Wong Wan Chee v. British Columbia Investments Ltd

HCA007761/1984

IN THE HIGH COURT OF JUSTICE

HONG KONG

ACTION NO. 7761 0f 1984

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BETWEEN

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Coram: Hon. Sears, J. in Court

Dates of Hearing: 28th-30th April, 1986, 8th-10th, 14th-17th July, 1986

Date of Delivery of Judgment: 7th August 1986

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JUDGMENT

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PRELIMINARY

1. In this action the Plaintiff, who is an architect, sues for the balance of his professional fees. In January 1979 an agreement in writing was entered into between the Plaintiff and the Defendants in which the Plaintiff was employed as an architect for the redevelopment of No. 28, Mt. Austin Road, The Peak. On that plot of land was one house and the architect was to design three houses to take the place of that house. The agreement is evidenced by a letter dated the 6th January 1979 from the Plaintiff to Mr. Yu, the Managing Director of the Defendants and the form of agreement was an unusual form, insofar as Hong WE is concerned, in that it is the American Institute of Architects abbreviated form of agreement which differs in a number of respects from the standard British or Hong Kong R.I.B.A. agreements. Those documents are found in the Plaintiff's second bundle of documents.

2. I should say straight away that the Defendants do not assert that the Plaintiff has been in breach of any of the express terms of that agreement, nor is there any dispute that if the Plaintiff is successful in this action the amount he claims for the balance of his fees is the correct amount.

3. The defence and counterclaim which has been filed has been amended on a number of occasions, was amended after the first few days of this case and continued to be amended throughout the action. I confess on occasions I found it difficult to know precisely what was the defence that was being put forward. The Defendants counterclaim an unspecified sum of damages for breach of contract and negligence and for an order that the Plaintiff indemnify the Defendants against certain liabilities. In the course of the action Mr. Eddis on behalf of the Defendants has conceded that the Defendants do not now counterclaim damages for breach of contract and/or negligence and they are counterclaiming only for an indemnity, and then an indemnity in a limited form.

4. The defence itself is difficult to follow and a number of matters contained in this unusual pleading have been abandoned in the course of the action and at the end of the day the issues have been distilled and I can state them quite shortly.

5. First, the Defendants assert that although the Plaintiff is not in breach of any express term, he is in breach of his implied duty to use all reasonable skill and care in two respects. First he acted negligently in giving an estimate to the Defendants on September 1st, 1982 and secondly he acted negligently in that he delayed the obtaining of a special approval from the appropriate government department. The Defendants say that by reason of that negligence he is either disentitled to his fees and/or liable to compensate them for the damage which they have suffered as a result of that negligence. It will be seen, therefore, that those two issues differ dramatically from the way in which the defence has been pleaded.

6. It is not necessary, however, in my judgment for the Defendants to amend yet once again their defence and to put it into a form that really does reflect what the issues are, because I am satisfied that the Plaintiff well knows what the defence now is and I have been made aware of it either through evidence or through submissions. It would only cause further delay and costs to be expended and although therefore I deplore the way in which this pleading has been put before me, nevertheless it is my duty to seek to do justice between the parties and not to be bound by the words that appear in the defence. It is right, however, to recognise that insofar as the first matter is concerned this has only been pleaded in paragraph 14(i) in this way "further and/or alternatively the Plaintiff by his letter to the Defendant dated 1st September 1982 advised (that word has now been amended to "confirmed to") the Defendant that the estimated cost of the super-structure would be in the region of $3 million. "(ii)" In the premises, it was an implied condition or condition precedent of the architect agreement that the Plaintiff would be entitled to be paid, if inter alia the plans, drawings and specifications could be executed for a sum in the region of $3 million. In sub-paragraph (v) a new amendment is found "The said excess was caused by a design fault of the Plaintiff which design fault included an inappropriate and unnecessarily costly feature for provision of a carport deck".

7. As far as the second matter is concerned there is not contained within the defence and counterclaim any allegation that the delay in obtaining a special approval was either a negligent act or gave rise to any damage. What had been pleaded was that the Plaintiff had negligently given certain advice. That type of allegation has now been abandoned. As I have said the second matter has not even been pleaded, but nevertheless I permitted Mr. Eddis to put this forward as the Plaintiff was made aware of this allegation and in my judgment has not been prejudiced by the matter not being put more clearly in the pleading.

8. I shall now set out the law as it effects this action and then deal with the chronology of-events before stating the conclusions which I have reached.

LAW

9. As far as the law is concerned, this being an agreement in writing the Plaintiff is bound to carry out the terms of that agreement. As I have said before no allegation is made against the Plaintiff that he has acted in breach of that agreement. He is an architect and holds himself out as an architect and therefore he, like other professional men, owes a duty to his client which may be founded both in contract and in tort.

10. In this action, although the word negligence is used to describe the failure, as the Defendants allege, of the Plaintiff's duty to take reasonable skill and care this case concerns essentially a matter of contract. The duty of the architect arises in this case out of the contract between himself and his client. The standard of care he owes is that of a person of ordinary competence; the Defendants allege that in performing his duty he acted negligently. At one time I thought Mr. Eddis was submitting that the Defendants' case was one of negligence i.e. the tort of negligence. As I understand it now, he accepts that the cause of action, which he says he has against the architect, arises out of contract and what is being alleged is a negligent breach of the architect's duty.

11. It is not necessary for me to set out the nature of the architect's duty. It is nowadays very well-known and can be found in Chapter 9 of Charles Worth on Negligence from paragraph 901 and also paragraph 918 to 928. The nature of the architect's duty, the standard of care which he owes are both now well-known principles. In order to judge whether or not an architect has failed in that duty, it is necessary to examine the contract and the circumstances of each particular case.

12. The Defendants make a double assertion, that if the architect was negligent they are entitled either not to pay him his fees and/or to counterclaim for any damages they have suffered. I do accept that insofar as the first negligent act which is alleged (the 'estimate' of September 9982) if the Defendants establish that negligent breach of duty, then they would be entitled in my judgment not to pay the fees of the architect, accepting, of course, that they have already paid the initial fees and they would be entitled to recover any damages which flow from that negligent act.

13. As far as the second negligent act is concerned, if the architect has performed, or substantially performed, his contract the Defendant would not be entitled to refuse to pay his full fees. They would, however, be entitled to claim all damages which flowed from that negligent act.

14. As I have said earlier the architect's general duty is dependent upon the facts and circumstances of each particular case. generally speaking, if an architect is asked in the course of his contract of employment to give an estimate as to the likely construction costs, then in my judgment he should do that and that estimate should be given with reasonable skill and care. Mr. Faulkner for the Plaintiff does not suggest that that principle is wrong. The law, therefore, in this action falls within a very small province and there is no real dispute between the parties as to the principles which should be followed.

15. The question therefore for me is whether, on the evidence which I have heard, I am satisfied that the architect has been negligent in one or both of these ways. The issues therefore are short but the evidence before me has taken a considerable time. I have been provided with something like 1,500 pages of documents, numerous plans and other matters.

16. When this action started in April of this year, it became clear that Mr. Eddis on behalf of the Defendants was seeking to suggest that the building as designed by the architect was in some way defective and I granted leave to amend the pleadings and permitted him to call expert evidence on this topic. It transpired, however, at the adjourned. hearing that this in reality was not the case for the Defendants. They do not allege that the building was improperly designed or could not fulfil the function of its design. What they allege simply is that the building as designed would cost more than the estimate which they say was given in September 1982. It is not necessary, therefore, to examine in any depth the actual design of the building save for certain relevant considerations when I come to look at the estimate which was given.

PARTIES

17. It nay be helpful if I set out the persons who figure prominently in this matter. First there is the Plaintiff himself. He is an experienced architect and obviously a highly qualified man. He had dealings in the early days with Mr. Yu, the Managing Director of the Defendant company. Mr. Yu has not given evidence before me. He is now apparently bankrupt and out of Hong Kong. Mr. Lawrence Ng became a director of the Defendant company at the end of 1982 and was apparently actively engaged from 1983 in running the company insofar as this project was concerned.

18. Mr. Aloysious Chu gave evidence before me. He is a solicitor, a partner of the Defendants' solicitors and also a director of the Defendant company.

19. Mr. Ie is an architect who also gave evidence before me. He was approached by the Defendants in early 1984 and he designed the three houses which were ultimately built at this site.

20. It will be necessary in due course for me to state my views of these persons as witnesses of truth and/or whose recollection I can safely rely upon.

HISTORY

21. I now turn to the history of this matter. I have been kindly provided with a chronology of important dates by Mr. Faulkner. In view of the number of concessions ultimately made on behalf of the Defendants and the abandonment of a number of their points of defence it is not necessary for me to set out at length all of these matters. Nevertheless, it is necessary to look at the very beginning of the history to understand the problems which arose later.

22. For many years Messers. Reuters Limited had been the registered owners of rural building lot No. 846 on the Peak and had erected on that land one house together with a radio-receiving station and it was known as Peak House, 28 Mt. Austin Road. In 1978 Messrs. Reuters entered into a draft agreement with the Defendants to redevelop the site by demolishing the existing house and buildings and erecting three single dwelling houses of European style and keeping the radioreceiving station also on the land. The details of that draft agreement are found in the Plaintiff's second bundle, pages 19 to 37. That agreement provided for a minimum sum to be spent on the construction of the dwelling houses of (HK)$1,800,000 and the architects to be appointed were T.K. Tsui & Associates.

23. As a result of discussions between Mr. David Yu for the Defendants and the Plaintiff, the Plaintiff agreed, in 1979, to act for the Defendants in the redevelopment of the site. He told me that he was aware of the terms of that draft agreement when he sent his letter of January 6th, 1979, page 15 of the second bundle. The Plaintiff was also the architect for the adjoining lot called Lot 734, No. 24 and 26 Alt. Austin Road. This action is not concerned with any of the details of that save insofar as it is clear from the correspondence that on occasions letters were sent by Mr. Wong dealing with both parcels of land. It is also important because from a redevelopment point of view the Plaintiff designed houses which fitted in one with the other over the whole area of land and the format of development was similar for both plots.

24. At page 1 of the Plaintiff's first bundle is a letter dated the 30th March 1979 when the Plaintiff confirmed his authorisation to proceed with certain works. The Plaintiff embarked upon a number of design drawings and applications to various government department for approval which form a large portion of the correspondence in the first bundle before me. It is not necessary in view again of the concessions made by the Defendants to review in any detail the work which was carried out by the Plaintiff, but in my judgment it is clear from a perusal of these documents that the Plaintiff was conscientiously and efficiently looking after the interests of his employer.

25. In July 1979, unbeknown to the Plaintiff, the Defendants entered into an agreement in writing with Messrs. Reuters to redevelop plot 846. That agreement is found between pages 38 and 55 of the Plaintiff's second bundle. It is dated July 20th, 1979 and the same architects T.K. Tsui & Associates are shown as the appointed architects. The construction cost, minimum amount, has doubled now to $3,600,000. There are a number of clauses within the agreement dealing with the payment of certain penalties by the Defendant company should the redevelopment not be completed within a specified time, which was 18 calendar months from possession being given to the Defendants. The Plaintiff told me that he was unaware of that agreement being entered into and I accept that as the truth.

26. On the 5th May 1981 another agreement was entered into between the Defendants and Messrs. Reuters which is found at pages 56 to 73 of the Plaintiff's second bundle. In this agreement, the Plaintiff's firm is shown as the appointed architect. The minimum capital construction sum is shown still at $3,600,000 and there are similar provisions contained within the agreement with regard to the payment of penalties by the Defendants should the development not be carried out within the same period of 18 months. The Plaintiff tells me that he was also unaware of this agreement and had not seen this, nor the previous agreement, until the documents in this action were disclosed. I accept that the Plaintiff is telling me the truth about that matter.

27. The next important group of dates is in 1982 and in my judgment the history at that time goes a long way to explain the reasons why the Defendants refuse now to pay the professional fees of the Plaintiff. At the beginning of 1982 the Defendant company was still being run by Mr. David Yu. He was obviously in financial problems because he approached Mr. Chu, a solicitor and asked him to provide financial assistance.

28. In March 1982, Mr. Chu took over the ownership of the Defendant company, the shares in it were transferred to himself, or through his company and also his wife. Mr. Chu told me that he was giving Mr. Yu an option to buy back the shares within six months, and that he was helping him because he was a friend. Mr. Chu accepted that he had no knowledge whatsoever of the agreement between the Defendant company and the Plaintiff, and he knew really very little about what the Defendant company was doing.

29. In my judgment, the evidence of Mr. Chu is of importance in understanding the problems which subsequently arose. On any view, and I hope this is not offensive to the gentleman, his conduct can only be described naive. He was entering into a legal agreement to acquire the shares in the Defendant company from a man who was in serious financial difficulties, and he had no idea about either the agreement with the architect, or the redevelopment agreement with Messrs. Reuters wherein penalties were to be paid if the re-development was not completed within a specified time. Nevertheless he appears to have willingly advanced a substantial sum of money to Mr. Yu, and was hoping that, by the end of 1982, or towards the end of 1982, Mr. Yu's financial position would have improved. There occurred, however, in September 1982, the visit of Mrs. Thatcher, as has been explained to me, to China, and a deterioration in the property market in Hong Kong; public confidence was deserting the property world, and prices were falling. Mr. Yu's financial position did not get any better and he was not therefore in a position to buy back the shares. Mr. Chu, no doubt, recognizing the difficulties he foresaw in taking over a company which was engaged in a property re-development, wanted to know what the costs of construction would be. He was told, he said, by Mr. Yu that the foundation work had been carried out and paid for, and he wanted to know therefore what the balance of the construction costs would be. He said that he approached Mr. Yu to discover what these costs would be. At that time he had not seen the agreement between the Defendant company and the Plaintiff. This evidence ties up with the evidence of the Plaintiff on this aspect, which as I said, is the main issue, namely the giving of the letter in September 1982.

30. The Plaintiff gave evidence before me on two occasions; he was recalled. He said that in September 1982, Mr. Yu came to his office and said he wanted to raise money, and he asked him to give him a statement of the construction costs. At that time, only the site foundation work had been carried out, nothing else at all. The Plaintiff said that it would take him two days to do this. Mr. Yu said he could not wait, so could he give him a rough estimate of the cost of the houses; the Plaintiff said based on a square footage at $450 per square foot, it would be about $3 million for the houses alone. Mr. Yu said this was fine, so the Plaintiff wrote the letter which is found at page 202 of the bundle. Although, as I have said before, and no doubt will repeat again, this action has taken many days and involves many hundreds of documents, the central issue is this letter found at page 202, and I shall set it out in full. It is a letter from Mr. Wong dated 1st September 1982 addressed to the Defendant company for the attention of Mr. David Yu which is under-lined at the top of the letter. It reads as follows:-

"Dear Sir,

Re: No. 28, Mt. Austin Road, The Peak, H. K.

In connection with the redevelopment referenced above, we estimate the cost of superstructure will be in the region of HK$3 million.

Yours' truly,            

(signed by the Plaintiff)"

The format of this letter is unusual because I have seen many hundreds of letters written by the Plaintiff and there is no doubt at all, in my judgment that he is an efficient architect. He sets out matters always in detail; copies are sent to the appropriate person. This very short letter is, in my judgment, precisely what the Plaintiff tells me it was. It was a rough estimate of the cost of the houses. It is noticeable that the word "super-structure" is used in the letter, and the words, for example, "cost of construction of the houses" are not used. There has been a considerable body of evidence given to me as to what “super-structure" means.

31. Before I deal with that, it is important to set out what my findings are with regard to this letter. I accept from the Plaintiff that his account is the truth. What Mr. Yu was doing was trying to get some approximate estimate as to the cost of the superstructure. It may be Mr. Chu was misled when he ascumed that all the foundation work had been done; at that time only the site formation work had been completed. No foundation work had been done at all. Mr. Chu was led to believe that all the foundation work had been carried out and paid for and no doubt Mr. Yu, being the sort of man he was, may well have deliberately misled Mr. Chu in this matter. I should say straight away that Mr. Yu has not been found. Although the Defendants, swore an affirmation that he was going to be called as a witness, he has not been called. He is apparently bankrupt, and there is no doubt at all, in my judgment, that in 1982 he was a desperate man. I hold that the Plaintiff was asked by Mr. Yu to provide the cost of the super-structure and that is exactly what he did Mr. Chu has given me his account of what he thought "super- structure" meant. The important matter, however, is the purpose for which the letter was given. It was given to enable Mr. Yu to raise some money, and the words used by the architect do not refer to total construction costs. I have not referred to the plans in this matter because I do not think it necessary so to do, but there is a photograph which is marked P1, which shows how this development was to occur. The land on which the houses were to be built was a sloping portion of land; and the method of development was the erection of houses above a carparking deck. The road would go underneath the houses, and there was a large slab on which the houses were to be built. The Plaintiff tells me that the estimate which he gave at this time was for the costs of the houses above that slab of concrete. Mr. Chu said that he thought the estimate was for the total construction cost. Mr. Ie, the architect, who eventually was able to redevelop this site, told me that as far as his development was concerned, "superstructure" meant all the development above the ground. That is no doubt correct, because his development was a wholly different method of development than that adopted by the Plaintiff. Mr. Ie said that, unless the architect specifies the word "super-structure" it means the cost of the work above the ground. He was also referred to a number of plans, references to which are found at pages 232 and 234 of the bundle where the word "super-structure up to decking" and "superstructure above decking" have been used by the government Department examining the plans. These words were not used by the Plaintiff, and I have looked through the plans, and I can discover nothing which distinguishes the plans "up to decking" and "above decking", as helping me as to what the word "super-structure" means. He said in cross-examination that the amount of $3 million would have been a reasonable estimate for the construction costs of these three houses above the level of the car park decking.

32. In my judgment, the word "super-structure", as used in this letter, is the meaning given by the Plaintiff to it because that was what he was being asked to do, and he deliberately used the word "super-structure" to describe the cost of the housing above the car park decking. In the shorter English Dictionary, the word "super- structure” is defined in its architectural meaning in three ways: a building considered in relation to its foundation. Secondly, an upper part of the building erected upon a lower supporting part and thirdly, any material structure resting on something else as a foundation. These three houses were erected on a very substantial concrete slab which provided the foundations for the houses themselves. Underneath the slab was the provision for the car park, and the foundations of the buildings was indeed, as I have said, the roof of the car parking deck. At page 108, when giving an elemental cost summary in October 1980 for this development, the Plaintiff specifically ascribed a sum of money for sub-structure and a sum of money for super-structure apart from other items.

33. In my judgment, this letter, short as it was, was to enable Mr. Yu who, as I have said, was in obviously desperate financial straits, to have an approximate cost of the building to be erected above the carparking deck. I hold, therefore, on this aspect of the case, that this architect in no way acted negligently in giving this estimate. The real reason why the allegation of negligence is made is, because at a later date, the overall cost of construction of the development was in the region of $5 million. In the beginning of 1983, Mr. Lawrence Ng came on the scene. He told me that he acquired the company from Mr. David Yu, and he described Mr. Yu as a stockbroker; all along, it had been represented to me that Mr. David Yu was an inexperienced developer, and really knew nothing much about land redevelopment. I found Mr. Ng an unimpressive witness. I considered on occasions he was not giving me an accurate recollection of events which transpired. He said that, according to Mr. Yu, there were no outstanding fees to the Plaintiff architect, and the cost of development was going to be about $3 million. He said that he saw the letter of September 1982 at the end of 1982, and the cost of super-structure to him meant the upper floors. He spoke to the architect, he said, at the beginning of 1983, but he cannot remember any of the details, but he was present at the meeting with Messrs. Reuters on February 22nd 1983. He said that he had looked at the plans and he thought the foundations had been completed and that the figure of $3 million would cover the total completion of the three houses. He said that he had told the Plaintiff that they had taken over the company and asked about the progress, and the matter of the special approval was then raised which I shall deal with separately. In 1983 on April 4th, tenders were received, and the figure of $5 million was the lowest tender received. The breakdown of the tenders is found at page 251 which has been signed both by the Plaintiff and by Mr. Ng, who said to me that he told the Plaintiff that the price was too high; it was much higher than the $3 million which he said, from the information which he had received, was going to be the total construction costs. There is an important letter which explain perhaps the problems in this case which is found at page 305 of the bundle. It is dated the 15th August, 1983 and is a letter from the Plaintiff sending to Mr. Ng a large number of documents. Mr. Ng told me that when he took over the company, some of the records were not there, and he asked the Plaintiff to send the documents. He said that he then realized that Mr. Yu had been employing the Plaintiff as an architect. It was only after he had read the letter that he confirmed that the Plaintiff was the architect. Having got all of those documents, he said he then asked a friend of his, Mr. Raymond Chow, to look for other contractors. That letter demonstrates that either or both Mr. Ng and Mr. Chu had no idea what the contractual position was between the company and the Plaintiff. Further they did not know about the plans of the development. They had not seen the photographs or the model that had been produced. They did not know the format of development, namely that it was a type of development of houses built above extensive car decking.

34. The Defendants say, however, through Mr. Ng that when the tenders were open, they were surprised at the price of the development, and they made a complaint to the architect about that matter. I hold that that did not occur. The property market was still in decline in 1983, and, in my judgment, the Defendant company were uncertain about proceeding with the project. The Plaintiff thought the Defendants wanted to sell the project and that was why they asked for all the documents. Mr. Ie came into contact with the Defendants about the beginning of 1984, and he examined the plans. He was concerned, he tells me, about the overall layout; he wished to increase the density, and he wanted to speed up the development. His instructions from the Defendants, and I quote his words 'were to put up the development as cheaply as possible and as quickly as possible'. Because of that, he gave up the idea of the design which incorporated a carpark deck. The site had been formed and therefore he designed buildings for the site to take into account the work which had been carried out. He removed the carpark decking and increased the density for the adjoining lot. His overall development was slightly different in that the garden area was reduced and no doubt other alterations were made. He tells me that Mr. Wong did not do anything wrong since at any rate after April 1983, and there was nothing wrong in the Plaintiff calling for tenders. He made no criticism of the format of development which the Plaintiff adopted, and he tells me that he cannot see anything which the Plaintiff has done which no reasonable architect would do. Mr. le's redevelopment proposals came to a lesser sum of money than the tenders on the Plaintiff's design. Mr. Chu dismissed the Plaintiff in circumstances which can only be described as unfortunate. He instructed Mr. Ng in May 1984 to terminate his agreement. Mr. Ng wrote to a Government Department telling them that the Plaintiff was no longer their architect. This was a deplorable factor. In my judgment, this architect had never done anything wrong, and, although under the agreement, the Defendant company were entitled to dismiss him, it seems most odd, that no reasons were put forward for bringing to an end to his contract of employment. The Defendant was by this time employing Mr. Ie and the development was finally concluded in 1986.

Conclusions or the Letter of

September 1st 1982

35. I accept the Plaintiff's evidence as to the purpose of this letter. The figure given was for the super-structure and not for the total construction cost, and it was a correct figure.

36. There are three other factors which also assist:

37. It is necessary for me to say a few words about the respective roles of the parties in this litigation. Mr. David Yu, who was the Managing Director of the Company, was as I have said a man in considerable financial difficulties. I have no doubt that he had not made up his mind in 1982 what he was going to do. Even in 1981, there must be considerable doubt as to whether or not this redevelopment would occur. By the beginning of 1982, he was expressing his problems to Mr. Chu, and so during 1982, the Plaintiff was in a difficult position as nobody was really giving him any instructions as to what was going to transpire in this development. Nevertheless, he was faithfully carrying out his role in obtaining all the various necessary government approvals and drawing the plans for the ultimate development.

38. Mr. Chu, who had taken over the ownership in March 1982 on what he thought was a temporary basis was not concerned with the day-to-day management of the Company at all.

39. Mr. David Yu apparently stayed in the Company for the first few months of 1983 but he appears to have played little part in the Company.

40. Mr. Ng, who joined the Company in the beginning of 1983, was also ignorant as to the agreements that had been entered into and until August 1983 did not acquaint himself with the history of the matter. I accept as Mr. Faulkner puts it that when judging negligence, all I have to examine is whether or not the Plaintiff has been negligently in breach of his duty to the Defendant Company. I am not concerned with particular personalities. He owes a duty to the Company and if I am satisfied that he was not negligent to the Company, that is the end of the matter.

41. As far as the witnesses are concerned, I found the Plaintiff to be an honest man. He appears to be an efficient architect and I do not recite the volume of correspondence which there is before me showing the work he was involved in on this project. He was conscientious and if he had a fault, it was not pressing for the money he was owed earlier.

42. Mr. David Yu I have made certain comments about. I do not necessarily accept that he was inexperienced in property development. He was a man obviously in financial trouble and I find that he misled Mr. Chu in persuading him to take over this Company in 1982.

43. Mr. Ng, as I have said, I found him an unimpressive witness and if there are any disputes of fact between himself and the Plaintiff, I prefer the evidence of the Plaintiff.

44. As far as Mr. Chu is concerned, he, as I have said, was looking upon this matter as a favour to his friend, Mr. David Yu. He acted in a way which I have no doubt he would have told his clients not to do. He entered into a binding agreement to acquire the Defendant Company without reading the Architect Agreement nor the Agreement entered into with Messrs. Reuters. At no time has he or Mr. Ng made any complaint about the conduct of the Plaintiff. Mr. Chu never even spoke to the Plaintiff. I hold, on the evidence which I have heard, that at no time did the Defendant Company ever complain that the Plaintiff had been acting negligently. There is not one single word in all the hundreds of letters which I have perused which criticizes the Plaintiff in any shape or form for the work he did. The Defendants dismiss the Plaintiff for no reasons at all. Indeed, I hold if necessary that their termination of the Agreement was wholly unjustified. Ever when they terminated his employment, they did not have the courtesy to tell him the reasons why they were so doing.

45. On June 19th 1984, at page 335 in the bundle, the Plaintiff writes a letter seeking the monies he was owing. There was no answer given to that letter. On August the 20th, some two months later, the Plaintiff writes again asking for payment of his invoice and enclosing a copy of that invoice. There was no answer to that letter. On September the 22nd, the Plaintiff again writes to have his fees settled and includes another copy of the invoice. There was no answer to that letter. In these 3 months, the Defendant Company did not write back and complain that the architect was not entitled to any of his fees because he acted negligently.

46. This is, in my judgment, an important factor because here was a solicitor, a director of the Company and if he had thought that the Plaintiff was disentitled to any of his fees, no doubt he would have quickly so stated.

47. On the 2nd of November 1984, the Plaintiff writes again to the Defendant Company asking them to settle his fees and warning them that if they are not paid, then he shall instruct solicitors to commence legal proceedings. There was not even an answer to this letter.

48. On the 14th of November, the writ was issued in this case. And it was not until June of 1985 that one has the amended defence and counterclaim wherein are set out a number of allegations against this architect.

49. I recite that short chronology because it does give an indication in my judgment where the truth of this matter lies.

50. Mr. Ng told me that it was not his personal decision to terminate the architect's employment. He said no reason had been advanced for the termination. There was no board meeting, no minute was kept. There was no expression of dissatisfaction. All that happened was that he had a discussion with Mr. Chu; he also told me that the Company was going to pay the fees of the Plaintiffs and he put up as an excuse in my judgment the reasons why the Plaintiff was not paid, because Mr. Ng was in and out of Hong Kong and Mr. Chu was in Hong Kong on occasions. He said they had discussions with Mr. Chu, "we had every intention of paying the Plaintiff this sum of money. ". Mr. Chu told me "at all times we intended to pay the Plaintiff up to the issue of the writ. ". He said that when the first demand came in, he thought the fees were too high because it was 8% based on the construction cost and he said that he asked Mr. Ng to approach the Plaintiff, but I had no evidence from Mr. Ng this happened at all. It appears, therefore, that the main complaint by Mr. Chu was that the percentage figure was too high and I should indicate that under the American standard form of agreement, the figure of 8% is indeed higher than the percentage which is found in the standard R. I. B. A. Agreements. Mr. Chu also told me that when his attention was brought to the matter in June, he instructed Mr. Ng to see Mr. Wong and he made the illuminating remark that when he got the writ, the Plaintiff was not prepared to reciprocate the spirit of settlement. I find that there was no attempt to settle this matter with the Plaintiff. Nevertheless, this indicates quite clearly in my judgment that there has never been any complaint at all against the Plaintiff and all that Mr. Chu was concerned with was the amount of the bill that had been sent and not any liability to pay it.

51. When then the defence was made to the writ, it is noticeable that the main allegation is found in para. 11. This alleged that the Plaintiff failed to obtain the Crown's approval to plans, drawings and specifications etc. before the 17th of June 1983. (The date when the penalty clauses started to run. ). That matter has now being disclaimed by Mr. Eddis on behalf of the Defendants.

52. Para. 12 alleges a further breach of the Agreement which has now been abandoned. The matter of the estimate on which this case now rests appears to be added as an after thought. It was pleaded that the letter was an advice, and then it was altered to "confirmed" to. When the case originally was before me, Mr. Eddis, as I have said before, was making allegations about design faults. I then thought that the Defendant's case would be that the Plaintiff failed to design a building that could either be utilized as a house or in some other way that there was some design fault in the building.

53. The defence was amended and the word design fault now appears. That really is a mis-description of what this allegation is about. It is not alleged that there was anything wrong in the design as such in the building. What is alleged is that, as the design incorporated a carport deck, the Plaintiff knew that in itself would be a costly item and that therefore when he gave what is said to be the estimate in September 1982, he should have told the Defendants that the carport decking etc. was costly and that the overall construction costs would be far higher than 3 million.

54. Another allegation which figures prominently in the pleading was in para. 15 that there was negligent advice given about certain clauses of this Agreement with Reuters. All those matters are now abandoned. I have thought it necessary to set these matters out in some detail because they. do give an indication, as I have said before, where the truth lies.

55. Although, therefore, there has been no allegation made against the Plaintiff that he was in any way negligent in any of the correspondence and the Defendants at all times appeared to have been willing to have paid the fees or any rate a proportion of the fees, I have listened with care to the evidence which seeks to justify this Plaintiff in not recovering his fees.

56. I turn to the only other point which is now in issue, that is the special approval. Mr. Eddis accepts that this is a as he describes it, not a strong point. By virtue of the various government restrictions insofar as development is concerned, similar to restrictions in other jurisdictions, it is necessary for the architect on behalf of the owner to obtain approval to the redevelopment.

57. There are a variety of approvals to be obtained; one is approval from the government department to vary the terms of the lease under which the land is held. For example, in this case, the original lease provided for only one building on the land, so that a modification to the lease had to be obtained to permit 3 buildings to be erected. Building approval is also required under the appropriate regulations. Further a special approval is required. This deals with the design disposition and layout of the buildings.

58. Only 5th of March 1980, page 260 in the bundle, approval was given to the modification of the lease covenants. Other approvals were given, during the preparation of drawings, to various matters under the building regulations. I do not deal at length with all of these matters because I am only concerned with the special approval. This was submitted by the Plaintiff on December the 3rd 1982 and it is found at page 220 of the bundle. It included a set of general building plans together with the application. Criticism was made that it was sent to the wrong department, but I hold that Mr. Wong was told to submit it to the Building Development Department. He was (page 221) told that they would be forwarded to the Lands Department.

59. On the 12th of April 1983 at page 263, the Lands Office wrote to the Plaintiff informing him that the application was rejected on the grounds that the proposed site coverage was in excess of a permitted limit.

60. On the 19th of April, that is only a few days later, the Plaintiff wrote and said that he was disturbed to receive that letter and said that he had had a meeting with Mr. Murray of the Lands Office who had suggested that a review of the decision should be made.

61. On July the 4th 1983, the Plaintiff wrote again, setting out the various contacts which he had had with the office and asked that the matter be dealt with as a matter of urgency so that the redevelopment would not be unnecessarily delayed.

62. Other letters were set in July, and the building plans conference held on the 27th of July accepted the Plaintiff's views on the subject of special approval.

63. By a letter dated August the 24th of 1983, the government department wrote at page 311 of the bundle:

"I am directed to advise you the proposed development as detailed on plans No. A1 - A13 is acceptable under the provisions of the modification letter. "

64. Before that letter had been received, which was on August the 30th, the Plaintiff had written to the Defendants by a letter of the 26th of August, page 312 saying this:

"Judging from the normal standard efficiency of bureaucrats in the government, we recommend to proceed with what we need to do for the project rather than stay put to wait for the letter of approval. "

65. It is said by Mr. Eddis for the Defendants that the Plaintiff was negligent because the approval did not come until August 1983 and that by reason of this there has been a delay - he says of some three months - and the architect is disentitled to his fees because of this. Alternatively, the Defendants have paid an additional 3 months' penalties which they otherwise would not have done.

66. I totally reject that submission. The architect carried out his functions in my judgment in a perfectly normal manner. He put in an application for special approval and it was granted. He is not to be held in any way to blame for the fault of a government department making unjustified queries and he certainly is not to be an insurer that the government will net make errors.

67. The Plaintiff told me and I accept it, that everything: was done perfectly properly. Mr. Ie gave evidence on behalf of the Defendants and he supported the Plaintiff's evidence. He made no criticism of the Plaintiff's conduct in this aspect. He said the particular project was a difficult project and there was a lot of government approval required. He also said that he could see no harm in calling for tenders before obtaining this special approval, but it was not wise to enter into a contract before this special approval was formally obtained.

68. In my judgment, the criticism which is made of the Plaintiff is wholly unjustified.

69. Further, I would point out that there is no evidence before me that the Defendants did delay at all. It is clear in my judgment that in 1983 the Defendants still did not know what to do with this project. The property market was in disarray and Mr. Chu said that they did not know what to do with the project; Mr. Ng wanted to re-tender and the re-tendering was not complete until late in 1983. Mr. Ie was not approached until the beginning of 1984 and he told me that it took him some 2 years to get a special approval although he said verbal approval had been obtained in 1984.

70. The letter at page 305 demonstrates that in August 1983 (as I have said earlier) the Defendants knew little about the project, I therefore reject this allegation of negligence. My conclusions on this case are as follows.

71. The architect acted throughout with the best interests of his clients in mind. In 1982, through no fault of his, the Managing Director had became financially unstable. A solicitor entered the scene who knew nothing about what he was letting himself in for. It was not until 1983 that the Defendants recognized that they should do something urgent about the project. In my judgment, the letter which was written in September 1982 in no way influenced Mr. Chu on any action he took. He had purchased the company in March of 1982 and he had bound himself legally to a number of agreements of which he had no knowledge. Throughout the history of this unfortunate matter, no allegations have ever been made against the Plaintiff until the defence is filed and then the allegations made are abandoned one after the other.

72. I can see no justification for the Defendants failing to pay the fees of the Plaintiff. What they had sought to do in the defence and in the conduct of the defence was to try to raise as many points as possible, most of which were really unarguable. I find that the Plaintiff is an honest man and gave me honest evidence. I accept that he was in no way negligent in the course of his employment. I therefore reject the defence which is being put forward.

73. The counterclaim of the Defendants is based on the negligent acts of the Plaintiff. In my judgment, as I have said, there was no negligence by the Plaintiff and the counterclaim also fails.

74. I therefore give judgment for the Plaintiff for the amount claimed.

Representation:

Mr.R. Faulkner ins'd by Messrs. Wong & Chiang for the Plaintiff.

Mr.F. Eddis, Q.C., and Miss J. Pinto ins'd by Messrs. Chu & Lau for the Defendant.