XCHRX CIVIL FOUNDATION CO. LTD. v. POLYFIT ENGINEERING LTD.

1997, No. A13771

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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The Background

1. The plaintiff is seeking recovery of the sum of $202,650 from the defendant for services rendered. The particulars of the sum claimed are -

2. In its defence, the defendant says that it did not enter into any contract with the plaintiff for the services, but this was entered into with one Ngor Chiu, and the defendant was liable to Mr Ngor for payment approved and received from the main contractor. This approved payment was $402,250. Taking into account the sum of $300,000 paid by the main contractor to Mr Ngor, the balance due was $102,250, but, because Mr Ngor owed the defendant $118,920, nothing is payable.

3. The plaintiff applied for judgment under Order 14 and this was granted on 26 May 1998. The defendant now appeals against that decision.

The Evidence

4. The evidence established by the contemporaneous documents in support of the plaintiff's claim is formidable, to say the least. This is -

1. On 9 April 1997, the plaintiff, under its own name, sent a quotation to the defendant for the work.

2. On 15 April 1997, the defendant signed a document which it had itself prepared. This document is addressed to the plaintiff for the attention of Mr Ngor. It sets out the basis on which the defendant was prepared to contract the work. It makes provision for the "signature and company chop" of the plaintiff.

3. The plaintiff sent invoices to the defendant dated as mentioned above. These invoices were under the letterhead of the plaintiff and gave full details of the work done, including the size of holes drilled, the unit price and the total. The defendant did not challenge these invoices.

4. On 21 May 1997, the defendant, at the request of the plaintiff, made payment of $300,000 to an associated company of the plaintiff, Well-Joint Engineering Limited.

5. Well-Joint sent a receipt to the defendant dated 11 May 1997 and recording "full payment of Invoice PEL-19701 ($219,150) & PEL-19703 ($80,850)". The defendant did not challenge this allocation.

6. At the relevant time, Mr Ngor was employed by the plaintiff.

7. There is nothing, absolutely nothing, from the defendant in writing, before the defence filed on 13 January 1998, in which it disputes the plaintiff's claim.

5. Against this, in an affirmation made by Mr Yeung Yik On, the managing director of the defendant, the defendant insists that the contract was with Mr Ngor personally. Mr Yeung makes the assertion - an extraordinary one in the light of the quotation of 9 April 1997 and contract document signed by it on 15 April 1997 - that "I was expecting that Mr Ngor Chiu would sign the said written contract in his personal capacity" and "I never expected that the said written contract would be signed by anybody else". Mr Yeung then says that, when the contract was returned signed by the plaintiff, he "did not query this at the time" because the contract was with Mr Ngor who would subcontract it to the plaintiff. Mr Yeung says that in about mid-May 1997 Mr Ngor instructed the defendant to pay $300,000 to Well-Joint and the defendant instructed the main contractor to pay this sum. It was paid. Mr Yeung goes on to say that Mr Ngor agreed to accept the sum of $402,250 as approved by the main contractor.

6. In spite of the fact that the defendant offered the contract to the plaintiff by name, Mr Yeung has the insolence to assert that he had no knowledge of the plaintiff. He says that the plaintiff changed its name to its present name about 10 days before signing the contract, and that "This change of the plaintiff's name was not even known to me or the defendant".

7. That was the state of the evidence before the Master. Since the Master's decision, the defendant has filed further evidence and the plaintiff had responded to this.

8. The evidence filed by the defendant is from Mr Ng Lee Chin, the managing director of the main contractor. He produces a quotation by the plaintiff to the defendant, although Mr Ng describes this as "a quotation by Ngor Chiu". How on earth he came to the conclusion that a quotation clearly by the plaintiff was by Mr Ngor is not explained. Mr Ng says that the defendant requested him to assess and certify "the work done by Ngor Chiu". Mr Ng says that "we discovered that 40% work done were inconsistent to our request, which were diameters of the holes were only 300mm". He goes on to say that Mr Ngor agreed to "the certified total net cost of the work done by Ngor Chiu at HK$402,250. A "sub-contractor's payment certificate" is produced by Mr Ng. This records the payment of $300,000 as "Total value previously certified" and mentions a contra charge of $500 for "unwearing safe helmet".

9. In response to this, Mr Ngor on behalf of the plaintiff, says that, as between the plaintiff and the defendant, there was an agreement that certain holes were to be made up by two 305mm holes. This is supported by the invoices rendered by the plaintiff without protest by the defendant. Mr Ngor also produces the daily drilling reports showing the actual work done by the plaintiff with each page signed by the defendant's site supervisor. Mr Ngor points out the obvious; that it is strange that the defendant has not raised any complaint about the size of the holes until after judgment was granted against it by the Master. That affirmation by Mr Ngor was filed on 21 July 1998. The defendant has not denied anything that Mr Ngor has said.

Assessment of the Defence

10. In the light of the contemporaneous documents and the probabilities, the defence put up by the defendant is not only incredible; it is insulting to the intelligence and verging on the contemptuous. Not only does the defendant advance this incredible defence but it makes no attempt whatsoever to explain -

(a) why it thought it was negotiating with Mr Ngor personally when it received the quotation from the plaintiff by name;

(b) why it offered the contract to the plaintiff by name when it was contracting with Mr Ngor personally;

(c) why it made no protest about the accuracy of the plaintiff's invoices, or, indeed, why the plaintiff was rendering invoices to the defendant at all; or

(d) why it made payment of the large sum of $300,000 on the instructions of the plaintiff; or

(e) why it did not query the receipt showing that the payment was allocated to two of the plaintiff's invoices; or

(f) why it made no protest that the plaintiff was drilling the wrong sized holes; or

(g) why it did not, at any stage before the plaintiff started proceedings, state in writing its case.

11. I have to say that I do not think I have ever seen a weaker case advanced by a defendant in an appeal against an Order 14 judgment.

12. It is clear to me that the defendant has no case at all that is fit for trial.

The Result

13. The defendant's appeal must be dismissed and the judgment entered by the Master must be affirmed.

The Costs

14. The matter of costs has not been argued, but my preliminary view is that this is an appeal that should never have been brought. I am inclined to think that it would not be just that the plaintiff should bear any part of its costs in defending this thoroughly unmeritorious appeal. I make an order nisi that the defendant pay the plaintiff's costs of the appeal on an indemnity basis.