YUE PO ENGINEERING CO. LTD. v. OCEAN INDUSTRIAL CO.

HCA3660/95

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3660 OF 1995

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J U D G M E N T

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Background and Pleadings

1. This action arises out of the plaintiff's claim for unpaid monies on a contract for goods sold and delivered to the defendant and installation fees.

2. The background of the claim is that the plaintiff, a Hong Kong company in the business of supplying and installing commercial kitchen equipment, provided various kitchen items, including stoves and refrigerators to the defendant's restaurant in Nanjing.

3. It is not in issue that such equipment was in fact sold to the defendant and installed by the plaintiff. Nor is it in issue that the sum claimed by the plaintiff, $230,331.68 remains unpaid on the contract by the defendant.

4. The defendant in its defence and counterclaim to the plaintiff's claim says that the plaintiff delayed in completing the manufacture and installation of the contracted for equipment so as to be in breach of the terms of the contract between them and so caused the defendant loss in that it had to delay opening its restaurant for a period of 3 months until the plaintiff had completed its obligations of supplying installing and testing the equipment.

5. The defendant says further that the stoves and refrigerators provided by the plaintiff were faulty and of unmerchantable quality in that the stoves were unable to provide adequate flame and the refrigerators were unable to properly freeze food stocks.

6. Underlying both issues raised by the defendant on the pleadings is its claim that pursuant to the terms of the contract the plaintiff was obliged to provide full electrical and mechanical drawings in respect of the restaurant kitchen showing, in respect of the ventilation, electricity, water and gas services provided for the kitchen, not only their capacities but also the routing of the various cables wires and piping required for each service.

7. The defendant says these plans were never provided and as a result there was some delay in providing utility services to the kitchen and, when provided, if defective as claimed by the plaintiff so far as the gas piping was concerned, that was due to the plaintiff's failure to provide electrical and mechanical plans.

8. It was accepted between the parties that the contract between them was contained in the quotations dated 19 May 1993 and signed 20 May 1993, and in a letter dated the 20 May 1993 which prevailed in the event of any inconsistency between its terms and those of the quotations.

9. It should be pointed out that three different versions of that letter exist in evidence. That is because I accept during the course of the negotiation and acceptance of the terms appearing in the letter, copies were faxed between the parties and their representatives and there was other duplication of the letter itself.

10. On the evidence in this case, and in terms of the issues which have arisen, I am satisfied that the letter which appears as Exhibit 2-58 is that which was intended to and does encapsulate the terms of the contract. There was no real issue as to this.

11. It was common ground that, pursuant to the contract entered into between them the plaintiff had delivered to the defendant's restaurant in Nanjing and had installed the required equipment.

12. It was also common ground that the defendant had made, in accordance with the terms of the contract two payments of $117,000 and $515,000 representing respectively and approximately the required deposit of 15% payable upon the signing of the contract and a payment of 65% due upon the delivery of the equipment prior to its installation.

13. There was some variation in the whole amount payable under the contract by the defendant to the plaintiff as a result of the ordering of extra items and negotiations over fees such as those relating to the transportation of the equipment, but as I say it was common ground at trial that the sum of $230,331.68 representing the balance of the contract monies remains unpaid by the defendant and it is that sum that the plaintiff seeks.

14. The defendant said that amount of the unpaid balance otherwise due to the plaintiff is extinguished by the plaintiff's own breach of the terms of the contract and that the consequent loss suffered by the defendant in the delayed opening and faulty operation of the restaurant and its equipment more than offsets the plaintiff's claim in that regard. The defendant claims damages.

The terms of contract relating to the issue of delay

15. The first issue which arises pursuant to the defence and counterclaim is the question of delay. Under the terms of the 20 May 1993 letter which sets out the work schedule to be observed by the plaintiff the equipment should have been manufactured by the end of June 1993 so as to be ready for shipment.

16. Specifically, delivery was to have been in terms of the contract letter of 20 May which refers to the equipment "being ready for shipment to Nanjing" before the end of June 1993 and its estimated arrival time in Nanjing as being mid July 1993.

17. It is common ground that the equipment was not delivered by that date.

18. By a memorandum of receipt of goods Ex 2-86 and a Delivery Order of the same date Ex 2-99, I accept that the items of equipment the plaintiff was bound to deliver pursuant to the contract in fact were delivered to Mr Kwok tai-ping (DW3) and received by him on behalf of the defendant on the 27 July 1993. He signed both that Receipt and the Delivery Order on that day.

19. That delivery did in fact occur on that date is not challenged by the defendant. A cheque representing the 65% payment due upon delivery in the sum of $515,000 was paid by the defendant to the plaintiff on that day.

20. Accordingly delivery of the contracted kitchen equipment had been delayed by about one month.

21. The plaintiff says that delay was brought about by the failure of the defendant to provide a proper site for the measurement and installation of the equipment.

22. It says that the Nanjing restaurant site was effectively still undergoing redecoration and partitioning in June 1993 and that as a result various measurements required to be taken by the plaintiff in order to construct the kitchen equipment could not be taken. That meant that the manufacture of the equipment had to be delayed until the site was sufficiently prepared to allow the necessary measurements to be taken.

23. The defendant says that this was not so, that the plaintiff simply delayed in manufacturing the equipment.

24. The terms of the contract letter of 20 May 1993 state quite clearly that time is the essence of the contract.

25. However without inconsistency to that, the terms of the quotations forming part of the contract state:-

"All testing after completion should be done before the 30 July. Any progress delay caused by sites situation will be deferred accordingly".

26. I am satisfied that within the expressed terms of the contract it was the intention of the parties to excuse any delay occasioned to the plaintiff's performance occurring as a result of the restaurant's reconstruction works rendering it reasonably unable to manufacture, install or test the equipment.

27. I am sure by referring to "progress delay" that term refers to the progress of the contract generally. Further, in the absence of any such expressed term I, in the circumstances of this case, would have been satisfied that it was an implied term of the contract that delay caused by the defendant not placing the site in a fit condition for the plaintiff to be able to perform its role under the contract would have excused any delay by the plaintiff occasioned by that and that that is not inconsistent with the expressed term of the contract letter Ex 2-58 that time was of the essence of the contract. In order words as said by Lord Blackburn in Mackay v. Dick (1881) 6 App. Cas 251:-

"As a general rule, where in a written contract it appears both parties have agreed that something shall be done, which cannot effectually be done, unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect."

Witnesses

28. So far as the reliability of witnesses called on the part of the plaintiff is concerned they, generally, impressed me as individuals who were giving evidence to the best of their recollection and ability. Their evidence was in many instances supported by contemporary documentary materials or by subsequent reports which were substantiated by detailed recollections of events at the time.

29. It is true that certain aspects of the plaintiff witnesses evidence was, as was the defendant's witnesses evidence, punctuated by lapses of memory, but I am satisfied that that was due to the lapse of time and the detail in which they were cross-examined. In my view certain aspects of Eddie Kwong (PW2's) evidence was unreliable such as his recollection that the contract letter dated 20 May 193 was backdated. In this regard I prefer the version of Eric Kwok to the effect it was not. In any event whether that letter was backdated or not has little bearing on the issues as they eventually arose in the course of the trial.

30. Generally all 4 of the plaintiff witnesses struck me as reliable and truthful. Those witnesses were:-

PW1	Suen Chor Keung, Alexis, a Deputy General Manager of the plaintiff
PW2	Eddie Kwong Chi Keung, a salesman of the plaintiff
PW3	Cheung Chi Wah, a manager of the plaintiff's Engineering Department
PW4	Cheng Kam Wah, a manager of the plaintiff's Engineering Department.

31. So far as the 3 defence witnesses are concerned, their evidence struck me as being in large part less reliable than the plaintiff witnesses. Those witnesses were:-

DW1	Eric Kwok Yu Wan an uncle of DW3 and a provider of funds for the restaurant
DW2	Kwok Chi Ching, the father of DW3 and the person mainly responsible for supervising the construction of the restaurant
DW3	Kwok Tai Ping, the son of DW2 and eventual proprietor of the restaurant

32. Each defence witness gave evidence in considerable part of facts and events from knowledge merely obtained by them from others.

33. Eric Kwok said he was personally responsible for the negotiation of the contract with the plaintiff and for making payment up to the part of delivery of the equipment on 26 July 1993. But he said he had little involvement in the events surrounding the installation and testing of the equipment and that that was the responsibility of Kwok Chi Ching.

34. DW3 Kwok Tai-ping agreed that although he was the proprietor of the restaurant he had remained in Hong Kong through July, August and September 1993 a period of time important to the delivery and installation of the equipment and gave evidence of the events at the restaurant over those months, as he admitted, on occasion based on what he was told by his father, Kwok Chi Ching.

35. So the primary defence witness, one would have thought, relating to the issue of delay was DW2 Kwok Chi Ching. But much of his evidence was vague and in parts contradictory. He struck me as a person who had difficulty remembering these events with any clarity and who did not inspire confidence in his reliability as a witness.

36. I will deal with more particular aspects of the witnesses evidence in the context of the issues.

General Issues

37. As I have said there are three fundamental issues. Firstly whether the delay in installing and testing the kitchen equipment was due to that installation and testing being prevented from occurring in accordance with the works completion schedule set out in the contractual letter of 20 May 1993 as a result of the defendant's delay in providing a proper worksite for the plaintiff.

38. Secondly whether, if that was so, that was caused in turn by the failure of the plaintiff to provide proper electrical and mechanical drawings as required by the contract.

39. Thirdly whether the stoves and refrigerators provided by the plaintiff were defective either inherently or as a result of defective utilities occasioned again by the failure of the plaintiff to provide proper electrical and mechanical drawings as required by the contract.

Delay

40. The first issue is that of delay. The evidence relating to the question of delay so far as the plaintiff's case is concerned came firstly from the oral evidence of PW2 Eddie Kwong who said that the delay occasioned up to the actual delivery of the plaintiff's manufactured goods was due to the delay in work at the restaurant site and the request by the defendant for additional items to be manufactured.

41. PW3 Cheung Chi Wah, a manager, of the plaintiff's Engineering Department said also that there was a delay until August 1993 in installation of the equipment after its completion as the site partitioning was incomplete. He said that following the eventual installation of most of the equipment in September 1993 testing was delayed as the restaurant site was without utilities and that eventual installation of the equipment and its testing was not substantially completed until prior to the signing of the Certificate of Acceptance, Ex 2-176 on 12 November 1993.

42. He said prior to that time he had been to the site, following the installation of the equipment, in September 1993, but that even at this time there was no water or electricity and so he could not test the equipment. He said that some parts of the floor tiling work in the kitchen were still incomplete at that time.

43. PW4 Cheng Kam Wah, another manager of the plaintiff 's Engineering Department also said that the manufacture of various items of equipment for the defendant's restaurant had been delayed as the result of measurements not being able to be taken at site.

44. He pointed to the contents of Ex 2-80, a letter dated 22 July 1993 from the plaintiff to the defendant referring to the plaintiff's staff having gone to the site in mid July 93 and being unable to take measurements for the purpose of manufacturing specific items referred to in an annexure to that letter.

45. That annexure sets out 8 items of substantially sized equipment. The proposal put forward in that letter is that those specific items of equipment be manufactured in sizes which were slightly smaller than the dimensions specified in the quotations originally provided so as, I accept, to allow them to fit the as yet uncertain dimensions of the kitchen.

46. I cannot see any real possibility of this letter being fabricated so as to provide the plaintiff with an excuse for late delivery.

47. It seems obvious in my judgment that the letter was written in response to a real problem encountered by the plaintiff in obtaining accurate measurements for the equipment it was manufacturing for the defendant as a result, as PW2 and PW3 had given in evidence as reasons, of the delay in construction at the defendant's restaurant site.

48. I accept also that the evidence of PW3 and PW4 in this regard is supported also by the report in evidence at Ex 2-232 of Zhao Jia Guo the plaintiff's Engineering manager at their Shanghai office which states that the defendant made slow progress in the renovation of the restaurant site and that although installation commenced in August 1993 it had to be done, sometimes "alternatively" with the construction work so causing delay in installation and that testing of stoves was further delayed in particular by the failure of the defendant to arrange a gas supply. That is supported also by the contents of the two contemporaneous letter and memorandums Ex 2-75 and 2-77, by the first of which the defendant was informed of the problem which existed as to the taking of measurements at the site.

49. The defendant's case in regard to the delay came primarily from DW2, Mr Kwok Chi Ching the father of the proprietor who, according to himself and the other Kwok family witnesses, was the person most present at the site and who was responsible for the supervision of the construction of the new restaurant.

50. DW2 said that he worked with the eventual manager and deputy manager of the restaurant in the setting up of the restaurant and that while DW3 was the registered proprietor of the restaurant, it was in fact his idea to set it up.

51. His evidence was characterised by considerable vagueness and inconsistency. He said for example, in his witness statement, that the installation of the kitchen equipment took all of October and November 1993. The plain inference to which that statement led was that the restaurant opened shortly after the installation was completed.

52. But in his evidence DW2 agreed that the equipment may have been installed by the end of September or early October.

53. Further he said that all his complaints to the plaintiff as to its delay in delivering, installing and testing the equipment were oral and that was the reason no complaints about the plaintiffs delay were recorded or written in any way so far as the defendant was concerned. He said that was simply his way of doing business. He did not commit things to writing but preferred to talk directly to the other party.

54. I rejected this aspect of his evidence. It simply made no sense that a delay or delays of the magnitude alleged by the defendant which resulted in its being unable to commence business until some 3 months had passed was not at any stage reduced to a complaint in writing, particularly by DW2, who was responsible for the supervision of the construction of the new restaurant, whether directly or indirectly through DW1 Eric Kwok or DW3 Kwok Tai Pang.

55. Indeed the same conclusion must apply to the evidence of DW1 and DW3 themselves insofar as they said they were aware that the plaintiff had delayed in delivering and installing the equipment.

56. I reject also the evidence of DW1,2 & 3 that insofar as there was any delay, caused by the unavailability of utilities or the continuing construction work at the restaurant, to the plaintiff being able to install or test its equipment that that delay was caused by the failure of the plaintiff to provide electrical and mechanical drawings as it was obliged to do by the terms of the contract.

57. There is no doubt that a term of the contract between the plaintiff and the defendant as set out in clause II(i) of the contract letter Ex 2-58, was that the plaintiff:

"Produce all shop drawings and electrical and mechanical drawings before 2 June 1993."

58. The defendant's case was that no drawings at all were provided by the plaintiff.

59. The plaintiff in its case produced 7 plans related to the equipment location and utility points to be provided in the kitchen:

(1) An equipment layout plan.

(2) A Builders Work Plan

(3) An electrical position plan

(4) An exhaust hood and ventilation plan

(5) An LP gas plan

(6) A water position plan

(7) A food services preparation quarters plan

The plans themselves gave considerable detail as to the specific capacity and location of the utility outlets.

60. In particular the electricity and gas plans clearly set out the precise location, numbers and capacity of the electrical and gas outlet points to be installed, and their heights above floor level.

61. The only detail these plans as a whole omit is the precise routing of e.g. the electrical wires and gas piping. That is, while the connection points are fully described and the capacity requirement of each connection point is specified, the plans do not show the particular routing of the wiring or pipes required.

62. The defendant's case is that no plans at all were supplied, in breach of clause (II)(i) of the contract letter, but that even if plans were supplied they were not "electrical and mechanical" plans as described in that clause for the reason that electrical and mechanical plans are required to include the routing of electrical and mechanical utilities.

63. In my judgment these plans were supplied to the defendant. The two primary witnesses who gave evidence as to the actual supply or otherwise of these plans were PW2 Eddie Kwong and DW2 Kwok Chi Ching

64. In that regard I accept the evidence of PW2 Eddie Kwong that he personally handed the plans to Kwok Chi Ching before the 2 June 1993.

65. That is supported also by the report of Zhao Fi Guo, Ex 2-232 that he received from the Hong Kong office by "speed post the full set of the plans for the kitchen equipment for Nanjing Chaozhou City Restaurant". This delivery of the plans had occurred after the signing of the contract. On the basis of those plans Zhao had attended at the restaurant site and further given an oral briefing to the defendant workmen and contractors at the site in respect of the plan requirements.

66. I accept the contents of both PW2's evidence and the contents of Zhao's report in this regard. It seems to me that the details therein are very unlikely to have been fabricated. They have the ring of truth. In coming to that conclusion I have borne in mind that Zhao, the maker of the report, was not able to be subjected to cross-examination.

67. Further the exhibited plans are dated as having being drawn by 22 May 1993. The name of the person who drew them is contained on the face of the plan itself. I am sure that the plans were drawn and in existence by that date and that there was no merit in the suggestion that seemed to be advanced in the cross-examination of PW2 at one stage that the plans may have been prepared much later in time in breach of the time for their provision provided by the terms of the contract letter dated 20 May 1993, and then back dated to cover up that breach.

68. I reject the evidence of DW2 Kwok Chi Ching and the supporting evidence of DW1 Eric Kwok and DW3 Kwok Tai Sing regarding the non-supply of electrical and mechanical plans.

69. Their evidence, particularly that of DW2, was to the effect that the provision of the plans was fundamental to the timely construction on the restaurant. I cannot accept, as is implicit in their evidence, that they continued on with the construction of the restaurant allowing their contractors to "use their own initiative," in the words of DW2, in the absence of such plans. That this was again done in the absence of any apparent written complaint renders the version, of DW2 particularly, again highly implausible.

70. The implausibility of the defence case in this regard is heightened when the evidence of Eric Kwok is taken into account to the effect he accepted it would have taken only a matter of 7 days to have drawn up complete electrical and mechanical plans for the kitchen including routing of utilities.

71. I cannot place any credence on the defence case that the plaintiff's failure to provide plans went unremarked in any written form and that DW2, Kwok Chi Ching as the person in charge of supervising the construction of the restaurant allowed that construction to apparently, so far as the routing of the utilities was concerned, to proceed on the basis of the Nanjing contractors using their own initiative.

72. In my judgment also it is highly unlikely that the plaintiff was to provide routing plans for the utilities in the kitchen, showing e.g. where those utilities entered into the kitchen, when other contractors were apparently responsible for designing the routing plans for the balance of the restaurant.

73. I am satisfied that the plaintiff in providing electrical and mechanical plans was obligated to show only that which was shown in the exhibited plans, i.e. the location of the utility connection points and their capacity.

74. I am sure that the plans were drawn up by the plaintiff and supplied to the defendant and were plans which satisfied the intent of the parties in their contracting for the provision by the plaintiff of "electrical and mechanical drawings" and that that was done within the time scale allowed by the contract.

75. I accept the evidence of PW3 Cheung Chi Wah in this regard that the exhibited plans were electrical and mechanical drawings and that that term was simply "a collective term referring to water electricity, construction and gas capacity and outlets based on a layout plan". I further accept his evidence that routing diagrams were not part of "electrical and mechanical drawings" but were contained in separate "working plans" or "circuit diagrams" which were the responsibility of the particular contractors involved in the construction of the restaurant. That was in fact what happened and that concurs with his evidence. I place no weight in this regard upon the evidence of PW2 Eddie Kwong. His evidence so far as this was concerned was to the effect that the exhibited plans were "not electrical and mechanical drawings". In my view, as a salesman, his evidence as to what constituted, in the construction trade, electrical and mechanical drawings was simply not reliable.

76. Further I reject DW1 Eric Kwok's evidence in this regard also. He went to great lengths in his evidence to express how carefully he had explained the requirement for "electrical and mechanical" plans to PW2 and their containing "routing" details. Those plans were due by the 2 June 1993 but DW1 made no follow up in respect of those plans. He said he received none. His evidence in this regard in my judgment was implausible.

77. At the end of the day I am satisfied that the plaintiff's delay in the supply and installation of the equipment under the contract to the defendant was caused by the defendant's own actions in failing to sufficiently construct the kitchen area of the restaurant in time to allow the plaintiff to properly measure and construct and install the equipment within the period allowed by the contract.

78. I am satisfied also that the testing of the equipment was similarly and further delayed by the failure of the defendant to provide electricity and gas utilities to the restaurant to allow that to be done.

79. In that regard, I accept from the report of Zhao Jiaguo Ex 2-2312 that the testing of the equipment was delayed, particularly so far as the stoves were concerned, until after 12 November 93 as the restaurants gas supply had not at that time been connected. I accept in this regard also the evidence of PW3 Cheung Chi Wah that after installation of the equipment in September 93 he had gone to the restaurant to test the installed equipment but had been unable to do so because certain of the utilities had not been connected.

80. Again I take into account that no written request or recorded complaint by the defendant appears to have been brought about requiring the plaintiff to test the equipment. The defendant's case that the plaintiff delayed in its performance of its obligations seems to me to be wholly implausible in this regard.

81. I cannot place any credit on DW2 Kwok Chi Ching's evidence that there was a significant delay in the testing of the equipment. It seems to me wholly unlikely that, given the level of standing expenses that DW2 said the restaurant was already incurring prior to opening any significant delay in opening due to the plaintiff failing to test the equipment would occur without leaving a significant presence in the correspondence between the parties.

82. I bear in mind the contents of the fax letter at Ex 1-96 dated 18 December 1993 sent by PW1 Eric Kwok to the plaintiff asking that the plaintiff send someone to repair the defects in the stoves and refrigerators.

83. As will be seen subsequently in this judgment there is no issue that the stoves and refrigerators did require maintenance and that the stoves particularly suffered chronic problems with a defective gas supply. But the point for present purposes is that if the defendant or one of the Kwok family involved with the establishment of the restaurant were prepared to write to the plaintiff concerning this relatively minor aspect of the restaurants affairs, it seems quite unbelievable there was no equally formal complaint made in respect of the 3 months delay alleged caused to the restaurant's opening.

84. In short again this aspect of delay by the plaintiff I am satisfied, if significant, was occasioned by the general delay in the defendant's placing his restaurant utilities in sufficient order to allow testing.

Defective stoves and refrigerators

85. The remaining issue is whether the equipment provided by the plaintiff was defective. The sole defects relied upon by the defendant is that the stoves failed to provide sufficient flame when all the stoves were operated simultaneously and that the refrigerators provided reached a temperature of only - 12oC rather than - 18oC.

86. This complaint was first brought to the attention of the plaintiff by a faxed letter from Eric Kwok dated 18 December 1993, Ex 1-96. It is further apparent from the maintenance records of the plaintiff as adduced in evidence that a continuing complaint was that the stoves failed to provide sufficient heat and that the refrigerators did on occasion suffered problems.

87. So far as the stoves are concerned it is common ground that when all stoves were turned on the flame became weak. The question is whether that was the fault of the stoves and therefore within the plaintiff's sphere of contractual obligations or whether the fault lay elsewhere.

88. The evidence of PW3 Cheung Chi Wah was that all stoves, when tested individually performed properly. In large part his evidence in this regard was borne out by the contents of the various maintenance and service reports to the effect that when the individual stoves were cleaned they performed adequately.

89. So far as the alleged defect in the stoves are concerned I am satisfied that that defect is due to the inadequate gas supply to the stoves.

90. It is common ground that the individual stoves suffer no defect but that when all are operating, or at least when a number are operated at the same time the gas supply is inadequate and the flame output for each stove is diminished.

91. In its case the defendant alleges this is due to the plaintiff confusing the nature of the gas supply in Nanjing as being a centralised gas supply rather than gas bottles and that the stoves were therefore mistakenly designed as suitable for a centralised gas supply.

92. There was no real evidence of this adduced on the part of the defendant and I find it difficult in any event to accept that the plaintiff may have made this mistake as alleged bearing in mind that Zhao, whose report I accept, had attended the restaurant and was aware that the delay in provision of gas was because the restaurants gas supply room had not been completed. It is difficult to comprehend that Zhao would have been under any misapprehension as to the nature of the gas supply.

93. But in any event I accept the evidence of PW1 Alexis Suen, who went to the restaurant personally to look at this problem, that the stoves inability to provide full flame when all were in use simultaneously was due to the insufficiency in and instability of the gas supply.

94. I accept from the terms of both the quotations and the contract letter dated 20 May 1993 that the actual provision of sufficient utilities was the responsibility of the defendant. It was not suggested otherwise during the course of the evidence.

95. DW2 Eddie Kwong's evidence which I accept in this regard was to the effect that the provision of utilities was the defendant's responsibility. And indeed DW2 Kwok Chi Ching said in his evidence that the restaurants other contractors provided the utilities.

96. I bear in mind in this regard also that the terms of the contract so far as the supply of utilities were concerned were the same whether the utility was gas, electricity, water or air.

97. I do not see how the plaintiff, under the terms of the contract either express or implied, could have been intended or expected to arrange a sufficient supply of a particular utility to the restaurant. In my judgment the plaintiff was required to do no more than provide to the defendant, as part of the drawings to be produced before the 2 June, a statement of the gas and other utilities capacity required for the kitchen. There is nothing to suggest that the capacity of gas required was not reasonably capable of supply.

98. From that I am led to the inevitable conclusion that, given that the plaintiff had specified on the drawings I have found were provided to the defendant, inter alia, the capacity of the gas supply required for the operation of the installed stoves, the plaintiff had properly performed its obligations in this regard under the terms of the contract.

99. So far as the defendant's allegations of defective refrigerators is concerned the evidence of both DW2 Kwok Chi Ching and DW3 Kwok Tai Ping was to the effect that the refrigerators could achieve a temperature of only - 12oC rather than a required - 18oC .

100. There was no other evidence provided by the defendant in this regard. No evidence was provided as to how the shortfall in temperature was measured or what caused it. DW2 Kwok Chi Ching said only that the defective refrigerators failed to freeze food.

101. Accordingly in the defendant's case no reason for the failure in refrigeration was given.

102. In the plaintiff's case in this regard a number of maintenance and repair reports and dockets show that on occasion the refrigerators were serviced following a complaint by the defendant that they were not freezing sufficiently. Although on one occasion at least, a substantial repair to a condenser was recorded, in the main the repair notes simply recorded that the failure to reach an adequately low temperature was due to the equipment not being kept clean.

103. I accept that the repair notes, which are contemporaneous documents and the reports at Ex 2-206, 229 and 241 are accurate representations of the maintenance work which was undertaken.

104. Those documents detail no more than an unremarkable history of the maintenance of commercial equipment. In very large part the maintenance required was reported as "cleaning".

105. That this must have been accepted by the defendant and that it must have been satisfied with the results of the plaintiff's maintenance is evidenced by its request that the maintenance contract between the parties be extended as set out in a letter from the defendant to the plaintiff dated 4 December 1994 at the end of the first year maintenance period. That letter is expressed in generally appreciative tones which one would not expect if the plaintiff had failed in its obigations under the contract to the extent alleged by the defendant, or if the equipment was inherently defective and unmerchantable in quality as alleged by the defendant.

106. In my judgment the evidence of the various repair notes and maintenance reports adduced in evidence established that the fault in the refrigeration was caused by a build-up of dirt and was remedied by proper cleaning.

107. I reject the evidence of the defendant witnesses, given primarily by DW2 and DW3 so far as it suggests any chronic defect may have existed in the refrigeration units. Their evidence in any event does not go to whether the alleged failure in refrigerator performance was inherent in the refrigerators or due to external causes.

Conclusion

108. In conclusion I am satisfied on the balance of probabilities that the plaintiff provided the defendant with kitchen equipment of proper merchantable quality in accordance with the terms of the contract between them and that the delay in manufacturing, installing and testing the equipment was due to the defendant's own delay in providing a site at its restaurant enabling the plaintiff to measure, construct, deliver and test the equipment within the time schedule set down in the contract. I am satisfied that in no way was the defendant's delay in providing a kitchen site in its restaurant due to the plaintiff failing to provide it with any proper plans.

109. Accordingly the plaintiff has established its claim. The defendant's counterclaim is dismissed. I order judgment to the plaintiff in the sum of $230,331.68.

110. I order costs nisi to the plaintiff to be taxed if not agreed

111. I order interest nisi be paid on the said sum of $230,331.68 at prime plus 1% from the 18 June 1994 to judgment and then pursuant to section 48 of the Supreme Court Ordinance at judgment rate until judgment is satisfied.