UNITED POWER ENGINEERING CO LTD v. BEST BILLION ENGINEERING LTD

DCCJ 1643/2018

[2021] HKDC 350

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1643 OF 2018

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BETWEEN

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JUDGMENT

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Introduction

1.  This is a claim brought by United-Power Engineering Company Limited (the “Plaintiff”) against Best Billion Engineering Limited (the “Defendant”) pursuant to an agreement dated 16 November 2015 (the “Principal Agreement”)[1], and an agreement for additional works evidenced by a quotation and invoices (the “Additional Agreement”). The Plaintiff accepted that the Principal Agreement was later superseded by another agreement signed with the Defendant on 3 December 2015 (the “Main Agreement”)[2].

2.  At the trial, the Plaintiff was represented by counsel Mr Wilfred Tsui (“Mr Tsui”) and the Defendant was represented by counsel Mr Roger So (“Mr So”).

Procedural history

3.  On the first day of trial, Mr So on behalf of the Defendant applied to disclose further documents for use at the trial. Most of these documents are relevant to the issue of whether there was any agreement on the price for some additional works,[3] and were cited in the Quotation[4] issued by the Plaintiff. With no objection from Mr Tsui, I allowed these documents to be added to the trial bundle and to be used at the trial.[5]

4.  Apart from the above, Mr Tsui on behalf of the Plaintiff applied for the amendment of the specially indorsed writ of summons on the last day of trial, based on what transpired during the trial. This was not contested by Mr So as he accepted that no prejudice is suffered by the Defendant due to such late amendment. I therefore granted the application and gave consequential leave for the Defendant to file and serve its re-amended defence, which the Defendant did on 11 December 2019.

The Plaintiff’s pleaded case

5.  As per its amended statement of claim, the Plaintiff alleged that, by the Principal Agreement, the Defendant engaged it for electrical installation in relation to “Barrier Free Access Improvement Work” (the “BFAI Work”) at Kennedy Town Jockey Club Clinic (the “Site”) in return for a fee of HK$360,000. The Principal Agreement also contained the terms that part-payments would be made by the Defendant on presentation of invoices from the Plaintiff for the completed works, and such payments should be made within 30 days from the dates of the invoices. Should the Defendant fail to make comply with such requirement, interests at the rate of 2% per month would be levied on the sums overdue.

6.  The Additional Agreement was entered between the Plaintiff and the Defendant under which the former would render works additional to the BFAI Work at the Site (the “Additional Works”). As previously mentioned, the Plaintiff asserts that the Additional Agreement was evidenced by a quotation dated 17 February 2017 (the “Quotation”),[6] and the 2^nd and 4^th Invoices[7] issued for the Additional Works. In return, the Plaintiff would receive an additional fee of HK$216,846. It was agreed between the Plaintiff and the Defendant that the same payment terms under the Principal Agreement would apply to the Additional Agreement.

7.  Pausing here, it is beneficial for me to set out the items of Additional Works listed in the Quotation in order to have a better understanding of the parties’ cases and their witnesses’ evidence.

8.  Under the Quotation, there are 5 heads of Additional Works. They are set out hereinbelow: -

(1) Revised construction drawings (Electrical) (III), with variation order reference number “VQ-EL001 (Rev. 1)”, and a fee of HK$114,216 (“1^st Additional Item”).

(2) Dismantling the installed conduit point due to the existing hollow ceiling, with variation order reference number “VQ-EL002 (Rev. 1)”, and a fee of HK$64,920 (“2^nd Additional Item”).

(3) Addition of electrical installation for new pump room and store room at roof floor, with variation order reference number “VQ-EL003”, and a fee of HK$19,660 (“3^rd Additional Item”).

(4) Dismantling the installed 13A fused spur unit point due to the relocation of control panel, with variation order reference number “VQ-EL004 (Rev.1)”, and a fee of HK$14,400 (“4^th Additional Item”).

(5) Dismantling the installed 13A fused spur unit point due to the relocation of hand dryer, with variation order reference number “VQ-EL005”, and a fee of HK$3,610 (“5^th Additional Item”).

9.  Coming back to the Plaintiff’s pleaded case, it asserts that the BFAI Work and the Additional Works were completed on or about 7 September 2017.

10.  On 30 April 2016, the Defendant paid to the Plaintiff a sum of HK$102,600, representing partial settlement of the fees for the BFAI Work.[8]

11.  From 18 February 2017 to 29 December 2017, the Plaintiff had issued 4 invoices (collectively as the “Invoices”) to the Defendant, seeking fees owed under the Principal and Additional Agreements, in the total sum of HK$474,246 (the “Outstanding Sum”). The particulars of the Invoices are as follows: -

(1) Invoice no. UP/17/I0216 dated 18 February 2017 in the sum of HK$171,000 for the BFAI Work (the “1^st Invoice”).[9]

(2) Invoice no. UP/17/I0226 dated 27 February 2017 in the sum of HK$164,802.96 for the Additional Works (the “2^nd Invoice”).[10]

(3) Invoice no. UP/17/I1211 dated 29 December 2017 in the sum of HK$86,400 for the BFAI Work (the “3^rd Invoice”).[11]

(4) Invoice no. UP/17/I1212 dated 29 December 2017 in the sum of HK$52,043.04 for the Additional Works (the “4^th Invoice”).[12]

12.  Notwithstanding the Invoices and the Plaintiff’s repeated demands, the Defendant had failed and/or refused to pay the Outstanding Sum. As such, the Plaintiff claims in this action for the Outstanding Sum together with the contractual interest at the rate of 2% per month, which came to HK$94,147.82 at the time of the statement of claim. Alternatively, the Plaintiff claims the sum of HK$257,400 under the Main Agreement, and quantum meruit for the Additional Works, or alternatively for damages to be assessed.[13]

The Defendant’s pleaded case

13.  In its amended defence, the Defendant agrees that it had engaged the Plaintiff for the BFAI Work at the fee of HK$360,000. However, it alleges that the Principal Agreement was in fact only a letter of intent (the “Letter of Intent”), without the details of the BFAI Work to be done. The Letter of Intent was made preliminary to a formal contract.

14.  It was only after the Letter of Intent was signed that the Plaintiff provided to the Defendant detailed breakdown of the BFAI Work, whereupon the Main Agreement was entered, and superseded the Letter of Intent.

15.  The payment and penalty terms under the Principal Agreement as alleged by the Plaintiff are denied. In their place, the Defendant highlighted the following terms of the Main Agreement in its amended defence: -

(1) Under clause 3.2, the BFAI Work was to complete the related electrical installation work (inclusive of materials) in accordance with the drawings and tender requirements (the “Contract Requirements”) under the overall contract being Quotation Contract No. PM12-01/14 (the “ASD Contract”) by the Architectural Services Department (the “ASD”).

(2) As per clause 3.9(a), acceptance of the BFAI Work shall be made subject to the standards adopted by the ASD, Electrical and Mechanical Services Department (the “EMSD”), the architect Messrs Andrew Lee King Fun & Associates Architects Limited (the “Architect”) and the electrical & mechanical engineer.

(3) Under regulation 10, for all materials to be used, samples of the same must be given to the Defendant and the surveyors for approval before they could be used in the BFAI Work.

(4) According to regulation 13, the Plaintiff must ensure that there was sufficient labour, equipment and materials to warrant smooth progress of the BFAI Work, and to have it completed within the time limit. If the progress were unsatisfactory or where it was anticipated that the time limit could not be adhere to, the Plaintiff was required to increase the manpower, or increase the working hours of the workers, or to implement changes to the working method, in order to complete the BFAI Work within the prescribed time. Notwithstanding the increase of manpower and/or work hours, the Plaintiff were not entitled to any additional project fees.

(5) Under regulation 14, where the BFAI Work could not be completed within the time limit, the Defendant was entitled to, apart from deducting from the Plaintiff’s fees the penalty stipulated in the contract, also deduct all losses, administration fees and additional fees caused by the delay.

16.  As to the Additional Works and the Additional Agreement, the Defendant alleges that the Plaintiff was required to provide variation works beyond the scope of the BFAI Work under the Main Agreement. It also avers that the electrical services consultant, WSP Hong Kong Limited (“WSP”), assessed the Additional Works to be worth HK$64,558.25.

17.  The Defendant contends that both the BFAI Work and the Additional Works were completed on 11 September 2017. It further explains that in breach of the Main Agreement, the Plaintiff wrongfully installed undersized electrical cable (“Defective Cable Incident”), contrary to the Contract Requirements of 4 mm². The Defective Cable Incident was discovered by the Architect or building services inspector on or about 3 March 2017. Despite numerous requests and demands, the Plaintiff was only able to rectify the Defective Cable Incident by 11 September 2017.

18.  The Defendant admits the part-payment of the fee of HK$102,600 for the BFAI Work. It also admits that the Invoices were issued by the Plaintiff. However, due to the Defective Cable Incident and the delay caused by the rectification of the same, the Defendant alleges to have suffered loss and damage as follows: -

(1) Provision of site staff from March to September 2017:

(a) project supervisor at the monthly wages of HK$20,500 for 3 months, amounting to HK$61,500;

(b) project supervisor at the monthly wages of HK$17,000 for 3 months, amounting to HK$51,000; and

(c) safety officer for 6 months at the monthly wages of HK$23,500, totalling HK$141,000.

(2) Office overhead, administration fees and additional fees for 6 months at the rate of HK$20,000 per month, at the total sum of HK$120,000.

19.  The Defendant therefore seeks to set-off the aforesaid loss and damage in the sum of HK$373,500 against the amount claimed by the Plaintiff.

20.  The Defendant agrees that the Plaintiff should be entitled to a reasonable sum for the Additional Works on the basis of quantum meruit, but the sum to be awarded shall be assessed.[14]

The Plaintiff’s replies

21.  In its reply, the Plaintiff admits that the Principal Agreement was actually a letter of intent, and that it was superseded by the Main Agreement. The terms of the Main Agreement cited by the Defendant in the amended defence are also admitted.

22.  I shall add at this point, based on such admission, the original assertion of the Plaintiff in its amended statement of claim that the terms of payment (including contractual interests) contained in the Principal Agreement shall apply to the Additional Agreement is no longer maintainable.

23.  Coming back to its reply, the Plaintiff also took the opportunity to provide some background concerning the Additional Works. It explains that the need for the same stemmed from the unstable condition of the ceiling at the Site, which led to all the works therein being halted. The Additional Works were therefore urgently requested by the Defendant’s site foreman, Mr Lo Kwok Wing[15] (“Mr Lo”) in or about January 2017. The Plaintiff then issued the Quotation for HK$216,846, together with it the detailed breakdown of the charges for the Additional Works. The Additional Works included dismantling and re-installing of certain BFAI Work that had been installed under the Main Agreement.

24.  The Quotation was verbally accepted by Mr Lo on behalf of the Defendant on or about 24 February 2017, which then became the Additional Agreement. The Plaintiff emphasises that, contrary to the Defendant’s assertion that the fees charged for the Additional Works were assessed by WSP, there was no provision under the Additional Agreement to this effect.

25.  As to the Defective Cable Incident, the Plaintiff accepts its existence, and that the problem was ultimately rectified. It explains that the Defective Cable Incident was caused by the mistake of its staff, and was discovered by the Plaintiff’s site coordinator. With the knowledge of the Defendant, the Plaintiff then commenced immediate re-installation of the cables, at its own costs and without any input from the Defendant, within about 7 days in or about August 2017. Hence, the remedial works caused no delay to the BFAI Work, the Additional Works and the project at the Site. The Plaintiff rebuts the Defendant’s claim for loss and damage due to provision of site staff, office overhead, administration fees and additional fees from March to September 2017, stating that they had nothing to do with the Defective Cable Incident, hence the Defendant is not entitled to set them off against the Plaintiff’s claim.

Issues to be resolved

26.  In light of the above, the following issues are agreed by the parties: -

(1) Whether the Quotation for the Additional Works in the sum of HK$216,846 had been accepted by the Defendant? (“1^st Issue”)

(2) If the answer to the 1^st Issue is yes, whether the Plaintiff is entitled to claim from the Defendant the full amount of HK$216,846 for the Additional Works and the outstanding balance of HK$257,400 under the Main Agreement, with interests of HK$94,147.82? (“2^nd Issue”)

(3) If the answer to 1^st Issue is no, whether the Defendant is entitled to rely on the assessment of WSP to pay only HK$64,558.25 for the Additional Works? (“3^rd Issue”)

(4) Whether, due to the Defective Cable Incident, damage in the sum of HK$373,500 was caused to the Defendant or what sum shall be set-off against the Plaintiff’s claim? (“4^th Issue”)

27.  For the 2^nd Issue, Mr Tsui has in his closing submissions abandoned on the claim for contractual interests at 2% per month. As such, evidence given in this regard by the witnesses at trial are excluded from this judgment.

Evidence of Mr Kam Ngai Keung (“Mr Kam”)

His evidence-in-chief

28.  The Plaintiff called 2 witnesses to give evidence at trial. Mr Kam is the first witness for the Plaintiff. He adopted his witness statement as part of his evidence-in-chief at trial. Mr Kam held the post of site coordinator with the Plaintiff at the material times.

29.  Mr Kam’s narrative started in January 2016, when the BFAI Work commenced at the Site. In or about mid-2016, the Defendant discovered that the ceiling became unstable, hence the requirement to remove and re-install some of the BFAI Work, eventually giving rise to the Additional Works. In or about mid-January 2017, Mr Lo contacted Mr Kam and requested for the Quotation from the Plaintiff. After the Quotation was sent out in mid-February 2017, Mr Lo telephoned him, saying that the Additional Works were confirmed and requested for their immediate commencement. All BFAI Work and Additional Works were completed in September 2017.

30.  As to the Defective Cable Incident, Mr Kam said that he was informed by Mr Lo about it in March 2017. Upon the Defendant’s instruction, he assigned 2 to 3 workers to perform the remedial works, and the same was completed within 7 days at the end of August 2017. Mr Kam emphasised that the remedial works were done without any involvement from the Defendant, be it on resources or manpower.

His evidence under cross-examination

31.  Mr So started his cross-examination with questions regarding distribution of works between Mr Kam, Mr Ng Man Fai (“Mr Ng”), and Mr H.H. Lam (“Mr Lam”) [16]. In reply, Mr Kam expounded that Mr Ng was responsible for progress of works, preparing and issuing quotations and invoices, whereas Mr Lam was responsible for site supervision. Although Mr Lam was also responsible for the progress of works, Mr Kam would only report any queries on electrical appliance manual to him. For other matters relating to work progress, Mr Kam would report them to Mr Ng only. He believed that Mr Ng would then discuss the progress matters with Mr Lam individually.

32.  Regarding the Additional Works, Mr Kam gave the following evidence: -

(1) The BFAI Work commenced in December 2015. But about 1 month into it, ceiling of the Site collapsed, leading to the BFAI Work being halted for about 10 months.

(2) In July 2016, the Defendant identified that the problem came from the ceiling. Since then, there had been discussions on the addition or subtraction of electrical installation that was required, and these tasks ultimately became the Additional Works.

(3) Mr Kam clarified that in spite of the discovery of the problem in July 2016, the Defendant spent time on ascertaining the need to re-stabilise the ceiling. In December 2016, the Defendant concluded that re-stabilisation of the ceiling was necessary. Thus, Mr Lo only requested for the Quotation from him via telephone conversation in mid-January 2017, during which Mr Lo told him that the Additional Works could be started.

(4) Mr Kam gave no answer when he was asked why the Defendant waited until mid-January 2017 to obtain the Quotation when the decision to re-stabilise the ceiling was made in December 2016.

(5) As to the Quotation, his responsibility was limited to providing measurements and etcetera to Mr Ng for preparation of the same. It took him 1 to 2 weeks to come up with the said information. Other than that, Mr Kam has no further knowledge of the Quotation, for example the costs charged, when the Quotation was issued, and how many quotations were issued. He had not seen the Quotation or other quotations issued by the Plaintiff to the Defendant for the Additional Works.

(6) During another telephone conversation with Mr Lo in February 2017, Mr Kam asked Mr Lo whether he had received the Quotation, to which Mr Lo answered in the affirmative. Mr Lo also green-lit the commencement of the Additional Works.

(7) Mr Kam disagreed that there were substantial overlaps between the BFAI Work and Additional Works. He also denied that if there were disputes over the tasks and costs for the Additional Works, they would be assessed by WSP.

33.  Turning to the Defective Cable Incident, Mr Kam’s evidence are as follows: -

(1) Initially, he asserted that the defective cables were discovered and informed to the Plaintiff (including himself directly) by the WSP. Mr Kam conceded that he made a mistake on this after he was referred back to his witness statement.[17]

(2) He reiterated that remedial works were completed within 7 to 8 days between July and August 2017. He denied that it was completed on 11 September 2017 as suggested in the letter issued by the Defendant to the Architect on even day.[18]

(3) Mr Kam disagreed with Mr So that the remedial works were completed at the end of August 2017. He corrected himself after referring back to his witness statement.[19]

(4) He concurred with Mr So that the remedial works could have been done between March and August 2017, and the same could be completed as early as March 2017. However, he disagreed that all the works at the Site could have been completed in March 2017 but for the remedial works.

His evidence under re-examination

34.  During re-examination, Mr Kam elaborated on his disagreement that all works at the Site could have been completed in March 2017, if the Plaintiff had completed the remedial works for the Defective Cables Incident by then. He explained that, although the Additional Works were also completed in March 2017, there were some patch-up works at the Site unrelated to the BFAI Work and Additional Works.

35.  Apart from the above, Mr Kam said that after completion of the remedial works at the end of August 2017, the WSP was required to test the new cables. This could explain why the Defendant reported that the remedial works were only completed on 11 September 2017.

36.  As to the question why the remedial works could not be done earlier than August 2017, Mr Kam remarked that the brand of cables required by the Defendant had to be ordered, and it took some time for them to be delivered.

37.  Finally, he confirmed that the Plaintiff was not responsible for the re-stabilisation of the ceiling; and there was no overlapping of the tasks under the BFAI Work and the Additional Works. He added that there were meetings on monthly basis with Mr Lo, the Architect, and representatives from the ASD and WSP. As such, he was well aware of the items of work required under the Additional Works.

Evidence of Mr Ng

His evidence-in-chief

38.  The Plaintiff’s second witness is Mr Ng, also known as Stanley Ng. His witness statement was adopted as part of his evidence-in-chief at trial.

39.  As a matter of background, Mr Ng is the director and quantity surveyor of the Plaintiff. At the time of trial, he had worked in the industry for 19 years. He was responsible for the preparation and revision of quotations for projects that the Plaintiff bid for. He was also tasked with the duty to seek payments from the main contractors pursuant to the contracts.

40.  In his witness statement, Mr Ng confirmed that a quotation for the BFAI Work was tendered to the Defendant and was accepted on 16 November 2015.[20] It led to the Main Agreement being signed between the parties.

41.  In relation to the Additional Works and Additional Agreement, Mr Ng elaborated that the unstable condition of the ceiling at the Site appeared in mid-2016. The situation led to the need for some of the BFAI Work already done to be re-installed, and the need for extra electrical installation. The Defendant thus requested for the Quotation from the Plaintiff via Mr Kam. On 24 February 2017, Mr Ng was informed by Mr Kam that the Quotation had been accepted by the Defendant. The Additional Works then began and were completed in or about March 2017.

42.  Apart from the above, Mr Ng’s evidence largely mirrored those pleaded in the Plaintiff’s amended statement of claim and reply.

His evidence under cross-examination

43.  Mr So again started his cross-examination with questions regarding distribution of works between Mr Kam, Mr Ng, and Mr Lam. Mr Ng confirmed that Mr Kam was the person specifically assigned to handle the BFAI Work and Additional Works. Mr Kam would be responsible for the progress of works, whilst Mr Ng would focus on issuing quotations and invoices, and sourcing materials required for the works. That being said, whenever there were problems with regard to the progress of works, especially if that would affect payments receivable by the Plaintiff, Mr Kam would notify him about them.

44.  On the other hand, Mr Lam had minimal involvement in the project. As a project manager, he would be consulted on issues that could not be solved. Mr Kam, however, would take the primary role in supervising the works. Mr Lam would also help out in issuance of letters, in particular those to be written in English.

45.  On the topic of Additional Works, Mr Ng’s evidence are as follows: -

(1) Whenever a project required variation of the works, Mr Kam would inform Mr Ng about it and provide Mr Ng with the necessary information so that a new quotation could be prepared. There would be discussions between them as to the items that required variation, and the respective price for each item to be varied. After a draft of the quotation was prepared, they would have further discussion on it, so as to ensure that the quotation contained no mistake. Mr Ng remarked that he would not go so far as to say that Mr Kam would know about the price of each quotation, but Mr Kam’s focus would be on the works itemised therein, for he would have to re-ascertain what works were involved before commencement of the same.

(2) Mr Ng was then referred to the Quotation. Notwithstanding that it was signed by Mr Lam, Mr Ng stressed that he was the one who handled it, as evidenced by him being named in it as the contact person for inquiry.

(3) Mr Ng answered in the negative when Mr So suggested that the Additional Works could be commenced without agreement on the price. He reiterated that the same was commenced only after the Defendant had agreed on the price under the Quotation. On this point, Mr Ng also disagreed with Mr So that the price for the Additional Works would be assessed by WSP. Mr So’s suggestion that neither the Letter of Intent nor the Main Agreement excluded the mechanism for WSP to assess any disputed fees was rejected by Mr Ng with rebuttal that such mechanism was not included therein either. Likewise, the proposition that all fees charged by the Plaintiff shall be approved and assessed by ASD, EMSD, WSP, Architect and the electrical & mechanical engineer, pursuant to clause 3.9(a) of the Main Agreement, was rebuffed by Mr Ng. He clarified that the approval under clause 3.9(a) concerned only with the materials used and the quality of the works.

(4) Mr Ng confirmed that there were other quotations issued for the Additional Works prior to the Quotation. The first quotation was issued on 19 April 2016 (the “Quotation [173]”)[21] and the second one was issued on 27 January 2017 (the January 2017 Quotation”).[22] The Quotation [173] concerned the 1^st Additional Item (in the sum of HK$62,616), whereas under the January 2017 Quotation it revised up the amount charged for the same work (in the sum of HK$114,216).[23] Mr Ng explained that such revision was based on information and plan updated since mid-2016.

(5) In addition, another quotation was issued on 19 April 2016, which set the price for the 2^nd Additional Item at HK$25,200 (the “Quotation [182]”).[24] Like the 1^st Additional Item, the price was revised upward in the January 2017 Quotation (in the sum of HK$64,920) for the same reason as provided in the preceding sub-paragraph.[25]

(6) Mr Ng agreed that both Quotations [173] and [182] were not prepared pursuant to the requests of the Defendant. Their creations were volunteered by the Plaintiff after learning about the ceiling problem, and the subsequent stoppage of work.

(7) Apart from quotations issued prior to the Quotation, Mr Ng said there were also 2 quotations issued afterwards, with both concerning the 2^nd Additional Item. The quotation dated 16 August 2017 revised downward the amount to HK$24,200 (the “Quotation [186]”)[26], and the amount was further reduced to HK$12,100 in the quotation dated 22 August 2017 (the “Quotation [189]”)[27]. Similar to Quotations [173] and [182], Quotations [186] and [189] were created without requests from the Defendant.

(8) At this point, I interposed with the question as to whether Quotations [186] and [189] would meant that the Plaintiff’s claim in this action should be reduced correspondingly. Mr Ng replied in the negative, explaining that the said reductions were made as enticements for the Defendant to settle the fees under the Additional Agreement, after the Additional Works were completed in March 2017. Following up on this, Mr Ng agreed with Mr So that such intention was never mentioned in Quotations [186] and [189], or in any other document.

(9) Mr So expanded on this line of question by examining the invoices issued by the Plaintiff for the Additional Works. He first referred to an invoice dated 22 March 2017 for a sum of HK$3,800[28], which was an item chased under the demand letter dated 7 February 2018 (“2^nd Demand Letter’).[29] This item was finally settled on 10 February 2018 at HK$2,000 (“Settled Item”).[30] Using this for illustration, Mr So suggested that the sums claimed in the invoices were subject to change as they were not agreed between the parties; equally the charges under the Quotation were never confirmed by the Defendant. Mr Ng disagreed.

(10) Mr Ng acknowledged that the fees charged under the Additional Agreement and the Quotation was about 60% of the fees charged for the Main Agreement. Nevertheless, he saw no oddity in not having the Defendant’s acceptance on the Quotation documented. He also denied that Mr Lo did not confirm, and was not vested with the authority to confirm, the Quotation.

(11) Towards the end of this topic, Mr So got Mr Ng to agree that all quotations for the BFAI Work and Additional Works were issued to Mr Cheung Siu Tong (“Mr Cheung”)[31] of the Defendant. Likewise, the letters and emails were also sent to Mr Cheung. Mr Ng confirmed that the said documents were sent to Mr Cheung as the latter was the person responsible for the BFAI Work and the Additional Works. However, Mr Ng disagreed that only Mr Cheung was vested with the authority to approve the works and fees on behalf of the Defendant, referring to the Letter of Intent which was apparently signed by someone else. Come what may, Mr Ng agreed that the Main Agreement which superseded the Letter of Intent was signed by Mr Cheung. There was no quarrel that Mr Cheung did not verbally or in writing confirmed acceptance of the Quotation.

46.  Mr So’s cross-examination on the Defective Cable Incident was condensed to simply putting the Defendant’s case to Mr Ng. In short, Mr Ng disagreed that the Defective Cable Incident had caused any delay in the completion date, or loss and damage to the Defendant.

His evidence under re-examination

47.  Mr Ng’s evidence under re-examination are summarised below: -

(1) Apart from the Settled Item, there was another payment of HK$4,800 on 10 February 2018[32] after issuance of the 7.2.2018 Demand Letter.

(2) Mr Ng could not recall why the balance of HK$1,800 was not claimed for the Settled Item.

(3) At the time when the Quotations [173] and [182] were issued, works for the 1^st and 2^nd Additional Items had not commenced.

(4) The information that Mr Kam would give to Mr Ng for preparing quotations would include plans and photographs. Mr Ng alone would do the calculation of prices, without Mr Kam participating in it.

48.  With the completion of Mr Ng’s evidence, the case for the Plaintiff concluded.

Evidence of Mr Cheung

49.  Two witnesses gave evidence for the Defendant at trial: Mr Cheung, being its sole director; and Mr Lo, its project and safety supervisor at the material times.

Mr Cheung’s evidence-in-chief

50.  Mr Cheung adopted his witness statement as his evidence-in-chief at trial.[33] His evidence on the Main Agreement and the BFAI Work were consistent with those pleaded in the re-amended defence.

51.  In relation to the Additional Works, Mr Cheung accepted that he had received the Quotation from Mr Lam on 17 February 2017. However, Mr Cheung did not sign on it, citing an allegedly well-known trade practice in the construction industry that any additional works beyond the scope of the original agreement had to be checked and approved by the employer’s representative, in this case WSP.

52.  His narratives continued with what had happened after the Additional Works were completed. It was said that he then forwarded the Quotation to WSP for their checking with the actual work performed by the Plaintiff. According to WSP’s assessment, the Additional Works were only worth HK$64,558.25. It was said that the lower assessment was due to the fact that over 70% of the Additional Works overlapped with the BFAI Work.

53.  As to the Defective Cable Incident, Mr Cheung explained that the problem was discovered by Mr Kent Ng of the Architect on or about 21 February 2017. Learning about this, Mr Cheung had requested on numerous occasions for the Plaintiff to rectify the problem. However, the Plaintiff had employed a delaying tactic, even suggesting the Defendant to accept the defective cables, which was rejected by the representative of the employer.

54.  Ultimately, the Plaintiff agreed to rectify the defects, and was only able to complete it on 11 September 2017. This led to the loss and damage claimed by the Defendant.

His evidence under cross-examination

55.  As a matter of preview, Mr Cheung’s evidence under cross-examination were so appalling that they were also captivating.  It is imperative to have a full picture of them to appreciate how they have sabotaged the Defendant’s case.

56.  Mr Tsui started his cross-examination on some background information, during which Mr Cheung pointed out that:

(1) apart from the BFAI Work, there were other works at the Site that the Defendant sub-contracted to other sub-contractors, for example installation of air-conditioners, waterproofing works, replacement of aluminium windows and fire safety devices;

(2) there is no dispute that the sum of HK$247,400 remains due under the Main Agreement; and

(3) regarding the BFAI Work, approvals from ASD, EMSD, the Architect and WSP were limited to the qualities of the Plaintiff’s works but not their prices, as the latter were already agreed.

57.  Mr Tsui’s focus then turned to the Additional Works. On this topic, Mr Cheung gave the following evidence: -

(1) Mr Cheung clarified the problem with the ceilings at the Site was not that it was unstable or hollow. The building was timeworn, which led to the diminished capability of its ceilings to hold any weight. This rendered some of the works that had been done in accordance with the original plans to install devices on the ceilings, for example fire safety devices and the BFAI Work, had to be removed and re-installed after the problem was resolved.

(2) He added that he knew at the very beginning the problem with the ceilings, but the works commenced in January 2016 nonetheless, until the problem was exposed and no longer ignorable after the fire safety devices were installed. The works were halted in January 2016 for the engineers to come up with a plan to tackle the problem. Eventually, they decided to add metal frames to support the ceilings, and for the devices to be installed on the metal frames. This plan was created in or about April 2016. Time was then spent on designing and making the metal frames, and finally installing the same on the ceilings between July and August 2016. Before this, however, the devices already installed on the ceilings, including minimal amount of the BFAI Work, had to be removed. Ultimately, all works at the Site were halted for 5 to 6 months to rectify the problem. Mr Cheung remarked that due to the lengthy stay of the works, it was unrealistic to adhere to the original deadline for completion of the project at the Site.

(3) Pausing here, when Mr Tsui suggested that the problem with the ceilings were discovered in mid-2016, Mr Cheung contended that it should be in March of that year.

(4) Mr Cheung confirmed that the Additional Works were required after the said rectification, and were performed at the same time as the BFAI Work. The Additional Works included, for example, installation of additional outlets or switches on the walls of the Site. He agreed that the Additional Works derived from the BFAI Work, hence the same regulations set out in the Main Agreement applied to them. For instance, the plan and etcetera must be approved before commencement of the Additional Works. After its approval, the plan was delivered to all sub-contractors, including Mr Kam of the Plaintiff, by Mr Lo.

(5) Mr Cheung agreed that, apart from the Quotation, breakdown of the costs for the Additional Works were sent to him by the Plaintiff. He also agreed that for the Additional Works, like the BFAI Work under the Main Agreement, there was the same requirement that the plans, materials and the quantity and quality of the workers must all be approved before commencement. However, he denied that the Additional Works could not be commenced until approval was granted, the reason being that some of them had been approved previously.

(6) Mr Tsui asked Mr Cheung whether he had objected to the Quotation and the breakdowns for reason that they overlapped with the BFAI Work, or any comment that the fees should be assessed by WSP. In his reply, Mr Cheung claimed that he telephoned Mr Ng, calling the Quotation and the breakdowns as mistakes, and complained that the 3^rd Additional Item was never performed. Pausing here, I made inquiry with Mr Cheung as to why he lodged the last complaint when the Quotation should have come before any actual Additional Works done. He made the same complaint repeatedly, and at long last he exclaimed that the 3^rd Additional Item was not required.

(7) Mr Cheung then volunteered that the 2^nd Additional Item was wrong, as the fee of the same should be assessed by the Architect. Considering the Defendant’s pleaded case that the fees of the Additional Works were assessed by WSP, I asked Mr Cheung whether he actually meant the WSP. He answered in the negative, with explanation that for the 2^nd Additional Item, it should be assessed by the Architect as the work was completed. Mr Cheung further said that the Quotation was just to report on the fee claimed for the 2^nd Additional Item.

(8) He went on to say that both the 4^th and 5^th Additional Items were also completed by the time the Quotation was issued. However, the fees were not agreed as the same had to be assessed by WSP. I asked Mr Cheung why the 4^th and 5^th Additional Items were assessed by WSP whilst the 2^nd Additional Item was assessed by the Architect. As they had all been completed, then according to the evidence he had previously given, the assessment should be conducted by the Architect. Mr Cheung said he did not understand the rationale behind it, speculating that it could have something to do with the nature of the works.

(9) Mr Cheung further said that the 1^st, 2^nd, 4^th and 5^th Additional Items were completed before issuance of the Quotation and the inspection by Mr Kent Ng of the Architect on 21 February 2017.

(10) He agreed that due to the problem with the ceilings, the BFAI Work done by the Plaintiff had to be removed and re-installed. However, Mr Cheung denied that the said tasks were part of the Additional Works, nor was the Quotation issued for the Additional Works. But the 1^st to 5^th Additional Items set out in the Quotation were all tasks requested by the Mr Cheung via Mr Lo.

(11) Mr Cheung confirmed that he had received from the Plaintiff the 2^nd and 4^th Invoices, claiming for fees under the Additional Agreement. He claimed to have telephoned Mr Ng to complain about them, saying that they were wrong. Mr Cheung reported that Mr Ng had no reaction at all to these complaints.

(12) As to the assessment by WSP, it was received by the Defendant on 22 June 2017 via email.[34] Mr Cheung could not recall when he sent the Quotation to WSP for their assessment. When he was asked why he sent the Quotation to WSP if he thought that the same was wrong, Mr Cheung refuted that he never claimed the same to be wrong. When Mr Tsui confronted him on this with reference to what he previously said in court, Mr Cheung murmured that WSP only assessed on the 1^st, 4^th and 5^th Additional Items. This was met with another challenge from Mr Tsui that this piece of evidence never appeared in his witness statement.[35] Upon hearing this, Mr Cheung changed his stance, claiming that he never sent the Quotation to WSP. In reality, the Defendant sent some tables of works to WSP (the “Tables of Works”).[36]

(13) Mr Cheung then elaborated on the Tables of Works. He clarified that the costs claimed under them were actually the prices charged by the Defendant, and those prices were marked-up based on the Quotation issued by the Plaintiff. Hence, WSP was actually assessing on the costs charged by the Defendant.

(14) After the assessment by WSP on the costs of the Additional Works, Mr Cheung conceded that the said email was not copied to the Plaintiff. He had no recollection as to whether the result was informed to the Plaintiff.

(15) Mr Cheung agreed that: (a) assessment by WSP was not pleaded in the amended defence as an express term of the Main Agreement or Additional Agreement; and (b) it was not pleaded as an implied term of the Main Agreement or Additional Agreement. He reiterated that the Defendant was relying on trade practice to establish its case in this regard, but he accepted that no expert evidence on such was adduced as he wanted to reduce the costs.

(16) Finally, Mr Cheung was asked how he determined that there was overlapping of the works under the Main Agreement and the Additional Agreement. He complained that the sum of HK$216,846 charged under the Quotation was disproportional to the HK$360,000 charged under the Main Agreement. Mr Cheung conceded there was no evidence to show there was any overlapping of works as alleged.

58.  Regarding the Defective Cable Incident, Mr Cheung had these to say during cross-examination: -

(1) The Defendant received an email from Mr Kent Ng of the Architect dated 28 February 2017, and attached with it was a list setting out the defects that required rectification.[37] Amongst the list of 28 items of defect, the Defective Cable Incident was listed as item 4. The same list of defects was re-sent by the Architect to the Defendant by another email dated 7 March 2017.[38] Mr Cheung agreed that in March 2017, the Defendant could not withdraw its staff from the Site due to rectification of these defects.

(2) Mr Cheung remarked notwithstanding the other 27 items of defect, the Defective Cable Incident was the key problem. He explained that but for the same, the Practical Completion Certificate could be issued, and the Health Department could commence their interior works at the Site. And before the Practical Completion Certificate was issued, there must be site supervisors situated at the Site. After its issuance, however, only a part-time site supervisor would be required to be stationed there. Hearing this, Mr Tsui confronted Mr Cheung with a letter dated 8 March 2017 issued by the Defendant to the Architect, with the former reporting that practical completion was achieved on 3 March 2017. To this, Mr Cheung murmured that the Defendant was eager to achieve practical completion.

(3) He explained that before it was concluded the cables had to be replaced due to the same being undersized, the Plaintiff had done some calculations to show the desired voltage of electricity could still be attained using the same cables. The Plaintiff therefore urged WSP to re-consider its decision to replace the cables. Mr Cheung confessed that he was willing to consider the Plaintiff’s suggestion, as the project had been delayed for quite some time already. The other stakeholders, i.e. ASD and others, were also willing to discuss about this. The Plaintiff’s suggestion was reduced into writing and a letter dated 5 June 2017 was sent to the Defendant.[39] Alas, WSP was not persuaded and insisted on the replacement of the cables. Mr Cheung could not remember exactly when WSP conveyed its rejection to them, but suspected it would not come late as everyone involved wanted to complete the project as soon as possible.

(4) As to the time of completion for the remedial work, Mr Cheung maintained his stance that it was on 11 September 2017. He was asked by Mr Tsui whether it was true that the Plaintiff completed the remedial work by the end of August 2017, but had to wait for inspection of the same which was ultimately done on 11 September 2017. In Mr Cheung’s reply, he did not dispute on the above, simply remarked that there was not much difference in the timing.

(5) Mr Cheung agreed that, as at 7 September 2017, there remained 2 items of defect which still required rectification, including the Defective Cable Incident.[40] He denied, however, that the Defective Cable Incident was not to be blamed for the delay. He explained that the other remaining rectification concerned tactile warning strips which had to be replaced at the ground floor staircase. It was so minor a defect that would not have affected the overall completion of the project at the Site. Mr Cheung added that installation of the tactile warning strips was a late addition requested by the Architect after March 2017. Come what may, he agreed that non- completion of such work until 10 September 2017 would require the Defendant to station a staff at the Site.

59.  Mr Tsui ended his cross-examination with questions on the loss and damage that the Defendant had suffered: -

(1) Mr Cheung reiterated that the Defendant suffered loss and damage for the increased administrative costs and staff salaries it had incurred due to the delay caused by the Defective Cable Incident. He confirmed that the Defendant was not financially penalised by the ASD and other stakeholders.

(2) For the salaries of staff, the Defendant claimed for the wages paid to Mr Cheung, Mr Lo and Mr Tang Wai Hung (“Mr Tang”). He confessed that the total amount claimed in the salary slips provided (HK$285,335.65) exceeded the amount claimed in the amended defence (HK$253,500). For himself, the salary slips showed that his wages from March to September 2017 were HK$156,275. As to Mr Lo, the Defendant claims for his wages from March to May 2017, totalling HK$64,460.65. Mr Tang’s wages from June to September 2017 were worth a total of HK$64,600.[41]

(3) For the administrative costs, overheads and other expenses, the Defendant claims 25% of the same against the Plaintiff, at a sum of HK$120,728.50.[42] On this claim, Mr Cheung agreed that, between March and September 2017, the Defendant was also involved in another project from ASD at Cape Collison. When he was questioned as to whether these expenses would have to be incurred regardless of the Defective Cable Incident, Mr Cheung rebuked that more works had to be done by the Defendant due to the delay caused by the same.

(4) Mr Tsui pressed on with the question of how the alleged delay caused by the Defective Cable Incident increased the salary payable to the office assistant Ms Au Yeung Yim Sheung (“Ms Au Yeung”), whom was paid wages of HK$6,000 per month. Mr Cheung agreed that she would be paid the said wages with or without the Defective Cable Incident, but he justified the Defendant’s case by claiming that but for the Defective Cable Incident, Ms Au Yeung could have devoted her time on some other works. Nevertheless, Mr Cheung accepted that there could be no other works for Ms Au Yeung to do.

(5) Mr Cheung was referred to the demand letters issued by the Plaintiff to the Defendant. The first demand letter was dated 12 January 2018 (the “1^st Demand Letter”).[43] In it, the Plaintiff chased for payments under both the Main Agreement and the Additional Agreement. He admitted having received the 1^st Demand Letter, and claimed to have telephoned Mr Ng and complained about it. Mr Cheung could not recall what he had said. When he was asked by Mr Tsui whether the complaints included denial of the fees charged for the Additional Works, Mr Cheung said he wanted Mr Ng to deduct the loss and damage suffered by the Defendant due to the Defective Cable Incident. Notwithstanding such request, he admitted that no related information was provided to Mr Ng for him to make the deduction.

(6) As to the 2^nd Demand Letter, Mr Cheung confirmed the same was received, even though the Defendant had never given any reply to the same. The Defendant had also given its cold-shoulder to the third demand letter dated 16 March 2018 also issued by the Plaintiff’s solicitors (the “3^rd Demand Letter”).[44] Mr Tsui queried why the Defendant had failed to rebuff the 1^st to 3^rd Demand Letters if the Plaintiff was wrong on the Additional Works, not to mention also the loss and damage suffered by the Defendant due to the Defective Cable Incident. To this, Mr Cheung simply said he did not know how to handle the matter.

His evidence under re-examination

60.  Regarding the loss and damage that the Defendant had sustained, and in particular on the alternative tasks that Ms Au Yeung would have been assigned with but for the Defective Cable Incident, Mr So invited Mr Cheung to elaborate further on why the Defendant would suffer a loss. To this, Mr Cheung explained that Ms Au Yeung was assigned to do normal office works, and because of the Defective Cable Incident, it took her longer to complete the assigned works.

61.  At the end of his evidence, I asked Mr Cheung, as the management fees for the office would be payable by the Defendant irrespective of whether the Defective Cable Incident existed or not, what was the rationale behind the Defendant’s claim that the Plaintiff should be held 25% liable for the same. He explained that whenever they calculated their project fees, they would add the costs, including overheads and etcetera, into the calculation. Hence when the project at the Site was delayed due to the Defective Cable Incident, the costs had increased.

Evidence of Mr Lo

His evidence-in-chief

62.  Mr Lo also adopted his witness statement as his evidence-in-chief at trial. His evidence only had to do with the Additional Works. In gist, he said that in January 2017, he conveyed the message from the Defendant to the Plaintiff that the Additional Works were required by WSP. He denied having received or verbally accepted the Quotation as alleged by the Plaintiff. He was not in the position to do so. He emphasised that such authority was vested in WSP.

His evidence under cross-examination

63.  Mr Lo was the Defendant’s representative at the Site, and if there was any message that the Defendant wished to pass to its sub-contractors, it would be done via Mr Lo.

64.  About the Additional Works, Mr Lo’s evidence are set out below: -

(1) The BFAI Work commenced in January 2016.

(2) The problem with the ceiling was identified in mid-2016 by an engineer.

(3) Due to such problem, the BFAI Work which had already been done on the ceiling had to be removed and later re-installed on the metal frames.

(4) Apart from the BFAI Work, the air-conditioners also had to be removed and re-installed due to the hollow ceilings. Mr Lo clarified that re- installation of fire safety device was not required.

(5) Re-installation of the BFAI Work should be regarded as additional works rather than variation of works.

(6) It was Mr Cheung whom instructed him to inform the Plaintiff about the Additional Works. Mr Lo contacted Mr Kam for this purpose, via telephone conversations. A working plan was sent to Mr Kam, which contained all the details required for the Additional Works, for example the materials that should be used and where the electrical sockets should be installed.

(7) Because the project was already delayed by the hollow ceilings, the Additional Works should be done on an urgent basis. This was conveyed to Mr Kam over the telephone. However, the Plaintiff did not commence on the same until the end of February 2017. Mr Lo added that he had twice chased Mr Kam for commencement of the Additional Works, but on each occasion, Mr Kam answered in the negative, citing the lack of manpower as the reason. Mr Lo denied that the reasons given by Mr Kam was that the Quotation was still being drafted.

(8) On the third occasion when Mr Lo pressed Mr Kam for commencement of the Additional Works, he could not recall what the latter had told him. But Mr Lo denied that Mr Kam had asked him whether the Quotation was accepted or not, and there was no truth in the allegation that he had replied in the affirmative and instructed for immediate commencement of the Additional Works.

(9) Mr Lo admitted that he was required to supervise on the works done on the Site, including the Additional Works. However, he had no recollection as to what the Additional Works included, not even when the Quotation was shown to him in court. He maintained that he had no such recollection in spite of his duty to supervise on the work progress with the aid of a plan.

(10) When Mr Tsui inquired about the 3^rd Additional Item, Mr Lo said the same was not performed. It was an added item having nothing to do with the hollow ceiling, as the work was supposed to be performed on the new pump room situated at the roof. However, the 3^rd Additional Item was later abandoned by the Architect. Mr Lo explained that the room was used as the Site office before the original plan to transform it into a pump room. As this plan was abandoned, the 3^rd Additional Item became redundant and was not proceeded with.

65.  The cross-examination ended with questions on the Defective Cable Incident. Mr Lo confirmed that he remained working at the Site from March to May 2017, but left the employ of the Defendant after May 2017. During the said period, Mr Lo said that there were remedial works going on at the Site, for example minor remedial works on the ceilings, aluminium window frames, air-conditioners and etcetera.

66.  Mr Lo was not re-examined by Mr So. With the completion of his evidence, and the Defendant calling no further witnesses, the Defendant’s case was concluded.

The relevant legal principles

67.  Mr Tsui and Mr So have no quarrel on the following legal principles.

Acceptance of offer verbally or by conduct

68.  Mr Tsui and Mr So cited various English authorities to support that an offer could be accepted verbally or by conduct.[45] A succinct summary of these principles can be found in the recent case of Yu Man Fung Alice v Chiau Sing Chi Stephen[46], where Coleman J said: -

“C.1 Requirements for a Contract

17. The basic requirements for a contract are trite. Those requirements are that: (1) the parties have reached an agreement, which (2) is intended to be legally binding, (3) is supported by consideration, and (4) is sufficiently certain and complete to be enforceable.

18. There is, of course, no legal requirement that a contract must be concluded in writing, or be evidenced in some form of written record. It is in general possible and permissible in Hong Kong law to make a contract without any formality, and to do so simply orally.

19. But it is obvious that the absence of a written record may make the existence and terms of a contract harder to prove. Anyone with business experience will understand the value of a written record. Therefore, the absence of any written record may – depending on the circumstances – tend to suggest that no contract was in fact, concluded.

20. Hong Kong law applies an ‘objective’ test in determining whether an agreement has been made, what its terms are and whether it is intended to be legally binding. It is settled that for questions of meaning in the law of contract, the ‘touchstone’ is how the words used, in their context, would be understood by a reasonable person. For these purposes, the context includes all relevant matters of background fact known to both parties. It may also be important to recall that the relevant intentions are, in most cases, those at the time of the alleged agreement/contract, and not any subsequent intention.

21. Though perhaps particularly relevant in the case of a written agreement, all the terms of an agreement should be read or considered together and construed with the overall context in mind. Construction is a unitary exercise involving an iterative process. The court should have regard to the implications of any competing constructions, at least by way of a cross-check, where business common sense should be engaged in the iterative process.

22. As to reaching an agreement, all law students know that an agreement is reached when one party makes an offer which the other accepts. An offer is a person’s expression, by words or conduct, of a willingness to be bound by specified terms if and as soon as there is acceptance by the person to whom the offer is made. It may, however, be necessary to look closely at the words actually used, as in some circumstances they may be such that it is unlikely that anyone could reasonably have thought that the words were meant seriously.

23. Acceptance may also be by words (whether written or oral) or by conduct. Likewise, it may be necessary to look closely at the words actually used, as in some circumstances they may be such that it is unlikely that anyone could reasonably have thought the words were meant as a serious acceptance of the offer.

24. There is a separate and independent requirement of a contract that there be certainty and completeness of terms. So even in cases where the Court concludes that the parties have made an agreement which is intended to be legally binding, the court may nevertheless also conclude that the agreement is too uncertain or incomplete to be enforceable. A typical example is because the agreement lacks an essential term which the court cannot supply for the parties. But the court will only hold that the contract, or some part of it, is void for uncertainty if it is legally or practically impossible to give the agreement, or that part of it, any sensible content.

25. Vagueness in what is said or omission of important terms may also be a ground for concluding either that no agreement has been reached at all or that, although an agreement has been reached, it is not intended to be legally binding.

……

C.3 Contract Inferred from Conduct or Course of Dealing

41. Though this aspect of Ms Yu’s claim was not really pursued at trial, I can briefly traverse the applicable principles.

42. It is well-established that for a contract implied by conduct the burden of establishing that contract rests on the person asserting its existence. The court will not lightly imply such a contract. The conduct relied on must be unequivocally referable to the contract sought to be inferred: see Shanghai Tongji Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79 at §§38-39. For this reason, it will be fatal to the implication of a contract if the parties would or might have acted exactly as they did in the absence of a contract. To put it another way, what the parties do must be consistent only with there being a contract implied, and inconsistent with there being no such contract.

43. The ‘unequivocal’ requirement also applies to the intention to create legal or contractual relations. The conduct must unequivocally show that the parties had that intention.” (emphasis added)

69.  The following passage from the case of Mirant Asia-Pacific Construction v Ove Arup & Partners,[47] at §62, is also enlightening: -

“… Acceptance may be by conduct, but the conduct needs to be clearly and unequivocally referable to the agreement contended for. Mere silence will usually not be sufficient, but silence accompanied by a course of conduct may contribute to a conclusion that an agreement came into being. It is an objective analysis. Subjective intention or understanding, unaccompanied by some overt objectively ascertainable expression of that intention or understanding, is not relevant. In order to conclude that a binding agreement came into existence, it is usually regarded as necessary to be able to identify the time at which this occurred. If this is not entirely possible, it is nevertheless necessary to spell out the factual process by which objectively the parties reached a common agreement binding each of them.” (emphasis added)

70.  Examples where offers can be accepted by conduct are provided in Chitty on Contracts, Vol 1, 33^rd Ed.: -

“For example, an offer to buy goods can be accepted by supplying them; an offer to sell goods made by sending them to the offeree, can be accepted by using them; an offer contained in a request for services can be accepted by beginning to render them; and an offer of services may be accepted by the offeree’s conduct in arranging an appointment in certain circumstances; …”[48]

71.  The learned author also throw light as to how the difficulty in ascertaining the terms of a contract created by conduct can be resolved: -

“But sometimes the court can resolve the uncertainty by applying the standard of reasonableness or by reference to another contract (whether between the same parties or between one of them and a third part), or even to a draft agreement between them, which had never matured into a contract. For example, in Brogden v Metropolitan Ry a railway company submitted to a merchant a draft agreement for the supply of coal. The merchant returned it marked “approved” but also made a number of alterations to it, to which the railway company did not expressly assent; but the company accepted deliveries of coal under the draft agreement for two years. It was held that once the company began to accept these deliveries there was a contract on the terms of the draft agreement.”[49]

72.  It is trite that price of the contract is always an essential term. Where the contract price is not agreed, no contract can come into existence.[50]

Loss and damage

73.  Mr So submitted, as a general principle, that a claimant is entitled to claim expenditure incurred due to the breach of contract by the defendant.[51] Mr Tsui has no argument with this, but he referred to the English case of R + V Versicherung AG v Risk Insurance Solutions SA, to point out that for managerial expenses, such principle is subject to the proviso that: -

“… it has to be demonstrated with sufficient certainty what the wasted time was indeed spent investigation and/or mitigating the relevant tort; i.e. that the expenditure was directly attributable to the tort …… in other words that staff have been significantly diverted from their usual activities. Otherwise the alleged wasted expenditure on wages cannot be said to be “directly attributable” to the tort. The quantification of such expenditure will, of course, have to be proved with sufficient particularity at the March 2006 hearing.”[52] (emphasis added)

The importance of pleadings

74.  As my analysis below will show, this is an area which played a significant role when I am considering the cases of the parties.

75.  In Kwok Chin Wing v 21 Holdings Ltd,[53] Ma CJ made it abundantly clear on the importance of pleadings: -

“21. It should by now really be quite unnecessary to issue yet another reminder on the rationale behind pleadings. The basic objective is fairly and precisely to inform the other party or parties in the litigation of the stance of the pleading party (in other words, that party’s case) so that proper preparation is made possible, and to ensure that time and effort are not expended unnecessarily on other issues: Wing Hang Bank Ltd v Crystal Jet International Lid. It is the pleadings that will define the issues in a trial and dictate the course of proceedings both before and at trial. Where witnesses are involved, it will be the pleaded issues that define the scope of the evidence, and not the other way round. In other words, it will not be acceptable for unpleaded issues to be raised out of the evidence which is to be or has been adduced. As the Court of Appeal remarked in Wing Hang Bank Ltd v Crystal Jet International Ltd:

“(2) In a trial, particularly where evidence is given by witnesses, it becomes extremely important that each side knows exactly what are the live issues. Where issues are sought to be introduced that have not been adequately or properly pleaded, amendments must be sought unless the consent of the other party or parties has been obtained. It will simply not do for unpleaded issues to be “slipped in” when evidence is being given in the hope that the other side is not sufficiently alert to object.”” (emphasis added)

76.  In another Court of Final Appeal judgment,[54] Ribeiro PJ reminded litigants on the need to raise all issues in their pleadings: -

“30. The fact that the plaintiff was unprepared to argue an essential aspect of its unpleaded alternative indicates just how unacceptable it was to allow this purported alternative to be run. A party must raise all the issues he wishes to raise to be dealt with at the trial. Parties are not entitled to have issues recently thought up dealt with separately and piecemeal. The other party is entitled to know from a clear pleading what is the entire case he has to meet so that he can decide whether particulars should be sought; how he should plead in response; what discovery he is entitled to; what evidence he should adduce to meet it; and what points of law should be taken. Notions like “the entire quantity of the mud dredged from the CT9 project” might be studded with arguable questions as to how such quantity should be ascertained dependent on the evidence. If there was room for exceptions regarding bad weather or anything else, the scope and effect of such exceptions could no doubt throw up factual and legal questions.

31. Where a late attempt is made to introduce a new case, it is doubly important that the other side should have a clearly pleaded draft amendment so that proper consideration can be given as to whether objections should properly be made to such amendment and whether an adjournment should be sought.

……

34. Pleadings are not mere formalities. They impose a necessary discipline and are fundamental to enabling every procedural facet of the adversarial system to operate fairly.”

77.  Before I dive into the issues, there is a side matter that I wish to touch on.  Originally in Mr So’s written submissions, a pleading point was taken against the Plaintiff, with the complaint that there have been inconsistent allegation of fact or grounds of claim between the Plaintiff’s amended statement of claim and the reply.  In essence, the alleged verbal acceptance of the Quotation by Mr Lo appeared in the reply but not in the amended statement of claim, the latter pleading only that the Additional Agreement is evidenced by the Quotation and the 2^nd and 4^th Invoices.  Mr So submitted that such new grounds of claim (contract entered verbally or by conduct) which came only in the reply, is in contravention with Order 18, rule 10 of the Rules of the District Court (the “RDC”), which forbids a party from pleading any allegation of fact or raise any new ground of claim inconsistent with a previous pleading of his.  The effect of this rule is further explained in the case of Goldon Investment Limited v NPH International Holdings Limited (formerly known as Nam Pei Hong International Holdings Limited).[55] Ma J (as the Chief Justice then was) stated in §15 of his judgment:-

“… Under the existing rules of pleading, an alternative claim inconsistent with what is pleaded in the Statement of Claim must be included in the Statement of Claim by way of amendment and not be pleaded only in the Reply: see RHC Order 18, rule 10; Hong Kong Civil Procedure 2002 at paragraphs 18/10/1 and 18/10/2. The words “inconsistent” here (which is found in Order 18, rule 10(1)) means “new” or “different” and not just “mutually exclusive”: see Herbet v Vaughan [1972] 1 WLR 1128, at 1131H.”

78.  I agree with Mr So that the present case may fall within the situation envisaged by the above provision, as illustrated in the case of CBRE Limited v Superform Investment Limited.[56]  The claimant in that case pleaded in the amended statement of claim that there was a contract between the parties as evidenced by some documents.  At the hearing for summary judgment, the counsel for the claimant advanced on the case being one of offer and acceptance by conduct.  This was rejected by the learned deputy judge, as the same was not pleaded. This case shows that an offer and acceptance by conduct claim is not one that could be seen as an extension from a pleaded case of contract evidenced by documents.  Applying this to the present case, one can say that the claims of verbal acceptance and/or acceptance by conduct relied upon by the Plaintiff should be so pleaded in the amended statement of claim rather than in the reply, to accord with Order 18, rule 10 of the RDC.

79.  Be that as it may, Mr So withdrew from taking this pleading point at the start of his verbal closing submissions, which in my view is a fair course to take.  It could be seen throughout the trial (and from the evidence reproduced in the above) that there was no objection to the evidence adduced by the Plaintiff on the acceptance of the Quotation by conduct or verbally by Mr Lo.  Moreover, Mr So was able to cross-examine Mr Ng and Mr Kam on these allegations, without any complaint that he was unable to conduct his case due to the lack of particulars.  There is also no application from the Defendant for further and better particulars on these allegations or application to strike out the relevant parts of the reply.  Under these circumstances, the passage below from the Hong Kong Civil Procedure 2020 is applicable: -

“In an ordinary civil action, generally speaking, an issue that has not been pleaded is not an issue before the court. However, objections to unpleaded issues will lose its force where the parties have chosen to disregard the pleadings and conduct the hearing on some unpleaded basis. The court is ultimately guided by what is fair and just in the circumstances: Wing Hang Bank Ltd v. Crystal Jet International Ltd [2005] 2 H.K.L.R.D. 795 ; Gould v. Mount Oxide Mines Ltd (1916) 22 C.L.R. 490 at 517; 成都中泰交通建設發展有限公司 v Neo China Land Group (Holdings) Ltd (unrep., HCA 2196/2009, [2013] H.K.E.C. 492 ) [92]-[93].”[57]

80.  I also find the views of Deputy District Judge W Y Ho in the case of Beauty Expert (logistics) Limited v 黃喜潤 & Ors[58] edifying and applicable to the present case:-

“21. The point of pleading particulars is to enable the other party to understand the case to be met. If a party is unable to understand the case to be met because it is not pleaded properly or because there are insufficient particulars, the party suffering the prejudice may make various applications to compel the other side to reveal the true allegations behind the claim or to tie the party down to a particular version of events. Though the court is now vested with extensive case management powers since the Civil Justice Reform, it is not for this court to advise the parties on the proper applications to be made and it is definitely not the court’s function to teach parties how to conduct their case.

22. If the defendants wish to take a pleading point, they are entitled to do so and it is for their legal advisers to advise them on the proper and necessary applications that should be made. If the defendants fail to take out necessary applications challenging the pleadings and yet are able to conduct their defence by extensively cross-examining the plaintiff’s witnesses on the purported breaches, as well as being able to answer to all allegations made against them, then I fail to see any prejudice that is suffered by the defendants caused by the lack of particulars in the pleadings.” (emphasis added)

81.  Now, on to the key issues in this case.

Analysis

1^st Issue: Whether the Quotation had been accepted by the Defendant

82.  Having considered all the evidence before me, I find the 1^st Issue in favour of the Plaintiff. I am persuaded that the Quotation had been accepted by the Defendant. My reasons are set out below.

83.  There is no denial from the Defendant in its re-amended defence that the Additional Works were performed. At trial, Mr Cheung and Mr Lo maintained that the 1^st, 2^nd, 4^th and 5^th Additional Items were completed by the Plaintiff. Out of the blue, however, Mr Cheung and Mr Lo claimed during cross-examination that the 3^rd Additional Item was never performed, with the latter adding that the plan for it was later abandoned. I am amazed that such a significant dispute never finds its way to the re-amended defence or their witness statements. The corresponding complaints allegedly made by Mr Cheung via telephone are omitted from his witness statement. What is more, this allegation was not even put to Mr Ng or Mr Kam during cross-examination. There is not a shred of documentary evidence to show there was any such protest raised by the Defendant to the Plaintiff when the Quotation, the 2^nd and 4^th Invoices, and the 1^st to 3^rd Demand Letters were received. For these reasons, I am not convinced that the 3^rd Additional Item was not performed. I find that the Additional Works comprised of all 1^st to 5^th Additional Items as recorded in the Quotation, and they were completed.

84.  There is no dispute that the Plaintiff should be paid for the Additional Works performed and the Quotation was received by Mr Cheung. The key issue is whether their fees contained in the Quotation were accepted by the Defendant (verbally by Mr Lo on behalf of the Defendant or by conduct), or the fees were never agreed because they were subject to the assessment by WSP (by trade practice), which the WSP eventually did on 22 June 2017. I will examine first the probability of the Plaintiff’s case.

85.  On the question of whether there was any verbal acceptance of the Quotation from Mr Lo, Mr So submitted, and I agree, that there is inconsistency in Mr Kam’s evidence on this topic. In his witness statement, Mr Kam simply narrated that in late February 2017, Mr Lo said to him that the Additional Works were confirmed, and the same should be commenced forthwith. There was no mentioning that Mr Kam had asked Mr Lo whether he had received the Quotation, nor how Mr Lo had replied to such question, until Mr Kam was cross-examined. Moreover, it is Mr Kam’s own evidence that he had not seen the Quotation (and other quotations issued by the Plaintiff for the Additional Works) and knew not when the Quotation was issued. It is therefore most peculiar for him to ask Mr Lo about the Quotation when he should know nothing about it. Suspicion that what Mr Kam added in court were recent creations to salvage a glaring omission in his witness statement is inevitable. It is unthinkable that these vital evidence could be missing from his witness statement, if they were true.

86.  That being so, I am equally dissatisfied with Mr Lo’s evidence on this topic. Mr Lo said he had twice chased Mr Kam to commence the Additional Works but in vain. I find it telling that for these 2 occasions, Mr Lo could recall the reasons given by Mr Kam for the delay, but not for the third occasion. One would question why his memory failed on him for a more recent event. Obviously, something must have clicked during the third conversation which set off the Additional Works. Could it be possible that during the third telephone conversation, Mr Kam simply confirmed that the necessary manpower was in place for the Additional Works to start? That could be possible, but if this was the case it is then unbelievable that Mr Lo would forget about the contents of the conversation, since the manpower issue was allegedly the very reason which clogged the commencement during the previous 2 communications. It also entails the question why, if that was the case, Mr Kam did not initiate the third telephone call and proactively inform Mr Lo about the same? On top of this, the alleged reasons given by Mr Kam on the first 2 occasions, i.e. that there was a lack of manpower, was not put to Mr Kam during cross-examination. This allegation also never appeared in Mr Lo’s witness statement, and it was not disclosed until he was cross-examined by Mr Tsui. Unsurprisingly, one would wonder whether Mr Lo’s evidence in this regard were also recent invention.

87.  Despite the doubt I have on Mr Lo’s evidence, I have not lost sight that the burden is squarely on the Plaintiff, in particular Mr Kam, to prove the verbal acceptance of the Quotation by Mr Lo. However, for reason highlighted in the above, he has failed to discharge such burden. Hence, I find that there was no verbal acceptance of the Quotation by Mr Lo on behalf of the Defendant.

88.  As to acceptance of the Quotation by conduct, I am persuaded that this was the case. The conduct concerned was the green-light for the Plaintiff to commence the Additional Works in late February 2017, after the Defendant had received the Quotation. This is supported by Mr Lo’s evidence that he and the Defendant permitted the commencement. I do not believe that the parties would or might have acted exactly as they did, i.e. performance of the Additional Works, in the absence of an acceptance of the Quotation. Even if the Defendant was silent on such acceptance, the conduct above contributed to a conclusion that such an agreement on the Quotation came into being.

89.  To begin with, I find that the Plaintiff’s case makes perfect commercial sense, i.e. to have the parties agreed on an essential term of the contract, namely the contract price, before commencement of the service. Equally, it makes perfect commercial sense for the Defendant to ascertain on its liability before agreeing to the commencement of the Additional Works. The timing of the events lends credence to such course being taken by the parties. As per Mr Ng’s and Mr Kam’s evidence,[59] the Additional Works were not commenced until after issuance of the Quotation on 17 February 2017, and after the confirmation that the Additional Works could be proceeded with from Mr Lo came on or about 24 February 2017. These assertions are consistent with Mr Lo’s evidence that:

(1) in January 2017, he conveyed the message to Mr Kam via telephone that the Additional Works were required by WSP;

(2) a working plan was sent to Mr Kam, which contained the details required for the Additional Works, including the materials that should be used and where the electrical sockets should be installed; and

(3) notwithstanding the urgent status of the Additional Works, their commencement did not start until the end of February 2017, and Mr Lo had to press for their commencement on 3 occasions.

90.  Correspond with Mr Lo’s narratives above, it is credible that after Mr Kam received the telephone call and the working plan from Mr Lo in mid-January 2017, Mr Kam had forwarded the same to Mr Ng for coming up with the Quotation. According to Mr Kam, it took about 1 to 2 weeks to provide the measurements and etcetera to Mr Ng for preparation of the Quotation. Mr Ng then had to discuss with Mr Kam on the works to be done when drafting the Quotation. The Quotation was finalised and sent out to the Defendant on or about 17 February 2017. These preparations took time to complete and coincided with Mr Lo giving the ultimate confirmation in late February 2017.

91.  The timing of the commencement of the Additional Works is also revealing. It is hard to believe that the same took place in late February 2017, which was after the Quotation dated 17 February 2017 was issued to the Defendant, to be a mere coincidence. This is significant especially taking into consideration the inaction after issuance of the January 2017 Quotation to the Defendant. If the fees of the Additional Works required no further discussions between the parties or agreement from the Defendant, the Plaintiff could have proceeded with the 1^st to 4^th Additional Items shortly after 27 January 2017. Interestingly, one could see that the January 2017 Quotation did not contain the 5^th Additional Item, and the same was added only in the Quotation. This fortified the Plaintiff’s case that the Additional Works required were not finalised until after issuance of the Quotation, which also tallied with Mr Lo greenlighting their commencement in late February 2017.

92.  On this point, Mr Cheung in his testimony tried to cloud the matter by alleging that the 1^st, 2^nd, 4^th and 5^th Additional Items were all completed before issuance of the Quotation, and the inspection by Mr Kent Ng on 21 February 2017 (when the Defective Cable Incident was revealed). The Quotation served only as a report of the costs incurred for the 2^nd Additional Item. I do not believe them. Again, such evidence never appeared in his witness statement; they came up only in his answer to my question.[60] In addition, what Mr Cheung said contradicted with Mr Lo’s evidence. I am also baffled by Mr Cheung’s allegation that the Quotation was issued simply to report on the fee claimed for the 2^nd Additional Item, which had been completed. If there were any truth in this, it is inexplicable for such report to be made in form of a quotation, rather than a simple letter or an invoice; neither does it make sense that the Quotation includes fees for the 1^st to 5^th Additional Items if the purpose of it was just to report on the completed 2^nd Additional Item, according to Mr Cheung.

93.  Mr So expended much effort in undermining Mr Lo’s confirmation, and the Plaintiff’s commencement of the Additional Works in late February 2017, as conducts which showed acceptance of the Quotation, by referring to the Quotations [173] and [182], and Quotations [186] and [189]. Mr So argued that the variations on the works and their costs reflected that, all along, the fees for the Additional Works had not been agreed. I do not agree. Quotations [173] and [182] were issued unilaterally by Mr Ng and at a time when the problem with the ceiling had yet been identified by the engineer.[61] Revising upward the fees charged for the 1^st and 2^nd Additional Items subsequently in the Quotation after the problem had been identified, and after a plan was devised to cure the problem, deserves no criticism. As to Quotations [186] and [189], they were issued on 16 August 2017 and 22 August 2017 respectively, i.e. after completion of the Additional Works. They were concerned only with the 2^nd Additional Item, with the fees charged for the same being reduced. Mr Ng explained these reductions were made on good faith in return for the Defendant’s settlement of the 1^st to 4^th Invoices. Mr So took these, together with the Settled Item, as clear indications that there was no acceptance of the Quotation. On this point, I need only to repeat the principle that one should look at the intention at the time of the alleged agreement, and not any subsequent intention.[62] Moreover, the Settled Item apparently had nothing to do with the Additional Works,[63] thus reliance on the same to shed any light on this topic is inappropriate.

94.  It is the Defendant’s case that its silence and the conducts in question stemmed from the industry-wide trade practice that the contract price would be assessed by the representative of the employer.

95.  This brings us to the next question, i.e. whether there was indeed such a term implied by trade practice.

96.  It is plain to see from the above that the Defendant relies on Mr Cheung’s evidence to advance its case under this head. It is said that the implied term would require the Additional Works to be approved and their fees to be assessed by the representative of the employer, in our case the WSP.

97.  Mr So, in his speaking notes for closing submissions, suggested that Mr Cheung, although being called as a factual witness, possesses the necessary professional expertise and experiences in this field, so much so that he could proffer an opinion on this, as such opinion evidence: (1) reasonably relates to facts within his personal knowledge; and (2) is based on his own experience and expertise. In support, Mr So cited Mr Cheung’s 35 years of experiences in the construction industry, and the opinion he has given on the said trade practice is neither challenged by the Plaintiff, nor was there any application by the Plaintiff to strike out that part of his evidence. All these, Mr So submitted, satisfy the requirements under the Multiplex Principle as adopted in the case of MG Charter Limited v Beijing Caissa International Travel Service Co. Ltd.[64] Hence, Mr So submitted, Mr Cheung’s opinion on the said trade practice shall be admissible.

98.  Neither Mr Tsui nor I have any quarrel with the Multiplex Principle. However, I do see problems with the Defendant’s case in this respect. First, as noted in the above, all these came from the evidence of Mr Cheung. It is nowhere to be seen in the re-amended defence. The relevant part of the re-amended defence simply stated that: “… The Defendant avers that the electrical services consultant, WSP Hong Kong Limited, assessed HK$64,558.25 as works additional to the Main Agreement.”[65] This alleged arrangement is neither pleaded to be a trade practice nor a term to be implied into the Additional Agreement. Moreover, it is not even listed as an issue to be considered by the court. On this point, I shall repeat the principles of pleadings set out in §§75 and 76 of this judgment.

99.  Second, even assuming that the same sufficed as a pleaded point and/or an issue that I have to resolve, there remains the question of how much weight I can place on Mr Cheung’s opinion. Apart from his evidence on this being self-serving as submitted by Mr Tsui, there are numerous aspects of the alleged trade practice that are unclear. For example: (1) whether in all construction projects the employer or developer would have its representative to assess the fees charged by a sub-contractor of the main contractor; (2) if so, what was the rationale behind having a third party (the representative) involved in determining an essential term contained in a contract between a main contractor and its sub-contractor; (3) even if the representative was vested with such power, whether the assessment of the fees should be done before commencement of the sub-contracted works, or the assessment could or would be done after commencement or completion of the sub-contracted works; (4) if the assessment could or would be done after commencement or completion of the sub-contracted works, whether there was a time limit for the representative to do so; (5) whether the result of the assessment would be final and binding on the sub-contractor, regardless of any disagreement from it; (6) would the same trade practice apply to a contract between the employer and the main contractor, and if not, why not; and (7) why the same trade practice was not adopted for the Main Agreement and only for the Additional Works.

100.  Third, one would query as to the exact content and scope of the trade practice, if it truly existed. In his witness statement, Mr Cheung pointed out that the assessment of the Quotation should be done by WSP. However, he contradicted himself at trial, saying the 2^nd Additional Item should be assessed by the Architect, for the reason that the same had been completed. This does not fit in with his allegation that the 1^st, 2^nd, 4^th and 5^th Additional Items had all been completed before issuance of the Quotation. If that was true, their corresponding fees should also be assessed by the Architect rather than WSP. When I raised this with him, Mr Cheung admitted that he has no answer to this. In addition, his evidence at trial also exposed the truth that the assessment performed by WSP was actually on the Tables of Works created by the Defendant, and it was the costs charged by the Defendant that was being assessed. Such confession signified that the fees for the Additional Works as contained in the Quotation were very much a term to be negotiated and agreed between the Plaintiff and the Defendant.

101.  Fourth, Mr Cheung has not provided previous dealings with the Plaintiff, or transactions with other sub-contractors, to illustrate on the existence of this trade practice, and in answer to the questions listed in §99 of this judgment. In the absence of any comparable transactions and explanation of the rationales behind the trade practice, I am very much puzzled as to why it would be accepted and adopted in the industry, which is conspicuously unfair to the sub-contractors. I share the view of Mr Tsui that it is hard to accept that a sub-contractor would perform a contract without first knowing how much it would be paid, leaving it at the mercy of the employer’s representative. I must add that this suggestion is especially unattractive in the present case, where the Additional Works became necessary due to the problem found in the ceilings of the Site, without any fault on the Plaintiff’s part. Not only was the BFAI Work postponed, and thereby affecting its completion and naturally a delay in getting paid for the same, the Plaintiff had to remove and re-install some of the BFAI Work already performed. I do not see there was any incentive for the Plaintiff to accept the alleged trade practice under these circumstances.

102.  Mr So, in answer to the above, referred to the case of Eternity Contracting & Engineering Company Limited v The Jardine Engineering Corporation, Ltd,[66] where the claimant was the sub-contractor to the defendant, and relied upon the quotations and invoices as evidence of a contract with the defendant. The first instance judge found against the plaintiff on the existence of a valid contract, whose decision was upheld on appeal. I do not intend to go into the details of that case. Suffice it to say, it is very different from ours, contrary to what Mr So submitted. The learned trial judge found that there was a conditional contract for service which would not materialised until a work order was issued by the defendant, and in that case, such work order was indeed never issued. Moreover, the learned judge found that there was insufficient evidence adduced by the claimant to show that: all the works were done; the number of workers hired to perform the works and that their wages had been paid; and etcetera. I see no similarity between that case and the present one as Mr So suggested.

103.  Fifth, it is unimaginable that the employer’s representative or the main contractor would have green-lit the works to be performed without first having ascertained on the works to be done and the fees to be charged by the sub-contractor. In the present case, it is also mindboggling that WSP had, as alleged by the Defendant, only after their completion, scrutinised on the breakdown of the Additional Works that accompanied the Quotation, and had only then discovered the alleged overlapping with the BFAI Work. As per Mr Cheung’s description, the trade practice included approval by the representative on the works to be done by sub-contractors. Assuming this was true, it is nonsensical that such approval should come after the Additional Works had been done, and for the alleged overlaps with the BFAI Work to be discovered only there and then.

104.  Pausing here, it was revealed by Mr Cheung during cross-examination that there was actually no overlapping between the BFAI Work and the Additional Works. His sole complaint was that the fees claimed under the Quotation were disproportional to those charged for the BFAI Work. This revelation crumbled the very foundation for WSP in assessing down the fees charged under the Quotation, as alleged by the Defendant.

105.  Sixth, there is no explanation as to why the fees charged under the Quotation could or would not be assessed by the WSP before commencement of the Additional Works, but it had to wait until 22 June 2017, when the Additional Works had been completed for almost 4 months. Of course, it makes sense now that it is revealed WSP’s assessment was on the Tables of Works, not on the Quotation. Yet again, the trade practice alleged by Mr Cheung imploded.

106.  Seventh, I shall repeat my observation that, notwithstanding the alleged existence of such trade practice, there is no documented rejection by the Defendant of the Quotation, 2^nd and 4^th Invoices, and the 1^st to 3^rd Demand Letters for this reason. In addition, Mr Cheung admitted that the email containing the result of WSP’s assessment was not even forwarded to the Plaintiff. Again, the alleged verbal complaints lodged by Mr Cheung did not see the light of day until he was cross-examined, and the same were not put to Mr Ng for his reply. Come what may, if the Plaintiff was bound by the assessment of WSP, regardless of whether the assessment was based on the Quotation or the Tables of Works, I see no reason why the email, together with WSP’s comments on each of the items contained in the Tables of Works, were not sent to Mr Ng, at the very least, for his information.

107.  Finally, I have heard no evidence from Mr Cheung that the Plaintiff’s fees for the Additional Works could not be more than what the Defendant received from the employer.

Summary on the 1^st Issue

108.  Much has been said by Mr So and Mr Tsui about the credibility of the witnesses. Suffice it to say, performances of the witnesses from both sides are far from impeccable, but in my view, save for Mr Cheung whose evidence I am obviously not impressed with, the blemishes in their evidence are not so serious to the extent of negating the Plaintiff’s claim that the Quotation was accepted by conduct. In making my findings on this subject, and also on my findings below regarding the 4^th Issue, I have in mind the principles set out in the case of Hui Cheung Fai v Daiwa Development Ltd,[67] a case cited by Mr So in his closing submissions. I have placed more emphasis on the inherent likelihood or unlikelihood of an event having happened, and the apparent logic of events. I have also attached importance to the consistency of their evidence with undisputed or indisputable evidence, and the internal consistency of their evidence.

109.  For the reasons above, I find against the alleged verbal acceptance of the Quotation by the Defendant via Mr Lo. Conversely, I find that the acceptance was given by conduct. I reject the suggestion that the Quotation should be assessed by WSP, being a term implied into the Additional Agreement by reason of trade practice.

3^rd Issue: if the answer to the 1^st Issue is no, whether the Defendant is entitled to rely on the assessment of WSP to pay only HK$64,558.25 for the Additional Works?

110.  In light of my findings on the 1^st Issue, there is no need for me to consider the 3^rd Issue.

2^nd Issue: whether the Plaintiff is entitled to claim from the Defendant the full amount of HK$216,846 for the Additional Works and the outstanding balance of HK$257,400 under the Main Agreement, with interests of HK$94,147.82?

111.  On the first 2 questions under this issue, my answers are in the affirmative. The Plaintiff is entitled to claim from the Defendant the full amount of HK$216,846 for the Additional Works, and the outstanding balance of HK$257,400 under the Main Agreement for the BFAI Work, the latter being undisputed by the Defendant. I do not see the need to consider whether the fees charged for the Additional Works under the Quotation were disproportional, as this was not the Defendant’s pleaded case, and was neither included in its witnesses’ statements nor put to the Plaintiff’s witnesses for their replies.

112.  As to the claim for interests of 2% per month, as I have earlier reported, Mr Tsui in his closing submissions conceded that, notwithstanding the same appearing on the Invoices as “Remark (1)”, it would not be sufficient to establish an agreement on the part of the Defendant to pay such interests. The Plaintiff therefore abandons its claim for the same and now seeks interests on the usual commercial rate of prime + 1% on pre-judgment sums, and at judgment rate thereafter until payment.[68] I think these are fair concession and suggestion from the Plaintiff, and there is no objection from Mr So on the latter. I shall therefore award interests in terms of the Plaintiff’s proposal. As to the date to be adopted as the date when the cause of action arose, I note the Invoices were issued on different dates. Mr Tsui did not, in his submissions, make any suggestion on this. In view of the remedial works for the Defective Cable Incident not completed until at least at the end of August 2017, I will use the dates of the 3^rd and 4^th Invoices, namely 29 December 2017, for this purpose. When adopting this date, I have already taken into account the 30-day credit period given by the Plaintiff in the Invoices, and balanced it with the fact that the 1^st and 2^nd Invoices were issued in February 2017.

4^th Issue: whether, due to the Defective Cable Incident, damage in the sum of HK$373,500 was caused to the Defendant or what sum shall be set-off against the Plaintiff claim?

113.  There is no denial from the Plaintiff that the Defective Cable Incident is a liability that it has to shoulder. Its challenge is solely on whether the Defendant did suffer from loss and damage as claimed.

114.  For clarity purpose, I will set out below the particulars of office overheads claimed by the Defendant. The salaries of Mr Cheung, Mr Lo and Mr Tang have already been enumerated in §59(2) of this judgment.

Item	Description	Claim amount
1	Office Salaries	HK$163,149.86 x 25% = HK$40,787.47
(a)	Au Yeung Yim Sheung (Office Assistant) (HK$6,000/month x 6 months) = HK$36,000
(b)	Ng Pui Man (Account Clerk) (HK$11,571.62/month x 1 month) = HK$11,571.62 (HK$12,350/month x 3 months) = HK$37,050 (HK$11,951.62/month x 2 months) = HK$23,903.24
(c)	Chan Sau Ching (Office Clerk) (HK$10,925/month x 6 months) = HK$54,625
2	Office Management Fee (HK$4,603/month x 6 months) = HK$27,618	HK$27,618 x 25% = HK$6,904.50
3	Office Electricity April 2017 (HK$1,312) May 2017 (HK$2,016) June 2017 (HK$2,409) July 2017 (HK$2,293) August 2017 (HK$2,326) September 2017 (to be assessed)	HK$10,356 x 25% = HK$2,589
4	Office Rent 3,131 s.f.@HK$15/s.f. = HK$46,965/month HK$46,965 x 6 months = HK$281,790	HK$281,790 x 25% = HK$70,447.50
		Total Claimed = HK$120,728.50

115.  In his closing submissions, Mr So conceded that the management fee for the office would be payable regardless of the Defective Cable Incident. Hence, this claim is no longer pursued.

116.  Notwithstanding the Plaintiff’s pleaded case[69], there is no dispute that the BFAI Work and the Additional Works were all completed in March 2017, save for the remedial works related to the Defective Cable Incident. Equally, there is no dispute that the remedial works due to the Defective Cable Incident were not completed until at least late August 2017. On this point, I would prefer the Defendant’s case that the remedial works ended on or about 11 September 2017. An email dated 6 September 2017[70] was issued from the Architect to the Defendant with the complaint that the scheduled BFAI Work inspection at the Site on 4 September 2017 had to be cancelled because the wiring works were still ongoing and the power was shut down. This was followed by another letter from the Architect dated 7 September 2017, recording that as at the same day, the remedial works for the Defective Cable Incident had yet been completed, and imposed on the Defendant a deadline (12 September 2017) for their completion.[71] These communications not only supported the Defendant’s assertion on the date of completion, they also undermined the Plaintiff’s case that the remedial works ended in late August 2017, with only inspection of the same pending. I therefore find the Defendant’s claim for loss and damage from March to 11 September 2017 a reasonable period to be adopted.

117.  Be that as it may, I am not persuaded that the Defendant should be able to claim the salaries and the above overheads. My reasons are provided below.

118.  According to Mr Cheung’s evidence at trial, the claim for the overheads is due to there being more works for the staff of the Defendant to do, caused by the Defective Cable Incident. Using the example of Ms Au Yeung, he said she could have devoted her time on the normal office works she was tasked with. As for the other overheads, i.e. electricity and rent, he explained that because they were calculated in the project fees, hence the longer it took for the project to complete, the more costs would be incurred. Pausing here, Mr Cheung said in court that between March and September of 2017, the Defendant was working on another project from the ASD at Cape Collison. If the latter part of Mr Cheung’s explanation was true, the overheads of electricity and rent during such period should have been calculated in the project fees that the Defendant charged for the Cape Collison project. In that case, I do not see how the defendant’s case for rent and electricity could stand.

119.  It is trite that expenses caused by the breach could be could be claimed by the innocent party. However, the passages from McGregor on Damages [72]relied upon by Mr So clearly provided for situations where additional costs were incurred by the innocent parties to rectify the aftereffect of the breaches, or for expenses incurred in preparation or in part performance of the contract rendered futile, as an alternative to a claim for loss of profits. These are irrelevant and unhelpful to the Defendant’s case, as there were neither additional costs incurred, nor were they claims for expenses incurred for preparation or in part performance of the Main Agreement. There is no evidence before me that due to the Defective Cable Incident: (1) the staff of the Defendant had to work overtime at the office or at the Site; (2) they received overtime pay from the Defendant; (3) more electricity had been used, for example, because the staff had worked overtime; and (4) the rent that the Defendant had to pay had increased. Equally, there is no complaint that, because of the Defective Cable Incident, the contract between ASD and the Defendant was terminated, rendering a loss of profits suffered by the Defendant. I need only mention in passing Mr Cheung had confirmed in court that the Defendant was not monetarily penalised by the ASD for the delay.

120.  Notwithstanding the above, a claim for managerial expenses could still be available[73], provided that the staff had been significantly diverted from their usual activities. Save for the tasters given by Mr Cheung (as reproduced in §§59(4), 60, 61 and 118 of this judgment), there is a lack of evidence to show how the Defendant’s business had been significantly disrupted, leading to its human resources having been significantly diverted. There is no particular as to what matters Ms Au Yeung and her 2 other colleagues had to handle relating to the Defective Cable Incident and how much time they had to spend on them. Correspondingly, how did these tasks interrupt their usual activities and the extent of the disruption? Likewise, regarding the claim of salaries for Mr Cheung, Mr Lo and Mr Tang, the same particulars are missing. I have received no evidence on how the Defective Cable Incident diverted their duties from, for example, the other project at Cape Collison, which was undertaken by the Defendant during the same period of time.

121.  Apart from the above, any disruption and diversion of resources suffered by the Defendant could be attributed to the other 27 items of defect, which could not have been resolved until after 7 March 2017, as evidenced by the email from the Architect issued on the same day.[74] Regrettably, I am not provided with concrete answer as to when these 27 items of defect were rectified. However, I observe that:

(1) in a letter dated 8 March 2017, the Defendant reported to the Architect that the defect rectification works would be completed on or before 17 March 2017;[75]

(2) the email from Mr Kent Ng of the Architect dated 21 April 2017 showed that there was an updated list of defects sent to the Defendant;[76]

(3) on 15 May 2017, Mr Kent Ng sent a reminder to the Defendant, requesting the same to report on the status of the rectification works based on the updated list of defects sent on 21 April 2017;

(4) as per the evidence of Mr Lo, before his departure from the Defendant after May 2017, there were still minor remedial works on-going at the Site that had nothing to do with the Defective Cable Incident;

(5) the rectification of the tactile warning strip, as per the email dated 13 July 2017 and explanation from Mr Cheung, came up as a new item;[77]

(6) by the emails dated 2 August 2017, 15 August 2017 and 24 August 2017, Mr Kent Ng only pressed for the completion of the remedial works concerning the Defective Cable Incident;[78] and

(7) the Architect in the email dated 6 September 2017 and the letter dated 7 September 2017 pressed for the completion of both the remedial works for the Defective Cable Incident and the tactile warning strip.

122.  From the above information, it was possibly only for a short period of time (i.e. from 15 May 2017 to 13 July 2017) when the remedial works for the Defective Cable Incident were the only concern of the Defendant at the Site. I cannot read too much into the above documents and convinced myself that the same could be seen as the complete picture, when full set of documents, i.e. the updated list of defects dated 21 April 2017, the Defendant’s report to the email dated 15 May 2017, and etcetera, are not presented to me. Nevertheless, this magnified the deficiencies in the Defendant’s case under this head, and created obstacles in showing that any disruptions and diversion of resources were solely caused by the Defective Cable Incident and without the need of any apportionment amongst all the other defects to be rectified.

123.  Before I put a closure on the 4^th Issue, there is still the allegation of Mr Cheung that, but for the Defective Cable Incident, the Practical Completion Certificate could have been issued, and thereafter only a part-time site supervisor would be required to station at the Site. This piece of evidence, again, never appeared in his witness statement, and did not appear until he was cross-examined by Mr Tsui. There is also no evidence to show that the Practical Completion Certificate was issued only after 11 September 2017 when the remedial works caused by the Defective Cable Incident were completed. Moreover, such assertion is contradicted by the Defendant’s report that the practical completion was achieved on 3 March 2017.

124.  For the reasons above, I find the Defendant’s claim for loss and damage not made out. It follows that its defence for set-off failed.

Conclusion

125.  Based on the above findings, there shall be judgment in favour of the Plaintiff for the Outstanding Sum (i.e. HK$474,246; being HK$257,400 under the Main Agreement plus HK$216,846 under the Additional Agreement) with interest at the commercial rate of prime plus 1% from 29 December 2017 to the date of judgment, and thereafter at judgment rate until payment.

126.  I also make an order nisi that the Defendant shall pay the Plaintiff’s costs of this action, including all costs previously reserved, and such costs to be taxed if not agreed, with certificate for counsel. Such order will become absolute in the absence of any application to vary the same within 14 days from the date of handing down of this judgment.

127.  Lastly, I thank counsel for their assistance.