ELITE HOUSE DESIGN LTD v. MAN HING INTERIOR DESIGN ENGINEERING LTD

DCCJ 3834/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3834 OF 2008

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ASSESSMENT OF DAMAGES

1.  In 2007, Yu, the owner of a residential flat on 6^th Floor, Tower 10, Parc Oasis, Kowloon, contracted Elite House (the Plaintiff) to renovate the flat.  Elite House subcontracted the work to Man Hing (the Defendant).  For breach of contract, Yu claimed against Elite House for damages.  This was settled between the parties through their respective solicitors.  Elite House commenced this action seeking an indemnity from Man Hing.

2.  On 10 November 2008, interlocutory judgment was entered against Man Hing for damages to be assessed.  Hence this hearing.  Man Hing was absent, as it was previously.  On the basis of the affirmations of service filed by Elite House’s solicitors, I accept that Man Hing should have received notice of this hearing and the other documents.  Elite House was allowed to proceed.

3.  The project liaison officer of Elite House, Ms Tang, gave evidence and adopted her statement.  I accept her evidence.

The pleaded case

4.  The pleaded case of Elite House is that Yu claimed against it, and so did Elilte House against Man Hing by commencing this action, for essentially two reasons: (1) breach of contractual duty of reasonable care and skill in carrying out the renovation work; and (2) failure to complete the work by the contractual deadline.

5.  The Chinese written contract dated 15 September 2007 between Yu and Elite House stipulated that the work would be completed in approximately 90 working days and that the work period might be extended by agreement.  As pleaded by Elite House and evidenced by the documents, Elite House still placed order with Man Hing for additional works in January 2008.  So the reality seems to have been that neither Yu nor Elite House did or was any longer able to insist on 90 days from 15 September 2007, i.e., 12 December 2007, as the deadline for completing the work.

6.  Indeed, according to the letter dated 21 January 2008 whereby Yu terminated his contract with Elite House, the completion date had been delayed, first to the end of December 2007, then to 3 January and lastly to 5 January 2008.  It was really the repeated delay and non-completion even as at the date of that letter that the owner sought to terminate the contract.

7.  Therefore, this part of the pleaded case by Elite House against Man Hing, namely, that Man Hing failed to complete the work on or before 15 December 2007, could not have been correct.  Though Man Hing defaulted in defending this action, I sought clarification during the hearing about the second basis mentioned above.  Ms Tang in her evidence could not say otherwise.

8.  I felt obliged to set the record right because of what transpired from the documents.  Nevertheless, this should not shake the foundation of the judgment, bearing in mind the other basis of the claim that is well evidenced by the contemporaneous correspondence and documents.

Yu’s claim and the settlement

9.  In March 2008, through his solicitors, Yu first put forward his claim against Elite House as follows:

10.  Upon termination of the contract between Yu and Elite House, there was a balance of HK$47,500 payable under the contract.  It would seem that the actual loss suffered by Yu as a result of the termination of the contract should be the extra cost incurred in completing/remedying the work.  Therefore, when claiming the total sum of HK$101,139 (HK$86,139 + HK$15,000), Yu had to give credit to the balance of HK$47,500 that he would have had to pay for the work but for the termination of the contract.  Effectively, Yu should at most be entitled to damages in the net sum of HK$53,639.

11.  Due to the workmanship of Man Hing, water leakage was caused to the flat on the 5^th Floor below in December 2007 and January 2008.  This gave rise to the claim by the owner of the 5^th Floor flat against Yu for the cost of repair in the sum of HK$26,700.  The correspondence suggested that Man Hing at one stage undertook to pay to that owner for such repair but eventually failed to honour that at all.

12.  As to the cost of alternative accommodation necessitated by the delayed completion of the work, the relevant receipt evidencing this amount showed that the period covered was 1 month from February to March 2008.  However, of the amount claimed, HK$18,000 was actually paid by Yu as the rental deposit.  As rightly pointed out by the solicitors for Elite House then, this amount being recoverable upon Yu’s vacating from the rented alternative accommodation should not be claimed as loss.

13.  Taking all the above into account, it is clear to me that the best case of Yu at that time should be that Elite House would have to pay damages in the net sum of HK$98,839.

14.  Eventually, Yu and Elite House settled at the lesser sum of HK$60,000 to be paid by Elite House.  Considering the correspondence evidencing the negotiation between the parties, I am satisfied that this was a genuine and reasonable settlement sum.

Elite House’s claim

15.  Elite House now claims against Man Hing for the sum of HK$60,000 paid to Yu, the sum of HK$47,500 that would have been receivable from the contract with Yu and legal costs incurred in the sum of HK$6,400 (which was also evidenced by the relevant debit note).  The total sum is HK$113,900.

16.  The contractual sum payable by Elite House to Man Hing for the work was HK$173,995 and for the additional work ordered in January 2008 was HK$7,000.  Ms Tang gave a breakdown of the payments made so far.  All of these figures are supported by documents and record.  The outstanding balance payable to Man Hing was HK$50,001.

17.  Giving credit to this sum of HK$50,001 that would have been payable under the contract with Man Hing, Elite House suffers loss as a result of Man Hing's breach in the sum of HK$63,899 (HK$113,900 – 50,001).

Conclusion

18.  In the circumstances, Man Hing shall pay Elite House damages in the sum of HK$63,899 together with interest thereon at the judgment rate from the date of writ until full payment.  Man Hing has been adjudged to pay costs.  Such costs shall be that of this action including these assessment proceedings, to be taxed if not agreed.