FAMTECK ENGINEERING LTD v YEUNG HIU CHONG: A Case Brief Analysis

This case brief concerns FAMTECK ENGINEERING LTD v YEUNG HIU CHONG, a construction contract dispute in the Hong Kong District Court. The case involves a sub-contractor, FAMTECK, suing a sub-sub-contractor, YEUNG, for breach of contract related to the Extension Development at North Satellite Concourse of Hong Kong International Airport. Key issues include the terms of the contract (partly oral, partly written), the existence of a binding sub-sub-contract, and whether YEUNG breached the agreement, leading to FAMTECK's right to terminate. The court considered the credibility of evidence, contemporaneous documents, and the conduct of both parties. The court found that an implied term existed for YEUNG to perform work according to FAMTECK's schedule, and that YEUNG breached the contract by failing to supply materials as promised. FAMTECK's evidence regarding YEUNG's non-attendance at meetings and failure to meet deadlines was accepted, leading to the conclusion that YEUNG was in breach.

Running head: CONTRACT ADMINISTRATION
CONTRACT ADMINISTRATION
Name of the Student
Name of the University
Author Note

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FAMTECK ENGINEERING LTD v YEUNG HIU CHONG T/A FINETEC
METAL WORKS - [2015] HKCU 2159
DISTRICT COURT
Deputy District Judge Eric Tam in Court
DCCJ 577/2013
16-17, 20-24 July and 11 August 2015, 17 September 2015
Building and Construction -- Construction -- Sub-contracting -- Whether part of contract
between parties -- Breach -- Entitlement to terminate
Mr Ivan Cheung, instructed by Wong & Associated, for the plaintiff Mr Vincent Li, instructed by
Lui & Law, for the defendant
Deputy District Judge Eric Tam
II. Introduction
1. This claim is considered to be bought by a plaintiff against the defendant for a certain
sum of HK$437,423.95 of damages for breach of construction contract and there had
been counterclaims which were for the sum of HK$662,265.00.
2. The plaintiff or the complainant was considered to commence the action in order to
recover the losses that had been caused due to the breach for the project which was
known as the Extension Development at North Satellite Concourse of the international
airport of Hong Kong and in this project the plaintiff or the complainant had been a
subcontractor and along with such the defendant or the respondent had been sub-sub-
contractor who was involved with the Project.

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III. Facts
3. It had been found that during July 2007 the plaintiff was considered to be invited to the
defendant in order to submit tender for a certain kind of supply comprising of the
installation of security as well as fire shutters for a Project which was upon the defendant
that had been prepared as well as submitted by the quotations for the sub-contract works
which would be for the consideration of the plaintiff. The plaintiff had also received three
quotations that were relating to that given by the defendant.
4. The sub-contract agreement was considered to be dated on 16th of September 2008, which
was also understood as the Sub-contract Agreement, and the plaintiff was considered to
be engaged and involved with the Gammon Construction Limited which was also the
primary constructor. They were considered to install the security as well as the fire
shutters for the International Airport of Hong Kong for the project where the terms and
conditions had been contained.
5. The plaintiff had provided another sub-sub-contract documents to the defendant on the
31st of March 2009 and such had not been signed by the defendant.
6. It was considered to be the case of plaintiff that such sub-sub-contracts were considered
to be binding on all the parties. The defendant or the respondent had denied such kind of
claim and alleged in defence for the agreement to be reached written partially as well as
orally in about the month of September 2008.
7. The plaintiff had terminated such an Agreement on the 17th of July 2009 and alleged that
there had been several breaches that had been committed by the defendant or the
respondent.
IV. Court’s Reasoning

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8. The issues that were considered to be determined by the court were to understand the
terms of the contract which had been entered between the plaintiff or the complainant
against the defendant and whether there had been an existence of sub-sub-contract as
such had been defined under the Statement of Claim which had formed a part of the
contractual agreement between that of the plaintiff as well as the defendant. In addition to
such it would also be determined that whether the defendant or the respondent had been
in breach of the said contract and whether the plaintiff had the right or authority to
terminate the contract.
9. It had been observed through the case of Honer Engineering Ltd v Hing Fat Machinary &
Electrical Engineering Co Ltd, DCCJ 3397/2012 that the party had a case which was
considered to be inherently plausible or it could be implausible. However, it could be
understood through the case of Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513
that the party’s credibility to assess would be considered to be taken into account and
whether such was considered to be plausible or implausible or whether the party’s case
was considered to be in a material way which would be contradicted through other
evidence which might be disputable or indisputable. In addition to such, it was also to be
determined that the witness would have been discredited due to one or more of the
matters that were considered to give evidence in order to use the above tests. This was
considered to be relevant to all the assessment of the overall credibility and along with
such the demeanour of the witness would also be considered to be taken into
consideration. This particular dicta was considered to be specifically cited with the
approval that was relating to the approval by that Court of Appeal in the case of Ageas
Insurance Company (Asia) Ltd v Lam Hau Wah Inneo, CACV65/2014 (unreported, 9

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January 2015) along with the case of Singh Harjit v Determination Business Ltd t/a
Muse Studio, DCEC 1082/2011 (unreported, 27 February 2015). It had been provide
through the perception of a District Judge that in their view the contemporaneous
document was considered to provide with the best guide in order to provide information
regarding what happened. The court of Appeal had observed through the case of Esquire
(Electronics) Ltd v Hong Kong & Shanghai Banking Corp Ltd [2007] 3 HKLRD 439 that
where there is considered to an existence of wealth of that of the contemporaneous
documents the credibility of such is considered to be tested by the reference that would
be specific in their case. This was considered to be particularly through the building and
along with such the construction case of Eu Asia Engineering Ltd v Wing Hong
Contractors Ltd, HCCT 16/1990 (unreported, 23 December 1991). It can be understood
that in cases regarding construction or in majority of the cases there is a great
significance which is considered to be attached to the contemporaneous documents
according to the Justice and such are considered to be usually prepared through good
faith and before any kind of dispute arising out of such or at any of the rates that have
been crystallized. It can also be specifically devious contractor or employer or any sub-
contractor who would be considered to systematically manufacture the documents that
have been arisen in order to assist in that of a future dispute. Fortunately these kind of
instances are considered to be rare and once any kind of dispute has been identified it
would be necessary in order to pay careful attention to the several documents that would
have been created after the time where only the natural parties are considered to reflect
the grievances and along with such the justification that has been done for the action
taken from those documents.

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10. In order to understand the terms of the contract that gave rise to the dispute it needs to be
understood that the parties were considered to come to an agreement which was partly
oral and partly in writing. Therefore, such was considered to be logical as well as
consistent with the pleading which was on behalf of the defendant or the respondent. The
plaintiff had also successfully secured the contractual agreement with Gammon and he
was considered to be eager to secure or get an opportunity for binding a contractual
agreement in a legal manner in order to secure the price as well as the provisions of
works of the sub-contractor of the defendant. This on the other hand was considered to
defy the commercial efficacy as the plaintiff would also be a part of such legally binding
contract with the defendant even prior the contract being secured by the defendant. The
work that had been done by the defendant was considered to be before the date that was
considered to be only preparatory work and such would be helping in securing the
contract and any other following or subsequent instructions which were only the
variations of the work.
11. It had also been understood that the defendant had provided a statement whereby it had
been said that the defendant had spoke to Mr. Lam in order to start with the preparation
of the shop drawings for the roller shutters of the Airport which was the project. After the
acceptance that had been made by Mr. Lam on behalf of the plaintiff the defendant had
started working on the materials and the schedule for the roller shutter works which was
to prepare small sample submissions for that of the plaintiff to Gammon.
12. The defendant in addition to such had also pleaded that through the above-mentioned
exchange of the data or the information between Lam who was considered to be acting on
behalf of the plaintiff along with the defendant the details and the scope of such had

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already been carried out and following the conduct of the plaintiff they were accepted by
the defendant.
13. Therefore, it had been stated that there was a disagreement with the submissions of the
plaintiff regarding the sub-sub-contract being binding. The cause for such was that it had
not been signed by the defendant and nor was the defendant willing to sign the sub-sub-
contract. This was considered to be a special circumstance which was in the case of
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523.
14. It had been found that there had been an implied term which had been provided for the
defendant where the defendant had to carry out the work in accordance with the schedule
of the plaintiff along with Gammon. It was also found that all the requirements that are
considered to be necessary for the implied term was considered to be in a written contract
as such had been set out in the case of BP Refinery (Westernport) Pty Ltd v President
Councillors and Ratepayers of Shire of Has- 6 tings (1978) 52 ALJR 20.
15. The defendant’s allegation had been rejected that there had been a term that the plaintiff
had agreed upon paying HK$400,000. The reasons were also considered to be such that
the term could not be considered to be seen in any kind of documents which had not been
considered to be put into any kind of writing. The defendant had also considered to have
stated its own quotation which required twenty percent as the deposit and along with such
the payments would have been made as per the progress but there had been no mention
regarding such term. In addition such, the defendant had never tried to enforce any kind
of term prior to such termination or after such for the Agreement.
16. It was found that the defendant had been in breach of the terms as the defendant had
failed to provide supply and slats as it had promised. The plaintiff’s evidence regarding

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the defendant was that the defendant had not attend any kind of meetings and the
defendant had agreed on certain dates to provide with shutters in the letter provided by
Gammon but at another subsequent meeting the defendant could not confirm all these
dates. The defendant had been aware of the urgency and had full knowledge regarding
the consequences for any kind of failure to deliver. These were considered to be
contained and supported by the letter which the plaintiff had received from Gammon and
the plaintiff had been warned against the letter that was in question that there would be an
imposition of liquidated damages of the amount 80,000 dollars per day if the plaintiff or
the complainant had missed any of the key date. It had been normal for the defendant to
pass such letter in order to work as a sub-contractor and in addition to such the burden of
responsibility would be considered to be shifted to that of the defendant.
17. The plaintiff’s evidence was considered to be accepted as the plaintiff had installed the
small fire shutter but it had to be dismantled and such would be reinstalled. Such defects
were considered to be discovered or identified after the termination of the Agreement as
it can be observed from the case of Tridant Engineering Company Limited v Mansion
Engineering Company Limited, HCCT 3 & 66/1996.
18. It had been found that due to the lack of the financial resources the respondent was
considered to not be able to complete the Project until and unless the defendant had been
assisted by the plaintiff. The plaintiff on the other hand was not considered to be under
any kind of obligation to provide any kind of assistance to the respondent. After the
agreement with Gammon in order to pay for the costs of the production it was considered
to waiver the rights of the plaintiff to repudiate. Therefore, there was not any kind of
unequivocal act or any kind of statement for the plaintiff in order to support the claim of

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the defence’s claim for waiver. The plaintiff had not pleaded in its Statement of Claim
and therefore the reply to the defendant was considered to be a failure to complete the
shutter works and such had amounted to repudiation.
19. It was also agreed upon and it had not been accepted that there had been a delay relating
to the cause of failure for setting out.
V. Decision
20. After taking everything into consideration it had been found that the defendant or the
respondent’s serious delay was considered to be a delay in the development of the project
and there had been a failure to deliver certain kind of slats which were promised as a lack
of the financial means in order to finish or complete the project. It was also found that the
plaintiff had justified itself for terminating the Agreement and the order for the judgment
was considered to be based on the responsibility or the liability that would be entered by
in favour of the plaintiff or the complainant. In addition to such, there also needs to be a
liberty in order to apply on the issue regarding the issue of the quantum.
21. After such due to the above-mentioned reasons it could be understood that the
counterclaim was considered to be dismissed. Furthermore, the value regarding the work
was considered to be done by that of the defendant or the respondent as such would have
been dealt with when the issue of quantum would be present and such would have been
dealt with.
22. Costs regarding the project would be followed by the event and an order would be made
for the defendant in order to pay such costs to that of the plaintiff . It had also been
certified and such had been provided with a certificate relating to the Counsel and the

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costs would be inclusive and reserved. The order for such would be made absolute unless
such had been varied through the application that had been within fourteen days.
23. It has also been found that there would be gratitude to the counsel for their assistance.

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Cases Referred
Ageas Insurance Company (Asia) Ltd v Lam Hau Wah Inneo, CACV65/2014 (unreported, 9
January 2015).
BP Refinery (Westernport) Pty Ltd v President Councillors and Ratepayers of Shire of Has- 6
tings (1978) 52 ALJR 20.
Empirnall Holdings Pty Ltd v Machon Paull Partners Pty Ltd (1988) 14 NSWLR 523.
Esquire (Electronics) Ltd v Hong Kong & Shanghai Banking Corp Ltd [2007] 3 HKLRD 439
Eu Asia Engineering Ltd v Wing Hong Contractors Ltd, HCCT 16/1990 (unreported, 23
December 1991).
Honer Engineering Ltd v Hing Fat Machinary & Electrical Engineering Co Ltd, DCCJ
3397/2012
Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513
Singh Harjit v Determination Business Ltd t/a Muse Studio, DCEC 1082/2011 (unreported, 27
February 2015).
Tridant Engineering Company Limited v Mansion Engineering Company Limited, HCCT 3 &
66/1996.

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