Chun Yuk Kwan v. A.G. Wilkinson and Associates Property Management Ltd
Read the full judgment text of DCCJ 5739/2007 on BabelCite. This District Court judgment was delivered on 26 April 2010.
1. Madam Chung Yuk Kwan (“Madam Chung”) runs two sole-proprietorship businesses concurrently. On the one hand, she carries on business in the provision of gardening service under the trade name of Kwan Kwan Garden Co. (“Kwan Kwan”) and on the other hand she operates a cleaning service business under the trade name of Yuen Wai Cleaning Service Company (“Yuen Wai”).
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DCCJ 5739/2007 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 5739 OF 2007 ----------------------
---------------------- Before: Deputy District Judge Kent Yee in Court Date of Hearing: 22, 23, 24 and 25 March 2010 Date of Judgment: 26 April 2010 ---------------------- J U D G M E N T ---------------------- Introduction 1.Madam Chung Yuk Kwan (“Madam Chung”) runs two sole-proprietorship businesses concurrently. On the one hand, she carries on business in the provision of gardening service under the trade name of Kwan Kwan Garden Co. (“Kwan Kwan”) and on the other hand she operates a cleaning service business under the trade name of Yuen Wai Cleaning Service Company (“Yuen Wai”). 2.A.G. Wilkinson and Associates Property Management Limited (“AGW”) is a company incorporated in Hong Kong carrying on the business in the provision of property management services. 3.Madam Chung commenced these proceedings on 28 December 2007 to sue AGW for unpaid charges for gardening and cleaning services allegedly rendered by Kwan Kwan and Yuen Wai to various buildings on the instructions of AGW between 2000 and 2004. Parties’ Contentions 4.In the statement of claim, it is pleaded the outstanding gardening service charges amount to HK$182,374 and the outstanding cleaning service HK$504,500. The breakdown of such charges is given by way of appendices to the witness statement of Madam Chun which sets out the details of all the invoices involved. There are altogether 87 invoices for the former charges and 93 invoices for the latter charges (collectively “the Invoices”). 5.Mr. Maurice Chan (“Mr. M. Chan”), counsel for Madam Chun, confirmed that not all the Invoices for the outstanding gardening services were included in the trial bundles. Mr. M. Chan indicated that Madam Chun would abandon her claim for those sums charged under such missing invoices[1]. Any claim in respect of two of them, namely, invoices numbered 2870 and 2931, is time-barred anyway. Accordingly, a total sum of HK$8,070 is to be deducted from the claim of HK$182,374 leaving a balance of HK$174,304. 6.Madam Chun’s pleaded case is that, except invoice numbered 10605 (“the Southorn Invoice”) which will be dealt with separately, her gardening service and cleaning service were provided to various buildings managed by AGW on the oral instructions of one Mr. Paul Lam, former Associate Director of AGW and/or his assistants including Carol Yip and Cheung Chi Ming (“Cheung”). Paul Lam left the employment of AGW in March 2004. Carol Yip and Cheung Chi Ming left even earlier. 7.Paul Lam once made an affirmation in support of Madam Chun’s claim to resist a striking out application by AGW. He has also made a witness statement for Madam Chun. He however did not turn up at trial and Mr. M. Chan made it clear that Madam Chun would not seek to rely on Paul Lam’s affirmation and his witness statement as hearsay evidence. 8.Likewise, Mr. Kenny Chan (“Mr. K. Chan”), counsel for AGW, made it clear that the witness statement of Tam Yiu Cho is not relied on due to his absence from trial. 9.The defence’s position is, on its pleading, straightforward. AGW denies having ever contracted with Madam Chun in whatever capacity at all. If it ever did, it did so solely as agents of the owners or owners’ corporations of those buildings and that Madam Chun was aware of this. Lastly, AGW further denies Madam Chun has ever provided the alleged gardening and cleaning services to those buildings and hence in any event, it is not liable to Madam Chun. 10.The invoice numbered 5635 for the sum of HK$480 was an exception. AGW once alleged that it had been settled. In his closing submission, Mr. K. Chan fairly accepted that there was insufficient evidence to substantiate this allegation. Hence, he agrees that the court should treat this invoice as unpaid as well. 11.The Southorn Invoice has a different story and requires separate consideration. Madam Chun’s case is that on or about 25 March 2000, AGW had a promotional event at Southorn Playground, Wanchai. Madam Chun supplied a number of plants and flowers to AGW and delivered them to Southorn Playground for decoration purposes. Madam Chun then took them away after the event was completed late in the day. 12.Madam Chun claims that Paul Lam has agreed with her on behalf of AGW that she would charge AGW HK$900,000 for such services. AGW denies such an agreement was ever made on its behalf and in any event the claim is now time-barred. Issues 13.Given these contentions of the parties, the issues calling for resolution are thus:
14.As a backdrop for the assessment of the relevant evidence in respect of the issues identified above, the non-contentious background facts are briefly stated as follows:
15.At trial, Madam Chun was the only witness for the plaintiff’s case. The defence called one Ms. Hung Lai Yee Flora (“Hung”), Assistant Director of AGW and Tang to testify. Issue I: Any Contract between Madam Chun and AGW at all? 16.Madam Chun testified that she was orally asked by either Paul Lam, Carol Yip or Cheung Chi Ming to provide gardening and cleaning services under the Invoices to various buildings managed by AGW. 17.Though AGW denies such requests in its Defence, AGW did not really challenge the existence of such requests at trial. Hung readily agreed with Mr. M. Chan in cross-examination that there had been invoices for gardening and cleaning service charges presented by Madam Chun. They were settled without demur because they were presented to AGW contemporaneously. As for the Invoices, AGW found them suspect just because they were late according to the dates thereon. Even so, some other belated invoices presented to AGW in May 2004 were settled. 18.Of course, the Termination Notices and the Termination Letters issued by AGW could only confirm the existence of contracts with Madam Chun. 19.Mr. K. Chan did not make any submission on this issue in his closing submission at all. 20.Therefore, I have no difficulties in finding that AGW did contract with Madam Chun through Paul Lam, Carol Yip or Cheung Chi Ming for her provision of gardening service and cleaning service alleged in the Invoices through Kwan Kwan and Yuen Wai. Issue II: Contracting personally or merely as agents? Plaintiff’s evidence 21.This issue is really the bone of contention in these proceedings. Central to the defence is the allegation that AGW contracted with Madam Chun as agents only. 22.Madam Chun’s evidence on this issue is simple and straightforward. When Paul Lam, Carol Yip or Cheung orally asked her to provide gardening service and cleaning service alleged in the Invoices through Kwan Kwan and Yuen Wai respectively, they did so without any reference to agency and none of them held out as agents for and on behalf of any other entities. Madam Chun said she did not know that AGW was the agent of the owners or owners’ corporations of such buildings. 23.After providing such services, Madam Chun would issue invoices to charge for such services. She would either send such invoices to AGW by hand. 24.The case of Madam Chun is further supported by the following matters:
Defendant’s evidence and submissions 25.Understandably, absent the assistance of Paul Lam, Carol Yip and Cheung due to their departure from AGW long before the commencement of these proceedings, there was no suggestion, let alone evidence, that these people on behalf of AGW held out to be the agents of the owners or owners’ corporations of those buildings only when they asked Madam Chun to provide such services under the Invoices without AGW’s assumption of any personal liability. 26.Mr. K. Chan firstly relied on the fact that there was no reference made to AGW in the Invoices and only the buildings’ names were found. He submitted that the Invoices were issued to the buildings and not to AGW and AGW was a mere agent to the knowledge of Madam Chun. 27.I do not agree to this submission. Madam Chun issued the Invoices to AGW and she looked to AGW for settlement of the Invoices. Madam Chun explained that the building names were so stated in the Invoices to indicate to which locations the relevant services being charged had been rendered. The building names were in any event no legal entities and could not effect payment of the Invoices. I accept her explanation. 28.Mr. K. Chan drew my attention to the fact that the two cheques of AGW drawn upon Bank of East Asia bore the names of the buildings. Mr. K. Chan then submitted that they were paid by AGW on behalf of the owners of such buildings and this pointed to an agency relationship. 29.Again I do not agree to this submission. As explained by Hung, for every building, AGW would open a separate account for easy accounting. At one stage, Bank of East Asia allowed AGW to have the names of the buildings to be printed on such cheques. This practice has long been ceased. Whether or not the names of the buildings appear in the cheques issued by AGW does not really matter, for the cheques have to be honoured by AGW. 30.Mr. K. Chan took me through a number of provisions in the Building Management Ordinance, Cap. 344 (“the BMO”). Section 16 of the BMO provides, among other things, the rights, powers, privileges and duties of the owners in relation to the common parts of the building (if they have been incorporated) shall be exercised and performed by, and the liabilities of the owners in relation to the common parts of the building shall, be enforceable against, the corporation to the exclusion of the owners. 31.Mr. K. Chan submitted that Madam Chun’s gardening and cleaning services were rendered in relation to the common parts of the buildings, individual owners of such buildings are liable to pay Madam Chun if there is no incorporation of the owners. If there are, Madam Chun should look to the owners’ corporations for payment of the Invoices pursuant to section 16 of the BMO. 32.This submission cannot be right. It ignores the doctrine of privity of contract. Unless it is proved that the owners and owners’ corporations of such buildings were parties to the underlying contracts evidenced by the Invoices, they could not be held liable to Madam Chun. 33.Mr. K. Chan further prayed in aid section 18 of the BMO. The gist of the provision is that a owners’ corporation shall maintain the common parts of the property in a state of good and serviceable repair and clean conditions and the corporation may in its discretion retain and remunerate a manager or other professional trade or business firm or person to carry out on behalf of the corporation any of the duties or powers of the corporation under the BMO. 34.Mr. K. Chan submitted that section 18 of the BMO proves that AGW was merely agents of the owners’ corporations of those buildings (for those there are owners’ corporations) and hence not liable to Madam Chun’s claims for services rendered in relation to the common parts. 35.I reject this submission. Whilst section 18 of the BMO confirms the discretion of owners’ incorporations to engage management companies such as AGW to discharge their statutory duties in relation to the common parts of the buildings under the BMO, it did not prove the actual capacity of AGW in its contracts with Madam Chun. 36.Even if AGW was the agents of those owners’ incorporations, AGW was still at liberty to enter into contracts with Madam Chun (or other contractors) in its personal capacity to fulfill its duties as agent. AGW should then have the right of indemnity against its principals for all payments made and liabilities incurred within its express or implied authority. 37.Mr. K. Chan referred me to some Deed of Mutual Covenants (“DMCs”) of the buildings in question, some management agreements and Schedule 7 to the BMO. In summary, his submission was that given the managers’ rights and duties under these documents, AGW did not contract with Madam Chun personally and only as agents of the owners of those buildings. 38.First, Mr. M. Chan rightly pointed out that there is no evidence that Madam Chun knew or was ever informed of any of those provisions in the DMCs and the management agreements at the time she agreed to provide services to AGW. 39.Further, none of the provisions in the DMCs, the management agreements and the BMO forbids AGW from entering into contracts with contractors in its personally capacity to fulfills its contractual obligations under the DMCs and/or management agreements. 40.Of course, I have taken these provisions into account in my assessment of the likelihood that AGW acting through Paul Lam, Carol Yip and Cheung entered into contracts in its personal capacity with Madam Chun. AGW could opt not to do so. There was evidence adduced by AGW that it indeed entered into agreements with some other contractors for their provision of security facilities and elevators maintenance services expressly for and on behalf of certain owners’ incorporations. 41.However, we also have evidence that AGW entered into service contracts with Cater Service Company and Service 2000 Limited Company in its personal capacity without qualifications for the benefit of Gracious Mansion which was managed by AGW. 42.Tang, speaking from his work experience in the property management industry (since 1996), characterized the Cater Service Agreement as exceptional and abnormal. He said that a prudent management company should not take such a risk to enter into a contract personally for its principals. I doubt the reliability of his opinion as he obviously did not take a neutral stance and in any event he was merely a factual witness. 43.His opinion cannot alter the fact that AGW did have experience in entering into contracts with contractors in its personal capacity and more importantly, it too expected Madam Chun to contract with it on that basis by sending to Madam Chun the Cater Service Agreement and the Service 2000 Agreement and not other agreements which AGW signed for and on behalf of owners’ corporations. 44.Mr. K. Chan referred me to a notice issued by AGW through Paul Lam to the owners of Ka On Building dated 26 March 2001. There it was stated that the pest control and cleaning services were rendered on an accountable reimbursement basis (實報實銷). 45.I fail to see the relevance of this notice. Ka On Building is not one of the buildings in question. Even if it were, my foregoing analysis is applicable and this notice does not advance the case of AGW any further. 46.On the other hand, Hung pointed out that upon termination of such management agreements, the accounts of such buildings were closed and all the accounting documents including income/expenditure statements, balance sheets and invoices would be returned to the owners of such buildings. Her evidence was that many management agreements were terminated in 2003. Mr. K. Chan then submitted that the return of such accounting documents showed that AGW only intended to contract with Madam Chun as agents. 47.Mr. M. Chan found this submission bad in law. He said that it was very trite that subsequent conducts of the parties could not be admitted to determine the parties’ contractual intention at the very moment when the contract is concluded. 48.I do not agree with Mr. M. Chan. I believe what is trite is the legal principle that the court may not look at the subsequent conduct of the parties to interpret a written agreement, as laid down by the House of Lord in James Miller & Partners v. Whitworth Street Estate (Manchester) Ltd [1970] AC 572 at p.603 per Lord Reid:
49.As the common law develops, there are a list of exceptions, as enumerated by the learned editors of Chitty on Contracts, Vol. 1 13th ed., §12-126. First on the list is where the contract is oral or partly oral. 50.In Maggs v. Marsh [2006] B.L.R. 395 at §26, Smith L.J. had this to say about the above legal principle expounded in James Miller & Partners v. Whitworth Street Estate (Manchester) Ltd, supra:
51.Here, we are concerned with oral contracts. To ascertain the intention of the parties including those relating to the contractual capacity of AGW, I am entitled to, and should indeed, take into account the post-contract conduct of AGW after termination of the relevant management agreements as advocated by Mr. K. Chan. 52.However, the intractable problem with the case of AGW is that there is no evidence emanating from Paul Lam, Carol Yip and/or Cheung reagrding their knowledge of and attitude towards AGW’s obligations owed to the owners of such buildings after termination of the relevant management agreements with them at the time when they orally asked Madam Chun to provide gardening and cleaning services to such buildings. 53.I thus cannot come to the conclusion as AGW now wishes me to reach that since Paul Lam, Carol Yip and/or Cheung all along knew such post-termination obligations and they believed AGW would not be able to honour such obligations unless the owners of such buildings were made party to all the oral contracts with Madam Chun, they would on balance of probabilities have contracted with Madam Chun on behalf of AGW only as agents of the owners of such buildings. 54.I also note that there is no alternative plea that even if Paul Lam, Carol Yip and/or Cheung contracted with Madam Chun on behalf of AGW purportedly in its personal capacity, they nevertheless did so without authority of AGW and AGW should not be held liable. 55.In the premises, for the foregoing reasons, I accept Madam Chun’s evidence on this issue and find as a matter of fact that Paul Lam, Carol Yip or Cheung orally contracted with Madam Chun on behalf of AGW in respect of the Invoices in its personal capacity and not as agents of the owners or owners’ corporations of the building concerned. 56.I should add that even if I were wrong to hold that AGW contracted personally and not as agents, I would find AGW equally liable to Madam Chun in respect of the Invoices along side with its principals. 57.In Stanley Yeung Kai Yung & Anor. v. Hongkong & Shanghai Banking Corp. [1980] HKLR 195, an authority helpfully cited to me by Mr. M. Chan, Lord Scarman delivering the judgment of the Privy Council made this statement of law:
58.This statement of law was cited with approval and applied by Cheung JA in Bowlstar (HK) Ltd v. Ho Kwai Po [2007] 3 HKLRD 1 at §37. There the Court of Appeal dealt with a contractual dispute and the liability of the defendant was affirmed on the basis that they (two partners) had not done anything which negated their personal liability when they signed the two sales confirmations in favour of the plaintiffs. 59.Here, AGW did not begin to show how it had ever negatived its personal liability when contracting with Madam Chun even as agents only. It therefore must be liable even as agents under the Invoices. Issue III: Gardening and Cleaning Services actually rendered? (excluding those charged under the Southorn Invoice) 60.Madam Chun’s evidence on this issue is again straightforward. Every month, she would cause to be sent by hand to AGW invoices to charge AGW the gardening and cleaning services rendered on its instructions. She confirmed that she had indeed rendered all the services under the Invoices. 61.Madam Chun clarified that for the Invoices now included in the trial bundles, some of them were re-issued at the request of AGW. She was asked by AGW to reissue some invoices to substantiate her claim in or about May 2004 because AGW claimed that it did not have in its possession some of the Invoices. 62.Madam Chun explained that whenever she issued an invoice, there would be a duplicate carbon copy left in the relevant invoice book. In addition she would make a record of the details of the invoice issued in a separate notebook which she called “information book”. 63.When AGW requested Madam Chun to reissue certain invoices, she would normally send a photocopy of the duplicate carbon copy left in the invoice books. She would however issue a new invoice altogether if (a) AGW asked her to do so though she could not understand why and (b) the duplicate carbon copies for unknown reasons were missing. She would reissue such new invoices making reference to the records in her information book. 64.Her evidence is not inherently improbable, not contradicted by documentary evidence and unshaken under cross-examination. Defendant’s evidence and submissions 65.AGW adduced no contrary evidence on this issue. Tang merely asserted that certain unidentified owners of some of the buildings concerned did not confirm whether they had received such gardening and cleaning services whilst some did. 66.Tang further demanded Madam Chun to provide documentary proof of such services rendered such as delivery notes or work completion forms for payment of the Invoices. In cross-examination, he however accepted that there could be no delivery notes for Madam Chun’s gardening services and AGW had no work completion form for Madam Chun to fill in for her cleaning services. Such a demand was unreasonable. Tang finally agreed that the ultimate reason of non-payment some of the Invoices was that there was no fund or insufficient fund left in the relevant accounts. 67.AGW did not deny that it had undertaken to provide or cause to be provided gardening and/or cleaning services to those buildings for the material periods. Nor did it allege to have engaged other contractors to provide such services to fulfill its undertakings. There is no evidence of any complaints of the owners of those buildings about AGW’s non-compliance of such undertakings. 68.In the result, on balance of probabilities, I find that such services to be charged under the Invoices were actually rendered by Madam Chun. Mr. K. Chan did not seek to argue otherwise in his closing submissions. Issue IV: Agreement evidenced by the Southorn Invoice? Plaintiff’s case and evidence 69.The pleaded case of Madam Chun in respect of the Southorn Invoice (§5 of the Reply) is reproduced as follows:
70.Obviously this paragraph is pleaded in reply to the alternative limitation defence raised by AGW. In her witness statement, Madam Chun merely rehashed her pleaded case. 71.In the witness box, Madam Chun first stood by her pleaded case and her witness statement. When cross-examined about the Southorn Invoice, Madam Chun was made aware of the chop of the Prince Edward West Road address of Kwan Kwan stamped on the Southorn Invoice. She explained that Kwan Kwan moved to this address only shortly before the Lunar New Year in 2004. Therefore, she accepted that the Southorn Invoice could not have been contemporaneously created on the date it bore, i.e., 25 March 2000. 72.She explained that the Southorn Invoice should be issued in May 2004 when she chased after AGW for payment of the Invoices. She asserted that she was even not allowed by Paul Lam to submit this particular invoice until Paul Lam told her to do so in early 2004. 73.Madam Chun could not explain why she had such a new story to tell in relation to the issue of the Southorn Invoice. Mr. K. Chan submitted that Madam Chun lied about the time when the Southorn Invoice was made. This submission is valid. I am not persuaded that Paul Lam could disallow Madam Chun to submit the Southorn Invoice when he was asking Madam Chun to give AGW a big favour. AGW effectively had indefinite time to pay the charges. 74.AGW was unable to adduce contrary evidence to rebut the versions of Madam Chun. That does not mean I would accept her evidence in this regard without further ado. 75.Whilst I am prepared to accept that Madam Chun did provide the decoration and gardening services to AGW on 25 March 2000 and that it had been agreed by Paul Lam that Madam Chun could charge for such services, I am unable to accept Madam Chun’s assertion about the payment terms including the amount payable and the time when it became payable particularly given her unsatisfactory evidence about when the Southorn Invoice was issued. 76.I cannot accept that the agreed amount was HK$90,000 in the absence of contemporaneous documentary evidence. The information book was not produced to lend support to her allegation and there is no reason why it was not. Issue V: Claim time-barred? 77.Given my rejection of Madam Chun’s evidence that the agreed charge was HK$90,000, strictly speaking I do not have to consider the limitation issue since Madam Chun does not claim any other amount payable under the Supply of Services (Implied Terms) Ordinance, Cap. 457. 78.For completeness, I find that the payment term, which Madam Chun would have me believe, was just bizarre and incredible. I cannot accept the liability of AGW to pay the charge only arose when AGW notified her of the abatement of its cash flow problem. If that is the case, AGW did not have to pay Madam Chun at all so long as it decided not to make the notification even if its financial condition had improved. This defies common sense. It seems to be tailor-made to overcome the limitation issue. I reject Madam Chun’s evidence in this respect without hesitation. Any claim for the services rendered by Madam Chun on 25 March 2000 must be time-barred by December 2007. Conclusion 79.By reason of my findings set out above, I would allow Madam Chun’s claim in relation to the Invoices except those abandoned by her through her counsel and the claim of HK$90,000 in respect of the Southorn Invoice. 80.There will be judgment on Madam Chun’s claim against AGW for (1) HK$84,304 (174,304 – 90,000) and (2) HK$504,500, making a total of HK$588,804. 81.Interest will run on the sum of HK$588,804 at 1% over prime from date of Writ until judgment, thereafter judgment rate until payment. 82.In his written closing submission, Mr. M. Chan set out 13 bullet points to explain why the defence is so oppressive that AGW should pay costs on an indemnity basis. Without the benefit of full arguments of counsel, I do not intend to make an indemnity costs order. I would require a great deal of persuasion to accept that such an order is appropriate in this action. 83.There will be an order nisi that AGW pay Madam Chun costs of this action, such costs to be taxed if not agreed on a party and party basis.
Mr. Maurice Chan instructed by Messrs. Chak & Associates for the Plaintiff Mr. Kenny Chan instructed by Messrs. Liu, Chan and Lam for the Defendant [1] These missing invoices include Invoices Nos. 3112, 6429, 7114, 7239, 2870,2931, 2989, 3066, 3156 and PD. |
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