HUI KIM YUEN t/a HARDWOOD ENGINEERING CO v. TECHNIQUE DECORATION & ENGINEERING CO LTD

DCCJ382/2003

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 382 OF 2003

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JUDGMENT

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Background

1. The Plaintiff was in the decoration business. By four separate agreements, the Defendant engaged the Plaintiff to provide various decoration services. Between June and November 2002, the Plaintiff issued to the Defendant a number of invoices for the work done and the total sum thereof amounted to $1,163,090.00. The Defendant only made partial payment of $787,510.55. Thus, by this action, the Plaintiff claimed for the balance sum of $375,579.45 together with interest and costs.

2. After the action was commenced, the Defendant through its solicitors made two more payments in the sums of $13,550.00 and $3,900.00 respectively. The payment of $13,550.00 in fact settled the outstanding sum under the 3rd agreement. So the Plaintiff is now claiming for the balance sum of $358,129.45 under the 1st, 2nd and 4th agreements together with interest and costs.

3. At the trial, Mr. Bok for the Defendant raised certain issues that had not been pleaded in the Defence. However, after taking instructions, Mr. Bok confirmed that the Defendant would not apply for any amendment of the Defence to raise those issues. It is trite law that a party is bound by his pleadings. The purpose of pleadings is to give fair notice of the case that has to be met by the other party, and they define the issues between the parties upon which the court has to adjudicate. Thus, without amending its Defence, the Defendant is restricted to raise only those issues that have been pleaded in the Defence.

4. Apart from not admitting the Plaintiff's case, the Defendant has raised the following specific issues in its Defence:-

(1) The Defendant denies (in Paragraph 3 of the Defence) that it was not a customer of the Plaintiff, but avers that the Plaintiff was a sub-contractor of the Defendant.

(2) In relation to the 1st agreement, the Defendant admits (in Paragraph 4 of the Defence) that by a Memorandum in writing dated 19 April 2002 between the Plaintiff and the Defendant, the Defendant subcontracted to the Plaintiff the decoration work at House No. 5 and House No. 92 of Casa de Costa, Tai Po. The following were, inter alia, the express terms of the subcontract:-

(a) 25% part payment one week after on-site works started;

(b) 25% further part payment after cupboards and wardrobes delivered on site;

(c) 35% further payment upon completion of job; and

(d) 15% final payment after defect liability period expires.

(3) In relation to the 2nd and 3rd agreement, the Defendant avers (in Paragraph 5 of the Defence) that it was agreed between the Plaintiff and the Defendant that the quality of works should be accepted by the Employer of the relevant site of decoration or renovation works and any defective or substandard works would have to be made good by the Plaintiff at his own costs.

(4) In relation to the 4th agreement, the Defendant avers (in Paragraph 6 of the Defence) that:-

(a) any rectification of defective or substandard works and variation from the original quoted works or works not requested, instructed or agreed by the Defendant were not variation works; and

(b) the renovation works at the 5/F Ballroom of Panda Hotel was on a lump sum fixed price on drawings and specifications provided by Panda Hotel, the Employer of the site. The Defendant would not pay for any variation works unless Panda Hotel agreed to pay the Defendant for such works as validated variation works instructed by Panda Hotel. If Panda Hotel treated such works as merely variation from the original drawings and specifications, then the Defendant would have to treat it similarly vis-à-vis the Plaintiff. Thus, the Defendant had never agreed to the variation works (if any) carried out by the Plaintiff not validated by Panda Hotel.

(5) In relation to the invoices issued by the Plaintiff, the Defendant avers (in Paragraph 8 of the Defence) that:-

(a) whether the alleged decoration or renovation works will be allowed depends on whether they were the works quoted by the Plaintiff and agreed by the Defendant;

(b) whether the works were additional works or variation works depends on whether they were works requested, instructed or agreed by the Defendant or merely variation from the original quoted works or rectification of defective or substandard works;

(c) despite repeated demands by the Defendant for the production of the invoices of the Plaintiff's alleged works categorized under the original quoted works and variation works for the Defendant's necessary approval, and in particular by a letter dated 1 November 2002 from the Defendant to the Plaintiff for such categorized works and a letter dated 21 January 2003 from the Defendant's solicitors to the Plaintiff's solicitors for appointment of an independent surveyor, the Plaintiff has refused and wrongfully failed to submit a categorized invoice or agree to the appointment of an independent surveyor for the purpose of assessing the alleged works done in resolving the disputes and differences between the parties.

5. I shall deal with these issues in turn.

Plaintiff's customer or Defendant's subcontractor

6. I do not think that there is any significance in raising the issue that the Defendant was not a customer of the Plaintiff, but the Plaintiff was a subcontractor of the Defendant. From the evidence of both parties, it cannot be disputed that both the Plaintiff and the Defendant were in the decoration business, and the Defendant engaged the Plaintiff to carry out decoration works at various sites on its behalf. From the Plaintiff's point of view, the Defendant was his customer, but from the Defendant's point of view, the Plaintiff was its subcontractor. So both nomenclatures can be correct. The contractual obligations of the parties are however governed by the agreements reached between them, rather than the nomenclature of their relationship. The issue raised by the Defendant in this regard is neither here nor there.

The 1st agreement

7. The Plaintiff's evidence in relation to the 1st agreement is that around early April 2002, Mr. Peter K.M. So, the boss of the Defendant telephoned the Plaintiff and said that he would like the Plaintiff to carry out decoration works for two houses, namely House Nos. 5 and 92 of the Defendant's project in Tai Po. The Plaintiff went to Mr. So's office to look at the floor plans and to discuss the type of works to be done on the site. When the Plaintiff returned to his office, Mr. Kam, the assistant of Mr. So, faxed him a list of works to be done in the two houses and asked the Plaintiff to fill in the price quotation next to each item on the list. The Plaintiff filled in the price quotation and faxed the same back to Mr. So and Mr. Kam for their consideration.

8. The next day, Mr. So telephoned and asked the Plaintiff to go to his office. Mr. So told the Plaintiff that he accepted the Plaintiff's quotation and they both further discussed and agreed that payment should be effected in the following manner:-

(a) 25% payable one week after the commencement of the on-site works;

(b) 25% payable after the delivery of the cupboards and wardrobes to the site;

(c) 35% payable upon completion of decoration works; and

(d) 15% payable 3 months after the expiration of the defect liability period.

Mr. So then wrote down the above payment terms on the list of works and they both signed the list. They further agreed that the defect liability period should last for 3 months from the completion of decoration works. According to the Plaintiff, the decoration works for the two houses were completed in May 2002.

9. The list of works was in fact the Memorandum in writing dated 19 April 2002 referred to by the Defendant in Paragraph 4 of the Defence. As can be seen from the Plaintiff's evidence, there is no dispute that the parties had executed this Memorandum, and the Plaintiff was then asked to carry out decoration works at House 5 and House 92 of Casa de Costa, Tai Po. There is also no dispute concerning the payment terms as written in the Memorandum. However, at the trial, Mr. Bok raised the issues that the works were completed on 9 October 2002 and the defect liability period was for a period of 6 months. Thus, the 15% final payment was not due when the Plaintiff commenced the action on 21 January 2003.

10. The issues concerning the date of completion of works, the length of the defect liability period and the 15% final payment were not pleaded in the Defence. Mr. Bok submitted that it was not necessary for the Defendant to plead these matters as it was the duty of the Plaintiff to establish his claim and that he was entitled to the 15% final payment. I totally disagree with Mr. Bok in this regard. In Aktieselskabet Dansk Skibsfinansiering v. Wheelock Marden [1994] 2 HKC 264 at 269-270, Bokhary J.A. (as he then was) said that the functions of properly particularised pleadings are to:-

"(1) inform the other side of the nature of the case they have to meet as distinguished from the mode in which that case is to be proved;

(2) prevent the other side from being taken by surprise at the trial;

(3) enable the other side to know what evidence they ought to be prepared with and to prepare for trial;

(4) limit the generality of the pleadings, the claim and the evidence;

(5) limit and define the issues to be tried, and as to which discovery is required; and the hands of the party so that he cannot without leave go into any matters not included (although if the opponent omits to ask for particulars, evidence may be given which supports any material allegation in the pleadings)."

11. Furthermore, according to Order 18, rule 8(1)(a) of the Rules of the District Court, a party must in any pleading subsequent to a statement of claim plead specifically any matter which he alleges makes any claim not maintainable. As the Defendant has not amended its Defence to include these matters, the Defendant is not entitled to raise them as a defence at the trial.

12. It is also not permissible for the Defendant to rely on the general denial or non-admission of the Statement of Claim. Order 18, rule 13(3) stipulates that every allegation of fact made in a statement of claim must be specifically traversed and a general denial of such allegation, or a general statement of non-admission of them, is not a sufficient traverse of them. In Harris v. Gamble (1878) 7 Ch.D. 877, it was held that a traverse in the form of "The Defendant puts the Plaintiffs to proof of the several allegations in their statement of claim" was insufficient denial and that the Plaintiffs were entitled to judgment without adducing any evidence in support of their case.

13. Thus, the Defence in its present form does not provide any defence to the Plaintiff's claim under the 1st agreement, and it is not necessary for me to deal with the issues concerning the date of completion of works, the length of the defect liability period and the 15% final payment, as these matters were not pleaded by the Defendant.

The 2nd agreement

14. The Plaintiff's evidence concerning the 2nd agreement is that around early July 2002, Mr. So telephoned and asked the Plaintiff to put up wooden partition walls around the area where internal decoration and renovation works would be carried out in Panda Hotel. The Plaintiff told Mr. So over the phone that the price for putting up such partitions was about $45,000.00 and the work should take around 2 to 3 days to complete. Mr. So confirmed orally that the Plaintiff's quotation was alright and asked the Plaintiff to start work. After the Plaintiff had put up the partitions, Mr. So asked him to carry out other decoration and renovation works on the site, the nature of work was similar to those in the Tai Po project. Mr. So and the Plaintiff agreed that the additional works would be charged according to the standard scale charge as listed in the Memorandum for the 1st agreement.

15. The defence raised in relation to the 2nd agreement is that the parties had agreed that the quality of works should be accepted by the Employer and any defective or substandard works would have to be made good by the Plaintiff at his own costs. The Defendant, however, did not plead any particulars concerning the items of work that had not been accepted by the Employer because of quality or that had to be made good by the Plaintiff at his own costs because of defective or substandard works. When asked by me at the trial for these particulars, Mr. Bok also failed to give such particulars. Instead, the Defendant raised some other matters such as the Plaintiff should charge according to plans, it was not a fixed price project, the Plaintiff did some unauthorised works and the 15% retention money, all of which have not been pleaded in the Defence.

16. Without the particulars or the evidence in support, the Defendant has simply failed to establish the defence pleaded. The Defendant cannot rely on some other matters that have not been pleaded. As aforesaid, the general denial or non-admission is insufficient to traverse the Plaintiff's claim and it will not be opened to the Defendant to raise any matters it saw fit to raise at the trial. Thus, the Defendant's defence concerning any quality of works and any defective or substandard works must fail. It is not necessary for me to deal with the other matters as they were not pleaded at all.

The 4th agreement

17. As to the 4th agreement, the Plaintiff's evidence is that from time to time, Mr. So telephoned the Plaintiff and asked him whether he had time to help him out on repair work or decoration work at a very small scale. When the Plaintiff accepted the work, the Defendant would confirm the exact address of the Defendant's client and the Plaintiff would go directly to the address to carry out whatever work that was needed to make good the fittings or installation. The Plaintiff always told the Defendant about his charge and got the Defendant's approval of the charge before he started work.

18. The Defendant admits that it has paid some of the works under the 4th agreement. The outstanding items that have not been paid are Items 5 to 10 of the Invoice dated 23 September 2002 (page 130 of Bundle C) and they all concerned the project at Panda Hotel. Again, no particulars have been pleaded in respect of the works that the Defendant alleged were not variation works or not validated by Panda Hotel. It is not clear which were the items disputed by the Defendant. Indeed, it is just unbelievable that Items 5 to 10 were all works done by the Plaintiff without any request, instruction or agreement by the Defendant. In particular, Item 6 refers to the installation of two safes. It is just impossible that the Plaintiff would install them without being asked to do so by the Defendant. There is also no evidence that Panda Hotel rejected these works. So there is no basis for the Defendant to allege that these works were not validated variation works.

19. In the circumstances, I do not find that the Defendant has established its defence in relation to the 4th agreement.

The invoices

20. The Plaintiff's case is that the invoices were issued to the Defendant between June and November 2002 and these invoices were for work done under the four agreements. In raising the allegations in Paragraph 8 of the Defence, the Defendant did not provide any particulars of the works that were not agreed by the Defendant or the works that were merely variation from the original quoted works or rectification of defective or substandard works. As aforesaid, such allegations without particulars simply cannot stand. The Plaintiff has already provided all the relevant invoices to the Defendant. So there is absolutely no ground for the Defendant to allege that the Plaintiff did not provide the invoices to categorize the works done. It is also unreasonable for the Defendant to insist on the appointment of an independent surveyor to assess the works done, as there is simply no contractual obligation for the Plaintiff to accede to such request. If the Defendant was not sure about the amount of works done, the Defendant could always appoint such surveyor itself and then challenge the Plaintiff's claim based on the surveyor's findings. This, however, was not done by the Defendant. The Defendant cannot simply challenge the Plaintiff's claim at large without any particulars.

21. There was an allegation against the Plaintiff for the duplication of the invoice dated 16 November 2002, one containing 6 items for the sum of $17,200.00 (page 132 of Bundle C) and the other containing 7 items for the sum of $24,700.00 (page 133 of Bundle C). The Plaintiff explained that he had not included Item No. 7 in the former invoice and hence the latter invoice was re-issued to substitute the former one. There was no duplication of claim, as the Statement of Claim referred only to the invoice for the sum of $24,700.00. I accept the explanation of the Plaintiff, and do not find anything wrong with the re-issuance of the invoice. The Defendant was not in any way misled by the two invoices and there was no double payment made by the Defendant. I see no relevance at all in raising this issue.

Other issues raised at the final submission

22. Mr. Bok submitted in his final submission that there is no evidence from the Plaintiff on the agreed price for the work done, there is no application from the Plaintiff to amend his pleadings to raise the alternative claim for quantum meruit and the Plaintiff had failed to show that any sum was 'indisputably due'. I do not agree with Mr. Bok. The Plaintiff has given evidence that the price were agreed between the parties pursuant to the Memorandum which formed the blueprint scale of charge for all the works done by the Plaintiff. Some of the works were charged according to the measurements and some were agreed orally before the works were commenced. I accept all these evidence given by the Plaintiff. If the Defendant wants to challenge any specific price charged by the Plaintiff, it should give the particulars of the items it disputed and raised them in the pleadings. Otherwise, it would be impossible for the Plaintiff to prepare his case and meet the Defendant's challenges. The Plaintiff's claim is not based on quantum meruit, so it is unnecessary to plead such cause of action.

23. Mr. Bok submitted that there was inconsistency in the evidence of the Plaintiff, in that if only charging rates were agreed with no scope of work confirmed, it is illogical to suggest that there were variation works. The Plaintiff's evidence is however that some of the items were charged according to the measurements, but not all, and there were also other items agreed by the parties while the Plaintiff was carrying out the works. So the scope of work was confirmed by the parties subject to the measurement of some of the items for which only the charging rate was agreed and there were also other additional items agreed by the parties from time to time. There is no inconsistency in the Plaintiff's evidence, and I do not think that Mr. Bok's submission is justified at all.

24. Mr. Bok also submitted that the Plaintiff did not plead the terms and conditions of the agreements, and the Plaintiff did not testify that the sum claimed under various invoices were the agreed sums between the parties. There is no basis to make these allegations either. The Plaintiff has pleaded the four agreements in question in the Statement of Claim. The Defendant has made various requests for further and better particulars and the Plaintiff has answered them. The particulars asked for and answered included the terms and conditions of the agreements. It is trite law that the particulars given in the Answers to Request for Further and Better Particulars form part of the pleadings. So the Plaintiff did give the particulars as requested by the Defendant. As to the evidence of the Plaintiff, there is no dispute from the Defendant that the invoices were not issued under the four agreements. Without such dispute being raised, the Plaintiff cannot be criticized at all for not making specific reference to the invoices being issued under the agreements. As already said, a party has to prepare his case and give such evidence in answer to the defence raised. When there is no such issue raised, it is not necessary to cover every single point that the Defendant has chosen to keep silent about. In any event, the Plaintiff had only entered into four agreements with the Defendant. The evidence shows clearly that the invoices were issued under these four agreements. In fact there is no dispute that the 3rd agreement was fully paid up and the outstanding items for the 4th agreement were all concerning the Panda Hotel and were connected to the 2nd agreement. So the invoices must have been issued pursuant to the four agreements.

25. There were other attacks on the credibility of the Plaintiff raised by Mr. Bok, such as the query why the Plaintiff would agree to charge by measurements when he had only two dealings with the Defendant, or that there was no written documents to support his allegations of oral instructions. Mr. Bok submitted that Mr. So's evidence is more reliable than the Plaintiff and should be accepted. I do not agree with Mr. Bok on this either. I find the Plaintiff as being a reliable and credible witness. I accept all his evidence. On the other hand, I do not find Mr. So being credible, as his evidence simply lacks particularity. From the evidence before me, I find that Mr. So was simply trying to raise various arguments to delay payment to the Plaintiff. I do not accept Mr. So's evidence at all.

Conclusion

26. In the circumstances, I do not find that there is any defence to the Plaintiff's claim for the sum of $358,129.45, and the Plaintiff is entitled to judgment accordingly.

27. I therefore order as follows:-

(1) Judgment be entered against the Defendant for the sum of $358,129.45 together with interest thereon at judgment rate from the date of the Writ to the date of Judgment and thereafter at judgment rate until payment.

(2) Costs Order Nisi:- The Defendant do pay the costs of this action to the Plaintiff with certificate for counsel, to be taxed if not agreed. If there is no further application on costs within the next 14 days, the costs order nisi shall become absolute.

Remarks: