TAM'S DECORATION CO. LTD. v. NEW INTERNATIONAL (GROUPS) LTD.

HCA2877/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2877 OF 1999

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J U D G M E N T

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1. The plaintiff is a decoration company who carried out works and supplied materials for the defendant at office premises in the Bank of China Tower Building in August and September 1998.

2. The issue concerns the defendant's liability to pay for additional and/or variation works. The original contract price was for $220,000. There is no dispute over that figure. A deposit of 50% was paid in advance. It is the plaintiff's case that some additional works became necessary and that they were approved by the defendant. They were approved by the defendant's project manager for this job, Mr K.W. Tang. Mr Tang gave evidence for the plaintiff. He confirmed that he gave approval for the plaintiff to do the work. He said he had discussed it with his boss, Mr Y. Wong, who knew about it and approved it.

3. There was no dispute that no quotation was prepared or discussed for the additional work. It is the plaintiff's case that once approval was given for the additional works to be done, they were duly carried out and an invoice submitted later after the whole job had been completed. Mr Tang confirmed in evidence that when he received the final account, he approved it for payment. It is the plaintiff's case that Mr Tang had authority to both instruct the plaintiff to do the additional works without a separate quotation and also to approve payment for the same as being a proper and reasonable sum for the work done.

4. The final invoice for both the original contract works and the extra work was for $306,603. $220,000 of this was the original contract sum. The defendant has only paid the original 50% deposit of $110,000, therefore $196,603 remains unpaid. Through their counsel, Mr Gary Fung, the balance of the original contract sum ($110,000) is admitted. The remaining issue, therefore, concerns the liability to pay the sum of $86,603 being the sum claimed for the additional work.

Application for an adjournment

5. The Defence applied for an adjournment before the start of the trial. Their only witness, Mr Y. Wong was on the Mainland. The court was informed that he was a witness in another case there. The Defence (including Mr Wong) had known this case was listed for this week. Mr Wong sent his solicitors a fax from the Mainland at 6.00 p.m. on the day before the trial instructing them to apply for an adjournment. The court ultimately decided to hear the plaintiff's evidence and then adjourn to a date when Mr Wong was available. There has, therefore, been a three week gap between the plaintiff's case and the Defence case.

6. The plaintiff's witnesses were Mr K.W. Tam (the plaintiff's managing director) and Mr K.W. Tang, the defendant's project manager at the material time. In April 1999, eight months after this contract, Mr Tang left the defendant's employment and was given a glowing reference by a Mr Rommel Luk, a vice-president of the defendant company. I found both Mr Tam and Mr Tang to be straightforward and reliable witnesses.

7. The Defence witness was Mr Wong Yin, the defendant company's managing director. I found him to be an unimpressive and, at times and on material issues, evasive and contradictory. The following are some examples of why Mr Wong's evidence has not been relied on.

8. In evidence, Mr Wong said that in April 1999, he dismissed Mr Tang because he was "not honest in his work" and was "not serious enough in his work". A vice president of the company, Mr Rommel Luk, however, had written in Mr Tang's reference that the reason he had left the company's employment was "unfortunately ... we had to lay him off" and said also that he had "made a great contribution to our company" and that he was "smart, hard working and responsible". Mr Wong's evidence about this reference was merely that he disagreed with it.

9. Secondly, in evidence, Mr Wong suggested that even the original quotation of $220,000 was not handed to him by Mr Tang, but by Mr Luk and that Mr Tang had no authority to do anything. In this regard, Mr Wong was turning his back on both his own witness statement and the pleaded case. His witness statement had said that the plaintiff company had been recommended to him by Mr Tang who he had instructed to find a suitable contractor. The witness statement continues that Mr Tang had sought his approval for the quotation, which he gave. Mr Wong attempted to downgrade Mr Tang's position in the company at the material time, suggesting he was the most junior designer with no authority at all. The evidence satisfied me, however, that he was a senior designer within the company and was authorized to make certain decisions on the company's behalf.

10. The final blow to Mr Wong's credibility came when he suggested in cross-examination that his case was, not that no additional works had been authorized, but that no additional works had ever been done and thus the plaintiff's claim for $86,000 was dishonest. Again, this was turning his back on reality and giving evidence contrary to his own witness statement and the pleaded Defence. The Defence as pleaded was that the additional work had not been agreed to or quoted for.

11. The outcome of this case depends on the court's findings of fact. I have already indicated where the court's finding lie in relation to the relative credibility of the plaintiff's witnesses on the one hand and the Defence witness on the other. The particular part of Mr Tang's evidence which I accept as being true and accurate is when he said "Mr Wong told me to instruct the plaintiff to carry out the extra work". In cross-examination, he said that the suggestion he had no authority to agree the payment of the extra work was "incorrect". His evidence was consistent with his witness statement as follows :-

"On or about early September 1998, Mr. Wong Yin instructed me to ask the Plaintiff to do additional and/or variation work in the Premises. The additional and/or variation work involved deductions and additions of items refer to in the Quotation including inter alia replacing old wall papers, supplying and fitting new wall papers, replacing and supplying teak wood doors, repainting false ceiling, installing wood wall panel to wall etc. Prior to instructing the Plaintiff to carry out the additional and/or variation work, I have made known to our Mr. Wong Yin that this is additional work and the costs stated in the Quotation will not cover such additional work. Mr. Wong Yin then asked me to instruct the Plaintiff to proceed."

12. Accordingly, I find that Mr Tang had actual authority to instruct the plaintiff company to carry out the additional works claimed for. On the question of liability, I find in the plaintiff's favour.

Quantum

13. The final invoice which includes the additional work is detailed. Both Mr Tam and Mr Tang gave evidence about it which satisfied the court as to its genuineness. Every extra item claimed for had been done satisfactorily. Mr Tang had checked and approved the final invoice for payment by the defendant company.

14. It is, however, agreed that no quotation was submitted for the extra work. The court may, therefore, approach the assessment on a quantum meruit basis. The plaintiff had agreed a discount of 5% (approximately) from the original quotation. I am satisfied that if asked, they would have conceded a similar discount for the extra work. A discount of 10% would, I find, have been reasonable and acceptable to the plaintiff. I reduce the claim for the extra work accordingly.

15. The judgment will therefore be :-

Unpaid balance of original price - $110,000

Extra work less 10% (approximately) - $78,000

16. There will be judgment for the plaintiff in the sum of $188,000 plus interest at prime +1% from 19 February 1999 to date of judgment. I further make an order for costs against the defendant company.