WING LEE ENGINEERING & TECHNICAL SERVICES LTD v. ALLIANCE BUILDING SERVICES ENGINEERING LTD

DCCJ2056/2004

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2056 OF 2004

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Reasons for Decision

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1. At the conclusion of the hearing, I dismissed the Defendant’s application for leave to appeal against the Judgment handed down on 21^st March 2006 (“the Judgment”), as well as its application for stay of execution of the Judgment, and indicated that I would give my reasons for the decisions in writing.  Here are the reasons.

2. I shall not repeat the facts of this case which have already been set out fully in the Judgment.  For the sake of convenience, I shall adopt herein the same abbreviations as used in the Judgment.

Application for leave to appeal

(a) The test for granting leave to appeal

3. Mr. Raymond Fong, Counsel for the Defendant, cited Smith v. Cosworth Casting Processes Ltd. [1997] 1 W.L.R. 1538, where Lord Woolf M. R. provided the following guidance for determining applications for leave to appeal: -

“1.

The court will only refuse leave if satisfied that the applicant has no realistic prospect of succeeding on the appeal.  The test is not meant to be any different from that which is sometimes used, which is that the applicant has no arguable case.  Why however this court has decided to adopt the former phrase is because the use of the word “realistic” makes it clear that a fanciful prospect or an unrealistic argument is not sufficient.

2.

The court can grant the application even if it is not so satisfied.  There can be many reasons for granting leave even if the court is not satisfied that the appeal has any prospect of success.  For example, the issue may be one which the court considers should in the public interest be examined by this court or, to be more specific, this court may take the view that the case raises an issue where the law requires clarifying.”

4. This guidance has been followed in Hong Kong: for instance, Ma Pik Yung v Ko Chuen, HCMP4303/1999.  I accepted and followed this guidance in the determination of this application for leave to appeal.

(b) The proposed grounds of appeal

5. The Defendant set out 7 proposed grounds of appeal in the amended summons dated 10^th May 2006.  In his written as well as oral submissions, Mr. Fong raised other grounds of appeal.  I do not propose to set out all the proposed grounds in details here.  It is because, as rightly pointed out by Mr. Damien Wong, Counsel for the Plaintiff, all the proposed grounds could be conveniently summarized into three points: -

(1)   The pleading point;

(2)   The election point; and

(3)   The Ordinance point.

6. In the Judgment, I had found that the Plaintiff was entitled to recover from the Defendant the sum of $350,000 that it had paid to Chu to discharge the outstanding wages owed by the Defendant to Chu and his workers pursuant to the agreement reached during the dinner meeting on 18^th July 2001 between the Plaintiff and the Defendant (“the Agreement”), and/or by virtue of section 43F of the Ordinance, subject to any claim of set off by the Defendant: paragraph 75 of the Judgment.  I had also found that the Defendant had failed to establish any claim for set off, save for the sum of $135,954 being the aggregate amount of the two stopped cheques that the Plaintiff was always prepared to and did deduct from its claim.

7. The Defendant was relying on the pleading point and the election point to attack the finding that the Plaintiff was entitled to recover the sum of $350,000 from the Defendant by virtue of the Agreement.

8. The Ordinance point was relied upon to attack the further and alternative ground upon which the Plaintiff was held entitled to claim the said sum of $350,000 from the Defendant under the Employment Ordinance.

(c) The Pleading point

9. Mr. Fong submitted that the Plaintiff’s case on what had been agreed in the dinner meeting of 18^th July 2001 was set out in paragraph 9 of the Re-Re-Amended Statement of Claim.  It was pleaded as follows: -

“9.	(a)	On 18th July 2001, a dinner meeting was then held at a Chinese restaurant in Kowloon City Plaza.  The attendees included Mr. Kent Choi, Mr. Chu Yau Chai, two representatives of Sinotech Engineering Limited and Mr. Wong Kong Fan of the Plaintiff.
	(b)	At the meeting, Mr. Kent Choi said that the Defendant would not be able to complete the project because the Defendant was unable to settle the wages of the manual workers employed by Mr. Chu Yau Chai.
	(c)	Eventually, it was agreed between the Plaintiff and the Defendant that:-
		(i)   the Plaintiff shall pay the Defendant a sum of HK$350,000 to redeem the 2 stopped cheques and to settle the outstanding wages of the manual workers employed by Mr. Chu Yau Chai;
		(ii)  out of the sum of HK$350,000 a sum of HK$135,954 was deemed to be used to settle the sums due and payable under the 2 stopped cheqes;
		(iii)  the Defendant shall return the 2 stopped cheques to the Plaintiff; and
		(iv)  the Defendant’s employment be terminated immediately but the Plaintiff would reserve its right to claim against the Defendant for loss and damage.”

10. On the terms of the Agreement, Mr. Fong submitted that the “neutral meaning of the agreed terms as pleaded is that the Plaintiff would pay the Defendant once for all with a sum of HK$350,000 which would be sufficient for the purpose of settling the amount of the two stopped cheques plus the wages of the workers employed by CHU.  In return, the Defendant’s employment be terminated immediately but the Plaintiff would reserve its right to claim against the Defendant for loss and damages”. 

11. Mr. Fong elaborated further that the words “shall pay” as pleaded in paragraph 9(c)(i) of the Re-Re-Amended Statement of Claim did not have the same meaning as “shall lend” or “shall advance”.  He submitted it was therefore quite wrong for this Court to have the finding that “it has been the Plaintiff’s case that the $350,000 was an advanced payment to the Defendant and that the Defendant would be asked to reimburse in due course” (paragraph 57 of the Judgment), and that it was likewise quite wrong for this Court to have the interpretation that “while the Plaintiff reserved its right to claim against the Defendant, it must follow by necessary implication that it was bound to take into account whatever claim the Defendant might have under the subcontract” (paragraph 52 of the Judgment).  He stressed that the Plaintiff had never pleaded that the sum of $350,000 was paid to the Defendant as a “loan” or as an “advance payment” for which the Defendant would be asked to reimburse, but on the contrary, the Plaintiff had used the word “pay” in the pleadings, and the considerations for such agreement were to terminate the contract immediately with the two stopped cheques deemed to have been settled.

12. Mr. Fong also submitted that the words “loss and damage” in paragraph 9(c)(iv) of the Re-Re-Amended Statement of Claim should not include a claim for reimbursement of the said sum of $350,000, and that to do so would be stretching the meaning of the words beyond their limits.  He submitted that the “loss and damage” referred therein could only be the loss and damage occasioned by defective work performed by the Defendant, but the Plaintiff had produced no evidence to prove such loss and damage.

13. Mr. Fong referred me to Order 18 rule 12 of the Rules of District Court and paragraphs 18/7/7 and 18/12/3 of the White Book for the principles that all relevant terms of an agreement relied upon had to be set out in the pleadings, and that if the plaintiff succeeded on findings of fact not pleaded by him, the judgment would not be allowed to stand, and on appeal the court would either dismiss the action, or in a proper case order a new trial if necessary.

14. I had no argument with the legal principles referred to by Mr. Fong, but I did not accept his submission that the Plaintiff had succeeded on allegations of facts that had not been pleaded in the Re-Re-Amended Statement of Claim.

15. In the Judgment, this Court had never held that the said sum of $350,000 was a “loan” from the Plaintiff to the Defendant.  What this Court had found was that this sum of $350,000 was advanced by the Plaintiff to the Defendant to enable him to pay the outstanding wages claimed by Chu and his workers.

16. It was correct to say that the words “advance” or “advanced payment” had not been used in the pleadings.  However, as Mr. Fong had rightly observed in his submissions, this Court used these words in accordance with the evidence given by PW1.  It had to be pointed out that at the trial, while counsels made their submissions in English, they used Punti in their examination or cross-examination of the witnesses who gave their evidence in Punti so as to speed up the trial.  PW1 used the words “發放” in his evidence, and I had translated the words to be “advance” or “advanced payment”.  In his evidence, PW1 said, “我代表公司承諾會儘快安排三十五萬錢發放畀呢個被告公司匯達，以方便佢去處理伙記的薪金 …”  

17. In my view, the evidence given by PW1 was not different from what had been pleaded.  I considered that the words “shall pay” in the pleading simply meant that money would be transferred from the Plaintiff to the Defendant under the Agreement.  Mr. Fong contended that the neutral or natural meaning of the word “pay” as pleaded was that the Plaintiff would pay the Defendant “once for all” the said sum of $350,000.  However, in my view, such contention was not consistent with the pleading in paragraph 9(c)(iv) when it was averred that the Plaintiff reserved its right to claim against the Defendant for its loss and damage under the Agreement. 

18. Furthermore, when the Re-Re-Amended Statement of Claim was read as a whole, it was clear that the Plaintiff had never averred that it paid that sum of $350,000 to the Defendant because that sum had already been due and payable at the time of payment, or that it was under a liability, contractual or otherwise, to do so.  Likewise, the Defendant made no such allegation in its Defence.  In other words, at the close of the pleadings, it was clear that the Plaintiff was alleging that it was not liable at all to pay at that point of time the said sum of $350,000, but that it had agreed to do so for the purposes pleaded while reserving its right to claim against the Defendant for any loss and damage.  Under these circumstances, the only reasonable interpretation of the Agreement as pleaded in paragraphs 9(c)(i) to (iv) of the Re-Re-Amended Statement of Claim must be that the said sum of $350,000 was merely an advancement from the Plaintiff to the Defendant for the purposes pleaded.  In my view, the evidence given by PW1 on the Agreement, which this Court had accepted, was not at variance with the case pleaded by the Plaintiff.  In the premises, Mr. Fong’s contention must fail.

19. I also rejected Mr. Fong’s submission that the words “loss and damage”, as pleaded in paragraph 9(c)(iv) of the Re-Re-Amended Statement of Claim, was only limited to loss and damage occasioned by the defective work performed by the Defendant.  It was common ground in the evidence that the Plaintiff was not under any contractual liability or obligation to pay wages to Chu and his workers, and it was the finding of this Court that the Plaintiff had paid $350,000 to Chu with the express consent of the Defendant.  When the Plaintiff had to make a payment that it had no liability to pay, I failed to see how that payment could not be considered as a “loss and damage”.  In addition, paragraph 9(c)(i) to (iv) of the Re-Re-Amended Statement of Claim plainly contained no limitation that the Plaintiff would only claim against the Defendant for defective construction work, but not anything else, including the payment of $350,000 which it was never liable to pay to Chu in the first place.

20. Besides, it was common ground in the evidence that because of the sit-in protest staged by Chu and his workers, all construction work in the site had been brought to a complete halt.  It was the evidence of PW1, which this Court accepted, that the Plaintiff agreed to make the payment to end this sit-in protest so that the construction work could be back to the normal on the following day, and that Chu and his workers as well as the Defendant only vacated from the site after payment had been made.  In this context, the payment of $350,000 to Chu and his workers, which the Plaintiff was not liable to pay, must be regarded as loss and damage occasioned by the failure of the Defendant to carry out the construction work in accordance with its subcontract with the Plaintiff.  In the premises, I did not agree with Mr. Fong’s contention that including a claim for reimbursement of the money so paid to Chu was stretching the meaning of the words “loss and damage” beyond their limits. 

21. In conclusion, I found that the pleading point was devoid of merits and had no realistic prospect of success on appeal.

(d) The election point

22. Mr. Fong referred to paragraphs 13(a) and (b) of the Re-Re-Amended Statement of Claim where the Plaintiff had pleaded that it had paid the said sum of $350,000 to Chu “pursuant to the agreement made on 18/7/2001 and/or section 43C of the Employment Ordinance”, and that “the Defendant was liable under the agreement made on 18/7/2001 and/or section 43F of the Employment Ordinance to repay the sum … to the Plaintiff”.  However, in the first paragraph of the Plaintiff’s written Opening, it had been stated that the Plaintiff was claiming for the balance of $214,046 pursuant to section 43F of the Employment Ordinance.  Hence, Mr. Fong submitted that the Plaintiff had made the election to make its claim only on the basis of section 43F of the Employment Ordinance, and that it was wrong for this Court to hold that the Plaintiff was entitled to judgment under the Agreement.

23. It is true that paragraph 1 of the written opening prepared by Mr. Wong, Counsel for the Plaintiff, did contain what Mr. Fong had referred to in his submissions.  However, it appeared to me that Mr. Fong had missed out how the Re-Re-Amended Statement of Claim had come into being.  When Mr. Wong opened the Plaintiff’s case, this Court had pointed out to him that the Plaintiff had not pleaded in the Re-Amended Statement of Claim that it was claiming against the Defendant on the basis of section 43F of the Employment Ordinance.  Mr. Wong then made it clear to this Court that the Plaintiff’s primary case was on the Agreement, but that even if its primary case failed, it was still entitled to claim against the Plaintiff on the basis of section 43F.  Subsequently, Mr. Wong applied for leave to amend paragraphs 8(b), 12, 13(a) and (b) of the Re-Amended Statement of Claim to make it clear that the Plaintiff was claiming against the Defendant “pursuant to the agreement made on 18^th July 2001 and/or section 43C of the Employment Ordinance” or words to that effect, and leave was granted for him to do so when Mr. Fong had no objection to the application: see the amendment highlighted in purple in the Re-Re-Amended Statement of Claim.  The course of event showed that Mr. Wong had put in the Re-Re-Amended Statement of Claim after he had started his Opening to include the two courses of action for the Plaintiff’s claim, and it was not the case that there were originally two causes of action in the pleading, and Mr. Wong limited himself to only one of them in his Opening.  In my view, there was simply no election on the part of the Plaintiff as contended by Mr. Fong.

24. I should also add that Mr. Fong was under no misapprehension at the trial that the Plaintiff was proceeding on both causes of action.  In his written closing submissions, after Mr. Fong had referred in paragraphs 1 to 4 the Plaintiff’s evidence on the agreement reached during the dinner meeting of 18^th July 2001 and during the telephone conversation on 19^th July 2001, he stated the following in paragraph 6: “The Plaintiff now also seek, in alternative, to rely on section 43C and 43F of the Employment Ordinance to claim for this sum of HK$214,046 by allowing HK$135,954 as a set-off for the amount due” (emphasis provided in italics).  In paragraph 8 of his written submissions, Mr. Fong set out what he said to be the 4 main issues that had to be resolved by this Court.  Under items (a) to (c), he referred to the agreement reached at the dinner meeting of 18 July 2001.  In item (d), he stated, “If the court did not find any agreement has been reached between the Plaintiff and the Defendant in the meeting, what would be the just order when applying section 43F of the Employment Ordinance?”  He put forward his substantive arguments on this issue between paragraphs 19 to 28 of his written submissions.  It was therefore readily apparent from Mr. Fong’s submissions that the Defendant had been under no misunderstanding at all that the Plaintiff was claiming on the basis of both the Agreement and section 43F of the Ordinance.

25. In my view, there was no factual basis to support the election point and that it had no realistic prospect of success on appeal.

(e) The Ordinance point

26. In paragraph 71 of the Judgment, it was stated that: -

“On the basis of the evidence before me, it is clear that the Plaintiff is liable under section 43(1) of the Ordinance to pay to Chu and his workers wages that the Defendant had failed to pay.  I find that the Plaintiff is under a liability to pay $350,000 to Chu and his workers by virtue of section 43(1), that it had paid this sum of money to Chu and his workers, and that it is entitled to recover this sum of $350,000 from the Defendant by virtue of section 43F(1) of the Ordinance.”

27. Mr. Fong submitted that it had been a misapplication of the law to the present situation that the Plaintiff was entitled to recover the said sum of $350,000 from the Defendant by virtue of section 43F(1) of the Employment Ordinance, which provided that: -

“(1)    If a principal contractor or superior sub-contractor pays to an employee any wages under section 43C, the wages so paid shall be a debt due by the employer of that employee to the principal contractor or superior sub-contractor, as the case may be.”

28. Mr. Fong submitted that since this Court had already found that Chu was a subcontractor of the Defendant (paragraph 5 of the Judgment), the Defendant could only be a superior subcontractor of the workers employed by Chu and was not an employer of them.  Hence, by virtue of section 43F(1), the said sum of $350,000 could only be a debt due from Chu to the Plaintiff, and not a debt due from the Defendant to the Plaintiff.  He submitted therefore that the Plaintiff had no cause of action to recover this sum of $350,000 from the Defendant under section 43F(1).

29. Mr. Wong agreed that section 43F(1) only applied to employer of the workers and had no application to the claim between the Plaintiff and the Defendant.  He submitted however that reading the Judgment as a whole, it was clear that this Court was referring to section 43F(2) of the Ordinance, and that the reference to section 43F(1) was merely a typo error.  He submitted that a short corrigendum would be sufficient to correct the typos.  Section 43F(2) provided that: -

“(2) Any principal contractor or superior sub-contractor who pays to an employee any wages under section 43C may either –

(a) claim contribution from every superior sub-contractor to the employee’s employer or from the principal contractor and every other such superior sub-contractor as the case may be; or

(b) deduct by way of set-off the amount paid by him from any sum due or which may become due –

(i) to any sub-contractor to whom he has sub-contracted all or any part of work that he contracted to perform being work upon which the employee was employed, and

(ii) in respect of the work that he has sub-contracted.”

30. Mr. Fong disagreed that the error was a typo error, and submitted that it was for the first time the Plaintiff sought to rely upon section 43F(2)(a) of the Ordinance as its cause of action.

31. I agreed with the parties’ submissions that section 43F(1) of the Ordinance had no application to the Plaintiff’s claim against the Defendant.  It was therefore an error to say in paragraph 71 of the Judgment that the Plaintiff was entitled to recover this sum of $350,000 from the Defendant “by virtue of section 43F(1) of the Ordinance”.

32. The reference to section 43F(1) in paragraph 71 of the Judgment should have been a reference to section 43F(2).  The error was very much regretted.  I would say nothing on whether the error was merely a typo since Mr. Fong refused to accept that.  However, the following findings of facts had been clearly set out in the Judgment: that the Plaintiff had no direct contractual relationship with Chu and his workers, but that it was the direct superior subcontractor to the Defendant, who in turn was the direct superior contractor of Chu and his workers (paragraph 67 of the Judgment); that the claim made by Chu was within the Plaintiff’s liability under section 43C(1) of the Ordinance (paragraph 70 of the Judgment), that the Plaintiff was liable to pay $350,000 to Chu and his workers by virtue of section 43C(1), and that it had paid this sum of money to Chu and his workers (paragraph 71 of the Judgment).  The Defendant had not contended that these findings of facts were wrong.  With these factual findings, the Plaintiff was plainly entitled to claim contribution from the Defendant who was the immediate superior subcontractor to Chu pursuant to section 43F(2)(a) of the Ordinance.  The judgment entered for the Plaintiff against the Defendant was therefore clearly sustainable by the Plaintiff filing a respondent’s notice to support the Judgment on the ground that the Plaintiff was entitled to succeed against the Defendant on the basis of section 43F(2)(a) of the Ordinance, and the Defendant could have no valid ground to oppose that.  In the premises, despite the error, I found that the Defendant had no realistic chance of success on this ground.  The facts of the case pointed clearly to the fact that the Plaintiff had an unanswerable claim against the Defendant by virtue of section 43F(2)(a) of the Ordinance.

33. I should add that there were errors in paragraphs 70 and 71 of the Judgment in that the reference to “section 43(1)” and “section 43(2)” should have been a reference to “section 43C(1)” and “section 43C(2)” as the case may be.  I believed that despite the error, the meaning was clear since the Judgment specifically referred to section 43C(1) in paragraph 69 before proceeding to the discussion and findings in paragraphs 70 and 71.

34. In his written submissions, Mr. Fong contended that if the Plaintiff relied upon section 43F(2)(a) as its cause of action to claim contribution from the Defendant, it had to bear the burden of proof of showing what contribution was required from the Defendant since all superior sub-contractors are jointly and severally liable to pay the wages by virtue of section 43C of the Ordinance.  He submitted that in the absence of any agreement on what contribution each respective superior sub-contractor should pay to the Plaintiff, the Plaintiff’s action to seek contribution from any superior sub-contractor (including the Defendant) had to fail ab initio.

35. I accepted Mr. Wong’s submission and found this argument had no merit at all.  Section 43F(2)(a) imposed a joint and several liability on the principal contractor and all superior sub-contractors to make contribution to the superior contractor who paid wages to an employee under section 43C of the Ordinance.  The Plaintiff was free to choose which party or parties it would like to claim contribution.  Section 43F(2)(a) also did not require the Plaintiff to show the existence of an agreement on what contribution that each respective superior sub-contractor should pay to the Plaintiff.  Mr. Fong realized the difficulty he faced during the course of his oral submissions and expressly abandoned this point.

36. In his written submissions, Mr. Fong submitted that the Plaintiff seemed to rely upon section 43F(2)(b) of the Ordinance as a cause of action to recover the sum of $214,046 from the Defendant, and on that premises, he had made a number of submissions.  The short answer to these submissions were that the Plaintiff was not using section 43F(2)(b) as a cause of action, and that this Court had not entered judgment for the Plaintiff on this basis.  Section 43F(2)(b) merely created a statutory right of set-off, and the Plaintiff had relied upon section 43F(2)(a) to recover the said sum of $350,000 from the Defendant, and relied upon section 43F(2)(b) to set off the aggregate amount of the two stopped cheques that the Plaintiff admitted liability to pay.

37. Mr. Fong further submitted that no matter the Plaintiff was relying upon section 43F(2)(a) or section 43F(2)(b) of the Ordinance as cause of action to claim against the Defendant, the Plaintiff still bore the burden of proof to show that the sum due or might become due from the Plaintiff to the Defendant was only $135,954.

38. I did not agree with this submission.  It was clear from section 43F(2)(a) that there was no requirement that the Plaintiff had to prove that it had already deducted every claim due to the Defendant, or to prove that there was no possible claim from the Defendant, before it was entitled to succeed in its claim for contribution from the Defendant pursuant to section 43F(2)(a).  I reiterated what I had stated in paragraphs 77 and 78 of the Judgment on the burden of proof, save to say that the reference to section 43F(1) in the third line of paragraph 78 should be substituted by a reference to section 43F(2)(a).

39. Mr. Fong complained that this Court had granted judgment to the Plaintiff for the sum of $214,046 without taking into account the reduction of any sum due or to be due (inclusive of the retention money) to the Defendant, and had alternatively failed to refer the case for assessment under Order 37 of the Rules of the District Court.  He cited the case of Choy Bing Wing v Hong Kong & Shanghai Hotels Ltd., CACV218/1994, to support his submission that this Court should refer the case for assessment for what was due to the Defendant on a quantum meruit basis.

40. On the sums due to the Defendant that Mr. Fong contended that this Court had failed to take into account, he referred firstly to the retention money withheld by the Plaintiff under the 2^nd and 3^rd invoices.  I had set out the 5 invoices relied upon by the Defendant for its claim against the Plaintiff in paragraph 81 of the Judgment.

41. In my judgment, it was not open to the Defendant to raise the issue relating to the retention money.  At the beginning of the trial, Mr. Fong on behalf of the Defendant had sought to amend its Defence and Counterclaim to include a claim for retention money as well as the contract value of work performed in the month of July 2001.  Mr. Wong opposed to this belated application for amendment, and Mr. Fong eventually abandoned his application for amendment.  As rightly submitted by Mr. Wong, this amount to an election by the Defendant in that it had elected not to pursue its claim for retention money as well as for the value of work done in July 2001.  Hence, the issue of retention money never arose at the trial, and the Defendant would not be allowed to raise this issue on appeal.

42. In respect of the Defendant’s claim under the 2^nd and 3^rd Invoices, Mr. Fong complained that while this Court was unable to determine what was the actual agreed contract sum between the parties (paragraph 98 of the Judgment), but this Court proceeded to find that the Plaintiff only owed the aggregate amount of the two stopped cheques in the sum of $135,954 to the Defendant, and failed to find out what was the correct sum due under the invoices.

43. The 2^nd Invoice (which PW1 said was the first invoice received by the Plaintiff) was for the first periodic progress payment claimed by the Defendant.  The Plaintiff had accepted that it was liable to pay 5% of the contract sum under this invoice, but contended that the contract sum was only $3,800,000 rather than $3,990,000 as contended by the Defendant.  I had found that the Defendant bore the burden to prove that the contract sum was $3,990,000 if it wanted to succeed in its claim for the price difference of $8,550 under the 2^nd Invoice.  I reiterated what I had said in paragraphs 87 to 99 of the Judgment.  I had found that the Defendant had failed to discharge its burden of proof, although I also found that the Plaintiff had not established that the contract sum was $3,800,000.  When the Defendant failed to prove that the correct contract sum was $3,990,000, its claim could not have succeeded.  Mr. Fong’s contention that the burden was on the Plaintiff to establish the contract sum was, in my judgment, plainly wrong.  The general principle must be that he who alleges must prove it.

44. Mr. Fong also complained that this Court had failed to find that the Plaintiff was liable to pay for the work done by the Defendant for the months of June and July 2001.

45. It must be remembered that the Defendant had expressly abandoned its claim for the value of work done in July 2001, and should not be allowed to raise this issue again on appeal.  As for the work done in June 2001, it was claimed in the Defendant’s 4^th Invoice.

46. In paragraph 107 of the Judgment, I had stated that the burden was upon the Defendant to prove the actual value of the work it had done.  I had stated that even if the work done by the Defendant had some value but if it failed to quantify it according to the subcontract it had made with the Plaintiff, the Defendant would fail to establish its claim for set-off against the Plaintiff.  I accepted the authority of Born Chief Co. (t/a Beijing Restaurant) v Tsai George & Another [1996] 2 HKC 282 cited by Mr. Wong.

47. Nothing said by Mr. Fong in this application for leave to appeal changed my view on the burden of proof, and on the consequences to follow when the Defendant failed to discharge that burden of proof.

48. In paragraph 22 of his written closing submissions at the trial, Mr. Fong submitted that the Defendant said that the amount due to it was the summation of the outstanding amounts shown in the 5 invoices.  Between paragraphs 108 to 118 of the Judgment, I had explained why I had found that the Defendant had failed to establish its claim for set off against the Plaintiff under each of these 5 invoices other than the sum of $135,954 that had been admitted by the Plaintiff.  In short, I had found that the Defendant had failed to prove the actual value of the work that it had performed in discharge of its burden of proof.  Mr. Fong had not advanced any or any valid ground to show that these findings could be wrong.

49. Mr. Fong relied upon the case of Choy Bing Wing v Hong Kong & Shanghai Hotels Ltd., CACV218/1994, and submitted that this Court should refer the case for assessment for what was due to the Defendant on a quantum meruit basis before a master.  I rejected this submission.  First, the Defendant had never asked for the case to be referred to a master for assessment of the value of its work done on a quantum meruit basis at the trial.  On the contrary, as evidenced by Mr. Fong’s closing written submission, it was relying upon the 5 invoices to prove its claim for the sum of $579,591.31, but this Court had found that these invoices were insufficient proof of the value of the work done.  Secondly, as rightly submitted by Mr. Wong, the case of Choy Bing Wing was totally different from the present case.  In that case, the problem was caused by the fact that the original agreement had been terminated and the parties had failed to formulate a new agreement as to how the plaintiff was to be remunerated, and the court having found that the provisions in the original agreement was not apt to deal with the new situation made an order to refer the case to a master for assessment.  However, in the present case, I had found that while there was no sufficient evidence to establish the agreed contract sum, the parties had agreed upon the bill of quantity submitted by the Defendant to be used as a reference to assess interim payment and future variations payable to the Defendant (paragraph 98 of the Judgment).  In other words, there had been an agreed formula for calculating the actual value of the work completed by the Defendant up to the time when it vacated from the site.  The Defendant’s claim was dismissed simply because it had failed to adduce evidence to substantiate its claim for the value of the work, falling fairly and squarely into the principle applied in the Born Chief case.  Raising the issue of sending the case to a master for assessing the actual value of the work on a quantum meruit basis was, as Mr. Wong had said, asking for a second bite of a cherry.  In my view, this ground was without merit and had no realistic prospect of success on appeal.

50. In my view, the Defendant and Mr. Fong had been led by the terms of section 43F(2)(b) of the Employment Ordinance into the erroneous thinking that the burden was upon the Plaintiff to establish that “any sum dued or which may become due” from it to the Defendant was zero after the Plaintiff had given credit to the sum of $135,954 due under the two stopped cheques.  In my judgment, the burden was plainly not there.

51. I find that the Ordinance point had no realistic prospect of success.

52. Having considered the submissions by both Mr. Fong and Mr. Wong, I was of the view that the intended appeal had no realistic prospect of success, and that there was no question of law that the public interest required determination or clarification by the appellate court. 

53. In the premises, I dismissed the Defendant’s application for leave to appeal with costs, with certificate for counsel.

Application for stay of execution

54. The applicable legal principles had been summarized in Wenden Engineering Service Company Limited v Lee Shing Yue Construction Company Limited, HCCT90/1999. 

55. In support of this application, DW1 had filed an affirmation affirmed on 9^th May 2006, stating in paragraph 7 thereof, “To the best of my knowledge and belief, the Plaintiff had not been in sound financial situation and therefore dishonoured cheques issued to the Defendant in this action.  Furthermore, the Plaintiff is now engaged in another costly litigation with Johnson Controls Hong Kong Limited.  The Plaintiff therefore will not be able to return the property seized from the Defendant if the Defendant’s appeal shall be successful.”

56. At the trial therein, PW1 gave evidence that the two cheques for the total sum of $135,954 were stopped because the Defendant did not perform work up to the required standard and failed to make improvement despite repeated demands.  I had preferred PW1’s evidence to that of DW1.  Hence, there was no basis for DW1 to say that the Plaintiff stopped the cheques because it was not in sound financial position.

57. On the allegation that the Plaintiff was engaged in costly litigation, there was clearly no evidence adduced by the Defendant to show that the Defendant would have lost in this litigation, or that it would be unable to settle the judgment and costs of the litigation even if it lost in this litigation.  In other words, there was no evidence at all that the Plaintiff would not be able to return the money to the Defendant after the Plaintiff had executed the judgment.  The principles summarized by Hon. Ma J. in Wenden Engineering showed that if the order appealed against was a money judgment, the court would require evidence as to why levying of execution would result in the appeal being rendered nugatory, such as, for example, for example, an appreciable risk that the respondent to the appeal would not be able to repay in the event of a successful appeal.  There was simply no such evidence here.

58. I had also found that there was no merit in the intended appeal.

59. There was therefore no reason why the Plaintiff should be deprived of the fruit of its judgment or should be made to wait.  I therefore dismissed the Defendant’s application for stay of execution with costs, with certificate for counsel.