THE INCORPORATED OWNERS OF KING YIP FACTORY BUILDING v. KWUN WAH FLOWER AND PLANT MANUFACTORY LTD.

DCCJ24390/1996

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 24390 OF 1996

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J U D G M E N T

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1. In this claim the Plaintiff, the Incorporated Owners of King Yip Factory Building ("hereinafter referred to as "the Building") claims against the Defendant, the owner of Unit A and Unit C on the 13th Floor of the Building, for the half share of repair costs related pursuant to a Chinese agreement in writing dated the 18th November 1995 (hereinafter called "the Agreement") entered into between them. In this Agreement, the Plaintiff and the Defendant acknowledged that there is water seepage from the ceiling of the Premises to the Defendant's premises. It was stated that there was a need to repair in order to safeguard the structural safety of the building and to resolve the inconvenience caused to the offices of the 13th Floor.

2. As there is no certified translation of the Agreement I will set out the terms of Agreement in its original Chinese text as follows:-

"甲方：	敬業工廠大厦業主立案法團，地址為九龍觀塘敬業街59 號地下；
	法定代表人：郭彥淳
	身份証號碼：A201351（A）
乙方：	冠華花葉廠有限公司(Kwun Wah Flower and Plant Manufacturing Limited)地址為九龍觀塘敬業街59號敬業工廠大厦13字樓A座及C座
	法定代表人：周登
	身份証號 碼：B864355（O）
事由：	九龍觀塘敬業街59號敬業工廠大厦13字樓A座及C座因天面漏水，需要進行維修以保障大厦之結構安全，及解決13字樓之不便，維因天面部份面積業權屬13樓所有，部份面積屬大厦公眾地方用以裝置公眾設施，為確保得到最佳的效果，維修時不可以分割進行，因此甲乙雙方達成協議如下。
（1）	維修範圍如所示A/C座有顏色部份。
（2）	採用專業人仕之意見，用最經濟的維修方法，自行買料僱工人做，首先清理天台表面雜物，舖上英泥沙，再髹PU防水漆，然後在PU漆上用藏有馬路綱的英沙覆蓋以保護 防水層。
（3）	由於天台拆卸物品多屬私人業權所，故單位之業主須負責清理泥頭雜物“兩車”費用。
（4）	由管理處潘厚昌先生負責招請工人及監管工程進行，周志雄先生義務協助監管。
（5）	維修費用由甲乙雙方各負責半數（不包括律師及顧問費）由律師樓監管及按照本合約執行，所須費用由甲方先行墊支，維修工程完成後乙方須立即向甲方支付其應付費用。
（6）	本協議書一式三份，甲乙雙方各執一份，一份由見証律師備案。”

3. The Plaintiff's case was that they had commenced the repair work on the 20th November 1995 but had not been able to carry out the repair work inside the structure built by the Defendant on the roof of Block A which premises was occupied by Mr. To Hon, who was a tenant and/or agent of the Defendant. Mr. To refused to allow the Plaintiff's workmen to enter into his said premises.

4. It was alleged by the Plaintiff that by the conduct of Mr. To, the Defendant had evinced an intention no longer to be bound by the Agreement and has repudiated the same.

5. The Plaintiff through their Messrs. C.T. Chan & Co sent a letter to the Defendant dated 17th April 1996 accepting the Defendant's repudiation of the Agreement.

6. The half share of the costs of labour and material in carrying out the repair works claimed by the Plaintiff amounts to $83,630.00.

7. Alternatively, the Plaintiff claimed damages to be assessed.

The Defendant's Case

8. The Defendant in their Defence pleaded that by virtue of the terms of the Agreement and in particular Clause (4) of the Agreement, the Plaintiff was responsible for the supervision of the repair work. They pleaded an implied term by reason of business efficacy to make the said Clause(4) of the Agreement meaningful and workable, that the Plaintiff was obliged to provide sufficient supervision and in particular to ensure that the said repair work would be completed without any water seepage or leakage affecting the ceiling of Unit A and Unit C of the 13th Floor of the Building.

9. Further they pleaded that the Agreement also contained the following implied terms:

"4A. Likewise, the Agreement also contains the following implied terms:

(a) The Plaintiff is not entitled to claim from the Defendant in respect of the Defendant's share of any repairing cost and expense incurred by the Plaintiff until they have arranged to be completed all the repairing work without the water seepage and leakage problem affecting the ceiling of the Unit A and Unit C of the 13th Floor of the Building.

(b) In the event that the Plaintiff failed to arrange to be completed or alternatively that the workmen retained by the Plaintiff or Poon Hau Cheong failed to complete the repairing work as required under the Agreement, the Defendant shall be entitled to engage its own workmen to complete the repairing work and to see reimbursement of a half share of such repair expenses form the Plaintiff."

10. The Defendant admitted that the Plaintiff had arranged to carry out certain repairing works at about the end of November 1995 but it was stopped after 20 days. The Defendant denied all the allegations related to the fact that Mr.To Hon had refused to allow the workers to enter into his premises to do repair works. They denied that they had repudiated the Agreement. They denied the claim of the Plaintiff.

11. They claim instead that despite their demands the Plaintiff had failed or refused to arrange to be completed the repair works in accordance with the Agreement. They pleaded that the Plaintiff had been in breach of the Agreement. Due to the Plaintiff's breaches, water seepage into the Premises continued. In the premises the Defendant had to employ their own contractor to complete the repairing work to remedy the water seepage problem. The Defendant has incurred the costs therefore in the sum of HK$250,000.00 for repairing costs and the sum of HK$6,000.00 in respect of surveyor's fee.

12. The Defendant seeks to assert an alternative claim based on the Plaintiff's common law duty to maintain the common area which includes an unused cemented water tank structure at the roof of the building so as to prevent nuisance to the Defendant. Due to the Plaintiff's failure to maintain these in good repair and condition the aforesaid common area fell into disrepair causing nuisance to the Defendant.

13. The Defendant pleaded an alternative claim of nuisance and negligence based on the Plaintiff's common law duty to maintain the common areas aforesaid. The loss and damages suffered are the sums of HK$125,000.00 and HK$6,000.00 referred to aforesaid.

14. At the trial, the Defendant's Counsel relied on the fact that the Agreement was an entire Agreement with the entire obligation on the part of the Plaintiff to rectify the water seepage. The Defendant's case was that the Plaintiff was only entitled to claim payment from the Defendant upon completion of their obligation. As they had failed to complete their obligation, the Plaintiff was not entitled to claim payment from the Defendant.

The Issues

15. The issues of the Claim and Counterclaim are:-

1. What was the scope of the repair works agreed to be done under the Agreement?

2. Did the Defendant repudiate the Agreement as claimed by the Plaintiff or did the Plaintiff breach the Agreement as claimed by the Defendant?

3. What remedies are available to the innocent party?

4. Was the obligation in the Agreement an entire obligation such that the Plaintiff would not be entitled to be paid until completion of the entire obligation by the Plaintiff?

The 1st Issue

16. The Recital in the Agreement states that because of water seepage on the ceiling of the 13th Floor of Block A and C, it was necessary to carry out repair in order to ensure the structural safety of the building and to resolve the inconvenience to the offices at the 13th Floor. It was envisaged that the repair work would encompass the area on the roof privately owned by the owner of the 13th Floor as well the common area of the roof. In order to bring about the best result, the repair should not be conducted in respect of each of these areas separately. For this reason Party A and Party B entered into the agreement for repair.

17. Hence according to the Recital of the Agreement, the repair was stated to be required because of water seepage to the ceiling of the 13th Floor of Block A & C. The scope of the repair was to remedy this to ensure the structural safety of Block A & C of the building and to resolve the inconvenience to the offices on the 13th Floor.

18. Paragraph 1 of the Agreement states a defined area for the repair. It refers to the coloured area on a plan. However according to Mr. Kwok In Son, the Chairman of the Plaintiff from November 1992 to March 2001, he could not remember if a plan was attached to the agreement at the time when he signed it. Mr. Chow Tang of the Defendant stated that no such plan was attached. The original of the Agreement kept by the Solicitors of the Plaintiff did not have a plan attached. Although it may have been envisaged by the Plaintiff to attach a plan to the Agreement showing the area of the repair, from the evidence of the parties, such plan had not been attached to the Agreement at the time of execution of the Agreement.

19. This being the case, and there being no evidence that the parties had limited the area of repair to a defined area, it seems that the scope of the repair work is that stated in the Recital of the Agreement.

2nd Issue

20. The evidence related to this comes from Mr. Poon Hau Cheung of the management office who is stated to be the person responsible for employing workers and to supervise the repair work.

21. Mr. Poon's evidence on this in examination-in-chief was not consistent ith his evidence upon cross-examination. In his evidence-in-chief he stated that he asked Wong Wai On on the 20 Nov 1995, when the repair work commenced to notify Mr. To Hon who occupied the structure on the roof of Block A to pack up his possessions so that the repair work could proceed in his premises. Wong Wai On did not report to him as to the result of this. He stated that he also asked To Hon many times. He did not remember how many times. On the morning of the 11th December, the workers told him that Mr. To Hon would not allow them to enter into his premises to do the repair. He then went to ask Mr. To personally to let the workers in to do the repairs. However Mr. To told him that there is no water seepage. There is no need for repair in his premises. He also stated that when he met Mr. To he asked him about this matter but with no response.

22. Under cross-examination, Mr. Poon stated that he asked Wong Wai On on the 20th November to notify Mr. To and again he asked Mr. Wong Wai On again to do so. The workers were working on the roof starting from Block C towards Block A. When the workers got to Block A on the morning of the 11th December, they asked Mr. To to let them into his premises to do the repair work. Mr. To refused. Mr. Poon then went to ask Mr. To. Mr. To refused. He then reported this to Mr. Kwok In Son, the Chairman of the Plaintiff a few days thereafter. He did not know what Mr. Kwok did about that.

23. Mr. Wong Wai On, the workman employed to work on the repairs stated in evidence that Mr. Poon had never asked him to ask Mr. To Hon whether he could do repair work in his premises. In fact, he stated that Mr. Poon had not asked him to do the repair work within the structures on the roof of Block A and Block C. These consist of one structure on the roof of Block A and two structures on the roof of Block C built by the Defendant. The structure on the roof of Block A was occupied by Mr. To Hon and of the two structures on the roof of Block C one was formerly used as a kitchen and the other structure was used as a storage area.

24. Mr. To Hon stated that in November or December 1995, there were workers doing repair work on the roof of the Building. In the course of the repair work no one ever asked him for permission to enter his home to do repair work. The workmen repaired the roof outside his home for 10 odd days. Subsequently his landlord did ask workmen to enter his home to do repair work. The work lasted 6 - 7 days.

25. Mr. Kwok In Son the Chairman of the Plaintiff Committee for the years from November 1992 to March 2001 stated in evidence that he was informed that Mr. To Hon had not allowed the workmen to enter into his premises to do the repairs. However he did not notify the Directors of the Defendant of this fact nor did he notify the Defendant to notify Mr. To Hon to allow the workmen in to do the repairs.

26. In the light of the conflict of evidence I have to find where the truth lay. Mr. To and Mr. Wong Wai On were adamant that they were telling the truth. It is not an easy task to find who was telling the truth. It seemed to me from the evidence of the parties that the relationship between Mr. Poon and Mr. Wong Wai On were not a happy one. Mr. Poon did not hesitate to give the Court his unfavourable view of Mr. Wong Wai On. Mr. Wong Wai On seemed to me to be lacking in initiative and interest in his work. At several points he stated that he merely took orders and he was just doing a job. He gave an impression of simply doing the bare minimum and would not take on anything that required taking responsibility.

27. It also seemed to me from the evidence of Mr. To Hon that Mr. To's relationship with the Plaintiff was not a comfortable relationship. It is obvious because the structure occupied by Mr. To was built by the Defendant and appeared to be a makeshift structure built from iron frame and iron sheets. It was an illegal structure and most probably existed on sufferance by the Incorporated Owners. Despite this the lack of interest in what the workmen were doing just outside his home appeared extraordinary. When asked whether he knew what the workmen were doing, he said, "I do not know. It's a matter for the building management." When asked whether he asked the workmen what they were doing when they were working outside his home, he said, "its a matter for the building. That did not affect me."

28. Further, the ill feelings between the members of the Committee of the Plaintiff and the Defendant was obvious. Mr. Kwok In Son who appeared to be polite and wel-mannered, came out with some adverse comments that Mr. Chow Tang and Mr. Chow Chi Hung were people who were secretive and could not be easily located.

29. Another extraordinary fact is, Mr. Poon Hau Cheong and Mr. Kwok In Son failed to inform the Defendant of Mr. To's refusal to allow the workmen in to do repairs. After the repair work ceased, and upon the complaint of Mr. Chow Tang of the Defendant that the water seepage still persisted, Mr. Poon was invited into the premises of the Defendant when it was shown to him that the water seepage still persisted. Even on this occasion, Mr. Poon did not inform members of the Defendant's staff and Mr. Chow Tang that Mr. To had refused the workmen permission to enter into his structure to do the repairs to the roof floor within his structure.

30. Having considered the aforesaid I still come to the finding that that the evidence of Mr. Poon that Mr. To Hon was asked by the workmen as to whether he would allow them to enter to do the repairs is true. This is because Mr. Kwok gave evidence that he was informed by Mr. Poon of the fact that the Mr. To would not permit the workmen to enter to do the repairs and I came to the conclusion that Mr. Kwok is a truth witness through his evidence and the manner he gave his evidence. In my view the likely scenario was that Mr. Wong Wai On did not ask Mr. To Hon permission to enter his premises for repair. He may have been asked by Mr. Poon to do so but it is possible that the communication was not clearly conveyed to him by Mr. Poon as their relationship was not good. I find that on the morning of the 11th December 1995, the workmen asked Mr. To for permission to enter his premises to do the repair. Mr. To was not willing to co-operate because it would cause him inconvenience. Further he had not received prior notice.

31. The repair of the roof surface within the structures on the roof at Block C, did not proceed as was stated by Wong Wai On. Wong Wai On stated upon cross-examination, "I saw the surface of the two illegal structures were dry. I did not work inside but outside."

32. Mr. Poon stated that he did not tell Mr. Chow Tang or Mr. Chow Chi Hung that Mr. To Hon had refused to let the workmen gain entry into his premises for repair. He stated that he merely told Mr. Kwok. He did not know if Mr. Kwok told Mr. Chow Tang or Mr. Chow Chi Hung. Mr. Kwok stated that he did not tell Mr. Chow Tang or Mr. Chow Chi Hung. Mr. Poon also stated that there was no need for him to tell the two Mr. Chow as Wong Wai On was the one authorized by Mr. Chow Chi Hung to assist in the supervision of the repairing work. However there is no evidence that Mr. Wong Wai On knew that Mr. To Hon had refused entry to the workmen. Mr. Wong himself stated that he did not know of that fact. Mr. Poon stated that he just asked the workmen to stop work until the Plaintiff's Committee had a meeting to decide what to do.

33. Mr. Kwok when cross-examined as to whether he had notified the Defendant of Mr. To Hon's refusal to let the workmen in to do the repair, stated that the two Mr. Chow of the Defendant could not be contacted, that they were very secretive. He stated that he did not have their telephone numbers or their address. He stated that they were not occupying the 13th Floor at the time. There had been no attempt to write to the Defendant, a limited company in relation to the refusal of To Hon to let them into the premises to do the repair work.

34. There is no evidence that the Defendant knew that Mr. To Hon had refused to allow the workmen entry into his premises to do the repair work. In my view as there is no evidence that Mr. Wong Wai On knew that To Hon had refused entry to the workers. It could not therefore be said that Mr. Wong had knowledge which could be attributed to the Defendant on the basis that Mr. Wong Wai On was given the authority to act on behalf of Mr. Chow Chi Hung. As Mr. To Hon was not the agent of the Defendant but the tenant of the Defendant, the act of Mr. To Hon could not be attributed to the Defendant. In my view, there is no evidence that the Defendant had evinced an intention no longer to be bound by the Agreement and there is no evidence that the Defendant had repudiated the Agreement. The Plaintiff had wrongly treated itself as having been discharged from the Agreement. This amounted to a repudiation of the Agreement by the Plaintiff.

The 3rd Issue

35. The Plaintiff's Counsel stated in final submission that were the Plaintiff's treating itself as discharged from the performance of the contract a repudiation of the Agreement which the Defendant nevertheless chose to keep alive, then the next issue is whether any of the implied terms as pleaded in the Defence in paragraphs 4 and 4A thereof could be invoked by the Defendant.

36. As regards the implied term pleaded in paragraph 4 of the Defence the Plaintiff's Counsel submitted that under the test of business efficacy, a term would only be implied where without such term, the contract would not be workable. It is not for the purpose of imposing further obligation. In paragraph 13-004 of Chitty on Contracts 28th Edition, it is stated,

"The court will be prepared to imply a term if there arises from the language of the contract itself, and the circumstances under which it is entered into, an inference that the parties must have intended the stipulation in question. An implication of this nature may be made in two situations: first, where it is necessary to give business efficacy to the contract, and, secondly, where the term implied represents the obvious, but unexpressed, intention of the parties. These two criteria often overlap and, in many cases, have been applied cumulatively, although it is submitted that they are, in fact alternative grounds. Both, however, depend on the presumed intention of the parties."

37. The Plaintiff's Counsel submitted by reference to Chitty paragraph 13-005 that under the test of business efficacy, a term would only be implied where, without such term, the contract will not be workable. It is not for the purpose of imposing a further obligation. Paragraph 13-005 of Chitty state the general principle of law as stated by Bowen L.J. in The Moorcock:-

"Now, an implied warranty, or, as it is called, a covenant in law, as distinguished from an express contract or express warranty, really is in all cases founded upon presumed intention of the parties, and upon reason. The implication which the law draws from what must obviously have been the intention of the parties, the law draws with the object of giving efficacy to the transaction and preventing such a failure of consideration as cannot have been within the contemplation of either side; and I believe if one were to take all the cases, and there are many, of implied warranties or covenants in law, it will be found that in all of them the law is raising an implication from the presumed intention of the parties with the object of giving to the transaction such efficacy as both parties must have intended that at all events it should have."

38. Clause 4 of the Agreement state that Mr. Poon Hau Cheong, of the management office shall be responsible for recruiting labour and for supervision of the progress of the work. Mr. Chow Chi Hung voluntarily assists in the supervision. In my view, the Clause in Paragraph 4 of the Re-Re-Amended Defence And Counterclaim that "the Plaintiff was obliged to provide sufficient supervision and in particular to ensure that the said repair work would be completed without any water seepage or leakage affecting the ceiling of Unit A and Unit C of the 13th Floor of the Building" cannot be implied. Clause 4 of the Agreement only stated that Mr. Poon Hau Cheong shall be responsible for recruiting labour and for supervision of the progress of work. It cannot be seen from Clause 4 and the Recital of the Agreement that the supervision to be provided by Mr. Poon was for any purpose other than to supervise the progress of the work. Nor can it be seen that it was the intention of the parties that the supervision of the progress of work was to ensure that the said repair work would be completed without any water seepage or leakage affecting the ceiling of Unit A and Unit C of the 13th Floor. The implied term pleaded in Clause 4 of the Re-Re- Amended Defence and Counterclaim goes beyond the intent in Clause 4 of the Agreement and in my view is not necessary to give business efficacy to the contract and therefore cannot be an implied term of the Agreement.

39. There is no necessity to imply the term in Clause 4A (a) of the Re-Re-Amended Defence and Counterclaim into the Agreement as the Defendant's liability for payment of the repair costs is to be construed from the Agreement itself. Such an implied term is not necessary, to give business efficacy to the contract.

40. In my view it is necessary for business efficacy to imply a term as stated in Clause 4(b) of the Re-Re-Amended Defence And Counterclaim. The Agreement is one made between the parties jointly to carry out repairs to resolve the water seepage to the ceiling of Blocks A and C of the 13th Floor and to safeguard the structural integrity of the building and to resolve the inconvenience to the office of the 13th Floor. The parties stated that in order to ensure the best results the repair work had to be undertaken as one project covering the common area of the Building owned by the Plaintiff as well as the area owned by the Defendant. Should the work not progress to completion by the Plaintiff who had the responsibility of employment of workers and supervision of work progress by the Plaintiff's staff Mr. Poon with the voluntary assistance in supervision by Mr. Chow Chi Hung of the Defendant, the stated intention of the Agreement to repair the water seepage to the ceiling of Block A and C of the 13th Floor and to safeguard the structural integrity of the building could not be attained unless the Defendant could take over the repair work by the employment of workers and purchase of material and supervision of work progress until completion. Therefore, I am of the view that the implication of this clause is necessary to give business efficacy to this Agreement.

41. In the event of the repudiation of the Agreement by the Plaintiff, the implied term gives the Defendant the right to treat the Agreement as subsisting, to employ workmen and to purchase material to complete the repair work as under the terms of the Agreement and to seek reimbursement of a half share of such repair expenses from the Plaintiff.

42. The Defendant claims by their Re-Re-Amended Counterclaim the sum of HK$125,000.00 being half share of HK$250,000.00 incurred by the Defendant in repairing the roof of Block A and C of the Building pursuant to the implied term in Clause 4A(b) aforesaid.

43. The Defendant's witness Mr. Chow Tang stated that the work of the Plaintiff's workmen had not fully resolved the water seepage problem of the Defendant's property on the 13th Floor of Block A and C at the conclusion of their work. Water still dripped from the ceiling of his premises although it had improved a little. His solicitors wrote to the Plaintiff on the 10th February 1996, (the letter is at page 55 of the Documents Bundle) giving the Plaintiff notice that owing to the Plaintiff's failure to complete the repairing work the Defendant shall employ workers to complete the repairing work on the Roof and advise the Plaintiff of the cost incurred. Mr. Chow Tang stated that owing to the failure of the Plaintiff to complete the repair work, the Defendant engaged its own contractor a company called Fai Shing Decoration Company (hereinafter referred to as "Fai Shing") to complete the repair work on the roof of Block A and C. The repair work was started in about February 1996 at the roof of Block A and C. After the repair work was completed by this company, the water seepage problem at the ceiling of Block A and C on the 13th Floor had stopped. The Defendant had to pay a sum of HK$250,000.00 to Fai Shing for their repair work carried out on the roof of Block A and C. The receipts for such is at pages 58, 59, 62, 63 and 66 of the Bundle of Agreed Documents.

44. Mr. Chu Man Fai of Fai Shing gave evidence to say that he found water seepage from the water tanks on the roof of Block A and C and carried out repairs thereto. This required quite extensive work. Under cross-examination he stated that the work and material on the water tanks alone cost about $170,000.00 and on the remaining part of the roof surface of Block A and C cost about $80,000.00. He spent about 40 odd days. The work could not be done every day for he had to wait for the material applied to dry. He stated that about 5 to 7 people worked on the contract per day of work at the time. He paid an average salary of $500 each. He spent about $120,000 to $130,000 on material and he could not remember how much profit he made on this contract. He stated that he would normally make about $20,000 per project.

45. I find Mr. Chu to be a credible witness. I accept his evidence and the evidence of Mr. Chow Tang of the Defendant that the work done by Fai Shing was effective in resolving the water seepage problem at the ceiling of the 13th Floor of Block A and C of the Building. However pursuant to the implied term, the Defendant is entitled to employ workmen and purchase material to complete the repair work pursuant to the intent of the Agreement, namely to do so by the purchase of material and the employment of labour with a view to an economic resolution of the problem . The Defendant had in fact employed Fai Shing to do this work. In so doing he had departed from the economical manner in which the work was envisaged to be done, without having to pay the profit margin of a decoration company as the Defendant had to. The Defendant would not be entitled to reimbursement from the Plaintiff of the sum he paid Fai Shing for their profit. Mr. Chu stated that he employed between 5 to 7 workers on the job per day earning an average of $500 per day. He purchased material in the sum of $120,000 to $130,000 for the work. He explained that a lot of material was required to be put inside the water tanks to make them waterproof. I find that the Defendant could only recover a sum from the Plaintiff for the repair costs paid to Fai Shing less a sum representing the profit element earned by Fai Shing.

46. I go to the evidence of Mr. Chu to see if it could be discovered what the profit element of the sum paid to Fai Shing by the Defendant would be.

47. He stated that he had spent between 40 odd working days on the project employing between 5 to 7 workmen at a salary ranging from $300 per day to $800 per day. He stated this would be averaged out to $500 per workmen per day. He also stated that he spent between $120,000.00 to $130,000.00 on material. I assess the profit of Fai Shing by deducting from $250,000, the wages of 5 workmen at the average wage of $500 per day multiplied by 40, and a sum of $125,000 representing the cost of material [$250,000 - ($500 x 5 X 40 + $125,000) = $225,000. Comparing the scope of work undertaken by Fai Shing which included the whole of the roof of Block A and C as well as within and around the water tanks and around the outer wall of the roof requiring 40 odd days' work with the labour and material charges of the Plaintiff at $167,260 for 20 days work, the scope of which did not cover the area of the structure in Block A and two structures in Block C and also did not include the inside of the water tanks although the work included the removal of debris, pot plants, poles and climbing frames for plants, plant soil, bricks holding up poles and surrounding flower pots etc. the charges of Fai Shing appear to me to be reasonable. I find that the Plaintiff is liable to reimburse the Defendant the sum of $112,500.00 (1/2 of $225,000.00) together with the Surveyor's Fees of $6,000 in respect of the Surveyor's Report.

The 4th Issue

48. The Defendant's Counsel submitted that the Defendant is not liable to pay the Plaintiff the Defendant's half share of the repair costs and expenses paid by the Plaintiff as the Agreement is an entire Agreement and until the Plaintiff had completed the repair work the Defendant was not liable to pay the Defendant.

49. Paragraph 22-027 of Chitty on Contract 28th Edition at page [1112], it states,

"Entire and divisible obligations. A contract is said to be "entire" when complete performance by one party is a condition precedent to the liability of the other, in such a contract the consideration is usually a lump sum which is payable only upon complete performance by the other party. . . The opposite of an "entire contract" is a "divisible contract," which is separable into parts, so that different parts of the consideration may be assigned to severable parts of the performance, e.g. an agreement for payment pro rata.

Yet the phrase "entire contract" is a misleading one in that the real issue in the cases is whether the "obligation" of the party in default is "entire," not whether the contract itself is entire. Of course, the contract may state that one party can only recover on the contract when he has completed his performance under the contract. . . ."

A matter of construction. It is a question of construction whether the obligation is entire or divisible, but in the reported cases the courts have tended to the view that in every lump-sum contract there is an implied term that no part of the price is to be recovered without complete performance..."

50. The obligation for the remedy of the water seepage problem was an entire obligation in that it was not divisible into different stages or parts. The obligation was to remedy the water seepage to the ceiling of the 13th Floor of Block A & C in order to safeguard the structural integrity of the building and to resolve the inconvenience to the 13th Floor arising from the water seepage. Until the water seepage is remedied and the structural integrity of the building is safeguarded and the inconvenience caused to the 13th Floor arising from water seepage problem is resolved the obligation is not fulfilled. However, it also appeared that both parties had jointly entered into the obligation to repair. The Plaintiff in their letter dated 18.1.96 to the Defendant at page 54 of the Agreed Bundle of Documents also referred to the Plaintiff and the Defendant having entered into a joint obligation to repair the roof. This is the letter where the Plaintiff sought payment by the Defendant of their share of the repair costs. Further this is clear from the finding that it is necessary to give business efficacy to the contract to imply the term referred to paragraph 4A (b) of the Defence & Counterclaim. Each party had their role to play in respect of this obligation. Clause (4) of the Agreement stated that Mr. Poon Hau Cheong was responsible for employing workmen and supervising the progress of work whilst Mr. Chow Chi Hung of the Defendant would voluntarily assist in the supervision. The repair work was a joint effort of the parties and a joint obligation. It is not a situation where one party had the obligation to perform the work and the other party had the liability to pay upon completion of the work.

51. Paragraph (5) of the Agreement stated that Party A would outlay the necessary expenses. At the completion of the repair work, Party B has to immediately reimburse Party A for the portion of the expenses that is due to be paid by Party B. It is clear here that the Agreement refers to expenses of the repair that both parties were liable to pay and not a contract sum for repair charged by the Plaintiff for completion of the entire contract. It is therefore not a lump sum contract as such. Although it is stated that the obligation of Party B to pay their share of the repair expenses is at the completion of the repair work yet the obligation to reimburse the Plaintiff their half share of the repair expenses is clearly stated. I find that the Agreement is not in the nature of an entire agreement as stated in paragraph 22-027 of Chitty referred to above.

52. I have found that the repudiation of the Agreement by the Plaintiff had not been accepted by the Defendant. The contract was kept alive for the benefit of both parties. The rights and obligations of both parties continue. (see Chitty on Contract 28th Edition paragraph 25-010). This being the case, the Agreement with the implied term is still alive. Could the Plaintiff claim against the Defendant for the sum paid by the Plaintiff for the work done by the Plaintiff?

53. Is the Plaintiff entitled to claim a half of the repair costs expended by them when it was the Defendant's workmen who brought to a conclusion the repair work? The original intention of the contract was for the parties to jointly enter into the obligation to repair and to share the repair expenses equally. I find that the Plaintiff would be entitled to claim from the Defendant that part of the repair costs expended by the Plaintiff which had not been wasted owing to incompletion of the work by the Plaintiff and had been necessary in attaining the obligation of the parties to repair the water seepage of the roof of Block A and C.

54. The photographs taken by the Surveyor of the roof in the Surveyor's Report at pages 76 to 85 of the Bundle of Documents, show the final state of the roof after all the repair work had been completed by Fai Shing. Mr. Chu stated that when he worked on the roof of Block C he found that there were some cracks there but they were not too deep and he just had to break open the areas where there were cracks and applied the material to those areas. In areas of the roof of Block C where there were no cracks he did not have to do that. In relation to the roof at Block A he found that there were many deep cracks and the surface of the roof had to be taken away for the waterproofing material to be applied.

55. The sum claimed by the Plaintiff included the following sums:-

(a) Cost of debris removal charges, (2 lorries)	$4,000.00
(b) Cost of labour (including wasted labour)	$37,800.00
(c) Cost of materials (including wasted materials)	$24,330.00
(d) Fees for removal work	$17,500.00
	$83,630.00
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These sums were expenses which were evidenced by documentation. I accept the expenses as genuine outlays made by the Plaintiff.

56. The Defendant had to expend labour and material to do the waterproofing work on the roof of Block A and on only the parts of Block C where there were some small cracks on the roof surface. It would however seem that part of the waterproofing work of the Plaintiff at the roof of Block C had been effective as the work required to be done by Fai Shing on the roof of Block C is not extensive and is limited to the areas where there are shallow cracks. Further pursuant to Clause 3 of the Agreement the Defendant was responsible for removing 2 lorries load of debris as most of the items to be demolished from the roof are private property, belonging to the Defendant. Item (a) claimed by the Plaintiff for removal charges in the sum of $4,000 and (d) being fees for removal work in the sum of $17,500.00 should be payable by the Defendant as these items of work are necessary before waterproofing work on the roof of Block A and C could begin. Mr. Poon and Mr. Wong Wai On gave evidence of the removal from the roof surface of poles for climbing plants, bricks holding flower pots, soil in flower pots, plants with climbing poles etc which had been erected on the roof by the Defendant. The workmen had to remove these before waterproofing work could be done on the roof surface. I had also found that the waterproofing work of the Plaintiff's workers on the roof of Block C had been partly effective as Mr. Chu stated that there were only small cracks found there and he only had to work on the areas around the cracks. I therefore apportion a fifth of the cost of labour and material claimed by the Plaintiff in items (b) and (c) as being labour and material for waterproofing of the roof surface which had not been wasted and is work that had been retained by Fai Shing. I therefore find that the Defendant should pay the Plaintiff the total of the following sums:-

(a) Cost of debris removal charges	$4,000.00
(b) Cost of labour 1/5 of $37,800	$7,560.00
(c) Cost of materials 1/5 of $24,330	$4,866.00
(d) Fees for removal work	$17,500.00
	$33,926.00
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57. I therefore give judgment for the Plaintiff in the sum of HK$33,926.00 together interest thereon at judgment rate from the date of the action to the date of judgment and thereafter at judgment rate until payment with an order nisi for costs of the action to be taxed if not agreed with Certificate for Counsel. I give judgment for the Defendant on the Defendant's Counterclaim in the sum of $118,500 together with interest thereon at judgment rate from the date of the Counterclaim to date of judgment and thereafter at judgment rate until payment together with an order nisi for costs of the counterclaim to be taxed if not agreed with Certificate for Counsel. I direct that the one judgment and costs be set off against the other and that execution do issue for the balance only