THRESHOLD CONSULTANTS LTD v. BOOST INVESTMENTS LTD

HCCT 58/2017

[2020] HKCFI 415

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 58 OF 2017

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J U D G M E N T

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A.     Introduction

1.  By this action, the plaintiff, Threshold Consultants Ltd (“Threshold”), sues the defendant, Boost Investments Ltd (“Boost”), for unpaid professional fees allegedly due under an agreement for consultancy service for the renovation of Concord Square in Tsuen Wan.  By its counterclaim, Boost claims damages for alleged breach of agreement and breach of duty.  The counterclaim is brought not only against Threshold, but also against Ms Au Man Yi Kitty (“Ms Au”), the director and shareholder of Threshold, on the basis of an alleged personal duty and collateral warranty.

2.  The question raised by Threshold’s action is whether it is entitled to fees under the agreement as claimed in five unpaid debit notes.  At the trial, however, Boost conceded Threshold’s claim, subject to the defence of set‑off based on the counterclaim.

3.  The issues raised by Boost’s counterclaim broadly are: (1) what were the implied terms in the agreement and the duties owed by Threshold to Boost; (2) whether Threshold was in breach of the implied terms and duties owed to Boost; (3) whether any such breach caused delay to the completion of the project, and the loss of rental income as a consequence, and the abortive or additional costs allegedly incurred by Boost; (4) whether Ms Au is personally liable to Boost on the basis of a collateral warranty or personal assumption of responsibility.

B.     The main facts and events

4.  Threshold is a private company that carries on the business of providing architecture and related consultancy services. Ms Au is a qualified architect and an “Authorised Person” registered under s 3 of the Buildings Ordinance (Cap 123) with the Building Authority. She was the sole director and shareholder of Threshold at the material times.

5.  Boost is the owner of the shopping centre, Concord Square, in Tsuen Wan (except for certain shops on the G/F which were held by others).  The shopping centre comprises five floors above ground and one level of basement.  The site area is around 3,767m².  The total lettable area owned by Boost is approximately 130,000 ft².

6.  In 2015 Boost planned to have substantial renovations carried out to Concord Square.  Through one of its project managers, Mr Mark Leung, Boost first approached Ms Heung, the person‑in‑charge of an interior design firm called Conceptech Interior Ltd (“Conceptech”) on 6 January 2015, seeking a fee quotation for architectural, interior design and project management services in relation to the intended renovation of the shopping mall.  Ms Heung in turn got Ms Au involved in the discussions right at the outset, on a visit to the site on 7 January 2015. Following this initial approach there were a number of conversations, meetings and site visits as well as email exchanges, before the written agreement was finally entered into between Boost and Threshold.

7.  On 13 January 2015, Ms Heung sent a copy of Ms Au’s curriculum vitae to Mark Leung.  On 9 February 2015, Threshold sent a project contact list to Boost, setting out the proposed parties involved in the project, as follows:

Interior	Conceptech
Architect/AP	Threshold
Structural engineering	Algo Design & Consulting Institute
Electrical / Mechanical	M&P Consulting Engineers (Hong Kong) Ltd

The proposal was that these entities would together act as a team to provide the necessary professional services for the renovation project.

8.  On 13 February 2015, Threshold gave a presentation of the conceptual design to Boost.  A revised edition was presented ten days later. 

9.  As to which entity would actually be entering into the consultancy agreement with Boost, on 3 March 2015 Ms Heung wrote to Boost (copied to Threshold) as follows:

“ Regarding the issue of signing the Agreement, we have discussed with Kitty and all we think it would be more appropriate for the Agreement to be signed by Kitty’s side / Threshold Consultants Ltd. The Authorised Person (AP) will surely be able to protect your side to meet the building rules of HK. As a design Company, we do not think we are suitable to hold the liabilities. Under the Agreement, both of our services to your Project will remain the same.” [sic]

10.  The draft written consultancy agreement, the first revision (Rev. A) of which was produced in May 2015, was from the start in the form of an agreement between Boost and Threshold.  Further discussions and meetings followed and the scope of the services required was also expanded.  These discussions were finalised in early 2016 following a meeting on 6 January 2016 at which Ms Au met Andrew Ng, Deputy General Manager of Boost.

11.  In broad terms, the project agreed upon was to carry out internal structural alteration works, revamp the building services works (relating to extra‑low voltage (ELV) installation, mechanical ventilation and air conditioning (MVAC), electrical works, fire services, plumbing and drainage, etc), replace the existing escalators, replace the two existing chillers, and carry out exterior renovation works and interior decoration works.

12.  The main consultancy agreement took the form of a 10‑page “Consultancy Services Proposal” by Threshold dated 12 January 2016 which was agreed and accepted by Boost on the same date.  It was marked “Rev. R”, showing it had gone through numerous editions before.  I shall refer to it in this judgment as the “Consultancy Agreement”.  Section 1 of the Consultancy Agreement sets out the Client’s Brief.  Section 2 sets out the scope of services which included: Inception and Feasibility Study, Schematic Design, Submissions to Buildings Department, Detailed Design and Tender Documentation, as well as work during the Tender, Construction and Completion stages.

13.  At the initial stage up to October 2016, as referred to below, it was envisaged that there would be a tender for the Main Contract for A&A (i.e. alterations and additions) works and a separate tender for the Sub‑contract for Interior Fitting‑out works.

14.  Threshold’s professional fees is the subject of section 3.  Clause 3.1 states:

“The proposed professional fee for the consultancy services for the renovation project shall be based on lump sum at the amount of $3,550,000. The payment is staged in the following table: -

Stage		%	HK$
1	Upon confirmation of appointment	5	177,500
2	Upon completion of Schematic Design1	15	532,500
3	Upon submission of plans to Buildings Department	10	355,000
4	Upon approval of plans from Buildings Department	15	532,500
5	Upon completion of tender drawings and document1	15	532,500
6	Upon completion of Tender report	10	355,000
7	Upon completion of 50% of renovation works	15	532,500
8	Upon Issue of Certificate of Practical Completion/ Substantial Completion Certificate2	10	355,000
9	Upon Issue of Certificate of Making Good Defects/ Defects Rectification Certificate2	5	177,500
	Total	100	3,550,000

Note:

1.   The stage of works is considered complete upon endorsement of the design drawings/tender drawings and document by the Client.

2.   Issue of Certificate of Practical Completion/Substantial Completion Certificate and Certificate of Making Good Defects/Defects Rectification Certificate by the Architect shall be in accordance with the provisions in the contract signed between the Client and Main Contractor.  The criteria for Issue of Certificate of Practical Completion/Substantial Completion Certificate shall be based on Form BA 14 submission to the Buildings Department.”

15.  Payment for stages 1 to 4 was made by Boost without dispute.  Threshold issued debit notes for stages 5 and 6 but Boost has refused to pay them.  They are part of Threshold’s claim in this action.  Threshold does not claim any payment for stages 7 to 9.

16.  Clause 4.1 of the Consultancy Agreement provides:

“ Payment shall be made in 30 days upon presentation of Debit Note at completion of each stage of works.”

17.  Clause 6.1 provides:

“ The services mentioned in Section 2.0 may be terminated by one (1) month notice served by either party. If our services are terminated before completion of the work a fee will be payable on a pro-rata basis to be agreed upon termination.”

18.  Various drafts of the Schematic Design were produced by Threshold from March 2016 onwards but it underwent many revisions by Threshold in discussion with the client.

19.  Meanwhile, various plans required by law were submitted to the Buildings Department for approval under the relevant legislation.  The A&A building plans were approved by the Buildings Department on 5 May 2016.  The structural A&A proposals and drainage A&A proposals were approved on 3 and 16 June 2016 respectively.

20.  Separately, on around 13 June 2016, Threshold and Boost signed a supplemental agreement for consultancy services for the relocation of the existing escalator between B1/F and G/F (“Escalator Agreement”).  The total fee for Threshold was $100,000 payable as follows:

Stage	Description	%	Amount (HK$)
1	Upon confirmation of appointment	5	5,000.00
2	Upon completion of Schematic Design	15	15,000.00
3	Upon submission of plans to Buildings Department	10	10,000.00
4	Upon approval of plans from Buildings Department	15	15,000.00
5	Upon completion of tender drawings and document	15	15,000.00
6	Upon completion of tender report	10	10,000.00
7	Upon completion of 50% of renovation works	15	15,000.00
8	Upon issue of Certificate of Practical Completion/Substantial Completion Certificate	10	10,000.00
9	Upon issue of Certificate of Making Good Defects/Defects Rectification Certificate	5	5,000
	Total	100	100,000.00

21.  Payment for stages 1 to 5 had been made by Boost without dispute.  Included in this action is Threshold’s claim based on its debit note for stage 6 which was issued but unpaid.  There is no claim for fees for stages 7 to 9 of the Escalator Agreement.

22.  In August 2016, Threshold produced the Schematic Design Proposal (Rev. F) for the project.  This revision was finally approved by Boost, and Threshold was notified on 20 August 2016.

23.  On 12 September 2016, Threshold sent a set of tender drawings which related to the Main Contract for A&A works to Boost (see §76 below). 

24.  On 6 October 2016, Threshold issued its tender report under the Escalator Agreement.

25.  On 13 October 2016, Threshold sent draft façade drawings to Boost for comment.  On 14 October 2016, Threshold sent the Detailed Design (“DD”) drawings package to Boost for their comment and approval.  The DD E&M drawings were also sent to Boost for comment the following day.  Thereafter Boost provided comments and Threshold responded, making revisions to the plans as appropriate.

26.  Separately, on 27 October 2016, the parties signed another supplemental agreement in relation for the replacement or overhaul of the existing chillers (“Chiller Agreement”).  The total fee for Threshold was $172,500 payable as follows:

Stage	Description	%	Amount (HK$)
1	Upon completion of Feasibility Study Report	37.68	65,000.00
2	Upon completion of NSC tender drawings related specification and Schedule of Rates	22.32	38,500.00
3	Upon completion of Tender Report	10	17,250.00
4	Upon completion of 50% of renovation works done by NSC	15	25,875.00
5	Upon issue of Certificate of Practical Completion/ Substantial Completion Certificate of Main Contract	10	17,250.00
6	Upon issue of Certificate of Making Good Defects/Defects Rectification Certificate	5	8,625.00
	Total	100	172,500.00

27.  Threshold issued two debit notes covering payment under stages 1 to 3 of the Chiller Agreement, which Boost has refused to pay.  These sums form part of Threshold’s claim in this action.  Threshold makes no claim for payment under stages 4 to 6 of the Chiller Agreement.

28.  On 2 November 2016, Threshold issued its tender report pursuant to the Chiller Agreement.

29.  On 7 November 2016, the intended tender structure for the general renovations was altered.  The parties agreed to combine the Main Contract for A&A works and the Sub‑contract for Interior Fitting‑out works into one tender, with the façade works becoming the subject of a separate sub‑contract tender.

30.  Boost continued to give comments and raise queries on the drawings prepared by Threshold, in particular at two meetings on 12 and 19 December 2016 respectively.  The DD drawings were revised and information and explanations were provided by Threshold to Boost from time to time. 

31.  Threshold also obtained approval from the Buildings Department for the Building A&A Amendment, Drainage A&A Amendment and Structural A&A Amendment on 9 November, 9 December and 30 December 2016 respectively.

32.  On 6 January 2017, through the quantity surveyor it engaged for the renovation project, namely, K C Tang Consultants Ltd (“K C Tang”), Boost issued invitation to 6 construction firms to submit tender for the Main Contract for A&A Works (including the Interior Fitting‑out Works).[1]  Four tender addenda dated 11, 19, 19 and 20 January 2017 respectively were issued by Threshold in response to queries raised by the tenderers.  By the tender deadline of 26 January 2017, 6 tenders were received, and 4 were selected for analysis.  Thereafter there were 3 tender interviews with the tenderers.  On around 2 March 2017, Threshold received from Boost the tenderers’ technical submission.

33.  Meanwhile, on 17 February 2017, Boost issued a letter to Threshold complaining that certain details and material samples were not ready prior to the tendering.  It stated that the renovation work was already behind “the agreed milestone dates” and warned Threshold to address the issues and re‑submit a realistic proposal and programme to complete the project on time.  Threshold replied by a detailed letter dated 28 February 2017 refuting Boost’s complaints and allegations.

34.  On 10 and 13 March 2017, Threshold completed its tender report on the Main Contract and on the Façade Sub‑Contract respectively.

35.  By letter dated 24 March 2017 Boost asked Threshold to review a list of shopping arcade provisions that Boost required which might affect the scope of works, and to update the tender drawings as necessary.

36.  On 29 March 2017, Threshold replied, stating that the proposed changes would require additional resources to make substantial revisions to the set of tender drawings already issued on 6 January 2017 and that Threshold was not obliged under the Consultancy Agreement to complete those changes.  Threshold further raised the issue of outstanding payments due under the agreements and asked Boost to settle them immediately.

37.  In the end, Boost did not award the Main Contract for A&A works (including the Sub‑contract for Interior Fitting‑out works) to any of the tenderers who responded in January 2017.  Instead, without Threshold’s knowledge, in early April 2017, Boost re‑issued the invitation to tender to a firm called Kawin Interior Contracting Co., Ltd (“Kawin”); Kawin submitted its tender for the Main Contract A & A Works; and on 13 April 2017 Boost awarded the contract to Kawin.

38.  I should mention that there was a dispute whether the invitation to tender had already been sent to Kawin in January 2017 in parallel with the other tenderers.  It seems to me the inherent probabilities based on the surrounding circumstances are that Kawin was approached only in late March or early April 2017 when Boost decided not to accept the then existing tenders.  That is why Kawin only submitted a bid in April 2017.  The reference to tender documents of earlier dates in Boost’s letter awarding the contract to Kawin probably resulted from the fact that the same tender documents were provided to Kawin without being re‑dated.  Mr George Chan (“Mr Chan”), Boost’s subsequent project manager, said after a long pause that it was January 2017 when Kawin was invited to tender but later changed his evidence to April 2017.  In this regard he seems to have been thoroughly confused about the dates.

39.  On 24 April 2017, Kawin sent a Form BA10 (Notice of Appointment of Registered Contractor, Notice of Commencement of Building Works or Street Works and Undertaking by Registered Contractor) and Supervision Plan (with Part IV — the part for Registered Contractor — filled in) to Threshold and asked Threshold to sign and submit it to the Buildings Department.[2] The form, however, did not state Kawin, but a firm called “Vesta Engineering and Consulting Ltd” (“Vesta”), to be the registered contractor.  Further, the form was incomplete as it omitted information about the Buildings Department’s consent for commencement of works, which in fact had not been obtained.

40.  On 28 April 2017, Threshold wrote to Boost stating they had received the Form BA10 from Vesta but were unable to move on to the next stage “due to the substantial amount of long overdue payments” for previous stages of services completed.  Notwithstanding that letter and despite that Boost had not paid the outstanding amounts, on 17 May 2017 Threshold submitted on behalf of Boost a Form BA8 (Application for Consent to the Commencement and Carrying out of Building Works or Street Works) and a Supervision Plan (with Parts I & II — the parts for the Authorised Person and Registered Structural Engineer — filled in, together with Part IV filled in by Vesta) to the Buildings Department.

41.  On 5 June 2017, Threshold wrote to Boost, advising that a number of documents were required from the demolition contractor for commencement of demolition works.  On 7 June, Threshold told Boost that the Buildings Department required, inter alia, a valid certificate from the registered contractor.  Boost responded that they would follow up with Kawin.

42.  By letter dated 21 June 2017, Threshold reminded Boost that a number of overdue fees were outstanding, stating that if the overdue payments were not settled by 4 July 2017, they would invoke the termination procedure under clause 6 of the Consultancy Agreement.

43.  In response, by letter dated 27 June 2017, Boost stated that they had not made the payments in question because of their dissatisfaction with Threshold’s services as outlined in Boost’s letter of 17 February 2017 and that Threshold had not attempted to remedy the situation but had discontinued all consultancy services since 28 February 2017. Accordingly, Boost gave notice to terminate under clause 6 of the Consultancy Agreement to terminate Threshold’s appointment with one month’s notice.

44.  On 5 July 2017, Ms Au wrote to the Buildings Department stating that as the site activities relating to the A&A works in Concord Square were no longer under her control, she would cease to be the Authorised Person with immediate effect.

45.  On 12 July 2017, Threshold’s solicitors issued a letter to Boost, demanding payment of outstanding fees and reimbursements in the total sum of $1,060,850.

46.  On 9 August 2017, Boost through its solicitors sent a cheque to Threshold for $42,600 for payment of two debit notes reimbursing Threshold for certain fees paid to the Buildings Department in respect of the project.

47.  On 11 August 2017, Boost entered into a new consultancy agreement with an architect’s firm called L&N Architects Ltd (“L&N”).

48.  On 28 August 2017, Boost’s solicitors replied to Threshold’s solicitors stating Boost’s dissatisfaction with Threshold’s services.  The letter stated that with the help of the new Authorised Person, Boost would investigate and consider whether Threshold had actually completed the works set out in the 5 unpaid debit notes.  It also stated that Threshold’s breaches had caused delay to the renovation and that Boost would claim against Threshold for the loss caused, to be set off against Threshold’s fees.

49.  On 29 August 2017, L&N applied to the Buildings Department for consent for the commencement of works, which was granted on 26 September 2017.  On 3 October 2017, L&N formally instructed Kawin to commence works.

50.  Threshold commenced this action against Boost on 12 October 2017.

51.  The Buildings Department’s inspection of the A&A works in Concord Square was completed on 5 May 2018.

C.     The parties’ pleaded cases

52.  Threshold’s case is simple.  It contends that prior to termination, it had performed the Consultancy Agreement up to stage 6 in the table in §14 above, the Escalator Agreement up to stage 6 in the table in §20 above, and the Chiller Agreement up to stage 3 in the table in §26 above, and was entitled to the relevant stage payments accordingly, which Boost failed to pay.

53.  In its amended defence and counterclaim, Boost contends that Threshold had only “partially completed” the works invoiced under the relevant debit notes.  This plea was abandoned by Boost in opening at trial. All that is left by way of defence is the set‑off against Boost’s counterclaim.  As a result, the trial is confined to the trial of Boost’s counterclaim on which it bears the burden of proof.  The order of speeches and evidence at trial was also adjusted in accordance with Order 35 rule 7(6).

54.  Boost contends that there were implied terms under the three agreements that Threshold would carry out its services with reasonable care and skill, proceed with its work diligently and carry out its services within a reasonable time, and that its work products would be fit for their purpose.  It is further contended that Threshold owed a duty of care to Boost to perform its work in accordance with the standard of a competent consultant in the role undertaken by Threshold so as to ensure that the project would be completed properly and within reasonable time.

55.  Threshold’s breaches of the agreements or of its duty as alleged by Boost are as follows:[3]

(1)  Threshold failed to provide a proper detailed design (a) for the Main Contract works by early September 2016, and (b) for both the Main Contract for A&A works and the Sub‑contract for Interior Fitting‑out works by 18 November 2016.  Further, Threshold’s DD drawings were not fit for the purpose of tendering in that they did not contain sufficient details and, as a result, Boost could not assess whether the design actually worked in reality and the tenderers could not price the relevant works and Boost could not assess their costs with reasonable certainty. Consequently, Boost could only award the tender for the Main Contract and Interior Fitting‑out works to Kawin on 19 April 2017.[4]

(2)  Threshold refused or failed to provide any consultancy service after 29 March 2017.  Kawin could not commence work after the award of the tender on 19 April 2017.  Boost had to terminate the Consultancy Agreement on 27 June 2017 and was not able to engage another consultant (ie L&N) until 11 August 2017 such that the internal structural alteration and E&M works could only proceed on about 3 October 2017.[5]

(3)  The structural plan no. ST‑03 prepared by Threshold was defective, resulting in abortive costs in the sum of $88,534.[6]

(4)  The general building plans prepared by Threshold were defective in relation to the headroom of the escalators between B1/F and G/F, resulting in abortive costs of $188,173.[7]

(5)  Threshold failed to submit structural details for the new glass wall at 1/F and 2/F facing the atrium void, resulting in additional costs of $406,785.[8]

(6)  The headroom of the common arcade on 1/F under Threshold’s design was too low, leading to abortive costs of $100,000.[9]

56.  The breaches in paragraphs (1) and (2) above are said to have caused delay to the completion of the project by about 10.5 months, which Boost managed to reduce to 8 months.  Boost alleges that it has suffered loss of rental income as a result in the sum of $6.9m per month, and claims $55.2m in damages from Threshold.

57.  The breaches in paragraphs (3) to (6) above are said to have caused Boost to incur additional or abortive costs in the amount of $783,492 (being the sum of $88,534, $188,173, $406,785 and $100,000).  Boost claims this sum as damages from Threshold.

D.    Alleged breaches causing delay

D1.  General

58.  Boost’s case of breaches by Threshold causing delay seems to me to be crude and based largely on assumptions.  The critical averments, seriously lacking in particulars, are set out in four paragraphs of the Amended Defence and Counterclaim (not pleaded by Boost’s trial counsel) as follows:

“ 24. According to TCL/Ms Au’s own programme dated 8 August 2016 (which represents the reasonable time for the Project’s various tasks as accepted by TCL/Ms Au then), they should:

(1) provide a proper detailed design for the Main Contract works (i.e. the internal structural alteration works, including the E&M works) by around early September 2016, so that the tender documents thereof would be ready by 3 October 2016, so that the award of the Main Contract would be made by 23 November 2016, so that the internal structural alteration works and the E&M works could be commenced by 24 November 2016; and

(1A) provide a proper detailed design (including the obtaining of the BIL’s approval) for both the Main Contract works and Interior Fitting‑out work Sub‑contract works by 18 November 2016, such that

(2) BIL would be able to award the tender for interior fitting‑out works by 16 February 2017, such that

(3) the Project would be completed (by reference to the completion of BD inspection) by 30 August 2017.

25. In breach of the Agreements’ implied terms and TCL’s duty of care:-

(1) TCL failed to provide a proper detailed design (a) for the Main Contract works by around early September 2016, and (b) for both the Main Contract and Interior Fitting‑out Work Sub‑contract works by 18 November 2016. In particular, without prejudice to the generality of the foregoing, TCL’s detailed design drawings were not fit for the purpose of tendering in that they did not contain sufficient details and as a result:

(a) BIL could not assess whether the design actually worked in reality;

(b) The future tenderers could not price the relevant works and BIL could not assess the costs of them with reasonable certainty.

(2) Consequently, BIL was only able to award the tender for the Main Contract works and the interior fitting‑out works to a contractor named Kawin Interior Contracting Co Ltd (‘Kawin’) on 19 April 2017.

26. Further or alternatively, in breach of Clause 2 of the Main Agreement (which was also incorporated into the Escalator Agreement and the Chiller Agreement by Clauses 1 and 3 thereof), the Agreements’ implied terms and TCL’s duty of care:-

(1) Despite repeated requests and demands, TCL refused or failed to provide any consultancy services for the Project since about 29 March 2017. BIL was forced to manage the Project by itself thereafter.

(2) After the award of tender on 19 April 2017, Kawin could not commence their works as there was no authorised person/architect to supervise/monitor the construction works.

(3) Consequently, BIL had no choice but to terminate TCL’s services pursuant to Clause 6 of the Main Agreement on or about 27 June 2017 and looked for a replacement consultant. It was not until 11 August 2017 that BIL was able to engage L&N Architect Ltd (‘L&N’) which eventually obtained the consent from the Buildings Department such that the internal structural alteration and E&M works could proceed on or about 3 October 2017.

   26A. By that time, the Project’s progress had been delayed for about 10.5 months (i.e. from 24 November 2016 to 3 October 2017).”

59.  I propose to divide the analysis of this claim into the following issues:

(1)  the status of the time estimates in the project programmes;

(2)  whether Threshold failed to provide DD drawings for the Main Contract for A&A works by around early September 2016;

(3)  whether Threshold failed to provide DD drawings for both the Main Contract for A&A works and the Sub‑contract for Interior Fitting‑out works by 18 November 2016;

(4)  whether Threshold had refused or failed to provide any consultancy services since 29 March 2017; and

(5)  whether Boost has proved the causation of the alleged loss of rental income by the alleged breaches.

D2.  Project programmes

60.  It cannot be seriously disputed that Threshold had to perform its obligations under the Consultancy Agreement with reasonable care and skill, and to perform them within a reasonable time.  In Hudson’s Building and Engineering Contracts (13^th ed), §6-063, it is stated:

“ If no date is specified in the contract for the performance of obligations, or if a contractual date for performance has lapsed due to prevention or breach of the other party, or as a result of election to keep the contract in being (that is, waiver), there will be an implied requirement to perform the obligation within a reasonable time. What constitutes a reasonable time is primarily a question of fact and must depend on all the circumstances which might be expected to affect the progress of the works. ...”

61.  The Consultancy Agreement did not lay down any timetable; nor did Threshold give any warranty as to time.  Clause 1.7 provides:

“ 1.7 The expected timeline of the renovation works has yet to be advised by the Client. The estimated timing for completion of each stage of work is included in the proposed preliminary project programme rev. F.”

There is no stipulated completion date, and the times specified in the project programmes were nothing more than estimates.

62.  There is no dispute that the programme attached to the Consultancy Agreement was in fact Rev. G, not Rev. F. I shall refer to this programme as the “Programme (Rev. G)”.  It is dated 11 January 2016 and estimates, inter alia, that the project from the beginning to the end of construction would take slightly over 22 months.

63.  Included within Threshold’s scope of services under the Consultancy Agreement was the preparation and updating of the master project programme.  This was specified as part of Threshold’s task under the Schematic Design Stage (clause 2.2.3) and the DD and Tender Documentation Stage (clause 2.4.6, which states: “Update the master programme based on the finalised design”).  As Mr Chan accepted, it was expected that as the renovation project progressed, the programme would be changed from time to time.

64.  In the course of the project Threshold in fact updated the programme a number of times.  After the version “Rev. 3” dated 8 August 2016, there were Rev. 4, Rev. 5, Rev. 5a, Rev. 5b, and finally Rev. 6 dated 3 January 2017.

65.  In its counterclaim Boost relies solely on the document “Preliminary Project Program (Option A Phase I — B1/F, G/F & 1/F only) (DRAFT)” dated 8 August 2016 and takes the estimated dates there as some kind of immutable benchmark.  As it was marked “Rev. 3”, I shall refer to it as the “Programme (Rev. 3)”.  At that time, as mentioned above the plan was that the principal renovation works would be covered by two separate tenders: (1) the Main Contract for A&A works, which were primarily the structural works based on the building plans submitted to the Buildings Department; and (2) the Sub‑contract for Interior Fitting‑out works, which essentially represented the rest of the renovation works, other than specific areas to be covered by special sub‑contract tenders, namely, the escalators and the chiller plant.  Accordingly, the Programme (Rev. 3) gave separate estimates for the tender for the Main Contract for A&A works and the tender for the Sub‑contract for Interior Fitting‑out works.  It estimated, inter alia, that:

-  the Schematic Design stage would take 179 days, from 6 March to 22 August 2016

-  the DD stage would take 88 days, from 23 August to 18 November 2016

-  the Tender Documentation (Main Contract for A&A works) stage would take 181 days, from 27 May to 23 November 2016, and that the tender documents would be finalised on 3 October 2016, with tender award by 23 November 2016

-  the Tender Documentation (Sub‑contract for Interior Fitting‑out works) stage would take 90 days, from 19 November 2016 to 16 February 2017, and that the tender documents would be finalised on 29 December 2016, with tender award by 16 February 2017

-  the Construction stage would take 397 days, from 30 July 2016 to 30 August 2017.

66.  Boost contends that as a result of Threshold’s breaches, the project’s progress was delayed for about 10.5 months — calculated as the period from 24 November 2016 (the commencement of the period for internal structural alteration works under the Programme (Rev. 3)) to 3 October 2017 (the date when Kawin was formally instructed by L&N to commence works).  Boost says that the new team worked hard and managed to complete the inspection by the Buildings Department on 5 May 2018.  Accordingly, it is said that there was a delay of completion by 8 months (from the estimated date of 30 August 2017 under the Programme (Rev. 3) to 5 May 2018).

67.  The alleged breaches of Threshold causing delay have been pleaded by Boost in a most cursory way.  The vague and general allegations relate mainly to 3 periods:

(1)  First, it is said that Threshold failed to provide proper DD for the Main Contract for A&A works by early September 2016 and for the Sub‑contract for Interior Fitting‑out works by 18 November 2016.  The DD drawings that were provided were not fit for the purpose of tendering in that they did not contain sufficient details and this led to a delay in issuing the tender which was issued on 6 January 2017.  There was therefore, accordingly to Boost, a delay of the issue of tender from 3 October 2016 (i.e. tender issue date for the Main Contract for A&A works under the Programme (Rev. 3)) to 6 January 2017.

(2)  Then it is said that Threshold’s breaches in relation to the drawings resulted in Boost not being able to award the tender until 13 April 2017[10] when it was awarded to Kawin.  There was therefore, accordingly to Boost, a delay of the tender award from 23 November 2016 (tender award date for the Main Contract for A&A works under the Programme (Rev. 3)) to 13 April 2017.

(3)  It is also said that Threshold’s refusal or failure to provide any consultancy service after 29 March 2017 resulted in the new team only being able to commence the internal structural alteration and E&M works on 3 October 2017.  There was, therefore, accordingly to Boost, a delay of the commencement of construction works from 24 November 2016 (commencement of A&A works under the Programme (Rev. 3)) to 3 October 2017.

68.  It seems to me that Boost’s exclusive reliance on the Programme (Rev. 3) is fundamentally flawed.  So far as Threshold and Boost are concerned, the purpose of the project programme was to show, as stated in the contract, the estimated timing for completion of each stage of work, and as such, the programme was subject to updating and revision, as in fact happened.  The programme does not set out any contractually warranted dates.  As Mr Chan accepted, none of the dates Boost relied upon in its counterclaim was stipulated in the Consultancy Agreement, and those estimated times and dates were subject to change.  There does not seem to me to be any basis for saying that the Programme (Rev. 3) sets out certain immutable milestone dates which Threshold warranted to be met or that the contract required that the DD drawings for the Main Contract for A&A works and Sub‑Contract for Interior Fitting‑out works should be finalised by early September 2016 and by 18 November 2016 so that the contracts would be awarded by 23 November 2016 and 16 February 2017 respectively as estimated in the Programme (Rev. 3).

69.  In fact, in the latest programme (Rev. 6) dated 3 January 2017, which was presumably prepared after the tender drawings were finalised pursuant to clause 2.4.6 of the Consultancy Agreement, the tender award of the Main Contract was estimated to be done by 16 March 2017 and the construction was estimated to be completed by 14 November 2017 (which would be approximately 22 months from the execution of the Consultancy Agreement, as estimated in the Programme (Rev. G) annexed to the agreement).

70.  Boost argues that the Programme (Rev. 3) represented what Threshold considered to be reasonable time estimates at that time.  Given the time taken in the earlier stages and what was already known, each update of the programme would naturally represent what Threshold considered achievable by juggling with the necessary tasks and any “float time” available. But it does not follow that taking longer than such estimates hoped to be achieved necessarily means that one has failed to perform an obligation within a reasonable time.  What was an objectively reasonable time still depends on all the circumstances.

71.  Even the Programme (Rev. G) attached to the Consultancy Agreement did not stipulate any dates with contractual force, though it might be said it would reflect the expectation of the parties at the time of contract.  From that programme, one can see that the Schematic Design stage actually took much longer (168 days compared to the estimated 78 days). More time was taken presumably because there were numerous exchanges back and forth between Threshold and Boost on the design, and no criticism has been raised by Boost in that regard in this action.  But there was inevitably some effect on the progress.  Indeed, in cross‑examination Mr Chan agreed that one should add 3 months to the expected completion date in the Programme (Rev. 3) because of this factor.  Also, the Programme (Rev. G) estimated the DD stage to take 133 days whereas the actual time taken from the approval of the Schematic Design (20 August 2016) to the issue of tender (6 January 2017) was 139 days, only 6 days more.

72.  Further, the evidence suggests that the dismantling works of the existing fittings and finishes, which was contracted out by Boost to a contractor, began only on 10 September 2016 (as Boost had to wait until all the tenants had vacated) and took a long time.  The dismantling works and clearing out of the site were not substantially done until late November 2016.  This would also have an effect on the programme for finalising the DD and tender drawings (as there were actual conditions that needed to be checked after the site was cleared).

73.  As stated above, the Programme (Rev. 3) was premised on the two contracts, namely, the Main Contract for A&A works and the Sub‑contract for Interior Fitting‑out works, being separately tendered and awarded.  On around 7 November 2016, however, it was decided and agreed between Threshold and Boost that the two contracts would be combined in a single tender, and the façade works would be carved out for a separate tender, as reflected in the programme from Rev. 5 onwards.  (There were throughout separate tenders for the chiller and escalator contracts so they are not relevant for present purposes.)  This seems to me to reflect a fundamental change of the structure of the project programme and the basis of the estimated times in the programme.

74.  In the Programme (Rev. 3), the tender dates for the Sub‑contract for Interior Fitting‑out works were significantly later than for the Main Contract for A&A works.  The date for finalising the tender document for the Sub‑contract for Interior Fitting‑out works was 29 December 2016.  Yet Boost has complained about delay of provision of DD drawings without distinguishing whether they were for the Main Contract for A&A works or the Sub‑contract for Interior Fitting‑out works.  In fact, it appears from the evidence that many of Boost’s comments, queries and criticisms concerned the drawings for the Interior Fitting‑out works.  On this basis, the tender issue date was only deferred for 8 days even according to the Programme (Rev. 3), from 29 December 2016 to 6 January 2017.

D3.  Alleged failure to provide DD drawings for Main Contract by around early September 2016

75.  Based on the estimate in the Programme (Rev. 3) that the tender document (Main Contract for A&A works) would be finalised by 3 October 2016, Boost alleges that Threshold was obliged to provide the DD drawings for the Main Contract works by around early September 2016 and that it failed to do so.  Boost contends that Threshold first provided such DD drawings on 14 October 2016.

76.  In fact, it transpired from the evidence that certain tender drawings had already been sent to Boost on 12 September 2016. Ms Au explained that those tender drawings were for the A&A works under the Main Contract and the DD drawings sent to Boost in mid‑October 2016 were a package focussing on the Interior Fitting‑out works.  This evidence is in my view credible:

(1)  Boost’s own email of 19 October 2016 to Threshold raised a question on the rationale of the changes in the DD drawings package sent to Boost compared with “the tender drawings received on 12 Sep 2016”, which shows that Boost did in fact receive tender drawings from Threshold on that date, even though Boost has not made discovery of these drawings or the cover letter/email from Threshold or included them in the trial bundles.

(2)  There was no email from Boost at all chasing for tender drawings for the A&A works under the Main Contract and no email at all complaining that because no such drawings had been produced, Boost could not issue the tender for the Main Contract for A&A works by 3 October 2016.

(3)  A number of disclosed drawings sent by Threshold to Boost later, on or after 14 October 2016, contain notes referring to “Main Contract” and an earlier edition of 12 September 2016.  In particular, the drawings numbered with the simple prefix “A” appear to be Main Contract tender drawings (see e.g. Threshold’s email of 3 December 2016 to Boost attaching Main Contract tender drawings which referred to an earlier edition of 12 September 2016).

(4)  Although Boost’s counsel challenged Ms Au in cross-examination on the basis that no tender drawings had been sent by Threshold to Boost before 14 October 2016, this was not in fact Boost’s own evidence.  Mr Chan said in his witness statement (at §20):

“ Between 20 August 2016 and 14 October 2016, I cannot recall if Threshold/Ms Au submitted any Detailed Design/tender drawings for the Main Contract. Even if they did, they must have been very rough and could not be properly treated as any Detailed Design/tender drawings.”

This statement is highly unsatisfactory, viewed in light of the allegations being made by Boost, but it means at least that there was no basis for Boost to put to Ms Au that there were no tender drawings submitted before 14 October 2016.  The second sentence quoted above was speculative and without basis.  Further, Boost has disclosed no contemporaneous correspondence showing any adverse comment it had given on those earlier tender drawings.

77.  I accept Ms Au’s evidence on this matter. In any event, given the above matters including especially Boost’s own email of 19 October 2016, there is at least a very large and serious doubt how it can be said that Threshold had failed to provide DD or tender drawings for the Main Contract by around early September 2016.  The burden of proof lies on Boost, and I find that it has failed to establish the plea that Threshold failed to provide the DD drawings for the Main Contract for A&A works by around early September 2016.

78.  Further, as already mentioned, by 7 November 2016 it had been decided that the Main Contract for A&A works and the Sub‑contract for Interior Fitting‑out works would be tendered together.  There was no longer any question for the Main Contract to be awarded by 23 November 2016. Accordingly, in subsequent project programmes including Rev. 5, Rev. 5a, Rev. 5b and Rev. 6, there was no separate estimated date for Tender Documentation for the Main Contract alone.  In Rev. 6, the estimated time for the award of tender for Main Contract and Interior Fitting‑out was 3 to 16 March 2017.

D4.  Alleged failure to provide DD drawings for both the Main Contract works and the Interior Fitting‑out works by 18 November 2016

79.  Boost alleges, again by reference to the Programme (Rev. 3), that Threshold was obliged to provide the DD drawings for both the Main Contract A&A works and the Interior Fitting‑out works, including obtaining Boost’s approval, by 18 November 2016, and that Threshold failed to do so. 

80.  There is in fact no dispute that on around 14 October 2016, Threshold sent the DD drawings to Boost.  Rather, the crux of the allegation is that they were not fit for the purpose of tendering in that they “did not contain sufficient details” and that, as a result, Boost could not assess whether the design would work, future tenderers could not price the relevant works and Boost could not assess the costs with reasonable certainty.  What really did not contain sufficient details was Boost’s plea, and no indication of what its case was emerged until around 18 October 2019, less than 6 weeks before the trial, in a witness statement of Mr Chan filed on the deadline of an unless order.  Such lateness in disclosing Boost’s case was in my view highly unsatisfactory and has apparently led to inadequate discovery being made of relevant documents.  I regret to have to say that this kind of conduct in litigation is to be deprecated (though I should make clear that, in saying this, I attach no blame to the present solicitors and counsel for Boost who apparently only began to represent Boost in around October 2019).  It seems to me that to minimise unfairness to Threshold, Boost’s pleading and Mr Chan’s witness statement must be most strictly construed so that any allegation not falling within the statement, and anything in the statement not falling within the four corners of the pleading, should be ignored.

81.  Mr Chan is a qualified architect, not an Authorised Person.  But his evidence suffers drawbacks in several respects.  He was a project manager of Boost but was engaged mainly in relation to group projects in Shanghai.  He became involved in the renovation project of Concord Square only in July 2016 and even so, between July 2016 and May 2018 he was mainly stationed in Shanghai and was in Hong Kong only occasionally.  He made his first ever visit to the site only in October 2016, when the existing fittings were being dismantled.  Boost’s entire case on this topic is based on his evidence, with reference to the drawings, the email exchanges and meeting notes at the time.  But as Mr Chan accepted, he only read parts of Threshold’s drawings, especially not the E&M drawings or structural drawings which he left to his colleagues.  Further, he accepted that some of his comments on the drawings were based on his own requirements rather than statutory standards or the requirements of actual work procedures, but in his evidence he did not distinguish between them.

82.  It will be seen that between October and December 2016 Boost gave comments and raised queries on the DD drawings and Threshold responded by providing information and revising the drawings.  The drawings eventually formed the tender drawings in the tender issued on 6 January 2017.

83.  Another serious difficulty in Boost’s way is that no expert evidence whatsoever has been adduced on the question whether the drawings were really not fit for tendering purposes as alleged.  Boost says that Threshold had in correspondence at the interlocutory stage contended that whether there were the alleged breaches was a question of fact.  This is correct as far as it goes.  However, the details of Boost’s allegations of deficiencies of the drawings were unknown to Threshold or the court at that time, there being no particulars given in the pleadings.  Furthermore, the entire burden of proof of any deficiencies lies on Boost, and it is for Boost to adduce the necessary evidence for its purpose.  Threshold has no burden to call expert evidence to disprove anything.  In any event, Boost never suggested calling expert evidence on the deficiencies but only on programming and delay. In the end, the only witness from Boost on this aspect is Mr Chan.  He was not, nor could he have been, called to give evidence as an expert.  In Jackson and Powell on Professional Liability (8^th ed), para 9‑106, it is stated:

“ ... in most cases in which construction professionals are alleged to have fallen below the required standard of skill and care, the court will be assisted by expert evidence as to either or both: 1. matters of scientific or technical fact ...; 2. the standards ordinarily observed in his profession, including the existence of schools of thought, bodies of opinion or of recognised practices within the profession. Indeed, save in those (relatively rare) cases in which the issue of breach of duty can properly be decided as a matter of ordinary common sense, expert evidence that the reasonably competent professional would not have committed the act or omission complained will be essential for a finding of breach of duty ...”

84.  In approaching the complaints enumerated in Mr Chan’s witness statement, therefore, it is necessary to be careful to exclude and ignore what is in truth opinion, as opposed to matters of primary facts.  There are numerous instances where, in my view, in the absence of expert evidence one cannot properly conclude that Threshold’s drawings were defective as alleged.

85.  There are also fundamental problems with Boost’s case that the alleged deficiencies caused delay in the project’s completion.  As stated above, Threshold submitted the tender drawings for the Main Contract for A&A works on 12 September 2016.  Boost did not plead and gave no proper evidence of any problem with these drawings.

86.  Even if Threshold caused a delay in the tender of the Main Contract for A&A works, there is nothing to show that this would cause a delay in the entire project even on the basis of the Programme (Rev. 3), for under that programme the Sub‑Contract for Interior Fitting‑out works was to be separately tendered and that was to take place considerably later.  That part of the tender was eventually issued only 8 days later than the estimate in the Programme (Rev. 3).  In my view, one cannot simply assume from the fact that the A&A works did not start earlier than the Interior Fitting‑out works as envisaged in the Programme (Rev. 3) that the entire project was thereby delayed.

87.  Further, Threshold did in fact submit the DD package to Boost on 14 October 2016, even before the date specified in Programme (Rev. 3) of 21 October 2016.  What happened then was that there were many queries and comments raised by Boost.  Many matters raised by Boost were promptly responded to by Threshold.  Threshold also issued several revised sets of the drawings (on 1 November, 18 November, 3 December, 8 December and 22 December 2016 respectively), with much toing and froing between Threshold and Boost.  Boost’s review was done by circulation among its various departments, which took time.  As a result the drawings were only finalised and formed part of the tender drawings for issue of tender on 6 January 2017.  Compared with the tender issue date for Interior Fitting‑out works under the Programme (Rev. 3), namely, 29 December 2016, however, there was only a slippage of 8 days.

88.  In these circumstances, Boost’s contention, illustrated by a simple diagram it put forward suggesting that any period of delay in the commencement of the A&A works beyond 24 November 2016 automatically translated into a corresponding equivalent delay in the completion of all the works at the end, seems to me overly simplistic and unacceptable.  Boost has not established that the alleged delay had a knock-on effect causing delay in later stages and in particular in the completion of the project.  Furthermore, the actual works according to Kawin’s contract would only take 153 days and had to be completed by 12 September 2017.[11]  Mr Chan accepted that if the works started in April 2017 they could have been completed by 12 September 2017.  The fact that inspection by the Buildings Department was not achieved by that date appeared principally to be due to Kawin’s inability to commence work.  In addition, even as at late August 2017, the renovation was expected to be completed by February 2018, according to Boost’s solicitors’ letter of 28 August 2017.  The cause of the further delay to May 2018 has not been explained; nor has it been explained how it could be attributed to Threshold.

89.  As a matter of fact, the tender drawings and specifications prepared by Threshold were used for the purpose of the tender including the preparation of the schedule of rates.  They were incorporated by the quantity surveyor, K C Tang, into the tender documents which were issued to the tenderers.  There is no evidence whatsoever from K C Tang to say that the drawings were not fit for their purpose even though they were used in the tender.  

90.  Four tender addenda were issued between the tender issue date and tender return date.  Boost relied on this as support for its criticisms of Threshold’s drawings but there is in my view no proper basis for doing so.  It is not unusual for tender addenda to be issued.  They can be issued for various reasons and the fact that tender addenda are required in no way suggests that the original tender drawings are defective or have been negligently prepared.  One of the tender addenda issued in fact related only to quantity survey.  As Mr Chan admitted, none of them related to his comments on the drawings or requests for details.  There is nothing to show that the longer time taken during the tender analysis stage than the estimated time in the programme was due to Threshold’s fault.

91.  Boost further submitted that the lack of details in the tender drawings led to the tenderers returning very high prices in order to reduce their risks in light of the uncertainty, and that this caused a deadlock in the contract negotiation process.  In my view this contention is not open to Boost.  Not only does it lie outside the pleading on any fair reading, but it is also unsupported by any proper reliable evidence.  There is nothing adduced other than a bare and general assertion in Mr Chan’s witness statement.[12] The tender returns are not in evidence and there are no specifics at all about which parts of the tender returns were priced very high as alleged.  There is no evidence from any of the tenderers to say that they had priced high because of the alleged uncertainty.  The delay caused by Boost’s own decision not to accept any of the original tenders but instead to invite Kawin to tender cannot, in my view, be attributed to Threshold.

92.  Furthermore, the drawings were eventually used by the contractor for the purpose of carrying out the actual renovations.  The letter of award of the contract to Kawin expressly stated that the works comprised the carrying out of A&A works as detailed in the tender drawings.  Boost’s case of unfitness for purpose is therefore in my view fundamentally flawed.

93.  Mr Chan raised a large number of comments and requests for information or details between early November 2016 and early January 2017.  Many of them, as concluded below, do not remotely show any breach of standards or duty on the part of Threshold.  But even if some of them do, there were so many other requests by Boost that dealing with them simply took time, and there would be nothing to prove that but for Threshold’s breach, the tender would have been issued earlier.  Be that as it may, in the rest of this section I shall discuss the numerous allegations belatedly raised in paragraph 25 of Mr Chan’s witness statement based on the exchanges between the parties in November and December 2016 up to early January 2017 in relation to the drawings.

94.  Paragraphs 25(7)(a), 25(12)(c), 25(14)(b), 25(16)(d) — sectional details of pipe ducts.  Boost commented in early November 2016 that there was no sectional detail to show the level of pipe ducts and their relationship with the structure, and that Boost could not therefore know the headroom for future shoppers walking below the pipe ducts.  Boost raised the issue again on 7 and 12 December 2016.  On 19 December 2016, Threshold accepted that a re‑design for the area of grid line 67 and ABCD on B1/F was necessary.  In my view this did not prove any breach of duty causing delay because:

(1)  These details concerning the Interior Fitting‑out works were provided by Threshold in revised drawings dated 22 December 2016, which was before the estimated time for finalising the tender document for the Interior Fitting‑out works under the Programme (Rev. 3), namely, 29 December 2016 (which was also the estimated date for finalising the tender document for the combined tender under the revised Programme such as Rev. 5, Rev. 5a, Rev. 5b and Rev. 6).

(2)  Boost’s counsel suggested that it should have been done by Threshold by early November 2016, but Ms Au disagreed, saying that this was part of what were known as combined services drawings which in Hong Kong should normally be done by the contractor as and when he ascertained the site conditions, although Threshold actually did it as far as possible upon Boost’s request; see also clause 7.3.1 of the Specification Preliminaries quoted in §134(3) below.  Ms Au also explained that the information was not required by the tenderers for pricing.  In the absence of expert evidence on professional standard and practice, I do not consider this court to be in a position to conclude there was a breach of duty.

(3)  Boost only said that it wanted this information to know the headroom for future shoppers, not (as pleaded) to see whether the design actually worked or to assess the cost.

(4)  Furthermore, as Ms Au explained, although dismantling work started on around 10 September 2016, it took a long time and the site during the dismantling was full of debris and the building services such that it was not possible, until quite late, in the site visit on 19 December 2016, to ascertain from inspection what was wanted and what was not wanted.  At that visit Ms Au accepted that the extraction duct relocation was not viable and had to be re‑designed, and a new layout was provided on 22 December 2016.

95.  Paragraphs 25(7)(b) & 25(14)(g) — MVAC system and location of air grilles.  Boost commented in early November 2016 that the drawings did not show the location of the air grilles of the air‑conditioning system and Boost could not know whether there would be too few or too many grilles at any particular location within the mall and therefore whether the MVAC would actually work.  Boost raised the issue again at a meeting on 12 December 2016.  In my view this does not show any breach of duty causing delay because:

(1)  The air grilles were a continuous one running along the light trough in the ceiling with air being emitted sideways, not located sporadically on the ceiling itself with air emitted downwards.

(2)  The location of the continuous air grilles as such was already in the architectural drawings of 18 November 2016 showing the ceiling (and possibly even earlier but I proceed on the basis of 18 November 2016).  In December 2016 Threshold simply added the length of the grille opening into the drawings in response to Boost’s comment.

(3)  I do not consider this was information that Boost needed to see if the MVAC would actually work.

96.  Paragraphs 25(7)(c), 25(9)(g), 25(10)(f) & 25(11)(e) — sectional details of staircases.  In early November 2016 Boost commented that there was no sectional detail of 3 internal staircases (two circular and one rectangular).  It is said that Boost could not know whether they would clash with the structural, MVAC and other systems and tenderers could not know how to price nor could Boost assess the item.  This was raised by Boost again in emails in late November 2016.  In my view this matter does not prove any breach causing delay because:

(1)  The sectional details were provided by Threshold at the latest by 2 December 2016.  Ms Au said the details were in fact in earlier editions of the drawing she referred to but unfortunately those earlier drawings were not before the court.  Given the way in which such a large number of allegations were raised by Boost at the eleventh hour I would not take the absence of the discovery against Threshold, but for present purposes I think I should proceed on the basis that the sectional details were provided by 2 December 2016.

(2)  Based on the existing plans obtained from the Buildings Department, Threshold had checked whether the proposed staircases within the shops would clash with existing structures such as a smoke vent duct, and found that there was a possible clash.  But Threshold agreed with Mark Leung, Boost’s then project manager, to leave the staircase in the drawings, pending Boost’s investigation as to whether there were tenants who wished to have such “duplex shop”.

(3)  The existing false ceiling at the site was only mostly dismantled by 23 November 2016 and only then could the clash between the proposed staircase and the MVAC system be confirmed.  Threshold then revised the drawing to have the relevant staircase moved to a different location.

(4)  In these circumstances there is no sufficient basis to conclude that what Threshold did fell below the standard of a competent architect.

97.  Paragraphs 25(9)(a), 25(10)(a) & 25(11)(a) — dimension of glass panels.  In late November 2016 Boost commented that there were no dimensions specified in the drawings for glass panels in general, and that Boost could not assess their appearance and future tenders could not know how to price and Boost could not know how to assess the item.  In my view this complaint fails because, as Ms Au explained in her evidence, the information was in fact already shown in a number of different plans from the outset which were cross‑referenced in the drawings.

98.  Paragraph 25(9)(b) — curved glass panels.  Boost commented in late November 2016 that there was no detail in relation to the curved glass panels to show whether they consisted of one curved segment or were divided into several smaller segments, which would affect cost.  This complaint also fails because, as Ms Au explained, the details of the curved glass panels were specified in the drawings, which contained short lines showing the joints, i.e. where particular pieces of glass began and ended.  Admittedly the lines were small (especially in the reduced copy of the drawings in the trial bundles[13]) and Boost could of course seek confirmation and clarification if it wished, but this does not mean that the original drawings were defective.  The information could also be seen from the elevation plans which showed whether the glass panels were of one piece or several pieces of glass.

99.  Paragraphs 25(9)(c), 25(10)(b) & 25(11)(b) — finish materials of exposed beams.  Boost commented in late November 2016 that there was no detail in the plans to show the finish materials of the exposed beams, which was relevant to price.  Ms Au accepted that in one drawing[14] she missed the finish of the cladding but the finish was specified for other places in other drawings.  In any event the details were incorporated into the tender drawings before they were issued.  In my judgment this matter does not prove a breach of duty causing delay to the completion of the project.  The finish of the beams was quintessentially an issue for Interior Fitting‑out, the tender for which was scheduled for 29 December 2016 under the Programme (Rev. 3).  Even if that could be taken as a benchmark, the slippage was only 8 days as the combined tender was issued on 6 January 2017.

100.  Paragraphs 25(9)(d), 25(10)(c) & 25(11)(c) — structural details for shop front.  Boost commented in November 2016 that there was no structural detail for the shop front.  The complaint in my view fails because:

(1)  Ms Au’s evidence which I accept is that structural details for the shop front were for the contractor to provide.  Clause 4.3.2 of the Specification Preliminaries in the tender stated: “The following parts of the Works shall be carried out by approved specialist sub‑contractors employed by the Contractor at his own expense: (a) Design, supply and installation of shop fronts ...”.

(2)  In closing submissions Boost tried to shift its case to complain that there were no shop front “design intention drawings”.  This is not permissible, as there was neither pleading nor witness statement to support it.  Anyway, Ms Au’s evidence was that Threshold did produce shop front design intention drawings and there was no clear evidence from Boost to the contrary.

(3)  Mr Chan did not explain why the structural details for the shop front were necessary for the tendering stage.  It was therefore not proved that lack of such details rendered the drawings unfit for tendering purposes, especially in the light of clause 4.3.2 of the Specification Preliminaries mentioned above.

101.  Paragraphs 25(9)(e) & 25(10)(c)‑(d) — cladding details for escalators.  Boost commented in late November 2016 that there was no cladding detail for the escalators.  Mr Chan said that Threshold evaded its responsibility by stating in the drawings that the design would be done “by others”.  This complaint is misconceived because:

(1)  The drawing referred to by Mr Chan was a drawing for the Interior Fitting‑out works.  The information he wanted was already contained at the time in another drawing which was for the Main Contract works and which stated “aluminium cladding with powder coated finish”.

(2)  The reason the phrase “by others” appeared on the drawings referred to was that the Main Contract and the Interior Fitting‑out Sub‑contract were initially to be separately tendered.  Thus when the tenderer for the Main Contract saw the phrase on a drawing he would know that that part related to the Interior Fitting-out Sub-Contract.  Although the two tenders were to be combined, Threshold considered that it would “take too much time” unnecessarily to delete the words “by others” from all drawings following the combination.  As Mr Chan eventually admitted, there was no question of evading responsibility as alleged.

102.  Paragraphs 25(9)(f), 25(10)(e) & 25(11)(d) — fire shutter details.  Boost commented in late November 2016 that there were no fire shutter details or schedule to show for the retained old fire shutters what repairs were needed and for new fire shutters their sizes and other details.  No breach causing delay to completion was made out because Ms Au’s evidence, which I accept, was that there were already drawings in November 2016 showing which fire shutter was to be replaced and the dimensions, but the information was not shown in one table in a schedule.  Upon Boost’s request, the schedule was subsequently provided and shown in a drawing of 7 January 2017.

103.  Paragraph 25(12)(a) — structural opening.  Boost commented in early December 2016 that Threshold had not provided structural details drawings and calculations to indicate the structural treatment for the new structure opening and calculation of the proposed escalator loading etc. This complaint was misconceived since the structural details and calculations had been submitted to the Buildings Department in April 2016 and approved in June 2016.

104.  Paragraph 25(12)(b) — existing ducting, pipes and pipeworks.  Boost commented in early December 2016 that Threshold had not provided information demonstrating the extent to which existing ducting, chilled water pipes and sprinkler pipeworks on site could be re‑used.  This does not prove any breach of duty.  The condition of the existing pipeworks etc needed to be ascertained on site, and this was done at the site walk on 19 December 2016 after the dismantling work had been completed.

105.  Paragraph 25(12)(d) — Fire Services Department and Water Supplies Department submission. Boost commented in early December 2016 that Threshold had not provided its proposed Fire Services Department and Water Supplies Department submission information.  This complaint fails because the latest Fire Services Department’s approval was obtained on 26 January 2017.[15]  There is nothing to show that this delayed the issue of the tender which had already gone out.  Nothing had to be done in relation to Water Supplies Department since there were existing water meters that needed no change.

106.  Paragraph 25(12)(e) — chiller plant, air‑conditioning & electricity power, ELV loading calculations and reports.  Boost commented in early December 2016 that Threshold had not provided its latest proposed chiller plant, air-conditioning & electricity power, ELV loading calculations and reports. This complaint fails because:

(1)  The chiller plant and air‑conditioning plan had been dealt with in the feasibility report in March 2016.  The later detailed plans regarding the chiller plant and air‑conditioning plan were developed from that feasibility report.  There was nothing to show there was any “latest proposal”.  Counsel’s suggestion to Ms Au in cross‑examination that there should be another feasibility test or report seems to me to be without basis.

(2)  As stated in Ms Au’s supplemental witness statement, the ELV loading calculations and reports had been dealt with and provided to Mark Leung before Mr Chan was involved.

107.  Paragraph 25(12)(f) — interior perspective colour drawings.  Boost commented in early December 2016 that Threshold had not provided the interior perspective colour drawings to demonstrate the interior design quality including main entrance lobbies, typical lift lobbies, atrium, common corridors and rest areas.  This complaint fails because the perspective colour drawings were already provided by Threshold in the schematic design.  In cross‑examination Boost’s counsel suggested that Threshold had failed to provide “colour codes” (which were unexplained).  This is not even mentioned in Mr Chan’s witness statement, and cannot be relied upon by Boost for its counterclaim.

108.  Paragraph 25(12)(g) & (h) — material samples.  Boost commented in early December 2016 that Threshold had not provided the proposed material samples including ironmongery for Boost’s approval or sample boards for the façade and information on specialist supplier.  These complaints in Mr Chan’s witness statement are not admissible because they fall outside the scope of Boost’s pleading, which only alleges that the DD drawings were not fit for purpose and makes no complaint about any failure to supply material samples or information on supplier.  In any event, the parties reviewed samples during the course of January and February 2017 and there is nothing to suggest that this caused delay to the project.  What happened during that time was set out in Threshold’s letter to Boost dated 28 February 2017:

“ The proposed sample boards of finishes materials prepared by Threshold was disapproved by Boost in the site meeting on 12 January 2017 ... Boost required that all the materials for Concord Square be the same as the selected materials from one of the projects at the Shanghai office.

Boost had since provided Threshold with the list of approved materials and samples on 23 January 2017 for Threshold’s review and sourcing of local suppliers.

Threshold issued a reply on the Shanghai samples in a letter (ref. 17/2028) dated 25 January 2017. Since some of the Shanghai material samples were found to be of very inferior quality, alternative material samples were proposed and presented to representative of Boost on 8 February 2017 at Threshold’s office and on 10 February 2017 at Boost’s office.  The final proposed material board prepared by Threshold was delivered to the renovation work site on 10 February 2017. According to Boost’s representative, Boost had decided after all at the 2^nd tender interview on 15 February 2017 that they would go back to the same floor tile samples for the arcade which had previously been proposed by Threshold in their original sample boards but subsequently disapproved by Boost.  ...”

109.  Paragraph 25(14)(a) — drawings not fully developed and coordinated.  Boost commented on 12 December 2016 that the tender information and drawings were not fully developed and coordinated.  This is a general concern raised by Boost and does not seem to me to stand as a separate complaint.  Threshold’s response was that the concern was addressed at the site walk on 19 December 2016. Further, Ms Au gave evidence that Threshold was not responsible for producing fully coordinated drawings or combined services drawings, which were a matter for construction, not for tender; see also clause 7.3.1 of the Specification Preliminaries quoted in §134(3) below.  In the absence of expert evidence on such matters, Boost has not shown that there was any deficiency in the drawings prepared by Threshold in this regard.

110.  Paragraph 25(14)(c) — floor tiles layout.  Boost commented on 12 December 2016 that Threshold had not provided the floor tiles layout based on long and narrow floor tiles (1,200mm x 200mm).  This complaint fails because:

(1)  Threshold had provided the floor pattern from the outset in their drawings.

(2)  The precise individual tiles layout, in Threshold’s view, was a workmanship issue, depending on what equipment the contractor used.  Boost raised the concern about wastage of tiles and cutting procedures due to curved edges around the shop front and columns, and in light of this Threshold provided information to address Boost’s concern on 30 December 2016.

(3)  In the absence of expert evidence, however, it has not been demonstrated that Threshold’s drawings were defective prior to 30 December 2016 because of this matter.

(4)  In Threshold’s letter of 28 February 2017, it was recorded:

“ During the 2^nd tender interview, Boost’s representative had agreed that the setting out of floor tiles would have to be submitted by the future contractor for Threshold’s approval based on the existing site conditions. As there would be discrepancies between the dimensions shown on drawings and the site, the setting out of floor tiles as marked on the drawings would have to be changed as per site situation.”

(5)  Clearly this is a matter concerning the Interior Fitting-out where the tender drawings need only be issued on 29 December 2016 even under the Programme (Rev. 3).

111.  Paragraph 25(14)(d) & 25(16)(a) — existing fire shutters.  Boost complains that Threshold wrongly advised at a meeting on 12 December 2016 that all existing fire shutters were outdated and needed to be replaced, though Threshold confirmed after site testing on 19 December 2016 that most of them were still functional and could be re‑used.  This complaint fails because:

(1)  It is difficult to see what the relevance of this is.  There is no pleaded claim for misrepresentation.  In any event Ms Au corrected herself a week later.  No damage flowing from this has been pleaded. It does not fall within the pleaded case of unfit drawings and is as such inadmissible.

(2)  In any event, the reason for the change was that, as Ms Au explained, Threshold had already told Boost (Mark Leung) that it was assumed that the fire shutters would be replaced, but they would be retained and not demolished in the meanwhile so that they could be tested.  Threshold would not be able to know how many of the fire shutters in question could actually be retained until the fire services contractor had carried out the site test.

112.  Paragraph 25(14)(e) — 4/F ladies toilet layout.  Boost commented on 12 December 2016 that Threshold had not provided drawings to show whether there would be sufficient fall for the drainage system to work.  In my view this complaint fails.  Threshold had long completed the building and drainage plans which were approved by the Buildings Department.  As Ms Au explained, these plans had to demonstrate the line of the drainage and how it went down from one point to another, since by law[16] the drains were required to have sufficient fall.  The plans were therefore sufficient for the Buildings Department to ensure compliance with the applicable regulations.  Boost could of course ask questions if it wished but it does not mean that Threshold’s drawings were defective for not having sufficient details.  Before actual construction the contractor would also be required to produce shop drawings for Threshold’s approval to ensure, inter alia, sufficient fall for drainage.

113.  Paragraph 25(14)(f) & 25(16)(b) — 2/F toilet layout.  Boost commented on 12 December 2016 that there was a concern that the drainage system in the 2/F toilet might clash with the existing edge beam in the floor below.  I do not think Boost has proved a breach of professional standards causing the alleged delay to completion.  Ms Au’s evidence which I accept is that the existing structural plans that Threshold had from the Buildings Department did not show how high the edge beam was, and it was not known whether it would conflict with the “P‑trap” plumbing arrangement submitted by Threshold.  It was not until the relevant finishes had been removed by the dismantling contractor that Threshold could check the position.  After the dismantling work, when the parties made the site visit on 19 December 2016, it was ascertained that there was a conflict and Threshold solved the problem with an “S‑trap” plumbing arrangement, the drawings for which were provided by Threshold on 22 December 2016.  In the absence of expert evidence, I do not think there is sufficient basis to find that Threshold’s conduct fell below the standard of a competent architect.  Further, it seems to me Boost has not established that this caused delay to the issue of any tender or to the completion of the renovation.

114.  Paragraph 25(14)(h) — E&M site survey report. Boost commented on 12 December 2016 that Threshold had not provided the E&M site survey report demonstrating the extent to which the existing system could be retained.  This complaint is not made out because the report was provided after the site walk on 19 December 2016 and, as Ms Au explained, the report could not have been done substantially earlier because the dismantling work had not been completed.

115.  Paragraphs 25(15) & 25(20)(b) — headroom at escalator between B1/F and G/F.  Boost sent an email on 13 December 2016 in which Threshold was asked, inter alia, to check that there would be sufficient headroom at the escalator between B1/F and G/F.  This is not a complaint about the drawings lacking in details causing delay.  The separate claim relating to the headroom at the escalator between B1/F and G/F is dealt with below.  In any event, the checking was done at the site walk on 19 December 2016, when the potential clash was observed.  On 30 December 2016, Threshold produced revised drawings to provide for re‑positioning of the staircase.

116.  Paragraph 25(16)(c) — extraction duct at the area of grid line 67 and GFH on G/F.  At the site walk on 19 December 2016 the parties observed that there might be a clash between an extraction duct at the area of grid line 67 and GFH on G/F and a new staircase.  Threshold agreed to provide a new layout of the staircase and did so on 22 December 2016.  This seems to me one of those things that had to be ascertained from the actual site conditions and were discovered on the site visit after the dismantling works had been completed.  Boost has not established a breach of professional standards causing delay.

117.  Paragraph 25(16)(e) — bulkhead on 4/F balcony.  At the site walk on 19 December 2016, Boost commented that Threshold had not provided the design for the bulkhead on the 4/F balcony.  Threshold had already provided a larger section showing that part of the bulkhead but upon Boost’s request, on 22 December 2016 they provided the “blown‑up” detail after the site walk.

118.  Paragraph 25(17) — green wall.  On 20 December 2016, the Buildings Department rejected the application for amendment of plans in relation to the green wall for Concord Square on the ground that it was an artificial green wall.  Mr Chan referred to this but did not explain its relevance.  Boost relies on this in its submissions but this complaint has to be rejected because:

(1)  This is not within the pleaded allegation of lack of details in the drawings.  Boost is not entitled to raise a new and unpleaded case (which was not even raised in that way in Mr Chan’s witness statement) that Threshold breached its duty by submitting a green wall application which was bound to fail.

(2)  In fact, as Ms Au explained, Threshold had told Boost that an artificial green wall would not be approved and had asked Boost whether it wanted a green wall but Boost decided to leave the it until a later stage.  Threshold put in an application nonetheless to buy time for Boost to confirm its intention.

119.  Paragraph 25(20)(a) — headroom.  The revised drawings provided by Threshold on 30 December 2016 provided headroom of 3m for B1/F rather than 3.3m.  It is not clear at all what breach is alleged.  There is no pleaded claim of breach of agreement to provide headroom of 3.3m.  The headroom was constrained by the actual condition of the building; it is not shown how that could have been changed by Threshold.  In any event Boost has failed to show any delay to completion caused by this matter.

120.  Paragraph 25(21) — E&M drawings on 5 January 2017.  Boost commented on 5 January 2017 that the E&M drawings were based on the old architectural drawings rather than the latest revised ones.  This complaint fails because this is not within the pleaded allegation of lack of details in the drawings, but a new and unpleaded allegation.  In any event, the E&M drawings were immediately updated and the tender was issued the next day, 6 January 2017.  This allegation is therefore irrelevant to the question of delay.

D5.  Alleged refusal to provide any consultancy services since 29 March 2017

121.  Boost’s pleaded case is that in breach of clause 2 of the Consultancy Agreement and its implied terms and Threshold’s duty of care, Threshold had refused or failed to provide any consultancy services for the Project since about 29 March 2017, and that Boost was forced to manage the project by itself thereafter.  Again, this plea is wholly unparticularised.

122.  The date of 29 March 2017 is, I infer, a reference to Threshold’s letter of that date whereby they refused to carry out certain amendments or revisions to the drawings requested by Boost by letter dated 24 March 2017 unless Boost settled the outstanding fees.  Boost said that the changes were minor but Threshold considered them substantial.  In any event Boost is not able to point to anything that imposed a contractual obligation or other legal duty on Threshold to accede to the request and carry out such additional work on the drawings without payment.

123.  In Boost’s submissions it is said that despite Kawin’s request on 21 April 2017, Threshold failed to submit Form BA10 (Notice of Appointment of Registered Contractor, Notice of Commencement of Building Works or Street Works and Undertaking by Registered Contractor) and site supervision plan to the Buildings Department for the purpose of commencement of works.  This complaint is misconceived because the form requires the details of the consent for the commencement of building works to be filled in, but no such consent had yet been obtained.  There is nothing to show that prior to Kawin’s email, Threshold had even been told that Kawin had been awarded the contract.  Nor was Threshold given a copy of the letter of award of the contract to Kawin.  Furthermore, the form provided by Kawin was not a notice of appointment of Kawin, but of a different firm, namely, Vesta.  Threshold had no knowledge of either firm.  It appears that Kawin was not a registered general building contractor (RGBC) registered under s 8A of the Buildings Ordinance (Cap 123) (unlike the four tenderers selected for tender analysis who were RGBC) and that what was being proposed was the dubious arrangement whereby the name of Vesta, an RGBC, would be put forward to the Buildings Department when in fact the contractor would be Kawin.

124.  Despite not having been paid the outstanding fees and its threats in correspondence not to carry on unless it was paid, Threshold agreed with Boost to submit Form BA8 to the Buildings Department to apply for consent for the commencement of works, and did so on 17 May 2017. However, this form required a site supervision plan from each of the Authorised Person, the Registered Structural Engineer and the Contractor as well as an annex to each supervision plan specifying the Technical Competent Person.  The Buildings Department also required various details such as debris disposal proposal.  The necessary information from the contractor was, however, outstanding.  Threshold had asked Peter Cheng of Boost for that information, but had not received it.  Upon being asked again by Threshold, on 7 June 2017, Peter Cheng thanked Threshold for the reminder and stated that Boost would follow up with Kawin for the requisite information, but in fact gave no further reply to Threshold at all.  It is therefore simply not correct to say that Threshold had refused or failed to provide any consultancy services for the Project since 29 March 2017.  Indeed, in his evidence Mr Chan admitted that during that period Threshold did involve themselves and did cooperate in progressing the project but only “reluctantly” and “did not make their best effort”.  This, in my view, is fatal to Boost’s pleaded case that Threshold refused to provide any service.

125.  In its closing submissions Boost claims that Threshold knowingly submitted an ill‑prepared Form BA8 well knowing that the Buildings Department would reject the application.  This is a wholly unpleaded allegation and not even mentioned in Mr Chan’s witness statement, and is not open to Boost.  Nor is there any pleading that Threshold wrongfully failed to advise Boost or Kawin what information to submit or how to complete the necessary forms.

126.  It seems to me that works could not begin during this period because the matters needed from the contractor (either Kawin or Vesta) for applying for the Buildings Department’s consent remained outstanding.  Boost never reverted to Threshold with those details even after being reminded.

127.  Clearly, the parties’ relationship had turned sour and on 21 June 2017, Threshold wrote to give notice that if the outstanding payments were not settled by 4 July 2017, they would invoke the termination procedure under clause 6 of the Consultancy Agreement.  This in my view cannot be construed as a refusal to provide any consultancy services.

128.  There was apparently an offer by Boost to pay 50% of Threshold’s fees immediately with the remaining 50% to be settled upon satisfactory completion of the consultancy services upon practical completion of the project.  This was not acceptable to Threshold, and by letter dated 27 June 2017 Boost itself invoked clause 6 to terminate the Consultancy Agreement.

129.  On 5 July 2017 Ms Au wrote to the Buildings Department giving notice that she ceased to be the Authorized Person with immediate effect.  In its closing submissions Boost alleges that Ms Au acted in breach in withdrawing as Authorized Person before the Consultancy Agreement’s formal termination.  Again, this is not pleaded in the counterclaim or even mentioned in Mr Chan’s witness statement, and is not an allegation open to Boost.  In fact Ms Au did so because she no longer had the requisite authority over the site even though the Consultancy Agreement would only terminate on expiry of the one‑month’s notice on 27 July 2017, and she was concerned that certain escalator removal works had apparently begun at the site without obtaining the Buildings Department’s consent, as recorded in Threshold’s letter to Boost dated 20 June 2017.  In these circumstances it was understandable she did not wish to be associated with what she considered to be illegal activities. 

130.  Boost failed to appoint a replacement architect until 11 August 2017.  The formal instruction to Kawin to commence works was not given until 3 October 2017.  There is nothing to show that the time taken was attributable to Threshold.

D6.  Causation of loss

131.  As stated above, Boost has signally failed to show that the completion of the project was delayed by any delay on Threshold’s part in producing drawings or any problems in the drawings or by the alleged refusal by Threshold to provide services.

132.  But the problems in Boost’s causation case go further.  Boost has taken a crude and simplistic approach of claiming that for each month that had passed after 30 August 2017, until the Buildings Department’s inspection was completed on 5 May 2018, there was a loss of a month’s rental income in respect of all the lettable area in the shopping mall.  This approach is in my view fundamentally flawed:

(1)  Remarkably, the evidence of Boost’s own witness, Mr Chao of L&N, is that the E&M works (i.e. electricity works, fire services works and air conditioning works) of the mall were still incomplete at the time of trial, in late November 2019.  From his point of view as the Authorised Person, the renovation works had not yet been completed.  He said that the E&M works done by Kawin were “really unsatisfactory” and could not achieve the level of testing and commissioning.  As a result, Boost terminated Kawin’s engagement in June 2018, and the works were suspended for a lengthy period of time.  Boost then searched for a replacement contractor and, as at the time of trial, a new contractor had only recently been found but the details of the contract had yet to be finalised.  Mr Chao said that he would not suggest for any tenant to move into the mall yet.  Such problems in Kawin’s performance cannot, of course, be attributed to Threshold.

(2)  Because of these independent problems, the termination of Kawin’s appointment, the suspension of works and the unsatisfactory state the mall was left in, there is nothing to show that the mall is fit for tenants intake.  Remarkably, none of these had been disclosed by Boost before, and none of the related documents has been produced in discovery.  These matters were only revealed, almost by accident, during the oral evidence of Mr Chao.

(3)  Boost adduced no evidence of the projected or actual tenants intake.  One simply does not know what the position actually was and cannot gauge what the position in relation to tenants’ interest, tenants’ intake and the occupancy rate would have been had the alleged breaches not been committed (assuming the breaches were proved and proved to have caused delayed completion).  In my view one cannot simply assume that a month’s delay in completing the Buildings Department’s inspection translates into the loss of one month’s rental of the whole mall.

(4)  There is no evidence that the mall has become ready for tenants after the Buildings Department’s inspection on 5 May 2018 or even at the time of trial.  There is no evidence that tenants have actually moved in, or that but for the alleged delay caused by Threshold, the mall would have been ready and let out to tenants after 30 August 2017.

(5)  I reject Boost’s submission that what happened to the next stage of works after inspection by the Buildings Department is of no concern to its claim.  It is for Boost to prove that, compared to what would have happened if Threshold had not breached its duty, it has actually suffered some real and substantial loss.

(6)  On the evidence it seems to me that Boost has failed to establish that but for the alleged breaches of Threshold, they could and would have let out any shop in the mall so as to earn any rental.

E.     Alleged breaches causing abortive or additional costs

133.  There are four alleged breaches by Threshold that are said to have caused Boost to incur abortive or additional costs. 

134.  First, it is alleged that Threshold’s structural design in structural plan no. ST-03 (approved by the Buildings Department) was defective because one steel member (1SB4) would protrude into the common smoke vents and a G/F shop not owned by Boost.  It is alleged that abortive work that cost $88,534 was incurred.  There are a number of reasons why this claim fails:

(1)  L&N’s letter to Boost dated 9 October 2017 stated that the 1SB4 steel member in drawing no. ST‑03 approved by the Buildings Department on 3 June 2016 could not be constructed after detailed site survey by them and the contractor, because the 1SB4 steel member had protruded into the common smoke vents and a private G/F shop.  There is no plea or evidence to explain precisely how and why there was a breach of implied term or duty of care by Threshold.  I do not consider that this court can assume that there was negligence and breach of duty on Threshold’s part simply because upon a detailed site survey at the commencement of works, when the dismantling works had been done, the alleged problem was discovered. 

(2)  Ms Au denies that the 1SB4 steel beam would encroach into the third party’s shop.  In the absence of detailed explanation this conflict cannot be resolved to the satisfaction of the court sufficient to discharge Boost’s burden of proof.  While Ms Au accepts the beam would encroach into the smoke vents, the vent could be relocated.  She was aware of the possibility of a problem (though the relevant spot was at a very high location and no measurement could be made at the site walk on 19 December 2016), and the relocation that would need to be done at the construction stage if the problem was confirmed.

(3)  In any event under the construction contract, which incorporated the tender documents, it was the contractor’s duty to take site measurement, verify site conditions and prepare shop drawings before commencing work.  Clause 7.3.1 of the Specification Preliminaries provided:

“ Shop drawings, combined services drawings and builder’s work drawings, as may be required, shall be furnished by the Contractor well before the work proceeds and in any case within two weeks of the Architect’s written request. ...”

Clause 7.5 of the Specification Preliminaries provided:

“ ... Before commencing any work or ordering any materials of goods, the Contractor must verify all measurements. If any discrepancies are found they must be brought to the notice of the Architect immediately.”

Clause 9.5.1 of the Specification Preliminaries provided:

“ The Contractor should note that he should not order materials or goods or commence work based only on quantities or sizes stated in the Schedule of Quantities and Rates without reference to the drawings and/or site measurements, and there shall be no liability for any expense incurred by the Contractor in connection with wrong items or abortive work which would have been apparent had the drawings and/or site measurements been checked.”

The notes to the drawings prepared by Threshold also specified: “All measurements must be verified on site”.  The Consultancy Agreement itself (in clause 2.6.2) envisaged that Threshold would monitor and comment on the “Contractor’s submissions”, which included shop drawings.  Where necessary, Threshold would then issue further drawings as might be necessary, as envisaged in clause 5.6 of the Standard Form of Building Contract 2006 that formed part of the tender documents.  It appears, however, that Kawin had not verified the site conditions or done any shop drawing with respect to the 1SB4 beam in question before carrying out the works.  On this basis, it seems to me that Boost has failed to show that any abortive work done was caused by Threshold rather than by a failure by Kawin to follow the proper procedure.

(4)  Boost has adduced no evidence to explain what work was actually done which was aborted or wasted as a result of the alleged defect in the plans.  Nor has it provided evidence to explain what the claimed sum of $88,534 represents, other than a sentence in Mr Chao’s statement that “[a]bortive work amounting to $88,534 was therefore incurred”.

(5)  The relevant invoice shows that of the sum claimed, $58,534 is the cost of materials supplied.  Mr Chao’s oral evidence reveals that the materials were those actually applied in the final renovations, not materials discarded or otherwise wasted.  One does not know how those materials were used and how they relate to 1SB4 beam or the alleged defect in the plans, but they were clearly not “abortive”.  There is no plea or proof that but for the alleged breach, these materials would not have been needed.

(6)  The other $30,000 was the cost of setting up and removing scaffolding.  Again, there is neither plea nor proof that somehow, without the alleged defect in the plans, the scaffolding cost need not and would not have been incurred.

135.  Secondly, it is alleged that on about 10 October 2017, L&N found that the headroom of the escalators between B1/F and G/F pursuant to the plans prepared by Threshold was insufficient and, in particular, less than 2.3m at two locations, contravening para 5.2.2 of the Code of Practice for Building Works for Lifts and Escalators 2011.  As a result, on the advice of L&N, Boost decided to relocate the relevant air duct in order to provide more headroom.  It is said that abortive work that cost $188,173 was incurred.

136.  In my judgment Boost has also failed to make out this claim:

(1)  The fact that the headroom, based on actual site conditions, would turn out to be less than 2.3m at two locations, does not mean that Threshold had been negligent in preparing the plans at a time when not all the site conditions (especially those on the ceiling) were known.  There is no plea as to what could and should have been done instead.

(2)  It was already noticed at the site walk on 19 December 2016 that there might be a need for repositioning.  Although L&N’s letter of 10 October 2017 might on its face suggest that structural works had already begun, Mr Chao clarified in his evidence that what he meant was that Boost wanted to keep the position of the escalator opening as planned unchanged. On the basis, the problem could be solved by repositioning the air duct, which L&N indeed instructed Kawin to do.  Boost has failed to show that any abortive work was caused by Threshold.

(3)  Mr Chao’s statement asserted that “[a]bortive work amounting to $188,173 was therefore incurred”, without explaining what the amount involved and how it was made up by “abortive” work. In fact, the relevant invoice suggests that the constituent sums were incurred for the relocation of the air duct.  Boost has failed to show that the sum claimed was money that it need not and would not have incurred had Threshold not been in breach.

137.  The third claim alleges that Threshold was obliged to submit structural details for the new glass wall at 1/F and 2/F facing the atrium void but failed to do so; and that to avoid further delay, Boost decided to use an alternative design with glass balustrade instead of glass wall.  This led to higher cost because the glass balustrade needed to be made from thicker glass and cost an additional sum of $406,785.

138.  In my view this claim also fails because:

(1)  The structural alteration works specified in clause 1.4.2 of the Consultancy Agreement stated: “Replacement of the existing balustrades at atrium voids with glass balustrades”, not a glass wall.  Boost relied on the description in clause 1.3 in relation to 1/F that “The existing balustrades around the atrium void shall be replaced with glass balustrades or of other design ...”.  However, as Ms Au explained, and read together with clause 1.4.2, it seems to me this still means balustrades as opposed to a full height glass wall.  A full height glass wall would be a structural matter falling under clause 1.4 and relevant plans and calculations would have to be submitted to the Buildings Department for approval. 

(2)  It is telling that although the relevant approved plans specifically referred to structural submission to be submitted separately, Boost has not been able to point to any complaint or request made by it prior to the drawings being incorporated into the tender that structural details of the glass wall were missing. 

(3)  I consider that Boost has failed to prove that the provision of these structural details was within the obligations of Threshold under the Consultancy Agreement or that Threshold breached its duty in failing to provide them.

(4)  Further, there is no explanation or proof as to how and why proceeding with the glass wall would cause further delay compared to proceeding with a new design with glass balustrade.

(5)  In respect of the claimed amount, Boost had failed to take account of the cost that would have had to be incurred in order to have a glass wall instead of balustrades, including additional drawing fees and Buildings Department’s fees.

139.  Fourthly, it is alleged that the headroom of the common arcade on 1/F was only 2.55m at certain locations under Threshold’s plans, which provided for false ceiling.  This was unduly low and as a result Boost decided to remove the false ceiling in order to provide more headroom, incurring abortive work that cost $100,000.

140.  In my opinion this head of claim also fails:

(1)  There is no plea or proof as to why Threshold was in breach or negligent simply because L&N considered the headroom of 2.55m “unduly low”.  It was not a self‑evidently negligent design.  The fact that a new architect took a different view, and on his advice the client made a different decision, does not mean that the previous plan was defective.  They were at liberty to take down the false ceiling to create more headroom, as they did, but this decision did not prove that Threshold’s plans were defective or had been negligently prepared.

(2)  In any event, as stated above, had Kawin verified the site conditions and produced shop drawings, L&N should have noticed what the resultant headroom would be, and Kawin would not have commenced work on producing the false ceiling that was subsequently taken down.  In fact, Kawin did not submit any drawings for verification purpose and was effectively allowed to do whatever it wanted.  I consider that Boost has therefore also failed to prove that the loss was caused by Threshold.

F.     Personal claim against Ms Au

141.  Boost’s counterclaim is made against Ms Au, in addition to Threshold.  The basis for suing Ms Au is said to be a collateral warranty or assumption of personal responsibility. 

142.  I deal with this allegation here although it is strictly unnecessary to do so having regard to the conclusions on the earlier sections.

143.  Mr Wong Sai Chung, the owner of Boost, said that he had quite a number of meetings with Ms Au (among others) including on 21 May 2015 and 23 October 2015 in the conference room in Boost’s office, and that at those meetings, which he attended from the beginning to the end, Ms Au repeatedly assured him that she would be personally responsible for the project and she personally guaranteed the satisfactory and timely completion of the project.  The gist of what Ms Au said to him was along the following lines: “Mr Wong, you don’t need to worry, I’ll be personally responsible for this project.  I personally guarantee that this project will be completed in good manner and on time”, to which Mr Wong would respond along these lines: “If it’s you who do it, from the beginning to the end, we do trust you”.  Mr Wong said that he was impressed by Ms Au and relied on her, and that all parties clearly knew that Boost was relying on Ms Au as the Authorised Person and the leader of her team in supervising the project and protecting Boost’s interests.

144.  In contrast, Ms Au gave evidence that she only communicated with Mr Wong directly about the project prior to the signing of the Consultancy Agreement on one occasion, on 23 February 2015, which she described as a “hand‑shake” meeting, when they were introduced to each other, and Mr Wong and another person from Boost took the others on a guided tour of Concord Square.  Ms Au denied having said what Mr Wong said she told him, or having heard Mr Wong say what he said he told her. She could not recall any other meeting with Mr Wong regarding the project.

145.  The emails between the parties immediately following the meetings of 21 May 2016 and 23 October 2016 do not cast much light on whether Ms Au met with Mr Wong at the meetings.  Mr Wong said he did not have an email address at the time, and so there was no email chain involving him. 

146.  The question largely turns on the oral evidence of the two individuals.  On balance I do not think there was the kind of conversation alleged by Mr Wong.  I appreciate that Mr Wong was the owner and would take an interest in the project, but nothing that I have seen suggests he would participate in many detailed meetings with the external architect to the extent he claimed.  While Mr Wong might have seen Ms Au on more than one occasion regarding the project, I accept that Ms Au honestly could not recall any significant meeting other than the one she referred to. The likelihood is that even if there were such further meetings in which Mr Wong participated, he did not play a substantial part and that his presence represented nothing significant such as to register in Ms Au’s mind.  No minutes of meetings or emails or any written documents have been disclosed that refer to Mr Wong’s attendance in the meetings alleged, let alone any exchange between him and Ms Au.

147.  It is also significant that there is no document whatsoever, whether in the form of communication between Threshold and Boost or even an internal record of Boost, that suggests that the kind of conversation alleged did take place between Mr Wong and Ms Au.  If, as Mr Wong claimed, those conversations with and assurances by Ms Au were an important consideration for Boost at the stage of choosing between several candidates for the consultancy engagement, one would have expected it to form part of the contractual documents, or would have expected at least some reference to it in an internal document or discussion.  Yet there is no such document.  Nor is there any other witness from Boost who can testify to hearing such conversations at the meetings.  This is to be contrasted with Boost’s letter of 13 April 2017 awarding the construction contract to Kawin, which expressly required a personal guarantee of an unlimited amount from one Mr Newcombe Chong, an executive director of Kawin, to secure the due performance of the agreement by Kawin. There is nothing similar in the Consultancy Agreement.

148.  Mr Lam referred to an early email of 7 January 2015 in which Ms Au represented herself to be a director of Conceptech. Ms Au accepted that she was in fact not a director of Conceptech although she and Ms Heung of Conceptech were on friendly terms and it appeared that together they wished to form a team complementing each other in relation to the intended project.  There was nothing, however, to show that Boost had any special relationship with Conceptech or that Ms Au gained any credibility with Boost by representing herself to be a director of Conceptech.  As Ms Au explained, there were also risks for Threshold in entering into an engagement with Boost, a company with which Threshold had not done business before.  I do not find that Ms Au was especially eager to take up the project, so much so that she would offer a personal guarantee for the agreement which had to be performed not only by her company, Threshold, but also by three other parties in her “consortium”. 

149.  Since Threshold was to form a team with Conceptech as well as the structural and E&M engineers, and to take the role as the “lead consultant” and as the contracting party with Boost, it would not be surprising if there were representations made during the discussions that Threshold agreed to be accountable to Boost for the team’s work, and that Boost could look to Threshold as being responsible overall.  This setting might lead to an impression in Boost’s thinking that Ms Au, as the sole director of Threshold, was the person-in-charge.  But in my view it does not mean that as “the person responsible” in a general sense, Ms Au had contracted to bear personal legal liability.

150.  As to the email of 3 March 2015 from Ms Heung to Mark Leung (see §9 above), I do not think it assists Boost’s counterclaim.  On the contrary, it shows that Boost had paid specific attention to the identity of the party that was to enter into the Consultancy Agreement with it, which of course was ultimately Threshold.  It is true that Ms Au was the Authorised Person and as such had statutory duties under the Buildings Ordinance and its subsidiary legislation.  In a loose sense it might be said that therefore Boost relied on Ms Au to discharge her duties as the Authorised Person.  But it would be an unjustified leap to say that there was therefore a general personal assumption of responsibility by Ms Au towards Boost.  Furthermore, there is no suggestion that Ms Au had breached any of her statutory duties as the Authorised Person of the project.

151.  My conclusion is that while there may or may not have been more than one meeting in which both Mr Wong and Ms Au attended, and while there may have been sales talk from Ms Au to which Mr Wong responded, Boost has not established that there was a serious conversation along the lines alleged by Mr Wong whereby Ms Au undertook personal legal liability, on which Boost relied to award the Consultancy Agreement to Threshold, such as to give rise to a collateral contract.

152.  In the absence of an express warranty of personal legal responsibility or express personal assumption of responsibility, there is in my view no basis in law to find any personal liability on Ms Au’s part.  In Wycombe Investments Ltd v Edwin Leong Siu Hung (unrep, HCCL 66/2004, 18 July 2005) at §89, Stone J, after referring to the English Court of Appeal’s and House of Lords’ judgments in Williams v Natural Life Health Foods Ltd [1998] 1 WLR 831, stated that high authority had established that a court should hesitate before finding that a director has assumed personal responsibility for an act attributed by law to his company. His Lordship held (at §92) that although in that case the defendant, the director of a small “one man company”, had said he would personally supervise the relevant trading investment activity, this was not of itself sufficient to bespeak an assumption of responsibility.  Rather, the deliberate adoption of an intervening company structure pointed to a contrary likelihood.  The passage in the judgment of Buckley J in the English case of Ojjeh v Waller (unrep, Queen’s Bench Division, 14 December 1998), which was quoted with agreement by Stone J at §99, is also instructive:

“ Apart from cases in which the third party reasonably thought that he was dealing with an individual, it must be difficult to find circumstances, short of an express personal warranty, where the director has assumed personal responsibility. Particularly in the case of a small, effectively one‑man undertaking, all the sales talk, all the expertise will necessarily come from the proprietor. However extravagant, it cannot, without more, lead to the personal liability of the individual. If it did there would be no protection in incorporation. There must be something to show that the proprietor is taking off his corporate hat so that the third party not only relies on his expertise but it is reasonable for him to look to the proprietor’s personal pocket book as opposed to the company’s ...

It is inherently unlikely either that the proprietor will wittingly do so or that the third party will believe him to have done so ...

The prima facie position must be that by incorporating his business, the proprietor not only intended to keep his ‘pocket book’ in his own pocket but has manifested that intention to those with whom he trades thereafter so that it cannot be reasonable for third parties to rely or subsequently to profess reliance upon a personal assumption of responsibility, save in unequivocal circumstances.  The onus must be firmly on the third party who wishes to displace the manifest intention of the proprietor.”

153.  Ms Au was herself the Authorised Person of the project, since as a matter of law an Authorised Person had to be an individual.  The Consultancy Agreement was, however, entered into by Boost knowingly with Threshold, a limited company.  Without an express personal warranty or express personal assumption of legal responsibility, there is nothing to suggest that there was any intention that Ms Au was to give up the protection that incorporation offered or that Boost was entitled to look to Ms Au (in addition to or in substitution for Threshold) as being the responsible counterparty.

154.  In my judgment, therefore, Boost’s claim against Ms Au based on a collateral warranty or a personal duty also fails.

G.    Disposition

155.  For the above reasons, Boost’s counterclaim wholly fails.  There will therefore be judgment in favour of Threshold on its action for the sum of $1,018,250, with interest at the prime rate plus 1% per annum from the date of writ to the date of judgment.  There will be judgment against Boost dismissing its counterclaim. 

156.  As an order nisi, the costs of the action are to be paid by Boost to Threshold and the costs of the counterclaim are to be paid by Boost to Threshold and Ms Au, to be taxed if not agreed, with a certificate for two counsel.