WONG KWAI MING v. YEUNG SHUET PING

HCA 1371/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1371 OF 2004

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Dates of Hearing: 7, 10-14 and 17 July 2006

Date of Handing Down Judgment: 11 August 2006

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J U D G M E N T

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The Action

1.  In this action, the Plaintiff claims against the Defendant the sum of $1,205,427- being the outstanding balance for sub-contract work done by the Plaintiff for the Defendant.

2.  The Defendant asserts that the total value of the sub-contract work by the Plaintiff amounted to $1,698,152- (or $1,698,150- in some places).  She claims that she has already paid to the Plaintiff the sum of $1,100,523- and that the Plaintiff owes her a sum of $866,979- in respect of other matters.  She therefore claims a set-off and counterclaims against the Plaintiff in the sum of $269,352-.

The Plaintiff and his family members

3.  The Plaintiff is 45 years old.  He was educated up to Primary 2 level.  He has been in the cleaning and refuse and waste collection and transportation business for over 22 years.  He is sometimes known by his nickname “Ha Chai”.  He is very much assisted in his business by his wife, Madam Leung Yuet Sin.

4.  The Plaintiff's wife is also not well educated.  She is responsible for the management and administration of the business of the Plaintiff, including but not limited to dealing with main contractors and sub-contractors, managing the accounts, arranging time tables for drivers and clients, supervising drivers, exploring clients, receiving orders from clients, handling complaints from clients and dispatching documents.

5.  The Plaintiff and his wife carried on their business under the personal name of the Plaintiff and also under the name of a limited company known as Yue Fat Environmental Cleaning Company Limited (“Yue Fat”).  The Plaintiff and his wife were the only two shareholders and directors of Yue Fat.  At some stage about which there is no clear evidence but probably in 2004 or 2005, as a result of a winding-up petition presented by some employees of Yue Fat relating to disputes on wages, a winding-up order was made by the Court against Yue Fat.

6.  The Plaintiff has a brother by the name of Wong Kwai Ping.  Wong Kwai Ping and a sister of the Plaintiff also run a business similar to Yue Fat in the name of a company called Yue Fung Environmental Engineering Co. Ltd. (“Yue Fung”).  Wong Kwai Ping and the sister are admittedly the only two shareholders and directors of Yue Fung.

7.  It appears that Wong Kwai Ping also runs a garage business under the name of “Yue Fat Motor Car Service”.

The Defendant

8.  The Defendant is a widow.  She is also not well educated. She used to assist her late husband, Wan Yun Sun (“Mr. Wan”), who was in the same trade as the Plaintiff.  Her husband died in June 2001.  She is usually referred to either as “Mrs. Wan” or “Ms. Yeung”.

9.  Mr. Wan used to work for or had dealings with another company in the same trade called Man Shing Cleaning Service Co. Ltd. (“Man Shing”).  The person in control of Man Shing is a person by the name of Wong Man Shing.  In about November 1994, Mr. Wan purchased from Man Shing a waste disposal vehicle bearing the registration number FB 4126 at a price of $700,000-.  He was also appointed by Man Shing as a subcontractor in the disposal of waste.

10.  In about June 1998, Mr. Wan was suffering from cancer and he started to employ somebody to assist him as a driver for waste disposal.

11.  In about April 1999, Mr. Wan purchased another waste disposal vehicle bearing the registration number FN 7555 from Man Shing for about $130,000-.

12.  Since about April 1999, the health condition of Mr. Wan deteriorated and the Defendant started to assist him more in the running of his business.

13.  In or about June 1999, Mr. Wan underwent an operation.  Since then, his condition had become very unstable.

14.  In or about February or March 2001, the Defendant decided to sell the said two waste disposal vehicles and subcontract to others the business of Mr. Wan so that she could take care of him.

The Plaintiff's Claim

The Agreements between the Defendant and the Plaintiff

15.  The Plaintiff and the Defendant had known or known of each other for some time because they were in the same trade.  They were, however, not acquainted with each other.

16.  In or about February or March 2001, the Defendant got hold of the telephone number of the Plaintiff and contacted him.  There is some dispute about the timing but in my view such dispute is not material.  The Defendant informed the Plaintiff that she would like to sell the two waste disposal vehicles used in her husband's business and to subcontract out work because of her husband's health.  She asked for $450,000- for the two vehicles.  Eventually the two of them met in certain restaurants in Shatin and arrived at agreements for the sale of the two vehicles as well as for the subcontract work.  There is some dispute as to when and where the meetings took place and whether they met twice or three times.  Such dispute is not material enough to affect my decision on the matter.

17.  According to the Plaintiff, the gist of the agreements eventually arrived at between him and the Defendant was as follows: -

(i) The Plaintiff would pay to the Defendant a sum of $400,000-.

(ii) Such sum was apportioned as to $220,000- being the price of the two vehicles and as to $180,000- being the consideration for the Defendant granting the subcontract work to the Plaintiff.

 The subcontract work was divided into two parts: -

(a) The work which was subcontracted by Man Shing to the Defendant or her husband (“the MS Works”).

(b) The work which the Defendant or her husband was doing for clients other than Man Shing, including other main contractors or individual clients (referred to by the parties in these proceedings as “the KTS Works”).

(iv) As for the MS Works, the monthly fee for the subcontract work would vary according to any variation in the number of locations or points for the picking up of refuse.

(v) As for the KTS Works, the monthly fee for the subcontract was fixed at $30,900-, irrespective of whether there was any variation in the number of locations or points for the picking up of refuse.

(vi) In each month, the Defendant should pay into one of the two personal bank accounts of the Plaintiff's wife the subcontract fee due and then telephone the Plaintiff's wife to inform her of the amount of the payment.

18.  According to the Defendant, the gist of the agreements arrived at was as follows: -

(i) The price of the two vehicles was $400,000-.  No part of it was attributed to being the consideration for the grant of the subcontract work.

(ii) The monthly subcontract fees for both the MS Works and the KTS Works were variable depending on any variation in the locations or points for the picking up of refuse.

(iii) There was no agreement fixing the KTS Works fee at a rate of $30,900- per month.

(iv) In each month, the Defendant should pay into one of the said two personal accounts of the Plaintiff's wife the subcontract fees due and then telephone to inform her of that fact.

19.  It is common ground that the Plaintiff did pay the sum of $400,000- to the Defendant and obtained a transfer of the two vehicles.

20.  Having considered the evidence of all the witnesses and all the documentary evidence put before the Court, I have no doubt that the version of the Defendant is to be preferred to that given by the Plaintiff and his wife.  I find as a fact that there was no agreement that the subcontract fee for the KTS Works was fixed at the rate of $30,900- per month but that, on the contrary, it was agreed that the same should be variable depending on any variation in the number of locations or points for the picking up of refuse.  I set out my reasons below.

21.  According to the Defendant, during the negotiations, the Plaintiff asked her what the volume of the work which she was proposing to subcontract out was.  She compiled two sheets of paper containing the information and gave them to the Plaintiff.  One sheet of paper contained the details of the MS Works showing 23 locations, the subcontract fee for each of those locations and the total fee of $70,690-.  The other sheet contained the details of the KTS Works showing 16 locations, the subcontract fee for each of those locations and the total fee of $30,900-.  She told the Plaintiff that the total subcontract fees which she would pay him were $101,590- ($70,690- + $30,900-) but that the same would vary depending on the decrease of the locations or points for the picking up of refuse.  She said that she did not really mention the possibility of an increase in the number of locations or points because the market was not good and it was unlikely that she would have new locations added.

22.  The Plaintiff's evidence was that one of the vehicles, that bearing the registration number FN 7555, was very old and due to be scrapped.  The two vehicles were only worth $220,000-.  He was paying $180,000- as consideration for getting the subcontract work.  He therefore must be protected as regards the return which he was going to get on his investment.

23.  As regards the MS Works, the Plaintiff did not mind the commencing subcontract fee of $70,690- being reduced from month to month as a result of reduction in the number of locations.  Further, as Man Shing was a big company and known to him, he would not be worried by any reduction in the number of locations or any possibility of not being able to receive his subcontract fee.

24.  As regards the KTS Works, the Plaintiff was adamant that he insisted on $30,900- per month as a guarantee for a return on his capital outlay of $180,000-.  The Plaintiff and his wife further put forward in support of their allegation of insistence on $30,900- per month the reason that very often the middleman, such as somebody in the position of the Defendant, would disappear and that they would have difficulty in getting paid their subcontract fee for the work.

25.  I find the allegations of the Plaintiff and his wife inherently improbable and incredible for the reasons set out below.

26.  First, the Plaintiff did not give any evidence to the effect that he had even inspected the two vehicles before he put a price on them as being $220,000- or how that sum was arrived at.  On the other hand, the Defendant's evidence was to the effect that appointments were made for the Plaintiff to inspect the vehicles before the price of $400,000- was agreed upon.  The Plaintiff's allegation of the value being $220,000- is not supported by any expert evidence.  The Plaintiff has adduced no evidence to the effect that the vehicle numbered FN 7555 was actually scrapped.  The evidence of the Defendant is clearly to be preferred.  Hence, I do not accept the Plaintiff's allegation that he needed protection for his investment of $180,000-.

27.  Secondly, the most serious flaw in the Plaintiff's allegation is that he has not put a time limit on the alleged obligation on the part of the Defendant to pay him $30,900- per month for the KTS Works irrespective of the number of locations.  This must mean that the alleged obligation on the part of the Defendant is permanent, irrespective of whether she earns any fee from her own clients.  The Plaintiff and his wife said in evidence that if a location was cancelled, the Defendant was under an obligation to put in a substitution location to make it up.  They also said that under the alleged agreement, even if the Defendant were to increase the number of locations to 50 or 100, the Plaintiff was under an obligation to do the subcontract work for $30,900- per month.  A substantial increase in the number of locations would throw an immense burden on the Plaintiff because it would necessitate an increase in the number of vehicles and amount of manpower in order to get the work done.  It was practically impossible for the Plaintiff to have agreed to such an arrangement.  Furthermore, there was no way in which the Defendant could ensure that she would be able to get a substitute location or point in case one was deleted.  Moreover, as can be seen from the two sheets of paper referred to in paragraph 21 above, each location or point would command a different amount.  The allegation by the Plaintiff that the Defendant was under an obligation to provide substitute locations in case of deletion of existing locations does not make sense at all.  It was equally improbable for the Defendant to have agreed to such an arrangement.

28.  As it turned out, the volume of the MS Works was gradually reduced from 23 locations with a subcontract fee of $70,690- in April 2001 to 12 locations with a subcontract fee of $25,092.80 in September 2003.  The volume of the KTS Works was gradually reduced from 16 locations with a subcontract fee of $30,600- in April 2001 (which was already $300- lower than the figure of $30,900- originally quoted by the Defendant to the Plaintiff one month earlier in about March 2001) to 8 locations with a subcontract fee of $9,500- in November 2003.  This is borne out by the detailed monthly schedules produced by the Defendant for the MS Works from April 2001 until September 2003 inclusive and for the KTS Works from April 2001 until November 2003 inclusive setting out the locations and the amount of subcontract fee for each location for each month during those periods (“the detailed monthly schedules”).  The contents of the same have not been challenged by the Plaintiff or his wife.

29.  I have no doubt that, if the volume for the KTS Works had not decreased in the way it did, the Plaintiff and his wife would not have said that even if the number of locations had been increased to 50 or 100 they would still be obliged to do the work for $30,900-.

30.  The allegation on the part of the Plaintiff and his wife is so bizarre that it is simply incapable of belief.

31.  Furthermore, the Plaintiff's allegation of agreement on a fixed rate is contradicted by the evidence of Wong Man Shing, who was called by the Plaintiff as a witness.  Wong Man Shing has about 20 years' experience in the trade.  His company is very substantial because he employs a staff of 500–600 persons.  His evidence was that people in the trade would never agree to a fixed sum for any subcontract work.  The fee for a subcontract would vary depending on the addition or deletion of locations.

32.  The reasons put forward by the Plaintiff and his wife about their worry that the middleman might disappear also does not make sense.  If the Defendant were to disappear, her disappearance would affect the Plaintiff's ability to collect the subcontract fees in relation to both the MS Works and the KTS Works.  Further, the fixing of a rate for the KTS works at $30,900- per month would not offer any protection for the Plaintiff against the disappearance of the Defendant.

33.  Thirdly, the mode and amounts of payment of the subcontract fees by the Defendant to the Plaintiff simply do not support the allegation by the Plaintiff of a fixed fee of $30,900- for the KTS Works.  I shall elaborate on this when I come to deal with the Defendant's pleas of set-off and counterclaim.

34.  Finally, I find the Plaintiff and his wife to be evasive and totally unreliable witnesses.  I find it very difficult to believe them on the material aspects of their evidence.  This is particularly so in view of the way in which the allegations by the Plaintiff and his wife regarding a sum of $90,000- paid by the Defendant into one of the personal accounts of the Plaintiff's wife on 16^th April 2003 were originally made and later changed.  This will be dealt with in greater detail below.

The Plaintiff and his wife and Yue Fat and Yue Fung

35.  At this juncture, I should deal with the relationship between the Plaintiff and his wife and the two companies, Yue Fat and Yue Fung.

36.  On the evidence, despite the fact that technically the two companies are separate legal entities, I find as a fact that the Plaintiff and his wife, Yue Fat and Yue Fung operated closely and interchangeably with each other.  I find that Yue Fat, and probably Yue Fung also, were in fact controlled by the Plaintiff and his wife.  The reasons are set out below.

37.  First, as mentioned above, the Plaintiff and his wife were the only two shareholders and directors of Yue Fat.  According to the Plaintiff in paragraph 6 of his 1^st Witness Statement, he in turn subcontracted the MS Works and KTS Works to Yue Fat.

38.  Secondly, it is admitted by the Plaintiff and his wife that sums due from clients to Yue Fat were sometimes also paid into the two personal bank accounts of the Plaintiff's wife.

39.  Thirdly, in about October 2003, Man Shing began to appoint Yue Fung as the subcontractor for the MS Works in place of the Defendant.  In giving evidence, the Plaintiff tried to give the impression that this substitution had nothing to do with him and that Yue Fung was a separate entity.  The lie was given by Wong Man Shing who in his evidence said quite plainly that the appointment of Yue Fung in substitution for the Defendant was suggested by the Plaintiff and it was still the Plaintiff who was doing the subcontract work.  This again undermines the credibility of the Plaintiff.

The payment of $90,000- on 16^th April 2003

40.  This matter really gives the Court an insight into the extent to which the Plaintiff and his wife were prepared to go in order to bolster up their case.

41.  It is the Defendant's case that on 18^th December 2003 there was a meeting between the Defendant and the Plaintiff's wife at which they were to do an accounting exercise to see who was owing whom money.  At that meeting, the Defendant produced a lot of documents including receipts and bank documents which showed that the Plaintiff ought to give her credit for various sums which she had incurred on his behalf or which he owed her.  The Plaintiff's wife took away all those documents on the pretext that she needed to check the sums.  She also refused to make copies for the Defendant, despite the latter's request, on the ground that her photocopying machine was out of order.  It is denied by the Plaintiff's wife that she did anything of that sort.

42.  The Defendant had kept records of the relevant transactions and it was from such records that she discovered that on 16^th April 2003 she made a payment by cheque in the sum of $90,000- into the personal account of the Plaintiff's wife.  I set out below how this matter developed between the two sides.

43.  In paragraph 21 of the original Defence and Counterclaim filed on 22^nd September 2004, the Defendant pleaded: -

“21.   The Defendant has settled the entire outstanding monthly Works sum for both Works due to the Plaintiff.  The Defendant has altogether paid a total sum of HK$1,058,037.00 to the Plaintiff for the monthly Works sum for both Works from 1^st April 2001 to 12^th November 2003.”

44.  The Plaintiff asked for further and better particulars of the said paragraph 21 of the Defence and Counterclaim.

45.  By an Answer filed on 19^th November 2004, the Defendant supplied further and better particulars of the said paragraph 21 of the Defence and Counterclaim as follows: -

“ANSWER

10.    The said sum was paid either by cash or by cheque.

11.    For those payments by cash, the Defendant could not recall when, where and how exactly those payments were made.

The Defendant used to pay the Plaintiff himself and sometimes she would deposit cash into the bank account of the Plaintiff's wife, Madam Leung Yuet Sin.  The Defendant was given two bank account numbers of Madam Leung Yuet Sin, namely, HSBC A/C No. 520-X-XXXXXX and Hang Seng Bank A/C No. 293-X-XXXXXX.

The Defendant recalled that she had paid a sum of around HK$90,000.00 in or about the end of Year 2002 and a sum of around HK$90,000.00 in or about April 2003 by depositing the same into either one of Madam Leung's bank account.

The Defendant had also paid a sum of around HK$50,000.00, HK$20,000.00 and HK$100,000.00 to the Plaintiff himself on or about June 2003, October 2003 and 15^th December 2003 respectively.

12.    For those payments by cheque, the Defendant is able to ascertain documentary evidence in respect of the payments as set out below.  [There then follows a table with details of the payee accounts, dates and serial numbers of the cheques and the amount of each cheque.]”

46.  By a letter dated 1^st March 2005, the Plaintiff's then solicitors, Messrs. Massie & Clement, asked the Defendant's solicitors to supply documentary evidence of the payment of the said two sums of $90,000.-.

47.  In reply, by a letter dated 10^th March 2005, the Defendant's solicitors asked the Plaintiff's then solicitors for discovery of the bank statements of the said two personal accounts of the Plaintiff's wife.

48.  The Plaintiff's then solicitors duly supplied the bank statements requested and subsequently pressed for an answer to the inquiry contained in their said letter dated 1^st March 2005.

49.  By a letter to the Plaintiff's then solicitors dated 1^st April 2005, the Defendant's solicitors said, inter alia: -

“Our client did also deposit HK$90,000.00 cash to Madam Leung Yuet Sin's Hang Seng Bank Account No. 293-X-XXXXXX on 16^th April 2003.  The said entry can be seen in Madam Leung's bank passbook.”

50.  One would have thought that at that stage, namely, about 1^st April 2005, it would have been quite easy for the Plaintiff's wife to check from her own bank whether the Defendant did in fact make a cash payment of $90,000- into her account.

51.  What happened next was that the Plaintiff's wife filed her 1^st Witness Statement dated 20^th April 2005 and said as follows in paragraphs 46 and 47 thereof: -

“46.   …Despite many requests and demands for the supporting documentary evidence, the Defendant replied that she had deposited HK$90,000- into my Hang Seng Bank account on 16^th April 2003, which were not accepted by me and the Plaintiff.

47.    Meanwhile, I have ascertained on behalf the Plaintiff the said sum of HK$90,000.00 cash being deposited into my Hang Seng Bank account, which was from the repayment of loan made by Mr. Wong Kwai Ping on or about 16^th April 2003.  The Plaintiff had lent a sum of HK$200,000.00 to Mr. Wong Kwai Ping during the period between around February 2002 and March 2002, Mr. Wong Kwai Ping handed a sum of HK$10,000.00 to the Plaintiff on or about 15^th April 2003 and deposited a sum of HK$90,000.00 into the Hang Seng Bank A/C No. 293-X-XXXXXX of the Plaintiff's wife on or about 16^th April 2003.  Further, the balance of remaining debt at a sum of HK$100,000.00 was repaid on or about 26^th November 2004.”

52.  In order to support the evidence of the Plaintiff's wife as set out in paragraph 51 above, the Plaintiff's brother, Wong Kwai Ping, also made a Witness Statement of the same date, 20^th April 2005, in which he said, inter alia, as follows: -

“2. In or about early February 2002, I suffered financial hardship and needed cash flow for my business very urgently.  I therefore phoned the Plaintiff and requested him to lend me a sum of HK$200,000 and undertook to repay the Plaintiff as soon as possible.  On or about 8^th February 2002, the Plaintiff instructed his wife, Ms. Leung Yuet Sin to deposit a sum of HK$100,000 by way of cheque into YFMCS's bank account.  Two days later, I phoned Ms. Leung up and confirmed the deposit of HK$100,000.

3. On or about 9th March 2002, Ms. Leung followed the instruction from the Plaintiff and deposited a sum of HK$100,000.00 by way of cheque into YFMCS's bank account again.  2 days later, I phoned Ms. Leung up and confirmed the deposit of HK$100,000.00.

4. On or about 16th April 2003, I handed a sum of HK$10,000.00 cash to the Plaintiff and deposited a sum of HK$90,000.00 into the Hang Seng Bank A/C No. 293-X-XXXXXX of the Ms. Leung for partial repayment of the debt to the Plaintiff.”

53.  Fortunately for the Defendant, she subsequently managed to locate the relevant bank document relating to the said payment.  By her 2^nd Supplemental Witness Statement dated 6^th January 2006, she said in paragraph 6 thereof that shortly before that date she accidentally discovered, inter alia, the pay-in slip which showed her payment of $90,000- in cash into the Hang Seng Bank account of the Plaintiff's wife on 16^th April 2003 and she exhibited a copy of the same.

54.  It was only subsequently to that that the Plaintiff and his wife admitted that there was in fact the payment of $90,000- by the Defendant into the bank account of the Plaintiff's wife on 16^th April 2003.  They have, however, never explained how the Plaintiff's wife and Wong Kwai Ping came to give the evidence in their respective Witness Statements referred to above.  The Plaintiff was asked in cross-examination about this and he said that he knew that his brother had made the Witness Statement which he did but that he was not clear as to why he did that.  The Plaintiff's wife was cross-examined about this and it was put to her that she and Wong Kwai Ping had fabricated evidence about the $90,000-.  Her answer was that the Defendant should have disclosed the pay-in slip in the first place.  On questioning by the Court, the Plaintiff's wife said that upon checking she was not able to find evidence of any payment by Wong Kwai Ping into any of her bank accounts of a sum of $90,000- whether before or after 16^th April 2003.  What is most significant of all is that Wong Kwai Ping was not called to given evidence.  I asked the Plaintiff's Counsel, Mr. King Wong, why Wong Kwai Ping did not give evidence.  After taking instructions, Mr. King Wong's reply was that Wong Kwai Ping, on learning that the matter of the $90,000- had been resolved, preferred not to come to Court to give evidence.

55.  In all the circumstances, I am firmly of the view that the Plaintiff, his wife and Wong Kwai Ping together made up a story regarding the $90,000- with a view to defeating the Defendant's entitlement to credit for the $90,000- she paid into the account of the Plaintiff's wife on 16^th April 2003 because they believed at that stage that she would be unable to produce the necessary evidence.

The Defendant's Set-Off and Counterclaim

56. The gist of the Defendant's case on set-off and counterclaim can be summarized as follows:

(i) Very soon after 1^st April 2001, when the subcontract work had started, the Plaintiff and/or his wife requested the Defendant to hire workers for him or their company, Yue Fat, to assist in the subcontract work.  The Plaintiff asked the Defendant to pay wages to such workers and set off the same against the subcontract fees.  The Defendant did so accordingly.

(ii) Throughout the subcontract period, the Plaintiff and/or his wife requested the Defendant to make various payments on their behalf or on behalf of their company, Yue Fat, and asked her to set off the same against the subcontract fees.  The Defendant again did so accordingly.

(iii) For the period between 1^st September 2001 and 12^th November 2003, the Defendant was actually employed as a foreman by Yue Fat at the request of the Plaintiff and/or his wife.  They agreed to pay her a salary of $12,000- per month and again asked her to set off the same against the subcontract fees.

(iv) After the setting off exercise, the Defendant has discovered that she has actually overpaid the Plaintiff and/or incurred on his behalf the sum of $269,352- which she now counterclaims against the Plaintiff.

57.  The gist of the case of the Plaintiff and his wife in relation to the claim for a set-off and the counterclaim by the Defendant can be summarized as follows: -

(i) The Plaintiff and his wife never asked the Defendant to employ workers for them or Yue Fat.

(ii) There were occasions on which the Plaintiff and/or his wife did ask the Defendant to incur expenses on behalf of them or Yue Fat but they had reimbursed the Defendant for such expenses either by paying her or setting off the same against the subcontract fees.  In respect of any item for which the Defendant is unable to produce a receipt or other documentary evidence in support, it must mean that the Plaintiff has settled the same with the Defendant.

(iii) The Defendant was never employed as a foreman by the Plaintiff or his wife or Yue Fat.

(vi) In any event, insofar as the Defendant has alleged that she had incurred expenses or done work for Yue Fat, she cannot make a claim against the Plaintiff because Yue Fat is a separate legal entity.

The claims and accounts between the parties

58.  Before I make a finding on the Defendant's set-off and counterclaim, it will be useful for me to set out the relevant sums between the parties.

59.  The Defendant sets out the following sums in the set-off and counterclaim: -

(i)	Subcontract fee for MS Works	$1,227,150-
(ii)	Subcontract fee for KTS Works	$471,000-
(iii)	LESS : total payments made by Defendant to Plaintiff	($1,100,523-)
(iv)	LESS : total amount of reimbursement and payment due from Plaintiff to Defendant	($866,979-)
	Amount due from Plaintiff to Defendant	$269,352  =======

60.  The Plaintiff admits that the subcontract fee for the MS Works was $1,227,150-.  There is thus no difference between the Plaintiff and the Defendant on this aspect.

61.  As regards the total payments made by the Defendant to the Plaintiff, the details are set out in paragraph 21 of the Re-Re-Amended Defence and Counterclaim as follows: -

Date	Mode of Payment	Amount (HK$)
05/06/2001	Cheque	70,190.00
15/05/2001	Cheque	20,600.00
20/06/2001	Cheque	19,500.00
07/07/2001	Cheque	70,190.00
20/07/2001	Cheque	19,500.00
13/08/2001	Cheque	69,190.00
13/08/2001	Cheque	18,017.00
24/09/2001	Cheque	65,970.00
24/09/2001	Cheque	16,700.00
20/10/2001	Cheque	2,300.00
20/10/2001	Cheque	11,700.00
20/10/2001	Cheque	48,790.00
07/12/2001	Cheque	17,590.00
07/12/2001	Cheque	17,290.00
07/12/2001	Cheque	4,500.00
07/12/2001	Cheque	11,700.00
07/12/2001	Cheque	16,200.00
17/12/2001	Cheque	9,686.00
23/02/2002	Cheque	70,220.00
23/02/2002	Cheque	8,200.00
27/04/2002	Cheque	8,200.00
27/04/2002	Cheque	78,360.00
25/05/2002	Cheque	4,100.00
25/05/2002	Cheque	39,030.00
27/05/2002	Cheque	7,000.00
27/05/2002	Cheque	4,800.00
End of 2002	Cash/Cash deposit	90,000.00
16/04/2003	Cash deposit	90,000.00
09/05/2003	Cash deposit	6,000.00
06/2003	Cash	50,000.00
03/06/2003	Cash deposit	10,000.00
10/2003	Cash	20,000.00
06/10/2003	Cash deposit	5,000.00
12/2003	Cash	100,000.00
	Total :	1,100,523.00

62.  The Plaintiff admits and concedes that a total of $1,010,523- was paid by the Defendant into the bank accounts of his wife between May 2001 and January 2004.  The only item in the table set out in paragraph 61 above which is now challenged by the Plaintiff is the cash/cash deposit in the sum of $90,000- at the end of 2002.  Hence, the difference between $1,100,523- (the Defendant's figure) and $1,010,523- (the Plaintiff's figure) is $90,000-.

63.  The Plaintiff claims that the subcontract fee for the KTS Works amounted to $988,800- on the basis that the same was at the fixed rate of $30,900- per month.  I have already found against the Plaintiff in that regard.  The Plaintiff does not dispute that if the fee for the KTS Works was agreed to be variable according to the decrease in the volume of work then the fee should be $471,000- for the relevant period.  This is further supported by the detailed monthly schedules relating to the KTS Works.

64.  The Plaintiff of course denies that he should give credit to the Defendant for any part of the sum of $866,979- being reimbursement or payment due from the Plaintiff to the Defendant.

Findings on the set-off and counterclaim

65.  I find as a fact that the subcontract fee for the MS Works was $1,277,150- on the following grounds: -

(i) It is supported by the documentary evidence showing the locations and the subcontract fee for each location for every month prepared by the Defendant.

(ii) It is admitted and conceded by the Plaintiff.

66.  I find as a fact that the subcontract fee for the KTS Works was $471,000- on the following grounds: -

(i) It is supported by the detailed monthly schedules relating to the KTS Works.

(ii) It is not disputed by the Plaintiff in the sense that the Plaintiff only argues on the basis that there was an alleged agreement for payment at a fixed rate of $30,900- per month irrespective of the number of locations.

67.  I find as a fact that the total payments made by the Defendant to the Plaintiff amounted to $1,100,523- as claimed by the Plaintiff.

68.  I find as a fact that the Defendant was employed as a foreman by the Plaintiff either in his own name or Yue Fat for the period between 1^st September 2001 and 12^th November 2003 at a salary of $12,000- per month.

69.  I find as a fact that the Defendant did make payments at the request of the Plaintiff by himself or his wife for which she should be reimbursed by the Plaintiff.  I find that there is no substance in the point raised by the Plaintiff that he should not be responsible for reimbursements or payments due from Yue Fat because, as I have found above, Yue Fat was controlled by the Plaintiff and his wife.  Further, such reimbursements and payments arose at the request of the Plaintiff and/or his wife acting on his behalf.

70.  I find that the total amount of reimbursements and payments due from the Plaintiff to the Defendant should be in the sum of $866,979-.

71.  I shall set out the reasons for my findings in paragraphs 67–70 above hereinafter.

72.  As stated in paragraph 62 above, regarding the sum of $1,100,523- said by the Defendant to have been paid to the Plaintiff as detailed in paragraph 61 above, the Plaintiff only disputes the sum of $90,000- said by the Defendant to have been paid at the end of 2002.

73.  It is common ground that payment of the subcontract fees was due from the Defendant to the Plaintiff in the month following the month in which the subcontract work was performed.  A comparison of the payment schedule set out in paragraph 61 above with the detailed monthly schedules reveals that the payments as detailed in paragraph 61 above could not simply have been on the basis of a straight monthly payment for the MS Works (variable and set out in the detailed monthly schedules relating to the MS Works) and for the KTS Works (allegedly at a fixed rate of $30,900-).  The Plaintiff and his wife admitted that that was so.  They, however, explained that the reason was twofold: -

(i) There was indeed some set-off agreed with the Defendant who had incurred some expenses on their behalf, although not the expenses alleged by the Defendant.  They did not, however, give details of what expenses the Defendant had incurred on their behalf.

(ii) The Defendant gave the excuse that she herself had not got payment from Man Shing on time and therefore she was not able to make any or full payment to the Plaintiff on time.

74.  As regards the first reason given by the Plaintiff and as claimed by the Defendant, there can be no doubt that the Defendant did make disbursements on behalf of the Plaintiff at the request of him and/or his wife.  Her claim that she, for instance, made payments in respect of court fines, compensation for traffic accidents, fees to Government and purchase of vehicles spare parts is fully evidenced by copies of cheques, receipts and other documents.

75.  In addition to such cheques, receipts and other documents, the Defendant has also produced her handwritten notes.  Her evidence is that such handwritten notes were not contemporaneously made.  What happened was that she entered the relevant payments and transactions in notebooks in a very untidy manner which could only be deciphered by herself.  After the litigation had started, she extracted from her notebooks the relevant entries which became her handwritten notes produced in court.  After that she thought that the notebooks were no longer useful and foolishly destroyed them.  She in fact destroyed those notebooks on two separate occasions, the last occasion as late as the beginning of 2006.

76.  Originally, I had doubts about the Defendant's account about the production of the handwritten notes.  After hearing her evidence, however, I believe that she was telling the truth.  First, a substantial part of her handwritten notes is borne out by the documentary evidence, such as cheques, bank documents and receipts.  Secondly, in order to produce the handwritten notes to fit in with the indisputable documentary evidence, she would have had to be very sophisticated and crafty.  I do not think that she is that type of person.  On the contrary, I think that she is a very straight-forward and honest witness who, despite her low level of education, has a very clear mind and good memory for details.  Thirdly, her allegations of making payment to workers employed for the Plaintiff or Yue Fat and of employment as a foreman by Yue Fat are supported by two such workers, Man Wai Cheung and Lam Siu Lung, who appear to me to be honest witnesses and whose evidence I accept.

77.  The Defendant was cross-examined about some items in respect of which she had obviously made disbursements or incurred expenses at the request of the Plaintiff and/or his wife and in respect of which there is no record in her handwritten notes.  Counsel for the Plaintiff sought to attack the truth and accuracy of her handwritten notes on this ground.  Her reply was that she had failed to record such items by oversight and therefore had not made a claim.  I find that the fact that she had failed to record and claim something in respect of which she was entitled to make a claim against the Plaintiff certainly does not support an allegation that she has put forward bogus claims.

78.  As regards the Defendant's claim that she was employed as a foreman by Yue Fat at the instance of the Plaintiff and his wife, it is also supported by circulars and notices issued by Yue Fat (acting by the Plaintiff and his wife) which clearly described her as a foreman.  Furthermore, it is quite clear that a substantial amount of the work she was required to carry out had nothing to do with the MS Works or the KTS Works.

79.  The evidence of Wong Man Shing shows that Man Shing had always made payment of the subcontract fees for the MS Works to the Defendant promptly.  If the Defendant had really put forward the reason that she herself had not been promptly paid by Man Shing as an excuse for not paying the Plaintiff promptly, it is inconceivable that the Plaintiff had not contacted Man Shing to find out the truth until a very late stage.  The evidence of the Plaintiff and his wife was that although the Defendant started defaulting in mid-2001, they did not contact Wong Man Shing until the beginning of 2004 when they were told that Man Shing had always paid the Defendant promptly.  Wong Man Shing said that they actually contacted him in about September 2003.  The explanation given by the Plaintiff for not contacting Man Shing earlier was that he was afraid of appearing not to trust the Defendant thus upsetting her.  I reject such evidence given by the Plaintiff and his wife.  Indeed, the evidence which is undisputed is that as between May 2002 and mid April 2003, there was absolutely no payment by the Defendant to the Plaintiff (except for the $90,000- which the Defendants says she paid to the Plaintiff or his wife and which the Plaintiff and his wife deny receiving).  This supports the Defendant's allegation that there were substantial sums set off against the subcontract work fees for the MS Works and the KTS Works.

80.  I accept the evidence of the Defendant about her handwritten notes produced in court.  I accept her evidence that all her documents in support of her claim were handed by her to the Plaintiff's wife on 18^th December 2003 who refused to return the same to her or give her copies.

81.  The total amount of the set-off claimed by the Defendant is $866,979- as particularized below: -

(a)	Salaries of Plaintiff's workers
	$62,400 $12,000 $16,400 $81,600 $20,000 $295,200 $22,588 $6,856 $5,700 $1,600 $6,000 $2,600 $900	$533,844.00
(b)	Salaries of Defendant as supervisor/foreman of Yue Fat (from 01/09/01 to 12/11/03) ($12,000 x 26 months and 12 days)	$316,800.00
(c)	Compensation to victims of traffic accidents caused by Plaintiff's workers	$5,000.00
(d)	Other expenses $1,700 $450 $445 $3,000 $1,440 $4,300	$11,335.00
	Total set-off :	$866,979.00 =========

On the evidence, including the documentary evidence supporting the above, I am satisfied that all such items have been proved by the Defendant.

Conclusion

82.  In the result, I dismiss the Plaintiff's claim and grant judgment to the Defendant on her counterclaim in the sum of $269,352- with interest thereon pursuant to section 48 (1) of the High Court Ordinance Cap. 4 from 19^th December 2003 (the day after the meeting between the Defendant and the Plaintiff's wife when the latter took away all the receipts and other supporting documents produced by the Defendant) to the date of judgment.

83.  I make an order nisi that the Plaintiff should pay the costs of this action including the counterclaim to the Defendant to be taxed on a party and party basis, if not agreed.