R & E DESIGN CONSULTANTS LTD v. LINDA CHOW also known as CHOW PAK DAN Defendant

DCCJ2381/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2381 OF 2014

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JUDGMENT

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Introduction

1. This is a simple claim of outstanding balance of renovation costs.

The plaintiff’s case

2. The plaintiff is a company engaged in the business of renovation works.

3. By a contract between the plaintiff and the defendant signed by the defendant on 21 September 2012 (“the contract”), the plaintiff was engaged by the defendant to perform renovation works on the property known as Flat C, 5th Floor, Celestial Garden, 5 Repulse Bay Road, Hong Kong (“the property”) at the price of $2,500,000.00.

4. In the course of the works, on or about 15 October 2012, at the request of the defendant, the plaintiff agreed to supply additional items (“the additional items”) to the defendant at the respective prices of $123,335.30; $8,250.00 and $70,577.10, totalling $202,162.40.

5. The renovation works were completed on or about 15 January 2013 whereupon possession of the property was delivered to the defendant.

6. The defendant has failed to pay:-

(1)  the price of the for the additional items in the sum of $202,162.40; and

(2)  final payment of the renovation costs in the sum of $125,000.00.

7. The plaintiff claims interest at the contractual rate of 2% per month pursuant to clause 10 of the contract.

The defendant’s case

8. The defendant said she has paid a total of $2,375,000. She did not pay the balance of $125,000.00 due to the following reasons:-

(1)  the quality of works and the materials used were found to be sub-standard.  Defects were found which necessitated repairs:-

(a)  cracks were found at the ceiling of the balcony and loosen plastering fell.  As a result, she spent $5,000 on repair costs;

(b)  the wooden sliding door and glass sliding door of the master bedroom were not sliding smoothly;

(c)  cracks were found on part of the wooden flooring; and

(d)  the large bathtub was not installed properly.

(2)  the defendant had demanded payment of different amounts, namely, $452,012.40 and $327,162.40, without explanation. Some of the additional items were without authorisation and some furniture was purchased at a price higher than its market value.

The defendant’s application to adjourn

9. This case was set down for trial on 14 March 2016.  The trial is to commence on Thursday, 1 September 2016 until Monday, 5 September 2016.

10. At the close of the plaintiff’s case on the first day of the trial, Mr Lok, solicitor for the defendant, applied for an adjournment of the trial until Monday, 5 September 2016 because the defendant, who was the only witness for the defence case, was in China.  Mr Lok informed this court that the defendant had planned to come back to Hong Kong on Tuesday, 6 September 2016.  Mr Lok said he would persuade the defendant to come back on Monday, 5 September 2016, which is the last day reserved for this trial.

11. The application of Mr Lok is in effect a request to vary a milestone date.

12. Order 25 rule 3 of the Rules of the District Court has the following provisions:-

“(2) A party may apply to the Court if he wishes to vary a milestone date.

(3) The Court shall not grant an application under paragraph (2) unless there are exceptional circumstances justifying the variation.

...

(3) In this rule --

“Milestone date” (進度指標日期) means --

(a) a date which the Court has fixed for --

...

(iii)  the trial”

13. The defendant has known the trial dates 6 months before trial.  She has a duty to make herself available at the trial.  Regrettably, the defendant did not bear this in mind at all when she planned her schedule.  Otherwise, she would not have chosen to be absent from Hong Kong altogether during the period of the scheduled trial.

14. By contrast, the plaintiff was very mindful of such duty.  I am told by Mr Warren Tang, counsel for the plaintiff, that the only witness for the plaintiff, Mr Li Kwan Lok Roy (“Li”), was badly injured in an accident in May 2016 whereby he is now confined to wheelchair.  Still, he sought the permission of his doctor to leave the hospital for 1 day and testified in court on the 1st day of the trial.

15. I do not think the application of Mr Lok would serve any purpose.  The defendant was only due to come back to Hong Kong on Tuesday, 6 September 2016, one day after the trial.  By his application, Mr Lok was only hoping that if the application were granted, he would have a chance to persuade the defendant to come back on Monday, 5 September 2016, which is the last day of the trial.  There was not the slightest indication that Mr Lok’s wish would materialise.

16. Assuming that the defendant was able to come back to testify on Monday, 5 September 2016, the trial could then not be finished within the time allocated because the legal representatives would need further time to prepare their closing submission.  In that event, the trial, which is a milestone event, would be disturbed inevitably.  The resources of the court would be wasted unnecessarily.

17. This is a blatant failure on the part of the defendant to attend the scheduled trial without reason.  There are no exceptional circumstances justifying this court to allow the trial to prolong due to the defendant’s absence.

18. For the above reasons, I refused to adjourn the trial until Monday, 5 September 2016.

Issues

19. The following issues are for the determination by this trial:-

(1)  whether the plaintiff’s works were of inferior quality;

(2)  whether the additional items were purchased and/or done without the authorisation or consent of the defendant;

(3)  whether the demands for payment for different amounts made by the plaintiff affect the defendant’s liability to pay the plaintiff; and

(4)  whether the contractual interest rate is applicable, and if so, whether it is applicable to the whole period of non-payment. 

Whether the plaintiff’s works were of inferior quality?

20. In the defence, the defendant raised 4 complaints which she said were proof of the sub-standard quality of the plaintiff’s works.  In her witness statement, the complaints were reduced to 3 (the complaint in relation to the bathtub was no longer raised).

21. However, no expert evidence was adduced by the defendant in respect of the alleged defects.

22. In judicial proceedings under the common law system, it is trite that he who asserts must prove[1]. Thus, where a party alleges certain facts as part of his case, he bears the burden of proving such facts by evidence save and except those facts which are self-evident.

23. Whether the works complained of are of inferior quality is not self-evident.  The defendant bears the burden of proving her alleged facts by evidence.  In relation to the quality of works, proof by expert evidence is required.  The defendant has made no effort in this respect at all.  She has failed to discharge the burden.

24. The answer to this question therefore must be in the negative.

Whether the additional items were purchased and/or done without the authorisation or consent of the defendant?

25. Li gave evidence that before the contract was signed, he submitted a draft contract for the sum of $2,419,812.45 for the defendant’s approval.  After looking at the draft contract, the defendant required several items to be added to the contract.  He therefore prepared a quotation for the additional items which were for the total sum of $124,850.00 (p 164 of Bundle B).  It was added to the original sum of $2,419,812.45, making a total of $2,544,662.45.  As a concession, he agreed to round up to $2,500,000, which was agreed to by the defendant 1 or 2 days later.

26. He therefore prepared the contract, which was signed by the defendant on 21 September 2012 (p 63 of Bundle B).  That is why the contract sum was described as “HK$2,500,000.00 (after discount)”.  Li said the sum of $200,000 under “section 12 purchase item” was for reference only.  The said sum was not included in the contract sum of $2,500,000.00.  It only served to let the defendant to have an idea of how much she was going to spend for the purchase of miscellaneous items such as lightings, furniture and curtain etc.

27. Li said the contract was not a turnkey contract.  He added that it was never his practice to enter into turnkey contract with his clients.

28. During the course of the renovation works, on or about 15 October 2012, the defendant requested further additional items to be purchased or done.  He did as per the instructions of the defendant but no supplemental contract was prepared for the defendant’s signature.  However, he did issue 3 invoices for the additional items to the defendant (pp 91, 93 and 95 of Bundle B) for the respective sums of $123,335.30, $8,250.00 and $70,577.10 on 3 January 2013 and 4 March 2013 respectively (“the 3 invoices”).  The defendant has never raised any complaints on those additional items until she filed her defence in this case.

29. The defendant gave a witness statement but did not testify at the trial.

30. In civil proceedings, hearsay evidence is admissible unless the party against whom it is adduced objects to its admission and the court is satisfied that exclusion thereof is not prejudicial to the interests of justice : see s 47(1) of Evidence Ordinance, Cap 8 (“EO”).

31. Having said that, however, in assessing the weight of hearsay evidence, the court is required to have regard to any circumstances from which any inference can reasonably be drawn as to the reliability or otherwise of the evidence : see s 49 of EO.

32. Accordingly, the evidence that contained in the defendant’s witness statement warrants consideration by this court.

33. The defendant said the contract was a turnkey contract for the sum of $2,500,000.00 which included the purchase of miscellaneous items for the sum of $200,000.00.  She further said that all those additional items arose out of the fine-tuning of the original renovation plan.  The plaintiff should not have purchased or installed any of them without her acceptance when added costs were involved.

34. In the summary of cost (p 64 of Bundle B), it can be seen that the plaintiff set out a breakdown of the costs of different types of works, which added up to the sum of $2,199,829.50.  Adding 10% design fee thereto, the grand total had become $2,419,812.45.  Notably, a sum of $200,000.00 under “purchase item” was put in a separate column and did not form part of the grand total.  Furthermore, the “purchase item” was specifically marked as “reference only”.

35. There is also another quotation described as “additional cost” dated 13 September 2012 for the sum of $124,850.00, which pre-dated the signing of the contract by the defendant.  Adding this amount to the grand total would yield the sum of $2,544,662.45.

36. To my mind, the picture is clear.  The plaintiff was quoting the price according to the requirements of the defendant. Therefore, there was another quotation for the sum of $124,850.00 dated 13 September 2012 after the draft contract was presented to the defendant.  The contract sum was the sum total of the costs of different types of works plus 10% design fee.  The contract sum of $2,500,000.00 at p 63 of Bundle B was the final price agreed upon between the plaintiff and the defendant after taking into account the said sum of $124,850.00.  This price covered the costs of different types of works plus design fee, but did not include the purchase of miscellaneous items as the sum of $200,000.00 was put in a separate column and was specifically described as for reference only.  For the same reason, when the defendant required additional items to be purchased or done, the plaintiff issued the 3 invoices to the defendant afterwards.

37. Looking at the 3 invoices, they included the supply of a marble dining table for the sum of $71,000.00; the purchase of lighting for the sum of $17,701.00; the purchase of finger print locks for the main entrance and rear door for the sum of $6,580.00.  They cannot be regarded as fine-tuning of the original renovation plan.  

38. Finally, I note that clause 9 of the standard terms of sales (p 62 of Bundle B) is in the following terms:-

“Where the Client adds to vary the work, the quotation sum will be adjusted at unit rate contained in the quotation (and if there is no unit rate at a price to be agreed). In such event, a variation order will be issued for Client's approval ...”

39. It is therefore abundantly clear that the contract sum was agreed by the contracting parties to be subject to variation at a later stage. 

40. From the above analysis, it seems to me that the evidence of Li sits well with the documentary evidence whereas the evidence of the defendant was at odd with the documentary evidence particularly the terms of the contract.  In particular, I reject the defendant’s allegation that the additional items belonged to a fine-tuning of the original renovation plan and were included in the contract sum of $2,500,000.00.

41. I find as a fact that during the course of the renovation works, the defendant required additional items (which were listed in the 3 invoices) to be purchased or done.  Those items were purchased or done with the authorisation and consent of the defendant.  The defendant is therefore liable to pay for those items.

Whether the demands for payment for different amounts made by the plaintiff affect the defendant’s liability to pay the plaintiff?

42. In his evidence, Li said after the completion of the renovation works, the defendant had paid a total sum of $2,375,000.00 only.  Thus, the amounts due the plaintiff were :

(1)  5% retention fund	$125,000.00
(2)  invoice No 414/02/12	$123,335.30
(3)  invoice No 414/03/12	$8,250.00
(4)  invoice No 414/04/12 rev	$70,577.10
Total:	$327,162.40

The defendant has failed to effect payment of the outstanding balance.

43. However, when the plaintiff issued a statement of outstanding balance on 8 November 2013, Ms Irene Fung of the plaintiff had made 2 clerical errors:-

(1)  mistakenly included the sum of $124,850.00 under invoice No 414/01/12; and

(2)  mistakenly stated that the date of invoice No 414/01/12 as 13 September 2013.

Therefore, the outstanding balance was mistakenly calculated as $452,012.40.  The solicitors’ demand letter dated 10 January 2014 was also issued for the incorrect amount.

44. The mistake was corrected by a revised statement dated 17 January 2014.

45. Obviously, the mistake arose out of the wrongful inclusion of an invoice.  The mistake was subsequently corrected.  The defendant has not paid the plaintiff either before or after the correction.  Therefore, such mistake has no effect on the overall liability of the defendant.

Whether the contractual interest rate is applicable, and if so, whether it is applicable to the whole period of non-payment?

46. Clause 10 of the standard terms of sales (p 62 of Bundle B) provides:-

“The Client should pay according to the payment terms. The Decorator shall be entitled to charge the Client interest on amounts overdue at the rate of 2% per month.”

47. The clause, being one of the terms of the contract between the plaintiff and the defendant, is of course binding on the defendant.

48. I reject the submission of Mr Lok that the contractual interest rate should not apply to the period between 8 November 2013 and 17 January 2014.

Conclusion and order

49. For the foregoing reasons, I find that the defendant is liable to pay the plaintiff the sum of $327,162.40 together with interest thereon at the rate of 2% per month from 15 February 2013 to the date of the judgment and thereafter at judgment rate until payment.

Costs

50. I make an order nisi that the defendant shall pay the plaintiff costs of this action, with certificate for counsel, to be taxed if not agreed.

51. In the absence of any application by summons to vary the same within 14 days from the date of this judgment, the order nisi shall become absolute.