cheng, the Plaintiff provided the 8/3/2021 Quotation, setting out the scope of the interior electricity works to be carried out, the unit rates and the estimated quantities, with the estimated sum totalling HK$779,900. Upon receipt of the same, Lam crossed out the entire printed payment terms（付款細節）and wrote down the special conditions and terms “實量實度，連工包料” (subject to the actual remeasurement and assessment, and the rates are inclusive of material costs and labour costs) and “中期糧款支九留一” (the interim progress payment is subject to 10% retention) (ie the Special Conditions). Lam further testified that the Special Conditions were clear and very commonly used terms in the trade / industry. 61.Lam also testified in-chief that he added in his handwriting the discount factor “折扣79900”. After deducting the discount factor of HK$79,900, the original estimated sum of HK$779,900 became HK$700,000, and so he wrote down HK$700,000 and stamped the Defendant’s company chop. 62.In my view, for the following reasons, it is more probable than not that the parties agreed upon the 8/3/2021 Quotation with the addition of the Special Conditions and the deletion of the printed payment terms. 63.First, apart from the assertion in his witness statement that Shane Cheng notified him of the Defendant’s agreement to the contents of the 8/3/2021 Quotation, the Plaintiff neither adduced any objective or documentary evidence showing the Defendant’s said agreement, nor testified as to the details including Shane Cheng’s means (such as by email, WhatsApp, telephone or face-to-face conversation) of communicating the Defendant’s said agreement. 64.Secondly, I do not accept the Plaintiff’s evidence under cross-examination that he received back the 8/3/2021 Quotation from the Defendant, in March or April 2021, with the handwritten words of “$700,000” only but without the words “折扣” or “支9留1”, whilst the marked up version of the 8/3/2021 Quotation with the words “折扣” and “支9留1” was only received on 12 July 2022. The Plaintiff failed to adduce the alleged 8/3/2021 Quotation with the handwritten words of “$700,000” only received from the Defendant, or any evidence showing that the 8/3/2021 Quotation with the Special Conditions was only received on 12 July 2022. 65.Thirdly, while Lam accepted under cross-examination that Eric Cheng, who joined the Defendant only in July 2021, could not have given the 8/3/2021 Quotation with Special Conditions to the Plaintiff before the commencement of the works, it defies logic and common sense to suggest that the 8/3/2021 Quotation with the Special Conditions, which would be crucial to the payment terms, was sent by the Defendant to the Plaintiff only after the completion of the 5/F Project. As pointed out by Lam, the Plaintiff never raised any objections regarding the Special Conditions in the 8/3/2021 Quotation. Taking into account inherent probabilities and improbabilities, I hold the view that the parties had already agreed upon the inclusion of the Special Conditions in the 8/3/2021 Quotation before the commencement of the works. 66.Fourthly, I also accept Lam’s testimony under cross-examination that actual remeasurement and reassessment was fairer for both sides because sometimes some works could not be done and at other times not all works were done, and the discounted amount of HK$700,000 was just an estimate which would be used for adjustment according to the actual works done in the future. Whilst Lam testified as a factual witness, he was a quantity surveyor and I find this part of his testimony reasonable. 67.While making the said finding, I do not accept that the addition of the Special Conditions and the deletion of the printed payment terms were based on trade practice in the construction industry or the parties’ previous cooperation experience. In examination-in-chief, the Plaintiff testified that prior to the projects in question, Artisan was engaged by the Defendant in March 2019 to carry out electrical engineering works at the Hong Kong Science Park. The costs of Artisan’s works for that project was relatively low, with each payment not exceeding HK$100,000. Under cross-examination, Lam admitted not having seen the contracts of the previous projects involving the Plaintiff, and such contracts were not adduced as evidence at this trial. There was no evidence adduced on the trade practice in the construction industry suggesting that the Special Conditions were commonly used while the printed payment terms were not. Moreover, under cross-examination, Lam could only name the Hilton Garden Inn as the only previous project in which the Defendant paid the Plaintiff only 90% and withheld 10% (支九留一). In my judgment, such evidence is not sufficient to establish a general consensus or “notorious, certain and reasonable” custom or usage between the Plaintiff and the Defendant for the inclusion of the Special Conditions and the exclusion of the printed payment terms for all their projects – Chitty on Contracts (35th Edition), paragraphs 17-036 to 17-037; Henley Engineers Limited v Jebsen & Fessen Technology(s) PTE Limited [2024] HKDC 1578, per DDJ Patrick Siu, at paragraph 63. 68.The Plaintiff submitted that by reason of the Defendant’s failure to call Shane Cheng, adverse inference should be drawn against the Defendant insofar as the alleged oral agreement reached between the Plaintiff and the Defendant under the Defendant’s case for both the 5/F Project and the Gammon Project G/F Sub-Contract. The Plaintiff relied on Telings International Hong Kong Ltd v John Ho & Others CACV 10/2010, unreported, 22 October 2010, at paragraph 79; Pacific Electric Wire & Cable Co Ltd v Texan Management Ltd CACV 90-91, 93-96/2012, unreported 17 September 2013, at paragraphs 106 and 107, which enunciated the following general principles:-
69.The Plaintiff’s case is that the 8/3/2021 Quotation was confirmed by Shane Cheng, whilst the Defendant’s case is that the said quotation was simply signed by Shane Cheng as acknowledgment and the same with the Special Conditions was given to the Plaintiff by Shane Cheng and Eric Cheng on site and orally confirmed by the Plaintiff upon commencement of works in about March 2021. It can therefore be seen that Shane Cheng’s testimony would be relevant to the question whether the parties agreed upon the 8/3/2021 Quotation with or without modifications by the Special Conditions. 70.Under cross-examination, Lam, who had left his employment with the Defendant for around 1 year at the time of this trial, testified that he tried to contact Shane Cheng to testify for the Defendant, though he could not remember when it was, but he believed that that was through Eric Cheng, but Shane Cheng was doing a new job and might not attend this trial for testimony. 71.Eric Cheng testified, under cross-examination, that he contacted Shane Cheng the year before regarding being a witness at this trial, but he had been busy after promotion and could not come. When asked if the Defendant had thought of calling Shane Cheng by issuing a writ of subpoena, Eric Cheng testified that he did not know as he had already left the Defendant around May 2023. 72.In my view, the explanation for Shane Cheng’s absence is not satisfactory. While it may be true that Shane Cheng had been busy with a new job, this Court does not accept that, on the available evidence, it was practically impossible or very difficult for him to be excused from work for a period of time to attend this trial to testify. Moreover, no explanation was given by the Defendant as to why Shane Cheng could not be called to testify by a writ of subpoena. 73.Having said that, I am aware of the following principles of adverse inference stated in the authorities cited by the Defendant:-
74.In my judgment, for reasons given in paragraphs 63 to 65 above, I find the Plaintiff’s own evidence with reference to the 8/3/2021 Quotation full of contradictions and incapable of being believed, and therefore refuse to draw adverse inference against the Defendant’s non-calling of Shane Cheng insofar as the 8/3/2021 Quotation is concerned. (B) Issue 2 75.Issue 2 concerns the terms agreed for the VO Works of the 5/F Project, and the relevant document is the 6/4/2021 Quotation. 76.Both the Plaintiff and the Defendant relied on the copy of the 6/4/2021 Quotation annexed to and marked as “LMK-2” to Lam’s Witness Statement. This quotation, again addressed to the Defendant with Shane Cheng as the contact person, set out about 45 items of works called “VO 數”, quantities, unit prices and total prices for the 5/F Project. There were some markings in handwriting on the said quotation – notably for 35 items, there was a tick on its quantity. The grand total price of the works was HK$603,100, and the printed payment terms were that 40% shall be paid as deposit before commencement of works, 30% shall be paid upon the completion of half of the works, 20% shall be paid upon completion of the works, and the final 10% shall be paid two weeks after the completion of works. It is not disputed by the parties that the said quotation bore the signature of Shane Cheng. 77.The Plaintiff testified in-chief that between March and April 2021, Artisan carried out the works for the 5/F Project, and he personally participated in the process. During the works of the 5/F Project, the Defendant had requested Artisan to perform works outside the scope of the already quoted items, ie the VO Works. Therefore, as requested by the Defendant, the Plaintiff prepared the 6/4/2021 Quotation for the 5/F Project, and sent the same to Shane Cheng via email. The 5/F Project carried on during the period when the Plaintiff prepared and sent the 6/4/2021 Quotation. Shane Cheng also confirmed to the Plaintiff shortly after the said quotation that the Defendant had accepted the quotation. Artisan then completed all the works listed in the quotations for the 5/F Project. 78.Under cross-examination, the Plaintiff testified that Shane Cheng stated that the VO Works was urgent and therefore, 1 day after the request, he made the 6/4/2021 Quotation and went ahead with the works upon Shane Cheng’s oral confirmation of the quotation. The quotation was eventually signed by Shane Cheng (but without markings like ticks) a few days after the commencement of the VO Works. The Plaintiff at first testified that Shane Cheng had only signed the quotation once only to confirm the same for commencement of works, but later he testified that he received another version with Shane Cheng’s signature and marked up with ticks on July 12. 79.I notice that by the Demand Letter, it was stated that the Plaintiff only presented the 6/4/2021 Quotation on 6 April 2021 upon completion of the works at the 5/F Project. The contents of the letter were diametrically opposite to the Plaintiff’s evidence under cross-examination that 1 day after the request, he made the 6/4/2021 Quotation and went ahead with the works upon Shane Cheng’s oral confirmation of the quotation, as well as his further evidence subsequently given also under cross-examination that he had received the 6/4/2021 Quotation marked with ticks only on 12 July 2022. In the premises, I reject the Plaintiff’s evidence on the agreed oral terms in respect of the 6/4/2021 Quotation. 80.Lam testified in-chief that for the only purpose of confirming the items and quantities of VO Works done, Shane Cheng put ticks on the quantities for the individual items. Under cross-examination, Lam testified that even if Shane Cheng agreed with the quantities the Defendant would still ask the sub-contractor to supply drawings to show how the various sums were calculated. Upon the Defendant’s receipt of the Demand Letter, Lam personally asked the Plaintiff to submit drawings but the Plaintiff failed to do so, and therefore no final account could be prepared. Lam admitted that he forgot to say in his witness statement that drawings were required for preparing the final account. 81.The Plaintiff relied on the Defendant’s letter dated 5 September 2022 drafted by Lam as a reply to the Demand Letter, and submitted that the real reason for the Defendant’s non-payment of HK$603,100 for the works under the 6/4/2021 Quotation was stated to be that the Defendant was still awaiting the approval of the costs for the VO Works, while the Defendant had still not received any payment so as to pay the Plaintiff on back-to-back basis. Lam testified under cross-examination that his answer given in the letter was not comprehensive enough, and what he meant was that he could assess the Plaintiff’s works with reference to the Employer’s assessment. In my judgment, given the unchallenged evidence that the Defendant had made various payments in respect of the 5/F Project to the Plaintiff, the Defendant simply did not use non-payment by the Employer as the reason for not paying the Plaintiff. Moreover, if the VO Works was agreed to be carried out as a lump sum contract for HK$603,100 and which was duly completed, then there should not have been room for the Employer or the Defendant to assess, and the Defendant could and should have paid the entire sum to the Plaintiff without waiting for assessment by the Employer. Lam’s WhatsApp message dated 6 September 2022 also supports his testimony that he had made the request for contract drawings from the Plaintiff no later than 6 September 2022. In the premises, I accept Lam’s evidence and explanation. 82.In my judgment, as the words “VO 數” suggested, the subject matter of the 6/4/2021 Quotation was the VO Works of the 5/F Project. Indeed, parties were in agreement that the 6/4/2021 Quotation was about the VO Works. As the VO Works were additional works and variation works of the original works of the 5/F Project, I accept that in the absence of evidence to the contrary, it was the parties’ contemplation that the same payment terms were applicable to both the 8/3/2021 Quotation and the 6/4/2021 Quotation. In other words, just like the 8/3/2021 Quotation, likewise the Special Conditions were added to and the printed payment terms were deleted from the 6/4/2021 Quotation, even though these changes were not expressly made on the said quotation. The reasons set out above for my acceptance of Lam’s evidence regarding the necessity of remeasurement and reassessment apply equally here. The prices for the various items of VO Works done were therefore subject to remeasurement and reassessment by the Defendant after completion of the works. 83.Further, based on the nature of the Special Conditions and Lam’s testimony in-chief and under cross-examination, I find as a fact that Shane Cheng signed the quotation to acknowledge the same subject to the addition of the Special Conditions and the deletion of the printed payment terms for the commencement of the VO Works, and upon completion of the works Shane Cheng checked the items of VO Works completed and put ticks on the quantities for the only purpose of confirming the completion of the works only, whilst the total prices of such works were subject to remeasurement and reassessment by the Defendant. 84.In making my findings on the inclusion of the Special Conditions, the exclusion of the printed payment terms and the ticks marked by Shane Cheng, I have disregarded Lam’s hearsay evidence that Shane Cheng had expressly informed the Plaintiff that despite his signing of the 6/4/2021 Quotation, his role was only to confirm the items and quantities of the VO Works that had been done, and he made it clear to the Defendant that all the actual measurements of the VO Works done, and the unit rates must still be subject to the assessment and approval of the Defendant’s Quantity Surveyor based on the market rates. As ruled above, the explanation for Shane Cheng’s absence from this trial is unsatisfactory, and I give no weight to the said hearsay evidence. That said, no adverse inference is drawn for the absence of Shane Cheng on this issue, given my rejection of the Plaintiff’s evidence on the agreed oral terms in respect of the 6/4/2021 Quotation which is contradicted by the contents of the Demand Letter. (C) Issue 4 85.Issue 4 concerns the payment terms for the 5/F Project original works and the VO Works. The Plaintiff pleaded in paragraph 6 of the Amended Statement of Claim that the payment terms were (a) 40% before commencement of works as deposit; (b) 30% when half of the works has been finished; (c) 20% when the rest of the works has been finished; and (d) 10% two weeks after the completion of works. Given my rulings above on the exclusion of the printed payment terms from the 8/3/2021 Quotation and the 6/4/2021 Quotation, I reject the Plaintiff’s case. (D) Summary of Rulings on Issues 1, 2 and 4 86.My rulings on Issues 1, 2 and 4 are as follows:-
IX. ISSUES 5, 6, 7, 8 AND 10 – AGREED TERMS FOR GAMMON PROJECT G/F SUB-CONTRACT 87.Broadly speaking, Issues 5, 6, 7, 8 and 10 concern the terms agreed for the date of completion, payment and scope of works for the Gammon Project G/F Sub-Contract. (A) Issue 5 88.Issue 5 relates to the existence or not of terms for time of completion, applicability of the Kin Wah Written Sub-Contract, relevance of actual remeasurement and reassessment of the works done and the applicability of back-to-back condition on payment. 89.Lam testified in-chief that on or about 20 April 2021, a written sub-contract was executed between the Defendant and its sub-contractor namely Kin Wah for the E&M electricity works of the project known as the construction of 6-storey production block on a 2-storey podium for tenants’ future M&E installation space, landscape deck, shared warehouse, logistics and other facilities, basement plantrooms and carparks, footbridge for linking to adjacent building, external and landscaping works for development of IE 2.0 Project C Advanced Manufacturing Centre, and the Seawater District Cooling System at Tseung Kwan O Industrial Estate, New Territories, ie the Gammon Project. In this Gammon Project, Hong Kong Science and Technology Parks Corporation was the employer, whereas Gammon was the main contractor, and the Defendant was Gammon's lower-tier contractor (for the interior works). 90.Lam testified in-chief that however, at the relevant times, Kin Wah did not have sufficient labourers to carry out the sub-contracted works and the progress was slow. As a result, the Defendant through Shane Cheng invited the Plaintiff to help and to carry out the interior electricity and LED lighting system works for the G/F of this Gammon Project (and at the relevant times, no works had been done or started for the G/F yet), and upon a series of discussion and a site inspection of the Plaintiff, the Plaintiff and the Defendant through Shane Cheng reached an oral agreement in respect this Gammon Project in the following terms and conditions (ie the Gammon Project G/F Sub-Contract) that:-
91.The Plaintiff testified in-chief that between July and August 2021, the Defendant mentioned to the Plaintiff that it desired Artisan to undertake the Gammon Project G/F Sub-Contract, and the Plaintiff also visited the site for inspection. At that time, the Defendant had not yet settled the full payment for the 5/F Project, but the Defendant had made part payments, so the Plaintiff still trusted the Defendant to a certain extent. Under cross-examination, the Plaintiff admitted that the Defendant approached him for the Gammon Project G/F Sub-Contract works because there were insufficient labourers. 92.The Plaintiff further testified in-chief that around September 2021, Shane Cheng provided the Plaintiff with copies of the relevant drawings for the Gammon Project G/F Sub-Contract and indicated that the project was urgent. In addition, Shane Cheng provided the Plaintiff with a 1-page quotation from Kin Wah, and both parties agreed that Artisan would also charge in the same way as that Kin Wah’s quotation. The Plaintiff prepared the 12/3/2021 Quotation of HK$1,902,520 based on the drawings provided by Shane Cheng (the date in the Plaintiff’s handwriting was a mistake, and the correct month should be September), and delivered the same to Shane Cheng. The Plaintiff had never received the Kin Wah Written Sub-Contract from the Defendant, let alone agreeing to the terms of the same. When cross-examined which particular page of the Kin Wah quotation he had received, the Plaintiff answered that he had received the said quotation by WhatsApp only and did not know which particular page it was. 93.Under cross-examination, the Plaintiff testified that Shane Cheng had only mentioned that the project was urgent but not the date of return of possession. When cross-examined that the Defendant had told him the date of completion being 1 April 2022, the Plaintiff denied and testified that the date of completion had only been informed by Eric Cheng at the end of March 2022. 94.In my judgment, bearing in mind the common evidence of the Plaintiff and Lam that the Defendant had already formed a sub-contract with Kin Wah for the G/F works of the Gammon Project, and that the Defendant had to invite the Plaintiff to help carry out such sub-contracted works due to insufficient labourers and slow progress, it was inherently probable, and also logical and reasonable, for the Defendant and the Plaintiff to agree to adopt the same terms and conditions including the unit rates in the Kin Wah Written Sub-Contract. I prefer the evidence of Eric Cheng under cross-examination that he provided the 3-page quotation of Kin Wah as well as the Kin Wah Written Sub-Contract (without contract drawings) to the Plaintiff for reference for quoting the price of the Gammon Project G/F Sub-Contract. 95.I further accept that the payment method under the Gammon Project Sub-Contract was pursuant to page 6 of the Kin Wah Written Sub-Contract, namely that upon completion there would be actual remeasurement and reassessment based on the actual works done; progress payment(s) would be paid within 6 to 8 weeks of submission of bills; 90% progress payment(s) would be paid with 10% retention for 12 months; payment would be made on back-to-back basis. As Gammon, the Defendant and the Plaintiff were the Main Contractor, the Sub-Contractor and the Sub-Sub-Contractor respectively, I find it that payments shall be made to the Plaintiff from the Defendant after its actual receipt of the corresponding payments from the Main Contractor under a back-to-back basis, and as such the remeasurement and the reassessment of the actual works done would be made by the Employer and/or Gammon. In fact, the Plaintiff agreed under cross-examination that the prices of the Gammon Project G/F Sub-Contract had to be assessed. Further, Lam’s evidence on the 5/F Project that actual remeasurement and reassessment were fairer for both sides applies equally to the Gammon Project G/F Sub-Contract. 96.Moreover, based on the September 2021 Quotation which stated the daywork rate of HK$1,500, I find it as a fact that the daywork rate of HK$1,500 was adopted in the Gammon Project G/F Sub-Contract. 97.However, there is no evidence that the Plaintiff and the Defendant agreed, at the formation of the Gammon Project G/F Sub-Contract, the date of completion of the works shall be 1 April 2022. 98.Apart from express terms, I agree with the Defendant’s submission that the following terms were implied in the Gammon Project G/F Sub-Contract:-
(B) Issues 6, 7 and 8 99.Issues 6, 7 and 8 concern the 3 quotations under the Gammon Project G/F Sub-Contract, namely the 12/3/2021 Quotation, the September 2021 Quotation and the 13/2/2022 Quotation. 100.Both the Plaintiff and the Defendant relied on the copy of the 12/3/2021 Quotation annexed to and marked as “LMK-7” to Lam’s Witness Statement. This quotation, again addressed to the Defendant with Shane Cheng as the contact person, set out 27 items of works and their quantities, unit prices and total prices. There were some markings in handwriting on the said quotation, including ticks, cross-outs and figures in replacement for some of the quantities, unit prices and total prices. The grand total price of the works was HK$1,902,520, and the printed payment terms were that 40% shall be paid as deposit before commencement of works, 30% shall be paid upon the completion of half of the works, 20% shall be paid upon completion of the works, and the final 10% shall be paid two weeks after the completion of works. It is not disputed by the parties that the said quotation bore the signature of Shane Cheng. 101.The September 2021 Quotation contained a table of attendance record of 5 labourers for replacement works from 1 to 30 September 2021 for the Gammon Project G/F Sub-Contract at the rate of $1,500 per manday. The grand total was 62 mandays in the total price of HK$193,000. The said quotation was apparently signed by Shane Cheng, which is not disputed by the parties. 102.Both the Plaintiff and the Defendant relied on the copy of the 13/2/2022 Quotation annexed to and marked as “LMK-7” to Lam’s Witness Statement. This quotation bore 2 items, namely replacement work for the testing of the lightings and nightshift overtime works, with their corresponding quantities in mandays, unit prices and total prices. The grand total price was HK$193,600. The quantities were ticked in handwriting. Again, it is not disputed by the parties that the said quotation bore the signature of Shane Cheng. 103.The Plaintiff testified in-chief that Shane Cheng stated that the Gammon Project G/F Sub-Contract was urgent. Therefore, during September 2021, Artisan had already carried out some replacement works (代工) as requested by the Defendant. Regarding the Gammon Project G/F Sub-Contract, the Plaintiff appointed Yu as the foreman and transferred the copies of the drawings provided by Shane Cheng to Yu. Yu reported to the Plaintiff the quantity of replacement works completed by Artisan during September 2021, and the Plaintiff also prepared and issued the September 2021 Quotation for the replacement works to the Defendant accordingly. 104.The Plaintiff testified in-chief that from approximately November 2021 to April 2022, Artisan carried out the Gammon Project G/F Sub-Contract according to the Defendant's requirements. Before Artisan officially commenced the project in November 2021, Shane Cheng had confirmed with him that the Defendant accepted the 12/3/2021 Quotation. Under cross-examination, the Plaintiff testified that the words in handwriting were only added after completion of works, which he received in July 2022. The Plaintiff also testified that there was a copy of the 12/3/2021 Quotation signed by Shane Cheng but without handwritten words, and he admitted that the same had not been produced in these proceedings. 105.The Plaintiff further testified that during the Gammon Project G/F Sub-Contract, Yu conveyed to him the Defendant's further request for Artisan to perform works related to night-shift lighting tests which were beyond the already quoted items. Therefore, the Plaintiff further prepared the 13/2/2022 Quotations relating to the replacement works requested by the Defendant, and personally delivered a copy to Shane Cheng. Shane Cheng signed and confirmed the content upon receiving the copy. 106.I have already ruled above that upon completion of the works, there would be actual remeasurement and reassessment by the Employer and/or Gammon based on the actual works done. The 12/3/2021 Quotation, the September 2021 Quotation and the 13/2/2022 Quotation, all being quotations issued pursuant to the Gammon Project G/F Sub-Contract, must be subject to the same terms including the remeasurement and reassessment of the actual works done. In fact, the Plaintiff agreed under cross-examination that the prices of the Gammon Project G/F Sub-Contract had to be assessed and the amount HK$1,625,200 in his application for payment for the works under the 12/3/2021 Quotation was only an estimate. Further, when cross-examined whether the invoice dated 11 January 2022 in the sum of HK$1,137,640 (HK$1,625,200 x 70%) was issued for payment of the Gammon Project G/F Sub-Contract, the Plaintiff initially answered affirmatively but later retracted the answer and said that the figure of HK$1,625,200 was wrong. Indeed, the Plaintiff used the same figure of HK$1,625,200 when claiming the completion of 85% works in around February or March 2022. If the Gammon Project G/F Sub-Contract was an agreed lump sum contract, the Plaintiff would have sought the price of HK$1,902,520 under the 12/3/2021 Quotation, let alone agreeing to use the amount HK$1,625,200 as the basis for remeasurement and reassessment. 107.In making the findings in the preceding paragraph, having considered all the circumstances especially the unsatisfactory explanation for Shane Cheng’s absence at this trial, I give no weight to Lam’s hearsay evidence that for each of the 12/3/2021 Quotation, the September 2021 Quotation and the 13/2/2022 Quotation, Shane Cheng had expressly informed the Plaintiff that his role was only to confirm the types and quantities of works that had been done, and all the actual measurements must be subject to the assessment and approval based on the agreed rate by the Quantity Surveyor of the Defendant. Neither do I find it necessary to draw any adverse inference against Shane Cheng in order to reach the aforesaid findings. Suffice it to say that I reject the Plaintiff’s evidence that the Defendant or Shane Cheng had ever agreed with the contents of the 3 quotations as the terms of the sub-contract. 108.Regarding the testing works, Lam considered that the alleged testing should be part of the sub-contract, and no additional dayworks should be allowed, and also, the alleged additional nightworks were due to the Plaintiff’s own slow progress and default, and the Defendant should not be liable to pay for the same. However, when cross-examined that Mr Leung, the quantum expert for the Defendant, stated in Item No 133 of the Schedule of Rates No 3 to the Kin Wah Written Sub-Contract that testing and commissioning of the light system was expressly excluded, Lam answered that he would accept the expert’s view. 109.In my judgment, given my ruling above that the terms and conditions of the Kin Wah Written Sub-Contract shall be adopted, Item No 133 of the Schedule of Rates No 3 was part of the terms of the Gammon Project G/F Sub-Contract. In other words, the alleged testing works was excluded from the original scope of the sub-contract, and the Plaintiff was entitled to submit costs of the works involved. (C) Issue 10 110.Moving on to Issue 10, the Plaintiff pleads in paragraph 9 of the Amended Statement of Claim that the payment terms agreed by the parties for the Gammon Project G/F Sub-Contract were: (a) 40% before commencement of works as deposit; (b) 30% when half of the works has been finished; (c) 20% when the rest of the works has been finished; and (d) 10% two weeks after the completion of works. I have found, on Issue 5 above, that the payment terms were pursuant to page 6 of the Kin Wah Written Sub-Contract, namely that upon completion there would be actual remeasurement and reassessment based on the actual works done; progress payment(s) would be paid within 6 to 8 weeks of submission of bills; 90% progress payment(s) would be paid with 10% retention for 12 months; payment would be made on back-to-back basis. In the premises, the Plaintiff’s pleaded case on payment terms in respect of the Gammon Project G/F Sub-Contract must be rejected. (D) Summary of Rulings on Issues 5, 6, 7, 8 and 10 111.In summary, my findings on Issues 5, 6, 7, 8 and 10 are as follows:-
X. ISSUES 11 AND 12 – REPUDIATORY BREACH BY PLAINTIFF AND ACCEPTED BY THE DEFENDANT? (A) Issue 11 112.Issue 11 concerns whether the Plaintiff committed repudiatory breaches of the Gammon Project G/F Sub-Contract. 113.Eric Cheng testified in-chief that since in about late March 2022, the Plaintiff only deployed about 3 to 5 labourers at the G/F site. Since in about early April 2022, the Plaintiff had failed and/or refused to carry out any works at G/F (and no labourer had attended the G/F site at all). 114.The Plaintiff did not seriously dispute the deployment of 3 to 5 labourers only on site in late March 2022 or the suspension of works in early April 2022, but attributed the same to the almost completion of the works and the Defendant’s failure to settle payments. 115.First, in relation to the outstanding works in about late March 2022, the Plaintiff testified in-chief that around March 2022, Artisan was informed that (1) the Gammon Technology Park in Tseung Kwan O needed to hold a ribbon-cutting ceremony on 1 April 2022; (2) the works for the Gammon Project G/F Sub-Contract had to be suspended for several days in early April; and (3) Artisan needed to install all installable components (including wirings, lightings, and ceilings) before the ribbon-cutting ceremony. Artisan was therefore required to work overtime (including night shifts) continuously in mid-to-late March 2022. 116.Under cross-examination, Eric Cheng testified that the Plaintiff installed and then uninstalled the sample lightings (燈片), which were subsequently lost and could not be found. The Plaintiff should have installed the remaining lightings first and went on to do testing, and the Plaintiff would not have known about the damage to the lightings without testing. Even though the lightings were insufficient the Plaintiff still had a lot of works to do including the installation of LED light strips (燈帶), spotlights (射燈) and recessed downlights (筒燈). Eric Cheng further testified under cross-examination that due to insufficient lightings the Defendant wished to install aluminium panels first so that it would look good at the ribbon-cutting ceremony on 1 April 2022, but the Plaintiff was not responsible for installing aluminium panels. During re-examination, Eric Cheng testified that if the Defendant could complete the works before the ceremony, it was only necessary to uninstall those lightings which were not working. For those aluminium parts that had to be uninstalled because of the absence of lightings, that was the responsibility of the Defendant. During re-examination, Eric Cheng testified that the transformers (火牛) were installed at hidden places such as above the ceiling, and it was therefore necessary to find someone to retrieve them. As the Plaintiff did not finish his works, the Defendant had to find someone to come and finish his works. 117.Under cross-examination, the Plaintiff also admitted that lightings in those parts of the G/F of the Gammon Project highlighted in orange colour in the G/F Entrance Lobby Reflected Ceiling Plan at Annexure B to the Amended Defence and Counterclaim [A1/96], which were substantial, had not been installed by the time the Plaintiff was, in his case, not allowed to work further at the site in April 2022. 118.In light of the aforesaid evidence, I do not accept the Plaintiff’s case that the project had almost reached completion after Chinese New Year in 2022. There was no evidence suggesting that no lightings would arrive from early April 2022 onwards, and in any event Eric Cheng’s evidence that the Plaintiff still had a lot of works to do including the installation of LED light strips, spotlights and recessed downlights was not challenged. 119.Secondly, the Plaintiff testified in-chief that during the Gammon Project G/F Sub-Contract, the Defendant failed to settle the project fees according to the quotations mentioned above. The Plaintiff repeatedly raised the issue of outstanding payments with Shane Cheng, urging him to remind the Defendant to settle the payments. The Plaintiff was later informed by Yu that Shane Cheng's supervisor, John Tang (full Chinese name unknown), promised to “make the payment when the lights are on.” Under cross-examination, around late March 2022, the Plaintiff called the Defendant’s surveyor Mr Mo Chan (full Chinese name unknown) to demand payment. The Plaintiff reiterated that Artisan would continue the project only if the Defendant settled the project payments. At that time, Mr Mo Chan replied that “(Artisan) will not receive any money in the future.” 120.The Defendant relied on Keating on Construction Contracts (11th Edition), paragraph 6-140 to submit that there is no general right at common law to suspend work if payment is wrongly withheld, except where there is a breach of condition or fundamental breach of contract. The Plaintiff cited Creatiles Building Materials Co Ltd v To’s Universe Construction Co Ltd [2003] 2 HKLRD 309, at 310B-C which, with respect, is consistent with Keating on Construction Contracts (supra). 121.In my judgment, it was wrong for the Plaintiff to suggest there being persistent non-settlement of interim bills by the Defendant. I accept Lam’s evidence that upon the Plaintiff’s requests, the Defendant had paid the Plaintiff HK$140,000 on 22 March 2022, HK$159,000 on 20 April 2022 and HK$141,000 on 20 April 2022 based on the assessment of the Defendant’s Quantity Surveyor, namely Mr Mo Chan and Lam himself. The said 3 payments are corroborated by:-
122.In the premises, I reject the Plaintiff’s evidence under cross-examination that he had received 2 payments from the Defendant in March 2022 instead of April 2022, and paragraph 15A(b) of his Amended Reply and Defence to Counterclaim, verified by Statement of Truth, was wrong. 123.Moreover, by reason of the internal records including payment requisition forms, interim assessments of the said quotations in the 5/F Project and the Gammon Project G/F Sub-Contract and cheque copies in exhibit LMK-18 to Lam’s witness statement, I find it as a fact that from about March 2021 to April 2022, the Defendant had made the following interim progress payments to the Plaintiff totalling HK$2,437,000 in respect of the 5/F Project and the Gammon Project G/F Sub-Contract, despite the Plaintiff’s non-provision of proper and sufficient information for assessment and therefore many assessments were said to be “on account” and subject to adjustment in the final account:-
124.Moreover, when cross-examined on the Demand Letter, the Plaintiff accepted that it was confirmed by the parties that insofar as the 5/F Project was concerned, the payment shall be made within 1 year, and that the Defendant could pay the Plaintiff nothing before 15 April 2022. 125.Hence, this Court rejects the Plaintiff’s explanation, ie Defendant’s failure to settle payments, for the deployment of insufficient labourers in late March 2022 and the suspension of works in early April 2022 for the Gammon Project G/F Sub-Contract. 126.Lam testified in-chief that since in about early April 2022, the Plaintiff had failed and/or refused to carry out any works at G/F (and no labourer had attended the G/F site at all). Eric Cheng further testified in-chief that despite the Defendant’s repeated requests and/or demands (through Eric Cheng by calling him directly) since early April 2022, the Plaintiff had still failed and/or refused to continue the work at the G/F site. Worse still, after the Defendant had paid the substantial interim payments to the Plaintiff on about 20 April 2022 (as required by the Plaintiff), the Plaintiff did not resume work immediately. No one had attended the G/F site on about 20 April 2022, and Eric Cheng therefore called the Plaintiff to demand him to resume his work duties, and to send more workers to work on site to speed up the site progress, as the Defendant had been urged and warned by the Main Contractor. Despite that, over such telephone conversation, the Plaintiff said clearly to Eric Cheng that he would not return to the G/F site nor resume work at all. 127.On the other hand, the Plaintiff testified in-chief that a few days after Artisan’s suspension of works in early April 2022, Yu informed the Plaintiff that when he and the workers went to the Gammon Project G/F Sub-Contract site to resume work, they discovered that the Defendant had already hired other workers to continue the Gammon Project G/F Sub-Contract and had placed Artisan’s materials (such as construction tools) aside on the site. The Plaintiff had never before learnt or heard from any source that the Defendant would hire other companies and/or workers to continue the Gammon Project G/F Sub-Contract. By mid to late April 2022, seeing that the Defendant’s hiring of another company for the project was a done deal, the Plaintiff arranged for the removal of Artisan’s materials from the Gammon project site. Under cross-examination, the Plaintiff testified that he went to the site in April 2022 but admitted that this was not stated in his witness statement. He said he went to the Defendant’s company to collect the cheques but no one demanded him to resume the works. He further testified that it was the workmen of the Defendant and Kin Wah who continued with the works. 128.Having considered all the evidence including documentary evidence, as well as inherent probabilities and improbabilities, I prefer Eric Cheng’s evidence to the Plaintiff’s evidence for the following reasons. 129.First, Eric Cheng’s evidence of repeated requests and demands to the Plaintiff to resume work was corroborated by his WhatsApp messages on 27 April 2022 with the Plaintiff’s representative (with the nickname 肥仔, whom the Plaintiff agreed to be his worker 劉敏聰), who used to attend the G/F site and carry out the works for the Plaintiff. When asked whether the Plaintiff would resume work and whether he had seen the Plaintiff, the said representative said that the Plaintiff became ill-tempered when being pressed by the Defendant to resume the works, and said that he had no money while he was in debt to the Defendant. The said representative also said that he could not see the Plaintiff and did not know what he was up to, and the Plaintiff would lose all his entitlements by leaving behind the project with the Defendant. The said representative also said that the Plaintiff should not have carried out works on other small projects while leaving the project with the Defendant behind. 130.Secondly, despite the Plaintiff’s deployment of only 3 to 5 labourers on site and hence the works had fallen behind schedule, and despite some defects having been found in the Plaintiff’s works, but given my finding above that the Defendant made interim payments to the Plaintiff in the sums of HK$140,000 on 22 March 2022, HK$159,000 on 20 April 2022 and HK$141,000 on 20 April 2022, no inference can be drawn that the relationship between the Plaintiff and the Defendant had deteriorated to such an extent that the Defendant would replace the Plaintiff by other workers for the Gammon Project G/F Sub-Contract in early April 2022. I accept Eric Cheng’s evidence that under the tight schedule since late March 2022, the Defendant started to engage other sub-contractors to speed up the progress and to make good the defects, but it was only after the Plaintiff’s repudiation on 20 April 2022 that the Defendant decided to replace the Plaintiff by the other sub-contractors. 131.Thirdly, I reject the Plaintiff’s evidence-in-chief that prior to his visit to the Defendant’s office regarding outstanding payments on 23 May 2022, Shane Cheng had personally inspected the Gammon Project G/F Sub-Contract site and confirmed to the Plaintiff that Artisan had completed all items in the quotation related to the Gammon project. As stated above, under cross-examination, the Plaintiff admitted that lightings in those parts of the G/F of the Gammon Project highlighted in orange colour in the G/F Entrance Lobby Reflected Ceiling Plan had not been installed. Moreover, when cross-examined that Shane Cheng left his employment with the Defendant in April 2022, the Plaintiff testified that Shane Cheng had returned to check the progress of the project, including that time on 23 May 2022, but he eventually agreed that Shane Cheng had no authority to confirm the completion of the works. He confirmed that the works at the Gammon Project G/F Sub-Contract had not been completed because the lightings were not available. 132.In light of the said evidence and the inherent probabilities and improbabilities, I find it that the Plaintiff had failed or refused to carry out any works at G/F since in about early April 2022 because he (or Artisan) was engaged in carrying out works for other smaller projects. I also make the finding that the Plaintiff had made it clear that he had already abandoned the site completely and would refuse to carry out any work at G/F, by virtue of his expression of intention in the telephone conversation with Eric Cheng on or about 20 April 2022, as well as his conduct of not returning to G/F to work himself and not sending workers there to work. Further, I make the finding that the Plaintiff had on or about 20 April 2022 abandoned the site, thereby failed and/or refused to complete the outstanding works or rectify the defects left behind. 133.In relation to outstanding works and defective works, Eric Cheng testified in-chief that at the time when the Plaintiff had abandoned the site, there were still substantial outstanding works and defect remedial works under the Gammon Project G/F Sub-Contract. Also, at the time when the Plaintiff abandoned the site, some of the alleged electricity and LED lighting works allegedly done by him so far had not been put to proper testing yet, as there were still outstanding works and it was pre-mature for the testing. Subsequently, upon testing, it was discovered that there were in fact more defects and/or outstanding works due to the Plaintiff’s defaults. According to Eric Cheng, the Plaintiff well knew about the extent of those outstanding works, as he had orally talked to the Plaintiff on site at the relevant times before he completely abandoned the site. 134.In my judgment, Eric Cheng’s evidence on outstanding works and defective works due to the default of the Plaintiff is supported by the following documentary evidence:-
135.On balance, I also accept that Eric Cheng had orally informed the Plaintiff on site about the outstanding works before he completely abandoned the site. 136.In the context of construction cases, contractors who simply walk away from their obligations clearly indicate an intention no longer to be bound by their contractual obligations – Keating on Construction Contracts (supra), paragraph 6-097. In summary, I answer Issue 11 in the affirmative, ie the Plaintiff had committed repudiatory breaches of the Gammon Project G/F Sub-Contract (including the implied terms) for the conduct set out therein. In particular, by the Plaintiff’s refusal to return to complete the outstanding and defect remedial works as communicated to Eric Cheng by phone on 20 April 2022 and by conduct, the Plaintiff evinced his clear intention not to be bound by the Gammon Project G/F Sub-Contract but to repudiate the same. (B) Issue 12 137.Turning to Issue 12, by reason of my finding on Issue 11, it is my judgment that the Defendant was entitled to accept the Plaintiff’s repudiatory breaches of the Gammon Project G/F Sub-Contract. 138.Eric Cheng testified in-chief that in view of the Plaintiff’s complete abandonment of the site and the G/F works on or about 20 April 2022, the Defendant had no choice, and was entitled to accept the Plaintiff’s repudiatory breach by engaging the sub-contractor(s) (ie Kin Wah and World Luck) to completely replace the Plaintiff, and to carry out and complete the outstanding works and defects left by and caused by the Plaintiff relating to the G/F works under the Gammon Project G/F Sub-Contract on dayworks basis (執手尾代工). The Defendant had started to engage the sub-contractor(s) (ie Kin Wah and World Luck) in about late March 2022, as the Plaintiff had only deployed about 3 to 5 labourers at the G/F site in March 2022, hence the site progress became a lot far behind schedule, while defects relating to the Plaintiff's default(s) had been found. Under such tight schedule, the Defendant started to engage those sub-contractors to speed up the progress, and to make good the defects, and then to engage those sub-contractors to completely replace the Plaintiff since his abandonment of the site. 139.In practice, businessmen often accept a repudiation by simply going into the market and obtaining performance of the work from someone else, and that may be sufficient act of acceptance of repudiation where the breach is self-evidently final and incapable of remedy, such as an abandonment – Hudson’s Building and Engineering Contracts (14th Edition), Volume 1, paragraph 8-011. On my findings on Issue 11, namely the Plaintiff’s abandonment of the site on or about 20 April 2022 and the outstanding and defective works left behind which constituted repudiatory breaches of the Gammon Project G/F Sub-Contract, I find that the Defendant was entitled to, and did, accept the Plaintiff’s repudiatory breaches by engaging replacement contractors and/or by filing of its Defence and Counterclaim herein. XI. ISSUES 3 AND 13 – AMOUNTS PAYABLE FOR 5/F PROJECT AND GAMMON PROJECT G/F SUB-CONTRACT 140.Assessment of damages is not an exact science – Penta Investment Advisers Ltd v Allied Weli Development Ltd (formerly known as Hennabun Capital Group Ltd HCA 1656/2012, unreported, 21 January 2015, per Chow J (as he then was), at paragraph 26. Where it is proved that an innocent party has suffered substantial loss, the court may adopt a broad brush approach in the assessment of such loss where the nature of the loss or the adequacy of evidence has presented difficulties in the assessment exercise, and the assessment of damages does sometimes of necessity involve what is guess work rather than estimation – Chun Wo Building Construction Ltd v Metta Resources Ltd HCCT 29/2013, unreported, 19 August 2016, per Anthony Chan J (as he then was), at paragraphs 50 and 255; ICI Swire Paints Ltd v Techni Motor & Engineering & Trading Co HCA 7251/1995, unreported, 29 January 2003, per Master Rimsky Yuen (as he then was), at paragraph 18. (A) Issue 3 141.I deal with Issue 3 first. By reason of my rulings on Issues 1 and 2 above, the grand total prices of HK$700,000 and HK$603,100 for the 8/3/2021 Quotation and the 6/4/2021 Quotation respectively were only estimates for the items of works and their quantities to be done, subject to remeasurement and reassessment by the Defendant’s Quantity Surveyor upon completion of the works. According to the Defendant’s case, after remeasurement and reassessment, the sums payable for the 8/3/2021 Quotation and the 6/4/2021 Quotation were HK$700,000 and HK$372,720. The question here is whether the Defendant’s remeasurement and reassessment were fair and reasonable. (1) 8/3/2021 Quotation 142.In respect of the 8/3/2021 Quotation, the Plaintiff’s case is that the parties reached an agreement that the Plaintiff shall be paid HK$700,000 for the original works of the 5/F Project. I have rejected the Plaintiff’s case. 143.That said, the Defendant’s case as pleaded in paragraph 6(b) of the Amended Defence and Counterclaim is that the measurement and assessment of the works done in relation to those works under the 8/3/2021 Quotation is at HK$700,000. 144.Therefore, it is not disputed that the Plaintiff should be paid HK$700,000 for the 8/3/2021 Quotation. (2) 6/4/2021 Quotation 145.In respect of the 6/4/2021 Quotation, Mr Leung assessed the total value of works done by the Plaintiff at HK$418,904.60, which is higher than the amount of HK$372,720 assessed by the Defendant’s Quantity Surveyor. 146.Under cross-examination, Mr Leung admitted not having visited the sites for the 5/F Project and the Gammon Project G/F Sub-Contract before preparing his Expert Report dated 16 October 2024 (“Expert Report”), but during re-examination he clarified that site inspections would not have assisted him because for electrical works project like the present two projects, works such as the cables installed could not be observed and it would be sufficient to consider photos taken at the sites, which he did. For the supply and installation of 3-phase 4-pole distribution box 32 switches, Mr Leung opined that since the next item, ie the supply and installation of 32A/4P residual current device, the quantity (10 sets) of which was allowed by Shane Cheng, went in pair with the former, and therefore even though the Defendant’s Quantity Surveyor crossed out the former, he allowed the former with the same quantity (10 sets). 147.In its written closing submissions, the Defendant accepted Mr Leung’s assessment of HK$418,904.60 to be the reasonable amount of assessment of the work done in respect of the VO Works. 148.As pointed out by the Defendant, in cross-examination, there was no serious challenge or suggestion that Mr Leung’s assessment or analysis in respect of the 6/4/2021 Quotation was wrong or unreasonably low. 149.This Court notices that the quantities and unit rates for most of the items of works were agreed by the parties. For the unit rates where there was no agreement between parties, Mr Leung referred to the unit rates after discount in the 12/3/2021 Quotation, or came up with his own figures calculated from components such as material costs, profit and overheads and labour costs. Items with no proof of instructions or records furnished were simply disallowed. In the premises, I accept Mr Leung’s assessment of the works done pursuant to the 6/4/2021 Quotation as fair and reasonable, and I make a finding that the total costs of the actual works done is HK$418,904.60. (3) Total Value of Works for 5/F Project 150.In the premises, the total value of the works done for the 5/F Project is HK$1,118,904.60 (HK$700,000.00 + HK$418,904.60). (B) Issue 13 151.Issue 13 concerns the assessment of the 12/3/2021 Quotation, the September 2021 Quotation and the 13/2/2022 Quotation for the Gammon Project G/F Sub-Contract. (1) 12/3/2021 Quotation 152.In respect of the 12/3/2021 Quotation, under cross-examination Mr Leung at first testified that he preferred the quantities checked by Shane Cheng to the Quantity Surveyor’s assessment should there be discrepancies, and he therefore revised the quantities for Item No 11 (ie the supply and installation of light fixture power point) from 108 sets to 240 sets, Item No 24 (ie the supply and installation of 25 mm x 5 low-smoke-free Halogen wire) from 90 m to 100 m, and Item No 25 (ie supply and installation of 25 mm x 5 mm fireproof cable) from 90 m to 100 m. 153.Subsequently, still under cross-examination, Mr Leung changed his evidence to say that he actually decided the quantities of the items with reference to Lam’s assessment, and further said that there was an error for the statements in the Expert Report that he based his assessment on Shane Cheng’s markings. Due to this change of evidence, it is instructive to analyse Lam’s assessment first. 154.In his written Closing Submissions, the Plaintiff challenged the truthfulness and real purpose of the assessment of the 12/3/2021 Quotation by Lam as the Defendant’s Quantity Surveyor. In gist, the Plaintiff submitted that, on the basis of Lam’s evidence under cross-examination, (a) the assessment was not the product of any consistent, objectively applied methodology but could instead be adjusted at will in response to subcontractors’ complaints that certain rates were too low, or in the hope of reaching a consensus with the Plaintiff, or in contemplation of settlement of a legal action threatened by the Plaintiff; and (b) there was absence of drawings upon which Lam’s assessment was based. 155.Under cross-examination, Lam testified that in remeasurement and reassessment, the Quantity Surveyor must follow the contractual item prices, and in the absence of which shall use his experience and refer to the market price or other market references, and disagreements shall be resolved with contract drawings and other methods of work. I accept that in the absence of contract drawings provided by the Plaintiff, the remeasurement and reassessment had to be based upon the Quantity Surveyor’s own experience and own drawings. Further, given remeasurement and reassessment is not an exact science, there is room for adjustment before the final account. I do not accept the Plaintiff’s submission that Lam’s evidence is not worthy of credit. 156.I have found above that Shane Cheng was responsible for checking and confirming the quantities of actual works done, while the Quantity Surveyor was responsible for remeasurement and reassessment of the costs of such works. Under cross-examination, Leung disagreed that the fact that Shane Cheng being on site made his assessment more reliable, and testified that the Quantity Surveyor should be more familiar with the quantities, and that was why he would refer to the Quantity Surveyor’s assessment for his own assessment. I find this explanation fair and reasonable, and given my ruling above, Mr Leung is entitled to consider Lam’s assessment as reference for his own assessment. 157.Based on Lam’s aforesaid evidence on the reliance of the Quantity Surveyor’s measurement, and his evidence that the Quantity Surveyor’s latest assessment was at [A2/283]:-
158.Mr Leung was also cross-examined on the second Item No 16 (ie the supply and installation of 100 mm x 150 mm trunking). The Plaintiff claimed the quantity of 30 m, while Shane Cheng marked the quantity of 16 m which was agreed by Lam. In the Expert Report, Mr Leung considered that the measurement by the parties was approximate, and as he was unable to take accurate measurement due to lack of drawings and/or as-built records available, he took the average of the two measured quantity for assessment, ie 23 m. 159.Mr Leung’s evidence is corroborated by Lam’s evidence that the Plaintiff failed to submit any drawings despite the Defendant’s request, and so the final account could not be prepared. As submitted by the Defendant, the Plaintiff did not challenge that this approach of taking the average of two measured quantities was wrong or unreasonable, and in fact this approach is well-supported by legal authorities such as Chun Wo Building Construction Ltd (supra), at paragraph 278; Chan Shun Kei t/a Chan Shun Kei Construction Works v Hong Kong Construction (Hong Kong) Ltd HCCT 2/2011, unreported, 7 April 2014, 07/04/2014, HCCT2/2011, per DHCJ Burrell (as he then was), at paragraph 7. In my judgment, Mr Leung’s approach of taking the average of the 2 measured quantities for Item No 15 (ie the supply and installation of 50 mm x 50 mm trunking) and the second Item No 16 is fair and reasonable. The same applies to the first Item No 16 (ie the supply and installation of 100 mm x 100 mm trunking) and Item No 17 (ie the supply and installation of 100 mm x 250 mm trunking). 160.Mr Leung was then cross-examined on his adoption of Yu’s evidence, in his Witness Statement, that the Plaintiff had completed 90% of his work under the Gammon Project G/F Sub-Contract including some lighting panels which were not functioning. Yu also said, based on his over 50 years’ experience, that the outstanding works of the Plaintiff could be completed by 1 worker in 30 days, ie labour cost equals to 30 mandays x HK$1,500 = HK$45,000.00. However, due to Yu’s failure to adopt his Witness Statement and testify at this trial, I made the order expunging his Witness Statement. Therefore, Mr Leung cannot rely on Yu’s statement of 10% outstanding works and 1 worker for 30 days to complete the same. Under cross-examination, Mr Leung testified that he had considered the Defendant’s Summary of Contra Charges at Appendix K to the Expert Report and verified Yu’s statement of 10% outstanding work. 161.In my view, Mr Leung did not demonstrate how the Summary of Contra Charges supported the assertion that 10% work had been left outstanding by the Plaintiff. Moreover, I accept the Plaintiff’s submission that Mr Leung had already assessed the actual quantities done for the items in the 12/3/2021 Quotation in paragraph 5.4 of the Expert Report and there was no reason to make deduction of another 10% in paragraph 5.7.4, as indeed such further discount amounted to double deduction. Therefore, in my judgment, I disallow the further deduction of 10%. 162.In summary, taking into account the revisions stated in paragraph 157 above, as well as the disallowance of the 10% deduction, I assess the costs of the actual work done in respect of the 12/3/2021 Quotation at HK$1,147,880.55. (2) September 2021 Quotation 163.For the September 2021 Quotation, the Plaintiff submitted his total costs as HK$93,000.00. The Quantity Surveyor of the Defendant assessed the works at 52 mandays at the rate of HK$1,500/ day. Mr Leung agreed, and came up with the total amount of HK$78,000.00. 164.When being cross-examined, the Plaintiff at first stated that he had other matters to attend, and he claimed that there were other means to attend the site without validation of the Gammon’s attendance system. Subsequently, the Plaintiff frankly admitted that Gammon’s employee monthly attendance record (每月員工紀錄表) should be the basis for assessing and paying the alleged daywork done by the Plaintiff. 165.I therefore accept that the proper assessment of the September 2021 Quotation is HK$78,000.00. Also, there is no further deduction of 10%. (3) 13/2/2022 Quotation 166.For the 13/2/2022 Quotation, the Plaintiff submitted his total costs as HK$193,600.00. The Quantity Surveyor of the Defendant assessed the works as HK$0, while Mr Leung’s assessment was HK$43,500.00. 167.As held in Issue 8 above, testing and commissioning works were expressly excluded from the Gammon Project G/F Sub-Contract, and therefore the Plaintiff was entitled to submit the costs of the works actually done. I therefore allow the testing and commissioning works for 29 mandays, which was ticked by Shane Cheng, at the agreed rate of HK$1,500 per day, in the total amount of HK$43,500.00. However, I do not allow the costs of extra night work by reason of clause 28 of the Kin Wah Written Sub-Contract, which provided that the contract price had already included the works done during holidays, lunch time, afternoon tea time, early start of work, overtime and nightwork. The total amount allowed under the 13/2/2022 Quotation is therefore HK$43,500.00. Again, there is no further deduction of 10%. (4) Total Value of Works for Gammon Project G/F Sub-Contract 168.The total amount assessed for the Plaintiff’s actual works done for the Gammon Project G/F Sub-Contract is therefore HK$1,269,380.55 (HK$1,147,880.55 plus HK$78,000.00 plus HK$43,500.00). (5) Contra Charges 169.Regarding the reasonable cost of completing the outstanding works due to the Plaintiff’s abandonment of the site since after April 2022, ie contra charges:-
170.The Plaintiff submitted that the burden of proof is on the party (ie the Defendant) in respect of its counterclaim for contra charges and damages for defective work: Wong Chun Kin v Millennium Engineering Limited HCA 876/2004, unreported, 17 August 2007, per DHCJ To (as he then was), at paragraph 41. On the other hand, the Defendant relied on Able Contractors Ltd v Wui Loong Scaffolding Works Co Ltd HCA 2587/2008, unreported, 13 June 2012 and extracted paragraphs 6.2 and 6.3 thereof, in which Chu J (as she then was) cited (at paragraph 6.2) Wong Chun Kin (supra) for the principle that proof rests on he who affirms not he who denies and it therefore lies upon the party who substantially asserts the affirmative to prove the issue and went on to say (at paragraph 6.3) that “since the defendant alleges under payment, it bears the burden of demonstrating that the assessments and deductions in the disputed items of work … and the contra charges were incorrect or without proper basis”. 171.I reject the Defendant’s submission. Paragraphs 6.2 and 6.3 of Able Contractors Ltd (supra) were extracted out of context. In fact, the learned judge continued, at paragraph 6.5 thereof, that “As to the contra charges, the defendant disputes the deductions for the testing of the eye-bolts for the safety ropes (Item D on Bundle C, p 770). The plaintiff relies on Clause 7B.3e) of schedule 3 of the Subcontract (see paragraph 12(5)(ii) above) as justifying charging the testing fees to the defendant. However, there is no evidence that the test results procured by the defendant were not conclusive or did not meet the requirement of the engineer as to necessitate additional testing. In the circumstances, there is no proper basis for including the expenses for testing the eye-bolts in the contra charges.” In other words, the learned judge held that the legal burden of proving the contra charges of testing fees rested on the plaintiff, while the defendant discharged its evidential burden of adducing conclusive test results which demonstrated no additional testing was necessary, and the plaintiff failed its legal burden. Therefore, in my judgment, it is clear from the authorities that the burden of proving contra charges lies on he who asserts, ie the Defendant herein. 172.On this point, the Plaintiff further cited, and I accept, the judgment of Mimmie Chan J in Hang Chin Marble Engineering Limited v Pacific Marble & Granite Limited [2025] HKCFI 480 in which the learned judge was similarly asked to decide the burden of proof on contra charges in light of Wong Chun Kin (supra) and Able Contractors (supra) and resolved that the defendants therein, being the parties who claimed contra charges, bore the burden at trial to prove that the contra charges imposed were for the purpose it claimed, namely “as a result of either: damage caused by the plaintiff/its workers; the marble/materials lost by the Plaintiff/its workers; defective or incomplete work carried out by the Plaintiff; or the hire of the forklift for which charges the Plaintiff is liable under the Contract” – see paragraphs 122 to 134 thereof. 173.At paragraph 5.10.1 of the Expert Report, Mr Leung took the view that the Defendant was entitled to deduct the extra costs incurred (HK$721,466.30) in rectifying the defects and carrying out the outstanding works due to the Plaintiff’s default, being HK$399,753.80 and HK$321,712.50 respectively, less the value of work not carried out by the Plaintiff being HK$121,447.28 (ie HK$1,214,472.80 x 10%). The total contra charges assessed was HK$600,019.02. However, Mr Leung did not assess the values of the remedial works and the outstanding works at all, but simply adopted the figures provided by the Defendant. As stated by DHCJ To in Wong Chun Kin (supra), at paragraph 41 thereof, the best I can do is to adopt a broad brush approach in analysing the evidence and to resolve the dispute on the burden of proof. 174.Lam confirmed under cross-examination that all supporting documents for contra charges had been adduced at Annexure LMK-16 to his witness statement. Such documents included, among others, Kin Wah’s and World Luck’s invoices for overnight work and/or replacement work, as well as the Defendant’s sub-contractor’s replacement work attendance records. I notice that the following attendance records were signed by the site representative of the Defendant, apparently showing the Defendant’s confirmation of the mandays spent by the labourers of Kin Wah and World Luck, such records matching the Defendant’s record of mandays in the Summary of Contra Charges at Appendix K to the Expert Report:-
175.In addition, the following World Luck’s invoices for supply of materials or labourers appear to be signed by the same site representative of the Defendant, signifying the Defendant’s confirmation and approval of such expenditure:-
176.While the Plaintiff did challenge, under the cross-examination of Lam, the Defendant’s claim for installation and removal of aluminium boards (HK$171,000.00 for 114 units) and cleaning (HK$23,940.00 for 38 units), and Lam answered that those two figures were estimates only, the Plaintiff did not challenge the aforesaid attendance records and World Luck’s invoices. Moreover, while there is no evidence on the agreed daily rate of Kin Wah and World Luck’s labourers for the outstanding works and the defect rectification works, the Defendant is claiming HK$1,400 or HK$1,500 which is fair and reasonable, given that the agreed daily rate of the Plaintiff’s labourers under the Gammon Project G/F Sub-Contract has been found by me to be HK$1,500. In the circumstances, I accept the Defendant’s claim for outstanding works and defect rectification works as supported by the attendance records and World Luck’s invoices in the preceding two paragraphs in the total amount of HK$298,233.00. In this connection, Mr Leung did not explain his rationale for deducting 10% of the value of the works not carried out by the Plaintiff from the contra charges. I do not apply the deduction here. 177.The rest of the items in the Summary of Contra Charges were claims for outstanding works including mandays by Kin Wah and World Luck. However, unlike the claims above, these claims were not verified by the Defendant by way of attendance records or acknowledgment by signing. In the absence of sufficient and credible evidence, I am not satisfied that those sums were spent or had to be spent. I do not allow the same. 178.I accept that the Plaintiff is entitled, pursuant to Clause 32 of the Kin Wah Written Sub-Contract which applied to the Gammon Project G/F Sub-Contract, to charge 15% administration charge on the outstanding works and defect rectification works carried out by Kin Wah and World Luck and assessed by me as HK$298,233.00. Such percentage is also accepted as a genuine and reasonable pre-estimate of the loss and damage which may be incurred to the Defendant in the event of the Plaintiff’s breach of his contractual obligation to carry out satisfactorily the outstanding works and the defect rectification works. See Yau Lee Construction Co Ltd v China Steel Engineering Co Ltd and Another HCCT 49/2010, unreported, 15 August 2016, per Mimmie Chan J, at paragraph 42. I award administration charge at 15%, ie HK$44,734.95. 179.In the premises, I award total contra charges and administration charge at HK$342,967.95 (HK$298,233.00 plus HK$44,734.95). XII. DISPOSITION AND COSTS ORDER 180.The Plaintiff is entitled to costs for the works actually done for the 5/F Project and the Gammon Project G/F Sub-Contract assessed at HK$1,118,904.60 and HK$1,269,380.55 respectively. 181.The Defendant is entitled to contra charges and administration charges in respect of the Gammon Project G/F Sub-Contract assessed at HK$342,967.95. The net amount payable to the Plaintiff for this project is HK$926,412.60. 182.The net costs for the works actually done for the 2 projects is therefore HK$2,045,317.20. 183.The Plaintiff did not dispute having received interim payments in the total sum of HK$2,437,000.00 for the 2 projects. 184.Moreover, given my ruling above that it was part of the payment term in the Gammon Project G/F Sub-Contract that 10% of the costs of the work would be retained for 12 months and that payment would be made on back-to-back basis, and given there is no challenge of Lam’s evidence-in-chief that the Employer and the Main Contractor had not released the 10% retention in respect of the Gammon Project G/F Sub-Contract, the Defendant is entitled to deduct the 10% retention, ie HK$92,641.26. 185.In the premises, the net sum payable by the Plaintiff to the Defendant is HK$484,324.06 (“Judgment Sum”) (HK$2,045,317.20 minus HK$2,437,000.00 minus HK$92,641.26). I so order. 186.I order the Plaintiff to pay the Defendant pre-judgment interest on the Judgment Sum at HSBC best lending rate plus 1% from the date of the Writ of Summons herein until the date of this Judgment, and post-judgment interest on the Judgment Sum at judgment rate from today until date of payment. 187.In the premises, the Plaintiff’s claim is dismissed. I find in favour of the Defendant’s counterclaim subject to the Judgment Sum ordered. 188.Costs should normally follow the event. Considering that the Defendant is the overall winner, that the Judgment Sum is substantially less than the amount claimed, and that the parties failed to comply with the order in respect of agreed list of issues and agreed chronology, I make a costs order nisi that the Plaintiff do pay 70% of the Defendant’s costs including all reserved costs, with Certificate for Counsel, to be taxed if not agreed. 189.I thank Mr Ma and Mr Chau for their assistance.
Mr Eric Chau Hin Chung, instructed by Wong & Tang, for the plaintiff Mr Billy N P Ma, instructed by Humphrey & Associates, for the defendant | |||||||||||||||||||||||
Cases cited in this judgment