Ma Liu Sha t/a Shing Fai Engineering Co v. Pollard Construction Co Ltd

HCCT68/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 68 OF 2006

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Before : Hon Burrell J in Court

Dates of Hearing : 13 to 17 October 2008

Date of Judgment : 31 October 2008

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J U D G M E N T

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1.The defendant (“Pollard”) was the main contractor for a water supply project in Ngong Ping, Lautau Island in 2003/4.

2.By a written contract dated 16 July 2003 Pollard sub-contracted part of the works to Leung Kee Construction Company (“Leung Kee”).

3.By another written contract Leung Kee sub-contracted those works to Kei Cheong Engineering Company (“Kei Cheong”).

4.By another written contract Kei Cheong sub-contracted the works to the plaintiff.  Ma Liu Sha (“Mr Ma”) was the sole proprietor of the plaintiff, Shing Fai Engineering Company (“Shing Fai”).

5.In this action Mr Ma is suing the main contractor, Pollard, for works done by him which he alleges were not within the scope of works defined in his sub-contract with Kei Cheong but were the subject of a separate oral contract made between himself and a Mr Bernardo Bernandino (“Bernie”), Pollard’s site agent, in about March 2004.

6.Much of Mr Ma’s case had been prepared by firms of solicitors who had acted for him.  A relatively short time before the trial Mr Ma gave notice that he would be acting in person at trial.  Thus the pleadings, witness statements, etc., had been prepared by solicitors but at trial Mr Ma only had the assistance of a “Mackenzie friend” a colleague of his in the industry who was familiar with spoken and written English.  It should be noted at the outset that Mr Ma conducted his part of the litigation courteously and competently.  By the same token, Mr Kenny Lin, counsel for the defendant, made appropriate allowances for the fact that his opponent was a litigant in person.

7.Mr Ma’s claim is made up of seven items which are particularized in the amended statement of claim as follows :

“1.	Original Contract Sum	$417,000.00
	(BQ3-Add01, Items 3,05.12~3.05.24)
2.	Additional Works for the Contract	$131,250.00
3.	Drainage Works (BQ2-Add01)	$43,768.56
4.	Conduit Works (BQ02-Add02)	$85,813.16
5.	Excavation Works	$178,111.30
6.	Variation Works (VO1~VO11)	$173,738.72
	Total	$1,029,681.73”

8.The seventh item is a small sum of $6,180 for items said to have been purchased by Mr Ma for Pollard but not paid for.

9.Mr Ma’s evidence was given by himself and a person to whom he had sub-contracted part of his works, a Mr Hau Sik Keung, the sole proprietor of Yat Sung Construction Company.  Pollard also called two witnesses, their director who had responsibility for this project, Mr Tso Hung Chuen (“Mr Tso”), and the site agent, Bernie.

10.In order to prove his case Mr Ma had to show that, on a balance of probabilities, Bernie and he, in about March 2004, had orally entered into contractual relations concerning the works set out above.  It follows that those works were outside the scope of works contracted for by Kei Cheong with Leung Kee.

11.Regrettably for Mr Ma the documentary evidence does not bear this out.  Where the contemporaneous documentary evidence contradicts Mr Ma’s case he submits that it is “false” evidence.  Other than his assertion that it is false there is no further evidence in support of his contention.  Moreover, the oral testimony of Mr Tso and Bernie for the defendant I found to be inherently probable.

12.I shall now refer to these two matters, namely the documentary evidence and the oral testimony in a little more detail.

DOCUMENTARY EVIDENCE

1.   Addenda to sub-contract

13.Two addenda, both headed “Addendum to Sub-contract” were produced.  The first was dated 12 February 2004, the second, 8 March 2004.  Both were addendums to the Leung Kee/Kei Cheong contracts.  The first set out works valued at $1,552,054, the second for works valued at $410,932.

14.There is no doubt that most of the works being claimed by Mr Ma are contained in those documents.  They provide clear evidence that much of Mr Ma’s claim, which is based on a separate oral contract, was in fact the subject of a written contract between Leung Kee and Kei Cheong.  Mr Ma suggested, relying in particular on the absence of signatures, that these documents had been recently created “falsely” so as to defeat his claim.

15.I reject this suggestion.  I am satisfied that they are genuine documents, created at the time stated on them, which added works to the signed sub-contract between Lee Keung and Kei Cheong.

2.   Interim payments

16.In the course of the evidence Leung Kee’s interim payments were investigated in some detail.  Works claimed by Mr Ma in this action were shown to be included, item by item, in Leung Kee’s payment schedules to Kei Cheong.

3.   Final accounts

17.On 8 October 2005, Kei Cheong submitted to Pollard, the main contractor, its application for final payments.  It unquestionably included the bulk of the items being claimed by Mr Ma on behalf of Shing Fai.  The claim was for $1,188,155.  On 10 October 2005, Pollard replied enclosing its final account which rejected any further sums due to Kei Cheong.  The state of affairs between Pollard and Kei Cheong has not changed since that date.  Pollard’s final account, which states that it owes nothing to Kei Cheong includes, in many material respects, the items claimed by Mr Ma.

18.Kei Cheong’s solicitors at the time, wrote on 28 October 2005 demanding payment of $1,188,155 but thereafter the matter was not pursued.

19.I consider it unnecessary to set out, item by item, the references to Mr Ma’s claims in the above documents.  In the course of the evidence given by Mr Tso and Bernie each item was identified and cross referenced.  In the end it was shown, without much difficulty, that Mr Ma’s claim in this action was part of the contract between Leung Kee and Kei Cheong and was included in the accounts.

ORAL EVIDENCE

20.Under the heading of “oral evidence” the key focus is on Mr Ma’s contention that a separate oral contract was formed between himself and Bernie.

21.Mr Ma’s case was entirely dependent on the existence of such a contract.  In a nutshell, he contended that Bernie, on Pollard’s behalf, specifically requested him to do work which was not covered by the contract with Kei Cheong.

22.Whilst I have no doubt that there would have been conversations between Bernie and Mr Ma on site all the credible evidence and common sense points towards such conversations being no more than normal instructions by a site agent.  Instructions that are in accordance with the written contract between Leung Kee and Kei Cheong.

23.Having heard the evidence of Mr Ma and Bernie I find it inherently improbable that any binding contract was created.  The following factors (all of which I find to be facts on the evidence) militate against such a scenario :

(i)    Whilst Pollard had worked with Kei Cheong on previous projects, this was the first time that either Pollard, or Bernie in particular, had worked with Mr Ma.  A binding contract between two such people, made on-site, is highly improbable.

(ii)  There was no logical reason for Bernie not to approach Kei Cheong to do the additional work.  The emergence of the two addenda to the sub-contract is entirely consistent with evidence relating to the progress of the works at the material time.  There was no good reason for Bernie to enter into private discussions with a sub-sub-sub-contractor.

(iii)    Bernie had no authority to enter into contractual relations.  Neither did he hold himself out as having any such authority.  He and Mr Ma had had no previous dealings and I accept his evidence that his role as site agent was, inter alia, to ensure proper progress of the contractual works and to pass on instructions from Mr Tso.  He was not authorized to, and did not, enter into oral contracts.

(iv)    Whilst Bernie’s role on site was clear and unequivocal, that of Mr Ma was, to say the least, confusing.  In evidence he stressed that he was a sub-contractor to Kei Cheong (as was his case).  However there were many examples of him being Kei Cheong’s representative on site.  At the foot of Kei Cheong’s stationery his name and phone number appear as being the person responsible for “civil engineering” within Kei Cheong.  In correspondence between Pollard and Kei Cheong, Pollard referred to him as “your Mr Ma”.  Kei Cheong, in correspondence, referred to him as “our associated partner, Mr Ma …”.  Kei Cheong’s final payment application lists him as their “civil engineer”.  Mr Ma’s response to this was that he had not written any of the above references and he disassociated himself from them.  However, they support Pollard’s contention that whatever was said between Bernie and Mr Ma it was in the context of Bernie believing he was talking to Kei Cheong’s representative.

(v)  Ultimately, Mr Ma finds himself in an impossible situation.  He cannot wear the Kei Cheong hat because the account has been finalized.  He cannot sue Kei Cheong because the works were outside the scope of his sub-contract with Kei Cheong.

(vi)    The chronology of events shows that he only turned his attention to Pollard after it became apparent that he was not going to receive any more payment from Kei Cheong and that Kei Cheong were not pursuing any disputes against Leung Kee or Pollard.

(vii)  In evidence Mr Ma put great stress on a handwritten note made by Bernie on one page of the “BQ3-Add01” (the first addendum schedule).  The note says : “Formwork and steel fixer labour only for the above.  KC to provide cost of steel workers”.  Mr Ma placed undue emphasis of this piece of writing which was the only evidence to which he could point when asked if there was any written evidence of his contract with Pollard.  However, the simple words used could neither form the basis of a contract as alleged by Mr Ma nor lend support to it being between Pollard and Mr Ma.  As Bernie pointed out it was, in any event, addressed to “K.C.”.  If Mr Ma was right when he said it was given to him it merely enforces the argument that he was part of Kei Cheong.

24.To conclude, the plaintiff has fallen well short of being able to prove his case to the required standard.  It is plain that he feels aggrieved that he carried out works for which he has not been paid.  However, in all respects the works have been accounted for.  It is not possible to speculate what would have happened if Kei Cheong had continued its dispute against Pollard and/or Leung Kee in respect of the final account.  Accordingly it is not possible to know whether Mr Ma’s sense of grievance is merited or not.

25.Wherever documentary evidence was produced which contradicted Mr Ma’s claim of an oral contract he rejected it as “false” or “untrue”.  His case could not succeed being based on mere assertions of falsely created documents.

26.His contention for an oral contract, in my judgement, was bound to fail.  That being so, such works that were done, whether by him or anyone else, were works sub-contracted to Kei Cheong and accounted for.  Thus any claim based on quantum meruit must also fail.

27.I dismiss the plaintiff’s claim and make a costs order nisi in the defendant’s favour.

The Plaintiff, in person

Mr Kenny C.P. Lin, instructed by Messrs Benjamin Au & Billy Chan,  for the Defendant