OZZO TECHNOLOGY (HK) LTD v. I VILLAS LTD

DCCJ 2807/2023

[2026] HKDC 750

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2807 OF 2023

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BETWEEN

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JUDGMENT

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GENERAL BACKGROUND

1.  By a written and signed agreement dated 5 September 2017, the Defendant company (“D”) appointed the Plaintiff company (“P”) to provide transport/traffic consultancy services in relation to a proposed columbarium development at Lots No. 813RP and 814RP in DD 131 and their adjoining Government Land in Tuen Mun, New Territories (“the 1^st Agreement”). The agreed price for such services was HK$410,000.

2.  The services were needed as D was itself appointed by Verywell Investments Limited (“Verywell”), the developer of the proposed columbarium, to submit an application to the Town Planning Board in support of the development. As mentioned by P’s director and witness, Mr Chan Pui Cheung (also known as “Mr Stanley Chan”), during the trial hearing, D’s position was akin to a project manager. D needed to incorporate P’s Traffic Impact Assessment Report (“TIA Report”) and other information/opinion into the planning application documents in order for the application to enjoy any prospect of success.

3.  Under the 1^st Agreement, P should be paid 20% of the said HK$410,000 right after the appointment, and a further 40% of the said HK$410,000 upon its submission of a draft TIA Report. P were paid those amounts at the relevant stages. The remaining fee should be paid upon the submission of a final report (30%) and the completion of the planning application (10%).

4.  It is P’s case that after the submission of a draft TIA Report, but before it was finalized, P and D entered into a second agreement on 24 January 2019 for P to provide an additional service at the agreed price of HK$60,000 (“the 2^nd Agreement”). The scope of such additional service will be discussed below. Unlike the 1^st Agreement, the 2^nd Agreement was not composed by a single document signed by both parties. Its existence has to be inferred from the contemporaneous communications between the parties and their respective conducts.

5.  D disputed the existence of the 2^nd Agreement in this action. D said the agreement to engage P to provide the additional service was made directly between P and Verywell, and so the liability to pay did not fall on it. P was paid a 20% deposit (HK$12,000) for the additional service on 29 January 2019, admittedly by a cheque drawn in favour of it by Verywell.

6.  P said its final TIA Report and the additional service under the 1^st and 2^nd Agreements have been provided in 2019. The town planning application was submitted, revised on a few occasions and ultimately rejected in September 2019.

7.  Notwithstanding the unfavourable outcome, P is still entitled to its fee, yet P has not received any further payment. P thus started this action to recover from D the remaining 40% of its fee under the 1^st Agreement and the remaining 80% of its fee under the 2^nd Agreement.

8.  D has filed a Defence in this action, but has taken no active part in the proceedings since its previous solicitors ceased to act for it in early 2025. D has not filed, served or adduced any witness statement; neither has it appeared in the Case Management Conference, Pre-Trial Review or the Trial.

9.  In the trial hearing, P is represented by Mr Hughes Tang of Counsel and calls Mr Stanley Chan to adduce his witness statement. I have the benefits of being explained the material documentary evidence in the Trial Bundle (particularly the various versions of the TIA Reports produced by P and the written communications between P, D and different Government departments) and asking Mr Stanley Chan supplemental questions to acquire a better understanding about the case.

ISSUES IN THE TRIAL

10.  That P had issued invoices for the claimed outstanding fees but was not paid is not disputed. D instead pleaded in the Defence that the services provided by P under the 1^st Agreement were substandard and P had failed to provide prompt responses to the enquiries of different Government departments. Implied terms, under the common law and the Supply of Services (Implied Terms) Ordinance (Cap. 457), were relied on; detailed factual particulars of P’s breach of those terms were provided. D argued that by reason of the breach, P was not entitled to be paid the remaining fee under the 1^st Agreement. As said, no evidence has been adduced by D to substantiate those factual allegations.

11.  As to P’s case on the 2^nd Agreement, D pleaded that on 23 January 2019, there was a meeting attended by Verywell (represented by one Mr Yim and one Mr Patrick Leung), P (represented by Mr Stanley Chan) and D (represented by one Mr Terry Leung and one Ms Lei In Leng) (“23/1/19 Meeting”). In this meeting, Verywell and P directly agreed for the additional service to be provided. The HK$12,000 deposit was thus directly paid by Verywell to P by cheque; D was later informed by Verywell of such payment.

12.  In reply, P pleaded that D had never raised any complaint against P’s quality of work during the course of their working relationship, be it failure/omission to complete work or substandard work. Mr Tang, Counsel for P, remarked in the trial hearing that D’s first complaint was actually made in 2023 when its Defence was filed in these proceedings, years after P’s completion of work. Key dates showing P’s reaction/responses to the Government departments’ positions/enquiries have been pleaded.

13.  Regarding the 2^nd Agreement, P pleaded that Mr Stanley Chan could not recall attending the 23/1/19 Meeting. Instead, its Ms Meg Mak emailed a quotation to Mr Lance Chu of D in relation to the 2^nd Agreement on 24 January 2019, to which Mr Chu did not say D should not be a party to that agreement.

14.  In his opening submissions, Mr Tang took me to an earlier email dated 15 January 2019, in which P recommended to D that additional work was necessary in view of certain comments from the Transport Department and Highway Department. The additional work included preparing preliminary feasibility reports for (1) the construction of a lay-by at an existing slope and (2) a wheelchair lift alongside a staircase.

15.  From P’s point of view, as these tasks were outside the scope of the 1^st Agreement, an additional fee was required. Consequently, a letter with the caption “Quotation for Additional Services for Preliminary Feasibility Appraisal” dated 24 January 2019 (“the Quotation”) was sent from P’s Ms Meg Mak to D’s Mr Lance Chu by email. The Quotation was specifically addressed to D for the attention of Mr Lance Chu.

16.  P did receive payment from Verywell, but P and D continued with the additional work and D has not suggested that it should not be a party to the 2^nd Agreement or be responsible for paying the relevant fee. Again, it was remarked that the Defence was the first occasion when D put forward a contrary position.

17.  By reason of the above, the issues in the Trial are simply:

(1) whether D entered into the 2^nd Agreement;

(2) whether P have completed the services it was required to provide under the 1^st and 2^nd Agreement; and

(3) whether P’s performance of the 1^st Agreement was in breach of the various implied terms about quality of service pleaded by D.

DETERMINATION OF ISSUE (1)

18.  Having read the relevant documentary evidence and heard from Counsel and witness, I have no doubt that D is a party to the 2^nd Agreement.

19.  In evidence, Mr Stanley Chan confirmed that he cannot recall if he had attended the 23/1/19 Meeting. He frankly admitted that he did meet Verywell’s representatives and D’s representatives to discuss this columbarium project, but he did not particularly recall when and the names of Verywell’s representatives attending the meeting(s). He said he and his colleagues had always considered D and its staff members their counterpart. P took instructions and provided its work (draft reports and responses to Government departments) to D, for which purpose P and D needed to regularly communicate with each other. To the contrary, P’s direct communications with Verywell’s side were scant. Even under D’s pleaded case, the 23/1/19 Meeting was attended by three sides.

20.  Mr Stanley Chan described D to be a project manager coordinating between the ultimate client (Verywell) and different professionals. This view is supported by D’s Defence, in which it was said that other than engaging P for transport/traffic consultancy, D also engaged a surveyor, an architect and a design company for the same project. In view of such a central role, it is inherently probable that the payment obligation to the different professionals in relation to the development fell on D, unless a contrary position had been made known between the service provider and D.

21.  By reason of the existing and ongoing contractual relationship between P and D under the 1^st Agreement (which is not disputed) and D’s role to bridge different entities involved in the project on behalf of Verywell, it was natural for P to understand that, when the additional work’s need was raised in January 2019 and it was agreed to be carried out by conduct, the party contracted to pay P was D. Objectively, such understanding also makes perfect sense.

22.  The documentary evidence shows the same position. In a way, it can be said the additional work represented only a mild expansion of the original scope of work under the 1^st Agreement, which justifiably required more fees.

23.  On 13 September 2018, D’s Terry Leung (a name D itself pleaded to be the name of its representative) sent an email to P’s Ms Meg Mak, providing comments from various Government departments. One comment from the Assistant Commissioner for Transport/New Territories was that visitors to the proposed columbarium might take taxis or private cars to the subject development site, particularly persons with disabilities. Disabled persons would likely use the northern entrance of the site as the southern entrance had staircase access only. Apparently, the vehicular road at the north side of the site could not withstand a heavy traffic. The Assistant Commissioner questioned if the general management measures previously proposed to restrict visitors to use public transport would be effective.

24.  Promptly, on 22 October 2018, Ms Meg Mak for P provided to D comprehensive responses to the comments from transportation/traffic perspective; the relevant email was copied to Mr Stanley Chan. Mr Chan gave evidence that he was personally involved in formulating the responses. The solution proposed was to install wheelchair stair lift at the south side staircase of the site and deploy staff members to assist in its operation.

25.  On 28 December 2018, Mr Lance Chu of D related a further comment from the Transport Department that the staircase within the subject site was not straight. The practicability and technical feasibility of a wheelchair stair lift was thus questioned. Such comment, coupled with a further one concerning the construction of lay-by forwarded by D to P on 7 January 2019, caused P to send D the email dated 15 January 2019 aforementioned, as well as the Quotation on 24 January 2019.

26.  In the covering email of 24 January 2019, Ms Meg Mak referred to a meeting on the previous day. It therefore seems a meeting did exist on 23 January 2019 (cf. D’s plea about 23/1/19 Meeting), though there was no further information about the meeting stated in the email. The words “additional services” were repeatedly used in the emails and the Quotation. The Quotation was not signed or returned, but then a pre-feasibility study report on “Provision of Wheelchair Stair Lift at Staircase” (“the Wheelchair Lift Report”) was provided by P’s Ms Meg Mak to D’s Mr Lance Chu in March 2019. There is no contemporaneous evidence showing that D did not require the report to be commissioned; neither is there any evidence of objection from D for being sent the Quotation or named as a contracting party for the additional work. It should be noted that, according to witness testimony and documentary evidence, Mr Stanley Chan and Ms Meg Mak were both traffic engineers, but the Wheelchair Lift Report contained substantial information going to other aspects of engineering expertise such as civil and electrical/mechanical engineering. Mr Chan said in evidence he needed to engage additional resources from qualified person to compile that report.

27.  This Court has the chance to peruse the above emails and the Wheelchair Lift Report concerning how the need for the additional work came about and how the work was executed. There being no contrary evidence, P’s case that D has contracted to pay for the additional work under the 2^nd Agreement is plainly established.

28.  As to why P accepted a payment by cheque from Verywell directly, Mr Stanley Chan said as he knew Verywell was the intended developer, it was connected to D and D’s funding might also come from Verywell, he and his accounting colleagues in P did not find it inappropriate to receive the payment when the cheque was delivered to P. In fact, even part of the fee received by P under the 1^st Agreement was paid by a cheque issued by Verywell, but there is no question about D’s status as a party to the 1^st Agreement.

29.  I accept the explanation, and do not consider the direct payment from Verywell a significant factor in determining which party contracted to pay P for the additional work. I have not been shown any professional/occupational code prohibiting engineering consultant from contracting with one entity to provide service and receiving a cheque provided by another entity for settlement of its professional fee. The explanation also accords with common sense.

DETERMINATION OF ISSUE (2)

30.  The determination of issue (2) needs no elaboration. This Court has read the final TIA Report and the decision document of the Town Planning Board in the Trial Bundle. Final report has been submitted and the planning application has been completed. The conditions for P to be paid the remaining 30% and 10% of its fee under the 1^st Agreement have been plainly satisfied. The Wheelchair Lift Report has also been provided to D and read by this Court. All the reports are accepted to be credible evidence. P should certainly be paid the remaining 80% of its fee under the 2^nd Agreement.

DETERMINATION OF ISSUE (3)

31.  As D has not adduced any evidence to prove its factual particulars about P’s breach of the 1^st Agreement in the Defence, I have no intention to deal with the particulars one by one. I would just generally state that, first, even under D’s pleas, the so-called occasions of “delay” in giving response on P’s part only took few weeks or at most 1-2 months. This Court has considered the actual responses in the form of emails or attachments to emails, and has found them substantial and informative. According to the Town Planning Board’s decision document, the Board’s deliberation was itself adjourned from time to time for the applicant to submit further information. The application process went through multiple meetings of the Board and lasted from around October 2018 to September 2019. The extent of delay (if any), even on the basis of D’s pleaded case, was not significant in comparison with the time taken by the whole process. The time used by P also impresses me to be necessary.

32.  Secondly, some dates pleaded by D are not consistent with the actual evidence I have seen. For example, it was pleaded that D forwarded Transport Department’s comments to P on 16 October 2018 and P did not reply until 28 December 2018. But as stated in the above, P actually advised substantively on Transport Department’s comments on 22 October 2018.

33.  Thirdly, from a reading of the emails and reports, I have no hesitation to accept P’s case in the Reply that it was not in breach of any implied term of the 1^st Agreement. Given D’s absence, the examination of Mr Stanley Chan during the Trial was not long. However, this Court can still come to the view that he is a reliable witness. He is able to quickly answer the Court’s factual queries about the subject development project (e.g. how did the need for wheelchair stair lift arose) and where pertinent documents can be found in the Trial Bundle (e.g. the Government departments’ comments giving rise to the said need). He was certainly hands-on in this project, for he could give details about the site instantly without the need to flip through the documents. After being referred to the relevant pages and studying them, this Court found Mr Chan’s evidence consistent with the documents. Given Mr Chan’s hands-on participation as a director of P, from beginning till the end of the project, any suggestion that P has a “high staff turnover” (as pleaded in the Defence) is neither here nor there. As I see it, there is no basis to suggest that any change of case handlers in P’s team has contributed to any problem.

34.  In the Defence, D apparently equated the making of comments from Government departments and the unsuccessful outcome of the planning application with a substandard performance by P. This is plainly illogical. As Mr Chan testified, the success of a planning application depends on many factors, one being whether the developer would find it commercially attractive to limit the extent of development to cater for the concerns from the Government and the public. The Government’s expression of certain concerns, and the application outcome, did not speak for the quality of P’s work and the effort made by its staff directly. Instead, they should be judged by the contents of P’s reports /responses. Not having seen any contrary evidence, but having studied the reports/responses in the Trial Bundle rather intensively, I am satisfied that P’s performance was certainly not below any reasonable standard. Reasonable skills must have been applied. To the contrary, I would venture to say the reports/responses are rather remarkable – P did provide solutions to resolve problems with bases and rationales. Mr Chan in evidence said P has specialized in this area of transportation/traffic study concerning columbarium for years and had various successful cases in the past. Having accepted him to be a reliable witness and read the documents of this case, I have no doubt that he did not exaggerate.

35.  People who have treated their work seriously and performed it professionally should not be denied their agreed and hard-earned reward. It is bad for D to leave the agreed fees outstanding for years, and even worse for it to further delay by pleading various allegations but not coming out to prove them. Judgment must be given for P against D in this case.

DISPOSITION

36.  I allow P’s monetary claim against D in the sum of $212,000, being the sum of the 40% unpaid fee under the 1^st Contract ($410,000 x 40% = $164,000) and the 80% unpaid fee under the 2^nd Contract ($60,000 x 80% = $48,000).

37.  Costs of this action should be paid by D to P, to be taxed if not agreed, on party-and-party basis, with certificate for counsel.

38.  Mr Tang seeks pre-judgment interest over the judgment sum of $212,000 from the date of writ (7 July 2023). I allow the same and order the interest rates of pre-judgment interest to be 1% above the prevailing HSBC best lending rates from the date of writ to the date of this judgment. Interest accrued after this judgment is certainly on judgment rate.