Perfect Marble Company Limited v. Tao Yun Company Limited

HCA006851/1984

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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BETWEEN

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Coram: Hon. Penlington, J. in Court

Date of hearing: 25th September, 1965

Date of delivery of Judgment: 25th September, 1985

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JUDGMENT

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Background

1. The plaintiff is a company specialising in the installation of marble facings for buildings. In September 1982 it entered into an agreement with the defendant, acting through its architects Cecil Chao and Associates ("the architects"), to install marble facing in a building being constructed by the defendant between Queen's Road and Stanley Street. As is common with such contracts some problems were encountered during the course of the work and the amount payable was varied because of additional work and materials required but it is not in dispute that finally the agreed price payable was $939,750 and of that sum $735,000 has been paid. The plaintiff sues for the balance of $204,750.

2. Because progress on the completion of the building was held up the defendant's claim that this was due to the default of the plaintiff in completing its part of the contract. It is the defendant's case that there was an agreement between them that if the plaintiff did not finish its work by the 7th of July 1983 it would pay agreed damages of $1,000 a day thereafter and in fact there was such further delay for 92 days. The defendant counterclaims for that amount and also for loss of rental for part of the building, due to the plaintiff's delay, from 1st October 1983 to 31st December 1983 at $320,000 per month, a total of $960,000.

The Evidence

3. Oral evidence was given for both the plaintiff and the defendant but the most important evidence was the initial agreement between them and subsequent correspondence.

4. The contract is dated 25th September 1982 and inter alia provides that "normal sub-contract conditions shall be applicable. The works shall be executed to match with the progress of the main contract". In a letter dated 4th May 1983 the architects set out that it had been agreed at a meeting on 29th April that the plaintiff "would endeavour to expedite the marble installation works and complete all works in 40 days time".

5. Some problems were encountered in connection with the carved walls and it was decided that special steel anchors would be required. A quote for these was submitted by the plaintiff on 2nd June 1983 in the sum of $20,000. That was reduced to $18,000 by a letter dated 8th June 1983 from the architects to the plaintiff which forms the basis for the defendants claim for liquidated damages at $1,000 a day. It reads as follows:-

"The following record the principle points of discussion/ agreement between your Mr Y. Y. Lui/our Mr C. Chao, Mr A. Au Yeung and Mr H.T. Leung with regard to the captioned subject.

Please signify your agreement by signing and returning the attached duplicate copy of this letter."

6. The plaintiff did not in fact sign or return the duplicate but also did not reply to that letter denying that such terms were agreed.

7. A further letter dated 18th June was sent by the architects to the plaintiff urging more speed in order to meet the 7th July date and on the 5th of July, 2 days before the target date for completion the architects again wrote urging more progress. No mention was made of the $1,000 a day damages in either letter but on the 25th July a further letter again complained of delay and did refer to it.

8. There was then a delay due to causes which the defendant agrees was not the fault of the plaintiff but another letter dated 4th November 1983 was sent by the architects to the plaintiff setting new target dates 13th November for the Queen's Road facing and 20th November for Stanley Street. There is no mention of the previous date of 7th July or of the $1,000 per day liquidated damages.

9. Finally on 31st May 1984 the architects wrote to the plaintiff saying that there had been a delay of 92 days due to their fault and damages of $92,000 would be deducted from final payment. The period of time was, however, not continuous. It was from 8th July to 4th August and 19th October to 22nd December 1983. Nothing was said as to why there was that break but clearly it was not regarded as the fault of the plaintiff.

10. Oral evidence was given by the plaintiff's Managing Director, Mr LUI Yee-yun who said that problems had been encountered with the oval shaped staircase of the building. However he said that there was no question of their work being done in step with the main contract as when they started the frame of the building was already completed. No date for completion was ever agreed and he considered that by not signing and returning the letter of 8th June he was indicating that the plaintiff did not in any way accept the completion date on the liquidated damages of $1,000 a day. No such sum had ever been mentioned in discussions with the architects. If there had been a dead-line and a provision for damages as claimed the plaintiff would have taken that into account in quoting for the job. They did not do so.

11. Mr Arthur C.K. Au Yeung, one of the defendant's architects gave evidence as to the agreement reached as to damages for delay. I did not in any way consider he was not being perfectly honest but his evidence as to that agreement was rather vague and all he could say was that as far as he could recall a date of 7th of July was settled and the level damages mentioned to which Mr Lui did not object. The gap from 4th August to 19th October was that scaffolding had to be erected - so that the marble work could be finished.

Decision

12. I am satisfied that there was no agreement between the parties as to a completion day nor any agreement as to the level of liquidated damages. That the amount claimed by the plaintiff is owing is not in dispute and the only real point in issue is whether the defendant agreed to the terms set out in the letter of 8th June. The onus of proving that is on the defendant and taking all the evidence I am satisfied that onus has not been discharged. The plaintiff should have indicated in writing that it did not agree to the terms but by simply not returning the duplicate they thought that was enough and taking the context of ordinary business relations in Hong Kong I cannot say that is not correct. Silence can sometimes be taken as acceptance but the general rule is that silence is not binding on an offeree. Felthouse v. Bindley (1862)11 C.B. 869. Here there is nothing to require that the general rule should not apply.

13. There is also the admission by the defendants architects that further scafolding had to be erected before the plaintiffs were able to finish their part of the contract.

14. There will be judgment for the plaintiff for the sum of $204,750 plus interest on that sum at 12% from the 22nd December 1983 to 25th September 1985.

15. There will be an order for payment out to the plaintiff's solicitors of the amount paid into Court. The plaintiff is to have its costs.

Representation:

Mr Ernest Lin (So & Karbhari) for the plaintiff

Mr Adrian Bell (Philip K.H. Wong) for the Defendant