Fung Cheung v. Kwan Lee Construction Co. Ltd.

HCCT000012/1993

Construction List No. 12 of 1993

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: The Hon. Mr. Justice Kaplan in Court

Date of heading down judgment: 4 July 1994

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J U D G M E N T

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1. As long ago as 1977, the Plaintiff and the Defendant entered into 12 sub-contracts in respect of a housing estate at Ngau Chi Wan. The work was completed in 1979 and so I have been trying a case involving, inter alia, disputed issues of fact which go back 17 years! Little wonder it is that this case has been bedevilled with uncertainty and confusion.

2. The Defendant was the main contractor employed by the Housing Authority. The Estate was completed in phases. The Defendant sub-contracted 12 contracts to the Plaintiff as follows:

3. There is some dispute as to when practical completion of these phases was effected. This dispute is no longer relevant. The sub-contract works were completed between mid 1979 and the end of 1980.

4. The Defendant had 2 arbitrations with the Housing Authority which have given rise to disputes in this Action to which I will have to refer in due course.

5. This Action commenced by writ dated 24 April 1986 and was transferred to this list in 1993.

6. Somewhat surprisingly 6 days later the Defendant commenced an Action namely, A2482 of 1986. In that Action, the Defendant claimed sums which it asserted it had lent or advanced to the Plaintiff in respect of these particular sub-contracts. For some reason that Action went to sleep and it was not resuscitated until after the present action had begun before me. I accept that Mr. Jonathan Harris, who appeared on behalf of the Defendant, was not aware of this other action when the matter before me commenced. Initially, Mr. Harris invited me to consolidate the two actions. Mr. Swaine, Q.C. objected. I adjourned this application in order to enable some discovery to be given over the Easter adjournment. After Easter, I declined to consolidate but ordered, instead, that I would hear A2482 immediately after the conclusion of the present action.

7. Towards the end of the hearing, Mr. Swaine issued a summons to strike out A2482 because it had become apparent that whereas the claim was for the return of the loans, in fact it was clear that these were limited recourse loans, i.e. only to be set off against moneys due to Mr. Fung in respect of this or one other project. Therefore, if the Plaintiff failed in this action, there would be nothing against which to set off these loans. To deal with this aspect of the matter, Mr. Harris prepared an amendment which converted the claim for a money judgment into a claim for a declaration.

8. Fortunately, by an agreement between the parties dated 22nd April 1994, A2482 - the loan action - was compromised on certain terms and I gave leave for that action to be discontinued.

9. Having discontinued the loan action I gave, by consent, Kwan Lee leave to re-re-re-amend their defence in the present action to plead the loans outstanding of $724,027.44 as a set off against any claims that the Plaintiff may be able to establish in the present action. The agreement between the parties also dealt with interest and partially with costs. I will have to give effect to this agreement in the light of my findings in this action.

Dramatis Personae

10. The Plaintiff, Mr. Fung Cheung, was the only witness of fact called by Mr. John Swaine, Q.C. who appeared together with Mr. John Swaine for the Plaintiff. Mr. Mclntosh, an expert, was called on behalf of the Plaintiff.

11. The chairman of the Defendant is Mr. T.P. Yu, who gave evidence in relation to the contractual negotiations. His son, Paul Yu, also gave evidence on a peripheral matter and another son's statement was put in but not challenged.

12. Mr. Harris also called 3 other witnesses. Firstly, Miss Ng Bik Lin who has been working in the accounts department of the Defendant since 1972. She gave evidence of the accounting system which is relevant to the sums paid to the Plaintiff and the amount of contra charges. Also called for the Defendant was Mr.K.C. Chan, who was a quantity surveyor, responsible for phases IIA and IIB of this estate. He was responsible for ascertaining, measuring and for preparing interim payment certificates for the works of the Plaintiff in respect of those phases. The Defendant also called an expert, Mr. W.K. Chang.

The Contracts

13. Both Mr. Fung and Mr. Yu had done business together since about 1961. Their arrangements were initially fairly informal. They would discuss the matter and in due course a written contract would be prepared. The first part of such contracts would be on the Defendant's printed form where as the schedule would be tailor made for the particular contract and would differ from case to case.

14. In essence, what they agreed was that the Plaintiff would carry out these works and get paid whatever the Defendant got from the Housing Authority, less an agreed percentage which again differed from case to case. However, this deceptively simple arrangement has given rise to points of construction in the light of the words used in the various written agreements.

15. It is, however, important to bear in mind that it was always Mr. Fung's understanding of the agreement reached with Mr. Yu that he was to get a percentage of the sums actually paid to the Defendant on the basis that Mr. Fung was carrying out the work. This was a simple agreement reached between two businessmen. I think they would have been surprised if, at the time they concluded their agreement, they had been told that this simple and straightforward agreement, which they both understood, would have given rise to such esoteric points of construction. Now, of course, many years later they have fallen out and so everything is "up for grabs!"

16. I now propose to deal with the various matters which I have been asked to decide but before doing so, I should point out that it is common ground that the payment provisions in the various sub-contracts are not identical but I agree with the Plaintiff's submission that they are similar in spirit. These two gentlemen agreed a split of the monies received by the Defendant from the Housing Authority. The Plaintiff was to carry out the works and the Defendant was to pay over a fixed percentage of what it received from the Housing Authority. The Defendant itself did not carry out any of the works in dispute in this action.

Caissons

The 1st sub-contract provided for payment as follows:

"The fee of the works shall be the actual amount receivable calculated at 80% of the BQ rate\price of the bill under the contract signed by party A (Defendant) and the Government (i.e. calculated by deducting 20%)."

17. The parties have not been able to agree on a translation of certain of the Chinese characters, hence the phrase "BQ rate\price of the bill". At the end of the day both sides veered to the view, with which I agree, that there is nothing significant between these two phrases.

18. Mr. Harris relied upon other clauses contained in this and other sub-contracts which related to interim payments. He pointed to the fact that these provisions referred to payments being based upon quantities of work done and submitted that this should lead me to interpret the sub-contracts on the basis that the Plaintiff was to receive the agreed percentage based upon the value of the actual amount of work carried out by him as valued by the Defendants, as opposed to the agreed percentage or whatever was received by the Defendant for this item.

19. In my judgment, there is a distinction to be drawn between "the fee for the works" on the one hand, and the stage payment on the other. The clause that I have set out above, governs the payment for the whole of the work contemplated by the sub-contract and in my judgment, however linguistically imperfectly, gives effect to the plain and simple agreement reached between the Plaintiff and Mr. Yu. I cannot agree that I am forced to a different conclusion merely because provisions in the sub-contract provided for interim payments to the Plaintiff to be based on quantities of work done at that time by the Plaintiff. I am quite satisfied on the evidence which I have heard that the agreement between the parties focused on a percentage of the monies received by the Defendant from the Housing Authority for particular items which were sub-contracted to the Plaintiff. It is not now open to the Defendant to argue that the Plaintiff should only receive the agreed percentage on the Defendant's own valuation on the work carried out by the Plaintiff. This is not what was agreed by the parties.

20. Mr. Harris concedes that the disputes concerning the interpretation of the sub-contracts only have financial effect in respect of the caissons and drainage which is an item covered in the fluctuations claim.

21. Finally, I would add this. These contracts in their English translation are not standard form contracts and are not easy to follow nor do some provisions sit comfortably with other provisions. In circumstances such as this, it is essential for the Court to attempt to ascertain what was agreed between these two businessmen, and, so far as they are able, given the words that they actually used when they reduced their contract into writing, to give effect to that agreement. I accept that in some cases, the terms of the written agreement may throw up a different result to that which the parties thought they had agreed orally. That is, of course, most unfortunate but it is the terms of the written agreement which governs the parties relationship. In the present case, I have given this point very careful consideration and as I have made clear above, I am not persuaded that the terms of the written agreement force me to reach a conclusion which cuts across what I have found to be the clear understanding of these two businessmen.

22. The 6th sub-contract had identical payment terms, save the split was 83%-17%.

The 8th sub-contract used different language as follows:

"It is to be completed according to the drawings including labour and all the material used in Caisson and to be paid according to the 83% of the actual company's BQ rate received (that is, by deducting 17%)."

The 11th sub-contract provides as follows in relation to payment :

"It is according to the actual BQ rate of a company. The machinery cost of $100,000 is deducted by the company and less 17% of the total sum, that is, net received of 83%

The issue in relation to Caissons

The Plaintiff's case is simple. He submitted that he should receive the agreed percentage of what the Defendant received from the Housing Authority in respect of caisson work. He submits that this is what he agreed with Mr. Yu and that is what the relevant sub-contracts provided for. He submits that there is no need to look at the actual work done as he is entitled to a fixed percentage of what the Defendant received for these items.

The Defendant has raised an issue of fact which Mr. Harris has helpfully set out as follows:

"Did the Plaintiff excavate the caisson on level ground from:

(i) The existing ground level to cut-off level in the case of Phases IIA, IIB and III and from the level of the underside of the hard core of the ground slab in the case of Phase IV; or

(ii) For all Phases from the level of the underside of the Caisson caps (cut-off level)."

23. The Plaintiff contends for (i) and the Defendant for (ii).

24. I am satisfied on the evidence adduced that the Defendant is correct on this issue of fact. I had the benefit of Mr. K.C. Chan's evidence. He was resident on site and regularly inspected the work. He recollected that he saw the Plaintiff carry out bulk excavation to the cut-off level and commence excavation of the caissons from that level. A letter dated 25th July 1978 from the Chief Architect of the Housing Authority supports Mr. Chan's recollection. Further, Mr. Chan and the quantity surveyors for Phases III and IV produced final accounts for the Plaintiff's caisson works which consistently showed amendments to the quantities in the main contract and final accounts for caisson excavation which take into account the fact that, with the exception of caisson excavation on slopes, the caissons had all been excavated from cut-off level.

25. The Plaintiff responds by pointing out that the quantities mentioned by Levett and Bailey constituted the best evidence of what work was carried out. Mr. W.K. Chang, the expert called by the Defendant, agreed that it was open to Levett and Bailey to interpret the BQ's for excavation of caissons as providing for payment for excavation from existing ground level, even if caissons were, in fact, excavated from cut-off level. The Defendant therefore submits that the quantities measured by Levett and Bailey cannot be taken as evidence of what work was actually carried out by the Plaintiff.

26. Mr. Harris recognises that if I am with him on this issue of fact, as I am, then the following issue has to be determined:

"Is the Plaintiff entitled to be paid for exactly the same quantity of work as that for which the Defendant has been paid for excavating caissons pursuant to the main contract."

27. The Defendant's position is as follows. It wishes to pay the Plaintiff the relevant percentage of the work actually carried out by the Plaintiff but because in fact the Defendant received a larger sum due to Levett and Bailey's interpretation, the Defendant wishes to keep the difference which he recognises is in the nature of a windfall.

28. Mr. Harris has constructed an elaborate argument which attempts to justify this conclusion. I did not intend to repeat it as it is all set out in his very helpful closing submissions.

29. How is this windfall to be dealt with? I am satisfied that the parties agreed that the fixed percentage should be applied to the actual sum received by the Defendant from the Housing Authority referable to each sub-contract. It would, in my judgment, be contrary to the spirit and letter of each of the caisson sub-contracts if the Defendant was to keep 100% of such windfall. What the parties agreed was that a fixed percentage should be divided between them and if that applies to the windfall, as I hold it does, then they both share in the consequences of Levett and Bailey's, perhaps generous, interpretation of the BQ in relation to the execution of caissons. The parties could not have intended that the windfall should all go to the Defendant. Further, I am satisfied that I am not bound to reach that conclusion by reason of the actual wording which the parties used.

30. On this issue, therefore, I hold that the Plaintiff is entitled to be paid for exactly the same quantity of work as that for which the Defendant has been paid for excavating caissons pursuant to the main contract. All that is required is to apply the appropriate percentage to the amount received by the Defendant for this work.

Concrete Walls

31. The Defendant alleges that some of the walls measured in the final account as having been constructed of concrete were in fact constructed of brick.

32. The Plaintiff's position is that he is entitled to payment for 100 mm concrete walls to Phases IIA and IIB by applying the stipulated sub-contract percentage rate for such work to the total amounts which the Defendant was paid under the main contract for 100 mm concrete walls for Phases IIA and IIB.

33. It is common ground that the Plaintiff only constructed concrete walls and was not involved in constructing brick walls.

34. The Plaintiff accepts that there was a letter from the Housing Authority recording its acceptance of the Defendant's proposal to substitute 102.5 mm brick walls for 100 mm concrete walls. Further, the Plaintiff accepts that Mr. Chan is accurate when he said that he saw walls constructed out of brick during his inspection on site which he knew were shown as concrete walls on the drawing. The Plaintiff further accepts the calculations shown on pages 12A & B and 27A & 27C of bundle 7 of the quantity of concrete walls substituted by brick which Mr. Chan confirmed he prepared.

35. . Swaine invites me to treat Levett and Bailey's measurements as correct. He submits that it is upon the Defendant to show that they are incorrect and they have not shown this. He points out that the Defendant has called an expert, Mr. Chang who said that Levett and Bailey would not have taken into account the substitute of bricks for concrete in the final account. Mr. Swaine submits that this is pure speculation. Mr. Swaine further submits that the evidence submitted by Mr. Chan, the Defendant's employee, to the effect that he measured bricks is unreliable evidence. He invites me to conclude that it is a fair assumption that Levett and Bailey had measured the correct quantity of concrete walls. There is nothing to show the re-measurement bills were wrong and it is only speculative when the Defendant asserts that Levett and Bailey did not take this into account. He further points out that no document has been produced showing what the Defendant had paid in respect of brick work so that a comparison could be made. It is accepted that there was a substitution by brick for concrete but nevertheless, there was a mix as between brick and concrete and the Plaintiff does not accept that Levett and Bailey's measurement of the amount of concrete has been shown to be wrong.

36. Mr. Swaine also points out that nobody from Levett and Bailey was called by the Defendant to put flesh on the mere assertion made by Mr. Chan and no arithmetic demonstration has been produced to indicate their figures were wrong. Levett and Bailey measured both brick and concrete and Mr. Swaine invites me to give effect to their measurement of concrete.

37. Mr. Harris, on the other hand, reminds me that Mr. Chan was a resident surveyor employed by the Defendant. There was an agreement as between the Defendant and Housing Authority that some concrete walls would be substituted by brick walls. Mr. Chan's evidence, he said, was that Levett and Bailey assumed that all walls were built out of concrete. His task was to deduct the quantities he knew were constructed out of brick. He invites me to conclude that Mr. Chan is correct in his calculations.

38. I have not found this aspect to the case at all easy to determine. I think I have to start by reminding myself that, prima facie, I ought to give effect to the measurements made by Levett and Bailey unless I am satisfied that on the balance of probabilities it has been established that their calculations are wrong. So far as this aspect is concerned, the onus is upon the Defendant to establish that the Levett and Bailey calculation is wrong.

39. They seek to do this in two basic ways. Firstly, they rely upon Mr. Chang's evidence that Levett and Bailey would not have drawn a distinction between bricks and concrete unless there was a cost consequence in so doing. I am not satisfied that this is evidence upon which I can rely. I am not, of course, attacking, in anyway, the bona fides of Mr. Chang's view but the plain fact remains that one must give effect to a measurement carried out by such an experienced firm as Levett and Bailey and if it is sought to gainsay what they have done the least one would expect is that the Defendant would have called them to ascertain this fact. For Mr. Chang in the best of faith to attempt to speculate what they would or would not have done is not really sufficient evidence upon which I can rely.

40. Further, it is not disputed that Mr. Chan purported to measure the quantity of brick work. However, the issue is, in essence, whether he was justified in deducting that quantity from the quantity of concrete measured by Levett and Bailey. Unless it can be shown that Levett and Bailey's concrete measurement is wrong, there would be nothing to deduct from that figure.

41. No documents had been produced showing what the Defendant actually paid for brick work carried out by third parties. No evidence was produced from Levett and Bailey to show that their measurement was wrong. We know that there was a mix of concrete and bricks for these walls. What we do not know is that Levett and Bailey's measurement of quantities for concrete are wrong. I am not prepared to make the huge leap which Mr. Harris, on behalf of the Defendants, wishes me to make, namely, that Levett and Bailey's quantities for concrete are unreliable.

42. In the light of all these matters, therefore, I conclude that the Plaintiff is correct in that it is not appropriate for there to be any deduction from Levett and Bailey's measurements for concrete walls.

Fluctuations

43. Some of the sub-contacts expressly provided for fluctuation payments to be made to the Plaintiff. Some did not.

44. A late amendment to para. 7 of the re-amended Statement of Claim pleaded as follows:

"Further, it was agreed orally between Mr. Fung Cheung of the Plaintiff and Mr. Yu Tai Peng of the Defendant at in or about March 1977 and thereafter confirmed from time to time that

(a). aggregate, sand and fine stone pieces were to accord with Anderson's current prices to be adjusted in the event of increase or decease;

(b) the Plaintiff would be entitled to payment in respect of labour and other materials including cement in accordance(a) aggregate with the fluctuations allowed under the main contract after deduction of the Defendant's agreed percentage under the respective sub-contracts for the type of work in question."

45. Mr. Fung confirmed such an agreement. Mr. Yu agreed that there were discussions in March 1977 but he denies that any firm agreement was concluded. A substantial attack was made on Mr. Fung's credibility on this issue and it is said that his evidence was unreliable and implausible.

46. Mr. Fung appeared to me to be an uneducated man who over the years has done very well in the sub-contracting business. I did not think that he was an acute businessman. He was concerned with entering into a simple agreement with Mr. Yu - one that he could understand and operate. He trusted Mr. Yu whom I believe to be a far more intelligent and astute businessman.

47. Many of Mr. Harris' attacks on Mr. Fung's case on this issue are forensically sound and have been well-deployed by Mr. Harris in his written submission. However, I did detect in Mr. Fung a basic honesty and straight forwardness. He was not good on detail and must have been a very trying client in the sense that he was always vague on detail. It must have been difficult to get sufficiently clear instructions from him to deal with a piece of litigation of this nature. However, he knew what he had agreed with Mr. Yu all those years ago. I have accepted his evidence that what was agreed was that he would receive the agreed percentage of whatever the Defendant received from the Housing Authority. I am quite satisfied that he did agree with Mr. Yu that he should be paid for fluctuations. I believe that the discussion did firm up into an agreement and I have no doubt that the agreement covered all the sub-contracts. In some sub-contracts, an express provision was inserted and that, of course, has to be applied. Where the sub-contract is silent, I am satisfied that the pleaded term was agreed and it constituted a valid agreement in law and was part of or collateral to Mr. Fung's promise to do the work. (Although Mr. Harris reserved the right to reply on the question of consideration, he declined, at the end of the day, so to do).

48. In my judgment, it would have been absurd for some contracts to contain a fluctuation clause and others not. The oral agreement is clear on the evidence. Anything else would not have made commercial sense.

49. This issue is therefore decided in the Plaintiff's favour.

Arbitration

50. The Defendant instituted two arbitrations against the Housing Authority. Mr. Fung and Mr. Yu entered into an agreement in relation to a split of the spoils of arbitration. They are no longer agreed as to what they agreed at the time.

51. Mr. Fung's version is now that he and the Defendant would share the proceeds of any arbitration on a 50/50 basis. This agreement encompasses that there would be a 50/50 split of any costs incurred.

52. Mr. Yu's version is that the costs and proceeds would be shared 80% - 20% i.e. the Plaintiff getting 80% of the spoils for paying 80% of any costs. This is the way the Defendant drew up the account after both arbitrations had been completed. There was success in one and failure in the other.

53. Mr. Fung's evidence was that it was Mr. Yu's idea to arbitrate as he thought some more money could be got from the Housing Authority. Having heard them both give evidence, I am satisfied that the suggestion came from Mr. Yu. I agree with Mr. Swaine's submission that it would have been most unlikely for the suggestion to have emanated from Mr. Fung as Mr. Yu would have me believe. Mr. Fung would not have known that the Defendant had an arguable case for a claim for loss of profit against the Housing Authority.

54. The only matter which has caused me to reflect before accepting Mr. Fung's evidence that a 50/50 split was agreed, is that in the course of these proceedings, Mr. Fung was maintaining that he was entitled to 80%, not 50% of the proceeds of the arbitration. This is, of course, a valid point which I must consider.

55. Mr. Fung's version that a 50/50 split was agreed had the air of reality about it. I think it most unlikely that Mr. Fung would have agreed to embark upon arbitration if he was to be liable for 80% of the costs. The 50/50 approach appears to be far more likely to have been agreed in all the circumstances of the case. As to the particulars which put Mr. Fung's claim at 80%, I think it most likely that this was an assumption made by those preparing the Plaintiff's case and I think they were likely to have made assumptions because, on the whole, Mr. Fung did not have a good grasp of detail. However, at the end of the day, accepting the points that Mr. Harris made, I accept Mr. Fung's evidence when he says that he and Mr. Yu agreed a 50/50 split. The arbitration account must now be recast to take into account this finding.

56. Did the parties agree 85% or 93% of the BQ rate payable under the main contracts for drainage works, executed in Phases III and IV, i.e. the 9th and 12th sub-contracts.

The relevant contractual provisions provide:

"All works to be completed according to drawings, including labour and materials and to be paid according to 93%, 85% sd. illegible of the actual tendered rate of the company (i.e. original price less 7%)."

57. It seems clear that the deletion of 93% and substitution of 85% was made by Mr. Yu. The issue is whether it was agreed. The deletion appears in the Chinese version by a circle around the Chinese characters for 93%, with 85% written underneath with a signature next to it. No help can be gained from looking at the interim payments. Mr. Yu thought that every interim payment was made at the rate of 85% but this is not so. Originally, the Defendant admitted that the relevant percentage was 7% but a late amendment withdrew that admission without any explanation.

58. Mr. Yu says that he agreed with Mr. Fung that he would pay 85% He alleges that Mr. Fung agreed and that Mr. Yu amended the Chinese version. What was not sufficiently explained was how the 93% - 7% split ever got into the contract in the first place.

59. If Mr. Yu did not agree 85% with Mr. Fung, then his deletion and signature was dishonourable. I did not think that Mr. Yu would have ever done a thing like that. I am fortified in this view by the fact that on p.62 of the contracts bundle one finds, in relation to this contract, Chinese characters which it is agreed state "proposed contract". I believe that someone drew up the proposed contract and inserted 93% - 7% but when Mr. Yu and Mr. Fung discussed it between themselves they agreed 85%, which after all was in line with their other agreements. Mr. Yu then amended the proposed contract term by deleting 93% and putting 85%.

60. In the light of all the evidence and on the balance of probabilities, I am quite satisfied that 85% was agreed for these two contracts and the quantum must be assessed on that basis.

The Deductions

61. A major issue which developed during the trial was how much had been paid to or on behalf of the Plaintiff. The Plaintiff was apparently short of cash at the time and it was agreed between the Plaintiff and Mr. Yu that the Defendants would make payments direct to Anderson Aggregates for aggregates to be used by the Plaintiff and to suppliers of cement on the same basis.

62. In September 1992, this case was listed before Deputy Judge Ribiero, Q.C. The case was in no position to proceed and the learned Deputy Judge made an order for the provision of certain particulars. Outside court, counsel for the parties discussed the issue as to how much had been paid to or on behalf of the Plaintiff and I was told that it was agreed that the sum was $33.67 million.

63. During the course of the trial, Mr. Harris wished to adduce evidence to the effect that the Plaintiff had in fact received $35,159,564. Mr. Swaine, Q.C. objected and referred to the agreement to which I have just made reference. He submitted that Mr. Harris should be held to the agreement made by his predecessors but if he was allowed to contend for a sum in excess of $33.67 million, then the Plaintiff should be free to challenge the deductions and contra charges.

64. In a short interlocutory ruling, I permitted Mr. Harris to adduce evidence attempting to prove the higher figure and I naturally permitted Mr. Swaine to challenge all items if he wished. This entailed supplementary proofs of evidence being put in together with 2 new proofs from the 2 sons of Mr. Yu. I heard the Plaintiff, Mr. Yu Senior, his son Paul, Mr. Chan and Miss Ng on this issue and I had placed before me a large bundle of documents relating to these issues.

65. The bundle produced was not complete by any means because a lot of documents had gone missing. The Defendant contended that they had given all the documents relevant to this issue to their former solicitors but unfortunately only part had been returned. Some original documents or copies were lost by the Defendant during the course of 3 moves in the long intervening period.

66. The Plaintiff accepts that he received by way of direct payments from the Defendant, the sum of $27,211,649.

67. The Plaintiff further accepts that the Defendant paid Anderson, the sum of $4,228,037 for aggregate supplied for his sole use.

68. The Plaintiff does not accept, but the Defendant avers, that the Defendant paid $1,800,597 for cement on behalf of the Plaintiff.

69. The Defendant further avers that it is entitled to deduct a further sum of $605,681 which in Schedule 10 is under the category of 'others'.

70. The Defendant has adduced evidence, which I accept, of the system which they operated in respect of this matter. Miss Ng was a very careful and, I am sure, honest witness and I am confident that she accurately recorded the information that she received from those on site.

71. The ledger cards on which all the payments, deductions and contra charges were recorded, were available to the Plaintiff and seen by him from time to time. However, the Plaintiff has told me that he is illiterate and thus these ledger cards may well have meant little to him. However, the fact remains that the Defendants conducted a system which was open and which was shown to the Plaintiff and thus he had an opportunity at the time to comment on this matter. Even if he was illiterate, I am quite confident that he can read figures and would probably have had all these at his finger tips, bearing in mind, payments and deductions were his life blood.

72. I am quite satisfied, and it is not denied, that the Defendant did pay for cement ordered for the Plaintiff's use. The Plaintiff has no positive case to make as to what is the correct figure, but in any event, I am satisfied that I can rely on the evidence adduced by the Defendant. I accordingly find that the Defendant paid the sum of $1,800,597 for cement on behalf of the Plaintiff.

73. As to the category entitled 'others' I find the position to be as follows. During the course of these works, the Defendant's employees on site, formed a view that contra charges should be made against the Plaintiff. This is a frequent occurrence in cases such as this. The Plaintiff may not have completed a piece of work he should have completed and the main contractor gets someone else to do it and seeks to contra the item against sums due to the Plaintiff. One item was referred to where the document indicated that the Plaintiff or one of his employees damaged a vehicle belonging to the Defendant and the minor cost of repairs was contra charged.

74. In respect of none of the contra charges, some of which are evidenced by the documents in a bundle put in specifically to deal with these matters, has the Plaintiff any positive case to make. Indeed, in the absence of any contemporary documents emanating from him about these matters, it would be inconceivable if he purported to remember events so trivial which took place over 15 years ago.

75. The Plaintiff told me, and I accept, that he genuinely expected all these matters to be sorted out at the Final Account Stage. However, the parties appear to have fallen out before that could take place and this action has become the final accounting.

76. Mr. Swaine, Q.C. invites me to conclude that the only way it is possible to ascertain whether a contra charge is valid is to examine the event that allegedly gave rise to the charge. As a lot of the relevant records are now lost he submits that the claim must fail.

77. I cannot accept this submission. I have to decide this case on the evidence presented to me. I am satisfied that the Defendants had a system and that the contra charges were properly recorded and open to the Plaintiff for inspection. It is far too late, 15 years later, for the Plaintiff to attempt to re-open these issues. As I have said, he had access to the ledger cards and that was the time when he should have taken objection to contra charges. He concedes that he was shown these ledger cards. Had an improper contra charge been put down, I am satisfied that he would have taken issue with it there and then. It lies ill in the mouth of the Plaintiff to complain that records are lost when he himself, for whatever reason, has not brought on this action until 1994 and did not commence it until 1986, both of them being years after the event.

78. The Plaintiff has produced absolutely nothing to indicate the nature of his objection to these items whereas the Defendant has produced evidence of a system and quite a lot of documents to support the implementation of that system.

79. In all the circumstances, I am quite satisfied that the Defendant has established, on the balance of probabilities, that it is entitled to credit for the sum of $605,681 under the heading of 'others'.

80. The effect of this part of the judgment is that after giving credit for the agreed sum of $91,764 and taking into account $550,000 received by the Plaintiff for fluctuations and $670,000 for additional site formation the Plaintiff has received the benefit of direct and indirect payments totalling $35,170,764. These figures are set out in a schedule of an analysis of Kwan Lee's Ledger Cards which was given the number 10. Eventually counsel agreed these figures subject to liability.

Conclusion

81. I hope that I have now determined the various issues which were outstanding between the parties. As I understand the matter the accounts are now to be recast in the light of my findings and the terms of the agreement in relation to the loan action will also be taken into account when the figures have all been worked out. This case proceeded in a somewhat stop start manner. I was told that there was a substantial agreement between the experts on certain matters and of course there was an agreement in relation to the loan action. I hope that the account between the parties can now be completed without further reference to me but if there are matters still outstanding upon which my judgment is required, I will, of course, be prepared to hear the parties at the earliest opportunity. I give both parties liberty to apply in relation to any matters which I might have omitted and of course there is liberty to restore the matter for argument on any consequential matters including the form of order, costs or interest, save in so far as the same have not already been agreed.

82. I would like to thank all Counsel for their most helpful written and oral submissions.

Representation:

Mr. John Swaine, Q.C. and Mr. J.J.E. Swaine instructed by Patrick Chung & Co. for Plaintiff.

Mr. Jonathan Harris instructed by Bateson Starr for Defendant.