BRIGHTFORD LTD. v. CT CONSTRUCTION ENGINEERING CO. LTD.

HCA 17919/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 17919 OF 1998

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J U D G M E N T

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1. These proceedings arise out of an agreement made between the plaintiff and the defendant on 18 December 1997 for the hire by the defendant from the plaintiff of two crawler cranes, one of 100 tons and one of 80 tons, for the monthly rental of $115,000.00 and $100,000.00 respectively, the operators to be supplied by the defendant. The agreement was contained in a fax transmission from the plaintiff to the defendant dated 16 December 1997, which was returned duly signed and confirmed by the defendant and one Mr F. Y. Pang of Wai Sing Engineering Co. Ltd on 18 December. Mr Pang was the defendant's sub-contractor, but apart from pleading in the defence that the cranes were leased to both the defendant and Mr Pang, there has been no serious suggestion that the defendant is not liable for the whole sum of the rental.

2. The agreement, after describing the cranes hired and the monthly rental, goes on to provide for the cost of transporting them to the site, to be borne by the hirer, to require the hirer to be responsible for insurance and maintenance, rather strangely under the heading "Fuel", states that repair is the responsibility of the owner and finally how payment is to be made, giving a 60 days period and interest at 2% per month thereafter.

3. The cranes were delivered to the defendant's work site in Electric Road, North Point on 22 December 1997 where the defendant was the main contractor for piling and foundation works. The cranes were inspected by authorised engineers on 24 December and certificates provided for the purposes of the Commissioner of Labour that they were in good working order.

4. Payments were made by the defendant under the agreement, albeit rather belatedly each time, until that due by 24 May 1998, being under the invoice dated 24 March 1998, when payment apparently ceased. The sums, due and the interest claimed under the agreement are set out in the statement of claim, and do not include that for May 1998. There was no evidence as to why this was, either because it was paid, or for some reason no invoice was issued. Neither were the reduced sums of $100,000.00 and $69,230.00 under invoices numbers 980604 and 980704 explained. However, the defendant took no issue as to the amount claimed or its accuracy.

5. The only defence raised here is that the plaintiff failed to fulfil its obligations under the agreement to repair the cranes when they broke down and thereby caused the defendant loss and damage which is now sought to be set off against the amount claimed, and the excess, if any, is the subject of their counterclaim. The defendant claims that, as a result of the breakdowns of the cranes, a total of 32 working days were lost, when no work on the site could be done, and the plaintiff could not be contacted to arrange repair. The loss claimed consists of the cost of running the site, being daily overheads and employees' wages, and the pro-rata daily hire cost of the cranes. It was originally pleaded that the plaintiff should also be responsible for the liquidated damages the defendant had to pay to the owner of the site for the delay caused by the breakdowns, but this was withdrawn at trial.

6. The plaintiff, by their Mr Lee See Woo, gave evidence that no complaint had ever been received by them as to breakdowns although there was always staff in the office, and that the cranes had been regularly serviced and checked by their technician, Mr Lee Kam Hung. He initially said that these checks were every 3 weeks, but the service reports prepared on each occasion showed that they were rather more erratic than that with a gap at one time of over two months. However, Mr Lee Kam Hung's evidence was that, apart from minor faults, there was never any serious problems with the cranes, and he too received no complaints.

7. Evidence in support of the defendant's case was given principally by a Mr Leung Wing Kwok and Mr Lam Chun Nam. The former was a clerk at the site, employed by Mr Pang the sub-contractor, and the latter the defendant's foreman and site agent. They both relied on the daily reports prepared by the clerk of works and Mr Lam recording events at the site each day, and said that these showed the 32 days when one or other of the cranes were out of order as a result of which no work could be done and the workers would be unable to do anything. Mr Leung said that he was the one who tried to telephone the plaintiff without success and confirmed that nothing could be done on the site if one of the cranes was out of action as they worked together on the piling. This account, however, was not supported by the defendant's other witness, Mr Lam, who admitted that the only time that breakdown of a crane caused work to stop completely was if the other was blocked by it and could not be moved to another part of the site to do other work, which happened only rarely. He was asked to show on the daily records which days this happened, but admitted that he could find no record of such an occurrence.

8. The daily records clearly show for each day the number of workers employed on the site, the work being carried out that day, and, under "Remarks", other information including defects in machinery. Close examination of these show that they do not bear out the defendant's contentions completely. Of the days listed for breakdowns in the defence, there is no record of 8 in the daily records, namely 6 to 8 and 26 to 28 February 1998, 24 March 1998 and 22 June 1998. Of the others, no details are given of the repair required and whether it prevented the machines working at all, or merely needed maintenance, which was the responsibility of the defendant, and it is clear from all but two of them that work continued on the site. Mr Lau Kin Sun who appeared in person for the defendant said that the record did not show parts of days when work could not be done. However, it is the defendant's case that these breakdowns lost whole days, and the records do not support this except for two occasions, 17 May 1998 and 23 June 1998, when the "State of Work" columns shows "100T crane need repair" and "80 tons crawler crane need repair" on the respective days. Even then, it also shows that other work was proceeding on the site and only two workers were idle on the first occasion and five on the second.

9. Apart from these records, the defendant could produce no documentary evidence to support their contentions. There was no written record of telephone calls, or complaints made to the plaintiff, nor written demands to change the cranes or remove them, or any claim for loss as a result of breakdowns, which was not made until these proceedings were commenced.

10. On the evidence before me, I am not satisfied that there were breakdowns sufficient to cause the defendant to cease work on their site, except for the two days I have referred to, nor that they suffered the losses which are claimed.

11. It is inevitable that, on any substantial worksite, using heavy machinery, there will be times when such machinery requires servicing and maintenance. There will equally be times when it needs repairs. This is particularly so when the machinery is not new, as here, where the cranes were some 16 years old, a fact no doubt reflected in the cost of hire. At such times there will inevitably a hiatus in the work, and I have no doubt also that this is factored in to any estimates of time given when contracts are tendered for. As I have found above, there were only two occasions here when part of the work was halted for a whole day for repairs, others, if any, being for shorter periods not recorded.

12. Is the plaintiff responsible for these delays to the extent that they should be liable for any financial loss?

13. On the plaintiff's own evidence there is no record of an attendance by their technician to repair the machines. But equally there is no evidence from the defendant that they were asked on those occasions to do so. Their evidence was that they had had such difficulty contacting the plaintiff that they arranged for their own technician to deal with it, although again, there is no documentary or other evidence to show when such technicians were called or what they were paid. And on each occasion, although the next day's record showed the cranes still needing repair, the record also shows work resuming as before. The obvious inference is that the defect was not serious and was repaired sufficiently within a day so that work could resume.

14. In my view, even if I had been satisfied that the plaintiff had been informed of the breakdown and had failed to arrive immediately, in the absence of a specific provision in the agreement that they should therefore be liable, it is not enough to say that there is a breach of the plaintiff's duty to repair such as to give rise to a claim for loss thereby caused.

15. This case has suffered throughout from a severe shortage of hard evidence except as to the plaintiff's claim that rental in arrears and interest was owing by the defendant. Such documentary evidence as the defendant produced did not support their oral testimony, and evidence which might have done so and which one would have expected to be available if it existed was not forthcoming. In the circumstances I have no alternative but to prefer the evidence of the plaintiff and his witness to that of the defendant, and find that there is no amount on the evidence or in law that the defendant can set against the sums due.

16. I accordingly find that the plaintiff succeeds in the claim for the sums set out in the statement of claim with interest as claimed, and I give judgment accordingly.