MARVEL INTERNATIONAL TRADING CO (a firm) v. WING TUNG ON CONSTRUCTION CO

IN THE HIGH COURT OF JUSTICE

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JUDGMENT

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1. There are in all 9 contracts. It is, I believe, common ground that these 9 contracts arose as a result of negotiation on 9 quotations separately presented. As Mr. Lam informed the court, they were separate contracts. That position was echoed by his counsel. These 9 contracts were concerned with various facets of construction in Phase II of the Ju Ching Chu English College in Kwai Chung.

2. A number of allegations have not been proceeded with or pursued during the course of these proceedings which are consolidated from the two actions 5126 and 5127, both of 1983. Being individual contracts each to be performed by the plaintiff for the benefit of the defendant, I need mention only two cases.  Small & Sons Limited v. Middlesex Real Estates Limited ⁽¹⁾ is for the proposition that abandonment of a distinct and separate contract cannot be justified by delay in payment in respect of another contract.  Sumpter v. Hedges ⁽²⁾ is an authority for the principle that unless work is completed under a lump sum contract, no price may be recovered by the contractor except where there is evidence of a fresh contract to pay for the part already executed.

3. The legal identity of the plaintiff in each of these consolidated actions is different, but for the purposes of these proceedings, they can be taken as one and the same entity. They are therefore collectively called in these consolidated actions "the plaintiff".

4. In Action 5126, there are 5 contracts. The outstanding dispute as finalised is the line of crack in the ceiling of the swimming pool under Contract S1128/82. Counsel for the defendant contended that the very existence of the line of crack was indicative of defect in the plaintiff's execution of this S1128 contract.  Mr. Chain invited the court to award general damages, special damages not having been pleaded.

5. The plaintiff complained that prior to the application of the substance to the ceiling of the swimming pool, there were iron strips, line marks, protruding concrete lumps, water stains and square holes or pores on the surface.  Mr. Leung, the co-ordinator of the plaintiff told the court that the plaintiff was only prepared to commence work under protest and on the insistence of the defendant who must be made to shoulder all the responsibility.  That cannot take the matter further, as there was no suggestion that any of these matters of complaint in the concrete surface had caused this line of crack subsequently discovered in the ceiling of the swimming pool.

6. On the other hand, we have Mr. Mok's evidence who was the sub-sub-contractor, actually executed the works specified in this Contract S1128. He was adamant that the work was not defective. The line of crack was attributable to water seepage particular near two previous openings of approximately 1 square foot and 2½ square feet respectively. Mr. Mok's evidence was not seriously challenged. No expert evidence was called on behalf of the defendant.  I accept Mr. Mok's evidence and find that the line of crack in the ceiling of the swimming pool was in fact so caused. Hence, the remaining matter in Action 5126 is disposed of, and all the claims mace therein under those 5 contracts against the defendant are, I find, proved.  It is hardly necessary for me to say that the plaintiff's claims against the defendant under the remaining 4 contracts in that action were never disputed. All in all, a total sum of $27,747.48  is, therefore, found due from the defendant to the plaintiff.

7. Next, I turn to the other 4 contracts in Action 5127. First of all, Contract   S1070/81: That was for a waterproof membrane on the flat roof above the stage and the auditorium. The contract itself, exhibit "P1", gave the membrane a 10 years' guarantee. In the brochure, "D1" page 4, the manufacturer recommended that the thickness of the membrane should be in the region of 1.5 mm. and that for its protection after completion, a coat of reflective paint should be provided.

8. The sub-sub-contractor for this particular job was the Far East Construction Water-proofing Company which, incidentally, was not called by the plaintiff.

9. Both Mr. Lam of the plaintiff and its co-ordinator, Mr. Leung, claimed that they each manually tested the thickness of  the membrane on completion by feeling and pressing on the completed roofing. However, it was conceded by Mr. Leung that such manual examination was less than precise and that he was unable to detect its actual measurement.

10. The plaintiff also complained that no protection was given to the cured membrane. The court was told that in Phase I, about half of the roofing was water-proved by the same kind of membrane and protective tiles of, I believe, one square foot of the thickness of an inch were installed. Mr. Lo explained that title Phase I membrane, though admittedly of similar construction, was designed to be what has been described as the "walkon" version whilst the membrane of the flat roof under this Contract S1070/81 in Action 5127 was intended to be what has been called a "non-walkon" membrane. The brochure "D1" was, so Mr. Lo agreed, supplied to the defendant prior to execution and completion of the works specified in this contract, but Mr. Lo maintained that despite the supply of this brochure, he was unaware of any necessary protection for the "non-walkon”version under this Contract S1070/81. Mr. Lo's disclaimer of any knowledge of the requisite protection for the completed membrane was not entirely without some support. Under its heading "Remarks" in the contract, (g) burdened the defendant with the responsibility for protecting the membrane after application. But not even in this contract, exhibit "P1", was any mention made of the desirability or requirement of a protective coating for the completed membrane. Reference to a reflective coating could have been easily made. According to Mr. Lam, he had clearly warned Mr. Lo of the desirability and requirement of this type of protection. This allegation was also refuted by Mr. Lo who testified that the first time he came to know of the necessity or desirability of such protection was when he was complaining of the leakage to Mr. Lam after the event. If a reflective coating had been advised, one would have expected the plaintiff as the same sub-contractor to be entrusted with or at least consulted as to its application.

11. I have had opportunity of observing the demeanour of both witnesses and evaluating the quality of their respective evidence. On the balance of probabilities, I prefer the version given by Mr. Lo to that given by Mr. Lam.

12. The protective coating desired for this type of membrane was, in fact, a coat of reflective paint to shield its surface from heat generated by sunlight so as to avoid unwanted reaction of the "binder".  Sun-ray would bring about a coat of chalky substance to the surface of this binder, which, when washed away by rain, would in turn reduce the residual thickness of the membrane. The membrane was completed some time in November 1982, and workers were seen from time to time to be in and upon the flat roof on top of the completed membrane.  From the photograph, exhibit "P2", taken proximately about 7 months after completion, tiles and other articles can also be seen stacked or stored on top of the membrane of the flat roof. The plaintiff warned the defendant about this. The tiles and some of the articles seen in photograph "P2" were said to have been left over from the installation of tiles on small areas next to the two entrances to the ceiling of the rear stage for operating spotlights.

13. It was suggested at one time that tools and shoes of workers might cause damage to the completed membrane. But there was really no allegation to the effect that there was any repture, puncture or tear or that any damage was caused by such or any similar carelessness. When confronted with exhibit "D2", Mr. Lam conceded that half a year's exposure to the elements could not have reduced a 1.5 mm. membrane to such a thin sheet of substance.  "D2" and "D2(1)" were produced by Mr. Lo who picked them up from, virtually, the centre of the flat roof membrane above the stage. When compared with the sample attached to exhibit "D1", the difference could readily be seen, but the sample was admittedly over 1.5 mm. and the comparison was therefore unhelpful.

14. The defendant also called Mr. Ho who I accept as having the experience of the type of examination and survey that his firm was invited to conduct. Mr. Ho informed the court that his firm was in possession the requisite sophisticated equipment for the survey or investigation. One piece was specifically examined by Mr. Ho with such equipment. It was found by Mr. Ho to be miserably below the recommended dimension. Mr. Ho pointed out in his report "D8" that there was a serious problem in the membrane. He drew attention to cracking of the membrane at the skirting, particularly in the roof area above the stage. He took exception to the measurement of the examined piece as being below the recommended minimum standard. He agreed that some parts of the membrane were more than 1.3 mm., but his opinion was that the state of the membrane as found on his inspection affected water-proofness. He concluded that there was inadequate adhesive power from incorrect application procedure and that the lack of bonding power was due to unacceptable thickness of the membrane. He also found that no primer was applied. The court was told that the function of the primer was to provide or enhance adhesiveness between the synthetic membrane and the concrete.

15. Water-proofness was the principal if not the sole purpose of the membrane. These defects as found by Mr. Ho point to a serious problem in the membrane. Clearly, the plaintiff has not given the defendant what it bargained for. The proper inference is that the membrane was worthless to the defendant as pleaded. There was no real allegation or evidence that this condition of the membrane on the flat roof was caused by anything other than the defects enumerated by Mr. Ho.  As I have said, the sub-sub-contractor eras not called. That being the position, as I have found it, the plaintiff clearly failed to supply the membrane stipulated for in this contract. But the defendant through its counsel now offers half the price, and I do not see any reason for not giving the plaintiff credit in that sum for even, what I have found to be, a worthless membrane. The total contract price at the agreed area of 15,989.09 square feet amounted to $47,969.70. I take that to he $48,000 for easier calculation. Half of that is, therefore, $24,000. The plaintiff had been paid $18,000 under this Contract S1070/81, and therefore, another $6,000 is due from the defendant to the plaintiff.

16. The next contract is no longer a matter of controversy between the plaintiff and the defendant, and that is S1083/81 for the walls of the gymnasium. A sum of $15,153.60, being the conceded balance, is therefore due from the defendant to the plaintiff.

17. I come lastly to the remaining two contracts S1075/81 for the gymnasium floor and S1082/81 for the walls of the library, general office, music room or changing room. First of all, Contract S1075/81, the sub-sub-contractor was again tire Far East Construction Water-proofing Company. It was for, what has been described as "seamless flooring" for the gymnasium by the application of "U-Tack AW" synthetic floor covering. The plaintiff complained that the surface had not been prepared as specified in the contract. The cement rendering of the gymnasium floor was done by the Ching Ngai Engineering Company. I find, from evidence of Mr. Siu of Ching Ngai and Mr. Lo, that the cement rendering wan finished in mid January. According to Mr. Siu, the cement rendering was finished within the first 10 days of January 1983. As a matter of fact, the defendant used it as an examination hall in mid April, and that can be seen in "D6(1) - (3)".  Mr. Lo explained that the plaintiff was urged to commence and complete work on the gymnasium flour between mid January to mid April before the commencement of the examinations when the gymnasium was expected to be used as a public hall. Mr. Lam was specifically warned by Mr. Lo whose evidence on this aspect I also accept that, otherwise, the gymnasium floor of U-Tack AW could only be applied after the examinations. I will come in a moment or two to the attitude of the plaintiff.

18. After the examinations at the end of May 1983, the finished cement floor surface of the gymnasium, though with very slight bulging almost unnoticeable to the naked eye, was founded to be defective in the sense that when the ground was struck with a stick, the sound of repercussion suggested that there were hollow spots beneath. Hence, the cement rendering surface had to be dug up for repair. It was during that time that Richards Brooks International was instructed by the plaintiff to conduct an inspection, and their report, exhibit "P15", dated the 7th July 1983 was produced in the course of these proceedings. Having set out the complaints of their client, the plaintiff, Richards Brooks International had this to say: "Attending as above, We found the surface of the concrete floor of the gymnasium to be cracked and uneven. We examined the cans and found as shown below. We had a number of cans opened and examined the contents, finding same to be externally in order, but the applicant feared that defects of the contents might occurred (sic) after application." The report would seem to have steered clear of the controversy raised by their client, the plaintiff, that the floor was in such a state that application of the U-Tack AW flooring was impossible. It refrained from commenting as to when the surface could be restored. The last conclusion merely recited the fear of their client, the plaintiff, of the possibility of defect of the materials stored in the cans.

19. The subsequent discovery of the hollow defects by the defendant after the end of May would seem to be quite irrelevant because at the material time when the execution of this particular contract ought to have been undertaken, the surface of the gymnasium was apparently taken by all as ready.

20. In fact, there had been hardly work done by the plaintiff in this college from as early as January 1983. According to Mr. Lam, he absented himself from the site between January or February to about May, because of delay in payment in some other contracts. A letter was sent on the 17th February 1983 with another letter to follow on the 17th March 1983, exhibit "P16" and "P17" respectively.  Subsequently a solicitors' letter was sent in April "P18", and the writ in this Action 5127 was taken out in May. In essence, the correspondence complained of delay in payment, informed the defendant of the plaintiff's suspension of work and aired the plaintiff's tear of the possibility of deterioration of the substance for this particular contract. What sums up the situation quite neatly is the observation extracted from Mr. Lam that he, Mr. Lam, would not have had work resumed even if the condition of the floor of the gymnasium was ready for application between January and May 1983.

21. I have found that the floor of the gymnasium was ready as from mid January. The subsequent discovery of the hollow defects could have had no bearing at the time when the plaintiff stopped work. Mr. Lam would have this court believe that apart from non-payment, part of the reason for the suspension was due to delay caused by obstructions, unfinished work site and other uncoordinated operational chaos. But the defendant had the floor ready in mid January, and there was no obstacle to the plaintiff executing this particular contract as from that time before the commencement of the examinations. The defendant did have the gymnasium arranged as an examination hall as shown in the photographs with tidy rows of chairs and desks. There could have been no reason or justification for the plaintiff refusing to perform its part of the bargain under this particular contract. The only excuse, I find, used by the plaintiff for suspending work and not carrying out its obligation under this contract was the question of payment, which clearly did not release the plaintiff from its obligations under this Contract S1075/81. The plaintiff was, I find, therefore, in breach. The excuse of the plaintiff was not legally justified. A sum of $49,104 had been paid to the plaintiff under this contract, and this sum ought to be returned to the defendant.

22. The last contract in these two consolidated actions is S1082/81 for the walls of the library, general office, music room or changing room. But again, similar complaint was raised by Mr. Lam as to delay caused allegedly by unprepared work location, obstruction and/or disruption. However, the sub-sub-contractor was able to put on the primer coat and the fine texture coat. The area done was disputed. According to Mr. Lo, he calculated the area for these two coats as some 7,000 square feet based on the drawings. That is not quite relevant in view of my finding to be given in a moment or two, but I accept his evidence.

23. Mr. Lam found himself hard-pressed by counsel for the defendant in explaining as to how he could justifiably rely on his complaints for delay when his own sub-sub-contractor had managed to finish the two primer and fine texture coats. I find that delay was not the cause but that in fact, the sub-sub-contractor was asked by Mr. Lam to suspend work. I further find that work was suspended on these instructions as Mr. Mok, the sub-sub-contractor was driven so to admit. As a matter of fact, Mr. Lam had not even asked for payment under this particular contract. Stoppage of work under this contract was designed to exert pressure to bear on the defendant in the hope of obtaining payments under some other contracts. There was no justification, I find, for the stoppage of work under this contract by the plaintiff.

24. Under Contract 1082/81, exhibit "P19", the plaintiff was enjoined by the contractual provisions to supply and apply a acrylic-base spraytile to the walls of these premises. The two under-coatings did not provide the work so contracted for under this contract.

25. Counsel for the plaintiff protested as to the manner in which alleged failure on the part of his client, the plaintiff under this contract was pleaded in paragraph 18 of the defendants Counterclaim. It was contended that pleading merely a failure to complete the application of the spraytile was insufficient to raise the allegation of a total failure of consideration. I do not agree.

26. It was common ground that the defendant had since painted these walls with a paint other than spraytile. Spraytile was contracted for under this contract but was not supplied. That would seem to be the end of the matter between the plaintiff and the defendant under this contract save for the payment that had already been made to the plaintiff by the defendant in the sum of $11,520. This sum has also to be returned to the defendant who was not given any spraytile.

27. In my view, the plaintiff was in breach. The quantum meruit claim of the plaintiff, so counsel condeded, could not arise in the circumstances as I have found them.

28. As for the plaintiff's claim for the materials in the sum of $58,080, first of all, the defendant was unaware of any possible deterioration until the plaintiff's letter of suspension. There was also no evidence that anyone in the defendant company had knowledge that the materials could become useless for application or were not readily disposable because of their uncommon specifications. I accept Mr. Lo's evidence that the nature of the materials proposed to be used for this contract was quite unknown to him. Even up to today, there is no evidence that the materials have, in fact, become useless save for some fear of Mr. Lam that as the materials have turned more viscous, it may be defective on actual application. Mr. Lam told the court that the materials were stored in the godown of Holden Enterprise, but no evidence was led as to what, if any, steps had been taken to dispose of them. Mr. Lam seemed to suggest that these were the defendant's materials. I accept Mr. Chain's contention that in the circumstances this claim of the plaintiff would, in any case, be too remote. I further find evidence of alleged defect due to long storage unsatisfactory and insufficient.

29. I need make a further finding for completeness. I accept Mr. Lam's evidence of charges for these two coats. If I were to find in favour of the plaintiff under this contract, they would be assessed at $1,80 per square foot. Mr. Mok informed the court, and whose evidence on this I also accept, that he would be entitled to chancre Mr. Lam $1.40 per square foot, being almost 70% of the contact price. However, the plaintiff has been found to be at Fault under this particular contract and these further findings could only be cold comfort to the plaintiff.

30. In the circumstances, it remains for me to order in these consolidated actions that there be no order made in Action 5126 of 1983 although the plaintiff has, in fact, wun the entire action with the 5 contracts therein pleaded. After computation, suffice it for me to give judgment in favour of the defendant on its Counterclaim in Action 5127 of 1983 in the sum of $11,622.92.

31. These proceedings were consolidated, but I have not been assisted on the true nature of the consolidation. Pleadings have been kept separate; so have most of the contentions. The withdrawal of some of the allegations by the defendant has ultimately shortened the proceedings, but quite some time was wasted in the course of the evidence. In the two consolidated actions, the number of contracts are almost equally split. The claims and counterclaims of the plaintiff and the defendant are likewise quite evenly aligned. Subject to What counsel have to say, I propose to make no order as to costs.

(1)    [1921] W.N. 245

(2)    [1898] 1 Q.B. 673