John James Nemeth and Another v. James Julius Killough Iii and Another
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IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 155 OF 1971 ----------------- BETWEEN
----------------- Coram : Li, J. ------------------------ J U D G M E N T ------------------------ 1. When Mr. and Mrs. Nemeth (hereinafter referred to as the Plaintiffs) acquired their new home at Olympia Fields hardly would they expect this home eventually would cause them to be away from home for nearly three years. When they met Mr. Killough, the 1st Defendant, they thought they had found the cream of architectural talent to redesign and to redecorate their home. Similarly, when Mr. Killough won the friendship of the Nemeths with the hope of being commissioned for the job he thought he would acquire the cream of his professional work. Unfortunately, neither of the parties seem to know that too much cream could cause indigestion and is bad for the system. Nor did they realise that when the cream turn sour the best decision would be to pour it away so that it would not affect the other provisions in the refrigerator. In life’s experience many times a small sacrifice may prove to be cheapest way out of an expensive proposition. It is therefore a great pity that the parties in this case have not taken heed of their counsel’s advice to settle their differences. Both partiesinsist on vindicating themselves and both parties will be hurt as I am given to understand that the costs of this action have by far exceeded the total claim by the Plaintiffs. 2. Before I consider the substance of the Plaintiffs’ claim I feel I should comment on a few unfortunate features in connection with this case. The first is the gross under-estimate of the length of time required for the hearing. On the 17th July 1971 the case was set down for hearing before my brother Huggins and the time estimated for trial by the application of the Plaintiffs’ solicitors was eight days. Discovery of documentsthen followed.From the affidavits filed in the months of August and September 1971 it would be quite apparent that the case required many more days of hearing than eight days in view of the great number of documents discovered. Yet on the 30th October 1971 when solicitors for the Plaintiffs made his second application for the caseto be set down his estimate was still eight days. On the 11th November 1971, Mr. Thornhill, the solicitor having the conduct of the action on behalf of the Plaintiffs, filed an affidavit in support of an application for the action to be taken out of the running list. In his affidavit he deposed as to the complicated nature of the evidence involved as well as to the great number of documents to be referred to in this action. He also deposed that it would take a long time to brief counsel on the facts and documents. It should be abundantly clear to him by that time that there could be no hope of finishing the hearing in eight days. Nonetheless he did see fit to ask for more days to be allocated to the case or, if necessary, to vacate the dates set down for the hearing and have fresh dates set downfor the case to be heard continuously till completion. For reasons best known to him he was happy to leave the original estimate to stand. The action commenced on the 2nd February 1972. At the end of the eighthday of hearing I had to allocate another four weeks for it in April. Had I insisted on the hearing to continue it would have caused embarrassment not only to counsel for the Plaintiffs but also to counsel for the defence. Mr. Zimmern gave me to understand that when he accepted the brief for the defence he was assured by his instructing solicitors that the case would not last beyond the eight days. How his instructing solicitors could come to such an opinion is yet another matter for bewilderment. Eventually the trial took a total of twenty-seven and a half working days with the unfortunate result of hearing the case by two instalments. Apart from the breach of duty cast on the parties under O.34 r.8, great inconvenience was caused to the judge as well as counsel. I made my observations in the course of the trial and put by comments on record. I shall say no more than I am in full agreement, and wish to associate myself, with the comments made by my brother Pickering on this subject of estimates of trial time in his judgment in O.J. Action No. 1769 of 1971. 3. I shall next refer to the subject of coverage of civil proceedings by shorthand writers. This has been subject matter of observation by my brother Huggins in O.J. Action No. 2350 of 1971. In that case he had no coverage at all. In the present case I have been more fortunate but not much more. When this case commenced on the 2nd February 1972 I was told that no shorthand writer could be spared to take down the evidence. Partly because I was misled that the trial would last no more than eight days I reluctantly exercised my discretion, albeit a course forced upon me, to dispense with the services of short-hand writers under the provisions ofO.68 r. 1.In this respect I am indebted to learned counsel for both parties who warned me at once and in no uncertain terms as to the importance of having shorthand coverage of the evidence in this case. On this understanding I rescinded my former order and asked for the assistance of shorthand writers. It was with some difficulty before I could obtain this assistance for the first eight days. Soon after the first adjournment counsel for the parties requested that transcript of the evidence taken in those eight days be made available before the resumed hearing in April. The request was made in mid February. I endorsed that request. However no transcript was provided in April and indeed up to after the completion of trial. 4. I encountered the same difficulty of obtaining the services of shorthand writers on the resumed hearing on the 17th April 1972. It was not until I indicated that I would adjourn the hearing until such time when a shorthand writer is available that such assistance was forthcoming. On the completionof the hearing when I asked for the transcript of the lengthy evidence given by two witnesses, I was informed that no one can be spared to transcribe the whole length of the evidence but that short extracts only could be supplied on request. I had to make the best of the situation. 5. The paradox of the whole position is that O.68 r.1(1) the Supreme Court Rules provide :-
6. Here in this case the parties requested the transcript. I also requested the transcript. Such requests were denied in contravention of thecourt rule by sheer necessity because there are not sufficient shorthand writers in theemploymentof the Supreme Court. If any party can apply for the transcript I do not see why the trial judge cannot do so. If the transcript of evidence is to be supplied on appeal only then the purpose is completely lost to the trial judge and counsel for the parties. Indeed such transcripts would fail to be of help to them in a long trial but serve as a trap against their memory or a slip in taking down the evidence. 7. With reference to the discretion to be exercised underthe aforesaid rule 1(1) I can think of one example ofa person beingforced to go voluntarily on starvation diet because no food is available anyway. The discretion required to be exercised by the trial judge is a complete force. Yet this is the problem which has plagued our courts for years. I do not believe any problem to be insoluble. It only reflects upon the complacency of the proper authority vested with the power of recruitment towards the problem over the years. I do not believe that it is impossible to employ a sufficient number of short-hand writers for the courts if better terms or other fringe benefits were offered to candidates or employees of that class. It also reflects upon the attitude that the administration of justice is viewed in this part of the world as of secondary importance and with contempt. Had there been a similar shortage in the executive branch of the Government, I am certain that such a problem would have been solved with comparative ease. I do not make this remark as a matter of conjecture. Before I was appointed to the Bench I had more than ten years in the Attorney General’s Chambers. During such time I have never experienced any shortage of shorthand typists to the same serious degree as in the courts. I conducted a considerable number of disciplinary inquiries on behalf of various heads of departments in the executive branch. Very often they could provide shorthand writers good enough to take down the evidence of the proceedings without apparent difficulty. To me the blame for the shortage of shorthand writers can only be laid on the doorstep of those who settle the conditions of service for short-hand writers. I understand that on the present terms offered by the Government likely candidates preferto have jobs elsewhere - commercial firms or the executive branch of the Government where the work is less exacting. 8. If we value the system of our administration of justice thisproblem must be solved and something must be done and done very quickly. For this reason I associate myself with the remark made by my brother Huggins. I will go further in suggesting that steps should be taken to attract more shorthand writers to the service inthe Supreme Court so that transcript may be prepared and made available at all times. 9. I turn now to the substance of the Plaintiffs’ claim which is founded on a breach of contract partly written and partly oral. No doubt such contract, if any, is to be found on evidence and mainly a question of fact. It is useful, therefore to relate the sequence of events leading up to this action in their chronological order. 10. In 1961 the Plaintiffs purchased their house known as 7 Grey Moore Lane Olympia Fields in Illinois. They wanted to redecorate and refurnish it with an oriental motif and to add to it an indoor swimming pool. They came to Hong Kong, arriving here on the 9th February 1968 and met Mr. J.J. Killough III (hereinafter referred to as Killough) through the introduction of one Valuric Wilton whom they met in Taipei.Killough was then a qualified architect in America. However, he did not practise in America but came to Hong Kong and set himself up as an interior designer and decorator. He formed a limited company named J.J. Killough III Ltd, the 2nd Defendant (hereinafter referred to as “the Company”) in which he held 50% of the shares and the position of president. The other shareholder Mr. Dedemonico is not a resident in Hong Kong. My impression is that at their first meeting both parties tried their best, to use an American expression, to sell themselves to one another and both were sold. Mrs. Nemeth was impressed by Killough’s decoration work for the I.O.S. Office and Killough was impressed by the Nemeth’s home and wealth. Mrs. Nemeth was sufficiently interested to ask Killough to redecorate not only their home in Grey Moore Lane but also the two supermarkets in America owned by her and her husband. Killough was keen to do the job. In the following ten days or so they had frequent and long meetings during which Mrs. Nemeth gave Killough a thorough run down of their house by means of the photographs taken of its interior - Exhs. 144 - 168, the blue prints Exhs. 132 - 143 prepared by the original architect, Keck and Keck and a floor plan Exh. N703. She also gave Killough the main idea as to what she wanted done and what she wanted to be altered. According to Mrs. Nometh she mentioned many times that the budget for the whole work including the indoor swimming pool was US$60,000. I will come back to this point which was strongly contested by the defence. On the Other hand Killough showed her his home in 76 MacDonald Road and told her he had 2 - 3 furniture factories. He told her that furnitures were cheaper in Hong Kong and his factories could supply furnitures for her or she could purchase furnitures here. He also told her that he, as a resident out of the U.S. for more than one year he could ship household goods in his name for her to America free of custom duty provided that she waswilling to give him 6% of the duty so saved in this way. There has also discussions on renumeration along the line that the design fees should be US$1,500 plus 10% or 12% of the costs constructions and purchase. 11. Eventually the parties were near enough to an agreement to sign what is called a Letter of Intent - Exh. Al. The number of pages contained in Exh. Al is in dispute. As this is an important document in this case I shall consider this issue as well as its full importat a later stage. Sufficient to say, at this stage, that this document sets out practically to the full Killough’s requirements in the bargain. It appears that this document Exh. Al was signed on the 21st February 1968 because it was on this day that Mrs. Nemeth drew two cheques Exhs. K522 and K524 in favour of the Company and a receipt therefor - Exh. A2 was given by Killough to her. This receipt was also signed by both parties. 12. On the 23rd April 1968 Killough arrived in Chicago. He brought with him two plans he had prepared for the house and ground of 7 Grey Moore Lane. In addition he brought two additional designs of the swimming pool which could be super-imposed on the two plans to show alternative designs for the pool. These are Exhs. 170 - 173. He was accommodatedin the house and the plans were discussed. The Plaintiffs disapproved of both plans. The first clash between Mrs. Nemeth and Killough over the discussion occurred about two or three days before his departure. As a result, one Edward Barney, the secretary of the Nemeth’s Co. and Mr. Nemeth were called in to pacify the situation. Barney went over the various points as to the Nemeths’ requirements for the house again. Eventually Killough left Chicago. But before he left he promised to send new plans for the Plaintiffs’ approval and signed another document Exh. A3. However no AIA contract was signed as anticipated in their original discussions in Hong Kong. 13. Between May and October 1968 Killough sent a series of letters to the Plaintiffs without obtaining any reply. These areExhs. B6, 7, 8, 10 and B16 - 21 (incl.). Amongst these he sent thema new plan Exh. 175 and a whole file of approval forms Exh. 176 - 204 (incl.) on or about the 1st June 1968. Practically all the letters were left unanswered. On the 9th October 1968 Mrs. Nemeth wrote him a long letter Exh. B22 - B38 which did not really answer Killough’s queries. In any event this letter of the 9th October 1968 was not sent until another letter Exh. B41 was sent in January 1969. In the meanwhile there were further correspondence resulting in Mrs. Nemeth’s second trip to Hong Kong arriving here on 15th March 1969. She stayedin Killough’s flat until the 21st June 1969. Right from the beginning of her arrival Mrs. Nemeth was accompanied by Killough on a shopping spree. Items like the jade dish, I.D.L. mirrors, were acquired. Chairs and furnitures were ordered. However up to the 9th April 1969 no further plan was produced. In the month of April 1969 a further plan was submitted Exh. 240. While they were shopping together their relationship was cordial. In the meanwhile further items were either purchased or acquired for Mrs. Nemeth. In the month of May a list of items Exh. N692 was given to Mrs. Nemeth with prices indicated for the various items for her approval. She approved a number of items. On the 28th May 1969 Mrs. Nemeth and Killough went to Macau for a shopping trip. As a result more items in the form of object d’art were purchased. During this period Mrs. Nemeth agreed to the order of an 18 panelscoromandel screen and a huge crate to be used for shipping her possessions back to America. 14. In May Mrs. Nemeth discovered that she had expended quite a sizable sum of money on antiques and furnitures. The question of fees of 10% became predominent in her mind and she revived the constant nagging question of fees again. She offered Killough a flat fee. There was constant disagreements. She asked Killough to stop all orders whichhad not been completed. This led to Killough giving her invoices for the items purchased and approved by her on 20th June 1969 Exh. B55and Exh. 453 and 456. A further invoice was dispatched to her in July- Exh 465. She left Killough’s flat on the 21st June 1969 and eventually set up a home in 3, College Road Kowloon. To all intents andpurposes everything came to a standstill. 15. However Barney was sent for and he came to Hong Kong in July 1969 arriving on 12th July 1969. He started neg otiations again on behalf of Mrs. Nemeth with Killough to try to eliminate the breakoff. During his stay he had several meetings with Killough one or two of which were in the presence of Mrs. Nemeth. Although no conclusion was reached yet such meetings established a foundation for resumption of a talk between Mr. Nemeth and Killough. Eventually some form of working arrangement was worked out between Mrs. Nemeth and Killough in a telephone conversation in August 1969. Some notes were taken by Mrs. Nemeth and produced in Exh. N 796 - N797. Another two cheques Exh. 538 and 541 were handed to Killough. Exh. 538 was drawn payable to the Co. and Exh. 541 to Killough. A new draft AlA contract Exh. A4 purported to incorporate their terms was given toMrs. Nemeth by Killough on 27th August 1969. The draft was forwarded to Mr. Nemeth and Mr. Barney for consultation with their attorney in Chicago. Later Mr. Nemeth forwarded a revised draft Exh. N799 to his wife to consult a solicitor in Hong Kong with the view of drawing up a final agreement to be executed by the parties. For reasons best known to the parties, however, no formal contract was ever signed at all.A further plan for the house Exh. 245 was provided by Killough. This is not different in character from all the other plans previouslysubmitted by Killough. They are all preliminary designs of the house and the indoor pool. Instead the parties again indulged in further shopping expeditions. Some of the shopping done were not really for furnishing the home but for investments. 16. In December 1969 Mr. Nemeth and his son came to the Far East. The Nemeth family spent a short holiday in Japan and Killough joined them. Further purchases were made for investments. These are not strictly relevant to the claim but they show the relationship and the conduct of the parties then existing. 17. Between December 1969 and July 1970 no progress was made on the plans at all. The parties appeared to engross themselves in buying and ordering furnishings and more cheques were drawn by Mrs. Nemeth. One incident during this period is worthy of mention. In February 1970Mrs. Nemeth went with Killough to the Excellent Silk Mills to order some silk fabrics for furnishings. Before any order was placed Killough worked out for her the yardage required of different types of fabrics for different purposes. A large quantity of fabrics were ordered. Mrs. Nemeth was invoiced for the purchase. It was found later that Killough never ordered the quantity he invoiced Mrs. Nemeth from the Excellent Silk MiIls. Thus the short measure was discovered on the 3rd August 1970. On being found out Killough has to re-order some more to make up the shortage in February 1971. 18. It is quite apparent that towards the middle of 1970 both parties harboured a sense of grievance. The Nemeths felt that Killough was overcharging them particularly on the issue of cancellation charges for the coromandel screen and the crate. Killough felt that he had spent far too much time for the Plaintiffs than was necessary. Finally,on the 7th July 1970 the question of cancellation charges was raised at a meeting between the Nemeths and Killough. The Plaintiffs contended that the suppliers never charged a cancellation fee for the aforesaid items. There was an argument. Killough was so upset that, to use his owndescription, he said in evidence “I was nervous and tense and I said ‘This is it, I can’t work with you, this is the end’”. 19. The aforesaid are my understanding of the facts which are not seriously disputed by either party. It is the Plaintiffs’ case on these facts that there is an agreement between them and Killough and/or the Company for redesigning, redecorating, refurnishing,todesign the landscaping of the grounds adjacent to the house and to purchase or order as agent for the Plaintiffs, divers items of furnishing and furnitures and household articles for their house within a budgetof US$60,000 for a fee of US$1,500, the costs of two return journeys to Chicago plus a 12% commission on the nett cost of all purchases made by Killough and/or the Company on behalf of the Plaintiffs or by the Plaintiffs themselves for the aforesaid purchases. It is also the Plaintiffs’ case that in or about August 1969 by an oral agreement the renumeration for Killough and/or the Company was varied to be:‑ (a) the sum of US$1,500 already paid (b) the costs of airfares agreed (c) the commission of HK$7,106.33 already paid (d) an all-in fee of US$10,000 in lieu of the 12% commission for the purchases. 20. The Plaintiffs allege that Killough and/or the Company, in breach of contract failed and refused to prepare and submit planspursuant to the aforesaid agreement and on the 7th July 1970 informedthe Plaintiffs that the Defendants were no longer bound by the agreement. They further allege that Killough and/or the Company in breach of duty as an agent, obtained commissions, unjustly enriched themselves by charging the Plaintiffs prices in excess of the real cost, madeconcealed profits, failed to pass on the benefit of discounts or reductions on all orders and purchases and refused to account to the Plaintiffs. 21. The defence case is that while Killough is a qualified architect in the United States he does not practice as one either in the United States or Hong Kong. He is a shareholder and a director of the Company, the 2nd defendant, and carries on business as a designer and interior decorator in Hong Kong. So does the Company. Neither Killough nor the Company has entered into any contract ofsuch nature as alleged by the Plaintiffs. It is contended that neither of them acts in the capacity of an agent for the Plaintiffs in various order and purchases. On the contrary, in all transactions the Company was acting in its capacity as a designer and dealer. Thus all the cancellation charges and profits were made by the Company in its capacity as a designer and dealer. 22. In view of the pleadings it is apparent that the first issue between the parties is whether the Plaintiffs have entered into an overall agreement to redesign, refurnish and redecorate their house; and, if so, with whom. Further there is the subsidiary question whether the terms of the agreement are such as to constitute both or either of Killough and the Company agents of the Plaintiffs in respect of Mrs. Nemeths’ purchases and orders. Finally the question is who is responsible for the breach of contract if there is one. 23. Mr. Zimmern for Killough and the Company, both Defendants, contends that there has been no agreement whatever. Exh. Al, at its best, is an agreement to agree in the future. When Killough prepared the Plans Exh. 170 - 173 and brought them to Chicago for the approval of the Plaintiffs he had done his part or that of the Company to earn the US$1,500 and the cost of the air fare (both admittedly received) for services rendered. No formal contract was signed and that was the end of the matter at that stage. It is not the duty of the Court to spin out a contract for the parties where there is none. He cites in support of this proposition Chitty on Contracts, 23rd Edition, paragraphs 82 - 83. Having considered this proposition and having read also paragraph 81 of the same volume I am of the opinion that I have to decide on this issue not only having regard to the signed documents (in this case the Letter of Intent Exh. Al, the receipt Exh. A2) but also to the conversation, conduct of the parties and correspondence between them. I will examine now in detail the evidence concerning these points. 24. It is common ground that the Plaintiffs, in particular Mrs. Nemeth, had extensive conversations with Killough during the first week or ten days of the Plaintiffs’ arrival in Hong Kong in February 1968 about themselves and the Plaintiffs’ house. Mrs. Nemeth toldKillough what she wanted done what additions and alterations she wanted for the house. At the same time Killough showed the Plaintiffs the jobs he completed or was doing in Hong Kong. In short each party was trying to impress the other. Mrs. Nemeth’s evidence is that in the course of such conversations she repeatedly mentioned a budget of US$60,000 for the whole job including the swimming pool. That evidence I must reject for several reasons. She might have that figure in her mind because of the remark made by a decorator, Himmel, in America. Having regard to the general nature of her specifications and her concentration on the subject of Killough’s renumerations it would be unlikely that she mentioned it. Further the Plaintiffs’ own witness Edward Barney testified that he knew of the figure of US$10,000 budget only in March or April 1968 and probably he was the one who suggested to the Plaintiffs this figure which was what they could afford upon their return from their trip to the Far East. In any event sucha budget was never included in the Letter of Intent - Exh. A1. Thatis admitted by Mrs. Nemeth. 25. On or about the 21st February 1968 the mindsof the parties were sufficiently in common toexecute this Letter of Intent Exh. Al ofwhich one page is produced in evidence. The Plaintiffs’ evidenceis that their Exh. Al consist of 2 pages - the page that is in evidence and a missing page. Mrs. Nemeth’s evidence is that the first page sets out the Plaintiffs’ obligations of the agreement and the 2nd Killough’s. She said she remember signing it. She cannot account how the 2nd page is missing except that the document was with her when she stayed in Killough’s flat up to their first break-up on the 7th July 1969. Although she does not say it in so many words she casts a suspicion on Killough who could have taken the 2nd page away from her file.Killough’s evidenceis that there was at all times onlyone page of Exh. Al. The secondpage is to be found in Exh. A2 on which are the signatures of both parties. Extensive evidence has been adduced by the defence including that of one Miss Pfeiffer on the preparation of Exhs. Al and A2. Both Mrs. Nemeth and Killough have been cross-examined in a searching manner. To my mind the presence or otherwise of a second page to Exh. Al is not all that important except that it may reflect on the honesty and creditability of Mrs. Nemeth and Killough. Having considered the evidence as a whole on this point I find that there must have been to Exh. A1 a second page of which Exh. A2 is not. I come to this conclusion because Exh. Al is not a complete document and Exh. A2 could notbe a continuation so as to give evidence that it is the second page. Further, in para. 41 of his affidavit dated the 12th July 1971 Exh. 0887 for the purpose of interlocutory proceedings, Killough deposed to the missing second page. I do not accept his explanation of being rushed to sign the affidavit as convincing. In cross-examinationMiss Pfeiffer had to admit that in her subsequent conversation with Mrs. Choy of Johnson Stokes & Masters she (Miss Pfeiffer) agreed that the provisions for furniture and landscaping which were included in Exh. Al are not found in the said document. She agreed with Mrs. Choy it might be on the second page. In answer to me Miss Pfeiffer agrees thatExh. Al is incomplete. She says that was why she typed Exh. A2. As I said Exh. A2 is a receipt and hardly a continuation of Exh. Al. It repeats most of the terms of Exh. Al. 26. While I do not say that Miss Pfeiffer is dishonest I am of opinion that her evidence is much affected by lapse of time and the fact that, probably Killough only showed her the first page of Exh. Al during the stage of drafting the document. Killough was concerned with her rights in the bargain at that stage. There is no evidence to suggest that Killough stole the second page from Mrs. Nemeth’s file. Perhaps he finds it convenient not to support the allegation that there is a second page which allegedly sets out his obligations in thebargain. It may also reveal the capacity in which he signed the documents. In any event, the plaintiffs also forget the details in the second page which is not in evidence. 27. Exh. Al reads as follows :
28. Pausing at this stage, it will be observed from this document that the intending parties to the agreement are the plaintiffs and Killough who is described as the architect, the intended work to be done are architectural revisions and interior decorations of the house and two supermarkets under three separate A.I.A. contracts. The renumeration is based upon “cost plus l2%” and a basic design fee ofUS$1,500.00 per contract. However I am only concerned with the agreement, if any, on the house. It is common ground between both parties that the contracts for the two supermarkets had been abandoned and even basic design fees had not been paid in respect of them. Killough did no work on the supermarkets except one inspection ofthe premises when he went to Chicago to view and discuss the plans for the house. Further the term “cost plus 12%” can only mean the“architect’s cost” as the architect is to execute the work of architectural revision and interior decoration. Otherwise cost will not be the architect’s concern and his renumeration should be “12% upon cost” and not “cost pIus 12%”. 29. The parties must have arrived at an agreement in accordance with the terms Exh. Al because on the 21st February 1968 Mrs. Nemeth drew two cheques for the US$1,500 fees and for the architect’s air fare (Exh. K522 and Exh. K524) in favour of the Company. Exh. Al also contains the clause “Upon the signature of this contract the initial airticket …... will be paid by the clients …....”. I do not findthe payee of the cheque being the Company is significant. The Letter of Intent named Killough as the party. The receipt for the cheques, Exh. A2, was signed by Killough in his personal capacity as architect. 30. When Killough went to Chicago arriving on the 23rd April, 1968 bringing with him the plans, Exh. 170 - 173 he was performing his part of the agreement. When he signed Exh. A3, at the airport on the 1st May, 1968, the day he left Chicago he varied the agreement to the extent of cancelling the dead line for the execution of a formal A.I.A. contract. When he sent Exh. 1v75, a new plan, to replace Exh. 170 and Exh. 171 again he could only have an agreement in mind. 31. I observe there is nothing in the Letter of Intent (Exh. Al) to indicate that the agreement includes refurnishing of the house. Mrs. Nemeth’s evidence is that refurnishing was part of the agreement and that Killough was to purchase or order furniture on her behalf. The corroborative evidence on this point is to be found in subsequent correspondence. On the 21st May 1968 Killough wrote to the Plaintiffs in the following terms :-
Presumably the plans and designs were forwarded accordingly withouta covering letter because none is exhibited. All the plans, Exh. 175, and the individual plans. Exh. 176 - Exh. 204 had printed forms attached to them. In these forms the Plaintiffs are described as clients, and on top is the name of the Company. Yet Killough signs everyone without disclosing his position in the Company. 32. Killough’s evidence is that the forms and designs were dispatched with the object of promoting sales of furnitures to the Plaintiffs only and not part of any agreement. However, the forms and designs were prepared with reference to individual room of the house. They are not designs of the individual pieces of furniture. Not even the shape of furniture is determined. They merely give a general idea as to the suggested outlay and position of furniture for the purposes of showing how the various rooms can be furnished afterarchitectural revisions. The nature of the designs are not consistent with their being dispatched to the Plaintiffs for the purpose of effecting a sale of furnitures only. They are consistent with being dispatched as part and parcel of an overall agreement to redesign, redecorate and refurnish the whole house. The matter of refurnishingmust have been discussed and agreed between the Plaintiffs and Killough during February 1968 even though it has not been specifically included in the Letter of Intent - Exh. Al. 33. Mrs. Nemeth says that all along she was contracting with Killough and I am of opinion that she had reasons for such an understanding. Of all the letters addressed to the Plaintiffs in the period between May and October 1968 only two were sent in the name of the Company viz. a letter dated 9th June 1968, Exh. B7, andletter dated 16th June, 1968, Exh. B10. Yet Exh. B7 was followed by a personal letter signed by Killough personally and the reply to Exh. B10 was addressed to Killough personally by Mrs. Nemeth. All other letters were signed by Killough in his personal capacity. At no time in this period were the Plaintiffs advised that they were dealing with the Company for purchases of furniture and furnishings. On the 19th August 1968 a letter, Exh. B16, was addressed to the Plaintiffs by Killough himself. Part of this letter reads :-
This is an offer to do all the furniture and accessories and to supervise landscaping personally. There was no mention of the Company at all. Up to this stage whatever agreement which might exist was on the verge of a break-up. In that case the cause would have been due to inertia on the part of the Plaintiffs. 34. Then there was a further exchange of correspondence in January 1969. Apparently on the 9th October 1968 Mrs. Nemeth scribbled along letter to Killough which was never sent until January 1969 together with another letter dated 8th January 1969. In her letter dated 9th October 1968, Mrs. Nemeth did not revoke anything previously agreed. On the contrary she commented on the furnishing and arrangement of a few rooms in the house. The phrase “but thats water over the bridge” in Page 4 - Exh. B25 was made in relation to the jobs for the supermarkets when she wrote on the same page “How do we stand - Do you still want to do it ?” She was referring to the house. In her letter dated 8th January 1969 she asked a list of questions. They are :-
Killough answered in his letter dated 17th January 1969 in the following terms :
The next letter is from Mrs. Nemeth to Killough dated the 28th January 1969 in which she wrote, inter alia, “Do go ahead and start planning -whatever is necessary” - Exh. B78. Eventually Mrs. Nemeth on the 15th August 1969 arrived in Hong Kong. Having regard to the correspondence and the conduct of the parties I am of opinion that an agreement had been reached between the Plaintiffs and Killough on the terms contained in the Letter of Intent and their conversation which took place in February 1968 and reaffirmed by subsequent correspondence. 35. There was a short break of this agreement in May or June 1969. According to Mrs. Nemeth the cause was that she raised the question of costs exceeding her original estimate and the failure on the part of Killough in producing an acceptable plan for the house. According to Killough the cause was that Mrs. Nemeth kept on going back on herwords concerning the term of renumeration. She offered a flatfeein lieu of commission. The break is evident in view of the letter dated 20th June 1969 from the Company to Mrs. Nemeth. Probably there istruth in both causes. It is natural that both parties blame each other. However, the cause and the result of the break is relatively unimportant because Mr. Edward Barney was called from Chicago to patch up the differences. Barney arrived in Hong Kong on the 12th July 1969 andleft on the 24th July 1969. During this period he had several meetings with Killough with a view to resume work on the project. 36. It appears that Killough and Barney each prepared a list on the subjects for discussion. Killough’s list is Exh. 691. This list contains more points of his complaint against Mrs. Nemeth than any subject pertinent to a reconciliation. Barney’s notes, Exh. 968 aremore down to earth. Exh. 968 is produced after Barney has given evidence and left the Colony and therefore was not available to be cross-examined on it. Anyway no conclusion was reached in their negotiations thougha foundation was laid for the resumption of a talk between Killough and Mrs. Nemeth. Exh. 807 is the list of the subjects discussed in Killough’s own words, prepared by him and Barney in one of their meetings. These were finally agreed between Mrs. Nemeth and Killough in a conversation on the telephone. Mrs. Nemeth produces Exh. 796 and 797 which contain some of the terms agreed. The contents of Exh. 807 and Exhs. 796 and 797 correspond to a substantial degree. For this reason I accept Mrs. Nemeth’s evidence that in August 1969 the partiescame together again in agreement to resume work in the project subject to certain variations. 37. It is of interest to note that neither Exh. 807 nor Exhs. 796 - 797 mention any formal contract. Nor do they pretend to contain all the terms of the second agreement. It is obvious that both parties expected a formal contract to be drawn up for the purpose. Thus a formal contract, Exh. A4, was sent by Killough to Mrs. Nemeth for approval and execution. This draft was dispatched by Mrs. Nemeth to her Chicago lawyer for advice. As a result another draft contract - Exh. 799A-D was returned to her in October 1969 forconsultation with her solicitor in Hong Kong. There is no doubt that at the time KiIlough intended the contract to be signed between the Company and Mrs. Nemeth only. Mrs. Nemeth’s lawyer, however, was not entirely agreeable to that. Their draft included a provision for Killough to be a guarantor for the due performance of the contract on the part of the Company. The whole tenor of the draft, especiallyclauses 13, 4 & 5, indicates that Mrs. Nemeth was in fact contracting with Killough. Otherwise these clauses have no meaning. However, a formal contract was never signed. In Killough’s own words he said :
Mrs. Nemeth’s version is that Killough told her not to waste money consulting solicitors so long as he trusted her and she trusted him. They went on co-operating and working on the plans and purchasing along the lines of their agreed terms without a formal contract until 7th July 1970 when the final break-up occurred. 38. Having regard to the aforesaid circumstances I am of the opinion that there was a second agreement formed in August 1969 between Mrs. Nemeth and Killough to confirm the former agreement subject to some agreed variations in terms and subject to contract. However the requirement of a formal contract was waived by both parties some time in October 1969 and they adopted the terms of their oral agreement and acted upon them. Thus Mrs. Nemeth paid Killough $5,000.00 as part of his fees and continued to draw cheques to cover her account until July 1970. 39. I further find that the agreement was reached by the Plaintiffs at all times with Killough rather than with the Company. The Letter of Intent, Exh. Al was signed between the Plaintiffs and Killough. The receipt, Exh. A2, was signed by Killough. So was Exh. A3. Most of the correspondence subsequent to these documents were conducted by Killough in his personal capacity. It is true that mostof the cheques drawn by Mrs. Nemeth were cheques for construction costs and advance payments made payable to the Company. Some were drawn in favour of Killough himself. Mrs. Nemeth said that this was done at Killough’s request. However, most of the receipts for these cheques(Exhs. 531, 534, 537, 540, 543 and 550) were given in the name of Killough in his personal capacity. After they came to agreement again in August 1969 Mrs. Nemeth had to pay the sum of US$5,000.00. At Killough’s request two cheques were drawn in US$3,000.00 and US$2,000.00- Exh. 538 and Exh. 541 - in favour of Killough and not the Company. The exchange of draft contracts Exh. A4 and Exh. 799A-D envisaged a renovation with a change of parties and variation of terms. But neither contract had been executed. In view of the conduct of the parties subsequent to the oral agreement on the telephone in August 1969 I can only interpret that the parties were content and prepared to reaffirm the previous agreement subject to certain new terms without changing the parties. Otherwise the cheques, Exhs. 538 and 541, would have to be drawn in favour of the Company instead of Killough. Ido not find that Killough seriously intend the Company to be a party to the contract in his dealings with the Plaintiffs. His sentiment on this issue, perhaps, may be expressed in his answers in cross-examination viz.
Having regard to his explanation I am of the opinion that Killough has always been willing and ready to enter into an agreement himself personally. The Company is merely a screen for the benefit of the U.S. Revenue. 40. I now come to the question whether the terms of the agreement render Killough an agent of the Plaintiffs in respect of Mrs. Nemeth’s purchases and orders. On this point the Plaintiffs’ case is that Killough was appointed to redecorate and refurnish the house on commission basisof cost plus 12%. The cost should be Killough’s costs. The defendant’s case is that there has been no contract and even if there were one Killough was only obliged to design plans for architectural revisions and advise on the selection of items. As to purchases and orders the Company dealt directly with the Plaintiffs in its capacity as a principal. In support of this Mr. Zimmern contends that there has been no express appointment of either Killough - or the Company as agent. Mrs. Nemeth often attempted to find out Killough’s costs from his files. She wasstopped. She never protested that she had such right. When Barney discussed the issue of costs with Killough, the latter maintained that cost was whathe (Killough) billed. Further in his dealing with the various suppliers Killough ordered the goods in the name of the Company and never in name of the Plaintiffs. But all these examples are not the true test of theexistence of a contract of agency. The true test lies in the agreement and conduct of the parties i.e. the principal and the agent. The fact thatan agent contracts with a 3rd party without disclosing his principal and without disclosing he is an agent does not necessarily mean that he is not an agent vis-a-vis the principal. Thus in Garnac Grain Co. Inc. v. H.M.F. Faure & Fairclough Ltd. Lord Pearson said :
41. Referring to the conduct of the parties it is significant to recall that when Killough left Chicago Mrs. Nemeth gave him $1,000 tocquire something nice for her. Then in June 1968 there was a letter for the Company Exh. B10 informing Mrs. Nemeth of a Chinese cabinet.There is no description of the article except that it is a bargain and beautiful. Nor is there indication that the cabinet is in the Company stock. Mrs. Nemeth replied in her letter Exh. B 11 and sent a cheque direct to Killough personally. Then Killough replied in a personal letter dated the 15th July 1968 Exh. B 13 saying “when I received thecheque I had the cabinet reserved .....” 42. On many occasions Mrs. Nemeth and Killough shopped together, particularly in Macau. Articles were selected and bargains made.When final purchases were made they were made in the name of Killough. This is not surprising in view of the advanced payment made to Killough. The purchases were not made in the name of the Company. 43. As to the cancellation charge on the coromandel screen Mrs. Nemeth maintains that Killough told her the charge was levied by Great Wall, the manufacturer. Although this is challenged in cross-examination yet Killough in his evidence-in-chief never said in so many words that the charge was in fact levied by his Company. He merely talked of the cost and trouble on his part in ordering this screen. In his own evidence, when the Plaintiffs revived this question again in July 1970 he (Killough) took them direct to Great Wall. 44. The list, Exh. 692(a) was supplied to Mrs. Nemeth in March or April 1969. In this list were items with prices and stock numbers submitted for her approval. Mrs. Nemeth accepted certain articles. Yet there is no indication in this list that it came from the Company. The stock numbers in the list are merely numbers to her. The name of the Company was never linked with these items until the invoices were delivered to her in May or June 1969. Nor did Mrs. Nemeth know that the prices were pricesmarked up by the Company. 45. Going through the agreed bundle of Exh. G. & H., it is observed that some of the purchasing orders were made in the name of the Company. There are also a great number of invoices given to Killlough personally. One was issued to Mrs. Nemeth personally, e.g. Exh. H437. It is not possible to mention them individually. To take one example, Exh. H424, is a receipt given to Killough personally for payment of purchases. The credit note, Exh. H425, was also given to Killough. If all the purchases were directsales by the Company to the Plaintiffs then the invoices issued by various tradesmen for the items acquired for the Plaintiffs should, in the first instance be issued to the Company and not toeither Killough or Mrs. Nemeth. Further in such a case the invoices submitted by the Company, e.g. Exh. 1451, should not include the 10% fee. In this connection I have in mind the defence case which is that the articles were sold by the Company to the Plaintiffs direct and that Killough would charge a 10% fee in his personal capacity as a designer and consultant. The two accounts ought to be separate. The Company has no right toinclude the 10% fee in the invoices submitted by the Company tothe Plaintiffs. 46. When Killough said “cost was what he billed” it was said ex post facto. It was said in October 1970 after the final break. This is evident in the following passage of Barney’s evidence in cross-examination, viz:-
47. Right at the beginning Killough told the Plaintiffs he had a few furniture factories and that the Plaintiffs could obtain things cheaper in Hong Kong. On his assurance the Plaintiffs appointed Killough to refurnish their house on the basis of “cost plus 12%”. In accepting this term Killough rendered himself their purchasing agent. Even he is also a director to the Company he has no right to put himself in that capacity to acquire goods for the Company first and resell them through the Company to the Plaintiffs at inflated prices. The refusal to show Mrs. Nemeth the Company’s books does not remove his obligations; nor does it help Killough to say that the prices, though inflated, are infact fair market prices. 48. Take the case of the jade dish. This was acquired by Killough who personally signed a cheque for it - Exh. 668 on the 26th March. He did not pay for it till Mrs. Nemeth showed her interest in this dish after her arrival on the 15th March 1969.Killough’s explanation as to why he’s entitled to charge a commission and as to the grossly inflated price is not convincing. If he was selling it to Mrs. Nemeth in his capacity as a dealer there was no necessity to enter it in the Company stock. Having entered it inthe Company stock his work in passing it on to Mrs. Nemeth was no more than that of a salesman for the Company. He had no right toany commission. Nor had the Company on a direct sale. The only explanation is that Killough knew he was a purchasing agent for the Plaintiffs and the only possible explanation he could giveto justify a profit and commission was to put the jade dish in the Company stock. 49. Taking all these into consideration, I am inclined to the belief that in the overall agreement Killough himself was at all times an agent for the Plaintiffs in all purchasing and ordering transactions on commission of 12% which was later voluntarily reduced by Killough to 10% when he sent the invoices to Mrs. Nemeth. Incidentally the fact that the invoices were given by the suppliers to Killough personnlly only goes to show that Killough is the contracting party with the Plaintiffs and not the Company. If the Company were the contracting party thenKillough, as an employee of the Company would have no justification in charging whatever commission on the sale of various articles to the Plaintiffs. His evidence on the subject of his being a consultant to Mrs. Nemeth for the acquisition of various articles, even if accepted, shows that he acted merely as a salesman of the Company of which he is an employee. Such evidence is not compatible with the defence case. 50. Finally there is the question as to who is responsible for the breach of contract. It is common ground that the final break came about on the 7th July 1970 when the parties discussed the cancellation charge for the coromandel screen. Mrs. Nemeth said Killough “blew up” and demanded that the Plaintiffs should leave for calling him a cheat in his own home. Even Killough said he was nervous and tense and said, “I can’t work with you.” The Plaintiffs’ allegation is that Killough never produced any plan which would enable them to obtain an estimate for construction work -particularly one within the budget of US$60,000. Instead he induced Mrs. Nemeth to buy or order items of furniture and articles without due regard to the priority of requirements - viz the final plan first. The defence case is that Mrs. Nemeth kept on changing her mind and that the Plaintiffs’ never mentioned a budget. It is alleged by Killough that no final plan could be drawn because Mrs. Nemeth kept on changing her mind and demanded the impossible. He gave two examples - one is the question of columns for the indoor swimming pool and the other is her demandthat the wall of the pool area be pushed back beyond the building area of the land. Instead of giving Killough her full co-operation she kept on pestering him about costs. 51. With reference to the agreement on a budget I have found that in all probability that the US$60, 000 for the whole project was not mentioned by the Plaintiffs in February 1968. However,Killough said that while discussing the plans, Exh. 170 and 171, everything seemed to cost too much to Mrs. Nemeth and said she wanted all things done for US$40,000. This led him to say “If you want it you have to pay for it. You can’t have your cake and eat it.” There is no evidence that Killough ever asked Mrs. Nemeth how much she intended to spend on the house. To my mindthis information would be vital for any designer who takes up the job for redecoration - expecially when his client mentions cost. This evidence rather ties up with Mrs. Nemeth’s allegation thatshe repeatedly mentioned the budget of US$60,000 and Killough never contradicted her. I am inclined to believe that the truth lies in between. If Mrs. Nemeth never mentioned the figure of $60,000 in Hong Kong in 1968 she must have mentioned it at her home in April 1968. She always had the idea that the pool would cost about US$20,000. Hence she mentioned the figure of US$40,000 for the other work. Killough must have contradicted her there and thenbut did not suggest to her a realistic figure. Nonetheless even Mrs. Nemeth must have known as early as 1968 that the budget of US$60,000 was not realistic. In one of her letters in October 1968 she mentioned that the pool alone would cost more with the rise in labour costs. I am certain she kept the budget flexible but prefer to use it constantly as a reminder to keep Killough’s work within a reasonable figure. Unfortunately her action was not a true reflection of her wish. As soon as she arrived in 1969 she went on buying luxury items like the jade dish and articles of an ornamental nature. Killough, to a great extent, encouraged her. Items like the I.D.L. mirrors, the coromandel screen, the octagonalbowl and the like indicate ideas of grandeur rather than practicalplanning. I do not think she seriously expect money spent for such like to be covered by the original budget in her mind. On theother hand I cannot imagine that the subject of an anticipated sum was never discussed between her and Killough. I am inclined to believe that a budget was certainly in the mind of both partiessince April 1968 and that they then had the idea of something a bit more than US$60,000. In any event the budget is not a great obstacle to the completion of the plans. The complaint is that Killough failed to produce the proper plans for estimates. 52. This leads me to consider Killough’s other complaint - Mrs. Nemeth’s failure to decide on the plans. In this connectionI am inclined to believe that Mrs. Nemeth is by no means an easy person to work with. She is impressionable and impulsive. But when the idea sinks in she starts to reason and she will change her mind. In this respect she differs from other women only in a matter of degree. It will be recalled that when Exh. 170 and171 were put before her at her home in April 1969 her first remark was “Oh it is so pretty, let us start right away”. But when she examined these plans in detail she at once saw that the plans were not practical and not acceptable. She gave her reasons for not accepting them and I think they are sound. Even Killough, though hurt and frustrated by her disapproval of his plans, accepted the situation and promised to send new plans. 53. When Killough returned to Hong Kong another plan, Exh. 175, was sent to Mrs. Nemeth. This plan formed the basis of later improvements. Even this one was merely a suggestionof ideas. Killough said that at the time he was more interested in selling furniture to her. Mrs. Nemeth said that the general outlay in a later plan, Exh. P240, was more acceptable to her. Killough said that he sent this to Mrs. Nemeth to obtain an estimate. Yet in cross-examination he admitted that Exh. P240 was merely to show Mrs. Nemeth what was possible and what impossible. In this plan two columns would have to be built in the middle of the pool. There were other huge columns in the pool area. In my opinion I do not think Killough seriously regarded Exh. 240 to be a workable plan. Exh 240 was refined into Exh. P245 which is the last plan ever produced by Killough in this job. 54. He blamed Mrs. Nemeth for the constant change of mind and her stubborn approach to the columns near the fire-place in the pool area. In particular he referred to two columns, one on each side of the fire-place. He knew that Mrs. Nemeth objected to visiblecolumns. She wanted all of them concealed. But he said that the two above-mentioned columns were structural necessities and could not be built into the wall adjacent to the fire-place. He also maintained that this is a requirement of the building code in theUnited States. A lot of evidencehave been adduced on this point including that of a structural engineer, Mr. Samuel Lee, called by him.Having considered all the evidence on this subject I understand that there is no absolute prohibition in the law of the United States against building a structural column in such a way as to be concealed by a wall joining to a fire-place provided that certain safety measures are taken.There is no evidence that Killough sought the advice of someone who knew better – e.g. a lawyer or a structural engineer at the relevant time. The opinion of an independent third party might solve the problem in one meeting. That third party would advise Killough what to do or convince Mrs. Nemeth that her idea was not practical. As it was, Killough stood firmand chose to fight Mrs. Nemeth singlehanded. A lot of cross-examination was directed to whether the two rectangles (one on each side of the perimeter of the circular fire-place area on the plan, Exh. 245) represented the two columns to be built. Killough said they did. This would show the cause of dispute between him and Mrs. Nemeth. This is not important in view of my finding that the two columns need not be put in such positions and could have been built into the wall. If it is necessary to make a finding on this point I am inclined to find that they are probably not the positions for the two columns. The fact that they are in the right position along the grid line of the roof for the pool area does not make them a necessity. In Exh. 240, the earliest version of Exh. 245, no such column is shown. In Exh. 244, a later version, again there is no such column. Further, Mr. Samuel Lee agreed that if the two columns were built in suchposition it would mean knocking two holes near the edge of the roof of the existing house though he justified this course as being more convenient. 55. Mrs. Nemeth’s request to have more space for deck chairs and tables around the pool is nothing unusual. Killough said in cross-examination he had done nothing in conformity with her wish. Difficult as Mrs. Nemeth is, I do not think thatshe can insist that Killough should build beyond the buildingline.In hisevidence, Mr. Nemeth said that, if so, he would not allow it. 56. Other small quibbleslike the step at the entrance and, door handlesand general outlay in the pool areas are insignificant. Itis true that Mrs. Nemeth had approved the carpet for the entrance in such a way that indicated she approved of the step at the entrance in the first instance. She might even change her mind from time totime in minor details of the general outlay of the pool area. But these are insignificant points for the general structure of the house and the pool. I find it difficult to follow Killough when he says that Exh. 240 and Exh. 245A are preliminary plansto show possibilities and in the next breath says that they can become plans for developments once he has decisions. If he means that once he has decisions he will be in a position to produce developmentplans then I may accept his proposition. As I understand the evidence when the plan, Exh. 245, is completed the parties are in general agreement on the main issues except the disagreement (if any) on the two columns. As I said that disagreement can be solved without great difficulty. 57. Needless to say the whole break down is due to a clash of personality between Mrs.Nemeth and Killough. Mrs. Nemeth is quick to jump to action, but her experience and intelligence as a business woman often cause her to relent and charge her mind - particularly when money is involved. She is easy with money but her demands are high. She is not the type that can be bludgeoned into any decision. On the other hand Killough has one object only in mind - money. As soon as the Letter of Intent, Exh. Al, was signed he caused inquiry to be made of the Plaintiffs’ financial resources. He entered into the agreement as a professional man (he described himself as architect) to redesign, redecorate and refurnish a house. But he devoted most of his efforts to be a shopping guide for Mrs. Nemeth. He agreed to the bargain as a designer, decorator and purchasing agent and he attempted to charge as a salesman and a consultant. That is why he was content to go about shopping with Mrs. Nemeth. At a certain stage, in his own words, Mrs. Nemeth was buying so much that he did not know where she would put them. The classic example of his moneyconsciousness is to be found in the transaction with Excellent Silk Mill. He openly admits that because he had spent time to help Mrs. Nemeth with her choice of fabrics and by that timehe had received a flat fee inlieu of commission and he could not inflate the price of the fabrics he had to inflate the yardage so that he could charge the Plaintiffs more in this transaction. He made up the shortage when this act of dishonesty (I can find no other word for it) was discovered. In my opinion, despite his complaint that he wasted far too much time he would havebeen happy togoon and on provided there would be a regular income for him. I cannot imagine he valued his time so much. Otherwise he would not have accompanied Mrs. Nemeth shopping for luxury items (not necessities for the house) including investmentitems. He would get on with his essential job first - the plan. 58. The production of the Company accounts should not influence my decision. The fact he made little profit on the job is due to his bad management of the whole job. This is not a true reflection of his intent. 59. I am of the opinion that the final break up and the responsibility for the breach of agreement is on Killough when he said:-
By that time it was obvious to him that where was no more money to be made and he must get himself out of the bargain. 60. In summary, for reasons aforesaid, I find as facts that between February and May 1968 the Plaintiffs and Killough had entered into a first overall agreement to redesign, redecorate and refurnish the Plaintiffs’ house for the renumeration as alleged by the Plaintiffs in the Stagement of Claim except that the commission should be 10%. I find that by April 1948 Killough knew or ought to have known and agreed that the budget for the house would be something slightly over US$60,000. This agreement was subsequently confirmed by letters between Mrs. Nemeth and Killough in January 1969. There was a temporary break in this agreement which was subsequently renewed and varied by a second agreement made orally between Mrs. Nemeth and Killough in August 1969. No formal contract was signed, there was no change in the parties to the contract and the Company did not come into the picture. Killough was responsible for the breach of the second contract in July 1970. He failed to produce a workable plan even for the redesigning of the house. He further committed a breach of the first contract by inflating the costs of various items he acquired for Mrs. Nemeth, by keeping the discounts andby levying cancellation charges not required by the suppliers. 61. There is, however, a difficult point. Exh. 796-7 contain some of the terms of the second agreement in August 1969. I find as a fact that one of the terms of the second agreement is that all the invoices are to stand. By this I can only interprete that the Plaintiffs agreed and confirmed the previous invoices prior to the second agreement in August 1969. On the one hand the Plaintiffs could not in August 1969 confirm what they didnot know viz the inflation of prices and unjustifiable levying of cancellation charges by Killough. On the other hand Mrs. Nemeth is the person who has been concerned, all the time with costs. In May or June 1969 she knew that there was something wrong in the purchase after she went with Killough for a shopping trip. On her return she was about to cancel the purchase. She went as far as stopping the orders for the screen and the crate. She must have known or ought to have known there was something wrong with the invoices. Before agreeing to the term: “all invoicestostand” in the second agreement she should find out which of the invoices as they stood would be acceptable to her. The second agreement is a contract in new terms. The Plaintiffs or Mrs. Nemeth entered into it with their eyes wide open. Had the second agreementbeen performed to completion I would have ruled that the Plaintiffs have no right to re-open the first agreement. However, I find that Killough has committed a breach of contract. This enables the Plaintiffs to stand on their rights. 62. The Plaintiffs’ claims are as follows :-
In view of my findings aforesaid it is obvious that the Plaintiffs are entitled to all the relief they seek to obtain. It is not practicable to require the Plaintiffs to prove every item of their claims by adducing evidence before me. This can only add to the already prohibitive costs of this action. For reasons aforesaid I shall go no further than entering judgment in favour of the Plaintiffs against Killough. The sum or sums to be recoverable cannot be determined without an account being taken after necessary inquiries. Killough only admits to the charges and commissions set out in Schedule X. He has not admitted the net costs of each item. Some of the claims are overlapping. Accordingly I direct that :-
Costs shall follow the events of this action and the taking of the accounts shall be before the Registrar. 63. The claim against the Company is dismissed. I observe that the Statement of Claim is amended to include the Company as second Defendant solely because of the nature of the defence. I shall make no order as to costs vis-a-vis the Company.
Jackson-Liokin (Johnson, Stokes & Master) for Plaintiffs. Zimmern (Gordon Hampton & Winter) for Defendants. Judgment handed down. |