Mr. Tong Pun Chung v. Blessgain Construction Engineering Ltd
Read the full judgment text of DCCJ 4618/2008 on BabelCite. This District Court judgment was delivered on 31 May 2010.
1. The Plaintiff's claim against the Defendant is for work done in respect of cabling works carried for the Defendant. The Main Contract Employer is CLP Engineering Limited (中電工程有限公司) ("CLP") and the project (“the Project”) relates to the distribution cable trenching and laying works in North Region (Contract No. Ref. No. CBE12102). CLP awarded the main contract ("the Main Contract ") to Excel Engineering Co Ltd (怡益工程有限公司) ("Excel") which sub-contracted (“the Sub-contract”) it to the Defendant
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DCCJ 4618/2008 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 4618 OF 2008 ___________________________ BETWEEN
___________________________ Coram : Deputy Judge Geoffrey Chan Date of Hearing : 7, 10, 11 May 2010 Date of Handing Down Judgment : 31 May 2010 ___________________________ JUDGMENT ___________________________
1.The Plaintiff's claim against the Defendant is for work done in respect of cabling works carried for the Defendant. The Main Contract Employer is CLP Engineering Limited (中電工程有限公司) ("CLP") and the project (“the Project”) relates to the distribution cable trenching and laying works in North Region (Contract No. Ref. No. CBE12102). CLP awarded the main contract ("the Main Contract") to Excel Engineering Co Ltd (怡益工程有限公司) ("Excel") which sub-contracted (“the Sub-contract”) it to the Defendant which in turn sub-contracted part of the same to the Plaintiff. The present case before me does not concern the issue of liability between the Plaintiff and the Defendant. Rather it is a purely matter of quantum - what the Plaintiff is entitled to be paid pursuant to his oral agreement with the Defendant. By the time this matter came before the Court, the amount in dispute is only HK$53,630.25. The Plaintiff claims the sum of HK$77,809 plus interest and the Defendant admits the sum of HK$24,178.
Background 2.It is commonground that the Plaintiff and the Defendant had an oral agreement made in or about December 2004 whereby the Defendant agreed to carry out cable trenching and laying works in Tin Shui Wai, New Territories, Hong Kong. The modest operandi was that CLP would issue work orders which would be passed down the line to the Defendant which would issue the same to, amongst other sub-contractors, the Plaintiff. The Plaintiff would carry out and complete the cable laying works contained in such work orders and would be paid. During the course of the Plaintiff's works, the Defendant issued to the Plaintiff eight payment certificates (“the 8 Certificates”) from January to August 2005 and certifying the total sum of HK$905,981 as payable. It is commonground that the sum certified has already been paid by the Defendant to the Plaintiff. The Issues 3.There are three issues in this case :-
(ii) whether the 8 Certificates were final payment certificates or interim payment certificates;
Witnesses 4.The Plaintiff himself gave evidence. Mr. Cheung Kwok Ming (張國明) and Mr. Law Kwok Shing (羅國成) gave evidence for the Defendant. Their witness statements stood as their evidence-in-chief. Terms of the Agreement 5.It is commonground that the Agreement was reached between the Plaintiff and Mr. Cheung Kwok Ming (張國明) of the Defendant. It is the Plaintiff's case that the terms of the Agreement were as follows :-
6.It is the Defendant's case that the terms of the Agreement as pleaded in paragraph 6 of the Defence :- (a) the amount payable by the Defendant to the Plaintiff is the amount payable by CLP to Excel after measurement and verification in accordance with the Main Contract in respect of work done by the Plaintiff less 18%;
7.It was the Plaintiff's evidence that laying such electricity cables under pedestrian pavements and under roads involved different amounts of work; the latter entailing more work as the trenches which had to be dug were deeper. Notwithstanding this, he agreed to be paid HK$410 and HK$240 for high voltage cables and low voltage cables regardless whether it was to be laid underneath the pedestrian pavements or roads. This was so even though at the time of the Agreement he would not know what proportion of his work orders would involve paving cables under road surfaces, as opposed to pedestrian pavements. As it transpired, only a few orders involved roads; so he did not take exception. 8.In cross-examination, the Plaintiff was referred to 8 Certificates which he relied on in support of his present claim against the Defendant. He conceded that if the Defendant had paid money on his behalf, it could be deducted from his payments. In this respect, his understanding is inconsistent with his pleaded case on the terms of the Agreement which contained no provision for contra-charges. Indeed, if his pleaded case on the Agreement were correct, there would be no room for the deduction of any expenses from the 8 Certificates. The Plaintiff was further asked whether he would be paid more if more than one cable was laid in a trench and his answer was in the affirmative although the extra amount paid to him would only be marginally more. This suggested that he was not paid just 2 rates and is contrary to his own case that only two rates of HK$410 or HK$240 per metre for high voltage and low voltage cables. Rather the evidence before the Court goes to show that there was a system of contra-charges against the work carried out by the Plaintiff. 9.In contrast, the evidence of Mr. Cheung Kwok Ming of the Defendant is more consistent with the contemporaneous documentary evidence and the factual matrix of this case with the exception of the percentage of retention monies which I shall deal with below. He explained the background to the contracting arrangement for the Project. Excel sub-contracted the whole of the works to the Defendant at 10% less than the Schedule of Rates (“the Schedule of Rates”) of the Main Contract and the Defendant would further retain 8% for itself in sub-sub-contracting to the Defendant. That explained the figure of 18% reduction from the Schedule of Rates as mentioned in his witness statement and the contemporaneous documentary evidence. He denied any agreement as contended by the Plaintiff for the reason that this did not fit into the present factual matrix. The Defendant had more than one sub-contractor for the works and its approach with the other sub-contractors was the same. This was not challenged by the Plaintiff. 10.Mr. Cheung for the Defendant further went on to explain that the Defendant would only be paid by Excel if the Defendant completed the whole of each work order issued. However, in ensuring that its sub-sub-contractors like the Plaintiff could pay his workers, the Defendant would pay on the basis of provisional estimates of the Plaintiff’s monthly work done. Each month the Plaintiff would assess the amount of work done by each sub-sub-contractor and the Defendant would then pay on an interim basis. The 8 Certificates relied upon by the Plaintiff were interim payment certificates as opposed to final ones. 11.The interim nature of the 8 Certificates was corrobated by Mr. Law for the Defendant. He went to great lengths to explain how the 8 Certificates contained provisional estimates of the work done and how the final account of the total amount of work done by the Defendant was calculated as well as explaining the methodology of deducting contra-charges in respect of the Plaintiff’s work with reference to the contemporaneous documentary evidence of the Defendant. 12.Returning to the terms of the Agreement between the Plaintiff and the Defendant, I do not agree that the terms of the Agreement were those as contended by the Plaintiff. As I mentioned in paragraph 7 above, it would have been illogical for the Plaintiff to agree only to one rate for each of the high or low voltage cables when he did not know how much of his work would be carried out under the pedestrian pavements and roads. Further the evidence shows that he would only be paid a little more as opposed to double the amount for laying of two cables within the same trench. This suggests that there were more than the 2 rates of payment as contended by the Plaintiff. I prefer the evidence of the Defendant as follows :-
paid in accordance with the final measurement and verification by CLP in accordance with the Main Contract at the rate of 18% less from the Schedule of Rates.
13. I further find that it was a term of the Agreement that upon final measurement and verification by CLP of the workdone under the Project and upon finalisation of the amount of contra-charges referred to in paragraph 11(ii), the Plaintiff and the Defendant would carry out a final accounting exercise to determine the final amounts payable to the Plaintiff or, as the case may be, the Defendant. 14.I do not, however, find for the Defendant on paragraphs 6(h) and (i) of the Defence. I do not believe that the discussions between the Plaintiff and Mr. Cheung of the Defendant were that sophisticated or detailed as they both stated that they received minimum education. On this issue, I only find that the agreed term was that the Plaintiff had to carry out his work in accordance with the technical and construction specifications and requirements of the Main Contract. This is logical because if the Plaintiff did not lay the cables to those requirements, he would not be able to be paid in accordance with the Scheduled of Rates, albeit discounted. Retention Monies 15.On the issue of percentage of retention monies, the Plaintiff's evidence was that after he received the payment certificate for January 2005 he noted that retentions to the tune of
16.As to the time of release of the retention monies, I prefer the evidence of Mr. Cheung in that it should be released one year after completion of the Defendant's works under the Sub-contract and after CLP paid all sums payable to Excel. Whether the 8 Certificates were final or interim in nature 17.It is the Plaintiff's case that the 8 Certificates were final in nature and Mr. Tsang for the Plaintiff sought to persuade that all I needed to look at were the 8 Certificates and no more. The Plaintiff's evidence in this regard was no more than a bare assertion in his witness statement. However, when one has a closer look at the 8 Certificates, one is not able to conclude that they are final in nature. In the payment certificates, there is one column clearly entitled "provisional deduction of materials" (暫扣材料) this suggests that the costs of the materials to be deducted are provisional or interim in nature and it is anticipated that there will be a final accounting exercise where the finalised sums will be identified and finalised. Mr. Law of the Defendant in his evidence explained the temporary nature of such deductions and quoted one example of compaction tests (泥辦) which appeared in the January 2005 certificate. In fact when the finalised figures later came to be known, the actual cost of each compaction test was HK$790 instead of HK$900 and the Defendant in its final accounting exercise apportioned the amounts back to the Plaintiff. 18.I accept the evidence of Mr. Law of the Defendant. Indeed, there is no suggestion on the
Proof of Work Done 19.Mr. Tsang accepts that once I find that the 8 Certificates are only interim as opposed to final in nature, he has no other proof of the amount of work done carried out by the Plaintiff. The Plaintiff's own notebook as proof of his work done has been lost. This, however, is not detrimental to the Plaintiff's case. As admitted by the Defendant, upon final measurement and verification of the works under the Main Contract and upon finalization of the total amount of contra-charges, the Plaintiff would carry out a final accounting exercise to calculate the final amount payable together with retentions which should be released in accordance with the Agreement. The Defendant's evidence is logical and is in line with the common practice in the construction industry. The 8 Certificates upon which the Plaintiff relies lends credence to this finding. 20.What then is the amount of work carried out by the Plaintiff ? The Plaintiff seeks to rely on the total sum certified under the 8 Certificates which total HK$1,292,389. The Defendant asserts that the total amount of work done by the Plaintiff is HK$1,279,371.30. The difference between the parties is HK$13,017.70. Mr. Ngai for the Defendant relies upon a schedule of work done ("the Schedule of Work Done") by the Plaintiff which is calculated by the Defendant at page 81 of Trial Bundle I. The substantiation (“the Substantiation”) of each of these figures is contained in pages 81 to 316 of Trial Bundle I and Mr. Law of the Defendant gave extensive evidence on how the figures in the Schedule of Work Done were arrived at with reference to Substantiation. At this juncture I duly note that Mr. Tsang for the Plaintiff does not dispute the admissibility of such evidence. He accepts the figures have been correctly calculated as figures although he submits that the documentary evidence in support is self-serving and it is a matter for the Court to consider what weight it should attach to such evidence. During the course of this trial, I ventilated my concern as to why there was nothing in the Statement of Mr. Law as to how he arrived at the figures in the Schedule of Work Done with reference to the supporting documentation. This not only would have assisted the Court but also the Plaintiff in understanding the Defendant's case. No doubt in due course this will be relevant on the question of costs. Returning to the evidence of Mr. Law of the Defendant on his calculation of the amount of work done by the Plaintiff. I am willing to accept the same subject to the specific objections by the Plaintiff below. It is in line with the Agreement which I have found above i.e., the Plaintiff would be paid 82% of the final measurement and verification of his work done; in other words, 18% would be deducted from the payment rates to Excel by CLP. I do not think the Schedule of Work Done is self-serving. Rather it is methodical and logical. By the same taken the same may be said of the Schedule of Contra-charges which I shall refer to below. 21.I therefore find that the total amount of work done by the Plaintiff is HK$1,279,371.30. Contra-charges 22.It is the Plaintiff's case that all the Defendant is entitled to deduct by way of contra-charges is the sum of HK$308,599 which is stated in the 8 Certificates. It is the Defendant's case that the deductions in the 8 Certificates are provisional or interim in nature and a final accounting exercise needs to be conducted to ascertain the finalised amounts. It is the Defendant's case that the total amount of contra-charges should be HK$349,211.55 which is set out in the Schedule of contra-charges ("Schedule of Contra-Charges") at pages 82 and 83 of Trial Bundle I. On this issue, Mr. Law of the Defendant explained logically and clearly the methodology of the amount of deductions, which I accept. Mr. Tsang for the Plaintiff accepted that the figures contained in the Schedule of Contra-Charges were correctly calculated as figures with reference to the Substantiation. 23.I posed the question to Mr. Tsang for the Plaintiff as to whether the Plaintiff's only objection to the Schedule of Contra-Charges was contained in paragraph 30 of the Plaintiff's witness statement which was admitted as evidence-in-chief. Mr. Tsang submitted that those items set out in paragraph 30 were not exhaustive and were only examples of deductions to which the Plaintiff objected. With respect, I disagree. The Plaintiff does not state in paragraph 30 of his witness statement that the five items of the Schedule of Contra-charges to which he objected were not exhaustive. On the contrary, he states that there were the 5 items to which he objected. 24.Mr. Ngai for the Defendant has helpfully assisted the Court in analyzing the difference of the contra-charges/deductions to identify the differences between the Plaintiff and the Defendant's case which I extract as follows:-. 25.I accept the evidence of Mr. Law of the Defendant in relation to the finalization of the exact contra-charges except for the items set out in the following paragraph. In other words on the issue of compaction tests (泥辦), concrete (石屎), oil (呔油), I accept that the finalized sums should be HK$18,960 for compaction tests, HK$72,022 for concrete, HK$41,149.05 for oil (呔油) in place of the provisional figures stated in the 8 Certificates. 26.That leaves eight disputed items as follows :-
(vii) Trial pit dayworks of 11 April 2006: 林章協 HK$1,500
27.The total amount outstanding is therefore as follows :-
28.As to the element of interest payable, the same shall be payable from 4 September 2008 at the rate of 1% above the prime lending rate of The Hongkong and Shanghai Banking Corporation Limited to the date of Judgment and thereafter at the Judgment Rate. 29. Costs At the outset of the hearing, I have already informed the parties that the costs of a 3-day hearing vastly outstrip the difference between the parties and indeed, during the course of the hearing I noted that Mr. Ngai has had to take DW1 through the Schedule of Contra-Charges and Schedule of Work Done. This could have been avoided had the Defendant's solicitors prepared adequate witness statements. This is especially so when the Court ordered that the witness statements were to stand as evidence-in-chief. 30.For present purposes, since the Plaintiff has been largely successful in his claim, I make a order nisi that the Defendant does pay the Plaintiff's costs to be taxed if not agreed.
Representations: Mr J Tsang of Messrs. Tsangs Assigned by D.L.A. , for Plaintiff. Mr. Lawrence Ngai instructed by Messrs. S.H. Chou & Co., for Defendant. * this is dealt with in paragraphs nos. 24 (iv) to (viii) |
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