WING FAT BUILDING CONSTRUCTION LTD v. C. Y. HON CONSULTANTS LTD

DCCJ 1192/2021

[2024] HKDC 10

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1192 OF 2021

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JUDGMENT

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Introduction

1.  This is a dispute arising from the performance of the professional service provided by a quantum expert to a Main Contractor involved in an arbitration between the Main Contractor and the Employer in respect of the construction works carried out in Tuen Mun, New Territories (“the Site”).

2.  The plaintiff was the Main Contractor for the site formation and foundation works at the Site (“the Works”). In May 2018, the plaintiff engaged the defendant as its quantum expert in an arbitration between the plaintiff and the Employer of the Site.

3.  However, without completing the expert service, the defendant unilaterally resigned from its position as the quantum expert of the plaintiff and refused to provide further expert service for the Arbitration. The plaintiff therefore purported to accept the defendant’s repudiation and terminated the defendant’s expert service. Upon the said termination, the plaintiff engaged a replacement quantum expert to continue with the outstanding expert service for the Arbitration, additional costs were thereby incurred by the plaintiff.

4.  In the present action, the plaintiff claims against the defendant for the additional costs incurred as a result of the defendant’s breach of the service agreement. By way of defence, the defendant contended that its resignation at the time was caused by the wrongful act of the plaintiff and was therefore justified. It further counterclaims for (a) loss of interest due to the plaintiff’s delay in the release of interim payments during the course of the service and (b) loss of business due to the institution of the present proceedings.

Background

5.  The Plaintiff was and still is a Registered General Building Contractor and a Registered Specialist Contractor for site formation and foundation works. It was at the material time the Main Contractor for both the site formation and foundation works at the Site.

6.  The defendant presented as a consultant offering various professional services in construction-related works, such as in dispute resolution or as a cost consultant and/or expert witness. According to the defendant’s pleaded case, Mr Hon Chi Yi, Ludwig (“Mr Hon”) is the sole owner of the defendant. Mr Hon is a qualified Quantity Surveyor and a RICS (HK) Registered Expert Witness.[1] Mr Hon’s CV also indicates that he has been listed as a HKIA/HKIS Arbitrator since 2014.

7.  In May 2017, the plaintiff commenced an arbitration against the Employer to recover the outstanding payments for the Works performed (“the Arbitration”).

8.  Mr Lok Wai Kei, Neville (of the plaintiff) was at all material times in charge of the Works on site. As the Plaintiff was required to adduce quantum expert evidence in the Arbitration, Mr Lok approached Mr Hon in early May 2018. Eventually, he agreed to engage Mr Hon as the plaintiff’s quantum expert in the Arbitration. The expert service to be provided by Mr Hon was to be paid on a time basis at an hourly rate of HK$2,000. A formal service agreement was signed between the parties on 25 May 2018, in which Mr Hon was specified as the person providing the required expert service.

9.  Subsequently, at the suggestion of Mr Hon, the plaintiff further engaged Ms Charlotte Liu (“Ms Liu”) to act as the Quantum Expert Assistant to Mr Hon at an hourly rate of HK$1,000. A supplemental service agreement covering the service of Ms Liu was signed on 29 May 2008. At the hearing, the original service agreement and the supplemental agreement were collectively referred to as the “May Agreement”.

10.  By a Procedural Order dated 11 June 2018, the arbitrator directed, inter alia, that:

“1. Unless the Arbitrator decides otherwise totally at its discretion in the case of exceptional circumstances, no party shall be entitled to reply upon its expert evidence unless the expert witness who prepare the expert evidence has been made available for cross-examination and examination by the Arbitrator at the evidentiary hearing.

7. By 21 October 2019, both parties shall exchange simultaneously their experts evidence in the form of expert reports in final form prepared by their respectively appointed experts …

8. By 5 November 2018, programming experts from both parties shall meet without the presence of the parties or their legal representatives with the attempt to reach agreement on any or all of the issues contained in their respective expert reports.

9. Separately, quantum experts from both parties shall perform the same before the same deadline.

10. By 4 December 2018, the programming experts from both parties shall jointly prepare, sign, issue … a Joint Comprehensive Programming Expert Report reporting those issues which and how they have been mutually agreed, and their respective justifications on those issues which the experts fail to reach agreement. …

11. Separately, the quantum experts form both parties shall prepared, sign, issue … a Joint Comprehensive Quantum Expert Report reporting the same on the quantum issues.”

11.  Mr Hon proceeded with the expert work accordingly. From 26 May 2018 to 30 June 2018, four interim invoices (I-WF-01 to I-WF-04) with a total sum of HK$430,500 were issued by the defendant. The said invoices were settled by the plaintiff in June and July 2018. It is however worth mentioning that the defendant now complains about delay in the settlement of the invoices, for which the defendant counterclaims for the corresponding loss of interest.

12.  On 31 July 2018, the defendant issued a further invoice of HK$292,500 (I-WF-05) for the service provided during the month of July 2018.

13.  Upon receipt of I-WF-05, Mr Lok (acting on behalf of the plaintiff) re-negotiated the May Agreement with Mr Hon. On or about 19 August 2018, they eventually reached a further agreement to provide the entire quantum expert service required under the Arbitration at a lump sum fee of HK$580,000 (the “August Agreement”). The August Agreement superseded the May Agreement[2]. Hence, the agreed lump sum fee covers Mr Hon’s expert service work that had been performed up to that point and the further work as may be required in the Arbitration (save and except any extra work as may be required because of the Employer’s amendment to its Defence and Counterclaim in the Arbitration). Thus, the agreed lump sum fee includes the fees paid to the defendant under I-WF-01 to I-WF-04.

14.  The following terms of the August Agreement are relevant:

(1)  Under Clause 1 – Scope of Services:

“Within this Fee Agreement (“the Agreement”), Ludwig C Y Hon (“Ludwig”) shall act as the Quantum Expert for WF [the Plaintiff] for the Arbitration.”

(2)  Under Clause 2 – Professional Fees:

“2.1 The lump [sum] fee for the services shall be at HK$580,000.

2.2 The above fee EXCLUDES any fee in relation to the additional/amendments, etc. works due to the amended Defence and Counterclaim to be submitted by the Respondent as ordered by the Arbitrator, which shall be ascertained, and to be added on top of the above fee. The hourly rate of such services shall be at HK$2,000 per hour.”

(3)  Under Clause 4 – Terms and Conditions”

“4.2 Invoices will be submitted in accordance with the above payment terms and should be settled within 7 days of date of the invoice.

4.4 Staff supports, offices and facilities in the Client’s head / site offices may be provided free of charge.

4.5 Ludwig shall be provide services to WF [Plaintiff] in no conflict of interest(s) principle.”

15.  Between September and November 2018, the defendant issued three further invoices (I-WF-06 to I-WF-09) with a total sum HK$149,500. These invoices were also settled in full by the plaintiff (although not within seven days from the invoice date).

16.  Hence, by November 2018, the lump sum fee of HK$580,000 for the provision of the quantum expert service under the August Agreement was fully paid by the plaintiff.

17.  Meanwhile, the Arbitrator issued further Procedural Orders postponing the schedule for the preparation of expert evidence. Eventually, by Procedural Order No 8 dated 16 May 2019, the deadlines for the exchange of the Final Expert Report, joint meeting of experts and submission of Joint Experts Report were set on 1 July 2019, 15 July 2019 and 15 August 2019 respectively.

18.  On or about 1 July 2019, Mr Hon completed his final report. A certain number of joint expert meetings were then held during the month of July 2019.

19.  In the morning of 28 July 2019, by way of WhatsApp messaging, Mr Hon notified Mr Lok that he had been attacked by a dog on 27 July 2019, and as a result his right palm was seriously injured. Because of the hand injury, Mr Hon indicated that he could not write or type for at least two weeks, and it might be up to a month.

20.  Between 28 July 2019 and 30 July 2019, Mr Hon and Mr Lok continued to communicate through WhatsApp, trying to explore ways to complete the remaining expert work by the scheduled deadlines. Mr Lok proposed to find someone to write or type for Mr Hon. Mr Hon disagreed. Mr Lok also requested Mr Hon to provide a medical certificate so that the plaintiff could apply to the Arbitrator for an extension of time.

21.  The following are extracts of the relevant WhatsApp exchanges between Mr Hon and Mr Lok between 27 July 2019 and 30 July2019, which are contained in the agreed bundle of which the authenticity of the records are admitted:

Date and time	By Whom	Message
27/7/2019 11:08 pm	Hon	今日去地盤搵過老闆開會，佢養咗兩隻狗，我行過其中一隻，乜都冇做…佢無端端走埋黎咬咗我隻右手一啖，傷口非常之深….即刻去急症室, 睇咗醫生，洗咗傷口，要打破傷風針，痛到飛起！最少兩個禮拜做唔到嘢，真黑仔。
28/7/2019 6:21 am	Hon	Lok先生，由於比狗咬右手呢件事，醫生話我兩個禮拜揸唔到筆，打唔到電腦 … 所以可否延期兩、三個禮拜，最好一個月 ….才去交個expert report呢？麻煩你試下幫我申請 ….. 唔該
28/7/2019 7:50 am	Lok	我試下，不過你另一面都嘗試可唔可以搵人代筆。
28/7/2019 7:52 am	Hon	我搵人代筆？？ 我冇錢俾佢
28/7/2019 7:53 am	Lok	你講佢打字啫，或者搵你囡囡幫忙。
28/7/2019 7:55 am	Hon	唔會啦…..麻煩你幫我申請下，試下得唔得？唔該 …. 唔得先再打算
28/7/2019 10:13 pm	Lok	Our solicitor ask for your medical proof.
28/7/2019 10:14 pm	Lok	With your name on evidence
28/7/2019 10:20 pm	Hon	OK, tomorrow morning
29/7/2019 12:01	Hon	今日嘅情況。晏少少傳個sick leave cert俾你
29/7/2019 17:54	Hon	我希望可以攞到一個月嘅延期 因為真係做唔做野
29/7/2019 18:49	Lok	Can you send me .pdf file?
29/7/2019 18:53	Hon	What do you mean?
29/7/2019 19:27	Lok	Pdf file of the medical certificates.
29/7/2019 19:39	Hon	No
29/7/2019 19:40	Hon	Your … mobile can send to email, right?
29/7/2019 20:38	Lok	I want to receive a more formal copy instead of photo for the solicitor’s application
29/7/2019 20:39	Hon	Ok, will send you later
29/7/2019 20:39	Hon	I need at least 1 month extension
29/7/2019 20:45	Lok	我只能儘試，因為假紙只批到2/8，如果以你名義出封信解釋會比較有把握。
29/7/2019 21:13	Hon	咁我聽日自己打俾Simon chee啦 …not bother you anymore
29/7/2019 21:52	Lok	你係打電話？
29/7/2019 21:53	Lok	申請嘅野始終要經雙方律師 要有文件確認的。
29/7/2019 22:10	Lok	要申請文件都要提供齊全，況且你已手足錢。
29/7/2019 22:15	Lok	可以先比現假紙，之後續咗再比，如果批准唔到你都明白需要另想方法，例如搵人代寫或代打字，但係你劈炮嘅話似乎講唔去。
29/7/2019 22:22	Lok	你而家隻手傷咗係打唔到字，可以口述搵人代打。
29/7/2019 22:24	Lok	咁你係咪應該要跟agreement做事，大家需要講誠信，我一直履行曬我的責任，兼且有早無遲。
29/7/2019 22:27	Lok	如果我只要求你出一封請假信我一方辦事你都做唔到，呢個你話講唔講得通？
29/7/2019 22:29	Lok	我冇話過唔重視你身體情況。
30/7/2019 18:26	Lok	Can you send me your ex Medical certificate to me? Please.
30/7/2019 18:59	Hon	No need, I’ve resigned already

22.  Eventually, on the morning of 30 July 2019 (at 9:08 am), Mr Hon tendered his resignation from the role of quantum expert in which Mr Hon stated he resigned due to personal reasons and with immediate effect. Mr Lok did not accept Mr Hon’s resignation. By way of a return email[3], Mr Hon said: “Please note, your unacceptable will not stopping me from resigning. Further, I’ll refund those fees in arrears, if any. Shall advise the amount in due course.”

23.  No medical certificate was therefore provided by Mr Hon on 30 July 2019 for applying for an extension of time for the submission of the Joint Expert Report.

24.  Between 30 July 2019 and 26 August 2019, there was a further exchange of emails and letters between Mr Lok and Mr Hon regarding Mr Hon’s resignation. As can be seen from the said correspondences, during that period, the plaintiff successfully obtained from the arbitral tribunal an extension of time for the submission of the Joint Expert Report (as originally requested by Mr Hon), and the plaintiff was trying to get Mr Hon to continue with the remaining expert service in the Arbitration. The following contemporaneous documents are relevant and of significance:

(1)  By a letter dated 30 July 2019, Mr K Y Lee (the Managing Director of the plaintiff) issued a warning letter to the defendant regarding Mr Hon’s unilateral decision to cease his expert service.

“In view of the sudden withdrawal of your professional service … (without prior mutual agreement) received by our Mr Neville Lok via email at 09:08 this morning, which was rejected by our side immediately at 10:58 because the services from your side still yet been completed, namely the final report and arbitration proceeding ongoing.

… As such, I hereby consider that your unilateral quitting from professional service rendered for the caption matter constitutes a breach to the contract that you are wholly responsible. …”

(2)  On 7 August 2019 at 6:52 pm, Mr Hon emailed Mr Lok two sick leave certificates[4].

(3)  On 8 August 2019, the plaintiff obtained the approval of the Arbitrator to extend the due date for the submission of the Joint Expert Report to 15 September 2019[5] (ie with one-month extension from the original deadline, which was what Mr Hon asked for at the time.),

(4)  On 16 August 2019, Mr Hon responded to the plaintiff’s warning letter dated 30 July 2019 (among other things) as follows:

“1. Acting as a Quantum Expert to the Court, I am NOT responding to and acting on behalf of Wing Fat nor your Mr Lok.

2. I have been/ am acting to the Court/Arbitrator solely.

3. Acting as a Quantum Expert, I should act impartially, independently, professionally, fair and reasonable, confidential, etc.

4. Around the date of 27.7.2019, my right hand was seriously injured since biting by a dog.

5. As a result, I could not write nor typing computer keyboard, as well as seriously painful for a prolonged period. … The doctor on 27.7.2019 certified a sick leave to me from 27 July 2019 till 2 August 2019 (Medical Certificate was sent to you previously), subject to further certification after 2 August 2019’s re-visit to the doctor.

7. After revisited to the doctor on 2.8.2019, I was recommended, … , not to work till 15.8.2019. Further, my sick leave was extended to 22.8.2019 by the doctor yesterday.

8. Mr Lok, instead of pro-actively applying for the extension for me, asking me to do Two things repeatedly urging me to (which I have “whatsapp” messages evidence to proof):-

8.1 ask someone to do the expert report services for me instead; and

8.2 ask my 13 years old’s daughter to assist the expert report services

so as to work continually, promptly and expedite, but not stopping works, even with the serious injury.

9. From the acts of Mr. Lok, re: 8.1 & 8.2 – this was surely an act of prevention and intervention to my role as a Quantum Expert, in all/part jeopardizing of my duty of impartiality, independency, professionally, fairness, confidentially, which was definitely a serious breach of our Contract/ Agreement to act as an Expert.

10. As Mr. Lok repeatedly (NOT ONLY ONCE) asked me to do 8.1 & 8.2, it was he in breach of Contract/ Agreement initially, which caused my no choice but withdraw from my role, since I could not act impartially, independently, professionally, fair and reasonable, confidential, etc., as per Mr. Lok’s act of prevention/intervention.

11. Based on the above, I am now firming and re-iterating on my withdrew correctly and professionally so as to maintain and jeopardizing my act of impartially, independently, professionally, fair and reasonable, confidentially, etc. to the Court/Arbitrator.

13. His rejection to my resignation was no meaning , since it was Mr. Lok in breach of Contract initially, which caused me to withdraw. By the principle of “Contra Proferentum”, Wing Fat/Mr. Lok could not benefit from your own faults at all …

14. I am hereby recording that Wing Fat/ Mr. Lok is wholly responsible for the breach of Contract/Agreement and I am reserving my rights to claim any direct loss and/or expenses so incurred.

15. Lastly, I am writing to hold Wing Fat/Mr. Lok’s liabilities for any defamation, as well as all consequences and/or damages due to Wing Fat/Mr. Lok’s breach of Contract/Agreement and the Letter’s groundless allegations, including but not limited to informing the related Associations/Institutions in Hong Kong and the world, e.g. the Hong Kong Construction Association, Chartered Institute of Builders, Hong Kong Institute of Construction Managers, etc. in connection with your wilful act of prevention/intervention, breach of Contract/Agreement, as well as your premeditated acts on your own defaults.”

(5)  Meanwhile, by a letter dated 16 August 2019 (which was received by Mr Hon on 16 August 2019 at 12:13 pm[6]), the plaintiff notified the defendant that the submission of the Joint Expert Report was extended to 15 September 2019.

“ … in light of the tight schedule of the matter (where the expert quantum report has recently been extended to 15 September 2019 due to your sick leave), we would like to receive your constructive response/action not later than 19 August 2019.”

(6)  As the defendant did not respond after being notified of the extension of time (to 15 September 2019), the plaintiff wrote again on 17 August 2019:

“… our subsequent letter dated 16 August 2019 (sent you in advance by e-mail at 12:13pm of the same date) has not been answered from your side. Furthermore, please further clarify in writing that your intentions either one of the below:

1. continue the final parts of Quantum Expert Report and as be the Witness Expert;

2. you will cease any further works in connection with the Arbitration matter we contracted.

Should you choose item 2, we have no choice but to accept your unilateral yet wrongful termination, we shall hereby reserve all our rights to hold you sole liabilities and cost implications as may be incurred therefrom.”

(7)  In response to the plaintiff’s letter dated 17 August 2019, by its letter dated 19 August 2019, the defendant replied to Mr Y K Lee of the plaintiff:

“9. Based on good faith and act of professionalism, I am surely capable and able to complete the final parts of Quantum Expert Report works, as well as the testimonial in the arbitration court, based on the assumption that I could resume duty since 23 August 2019, after the last day of the sick leave so certified on 22 August 2019.

10. However, it seems no point, if Mr. Lok did not admit his faults and did nothing for his wilful act, then for my intention to continue my professional services as an Expert.

11. Please provide detailed proposal(s) on Mr. Lok’s apologize acts, including but not limited to:

(a) Formal/written apologize on his wrongful and wilful intervention/prevention that he has made..;

(b) Withdrawal of ALL letters/correspondences/conversations, etc. made since 30 July 2019, with apologize as well, on wrong letters/correspondences/conversations, etc. so made;

(c) Hold silence in the future about this case;

(d) No claims of whatsoever nature, on time, cost, etc., in the future form Wing Fat/ Mr. Lok;

(e) To reimburse CY Hon Consultants Ltd. for ALL compensations on the costs, time etc. that I have incurred due to Mr Lok’s wilful act and subsequent involvements due to your wrongful acts, including but not limited to reading, understanding and responding to all of your letters, etc;

(f) All other associated compensations that will occur/have been occurring; and

(g) Successfully receive another extension, for my sick leave from 15.8.2019 till 22.8.2019 as certified by the doctor.

12. After you shall have completed [11(a) to (g)] above to my full satisfactory, I might consider to continue the Expert services.” (emphasis added)

(8)  Without receiving any reply from the plaintiff, by a letter dated 25 August 2019, the defendant confirmed it would not resume his duty and complete the final parts of the Quantum Expert Report, nor would he give evidence for the plaintiff in the Arbitration. Mr Hon emphasized in the letter that it was due to the plaintiff’s defaults.

“I refer to my letter to you dated 19 August 2019 …

I would like to remind and repeated my previous intentions (part) as follows:-

“9. Based on good faith and act of professionalism, I am surely capable and able to complete the final parts of Quantum Expert Report works, as well as the testimonial in the arbitration court, based on the assumption that I could resume duty since 23 August 2019, after the last day of the sick leave so certified on 22 August 2019.”

BUT NOW, as today is 25.8.2019 already, your respond is still outstanding.

Pursuant to Paragraph 9 above, today, as I could NOT resume my duty on 23.8.2019, as per your NONE confirmed and agreed to continue my services till today, I am advising/confirming that it is impossible for me to complete the final reports of Quantum Expert Report works, as well as the testimonial in the arbitration court, due to your defaults.

… Additionally I shall likely inform all the professional institutes and the whole Hong Kong construction practitioners about your wilful act of prevention/intervention, breach of Contract/Agreement, as well as your premeditated acts on your own defaults.”

(9)  By an email dated 26 August 2019 (at 6:16 am), Mr Hon informed the plaintiff and Mr Lok that he was ready to send back a cheque of HK$8,000 representing the value of the outstanding expert service that is yet to be rendered, on condition that the plaintiff agrees not to raise any claim against the defendant or Mr Hon personally.

25.  Pok Oi Hospital granted no further sick leave after 22 August 2019. Additionally, under the last sick leave certificate dated 15 August 2019 issued by the hospital, no date was set for Mr Hon to return for follow-up treatment.

26.  By a letter dated 27 August 2019 from the plaintiff to the defendant, the plaintiff purported to accept the defendant’s repudiation and terminate the August Agreement.

“We refer to your letter dated 25 August 2019 … and would return as follows:

1. We reiterate to stress that any verbal conversations, dialogues, text messages etc. via WhatsApp/phone calls occurred during the course of the Contract merely served as personal suggestion, changing of ideas and thoughts BUT neither treated as a formal instruction/decision nor act of prevention/stoppage etc. You, as a professional within the field, should obviously perform independently, individually and distinctly to the task (Contract) as assigned/ contracted to the qualities in total alignment with your professionalism.

2. In fact, we received so far NO firm answer with respect to our enquires made under our letter of 17 August 2019. Only received from you some newly imposed conditions (for work resumption after your sickness in respect of joint expert quantum report submission etc.) per item 11(a) to 11(ga0 of your letter dated 19 August 2019 which are considered utterly irrational and impracticable but constitutes a blatant breach of the Contract.

3. In view of the tight progress of the said matter (despite an extension of one month, ie up to mid-September 2019 as granted recently), we have no other alternative but to accept your unilateral withdrawal of the Contract and to arrange for prompt replacement, the above Contract is hereby terminated with immediate effect.”

27.  The facts set out above are either admitted by the parties on pleadings or clearly stated in the contemporaneous documents, which are agreed upon by the parties (at the hearing) to be authentic for the purpose of these proceedings. They are, therefore, not in dispute.

28.  The only factual issue between the parties regarding termination is whether there were any telephone conversations between Mr Hon and Mr Lok on 28 July 2019 and 29 July 2019, in which Mr Lok instructed Mr Hon to find someone to perform the remaining expert work on Mr Hon’s behalf and to complete the same by the original deadline without any extension of time.[7] The defendant contended that there were such telephone conversations, which (the defendant contended) amounted to an act of prevention on the plaintiff’s part. The plaintiff, however, denied and asserted that all communications between them during the said period were made by either text messages or recorded voice messages through WhatsApp. In cross-examination, Mr Lok however did not rule out there might be telephone conversations with Mr Hon at that time but insisted that he gave no instruction as Mr Hon alleged.

The Parties’ cases

29.  It is the plaintiff’s case that the defendant’s resignation tendered on 30 July 2019 and the subsequent refusal to resume the expert service amounted to a repudiatory breach of the August Agreement. And by its letter dated 27 August 2019, the plaintiff accepted the defendant’s repudiation and thereby terminated the August Agreement.

30.  Upon termination, the plaintiff engaged a replacement quantum expert, KCI Management Consultancy Limited (“KCI”), to continue with the remaining expert service and sought the corresponding leave of the Arbitrator for such replacement. Additional costs were thereby incurred.

31.  In the present action, the plaintiff, therefore, seeks damages against the defendant in respect of the additional costs incurred and interest.

32.  The defendant was not legally represented in this action. At the hearing, Mr Hon represented the defendant. It is not easy to ascertain from its Defence what the defendant’s case regarding termination really is. Doing the best I can, the defendant’s contention seems to be as follows:

(1)  The defendant’s scope of service under the August Agreement does not include the preparation of the expert final report, attending the joint expert meeting, preparation of the joint expert report or giving evidence at the arbitration hearing (“Scope of Service Defence”)[8];

(2)  During the telephone conversations between Mr Hon and Mr Lok on 28 July and 29 July 2019, Mr Lok wrongfully instructed Mr Hon to find someone else to do the expert witness service on Mr Hon’s behalf and to get Mr Hon’s daughter to assist with the typing work. Such instructions amounted to an act of prevention and, if complied with, would have rendered Mr Hon committed professional negligence, a breach of confidence, etc. Mr Hon’s resignation on 30 July 2019 was therefore justified (“Act of Prevention Defence”)[9];

(3)  By the plaintiff’s letter dated 17 August 2019, in which the plaintiff insisted that the defendant either (a) continued with the expert service without any extension of time or (b) ceased the service, Mr Hon’s subsequent refusal to resume his expert service after 22 August 2019 was also justified;

(4)  The defendant was, therefore, not in breach of the August Agreement. The August Agreement was in fact terminated by the defendant back on 30 July 2019 due to the plaintiff’s wrongful act[10];

(5)  In any event, the plaintiff is not entitled to the amount claimed due to its failure to mitigate its loss[11];

(6)  By way of counterclaim[12], the defendant seeks to recover from the plaintiff (a) interest loss due to delay in the release of interim payments in a total sum of HK$818.25 and (b) loss of business in the sum of HK$580,000 due to the plaintiff’s commencement of the present action.

33.  The issues for determination are therefore:

(1)  Was the August Agreement rightfully terminated by the plaintiff on 27 August 2019?

(2)  Is the plaintiff entitled to recover damages from the defendant by reason of the said termination? If so, how much?

(3)  Is the defendant entitled to recover interest loss and/or loss of business against the plaintiff by way of counterclaim? If so, how much?

Witnesses

34.  There were only two factual witnesses called at the hearing, namely Mr Lok for the plaintiff and Mr Hon for the defendant respectively.

35.  Mr Lok has prepared one witness statement in which he described the circumstances in which the May Agreement and August Agreement were entered into, details of his discussions with Mr Hon via WhatsApp between 27 July 2019 and 30 July 2019, as well as the subsequent exchange of correspondences (both by emails and formal letters) between the plaintiff and the defendant leading to the issue of the termination letter dated 27 August 2019.

36.  Mr Lok’s witness statement also covers the engagement of KCI (as the replacement quantum expert) to continue with the remaining expert service work after 27 August 2019, the corresponding costs incurred by the plaintiff and the extra fees charged by the Arbitrator. Subject to a downward adjustment to the total additional costs incurred, Mr Lok adopted his witness statement as his evidence in chief.

37.  As I mentioned above, most of the facts relevant to the question of termination are not in dispute; the only issue is whether there were telephone conversations between Mr Lok and Mr Hon on 28 July and 29 July, as asserted by Mr Hon. In that regard, Mr Lok was adamant that he gave no such instruction, whether during the telephone conversation with Mr Hon (if any) or in the WhatsApp messages. He repeatedly emphasized that he merely explored with Mr Hon the possibility of finding someone to help with the typing work. As to the suggestion of getting Mr Hon’s daughter to assist, it was raised for Mr Hon’s consideration; it was not an instruction as Mr Hon contended.

38.  I find Mr Lok an honest and reliable witness. He was forthcoming and did his best to assist the court. His evidence aligns with contemporaneous documents and other documentary records, and he remained unshaken upon cross-examination. Despite what the plaintiff has pleaded in paragraph 9(5) of its Reply and Defence to Counterclaim, he frankly admitted that he actually had telephone conversations with Hon. Nevertheless, he insisted he did not instruct Mr Hon to perform and complete his service by the original deadline (ie without any extension of time).

39.  I am, however, unimpressed by Mr Hon. His evidence is inherently improbable and contradicted by the agreed contemporaneous records. He tended to evade/sidestep straightforward cross-examination and changed his position upon persistent questioning. I will further elaborate when I deal with the various issues below. Hence, to the extent that Mr Hon’s evidence is inconsistent with that of Mr Lok’s, I would prefer that of Mr Lok.

Termination of the August Agreement

40.  It is common ground that Mr Hon suffered severe injury to his right palm on 27 July 2019, and Mr Hon has duly informed the plaintiff. Further, the plaintiff does not take issue with Mr Hon’s assertion that he was at the time unable to write or type because of the said injury.

41.  Mr Hon asserted that, despite his injury, Mr Lok did not seek an extension of time for serving the Joint Expert Report, and during the telephone conversations on 28 July and 29 July 2019, instructed him to find someone else and/or his daughter to assist with the expert work. The said instruction has left him with no choice but to resign on 30 July 2019. It was denied by Mr Lok.

42.  Plainly, such evidence must be carefully scrutinised in light of the totality of the contemporaneous documents (see Eu Asia Engineering Ltd v Wing Hong Contractors Ltd, unrep, HCCT 16/1990, 23 December 1991, per Kaplan J at p 9 (3^rd para)).

43.  In Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513, Deputy High Court Judge Thomas Au (as he then was) further observed (at §53) that in assessing the credibility of a party’s case on a particular issue, the court should take into consideration the following:

“(1) Whether the party’s case is inherently plausible or implausible;

(2) Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable;

(3) Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment of his overall credibility; and

(4) The demeanour of the witness.”

44.  I have set out above the relevant contemporaneous WhatsApp messages between Mr Hon and Mr Lok in the agreed documents. From these undisputed records, it is plain that, given that Mr Hon’s injury only rendered him unable to write or type, Mr Lok at the material times merely requested Mr Hon to get someone (including possibly Mr Hon’s daughter) to help with the typing, not someone to express expert opinion on Mr Hon’s behalf. The following WhatsApp exchange between the parties in the late evening of 29 July 2019, in my view, can leave no room for misinterpretation:

29/7/2019 22:10	Lok	要申請文件都要提供齊全，況且你已收足錢。
29/7/2019 22:15	Lok	可以先比現假紙，之後續咗再比，如果批准唔到你都明白需要另想方法，例如搵人代寫或代打字，但係你劈炮嘅話似乎講唔去。
29/7/2019 22:22	Lok	你而家隻手傷咗係打唔到字，可以口述搵人代打。
29/7/2019 22:24	Lok	咁你係咪應該要跟agreement做事，大家需要講誠信，我一直履行曬我的責任，兼且有早無遲。
29/7/2019 22:27	Lok	如果我只要求你出一封請假信我一方辦事你都做唔到，呢個你話講唔講得通？
29/7/2019 22:29	Lok	我冇話過唔重視你身體情況。
30/7/2019 18:26	Lok	Can you send me your ex. Medical certificate to me? Please.
30/7/2019 18:59	Hon	No need, I’ve resigned already

45.  These text messages clearly demonstrate that Mr Lok only enquired with Mr Hon as to whether or not he could find someone to help with the writing or typing work, and subject to Mr Hon providing the corresponding medical certificate, he was willing and prepared to apply for an extension of time for the service of the Joint Expert Report (as Mr Hon had requested).

46.  Had Mr Lok instructed as Mr Hon now alleges, as a matter of human nature, Mr Lok would not have sent those messages as he did. It is also inconceivable that Mr Hon did not find it necessary to respond to those WhatsApp messages in such circumstances.

47.  Further, it is to be noted that the said text messages were among the last messages sent out by Mr Lok to Mr Hon before Mr Hon tendered his resignation by email in the morning (at 9:08 am) of 30 July 2019. It represents Mr Lok’s latest position at the time, which remained the same all along.

48.  Besides, I also note that in Mr Hon’s resignation email, he made no reference to the alleged instruction from Mr Lok. Instead, he said he resigned due to personal reasons. I am therefore not convinced that Mr Lok had ever given such instruction as contended by Mr Hon.

49.  It is commonplace in both litigation and arbitration that the original timetable fixed for filing or service of documents in the proceedings would have to be extended for one reason or another. Extension of time would usually be allowed, especially when the failure to comply with the original schedule was due to medical or health reasons of the person concerned, like the present one. Typically, documentary proof, eg sick leave or medical certificate, has to be provided in support of the application for extension. Thus, it was reasonable for Mr Lok to ask for a medical certificate from Mr Hon for the purpose of applying for an extension of time. I cannot understand why Mr Hon refused to provide such a medical certificate but, instead, tendered his resignation at the time.

50.  In these circumstances, I find Mr Hon’s resignation on 30 July 2019 unjustified and constituted a breach of the August Agreement.

51.  It follows that the Defendant’s Act of Prevention Defence must fail.

52.  By way of a return email on 30 July 2019, Mr Hon’s resignation was rejected by Mr Lok. At the hearing, Mr Hon accepted that the August Agreement was not terminated on 30 July 2019. The August Agreement, therefore, remained in existence.

53.  After 30 July 2019, the parties continued their discussions regarding the possible resumption of Mr Hon’s expert service for the Arbitration.

54.  On 7 August 2019, Mr Hon provided Mr Lok with two sick leave certificates issued by Pok Oi Hospital covering the period from 27 July 2019 to 15 August 2019. Consistent with Mr Lok’s intention shown in text messages, upon receipt of the sick leave certificates, Mr Lok immediately applied to the Arbitrator for an extension of time. On the following day, an extension of one month (ie up to 15 September 2019) was granted for the service of the Joint Expert Report. Notably, the extent of extension obtained was what Mr Hon originally asked for. Mr Hon was informed of the extension on 16 August 2019.

55.  From the evidence, there was no relevant communications between the parties in August 2019 other than the emails and letters referred to in paragraph 24 above. What transpires from those emails and letters exchanged during the period are that:

(1)  The plaintiff had been willing to apply for an extension of time for the service of the Joint Expert Report to accommodate Mr Hon;

(2)  As mentioned above, an extension of time was obtained as per Mr Hon’s request, and Mr Hon was notified accordingly on 16 August 2019;

(3)  During that period, the plaintiff was trying to get Mr Hon to resume his expert service for the Arbitration;

(4)  On 17 August 2019, without hearing from Mr Hon after he had been notified of the extension, the plaintiff sought clarification from the defendant as to whether Mr Hon would resume his expert service. At the same time, it was also made clear to the defendant that if Mr Hon decided to cease further work, the plaintiff would terminate the August Agreement;

(5)  Mr Hon could resume his expert service after 22 August 2019 (the last day of his sick leave) if he wanted to. However, he would not do so unless the plaintiff satisfied the seven conditions set out in the defendant’s letter dated 19 August 2019.

(6)  The seven conditions are plainly outside the terms of the August Agreement. It is to be noted that the liabilities imposed by some of the conditions are actually not well defined and thus unlimited. (Note: In answer to this court’s enquiry, Mr Hon frankly admitted that he did not expect those terms to be acceptable to the plaintiff.)

(7)  Imposing such terms as pre-conditions to resuming expert service strongly suggests that the defendant (Mr Hon) has no intention to resume work.

(8)  Unsurprisingly, the plaintiff did not accept these extra conditions.

(9)  In the circumstances, by a letter dated 25 August 2019, the defendant confirmed that Mr Hon would not resume the expert service work for the Arbitration.

56.  At the hearing, when being asked by this court what exactly was the outstanding expert work at that stage, Mr Hon said his Final Expert Report had been submitted, joint expert meetings had been conducted, what remained to be completed were holding further discussion with the Employer’s quantum expert on a few more items and the preparation of the Joint Expert Report.

57.  When being further questioned about the logistics for the preparation of the Joint Expert Report, Mr Hon revealed that the quantum expert for the Employer had offered or agreed to produce a draft Joint Expert Report for Mr Hon’s comment and agreement. In light of Mr Hon’s answer, the issue with writing or typing raised by Mr Hon at the time appears unreal. This then begged the question: what really prevented Mr Hon from attending further joint expert meetings with the Employer’s expert to discuss the remaining few items of work and to review and provide comment (if any) on the draft Joint Expert Report (which would be prepared by the Employer’s expert)? In answer, Mr Hon raised for the first time that because of the injury, he was mentally incapable of performing such work. This was not mentioned by Mr Hon in any contemporaneous text messages, emails or formal letters. If this latest claim was genuine, I cannot think of why this was not mentioned in any of the contemporaneous correspondences in which the defendant asserted the legitimacy of Mr Hon’s resignation and withdrawal of his expert service under the August Agreement. Mr Hon gave no credible explanation.

58.  Further, this new allegation was not pleaded in the Defence and Counterclaim, nor was it mentioned in Mr Hon’s witness statement.

59.  Moreover, considering the thoroughness of the content and the points made in the letters drafted by Mr Hon in August 2019 and their level of detail, I find Mr Hon’s claim that he was not mentally capable of performing expert work during that period unconvincing. I, therefore, do not accept his latest evidence.

60.  I further observed that as of 23 August 2019 (when Mr Hon was physically able to resume work), with the extension of time up to 15 September 2019, there remained more time for Mr Hon to complete the remaining expert work than what he had under the original deadline when he sustained the injury. Hence, there cannot be any argument that Mr Hon could not resume work because there wasn’t sufficient time to complete the remaining work by the new deadline.

61.  In paragraph 28 of DCC, the defendant refers to the plaintiff’s letter dated 17 August 2019 and asserts that the plaintiff forced the defendant to choose between ceasing the work or continuing with the expert service without any extension of time. Mr Hon also highlighted this part of the defendant’s case in his oral Opening.

62.  However, when being cross-examined by Mr Cheung, counsel for the plaintiff, as to where it was stated in the plaintiff’s letter that there was “no chance/no option for applying any extension of agreed time frame for the expert services, as proposed by the Defendant.”, Mr Hon admitted that there were no such wordings in the letter. Again, no explanation was given by Mr Hon as to why the defendant took that position in the first place.

63.  When it was further pointed out by Mr Cheung that the defendant had actually been notified of the extension of time granted, Mr Hon sidestepped the question and claimed that Mr Lok said words to that effect during the telephone conversations between 28 July and 30 July 2019. Even if what Mr Hon claimed was true (which I do not accept), it still does not explain why, despite the extension obtained (which Mr Hon was aware of at the time), the defendant still took the stance as pleaded.

64.  When Mr Hon was further asked by Mr Cheung why he did not put to Mr Lok the defendant’s case as pleaded in paragraph 28 of DCC, he said that he was not giving evidence at the time and he was not familiar with the court rules. In view of Mr Hon’s extensive qualifications about dispute resolution[13], in particular, he has been a professional arbitrator and quantum expert since 2014. I find Mr Hon’s answer most unbelievable.

65.  Further, when asked by the court why he could not get someone to type for him, surprisingly, Mr Hon said it was not feasible because to do so would give rise to an “issue of confidentiality”. While Mr Hon never explained what he meant, he seemed concerned with possible breach of confidence if he engaged someone to do the typing work for him. I find Mr Hon’s suggestion that an expert must do his own typing in performing the expert service in an arbitration unconvincing, to say the least. In the end, he admitted that there was no such restriction imposed by the Arbitrator.

66.  Regarding the Scope of Service Defence, it is very difficult to see any real scope for the argument that the defendant’s scope of service does not include the preparation of the expert final report, attending the joint expert meeting, preparation of the joint expert report or giving evidence at the arbitration hearing.

67.  It is Mr Lok’s unchallenged evidence that Procedural Order No 2 dated 11 June 2018 containing the expert directions for submission of expert reports, conducting joint expert meetings and giving expert evidence at the arbitration hearing, was passed to Mr Hon during the negotiation which led to the execution of the August Agreement. Under the August Agreement, the defendant agreed to perform all necessary expert services required under the Arbitration at a lump sum fee of HK$580,000. As a matter of construction or by implication, the said work in my view should form part of the expert scope of service under the August Agreement.

68.  Mr Hon (in my view quite rightly) did not pursue this argument at the hearing or in his written closing submissions. Had Mr Hon taken such a point, I would have rejected it without hesitation.

69.  In light of the above discussion, I find, as a matter of fact, that

(1)  The plaintiff has made full payment to the defendant and thus has fully performed its part of the August Agreement;

(2)  After 22 August 2019, Mr Hon was physically and mentally capable of performing the remaining expert service under the August Agreement;

(3)  However, the defendant (Mr Hon) had at the material time no intention and failed to resume the expert service after 22 August 2019 without justification.

70.  I further hold that the defendant’s (Mr Hon’s) failure and/or refusal to resume the expert service after 22 August 2019 amounted to repudiation of the August Agreement. And by the plaintiff’s letter dated 27 August 2019, the August Agreement was terminated by the plaintiff. As a matter of law, the plaintiff is entitled to recover the loss and damage suffered as a result from the defendant.

Loss and damage suffered by the plaintiff

71.  It is trite that in a contract to perform services, the measure of damages is the additional costs incurred by the innocent party in completing the outstanding services abandoned by the defaulting party unless it would be unreasonable for the innocent party to do so in the circumstances. See Chitty on Contracts, 35^th ed Vol 1 §30-45:

“In appropriate circumstances, damages may be assessed on the basis of what it will cost the claimant to obtain performance (or completion of performance) of the contractual undertaking by a thirty party. … In a contract to perform services or for work and materials it will be assumed that the claimant will have the incomplete or defective performance completed or corrected and the damages will be assessed by the cost of getting this done; …”

72.  In the present case, it was not only reasonable but necessary for the plaintiff to engage a replacement quantum expert to complete the outstanding Joint Expert Report as soon as possible so as not to delay the arbitral proceedings.

Costs of the replacement expert – KCI

73.  In that regard, it is Mr Lok’s evidence that upon termination of the August Agreement, the plaintiff proceeded to seek quotations from different quantum experts; three quotations were received, and KCI was the lowest bidder.

74.  The tenderers have taken time to review the existing documents (including Mr Hon’s work) before quotation could be provided for the remaining expert service work. KCI was formally engaged on 8 October 2019 to replace Mr Hon as the plaintiff’s quantum expert in the Arbitration.

75.  According to KCI’s invoices, it had commenced work on 3 October 2019 before the formal agreement was executed. I don’t find this to be objectionable.

76.  Because of KCI’s engagement to complete the outstanding expert service, a total cost of HK$428,925 was incurred by the plaintiff. The costs incurred are supported by invoices and timesheets issued by KCI, with details on the actual time spent and the corresponding work performed[14]. The plaintiff also provided copies of the payment records in support.

77.  Mr Lok stated that KCI had reviewed Mr Hon’s work, and for completing the remaining expert work, they would have adopted those parts of Mr Hon’s work, which they found agreeable. Mr Lok further testified that if KCI ignored Mr Hon’s work and started the expert work afresh, the cost to be incurred would have been much higher. In cross-examination, Mr Hon also agreed that it was reasonable for KCI to adopt such an approach.

78.  As to the costs incurred, the defendant merely asserted in its pleading that the plaintiff failed to prove it had used its best endeavours to mitigate its loss[15], no particulars was provided in support of such plea.

79.  The legal principles regarding “mitigation” are succinctly set out in Chitty on Contract, 35^th ed Vol 1 §30-098:

“There are three rules often referred to under the comprehensive heading of “mitigation”: … First, the claimant cannot recover damages for any part of his loss consequent upon the defendant’s breach of contract that the claimant could have avoided by taking reasonable steps. Secondly, if the claimant in fact avoids or mitigates his loss consequent upon the defendant’s breach, he cannot recover for such avoided loss, even though the steps he took were more than could be reasonably required of him under the first rule. Thirdly, where the claimant incurs loss or expense in the course of taking reasonable steps to mitigate the loss resulting from the defendant’s breach, the claimant may recover this further loss or expense from the defendant.”

80.  As a matter of principle, the onus of proof of the claimant’s failure to mitigate is on the defendant. Chitty on Contracts 35^th ed Vol 1 §30-100:

“It is not strictly a “duty” to mitigate, but rather a restriction on the damages recoverable, which will be calculated as if the claimant had acted reasonably to minimise his loss. The onus of proof is on the defendant, who must show that the claimant ought, as a reasonable man, to have taken certain steps to mitigate his loss, and that the claimant could thereby have avoided some part of his loss.”

81.  In the present case, the defendant was not able to point to any steps that the plaintiff ought to have taken in mitigation in the circumstances which it failed to take. Thus, the mitigation point cannot be taken seriously. In fact, under cross-examination, Mr Hon admitted that he was not able to tell whether the additional cost of KCI incurred was reasonable or not.

82.  Mr Hon, in his written Closing, submits that he had completed 95% of the expert service at the time of termination and went on to opine that a reasonable cost to complete the outstanding should be around 10% of the total costs, which (he submits) is about HK$60,000.

83.  First, there is no evidence adduced by the parties on the percentage completion of the expert service achieved at the time of termination. Mr Hon has no basis for making such a submission. Besides, as a matter of common sense, KCI would have to study all the relevant documents in the Arbitration, perform its own analysis of the quantum issues in question, review and consider Mr Hon’s work before deciding whether Mr Hon’s work could be adopted, and if so which part(s) are to be adopted etc. These are inevitably duplicated work and do not necessarily depend on the amount of work left behind by Mr Hon.

84.  As to Mr Hon’s opinion on the reasonable cost to complete, it is not even supported by his own evidence. In cross-examination, Mr Hon admitted that he was not in a position to form a view as to whether or not the costs incurred by KCI were reasonable. Mr Hon’s submissions are therefore rejected.

85.  Upon considering Mr Lok’s evidence regarding the circumstances in which KCI was engaged and the expert service performed, I am satisfied that the plaintiff has acted reasonably in the circumstances. As nothing suggests that the corresponding costs incurred were unreasonable, I allow the amount claimed in full in my assessment below.

Additional fees charged by the Arbitrator

86.  Other than the additional cost arising from the engagement of KCI, the Arbitrator also charged additional fees for the time spent on dealing with (a) the plaintiff’s application for extension of time for the service of the Joint Expert Report, and (b) the plaintiff’s subsequent application for leave to replace Mr Hon. The total sum charged by the Arbitrator was HK$40,029, being 12.13 hours at HK$3,300 per hour. The Arbitrator also provided the corresponding breakdown showing the time spent on each task.

87.  I am of the view that the Arbitrator’s fee for dealing with the plaintiff’s application for an extension of time in early August 2019 did not arise out of the defendant’s breach of the August Agreement. It is therefore not recoverable by way of damages. By reference to the breakdown provided by the Arbitrator[16], the amount to be excluded is HK$2,706, being 0.82 hours[17] at HK$3,300 per hour.

88.  The balance representing the time spent on dealing with the plaintiff’s application for replacement of quantum expert is HK$37,323, which I allow.

89.  It follows that the total additional costs incurred by the plaintiff resulting from the defendant’s breach is HK$466,248.

The defendant’s counterclaim

Loss of business

90.  The defendant pleaded that due to the plaintiff’s wrongful commencement of the present action, it has lost a potential expert appointment and suffered an income loss. As to the quantum of loss, the defendant adopted the same lump sum fee of HK$580,000 agreed under August Agreement for this counterclaim.

91.  Mr Cheung submits that the defendant failed to establish a valid cause of action for this claim; I agree. The defendant has not cited any authorities in support of this claim. Even if the defendant has any entitlement under this head (which I do not agree with), I see no sensible reason for the adoption of the same lump sum fee under the August Agreement as the defendant’s loss.

92.  In any event, the defendant adduced no evidence in support of the alleged loss.

93.  Lastly, given my adjudication on the issue of termination and the plaintiff’s entitlement to damages above, it was indeed proper for the plaintiff to commence the present action against the defendant.

94.  For the above reasons, this claim has no legal basis. It therefore ought to be dismissed.

Loss of interest

95.  Clause 4.2 of the August Agreement provides that:

“Invoices … should be settled within 7 days of the date of the invoice.”

96.  Before the termination of the August Agreement, the defendant had issued seven invoices to the plaintiff, namely I-WF-01 to I-WF-04 and I-WF-06 to I-WF-08. The defendant contended that the plaintiff failed to settle I-WF-03 to I-WF-08 within 7 days from the respective dates of the invoices; the extent of delay ranges from 3 to 25 days. By applying HSBC’s Best Lending Rates at the time, the defendant assessed its total interest loss due to plaintiff’s delay in settling the invoices concerned at HK$818.25, which it claims. The detailed calculation for the amount claimed is set out under paragraph 41 of the DCC.

97.  Regarding the dates of the invoices and the corresponding dates of payment, those for I-WF-01 to I-WF-04 are admitted by the plaintiff on pleadings and thus not in dispute. In respect of I-WF-06 to I-WF-08, although not expressly admitted, they were not seriously disputed by the Plaintiff at the hearing.

98.  As a general rule, unless the contracting parties make an express provision for the payment of interest, late payment of a debt does not carry interest, nor are damages available under common law for simple late payment.

99.  However, in Sempra Metals Ltd v Commissioners of Inland Revenue [2008] 1 AC 561, it was held by the House of Lords that in principle, it is always open to a claimant to plead and prove his actual interest losses caused by late payment of a debt. Chitty on Contract 35^th ed Vol 1 para 30-288 to 30-291. Sempra Metals was applied in Hong Kong in the case of Joe Zhixiong Zhou and Saif Partners II L P & Another (unreported, HCCL 16/2016, 14/02/2018) [2018] HKCFI 357 (at §§204 and 205):

“204. In Sempra Metals, both Lord Scott and Lord Nicholls emphasised that such a compound interest loss must be proved. Lord Nicholls said:

“the House should now hold that, in principle, it is always open to a claimant to plead and prove his actual interest losses caused by late payment of a debt.” [94]

“But an unparticularised and unproved claim simply for ‘damages’ will not suffice. General damages are not recoverable. The common law does not assume that delay in payment of a debt will of itself cause damage. Loss must be proved.” [96]

205. In my judgment, the failure to plead a claim for compound interest and the failure to plead and prove particulars of how such a loss occurred, are fatal to Mr Zhou’s claim for compound interest, which I reject. …”

100.  Coming back to the defendant’s interest claim, here, the defendant has pleaded particulars of the alleged loss. However, the defendant adduced no evidence to prove it has suffered any actual loss of interest, let alone at HSBC’s Best Lending Rates. I am therefore not satisfied that the defendant has suffered interest loss as alleged.

Conclusion

101.  For the reasons set out above, I give judgment in favour of the plaintiff against the defendant in the sum of HK$466,248 with interest at prime rate(s) plus 1% from the date of commencement of this action to date of judgment and thereafter at judgment rate(s) until payment.

102.  The defendant’s counterclaim is dismissed.

103.  Following the above event, I further make an order nisi that the costs of this action be to the plaintiff to be taxed, if not agreed, with certificate for counsel. Unless any party applies to vary within 14 days, this order nisi shall become absolute without further order of the court.