|
DCCJ 1440/2018
[2021] HKDC 1277
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 1440 OF 2018
--------------------------
BETWEEN
| |
JEKCO ELEVATORS LIMITED |
Plaintiff |
|
and
|
| |
MILLION HOTEL MANAGEMENT LIMITED |
Defendant |
-------------------------
Coram: His Honour Judge H. Au-Yeung in Court
Dates of hearing: 8 – 11 & 29 – 30 June, 8 July and 12 August 2021
Date of Judgment: 12 October 2021
--------------------------
JUDGMENT
--------------------------
BACKGROUND
1. By an agreement dated 28 May 2015 (“the 1st Agreement”), the plaintiff agreed to provide the defendant with regular and basic maintenance services for two elevators at M1 Hotel North Point (“the Hotel”) at monthly payments of $6,000 for the period from 1 June 2015 to 31 May 2017.
2. On 12 April 2017, the plaintiff sent another agreement (“the 2nd Agreement”) to the defendant for its consideration. Under the 2nd Agreement, the contractual period would be from 1 June 2017 to 31 May 2019. All other terms of the 2nd Agreement were identical to those contained in the 1st Agreement, except that the monthly fee would be increased to $6,600. The defendant accepted to enter into the 2nd Agreement on 17 July 2017.
3. However, around 2 months later, the defendant terminated the 2nd Agreement by virtue of a letter dated 15 September 2017, on the ground that the plaintiff’s maintenance service was not satisfactory.
4. The plaintiff alleged that the defendant was in repudiatory breach of the 2nd Agreement by terminating the 2nd Agreement prematurely.
5. The plaintiff therefore commenced this action against the defendant and claimed for the monthly payments for the remainder of the contractual period under the 2nd Agreement in the total sum of $135,300.
6. In its Defence and Counterclaim, the defendant alleged that it had terminated the 2nd Agreement because of the plaintiff’s persistent breach of the express terms of the 2nd Agreement[1] by its failure to:
(1) provide competent technicians to carry out maintenance and repair service of the lifts[2];
(2) inform and/or explain to the employees of the defendant the repair works required and the progress of repair works[3];
(3) ensure that the two lifts and their associated equipment and machineries were kept in a proper state of repair and in safe working order[4]; and
(4) provide technicians to the defendant’s premises as soon as possible in cases of emergency[5].
7. The defendant also alleged that, by reasons of the above, the plaintiff was in breach of the implied conditions of the 1st Agreement and the 2nd Agreement that the plaintiff would carry out lift maintenance service with reasonable care and skill pursuant to section 5 of the Supply of Services (Implied Terms) Ordinance (Cap.457, Laws of Hong Kong), and carry out the above lifts maintenance service within a reasonable time[6] pursuant to section 6 of the said Ordinance. Particulars referred to in paragraph 6(1) – (4) above were again relied on (without more) in support.
8. The defendant further alleged that as a result of the plaintiff’s breach, there were recurrent malfunctions of the two lifts in the Hotel, namely:
(1) false alarms of the overload warning system;
(2) sudden stoppage;
(3) irregular and uncontrolled ascending or descending movements of the lift cabs;
(4) uncontrolled opening and closing of lift doors; and
(5) uneven platforms between the interior of the elevator and the ground of the Hotel.[7]
9. On the above basis, the defendant alleged that it was entitled to terminate the 2nd Agreement. Furthermore, because the defendant had engaged another service provider (“Sigma”) to carry out inspection and repair works to remedy the defects of the 2 lifts, it claimed against the plaintiff for the sum of $213,300 being the costs of such an engagement[8].
PARTICULARS OF THE DEFENDANT’S COMPLAINTS
10. On the first day of the trial, this court pointed out to Mr Ng, the defendant’s counsel, that there was a lack of particulars in relation to the plaintiff’s alleged failings, the malfunctions and the defects (which were said to have been remedied by the new service provider) in the Defence and Counterclaim. Even though the plaintiff had never sought for such particulars, it is plainly undesirable for the trial to be proceeded under such circumstances.
11. If any case authority is still required to demonstrate the importance of pleadings, reference may be made to the Court of Final Appeal case of Kwok Chin Wing v 21 Holdings Ltd (2013) 16 HKCFAR 663 in which Chief Justice Ma had the following to say in paragraph 21 of the Reasons for Judgment:
“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 Limited v Crystal Jet International Limited [[2005] 2HKC 638, at 643G-H (para 6(1))]. 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 Limited v Crystal Jet International Limited:
“(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.”
12. The learned Chief Justice continued in paragraph 23:
“The purpose of pleadings, in clearly and unambiguously setting out the true extent and nature of a dispute not just for the benefit of the parties but also for the Court in managing and trying cases, remains important under our system of civil justice. The retention of the old rules as to pleading as well as the introduction of new provisions over four years ago under the Civil Justice Reform, reinforce this.”
13. Having said that, I must bear in mind the relatively small claim and counterclaim made in this action. I suspect that before the first day of the trial, the total amount of legal costs spent in this case by both sides had already far exceeded such pleaded claim and counterclaim. Hence, adjourning the trial would only lead to much more disproportionate costs to be spent.
14. I therefore proposed to Mr Ng that he should provide the court and the plaintiff with a table by virtue of which the required particulars should be supplied, and that the defendant shall be bound by such particulars at the trial, so that the court and the plaintiff would have a clear idea as to what have to be dealt with in the trial. In other words, this court shall only consider the complaints particularised in this table. As both parties agreed to proceed on such a basis, no adjournment of the trial was necessary. The table of particulars (“the Table of Particulars”) was duly submitted by the defendant thereafter and the trial as a result commenced accordingly.
THE DEFENDANT’S LATE APPLICATION TO ADDUCE NEW EVIDENCE
15. By summons filed on 2 June 2021 which was returnable on the first day of the trial, the defendant applied for leave to file a Supplemental List of Documents and adduce the following documents as documentary evidence at the trial:
(1) 升降機工程及自動梯工程實務守則2012版 (“the Code of Practice”) issued by the Electrical and Mechanical Services Department (“EMSD”);
(2) Best Practices for Operation and Maintenance Service of Lift and Escalator Installations issued by the EMSD;
(3) Guidebook for the Responsible Persons for Lift – Lifts and Escalators Ordinance (2012 Edition) issued by the EMSD;
(4) The relevant entries in the defendant’s Occurrence Book during the contract period; and
(5) Search records of registered lift worker(s) / engineers as stated in the plaintiff’s Logbook.
16. The application in relation to the defendant’s Occurrence Book (item 4 above) was withdrawn at the hearing.
17. In relation to the rest of the documents, while Mr Ng for the defendant accepted that the application was indeed a late application, he submitted that:
(1) they are documents of public nature;
(2) the plaintiff would suffer no prejudice anyway because the documents had been referred to by the plaintiff’s own expert;
(3) those documents, even if admitted, are not new facts;
(4) those documents, even if admitted, would not render it necessary for the experts to file any supplemental expert report;
(5) they are relevant because they would shed light on the standard of reasonable care and skills required.
18. Despite Mr Ng’s initial suggestion that all those documents issued by the EMSD had been referred to by the experts, at the end of the day, he accepted that only the Code of Practice was referred to in the expert’s report of the plaintiff and the joint experts’ report[9].
19. The Code of Practice was mentioned by the plaintiff’s expert in 2 places in his solo report (and repeated in the joint experts’ report):
(1) when he described the condition of the main wire ropes; and
(2) when he opined that replacement of certain parts of the lifts was not mandatory under the Code of Practice.
20. When the plaintiff’s expert described the condition of the main wire ropes, he had exhibited a part of the Code of Practice. If the defendant’s expert considered it necessary to refer to any other part of the Code of Practice, I am sure he would have done so. However, he did not exhibit any other document in the joint experts’ report.
21. The plaintiff also referred to the Code of Practice when he discussed whether it was mandatory for the plaintiff to replace certain parts of the lifts as follows:
“If the plaintiff had continued the maintenance for the lifts in question, replacement of the quoted items would not be necessary as the lifts were still in safe working order. The work items quoted were not mandatory under Cap 618 nor Code of Practice for Lift Works and Escalator Works. In addition, they were not required by the maintenance contract at that moment.”
22. Again, I am of the view that if the defendant’s expert considered that the Code of Practice would prove that the opinion of the plaintiff’s expert was wrong, he would have pointed that out in the joint experts’ report, and expressly referred to the relevant part of the Code of Practice therein. However, the defendant’s expert did not do that.
23. As far as the other documents are concerned, as aforesaid, they were not even referred to by the experts.
24. Mr Ng referred this court to sections 147 and 151 of the Lifts and Escalators Ordinance. Section 147 provides, among other things, that the Code of Practice is admissible as evidence in civil proceedings. On the other hand, section 151 stipulates that a document purporting to be given or issued by the Director of Electrical and Mechanical Services is admissible in evidence, and is evidence of the facts stated in it in the absence of evidence to the contrary.
25. In my view, these sections cannot assist the defendant, because the fact that those documents are admissible does not mean that the court is bound to accept such evidence. In the present case, Mr Ng simply cannot satisfy this court that the new documents are relevant in this action, in the light of the joint experts’ report.
26. Even if the new documents are relevant, this application has been made far too late.
27. In the case of Chu Hsiao-Chiu alias Chu Tony Chu Hsiao Chiu alias Chu Hsiao Chiu, deceased v Ma Jinrui & Another [2020] HKCFI 942, in which the plaintiff sought leave to file two affidavits in opposition to various applications taken out by the defendants at a very late stage, Coleman J. had the following to say:
“18. It is well-established in the ‘post-CJR era’ that the underlying objectives emphasise not only substantive but also procedural fairness. Therefore, late or last-minute applications trigger the Court’s expectation that the applicant will provide a full account of the lateness of the application, and full justification as to why the application should be entertained at all at such a late stage.
19. There is no longer room for the notion that delay, even though inordinate and unexplained, will be forgiven as long as there is no prejudice and costs are paid. Courts should take into account that there may be an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Further, the vacation or adjournment of the hearing occasioned by last-minute applications may mean the loss of the hearing day which could have benefited other litigants, and inefficiencies in the use of Court time, which is a public resource. Hence, late applications can be dismissed on the basis of lateness alone.”
28. I have not lost sight of the fact that this authority concerned the filing of affirmations. However, I cannot see why the same principle should not be applicable to the present case, as the defendant herein is also trying to rely on new materials at the last minute.
29. Mr Ng attempted to distinguish the above authority by pointing out that the lateness was unexplained therein, whereas the defendant’s solicitor herein had explained why this application was made so late. In Cheung Sze Mei Amy’s Affirmation filed on 2 June 2021, she explained in paragraph 14:
“The subpoenas were granted a few days into April 2021 (one day before PTR). Since then and before the Defendant sought the Plaintiff’s consent to have the above items adduced on 27 May 2021, the Defendant had to consider the candidate for counsel, confirm brief for trial, arrange meeting (which required the liaise of diaries of our handling solicitors, counsel, and expert), and identify and obtain such less serious entries that were contained together with all other entries relating to the everyday operation of a hotel in the voluminous Defendant’s Occurrence Book (which was more arduous when such entries were made some 4 years ago). All these were done within 2 months.”[10]
30. With respect, I have no hesitation in rejecting these explanations. It is not an acceptable excuse to say that the handling solicitor was so busy that she had no time to prepare the case properly on behalf of her lay client. In any event, such explanations only sought to explain why the handling solicitor was so heavily engaged that she had no time to deal with this matter in the last 2 months. If the documents issued by EMSD are “directly relevant for determining the issues in dispute and necessary for disposing of the matter fairly”[11], there is no explanation as to why they could not be produced earlier. It must be borne in mind that Messrs. Zebra H. Y. Kwan & Partners had been the defendant’s legal representatives in this action since the defendant’s Acknowledgement of Service was lodged on 2 May 2018. The defendant’s list of documents was filed on 27 December 2018, the witness statements herein were exchanged on 26 November 2019 and the joint experts’ report was lodged on 19 May 2020. Solicitors acting for the defendant should have considered what documents should be produced in support of the defendant’s case along the way while the aforementioned steps were taken and they had had plenty of time in gathering relevant documents for this purpose. I hold the view that it is inexcusable for them to leave such work until last minute.
31. In the course of his argument, Mr Ng asked this court to allow the admission of the new documents on de bene esse basis. I cannot accept this suggestion, because the question is not only about whether the documents are relevant. The undue delay on the part of the defendant to produce these documents is also fatal. As pointed out by Ms Moy, the plaintiff did not even know which part of those new documents would be relied on by the defendant. Even if Mr Ng supplied a list of references there and then (which he indeed proposed to do so in reply to Ms Moy’s submissions), as a matter of fairness, the plaintiff should be given adequate time to take further instructions. This will further delay the trial.
32. For the above reasons, the Summons was dismissed.
THE DEFENDANT’S REPEATED APPLICATION TO ADDUCE NEW EVIDENCE
33. In the course of the cross-examination of Mr Chan Tak Wah, the plaintiff’s director and General Manager, Mr Ng asked a series of questions on whether the lift engineers and lift workers sent by the plaintiff to provide lift maintenance services to the defendant during the contractual periods were registered with the EMSD. Having done so, Mr Ng made another application for leave to disclose 4 pages of search records of registered lift workers and engineers.
34. While Mr Ng frankly admitted that these records were included in the supplemental list of documents which this court refused to allow the admission thereof on the first day of the trial, he submitted that the situation had changed since then, because by the time he renewed the application, the plaintiff’s witness had given evidence on the registration of the plaintiff’s lift engineers and lift workers, and as a result of this “recent development”, it was necessary to have those 4 relevant pages of records placed before the court so that this issue on registration may be disposed of fairly.
35. The suggestion that there was a “recent development” was a very bold one, because this so-called “recent development” was self-created by the defendant’s counsel. It was undoubtedly his planned approach of cross-examination in asking Mr Chan questions on registration. The defendant’s counsel must have known well that he was not entitled to rely on the registration records in the trial when he started to ask questions on registration. In my view, this renewed application was squarely an abuse of the process of the court, for a similar application had been dismissed already by, among other things, the reason of lateness. It is indeed regrettable that counsel had adopted such an approach.
36. The defendant’s counsel relied on the well-known principles in Ladd v Marshall [1954] 1 WLR 1489 and submitted that this application should be allowed even if it were made after trial. With respect, I totally disagree with him, because the proposed new evidence is plainly not evidence which could not have been obtained earlier with due diligence. As he had rightly pointed out, the issues on competence of the plaintiff’s employees and on registration were raised in the pleadings. There is no acceptable reason why the proposed new evidence could not be disclosed earlier.
37. The renewed application was therefore dismissed.
THE PLAINTIFF’S CLAIM
The relevant timeframe
38. As aforesaid, the plaintiff claimed for the sum of $135,300 being the loss and damage suffered by the plaintiff due to the alleged repudiatory breach by the defendant in terminating the 2nd Agreement wrongfully. This amounts to 20.5 months[12] of the agreed monthly fees, at $6,600 per month.
39. It is undisputed that the parties had entered into the 2nd Agreement and that the defendant had indeed terminated the 2nd Agreement on 15 September 2017.
40. The question is whether the defendant was entitled to terminate the 2nd Agreement as it did.
41. In this regard, the defendant pleaded in the Defence and Counterclaim that:
“4. Paragraphs 9 to 11 of the Statement of Claim are admitted and the Defendant avers that the 2nd Agreement contained, inter alia, the following express terms in Chinese:
‘5. 乙方要對設備作全方位檢查，並提供有關的零件及人工對設備進行必要的修理，但不包括更換機箱LED照明、機箱風扇、人為故障造成的損壞。
6. 乙方提供每兩週一次的保養工作，並在發生停機或緊急事故時，提供24小時服務。
8. 在設備出現不正常情況時，甲方有責任馬上通知乙方。而乙方接通知後應盡快派員排除故障。’
5. The said express terms in paragraph 4 hereinabove providing to the effect that:
(a) Clause 5: The Plaintiff should conduct comprehensive inspection of the lifts and provide relevant parts and labour to carry out necessary repairs. Replacement of LED lightings of the lift cabs, elevator cab fans and damages caused by human errors are not included.
(b) Clause 6: The Plaintiff provides maintenance service in every two weeks and provides 24-hour service in the case of stoppage or emergency.
(c) Clause 8: Where abnormal condition of the equipment occurs, the Defendant is responsible to inform the Plaintiff immediately. Upon the notification by the Defendant, the Plaintiff should send staff to fix the issue as soon as possible.
6. The Defendant avers that the Agreement dated 28th May 2015 (‘the 1st Agreement’) and the 2nd Agreement (‘the Agreements’) were contracts for the supply of services, and the Plaintiff was a supplier within the meaning of Section 3 of the Supply of Services (Implied Terms) Ordinance (“the Ordinance’), Cap.457 of the Laws of Hong Kong. Pursuant to Section 5 of the Ordinance, it was an implied condition of the Agreements that the Plaintiff would carry out the lift maintenance service with reasonable care and skill.
7. The Defendant further avers that pursuant to Section 6 of the Ordinance, it was an implied condition of the Agreements that the Plaintiff would carry out the service within a reasonable time.
8. Save it is admitted that the Defendant gave notice to the Plaintiff to terminate the 2nd Agreement by a letter dated 15th September 2017 (‘the Notice of Termination’), paragraph 12 of the Statement of Claim is denied. The Defendant avers that the Notice of Termination was delivered to the Plaintiff by reason of the Plaintiff’s persistent breach of the express terms of the 2nd Agreement:
PARTICUALRS (sic) OF BREACH OF CONTRACT
(1) failing to provide competent technicians to carry out maintenance and repair service of the lifts;
(2) failing to inform and/or explain to the employees of the Defendant the repair works required and the progress of repair works;
(3) failing to ensure that the two lifts and their associated equipment and machineries were kept in a proper state of repair and in safe working order; and
(4) failing to provide technicians to the Defendant’s premises as soon as possible in cases of emergency.
9. Further or alternatively, the Plaintiff was in breach of the implied conditions of the Agreements under Section 5 of the Ordinance by failing to carry out the lifts maintenance service with reasonable care and skill, and Section 6 of the Ordinance by failing to carry out the lifts maintenance service within a reasonable time. The Defendant repeats sub-paragraphs 8(1) to 8(4) above.
10. As a result of the Plaintiff’s breach, there were recurrent malfunctions of the two lifts in the Defendant’s premises. For instance, false alarms of the overload warning system, sudden stoppage, irregular and uncontrolled ascending or descending movements of the lift cabs, uncontrolled opening and closing of lift doors, and uneven platforms between the interior of the elevator and the ground of the Defendant’s premises. These situations led to frequent closures of the lifts. Danger and inconveniences were caused to the Defendant’s employees and customers. The Defendant has suffered loss and damage.
11. Paragraph 13 of the Statement of Claim is denied. It is denied that the Defendant was in breach of the 2nd Agreement. The Defendant avers that the Plaintiff’s conduct of breach pleaded in paragraphs 8 and 9 hereinabove amounted to a repudiatory breach of the 2nd Agreement on part (sic) of the Plaintiff. The Defendant was entitled to elect to terminate the 2nd Agreement. The decision to terminate the 2nd Agreement was communicated to the Plaintiff by the Notice of Termination.”
42. I have set out the Defence and Counterclaim at great length above because, as it will be seen below, it is important to appreciate what exactly the defendant’s pleaded case was.
43. As far as the plaintiff’s claim is concerned, it is the defendant’s argument that it was entitled to terminate the 2nd Agreement because of the plaintiff’s breach as pleaded in paragraphs 8 and 9 of the Defence and Counterclaim.
44. In paragraph 8 of the Defence and Counterclaim, the defendant pleaded that the plaintiff had persistently breached the express terms of the 2nd Agreement.
45. In paragraph 9 of the Defence and Counterclaim, the defendant relied on the alleged breach of the implied terms of the “Agreements” on the part of the plaintiff. “Agreements” had been defined in the Defence and Counterclaim to include both the 1st Agreement and the 2nd Agreement. That means the defendant is arguing that the plaintiff’s breach of the 1st Agreement (which had expired on 31 May 2017) would give the defendant a right to terminate the 2nd Agreement (which only covered the period beginning from 1 June 2017).
46. In the course of the trial, I had already expressed my concern as to whether the plaintiff’s performance during the contractual period under the 1st Agreement would be relevant in deciding whether the defendant was entitled to terminate the 2nd Agreement prematurely, and had requested the defendant’s counsel to make submissions on this in his closing submissions with authorities in support.
47. The defendant’s counsel did not make any submission on this matter in his written closing submissions (the first round of written submissions exchanged after all evidence was called). He cited 3 cases only in his written reply submissions and “Defendant’s Note on Legal Issues” (which was dated the same date as his written reply submissions), namely, Farnworth Finance Facilities Ltd v Attryde [1970] 2 All ER 774, Pang Yau Shing Glendy v Sano Engineering Ltd (DCCJ 61/2013, unreported, 29 January 2016) and Auld Associate Ltd v Rick Pollard Associates & Another [2008] EWCA Civ 655.
48. Relying on Farnworth Facilities Ltd and Pang Yau Shing Glendy, he submitted that the plaintiff’s breaches should not be viewed in isolation but “in cumulation”, and they were “congeries of defects”.
49. The defendant’s counsel also referred this court to the case of Alan Auld Associate Ltd (in particular, paragraphs 15 to 17 thereof) and submitted that:
“In the same judgment, references were also made that particularly for maintenance contracts, the accumulation of past breaches is relevant, not only for its own sake, but also for what it shows about the future. It was correct to ask whether the cumulative breaches were such as to justify an inference that the contractor would continue to deliver a substandard performance.”[13]
50. In his oral closing submissions, the defendant’s counsel further relied on what Hale LJ stated in Rice (T/A The Garden Guardian) v Great Yarmouth Borough Council [2000] All ER (D) 902 which was quoted in Alan Auld Associate Ltd. The quoted paragraphs are as follows:
“The question for the court (and indeed the contracting parties) in a case like this is whether the cumulative effect of the breaches of contract complained of is so serious as to justify the innocent party bringing the contract to a premature end. The technical term is ‘repudiatory’ but that is just a label to describe the consequence which may flow. It is not always an entirely satisfactory label, if it implies that the conduct itself must always be such as to demonstrate an intention to abandon contractual obligations: while this will sometimes be so it is not
an invariable requirement. As the judge indicated there are in effect three categories: (1) those cases in which the parties have agreed either that the term is so important that any breach will justify termination or that the particular breach is so important that it will justify termination; (2) those contractors who simply walk away from their obligations thus clearly indicating their intention no longer to be bound”
“those cases in which the cumulative effect of the breaches which have taken place is sufficiently serious to justify the innocent party in bringing the contract to a premature end. It is clear that the test of what is sufficiently serious to bring the case within the third of these categories is severe.”
“These contracts are like building contracts in that the accumulation of past breaches is relevant, not only for its own sake, but also for what it shows about the future. In my view, the judge was right to ask himself whether the cumulative breaches were such as to justify an inference that the contractor would continue to deliver a substandard performance.”
51. I do not think there can be any dispute that repeated breaches of a contract may, depending on the circumstances, constitute repudiatory breach of that contract. However, it should be noted that the past breaches referred to in the Alan Auld Associate Ltd case were all committed in the course of the contract which the innocent party terminated. The facts in Farnworth Facilities Ltd and Pang Yau Shing Glendy are also different from those before this court in that in those cases, the court was only concerned with one contract.
52. Similarly, the only legal proposition I can find in what was said by Hale LJ in Rice (T/A The Garden Guardian) as quoted above which may be relevant to this action is that cumulative breaches of a contract may justify an innocent party to terminate the contract prematurely. However, there is no discussion to the effect that the breach of one contract would provide a ground for the termination of another contract.
53. Hence, insofar as it is the defendant’s argument that the cumulative breaches of the 1st Agreement would justify the defendant’s termination of the 2nd Agreement, this must be rejected. I cannot accept that the cumulated breaches of a contract can provide any ground to terminate another contract.
54. It is therefore my view that the court should only take into account the alleged breach on the part of the plaintiff during the period of the 2nd Agreement when considering whether there was repudiation thereof by the plaintiff.
Alleged breach of the 2nd Agreement
55. To recap, the defendant has pleaded in paragraph 8 of its Defence and Counterclaim that the plaintiff had breached the 2nd Agreement in the following way:
(1) failing to provide competent technicians to carry out maintenance and repair service of the lifts;
(2) failing to inform and/or explain to the employees of the Defendant the repair works required and the progress of repair works;
(3) failing to ensure that the two lifts and their associated equipment and machineries were kept in a proper state of repair and in safe working order; and
(4) failing to provide technicians to the Defendant’s premises as soon as possible in cases of emergency.
56. It was also alleged by the defendant that, by reasons of the failures referred to above, the plaintiff had breached the express and implied terms of the Agreements.
57. As far as the express terms are concerned, the defendant relied on the following terms in the 2nd Agreement:
‘5. 乙方要對設備作全方位檢查，並提供有關的零件及人工對設備進行必要的修理，但不包括更換機箱LED照明、機箱風扇、人為故障造成的損壞。
6. 乙方提供每兩週一次的保養工作，並在發生停機或緊急事故時，提供24小時服務。
8. 在設備出現不正常情況時，甲方有責任馬上通知乙方。而乙方接通知後應盡快派員排除故障。’
58. For implied terms, the defendant pleaded that the plaintiff should carry out the lift maintenance service with reasonable care and skill and that the plaintiff should carry out the service within reasonable time. However, it should be noted that under paragraph 9 of the Defence and Counterclaim, the defendant had relied on the same particulars (those pleaded in sub-paragraphs 8(1) to 8(4) of the Defence and Counterclaim) which were pleaded to support the allegation that the plaintiff had breached the express terms of the 2nd Agreement. Therefore, the same allegations of failures would have to be analysed for the purpose of considering whether they provided the defendant with any valid basis to terminate the 2nd Agreement pre-maturely.
59. With the above in mind, I will now consider the alleged “4 failures” in turn below.
Failing to provide competent technicians to carry out maintenance and repair service
60. In the Table of Particulars, the defendant had included 3 dates on which it was alleged that the plaintiff had failed to provide competent technicians to carry out maintenance and repair service, namely 29 October 2015, 12 April 2016 and 28 March 2017.
61. All those 3 dates fall within the contractual period under the 1st Agreement. As it is my ruling that any breach of the 1st Agreement would not provide any valid ground for the defendant to terminate the 2nd Agreement, it is unnecessary to discuss this alleged breach further.
Failing to inform and/or explain to the employees of the Defendant the repair works required and the progress of repair works (“the Ground of Failure to Inform and/or Explain”)
62. Before this court considers whether there was any breach of the 2nd Agreement in relation to this complaint, it should first be decided whether there was any obligation on the part of the plaintiff to inform and/or explain to the employees of the defendant the repair works required and the progress of repair works.
63. I have difficulty to understand how it could be said that the plaintiff was in breach of Clause 5, 6 or 8 of the 2nd Agreement by reason of its alleged failure to inform and/or explain to the defendant the repair works required and the progress of repair works. There is nothing in the said clauses which requires the plaintiff to inform and/or explain. Those clauses only require the plaintiff to maintain and repair the lifts.
64. What about the implied term?
65. As can be seen from the Defence and Counterclaim quoted in the earlier part of this Judgment, the defendant has actually not pleaded that there was an implied term in the 2nd Agreement that the plaintiff had to inform and/or explain. The only pleaded case is that given the plaintiff was a supplier of services, and that the 2nd Agreement was a contract for the supply of services, there was an implied term that the plaintiff would carry out the service with reasonable care and skill by virtue of section 5 of the Supply of Services (Implied Terms) Ordinance (Cap.457, Laws of Hong Kong). In this regard, Mr Ng submitted that:
“Coupled with the pleaded implied conditions under the Supply of Services (Implied Terms) Ordinance (Cap.457), it is a condition of the Agreements that the Plaintiff shall undertake with reasonable care and skill the works of the subject lifts and their associated equipment or machinery to keep them in safe working order, including inspection, cleaning, oiling, adjusting, repairing, replacement and alteration – with respect to any component, device, equipment or machinery for, of or connected with the lifts.”[14]
66. It can be seen that even in the defendant’s own description of the coverage of the implied term, there is nothing which requires the plaintiff to inform and/or explain to the employees of the defendant the repair works required and the progress of repair works.
67. That being the case, this complaint is bound to fail.
68. Be that as it may, I will say a few words on the particulars provided by the defendant in the Table of Particulars in relation to this complaint.
69. In the Table of Particulars, as far as the contractual period under the 2nd Agreement is concerned, the defendant had provided the following dates as particulars: 10 June 2017, 11 June 2017, 17 June 2017, 26 June 2017, 28 June 2017, 5 July 2017, 30 July 2017 and 31 July 2017.
70. Out of the above dates, the plaintiff’s director, Mr Chan Tak Wah, was only cross-examined in relation to the entries of the defendant’s Occurrence Books of 3 dates, namely, 10 June 2017, 11 June 2017 and 17 June 2017. Judging from the approach of Mr Ng’s cross-examination, it seems the complaint was that while there were problems with one of the two lifts on those days, the investigation/repair work undertaken by the plaintiff’s engineer or worker was not recorded in the logbook which the plaintiff was obliged to fill in every time when lift work was done. Indeed, in paragraph 135.10 of his reply submissions, Mr Ng summarised one of the alleged breaches on the part of the plaintiff as:
“The Plaintiff did not enter the mandatory entries into the Logbook in respect of the failures, incidents and the results of examinations.”
71. I must make it clear that insofar as it is submitted that the failure on the part of the plaintiff to fill in Logbook amounts to a breach of the Ground of Failure to Inform and/or Explain, this submission is rejected. If the defendant was minded to rely on any failure on the part of the plaintiff to fill in the Logbook as a ground to terminate the 2nd Agreement, such a ground should have been clearly pleaded in the Defence and Counterclaim. I refuse to consider any grounds which have not been properly pleaded.
72. The same applies to the defendant’s complaint that “The plaintiff did not render any advice to the defendant about any item that required replacement for remedying the lift malfunctions”[15]. I reject Mr Ng’s submission that this is caught by the Ground of Failure to Inform and/or Explain.
Failing to ensure that the two lifts and their associated equipment and machineries were kept in a proper state of repair and in safe working order (“the Ground of Failing to Maintain”)
73. In the Table of Particulars, the defendant had given the following dates in support of the Ground of Failing to Maintain: 6 June 2017, 10 June 2017, 11 June 2017, 12 June 2017, 17 June 2017, 26 June 2017, 28 June 2017, 5 July 2017, 30 July 2017 and 31 July 2017 (dates falling within the contractual period of the 1st Agreement are disregarded here for the reasons explained above).
74. In the Occurrence Book which was filled in by the security guards engaged by the defendant, it was recorded that there were a number of problems with lift No.1 of the Hotel on the aforesaid days, namely, false alarm of the overload warning system, sudden stoppage, irregular and uncontrolled ascending or descending movements of the lift cab and uncontrolled opening of the lift doors.
75. It appears from the Occurrence Book that the main problem of the said lift No.1 in the month of June 2017 was that there were repeated false overload alarms. Whenever there was such false alarm, the lift stopped operating. While the lift resumed normal operation after the plaintiff’s technician had reset the electronic board on 6 June 2017, the false alarm went off again on 10 June 2017, 11 June 2017, 12 June 2017, 17 June 2017 and 26 June 2017.
76. On 26 June 2017, there was a false overload alarm at lift No.1 again. The plaintiff’s technician arrived at the scene and repaired the lift. However, the alarm sounded again 5 minutes after the technician had left. The lift resumed normal operation after it was “reset”.
77. The same problem did not arise again thereafter.
78. According to the Occurrence Book, the lift also went out of order on 28 June 2017 and 30 – 31 July 2017.
79. The malfunction of the lift on 28 June 2017 and 30 – 31 July 2017 can be dealt with quickly. It is evident that the lift resumed normal operation after repair work had been done by the plaintiff’s technician. I cannot see how it can be said that the plaintiff had failed its duty pursuant to the 2nd Agreement.
80. The problem caused by the false alarms is a bit more complicated. There were indeed false alarms for a number of times in the month of June 2017. It is also true that it seems that the false alarm problem only subsided after nearly 3 weeks[16]. However, I bear in mind that the defendant bears the burden in proving that the plaintiff had failed to maintain the lift properly, and it is not enough for the defendant to show that there were malfunctions per se. In the present case, the defendant has not adduced any evidence to prove that it was because of the plaintiff’s breach of duty rather than any other factor beyond the control of the plaintiff that the alarm went off repeatedly in the way it did.
81. I have not forgotten that the defendant has called an expert, Mr Ricky Cheng, to give evidence in court. However, Mr Cheng did not give any opinion specifically in relation to the false alarms in his 2 expert reports. He only stated generally that there was ageing problem with the lifts when he gave his opinion on the need to replace certain parts of the lifts while he was cross-examined.
82. However, I do not agree that such evidence is enough for the defendant’s purpose for the following reasons:
(1) I hesitate to accept Mr Cheng’s expert evidence on the necessity to make certain replacement of different parts of the lifts because it is apparent that his opinion was largely based on the fact that it was Sigma’s recommendation that the replacements were necessary, rather than his independent opinion on the matter (see further below);
(2) If the false overload alarm was really caused by the “ageing” parts of the lift, I would have thought the false alarm problem would not go away until such ageing parts had been replaced. However, as aforesaid, there is no evidence showing that the problem did arise again after 26 June 2017[17]. Further, according to Madam Sit Po Ling (a former security officer of the defendant), after Sigma had taken up the lift maintenance role from the plaintiff on 15 September 2017, there was basically no malfunction[18]. She then clarified that there was no malfunction in the first month since Sigma had become the service provider, and the lifts only went out of order once in every 2 to 3 months. Mr Ng for the defendant also accepted in his closing submissions that both Madam Sit and Mr Tong (Project Manager of the defendant) stated that “since Sigma took over the maintenance works from the plaintiff, there had been no malfunction basically except with some very minor issues”[19]. However, it should be borne in mind that according to the evidence of Mr Timothy Fung (a salesperson of Sigma who was the person in charge of matters relating to the quotation dated 19 May 2017 issued by Sigma to the defendant (“the Quotation”)), lift parts were only replaced within 3 to 6 months after Sigma had taken over the maintenance work. In other words, the lifts had no malfunction problem even though no part thereof had been replaced by Sigma yet.
83. Under the above circumstances, I am not satisfied that the defendant has discharged its burden to prove the Ground of Failing to Maintain.
Failing to provide technicians to the defendant’s premises as soon as possible in cases of emergency
84. According to the Table of Particulars, the only date in respect of which the defendant alleged that the plaintiff had breached the 2nd Agreement under this ground is on 6 July 2016. That was within the contractual period of the 1st Agreement and therefore, in my view, is irrelevant for our purpose.
85. Even if this complaint is in relation to a date which fell within the contractual period under the 2nd Agreement, I would have no hesitation in rejecting this ground.
86. In the Occurrence Book, it was stated in an entry dated 6 July 2016 that:
“致電捷高����公司派員到本店，有人被困在����內公司職員回復(sic)，師傅在九龍工作中可能未可在30分鐘內到達開����，叫我致電消防署協助先”
87. It may well be because of this entry that Mr Ng for the defendant somehow assumed that there was a requirement that the plaintiff’s technicians must arrive in the Hotel within 30 minutes after being notified. However, with greatest respect, Mr Ng had provided absolutely no basis, apart from Mr Chan’s evidence which I will deal with below, for justifying his case on this 30-minute limit.
88. Mr Ng had drawn my attention to Mr Chan’s admission during cross-examination that lift contractors have to arrive at the scene within 30 minutes. That is indeed his evidence. However, it is unclear whether this was a standard which was imposed by Mr Chan on his own company himself or whether this was a statutory requirement. Even if it was the latter, it was never pleaded in the Defence and Counterclaim. The only complaint that the defendant made in this aspect of the case was that the plaintiff had failed to provide technicians to the defendant’s premises as soon as possible in cases of emergency. It was never alleged that “as soon as possible” means “30 minutes”.
89. On the other hand, it was the evidence of the plaintiff’s expert, Mr Lee Kwok Li, that there was no statutory provision or guideline which stipulated that a lift maintenance contractor had to arrive at the scene within 30 minutes upon notice where there was someone being trapped in a lift. The defendant’s expert did not contend otherwise.
90. According to the Occurrence Book, the plaintiff’s technician did arrive in the Hotel at 6:25pm on 6 July 2016 (i.e. 42 minutes after 5:43pm when the defendant called the plaintiff). It cannot be said that the plaintiff’s technicians did not arrive “as soon as possible” as required under the 2nd Agreement.
91. This ground therefore fails anyway.
Other complaints
92. In the course of his cross-examination and in his submissions, the defendant’s counsel had raised a lot of complaints other than those referred to above. For example, it was alleged that the plaintiff did not ensure that there was adequate “equipment and tools”[20], that the plaintiff did not enter the mandatory entries into the Logbook in respect of the failures, incidents and the results of examinations, that the plaintiff did not report “reportable lift incidents” to the EMSD and that the plaintiff did not render any advice to the defendant about any item that required replacement for remedying the lift malfunctions, etc. In his closing submissions, the defendant’s counsel also referred to a number of statutory provisions and suggested that the plaintiff had not complied with certain statutory requirements under the Lifts and Escalators Ordinance (Cap.618) and the Lifts and Escalators (General) Regulations (Cap.618A)[21]. These complaints have not been pleaded in the Defence and Counterclaim at all.
93. With greatest respect to the defendant’s counsel, he had raised the above in total disregard of the issues as defined by the pleadings. He had attempted to advance the defendant’s case as if he could do it freely without restrictions. As explained time and again by numerous authorities, this is simply not the acceptable approach. I have already referred to the reminder given by Chief Justice Ma in the Court of Final Appeal case of Kwok Chin Wing above, and I think I need not quote any other reminders and warnings given by other Judges. The rule is trite.
94. I therefore refuse to consider the aforesaid unpleaded matters.
Conclusion on liability
95. Given my finding that the defendant did not have any valid ground in terminating the 2nd Agreement pre-maturely, the defendant’s early termination of the 2nd Agreement amounted to a repudiatory breach thereof, which was accepted by the plaintiff by letter dated 19 September 2017.
Quantum
96. The defendant’s counsel submitted that the plaintiff has failed to prove its damages even if it was the innocent party. In his own words:
“15. On the other hand, even if the Plaintiff is to be held innocent, the Plaintiff is only allowed to claim damages but not the contract sum in this case. This is so despite the Plaintiff was delivering professional services. The only remedy is to sue for damages and not for the contract sum if the contract is unable to be completed without the cooperation of the other party [See Chitty (33rd Edition), at §24-010].
16. Here, the Maintenance Works under the Agreements could only be completed in the Hotel, if not the lift shafts of the Hotel. The Plaintiff was unable to complete the contract without the Defendant’s cooperation.
17. This is not to absurdly suggest that the Plaintiff would not be entitled to any remedy at all. The application means the Plaintiff would still be entitled to damages, but not the contract sum. However, the Plaintiff did not prove the loss for the damages. There is no evidence whatsoever at all in this respect.
18. The Plaintiff’s reliance on the Ryoden is of assistance to its case. In that District Court case, it concerned a self-induced frustration. There was no discussion on the available remedy where performance requires the cooperation of the other party.
19. Alternatively, the Plaintiff may claim the contract sum if it was stipulated that the contract sum would become payable irrespective of the performance of its outstanding obligations [See Chitty (33rd Edition), at §27-002]. Again, the Plaintiff was in repudiatory breach of the Agreements to begin with and there is no liability on the Defendant’s part before going into quantum. In any event, as a matter of fact-finding, the Plaintiff did not prove any loss whatsoever for the damages.”[22]
97. With greatest respect, these arguments are totally misconceived.
98. Firstly, while the plaintiff is indeed suing for $135,300 which is equivalent to the contractual sum for the remaining period of the 2nd Agreement, it is clear from the Statement of Claim that the plaintiff is suing this sum as damages rather than as a debt.
99. Secondly, I totally disagree that the plaintiff has not adduced evidence on its loss: There is undisputed evidence on the term of the 2nd Agreement (which was in fact admitted in the Defence and Counterclaim). It is also common ground that the defendant has not paid the plaintiff the agreed monthly fee of $6,600 in respect of any period after the termination of the 2nd Agreement on 15 September 2017.
100. Thirdly, it is trite that if the defendant has any positive challenge against the plaintiff’s claim, the defendant has to plead such challenge expressly. In Wang Ruiyun v Gem Global Yield Fund Ltd. [2011] 3 HKLRD 785, it had been held that:
“29. Order 18 Rule 12(1)(c) of the Rules of High Court provides that
‘12.—(1) Subject to paragraph (2), every pleading must contain the necessary particulars of any claim, defence or other matter pleaded including, without prejudice to the generality of the foregoing—
(a) –
(b) –
(c) where a claim for damages is made against a party pleading, particulars of any facts on which the party relies in mitigation of, or otherwise in relation to, the amount of damages.’
30. By this Order it is incumbent on the defendant, in order to be more informative about its defence to state the grounds on which it intends to contest the amount of damages by giving particulars of all the facts on which it relies to support any such ground as, for example, in mitigation of or otherwise in relation to, the amount of damages. The burden is cast on the defendant to plead and prove the facts it relies on to support any positive case to contest the amount of the damages claimed. In accordance with the policy of openness in pleading, the rule is expressed in general terms, so that the rule will apply to a plea in mitigation, and also apply to any ground on which it is open to the defendant to contest the amount of damages.”
101. The defendant has not pleaded any positive case in its Defence and Counterclaim as such.
102. Lastly, on the case of Ryoden Lift Services Limited v The Incorporated Owners of Rialto Mansion (DCCJ 36/2005, unreported, 17 June 2009), I do not understand why Mr Ng had to highlight in paragraph 18 of his “Note on the Legal Issues” the ground of frustration relied on by the defendant in that case, for such a defence had been rejected by the court. No matter what defence was raised, the court’s finding was that there was wrongful termination of the lift maintenance agreement on the part of the defendant therein. While this is not a case which is binding on me, I totally agree with what was held by His Honour Judge Simon Leung in that case:
“41. The prima facie measure of damages for wrongful termination of a contract for professional service is the contract price. Upon termination of the contract, the duty of mitigation arises and the claimant is therefore obliged to place his service on the market, but the onus is on the defendant to show that the claimant has or should have obtained an alternative employment: see McGregor on Damages (17th ed) at 28-002.”
103. By reasons of the above, it is my finding that the plaintiff is entitled to damages in the sum of $135,300.
THE DEFENDANT’S COUNTERCLAIM
The counterclaim as pleaded
104. The defendant’s counterclaim (as pleaded) is that by reason of the plaintiff’s breaches of the Agreements, the defendant had to engage Sigma to remedy the defects of the 2 lifts of the Hotel after the 2nd Agreement had been terminated. The particulars, as pleaded in the Defence and Counterclaim, were as follows:
| Particulars |
| Cost of engaging another service provider, SIGMA Elevator (HK) Limited, to carry out inspection and repair works to remedy the defects of the two lifts: |
| (i) |
Lift 1 |
HK91,800 |
| (ii) |
Lift 2 |
HK$145,200 |
|
Total after discount: |
HK$213,300 |
Basis of the Counterclaim
105. The counterclaim was made on the basis of the Quotation. It reads as follows:
“Thanks for your invitation regarding the lift maintenance service of your premise, we could provide you the comprehensive maintenance after clean up all the defects below:
Contract type: Comprehensive maintenance (全保)
Monthly price: HK$6,500
Contract period: 15 September 2017 – 14 September 2018
Scope of Works:
| Item |
Work description |
Unit price |
Qty |
Total price |
| 1 |
TOCI |
3000 |
1 |
3000 |
| 2 |
Double brake |
15000 |
1 |
15000 |
| 3 |
Stack |
40000 |
1 |
40000 |
| 4 |
Landing door lock 0021 |
1300 |
20 |
26000 |
| 5 |
Alarm |
800 |
1 |
800 |
| 6 |
Man-day |
1400 |
5 |
7000 |
L1: HK$91,800
| Item |
Work Description |
Unit price |
Qty |
Total price |
| 1 |
TOCI |
3000 |
1 |
3000 |
| 2 |
Double brake |
15000 |
1 |
15000 |
| 3 |
Stack |
40000 |
1 |
40000 |
| 4 |
Main Wire Rope 12mm x 4 x 80M |
190 |
320M |
60800 |
| 5 |
Landing door lock 0021 |
1300 |
10 |
13000 |
| 6 |
Alarm |
800 |
1 |
800 |
| 7 |
Man-day |
1400 |
9 |
12600 |
L2: HK$145,200
Total cost (L1 + L2) : HK$237,000
Special offer : HK$213,300
[…]”
Whether replacement costs had been incurred
106. It is the defendant’s case that Sigma had indeed undertaken the above work pursuant to the Quotation, and the defendant had paid Sigma $213,300 accordingly. Ms Moy for the plaintiff queried whether the work had really been done, because the defendant had not even produced any receipt in support of its payment to Sigma.
107. It is indeed strange that the defendant, which was all along legally represented, would fail to disclose any documentary proof in support of its case that it had paid Sigma for $213,300. Mr Tong (Project Manager of the defendant) could not give any plausible explanation as to why he did not produce the receipt in this action. He said that if at the end of the day the defendant succeeded in this action, the defendant could provide the receipt. It goes without saying that this approach is not acceptable at all.
108. Having said that, since I accept Mr Timothy Fung’s evidence that the work stated in the Quotation had indeed been done (as he seems to me to be a witness who does not have any interest in the outcome of this action despite the fact that he is still employed by Sigma, which in turn is still a lift maintenance contractor for the defendant), I am of the view that it is more likely than not that the defendant had paid Sigma accordingly.
Discussion – generally
109. Even if the defendant had indeed incurred the expenses under the Quotation, in my view, the defendant cannot succeed in its counterclaim unless it can establish that there were indeed defects in the parts mentioned in the Quotation and that the plaintiff had failed to replace those parts free of charge for the defendant. In this regard, it is important to bear in mind Clause 5 of the Agreements which reads:
“乙方要對設備作全方位檢查，並提供有關的零件及人工對設備進行必要的修理，但不包括更換機箱LED照明、機箱風扇、人為故障造成的損壞。” (emphasis added)
110. Again, the burden is on the defendant to prove the necessity of replacement of the relevant parts.
111. The defendant’s expert, Mr Cheng, had given the following opinion on the necessity of the work done pursuant to the Quotation in the joint experts’ report:
“The replacement works of (1) TOCI; (2) Double Brake; (3) Stack; (4) Main Wire Rope; (4) Landing Door Lock; and (5) Alarm were carried out for the safety and stability of the lift operations. While the necessity depends on the individual facts of each case and the nature of building use, such as hotel serving guests of various countries, the circumstances are that (1) the devices and parts are ageing (as agreed by the Plaintiff’s expert); (2) the maximum rope reduction was 9.17%, which reached the marginal criteria for replacement of 10% (as agreed by the Plaintiff’s expert); and (3) the high frequency of lift malfunctions. In light of the circumstances, the replacement works would undoubtedly improve the safety and stability of the lift operations. This is shown by the substantial improvement of the lift operations after the replacement works had been carried out by the original manufacturer, Sigma Elevator (HK) Ltd. However, even with the repeated complaints and reports of malfunction incidents, there has been no such advice made by the Plaintiff to the Defendant at all.”
112. On the other hand, Mr Lee, the plaintiff’s expert, opined that there was no need to do the replacement work. After opining on the items individually (which I will discuss further below), he came to the following views in the joint experts’ report:
“Lee’s examination of the logbook (Exhibit I), examination reports (Exhibit II), rope photos (Exhibit III) revealed that all the so-called ‘defects’ were not defects of the Plaintiff’s maintenance work under the contract. The lifts were still in safe working order even without clearing of any of such defects if the Plaintiff had been permitted to continue the lift maintenance work after 15-9-2017. In other words, the defects were not necessary to keep the lifts in safe working order but only helped to substantially minimize the costs of subsequent maintenance works, particularly in the following 4 to 5 years at least […]”
113. I prefer the expert opinion of Mr Lee over that of Mr Cheng for the following reasons:
(1) While Mr Lee has been a registered lift and escalator engineer since February 1993, Mr Cheng has never been so registered;
(2) Mr Lee has had abundant experience in giving lectures in relation to lift operations and safety for a number of institutions such as HKU SPACE, Hong Kong Polytechnic University, Vocational Training Council, Lift & Escalator Contractor Association, etc. I am of the view that these are recognitions of those institutions of Mr Lee’s expertise in the field. While Mr Cheng also stated that he had taught in IVE for 15 to 16 years, according to him, the courses which he taught were about electricity system. It was said that that included electricity system of lifts. With respect to Mr Cheng, Mr Lee’s experience is much more relevant as far as this case is concerned.
(3) Taking into account all the qualifications and working experience of the two experts, I am of the view that Mr. Lee is much more specialised in lifts than Mr Cheng.
(4) As I have mentioned before, it had been shown by a number of answers given by Mr Cheng in court that he did not exercise independent judgement when he gave his expert opinion, but simply supported the necessity of the work proposed in the Quotation by reason of the fact that those pieces of work were considered necessary by Sigma.
(5) There are problems with Mr Cheng’s expert opinion quoted above:
(i) It is not enough for the defendant to prove that the replacement of the parts would “improve the safety and stability of the lift operations”. This is not the test, as the plaintiff was only responsible to 提供有關的零件及人工對設備進行必要的修理 pursuant to Clause 5 of the Agreements.
(ii) Mr Cheng referred to the maximum rope reduction of 9.17%, and stated that in his view, it had reached the marginal criteria for replacement of 10%, and he therefore supported that the main wire rope should be replaced. First of all, as he accepted in court, even if the main wire rope had a reduction of 9.17%, it had still not reached “臨界點” (a term which Mr Cheng used in court), and secondly, he had made a mistake in that the figure of 9.17% was actually the maximum reduction rate of the main wire rope of lift No.1 of the Hotel. There is no dispute that the main wire rope of lift No.1 had already been replaced by the plaintiff before the 2nd Agreement was terminated, and what Sigma proposed to replace was the main wire rope of lift No.2. Such a mistake, in my view, cast doubt on the reliability of Mr Cheng’s evidence.
(iii) When Ms Moy pointed out to Mr Cheng that in fact the maximum wire rope reduction of lift No.2 was only 6.67% which was far from 10%, Mr Cheng still maintained that Sigma’s recommendation should be followed. However, he could not identify any positive reason why that should be so. As he admitted, he did not even know what Sigma’s examination of the main wire rope of lift No.2 revealed. This shows that he did not give his expert opinion impartially.
(iv) Furthermore, one of the matters relied on by Mr Cheng in justifying the replacement of the parts under the Quotation was that he thought there was substantial improvement of the lift operations after the replacement works had been carried out by Sigma. In other words, it seems that he thought that lifts problems were only solved upon the replacement of the said parts. However, it is evident that this was as a matter of fact not the case. According to Madam Sit, there was no malfunction of the lifts at all in the first month after Sigma had taken over the maintenance work, and there was only one occasion of malfunction every 2 to 3 months thereafter. Mr Ng for the defendant also accepted in his closing submissions that both Madam Sit and Mr Tong stated that “since Sigma took over the maintenance works from the plaintiff, there had been no malfunction basically except with some very minor issues”[23]. However, Mr Fung told the court that the replacement work was not done immediately after Sigma had taken over on 15 September 2017. It was only done in the period between 3 to 6 months after 15 September 2017. In other words, there was no problem with the lifts at all even before the replacement work was done.
114. If the undisputed fact is that the lifts operated without any problem even without any replacement of the alleged defective parts thereof, I am of the view that the defendant has failed to prove that the plaintiff had breached the Agreements in failing to replace those parts for the defendant. This objective fact coincides with Mr Lee’s expert opinion as quoted above.
115. The above should be adequate in dealing with the defendant’s counterclaim as pleaded in the Defence and Counterclaim. Insofar as it is necessary, I would discuss below the individual items which had been replaced pursuant to the Quotation.
Discussion – individual items
TOCI
116. According to Mr Fung, the lifts of the Hotel being very old lifts, they did not have TOCI (Top-of-Car-Inspection Box) installed at all when they were manufactured. It was only after the installation of the lifts that EMSD issued guidelines recommending that TOCI be installed to the lifts which were already in operation so as to protect lift workers’ safety.
117. The defendant’s expert, Mr Cheng, also accepted that TOCI was not installed in lifts which were 20 odd years old, and that the lifts at the Hotel were indeed installed 20 odd years ago.
118. If TOCI was not something which was already there when the plaintiff entered into the Agreements, in my view, the plaintiff could not be under any obligation to install such a new part free-of-charge for the defendant, as this would amount to an upgrade of the lifts. I take the view that this is not covered by Clause 5 of the Agreements.
119. The defendant’s counterclaim for installing TOCI is therefore bound to fail.
Double brake
120. It is also Mr Fung’s evidence that there was no “double brake” installed when the lifts of the Hotel were manufactured, and that it was only a guideline issued by the EMSD (as opposed to a legal requirement) that double brake should be installed to old lifts.
121. This being a newly added item, it is an item for upgrade rather than an item of repair, and the plaintiff should not be responsible pursuant to Clause 5 of the Agreement for installing this for the defendant free-of-charge at all.
122. Hence, like TOCI, this cannot be an item of costs which the defendant can recover from the plaintiff in any event.
Stack
123. Mr Lee gave the following expert opinion in the joint experts’ report as follows:
“This electronic equipment should be one of the components of the driving system for each of the lifts in question. As the lifts were still in safe working order at the end of the contract period, replacement of this equipment should not be necessary. If the Plaintiff had continued to carry out the maintenance, no replacement of this component should be necessary at that moment for keeping the lifts in safe working order.”
124. On the other hand, Mr Cheng considered it necessary to have the stack replaced, because stack was related to the “平層問題”.
125. According to the Table of Particulars, the defendant only pleaded 3 days on which it was alleged that there was “平層問題”, namely, on 10 July 2016, 11 July 2016 and 21 August 2017. It can be shown from the Occurrence Book that there was another complaint made by the defendant on “平層問題” on 15 February 2017, but for unknown reason, this was not relied on in the action herein by the defendant (as it was not listed under the Table of Particulars).
126. As far as the “平層問題” which appeared on 10 – 11 July 2016 is concerned, I am of the view that it should be treated as having arisen on a single occasion, because it can be seen from the Occurrence Book that the plaintiff only inspected lift No.1 of the Hotel on 11 July 2016 upon its receipt of a complaint on 10 July 2016.
127. The defendant had failed to prove any “平層問題” as far as 21 August 2017 was concerned, because no entry in the Occurrence Book in relation to that day was produced as evidence in this action.
128. In other words, what remains is that there was only one pleaded occasion when there was “平層問題”, and it was back in July 2016. I do not think that would be enough for the defendant to establish that the plaintiff should have replaced the stack free-of-charge before the termination of the 2nd Agreement.
129. The position would be the same even if we take into account the unpleaded occasion on 15 February 2017, because even in such a scenario, there had not been any further complaint on “平層問題” after 15 February 2017.
130. In my view, Mr Lee’s opinion on stack is apparently more reasonable in the circumstances. I would therefore accept his opinion on this matter.
Main wire rope
131. Sigma proposed that the main wire rope of lift No.2 of the Hotel should be replaced. On this recommendation, Mr Lee opined that:
“For lift no.L2, the maximum rope reduction was measured to be 6.67%, which was far from the replacement criteria of 10%. It was expected that the remaining use life of these ropes should be 4 to 5 years. Premature replacement of such main wire ropes should not be necessary for keeping the main wire ropes in safe working order but could substantially lower the maintenance cost in following 4 to 5 years.”
132. As aforesaid, Mr Cheng opined that Sigma’s recommendation should be followed despite the fact that the main wire rope reduction rate of lift No.2 was just 6.67%. He said the said reduction rate is not the only matter which should be taken into account and there are other factors which have to be considered. However, he did not explain the reason why replacement of the ropes was considered necessary in the light of such factors.
133. I have no hesitation in accepting Mr Lee’s opinion, since there is no dispute that the maximum wire rope reduction rate of lift No.2 of the Hotel was only 6.67% as at 28 March 2017. There is nothing in the evidence which supports the necessity of replacing the said main wire rope despite such a reduction rate.
134. It was submitted on behalf of the defendant in the reply submissions that:
“84.12 […] Even if the reduction in the diameters is fine, it is only one of the seven conditions. There are six other conditions. This is especially so when there are a number of conditions specifically stipulated in the Code of Practice that concern the random distribution of the broken wires along the strands of the main wire ropes. Plainly, this is a fallacy of composition i.e. to infer that something is true of the whole when it is true of a part of the whole.”
135. In my view, the defendant was trying to shift the burden of proof to the plaintiff.
136. Sigma’s proposal in replacing the main wire rope for lift No.2 of the Hotel, in my view, highlighted the danger on the part of Mr Cheng in relying on Sigma’s recommendation when he gave his expert opinion. As shown by the objective data relied on by Mr Lee, the condition of the lift No.2 main wire rope clearly did not require replacement. Yet, Sigma proposed that it should be replaced. Mr Lee told the court that doing so would substantially lower the maintenance cost in following 4 to 5 years. If that is so, it is understandable why Sigma made such a recommendation. I am not for one moment criticising Sigma, because they are doing business, and thus cannot be blamed on endeavouring to lower the maintenance cost which they had to bear as a maintenance contractor after their maintenance agreement with the defendant commenced to run. However, that does not mean that the plaintiff was under any obligation to do the replacement which Sigma required the defendant to do.
Landing door lock
137. In the joint experts’ report, Mr Lee opined that:
“The lifts, including landing door locks, were found in safe working order during the periodic examinations on 28-3-2017. Moreover, no defective landing door locks were noted during routine maintenance until end of contract period, i.e. 15-9-2017. Hence, the replacement with landing door lock model 0021 was not necessary.”
138. As a matter of background, it is undisputed that the plaintiff had conducted an annual examination of the 2 lifts at the Hotel on 28 March 2017. It also appears that the plaintiff’s engineer and worker had jotted down the result of what they had examined in a document which contained a table with many technical names of individual parts of the lifts (“the Examination Records”).
139. However, it can be seen from the Examination Records (one page for each of the 2 lifts) that there were a number of blank boxes which were not filled in, and boxes of “外門檢查” were amongst them.
140. When the above blanks were put to Mr Lee, he opined, among other things, that:
(1) The Examination Records were internal documents of the plaintiff, and they were not required to be submitted to the EMSD;
(2) While it is undesirable, it could well be that the engineer/worker mainly marked the boxes of items to which attention should be drawn, but omitted to tick some of the boxes if no problem was found in respect thereof;
(3) At the end of the day, the engineer responsible did sign safety certificates in respect of the 2 lifts in question, and that means the lifts were certified to be in safe working condition at the material time;
(4) EMSD did issue use permits for the lifts subsequently.
141. On the other hand, Mr Cheng opined that the landing door lock should be replaced, because:
(1) The examination result of the landing door lock was not reflected in the Examination Records as the relevant boxes had been left blank;
(2) Sigma had inspected the lifts before they issued the Quotation. If they held the view that the landing door locks had to be replaced, then there should be a need to do so;
(3) Some of the “out-of-order” events were related to the doors of the lifts.
142. I am of the view that the defendant has failed to establish that the plaintiff had breached Clause 5 of the Agreements by not replacing the landing door locks for the defendant for the following reasons:
(1) While the boxes relating to lift doors in the Examination Records were left blank, I do not think it can be inferred that the landing door locks were defective nor that they had to be replaced;
(2) I would not accept Mr Cheng’s opinion because he had based his view on Sigma’s recommendation. I have already explained above why it is dangerous for him to do so;
(3) There is no evidence before the court to show that landing door locks had to be replaced. The mere fact that some of the “out-of-order” events were related to the lift doors, in my view, cannot serve this purpose;
(4) As a matter of fact, there is no evidence showing that there was any problem with the lift doors since 26 June 2017.
Alarms
143. I have dealt with the false alarm problem above and I do not propose to repeat my discussion here again. On the basis of my findings above, the defendant has failed to prove that the plaintiff had breached its duty in replacing the alarms for the defendant.
The defendant’s claim for general damages
144. In the closing submissions of the defendant’s counsel, he had the following to say:
“133. In addition, it is also the Defendant’s pleaded case that the Defendant suffered inconvenience and discomfort. While there is no systematic way of crystalizing inconvenience and discomfort into a sum of money, the damages awarded would be a conventional sum.
134. From the first episode of faults on 19/6/2015 until the Plaintiff acknowledged the termination of the Maintenance Works on 19/9/2017, the Defendant had suffered inconvenience and discomfort for a period of 28 months.
135. In light of the dire seriousness, appalling frequency and proximate intervals seriousness of failures and incidents, and the fact that the subject lifts were for access to 27 levels of floors, the Plaintiff’s breach amounted to persistent and substantial nuisance to the Defendant’s daily operation. In this regard, the Defendant also claims for general damages of a conventional sum against the Plaintiff.” (emphasis added)
145. The defendant’s counsel supplemented the following submissions in his reply submissions:
“144. On the other hand, it is in the evidence that the Defendant also suffered inconvenience and discomfort as a result of the frequent and recurrent lift malfunctions that were not remedied.
145. Damages for inconvenience and discomfort can be awarded in a breach of contract action. As held by the Court of Appeal in So John & Another v Lau Hon Man & Others [1993] 2 HKC 356 at §11: […]
146. While there is no systematic way of crystalizing inconvenience and discomfort into a sum of money, this does not mean that there would (sic) no damages awarded at all. The general damages awarded would be a conventional sum. As held by the Court of Appeal at §18: […]
147. This approach was also adopted in Pang Yau Shing Glendy v Sano Engineering Ltd (unreported, DCCJ 61 of 2013) at §§117-118: […]
148. The malfunctions had led to frequent and recurrent suspension of the lift operation which was for access to 25 floors. The extent of inconvenience and discomfort is comparable to those brought by water seepage of moderate to serious extent. Nevertheless, once the serious dangers caused by the frequent and recurrent lift malfunctions are viewed, the extent would be comparable to the extent of those in water seepage of a serious extent. In comparison to other services such as renovation, the difference is that – the inconvenience and discomfort in these circumstances concerned real dangers and even a matter of life and death.
149. From the first episode of lift malfunctions i.e. 19/6/2015 until the Notice of Termination on 15/9/2017, the Defendant had suffered persistent and substantial inconvenience and discomfort for a period of approximately 28 months.
150. Taking into account the factor of general inflation, it is submitted that the general damages for the inconvenience and discomfort should be awarded in the sum of $200,000: Leung Ying Chun v Chan Wing Sang [2001] 1 HKLRD 456. Coupled with the special damages of $213,000, the Defendant should be awarded $413,000 as a result of the Plaintiff’s breach.”
146. Pausing here, I have to point out that Ms Moy for the plaintiff had not made any submissions on the defendant’s counterclaim of general damages in her closing submissions. Hence, the above supplemental submissions on general damages were not made by the defendant’s counsel in reply to Ms Moy’s submissions at all. Even if there is any live issue on general damages (there is none in my view – see further below), the above supplemental submissions should have been made in the closing submissions rather than in the reply submissions for the first time.
147. Furthermore, over half of the content of the written closing submissions of the defendant’s counsel had been repeated in his written reply submissions (either in identical form or with only very minor change of wordings). To me, the defendant’s written reply submissions were a revised version of the defendant’s closing submissions rather than reply submissions. A large number of arguments raised in the “reply submissions” of the defendant’s counsel should have been included in the closing submissions instead. However, they were not. This is entirely inappropriate.
148. In my “directions for final submissions” which was given right after the defendant closed its case, I had also directed that:
“In respect of each part/paragraph of the written reply submissions, parties shall indicate clearly to which part/paragraph of the written final submissions of the other side that they are replying.”
149. It is most unfortunate that such a direction was not followed by the defendant’s counsel. As a result, much convenience has been caused to this court. I hope all trial advocates shall bear in mind in future that this kind of directions has to be complied with so as to render assistance to the court and also, as a matter of fairness, to inform the other side frankly what the reply submissions are really about.
150. Coming back to the defendant’s claim for general damages, I note that what the defendant pleaded in its Defence and Counterclaim was as follows:
“10. As a result of the Plaintiff’s breach, there were recurrent malfunctions of the two lifts in the Defendant’s premises. For instance, false alarms of the overload warning system, sudden stoppage, irregular and uncontrolled ascending or descending movements of the lift cabs, uncontrolled opening and closing of lift doors, and uneven platforms between the interior of the elevator and the ground of the Defendant’s premises. These situations led to frequent closures of the lifts. Danger and inconveniences were caused to the Defendant’s employees and customers. The Defendant has suffered loss and damage.”
151. Then the defendant pleaded on the costs of remedying the defects in the sum of $213,300 which I had disposed of above.
152. In the Prayer of the Counterclaim, the defendant only included the followings:
“(1) Damages of HK$213,300.00 as set out in paragraph 12 above;
(2) Interest;
(3) Costs; and
(4) Further and/or other relief.”
153. It can be seen that there was clearly no pleaded claim for general damages. Neither was the cause of action of nuisance mentioned in the Counterclaim.
154. For the avoidance of any doubt, I would not accept (even if it is so argued) that the present situation can be salvaged by the defendant by relying on the “Further and/or other relief” claimed in the Prayer, for a relief or remedy which is claimed must be specifically stated (see Order 18 rules 15(1) and 18 of the Rules of the District Court and Paragraph 18/15/1 of Hong Kong Civil Procedure 2021, Volume 1)
155. In my view, it is a hopeless attempt on the part of the defendant to make a claim in such a manner. Counsel and solicitors for the defendant should have recognised the fact that they were bound by the pleadings, and should never have wasted time on matters which clearly had not been pleaded.
156. I shall not consider any claim raised in such a way.
Conclusion
157. For the above reasons, the defendant’s counterclaim should be dismissed.
ORDER
158. I allow the plaintiff’s claim and order the defendant to pay the plaintiff damages in the sum of $135,300. The defendant’s counterclaim is hereby dismissed.
COSTS
159. I make a cost order nisi that the defendant shall bear the plaintiff’s costs of the whole action (including all costs reserved, if any), with certificate for counsel, to be taxed if not agreed.
160. The above order nisi shall become absolute in the absence of application to vary (which shall be made by letter, if any) within 14 days hereof. Any application to vary the costs order nisi shall, with the consent of the parties[24], be dealt with on papers.
| |
( H. Au-Yeung ) |
| |
District Judge |
Ms Moy Phaik See, instructed by Huen & Partners, for the plaintiff
Mr Casper Ng, instructed by Zebra H.Y. Kwan & Partners, for the defendant
[1] Paragraph 8 of the Defence and Counterclaim
[2] Paragraph 8(1) of the Defence and Counterclaim
[3] Paragraph 8(2) of the Defence and Counterclaim
[4] Paragraph 8(3) of the Defence and Counterclaim
[5] Paragraph 8(4) of the Defence and Counterclaim
[6] Paragraph 9 of the Defence and Counterclaim
[7] Paragraph 10 of the Defence and Counterclaim
[8] Paragraph 12 of the Defence and Counterclaim
[9] The plaintiff very largely repeated what he stated in his solo report in the joint experts’ report, and as a result, the documents exhibited to the plaintiff’s expert report and the joint experts’ report are identical
[10] The part concerning the Occurrence Book is no longer relevant as the defendant had abandoned its application in relation thereto
[11] Paragraph 5 of the Affirmation of Cheung Sze Mei Amy
[12] Only fees for 20.5 months were claimed by the plaintiff even though, according to the documents attached to the witness statement of the plaintiff’s director Mr Chan, the defendant had only paid monthly service fees for 3 months up to August 2017
[13] Paragraph 11 of the “Defendant’s Note on Legal Issues”
[14] Paragraph 122 of the defendant’s reply submissions
[15] Paragraph 135.11 of the defendant’s reply submissions
[16] It is noted that a similar complaint on false alarm had also been made on 2 May 2017. However, this would not affect the analysis
[17] Neither Mr Allen Tong (Project Manager of the defendant) nor Madam Sit Po Ling (former security officer of the defendant), produced any further record of the Occurrence Book on this matter for the period after 26 June 2017
[18] Madam Sit stated in her witness statement that: “There has been significantly less malfunctions since the other company became the contractor for Million Hotel’s lift maintenance”. When she was asked to clarify the meaning of “significantly less malfunctions”, she answered “基本上無”
[19] Paragraphs 43 and 53 of the defendant’s closing submissions
[20] Mr Ng for the defendant clarified subsequently that he meant “parts” rather than “equipment and tools”
[21] Paragraph 128 of the defendant’s reply submissions
[22] The defendant’s “Note on the Legal Issues”
[23] Paragraphs 43 and 53 of the defendant’s closing submissions
[24] Parties have given their consent at the trial
|