NG LEUNG MING t/a MING KEE ENG CONSTRUCTION CO v. HANKI CONTRACTORS (HONG KONG) & ASSOCIATES LTD

HCA 295/2020

[2024] HKCFI 376

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 295 OF 2020

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BETWEEN

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J U D G M E N T

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A. INTRODUCTION

1.  This claim concerns outstanding payments over construction works (“the Project”) at a site (“the Site”). The Defendant was the main contractor there. The sub-contractor was Homeland Civil Engineering Company (“Homeland”). The Plaintiff was and is a sole proprietor and one of the sub-sub-contractors of Homeland.

2.  The Defendant was not doing the Project itself, but would earn an 8% commission on it. The Defendant would pay Homeland 92% of every periodic payment it received from the landlord.

3.  On 4 April 2019, the Defendant terminated its contract with Homeland (“the Termination”) and took over the Site (“the take-over”).

4.  The subject matter of the claim concerns 2 matters.

(1) The amount of HK$2,982,702 due under 7 invoices of Stage 2, which the Plaintiff says the Defendant had agreed to take up liability of under: (1) a written Agreement and (2) a Purported Guarantee, both defined below;

(2) The amount of HK$770,800 due under 4 invoices delivered by the Plaintiff to the Defendant for construction works performed by the Plaintiff at the request of the Defendant after the take-over.

5.  The Plaintiff accepts that the Defendant had partially performed their obligation under the Agreement by Two Payments totalling HK$300,000.

6.  The Defendant’s case is that it had never agreed to assume the liability of Homeland. The Defendant only promised to follow up with Homeland as to the money due to the Plaintiff. The Two Payments were pre-payments to help the Plaintiff out of financial strain.

7.  Further, the Defendant claims that (i) 3 out of the 4 Post-Termination Invoices had not been delivered to the Defendant; and (ii) certain items in the Invoices were for pre-Termination works for which the Defendant was not liable.

B. FACTUAL BACKGROUND

8.  Save where otherwise specified, the facts in this Section are undisputed.

B1. Pre-Termination

9.  Homeland had 2 sub-contracts with the Plaintiff: (i) relating to slope maintenance, drainage and retention walls, starting in 2017, which the Plaintiff described as “Contract 1” or “Stage 1”; and (ii) relating to the dam, starting in July 2018, which the Plaintiff described as “Contract 2” or “Stage 2”.

10.  Between 15 September 2018 and 15 February 2019, the Plaintiff had issued a total of 7 invoices to Homeland (“the 7 Invoices”), totalling HK$2,982,702. After deducting retention money of HK$280,000, the balance was HK$2,702,702.

11.  A cheque was issued by Homeland to the Plaintiff on 10 March 2019 for HK$652,000 for one Invoice but it was not presented.

B2. Termination

12.  The Termination took place on 4 April 2019 when the Project was approximately 90% complete. The cause was that the Defendant found Homeland’s performance unsatisfactory. Any work done after this date was done at the direct instructions of the Defendant to the Plaintiff, and the Defendant accepted the liability to pay.

13.  There was a meeting on this date (“the Meeting”) between the Defendant’s directors (Ng Kwok Hei and Madam Ling Kin Ying (“Madam Ling”)), Homeland’s representatives, as well as Mr. Wong Wan Sang (“Alfred Wong”).

14.  There is dispute over what was discussed at the Meeting. However, indisputably, Ng Kwok Hei told those present that Alfred Wong would be responsible for the work at the Site. The work had to be completed by 9 April and there should be no delay.

B3. Post-Termination

15.  After 4 April 2019, the Defendant asked the Plaintiff to continue working at the Site until completion of the Project. The Defendant accepts that it had agreed to pay the Plaintiff for construction works done after 4 April 2019 subject to measurement of quantity and quality.

16.  Between 4 and 8 April 2019, the Agreement (C19) signed by 3 parties came into being. It provided as follows:

“協議書 4-4-2019

應恆佳建築工程有限公司要求，配合完成青龍頭地盤TLTL70號斜坡工程。我明記建築工程公司，吳娘明先生將余下部分. 釘板、落石屎工程. 交恆佳建築工程有限公司收回，由恆佳建築工程有限公司支付明記建築工程公司 第二期改造工程費 2,702,702元港幣。在一個星期內，即(2019年4月11日) 付還。第一期工程費. 及保固金，由第三方協商支付。

本公司恆佳會跟進木子欠明記實在工程有幾多。” [Note: this is a “sentence added in blue and signed by Alfred Wong with the chop of the Defendant (“1^st Blue Sentence”)]

17.  It is the Plaintiff’s case that the Agreement was a tripartite novation agreement made by Alfred Wong on behalf of the Defendant, the Plaintiff and Homeland, whereby the parties agreed that the Defendant should pay the Plaintiff directly the sums due and owing by Homeland to the Plaintiff.

18.  The Defendant’s case is that:

(1) Alfred Wong did not have capacity to enter into the Agreement and had not agreed to its terms;

(2) As the Defendant had paid in full to Homeland for everything under their sub-contract, the Defendant did not agree to pay the Plaintiff all sums owing to it by Homeland for work done pre-Termination;

(3) What Alfred Wong did was to promise the Plaintiff that the Defendant would follow up to find out what was done by Homeland, hence the 1^st Blue Sentence.

19.  The Plaintiff issued an invoice on 15 April 2019 (“the 15 April 2019 Invoice”) for HK$335,000, with these handwritten words:

“預支$拾萬（第一次支付） 25-4-2019

餘額: 335,000.00 – 100,000.00 = 235,000.00” (underline added)

The HK$100,000 was one of Two Payments paid by the Defendant.

20.  By 23 April 2019, the 15 April 2019 Invoice was still unpaid. The Plaintiff and Alfred Wong then signed a handwritten document under the Plaintiff’s letterhead with the words “Guarantee” at the top and “Guarantor” at the bottom struck through (“the Purported Guarantee”). The contents provided as follows:

“擔保人 :

就應恆佳工程建築有限公司的要求, 於青龍頭 Lot 70號. 斜坡工程, 急於完工, 本公司為配合依時完成余下工程 。恆佳工程建築有限公司作担保,代表人。

1. 早前雙方於2019年 4月4日, 雙方簽署的協議書, 現在恆佳公司__擔保於2019年__月__ 日支付 。

2. 本公司於2019年 4月15 入糧單於2019 年__月__ 日付清。

3. 本公司於大霸結尾工程入單後__日 付清。”

It was signed and chopped by the Plaintiff.

21.  The Purported Guarantee also bore the following handwritten words signed by Alfred Wong (“2^nd Blue Sentence”)

“第2期只有核數有幾多 核數完為實

見證人: 第三期大霸所有工程”

22.  The Plaintiff’s case is that the Defendant guaranteed the payment of the 7 Invoices and the sum due under the 15 April 2019 Invoice.

23.  The Defendant’s case is that it did not sign any guarantee and Alfred Wong had no capacity to sign one. Alfred Wong deleted the words “Guarantee” and “Guarantor”. He wrote the 2^nd Blue Sentence (i) to clarify the works performed by Homeland pre-Termination so that the Plaintiff would know how much to claim from the Defendant and how much from Homeland; (ii) to clarify his position as a witness to the works done by the Plaintiff on the Site in Phase 3.

24.  Between 7 May and 16 June 2019, the Plaintiff issued 4 further invoices to the Defendant totaling HK$770,800:

Date	Amount
7 May 2019 Invoice	HK$52,500
8 May 2019 Invoice	HK$665,300
8 June 2019 Invoice	HK$17,000
16 June 2019	HK$36,000

25.  The Defendant’s case as regards these invoices is that:

(1) The 15 April 2019 Invoice was superseded and subsumed into the 8 May 2019 Invoice.

(2) The Plaintiff had never delivered the invoices dated 7 May, 8 June and 16 June 2019 (“the 3 Post-Termination Invoices”) to the Defendant.

(3) The Defendant revised the amount of the 8 May 2019 Invoice to HK$257,800 after measurements and the Plaintiff acknowledged the same without objection.

26.  The Defendant had made Two Payments to the Plaintiff Post-Termination: (i) HK$100,000 by cheque on 25 April 2019; and HK$200,000 by cheque on 13 August 2019.

27.  The Plaintiff claims that the HK$300,000 were part payments of the liability under the Agreement. The Defendant claims that they were prepayments for post-Termination works. The Defendant had in fact overpaid the Plaintiff by HK$42,200 and thus counterclaims for the same.

28.  By a letter to Homeland dated 21 June 2019 (“the Letter”), issued by the Defendant and signed by Alfred Wong on its behalf, the Defendant informed Homeland that the Defendant reserved the right to recover from Homeland for loss, including money paid to workers, for construction materials and for lab tests that should have been paid by Homeland.

C. ISSUES

29.  The following issues are agreed upon by the parties:

(1) Whether as a matter of proper interpretation of the Agreement, the Defendant had agreed to take up the liability of Homeland to pay the Plaintiff in respect of the 7 Invoices;

(2) If it had, whether Alfred Wong had the authority (actual or apparent) to enter into the Agreement;

(3) What were the Defendant’s instructions to the Plaintiff after the removal of Homeland and whether those instructions were carried out by the Plaintiff;

(4) In respect of the 8 May 2019 Invoice, whether the amount due should be HK$664,300 or HK$257,800;

(5) Whether the 3 Post-Termination Invoices dated had been delivered to the Defendant;

(6) What was the nature of the Two Payments for HK$300,000 made by the Defendant to the Plaintiff?

(7) Is the Defendant entitled to refund of the overpayment?

D. THE COURT’S APPROACH TO ASSESSING CREDIBILITY OF WITNESSES

30.  When assessing credibility, the Court takes into account the inherent plausibility of a witness’ testimony and considers whether any part of it is, in a material way, contradicted by other undisputed or indisputable evidence (such as contemporaneous documents). Where it is shown that a witness has been discredited over one or more matters to which he has testified (using the above tests), this fact is relevant to the assessment of his overall credibility. Likewise, regard may be had to a witness’s motive for deliberately not giving truthful testimony. For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest. See Siu Chi Tat v Land Zone Ltd [2023] HKCFI 610, §64, Au Yeung J.

31.  The Court should consider inherent plausibility by reference to commercial or ordinary common sense. See Tien Sau Tong Medicine Company (Hong Kong) Limited v Cheung Po Ling & Anor [2019] HKCFI 1258, §9, Coleman J.

32.  The Plaintiff only has himself as witness. The Defendant has 3 factual witnesses - Madam Ling Kin Ying, Ng Kwok Hei, and Alfred Wong. I do not find any of the witnesses to be entirely credible.

33.  With regard to the Plaintiff, his whole claim is inherently dubious:

(1) Homeland was supposed to pay the Plaintiff, by contract, within 28 days of the invoice issued by the Plaintiff from time to time subject to retention of monies: §3, Statement of Claim (“SOC”) . It was incredible that the Plaintiff would have left 7 invoices unpaid for months, the last being dated 15 February 2019.

(2) For Contract 1, Homeland owed him HK$821,000 retention monies. For Contract 2, Homeland allegedly owed him HK$2.9 million accumulated over 8 months (from July 2018 to end of March 2019), which the Plaintiff first said he had never received a single cent. On top of that, the Plaintiff himself had to pay his workers with his own money in the amount of HK$1,979,775 in those 8 months. The Project with Homeland was the only business that the Plaintiff had in 2018-2019. How could the Plaintiff have left so much outstanding without ever taking action against Homeland?

(3) Under cross-examination as to why he continued to work in Stage 2 despite not being paid, the Plaintiff admitted that he had in fact received HK$440,000 for Contract 2. This is explained in the next sub-paragraph below.

(4) The Plaintiff behaved strangely with regard to Homeland. He had received 2 post-dated cheques from Homeland, without presenting them for payment.

(a) One was post-dated to 30 January 2019 for HK$445,646 which Homeland told the Plaintiff not to bank in for lack of funds. That cheque purportedly was to cover噴漿代工up to 15 November 2018. Eventually, the Defendant gave the Plaintiff HK$250,000 before Chinese New Year; and one boss of Homeland paid the Defendant HK$190,000 on 30 March 2019 with a cheque of another company. Homeland retrieved its cheque. Such new evidence actually contradicted the Plaintiff’s assertion that he had never received a single cent for Contract 2. Moreover, the HK$250,000 received from the Defendant was never reflected in any of the invoices issued by the Plaintiff or the SOC. When caught out, the Plaintiff stated that the money was for something else unrelated to the 7 invoices. The Plaintiff left the witness box, went to the public gallery, and produced Exhibit P1 which was part of the documents that the Defendant sought to produce 4 days before the trial, but were excluded due to the Plaintiff’s objection.

(b) Another was for HK$652,000 post-dated to 10 March 2019, which the Plaintiff deducted from the last of the 7 invoices dated 15 February 2019, despite never presenting that cheque for payment.

(5) Mr Leung, counsel for the Defendant, submits that the explanations for the Plaintiff’s irrational behaviour are that (i) Homeland had paid him for the 7 invoices; or (ii) the 7 invoices were severely inflated and the Plaintiff’s records of payment to workers signed by the workers (“Workers’ Records”) were fake. As these have not been put to the Plaintiff in cross-examination, I decline to draw such inferences. However, I do have doubts as to whether the Plaintiff has over-claimed by HK$440,000.

(6) As shall be analyzed in Section H below, the Plaintiff has included pre-Termination work in his 8 May 2019 Invoice. Mr Gary Lam, his counsel, actually conceded in his closing submission to deduct HK$194,600 from the overall claim.

(7) The sum total of sub-paragraphs (3),(4) and (6) shows that the Plaintiff has been discredited over more than one matter. His credibility has to be approached with care.

34.  Madam Ling was a forceful and credible witness. Unfortunately, much of her oral evidence did not appear in her witness statement. By way of example she said she had paid all dues of Homeland before 4 April 2019. Rather, it was Homeland who owed the Defendant several millions. She said the Plaintiff told her that Homeland owed him several hundred thousands, but Homeland said that not much was owed.

35.  There was no opportunity for the Plaintiff to verify her oral evidence before trial. I would not place much weight on Madam Ling’s oral evidence but accept what she stated in her witness statement.

36.  Ng Kwok Hei was emotionally charged at times in the witness box. He had a tendency to jump to conclusions and challenged Mr Gary Lam’s questions without reason. He gave incoherent, incomprehensible explanation of the 2 Vouchers, concerning the Two Payments. He disowned twice his verified statement that the loan to Homeland would be set-off. He admitted in §6 of his 4^th Affirmation that he deliberately withheld from the Court information which he thought would “look unfavourable” to the Defendant for tactical reasons. And yet, during cross-examination, he told this Court that he would not hide any documents from the Court. He was unreliable. Save where expressly accepted, I reject his evidence.

37.  As for Alfred Wong, Mr Gary Lam submits that he was not an independent witness. He enjoyed trust from Ng Kwok Hei and they had been in a business relationship for more than 10 years. He would not like to see the Defendant lose this case in relation to a site for which Alfred Wong was responsible. He would like to have another chance to work with the Defendant again. There were also occasions when Alfred Wong’s evidence changed course. Most notable was his change of evidence in the witness box overnight. On the first day of his evidence, he testified that he did not know if the Defendant had paid Homeland in full. On the following day, he testified that he already knew from Madam Ling and Ng Kwok Hei on 4 April that Homeland’s liabilities exceeded its assets and that the Defendant had paid Homeland in full. In his eagerness to help the Defendant, Alfred Wong even asserted that the figure of HK$2,702,702 was false, when even the Defendant has never raised this as a defence.

38.  Having seen and heard Alfred Wong, I find him to be independent, having no interests in the outcome of this case. He has always been unwilling to be a witness. I could see no reason for him to turn up eventually except to tell the Court the truth. His answers in the witness box were spontaneous and precise, despite the events happening 4 years ago. I do not find the change of evidence highlighted by Mr Gary Lam to have undermined Alfred Wong’s credibility and I will explain below. I accept his evidence under otherwise stated.

39.  The overall effect of the defence witnesses’ evidence, which I accept, is that the Plaintiff was told that the Defendant would pay the Plaintiff for everything after the take-over but would not take up Homeland’s liability for work done before 4 April 2019.

E. ISSUE 1 - INTERPRETATION OF THE AGREEMENT

E1. Legal Principles on interpretation of agreements

40.  In Maeda Kensetsu Kogyo Kabushiki Kaisha v Bauer Hong Kong Ltd [2020] HKCA 158, 18 March 2020, §29, Kwan JA, delivering the unanimous judgment of the Court, set out the trite principles governing interpretation of an agreement:

“(1) The construction of a contract is an attempt to discover what a reasonable person would have understood the parties to have meant. This is done by identifying the meaning of the relevant words, (a) in light of the natural and ordinary meaning of those words, the overall purpose of the contract, any other provisions of the contract, the facts known or assumed by the parties at the time at the time the contract was made, and common sense, but (b) ignoring subjective evidence of any party’s intentions. …

(2) The background knowledge which would reasonably have been available to both parties in the situation in which they were at the time of the contract includes anything which would have affected the way in which the language of the document would have been understood by a reasonable man. …

(3) The ‘rule’ that words should be given their natural and ordinary meaning reflects the common sense proposition one does not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other. …

(4) Reliance placed on commercial sense and surrounding circumstances should not be invoked to undervalue the importance of the language of the provision which is to be construed. Except in a very unusual case, the parties have control over the language they use in a contract and must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision. Where the parties have used unambiguous language, the court must apply it. A court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. Commercial common sense is not to be invoked retrospectively. …

(5) In some cases, an event subsequently occurs which was plainly not intended or contemplated by the parties, judging from the language of the contract. In such a case, if it is clear what the parties would have intended when they entered into the contract, the court will give effect to that intention. The role of the construct, the reasonable person, is to ascertain objectively, and with the benefit of the relevant background knowledge, the meaning of the words which the parties used. The construct is not there to re-write the parties’ agreement because it was unwise or because subsequent events have shown that the natural meaning of the words has produced a bad bargain for one side. Commercial common sense must not be seen through the eyes of only one party. …

(6) Interpretation is a unitary exercise. Where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But in striking a balance between the indications given by the language and the implications of the competing constructions, the court must consider the quality of drafting of the clause (the poorer the quality of the drafting, the less willing the court should be to be driven by semantic niceties to attribute to the parties an improbable and unbusinesslike intention), and it must be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest. …

(7) Where the disputed provision is open to two possible interpretations, the unitary exercise involves an iterative process, by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated. Once one has read the language in dispute and the relevant parts of the contract that provide its context, it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each.”

41.  While in general, evidence of subsequent actions is inadmissible to interpret a written contract, it is admissible to show whether there was a contract and what the terms of the contract were: Sze Fung Engineering Ltd v Trevi Construction Co Ltd [2023] HKCFI 419, §55, Mimmie Chan J.

E2. Analyses of the Agreement

42.  It was firmly established in the evidence that the Agreement was prepared by the Plaintiff on 4 April 2019 and signed sometime between 4 and 8 April, with Alfred Wong being the last person to sign. There was no company chop of the Defendant.

43.  Mr Gary Lam accepts that it was not clear from the wording in the Agreement that Alfred Wong had agreed to pay the HK$2,702,702. I have no doubt that there was an agreement of some kind. It is a question of what the agreed terms were. I approach this issue from the angles of (i) the known circumstances before the Agreement was signed; (ii) how the Agreement developed to its final form; (iii) the 2 Vouchers showing the Two Payments to the Defendant; and (iv) the Purported Guarantee.

E3. Know Circumstances before the Agreement was signed

44.  Both parties knew that there was pressure from the landlord to complete the works on time.

45.  The Plaintiff would have wanted to seize the opportunity to make sure he would be fully paid by the Defendant instead of Homeland which did not appear to have been honouring cheques. He had wanted to use refusal to leave the Site as a bargaining chip. However, his own Workers’ Records only showed 5 workers on the Site on or around 4 April 2019. Such a workforce could hardly be a bargaining chip. This was especially since, in Alfred Wong’s perception, there was none other than the Plaintiff himself when he entered the Site.

46.  On the other hand, even though Alfred Wong claimed that he would not need the Plaintiff’s cooperation because he had with him a team of new workers who was ready to start, the hand-over would have been smoother if workers familiar with the Site could stay on. It must be desirable to enter into some form of “agreement”.

47.  Four things in Alfred Wong’s knowledge were important:

(1) That the Defendant had to discharge the statutory task of paying 2 months’ wages in arrears of the Plaintiff’s workers pursuant to section 43C of the Employment Ordinance, Cap 57. On top of that, the Defendant had to pay off the suppliers of iron in order to get a certificate and hence the Building Authority’s approval on completion. These would already be a financial liability of the Defendant and something recoverable from Homeland. Alfred Wong had given some broad figures but I will not rely on them for lack of documentary proof.

(2) I have alluded to the change in evidence in §37 above. I do not think it made Alfred Wong unbelievable. As a representative of the Defendant, it would not be surprising that he would have been told by the Defendant about the broad picture of the poor performance of Homeland and the payments passing between them instead of the full details. What is important is that whichever version was correct, there was no reason for him to commit the Defendant to the financial liability of Homeland.

(3) According to Alfred Wong, his role was to assist Ng Kwok Hei in completion of the Project. Whilst Alfred Wong’s team would do the work, all the expenses would be on account of Homeland. After the take-over, some sub-contractors would continue to work and the Defendant instead of Homeland had to pay them. Alfred Wong knew that Homeland owed the Plaintiff money. Alfred Wong was to oversee the progress of the Project and verify work done. After the follow up, it was Homeland who would pay. Such evidence was messy but it clearly showed he expected Homeland to incur some liability despite the take-over.

(4) In his trade, measurements of work done were necessary to decide on what to pay a contractor.

48.  Given such knowledge, it was inherently unlikely that Alfred Wong would have accepted the liability to pay HK$2.7 million unconditionally.

49.  In my view, it was more likely than not that, as Alfred Wong had told the Plaintiff, “What I ask you to do, I would pay. What was done previously, you should pursue Homeland.” This was because he did not know the precise financial relationship between Homeland and the Plaintiff.

E4. How the Agreement developed into its final form

50.  One should not overlook how the final Agreement came to be signed. The Plaintiff provided 3 versions of this document (C17-19) with slight variations. In C17 (a prior draft), it was proposed that the Defendant and Homeland would pay the Plaintiff HK$2,702,702. Neither the Defendant nor Homeland had signed. In C18, the proposal was for the Defendant to pay the Plaintiff HK$2,702,702. It was accepted that the round chop of the Defendant was invalid to authenticate that document. In C19 (agreed to be the “final agreement”), it was stated that the Defendant would pay the Plaintiff HK$2,702,702. However, the 1^st Blue Sentence was added by Alfred Wong, the last to sign, using a different colour pen.

51.  Alfred Wong testified that he did not delete the sentence “to be paid by [the Defendant] to [the Plaintiff] (由恆佳建築有限公司支付明記建築公司) because it was written by the Plaintiff. He would not cross out what he was not clear about. He did not know how much Homeland owed the Plaintiff, or what Phase 1 or 2 was. He would not have acknowledged a figure of HK$2 million. He had the obligation to investigate. All he knew was that he had to follow up what was not completed. Alfred Wong signed to promise the Plaintiff that he would be the latter’s witness when he sued Homeland.

52.  In my view, such evidence and the 1^st Blue Sentence completely refuted any agreement on the part of the Defendant to take up financial liability but was consistent with Alfred Wong’s knowledge and what he told the Plaintiff as set out in paragraph 49 above).

53.  Mr Gary Lam suggests that the 1^st Blue Sentence only required the last sentence of the Agreement (第一期工程費及保固金由三方協商支付) to be subject to measurement, because the figure of $2,702,702 was ascertained and confirmed by Homeland’s signature.

54.  I disagree because the 1^st Blue Sentence did not differentiate between Phase 1 and Phase 2 of the works. Even if Homeland and the Plaintiff had agreed the figure, there was nothing to prevent the Defendant, as main contractor, to measure the works done before paying what was due.

E5. The Vouchers for the Two Payments

55.  The Plaintiff places heavy reliance on 2 contemporaneous vouchers to show that the intention of the parties was for the Defendant to shoulder the liability of Homeland. Those documents were prepared by the Defendant’s accounting staff showing payments of HK$100,000 by the Defendant to the Plaintiff on 25 April 2019 (“the HK$100,000 Voucher”) and HK$200,000 on 13 August 2019 (“the HK$200,000 Voucher”) (collectively, “the 2 Vouchers”). Both Payments were post-Termination, but only the HK$200,000 Voucher was produced in evidence. The 2 Vouchers contained similar wording, ie that the Payments were “loan out to Homeland creditor for deduction”. The particulars were stated to be “subcontracting fee for P0137-1 青龍頭地盤, 代【木子】支付青龍頭地盤之工程費用（第二次代付款）”.

56.  The first version of the Defence pleaded that the HK$100,000 was a partial payment for the 15 April 2019 Invoice but the ADC pleaded that it was a prepayment or part-payment of the 8 May 2019 Invoice.

57.  Mr Gary Lam submits that the 2 Vouchers were referring to the pre-Termination works for which Homeland owed the Plaintiff, and that the Defendant was helping (代) Homeland to pay.

58.  I am unable to agree. These Payments in round figures were not inconsistent with Alfred Wong’s evidence that payments were subject to measurements. Nor were they inconsistent with the Defendant’s intention of suing Homeland in future as evidenced by the Letter. Therefore it was necessary to make clear identification in the Defendant’s accounts what payments were related to Homeland or the Site.

59.  The Court has heard that advancing loans to Homeland for payments to the Plaintiff was nothing new to the Defendant. The Defendant has heard from the Plaintiff that Homeland owed him money. It was not thus surprising that in anticipation of post-Termination work, the Defendant was willing to make some payments to the Plaintiff.

E6. The Purported Guarantee

60.  The Purported Guarantee gave some clue as to what the parties had agreed under the Agreement:

(1) If the Defendant had already agreed to shoulder Homeland’s liability, there was no necessity for this Purported Guarantee at all. Still less would it be necessary to fix a date for the Defendant to pay because any obligation to pay under the Agreement would have been “forthwith”, on the Plaintiff’s interpretation of the Agreement.

(2) Alfred Wong’s crossing out of the words “guarantee” and “guarantor” on the Purported Guarantee was important. It was plain that the Defendant would not want to guarantee what should be the liability of Homeland. The other material terms sought to impose a date by which the Defendant was to pay the Plaintiff but the dates were not filled in.

(3) The 2^nd Blue Sentence plainly covered Phase 3 i.e. the new phase after the take-over. Alfred Wong testified that he did not have authority to guarantee anything. I agree.

61.  Considering all the circumstances leading up to the signing of the Agreement and on a proper interpretation, I am not satisfied that there was an agreement as alleged by the Plaintiff for the Defendant to shoulder the liability of Homeland as of 4 April 2019 to pay HK$2,702,702. Rather, it was only an agreement to ascertain what Homeland had to pay the Plaintiff, after the Defendant took measurements. For work post-Termination, subject to the practice of measurement of the relevant works, the Defendant was willing to pay the Plaintiff.

F. ISSUE 2 – AUTHORITY OF ALFRED WONG

F1. Legal principles on authority

62.  There are 4 conditions which have to be satisfied before a third party described as a “contractor” can enforce a contract against a company entered into by a purported agent with no actual authority:

(1) Representation that the agent had authority to enter on behalf of the company into a contract of the kind sought to be enforced was made to the contractor;

(2) Representor being someone who had ‘actual’ authority to manage the business of the company either generally or in respect of those matters to which the contract related;

(3) Reliance by the contractor on the representation to enter into the contract; and

(4) Capacity of the company under its memorandum or articles of association either to enter into a contract of the kind sought to be enforced or to delegate authority to an agent to enter into that kind of contract.

See Thanakharn Kasikorn Thai Chamkat (Mahachon) v Akai Holdings Ltd (No 2) (2010) 13 HKCFAR 479, at §§43-44, Lord Neuberger, NPJ.

63.  When a person is appointed to an office, he is impliedly authorized to do all such things as fall within the usual scope of that office. This is called “usual authority”. Whether there is such authority turns on the ordinary scope of the person’s employment and duties, subject to any express restriction imposed by the principal. See News Cleaning Services Co Ltd v Watson Environment Management Ltd, HCA 2244/2009, 14 June 2013 at133, Godfrey Lam J (as he then was).

F2. Authority of Alfred Wong to enter into the Agreement

64.  The Plaintiff claims that Alfred Wong had actual or apparent authority of the Defendant to enter into the Agreement.

65.  The first version of the Defence admitted that Alfred Wong was the representative of the Defendant. The ADC denies the same and pleads that Alfred Wong was an independent engineer engaged by the Defendant to make arrangements for the remainder of the works to be done and rectifying works of Homeland. This change of defence was not explained.

66.  It was the unchallenged evidence that a meeting had taken place on 1 April 2019 attended by the Plaintiff, Alfred Wong, Ng Kwok Hei and Mr Poon Leung of Homeland (“the Meeting”) to talk about progress of the Project. At the meeting, Ng Kwok Hei stated that Alfred Wong was responsible for the matters of that Site, including assisting all sub-contractors to hurry towards completion; and that all items had to be completed by 9 April 2019 in accordance with the head contract with the landlord. This tallied with Ng Kwok Hei’s testimony, which I accept, that after the take-over, everything was left to Alfred Wong and that Alfred Wong had 100% say over the Project.

67.  The Plaintiff’s evidence was that, at the Meeting, he obtained a name card bearing Alfred Wong’s name (“the Name Card”), his title as director, the name of the Defendant and its logo.

68.  Alfred Wong’s witness statement denied ever giving the Plaintiff any name card. However, his oral testimony (which was consistent with Ng Kwok Hei’s) was that he would and did give the Name Cards to outsiders only with Ng Kwok Hei’s permission. However, he could not remember whether it was done at the Meeting.

69.  Given the evidence in the 3 preceding paragraphs, I find that it was more likely than not that Ng Kwok Hei permitted Alfred Wong to give the Name Card to the Plaintiff at the Meeting. It was plain that a representation was made by Ng Kwok Hei (himself a director having actual authority to make the representation) that Alfred Wong had at least apparent authority to act as a director of the Defendant. There is no suggestion that the Defendant, being in the construction business, was barred by its memorandum and articles of association from conferring authority on Alfred Wong.

70.  On his own evidence, Alfred Wong was a self-employed engineer engaged by the Defendant since late March 2019. His evidence supports the changed plea in §65 above. Alfred Wong had attended the Site daily for and on behalf of the Defendant. He had authority to confirm the fees of the construction work done, and authority to give instructions on what needed to be done. I find that he had actual authority from the Defendant to act as its representative and Project Manager of the Site.

71.  With such authority, Alfred Wong issued the Letter. He referred to the Defendant as “our company”.

72.  Ng Kwok Kei confirmed in the witness box that it was him who told Alfred Wong to write the Letter; and that Ng Kwok Hei understood and agreed to the contents. The Letter reflected the truth that the Defendant had paid the workers and “those persons who sub-letted (sic) the works from Homeland” and (ii) was consistent with Ng Kwok Hei’s intention to sue Homeland.

73.  For the reasons given in this Section, I have no doubt in finding that Alfred Wong did have at least apparent authority to enter into the Agreement, and the Agreement was binding on the Defendant.

G. ISSUE 3 - DEFENDANT’S INSTRUCTIONS TO PLAINTIFF

74.  This issue is relevant to the works involved under the 15 April 2019 Invoice, the 8 May 2019 Invoice and the 3 Post-Termination Invoices. The 15 April 2019 Invoice was in fact subsumed under the 8 May 2019 Invoice.

75.  The Plaintiff has Workers’ Records in proof, the authenticity of which is not disputed.

76.  According to Alfred Wong’s testimony, the Defendant’s instructions to the Plaintiff were (i) to complete the remaining “clean up” works of the dam on-site; and (ii) to construct a concrete planter at the bottom of the hill.

77.  Alfred Wong testified that the photo at C/27/196 was taken on 4 April 2019 when he took over the Site. The photo showed that the concrete structure of the dam was already completed and the wooden boards removed. The clean up work therefore, would entail clearing construction debris and minor patching up works. Homeland had not finished the upper part of the dam and did not follow the schedule. From this photo, one could not judge by sight how many boards were fixed. On that day, Homeland’s bosses were there, but no measurements were taken.

78.  Exhibit D2 and D3 are photos used by Alfred Wong in the witness box to illustrate the completed state of the Project in June 2019.

79.  However the photos were never put to the Plaintiff in cross-examination. Alfred Wong’s testimony in this aspect was an ambush on the Plaintiff and I disregard the photos.

80.  Ultimately one goes back to analyse each of the Invoices to see what was done. This leads to Issues 4 and 5.

H. ISSUE 4 – AMOUNT DUE UNDER THE 8 MAY 2019 INVOICE

81.  The Plaintiff argues that the amount payable under the 8 May 2019 Invoice should be HK$665,300 as assessed. The Defendant claims it should be HK$257,800 as the amount agreed upon for post-Termination work. The Plaintiff disagrees, contending that, read in context, HK$257,800 was the amount to be paid first out of the outstanding balance of HK$665,300.

82.  Mr Gary Lam takes a pleading point. He points out that in §12 of the ADC, the Defendant pleads that, after verification, the work amounted to HK$257,800 without giving the reasons why. Alfred Wong notified the Plaintiff and the Plaintiff acknowledged the same. Hence, the issue is whether or not the Plaintiff had agreed to the deduction and not how Alfred Wong came to the figure of HK$257,800. Whether the work under the 8 May 2019 Invoice was pre-Termination and, if so, how much should be deducted, should be an expert issue.

83.  I am unable to agree entirely with Mr Lam.

(1) §15 of the SOC pleads that “Alfred Wong of the Defendant gave instructions direct to the Plaintiff requesting the Plaintiff to carry out varous works. The Plaintiff completed the same” and issued, amongst others, the 8 May 2019 Invoice for HK$734,110 (revised subsequently to HK$665,300). That Invoice therefore purportedly covered post-Termination work.

(2) §12 of the ADC pleads that “save and except it is admitted that the Plaintiff did issue an invoice to the Defendant dated 8 May 2019 in the sum of HK$734,110 … paragraph 15 is not admitted.”

84.  Therefore, apart from putting in issue the Plaintiff’s acknowledgement of the amount of HK$257,800, the Defendant has put the Plaintiff to strict proof of the rest of his entitlement under the 8 May 2019 Invoice. Even if the Defendant is not entitled to put up a positive case that item 2 of that Invoice covered pre-Termination work, the Defendant is entitled to test the credibility of the Plaintiff’s case on that Invoice.

85.  The evidence was that Alfred Wong simply notified the Plaintiff of the reductions without explanation and the Plaintiff acknowledged it. The Plaintiff’s unchallenged evidence was that he did not understand why it should be HK$257,800. His case is that it was inherently improbable that he would have agreed to a huge deduction of 64.88%. I find that the Plaintiff had not agreed to this figure.

86.  Alfred Wong gave the computation of $257,800 as HK$60,000 + 128,000 + 17,000 + 5,400 + 5,400 + 42,000.

87.  It was also established in the cross-examination of the Plaintiff that, pre-Termination:

(1) The last invoice issued by the Plaintiff to Homeland was dated 15 February 2019, when Homeland was still on the Site.

(2) In February 2019, no worker of the Plaintiff had worked at the Site.

(3) In March 2019, there were 4 carpenters and one odd-job worker.

(4) Those workers did work for the dam and fixing of boards.

(5) Wages for the 5 workers were reflected in the contract fees claimed under the Post-Termination Invoice dated 15 April 2019 (and 8 May) for Phase 2. The Plaintiff initially referred to the item 1 in this invoice for $79,200. But Mr Leung pointed out to him that it could not be right because the 5 workers’ wages were $194,600 in total. The Plaintiff then changed to say that anyway, it was not possible to identify which worker did what at what location; their wages were anyway reflected in the total sum of $335,000 in this Invoice. The Plaintiff confirmed in the witness box that he and Homeland had closed accounts (結了賬單) in February 2019 and the 15 February 2019 Invoice was the last one issued to Homeland.

88.  Such evidence shows that the 5 workers’ wages had been incurred in the pre-Termination period. It should not be included in a post-Termination Invoice.

89.  It turned out, during cross-examination, that the Plaintiff admitted that HK$194,600 covered workers’ wages pre-Termination. It cast doubt as to the veracity of the Plaintiff’s case under the 8 May 2019 Invoice.

90.  Due to lack of proof to support other items in the 8 May 2019 Invoice, I find that the total amount due post-Termination under the 8 May 2019 was HK$257,800. The balance being HK$665,300 less HK$257,800 was pre-Termination work that Homeland should pay the Plaintiff.

I. ISSUE 5 –THE 3 POST-TERMINATION INVOICES

91.  Firstly, there is dispute as to the location of delivery.

92.  The Plaintiff claims that, similar to the 15 April and 18 May 2019 Invoices, he had personally delivered the 3 Post-Termination Invoices to the Defendant at the latter’s office in Shatin (“Shatin Office”), but he could not recall the identity of the recipient.

93.  The Defendant claims that it had never received the 3 Post-Termination Invoices. It would have been more logical for the Plaintiff to send those Invoices to Mr Alfred Wong, who was at the Site every day.

94.  However, as established in Mr Alfred Wong’s evidence under cross-examination, Mr Alfred Wong had received invoices in the past from the Plaintiff both at the Site and at the Shatin Office. There is not enough evidence to establish on balance of probabilities that the Plaintiff had delivered the 3 Post-Termination Invoices. I would not rest my decision on the location of delivery.

95.  Secondly, the Defendant disputes the Post-Termination Invoices on the following grounds set out in a letter from the Defendant’s solicitor to this Court dated 23 June 2023 after the pre-trial review:

(1) 7 May 2019 Invoice for HK$52,500 – it did not specify the location of the works and was unverifiable;

(2) 8 June 2019 Invoice for HK$17,000 – it did not specify the location of the works and was unverifiable;

(3) 8 May 2019 Invoice for HK$665,300 – disputes item 2 as pre-Termination work and accepts others after assessment.

(4) 16 June 2019 Invoice for HK$36,000 – items related to remedial works of the 8 May 2019 Invoice. The Plaintiff had no basis to bill for works that were not completed to satisfaction. This Invoice was not presented to the Defendant for verification at the material time.

These grounds have not been pleaded in the ADC and can be disregarded.

96.  Thirdly, regardless of delivery, Mr Lam submits that whether the Post-Termination Invoices were delivered is not a defence. The Invoices merely evidence the work done. Those Invoices have been delivered, at the latest, after commencement of this action. According to the Plaintiff’s testimony, the 7 May and 8 June 2019 Invoices were 代工噴漿。 The workers were not his and the work was not done on 8 June, but was done according to the Defendant’s instructions.

97.  I am unable to accept Mr Lam’s submission in this respect, because this action was commenced in 2020, way after the parties have left the Site. The Defendant simply had no opportunity to verify if the works were done or to take measurements.

98.  Fourthly, the circumstances of alleged delivery of the Post-Termination Invoices give rise to doubts in the Plaintiff’s credibility.

99.  The 3 Post-Termination Invoices were dated in different months. Why did the Plaintiff wait till June to deliver the 7 May 2019 Invoice together with the June Invoices in one go? As the Plaintiff confirmed under cross-examination, the 3 Post-Termination Invoices were sent, separately from the 8 May 2019 Invoice. That was most illogical. When the Plaintiff delivered the 8 May 2019 Invoice, why did he leave out the 7 May 2019 Post-Termination Invoice? In fact, the contents of those 2 Invoices could have been combined into one.

100.  The Defendant’s conduct was more logical. Alfred Wong had cared to assess the 8 May 2019 Invoice, indicating that the Defendant had not wanted to evade the liability to pay the Plaintiff. If the 3 Post-Termination Invoices had been delivered by the Plaintiff, there was no reason why Alfred Wong would not have assessed them. The Plaintiff could not give any explanation in rebuttal.

101.  In respect of the 16 June 2019 Invoice, the Plaintiff confirmed that it was his employees who performed the works claimed thereunder. And yet the Workers’ Records were only produced up to May 2019. So the Plaintiff’s own evidence could not support that work was done in June 2019 to justify the 16 June 2019 Invoice. His explanation that he had forgotten was unbelievable. Why would he have produced the whole sequence of Workers’ Records but left out one of them?

102.  Given the above reasons, I do not find the Plaintiff’s evidence to be credible. I am therefore not satisfied on balance of probabilities that the 3 Post-Termination Invoices had been delivered to the Defendant. Due to doubt in the Plaintiff’s credibility, I am also not satisfied that the Plaintiff had done the work stated therein. I therefore dismiss the claim thereunder.

J. ISSUE 6 –NATURE OF THE HK$200,000 and HK$100,000 PAYMENTS

103.  The Plaintiff contends that the Two Payments were evidence of both (1) the Agreement and (2) acknowledgement of the original amount of HK$834,110 in the 8 May 2019 Invoice.

104.  The Defendant’s case is that the Two Payments were pre-payments for post-Termination work. With regard to the HK$100,000 payment, the Plaintiff had told the Defendant that he was short of money. Ng Kwok Hei and Madam Ling were sympathetic.

105.  One has to remember that before this Payment, the Plaintiff had already presented the 15 April Invoice for the amount of HK$335,000. By then, the Plaintiff had complained many times that Homeland had failed to pay him. It was understandable that the Defendant had paid the Plaintiff something before Alfred Wong was to measure the Plaintiff’s work.

106.  The documentary evidence should not be overlooked. The 8 May 2019 Invoice was addressed to the Defendant directly.

(1) In the original version of the 8 May 2019 Invoice (C41), the Plaintiff himself stated that the HK$100,000 was “payment in advance” (上期付).

(2) In the 8 May 2019 Invoice kept by the Defendant (C42), Alfred Wong wrote “13/8/2019 付款” 200,000.00. Underneath was the ultimate figure of HK$534,110.

107.  Taking these 2 versions of the 8 May 2019 Invoice together, it was plain that both parties attributed the Two Payments to Post-Termination work. The HK$100,000 was payment in advance and the HK$200,000 was part-payment.

108.  The third version of the 8 May 2019 Invoice did not refer to any of the 2 Payments. Plainly, it was because Alfred Wong used it to mark up the results of his measurements. It would not undermine my conclusion in the preceding paragraph.

K. COUNTERCLAIM FOR REFUND

109.  The counterclaim appears to be an afterthought. The pre-action letter was issued by the Plaintiff back on 9 December 2019. The action was started on 12 March 2020. The original Defence was filed on 6 May 2020. The Counterclaim only first appeared, a year later, on 20 May 2021. Be that as it may, the counterclaim is the result of an accounting exercise in this case.

110.  As the Plaintiff is only entitled to HK$257,800 but the Defendant had paid him HK$300,000, the Plaintiff should refund the overpayment of HK$42,200 to the Defendant for lack of consideration in support or unjust enrichment.

111.  It is not necessary to go into other pleaded grounds of constructive trust and equity in the counterclaim on such a simple accounting matter between the parties.

L. CONCLUSIONS

112.  I answer the issues as follows:

(1) As a matter of proper interpretation of the Agreement, the Defendant had not agreed to take up the liability of Homeland to pay the Plaintiff HK$2,702,702. What the Defendant agreed, through Alfred Wong, was that it would follow up to ascertain what was due from Homeland to the Plaintiff.

(2) Alfred Wong had apparent authority to enter into the Agreement on behalf of the Defendant.

(3) The Defendants’ instructions to the Plaintiff after the removal of Homeland in April 2019 were as stated in the 8 May 2019 Invoice as assessed.

(4) Concerning quantum:

(a) In respect of the 8 May 2019 Invoice, the amount that the Defendant had to pay the Plaintiff was HK$257,800.

(b) In respect of the 3 Post-Termination Invoices dated 7 May, 8 June and 16 June 2019 Invoices, they had not been proved to have been delivered to the Defendant before commencement of this action. Even if they had been delivered, the Plaintiff has not discharged his burden of proving that he had done the work stated therein on behalf of the Defendant.

(5) The Two Payments of HK$100,000 and HK$200,000 were payments in advance and payment respectively for work which the Defendant instructed the Plaintiff to do post-Termination.

(6) The claim is dismissed. The Defendant is entitled to refund of HK$42,200 on the counterclaim.

113.  If I am wrong, and I have to award the Plaintiff under the Agreement, I would deduct HK$440,000 which the Plaintiff had received from Homeland and HK$194,600 conceded by Mr Gary Lam to be the wages of work done in March 2019.

114.  The Defendant asked for deduction of HK$150,000 more, being for a cheque drawn by the Defendant in favour of the Plaintiff on 22 January 2019. However, that cheque was not produced and the Plaintiff has denied receiving it. It was not proved on balance of probabilities that the Plaintiff has received this sum.

115.  On a nisi basis, the Defendant is entitled to interests on the sum awarded at P+1% p.a. from 20 May 2021 to the date of judgment and thereafter at judgment rate until full payment.

M. COSTS

116.  Given the above findings, costs of the action should follow the event.  I make an order nisi that the Plaintiff shall pay the Defendant’s costs of the action, to be taxed if not agreed.

117.  I thank counsel for their assistance.