DCCJ 5479/2004 & 5871/2004 (Consolidated)
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NOS. 5479 AND 5871 OF 2004
||SUCCESS REWARD ENGINEERING LIMITED
||EVER-COLD REFRIGERATION TRADING COMPANY LIMITED
Coram: H.H. Judge Chow
Hearing dates : 21st to 24th January, and 11th February 2008
Date of handing down Judgment : 18th April 2008
1. In this action the Plaintiff claims against the Defendant for $211,900, being the difference between the sums of a sales contract($705,000.00), a variation order ($58,300.00) dated 22 July 2003 and a variation order ($17,000.00) dated 30 July 2003 (“Sales Contract”) dated 9 January 2003 and the sums paid by the Defendant totaling $568,400.00 under the Sales Contract. On the other hand, the Defendant counterclaims against the Plaintiff in the sum of $320,200.00, being damages for breach of the Sales Contract by the Plaintiff, particularized as follows: -
(1) $156,000.00, being labour costs for rectification works
(2) $26,000.00 being materials costs for rectification works
(3) $18,000.00 being costs for audiovisual alarms and waterproof boxes
(4) $22,000.00 being costs for diagrams for control panels
(5) $35,200 being costs for Testing and commissioning (“T&C”) of rectification works; and
(6) $63,000.00 being costs for 10 transformers with wiring and accessories.
2. On or about 9 January 2003, the Plaintiff and Ever-Cold Engineering Company Limited (“ECE”) entered into the Sales Contract in the contract sum of HK$705,000.00, whereby the Plaintiff had to supply control panels to the Defendant for use in a project at Tseung Kwan O (“the Project”). On 4 April 2003, ECE was deregistered in the Companies Registry, whereupon the Defendant took over ECE’s rights and obligations under the Sales Contract.
3. Between late May and late August 2003, the Plaintiff made deliveries of the items under the Sales Contract to the Defendant at the site of the Project, namely, Area 73A at Tseung Kwan O for Phase 3 and Phase 4 (“the Site”).
4. On 22 and 30 July 2003 respectively, the Plaintiff made quotations to the Defendant for two Variation Order items of $58,300.00 and $17,000.00 respectively. On 10 September 2003, the Plaintiff delivered the Variation Order items to the Defendant at the Site.
5. Between September and October 2003, the Plaintiff issued invoices to the Defendant in respect of the items under the Sales Contract and the Variation Order items, totaling $779,900.00. So far, the Defendant has made payments to the Plaintiff totaling $568,400.00 pursuant to the Sales Contract.
The Plaintiff’s evidence
6. Mr. Yuen Lik Hang (“Yuen”) testified on behalf of the Plaintiff. At the material times, he was responsible for the Project. On or about 9 January 2003, a Sales Contract was entered into between the Plaintiff and one Ever-Cold Engineering Company Limited (“the Sales Contract”). Ever-Cold Engineering Limited was a sub-contractor of the Project at the Site, and the Plaintiff was engaged by Ever-Cold Engineering Limited to supply and deliver pump control panels and fire alarm equipments as specified in the Sales Contract for the use of the Project. The Sales Contract was entered into by one Mr. Lam Wai To (“Lam”) for and on behalf of the Ever-Cold Engineering Company Limited.
7. Within 2 months after entering into the Sales contract, Yuen handed over the following diagrams to Mr. Lam for their further submission to the Housing Authority for approval:
(a) Hong Kong Housing Authority Standard Drawing for Control Panels of Main Block;
(b) Non-standard Drawing for Control Panels for two Secondary Schools; and
(c) Brand name, specification and model number of used accessories in control panels.
8. The Plaintiff had in the past provided for control panels of the main buildings for the Hong Kong Housing Authority. With such experience, the Plaintiff supplied the drawings for control panels of the main block which was in fact the standard drawing for the Hong Kong Housing Authority. It provided materials and equipments to Ever-Cold Engineering according to those standard specifications.
9. Apart from the said Housing Authority Standard Drawing for control panels of the Main Block, the Plaintiff was responsible for drafting all other panels diagrams and the same were handed over to Lam for further submission to the Housing Authority for approval. Upon being notified by Lam of the approval by the Housing Authority of the other panels diagrams and endorsement on the said diagrams of the approval by Lam, the Plaintiff proceeded to produce the relevant pump control panels and fire alarm control panels.
10. From about 30 May 2003, the Plaintiff started to deliver the assembled control panels to Ever-Cold Engineering. All the relevant control panels were delivered by 10September 2003. Upon delivery of batches of the assembled control panels, Ever-Cold Engineering would install the same together with the connection of electricity and connection of the panels to other parts of the relevant buildings. Every time after Ever-Cold Engineering had finished installing the control panels, Lam would notify the Plaintiff to conduct tests and commissioning (“T&C”) for the control panels.
11. Various T&C were conducted with the Fire Services Department in Yuen’s presence for approval of the completed work by the Fire Services Department.
12. In about early July 2003, Yuen received a telephone call from Lam, saying that the Front Panel Covers of 2 fire alarm panels installed in the secondary schools for Phase 3 and 4 required replacement. However, due to the fact that T&Cs by Fire Service Department were scheduled for 15 July 2003 and 16 July 2003 for the secondary school in Phase 3, Lam requested the Plaintiff to replace the said front panel covers after completing the T&Cs by Fire Services Department for the relevant panels.
13. Lam requested them to supply extra panel equipments for their project. Quotations of prices for these extra equipments were passed to Lam for his approval.
14. By way of a variation order dated 22 July 2003, Ever-Cold Engineering ordered from the Plaintiff extra panels equipments in the agreed price of HK$58,300.00 (“the 1st VO”). Since further panel equipments were required, Ever-Cold Engineering further ordered from the Plaintiff more panel equipments in the agreed price of HK$17,000.00 by way of a second variation order dated 30 July 2003 (“the 2nd VO”).
15. After receiving the 1st VO and 2nd VO, the Plaintiff proceeded to assemble or produce brand new Front Panel Covers for the 2 fire alarm panels and delivered the same to the Ever-Cold Engineering on 10 September 2003 for installation according to the instructions of Lam.
16. A T&C was conducted by Fire Services Department for the completed work in the secondary school in Phase 3 from 15 July 2003 to 16 July 2003.
17. The 1st T&C was conducted by Fire Services Department for the completed work in the secondary school in Phase 4 and the main block form 15 October 2003 to 17 October 2003 and on 20 October 2003.
18. Then, another T&C was conducted by the Fire Services Department for the completed work in the main block from 22 October 2003 to 24 October 2003 and on 17 October 2003.
19. In or about mid November 2003, Mr. Lam informed the...