HONG KONG SD.K. CO LTD t/a HONG KONG SD.K. CO v. K & C CREATION LTD

DCCJ 3455 of 2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3455 OF 2005

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JUDGMENT

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1.  Messrs. Shimizu-China State Joint Venture (“JV”) was the principal contractor for the construction of Hong Kong Disneyland. The employer of this project was Walt Disney Imagineering (“WDI”).

2.  JV sub-contracted part of the work to the Plaintiff including those in relation to carpentry work for the theme projects “Space Mountain” and “Buzz Lightyear” (“the Carpentry Works”).

3.  Plaintiff’s case

The Plaintiff sub-contracted further the Carpentry Works to the Defendant (“the February Quotation”. See Bundle 2.1, page 254 to 262). The Defendant was to provide, inter alia, labour and construction materials from overseas.

4.  Consideration for the February Quotation was $1,117,717. Item C1/6.1/2Q in the sum of $14,900 was subsequently omitted by WDI via Contract Directive No. CD-0391 (Bundle 2.1, page 263 to 267). Thus the Defendant was entitled to $1,102,817. However, the Defendant

a)     failed or refused to carry out certain work (as particularised in Schedule I of the Amended Statement of Claim). The sum of $260,934.76 has thus to be deducted;

b)    failed or refused to complete works specified under items C1/9.3/2K and F1/6.2/2A-D.  The Plaintiff engaged other contractors to complete and thus incurred cost of HK$47,740. The Plaintiff claims 10% handling charges making a total claim of $52,514 and

c)     failed to supply various materials from overseas (Schedule II of the Amended Statement of Claim). The Plaintiff had to arrange and pay for such. The Plaintiff claims $930,268.76 together with 10% handling fees making a total of $1,023,295.64.

5.  The Defendant, however, carried out various additional or variation works (“the Additional Works”. Schedule III of the Amended Statement of Claim). Though the Additional Works fell outside the scope of the February Quotation, the first witness for the Plaintiff (“PW1”, Chairman and President of the Plaintiff) agreed to pay for them as they were “compulsory” (see also paragraph 14 of the Amended Statement of Claim and paragraph 8 of the Amended Reply where the Plaintiff admitted such liability). The Additional Works shown in the relevant 10 quotations of the Defendant amount to $299,869. From this, however, the Plaintiff deducts $51,680 as work already covered by the February Quotation. The Plaintiff is thus willing to pay $248,189.

6. The Plaintiff had paid the Defendant $880,000. There is thus overpayment of $865,738.40 for which the Plaintiff claims in this action ($1,117,717 less $14,900 less $260,934.76 less $52,514 less $1,023,295.64 plus $248,189 less $880,000).

7.  The Plaintiff entered into a Technical Cooperation Services Agreement with a Daiken Corporation of Japan (“Daiken”. Bundle 2.1, page 321 to 322 with English translation at page 325 to 328. This Agreement will be known hereafter as “the Technical Agreement”).

Paragraph 1 of Article 1 of the Technical Agreement provided that Daiken “will execute the work for the…carpentry…for the Space Mountain and Buzz Light-year at Hong Kong Disneyland ordered in Hong Kong by Hong Kong SD.K Co with local craftsmen, as appropriately instructed by Hong Kong SD.K Co employees and will provide the pertinent safety related guidance…”

Article 3 provided that Daiken “shall dispatch Mr. Pon Wai Man…who shall be assigned to cooperate with Hong Kong SD.K. Co to accomplish the services set out in Articles 1 and 2. In addition, Mr. Hidekazu Kataoka (member of the International Division of Daiken Corporation) will assist in arranging the procurement of third party materials, WDI approval work and negotiations with Shimizu Construction-China Construction Union Corporation.” (Mr. Hidekazu Kataoka will be referred to hereafter as “Mr. K”. Article 2 dealt with the duration of the Technical Agreement).

8.  The Plaintiff maintains that Mr. K never had any actual or ostensible authority to give instructions regarding the Carpentry Works or to enter into any contract on behalf of the Plaintiff.

9.  Defence case

Before December 2003, the Defendant received from the Plaintiff bills of quantity, specifications and drawings relating to the Carpentry Works. Through such documents, the Defendant knew that WDI required materials for the Carpentry Works to be sourced from overseas. The first witness for the Defendant (“DW1”), Director of the Defendant, told Mr. K and a Mr. Hirahara of the Plaintiff that the Defendant would be unable to get the materials from overseas. Mr. K told DW1 to submit a quotation for the Carpentry Works based on local materials. The Defendant therefore submitted a quotation in December 2003 based on the use of local materials (“the December Quotation”). The December Quotation was rejected by the Plaintiff.

10. At a meeting on 7 February 2004 Mr. K told the Defendant to prepare another quotation based on the use of local materials. Mr. K further said that if ultimately only overseas materials could be used, the Plaintiff would provide such overseas materials. The Defendant then submitted a quotation dated 10 February 2004 (see Bundle 2.1, page 254 to 262. See also Bundle 3, page 774 to 782. This quotation will be known hereafter as “the February Quotation”). The February Quotation was submitted by the Defendant to the Plaintiff based on the use of local materials. It was valid for acceptance within 15 days of its date. PW1 accepted it on 26 March 2004 by signing it and affixing the company chop to it. 

(The fact that the Plaintiff accepted the February Quotation after the 15-day validity period is of no consequence in this case. Both parties proceeded on the basis that the February Quotation was validly accepted.)

11.  It subsequently became clear that WDI insisted on the use of overseas materials. DW1 mentioned to Mr. K and PW1 that the contract between the Plaintiff and the Defendant would thus be different (from that in the February Quotation). Mr. K told DW1 to prepare another quotation. A quotation was prepared in June 2004 (“the June Quotation”) to replace the February Quotation. The Defendant’s fees/ charges for local materials were taken out and certain items were deleted (see Bundle 3, page 927 to 935. I note that the June Quotation does not seem to have been signed by anyone).

12. A quotation was subsequently prepared by the Defendant in November 2004 (“the November Quotation”. Bundle 1, page 172 to 178. See also Bundle 3, page 794 to 802. But see Bundle 3, page 904 to 910). This was to reflect the up-to-date situation between the Plaintiff and the Defendant with more items being cancelled. The November Quotation was signed by Mr. K (not PW1) on behalf of the Plaintiff and was meant to supersede the February Quotation (as well as the June Quotation). The consideration for the November Quotation was $792,076.20.

13.  The Defendant carried out additional or variation works. There are 16 quotations covering such work. 10 of them relate to the Additional Works, the other 6 quotations are: SDK-KT-1973R2 ($45,000), SDK-KT/2051R2 ($41,000), SDK-JW-2117R3 ($261,717.20), SDK-JW-2218 ($39,690), SDK-JW-2254 ($60,700) and SDK-JW-2353 ($44,100) (see Bundle 1, page 216 to 233 for all 16 quotations. I note that though the Amended Defence pleaded SDK-JW-2408R1 as dated “24.02.05”, the date should really be 21 January 2005 as shown on the quotation itself in Bundle 1, page 232. I should also say that some of the quotations (in relation to the Additional Works) pleaded in Schedule III of the Amended Statement of Claim do not tally with those pleaded in the Defence and produced in Bundle 1. For example, quotation SDK-TK-2141R1 in Schedule III should really be SDK-TK-2142R1. Be that as it may, it is reasonably clear that the Additional Works are covered by the quotations relied on by the Defendant. I consider that the evidence of PW1 confirmed so much).

14.  According to DW1, all 16 quotations were accepted and signed by Mr. K for the Plaintiff (I should immediately add that DW1 showed some uncertainly about Quotation SDK-JW-2408R1 [Bundle 1, page 223]. He said he thought it was signed by Mr. K. It is noted that of the 16 quotations, this is the only one bearing the company chop of the Plaintiff. PW1 said that it was his Deputy, Mr. Kwok, who signed this particular quotation).        

15.  On the first day of trial, Defence Counsel indicated in clear terms that Defence did not rely on there being actual authority in Mr. K (to gives instructions regarding the Carpentry Works or to enter contracts on behalf of the Plaintiff) and that, at most, Defence said it was a case of ostensible authority or holding-out. Under paragraphs 34 and 35 of his written closing submission, Defence Counsel submitted that PW1 had conferred actual authority on Mr. K! Defence Counsel finally asked to be put on record that Defence merely relied on ostensible or apparent authority. 

In any event, Defence never argued that Mr. K had such actual authority under the Technical Agreement.

16.  Defence maintains that the November Quotation is the governing contract, not the February Quotation. The Defendant completed all works under the November Quotation. Defence maintains that the Plaintiff is liable on all 16 quotations for additional or variation works. After giving credit to the Plaintiff for payment of $880,000 and after a special discount, the Defendant counterclaimed the amount of $610,100.

17.  Witnesses  

Only PW1 gave evidence for the Plaintiff. In addition to DW1, Defence called a second witness (“DW2”). DW2 joined the Defendant sometime in March 2004. He took over as Project Manager of the Defendant supervising the Carpentry Works sometime in June 2004.

Having heard all the evidence in this case, I preferred the evidence of the Plaintiff to that of the Defendant. In particular, I found that Mr. K had no authority, actual or ostensible, to issue instructions regarding the Carpentry Works or to enter into any contract for the Plaintiff. I found the February Quotation to be the basis of contractual relationship between the parties. In arriving at this decision, I had considered matters in the subsequent paragraphs.

18.  Matters considered

i)        PW1 came to know Daiken through a customer. It was because PW1 had not worked in Hong Kong before that he engaged the services of Daiken. The Plaintiff and Daiken entered into the Technical  Agreement. Under the Agreement, Daiken was to, inter alia, second Mr. K to the Plaintiff in Hong Kong to “assist in arranging the procurement of third party materials, WDI approval work and negotiations with Shimizu Construction-China Construction Union Corporation” (see also paragraph 7 above).

It seems to me that if anyone from Daiken was to “execute the work for the…carpentry…for the Space Mountain and Buzz Light-year at Hong Kong Disneyland”, it was Mr. Pon Wai Man and not Mr. K. In any event, I think there is a difference between executing “the work for the…carpentry” and entering into contracts on behalf of the Plaintiff.  

ii)        It is clear that Mr. K was not an employee of the Plaintiff. I consider that he could not (and did not) know about such things as the Plaintiff’s considerations or profit margins when contracting with the Defendant. The uncontroverted evidence was that whilst Mr. K worked in Hong Kong, he wore the uniform of Daiken. His business card was that of Daiken (see Bundle 2.1, page 320).

iii)      I have no difficulty accepting PW1’s evidence that Mr. K basically played the role of supervisor. His responsibility was only to advise and help in the sourcing of construction materials. He had no authority to enter into any contract on behalf of the Plaintiff or to change materials to be used. I also accept PW1’s evidence that he introduced Mr. K to all sub-contractors as the Project Manager of Daiken (not the Plaintiff).

iv)      DW1 said PW1 told him, inter alia, that Mr. K was Project Manager of the Plaintiff, that all matters relating to the Carpentry Works were handled by Mr. K and that DW1 should work according to the instructions of Mr. K. DW2 said that on the rare occasion when he saw PW1 at the construction site, PW1 had told him that Mr. K was responsible for the Defendant’s work.

In view of matters stated in sub-paragraphs i) to iii)     above, I find it improbable that PW1 would have so spoken to DW1 and DW2.

19.  DW1 had had previous dealings with Daiken. He came to know Mr. K 3 to 4 years ago. It was Mr. K who introduced him to PW1. I consider DW1 knew full well that Mr. K was not part of the Plaintiff and that Mr. K must have had only a limited role to play for the Plaintiff.

20.  The February Quotation was signed by PW1 affixing the company chop of the Plaintiff. According to Defence case, there was a June Quotation. As noted earlier, the June Quotation seems not to have been signed (or presented) to anyone. Defence relied on the November Quotation. This was signed only by Mr. K and not PW1. There was also no company chop of the Plaintiff.  The February Quotation or, according to the Defence, the November Quotation formed the backbone or foundation of relationship between the Plaintiff and the Defendant. I am more than surprised that DW1 did not ask for the November Quotation to be signed by PW1 and sealed with the company chop of the Plaintiff just like the February Quotation. Even if DW1 had been told by PW1 as alleged in paragraph 18 iv) above, DW1 should have appreciated that fundamental changes were being made to the contract between the parties. I do not think DW1, as a businessman, would be content (or so naïve) to accept only Mr. K signing for the Plaintiff. This is particularly so when, according to Defence, DW1 had been told in the course of doing the additional or variation works (prior to the November Quotation) that the Plaintiff was in financial difficulty and the Defendant had to pay upfront for overseas materials the provision of which (according to Defence) was the responsibility of the Plaintiff. Why run the risk of the Plaintiff shirking its responsibility or liability for the November Quotation on the basis that it had not been (properly) accepted? I also note that DW1 could have easily contacted PW1. According to DW1, he would meet PW1 at the construction site on occasions.

21.  There is cause to wonder why the Defendant, with knowledge of the financial dire straits the Plaintiff was in, would undertake any additional or variation work in the first place. One can also query why the Defendant would be so magnanimous in paying upfront the overseas materials for the apparently impecunious Plaintiff.

22.  It is noted that Mr. K signed 2 documents that bore the company chop of the Plaintiff viz. Quotation SDK-TK-2134R2 dated 12 May 2004 for $445,064.33 (Bundle 3, page 923) and Quotation SDK-JW-2117R1 of 27 Apr 2004 for $227,869.20 (Bundle 3, page 920 to 922). It seems that Mr. K also signed a third document bearing this company chop viz. Quotation SDK-JW-2408R1 (but see paragraph 14 above). There is no evidence on the circumstances the first 2 documents came to be executed. DW1 is not certain whether it was Mr. K who signed the third document.

There is scant evidence as to where the company chop of the Plaintiff was kept and whether it was secured in any way. The Plaintiff did not operate from an office at Kowloon Bay. It in fact operated from several containers at the Hong Kong Disneyland construction site. The containers were shared by a number of staff members. PW1, Mr. K and others shared the same container office. It is not beyond the realm of probabilities that the company chop of the Plaintiff could have been accessed by Mr. K without authority.

I accept PW1’s evidence that Mr. K was not authorised to use the company chop of the Plaintiff. I do not think that even if Mr. K had used this chop (without authority), it meant that he had been clothed with ostensible authority vis-à-vis the Defendant. As I understand it, the Defence case of ostensible authority is not based on the use of company chop by Mr. K. Indeed, if DW1 placed any emphasis on this aspect, one would have expected him to insist on Mr. K applying the company chop to all the other quotations signed by him and, indeed, to the November Quotation (see also paragraph 14 and 20 above).

23.  PW1 admitted he came to know sometime in 2004 that Mr. K had (purportedly) signed contracts for the Plaintiff. He was very angry over this but did not inform other sub-contractors (including DW1) that Mr. K had no authority to do so. PW1 said this was because all sub-contractors knew the absence of authority. PW1 could not recall when it was in 2004 that he learned about such acts of Mr. K. The evidence is silent as to the circumstances PW1 came by such knowledge e.g. was it the case that a particular sub-contractor complained that Mr. K had signed a contract and asked PW1 to have it properly executed again? I do not think the available evidence on this aspect is of any real assistance to the Defence.

24.  Defence case is that before submitting to the Plaintiff any quotation for the Carpentry Works, DW1 already knew that the use of overseas materials was required. It is clear that the February Quotation was made in a form that could be accepted by the Plaintiff. If Mr. K did inform DW1 along the lines alleged in paragraph 9 and 11 above, I would expect DW1 to insert something in the quotation to say that it was based on local materials. I would also expect there to be something to say that in case overseas materials were to be used, the Plaintiff would be responsible to supply the same. This was after all the first time the Defendant was doing business with the Plaintiff and the use of overseas materials meant a lot of difference to the Defendant. Any such wording  is, of course, absent. I note further that the Defendant did not even write to the Plaintiff to put on record such advice or commitments by Mr. K.

25.  There is a letter from Mr. K to the Defendant/ DW1 dated 15 November 2006. In this letter, Mr. K said that he represented the Plaintiff to give direct instructions to the Defendant regarding the Carpentry Works and that he signed the November Quotation as well as other quotations on behalf of the Plaintiff. He went on to say that all material costs were borne by the Plaintiff and that material costs paid by the Defendant had been reimbursed by the Plaintiff through Daiken (Bundle 3, page 903 to 910). This letter is covered by the second hearsay notice issued by the Defendant (see Bundle 1, page 86 to 88).

I am not willing to give any weight to the contents of this letter. Evidence is wanting as to what efforts, if any, had been made to secure the appearance of Mr. K at trial. It is clear that not only in this case but in other case or cases, the Plaintiff is alleging that Mr. K misconducted himself by making unauthorised orders. Without seeing and listening to Mr. K (particularly under cross-examination), I cannot discount the probability that he has a motive to conceal and misrepresent matters. It is simply not possible to assess the weight, if any, to be attached to this letter from Mr. K without his giving evidence in Court (see also paragraph 7 and 18i) above).

26.  There is a Statement of Account dated 18 March 2005 from the Defendant (Bundle 3, page 808. See also Bundle 1, page 235. This Statement of Account will be known hereafter as “the Statement”). It was “confirmed and approved” by Mr. Okado of the Plaintiff signing it. PW1 admitted authorising Mr. Okado to do so. However, the Plaintiff’s case is that it had no choice but to sign: the deadline set by WDI for completion of the Carpentry Works was approaching but the Defendant had not finished its work. The Defendant threatened to suspend all work unless the Statement was signed. There was no sufficient time for the Plaintiff to seek other sub-contractors. DW1 confirmed he had told Mr. Okado that if the Statement  was not signed, the Defendant would suspend all outstanding work. Given such circumstances, I am not willing to give any weight to the Statement.

27.  By a letter in English dated 5 May 2005 to the Defendant, PW1 objected to the Statement. According to PW1, he wrote the original letter in Japanese. His letter was translated from Japanese into English. PW1 then signed the English version and sent it to the Defendant. PW1 admitted in evidence that he could not understand the contents of the letter in English. He did say, however, he wanted to mention that the Plaintiff had made overpayments and that the Plaintiff objected to the Statement. According to DW1, after he received the letter he telephoned PW1 and explained to him the full contents of the letter. He asked PW1 why he (or the Plaintiff) was behaving in a contradictory way (it is Defence case that after the Defendant sent the Plaintiff a dunning letter of 28 April 2005 [Bundle 3, page 925] for outstanding amounts mentioned in the Statement, PW1 replied that he intended to pay but had no means to do so for the time being). PW1’s response was that the letter was prepared by a local staff and that he would get confirmation about the contents of the letter.

It is clear that the letter in English expressed what PW1 wanted to say in his original letter. I can see no reason for PW1 to respond in the way DW1 alleged, if DW1 did contact him on the matter.

28.  There is a letter in Japanese from the Plaintiff to the Defendant dated 13 June 2005 (Bundle 3, page 809 with English translation at page 812. The English translation of this letter puts the date of the letter as 13 August 2005. The date on the letter is a bit unclear, the digit representing the month can be a “6” or an “8”. Fortunately, the date of the letter is not material in this case). Defence seems to say that this letter amounted to an admission by the Plaintiff that it was “indebted to the Defendant and agreed to settle the outstanding sum” (Paragraph 11(c) of the Amended Defence). PW1 in-chief explained that the purpose of the letter was to see if the problem the Plaintiff had with Daiken could be cleared up with the assistance of evidence from the Defendant/ DW1. According to PW1, this problem was not related to the Defendant. It concerned Daiken/Mr. K breaching other contracts in that Mr. K ordered materials without authorisation. The letter mentioned that the Plaintiff would “try hard to get the payment settled to you” (i.e. the Defendant). PW1 explained that he meant money obtained from Daiken might be used to offset extra amounts for overseas materials paid by the Plaintiff in this case and hence decrease (or even extinguish) the Plaintiff’s claim against the Defendant.

I am unable to read the letter as the Plaintiff’s admission of liability to the Defendant. In all probabilities, it was an invitation to lend ammunition to the Plaintiff in its conflict with Daiken coupled with a promice of a share of the spoils on victory.

29.  On Defence case, there was the February Quotation. Due to the Defendant’s inability to provide overseas materials, the February Quotation had to be set aside. There was the need for the June Quotation. The evidence before me indicated that the Defendant started work on the Carpentry Works around July 2004. Subsequently, the November Quotation was entered into.

Such a scenario means that for quite a number of months, there was no written contract that correctly reflected the agreement of the parties regarding the Carpentry Works (about 5 months if one counted from the February Quotation to the June Quotation and about 9 months if one counted to the November Quotation). This is so even though the Defendant commenced work around July and, in relation to the Defendant’s additional or variation works, there was always a quotation signed (albeit by Mr. K). I find the scenario bizarre and reject it.

30.  Why did Mr. K sign on the November Quotation as well as the various quotations for additional or variation works? What was in it for him? I will simply say that on the evidence before me I am convinced that DW1 did not tell me the truth about how he related to Mr. K.

31.  DW2 is the Project Manager of the Defendant. He joined the Defendant in March 2004 but was only involved with the Disneyland project in June 2004 taking over from his predecessor, Mr. Ken Tam. Regarding the Carpentry Works as well as the relationship between the Plaintiff and the Defendant, DW2 relied to a very large extent on what DW1 told him. I have earlier rejected his evidence about PW1 telling him that Mr. K was responsible for the Defendant’s work (see paragraph 18 above). I do not regard DW2’s evidence as being helpful in this case.

32.  Quantum

I turn now to consider the amount (if any) to be paid by the Defendant to the Plaintiff in this case. I focus on the items and amounts referred to in paragraph 4 above.

33.  It is clear that the Defendant is not entitled to the sum of $14,900 (see paragraph 4 above and paragraph 8(a) in the statement of DW2 at page 102 of Bundle 1).

34.  Schedule I of Amended Statement of Claim

Save for the 3 items of C1/9.3/2A ($4,200), C19.3/2B ($9,100) and C1/9.3/2C ($25,600) which the Defendant says were completed by it, the Defendant agrees that it never did work on the other items in Schedule I (statement of DW2 at page 102 and 103 of Bundle 1). I note, however, that item C1.9.3/2C is listed as “CANCELLED” in the November Quotation. If the Defendant completed this item, why would it be so listed? I do not accept Defence evidence about the Defendant having completed the 3 items.

I accept that items under Schedule I were not done by the Defendant. That is justification enough to allow their deduction as claimed by the Plaintiff. There is “Adjustment for Preliminaries (Pro rata based upon the % amount of the works omitted)” in the amount of $28,714.76. The value of Preliminaries under the February Quotation is $123,000 (see Bundle 2.1, page 254). The “% of the amount of works omitted” ($232,220 as stated in Schedule I) to the total value of the contract ($1,117,717) is 20.77%. The pro-rata adjustment, assuming I am adopting the correct approach, should thus be $25,547.10. The Court is under no duty to and must not rationalise the claim for any party. I will simply say that I do not see the basis for this adjustment or how the amount claimed is arrived at. I will only allow deduction for the value of the work i.e. $232,220.

35.  Items C1/9.3/2K and F1/6.2/2A-D

The evidence regarding who the Plaintiff secured to perform work for items C1/9.3/2K and F1/6.2/2A-D and the amount involved can only be described as tenuous. PW1 was not in the know. I see in Bundle 2.1 at page 268 and 269 2 invoices from a Leung Ngai Enterprises Ltd. These invoices recite the amounts claimed. PW1 did not refer to these invoices in evidence. I find it difficult to relate these invoices to the 2 relevant items. For example, the dimensions stated in the invoice at Bundle 2.1 page 269 cannot be seen in the description of either item C1/9.3/2K or F1/6.2/2A-D (see Bundle 2.1 page 258 and 259). References in the same invoice to Drawings A-M-633, 635 and 641 cannot be seen in either of the 2 items. In the circumstances, I will only allow the Plaintiff the nominal sum of $1,000.

PW1 said that the 10% handling fees was standard in building industry. I regard this as just a bald assertion. I note that this is the first time PW1 had ever worked in Hong Kong. I query whether this “standard in building industry” is based on PW1’s experience overseas. In any event, Counsel for the Plaintiff said he would not be pressing for this 10%. I decline to make any award for handling fees.

36.  Schedule II of Amended Statement of Claim

The last 4 items in this Schedule are related to a (finishing) material called Avonite. There is a Finish List for “Buzz Lightyear” at page 773 of Bundle 3. There is no mention of Avonite. Under Special Finish, there is only mention of Corian. No other Finish list was produced during trial. There is nothing to show that the Defendant was obliged to perform work using Avonite. I disallow the 4 items of claim relating to Avonite.

It is clear that the Defendant carried out work under the February Quotation with overseas materials provided by the Plaintiff. The Plaintiff is entitled to reimbursement of the same. What is the amount? The remaining amount claimed is $826,529.52 viz. Carpentry Works $773,289.19, Stainless steel perforated panel $23,396.10, Materials for foot pedestal unit in SM $26,046.70 and Transportation charge for materials for foot pedestal unit in SM $3,797.53 (see the first 4 items in Schedule II). In cross-examination, PW1 confessed that he did not know the purchase price because he was not the one to make the purchases.

In Annex I of his written closing submission, Counsel for the Plaintiff directed my attention to quotations and invoices produced in Bundle 2.1 :

a)	Carpentry Materials -	page 281
b)	Stainless steel perforated panel -	page 291
c)	Materials for foot pedestal unit in SM -	page 292
d)	Transportation charges for foot pedestal unit in SM -	page 293

This is Counsel giving evidence for the Plaintiff. This cannot be.

The English translation of the document at page 281 (“the July quotation” is found at page 331 to 332 of the same Bundle. I suppose Counsel wanted to direct my attention to the amount of $637,481.48 for “Woodworking Materials” (page 332). The amount claimed for Carpentry Works is, however, $773,289.19. I think the balance of $135,807.71, is to be found at the document produced in Bundle 2.1 at page 288 and 289 (“the September quotation”) with English translation at page 336 and 337. The balance can be seen at page 337 for “Woodworking Materials”. I have already embarked on an exercise of rationalising this part of the Plaintiff’s case. This should not and cannot be. 

I note that both the July quotation and the September quotation were issued by Daiken to a Kuwazawa Co., Ltd., not to the Plaintiff. There is nothing to explain why this was so. I also note that the amount of $637,481.48 is mentioned in a quotation and an invoice from the Defendant to Daiken (Bundle 2.1 page 283 to 285). I find all this very confusing.

Page 292 of Bundle 2.1 is an invoice of Trans-Pacific Marketing to the Plaintiff. I cannot see how it is related to “Materials for foot pedestal unit in SM”. I tend to think that the last 7 items in the invoice at Bundle 2.1 page 294 and 295 are the relevant entries. One can arrive at the amount of $26,046.70 by applying the exchange rate of US$1 to HK$7.8 to the sum total of those 7 items. Unfortunately, I am again rationalising for the Plaintiff.

The July quotation and the September quotation as well as the 2 invoices just referred to are covered by the Plaintiff’s first hearsay notice. In view of matters mentioned above, this fact does not help to establish quantum for Carpentry Materials or Materials for foot pedestal unit in SM.

The simple fact is that there is no evidence to substantiate the amount the Plaintiff spent for the first 4 items in Schedule II. I am satisfied that the Plaintiff did pay for overseas materials used by the Defendant and the Plaintiff is entitled to reimbursement. There is, however, no evidence to prove quantum. The Court will not perform magic and pluck a figure out of the hat for the Plaintiff. In the circumstances, I award the Plaintiff the nominal sum of $1,000 for overseas materials supplied.

I refuse the claim for handling fees of 10% for the same reasons stated in paragraph 35 above.

37.  The Plaintiff admits liability to pay the Defendant for the Additional Works in the amount of $299,869 but that the amount of $51,680 needs to be deducted  because of  “duplication with the works specified under various items” of the February Quotation. No one bothered to point out where the various duplicated items could be found in the February Quotation. I refuse to make the deduction of $51,680.

38.  It is agreed that the Plaintiff has paid the Defendant the total sum of $880,000.

39.  Even though I find that the Plaintiff succeeded on the key issues in this case (i.e. the February Quotation was the binding contract between the parties and that Mr. K had no authority to commit the Plaintiff), evidence on quantum is such that the amounts I allow the Plaintiff to claim from the Defendant are drastically reduced. Adopting the calculation of the Plaintiff but substituting amounts allowed by me, there is outstanding to the Defendant the amount of $288,486 ($1,117,717 less $14,900 less $232,200 less $1,000 less $1,000 add $299,869 less $880,000). I regret this result. I am, however, bound to decide a case on the evidence as presented.

40.  The Plaintiff claims the amount of $865,738.40. The Plaintiff has failed to prove that this is the amount it is entitled to. The Plaintiff’s claim is dismissed.

41.  The Counterclaim of the Defendant included the Additional Works. The Plaintiff admits liability for the Additional Works. I refused deduction of $51,680 (see paragraph 5 and 37 above). Leaving out the Plaintiff’s liability for the Additional Works, the Plaintiff is entitled to claim $11,383 from the Defendant ($1,117,717 less $14,900 less $232,200 less $1,000 less $1,000 less $880,000). The Defendant is entitled to be paid for the Additional Works in the amount of $299,869. The Defendant has sought to set this off against any amount the Plaintiff succeeded in claiming (see paragraph 18 and 20 of Amended Defence). I therefore enter judgment for the Defendant on the Counterclaim for $288,486 ($299,869 less $11,383). The rest of the Counterclaim is, of course, dismissed. I order the Plaintiff to pay interest on this $288,486 at judgment rate from the date of the Counterclaim (16 August 2005) until payment in full.

42.  The Plaintiff won on the key issues in this case. Regrettably, it turned out to be a pyrrhic victory. As far as costs are concerned, I think each party should bear its own costs. I make an order nisi that, save for costs already provided for, each party is to bear its own costs.