Chow Yan Wei v. Riseship Construction Co Ltd
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DCCJ1738/2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 1738 OF 2008 -------------------- BETWEEN
-------------------- Coram : H.H. Judge Chow in Court Dates of hearing : 2nd, 3rd and 4th December 2009 Date of written submission : 24th December 2009 Date of handing down judgment : 2nd March 2010 Judgment 1.This is the Plaintiff’s claim against the Defendant for outstanding consultancy fee in the sum of $535,000. The Defendant counterclaims against the Plaintiff in the sum of $150,000 for breach of an oral agreement not to make further unwarranted demands, upon payment of the said sum of $150,000 by the Defendant. The Plaintiff’s evidence 2.The Plaintiff was a shareholder and a director of Po Wing (International) Construction Limited (“Po Wing”), a contractor specializing in demolition work and a Registered Special Contractor (“RSC”) on the approved list of registered specialist contractors (demolition works) maintained by the Buildings Department. In April, Kin Shing Construction Company Limited (“Kin Shing”), a general contractor, entered into a contract (“the Contract”) with the Government in respect of some building works in the Kai Tak Airport. The Contract required the engagement of a RSC. In September 2004, Kin Shing had dispute with its then RSC, Wing Key Construction Company Limited (“Wing Key”), and wanted another RSC to replace Wing Key. Mr. Sihoe (“Sihoe”) of Kin Shing approached the Plaintiff for the purpose of resolving this matter. In September 2004, the Plaintiff entered into an oral agreement on behalf of Po Wing with Mr. H.S. Chan of Kin Shing. Under this oral agreement Po Wing became the demolition subcontractor under the Contract. The change was approved by the Civil Engineering and Development Department (“CEDD”). 3.In November 2004, disagreement between the Plaintiff and the other shareholders within Po Wing arose. Mr. H.S. Chan came to know about this. Being concerned that it might delay the work progress under the Contract, he instructed Sihoe to approach the Plaintiff to sort out the problem. The Plaintiff recommended Mr. K. Lo (“Lo”) of the Defendant, a common acquaintance of his and Sihoe. On or about 23.11.2004 they met at Sihoe’s office at the Kai Tak Airport. The Plaintiff and Lo reached an agreement (“the Consultancy Agreement”), under which the Plaintiff would recommend the Defendant to Kin Shing to replace Po Wing. When this succeeds the Defendant would pay the Plaintiff a monthly consultancy fee of $62,500 per month for 10 months. The Plaintiff succeeded to procure the Defendant to replace Po Wing as the demolition subcontractor substituting Po Wing, and the approval of CEDD was obtained in December, 2004 for this change. Later on, the Plaintiff prepared a written agreement including all the terms of the Consultancy Agreement. But Lo refused to sign it, saying that both parties could rely on the oral agreement. 4.Pursuant to the Consultancy Agreement the Plaintiff received 5 cheques from the Defendant in the total sum of $150,000:-
5.In or about September 2005, the Plaintiff had a meeting with Lo and Sihoe. He and Lo agreed that the Defendant would pay him a sum of $250,000 to settle the matter. But the Defendant did not make any payment. The evidence of Sihoe 6.The Plaintiff called Sihoe to testify for him. Sihoe remembered that in or about the end of November, the Plaintiff and Lo came to his office at the construction site of Kai Tak Airport. It was agreed that on successfully recommending the Defendant to Kin Shing as the demolition subcontractor substituting Po Wing under the Contract, the Defendant would pay the Plaintiff a consultancy fee of $625,000, to be paid by 10 monthly instalment at $62,500 per month. 7.Subsequently he received complaints from the Plaintiff that he had not received the full amount of consultancy fee from the Defendant. So he arranged a meeting with the Plaintiff and Lo in a restaurant in Kowloon. During the meeting Lo explained that the Defendant was in financial difficulties. The Plaintiff agreed to receive $250,000 from the Defendant, if the Defendant immediately settled it. 8.Sihoe impressed me as an honest witness. He has nothing to gain from the outcome of this action. There is no incentive for him to lie. I accept his evidence. Defendant’s evidence 9.Lo testified on behalf of the Defendant. It is his evidence that in or about November 2004 Sihoe asked him if the Defendant would be interested to be the demolition subcontractor of the Contract. He said that the Defendant was interested. In or about November 2004, Mr. H.S. Chan and he had a meeting at the site office of Kin Shing at the Kai Tak Airport in the presence of Sihoe. During the meeting, Mr. H.S. Chan told him that Po Wing was the demolition subcontractor of the Contract at that time. However, Mr. Chan Cheung, one of the directors of Po Wing, informed Kin Shing that they would terminate the demolition subcontract and would quit the site office on 18.11.2004. Therefore Kin Shing had to find another licenced RSC to replace Po Wing. He and Mr. H.S. Chan agreed that Kin Shing would propose the Defendant to be the RSC of the contract to CEDD, and if CEDD accepted the proposal, Kin Shing would engage the Defendant as the demolition subcontractor of the contract to replace Po Wing. It was also orally agreed that the Defendant would take over Po Wing to supervise the demolition works of the contract after Po Wing had vacated the site and before CEDD’s approval of the Defendant as the RSC was given. On or about 6.12.2004, CEDD granted the approval. 10.In or about November 2004, after the Defendant had taken over Po Wing’s position, the Plaintiff came to the site office, and demanded the Defendant to pay him “an introduction fee in the sum of half of the demolition subcontract sum, that is $625,000” for the demolition subcontract period with Kin Shing for “the Plaintiff’s introduction of the Defendant to Kin Shing”. Lo refused to make payment, because there is no basis for the Plaintiff to make such a demand, 11.On or about 7.12.2004, the Plaintiff sent a fax message to the Defendant. It stated that the Plaintiff “recommended the Defendant to Kin Shing as the RSC of the demolition works in the Contract” and “the Defendant would pay $62,500 monthly to the Plaintiff if CEDD approved the Defendant to become such RSC”. Since the Defendant had never agreed to enter into such an agreement or to make any payment to the Plaintiff, the Defendant did not sign the agreement, and did not follow up the matter. 12.In his witness statement Lo said:-
13.After the last payment made to the Plaintiff on or about 15.9.2005, Lo did not hear from the Plaintiff until the Defendant received a letter from the Plaintiff’s legal representative in August 2007. Analysis of the evidence 14.In the notification (dated 16.1.2007) filed by the Defendant to the Inland Revenue Department (“the IRD”) the payment made to the Plaintiff for the period from 12.8.2005 to 30.9.2005 was described as “consultancy fee”. The Defendant sent a copy of this notification to the Plaintiff, obviously for the purpose of reminding him of his tax obligation in respect of the payment made to him. In respect of the payment made to the Plaintiff for the period from 18.12.2004 to 31.3.2005 in the total sum of $90,000 the same filing (dated 18.4.2005) with the same description was done. In all the receipts prepared by the Defendant, the payments made to the Plaintiff were recorded as “工程顧問費” or “顧問費” which denotes consultancy fees. The notifications to the IRD and the receipts show that the Defendant was paying the sums for a certain purpose, but that certain purpose was not to stop the alleged unwarranted demands made by the Plaintiff on the Defendant. There is no reason for the Defendant to put down untrue information on the notifications the IRD and the receipts. The term “consultancy fees” show the nature of the fees concerned. These are admissions of facts made by the Defendant. 15.The 1st payment to the Plaintiff was made on 6.1.2005, just a few days after the Defendant had received the 1st payment from Kin Shing. This is consistent with the Plaintiff’s case that under the Consultancy Agreement, the Defendant was to pay the fees to the Plaintiff when it received payment from Kin Shing. 16.Lo said that the Plaintiff agreed to his proposal of paying $150,000 by 5 instalments. According to his evidence the Plaintiff did not ask for any payment date. This is incredible, as the Plaintiff made a number of telephone calls to urge Lo for payment. So the Plaintiff must be eager to get the money as soon as possible, and yet he did not mention any date for Lo to make the payment. He just let Lo make the payment at the time he deemed fit. This is unbelievable. 17.On or about 7.12.2004, Lo received a faxed written agreement from the Plaintiff for his signature. He refused to sign. Lo admitted that the Plaintiff phoned him up to discuss this document. The two of them had a discussion on the details of the project. There were some notations on the draft written agreement. One of the notations is “tax shall be borne by Chow”. Lo agreed that his was an agreement reached between the two of them. If the Plaintiff had made unwarranted demands for payment, there could not have been such an agreement regarding tax arrangement. Tax payment is totally not connected with any unwarranted demands for payment! 18.Under paragraph 14 of his witness statement, the Plaintiff said that in September 2005, the Plaintiff met the Defendant and Sihoe to talk about the unpaid fees. Lo explained that the Defendant was in financial difficulties and would settle the entire outstanding fee for $250,000. In his witness statement, Lo did not make any denial or response to this material allegation. 19.The Defendant’s case is inherently incredible. I reject its evidence in so far as it contradicts the Plaintiff’s evidence. The Plaintiff’s evidence is credible, and is supported by documentary evidence and by the evidence of Sihoe. I accept it in its entirety. I find that the payment to the Plaintiff in the total sum of $150,000 was made pursuant to the Consultancy Agreement. I therefore dismiss the counterclaim, and enter judgment in favour of the Plaintiff in the sum of $475,000, with interest thereon, at judgment rate, commencing from 13.3.2008 until satisfaction. Costs 20.I make an order nisi, to be made absolute in 14 days’ time, that the Defendant do pay costs of this action to the Plaintiff, to be taxed, if not agreed, with certificate for Counsel.
The Plaintiff: represented by Miss Frances Lok, instructed by M/S. Lo, Wong & Tsui, Solicitors The Defendants: represented by Mr. Hylas Chung, instructed by M/S. Fung & Fung, Solicitors |