Kinetic Consultants Ltd v. Keith To Architects Ltd

DCCJ 2257/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2257 OF 2004

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BETWEEN

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Coram :  H.H. Judge Chow in Court

Hearing date :  28^th February, 2^nd March, 2005

Date of handing down Judgment :  5^th May, 2005

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JUDGMENT

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1.The Plaintiff is a company carrying on the business of consultancy services, predominantly in providing electrical and mechanical services (“E & M services”); the Defendant is a companying carrying on the business of architecture.  The Plaintiff’s application is for the recovery of the remaining fees (“the Fees”) for building and design services rendered by the Plaintiff to the Defendant in the sum of $228,620.26.  The Fees arose out of five individual construction and building works related projects, namely, the Tai Po Sam Yuk Secondary School project (“Sam Yuk Project”), the La Salle Road project (“La Salle Project”), the Tai Po Tau Village project (“Tai Po Tau Project”), the Mei Ah project (“Mei Ah Project”), and the Castle Peak Road project (“Castle Peak Project”).  In respect of these five projects, the Plaintiff was the sub-consultant to the Defendant, and in turn the Defendant was the consultant to the respective clients.  The Plaintiff was only responsible for providing E&M Services.  These five projects commenced in around 1997.

2.The Defendant raised the following arguments as its defence:-

(a)	The Plaintiff have not presented proof that they have delivered their services in full in all five projects;
(b)	The Plaintiff have no proof that the Defendant has agreed to their service fees for the Tai Po Sam Yuk Secondary School, Mei Ah Industrial Building and Castle Peak Road projects;
(c)	The Plaintiff has changed the “implied” pattern of payment arrangement for the five projects immediately after the resignation of one of their directors Mike Li, who was in charge of all projects related to the Defendant;
(d)	The five projects involved were not considered as completed as at the date of the Plaintiff’s invoices issued on 19th January 2004.

3.Mike Li (“Li”) was one of the Plaintiff’s two directors.  The other director is Mr. Lun Kwok Kin (“Lun”).  After Li’s resignation from the Plaintiff, Lun took over the five projects previously handled by Li.  According to his evidence, in view of the completion of the said projects, the Plaintiff issued five invoices dated 19^th January 2004 to the Defendant, demanding the Defendant to settle the outstanding sum of $266,620.26 for the said projects (which was later amended to $228,620.26).  Despite repeated demands made by the Plaintiff and its solicitors, the Defendant has failed to pay the Fees.

4.According to the evidence of To Tak Kin (“To”) (the representative of the Defendant), towards the end of 2003, Li said that he was considering resigning from the Plaintiff.  He also talked about the possibility of waiving the fees for the five projects.  Before a fee can be waived, there must have been an existing liability.  There is no evidence to show that at that time To told Li that no debt had accrued and owed by the Defendant.  Therefore at the time when Li talked about the possibility of waiving the debts, the debts must have already accrued.  Hence, at that time, the Defendant knew that the Fees had already been due and owing.  Li did not waive the fees.  He merely talked about such a possibility.  That does not constitute waiving the debts.  The Defendant still owes the Plaintiff the debts.  If the debts accrued, the Defendant must have agreed to the service fees for the five projects and that the five projects must have been completed.  Therefore ground (b) and (d) cannot stand.

5.In his evidence-in-chief, To said that the five projects were not wholly completed because the respective occupation permit and final account had not been made.  But the issuance of occupation permit and the settlement of final account have nothing to do with the Plaintiff, as it had no control over these documents.  In response to the Defendant’s allegation that the five projects were not completed by the time of issuance of the said five invoices, Lun referred to three occupation permits (Exhibits P4, P9 and P21) and a final account (Exhibit P3) to prove that the Projects concerned, namely, the La Salle Project, the Mei Ah Project, the Castle Peak Project and the Sam Yuk Project respectively, had been completed.  Regarding the Tai Po Tau Project, no occupation permit would be issued, since it was only a small scale drainage project.  Exhibit P3 was dated 16^th December 2004.  The Plaintiff instituted these proceedings on 3^rd May, 2004.  By that date, there was a sufficient cause of action for the Plaintiff to pursue the debt relating to the Sam Yuk Project.  During cross-examination, To said that the Plaintiff’s performance cannot be regarded as unsatisfactory.  Therefore grounds (a) and (d) cannot stand.

6.To said that the Defendant had all along adopted a so-called ‘back to back’ payment arrangement with the Plaintiff, and that the Plaintiff was only to be paid upon payment from the Defendant’s clients.  But he could not prove that the prior payments were made on ‘back to back’ basis.  No evidence was adduced by the Defendant to rebut the Plaintiff’s evidence that all along payments were made upon completion of each stage of work.  No evidence was adduced to alter and overturn the express term of payment in the agreements of the five Projects (Exhibit P2).  To admitted that the Defendant’s signature on the written agreements in respect of the La Salle Project and the Tai Po Tau projects were genuine.  In these two contracts, there is no mention of the alleged agreement of “back to back” payment.  If there had been such a “back to back” agreement, no doubt it would have been written into these two contracts.  I find that To’s evidence is not credible.

7.All the past payments made by the Defendant in respect of the five Projects were made upon completion of the respective work stages as stipulated in the express agreements (Exhibit P2).  This conduct of the Defendant contradicts the allegation of the “back to back” agreement.  I find that the Defendant fails to prove that the back to back agreement was in existence.  Therefore ground (c) cannot stand.

8.The Plaintiff followed the work schedule stipulated in the express agreements (Exhibit P2), and the Defendant made payments according to the payment schedules of “pay upon completion”.  Therefore both parties relied on such work pattern and payment pattern respectively.  The Defendant must have agreed to the work schedule of the Plaintiff and the payment schedule relating thereto.  Therefore ground (b) fails.

9.All the grounds raised by the Defendant fail.  Accordingly I enter judgment in favour of the Plaintiff in the sum of $228,620.26.  I order that the Defendant do pay to the Plaintiff within 14 days from today this sum of $228,620.26, with interest thereon at judgment rate, commencing from 3^rd May 2004 until payment.

Costs

10.I make an order nisi, to be made absolute in 14 days’ time, that the Defendant is to pay the Plaintiff the costs of these proceedings, to be taxed, if not agreed, with certificate for Counsel.

The Plaintiff : represented by Mr. Tony C.Y. Li, instructed by Messrs Burke , Fung & Li, Solicitors.

The Defendant: represented by Mr. To Tak Kin, unrepresented.