PINK BOX LTD v. HENG WAH (HONG KONG) DECORATION CO LTD

DCCJ 4302/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4302 OF 2008

--------------------

JUDGMENT

1.  This is a dispute arising from a construction contract.

2.  The Plaintiff (Pink Box Limited) is and was at all material times a limited company carrying on the business of a retailer of jewellery.  It has a number of shops in Hong Kong and China.  In 2006, the Plaintiff was to start a new shop in 廣州市天河區廣百中怡店二層 (“the GZ Shop”).  廣百中怡店 (“the Mall”) is a department store and the GZ Shop would be a section thereof.

3.  The Plaintiff engaged the Defendant (Heng Wah (Hong Kong Decoration Co. Ltd.) to design and build the GZ Shop.  It is the pleaded case of the Plaintiff that the agreement is contended in a quotation no. hw (hk) q260706-02 (rev3) dated 15 September 2006 issued by the Defendant to the Plaintiff (“the Quotation”).  The Plaintiff has endorsed its agreement when its employee/agent, Choy Chui Yin (“PW1”) amended the quotation and signed thereon on 18 September 2006. 

4.  Details of the work to be done have been set out in the Quotation (“the Works”) and the Plaintiff claims that the Defendant has agreed to carry out the Works at the contract price of HK$164,709.00.  This is admitted by the Defendant.

5.  The Plaintiff also claims that it is an express or, alternatively, implies term of the Quotation, or alternatively, the contract for the decoration/renovation of the GZ Shop as evidenced by the Quotation that

(a)  the Defendant shall carry out the Works in all manners and respects in compliance with the specifications, requirements and measurements as set out and laid down by the Plaintiff.

(b)    the Defendant shall carry out and complete the Works in all manners and respects in good or reasonable or merchantable quality, finishing and condition in compliance with and in accordance with the specifications and especially the requirement of the Plaintiff in using the Premises for operating a fashion jewellery shop.

(c)  the Defendant shall ensure that the furniture, fitting and partition built and set up by the Defendant at the Premises shall be reasonably and practically useable and workable and fit for the specific use and purpose of the Plaintiff in using the Premises as a fashion jewellery shop.

6.  The above implied terms are denied by the Defendant.

7.  It is the Plaintiff’s case that some of the Works completed by the Defendant are defective as particularized in the Amended Consolidation Statement of Claim.  The Plaintiff has to engage another contractor to rectify the defects and suffers loss.  The Plaintiff claims against the Defendant for the sum of RMB¥192,750 being the cost of engaging another contractor as damages it suffered.

8.  The Defendant denies that the Works completed are defective as claimed by the Plaintiff or at all.

9.  Further, the Defendant claims that on 28 September 2006, it was instructed by the Plaintiff to stop all the Works and the site of GZ Shop was returned to the Plaintiff for the Plaintiff to arrange for the grand opening of the Mall on 1 October 2006.

10.  As an alternative defence, the Defendant claims that they were prevented from completing all the Works.  The witness of the Defendant claims that most of the Works are completed and handed over to the Plaintiff on 28 September 2006.  They agree that some structures are temporary measure for the grand opening and they would return later to “rectify” such temporary measures.  But they have not been allowed to return to work after the grand opening of the Mall and should not be liable to the Plaintiff for any loss.

11.  In the Amended Consolidated Defence and Counterclaim, the Defendant relies on the following express term of the Quotation:-

12.  The Defendant also claims that the Quotation has the following implied terms:-

(a)  The Plaintiff shall not prejudice the Defendant’s rights to receive the payments for the Works done.

(b)  The Plaintiff shall as soon as reasonable pay the Defendant for the Works done.

(c)  The Plaintiff shall not in any way hinder and/or prevent the Defendant from carrying out and completing the Works.

13.  It is not disputed that the Plaintiff has only paid HK$82,354.50 being 50% of the price.  The Defendant counterclaims the balance of HK$82,354.50.

14.  In the Consolidated Reply & Defence to Counterclaim, the Plaintiff claims that by reason of the matters pleaded in the Amended Consolidated Statement of Claim and in the Consolidated Reply, the Defendant is not entitled to claim the said balance of HK$82,354.50 or any damages. 

15.  In her opening, Ms. Yap, counsel for the Plaintiff submits that the completed work is so badly done that the Plaintiff is entitled to treat such breach as a fundamental breach and has accepted the repudiation on 11 October 2006 at a meeting between the Plaintiff and the Defendant, when Mr. Visuit of the Plaintiff (“PW2”) notified the Defendant that their service is no longer required.  The Quotation is then terminated.

16.  But repudiation and the particulars as outlined by Ms. Yap have not been pleaded in the Plaintiff’s pleading.  After all the factual witnesses have given evidence, Ms. Yap seeks to re-amend the Statement of Claim.  There is no justification of such a late application which I refused. 

17.  Ms. Yap agreed with Mr. Yeung, counsel for the Defendant that the following are the issues in dispute:-

a.  What are the contractual agreements?

b.  What would be the consequences of a push to finish the work on 28 September 2006?

c.  Did the Plaintiff hinder or prevent the Defendant from finishing the Works?

d.  What are the defects, if any?

e.  What are the experts’ opinions on workmanship and costs for rectification?

f.  Is the Plaintiff entitled to the sum of ¥192,750, or any part thereof, as pleaded in the Amended Statement of Claim?

g.  Is the Defendant entitled to set off and/or counterclaim HK$82,354.50 as the balance of the contract sum?

18.  It is not disputed that the express terms of the contract were contained in the Quotation.  One of the issues in question is the agreed completion date.  The following Remarks of the Quotation would be relevant to consider if there is an agreed completion date:-

       Remark 2  -  Site work will be started after deposit received.

       Remark 4  -  20 working days for preparation.

       Remark 5  -  Match remarks item 4, Anticipate 14 working days upon sign back quotation to job completion.  (To be arranged and confirmed)

19.  Prima facie, these Remarks are terms of the contract between the parties.  This is disputed by the Plaintiff.

20.  The first factual witness for the Plaintiff is the said Madam Choy Chui Yin (“PW1”), the general manager of the Plaintiff.  According to the evidence of PW1, she has an oral agreement with the Defendant that the Defendant should commence their work on 14 September 2006, and to complete the work on or before 29 September 2006, before signing the Quotation.  She said the Remarks have been replaced by the oral agreement.

21.  When PW1 was cross-examined by Mr. Yeung, she said she reached the agreement with Madam Lai Ka Po of the Defendant (“DW1”), when she contacted the Defendant in July 2006.  And she has also mentioned to Mr. Ho Chun Yu of the Defendant (“DW3”) that the shop must be completed before 1 October 2006.

22.  I note that PW1 signed the Quotation for the Plaintiff.  Before she signed, she has made some amendments to the Quotation.  Mr. Yeung put to PW1 that if there is such an oral agreement, why she has not amended the Quotation to that effect before she signed.  PW1 said it is her mistake.  I do not believe that such an important term could be forgotten when she has paid attention to the detail of the Quotation by making the amendment.

23.  Madam Cheung Fung Kwan Anna of the Plaintiff (“PW3”) also said in her evidence that there is an agreement with Defendant to complete all works on or before 29 September 2006.  When being cross-examined, she agreed that the Defendant has not promised to complete the work before 29 September 2006, but they agreed to match (配合) the time for the said grand opening of the Mall.

24.  DW1 said in her evidence that the completion date calculated according to the Remarks 4 & 5 should be 27 October 2006.  On cross-examination she said she did not know the GZ Shop had to be opened on 1 October 2006.  She agreed that the Plaintiff had requested for completion on 29 September 2006. She also said the Plaintiff had requested them to push ahead the completion date to 28 September 2006.  She had not agreed to push ahead to 28^th, but only promised to try.

25.  DW3 also said in evidence that the completion should be about 20 days for preparation, and 14 days for the construction work, as stated in the Remarks of the Quotation.  He agreed that in July, he prepared the work schedule showing that the Works could be completed before 1 October 2006. Later, the plans had been amended and the Works could not be completed before the National Day.

26.  The Quotation is the written contract for the renovation work.  The parties are bound by the terms therein set out.  Having heard all the evidence, I am not convinced that there is an oral agreement on the completion date that overrides the Quotation.  The best of PW1’s evidence is that she has “agreed orally” with DW1 when she contacted the Defendant.  I do not believe there could be any agreement reached at such an early stage, when the other terms of the contract had not been finalized.  It is at best a matter being discussed. 

27.  Further, according to the evidence, there were exchanges of e-mail before DW1, and PW1 & PW3.  Proposed work schedule has been submitted.  The Plaintiff or PW1 or PW3 has not raised any objection to the work schedule.  And the work schedule sent on 14 August 2006 shows a completion date on 20 October 2006.

28.  I also refer to a series of e-mail between DW1 and PW1 on 20 September 2006.  DW1 clarified with PW1 that the handover date is not 28 September 2006. But the Defendant would try their best to finish the site work around 28 September 2006.  And PW1 has no objection to this comment by DW1 in her e-mail in reply.

29.  Ms. Yap tries to argue the 14 working days as stipulated in the Quotation is just an estimate.  And the Defendant has started the preparation work at the earliest in July (according to the evidence of DW1).  There is no meeting of mind for the provision of “20 working days for preparation” in the Quotation.

30.  PW1 has amended the Quotation before she returned it to the Defendant. If she disagrees with any of the Remarks, or if there is the alleged oral agreement on completion, I see no reason why she would not amend the remarks before she returns the Quotation.  I am not convinced that there is no meeting of the mind for the above terms. 

31.  In conclusion, I found that the completion date should be fixed according to the terms in the Quotation, and it would be after the National Day.  Using the last schedule presented to the Plaintiff by DW1, the completion date has been advanced to 9 October 2006.

32.  The completion date is only relevant to the argument of the Defendant that, as the completion date was push ahead to 28 September 2006, some works “completed” were temporary measure and they should be allowed to return to rectify such works.  If the completion date is on 29 September 2006, as alleged by PW1, the difference is only 1 day.  But if the completion is sometime in October, the change would be more significant.

33.  I should come to consider the evidence on the defects.  According to paragraph 6 of the Amended Defence and Counterclaim, the Plaintiff set out 11 items of defects/damages it discovered after completion.  The burden rested on the Plaintiff to prove that these are defects and what are the reasonable costs for carrying out remedial work.  

34.  The evidence relied on by the Plaintiff could be divided into two main parts.  The first part of evidence is from factual witnesses and documents. PW1 and PW3 gave evidence on the items of defects.  Further, after the Works has been handed over, there are 5 defect lists prepared by the Defendant and submitted to the Plaintiff.  For the first 4 lists, they are agreed by the Plaintiff, and the Plaintiff relies on these lists to show the defective work done.  But they disagreed with the contents of the 5^th defect list, as the Plaintiff claims that certain items in the earlier defect lists have not been included. 

35.  The second part of the evidence comes from the experts.  They comment on the existence of any defects, and the costs of repair. There are two experts in this case, Mr. Martin Lam (“Mr. Lam”) engaged by the Plaintiff and Mr. Terence Kwan (“Mr. Kwan”) engaged by the Defendant.  Mr. Lam prepares his report dated 13 July 2007 and he has the opportunity to carry out site inspection.  When Mr. Kwan prepares his report in October 2009, the defects in the GZ Shop had been rectified and he has no opportunity to examine them.

36.  For convenience, I would refer to the relevant evidence of the witnesses (both factual and expert) as I consider each defect as claimed by the Plaintiff. 

37.  First item of defects is in respect of wooden board partition.  It is claimed by the Plaintiff in the Amended Consolidated Statement of Claim that the wooden frame of the single side wooden board partition could not reach the ground to match at the same level of the glass panel.  It is the evidence of PW1 that the partition is not wide enough and the Plaintiff has to engage contractor to extend the partition.  The extension was support by a wooden frame, which could not reach the ground and could not match and/or support the partition.  Her evidence is different from the pleaded case of the Plaintiff and is not helpful.

38.  DW1 said this item was not stated in any of the defect lists.

39.  Both experts agreed that this defect had not been stated any of  the defect lists and no rectification is necessary since there is no safety or functional problems resulted.  I accept the evidence of the expert and found that no rectification would be required and hence no damages should be awarded.

40.  The second items of defects are in respect of  the mirror panels.  The Plaintiff had three complaints.  Firstly, according to the evidence of PW1 and Mr. Lam, the left and middle glass panels of the mirror on wooden board partition had spot stains and the right glass panel had oil paint stains.  PW1 said they could not remove the stains.  As the Plaintiff is a jewellery shop selling expensive items, all settings must be of high standard.  Hence they have to replace the mirror panel.  Mr. Lam was of the view that the stains could not be removed.  He also recommended a replacement of the glass panel. 

41.  Mr. Kwan commented that this is a minor defect that could easily be rectified.

42.  A photograph of the stains was produced in the report of Mr. Lam.  It shows that the stains are very small in size.  They are just three very minor dots of less than the tip of a ball pen in size.  They are not at all obvious.  I fail to see how they could render the mirror defective.  Ms. Yap tried to explain that the Plaintiff is a jewellery shop and any defect cannot be tolerated.  Accepting that the Plaintiff is a jewellery shop, I am not convinced that such minor defects would in any way affected the overall image of the shop.  I found this a minor defect and I do not consider the recommendation of replacing the mirror reasonable.  I found that no remedial work would be required and no damages is allowed.

43.  The second complaint on the mirror panel is there are three nails found on top of the glass panel.  Both experts agree these are minor defects.  And Mr. Tsui Kang Wu of the Defendant (“DW2”) in evidence confirms they have been removed and I accept his evidence.  No further work is required and no damage would be awarded.

44.  The third complaint is in respect of the size of the mirror panel.  The overall size of the mirror is only 9 sq. meters while according to the Quotation, the mirror panel is 14 sq. meters.  Both experts confirmed that this is a minor defect.

45.  DW2 explained that while the contract provided that the minor is of 14 sq. meters in size, this is an estimation and subject to the actual measurement on site.

46.  In most of the construction cases, there could be minor variation of size due to limitation at the construction site.  Ms. Yap submits that DW2 confirmed that they have not informed the Plaintiff of the variation in size. This means the Plaintiff has not agreed to the variation.  This entitled the Plaintiff to claim damages for replacing the mirror.

47.  I agree with Ms. Yap that the variation has not been agreed.  But I do not agree that the mirror panel has to be replaced.  Ms. Yap would be corrected if this is one piece of mirror.  But this is a mirror panel.  It is possible to extend the panel.  This item is  item 1 in the agreed defect lists, which the Defendant agreed to extend the mirror panel by 1 meter. 

48.  Accordingly, this is a defect in that 5 sq. meters of mirror panel has not been  provided to the Plaintiff.  Unfortunately I have no evidence on the costs of extending the mirror panel by 5 sq. meters as the remedy suggested by Mr. Lam is on replacement.  In the alternative, the Defendant should not be entitled to the price of the mirror panel not supplied and I could assess the loss to the Plaintiff by adjustment in the price.  I would come to this point on assessment of damages

49.  The third defect relates to spotlights and down lights.  It is the case of the Plaintiff that the total number of the spotlights for the display cabinet exceeded the specifications and were not functioning due to overheating.  According to the joint opinion of the 2 experts, there is no conclusive evidence to show that there is overheating of the installation.  And the relevant drawing showed that 12 spotlights are specified to be installed. There is no non-compliance to the specifications.  I adopt the opinion of the experts and found that there is no non-compliance or defects with this complained item.

50.  In respect of the spotlights and down lights, the Plaintiff further complains that the transformers provided by the Defendant were not approved by the management company of the Mall.  As a result, they had to acquire the appropriate transformers  from the management company and they had paid the costs.  It is the evidence of PW1 that the installation of the transformers as supplied by the Defendant was stopped by the management company due to overheating and absence of CCC Certificate, a form of quality certificate used in China.  PW1 said DW1 agreed on spot to be responsible for the costs.

51.  It is the evidence of DW1 that the Defendant has provided copies of the CCC Certificate to the Plaintiff and it is for the Plaintiff to provide the Certificate to the Shopping Mall.  She knew that the management company rejected the transformers but she denies having agreed to bear the costs.  She said the Plaintiff agreed to buy and provide the transformers themselves.

52.  It is also the evidence of DW2 that they had supplied copies of the CCC Certificate to the Plaintiff.  DW2 also said they must have the CCC Certificate, or otherwise they would not be allowed by the management company to bring the transformers into the Mall.

53.  The burden rests on the Plaintiff to prove that the transformers do not have CCC certificate and/or they are not in accordance with the specification required by the Mall.  I have no evidence from the management company of the Mall.  The only evidence came from PW1 and she could not explain the problem with the transformers.  Mr. Lam could not verify whether the transformers had been approved by the Plaintiff or not.  Mr. Kwan opines that the Plaintiff is responsible for his own choice of material.  He also noticed from the correspondence between the Plaintiff and the Defendant that the Defendant had supplied copies of the CCC Certificate for the lighting equipment used to the Plaintiff in one of its fax dated 20 September 2006.  He confirmed that it is not a non-compliance.

54.  On balance, there is no evidence to support the claims that the transformers supplied by the Defendant do not comply with the requirement of theMall, or that they are defective.  Further, if the Defendant agreed to pay for the transformers, there is no explanation why the Plaintiff paid for the transformers in the first place.  I am not convinced that there is any agreement for the Defendant to pay the costs.  I do not award any damages for purchase of transformers from the management company.

55.  The fourth item of defects as pleaded in paragraph 6 of the Amended Statement of Claim relate to the VIP service counters.  There are a number of defects complained of by the Plaintiff and they asked for replacing the counters. 

56.  PW1 complains that the length of the VIP service counter was shorter than the approved drawings.  According to Mr. Kwan, for both VIP counters, the length was shorter than the drawings by about 100 mm.

57.  It is the evidence of DW1 that she had informed the Plaintiff of the change which was necessary because the corridor was too narrow.  She also referred to an e-mail dated 16 September 2006 to PW1 which attached a drawing of the shop layout, when it was written in Chinese that the corridor is only 480 mm in width.  PW1 denied any agreement.  But there is no evidence that she rejected the drawings.

58.  I accept the evidence of DW1 that she had been brought to the attention of the Plaintiff the width of the corridor and informed PW1 any changes required.  I can safely infer that the variation has been agreed by the Plaintiff.  After all, the variation is a minor one.

59.  The main complaint by PW1 on the construction of the VIP service counter is the position of the VIP service counter from the overhead spotlights and down lights.  It was built closer to the super graphic light box and as a result, the spotlights and down lights could not be directly on top of the VIP counters, and could not focus on the jewellery displayed inside the counter. This was confirmed by Mr. Lam in his report.  And Mr. Kwan did not raise any observation as he had not seen the position of the VIP counters.

60.  According to DW2, there is no difficulty in moving the VIP counter in order for the spotlights and down lights be directly on top.  Mr. Lam did not comment on whether the VIP counter could be moved.

61.  There is no evidence from the Plaintiff to prove that the VIP counter could not be re-located.  DW2 is the site supervisor of the Defendant who has attended to installing the VIP counters.  I accept his evidence that it is not difficult to move this VIP counter to come under the spotlights.  Prime facie, the position of the VIP counter to the spotlights would not be a ground for rebuilding the VIP counter.  Even if the lightings direction could not be adjusted, possibly the only remedy required is to reset the lightings. 

62.  The Plaintiff also complains that the locks to the VIP counters did not function.  Mr. Lam confirmed that the lock could not function properly, but he had only checked a few of the locks.  DW1 recalled there have been about 5 locks that could not work and they have replaced the same.

63.  On the balance, I accept the evidence of Mr. Lam that the locks are not in working order.  But this defect itself would not justify replacing the VIP counter.  Appropriate damages should be awarded to the Plaintiff to replace the locks and I consider this as a defect in the VIP counters.

64.  The other complaint by the Plaintiff is in respect of the workmanship of the counter.  They complain that the use of glass glue was in the below average standard as compared with similar item in other shops of the Plaintiff in China.  It is also complained that the hairline stainless steel finish did not cover the bottom of the glass display counter.  Mr. Lam considered this as defect.  However if this is the only defect, surely I cannot agree with Mr. Lam that it justified replacing the VIP counters.  Regarding the stainless steel cover for the base of the counter, Mr. Kwan rightly pointed out that according to the drawings, such would not provide.  Accordingly, the Defendant has not in breach of the agreed designs and drawings.

65.  The witnesses have not explained the unsatisfactory glass glue that was supplied, and how it affects the structure.  I am not convinced by the Plaintiff that this is an unsatisfactory workmanship.

66.  Ms. Yap also relied on the 3^rd defect list when the Defendant agreed to replace the VIP counter SC 001.  I shall at this stage come to the question of the defect list.

67.  It is not disputed that after the handover, the parties have returned to the GZ Shop to consider the rectification work required.  DW1 said in her evidence that the lists are revised after discussion.  The Defendant has issued 5 defect lists. 

68.  The defect lists are evidence of the parties’ attempts to agree on defects to be rectified.  It is obvious from the conduct of the parties that there was no agreement at the end.  Hence I cannot regard these as the agreed items to be rectified.  And the Plaintiff has not relied on the defect lists in the pleading as any form of agreement from the Defendant to rectify the works therein.  In fact, the defects claimed are more extensive.  Hence, at best, these are evidence to support the Plaintiff’s case of defective works.  They have to be read together with the other evidence before me, including expert evidence and oral evidence of the Plaintiff’s witnesses and the Defendant’s witnesses.

69.  Having considered all the evidence, and on the balance, I am not convinced that the VIP counters are defective and have to be replace, and the only rectification is what I have found above on the locks.

70.  The next item of defects that the Plaintiff complained is one of the glass covers of one VIP counter was broken.  Both experts made no comment on this item.  PW1 said in her evidence that the glass broke after working hour. There is no evidence as to the cause of the breakage. In the circumstances, the Plaintiff failed to prove this is a defect arising from unreasonable workmanship of the Defendant, and no damage would be awarded.

71.  Inside the VIP counter, the Plaintiff requested the Defendant to provide them with safety box.  The Plaintiff claims that the dimension of the safety box was not in accordance with the specifications.  Both experts are of the view that the actual size of safety box matched with the Defendant’s sketch faxed to the Plaintiff on 15 September 2006.  They confirmed that there is no non-compliance to the specifications.  I adopt the joint opinion of the experts.  There is no defect on this alleged item. 

72.  Jewellery trays had to be placed inside the VIP counters.  It is the case of the Plaintiff that by reason of the shortening of the VIP counters as aforesaid, the jewellery trays have to be replaced.

73.  The Defendant said it is not required to provide  the jewellery trays under the Quotation, which is not disputed.  DW1 said the Defendant has provided the jewellery trays as a gesture of good view to assist the Plaintiff that the shop could be opened with the Mall.  Accordingly, they should not be held liable.

74.  The Plaintiff claims the cost for replacing all the trays.  There is no comment by Mr. Lam.  Mr. Kwan also comments that this is not an item in the contract.  The Quotation expressly excludes this item.  I agree that the supply of trays is not part of the Quotation, and the loss, if any, for replacing the trays would not be a defect of works to be provided under the Quotation.  The Plaintiff is not entitled to claim any damage. 

75.  Further, even if the trays cannot fit into the small counter, I thought all Plaintiff needed was to replace one tray for smaller size.  The claim for replacing all the trays is unreasonable.

76.  The next item of defects is in relation to double-sided display cabinet.  The main complaint is directed to the front glass panel.  According to the contract, the glass should be made of black colour glass.  According to the evidence of DW1, she admitted that they should supply black colour glass. Due to constraint of time, they have only provided transparent glass with a black paper backing.  This created the effect of black colour glass but they intended to replace it afterward. 

77.  There is no suggestion that the use of transparent glass was approved by the Plaintiff.  Accordingly, this must be a defect and should be replaced.  DW1 complained that they were not allowed to return to rectify which I should deal with later. 

78.  And in respect of the other complaint that there is only one iron earring for the front glass panel, this may be rectified at the same time with the replacement of the glass.  The issue does rest on my subsequent consideration as to whether the Defendant was deprived of the opportunity to rectify the defects, and whether replacement of the cabinet is justified.

79.  It is not disputed that the Plaintiff supplied at least five films or slides for insertion in the super graphic light box.  The Plaintiff claims one was lost.  According to Mr. Lam, the film has not been lost but wrongly installed.  I accept his evidence and the claim failed.

80.  The next item of defect is in relation to the super graphic light box. The main complaint by the Plaintiff is that the light box could not be opened for replacement of the fluorescent tubes inside or to replace the film/slide inside.

81.  It is not disputed that, according to the initial drawings, the light box could be opened by lifting the front panel.  Later, a supplemental drawing has been provided to the Plaintiff that the panel would be divided into three parts.  The left and right panels are fixed and could not be opened.  Only the middle panel could be lifted and opened.  Once the middle panel is lifted up, one could easily move the sliding boards holding the fluorescent tube at the left and right panel for replacement.  And there appears to be sufficient spacing for replacing all the films or slides placed inside the light box.

82.  According to the evidence of Mr. Lam, he had tried to open the light box, but he could not.  He found there was no opening.  It is the evidence of PW1 that they could not open the light box for replacement of the fluorescent tubes or slides.  Clearly, a light box that could not be opened for replacement of the slide inside and to replace the fluorescent tube is defective, and may impose a danger.

83.  DW2 explained in his evidence that the middle part could be opened.  He explained that there is a “bus track device” at the top.  By engaging the bus track, the middle part could be moved to one side and enabling the Plaintiff to replace the fluorescent tubes and the slides.

84.  I would be surprised if  a bus track open device had been installed, it could not be discovered by the expert Mr. Lam.  DW2 has been examined at length on how the device works.  And with the assistance of the photograph in the reports, it is not clear how this bus track operates, or whether it exists at all.  I am not convinced that the bus track has been built.

85.  Further, if it was the original design to flip open the light box, which appears to be a more simple and strict forward device, what is the reason for changing the opening to a bus track, which according to DW2 is an expensive device.  And there is no suggestion that this variation has been approved by the Plaintiff.  And I add under that the 5^th List, the Defendant agreed to rebuild the super graphic light box which supports the complaint of the Plaintiff that the light box is defective.

86.  In conclusion, I confound that the light box was defective. Alternatively, it is not build in accordance with the agreed design.  This should be replaced by the Defendant.

87.  The next defective item is the full height logo light box cabinet.  The Plaintiff complains that the Plaintiff’s logo film slide was missing.  Further, there was no space provided for replacing the fluorescent tube and the logo film slide. The Plaintiff also complains that the workmanship of the edge was below standard and the wooden frame of the logo slide did not match with the original design. 

88.  DW2 when gave evidence said the top of the cabinet could be removed for replacement of the fluorescent tube and the logo slide.  He denies the loss of the slide.

89.  As Mr. Kwan has not inspected the cabinet, he could not make any comment.  Mr. Lam in his expert report states that the Plaintiff’s logo was missing.  There was no space to replace the fluorescent tube and the logo slide.  During cross-examination, Mr. Lam agreed that he had not examined the top of the cabinet. 

90.  I accept the evidence of DW2 that an opening was provided at the top. In any event, I do not believe that the cabinet has to be replaced in total. Reading the photographs with the evidence of DW2, the design of having an opening at the top is workable.  Hence, if an opening has not been provided, the top could be converted to have a flip door or removable door for replacing the fluorescent tubes or slide.  Accordingly, the costs  would be much lower.

91.  The final complaint by the Plaintiff is that the full height computer cabinet had to be replaced if the full height logo light box cabinet has to be replaced.  They are attached together and they could not remove or replace the full height logo light box without damaging the computer cabinet.  Since I find against the Plaintiff for replacing the logo cabinet, this item of claim must fail.   

92.  The Plaintiff claims that they suffered loss.  For those items that I accept as damaged, and subject to my further discussion on whether there are recoverable damages, they should be assessed in accordance with the opinion of the experts on the reasonable cost.  What the Plaintiff has actually spent is only a matter to be taken into account.  Further, given my ruling that not all the items of defects as claimed by the Plaintiff had been proved, I am not prepared to award the full amount of damages claimed.  I would assess the loss according to the opinion of the experts.

93.  It is the Defendant’s argument that while they agreed that certain defects ought to be rectified, they are not liable for any damages for the following reasons.  It is an implied term of the Quotation that the Plaintiff should not in any way hinder and/or prevent the Defendant from carrying out and completing the Works.  It is not disputed that the Plaintiff requested the Defendant to push ahead the completion date to 28 September 2006.  According to the evidence of DW2, which is not disputed, the Defendant was instructed to stop all Works and was requested by the security guard of the Mall to leave the site on the evening of 28 September 2006. 

94.  Further, the Defendant claims that it is an implied term of the Quotation that the Plaintiff should co-operate with the Defendant and provide them with reasonable time to rectify the defects.  But the Plaintiff only agreed to allow them to have two nights to carry out all the rectification works as listed in the 5th List.  It was unreasonable.   And lastly, according to the Quotation, there would be a 1-month maintenance period.  The Plaintiff has denied them the right to maintain and/or rectify the Works within this month.

95.  Mr. Yeung refers me to the judgment in Ying Ho Company Limited v. The Secretary for Justice FACV 17 of 2003, when Mr. Justice Bokhary approved the principle that the court is often willing to imply a term that the parties shall co-operate to ensure the performance of their bargain.  I believe there should not be an argument to this principle.

96.  The argument that the Plaintiff should not prevent the Defendant from completing the Works is grounded on an implied terms.   But it is not disputed that the time for the grand opening is set by the Mall.  By co-operation, it must be a mutual obligation.  The Defendant would equally be obliged to assist the Plaintiff to hit the deadline set by the Mall.  If the Works or part thereof cannot be completed because of the direction to stop working, it may be a defence to not having completed all Works on time.  But it would not be a ground for the Defendant to say that they are entitled to present defective workdone or goods.  This is not helpful in this case as the complaint is on goods and work done completed and delivered.

97.  Mr. Yeung also refers me to the cases of Pamax Ltd. v. Cross Max Interiors Ltd. [2008] HCA 218/2002.  As commented by Deputy judge Gill, “fundamental to the obligation of a claimant in such circumstances is that he must mitigate his loss.  In the context of construction contracts this invariably means giving the defaulting contractor the chance to remedy the faulty workmanship; see Chitty on Contracts, 29^th edition, 37-199 ....”

98.  The judgment was followed by Deputy Judge Carlson in Shun Fai Decoration Handicraft Co. Ltd. v. F & F Investment Ltd. [2009] HCA 1588/2006 and said the Defendant could not be held to be in breach for defective workmanship in circumstances where it had been denied the opportunity to put right items which required further work.

99.  Ms. Yap did not address the point directly.  However she refers to the evidence of DW1 who said the remedial work would take 20 preparation days and 14 working days.  And DW2 said the remedial work would take 10 working days.  It shows the scale of rectification required.  I believe Ms. Yap was submitting that there was no substantive completion which is a matter I would consider further in respect of the counterclaim. 

100.  The defence of a reasonable chance for the Defendant to rectify the defects is nothing more than a  claim that the Plaintiff has failed to mitigate his loss.  (See paragraph 129 of the judgment of Deputy Judge Gill in Pamax Ltd.’s case.)  Since this is a matter of mitigation, the question is whether the failure on the part of the Plaintiff caused or contributed to the loss.  Even if the Plaintiff may have been unco-operative in some aspects, loss not created or caused by such failure would still be recoverable.  I have to consider each item and I do not agree that a board bush approach to disallow all the damages claim should be appropriate.

101.  And having heard all the evidence, save for some items when the Defendant admits that they took temporary measure to hit the deadline, such as the display cabinet, it is the case of the Defendant that they have been completed the Works delivered.

102.  The main complaint of unreasonableness, or denial for a fair chance to rectify all loss is the request of the Plaintiff for the Defendant to complete all Works within 2 nights.  In any event, while I accept that the Plaintiff may be unreasonable in only allowing 2 nights, but from the evidence DW2, the Defendant had returned to the site to carry out some remedial works.  In considering if this request is unreasonable, I would take into account other opportunity given to the Defendant to carry out remedial work.

103.  I note that the Defendant in the 5^th defect list requested 14 working days on site.  Ms. Yap submits that the time indicated a substantial rectification project to be undertaken.  I am also surprised by the length of time required, when comparing with the items of work suggested in the 5^th defect list.  Mr. Kwan assessed the time required to be 4-5 days.  It only shows that the request of the Defendant is unreasonable. 

104.  I have to bear in mind that the GZ Shop has started their business.  And substantive work would affect the business.  2 nights, together with earlier chance for rectification, and taking into account only a few rectifications are necessary as stated in the 5^th defect list, I cannot say that the Plaintiff is unreasonable.  The VIP counter would be built before hand, and it must be a matter of fixing and setting up.  Mr. Yeung submits that the new contractor was allowed 4 nights to complete the job.  But they have a longer list of item to complete.  Balancing all the evidence before me, I am not convinced that the Plaintiff has failed to offer a reasonable opportunity for the Defendant to return to work or to mitigate the loss. 

105.  I now proceed to assess the damages.

106.  There are 4 items of defects which I found in favour of the Plaintiff. First, for the replacement of locks for all the VIP counters.  It is unfortunate that I do not have any proposed figure from the experts.  I do not even have the number of locks.  Judging from the photographs, there would be about 15 locks.  They are not special one.  I assess a sum of HK$1,500.00 for replacing the locks.

107.  For the double side display cabinet, the front clear glass panel is not built according to the design.  For replacing this cabinet, Mr. Lam said the costs is HK$7,400.00 x 130% (for working at night) = HK$9,620.00.  Messrs. Loong Shing (the contractor who was later engaged by the Plaintiff to carry out the remedial work) charged RMB¥7,600.00 for the work, which is about HK$9,047.61 (using an exchange of 0.84). 

108.  The argument would be that replacing the glass panel would be sufficient to rectify the loss.  It means additional workdone to remove the glass panel without doing any damage to other parts of the cabinet, before the proper glass panel could be installed.  I do nto believe it would make much difference for a new cabinet made.  I award HK$9,047.00 to the Plaintiff for this defect. 

109.  For the super graphic light box, Mr. Lam assesses the costs at HK$22,500.00 x 130% (for working at night) = HK$29,250.00.  Messrs. Loong Shing charged RMB¥11,000.00 for replace the light box.  I award HK$13,095.00 to the Plaintiff for this defect (again using the exchange rate of 0.84).

110.  For the glass panel, the Defendant failed to provide 5 sq. meters.  The unit price in the Quotation is HK$550.00 per sq. meter.  The loss to the Plaintiff is assessed at HK$2,750.00. 

111.  The Defendant counterclaims for the balance of the contract price. According to the Quotation, 50% of the price has to be paid on job confirmation, which has been paid.  40% of the price has to be paid upon completion of half of the work.  And the balance is paying 7 days after job completion.

112.  There can be no doubt that the work handover is more than half of the Works.  I see no defence to the 40%.  And given the background aforesaid, the job is completed on 28 September 2006.  Ms. Yap argues that in light of the substantive remedial work suggested in the fourth and fifth defect lists, there is no substantial completion.  I cannot agree. 

113.  I also refer to the judgment of Judge Newey QC in Emson Eastern Ltd (in receivership) v. EME Developments Ltd (1991) 55 BLR 114, which has been quoted by Deputy Judge Gill in his above judgment –

“I think that probably the most important background fact which I should keep in mind is that building construction is not like the manufacture of goods in a factory. The size of the project, site conditions, use of many materials and employment of various types of operatives make it virtually impossible to achieve the same degree of perfection as can a manufacturer. It must be a rare new building in which every screw and every brush of paint is absolutely correct.”

114.  I have gone through each item claimed by the Plaintiff to be defective. Other items of work would be assumed to be properly done and delivered. Indeed, there is substantial completion and the remedy to the Plaintiff is at damages. 

115.  Ms. Yap also submits that the Plaintiff has terminated the contract.  I have ruled earlier that it has not been pleaded and the Plaintiff could not rely on this as the reason for not paying the balance. 

116.  Further, on termination, the Plaintiff relied on the evidence of Mr. Imthanavanich Visuit (“PW2”), a shareholder director of the Plaintiff.  PW2 said in a meeting with the DW3 on 15 November, 2006, he told DW3 that if the Defendant refuses or could not rectify the defects, the Plaintiff would engage another contractor but the Defendant would not be entitled to the balance of the contract price.  DW3 rejected his suggestion.  And even on his evidence, it is not clear that he has terminated the contract.  And in fact, according to PW2, after the meeting, the staff of the Plaintiff has requested the Defendant to carry out rectification work.  It clearly shows that the Plaintiff has not treated the Quotation or contract with the Defendant as being terminated.

117.  In conclusion, I found that the Plaintiff is liable to pay the balance of the contract price.

118.  The amount of damages should be set off against the balance of contract price –

119.  There be interest on the judgment sum of HK$55,962.50 from date of writ until judgment at 8% p.a. and thereafter at judgment rate until payment.  The Plaintiff is successful in part of its claim which is well within the jurisdiction of the Small Claim Tribunal.  And the Defendant has succeeded in its Counterclaim.  While it is usual to order the Plaintiff to have costs of the action and the Defendant to have costs of the counterclaim, I take into account the matter aforesaid and give an order nisi that the Defendant do have 75% of the costs of the action (including both claim and counterclaim) with certificate for counsel.  The order nisi shall become absolute within 14 days and the costs shall be taxed if not agreed.