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HCA006934/1996
HCA 6934/1996
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 6934 OF 1996
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JESSLETON LIMITED |
Plaintiff |
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JOSEPH SY & ASSOCIATE LIMITED |
1st Defendant |
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GOLDEN COMPANY |
2nd Defendant |
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JOSEPH Q SY |
3rd Defendant |
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Coram: Hon Chung J in Court
Date of Hearing: 18 to 22 September 2000 and 14 to 18 and 21 to 25 May 2001
Date of Handing Down Judgment: 1 December 2001
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J U D G M E N T
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Introduction
1. This action arose out of the renovation work of a residential duplex in the Mid-Levels, Hong Kong.
2. The following facts are undisputed at trial:-
(1) the plaintiff is a company and the registered owner of a residential duplex known as 28th and 29th Floors, Silvercrest, 24 MacDonnell Road, Hong Kong (respectively "the 28th floor" and "the 29th floor" and collectively "the suit property");
(2) the persons controlling the plaintiff are members of the Mui family. For the purpose of this trial, the Mui family refers to Mr. David Mui ("David Mui"), Mr. Robert Mui ("Robert Mui") (who do not reside in the suit property) and the 4 Mui sisters who reside in the suit property;
(3) the Mui family also runs a Mui's Kamsing Enterprises Ltd. ("the related company") and a Mui's Kamsing Garment Ltd. ("the garment company");
(4) the 1st defendant ("D1") is a limited company the shareholders and directors of which are the 3rd defendant ("D3") and his wife. D1's principal business has been interior design and landscaping;
(5) the 2nd defendant ("D2") has been a interior decoration contractor, who has undertaken renovation work at the suit property from about the end of 1996 to early 1997.
3. Further, it is undisputed that the plaintiff has entered into an agreement for the renovation of the suit property ("the renovation agreement"). However, the identity of the other contracting party to the renovation agreement is disputed. The plaintiff contends that the other contracting party is both D1 and D3; alternatively, D3, although signing the renovation agreement as D1's agent, has also incurred personal liability thereunder. D3 denies having contracted with the plaintiff whether in his own right or as D1's agent (having incurred personal liability).
4. It is also undisputed that the plaintiff entered into an agreement with D2 whereby D2 was to undertake the renovation work at the suit property ("the work agreement").
5. Credibility of the witnesses is an important issue in the determination of a lot of the disputes herein. This issue will be dealt with under the headings and sub-headings below as appropriate. To avoid any doubt, when assessing credibility, I have borne in mind the need to consider the totality of the evidence and the overall circumstance, apart from looking at the individual aspects of the action.
The Issues Raised by the Pleadings
6. The plaintiff claims in short that D1/3 breached the renovation agreement by failing to provide proper designs, failing to properly advise the plaintiff and failing to properly supervise D2's work. The plaintiff's claim against D2 is essentially that the interior decoration work was defective and the materials supplied were sub-standard.
7. D1's Defence is a relatively short document consisting of 10 paragraphs. In brief, the defence is that the plaintiff has expressly approved the designs and the choice of materials and thus D1 has fully complied with the terms of the renovation agreement. At the beginning of the trial, D1 sought leave to amend its Defence. The most substantial proposed amendment was in effect to withdraw the admission that the renovation agreement was made with the plaintiff. The new averment in the draft was that the renovation agreement was made with David Mui. The application for leave was refused after hearing the parties. Extempore reasons for the refusal were given at the time and will not be repeated here.
8. D2 sought, and was granted, leave to amend his Defence at the beginning of the trial. D2 also denies the plaintiff's claim and asserts that his work was expressly approved and accepted by D1. D2 further alleges that he was wrongfully prevented from rectifying the defective items of work (if any).
9. D3 denies he was a party to the renovation agreement or was otherwise liable thereunder.
The Issues Raised at Trial
10. The issues raised by D1 go beyond those pleaded in the Defence and include:-
(1) the scope of D1's duty under the renovation agreement;
(2) whether the plaintiff waived its claim regarding the defects;
(3) whether the plaintiff suffered any loss;
(4) the loss claimed is irrecoverable.
11. The issues raised by D2 also go beyond those pleaded and include:-
(a) whether the alleged defects were part of D2's work;
(b) whether the alleged defects were matters of design (and therefore D1's duty);
(c) whether the work was defective;
(d) whether the materials supplied were defective.
12. These issues (and others not specifically set out above) will be dealt with further below.
Parties to the Renovation agreement
13. As stated above, the plaintiff argues that both D1 and D3 were liable under the renovation agreement and should accordingly be both answerable for any breach of it.
(a) Was D3 a Party to the Renovation agreement?
14. The plaintiff's primary case is that both D1 and D3 were co-contracting parties to the renovation agreement.
15. The following points are undisputed by the parties:-
(a) the renovation agreement was entered into in about September 1995 (evidenced by a letter of engagement dated 29 September 1995);
(b) prior to the renovation agreement, David Mui and D3 were close friends and known to each other for a relatively long time;
(c) the letter of engagement was set out on D1's letterhead. It was signed by D3 with a chop "Joseph Sy & Associates" (that is, a name similar to D1's) near D3's signature;
(d) the pre-contract negotiations with the plaintiff were made in D1's office premises where D1's name was displayed.
16. The plaintiff relies upon the following matters in support of its case that D3 was also liable under the renovation agreement:-
(a) David Mui only knew D3 and not D1 before the plaintiff discussed the renovation work with D3;
(b) there was a close relationship between D1 and D3 in that D3 was the person effectively in control of D1;
(c) David Mui (on the plaintiff's behalf) obviously relied on D3's personal skill and experience rather than that of his company (that is, D1) when he entrusted the renovation work of the suit property to D1/3;
(d) the oral representations made by D3 to David Mui before the plaintiff entered into the renovation agreement to the effect that the renovation work would be "first class" and that the plaintiff would definitely like the result of the renovation work;
(e) when D3 signed the letter of engagement, he did not state that he did so for and on behalf of D1 (nor did D3 in any other way sufficiently qualify his personal liability when signing such document);
(f) as opposed to other decoration/renovation works referred to by D3 in his testimony, D1's pro forma contract was not used and only D1's letterhead was used.
17. On the other hand, D3 relies upon the following matters in defence:-
(1) the letter of engagement was clearly set out on D1's letterhead;
(2) the discussions with the Mui family regarding the then proposed renovation work were made in D1's premises where it must have been clear that the interior design business was run by D1; for example, D1's name was conspicuously displayed at the office premises;
(3) the letter of engagement used the word "we" (instead of "I") which is consistent with the description usually used by companies to describe themselves.
18. Where there is no express agreement (oral or written) on the matter, whether it was intended that an individual was a party to a contract depends on the circumstances of the case. Further,
"In deciding issues of contractual intention, the courts normally apply an objective test ... The objective test ... prevents a party from relying on [a party's] uncommunicated belief as to the binding force of the agreement ...":
Chitty on Contracts (1999) 28th Ed., para. 2-148.
A similar test was adopted in relation to the interpretation of a contractual document in ICS Ltd. v. West Bromwich Building Society [1998] 1 WLR 896, 912-3.
19. The same objective test should apply to the ascertainment of the identity of contracting parties. Hence, matters such as:-
"... background knowledge ... [meaning] ... the 'matrix of fact' ... Subject to the requirement that it should have been reasonably available to the parties and ... includes absolutely anything ... ".
(the ICS Ltd. case at pp. 912-3) should be considered in determining the issue. But
"... The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent ... ":
see the ICS Ltd. case at pp. 912-3.
20. Bearing in mind the relevant circumstances and the parties' arguments (summarized above), I conclude that the renovation agreement was made between the plaintiff and D1 (only) and reject the parts of David Mui's testimony which assert otherwise. I do not find that D3 was also a contracting party. In addition to the circumstances set out above, it is also relevant that David Mui, who essentially was the plaintiff's agent in relation to the renovation agreement, was highly educated and must have been fully aware of the difference between an individual and a limited company. Further, the Mui family (including David Mui) has itself made use of various corporate vehicles to conduct its affairs, such as running the businesses of garment manufacture and property-holding.
21. Quite a lot of time has been spent in the examination of witnesses about their subjective intention as to the identity of the contracting party or parties. Further, counsel have referred to the parties' conduct subsequent to the renovation agreement, such as, the identity of the parties to which correspondence was addressed, or of the party issuing invoices for payment, or of the payee of cheques for interim payments, or of the recipient of letters before action.
22. Neither of the above matters are admissible evidence for the purpose of this issue. In relation to the former matter (subjective intention), the relevant legal principles appear above and need not be repeated. In relation to the latter matter (subsequent conduct), the relevant legal principles have been set out in Chitty, para. 12-124 (although that passage was related to the interpretation of contracts). The latter matter may well be relevant to an estoppel by convention but since the point has not been raised or argued, there is no need to consider or decide that.
23. These matters are, however, relevant to the credibility of witnesses regarding the other disputes in this action and I have borne this in mind when considering the credibility issue. It is in particular to be noted that:-
(a) the defence suggests that the plaintiff is bringing this action against the defendants in effect to harass them;
(b) by reason of the conclusion reached above regarding D3's liability, the related parts of David Mui's testimony must be (and were) rejected;
(c) further, the said parts of David Mui's testimony are inconsistent with, for example, the invoices issued by D1 (and not D3) and the pre-writ correspondence (made almost totally between the plaintiff and D1).
(b) Was D3 Personally Liable as D1's Agent?
24. The plaintiff's alternative case is that although D3 might only have signed the renovation agreement as D1's agent, D3 has also incurred personal liability because he failed to sufficiently qualify or negative his own liability. In this connection, the plaintiff relies on Stanley Yeung Kai Yung v. Hongkong & Shanghai Banking Corporation [1981] AC 787, 795D:-
"It is not the law that, if a principal is liable, his agent cannot be. The true principle of the law is that a person is liable for his engagements (as for his torts) even though he is acting for another, unless he can show that by the law of agency he is to be held to have expressly or impliedly negatived his personal liability".
25. The relevant circumstances set out above (under the heading "(a) Was D3 a Party to the Renovation Agreement?") are relevant to, and need to be considered in determining, this point. It is unnecessary to repeat them here suffice it to say that having considered them, I conclude that D3 has sufficiently negatived his personal liability.
(c) Did D3 Make a Collateral Agreement with the Plaintiff?
26. I am satisfied and find as a fact that, before the renovation agreement was entered into, D3 has orally represented to the effect that:-
"the renovation work would be "first class" and that the plaintiff would definitely like the result of the renovation work".
However, I do not find them to amount to any legally binding representations or warranties. Instead, I consider them to be in the nature of mere "puffs": Dimmock v. Hallen (1866) LR 7 Ch App 21, 27.
27. There was accordingly no collateral agreement between the plaintiff and D3.
D1's Scope of Duty under the Renovation agreement
28. There are 2 aspects regarding this issue. The first aspect is the scope of D1's duty under the renovation agreement (if any) relating to D1's own work. The other aspect is the scope of D1's duty thereunder (if any) relating to D2's work under the work agreement. These 2 aspects may, however, be inter-related and will be discussed further below.
29. Before proceeding with the further discussion below, it is pertinent to refer to the pro forma contract of D1 (exhibit "D8"), which has been accepted by D3 in cross-examination to be the terms which D1 would normally abide by in the ordinary course of its business. The plaintiff relies especially on the following provisions:-
"PHASE III
... [D1] will provide CLIENT with sufficient information via photographs, tear sheets of manufactured furniture, decorative or special lighting style and types, and floor materials. All pertinent and necessary information will be provided to aid and assist, in order that the CLIENT ... can commence with their respective responsibilities to provide the architects, contractor and others with production drawings" (emphasis supplied).
"PHASE VI
... Inspection and Supervision
At all phases of the construction and installation of furnishings to ensure that methods and materials conform to [D1's] drawings and specifications
... Completion of Work
Each phase of [D1's] work will commence immediately upon CLIENT's decision and will be completed prior to such reasonable time as designated. All work will be performed pursuant to the instruction of the CLIENT and subject to his approval" (emphasis supplied)."
30. D1 (through D3) has not stated in testimony that the terms appearing in exhibit "D8" did not apply to the renovation agreement, nor put forward any reason for excluding them. I find that those terms were part of the renovation agreement.
(a) In Relation to D1's Work
31. The plaintiff submits that the duty of care and skill of an interior designer is in principle the same as that of an architect, although the standard of care may be lower for an interior designer. In Jackson & Powell on Professional Negligence (1997)4th Ed., para. 2-106 it was said:-
"One of the primary functions of an architect ... is design, including the preparation of plans, drawings, specifications and the selection of materials. ... the standard commonly applicable in designing is that of reasonable care ...
If a design is outside his expertise the proper course is for him to inform his client accordingly and either himself to engage, or to advise the employer to engage, a person with the required expertise. ...
The approval of defective plans or drawings by the employer will not absolve the architect from liability in circumstances in which the employer is relying on him to avoid defects, unless the employer has given his approval with full knowledge of the defects ... " (emphasis supplied) .
It was also said in Jackson & Powell, para. 2-109 that:-
"It will often be the case that a designer instructed to design only a part of a building will need to take account of the design of other parts ... ".
32. D1 apparently accepts that an interior designer owes some kind of duty of care and skill to his clients. I do not think that D1 has clearly stated what should be the nature or extent of this duty (as a matter of general principle). In any event, even in the absence of express contractual stipulations, I consider that an interior designer still owes to his clients a duty of care and skill. Whether the duty is contractual in nature (by way of duties arising from an implied term) or tortious in nature (by way of a duty to exercise due care) does not really matter in this action.
33. I disagree with the plaintiff's argument above insofar as it states that the duty of an interior designer may be lower than that of an architect. The duty in either case is the same: in both instances it is a duty to use due or reasonable care and skill. There is however a difference between the two regarding what should be the reasonable duty of care and skill. An architect is a professional and therefore there are often professional standards against which his duty can be compared or measured. An interior designer, on the other hand, is not a professional and there are no such professional standards. Further, an architect has to undergo professional training and obtain professional qualifications whereas there is no need for an interior designer to do so. But there is no reason why, as a matter of principle, an interior designer's duty to his clients (apart from express contractual stipulations) should be anything less than to exercise due and reasonable care and skill.
34. In law, an interior designer's duty of reasonable care and skill should be that which a reasonably competent interior designer will or will not reasonably do in the relevant circumstances. The relevant circumstances may differ according to the facts of each case but usually (and especially so in the context of this case) would include:-
(a) whether the matter is one which the client can reasonably rely on the interior designer for the designer's judgment or advice;
(b) whether the matter is one which involves safety (or hazard) to life and/or property, or hygiene;
(c) whether the matter is one which involves compliance with the law (such as statutes).
Subject to the above observations, I conclude that the duties of an architect referred to in Jackson & Powell also apply to an interior designer.
35. One duty contended for by the plaintiff is D1's duty to provide the plaintiff (as its client):-
"with sufficient... 'pertinent and necessary information' to 'aid and assist' [the plaintiff] in making...decisions and [giving] approvals relating to [the renovation of the suit property]" (p. 2 of the plaintiff's skeleton final submission).
This point becomes important because in relation to many of the defects now relied upon by the plaintiff, the defendants argue that the plaintiff has either accepted them, or at least waived any claim arising therefrom, because:-
(a) the plaintiff has been shown, and either expressly approved, or at least acquiesced in, the design plans and drawings produced by D1;
(b) the plaintiff has either expressly approved, or at least acquiesced in, the items of work items in dispute when they inspected the suit property while renovation work was in progress;
(c) the plaintiff has either approved (whether expressly or impliedly), or at least acquiesced in, some of the allegedly defective items of work the related items of work were not referred to in the letter of complaint dated 28 February 1996.
The plaintiff's response is that (1) the above points are factually untrue, and (2) in any event, unless and until D1 has discharged its duty of properly providing the plaintiff (as its client):-
"with sufficient... 'pertinent and necessary information' to 'aid and assist' [the plaintiff] in making decisions and giving approvals relating to [the renovation of the suit property]",
the plaintiff could not properly be regarded as having either approved, or acquiesced in, the design or the renovation work.
36. D1's stance regarding its duties under the renovation agreement can be summarized as follows:-
(1) it is accepted that D1 was to provide designs for the renovation of the suit property;
(2) although D1 was to recommend some of the materials to the plaintiff, D1's duty was only to ensure that these materials should be fit for the purpose for which they were required;
(3) it was not a contractual term that D1 was responsible for advising the plaintiff as to all necessary consent and/or approval from the authorities, nor was it a term that D1 was to apply for such consent or approval. It is common ground that D1 was not professionally qualified to advise on or obtain the same.
(D1's other contentions regarding its duties will be set out under the next sub-heading "(b) In Relation to D2's Work").
I have taken the above matters into account when deciding that D1 was under a duty to use reasonable care and skill (set out above). For the avoidance of doubt, I do not accept D1's contentions insofar as D1 submits that it either has no duty or that its duty was limited. As stated earlier, subject to the point regarding the standard of D1's duty, I accept the plaintiff's arguments.
37. Specific aspects of D1's duties (including those contended for by D1 above) will be further discussed in relation to the individual items of work under the heading "Were the Renovation Agreement and Work Agreement Breached?"
(b) In Relation to D2's Work
38. If D2 had been D1's agent in carrying out the work agreement, D1 would have been vicariously liable for any breach of the work agreement on D2's part. It would obviously be D1's duty in such a case to ensure that D2 should act in accordance with the work agreement. However, it is accepted by the parties herein that D2 was not acting as D1's agent when carrying out the work agreement.
39. D1's stance as regards its duties under the renovation agreement in relation to D2's work can be summarized as follows:-
(1) while D1 did recommend D2 to the plaintiff to be a contractor for the renovation of the suit property, it is denied that it was a contractual term that D1 was to advise the plaintiff on the choice of contractors;
(2) while D1 was responsible for supervising D2's work, D1's duty was only limited to asking D2 to carry out the work in accordance with D1's design. D1 was not responsible for supervising or ensuring the quality or workmanship of D2's work;
(3) it was not D1's duty to ensure that the finished work (of D2) should conform exactly with D1's design. It is however accepted (by counsel in the course of his final submissions) that it was D1's duty to ensure a reasonable conformity;
(4) D1 was responsible for making an effort to coordinate the work of different contractors (including D2), but it was not responsible for ensuring such coordination;
(5) it was not D1's duty to ensure the renovation work would be completed in time, that is, before the Chinese New Year.
40. On the other hand, the plaintiff argues that it was part of D1's duty to inspect and supervise all phases of the renovation work to ensure that the methods and materials used conform with the drawings and specifications.
41. Generally speaking, whether an interior designer owes a duty under an agreement to supervise and/or coordinate the works of contractors depends ultimately on the terms of the agreement (which are usually express but can sometimes be implied).
42. D1 argues that its duty was to provide:-
"designs and proposals [which] ... were ... of a standard which could be reasonably expected of a competent interior designer" (para. 6, D1's skeleton submissions),
and that the duty was on-going (para. 7, D1's skeleton submissions). Further, D1 says it should not be liable for defective work (normally only the contractor would be) unless "the defects were directly attributable to designs provided by [it]" (para. 11, D1's skeleton submissions).
43. The difficulties with D1's argument above are, first, that it was one of the express terms in exhibit "D8" (which I found to be part of the renovation agreement) that:-
"At all phases of the construction and installation of furnishings to ensure that methods and materials conform to [D1's] drawings and specifications ... " (emphasis supplied) (see also the heading "D1's Scope of Duty under the Renovation Agreement").
Secondly, it is common ground that D2 was introduced by D1 (through D3) to the plaintiff to be the renovation contractor. It is undisputed that there has been a long working relationship between the defendants. The only reasonable inference is that D1 did so because it realised that there was a need to supervise the contractor's work.
44. D1 further argues that a duty to supervise the contractor's work is untenable because:-
(a) at the time when D1 entered into the renovation agreement, the identity of the contractor and the ambit of the contractor's work were still unknown. It would be implausible for D1 to agree to supervise an (as yet) unknown third party for uncertain items of work;
(b) in any event, D1, not being one of the parties to the work agreement, would not have the power to instruct D2 what to do or what not to do.
45. In relation to D1's point (a), as the interior designer which provided the drawings and the design, the ambit of the contractor's work must have been known to D1. Further, D1 and D2 must have known each other for a long time by reason of previous cooperations. In these circumstances (as indicated above), the reason why D1 introduced D2 to be the contractor must have been because D1 recognised that it was part of its duty to supervise the contractor's work.
46. In relation to D1's point (b) above, I find that D1 was in effect an agent authorized by the plaintiff to supervise D2's work. Again, the fact that D2 was introduced by D1 to the plaintiff is relevant. D1 wanted to make sure that D2 (as the contractor) would recognise D1's authority to supervise D2's work.
47. D1's counsel also submits that it is impracticable for any such duty to be impose on D1 because D1 could do nothing if D2 refused to properly perform the work agreement. I do not agree. Having been authorized by the plaintiff to supervise D2's work under the work agreement, D1 (as the plaintiff's agent for such purpose) should have the same power thereunder (as the plaintiff should have) to ensure D2's due performance. Even if D1 should somehow be unable to ensure D2's due performance of the work agreement, D1 should at least report to the plaintiff D2's breach and, if appropriate, advise the plaintiff the possible steps to be taken in such event.
48. In short, I disagree with D1's arguments relating to D1's scope of duty under the renovation agreement regarding D2's work under the work agreement.
49. Specific aspects of D1's duties will be further discussed in relation to the individual items of work under the heading "Were the Renovation Agreement and Work Agreement Breached?".
D2's Scope of Duty under the Work Agreement
50. It is accepted by D2 that his duty under the work agreement included:-
(a) work must be done with due and proper skill and care;
(b) materials supplied must be of the appropriate quality.
D2 also accepts that all items of work were to be completed before the Chinese New Year, and that any defects should be rectified by D2 within 3 months after the completion date.
51. The plaintiff contends that D2's duty should include that of carrying out the renovation work in accordance with D1's design, drawings and instructions. This seems to be accepted by D2. I find this to be part of the work agreement in any event.
52. It is common ground that D2's duty under the work agreement and in tort is essentially the same.
53. It is D2's case that the work which needed to be undertaken under the work agreement has been fully set out in:-
(1) the "Quotation" dated 9 November 1995 signed by D2 and David Mui;
(2) the undated (and unsigned) "Additional Works".
54. The dispute between D2 and the plaintiff can be summarised as follows. First, whether work not expressly stated in the above documents was still within D2's scope of work (for example, leveling of floor surface). Secondly, whether some of the alleged defects were in fact matters of design (and hence D1's responsibility). Thirdly, whether some of the alleged defects were really defects. Finally, whether the alleged defective materials were defective. These will be dealt with under the heading "Were the Renovation Agreement and Work Agreement Breached?".
Were the Renovation Agreement and Work Agreement Breached?
55. Subject to the matters set out below, the testimony of the plaintiff's witnesses regarding the defective work is accepted whereas that of the defence witnesses is rejected.
56. In particular, subject to the matters set out below, I accept the testimony of Francis Au from Davis Langdon & Seah Hong Kong Ltd. Francis Au has in his testimony adopted the contents of:-
(1) the report dated 29 April 1996;
(2) the 2nd report dated 12 October 1999;
(3) the replies dated 14 January 2000.
57. D1 argues that Francis Au's reports and replies should not be accepted because (as he accepted in his testimony) those documents were prepared by his subordinates only. I find that although Francis Au did not prepare the documents himself, he has carefully considered their contents and in effect adopted them as his own assessment. I also accept his expertise in relation to the assessment of whether an item of work is defective as well as what the reasonable costs of rectification/repair should be.
Did the Plaintiff Accept the Breach or Waive Its Claim?
58. The defendants also argue that even if they had breached the renovation agreement and work agreement, the plaintiff has either approved or accepted the breach by conduct. This is because (the defendants contend) the plaintiff has, through the Mui family, inspected the suit property while renovation work was continuing and has either not complained, or in some instances, expressly approved, items of work now contended to be defective. The defence relies in particular on the lack of evidence of any dissatisfaction or complaint before February 1996.
59. Since I accept the plaintiff's evidence and reject that of the defence, there is no basis for contending that the plaintiff has approved the defendants' work. In relation to the argument that designs and/or design drawings have been approved by the plaintiff, I repeat what has been stated under the sub-heading "(a) In Relation to D1's Work", that is, insofar as the plaintiff was entitled to rely on D1's advice and/or judgment, D1's liability is not absolved unless the approval was given with full knowledge on the plaintiff's part.
60. In relation to arguments arising from an alleged waiver, I find that the plaintiff has complained about the defects (which it was able to detect at the time). There is accordingly insufficient evidence to establish any waiver.
61. In the absence of approval or waiver, any difference between the defects set out in the plaintiff's letter of complaint (in February 1996) and those set out in the report of Francis Au (in April 1996) can only be relevant to the witnesses' credibility. I have taken this into account when assessing that matter.
The Internal Staircase between the 28th Floor and 29th Floor
62. It is common ground that the old staircase between the 28th and 29th floors of the suit property was demolished and replaced by a new one as part of the work performed under the renovation agreement and work agreement. It is also common ground that the new staircase constructed by D2 was subsequently demolished and replaced by yet another staircase.
63. The plaintiff's complaint about the staircase built by D2 is essentially that (1) it was built in contravention of the provisions of the Buildings Ordinance (Cap. 123) and (2) in any event, it was built defectively. The defendants contend either that there was no defect or that the defects were minor and did not justify the demolition of the staircase. They further contend that the plaintiff demolished and replaced the staircase only because the plaintiff did not like its style or appearance.
64. The various areas of dispute relating to the staircase built by D2 will be dealt with under the sub-headings below. Before turning to those matters, I note that D3 admitted in cross-examination that the plaintiff has complained about the uneven height of the steps and vibration of the staircase.
(b)(1) Government Approval
65. It is undisputed that, by virtue of the provisions of the Buildings Ordinance (Cap. 123), the demolition and construction of a concrete staircase inside the suit property would require the approval of the Building Authority and that no such approval was obtained.
D1
66. The plaintiff's case against D1 is in short that D1 failed to advise the plaintiff of the need to apply for, or obtain, the requisite approval. According to the plaintiff, D3 said in effect that it did not matter whether approval was obtained or not. D1's case is that it has fully explained such need to the plaintiff but the plaintiff decided not to obtain the approval because to do so would delay the completion date of the renovation work to some time after the Chinese New Year. This dispute is in essence a credibility issue.
67. I accept the testimony of the plaintiff's witnesses and reject that of the defendants regarding this point.
68. The criticisms of the defence regarding the credibility of David Mui include the following. According to the approved plan obtained by the plaintiff's architect (engaged to demolish the staircase built by D2 and to construct a replacement), there should be another staircase inside the suit property. That staircase was not found in the suit property and must have been removed sometime before the renovation agreement. The defendants submit that the plaintiff removed it without obtaining approval. I agree with the plaintiff's argument that there is insufficient information regarding this staircase for any proper conclusion to be drawn, such as whether there was a need to apply for approval from the authorities for its removal, and if so, whether approval has been applied for or obtained. I reach the same conclusion regarding the allegation that the plaintiff has adopted a similar tactic in 1987 (denied by David Mui) to force another contractor to reduce the price.
69. D3 admitted in his testimony (examination-in-chief and cross-examination) in effect that he initiated the idea of rebuilding the staircase and he said to the Mui family that it would be nice if the staircase be replaced. According to D3, the Mui family said this would be considered and finally agreed to the suggestion.
70. Counsel for D1/3 submits there was no reason for D1 to conceal the need for approval from the Building Authority. If motive is needed, it was an express term of the renovation agreement that the fees payable to D1 depended on the total value of the renovation work. The construction of a replacement staircase would increase the sum payable for the renovation.
71. Plaintiff's counsel levied various criticisms about D3's testimony regarding this matter. When D3 was cross-examined on 22 May 2001, he testified that at a meeting in the suit property in early November 1995, it was proposed that work relating to the rebuilding of the staircase could be done in 2 stages so that work could start while an application for approval was made. The plaintiff points out that this was not mentioned in the court documents, including the pleadings and witness statements. The assertion was not put to David Mui by defence counsel either. The plaintiff also asks the court to note that, even according to D3, he only mentioned the need for approval several weeks after the plans were produced to the plaintiff in October 1995. As D3 accepted, this matter was only discussed after David Mui raised it. Counsel argues that this was not consistent with someone who genuinely wanted to advise his client that approval was needed to rebuilding the staircase. Counsel also submits that the lack of a contingent plan (in case the plaintiff had insisted on obtaining approval first) and the recommendation of only D2 (not a registered contractor qualified to do the work) as the contractor are matters which weigh against D3's credibility. I agree with these arguments.
72. D1 also argues that since it is not a qualified professional who was in a position to apply for approval from the Building Authority, it is "unreasonable and unrealistic" to imply a term into the renovation agreement that D1 should be responsible for the failure to obtain such approval. I disagree with this argument because, as has been set out above, it was part of D1's duty, when something is outside his expertise,
"... to inform his client accordingly and either himself to engage, or to advise the [client] to engage, a person with the required expertise ... ".
73. Further, by reason of the conclusion set out under the sub-heading "(a) In Relation to D1's Work", I do not accept D1's argument that D1 was not under a duty to advise the plaintiff of the need for Government approval.
74. Because of the matters aforesaid, I find that D1 has breached its duty under the renovation agreement.
D2
75. The plaintiff does not argue that D2 was under a duty to advise it of the need to obtain government approval for the replacement of the internal staircase. I do not find D2 has breached the work agreement by not advising the plaintiff about this matter.
(b)(2) Design of the Internal Staircase: Railing Pattern
76. It is common ground that the railing pattern was designed by D1 after consulting and obtaining the approval of the plaintiff. It is also undisputed that the gaps of the pattern on the metal railing were wider than the standard provided for by the provisions of the Building (Construction) Regulations (Cap. 123).
D1
77. D3 designed the metal railing (and the railing pattern) which serves as a fence of the internal staircase. He admitted in his testimony that the gaps in the railing pattern were too wide and can pose a danger to small children. D3 also admitted in cross-examination that, with hindsight, the possibility of the Mui family having visitors (including small children) should have been considered by him when designing the railing pattern.
78. I agree with the plaintiff's argument that it was wrong for D1 to only consider the risk which may be posed to adults and fail to consider the risk to visitors. I find that the likelihood of children going to the suit property to be real and the risk to them should have been taken into account in the design.
79. I do not accept D1's argument that it was absolved from liability because the design drawings (with measurements shown) were approved by the plaintiff and the plaintiff could see the railing after it was built. The potential risk created by gaps which are too wide is a matter which the plaintiff was entitled to rely on D1 for advice and/or judgment. Unless D1 has duly explained the potential risk to the plaintiff (which I find D1 has not), merely that the design drawings were approved or the plaintiff could see the railing is not a sufficient answer.
80. I therefore find that D1 has breached its duty by failing to advise the plaintiff on, and by designing, a railing with gaps which are too wide.
D2
81. No allegation has been made against D2 under this head.
(b)(3) Design of the Internal Staircase: Railing Height
82. It is common ground that:-
(1) the height requirement of the provisions of the Building (Construction) Regulation (Cap. 123) are inapplicable to the metal railing of the internal staircase;
(2) the height of the said railing is lower than that required by the said provisions.
83. I agree with the plaintiff's argument that although the said provisions are inapplicable to the railing of the internal staircase, they provide evidence of what is generally considered as the acceptable minimum height of a railing for a staircase.
84. The plaintiff's arguments in support of, and D1's counter-arguments regarding, D1's breach of duty arising out of the failure to advise the plaintiff of the safety standard are similar to those set out above under the sub-heading "(b)(2) Design of the Internal Staircase: Railing Pattern". I conclude that the commonly acceptable minimum standard of the height of a railing is a matter which the plaintiff is entitled to rely on D1 for advice and/or judgment.
85. I also agree with the plaintiff that D3's assertion in testimony that the matter has been discussed with the Mui sisters should not be accepted; the alleged discussion does not appear in D3's witness statements.
86. Because D1 failed to advise the plaintiff of, or to design, a railing with a sufficiently safe height, I find it has been breached its duty under this head.
D2
87. There is no complaint against D2 regarding this aspect.
(b)(4) Uneven Steps of Internal Staircase
88. The plaintiff complains that the steps of the internal staircase were of uneven height. I agree with the plaintiff's argument that this is not only an aesthetic defect, this also posed a potential safety problem because walking up or down uneven steps could cause the user (especially the young and the aged) to trip or fall. I also agree with the plaintiff's argument that this is a major defect because it could not removed by adjusting the height of individual steps. To adjust the height of one step would bring about a difference in height in another step. The remedy would involve in effect the removal (and replacement) of all the then existing steps.
89. I find that the plaintiff has complained about this defect and there was no conduct amounting to an acceptance or waiver of this. The contemporaneous documents referred to in the plaintiff's skeleton final submission also support this finding.
D1
90. D3 admitted in cross-examination that it was unacceptable to him that the height of one of the steps was 210 mm (higher than the other steps). He also admitted that it was D1's duty to inform the plaintiff of the uneven steps but D1 did not do so.
91. I find that D1 has breached its duty under the renovation agreement in this regard by failing to supervise D2's work and/or inform the plaintiff of the defect.
D2
92. The unacceptability of the uneven steps was also admitted by D2. In any event, I am satisfied from evidence adduced by the plaintiff that D2 has breached the work agreement. The breach included failing to properly construct the steps of the staircase.
(c) Floor Levels
93. There used to be a wooden floor in the suit property. It is undisputed (between the plaintiff and D1/3) that before the renovation of the suit property there was no floor level problem therein. It is also undisputed that after the renovation, there was a difference in the floor levels on the 28th floor between the foyer and the master bedroom. Whether there was a similar difference in the floor levels between the foyer and the living room is disputed.
94. It is also undisputed that after the renovation, there was a difference in the floor levels on the 29th floor:-
(a) between the foyer and the mahjong room;
(b) between the foyer and the master bedroom.
95. Considering there was no such difference before the renovation, the difference in the floor level could have been caused by:-
(a) a slanted floor level inside the suit property before the renovation;
(b) difference in the thickness of the different floor materials used by the defendants, that is, marble slabs (thicker) and wooden floor slabs. One way of leveling the floor where different materials are used (as D2 accepted in testimony) is to further lower the underlying floor level where marble slabs are to be laid.
If the floor of the suit property was in fact slanted (see (a) above), D3 accepted in testimony that one way to overcome the floor level of a slanted floor would be to lay the floor materials in a slanted manner so that the finished floor would have a flush but slightly sloping surface.
96. I accept the plaintiff's evidence (see the testimony of Francis Au and Martin Tam) to the effect that differences in floor levels and the presence of thresholds on the floor would pose danger to occupants of the suit property, especially at time of emergencies, at night or when people are in a rush.
D1
97. D3 agreed in his testimony that floor leveling was not a matter which the plaintiff ought to have thought of. This matter would be for D1 as the interior designer to consider. D3 testified that he only thought of the floor leveling problem after renovation work was already underway. D3's also asserted that a commonly accepted solution, which was to install a ridge-shaped threshold at the step created by the difference in the level, was adopted.
98. By reason of the matters aforesaid, I agree with the plaintiff's arguments that D1 failed to:-
(a) consider the possible leveling problem or give appropriate advice to the plaintiff about that;
(b) design the renovation work with due care and attention before actual work commenced;
(c) inform the plaintiff of the leveling problem immediately or shortly after it was discovered;
(d) duly advise the plaintiff of the rectification options and the respective advantages and disadvantages of each option.
99. Accordingly, D1 has breached its duty.
D2
100. When D2 testified, he claimed that there were already differences in the floor level inside the suit property. This claim was never made previously and is contradicted by D3's admission that there was no such difference before the renovation. I reject this claim.
101. In the absence of express terms, whether the leveling of the floor is part of a contractor's work when the contractor is instructed to replace a wooden floor with other types of floor materials (such as marble) depends on whether such work is an implied term of the contract. I find that in the absence of extraordinary circumstances, such as a pre-existing difference in the floor levels, such a term is reasonably necessary and thus should be implied into a contract like the work agreement that.
102. If such an implied term was part of the work agreement, the failure to level the floor would have been a breach of it. However, as was found above, D1 was authorised by the plaintiff to supervise D2's work. If D1, having discovered the breach, instructed D2 to rectify it in a specific manner, the plaintiff is bound by D1's decision.
103. D3 testified that it was D1's decision to solve the floor level problem by putting thresholds at the places where that occurred. I have reservations about the truthfulness of this allegation. Despite this, the assertion is not inherently implausible and there is no evidence to contradict it. It is accordingly possible that D2 has been instructed by D1 to do so. D2 should not incur any liability for doing so.
104. D2 relies further on a item in the work agreement regarding payment for the leveling of the floor levels between the living room and dining room on the 28th floor (item 14 of the undated "Additional Works" (under the heading "28th floor")) and submits that this is evidence of an express term that floor leveling work would be charged. There is accordingly no room for leveling work to be implied.
105. Since I already found in D2's favour on another ground, there is no need to consider this further point.
(d) Quality of Marble
106. Evidence regarding the quality of the marble was adduced by the plaintiff through the testimony of Francis Au. Defence evidence was adduced by way of the testimony of D2 and D3. The plaintiff's case is that the quality of the marble was sub-standard whereas the defence case is that the marble was reasonably acceptable.
107. Before considering the evidence itself, because the expertise of the witnesses is disputed, it is necessary to decide on the witnesses' expertise. I accept the evidence of the plaintiff (the testimony of Francis Au) and find that Francis Au possesses the expertise to give his opinion regarding the quality and acceptability of the marble slabs used. On the other hand, I do not accept the testimony of the defendants about these matters.
D1
108. D1 contends that the complaint is groundless and the alleged defect is in fact the natural grains or pattern of the marble. I agree with the conclusion of the plaintiff's expert about this complaint and find that D1 breached the renovation agreement by failing to properly supervise D2's work.
D2
109. D2's argument is substantially the same as that of D1 (see above). For the reason set out above, I reject D2's argument and accept the plaintiff's evidence. D2 breached the work agreement by supplying defective materials.
(e) Work Quality of Wall-paper
110. The plaintiff's complaints regarding wall-paper are:-
(1) the surface of the wall-paper was uneven;
(2) there were blisters on the wall-paper;
(3) there were obvious seam-lines on the wall-paper;
(4) some parts of the wall-paper were damaged.
111. In relation to point (1) above, both D2 and D3 accepted that they did not notice any wall surface unevenness before the renovation work. The plaintiff's case is in effect that there was no unevenness.
D1
112. Even if there was any pre-existing unevenness of the wall surface, D1 should have noticed it and advised the plaintiff of the same. Alternatively, if the uneven surface of the wall-paper was caused by D2's defective work (which I find it to be), D1 should have duly supervised D2 by instructing D2 to rectify the work and/or informed the plaintiff of the same. The same applies to points (2) to (4) above. I conclude that D1 has breached its duty under the renovation agreement.
D2
113. D2 contends that the uneven wall surface was the possible explanation for the uneven surface of the wall-paper. I reject this contention and agree with the plaintiff that because D2 accepted there was no pre-existing unevenness, the more probable cause was the poor quality plastering work which was performed before the wall-paper was put onto the wall. In this connection, I also accept Francis Au's testimony that even if there were some slight unevenness of the wall surface, the plastering should be able to even it out.
114. D2 also argues that D1 did not instruct him to level the wall surface before laying wall-paper. Since I accept Francis Au's testimony (slight unevenness could be even out by plastering), this argument is rejected because there should be no need for specific instruction to be given.
115. The blame placed on the weather for causing the defects complained of is also rejected. I conclude that the defects (points (1) to (4) above) were caused by D2's defective work.
(f) Fabric Panel Doors on the 29th Floor
116. I accept the plaintiff's testimony that the fabric panel doors were difficult to open and hence made access through the entrance (possibly as a fire exit) on the 29th floor unsafe.
D1
117. D1 has breached its duty by failing to provide proper advice to the plaintiff about the disadvantages of the fabric panel doors. The defence that the entrance would in any event be blocked by a model ship placed in front of it has no substance. A model ship may easily be removed at time of emergencies; the fabric panel doors would not be easily removable.
D2
118. There is no complaint against D2 regarding this.
(g) Veneers Book Matching
119. The presentation board provided by D1 to the plaintiff (exhibit "D6(ii)") contains a sample with book matching, that is, the pattern of the wood veneers on the left and right doors of a piece of furniture match each other. I agree with the plaintiff that the sample should be the standard which the plaintiff could legitimately expect.
D1
120. D1 has breached its duty for failing to ensure that D2's wood work would include book matching the veneers.
121. D1's defence that there was no specific request for book matching is rejected for the reason given above.
D2
122. D2 has breached the work agreement by failing to book match the veneers. It was part of D2's duty to work according to D1's design. D2 has failed to work according to D1's presentation board.
(h) V-Joints in the Toilets
123. It is undisputed that the marble slabs (both on the walls and the floor) in the toilets were laid with V-joints between them. I accept the plaintiff's evidence that placing V-joints there would present a hygiene problem because dirt and filth can easily accumulate in the joints and they would be difficult to clean.
D1
124. D3 admitted in cross-examination that it was part of D1's duty to advise the plaintiff of the advantages and disadvantages of the V-joints in the toilets. D3 asserted in testimony that he obtained the express oral approval of the Mui sisters before installing the V-joints. This assertion does not appear in D3's witness statements and is rejected.
125. D1 has failed to properly advise the plaintiff about the V-joints. This is so even if D1 was correct about the toilets being subject to a low usage only. D1 has also failed to consider the hygiene problem before installing them. There is no substance in the argument that marble slabs are porous and thus whether V-joints were installed is irrelevant.
D2
126. There is no complaint against D2 about the V-joints.
(i) Other Items of Work
127. I already indicated that, subject to the matters specifically set out under the heading "Were the Renovation Agreement and Work Agreement Breached?" (including this sub-heading), I accept the reports and replies of Francis Au. I do not propose to set out in full the other items of work referred to by Francis Au except the ones below because :-
(a) they were expressly referred to in the skeleton final submissions of the defendants; or
(b) they have been found not to be items of defect.
D1
128. In relation to the change of the base of the columns in the suit property, D1 contends that it is a matter of design which D1 was entitled to change without informing the plaintiff first. I do not agree. D1 and D2 were bound to follow the designs approved by the plaintiff (subject to the duty of proper advice set out above) and could not change them merely because D1 and/or D2 consider the change to be better.
129. I disagree with D1's contention that the defects at the joint and edge of the TV armoire are trivial (if D1 is contending that no rectification is necessary). Insofar as D1 is contending that the defect could have been rectified by D2, I repeat the conclusion reached under the heading "Quantum of Loss Caused by D2 regarding the plaintiff's right to terminate the work agreement".
130. In relation to the inconsistent width of the joints to the floor tiles laid in the kitchen/pantry, D1 has failed to properly supervise D2's work.
131. In relation to the failure to install a cornice in the guest toilet, D1 claims that it found the effect of a cornice not pleasing. As stated above, it was not up to D1 to decide what was pleasing or not when the design has been approved (and agreed).
132. D1 has breached its duty in not ensuring there would be no cracks on or damage to the wall surface in the guest toilet.
133. I have doubts about Francis Au's claim that there was a drop on the floor from the foyer to the living room on the 28th floor and therefore disallow the claim based on this item. I consider that he was mistaken about this matter.
134. I find that D1's failure to ensure D2's workmanship resulted in the defects found in the toilet of the twin bedroom. However, I do not find that D2 has failed to use tempered glass for the shower cubicle there. There will be an adjustment to the amount assessed by Francis Au from $46,040 to $23,020 in the absence of any evidence indicating how much the tempered glass should account for.
135. D1 argues that the closet in bedroom 2 was unfinished only because D2's work was suspended by the plaintiff. There is no merit in this argument. First, I repeat the conclusion about this matter set out under the heading "Quantum of Loss Caused by D2". Secondly, it was a breach of the work agreement for D2 not to have finished the work thereunder by Chinese New Year.
D2
136. D2's contention that he did not have to perform any work at the lift lobby of the 29th floor is not accepted.
137. I accept D2's argument that the installation of air-conditioning grilles should be another contractor's work.
138. D2 merely followed D1's instructions:-
(a) to change the shape of the base of the columns inside the suit property;
(b) to use marble for the floor of the shower cubicles;
(c) to not install the cornice in the guest toilet;
(d) to change the pattern of the floor of the 28th floor lift lobby
and should not be liable for doing so.
139. As stated above, I accept D2's evidence that tempered glass has been used for the shower cubicles.
140. The inconsistent width of the joints of the floor tiles of the kitchen/pantry was a result of D2's defective work. The failure of the sliding windows above the internal staircase to exclude light was due to the same reason.
Did the Plaintiff Suffer Any Loss?
141. The different types of loss will be set out under the sub-headings below. As a matter of general principle, an award of damages is to put a plaintiff in as good a position as if the contract had been duly performed. In relation to the renovation agreement and work agreement, the award is intended to make good the defective items of work.
142. I agree with the plaintiff's submission that the reference to how damages were assessed in cases concerning surveyors' negligence is inapt. I also agree that the facts in Ruxley Electronics and Construction Ltd. v. Forsyth [1996] 1 AC 344 are different from the present. Some rather peculiar facts were involved in the Ruxley case which are not present in this action. For this reason, I do not find the Ruxley case to assist the defence.
143. There is no substance in D1's argument that because payments have been made by the garment company rather than the plaintiff, no loss has been suffered by the plaintiff. Merely because the garment company is related to the plaintiff and the plaintiff has not repaid its related company does not mean that there is no liability to do so. The liability has clearly been incurred by the plaintiff.
144. I have already indicated my acceptance of Francis Au's expertise in relation to the assessment of the reasonable costs of rectification/repair under the heading "Were the Renovation Agreement and Work Agreement Breached?".
145. D1 also argues that there was no need to rebuild the staircase because retrospective approval could have been obtained from Government. I agree with the plaintiff's argument, relying on Yeung Pui Yee v. The Building authority, MP No. 930 of 1988 and Filipino Club v. Appeal Tribunal, MP No. 977 of 1995, that the Building Authority has no power to give such approval or consent in respect of building work that had already been commenced, carried out or completed.
(a) Costs of Rectifying/Repairing the Defects
146. These are set out in the "Schedule" attached hereto. The item numbers correspond to those set out in Francis Au's reports and replies. The respective amounts payable by D1 and D2 are based on those set out in the said 3 documents (subject to the adjustment at para. 134 above). The total amount payable by D1 is $809,340. The total amount payable by D2 is $702,660.
(b) Costs of Rental Alternative Accommodation
147. I agree with the plaintiff's submission that it was reasonable for the Mui sister to move out of the suit property to enable rectification/repair work to be undertaken. However, the rental loss claimed is $717,092.69 being the rent paid for the period from February 1996 to December 1996. I do not think that the loss should be as much and thus reduce it by two-thirds. The amount recoverable is $239,030.89.
(c) Authorised Person's Fees
148. The fees paid to the authorized person amounted to $120,000. This was for obtaining government approval for replacing the internal staircase. D1 argues that this sum is not recoverable because the plaintiff would have to pay it any way (if D1 has provided the plaintiff with the proper advice).
149. Plaintiff's counsel relies on David Mui's testimony that, but for D1's representation that it did not matter if approval was obtained, the plaintiff would not have agreed to replace the staircase. While I accept the testimony, the loss now claimed is said to flow from a breach of the renovation agreement. The breach was D1's failure to properly advise the plaintiff. The plaintiff has not put forward a case of misrepresentation which allegedly induced it to enter into an agreement to rebuild the internal staircase.
150. I therefore find that this sum is irrecoverable.
(d) Surveyor's Fees
151. This amounts to $52,005.30. D2 argues that this should be part of the costs of the action. I do not agree.
Quantum of Loss Caused by D1
152. The total amount of loss caused, and thus payable, by D1 is $1,100,376.19 (809,340 + 239,030.89 + 52,005.30).
Quantum of Loss Caused by D2
153. The total amount of loss caused, and thus payable, by D2 is $993,696.19 (702,660 + 239,030.89 + 52,005.30).
154. D2 contends that he was entitled under the work agreement to rectify any defective work. He further argues that the plaintiff has wrongfully breached the work agreement by suspending his work on about 12 March 1996. The plaintiff (so D2 argues) also failed to mitigate its loss by refusing to allow D2 to rectify the defects. I disagree with these arguments. In this regard, I repeat that I accept the plaintiff's evidence about D2's breach of the work agreement. I also accept the plaintiff's evidence that D2 failed or refused to effect major rectification work (and only effected minor "touch ups"). This also constituted a breach of the work agreement.
155. In view of the extent of D2's breach of the work agreement, the plaintiff was entitled to regard it as a repudiatory breach. The plaintiff has in effect accepted the said breach by its letter dated 12 March 1996 (alternatively, by the letter dated 27 March 1996 at the latest). Since then, the plaintiff was no longer bound by the terms of the work agreement. The only duty is that the plaintiff should reasonably mitigate its loss.
156. As to whether the plaintiff was obliged to allow D2 to rectify the defects, the plaintiff's duty in law is to reasonably mitigate its loss. I find that the costs of rectification which the plaintiff now claims (set out in Francis Au's reports and replies (as adjusted in the "Schedule" hereto)) are reasonable. The law does not require a plaintiff necessarily to use the cheapest means to make good the breach of contract, provided the means used is reasonable: McGregor on Damages (1997) 16th Ed., para. 322 and 324.
D2's Counterclaim
157. D2' case is that the plaintiff has only paid him $1.6 million leaving an unpaid balance of $440,495. The plaintiff does not dispute this claim but seeks to set it off against damages payable by D2.
Indemnity
158. There is no claim in the plaintiff's pleading for D1 to indemnify it against any sums payable to D2. Plaintiff's counsel asks for such an indemnity during final submission. He argues that no prejudice would be caused to D1 by an order for indemnity because the plaintiff will be entitled in any event to bring an action against D1 for the same if the court finds that the plaintiff's liability to D2 was caused by D1's breach of the renovation agreement.
159. Because I find that the amount of damages payable by D2 is more than D2's counterclaim (see under the heading "Conclusion"), there is no need to consider this argument at present. I would have been inclined to make such an order if it were necessary to do so.
Conclusion
160. By reason of the matters aforesaid, judgment is entered against D1 in the sum of $1,100,376.19.
161. By reason of the matters aforesaid, judgment is entered against D2 (after setting off the plaintiff's claim against D2's counterclaim) in the sum of $553,201.19 ($993,696.19 - 440,495).
162. Interest on the judgment debts will be at judgment rate (instead of 12% per annum asked for by the plaintiff) from the date of writ to the date of judgment and thereafter also at judgment rate until payment.
Costs
163. There is no apparent reason to depart from the usual rule that costs should follow the event. There will accordingly be a costs order nisi pursuant to RHC Ord. 42 r. 5B(6) that costs of this action (as between the plaintiff and D2, including those of the plaintiff's claim and D2's counterclaim) be paid by D1 and D2 to the plaintiff to be taxed if not agreed.
164. For the same reason, there will be a costs order nisi that the costs of this action relating to D3 are to be paid by the plaintiff to D3 to be taxed if not agreed. Subject to the parties' submission, it appears that the time of the trial spent on D3's liability was approximately one-eight of the whole trial.
Schedule
Amounts Payable by D1 and D2
| Item No. |
D1 |
D2
|
| 1.1.1 |
27,000 |
Not liable |
| 1.1.2 |
9,850 |
9,850 |
| 1.1.4 |
2,120 |
Not liable |
| 1.1.6 |
6,550 |
6,550 |
| 1.1.5 |
9,500 |
9,500 |
| 1.2.1 |
28,180 |
28,180 |
| 1.3.1 |
25,990 |
Not liable |
| 1.3.2 |
13,750 |
Not liable |
| 1.3.3 |
1,200 |
1,200 |
| 1.4 |
100,200 |
100,200 |
| 1.5.1 |
4,680 |
4,680 |
| 1.6.1 |
14,010 |
Not liable |
| 1.6.2 to 1.6.5 |
23,020 |
23,020 |
| 1.6.8 |
8,600 |
8,600 |
| 1.6.9 |
3,800 |
3,800 |
| 1.6.10 |
3,500 |
3,500 |
| 1.7 |
31,750 |
31,750 |
| 2 |
318,000 |
318,000 |
| 3.1.3 |
9,800 |
Not liable |
| 3.1.9 |
7,500 |
7,500 |
| 3.1.2, 3.1.5, 3.1.6, 3.1.8 |
38,800 |
38,800 |
| 3.2.1 |
5,400 |
5,400 |
| 3.2.2 |
10,400 |
10,400 |
| 3.2.3 |
10,350 |
10,350 |
| 3.2.4 to 3.2.6 |
9,950 |
9,950 |
| 3.3.1 to 3.3.3 |
10,550 |
10,550 |
| 3.3.4 |
14,880 |
14,880 |
| 3.3.5 |
3,100 |
3,100 |
| 3.3.6 |
2,400 |
2,400 |
| 3.4.1 |
14,010 |
Not liable |
| 3.4.5 |
6,150 |
6,150 |
| 3.5 |
34,350 |
34,350 |
| Total |
809,340 |
702,660 |
|
(Andrew Chung) |
|
Judge of the Court of First Instance |
|
High Court |
Representation:
Mr Andrew K N Cheung, instructed by Messrs P. C. Woo & Co., for the Plaintiff
Mr John Kerr, instructed by Messrs Lee & Chow, for the 1st and 3rd Defendants
Ms Po Wing Kay, instructed by Messrs Chan, Wong & Lam, for the 2nd Defendant
|