ALDO TRADING LTD v. PARTNER DECORATION ENGINEERING LTD

CACV 30/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 30 OF 2008

(ON APPEAL FROM HCA 1199 OF 2005)

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REASONS FOR JUDGMENT

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Hon Le Pichon JA :

1. I agree with the reasons for judgment given by Cheung JA.

Hon Cheung JA :

2. The Court dismissed the appeal by Charlie Lee Chun Kee (‘Lee’) (the 2^nd defendant by counterclaim) against the judgment of Burrell J and ordered costs of the appeal to be paid by Lee.  I now give the reasons for the dismissal.

Background

3. In the original action, Aldo Trading Limited (‘Aldo’) sued the defendant Partner Decoration Engineering Limited (‘Partner’) for damages in the sum of $2,298,599 arising from defective workmanship of Partner in the waterproofing and installation of wooden flooring works (‘the works’) carried out by Partner for Aldo.

4. Partner denied that it did the works for Aldo.  It claimed that the works were done for Lee.

5. Partner raised a counterclaim of $812,980.49 for the balance of payment due to it under the works against Aldo alternatively against Lee.  Lee was joined as the 2^nd defendant by Partner in its counterclaim. 

6. After a 10 day trial, Burrell J dismissed Aldo’s claim against Partner on the merits.  He further found that it was Lee who had contracted with Partner.  He found for Partner on its counterclaim against Lee.  He gave judgment for Partner accordingly.

7. Lee appealed against the judgment. 

Identity of the employer

8. The sole issue in this appeal was whether Lee had contracted with Partner.  Lee did not challenge the judgment on the substance of the claim and counterclaim.

9. Lee was the registered owner of half of the interest of a building situated at 98 Repulse Bay Road (‘the Building’).  He acquired it in 1960.  Lee’s share in the Building consisted of seven flats.  In 2003 Lee carried out renovation work to the flats.  Partner was involved with part of this renovation, two items of its work are the subject matter of this case.

10. Lee instructed a firm of architects, Fairview Project Consultants Ltd (‘Fairview’), to be his consultant, designer and architect for the renovation work.  The agreement instructing Fairview was signed by Lee on 12 June 2003 (‘the consultant agreement’).  The consultant agreement was addressed to ‘Hecny Group....  For the attention of Mr. Charlie Lee, President’.  Although the parties in this agreement were stated to be the Hecny Group and Fairview, Lee signed the consultant agreement without qualifying that he signed for and on behalf of the Hecny Group.  No company seal of Hecny Group was stamped on the signature column of the consultant agreement.

11. Fairview then invited Partner to tender for the renovation work on 8 August 2003.   

12. On 13 September 2003 Lee assigned his share in the Building to Aldo.  The Judge found that neither Fairview nor Partner was aware of this. 

13. Partner on 24 September 2003 submitted a quotation to Fairview for the renovation work.  By a letter dated 25 September 2003 Fairview informed Partner that the quotation was accepted.  This letter stated that Fairview accepted the tender ‘On behalf of our client, Gold World Trading Ltd. (‘Gold World’)’.

No conclusive answer

14. The consultant agreement and the letter of acceptance dated 25 September 2003 did not provide a conclusive answer as to who was the employer of Partner.  Hecny Group and Gold World were companies belonging to Lee.  In fact the letter dated 25 September 2003 added more confusion to the topic.  Page two of the letter had a ‘Confirmed and Accepted By’ clause.  It was signed by the son of Lee.  Again there was no qualification that he signed for and on behalf of Gold World.  The company seal was also not imprinted on the letter.

The invoices

15. Some light was thrown on the identity of employer by the invoices issued by Partner seeking payment for the works.  They were all addressed to Aldo.  Aldo’s name was typed against the printed word ‘client’.

16. The invoices were indeed strong evidence, if they were the only evidence in this case, upon which an inference could be drawn that Partner itself regarded Aldo as the employer.

17. Mr. Kenneth Chan, who appeared together with Mr. Herbert Leung, as counsel for Lee, recognized the heavy burden he faced in challenging a finding of fact.  He skilfully submitted that the Judge had ignored a very important piece of evidence, namely, the admission by Mr. Sit, the owner of Partner, that whoever’s name was put on the invoice was his client.  If that was the case, then the finding would be flawed.

18. It is necessary to refer to the questions put by Mr. Chan and the answers provided by Mr. Sit on this topic :

‘Q. Now, this invoice, your counsel had asked you, “You don’t understand the words A-L-D-O Trading Limited.”  Is it your case you did not even recognise it was a company when it was put there?

A.    I did not know.

Q.    Although I know you don’t understand English...

A.    Because I even don’t know the English name of my own company.

Q.    But this word “Limited,” for that many years of being a contractor are you suggesting you don’t even know it is referring to a company at all?

A.    I really don’t know.

Q.    You understand Chinese.

A.    Yes.

Q.    Before the word of English appearing it was stated in Chinese “client.”

A.    Yes.

MR CHAN:  35 is the original.

Q.    That you understand to mean “client” and nothing else.

A.    Right, correct.

Q.    And you understand what you put after that column, which is your own invoice, meant by you to be your client.

A.    I suppose that is the case.

Q.    That is the case, isn’t it?  Not “supposed.”  That is the case.  Your client is Aldo Trading Limited as you yourself put it on.

A.    Yes, correct.

Q.    So to cut it short, your client is not Charlie Lee.  It is Aldo Trading Limited as you described there.

A.    At that time I did not know him.  In fact up to now, I still do not know him.  What I do know is he was the client.  At the time when I had made the quotations I was told that the place at Repulse Bay belonged to Mr Lee.  But I did not know who Mr Lee was because I was never in contact with him.

Q.    Would you accept the name - whatever you put in here as your client - as your client as you treated it, as your choice?

A.    Yes, but it was not my choice.

Q.    Even if it was a suggestion it was your choice who to put down as your client.

A.    Yes, I just put down whatever I was told to put down.

Q.    But once you put it down it was meant to have an effect, as you would realise, isn’t it?

A.    That I don’t know.

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Q.    In so far as to whom you look for payment you said Aldo again had not nothing to do with Charlie Lee.

A.    I don’t know what you are talking about.

Q.   When you put the name down on the invoice of 35 how did you understand those English words would stand for?  Are you suggesting it means Mr Lee?

A.    It means the client.

Q.    So you would accept whoever you would say there was your client.

A.    Yes.

Q.    So your client is...

A.    Well, I just put down whatever he told me to put down.

Q.    Okay, but that is something accepted by you that is important.

A.    Yes.  Well, I was not clear as to who the client was.  I just wrote down whatever he told me to write.’

19. I do not consider that the Judge had ignored this evidence at all.  The Judge having found Mr. Sit to be ‘an honest and reliable witness’ when he dealt with the merits of Aldo’s claim, specifically addressed the issue of Aldo’s name on the invoices :

‘ 68. As stated earlier Partner takes the view that, throughout, Mr Lee was the employer and Mr Sit was unaware of the BVI company, named Aldo until the proceedings commenced.  Mr Sit conceded that the word “Aldo” appears at the top of his invoice for interim payments.  To that extent he had heard of the word “Aldo”.  However, he neither writes, nor reads nor understands English.  It was merely a word which Tony Chan instructed him to put on the invoices.  He duly typed the four letters “ALDO” at the top of each invoice.  There is no doubt that he was unaware that Mr Lee had assigned 98 RBR to Aldo in September 2003.’

20. The evidence shows that Mr. Sit only had two years of primary education.  There was no need for the Judge when he dealt with this issue to state again the reliability of Mr. Sit as a witness.  The extract shows that the Judge accepted the evidence of Mr. Sit including his answer that he did not know who his client was.  Mr. Sit’s case was that when he submitted the quotation he was told by Fairview that Lee was the owner of the Building.  The so-called ‘admission’ was not an unqualified one.  It does not provide a basis for the finding of fact to be challenged.

Other evidence

21. The invoices were not the only relevant evidence on this topic.  The Judge had also taken into account the fact that Fairview’s design drawings were submitted to Lee, Partner’s invoices (except the final one) were paid by the personal cheques of Lee and the correspondence was addressed to Lee.

The Judge’s view

22. On the issue of the identity of the employer, the Judge held that :

‘ 73.   The final question is by whom?  I am persuaded that the truth of the matter and the reality of the situation was that Mr Lee engaged Tony Chan of Fairview as his design consultant/architect.  Tony Chan, in turn, on Mr Lee’s behalf, engaged Partner.

74.   Mr Lee agreed that he had signed the consultancy agreement with Fairview (albeit before 98 RBR had been transferred to Aldo).  Fairview thereafter, for example, on all their drawings, referred to Mr Lee as the client.

75.   There was an important meeting of the relevant parties at Mr Lee’s offices on 3 November 2003.  At that meeting Mr Sit perceived Mr Lee as the employer.  Mr Sit was later paid by Mr Lee’ cheques (save one) and much of the correspondence was for Mr Lee’s attention.  I accepted Mr Sit’s evidence that at that meeting no mention was made of Aldo.  Mr Lee did not disagree.

76.   It was plainly Mr Lee’s project.  I am satisfied that he was the contracting party.  The consequences of the finding on the original claim by Aldo need not be addressed as I have determined the matter 100% in Partner’s favour on the merits.’

My view

23. In my view this is a decision that the Judge, having seen and heard the witnesses and having considered the written evidence, was clearly entitled to arrive at.  The fact that Aldo became the owner of the Building does not necessarily mean that it was also the employer of Partner for the works.  Ultimately it was a question of fact to be decided by the Judge.  This Court would not be in a better position in drawing the necessary inference or weighing the evidence.

The correspondence

24. Although Mr. Chan initially relied on a ground that he was precluded by the Judge from pursuing his cross-examination on the issue of identity, it was not pursued by him.  Instead he relied on the correspondence to show that the Judge had not properly assessed Partner’s contention that Lee was the employer.  First, in respect of the pre-action correspondence by solicitors, it was argued that Partner’s former solicitors had not stated that Aldo was not the employer.  This point can be shortly answered.  At that stage the parties were concerned with identifying the cause of the complaints by Aldo.  The issue of workmanship clearly dominated the minds of the parties at that stage.  Second, it was submitted that Partner’s former solicitor only raised the issue of identity after Aldo had issued the writ and then it was only Gold World and not Lee who was said to be employer.  I accept that this point might have an impact on the assessment of Partner’s case but at the trial this was not raised for the Judge’s consideration at all.  If this matter was not relied upon by Aldo then the Judge cannot be faulted for not addressing this issue in the assessment of evidence.  It is not proper for this Court at this stage to decide how this would impact on the decision because, as said earlier, assessing and weighing the evidence are the task of the trial judge.  This topic is not so overwhelming in favour of Lee that this Court could either assess the evidence itself or order a retrial for this matter to be considered.

Conclusion

25. Accordingly the appeal was dismissed.

Hon Barma J :

26. I agree with the reasons given in the judgment of Cheung JA.