Yim Wing Shing t/a Wing Shing Electrical Engineers v. Hoe Wah Engineering Services Ltd

HCA3188/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

ACTION NO. 3188 OF 2001

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BETWEEN

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Coram : Deputy High Court Judge L. Chan in Court

Date of Hearing : 3 January 2006

Date of Delivery of Decision : 3 January 2006

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J U D G M E N T

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1.The plaintiff is and was an electrical engineering contractor.  He claims $5,091,960.84 from the defendant as the price for work done under a sub-subcontract with the defendant.  The plaintiff himself gave evidence.  The defendant has not appeared at the trial.  Its solicitors had ceased to act on 16 November 2005.

2.The plaintiff said that he entered into an oral contract with the defendant in about April 1998 to carry out certain electrical installation works in Shatin.  The defendant was a subcontractor of a Wang Chong Construction Company Limited for these works and Wang Chong was the principal contractor which obtained these works directly from the Architectural Services Department (“ASD”) of the Hong Kong Government. 

3.The plaintiff’s remuneration for the works was at 57% of the value of the works assessed in accordance with a scheme called “the Schedule of Rates for Electrical Works in Government Buildings of the Hong Kong Special Administrative Authority for 1997”, or commonly known in the industry as the Dim Book Value.

4.However, Wang Chong only charged the Government 27% of the Dim Book Value as assessed.  The plaintiff explained that Wang Chong, as the principal contractor, had contracted many different items of work in its tender.  The electrical works comprised only a small portion of such works.  The low level of charges for the electrical works made it possible for Wang Chong to submit a successful tender for all the works. 

5.The scheme for assessing price of works done as Dim Book Value was however not applied to minor works.  There was a separate mode of remuneration for minor works.  Wang Chong would be paid $300 for very urgent minor works, $200 for urgent minor works and $150 for non-urgent minor works.

6.In the sub-subcontract between the plaintiff and the defendant, the plaintiff would be paid by he defendant for the same minor works at $260, $160 and $130 respectively.  He had no idea as to the percentage of the assessed Dim Book Value or the rate of the minor works that Wang Chong would pay the defendant. 

7.There were two types of work orders which were issued by the ASD to Wang Chong under the tender.  One type had its reference numbers prefixed with the letter “E” and the other type with the letter “C”.  Minor work orders only existed in the “C” category.  There were of course “C” orders which were not minor work orders but had to be assessed per the Dim Book Value. 

8.The orders were passed by the defendant to the plaintiff for execution.  The plaintiff said that he had altogether executed 283 “E” orders and 684 “C” orders.  For the “E” orders, he was entitled to be paid by the defendant $7,853,387.07.  For the “C” orders he was entitled to be paid $27,560 for 212 of these orders and $280,301.62 for the remaining 472 orders.  Of this total sum of $8,161,248.69, the defendant had paid him $2,245,000 and also paid $824,287.85 material costs for him.  The net sum payable by the defendant to him is $5,091,960.84.

9.The plaintiff has also called one Mr Mak Wai-cheung, who is an expert in undertaking electrical works for the Government.  Mr Mak is very familiar with documentation issued by the ASD.  He had studied two brief status reports and some detailed pay lists.  These documents were issued by the ASD in respect of works done by the plaintiff under Wang Chong’s contract with the Government.  They were given by the defendant to the plaintiff upon release of part payments in the past.  Mr Mak confirmed that the documentation showed that there were 282 “E” order and 212 “C” orders that had been completed and the remuneration for the same had been assessed and certified by the Government.

10.Mr Vaughan, counsel for the plaintiff, also confirmed to me that he had checked the items of the plaintiff’s claim and verified that, save for the minor work orders, the sum claimed was at 57% of the amounts assessed by the ASD.  The rates for the minor works were at $130, $160 and $260, depending on their nature.

11.I am satisfied that the plaintiff has carried out the said work orders for the defendant and the defendant is liable to pay the plaintiff the balance of $5,091,960.84.  I accept the evidence of the plaintiff and the evidence of Mr Mak.

12.However, in the course of my questioning of the plaintiff, I discovered that for minor works that were worth more than $260 for the plaintiff, the plaintiff would suppress the value to $260 and only made a claim at $260.  The reason being that if his claim should exceed $260, it had to be assessed, but if the assessed Dim Book Value should be at or below $456.14, the plaintiff’s 57% of the assessed Dim Book Value would be at or below $260.  Thus, his apparently smaller claim at $260 would in fact benefit him so long as the assessed Dim Book value should be within $456.14.  This was known to the defendant and Wang Chong.  In fact, it would also benefit Wang Chong as Wang Chong was only getting 27% of the Dim Book Value.  Wang Chong would benefit by this mode of under-claim, unless the assessed Dim Book Value should exceed $1,111.11.  The only loser in this scheme is the Government.

13.The plaintiff said that about 5% of his claims for minor works at $260 were under-claims.  Counsel told me that the total sum of all the plaintiff’s claims at $260 was $12,740.  I do not know what is the exact percentage of the under-claims, but such claims are tainted with an element of fraud or conspiracy to defraud the Government.  I would not entertain this sum.  I would deduct it from the judgment.

14.I thus order the defendant to pay the plaintiff $5,079.220.84.  I also dismiss the defendant’s counterclaim and order the defendant to pay the plaintiff the costs of this action and the counterclaim.

Mr Joseph Vaughan, instructed by Messrs Chris H M Yuen & Co., for the Plaintiff

Defendant, in person, absent