XCHRX CHAN CHIU CHUNG VINCENT v. WANG YIP (HK) ENGINEERING LTD.

HCA 7552/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 7552 OF 1999

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REASONS FOR DECISION

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1. This is the Defendant's appeal against the order of the Master dated 22 February 2000 whereby he gave leave to the Defendant to defend this action conditional upon payment into court of $461,523.75. The Plaintiff brings this action against the Defendant for payment of sums allegedly outstanding for marble fixing services and the supply of accessories for fixing marble in a number of construction/decoration projects. The total sum claimed is $703,475.95 which consists of:

(1) $107,648.75 being the outstanding balance for a project in Charming Garden, Mongkok;

(2) $356,935.20 being the outstanding balance for a project in Bevery Garden, Tseung Kwan O;

(3) $179,048 being the outstanding balance for a project in Repulse Bay;

(4) $59,844 being the outstanding balance for several projects in (a) Serenity Park, Tai Po, (b) Tseung Kwan O and (c) Marina Cove, Sai Kung.

2. The sum referred to in the Master's order dated 22 February 2000 is the total of (a) the full outstanding amount for the Charming Garden project and (b) the outstanding amounts for the other projects set out in (2) to (4) above less 10% being the amount of retention money (alleged by the Defendant). At the end of the appeal hearing, I gave unconditional leave to the Defendant to defend this action. The reasons are as follows.

3. The Defendant fairly accepts that additional materials have been placed before the court in this appeal which were not before the learned Master. The Defendant also fairly accepts that the learned Master cannot be faulted for deciding in the way he did in the absence of the said additional materials. These materials can be summarised as follows:

(a) a detailed analysis as to the respective total liability of the Defendant for each of the projects set out above;

(b) supporting documents such as payment certificates and documentary credits.

4. For the purpose of this appeal, the agreements reached between the parties regarding the said projects can in short be regarded as "measurement" agreements, that is, the Plaintiff was to be paid according to the actual work done rather than fixed sums.

5. There is firstly as a factual dispute as to what was the amount payable to the Plaintiff for the work carried out by it. According to the Plaintiff, the total amount payable was $3,048,354.80 consisting of:

(1) $1,414,458.80 for Charming Garden;

(2) $867,758 for Bevery Garden;

(3) $706,294 for Repulse Bay;

(4) $59,844 for the other miscellaneous projects.

This amount was alleged by the Plaintiff to have been agreed orally between the Plaintiff and the Defendant on several occasions but this was denied by the Defendant. The Defendant alleges that the amount payable depends on the assessment by the employer of the respective projects of the Plaintiff's actual work done for each project. The Defendant's case is that the total amount payable was only $2,561,721.10 consisting of:

(1) $1,178,236.30 for Charming Garden;

(2) $730,132.80 for Bevery Garden;

(3) $619,204 for Repulse Bay;

(4) $34,148 for the other miscellaneous projects.

6. Further, the parties also dispute whether the Defendant is entitled to retain 10% of the amount by way of retention money. The Plaintiff contends that the Defendant was only entitled to retain a lesser sum and for a shorter period of time. The agreement relating to the retention money is also said to be oral. It is common ground that the Defendant has paid the Plaintiff $2,344,878.85. Thus, according to the Plaintiff's calculation, the Defendant still owes it $703,475.95 whereas according to the Defendant, it has overpaid the Plaintiff $39,329.86:

(1) $2,561,721.10 less 10% = $2,305,548.99;

(2) less total payment $2,344,878.85.

7. Further to the above issues, the parties also dispute whether the Defendant is entitled to an equable set-off, alternatively, a mutual debt set-off even if the Defendant's calculation is correct.

8. The Plaintiff criticised the Defendant's evidence and supporting documents to be incredible and a number of reasons are put forward in that regard. However, this is an appeal under Order 14 Rule 1. It is not a proper occasion for the court to determine whether the Defendant is to be believed, but whether the evidence adduced is believable. I do not find any proper basis for concluding that the Defendant's case is "unbelievable" or "practically moonshine".

9. Further, even if the only defence raised is the amount due by the Defendant to the Plaintiff but there is uncertainty as to the exact amount due, it is appropriate to give unconditional leave to defend: see The Supreme Court Practice 1999, para. 14/4/11 (p.176) and Frigidaire Consolidated Ltd v. Kaeast (Far East) Ltd C.A. No. 108 of 1991 at pages 4 to 5.

10. For the above reasons, I find that unconditional leave to defend ought to be given to the Defendant. Having decided the appeal for the reasons given above, I do not find it necessary to decide whether the Plaintiff is barred from obtaining judgment by reason of the alleged defects in its pleading: see Super Electric Motor Ltd v. Pai Chung Ying CACV 225 of 1994 at p.2.

11. I awarded the costs of the appeal to the Defendant in any event. The Plaintiff argues that those costs should be in the cause because additional materials were adduced only at the time of the appeal. That may well be the case but the Plaintiff decided to contest the appeal in the face of the additional materials. For that reason, I do not find that there is any good reason to depart from the usual rule that costs should follow the event.