Tang Kan t/a Wai Yip Engineering & Steel Work Co. v. Tsang Poi Chi t/a Chity-space Interiors

HCA006000/1987

1987 No. A6000

IN THE SUPREME COURT OF HONG KONG

HICK COURT

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BETWEEN

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Coram: Hon. Liu J. in Court

Dates of hearing: 14, 15 & 16 June 1988

Date of delivery of judgment: 16 June 1988

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JUDGMENT

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1. This is a comparatively small claim which calls for a determination without delay.

2. The plaintiff's claim against the defendant is for work done and materials supplied in the sum of $65,360. He also claims interest at 8% per annum from the date of the writ to judgment. Interest after judgment would be regulated by the Chief Justice's direction. The plaintiff also claims costs against the defendant.

3. In or about early March last year, the plaintiff Mr Tang undertook to relocate an air-conditioning system together with the supply and installation of four fans. It is common ground that the work was done and that the price of $65,360 is not excessive. The controversy revolves around the question of alleged employment or agency. It is the plaintiff's claim that he was approached and instructed by one Mr Lai, an employee and/or agent of the defendant, Mr Tsang. Mr Tsang denies any such tie with Mr Lai. The defendant's case is one of Mr Lai being an independant contractor.

4. In early March 1987, a company by the name of AMP engaged the defendant for works including the relocation I have described together with the supply and installation of four fans. Mr Law from AMP testified that when Mr Tang, the plaintiff, came for installation, Mr Tang told him that he was coming for City Space Interiors of which the defendant, Mr Tsang was the sole proprietor. Such information could at best be taken as evidence of Mr Tang not conducting himself inconsistently with his alleged direct instructions from City Space Interiors. But it does not really take the matter further. Mr Tang would probably have given the same reply. City Space Interiors and no one else had contracted with and been known to AMP, and "City Space Interiors" would probably have been given as reference even if Mr Lai had been engaged, as alleged by the defendant, as an independant contractor.

5. I would turn, first of all, to the surrounding circumstances. Mr Tang ran three companies at the material time, two of which were City Space Interiors and China Straight Investments Ltd. Mr Lai was then personally interested in a company by the name of Master Contracting Company Limited which had three shareholders. Master Contracting Company Ltd. virtually disintegrated on account of trading loss and the attitude of its shareholders. Mr Lai's business front was taken over by a newly formed company, the Central Structure Int'l Company in October 1986. The Business Registration Application Form gives the date, the 10th October 1986. At or about the end of 1985, Mr Lai started to share office accommodation with Mr Tsang in Room 1626A Star House. He was operating in those premises Master Contracting Company Limited and thereafter Central Structure Int'l Company. Subsequently in mid April 1987, they moved to Stanley Street. After Mr Lai's Master Contracting Company Ltd. was in effect superceded by Central Structure Int'l Company at the end of 1986, be it noted that Mr Lai's Central Structure Int'l Company had the same initials "CSI". These initials "CSI" had been used by the defendant's two said companies since 1985. Not only did all these three companies have the same initials by coincidence or design, they used these initials in virtually the same logo. The former secretary of Mr Lai, Miss Jun testified that the logo of Central Structure Int'l Company was conspicuously different from the defendant's. But even counsel for the defendant had little alternative but to concede that the logos are very similar. Be it further noted, therefore, that these companies shared the same initials in their names, operated from the same office and used the same logo. Some play was made of separate office furniture and equipments, Business Registration Certificates and the partition. But it can hardly be denied that their operations could easily lead to utter confusion. In fact, confusion was caused and a public announcement was inserted by the defendant in an issue of Sing Pao on the 7th July last year in these terms : "This is to certify that Central Structure Int'l Co. (CENTRAL STRUCTURE INTERNATIONAL CO.) also known as CSI has no relations whatsoever with our company, and is not a subsidiary of our company. By this we declare." It was inserted by City Space Interiors as "Important Declaration".

6. After the defendant, Mr Tsang, discovered Mr Lai in financial predicament, he allegedly demanded production of documents involving the defendant, involved in the sense of sub-contracting. According to Mr Tsang, Mr Lai gave him documents, Documents 7 & 8 in Bundle A, and some other documents of like nature. Mr Tsang claimed that his demand for production of these documents was to enable him to evaluate the standing and status of Mr Lai for any further sub-contracting. I find his excuse difficult to accept.

7. Mr Tang denied that he had ever perused these documents but merely retained them for record. He maintained that he was not-aware, at the material time, of Mr Lai using Central Structure Int'l Company or CSI in English as Mr Lai had been known to Kim to be using only a Chinese company name "Chung Yeung Kin Chit". In addition to the documents I have last mentioned, Miss Jun told the Court that the letter head of Central Structure Int'l Company together with the CSI logo was shown to Mr Tsang at about the same time when that company was formed. Mr Tsang was here not telling the truth, and he has given no explanation as to why he did not think fit to restrain Mr Lai from using a name with identical initials and virtually the same logo.

8. At the beginning, when Mr Lai was introduced to Mr Tang, Mr Lai produced a visiting card, Exhibit "Pl", bearing the logo "CSI" and the name of the defendant, City Space Interiors. The use of this visiting card has not been shown to be with the knowledge or consent of Mr Tsang and cannot be evidence against him. But all in all, running companies of names bearing the identical initials, the use of virtually the same logo, operating these companies from the same office, the "Important Declaration" in Sing Pao, the demand, receipt and retention of allegedly Mr Lai's own documents are all matters building up a highly suspicious background against which the plaintiff was instructed.

9. These, I should hasten to add, are not proper matters to be taken, either jointly or severally, against the defendant. They constitute no more than background information that makes any court seized with this case considerably uncomfortable.

10. Next I come to the factual allegations of Mr Tang. He claims that after he was introduced to Mr Lai on a social occasion, he called upon Mr Lai at the address on his visiting card with a view to soliciting business from City Space Interiors. He met and comunicated with Nr Lai on four, five, six occasions. Principally, it was in relation to a Shanghai project. He gave his quotation and constantly during these 4, 5, 6 occasions, visited Mr Lai, hoping that he would get some favourable response. On or about the 6th occasion in early March, last year, Mr Lai sought his assistant in an urgent chore. It was a comparatively insignificant project requiring immediate attention. There was no time for any quotation, and Mr Tang was eager to please Mr Lai in the hope of gaining a better impression and fostering confidence. The offer was immediately taken up and put into execution the very next day. Terms had been roughly discussed and readily found acceptable to Mr Tang. Approval had to be sought from Mr Tsang. Mr Tsang was no stranger to Mr Tang. Earlier, on Mr Tang's first visit to the office at 1626A Star House, Mr Tsang was introduced to him by Mr Lai as Mr Lai's "boss". After terms had been tentatively agreed, Mr Lai consulted Mr Tsang in the presence of Mr Tang. Mr Tsang told Mr Lai : “O.K., you give it to him". An address was supplied to Mr Lai, and Mr Lai accompanied by Mr Tang immediately went to inspect the site. The introduction of Mr Tsang to Mr Tang as Mr Lai's boss is certainly a piece of evidence, if believed, against the defendant. The consultation with and approval of Mr Tsang could perhaps have also taken place even if Mr Lai had been a sub-contractor. However, not only was Mr Lai an alleged independent contractor, there was no evidence that the independent contractor was in any way made subject to Mr Tsang's control in the choice of workmen. The approval of the engagement of Mr Tang sought by Mr Lai from Mr Tsang, as testified to by Mr Tang, the plaintiff, is therefore a piece of equally damning evidence against the defendant, if believed.

11. On or about the 7th March last year, Miss Jun gave instructions on behalf of Mr Lai for 4 additional fans.

12. The project was completed. According to Mr Tang, invoice and letter, documents 4, 5 and 6 in Bundle A, were sent to the defendant. There was no response. Subsequently, not having been paid for a considerably long time, in July 1987, upon the insistence of Mr Lai, it is said that another invoice was sent to Central Structure Int'l Company. Mr Tang had asked for an explanation, but he was given no direct answer, except for Mr Lai's casual remark that it was an internal arrangement.

13. Counsel for the plaintiff emphasized that in the circumstances, it was not unusual, nor out of the ordinary for Mr Tang to act as suggested. The defendant through his counsel criticized this alleged action of the plaintiff as one no business man of his experience would have taken : Mr Tang could not possibly have been persuaded to dispatch another invoice in a different name at a later time. I do not share Mr Li's view.

14. The defendant admits that he was given documents 7, 8 & 9 of Bundle A by Mr Lai but that documents 4, 5 & 6 came from his own solicitors much later. In respect to these documents 4, 5, 6, 7, 8 and 9, the defendant's suggestion is that having sent 7, 8 and 9 to the company of Mr Lai and not getting satisfaction, the plaintiff manufactured 4, 5 and 6, the same set of documents but addressed to the defendant company, in order to shift the blame to Mr Tsang. On this hypothesis, Mr Tang's documents 4, 5 and 6 must have been allegedly sent after Mr Lai had absented himself from Stanley Street but returned only ocasionally. Probably these documents would be delivered to City Space Interiors with less likelihood of any interception by Mr Lai. On both the plaintiff's version and the suggestion advanced on behlaf of Mr Tsang, City Space Interiors had in all probabilities received the letter of demand and the invoice from Mr Tang. If that be so, the silence of City Space interiors would also be telling aginst the defendant.

15. After the plaintiff had obtained no satisfaction, he approached Mr Lai again, this time in Stanley Street. After the move from Star House, Mr Tang told the Court that Mr Lai finally offered to pay him first $50,000 with the remainder to come by way of additional benefit in a future sub-contract. That was agreeable to Mr Tang. Thereupon, according to Mr Tang, Mr Lai knocked at the door of Mr Tsang. In Mr Tsang's room, he, Mr Tsang, was with Miss Tse. Mr Lai enquired from Mr Tsang as to when payment of the $50,000 could be effected, and Mr Tsang gave a date, the 15th July. There is an additional matter here for consideration : if Mr Tang were to he believed, that would he evidence of some pre-arrangement between Mr Tsang and Mr Lai to pay $50,000 of the demand first. I am conscious of the fact that Mr Tsang could possibly have been similarly consulted by an alleged independent sub-contractor.

16. Only the introduction of and approval by Mr Tsang are direct evidence against him, but the cumulative effect of all these incidents as narrated by Mr Tang is that Mr Lai was an employee of Mr Tsang and his firm "City Space Interiors" for the relocation project, or at least he was an agent.

17. Mr Tsang denies that he had ever seen Mr Tang until the parties turned up at some hearing in Court long after. Mr Tsang's denial was certainly not wholly supported by the evidence of Miss Jun. She was adamant that while there was no discussion between Mr Tsang and Mr Tang, from time to time Mr Tsang met Mr Tang in the office and greeted or nodded to him. In view of her evidence, it is incredible that Mr Tsang could have honestly forgotten all prior encounters with Mr Tang. I have commented on Miss Jun's evidence directly contrary to Mr Tsang's denial of his knowledge of the use of Central Structure Int'l Company and the logo. The production of documents by Mr Lai on demand in April/May 1987 must have put Mr Tsang on notice that Mr Tang's firm was involved, and yet Mr Tsang explained that he was for the 1st time told by his wife in July/August that it was the plaintiff who executed the relocation project. It is difficult to believe that Mr Tsang did not examine any of the produced documents when he claimed to have been concerned enough to demand their production. Mr Tsang denied the receipt of documents 4, 5 & 6; hence there was no need for a reply. Mr Tsang had many situations to explain and he was exposed as being untruthful on the aspects I have outlined.

18. I have commented on matters raising a suspecious background. I do not wish to repeat myself. The Inland Revenue returns are self-serving documents which carry little weight, particularly against the unusual background. In truth, the crux of this case lies on whether it is the evidence of Mr Tsang or Mr Tang I prefer.

19. Miss Jun in her gallant attempt to support the case of Mr Tsang, the defendant, was not, I find, an impressive witness. She was certainly partisan and far from being impartial. Her partiality was best illustrated by her evidence given on the logo used by the various companies and the manner in which she answered counsel's questions in the course of her evidence. Suffice it for me to say that both Mr Tsang and Miss Jun did not cut good figures under cross-examination.

20. Mr Law of "AMP" is a witness who drew little cross-fire, as it were.

21. Mr Tang gave evidence. I have taken into consideration the apparent mistakes he made as to the name on the Directory next to the lift in Star House as well as the exact date of the relocation project. His evidence on partition and Business Registration Certificates is peripheral. In substance, I accept all the incidents he repeated for the benefit of this Court. On the whole, I find Mr Tang an honest witness. There is no doubt in my mind that his evidence is to be preferred.

8% per annum I regard as reasonable. I give judgment as claimed to the plaintiff with interest at that rate from the date of the writ to the date of judgment. Interest after judgment is to be guided by the direction of the Chief Justice. I grant costs in favour of the plaintiff against the defendant.

Representation:

Mr. J. G. Fenton instructed by M/s P.H. Sin & Co. for the plaintiff

Mr. H.L. Li instructed by M/s Peter Mo & Co. for the Defendant