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Honor Engineering Ltd v Hing Fat Machinery & Electrical Engineering Co Ltd

Judgment Cited authorities 4 Cited in Precedent Map Related
Vincent
Judgment Date17 April 2015
Subject MatterCivil Action
Judgement NumberDCCJ3397/2012
CourtDistrict Court (Hong Kong)
DCCJ3397A/2012 HONOR ENGINEERING LTD v. HING FAT MACHINERY & ELECTRICAL ENGINEERING CO LTD

DCCJ3397/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3397 OF 2012

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BETWEEN
HONOR ENGINEERING LIMITED Plaintiff

and
HING FAT MACHINERY & ELECTRICAL ENGINEERING CO LTD
（興發機電工程有限公司）		 Defendant
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Before: Deputy District Judge Lawrence Ng in Court
Date of Hearing: 5-6 and 15 January 2015
Date of Judgment: 17 April 2015

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JUDGMENT

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1. This is the trial of an action by the plaintiff against the defendant where the plaintiff is suing the defendant for the sum of $601,395 in respect of works done in a project known as the Resources Centre of the Construction Industry Council at G/F, CIC Kowloon Bay Training Centre, 44 Tai Yip Street, Kowloon Bay, Hong Kong (“the Project”).

A. Background and the parties’ respective cases

2. The plaintiff is and was at all material times a company incorporated in Hong Kong carrying on the business as, inter alia, a building services sub-contractor.

3. The defendant is and was at all material times a company incorporated in Hong Kong carrying on the business as a building services sub-contractor.

4. REC Engineering Company Limited (“REC”), a wholly-owned subsidiary of Yau Lee Holdings Ltd, is and was at all material times the main contractor of the Project.

5. By an Agreement in writing dated 15 December 2011 and made between REC and the defendant (“the Agreement”), REC sub-contracted certain works of the Project to the defendant for the sum of $1,713,309. The scope of the sub-contract works comprised the following major items: electrical system, fire service system and mechanical ventilation and air-conditioning system installation works.

6. It is not in dispute that the contract works under the Agreement together with some variation and/or additional works were completed.

A1 The plaintiff’s case and evidence

7. The plaintiff’s case is a simple one. By a purchase order No PO-CIC-050112-1 dated 5 January 2012 (“the PO”) signed by Mr Cheung King Kit (“Mr Cheung”) for and on behalf of the plaintiff and Mr Raymond Ng (“Mr Ng”) for and on behalf of the defendant, the defendant engaged the plaintiff to execute the electrical system and fire service system installation works of the Project for the sum of $646,500 (“the Works”).

8. It is also the plaintiff’s case that in the course of the execution of the Works, it executed and completed various variation and/or additional works as instructed by the defendant from time to time and that the total value of these variation and/or additional works is $354,895, full particulars of which are set out in the variation orders (“VO”) nos 1 to 14 submitted by the plaintiff to the defendant on divers occasions in January and February 2012.

9. The plaintiff claims that the total value of the Works including the VO is $1,001,395 ($646,500 + $354,895). However, the defendant only paid $400,000. Therefore, a balance of $601,395 is due and owing by the defendant to the plaintiff. By an invoice dated 20August 2012, the plaintiff sought payment of the sum of $601,395 from the defendant.

10. At trial, Mr Cheung, a director of the plaintiff, gave evidence for the plaintiff. In gist, Mr Cheung’s evidence consists of the following:-

(a) Mr Ng was his old colleague when he worked for Tridant Engineering Limited and later for Kenworth Engineering Limited. He met Mr Ng again in 2009 in a project known as Grenville House. Mr Ng was then a senior engineer of REC.

(b) In or about late 2011, Mr Ng told Mr Cheung that he had teamed up with the defendant and had subcontracted various works including the electrical system and fire service system installation works for the Project from REC. Mr Ng also told Mr Cheung that he was authorised by the defendant to manage the defendant’s works under the Project and was desirous of further subcontracting the electrical system and fire service system installation works of the Project to the plaintiff. Mr Ng asked Mr Cheung to carry out certain works under the Project on an urgent basis. He further told Mr Cheung that the plaintiff could contact him for any liaison works.

(c) In anticipation of a contract to be entered into between the parties for the Project, Mr Cheung agreed on behalf of the plaintiff to carry out the works. In or about November 2011, the plaintiff carried out certain works for the Project.

(d) Shortly after the plaintiff’s commencement of the Works, Mr Cheung told Mr Ng that he wanted to apply for interim payment to finance the purchase of materials and labour for the Works and asked him how the plaintiff could apply for payment. Mr Ng told Mr Cheung that the plaintiff should invoice the defendant for the plaintiff’s work done in the Project, and all correspondences including the plaintiff’s invoices should be sent to Room 16, 13/F, Block B, Hang Tung Building, 26 Bute Street, Mongkok for both his and his partner one Mr Lai’s attention. It is not in dispute that this is the residential address of Mr Lai Koon Lun, the sole director of the defendant (“Mr Lai’s residential address”).

(e) In or about January 2012, Mr Ng gave the PO to Mr Cheung for him to sign. The contract sum stated in the PO was $646,500. Mr Cheung signed the PO accordingly.

(f) During the course of the Works, the plaintiff was known as the defendant’s subcontractor by REC and other contractors working at the site. Mr Cheung also attended on behalf of the defendant site coordination meetings, received instructions from REC and acted on these instructions and attended matters happened on site.

(g) During the course of the Works, the plaintiff was instructed by REC to carry out works which were not covered by the PO but were set out in the VO claims submitted by the plaintiff to the defendant. By its six letters all dated 31 January 2012, the plaintiff submitted VO claims nos 1 to 6 to the defendant. On divers dates in February 2012, the plaintiff submitted VO claims nos 7 to 14 to the defendant. The VO claims were sent by the plaintiff to the defendant at Mr Lai’s residential address. The defendant in turn submitted its VO claims to REC for assessment. The VO claims submitted by the defendant to REC are called “Quotations”, stamped with the defendant’s company chop and printed on the defendant’s letterhead with Mr Lai’s residential address stated thereon. Two summaries of the VO claims submitted by the plaintiff to the defendant and by the defendant to REC are at Annexes 1 and 2 respectively. As can be seen from the Annexes, the total values of the VO claims submitted by the plaintiff to the defendant and by the defendant to REC are $354,895 and $400,335 respectively.

(h) From time to time the plaintiff issued invoices/interim payment applications to the defendant. The final invoice/payment application is dated 20August 2012. In it the original sub-contract sum and the VO claims are stated in the amounts of $646,500 and $354,896 respectively, ie, total amount of $1,001,395. As the defendant had paid $400,000, the outstanding balance under the final invoice was $601,395. All the invoices/payment applications were sent by the plaintiff to the defendant at Mr Lai’s residential address for the attention of Mr Lai and Mr Ng.

(i) As regards the quantum of the plaintiff’s claim, in or about September 2012, Mr Ng on behalf of the defendant verbally agreed with Mr Cheung on behalf of the plaintiff that the plaintiff should be entitled to the values of the VO claims as assessed by REC and agreed by the defendant less 10% for the defendant’s management fee.

(j) In or about October 2012, Mr C S Choi, an engineer of REC (“Mr Choi”), told Mr Cheung that REC had paid to the defendant over 80% of the contract sum under the PO. Furthermore, in or about the end of May 2013, Mr Choi told Mr Cheung that REC had assessed the final value of the VO claims as $214,143.04 and that a contra charge of $15,564 for relocation of PABX (public address broadcasting system) would be charged against the defendant. REC’s assessment on the VO claims and contra charge had been sent to the defendant for its agreement. As regards the contra charge, the relocation was not caused by the plaintiff’s default nor was it included in the original works under the PO. The plaintiff is not liable for the said contra charge. Mr Choi told Mr Cheung that as at late May 2013, the defendant had already received about $60,000 for the VO claims completed by the plaintiff under the Project. Mr Choi further told Mr Cheung that REC had withheld certain sums under the Agreement because of the defendant’s other projects with REC and of which the plaintiff played no part.

A2 The defendant’s case and evidence

11. In the defence, the defendant pleads that it had no knowledge of the PO, that the PO was signed without its authority and did not bind it. The defendant pleads that there were no director’s resolutions and/or board meetings authorizing the signing of the PO or the making of any sub-contract with the plaintiff. The defendant further pleads that it had wholly sub-contracted the works under the Agreement to Full Harvest International Limited (“Full Harvest”), that it entrusted all site management and administration functions to Full Harvest and that after it received payments from REC, it would pay 95% of the same to Full Harvest under its sub-contract with Full Harvest.

12. In an answer to a request for further and better particulars of the defence, the defendant pleads that the sub-contract was made between Mr Lai and Ms Ma Ngan Sui (“Ms Ma”)...

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