Ho Kwai Chun t/a Multiple Design v. Wong King Man
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HCCT 44/2011 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 44 OF 2011 (TRANSFERRED FROM HCA NO 392 OF 2011) ____________________
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________________________ 1.Number 28 Windsor Heights in Shatin is a substantial, three storey, six bedroom, detached private residence. It has been the home of the Wong family since 1999. The current occupants are Madam Wong (senior) and her three children, one son‑in‑law and two grandchildren. One of her two daughters, Vivian Wong King Man is the defendant in these proceedings. 2.Prior to 2009 the Wong family became aware that extensive renovations, including alterations and redecorations, were being carried out in the houses of their neighbour, the Yeung family, at Nos 26 and 27 Windsor Heights. As a result of what they saw being done in those houses they decided, in 2009, to have major renovations works carried out throughout the whole of their property. Such was the extent of the proposed works that they realized they could not live in the house while the works were being done. They all moved out for over 10 months. 3.The plaintiff company had been the contractor for the works done at Nos 26 and 27. Mr Joe Li, an interior designer by profession, was employed by the plaintiff company and was the person responsible for the company’s daily operation. In effect, he had been the project manager for the works at Nos 26 and 27 and he was engaged in the same capacity for the works to be done at No 28. I shall deal below with the pre‑contract negotiations and the terms of the agreement upon which Joe Li commenced work. The parties’ versions of what was said and agreed before Joe Li was engaged differ significantly. 4.At trial, this issue was canvassed in some detail. It is an important preliminary issue because it impacts on subsequent issues relating to the standard of work done and the quality of materials used. Ultimately, Joe Li claims that all the required works were completed satisfactorily (subject to some minor agreed defects). The total sum due under a number of quotations, which he claims were all agreed, comes to $7,918,461.30. The defendant has paid a total of $6,200,000. The plaintiff’s claim is for the balance, namely $1,718,481.30. 5.The defendant’s case in that the work done, in many respects, is defective. She claims that the sum due to the plaintiff under the quotations should be $1,085,281.30 but that the value of her counterclaim, based on defective work and costs of rectification, is $4,223,021.10. In this action, she therefore seeks a net refund in excess of $3 million. 6.It will be necessary to deal with each quotation and each alleged defect, item by item. The court has had the assistance of two expert witnesses, Mr Mervin Chen for the plaintiff and Mr Raymond Wu for the defence. Both gave evidence and both prepared detailed reports. In addition I have read two further reports concerning structural aspects of a glass and steel ground floor extension. The authors of those reports namely, Mr P C Lam for the plaintiff and Mr C C Chan for the defendant, did not give oral testimony. 7.The factual witnesses were as follows; Mr Joe Li gave evidence for the plaintiff, Ms. Vivian Wong and her brother‑in‑law Mr Angus Chung gave evidence for the defence. Finally, Mr Po Wing Nai, a colleague of Mr Raymond Wu’s, also gave evidence for the defence. He had prepared a tender booklet for the purpose of inviting tenders for the alleged rectification requirements. In due course I will give the court’s evaluation of each witness, particularly with regard to the extent to which their evidence could be relied upon in the fact finding process. 8.The remainder of this judgment will be divided into the following sections:
PRE‑CONTRACT NEGOTIATIONS AND TERMS OF CONTRACT 9.The defence’s main witness was Ms Vivian Wong. She had made a 40‑page witness statement. Angus, her brother‑in‑law, was the only other family member to give evidence. His witness statement was much shorter and, on many matters, adopted Vivian’s statement. 10.The evidence concerning when they first met Joe Li was not clear. Vivian said she was not involved in the first two meetings. Angus said he became more involved after the contract had been signed. He also indicated that his wife, Helen, was more involved in the early meetings. It was clear also that Madam Wong was a party to the meetings and an important contributor to the discussions. Neither Helen nor Madam Wong made statements or gave evidence. No criticism is made of Madam Wong’s absence due to her age and frail health. However, Helen’s absence, due to her obvious involvement, was described as “surprising”. 11.Much of Vivian’s evidence was what Angus had told her and Angus often said in evidence that Helen would be a better person to ask. Joe Li, on the other hand, simply recalls there being two meetings before a contract was signed and that the negotiations started in about October, not earlier as suggested by the Wong family. 12.It is not necessary to make particular findings about the timing of the early discussions or between whom they took place. In general terms it is sufficient to find as follows. 13.The Wong family were acquainted with and on friendly terms with their neighbour, the Yeung family. Some Wong family members must have seen, albeit briefly, the works completed by Joe Li in Nos 26 and 27 or both. Otherwise, they would never have asked for Joe Li’s details so as to contact him for discussions about No 28. They must also, by the same reasoning, have been impressed with what had been done. Vivian, in evidence, described Joe Li’s work at Nos 26 and 27 as “so so”. If she truly believed it was only “so so”, Joe Li would not have been contacted. Her evidence that she regarded it as “so so” cannot be relied on. It is an attempt to distance herself from the plaintiff’s case that the benchmark for the standard of work to be performed by Joe Li at No 28 was that of the work that had been done at Nos 26 and 27. 14.It is agreed that, with the Yeung’s permission, a group including Joe Li and Wong family members inspected Nos 26 and 27 before a contract (the first quotation) was signed. Versions differ as to the time spent in Nos 26 and 27 or the purpose of the visit but the differences are not important. The important point is that one obvious purpose was to get a general impression of the style and standard of the renovations and not to examine in any detail particular aspects of it. 15.The defence case is that the work done in Nos 26 and 27 is irrelevant in this case. It is denied that it set the standard of work to be done. The defendant’s expert, Mr Raymond Wu did not visit the premises next door because the work done there, according to his instructions, had no bearing on his task to assess the work done by Joe Li at No 28. 16.The defence case is that it was an oral term of the contract that the finished product would be “like a 5 or 6 star hotel”. To be fair to Mr Wu, his report is not based on this expression either. He simply gives his expert evidence on the materials and workmanship without deciding whether or not it met any agreed benchmark. 17.The defence evidence was adamant that the expression “a 5 or 6 star hotel” was made and accepted at an early stage in the negotiations. Joe Li’s evidence is that the first time he heard of it or saw it written was in an email dated 28 December 2010, after the work had been substantially completed and over a year after the initial negotiations. It is true to note that in the contemporaneous documents, which include plentiful email and text exchanges from throughout the whole project, the expression “5 or 6 star hotel” does not appear anywhere, until the 28 December 2010 email. Vivian and Angus’s witness statements however are littered with the phrase. 18.My finding on this stark conflict of evidence is as follows. I am not satisfied that the expression was conveyed to Joe Li as part of the contractual negotiations, neither did it from part of the oral agreement. The Wong family had in mind that the final result would be their “dream house” (another expression often used by Vivian). They knew that the renovations would cost a minimum of $6 million and they expected a top quality result. I have no doubt that the expression “5 or 6 star hotel” came into their minds as the project progressed but it was not meaningfully conveyed to Joe Li. Its absence from any written communication until December 2010 is telling. 19.More importantly however is that even if it was used earlier, in the early stages of the project, it is a phrase that is vague and has no useful meaning in the context of a house renovation. Hotel stars are awarded on different bases in different countries throughout the world. Moreover they apply as much to the hotel’s bedding, restaurants and artwork as they do to the marble in the lobby. Further, what does “5 or 6” mean? Is it “5” or is it “6”? Also, is there a difference between a 5 star hotel and a 5 star house? These questions merely demonstrate the impossibility of incorporating such a term in a house renovation. 20.Far more likely and far more tangible is the house next door. In my judgment it is simple and plain logic to conclude that the Wongs saw the pleasing results of the work done at Nos 26 and 27, they asked to meet the contractor, they went to have a look with Joe Li, they asked approximately how much it would cost and Joe Li was thereby engaged and he commenced his preparation of quotations. I am satisfied also that the timing of the negotiations can be best identified by reference to the commencement of written communications between the parties. Throughout the project both parties made frequent written exchanges. The first design plan is dated 4 November 2009 and the first email is dated 10 November 2009. Such documents would have post dated the important pre‑contract negotiations by a relatively short time. At those meetings (two or three in number) an estimated budget of $6 million plus had been mentioned and accepted, a visit to Nos 26 and 27 had been made and Joe Li had provided photographs from magazines to show the style of renovation to be achieved. The style and design ideas met with the Wongs’ general approval. A high standard of workmanship, appropriate for a renovation in a private dwelling at the top end of the Hong Kong property market, was expected. Such workmanship had been achieved in Nos 26 and 27. As for the materials, they would be chosen by the Wong family as the project progressed, in consultation with Joe Li. 21.For the sake of completeness the above findings resolve most of the issues relating to the defendant’s pleaded case for implied terms in paragraph 12 of the Defence and Counterclaim. In outline, they are as follows:
My finding that Nos 26 and 27 were agreed as the benchmark for materials and workmanship means that the proposed implied terms in paragraphs 12(1) and (2) do not arise. Paragraph 12(3) should be an implied term (but absent any specific statutory provisions). The law relating to implied terms (with which I deal later at paragraph 80) does not permit implied term 12(4). THE QUOTATIONS 22.Between 6 and 24 November 2009 various proposed quotations were prepared, discussed and amended. On 24 November a quotation summary (listing 16 areas of work plus general work) totaling $4,478,800 was signed by Vivian. The marble was estimated to cost $120 per sq ft. On the same day, a quotation, also signed, for “additional work” came to $2,556,350. Included were the following terms and conditions:
23.Over the next few days three items were excluded, making the total $6,646,150. Vivian paid a deposit of $700,000 on 30 November and a further $2,300,000 on 30 December 2009. 24.The defendant disputes liability to pay the 5% design fee. It is difficult to understand the basis upon which the liability is disputed. Vivian said in evidence that it had been agreed that the 5% fee formed part of the total payments and thus there would be no “extra” fee for design. Paragraph 3.01 above is unambiguous and I find no reliable evidence to contradict it. The first five items are stage payments which total 100%. The final item is not a stage payment, it is a 5% fee to be calculated with reference to the 100% total. I am satisfied that the design fee was part of the agreed contract and the defendant is liable for it. 25.Subject to the issues of defects, rectification, alleged delay and certain works not carried out or overcharged, the agreed sums are due on the basis of the project being substantially completed (as legally defined later in this judgment at paragraph 82) by the end of December 2010. As will be seen there were defects and the sums due must be adjusted accordingly. However, at this stage it is sufficient to state that the defects in total, were not such that substantial completion had not been achieved. The project was in the nature of a lump sum contract. Being a private dwelling renovation there is no architect’s certificate to evidence substantial completion, rather it arises from an evaluation of the work done when Joe Li said he had finished. It is a judgment based on evidence. The question to be addressed is, was there anything to prevent a family moving back in to the property and live a normal life? As will be seen later the answer to this question is in the negative. Subsequent quotations 26.By agreement further minor deductions were made as the work progressed. These totaled $348,000. One challenge was made in respect of one item of deduction, namely $41,000 for a wardrobe. Joe Li’s version was that the original price was $82,000 but he reduced it by half because what was actually built was smaller than originally designed. The Wong’s argued that the deduction should be for the whole amount, $82,000, but there was no justification for this stance. Joe Li’s evidence was clearly correct. 27.Four more quotations for additional works were prepared. These have not been paid. They need to be set out and individually considered. They were not signed by the defendant. (1) Quotation No 4 of 10 February 2010 28.This quotation was for “additional work” as follows:
29.Items (a) and (d) are disputed. Item (a) is the cost of preparing a quotation for work in the basement. The basement work was not ultimately done by Joe Li. The charge is for the cost of demolition so as to access pipework and thereby assess and cost the proposed alterations. The person who actually did the work would have had to do the same thing that Joe Li did. The defendant therefore got the benefit of this work. I judge that a reasonable sum of $30,000 may be charged. As for item (d), I agree that it was reasonable to expect that work to be done within the original quotation. The sum due under Quotation 4 is therefore $126,500. (2) Quotation No 5 of 26 February 2010 30.This quotation was for “additional work” as follows:
31.As evidence of agreement Joe Li relies on text messages sent by Vivian such as on 22 February 2010:
32.The dispute in relation to item (b) concerns how many i‑bars were re‑used. Joe Li points out that his original price of $230,000 was reduced to $200,000 to take account of the fact that a small amount were re-used. I accept the defence evidence in part, that this was probably an under estimation and accordingly I consider it reasonable to reduce the price by a further $50,000. However, the defence submission that none of the $200,000 is due is unsustainable. The amount due under Quotation No 5 becomes $178,000. 33.A general complaint made about this and the other three additional quotations is that there is a lack of documentation such as design drawings, programming, measurement sheets and so on. The observation is correct but it is nonetheless clear from the evidence that agreements were reached. It is true that the instructions were sometimes vague. However, that was the nature of the arrangements made, on an on‑going basis, between Vivian and Joe Li. The court’s task is to decide if instructions were given, if they were understood, if they were carried out competently and if they were reasonably charged for. (3) Quotation No 6 of 24 May 2010 34.This quotation was for “ground floor living room with glass rooftop with electric motorized window curtains works” as follows:
35.Again, text messages confirm this work. The only issue is the reasonableness of the charges. I accept Mr Raymond Wu’s evidence on this matter, in relation to items 2 and 3. A reasonable charge under this quotation is $60,000. (4) Quotation No 7 of 22 December 2010 36.This quotation lists 10 items for additional furnishings in three upstairs rooms totaling $255,900. 37.A complaint about this quotation is that it was dated 22 December 2010 and yet the text messages giving constructions and consent to carry out the work are dated many months earlier. It is clear that the work was done before the quotation was finally issued. It is more of an invoice than a quotation. Plainly, it would have been better to issue it before the works commenced, however there can be no issue concerning the agreement to do the work or the fact that it was done. The only issue, due to the fact that Vivian did not see any prices before the jobs were done, concerns the reasonableness of the charges. 38.Vivian makes the same complaint in respect of all four additional quotations. I regard it as a fair complaint, because of the time difference, in respect of Quotation No 7. Reducing a bill in a judgment on the basis of “reasonableness” is an inexact science. The defence is not specific as to the amount by which it is said that the bill is excessive. Their case is simply that it was not agreed. Bearing in mind that Joe Li made offers to reduce the final account, albeit in an effort to finalize the matter, I consider it appropriate for the court to make a reduction, albeit on a somewhat arbitrary basis. The plaintiff is entitled to $200,000 under Quotation No 7 dated 22 December 2010. (5) Marble wastage 39.A final matter should be addressed before calculating the plaintiff’s entitlement on the claim and before moving on to the issues, particularly defects, in the counterclaim. Much evidence was adduced concerning marble. Most of that evidence will be dealt with later when considering the alleged defects. There was a considerable amount of marble used in this project. All the floors, all the bathrooms, most of the walls and internal pillars were marble. Great care was taken in sourcing the marble. It was purchased from a single outlet in Yuen Long. Joe Li visited those premises with Wong family members to select the marble. The original estimate of $120 per sq ft was increased to $230 per sq ft because a high quality marble was chosen. The extensive use of marble was primarily because of Madam Wong’s love of the material. She was involved in the inspection, choice and selection process. 40.This issue, at this stage, is confined to the issue of wastage. 41.In the final balance statement Joe Li seeks a payment of $584,548 for the increased cost of $110 per sq ft for 5,314 sq ft of marble, the amount actually purchased. Some wastage is inevitable. Joe Li has estimated a wastage of 1,458 sq ft. This figure seems to be an arbitrary estimate and it is not clear how it was arrived at. In any event the plaintiff claims for the full amount on the basis that 1,458 sq ft is a reasonable wastage. 42.It is difficult for the court to estimate what a reasonable amount of wastage would be. My starting point is that 1,458 sq ft which represents nearly 28%, is excessive. It is noted that in the 17 January 2011 Balance Statement Joe Li made a “special offer” and reduced the cost of the extra marble by $160,380 (being the extra cost of the marble not used, $110 x 1,458). 43.In order to give effect to the fact that an estimated 28% wastage was excessive, I consider it fair to order that Joe Li stands by his “special offer”. Accordingly the extra marble will be reduced by $160,380. By the same token the further “special offer” in respect of two further items of $58,000 should also remain. (6) Summary of the claim 44.Accordingly, the summary of the claim is as follows:
DEFECTIVE WORK AND DELAY (i) Marble slabs 45.Mr Allen Lam, counsel for the defendant, made an application for the court to view the premises. Although initially reluctant to accede to the application I decided, at the conclusion of the evidence in court, that a view would assist. The “marble” issue was a key issue. The photographs in the reports were small and of a poor quality. The prime purpose of the view was to get a general impression of the colour variations in the marble slabs as laid and the standard of workmanship in their installation. 46.The decisions which follow in respect of this and other defect issues have been made on the basis of a combination of the following:
47.It should be stated at the outset that whilst both expert witnesses had prepared comprehensive reports and gave helpful evidence I found, generally speaking, the evidence given by Mr Mervin Chen to be more realistic, more practical and thereby more reliable and preferable. 48.The marble slabs at source measured 9ft x 6ft. They were then cut into six square slabs. Naturally, the Wong family wanted the shades and patterns of the slabs to match as best as possible. The degree to which this could be achieved was a matter of dispute between the expert witnesses. Marble being a natural raw material contains inevitable colour variations and the veins and cloud‑type patterns wander randomly over the surface. The question arises, once the slabs have been cut how does one get the best result? Joe Li’s and Mervin Chen’s evidence was to the effect that:
I accept both these premises. 49.Joe Li’s opinion was that given the inevitable variations in colour and difference in pattern the best result is achieved by “random” placements. Mr Allen Lam sought to argue that Joe Li’s use of the word “random” meant that he had put down the slabs without any thought about the final result. I do not agree. By “random”, Joe Li meant in such a way as to spread the variations and differences around across the whole area of the floor thereby minimizing sharp contrasts as much as possible to give a pleasing overall effect. 50.To what extent that was actually achieved depended on (a) the material supplied and (b) the plaintiff’s workmanship. Mr Chen describes the arrangements of the marble slabs to be “marginally acceptable”. I agree with this assessment. There are some areas where a better result might have been achieved but to literally “re‑do” large areas would (a) be disproportionate as the scale of the actual defects do simply not merit such drastic measures, (b) cause damage to the edges of the slabs not re‑done and (c) involve a risk that the re‑done parts would be no better than they are now because there would be no guarantee that the replacement slabs could improve the final result. 51.For the avoidance of doubt I find that the defendant’s claim that the entire marbling should be re‑done is wholly disproportionate to the defects present in the job as done. 52.I now turn to the complaint that the width of the joins between slabs is excessive. Taking the marble work at Nos 26 and 27 as a benchmark, widths of 3 mm would be acceptable. I consider Mr Wu’s belief that 1 mm throughout the entire house should have been achieved as a somewhat unrealistic counsel of perfection, an unrealizable ideal. 53.Nonetheless, there are many instances where the widths are too wide and thus a reasonable standard has not been achieved. 54.Again, the appropriate rectification, if any, should not be disproportionate. In my judgment there are insufficient examples of excessive joint widths to justify the uplifting of the slabs so as to try and reduce the width of the grouting from say 5 mm to 3 mm. Such an exercise would risk, as already stated, damaging adjoining slabs which would then, in turn, require more rectification work. Nonetheless, a genuine defect exists but it can only be resolved, in my judgment by payment of damages. The measure of damages should be a reflection of the cost of effecting such repairs as can be reasonably carried out using the wealth of modern techniques and materials available. The joints could be cleaned, improved and levelled. It is true to say that the functionality of the marble is unaffected but the aesthetic appearance is, in my judgment, capable of improvement. Mr Chen has estimated a payment of $20,000 to be sufficient. The defendant’s claim is for an entire re‑fit costing $1,380,000. I consider $200,000 to be an appropriate measure of damages for this acknowledged defect. This sum also takes into account the cost of repairing rough edges wherever that may be possible. It is acknowledged that this is a somewhat arbitrary figure. However, circumstances do sometimes arise where the court has to decide what is reasonable in spite of a shortage of evidence to that effect. Short of calling for further evidence on the matter (which would involve unacceptable further time and expense) the best that a court can do is consider the matter in context and strive to reach a fair and sensible figure in all the circumstances. I considered $20,000 to be parsimonious. (ii) The staircase 55.The complaint is that the staircase is too narrow. The stairwell is a square space measuring 2,000 mm across. The widths of two flights of stairs have to be accommodated within the space. The defendant claims each step should be a minimum of 900 mm wide. This would leave a balance of 200 mm for the central stair rail or banister and skirting on the outside wall. On average the width of the marble steps, as built, was about 850 mm each. The defendant requires the entire staircase from the ground floor to the second floor to be rebuilt at a cost of $746,800. 56.On this issue I find the plaintiff’s submissions to be correct. Mr Desmond Leung, counsel for the plaintiff, firstly points out that the pleadings are silent on this issue. There is no pleaded complaint of a breach of statutory provisions or non‑compliance with safety regulations. The court has been referred to the 1996 Code of Practice for the Provision of Means of Escape in Case of Fire and the Building (Planning) Regulations, Cap 123. The latter states:
57.Mr Leung however argues that the subject property is exempt by virtue of two provisions in the Code of Practice, namely Clause 5.1 which states:
and Clause 3.1 states:
58.Moreover, taking a sensible view of the structure as built, at each end of each step (measuring approximately 850mm) is black marble skirting. This was not measured. It appeared to be 10 to 15 mm on each side. Thus the distance from the wall of the stairwell (a few inches above the skirting) to the central glass division between the two flights of stairs would be correspondingly wider. If this is taken into account the question has to be asked, bearing in mind Clauses 5.1 and 3.1 above, is it proportionate to rebuild an entire staircase at a cost of $746,000 because of a few millimetres deficiency? I have concluded that the answer to this question is no. (iii) Curtain wall 59.The “curtain wall” refers to the glass extension at the rear of the property. Aesthetically it is a very pleasing design and addition to the property. However the reports from the two structural engineers agree that there are inadequacies in the structure. The issue is how much to spend on rectification. The plaintiff submits that the existing structure can be strengthened at a cost of $270,000. The defendant claims for the cost of rebuilding. 60.Each defect must be considered separately. In some cases rebuilding may be required, in other cases repairs can be carried out and in other cases financial compensation alone is the only remedy. 61.With regard to the curtain wall the court has had the benefit of two helpful, comprehensive and professional reports. On many aspects the experts agree. I have come to the conclusion that for such an important item the defendant’s expert’s (Mr C C Chan) alternative proposal should be accepted, namely rebuilding the lower part of the curtain wall and strengthening the upper part. This will cost $380,000. (iv) Marble steps from entertainment area to living area 62.There are three steps down from the entrance hall area to the living area. The feature is a curved descent about 15 ft from one end to the other. The complaint is that at the end of these steps where they join the main staircase they taper together to a single point. Thus the last few feet of the steps are useless as steps because the treads get narrower and narrower. A large plant pot has been placed at the foot of the staircase to prevent use of the narrow part of the steps because they are dangerous. 63.Joe Li says they were built to instructions. Some evidence was adduced to suggest a Fung Shui master’s advice resulted in the final design. 64.There are no similar steps in Nos 26 and 27. I accept that it is a design defect and the cost of rebuilding these steps so that they are of uniform width should be allowed. I accept Joe Li’s estimate of $29,000. (v) Marble work in bathrooms and kitchen 65.The complaints under this heading fall into two categories: (a) joints and (b) cracks.
(vi) Kitchen 66.The defendant complains about the excessive charge of $250,000 for a kitchen cabinet. The evidence revealed it was sourced from mainland China. Needless to say, it is possible to source high quality products from China and I do not agree with the defence submission that the cabinet was built with “cheap” materials. Whilst no complaint can honestly be levelled at the appearance of the finished product the complaint that the cost was excessive has some merit. All that can be done in this judgment is to make an appropriate reduction, which I do in the sum of $50,000. (vii) Other defects 67.Having considered the complaints, concessions and submissions from both parties I propose to deal with the remainder of the defects by listing those which I consider merited together with a figure for damages. In general terms I have adopted Mr Mervin Chen’s figures but have made increases where I have considered it appropriate and fair to do so:
QUANTUM 68.As already stated the sum of $1,343,744 has been proved on the claim. 69.The total of the counterclaim (using the headings above) is $900,800:
70.The net effect is that the plaintiff is entitled to judgment in the sum of $483,944. THE WITNESSES 71.It is convenient to refer to this issue at the conclusion of this judgment because in many respects my evaluation of the witnesses will have become apparent from the findings already made. 72.Generally speaking, I do not share the extreme positions taken by Mr Leung in his written submission. He describes Vivian as evasive, unreliable and lacking in candour, Angus as impulsive and Mr Raymond Wu as histrionic, evasive, argumentative and biased. On the other hand he urged the court to regard Joe Li as direct, honest and reliable and Mr Mervin Chen as a candid, impartial expert. 73.Mr Allen Lam was not as specific in his criticisms and praise, but generally speaking urged the reverse situation. 74.On balance, I preferred the demeanour of Joe Li and Marvin Chen and the content of their evidence and reports. I agree that Joe Li answered questions in a straightforward manner which I considered to be a reflection of his competence as a designer and manager of this particular renovation project. He genuinely believed he had completed the works competently and to the required standard. He has been willing to concede defects where appropriate. 75.The Wong family was clearly disappointed and dissatisfied with the final result. The disappointment and dissatisfaction stems from two sources; firstly, the fact that there were indeed some defects in Joe Li’s work and, secondly, their concept of a “dream house” (as was their original idea) or a “5 or 6 star hotel” (which took over in their minds as things progressed) developed into an unachievable level of perfection. Thereafter, any defect became exaggerated and unsustained complaints were added to the mix as makeweights. 76.I accept that the project fell short of their expectation but the reason that significant parts of their evidence has not been preferred is that their insistence on an unrealizable ideal has masked the satisfactory quality of much of the workmanship actually done and materials actually used. 77.Angus became more involved during 2010 when the project was underway. On his own admission he was a forthright personality (not his own words) who, I suspect, fell out with Joe Li. An uncomprising attitude developed which was reflected in his demeanour when testifying. 78.A key difference between the expert witnesses was that whereas Mr Chen did recognize and acknowledge inadequacies, Mr Wu was at times loathed to acknowledge even adequacies. Given the adequacies of the major parts of the works I considered his stance of requiring a wholesale return to the concrete shell in many areas, as unnecessary, impractical, disproportionate and unrealistic. 79.A final difference is worthy of mention. Whilst both experts acknowledged their duty to assist the court it was perhaps a little too obvious whose side Mr Wu was on when being cross‑examined. 80.Having said that, both experts produced highly detailed, comprehensive, professionally prepared reports from which the court gleaned considerable assistance. LEGAL PRINCIPLES (i) Implied terms 81.The implied terms sought by the defendant (see supra at paragraph 21) are, in view of my findings, academic except for 12(4). The general principles governing implied terms have been stated many times. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1978] 52 ALJR they are listed as follows:
82.Implied term 12(4) is rejected because of (2) and (3) in the above case. (ii) Substantial completion 83.In Hudson’s Building and Engineering Contracts, 12th Edition, page 441, it is said that:
84.In Hoenig v Issaacs [1952] 2 AER at 180 Derring LJ said:
85.I agree with the plaintiff’s submission that this contract be treated as a lump sum contract and that the sums originally quoted for works and additional works, having been substantially completed, became due subject to adjustments and reductions for defects. It falls precisely into the type of contract described in Chitty Hong Kong Specific Contracts, 3rd Edition, page 418:
86.In the present case the Wong family’s decision not to move back into the house was influenced by their disappointment that the final result fell short of the “dream house” they had in mind which, in turn, formed part of their erroneous belief that the agreed standards of work and materials had not been achieved (subject to reparable defects). (iii) Defects 87.The court’s approach to determining what is and what is not a defect and the appropriate measure of damages is referred to in Hudson, 12th Edition (page 717) as follows:
88.In the case of each defect the court must ask:
89.In the present case damages under (ii) and (iii) are either nil or token. My assessments under (i) depend on firstly, whether the cost of reinstatement is wholly disproportionate to the advantages of reinstatement and secondly, if the cost is disproportionate, a judgment on how much is fair and reasonable having considered the opinions of both experts. 90.Writings and authorities on the subject are plentiful. It is trite to observe that each case depends on its own facts. In each case the defect has to be (i) identified, (ii) evaluated and (iii) compensated for:
CONCLUSION AND COSTS 91.There will be judgment for the plaintiff in the net sum of $483,914 (value of claim less value of counterclaim). As to costs I direct further short written submissions. After considering those written submissions I shall make a final cost order.
Mr Desmond Leung, instructed by Keith Lam Lau & Chan, for the plaintiff Mr Allen M Y Lam, instructed by S H Chan & Co, for the defendant | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Further hearings and rulings under HCCT 44/2011