WONG LAI SEE v. OCEAN PROFESSIONAL WATERPROOFING COMPANY LTD

DCCJ3933/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3933 OF 2012

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JUDGMENT

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INTRODUCTION

1.  This is a renovation contract dispute.  The plaintiff, Madam Wong, is the registered owner of the premises situated at and known as Duplex Apartment A on 23/F-24/F and Main Roof A immediately thereabove of Tower 2, No 37 Repulse Bay Road, Hong Kong (“the Premises”).  The defendant is a limited company incorporated in Hong Kong carrying on business of providing waterproofing works.

2.  Between June and September 2012, the plaintiff and the defendant entered into a series of contracts in which the defendant was engaged to undertake waterproofing works on various parts of the Premises.  The plaintiff had paid the defendant about 40% of the contract price as deposit.

3.  It is the plaintiff’s case that the defendant did not complete the works in time and the works done were defective.  The plaintiff had to engage another contractor to re-do the works.  The plaintiff claims for the extra costs of re-doing the works and other damages. 

4.  On the other hand, it is the defendant’s case that most of the works were completed.  The defendant was not able to complete the works only because the plaintiff evicted the defendant from the Premises.  The defendant therefore counterclaims the balance of the contracts price and the costs of some additional works done as requested by the plaintiff.

THE CONTRACTS

5.  It is not in dispute that the parties entered into the following three contracts:-

(a) Quotation No Q 11328 (“Contract 1”): it concerns the waterproofing works of the rooftop and the balcony.  The contract price is $198,800;

(b) Quotation No Q 11389 (“Contract 2”): it concerns the waterproofing works of the maid bathroom and the staircase leading to 24/F.  The contract price is $60,000; and

(c) Quotation No Q 11384R (“Contract 3”): it concerns the      waterproofing works of the guest bathroom.  The contract price is $56,500.

6.  For Contract 1, the plaintiff had paid the defendant a deposit of $80,000 in or about mid-July 2012.  For Contracts 2 and 3, the plaintiff had altogether paid the defendant $50,000 on 28 August 2012.

7.  In addition to the above three contracts, some additional works were carried out by the defendant.  It is not disputed by the plaintiff that she had instructed the defendant to do some additional work in relation to Contracts 1 and 2.  As a result, the defendant issued Invoice No 5991 (“Contract 1a”) and Invoice 6026 (“Contract 2a”) respectively. 

8.  However, it is disputed by the plaintiff that works carried out on the wall skirting of the rooftop (Invoice No 6028) can be qualified as additional works.  The plaintiff also denies that additional works had been carried out in relation to Contract 3.  Those works include removing and installing pipes in the guest bathroom (“Contract 3a”). The defendant issued Invoice 6025 for those works. The plaintiff’s position is that these works were all included in Contract 3 and were not additional works.

ISSUES

Contract 1

9.  It is common ground that the plaintiff unilaterally terminated Contract 1 on or about 3 October 2012 before the agreed deadline i.e. 8 October 2012.  The main issue is whether the plaintiff has reasonable grounds to terminate Contract 1 before the agreed deadline.

10.  To resolve this main issue, this court has to determine the following sub-issues:-

(a) What is the correct interpretation of Item 12 of Quotation No Q 11328?

(b) Whether the works carried out by the defendant under Contract 1 were defective? 

(c) Whether time is of the essence of Contract 1?

(d) Whether it is reasonable for the plaintiff to anticipate that the defendant would not be able to complete the works in time?

11.  If it is found that the defendant had committed anticipatory breach and the plaintiff is entitled to terminate Contract 1, the next issue is what should be the remedy?  Is it reasonable for the plaintiff to engage another contractor to redo all the works under Contract 1?

Contract 2 & Contract 3

12.  It is common ground that the works carried out under Contract 2 and Contract 3 had been completed and the plaintiff had paid only about 40% of the contract price.  The plaintiff now claims the costs for redoing the works under both contracts on the ground that the works were defective. 

13.  The first issue is, were the works carried out by the defendant defective?  If yes, what is the reasonable remedy?  Is the plaintiff entitled to claim for the costs of redoing the whole contract or is she only entitled to damages?

Additional works

14.  For Contracts 1a and 2a, whether the plaintiff should pay depends on my finding on liability of Contract 1 and Contract 2.  If I find against the plaintiff on both contracts, she would be liable to pay for the balance of these two contracts.

15.  For Contract 3a, the issue is whether the works under this invoice were inclusive of Contract 3 or are they additional items that the plaintiff should pay for separately?

16.  Concerning Invoice No 6028, again, there is no dispute the works were completed.  The only dispute is whether the works done were additional works which the plaintiff should pay for separately, or are they part of Contract 1 so that the plaintiff does not have to pay separately?

Other breaches

17.  It is the plaintiff’s case that the defendant committed other breaches.  Firstly, it was specified in the quotations that all waterproofing works would not be out-sourced or sub-contracted to other company.  However, it is the plaintiff’s case that at least some of the works had been sub-contracted to one Mr. Tong Kin Sing.  Secondly, the plaintiff said the defendant was in breach of contract by failing to remove all remaining debris, cement and other articles.

THE TRIAL

18.  At the trial, the plaintiff called three witnesses including herself, Mr. Wong Ka Fai who is the contractor the plaintiff later engaged to redo all the works, and Miss Lau Shan La, the expert.  The defendant called two witnesses.  Mr. Leung Shue Wing is the director of the defendant and Mr. Albert Chan is the expert.

DISCUSSION

Contract 1 – interpretation of Item 12

19.  I start with the interpretation of Item 12. It is the plaintiff’s case that Item 12 should be interpreted literally and there were no missing words and no misunderstanding between the parties. According to the plaintiff, Item 12 means waterproofing paste mixed with cement and wire mesh (“waterproofing materials”) should be applied to the wall skirting of rooftop and the floor of the balcony. 

20.  On the other hand, it is the defendant’s case that the words “floor of the balcony” actually means the wall skirting of the floor of the balcony.  The phrase “wall skirting” was missed out by clerical mistake.  The true meaning of Item 12 is that waterproofing materials should be applied to wall skirting of both rooftop and the balcony.  Item 12 does not concern the floor of the balcony as it was already covered by Item 11.

21.  After careful consideration, I have no hesitation in rejecting the plaintiff’s interpretation.  If the plaintiff’s interpretation is adopted, the result will be very unreasonable.  Firstly, waterproofing materials would have to be applied twice on the balcony. Secondly, waterproofing materials would only be applied to the wall skirting of the rooftop but not the wall skirting of the balcony.  I fail to understand why that would be the intention of the plaintiff.

22.  The plaintiff later engaged another contractor, Cooper Decoration Engineering Co Ltd (“Cooper”) to redo all the works. It is interesting to note that it was stipulated in Item B5 of the Cooper quotation that only one layer of waterproofing materials is required to apply on top of the heat resisting plate/layer.  It is consistent with my interpretation of Item 12 of Contract 1.  In the circumstances, I find that the true interpretation of Item 12 is that it was meant to cover the works concerning the wall skirting of both the rooftop and the balcony.    

Contract 1 – whether the works were defective?

23.  In the Amended Statement of Claim, the plaintiff complains that the defendant failed to remove all the old tiles on the wall skirting of the rooftop.  However, in the joint expert report, it was accepted by Miss Lau that all the old tiles had in fact been removed.  This complaint fails.

24.  The plaintiff’s major complaint on the quality of works is based on her interpretation of Item 12.  She maintains that according to Item 12, a second layer of waterproofing paste mixed with cement and wire mesh should be applied to the floor of the balcony.  As I found against her on this issue, this complaint cannot stand. 

25.  The next complaint is that the defendant only applied “Everbond” waterproofing paste up to 4.5 inches of the wall skirting above the floor of the rooftop and up to 6 inches of the wall skirting above the floor of the balcony.  There is no dispute that the defendant did apply the waterproofing paste up to 10 to 12 inches on the wall skirting of the rooftop and balcony, if measured from concrete base.  However, it is the plaintiff case that waterproofing paste should be applied on the wall skirting up to 10 to 12 inches measured from the surface of the floor tiles, not from the concrete base.

26.  It is not expressly stated in the quotation as to how high from the floor tiles or from the concrete base that Everbond should be applied.  Therefore, the court has to look into the wordings of the items to infer the intention of the parties.  After consideration, I am of the view that Item 2 means 10 to 12 inches of wall skirting had to be removed, measured from the floor tiles.  This interpretation is more reasonable because from the plaintiff’s point of view, she would not know the thickness of the waterproofing system.  It would be strange for the plaintiff to agree that waterproofing paste applying to wall skirting would be measured from the concrete base.  It would also be strange for the plaintiff to agree to apply waterproofing paste to wall skirting up to 4.5 to 6 inches above the floor tiles as it might not be enough to resist water if there is heavy rain. 

27.  Base on the above analysis, I find the true intention of the parties is that Everbond applied to wall skirting should be up to 10 to 12 inches from the floor tiles and not concrete base.  In any event, the fact was after negotiation, the defendant acceded to the request of the plaintiff and applied Everbond up to 10 to 12 inches from the floor tiles (but the defendant considered it as extra works and charged the plaintiff separate, it will be dealt with later) so it is not a defect anymore.

28.  The next complaint is about wire mesh not being used with waterproofing materials at the wall skirting of the rooftop and the balcony.  It was expressed stated in the quotation that wire mesh should be used.   According to Mr. Leung, he had told the plaintiff that wire mesh would not be used to save time and the plaintiff agreed.  The plaintiff, on the other hand, said she was never told and she never agreed that wire mesh could be dispensed with.

29.  After consideration, on this issue I prefer the evidence of Mr. Leung.  Wire mesh is just one of the many materials used in the waterproofing system.  Compared with waterproofing membrane or waterproofing paste, the role of wire mesh is relatively minor.  I do not think the plaintiff, as a lay man to renovation business, would really understand the importance of each material.  In fact, in the Cooper quotation, there was no mention that wire mesh had to be used with other waterproofing materials.  I believe, at the material times, the first concern of the plaintiff was the time of completion of the works.  I find that Mr. Leung’s version was more believable and this complaint fails. 

30.  Another complaint of the plaintiff is that Litomix waterproofing paste was not applied to the rooftop, the balcony and the wall skirting.  After listening to the evidence of both sides, I am not convinced by the plaintiff that Litomix had not been used.  The burden is on the plaintiff to prove on balance that the defendant was in breach.  The evidence of the plaintiff and Miss Lau is nowhere near the standard.  Miss Lau admitted there is no way one could tell whether Litomix was used once it is mixed with cement and sand as the colour of the paste will change.  In the circumstances, I do not think the plaintiff have substantiated this complaint.

31.  At trial, Miss Lau testified that she had conducted two water ponding tests on the rooftop and the balcony.  The result of the test on the balcony was that water seepage was found.  However, as Miss Lau testified, tests were only carried out at part of the rooftop.  Cause, source and extent of the seepage had not been found out.  Even if there was seepage, the burden is on the plaintiff to prove on balance that it was so serious that is beyond repaired.  I do not think the plaintiff has provided sufficient evidence to prove that and certainly the evidence does not justify the redoing of all the works.

32.  Lastly, it was pleaded in the Amended Statement of Claim as a breach that the defendant failed to lay tiles on the floor of the rooftop and the balcony.  Mr. Leung testified that laying tiles is the last step of the works and it was not done only because the plaintiff evicted the defendant’s workers from the Premises before the agreed deadline. I find that failure to lay tiles itself is not a breach as the defendant was not given the time to complete the works.  It is for the plaintiff to prove that it was reasonable to anticipate that the defendant would not be able to complete the works before the agreed deadline.  That brings us to the next issue and I will deal with it separately.

33.  The short conclusion on the defective issue is that as a whole the plaintiff fails to prove that the works under Contract 1 were defective. 

Contract 1 – Whether the defendant committed anticipatory breach?

34.  The short answer is no.  It is not stipulated in the contract that time is of the essence.  There is nothing in the quotation to suggest that there was a deadline.  What was said in the contract is that works should be completed approximately within 28 to 30 working days. It is common ground that the last “agreed deadline” was 8 October 2012 and the plaintiff terminated Contract 1 on 4 October 2012.  As it was the plaintiff who terminated the contract before the agreed deadline, the burden is on the plaintiff to prove on balance that the defendant would not be able to complete the works before the deadline.

35.  Considered all the evidence, I find the plaintiff fails to prove on balance that the defendant would not be able to complete the works on or before 8 October 2012.  On the date the plaintiff terminated the contract, what remained to be done mainly was laying the tiles.  According to Mr. Leung, it would take only three to four more days to complete the works. Even if I do not accept the estimation of Mr. Leung, it would be fair to say that it would not take too long to complete the works.  Even if the defendant completed the works two or three days beyond the agreed deadline, the plaintiff still has no right to terminate the contract because the breach is not serious.  At most, if delay is proved, the plaintiff would be entitled to damages.  As time is not of essence of the contract, it was wrong for the Plaintiff to terminate the contract pre-maturely. 

36.  Base on the above analysis, I find the plaintiff fails to prove the defendant committed anticipatory breach.  In the contrary, it was the plaintiff who was in breach of the contract by terminating it pre-maturely.

37.  In conclusion, I find that it was the plaintiff who was in breach of Contract 1 and therefore she is not entitled to any damages claimed under Contract 1.  In the contrary, as the defendant had substantially completed the works of Contract 1, it should be entitled to have the balance of the contract price.

Contract 2 - whether the works were defective?

38.  Contract 2 concerns the waterproofing works at the maid bathroom.  It is the plaintiff’s case that the defects include:-

(a) Using pins instead of applying wire mesh to the wall;

(b) Failing to use wire mesh on the floor;

(c) Failing to remove the loosened concrete on the ceiling;

(d) Failing to apply waterproofing paste and to fill up the cracks/holes;

(e) Failing to apply waterproofing paste to the cracks on the wall of   the staircase to 24/F.

39.  There is no dispute that no wire mesh was applied to the wall and the floor of the maid bathroom.  It is the plaintiff’s case she never gave consent to the defendant not to use wire mesh.  On the other hand, it is Mr. Leung’s evidence that in view of the tight schedule, he opted to use pins to save time.  He had consulted the plaintiff and the plaintiff had no objection.

40.  Having considered the evidence of the plaintiff and Mr. Leung, I find the version of Mr. Leung more believable.  As I said earlier at paragraph 28, at the material times what the plaintiff had in mind was to have the works completed as soon as possible.  I do not think she would concern herself with such minor matter.  As a lay man to the renovation business, the difference between using wire mesh and pins should not be too significant.  Therefore, in this matter I prefer the evidence of Mr. Leung and find as a matter of fact that the plaintiff did give consent to the defendant not to use wire mesh to the wall and the floor.

41.  Next, the plaintiff said it was a breach on the part of the defendant that loosened concrete on the ceiling was not removed and some cracks on the ceiling were not filled with waterproofing materials. Having considered the evidence of both experts and some photos annexed to the expert reports, I prefer the evidence of Mr. Chan and find that the plaintiff failed to prove on balance the defendant was in breach.

42.  Even assuming I accept the plaintiff’s case that loosened concrete was not removed and some cracks were not filled on the ceiling, these breaches are comparatively minor and can be rectified by small scale remedial works.  The plaintiff certainly cannot rely on these grounds to terminate the contract.  At most, the plaintiff can claim for damages. However, the plaintiff has not adduced any evidence to prove that if remedial works are needed, how much they would cost.  This court is not in a position to speculate how much these works would cost the plaintiff.  In other words, the plaintiff does not have a fall-back position and her claims will fail anyway.  In any event, I find the plaintiff failed to prove this complaint.

43.  Lastly for Contract 2, it was pleaded in the Amended Statement of Claim that the defendant failed to apply waterproofing paste to the cracks on the wall of the staircase to 24/F.  The burden of proof is on the plaintiff but I cannot see any concrete evidence provided by the plaintiff to prove this breach except the bare assertion of Miss Lau in her report.  After consideration, I find the plaintiff failed to discharge the burden to prove this breach.

44.  In short, I find the plaintiff fails to prove that the defendant was in breach of Contract 2.  As the works had been completed, the defendant is entitled to have the balance of the contract price.

Contract 3 – whether the works were defective?

45.  Contract 3 concerns the works carried out at the guest bathroom.  According to Amended Statement of Claim, the defendant was in breach of Contract 2 for the following reasons:-

(a) Failing to use wire mesh on the floor;

(b) Not using granite tiles on the floor of the door entrance area.

46.  Concerning the use of wire mesh, I repeat what I said at paragraphs 28 and 39.  I prefer the version of the defendant and find that the plaintiff had agreed not to use wire mesh.  This complaint fails.

47.  Concerning the use of granite tiles at the door entrance, it is the plaintiff’s case that she never agreed to change to normal tiles.  Mr. Leung said, in the contrary, that he had obtained consent from the plaintiff not to use granite tiles.  Both sides provided no evidence other than words of mouth. 

48.  After consideration, I prefer the evidence of defendant.  It would be strange if the defendant used other material for the door entrance without the consent of the plaintiff.  It would be immediately apparent to the plaintiff that the defendant was in breach of contract.  There was no evidence adduced by both sides to prove that in using normal tiles the defendant would save money or time.   I do not think the defendant would take such risk to create further trouble for no obvious benefit.  In the premises, I find the plaintiff is not able to prove on balance that the defendant was in breach.     

Additional works

49.  As I said at paragraph 14, whether the plaintiff is liable to pay for Contract 1a depends on my finding on Contract 1.  As I found against the plaintiff on Contract 1, it follows that the plaintiff is also liable to pay the defendant the contract price of Contract 1a.

50.  For Contract 2a, it has already been conceded by the plaintiff that she should pay the contract price. 

51.  Concerning Contract 3a, the plaintiff’s position is that the removing and reinstalling of pipes are part of the works under Contract 3 and she should not pay for these works separately.  I have carefully considered the contents of Contract 3, I do not agree the items of Contract 3 include the works of Contract 3a.  Item 1 of Contract 3 only provides that commode and water tank to be removed.  Item 18 further provides that commode and water tank to be reinstalled and the pipes be reconnected. There is no mention that the old pipes had to be removed and new pipes would be installed.  These are obviously additional works.  There is no dispute that these works were done so it is only logical that the defendant should be paid separately.  There is no evidence to suggest that the defendant has over-charged on these works.  In the premises, I find the plaintiff should pay the defendant the contract price of Contract 3a.

52.  Concerning Invoice No 6028, it is about the redoing of wall skirting at the rooftop and balcony.  The defendant says these are extra works not included in Contract 1 and the plaintiff says otherwise. Following my finding at paragraph 27, I find that these works are not additional works and should be covered by Contract 1.  The plaintiff is not liable to pay for this invoice.

Other breaches

53.  I now deal with the plaintiff’s other complaints.  Firstly, the plaintiff complains that the defendant had outsourced the waterproofing works to a sub-contractor which was in breach of one of the terms specified in the quotation.  I find the plaintiff fails to substantiate this complaint.  An undertaking not to outsource the waterproofing work does not mean the defendant could not outsource any works related to waterproofing. It depends on how one interprets the phrase waterproofing works.  Considered all the evidence, I find the plaintiff failed to prove on balance that the defendant had outsourced the waterproofing works.  Other than the name card of Mr. Tong which could not prove anything, the plaintiff could not provide any evidence that the waterproofing works were carried out by workers not directly employed by the defendant.  In the contrary, I accept the evidence of Mr. Leung that Mr. Tong was only hired to do cement works.  I find that there is no breach on the part of the defendant in this issue.

54.  Lastly, the plaintiff also claims that the defendant was in breach of contract by failing to remove all remaining debris, cement and other articles.  As the defendant was evicted from the premises before the agreed deadline and the works were not finished, it is only natural that the defendant had not clean up the premises and removed all waste.  I already found that it was the plaintiff who was in breach of Contract 1 by terminating it pre-maturely.  It follows that the defendant could not be criticized for failing to remove the waste. 

CONCLUSION

55.  As I found for the defendant on liability on all contracts except Invoice No 6028, the plaintiff is liable to pay the balance of the contract price as follows:-

Contract 1	$103,350
Contract 2 & Contract 3	$66,500
Contract 1a	$3,600
Contract 2a	$3,000
Contract 3a	$8,500
Total	$184,950

56.  In the premises, the plaintiff’s claims against the defendant in this action are dismissed.  The defendant shall be entitled to judgment in the sum of $184,950 by counterclaim.  

ORDER

57.  Accordingly, I order that the plaintiff do pay the defendant the sum of $184,950 together with interest thereon at judgment rate from the date of the Defence and Counterclaim to the date of payment.

58.  Costs should follow the event.  I make a costs order nisithat the plaintiff shall pay the defendant’s costs of this action (including costs previously reserved, if any), with certificate for counsel, to be taxed if not agreed.  Unless application is received within 14 days from the date of this judgment to vary this costs order nisi, it shall become absolute after 14 days.