Renovators who inflated bill by HK$615,000 found guilty in landmark case

In first prosecution of its kind under amended law, court told of how customs officer was given a quote for HK$175,000 – then told final cost was HK$790,000

PUBLISHED : Wednesday, 21 June, 2017, 8:30am
UPDATED : Wednesday, 21 June, 2017, 9:02am

A renovation company and its director who used hidden costs to inflate a bill by more than four times were found guilty of unfair trade practices on Tuesday in the first case of its kind in Hong Kong.

Sha Tin Court heard that a customs officer reached an agreement in late 2014 for the firm to renovate his Ma On Shan flat for HK$175,189.

He was stunned when told the final bill came in at HK$790,000.

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The officer was tripped up on the cost of 218 items – only the basic unit price was stated in the original quotation. So, although he was told an electric switch would cost HK$690, he did not realise his 800 sq ft flat would require 108 of them.

As for knocking down a bedroom wall, the price was put at HK$280 per foot, but he was not informed of the extra costs required for procedures to complete the work.

The officer testified that he believed the charges were unreasonable but felt he had to commit when he had already paid for part of the ongoing work.

In February 2015 he filed a complaint with the Consumer Council, which directed him to the Customs Department, which handles unfair trade practices. By then he had already paid HK$500,000.

Senior Design Associates and Lam Pui-chuen, 50, were each convicted after trial on Tuesday of commercial malpractice through misleading omissions.

Their lawyers had previously argued that the contract did not require them to explain the additional costs, nor was it an industry requirement for them to begin work only after the quotation was approved.

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But magistrate Colin Wong Sze-cheung found both defendants had failed to comply with the Trade Descriptions Ordinance as they misled the officer into making a decision with material information provided in an “unclear, unintelligible, ambiguous and untimely” manner.

“Average consumers would consider the total cost,” the magistrate said. “Such information is an influential factor in helping them decide whether to engage the contractor.”

As consumers were unlikely to understand the complexities involved in a renovation, Wong noted it would be difficult for them to guess the final cost based on unit prices.

He said the defendants should have provided the officer with an estimate of total costs and proper plans with clear measurements that would have allowed him to make his own calculations.

Under the amended Trade Descriptions Ordinance, which came into effect in July 2013, traders have to provide consumers with sufficient product information for them to make informed decisions.

This was the first prosecution involving the renovation industry under the amended law.

Offenders face a fine of up to HK$100,000 and two years’ imprisonment.

The defence said in mitigation that there was no intention to break the law. The court also heard the company had been suffering losses since media reports first appeared on the incident.

Sentencing was scheduled for July 4, pending reports on the suitability of a community service order for Lam.