HASSEI TRADING (H.K.) LTD v. HANG WOO SHIP MANAGEMENT LTD

DCCJ 4239/2016

[2021] HKDC 109

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4239 OF 2016

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J U D G M E N T

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INTRODUCTION

1.  This is a contractual claim regarding the outstanding fees of JPY 3,177,839.00 for maintenance and repair services rendered to a vessel known as “MV Rainbow Angel” (“the Vessel”) in November and December 2011.

2.  The fundamental issue before this court is essentially whether there had been variation agreements for the plaintiff to deploy two engineers and a technician when the original agreement states that the work required the service of one engineer only.

THE BACKGROUND

3.  In November 2011, the Vessel was to have its first dry-docking in a shipyard.  As the ship and the machineries would have an expected life span of 20 years, in order to set up a long-term maintenance scheme to ensure safe and efficient operation of these equipment, instead of just engaging the shipyard to carry out the checking and repair of the two diesel generators (“D/G”) of the Vessel, the owners and managers of the Vessel decided to engage an engineer from the D/G manufacturer to supervise the ship crew in taking up the opening up, maintenance and reassembling, plus the required spare part replacement work.  This arrangement would also provide the ship crew with some experience under the supervision of the manufacturer’s engineer and learn from the engineer all the vital information about clearance, torque force, tolerance that are important in the safe and efficient operation of the machines.  The ship manager eventually engaged the manufacturer through a ship engine repair and maintenance agent.  The defendant was the ship management company.  The plaintiff was a ship engine and maintenance agent.  Daihatsu Diesel Manufacturing Co. Ltd. (“Daihatsu”) was the D/G manufacturer. 

4.  In mid-November 2011, the defendant, through the plaintiff, sought Daihatsu’s opinion as to their advice on the appropriate number of engineer(s) to carry out the work specified. 

5.  On 17 November 2011, Daihatsu advised that the work required the attendance of one engineer plus one fitter.

6.  The defendant subsequently decided to engage Daihatsu for the work but concluded that only one Daihatsu engineer would be required for the advisory and supervision work.  The actual work was to be carried out by the ship’s crew, as the defendant considered engaging more than one Daihatsu engineer would not bring any additional benefit since an extra engineer would provide the same supervision and knowledge.  Further, if technician work was required, the shipyard could be asked to provide them, at a much cheaper shipyard rate to save costs.

The Agreement

7.  The agreement was reached on 25 November 2011.  It was agreed by e-mail between the plaintiff and defendant the following:-

a)  The plaintiff would arrange overhauling of two engine units on board the vessel at the Huarun Dadong Shipyard;

b)  The plaintiff would arrange the attendance of one engineer from Daihatsu or its Shanghai branch to supervise the implementation of the overhauling to be carried out by the crew of the Vessel (Emphasis added);

c)  The Vessel will be dry docked in Shanghai at the Huarun Dadong Shipyard (上海華潤大東船務工程有限公司);

d)  The overhauling of the two engines on the Vessel would be completed on or before the departure of the Vessel; and

e)  All necessary tools and cleaning materials were to be provided from the Vessel.

8.  The remuneration of the overhauling services was based upon the rates under the “Daihatsu Diesel (Shanghai) Service Tariff” (“Service Tariff”) sent to the defendant by e-mails on 17 and 18 November 2011.  The rates as shown in the Service Tariff are not disputed. 

9.  Service of the Vessel commenced on 28 November 2011.  The overhaul work was eventually completed on 9 December 2011.  At the end, the work required more time than originally envisaged.

10.  The plaintiff subsequently sent the defendant a bill for the disbursement of two engineers and one technician.  The defendant challenges the Bill on the basis that Daihatsu charged for the time and work carried out by two engineers and one technician when the parties have agreed for the services of only one engineer from Daihatsu.  The contention by the defendant is that there was no need for an additional engineer and an additional technician (at engineer rate).

The Plaintiff’s Claim

11.  The plaintiff now claims for the outstanding service fees based on the time spent by two Daihatsu engineers and one technician with reference to the Service Tariff at JPY 3,177,839.00.

12.  The plaintiff does not dispute that the defendant had at the time of contract requested for only one engineer.  However, at the time of contract, neither party knew exactly how much work was involved, and the decision as to the number of engineer(s) required could only be made after the Daihatsu engineer had made an on-site examination.  It is the Plaintiff’s case that an extra engineer and technician from Daihatsu was required as a result of two additional works which result in two variation agreements. 

13.  The following are the alleged two additional works:-

a)  On 1 December 2011, the defendant ordered a set of “bolt bearings” from the plaintiff to make up for missing bolts.  These bolts had to be installed. 

b)  On 5 December 2011, water seepage that affected the D/G required Daihatsu’s immediate assistance.

14.  It is the plaintiff’s case that but for the need to deal with the additional issues, there was no need for the extra manpower from Daihatsu who only came in as a result of the varied agreements.  The defendant’s technical manager Jimmy Tse (“Jimmy”), who was present at the dry dock must have known that there were two engineers plus one technician carrying out the additional work and yet he took no steps to stop these Daihatsu engineers/technician from carrying out their services.  Therefore the defendant must have knowingly consented and freely accepted the services of the two engineers and one technician.  In addition, after the services were provided, the service report was signed by the Vessel’s chief engineer who apparently acknowledged the time and manpower spent on the assignment.  There was no complaint as to the quality of services provided.  Since the defendant agreed to the Service Tariff, the plaintiff was entitled to full payment.

Not a claim for a reasonable sum or restitution

15.  Mr Wong, counsel for the plaintiff, made it clear that the plaintiff does not seek to claim on there being a contract to pay a reasonable sum or in restitution but claims on there being two variation agreements.  Hence, no evidence was led on the reasonableness or justification in using the extra engineer/technician and the additional work carried out. 

THE ISSUES

16.  The issues to be determined by this court are as follows:-

1)  What were the terms of agreement between the plaintiff and the defendant?  Whether Jimmy had authority to make the two varied agreement?

2)  Were the terms of agreement between the parties varied at the own request and conduct of the defendant, if so, which variation was agreed upon by the plaintiff?

3)  If the defendant is found liable for the work done under the plaintiff’s bill no. DDB-12-01140 (which is still outstanding and unpaid), is the defendant liable to settle the Invoice by Japanese Yen at the exchange rate as at 26 February 2012, which is the due date of the said Bill?

4)  Further or in the alternative, is the plaintiff entitled to claim damages against the defendant for losses suffered as a result of payment to the Japanese supplier at the exchange rate of Japanese Yen around that time?

The Witnesses

17.  The plaintiff called Madam Wong Lai Yi Grandy (“Madam Wong”) who was and still is the director of the plaintiff.

18.  The defendant called Mr Tam Kwok Lim (‘Tam”), the director of the defendant.

19.  Neither Madam Wong nor Tam took part in the actual negotiations of the agreement or the alleged varied agreement.  Neither of them were present at the dockyard.  In fact, nobody from the plaintiff was present at the dockyard.

20.  The key personnel from both parties who took part in the negotiation of the original agreement were Stephen (“Stephen”) from the plaintiff and Jimmy from the defendant.  Neither Stephen nor Jimmy gave evidence.  Stephen has left the plaintiff and Jimmy has passed away.

21.  At one stage, Mr Patrick Lee, a manager of the defendant was designated to attend the dockyard, but Tam confirms that he did not attend the dockyard and was not present during the period of service.

22.  No one from Daihatsu gave evidence.

23.  In other words, there was no factual witness as to the happenings at the dockyard and how the alleged variation agreements were reached.

The Relevant Documents

24.  In support of its claim, the plaintiff produced the following supporting documents:-

a)  The Service Tariff of Daihatsu Shanghai;

b)  The confirmation E-mail by Jimmy dated 17 November 2011;

c)  The invoice issued by Daihatsu itemising actual work time;

d)  The service report & certificate of completion of the works dated 9 December 2011 (the “Service Report”);

e)  The work report dated 18 December 2011 accounting for the actual work time (the “Work Report”);

f)  The confirmation email from Daihatsu to the plaintiff after the completion of the actual work.

Did Jimmy have authority to act?

25.  Mr Wong submits that Jimmy was the representative of the defendant.  Jimmy was the person who negotiated the contract on behalf of the defendant.  Jimmy, according to Tam was the sole representative of the defendant sent to Shanghai to handle all matters with the dry docking of the Vessel.  I find Jimmy has authority to oversee the performance of the contract on behalf of the defendant.  Had Jimmy requested for or agreed to any variation of contract to use more than one Daihatsu engineer, it should bind the defendant.

Was the engagement of the extra engineer and technician a result of the varied agreement?

26.  To determine the plaintiff’s case that the additional engineer and technician were called in for the varied works, it is appropriate to set out the sequence of events from the available documentary evidence.

Bolt Installation

27.  November 2011

27.   The Vessel berthed at the Shanghai Shipyard. 

28.  The Service Report shows two Daihatsu’s personnel, Shen li ping沈利平 (“Shen”) and Li Ya Jun李亞軍 (“Li”) started to “transact boarding pass” from 1500 to 1900.

28 November 2011

29.  The plaintiff by an E-mail at 9:30 am informed Jimmy the names of the Daihatsu engineers that will attend, including Shen and Li.

“….Daihatsu will arrange their engineer as below:

11/28沈利平 (mobile……. , 李亞軍 (mobile…..)

11/29 supervising沈  + 李.”

30.  The Service report shows Shen and Li both attended the checking of the D/G on 28 November 2011 from 0730 to 1900 hours.

29 November 2011

31.  The Service report shows that both Shen and Li checked D/G and spare parts.

32.  By an e-mail dated 29 November 2011, the plaintiff was informed by Daihatsu that there was a change of schedule of work.  This e-mail states, inter alia, that:-

“Problem – the accompanying tool are lost. The ship owner has requested the shipyard to build or purchase them but it is expected to take 2 to 3 days and the maintenance period becomes uncertain. How about having DDC build them according to diagrame, or building them?”

1 December 2011

33.  On 1 December 2011, the defendant placed an order with the plaintiff for additional items of “Bolt: Rod: connection – 20 pieces for the D/C.” (“additional items”)

THE ANALYSIS

34.  The earliest date for Daihatsu to discover the problem with the bolts was on 29 November 2011 when Shen and Li inspected the D/G parts.  Since it may take some time for the bolts to be delivered to the dry dock in Shanghai, it is reasonable to assume that the earliest time for Daihatsu engineer(s) to be able to work on these bolts would be sometime after the defendant have placed an order for the delivery of the bolts on 1 December 2011.

35.  However, the sequence of events shows that as early as 27 November 2011, Daihatsu had already made arrangements for Shen and Li to make their way to the dry dock.  Further, the plaintiff subsequently did bill the defendant for the services of two engineers from 27 to 29 December 2011.  Apparently, Shen and Li were the two engineers referred to in the Bill.  It follows that the deployment of the additional engineer since 27 November 2011 could not have been a result of the need for the installation of the bolts which was not discovered until 29 December 2011.

36.  Since sending a second engineer would be contrary to the defendant’s specific instructions to send one engineer only, any decision to send in additional engineer(s) would have involved a processes of negotiation and getting clearance from the contracting parties.  It is surprising that despite Daihatsu reporting the bolt problem and the defendant ordering for the bolts on 1 December 2011, there had been no correspondence between Daihatsu and the plaintiff or between the plaintiff and the defendant about the sending of an additional engineer for the purpose of installing the bolts, or at all. 

37.  Further, the plaintiff’s director Madam Wong fairly agreed that the installing of the bearing bolts was a simple task which could have been carried out by the ship’s crew, albeit the absence of readily available bearing bolts may cause delay to the service progress.

38.  Indeed, since the earliest date that the engineers could have worked on the new bolts would have been sometime after 1 December 2011, it makes no commercial sense for Daihatsu to send in an extra engineer on 27 November 2011 and start work on the 28 November 2011.  This also contradicts the plaintiff’s case that Daihatsu deployed the two engineers Shen and Li on 27 November 2011 as a result of the varied agreement to install the bolts.

39.  I accordingly find that for whatever reason the two engineers Shen and Li were named and dispatched by Daihatsu, it could not have been a result of an on the spot work assessment to deal with the alleged bolt installation.

Why did Daihatsu deploy more than one engineer on the first day of work?

40.  It was clear from the correspondence that there have been discussions as to the appropriate number of engineers to be supplied by Daihatsu to carry out the work. At the initial stages of the negotiations, the plaintiff informed the defendant that Daihatsu advised that they intend to dispatch one service engineer plus one fitter.  The defendant by an E-mail dated 25 November 2011 stated, “….. we hereby confirm our P/O ….. but we would like you to provide just one service engineer to give service and supervision which we think it will be adequate as all the repair work will be carried out by the ship’s engineers.” (Emphasis added)

41.  It is common ground that up to 25 November 2011, the plaintiff and the defendant had expressly agreed that only one engineer will be sent from Daihatsu.  So what caused Daihatsu to send in the second engineer and subsequently, the technician?  The unusual turn of events, in my judgment is more likely a result of  the miscommunication between the plaintiff and Daihatsu due to the plaintiff’s failure to fully relate to Daihatsu the defendant’s express instruction for one engineer only, as shown below:

The Communication on 25 November 2011

42.  Upon receiving the defendant’s confirmation on 25 November 2011 at 5:57 pm, the plaintiff’s Stephen sent an e-mail on the same day at 18:06 to Daihatsu’s Iwabuchi-san stating:-

“Thank you for your support and we hereby confirm order for your service engineer only for this job. ………. Please find below message from owner and he will attend vessel this time.” (Emphasis added)

43.  Bearing in mind Daihatsu has throughout advised that the service of the vessel required one engineer and one fitter.  The e-mail from the plaintiff to Daihatsu on 25 November 2011 did not draw Daihatsu’s attention to the fact that Daihatsu’s advice for deploying one engineer plus one fitter was not accepted by the defendant.  There was no reference in the plaintiff’s e-mail that only one engineer would be required. 

44.  This e-mail from the plaintiff to Daihatsu was also copied and sent by the plaintiff to Shen and Li.  It was clear that by the time of this e-mail, Daihatsu has already brought in Shen and Li, not envisaging that their advice would be turned down.

45.  In order to get the message that only one engineer was required, Iwabuchi-san upon reading Stephen’s e-mail would have also had to read the attachment.  It is uncertain whether Iwabuchi-san had actually read the attached defendant’s e-mail, but the subsequent conduct of Daihatsu shows that Iwabuchi-san may well have read the e-mail of the plaintiff only without going into the contents of the attached defendant’s e-mail. 

46.  It is regrettable that no one from Daihatsu gave evidence.  From the limited evidence before me, I find it highly probable that Daihatsu overlooked this important instruction from the defendant to send one engineer only and have proceeded on the basis that the confirmed contract was for Daihatsu to send one engineer plus one fitter.

Water Leakage

47.  The plaintiff states that a water leakage incident on 5 December 2011 affecting the function of generator no. 1 needed additional attention by the engineers from Daihatsu.

48.  An additional Daihatsu technician Liu hong (“Liu”) attended work on the vessel on 1 December 2011.  Liu, according to the plaintiff, was a fitter/technician.  Liu worked in pairs with Shen.  It appears from the work schedule that Liu substituted for Li for the period from 2 to 4 December 2011.  There is no evidence of there being any prior communications between Daihatsu or the plaintiff and the defendant in relation to the dispatching of Liu.  There is no evidence of any request by Jimmy or anyone from the defendant requesting for a technician/fitter from Daihatsu.  There was no apparent reason for the deployment of Liu.

49.  As Liu had commenced work and Daihatsu had started charging for Liu’s fees from 1 December 2011 onwards, for whatever reason Liu was first assigned to work on the Vessel, it could not have been for the urgent service of the water leakage, which did not occur until 5 December 2011.  It follows that neither Shen, Li nor Liu were engaged as a result of the water leakage incident on 5 December 2011 as claimed by the plaintiff.

50.  The defendant denies having received any contemporaneous report regarding the water leakage incident.  There is no evidence that the ship crew cannot take care of the water leakage.

51.  To succeed on the claim for the alleged varied agreements, the plaintiff must prove there to be meeting of the minds of the parties for the plaintiff to depart from the original contract and deploy more than one engineer as originally agreed.  The sequence of events does not support the plaintiff’s notion that the additional engineer and technician were called in for the additional works

52.  I find the deployment of the extra engineer and technician was not a result of the alleged varied agreement and the basis of the plaintiff’s claim collapses for failing to establish the primary fact that the additional works resulted in the defendant requesting and agreeing to the deployment of extra Daihatsu manpower.

53.  However, if I am wrong on the above analysis, I shall proceed to deal with the other issues arising from the notion of the defendant’s acceptance by conduct.

Acceptance by conduct?

54.  Mr Wong further submits that whilst there is nothing in writing between the parties as to the deployment of more than one engineer, the behaviour of the defendant amounts to an acceptance by conduct for the services of the extra engineer and technician for the following reasons:-

a)  The defendant was informed that Daihatsu will arrange two engineers to board the vessel as shown in the plaintiff’s e-mail dated 28 November 2011.  Since, the defendant was provided with the particulars of the Daihatsu engineers to enable the defendant’s local agent to obtain boarding visa and book accommodation for Shen and Li, the defendant must have been well aware that both Shen and Li will be sent but the defendant made no objection.

b)  If the defendant was so minded about the number of engineers to be sent, Jimmy who was present should have stopped the engineers (or the additional engineer) from Daihatsu from doing anything or take the matter up with the plaintiff on day one.  In fact, during the entire period from 27 November 2011 to 9 December 2011, the defendant had not taken up the issue of additional personnel from Daihatsu with the plaintiff.

c)  The nature of the work as accounted (and not disputed by the defendant) and carried out by Daihatsu was not merely supervision or advisory but in fact involved checking both diesel engines of the Vessel, carrying out the overhauling, dissembling and replacing parts, carrying repairing work to the generator as a result of water leakage and as well as cleaning up.  These works under the original agreement was to be done solely by the crew of the Vessel and not within the scope of works undertaken by Daihatsu.

d)  The above are not small manoeuvrings which would come across unnoticed by Jimmy who were present.  If the defendant did not approve of the works by the Daihatsu engineers, they could always be stopped.  Equally, if there was no approval by the defendant, the engineers from Daihatsu would never have gone down to the engine room to carry out the works which should have been done by the crew.

e)  All along, the plaintiff claims,  the defendant was well aware of the additional works undertaken by Daihatsu engineer(s) because of the corresponding urgent orders placed on the 1 December 2011 for the Vessel corresponding with the installation work undertaken by Daihatsu.

f)  It is unfair for the defendant (where Jimmy was present all along) to suggest that it did not agree that Daihatsu was required to carry out the works but rather just to supervise the crew of the Vessel.  Obviously, being aware of the situation, the defendant had permitted the works to be carried out by the engineers of Daihatsu to its benefit, it is not just for the defendant to deny responsibility. 

g)  The result of the change of the scope of work the service of Daihatsu was changed from the original estimation of 8 days to 12 days.  If the defendant were insisting on strict contractual rights, Daihatsu’s engineers should no longer be required to board the vessel after 3 December 2011 (for 8 days only).  The defendant was well aware of the service tariff and clearly knew that the expenses for the work would be different if the defendant continued to ask for the services of Daihatsu.  This could be seen from the admission of the defendant in paying for one engineer in accordance with the rates specified in the service tariff.

h)  It is clear that as to the issue that the number of personnel from Daihatsu is concerned, the defendant had never complained of their presence. Instead the contemporaneous complain by Jimmy who was present, was limited the “service attending hours”.

i)  The act of the defendant amounts to an acceptance of the variation by conduct and that courts have found that this is sufficient to support a cause of action: see, for example, Hui Chi Yuk previously known as Hui Chi Hing trading as Tak Yue Transportation Company v Uni Top Air and Seafreight (HK) Limited (unreported) DCCJ 2092/2009 at paragraphs 9, 29-30.

j)  In the case of UBC (Constructions) Ltd v Sung Foo Kee Limited [1993] 2 HKLRD 207 per Kaplan J at 226 line 35-45

“Miss Cheng submits the acceptance of the quotations for VOs by conduct has not been pleaded Mr. Graham submits that UBC have alleged that they were instructed to quote, did quote, their quote was accepted and they were told to carry out the work. UBC relied upon an express acceptance in all cases, but in my judgment, they are also entitled to rely upon acceptance by conduct which is plainly made out on the evidence. I agree with Mr. Graham that this is not primarily an estoppel situation but merely the mode of acceptance of the UBC offer. Having been asked to quote and told to go ahead it is not possible for SFK to deny acceptance given that they stood by while these very works were being carried out and what is more, they made many payments at the rate agreed. There are cases referred to at page 25 of Keating which illustrates the principle involved.”

k)  In the present case, the defendant had knowledge of the service tariff of Daihatsu and it must have been clear to the defendant that if they allowed the engineers (ie more than one) of Daihatsu to carry out work in variation to the initial agreement to “supervise”; it is not for the defendant to go back and say that they have not accepted to pay for the varied work done.

The Role of the Chief engineer

55.  It appears that the chief engineer was employed by Vessel owner.  There is no evidence that he was under the employment of the defendant.  He apparently had no interest in the terms of agreement between the plaintiff and the defendant.  His action should not bind the defendant and his signing of the Service Report has little bearing on the party’s alleged varied agreements.

Did the Plaintiff know that an additional engineer will be deployed?

56.  From the evidence, it is not certain when the plaintiff was first made aware of the fact that more than one Daihatsu engineers would be deployed.  During the vessel service period, there was no e-mail from Daihatsu to the plaintiff notifying them of any request, intention, discussion or agreement with the defendant for the dispatch of the second engineer or the technician.  It appears that during the service period, there was no email either to or from the plaintiff to show that they had knowledge of there being any variation agreement to deploy more than one Daihatsu engineer.  There is no allegation from the plaintiff as to there being any oral communication on this subject.

57.  If the plaintiff was not made aware of any intention or offer from Daihatsu or any request from the defendant to deploy more than one engineer, the plaintiff was in no position to make such an offer or be a part of any alleged variation agreement(s).

Did the Defendant know that an additional engineer will be deployed?

The e-mail dated 28 November 2011

58.  In my judgment, the plaintiff’s e-mail dated 28 November 2011 providing names of two personnel from Daihatsu could be read neutrally, to which Mr Wong also agreed.  It could mean 1) one engineer plus one apprentice; 2) one engineer plus an assistant; 3) one engineer with one back up engineer to take shifts.

59.  By reading the plaintiff’s e-mail dated 28 November 2011 alone, it cannot be concluded that defendant must have known that Daihatsu intended to deploy two engineers to work on the Vessel at the same time and that the plaintiff would be charged for the services of two engineers.  Bearing in mind, the defendant had just confirmed three days before this e-mail that only one engineer was required.

60.  Likewise, I find that providing boarding pass to two personnel from Daihatsu does not necessarily imply the defendant’s knowledge or consent of the defendant for Daihatsu to charge for more than one engineer.

Jimmy subsequently raised no issues regarding the extra engineer and technician 

61.  When being chased for payment by the plaintiff, Jimmy wrote back to the plaintiff on 20 April 2012 stating that the defendant does not agree to the service attending hours.  

62.  Jimmy’s 20 April 2012 email to the plaintiff reads:-

“However, re the mentioned invoices, we do not agree with your charge due to the service attending hours of your engr & tehn was not truly reported as I had observed during my attending on board for dry docking repair at the time. I am now checking your invoices and will revert the details to you sometime next week.”

63.  On 9 May 2012, Jimmy replied:-

“We have finished checking your invoices but they are being withheld by our top management for payment approval because the invoices appear to have some major inconsistencies. Our top management wish to meet the engine maker representative … to discuss about the matter. Can you propose a meeting arrangement by return?”

64.  Subsequent to this email, no meeting was arranged by the plaintiff.

65.  Mr Wong submits that if it was the defendant’s case that the plaintiff have over charged in respect of the number of engineers and technician, one would have expected Jimmy to have rebutted the Bill and raised this specific issue of the plaintiff not being entitled to charge for the extra engineer and technician.

66.  Jimmy has since passed away.  The court does not have the benefit of Jimmy explaining the contents of this e-mail.  Tam is now aged 76, I should probably not put too much weight on his not being able to recall clearly full details of his instructions to Jimmy that occurred over 8 years ago.  Tam nevertheless, fairly agrees that the defendant should have been more clear or specific when challenging the Bill.  He accepts that there may have been an oversight on the defendant’s part when challenging the Bill. 

67.  I accept Mr Wong’s submission that this email from Jimmy signifies that Jimmy may have had knowledge at the time of the service of the vessel that more than one Daihatsu engineer and/or technician was/were deployed.

Was there an offer to deploy a second engineer or technician?

68.  Mr Wong submits that the nature of the contract provides that any additional personnel from Daihatsu and additional hours of work are covered by the agreed Service Tariff.  It was in contemplation that there were changes to be made after inspection.  The Service Tariff served as a standing offer.  The act of the defendant asking for or permitting the additional personnel from Daihatsu will amount to an “acceptance by conduct”.  The agreement between the plaintiff and the defendant could be and was varied according to the above.

69.  The Service Tariff was sent on 17 November 2011 at a time when the plaintiff was advising the defendant that Daihatsu intended to dispatch one service engineer and one fitter.  The parties have subsequently agreed to there being one service engineer only.  In my Judgment, the Service Tariff was a neutral document no more than a list of fees for the defendant’s reference. 

70.  Whilst it is appreciated that extra work called for would affect a difference in the final total fees, under the circumstances of this case, a variation of work may well affect the number of working hours to be extended and the total fees for the engineer.  However, when it comes to the issue of engaging more than one engineer, I do not accept that the Service Tariff on its own can stand as an offer. 

71.  Any variation of the term “one engineer only” in the state of affairs of this case had to be specific.  The plaintiff have not demonstrated that at what point and by whom such an offer was made by either party.  I find that in absence of an offer from the plaintiff for the use of an extra engineer and/or technician, a mere non-interference on the part of the defendant for Daihatsu to use more personnel for the work could not amount to an acceptance by conduct.  I find that under the circumstances of this case, in absence of a written order placed by the defendant for extra manpower, any variation of the condition of the contract of using one Daihatsu engineer only will have to be clear and unequivocal.  For instance, an act from the defendant to signify a request or orally consent to give the go ahead.

Did Jimmy request for the extra engineer/technician?

72.  Mr Wong submits that it would be incredible for anyone to believe that Daihatsu personnel send in extra manpower and carry out works without the request or approval by Jimmy.  Further, this is incredible and lacks commercial sense because it suggests that Daihatsu was willing to undertake work without having been confirmed by a person with authority.

73.  Under normal circumstances, Mr Wong’s observations would be sound.  However, in light of the miscommunication between Daihatsu and the plaintiff on 25 November 2011, Daihatsu is likely to have proceeded on the basis that they already had the green light and never considered the need to seek consent from the defendant.

74.  There is no evidence of Jimmy requesting for the second engineer and technician.  Unlike the UBC (Constructions) Ltd.’s case, there is no evidence in the present case that the defendant or Jimmy had ever expressed consent or given the go ahead for the deployment of more than one Daihatsu engineer.

Should Jimmy have stopped the deployment of extra engineer/technician?

75.  So far as the defendant was concerned, the contract was for the payment of one Daihatsu engineer only.  The fact that Daihatsu had for whatever reason sent more than one engineer was a matter for them.  As illustrated, Daihatsu may well need more than one engineer to take shifts or serve as a support substitute.  Even if Jimmy was made aware of the fact that there was more than one engineer from Daihatsu, the extra engineer may be an apprentice or an assistant to the engineer or even a standby substitute.  It was not for Jimmy to intervene with how Daihatsu saw fit to carry out their duty.  I do not accept the submission that Jimmy should have stopped Daihatsu.

76.  Jimmy was responsible for the negotiation for Daihatsu to send one engineer only.  He was from the technical department and was not unfamiliar with the technical aspects of the overhauling.  It would make no sense for Jimmy to agree to the deployment of more than one engineer and for the defendant to be charged for the same without first being satisfied that the additional work cannot be carried out by the ship’s crew.  In fact, it is not disputed that the installation of the bolts were simple tasks which could have been carried out by the ship’s crew.  Likewise, there is no evidence that the water seepage incident cannot be handled by the ship’s crew. 

77.  Had there been a variation of the term for “one engineer only”, I would have expected there to be at least a discussion between Daihatsu engineer and Jimmy on the spot.  Latest, by the time of litigation when it became apparent that the defendant challenged the Bill on the basis that there was no request and no agreement for the use of an extra engineer and technician, I would have expected the plaintiff to seek clarification from Daihatsu.  Had there been a request or any acceptance by Jimmy for the use of extra engineer from Daihatsu, it was obligatory for Daihatsu to report to the plaintiff of such a request or acceptance.

78.  On the totality of evidence, I am not satisfied that Jimmy had given the go ahead for the deployment of the extra engineer and the technician.  I am not satisfied that there is sufficient evidence to establish the fact Jimmy had knowledge that the defendant would be charged for the extra engineer and technician if deployed.  I am not satisfied that Jimmy agreed to the alleged two variation agreements, through the acceptance by conduct or otherwise.

The General Lack of evidence

79.  There is a general lacking of evidence on essential issues.  There is no evidence on the dealings between Jimmy and Daihatsu personnel at the dockyard.  There is no evidence that the two additional work could not have been carried out by the ship’s crew under the supervision of one Daihatsu’s engineer.  There is also no evidence of there being any offer from the plaintiff to the defendant to vary the terms of contract to deploy more than one engineer.  There is no evidence that the defendant requested for the services of the extra engineer and technician.  There is no evidence that the defendant consented to pay for the services of the extra engineer and technician.  There is no evidence of there being any meeting of minds between the plaintiff and the defendant that the defendant would be charged for more than one engineer resulting from the two variation works.

The lack of evidence on the two alleged variation agreement

80.  Had there been such an agreement to the variation of the contract for Daihatsu to deploy and charge for more than one engineer/technician, Daihatsu being an international ship engine manufacturing company would have at the time notified the plaintiff to such an important variation.  After all, it was the plaintiff who contracted with the defendant. To the contrary, during the 11 days of service of the Vessel, there was no contemporaneous correspondence between Daihatsu and the plaintiff or between Daihatsu engineer and Daihatsu office or the plaintiff and the defendant regarding any variation of contract or deployment of more than one engineer.  This defies business common sense.

81.  Further, the standing instruction and agreement was for one Daihatsu engineer only for advisory and supervision purpose.  To engage an additional engineer and technician may well double or triple the contract fees.  Unlike in Hui Chi Yuk’s case where the parties have had previous dealings, in the present case, it was the first time that the plaintiff dealt with the defendant. It made no commercial sense for the plaintiff not to have taken appropriate steps to protect its business interest by ensuring a written confirmation from the defendant before proceeding to send in more than one engineer.  Yet, subsequent to the contract on 25 November 2011, there was nothing in writing in relation to any discussion or prospect of sending more than one Daihatsu engineer to attend work.  There was no notification or confirmation sought from Daihatsu to the plaintiff or from the plaintiff to the defendant about such an important variation.

82.  Not only had there not been any written confirmation, there was not even any allegation of oral consent or confirmation from either the plaintiff or the defendant for Daihatsu to go ahead with deploying more than one engineer.

CONCLUSION

83.  The sequence of events are against the plaintiff’s primary case that the additional engineer and technician were sent in as a result of the additional work and alleged varied agreements. I find that the deploying of the extra engineer and the technician could not have been a result of the order for bearing bolts or the water leakage incident.

84.  On the totality of the evidence, I find that there is insufficient evidence to substantiate there to be any requests from the defendant for the services of the extra engineer and the technician.  Nor is there sufficient evidence to establish any offer or acceptance for the two alleged variation agreements to dispatch more than one Daihatsu engineer.  Accordingly, I find that there was no variation agreements between the plaintiff and the defendant for Daihatsu to deploy more than one engineer.

85.  The plaintiff is only entitled to Judgment for the fees of one engineer and the claim for the fees of the extra engineer and technician is dismissed. 

The difference in the exchange rate claim

86.  The plaintiff claims for losses/damages arising out of the difference of the foreign exchange rate.  Alternatively, the plaintiff claims for the difference of the foreign currency as damages.  In light of my finding that the plaintiff have failed to establish contractual liability for the variation agreements, there is no need to go into the issue of claim for loss/damages for exchange rate regarding the fees for the extra engineer and technician. 

87.  However, in the event that I am wrong and the plaintiff is entitled to Judgment for the variation agreements, I would accept Mr Wong’s submission that the plaintiff should not suffer from further losses as a result of the depreciation of the foreign currency: see Stibbe (Burtotex) Ltd v A J Bayman (1976) DCLR 70.  In that case, Judgement would be entered for the plaintiff in the amount in local currency of the expressed Yen at the rate of conversion at the date of the breach on 26 February 2012.

COSTS

88.  Mr Wong submits that the defendant has failed to appear before the court in the Pre-Trial Review hearing (PTR) without giving good reasons and continue to operate without a registered office address.  Further, a significant amount of costs has been generated as a result of the defendant’s failure to attend the PTR and the plaintiff’s effort to report to this court the possible whereabouts of the defendant.  Mr Wong further submits that these costs should be borne by the defendant notwithstanding the outcome of these proceedings and the plaintiff asks this court to make a relevant order as to costs on an indemnity basis.

89.  As it has been the defendant’s stance at the commencement of the proceedings that it agrees to pay for one service engineer, this matter could have been resolved at a very early stage.  Taking into account the fact that the defendant had this matter hanging for over 8 years and had to go through prolonged litigation, I am prepared to give the defendant some latitude.  That said, I have not had the benefit of hearing full arguments and shall hear further arguments on costs, if so required.  In the meantime, I make costs order nisi against the plaintiff in favour of the defendant, with the exception of making no order as to costs for the PTR hearing where the defendant was absent.  This costs order shall be made absolute in 14 days from the date hereof.