WAI SING ENGINEERING CO. (a firm) v. WALSUNION INDUSTRIES LTD.

DCCJ22823/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 22823 OF 2001

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Date of Handing Down Judgment: 3 January 2003

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JUDGMENT

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1. The Plaintiff carries on the business of a contractor for laying wooden floor boards and skirtings while the Defendant is a contractor for the provision of wooden floor boards and skirtings.

2. In this action, the Plaintiff claims against the Defendant for work done under a sub-contract agreement (hereinafter called "the contract") for the laying of floor boards at areas 27 and 34 of the construction site at Metro-City in Tseung Kwan O in the New Territories (hereinafter referred to as "the site") between December 1998 and July 2000. The main contractor is a subsidiary company of the Henderson group of companies.

The Plaintiff's Case

3. The Plaintiff relies on a demand letter dated 22 August 2001 for payment of the outstanding sum of $312,516 for work done at the said site.

4. The Plaintiff's proprietor Mr. Lui Kwong Shing (PW1) gave evidence at the hearing. He agreed that both parties signed a written agreement on 15 January 1999 though the Plaintiff had already started work at the said site in December 1998. The contract price of the floor board laying work was $5,127,687.30 and addition work to the value of $180,200 was performed at the Defendant's request. The Defendant had paid to the Plaintiff a total of $4,964,500. In his claim against the Defendant, the Plaintiff deducted the set-off account with the Defendant, leaving the total of $312,516.10 outstanding.

5. According to PW1 Mr. Lui's evidence, the Defendant refused to pay the balance outstanding, it complained of the low work quality on the Plaintiff's part due to poor colour co-ordination of the floor boards leading to variation of colours of the floor boards laid, the poor quality of workmanship and poor work management and procedure resulting in serious wastages and damages done to the otherwise good quality wooden floor board strips. Mr. Lui denied there were any wastages or poor workmanship. He blamed the Defendant for ordering and directing his workers to lay the floors using 8 inches and 10 inches floor board strips. This had resulted in rejection by the flat owners and that later replacements have to be performed. He further complained there were uneven floor slabs and walls that were not level thereby causing unsatisfactory results in the floor boards laid. According to the Plaintiff , the latter complaint was rectified by the main-contractor and the floors redone, and the Defendant was compensated for the extra work done. The flooded floors were also replaced but the Plaintiff blamed it on the Defendant for directing his workers to lay the floors before windows were installed.

6. The Plaintiff claimed the Defendant was satisfied with the job he did at the said site, otherwise, it would not have awarded the Plaintiff with another contract for a Tai Po 「淺月灣」project in February 2000.

7. The Plaintiff called two further witnesses, PW2 Mr. Chung Tim Sung and PW3 Madam Wong Chung Fung both independent contractors of the Plaintiff. PW2 Mr. Chung was in charge of delivery of wooden floor and skirting board strips to the individual units from the point of deposit by the Defendant on the ground floor of the site. He was also in charge of removing the excess floor boards after completion of each unit to other units where work would commence. Upon completion of all units, he would collect the left-over boards. In his evidence, he claimed that DW1 Chow Cheung Wing had instructed him to deliver the left-over strips of 8" and 10" boards to the designated storage area for the three tower blocks, but he had never been paid for the extra work done. Subsequent to that, he had under DW1's instructions delivered a further cargo of 12" boards to each floor and he was paid by the plaintiff for this job. He denied the boards were ever scattered about over the floor of the units though admitting they were put aside after work completed awaiting collection later on. He claimed the left over boards would not be left uncollected unless work in certain area of the unit had not been completed.

8. PW3 Madam Wong's evidence was that she took up the job in early May 1999 and had worked at Phase 3 at the said site laying floor boards in the 3 tower blocks for the Plaintiff. She claimed that she was told to lay floor boards in certain units before the windows were installed. She also recalled that on one occasion, she was sent home after reporting for work in the morning because the units were flooded after heavy rain during the night and work had to be suspended. She worked under the Plaintiff's and the Defendant's directions and instructions and she was told that there were insufficient 12" floor boards strips and she had to work with 8" and 10" strips in the centre of the room though they were intended only for the corners and edges of the room she found it most unusual and time consuming. She further said she was told by PW1 that instead of the usual margin width, she was to lay margins of a variation between one (2 inches) to 4 (8 inches) boards strips. After the flooding occurred, she was subsequently asked to relay the floor boards in the units with water stains.

The Defence Case

9. Mr. Chow Cheung-wing, a director of the Defendant gave evidence on behalf of the Defence. He denied he had supplied 8" and 10" floor boards strips instead of 12" strips to the Plaintiff at the said site in the beginning. He claimed it was a suggestion from the Plaintiff that shorter floor board strips could be used at corners and edges of the rooms in the units. He claimed that samples of the 8" and 10" boards have been approved by the main contractor in or about mid-March 1999 after which he placed his first order to be used at the said site and these shorter boards first arrived in May or late April 1999. He claimed that it was the Plaintiff's poor quality work that resulted in the complaints from the main contractor and the individual owners requesting for replacements. Though the Plaintiff had replaced only some of the floor boards, eventually, he had to call in another contractor to finish the remedial work because the Plaintiff refused to finish the work in spite of the incentive of the Tai Po 「淺月灣」job in February 2000.

10. It is the defence case that it had sub-contracted three of the 6 tower blocks of phase 3 to another floor board contractor and compared to the work of the Plaintiff, the board wastages of the Plaintiff were excessively high at 11.6% while the former contractor was 1.5%. According to the Defendant, the Plaintiff's wastage rate for phase 3 blocks 1 to 4 was 3.7%. The Defendant therefore blamed the Plaintiff's workers for failing to match and grade the colours of the floor boards before laying, resulting in complaints from individual owners requesting for replacements. Further wastages occurred when the Plaintiff failed to direct PW2 and his workers not to deposit boxes of floor boards on the two units on each floor of the tower blocks where the construction lifts were installed. These units were laid after the construction lifts were removed. As a result, the boxes of floor boards have been left exposed in the open for many months, resulting in the paper cartons torn and some of the strips were damaged and soiled. He denied there were any complaints of water damages to the floor laid. He further denied having been compensated for the replacements done on uneven floors by the main contractor.

11. The Defence produced lists of defects to be remedied from the flat owners and the main contractor in support of its counterclaim. It claims 3,000 square meters of extra floor boards had to be ordered as a result of wastages by the Plaintiff.

12. The Defence's second witness Wong Po-ming confirmed that he had only started working at the site as the Defendant's senior foreman in May 1999, and was therefore not responsible for supervision of work done before that date. Upon being cross-examined by the Plaintiff's counsel, he admitted that he had signed the chits submitted by the Plaintiff for remedial work done and at the time he had approved them as additional work undertaken. He further admitted that he signed them for the Plaintiff to enable the Plaintiff to get approval from the main contractor's foreman but whether they would be approved for payment would be up to the main-contractor's site foreman.

Findings

13. The issues to be decided are :

a) Was the work done after completion 'additional work'?

b)	Who should be liable for laying mixed colours and sizes of floor boards in the centre of the rooms leading to complete replacements later on?

c) Who should be liable for uneven floors, flooded and loose boards?

d) Who should be liable for wastages of floor boards?

14. a) Was the work done after completion 'additional work'?

Clearly, work performed due to poor quality of workmanship, such as wrong alignment or failure to lay out the boards in an aesthetically acceptable and orderly manner must be work of poor quality and remedial work done subsequently cannot be regarded as additional work under the agreement signed by the parties.

15. Keating on Building Contracts, 6th edition by Sir Anthony May at page 56 refers to the implication of the "usual" contract.

"Workmanship. The contractor must do the work with all proper skill and care. It is suggested that this is a continuing duty during construction and not only upon completion. In deciding what degree of skill is required the court will, it is submitted, consider all the circumstances of the contract including the degree of skill expressly or impliedly professed by the contractor. Breach of the duty includes the use of materials containing patent defects, even though the source of such materials has been chosen by the employer. It may also include relying uncritically and without due precautions on an incorrect plan supplied by the employer where an ordinarily competent builder should have had grave doubts about the plan's correctness."

16. On the other hand, the materials supplied must be fit for the purpose and of good quality from the Defendant. These are described as implied warranties of fitness for purpose and good quality - see p.57 of Keating :

"Warranties of fitness for purpose and good quality. If the contractor is to supply materials he warrants that the materials he will use are (1) reasonably fit for the purpose for which they will be used and (2) of good quality, unless the express terms of the contract and any admissible surrounding circumstances show that the parties intended to exclude either or both warranties. The two warranties correspond substantially with the warranties implied by section 14 of the Sale of Goods Act 1979 upon a contract for the sale of goods, so that where there is no limitation upon the contractor's right of recourse against his supplier he will in the case of defective materials or goods have his remedy over against his supplier who in turn will have his remedy over and so on down the chain of contracts until the manufacturer or other author of the defect is reached."

17. The agreement between the Plaintiff and the Defendant did not refer to the application of the "usual" contract terms. There were, however, specific references to the exact procedures of floor board being laid and, to the even colours of the boards being put together under Clause 2 of the agreement:.

“（二）地板需按色澤歸類合併一處鋪砌方法，需按照建築公司指示，先用呔油塗二勻地上再用上等瀝青鋪妥，再用粗幼磨沙紙磨平，及人手抹腊一次做妥（腊不得用水稀釋及用地拖抹腊）。”

18. Further references to the order of delivery of the floor boards to individual units and floors and the standard of tidiness to be kept by the contractor etc. appeared in Clauses 1 and 5, it states :

“（一）主判人將地板或腳線運抵地盤後，承判人負責按照主判人指示及建築公司安排運上樓上。"

"（五） 承判人將地板或腳線運上樓上後，要將樓上地板或腳線分派各單位放於不阻礙別行業工作之地方。工人鋪砌完每層或每個單位後，承判人要督促工人將剩餘之地板或腳線清理好，放於房間不阻礙別行業工作之地方。或搬遷上層或下層繼續安裝，不得散在地上不清理。如有發現此情況主判人有權將浪費之材料金額在總工程額扣除。”

19. Clearly, if it was stipulated in the agreement that the work should meet certain standards, and the Plaintiff failed to meet those standards, the Plaintiff should be liable to repair and remedy the defects.

20. From the evidence of the photographs taken by the Defendant, there were obvious breaches of Clauses 2 and 5. In that, floor board strips were seen scattered over the floor, boxes of unused floor boards strips were left in the staircase landing and some were left inside the units with the paper boxes torn and boards exposed. Further breaches included boards of varying shades being laid in the centre of room.

21. According to the evidence of Mr. Chow, the boards for units G and H where the building construction lifts were installed during the construction period should not have been delivered up to these units until 6 months later when the lifts would have been removed. The Plaintiff failed to comply with the Defendant's instructions resulting in boxes of boards left to rot in these units. Furthermore, some of the rooms were partly finished, boards of different shades were then being laid side by side to the ones laid earlier.

22. On the other hand, the Plaintiff blamed the Defendant for failing to order sufficient floor boards of 12" but insisted the Plaintiff should carry on with the laying work. This had resulted in the Plaintiff's sub-contractor PW3 Madam Wong being instructed to use 8" and 10" boards in the whole room and to carry out laying work in some rooms before the windows were installed.

23. The Defendant denied these allegations, and claimed it was on the Plaintiff's suggestion that the 8" and 10" boards were ordered for the edges and corners of the rooms. That these shorter boards were not intended for the centre of the rooms.

24. From the evidence adduced, I find there was a breakdown of communication and lack of supervision and co-ordination by the Plaintiff of his sub-contractors and by the Defendant of the Plaintiff and his sub-contractors. It is questionable why the Plaintiff's workers should decide to lay these shorter strips in the middle of the rooms. Had there been proper supervision by the Plaintiff, and had the Plaintiff made sure that the work was performed in strict compliance to Clause 2 of the contract, the complaints raised by the Defendant would not have arisen.

25. b) Who should be liable for laying mixed colours and sizes of floor boards in the centre of the rooms leading to complete replacements later on?

If it was the Defendant who had delayed in the delivery of sufficient supply of floor boards, while insisting that the Plaintiff should carry on with the work with whatever was available, then, the Defendant had itself to blame. However, the Defendant's Mr. Chow (DW1) claimed it was the Plaintiff who had mixed the boards of different colours in the same room and that the Plaintiff's workers laid part of the floor of the room leaving the remaining part until after the lifts were removed or until further boards had arrived. The Defendant gave no explanation as to why PW3 Madam Wong should be allowed to use the 8 and 10 inches strips in some of the rooms. As DW2 was already working at the site when PW3 started work there, DW2 could have prevented it. The fact that it was allowed to happen, the irresistable inference is the Defendant had permitted it to take place.

26. c) Who should be liable for uneven floors, flooded and loose boards?

As to the loose skirting boards and floor boards, this should be checked by the Plaintiff before completion, it follows therefore, the Plaintiff must be responsible for any necessary remedial work after completion during the warranty period. The exception being, boards becoming uneven and loose after flooding caused by rain-water in units with no windows installed.

27. As to the many incidents of floor concrete slab found to be uneven by the individual owners and main contractor resulting in the uplifting of the floor boards for concrete work to be done, these incidents should be the responsibility of the main-contractor. Thus, these were additional work which the Defendant should have recovered from the main contractor if it had not done so already.

28. I accept the Plaintiff's evidence that some of the floors were damaged by water. From the evidence of the records of complaints filed and remedial work to be performed produced by the Defendant, there were a number of complaints of 'water stained' floors. Water stained and flooded floors were caused by water. There was no evidence that these were caused by burst pipes or poor plumbing. The only suggestion and possible explanation was rain and wind storms that caused flooding in units without windows installed. I accept the Plaintiff's evidence that his workers were told to lay the boards in the units before the windows were installed. I further accept the evidence of Madam Wong (PW3) that the Defendant's staff gave the instructions. The list of dates of typhoons produced by the Plaintiff (page 109a of the agreed bundle) showed that between April and June 1999, there were indeed two major typhoons Leo (29/4/99 - 2/5/99) and Maggie (5/6/99 - 8/6/99).

29. As all the 'additional work' had been signed by DW2 Wong Po-ming, albeit pending approval by the main contractor, this, nevertheless, showed that it was accepted by the Defendant pending approval for payment by the main contractor. For this reason, I find the Plaintiff's claim including the 'additional work' of $312,516.10 proved on a balance of probability.

30. As to the Defendant's counterclaim. The Defendant produced some photographs of the rooms where different colour boards were mixed together, they were quite noticeable from the photographs produced. The Plaintiff's witnesses DW2 Mr. Lui and DW3 Madam Wong both blamed it on the 8" and 10" boards which were lighter in colour than the 12" boards used on the margins of the rooms. They further claimed that the Defendant had insisted work to be carried out before the windows were installed.

31. There was a memo from the main-contractor to the Defendant on 5 May 1999 complaining about the mixing of floor board strips of different colours. This memo was brought to the attention of and signed by the PW1 Mr. Lui on 11 May 1999. Further, the Defendant's Mr. Chow sent a fax letter to PW1 Mr. Lui on 25 May 1999, complaining about scattering of floor board strips on the floors of a number of units at the site. There were further memos from the main contractor complaining to the Defendant about insufficient men working on the site and the delay in the floor board laying work.

32. I am satisfied on the evidence before me that the aforementioned had occurred and the Plaintiff's attention have been drawn to them. I am also satisfied that the Defendant had delayed in supplying to the Plaintiff sufficient 12" board strips either due to miscalculation of the quantity of floor board strips needed on delay in delivery. The Plaintiff's work on site had been delayed on occasions also due to insufficient workers on site.

33. According to the list set out by the Defendant on page 89 of the agreed bundle, the Defendant initially intended to deduct $295,200 from the Plaintiff's claim including the sum of $225,000 of what the Defendant claimed to be wasted floor board materials. On the other hand, the claim for the costs for replacement of floor due to strong colour variations was only $18,400 according to the said list. This item had become $158,400 in the Defendant's counterclaim. As no invoices or other evidence had been produced by the Defendant to support this claim of $158,400. I am not convinced it amounted to $158,400.

34. Further, I disallow the Defendant's claim for wasted teakwood strips and skirtings. This claim was based purely on the Defendant's statistical calculations which I find to be totally unsatisfactory. There were no invoices or evidence of payment of the additional 3,000 square meters of boards ordered for the said site. Furthermore, the Defendant was partly to blame for over supplying 8" and 10" strips and under supplying 12" strips and had allowed shorter strips to be used on the whole floor. I am satisfied that the Defendant has allowed floor boards to be laid before windows were installed because the main contractor had been pressing for the job to be completed as soon as possible. These were reasons for wasted floor board strips.

35. Base on the evidence of the photographs produced by the Defendant, I accept the Plaintiff have left floor boards scattered about in some units and was in breach of Clause 5. Consequently, I allow the Defendant its counterclaim and find the following proved on a balance of probability :

(1)	Removal of debris of boards and skirting	$28,000
(2)	fixing of loose skirtings in Blocks 4-6	16,800
(3)	fine for being absent at one site meeting	1,000
		$45,800

36. I disallow the Defendant's counterclaim for the 3,000 sq. metres of boards of $225,000 for reasons set out in paragraph 34 above. I further disallow the claim for $52,800 under paragraph 14(5) of the counterclaim for proof of this item had not been produced and shown to my satisfaction on a balance of probability. I disallow the Defendant's claim of $6,000 for replacement work of the 3 rooms where 8 and 10 inches strips were used for the reason set out in paragraphs 25 and 34.

37. Of the Defendant's claim for $48,299.50, the Plaintiff admits to $30,871.20. I accept that this $30,871.20 had been deducted as set out in paragraph 1 of his statement of claim. Mr. Lui of the Plaintiff admitted he had been supplied with these door frames and teakwood flooring boards but some of the doors were returned to the Defendant due to their poor quality. I accept his evidence and the amount calculated by him on page 80 of the agreed bundle. For this reason, I disallow this item of the Defendant's counterclaim.

38. The Plaintiff is consequently successful in recovering the following sum :

$(312,516.10 - 45,800.00) = $266,716.10.

39. Interests on the judgment sum from date of writ to date of judgment at half judgment rate, and at judgment rate thereafter until full payment.

40. As the Plaintiff is successful on his claim, the Plaintiff is entitled to recover the costs of his claim. I therefore order costs nisi to the Plaintiff to be taxed if not agreed with certificate for counsel. As to the counterclaim, the Defendant is successful in setting off approximately 15% of the counterclaim, I would order costs nisi on 15% of the Defendant's costs on the counterclaim.