Wharf Properties Ltd and Another v. Eric Cumine Associates Architects Engineers & Surveyors (A Firm) and Others
Read the full judgment text of CACV 84/1988 on BabelCite. This Court of Appeal judgment.
1. This is the judgment of the Court.
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CACV000084/1988
BETWEEN
______________ Coram: Hon. Power, J.A., Penlington, J.A. & Macdougall, J. Date of Hearing: 22nd & 23rd November, 1988. Date of Delivery of Judgment: 23rd December, 1988. ______________ J U D G M E N T ______________ Power, J.A.: 1. This is the judgment of the Court. 2. The appellants 1st defendants, Eric Cumine Associates, Architects Engineers & Surveyors are a firm of Hong Kong architects. The plaintiffs/respondents Wharf Properties Ltd. and The Wharf (Holding) Ltd. (formerly, 'the Hong Kong & Kowloon Wharf & Godown, Co. Ltd.') are property developers. In 1974 the respondents, then under the ownership of the Hong Kong & Kowloon wharf & Godown Co. Ltd., commenced to develop their wharf facilities situated on the western side of the Kowloon Peninsula. The appellants were appointed as the architects for this project. The overall development was an enormous one with a projected completion period of seven years. In 1979 the Ocean Centre was completed and by 1984 the adjacent Harbour City was completed. The main contractor for the Project was John Lok & partners Ltd., the 4th defendant, and the foundation contractor was Shing Yip Engineering Co., the 3rd defendant. There were a large number of other contractors most of whom were joined as defendants in this action. 3. While the work was proceeding there were changes in the ownership of the developer and in November 1983, the Writ in this action was issued and served upon the appellants and seventeen other defendants. 4. The Writ has, since issue, been amended and re-amended and at present it extends to some 400 pages excluding supporting schedules. It is in an unusual form being divided not into paragraphs but into 28 sections. These sections are in turn divided into four parts. 5. The first part is comprised of section 1 which is an introductory section detailing the position at the date of the last amendment to the writ. 6. The second part is comprised of sections 2 to 22 and sets out the obligations of the 1st defendant and the alleged negligent breaches of duty by it. It is with the allegations of negligent in this second part that we are Presently concerned. 7. The third part is comprised of sections 23 to 27. We need not concern ourselves with these sections as in April 1988 the respondents withdrew the claims made therein. 8. The fourth part, comprised of section 28, is a claim against the appellants alleging negligent failure to exploit the full plot ratio potential of the site with the consequence that the area was under-developed. This claim has been the subject of a separate trial in which judgment has been given in the appellants' favour. 9. The first part sets out that since the commencement of the proceedings the respondents and the 2nd and 4th to 18th defendants have compromised their claims and counterclaims relating to the matters which the subject of these proceedings. It recites also that the claim against the 3rd defendants has been stayed pending arbitration and that the present claims are proceedings solely against the appellants. Section 1.3 sets out that Phase I of the development, which is the phase with which the allegations contained in sections 6 to 22 are concerned, covered a site area of 179,222 sq.ft. The work in this Phase was divided into five sections and as designed and constructed comprised 129 apartments, 118,706 sq.ft. of shop area (currently 75 units) 406,000 sq.ft. of office area (currently 123 units )and a hotel with 441 bedrooms. All of the matters of complaint set out in s.6 to s.22 are based upon delay alleged to have been caused by negligence or breach of contract or both on the part of the appellants. Mr. Butcher who appeared with Mr. Lewis for the respondents, abandoned the claim for damages for negligence and the respondents' case now rests solely upon the alleged breaches of contract. 10. The allegations broadly put are that the appellants by their failure properly to supervise contractors and sub-contractors caused or allowed the work to be delayed and that this had two effects. First, the delay of a particular contractor resulted in other contractors being unable to commence their work when they should have commence it which exposed the respondents to by them. These specific periods of delay affected specific contractors or sub-contractors. The second consequence was that the completion dates of various parts of the development were later than they should have been and that, because of this, the respondents suffered a loss of rental income. 11. The claims of the contractors who suffered damage because they were unable to commence their work on time, as we have already pointed out, have been compromised except in the case of the 3rd defend ant. The respondents claim that the appellants are liable for all of the payments made by them in this regard. The respondents also claim that the appellants are wholly liable for the loss of rent. The damages claimed with respect to the payments to contractors amount to $317,712,799 and the damages claimed for loss of rent amount to $199,910,544. 12. The wide-ranging allegation made against the appellants can be summed up by saying that contrary to their contractual obligations they failed to properly manage, control, coordinate, supervise and administer the work of contractors. 13. The Statement of Claim does not, however, with regard to any of the allegations of breach of contract causing delay, identify and particularize any specific period of delay said to have been caused by the breaches of the appellants. The late completion dates are, it is true, pleaded (section 6.5) as is the fact that contractors were given possession later than they should have been. Nowhere, however, does the pleading indicate which periods of delay were due to the alleged negligent mismanagement by the appellants. 14. Given that no specific periods of delay had been indicated in the Statement of Claim the appellants requested further and better particulars, and on the 11th of March 1987 Mortimer J., ordered that these particulars be given. It also seems clear that the judge at that time "ruled against the respondents on the question of discovery and said they must deliver their particulars of these requests before discovery." (Judgment of 1/6/88 p.5). 15. Mortimer J. when ordering that particulars be furnished held as follows:
Mortimer, J., went on to say:
16. The ruling makes it clear that the judge was satisfied not only that the particulars should he given but also that the plaintiffs did not contest that the application was justified. 17. At the outset of this appeal Mr. Neville Thomas, who appeared with Mr. Pennicott for the appellants, stated that it was common ground that if there is incurable vice in the claim made in section 7 of the Statement of Claim, that vice runs through all of the other sections. We have, therefore, dealt with this matter by directing out attention to section 7. 18. Paragraphs 7.5 to 7.11 of section 7 allege that the defendants' breaches had delayed and disrupted the work of the 4th defendants and the nominated sub-contractors in all five sections of Phase 1. 19. The request for particulars of those paragraphs as follows:
20. There are six schedules in an appendix to the Request for Further and Better Particulars each dealing with a particular aspect of the alleged breaches e.g. "Schedule A: Late Instructions". In the case of each, the respondent was asked to specify the "consequences for the progress of phase I" arising from the appellants' breaches. 21. The answer to Request 44, for particulars under Paragraphs 7.5 to 7.11, was as follows:
The answer goes on to justify and explain why it is said that this was not possible. There was, further, no attempt made to specify any individual periods of delay in the terms requested in the Schedule and ordered by Mortimer, J. 22. A further illustration of the approach of the respondents can be found in the answer to Request 34. 23. Section 7.2 alleged, inter alia, that the appellants had caused or permitted an excessive number of variations in the design of the 3rd defendants' works so as to disrupt their progress. Request 34 asked for particulars of the variations alleged to have been excessive in the schedule titled Schedule B. The Answer stated that:
The answer to Request 44, which we have set out above, was, then, that no answer could he given. It is also stated that it will not be known, until the trial which, if any, variations were not necessary and what, if any, delay resulted from each such unnecessary variation. 24. On the 30th of March 1988 the appellants took out a summons in which they sought, first; that the Statement of Claim be struck out on the ground that the pleadings did not disclose a reasonable cause of action and were otherwise an abuse of the process of the court or both and in the alternative that, if the plaintiffs failed within 14 days to provide full and proper particulars to, inter alia, Request 44, the action should be dismissed. The respondents took out a summons returnable upon the same day asking that prior to their being obliged to provide such further and better particulars the respondents provide to them discovery of all design flow information relevant to the request for further and better particulars. 25. Mortimer, J. first dealt with the submission that the pleadings did not disclose a cause of action in that neither the Statement of Claim nor the particulars specified any of the periods of delay said to have been cause by the acts or omissions of the appellants. When dealing with the Answer to Request 44 the judge said:
26. He noted Mr. Thomas's contention that because the causal connection has not been made and cannot be made by the plaintiffs, the Statement of Claim establishes no reasonable cause of action:
27. The Judge then turned to the submission that the pleading was an abuse of process as it failed to disclose to the appellants the case which they would have to meet. Having further canvassed the strong arguments put forward in this regard by Mr. Thomas the judge held:
28. The Judge did, however, appear to have grave doubts as to whether or not the respondents could succeed. He said:
29. Understandably given his order dismissing the applicant's summons, the judge also dismissed the respondent's summons. He ordered, by consent, that there be discovery by exchange of lists within 60 days. 30. It is against the refusal of the Judge to strike out that this appeal has been brought. 31. We deal firstly with the submission that the pleading should be struck out on the ground that it discloses no cause of action. Mr. Thomas submits that, while it is Pleaded that the breaches by the appellants caused delay there is no hint or clue given as to which breach or which Parcel of breaches caused which period of delay. It is his principal content that cause of action for breach of contract is only properly pleaded if facts are pleaded which establish the breach, the causative effect of the breach and the financial consequences. He submits that the second stage, the causative effect of the breach, has not been pleaded and that no attempt has been made to attribute a consequential period of delay to any breach. Mr. Butcher, says that as the matter has progressed to date it has simply not been possible to formulate any such attribution. 32. At the outset we cannot help but observe that if there be any substance in the respondents claim, it is remarkable that it has not been able to link directly even one of the alleged numerous breaches to a particular period of delay. 33. Mr. Thomas referred to the Supreme Court Practice, and in particular to 0.18 r.7 (1) which states that:
He relied on the passage at 18/7/5 which states:
34. He referred to the definition of cause of action given by Diplock, L.J. in Letang v. Cooper [1965] 1 O.B. 232 when he said at p.243:
35. He submitted that the factual situation which would entitle a person to obtain a remedy for damages said to flow from a breach would properly be pleaded only if both the consequent loss and the periods of delay causing that loss were pleaded. 36. He referred to Bruce v. Odhams Press Ltd. [1936] 1 All E.R. 287 and in particular to the statement of Scott, L.J. at 294 where he said:
37. Mr. Thomas argued that there was a clear failure in the present case to "state material facts", i e. the periods of delay caused by the breaches of the appellants. 38. He next referred to Saccharin Corporation Ltd. v. Wild [1903] 1 Ch. 410. The opening paragraph of the headnote sufficiently indicates the matters which were there at issue when it states:
39. Mr. Thomas referred particularly to the passage, at p 420, when Collins, M.R., after having indicated that "the plaintiffs' claim rests on no less than 23 patents", went on to say:
40. Mr. Thomas submits that in the present case the fact that the respondents have difficulty in pleading their cause of action cannot be allowed to work in any way to the detriment of the appellants. If the respondents are unable to formulate and plead their cause of action then the burden of such failure must fall upon them. 41. Mr. Butcher, in this regard, contends that the obligations and the breaches are sufficiently spelt out and that the nature of the plaintiffs' case is clear, in that all of the breaches were responsible for the delay and that the totality of the breaches caused the damage. 42. Mr. Butcher reminds us that this is an appeal against the exercise of a judicial discretion and that we should only interfere if the judge was wrong in principle or if we are satisfied either that he gave no weight or no sufficient weight to considerations which ought to have weighed with him or was influenced by considerations which ought not to have weighed with him. 43. Mr. Butcher submits further that a cause of action accrues at the moment of breach, and that a pleading is sufficient if it asserts the existence of a contract, sets out facts which allege that the defendant was in breach, and claims damages. This submission must be examined with care. 44. There can be no doubt that an action in which there is a claim for damages is properly pleaded by the allegation of facts which, if proved, would establish the existence of a contract and that the defendant committed a breach of it. However, if where special damages are claimed, no facts are pleaded to ground that claim then the pleading is defective in that regard and all that a plaintiff could hope to recover would he nominal damages. The "complete cause of action" referred to by Scott, L.J., at p.294, in Bruce v. Odham Press, Ltd. [1986] l All E.R. 287 is, we are satisfied, only pleaded where, in obedience to 0.18 r.7 (1), the pleading contains "a statement in a summary form of the material facts upon which the party pleading relies for his claim......" 45. In a pleading such as the present one where substantial special damages are sought they must be supported by material facts sufficient when proved to establish the respondents' entitlement thereto. Although Mr. Butcher concedes that at the trial he will have to prove all the facts which establish the individual periods of delay caused to the contractors, he contends that his pleading, which omits those facts, cannot be assailed as it sufficiently links the damage to breaches which it is alleged have caused the overall period of delay. He does concede, as regards the piling contractor, who was the first contractor on the site, that probably an assessment of the delays caused by the appellants could have been made, but argues that it was not incumbent upon the respondents so to do. He further argues that as regards other periods of delay, it was not only unnecessary but was, indeed, impossible to give particulars because so many complex interacting factors came into play. It is the respondents' contention that, amidst all the conflicting delays, they cannot at this stage possibly say which was the prime delay. 46. It was at times difficult to follow Mr. Butcher's explanation as to the "impossibility" of pleading specific periods of delay or of furnishing particulars as to those periods. It was far from clear whether this "impossibility" was discovered after an attempt to make an assessment had been made or because, at the outset, a broad view was taken that it was so difficult that it should not be attempted. 47. When dealing with this aspect of the matter it is important to keep in mind the two types of delay for which damages are sought. Firstly there is the claim for damages arising out of the delay caused to specific contractors. Secondly there is the claim for damages for the overall delay which caused a loss of rental income. 48. In the former case the respondents must be relying upon individual periods of delay which caused or contributed to the delay which occasioned the loss to the individual contractors. We have in this regard no doubt whatsoever that the facts which establish such individual periods are "material facts" which must be pleaded. 49. While the position may not be as clear as regards the overall delay, we are, after consideration, satisfied that the facts necessary to establish the appellants' liability for that delay must also be pleaded. An assertion by counsel that the plaintiffs have not pleaded such facts because they are difficult to ascertain provides no shield against an attack upon the pleading. 50. In the light of these conclusions it becomes unnecessary to consider the other arguments that had been addressed to us save to say that Mr. Butcher submitted that where a court decides that a claim for special damages has not been properly pleaded, it should do no more than order that that claim be struck out. This stemmed from his contention that it would not be proper to strike out as an abuse of the process of the court any pleading which alleges a legally enforceable right, albeit one that sounds only in nominal damages. 51. We are satisfied that such a contention, however correct as a general statement of law, has no application in the present case. What we must here ask ourselves is whether "the complete cause of action" has been properly pleaded. The complete cause of action in the present case is clearly one for the recovery of massive special damages. In the circumstances as we apprehend them to be it would be quite unreal to suggest that the plaintiffs are also seeking somehow to vindicate themselves by pursuing through this complex and costly litigation claim for nominal damages. 52. We are satisfied on the facts before us that the only proper order is that the Statement of Claim be struch out. We will adjourn to hear argument as to costs. 53. Mr. Thomas conceded that the claims in paragraphs (2) and (3) of Section 22.7 which were not based upon allegations of breach causing delay should not fall along with the rest of the claim for special damages and we will hear the parties as to the appropriate order as regards those 2 claims. Penlington, J. A.: 54. I have read in draft the judgment of Power J.A. and I agree with his conclusions. There is little I can usefully add. 55. The plaintiffs concede that they must prove all the breaches of contract alleged, and that the 3rd defendants and nobody else was responsible for them. They also, however, concede that in respect of the alleged breaches in allowing excessive variations in subcontractor's conditions they will not be able until the trial to show what variations were not necessary and what effect that had on the overall delay. 56. That approach is enough, in my view, to make this speculative litigation which would throw an enormous and quite unfair burden on the defendants and should not be allowed to continue. In Saccharin Corporation Ltd. v. Wild (which has not cited below) Collins M.R. said "The plaintiffs reply: we are in great difficulty in finding out which of our patents you are infringing by your product; and because we are in that difficulty our easiest course is to put them all together". That pleading was held to be wrong. Here, 5 years after the issue of the writ, the plaintiffs say they hope, before trial, to be able to give the particulars required and ordered as to damages. The defendant, however must go ahead and face the enormous cost of preparation for vastly complex trial without those particulars, having already successfully defended in a hearing occupying 3 months, the first part of the claim. That cannot be right and I have no doubt that in the particular circumstances of a case such as this the court should intervene to prevent what would he an abuse of its process. 57. The plaintiffs submit that this Court should not interfere with the exercise of a discretion unless it was clearly exercised on wrong principles. At page 10 of his Judgment Mortimer J. said "what I feared was that there could be a possibility that having settled the claims with all these contractors for delay and then having alleged every conceivable breach against the architects, that by seeking to show that those delays caused the cumulative delay without any intermediate stake referable to the individual breaches this might be an attempt to throw a net over the architects and force them to get out of it by exculpating themselves rather than the reverse. The unsatisfactory nature of the plaintiffs' case is frankly conceded by Mr. Butcher," Clearly the judge was not at all happy with the position and reached his decision with some reluctance. I think that if he had been referred to the dicta of Collins M.R. in Saccharin Corporation Ltd. v. Wild he would have decided this matter differently. Representation: A. Butcher, Q.C. & Kevin Lewis (Messrs. McKenna & Co.) for the 1st & 2nd Plaintiffs/Respondents. Neville Thomas, Q. C. & Ian Pennicott (Nessrs. Johnson Stokes & Master) for the 1st Defendants/Appellants. |