TUNG PO DECORATION ENGINEERING LTD v. GREAT BRIGHT ENGINEERING LTD

DCCJ 4853/2020

[2024] HKDC 2081

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION 4853 OF 2020

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BETWEEN

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DECISION ON COSTS

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INTRODUCTION

1.  On 2 July 2024, this Court delivered its judgment to this action (“Judgment”) in which the Court:-

(1) Awarded the sum of HK$216,378.10 (“Judgment Sum”) to the Plaintiff after setting off part of the Defendant’s counterclaim together with interest;

(2) Made an order nisi that costs of the action and the counterclaim be to the Plaintiff to be taxed if not agreed, with certificate for one counsel (“Costs Order Nisi”). The Costs Order Nisi shall become absolute upon the expiry of 21 days from the date of the Judgment.

2.  Subsequent to the Judgment, the Defendant took out a summons for amendment of certain parts of the Judgment under O 20 r 11 of the Rules of the District Court (Cap 336H) (“RDC”). On 28 August 2024, I allowed the Defendant’s application[1] and a Corrigendum was issued on 12 September 2024 (“Amendment”). Pursuant to the Amendment, the amount of Judgment Sum was reduced to HK$47,098.10.

3.  Further, by another summons dated 23 July 2024, the Defendant applied for the Costs Order Nisi to be stayed and not made absolute pending its appeal against the Judgment. On 28 August 2024, I refused to stay the Costs Order Nisi pending the appeal, but granted an interim stay of the Costs Order Nisi up to the date of hearing and directed the parties to lodge further submissions as to whether the Costs Order Nisi should be varied in view of the Amendment.

4.  Pursuant to my directions, the parties have respectively lodged their submissions on 11, 25 September 2024 and 9 October 2024. In gist:-

(1) The Plaintiff’s stance is that the Costs Order Nisi should not be varied and be made absolute;

(2) The Defendant’s stance is that the Costs Order Nisi should be replaced by no order as to costs or, as a fallback position, an order that the Plaintiff should only have 20% of its costs to be assessed on the Small Claims Tribunal scale (“SCT Scale”).

REASONS FOR VARIATION

5.  The reasons relied upon by the Defendant in support of its primary case that there should be no order as to costs (which also apply mutatis mutandis to its alternative case) can be summarized into the followings:-

(1) Both parties have been partially successful in their respective claim / counter-claim, and the disparity between the parties’ respective success is minimal;

(2) The Plaintiff’s primary pleaded case – that it had completed “over 99%”[2] or “over 99% of the contracted works … on or before 4 January 2020” as confirmed by the Defendant in the meeting on 17 January 2020[3] – has completely failed;

(3) In finding that the Plaintiff had been in repudiation, the Court found that the Plaintiff’s version of events to be “inherently incredible”.[4] On the contrary, the Defendant’s version was found to be credible and supported by unimpeached evidence[5];

(4) The length of the trial was markedly increased from 5 days to 9 days partly due to the Plaintiff’s belated introduction of new witnesses less than a month before the commencement of the trial. The new evidence raised new issues, but the Plaintiff’s case on both new issues was rejected by the Court.

6.  In relation to its alternative case, the Defendant further submitted, inter alia, that the outcome of the trial was within the jurisdiction of the Small Claims Tribunal and it was unreasonable for the Plaintiff to persist with its claim in the District Court upon having sight of the Defendant’s counterclaim.

APPLICABLE PRINCIPLES

7.  There is no dispute that the Court has wide discretion with costs. In exercising its discretion, the Court is entitled to, insofar as is relevant to the present case, take into account: (a) the underlying objectives set out in O 1A r 1 of RDC; (b) the conduct of all the parties and (c) whether a party has succeeded on part of his case, even if he has not been wholly successful: O 62 r 5(1) of RDC.

8.  In considering the parties’ conduct, the Court shall bear in mind various factors including, insofar as is relevant to the present case: (a) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (b) the manner in which a party has pursued or defended his case or a particular allegation or issue; (c) whether a claimant who has succeeded in his claim, in whole or in part, exaggerated his claim; and (d) the parties’ conduct before, as well as during, the proceedings: O 62 r 5(2) of RDC.

SUMMARY OF DECISION

9.  Having considered the parties’ written submissions, I come to the decision that the Costs Order Nisi should be varied and there should be no order as to costs. Below are my reasons.

ANALYSIS

(A) Partial Success & Disparity

10.  The Plaintiff’s claim is for outstanding payment for renovation works performed. In general, the performance of works was not hotly disputed by the Defendant (subject to the same being proven by the Plaintiff).[6] The primary defence relied upon by the Defendant is a set-off by way of counterclaim for overpayment to, and damages for repudiation of contract by, the Plaintiff. If one takes a holistic view of the parties’ cases, the trial was in substance a contest between parties on the quantum of their respective claim and counterclaim.

11.  In respect of the outcome of their claim and counterclaim (in terms of the quantum awarded), both parties can be said to have won only a small fraction of their cases:-

(1) I found in favour of the Plaintiff’s claim in the sum of HK$205,604.10, which accounts for about 25% of its pleaded claim;

(2) I found in favour of the Defendant’s counterclaim in the sum of HK$158,506, which accounts for about 17% of its pleaded counterclaim.

12.  I do not find the disparity between the parties’ respective rates of success (and the difference in quantum) to be of high significance. It suffices to say that both parties were only able to succeed on a relatively small fraction of their cases. Indeed:-

(1) If one takes into account the amount of set-off, the net sum awarded to the Plaintiff (ie HK$47,098.10) only accounts for about 5.75% of its pleaded claim. The value of the net award is small in the sense that the making of the award is within the jurisdiction of the Small Claims Tribunal;[7]

(2) Apart from the amount awarded under the counterclaim, the Defendant also succeeded in claiming for certain additional expenses to be deducted from the outstanding sum payable to the Plaintiff, whether through concession by the Plaintiff or otherwise. Those additional expenses were however not pleaded as part of the counterclaim (although in theory they could be). Hence, whilst I am not of the view that the disparity between the parties’ rates of success to be a matter of significance, the Defendant’s successful rate is in substance higher than 17%.

13.  Against this position, the Plaintiff submitted that it was the substantive winner of the claim and counterclaim because:-

(1) The actual worth of the Plaintiff’s works as found by the Court amounted to almost 80% of the total amount payable for the works upon completion. On the other hand, it was unreasonable for the Defendant to refuse making any payment to the Plaintiff;

(2) The Court should take into account 13 additional or variation works (“VO Works”) of which the completion was admitted by the Defendant but no sum to those VO Works was awarded by the Court due to want of objective valuation evidence. These VO Works were recorded to be worth HK$100,250 under the payment application forms submitted on behalf of the parties on about 3 January 2020 (“3^rd PAF”);

(3) The Defendant has unreasonably sought to disparage the Plaintiff’s works by refusing to take into account the additional works and underestimating the degree of completion by the Plaintiff (of which the position was rejected by the Court[8]);

(4) The Defendant has failed in most of the heads of the counterclaim and exaggerated its counterclaim with a view to pressurize the Plaintiff.

14.  I am not persuaded by the aforesaid arguments.

15.  First, the mere fact that the actual worth of the Plaintiff’s works amounted to almost 80% of the total amount payable is neither here nor there insofar as whether the Plaintiff was the substantive winner of the action is concerned. The fact remains that, after taking into account the set-off, the Plaintiff was only able to achieve or obtain about 5.75% of its pleaded claim, which is a far-cry from the Plaintiff’s contention that it was the substantive winner. On the other hand, the relatively small amount awarded to the Plaintiff also suggests that the Defendant might not be unreasonable in refusing to make any payment for the outstanding sum after properly taking into account the merits of the parties’ cases.

16.  Second, despite the value of the 13 VO Works was reportedly the same under both parties’ 3^rd PAFs, there is no justification for me to take the stated value into account in deciding whether the Plaintiff is the substantive winner, since it was my finding that the stated value had neither been agreed nor verified.[9] Indeed, given my findings as to the nature of the 3^rd PAF,[10] there were ample reasons why the stated value of the 13 VO Works under both parties’ 3^rd PAFs was the same. In the premises, it is futile to suggest (insofar as it was the Plaintiff’s stance) that the Plaintiff has failed to establish its claim under the 13 VO Works only for technical reason. In my view, the lack of objective valuation evidence is a material cause for the failure of the Plaintiff’s claim for the 13 VO Works. This is especially glaring when there was evidence that invitation has been made by the Defendant on 7 January 2020 for the Plaintiff to inspect the work progress at the site with professional surveyor.

17.  Third, as I have found in the Judgment, the absence of any reference to the additional or variation works in the evidence of Cheung Siu Ming (“Ming”) was because of the Defendant’s position that these works were performed without approval rather than due to their non-existence.[11] As to the degree of completion, the reason why the Court refused to accept Ming’s evidence was that Ming was inherently not an impartial witness (being a staff of the Defendant) and hence incapable of making an objective assessment.[12] Ming’s evidence was not rejected on his credibility.

18.  Fourth, whilst the Defendant has admittedly only been successful in a small fraction of its pleaded counterclaim, I am unable to come to the view that it would per se mean that the Defendant had exaggerated its claim with a view to pressurize the Plaintiff:-

(1) Among the heads of claim by the Defendant, certain heads (or amount under those heads) were conceded by the Plaintiff. This demonstrates some degree of genuineness in the Defendant’s counterclaim;

(2) For certain heads of claim rejected by the Court, the reason for rejection was not that the Defendant had provided no evidence (which would be indicative of an exaggeration of its claim) but the evidence provided was insufficient to satisfy the connection between the repudiation and the damages suffered.[13]

19.  All in all, the fact that the parties were both partially successful in their respective claim and counterclaim by a relatively small fraction and the little disparity on their degree of success tilt strongly in favour of a reflection of this result by making no order as to costs.

(B) Failure of Plaintiff’s Primary Case

20.  It is undisputed that the Plaintiff has failed to prove its primary case of substantial performance – that the works were performed by “over 99%” or “over 90%”.[14] Insofar as legal costs is concerned, there seems to me to be no good justification as to why the Plaintiff should now be entitled to this part of the costs.

21.  The Plaintiff succeeded in its alternative case of quantum meruit. However, despite the Plaintiff’s success, it is pertinent to note that the evidence relied upon by the Plaintiff on quantum meruit has been rejected by the Court.[15] The favourable outcome of the Plaintiff claim under its alternative case was entirely derived from evidence produced, and concessions made, by the Defendant, namely:-

(1) A Schedule of Completion produced by Ming (工程完成度紀錄表) (“Ming’s Schedule”), under which Ming set out his own observation on the degree of completion of works by the Plaintiff;

(2) Concessions made by the Defendant in a schedule jointly prepared by the parties pursuant to the Order of the Court dated 4 September 2023 (“Work Schedule”).[16]

22.  In my view, the Plaintiff would be unable to succeed in quantum meruit if not for the Ming’s Schedule and the Defendant’s concessions in the Work Schedule (which only came in shortly before the commencement of the trial). On this footing, it would appear that, despite the Plaintiff had been the ultimate winner on quantum meruit, a fair costs order is that the Plaintiff should not be entitled to its costs despite its success in its alternative case.

23.  From the above perspective, I am also of the view that no order as to costs would be the appropriate costs order.

(C) Credibility of Plaintiff’s Witnesses

24.  Under O 62 r 5(1) of RDC, credibility of a witness is not a relevant factor which the Court has to take into account when considering the appropriate costs order. In a trial involving factual disputes, the Court invariably has to rule on the credibility of a witness. In my view, unless there are specific observations on the credibility of a witness which goes to the conduct of the relevant party, findings on the credibility of a particular witness should not be a relevant factor to be considered when it comes to costs.

25.  In the present case, although I found against the Plaintiff on the credibility of its witnesses regarding the repudiatory event on 4 January 2020 and the meeting on 17 January 2020, I am not of the view that their credibility have shed any light on the conduct of the Plaintiff so as to affect the latter’s position on costs.

26.  For this reason, I find this factor to be irrelevant in deciding whether the Costs Order Nisi should be varied.

(D) Trial Length

27.  Less than a month before the commencement of the trial, the parties took out a consent summons on 10 October 2023 for the introduction of new witnesses and evidence, for which order in terms was granted on 16 October 2023. Pursuant to the said order, a total of 4 witness statements (with annexures) were filed after the pre-trial review hearing. In particular:-

(1) The Plaintiff filed 4 additional / supplemental witness statements (including those from two new factual witnesses) on 20 October 2023; and

(2) The Defendant filed 3 supplemental witness statements from its 3 witnesses on 1 November 2023.

28.  As it later transpired at trial, much of the cross-examination arose from these newly adduced statements (and the documents annexed). Nevertheless, neither party has made any proactive attempt to update the Court on the time estimate after these statements were filed. The trial, which was originally fixed for 5 days, eventually took up to 9 days.

29.  The Plaintiff submitted that it was the Defendant who contributed to the marked increase of trial days. The Plaintiff argued that: (a) it had not deviated substantially from its own time estimation; (b) the introduction of new witnesses did not raise any new issues; and (c) it was the Defendant who had introduced long witness statements right before the trial with voluminous exhibits which were not disclosed beforehand.

30.  Having considered the parties’ submissions, I reject the Plaintiff’s argument.

31.  When the parties sought to introduce new evidence at the eleventh hour before trial, the real issue is not whether it would disturb the original time estimates previously given by the parties. Common sense tells that it would, as the increment on number of witnesses and expansion of evidence would normally entail more cross-examination. In my view, in a situation like this, the real issues would rather be:-

(1) Why were the new witnesses and evidence not introduced at an earlier stage, and was there any reasonable excuse for the parties to introduce them at such a late stage?

(2) Having introduced the new witnesses and evidence at a late stage, whether any action has been taken by the parties to facilitate the conduct of the trial, including those underlying objectives under O 1A r 1 of RDC?

32.  The aforesaid issues are relevant to the decision on costs as they would reflect the parties’ conduct before and during the proceedings. See: O 62 r 5(2) of RDC.

33.  In the present case, there is no reason why the new witnesses and evidence could not be introduced at a much earlier stage. Further, upon the introduction of the new witnesses and evidence, there could have been actions taken to facilitate the conduct of the trial and/or to remedy the uncertainty brought by the introduction of the new and voluminous evidence, including (but not limited to) making proactive and realistic update and evaluation on the trial length and timely proposal as to any new trial arrangement. Nevertheless, none of these have been done. During their opening submissions, the parties were still hoping, and in my view quite unrealistically, that the evidence could be finished within the original time estimation. The consequence was that, quite expectedly and contrary to the Plaintiff’s submissions, both parties had deviated substantially from their own time estimations.

34.  In my view, the parties’ passiveness in dealing with the consequence of their introduction of new witnesses / evidence is a matter which the Court is entitled to take into account in determining the appropriate costs order to be made. Having considered the circumstances, I find that both parties have contributed to the overrunning of the trial, and most importantly none of them have taken any step to facilitate the conduct of the trial and the underlying objectives under O 1A r 1 of RDC after the introduction of the new witnesses and evidence. This, in my view, should be reflected by an order depriving the costs of the parties despite both of them appeared to have been partially successful in their respective claim and counterclaim.

(E) Conclusion

35.  Taking into account the above factors and adopting a global view on the entire matter, I come to the view that there should be no order as to costs of the action.

36.  In view of my decision above, it is unnecessary for me to consider the Defendant’s alternative position, namely, that the Plaintiff shall have 20% of its costs to be taxed on SCT Scale.

ORDER

37.  I order that the Costs Order Nisi should be varied and be replaced by no order as to costs.

38.  As to the costs of the paper application for variation of the Costs Order Nisi, although the Defendant is the successful party, the application was effectively necessitated by the Amendment, of which no fault should be attributed to the Plaintiff. In my judgment, the most appropriate costs order should be no order as to costs. I therefore so order.

Mr Billy Mok, instructed by Ho, Tse, Wai & Partners, for the Plaintiff

Ms Valerie Tang, instructed by Yung, Yu, Yuen & Co, for the Defendant

DCCJ 4853/2020

[2024] HKDC 2045

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4853 OF 2020

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BETWEEN

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DECISION

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INTRODUCTION

1.  On 2 July 2024, this Court delivered its judgment to this action (“Judgment”) in which the Court awarded, inter alia, the sum of HK$216,378.10 (“Judgment Sum”) to the Plaintiff after setting off part of the Defendant’s counterclaim.

2.  By a summons dated 30 July 2024 (“Summons”), the Defendant applied for: (a) leave to appeal against the Judgment and (b) stay of execution of the Judgment pending appeal.

3.  After hearing submissions from the parties, I reserved my decision on the leave application and granted an interim stay of execution of the Judgment pending the said decision. I now give my decision on the leave application.

GROUNDS OF APPEAL

4.  According to the draft Notice of Appeal attached to the Summons, the Defendant intended to rely on the following grounds of appeal:-

(1) An error in the finding and calculation of three sums owed by the Defendant to the Plaintiff under “(B) Works disputed by the Defendant under Work Schedule”[1] respectively in the amount of: (a) HK$149,520, (b) HK$10,000 and (c) HK$9,880 (“Grounds 1 & 2”);

(2) An error in rejecting the Defendant’s claim in relation to the lichen wall in the sum of HK$20,500[2] for failing to properly assess the relevant evidence (“Ground 3”);

(3) An error in finding that the Defendant was only entitled to damages in the sum of HK$65,900 under the head of counterclaim for “workmen wages”[3] (“Ground 4”);

(4) An error in rejecting the Defendant’s claim in the sum of HK$16,711.30 under the head of counterclaim for “costs of materials” incurred for completing the outstanding works[4] (“Ground 5”).

LEGAL PRINCIPLES

5.  Under section 63A of the District Court Ordinance (Cap 336), leave to appeal shall not be granted unless the Court is satisfied that: (a) the appeal has a reasonable prospect of success; or (b) there is some other reason in the interests of justice that the appeal should be heard.

6.  The test of whether an appeal has a reasonable prospect of success is whether the applicant can show that he has an arguable case with reasonable chances of success on appeal. A reasonable prospect of success means a prospect which is more than ‘fanciful’ but does not need to be shown to be “probable”. See, for example: SMSE v KL [2009] 4 HKLRD 125.

ANALYSIS

(A) Grounds 1 & 2 – Calculations

7.  Subsequent to the Judgment, the Defendant took out a summons for amendment of the Judgment under O 20 r 11 of the Rules of the District Court (Cap 336H) (“RDC”). On 28 August 2024, I allowed the Defendant’s amendment application and a Corrigendum was issued on 12 September 2024.

8.  It was accepted by the Defendant that, following the amendment of the Judgment, Grounds 1 and 2 had become irrelevant. It is therefore unnecessary for me to deal with these grounds.

(B) Ground 3 – Lichen Wall

9.  The Defendant contended that, in rejecting the Defendant’s case that the unit price of the lichen wall was HK$4,000/m² (instead of HK$2,400/m²), the Court had failed to consider: (a) the second payment application form dated 12 December 2019 (“2^nd PAF”);[5] (b) WhatsApp conversations where the Defendant raised issues with the picture and plan of the lichen wall sent out by the Plaintiff; and (c) evidence of other instances where the Plaintiff accepted disadvantageous arrangements.

10.  In my view, this ground has no reasonable prospect of success:-

(1) First, in relation to the lichen wall, the Defendant’s case is that the relevant sum was agreed to be paid by the Defendant for ordering lichen wall on the Plaintiff’s behalf at the unit rate of HK$4,000/m² (for which the Plaintiff agreed to reimburse the Defendant or be deducted from the sum payable to the Plaintiff). The Defendant therefore not only had to prove the existence of the agreement but also the actual costs being incurred by the Defendant for ordering the lichen wall from the designated supplier at the specified unit rate. In relation to the latter, I have found in paragraph 93 of the Judgment that the email of 19 June 2017 was insufficient evidence as it provided no particulars as to the model of lichen wall quoted (not to mention whether the quoted lichen wall had been ordered or not). In my view, this deficiency cannot be cured by the relevant wordings in the 2^nd PAF even if those wordings were inserted by the Plaintiff;

(2) Further, the relevant wordings in the 2^nd PAF (which the Defendant now relies on) were neither mentioned in any of the Defendant’s witness statements nor put to the Plaintiff’s witnesses during cross-examination. It is also not disputed by the Defendant that the relevance of those wordings was not specifically addressed by the Defendant (who was then represented by another counsel) in its closing submissions. In my view, it would not be fair for the Defendant to be allowed to rely on appeal a point which it had no intention to develop or place reliance at trial;

(3) As for the WhatsApp messages and evidence relating to other instances of disadvantageous arrangements, I am not of the view that they provide much assistance to the Defendant’s case. In particular, the WhatsApp messages are not evidence of any order being placed by the Defendant with the lichen wall supplier. The evidence of other disadvantageous arrangements is also neither here nor there insofar as the specific arrangement in relation to the lichen wall is concerned.

11.  I therefore refuse to grant leave to appeal on this ground.

(C) Ground 4 – Workmen Wages

12.  The Defendant claimed that:-

(1) In relation to payment record by the Defendant to one Mr Ko (高建基) in the sum of HK$11,200, the Court had failed to take into account the viva voce evidence of Cheung Siu Ming (“Ming”) at trial that among the said sum, a portion of it represented payment by the Defendant on behalf of the Plaintiff for works performed by Mr Ko before the repudiatory event on 4 January 2020[6] and other documentary evidence showing that Mr Ko was responsible for carrying out paint job for the ceiling, which corresponded to specific items of the Plaintiff’s works;

(2) In relation to wages paid by the Defendant to other workmen, the Court had failed to take into account the invoice record from one ‘創文雲石工程有限公司’ which showed that works for lift car floor and lift wall were carried out, which corresponded to specific items of the Plaintiff’s works.

13.  In my view, this ground also presents no reasonable prospect of success.

14.  First, issue of fact is decided by pleadings, but not the other way round. Under the Amended Counterclaim,[7] the wages allegedly paid to the workmen in the total sum of HK$234,525 (of which the said payment to Mr Ko in the sum of HK$11,200 formed part) were pleaded to be:-

(1) Damages suffered by the Defendant “as a result of the Plaintiff’s repudiatory breach of the Contract”; and

(2) Wages paid to workmen for completing the outstanding parts of the works “from and including the evening on 4 January 2020 onward”.

15.  The evidence of Ming, even if accepted, only served to show that, among the sum of HK$11,200 allegedly paid to Mr Ko, a portion of it (of which the amount was unknown) was for works rendered by Mr Ko before 4 January 2020. This evidence contradicted the Defendant’s pleaded case in the sense that that portion of wages, even if paid by the Defendant: (a) were not incurred as a result of the repudiatory event on 4 January 2020; and (b) were not paid for works performed by Mr Ko from 4 January 2020 onward. In my view, this evidence ought to be disregarded for being irrelevant to the Defendant’s pleaded case.

16.  Alternatively, even if I were to consider Ming’s evidence relevant (which I did not), his evidence ought to be rejected for being unbelievable. Not only is his evidence in contradiction to the Defendant’s pleaded case, the relevant evidence was also not mentioned in any of his witness statements, despite the Defendant’s reliance on Mr Ko’s payment record in support of its pleaded case that the claim under this head was for works performed from 4 January 2020 onward (but not before). The fact that Ming only proffered this explanation for the first time under cross-examination made his evidence in this respect highly doubtful.

17.  Regarding the other evidence showing certain works were performed by Mr Ko and the other workmen, the fact that there were piecemeal documents showing that Mr Ko and other workmen had been responsible for certain works purportedly corresponding to specific items of the Plaintiff’s works provided very little assistance to the Defendant’s case. There was no credible evidence connecting those documents with any of the payment records relied upon by the Defendant or showing that they related to the Plaintiff’s works. In any event, none of these documents now referred to has been specifically drawn to the Court’s attention by the Defendant in its closing submissions.

18.  In the premises, I refuse to grant leave to appeal under this ground.

(D) Ground 5 – Material Costs

19.  Under this ground, the Defendant contended that:-

(1) The Court had failed to take into account the receipts produced in support of the Defendant’s claim for materials costs; and

(2) In relying on the evidence of Cheung Wah Hang Ricky (“Ricky”) that there was no document or photo showing that any of the materials were used for the Plaintiff’s work, the Court had failed to consider Ricky’s evidence at trial that he was not familiar with the relevant documents and that the matter ought to be directed to Ming.

20.  I find no merit in this ground.

21.  The receipts produced by the Defendant are only evidence that some materials were purportedly purchased from their respective suppliers. These receipts (many of them are illegible) did not show who was the purchaser and, in many of them, one could not even reckon the materials purchased on those occasions. There was also no evidence from the Defendant’s witnesses explaining how these receipts related to the material costs incurred for completing the outstanding works which the Plaintiff should be responsible but for the repudiation. It remained Ricky’s bare assertion (which I attached no weight in the Judgment) that these receipts were relevant to the counterclaim.

22.  Regarding Ricky’s evidence that “matters relating to the receipts should be directed to Ming”, I bear in mind that the burden to establish its counterclaim lies squarely on the Defendant and, in this regard, I am not aware of any credible evidence being led from Ming as to the relevance of these receipts at trial. In the premises, I fail to see any error in referring to Ricky’s evidence that there was no document or photo showing that the materials “were used for the works contracted to the Plaintiff”. Indeed there was none.

23.  By reason of the above, I refuse to grant leave to appeal under this ground.

DISPOSAL

24.  In summary, I find no reasonable prospect of success in respect of Grounds 3 to 5. There is also no other reason why, despite my findings herein, the appeal should be heard in the interests of justice.

25.  For the above reasons, I dismiss the Defendant’s application for leave to appeal under the Summons. Following the dismissal of the leave application, the interim stay of execution of the Judgment granted on 28 August 2024 shall be lifted.

26.  The parties agreed that costs should follow the event. In the premises, I order that costs of the Summons and the hearing be to the Plaintiff to be summarily assessed, with certificate for counsel. I do not intend, and it was not argued, to give any discount on costs to reflect the fact that Grounds 1 and 2 were effectively ruled in the Defendant’s favour, as the subject matters of these two grounds should have been dealt with by way of an application under O 20 r 11 of RDC instead of being pursued by way of appeal.

ORDER

27.  The Court therefore makes the following orders:-

(1) The Defendant application under paragraph 1 of the Summons be dismissed;

(2) There shall be no continuation of the interim stay of execution of the Judgment granted on 28 August 2024 and the same shall be lifted;

(3) Costs of the Summons and the hearing be to the Plaintiff to be summarily assessed, with certificate for counsel;

(4) The parties do lodge their respective statements in relation to costs for the purpose of summary assessment in the following manner:-

(a) The Plaintiff do file and serve its Statement of Costs within 14 days from the date hereof;

(b) The Defendant do file and serve its Statement in Opposition within 14 days thereafter; and

(c) The Plaintiff do file and serve its Statement in Reply (if any) within 14 days thereafter.

Mr Billy Mok, instructed by Ho, Tse, Wai & Partners, for the Plaintiff

Ms Valerie Tang, instructed by Yung, Yu, Yuen & Co, for the Defendant

DCCJ 4853/2020

[2024] HKDC 1086

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4853 OF 2020

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BETWEEN

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JUDGMENT

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INTRODUCTION

1.  This is a trial of an action for outstanding payments in respect of fitting-out works conducted at the construction site of Nos 310-310C, Un Chau Street (“Site”).

BACKGROUND

2.  Unless otherwise stated, the following facts are either uncontroversial or beyond dispute as they are supported by unchallenged contemporaneous documents.

3.  The present dispute arose from a construction project at the Site (“Project”) to which Po Shing Construction Ltd (“Po Shing”) was the main contractor.

4.  Insofar as the interior fitting-out works under the Project are concerned, Pinn Work Ltd was engaged[1] as the consultant, who then engaged[2] Wang Hing Interior Design Company Ltd (“Wang Hing”) as the contractor. Among all the fitting-out works, Wang Hing contracted those relating to the following areas (“Relevant Works”) to the Defendant:-

(1) The main entrance lobby (“Entrance”);

(2) The clubhouse (“Clubhouse”); and

(3) The lift cars (“Lift Cars”).

5.  Before October 2019 (and perhaps in around November 2018), the Defendant sub-contracted the Relevant Works to Tunghoi Construction Material Ltd (“Tunghoi”) in accordance with the unit rates stipulated in the Schedules of Quantities and Rates provided by Rider Levett Bucknall Limited, the surveyor of the Site (“RLBSchedules”). At the time when the Defendant engaged Tunghoi, the Relevant Works were taken charge of by Mr Au Kwok Ming (區國明) (“Mr Au”) and Mr Lam Wing Hong (林永康) (“Mr Lam”).

6.  In about October 2019, Tunghoi was unable to perform all the Relevant Works and, through the introduction of Mr Lam,[3] the Defendant agreed that the Plaintiff should take up the Relevant Works which remained unperformed by Tunghoi at the Site (“Unperformed Works”). At that time, the persons who operated the Plaintiff’s business were principally Mr Li Ka Lok (李嘉樂) (“Mr Li”) and his wife (“Mrs Li”), in particular:-

(1) Mr Li was a director and majority shareholder;

(2) Mrs Li’s was the other director and the secretary.

7.  At the material times, the Defendant’s representatives at the Site were Mr Cheung Wah Hang, Ricky (張華亨) (“Ricky”) and Mr Cheung Siu Ming (張肇銘) (“Ming”).[4]

8.  The contract between the Plaintiff and the Defendant (“Contract”), which was made orally,[5] contained, inter alia, the following terms:-

(1) Payment for the Unperformed Works should be subject to the progress of their completion;

(2) 10% of the total sum payable should be retained by the Defendant as retention money (“Retention Money”) to secure the rectification of defects by the Plaintiff after completion;

(3) The Retention Money would be released after expiry of defect liability period between the Defendant and Wang Hing.

9.  Among the Unperformed Works, the Plaintiff was required to provide and install a set of stainless steel letterboxes at the Entrance (“Letterboxes”), which were ordered by the Plaintiff from Lai Fai Metal Products Company Limited (“Lai Fai”) in about November 2019 and the same was delivered on 2 January 2020.

10.  There is no dispute that the Plaintiff did conduct the Unperformed Works at the Site. In addition, some additional or variation works which are not contained or stipulated in the RLB Schedules (“VO Works”) had been performed by the Plaintiff under the Project.

11.  In assessing the progress of completion, the Plaintiff would prepare hand-written records on the progress and the same would be typeset into a progress table in Excel format (進度表) (“Work Records”).[6] During a certain time interval, the Plaintiff would submit a payment application form (“PAF”) together with an updated Word Record to the Defendant for payment. In this regard, a dispute exists as to whether the Defendant has confirmed the Plaintiff’s progress in the Work Records.

12.  According to the Plaintiff, the following PAFs have been submitted to the Defendant in request for payments since December 2019:-

(1) The first PAF submitted on 6 December 2019 in the sum of HK$123,593 (“1^st PAF”);

(2) The second PAF submitted on 12 December 2019 in the sum of HK$72,672.90 (“2^nd PAF”);

(3) The third PAF submitted on 3 January 2020 in the sum of HK$163,833.80 (“3^rd PAF”).

13.  The Defendant has made payments in respect of the 1^st and 2^nd PAFs on about 9 and 19 December 2019 respectively, but without admission that the 1^st and 2^nd PAFs were properly lodged or received. The Defendant, however, did not make any payment in respect of the 3^rd PAF. In particular, the Defendant has produced a different version of 3^rd PAF of which both the applied sum and the contents of the Work Record attached thereto were significantly different.

14.  On 4 January 2020, Mr Li left the Site after a dispute with Ricky and never returned (“1.04 Event”). The parties were in divergence as to the subject matter of the dispute during the 1.04 Event. In gist, the Plaintiff alleged that it was due to Ricky’s refusal to make payment under the 3^rd PAF, while the Defendant alleged that it was due to the quality of the Plaintiff’s works and in particular the defects of the Letterboxes. At the material time, the responsible person for Lai Fai (the supplier of Letterboxes) was one Mr Yam (任偉仲) (“Mr Yam”).

15.  It is undisputed that, by the time Mr Li left the Site, the Plaintiff’s works were not fully completed.[7] However, it is the Plaintiff’s pleaded case that “over 99%” of the works has been completed as of 4 January 2020.[8]

16.  On 7 and 9 January 2020, attempts have been made by the Plaintiff to resolve dispute with the Defendant but without success. However, the Plaintiff claimed that in a meeting on 17 January 2020 (“1.17 Meeting”) allegedly attended to by Mrs Li, Ms Leung (梁曉琪)[9] (“Ms Leung”), Mr Lam, Ricky and Ming at a local restaurant (茶餐廳) near the Site, the Defendant had agreed to or confirmed the followings after cross-checking the 3^rd PAF and the Work Record:-

(1) Over 90% of the works under the works had been completed by the Plaintiff on or before 4 January 2020;

(2) Payment of all outstanding works rendered by the Plaintiff would be made by the Defendant after 19 January 2020 (after the returning of the Site to its owner (“Owner”)).

17.  According to the Defendant, the completion of the works was accepted by the Owner on 20 January 2020, the possession of the Site was handed back to it on the same day.

THE CLAIM & COUNTERCLAIM

18.  The Plaintiff claimed outstanding sum for the works performed as of 4 January 2020 under the Contract or, alternatively, on quantum meruit basis.

19.  It is perhaps of relevance, for it will help understanding the basis of the Plaintiff’s claim, to state that the total amount of the Plaintiff’s contractual claim in the sum of HK$818,953.10 was purportedly deduced from the following formula (“Plaintiff’s Formula”):-

(HK$865,660 + HK$599,250) x 90% - HK$296,265.90 - HK$203,200

20.  The Plaintiff’s Formula was composed by or formulated on the basis of the following elements and facts:-

(1) The amounts of all the works allegedly performed by the Plaintiff as of 19 December 2019[10] and hence entitled to be paid by the Defendant were: (a) HK$865,660 for Unperformed Works and (b) HK$599,250 for VO Works as shown in the Work Record attached to the 3^rd PAF produced by the Plaintiff;

(2) Over 90% of the works had been completed by the Plaintiff on or before 4 January 2020 as confirmed by the Defendant’s representatives in the 1.17 Meeting;

(3) A total sum of HK$296,265.90 was paid by the Defendant to the Plaintiff in November and December 2019 in partial settlement of the sum due to the Plaintiff;

(4) A total sum of HK$203,200 has been incurred by the Defendant for discharging the Plaintiff’s obligations under the Contract.

21.  Under the counterclaim (which was also pleaded as a defence of set-off), the Defendant claimed against the Plaintiff for the followings:-

(1) The sum of HK$129,510 being the Defendant’s overpayment to the Plaintiff under the Contract (“Overpayment”); and

(2) Damages for the Plaintiff’s repudiation of the Contract (“Repudiatory Damages”).

ISSUES IN DISPUTE

22.  Despite the numerous controversies between the parties and the issues stated in the Agreed List of Issues filed by the parties, the material issues which call for the Court’s determination at trial are in essence:-

(1) Whether the Plaintiff has substantially performed the Unperformed Works and VO Works. In this regard, the Court should particularly look into the following areas:-

(a) Whether there is any evidence showing that “over 99%” of the works had been completed on 4 January 2020;

(b) Whether the parties have confirmed and/or agreed in the 1.17 Meeting that over 90% of the works had been completed by the Plaintiff as of 4 January 2020;

(c) Whether the contents of the Work Record attached to the 3^rd PAF (in particular the items and total prices of all the works) were confirmed by the Defendant;

(2) If the answer to (1) is ‘no’, whether the Plaintiff is entitled to damages on quantum meruit basis and, if so, the quantum;

(3) Regarding the counterclaim for Overpayment, whether the Defendant has overpaid the Plaintiff for the contracted works;

(4) Regarding the counterclaim for Repudiatory Damages, whether the Plaintiff was in repudiatory breach of Contract;

(5) If, having answered the issues in (4) and/or (5) above the Court finds that the Defendant is entitled to Overpayment and/or Repudiatory Damages, the quantum.

WITNESSES

23.  At trial, the Court has heard evidence from the following witnesses tendered by the parties:-

(1) Mr Li, Mrs Li, Ms Leung and Mr Yam for the Plaintiff;

(2) Ricky, Ming and Mr Kelvin So (“Mr So”)[11] for the Defendant.

PRELIMINARY MATTER

24.  The trial of this matter was originally fixed for 5 days.

25.  By a consent summons dated 10 October 2023 (taken out less than a month before commencement of the trial), the Plaintiff applied to file and serve, inter alia, 4 additional witness statements. The consent summons was ordered in terms on 16 October 2023.

26.  Among the 4 witness statements, two of them (namely, Ms Leung and Mr Yam) were made by witnesses who were newly introduced by the Plaintiff since the pre-trial review.

27.  As for the remaining two witness statements, they were further statements made by Mr and Mrs Li primarily for the purpose of tendering several schedules in compliance with the directions given at the pre-trial review hearing. They also sought to give further details and information as to the works completed by the Plaintiff and the quantification of damages.

28.  Despite the introduction of two new factual witnesses and the expansion of scope of evidence, neither party has attempted to re-fix the trial or updated the Court with any new time estimation before the commencement of the trial. It was only until the third day of the trial that the parties’ counsel informed the Court that 2 more days would be required. The trial eventually took up to 9 days, with the evidence from the Defendant’s witnesses being taken on 3 non-consecutive days all of which over-running beyond the normal Court hour.

29.  In my view, when new evidence is being introduced at the eleventh hour before trial, it is incumbent upon counsel to make realistic update and evaluation on the trial length, and to make timely proposal to the Court as to any new trial arrangement well before commencement of the hearing. It would not be conducive to a smooth and fair trial for the parties to simply shy away from the matter hoping that the Court would give leniency to the parties when the trial overruns. The way this matter was handled is unsatisfactory and should not be repeated in future.

PLAINTIFF’S CLAIM

Right to Payment

(A) Substantial performance

30.  There is no dispute that the Plaintiff’s works were not fully completed by the time Mr Li left the Site on 4 January 2020. The Plaintiff’s case is, however, that it should be entitled to payment since the contracted works have been “substantially performed”.

31.  It is trite that where a builder under a lump-sum contract fails to perform some of the agreed works, the builder can recover nothing for the work which was actually completed despite the fact that the other party may have received substantial benefit therefrom, subject to the doctrine of “substantial performance”: Chitty on Contracts (35^th ed), §25-030. The doctrine is also applicable to a contract to perform work in consideration of payment of different sums for different parts of the work: Willimas v Roffey Bros & Nicholls (Contractors) Ltd [1991] 1 QB 1, at 8D-10E and Keating on Construction Contracts (11^th ed), §4-027.

32.  The Defendant did not seek to argue that the doctrine had been excluded by an express provision of the Contract or that the doctrine itself was questionable as a matter of legal principle, see for example: Chitty on Contracts (35^th ed), §25-031. The Defendant only took issue on whether there was “substantial performance”, the onus of proof lying upon the Plaintiff.

33.  The general principle of substantial performance has been set out in Hoenig v Isaacs [1952] 2 All ER 176 as follow:-

(1) When a contract provides for a specific sum to be paid on completion of specified work, the court leans against a construction of the contract which would deprive the contractor of any payment at all simply because there are some defects or omissions. For this reason, it is not every breach, but only a breach which goes to the roof of the contract, which absolves the employer from his promise to pay the price, such as an abandonment of the work when it is only half done;

(2) Unless the breach goes to the root of the matter, the employer cannot resist payment of the price. He must pay it and bring a cross-claim for the defects and omissions, or, alternatively, set them up in diminution of the price. A familiar instance is when the contract provides for progress payments to be made as the work proceeds, but for retention money to be held until completion. The entire performance is usually a condition precedent to payment of the retention money, but not to the progress payments. The contractor is entitled to payment pro rata as the work proceeds, less a deduction for retention money (which would only be payable until the work is entirely finished, without defects or omissions).

34.  In determining whether there was substantial performance of the works, the Court would consider:-

(1) The nature of the defects and the proportion between the costs of rectifying them and the contract price: Keating on Construction Contracts (11^th ed), at §4-019;

(2) Whether the work can be “readily made good”: Golden Sand Marble Factory Ltd v Hunnewell Ltd HCA 4649/1997 (2 February 2001, DHCJ Gill, unreported), at §63.

(B) Whether there was substantial performance

35.  In relation to the issue of substantial performance, the Plaintiff’s case is that:-

(1) It has performed the works in accordance with the RLB Schedules and in accordance with the Defendant’s instructions. In particular, it was pleaded in the ARDCC that it had completed “over 99%” of the works by 4 January 2020;

(2) It relied upon an alleged agreement by the parties in the 1.17 Meeting that the Plaintiff had completed “over 90%” of the works on or before 4 January 2020.

Plaintiff’s Case in ARDCC – Completion of “Over 99%”

36.  Having considered the parties’ evidence, I hold that the Plaintiff has failed to establish that it had completed “over 99%” of the works on 4 January 2020 for the following reasons:-

(1) The burden rests on the Plaintiff to show, by way of credible evidence, that it had completed “over 99%” of the works on 4 January 2020;

(2) The Plaintiff has tendered no objective evidence (eg valuation evidence) at trial to justify that it had completed “over 99%” of the works on 4 January 2020. It appears from Mrs Li’s testimony that this percentage was arrived at arbitrarily instead of based on any objective assessment;

(3) The Plaintiff relied on a ‘defect list’ dated 4 February 2020 (“Defect List”) issued by Po Shing and argued that the items responsible by the Plaintiff should mainly be about touch-ups or cleaning only, which were mostly rectified by 26 February 2020;

(4) The Defect List is not evidence of all defects existing immediately after the 1.04 Event. According to Mr So (whose evidence in this area was not subject to challenge), the Defect List was issued following an inspection by the Owner’s designer on 20 January 2020 and is therefore only evidence of defects existing on 20 January 2020 (16 days after the 1.04 Event);

(5) Furthermore, it could not be seriously disputed that, after the 1.04 Event, rectification works had been carried out by the Defendant in anticipation of the imminent handover of the Site to the Owner within the same month. For this reason, the Defect List would not be able to include defects which had been rectified during that period;

(6) It is also Ming’s evidence that the Defect List might not cover defects which had been continuously under rectification, such as the lichen wall (苔蘚牆);

(7) In any event, even if I were to give any weight to the Defect List, it cannot be reasonably deduced from it that the Plaintiff has completed “over 99%” of the works on 4 January 2020. It would be apparent from the Defect List that as of 20 January 2020, there were admittedly still 45 items which needed to be followed up. No evidence has been adduced as to how these 45 items could be scientifically translated into a percentage of “over 99%” of work completion, let alone over 99% of work completion as of 4 January 2020;

(8) The Plaintiff’s counsel sought to argue that most of the items which needed to be followed up only concerned touch-up and cleaning. In my view, even if that were the case, it did not mean that those works were necessarily so insignificant to the extent that they did not account to even 1% of the works, given that the Plaintiff’s works were mainly about interior fitting-out of which the degree of the works’ finishing would be a rather weighty factor in considering whether those works were fully completed;

(9) The Plaintiff also relied on two video clips taken by Mr Lau of the Plaintiff at the Site on 7 January 2020 and photo to demonstrate that the works had been substantially performed. In my view, whilst they served the purpose of demonstrating that various fitting-out works were performed, I would not attach great weight to them in deciding the precise degree of completion of those works in the absence of any objective evidence explaining how they could reflect and be translated into the work progress claimed.

37.  In the circumstances, the crucial point in deciding whether there was substantial performance of the Plaintiff’s works would be whether the work progress had been allegedly agreed by the Defendant in the 1.17 Meeting.

1.17 Meeting

(A) Defendant’s stance

38.  The Defendant’s stance towards the 1.17 Meeting is two-folded, namely:-

(1) The 1.17 Meeting did not exist;

(2) Alternatively, there was no agreement that the Plaintiff’s works had been completed by “over 90%”.

39.  Having considered the parties’ evidence, I find in favour of the Defendant that no agreement was reached in the 1.17 Meeting that the Plaintiff’s works had been completed by “over 90%”. For this reason, it is unnecessary for me to make any finding on the existence of the 1.17 Meeting. It suffices for me to set out only the reasoning of my ruling on the second point hereinbelow.

(B) No agreement reached in 1.17 Meeting

40.  The Plaintiff’s pleaded case is that, in the 1.17 Meeting, it was agreed that over 90% of the works had been completed on or before 4 January 2020. According to Mrs Li’s witness statement, it was Ricky and Ming who agreed to the completion progress on the Defendant’s behalf.

41.  When being asked during cross-examination under what circumstances the said ‘agreement’ was reached in the 1.17 Meeting, the following evidence was given by Mrs Li:-

(1) Mrs Li was the one who initiated and raised with Ricky and Ming in the 1.17 Meeting that the completion progress of the Plaintiff’s works was over 90% (多於九成) and demanded the Defendant to make payment;

(2) Although it was mentioned in Mrs Li’s witness statement that Mr Lam and Ming had sat together to verify the 3^rd PAF, it appears from her evidence during cross-examination that the ‘agreement’ on the degree of completion reached was more likely to be a product of negotiation than verification of the actual works done. This is apparent from: (a) Mrs Li’s evidence that she already had in mind giving a 90% discount to the total amount due prior to the meeting and before she made the suggestion to Ricky; and (b) there was no evidence that Mr Lam and Ming had walked through the Site to confirm the degree of completion. It was Mrs Li’s evidence that the 1.17 Meeting was all along conducted in a local restaurant near the Site and she was not allowed to enter the Site that day;

(3) Regarding Mrs Li’s suggestion, it was Mrs Li’s evidence that Ricky either did not respond (佢無回應), indicate any disagreement (佢無反對) or reject the suggestion (佢無拒絕). When being asked whether Ricky specifically agreed to the suggestion, Mrs Li’s evidence was that Ricky neither agreed nor disagreed (無同意、無反對). For this reason, Mrs Li treated Ricky had agreed to her suggestion (我覺得佢同意);

(4) Ricky had indicated that the payment would be made by the Defendant, but subject to the degree of completion of the works (俾幾錢再商討，基於東寶做咗幾多嘢再商討). It was on this basis that Ricky told Mrs Li that the Defendant would arrange payment after the handover of the Site back to the Owner on 19 January 2020 (佢哋話1月19號交完場再安排俾錢), to which Mrs Li understood that the Defendant had agreed to her suggestion (我理解係佢哋同意90%收錢).

42.  Even taking Mrs Li’s evidence to the highest, I am unable to form the view that, by refraining from expressing disagreement to Mrs Li’s suggestion, Ricky had acquiesced or even agreed to Mrs Li’s suggestion that the Plaintiff’s progress of completion was over 90%. Reading Mrs Li’s evidence in the proper context, it is obvious that the reason why Ricky did not indicate any disagreement on the spot was because he needed to take time to verify the degree of completion, which could not be done or confirmed during the 1.17 Meeting.

43.  The other Plaintiff’s witness, Ms Leung, claimed that an agreement had been reached in the 1.17 Meeting. Given the material inconsistency between her evidence and that of Mrs Li during cross-examination, I have no alternative but to reject Ms Leung’s evidence in this respect. Indeed, as admitted by Ms Leung, she was only a bystander and had taken no part in the discussion during the 1.17 Meeting. I find that Mrs Li’s evidence would be inherently more cogent than hers when its comes to the terms of the discussion.

44.  In any event, insofar as it was suggested that Ricky and Ming had confirmed that the degree of completion was over 90% by going through all the items in the 3^rd PAF in the 1.17 Meeting, I find this to be incredible for the following reasons:-

(1) It was the evidence of Mrs Li and Ms Leung that the only document gone through by the parties in the 1.17 Meeting was the 3^rd PAF (and the Work Record attached). However, both Mr and Mrs Li emphasized that the 3^rd PAF only reflected the Plaintiff’s work progress up to 19 December 2019. There was no evidence as to how and on what basis Mr Lam and Ming had worked out the Plaintiff’s work progress between 20 December 2019 and 4 January 2020, to which the Word Record was silent. It would appear that if they did ascertain any work progress during that period in the 1.17 Meeting, they had to do it out of vacuum, which in my view is inherently implausible;

(2) The above must be considered in light of other documentary evidence which showed that, as of 20 December 2019 (and up until 4 January 2020), the Plaintiff’s work progress, at least from the Defendant’s point of view, was still far from being satisfactory. For example:-

(a) On 20 December 2019, Ricky still complained through WhatsApp that various materials and decoration works at the Entrance had not been applied for and completed. On 30 and 31 December 2019, Ricky also sent out a rather extensive list of outstanding works which awaited finishing;

(b) Pursuant to a joint inspection walk conducted on 2 January 2020 and attended by the representatives of the Employer, Po Shing, ICIL and Thomas Chow Architects Ltd (“TCA”),[12] TCA commented that the interior fitting out works have been unsatisfactory and requested Po Shing to take immediate action to carry out and complete outstanding items and defect rectification works;

(c) According to the WhatsApp messages sent by Ricky in the morning of 4 January 2020, there were still a lot of outstanding works which the Plaintiff was required to follow up. Deadlines relating to certain works at the Lifts were further extended to go beyond 4 January 2020.

(3) Given the persistent history of complaints by Ricky and TCA between 20 December 2019 and 4 January 2020, one would wonder – how would Ricky and Ming suddenly be able to agree in the 1.17 Meeting that the Plaintiff’s progress of completion was over 90% by 4 January 2020 when at the same time all they had was a Work Record which only reflected work progress up to 19 December 2019? How could they come up with such conclusion without any proper documentary reference or any inspection at the Site to verify the progress? In my view, there was simply no justifiable basis for Ricky and Ming to come up with the conclusion and/or agreed with Mrs Li’s suggestion that those works were completed by over 90%;

(4) During her cross-examination, Ms Leung had mentioned about Ricky going in and out of the restaurant by himself during the 1.17 Meeting, but soon confirmed that the purpose Ricky leaving the restaurant was not for the purpose of inspecting or verifying the work progress at the Site. Indeed, I also find that it could not be so, for otherwise Ricky would have left the restaurant with Mr Lam instead of by himself alone;

(5) What adds to the difficulty of confirming the progress of completion is that the 3^rd PAF[13] contained hundreds of entries, and it would be unimaginable for the parties to go through and verify those entries within about one hour, which Mrs Li confirmed to be the duration of the 1.17 Meeting.

45.  The 1.17 Meeting ended without any written record of the ‘agreement’ reached. Ms Leung’s evidence was that the 3^rd PAF marked with progress of completion was retained by Ming when the meeting concluded. In my view, it would be improbable for Mrs Li not putting down on record (perhaps through a WhatsApp message, which she was accustomed to use as a means of communication) about the ‘agreement’ reached shortly after the 1.17 Meeting but to wait until about 18 March 2020 when the Plaintiff’s solicitors issued one of their pre-action letters to the Defendant, particularly in view of the fact that:-

(1) The Plaintiff’s own case suggests that Mrs Li would be desperate to have the outstanding sum from the Defendant; and the degree of completion was an important element in working out the amount of the outstanding sum;

(2) At the same time, Mrs Li was left with no written confirmation after the 1.17 Meeting as to the ‘agreed’ degree of completion; as someone taking care of the finance of the Plaintiff, there was no reason why Mrs Li would not want a record to protect the Plaintiff’s interest. This was especially so when the whole purpose of the 1.17 Meeting was about agreeing or working out the degree of completion of the Plaintiff’s works.

46.  For the above reasons, I reject the Plaintiff’s evidence that an agreement had been reached in the 1.17 Meeting that the Plaintiff’s works had been completed by over 90% as of 4 January 2020.

Amount Payable Upon Completion

(A) Relevance of the issue

47.  Given my findings above that the Plaintiff had failed to establish its pleaded case that the Contract had been substantially performed to “over 90%” or “over 99%” as of 4 January 2020, it would appear to be unnecessary for me to find what was the amount payable to the Plaintiff upon completion since one the elements of the Plaintiff’s Formula (ie the percentage of completion) has fallen away.

48.  However, having considered the Plaintiff’s pleaded case and Mrs Li’s evidence, I am of the view that the amount payable to the Plaintiff upon completion remains a relevant issue even though the Plaintiff has failed to establish its claim under the Plaintiff’s Formula. This is because:-

(1) In its opening submissions and Mrs Li’s supplemental witness statement,[14] the Plaintiff purported to set out an alternative form of calculation of the sum payable, namely, that the Plaintiff should be awarded 100% of the total contracted sum yet deducting a sum representing the unfinished works and touch-ups and taking into account the appropriate amount to be credited to the Defendant;

(2) In my view, this alternative form of calculation is acceptable. In the present case, the Contract does not provide for lump-sum payment but payments subject to progress of the works. Failure to complete should normally not go to the root of the matter, and the Defendant cannot resist payment of the price save for bringing a cross-claim for the defects and omissions or set it up in diminution of the price. The entire performance of the works was only a condition precedent to the payment of Retention Money but not progress payments: Hoenig v Isaacs(supra);

(3) The Plaintiff also has an alternative claim based on quantum meruit, and it is the Plaintiff’s submission that the total amount payable on completion should form the basis of what would be the reasonable market value of those works. It seems to be the Plaintiff’s case that the alternative form of calculation suggested by Mrs Li would likewise apply to computation of the reasonable market value.

(B) Different versions of 3^rd PAF and Work Record

49.  The Plaintiff’s case on the amount payable upon completion was principally premised upon the Work Record attached to the 3^rd PAF referred to in Mr and Mrs Li’s witness statements[15] (“P’s 3^rd PAF”). The Work Record provided that the total amount which the Plaintiff should be paid upon completion of the works was:-

(1) HK$865,660 for Unperformed Works; and

(2) HK$599,250 for VO Works.

50.  The Defendant denied having received P’s 3^rd PAF. However, the Defendant had produced another version of 3^rd PAF in Ming’s supplemental witness statement (“D’s 3^rd PAF”),[16] which was prepared by Ming on instructions from Mr Lam, and the same was passed to Ricky but no approval had yet been obtained. The Work Record enclosed to D’s 3^rd PAF purportedly showed that upon completion the Plaintiff would be entitled to:-

(1) HK$719,260 for Unperformed Works; and

(2) HK$168,500 for VO Works.

51.  In light of the conflicting evidence, the first question that I have to determine is whether P’s 3^rd PAF should be received by the Court.

(C) Nature of 3^rd PAF

52.  According to the Plaintiff’s pleaded case and Mr Li’s witness statement, the procedure for preparation of PAFs was as follow:-

(1) The Plaintiff would first prepare handwritten records of the items and the Plaintiff’s progress of the works and the Defendant would typeset the same to become the printed Work Records;

(2) The Plaintiff and the Defendant would check against the items therein together by inspecting the Site. It was not explicitly stated whether the said inspections would be conducted before or after the typing up of the Work Records, although the way the Plaintiff and Mr Li expressed it in pleadings and witness statement seemed to suggest that they took place after the Work Records were typeset;

(3) After the aforesaid inspections, the Plaintiff would submit a PAF together with the agreed Work Records to the Defendant for processing payment.

53.  Pausing here, it is noticeable that if the site inspections took place after the Work Records were typeset, then the production of a typeset Work Record per se does not necessarily mean that the same has been agreed or approved by the Defendant. The critical issue would be whether the items stated in Work Record had been checked against through site inspection by the parties’ representatives.

54.  In this regard, it was Mr Li’s evidence in Court that all the payment applications (which necessarily included the 3^rd PAF) were mainly handled by Mr Lam, who would provide the relevant hand-written documents and submit the same to Ming, the person admittedly in charge of type-setting for the Defendant. While Mr Lam would send the hand-written document to Mr Li for confirmation before the same was submitted to Ming, Mr Li frankly admitted that he would only have a brief look of the final figure without verification of the items therein. Mr Li also mentioned that Mr Lam would be responsible for liaising with Ming to verify the Work Records and obtain approval from the Defendant.

55.  The role of Mrs Li in payment applications was even more limited than Mr Li. Her knowledge about how and when a payment application would be made solely came from Mr Li. This is not surprising given that her job duty in the Plaintiff mainly involved assisting Mr Li to process the Plaintiff’s books and accounting only.

56.  In light of the uncontroversial facts above, it would appear that no weight could be given to the evidence of Mr and Mrs Li as to whether the contents of P’s 3^rd PAF were agreed or approved by the Defendant. This is because neither of them was responsible for preparing P’s 3^rd PAF and had no direct knowledge of the items and figures stated therein. Most importantly, neither of them gave evidence as to whether the contents of P’s 3^rd PAF had been checked against during any site inspection. The most relevant evidence, if any, would be that of Mr Lam, who presumably should have prepared the hand-written documents and attended any site inspection with Ming to verify the contents of the Word Records.

57.  In the alternative, even assuming that the site inspections took place before the Word Records were typeset (which seemed to be unsupported by any evidence), Mr Lam’s evidence remained highly relevant as there was no direct evidence showing that P’s 3^rd PAF was a product of any site inspection (eg that it was sent by Ming to Mr Lam after an inspection).

58.  Mr Lam, however, was not called or subpoenaed to give evidence at trial. There was also no witness statement prepared by him. There was simply no evidence from Mr Lam as to how the Work Record attached to P’s 3^rd PAF was prepared and whether its contents had been verified by any site inspection before it was produced by Mr and Mrs Li in their witness statements.

(D) Omission to call Mr Lam

59.  Regarding the situation of an uncalled witness relating a particular issue in civil proceedings, the following applicable principles have been summarized in Ip Man Shan Henry v Ching Hing Construction Co Ltd (No 2) [2003] 1 HKC 256 at paragraph 155:-[17]

(1) If a party has made out a prima facie case, and if there is evidence available to the party against whom the case is established which could displace the prima facie case, and he omits to call such evidence, an inference that such available evidence, if adduced, would not displace the prima facie case can be drawn;

(2) It is also open to a tribunal of fact, upon drawing such inference, to take into account in respect of matter with respect to which the person not called as a witness could have spoken: (a) in deciding whether to accept a particular evidence, which has in fact been given, either for or against that party; (b) in deciding whether to draw inferences of fact, which are open to them upon evidence which has been given;

(3) However, the inference could be rebutted by a plausible explanation by the party who elected not to call the evidence.

60.  The Plaintiff has not provided any explanation as to why Mr Lam was not called to give evidence at trial. It was only until cross-examination that Mr Li said that he had lost contact with Mr Lam for 2 to 3 years although he had attempted to contact him through phone call and WhatsApp message but without success. In my view, Mr Li’s explanation is not plausible for the following reasons:-

(1) Apart from his bare assertion in Court, there was no evidence that Mr Li had made any attempt to secure Mr Lam as witness. In particular, while Mr Li asserted that Mr Lam had not replied to his WhatsApp message, no such messaging record had been adduced by the Plaintiff;

(2) No reason has been given by Mr Li as to why he did not produce any of the messaging record despite his allegation that he had attempted to contact Mr Lam through WhatsApp. It was not suggested that Mr Li’s messaging record had been lost or for any reason irretrievable. The unexplained absence of such record shed light on the truthfulness of Mr Li’s explanation;

(3) There was no evidence as to how many times Mr Li had attempted to find Mr Lam for the purpose of securing him as a witness in these proceedings before Mr Li formed the view that he had lost contact with Mr Lam. In my view, the Plaintiff had failed to show a plausible explanation that there was a genuine attempt to secure Mr Lam as a witness;

(4) This is not a case where the Plaintiff only became aware of the relevance of Mr Lam’s evidence until Mr Li was under cross-examination. It has all along been the Defendant’s case that it did not admit the figures in P’s 3^rd PAF. I see no good reason why no proper evidence was adduced from Mr Lam or, if his attendance could not be secured, a plausible explanation as to why it could not be so secured. In this regard, I find that not only is Mr Li’s explanation unsatisfactory, but that no credible explanation has been given for the omission: Wisniewski v Central Manchester Health Authority [1998] PIQR P 324.

61.  On the other hand, by producing documentary evidence that D’s 3^rd PAF was sent by Ming to Mr Lam in the afternoon of 3 January 2020 (and that the same had been sent to Ricky for approval), the Defendant had shown a prima facie case that P’s 3^rd PAF was not prepared by Ming. Although D’s 3^rd PAF was only produced on 31 October 2023 (less than a week before trial), there could be no dispute that it was sent by Ming to Mr Lam at 5:23 pm on 3 January 2020 hence its authenticity could not be seriously challenged.

62.  In the circumstances, the Court is entitled to draw an inference from the omission to call Mr Lam that his evidence, even if adduced, would not have helped the Plaintiff’s case. See: Li Sau Keung v Maxcredit Engineering Ltd & Anor [2004] 1 HKC 434, paragraph 28.

63.  In any event, the Plaintiff has failed to discharge its burden in showing that, on a balance of probabilities, the contents of P’s 3^rd PAF was produced by Ming or had been confirmed by the Defendant. This was fortified by the evidence of Mr Li who, when being cross-examined: (a) was unable to confirm that P’s 3^rd PAF was the one which was actually submitted, while (b) agreeing that it was possible that D’s 3^rd PAF was the one actually submitted.

64.  The Plaintiff took issue with the absence of certain items of VO Works[18] from D’s 3^rd PAF, while it claimed that it had completed or at least provided the materials for the items therein[19] and performance of certain items were undisputed by the Defendant.[20] The Plaintiff argued that the discrepancy suggested that P’s 3^rd PAF should be preferred. I am not persuaded by this argument for the following reasons:-

(1) The burden of showing that the contents of P’s 3^rd PAF was confirmed by the Defendant through site inspection rests on the Plaintiff. As analyzed above, there was no evidence that P’s 3^rd PAF had been verified in any site inspection;

(2) As supported by contemporaneous document: (a) D’s 3^rd PAF was sent to Mr Lam in the afternoon of 3 January 2020, the date on which the Plaintiff claimed to have submitted the 3^rd PAF; and (b) D’s 3^rd PAF had been sent to Ricky for approval, albeit without response. There was no evidence that any other 3^rd PAF had been submitted after that. The above pointed starkly to the fact that, even if the Plaintiff’s case was to be believed, it would be the Work Record attached to D’s 3^rd PAF (instead of P’s 3^rd PAF) which should have been checked against in site inspection;

(3) The absence of any evidence from Mr Lam also meant that there was no explanation as to why there were 14 items of VO Works in P’s 3^rd PAF which did not appear in D’s 3^rd PAF. In this regard, it would be open to the Court to take this into account in deciding whether to accept such discrepancy to be a matter in favour of the Plaintiff or not: Ip Man Shan Henry v Ching Hing Construction Co Ltd (No 2) (supra). Given points (1) and (2) set out above, I do not consider it to be evidence in favour of the Plaintiff. Indeed, the discrepancy is also consistent with the Plaintiff’s own case that the scope of work agreed between the parties had been revised time and again since the Owner’s architect would revise their designs from time to time.

65.  Further, as Ming pointed out in his supplemental witness statement, there were certain items in P’s 3^rd PAF which were reportedly having achieved progress were in fact non-existent when the relevant Work Record was allegedly prepared. This further supports the improbability of the Plaintiff’s suggestion that P’s 3^rd PAF had been verified by the Defendant.

66.  For the above reasons, I find that the Plaintiff has failed to establish that the contents of P’s 3^rd PAF have been verified or agreed by the Defendant. I will attach no weight to P’s 3^rd PAF and its Work Record for the items of work and the total price of the works stated therein.

(E) D’s 3^rd PAF

67.  Despite my rejection of P’s 3^rd PAF, an outstanding issue remained as to whether the contents of D’s 3^rd PAF (in particular the Work Record attached) had been verified by any site inspection, or was D’s 3^rd PAF merely a document typeset by Ming from Mr Lam’s handwritten record without being verified at all?

68.  According to the Plaintiff’s evidence, the alleged site inspections confirming the contents of the Work Records were attended by Mr Lam and Ming. As analyzed above, the absence of evidence from Mr Lam not only meant that there was no evidence from the Plaintiff to support the existence of those site inspections, but the Court could also draw such inference that even if Mr Lam were to give evidence, his evidence would not be helpful in proving the existence of those inspections. It would also be open to the Court to take this into account in considering whether to accept the Defendant’s evidence that no such inspection had been conducted by the parties.

69.  In my view, there is ample reason for me to accept the Defendant’s evidence that D’s 3^rd PAF had not been verified by the Defendant. I do not intend to repeat my entire reasonings above regarding the implication brought by the absence of Mr Lam’s evidence. It suffices for me simply to point out that if D’s 3^rd PAF had been verified by any site inspection, it would best be proved by the evidence of Mr Lam, and in the absence of his evidence, the Court would be quite entitled to infer that the very existence of this inspection was questionable.

70.  In the premises, I find in favour of the Defendant that D’s 3^rd PAF was merely a document submitted to Ricky for approval only. Although D’s 3^rd PAF was type-set by Ming, its contents were neither agreed by the Defendant nor verified by any site inspection. I will also attach no weight to D’s 3^rd PAF and its Work Record for the items of work and the total price of the works stated therein.

Other Evidence of Amount Payable on Completion

(A) Schedule prepared by Ming

71.  In his witness statement, Ming has produced a Schedule of Completion (工程完成度紀錄表) prepared by him (“Ming’s Schedule”) with reference to the RLB Schedules setting out his own observation on the degree of completion and the defects observed. It is notable that under Ming’s Schedule:-

(1) The total amount payable to the Plaintiff upon completion in respect of the Unperformed Works was HK$771,500;

(2) Ming made no reference to any VO Works. Understanding the Defendant’s case in proper context, I find the reason behind was only because those works were performed without approval from the Defendant instead of they never existed.

72.  On Ming’s Schedule, the first question is whether I should give any weight to it, given that the Court will usually derive assistance from expert evidence in the interpretation of what amounts to a fair commercial rate under a quantum meruit claim: Chitty on Contracts (Hong Kong Specific Contracts) (6^th ed), §8-191 and 陳紹銘 對 黃國雄及另一人 DCCJ 2002/2010 (HH Judge R Yu, 24 September 2013, unreported), paragraphs 89-92.

73.  Having considered the particular circumstances of the case and the authorities cited by the parties, I am of the view that Ming’s evidence is admissible for the following reasons:-

(1) Although the Court invariably requires assistance from expert evidence in assessing the fair commercial rate of work done, it has not laid down any particular rules to limit the way in which a reasonable sum is to be assessed, and each case will depend on its own particular circumstances: Chitty on Contracts (Hong Kong Specific Contracts) (6^th ed), §8-191 and Sun Kai Engineering Co Ltd v Tileman Asia (HK) Ltd HCCT 56/1997 (Recorder Kotewall SC, 6 March 2000, unreported);

(2) Regarding the total amount payable upon completion, Ming’s Schedule only covered the prices of the Unperformed Works, of which the unit prices have been set out in the RLB Schedules. In other words, Ming’s evidence is predominantly about factual issues which were solely within his personal knowledge, ie what were the agreed items of work to be performed by the Plaintiff.

74.  I will therefore consider Ming’s Schedule by giving it due weight when deciding what would be the sum of the Unperformed Works payable to the Plaintiff upon completion. Furthermore, insofar as there is any controversy on the scope of work between Ming’s Schedule and the Defendant’s observations, I prefer the former since Ming was the one who had the direct knowledge of the works performed and would be in the best position to provide the Court with the relevant evidence.

(B) The Work Schedule

75.  Pursuant to an order by Deputy Judge Michelle Lam dated 4 September 2023, the parties have jointly prepared a schedule setting out, inter alia, the scope of works which allegedly had been and had to be performed by the Plaintiff, as well as the parties’ respective stances (and reasons for adopting those stances) on those work items (“Work Schedule”).[21]

76.  The Work Schedule is in substance a “Scott Schedule”, which is a special form of pleadings: Hong Kong Civil Procedure 2024 (Vol 1), §18/12/41 and Atkin’s Court Forms Hong Kong (Issue 101), §302. In my view, the parties’ stances in the Work Schedule shall be binding on them as the Work Schedule carries the effect of pleadings.

77.  Under the Work Schedule, the Defendant has quite fairly made concessions to a number of work items on both Unperformed and VO Works. Hence, for those items which have been conceded unconditionally,[22] I intend to award the Plaintiff, where evidence is available, the corresponding sums under those items.

78.  I will therefore consider the Work Schedule when deciding whether an item of works and its price has been agreed by the parties. I will also take the Defendant’s stances therein in considering whether sufficient evidence has been shown to justify a particular claim.

(C) Summary of Stances

79.  The Plaintiff’s counsel has categorized the items in Ming’s Schedule by reference to the Work Schedule and summarized them (together with those in P’s and D’s 3^rd PAF) in a document enclosed in its closing submissions titled “Summary of Parties’ Respective Stances on Contract Sum by Items” (“Summary of Stances”). The Defendant did not take any specific issue with the contents of the Summary of Stances. In any event, the Summary of Stances is not in itself any evidence but only a document summarizing the figures in the parties’ 3^rd PAFs and Ming’s Schedule, though it would be very helpful in simplifying the quantum calculation exercise.

Computation of Quantum

(A) Works conceded by Defendant under Work Schedule

80.  According to the Summary of Stances, a total of 27 items have been conceded by the Defendant unconditionally under the Work Schedule for falling within the Plaintiff’s scope of works, among which were 14 items of Unperformed Works and 13 items of VO Works. Of these items:-

(1) I agree with Ming’s calculation[23] that the total prices of the following 13 items of Unperformed Works should be HK$149,520:-

	Works under RLB Schedule	Amount
(1)	3/1/3	HK$2,400
(2)	3/1/4	HK$4,320
(3)	3/3/7	HK$6,000
(4)	3/3/8	HK$40,000
(5)	4/1/1	HK$400
(6)	4/3/8	HK$13,500
(7)	4/5/13	HK$1,200
(8)	4/6/17	HK$1,800
(9)	4/7/20	HK$7,500
(10)	4/8/25	HK$6,000
(11)	4/10/29	HK$5,400
(12)	4/23/69	HK$45,000
(13)	4/28/83	HK$16,000
	Total:	HK$149,520

(2) For the remaining item of Unperformed Work to which Ming did not set out any price (ie 4/15/39), I found that it was stipulated in the RLB Schedule that the total sum payable should be HK$16,000;

(3) For the following VO Works, although they were admittedly performed and completed by the Plaintiff, there is no objective valuation evidence before me as to their fair market prices. This is regrettable but the Court is bound by the evidence available: Chitty on Contracts (Hong Kong Specific Contracts) (6^th ed), §8-191 and 陳紹銘 對 黃國雄及另一人(supra), paragraphs 89-92:-

	VO Works
(1)	VO-01
(2)	VO-02
(3)	VO-03
(4)	VO-06
(5)	VO-07
(6)	VO-010
(7)	VO-017
(8)	VO-022
(9)	VO-024
(10)	VO-031
(11)	VO-033
(12)	VO-034
(13)	VO-038

81.  In the circumstances, I hold that the total prices of the agreed Unperformed and VO Works should be HK$165,520 (HK$149,520 + HK$16,000).

(B) Works disputed by Defendant under Work Schedule

82.  As for those items of Unperformed and VO Works which were not admitted by the Defendant under the Work Schedule, the burden rests on the Plaintiff to show the amount payable by way of credible evidence. That would also entail showing that they were/had to be performed and their fair market prices.

83.  With the above in mind, I will make the following findings on the disputed items under the Work Schedule:-

(1) For items disagreed for not being responsible by the Plaintiff,[24] since I have rejected P’s and D’s 3^rd PAFs as evidence of any items of works therein being agreed, there is nothing apart from Ming’s evidence to show whether they were within the scope of the Plaintiff’s work. In the premises, I accept Ming’s evidence and hold that the total price for those items should be HK$6,400;

(2) For items disagreed for other reasons (save those disagreed for no reason),[25] their performances were acknowledged by the Defendant. In assessing their quantum, I shall therefore adopt Ming’s evidence that the prices of all Unperformed Works should be HK$745,220. As I stated above, there is no objective evidence to substantiate the following VO Works, which I have no alternative but to attribute no price being payable upon completion:-

	VO Works
(1)	VO-04
(2)	VO-05
(3)	VO-09
(4)	VO-011
(5)	VO-012
(6)	VO-015
(7)	VO-016
(8)	VO-020
(9)	VO-023
(10)	VO-025
(11)	VO-029
(12)	VO-030
(13)	VO-032
(14)	VO-036
(15)	VO-040
(16)	VO-042

(3) Ming also confirmed that two items of Unperformed Works were actually performed by the Plaintiff, to which he stated that their total prices should be HK$19,880.[26] I accept Ming’s evidence in this respect and hold that they shall be of such price;

(4) There is a remaining category of 17 items in which the Defendant disagreed with no specific reason.[27] For those items, the Plaintiff was put to strict proof. In order to be eligible for payment, the Plaintiff must first prove that they were either within the agreed scope or were actually performed. I find that, apart from VO-047 and VO-048, the performance of these items was prima facie supported by messages, video footages or photos. Item 4/9/27 was even a contracted item. However, apart from the contracted item 4/9/27 which I find its price to be HK$9,000 under the RLB Schedule, there was no objective valuation evidence as to the fair market prices of the other VO Works as stated below:-

	VO Works
(1)	VO-08
(2)	VO-027
(3)	VO-028

84.  I find that the total amount of the disputed works which the Plaintiff would be entitled to be paid upon completion is HK$780,480 (HK$6,400 + HK$745,200 + HK$19,880 + HK$9,000).

85.  Taking into account all the work items involved, the total amount of those works which would be payable upon completion is therefore HK$946,000 (HK$165,520 + HK$780,480).

Deductions

(A) Overview

86.  Under the Statement of Claim (“SOC”), the Plaintiff acknowledged that credit should be given to the Defendant on the followings:-

(1) A total sum of HK$296,265.90 paid by the Defendant during three occasions between November and December 2019 in partial settlement of the sum due to the Plaintiff (“Partial Settlement”);

(2) A total sum of HK$203,200 as expenses incurred by the Defendant for the discharge of the Plaintiff’s obligations under the Contract (“Defendant’s Expenses”).

(B) Partial Settlement

87.  The Defendant did not dispute the amount of the Partial Settlement[28] but alleged that the following two additional payments should also be deducted from the sum awarded to the Plaintiff as advancement made to the Plaintiff:-

(1) HK$100,000 paid on 18 December 2019;

(2) HK$20,000 paid on 21 December 2019.

88.  The Plaintiff conceded that credit should be given to the two sums above although they should be regarded as the Defendant’s Expenses: ARDCC, paragraph 18(4). In light of the Plaintiff’s position under pleadings, it is not necessary for me to resolve the difference, nor the Defendant’s allegation that the first sum was a loan made to Mr Li. It suffices to say that these two sums shall also be deducted from the award to the Plaintiff.

(C) Defendant’s Expenses

89.  The Defendant’s Expenses were itemized in the SOC as follow:-

	Item	Amount
(1)	Lightboxes	HK$12,800
(2)	Wall tiles	HK$15,000
(3)	Bank charge	HK$100
(4)	Glass works	HK$5,300
(5)	Ceiling works	HK$50,000
(6)	Other costs	HK$120,000[29]
	Total:	HK$203,200

90.  Save for the amount for ceiling works as stated item (5) above, the Defendant did not express any dispute over the amount of the Defendant’s Expenses under the Amended Defence and Counterclaim (“ADCC”).  It was however claimed that the following additional expenses should also be deducted from the sum awarded to the Plaintiff:-

(1) HK$20,500 being difference in the costs for supplying the lichen/moss wall (苔蘚牆);

(2) HK$9,550 for re-ordering marbles for the Lift Cars;

(3) HK$6,272 for re-ordering marbles for the lobby concierge table;

(4) HK$55,000 for ordering 55 pieces of timber veneer;

(5) HK$32,000 overpaid upon the 1^st PAF due to incorrect calculation;

(6) HK$100 for bank charge arising from the Plaintiff’s mistake in providing wrong bank account number to the Defendant;

(7) For ceiling works, the Defendant also claimed that the amount should be HK$80,000 instead of HK$50,000.

91.  The Plaintiff accepted that it should be responsible for items (2), (5) and (6) above but disputed the rest.

(i) Lichen wall (HK$20,500)

92.  In gist, the Defendant’s case was that the pattern of the specific model of lichen wall supplied by the Plaintiff (at HK$2,400/m²) failed to satisfy Wang Hing and the Plaintiff had agreed to replace it with the model specified by the designer (at HK$4,000/m²).

93.  Defendant’s claim was based on a quotation of HK$4,000/m² allegedly agreed by the Plaintiff. However, the only evidence supporting the said quotation was an email to one “Jayden Lam” (whose capacity was unknown) dated 19 June 2017, in which no particular was given as to the particular model of “moss tile” quoted.

94.  Further, it is inherently implausible that the Plaintiff would agree purchasing the material at HK$4,000/m² as alleged by the Defendant, since the material costs alone would have substantially exceeded the entirety of the Plaintiff’s quote for the lichen wall. There was no evidence showing why the Plaintiff would accept this seemingly disadvantageous arrangement.

95.  For these reasons, I find that the Defendant has failed to prove that this item was deductible from the Plaintiff’s claim.

(ii) Marbles for lobby concierge table (HK$6,272)

96.  The Defendant’s case was that marble materials had to be re-ordered as a result of the Plaintiff’s mistake in making wrong measurement of the dimensions of the lobby concierge table.

97.  Apart from Ricky bare assertion, the Defendant has not referred the Court to any evidence supporting its allegation. I find that the Defendant has failed to establish that this item was deductible from the Plaintiff’s claim.

(iii) Timber veneer (HK$55,000)

98.  The Defendant’s case was that it had placed order on behalf of the Plaintiff to order 55 pieces of timber veneer and was therefore entitled to be reimbursed.

99.  The Defendant provided evidence that it had issued cheques (although not in the exact total sum of HK$55,000) purporting to purchase timber veneer. However, apart from Ricky own assertion, there was no evidence that the timber veneer was sourced on behalf of the Plaintiff or it was the latter’s duty to provide the timber veneer.

100.  Indeed, the Defendant’s case appears to be inconsistent with a WhatsApp message sent by Ricky on 20 December 2019 in which he said “木皮55塊比你們多時仍未見出現 … [怎]麼交貨”. In my view, the message is more consistent with the Plaintiff’s case that it was not responsible for supplying the timber veneer apart from providing the finishing works.

101.  I find that the Defendant has failed to show that this item was deductible from the Plaintiff’s claim.

(iv) Ceiling Works (HK$80,000)

102.  The Plaintiff’s dispute only relates to the amount of the ceiling works (in which the Plaintiff claimed that only HK$50,000 should be deductible).

103.  According to Ricky’s evidence, the Defendant has paid a total sum of HK$80,000 to a company called Diss Engineering Co in the following manner:-

(1) HK$50,000 on 2 January 2020; and

(2) HK$30,000 on 31 January 2020.

104.  In support of Ricky’s allegation, the Defendant has produced two confirmation documents signed by the contractor on 2 and 31 January 2020. It is apparent from those documents that the Defendant has paid a total sum of HK$80,000 both by way of cheques and cash on those occasions.

105.  In the premises, I find that the Defendant has shown that this item (to the extent of the difference of HK$30,000) should be deductible from the Plaintiff’s claim.

Amount of Plaintiff’s Claim

106.  In summary, I find that the amount to which the Plaintiff would be entitled upon completion is HK$946,000. Such sum, however, shall be subject to deduction of the following items:-

(1) Partial Settlement in the sum of HK$296,265.90;

(2) Defendant’s Expenses in the sum of HK$203,200;

(3) Costs for re-ordering marbles for the Lifts in the sum of HK$9,550;

(4) Overpayment under the 1^st PAF in the sum of HK$32,000;

(5) Bank charge in the sum of HK$100;

(6) Price difference on the ceiling works in the sum of HK$30,000.

107.  Taking into account the deductible items above, the net sum which the Plaintiff would be entitled to upon completion is HK$374,884.10.

108.  However, the aforesaid sum is only a sum which would have been payable to the Plaintiff upon completion, which in fact never happened. Prior to completion of the works on 20 January 2020, various follow-up and rectification works were allegedly performed at the Site. Costs of the relevant follow-up and rectification, which were allegedly borne by the Defendant, formed part of the Defendant’s set-off and counterclaim.

109.  In the premises, I will allow the Plaintiff’s claim in the sum of HK$374,884.10, subject to any set-off by the Defendant’s counterclaim being proven.

SET-OFF FROM DEFENDANT’S COUNTERCLAIM

General

110.  Under the counterclaim, the Defendant sought against the Plaintiff for:-

(1) Overpayment; and

(2) Repudiatory Damages.

111.  The Plaintiff denied liability, claiming that it was not in repudiation. For some of the items sought in the counterclaim, the Plaintiff further argued that it should not be liable to them by reason of the nature of those items.

Overpayment

(A) Overview of amounts overpaid

112.  Under the ADCC, the amount of Overpayment was arrived at in the following manner:-

	Item	Amount
	Sum paid to the Plaintiff under Contract	HK$416,265
+ )	Disbursement paid by the Defendant	HK$35,900
- )	Worth of Unperformed Works completed by the Plaintiff on 4 January 2020 as assessed by the Defendant	HK$322,655
	Total:	HK$129,510

(B) Worth of works completed by the Plaintiff

113.  It is perhaps more convenient for me to conclude this head of claim by disposing of this item first.

114.  The Defendant relied on the assessment in Ming’s Schedule that the worth of the Unperformed Works finished by the Plaintiff on 4 January 2020 was HK$322,655.

115.  Ming’s Schedule contains two categories of information, the first category being the items of contractual works and their respective prices under RLB Schedules (hence the total sum payable upon completion); the second category being Ming’s assessment of the degree of completion of the works (hence the estimated value of the works finished).

116.  As I have stated above, the first category of information was primarily factual in nature, since Ming only needed to confirm whether a particular item was within the scope of the Plaintiff’s works. The same cannot be said about the second category, which required the exercise of an objective assessment based on the status of a particular work on 4 January 2020.

117.  I do not accept Ming’s assessment on the degree of completion of the works.

118.  At the material time of the assessment, Ming was a staff of the Defendant and had to report to Ricky. He was also called by the Defendant as a factual witness whose evidence was subject to vigorous challenge. I have seriously doubt about his impartiality when it comes to an assessment of which the result will dictate the amount of the Plaintiff’s claim. This is particularly so when:-

(1) As observed above, Ming’s assessment did not take into account any of the VO Works, even though they were admittedly performed by the Plaintiff. Whilst I am aware of the Defendant’s legal position that the VO Works were performed without its acknowledgment, this should not be a reason for Ming to refuse stating their worths. The basis of the assessment was, to say the least, doubtful;

(2) Further, the Court has found that the total prices which the Plaintiff would be entitled to upon completion was HK$946,000. Ming’s estimation was thus less than 35% of the total price of the works. It would be a rather bold assertion that the Plaintiff was only able to perform less than 35% of the works after about 2 months while the Defendant would be able to complete the remaining 65% within about 2 weeks’ time.

119.  Having rejected Ming’s evidence, the Defendant will have no evidential basis to support its case on the worth of the Plaintiff’s works completed.

120.  On the other hand, I have found that the total amount payable to the Plaintiff for its works upon completion should be HK$946,000. Further, as I shall find below, the costs of follow-up and rectification of the Plaintiff’s unfinished works is in the sum of HK$158,506. The actual worth of the Plaintiff’s works as suggested by these two figures is HK$787,494 (HK$946,000 – HK$158,506), which has far exceeded the sum and the disbursement paid by Defendant.

121.  For this reason, I reject the Defendant’s counterclaim for Overpayment.

Repudiatory Damages

(A) The alleged repudiation

122.  The Defendant has in ADCC referred to various events in support of its claim that the Plaintiff was in breach of the Contract, but only relied on the following event taking place at the Site on 4 January 2020 in support of the Plaintiff’s repudiation at trial (“Repudiatory Event”):-

(1) Mr Li declared that the Plaintiff would no longer perform the Contract; and

(2) Mr Li announced that the Plaintiff would leave the Site on the same day and ceased to perform the outstanding parts of the remaining works.

123.  The Plaintiff denied the aforesaid Repudiatory Event, claiming that:-

(1) The Plaintiff ceased to carry out the remaining works because the Defendant refused to pay;

(2) Only Mr Li left the Site on 4 January 2020. The Plaintiff did not instruct its workers to leave the Site and they remained at the Site to complete the work after 4 January 2020;

(3) By 4 January 2020, over 99% of the works had in fact been completed and only minor items would require remedies. The Owner also accepted the Plaintiff’s work on 4 January 2020.

(B) What happened during the 1.04 Event?

124.  Both parties provided different versions of evidence as to what happened during the 1.04 Event. In my view, it would be convenient to begin with the undisputed or indisputable events on the day in question:-

(1) In the afternoon of 4 January 2020, Mr Li left the Site on his own initiative and had never returned to the Site ever since;

(2) From 6 pm onwards, the Plaintiff had ceased to be responsible for paying the salaries of its workers;

(3) The Plaintiff and/or Mr Li were not allowed to enter the Site since 7 January 2020. The decision was not made by the Defendant, as supported by the evidence of Mr So that such instruction was received from ICIL after the event on 4 January 2020. His evidence in this respect was unchallenged by the Plaintiff.

125.  In deciding which version of the parties’ cases should be received, it is perhaps desirable to begin by looking at the different reasons provided by the parties as to why Mr Li left the Site on 4 January 2020:-

(1) The Plaintiff’s pleaded case and Mr Li’s evidence was coherent that it was due to the Defendant’s unreasonable refusal to accede to the Plaintiff’s payment application under the 3^rd PAF. According to Mr Li, the Defendant (through Ricky) said it was due to the Plaintiff’s unsatisfactory quality of work but failed to point to any concrete mistake made by the Plaintiff;[30]

(2) The Defendant’s pleaded case was that it was due to: (a) Mr Li’s refusal to replace the Letterboxes which were regarded as defective and beyond repair by the unanimous view of the Employer, Wang Hing and the Defendant reached on the same day; (b) Mr Li’s refusal to continue to perform the Contract and (c) Mr Li’s departure from the Site and indication to workers that the Plaintiff would only pay their salaries up to and including 4 January 2020.

126.  After considering the parties’ evidence and their respective submissions, I find the Plaintiff’s version to be inherently incredible and I prefer the version propounded by the Defendant.

127.  First, I see no credible reason as to why the Defendant would, as alleged by the Plaintiff, refuse making payment at all without pointing to any concrete mistake made by the Plaintiff. This is because:-

(1) The Defendant has undisputably made payments in respect of the 1^st and 2^nd PAFs, despite making certain justifiable deductions. There was no reason for the Defendant to, shortly after receiving the 3^rd PAF, suddenly decide to refuse making payment, especially when the date for handover of the Site to the Owner was approaching and the Defendant was concerned about the completion of the works before the handover;

(2) The irrationality of the refusal was further fortified by the indisputable fact that as of 4 January 2020, there were still some outstanding works and defects which needed to be followed up and rectified by the Plaintiff. Even if the Defendant was dissatisfied with the Plaintiff’s progress or quality of works, it would certainly be in the interest of the Defendant to persuade the Plaintiff to stay and follow up those works, rather than to tell Mr Li that the 3^rd PAF would not be paid at all – in which case the Plaintiff’s abandonment of the works would become readily foreseeable;

(3) On the other hand, if the Defendant were to tell Mr Li that the 3^rd PAF would not be paid at all and expected the Plaintiff to withdraw from the Site immediately, the Defendant would inevitably have to undergo the difficulty of engaging other contractor(s) within a short time so that the latter could complete all the outstanding works before the imminent handover. This was somehow not anticipated by the Defendant, as evidenced by the fact that it had to engage many of the Plaintiff’s workers after 4 January 2020 in order to complete the outstanding works;

(4) In terms of the peculiar time for the Defendant to allegedly refuse payment, even under the Plaintiff’s own pleaded case, it was an express term of the Contract that the Defendant would be given 5 days to verify the Plaintiff’s payment application before proceeding to payment. It begs the question – why would the Defendant reject the payment application on the next day of the submission of the 3^rd PAF (knowing that the deadline for handover was approaching and he was entitled more time to consider the application under the Contract)? And why would the Plaintiff demand payment on the next day of the application in defiance of the express term of the Contract? In my view, the Plaintiff’s assertion in this respect is illogical.

128.  Second, as observed by Mr So, there was a heated dispute between Mr Li and Ricky concerning the Letterboxes during the 1.04 Event. Mr Li also agreed that the issue of the defective Letterboxes had been brought up during the meeting. Surprisingly:-

(1) This matter was not specifically mentioned in Mr Li’s first witness statement when he gave details of the events leading to his departure from the Site on 4 January 2020, despite the matter has been clearly referred to in pleadings;[31]

(2) When evidence relating to the above pleaded facts was brought up by Ricky in his first witness statement, Mr Li only replied in his supplemental witness statement that the Plaintiff had informed the Defendant that the defect was repairable but the Defendant had never requested the Plaintiff to repair or replace the Letterboxes;

(3) During his cross-examination, Mr Li said he had indicated to the Defendant that the Plaintiff would repair the Letterboxes, and if that did not work out, the Plaintiff was willing to replace them.

129.  Two matters may immediately be noted:-

(1) There was a material inconsistency between what Mr Li said in his witness statement on one hand, and his pleaded case as well as his oral evidence on the other. In the latter case, (a) the Plaintiff claimed it had heard from the Defendant that the Letterboxes should be replaced; and (b) Mr Li agreed to make order for replacement. This was starkly contrasted by what he said in his supplemental witness statement. The Plaintiff’s account on the issue of the Letterboxes is therefore incredible;

(2) By omitting to mention this material dispute on 4 January 2020 and by saying that Ricky rejected the payment application without specifying the nature of mistake in his first witness statement, Mr Li smacked avoiding this subject by ignoring the elephant in the room. Given the inconsistency unfolded above, it is not unreasonable for the Court to reject Mr Li’s explanation that this event was immaterial but to infer that he was unable to give any justifiable reply to the Defendant’s allegation.

130.  Third, objective evidence tends to suggest that Mr Li’s evidence regarding the dispute on the Letterboxes was inherently implausible:-

(1) According to Mr Li, the parties did not have any dispute on the defective Letterboxes during the 1.04 Event either because: (a) the Defendant had accepted their quality in the meeting, (b) the Defendant did not request for replacement or (c) the Plaintiff was willing to replace them;

(2) The first reason is prima facie contrary to the site notice issued by Po Shing to ICIL on 5 January 2020, in which it refused to accept the quality of the Letterboxes and requested ICIL to replace the same within 7 days. It would be rather unimaginable that the Defendant would accept the quality of the Letterboxes during the 1.04 Event without first consulting the view of Po Shing, who would be the ultimate party to account to the Owner upon the handover, or if it did, that it would act in contrary to the opinion of Po Shing;

(3) As for the second reason, I am of the view that it is incredible for being contrary to the Plaintiff’s own pleaded case. See: paragraph 13(c)(v) of the ARDCC;

(4) The third reason is inherently implausible and beyond belief. Not only was it the solution required by Po Shing (as shown in the site notice issued on the next day), one would wonder what else could the Defendant ask for in remedying the defects if both solutions, ie repair and replacement, were rejected. In any event, Mr Li has stated in his supplemental witness statement that he had never offered replacement since the Defendant never asked for it.

131.  On the other hand, I find that the Defendant’s version to be more credible:-

(1) The Defendant’s version was largely supported by the evidence of Mr So, whose credibility in this respect was not heavily impeached during cross-examination;

(2) I find it is more likely that, upon forming the view that the Letterboxes were beyond repair, the Defendant has requested the Plaintiff to replace the same but the request was denied by the Plaintiff. I refer to my analysis above for my reasonings;

(3) Although it was accepted that the defect of the Letterboxes was eventually remedied not by total replacement and the overall quality was subsequently accepted by the Owner, this piece of evidence is neither here nor there as the site notice of 5 January 2020 strongly suggests that this could not have been the Defendant’s view during the 1.04 Event. In this regard, whether the view possessed by the Plaintiff during the 1.04 Event was ultimately proven to be ‘right’ by the Owner was entirely irrelevant. What matters is the way in which the Plaintiff handled the disagreement and whether the way he handled amounted to repudiation;

(4) Mr Li accepted that he had never returned to the Site since 4 January 2020 but insisted that he did not instruct the workers to cease working. This might be the case, but it does not mean that there was no repudiation. As accepted by Mr Li, the salaries of the workers who remained at the Site were paid by the Defendant after 4 January 2020. There was no evidence that Mr Li had protested against this arrangement, claiming that those workers should be engaged, and hence their salaries should be responsible, by the Plaintiff. In my view, by leaving the Site and allowing the workers’ salaries to be paid by the Defendant, the Plaintiff has effectively repudiated the Contract;

(5) During cross-examination, Mr Li has shared his own thought that he might return to the Site later since he had not indicated that he would never return. This evidence is irrelevant. In any event, Mr Li has never indicated to the Defendant that he would return to the Site to follow up the outstanding works and, as a matter of fact, Mr Li never returned.

132.  For the above reasons, I find that the Plaintiff to be in repudiation of the Contract when Mr Li left the Site on 4 January 2020. The repudiation was accepted by the Defendant on 7 January 2020 when the Plaintiff was no longer permitted to enter the Site (even though the instruction came from Po Shing).

133.  During his oral evidence, Mr Li has mentioned that he left the Site because of the poor attitude displayed by Ricky (involving the using of foul language) during the 1.04 Event. This matter was neither pleaded by the Plaintiff nor mentioned in any of its witnesses’ statements. In any event, it is not a valid ground for the Plaintiff to abandon the works before completion, to which the Plaintiff would likewise be held in repudiation of the Contract.

(C) The Repudiatory Damages

134.  As a result of the Plaintiff’s repudiation, the Defendant should be entitled to damages. In this regard, the Defendant counterclaims against the Plaintiff for the following items:-

	Item	Amount
(1)	Amount disbursed by Defendant	HK$200,622.00
(2)	Workmen wages for completing outstanding Unperformed Works	HK$234,525.00
(3)	Staff costs for to supervise completion of outstanding Unperformed Works	HK$72,000.00
(4)	Supervision costs charged by Wang Hing to supervise completion of outstanding Unperformed Works	HK$24,000.00
(5)	Staff costs to follow up defects of Unperformed Works	HK$40,500.00
(6)	Costs of materials for completing Unperformed Works	HK$40,350.00
(7)	Costs of materials incurred by reimbursing Mr Lam for completing outstanding Unperformed Works	HK$16,711.30
(8)	Costs of ordering new Letterboxes from Lai Fai	HK$75,000.00
(9)	Metal works of the stainless steel wall adjacent to Letterboxes by Lai Fai	HK$82,000.00

(i) Disbursement by the Defendant (HK$200,622)

135.  This item has overlapped with the Defendant’s Expenses dealt with above.

(ii) Workmen wages (HK$234,525)

136.  The Defendant claimed that a total sum of HK$234,525 had been incurred for wages of workmen to complete the outstanding works of the Plaintiff from the evening of 4 January 2020 onwards falling within the “final works phase”.[32]

137.  In support of its claim, the Defendant has produced certain records of payment of salaries to the workers. These records added up to a figure of over HK$340,000. Clearly, some of these records are irrelevant to the Defendant’s claim under this head.

138.  In his witness statement, Ricky stated that the sum of HK$234,525 was verified (此為經最後核算之數額). However, there was no evidence as to how this sum was verified. The absence of such evidence is particularly telling on the accuracy of the claimed figure in light of the following:-

(1) The Plaintiff was only a sub-contractor of the Defendant for the fitting-out works at the Entrance, Lift Cars and Clubhouse. It is not unreasonable to infer that, at the material time, there were other contracted works being carried out at the Site alongside the Plaintiff’s works;

(2) The payment records did not have the necessary particulars as to how those works were relevant to the Plaintiff. Most of these records (save for those which came with invoices) only contained the workmen’s names, signatures, work periods as well as the dates, modes and amounts of payment. The said information is, however, unhelpful in deciding whether these payments related to the Plaintiff (or other contractor(s));

(3) Among the documents is a payment record in the sum of HK$11,200 made to one Mr Ko (高建基) for period between 2 to 8 January 2020, ie including period before the Repudiatory Event which the Plaintiff should never be held responsible. Some of these records even did not contain any working period. This shed light of the relevance and reliability of these documents;

(4) In any event, the Defendant has not provided any evidence as to how these payment records could work up to the claimed figure of HK$234,525.

139.  The Defendant bears the burden of showing that these payments were incurred or caused by the Plaintiff’s repudiation of the Contract. In my view, the Defendant has failed to do so.

140.  Despite the Defendant’s failure to discharge its onus, I shall nonetheless hold that a total sum of HK$65,900 should be borne by the Plaintiff as the same had been conceded by Mrs Li for being relevant to the outstanding works left by the Plaintiff at the Site falling within the “final works phase”.[33]

141.  In the premises, I hold that the Defendant is entitled to damages in the sum of HK$65,900 under this head.

(iii) Staff costs to supervise completion (HK$72,000)

142.  The Defendant’s case is that a sum of HK$72,000 was incurred for engaging Ricky, Ming and one Mr Au to supervise the “final works phase”.

143.  Nevertheless, among the payment records provided by the Defendant:-

(1) Only a single payment of HK$2,500 was made to Mr Au during the “final works phase”. There was no evidence that any payment had been made to Ming and Ricky during this period;

(2) There are two other payment records evidencing that a total sum of HK$48,000 was paid to Mr Au and Ming on 23 January 2020. Given that they were made shortly after the expiry of the “final works phase” and the Plaintiff’s position under this head, I consider this sum to be damages arising from the Plaintiff’s repudiation.

144.  I also agree with the Plaintiff’s submission that since it could not be reasonably distinguished whether the supervising works provided by the Defendant’s staff related only to the outstanding works left by the Plaintiff, a discount of 31.20% should, in the circumstances of the case, be applied.[34]

145.  In the premises, I therefore hold that the Defendant is entitled to supervising staff costs during the “final works phase” in the sum of HK$15,756 (ie (HK$2,500 + HK$48,000) x 31.20%) under this head.

(iv) Wang Hing’s costs to supervise completion (HK$24,000)

146.  The Defendant claimed that an extra supervising charge had been collected by Wang Hing from the Defendant.

147.  Apart from Ricky’s own assertion, the Defendant has failed to refer to any other evidence in support of its case. I find that the Defendant has failed to discharge its burden in proving its claim.

148.  I dismiss the Defendant’s counterclaim under this head.

(v) Staff costs to follow up defects (HK$40,500)

149.  The Defendant claimed that Ming was specifically engaged to supervise the following up of defects during the “defect rectification phase” (ie 21 January 2020 onwards). The Defendant relied on a payment record which showed that a sum of HK$40,500 was purportedly paid to Ming on 29 May 2020 and the same was acknowledged by Ming.

150.  The Plaintiff opposed this claim on the ground that the payment records lacked particulars of the service provided.

151.  I find that the Defendant has established its claim under this head both by reason of Ricky’s evidence and the payment record provided. In my view, it would not be unreasonable for someone to be engaged to follow up the defect rectification, as this was what the Plaintiff had to perform under the Contract. On the other hand, the Plaintiff has not provided any evidence that the said works had not been provided by the Defendant.

152.  In the premises, I find that the Defendant is entitled to the sum of HK$40,500 under this head.

(vi) Costs of materials (HK$40,350)

153.  According to the Defendant’s pleaded case, this head of claim composed of:-

(1) Costs of repairing the folding screen wall (臨時修補屏風牆) at HK$13,000;

(2) Costs of repairing the Letterboxes at HK$5,500;

(3) Costs of ordering lampstands for wall lamps from Lai Fai at HK$5,400;

(4) Costs of payment of material ordered from Lai Fai at HK$12,450;

(5) Costs of ordering elevator panel (電梯面板) at HK$4,000.[35]

154.  The Defendant has provided invoices issued by Lai Fai showing that these sums were in fact incurred after 4 January 2020. I also accept Ricky’s evidence that these sums were incurred for the purpose of completing the outstanding works left by the Plaintiff.

155.  The Plaintiff’s argument in respect of the Defendant’s claim was primarily about the irrationality of the claim. In my view, the crucial issue is whether these repair works and materials were within the scope of the Plaintiff’s works and whether they were incurred as a result of the Plaintiff’s repudiation. In my view, the answers to both questions are ‘yes’.

156.  As to the wall lamp, the Plaintiff advanced a further argument that the Plaintiff’s scope of works did not involve the supply of material, since the amount of the lampstands had exceeded the quote made by the Plaintiff in respect of the whole item of works. In my view, the Plaintiff has ignored the clear wordings under page 3/15 of the RLB Schedule that the Plaintiff should be responsible for the supply and installation of the light fittings, including “all necessary fitting and fixing accessories”.

157.  For the above reasons, save for the costs of ordering elevator panel (of which the sum was forgone at trial), I hold that the Defendant is entitled to its counterclaim in the total sum of HK$36,350 (HK$13,000 + HK$5,500 + HK$5,400 + HK$12,450).

(vii) Costs of materials incurred by Mr Lam (HK$16,711.30)

158.  Save for Ricky’s own assertion, the Defendant did not provide any evidence in support of this claim. Further, Ricky also agreed under cross-examination that there was no document or photo showing that any of these materials were used for the works contracted to the Plaintiff.

159.  I find that the Defendant has failed to establish its claim and I dismiss the Defendant’s counterclaim under this head.

(viii) Costs of ordering new Letterboxes (HK$75,000)

160.  This part of the claim was forgone by Ricky at trial. As a result, the Defendant’s counterclaim under this head is dismissed.

(ix) Metal works of stainless steel wall (HK$82,000)

161.  This part of the claim was forgone by Ricky at trial. As a result, the Defendant’s counterclaim under this head is dismissed.

(D) Summary

162.  In summary, I find that the Defendant is entitled to Repudiatory Damages from the Plaintiff in the total sum of HK$158,506, particulars of the sum are:-

(1) Workmen wages for completing outstanding works of HK$65,900;

(2) Staff costs for supervising completion of works of HK$15,756;

(3) Staff costs for following up defects of HK$40,500;

(4) Costs of materials paid to Lai Dai of HK$36,350.

(E) Retention Money

163.  Although the issue of whether the Retention Money should be retained was not specifically pleaded by the Defendant, for clarity purpose perhaps I shall also deal with it briefly.

164.  Normally, retention money should be payable to the contractor when the work is entirely finished and without defects or omissions: Hoenig v Issacs (supra).

165.  As stated above, the Plaintiff failed to remedy defects and the Defendant was awarded damages arising from follow-up and rectification of the Plaintiff’s works. In this situation, the Retention Money should be applied to offset this kind of costs: Force Way Engineering Limited v The Incorporated Owners of Grand Court DCCJ 3216 of 2016 (HH Judge Winnie Tsui, 19 December 2017, unreported), at §§207, 213-214, §§207, 213-214. For this reason, the Retention Money has become a non-issue.

Conclusion

166.  In the circumstances, I will allow the Defendant’s counterclaim in the sum of HK$158,506.

DISPOSAL

167.  Accordingly, I enter judgment:-

(1) In favour of the Plaintiff in its claim against the Defendant in the amount of HK$374,884.10; and

(2) In favour of the Defendant in its counterclaim against the Plaintiff in the amount of HK$158,506.

168.  The Defendant’s award shall be set off against the award to the Plaintiff. After setting-off, the balance of the Plaintiff’s award is HK$216,378.10.

169.  I also award interest on the balance of the Plaintiff’s award in the claim (after deducting the Defendant’s award in the counterclaim) at judgment rate from the date of the issue of the writ until payment.

170.  Although the Defendant succeeded partially in its counterclaim, the Plaintiff is the substantive winner of the action. I will therefore make an order nisi that costs of the action and the counterclaim be to the Plaintiff to be taxed if not agreed, with certificate for one counsel. Unless either party applies to vary the same, such order shall become absolute after 21 days from today.

Ms Catherine Wong and Mr Billy Mok, instructed by Ho, Tse, Wai & Partners, for the Plaintiff

Mr Ivan Lee, instructed by Yung, Yu, Yuen & Co, for the Defendant