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DCCJ 1418/2012
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 1418 OF 2012
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BETWEEN
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WONG KWOK WAH |
Plaintiff |
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and
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YAN KAM TO, represented by
YEE YUNG CHING, the Administratrix
of the estate of YAN KAM TO |
1st Defendant |
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YAN KWOK HUNG MICHAEL |
2nd Defendant |
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YEE YUNG CHING |
3rd Defendant |
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| Before: Deputy District Judge J Chow in Court |
| Dates of Hearing: 6 – 8 and 10 October 2014 |
| Date of Judgment: 22 October 2014 |
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JUDGMENT
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Introduction
1. The plaintiff claims the 1st – 3rd defendants for outstanding fees due and owing from constructions works done in the building located at 18 Kimberly Street, Tsimshatsui, Kowloon (“the Building”).
Background / undisputed facts
2. The plaintiff is a construction work contractor. The 1st, 2nd and 3rd defendants are respectively the registered owners of the ground floor and 2nd floor; the 1st floor; and the 3rd floor of the Building.
3. Upon introduction by Wong Siu Fong and Tam Kwong (who were workers for the plaintiff) the plaintiff came to know the 2nd defendant.
4. On 16 March 2011, by way of a written agreement, the plaintiff and the 2nd defendant (for and on behalf of the 1st and 3rd defendants) entered into a construction work contract, the 2nd defendant agreed to carry out constructions / renovation works at the Building at an agreed price of $184,000 (“the 1st Agreement”). The terms of the 1st Agreement are mainly works on the outer wall of the Building, inter alia, to removal of the surface paint, to do new plastering and repaint it. The costs of the works included erecting and dismantling scaffoldings, demolition old structures and insurance premiums. It was also specifically agreed in clause 6 therein:-
(i) the construction works shall be completed within 75 days (public holidays and rainy days excluded);
(ii) the plaintiff shall be responsible for all tools for the construction works; and
(iii) the 2nd defendant shall pay the price of the construction works as follows: 40% of the price at the commencement of the works; 30% of the price at 2nd phase of the works; and the remaining sum at completion and upon the satisfaction of the 2nd defendant. The guarantee period shall be 6 months from the date of completion. Additional works shall be charged separately.
5. On 28 March 2011, the 2nd defendant paid the plaintiff $80,000 as the 1st installmentof the 1st Agreement.
6. The plaintiff commenced work as agreed in the 1st Agreement.
The plaintiff’s claim
7. The 1st Agreement bears the title of “Wah Yick Construction Engineering Co.” (華益裝修工程), affixed with a business chop bearing with a different name, 華益裝修工程公司. Wah Yick Construction Engineering Co. ceased to exist at time of signing of the 1st Agreement because it was deregistered in 2003. The plaintiff agreed he had entered into the 1st Agreement in his own capacity.
8. The plaintiff said Wong Siu Fongsigned the 1st Agreement as a witness.
9. The plaintiff alleged additional works were done and was evidenced by an unsigned agreement dated 6 April 2011 (“the alleged 2nd Agreement”), the additional works included repainting the outer wall of the Building, replacing existing windows and other interior renovation. The price of the contract is $275,500. It is also stated in clause 10 therein:-
(i) the 2nd defendant shall pay 40% of the price of works prior the commencement of the works; and
(ii) the additional works shall be completed within 75 days (public holidays and rainy days excluded).
10. The plaintiff said the 2nd defendant has paid 40% of the contract price of the alleged 2nd Agreement, in sum of $100,000 on 27 April 2011.
11. The 2nd alleged Agreement bears the title of “Wah Yit Construction Limited” (華益裝修工程有限公司), a newly incorporated limited company. Notwithstanding this, the plaintiff said he is the contracting party of the alleged 2nd Agreement.
12. Wong Siu Fong also signed the alleged 2nd Agreement as a witness.
13. The plaintiff alleged the 2nd defendant was in default paying 2nd installment of the 1st and the 2nd alleged Agreements. The plaintiff and his workers discontinued the works and had left the Building on 17 June 2011.
14. On 24 June 2011, by way of a letter issued by Wah Yit Construction Limited, the 2nd defendant was asked to pay $150,000, being the 2nd installment of both the 1st and 2nd alleged Agreements. It was stated in the letter that 70% of the entire works have been completed. In absence of the 2nd defendant’s response, on 27 July 2011, the plaintiff’s solicitors notified the 2nd defendant that the plaintiff has accepted his repudiation of the 1st and the 2ndalleged Agreements.
15. The plaintiff claims outstanding construction costs dueand owing from the 1st – 3rd defendants arising from the 1st and the 2ndalleged Agreementsin the sum of $280,000[1].
The defence
16. The 2nd defendant said he has not engaged the plaintiff to carry out additional works, he has fully settled the contract price of the 1st Agreement. The sum of $80,000 and $100,000 paid on 28 March 2011 and 27 April 2011 were part of the contract price of the 1st Agreement.
17. The 2nd defendant said both sums of $80,000 and $100,000 were made in satisfaction of the contract price of the 1st Agreement. The remaining $4,500 was paid to one construction material shop (known as 江夏五金公司) for settlement the material costs which should have paid by the plaintiff [2].
18. Wong Siu Fong was not a contracting party, Wong Siu Fong signed on the 1st Agreement because the 2nd defendant was of the view that he could ask Wong Siu Fong for assistance had there been any problem with the plaintiff’s works.
19. The 2nd defendant complained the construction works agreed in the 1st Agreement were behind schedule, the plaintiff refused to continue the works. The plaintiff refused to remedy water seepage occurred as a result of inadequate preventive measures after the removal of the old windows. The 2nd defendant said the plaintiff was in breach of the 1st Agreement and had finally left the site with works unfinished in June 2011.
20. In or about August 2011, the 2nd defendant engaged Wong Siu Fong and Tam Kwong to remedy water seepage problem and to complete the unfinished works. He further asked them to remove canopies, a water container and to do other miscellaneous items.All constructions works were finished in or about October 2011. The 2nd defendant spent $340,000.
The issues
21. The issues to be determined are:-
(i) Whether the plaintiff and the 2nd defendant agreed to proceed with the additional works apart from those agreed in the 1st Agreement, including but not limiting to those stated in the alleged 2nd Agreement?
(ii) If so, who were the contracting parties of the alleged 2nd Agreement?
(iii) Who was in breach of the 1st and/or the alleged 2nd Agreements?
The evidence
22. The plaintiff is the only witness. The 2nd defendant, Wong Siu Fong and Tam Kwong testified for the defendants. The 3rd defendant was not called as a witness because she is one of the registered owners of the Building and has no involvement in the works.
Analysis
Issue (i) :
The alleged 2nd Agreement
23. The plaintiff testified, on request of the 2nd defendant, additional works are contemplated after the commencement of the works. The plaintiff and Wong Siu Fong presented the 2nd alleged Agreement to the 2nd defendant in a meeting in April 2011. Although the 2nd defendant did not sign the alleged 2nd Agreement, the plaintiff said the 2nd defendant had verbally agreed to the terms and contract price. The plaintiff commenced the works agreed therein upon instruction of the 2nd defendant. On 27 April 2014, the plaintiff received $100,000 as the 1st installment of the alleged 2nd Agreement.
24. The 2nd defendant and Wong Siu Fong testified to the contrary. The 2nd defendant denied he has agreed to the terms and contract price of the alleged 2nd Agreement. He did not ask the plaintiff to commence the additional works. In the meeting in April 2011, he was told the additional works has already been commenced. The plaintiff informed him that he was running out of funds to pay the workers, with a view to wrap up the unfinished work under the 1st Agreement, the 2nd defendant paid $100,000 to the plaintiff as part of the contract price of the 1st Agreement.
25. The 2nd defendant said, he refused to enter into contract for additional works (the 2nd alleged Agreement) with Wah Yit Construction Limited. He further explained, he found the alleged 2nd Agreement unacceptable because the contract price was on the high side. He made no contract with the plaintiff for works outside the ambit of the 1st Agreement.
26. Wong Siu Fong testified, he and the plaintiff compiled the alleged 2nd Agreement on request of the 2nd defendant to carry out additional works. He agreed, in the meeting in April 2011, no agreement with regard to the additional works has been reached because the 2nd defendant found the price of the alleged 2nd Agreement was too expensive. The 2nd defendant had made clear to both the plaintiff and himself that he needed time to reconsider. No agreement has been reached. Wong Siu Fung explained, he was not told of the further development of the signing of the alleged 2nd Agreement. Without knowing whether the 2nd defendant has agreed to the price of the quotation, the plaintiff asked him to commence the additional works, which he did.
27. Both Chan King Loi (plaintiff’s witness) and Tam Kwong (2nd defendant’s witness) were not involved in the discussion of the alleged 2nd Agreement.
28. On balance of probabilities, I accept both the 2nd defendant and Wong Siu Kwong’s evidence, the plaintiff’s evidence is not to be believed, reasons as follows.
29. The parties have previous dealings that acceptance of offer in formation of a contract was evidenced by signed written contract. In absence of the 2nd defendant’s signature on the alleged 2nd Agreement, the plaintiff have difficulty to prove he and the 2nd defendant have reached an agreement to carry out additional works. It is particularly so when a meeting was specifically called for to discuss the additional works. It is believable that the 2nd defendant did not agree to a sudden change of contracting party from the plaintiff himself to a limited company.
30. Clause 10 of the alleged 2nd Agreement states the 2nd defendant shall pay 40% of the contract price as deposit, which is $110,200. The plaintiff has received $100,000 only, with a shortfall of $10,200. It is more likely than not such payment was meant to be the outstanding price of the 1st Agreement when the 2nd defendant refused to accept the alleged 2nd Agreement. I find the payment of $100,000 was paid as part payment of the 1st Agreement to the plaintiff, not the 1st installment of the alleged 2nd Agreement.
31. Mr Chan, counsel for the plaintiff submitted, the alleged 2nd Agreement was only evidence in support of an agreement for additional works. The plaintiff and the 2nd defendant had orally agreed to proceed with the additional works. I do not agree. Had there been an oral agreement to proceed, there is no evidence on the terms, including the scope of work, price and duration of such agreement. The plaintiff could not have relied on the 2nd defendant’s intention to proceed with doing additional works and have proceeded without ascertaining the terms of the contract.
32. The payment of the $100,000 is good evidence to show the 2nd defendant’s evidence is more probable. The $100,000 cheque was payable to the plaintiff personally. A receipt dated 26 April 2011was issued by the plaintiff himself. Should the 2nd defendant agreed and accepted the alleged 2nd Agreement, both the cheque and the receipt of the $100,000 payment should be made to and issued by the new contracting party, Wah Yit Construction Limited, not the plaintiff.
33. Although it is not pleaded in the defence that the 2nd defendant had settled for and on behalf of the plaintiff $4,500 with the shop (known as 江夏五金公司) for the price of the constructing materials. During cross examination, the plaintiff admitted he did not pay for them. As a result, on top of the payment of $80,000 and $100,000; the total sum $184,500 was paid by the 2nd defendant. It falls squarely as full payment of the 1st Agreement.
34. I am satisfied the defence could be established. I find no agreement has been reached between the plaintiff and the 2nd defendant to proceed with the additional works. Notwithstanding the 2nd defendant’s refusal to sign or agree to the alleged 2nd Agreement, the plaintiff unilaterally, without informing the 2nd defendant, performed some of the works as stated in the alleged 2nd Agreement, with a hope that the 2nd defendant would concede to pay for the works. As there were no contract, the 2nd defendant shall not be liable to the sum claimed.
Issue (ii) :
The contracting party of the alleged 2nd Agreement
35. Notwithstanding the findings in issue (i), I shall analyse issue (ii).
36. The plaintiff entered into contract with the 2nd defendant with a non-existing trading name, “Wah Yick Construction Engineering Co”. He agreed, having done so, does not affect the 1st Agreement was entered into in his personal capacity. I believe this is the intention of the parties, when the 1st instalment of the price of the contract was made to the plaintiff personally, and the plaintiff had issued receipt in his own name.
37. In the plaintiff’s own evidence, “Wah Yit Construction Limited” should be the contracting party to the alleged 2nd Agreement, if any. The reason being, both the contract itself and the demand letter bears the title of “Wah Yit Construction Limited”, instead of “Wah Yick Construction Engineering Co.”
38. Wong Siu Fong and Tam Kwong were never a party to the 1st Agreement. The plaintiff paid $10,000 to Wong Siu Fong as commission for introducing the 2nd defendant to him. It was later shown in the evidence that $5,000 was shared by Tam Kwong. It is agreed in the evidence that both of them could share a percentage of the profit.
39. More importantly, the plaintiff testified the alleged 2nd Agreement was made to be an entry in the accounts of “Wah Yit Construction Limited”. Solely on his evidence, it is more probable than not that the alleged 2nd Agreement, if any, was entered into between “Wah Yit Construction Limited” and the 2nd defendant. The plaintiff was not a contracting party to the contract, he is not entitled to claim damages against the 2nd defendant in his own capacity.
Issue (iii)
Who was in breach of the 1st and/or the 2nd alleged Agreement?
40. The plaintiff said the 2nd defendant refused to pay further sums after paying $100,000. On 16 June 2011, a meeting was held to discuss the progress of the works. The plaintiff made himself clear that unless the 2nd defendant paid further sums, he and his workers would discontinue the works.
41. Both the 2nd defendant and Wong Siu Fong testified. In or about May 2011, notwithstanding water seepage problem, the works were grossly behind schedule. Whilst the 2nd defendant was unhappy with the progress of the works, the plaintiff further demanded the 2nd defendant to pay $200,000. The 2nd defendant made no further payment to the plaintiff. The plaintiff has unilaterally left the site without remedying water seepage problem in June 2011.
42. It is in the evidence that the plaintiff (more precisely Wah Yit Construction Co Ltd) demanded the outstanding payment in a letter dated 24 June 2014. The plaintiff accepted the 2nd defendant’s repudiation in his letter dated 27 July 2011. The site was further left idle from June 2011 until Wong Siu Fong and Tam Kwong to do remedial and the unfinished works of the plaintiff. in August 2011.
Installments
43. Mr Chan submittedthe 2nd defendant was in breach of both the 1st and the 2ndalleged Agreements in default of paying the 2nd installment. Non-payment of installments amounted to repudiation. In Creatiles Building Material Co Ltd v To’s Universe Construction Co Ltd [2003] 2 HKLRD 309, Cheung JJA decided,
“16. As a starting point, it is correct to say that there is no general right in common law to suspend work if payment is wrongly withheld. Lubenham v South Pembrokeshire DC [1986] 33 BLR 39…”
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“23. Ultimately one has to examine the facts of the case to see whether the non-payment amounted to a repudiation. The principle is to consider whether the circumstances of the non-payment show an intention not to be bound. See also Hudson’s Building and Engineering Contracts 11th Edn Vol 1 para 4.221 and Keating on Building Contracts 7th Edn para 6-94.”
44. The payment terms of the 1st and the alleged 2nd Agreements are: (i) in the clause 6 of the 1st Agreement, payment should be made in three installments: 40% at the commencement of the works; 30% to be paid in accordance of the work done; and 30% upon completion and satisfaction of the 2nd defendant[3]; (ii) in the alleged 2nd Agreement, there was no precise agreement on payment terms, save and except clause 10.1 stated payment of 40% deposit at the commencement of the additional works[4].
45. The plaintiff’s allegation is premised on the 2nd defendant’s default of subsequent installments / payments. In the plaintiff’s letter dated 24 June 2014 (more precisely Wah Yit Construction Limited), it stated 70% of the works had been completed and demanded a 2nd installment of $150,000[5].
46. In fact, clause 6 of the 1st Agreement is ambiguous. It does not specify the time to pay further 30% of the price, it does not state the extent of works to be completed, it merely states such payment depends on the progress of the works (第二期按工程進度計支付30%). No evidence could assist me to find when the 2nd installment should be paid. The demand of the 2nd installment of both the 1st and the alleged 2nd Agreement were unjustified. It follows that Creatiles Building Material Co Ltd v To’s Universe Construction Co Ltd is distinguishable because the plaintiff could not have established a valid demand of installment of payment.
Extent of completion of works when the plaintiff left the site
47. No evidence was tendered by the plaintiff to prove the completion of (i) all works agreed in the 1st Agreement except some cement and painting works; and (ii) 70% of the additional works. During cross examination, the plaintiff said he has taken photographs of the unfinished works when he had left the site, nevertheless, he elected not to disclose the photos as evidence in this action. The plaintiff himself is evasive in answering questions in relation to the extent of works done. The plaintiff should have envisaged claims of the outstanding amount at time when he had left the site. It is illogical for an experienced construction contractor to keep no contemporaneous evidence of the work done at the time of dispute. I am not satisfied, on evidence of the plaintiff, he could have proved, on a balance of probabilities, that most of the work in the 1st Agreement and 70% of the works in the alleged 2nd Agreement have been completed.
48. In absence of expert reports on work done at the site, the evidence in this case is inadequate to establish the extent of works done at time when the plaintiff has left the site. The plaintiff, as the contractor, barely asserted 70% of the works have been completed.
49. Wong Siu Fong testified in his witness statement that the plaintiff has done less than 50% of the works as at May 2011. During cross examination, Wong Siu Fong testified on the extent of completion of each of the items on the 1st and the alleged 2nd Agreements. As the items relates to different areas of work, solely on his evidence, it is implausible for the court to determine the percentage of work done as a whole.
50. Tam Kwong, due to lapse of time, was uncertain of the extent of works completed by the plaintiff at time when he entered the site for further works in August 2011. I do not find his evidence is of assistance in this area.
51. On balance of probabilities, I accept Wong Siu Fong’s evidence. He was a worker of the site since April 2011, I believe he has the best knowledge of the works done. The factual finding would be that works agreed in the 1st Agreement were unfinished at the site as at May 2011. There appeared water seepage problems in the site. After the 2nd defendant’s refusal to pay further sums to the plaintiff in June 2011, the plaintiff refused to remedy water seepage problem and had left the site with the unfinished works. I find the plaintiff as in breach of the 1st Agreement.
Conclusion
52. With the foregoing reasons, the plaintiff is not entitled to claim damages against the 1st – 3rd defendants. I dismiss the plaintiff’s claim.
53. Costs should follow the event, I make a costs order nisi that the plaintiff shall pay the costs of the 1st – 3rd defendants in this action, with certificate of counsel, to be taxed if not agreed. The costs order nisi should become absolute in absence of application to vary within 14 days.
54. The plaintiff is a legally aided person, I order the plaintiff’s own costs be taxed in accordance with the Legal Aid Regulations.
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( J Chow ) |
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Deputy District Judge |
Mr Chan Hei Ching Jacky, instructed by Liu, Chan & Lam, assigned by the Director of Legal Aid, for the plaintiff
Mr Keith Fung, instructed by Wongs, for the 1st – 3rd defendants
[1] Sum due to from the 1st Agreement: ($184,500 - $80,000) = $104,500
Sum due to from the alleged 2nd Agreement: ($275,500 - $100,000) = $175,500
Total: $104,500 + $175,500 = $280,000
[2] The defendants did not plead this fact but appeared in the evidence of both parties.
[3] “六、工程進進度注意事項：…. (3) 工程總金額支付安排分三期，第一期開工計40%，第二期按工程進度計支付30%，第三期工程完工經業主收檢無問題付清所有金額，有保養期6個月，以上項目如有後加的話另計單價是可的。”
[4] “10.1 是次後加數按工程金額先支付40%。”
[5] Extra 30% of the total costs of both the 1st and 2nd Agreements should be [($184,500 + $275,500) x 70% ] – ($80,000 + $100,000) = $142,000, instead of $150,000.
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