Wai Yip Design Studio Ltd. v. Gary Ahija (a male) also known as Ahuja Copaldas Holaram

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 16357 OF 2000

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J U D G M E N T

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1. This is a claim by the plaintiff company for work done to the defendant's order in the sum of $332,028.50, being the balance of what is allegedly owed by the defendant under five invoices set out in paragraph (1) of the Statement of Claim totalling $661,028.50. The defendant has paid $329,000 but the plaintiff says that he still owes the amount now claimed in this action.

2. The plaintiff company is a family business headed by Mr Kwong Wai-yip which also involves Mr Kwong's son. They are painters and decorators taking in carpentry, electrical work and other associated trades. They refurbish domestic premises, shops, offices and the like. Mr Kwong has been doing this sort of work for over 30 years now. He does not employ a large permanent staff but brings in the various tradesmen that he may require on a particular job as and when they are needed. No doubt he subcontracts particular works to them on any particular contract that his company is engaged on.

3. The defendant is a businessman who is long-established in Hong Kong. He is a prominent member of the Indian community, particularly around Tsim Sha Tsui. His principal business activity relates to the export of watch straps. He is also a District Board member for his district and has been returned in four elections. He was justly proud in telling me, and indeed showing me, a Certificate of Honour awarded to him by Mr Patten (Hong Kong's last British Governor) on behalf of Queen Elizabeth II for his good and valuable services to the community. So much for the main dramatis personae.

4. In the early part of 1996, the defendant purchased two adjoining flats converted into one large single residence on the 15th Floor at 31-33 Chatham Road South, Tsim Sha Tsui ("the premises") which he required to be substantially refurbished before he and his family went to live there. He and his elder brother had made use of Mr Kwong's services about 18 years prior to this when they required their offices to be refurbished. The defendant was satisfied with the work on that occasion and so he invited Mr Kwong to view the premises and after discussing his requirements, he asked Mr Kwong to prepare a quotation for these works.

5. After visiting the premises on three occasions, Mr Kwong was able to produce two detailed quotations for the work that the defendant required. These are Q96013, pages 55 to 58, for $335,665 which is dated 7 June 1996 and Q96014A, also dated 7 June 1996, $242,640, pages 67 and 68. The total of these two quotations comes to $578,305.

6. The defendant, as an experienced businessman, sought to reduce the prices. His case is that he demanded and got a 30 per cent discount from Mr Kwong. He did that, according to him, by reminding Mr Kwong that they knew each other well and that Mr Kwong should give him a special price. He had also made it clear to Mr Kwong that he had another contractor coming to view the premises in order to give him an estimate. The defendant says that this persuaded Mr Kwong to let him have a 30 per cent discount. But, I should also observe that even on the defendant's account of it, that 30 per cent discount was not one that related to all the works in the quotation. He says that he told Mr Kwong to give him a 30 per cent discount and do the important works that were required in the quotations and that the number of items of other works that he required would be reviewed as things progressed. And so, even on the defendant's account, the discount did not have the certainty and firmness that he would have wished for.

7. Mr Kwong's account is that the defendant asked him for a 10 per cent discount which he could not give him. They negotiated and he gave, and the defendant accepted, a 5 per cent reduction from the quoted prices. Following that acceptance, the defendant gave Mr Kwong a cheque for $100,000 to set him on his way.

8. The work progressed through the summer and was completed on or about 2 September that year. As the work was being done, the defendant made further payments to the plaintiff being three further cheques on 30 July 1996 for $75,000, on 6 August 1996 for $74,000 and a last payment on 26 August 1996 for $80,000 (see page 111). It is right to say that the works progressed uneventfully. Some additional items were requested by the defendant and these are not set out in any formal quotation but appear in invoice No. 96015 dated 2 September 1996 at pages 71 to 73, totalling $158,992. There was also a further, less extensive amount of additional work which originally was the subject of invoice No. 96016 dated 4 September 1996 for $23,480 (page 75) but which was later adjusted and reissued dated 30 September 1996 which is for $10,635 (page 76).

9. The final item which is also sued on relates to a debit note dated 2 September for $18,500 for a split air-conditioner (page 74). The claim therefore is itemised as follows:-

1) Invoice No. 96013 (adjusted) for $274,456 dated 2 September 1996 at page 63 to 66 and which is based on quotation Q96013 dated 7 June 1996, pages 55 to 58.

2) Invoice No. 96014 for $198,445, also dated 2 September 1996, pages 69 to 70 which is based on quotation Q96014A dated 7 June 1996, pages 67 and 68.

3) Invoice No. 96015 for $158,992 dated 2 September 1996, pages 71 to 73, which refers to the additional works ordered by the defendant following the start of the work for which there is no quotation.

4) Two smaller invoices being 96016 (adjusted), which I have already referred to for $10,635, page 76, with no underlying quotation.

5) The debit note for $18,500, page 74, for the split air-conditioner.

10. These total $661,028.50. The defendant has paid $329,000 and the balance now claimed is for $332,028.50.

11. It was only once the two larger invoices dated 2 September and the one on 7 September were presented to the defendant that the first sign of this now prolonged dispute emerged. As I follow the evidence the works had progressed in a trouble-free manner. Once he saw what he was required to pay and that he had only been allowed a 5 per cent discount, the defendant began to take issue with the amounts that were being asked for and with the quality of some of the work. As to the quality of the work, it would not be fair to suggest that his complaints should have been made earlier or anything of that kind because whilst he no doubt had access to the premises during the works, he would not have had an opportunity to inspect them in any detail until after he went to live there in the early part of September.

12. It now becomes necessary to refer to the pleadings to see how the defendant's complaints are put against the plaintiff.

13. Unfortunately, the defendant has represented himself throughout. Whilst he is a highly articulate individual, he cannot be expected to conduct litigation of this sort as effectively as a represented litigant. He has not been able to marshall all the evidence that he should have. He has given evidence himself and called his secretary on a short issue in the case. He has prepared the pleadings and the witness statements. He has collected the documents in his possession to comply with the order for discovery. He has written all the correspondence with the plaintiffs and with their solicitors. In preparing his pleadings, I refer here to his defence, he has, as I shall have to indicate in more detail presently, made several general allegations and some specific points as to the quality of workmanship but this sort of home-made defence can never be a substitute for a professionally prepared pleading.

14. The result is that on a number of occasions, where he has sought to rely on a number of other matters not raised in his pleaded case, he has been met with the obvious objection that the particular matter has not been pleaded nor raised in his witness statements. Whilst the court would not wish to shut out a litigant in person, particularly one who feels so strongly that he has been overcharged by his builders who he accuses of substandard work, I am required to be fair to both sides.

15. The trial has taken place 41/2 years after the event. The plaintiff and his representatives have come to court to meet the case which is on the pleadings or at all events is at least indicated on the pleadings or, if not specifically pleaded, is referred to in the defendant's witness statements. Whilst I have been anxious to be of assistance to the defendant in the presentation of his case, I have stopped him producing new documents on the morning of the trial and other documents during the course of his closing speech which would have had the effect of supporting a counterclaim where none is pleaded. Nevertheless, I have let him raise a number of unpleaded allegations which appear in his witness statement that are not pleaded because I take the view that the plaintiff has had notice of them. I do not believe I would have given this sort of latitude to a represented party.

16. The final general comment that I wish to make is that in a case based, as this one is, on allegations of bad workmanship and materials, that the party taking that position as a defence would have supported its case by some expert evidence which would have dealt with each individual complaint and attached a cost to putting each item right. This is singularly lacking in the defendant's case and is due, I fear, to the defendant's failure to appreciate, as a layman, the sort of evidence that is required to contest a case such as this. In the event, I am left to consider his complaints, which I shall give proper effect to, with the limitations that I have just referred to.

17. It is convenient to first decide the issue of whether the

defendant had been given a 30 per cent discount on the plaintiff's prices or whether the prices were to be discounted by only 5 per cent.

18. Mr Kenneth Ng who appears for the plaintiff, has in the course of an extremely helpful and comprehensive final speech submitted that as a matter of burden of proof in respect of the allegations of defective workmanship, once the plaintiff, who retains the persuasive burden throughout, has shown that the work has been done, an evidential burden attaches to the defendant to demonstrate that the work is defective. I shall return to this in a moment when I come to consider the various allegations of defective work. But, in respect of this issue as to whether the discount was 30 per cent or 5 per cent, no such niceties arise. The plaintiff must show that the discount was 5 per cent, that being the basis of its assessment of the invoices.

19. As to this issue, I have already referred to the fact that the defendant himself says that the 30 per cent was not on the basis of the whole of the main two quotations, those dated 7 June 1996, but that the plaintiff was to do the important works and then the parties would decide on what further work would be carried out as the work progressed and that presumably, if the defendant is right about this, 30 per cent would be taken off the cost of each piece of work.

20. Mr Kwong is firm on all of this. The defendant had asked him for 10 per cent which he felt unable to deduct and they agreed on 5 per cent. He has put in sample invoices from his company showing various discounts that he has given to other clients and none come to anywhere near 30 per cent but these give me no assistance whatsoever. They are few and selected by Mr Kwong. I cannot rely on them to come to a view on this.

21. Of more assistance is what I regard as the inherent unlikelihood that a man of Mr Kwong's experience would go to all the trouble of preparing detailed quotations following three visits and then feel able to knock off very nearly a third from the asking price. That is just the starting point.

22. I derive more specific assistance from the correspondence between the parties that was exchanged once the dispute between them began to develop. The defendant wrote a series of letters to the plaintiff making a number of complaints about various aspects of the work and of the amount of the invoices. He wrote on 7 September, page 109; on 9 September, page 110; on 11 September, page 108; on 24 September, page 81 and on 6 October, page 80. There is not one mention of a 30 per cent discount in any of those letters.

23. The letter of 24 September at page 81 represents the first comprehensive broadside sent by the defendant against the plaintiff. It runs to three closely-typed pages. Clearly, the defendant must have thought about its contents before drafting it. Of particular significance is the absence of a reference to a 30 per cent discount. The first reference to this comes in a letter sent by him to the plaintiff's solicitors on 14 November 1996, page 155, where he asks why a 30 per cent discount was not given on the first two invoices, this being in response to a letter before action sent to him by the plaintiff's solicitors on 5 November (see page 100).

24. I have no doubt the defendant would very much have liked a 30 per cent discount from Mr Kwong but he soon realised that he was only going to get 5 per cent. In those circumstances he decided to try and leave the matter in the air. He hoped that by adopting this approach he would end up with a bigger discount as the work progressed and as he ordered additional works to be done. Whilst that may have been his hope, that hope never came to fruition. I am entirely satisfied that a 5 per cent discount was the firm basis of the pricing and so this issue is resolved in favour of the plaintiff. I have no doubt that Mr Kwong would not have started this work nor contracted on a 30 per cent discount.

25. I now turn to consider the various alleged defects in the work against the background of the shortcomings in the presentation of the defendant's case which I have already referred to.

26. A contract for these type of works comes with an implied term that the work will be done in a proper workmanlike manner by the contractor who will use suitable materials throughout. The first matter which the court must determine is the precise nature of the works ordered by the defendant and then look at the various invoices sued upon and decide whether the works described there were those ordered by the defendant and also, in the terms of this dispute, decide whether the work has been properly done, having regard to the implied terms that I have just referred to. If the answer to both these questions is yes, the plaintiff must succeed.

27. There is also another issue raised by the defendant that the plaintiff has been guilty of double charging where charges allegedly appear twice in different invoices. I must therefore also determine this issue.

28. As to the mechanics of the burden of proof which Mr Ng has raised in paragraph (9) of his written submission, it seems to me that the persuasive burden must remain with the plaintiff throughout. As to the allegations of defective work, the defendant has an evidential burden to raise these matters and once he has done that, the plaintiff, as the carrier of the overall persuasive burden, must then negative those allegations.

29. I now come to the specific matters that I need to decide. What works were ordered by the defendant?

30. I am satisfied that all the works set out in the two main quotations dated 7 June, that is to say Q96013, pages 55 to 58, and Q96014A, pages 67 and 68, were ordered by the defendant. There is no real issue about this, save that the defendant has said that when giving the initial $100,000 to start the work, he told Mr Kwong to do the important work and then he would give further instructions. This evidence related to his explanation as to how the 30 per cent discount was agreed on. Nevertheless, I have no doubt that these two quotations which were the result of discussion between the parties and three visits to the premises by Mr Kwong are what the defendant ordered. These two quotations are mirrored in invoices 96103 for $274,456 and 96014 for $198,445 which amounts are net after the 5 per cent discount. Subject to the issue of defective works, I am entirely satisfied that the works described in those two invoices have been carried out and that subject to the allegations about bad workmanship and/or materials, the plaintiff company must succeed.

31. The invoices which relate to what are described on the invoices as additional works have no initial quotation in support of them. In order to succeed, the plaintiff must show that these items of work were ordered by the defendant and that the prices were agreed by him or alternatively, that the prices are reasonable prices for the work done and the materials used. The tenor of the dispute on these invoices does not involve the direct question of whether the work had been asked for by the defendant but is concentrated on issues such as whether there has been double charging, the reasonableness of the charges and more particularly, of the quality of the work.

32. Having isolated the issues, I now turn to consider them separately.

1) Defective work

33. The issues are raised in the defence at paragraph 8(a) to (p) at page 16 of the bundle.

34. That therefore deals with the specific complaints. There are other more general complaints which are not pleaded, such as the fact that the lavatory seat does not stay up due to the position of the water closet relative to the wall and cabinet behind it. These and other unpleaded complaints, I am afraid I am not prepared to entertain.

35. Again, more generally, in respect of invoice 96016 (adjusted) which is for $10,365, the defendant was suggesting that this was bogus, meaning it had been made up (see page 76). This replaced invoice 96016 on page 75 which was cancelled. The defendant has said that Mr Kwong had threatened him with this charge if he did not settle the 2 September 1996 invoices immediately. I do not accept this evidence. I believe Mr Kwong when he tells me that he withdrew the invoice in its original form in a spirit of compromise, hoping that this would create an atmosphere that would allow the various issues between the two men to be resolved amicably. Alas, it did not, but I accept his evidence as the true version of events.

36. This then brings me to the last matter of the air-conditioner, the relative debit note being at page 74. This order was placed for the defendant by his brother, Ramesh, when the defendant was temporarily out of Hong Kong. The defendant's case is that the total cost of this air-conditioner and its installation was $19,500. The plaintiff says that the cost of the appliance was to be $18,500 plus $3,500 for installation which, in fact, the defendant has already paid the person who installed this appliance and also other air-conditioners for which he had to pay additional amounts. It is clear that this appliance cost $18,500 and it is inconceivable, having regard to the cost of installation of the other air-conditioners, that this, the largest of those orders, would only cost $1,000 to install. The plaintiff succeeds on this issue as well and must succeed as to the full amount of this debit note.

37. That then leaves over a small issue as to whether the 5 per cent discount should also apply to the lesser invoices for additional work. The defendant says that it is a 30 per cent discount throughout. I have already rejected this percentage. Mr Kwong says that they agreed that there would be no deduction on these additional works, hence no deduction is shown on the invoices. Where I have not felt able to accept the evidence of the defendant on the 30 per cent and much else and I have found Mr Kwong's evidence credible throughout, I see no reason to disbelieve Mr Kwong on this matter as well.

38. Accordingly, and for all these reasons, there must be judgment to the plaintiff in the amount appearing in the writ.

39. The sad postscript to this lengthy litigation is that I am reasonably sure that had these two gentlemen been more prepared to discuss the various matters that were in dispute, this trial could have been avoided. This, after all, is a modest claim and the costs are out of all proportion to the size of the claim. The impact of costs will mean that the defendant faces a substantial outlay and the consequence of taxation of costs will also result in the plaintiff not getting the full amount in net terms at all events.

(Discussion re interest and costs)

40. Mr Ahuja, I am not minded to award interest on the claim for the whole of the period because I take the view that the plaintiffs could have brought this on within 21/2 years, I think. So, I am going to award interest on the claim for a period of 30 months at half the judgment rate and thereafter at the judgment rate which is the usual order until the claim is paid and I am afraid there must be costs to the plaintiffs. They have had to bring the action and they have succeeded I am afraid, Mr Ahuja.