Yeung Wut Chiu v. Hing Cheong Furniture & Decoration Co
Read the full judgment text of DCCJ 718/2002 on BabelCite. This District Court judgment.
1. In this action the Plaintiff claims against the Defendant for work done under an agreement for services rendered in a construction site known as Fortune Street Phrase I. The Plaintiff claims against the Defendant for :
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DCCJ 718/2002 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 718 OF 2002 ------------------ BETWEEN
------------------ Coram : Her Honour Judge H.C. Wong in Court Dates of Hearing : 14th - 16th March 2005 Date of Handing Down Judgment : 28th June 2005 JUDGMENT 1.In this action the Plaintiff claims against the Defendant for work done under an agreement for services rendered in a construction site known as Fortune Street Phrase I. The Plaintiff claims against the Defendant for :
Background 2.The Plaintiff is and was a contractor engaged in the business of construction and decoration services. The Defendant is and was a company registered at Room 1911, 19th floor, 34 Tai Yau Street, San Po Kong, Kowloon operating the business of furniture and decoration services. 3.In or about 13th July 1999, the Defendant and one Mr. Fong Wai Ming entered into a written contract (“the written agreement”) under which Mr. Fong would provide services of the installation of metal items, louvre doors and washbasin stands at Chun Yat Court, Chun Lai Court and Fook Yat House of No. 10 Fortune Street, Cheung Sha Wan ( “the construction site”). The contract price for the work that Mr. Fong agreed to undertake under the written agreement was HK$124,421.00. 4.In or around January 2000, the Plaintiff was approached by Mr. Lam Shek Kwan, the proprietor of the Defendant, to replace Mr. Fong in the sub-contract work at the construction site in Fortune Street. The Plaintiff was given a copy of the written agreement entered between the Defendant and Mr. Fong dated 13th July 1999 containing a list of items for services to be rendered. The Plaintiff accepted and agreed orally with the Defendant that he would take over from Mr. Fong as a sub-contractor of the Defendant at the same price set out in the written agreement of HK$124,421.00, adopting the terms set out in the written agreement (“the first oral contract”). It is not disputed that the Plaintiff did perform the work under the said written agreement between the months of January and August 2000. It is also not disputed that the Defendant had paid the Plaintiff a total of HK$111,978.90 for the items of work done under the written agreement. The only matter in dispute under the first oral contract is the sum of $12,442.10, representing 10% of the contract price which remained, according to the Plaintiff, unpaid and outstanding. 5.Also in issue is the second oral contract for work performed by the Plaintiff as extra services of work done at the construction site on the instruction of the Defendant and the main contractor Chun Wo Construction (“Chun Wo”). The Plaintiff claimed that the value of such extra work performed by the Plaintiff that remained outstanding is in the sum of HK$120,973.00. The Plaintiff’s case 6.On the first claim of 10% retention money under the said first oral contract, the Plaintiff relies on Clause 2 of the said written agreement where it is stated as follows: “甲方依照淨工安裝後，按進度支付90%，餘10%會在入伙紙發出時付餘款95%，入伙後30天付清100%。” 7.It is the Plaintiff’s case that he should be paid the balance of the contract price of 10% : 5% when the occupation permit was issued and the remaining 5% within 30 days of the issuance of the occupation permit of the construction site under Clause 2 of the first oral contract. 8.The Defendant claimed that the outstanding 10% of the contract price represented the retention money under the contract. That it is an implied term under the first oral contract that the Defendant is entitled to withhold the retention money if the Plaintiff was found to have performed defective work. The Defendant relied on what he called a “trade practice’ that the main contractor would retain a sum of money representing a percentage of the contract price under the contract. The Defendant alleged that the main contractor Chun Wo had engaged another contractor Choi Nam Kee to rectify the defective work performed by the Plaintiff in the sum of $19,800.00. This sum being larger than the amount of the retention money, the Defendant claimed it is entitled to forfeit the retention money. The Defendant amended the defence at the trial and added a counterclaim for the balance of the forfeited amount against the amount deducted by the main contractor Chun Wo of $19,800.00. It is the Defendant’s case that the Plaintiff well knew of the defective work complained of and the deduction of $19,800.00 by Chun Wo from the Defendant’s contract price because the Defendant had informed the Plaintiff of it. The implied term 9.It is the Plaintiff’s claim that he was never informed of the retention money requirement either as an implied term or trade practice when he entered into the first oral contract with the Defendant. The Plaintiff had never recognized or agreed that the Defendant was entitled to the forfeiture of the money. In any event, the Plaintiff claimed that neither the written agreement nor the first oral contract had specified the sum of 10% would be forfeitable. 10.The Defendant relied on a document on pages 118 and 119 of the bundle. Page 118 of the bundle is a record produced by the Defendant of the payments to the Plaintiff under dispute. Page 119 is a copy of a receipt signed by the Plaintiff and a copy of the cheque dated 8th December 2000 for a sum of $2,290.80. The receipt stated: “本人楊活潮，身份證號碼P475656(1)受僱於興昌裝飾有限公司判工，所有累積合約數為港幣拾弍萬四仟四佰弍拾壹元正，扣除保固金港幣壹萬弍仟四佰四拾弍元玖角正及已付金額港幣拾萬零三仟三佰捌拾捌元正後，代付工人（勞健攀）薪金港幣陸仟三佰元正，尚餘應得款項為港幣弍仟弍佰玖拾元玖角正，正確無誤，今後不得追究。 11.The Defendant claimed that under the said receipt the Plaintiff is estopped from claiming the retention money when he agreed to receive the $2,290.80 as evidenced by the said receipt. On the other hand, the Plaintiff’s evidence was that he did not know the detail contents of 「幸福街判工結算」, i.e. the P.118 record and the receipt on page 119 for no one brought to his notice the meaning of this receipt and that he had rushed into signing the receipt in order to receive the money. Findings Implied term or trade custom 12.So far as this item of the 10% retention money is concerned, I find the Defendant has failed to show there was/is a trade practice or an implied term for forfeiture of 10% of the contract price under this contract. A trade practice/custom is usually established by expert evidence. No attempt had been made to establish such a trade practice at the hearing before me. Neither did the Defendant successfully show the parties had agreed under what circumstances forfeiture of 10% of the contract price would take place and how it had become an implied term. Clause 2 of the written agreement failed to specify the forfeitability of the balance of 10% of the contract price; it merely set out the payment terms. There is no express term under the written agreement, neither was there evidence of specific reference of such a term in the first oral contract. 13.The author of Chitty on Contract, stated in vol. 1 para. 13–004 : “Intention of parties. In many cases, however, one or other of the parties will seek to imply a term from the wording of a particular contract and the facts and circumstances surrounding it. The court will be prepared to imply a term if there arises from the language of the contract itself, and the circumstances under which it is entered into, an inference that the parties must have intended the stipulation in question. An implication of this nature may be made in two situations: first, where it is necessary to give business efficacy to the contract, and, secondly, where the term implied represents the obvious, but unexpressed, intention of the parties. These two criteria often overlap and, in many cases, have been applied cumulatively, although it is submitted that they are, in fact, alternative grounds. Both, however, depend on the presumed intention of the parties.” Based on the evidence before me, I find there was no such intention shown when the parties entered into the first oral contract, neither can such a term be obviously inferred from the terms of Clause 2. Estoppel 14.According to the Plaintiff, on 9th February 2001, the occupation permit of Fortune Estate was issued and the occupants moved into the Fortune Estate in March 2001. Under clause 2 of the written agreement, the Defendant would be paid 5% at the time of the issuance of the occupation permit and the balance of 5% would be paid within 30 days of the occupation permit. Based on the evidence produced, the occupation permit was not yet issued in February 2001, and the Plaintiff would not have expected the 10% to be payable until after the issuance of the occupation permit. In spite of signing the receipt for the cheque and the “Fortune Street sub-contractor account” on 8th December 2000, it is unlikely that the Plaintiff would query the retention of 10% on that day because under the written agreement, the 10% payment was not yet due. On that basis, I cannot see how the Defendant can successfully establish the receipt as evidence that the Plaintiff had accepted in full and final settlement his claim for services rendered when he accepted the $2,290.80 cheque and signed the receipt on 8th December 2000. The receipt showed he accepted the payment record on page 118 of the bundle and the cheque on P.119, it did not state he accepted the 10% ‘retention money’ had been forfeited. Based on the aforesaid, it is insufficient for the Defendant to rely solely on this document on P.119 and claim that the Plaintiff is estopped from demanding payment of the 10% retention money. 15.On the other hand, the Defendant has a counterclaim of $19,800.00 for work done, which was poorly executed that led to remedial work by an outside contractor. The item in question is the shower curtain rails installed by the Plaintiff. The Defendant claimed that the Plaintiff had failed to install the shower curtain rails at the position designated in the sample room, resulting in the replacement of bathroom tiles and the shower curtain rails had to be reinstalled. The Defendant was penalized by the main contractor and had its contract sum deducted by $19,800.00, therefore it is entitled to deduct the same amount from the Plaintiff. I find this claim to be fully supported by the documentary evidence produced. On the aforesaid basis, I allow the counterclaim of $19,800.00, and I also allow the setting off of this amount against the $12,442.10 of the 10% balance outstanding under the written agreement. The Second Oral Agreement 16.The Plaintiff alleged that he was instructed to do 7 items of additional or extra work, these included the following items of work done:
17.According to the Plaintiff, these 7 items were added during the course of work conducted under the first oral contract and he recorded these 7 items on the copy of the written agreement given to him by the Defendant. This document can be found on page 95 of the bundle. 18.So far as the requirements of these 7 items of extra work are concerned, they were necessary items under the contract between Chun Wo Construction Company (the main contractor) and Hing Cheong Decoration Company Limited (the Defendant), evidence of this can be found on page 159 of the bundle in Chinese and page 166 onwards in English. On page 168. under the ‘Carpenter and Joiner’ specifications and requirements of the sub-contractor (the Defendant) and the preamble of the contract between the main contractor and the Defendant, it set out the following stipulations: “A. The rates for all teak and teak veneered plywood shall further include for glass papering and leaving clean for polishing. 19.On page 169 of the bundle still under the preamble attached to the contract under ‘Carpenter and Joiner’ Item B:
20.In addition, page 159 of the bundle para. 2 of the contract between the main contractor and the Defendant in Chinese stated:
21.Clearly these 7 items were new items in addition to the first oral contract. As the Plaintiff was not the only sub-contractor of the Defendant, work assigned to the Plaintiff were clearly specified, these 7 items were extra items in addition to the original first oral contract. If the Plaintiff was asked to take up these extra items, which formed part of the Defendant’s work under the contract between the main contractor and the Defendant, the Plaintiff is entitled to demand payment for these 7 items of extra work. 22.I accept the evidence of the Plaintiff that these 7 items of extra work were performed under instructions. He had no reason to lie about them particularly when e.g. as many as 799 additional items of towel rails were installed. I accept these were extra items in addition to the original items listed on the written agreement between the Defendant and Fong Wai Ming (page 95). As the Plaintiff was not given the full preamble and contract requirements to the contract between the Defendant and the main contractor, there is no reason to require the Plaintiff nor should he be expected to accept the same terms under the Defendant’s contract with Chun Wo when there was no such undertaking under the first oral contract or the written agreement. It was not specified that he would have to throw in extra services such as transfer of the louvre doors up to each of the floors (at $10 per door for the 148 doors in total) or indeed the installation of the pipe-shape door-closing devices (at $20 each for a total of 120 items). These were certainly not set out in the written agreement and the Plaintiff had written these down on page 95 as extra items later on. 23.I find the Plaintiff to be an honest witness. I accept that before he had the louvre doors transported up to the floors he did obtain the approval of Mr. Lo and they had agreed the price payable before the doors were taken up the floors. I also accept the Plaintiff’s evidence that the (pipe-shaped) door closing devices installed were performed at the instruction of Mr. Lo who promised the Plaintiff that he would get paid. 24.So far as the evidence of Mr. Lo is concerned, he claimed that:
25.On the other hand, the Plaintiff’s claim was $10 per door transfer and the quantity was 148 doors making a total of $1,480.00. There were no explanations as to the differences in the number of doors moved up to different floors. Was it an item originally contracted under the written agreement on page 95 i.e. 148 doors or was it increased to 296 doors, doubling the original numbers? There is clearly a discrepancy in the number of doors transferred up the floors. In spite of the lack of explanation as to the unit price of the labour cost of removal up the floors of $5 or $10, the Defendant relied on page 271 and claimed that the work had been paid and accounted for. On the other hand, according to the Defendant, the payment of $1,204.00 on the chit dated 25 March 2000 (page 271 of the bundle) was paid out directly into the account of the Plaintiff, the date of the cheque was 26 May 2000 and date of receipt was 17 June 2000, some 20 days after the cheque was made out to the Plaintiff. It is obvious that the Plaintiff was asked to sign a receipt for the payment sometime after the cheque payment into his account at the bank. It is not known if the Plaintiff was shown the payment slip of 25 May 2000 before he was asked to sign the receipt which stated that it was payment for the first half of May for substitute work and reward payments. The Plaintiff’s explanation was that he received payments from month to month and he was happy to receive the payments, he would not normally read the small prints before he acknowledged receipt for payments paid directly into his bank account by the Defendant. The Defendant’s Mr. Lo on the other hand, claimed the transfer charge of $30 per door was included in the cost of $190 per door; he relied on the P.231 invoice. Unfortunately, the invoice did not show a separate item of transport costs charged by the supplier. 26.Based on the evidence before me, I am satisfied the Plaintiff had been receiving regular monthly payments from the Defendant and I accept that the Plaintiff believed they were working on the basis of trust and that the balance of payment will be worked out at the end of the contract. I also find that all of the additional items of work done by the Plaintiff were items the Defendant had to perform without additional payments from the main contractor, these included pesticide coating on the doors and the pipe shape air drum door closing devices, transfer of louvre doors up to the individual floors, supply of screws, nuts and bolts etc. etc. The Defendant had to supply these services to the main contractor under the main contract without additional charges. Consequently, these were items of services that would not require any quotation of charges before work commenced because the Defendant would not get any extra payments for them. The same applied to replacement of the screws because they were not up to the main contractor’s or the Housing Authority’s standards. These terms were clearly spelt out in the main contract between the main contractor and the Defendant (see paragraphs 17 – 19 above). 27.Further items such as wrongly installed items that had to be redone. The shower curtain railings which were not installed according to the sample requirement of the main contractor and had to be reinstalled had been taken care of in the set off and counterclaim (see paras. 12 – 15 above). For those works, which were not part of the first oral contract performed by the Plaintiff even though they may be under the Defendant’s contract with Chun Wo, he should not be responsible for them. 28.It follows that of the remaining items claimed: -
29.In summary, I allow the following items of claim:
30.I give judgment to the Plaintiff against the Defendant in the sum of $103,315.10 with interests at half judgment rate from the date of writ to date of judgment, thereafter at judgment rate until full payment. 31.Costs nisi – costs to the Plaintiff to be taxed if not agreed with certificate for counsel.
Parties : Mr. Sin Ping Ho of Messrs. Lam Fung & Co. for the Plaintiff. Miss Anna Saing instructed by Messrs. B. Mak & Co. for the Defendant. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||