WAI KO E & M ENG CO (a firm) v. INTEGRATED ENGINEERING LTD

HCA 130/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 130 OF 2004

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J U D G M E N T

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I.  Introduction

1.  Wai Ko was Integrated’s sub-contractor for work at the CLP Data Centre.  Wai Ko seeks summary judgment against Integrated in respect of work done under 4 invoices, identified as VO-2, VO-3, VO-5 and VO-6.  The master granted Integrated unconditional leave to defend.  Wai Ko now appeals against that decision.

2.  For the purposes of this appeal only, Wai Ko does not apply for final judgment in connection with VO-6.

II.  Background

3.  VO-2 was an invoice for additional electrical work at the Data Centre.  There is no dispute that Integrated requested and paid for a first lot of electrical work under an Invoice IE/2002/INV-05. 

4.  However, Integrated denies that Wai Ko was asked to perform the additional work claimed under VO-2.  Integrated says that the work invoiced under VO-2 ought in substance to have formed part of the first lot of electrical work for which Wai Ko has already been paid. 

5.  The exception was Item I of VO-2 which (according to Integrated) involved network cabling rather than electrical work.  Integrated asked Wai Ko to bill separately for item I.  Wai Ko therefore issued an invoice VO-4 for $30,040 in respect of item I.  Integrated has paid this.

6.  VO-3 and VO-5 similarly relate to additional or variation works at the Data Centre.  Integrated also denies that it instructed Wai Ko to perform such extra work.  Integrated’s case is that such work formed part of the work covered by the original specifications.  Integrated contends that it has already paid for such alleged “additional” or “variation” work.

7.  Wai Ko says that it has been pressing Integrated for payment and there have been extensive negotiations between the parties.

8.  On 4 August 2003 Integrated wrote as follows to Wai Ko:-

“With reference to the meeting held at our office with your Mr Ng Kwok Hung and our Marco Cheuk and Queenie Cheung on 18 July, 2003 and your letter received on 1 Aug. 2003 regarding the variation work, we have being discussed the variation work with our client and would like to reply that your variation quotation IE/2002/QU-2A/VO-2, VO-3 & VO-5 have been under reviewed and will be settled up on confirmation of the final account with our client and ref. VO-6 has been rejected due to no substantial support.

To further substantiate your quotations, please provide more information, e.g. site memo or instruction for our easy assessment.”

There is some suggestion by Wai Ko that by this letter Integrated has admitted its liability.

9.  Integrated acknowledges that there have been negotiations.  Integrated says that, as a gesture of goodwill towards Wai Ko, Integrated attempted to explore the possibility of obtaining extra payment for Wai Ko from the Main Contractor.  Integrated denies that, by asking Wai Ko in the letter to substantiate its claims and by negotiating with Wai Ko and the Main Contractor, it implicitly admitted Wai Ko’s entitlement to payment.

10.  According to Integrated the negotiations with the Main Contractor bore some fruit.  The Main Contractor agreed that there were variation works to a sum of $522,294.  Of this, Integrated reckoned that $349,532.75 was attributable to the work of Wai Ko as opposed to other sub-contractors of Integrated.  Integrated alleges that, having taken into account its cost of materials, it offered to pay $200,000 to Wai Ko for the extra work claimed.  Integrated says Mr Ng Kwok Hung of Wai Ko accepted this offer in November 2003.

11.  Apparently, Mr Ng telephoned a week later and asked Mr Marco Cheuk for an upward adjustment of the $200,000 to $250,000.  Mr Cheuk accepted this.  But the amount has so far not been paid, seemingly because Wai Ko commenced litigation for all monies due under the disputed invoices.  Integrated stresses that it agreed to pay $250,000 purely by way of an ex gratia arrangement.

III.  Discussion

12.  I am unable to read Integrated’s August 2003 letter as an unequivocal admission of liability. 

13.  Nor do I think that the negotiations among Integrated and Wai Ko on the one hand and Integrated and the Main Contractor on the other, necessarily point to an acceptance by Integrated of Wai Ko’s claim.

14.  The Court cannot on affidavit evidence alone rigorously scrutinise the quoted specifications for the first lot of electrical work to determine whether or not they included the work billed under VO-2, VO-3 and VO-5 as Integrated contends.  Such an undertaking would inevitably involve examination and cross-examination.  A trial is necessary.

15.  In all the circumstances, save in one respect, it does not seem that this is a case in which summary judgment is appropriate.

16.  The one respect is the agreed payment of $250,000.  On Integrated’s own case at least that sum was achieved through negotiations by Integrated on behalf of Wai Ko.  To that limited extent Integrated was Wai Ko’s agent.  Integrated was presenting Wai Ko’s case to the Main Contractor in order to get money, extra payment, for Wai Ko. 

17.  Integrated succeeded partially and must consequently accept that at least $250,000 would have been due as payment for Wai Ko’s alleged additional work.  Integrated must account to Wai Ko for at least that $250,000.  It would be unconscionable to allow Integrated to retain that $250,000. 

18.  Whatever happens at trial, Integrated must at least have to pay $250,000 to Wai Ko.  I do not understand how the fact that Wai Ko claims more and has brought proceedings to obtain more, alters Wai Ko’s entitlement to and Integrated’s obligation for that amount.

19.  I appreciate that Wai Ko says it is entitled to much more. 

20.  I also accept that there are obscurities in Integrated’s case.  One such is Integrated’s statement that it deducted its material costs from the $349,532.75 received from the Main Contractor for Wai Ko.  What costs could those be if Integrated denies that any additional work was done by Wai Ko? 

21.  Nonetheless, on the whole I do not think that the obscurities are sufficient to outweigh my general impression that, save for the $250,000 discussed above, the rest of these proceedings should go to trial.

Iv.  Conclusion

22.  Wai Ko’s appeal succeeds in part. 

23.  There will be an interim judgment in Wai Ko’s favour for $250,000.  Interest is to run on that amount from date of writ until today at 1% over prime and thereafter at the judgment rate until payment. 

24.  Integrated is to have unconditional leave to defend against the remainder of Wai Ko’s claim.

25.  I shall now hear the parties on costs.