SO KWOK KEE JOHN t/a SPRAY ENGINEERING CORPORATION v. MELOFIELD NURSERY AND LANDSCAPE CONTRACTOR LTD

DCCJ 1760/2010

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 1760 OF 2010

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BETWEEN

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Judgment

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1.  This is the trial of the plaintiff’s claim against the defendant and the defendant’s counterclaim against the plaintiff.

2.  The representative of the defendant, Mr Lau Sum Yan, and the parties agreed that this trial was to be conducted in English where legal submissions were made and was conducted in Chinese where evidence was being given.  As indicated at the end of the hearing, I now hand down this judgment in English.

The background of the case

3.  Both the plaintiff and the defendant are contractors in the construction and landscaping business.  The plaintiff specializes in providing services for replanting slope surfaces and slope erosion control, whereas the defendant provides more generalized construction and landscaping services.

4.  The plaintiff has been carrying on trading as a specialist in replanting slope surfaces and slope erosion control for more than 21 years.  The plaintiff provides both the service and hardware which allows for slope surfaces to be covered firstly with an underlying level of soil, secondly a level of a mulch solution that allows for growth of vegetation on top of the level of soil, thirdly the two preceding levels of soil and mulch solution are supported by a netting system that is secured by supporting steel bars drilled into the surface of the slope, fourthly further vegetation to be planted on top of the three preceding levels.  On May 2003, the plaintiff registered the trade mark of “Rocksgrass” under classes 17 and 37 for its aforesaid services and related goods as already explained.

5.  Mr So Kwok Kee, John (“Mr So”) of the plaintiff further explained that the service and hardware provided by the plaintiff is generally referred to as the “Rocksgrass system”.  The plaintiff has provided the Rocksgrass system to various private clients as well as governmental bodies such as the Highways Department and the Drainage Services Department. 

6.  Mr So also explained that the Rocksgrass system is entirely different from “hydroseeding” since hydroseeding is a process whereby grass is used as a dispersing agent that is just sprayed onto a surface which is a separate and different process to prevent slope erosion. 

7.  Mr Lau Hing Wan, the sole proprietor of Yat Shing Engineering Company (“Yat Shing Engineering”), has known Mr So for more than 21 years and the Plaintiff has previously sub-contracted its Rocksgrass system to Yat Shing Engineering to be carried out in over 61 such occasions.

8.  The defendant had entered into a sub-contract to provide landscaping and related services at a residential and commercial development at No 168 Kwok Shui Road, Tsuen Wan, New Territories (“the Site”).

9.  The defendant contacted the plaintiff for the Rocksgrass system to be applied to various locations at the Site and the parties began discussions in June 2009.  At that time, the Site was still undergoing construction at the time and therefore the plaintiff was unable to provide a quote for its Rocksgrass system based on the actual area to be completed.

10.  The plaintiff delivered a contract to the defendant on 12 June 2009 containing the following relevant terms offered to the defendant being that the Rocksgrass system was to be applied onto the slope at the Site with the “area about 300” square meters, the contract then later referring to the “approximate area” of 200-300 square meters, the “unit rate” of HK$700 per square meter (without hydroseeding), that “Final contract sum depends on actual area completed.  Minimum area 200 S.M., (square meters), the contract will be charged for 200 S.M.” and the warranty was “One year warranty on the system, but not on vegetation which is totally the liability of Melofield Nursery & Landscape Contractor Ltd (the defendant)”.

11.  The parties continued to enter into discussions regarding the terms of the contract to be agreed and eventually a contract was signed and entered into on 3 November 2009 that contained the same relevant terms as those offered by the plaintiff on 12 June 2009 save that on the face of the contract the “unit rate” was changed from HK$700 per square meter to HK$550 per square meter and that the words “Appro. 287 (per square meter)” was added by the defendant in handwriting (“the Contract”).

12.  It is not in dispute that the Contract was signed by Mr So on behalf of the plaintiff and a Mr Stanley Tsui Ka Hing on behalf of the defendant (“Mr Stanley Tsui”) but Mr Tsui left the employment of the defendant some time in December 2009.  Mr Lau Sam Yan (“Mr Lau”), the representative of the defendant, agrees that the Contract was validly entered into, binding on the parties and that he continued to oversee matters related to the Contract.

13.  It is not in dispute that the Contract was still marked 12 June 2009 but that the parties signed and entered into the Contract on 3 November 2009 and an initial deposit of $40,000 was paid by the defendant on 12 November 2009.  

14.  Despite the various factual disputes that shall be discussed later in this judgment, it is also agreed between the parties that the Contract was entered into upon the basis that the cost of the Rocksgrass system was $550 per square meter of actual application at the Site.

The plaintiff’s case

15.  The plaintiff’s case is that the final sum owed by the defendant pursuant to the Contract depended upon the actual area completed for the Rocksgrass system at the Site.   

16.  On 3 November 2009, immediately upon the Contract being entered into by the parties, the plaintiff issued an invoice to the defendant for a deposit of $40,000 which was paid for by the defendant on 12 November 2009.

17.  In December 2009 the plaintiff was notified by the defendant that it may begin for preparation of providing the Rocksgrass system at the Site.  On 19 December 2009 Mr Lau Hing Wan of Yat Shing Engineering went on the Site to measure the amount of area that required the Rocksgrass system to be applied.

18.  The initial estimate provided by Mr Lau Hing Wan of Yat Shing Engineering was that the actual amount of area where the Rocksgrass system would be applied was still unknown and would be subject to a detailed measurement that would eventually be carried out. Nonetheless, Mr Lau Hing Wan of Yat Shing Engineering believed that it would be no less than 500 square meters and in any event much more than the original estimate of the defendant of 287 square meters.  It is not disputed that this was the first opportunity for the plaintiff and/or Yat Shing Engineering to visit the Site to make an actual measurement for the application of the Rocksgrass system.

19.  On 23 December 2009 the plaintiff issued an invoice to the defendant for an additional deposit of $31,500 which was paid for by the defendant on 13 January 2010.  On 11 January 2010 the plaintiff issued an invoice for $100,000 to the defendant for interim payment and this was paid for by the defendant on 18 February 2010.  

20.  On 12 January 2010, Mr Lau Hing Wan of Yat Shing Engineering had informed Mr So that the Rocksgrass system had been applied and completed at the Site.  Mr Lau of the defendant was so informed and then replied that instead a Mr Tai on behalf of the defendant would go together with Mr Lau Hing Wan of Yat Shing Engineering to confirm the actual area of the Site that had the Rocksgrass system applied along with “誠哥” of Kerry Property Management Services Limited (“Kerry Property”).  Mr Lau Hing Wan of Yat Shing Engineering contacted Mr Tai on behalf of the defendant but he stated that he was busy and unavailable to go to the Site. Instead Mr Tai agreed that Mr Lau Hing Wan of Yat Shing Engineering and誠哥of Kerry Property would represent the defendant in measuring the Site where the Rocksgrass system was applied.

21.  Later that same day, Mr Lau Hing Wan of Yat Shing Engineering and誠哥of Kerry Property measured the Site using scaffolding that was present on the Site to allow for a higher point of observation and a more accurate method of measurement. It was agreed by Mr Lau Hing Wan of Yat Shing Engineering and誠哥of Kerry Property that the actual area of the Rocksgrass system applied at the Site was 506.80 square meters and both of them signed a 3-page document that included 2 sheets of diagrams and 1 sheet of calculations confirming the measurements which was immediately thereafter sent to the plaintiff (“the Site Measurements”). 

22.  After the plaintiff received the Site Measurements, later that same day the plaintiff issued an invoice attaching the Site Measurements to the defendant (“the Outstanding Invoice”) where the balance of the amount owed to the plaintiff by the defendant was $107,240 based upon the calculation of $550 per square meter as multiplied by 506.80 square meters of the actual area of Rocksgrass system applied being $278,740 but less the previously paid amount of $171,500.

23.  The plaintiff has sought payment of the Outstanding Invoice since its issue on 12 January 2010 but the defendant has since refused to pay any amount.

24.  As will be further discussed in this judgment, the amount of payment sought by the plaintiff was reduced to $75,395 given that the plaintiff has accepted that the actual amount of area of the Rocksgrass system applied at the Site pursuant to the Contract was in fact 448.9 square meters.

25.  The plaintiff issued letters before action on 4 May 2010 proceedings against the defendant on 19 May 2010.

The defendant’s case

26.  The defendant’s case on its defence is that the final sum owed by the defendant pursuant to the Contract was agreed between the parties at 287 square meters only and that any additional works would need to be approved by other parties such as the principal contractor being Grand Tech Construction Company Limited (“the Principal Contractor”). 

27.  The defendant’s position was that eventually the Principal Contractor and the landlord of the Site confirmed that an additional 60 square meters was completed by the plaintiff and should be paid for although this matter was not pleaded but rather provided for in the evidence only. Given the foregoing, the defendant’s position is that it accepts that payment is due to the plaintiff but only for 347 square meters of the Rocksgrass system applied at the Site pursuant to the Contract.

28.  The defendant filed and relied on a drawing dated 23 February 2011 indicating where 357 square meters of the Rocksgrass system by the words “existing slope profile” was applied at the Site that was allegedly prepared by a surveyor appointed by the defendant of whom remained unidentified and the drawing is unsigned (“the Defendant’s Drawing”).

29.  The defendant also disputed that there was no such person called 誠哥of Kerry Property and that the Site Measurements made by Mr Lau Hing Wan of Yat Shing Engineering were in any event inaccurate. 

30.  The defendant’s case on its counterclaim is that since the defendant had already paid $171,500 to the plaintiff, the defendant had overpaid $13,650 since the area pursuant to the Contract was 287 square meters and at a cost of $550 per square meter with a total cost of only $157,850.

31.  As previously mentioned, the defendant did not plead but later stated in the evidence that an additional 60 square meters was confirmed by the Principal Contractor and the landlord of the Site.  The result is that the defendant agreed that the actual area of the Rocksgrass system applied at the Site and pursuant to the Contract was 287 square meters plus an additional 60 square meters with the total being 347 square meters at a cost of $550 per square meter and a total cost of $190,850.  As such, the defendant’s counterclaim on the pleadings of $13,650 should be dismissed since the balance of $171,500 already paid by the defendant is to be reduced from the agreed total cost of $190,850 with the unpaid balance being $19,350 is therefore greater than the counterclaim as pleaded.

32.  In any event, the defendant raised further matters on its counterclaim on the evidence and at trial.  The defendant accepted that although the Rocksgrass system relating to the Contract was completed by the plaintiff in mid-January 2010, the defendant asserts that a notice of completion of works was only released in April 2010 from the defendant to the Principal Contractor.  Furthermore, a warranty for the Rocksgrass system relating to the Contract was for 12 months starting from April 2010 and ending in May 2011.

33.  The defendant also adduced evidence that the plaintiff failed to perform its obligations under the Contract in that there were defects in the applied Rocksgrass system at the Site.  The defendant gave examples such as parts of the soil and grass had fallen off of the Rocksgrass system and despite complaints by the defendant on 4 April 2011 to the plaintiff, the plaintiff did not take any action remedy the alleged defects. The cost of remedying the alleged defects of the Rocksgrass system at the Site was in the amount of $25,000.  

34.  In addition to the foregoing matters relating to the counterclaim, the defendant also adduced evidence that the Principal Contractor of the Site fined the defendant $1,000 for not carrying out proper safety precautions at the Site when in fact the defendant states that it was the workers of the plaintiff who were liable for such acts when installing the Rocksgrass system and that the plaintiff should therefore be liable for the said fine.

Expert report

35.  One of the key issues identified by the parties in their preparation leading up to trial was on the actual size of the area where the Rocksgrass system was applied at the Site.

36.  By way of an order dated 10 October 2011, a single joint expert report was to be rendered to measure the actual size of the area where the Rocksgrass system was applied at the Site.

37.  By way of an order dated 19 December 2011, both parties had agreed to a Mr John Henry Barrett to be appointed as the single joint expert but if his report was not agreed to by either party, nonetheless the party so agreeing to his report may still rely on the same at trial.

38.  By way of an order dated 13 February 2012, the single joint expert report Mr John Henry Barrett dated 19 January 2012 (“the Expert Report”) do stand as expert evidence without the need to call the said expert at trial save for any order to be made by the trial judge.

39.  The Expert Report concluded that the actual size of the area where the Rocksgrass system was applied at the Site was 448.9 square meters.

40.  As a result, the plaintiff on 18 May 2012 pleaded in its re-amended statement of claim a reduced amount of the outstanding Contract sum in the amount of $75,395, namely, 448.9 square meters at a cost of $550 per square meter (ie $246,895) less the already paid amount of $171,500.

41.  At trial, the plaintiff chose to rely on the Expert Report but the defendant did not and instead relied on, inter alia, the defendant’s drawing and I shall deal with this aspect in the later part of this judgment.

42.  I accept that the Expert Report has been properly prepared in relation to Rules of the District Court, Order 38, Appendix E.

Issues to be determined

43.  In having considered the issues in this case, I have taken into account all the evidence adduced at trial and all submissions made by both parties.  Insofar as the discussion later in this judgment does not specifically address any point or evidence relied on by the parties, that does not mean I have omitted them from my assessment.  Furthermore, I find that my reasons in this judgment are sufficient to dispose of the matter and to illustrate my findings.

44.  I find that the key issues in dispute that require determination are as follows:-

(1) the basis of calculation for the size of the Rocksgrass system applied at the Site pursuant to the Contract ;

(2) the actual size of the Rocksgrass system applied at the Site pursuant to the Contract;

(3) whether the plaintiff had fully and properly complied with the terms of the Contract.

45.  Aside from the various subsidiary legal issues to be dealt with later in this judgment, the key issues in dispute between the parties are primarily factual.

46.  With regards to the factual disputes involved in this case and in particular considerations relating to the witnesses, I refer to the judgment of Litton JA (as he then was) in R v Ng Wing Ming[1995] 1 HKCLR 64, at p 65:-

“5. Demeanour is a notoriously uncertain guide to the truth for obvious reasons. A witness comes into court as a total stranger to the judge who can hardly be expected to read from his or her facial expressions or 'body language' indications as to truthfulness or otherwise. The inherent probabilities in most cases would be the first point of reference for the trial judge in seeking to ascertain the truth. Demeanour could only be a point of last resort."

47.  Ng Wing Ming was later cited with approval in Lee Fu Wing & Anor v Yan Paul Po Ting & Anor[2009] 5 HKLRD 513 and it was held that when assessing the credibility of a party’s case on a particular issue, features that should be taken into consideration include the following:-

(1) whether the party’s case is inherently plausible or implausible;

(2) whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable;

(3) where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests as this is relevant to the assessment of his overall credibility;

(4) the demeanour of the witnesses.

48.  It should be noted that the witnesses in this case were Mr So and Mr Lau Hing Wan for the plaintiff and Mr Lau for the defendant but not Mr Stanley Tsui and/or other persons of the defendant and the Principal Contractors.

Conduct of the trial

49.  The defendant was not legally represented and the manner in which the defendant dealt with this action, in particular advancement of its case at trial, had departed from its pleadings.  In the course of the trial, I gave latitude to the defendant via Mr Lau to present the defendant’s case as best it could within limits and the plaintiff through its solicitor, Mr Tsui was equally patient and generous. 

50.  Nonetheless, I remind myself of the necessity to maintain the proper function of the court and matters of procedure.  I refer to Chan Kong v Chan Li Chai Medical Factory [2009] 2 HKLRD 455, where Yuen JA held that:-

“Principles governing pleadings

15. Before we deal with the draft Re-Re-Amended statement of claim, we should say a word about the importance of pleadings.  It is well-established that pleadings need to be clear - because pleadings are the foundations on which the rest of the action stand.  The reason why parties to litigation must ensure that the real issues in dispute are defined in advance in the pleadings is so that there is an unambiguous framework for the many interlocutory steps that follow in an action, such as discovery of documents, interrogatories and witness statements, as well as for the conduct of the trial itself.  A statement of claim should make it clear to the reader what the plaintiff’s cause of action is, and it should set out the material facts which provide the basis for him to pursue that cause of action.  It is notadequate for a plaintiff just to set out his story extensively and then to allege a number of breaches of rights for which he claims relief.  Put another way, it should not be left to the reader to guess how the dots should be connected.

16. The more complex the facts and the more complicated the claim, the more important it is for the pleader to get it right.  That is because the more obtuse the pleading, the more capacity there is for genuine misunderstanding or specious opportunism.  And the more blind alleys are left in a pleading, the more expensive and time-consuming the litigation will be.

17. Although an unrepresented litigant may not be expected to use legal terminology, that does not relieve him of the need to comply with the rule that pleadings have to be clear.  A litigant in person cannot simply pour out his story and ask the court to sort out his legal rights because he himself is ignorant what rights may have been breached or how.  A pleading cannot be like a set of instructions to the judge as if he were the unrepresented litigant’s counsel.  That is not the function of the court in an adversarial system.  Having said that, a court is entitled in the exercise of its discretion to be a little more lenient to an unrepresented litigant in giving him an opportunity to get things right.”

51.  Although the matters in consideration relevant to Chan Kong were in reference to a statement of claim, I find that such principles must also apply to a defence and/or counterclaim and therefore to the present case as well.

The basis of calculation for the size of the Rocksgrass system applied at the Site pursuant to the Contract

52.  When the Contract was signed and entered into on 3 November 2009, it was agreed by the parties that neither the plaintiff nor Yat Shing Engineering had an opportunity to take measurements of the Site because it was still undergoing construction.

53.  I have already stated the relevant terms of the Contract, namely in relation to this issue, are that the Rocksgrass system at the Site would be an “area about 300” square meters, the Contract then later referring to the “approximate area” of 200-300 square meters, the “unit rate” of HK$700 per square meter (without hydroseeding), that “Final contract sum depends on actual area completed. Minimum area 200 S.M., (square meters), the contract will be charged for 200 S.M.”

54.  In reviewing the evidence, save for the exceptions to be discussed and raised by the defendant, there are no contemporaneous documents to show that the defendant disagreed with the basis that the Contract amount to be paid for was based at the time on an approximate area and thus dependent upon the actual area to be completed.

55.  An exception to show the defendant disputing the terms of the Contract was that the words “Appro. 287 (per square meter)” was added in handwriting by Mr Stanley Tsui who was at that point in time still in the employment of the defendant and until some time in December 2009.

56.  It is noted that payments were made by the defendant to the plaintiff very shortly after entering into the Contract on 3 November 2009 and until 18 February 2010 for an invoice issued by the plaintiff on 11 January 2010.  As such, there was a period whereby Mr Stanley Tsui was still in the employment of the defendant and did not dispute payment, nor the period after Mr Stanley Tsui left the defendant and Mr Lau took over the continued handling of the Contract and did not dispute payment until near the time when this action commenced.  It is noted that the Outstanding Invoice amounts to more than half of the value of the Contract which were paid promptly and without dispute.

57.  Another exception to show the defendant disputing the terms of the Contract were that the Defendant’s Drawing dated 23 February 2011 allegedly indicated 357 square meters of the Rocksgrass system being applied at the Site but this was well after the commencement of proceedings and in any event the alleged surveyor remained unidentified and the drawing is unsigned. It is also noted that the Defendant’s Drawing shows various shaded slope areas but it does not indicate that these are the same areas where the Rocksgrass system was applied nor in fact was this clearly stated to refer to the Site.

58.  Other exceptions to show the defendant disputing the terms of the Contract would be a letter it sent to the Principal Contractor stating that the additional work to the Site for the Rocksgrass system was only 60 square meters but this letter was dated 10 December 2010, well after the commencement of proceedings, and not sent to the plaintiff.  The defendant also sent a letter to the plaintiff stating, inter alia, that the additional work to the Site for the Rocksgrass system was only 60, or alternatively 70, square meters but this letter was dated 18 June 2011, also well after the commencement of proceedings.  As result, neither of the letters of the defendant can be said to be contemporaneous evidence as such.

59.  Under cross-examination Mr So was questioned about the terms of the Contract in relation to the size of the Rocksgrass system to be applied.  Mr So explained that the situation as at 3 November 2009 did not allow either the plaintiff or Mr Lau Hing Wan of Yat Shing Engineering to be able to take actual measurements at the Site and Mr Stanley Tsui also agreed that the amount of the actual size of the Rocksgrass system could not be confirmed.  Mr So stated that therefore the parties agreed that the Contract be entered into by the parties but not defined with a strict limitation on the size of the Rocksgrass system but rather the actual size of the area with the Rocksgrass system applied at the Site after completion.

60.  I accept that Mr So was truthful under cross-examination and he was also consistent and knowledgeable about the relevant evidence when put to him. 

61.  The defendant’s position in dealing with this issue was that the final sum owed by the defendant pursuant to the Contract was agreed between the parties at 287 square meters only and that any additional works would need to be approved by the Principal Contractor.

62.  Under cross-examination Mr Lau stated that there were other documents relating to the Contract and in fact the Contract should not be characterised as a complete contract but rather only as a quotation to be read together with a separate document between the defendant and the Principal Contractor confirming the quotation and expanding on the terms and conditions between the Principal Contractor, the defendant and the plaintiff. Mr Lau accepted that there was no such document provided in discovery but instead stated he was ignorant of the law, the fault lay with the plaintiff since it had never asked for it to be produced, that the court had never compelled the defendant to have it produced, and in any event the existence and usage of such a separate document was part of the standard procedure in construction contracts that was also known by the plaintiff.

63.  I do not accept that Mr Lau was truthful under cross-examination especially when such matters were generally pleaded and generally referred to in Mr Lau’s witness statements and in any event must have been known by Mr Lau to be obviously relevant to the issues to be tried. I also find that Mr Lau must have known that the defendant was required to produce supporting evidence despite Mr Lau being a lay person since under cross-examination he agreed that he knew of the discovery process.  Furthermore, the production of such supporting evidence cannot be faulted on anyone other than the defendant since Mr Lau claimed to be an experienced person in the trade of landscaping and construction for some 30 years.

64.  Under cross-examination Mr Lau reconfirmed that the Principal Contractor and the landlord of the Site confirmed that an additional 60 square meters was completed by the plaintiff and Mr Lau also made reference to the Defendant’s Drawing. In addition, Mr Lau also made detailed reference to an architect’s plan of the Site dated 14 February 2009 (“the Architect’s Plan”) allegedly indicating where the Rocksgrass system was applied by way of Mr Lau tracing out the location by hand on the Architect’s Plan at trial.

65.  In relation to the Defendant’s Drawing, under cross-examination Mr Lau was unable to clarify or properly explain that the words “existing slope profile” actually related to the Rocksgrass system at the Site, nor whom the alleged surveyor was that prepared the Defendant’s Drawing.

66.  In relation to the Architect’s Plan, under cross-examination Mr Lau was unable to show that the Architect’s Plan related to the Rocksgrass system at all since there was no indication on the document to confirm the same, that by his own estimation at trial only that it related to 287 square meters and in any event his explanation and tracing out of the location by hand on the Architect’s Plan at trial did not relate to any corroborating evidence confirming his correctness.  It will also be noted that the Architect’s Plan was dated 14 February 2009 which was while the Site was undergoing construction which did not end until or about mid-December 2009.

67.  Mr Lau of the defendant relied on the Defendant’s Drawing and the Architect’s Plan in a manner consistent with that of an expert report which I reject given my foregoing reasons and failure to comply with the relevant procedural requirements for such usage at trial.  Given also my foregoing observations on the Defendant’s Drawing and the Architect’s Plan, I place no or no substantive weight on their probative value.

68.  In the witness statements of Mr Lau, the defendant stated that any works done by the plaintiff required the plaintiff to issue a work completion certificate to the defendant in order for the period of warranty to commence.  Under cross-examination, Mr Lau expanded the foregoing matters in his witness statement and additionally stated that a work completion certificate needed to be issued also for the purpose of the Principal Contractor confirming and agreeing to the works done by the plaintiff and thereafter for the defendant to pay the plaintiff.

69.  I do not accept that Mr Lau was truthful under cross-examination since when asked why if there was no work completion certificate issued to the defendant but still the defendant paid the plaintiff the outstanding amounts up to 11 January 2010 with Mr Lau simply replying that he felt morally obliged to pay the outstanding amounts. Mr Lau also stated that in any event it did not matter since the size of the area of the Rocksgrass system at the Site was yet to be confirmed by an architect and therefore payment to the plaintiff would be subject to variation.  I find that Mr Lau’s testimony makes no commercial sense, is uncorroborated and I reject it.

70.  Mr Tsui submitted that there was no privity of contract between the Principal Contractor and the plaintiff and that the contract between the Principal Contractor and the defendant was not binding on the plaintiff. Mr Tsui cited Halsbury’s Laws of Hong Kong, Volume 7(2): Contract, 2007 Reissue at 115.377 where it states:-

“The parties to a contract may by agreement vary the terms of that contract; but a unilateral notification by one party, without any agreement, cannot be a variation (unless the contract provides for such a power in that party), although it may constitute a repudiation of the contract by him.”

71.  For completeness sake, none of the documents produced by the parties, in particular the Contract, show any relationship or any reference between the Principal Contractor, the defendant and the plaintiff to establish any co-existing relationship or reliance between the three parties. The defendant was not even able to provide any documentation that such a relationship existed generally in the trade, or that a requirement such as a work completion certificate needed to be issued whether in the present case or otherwise.

72.  Given my findings as stated in this section of the judgment, I find that the basis of calculation for the size of the Rocksgrass system applied at the Site pursuant to the Contract was subject to the actual size as applied by the plaintiff.

The actual size of the Rocksgrass system applied at the Site pursuant to the Contract

73.  I turn now to the issue of what, in fact, was the actual size of the Rocksgrass system applied at the Site pursuant to the Contract.  Where necessary, I shall also refer to the relevant parts of my findings as discussed in the previous sections.

74.  The plaintiff had relied on the witness statement of Mr Lau Hing Wan of Yat Shing Engineering to support its case that the actual size of the Rocksgrass system applied at the Site was 506.80 square meters of the Site and countersigned by him and 誠哥of Kerry Property on the Site Measurements.

75.  The plaintiff’s re-amended statement of claim dated 18 May 2012 reduced the actual area of the Rocksgrass system applied at the Site to 448.9 square meters due to the findings made in the Expert Report.

76.  Save for the actual size of the Rocksgrass system applied at the Site being 448.9 square meters, all other background factual matters are based upon the on the witness statement and testimony of Mr Lau Hing Wan of Yat Shing Engineering to support its case at trial.

77.  I accept that Mr. Lau Hing Wan of Yat Shing Engineering was truthful under cross-examination and he was also consistent and knowledgeable about the relevant evidence when put to him.  I also accept that the Site Measurements were countersigned by both Mr Lau Hing Wan of Yat Shing Engineering and 誠哥of Kerry Property and were immediately thereafter sent to the plaintiff.  It was not denied in the witness statements of Mr Lau or under cross-examination that the defendant did receive the Site Measurements and the Outstanding Invoice.

78.  As previously stated in this judgment, the defendant disputed that there was no such person called 誠哥of Kerry Property and that the Site Measurements made by Mr Lau Hing Wan of Yat Shing Engineering were in any event inaccurate, both matters repeated when Mr Lau was cross-examined.  Mr Lau also made complaints that none of staff of the defendant was used to confirm the Site Measurements.  

79.  Under cross-examination Mr Lau simply disagreed with the findings in the Expert Report.  When Mr Lau was asked why the defendant had originally agreed to having a single joint expert report prepared but then later changing its mind, Mr Lau simply answered that the defendant had not agreed and did not want to pay the related fees.

80.  In the previous section of this judgment I have already made a finding that the Defendant’s Drawing and the Architect’s Plan have no or no substantive weight on their probative value.  With regards to Mr Lau simply disagreeing with the findings in the Expert Report, this does not take or improve the defendant’s case any further.

81.  Despite the complaints of the defendant, the relevant point which cannot be ignored is that there was no substantive challenge to the accuracy of the Expert Report.  The only challenge by the defendant to the Expert Report, if it can be characterized as such, was by generally comparing the Defendant’s Drawing and the Architect’s Plans against that of the Expert Report. 

82.  Given my findings as stated in this section of the judgment, I find that the actual size of the Rocksgrass system applied at the Site pursuant to the Contract was 448.9 square meters.

83.  When considering my findings on the first two of the three issues in favour of the plaintiff, namely that the actual size of the area of the Rocksgrass system at the Site was 448.9 square meters and at the agreed cost of $550 per square meters, I find that the plaintiff is entitled to judgment in the amount of $75,395.

Whether the plaintiff had fully and properly complied with the terms of the Contract

84.  The defendant’s pleaded case on its counterclaim is that it had overpaid $13,650 since the area pursuant to the Contract was 287 square meters and at a cost of $550 per square meter with a total cost of only $157,850.  On the defendant’s own evidence an additional 60 square meters was confirmed by the Principal Contractor and therefore the total actual size of the Rocksgrass system at the Site was 347 square meters at a cost of $550 per square meter and a total cost of $190,850.

85.  Having considered Chan Kong and the defendant’s own case, I dismiss the defendant’s counterclaim of $13,650 since on the defendant’s own case the agreed unpaid balance to the plaintiff is $19,350 and this extinguishes the counterclaim as pleaded.  Given also my findings on the first two of three issues to be decided in favour of the plaintiff, namely that the actual size of the area of the Rocksgrass system at the Site was 448.9 square meters and at the agreed cost of $550 per square meters, this too gives grounds for dismissing the defendant’s counterclaim.

86.  For the sake of completeness, I shall nonetheless consider the relevant parts of the defendant’s evidence in relation to its counterclaim.

87.  The first matter to be considered is the period in which the defendant forms the basis of its counterclaim on the evidence.

88.  The defendant accepted that although the Rocksgrass system relating to the Contract was completed by the plaintiff in mid-January 2010, the defendant asserts that a notice of completion of works was only released in April 2010 from the defendant to the Principal Contractor.  Furthermore, a warranty for the Rocksgrass system relating to the Contract was for 12 months starting from April 2010 and ending in May 2011.

89.  As previously noted, the Contract stipulated that “One year warranty on the system, but not on vegetation which is totally the liability of Melofield Nursery & Landscape Contractor Ltd (the defendant)”.

90.  The defendant issued a letter to the plaintiff that the plaintiff do take steps to remedy various defects at the Site due to the Rocksgrass system installation on 4 April 2011. The defendant’s aforesaid letter of 4 April 2011 was issued after 12 months starting from mid-January 2010 when the Rocksgrass system was completed at the Site which is not a disputed fact.  The plaintiff replied to the defendant’s aforesaid letter of 4 April 2011 on 6 and 8 April 2011 where the plaintiff stated, inter alia, that the period of warranty had expired, denied that the nature of the alleged defects were part of the warranty relating to the Contract such as grass planting works and irrigation works.  Furthermore, there is no evidence showing that the plaintiff was bound by a notice of completion of works.  I have already declined to accept that the defendant required the plaintiff to issue a work completion certificate to the defendant in order for the period of warranty to commence.

91.  Based on these matters as considered, the defendant’s counterclaim based on the period of warranty fails.

92.  The second matter to be considered is the nature of the complaint on which the defendant based its counterclaim.

93.  The defendant gave examples such as parts of the soil and grass had fallen off of the Rocksgrass system and despite complaints by the defendant’s aforesaid letter on 4 April 2011 to the plaintiff, the plaintiff did not take any action remedy the alleged defects.  The cost of remedying the alleged defects of the Rocksgrass system at the Site was in the amount of $25,000.

94.  Under cross-examination Mr Lau referred to the documentary evidence found via the defendant’s aforesaid letter of 4 April 2011 from the defendant to the plaintiff and also various photos from the defendant to the plaintiff but without stating the actual cost of the damage or that the photos showed that it came from or due to the Rocksgrass system.  Mr Lau also referred to correspondence on various dates from the Principal Contractor to the defendant with various photos attached indicating general damage to various parts of the Site but without stating the actual cost of the damage nor that it came from or due to the Rocksgrass system.  Neither sets of documentary evidence from the defendant indicated with any or any sufficient particularity that it came from the plaintiff’s Rocksgrass system.

95.  Furthermore, the defendant’s complaint in this regard was primarily due to grass with mud attached supposedly falling off the top of the Rocksgrass system. I find that even if this complaint of the defendant is true, is characterized as “vegetation” and therefore is not covered under the warranty of the Contract.

96.  Mr Lau provided his own calculation of remedying the alleged defects of the Rocksgrass system at $25,000 but again, there were no contemporaneous documents to substantiate such a claim save for .

97.  Based on these matters as considered, the defendant’s counterclaim based on nature of the alleged breach of warranty also fails.

98.  For completeness sake, a letter dated 14 January 2010 from the Principal Contractor to the defendant for levying a $1,000 fine did not indicate this was the plaintiff’s fault, or due to the installation of the Rocksgrass system, or a matter raised to the plaintiff until the discovery stage and explained in the supplemental witness statement of Mr Lau.  I reject such a claim by the defendant due to the lack of particularity on the evidence indicating the plaintiff’s liability.

Conclusion

99.  Accordingly I enter judgment in favour of the plaintiff in the sum of $75,395 with interest thereon at half prevailing judgment rate commencing from 12 January 2010 to the date of judgment and thereafter at judgment rate until full satisfaction.  The defendant’s counterclaim is dismissed.

100.  I make a costs order nisi, to be made absolute in 14 days time, that costs of the claim and counterclaim be to the plaintiff to be paid by the defendant, such costs to be taxed, if not agreed.