Fuji (China) Decoration & Engineering Co., Ltd v. Winmost Enterprises Ltd
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DCCJ1894/2010 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 1894 OF 2010 --------------------
-------------------- JUDGMENT -------------------- 1.The plaintiff is a contractor engaging in decoration and engineering work, whereas the defendant is a company engaging in the supply and installation of furniture. The plaintiff alleges that the defendant was in breach of statutory implied conditions of an agreement and a supplemental agreement entered between the parties on 20.5.2009 and 19.8.2009 respectively for the supply and installation of furniture and built-in fitting works, and claims against the defendant for the following losses and damages:-
2.The plaintiff alleges that the defendant committed a breach of the following statutory implied conditions of the agreement and the supplemental agreement under s 16(2) and (3) of the Sale of Goods Ordinance:-
Defective works 3.In the statement of claim the plaintiff pleaded that the defective works are in respect of (1) mini bars, (2) luggage racks, (3) TV cabinets, (4) study desks, (5) armchairs with ottomans, and (6) bedside tables. There are 18 categories of defects. 4.There are 3 categories of general defect lists:-
5.The first set of general defect lists was under the covering letter dated 5.10.2009 (defect lists from 7/F to 26/F) by which the plaintiff requested the defendant to rectify all the defects by 7.10.2009. On 6.10.2009 the plaintiff’s solicitors wrote to the defendant, demanding the defendant to rectify all the defects before the close of business on 7.10.2009. On 7.10.2009 the defendant replied by email, stating that:-
6.On 8.10.2009 the plaintiff issued 2 letters to the defendant, saying that it did not send any worker to do the rectification works. It did not refute point (a) and (b). On 8.10.2009, the defendant replied that the full defect lists of over 700 pages were only delivered to the defendant on 7.10.2009, and that:-
7.The second set of general defect lists was under the covering letter dated 9.10.2009 (Ray Chan Lists for 13/F to 15/F and 23/F and 26/F) by which the plaintiff requested the defendant to rectify all the defects by 11.10.2009. On 10.10.2009 the defendant by email replied:-
8.On 13.10.2009 the defendant wrote to the plaintiff, saying:-
9.On 13.10.2009 the plaintiff sent an email to the defendant, stating that the defendant’s statements were untrue, that Mr Steve Man (ie defence witness Mr YF Man) did not reply to their staff and the plaintiff sent the defect list twice to the defendant but the defendant refused to take the document or sign on the receipt for those document. 10.The third set of general defect lists was under the covering letter dated 15.10.2009 (Ray Chan Lists for 12/F, 24/F and 25/F) by which the plaintiff requested the defendant to rectify all defects by 17.10.2009. 11.The fourth set of general defect lists was under the covering letter dated 16.10.2009 (Ray Chan Lists for 11/F) under which the plaintiff requested the defendant to rectify all defects by 18.10.2009. On 22.10.2009 the defendant by email replied:-
12.The fifth set of general defect lists was under the covering letter 20.10.2009 (Ray Chan Lists for 10/F) by which the plaintiff requested the defendant to rectify all defects by 22.10.2009. 13.The sixth set of general defect lists was under the covering letter dated 28.10.2009 (Ray Chan Lists for 8/F and 9/F) by which the plaintiff requested the defendant to rectify all defects by 30.10.2009. On 4 November, 6 November and 13 November 2009 the defendant replied by email:-
14.The seventh set of general defect lists was under the covering letter 19.11.2009 (Ray Chan Lists for 7/F) by which the plaintiff requested the defendant to rectify all defects by 21.11.2009. On 20.11.2009 the defendant replied by email:-
15.The eight set of general defect lists was under the covering letter 28.11.2009 (Ray Chan Lists for 6/F) by which the plaintiff requested the defendant to rectify all defects by 30.11.2009. 16.The ninth set of defect list was under the cover letter dated 21.12.2009 (“House-Keeping List” for 6/F to 26/F) by which the plaintiff requested the defendant to rectify all defects by 23.12.009. On 29.12.2009 the defendant replied by email:-
Comparison of the defect lists 17.By comparing the defect lists with each other, it can be found that:-
Comparison: Ray Chan Lists and SEA Lists 18.The SEA Lists categorized the “defects” into groups “A” to “N”. In view of the plaintiff’s pleaded case, only “defects” relating to (1) mini bars, (2) luggage racks, (3) TV cabinets, (4) study desks, (5) armchairs with ottomans, and (6) bedside tables are relevant. Taking the list for 7/F as an example, the relevant items are:-
Within these categories, not all of the items are related to the works of the defendant. For example, item D7 is concerned with the installation of the refrigerator. Items F4 to F6 are related to the installation of stereo system and the wiring. G7, G3 and G4 are related to the installation of electricity facilities. There are additional items of “mini bar” and “TV cabinet” other than the aforementioned items D and F. This item is “item N”, which refers to“入牆mini bar及電視櫃” (built-in mini bar and TB cabinet). These items are not related to the defendant’s works which only involved furniture. 19.The Ray Chan Lists refer to “defects” of the following nature (taking 7/F as example):-
20.None of the items in the SEA Lists is related to the “defects” mentioned in the Ray Chan List, namely Defects B, C, D, E, F, G, I, K, L, N, O, P, Q and R. Therefore the Ray Chan Lists and SEA Lists are inconsistent with each other. 21.Some examples of the defects amongst the defect lists are as follows:- The 1st set of defect lists under covering letter dated 5.10.2009: taking Ray Chan Lists and SEA lists for 19/F as an example 22.In the SEA List:-
However, the relevant Defect M (drawers not even/not in good alignment（柜桶拉出不平/不對稱/不貼/太鬆/開關有聲/大小不同）was not marked in the Ray Chan List for these rooms 23.In the SEA List:-
However, the relevant Defect J (touch up paint（執油/執色）) was not marked in the Ray Chan List for these rooms. 24.In the Ray Chan List Room 1904, 1905, 1906, 1907, 1912, 1913 and 1914 were marked with Defect H（門有高低）. However, the relevant items G3 and D2 were not marked in the SEA List for these rooms. 25.The 9th Set of Defect List under the covering letter dated 21.12.2009 is “House Keeping List”. This list is however also inconsistent with Ray Chan Lists. For example:-
26.The inconsistencies between the House Keeping List and the Ray Chan Lists again demonstrate the lack of reliability of the lists. 27.The fundamental issue which this court must consider is the standard applied by the defect list makers to determine how severe a problem should be in order to be regarded as a defect. The plaintiff has not adduced any evidence in this respect. It is simply unknown whether the defect lists makers adopted the same or different standards. It is open to the hotel owner to be satisfied with the furniture upon the standard acceptable to them, whereas the hotel operator took another standard. When one defect list alleged the existence of some defects but the other defect list did not allege the existence of the same defects, this shows that the defendant’s furniture and works were free from such purported defects and that different standards must have been adopted by different defect list makers. The plaintiff has no evidence to prove that one defect list should prevail over the other. In the absence of evidence to show the standards adopted, this court has difficulties to determine whether a defect alleged by the plaintiff is really a defect at all. Because of the inconsistency of the defects lists cannot be accurate, and hence not reliable 28.On many occasions the plaintiff did not deliver the lists on the dates marked on the covering letter :-
29.The above delay in supplying the defect lists made it impossible for the defendant to deal with the alleged defects by the dates unilaterally set down by the plaintiff, even if it is liable to do so. No reasonable time given for verification and rectification 30.The plaintiff did not give sufficient time to the defendant to verify the purported defects and do the rectification work:-
The purported rectification works prior to delivery of defect lists 31.On the excuse that the defendant did not comply with the plaintiff’s request, the plaintiff arranged workers to purportedly work in various rooms.
32.The plaintiff alleges that the plaintiff had provided the defect lists to the defendant timely and since the defendant had refused to rectify the defects, the plaintiff had no alternative but to rectify the defects by contracting a third party to carry out the rectification works. This cannot be true. The plaintiff simply did not give a chance to the defendant to verify the purported defects and to rectify those defects for which the defendant should be responsible. Denial of access/full access to site 33.When the defendant conducted the inspections in October and November 2009, the defendant was denied full access from time to time. As recorded on the complaints sent by the defendant, the defendant was denied access to the site on 9.10.2009 and denied full access to the site on 12.10.2009. As recorded in the inspection reports (Exhibit D1), the defendant was also denied full access to the site on 21.10.2009 and on 5.11.2009. The denial of full access plainly reflect the lack of intention on the part of the plaintiff to allow the defendant to verify the purported defects. This is consistent with the plaintiff’s conduct that it sent defect lists only after the purported rectification works had commenced or finished. Conclusion on the general defect lists 34.As the defect lists is concerned:-
Weight to be given to hearsay evidence 35.According to the statement of Mr CS Yeung of the plaintiff, the inspections of the defendant’s works were held among a Mr Edward Tse (a representative from the employer), a Mr Nicholas Fan (an architect appointed by the employer), a Mr Gilbert Lim (the hotel operator) and Mr WH Lui of the plaintiff. The “defect lists” were issued by the architect and the hotel operator after the inspections. There is no evidence to show that Mr WH Lui was present at all of the inspections, identification and recording of the defects. Thus he is not in a position to confirm the findings shown on these “defect lists”. Nobody was in a position to confirm the accuracy of the defect lists according to their personal knowledge. Hence the “defect lists” constitutes hearsay evidence. 36.The evidence submitted by the plaintiff is not sufficient to establish that there were “defects” caused by the defendant. No breach of contract has been established. Even if the plaintiff succeeds in proving that some defects were caused by the defendant, the plaintiff has to prove that the defects rendered each and every item unmerchantable. The plaintiff has not provided any evidence in this respect. It has also not provided evidence relating to what it meant by a first class hotel in Hong Kong. Therefore the plaintiff fails to prove that the defendant breached the contract in respect of the general defects. OTHER DEFECTS – WALL COVERING INSIDE TV CABINET Pleading point 37.In the witness statement of Mr CS Yeung, there is an accusation against the defendant that the defendant failed to install veneer panels at the inner surfaces of the cabinet behind the drawers of some mini bars, where the mock-up mini bar had been fixed with veneer panel at the inner surface. Such purported problem does not fall within the pleaded defects as defined and particularized in paragraph 12 of the Statement of Claim. The plaintiff’s claim on defects is referring to the “defects” as defined in paragraph 12 of the Statement of Claim, where paragraph 13 only serves to list out the purported demands for rectification of the “defects”. Paragraph 13 cannot serve to expand the scope of “defects” as specifically set out in paragraph 12. Nowhere in paragraphs 12 to 14 of the Statement of Claim is mentioned the purported failure to install veneer panels at the mini bars an item of defect or an item of breach. Therefore the plaintiff has failed to plead a case that covers this item. 38.Even if one goes beyond the pleadings and considers the mini bar claim, in the context of the implied terms pleaded by the plaintiff, the so-called veneer panel concerns with the inner surfaces of the cabinet between the drawers, a concealed area of the cabinet which no reasonable hotel room user is expected to see. The plaintiff therefore cannot prove that the cabinet is not of merchantable quality. No breach of contract has been established. OTHER DEFECTS – MAKING GOOD ORIENTATION OF DESK TABLE AT ROOM 1009 Pleading point 39.In the witness statement of Mr CS Yeung, there is an accusation against the defendant that the study desk in Room 1009 was installed by the defendant in the wrong direction. This defect does not come within the definition of “defects” particularized in paragraph 12 of the Statement of Claim. Therefore this claim (if any) must fail. The claim on short delivery of armchairs and ottomans 40.The plaintiff says that the defendant should supply 8 armchairs with ottoman (goods label “LF-01”) according to the contract, but the defendant only supplied 5 sets. The defendant says it supplied all armchairs with ottoman. 41.Mr WH Lui testified that the goods were delivered to the site at night. The goods were then sent to the respective floors and were unpacked only on the next day. When the goods were unloaded, he could only count the number of box (點箱頭). He later counted with Mr YF Man together and Mr YF Man acknowledged that there was a short delivery. However, there was no document signed by Mr YF Man which confirmed the short delivery. 42.Mr WH Lui’s evidence is that he counted the number of boxes at the time when they were unloaded. Then it is difficult to imagine how the short delivery was only discovered on the next day. Mr WH Lui said that the workers would deliver the goods to the respective floor after the goods were unloaded. As such, if there was a short delivery, some workers would be delivering empty boxes to some floors. It is impossible that such problem was not noticed immediately. 43.The handwritten note by him at the bottom of the delivery note (3 arm chairs shrt for that lot of delivery, with a date “21/9”) clearly shows that he would write down problem. If he and Mr YF Man had jointly counted the goods and the latter confirmed the short delivery as alleged, it is impossible that Mr WH Lui would have failed to note down the problem immediately and ask Mr YF Man to sign for acknowledgment. 44.According to the evidence of Mr SS Leung, the plaintiff raised the matter 5 days after the delivery. However, the date “21/9” marked on the delivery note shows that the formal counting took place on 21.9.2009. As recorded on the defendant’s email in reply dated 7.9.2009, there were people at the site moving around the defendant’s furniture. Only after 2 weeks’ times the plaintiff conducted a proper counting. It would not be surprising that they could not locate the goods anymore. The plaintiff cannot prove on balance the purported short delivery. No breach of contract has been established. The claim on costs incurred by the plaintiff for providing as-built drawings 45.The plaintiff’s case is that pursuant to clause 2.3 and section A “Preliminary 3.23” of the Agreement, the defendant was required to prepare shop drawings and as-built drawing. The as-built drawing was required to be submitted within a period of 1 week after Practical Completion. By letter dated 11.1.2010, the plaintiff requested the defendant to complete the as-built drawing on or before 15.1.2010 for its onward submissions to the Employer. 46.Paragraph 28 of the Statement of Claims states,
Paragraph 28 of the Statement of Claim does not allege that the defendant was in breach of contract. It is the plaintiff was in breach of the contract in incurring costs in respect of the as-built drawings. There is no pleading as to what term was breached by the defendant and how such term was breached. There is no pleading alleging that the defendant failed to submit as-built drawings in breach of any term of the agreement(s). As a matter of pleadings, the plaintiff’s claim must fail. The claim on refusal to account and return the unused 1st lot of veneer sheets and panel as agreed: HK$300,000 47.The plaintiff’s case is that the defendant had purchased a lot of veneer sheet and panels for certain furniture (the 1st Lot). Upon the plaintiff’s request, the defendant agreed to replace the 1st Lot with another lot of veneer sheet (the 2nd Lot) at the plaintiff’s costs. In July 2009, the parties verbally agreed that the plaintiff should pay the defendant HK$300,000 for the defendant’s purchase of the 2nd Lot of veneer sheet and panels on the condition that the defendant shall return the 1st Lot of unused veneer sheet and panels (“the Oral Agreement”). However, the defendant failed and/or refused to give a detailed account as to the quantity of the unused 1st Lot of veneer sheets and panel, and to return the said unused veneer sheets and panels. 48.According to his statement of Mr YM Chan the agreement was that the plaintiff shall pay a sum of HK$300,000 to the defendant for the defendant’s purchase of the 2nd Lot of veneer sheet and panels on the condition that the defendant shall return the 1st Lot of unused veneer sheet and panels (including the Furniture which had been veneered with the 1st Lot) to the plaintiff, and it was agreed that the value of these unused veneer sheet and panels together with those Veneered Furniture was about HK$300,000. 49.The defendant’s case is simply that the defendant agreed to either replace the 1st Lot of veneer sheet and panels with the 2nd Lot and/or to mount the 2nd Lot of veneer sheet and panels on top of the 1st Lot. The HK$300,000 was a consideration to the purchase of the 2nd Lot. There was no condition to return the unused veneer sheets and panels. 50.According to Mr SS Leung the agreement is to the replace the 1st Lot with the 2nd Lot at the plaintiff’s costs, ie HK$300,000, without other condition attached thereto. The fact has been reflected in the minutes of the meeting between the parties held on 16.7.2009. The matter was recorded by the plaintiff at point no. 9:-
As reflected by the minutes, the return of the unused 1st Lot and the return of the furniture veneered with the 1st Lot was never a concern of the parties. The plaintiff has failed to establish the Oral Agreement and therefore the purported breach. 51.Due to the reasons stated above, I dismiss all the plaintiff’s claims. Costs 52.I make an order nisi, to be made absolute in 14 days’ time, that the plaintiff do pay costs of these proceedings to the defendant, to be taxed, if not agreed, with certificate for counsel.
Mr Chung Yuen Foo, Hylas instructed by Gary Lau & Partners, Solicitors, for the plaintiff Mr Michael Chai, instructed by Ho Tse Wai, Philip Li & Partners, Solicitors, for the defendant | |||||||||||||||||||||||||