HON FUNG ENGINEERING LTD v. HOP TAI CONSTRUCTION CO LTD

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JUDGMENT

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1.  The Plaintiff (“Hung Fung”) was a subcontractor of the Defendant (“Hop Tai”).  Hung Fung says as a subcontractor it had carried out various construction and building works for Hop Tai under three different contracts^[1].

2.  By way of the present action, Hon Fung claims against Hop Tai a total sum of HK$687,430.00, as the total outstanding contract sum payable under these three contracts.  The particulars are as follows:

(1)	A contract for the removal of parapets and installation of new ones at a highway (“the parapet contract”). The outstanding sum claimed is HK$369,150.00.
(2)	A contract for carrying out A&A works at a pump house at Ting Kok Road, Tai Po (“Ting Kok Road Contract”).  The outstanding sum claimed is HK$191,200.00.
(3)	A contract for the installation of lifting device at Anchor Street (“the Anchor Street Contract”). The outstanding sum claimed is HK$127,080.00.

3.  Hop Tai accepts that there were these three contracts with Hon Fung.  It however disputes the claims principally on the basis of various counterclaims and set-offs, or that some of the works claimed had not in fact been fully carried out by Hon Fung.  I will deal with these defences in greater below when I consider each of the claims.

I. The parapet contract

4.  The following is undisputed.

5.  This contract was for the removal and installation of aluminium parapet railing at a highway.  The employer of this contract was the Hong Kong Government, while the head contractor was Apex Base Ltd.  Apex Base subcontracted the same to Shing Kee Construction Company, which in turn subcontracted the same to Hop Tai. Hop Tai subcontracted it to Hon Fung under a written contract signed by Hon Fung on 13 May 2000.

6.  It is common ground that:

(1)	Under this subcontract, the removed aluminium railing materials and the in-between posts belonged to Hop Tai.
(2)	By a contract dated 9 November 2000, Hop Tai agreed to sell these removed materials to one Mr Lai Chi Keung.
(3)	Mr Lai was in fact the direct subcontractor engaged by Hon Fung to carry out the actual works in removing the aluminium railing and posts.
(4)	Hon Fung subsequently further agreed to carry out a variation order to modify connecting brackets. The connecting brackets were the structural gadgets connecting different sections of the new parapets.

7.  Hon Fung completed the works for the removal and installation of parapets and posts at the highway.   In its final invoice dated 27 November 2001 submitted to Hop Tai, it asked to be paid a total sum of HK$369,150.00 for all the works it had carried out (after giving deductions to various previous payments or set-offs).  This sum included the work cost for the modification of 2,000 units of connecting brackets at HK$90.00 per unit.

8.  This invoice has not been settled by Hop Tai.

9.  Hop Tai now disputes this invoice on the following basis:

(1)	Hon Fung did not in fact modify 2,000 units of the connecting brackets, and Apex Base certified only 235 units of the connecting brackets.
(2)	In breach of its contract, Hon Fung has not returned the removed railing and posts to Hop Tai.  The pleaded loss under this is about HK$370,000.00.

Whether Hon Fung only modified 235 units of connecting brackets

10.  Mr Li Wing Chiu of Hon Fung gives evidence that Hon Fung in fact modified 2,000 units of the connecting brackets.  Mr Li is one of the partners of Hon Fung.  He says his case is supported by Hon Fung’s invoice dated 27 November 2001, and the fact that neither he nor anyone from Hon Fung was ever asked to participate in any joint measurement on site to verify the same.   The apparent fact that Hon Fung was not asked to attend any joint measurement on site is supported by its demand letter dated 21 December 2001. In the letter, it was expressly stated that despite its numerous requests for an arrangement of a joint measurement on site, Hon Fung had not received any information regarding the same from Hop Tai.

11.  Mr Hung Ling Tat gives evidence for Hop Tai as one of its directors.  His evidence on the certification of the modification of connector brackets is as follows.

12.  Upon completion of work, Hon Fung submitted its final payment application by way of the 21 November 2001 invoice stating that the final number of connector brackets it had modified under the variation work were 2,000.  Hop Tai submitted its invoice based on the same figure to Shing Kee, which in turn submitted the same invoiced figure to Apex Base for certification.

13.  The final certification of the actual work done on the modification of connector brackets was carried out on site by someone from Apex Base.  Mr Hung’s younger brother, Mr Hung Ling Wai was also present during this certification.

14.  After this final certification, Apex Base reduced the numbers of modification of connector brackets done from 2000 units to 235 units.  This final certification is reflected by the corresponding handwritten amendments made by Apex Base on Shing Kee’s submitted invoice dated 20 December 2001.  It is Mr Hung’s evidence that these amendments were signed by one Mr T K Tse of Apex Base.  Mr Hung can confirm that the signature is Mr Tse’s because (a) Mr Tse had previously worked for Hop Tai and Mr Hung was familiar with the signature, and (b) the signature looks similar to Mr Tse’s signature on a letter dated 19 October 2001, where he signed for and on behalf of Apex Base and sent to Hop Tai.

15.  Mr Hung also says under examination in chief that Hon Fung accepted this final certification at that time.

16.  After assessing the evidence as a whole, I do not accept Mr Hung’s evidence for the following reasons.

17.  First, I do not find Mr Hung a reliable witness:

(1)	Mr Hung changes his evidence without good reason on the important question as to whether and when an on the site certification was done:  When giving evidence in chief and in answering my question, he initially says that there was a joint measurement carried out with the presence of his brother, the people from Apex Base as well as someone from Hon Fung.  At this on the site measurement, the certified unit was 235 instead of 2,000 and Hon Fung through Mr Li agreed to it.
(2)	However, when he was shown Hon Fung’s demand letter dated 21 December 2001 where Hon Fung was specifically asking for a joint measurement on site, he changes his evidence and says in fact there was a final joint measurement done after 21 December 2001 and after all the remedial works were carried out by Apex Base and Shing Kee (but not Hon Fung).  This was however not attended by Hon Fung.  The one attended by Hon Fung was a joint measurement but not a final joint measurement.
(3)	His evidence on the existence of both the joint inspection and final joint inspection is incredible in that:
	(a)	notwithstanding Hon Fung’s repeated demands for payment, Hop Tai has never written back and stated that there was an final joint inspection where the certified work for the modification of the connecting brackets was only 235 units instead of 2,000 units as demanded by Hon Fung;
	(b)	notwithstanding that this claim for 2,000 units of modification of connecting brackets forms one of the main subject matters of Hon Fung’s claim herein, the alleged joint inspection and certification down and Mr Li’s agreement to it has not been pleaded in Hop Tai’s Defence or set out in Mr Hung’s witness statement.

18.  Secondly, I also find Hop Tai’s case that the work of modification of connecting brackets was finally certified to be only 235 units incredible for the following reasons:

(1)	Hop Tai has not produced its invoice submitted to Shing Kee to show that the submitted work of modification of connecting brackets had been certified down to 235 units.
(2)	Hop Tai has not provided any evidence to show that it had only been paid by Shing Kee for modifying 235 units of connecting brackets.
(3)	It is not contained in any of the correspondence between Hop Tai and Hon Fung where Hop Tai stated that the certified work for the modification of connecting brackets was only 235 units.
(4)	In my judgment, had there been such certification down, all or some of the above documents ought to have existed.  Their absence points strongly to the fact that there was no such certification down.
(5)	Further, for no good reasons, Hop Tai has not called Mr Hung’s brother, the very person of Hop Tai who was said to have attended the final joint measurement on site, to give evidence on this important issue.  The failure to call Mr Hung’s bother to give direct evidence on this adds doubt to Mr Hung’s indirect evidence on the existence of the alleged on the site inspection and certification of the measurement of works.

19.  The handwritten amendments to Shing Kee’s invoice in reducing the 2,000 units of modification of connecting brackets to 235 units does not in my judgment constitute evidence that could overwhelm the weight of my above consideration in rejecting Mr Hung’s evidence.  No one from Apex Base or Shing Kee is giving direct evidence on this document, and thus its interpretation given by Mr Hung, who has no direct dealing with it, is unreliable.  As I mentioned above, had there been a final certification, there ought to have been a corresponding certification down by Shing Kee marked on Hop Tai’s submitted invoice, but none was shown.

20.  On the other hand, I find Mr Li a truthful witness.  He gives evidence in a direct manner, and is not shaken under cross-examination.  His evidence is also consistent with the documentary evidence.  I therefore prefer his evidence to that of Mr Hung’s if it is in conflict.

21.  For the above reasons, I find as follows:

(1)	Hon Fung did modify 2,000 units of connecting brackets under the parapet contract.
(2)	Insofar as necessary, no one from Hon Fung was invited to and attended any joint measurement on site of the modification of connecting bracket work, nor has Mr Li of Hon Fung ever agreed to any reduction.

22.  Hop Tai is therefore not entitled to any set-off or deductions against Hon Fung’s claim under this head.

Unreturned removed materials

23.  It is not disputed that Hop Tai entered into a contract to sell to Mr Lai (a) removed aluminium rails at HK$40 per metre and (b) posts at HK$100 per unit. 

24.  Hop Tai now seeks to set-off against Hon Fung’s claim the sum of HK$362,000 (as confirmed in Mr Hung’s witness statement) as the value of the removed parapets and posts.  It is Hop Tai’s case that upon the removal of these parapets and posts, Hon Fung had failed to return them to it, and as a result, it has lost the revenue it could have obtained by selling them to Mr Lai.

25.  There is no dispute that Hon Fung had removed the parapets concerned and they had not been physically returned or delivered to Hop Tai by Hon Fung. 

26.  It is however Hon Fung’s case that the removed materials had all been directly taken away by Mr Lai, and it was Mr Lai himself who did not pay for them.

27.  Again, Mr Hung gives evidence in support of Hop Tai’s case.  Other than confirming the gist of Hop Tai’s case as set out above, he further says the following:

(1)	Mr Li of Hon Fung was all along aware of the sales contract between Hop Tai and Mr Lai.
(2)	Mr Lai wore two hats in this project:  he was Hon Fung’s subcontractor who actually removed the parapets, and he was also the buyer of these parapets under his contract with Hop Tai.
(3)	Given that Hon Fung had not been paying Mr Lai’s subcontractor fees, he, Mr Lai and Mr Hung came to an agreement whereby he would first pay Mr Lai the fees on behalf of Hon Fung, and Hon Fung would have to set-off this contra payments against its invoices submitted to Hop Tai.  This sum eventually came to HK$155,000.00.
(4)	However, given Mr Lai’s history of refusing to pay for the removed parapets and to return the same to Hop Tai in light of Hon Fung’s failure to pay him the fees, after the above agreed setting off, Mr Li further agreed with Mr Hung that Hon Fung would set off the value of these removed materials against its invoices if Mr Lai did not pay for them or return them to Hop Tai, whether or not Hon Fung had paid Mr Lai for his subcontractor fees (“the subsequent set-off agreement”).

28.  Although accepting that he agreed to have the deduction of HK$155,000.00 from its invoices for interim payment, Mr Li denies having entered into the subsequent set-off agreement.  He also says that since Mr Lai was the very person who had actually physically removed the parapets, and given the sales contract between him and Hop Tai, it was a simple case where, on the removal of the parapets from the highway, Mr Lai also took them away as the purchaser.  It is his default, but not Hon Fung’s, in not paying Hop Tai for the materials.

29.  I reject Mr Hung’s evidence and Hop Tai’s case for the following reasons.

30.  Again, I find Mr Hung not a reliable witness under this issue:

(1)	In relation to the undisputed deduction of HK$155,000.00, under cross-examination, apparently in order to insist on the case that Hop Tai is now still entitled to claim HK$362,000.00 as the value of the removed materials as set out in his witness statement, he says that this deduction was not based on the value of the removed materials at that time already obtained and kept by Mr Lai, but was in fact contra charges Hop Tai paid on behalf of Hon Fung.
(2)	However, this is inconsistent with the documentary evidence where Hop Tai’s own accounting staff expressly wrote on Hon Fung’s invoice dated 13 December 2000 that this sum of deduction represented the returned material value accountable for Mr Lai “退鉄料數 ->$155,000.00(黎先生)”.  When asked as to why the accounting staff would have written as such, Mr Hung says it must have been a mistake made by the staff.  I cannot see how the accounting staff would have made such a mistake without any express instruction coming from Hop Tai’s own supervisory staff.  I reject his explanation, and find his evidence on this incredible.
(3)	Further, the allegation of the subsequent set-off agreement is in my view only made up by him when he was under cross-examination.  If there had been such an important agreement which entitled Hop Tai to claim against Hon Fung for the removed materials, it is incredible that this has not been (a) pleaded in the pleading, and (b) set out in his own witness statement.  Moreover, I also find the existence of such an agreement incredible as it makes no commercial sense whatsoever: why should Hon Fung agreed to pay for these removed materials if kept by Mr Lai even if, according to Mr Hung, Hon Fung had in fact paid Mr Lai for his subcontractor’s fees.

31.  On the other hand, I accept Mr Li’s evidence.  He gives evidence straightforwardly and his evidence is generally consistent with the documentary evidence.

32.  Further, I have come to the conclusion that it was implicit in the arrangement and the conducts of the parties that it was not necessary for Hon Fung to physically return the removed parapets and posts to Hop Tai first, before they were delivered to Mr Lai.   I have arrived at this view because of the following reasons:

(1)	In light of the undisputed evidence that Mr Lai was the person who was responsible for the removal of the parapets at the highway and also the very purchaser of these materials, coupled with Mr Hung’s own evidence that Mr Li of Hon Fung was aware of this sales contract, it does not make any common or commercial sense that Hon Fung and Hop Tai would have to carry out such a “merry go round” logistics to deliver the removed materials to Mr Lai eventually.
(2)	It was on the other hand simple and straightforward that Mr Lai would keep them as and when he removed them from the highway, and paid for them in accordance with the terms of the contract (which allowed him to pay whenever he had obtained every 500m of the parapets).
(3)	Notwithstanding that the works had gone on for a few months and Mr Lai had been keeping the removed materials without payment, there is no evidence to suggest that Hop Tai had ever attempted to stop Mr Lai from doing that or to ask Hon Fung not to allow Mr Lai to keep the materials but to return them to Hop Tai.  The absence of any such acts on the part of Hop Tai is consistent with it having impliedly consented that Hon Fung needed not physically return the materials to Hop Tai, as it had already agreed to sell the materials to Mr Lai.

33.  For the above reasons, I reject Hop Tai’s case on Hon Fung’s alleged failure to return the materials to it.  I therefore find that Hon Fung is not liable to Hop Tai for any of these non returned removed materials. 

34.  Hop Tai therefore fails in its counterclaim for the alleged value of the non returned removed materials.  It is not entitled to any set-off against Hon Fung’s claim under this head.

Quantum of Hon Fung’s claim

35.  In the premises, Hon Fung has proved its claim for HK$369,150.00 as the outstanding sum under this contract.

II. Ting Kok Road Contract

36.  In relation to Hon Fung’s claim for HK$191,200.00 under this contract, Hop Tai counterclaims and seeks set-off for the following items:

(1)	HK$5,000.00 being payment to a sub-contractor for carrying out some concrete works on behalf of Hon Fung.
(2)	HK$3,872.96 being the concrete materials paid by Hop Tai on behalf of Hon Fung under this project.
(3)	HK$1,450.00 being Hon Fung’s unpaid proportionate contribution to the cost of the installation of a water meter at a temporary depot in Tuen Mun.
(4)	HK$134,514.40 being the alleged costs of substituted workers employed by Hop Tai to carry out the work for Hon Fung.

37.  Hon Fung through its Counsel Mr Chong accepts at trial the set-off in the total sum of HK$8,872.96 under items (1) and (2) above.  Hon Fung therefore now claims only HK$182,327.04 (HK$191,200.00 – HK$5,000.00 – HK$3,872.96) under this head.

38.  There thus remains for me to decide whether Hop Tai could establish the two items of set-off under paragraphs 36(3) and (4) above.

Water meter cost

39.  Mr Hung, in giving evidence for Hop Tai, says Hon Fung made use of Hop Tai’s temporary depot in Tuen Mun to prepare concrete mix.  Hop Tai had built a water-meter there at the cost of HK$5,800.00.  Given that Hon Fung was one of the four parties who had made use of the depot, it had agreed to contribute one-fourth of this cost, which equals to HK$1,450.00.  The HK$5,800.00 cost of the water meter is supported by an invoice dated 11 February 1999.

40.  Mr Li in evidence denies that Hon Fung had ever agreed to pay for this nor had Hon Fung used the temporary depot as alleged.

41.  I reject Mr Hung’s evidence and Hop Tai’s case:

(1)

This claim for the contribution of HK$1,450.00 for the water meter has not been set out in his witness statement or pleaded even in its Amended Defence and Counterclaim, although it was only amended at the beginning of the trial.   The evidence concerning this only arises in Mr Hung’s oral testimony.  As such, the evidence again bears the hallmarks of an afterthought to inflate the set-off and counterclaim. I find it unreliable.

(2)

In any event, as the Ting Kok Road Contract was undisputedly entered into by the parties in November 2000, the installation of the water-meter in February 1999 cannot be related to the Ting Kok Road Project.  It again shows that Hop Tai’s case on set-off is without merit.

42.  For the above reasons, Hop Tai has failed to prove that it is entitled to counterclaim or set-off this sum of HK$1,450.00 against Hon Fung’s claim under this head.

The substituted labour costs

43.  Mr Hung says in evidence as Hon Fung did not have enough manpower to carry out the concrete work under the contract, Mr Li asked Hop Tai to carry out the work on Hon Fung’s behalf by substituted labour.  Mr Hung agreed and thus Hop Tai had asked its own labour to do so. 

44.  In support of this part of the counterclaim, Hop Tai relies on various day work records to show the labour man-hours that had been spent on the work in relation to the Ting Kok Road project.  These day work records cover the period between March and November 2001.  

45.  On each of these day work records, it shows the names of various workers who had worked on that particular day.  There is also a reference in the record to the jobs and site locations these workers were assigned to work on each day.  In most of the day work records which are said to be relevant to the Ting Kok Road project, other than the reference to the Ting Kok road site, there are also references to other jobs and site locations.  This means that the workers had also worked at other sites and for other projects on the same days.  There is however no indication in these records as to how many workers and how many hours of work had been spent specifically on each of these site locations.

46.  According to Mr Hung, the total work hours said to be related to the Ting Kok Road project are translated into a total sum of HK$134,514.40 of labour cost.

47.  Hop Tai also relies on the expert report of Mr Terence Kwan, a quantity surveyor, to support the calculation of the above man-hours.  In his opinion, the hourly rate attributed to the worker is a reasonable and commensurate with the market rate, and the number of man-hours spent for the concrete work said to have been carried out by these substitute workers is similarly reasonable.

48.  Other than the agreed item of substituted labour as set out above, Mr Li denies having asked Hop Tai to engage substitute labour to carry out other concrete works under the contract.  It is also Mr Li’s case that the extent of concrete work Hon Fung was required to carry out under the Ting Kok Road contract was very limited.

49.  The burden lies on Hop Tai to prove (a) that it had engaged substituted workers to carry out Hon Fung’s work under this contract, and (b) the quantum of the cost. 

50.  I reject Hop Tai’s evidence under both of these issues for the following reasons.

51.  First, the allegation of there being an agreement for Hop Tai to engage substituted workers to carry out substantial concrete work for Hon Fung is inherently incredible for the following reasons:

(1)

There is not one single contemporaneous document to show that Hop Tai had been carrying out the work for Hon Fung on an ongoing basis and that it would claim for the costs incurred.  Had there been such an agreement as alleged, it is incredible that, notwithstanding that substituted labour had allegedly been engaged for a period of 9 months or so, Hop Tai had never once informed Hon Fung in writing the accumulated amount of the costs that had been incurred, nor had it made any deductions or set-off against Hon Fung’s interim payment applications.

(2)

Mr Hung accepts it under cross-examination that the substantial part of subcontracted work under the Ting Kok Road contract involved steel work but not concrete work.  This is also reflected by Hon Fung’s quotation dated 9 November 2000, which evidenced this contract.  In light of this evidence, I find Hop Tai’s evidence and case that Hon Fung had to ask Hop Tai to engage substantial labour to carry out the accepted relative small amount of concrete work incredible.

52.  Secondly, I do not accept that the day work records constitute sufficient evidence to support Hop Tai’s case both on liability and quantum:

(1)	Given that there were various variation works under this project which had not been undertaken by Hon Fung (as demonstrated by the schedule of items of work attached to its final bill), these works must have been undertaken by either Hop Tai itself or other subcontractors.  As such, I do not regard it as proved on a balance of probabilities that the day work records’ stated reference to the Ting Kok Road’s works must refer to the works that Hon Fung had contracted to carry out.  In the premises, these day work records do not amount to sufficient proof that substituted labour had been engaged to perform Hon Fung’s works.
(2)	Further, even if these day work records show that some works were carried out in relation to the Ting Kok Road project by the workers, they do not show specifically how many of the man hours were spent on this project and how many were spent on the other projects as stated in them.
(3)	Mr Hung says in evidence that he just apportioned the time equally amongst the various projects stated on each of these day work records for fairness: for example, if there are two projects referred to in the day work record, he would attribute half of the total man hours spent to the Ting Kok Road project; if there are three project, he would then attribute one-third of the man hours to the Ting Kok Road project.   I do not accept it as a proper proof as to the alleged actual man-hours of substituted labour spent on the Ting Kok Road project, since the allocation is without proper basis and does not reflect what might have been the actual and factual situation.

53.  Hop Tai’s expert Mr Kwan does not take the matter any further.  The opinions he expressed in his report are premised fundamentally on the assumption that the instructions he received from Hop Tai were correct and true.  These instructions included the above allegations that Hon Fung had to carry out all these concrete works, and that the works carried out by the workers as recorded in the day work records relate to Hon Fung’s works.  However, these are the very matters which I have rejected above.  In the circumstances, I place no weight to the expert report.

54.  For the above reasons, I am not satisfied that Hop Tai has proved (a) the existence of the alleged agreement to engage substituted workers to carry out the various concrete works for Hon Fung, and in any event (b) the quantum of HK$134,514.40.

55.  In the premises, I reject Hop Tai’s counterclaim under this head.  Other than the agreed deductions as set out in paragraph 37 above, Hop Tai is not entitled to any further set-off against Hon Fung’s claim under the Ting Kok Road contract.

Quantum of Hon Fung’s claim

56.  In the premises, Hon Fung has proved its claim for HK$182,327.04 against Hop Tai under this contract.

III. Anchor Street contract

57.  The employer of the entire Anchor Street project was Territory Development Department (“TDD”).  The head contractor was Wing Hon Contractors Ltd.  Wing Hon subcontracted part of the works to Hop Tai, and Hop Tai subcontracted it to Hon Fung.

58.  The sub-contract between Hop Tai and Hon Fung is evidenced by a written agreement dated 11 December 2000.  This is for the provision and installation of lifting device for penstock in a wetwell.  It is stipulated in the agreement that the completion date for the work should be 15 February 2001, and that liquidated damages imposed by TDD would be fully deducted from the payment due to Hon Fung.  This in my judgment must be understood to mean any liquidated damages that are caused by Hon Fung’s delay in the work would be borne by Hon Fung itself.

59.  Hon Fung now claims HK$127,080.00 as the outstanding contract sum.  Hop Tai however counterclaims and seeks set-off for the following items:

(1)	HK$26,967.84 being the liquidated damages imposed by TDD.
(2)	HK$9,200.00 being the cost of a substituted subcontractor engaged by Hop Tai to carry out work on behalf of Hon Fung.  The substituted contractor is Lik Hang Engineering.

Liquidated damages

60.  It is not disputed that TDD had imposed on Wing Hon liquidated damages for the sum of HK$26,967.84.  This is supported by TDD’s final engineer’s certificate.

61.  However, there is no evidence that Wing Hon had similarly deducted this sum of liquidated damages against its payment to Hop Tai.  As a matter of fact, Hop Tai has not provided any evidence concerning Wing Hon’s payment to it.  As such, as submitted by Mr Chong, Hop Tai cannot show on a balance of probabilities that the liquidated damages were imposed by reason of Hon Fung’s delay.  This may well be imposed by reason of Wing Hong’s own delay and that is why it has not been reflected in Wing Hong’s payment to Hop Tai.   It is particularly as Wing Hon had not subcontracted all the works to Hon Fung through Hop Tai. 

62.  When asked as to why there are no documents to show Wing Hong’s payment to Hop Tai, Mr Hung says in evidence that in fact Wing Hong did not pay it anything and thus Hop Tai could not produce any documents regarding the payment.  I do not accept his evidence:

(1)

If what he says were true, there must at least be demand letters coming from Hop Tai to chase Wing Hon for payment.  None is produced.  This shows that Mr Hung’s evidence is unreliable and highly suspicious.

(2)

Mr Hung then says Hop Tai is engaged in various arbitrations with Wing Hong and the claim under this project forms part of them.  However, when asked under cross-examination about these arbitrations, he says he could not remember even the rough amount of the claims Hop Tai is allegedly litigating with Wing Hon. This is hardly convincing if what he says about the arbitrations were true.  Further, no documents concerning the arbitration relating to Wing Hong’s alleged non-payment under this contract are produced.  All these again show that his evidence is unreliable and suspicious.

63.  For the above reasons, I accept Mr Chong’s submission that Hop Tai has failed to prove that the liquidated damages in the sum of HK$26,967.84 was incurred as a result of Hon Fung’s delay in carrying out its works.  In the premises, I reject Hop Tai’s counterclaim for this sum.

Lik Hang’s cost of HK$9,200.00

64.  It is Mr Hung’s evidence that Hon Fung walked away from the contract and did not complete the items, which were eventually carried out by Lik Hang.

65.  This is denied by Mr Li, who says Hon Fung had completed the work under this contract.

66.  I reject Mr Hung’s evidence.  I find him not a reliable witness as his evidence is contradictory by itself or is inconsistent with the contemporaneous documents:

(1)	He says Hon Fung did not complete the work under the contract and thus Wing Hong had to carry out part of the works.  This included instructing Loong Sang Company Ltd to test and examine the completed work of lifting I-beam and chain block.  This is contradicted by the various contemporaneous documents which show clearly that it was Hon Fung which had instructed Loong Sang to carry out the test and examination.
(2)	His evidence that Lik Hang was engaged by Hop Tai to carry out part of the works left by Hon Fung is contradictory to his own evidence that Wing Hong took over the works when Hon Fung did not complete the contract.  When he was asked under cross-examination about this contradiction, he says Hop Tai had to do some of the works as a responsible contractor.  This answer is unreasonable in that if Hop Tai had to perform its duties as a contractor, why did it not carry out all the uncompleted works, but only part of it. I reject his explanation.
(3)	Mr Hung further says Mr Li of Hon Fung was evasive and uncontactable when he tried to locate him to ask Hon Fung to finish the work.  As such Hop Tai had to find substituted workers.  This is flatly contradicted by the series of correspondence showing that the parties were in constant communication well beyond the date of Lik Hang’s invoice.

67.  In the premises, Hop Tai has also failed to prove that the HK$9,200.00 incurred for the engagement of Lik Hang was caused by Hon Fung’s breach of the sub-contract in failing to complete all the works.   I therefore reject its counterclaim and set-off under this item.

Quantum of Hon Fung’s claim

68.  In my judgment, Hon Fung has proved its claim for HK$127,080.00 against Hop Tai under this contract.

IV. Conclusion

69.  For the reasons given above:

(1)	I grant judgment in favour of Hon Fung for the total sum of HK$678,557.04 (HK$369,150.00 + HK$182,327.04 + HK$127,080.00).  Hon Fung is further entitled to interest on this sum at 1% above the prime rate as from time to time quoted by the Hong Kong and Shanghai Bank Ltd from the date of the Writ to the date of judgment, and thereafter at judgment rate.
(2)	I dismiss Hop Tai’s counterclaim.

70.  I further grant an order nisi that costs of the action including the counterclaim be to Hon Fung to be taxed if not agreed.  Insofar as necessary and to avoid any doubt, I also grant certificate for counsel.