Holake (HK) Ltd v. The Incorporated Owners of Fullagar Industrial Building
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DCCJ 3313/2006 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 3313 OF 2006 -------------------- BETWEEN
-------------------- Coram : Deputy District Judge A. Yuen in Court Date of Hearing : 8th August 2007 Date of handing down Judgment : 21st August 2007 JUDGMENT 1.The Plaintiff (P) bought an action against the Defendant (D) for damages on the ground that D had wrongfully terminated a maintenance agreement. P also claims a sum of money which D was due to pay for the service P had provided. Background 2.P is a lift and escalator company while D is the Incorporated Owners of Fullagar Industrial Building in Aberdeen. (the “Building”) 3.The Building had 7 lifts. No. 1 to 5 were cargo lifts while No. 6 and 7 were passenger lifts. 4.Pursuant to an agreement dated 1 April 2005, parties agreed, inter alia, that:
5.In the evening of 3 August 2005, a fire broke out inside lift No. 3. As a result, lift No. 3 was seriously damaged. All the remaining lifts were also damaged to different extent by the fire as well as by the water sprayed into the Building by firemen. 6.P was informed of the fire at 8:45 p.m. in the same evening. One of P’s technicians arrived at the Building 20 minutes later. Two more arrived shortly afterward, yet they were only allowed access into the Building at 10:10 p.m. after the fire was completely put out. 7.Lift No. 1 and 2 were least damaged. P’s technicians worked through the night and were able to repair them by the morning of 4 August 2005. 8.At around 3:00 p.m. on 4 August 2005, representatives from P, D and the E & M Services Department carried out an inspection of the lifts. 9.In the afternoon of 5 August 2005, P submitted detailed quotations to D concerning the repair of lifts No. 4 to 7. For lift No.3, it was so seriously damaged that it had to be replaced. 10.The written quotations didn’t mention the time required for the repairing of the 4 lifts. There was an oral discussion of the time required between representatives of P and D. Apparently, D was not satisfied with the required time suggested by P, therefore, D engaged another contractor to carry out the repair while terminating the Agreement immediately. 11.On 6 August 2005, D sent a letter to P informing P that the Agreement was terminated with immediate effect. 12.P, on the other hand, sent two letters to D on 10 August 2005 and 19 August 2005, informing D that P didn’t accept D’s repudiation of the Agreement. 13.Up to the present moment, there is an outstanding sum of $420 which represents fee for services provided prior to termination of the Agreement. P also claims the balance of the contract fee from 1 August 2005 to 31 March 2006 and/or damages as a result of D’s wrongful termination of the Agreement. Facts in Issue 14.Most of the facts are not in dispute save and except what was discussed between parties in relation to the time required for the repairing of the 4 lifts, i.e. lift No. 4 to 7. Plaintiff’s Case 15.P’s witness, Mr. Leung Wai Ming (PW), the assistant engineer of P, testified that his company had submitted quotations for the repairing of the 4 lifts to D in the afternoon of 5 August 2005. Then, at around 6:00 p.m. on 5 August 2005, PW received a call from Mr. Lam Chi Keung (DW) of D who enquired as to the estimated time required to repair all 4 lifts. PW said it would take 14 days. However, if two teams of men were deployed, it would take 7 days instead. DW said the owners wanted a shorter repair time. PW then said if his men worked round the clock, the repair time could be shortened to 4 days, however, it would cost D an extra $20,000 for overtime. 16.DW said he needed to seek the opinion of the owners, yet, DW never called back. 17.Then, on 8 August 2005, PW was told that D had terminated the Agreement. Defence’s Case 18.Mr. Lam Chi Keung (DW) was the manager of the management company of the Building. He testified that his company received P’s quotations at around 4:00 p.m. on 5 August 2005 after he had repeatedly chased for them. At around 5:00 p.m. he called PW and asked him about the estimated repair time. PW said the earliest time would be on 15 August 2005 for the repairing of the first lift be finished. Then it took another week for the second lift, so on and so forth. 19.DW reported what PW told him to the owners in the owner’s meeting on the very same day. The owners asked DW to make enquiries with P as to whether or not the repair time could be shortened. DW, therefore, called PW again at around 6:00 p.m. PW, over the phone, suggested that the earliest time would be on 12 August 2005. DW warned PW that if P couldn’t repair the lifts as soon as possible, D would consider terminating the Agreement immediately and engage another contractor to do the repairing. DW said this other contractor estimated that it only needs 3 to 4 days to finish the repairing of all 4 lifts. 20.PW, however, still insisted that the earliest time was on 12 August 2005 and he further explained that it’s time consuming for the repair because P put safety on top of everything. 21.DW said, after considering all factors, D decided to engage another contractor to do the repairing and terminated the Agreement immediately. DW agreed that the new contractor insisted that D had to terminate the existing Agreement and let them have the maintenance agreement before they agreed to do the repairing for D. 22.DW denied PW ever mentioned about the estimated time of 4 days. Breach of the Agreement by P? 23.Whether or not D entitled to terminate the Agreement depends on whether or not P had committed any breach of the terms and conditions of the Agreement.
25.D complained that P failed to repair the said 4 lifts as soon as reasonably possible, therefore, constituted a breach of Cl. 3. D was, therefore, entitled to terminate the Agreement. 26.There is no dispute that the fire broke out in the evening of 3 August 2005. P was informed of the fire at 8:48 p.m. and a technician arrived at the Building 20 minutes later. 2 more P’s technicians arrived later and they were allowed access to the Building at 10:10 p.m. They worked through the night and finished repairing 2 of the 7 damaged lifts by next morning. For the rest of the 5 lifts, one needs replacement and the other need extensive repairing. 27.Up to this point, I see no breach of Cl. 3 by P. 28.Was P in breach of Cl. 3 by failing to carry out the repairing of the remaining 4 lifts as soon as reasonably possible?
29.It’s clear in this case that the fire had nothing to do with any fault of P and therefore constitutes a “cause or event beyond the control of Contractor”. Therefore, P shall not be responsible for the repairing of the 4 lifts in question. The discussion between P and D as to the repairing of the 4 lifts amounts to a negotiation of a different contract. The failing to reach any agreement cannot constitute a breach of the existing Agreement. 30.Assuming, for the sake of argument, that the repairing of the 4 lifts falls within the ambit of the Agreement, then Cl. 11 comes into operation.
31.In the present case, P did notify D the time required for the repairing of the 4 lifts. Quotations were submitted for D’s approval. It’s clear that D didn’t approve nor authorize P to carry out the repair. 32.Cl. 11 allows P to suspend the service without prior notice or terminate the Agreement forthwith in writing. On the other hand, it doesn’t allow D to terminate the Agreement. 33.D could terminate the Agreement pursuant to Cl. 8 yet it requires a written notice of “three calendar months”. Otherwise, the Agreement will only expire “at the end of the Initial Term”, i.e. on 31 March 2006. Conclusion 34.P committed no breach of the Agreement. D had wrongfully terminated the Agreement and P had never accepted D’s repudiation. Therefore, P is entitled to the balance of the contract fee of the Agreement. 35.There is no dispute that there is an outstanding fee of $420. Order
Representation: Mr. G Shaw of Messrs. Deacons for the Plaintiff. Mr. Lok Tze Bong of Messrs. Huen & Partners for the Defendant. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||