HO KAM CHUNG t/a K.C. CHARLES & ASSOCIATES v. BENNY LAU t/a BENNY LAU JEWELLERY & WATCH CO.

------------

------------------

JUDGMENT

------------------

Penlington, J.A.:

1. We dismissed this appeal oh the 20th of November 1991 without calling on the respondent and said we would hand down our reasons later. This we how do.

2. This is an appeal from a decision dated the 13th of May 1991 of Judge Moylan in the District Court in which he gave judgment for the plaintiff for, $39,000, together with interest and costs, being fees for design work and consultations regarding the proposed interior decoration of the defendant's house at 69 Hereford Road, Kowloon Tong ("the house") between the 27th of may and the 3rd of August 1988.

3. That the plaintiff, who had carried out work on previous occasions for the defendant at his shop premises, did do some design work for the defendant and prepared a long estimate of costs for the decoration of the house was not in dispute. It is also agreed that if the design work and estimates had been accepted by the defendant and the work had been carried out by the plaintiff, he would have been entitled to an overall fee for his services, which would have incorporated the preliminary design work. This however did not happen and although the plaintiff prepared alternative estimates at a reduced price these were also not accepted and the work was done by another firm. It is the plaintiff's case, however, that there was an oral agreement with the defendant that if such an eventuality occurred and he was not awarded the contract he would nevertheless be paid for his initial design work. The amount claimed was 5% of the defendant's own budget for the work which, if not specifically agreed, was a reasonable sum.

4. It was the case for the defendant that there was never any agreement between the plaintiff and himself for the payment to the plaintiff of any fees for the preliminary design work on the house. He did ask the plaintiff to prepare sketches and an estimate for the work but he found the estimate to be incomplete and too expensive. It was not accepted. The plaintiff was only entitled to be paid for that work if the designs and estimate were found to be acceptable. The plaintiff, being in the business of doing interior decoration work, must have realised that that was a risk he had to accept. Payment of any sort depended entirely on the plaintiff being awarded the contract for the whole job. So far as payment on a quantum meruit basis was concerned, there was no agreement as to what fees were payable, if any, for the design work, and as he received no benefit from the plaintiff's work there is no question of "unjust enrichment". The quantum meruit principle was only applicable to cases where the recipient of the goods or services had received a benefit and it would be unjust for him not to pay for it, in the absence of an agreement on the actual amount payable. That was not so here. The defendant also says that in previous dealings with the plaintiff in 1981 and 1982 for the re-decoration of the defendant's shop premises there was a specific agreement in writing that payment would be made for the design work. The absence of such a written document here is evidence that there was no agreement for payment for the design work in itself.

5. In his decision the trial judge found that from the first time the defendant contacted the plaintiff in connection with the decoration of the house, the plaintiff made it clear that, because of the nature and extent of the design work, it would have to be paid for, even if the plaintiff was not awarded the contract. If his quotation was accepted the cost of the design work would however be incorporated in his overall fee for the whole job. The trial judge went on to find that on subsequent occasions when the plaintiff raised the question of the payment for the design work with the defendant this was brushed aside and the plaintiff was assured that, as he would be certain to be doing the decoration work, he need not worry about being paid for his designs. He should just yet on with the designs and prepare estimates, based on the use of the best available materials. However the plaintiff was eventually told that the estimate he prepared, $1,359,234, was too expensive. He then did a further quotation, using less expensive materials, and came out with a revised quotation of $977,289. This however was also found to be unsatisfactory by the defendant and the plaintiff was not awarded the contract. The plaintiff said that he was then told by the defendant that his budget for the work was in fact $780,000. This was the first time such a figure had been mentioned. He was however prepared to accept it as a basis for estimating his fee which was 5% of that amount.

6. So far as the amount of the fee was concerned the trial judge found that there had been no specific agreement on that, apart from it being a percentage of the cost of the work. The plaintiff had earlier mentioned a fee of 10 to 15% but that had not been agreed aside by the defendant who assured the plaintiff that he would be awarded the contract and the cost of the initial design work would fall within the overall fees for the whole job.

7. So far as the previous course of conduct between the parties in 1981 and 1984 was concerned the judge found that these were much smaller contracts undertaken by the plaintiff for the defendant in his capacity as a businessman and while there had been a specific agreement on those occasions for payment for the design work, on this occasion the plaintiff accepted that it was not necessary to do so as he had been assured of getting his overall fee for doing the whole contract.

8. It was not disputed that the plaintiff produced a large number of plans, sketches, photographs, lists of materials and costings. The judge found that this went far beyond what would normally be contemplated or necessary in order to prepare a quotation for the work. He found that "this was done on the instructions of the defendant and with the alterations suggested by the defendant as part of the defendant's clarifying in his mind what he wanted and what could be done in decorating his house". He was satisfied that the plaintiff had established that, as in the past, he had told the defendant that design work done would have to be paid for if he was not to be the selected contractor. The defendant had accepted that liability.

9. As regards the amount of the fee the judge said that in the absence of any express agreement this should be calculated on a quantum meruit basis and he was satisfied that the percentage and the base figure set out in the plaintiff's claim was reasonable, having regard to the work done. He accordingly gave judgment for the plaintiff for the amount of $39,000, as claimed.

10. There were some 18 grounds of appeal raised in the appellant's notice. Most of these however were that at various points in his judgment the trial judge had come to wrong findings of fact.

11. Here the appellant faced the heavy burden, as Mr. Bernard Yuen, his counsel here and at the trial, conceded, of satisfying this court that the evidence was such that the trial judge could not reasonably have come to the findings of fact which he did. The authorities and principles as to when an appellate court should interfere with findings of fact are fully and cogently set out in Hong Kong and Shanghai Banking Corporation v. Chan flu Wan and Another [1988] 1 HKLR 457, at 474 per Fuad, V.P., and we do not need to repeat them here. The trial judge has seen and heard the witnesses and this court must be slow to conclude that his assessment of their credibility is wrong. That is especially so when it is a question of findings of fact from direct evidence, as here, not of inferences to be drawn from such findings.

12. It was fundamental to the appellant's case that the trial judge was wrong in coming to the conclusion that there was an agreement that any fee should be payable to the plaintiff for the work he did, irrespective of whether he was finally awarded the contract. The plaintiff gave evidence that when he first saw the defendant he made it clear that the design work would have to be paid for, whether or not he did the work, but if he did get the job the fees would merge into the overall costs. His evidence was that he did subsequently press the defendant several times on this point. He said "I repeatedly told him that I must be paid for my design work because it was a design involving quite a lot of things". He then prepared plans and sketches and again saw the defendant on some five to six occasions when the defendant gave him ideas and suggestions. However when asked about the fees for this work the defendant said "You just do the drawings for me carefully and rest your mind at peace for the work is yours. I am very satisfied with the decoration work, you did on the two shops for me. I will certainly engage you for this work." That evidence was supported, so far as the first occasion was concerned, by a Mr. Yuen Kwok Fai, who was called by the plaintiff, and who said he was present on that occasion.

13. This evidence was simply denied by the defendant. He said he never agreed to pay for the plaintiff's design work even if he was not awarded him the contract. He did not do so because he found the plaintiff's design unsatisfactory and his quotation too high. Moreover as a businessman he would never have agreed to a fee based on a percentage of the cost of the work when he did not know what that cost would be.

14. The judge came to the conclusion that while there was no agreement as to the amount that would be payable, there was agreement that the plaintiff would be entitled to a fee for his initial design work. While the defendant would not agree on a figure for that work it would be included in the overall cost agreed for the whole job, which the plaintiff would be contracted to carry out. He was satisfied that the work done in preparing the plans went well beyond what was normal to enable the plaintiff to give an estimate for the work. The fee finally charged was not based on the amount of the estimate but on what the defendant himself eventually told the plaintiff was his budget. We are satisfied that there was ample evidence here, which was accepted as credible by the trial judge, to justify that conclusion. On the basis of the principles set out in Hong Kong and Shanghai Banking Corporation v. Chan Yiu Wan and Another, it is certainly not one with which we should interfere and we see no reason to do so.

15. The plaintiff's second limb of appeal is that as there was no agreement on the amount of the fee, nothing is payable and the fee cannot be assessed on a quantum meruit basis as the defendant has received no benefit from the plaintiff's work and there is no question of unjust enrichment which has always been the basis for a claim relying on that principle. We do not agree with that as a statement of the law and the only relevant case cited to us, William Lacey (Hounslow) Ltd. v. Davis [1957] 2 All ER 712, is against it. Mr. Yuen tried to distinguish that decision on the basis that there the work done had benefitted the defendant, albeit to a limited extent. We do not agree and while, as always, the facts of that decision are not precisely on all fours with those here, it affords the plaintiff strong support.

16. Here the trial judge was satisfied that there was an agreement between the parties that a fee would be payable to the plaintiff for the services he rendered to the defendant. He went on to find that the amount claimed was a reasonable sum, considering the amount of work done. We saw no reason to disturb those conclusions and for these reasons dismissed this appeal. We also ordered that the plaintiff should have his costs of the appeal, on a common-fund basis.