Li Hoi Sang v. Chan Lap Wing Alan

DCCJ 873/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 873 OF 2009

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JUDGMENT

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Background

1.In this action the plaintiff is seeking payment in the amount of $606,500 (“the said Sum”) against the defendant on a quantum meruit basis.  The plaintiff’s claim is based on decoration works done in relation to a property of the defendant which is at No 54 River North, 11^th Street, Fairview Park in Yuen Long, New Territories (“the Property”).  The said Sum is in relation to the balance of costs of labour supplied and materials purchased by the plaintiff for decoration works done at the Property.

2.The plaintiff was and is at all material times a decoration contractor by trade and by his witness statements and testimony at trial had some 10 years of experience with emphasis on his expertise in the area of woodworking and related tasks.

3.The plaintiff was engaged by the defendant in or about mid-December 2006 for woodworking based decoration works at the Property. The plaintiff issued a written quotation to the defendant in the total amount of $91,000 which was undated but it is not in dispute that this first quotation was issued in or about mid-December 2006 (“the First Quotation”).  Although the First Quotation was incorrectly numbered by the plaintiff, all references in this judgment will refer to the 17 listed items thereof by their correct numbering of which the parties did as well at trial.  Annexed to this judgment is a copy of the relevant excerpts of the First Quotation with correct sequencing of the 17 listed items.

4.It is not in dispute the First Quotation’s 17 listed items were for woodworking based decoration works to be done on the Property and the parties also have no disputes over the last item thereof.  It is also not in dispute that the defendant paid $30,000 as a deposit after the issue of the First Quotation.

Pleadings

5.The plaintiff’s pleaded case as per the Statement of Claim was for material and labour costs for the decoration works carried out at the Property.  The plaintiff has also pleaded in the Answer to Request for Further and Better Particulars of the plaintiff’s reply (“the Answer to F&BP”) and subsequently the Amended Statement of Claim that the defendant telephoned the plaintiff on numerous occasions and gave verbal instructions to the plaintiff to, inter alia, carry out glassworks, aluminium works and other miscellaneous works, as well as having requested and changed the building materials to more expensive ones and that the defendant varied the designs and instructions which therefore changed the costs involved to the decoration works to be done at the Property.

6.The plaintiff’s pleaded case is that all decoration works and all minor rectification works were completed and inspected by the defendant in July 2007.  The plaintiff’s Amended Reply pleads that he sent to the defendant a “detailed breakdown” of the labour and material costs for 25 items of decoration works on or about 15 July 2007 for the balance of $606,500 as requested by the defendant (“the Second Quotation”). 

7.As a result, the plaintiff’s pleaded case included a variation of the First Quotation or alternatively $606,500 which is a reasonable fee for which the plaintiff is entitled to recover by way of quantum meruit. 

8.The defendant pleads that he was a property investor by profession and in particular with properties in Fairview Park.  The defendant also pleads he is an experienced professional in decoration works of which his experience is inclusive of woodworking.

9.The defendant’s pleaded case is that he agrees that the plaintiff was engaged to do woodworking based decoration works at the Property and that this was in or about January 2007.  The defendant pleaded that in or about January 2007, by an agreement made partly orally, partly in writing and partly by conduct (“the Agreement”), it was agreed that materials and labour costs for woodwork payable by the defendant to the plaintiff would be inclusive in the amount of $91,000 and this was evidenced in the First Quotation.  The defendant averred that there was no variation given to the plaintiff after the issue of the First Quotation. 

10.It is not denied that the woodworking based decoration works pursuant to the Agreement was substantially completed by about July 2007, although it is disagreed whether there were still some rectification works that were outstanding.

11.The defendant avers that the sum of $61,000 was offered to the plaintiff in August 2007 and in any event on 7 February 2009 before the issue of the writ in this action.  The sum of $61,000 was tendered to the plaintiff through his solicitors which was refused.  It is undisputed that the defendant did issue a cheque to the plaintiff in the amount of $61,000 on 7 February 2009.  The defendant pleaded that he paid $61,000 into court, the plaintiff’s Amended Reply admits the same and that the payment into court was on 30 March 2009.  In other words, prior to the issue of the defence on 31 March 2009, $61,000 has been paid into court by the defendant of which the date is confirmed from the Amended Defence.  This effectively operates as a defence of tender before action as per section 30 of the Law Amendment and Reform (Consolidation) Ordinance, Cap 23.

12.The defendant has pleaded that the Second Quotation although dated 15 July 2007 was not actually received by the defendant until 13 February 2009 via an attachment to the plaintiff’s solicitors’ letter dated 11 February 2009 although a letter dated 23 January 2009 from the plaintiff’s solicitors did notify the defendant of the outstanding sum of $606,500.

Agreed list of issues

13.On 11 October 2011, the parties through their respective solicitors signed an agreed list of issues (“the Agreed List of Issues”) which were for the following matters:-

(1) Whether the agreement between the plaintiff and the defendant for the quoted price of $91,000 for decoration works at the Property as contained in the First Quotation was exclusive or inclusive of material costs save item 17.

(2) Did the defendant instruct the plaintiff to vary the design and to change the materials stated in the First Quotation in the manner as provided by the plaintiff in Annex 1 of the Answer to F&BP.

(3) If the answer to (2) above is yes, did the plaintiff provide the variation works and supply the changed materials?

(4) If the answer to (2) and (3) above is yes, what is the agreement of costs of materials and labour supplied by the plaintiff pursuant to the defendant’s instructions?

(5) Alternatively, what is the reasonable value of the materials and service provided by the plaintiff to the defendant on a quantum meruit basis?

14.It was accepted by counsel for the plaintiff, Mr Francis Yip, that if the First Quotation was for $91,000 which is inclusive of materials and labour and that there were no variations, he agreed that the plaintiff would only be entitled to the remainder of $61,000.  Mr Yip was also not pursuing any arguments on variation of contract as a cause of action per se and this was reflected in his written closing submissions.  Counsel for the defendant, Mr King Wong, also agreed that this was the correct approach to be taken.

15.I agree with the parties’ proposed approach as this is a logical and sensible approach in dealing with this case.  In relation to the considerations between a contractual claim and that of quantum meruit, a similar approach was taken by Reyes J in Greatworth Industrial Limited v Sun Fook Kong Construction Limited & Anor, HCCT 45/2003, 4 April 2006.

16.In addition, I would also refer to Keating on Construction Contracts, 9^th edition, 2012, the following was stated by the learned editors at the relevant excerpt from paragraph 4-020:-

“The expression quantum meruit means “the amount he deserves” or “what the job is worth”, and in most instances denotes a claim for a reasonable sum. It is used to refer to various circumstances where the court awards a money payment whose amount at least is not determined by a contract. In some instances, the basis for the payment also is less than contractual.

“A quantum meruit claim (like the old actions for money had and received and for money paid) straddles the boundaries of what we now call contract and restitution; so the mere framing of a claim as a quantum meruit claim, or a claim for a reasonable sum, does not assist in classifying the claim as contractual or quasi-contractual”.

However, more recently the term quantum meruit has been defined as “a restitutionary claim which can be made when there is no contract” rather than an agreement to pay a reasonable sum.

A claim on a quantum meruit cannot arise if there is an existing contract between the parties to pay an agreed sum.”

The witnesses

17.Both parties raised the issue that this case turns primarily on the facts and the credibility of the witnesses.  The witnesses who gave evidence at trial were the plaintiff, defendant and a Miss Lau Diu Lan who did accounting works for the defendant although almost exclusively the evidence given at trial was from the plaintiff and the defendant. An assessment of the witnesses’ credibility has an important bearing on this judgment.

18.The evidence of the plaintiff and the defendant challenged and contradicted each other.  Both the plaintiff and the defendant were subject to extensive cross-examination on several aspects of the case inclusive of inconsistencies, witnesses failing to mention various documents, dates and or events.  There were arguments on which pieces and or parts of the documentary evidence was relevant, their probative value, the veracity of the witnesses’ statements as compared to the viva voce evidence.  I would add that some the arguments and challenges were of peripheral relevance or irrelevant as relating to the issues that need to be resolved. 

19.I have considered the evidence and the inconsistencies thereof at trial, which were addressed at trial and in closing submissions by counsel and considered in this judgment.  As such, this judgment shall deal with the relevant points of evidence that have had a material impact on the findings that need to be made as relating to the issues to be determined.

20.In considering whose evidence to accept in relation to the issues to be determined, the veracity and credibility of the witnesses have been considered in light of the issues to be determined insofar as possible.  Additionally, I am also cognizant of the fact that although credibility of the witnesses will be an important factor on the court’s judgment, nonetheless it is not the only factor to be borne in mind since one must again have regard to what are the relevant issues to be determined. 

21.I refer to the order made by Deputy Distrct Judge Grace Chan dated 31 May 2012 (“the 31 May 2012 Order”) whereby it was ordered that the defence, reply and documents and witness statements relating to certain events were to be removed from the trial bundles since those documents were unrelated to the present action. I agree with the learned deputy judge’s order since those documents might also unfairly taint the credibility of certain witnesses and thus the trial process.  Indeed, it appeared that the 31 May 2012 Order was also made by the learned deputy judge since those said certain documents did not relate to the relevant issues in this case as defined in the Agreed List of Issues. 

22.Although the documents referred to in the 31 May 2012 Order were removed, some of the witness statements continued to have references to the said events that were not expunged and I informed counsel of the same. I informed counsel that I would not allow such references to be made to those said events at trial, such references should not be referred to me in the trial and were any such references made I shall disregard them in the making of this judgment and counsel agreed with my carrying on the trial in such a manner.

23.In addition to the 31 May 2012 Order made by the learned deputy judge, I also note Sun Legend Investments Limited v Ho Yuk Wah David & Ors., (2011) 14 HKCFAR 541, where it should be noted at paragraphs 57 to 58 the following was held by Mr Justice Litton NPJ:-

“57. With respect, I cannot agree with the Vice-President’s approach. A civil case is a trial of the issues as put before the court. It is not a trial of the character of the parties. This is a matter beyond the scope of analysis in a court of law.

58. Courts have always been wary of cross-examination of witnesses as to credit.  Generally speaking evidence of facts and circumstances to show the disposition of a party is inadmissible: see Sankey LJ in Hobbs v. Tinling [1929] 2 KB1 at 50. …”

The plaintiff’s burden

24.The parties agreed that this case is to be resolved by way determining the Agreed List of Issues. Nonetheless, the burden rests on the plaintiff to establish those issues in his favour on a balance of probabilities. 

25.In his written opening and closing submissions, Mr Wong submitted that since the First Quotation was drafted by the plaintiff, the contra proferentem rule applied and should there be any ambiguities on any of the terms of the First Quotation they should be construed in a manner least favourable to the plaintiff.

26.As per Chitty on Contracts, Volume 1, 31^st edition, at paragraph 12-083, it was stated by the learned editors that:-

“Construction against grantor. Another principle of construction is that a deed or other instrument shall be construed more strongly against the grantor or maker thereof. This rule is often misinterpreted. It is only to be applied to remove (and not to create) a doubt or ambiguity and as a last resort where the issue cannot otherwise be resolved by the application of ordinary principles of construction. Nevertheless, despite certain doubts which have been cast upon it from time to time, the principle has been constantly cited as a rule of construction from Coke’s time to the present day. For instance, Coke says,

“[i]t is a maxim in law that every man’s grant shall be taken by construction of law most forcibly against himself”; and in 1949, Evershed M.R. said:-

“We are presented with two alternative readings of this document and the reading which one should adopt is to be determined, among other things, by a consideration of the fact that the defendants put forward the document. They have put forward a clause which is by no means free from obscurity and have contended … that it has a remarkably, if not an extravagantly wide scope, and I think that the rule contra proferentem should be applied.””

27.As will be discussed later in this judgment, although there are different positions put by the parties and different emphasis on the relevant evidence relating thereof, the parties do agree that the First Quotation was not to be singularly considered on the face of that document alone.

28.Although there is little to quarrel with the contra proferentem rule, I also make note of the reference in Chitty (supra) relating to contracts that are not wholly in writing where the learned editors state at paragraph 12-046:-

“Construction of contract not wholly in writing. Where the contract is oral or does not depend solely on written documents, the question as to the character of the contract is properly one of fact.”

The Agreed List of Issues – the 1^st Issue

(1)     Whether the agreement between the plaintiff and the defendant for the quoted price of $91,000 for decoration works at the Property as contained in the First Quotation was exclusive or inclusive of material costs save item 17.

29.As previously mentioned, the plaintiff was a decoration contractor with experience in woodworking whereas the defendant was a property investor in particular with properties in Fairview Park and also has experience in decoration works inclusive of woodworking.  I accept that both of these aspects of the evidence were established in particular after hearing both the plaintiff and the defendant give evidence at trial although the quality, accuracy and veracity of the evidence given on various points were challenged.

30.The plaintiff and the defendant had a history of cooperation and both had knowledge of the layout of properties located at Fairview Park.  The Property was purchased in late 2006 with completion in mid-December 2006. 

31.At trial it was not disputed that in mid-December 2006 the plaintiff went to the Property with the defendant whereby both of them inspected the Property.  The plaintiff stated that the said inspection took approximately 10 minutes whereas the defendant disputed the plaintiff’s version of events and instead stated the inspection at the Property was for an hour to an hour and a half. 

32.It was also not disputed that the only woodworking decorator at the Property was the plaintiff and that there would be other decorators and sub-contractors carrying out various other renovations and works at the Property.

(a) The First Quotation

33.At trial it was not disputed that the First Quotation was prepared by the plaintiff and was issued to the defendant after the said inspection of the Property.  The plaintiff asserts the First Quotation was issued in or about mid-December 2006 whereas the defendant asserts it was issued some time after the said inspection of the Property and then after further oral agreement with the plaintiff in mid-January 2007.

34.In the process of considering the witness statements, contemporaneous documents and the testimony of the witnesses (in particular the plaintiff and the defendant), I have come to certain findings in relation to the First Quotation.

35.The plaintiff in his witness statement stated various matters relevant to the First Quotation.  The plaintiff stated that he met the defendant more than 10 years ago and he knew the defendant was an active property speculator.  The plaintiff understood that the defendant would purchase property, re-decorate the property and then re-sold the property at a profit.  Since or about 2003 or 2004 the defendant gave decoration contracts to the plaintiff. 

36.The plaintiff and the defendant went to the Property together and the defendant pointed out the works to be done and thereafter gave the defendant a preliminary quotation in around December 2006, namely, the First Quotation. The plaintiff stated that the price of the First Quotation would change according to the works to be done, materials used as well as design demands and additional work instructions.

37.After the issue of the First Quotation, the defendant called the plaintiff nearly daily with verbal instructions relating to the works to be done at the Property and those works included matters relating to work on glass materials, miscellaneous works, change to more expensive materials, changes of design demands and additional works instructions.  The plaintiff recalled some 20 or more changes sought by the defendant.

38.The plaintiff stated that from December 2006 to July 2007, approximately 2 to 3 times per month the plaintiff asked to see material samples for the Property. From December 2006 to June 2007 there were 3 to 4 times that the plaintiff brought the defendant to Shenzhen to choose decoration materials.  The plaintiff’s decoration works at the Property were substantially completed by around June 2007 and fully completed by July 2007, in particular between 3 to 9 July 2007 when the plaintiff went to the Property with one of his workers.  Verification of the Property in relation to the works done took place on 11 July 2007 and the plaintiff accepted completion of all works.  On 15 July 2007 upon the request of the defendant, the plaintiff issued the Second Quotation and the plaintiff chased after such outstanding sums and particularly on 25 July 2007.

39.The defendant in his witness statement stated various matters relevant to the First Quotation.  The defendant stated that after taking possession of the Property, he began to plan the decoration works and he led the plaintiff through the Property and stated the particulars of the woodwork decoration needed and for the plaintiff to provide a quote for the same.  By or about mid-January 2007 the plaintiff and the defendant verbally agreed the cost of woodwork decoration at the Property to be at a lump sum of $91,000 which included labour and the materials needed as reflected in the First Quotation.

40.Due to the long history of cooperation between the plaintiff and defendant, a contract in writing was not required to be signed by the parties although a deposit was normally given to the plaintiff.  In addition, the plaintiff would from time to time make a request for additional funds to the defendant for purchasing materials.  The defendant’s witness statement also stated that for those items of woodwork decoration that required labour only, the materials would be provided by the defendant at his own expense.  The defendant, sometimes together with the plaintiff, went to source the materials from Hong Kong and Shenzhen. As such, various items of materials to be used in decoration at the Property were paid to the plaintiff for reimbursement by cheque or cash or that the defendant himself paid for the same.

41.The 2^nd supplementary witness statement of the defendant admitted that the majority of the works at the Property was completed in July 2007 but he denied that on 11 July 2007 he verified the works done at the Property.

42.At trial, the plaintiff under cross-examination stated he was only on the Property for about 10 minutes with the defendant during their joint inspection of the Property and works to be carried out before the issue of the First Quotation. 

43.Given the size of the Property and the apparent particularity of the First Quotation, I found the plaintiff’s answers to this line of questioning to be doubtful.  I would also add that the plaintiff gave confusing and contradictory answers such as by stating that during those 10 minutes of joint inspection at the Property, the plaintiff answered that in providing the First Quotation that the cabinets in the bedrooms of the Property were only roughly measured since he was familiar with the dimensions of homes in Fairview Park.  However, in relation to items 1 and 2 of the First Quotation he knew he had to install a “收口” for cabinets in the master and small bedroom of the Property despite not knowing about the size and location of the lighting switch and door width.  Additionally, for item 14 of the First Quotation the plaintiff was instructed to install a faux ceiling and light trough for covering a ceiling beam and air conditioner but accepted he had no idea of the size of the air conditioner.  Furthermore, the plaintiff did not have any idea of the size of the ceiling to be installed in the backyard of the Property. 

44.In any event, the plaintiff was quite clear, and I accepted, that he was familiar with the dimensions in various parts of the Property since he was familiar with homes in Fairview Park having done other contracting works there. 

45.The defendant’s position under cross-examination was that both the plaintiff and the defendant were at the Property for an hour to an hour and a half discussing in relative detail and with particulars the works to be done of which I found the defendant’s answers to this line of questioning to be unembellished and credible.

46.After considering the evidence provided by both the plaintiff and the defendant and in particular under cross-examination, I prefer and find that the defendant was more accurate and truthful about, inter alia, the parties’ time together inspecting the Property.

47.When considering the wording of the First Quotation, it appears that the items thereof (save for item 17 which is not disputed) were not so lacking in particulars for the parties to be unable to agree upon since by conduct the plaintiff was able to commence and carry out woodworking based decorations at the Property until July 2007.  This is so when considering the wording of the First Quotation that states that the 17 listed items provide for labour and materials save for item 13 which was for labour only.  Items 3, 6, 7, 10 and 14 of the First Quotation were for labour and materials as well albeit the specific materials were not mentioned per se and thus some materials were outstanding or of a certain type understood by the parties. 

48.Given the amount of particularity found in the First Quotation for the 17 listed items, I also found that this was consistent with the fact that both the plaintiff and defendant were respectively experienced in matters pertaining to woodwork decoration in addition to having worked together in the past on various occasions.  I find that the parties did use some significant amount of time for inspection of the Property as well as having verbal discussions with particulars on the works to be done at the Property which were eventually the terms agreed and found in the First Quotation’s 17 listed items.  Given my assessment of the contemporaneous documents as well as the plaintiff’s and defendant’s evidence at trial, I have also considered that the words “全部工程總金額” reflected the parties’ intention that the First Quotation would globally be for all matters relating to works at the Property and the said words’ inclusion provided a commercially realistic approach.

49.As a question of fact I find it unsurprising that the First Quotation did not need the amount of details and particulars to the extent that every minutiae was to be stated in order for the plaintiff to be able to commence, and thereafter was in fact able to carry out, works at the Property until July 2007 without complaint to the defendant or vice versa given the parties’ experience in such matters, experience in working with one another over the years and their verbal agreement after sufficient joint inspection. 

50.The fact that the First Quotation was left undated and unsigned was not of any material relevance to the 1^st Issue.  In any event the defendant provided documentary evidence to establish, of which I accepted, that there were 3 other past instances of the parties working together also which showed cooperation in a similar fashion although not in the exact same manner as the First Quotation.  Again, there was no inordinate amount of details and particulars in the other said past instances of cooperation between the parties in order for the plaintiff to be able to commence and carry out his instructions which was without complaint to the defendant or vice versa.

51.There were disputes over the usage of the words “做” and “裝” which appears in the First Quotation when describing the works to be done at all of the 17 listed items save for items 3 and 7. 

52.Mr Yip argued that “裝” as per the witness statement of the defendant meant the plaintiff would only provide labour and that the materials would be provided at the defendant’s own cost and expense.  Mr Yip also argued that the defendant under cross-examination and the witness statement of the defendant showed that “做” meant the contract price was inclusive of materials cost but it does not say who should bear such costs. 

53.The defendant at trial then also stated that never in his 10 odd years in his profession were there problems relating to how such decoration contracts operated or his having any difficulties in cooperating with other decorators in the manner as seen in this case. 

54.The defendant also stated that since the plaintiff was a woodworking decorator, he was the one to pay for the materials relating to the First Quotation save for the ones he was to provide himself or was to pay in lieu of the plaintiff. 

55.The defendant and Miss Lau Diu Lan provided evidence to show that payments were made by the defendant for the outstanding materials pursuant to the First Quotation that he provided himself and also payments made to the plaintiff who paid in lieu for the outstanding materials pursuant to the First Quotation not already purchased by the defendant and not already stated in the First Quotation. 

56.It was accepted by the defendant that because a few minor payments were by cash and there being some minor errors in the documentation, the vast majority but not the complete copies recording payment for the said outstanding materials pursuant to the First Quotation have been provided.  For the purposes of assisting this court and the parties generally, 3 sets of cross-referenced tables to the documents and the relating foregoing matters were provided by Mr Wong that were marked MFI-1 to MFI-3 which were tendered and used in cross-examination of the defendant.  After considering and comparing the documentary evidence and testimony of the defendant after cross-examination, I find that the said outstanding materials pursuant to the First Quotation was paid by the defendant pursuant to the First Quotation as well as payments made to the plaintiff who paid in lieu for the outstanding materials pursuant to the First Quotation and not already stated in the First Quotation. 

57.On the plaintiff’s case, it was less than satisfactorily shown that the plaintiff paid for the material costs of the First Quotation since there were various instances where the plaintiff was unable to provide credible evidence to show that he paid for the materials pursuant to the works being done at the Property.

58.An example of an inconsistency on the plaintiff’s evidence related to purchases of granite allegedly purchased pursuant to the First Quotation but the granite pieces were different from the sizes required to be used and actually used for the works at the Property.  The plaintiff attempted to explain at trial that he could cut the granite pieces on site with a tile cutter but this is contradicted by the fact that the delivery notes for the relevant granite pieces were already pre-cut and down to specific sizes measured to the millimetre and thus there would be no need to further cut them which would be less accurate and time consuming.  Given the plaintiff’s expertise mainly in woodworking, the plaintiff’s account of events on this matter seemed unlikely.

59.Another example of an inconsistency on the plaintiff’s evidence was that there were purchases of glass and mirrors which did not actually match with those found on the Property.  The plaintiff was unable to satisfactorily match the same to those actually found on the Property.  This part of the evidence will be discussed further in this judgment.

60.Yet another example of inconsistency on the plaintiff’s evidence were explanations relating to the cost of cabinet installation was due to numerous shelves, partitions and drawers which the plaintiff was required to install of which such costs were substantially increased when comparing the cost noted in the First Quotation to that found in the Second Quotation, also a matter which will be discussed later in this judgment.  Contemporaneous photos at the Property show a simple cabinet with room for limited shelving in a rudimentary shelving system.  The plaintiff provided unconvincing answers when trying to explain the substantially increased cost.

61.Mr Yip also stated that quotations relating to other contractors showed that there was no universally understood meaning behind the word “做”.

62.I repeat paragraphs 48 and 49 of this judgment and note that what is of greater importance is not whether there was any universally understood meaning behind the particular words of “做” and or “裝” but rather the undisputed fact that the plaintiff was able to commence and carry out works at the Property until July 2007 without complaint to the defendant or vice versa. There was a common, uninterrupted commercial understanding between the parties due to their experience in the trade but more importantly between each other over the years and until at least substantive completion of works at the Property in July 2007 without complaint.  As such, I find on a balance of probabilities that the First Quotation was an agreement that was inclusive of labour and materials (save for item 17).

63.The plaintiff gave evidence that materials for the First Quotation were to be provided by the defendant and the prices in the First Quotation were only a rough estimation that would be adjusted if there were substantive additional works done.  This was a rather vague explanation given by the plaintiff and is also considered in matters relating to the Second Quotation.

(b) The Second Quotation

64.Generally described, the Second Quotation is an extension of the First Quotation in that:-

(i) the first 17 listed items found in the First Quotation have been further particularized as to the labour and materials used with corresponding increases in the prices thereof;

(ii) there are an additional 8 listed items (therefore 25 listed items in total) with particularization of the labour and or materials used with prices thereof.

65.It is in dispute whether the Second Quotation was provided by the plaintiff to the defendant on 15 July 2007 despite what is stated on the face of that document. Except for the evidence from the plaintiff’s witness statement and the plaintiff under cross-examination (which the defendant’s witness statement and the defendant denied under cross-examination), there are no other contemporaneous documents and or independent accounts to show or verify that there were any demands (written or otherwise) from the plaintiff to the defendant for payment of the works done by the plaintiff at the Property save until 11 February 2009.  Despite the fact that it was agreed that the parties had worked together in the past, nonetheless the plaintiff made no apparent demands for payment for over 2 years for works done at the Property if it is to be accepted that the provision of the Second Quotation was not on or about 15 July 2007 but rather until demands from the plaintiff’s solicitor were made to the defendant in a letter dated 11 February 2009. 

66.At trial there was a lack of explanation why there was a delay of over 2 years before the plaintiff pursued the outstanding sum of $606,500 was pursued via the Second Quotation.  It is not denied that from the provision of the First Quotation until the Second Quotation, the plaintiff during that interim period did not make any form of written demand for payment from the defendant for works carried out at the Property although costs were allegedly increasing due to the defendant’s numerous and additional requests on labour and materials.  This is contrary to the fact and commercial sense that it was the plaintiff’s case and as per the plaintiff’s evidence that he had paid more than approximately $22,020 and $66,812 for materials for works to be done at the Property as early as 6 and 7 April 2007 respectively.

67.The plaintiff explained in his witness statement that he did not accept the payment of $61,000 by the defendant since if he had accepted the amount of $61,000 it would not account for his actual loss of profit. 

68.The plaintiff’s explanation under cross-examination was that he did not want to push for repayment since he was familiar with the defendant and that the defendant as a person who gave him work in the past he did not want to jeapordize any future chances of work and therefore he was willing to bear the loss temporarily.  However, this is contradicted by the plaintiff again under cross-examination when he then stated that he was always verbally pushing for payment from the defendant but was unable to state when he made such demands and did not answer any further.  The plaintiff then simply stated that he was adding on expenses for the works done at the Property and then concluded that the defendant just never paid.

69.Additionally, the plaintiff also explained in his witness statement that in cooperating with the defendant in the past that the defendant would delay paying the outstanding balance of payment until the majority of the works were completed. 

70.It is the plaintiff’s evidence that substantive completion of the works by the plaintiff at the Property had ended by 11 July 2007 and on 15 July 2007 the Second Quotation was provided from the plaintiff to the defendant upon the defendant’s request.  The plaintiff in his witness statement stated that he chased the defendant for payment under the Second Quotation shortly after its issue on 15 July 2007 and again on 25 July 2007 but under cross-examination the plaintiff could not recall specific dates when he made such demands to the defendant.

71.The defendant denied the plaintiff’s aforesaid explanations and the defendant maintained that there were still outstanding rectification works to be done by 15 July 2007.  It is noted that the 2^nd supplemental witness statement of the plaintiff relating to item 6 of the Second Quotation that were, inter alia, washroom cabinets, that completion of that item did not end until 16 July 2007 for an amount of $18,000 which would be inconsistent with the issuing of the Second Quotation by the plaintiff on 15 July 2007.  Under cross-examination the plaintiff stated that installation for various washroom cabinets were incomplete which would have incurred costs but the plaintiff was also unable to give specific dates when installation was actually complete.

72.It is also noted that the 2^nd supplemental witness statement of the plaintiff relating to items 3, 6 (as already discussed), 8, 9 and 10 of the Second Quotation all show dates of completion on 13 July 2007, 16 July 2007, 15 July 2007, 12 July 2007 and 12 July 2007 respectively, namely, after the plaintiff’s case that substantive completion of the works by the plaintiff at the Property had ended by 11 July 2007.

73.The plaintiff admits that since August 2007, the plaintiff and defendant had not cooperated together and that the defendant had fully paid for fees of other works that they had cooperated on together in the past.

74.Whether the Second Quotation was given by the plaintiff to the defendant on 15 July 2007 and indeed whether the Second Quotation was even genuinely made on 15 July 2007 was a point in issue.  Given the foregoing matters, I do find that the plaintiff did issue the Second Quotation but only until via an attachment to the plaintiff’s solicitors’ letter dated 11 February 2009.  As such, I also find that the Second Quotation was not genuine as to it being made on 15 July 2007 and is essentially a self-serving document of the plaintiff.

75.The evidence and the conclusions relating to the Second Quotation are to be read together with and reinforce my findings in relation to the First Quotation.

76.Where there has been a conflict between the evidence of the plaintiff and the defendant in these circumstances and under the factual questions determined relating to this 1^st Issue, on a balance of probabilities I favour the defendant’s account.  I would also add that if my analysis of the facts and evidence were to be in any way unclear or ambiguous in relation to my preferring either the plaintiff’s or defendant’s interpretation of the First Quotation or items thereof, were it necessary, I would also apply the contra proferentem rule against the plaintiff.

77.Given the foregoing matters, in relation to the 1^st Issue on whether the agreement between the plaintiff and the defendant for the quoted price of $91,000 for decoration works at the Property as contained in the First Quotation was exclusive or inclusive of material costs save for item 17, I find that the First Quotation was inclusive of material costs.

Agreed List of Issues – 2^nd Issue

(2)     Did the defendant instruct the plaintiff to vary the design and to change the materials stated in the First Quotation in the manner as provided by the plaintiff in Annex 1 of the Answer to F&BP.

78.In relation to the 2^nd Issue, I repeat paragraphs 66 to 75 of this judgment whereby I have found that the Second Quotation was not genuine as to it being made on 15 July 2007 and is essentially a self-serving document of the plaintiff.  When considering Annex 1 of the Answer to F&BP, it is derived directly from the Second Quotation. 

79.The plaintiff alleged there were daily requests as per his witness statement and answer 4 of the Answer to F&BP but under cross-examination he only stated on general terms that requests for varying of the design happened.  The defendant under cross-examination was clear when challenged and stated that he never changed the terms involved since the designs never changed in any particular way. 

80.The defendant also provided evidence via Autotoll records to show that he made frequent visits to the Property and that he would be able to ensure works at the Property were properly carried out, inclusive of those works relating to the First Quotation.

81.Whether on the plaintiff’s case or the defendant’s case, such requests for variation, if made by the defendant, were only made verbally. 

82.One of the arguments raised at trial was whether the defendant intended to resell the Property or whether it was for the defendant’s own usage since it was put to the defendant that the Property was for the defendant’s own usage and that was why more effort was being put into the decorations of the Property which led to variation of the design and change of the materials.  The defendant flatly denied this allegation and there was no contemporaneous evidence to show any such intended self use of the Property by the defendant.

83.Again, where there has been a conflict between the evidence of the plaintiff and the defendant in these circumstances and under the factual questions determined relating to this 2^nd Issue, on a balance of probabilities I favour the defendant’s account.  This is further reinforced by virtue of the matters to be discussed in this judgment.

84.The plaintiff under cross-examination answered that discrepancies between the size and amounts of glass and mirrors in the production order varied from those found on the Property was because the dimensions in his production orders were according to a note book which he kept.  The plaintiff under cross-examination when asked for the breakdown of various items in the Answer to F&BP he also said he relied on the same said note book.  It is noted that no such note book as referred to by the plaintiff under cross-examination has ever been produced to the court nor referred to anywhere in the trial bundles in any shape or form despite the ongoing duty of the parties to provide relevant discovery.

85.In relation to varying the design and changing materials, under cross-examination, the plaintiff stated that:-

(i) there was an agreement of a lump sum price (or per unit length price for cabinets) when the defendant made a variation;

(ii) a requirement to chip and smooth uneven concrete at the wall for the “收口” of the cabinet in the small room of the Property;

(iii) item 16 of the First Quotation refers to only mirrors in two bathrooms of the Property but not others;

(iv) more expensive works for skirting due to change of finishing materials of floating steps;

(v) a change to a more expensive door on the ground floor toilet;

(vi) no door for the wine cabinet in the dining room;

are all examples of items never previously mentioned in the Answer to F&BP. 

86.In relation to varying the design and changing materials, some examples were that the plaintiff admitted taking measurements for various items that were produced or installed at the Property and were referred to in his own production notes. The plaintiff was unable to explain the differences in size and dimensions of various items at the Property such as dimensions of a mirror in the column next to the main entrance whereby he assumed the same was purchased and installed by him.  The plaintiff was at times even confused by his own production notes which were in fact duplicating purchased items such as mirrors. 

87.In relation to varying the design, an example was that the plaintiff would also refer to installation of a column and mirror next to the entrance of the Property which did not in fact exist when comparing contemporaneous photos made at the Property which has resulted in increased labour costs.

88.For the purpose of being complete in this matter, Annex 1 of the Answer to F&BP (which is derived directly from the Second Quotation) relates to the Updated Scott Schedule dated 5 July 2012 (“the Updated Scott Schedule”) of which its filing (prior to it being updated) was sensibly initiated and ordered by Deputy District Judge Jonathan Wong on 17 January 2011. 

89.The defendant argued that the plaintiff’s position in the Updated Scott Schedule did not support the Answer to F&BP with examples of inconsistencies such as:

(i) Item 8 of Annex 1 of the Answer to F&BP indicates the material cost for wood at $8,600 whereas the Updated Scott Schedule for the same item is only $6,000;

(ii) Item 10 of Annex 1 of the Answer to F&BP indicates the material cost for glass at $13,500 whereas the Updated Scott Schedule for the same item is only $8,829;

(iii) Total labour costs of Annex 1 of the Answer to F&BP indicates the amount at $287,500 whereas the Updated Scott Schedule the amount is only $170,000.

90.The Updated Scott Schedule shows that one of the plaintiff’s workers, Yeung Fok Kun, worked for a daily rate of $450 and which he worked for a total of 22 days relating to installing a kitchen cabinet (relating to item 13 of the Updated Scott Schedule) and wooden strips (relating to item 15 of the Updated Scott Schedule).  However, Yeung Fok Kun’s payment slips shows he only worked a total of 20 days.

91.The Updated Scott Schedule shows that the material cost for gypsum plaster board relating to items 4, 17, 18 and 20 was a total cost of $20,250 whereas invoices relating to the same only shows a total cost of $5,718.

92.It will also be noted that matters relating to the single joint expert report that was prepared by Mr Honby Chan dated 19 December 2011 (“the Expert Report”) and updated on 4 September 2012 (“the Updated Expert Report”) began via the order of Registrar Lee dated 16 August 2011 and the order of Master I Wong dated 28 October 2011 confirms that Mr Honby Chan was jointly approved by the parties. 

93.By the order of Master I Wong dated 17 January 2012 it was agreed that the Expert Report be adduced at trial without calling Mr Honby Chan subject to the direction of the trial judge.

94.The Expert Report was agreed to be updated between the joint consent of the parties after I allowed the same on 27 July 2012 given the case was definitely going to overrun and additional dates were fixed for the continuation of the trial.

95.Joint instructions for Mr Honby Chan were agreed by counsel in court before adjourning on 27 July 2012 and those joint instructions were dated 6 August 2012 and sent to Mr Honby Chan.  It was agreed that the Updated Expert Report would be ready by 4 September 2012 and I indicated to the parties this was so that time could be given to the parties to consider and or comment on the same if needed ahead of the resumed date of 13 September 2012.

96.It was also on 27 July 2012 that counsel for both parties agreed before me in court before adjourning that day that Mr Honby Chan would not be called to attend court on the resumed dates.

97.On 13 September 2012, Mr Yip made a complaint that the Updated Expert Report did not satisfy its purpose and a further expert report should be filed.  The foregoing matters relating to the origin and reasons leading up to the Expert Report and Updated Expert Report were recounted to counsel.  I considered Mr Yip’s complaint and refused to allow a further expert report to be filed.

98.In preparation of the Expert Report, for the avoidance of doubt, it will also be noted that the parties attended the Property for a joint inspection and that photographs were made during that joint inspection and included in the Expert Report. 

99.The Expert Report has helpfully cross-referenced Mr Honby Chan’s findings to the 17 listed items in the First Quotation (with additional comments relating to the first 17 listed items and then the newly added 8 listed items in the Second Quotation) by referring to the descriptions in both the First and Second Quotations, making an assessment and comparison of the actual work done and then coming to a reasonable fee for the same. 

100.Save where described, Mr Honby Chan found no or no substantive difference when comparing the descriptions of the items found in the First Quotation with the Second Quotation.

101.I have considered and adopt the findings of the Updated Expert Report which relates to findings of items 2, 3, 5, 6, 9 and 10 of the First and Second Quotations. 

102.The findings in the Expert Report and Updated Expert Report are subject to a caveat on whether the items are inclusive of materials.  Given my findings in relation to the 1^st Issue that the First Quotation was inclusive of material costs, the said caveat of the Expert Report and Updated Expert Report is inapplicable. 

103.In relation to the Expert Report (“ER”) and the Updated Expert Report (“UER”), those findings are stated hereinbelow of which certain items which would require a further express factual finding from this court, I have provided my ruling thereof:-

(i) Item 1: ER	The reasonable amount for labour and materials was in the sum of $14,000.  This was subject to whether the timber wall above the wardrobe was an additional work under the First Quotation (the Expert Report did not consider the description between the First and Second Quotation to differ for item 1).  After considering the description found in the First Quotation relating to item 1 and the photos in the Expert Report of item 1, I find that there was no additional work for item 1.
(ii) Item 2: UER	The reasonable amount for labour and materials was in the sum of $7,700.
(iii) Item 3: UER	The reasonable amount for labour and materials was in the sum of $4,000.
(iv) Item 4: ER	The reasonable amount for labour and materials was in the sum of $12,000.
(v) Item 5: UER	The reasonable amount for labour and materials was in the sum of $10,800.  I have considered the photos in the Expert Report relating to item 5.  Although the Expert Report noted that there was underpricing for this item, it was stated that no adjustment was made based on the “spirit of the contract”.  This was in line with my findings at paragraph 48 of this judgment relating to the inclusion of the words “全部工程總金額” in the First Quotation.
(vi) Item 6: UER	The reasonable amount for labour and materials was in the sum of $3,500.
(vii) Item 7: ER	The reasonable amount for labour and materials was in the sum of $4,500.
(viii) Item 8: ER	The reasonable amount for labour and materials was in the sum of $4,700.
(ix) Item 9: UER	The reasonable amount for labour and materials was in the sum of $3,500.  I have considered the photos in the Expert Report relating to item 9. Although the Expert Report noted that there was substantial underpricing for this item, it was stated that no adjustment was made based on the “spirit of the contract”.  This was in line with my findings at paragraph 48 of this judgment relating to the inclusion of the words “全部工程總金額” in the First Quotation.
(x) Item 10: UER	The reasonable amount for labour and materials was in the sum of $1,200.  This was subject to whether the switch board cover cabinet was additional work and not specifically mentioned under the First Quotation where the difference would otherwise be $4,000. After considering the description found in the First Quotation relating to item 10, the photos in the Expert Report of item 10 and my findings at paragraph 48 of this judgment relating to the inclusion of the words “全部工程總金額”, I find that there was no additional work for item 10.
(xi) Item 11: ER	The reasonable amount for labour and materials was in the sum of $2,200. Although the Expert Report noted that there was substantial underpricing for this item, it was stated that no adjustment was made based on the “spirit of the contract”.  This was subject to whether the gypsum board false ceiling was additional work and not specifically mentioned under the First Quotation where the difference would otherwise be an additional $1,300.  After considering the description found in the First Quotation relating to item 11, the photos in the Expert Report of item 11 and my findings at paragraph 48 of this judgment relating to the inclusion of the words “全部工程總金額”, I find that there was no additional work for item 11.
(xii) Item 12: ER	The reasonable amount for labour and materials was in the sum of $3,900.  I have considered the photos in the Expert Report relating to item 12.  Although the Expert Report noted that there was substantial underpricing for this item and should have been RMB6,900 as materials costs, it was stated that no adjustment was made based on the “spirit of the contract”.  This was in line with my findings at paragraph 48 of this judgment relating to the inclusion of the words “全部工程總金額” in the First Quotation.
(xiii) Item 13: ER	The reasonable amount for labour was in the sum of $1,500.
(xiv) Item 14: ER	The reasonable amount for labour and materials was in the sum of $3,000.
(xv) Item 15: ER	The reasonable amount for labour and materials was in the sum of $4,000.
(xvi) Item 16: ER	The reasonable amount for labour and materials was in the sum of $4,000.
(xvii) Item 17: ER	Not applicable as agreed.
(xviii)*Item 18:	ER These were included in Item 4.  I have considered the photos in the Expert Report relating to item 18.
(xix) *Item 19: ER	These were included in Item 16.  I have considered the photo in the Expert Report relating to item 19.
(xx) *Item 20: ER	No such item found or alternatively this was included in Item 17.
(xxi) *Item 21: ER	These were included in Item 16.  I have considered the photos in the Expert Report relating to item 21.
(xxii) *Item 22: ER	These were not works carried out by the plaintiff.
(xxiii) *Item 23: ER	These items were paid for by the defendant.
(xxiv) *Item 24: ER	No such item found.
(xxv) *Item 25: ER	No such item found.

104.As can be seen in my foregoing findings on the Expert Report and Updated Expert Report, there appeared to be no or no substantive difference in those findings when compared to that of the First Quotation.

105.Given the foregoing matters, in relation to the 2^nd Issue on whether the defendant instructed the plaintiff to vary the design and to change the materials stated in the First Quotation in the manner as provided by the plaintiff in Annex 1 of the Answer to F&BP, I find that the defendant did not instruct the plaintiff to vary the design and to change the materials stated in the First Quotation in the manner as provided by the plaintiff in Annex 1 of the Answer to F&BP.

Findings on the 1^st and 2^nd Issues

106.In light of my findings in relation to the 1^st and 2^nd Issues, the plaintiff is entitled to $91,000 pursuant to the First Quotation.

Agreed List of Issues – 3^rd and 4^th Issues

107.As pursuant to the Agreed List of Issues, given my findings in relation to the 1^st and 2^nd Issues, I need not make any further findings relating to the 3^rd and 4^th Issues.

Agreed List of Issues – 5^th Issue

108.As accepted by Mr Yip, given my findings on the 1^st and 2^nd Issues, the plaintiff is entitled to $91,000 pursuant to the First Quotation which was inclusive of materials and labour and that it was not subject to design variations or changes in materials and therefore the plaintiff’s claim for quantum meruit fails.

109.For the sake of completeness and were it necessary, I repeat my findings in relation to the 2^nd Issue and in particular my findings on the Expert Report and the Updated Expert Report which, on a balance of probabilities, results in the plaintiff’s claim for quantum meruit failing.

110.Even if I were to exercise my discretion in favour of the plaintiff on items which the Expert Report or Updated Expert Report which particularized an alternate and increased amount, that would relate to items 10 (an additional $2,800), 11 (an additional $1,300) and 12 (an additional RMB3,000) the total reasonable sum being $84,500 + $4,100 + RMB3,000.

Hearsay evidence

111.I would note that in coming to my findings, I have taken into account the parties’ position on hearsay evidence relating to various witnesses for the plaintiff that are located in the PRC but were unable to attend court and therefore the plaintiff sought reliance on their witness statements. 

112.Given my findings in relation to the Agreed List of Issues and those various related evidential aspects, it appears that those witnesses for the plaintiff in the PRC would not have had any or any substantive impact on my judgment although I would agree with Mr Wong that some of those witnesses appear to have made their statements which were not contemporaneous and or involved multiple hearsay. 

113.To be complete in the matter, there has been no explanation from any of those witnesses for the plaintiff in the PRC (specifically in the close proximity of Shenzhen) why they were unable to attend court.

114.As such, I have given no weight to any of the witness statements in relation to the witnesses for the plaintiff located in the PRC.

Conclusion

115.The plaintiff’s claim is dismissed.

116.I order that the plaintiff be entitled to $61,000 which was previously paid into court. 

117.I make no order as to costs relating to the defendant’s further discovery on 22 August 2012.

118.I make an order nisi that the plaintiff do pay the defendant the costs of the action to be taxed if not agreed with certificate for counsel.

119.I thank counsel for their assistance.

Mr Francis Yip, instructed by Ko & Chow, for the plaintiff

Mr King Wong, instructed by Howell & Co, for the defendant

Annex

Relevant excerpts from the First Quotation

工程項目：木器工程