Ho & Consultants Ltd v. Unicon Concrete Products (HK) Ltd
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DCCJ 4997/2006 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 4997 OF 2006 ______________________
______________________ Coram : Deputy District Judge Eddie Yip in Court Date of Hearing : 29th - 31st October 2007 Date of Handing Down of Judgment : 14th November 2007 JUDGMENT Background 1.The Plaintiff seeks to claim payment for services rendered to the Defendant. The Defendant counterclaims overpayments made to the Plaintiff by the Defendant under contracts signed between the Plaintiff and the Defendant’s related companies. The Defendant prays in aid mistake on its own part and unjust enrichment on the part of the Plaintiff. 2.The Plaintiff’s name had first been “Hong Kong Concrete Engineering Management Limited” at a certain point of time. Subsequently it changed to another name, and then to the present name. The changes have no effect on the present case. I will simply refer to such companies uniformly as “the Plaintiff”. There are 3 hearing bundles, A, B, and C. I will refer to a document, say, at page 101 to 103 in Bundle B as “B101-103”. 3.There were 4 agreements involved in this case. 4.“Agreement 1” [B101-103] was reached between the Plaintiff in its previous name of “Hong Kong Concrete Engineering Management Limited” and a company called Dongguan Hengli Hamker Precast Concrete Products Factory (“Hamker”) on 27 March 2002. Hamker was the Defendant’s subsidiary. The Plaintiff was to provide consultancy services to ensure that the current system of ISO 9002:1994 could be upgraded to ISO 9001:2000 by 2003 in Hamker, and that the Plaintiff would be paid a consultancy fee in the sum of $120,000 per year (namely $10,000 payable at the end of each month) by Hamker. 5.“Agreement 2” [B105-106] was signed between the Plaintiff and a company called Unistress Concrete Product (HK) Ltd (“Unistress”) on 23 April 2003. Unistress was the Defendant’s parent company. The Plaintiff was to provide consultancy services for the establishment and maintenance of quality management system of ISO 9001:2000 in Unistress. The Plaintiff would be paid a consultancy fee in the sum of $5,000 per month by Unistress. 6.“Agreement 3” [B97] was signed between the Plaintiff and the Defendant on 8 September 2005 for the for the Defendant’s precast factory in Dongguan to obtain the ISO 14001:2004 environmental certification within 3 months from SGS, the certification agent. The Plaintiff would be paid a consultancy fee of $36,000 (namely $12,000 payable in each of the 3 months) by the Defendant. This Agreement was terminated by the Defendant in writing with immediate effect on 6 December 2005 [B86-87]. 7.“Agreement 4” [B99] was signed between the Plaintiff and the Defendant on 18 October 2005 for the Plaintiff to perform service as ISO 9000 Consultant, QA Manager and QC Engineer for precast concrete products and ready mixed concrete plants in Hamker. The Plaintiff would be paid $15,000 per month by the Defendant. This Agreement was terminated by the Defendant in writing with immediate effect on 1 December 2005 [B108]. The Plaintiff’s claim Under Agreement 3 8.The Plaintiff says that it had provided services for over 2 months under Agreement 3. So far the Defendant had not paid up anything. The Plaintiff now claims payment for such 2 months. 9.The Defendant says that 2 days before expiry of the 3 months’ period it looked like that the Plaintiff would be unable to obtain the certificate. Therefore the Defendant regarded this as anticipatory breach and accepted its repudiation of the agreement. 10.The Plaintiff says that it had good prospect of obtaining the certificate but for the Defendant’s premature termination of the Agreement. Under Agreement 4 11.The Plaintiff says that it had provided services for over 2 months under Agreement 4. So far the Defendant had not paid up anything. The Plaintiff now claims payment for such 2 months. 12.The Defendant says that the Plaintiff had repeatedly failed to discharge its contractual duties. The Defendant had complained to it but to no avail. Its conduct amounted to a total failure of consideration. It had no right to ask for payment. 13.The Plaintiff says that it had rendered proper performance under the Agreement. The Defendant’s counterclaim Under Agreements 1 and 2 14.The Defendant was Hamker’s and Unistress’s agent in making payments to the Plaintiff. Hamker, Unistress, and the Defendant were related companies. Although not pleaded as such, Defence Counsel insists that the Defendant’s case is that Hamker and Unistress had authorized the Defendant to look into their accounts with the Plaintiff with a view to paying what were due to the Plaintiff. The Defendant made a mistake in the calculations, resulting in overpayments to the Plaintiff under Agreements 1 and 2. The Defendant now counterclaims such overpayments from the Plaintiff. Hamker and Unistress are not parties to the present action. 15.The Plaintiff denies any overpayments under Agreements 1 and 2. The Plaintiff’s evidence 16.The Plaintiff calls 1 witness: Ho Chung Ming Tommy (“Tommy Ho”). He adopts his witness statement [B70-75] as evidence-in-chief. Since its establishment on 12 January 2001, he has been the Plaintiff’s director. From May 1994 to July 1997, he worked as the Defendant’s engineer. In early 2002, the Defendant asked him to change his working relationship with the Defendant by providing consultancy services rather than staying as an employee. The Defendant had 2 related companies, namely Hamker and Unistress respectively. He set up the Plaintiff to provide such services accordingly. 17.On 27 March 2002, the Plaintiff reached Agreement 1 with Hamker. On 25 April 2003, the Plaintiff reached Agreement 2 with Unistress. In accordance with the terms of Agreements 1 and 2, he provided services to Hamker and Unistress respectively. Hamker and Unistress paid him according to the terms of Agreements 1 and 2. 18.On 8 September 2005, the Plaintiff reached Agreement 3 with the Defendant. In accordance with its terms, he provided services to the Defendant. On 6 December 2005, the Defendant wrote to terminate Agreement 3 with immediate effect. The Defendant had failed to pay up the consultancy fee for the 2 monthly periods of 8 September – 7 October, and 8 October – 7 November 2005 respectively, each in the sum of $12,000. The Plaintiff now claims $24,000 under this Agreement. 19.On 18 October 2005, the Plaintiff reached Agreement 4 with the Defendant. In accordance with its terms, he provided services to the Defendant. On 1 December 2005, the Defendant wrote to terminate Agreement 4 with immediate effect. The Defendant had failed to pay up the consultancy fee for the 2 monthly periods of 18 October – 17 November 2005, and 18 November – 17 December 2005 respectively, each in the sum of $15,000. The Plaintiff now claims $30,000 under this Agreement. The Defendant’s evidence 20.The Defendant calls 2 witnesses: Chan Chung On, and Chan Kim Hung Oliver (“Oliver Chan”). 21.Chan Chung On and Oliver Chan each adopt his own witness statement [B89-95; B77-84, B115(1)-(4)] as evidence-in-chief. In February 2004, Oliver Chan was appointed the manager of Hamker. He came to know Ho. In October 2005, he became the managing director of Hamker and the director and major shareholder of the Defendant. 22.In early September 2005, he was planning to invest in the Defendant. He thought it conducive to its long-term development if it could obtain an ISO 14001:2004. On 8 September 2005, the Defendant reached Agreement 3 with the Plaintiff for the Plaintiff to obtain an ISO 14000:2004 certificate within 3 months. 23.On 1 December 2005, upon checking Agreements 1 and 2, the Defendant was of the view that they would not expire until April 2006. The Defendant wrote to the Plaintiff [B108] to terminate Agreement 4. 24.On 6 December 2005, the Defendant wrote to the Plaintiff [B86-87] to terminate Agreement 3 based on a list of complaints about the Plaintiff’s poor performance of Agreement 3, namely failure to prepare documentation for the certification and to attend the certification agent’s, SGS’s, visit, 4 critical findings and 21 non-critical findings pointed out by SGS, improper and inappropriate test for environmental control, and no formal contact to Dongguan environmental department for related tests and local authority application. The Plaintiff had no reply to the complaint. This Court’s findings On the Plaintiff’s claim 25.As regards Agreement 3, the Plaintiff says that the Defendant had failed to pay up the consultancy fee for the 2 monthly periods of 8 September – 7 October, and 8 October – 7 November 2005 respectively, each in the sum of $12,000. The Plaintiff now claims $24,000 under this Agreement. It is for the Plaintiff to prove that it has provided services to earn this sum of $24,000. 26.It is common ground that the Plaintiff had to get the certificate in order to earn the payment. It is the Plaintiff’s case that the Defendant had terminated Agreement 2 days ahead of the 3-month deadline. The Plaintiff says that it would otherwise have had a reasonably good prospect, namely over 50% chance, in getting the certificate. Tommy Ho has no explanation as to why the Plaintiff now claims only $24,000 and not the whole sum of $36,000. There is no evidence to support its allegation of work done worth $24,000. 27.To the contrary, in late November 2005 the Defendant had to directly inquire from SGS, the certification agent, of an important point, namely which items would be required to be tested for certification. It transpired that the Plaintiff’s advice had been wrong [C650, 651, 653]. 28.On 1 December 2005, the Defendant wrote to the Plaintiff [C638] to complain about the Plaintiff’s failure to provide a custom-made implementation manual for the Defendant, failure to handle the required documentation on site, failure to liaise with the relevant authorities, failure to elaborate on the Defendant’s profile on website, and failure to obtain PCI membership certificate. Up to 6 December 2005, the Plaintiff had been unable to fix up all these matters. 29.On 6 December 2005, the Defendant had written to the Plaintiff [B86-87] to terminate this Agreement based on a list of complaints about the Plaintiff’s poor performance of Agreement 3, namely failure to prepare documentation for the certification and to attend the certification agent’s, SGS’s, visit, 4 critical findings and 21 non-critical findings pointed out by SGS, improper and inappropriate test for environmental control, and no formal contact to Dongguan environmental department for related tests and local authority application. The Plaintiff had no reply to the complaint. 30.The Plaintiff fails in its claim under Agreement 3. 31.As regards Agreement 4, the Plaintiff says that the Defendant had failed to pay up the consultancy fee for the 2 monthly periods of 18 October – 17 November, and 18 November – 17 December 2005 respectively, each in the sum of $15,000. The Plaintiff now claims $30,000 under this Agreement. 32.It is for the Plaintiff to prove that it had provided services to earn this sum of $30,000. This Agreement replicated Agreement 1, for which the Defendant had continuously been, and was still, paying the Plaintiff at all material times. The Plaintiff has no evidence to support any extra work done worth $30,000. 33.The Plaintiff fails in its claim under Agreement 4. On the Defendant’s counterclaim 34.As regards Agreement 1, Defence Counsel [in para. 25 of Submission] draws upon the fact that that Tommy Ho put a new chop on the purported renewed agreement [B114] on 5 April 2004 went a long way to prove that the Plaintiff knew that it was a one-year contract. I do not agree. I consider Tommy Ho’s explanation in Court that he did so because the Plaintiff had changed its name to the present one at around that time. This explanation is borne out by the Certificate of Incorporation on Change of Name that the said change was made on 17 March 2003 [C252]. Agreement 1 was reached on 27 March 2002 when signed by the Plaintiff. I accept Tommy Ho’s explanation that the new company chop and signature were affixed in order to match the invoices. I find no merit in the Defendant’s suggestion that Tommy Ho was signing in order to unilaterally re-activate the expired contract. 35.As regards Agreement 2, Defence Counsel draws upon nothing to argue that it was a one-year contract. I see no basis for arguing that it had no time-limit. 36.Defence Counsel submits [in para. 24 of Submission] that if this Court should hold that Agreements 1 and 2 were not one-year contracts, the Defendant’s counterclaim would collapse. I now hold that they were not one-year contracts. Actually, it had been the Defendant’s stance even up to 1 December 2005, as communicated to the Plaintiff by an even-dated fax [B108], that these Agreements were still valid until “April 2006”. 37.To complete the picture, I shall go to other aspects of the Defendant’s case. The Defendant’s case as pleaded [A31, para. 15] is that “As there was a reconstruction of business between the Plaintiff and Unistress in or about 2004, and that the Defendant reposed faith and trust in the Plaintiff, it had mistakenly thought that [Agreements 1 and 2] were still in effect and wrongfully paid the Plaintiff $15,000 each month as requested in the Plaintiff’s invoices, from October 2004 to September 2005, wrongly believing that the Plaintiff was entitled to the sum for [Agreements 1 and 2].” 38.It is not apparent from the materials before me as to the nature and effect of the reconstruction of business between the Plaintiff and Unistress, and how it resulted in the Defendant’s mistake. 39.Besides, I do not accept the Defendant’s evidence that the Plaintiff had provided no services under Agreements 1 and 2 during the period in question. Chan Chung On gave no details on top of this bare allegation [B95, para. 15]. As regards Agreement 2, Oliver Chan, the Defendant’s operation and administration manager, mentioned [B80, para. 11] the Plaintiff ’s tasks in postponing Unistress’s application to HKQAA from time to time. It reflects the Plaintiff’s continual monitoring over the state of the operation. After all, there was no deadline for performance of the various tasks under Agreement 2. Oliver Chan also says in Court that the Plaintiff provided no services to Unistress since “May” 2003. This is inconsistent with his witness statement [B80, para. 13], which stated that it was since “November” 2003. I do not find him to be a reliable witness. 40.As regards Agreement 1, he stated [B81, para. 15-16] that the Plaintiff had made consultancy visits (which were all charged for payment) more often than was required by the HKQAA administrative regulations. Therefore the Plaintiff should not charge for any visits beyond the required regulations. In my view, the regulations only provided for the minimum number of visits. Parties might want to be more vigilant. I reject the Defendant’s argument. 41.The Defendant has failed to prove overpayments to the Plaintiff under Agreements 1 and 2. Conclusion 42.The Plaintiff fails in its claim. The Defendant fails in its counterclaim. I make no order as to costs. This costs order shall be made absolute 14 days from today.
Representation: Plaintiff in person, represented by Mr. Ho Chung Ming, Tommy. Mr. Shum Ka Hei Kenneth, instructed by Messrs. Stephen Lo & P.Y. Tse, for the Defendant. |