Wellpoint Contracting Co. Ltd. v. Ip Chung George and Another

HCA011671/1998

HCA 11671/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 11671 OF 1998

----------------------

(By Original Action)

(By Counterclaim)

------------------------------

Coram: Deputy High Court Judge Poon in Court

Dates of Hearing: 4 - 6 February, 29 - 31 May and 3 June 2002

Date of Handing Down Judgment: 10 July 2002

--------------------------

J U D G M E N T

--------------------------

DISPUTE

1.This dispute arose out of the decoration works carried out by Wellpoint Constructing Company Limited ("Wellpoint") at the residence of Mr George Ip Chung and his wife Ms Tsang Pui Lin ("Mr and Mrs Ip" respectively) at No.6, 5th Street, Hong Lok Yuen, Tai Po, New Territories ("the Premises") in 1997. The project for the decoration works is referred to as "the Project" in the rest of this judgment.

PROCEEDINGS

2.In these proceedings, Wellpoint claims against the Ips for : (1) $604,585.20, being balance of unpaid works; and (2) $119,942.33, being balance of unpaid materials with interest. The Ips raise a number of defence, including defective workmanship, delay in completion of the works, failure to remove rubbles causing a flood to the Premises in May 1997. Their principal defence is that a full and final settlement agreement was reached between the Ips and a Mr Billy Hui ("Mr Hui") acting for and on behalf of Wellpoint on 24 August 1997 ("the Settlement Agreement") pursuant to which, Mr Ip had paid $190,000 to settle all outstanding balance due to Wellpoint. In the event that the court finds that no settlement agreement had been reached, the Ips counterclaim against Wellpoint for damages arising from its breach of contract and against Mr Hui for damages arising from his breach of an implied warranty that he had the authority to act for Wellpoint in reaching the Settlement Agreement.

3.The trial first came before me on 4 February 2002. It was set down for three days. It was a gross under-estimate. (The evidence of Wellpoint's principal witness, Mr Kevin Wong Chi Ming ("Mr Wong") alone took nearly four days.) In the event, the trial went part-heard and resumed on 29 May 2002. It took seven days to finish.

4.Mr Hui did not appear. But as will be seen in a moment, his involvement in the dispute was crucial. Other than Mr Wong, Wellpoint called its supervisor of the Project, Mr Chan Yip Fung ("Mr Y.F. Chan") to give evidence. The Ips themselves gave evidence. They did not call any other witness. The parties' evidence on the main events is set out below.

SUMMARY OF EVIDENCE ON THE MAIN EVENTS

(1) Negotiations and contract

5.Mr Ip described the initial negotiations and the formation of the renovation agreement thus.

6.After he bought the Premises on 26 October 1996, he and his wife wished to have it renovated in its entirety. Through the introduction of his cousin, Mr Ip came to know Mr Hui. Mr Ip first met Mr Hui at his office. The two of them exchanged ideas of how to renovate the Premises. Mr Ip also gave a layout plan of the Premises to Mr Hui. A few days later, Mr Hui came to Mr Ip's office again with Mr Wong and Mr Steven Chan ("Mr S. Chan"). Mr Ip believed that Mr S. Chan was a designer as he talked about his previous design works. The parties exchanged ideas of renovation again. In the course, it was Mr Hui who mainly took part in the discussion with Mr Ip and jotted down Mr Ip's requests whereas Mr Wong and Mr S. Chan did not talk much, behaving like assistants to Mr Hui. There were further meetings in November 1996.

7.Mr Ip said eventually that it was agreed that Wellpoint would carry out the Project on the following terms :

(1) Wellpoint was to carry out the Project with materials at a price to be quoted and agreed.

(2) Wellpoint was to finish the works within 85 days from the date of confirmation of the quotation and receipt of deposits and in any event not later than the end of March 1997.

(3) A deposit and payment for the renovation would be made by instalments in a manner to be agreed.

(4) If there is any delay in completion of the Project, Wellpoint should pay a sum of HK$5,000 per day as compensation.

8.At the time when the above agreement was reached, no exact quotation had been prepared yet. Mr Hui told Mr Ip that he would later provide him with a detailed quotation. Mr Ip told Mr Hui that his budget for the Project was below HK$2 million and that the completion date was important as by then he would have sold the old house and his family would need to move into the Premises.

9.Mr Ip had further telephone conversations with Mr Hui, Mr Wong and Mr S. Chan after the meeting concerning the renovation works. In mid-November 1996, Mr Ip made arrangement with the estate agent to allow Mr Hui to enter into the Premises to carry out measurements and design works.

10.On 10 December 1996, Mr Hui gave a quotation prepared by Wellpoint with the reference QT/12/K1048/96 Rev-1 dated the same date, which had already been signed on behalf of Wellpoint. After reading it, Mr Ip found the costs slightly above his budget. He discussed it with Mr Hui who said that the quotation was not finalised, that he would go through it with Mr Ip step by step later, and that if Mr Ip was not satisfied with any item stated therein, he could alter it. Relying on what Mr Hui said, Mr Ip signed the quotation but he substituted the words "& Confirmed" above his signature by "proposal".

11.On 17 December 1996, Mr Ip paid the initial deposit of HK$200,000 to Wellpoint by cheque. He then asked Mr Hui to go ahead with the renovation work. He further told Mr Hui that he would pay a further deposit of HK$450,000 after his return from a trip for Christmas holidays. Mr Hui confirmed that the work would start forthwith and would be completed by end of March 1997. When Mr Ip returned from the trip on 2 January 1997, he discovered that renovation work had already started. On 4 January 1997, he paid a further deposit of HK$450,000 to Wellpoint by cheque.

12.Mr Wong agreed that Mr Hui did the initial negotiations with Mr Ip. He could not recall if Mr S. Chan attended Mr Ips' office as alleged. But he stressed that Mr Hui was just a part time salesman and with no authority to enter into any contract with Mr Ip. Mr Wong said the contract with Mr Ip was made on 15 January 1997. In this connection, he relied on an undated Conditions of Contract signed by Mr Ip, the quotation signed by Mr Ip on 10 December 1996 and a document entitled "Contract" with the reference QT/01/K1048/96 Rev-3 dated 15 January 1997, on which document Mr Ip had made some revision and initialled at the end. Under this document, the agreed sum was HK$1,819,400 and the works was to complete within 85 working days. Mr Wong said that Wellpoint should have up to 15 May 1997 to complete the works. However, he did not seriously dispute that demolition work in the Premises had already started before 15 January 1997.

13.Mr Ip said that it was Mr Hui who showed him the "Contract" for further discussions and his approval of the items of works. After discussions with Mr Hui, Mr Ip revised some of the items and came to the agreed costs of HK$1,819,400. He pointed out that it was in fact the 3rd revision of the quotation dated 10 December 1996. It is common ground that in the course of the Project, the Ips had asked that additional items of works be carried out.

(2) Contract sum

14.It is Wellpoint's pleaded case that the total amount for works after various adjustments was agreed at HK$3,112,285.20, that Mr Ip had only endorsed a total sum of HK$2,879,235.20 but paid only HK$2,508,000, leaving a balance of HK$604,585.20, and that a sum of HK$119,942.33 being balance of materials costs was unpaid.

15.In the defence and counterclaim, the Ips alleged that the total sum for the Project paid by them was HK$2,988,954.60. This Wellpoint did not deny but alleged in its reply and defence to counterclaim that in its claim against the Ips, it had already given credit to certain sums paid by them totalling HK$124,689.6.

16.It should however be noted that in the letter of demand sent by Wellpoint's solicitors to the Ips dated 27 April 1998, it was alleged that the agreed contract sum was HK$2,988,527.33 and the Ips had only paid a total sum of HK$2,270,270, leaving a balance of HK$718,257.33.

17.It was put to Mr Wong under cross-examination that he was confused about the exact amount outstanding. He denied. In this connection, it is important to note two points. First, it is not seriously in dispute that before he left Wellpoint, it was generally Mr Hui who prepared the relevant documents, including invoices. Second, Mr Wong admitted under cross-examination that most of the invoices he sought to rely on at trial were in fact all prepared by him for the purpose of this litigation afterwards.

(3) Co-operation Agreement

18.On 19 December 1996, Mr Hui, Mr Wong representing Wellpoint and Mr S. Chan representing IDS design Group signed a tripartite agreement to take up the Project on a co-operation basis in the name of Wellpoint, to share the profit and loss arising out of the Project in the ratio of 37.5%, 37.5% and 25%, and to share in the same ratio the instalment payments made by the Ips as the works progressed. The parties further agreed that Wellpoint would be responsible for "keeping the finance record and the receipt and payment of finance". This tripartite agreement is referred to as "the Co-operation Agreement" below.

19.It is not in dispute that Mr Ip was not aware of the Co-operation Agreement until the end of July 1997.

20.Mr Wong was heavily cross-examined on the Co-operation Agreement. Several points arose out of his oral testimony. First, despite the Co-operation Agreement, he repeatedly stressed that Mr Hui was at the material times a mere part-time salesman. Second, Mr Hui was remunerated on a commission basis. The rate was generally 40% of the profit made out of the project he brought in. Mr Wong initially said that Mr Hui did not share liability. But he went on to say that if there was any loss of the business that he brought in, Mr Hui would have to bear the same percentage of loss and that would be carried forward to the next project. Other than the Co-operation Agreement, he had in the past signed two to three contracts for sharing of profits and loss with Mr Hui for the business he brought in. Mr Wong accepted that agreements to share profit and loss are rare in ordinary employment relationship but he explained that Mr Hui would then have greater incentive and would be more cautious for his work. Third, Mr Wong stressed that the Co-operation Agreement was not a partnership agreement. It was just an agreement on how to calculate profit and loss. Mr S. Chan was a party to it because he was an interior designer and his drawings were good. Mr S. Chan used to be a sub-contractor of Wellpoint. He became a party to the Co-operation Agreement because Mr Wong wanted to perfect the work under the Project and it would be better if Mr S. Chan was to share its profit and loss. Mr S. Chan agreed to share the loss because in return he could make more profit. Fourth, Mr Hui was stated to be a representative of a B company in the Co-operation Agreement. Mr Wong said it was a standard term his wife (who prepared the Co-operation Agreement) copied from a certain textbook.

(4) Disputes

21.It is Mr Ip's evidence that as at March 1997, only a small portion of the works had been done. Mr Ip complained to Mr Hui. He was very concerned about the delay. By the end of April 1997, a substantial portion of the work had not been completed, Mr Ip complained to Mr Hui again. It is also the evidence of the Ips that whenever problems arose out of the works, they would relate the matter to Mr Hui who would then dealt with them. But if they complained to Mr Wong, he was not helpful at all.

22.It is common ground that keys to the Premises were given to the Ips on 3 May 1997. It is Mr Wong's evidence in his first witness statements dated 15 September 2000 that works under the Project had all been completed on that date and that keys were handed to Mr Ip in the presence of Mr Y.F. Chan. In his oral testimony, Mr Wong added that he had asked Mr Y.F. Chan to ask Mr Ip to sign a completion certificate. But Mr Wong was unable to produce the certificate. Mr Y.F. Chan denied in his oral evidence that it was he who handed over the keys to Mr Ip. He said he gave them to Mr Wong who then passed them to Mr Ip. He was simply not present when keys were handed to Mr Ip. Further, Mr Y.F. Chan said he could not be sure if all the work had been completed because of the lapse of time. He could not recall if he had asked Mr Ip to sign any certificate of completion although it was the usual practice of Wellpoint to ask a client to sign such a certificate if the work had been completed. The Ips on the other hand said that the keys were handed to them on 3 May 1997 because the family had to move into the Premises, the old house having been sold already.

23.The Ips also complained about defective workmanship. Particulars can be found in their witness statements. They were in particular upset by the flooding incident to the living room on 5 May 1997, which they said were caused by Wellpoint's failure to remove rubbles and scaffolding at the garden in time. No expert evidence, however, has been adduced in this respect.

24.Mr Wong said that on or about 17 July 1997, when a paint subcontractor asked Mrs Ip if there was any exterior paint touch up work to be done, she got angry with the subcontractor's attitude. She unilaterally terminated the contract and told Mr Wong that she would call the police if any of the Wellpoint's workers came to the Premises again. Mrs Ip gave a different version. She said that on that day, Mr Wong came with the paint subcontractor and his wife. Mr Wong asked her if there was any problem about the exterior paint work. When she pointed out the defects, the subcontractor became furious and acted in a threatening manner. At that time, Mr Ip was not in Hong Kong. Mrs Ip was at the Premises with her kids. She was concerned about their safety. She called Mr Ip who agreed that she should contact Mr Hui, which she did. She told Mr Hui that because of the incident, she would not allow Mr Wong into the Premises in the future. Mr Hui apologized and said that he would personally handle and supervise the renovation work in the future.

25.The Ips further complained that the renovation work just dragged on. Eventually, they had to engage another contractor to complete the decoration works, thereby incurring some HK$293,000.

26.Mr Wong said that in mid-June 1997 he had a discussion with Mr Ip about the works. That Mr Ip denied.

27.On 23 July 1997, Wellpoint sent a letter to the Ips requesting for payment of the outstanding sums. It is stated in this letter that no payment should be made to any staff of the company but it should be made by way of a cross cheque made payable to Wellpoint.

28.By the end of July 1997, Mr Ip discussed the matter with Mr Hui who gave him a copy of the Co-operation Agreement. Mr Ip was not aware of it beforehand. It is his evidence that had he known about it, he would not have entered into the decoration agreement with Wellpoint.

29.Mr Wong complained that Mr Ip had delayed payments all along. But it should be noted that Mr Ip had paid HK$650,000 even before the signing of the "Contract" on 15 January 1997 and that he had paid more than HK$2.5 million before early May 1997 even without proper invoices. Although Mr Wong disagreed that Mr Ip had paid without invoices, he was only able to point out two invoices (both issued before early 1997) that had been issued before payments thereunder were made.

(5) Settlement Agreement

30.On 24 August 1997, Mr Ip met with Mr Hui. It is Mr Ip's case that at the meeting he reached the Settlement Agreement with Mr Hui. By that time, Mr Ip had already known about the Co-operation Agreement. He therefore asked Mr Hui to produce a letter of authorisation from Wellpoint authorising him to reach the Settlement Agreement. Mr Hui asked that the cheques for payment be made to him so that he could settle the outstanding balance with the subcontractors directly. Mr Ip then gave Mr Hui a cheque for the partial settlement sum of HK$100,000 and asked him to return the following day, which was a Sunday, with the letter. Mr Ip told Mr Hui that if he was unable to show him the letter, Mr Ip would countermand the cheque on the following Monday. On 25 August, Mr Hui came to Mr Ip in the morning and showed him an authorisation letter on the letter head of Wellpoint and signed by Mr Wong on behalf of Wellpoint ("the Letter"). The material part of the Letter read :

"We refer to the meeting by Mr. Billy Hui at Aug. 24, 1997. We agree with the partial payment for you to settle down all our sub-contractor/co. bill; and authorise Mr. Billy Hui to act on our behalf to follow up all defects items and negotiation the defect liability."

31.On 3 October 1997, pursuant to the Settlement Agreement, Mr Ip paid the balance of HK$90,000 to Mr Hui again by cheque.

32.Mr Wong denies that the dispute between the parties had been settled by virtue of the Settlement Agreement as alleged. He did not deny having signed the Letter. But he said he had never authorised Mr Hui to receive any payment from Mr Hui. In his second witness statement dated 28 February 2001, Mr Hui had this to say :

".... Upon reflection, I believe that I must have been tricked into signing [the Letter]. On or about 23/8/1997, I called Billy Hui to ask him if he had talked to George Ip concerning payment of the outstanding balance due to Wellpoint. He told me that he would meet with George Ip the next day, but the time of meeting has not been confirmed. I told him to bring me along for the meeting. In the morning and afternoon of 24/8/1997, I called Billy Hui a number of times to find out the time of meeting, but he just told me that it has not been confirmed. In the evening and night of 24/8/1997, I called Billy Hui but no one answered the phone. I left message but he did not return my call. In the morning of 25/8/1997, Billy Hui called me up and told me that he had met with George Ip last night to discuss about certain decoration works he was doing for George Ip. Billy Hui said that he also asked George Ip about the outstanding balance due to Wellpoint and came to certain terms with him in relation to payment of the outstanding balance. Billy Hui invited me out for a drink to discuss the matter with me. He asked me to bring along the Company Chop (but I did not). Upon hearing that George Ip has agreed to pay further sums to Wellpoint, I immediately prepared a letter in Chinese to be sent to George Ip through Billy Hui. However, when I met with Billy Hui and produced to him the Chinese letter which I had prepared, he told me that George Ip would prefer the documents to be in English. At that point, Billy Hui produced a letter dated 25/8/1997 typed in English and printed on Wellpoint's letterhead for me to sign. My understanding of [the Letter] is that George Ip has agreed to pay a further sum in partial settlement of the outstanding balance due to Wellpoint to enable Wellpoint to pay the sub-contractors and that Billy Hui would follow up on the touch up works required by George Ip. Further, as the content of [the Letter] does not state that Billy Hui has the authority to receive money in his personal capacity for and on behalf of Wellpoint, I did not think that it would prejudice the rights and interest of Wellpoint in signing [the Letter]. It was on that understanding that I signed [the Letter]. Billy Hui had in his possession letterheads of Wellpoint because he used to be responsible for preparing quotations for customers when he worked for Wellpoint. He probably still retained some letterheads after he resigned in July 1997. When Billy Hui was authorised to act on behalf of Wellpoint at the time, he was and could only be acting as an independent agent, not as an employee of Wellpoint. If not for the fact that George Ip refused to have any further discussion with me concerning payment of the outstanding balance due to Wellpoint and if not for the fact that he has told me to talk to Billy Hui instead, I would not have opted for handling the matter through Billy Hui. I believe that Billy Hui must have received some assistance in preparing [the Letter] as he did not have the requisite English level to write [the Letter]. I note ..... that a sum of HK$100,000.00 has been paid to Billy Hui on 24/8/1997. This confirms with my suspicion that there has been prior agreement between George Ip and Billy Hui before I was tricked into signing [the Letter]."

33.In his oral testimony, Mr Wong said that he only asked Mr Hui to negotiate the follow-up work but he did not know when Mr Hui would meet Mr Ip. He had not asked Mr Hui to discuss settlement.

34.Mr Ip denied that he had insisted that the Letter must be in English. He himself did not prepare it or give any assistance to its preparation. Mr Ip gave evidence in fluent English. The Letter, as can be seen above in paragraph 30, was drafted in rather poor English.

(6) Other points

35.Mr Wong said in September and October 1997 he had faxed over to Mr Ip the statement of accounts. But the statements of accounts were dated 1 April and 19 June 1998. Mr Wong said that he was only able to ask Mr Ip on the phone for payment once in December 1997. But Mr Ip said he always had his mobile on as he was a businessman and that he had not received any demand from Mr Wong after the Settlement Agreement was reached in August 1997 until February 1998. Mr Wong admitted that it was only after he had been unable to settle the matter with Mr Hui in February 1998 then he came after Mr Ip. He further agreed that he did not make any formal demand until April 1998 when his solicitors issued the letter of demand.

FINDINGS

36.This case essentially turns on the credibility of the witnesses. Having considered their evidence carefully, I find Mr Wong a poor and untruthful witness. I will explain why below.

37.First, it is common ground that Mr Ip made a payment of HK$200,000 on 17 December 1996 and another of HK$450,000 on 2 January 1997. It should be noted the parties dispute when the contract of decoration was actually concluded. To recap, it is the Ips' case that the contract was concluded with Mr Hui sometime in November 1996 whereas Wellpoint, relying on the various documents signed by Mr Ip, alleges that the contract was concluded on 15 January 1997. HK$650,000 was of course a significant sum. The payments might reinforce the Ips' case because had the contract not been concluded at the time when the payments were made, Mr Ip would not have given away such a significant sum. On the other hand, it is open to Wellpoint to argue that they were paid in anticipation of the contract to be concluded. This is, in my view, what Mr Wong was attempting to say in his evidence. But he went too far beyond the line. It is his evidence that Mr Ip made the payments principally because he might then see the drawings. I find this incredible. It defies common sense that Mr Ip would pay a total sum of HK$650,000, some 23% of the total payment that he made to Wellpoint, simply for the preparation of the drawings. It demonstrates Mr Wong is capable of tailoring or exaggerating the evidence in order to suit his own purposes.

38.Second, Mr Wong had repeatedly and adamantly stressed that Mr Hui was just a part-time salesman of Wellpoint despite the Co-operation Agreement. But in my view, these are mere futile and desperate attempts which have failed miserably in light of the contemporaneous document, namely, the Co-operation Agreement. The Co-operation Agreement clearly shows that Mr Wong, Mr Hui and Mr Chan formed a partnership or joint venture to take up the Project in the name of Wellpoint. While I accept the submission of Mr Bedford, counsel for Wellpoint, that the contractual relationship under the Project was between the Ips and Wellpoint, it does not assist Mr Wong in his evidence on Mr Hui's role and the relationship among the parties under the Co-operation Agreement. Mr Wong's explanation as to why the parties entered the Co-operation Agreement is highly unsatisfactory. Why would an employee agree to share the liability or loss of his employer? And the percentage is not low. It is set at 37.5%. Why was Mr Hui stated to be a representative of another company if he was really an employee? I reject Mr Wong's explanation that it was a standard term copied by his wife. I see no reason why such a standard term had to be used at all. The Co-operation Agreement involved a subcontractor, namely, Mr S. Chan, the interior designer responsible for drawings. His liability and entitlements are just the same as Mr Hui's. Why would an employee and a subcontractor be given the same treatment? In my view, Mr Wong's evidence on the Co-operation Agreement is flatly contradicted by its express terms and contrary to commercial sense. I have no hesitation to reject it. It is beyond doubt, in my view, and I so find that Mr Hui, Mr Wong and Mr S. Chan entered into the Co-operation Agreement, which is a partnership or joint venture agreement, to take up the Project by using Wellpoint as the vehicle. This explains the role played by Mr Hui throughout as portrayed by the Ips in their evidence, which I accept. He actively participated in the initial negotiations, promptly addressed problems raised by the Ips concerning the decoration works and more importantly, settled the dispute with Mr Ip on behalf of Wellpoint at the meeting on 24 August 1997.

39.Third, Mr Wong admitted under cross-examination that he prepared most of the invoices for the purpose of this litigation. In other words, they were not documents made contemporaneously at their purported dates. Mr Wong could not satisfactorily explain why he was unable to prepare contemporaneous invoices. It would appear that he was unable to do so because Mr Hui was the person mainly responsible for preparing invoices at the material times. I agree with Mr Cheung, counsel for the Ips, that it is a serious matter that cannot be ignored. It shows that Mr Wong is liable to create evidence to support his claim. It also underpins Mr Cheung's submission that Mr Wong's evidence on the quantum of the alleged outstanding amount was confusing.

40.Fourth, Mr Wong's evidence that the works had completed by 3 May 1997 is also unsatisfactory. Mr Y.F. Chan was not sure if that was the case because of the lapse of time. He further contradicted Mr Wong in that he did not witness the handing over of the keys. According to Mr Y.F. Chan, it was Wellpoint's practice to ask clients to sign certificate of completion. But he did not recall if he had ever asked Mr Ip to sign one. Mr Wong insisted that there should be one but was unable to produce it. In my view, Mr Wong made this up as he went along in the box in order to bolster his case on completion.

41.Fifth, Mr Wong's evidence on the meeting between Mr Ip and Mr Wong on the Settlement Agreement and the Letter was unconvincing. To begin with, I see no satisfactory reason why he had to authorise Mr Hui, an ex-employee by that time, to deal with the follow-up work. Further, Mr Wong said that it was his understanding of the Letter that Mr Ip would make partial settlement of the outstanding balance : see paragraph 32 above. But the terms of the Letter made it clear that partial payment was accepted to satisfy all the outstanding claims by Wellpoint and its subcontractors. Mr Wong seemed to have suggested that he was not good in English and could not understand the contents of the Letter well. But I observed that when he gave evidence he was able to respond to counsel's questions put in English without translation. He had a degree in business. In my view, he was just trying to use that as an excuse to distant himself from the Letter. Mr Wong repeated said (and Mr Bedford echoed in his submissions) that Mr Hui was not authorised to receive payments for Wellpoint by the Letter. It is true that the Letter did not expressly say so. In particular, he pointed to the letter of 23 July 1997 in which the Ips were reminded to pay by a cross cheque made payable to Wellpoint. But I have to look at all the circumstances. And when all the circumstances are considered in the round, I find that Mr Hui must have informed Mr Wong about the entire meeting he had with Mr Ip including Mr Ip's request for the Letter and that the payments would be made to Mr Hui in order to enable him to settle the subcontractors forthwith. All these were agreed by Mr Wong and he signed the Letter accordingly. It is true that the Letter did not contain all the details. But as it was drafted by Mr Hui, who did not seem to have a good standard of English, it is not surprising at all. Further, given Mr Hui's role as revealed by the Co-operation Agreement, I find that he had the ostensible authority to make the Settlement Agreement and to receive the settlement sum for and on behalf of Wellpoint.

42.Sixth, I find Mr Wong's explanation why he did not chase after Mr Ip forthwith difficult to accept. The outstanding balance is not a small sum. There is no reason why he should wait for almost six months from August 1997 until February 1998 to make the demand. I do not accept his evidence he was unable to contact Mr Ip. He could do it by phone, by paying visit at the Premise or his office or even by letter. He admitted that he only came after Mr Ip when he could not resolve the matter with Mr Hui. That is very telling indeed. It goes to reinforce my earlier finding that he must have authorised Mr Ip to reach the Settlement Agreement with Mr Ip. It also partly explains why Mr Hui had to prepare the invoices afterward to support of his claim. For he did not intend to take legal action until February 1998. But by then, he had no contemporaneous documents to rely on. He had to create the invoices and back dated them as if they were contemporaneous documents.

43.On the other hand, I find the Ips credible and reliable witnesses. They gave consistent evidence and were not shaken under cross-examination. I accept and prefer their evidence whenever it is in conflict with that of Mr Wong.

44.The burden is on Wellpoint to prove its claim. In light of my finding that Mr Wong is a poor and unreliable witness, I am not satisfied that Wellpoint had discharged the burden. I have considerable doubt if there was any outstanding amount as alleged and even if so, what is the correct quantum. Most of the invoices in support were made afterwards and Mr Wong is, as I have already found, liable to create evidence to suit his own purposes. Paragraphs 14 to 16 above also shows considerable confusion in Wellpoint's calculation of the alleged outstanding sums.

45.Further and in any event, I find that the parties had reached the Settlement Agreement by virtue of which all the disputes between the parties had been fully settled. Wellpoint is not entitled to renege it now.

46.In light of my above findings, it is not necessary to address other issues, including whether the decoration contract was oral or in writing, when it was concluded, whether Wellpoint was in breach of its contractual obligations, and what the loss and damages the Ips had suffered is if Wellpoint's breaches are proven.

CONCLUSION

47.For the above reasons, I will dismiss Wellpoint's claim and the Ips' counterclaim as well.

48.On the question of costs, I will make an order nisi that the Ips shall have the costs of Wellpoint's claim, to be taxed if not agreed, and that there shall be no order as to costs on their counterclaim. The order nisi will become absolute 14 days after handing down.

Representation:

Mr Nigel Bedford, instructed by Messrs Solomon C. Chong & Co., for the Plaintiff (By Original Action) and the 1st Defendant (By Counterclaim)

Mr D. Cheung, instructed by Messrs K.M. Lai & Li, for the Defendants (By Original Action) and the Plaintiffs (By Counterclaim)

Mr Hui Chung Ming Billy, the 2nd Defendant (By Counterclaim), absent