CHOY BING WING v. THE HONG KONG & SHANGHAI HOTELS, LTD.

Construction List No. 8 of 1992

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. By writ dated 8th January 1991 the Plaintiff, who is a structural engineer, claims against the Defendants, who are the owner of the Peninsula Hotel, professional fees for work carried out for the Defendants to the Peninsula Hotel in the sum of $3,504,860.

2. The legal and factual background to the Plaintiffs engagement by the Defendant is somewhat confused. This confusion has been caused by a number of factors which are as follows:

(a) A number of arrangements between the Plaintiff and the former management staff of the Defendant were made orally and were somewhat simple.

(b) The Defendant changed their mind several times in relation to their ideas for an extension of the Hotel.

(c) The new management team which came in at or about late 1989 took a stricter attitude to contractual matters than did their predecessors.

(d) When the Defendant terminated the Plaintiff's engagement as structural engineer for the extension project no one on either side properly applied their minds to what effect, if any, that had on the relationship between the terms of the October Agreement and the other functions still to be carried out by the Plaintiff for the Defendant.

3. In accordance with the Practice Direction for this List Mr. Jonathan Harris, who appeared for the Plaintiff, provided me with a dramatis personae, abbreviations and chronology which I have found most useful. Mr. M. Thomas Q.C. who appeared with Mr. Adrian Bell for the Defendants also provided me with a document headed "common ground". I set out hereafter the dramatis personae, abbreviations and chronology which are not in dispute.

4. DRAMATIS PERSONAE AND ABBREVIATIONS PLAINTIFF

Choy Bing Wing: Plaintiff - gave evidence.

Li Kin Yan: Draftsman employed by the Plaintiff - gave evidence.

Tam Kwum Wah: Engineer employed by the Plaintiff - Statement put in.

Ku Kwai Sing: Draftsman employed by the Plaintiff - Statement put in.

Tsoi Ping Fat: Draftsman employed by the Plaintiff - gave evidence.

Ching Cheuk Wai: Draftsman employed by the Plaintiff - Statement put in.

DEFENDANT

Witnesses or persons who have made statements in respect of which Civil Evidence Ordinance Notices have been served.

Neil McCullum: General Manager, Projects of the Defendant. Employed by the Defendant since November 1989 - gave evidence.

Gordon Robinson: Group Development Manager of the Defendant. Employed by the Defendant since 1 April 1990 - gave evidence.

Robert Lee: Quantity surveyor employed by the Defendant who worked on the Hotel extension and renovation works. No longer employed by the Defendant - Civil Evidence Statement.

Steven Stowe: Group Engineering Manager for the Defendant at the time of the Hotel extension and renovation works. No longer employed by the Defendant - Civil Evidence Statement.

Paul Sheppard: Project Design Manager/Hong Kong Development at time of the Hotel extension and renovation works. No longer employed by the Defendant - Civil Evidence Statement.

Sheilah Hamilton - Forensic Scientist - gave evidence.

Others referred to in documents and statements

Eric Lai: Director of the Defendant who negotiated October agreement with the Plaintiff. Left the Defendant in 1990.

Andrew Chan: Assistant to Eric Lai who also negotiated fee arrangements with the Plaintiff until his departure from the Defendant in 1990.

Rocco Design Partners ("RDP"): The Architect for the Hotel extension works.

Other abbreviations and definitions

Hotel: Peninsula Hotel

Extension Design Services: The design of the permanent substructure and superstructure works for the Hotel extension and the submission of the design to the Building Authority.

Temporary Works Services: Temporary works to the Hotel, necessary for it to continue in operation while the extension was under construction. This included what is referred to as Activities A, C and D.

General Structural Engineering Services: Services required for the renovation works. They did not form part of the Extension Design Services and the Temporary Works Services. This includes what is referred to as Activities B, E and F.

Activity A: Temporary Transformer Room Hankow Rd. (including hoarding and louvre covers)

Activity B: Subsoil drainage at Middle Road.

Activity C: Advance diversion (underground heating ventilation and air-conditioning chamber at Middle Road).

Activity D: Allocation and diversion works (existing building including new MDF room.)

Activity E: Feasibility study for new structures on existing Hotel roof.

Activity F: Survey of existing roof structure.

October Agreement: Written agreement dated 5/10/87 between the Plaintiff and the Defendant pursuant to which the Plaintiff provided the Extension Design Services and Temporary Works Services.

July Meeting: Meeting on 25 July 1990 between the Plaintiff and Messrs. Robinson, McCullum and Sheppard of the Defendant at which the Plaintiff is formally informed Extension Design Services will be terminated.

CHRONOLOGY

November 1983: Plaintiff first engaged by Defendant in connection with the Repulse Bay Apartments.

April 1986: Plaintiff attends meeting with Eric Lai and Andrew Chan at which Plaintiff is engaged to carry out a feasibility study on adding 5 storeys on top of existing Hotel.

July 1987: Plaintiff attends meetings with Eric Lai and Andrew Chan as a result of which he is engaged to carry out Extension Design Services, Temporary Works Services and General Structural Engineering Services. It is agreed Plaintiff will be paid on an hourly basis.

5 October 1987: October Agreement made [3 to 5]. October Agreement provided that Plaintiff would be paid 1.5% of total construction costs for Hotel extension, (which were assumed at that time to be HK$320,000,000), in 6 stages for Extension Design Services and Temporary Works Services. Stages were:

Stage 1. 20%: Upon submission of foundation plan and calculation to the B.A.

2. 20%: Upon approval of building structural plan and calculations by B.A.

3. 25%: Upon completion of design of superstructure work.

4. 25%: Upon commencement of superstructure work.

5. 7.5%: Upon issue of Occupation Permit.

6. 2.5%: Upon settlement of final accounts with contractors.

Also orally agreed between Plaintiff and Eric Lai and Andrew Chan that General Structural Engineering Services should be paid for on hourly basis.

27 February 1988: Stage 1 completed and Plaintiff submits invoice 5670 [9] for $960,000 which is paid on 6 April 1988.

14 November 1988: Stage 2 completed and Plaintiff submits invoice 6028 [14] for $960,000 which is paid on 12 December 1988.

October 1988: Defendant decides to change conceptual design for Hotel extension to single rear tower.

October 1988 to May 1989: Various designs produced. Plaintiff carries out feasibility studies on structural aspects of new designs, which are called "Schemes". Plaintiff agrees with Eric Lai and Andrew Chan that he will be paid for feasibility studies on an hourly basis and once a Scheme has been chosen he will be paid for detailed design work in accordance with October Agreement.

1 May 1989: Andrew Chan informs Plaintiff original design will definitely not be used. Plaintiff submits invoice 6062 [17] for $960,000 for balance of what he believes is due for services provided in connection with original design. Plaintiff also submits invoice 6063 [18] for services provided in connection with Scheme F.

8 September 1989: RDP instruct Plaintiff to carry out Activity B.

16 November 1989: Plaintiff submits invoice 6113 [36] for $2,218,128 which supersedes invoices 6062 and 6063. Invoice 6113 covers:

20 June 1990: RDP ask for fee proposal for structural surveys of the main and Verandah roofs (Activity F). Plaintiff replies on same day quoting $125,000 [57].

27 June 1990: Defendant writes to Plaintiff accepting 20 June 1990 [66] quote.

28 June 1990: Plaintiff and Paul Sheppard have lunch and Plaintiff is told that that the Defendant wishes to engage another engineer to design the Hotel extension as it is felt he has insufficient experience.

25 July 1990: Meeting between Plaintiff and Messrs. Robinson, McCullum and Sheppard at which Plaintiff is informed that Defendant is terminating the Extension Design Services but wishes him to continue to provide the Temporary Works Services and the General Structural Engineering Services. (A, C & D)

26 July 1990: Plaintiff submits invoice 6156 [83] for $5,768,080. Invoice expressed to cover:

(i) Fees for detailed design work done on new single tower design prior to 25 July 1990; and

(ii) fees for work done on feasibility studies calculated on an hourly basis.

Early August 1990: Plaintiff instructed by RDP to carry out feasibility study for putting new structures on roof of Hotel (Activity E).

30 August 1990: Defendant responds to invoice 6156 offering to pay $135,000 [96].

11 September 1990: Meeting between Plaintiff and Messrs. Robinson and Stowe at which it is agreed that Defendant will pay $3,768,080.

5 November 1990: Defendant writes [122] terminating all Plaintiff's services other than continuing obligations in respect of Activities A, C and D.

9 November 1990: Plaintiff writes [126] to Defendant stating he considers his engagement for all services in connection with the Hotel terminated.

10 December 1990: Plaintiff submits invoice 6176 [141] for $3,504,086 for all services which he has provided for which he considers he has not been paid, namely, Activities A, B, C, D, E and F charged on an hourly basis. The Defendant has not paid this invoice.

8 January 1991: Plaintiff issued the writ in the present action claiming sums due and unpaid under invoice 6165 and interest.

Issues

5. It has been agreed by the parties that I would determine the Plaintiff's contractual entitlement to fees, and then the matter will be sent to a Master in order to quantify those fees in accordance with this judgment. I do not propose to go into great detail on the evidence nor quote extensively from the agreed bundle. The issues are now fairly clear cut. I think I can take them largely from Mr. Thomas's closing submissions although Mr. Harris, by a late amendment introduced a different way of putting the Plaintiff's case if I was against him on the oral agreement. The issues appear to be these:

6. 1) Was it agreed orally at the meeting held on 25th July 1990 between the Plaintiff, Mr. Robinson and Mr. McCullum that the Plaintiff would be entitled to be paid for the temporary works (A, C, D) which had been carried out prior to and after 25th July 1990 on an hourly basis?

7. 2) If yes, then a Master will have to decide how many hours were properly chargeable and at what rate.

8. 3) If no, whether on any other basis the Plaintiff has a claim for fees for services rendered prior to 25th July 1990 including whether further stage payments under the October 1987 Agreement are due.

9. 4) On what basis is the Plaintiff entitled to be paid for services rendered after 25th July 1990.

10. 5) Whether the Plaintiff has any claim for work done apart from survey work for which the amount for this remuneration is limited by agreement to HK$100,000 (the main roof) and HK$25,000 (verandah roof).

Has the Plaintiff established on the balance of probabilities that the oral agreement for which he contends was in fact entered into on 25th July 1990?

11. Mr. Thomas made a strong attack on the way the Plaintiff's case had emerged. He set these out in his written closing submissions and I only propose to refer to a few points:

(a) The case now pleaded differs from the way it was originally put forward;

(b)the claim for hourly rates for A, C & D as a result of an agreement made on 25th July 1990 did not surface till very late in the day;

(c)the claim relies heavily on uncorroborated oral agreements;

(d) the Plaintiff considered the presentation of invoices not so much as a matter of contractual entitlement but more as a negotiating stance;

(e) the claim for 9,000 hours going back three years was unsupported by documents and a writ was issued within one month of presentation of this large and unsubstantiated claim;

(f) neither the Plaintiff nor his staff had any means of proving the number of hours spent on the Defendant's work from 1987 to 1990. It was all based on "guesstimates" and if I were to accept the evidence of Ms. Sheilah Hamilton (which I do) I should be satisfied on the balance of probabilities that the signed time sheets produced only at trial were all signed together and do not have a genuine look about them;

(g) the Plaintiff was not frank in cross-examination when he denied any animosity towards the Defendant and denied feeding "Target" adverse comments about the Defendant.

12. In my judgment, there is considerable force in all of the above submissions.

13. When the Court is faced with diametrically opposed recollections of what was or was not agreed almost 4 years previously, it is most useful to first look at the contemporary documents and see whether they support one version or the other.

14. The matter really begins on the 26th July 1990 when by letter of that date, the Plaintiff sends a fee note for $5,768,080. This was invoice 6156.

15. On 30th August 1990, the Defendant responds to this invoice by offering only $135,000.

16. By a letter dated September 3rd 1990, the Plaintiff wrote to the Defendant disputing their offer of $135,000 contained in the letter of 30th August 1990. It is important to note that there was no mention in this letter of any agreement to be paid on hourly basis.

17. On the 11th September 1990 following a meeting, the Plaintiff wrote accepting an offer of $3,768,080. On the same day he sent in a new revised fee note for that sum headed "settlement of fees on termination". This was duly paid when the Plaintiff sent a receipt on the 14th September 1990.

18. On 13th September 1990, the Defendant had written to the Plaintiff in the following terms:

"We referred to your letter dated 11th September 1990 in which you confirmed your acceptance of the sum of HK$3,768,080 in full and final settlement of your fees due for all work performed by you on this project."

19. It is the Defendant's case that this payment was not just for the limited categories of work referred to in invoices 6156 and 6165 but was an overall agreement for the payment of all sums due in relation to the extension and temporary works up to and including 25th July 1990.

20. On the 14th September, the Plaintiff writes to the Defendant in the following terms:

"I refer to the meetings held on 25th July 1990 and 11th September 1990 ..... concerning the above works carried out and to be carried out.

In the meetings I requested your consideration that my remuneration is to be paid on hourly basis. Your early confirmation in an appointment agreement to be agreed shall be much appreciated."

21. A note written on the copy of this letter addressed to Mr. McCullum states:

"I cannot see how we can tie down a fixed fee on B C's involvement that will be piecemeal as and when we need him - suggestion."

22. This contemporary note is quite inconsistent with the agreement for which the Plaintiff contends. Both Mr. Robinson and Mr. McCullum denied that the agreement had been entered into and some of the documents, including this one certainly supports their denials.

23. By a letter dated 5th November 1990 from the Defendant to the Plaintiff the Defendant terminated the Plaintiff's engagement in relation to Activities B and F. However, the letter went on to state:

"Notwithstanding the termination of your engagement with HSH for all work on the Peninsula Hotel we would remind you of your continuing obligations in connection with the following contracts and assignments ...."

24. On the 8th November 1990, the Plaintiff wrote to the Defendant stating that his invoice will be submitted pending the Defendant's confirmation that he should stop all works.

25. On 15th November 1990, the Defendant wrote to the Plaintiff pointing out that in a letter of 5th November they had made it clear that he was to remain responsible for certain continuing contracts and assignments. They therefore expressed some surprise that the Plaintiff had written to the Building Authority informing them that he was no longer employed by the Defendants to carry out duties as required for their existing structure and all temporary steel structures erected by him during his engagement as a resident structural engineer. In the Defendant's letter of 15th November 1990 they set out works which they maintained he was obliged to continue.

26. Solicitors come on to scene on 20th November 1990 on behalf of the Plaintiff, and on 28th November 1990 on behalf of the Defendant.

27. On December 10th 1990, the Plaintiff writes to the Defendant in the following terms:

"In response to your letter dated 5th November 1990, I submit herewith my invoice and my services in a sum of $3,504,860 for your kind consideration and early settlement."

28. It is not without significance that this letter makes no mention of the oral agreement alleged to have taken place on 25th July 1990. In the invoice 6176 enclosed with that letter is a claim for about 9,000 hours between September 1987 to November 1990. This covers work for all items A to F. No further breakdown is given.

29. It seems to me highly unlikely that the Plaintiff would have proposed charges on hourly rates going back for three years, when it is perfectly plain from the evidence given by him and some of the staff that he really had no record of hours worked and no means of easily proving them. All he produced was a monthly calendar sheet in which he put down certain hours relating to this project. I think it most unlikely that he was actually thinking of charging on an hourly rate basis given his failure to implement any proper time keeping systems.

30. I also find it quite impossible to accept that Mr. Robinson and Mr. McCullum would have agreed on the 25th July 1990 to pay on an hourly basis, and I find it more incredible that they would so have agreed and then immediately gone back upcn it. They do not strike me as men who would have agreed something with the Plaintiff on the 25th July 1990 and reneged on the deal a little while later. The Plaintiff was not the most impressive witness. His evidence was at times all over the place and I am afraid that in the light of the conclusions at which I have arrived in relation to Ms. Hamilton's evidence, I think the Plaintiff was in fact trying to mislead the Defendant and the Court by the production of the time sheets.

31. In all the circumstances, therefore, taking into account everything which Mr. Harris has said on behalf of the Plaintiff, I cannot find on this evidence that there was the oral agreement for which the Plaintiff contends and upon which he places his primary case.

On what other basis has the Plaintiff a claim for fees for services rendered prior to 25th July 1990?

32. I now turn to consider the alternative basis upon which Mr. Harris put the Plaintiff's claim. This new basis appears in paras. 10A and B of the re-re-amended Statement of Claim which I permitted him to put in very late in the day. Mr. Thomas opposed this amendment although he declined to seek an adjournment. He did not apply to recall any witnesses. Had he made either such application I would have been bound to have granted it. Although this was a very late amendment nevertheless I considered that justice required that I exercise my discretion in favour of granting the amendment especially bearing in mind that the matter was documented. I was aware that this amendment would lead to an argument on costs which will have to take place at a later date. These paragraphs read as follows:

"10A. Further and in the alternative, if the agreement referred to in pare. 9 hereof was not concluded and payment of HK$3,768,080 was paid in settlement of all fees due pursuant to the agreement referred to in para. 8 hereof ("October Agreement") and due in respect to production fof feasibility studies for new designs for the proposed extension to the Peninsula Hotel up to 25th July 1990, the Plaintiff claims the following further payments:

(i) On 22nd August 1990, the Building Ordinance Office approved the Plaintiff's structural drawings and calculations for the construction works referred to as Activity D in the particulars of para. 10(2) hereof. In the premises pursuant to Clause 4.2 para. 2 of the October Agreement the Plaintiff is due a payment of 20% of the total construction costs of the extension and renovation works for the Peninsula Hotel.

(ii) Pursuant to Clause 4.2 para. 5 of the October Agreement, the Plaintiff is due a payment of 7.5% of a total construction costs of the exiension and renovation works for the Peninsula Hotel.

(iii) These are the best particulars of Plaintiff can provide of the sums due until discovery of the construction costs of the said extension and renovation works.

10B. Further and in the alternative, if the total construction costs for the purposes of calculating the payment is due to the Plaintiff pursuant to the October Agreement after 25th July 1990 are the construction costs of the particular item of construction work to which his services relate, the Plaintiff claims the following payments:

(I) On 22nd August 1990 the Building Ordinance Office approved the Plaintiff's structural drawings and calculations for the construction works referred to as Activity D in the particulars of para. 10(2) hereof. In the premises pursuant to Clause 4.2 para. 2 of the October Agreement, the Plaintiff is due a payment of 20% of the a construction costs of Activity D.

(ii) Pursuant to Clause 4.2 para. 5 of the October Agreement the Plaintiff is due a payment of 7.5% of the total construction costs of Activity D.

(iii) These are the best particulars of Plaintiff can provide of the sums due until discovery of the construction costs of Activity D."

33. It is common ground that on 22nd August 1990 the Building Ordinance Office did approve the Plaintiff's structural drawings and calculations for the construction of works referred to as Activity D. This approval appears at p.92 of the Bundle and it is clear from this that the application for approval was dated 27th June 1990, prior to the termination.

34. Mr. Thomas seeks to meet this point by contending that the Plaintiff prematurely submitted the foundation plan for the 300 room scheme before the Building Authority approved plans for a 400 room scheme. He said this was done in order to trigger a 20% stage payment.

35. The Defendant further suggests that this unauthorised submission is somehow established by minutes of a meeting of consultants held on 28th June 1990 at which the Plaintiff attended. On p.68 of the bundle, there is a note that somebody from the Defendants noted that the Plaintiff had submitted drawings and calculations to the Building Authority on the 23rd June 1990 which did not follow the procedure defined by RDP on 21st June 1990, and then is set out a scheme by which they first get approval for the 400 room scheme and then later re-submit the plan for the 300 room scheme. On p.69, there is a statement that the Defendants warned that premature submission may result in abortive work and they asked the Plaintiff to check if the Building Authority would consider structural calculations before the building plans were approved.

36. Mr. Harris submits there is nothing in the 21st June minutes to support the submission that the Plaintiff had not followed the procedure defined by RDP on the 21st June 1990. I have carefully read the 21st June minutes 1990 and I think there is force in Mr. Harris's submission. I can see nothing in them which sets out the same sort of procedure as is set out in the minutes 1 week later. Mr. Harris strengthens his submission by reference to a Bar Chart at p.62A from which it can be seen that BOO approval for this stage was scheduled for June 1990.

37. The real problem with this matter is that, as it turned out, this has become a very important point indeed. It is true that the Plaintiff was cross-examined briefly about it, but the Defendant's witnesses hardly gave any evidence about it at all. Nobody was called from RDP and I am left in a state of some uncertainty.

38. My analysis of the situation is this. There is no doubt that the plans were submitted and approval received. Insofar as the Defendant wished to assert that the Plaintiff submitted these plans when he was requested not to do so or submitted them in a way which did not conform with some agreed schedule for the submission of plans then the burden of proving this allegation rests upon them. The Plaintiff has prima facie established a triggering mechanism for a stage payment. In my judgment, on the evidence presented to me, the Defendants have got nowhere near to establishing that what the Plaintiff did was unauthorised and against their instructions. I should have added that Mr. McCullum agreed in cross-examination that the approval, to which I have been referring, was approval for Activity D.

39. Mr. Thomas had argued that the 2nd stage did not become payable because stages 3 and 4 had already been reached. However, I can find nothing in the October Agreement to suggest that if one reaches a later stage before a payment for an earlier stage has fallen due, the right to payment in respect of the earlier stage is somehow lost.

Total construction costs

40. Mr. Harris contends that if"total construction costs" meant the whole of the costs of the project before 25th July, it meant the same after that date unless there was an agreement to vary it.

41. Mr. Thomas submits that if contrary to his contention the 20% fee payable upon approval of the building structural plan and calculation was due then he submits that the total construction costs should be only those costs in relation to Activity D. It is believed that Gammon carried out the works specified as Activity D in the sum of HK$53,500,000.

42. What warrant is there for not giving effect to the clear words of para. 4 of the October 1987 agreement? It is clear from the evidence given by the Defendants that they never applied their mind to precisely what was to happen about payment provisions. Mr. Robinson freely agreed that he had not given any thought as to how the October Agreement would operate in practice. The Plaintiff gave evidence that 1.5% of the costs of Activity D alone would be inadequate remuneration and he would not have agreed to it. I accept his evidence on this point.

43. What was the effect of the agreement the Defendant alleges was made at the July 1990 meetings? Both Mr. Robinson and Mr. McCullum gave evidence that they believed they had varied the scope of work and nothing else. This was certainly a very relaxed way of attempting to sort out this problem. The Defendant's case on the evidence seems to be that the October Agreement continued in force as before, except that the Plaintiff had to do less work. I can find nothing in the evidence or documents to show that there was an express agreement to vary the payment provisions. I can see no warrant in construing the phrase in para. 4 of the October 1987 Agreement "total construction costs" as anything other than what it plainly means. I would be rewriting the agreement if I said that in the light of what had happened it meant the total construction costs, whatever they are, of Activity D. I can see no reason why the Plaintiff is not entitled to further payments if another stage was reached, as I find it was, between 23rd June 1990 and the termination of the October Agreement in respect of the remaining works.

44. It seems to me that the Plaintiff is entitled to a further 20% upon approval of building structural plans and calculations and 7½% if the Occupation Permit has been issued. These percentages cannot be based on $320m, because it is clear from para. 4 of the October 1987 agreement that $320m was an estimate at that time.

45. It seems to me that the Plaintiff is entitled to these two percentages based upon $320m or whatever the total construction costs were based on the design that prevailed at the time of termination. Obviously if after termination, a completely new and more expensive design was put in, it would not be right for the Plaintiff to base his percentages on that larger sum. But it seems contractually inevitable that he is entitled to his percentages based on either $320m or the costs of the prevailing design as at the date of termination whichever is the higher.

46. I recognise that the Plaintiff has succeeded on this point which was not pleaded until the closing stages of this case and after the evidence. Mr. Thomas, of course, put down a marker that if this was my finding, he would wish to make certain submissions about costs and, of course, in due course I will hear him on that issue.

On what basis is the Plaintiff entitled to be paid for services rendered after 25th July 1990

47. In the light of my finding that the Plaintiff is entitled to two further stage payments and that this has to be based upon the total construction costs as I have set out above, I do not believe it is necessary to further consider this point because the Plaintiff would have been paid what was due under the October 1987 Agreement which I have found still bound the parties despite the various events that had happened. In case this matter goes further, it may be helpful if I stated that, if I had not come to the conclusion that the October 1987 Agreement continued and that the two further stage payments had not become due, I would have dealt with the matter post 25th July 1990 on the basis of a quantum meruit based upon a percentage. On this basis I would have treated the continuation of the works as the consequence of a separate request for which no remuneration was agreed and thus a quanturn meruit was payable.

48. It is common ground that the Court has a wide discretion to apply a fair and appropriate yardstick and Mr. Thomas submits that I should have chosen 1.5% of the total value of the works for D and allow the Plaintiff one quarter of 1.5% of $53.5m. The one quarter was chosen because it is alleged that the Plaintiff did not fully complete this work.

49. I do not think that I can accept this submission. I have already accepted the Plaintiff's evidence that he would not have agreed to 1.5% for Activity D alone. Although I would like to assist the parties by giving them some indication as to what I think would be reasonable, I do not think I have sufficient evidence before me to make such a ruling. If this had been the basis upon which I had given judgment I would have left the matter to a Master to decide what was a reasonable percentage, having heard evidence as to that issue (which I have not) and what were the appropriate construction costs upon which to base the percentage.

50. I should have made it clear that Mr. Thomas put forward three possibilities for payment for work after 25th July 1990. The first was on the basis that the October Agreement continued to govern. The second was on the basis that a quantum meruit should be awarded based upon a percentage and the third basis was a reasonable hourly rate for work done plus expenses. Mr. Thomas was inclined to go for the quantum meruit and I think his instinct was right and that is what I would have done, had I not dealt with the matter differently.

Item E - a structural feasibility study

51. The Plaintiff claims $17,000 for Activity E.

52. I am satisfied that on the pleaded case there is no liability established for work under E other than survey work. Survey work is under F and it is admitted that this remuneration is capped. Mr. Thomas pointed out the defects in the Plaintiff's pleaded case under this item before Mr. Harris commenced his closing submissions and no amendment was sought. Mr. Thomas was careful not to cross-examine about a case which had not been pleaded.

Item F

53. This relates to surveys for the main roof of the hotel and of the Verandah roof. The Plaintiff accepts that fees for these two surveys were capped at $100,000 for the main roof and $25,000 for the Verandah.

54. The Plaintiff claims $132,980 for Activity F. He is prepared to limit this claim to $125,000. If the Defendant accepts liability for $125,000 then the matter need not go further. If the Defendant does not so admit then a Master must determine what is due to the Plaintiff for these 2 surveys but in no case must the Defendant's liability exceeds the 2 caps stated above.

Conclusion

55. Unless the parties can agree on what is due to the Plaintiff pursuant to this judgment then the matter of quantum must be referred to a Master for assessment of what is due in accordance with the terms of this judgment. I give leave to the parties to apply and I will adjourn the question of costs to enable the matter to be argued in due course.