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HCA 398/2006
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 398 OF 2006
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| BETWEEN |
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SECRETARY FOR JUSTICE |
Plaintiff |
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and |
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YU'S TIN SING ENTERPRISES COMPANY LIMITED |
Defendant |
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Before : Mr Recorder Kwok SC in Court
Dates of Hearing : 14, 15, 18 & 20 August 2008
Date of handing down Judgment : 9 September 2008
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J U D G M E N T
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Introduction
1.In or around July 2003, the Director of Cultural and Leisure Services (“the Director”) of the Government of the Hong Kong Special Administrative Region (“the Government”) invited tenders for the provision of cleansing and supporting services for leisure venues in Kowloon East districts (which included Kwun Tong) for 3 years from 1 January 2004.
2.On about 27 August 2003, the defendant submitted a tender.
3.By letter dated 19 December 2003, the Director accepted the defendant’s tender for the provision of cleansing and supporting services for leisure venues in Kwun Tong. A Memorandum of Acceptance dated 12 January 2004 was signed by an assistant director of the Cultural and Leisure Services Department (“LCSD”). The contract between the Director and the defendant came to be known as Contract No. LCC 141/03 (“the Contract”).
4.On 3 February 2005, the defendant was convicted on its own plea of 15 offences contrary to sections 23 and 39 of the Employment Ordinance, Cap 57, for failure to pay wages within the statutory time limit under section 23 and for failure to grant statutory holidays in accordance with section 39. The offences related to the performance of services under the Contract and the defendant was fined various sums totalling $9,500.
5.By letter dated 21 February 2005 to the defendant, the Director terminated the Contract with effect from 1 March 2005.
6.On 23 December 2005, Yu Lai Yin, the (then) general manager of the defendant, Ng Lam Tin, the then supervisor of the defendant, and So Mun Yu, the then district manager of the defendant, were convicted after trial of conspiracy to defraud by falsely representing to the LCSD that the defendant did pay monthly wages in January and February 2004 at the rates provided for in Contract Schedule 4, a schedule to the Contract.
7.On 23 January 2006, the plaintiff issued the writ in this action claiming damages against the defendant.
8.The defendant counterclaimed “loss and damages”.
9.Before counsel for the plaintiff opened his case, counsel for the defendant told me that he did not dispute quantum and that he did not dispute that there were some breaches of clauses 15 (on minimum wages and maximum working hours for staff) and 19 (on compliance with the Employment Ordinance) of the Special Conditions of Contract.
10.The plaintiff called 2 witnesses, Wong Ying Ming (“Wong”) and To Siu Ngan, Kate (“Kate”). Wong was cross-examined briefly and only on auditors’ fees. There was no cross-examination of Kate at all.
11.The defendant called Yu Lai Yin, Paul (“Paul Yu”) and Yu Min Hsien, Teresa (“Zoe Yu”) to give evidence. Before they were called, counsel for the plaintiff identified various passages in their witness statements of defence witnesses and objected to their admission. After hearing counsel for the plaintiff and counsel for the defendant, I did not allow evidence to be led on all the matters objected to by counsel for the plaintiff and told the parties my reasons would be given at a later stage which I now do.
Reasons for disallowing evidence
12.The witness statement of Paul Yu dated 26 March 2007 is reproduced in Schedule 1 to this Judgment. His supplemental statement dated 14 October 2007 is reproduced in Schedule 2. Zoe Yu’s witness statement dated 26 March 2007 is reproduced in Schedule 3 and her supplemental witness statement dated 11 June 2008 in Schedule 4. These schedules are reproduced using soft copies of witness statements supplied by solicitors for the defendant, except that corrections have been made to errors in the soft copy of Paul Yu’s supplemental witness statement as re-typed by solicitors for the defendant.
13.The passages objected to are underlined. The beginning of each passage objected to is indicated by the mark “《” and the end of that passage by “》”. Each passage is identified by a number at the beginning of each passage, e.g. “『1』”.
14.My reasons are:
『1』 This passage alleged matters which transpired between Paul Yu and Kate. There was no cross-examination of Kate when she gave evidence. This was calculated to, and did, create the impression that the evidence of Kate was no longer in dispute. To adduce evidence which contradicted Kate’s evidence in such circumstances was unfair to the plaintiff in that it deprived Kate of any opportunity to comment on Paul Yu’s evidence. Where there is a direct conflict of evidence, it is desirable for the judge to have the opportunity to assess the performance of the witnesses under cross-examination, if not also in-chief, in resolving the conflict. I was deprived of such opportunity. Absent any explanation for not having cross-examined and not having put the defendant’s case to the plaintiff’s witnesses, I decided to exclude evidence on matters which could and should have been put to the witnesses but were not. Counsel for the defendant had no objection to the exclusion of this passage.
『2』 This passage sought to argue that there was no breach of clause 15 of the Special Conditions of Contract and Contract Schedule 4. Breach had been conceded. It also sought to raise the effect of meal time on quantum. Quantum (save possibly on audit fees) had been conceded. To raise matters on issues which had been conceded would be a waste of time. Counsel for the defendant had no objection to the exclusion of this passage.
『3』 This passage alleged matters which transpired between Paul Yu and Wong. There was no cross-examination of Wong when he gave evidence. It was disallowed for reasons given under 『1』 above. Counsel for the defendant had no objection to the exclusion of this passage.
『4』 This passage alleged matters which transpired between Paul Yu and Wong. There was no cross-examination of Wong when he gave evidence. It was disallowed for reasons given under 『1』 above.
『5』 This passage alleged matters which transpired between Zoe Yu and Wong. There was no cross-examination of Wong when he gave evidence. It was disallowed for reasons given under 『1』 above. Counsel for the defendant had no objection to the exclusion of this passage. The point where counsel for the defendant cut off passage 『5』seemed odd in that it was in the middle of a sentence.
『6』 This passage alleged matters which transpired between Zoe Yu and Wong and contained accusations against other LCSD officers. There was no cross-examination of Wong or Kate and none of the matters alleged in this passage was put to the plaintiff’s witnesses. It was disallowed for reasons given under 『1』 above. Another reason was that it raised matters not pleaded.
『7』and『8』 These passages set out Zoe Yu’s opinion on termination for breach of the Employment Ordinance. Her opinion was irrelevant and inadmissible.
『9』 This passage alleged messages given by LCSD to the defendant. There was no cross-examination of Wong or Kate and none of the matters alleged in this passage was put to the plaintiff’s witnesses. It was disallowed for reasons given under 『1』 above. Another reason was that it raised matters not pleaded. Counsel for the defendant had no objection to the exclusion of this passage.
『10』 This passage alleged matters which transpired between Zoe Yu and Kate. There was no cross-examination of Kate when she gave evidence. It was disallowed for reasons given under 『1』 above. Another reason was that it raised matters not pleaded.
『11』 This passage alleged matters which had not been put to the plaintiff’s witnesses. It was disallowed for reasons given under 『1』 above. It also contained Zoe Yu’s opinion on the question of the termination of the Contract. Her opinion was irrelevant and inadmissible. Another reason was that it raised matters not pleaded.
『12』 This passage contained Zoe Yu’s opinion on the contravention of the Employment Ordinance. Her opinion was irrelevant and inadmissible.
『13』 Zoe Yu accused the LCSD of setting a trap to betray the defendant in the hope of protecting itself from political and public pressure. It was not pleaded and inadmissible. This was irrelevant (because the issue is whether the LCSD was entitled in law to terminate the Contract) and scandalous and inadmissible.
『14』 This passage alleged matters which had not been put to the plaintiff’s witnesses. It was disallowed for reasons given under 『1』 above. Another reason was that it raised matters not pleaded.
『15』 This passage sought to raise the effect of meal time on quantum. Quantum (save possibly on audit fees) had been conceded. To raise matters on issues which had been conceded would be a waste of time. It also raised matters not pleaded and contained inadmissible evidence of Zoe Yu’s opinion. Counsel for the defendant had no objection to the exclusion of this passage.
Contract documentation
15.The tender documents consisted of:
(a) Tender Form (GF 231 – Parts 1 to 5);
(b) Interpretation (Supplement) (Sheets 1 to 2);
(c) Terms of Tender (Supplement) (Sheets 3 to 11);
(d) General Conditions of Contract (Supplement) (Sheets 12 to 24);
(e) Special Conditions of Contract (Sheets 25 to 43); and
(f) Contract Schedules (Sheets 44 to 155).
16.The Tender Form was dated 27 August 2003 and signed by Paul Yu on behalf of the defendant agreeing to the following:
“1. Having read the Terms of Tender, the General Conditions of Contract and (if any) the Special Conditions of Contract set out in Parts 1–3 hereof, we agree to be bound by the terms and conditions as stipulated therein.
2. We do hereby agree to carry out the whole (or any part) of the Services mentioned in the attached Schedule which may, during the Contract period or any extension thereto be required, by or on behalf of the Government Representative to be carried out, at the charges quoted by us in the said Schedule free of all other charges, subject to and in accordance with the Terms of Tender, the General Conditions of Contract and (if any) the Special Conditions of Contract.”
17.By letter dated 19 December 2003, the Director accepted the defendant’s offer for the provision of cleaning and supporting services for Kwan Tong district and stated that:
“The duplicate contract document No. LCC 141/03 will be sent to you by registered mail upon settlement of contract deposit. However, this letter of acceptance shall constitute a binding contract.”
18.The Memorandum of Acceptance on the Tender Form was signed by an assistant director of LCSD and dated 12 January 2004 accepting the defendant’s “offer upon the terms of this Contract so far as such offer relates to the following item(s) in the Schedule: Provision of Cleansing and Supporting Services for Kwun Tong District for the 36- month period from 1.1.2004 to 31.12.2006 at an estimated total amount of HK$28,111,500.00”.
19.Clause 1 of the Interpretation (Supplement) defined “Government Representative” to mean: “the [LCSD] acting for and on behalf of the Government or any duly authorized officer for the purpose of this Contract”.
20.Clauses 11 and 12 of the Terms of Tender (Supplement) provided that:
“11. Offers to be Binding
11.1 All parts of the Tender Documents submitted and offered by the Tenderer will be binding on the Tenderer after the Contract has been awarded. If there is any amendment/addition/deletion to any part of the Tender Documents before the award of tender, the amendment/addition/deletion must be agreed upon in writing between the Government Representative and the Tenderer. Such written agreement shall also form part of the Contract after the Contract has been awarded.
…
11.3 Tenderer’s offers on wage levels and working hours for his workers shall be binding on the Tenderer after the Contract has been awarded.
11.4 Tenderer will be responsible to ensure that his sub-contractor, employees or agents will also observe the conditions on wage levels and working hours included in his tender offers.
11.5 Variation to any part of the Contract will not be allowed after the Contract has been awarded unless prior approval has been sought from the Government Representative.”
“12. Award of Contract
The successful Tenderer will receive as an indication of acceptance a fax or a letter of acceptance prior to the receipt of the duplicate copy of the Contract document duly completed. This fax or letter of acceptance shall constitute a binding Contract.”
21.Clause 18 of General Conditions of Contract (Supplement) provided that:
“Entire Agreement
The Contract supersedes all prior agreements, arrangement and undertakings between the parties and constitutes the entire Contract between the parties relating to the subject matter hereof. No addition to or modification of any provision of the Contract shall be binding upon the parties unless made by a written instrument signed by a duly authorised representative of each of the parties.”
22.The following clauses in the Special Conditions of Contract are material:
“15. Level of Wages and Allowable Maximum Working Hours for Staff
15.1 The Contractor and his sub-contractors shall pay the wages not less than those specified by him in Contract Schedule 4 for each staff. For avoidance of doubt, the monthly wage for staff working hours deviating from the referenced hours as quoted in Contract Schedule 4 shall be determined on a pro rata basis. The Contractor shall also not allow his working staff to work with net total hours in a day more than specified by him in Contract Schedule 4.
15.2 The Contractor undertakes and warrants that he will pay each workman the wage specified in 15.1 above at the time and in the manner so agreed between the Contractor and his staff.
15.3 For reference purpose, the Contractor’s attention is drawn to the wage statistics concerning the overall average monthly salary for cleaner (general) in Sanitary and Similar Services as published in the Quarterly Report of Wage and Payroll Statistics by the Census and Statistics Department in the edition for the time being in force (that is, March 2003 edition).
15.4 If there is any breach of clauses 15.1 and 15.2 by the Contractor, the Government Representative shall be entitled to record in writing a default notice in employment commitment to the Contractor and deduct in the form of liquidated damages of a sum as stated in clause 27.4 of Special Conditions of Contract.
15.5 In addition to clause 15.4, the Government Representative may, by notice in writing, terminate this Contract for any breach of clauses 15.1 and 15.2 by the Contractor and the Contractor is not entitled to claim any compensation. The Contractor shall be responsible for any expenses or loss that the Government Representative may incur or suffer due to the breach of this clause.
15.6 The Contractor shall ensure that his contract with his sub-contractor, employee or agent shall contain a contractual clause to the same effect as the ‘Level of Wage and Allowable Maximum Working Hours for Staff’ clause hereof. The Contractor shall ensure that any default of the said contractual clause by his sub-contractor, employee or agent shall be readily remedied. Any failure of his sub-contractor, employee or agent to observe the aforesaid contractual clause shall be deemed to be a breach of the Contract on the part of the Contractor and the Government Representative shall be entitled to terminate the Contract under clause 16 of the Special Conditions of Contract.”
“16. Immediate Termination for the Contract
16.1 The Contractor agrees and undertakes to perform the Contract in accordance with the terms as set out in clause 15 of Special Conditions of Contract and Contract Schedule 4.
16.2 Without prejudice to this ‘Immediate Termination of Contract’ clause hereof and without prejudice to any other right, actions or remedy which shall have accrued or shall accrue thereafter to the Government, the Government may at any time terminate the Contract forthwith if the Contractor is in breach of all or any of the commitments set out in clause 16.1 of Special Conditions of Contract, and recover all losses, damages, costs and expenses including but not limited to all costs and expenses incurred in relation to engaging replacement contractor(s) and conducting re-tendering exercise(s), if any, upon the Contractor’s breach of clause 16.1 of Special Conditions of Contract, and shall have the right to deduct any money due to the Contractor under this Contract and under any other Government contracts.”
“19. Compliance with Employment Ordinance
The Contractor shall comply with the Employment Ordinance, Chapter 57 of the Laws of Hong Kong. Conviction record of breaches of the Employment Ordinance in relation to the Contractor’s performance of this Contract may be construed as a material breach of the Contract and without prejudice to any other rights or remedies which the Government has or may have, the Government shall be entitled to terminate the Contract in accordance with clause 16 of Special Conditions of Contract.”
“20. Compliance with Immigration Ordinance and Occupational Safety and Health Ordinance
20.1 The Contractor shall comply with the Immigration Ordinance, Chapter 115 of the Laws of Hong Kong. If the Contractor is convicted of an offence under the Immigration Ordinance for employing a person who is not lawfully employable in performing this Contract, such conviction shall constitute a material breach of the Contract and without prejudice to any other rights or remedies which the Government has or may have, the Government shall be entitled to terminate the Contract in accordance with clause 16 of Special Conditions of Contract.
20.2 The Contractor shall comply with the requirements of the Occupational Safety and Health Ordinance, Chapter 509 of the Laws of Hong Kong and any other legal provisions pertaining to the health and safety of his own staff, Government staff and others who may be affected by his performance of Services. Conviction record of breaches of the Occupational Safety and Health Ordinance in relation to the Contractor’s performance of the Contract may be construed as a material breach of the Contract and without prejudice to any rights or remedies which the Government has or may have, the Government shall be entitled to terminate the Contract in accordance with clause 16 of Special Conditions of Contract.”
“21. Sub-contractors’ Compliance with Employment Ordinance, Immigration Ordinance and Occupational Safety and Health Ordinance
21.1 The Contractor shall ensure that his contract(s) with his sub-contractor(s), employees or agents which are subject to prior written consent of the Government Representative, shall contain contractual clauses to the same effect as the ‘Compliance with Employment Ordinance’ and ‘Compliance with Immigration Ordinance and Occupational Safety and Health Ordinance’ clauses herein. Any failure on the part of the Contractor’s sub-contractor, employee or agent to observe any of the aforesaid contractual clauses shall be deemed to be a breach of the ‘Compliance with Employment Ordinance’, and ‘Compliance with Immigration Ordinance and Occupational Safety and Health Ordinance’ clauses on the part of the Contractor himself entitling the Government to terminate the Contract forthwith in accordance with clause 16 of Special Conditions of Contract. Without prejudice to any of the Government Representative’s rights under this clause, the Contractor shall ensure that any default on the part of his sub-contractors, employees or agents of the said clauses shall be readily remedied.
21.2 Conviction of the Contractor’s (or his sub-contractors, employees or agents) breaches of the Employment Ordinance, Chapter 57 of the Laws of Hong Kong, the Immigration Ordinance, Chapter 115 of the Laws of Hong Kong and the Occupational Safety and Health Ordinance, Chapter 509 of the Laws of Hong Kong in relation to the performance of this Contract or other Government contracts shall constitute a sufficient ground for the Government Representative’s removal of the Contractor from the Government Representative’s list of suppliers.”
“22. Payment for Services
22.1 Provided that the Contractor shall have performed the Services in accordance with the Contract and that the Contractor provides a statement which affirms all his cleaners have been paid no less than the wages as specified in Contract Schedule 4 to the satisfaction of the Government Representative, the Government Representative shall pay to the Contractor the Monthly Rates in arrears as specified in Contract Schedule 1 subject to any payment discount or deductions provides herein and in the manner hereinafter provided.
…”
“25. Termination
The Government Representative shall be entitled to forthwith terminate the Contract but without prejudice to any other rights which the Government Representative has or may have if –
(a) the Contractor shall fail to carry out the whole or any part of the Services or neglect to observe or perform any of the terms and conditions of the Contract or to pay any of the sums payable by the Contractor under the Contract or shall be in breach of his warranties or undertakings under clause 4 of the General Conditions of Contract (Supplement) and (in the case of a breach capable of being remedied) shall have failed within fourteen (14) days or such longer period as the Government Representative may allow after the receipt of a request in writing from the Government Representative so to do, shall remedy the breach (such request to contain a warning of the Government Representative’s intention to terminate); or
(b) the Contractor shall go into liquidation or a petition shall be filed for the bankruptcy or the winding up of the Contractor’s business otherwise than for the purpose of a reconstruction or amalgamation previously approved by the Government Representative in writing or the Contractor shall become insolvent or make any composition or arrangement with creditors; or
(c) the Contractor shall assign or purport to assign any or all the burden or benefits of the Contract without the prior written consent of the Government Representative.”
“38. Order of Precedence
In the event that there is any conflict, contradiction or ambiguity between any documents which form part of the Contract, the following order of procedure shall be applied in order to resolve any such conflict, contradiction or ambiguity –
(a) Special Conditions of Contract;
(b) General Conditions of Contract (Supplement);
(c) General Conditions of Contract i.e. Part 2 in GLD-TERMS-2 Standard Terms and Conditions;
(d) Contract Schedules;
(e) Terms of Tender (Supplement); and
(f) Terms of Tender i.e. Part 2 in GLD-TERMS-2 Standard Terms and Conditions.”
23.Contract Schedule 4 provided as follows:
“1. The Contractor shall confirm whether he will provide the manpower requirements as required by the Government Representative in Contract Schedule 3 and state whether he will provide any additional staff for the Venue.
2. The Contractor shall indicate the wages and maximum allowable working hours per day and maximum allowable working days per month of his cleaners/labours as follows-
(a) Wages (Note)
| |
Wages per month per staff |
Net working hours per day |
Total number of working days per month |
| Cleaner/Worker |
HK$5,081.00 |
8 |
26 |
(b) Maximum allowable working hours
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Maximum allowable net working hours per day for each staff (excluding meal break) |
Maximum allowable working days per month for each staff |
| Cleaner/Worker |
8 |
31 |
Note: Tenderers’ attention is drawn to clause 15 of the Special Conditions of Contract concerning the level of wage and allowable maximum hours for cleaner/workers.”
Breach of clause 15 of the Special Conditions of Contract and Contract Schedule 4
24.The defendant’s conduct of its case showed that it did not have the requisite respect for concessions voluntarily made or the requirements of pleading.
25.Counsel for the defendant told me before any witness was called that a breach of clause 15 of the Special Conditions of Contract was conceded. He categorically confirmed his concession in his closing submission.
26.He went on to submit that:
“The oral evidence of [Zoe Yu] which relevant part is not challenged, shows that the Defendant had taken steps to remedy the breaches of Clauses 15 and the wage differences for January and February was made up in March 2004 already.”
27.Neither willingness to remedy a breach of clause 15 nor actual remedy was pleaded.
28.By clause 15.1 of the Special Conditions of Contract, the defendant agreed that it and its sub-contractors “shall pay the wages not less than those specified by him in Contract Schedule 4 for each staff” and it “shall also not allow [its] working staff to work with net total hours in a day more than specified by [it] in Contract Schedule 4”. The first table in Contract Schedule 4 dealt with minimum wages and the second table with maximum working hours.
29.On minimum wages, clause 15.1, read with Contract Schedule 4, provided that:
“(a) Wages (Note)
| |
Wages per month per staff |
Net working hours per day |
Total number of working days per month |
| Cleaner/Worker |
HK$5,081.00 |
8 |
26 |
30.What the defendant agreed was to pay a minimum wage of $5,081 per month, not a minimum wage of $60,972, or $5,081 x 12, per annum. The minimum monthly wage was for 8 net working hours per day and 26 working days per month.
31.Meal breaks were irrelevant for the simple reason that they did not form part of the net working hours, whether in relation to the minimum wage or the maximum allowable working hours under the second table which provided that:
“(b) Maximum allowable working hours
| |
Maximum allowable net working hours per day for each staff (excluding meal break) |
Maximum allowable working days per month for each staff |
| Cleaner/Worker |
8 |
31” |
Meal breaks were expressly excluded.
32.The number of working days for the purpose of the minimum monthly wage was 26, not more than 26.
33.In order to arrive a minimum wage of $5,081 in accordance with clause 15.1, read with the tables in Contract Schedule 4, the minimum hourly rate was $5,081 ÷ 8 ÷ 26 = $24.43.
34.Zoe Yu’s computation in Exhibit D1 was wrong and the defendant was in breach of clause 15, read with Contract Schedule 4, even if the defendant had paid its workers at the hourly rate of $23.03 which it had not.
The conspiracy conviction
35.Paul Yu, the (then) general manager of the defendant, Ng Lam Tin, the (then) supervisor of the defendant, and So Mun Yu, the (then) district manager of the defendant, were charged with conspiracy to defraud and were convicted on 23 December 2005 after trial. Paul Yu was sentenced to 12 months’ imprisonment, Ng Lam Tin 15 months’ imprisonment and So Mun Yu 10 months. The applications for leave to appeal by Paul Yu and Ng Lam Tin were dismissed by the Court of Appeal on 2 April 2007. So Mun Yu had abandoned the application for leave to appeal.
36.The Particulars of offence stated that between 24 December 2003 and 7 April 2004, the 3 accused conspired together to defraud the LCSD by dishonestly:
(a) falsely representing to the LCSD that the defendant had paid its cleaning works at or above the stipulated wages in accordance with the amount of wage specified in the Contract;
(b) concealing from the LCSD the fact that the cleaning workers had not been paid the stipulated wages in full;
(c) falsely representing to the LCSD that the defendant had complied with all the relevant terms and conditions of the Contract; and
(d) inducing the LCSD to make, or cause to be made, monthly payments to the defendant pursuant to the Contract.
37.On the LCSD’s interpretation of the Contract, the minimum hourly rate was $24.42. The accused contended that the defendant’s interpretation differed from that of the LCSD and that on the defendant’s interpretation, the minimum hourly rate was $23.03.
38.In considering whether the prosecution could prove the conspiracy beyond reasonable doubt, the deputy District Judge thought special attention should be paid to the following points:
(a) According to the undisputed evidence, the wages for January and the wages paid through autopay for February were calculated on the basis of the daily wage rate of the witnesses upon their appointment and the number of days worked.
(b) Although the LCSD and the defendant differed in their interpretation of the Contract, the workers’ hourly rate should not be lower than $24.42 and $23.03 respectively. However, the hourly rate of the witnesses upon appointment ranged from $16.25 to $20, lower than that based on the defendant’s interpretation.
(c) If the defendant’s interpretation was bona fide, why were the witnesses unaware of the existence of the $23.03 hourly rate? Why did the defendant not pay the wages for January and February 2003 at the hourly rate of $23.03? Why did the monthly returns for January and February tally with the LCSD’s interpretation of the Contract? Why did the defendant not pay the wage difference for January, whether on the basis of their interpretation of the Contract or on the LCSD’s interpretation?
(d) The method for wage calculation first put forward by the defendant to the LCSD was complicated. There was said to be a misunderstanding on the part of the workers at the meeting held in early March, which was convened by Wong after he had learned of the complaints lodged by the workers about their wages. However, if the defendant had paid the workers in accordance with the defendant’s return for January, why would the workers complain?
39.The deputy District Judge concluded that:
(a) the defendant’s claim that it had complied with the terms and conditions of the Contract but that its interpretation differed from that of the LCSD was merely an excuse;
(b) in fact, there was sufficient evidence in that case to show that the defendant falsely represented to the LCSD that it had paid wages in accordance with the terms and conditions of the Contract and that the defendant concealed the fact that the workers’ wages were lower than those stipulated in the Contract; and
(c) such conduct was not only dishonest but also damaged the interests of the LCSD under the Contract.
40.Section 62 of the Evidence Ordinance, Cap. 8, provides that:
“(1) In any civil proceedings the fact that a person has been convicted of an offence by or before any court in Hong Kong shall, subject to subsection (3), be admissible in evidence for the purpose of proving, where to do so is relevant to any issue in those proceedings, that he committed that offence, whether he was so convicted upon a plea of guilty or otherwise and whether or not he is a party to the civil proceedings; but no conviction other than a subsisting one shall be admissible in evidence by virtue of this section.
(2) In any civil proceedings in which by virtue of this section a person is proved to have been convicted of an offence by or before any court in Hong Kong-
(i) he shall be taken to have committed that offence, unless the contrary is proved; and
(ii) without prejudice to the reception of any other admissible evidence for the purpose of identifying the facts on which the conviction was based, the contents of any document which is admissible as evidence of the conviction, and the contents of the information, complaint, indictment or charge on which the person in question was convicted, shall be admissible in evidence for that purpose.”
41.The conspiracy conviction is relevant to the following issues in this action:
(a) whether the defendant had paid its workers in January and February 2004 in accordance with Contract Schedule 4;
(b) whether the defendant had falsely represented to the LCSD that it had paid its cleaning works at or above the stipulated wages in accordance with Contract Schedule 4;
(c) whether the defendant had concealed from the LCSD the fact that the cleaning workers had not been paid in full in accordance with Contract Schedule 4; and
(d) whether the defendant had falsely represented to the LCSD that it had complied with Contract Schedule 4.
42.In my judgment, the conspiracy conviction is admissible under section 62. Based on the conspiracy conviction and the facts on which the conviction was based, I make the following findings of fact:
(1) For January and February 2004, the defendant had paid its workers at rates below $23.03 or $24.42 per hour. In other words, it had not paid its workers in January and February 2004 in accordance with Contract Schedule 4.
(2) The hourly rate of $23.03 was not a bona rate based on which it paid its workers for January or February 2004.
(3) The defendant had falsely represented to the LCSD that it had paid its cleaning works at or above the stipulated wages in accordance with Contract Schedule 4.
(4) The defendant had concealed from the LCSD the fact that the cleaning workers had not been paid the stipulated wages in full in accordance with Contract Schedule 4.
(5) The defendant had falsely represented to the LCSD that it had complied with all the relevant terms and conditions of the Contract.
(6) The defendant had not paid its workers the wage difference between the amounts at which the workers had actually been paid for January 2004 and the minimum wages they should have been paid under the Contract.
43.Zoe Yu’s allegation that the defendant had made up the wage shortfall for January was a bare assertion not supported by any documentary evidence or particulars. I have no hesitation in, and do, reject it. The defendant’s payments of wages to its workers were matters peculiarly within the knowledge of the defendant and it might be expected to have material evidence to give the issue. The absence of documentary evidence or particulars did not assist the defendant. Ma J (as he then was) summarised the principle on drawing of inferences in cases of absence of material evidence as follows in Kao Lee & Yip v Koo Hoi Yan and others [2003] 3 HKLRD 296 at paragraph 34:
“None of the Defendants gave evidence. In these circumstances, adverse inferences may be more easily drawn against them and correspondingly, any inferences favourable to KLY can more confidently be drawn as well:- see Polaroid Far East Ltd v Bel Trade Co Ltd [1992] HKLR 447 at 454; Jones v Dunkel (1958-1959) 101 CLR 298. This is of course providing that the rest of the evidence allows such inferences to be drawn and that such evidence is credible in the first place.”
In Wisniewski v Central Manchester HA [1998] Lloyd’s Rep Med 223 at p. 240 Brooke LJ derived the following principles from the line of authority he had cited:
“(1) In certain circumstances a court may be entitled to draw adverse inferences from the absence or silence of a witness who might be expected to have material evidence to give on an issue in an action.
(2) If a court is willing to draw such inferences they may go to strengthen the evidence adduced on that issue by the other party or to weaken the evidence, if any, adduced by the party who might reasonably have been expected to call the witness.
(3) There must, however, have been some evidence, however weak, adduced by the former on the matter in question before the court is entitled to draw the desired inference: in other words, there must be a case to answer on that issue.
(4) If the reason for the witness’s absence or silence satisfies the court then no such adverse inference may be drawn. If, on the other hand, there is some credible explanation given, even if it is not wholly satisfactory, the potentially detrimental effect or his/her absence or silence may be reduced or nullified.”
Wisniewski v Central Manchester HA was applied by Chu J in Bank of China (Hong Kong) Limited v Wong Tang and others, HCMP 4222 of 2003, 24 August 2006, at paragraph 60.
44.I find as a fact that the defendant had been in breach of clause 15, read with Contract Schedule 4, for January and February 2004 and its breach in respect of January has not been remedied.
Entitlement to terminate on the ground of breach of clause 15
45.Counsel for the defendant submitted clauses 15 and 19 of the Special Conditions of Contract “are innominate terms, the breach of which do (sic) not entitle the Plaintiff to terminate the contract”. He cited certain passages in Rice (t/a Garden Guardian) v Great Yarmouth Borough Council [2000] App. L.R. 06/30 out of context and based his argument “upon a dangerous misunderstanding, or misapplication” of the relevant authorities.
46.The submission that one must consider the breach actually committed and then decide whether that default would deprive the party not in default of substantially the whole benefit of the contract was held by the House of Lords to be “unacceptable in law” in Bunge Corpn. v. Tradax S.A. [1981] 1 WLR 711. At pp. 714 – 716, Lord Wilberforce said (and agreed to by Lord Fraser, Lord Scarman and Lord Lowry):
“…the main contention of Mr. Buckley for the appellant was based on the decision of the Court of Appeal in Hongkong Fir Shipping Co. Ltd. v. Kawasaki Kisen Kaisha Ltd. [1962] 2 Q.B. 26, as it might be applied to clause 7. Diplock L.J. in his seminal judgment illuminated the existence in contracts of terms which were neither, necessarily, conditions nor warranties, but, in terminology which has since been applied to them, intermediate or innominate terms capable of operating, according to the gravity of the breach, as either conditions or warranties. Relying on this, Mr. Buckley’s submission was that the buyer's obligation under the clause, to ‘give at least [15] consecutive days’ notice of probable readiness of vessel(s) and of the approximate quantity required to be loaded,’ is of this character. A breach of it, both generally and in relation to this particular case, might be, to use Mr. Buckley’s expression, ‘inconsequential,’ i.e. not such as to make performance of the seller’s obligation impossible. If this were so it would be wrong to treat it as a breach of condition: Hongkong Fir would require it to be treated as a warranty.
This argument, in my opinion, is based upon a dangerous misunderstanding, or misapplication, of what was decided and said in Hongkong Fir. That case was concerned with an obligation of seaworthiness, breaches of which had occurred during the course of the voyage. The decision of the Court of Appeal was that this obligation was not a condition, a breach of which entitled the charterer to repudiate. It was pointed out that, as could be seen in advance the breaches, which might occur of it, were various. They might be extremely trivial, the omission of a nail; they might be extremely grave, a serious defect in the hull or in the machinery; they might be of serious but not fatal gravity, incompetence or incapacity of the crew. The decision, and the judgments of the Court of Appeal, drew from these facts the inescapable conclusion that it was impossible to ascribe to the obligation, in advance, the character of a condition.
Diplock L.J. then generalised this particular consequence into the analysis which has since become classical. The fundamental fallacy of the appellants’ argument lies in attempting to apply this analysis to a time clause such as the present in a mercantile contract, which is totally different in character. As to such a clause there is only one kind of breach possible, namely, to be late, and the questions which have to be asked are, first, what importance have the parties expressly ascribed to this consequence, and secondly, in the absence of expressed agreement, what consequence ought to be attached to it having regard to the contract as a whole.
The test suggested by the appellants was a different one. One must consider, they said, the breach actually committed and then decide whether that default would deprive the party not in default of substantially the whole benefit of the contract. They invoked even certain passages in the judgment of Diplock L.J. in the Hongkong Fir case [1962] 2 Q.B. 26 to support it. One may observe in the first place that the introduction of a test of this kind would be commercially most undesirable. It would expose the parties, after a breach of one, two, three, seven and other numbers of days to an argument whether this delay would have left time for the seller to provide the goods. It would make it, at the time, at least difficult, and sometimes impossible, for the supplier to know whether he could do so. It would fatally remove from a vital provision in the contract that certainty which is the most indispensable quality of mercantile contracts, and lead to a large increase in arbitrations. It would confine the seller - perhaps after arbitration and reference through the courts - to a remedy in damages which might be extremely difficult to quantify. These are all serious objections in practice. But I am clear that the submission is unacceptable in law. The judgment of Diplock L.J. does not give any support and ought not to give any encouragement to any such proposition; for beyond doubt it recognises that it is open to the parties to agree that, as regards a particular obligation, any breach shall entitle the party not in default to treat the contract as repudiated. Indeed, if he were not doing so he would, in a passage which does not profess to be more than clarificatory, be discrediting a long and uniform series of cases - at least from Bowes v. Shand (1877) 2 App. Cas. 455 onwards which have been referred to by my noble and learned friend, Lord Roskill. It remains true, as Lord Roskill has pointed out in Cehave N.V. v. Bremer Handelsgesellschaft m.b.H. (The Hansa Nord) [1976] Q.B. 44, that the courts should not be too ready to interpret contractual clauses as conditions. And I have myself commended, and continue to commend, the greater flexibility in the law of contracts to which Hongkong Fir points the way (Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen (trading as H.E. Hansen-Tangen) [1976] 1 W.L.R. 989, 998). But I do not doubt that, in suitable cases, the courts should not be reluctant, if the intentions of the parties as shown by the contract so indicate, to hold that an obligation has the force of a condition, and that indeed they should usually do so in the case of time clauses in mercantile contracts. To such cases the ‘gravity of the breach’ approach of the Hongkong Fir case [1962] 2 Q.B. 26 would be unsuitable. I need only add on this point that the word ‘expressly’ used by Diplock L.J. at p. 70 of his judgment in Hongkong Fir should not be read as requiring the actual use of the word ‘condition’: any term or terms of the contract, which, fairly read, have the effect indicated, are sufficient. Lord Diplock himself has given recognition to this in this House: Photo Production Ltd. v. Securicor Transport Ltd. [1980] A.C. 827, 849. I therefore reject that part of the appellants’ argument which was based upon it, and I must disagree with the judgment of the learned trial judge in so far as he accepted it. I respectfully endorse, on the other hand, the full and learned treatment of this issue in the judgment of Megaw L.J. in the Court of Appeal.”
47.In Mariner International Hotels Ltd v Atlas Ltd (2007) 10 HKCFAR 1 at paragraph 62, Chan PJ said that it was open to the contracting parties to agree that a certain term in the contract is a condition the breach of which entitles the innocent party to terminate the contract:
“... the principles in Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 ... apply to the situation where (as in that case) there is no provision in a contract, whether expressly or by necessary implication, to the effect that a certain term in that contract is a condition the breach of which entitles the innocent party to terminate the contract. But as Upjohn LJ said at p.63:
It is open to the parties to a contract to make it clear either expressly or by necessary implication that a particular stipulation is to be regarded as a condition which goes to the root of the contract, so that it is clear that the parties contemplate that any breach of it entitles the other party at once to treat the contract as at an end.
See also Diplock LJ at p.65.”
48.Beyond doubt the law recognises that it is open to the parties to agree that, as regards a particular obligation, any breach shall entitle the party not in default to treat the contract as repudiated. This was clearly recognised by Hale JA in Rice. However, Rice was a case where there was no characterisation of any particular term as a condition or indication which terms were to be considered so important that any breach would justify termination and Rice was decided on that basis. To apply Rice as if it also applied to cases where the parties had agreed that any breach of a particular obligation should entitle the party not in default to treat the contract as repudiated would be a “dangerous misunderstanding, or misapplication” of Rice. See paragraphs 17, 21, 22 and 35:
“17. The council argued first that clause 23.2.1 should be applied literally so as to give them the right to terminate the contract for the breach of any of the obligations contained in it, other than the trivial. The judge was referred to a number of well-known authorities. On the one hand, ‘it is open to the parties to agree that, as regards a particular obligation, any breach shall entitle the party not in default to treat the contract as repudiated’: see Bunge Corporation v Tradax Export SA [1981] 1 WLR 711, per Lord Wilberforce at 715E. On the other hand ‘... if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must yield to business commonsense’: see Antaios Compania SA v Salen Rederierna [1985] AC 191, per Lord Diplock at p 201 D.”
“21. Lord Wilberforce emphasised, in the words already quoted in paragraph 17 above, that it is still open to the parties to agree that a term is so important to them that it should have that effect. He continued: ‘It remains true, as Lord Roskill has pointed out in Cehave NV v Bremer Handelsizesellshaft m b H (The Hansa Nord) [1976] QB 44, that courts should not be too ready to interpret contractual clauses as conditions …. But I do not doubt that, in suitable cases, the courts should not be reluctant, if the intentions of the parties as shown by the contract so indicate, to hold that an obligation has the force of a condition.’
22. The problem with the council’s argument in this case is that clause 23.2.1 does not characterise any particular term as a condition or indicate which terms are to be considered so important that any breach will justify termination. It appears to visit the same draconian consequences upon any breach, however small, of any obligation, however small. In this it is unlike cases, such as Bunge, which concerned an obviously vital time clause that can only be broken in one way, and much closer to the cases, such as Hong Kong Fir Shipping and The Antaios, concerning multi-faceted obligations, which can be broken in many different ways.”
“35. The question for the court (and indeed the contracting parties) in any case like this is whether the cumulative effect of the breaches of contract complained of is so serious as to justify the innocent party in bringing the contract to a premature end. The technical term is ‘repudiatory’ but that is just a label to describe the consequence which may flow. It is not always an entirely satisfactory label, if it implies that the conduct itself must always be such as to demonstrate an intention to abandon contractual obligations: while this will sometimes be so it is not an invariable requirement. As the judge indicated, there are in effect three categories: (1) those cases in which the parties have agreed either that the term is so important that any breach will justify termination or that the particular breach is so important that it will justify termination; (2) those contractors who simply walk away from their obligations thus clearly indicating an intention no longer to be bound; and (3) those cases in which the cumulative effect of the breaches which have taken place is sufficiently serious to justify the innocent party in bringing the contract to a premature end.”
49.The parties in this case, the Government and the defendant, agreed by clause 15.5 that any breach of clause 15.1 and 15.2 shall entitle the Government to terminate the Contract. Beyond doubt, the law recognises that it is open to the parties to so agree.
50.Indeed, the agreement of the parties was that the Government was entitled to terminate the Contract on grounds of breaches other than breach of clause 15.1 and 15.2. It is clear from clause 15, clause 16, clause 19 (compliance with Employment Ordinance), clause 20 (compliance with Immigration Ordinance on employment of persons not lawfully employable and Occupational Safety and Health Ordinance), clause 21 (sub-contractors’ compliance with the 3 Ordinances) and clause 22.1 that the parties attached fundamental importance to the protection of the rights and interests of lawfully employable workers providing the services under the Contract, whether employed by the defendant or its sub-contractors and agreed specific provisions governing the Government’s rights to terminate on the ground of breaches. Significantly, these provisions are additional to the general provision for termination under clause 25.
51.There is no need to give any warning or serve any default notice before terminating under clause 15.5. As a matter of fact, the Government did gave numerous warning and served numerous default notice, including those in writing by letters dated 22 March 2004, 25 March 2004, 26 March 2004 (2 letters), 3 April 2004, 15 April 2004, 26 April 2004, 10 May 2004, 1 June 2004, 8 June 2004, 23 June 2004, 14 July 2004 (2 letters), 19 August 2004, 27 October 2004, 29 November 2004, 24 December 2004, 31 December 2004 and 14 January 2005. The defendant’s breach in respect of the January 2004 wages is continuing.
52.Counsel for the defendant also contended that the Government was not entitled to rely on clauses 15 and 16 because no notice had been served under clause 15.5.
53.The well-established general rule is stated in paragraph 24-014 in Chitty on Contract, 29th edition, volume 1, as follows:
“No reason or bad reason give. The general rule is well established that, if a party refuses to perform a contract, giving therefore a wrong or inadequate reason or no reason at all, he may yet justify his refusal if there were at the time facts in existence which would have provided a good reason, even if he did not know of them at the time of his refusal. Thus when an employee brings an action against his employer, alleged that he has been wrongfully dismissed, the employer can rely on information acquired after the dismissal when seeking to justify the dismissal.”
54.Counsel for the defendant told me that he did not rely on any exception to the general rule.
55.It is obvious that no notice for termination under a ground would have been served if a party had not given that ground as a reason for termination or did not at the time know about the existence of that ground. To require service of written notice defeats the general rule and I reject the contention that written notice was required before the Government could rely on clause 15.
Conclusion on breach of breach of clause 15
56.I hold that the Government was entitled to rely on the defendant’s breach of clause 15 to terminate the Contract with effect from 1 March 2005. On this ground alone, judgment should be entered in favour of the plaintiff against the defendant on the claim and the counterclaim should be dismissed.
Breach of clause 19 of the Special Conditions of Contract
57.Having regard to my conclusion above, there is, strictly speaking, no need for me to deal with clause 19 of the Special Conditions of Contract. For completeness, I shall deal with it briefly below.
58.The defendant agreed by clause 19 to “comply with the Employment Ordinance”. The parties went on to agree that “a conviction record of the breaches of the Employment Ordinance in relation to [the defendant’s] performance of this Contract may be construed as a material breach of this Contract”.
59.While clause 19 does not in express terms provide that any conviction shall be construed as a material breach, one must bear in mind the following in considering materiality:
(a) the fundamental importance which the parties attached to the protection of the rights and interests of lawfully employable workers providing the services under the Contract;
(b) the Government’s entitlement under clause 21.1 to terminate the Contract for any failure on the part of the defendant’s sub-contractors to observe the contractual clauses referred to in clause 21; and
(c) the cumulative effect of the conviction or convictions on the facts of each particular case.
Convictions under Employment Ordinance
60.Section 23 of the Employment Ordinance provides that:
“Wages shall become due on the expiry of the last day of the wage period and shall be paid as soon as is practicable but in any case not later than 7 days thereafter.”
61.Section 39(1)(a) – (c) provides that:
“Subject to subsections (1A), (2) and (3), an employee shall be granted a statutory holiday by his employer on each of the following days-
(a) Lunar New Year’s Day or, if that day falls on a Sunday, then the day immediately preceding Lunar New Year’s Day;
(b) the second day of Lunar New Year or, if that day falls on a Sunday, then the day immediately preceding Lunar New Year’s Day;
(c) the third day of Lunar New Year or, if that day falls on a Sunday, then the day immediately preceding Lunar New Year’s Day”
Subsections (1A), (2) and (3) were not applicable on the facts of this case. In 2004, Lunar New Year was on 22 January 2004, Thursday.
62.Particulars of the convictions of the defendant on 3 February 2005 of offences under sections 23 and 39 in relation to the performance of services under the Contract are as follows:
Under section 23:
| Name of employee |
Wage period |
Failure to pay by |
Amount of fine ($) |
| Wong Tung Yip |
1/1/04 – 31/1/04 |
10/2/04 |
3,000 |
| Law Keung |
1/1/04 – 31/1/04 |
10/2/04 |
500 |
| Ma Choi Ming |
1/1/04 – 31/1/04 |
10/2/04 |
500 |
| Kung Hoi Chun |
1/2/04 – 29/2/04 |
10/3/04 |
500 |
| Ling Siu Hing |
1/1/04 – 31/1/04 |
10/2/04 |
250 |
| Ling Siu Hing |
1/2/04 – 29/2/04 |
10/3/04 |
250 |
| Kwok Sheung Ngan |
1/1/04 – 31/1/04 |
10/2/04 |
500 |
| Kong Nyiun Siu |
1/1/04 – 31/1/04 |
10/2/04 |
500 |
| Kong Nyiun Siu |
1/2/04 – 29/2/04 |
10/3/04 |
500 |
| |
|
Sub-total: |
6,500 |
Under section 39:
| Name of employee |
Failure to grant statutory holiday for |
Amount of fine ($) |
| Law Keung |
Lunar New Year’s Day |
500 |
| Law Keung |
Second day of Lunar New Year |
500 |
| Law Keung |
Third day of Lunar New Year |
500 |
| Kwok Sheung Ngan |
Lunar New Year’s Day |
500 |
| Kwok Sheung Ngan |
Second day of Lunar New Year |
500 |
| Kwok Sheung Ngan |
Third day of Lunar New Year |
500 |
| |
Sub-total: |
3,000 |
Conclusion on the materiality of the breach of clause 19 and the Government’s entitlement to terminate
63.There is no doubt that the defendant was in breach of clause 19.
64.The defendant got off to a poor start in the first 2 months under the Contract. The wages for Ling Siu Hing and Kong Nyiun Siu were not paid within the statutory time limit for 2 consecutive months, i.e. January and February 2004. Law Keung and Kwok Sheung Ngan were not granted statutory holidays for Lunar New Year’s Day, the second day of the Lunar New Year and the third day of Lunar New Year, and, to make matters worse, their wages for that wage period were not paid within the statutory time limit.
65.The materiality of the defendant’s breaches under the Contract is a matter for me, not for the magistrate. In my judgment, the cumulative effect of the defendant’s breaches and the conviction records was sufficiently material entitling the Government to terminate the Contract as it did.
Quantum
66.The only challenge was on the audit fees. I accept Wong’s evidence that the replacement contractor had not taken the requirement of certification by a certified public accountant on the payment of wages into account when bidding for the contract. The defendant’s challenge on this ground fails. I assess quantum at $2,636,203.50.
Costs
67.The parties agreed that costs should follow the event.
Order
68.I order that:
(1) Judgment be entered in favour of the plaintiff against the defendant in the sum of $2,636,203.50 with interest at the judgment rate from the date of issue of the writ until payment.
(2) The defendant’s counterclaim be dismissed.
(3) Costs of the plaintiff in this action, including his costs in the counterclaim, including all costs reserved (if any), be taxed and paid by defendant to the plaintiff.
| |
(Kenneth Kwok, SC)
Recorder of the Court of First Instance
High Court |
Mr Jin Pao, instructed by Department of Justice, for the Plaintiff
Mr Albert Poon, instructed by Messrs Pang & Associates, for the Defendant
Schedule 1
Witness statement of Paul Yu dated 26 March 2007
1. 我在2003年-2005年期間，出任余氏天成企業有限公司(余氏天成)總經理一職。
2. 康樂及文化事務署(康文署)，在2003年12月尾通知批出合約LCC/141/03(觀塘區康樂場地潔淨合約)予我司，合約由2004年1月1日開始，為期36個月，並請我司自行與該署觀塘區經理聯絡，以便安排接手事宜。
3. 在批出該合約之前，康文署未有向本人或我司代表提出，余氏天成的工資計算方式不正確，亦沒有詳細向我們解釋康文署心目中的工資計算方式。
4. 『1』《在2004年1月6日(上述合約已開始)，康文署物料供應組陶小姐(Kate To)來電，就另外兩份(沙田區及西貢區)同樣性質的投標書向我查詢。她說正在考慮我司的標書，並提到我們的投標價並不足支付標書內工人的工資，我說不會有這情況。她這時才透露康文署是有一套計算方法的，並說稍後會將康文署的計算方法傳真給我，並請我詳細研究後決定，可否根據康文署的計算方法來出糧給工人。跟著她就傳了共10頁的傳真來，包括一封共2頁的信(exhibit 0001及exhibit 0002)及另外8頁紙，列出每個場地的工資支出(exhibit 0003- exhibit 0010)，我經過詳細核算後，發覺與我司的計算方法確實不同。我隨即致電陶小姐並瞭解他們的計算方法的準則，亦向她說出我司的計算方法的準則，我又隨即出了一封信(exhibit 0011)，連同兩頁我司的計算方法(exhibit 0012及exhibit 0013)，傳真給陶小姐。她及後致電對我說，雖然我司的計算方法與康文署的有別，但必須根據康文署的計算方法。我向她表示我司剛開始的觀塘區合約，亦是根據這樣的計算方法的，為何可以接受，現在又不能在沙田區及西貢區接受呢﹖如現在要根據康文署的計算方法，我們的投標價就需作出調整。她回答說不是每份標書都一樣的，康文署會經常修改要求的，而投標價在開標後是不能再作修改的。我當時覺得頗為難，並問她我們現在可以怎樣做﹖她說我們可以根據康文署的計算方法，以合約價履行為期三年的合約，至於虧蝕與否我們自己衡量。另一做法是出信給康文署，說明計錯成本並要求撤消我司的投標。我又問她採取第二個做法會否有任何adverse effect? 她說若果我們要虧蝕，對雙方都沒有好處，亦都無謂勉強，以致影響質素。於是我在同日即傳真我司的撤消信給康文署(exhibit 0014)，以便康文署有時間考慮其他標書。及至1月21日收到康文署的傳真信件(exhibit 0015)。》
5. 另外在合約臨開始時，我司高級經理余敏賢收到康文署要求，在合約開始時，需加多提供46名工人，而鑑於時間傖倅，恐一時未能聘得工人，故與對方協商於2月份才開始增加工人。康文署在這次增加工人事件中，已清楚表明所謂的淨工時(net working hours)，是不包括一小時的膳食時間的(exhibit 0016, exhibit 0017及exhibit 0018)。及後在2004年12月的另外一次增加工人，也是不包括一小時的膳食時間的(exhibit 0019)。這更進一步印證康文署一向所講的當值時間，是不包括膳食時間的，而膳食時間是以一小時計算的。
6. 合約內註明如果因為違反了勞工條例或人民入境條例而被定罪而影響合約, 康文署有權取消合約而差價及行政費由被終止者負責。
7. 雖然余氏天成或是違反了勞工條例，但未因此影響任何工作上之表現，而康文署從來未有對余氏任何表現不如理想之投訴及警告。故雖然余氏是違反了勞工條例，但沒有因此而影響了對該合約提供服務之表現。故康文署是無理單方面違約. 而且當康文署取消余氏合約時他們出了一份全新合約，而所提供之合約要求內容及提供合約人手及工時都比余氏原約為多，故不公平。好似是一橙有問題而要求對方賠一個西柚， 絕不公平。
8. 雖然因為勞工法例違反了，即因遲發工資及未有及時通知勞工假的安排(即如想工人在勞工假開工及時補假) 。但此等雖然沒有及時安排補假，這二條罪並沒有影響合約業務質素。從未收到投訴有關工作表示不好。單方面指控無據而終止合約並另請別間加多工作，額外加多工作時間，因而增加的工資亦非本公司的負責範圍，故對本司極不公平。
『2』《但合約內容有效：
舊合約沒有列明用膳是時每更多少，而我們一向之慣例計算每8 小時包括 1 小時用膳。(e.g. 如當值時間8 小時減去1 小時用膳，我們衹支付 7 小時工資。因此合約之工資計算是根據每小時凈工作時間不包括用膳時間計糧，而新合約則列明每8 小時有1/2 小時用膳，而少於8 小時不給予用膳時間如下：
每天每名工人之凈工作時不超過8 小時
返9 小時給 1 小時用膳 = 8 小時工作 (工資)
返 8 小時給 1 小時用膳 = 7 小時工作 (工資)
返 6 小時 給 45 分鍾用膳 = 5.25 小時工作(工資)
返 4 小時給 30 分鐘用膳 = 3.5 小時工作(工資)
故成本上之計算在新合約是高多很多的。》
Schedule 2
Supplemental witness statement of Paul Yu dated 14 October 2007
『3』《我曾細閱黃應鳴先生於18-06-2007所作出之補充，本人確認本公司抗辯理由，基本上當時我們公司承接到清潔服務的中標合約，有很多合約內之細則，本公司余敏賢女士與康文署負責人還在商討中．有些要求，尤其是有關員工之工資,時間等的計算方法還未有定論，雙方仍在協商，康文署方面亦未有甚麼既定方針，他們給我們的印象，是最緊要我們公司對合約有交代，員工們沒有投訴，公眾人士沒有意見，則一切從中慢慢協商，當時大家都理解，合約員工工資計算的方程式雙方各有不同，大家同意容後解決，這件事就是如此拖下來，到最後還未有解決好便硬說我們公司不依合約辦事．事實上，當時大家還未有一個議決，大家都希望將來可以達到一個雙贏局面．》
『4』《我感覺到康文署根本是在未解決這計算方式前，容許我們公司以我們的計算工資方法，直至找到各方都可接受的方案，政府和我們公司皆一樣，不欲勞資方面的爭議每每見報，給政黨人士政治化，頻頻質詢，政府難做，我們亦難做，事情又解決得到，這方面，本公司的余女士與康文署商討至多，我們公司未有就工資計算方面有毀約．大家就這方面的協商還未有議決，康文署亦一直允許我們如此計算，並有增加其他清潔工作給我們，只不過後來為了自保，硬說我們未有遵守合約．》
就黃應鳴先生於其補充証供內所提出之細節，我認為有需要就黃應鳴先生所提出之一些重點作出以下回應：
1) 就黃應鳴先生於18-06-2007之証供內第3, 4, 5點
a) 黃應鳴先生對合約上的方程式有所誤解，該方程式($5,081÷﹝8 hr x 26﹞)只是在用作按比例計算部份多出或少於月薪的日子，而非作整月工資的計算．故以此得出的時薪來計算所有工資，在基礎上是不穩妥的。
b) 從exhibit 0003-0013明確得知康文署在計算工資月薪時，是以每月30天計，事實上一年12個月中，有一半是有31天的，康文署亦不曾將之化作時薪計算，便是這個原因．因此黃應鳴先生不應將以上方程式得出的時薪，按實際日子計算工資，這樣便會令工資出現“超支”，這是一個很大的謬誤。
c) 我之所以在我於26-03-2007之証供內第4點提出該聲明，其實是與陶小姐經過一番爭議，後來姑且以陶小姐提出的方程式化出時薪以30天計算，但請留意最大的差別，是康文署的工資是連用膳時間也計算在內，而我們的是減卻用膳時間．當時陶小姐對我說不是每份合約都是一樣的，這令我意會到沙田，西貢的合約是需將用膳時間計算在內，而觀塘的合約則不需要。
2) 就黃應鳴先生於18-06-2007之証供內第6點為甚麼相同工種和相同場地的工人，有service hour(9小時)和service hour(9小時, exclude meal break)之分？那叫管理層(康文署及清潔承辦商)如何管理？誰去界定A，B，C是屬前者，D，E，F是屬後者？根據黃應鳴先生說前者在用膳時間，承辦商需安排替工，試問整個區有二百多人，若同一時間用膳，在技術上，如何安排每天都在這段時間內聘用如此多的替工，在98個不同的地點去替更呢？據我所知，在觀塘區以前從未執行過這樣的要求．
Schedule 3
Witness statement of Zoe Yu dated 26 March 2007
本人 余敏賢乃余氏天成企業有限公司工程經理於2003年十二月下旬接公司通知我司（中標），並於2004 年1月1日起為期三年提供康文署於九龍東區之各康樂場地之清潔服務之服務。而本公司在之前亦多次為康文署提供其他區域之清潔服務，如香港南區之所有泳灘清潔服務、深水埗區之各康樂場地清潔服務、沙田文化博物館之清潔服務。每次表現皆令各康文署各區負責人滿意，就此合約而言本公司由為東九龍提供合約之第壹天至被終止時每天之工作皆令人滿意，從來沒康文署之職員投訴。而此康文署之東九龍清潔合約，乃康文署之第一張有最低工資限制之合約，而在此合約投標之前，康文署從未有任何代表向本公司及其他投標商解釋最低工資之計算方法，祇是在標書列出計算工資的方法，是一個基數÷26日÷８小時，不包用膳時間，以實際工作日數計算,多除少補。而我司接合約的初時並沒有任何問題。『5』《直至有一次，本人收到康文署代表黃應鳴先生之查詢,內容大致如下, 他收到有部份康樂場地的負責人表示有部份的清潔工人向他們投訴說，他們的工資每月達不到伍仟零捌拾壹圓之水平。黃先生問本人之情況，本人亦清楚向黃先生表示計算工資的方法，更向黃先生表示$5,081元並非一個底薪，而是該員工必須於該月份每日工作淨８小時，不包括用膳時間，而每月工作26天，多除少補；由於此計算方法是一個計算之根據，並不是一個底薪。我公司必須將此數化成一個底薪時薪，並按勞工法例，發放法定假期，並不能直接的將$5081÷26÷8，員工有返工則計錢，沒有返工則不計錢。當時黃應鳴曾對本人表示，我們沒有任何干涉你們如何計算方法之意思，祇是你們要清楚解釋給各員工了解，則沒有問題。而我當時亦對黃應鳴先生明示，經過是次的查問，我亦覺得可能有部份員工不明白，我們會列印一份計算方法，並給每名員工解釋，並簽名交回公司。而將各簽名之副本連僱員合約之副本, 亦交康文署存查。而黃先生亦接受本人之提議。有關工資，計算方法祇要合情或合法，同員工解釋清楚，又員工可以或願接受，》
『6』《則康文署本身不會過問，我們事實有照做，亦有向員工解釋。當時他們全部接納，當時祇有佐敦谷遊樂場，有部份員工受康文署職員挑撥而引致行為過激，因而與本公司代表有所衝突。而被公司集體解僱後，他們一行十一人先到ICAC投訴。被拒後，再去「李卓人辦事處」投訴，而被人作政治籌碼，在電台「茶杯裏的風波」中，被某些政黨為了成名，更後來再被各傳媒大作文章。而李卓人更帶同各工人及傳媒再去ICAC投訴。由ICAC接手案件。而當時康文署代表黃達明先生亦被李卓人於節目中說他們與承辦商官商勾結及包庇承辦商等。而康文署亦因此事要求我及公司其他同事於沙田康文署之會議室中商談此事。而在會議中當時署方暗示為了我們與康文署日後之合作，我們最好將全部被炒之員工，全部復工.而在會中，康文署亦表明，希望我們公司能夠息事寧人，能安排所有被開除工人復工，使他們不致行動過激，亦免康文署尷尬。當初本人不接納他們的要求，而本人亦對他們表明，如果一些員工可以為了達到私下利益隨便向公司抹黑，而抹黑後不但不需要接受處分，還有人為其撐腰者，我公司以後何以管理一班員工？我根本找不到一個令我叫他們復工的理由。而當時康文署代表則說：「那個理由就是為我們日後之更好的合作，作出貢獻，工人既可復工，康文署又不需要尷尬，何樂而不為。」當時康文署代表言下之意是，如果我們不給員工復工的話，我公司與康文署之合作關係則大不如前，所以在權衡輕重的情況下，我當時向康文署代表申明，為了我們與康文署日後之合作，我們最大之讓步是可以讓工人復工，但絕不能留在康文署工作，他們工作地區、性質及工資全部不變，反而福利更好，是逢星期日例休不用輪休。但是，調去其他非康文署管轄範圍工作。後來，那班員工堅決表示一定要回到原職才肯返工，所以談判破裂。而康文署亦因此事件，而鋪排終止我公司之合約。我覺得康文署根本從未理會本公司有甚麼過失，最重要是他們對判出來之合約，祇要做到無人投訴。若有小問題，如遲發工資或技術上可以解釋到令人信服，可以息事寧人，則他們不會緊張其他，祇要天下太平，他們亦要心交託我們管理工作，我們在合約上雖有條款寫上，若有觸犯勞工法例，則可以隨時終止合約。但若公司可以解釋得體，化解得到，則康文署亦不會追究。還有招標時之條款及合約一大堆，亦有多次中標後，後補交來一堆更改條文。我們公司追問他們康文署，則他們回應，因環境、地理、時間等等各種因素或潮流、大氣候所需，他們是可以隨意加入，他們不會太過份，祇是大家過得去,沒有多投訴，則大家快樂太平、合作愉快，他們亦少找我們麻煩。 以本人理解康文署處理有關最低工資之問題上,其內部沒有一套清晰及劃一的處理標準,而導致此種灰色地帶不時有爭拗與此同時在我司與康文署合約因為最低工資計算之方法,康文署除對我司不一致外,還有太古集團旗下的衛龍清潔服務公司,新生精神服務社等. 亦因最低工資之計算爭拗, 而結果衛龍清潔服務公司,可以在無任何罰則之情況下,一面討論解決,一面妥協商討或提前解約,而新生精神服務社及其他有類似問題之公司亦不了了之完成合約. 故此本司極認為此是一個灰色地帶而導致之問題,最終亦會協商方式解決,從未想過本司要遭康文署採取激烈及不合理之對待.》
Schedule 4
Supplemental witness statement of Zoe Yu dated 11 June 2008
『7』《本人認為康文署單方面取消合約是違約和不合理，原因如下：
雖然合約內有列明其中承辦商違反了勞工法例被定罪因而影響到服務表現時，康文署可能會終止合約。
此項條文不是合約內的主體骨幹，根本雙方皆不認為是主要重點，包括康文署及所有投標商：
在此合約的投標文件中內容是疊很厚的有幾佰頁紙的文件，其中大部份是官樣文章，康文署及投標者最關注的是合約的主體骨幹即合約要求所提供的服務內容、時間、人手規定及收費，至於其他條文皆不重要，》今次以合約條文第十九條終止是史無前例的第一次，即此份合約中承辦商違反勞工法例被定罪後的後果，『8』《當日簽約時，雙方的理解這是並不重要，今日我公司被終止合約，我認為是一個藉口。》
康文署對上述條文也認為不重要
以往康文署的做法是他們認為有甚麼重要規例或措施是他們認為重要的，康文署會約見所有承辦商發報工作坊或簡介會，要求所有承辦商一律必須遵從，就算是如何洗廁的工序、地面的乾淨程度及乾濕程度，他們也製作了錄像短片，由康文署的高層代表包括副署長、外判組主管及多名高層官員出席，而是不祇一次。但今次指責余氏觸犯勞工條例而藉口終止合約，是小題大做，根本事前全無提示和沒有清楚詮釋給每個投標者，就算連簡單的提及也沒有，所以我認為康文署認定此項條文一點也不重要，「余氏」由投標前至余氏開始接手後，被勞工處票控時排期上庭有很長的時間(而其中勞工處亦傳召了康文署兩個代表作為證人，所以康文署一定是知情的)及認罪後(中間康文署與余氏無論在私人面談和公開會議中亦都未有提及任何有關上述定罪後的罰則，直至余氏在毫無徵兆的情況下，突然收到康文署終止合約的通知中，內容竟將此項無關痛癢的條例作為終止余氏合約的理由，此舉康文署對余氏在政治風波下設下陷阱，讓余氏走下萬刼不復的地步以求獨善其身，殊為不義。
『9』《康文署錯誤引導余氏認罪；衍生致被終止合約
由於康文署給余氏的訊息違反勞工法例的後果並不嚴重，所以在勞工處對余氏的違反勞工法例即沒有及時安排發放勞工假中，在商業立場來說，案件輕微傳票罰款了事，不值得浪費不必要的資源去打官司，就算在違反勞工例案中，當時主審法官林鉅溥也認為上述案件是一件很輕微的技術犯規的事件，並不是余氏有心犯下甚麼大罪，如果當初余氏知道認了罪後會被取消合約及要賠償差額的話，余氏一定不會隨便認罪。》
『10』《康文署一向行事不依照合約的條文，所有的行為皆很有彈性
余氏與康文署所簽訂即在本案中所爭拗的合約內，其中有一項額外收
費是合約中CONTRACT SCHEDULE 1 的RATES FOR PROVISION OF SERVICES在合約SHEET 64(見附表1及2)中列明有關提供合約以外的人手收費也列入此張合約內，在SHEET 64中清楚列明余氏每日提供每名額外工人以8小時計算收費是300元，但康文署由合約初已經要求余氏每日額外提供46名工人，每人每日工作8小時，按合約中列明余氏所提供給康文署的每名工人每月工作26天每天工作8小時付支余氏7,800元，此數是包括員工工資、強積金、假期替工、物料、工具、制服、行政、管理及保險等的費用支出。康文署應該根據合約SHEET 64中支付給余氏額外工人的收費是7,800元，但康文署要求余氏每月要額外提供46名工人，每工人每月要工作26天而每天工作8小時，所以應支付余氏的費用為7,800元x 46名工人=358,000元，但由於雙方簽約後，康文署告訴余氏向余氏支付每名工人只是每月5,600元(見附表3, 3A, 3B, 5 及 5A共5頁附表)，即每名工人康文署少付余氏2,200元x 46人=101,200元，由04年2月至合約尾(06年12月) 康文署共少付余氏101,200元x 35個月=3,542,000元港幣叁佰伍拾肆萬貳仟圓。即康文署由合約的第一天至被終止合約前都祇是支付每名工人5,600元，實際每名工人康文署如跟合約每月少付給余氏2,200元，每月康文署少付46名工人共少付余氏101,200元港幣拾萬壹仟貳佰圓，如果至合約尾余氏共少收叁佰伍拾肆萬貳仟圓，就算康文署選擇按每月計算方式，康文署亦要向余氏支付每名額外工人之費用7,500元，按此計算7,500元x 46名工人，每月康文署應向余氏支付345,000元，即康文署每月少付余氏(7,500 – 5,600) x 46人=87,400元。由04年2月至合約尾06年12月，康文署共少付余氏87,400 x 35個月=3,059,000元港幣叁佰零伍萬玖仟圓，就算截計至被終止合約時也實際少收康文署超過壹佰萬圓，而上述那些額外增加的人手是康文署要求增加的，並非在余氏接合約後才突然要求增加，上述附加收費中在康文署批約給余氏前有預算在內的條件，當余氏正式接了康文署的合約工作後，康文署外判組代表陶小姐來電通知本人要安排附加人手46人開工，但每名工人卻不能收取合約內的金額(即每月$7,500或每天$300 x 26天=$7,800)，每名工人康文署祇實支付伍仟陸佰圓，硬要我們公司接受，當時陶小姐說希望我們能夠接受她的要求，否則諸多難題給余氏，她亦表示我們的合作是一個三年長期的合作，日後有甚麼問題大家亦可以互相遷就，好好合作，他們不會嚴格執行合約條文，雙方和衷共濟地完成這張合約，在此段談話中，我意會到康文署有意並接受余氏支付一個較低的工資給員工，雖然她有提及最低工資每月$5,081，》
『11』《此是基數，余氏曾將每月工資$5,081的計算列出告知所有工人及康文署，沒有異議甚至終止合約時亦非以此為理由。後來出告票控訴時又加入終止合約之理由是因為公司職員犯法，這些都是2006年的事情，而此合約亦祇是到2006年尾，康文署忽然提早於2005年以合約條文終止合約實在不合理。余氏肯減收是意會到康文署是不會執行合約中的條文，亦基於余氏與康文署過往的關係良好，合約就算白紙黑字寫得清清楚楚，到實行起來為了方便工作也從未有執行過，所以我亦接受，以換取余氏在合約的未來三年安寧和順利。其實一張清潔合約最重要構成之骨幹是一方提供約定的清潔服務，另一方支付約定的金錢，既然康文署連最重要支付約定的金錢，我重申在此康文署亦破壞了當初他們要求余氏不根據合約要求收費，才換取雙方順利完成此合約之條件。》
余氏違反勞工法例的原因及內容：
『12』《我覺得余氏與康文署所簽定的是一份清潔服務合約，合約本身最重要的地方是承辦商提供一個合理合格的清潔水準及有關服務表現，亦是代表康文署服務於市民大眾，其精要在於是否有提供清潔乾淨的環境給市民大眾所享用，而非是否準時出糧或有否準時放勞工假，》當然余氏也不會漠視員工的利益，例如準時出糧及準時發放勞工假，但是這一張合約的生效日期是2004年1月1日至2006年12月31日，余氏於2003年12月尾收到康文署通知開工，距離開工日期祇是四個工作天，此合約所涉及的人手超過150名工人，余氏衹能在4天內安排大量新員工上班不是一件容易的事情，而前線基層的管理人員即工頭，他們的當前急務是確保每一個工作的地點要有足夠合資格的清潔員工，每日準時及合格地提供清潔服務，一年365天從不間斷，至於人事登記文件卻未能保證在短期內每一名員工的資料都清楚無誤地交回寫字樓會計部出糧，而那150名新員工的第一期糧是2004年2月7日，而該期糧衹有幾個工人遲了4天出糧，這也不表示余氏有意違反勞工法例，況且第一期糧之正常出糧日期是2004年2月7日星期六，當上述未能準時出糧的員工下午通知科文，會計部當時已下班，到了星期一即2月9日才通知會計部，當查核員工資料後已於2004年2月11日公司立即派人親身到員工工作地點出糧給他們。
至於未有即時安排勞工假2月22日、2月23日、2月24日即農曆年初一、初二、初三之發放
由於中國人在傳統上很重視農曆年的假期，有很多工人都希望在新春回鄉度歲，故在此期間之人手很緊絀，而余氏希望讓所有市民都在春節期間能享受清潔乾淨的康樂場地及設施，所以在權衡之下為著市民大眾的利益為大前提，而暫緩前線員工之法定假期的發放，雖然按照勞工法例有關法定假日之安排及發放是可以於該假日的前60天彧後60天安排，但是余氏於2004年1月1日接手在1月份已安排了該日150名工人的元旦法定假期之發放，而後60天即在2004年4月22日前發放，可惜案中之5名員工在2004年3月1日已離職，故無法在其離職前發放法定假期。余氏接手此合約的日期是2004年1月1日，而此在2004年1月份余氏除了要安排每名員工於元旦日之法定假期外，還要安排每名員工每週1天的例假，需要額外聘請工人替工，因為康文署的這一張合約是年終無休，每天都要提供合約所要求的足夠人手，在一月份內已發放，至於二月份每名員工除了每週例假外還要安排每人三天法定假期，即換句話說假期2月份必須發放所有員工的假期及法定假期，余氏就要在2月份內多請1,050日的替工即每日要多請40名額外替工工作，基於2月份農曆年人手緊絀，余氏不希望有人手不足失場致不能向市民大眾提供合格的工作水準，而有部份員工暫緩發放勞工假，引致違反勞工法例，案中之5名員工因他們於2004年3月已離職，所以未能及時發放勞工假，就算此違例事件中的主審法官林鉅溥的觀點也認為是小意思的技術性犯規罷了。
余氏雖然承認了違反勞工法例，但從未有一刻因此事而影響了余氏提供的清潔服務之水平。
余氏由第一天開始接手康文署的此份合約直至被終止合約前，從未收到康文署代表投訴余氏天成的清潔服務有任何不理想的地方，既然本合約主要架構是環繞著提供合理的清潔服務水準，有否放勞工假及是
否準時發放工資是枝節，而余氏本著對康文署及全港市民大眾服務提供合理水準為大前提，而一時犯上輕微的技術犯規即安排勞假的發放、準時出糧，但此事祇是在接手新合約的初期的小問題，而往後余氏亦沒有同樣的問題發生，余氏亦更加沒有因為此問題而導致所提供的清潔服務水平有所下降！所以我認為康文署斷不能錯誤的將余氏的合約終止，除不對余氏賠償外，還要求余氏補賠足合約差價。
『13』《康文署受了政治及輿論的壓力設下陷阱出賣余氏以求自保：》
康文署一早就知道余氏第一個月遲出糧及在2月份未能將所有清潔員工的初一、初二、初三的勞工假全數發放，也沒有任何特別表示，亦從來沒有任何一個康文署的代表提及過如果余氏因上述事件被定罪會有可能被終止合約。就連康文署的代表正式收到勞工處發給他們的簡易傳票通知書中要求提供康文署的人員作為證人，而在此段過程的期間即2004年9月9日至2005年2月3日即余氏承認違反勞工法例的當日，而在該段期間我本人及余氏代表出席康文署正式及非正式的會議或傾談中，從未提及過有關罰則，而在這些溝通中，『14』《反而是有一次我與康文署高層官員的傾談中表示，如果我們余氏繼續在此合約中運作，會否帶來他們的不便或者壓力，余氏也不想在與康文署多年良好關係的情況下使康文署受窘，如果是這樣的話，不如請康文署提早招標，當他們找到承辦商，順利過渡此合約，而對方對我說叫我不要多疑，並叫余氏俾D心機做落去直至合約正式終結為止，》但我萬萬想不到後來康文署充竟然用了一個不是合理的理由去終止余氏的合約，康文署不但不合理地去取消余氏的合約，他們還向傳媒發佈取消余氏合約的消息還要余氏補足新合約的差價，而此項消息一出，全港新聞為之轟動，連外國的傳媒亦作大篇幅的全面報導，此舉頓使余氏的生意受損，最終無法運作，生意全面停頓，損失慘重。
康文署單方面強指余氏未能遵從所訂之合約，無理取消原定之約，吞蝕余氏保證金外更苛索不合理金錢補差價
在康文署取消余氏合約後，他們將原本簡單的合約加入很多明確的規範例如每月所有員工的出糧需要註冊會計師核實才呈交康文署，『15』《又將最低工資的詮釋改寫，新合約增加了工作時間並減少了用膳時間，原來每人每更有1小時用膳時間承辦商不需要支付工資給工人的，但康文署將接手余氏合約的用膳時間減少了最少一半至3/4的時間，使該合約的做價大幅攀升，而這林林總總的各項新增加開支也要余氏跟新條例負責，極不合理，這些當初簽約時沒有提及和非雙方理解和要遵守的條文，而是簽約之後，後加之多多要求，絕非事前或簽約時所理解和雙方要遵守的合約條文。我在此要順帶一提的是康文署在單方面終止余氏之合約後，要求余氏支付新合約的後加條文所增加的費用外，亦不減除康文署合約在生效時每月少付給余氏的費用總差額超過叁佰萬圓，就算康文署認為自己有權而且合理地終止余氏合約也不應該增加後加條文而產生的額外費用及亦須對余氏補回舊合約每月所少付的金額共超過叁佰萬圓多。如果康文署認為他們每月支付給余氏的每名附加工人金額不是此舊合約的一部份，祇是一張獨立的額外收費的話，那麼當康文署明知道余氏在開約之初已有遲出糧及沒有及時安排所有員工之勞工假發放(在2004年2月中康文署已知道此事)，此事是如康文署認為最重要的合約之主體骨幹，為甚麼康文署不立刻終止那個獨立的附加額外收費，仍然要不斷要求余氏提供合約之外的服務呢！其實額外提供46名清潔工的要求，是余氏與康文署雙方早都已經預見並存在的，因那個時期是每個政府部門都長期實行的措施之一，及當時每個場地的人手據康文署的合約要求都是不足應付日常的工作。余氏有見如此，所以在此合約報價時，用此附加之收費來補貼日常運作的費用，現在康文署一方面強行少付余氏每月超過拾萬圓的服務費，並暗示他們對合約不會有嚴格的要求，而另一方面，因受到各方面之輿論壓力，以引用不合理的理由取消余氏合約外，除不清付少付余氏差額，更加大日後新合約的成本要求，由余氏全數賠償支付，這種做法極不合理。》
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