鄺裕成經營大成工程公司 v. 卓賢科務有限公司

DCCJ 3804/2013

[2019] HKDC 1286

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.3804 OF 2013

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JUDGMENT

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A. Introduction

1.  In 2012, the defendant limited company[1] was subcontractor to 2 air-conditioning projects (both projects), one at The Park Lane Hotel (Park Lane and Park Lane project) and the other at The Peninsula Hotel (Peninsula and Peninsula project).

2.  The main contractor which engaged the defendant in Park Lane project is Chivas Corporation Ltd (Chivas). And the main contractor which engaged the defendant in Peninsula project is Carrier Hong Kong Ltd (Carrier).

3.  The defendant in turn subcontracted part of its subcontracts in both projects to Mr Kwong Yue Sing (Kwong) trading as the plaintiff company[2] (the plaintiff).

4.  The plaintiff had by late May 2012 substantially completed all subcontract works for Peninsula project, including agreed variation or additional works, for the defendant.

5.  But, for Park Lane project, on 11 May 2012, before all subcontract works were completed, the defendant demanded plaintiff’s staff to leave Park Lane, and they left as demanded, on the same day (the Eviction).

6.  In 2013, the plaintiff brought this action to recover from the defendant alleged sums due on both projects, wasted expenditure and damages for defendant’s alleged breach of contract for Park Lane project. The defendant counterclaimed for various sums allegedly spent on remedying alleged breaches, including work defects, by the plaintiff in both projects.

7.  By closing submissions, mainly due to the oral evidence given by witnesses in the course of trial, many issues on the pleadings, the witness statements and expert reports were no longer pursued and certain figures have also been agreed as either admittedly due or payable on alleged event(s). This court is most grateful for the assistance given by Mr Kevin Poon (Mr Poon) appearing for the plaintiff and by Mr Vincent Kee (Mr Kee) appearing for the defendant.

B. Background facts

8.  The following facts are, I think, common ground, admitted, not disputed or cannot be disputed and have been proven. At appropriate junctures below, I will also highlight the issues that remain to be resolved on counsels’ concessions and submissions before me.

B1. Peninsula project

9.  By defendant’s purchase order dated 5 Jan 2012, the defendant accepted plaintiff’s quotation dated 5 September 2011 and instructed the plaintiff to supply labour and tools to replace one compressor unit for one chiller at Peninsula for the sum of $115,000. One work item was later cancelled by parties’ agreement and it is agreed that the defendant is no longer liable to pay a sum of $13,000.

10.  The defendant had later, it is agreed, orally instructed the plaintiff to carry out additional or variation works on top of those set out in the above quotation. It is agreed that the defendant should pay $62,800 for these works.

11.  It is further agreed that the defendant had made 2 part payments of $34,500 and $57,500 to the plaintiff.

12.  Hence, both parties agree that a sum of $72,800 remains due from the defendant to the plaintiff i.e. $115,000 - $13,000 + 62,800 - $34,500 - $57,500.

13.  The only outstanding issue is thus defendant’s counterclaim (and set-off) in the alleged sum of $17,300 (Issue One).

14.  The defendant contends, and I accept, that under s.5 of Supply of Service (Implied Terms) Ordinance, Cap.457, there is an implied term that the plaintiff shall carry out its subcontract works with reasonable care and skill (the Implied Term).

15.  For 3 alleged work defects particularized at para 40(b), (d) & (e) of the Re-Amended Counterclaim, the plaintiff, it was argued, had breached the Implied Term, causing the defendant to have incurred alleged rectification costs of $17,300.

16.  The plaintiff disputes whether or not these alleged defects existed when his staff completed the subcontract works and called his staff Mr Wong Sau Lun (SL Wong) to give evidence. He also puts the defendant to strict proof of its alleged loss.

17.  Before me, parties also called their respective experts to give oral evidence over the quality of subcontract works of both projects. Defendant’s expert is Mr Chan Kar Ling (Chan) whereas plaintiff’s expert is Mr Wong Wai Kong Raymond (Raymond Wong & collectively the 2 Experts).

B2. Park Lane project

18.  In about 2012, by its subcontract with Chivas, the defendant was required to dismantle 3 old chillers at Park Lane and replace them with 3 new chillers to be supplied by Chivas. They are called chillers No.1, No.2 and No.3 on the evidence.

19.  For the said chiller replacement works, the defendant sought quotation from the plaintiff regarding ancillary water pipes works and electrical works.

20.  By its signed quotation dated 19 Dec 2011 addressed to the defendant (the Quotation), the plaintiff quoted to the defendant a total sum of $452,000 for such ancillary works, with their details and unit prices set out in the Quotation.

21.  Under the terms of the Quotation, a sum of $135,600 equal to 30% of the total contract sum was expressly required to be paid to the plaintiff before work commencement (付款方式：工程報價單認可施工前支付總價30/%港幣：135,600.00) and it was further provided as follows: “余下按進度支付” (collectively the Payment Clause).

22.  On or about 17 Mar 2012, defendant’s director Mr Woo Chan Cheong Waiman (Woo) signed on the Quotation and put defendant’s chop on it, and the defendant paid the said sum of $135,600 to the plaintiff.

23.  Subsequent to defendant’s signing of the Quotation, Woo on behalf of the defendant orally agreed with the plaintiff to instruct the plaintiff to carry out further works than those in the Quotation (Oral Agreement).

24.  In or about late Mar 2012, the plaintiff started the said ancillary works at Park Lane. Park Lane required that each of the 3 old chillers be replaced in turn, so as to keep the remaining two in operations. The plaintiff thus started working on chiller No.3 first.

25.  The 3 new chillers were scheduled to arrive at Park Lane in late Mar 2012 but they arrived late. They were not lifted by crane from ground to 5/F carpark of Park Lane until the evening of 4 or 5 Apr 2012. Afterwards, it was not until 13 Apr 2012 that the defendant managed to dismantle, deliver and re-assemble them at 6/F machine room of Park Lane.

26.  By 11 May 2012, except for 1) controlling unit installation (the Control Unit), and 2) pipework insulation (the Pipework Insulation), both are items of works specified in the Quotation (collectively the 2 Tasks), the plaintiff had completed all ancillary works required for chiller No.3 and those under the Oral Agreement. Immediately before the Eviction, Chivas had in the afternoon of that day carried out a testing of chiller No.3 (the Test).

27.  The issues that divide the parties are whether or not: -

1) the plaintiff had “substantially” completed agreed ancillary works regarding chiller No.3 by 11 May 2012 (Issue Two); and

2) the parties had orally agreed on a deadline of 3pm on 11 May 2012 (the Deadline) for the said completion of ancillary works for chiller No.3 by the plaintiff and made it a condition of parties’ contract or time of the essence (Issue Three).

28.  If Issue Two is answered in the negative and Issue Three answered in the positive, the defendant was, it is agreed, entitled to accept plaintiff’s repudiation for Park Lane project and to evict plaintiff’s staff from Park Lane on 11 May 2012 as it did.

29.  If, however, Issue Two is answered in the positive or Issue Three answered in the negative, it is agreed that it was the defendant which had repudiated the contract for having evicted plaintiff’s staff from Park Lane on 11 May 2012 and that the defendant became liable to pay damages to the plaintiff as a result.

30.  So, another issue is who repudiated the contract for Park Lane project on 11 May 2012 (Issue Four).

31.  If Issue Four is answered in plaintiff’s favour, Mr Kee agreed that the plaintiff shall be paid for completed ancillary works for chiller No.3. But parties differ on the amount payable, with the plaintiff contending for $105,466.67 and the defendant arguing for $15,066.67 (Issue Five). This is a question of construction of the Quotation, including the Payment Clause.

32.  If Issue Four is answered in plaintiff’s favour, Mr Kee also agreed that the plaintiff is entitled to recover from the defendant 1) wasted expenditure in preparing for works for chillers No.1 & 2 in an agreed sum of $16,400 and 2) an agreed sum of $38,950 for such works the plaintiff had carried out under the Oral Agreement.

33.  If, however, Issue Four is answered in defendant’s favour and not otherwise, the defendant counterclaimed against the plaintiff (and set off against plaintiff’s claim) the alleged sum of $91,266 for allegedly having instructed Wing Ming Electrical Engineering Ltd (Wing Ming), another subcontractor, to complete the ancillary works for chillers No.1 & 2 in place of the plaintiff. The plaintiff puts the defendant to strict proof of such alleged loss (Issue Six).

34.  Also, by way of counterclaim and set-off, the defendant contends, and I accept, that the Implied Term also applied to Park Lane project. For 4 alleged work defects particularized at para 9(c)(i), (ii), (iv) & (v) of the Amended Defence, the plaintiff, it was argued, had breached the Implied Term, causing the defendant to have instructed Wing Ming to carry out rectification works to chiller No.3 in the alleged sum of $89,000 (Issue Seven).

35.  The defendant produced a series of photos with Chinese captions in boxes alleging capturing alleged defects of chiller No.3 (Park Lane Photos). They were, however, taken by Woo latest on 8 May 2012. They did not capture the quality of the subcontract works on the day of the Eviction.

36.  The plaintiff disputes whether or not the alleged defects existed, or still existed, at the time of the Eviction and called his staff Mr Wong Ka Wing (KW Wong) to give evidence. He also puts the defendant to strict proof of its alleged loss.

C. Discussion

C1. Peninsula project

C1.1. Issue One – counterclaim for work defects

C1.1.1. Para 40(b) - Some of the trunkings were poorly fabricated which the edges were too sharp and could damage the cables inside

37.  I think this defect was made out by the defendant on some of the spots it complained of.

38.  First, I accept Woo’s evidence to the above effect. He managed to produce photos as proof (as I shall go into below, plaintiff’s witnesses did agree some of them show sharp edges complained of) and I believe some of them came from Carrier.

39.  Carrier, I accept on documents produced before me, after its inspection of Peninsula on 23 May 2012, wrote an email to Woo on 25 May 2012 enclosing a defect list of 14 images (Carrier’s Photos)[3] for rectification by 30 May 2012. I further find that, on 25 May 2012, the defendant wrote a letter to plaintiff referring to receipt of the said defect list from Carrier and requiring plaintiff to rectify the said defects by 29 May 2012.

40.  Kwong admitted in the box of having received the above letter dated 25 May 2012 from defendant, though he claimed not to have received the enclosures. He, however, further admitted having received defendant’s call afterwards giving details of the defects.

41.  Significantly, SL Wong admitted in his witness statement of having received defendant’s complaint of sharp edges at one spot[4], rectified once but the defendant was still not satisfied. He did not follow up afterwards as he was demanded to leave Peninsula by, he clarified in the box, Kwong[5].

42.  Under cross-examination, SL Wong gave further admissions on being confronted with Carrier’s Photos. He agreed that he was responsible for another captured spot[6] and that the sharp edges concerned required protection or else the cables inside could be damaged. He also admitted that rectification works were required to prevent cable damage to a third captured spot[7] but they were not done up to 23 May 2012 when he was asked by Kwong to leave Peninsula.

43.  For 2 spots captured[8] (on Carrier’s Photos), Raymond Wong expressly opined in his reports that he “basically agreed with defendant’s complaint”. He added under cross-examination of them having risk of damage to cables.

44.  I give full weight to all above admissions by plaintiff and his witnesses (notwithstanding Raymond Wong did not go as far to opine the remaining spots as “defect” though “protective works” are suggested, and notwithstanding he and Woo claimed not seeing in photo sharp edges any more on one spot[9]).

C1.1.2. Para 40(d) - Some of the nuts of power cables were not properly connected to the electrical busbar and overheating may occur when the chillers operate

45.  It is common evidence of the 2 Experts (which I accept) that, on photos produced by defendant (some of them are Carrier’s Photos), the area of the nuts was smaller than that of the busbar. They differed on whether or not the contact area between the two had so reduced as a result and whether or not, as a result, it carried the electrical hazard of overheating during operation.

46.  On both differences, I prefer the expert opinion of Raymond Wong to those of Chan. On the former, Chan admitted in the box the photos produced do not clearly show the existence of gap between the nuts and the busbar. On the latter, Chan also admitted in the box that equipment could be used to test the electricity transmitted through the two to see if they carried any hazard of overheating but such test had not been done.

47.  Hence, I do not find Chan’s opinion based on his bare eye observation from unclear photos and his inference so drawn reliable to be acted upon.

48.  To the contrary, Raymond Wong was adamant that no such hazard existed and that the problem is one of appearance. Kwong also gave evidence that the installation had “proved to be safe after testing” but, somehow, Woo still required alteration. I accept these evidence given by plaintiff’s witnesses.

49.  This complaint has not, I think, been made out by the defendant.

C1.1.3. Para 40(e) - The control wiring of chillers was not properly connected to the control unit

50.  The 2 Experts agreed that the wiring connection to the control unit had not been properly or completely connected on the photos produced by the defendant and I so find.

51.  In fact, Kwong also admitted in his witness statement and in the box that such connection had not been completed when plaintiff’s staff left Peninsula for good.

52.  Kwong merely gave excuse for such non-completion for lack of circuit diagram. Crossed-examined by Mr Kee, Kwong claimed to have sought assistance from staff of Park Lane and he later changed to answer staff of Peninsula. Had it been necessary for me to decide whether such excuse stood or not, I find it inherently unlikely that the hotel concerned would not offer assistance to plaintiff’s staff if indeed the same was required as claimed by Kwong.

53.  I do not accept this excuse of Kwong.

54.  I find that the defendant has also made out this complaint against the plaintiff.

C1.1.4. Quantum

55.  To recap, the defendant had, I find, managed to prove 2 work defects particularized at para 40(b) & 40(e) of the Re-Amended Counterclaim. To such extent, the plaintiff was, I think, in breach of the Implied Term and liable to pay damages to compensate the defendant for any loss so caused.

56.  The defence case is that the defendant was obliged to instruct Wing Ming to carry out rectification works for all defects particularized in the Re-Amended Counterclaim for $17,300.

57.  This alleged payment of $17,300 from defendant to Wing Ming is, I agree with Mr Poon, a bare allegation of Woo with no supportive document or document showing the breakdown for remedying individual defects complained of.

58.  In any event, under cross-examination, Woo said that this alleged payment of $17,300 was mainly spent on remedying alleged defect particularized at para 40(d) of the Re-Amended Counterclaim which, on my findings, has not been made out. For the remaining part, he simply could not recall.

59.  And Chan never addressed the costs of rectifying individual work defects in his expert report[10] or in the joint expert report. While Raymond Wong in his expert report and in the joint expert report gave estimates of rectifying certain individual defects in terms of time, he never quantified them in terms of money.

60.  Accordingly, I agree with Mr Poon that the defendant is only entitled to nominal damages for such of its counterclaim proven against plaintiff.

61.  I assess such nominal damages at $100.

C1.2. Summary for Peninsula project

62.  It is agreed that the defendant is liable to pay the total sum of $72,800 on plaintiff’s claim.

63.  On my findings of work defects, the plaintiff is liable to pay nominal damages of $100 on defendant’s counterclaim. To avoid any doubt, Mr Kee has abandoned defendant’s counterclaim for power cables allegedly removed by the plaintiff.

C2. Park Lane project

C2.1. Issue Two – substantial completion of chiller No.3 or not?

64.  Mr Kee relied on non-completion of the 2 Tasks to submit that the ancillary works for chiller No.3 had not been completed by the plaintiff by 11 May 2012. The 2 Tasks are, he submitted, essential conditions which go to the substance of parties’ contract, failing which the plaintiff had not substantially completed the contract by 11 May 2012. In particular, he stressed that the Control Unit was a particular operational mode demanded by Park Lane to be installed.

65.  I am afraid Mr Kee applied the wrong test at law.

66.  I agree with Mr Poon that the test of “substantial completion” was well settled at law.

67.  In the ordinary lump-sum contract the employer cannot refuse to pay the contractor merely because there are a few defects and omissions. If there is substantial completion it must pay the contract price subject to a deduction by way of set-off or counterclaim for the defects. One test is whether the work was ‘finished’ or ‘done’ in the ordinary sense, even though part of it is defective. It is relevant to take into account both the nature of the defects and the proportion between the costs of rectifying them and the contract price. Thus it is not sufficient to consider the costs of rectification alone: Keating on Construction Contracts, 10^th Ed, para 4-016 & 4-019.

68.  Applying the right test above, on Woo’s evidence under cross-examination, I think ancillary works for chiller No.3 had been ‘finished’ or ‘done’ in the ordinary sense by 11 May 2012, even though the 2 Tasks had not been completed or that there are alleged work defects complained by the defendant.

69.  First, the 2 Tasks were, I observe, two out of many items of works for chiller No.3 in the Quotation, whose total contract price is $452,000 for chillers No.1, 2 & 3.

70.  Secondly, while Woo said that, absent the Control Unit, chiller No.3 had to be manually operated, and could not be operated remotely, during the Test, he agreed that the chiller could function to produce required air-conditioning during the Test. He agreed that the plaintiff had by then completed all electrical installations and water pipes installations for chiller No.3 to perform its normal function and chiller No.3 met no problem in terms of normal functioning on or after 12 May 2012.

71.  Woo further admitted that it took only a day at a mere cost of $2,000 to $3,000 to install the Control Unit when Wing Ming, on defendant’s instructions, took over in May 2012 to dismantle and re-assemble chiller No.3. Such amount was, one thinks, relatively minor as compared to the contract price in the Quotation.

72.  Thirdly, the uncompleted Pipework Insulation is, I accept on the common evidence of Kwong and Woo, confined to gate valve locations. It is also common ground (and I accept) that temporary fiberglass insulating materials were installed at chiller No.3 during the Test as the permanent materials arrived late on 11 May 2012 and were yet to be installed. Despite so, chiller No.3 remained operational during the Test producing the required air-conditioning.

73.  And there is no evidence before me that it would take great efforts, time or costs to replace the temporary insulating materials with the permanent ones after the Test. While Wing Ming charged the defendant for, among others, the Pipework Insulation for chiller No.3 in its quotation and invoice both dated September 2012 (both totaling $89,000), Woo could not tell in the box how much, or how long, it took Wing Ming to complete the Pipework Insulation.

74.  Hence, I answer this issue in the positive.

C2.2. Issue Three – the Deadline agreed or not, and, if so, a condition or made time of the essence or not?

75.  The applicable legal principles on this issue are, I find, as follows.

76.  A condition is a stipulation that is regarded as so vital to the contract that its complete and exact performance by one party is a condition precedent to the obligations of the other party to perform his part. The parties may by express words agree that a particular stipulation is to be a condition of their contract: Chitty on Contracts, 32^nd Edition, Vol.1, para 13-026.

77.  Time can be made expressly “of the essence”. Parties could have expressly stipulated in their contract that the time fixed for performance must be exactly complied with, or that time is to be “of the essence”. The effect of declaring time to be “of the essence” is to elevate the term to the status of a condition: Chitty on Contracts, supra, para 21-103 & 21-015.

78.  There being no time provision in the Quotation, Mr Kee solely relied on the evidence of Woo to prove this issue in defendant’s favour. Woo gave evidence in the box (and in his witness statement[11]) of him and Mr Ng Ka Keung (Ng), another director of defendant, having issued an ultimatum (最後死期) to Kwong on 5 May 2012 at Park Lane for the plaintiff to complete all agreed ancillary works for chiller No.3 by the Deadline, which, it was said, could not be deferred later, and Kwong was said to have orally so agreed.

79.  Kwong denied when Mr Kee put the Deadline to him. He asserted instead in the box that he only promised Woo to complete all ancillary works for chiller No.3 by 12 May 2012 i.e. one day after the Deadline or the day after the Eviction.

80.  I first doubt Kwong’s evidence of agreed completion date of 12 May 2012. Such evidence was, Mr Kee rightly pointed out, nowhere to be found in Kwong’s witness statement he signed in Dec 2016. To the contrary, Kwong said in his witness statement[12] that the defendant never discussed nor came to any agreement on time with him after late arrival of the 3 new chillers on 13 Apr 2012.

81.  Moving to Woo’s evidence of the Deadline, there is, as Mr Poon right observed, no contemporaneous record to that effect.

82.  Indeed, Woo also claimed an earlier deadline of 5 May 2012 agreed by Kwong at a restaurant meeting on 2 May 2012 attended by Ng and Mr Li Wai Yuen (Li), another director of defendant. Nowhere was such an earlier deadline of 5 May 2012 recorded in a letter written by Li on behalf of the defendant to plaintiff on the same day of 2 May 2012 after the said restaurant meeting[13].

83.  However, Kwong admitted under cross-examination having impression of the said restaurant meeting with Woo, Ng & Li on 2 May 2012 and having agreed in the said meeting to complete all ancillary works for chiller No.3 by 12 May 2012.

84.  Kwong also admitted at an earlier stage of cross-examination of having agreed with Ng on 28 Apr 2012 for arranging test run of chiller No.3 by 30 Apr 2012. This is in line with defendant’s answer[14] to request for further & better particulars of Amended Defence and Counterclaim given in Aug 2016 (and Woo gave similar evidence in the box of Kwong having agreed on a deadline of 30 Apr 2012).

85.  Such admissions of Kwong above, I think, reinforce to some extent the defence case.

86.  But Woo’s evidence on this point was, I agree with Mr Poon, also contradicted by emails he received from Chivas on 7 & 9 May 2012 and an email he wrote to Chivas on 8 May 2012.

87.  Woo claimed in the box to have imposed the Deadline by way of an ultimatum as defendant had received the above email complaints from Chivas such that the completion deadline of chiller No.3 could not be further deferred.

88.  But Chivas made no complaint of delay in the said 2 emails. Instead, Chivas related to Woo complaints of defendant’s workmanship Chivas had received from Chivas’ customer i.e. Park Lane, saying that Park Lane’s management had no confidence on plaintiff and asking the defendant to explore replacing its subcontractor.

89.  Hence, these 2 emails do not lend support to Woo’s claim of having to impose the Deadline, or the Deadline by way of an ultimatum, due to complaints the defendant had received.

90.  Significantly, Woo wrote back to Chivas on 8 May 2012 to say that, after discussion with defendant’s subcontractor i.e. the plaintiff, the plaintiff had “promised” to finish the remaining works for the 1^st chiller “within a relatively short time”. He “suggested” that the plaintiff be replaced by another subcontractor to carry out works for the 2^nd and 3^rd chillers after all remaining works completed by plaintiff for the 1^st chiller have been successfully tested.

91.  Though Woo referred to “promise” from the plaintiff in the said email dated 8 May 2012, he had not, I note, specifically put down the Deadline in it despite he allegedly reached agreement on it with Kwong 3 days ago on 5 May 2012. Nor did Woo refer to plaintiff’s promise obtained by way of an ultimatum.

92.  Under cross-examination, Woo purported to explain such omission of the Deadline in the said email of 8 May 2012 by saying that he would like to leave some room in case the plaintiff not being able to finish the works for chiller No.3 by the Deadline. Such explanation does not, I think, sit well with Woo’s claim of obtaining the Deadline by way of an ultimatum, whose non-compliance would allow defendant to accept plaintiff’s repudiation of parties’ contract.

93.  And, confronted with his “suggestion” of subcontractor replacement in the said email of 8 May 2012, Woo conceded under cross-examination that the plaintiff would anyway not be allowed to carry out works for chiller Nos.1 & 2. In other words, the defendant had already decided as early as on 8 May 2012 to follow the views of Park Lane to replace the plaintiff, even if the plaintiff could complete the works for chiller No.3 on time by the Deadline.

94.  In line with the above complaints defendant had received from Park Lane through Chivas, I think it likely that the defendant simply followed the decision of the management of Park Lane made on 11 May 2012 in carrying out the Eviction on that day.

95.  Woo gave evidence that, on 11 May 2012, he heard from Chivas and he (and that is common evidence of Woo and Kwong) in turn conveyed to Kwong, that Park Lane’s management was displeased with plaintiff and that Park Lane demanded plaintiff’s staff to stop all works and to leave Park Lane at once (and Park Lane ordered its security staff to prohibit plaintiff’s staff from entering Park Lane again). I accept these   evidence and find Woo to have been so conveyed to Kwong on 11 May 2012.

96.  I do not find it necessary to decide whether or not plaintiff’s staff had removed temporary insulating materials during or after the Test to cause them floating around in the air to irritate the management of Park Lane in the afternoon of 11 May 2012. Kwong claimed in the box of not witnessing such alleged floating with himself facing the opposite direction at the material time[15]. And Woo claimed in the box that he was not at Park Lane at the time of the Test and that he heard it over the phone from Chivas before conveying Park Lane’s demands to Kwong over the phone. In other words, I do not decide why the management of Park Lane was displeased as Woo had conveyed to Kwong in the afternoon of 11 May 2012.

97.  But I do find that Woo had never conveyed to Kwong on 11 May 2012 that plaintiff’s staff should leave Park Lane at once for non-completion of the works for chiller No.3 by the Deadline (Woo never gave evidence of advising Kwong this very reason to explain the Eviction). Such omission militates, in my views, against the parties having agreed on the Deadline by way of an ultimatum, for otherwise Woo would likely have so given it as the reason for the Eviction.

98.  All things considered, I find evidence of both Kwong and Woo on this point unreliable. The defendant, I conclude, fails to prove on the balance that the Deadline had been orally agreed as alleged. Had the Deadline been orally agreed as alleged, I do not find it likely to have been made a condition or time of the essence by parties’ oral agreement as alleged.

99.  I answer this issue against the defendant.

C2.3. Issue Four – who repudiated contract?

100.  For my answers to Issue Two and Issue Three, I rule that it was the defendant who repudiated parties’ contract by carrying out the Eviction on 11 May 2012. Indeed, either my answer to Issue Two or to Issue Three will suffice for me to so rule.

101.  Hence, as Mr Kee agreed, the defendant is liable to pay plaintiff wasted expenditure for chiller No.1 & 2 in the sum of $16,400 and $38,950 for such works the plaintiff had carried out under the Oral Agreement, and the plaintiff should be entitled to be paid for completed   chiller No.3.

C2.4. Issue Five – amount payable on completed chiller No.3

102.  Mr Poon submitted that the plaintiff should be paid for completed chiller No.3 at one-third of the remaining balance of the contract price in the Quotation after deducting the sum of $135,600 i.e. ($452,000 - $135,600) / 3 = $105,466.67.

103.  To the contrary, Mr Kee submitted that the plaintiff should only be paid one-third of the whole contract price in the Quotation with credit given to the said sum of $135,600 i.e. $452,000 / 3 - $135,600 = $15,066.67.

104.  Mr Poon laid emphasis on the 2 Chinese words “余下” used in the Payment Clause, which words, he submitted, could only objectively represent the balance of the contract price in the Quotation after deducting the said sum of $135,600. Defendant’s suggestion of defendant making progress payment to plaintiff pro rata of the whole contract price cannot, he submitted, explain the use of the 2 Chinese words “余下” in the Payment Clause.

105.  Defendant’s interpretation would, Mr Poon argued, mean that the plaintiff would almost not be entitled to any further payment than $135,600 before works for the 1^st chiller was completed. And, on defendant’s construction of the Quotation, this 30% payment would represent “prepayment” for the 1^st chiller rather than “deposit” as it is supposedly to be.

106.  I disagree with Mr Poon.

107.  I think Mr Poon focused too narrowly on the 2 Chinese words of “余下” in the Payment Clause. One needs to consider them in the whole context of the Quotation.

108.  First, the completed chiller No.3 is but one out of 3 sets of identical chillers[16] in the Quotation. Looking at the 2 major items of the Quotation i.e. item 1 & 3, one can see that the whole contract price of $452,000 is mainly arrived at by multiplying the unit prices of these 2 items by three. It is, in my view, entirely fair and reasonable for defendant to make progress payment to plaintiff pro rata with whole contract price in the Quotation i.e. paying plaintiff one-third of whole contract price for having completed one out of three chillers.

109.  As Mr Kee put it, if the plaintiff is to be paid $105,466.67 for the completed chiller No.3 on top of the said sum of $135,600 it had already received, the plaintiff would in effect have received a total of $241,066.67 which represents 53.33%^[17] (i.e. more than one-third of the whole contract price) when he had completed one out of 3 identical chillers.

110.  Secondly, the Chinese word of “deposit” never in fact appears in the Quotation. The said sum of $135,600 paid before work commencement could well be, one thinks, “pre-payment” or “part-payment” to provide the plaintiff with the capital to start the subcontract works. Assuming it was indeed “deposit” as Mr Poon suggested, I can see nothing wrong with it also serving as “pre-payment” or “part-payment”. The wordings of the Payment Clause, including the 2 Chinese words of “余下” do not, I think, prevent it having such dual functions.

111.  Neither does the Payment Clause, in my views, prevent progress from day one to be considered or taken into account in allowing/calculating progress payment pro rata of whole contract price to be given to plaintiff. On defendant’s construction of the Quotation, the plaintiff could still earn more than $135,600 if it achieves progress of more than 30%. On plaintiff’s completion of all works for chiller No.3, the plaintiff would still be paid a sum of $15,066.67 on top of $135,600 it had already received and the total of these 2 sums is precisely one-third of the whole contract price.

112.  For above reasons, I agree with Mr Kee and hold that the plaintiff is entitled to be paid $15,066.67 for substantially completing the agreed ancillary works for chiller No.3.

C2.5. Issue Six – substituted ancillary works for chillers No.1 & 2

113.  As it was not the plaintiff who had repudiated parties’ contract on 11 May 2012, the plaintiff is, I find, not liable to defendant for this head of claim.

114.  Were the plaintiff to be held liable to defendant for this head of claim, I agree with Mr Poon that the defendant should at best be entitled nominal damages.

115.  There is no evidence to prove that the 2 sums of $300,000[18] and $70,940[19] paid, if at all, by defendant to engage Wing Ming to complete such ancillary works regarding chillers Nos.1 & 2 were reasonable or not. Under cross-examination of Mr Poon, Woo admitted the defendant had not sought quotations from contractors other than Wing Ming.

116.  There is also no evidence to show whether such works Wing Ming had undertaken regarding chillers Nos.1 & 2 were comparable with those in the Quotation or not.

117.  The Quotation had, one notices, altogether 5 individual items of works, with items 1 & 3 having unit price for each of the 3 chillers. In contrast, as Woo agreed, an “all-inclusive package” sum of $150,000 was agreed and put down in Wing Ming’s invoice 10 July 2012 for works to be carried out on each of chiller Nos.1 & 2. There is no breakdown figure for individual item of works for each chiller in the said invoice. Though there is breakdown figure for individual item of works in Wing Ming’s Invoice dated 21 Aug 2012, one cannot match their descriptions with those in the Quotation.

118.  As a result, one simply cannot tell how much more, if any, the defendant had paid Wing Ming for taking over exactly the same ancillary works the plaintiff had agreed to perform for chillers No.1 & 2 in the Quotation, even if Wing Ming had charged the defendant reasonably at all.

C2.6. Issue Seven - counterclaim for work defects

C2.6.1. Para 9(c)(i) - The framework underneath the chiller could not bear the weight of the chiller

119.  On Kwong’s admissions, I find the said framework did bend slightly due to the weight of chiller No.3 in the first place. But I accept the common evidence of him and of Woo that the plaintiff had rectified the same after Woo’s complaint. The Park Lane Photos also captured the conditions after rectification was done.

120.  And Kwong gave further evidence that the slight bending in the first place caused only an appearance problem (美觀問題) and there was no more bending after rectification. Crucially, Woo gave no contrary evidence to rebut these evidence. Woo never said there was further bending after rectification or that chiller No.3 had been damaged as a result (indeed, it was never so pleaded).

121.  The Park Lane Photos also fail to tell the position after 8 May 2012 either. After being cross-examined on enlarged copies of the Park Lane Photos, Chan saw fit to revise his original opinion that chiller No.3 could be damaged and rendered unsafe. He changed to say that he had “no opinion” so long the calculations are alright according to a registered structural engineer (and Chan being himself an electrical and mechanical engineer).

122.  Hence, the defendant has, I think, failed to prove existence of this alleged defect at the time of the Eviction.

C2.6.2. Para 9(c)(ii) - There was a big gap between the straight pipe and the bend fitting. The defendant requested the plaintiff to rectify it. The plaintiff only used galvanized welding to weld the gap. Actually the bend fitting should be replaced by a suitable sized fitting, otherwise there would be a risk of water leaking from cracks

123.  Again, I think the defendant failed to prove that this alleged defect still existed by the time of the Eviction.

124.  I find on balance on the evidence of KW Wong, the opinion evidence of Raymond Wong and of Chan, and on the Park Lane Photos that gap did once exist between the straight pipe and the bend fitting, that the two were welded together at some points only (as shown by the Park Lane Photos) with galvanized welding and that Park Lane had requested the plaintiff not to carry out galvanized welding due to different material of the pipe[20].

125.  But KW Wong further testified to say that he afterwards did compile with Park Lane’s request to weld together the straight pipe and the bend fitting fully with same material.

126.  Woo did not, and could not, contradict the above evidence. He agreed in the box that he could not tell what welding materials had been used to weld the gap shown in the Park Lane Photos. Had it been galvanized welding as alleged, the Park Lane Photos could not prove continued existence of such gap by the time of the Eviction, all the more so as Wing Ming “dismantled and re-assembled” chiller No.3 after it took over the subcontract works as Woo said. Neither could the 2 Experts give contrary factual evidence to rebut KW Wong’s evidence.

127.  As such, I do not find it necessary to decide whether or not there once existed any risk of water leakage due to galvanized welding as complained by the defendant.

C2.6.3. Para 9(c)(iv) - The bolts and nuts for connecting the flexible connector with pipeworks were overly tight on the rubber body of the flexible connector and this could accelerate deterioration

128.  Kwong gave evidence that the plaintiff had made proper measurements and used appropriate bolts and nuts to connect the flexible connector and that the ends of the former had never come into any alleged contact with the rubber body of the latter so as to cause any alleged friction as Woo complained.

129.  Not to mention the timing limitation of the Park Lane Photos, I agree with Raymond Wong that they did not show the alleged contact complained of.

130.  Chan did not opine otherwise in his own expert report or the joint expert report. He belatedly raised for the first time under cross-examination possibility of such alleged contact. I do not find such belated evidence reliable and I give it no weight.

131.  Had there been such alleged contact problem, Woo agreed under cross-examination that he did not inspect again to see whether or not the plaintiff had rectified it before Wing Ming set out to dismantle chiller No.3 and re-assemble it.

132.  On the above evidence, the defendant has, I think, failed to prove existence of this alleged defect at the time of the Eviction.

C2.6.4. Para 9(c)(v) - Instead of installing a new hanger for supporting the large chilled water pipes, the plaintiff only made use of the existing chilled water pipeworks to be the supporting point of the newly installed pipeworks. The existing pipeworks could not bear the heavy weighted pipes installed and water leakage occurred

133.  KW Wong had admitted that the plaintiff did make use of existing chilled water pipeworks to be the supporting point of the newly installed pipeworks and had not installed a new hanger for supporting purpose. I so find.

134.  Though he did hear of defendant’s complaint of water leakage, KW Wong said he did not know whether or not there had been water leakage or about the cause of the same.

135.  Looking at the pipeworks captured in the Park Lane Photos, Raymond Wong opined that the water leakage complained of was not caused by inadequate support as alleged.

136.  Chan never addressed in his own expert or joint expert report the cause of such alleged water leakage.

137.  Chan again belatedly claimed for the first time under cross-examination that the additional weight may cause leakage as the original design did not cater for it. However, he had written down in blue in his own handwriting in his own expert report: “if this is for temporary support. Can be fixed properly before completion. No adverse comment” next to the Park Lane Photos concerned. In view of that, I also decide to give no weight to such belated evidence of Chan.

138.  Under cross-examination, Woo said for the first time that the alleged water leakage stopped after defendant’s staff had tightened the screw of the pipeworks concerned. That was not mentioned at all in his witness statement.

139.  On the above evidence, I do not think the defendant had made out this defect as pleaded.

C2.6.5. Quantum

140.  To cap, the defendant has completely failed to make out any of the alleged work defects particularized at para 9(c)(i), (ii), (iv) & (v) of the Amended Defence. As such, the plaintiff was, I think, not in breach of the Implied Term at all and the defendant can recover nothing from the plaintiff.

141.  Were I wrong to so find above, I agree with Mr Poon that the defendant is at best entitled to nominal damages for there is insufficient evidence to prove the quantum of its alleged loss.

142.  I am afraid Wing Ming’s quotation and invoice in the lump sum of $89,000 for chiller No.3 both dated September 2012[21] gives one no clue how much the defendant had paid Wing Ming, if at all, for remedying alleged individual defect above. There is no breakdown of individual item of works for this lump sum of $89,000, which, on Woo’s evidence, included unknown amount for the Pipework Insulation.

143.  And Woo gave no evidence of seeking quotation from other contractors to prove that such amount, if any, paid to Wing Ming by defendant for remedying individual defect of chiller No.3 caused by the plaintiff was reasonable or not.

144.  I repeat here the same deficiencies above in terms of expert opinion of both parties on costs of rectification works. Chan merely said in the joint expert report that more should be required than those estimated by Raymond Wong.

C2.7. Summary for Park Lane project

145.  On plaintiff’s claim, the defendant is, I think, liable to pay a total sum of $70,416.67 to the plaintiff i.e. $38,950 + $16,400 + $15,066.67.

146.  The defendant fails, I think, to prove its counterclaim at all against the plaintiff.

D. Interest

147.  Both counsels suggested to adopt prime rate plus 1% as the applicable rate for any judgment entered and that will be followed below. On accrual date of interest, I have taken into account the different accrual dates of parties’ respective causes of action on both projects in arriving at the common date adopted below for claim and counterclaim.

E. Disposition

148.  I enter final judgment on plaintiff’s claim in the sum of $143,216.67 in favour of the plaintiff against the defendant, together with interest thereon at HSBC prime rate(s) plus 1% from 29 May 2012 to the date hereof.

149.  I also enter final judgment on the defendant’s counterclaim in the sum of $100 in favour of the defendant against the plaintiff, together with interest thereon at HSBC prime rate(s) plus 1% from 29 May 2012 to the date hereof.

150.  I direct that the 2 judgments above on plaintiff’s claim and defendant’s counterclaim be set off against one another and that execution, if any, be issued on the balance only.

F. Costs

151.  The plaintiff is obviously the successful party on plaintiff’s claim. As the defendant only obtained nominal damages for its substantial counterclaim, I also consider the plaintiff the successful party on the counterclaim in all the circumstances of this case.

152.  I therefore make a costs order nisi that the defendant shall pay the plaintiff both the costs of the claim and of the counterclaim, including all reserved costs and the costs of this trial thereof with certificate for counsel, to be taxed if not agreed.

153.  Finally, if none applies to vary the above order nisi within 14 days, it shall become absolute.