TOP CATERING DEVELOPMENT LTD v. CHAN SZE NGA FIONA t/a TASTY

HCA 1817/2015

[2018] HKCFI 979

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1817 OF 2015

______________

______________

______________

J U D G M E N T

______________

A. INTRODUCTION

1.  The plaintiff ie Top Catering Development Ltd (“Top Catering”) carried on the business of providing catering service.  It was run by Ng Wai Wing(“Ng”), one of its directors.  By an agreement dated 27 June 2003, China MerchantsContainer Services Ltd (“CMCSL”) and one Top World Village Limited (which was another company associated with Ng) entered into an agreement whereby the latter agreed to provide catering services at CMCSL’s staff canteen at Nos 5 – 9 Tsing Keung Street, Tsing Yi, New Territories, Hong Kong (“the Canteen”).  There were a number of subsequent variation and novation agreements.  As evidenced by a written agreement between CMCSL and Top Catering dated 1 August 2008, Top Catering had become the provider of catering service at the Canteen (“the CMCSL Contract”).

2.  The defendant ie Tasty (“Tasty”) also carried on the business of providing catering service.  Its sole proprietor was Chan Sze Nga Fiona (“Fiona Chan”).  By a written agreement dated 8 September 2012, Top Catering sub-contracted the provision of catering service at the Canteen to Tasty for three years from 16 September 2012 (“the Contract”).  Fiona Chan was not involved in the operation of the Canteen at all.  The Canteen was actually run by her parents ie Chan Chiu Yee (“CY Chan”) and Ko Shuk Hing (“Ko”).  Ko was in charge of the daily operation of the Canteen.  Except the first few months after the Contract came into effect, CY Chan did not work at the Canteen.  However, he was the person whom Ng would contact usually for matters concerning the Contract.

3.  Each party claimed that, before or at the time of the execution of the Contract, the other party had made various oral agreements or representations. After Tasty took over the catering service at the Canteen, Top Catering claimed that CMCSL had made repeated complaints about the catering service.  By a notice dated 7 August 2014, Top Catering purported to exercise its right to terminate the Contract with effect from 30 August 2014 pursuant to an express provision in the Contract.  In contrast, Tasty claimed that the parties had agreed to terminate the Contract by an oral agreement on or about 14 August 2014.  Nevertheless, in fact, Tasty handed over the Canteen back to Top Catering on 30 August 2014.  After the termination of the Contract, each party claimed against each other miscellaneous sums.

4.  I shall resolve the issues in the following sequence:

(a)  Whether each party had made various oral agreements or representations as claimed by the other party before or at the time of the execution of the Contract?

(b)  How was the Contract terminated?

(c)  What are the sums owed by each party to the other party?

5.  There are numerous factual disputes.  At the trial, Ng and Poon Yik Leung (“Poon”) (ie a manager of CMCSL) gave evidence for Top Catering.  On the other hand, Fiona Chan, CY Chan, Ko and Kwan Cheuk Chi (“Kwan”) (ie a chef who used to work in the Canteen) gave evidence for Tasty.  To resolve the factual disputes, apart from their oral evidence, I had considered all documentary evidence.

B.    THE ORAL AGREEMENTS CLAIMED BY TOP CATERING

6.  I shall consider the oral agreements claimed by Top Catering first.  Top Catering claimed that Ng on behalf of Top Catering and CY Chan and/or Ko on behalf of Tasty entered into the following oral agreements at about the same time as the Contract:

(a)   Tasty shall be entitled to use the frozen meat and all other stock left by Top Catering at the Canteen at the time of handover ie 16 September 2012 and shall pay a reasonable price for such meat and stock.  (“The 1^st Oral Agreement claimed by Top Catering”)

(b)   Tasty would (in consideration of Top Catering agreeing to enter into the Contract and to the actual knowledge and approval of Top Catering) provide at the Canteen and at any time during the period of the Contract, firstly, free meals to Ng; and secondly, free meals to such other people as Ng may nominate up to the value of $2,000 a month.  (“The 2^nd Oral Agreement claimed by Top Catering”)

(c)   Top Catering would sub-let or license to Tasty one of the two rooms near the Canteen which it rented from CMCSL (“the Room”) at the rent or licence fee of $6,000 a month (inclusive of electricity charges).   (“The 3^rd Oral Agreement claimed by Top Catering”)

B1.    The 1^st Oral Agreement claimed by Top Catering

7.  The 1^st Oral Agreement claimed by Top Catering could not constitute a legally enforceable agreement because it would be void for uncertainty.  Top Catering’s case was that, under such an agreement, Tasty shall pay a “reasonable”price for the frozen meat and stock left in the Canteen at the date of handover ie 16 September 2012.  The absence of any agreement on the price, or a mechanism to determine the price, is fatal. In any event, at the trial, Ng confirmed that he would not pursue this claim.

B2.    The 2^nd Oral Agreement claimed by Top Catering

8.  As to the 2^nd Oral Agreement claimed by Top Catering, CY Chan admitted that, at about the time when the Contract was signed, he had agreed to provide free meals to Ng, and that Ng could claim free meals for other people up to a monthly sum of $2,000.  According to a letter issued by Top Catering dated 23 March 2013, Ko informed Ng on 22 March 2013 that, due to poor business, Tasty would stop providing such free meals from 1 April 2013.

9.  The issue is whether the above oral promises made by CY Chan were supported by consideration.  In its opening submission, Top Catering suggested that the consideration for these oral promises was Ng’s agreement to provide advices to Tasty, and act as a go-between between CMCSL and Tasty.  However, this was not the pleaded case of Top Catering.  Nor was it mentioned in Ng’s witness statement.  The oral evidence given by Ng on what services he had actually provided to Tasty was vague and equivocal.  In its closing submission, Top Catering changed its case and submitted that the consideration was that Ng was obliged to take meals at the Canteen.  In the letter dated 23 March 2013, Top Catering merely stated that Tasty made the oral promises because Ng was the ultimate boss of the Canteen.  Top Catering’s case and evidence on what constituted the consideration for the oral promises are inconsistent and confusing.  I am not satisfied that the oral promises made by CY Chan on behalf of Tasty were supported by good consideration in order to constitute a legally enforceable agreement.  I believe CY Chan made those promises merely as a gesture of goodwill, and to give face to Ng.

B3.    The 3^rd Oral Agreement claimed by Top Catering

10.  As to the 3^rd Oral Agreement claimed by Top Catering, CY Chan and Ko admitted that Ng had allowed them to use one of the two rooms that Top Catering had rented from CMCSL.  The Room was less than 100 square feet with no toilet or bathroom.  Ko said that she only lived there for a few days; and the Room was used mainly for storage.  Ng claimed that they used the Room for the period between 20 September 2012 and 10 April 2013.  He said he rented the two rooms from CMCSL at a total monthly rental of $1,500 (ie $750 for each). While Ng claimed that Tasty had agreed to pay $6,000 a month for the use of the Room, CY Chan and Ko claimed that Ng had agreed to allow them to use the Room free of charge for six months.

11.  There is no written evidence of any agreement between the parties in this respect.  However, in a letter dated 18 September 2012, Top Catering informed CMCSL that it had sub-let one of the rooms to Tasty by an oral agreement, though the amount of rent payable by Tasty was not mentioned.  Top Catering has also produced letters dated 8 January 2013, 1 March 2013, 23 March 2013 and 20 December 2013 in which it demanded Tasty to pay outstanding rents for the Room at the monthly rate of $6,000.  Ng said that he had given these letters by hand to CY Chan but CY Chan denied that he had ever received them.  I prefer Ng’s evidence in this respect.  The above-mentioned letters constitute contemporaneous documents supporting Top Catering’s case.  In addition, it was inherently improbable that Top Catering would allow Tasty to use the Room free of charge when it had to pay rent to CMCSL.  I note that Top Catering only needed to pay $750 for the Room to CMCSL, which was substantially less than $6,000.  However, it appears that the sum of $750 was agreed between CMCSL and Top Catering long before the Contract.  In the circumstances, I am satisfied that the parties had reached a legally enforceable agreement under which Tasty agreed to pay $6,000 a month for the use of the Room.

C.    THE REPRESENTATIONS/ORAL AGREEMENTS CLAIMED BY TASTY

12.  Tasty claimed that, before the execution of the Contract, Ng on behalf of Top Catering had made the following representations or oral promises:

(a)  The water and electricity charges of the Canteen had never exceeded $20,000 a month in the past.  Top Catering would only charge Tasty $20,000 a month regardless of the actual usage of water and electricity.  (“The 1^st Representation/Oral Promise claimed by Tasty”)

(b)  The revenue of the Canteen had always been at least $300,000.  Top Catering forecasted that the monthly revenue to be made by Tasty would be at least $300,000.  (“The 2^nd Representation/Oral Promise claimed by Tasty”)

(c)  The Canteen had always sold lunch boxes to a regular customer (ie Ecospace Ltd) at $22 each.  Top Catering shall pay Tasty lunch boxes provided to Ecospace at $22 each (subject to further revision by mutual agreement).  (“The 3^rd Representation/Oral Promise claimed by Tasty”).

C1.    The 1^st Representation/Oral Promise claimed by Tasty

13.  Clause 2 of the Contract provided that:

「 2. 費用

A. 按金合共港幣貳拾伍萬元整。約滿或及經雙方同意終止承包，包括下述2、3、4及5B項 (觸犯5A項除外) ，在乙方無拖欠任何費用下，甲方需七日內無息將全數按金退還乙方。

B. 每月承包費合共港幣肆萬捌仟圓整 (包括全部設備和場所的租金)

C. 每月水、電費合共港幣貳萬元整，費用經由甲方繳交招商局。超額之數由乙方支付。

D. 甲乙雙方同意，由甲方代乙方收取招商局每月應付的膳食費。甲方可在該月結款項中扣起每月的租金及代交的水電費用共六萬八千圓。不足之數，乙方付予甲方，多出之數，甲方付與乙方。」

14.  Clause 9 of the Contract provided further that:

「 全部費用包括水、電、租、貨款、勞工保險、員工薪金‌……等一切餐廳開支及所負責任

A. 2012年9月16日交吉日前由甲方負責，與乙方無關。

B. 2012年9月16日交吉日或之後由乙方負責，與甲方無關。」

15.  The 1^st Representation/Oral Promise claimed by Tasty was contradictory to, and inconsistent with, clause 2C (in particular the last sentence thereof) and clause 9.  Although it is permissible in law to have an oral collateral agreement which contradicts the express term of a written contract, the Court views such collateral agreement with suspicion and requires strict proof of the oralterms (Wai Kam Chiu and another v Chim Siu Fan CACV 376/2007 (24 June 2008, unreported), §§17 – 23).

16.  Ng denied that he had made any such representation/oral promise.  CY Chan and Kwan insisted that Ng had agreed that Tasty would need to pay $20,000 a month only for water and electricity charges.  However, their evidence is not identical to that given by Ko.  Ko said that Ng told her and her husband that, if the water and electricity charges turned out to be more than $20,000 a month slightly (“爭少少”), he would try to settle the matter with CMCSL.  She admitted that there was no discussion on what if the difference was substantial.  The discrepancy between what she said on the one hand and what CY Chan and Kwan said on the other hand casts a serious doubt on the reliability of their evidence.  Further, the oral evidence given by Ko, even if true, does not support that Ng had made any unequivocal promise in this respect.  In addition, Top Catering was obliged to pay the water and electricity charges to CMCSL.  There was no conceivable reason why Top Catering would agree to pay any of these charges outof its own pocket for Tasty when they were the costs incurred by Tasty in running the Canteen.  CY Chan could not explain satisfactorily why the last sentence in clause 2C was not simply deleted if Ng had made the alleged oral agreement.  At the same time, he had not challenged clause 9.  Furthermore, Ko on behalf of Tasty had signed on the monthly records which set out the readings of the water and electricity meters taken by a staff member of CMCSL.  If Tasty was only obliged to pay $20,000 a month as water and electricity charges in any event, there would be no point to ask Tasty to sign on such records.  Top Catering has also produced letters dated 30 December 2012, 23 March 2013 and 20 December 2013 in which it demanded Tasty to pay the outstanding water and electricity charges.  In a letterdated 8 January 2013, Top Catering stated that, upon Tasty’s request, it would not chase Tasty for the outstanding water and electricity charges in the meantime; but it urged Tasty to settle those charges as soon as possible if circumstances permitted.  According to the letter dated 23 March 2013, on the ground that Tasty had breachedthe oral promises to provide free meals, Top Catering started to chase Tasty for theoutstanding water and electricity charges again.  Ng stated that he gave these lettersto CY Chan by hand but, as mentioned, CY Chan denied that he had ever received them.  I have already stated above that I prefer Ng’s evidence in this respect.  All in all, I am not satisfied that Top Catering had made the 1^st Representation/Oral Promise as alleged by Tasty.

C2.   The 2^nd Representation/Oral Promise claimed by Tasty

17.  Ng denied that he had made the 2^nd Representation/Oral Promise claimed by Tasty.  Even assuming that he had told CY Chan and Ko that Top Catering’s monthly revenue in the past was not less than $300,000, there is no evidence that this was untrue.  And even assuming that Ng had forecasted that the monthly revenue of Tasty would not be less than $300,000, it would not be a representation of fact, but an expression of opinion.  CY Chan said that he asked for such information “for reference only”; and he had not asked for a promise or warranty from Ng.  He also agreed that the revenue would depend on many variables.  In the circumstances, I am not satisfied that Top Catering had made any actionable representation in this respect.  CY Chan further said that, in fact, except the first few months after the execution of the Contract, the monthly revenue invariably exceeded $300,000.  The forecast allegedly made by Ng turnedout to be correct.  Hence, even assuming that Top Catering had made an actionablerepresentation in this respect, there is no evidence that the representation was false.

C3.    The 3^rd Representation/Oral Promise claimed by Tasty

18.  The 3^rd Representation/Oral Promise claimed by Tasty is that lunch-boxes had been sold, and would be sold, to Ecospace at $22 each.  As a matter of fact, Ecospace only paid $21 for each lunch-box to Top Catering.  There was no reason why Top Catering would agree to pay $1 more for each lunch-box to Tasty.  Ng denied that he had made any such representation or oral promise.  CY Chan, on the other hand, said that Ng might have made a mistake when Ng mentioned the figure of $22.  And when he discovered that Ng had made such a mistake about a month after Tasty started to run the Canteen, he simply accepted it without making any protest.  On CY Chan’s own evidence, even if Ng had in fact mentioned the figure of $22 per lunch box, he had not taken it seriously.  I am not satisfied that Top Catering had made any actionable misrepresentation or oral promise in this respect as claimed by Tasty.

D.    TERMINATION OF THE CONTRACT

19.  Clause 5 of the Contract provided that:

「 5. 由本承包合約生效日起，甲方可在下列情況下單方面終止乙方承包權

A. 因為招商局對乙方提供的服務包括食物水準及衛生、服務水準、餐廳衛生、用膳環境、違反貨櫃碼頭場地規定……等原因不滿，未能達到招商局的要求，而需要發出共三封或以上警告信或投訴信，甲方有權隨時終止乙方的承包權，甲方可取回餐廳經營權。若招商局在第三封或以上的警告信或投訴信中要求甲方終止將餐廳對外承包或中止甲方的經營權，乙方同意在乙方按金內扣繳貳拾萬圓，作為賠償甲方一切損失。

B. 招商局取消或搬遷本餐廳或收回餐廳經營權。」

20.  CMCSL had issued complaint/warning letters to Top Catering dated 26 December 2012, 6 February 2013, 10 July 2013, 6 August 2013, 4 September 2013, 16 October 2013, 15 November 2013, 9 December 2013, 9 June 2014, 27 June 2014, 12 July 2014, and 4 August 2014.

21.  In the letter dated 9 June 2014, CMCSL indicated that it may demandTop Catering to terminate the sub-contract with Tasty, and it may even terminate theCMCSL Contract.  In the letter dated 4 August 2014, CMCSL formally demanded Top Catering to terminate the sub-contract with Tasty; and stated that, if the situation did not improve, it would not rule out terminating the CMCSL Contract.

22.  CMCSL’s complaint/warning letters were all signed by Poon.  The complaints were concerned with various aspects of the catering service provided byTasty such as quality of the food, the hygiene of the Canteen, and the attitude of thestaff members of Tasty.  Poon had not been cross examined at all on the genuinenessof the complaints set out in those complaint letters.  In the circumstances, it is clear that the pre-condition for invoking the termination clause in clause 5A had been satisfied by 4 August 2014.

23.  By a notice dated 7 August 2014, Top Catering stated that it had decided to exercise its right to terminate the Contract pursuant to clause 5 thereof, and that the deadline for Tasty to run the Canteen would be 7 pm on 30 August 2014.  CY Chan admitted that he had received a copy of the notice by WhatsApp on 14 August 2014.  I am satisfied that Top Catering had elected to exercise its contractual right to terminate the Contract by issuing this notice.

24.  CY Chan claimed that, on 14 August 2014 before he received a copy of the said notice, he and Ng reached an oral agreement to terminate the Contract with effect from 31 August 2014; and under such oral agreement, Ng agreed, among other things, to return the deposit of $250,000 to Tasty within 7 days after 31 August 2014.  Had the parties agreed to terminate the Contract by an oral agreement as alleged by CY Chan, it would not be necessary, and would make no sense, for Ng to issue the said notice of termination.  The notice of termination wasinconsistent with the alleged oral agreement on termination.  There is no evidencethat CY Chan had raised any objection upon receiving the notice.  His explanation as to why he ignored the notice is unconvincing.  I do not believe that he and Ng had reached an oral agreement to terminate the Contract as alleged by Tasty.  In its closing submission, Tasty no longer pursued its argument that the Contract was terminated by agreement.

25.  In short, the Contract was terminated by Top Catering’s exercise of its contractual right under clause 5A of the Contract.  It was, however, not the case that the Contract was terminated by Top Catering’s acceptance of any repudiatory breach committed by Tasty.

E.    LOSS AND DAMAGE SUFFERED BY TOP CATERING UPON TERMINATION OF THE CMCSL CONTRACT

26.  By a notice dated 18 August 2014, CMCSL notified Top Catering that it had decided to terminate the CMCSL Contract with effect from 1 October 2014.  CMCSL stated that Top Catering was responsible for the poor catering service provided by Tasty.

27.  Top Catering claims loss of profits by reason of the termination of the CMCSL Contract in the sum of $2,451,000; or alternatively, a sum of $200,000 under clause 5A of the Contract.  The sum of $2,451,000 is based on $ (48,000 − 5,000) ×57 months.  $48,000 was the sub-contracting fee payable by Tasty to TopCatering whereas $5,000 was the monthly rent payable by Top Catering to CMCSL.  57 months was allegedly the period from the date CMCSL terminated the CMCSL Contract to the expiry of the 8-year contractual period concerning the CMCSL Contract.  However, I note that the CMCSL Contract was not for a fixed term. 

28.  In any event, I take a clear view that Top Catering’s primary claim inthis respect must fail.  The last sentence in clause 5A of the Contract provided that, if CMCSL demanded Top Catering to stop sub-contracting the catering service at the Canteen in its third (or subsequent) complaint or warning letter, or if CMCSL terminated the CMCSL Contract, Tasty agreed that a sum of $200,000 out of the deposit of $250,000 that it had paid to Top Catering shall be deducted as compensation for all loss and damage suffered by Top Catering.  This part in clause 5A was an agreed or liquidated damages clause.  What happened in fact fell squarely within the scope of this contractual provision.  Top Catering has not suggested any reason why this agreed or liquidated damages clause is not legally enforceable.  As Top Catering is bound by this contractual provision, whether it would be unjust to apply this provision (as claimed by Top Catering) in the circumstances is irrelevant.  Hence, Top Catering is only entitled to deduct $200,000 from the deposit of $250,000 as compensation for all loss and damage that it has suffered as a result of the termination of the CMCSL Contract.

F.    MISCELLANEOUS CLAIMS MADE BY TOP CATERING AGAINST TASTY

29.  I turn to consider miscellaneous claims made by Top Catering against Tasty.

F1.    Balance of the sub-contracting fee for November 2012 under clause 2B of the Contract

30.  Top Catering claims $19,743 under this head.  According to clause 2D of the Contract, Tasty should have paid Top Catering a total sum of $68,000 each month; and Top Catering may set off this sum against the catering fees that it had receivedfrom CMCSL (and Esospace) for and on behalf of Tasty.  In November 2012, after taking into account the catering fees paid by CMCSL and Ecospace for the period between 16 September and 30 September 2012, Top Catering claims that Tasty still owed a net sum of $19,743.

31.  Tasty claims that Ko had paid this sum to Ng in cash. However, there is no receipt or any other documentary evidence supporting the alleged payment.  I allow Top Catering’s claim of $19,743 in this respect.

F2.    Outstanding water and electricity charges under clause 2C of the Sub-Contract

32.  Top Catering claims $483,511 under this head.  The amount claimed is supported by a table prepared by Top Catering whereas the amounts of water and electricity actually consumed were set out in the contemporaneous records signed by Ko on behalf of Tasty.  As mentioned, the last sentence in clause 2B of the Contract provided that Tasty shall be responsible for water and electricity charges exceeding $20,000 a month; and clause 9 confirmed that Tasty shall be responsible for all utility charges.

33.  There is no basis for Tasty to challenge the accuracy of the amount claimed by Top Catering, which is supported by the contemporaneous records.  There is no, and cannot be any serious, suggestion that those records were forged or fabricated.  Although Tasty queried whether Top Catering had in fact paid the amount claimed to CMCSL, Ng and Poon had not been crossed examined in this respect.  In a letter dated 3 December 2015, CMCSL certified that all its contractors(including the contractor for running the Canteen) was obliged to pay to it all utilitycharges actually incurred by them. As mentioned, I have rejected Tasty’s claim that there was any representation or oral promise made by Top Catering that Tasty’s liability in this respect shall be limited to $20,000 a month.  In the circumstances, I allow Top Catering’s claim of $483,511.

F3.    Repair costs for the facilities at the Canteen following the first month of the sub-contract period under clause 7 of the Contract

34.  Top Catering claims $137,500 under this head.  Save and except a small sum of $600, Top Catering has produced documentary evidence such as receipts to support the amount claimed.

35.  In a letter dated 22 August 2014, Top Catering sent to Tasty a schedule setting out items which Tasty should repair before leaving the Canteen on 30 August 2014.  CY Chan admitted that Tasty was responsible for carrying out those repair works.  However, he relied on a “price list” dated 29 August 2014 to support his assertion that it had done most of the repair works as requested.  CY Chan said that he had paid the repair costs in cash.  While I cannot rule out the possibility that CY Chan had done some repair works, I am not satisfied that he had fully discharged the repair obligation of Tasty.  In a letter dated 30 August 2014, Top Catering stated that upon inspection of the Canteen after Tasty handed it backon that day, it discovered that various items as particularized in that letter had been damaged or needed to be repaired.  In that letter, Ng asked CY Chan to reply in writing or by WhatsApp if Tasty had any disagreement or objection.  There was no such reply. Further, there were WhatsApp messages on 28 August 2014, 4 September 2014 and 27 September 2014 in which Ng put on record various itemsthat Tasty had failed to maintain and repair properly during the term of the Contract. 

36.  Clause 7 of the Contract provided that:

「 場地以現狀交收，甲方負責承包後首月內餐廳設備在正常使用下出現的損壞和維修，之後的承包期內，餐廳設備的損壞、維修保養全部由乙方負責。並必須於解除承包前按承包前現狀交收。但礙於該餐廳設備已經使用多年，如果被確認為因機件老化無法維修或維修並無經濟價值則另作別論，乙方不用負責。」

37.  Under clause 7 of the Contract, Tasty shall be responsible for the repair and maintenance of all facilities in the Canteen after the first month of the Contract; and upon termination of the Contract, the facilities should be handed over to Top Catering in the same condition as that before the Contract. However, Tasty shall not be responsible if it was impossible or impracticable to repair the facilities due to their age.  In essence, subject to the exception just mentioned, clause 7 required Tasty to ensure that the facilities would remain in substantially the same condition during the term of the Contract.

38.  I accept that Top Catering had incurred the total sum of $137,500, and that it would not have incurred this sum if it was not really necessary to repair the facilities in issue.  For reasons stated above, I reject CY Chan’s evidence that he had fully complied with the repair obligation under the Contract.  I accept that Tasty had failed to return the facilities to Top Catering in substantially the same condition as that before the Contract on 30 August 2014 when it returned the Canteento Top Catering.  Tasty argued that most of the items claimed by Top Catering were replacement of new items, which fell outside the scope of clause 7.  I agree with Top Catering that, in order to repair the facilities in issue, it was inevitable that, in practice, some parts may need to be replaced.  Such replacement should not be regarded as an unjust enrichment enjoyed by Top Catering as alleged by Tasty.  Tasty would not be liable for the cost of replacing an item if and only if it was incapable of being repaired due to its age.  It had not been put to Ng that any of the item claimed by Top Catering fell within this exception.  In the circumstances, I allow Top Catering’s claim of $137,500.

F4.    Costs and expenses incurred under clause 9 of the Contract

39.  Top Catering claims $11,523.48 under this head.  This sum consists offour items.  Top Catering has abandoned its claim for a small sum of $74 being the cost of orange juice; Tasty has agreed to the claim of $149.48 for telephone bills.  Hence, two items remain in dispute.

40.  As mentioned, clause 9 of the Contract provided that:

「 全部費用包括水、電、租、貨款、勞工保險、員工薪金‌……等一切餐廳開支及所負責任

A. 2012年9月16日交吉日前由甲方負責，與乙方無關。

B. 2012年9月16日交吉日或之後由乙方負責，與甲方無關。」

41.  First, Top Catering claims that Tasty should indemnify it for fines paid by it to CMCSL in the total sum of $6,500.  Top Catering paid a fine of $500 to CMCSL on or about 18 November 2013 as a penalty for the poor quality of the food.  Top Catering paid another fine of $6,000 to CMCSL on or about 16 July 2014 as a penalty for failing to provide proper catering service at lunch time on 4 – 5 July 2014.  I agree that Tasty should indemnify Top Catering for the total sum of $6,500.  Tasty admitted the claim in this respect in its closing submission.

42.  Second, Top Catering claims $4,800 as the cost of providing the use of vehicle for a period of 6 days at the daily rate of $800.  I am satisfied that Top Catering had in fact lent a van to Tasty for about a week.  However, I am not satisfied that the parties had reached any agreement on the daily rate or amount that Tasty should pay to Top Catering.  Ng said that Ko told him that she would sortout the amount payable in due course.  Even assuming what he said was true, whatKo had told him was too vague to constitute any legally enforceable agreement.  Inits closing submission, Top Catering submitted in the alternative that Tasty should pay the sum of $4,800 as quantum meruit.  This is, however, not the pleaded case of Top Catering.  There is also no independent evidence on what a reasonable sum for renting such a van should be at the material time.  For these reasons, I will not allow the claim in this respect.

43.  Accordingly, the total sum allowed under this head is $ (6,500 + 149.48) = $6,649.48.

G.    SUMS ALLEGEDLY DUE AND PAYABLE BY TASTY PURSUANT TO THE ORAL AGREEMENTS CLAIMED BY TOP CATERING

G1.    Under the 1^st Oral Agreement

44.  Top Catering claimed $10,361 under the 1^st alleged Oral Agreement.  As mentioned, I am not satisfied that there was any legally enforceable agreement in this respect.  Further, Ng has decided to abandon this claim.

G2.    Under the 2^nd Oral Agreement

45.  Top Catering claims $68,000 under the 2^nd alleged Oral Agreement.  This sum is based on $2,000 each month for Ng and his guests respectively (i.e a total monthly sum of $4,000) and a period of 17 months from April 2013 to the termination of the Contract in late August 2014.  As mentioned, I am not satisfied that there was any legally enforceable agreement in this respect.  In any event, assuming that there was such a legally enforceable agreement, Top Catering shouldonly be entitled to claim its actual loss ie the actual amounts that Ng and his guests had spent on meals which ought to have been provided free of charge.  However, Top Catering has not adduced any evidence on the actual amounts incurred by him or his guests.  It is wrong in principle, and artificial in practice, for Top Catering to claim a notional sum of $2,000 each month for Ng and his guests respectively.  No sum will be allowed under this head.

G3.    Under the 3^rd Oral Agreement

46.  Top Catering claimed $40,020 under the 3^rd alleged Oral Agreement.  Ng revised the sum to $40,000 when he gave oral evidence.  This is the sum statedin Top Catering’s demand letter dated 20 December 2013.  As mentioned, I accept that there was such an oral agreement as claimed by Top Catering.  I shall allow the sum of $40,000.

H.    MISCELLANEOUS SUMS COUNTERCLAIMED BY TASTY AGAINST TOP CATERING

47.  Tasty sets out eleven items in its counterclaim.  Four of them have been admitted by Top Catering.

48.  The admitted items are as follows.  First, Top Catering admits that it should pay $143,825 to Tasty as the revenues received for July and August 2014. Second, it admits that Tasty is entitled to the sums of $1,500, $5,500 and $2,051.73 as the deposit for a refrigerator, petty cash and the costs of some newspaper and magazines.  I turn to consider the seven remaining items in dispute.

H1.    Loss of $1 for each of the 13,303 lunch boxes provided to Ecospace

49.  Tasty claims the loss of $1 each for the 13,303 lunch boxes provided to Ecospace in the total sum of $13,303.  Such claim is made on the basis that Top Catering had made a representation or oral promise that Esospace would pay $22 for each lunch box, but in fact Esospace only paid $21 for each one.  There is no evidence that Ecospace had purchased 13,303 lunch-boxes.  More importantly, as mentioned, I have rejected Tasty’s claim that Top Catering had made any misrepresentation or oral promise in this respect.  It follows that no sum will be awarded under this head.

H2.    Ng’s meals from 1 to 30 August 2014

50.  Tasty claims that Ng has not yet paid $1,471 being the cost of meals taken by him from 1 to 30 August 2014.  Ng’s case is that he was entitled to free meals, which is a claim that I have already rejected.  I shall allow Tasty’s claim in this respect.

H3.    Over-payment of sub-contracting fee and water and electricity charges for 31 August 2014

51.  Tasty had paid $68,000 in advance for the month of August 2014.  However, the Canteen was returned to Top Catering in the evening on 30 August 2014.  Tasty did not run the Canteen on 31 August 2014.  Hence, Tasty claims for the return of one day’s payment on a pro rata basis in the sum of $2,193.55.  Top Catering chose to take back the Contract with effect from 7 pm on 30 August 2014 as stated in the notice dated 7 August 2014.  It is wrong in principle to allow Top Catering to keep the payment in respect of 31 August 2014.  I allow Tasty’s claim of $2,193.55 in this respect.

H4.    Deposit under the Contract

52.  Tasty claims the repayment of the deposit of $250,000 that it had paid under the Contract.  As mentioned, Top Catering is entitled to deduct the sum of $200,000 pursuant to clause 5A.  Hence, Tasty is only entitled to claim the return of $50,000.

H5.    Stock left by Tasty at the time of the handover on 30 August 2014

53.  Tasty claimed the value of stock left at the handover date on 30 August 2014 in the sum of $55,913.89.  To begin with, the amount claimed is different from the figures appearing on the relevant documents.  At the trial, Tasty revised the amount of the claim to $47,538.45, based on the WhatsApp messages between Ng and CY Chan on 2 and 3 October 2014.  However, if one reads the messages carefully, $47,538.45 was merely a sum suggested by CY Chan and Ng had made it clear that he did not agree to it.  In the WhatsApp message on 3 October 2014, Ng stated that as the parties could not reach an agreement on the quantity and value of the remaining stock in the Canteen, he decided to return all of them to CY Chan.

54.  More importantly, Ng relied on the WhatsApp messages on 13 October2014 and 23 May 2015 to support his case that he had returned all the stock left inthe Canteen to CY Chan on 13 October 2014 at Tsuen Wan, and that CY Chan had failed to sign on a receipt.  CY Chan said that the message which referred to the receipt was wrongly sent.  He said that although there was an agreement that he would collect the stock left in the Canteen, the matter had not been followed up; and Ng merely gave him some papers on 13 October 2014.  I prefer Ng’s evidence on this issue.  In any event, I am not satisfied that $47,538.45 represented the market value of the remaining stock at the material time.  Accordingly, I will not allow Tasty’s claim in this respect.

H6.    Loss and damage for misrepresentation(s)

55.  Putting aside that, as mentioned, Tasty has failed to prove any actionable misrepresentation, Tasty has not pleaded any loss and damage that it has suffered because of the alleged misrepresentations.  Its claim in this respect is doomed to failure.

H7.    Loss of profits

56.  Tasty claimed loss of profits at $19,132 a month for a period of 36 months ie a total sum of $688,752.  In its opening submission, Tasty reduced the period of claim to 12 months but increased the monthly sum to $20,265.  Tasty argued that it intended to operate the Canteen for at least another 12 months but for the termination of the Contract by Top Catering in August 2014.

57.  Tasty has not adduced any evidence on the amount of its net profits during the term of the Contract.  More importantly, as I have found that Top Catering was entitled to terminate the Contract pursuant to clause 5A of the Contract, Tasty’s claim in this respect must be rejected.  Tasty confirmed that it would not pursue this claim in its closing submission.

I.    CONCLUSION AND ORDERS

58.  For reasons stated above, the total sum that Tasty is liable to pay to Top Catering is as follows:

1.	Balance of the sub-contracting fee for November 2012	$19,743.00
2.	Water and electricity charges	$483,511.00
3.	Repair costs for facilities	$137,500.00
4.	Costs and expenses incurred by Top Catering	$6,649.48
5.	The rent or licence fee for the Room	$40,000.00
	Total :	$687,403.48

59.  On the other hand, the total sum that Top Catering is liable to pay to Tasty is as follows:

1.	Outstanding sum of CMCSL revenue	$143,825.00
2.	Cost of Ng’s meals from 1 to 30 August 2014	$1,471.00
3.	Over-payment of sub-contracting fee and water and electricity charges for 31 August 2014	$2,193.55
4.	Return of deposit under the Contract	$50,000.00
5.	Deposit for the Appolo refrigerator	$1,500.00
6.	Petty cash	$5,500.00
7.	Costs of newspaper and magazines	$2,051.73
	Total :	206,541.28
		========

60.  It follows that Tasty is liable to pay to Top Catering a net sum of:

$ (687,403.48 − 206,541.28) = $480,862.20

61.  I therefore order that Tasty shall pay the sum of $480,862.20 to Top Catering with interest at 1% over the prevailing prime lending rate of HSBC from the date of writ until the date of this judgment, and therefore at the judgment rate until payment.

62.  As to costs, Top Catering is, overall speaking, the successful party because Tasty is liable to pay a net sum to it.  Top Catering succeeds on most of its claims whereas Tasty fails on most of its counterclaims (save those which Top Catering has already admitted).  In the circumstances, Tasty should pay the costs of this action (including both Top Catering’s claims and Tasty’s counterclaims) to Top Catering.  However, the amount that Top Catering can recover from Tasty is substantially less than the amount of its primary claim; and it has failed on some items.  Adopting a broad-brush approach, I shall only allow Top Catering to recover 90% of the costs that it has incurred in this action.  I shall make a costs order nisi that Tasty shall pay 90% of Top Catering’s costs in this action to be taxed if not agreed. If any party intends to apply to vary the costs order nisi, it shall submit a written application (not more than 3 pages) within 14 days of this judgment, and the other party shall reply in writing within the next 14 days. I shall then dispose of the application on paper.