TUNG PO DECORATION ENGINEERING LTD v. GREAT BRIGHT ENGINEERING LTD

DCCJ 4853/2020

[2024] HKDC 2045

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4853 OF 2020

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BETWEEN

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DECISION

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INTRODUCTION

1.  On 2 July 2024, this Court delivered its judgment to this action (“Judgment”) in which the Court awarded, inter alia, the sum of HK$216,378.10 (“Judgment Sum”) to the Plaintiff after setting off part of the Defendant’s counterclaim.

2.  By a summons dated 30 July 2024 (“Summons”), the Defendant applied for: (a) leave to appeal against the Judgment and (b) stay of execution of the Judgment pending appeal.

3.  After hearing submissions from the parties, I reserved my decision on the leave application and granted an interim stay of execution of the Judgment pending the said decision. I now give my decision on the leave application.

GROUNDS OF APPEAL

4.  According to the draft Notice of Appeal attached to the Summons, the Defendant intended to rely on the following grounds of appeal:-

(1) An error in the finding and calculation of three sums owed by the Defendant to the Plaintiff under “(B) Works disputed by the Defendant under Work Schedule”[1] respectively in the amount of: (a) HK$149,520, (b) HK$10,000 and (c) HK$9,880 (“Grounds 1 & 2”);

(2) An error in rejecting the Defendant’s claim in relation to the lichen wall in the sum of HK$20,500[2] for failing to properly assess the relevant evidence (“Ground 3”);

(3) An error in finding that the Defendant was only entitled to damages in the sum of HK$65,900 under the head of counterclaim for “workmen wages”[3] (“Ground 4”);

(4) An error in rejecting the Defendant’s claim in the sum of HK$16,711.30 under the head of counterclaim for “costs of materials” incurred for completing the outstanding works[4] (“Ground 5”).

LEGAL PRINCIPLES

5.  Under section 63A of the District Court Ordinance (Cap 336), leave to appeal shall not be granted unless the Court is satisfied that: (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice that the appeal should be heard.

6.  The test of whether an appeal has a reasonable prospect of success is whether the applicant can show that he has an arguable case with reasonable chances of success on appeal. A reasonable prospect of success means a prospect which is more than ‘fanciful’ but does not need to be shown to be “probable”. See, for example: SMSE v KL [2009] 4 HKLRD 125.

ANALYSIS

(A) Grounds 1 & 2 – Calculations

7.  Subsequent to the Judgment, the Defendant took out a summons for amendment of the Judgment under O 20 r 11 of the Rules of the District Court (Cap 336H) (“RDC”). On 28 August 2024, I allowed the Defendant’s amendment application and a Corrigendum was issued on 12 September 2024.

8.  It was accepted by the Defendant that, following the amendment of the Judgment, Grounds 1 and 2 had become irrelevant. It is therefore unnecessary for me to deal with these grounds.

(B) Ground 3 – Lichen Wall

9.  The Defendant contended that, in rejecting the Defendant’s case that the unit price of the lichen wall was HK$4,000/m² (instead of HK$2,400/m²), the Court had failed to consider: (a) the second payment application form dated 12 December 2019 (“2^nd PAF”);[5] (b) WhatsApp conversations where the Defendant raised issues with the picture and plan of the lichen wall sent out by the Plaintiff; and (c) evidence of other instances where the Plaintiff accepted disadvantageous arrangements.

10.  In my view, this ground has no reasonable prospect of success:-

(1) First, in relation to the lichen wall, the Defendant’s case is that the relevant sum was agreed to be paid by the Defendant for ordering lichen wall on the Plaintiff’s behalf at the unit rate of HK$4,000/m² (for which the Plaintiff agreed to reimburse the Defendant or be deducted from the sum payable to the Plaintiff). The Defendant therefore not only had to prove the existence of the agreement but also the actual costs being incurred by the Defendant for ordering the lichen wall from the designated supplier at the specified unit rate. In relation to the latter, I have found in paragraph 93 of the Judgment that the email of 19 June 2017 was insufficient evidence as it provided no particulars as to the model of lichen wall quoted (not to mention whether the quoted lichen wall had been ordered or not). In my view, this deficiency cannot be cured by the relevant wordings in the 2^nd PAF even if those wordings were inserted by the Plaintiff;

(2) Further, the relevant wordings in the 2^nd PAF (which the Defendant now relies on) were neither mentioned in any of the Defendant’s witness statements nor put to the Plaintiff’s witnesses during cross-examination. It is also not disputed by the Defendant that the relevance of those wordings was not specifically addressed by the Defendant (who was then represented by another counsel) in its closing submissions. In my view, it would not be fair for the Defendant to be allowed to rely on appeal a point which it had no intention to develop or place reliance at trial;

(3) As for the WhatsApp messages and evidence relating to other instances of disadvantageous arrangements, I am not of the view that they provide much assistance to the Defendant’s case. In particular, the WhatsApp messages are not evidence of any order being placed by the Defendant with the lichen wall supplier. The evidence of other disadvantageous arrangements is also neither here nor there insofar as the specific arrangement in relation to the lichen wall is concerned.

11.  I therefore refuse to grant leave to appeal on this ground.

(C) Ground 4 – Workmen Wages

12.  The Defendant claimed that:-

(1) In relation to payment record by the Defendant to one Mr Ko (高建基) in the sum of HK$11,200, the Court had failed to take into account the viva voce evidence of Cheung Siu Ming (“Ming”) at trial that among the said sum, a portion of it represented payment by the Defendant on behalf of the Plaintiff for works performed by Mr Ko before the repudiatory event on 4 January 2020[6] and other documentary evidence showing that Mr Ko was responsible for carrying out paint job for the ceiling, which corresponded to specific items of the Plaintiff’s works;

(2) In relation to wages paid by the Defendant to other workmen, the Court had failed to take into account the invoice record from one ‘創文雲石工程有限公司’ which showed that works for lift car floor and lift wall were carried out, which corresponded to specific items of the Plaintiff’s works.

13.  In my view, this ground also presents no reasonable prospect of success.

14.  First, issue of fact is decided by pleadings, but not the other way round. Under the Amended Counterclaim,[7] the wages allegedly paid to the workmen in the total sum of HK$234,525 (of which the said payment to Mr Ko in the sum of HK$11,200 formed part) were pleaded to be:-

(1) Damages suffered by the Defendant “as a result of the Plaintiff’s repudiatory breach of the Contract”; and

(2) Wages paid to workmen for completing the outstanding parts of the works “from and including the evening on 4 January 2020 onward”.

15.  The evidence of Ming, even if accepted, only served to show that, among the sum of HK$11,200 allegedly paid to Mr Ko, a portion of it (of which the amount was unknown) was for works rendered by Mr Ko before 4 January 2020. This evidence contradicted the Defendant’s pleaded case in the sense that that portion of wages, even if paid by the Defendant: (a) were not incurred as a result of the repudiatory event on 4 January 2020; and (b) were not paid for works performed by Mr Ko from 4 January 2020 onward. In my view, this evidence ought to be disregarded for being irrelevant to the Defendant’s pleaded case.

16.  Alternatively, even if I were to consider Ming’s evidence relevant (which I did not), his evidence ought to be rejected for being unbelievable. Not only is his evidence in contradiction to the Defendant’s pleaded case, the relevant evidence was also not mentioned in any of his witness statements, despite the Defendant’s reliance on Mr Ko’s payment record in support of its pleaded case that the claim under this head was for works performed from 4 January 2020 onward (but not before). The fact that Ming only proffered this explanation for the first time under cross-examination made his evidence in this respect highly doubtful.

17.  Regarding the other evidence showing certain works were performed by Mr Ko and the other workmen, the fact that there were piecemeal documents showing that Mr Ko and other workmen had been responsible for certain works purportedly corresponding to specific items of the Plaintiff’s works provided very little assistance to the Defendant’s case. There was no credible evidence connecting those documents with any of the payment records relied upon by the Defendant or showing that they related to the Plaintiff’s works. In any event, none of these documents now referred to has been specifically drawn to the Court’s attention by the Defendant in its closing submissions.

18.  In the premises, I refuse to grant leave to appeal under this ground.

(D) Ground 5 – Material Costs

19.  Under this ground, the Defendant contended that:-

(1) The Court had failed to take into account the receipts produced in support of the Defendant’s claim for materials costs; and

(2) In relying on the evidence of Cheung Wah Hang Ricky (“Ricky”) that there was no document or photo showing that any of the materials were used for the Plaintiff’s work, the Court had failed to consider Ricky’s evidence at trial that he was not familiar with the relevant documents and that the matter ought to be directed to Ming.

20.  I find no merit in this ground.

21.  The receipts produced by the Defendant are only evidence that some materials were purportedly purchased from their respective suppliers. These receipts (many of them are illegible) did not show who was the purchaser and, in many of them, one could not even reckon the materials purchased on those occasions. There was also no evidence from the Defendant’s witnesses explaining how these receipts related to the material costs incurred for completing the outstanding works which the Plaintiff should be responsible but for the repudiation. It remained Ricky’s bare assertion (which I attached no weight in the Judgment) that these receipts were relevant to the counterclaim.

22.  Regarding Ricky’s evidence that “matters relating to the receipts should be directed to Ming”, I bear in mind that the burden to establish its counterclaim lies squarely on the Defendant and, in this regard, I am not aware of any credible evidence being led from Ming as to the relevance of these receipts at trial. In the premises, I fail to see any error in referring to Ricky’s evidence that there was no document or photo showing that the materials “were used for the works contracted to the Plaintiff”. Indeed there was none.

23.  By reason of the above, I refuse to grant leave to appeal under this ground.

DISPOSAL

24.  In summary, I find no reasonable prospect of success in respect of Grounds 3 to 5. There is also no other reason why, despite my findings herein, the appeal should be heard in the interests of justice.

25.  For the above reasons, I dismiss the Defendant’s application for leave to appeal under the Summons. Following the dismissal of the leave application, the interim stay of execution of the Judgment granted on 28 August 2024 shall be lifted.

26.  The parties agreed that costs should follow the event. In the premises, I order that costs of the Summons and the hearing be to the Plaintiff to be summarily assessed, with certificate for counsel. I do not intend, and it was not argued, to give any discount on costs to reflect the fact that Grounds 1 and 2 were effectively ruled in the Defendant’s favour, as the subject matters of these two grounds should have been dealt with by way of an application under O 20 r 11 of RDC instead of being pursued by way of appeal.

ORDER

27.  The Court therefore makes the following orders:-

(1) The Defendant application under paragraph 1 of the Summons be dismissed;

(2) There shall be no continuation of the interim stay of execution of the Judgment granted on 28 August 2024 and the same shall be lifted;

(3) Costs of the Summons and the hearing be to the Plaintiff to be summarily assessed, with certificate for counsel;

(4) The parties do lodge their respective statements in relation to costs for the purpose of summary assessment in the following manner:-

(a) The Plaintiff do file and serve its Statement of Costs within 14 days from the date hereof;

(b) The Defendant do file and serve its Statement in Opposition within 14 days thereafter; and

(c) The Plaintiff do file and serve its Statement in Reply (if any) within 14 days thereafter.