MANDIZARI INTERIOR DESIGN & DECORATION CO LTD v. SIN YIU KEUNG

DCCJ 1405 / 2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 1405 OF 2006

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JUDGMENT[1]

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Introduction

1.  In October 2005, the Plaintiff (“Mandizari”) was engaged by the Defendant (“Mr Sin”) to carry out certain decoration works at a salon managed by Mr Sin.  Mandizari now claims against Mr Sin for the sum of HK$80,000.00 as the outstanding balance of the agreed charges for the decoration works (inclusive of materials).

2.  Mr Sin defends the claim on the basis that:

(1)	Mandizari had failed to carry out some of the agreed works.
(2)	Some of the works that had been carried out by Mandizari were of unsatisfactory and inferior quality.
(3)	He has a counterclaim against Mandizari for (a) the sum he had paid on its behalf for purchasing materials, and (b) damages in engaging other workers to carry out some of Mandizari’s uncompleted works.

3.  Mandizari in rebuttal says for some of alleged uncompleted works, they were not part of the agreed works to be carried out by it, while for the rest, they had all been properly carried out.  Mandizari  also denies that any of its works are of defective or inferior quality.  It further disputes the quantum of the sum Mr Sin had paid on its behalf for materials.

4.  In light of the above, the issues I have to determine at trial are:

(1)	Whether Mandizari agreed to carry out any of the alleged uncompleted works.
(2)	Whether for the agreed works, Mandizari had carried out all of them.
(3)	Whether Mr Sin had engaged additional workers to carry out work that should have been carried out by Mandizari, and if so the quantum of the costs for engaging of them.
(4)	Whether some of the works that had been carried out by Mandizari were of defective or inferior quality as alleged by Mr Sin.
(5)	Whether Mr Sin had paid for materials on behalf of Mandizari as alleged, and if so the quantum thereof.

5.  To understand the dispute between the parties in a proper context, it is necessary for me to set out some of the uncontroversial background as follows.

Background

6.  Before Mandizari came into the picture, Mr Sin had engaged a decoration contractor known as Ricky to carry out the decoration works at the salon.  Ricky was introduced to Mr Sin by his friend, Mr Au, who operated a pub nearby the salon.

7.  Ricky provided to Mr Sin a quotation which set out all the items of work to be carried out at the salon.  It contained a total of 30 items.  The agreed contract price was HK$191,960.00.  Ricky commenced work in about August and it was agreed that the works would be completed by end of September 2005.

8.  However, after commencing work, Ricky had been very slow in proceeding with it, and sought to increase the contract sum repeatedly. Mr Sin was so dissatisfied with Ricky’s performance and progress that, he decided to and did terminate Ricky’s engagement in about the end of September 2005.  Mr Sin says in his witness statement that by that time, he had already paid Ricky about 70% of the contract sum (that is about HK$133,000.00).

9.  Mr Sin, with the assistance of Mr Au, then tried to find a replacement contractor.  He rejected a few recommended by Mr Au.  Eventually, through a middle person, Mr Sin was introduced to Mr Chu of Mandizari.  After meeting up at the salon on 7 October 2005, and after looking at the state of decoration already completed there, it was agreed that Mandizari would carry out decoration works so as to enable the salon to commence business on 23 October 2005.  In other works, Mandizari would be given fifteen to sixteen days to complete the works.

10.  For that purpose, Mr Sin and Mr Chu personally signed a written contract dated 7 October 2005 prepared by Mr Chu.   The terms of the contract were as follows:

“	工程合約
	甲方:		藝庭裝飾設計工程有限公司。
	乙方:		(付款方) 冼耀強 HKID:******(*)
	1.	甲方願意承接旺角西洋菜北街145159A之髮型屋尾期工程。
	2.	甲方需完成前工程公司未完成之工程。
	3.	乙方願意分期付工程總額港幣拾壹萬元正。$110,000.00
		分期方式 : 共四期。
			首期 : 港幣叁萬元正。$30,000.00於開工日支付。
			二期 : 港幣貳萬元正。$20,000.00於二零零五年十一月二十日支付。
			三期 : 港幣叁萬元正。$30,000.00於二零零五年十二月二十日支付。
			尾期 : 港幣叁萬元正。$30,000.00於二零零六年一月二十日支付。
	本合約一式兩份，各存一份，簽署則明白及需履行以上合約。”

11.  Under the written contract, the payment of the contract price of HK$110,000.00 was to be made by four instalments: the first instalment of HK$30,000.00 by the date of commencement of work, the 2^nd instalment of HK$20,000.00 on 20 November 2005 (i.e., about 1 month after the anticipated completion date), the 3^rd instalment of HK$30,000.00 on 20 December 2005 (i.e., about 2 months after the anticipated completion date), and the 4^th instalment of HK$30,000.00 on 20 January 2005 (almost 3 months after the anticipated completion date).

Agreed scope of works and the alleged uncompleted items

Scope of works

12.  It is Mr Sin’s case and evidence that at the first meeting with Mr Chu at the salon, he provided to Mr Chu a copy of Ricky’s quotation (with the terms of payment blanked out). Mr Chu agreed to carry out the entire work quoted thereat unless the same had already been completed by Ricky.   However, by 23 October 2005, Mandizari failed to carry out certain items of these works, while many of the others had been done defectively or with inferior quality. 

13.  I set out in the Appendix to this judgment all the items as set out in Ricky’s quotation (with the same corresponding item numbers) which Mr Sin said Mr Chu had agreed to carry out.  For convenience, I will in below refer to these items by reference to the item number as set out the Appendix.

14.  Mr Sin’s evidence is to certain extent corroborated by Mr Au’s evidence.

15.  Mandizari’s case and Mr Chu’s evidence is however that Mr Chu had never agreed to carry out works in accordance with the items set out in Ricky’s quotation.  Mr Chu says in fact he had not seen such quotation nor had he been given a copy of it as alleged.  Mr Chu’s evidence is that on 7 October 2005, he was asked by Mr Sin to look at the salon and make a quote on whatever works that he considered necessary to carry out so as to enable the salon to commence business on 23 October 2005.  He looked around the salon, and told Mr Sin right there and then briefly what were the essential works that had to be carried out.  He also quoted to Mr Sin initially the fee of HK$120,000.00, which was subsequently reduced to HK$110,000.00 as Mr Sin said he had already paid quite a substantial sum to Ricky before.

16.  Mr Chu then later drafted the written contract for Mr Sin to sign.  Mr Chu also says the agreed payment term was unusually favourable to Mr Sin, since Mandizari was only to receive the substantial balance of the contract price (i.e, more than two-thirds of it) almost three months after completion of works.  Mr Chu agreed to do so because the middle man, with whom he was very familiar with, asked him to give a favourable term to Mr Sin.

17.  Mr Chu says Mandizari in fact carried out all the works that he had agreed to do.

The uncompleted items

18.  It is Mr Sin’s case that Mandizari had failed to carry out work items (1), (4), (8), (20), (21), (23), (25), (26) and (27) of Ricky’s quotation.  It is however Mandizari’s case that it had not through Mr Chu agreed to carry out work items (1), (8), (25), (26) and (27) of Ricky’s quotation.  For the rest, that is, items (4), (20), (21) and (23), it is Mr Chu’s evidence that similar types of work that he had agreed to perform, had in fact been properly carried out.

Discussion

19.  After hearing the evidence of Mr Chu for Mandizari, and Mr Sin and Mr Au for Mr Sin, I accept Mr Chu’s evidence and reject that of Mr Sin and Mr Au insofar as they are in conflict with Mr Chu’s.

20.  I do not accept Mr Sin’s evidence that he had given Mr Chu a copy of Ricky’s quotation, and that Mr Chu agreed to carry out all those items insofar as they were left undone by Ricky.  My reasons are as follows:

(1)	It is contrary to common and commercial sense that, had Mr Chu been given a copy of the quotation and had agreed to carry out the works set out therein, he would not have attached a copy of the quotation to the written contract to identify the scope of work.  It would have been the obvious and reasonable thing to do. Similarly, even if Mr Chu had not done so, in my view, Mr Sin would have insisted on attaching a copy of the quotation thereto if there had in fact  been such an agreement, in particular given his unsatisfactory experience with Ricky.
(2)	In the premises, the absence of a copy of the quotation attached to the written contract points strongly to the fact that Mr Chu was not given a copy of it, or in any event, he had never agreed to carry out works in accordance with those set out in the quotation.
(3)	Further, it is Mr Sin’s case that substantial works agreed to be carried out by Ricky had been left undone or uncompleted:  in Mr Sin’s pleaded case, Ricky had failed to carry out any work for 20 items out of 30 items in the quotation, while another 4 items had only been partially completed.  At the same time, the time left for Mandizari to carry out the works before the salon had to commence business was relatively short and tight, which was about 15 days.
(4)	Under such circumstances, it is inherently more likely than not that Mr Sin had only asked, and Mr Chu had only agreed, to carry out essential works that needed to be done to enable the salon to do business, instead of carrying out completely all the works left undone by Ricky.  It is pertinent to note that Ricky was given more than one month to carry out all the works under the original agreement.
(5)	Moreover, it is Mr Sin’s evidence that he had already paid a substantial sum to Ricky (who had however failed to carry out a substantial part of the works as agreed) and that he needed to find a replacement contractor who could offer him a very favourable payment term (as he was financially tight).  As such, it is also inherently more likely that he had not asked Mr Chu to carry out all the works left undone by Ricky, but instead to perform essential works to enable the salon to operate, so as to minimize further costs to be incurred.

21.  For the same reasons, I also reject Mr Au’s evidence insofar as it corroborates Mr Sin’s above evidence.

22.  I therefore find that Mr Sin had not given a copy of Ricky’s quotation to Mr Chu, and Mr Chu for Mandizari had not agreed to carry out all the uncompleted and undone items set out in it.  I also find that Mr Chu only agreed to carry out those essential works that would be required to be done to enable the salon to operate on 23 October 2005.  The details of these essential works had been set out in Mr Chu’s witness statement, which I accept were the items of works Mandizari had agreed to carry out.

23.  I also reject Mr Sin’s evidence on the uncompleted works, being works agreed to be carried out by Mandizari because:

(1)	If there had in fact been the failure on the part of Mandizari to carry out those items, in my judgment it is only natural that Mr Sin would have put on record (say by the use of photographs) the state of those uncompleted works.  However, none of the photos produced by Mr Sin (which were in any event only taken in March 2006) show those uncompleted works.  There is also no other objective evidence to show the alleged uncompleted works.
(2)	Mr Sin explained that for most of these uncompleted works (which included the making of certain cabinets, light boxes and signboard), he had subsequently either purchased from a furniture shop or engaged another contractor to finish.  However, if that were the case, it is incredible that Mr Sin had not produced any evidence on the costs he had paid for the making of these items, nor has he included these incurred costs in the present claim against Mandizari.   Other than an allegation relating to a contractor known as Lik Hang, which allegation I will deal with below, he has not even mentioned in his witness statement that he had so purchased or engaged other contractors to make and complete these alleged outstanding items.
(3)	In light of the lack of evidence set out in subparagraphs (1) and (2) above, I find Mr Sin’s evidence on the uncompleted works incredible and thus reject the same.

24.  It is Mr Sin’s evidence that Mr Sin had engaged one Lik Hang Air-Cond Engineering Ltd to carry out additional works (which were left uncompleted by Mandizari) on 23 October 2005.  The cost of it is HK$14,100.00.  Mr Sin says in oral evidence that Lik Hang in fact carried out various works to complete Mandizari’s uncompleted works.  I reject his evidence for the following reasons:

(1)	All the work items in Ricky’s quotation which Mr Sin now says Mandizari had failed to complete were related to non air conditioning works.  They included wood and furniture works, wall painting works, plastic and glass work, as well as electricity sockets and lights work.
(2)	However, Lik Hang by its name is a contractor in air-conditioning works.  In the circumstances, unless there is evidence to show that somehow Lik Hang had carried out all these non air-conditioning works, it is in my judgment more likely than not that Lik Hang was engaged to carry out air-conditioning works, but not these alleged uncompleted works.  Other than a receipt from Lik Hang stating that the payment was for “engineering work fee”, there is no such evidence adduced by Mr Sin.
(3)	In the absence of such additional evidence, and coupled with my above finding on the agreed scope of work between the parties, in my judgment, Mr Sin has failed to prove that the HK$14,000.00 paid to Lik Hang was for the carrying out any of the works allegedly uncompleted by Mandizari.

25.  For these same reasons, I also reject Mr Au’s evidence insofar as it corroborates Mr Sin’s above evidence.

26.  I therefore further find that on a balance of probabilities:

(1)	There is no failure on the part of Mandizari to carry out any of the agreed works between the parties.
(2)	Mr Sin has failed to prove that the HK$14,000.00 paid to Lik Hang was additional costs incurred by him by reason of Mandizari’s breach of the agreement to carry out any of the works.
(3)	Mandizari is thus not liable to Mr Sin for the said HK$14,000.00.

Defective works

27.  Although Mr Sin confirms at the beginning of the trial that he would no longer be pursuing any damages for costs incurred by him in remedying the alleged defective works of Mandizari as originally pleaded, it is still part of his defence that because of the defective works, he is not liable to pay Mandizari the balance of the contract price.

28.  The burden in on Mr Sin to show and prove the defective works.  He relies on various photos taken by him of the salon to show the alleged defective works.

29.  I do not think it is necessary for me to set out in detail each and every of the allegations of the defective work, as I do not find any of the photos show or support any of these allegations.  Most of these photos in fact do not relate to the items of work which Mr Sin says were defective.  For those which do relate to the relevant items of works, they do not show the defects as alleged.   Mr Au’s oral evidence adds nothing to the photos and does not therefore take Mr Sin’s case any further.

30.  Mr Sin therefore has failed to prove on a balance of probabilities any of the defective works as alleged.

31.  On the other hand, it is Mr Chu’s own evidence that he accepts that some 5% of the works completed by Mandizari is of defective or inferior quality.

32.  In light of this evidence, and doing the best as I can, I find that 5% of Mandizari’s works was defective, and Mr Sin is entitled to deduct 5% of the contract sum from payment.  That amounts to HK$5,500.00 (HK$110,000.00 x 5%).

Payment made for the purchase of mirrors

33.  Mr Chu accepts in evidence that he had asked Mr Sin to pay in advance for Mandizari HK$5,000.00 for the purchase of mirrors when they were delivered at the salon.

34.  In the Defence and Counterclaim dated 26 July 2006, Mr Sin’s pleaded case is that he had paid in advance for Mandizari HK$21,766.70 for the purchase of the mirrors^[2].  In his witness statement filed on 7 June 2007, he however says he had paid HK$22,000.00.  At the beginning of trial, he submits to the court that the sum he had in fact paid for the purchase of mirrors is HK$26,776.70.

35.  I do not accept Mr Sin’s evidence: 

(1)	Given it is Mr Sin’s own evidence that he made payment at one go on the evening when the mirrors were delivered, it should not have been difficult for him to remember how much he had actually paid.  It therefore appears to me to be highly suspicious that Mr Sin could have come up with these different versions as to what was the amount he had paid for the mirrors.
(2)	Further, under cross-examination, it was pointed to him by Mr Ho for Mandizari that it was stated in the mirrors supplier’s invoice that a HK$10,000.00 deposit had already been paid for the invoiced sum of HK$29,776.70 (leaving a balance of HK$19,776.70) before delivery, and thus it would not have been possible for him to have paid HK$21,776.70 or HK$26,776.60.  Mr Sin then immediately changed his evidence and said in fact he paid HK$19,000.00 for the mirrors on site upon delivery, and had also previously paid Mandizari’s worker HK$3,000.00 to contribute to the deposit.
(3)	Although this makes the evidence in line with what is stated in the witness statement (i.e., HK$22,000.00 although he has not provided such breakdown therein), this still could not explain why he pleaded a case of HK$21,776,70.00 initially and then states at the beginning of trial that he had paid HK$26,776.70.   Given his changing evidence and its inconsistency, I also find Mr Sin’s evidence unreliable and incredible.

36.  For the above reasons:

(1)	I reject Mr Sin’s evidence and case on how much he had paid for the mirrors on Mandizari’s behalf.
(2)	I accept Mr Chu’s evidence and find that Mr Sin had only paid HK$5,000.00 for the purchase of the mirrors on Mandizari’s behalf.  Mandizari should therefore be liable to repay Mr Sin HK$5,000.00.

Conclusion

37.  In light of my above findings:

(1)	Mandizari has proved on a balance of probabilities that it is entitled to be paid by Mr Sin HK$69,500.00 (HK$80,000.00 – HK$5,500.00 – HK$5,000.00) as balance of the contract sum.
(2)	Subject to the above deductions, Mr Sin has failed to prove his counterclaim.

38.  I therefore give judgment in favour of Mandizari in the sum of HK$69,500.00.  Mr Sin is also liable to pay interest on this sum at 1% above the prime rate as from time to time quoted by the Hongkong and Shanghai Bank from the date of Writ to the date of this judgment, and thereafter at judgment rate until full payment.   I also dismiss Mr Sin’s Counterclaim.

39.  I further grant an order nisi that costs of the action be to Mandizari to be taxed if not agreed.  This order will be made absolute 14 days after this judgment unless any of the parties apply to vary it in writing.

DCCJ 1405/2006

APPENDIX