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DCCJ 3572/2019
[2021] HKDC 1148
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 3572 OF 2019
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BETWEEN
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WU TAK HUNG trading as VINCENT ENGINEERING |
Plaintiff |
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and
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LEE HOI trading as HOI KONG ENGINEERING COMPANY |
Defendant |
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Before: Deputy District Judge Charles Wong in Court
Date of Hearing: 1, 2, 3 and 8 March 2021
Date of Judgment: 14 September 2021
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JUDGMENT
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1. This action relates to a dispute over an air conditioning installation work contract of a shopping mall.
The background
2. The plaintiff is a company carrying on business as a contractor providing and installing large-scale air-conditioning and ventilation system for residential, commercial and/or industrial premises in Hong Kong.
3. The defendant is a building contractor who was engaged to take up renovation works at a shopping mall named One Terminal (一號總站) (“the Shopping Mall”) at the 1st Floor of Wah Lok Mansion including the common parts and toilets, No 2 Tsing Shan Square, Tuen Mun, New Territories, Hong Kong.
4. Elegant Decoration & Engineering Company was the principal contractor (“the Principal Contractor”) and the defendant was the sub-contractor of the renovation project for the Shopping Mall which includes the installation of air-conditioning system (“the Air-Con Project”).
5. At around mid-March 2015, the defendant approached the plaintiff for sub-sub-contracting to him the Air-Con Project. Eventually, the plaintiff and the defendant entered into an agreement for the provision and installation of air-conditioning and ventilation system at the Shopping Mall (“the Agreement”).
6. The Air-cooled air-conditioning system (“Air-Cooled System”) was eventually installed and completed by the plaintiff in or about the end of September 2015 and the defendant made a total payment at HK$3,400,000.00.
7. The plaintiff’s case is that the contract price under the Agreement was HK$4,686,000 and hence the defendant owes him an outstanding balance of HK$1,286,000. The defendant’s case is that the contract price under the Agreement was HK$3,543,000 and the plaintiff is not entitled to the outstanding balance of HK$143,000 as the plaintiff was in repudiatory breach of the Agreement for failing to install the Chiller properly, failing and/ or refusing to repair the Chiller within the warranty period and asking for an extra sum to which he was not entitled under the agreement and damaging the Chiller. The defendant also counterclaims the plaintiff for HK$60,000 being costs incurred in repairing the Chiller.
The plaintiff’s case
8. It is the plaintiff’s case that on 23 March 2015, the plaintiff gave the defendant a preliminary quotation for the provision and installation of ‘air-cooled’ air-conditioning system (“Air Cooled System”) (“1st Quotation”). On 14 April 2015, at the defendant’s request, the plaintiff provided the defendant with another quotation for provision and installation of ‘water-cooled’ air-conditioning system (“Water Cooled System”) (“2nd Quotation”). Since the water towers for the Water Cooled System was too heavy for the rooftop, it was rejected by the consultation firm engaged by the Shopping Mall, Ample Survey Services Limited (Ample). Upon the defendant’s request, the plaintiff provided the defendant with a revised Air Cooled System quotation on 28 April 2015 (“3rd Quotation”).
9. It was based on the 3rd Quotation that an agreement was made between the plaintiff and the defendant on 4 May 2015. Whereby the plaintiff agreed for the provision and installation of the Air Cooled System at the price of HK$4,686,000.00 (“the Agreed Price”).
10. Pursuant to the terms of Agreement as set out in the 3rd Quotation, the defendant was to make payment up to 90% by different stages of the Agreed Price during the progress of the provision and installation works and the defendant was to pay the outstanding balance of the Agreed Price one month after the completion of the installation works. Accordingly, the defendant did make payments on different occasions to the plaintiff at all times and during the progress of the installation works in partial satisfaction of the Agreed Price as follows:-
| Description |
Date (dd/mm/yy) |
Amount |
| 1st interim payment |
04/05/2015 |
HK$600,000.00 |
| 2nd interim payment |
04/06/2015 |
HK$600,000.00 |
| 3rd interim payment |
26/06/2015 |
HK$800,000.00 |
| 4th interim payment |
27/07/2015 |
HK$500,000.00 |
| 5th interim payment |
28/08/2015 |
HK$500,000.00 |
|
Total: |
HK$3,000,000.00 |
11. Upon completion of the installation works on 21 September 2015 and the quality of the installation works was duly inspected and approved by the defendant, Ample and the Principal Contractor to be satisfactory, the defendant only made further partial payments in sum of HK$300,000.00 and HK$100,000.00 to the plaintiff on 7 October 2015 and 12 December 2015 respectively. The defendant had in total made a partial payment at HK$3,400,000.000 of the Agreed Price, leaving an outstanding sum of HK$1,286,000.00 unpaid for (“the Outstanding Sum”).
12. The plaintiff then issued an invoice to the defendant on 24 December 2015 and made a formal demand to the defendant for payment of the Outstanding Sum. Despite repeated demands and requests, the defendant has continued to refuse to pay any or part of the Outstanding Sum to the plaintiff.
The defendant’s case
13. By a project agreement dated 22 April 2015 (the “Project Agreement”), the Principal Contractor subcontracted its renovation works to the Shopping Mall to the defendant at the price of HK$21,600,000.00.
The breakdown for the Project Agreement is as follows:
(1) Installation of power units, water supply and drainage system at HK$5,180,000.00;
(2) Installation of Air Conditioning Equipment (the “Air-con Project”) at HK$4,220,000.00;
(3) Supplying renovation materials and installing fire-fighting system at HK$12,200,000.00;
(4) The warranty period of the renovation was 1 year after the completion of the renovation project; and
(5) Until the lapse of the abovementioned warranty period, the Principal Contractor was entitled to withhold a portion of the contract price.
14. On or before 14 April 2015, whilst the Principal Contractor and the defendant were in the course of negotiating the Project Agreement, the defendant approached the plaintiff with the intention to sub-subcontract the Air-Con Project to the plaintiff. Subsequently, in or late April 2015, the defendant sub-subcontracted the Air-Con Project to the plaintiff at the price of HK$3,543,100.00 pursuant to an oral agreement (the “Air-Con Agreement”), and the aforesaid contract price was based on the quotation dated 14 April 2015. It is not disputed that this is what the plaintiff refers to as the 2nd Quotation.
15. Pursuant to the 2nd Quotation, inter alia, the plaintiff was required to install the Water-Cooled System in which, 2 Water-Cooling Towers needed to be installed on the rooftop of the Shopping Mall and 75 air conditioner units needed to be installed in the corridors of the Shopping Mall respectively.
16. Notwithstanding the error of the recipient’s name, the defendant wrote the Chinese character “新” on each and every page of the 2nd Quotation to indicate that it would be used as the basis of sub-subcontracting the Air-Con Project to the plaintiff. Meanwhile, the plaintiff also stamped his company chop on the last page of the 2nd Quotation as confirmation.
17. Shortly after the Project Agreement was formally signed by the defendant and the Principal Contractor on 22 April 2015, upon the basis of the 2nd Quotation, the plaintiff and the defendant reached the Air-Con Agreement with the defendant sub-subcontracted the Air-Con Project to the plaintiff at the price of HK$3,543,100.00 (the “Contract Price”).
18. The terms of agreement were as follows:-
(1) The plaintiff agreed to conduct the Air-Con Project for the defendant at the price of HK$3,543,100.00 pursuant to the 2nd Quotation;
(2) The parties agreed that the Water-Cooled System would be installed in the Shopping Mall;
(3) The plaintiff agreed the warranty period of the air-conditioning system was 1 year after the completion of the Air-Con Project;
(4) The parties agreed that the defendant shall first settle HK$3,400,000.00 (which was about or equivalent to 96% of the Contract Price), then the remaining HK$143,100.00 (which was about or equivalent to 4% of the Contract Price) shall be settled 1 year after the completion of the Air-Con Project;
(5) The parties also agreed that the said remaining HK$143,100.00, in accordance with the common business practice, would be withheld by the defendant to ensure the plaintiff would repair the air-conditioning system in case it broke down within the said 1-year warranty period; and
(6) By implied term, it was agreed that the plaintiff shall take care not to cause any damage to any part of the air-conditioning system at all material times.
19. Before making the 1st payment, the parties verbally agreed to vary the Air-Con Agreement (the “Varied Air-Con Agreement”). It was orally agreed that the plaintiff would install the Air-Cooled System instead of the Water-Cooled System. Under the Air-Cooled System, only 1 Integrated Hydronic Module needed to be installed on the rooftop of the Shopping Mall and 57 Fan Coils needed to be installed in the corridors of the shopping mall respectively.
20. Save and except the variation of the Air Cooled System, other terms and conditions of the Air-Con Agreement remained the same in the Varied Air-Con Agreement, including the Contract Price and the said warranty period.
21. The renovation project under the Project Agreement was completed in or about end of September 2015 and the defendant made 7 payments in total to settle the said 96% of the Contract Price pursuant to the Varied Air-Con Agreement:-
| Description |
Date (dd/mm/yy) |
Amount |
| 1st payment |
4/5/2015 |
HK$600,000.00 |
| 2nd payment |
4/6/2015 |
HK$600,000.00 |
| 3rd payment |
26/6/2015 |
HK$800,000.00 |
| 4th payment |
27/7/2015 |
HK$500,000.00 |
| 5th payment |
28/8/2015 |
HK$500,000.00 |
| 6th payment |
7/10/2015 |
HK$300,000.00 |
| 7th payment |
12/12/2015 |
HK$100,000.00 |
|
Total: |
HK$3,400,000.00 |
22. In or about late August or early September 2016, less than a year after the plaintiff finished the Air-Con Project and handed it over to the Principal Contractor, one of the chillers of the Air-Cooled System (the “Chiller”) broken down.
23. The plaintiff was therefore called in by the defendant to repair the Chiller; however, the plaintiff refused to fix the Chiller unless the defendant agreed to pay the plaintiff an extra sum of HK$1,250,000.00 (the “Extra Sum”).
24. When the defendant refused to pay the Extra Sum to the plaintiff, in the absence of any notification to the defendant, the plaintiff secretly entered into the rooftop area of the Shopping Mall and further vandalized the Chiller as follows:-
(1) The Chiller’s K90F relay was bypassed by an extension cord, which triggered the flow switch alarm when the Chiller was turned off.
(2) The display board of the Chiller was out of order, which caused the Chiller uncontrollable by the remote control and the display board therefore had to be replaced.
25. The plaintiff was in repudiatory breach of the Varied Air-Con Agreement, which the defendant orally accepted on the date that the plaintiff demanded for the Extra Sum, as follows:-
(1) The plaintiff failed to install the Chiller properly, which formed a crucial part of the Air-Cooled System;
(2) The plaintiff failed and/or refused to repair the Chiller while the Air-Cooled System was still within the 1 year warranty period;
(3) The plaintiff asked for the Extra Sum, which deviated from the Contract Price pursuant to Varied Air-Con Agreement; and
(4) The plaintiff further damaged the Chiller.
26. Due to the abovementioned repudiatory breach, the defendant’s contractual duty to pay the defendant the remaining 4% of the Contract Price (ie HK$143,100.00) pursuant to the Varied Air-Con Agreement has been discharged.
27. As a result, the defendant’s case being it had to engage other contractors to remedy the defects of the Chiller and counterclaims HK$60,000.00 for the defendant’s loss and damages.
Issue in dispute
28. On the first day of the trial, the defendant abandoned his counterclaim and conceded liability for the return of the remaining 4% of the contract price in the sum of HK$143,100.
29. As a result of the defendant’s late concession, the court is only asked to determine the contract price, whether it was HK$3,543,000 (2nd Quotation) or HK$4,686,000 (3rd Quotation).
The Analysis
Did the defendant receive the 3rd Quotation on around 28 April 2015?
30. The plaintiff’s claim stands and falls on one important factual finding of whether the defendant received the 3rd Quotation on or about 28 April 2015. This core factual matter warrants a full analysis.
31. Under cross-examination, the defendant stated that he never saw the 3rd Quotation until early October 2016 which was about a year after the Agreement, when the plaintiff was called in to do repair work and the parties had a heated argument which ended up having to make a police report (“the Rooftop Incident”). According to the defendant, that was the first time he was shown the 3rd Quotation. The defendant, then in court for the first time stated that he had refused to take the copy of the 3rd Quotation at the rooftop because he was angry and he only got his copy of the 3rd Quotation later through the solicitors. This was poles apart from his own affirmation dated 27 November 2018.
32. In his affirmation, the defendant affirmed that the first time he saw the 3rd Quotation was on the rooftop when the plaintiff presented it to him asking him to pay the Extra Sum of HK$1,286,000[1] and the 3rd Quotation that he received from the plaintiff only contained two pages. The defendant then affirmed that when he moved his office from Tai Kwok Tsui Office to Mongkok office, and upon his solicitor’s advice, he passed the 3rd Quotation to his solicitors in or about December 2017. It is clear from the defendant’s affirmation that it was the defendant himself who received the 3rd Quotation and later passed it on to his solicitors for handling and not the other way round.
33. According to the defendant it was only a couple of days before the Rooftop Incident that the plaintiff had over the phone suddenly out of the blue for the first time demanded for an extra sum of HK$1,286,000 which had made the defendant furious and hung up the phone on the plaintiff. It would have been rather illogical under those circumstances for the defendant to have accepted a quotation from the plaintiff a couple of days later.
34. The Rooftop Incident occurred at approximately a year after the completion of the installation of the Air Cooled System. By then, all the works have been done except for minor maintenance work. The plaintiff had at that stage very little bargaining power and was in no position to make a demand for an additional HK$1,286,000. The plaintiff could have easily been replaced by other contractor(s) to do the minor maintenance work. In any event, even if the plaintiff had plotted to make such a demand at that late stage, it would have made more sense for him to have presented the defendant with the invoice[2] rather than an unsigned quotation.
Made no commercial sense for the parties to proceed without the 3rd Quotation
35. The Air Cooled system and the Water Cooled System were two completely different air conditioning systems which involved the purchase of different main air conditioning pieces. The Air Cooled System required the purchase of many new items. Out of the 15 items as set out in the 3rd Quotation, new items for the Air Cooled System included the Carrier Chiller and new brands of fan coils under items 1-6. Items 7-10 on the installation of water tank and fan coils were newly revised and item 13-15 related to the provision and installation of the insulation parts were also new items. These are all significant variations from the Water Cooled System under the 2nd Quotation, which increased the costs significantly. For instance, the price of the Chillers which were not needed for the Water Cooled System alone were at HK$807,000. This is supported by the purchase order showing the plaintiff subsequently on 6 May 2015 bought the Chillers at the cost of HK$738,000 from Carrier.[3]
36. The Project Agreement required the defendant to provide the Principal Contractor with the work sheet and project proposal. Since Ample had disapproved the Water Cooled System proposal, the defendant apparently needed Ample’s approval to proceed with the Air Con Installation work. The details and specifications of the Air Cooled System clearly would have had to be submitted to Ample for its approval. However, based on the defendant’s case, he only had with him the 2nd Quotation. Without a proper quotation and work specifics for the Air Cooled System, the defendant at around end of April to early May 2015 would simply have nothing in writing to go by to get the approval from Ample and the Principal contractor.
37. Further, the Shopping Mall would also require a proper record of items purchased and work done for the record and future maintenance purpose. The defendant would have had to report and account for the work done and Air Cooled System installed. The defendant had nothing in writing before him to consider the brands of items to be purchased and the work involved for the installation of the Air Cooled system. It would have been impossible for the defendant to verify and check on the items to be installed and works to be done. There would be no basis for any claims against the failure to supply and items and defective work for the Air Cooled System. A quotation for the Air Cooled System was essential for this purpose.
38. It would have taken the plaintiff probably at most a couple of days to come up with a revised quotation for the Air Cooled System, hence, it made no commercial sense for the defendant to have instructed the plaintiff to start work without first obtaining from the plaintiff a quotation with specifications of the items to be purchased and the works to be carried out in relation to the Air Cooled System.
39. I find it inherently improbable that the parties carrying out building contract at the amount of multi-million dollars could have proceeded without any document which set out the scope of works and prices for the significant varied work to be done and I also find it incredible that the defendant could have proceeded to report to the Principal Contractor and Ample without a full list of items to be installed as set out in the 3rd Quotation. I am not persuaded that the defendant, as subcontractor to the Air Con Project would have given the plaintiff the green light to purchase the Chiller and carry out the installation work without being provided with the quotation for the Air-Cooled System.
40. I therefore do not accept the defendant’s case that he did not personally receive the 3rd Quotation. I find that the defendant has been provided with the 3rd Quotation latest by the end of April 2015.
The letter before Action dated 17 November 2016 [4]
41. At the commencement of trial, counsel for the defendant initially on behalf of the defendant denied receiving the demand letter by Messrs Lee & So, Solicitors dated 17 November 2016[5] which demanded that the defendant pay the outstanding subcontract sum of HK$1,286,000. Upon consideration of an admission of the receipt of the letter in the Amended Defence and Counterclaim[6] and after taking instructions defence counsel retracted from the denial but stated that the defendant was unable to recall when he received the demand letter. Notwithstanding the said clarification, during cross-examination the defendant again stated that he never received any demand letter from the defendant’s solicitors.
42. The defendant has shifted his stance on whether he received the demand letter and when confronted with his own pleaded case, he was evasive about the time when he received the letter. I reject the defendant’s evidence on this subject and find that he must have received the demand letter on or about 17 November 2016 and have failed to make any reply to this letter. This letter was issued more than half a year before the issue of the writ in August 2017. The failure to make a reply on the defendant’s part did undermine his case that the plaintiff had made up the alleged outstanding sum as well as his case on the plaintiff’s sabotage and blackmail.
Was the defendant in possession of the original copy of the 2nd Quotation?
43. At discovery stage, the plaintiff sought specific discovery of the originals of the 2nd and 3rd Quotations. The defendant in his affirmation dated 25 February 2021 affirmed that the original copy of the 2nd Quotation was lost when he moved his office from Shop 2, G/F, 68 Bedford Road, Tai Kok Tsui, Kowloon, Hong Kong (“Tai Kok Tsui office”) to the address at Canton Road, Mong Kok, Kowloon, Hong Kong (“Mong Kok office”). However, some invoices and receipts from Carrier to the defendant dated 10 April 2017 were still sent to the Tai Kok Tsui office.[7] In cross-examination, the defendant had to admit that he was still renting the Tai Kok Tsui Office. I find the defendant’s reason for not providing the originals of the 2nd Quotation unconvincing and adversely reflects on his credibility.
The invoice dated 24 December 2015 [8]
44. The defendant denies having received the plaintiff’s invoice dated 24 December 2015. The defendant also denies requesting for one.
45. I find it unreasonable for the defendant not to have requested for an invoice from the plaintiff. The defendant would have required the invoice and receipt of the Air Con Project for taxation purpose. The defendant claimed that his accountant did not request for an invoice in relation to this project. I do not find this to be a convincing reason for not requesting an invoice. The authenticity of the invoice produced by the plaintiff is not seriously challenged and I do not accept the defendant’s case that he did not receive it.
No price change despite changing from Water Cooled System to Air Cooled System
46. It is the defendant’s case that the plaintiff has agreed that despite the change to the Air Cooled System, the sub-subcontract Air Con Project price remained the same at HK$3,543,100 as set out in the 2nd Quotation. The defendant’s case is that the plaintiff informed him that despite the change to Air Cooled System, the contract price remained the same because the Air Cooled System could be installed at a more cost-effective way. That is because the 300 shops were of little depth and these shops could benefit from the cool air from the corridor, there would be no need to install split-type air-conditioners for each individual shop[9]. Hence, they can proceed with the installation of the Air Cooled System at the original contract price.
47. I find the defendant’s explanation illogical. Under the 2nd Quotation[10], items 1-14 at the price of $3,543,100 had already excluded the installation of the individual air conditioners inside the 300 individual shops. Hence, the non-installation of air conditioners inside the 300 shops should have no bearing in the contract price when switching from Water Cooled System to Air Cooled System.
48. The documentary evidence shows that due to the fact that the installation of the Air Cooled System required installation of three types of water pipes as opposed to just one in the Water Cooled System plus the fact that the water pipes needed to be insulated, the price for the installation of the Air-Cooled System was significantly higher than the Water Cooled System. Under the 2nd Quotation, the Water-Cooled System featuring 4 cooling towers of the brand name Ryowo “菱和”. The price for the two 80-tonne and two 200-tonne towers are HK$39,000 and HK$123,600. They add up to HK$162,600.[11] Whereas, under the 3rd Quotation the Air Cooled System adopted two Carrier Chillers “開利牌 風冷冷水機組” for which the plaintiff quoted $807,000.[12] It is not disputed that the plaintiff had installed the Chillers and other installation work in accordance with the 3rd Quotation.
49. By the time the plaintiff was informed by the defendant that the Air Cooled System had to be adopted, unlike the defendant who on 22 April 2015 had already committed himself by accepting the Project Agreement, the plaintiff was under no pressure to accept what the defendant described as the oral variation of the 2nd Quotation at the same price.
50. According to the defendant, the plaintiff did not even bring up the subject of the need to upward adjust the sub-sub contract price, but simply informed the defendant that the price would remain the same. It did not seem to make any commercial sense for the plaintiff to have agreed to no price change without even an attempt to negotiate for a higher price when the plaintiff knew that there was to be a substantial rise in the costs for the installation and the purchase of items for the Air Cooler System.
51. I therefore accept Mr Lau, counsel for the plaintiff’s submission that it is inherently improbable for either the plaintiff or the defendant to believe that the price could remain the same after the conversion from Water Cooled System to the Air Cooled System. I reject the defendant’s case that the plaintiff has informed the defendant that the price would remain the same irrespective of changing from Water Cooling System to Air Cooled System.
The defendant would not have accepted the 3rd Quotation for he would make a loss?
52. Ms Chan, counsel for the defendant, submits that under the Project Agreement, the defendant would only receive HK$4,220,000 contract price for the Air Con Project.[13] It is therefore inherently improbable for the defendant to sub-sub contract the air con project to the plaintiff at the contract price of HK$4,686,000 which means he would have made a loss.
53. The Project Agreement included three types of works, fire service, air-conditioning and water and electricity. The defendant admitted in cross-examination that the expected profit of the whole project, including electric works, decoration works, fire service installation and equipment, would amount to around HK$2-3 millions. Even if the Air Con Project may cause the defendant to make a loss at $466,000, the defendant would still make a profit of over $2 million out of the Project Agreement.
54. When taking into account the fact that Ample disapproved the Water Cooled System at around 28 April 2015, there was obviously time pressure for the defendant to place an order for the Chillers to meet the Project Agreement deadline, which was 143 days from 22 April 2015.[14] Given the fact that the plaintiff had estimated 2 months for the delivery of Chillers, when handing over the cheque of HK$600,000 to the plaintiff on 4 May 2015, the defendant himself had expressed his concern that there may not be sufficient time for the installation of the Air Cooled System. Faced with the tight schedule, the defendant did not have the luxury of time to find a substitute sub-sub Air Con contractor. In the circumstances, I do not accept that it was inherently improbable for the defendant to sub-sub contract the Air Con Project to the plaintiff at the price of HK$4,686,000. The loss in the air con sub-sub contract could have been made up by the overall gains from the Project Agreement.
Defect liability period (DLP)/ warranty period
55. The defendant’s pleaded case on the DLP was that the plaintiff agreed that the warranty period of the air-conditioning system was 1 year after the completion of the Air-Con Project. This is in line with the Project Agreement which required there to be 1 year warranty period. Whereas in court, the defendant at one stage refused to admit that the warrant period was one year. The defendant was inconsistent on the duration of the DLP which also adversely affects his credibility.
The audio recording transcript
56. The plaintiff produced the transcript of the audio-recorded conversation on 4 October 2015 with Mr Siu Pui Fung (“Mr Siu”), a shareholder and director of Hoi Kong Design Engineering Ltd of which the defendant is the majority shareholder. The plaintiff in his oral evidence said that it took place on 6 October 2015. Mr Siu in the audio recording claims he was authorised to speak with the plaintiff. The defendant denies that Mr Siu had authority to discuss issues relating to Air Con Project on behalf of the defendant. Having considered the contents of the conversation, I find that the matters arising from the audio recording is of little probative value in relation to the core issues before the court and I attach little weigh to the transcript. I also do not find it appropriate to draw any adverse inference against the defendant’s failure to call Mr Siu to give evidence.
The alleged blackmail/extortion and sabotage
57. The defendant’s case in his witness statement stated that around September and October 2016, the plaintiff presented the 3rd Quotation and threatened the defendant to pay him $1,286,000, otherwise the plaintiff would no longer perform any repair works. Mr Keung Kin Wah (Mr Keung), the managing supervisor of the Shopping Mall confirmed that the plaintiff was given access and authority to carry out repair work. Mr Keung was present during the repair. There was no evidence of the alleged sabotage by the plaintiff or his team as alleged by the defendant.
58. Under cross-examination, the defendant withdrew the complaints that (1) the plaintiff failed to install the Chiller properly; and (2) the plaintiff refused to repair the Chiller during the warranty period. The defendant also admitted that his complaint of the alleged sabotage is as a result of his mere speculation. I find that the defendant has not proven on balance of probability that the plaintiff threatened not to carry out repair or damaged the Chiller.
The factual findings
59. Both parties agree that this case turns on the factual findings based on the reliability of the witnesses. In assessing the credibility of the witnesses, I have reminded myself of the dicta summarized in Hui Cheng Fai and another v Daiwa Development Limited, HCA 1734/2009, and dated 8 April 2014 at para 77-81.
“77. Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility: Onassis v Vergottis [1968] 2 Lloyd’s Rep 403 at 431 (Lord Pearce). It is right to point out, however, that some of the documents in this case are alleged by the Son to be shams and those documents obviously cannot be used to assess the credibility of the parties.
78. In deciding whether to accept a witness’ account, importance should also be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events: e.g. Lam Rogerio Sou Fung v Tan Soon Gin George (unreported, HCA 2576/2005, 5 May 2011) §39 (Chu J).
79. In determining a witness’ credibility, I have also attached importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement.
80. I have cautioned myself against the dangers of too readily drawing conclusions about truthfulness and reliability solely or mainly from the appearance of witnesses (Ting Kwok Keung v Tam Dick Yuen (2002) 5 HKCFAR 336 at §§36-37 (Bokhary PJ)), or from the assessment of the witnesses’ character (Esquire (Electronics) Ltd v HSBC [2007] 3 HKLRD 439 at §135 (Stock JA)).
81. The practical approach to assessing credibility of witnesses in a case such as the present may have best been summarized by the words of Robert Goff LJ, as he then was, in The Ocean Frost [1985] 1 Lloyd’s Rep 1 at 57:
“Speaking from my experience, I have found it essential in cases of fraud, when considering the credibility of witnesses, always to test their veracity by reference to the objective facts proved independently of their testimony, in particular by reference to the documents in the case, and also to pay particular regard to their motives and to the overall probabilities. It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witnesses’ motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth.”
60. For reasons stated, I find the defendant to be an untruthful witness and his evidence was inconsistent and unreliable. I also find the defendant’s case inherently improbable. On the other hand, I find the plaintiff’s case to be consistent, logical and makes commercial sense. The plaintiff and his witness, Mr Keung, an independent witness impressed me as straightforward and trustworthy witnesses. They remained unshaken in cross-examination. When there are conflicting evidence between the plaintiff and the defendant, I have no hesitation in preferring the plaintiff’s evidence to the defendant’s.
61. I therefore make the following factual findings:-
(1) On 23 March 2015, the plaintiff gave the defendant the 1st Quotation for the provision and installation of the Air Cooled System for the Shopping Mall which at the time the plaintiff has not made any on-site inspection.
(2) On 14 April 2015, at the defendant’s request, the plaintiff personally handed to the defendant the 2nd Quotation for the provision and installation of the Water Cooled System.
(3) After 14 April 2015 but before 28 April 2015, Ample informed the plaintiff and the defendant that the Water Cooled System was not viable due to the rooftop loading. The defendant then instructed the plaintiff to prepare a new quotation for the Air Cooled System but at a lower price as compared to the 1st Quotation.
(4) On 28 April 2015, the plaintiff personally delivered to the plaintiff two copies of the 3rd Quotation at the contract price of HK$4,686,000 at the defendant’s office. Both copies were stamped and signed by the plaintiff.
(5) At the defendant’s office, the plaintiff asked the defendant to sign on the 3rd Quotation but the defendant said that he was busy and would like to have a closer look at it first. A few days later, he was informed by the defendant that the quotation had been approved by Ample. The defendant told the plaintiff to go up to his office to collect a cheque to place order for the Chillers under the 3rd Quotation.
(6) On 4 May 2015, the plaintiff again visited the defendant’s office. The plaintiff informed the defendant that it may take about two months for the Chillers to arrive, the defendant gave the plaintiff a cheque for HK$600,000 and instructed the plaintiff to proceed to place an order for the two Chillers listed on the 3rd Quotation as there may not be sufficient time for installation of the Air Cooler System. The defendant did not sign the 3rd Quotation but promised that he would give the plaintiff the signed copy the next time they meet.
(7) The plaintiff then proceeded to place order for the Chillers and started the installation works as specified in the 3rd Quotation.
(8) On 21 September 2015, testing and commissioning in respect of the Air Cooled System was carried out. This also marked the commencement of DLP for a period of 1 year. During the DLP, there were only a few occasions when the plaintiff was called in to fix some minor problems which were satisfactorily remedied.
(9) When the plaintiff made requests for the balance payment, the defendant told the plaintiff to issue an invoice. As a result the plaintiff issued an invoice on 24 December 2015.[15] The defendant received the invoice around 24 December 2015. When the balance sum remained outstanding, the plaintiff continued to request the defendant for payment by telephone calls and text messages.
(10) Despite the expiry of the warranty period, in early October 2016, the plaintiff agreed to carry out repair work on the Chiller upon the Principal Contractor’s request.
(11) The plaintiff’s solicitors sent a demand letter before action to defendant on 17 November 2016 which the defendant received but made no reply.
62. Ms Chan submits that even if the plaintiff’s case is accepted in its entirety, the evidence is insufficient to prove that an agreement was formed based on the 3rd Quotation. In my judgment, the defendant by requesting for the 3rd Quotation, having received it on or about 28 April 2015 must have seen and had time to consider the contents of the 3rd Quotation. By asking the plaintiff to come back on 4 May 2015 and giving a cheque to the plaintiff to place the order of the Chillers as stipulated under the 3rd Quotation, it shows that the defendant had acted on the 3rd Quotation. The handing over of the HK$600,000 cheque in my judgment was a payment under the 3rd Quotation[16] and amounted to an acceptance by the defendant of the 3rd Quotation. I accordingly reject Ms Chan’s submission that there is no evidence that the defendant has actually seen or agreed to the price stated in the 3rd Quotation.
63. I find that the Air Con Project was based on the 3rd Quotation at the contract price of HK$4,686,000. In light of the defendant’s concession at the commencement of the trial, I find that the plaintiff was not in repudiatory breach of the agreement and I make an order that:-
(1) Judgment be entered for the plaintiff against the defendant in the sum of HK$1,286,000 with interest.
(2) Counterclaim be dismissed with costs to the plaintiff.
(3) The defendant do pay the plaintiff’s costs of this action. The plaintiff’s own costs shall be taxed in accordance with Legal Aid Regulations, if not agreed.
64. I thank both counsel for their assistance.
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(Charles Wong) |
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Deputy District Judge |
Mr Raymond Lau, instructed by Lee & So, assigned by the Director of Legal Aid Department, for the plaintiff
Miss Joyce M Y Chan, instructed by T H Wong & Co, for the defendant
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