CHOW SING YUET ELTON v. CARRY EXPRESS INVESTMENT LTD

HCCT 18/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 18 OF 2007

____________

_________________

J U D G M E N T

_________________

Background:

1.  In these proceedings, Mr Chow, an architect and structural engineer, and an Authorised Person, sues Carry Express for professional fees in respect of a proposed building project in Conduit Road, Mid-Levels, Hong Kong, (the project).  The facts that I now set out were not in dispute, except where indicated.

2.  In November 1988, a residential property known as Rockymount was located at 39 Conduit Road Mid-levels, Hong Kong.  Carry Express, (then known as Tyson Investments Ltd) then owned 22 units in the property.  In addition Carry Express owned a piece of vacant land in the form of an elevated platform situated at the rear of Rockymount, legally known as the Remaining Portion of Inland Lot No.7898, and called throughout the proceedings the “Remaining Portion site”.  The dispute involves the development of the project on the Remaining Portion site.

The contract:

3.  On 5 March 1991, the parties entered into a formal written agreement, (the contract), whereby Carry Express appointed Mr. Chow’s firm to be the project consultant, in relation to the project.  Mr. Chow would act as the Authorised Person and Registered Structural Engineer for the project. 

4.  In accordance with the contract, Mr. Chow was to prepare and submit building plans, structural plans, drainage plans and building service plans to the relevant authorities for their approval.  He would act as coordinator between technical consultants as requested and liaise with the consultants in respect of each of the various plans.  He would be responsible for overall planning, coordination and supervision of the project and render advice to Carry Express generally on the project.

5.  Provision was made in the agreement for the payment of fees for Mr. Chow’s services by Carry Express.  Those fees were to be determined in two ways. 

6.  First, the contract provided for professional fees totalling 4% of the total construction cost of the project.  Clause 4 of the contract specified that those funds would be paid in five tranches, namely, 50% on the date of the approval for building plans, RC structural plans and foundation plans by the Building Authority, and 12.5% each, the date of commencement of the foundation works, the date of commencement of superstructural works, on the date of completion of superstructural works, and finally on the date of the issuance of the occupation permit and letter of compliance, (whichever was the later).  If geotechnical consultants were engaged they would be paid separately. 

7.  The site was a difficult site and it would be an expensive site on which to build.  Consequently the greater the gross floor area (GFA) that would be approved by Government, the more economic would be the proposed construction project.  Thus, the agreement next provided for a “GFA bonus” in the sum of $100 per ft.² for each additional square foot of GFA approved by Government, exceeding 36,000 ft.².  The GFA bonus was to be paid within 14 days of the date of obtaining approval of all requisite plans for the GFA and all necessary approval for the development of the project from the relevant authorities.

Mr. Chow’s case:

8.  The case for Mr Chow is that he prepared the necessary building plans, structural plans and foundation plans for the project and obtained approval from the relevant government authorities for the development.  Those plans were approved on 30 December 1997, but the project did not proceed.  In November 1991, and April 1996, two sums were paid to Mr Chow, he says, in part payment of the GFA bonus.

9.  Pursuant to clause 6 of the contract, Carry Express had the right at any time prior to the completion of the project to terminate the contract by notice in writing.  In those circumstances provision was made for reduced fees to be paid to Mr. Chow.  Although the project was never completed, it is common ground that Carry Express did not exercise its rights under that clause. 

10.  Mr Chow says that he was not told by Carry Express that no further service under the contract would be required until January 2006.  Mr. Chow draws an inference from Carry Express’ solicitors letter of 25 January 2006, in which a demand by Mr. Chow for payment of a sum of $1,390,625 was rejected, as an expression that no further service under the contract would be required.

11.  Mr Chow says that the actions of Carry Express have prevented him from earning his professional fees in terms of the contract, notwithstanding that he has performed all that was asked of him.  Consequently Mr Chow sues for the balance of the professional fees that would have been payable, had the project continued to completion.  He bases his claim upon an estimate of the of the total construction costs of the project, had it proceeded, applied to the gross floor area approved by the relevant government authorities.

Carry Express’ case:

12.  The primary case for Carry Express is that the action is time-barred under the Limitation Ordinance, Cap 347.  The consideration of that defence will involve a determination as to when the cause of action began to run.  As a corollary to the limitation argument, Carry Express says the claim is barred by laches.

13.  The secondary case for Carry Express is that, at all times, Mr Chow knew that the project would not proceed, and that the contract with Mr Chow was never intended by the parties to be fully executed. The circumstances in which this contention is made are somewhat unusual.

14.  Between 1988 and early 1991, Carry Express had acquired 22 units in the development.  Carry Express endeavoured to acquire the remaining units but the vendors were reluctant to sell, except at prices considered extortionate by Carry Express. 

15.  The case for Carry Express was that in order to encourage the remaining 22 unit holders in Rockymount to sell to Carry Express, an exercise, described by Carry Express in the amended defence as “staging a play”, was carried out.  The exercise was essentially a deception of those remaining owners in Rockymount. 

16.  The deception involved a development proposal which was to be prepared in respect of the Remaining Portion site with the intention of starting work, but with no intention of ever completing the project.  The case for Carry Express was that it was thought that the prospect of a new development at the rear of Rockymount would persuade the remaining unit holders in Rockymount to dispose of their properties quickly, before the development was completed.

17.  Carry Express says that it was in those circumstances, which it says were known to Mr Chow, that Mr Chow’s professional services were engaged.  Mr. Chow denies any knowledge of the deceit to be carried out on the part of Carry Express on the remaining unit holders in Rockymount, and says that as far as he was concerned he believed that Carry Express intended to construct the building he designed.

18.  The present proceedings were not issued by Mr Chow until 2007.  Carry Express says that, at least for seven years between 1998 and 2005, there was complete inactivity in respect of the project on the Remaining Portion site, and that during that time, no demand was made by Mr Chow for fees.  The case for Carry Express is that whatever the circumstances, by March 2007, when the writ was finally issued and served, the limitation period in respect of any proceedings that Mr. Chow might take had long expired.

The events from November 1991 to January 1998:

19.  Except where I indicate, there is no dispute in respect of the facts that I set out in the following paragraphs.

20.  On 7 November 1991, the building plans that had been prepared by Mr. Chow were approved by the Buildings Department, giving a GFA 51,614.29 ft.².  In terms of the contract Mr. Chow was entitled to the GFA bonus in respect of every square foot approved, above 36,000 ft.².  The GFA approved exceeded the minimum by 15,614.29 ft.², giving a GFA bonus in the sum of $1,561,429.

21.  On 12 November 1991, Mr. Chow issued a debit note to Carry Express in the sum of $800,000, described as part of his entitlement to the GFA bonus.  Neither the letter nor the debit note set out the basis of the calculation of the GFA bonus.  The sum of $800,000 was paid by Carry Express, without comment or complaint, on 15 November 1991.  On the face of it, there was accordingly a balance due on the GFA bonus of $761,429.

22.  The pleaded case for Mr. Chow asserted that in about December 1991 or January 1992, Carry Express informed him that he should not proceed with, or he should delay, proceeding with the project until the outcome of Carry Express’ negotiation with the owner of the lot adjacent land, with a view to achieving a joint development of both lots, so as to maximise profit.  Mr. Chow said this in his witness statement:

“In or about December 1991 or January 1992, the Defendant notified me that I should delay in the said development project as the Defendant had been in negotiation with the owner of the adjacent land lot and there was a possibility of a combined development with the 2 land lots.

In the building and construction industry, this is not unusual and, as the authorised person and engineer employed by the Defendant, I was under a contractual duty to adhere to my instructions.  Therefore, I accepted the Defendant’s instruction and, save and apart from delaying the existing applications which had already been submitted to the Buildings Department for approval, I did not proceed with new applications for the Defendant.”

23.  In the amended defence, Carry Express asserted that in about November 1991, Mr. Chow was asked by Carry Express not to proceed with the project for the time being as it was negotiating with Henderson Land Development Group (Henderson), which was interested in joining the project. The evidence from the only witness called for Carry Express, Mr. Yeung Ching Man (Mr. Yeung), who had acted as a “middleman” between Mr. Chow and the owner of Carry Express, was that in about August 1992, Mr. Yeung told Mr. Chow that there was an ongoing negotiations between Carry Express and Henderson, and that when Henderson agreed to join the project he told Mr. Chow of that.

24.  In fact, Henderson did later join the project. I am satisfied that, and find as a fact that at some time between November 1991 in January 1992, Carry Express requested Mr. Chow to delay in the project.  But that delay did not last, and after that brief delay, Mr. Chow again became involved in the project.  It is clear from Mr. Chow’s continuing involvement in the project that he knew of the involvement of Henderson, that any requirement that the project be delayed had come to an end.

25.  During 1992, site investigation works were carried out by MAA Engineering Consultants (HK) Ltd and the necessary reports from them was submitted to Mr. Chow on 18 November 1992.  On 6 September 1993, Mr. Chow submitted to the Buildings Department an application for the approval of caisson plans.  Plainly, the period of delay had ended.  Caissons were required to be established at the rear of the Remaining Portion site to enable excavation to approximately the level of the Rockymount development in order to best utilise the Remaining Portion site.

26.  On 21 October 1993, Mr. Chow was notified that the caisson plans that had been submitted were not approved.  There were a number of issues, including inadequate safety provision for existing retaining walls and slopes.  On 19 April 1994, Mr. Chow attended a meeting at Henderson’s office in which the disapproval of the caisson plans was discussed and it was agreed that new plans, calculations and information required for resubmission would be prepared by Woo Hing Engineering Co. by 26 April 1994, and submitted to the Buildings Department by 16 May 1994. 

27.  It was not until 14 July 1994, that the new plans were submitted, but nothing turns on the delay.  The new plans were submitted by Mr. Chow, together with slope stabilisation plans.  On 10 September 1994, the Buildings Department notified the parties that the caisson plans had been approved, but subject to conditions.  Carry Express saw this as a disapproval of the caisson plans.

28.  On 27 November 1995, Mr. Chow formally notified the Buildings Department of his resignation as the Registered Structural Engineer in respect of the project, and that he would be replaced by Mr. CM Wong.  The resignation was at the request of Carry Express.  However, Mr. Chow was to remain the Authorised Person in respect of the project.  On 30 November 1995, new caisson plans were submitted to the Buildings Department by Mr. CM Wong’s firm, CM Wong & Associates Ltd.

29.  On 29 January 1996, the Buildings Department notified Mr. Chow, Carry Express, and CM Wong of the approval of the caisson plans.  On 31 January 1996, each was notified of the approval by the Buildings Department of the approval of plans for site formation, slope stabilisation, building and foundation plans.

30.  On 10 February 1996, Mr. Chow wrote to Carry Express.  The letter sought payment of part of the professional fees, said to arise from the approval of the building plans, RC structural plans and foundation plans by the Buildings Authority.  That sum was calculated as {2/3 x (4% x 50%) x HK$36,130,000} being $482,000.  In the calculation the sum of $36,130,000 represents the estimated construction cost.  Notwithstanding that it appeared that the Building Authority had given approval of all of the plans that were acquired to entitle Mr. Chow to the 1st tranche of the professional fees, there was no explanation as to why only two thirds of the sum should be claimed.

31.  The letter also sought payment of the balance of the GFA bonus of $761,429. 

32.  The letter, headed “39-39A Conduit Road Hong Kong”, contained the following statement:

“The Building and Foundation Plans of the captioned project have already been approved by the Buildings Department. We have, in this case, completed 2/3 of Schedule Work 1 under Clause 4(i) of our duly signed contract.

Due to the fact of uncertainty with respect to the proposed development of the captioned project, we would be very grateful if you could kindly settle a professional service fee charged up to the present work done as mentioned above.”

33.  The letter did not identify the “uncertainty”, nor did Mr. Chow in his evidence identified that uncertainty.

34.  On 12 February 1996, Mr. Chow wrote to Henderson, Carry Express, and CM Wong sending them a copy of the Buildings Department’s letter of 29 January 1996 giving approval to the caisson foundation plans.

35.  Carry Express did not pay the invoice for professional fees that had been submitted by Mr. Chow.  Between February and April 1996, repeated telephone calls were made by Mr. Chow’s secretary to Carry Express seeking payment of the invoice.  These requests were largely ignored by Mr. Franco Yeung, the owner of Carry Express.  Ultimately, on 3 April 1996, a meeting took place between Mr. Chow and Mr. Franco Yeung.  At, or shortly after, that meeting Mr. Chow received a cheque from Carry Express in payment of the balance of the GFA bonus in the sum of $761,429.

36.  It was the case for Carry Express that in the course of that meeting agreement was reached between Mr. Chow and Mr. Franco Yeung is that payment of the balance of the GFA bonus would be made on the basis that it was a full and final settlement of all claims that Mr. Chow might have against Carry Express.  Mr. Chow denied that such an arrangement had been made.  Mr. Franco Yeung was not called to give evidence and accordingly there is no evidence at all in respect of such an arrangement.  I am accordingly reject any suggestion of a settlement based upon that payment.

37.  Although the suggestion of a settlement was not established I am satisfied that it is quite clear that Carry Express, at that time, refused to pay Mr. Chow’s professional fees.

38.  On 11 November 1997, the Buildings Department notified Mr. Chow that as two years had elapsed since the approval of the building plans, amended plans must be submitted to comply with current rules, otherwise an application to consent to commence superstructure works would be refused.  Mr. Chow forwarded that notification to Carry Express with a handwritten note endorsed reading:

“enclosed to client for instruction to reply”.

39.  Mr. Chow received no response to that note, nor was he given any further instructions by Carry Express.  Other than notifying the Buildings Department of his resignation as the Registered Structural Engineer for the project, and, on two occasions, submitting accounts to Carry Express, Mr. Chow had had no active involvement in the project since 14 July 1994, when he had submitted the new caisson plans and calculations prepared by Woo Hing Engineering.

40.  On 16 January 1998, following a further approval in relation to caisson work from the Buildings Department on 30 December 1997, Mr. Chow issued another invoice to Carry Express, described as being due “on the date of commencement of foundation works”, for the sum of $206,500.  There were as an error in the calculation but nothing turns on that.  Carry Express simply did not respond to the demand, and did not make payment of the amount claimed. 

41.  It is normal for professional men, when submitting a fresh invoice for payment at a time when there are fees outstanding, to record in the invoice the amount outstanding, and show a total balance due.  The invoice sent by Mr. Chow did not record that the earlier amount demanded by way of professional fees of $482,000 was still outstanding. His accompanying letter enclosing the invoice was silent about that fact.

The events between January 1998 and August 2005:

42.  Although other events, (described below), took place after January 1998 in respect of the project, Mr. Chow was not involved in those events.  On the evidence Carry Express were perfectly entitled to say that, as far as Mr. Chow was concerned, there was complete inactivity on his part for that 7 ½ year period.

43.  By 2001, Carry Express had acquired all of the units in Rockymount, apart from three.  On 4 June 2002, Carry Express applied to the Lands Tribunal for orders for compulsory sale of those last three units.  On 21 November 2002, a different firm of architects, Dennis Lau & Ng Chun Man Architect & engineers (HK) Ltd, (Dennis Lau), submitted general building plans for the redevelopment of both the Rockymount site and the Remaining Portion site.  Although these were initially disapproved, approval was given on 28 February 2003.

44.  In May 2003, Carry Express acquired the last 3 units in Rockymount, and on 30 August 2003, and Mr. Cheung Kwong Wing, an authorised person, gave notice to the Buildings Department that a contractor Wang Lee Construction Company Ltd, would commence demolition work on Rockymount on 6 September 2003.  The demolition began on that date, and was completed on 6 January 2004.  Thereafter commencement of foundation works began, those taking approximately two years.

Mr. Chow renews his demands for payment in August 2005:

45.  On 13 August 2005, Mr. Chow wrote to Carry Express.  In his letter he first referred to the contract dated 5 March 1991, and his letters of 10 February 1996, and 16 January 1998, and requested payment of outstanding professional fees totalling $688,500.  The letter then noted that the site, described as “39-39A Conduit Road Hong Kong” had been amalgamated with an adjoining property and that he had received no instructions from Carry Express to carry on any further.  He sought a meeting to discuss the outstanding amounts, and said that if he did not receive a response within seven days, he would seek advice.

46.  Carry Express did not respond.

47.  Three months later, on 23 November 2005, Mr. Chow wrote again enclosing an account rendered totalling $688,500.  Still, Carry Express did not respond.

48.  Mr. Chow then instructed solicitors.  On 11 January 2006, Mr. Chow’s solicitors wrote to Carry Express demanding payment of the sum of $688,500 within seven days, failing which legal action would be instituted without further notice.  A further letter was written on 19 January 2006, in which the demand was increased to $1,390,625.  No explanation was offered to the increase in the demand, then or throughout the proceedings.

49.  On 25 January 2006, Carry Express’ solicitors responded.  They asserted, first, that Mr. Chow would only be entitled to 4% of the total construction cost of the project upon approval of all building plans, RC structural plans and foundation permit by Buildings Authority, and issuance of the occupation permit.  They asserted that Mr. Chow had failed to procure the approval of the RC structural plans.

50.  Next, the solicitors asserted that on 3 April 1996, by an oral agreement in a meeting on that date, Carry Express had paid Mr. Chow $761,429 on his invoice dated 10 February 1996, which was through total sum of $1,243,429, in full and final settlement of his claim.  The letter then referred to the invoice for the sum of $206,500 that had been issued by Mr. Chow on 16 January 1998, and said that Carry Express had refused to pay that sum as the matter had already been settled.  Finally the solicitors asserted that they were unable understand the basis of the claim of some of $1,390,625.

51.  For the next 12 months, no steps were taken by Mr. Chow.

52.  Then, in a letter dated 26 January 2007, Mr. Chow’s solicitors suggested arbitration of the dispute, a proposition to which Carry Express’ solicitors indicated provisional agreement by letter dated 29 January 2007, at the same time asserting that the claim was statute barred.  The parties were however unable to agree upon an arbitrator and on 12 February 2007, Mr. Chow’s solicitors sought instruction Carry Express’ solicitors to accept service of a writ.  On 22 March 2007, service of a writ issued on 20 March 2007 was accepted by the solicitors on behalf of Carry Express.

53.  The writ, when issued sought payment of the following sums:

1.      a sum of $10,000 as a retainer fee pursuant to clause 5(ii) of the contract;

2.      a sum of $26,500 being a processing fee paid by Mr. Chow on behalf of Carry Express, to the Buildings Department on about 7 November 1991;

3.      the sum of $2,402,852.50 being as a total professional fees that would have been earned, had the building being constructed as designed by Mr. Chow, and the sum of $81.20 said to be the balance due of the GFA bonus.  A schedule was attached to the writ demonstrating a calculation of the construction cost of a gross floor area of 51,615.102 ft.², by applying an appropriate price index provided by Levett & Bailey Quantity Surveyors Ltd of Hong Kong.

54.  In the writ it was asserted that the gross floor area approved with 51,615.102 ft.², which is 0.812 ft.² larger than the area set out in Mr. Chow’s letter of 10 February 1996, (see paragraph 25 above).  In the course of the proceedings before me the parties ignored this anomaly.

The limitation defence:

55.  On the case for Carry Express, Mr. Chow had done nothing active in respect of the project since 14 July 1994, other than forwarding on the Buildings Department letter of 11 November 1997 and issuing two invoices.  The writ not being issued until 20 March 2007, nearly 13 years after Mr. Chow’s last action, it is unsurprising that a limitation defence should be raised.

56.  The limitation period in respect of an action founded on a simple contract is six years from the date on which the cause of action accrued: s 4(1)(a) Limitation Ordinance Cap 347.  Both parties accept that the burden is on the defendant to plead the limitation, as it has, and to the plaintiff to show when time began to run and the limitation period had not expired: see Bank of East Asia Ltd v Tsien Wui Marble Factory Ltd & Ors (1992) 2 HKCFAR 349.  Mr. Chong accepts that evidential burden.

57.  The position advanced by Mr. Chong was that while in the course of the performance of the agreement Carry Express had been guilty of other breaches of contract, none of them could be relied upon as a cause of action because none of the breaches constituted actionable wrongs, as no damage had been caused.  He contended that the relevant breaches giving rise to actionable damage were Carry Express’ disposal of its interest in the land in the last quarter of 2005, or in January 2006, by the solicitors letter, intimating that Mr. Chow’s services would no longer be required.  Mr. Chong said that any breaches prior to those in 2005 or 2006 were not accepted by Mr. Chow as an end to the agreement, and that Mr. Chow continued to discharge his contractual duties under the agreement.

58.  The position advanced by Ms Lan for Carry Express is first, that Carry Express has not disposed of its interest in the sites, which are now held by Carry Express and an associated company of Henderson, as tenants in common.  Neither side pursued this point in trial. 

59.  Second, she contended that Carry Express effectively notified Mr. Chow added services under the agreement were no longer required in about November 1995, when he was replaced as the Registered Structural Engineer for the project by Mr. CM Wong.  But that submission fails to recognise that Mr. Chow was not replaced as the Authorised Person. However, can Mr. Chow rely upon that replacement as an actionable breach of contract for the simple reason that he agreed to resign, and notified the Buildings Department accordingly.

60.  The real issue in my view is whether or not there has been an actionable breach of contract on the part of Carry Express giving rise to a right in Mr. Chow for damages, from which time will have begun to run.

61.  By 10 February 1996, the building plans, RC structural plans and foundation plans had been approved by the Buildings Authority.  That approval comprised the conditions precedent to the entitlement of Mr. Chow to the first of the five tranches of payment of the professional fees in terms of the contract.  When Mr. Chow submitted his invoice the payment on that date, he sought payment of only two thirds of the sum that was due. 

62.  At the meeting on the 3 April 1996, payment of the balance of the GFA bonus was discussed, agreed, and a cheque sent to Mr. Chow.  But Carry Express continued to steadfastly refuse to make payment of the professional fees that had been invoiced.  In so refusing Carry Express was in breach of the contract.  From that time, Mr. Chow was entitled to sue Carry Express for the sum demanded in the invoice.

63.  On 16 January 1998, following the approval of further relevant plans, Mr. Chow submitted a further invoice the $206,500. Again no payment was made, but again, from the rendering of that account, Mr. Chow is entitled to sue Carry Express the sum claimed.

64.  By refusing to make payment of those sums of professional fees and by further failing thereafter to instruct Mr. Chow in respect of any proposed works on the Remaining Portion site Carry Express were in breach of the contract.  Mr. Chow was then entitled to sue on the contract. That that was so is demonstrated by the pleaded breach in the statement of claim, §9(c) in the following terms:

“Despite approval of the relevant plans on 30 December 1997, the Defendant failed or refused to commence foundation works.”

65.  Mr. Chow relied upon the refusal of Carry Express to pay to him the sum of $1,390,625, pursuant to his demand made on 19 January 2006, as a breach of contract upon which he could sue.  But, equally, he was entitled to rely upon the refusal of Carry Express to pay the outstanding professional fees invoiced in February 1996 and January 1998, as breaches of contract upon which he could sue.  His right to commence the action did not depend upon his acceptance of those breaches.

66.  Although in its pleaded case, Carry Express denied those breaches, by the time of closing submissions Ms Lan did not dispute that the failure to make payment in February 1996 and January 1998 constituted breaches of the contract.  Instead she submitted that the date of accrual of the cause of action did not depend upon acceptance of the breach.  I accept that submission.  The point is illustrated by the following passage from Bell v Peter Browne & Co [1990] 2 QB 495, where at 512E Mustill LJ said:

“The point however for present purposes is that even if the promisee does not “accept” the promisor’s breach as a repudiation, it retains its character as a breach and is actionable at once, even though the continuing obligation to perform in the future will also be capable of founding new causes of action when the time becomes ripe.  Thus I would not for my part accept that there is no right of suit, and hence no commencement of the limitation period, until the promisee finally loses patience and elects to bring the contract to an end.”

67.  The case involved negligence on the part of the solicitor in the form of failure to cause the execution of a declaration of trust and respect of the matrimonial home, on the plaintiff’s divorce and/or failure to register a caution at the Land Registry against a dealings with the property.  The plaintiff’s wife sold the property and spent all of the proceeds of sale and as a result the plaintiff lost a one sixth interest in those proceeds which had been agreed as part of the divorce settlement.  The breach of contract occurred at the time of the settlement, and the continuing obligation on the part of the solicitors to register a caution did not save the claim in contract, although it saved the claim in tort.

68.  Clear actionable breaches of contract having occurred in the present case, any so-called “continuing obligation” on the part of Carry Express to complete the project thereby affording Mr. Chow in opportunity to earn his fees cannot save the situation for Mr. Chow.

69.  While there might be argued to be a continuing obligation on the part Carry Express to construct a building on the Remaining Portion site, once it had evinced a clear intention to breach the contract, that is to construct a building, it cannot be said that there was any continuing obligation.  The breaches were clear in January 1998.  Carry Express had refused to pay Mr. Chow, and were not giving him instructions in respect of any continuing work.

70.  The justification for the rule in contract may be found, again in Bell v Peter Brown & Co, where, at p 501B, Nichols LJ said:

“A remediable breach is just as much a breach of contract when it occurs as an irremediable breach, although the practical consequences are likely to be less serious if the breach comes to light in time to take remedial action. Were the law otherwise, in any of these instances, the effect would be to frustrate the purpose of the statutes of limitation, for it would mean that breaches of contract would never become statute-barred unless the innocent party chose to accept the defaulting party’s conduct as a repudiation or, perhaps, performance ceased to be possible.”

71.  I am satisfied accordingly that from April 1996, on the refusal of Carry Express to pay Mr. Chow’s professional fees rendered, or at the latest, from February 1998, following the failure of Carry Express to pay the further professional fees rendered, there has been an actionable breach of the contract on the part of Carry Express.

72.  The cause of action in contract having arisen, at the latest in February 1998, and the writ not having been issued until 20 March 2007, over 9 years later, I hold that the plaintiff is statute barred from pursuing the claim pursuant to s 4(1)(a) Limitation Ordnance.

Mr. Chow's knowledge of the deception:

73.  In case I am wrong in that conclusion I should deal with the issue as to whether or not Mr. Chow knew that the project was never intended to be completed, and that consequently, in any event, he had no right to earn a professional fees.

74.  The following reasons I have reached the conclusion, on the balance of probabilities, that Mr. Chow did not know of the deception.

75.  First, that the project was not to proceed is entirely inconsistent with the terms of the written contract.  If all that was required Mr. Chow was that he prepare plans which enabled approval of a gross floor area, and ground works, there was no need at all to make provision fees to be paid based on the total construction cost of the project, the final tranche of which would not be paid until occupation permit was issued.

76.  Second, if the deception was to work it was important that as few people as possible knew of the deception.  In no circumstances it is entirely logical that Mr. Chow would not be brought into the picture on the basis that the fewer people who knew of the deception, the less likely it would be that the owners in Rockymount would learn the truth.

77.  I reject the suggestion, for which there was no evidential foundation, that given Mr. Chow’s experience in the industry, the fact that Carry Express was in the course of acquiring units in Rockymount for the purpose of redevelopment of both sites, meant that Mr. Chow knew the project would not proceed.

78.  The fact that Mr. Chow would be entitled to the GFA bonus, while a special feature of the contract, does not lead in any way to a conclusion that there was no intention to complete the project.  It was instead, entirely understandable that there would be a bonus for maximising an extremely difficult site.

79.  A peculiar feature of the arrangement was Mr. Chow’s agreement to pay Mr. Yeung 50% of the GFA bonus as an introduction fee. The project would plainly have been a profitable exercise for Mr. Chow and it is not an usual in Hong Kong for a middle man in the position of Mr. Yeung to be paid an introduction fee.  The fact that Mr. Chow agreed to make that payment does not impact upon the likelihood of any knowledge he may have had of Carry Express’ true intention.

The preparation of the contract:

80.  Ms Lan attempted to argue that the contract had been initially prepared by Mr. Chow and that somehow that should count against Mr. Chow.  It may well have been that Mr. Chow did prepare the original draft of the contract.  But nothing at all turns on that.

81.  The evidence demonstrated that whoever prepared the first draft, a draft of the contract was sent, by fax, by a firm of solicitors to Luen Yum Development Co Ltd, a real estate agency operated by Mr. Yeung.  Mr. Yeung immediately sent it on to Mr. Chow. 

82.  Mr. Chow had not instructed the solicitors.  The overwhelming inference was that the solicitors had been instructed by Carry Express.  There was no evidence to the contrary.  In those circumstances it is irrelevant who prepared the first draft of the contract.  Carry Express plainly entered into the contract, having first received legal advice in relation to the contract.

A collateral contract:

83.  For completeness, I recorded I reject entirely Ms Lan’s proposition that there was a collateral agreement between the parties in relation to the redevelopment of both the Rockymount and the Remaining Portion site.  No collateral agreement was pleaded.  The terms that were contended in such a collateral agreement for were entirely unclear, and there was no suggestion at all as to what might constitute the consideration for such a collateral contract.

Conclusion:

84.  For the foregoing reasons the claim by Mr. Chow against Carry Express fails.  There will be an order nisi that Carry Express will have its costs of the action, including all costs reserved, on a party and party basis.