CIRRUS DESIGN CONSULTANTS LTD v. KENNETH ROTHGORDT JOHANSEN AND ANOTHER

DCCJ 1205/2013

[2019] HKDC 830

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.1205 OF 2013

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JUDGMENT

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1.  At all material times, the 1^st defendant (D1) was an airline pilot and the sole director and shareholder of the 2^nd defendant company (D2). D2 at all material times owned the subject property located at Prince’s Terrace, Bonito Casa, Hong Kong (the Property).

2.  The plaintiff company (P) at all material times engaged in   interior design and decoration. At all material times, Mr Hanson Hung (Hung) was P’s director and shareholder.

3.  After D1’s pilot colleagues had sought P’s service, they introduced D1 to P in 2006. In Oct 2006, D1 met Hung at the Property. They discussed about decoration works to be carried out at the Property.P was then instructed to decorate the Property. The person who instructed P is in issue. P commenced the decoration works in or about Nov 2006 and completed them in or about Apr 2007.

4.  D2 had on 7 Dec 2006 transferred $100,000 (with $10 deducted as bank charges) into P’s bank account as initial deposit (the Deposit) for the decoration works at the Property.

P’s claim

5.  On 9 Apr 2013, P began this action against D1 and D2 to recover alleged total outstanding balance of $371,552.5 (the Balance) for materials supplied and decoration service rendered at the Property.

6.  The Balance is said to be evidenced by three P’s invoices all dated 28 May 2007 all to the attention of D1 at the same email address of 747@mail.dk (the 3 P’s 2007 Invoices).

7.  The 3 P’s 2007 Invoices are:

1)   a 3-page invoice with 8 sections[1] No.ICD-07011-1 in the balance[2] sum of $122,354 (the 1^st Invoice);

2)   a one-page invoice (materials) No.ICD-07011-2 in the total sum of $200,258.5 (the 2^nd Invoice) for 17 items of materials and service[3] allegedly paid for and supplied by P at the Property (the Materials); and

3)   a one-page invoice (additional works) No.ICD-07011-3 in the total sum of $48,940 (the 3^rd Invoice) for 18 items of alleged additional and variation works carried out by P at the Property (the Additional Works).

Issues in dispute

8.  D1 says it was D2 who instructed P to decorate the Property and he is not responsible.

9.  D2 in turn says all renovation costs owed by it to P “has been duly settled upon completion of the renovation works”.

10.  In an Answer filed in Mar 2017 (the 2017 F&B Answer) to P’s Request for Further & Better Particular of the Defence dated 22 May 2013 (the Defence), D2 said it “cannot remember the exact amount” of total renovation costs as it was long time ago. “There was a dispute between P and D2, which was subsequently resolved and P was fully paid”. “According to D2’s … accounts from 1 Sept 2004 to 31 Dec 2007, there are no outstanding payables for renovation works”. Hence, it is D2’s case that “all renovations have been paid for”. D2 is “only required to keep documentary evidence of payment for at least 7 years under s.51C of Inland Revenue Ordinance (IRO)” and evidence of payment to P is “likely to have been destroyed (italics supplied)”.

11.  For the Materials, it was said by the defence that they were purchased and paid for by D1 on D2’s behalf.

12.  For the Additional Works, it was said that neither D1 nor D2 had agreed to them.

13.  Mr Avery Chan of counsel (Mr Chan) appeared for P before me and Ms Joyce Lai of counsel (Ms Lai) appeared for both D1 and D2 before me.

P’s case

14.  Hung gave evidence. He said D1 called him in Oct 2006. D1 introduced himself as a pilot and said he was referred to P by his colleagues, who were satisfied with P’s service.

15.  Hung said D1 was D2’s sole director and sole shareholder. D1 wholly controlled D2 and purchased the Property in Oct 2006 in the name of D2. Hung said he on P’s behalf made contact with D1 and no others to discuss decoration works at the Property. D1 was the person-in-charge. During all discussions, P considered the other contracting parties for the works being D1 and D2.

16.  Hung recalled himself meeting D1 at the Property, taking measurements of the Property, and discussing with D1 about the details, and price, of decoration works at the Property, shortly after receiving D1’s call in Oct 2006. 

17.  D1 told Hung that he would often be away from Hong Kong as a pilot and asked P to proceed with decoration works at the Property first. Hung said he had agreed to start as from Nov 2006 notwithstanding P was not paid anything.

18.  Hung said P had sent by email to D1 a 3-page quotation No.QCD-06064-1(R2) dated 23 Oct 2006 with 8 sections[4] in the sum of $222,354 addressed to D1’s attention at email address of 747@mail.dk (the 2006 Quotation)[5]. D1, said Hung, had orally accepted the 2006 Quotation before P commenced works at the Property.

19.  As D1 was away from Hong Kong during the course of the decoration works, Hung said he communicated with D1 most of the time by emails and text messages. For important decisions, he would await D1’s return to Hong Kong before proceeding further. For installation of telephone and gas at the Property, D1 had also delegated them to his accountant by the name Eric (Eric).

20.  In about Dec 2006, D1 came to the Property to inspect the progress of the decoration works, which had by then been practically completed. D1 then, said Hung, gave instructions to P to carry out the Additional Works. At that time, Hung asked D1 to settle the outstanding balance for the works. D1 replied Hung that it would be paid in one goal upon his next return to Hong Kong.

21.  By about Apr 2007, P had also completed the Additional Works. Hung sent text message to D1 demanding settlement of the outstanding balance for the works. D1 replied telling Hung to liaise with Eric. But Eric in turn told Hung he had no idea about the matter.

22.  On 28 May 2007, P issued (and sent by email to D1) the 3 P’s 2007 Invoices demanding payment of the Balance. All the works thereon, including the Additional Works, said Hung, have been completed at the Property and all the Materials thereon have been paid for by P and supplied to the Property.

23.  Afterwards, P chased Eric and D1 for payment, including trying to contact D1 by mobile and text messages, but there was no reply from D1.

24.  About 2 months later, Hung managed to get hold of D1 by phone. D1 suddenly complained of delay in completion and demanded deduction of balance payment. Hung explained that D1 was often away from Hong Kong. Since this last call, Hung lost contact with D1.

25.  After further futile attempts to seek payment, on 10 Dec 2012, P instructed Messrs. Yu & Associates to send to D1 and D2 its letter before action (the 2012 Demand Letter).

26.  P had made bad debt provision for 90% of the balance amount in the 1^st Invoice in the sum of $100,118 in its audited accounts for the year ended 31 Mar 2009 and same provision for the whole amount of the 2^nd Invoice in the sum of $200,259 in its accounts for the year ended 31 Mar 2010. Afterwards, P simply instructed its accountant to write off all 3 sums in the 3 P’s 2007 Invoices.

Defence case

27.  D1 elected to give evidence. HeHe said he decided to renovate the Property in or about Oct 2006.As D2’s director, D1 said he acted as the mouthpiece of D2 only and did not personally take on any liability for the decoration works of the Property. Any of his action on these decoration works with P was made by him on D2’s behalf.He dealt with Hung of P on D2’s behalf.

28.  D1 recalled entering into negotiation with Hung, providing a sketch of his design of the Property (which was later modified) to Hung for a quotation in Oct 2006.

29.  D1 further recalled signing on D2’s behalf at the Property a final quotation/contract in Oct 2006. The last page he signed contained, he said, payment terms by way of 4 instalments in total.

30.  D1 said he transferred the Deposit on 7 Dec 2006. That was the first payment.

31.  D1 explained that the 2^nd payment, the 3^rd payment and the final payments were payable at different stages of completion (the 2^nd   payment on 50% completion, the 3^rd payment on completion, and the final payment one month after completion as security monies to ensure all works had been completed).

32.  D1 believed that the 2^nd & 3^rd payments were made to Hung directly. He, however, cannot recall their modes of payments, or their exact amounts, due to lapse of time. He said he paid most of these sums personally and he paid the majority of them in cash as there was no fund in D2 (as D2’s shareholder, he would meet these payments first and get reimbursed later).

33.  Due to lapse of time, D1 said, a lot of evidence had already been destroyed. D2 is only required to keep company records for 7 years. He had checked with D2’s accountant who has not retained such documents because of lapse of time.

34.  From work commencement to 3^rd payment, said D1, there was no dispute between P and D2 other than P’s failure to keep to scheduled completion timetable.

35.  After the decoration works were completed, D1 recalled there were problems with air-conditioner and other matters. He refused payment, inter alia, in respect of the air-conditioner. A dispute arose and he withheld final payment until defects were rectified. At the end, Hung agreed that a sum should be deducted from the final payment. The dispute was settled regarding payment of the air-conditioner, which P never fixed. And D1 considered the issue closed.

36.  Regarding the 2^nd Invoice, D1 recalled he paid for the Materials out of his pocket first. All the shops for these purchases were generally, he said, along Lockhart Road. He purchased his own materials as he was designer of the Property and he was very specific about the materials to be used for the Property. P’s name and its contact details were, he explained, put on the shops’ invoices for ease of delivery only. He was a pilot by profession and was not always in Hong Kong. He thus requested P’s contacts details to be so placed so that suppliers could contact P directly to arrange delivery.

37.  Regarding the 3^rd invoice, D1 denied ever agreeing on D2’s behalf to the Additional Works.

38.  Therefore, D2 owes no money to P.

39.  D2’s accountant, Mr Mok Yu Cheung (Mok), also gave evidence. He said he was in charge of auditing D2’s accounts for the years from 2004/2005 to 2008/2009. Under s.51C of IRO, an accountant is only obliged to keep records for at least 7 years. Evidence of D2’s payment of P’s invoices would have been destroyed. All he now has is only D2’s audited accounts. He explained from his memory entries in D2’s audited accounts surrounding D2’s decoration expenses.

40.  Mok explained that, according to D2’s audited accounts, expenses totaling $150,000 were paid for decoration expenses. And expenses of $92,132, $54,739 and $128,255 totaling $275,126 were respectively booked in the years of 2007, 2008 & 2009 in D2’s audited accounts. Hence, the total amount D2 had paid P for decoration expenses of the Property was $425,126i.e. $275,126 + $150,000.

41.  As far as D2’s audited accounts are concerned, no money is, said Mok, due or outstanding to P. If there was, a provision would have been made for in such accounts.

42.  Mok said these figures are all elicited from D2’s audited accounts. Though he no longer has the documents in support of them as they have all been destroyed, Mok verified them to be true and correct as he would have required D2 to submit him with proof at the time of preparation of these audited accounts.

Discussion

43.  I am grateful to counsels for reminding me well-established approaches in assessment of witnesses’ evidence (and parties’ cases) and on burden of proof. Except for one, I hope I can be forgiven for not quoting in this judgment the many passages of authorities counsels have cited to me.

44.  That exception is Esquire (Electronics) Ltd v Hong Kong & Shanghai Banking Corp Ltd [2007] 3 HKLRD 439, 480I-481I, where Stock JA (as he then was) helpfully reminded one the value of contemporaneous documents, inherent probabilities and a study of how matters were originally pleaded and asserted in witness statements could be of particular use in assessing the facts where there has been a long delay between trial and material events.

45.  I find that particularly helpful as I am confronted with the same problem. The decoration works at the Property occurred between about Nov 2006 and about Apr 2007. The writ was issued in Apr 2013. Pleadings were closed in Jun 2013. This action thereafter went dormant until it was revived in late 2016. Discovery only began with P’s list of documents in Jan 2017. Most witness statements were dated Apr 2017, except for Hung’s supplemental statement dated Feb 2018. It was not until July 2018 that this action was set down for trial.

46.  I have therefore not overlooked the effect of the above delay and history on all witnesses’ recollection and on both parties’ ability to gather and/or preserve documentary evidence.

Oral or written contract?

47.  Ms Lai submitted that it is inherently improbable, and contrary to commercial sense, that P would be contended to have an oral agreement to carry out decoration works at the Property without reducing it into writing.

48.  I cannot agree.

49.  I do bear in mind P engaged in business at the material times and Hung was a businessman at the material times. There is no past dealing between the parties. Hung himself prepared, after 2 revisions, the 2006 Quotation which, he agreed with Ms Lai, defines parties’ respective obligations clearly in writing and provides by its P’s standard terms of contract for parties’ signatures on it in order for them to take effect.

50.  However, while Hung agreed that he was an experienced businessman, he said he ran his business as from 2002. He therefore had only 4-5 years of limited business experience by the material years of 2006 and 2007.

51.  It is, I think, also not unheard of for decoration companies to enter into renovation projects without signed contract.

52.  As Hung had explained, D1 was an airline pilot with, one thinks, steady income (and P had successful past experiences with D1’s pilot colleagues, which experience, one thinks, increased his confidence in D1). The Property was, as Hung also explained, located in Hong Kong and, one thinks, was also available for payment for decoration expenses if it was really required.

53.  Due to D1’s career, D1 did, one thinks, have good reason (or excuse) not to be present in Hong Kong most of the time, or for sufficiently long time, to attend to such trouble of, say, signing written contract (though Hung agreed that D1 gave him key of the Property to carry out decoration works).

54.  Hence, it is, I think, not surprising that Hung had trust in D1 at the material times as he said in the box and was prepared to start work in about Nov 2006 without a signed written contract (he, on P’s case, had at least secured D1’s oral acceptance of the 2006 Quotation before works began) and before the arrival of the Deposit.

55.  Contrary to Ms Lai’s submissions, the reference to “a contract evidenced in writing … in or about Oct 2006 (italics supplied)” in the 2012 Demand Letter is, I think, consistent with P’s case of D1’s oral acceptance of the 2006 Quotation dated 23 Oct 2006.

56.  In this respect, I disbelieve D1’s evidence in the box that he had most likely stopped using the email address of 747@mail.dk found in the 2006 Quotation as early as in 1997. Had it been so, it would be pointless for Hung to put it down to contact D1. Moreover, Hung had managed to reach D1 on 11 Dec 2006 by sending an email addressed to D1 to that address. There was a reply email addressed to Hung from the address of 6012311@smartone-vodafone.blackberry.com and D1 agreed in the box that he most likely had sent out this reply email (the Dec 2006 Email Exchange).

57.  Had D1 signed on behalf of D2 a written contract with P as alleged by D1, one fails to see any material advantage P could obtain (or any material disadvantage P could avoid) by not disclosing it or not referring to it in P’s case in the context of this case. D1 suggested none in his evidence. Ms Lai suggested neither in her cross-examination of Hung or her submissions.

58.  On this dispute, I believe Hung and prefer his evidence to that of D1. I find that D1 had orally accepted the works and their prices particularized in the 2006 Quotation, which, I accept, had been emailed to D1. There was, I find, an oral decoration contract evidenced by the 2006 Quotation.

All outstanding duly settled or not?

59.  It is, Ms Lai also submitted, incredible that P would 1) complete the works in the 1^st Invoice, 2) complete the Additional Works, and 3) make extensive purchase like the Materials out of its own pocket, without receiving further payment than the Deposit.

60.  It is strange, she further submitted, that P did not demand for payments earlier on. The 3 P’s 2007 Invoices were not issued until, it was argued, as late as on 28 May 2007.

61.  Ms Lai finally submitted that it is probable that P was opportunistic and had contrived a false claim against D1 and D2 from documents in its possession, when in fact D2 had duly settled all owed by it to P and when in fact D1 had himself purchased and paid for the Materials on D2’s behalf.

62.  I start by noting that, according to P’s audited accounts for the year ended 31 Mar 2007, in the material year of 2006, its turnover was $7.8 million odd, its gross profit was $1.1 million odd and its profit was $202,239.

63.  Nevertheless, it is, I think, not uncommon for decoration firms or companies to require a deposit of varying size and then to give credit to property owners by agreeing to stage payments one way or another. Indeed, D1 also said P agreed to stage payments in alleged signed written contract and he made payments to Hung after works were completed to the required stages.

64.  The total amount in the 3^rd Invoice is, one notices, a relatively small sum of $48,940. This sum and the total sum in the 1^st Invoice should include, one thinks, a profit element. Therefore, P should not have given credit at the face value of these figures, not to mention that P’s suppliers and/or subcontractors could have also given credit to P to settle their bills.

65.  While P on its case paid the Materials upfront as much as $200,258.5 and charged them in the 2^nd Invoice, as Hung explained and I agree, he had stronger ground to expect that P would be paid in full for the 2^nd Invoice (as compared to the 1^st and 3^rd Invoices) as it was “on disbursement basis” and no complaint of their quality or workmanship could be raised against P.

66.  On Hung’s evidence, he had, I note, already demanded D1 for the 2^nd time payment of outstanding balance from D1 in about Dec 2006 but was persuaded to wait for D1’s next return to Hong Kong for payment “in one goal”.

67.  Considering the completion of all decoration works at the Property, including the Additional Works, in or about Apr 2007 on P’s case, the issue of the 3 P’s 2007 Invoices all on 28 May 2007 could not, I think, be said to be too late.

68.  Though, with the benefit of hindsight, Hung might, on P’s own case, have been more optimistic, or less strict, about recovery of such credit P had extended over decoration at the Property than he ought to have been, his evidence cannot, I think, be said to be inherently improbable.

The Materials paid by D1 or P?

69.  While P has not produced documents to support and verify each of the claimed individual items stated in the 1^st and 3^rd Invoices, P managed, I note, to produce memos, invoices and bills of all 17 claimed items of the Materials in the 2^nd Invoice with matching claimed individual amounts on them.

70.  On Ms Lai’s extensive cross-examination, Hung did, I note, say in the box that he had accompanied D1 to the shop of the suppliers of items 8 to 12 of the 2^nd Invoice to allow D1 to see for himself the real objects before P’s purchasing and paying for them (for the remaining items, Hung said he had either provided samples or information and/or had sought D1’s instructions on his requirements before P purchased and paid for them as instructed).

71.  However, reading the 2^nd Invoice, one thinks it unlikely that D1, a pilot who was admittedly often away from Hong Kong, could (or would) have spared sufficient time in Hong Kong on as many as about 15 occasions during a period of about 5-6 months attending 13 different suppliers to make purchase and payment of the Materials (including paying electricity fees as small as $52 & $397 and buying lock valued at only $435) himself as he claimed. This is all the more so when D1 said that the Property was to be rented out as opposed to be used as his own residence.

72.  Had D1 had the luxury of time in Hong Kong to have taken on himself these trouble for tenant as he claimed, he could, one thinks, equally have demanded that such memos, invoices and bills issued for those of the Materials that required delivery be made in D2’s name as the “client” or “customer” but marked for Hung’s attention in order for P to accept delivery. By doing so, they could reflect the true alleged buyer and could also be consistently kept as D2’s business records under s.51C of IRO. But P’s name was instead put down as the “client” or “customer” on some of them. This is not to mention that some of the Materials, especially the services paid for, did not demand delivery to the Property as suggested by D1.

73.  The possession and production of such matching memos, invoices and bills by P are, one thinks, supportive of Hung’s evidence that P had purchased and paid for them.

Complete absence of payment records from defence

74.  In contrast, there was, I note, not one single document evidencing payment from D1 or D2 to P (or to third party suppliers for the Materials) disclosed in their list of documents filed in Jan 2017 (their only other list is their supplemental list dated Jan 2018 disclosing D2’s audited accounts).

75.  On Mr Chan’s cross-examination, D1 could not, one notices, even recall whether receipts have been issued by P for alleged 2^nd and 3^rd payments he allegedly paid to Hung in cash (it should be noted that D1 also said in his witness statement that he could not recall the mode of their payments).

76.  In so far the defence relies on s.51C of IRO to explain lack of documentary evidence on their part, as Mr Chan rightly pointed out, 7 years have, I agree, not elapsed when defence received notice of these proceedings, considering that the material period for our purpose was from Oct 2006 to Apr 2007 (thus 7 years will expire by the earliest only in Oct 2013).

77.  In this respect, D1 disagreed with Mr Chan that he had notice of these proceedings latest by 22 May 2013, on which day he signed statement of truth (SOT) verifying the facts stated in the Defence. I do not accept such denial. And it reflects badly on D1’s credibility.

78.  By then, on court record, D1 and D2 were represented by a solicitors’ firm and the Defence was filed by that firm on behalf of D1 & D2 to contest these proceedings (and disputing the allegations in the Statement of Claim (SOC) indorsed on P’s writ). The SOT has a certificate signed by a solicitor of that firm certifying that the contents of the Defence and the SOT had been translated to D1.

79.  In my views, the need to gather and preserve payment records and other documentary evidence ought to be crystal clear to D1 and D2 latest by 22 May 2013 when it was averred in the Defence that “all the renovation costs owed by D2 to P has been duly settled upon the completion of the renovation works”, though it is fair to observe as well that this action later went dormant for 3 years after pleadings were closed in June 2013.

The Defence

80.  At this juncture, it is also pertinent to observe that it was nowhere specifically pleaded in the Defence dated May 2013: -

(1)   The Materials were purchased and paid for by D1 on D2’s behalf;

(2)   Neither D1 nor D2 had agreed to the Additional Works; and

(3)   Due settlement of renovation costs owed allegedly by D2 to P involves alleged deduction of sum for faulty air-conditioners as alleged by D1 in his evidence.

81.  Back in May 2013, P has only pleaded one invoice dated 28 May 2007 for materials supplied and service rendered in para 4 of SOC (P was given leave to amend SOC on 1^st day of trial to make it clear that this refers to 3 P’s 2007 Invoices previously disclosed to defence and referred to in witness statement of Hung). P has also referred to defence request for the Additional Works in para 6 of SOC.

82.  Save making the positive plea of alleged due settlement by D2, the Defence simply made no admission to para 4 & 6 of SOC. It did not in May 2013 specifically put forward the above 3 pleas in para 80. All these three allegations were only raised for the first time when D1 made his witness statement about 4 years later in Apr 2017 (leave was only given on the 1^st day of this trial for defence to amend the Defence to specifically plead the first two). These new allegations occur to one likely as an afterthought, though it is fair to observe again that this action had gone dormant for 3 years after close of pleadings.

83.  And, contrary to Ms Lai’s submissions, it is not surprising, I think, for Hung not to have covered the first two areas in his witness statement dated Apr 2017, as they were not issues then joined on pleadings.

Audited accounts of parties

84.  D2 did, of course, produce its audited accounts as evidence and called its accountant. P equally produced its audited accounts and Hung gave evidence on them too.

85.  All things considered, I decide to give no weight to Mok’s evidence regarding the 3 so-called expenses figures of $92,132, $54,739 and $128,255 booked in D2’s accounts in the respective years of 2007, 2008 and 2009. I do not accept that these sums were paid by D2 to P as decoration expenses for the Property.

86.  The reasons are that: -

(1)   The first figure of $92,132 is the sum total of 2 “consumables” figures for 06/07 and 07/08, and 2 “sundries” figures for 06/07 and 07/08, in D2’s profit & loss account for the years from 2004 to 2008.

(2)   The 2^nd figure of $54,739 is the sum total of one “consumables” figure, one “repair and maintenance” figure and one “sundries” figure in D2’s profit & loss account for 2008/2009 year.

(3)   The 3^rd figure of $128,255 is the sum total of one “consumables” figure, one “repair and maintenance” figure and one “sundries” figure in D2’s profit & loss account for 2009/2010 year.

(4)   All 3 figures, as Mok explained in the box, were not printed thereon at the time of the preparation of these accounts submitted to tax authorities but were subsequently added up, and put down thereon in handwriting, by his colleague using some alleged notes, when current defence solicitors approached him for assistance. In other words, Mok himself had no personal knowledge of this later exercise required by defence legal team.

(5)   Mok’ s colleague was not called. Neither was the alleged notes produced. These 3 handwritten figures are double hearsay.

(6)   Reading the descriptions of the underlying entries i.e. consumables, repair and maintenance, and sundries, they do not by themselves readily suggest “renovation” or “decoration” expenses.

(7)   Moreover, these underlying entries cannot tell one whether they were sums paid to P (and not other decorators) for the Property or not (D1 said D2 owned 4 properties and these accounts also indicated that D2 owned other properties at the same time).

(8)   On D1’s evidence, D2 ought to have duly settled all due to P by 2007. Most of these underlying entries were booked later or much later than they should have been. The alleged fact that D2 had a dispute with P over its fee (which was anyway settled soon on D1’s evidence) is, one thinks, no excuse for these sums not booked in the year they were allegedly paid to P by D2.

(9)   Mok’s evidence is, one thinks, also contradictory to D2’s case of not knowing the exact amount paid to P for decoration at the Property pleaded in the 2017 F&B Answer, which gave no figure at all in Mar 2017.

87.  To the contrary, I decide to give full weight to the two bad debt entries in P’s audited accounts for the two years ended 31 Mar 2009 and 31 Mar 2010 and the related explanations given by Hung. My reasons are that: -

(1)   Consistent with Hung’s evidence, the two entries specifically recorded down that the customer being D1, the project address at the Property and the reason being “lost contact”.

(2)   It takes time to tell whether one’s debt becomes “bad debt” and therefore there is no problem of provision being made in P’s accounts of later years.

(3)   The defence has not required cross-examination of P’s accountant.

(4)   And Hung was unshaken (and gave, I think, proper explanation) on being cross-examined by Ms Lai on this point. In any event, Ms Lai never suggested to Hung that these two bad debt entries did not relate to the Property or D1.

(5)   Ms Lai advanced no submission against these two bad debt entries in her closing submissions.

The Additional Works agreed or not?

88.  Though P produced no quotation for the Additional Works (Hung said none was issued), considering the wide ranging items of works to be done at the Property as required by the 2006 Quotation, it is, one thinks, possible and inherently likely that additional and variation works would be discovered to be required, and agreed upon, as the works progressed over time.

89.  As Hung explained by reference to item 2 of the 3^rd Invoice and item 6.3 of the 2006 Quotation, it was found out later that two additional 13A single sockets were required. Thus D1 ordered them and P charged them in the 3^rd Invoice at the same unit rate stated in the 2006 Quotation.

90.  On this point, considering the dates of the small number of underlying supporting documents produced by P, I accept Hung’s clarification in the box that D1 gave oral instructions to P to carry out the Additional Works from about Jan to Mar 2007. This timing discrepancy with P’s pleadings is, in my view, peripheral and does not cast serious doubt on Hung’s credibility.

The 3 P’s 2007 Invoices

91.  Returning to Ms Lai’s submissions of P being opportunistic in making a contrived claim against D1 and D2, it is, I think, significant to note that nowhere was receipt of the 3 P’s 2007 Invoices sent to D1 on P’s case specifically denied in the Defence, amended Defence or the witness statement of D1. Nor was it challenged in the cross-examination of Hung. Neither was their authenticity challenged by defence, especially their common date of 28 May 2007. It was never suggested that they were backdated.

92.  As such, I find that they were sent by way of email to D1 on or about 28 May 2007, all the more the Dec 2006 Email Exchange confirmed the continued use of the email address of 747@mail.dk by D1 about a mere 5 months ago.

93.  Had P been opportunistic as Ms Lai suggested, it would, one thinks, certainly not be a good opportunity for P to put forward its contrived claim to D1 and D2 in May 2007 by way of the 3 P’s 2007 Invoices when one imagines D1 and D2 could then have evidence at their disposal and/or could then be in a good position to gather and/or preserve evidence to oppose and/or defend themselves successfully against the contrived claim of P.

94.  Hence, I cannot agree with this submission either.

Overall assessment of parties’ cases

95.  All things considered, I find P’s case inherently more probable, well supported by contemporaneous documents and consistent over time at its core. To the contrary, the defence case is, I think, inherently improbable, lacks documentation in support and is not consistent over time.

Other findings of facts

96.  Overall speaking, I find Hung credible and reliable. I do not find D1 credible or reliable. Subject to the party issue below and unless otherwise stated, I accept Hung’s evidence and prefer his evidence to that of D1, in so far they conflict from one another.

97.  In particular, I find that (1) P had purchased and paid for the Materials supplied to the Property; (2) D1 had instructed P to carry out the Additional Works and P had carried them out at the Property as instructed; and (3) Neither D1 nor D2 had paid the Balance due to P on the 3 P’s 2007 Invoices.

Other party being D1 or D2?

98.  By his opening, Mr Chan no longer maintained P’s previous pleaded case of both D1 and D2 being the other contracting parties and, with my leave given on the 1^st day of trial, he amended the SOC to plead them in the alternative. He submitted in his closing submissions that the other party was D1, failing that it was D2. Ms Lai maintained in her closing submissions the defence pleaded case of D2 being the other contracting party.

99.  On my request for assistance, counsels drew my attention to the 2 following authorities on this disputed issue. I am afraid they are not of much assistance to me as each had its own peculiar facts or issue different from ours.

100.  The case of 天慧工程公司v領威亞太有限公司, unreported, DCCJ 4587/2011, 29 Apr 2016, cited by Ms Lai would, I think, be pertinent had Hung signed the 2006 Quotation and issue was joined on pleadings as to whether or not Hung had incurred any personal liability in signing it as agent for P. But that is not the case or issue before me.

101.  The authority of China Finance & Assets Management Ltd v Lafe Properties (HK) Ltd, unreported, HCA 526/2010, 18 Feb 2015, cited by Mr Chan, revolves around the identity of a company payee named in a cheque where there are 2 companies of the same name incorporated in 2 different jurisdictions, whose facts are far removed from ours.

102.  In approaching this issue, in line with general principles about formation of contract, I agree with both counsels that it is a matter of ascertaining the objective intention of the parties at, I think, the time of the making of the contract.

103.  But I part company with Ms Lai that such self-serving statement of D1 in his witness statement (or such self-serving statement of Hung in his witness statement) made after this dispute had arisen should be given much weight. Indeed, for reasons stated, they should, I think, be viewed with caution and given little or no weight.

104.  Moreover, nowhere did D1 state in his witness statement that he had at the material times made known to Hung that he acted as alleged mouthpiece of D2 and assumed no personal liability for decoration works to be done by P at the Property. Such alleged subjective intention or private thought, if any, held by D1 is not, in my view, determinative of this issue of the identity of the contracting party with P.

105.  For his part, Mr Chan apparently abandoned any reliance of Hung’s evidence that both D1 and D2 being the other contracting parties with P.

106.  In terms of other evidence in support of defence pleaded case, Ms Lai pointed to: -

1)  payment of the Deposit by D2;

2)  a statement dated 15 Nov 2012 given by P to D2 marked for the attention of D1 re the Property setting out the Balance;

3)  the 2012 Demand Letter, in which it was suggested to D2 that the subject contract was “made by D1 on your behalf (italics supplied)”;

4)  the Property was at all material times owned by D2; and

5)  Hung’s evidence that Hung and his brother had incorporated P to carry out business by way of limited liability company.

107.  Mr Chan pointed to, among others, the following evidence in support of his submissions that D1 was the other contracting party, namely: -

1)  the 2006 Quotation marked for the attention of D1 and to be confirmed/accepted and signed by D1 himself;

2)  the 3 P’s 2007 Invoices all marked for the attention of D1 alone; and

3)  the 2012 Demand Letter also addressed to D1.

108.  In considering the weight of these evidence in the 2 preceding para, as the exercise involves ascertaining parties’ objective intention at the time of the making of the contract, I agree with Mr Chan’s submissions that such evidence closer in time to such making shed more light (and should be given more weight) than those far away in terms of time (such as those in 2012).

109.  Among those closer in time, the deposit of the Deposit into P’s account by D2 is, in my view, of little weight or neutral in that D2 could be a vehicle used by D1 to make his own payment to P.

110.  Though the Property was owned by D2 at the material times, as I have pointed out, nowhere did D1 say in his evidence that he had made known to Hung that he acted as mere agent of D2 in dealing with him regarding decoration at the Property.

111.  All things considered, I decide to give most weight to the 2006 Quotation as the contract was formed by D1’s oral acceptance of it. Considering its contents objectively against the rest of evidence that I have accepted, including the 3 P’s 2007 Invoices, I conclude that the contract was formed between P and D1 as Mr Chan had submitted.

Disposition

112.  On my findings above, I enter judgment in P’s favour against D1 in the sum of $371,552.5, together with interest at prevailing HSBC best lending rates from 9 Apr 2013 to the date of judgment and thereafter at judgment rates until full payment.

113.  And I dismiss P’s action as against D2.

Costs

114.  I make an order nisi that D1 shall pay P costs of this action, together with all reserved costs and the costs of this trial with certificate for counsel.

115.  I further make another order nisi that there shall be no order as to costs of this action as between P and D2.

116.  The above two orders nisi shall become absolute should none applies in writing within 14 days to vary them.

117.  Finally, I thank Mr Chan and Ms Lai for their assistance.