IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO. 441 OF 2004
||(formerly known as DYNA
Coram: Deputy District Judge J. Ko in Court
Dates of Hearing: 5th - 7th December 2005, 6th January 2006, 3rd February 2006 & 14th March 2006
Date of Handing Down Judgment: 4th May 2006
J U D G M E N T
1. By a consultancy agreement made on 16th October 2001 between the Plaintiff on the one part and the Defendant (then known as Dyna Concrete Limited) on the other part (“the Consultancy Agreement”), the Defendant appointed the Plaintiff to provide consultancy services for a term of 2 years from 16th October 2001 to 15th October 2003.
2. Under the Consultancy Agreement, the Plaintiff (as the consultant) undertook that it and its employee(s) deployed to the Defendant to carry out the services covered by the agreement should devote such of their time attention and abilities to manage and market the business of the Defendant as may be necessary for the proper exercise of its duties.
3. The services covered by the Consultancy Agreement were set out in clause 3.1 as follows [Bundle 55-56]:
“The [Plaintiff] shall manage, advise and assist the [Defendant] in respect of the day-to-day operation of the [Defendant] including in particular but without prejudice to the generality of the foregoing to be responsible for:
a. managing and supervising for and on behalf of the [Defendant] in a proper and reasonable manner and in accordance with instructions and directions given by the [Defendant] from time to time;
b. advising and assisting the [Defendant] from time to time in respect of any projects undertaken by the [Defendant];
c. providing all administrative and technical assistance and financial management and control in respect of any projects undertaken by the [Defendant];
d. using its reasonable endeavours to promote and develop to the best advantage of the business of the [Defendant];
e. liaison and co-ordination with relevant professional architects, surveyors, engineers and relevant local authorities in the development and completion of any projects undertaken by the [Defendant];
f. the day-to-day business operations of the [Defendant] subject to the directions of the [Defendant]; and
g. informing and keeping the [Defendant] informed of all material transactions in connection with the business of the [Defendant] of which the [Plaintiff] and/or its employee(s) deployed to the [Plaintiff] to carry out the services has/have knowledge or is/are aware.”
4. Notwithstanding the general nature of the services set out in clause 3.1, it is common ground that the Plaintiff was only required to provide services to the Defendant under the Consultancy Agreement upon the latter’s request (see paragraph 1 of the Plaintiff’s closing submission; and paragraph 14 of the Defendant’s closing submission).
5. In consideration of the services to be rendered by the Plaintiff under the Consultancy Agreement, the Defendant agreed to pay the Plaintiff a consultancy fees of $50,000 per month.
6. The Defendant paid consultancy fees for the first 19 months of the term of the Consultancy Agreement but has refused to pay for the last 5 months, covering the period from 16th May 2003 to 15th October 2003.
7. By this action, the Plaintiff claims against the Defendant for the outstanding consultancy fees, totalling $250,000.
8. At the trial of this action, the Defendant maintains that the Plaintiff is not entitled to the consultancy fees claimed because:
a. The Plaintiff was in breach of the Consultancy Agreement in that none of the directors or staff members of the Plaintiff could be located or contacted by the Defendant in early 2003.
b. The Plaintiff failed and refused to perform its obligation under the Consultancy Agreement in that Mr. Mak Kau-kei Cary (“KK-MAK”) refused to assist the Defendant in resolving the commercial dispute between the Defendant and Towa Concrete Limited (“TOWA”) despite the Defendant’s request.
c. The onus is on the Plaintiff to prove that it was ready and willing to perform the Consultancy Agreement in the relevant period as and when requested and the Plaintiff has failed to discharge that burden.
9. The above defences will be examined one by one in the ensuing discussion. Before embarking on the discussion, it would be helpful to introduce the protagonists in this action.
a. Ms. Chang Wei-wu (“CHANG”), who is the director of the Plaintiff.
b. Mr. Yin Xiaoguang (“YIN”), who was the managing director of the Defendant at the material time. He has since resigned from being a director and is now a consultant of the Defendant.
c. Mr. Ng Wai-kwok (“NG”), who is a manager of the Defendant.
10. KK-MAK features significantly in this dispute. He is a chartered engineer and has extensive experience and expertise in the concrete trade. Furthermore:
a. He is CHANG’s husband.
b. He was a director and shareholder of the Plaintiff at the time of the Consultancy Agreement (i.e. 16th October 2001). On 28th October 2002, he resigned from being a director of the Plaintiff and transferred his shares in the Plaintiff to CHANG’s sister (see Bundle 73).
c. He had been a director of Dyna Concrete Limited, up to the time of the Consultancy Agreement.
d. He had been an executive director of a company known as Express Builders Company Limited, but retired from that position in December 2001.
e. His younger brother is Mr. Mak Wai-kei (“WK-MAK”). It is common ground that WK-MAK is the person controlling TOWA, the other director being WK-MAK’s son.
11. As I have highlighted above when outlining the defences, there is a commercial dispute between TOWA and the Defendant. The dispute has cumulated into another action in the District Court under DCCJ 7267/2003.
None of the directors or staff members of the Plaintiff could be located or contacted by the Defendant in early 2003?
12. It is the Defendant’s pleaded case under paragraph 6 of the Re-Amended Defence that “the Plaintiff had since early 2003 failed and/or refused to carry out any of the services as agreed to be provided by it under the Consultancy Agreement including the managing of, giving advice and assistance to the Defendant in respect of the day-to-day operation of the Defendant.” [Bundle 19]
13. The Defendant basically repeat the terms of clause 3.1 of the Consultancy Agreement in the particulars provided under paragraph 6 of the Re-Amended Defence.
14. Despite the rhetoric allegations in paragraph 6 of the Re-Amended Defence, the only material fact pleaded by the...