GOLDFORD ENGINEERING LTD. v. ROUNDEL CO. LTD.

HCCT 122/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 122 OF 1997

(Formerly No. A7799 of 1997)

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J U D G M E N T

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1. At all material times, the principal contractor for the MTRC contract no. 520 for the noise enclosure installation at Tung Chung for the Lantau and Airport Railway was Gammon-Balfour Beatty J.V. ("GBB"). GBB engaged the Defendant as a contractor for the noise enclosure installation works and the Defendant sought a sub-contractor to carry out those works.

2. The Plaintiff's claim against the Defendant is for damages for breach of a contract namely, the oral sub-contract which was made on 13 December 1996. The Plaintiff's alternative claim is on the basis that the Court finds that there was no binding contract made between the parties. The Plaintiff's claim, in the alternative, is for the wasted expenditure that it had incurred on a quantum meruit basis namely, in quasi-contract and restitutionary principles.

3. The Plaintiff's case is that the parties arrived at a legally binding contract made on 13 December 1996 at a meeting between representatives of the Plaintiff and the representatives of the Defendant ("the 13 December meeting"). It is common ground that at that meeting the Plaintiff was represented by Frankie Kwa Tik Yung ("Frankie Kwa") and Bon Kok Cho Shan ("Bon Kok"). The Defendant was represented by Graham Anthony Byard ("Graham Byard") and Derek Beverly Byard ("Derek Byard").

4. The Defendant's case is that there was no legally binding contract made on 13 December 1996 or at any time thereafter. The Defendant also denies that the Plaintiff is entitled, in the alternative, to claim for the wasted expenditure on a quantum meruit basis.

5. I heard evidence from Frankie Kwa, Bon Kok and Osman Lee for the Plaintiff and Graham Byard and Derek Byard for the Defendant. I also had before me the witness statement of Li Man Kit of the Plaintiff which was agreed to be his evidence in chief. There was also placed before me a bundle of the reports of the experts but the parties have principally relied on the joint expert report of Kenneth Alan Thorpe and Timothy James Ridley dated 2 November 1999 ("the joint expert report") together with the addendum to the joint expert report dated 1 December 1999.

The issues

6. The issues that I am concerned with are:

(1) whether a legally binding agreement was made between the Plaintiff and the Defendant on 13 December 1996;

(2) if so, whether the Defendant is liable to the Plaintiff in breach of contract for any relief set out in the Re-Amended Statement of Claim;

(3) if not, whether payment is due to the Plaintiff from the Defendant on a quantum meruit basis for work done and costs incurred pursuant to the Defendant's request;

(4) if (2) or (3) above is answered in favour of the Plaintiff, what is the total amount of damages (or payment) due from the Defendant.

The evidence

7. It is common ground that prior to the events leading to this litigation the parties had never conducted business with one another. Derek Byard of the Defendant first contacted the Plaintiff with a view to finding a suitable sub-contractor for the noise enclosure installation. On 7 November 1996 Frankie Kwa and Bon Kok attended the offices of the Defendant to discuss tendering for the project. There they met Derek Byard and his father Graham Byard and it was explained to them that the Defendant wanted to sub-contract the noise installation work in relation to the MTRC contract no. 520 for the Lantau and Airport Railway at Tung Chung. The work was to supply labour and equipment for the erection of the structural steel frame and also to supply labour and equipment to install paraglas and perforated aluminium noise barrier panels ("the works"). A drawing no. 520/K/00/PWY/C60/517 Rev. O ("the drawing") was referred to and a copy of the same was given to the Plaintiff. This was a preliminary drawing. The Plaintiff was informed that there were some design problems and they were asked to prepare and submit a quotation for the works. It was understood that the Defendant would deliver the steel frames and panels to the site and the Plaintiff was to erect the frame and to fit the paraglas and aluminium noise barrier panels.

8. Bon Kok said that he was the director of the Plaintiff who would usually prepare quotations and deal with contract matters. However, as he was about to go on holiday, he left it to Frankie Kwa to prepare the quotation for the sub-contract. Frankie Kwa was the director responsible for supervising construction contracts. The quotation was prepared and was contained in the fax dated 15 November 1996 sent to the Defendant. This was signed by Frankie Kwa. The price for the works was set out as follows:

"Supply labour & equipment for the erection of structural steel frame
260 ton x @2284.00/ton =	HK$593,840.00
Supply labour & equipment to install the paraglas & perforated aluminium noise barrier panel
2460 sq. m. x @140.00/sq. m. =	HK$344,400.00
	HK$938,240.00"

9. There were other conditions set out in the quotation or tender. It was also stated that the estimated time of completion would be 45 working days.

10. On 25 November 1996, Derek Byard faxed a response to Frankie Kwa on the quotation asking for the Plaintiff's comments. It was made clear in the communication that the contractor had a deadline of 24 February 1997 for the completion of the works. It was also made clear that it was the intention to have the first delivery of finished steel work on site ready to start the erection works on 6 January 1997 and it was likely that works would need to be done during the Chinese New Year holidays starting on 6 February 1997.

11. Bon Kok gave evidence that he made a notation at the bottom of the fax dated 25 November 1996 from the Defendant which referred to the start date of 6 January and the completion day of 24 February which he calculated to be 48 days, and deducting 7 days for Sundays and public holidays that would make it 41 working days. He also drew a simple diagram which he explained showed that it would take 30 days to erect the steel frame and the installation of the glass would commence from day 15 of the erection of the steel frame and end at day 40 so that the whole of the works could be completed within 40 days.

12. On 27 November 1996, Bon Kok replied to the Defendant stating, inter alia, that:

"We envisage that if the erection work can be started on 6 Jan 97, we will be able to complete the work by 24 Feb 97 taking consideration of no work during Chinese New Year holiday ..."

It is clear that the time for completion was to be the period from 6 January to 24 February 1997. This was only 40 working days after deducting Sundays and public holidays. As explained by Bon Kok in his simple diagram at the bottom of the Defendant's fax of 25 November 1996, the whole of the works could be completed in 40 working days.

13. The next thing that happened was that there was the 13 December meeting between the parties at the Defendant's offices to discuss the works in more detail. At this meeting, Frankie Kwa and Bon Kok represented the Plaintiff and Derek Byard and Graham Byard represented the Defendant.

14. There is a dispute between the parties as to whether a legally binding agreement was reached at this meeting. It is important to consider whether there was a legally binding agreement on the two fundamental terms of the contract namely, time for completion and price.

15. Frankie Kwa gave evidence that at the 13 December meeting he told the representatives of the Defendant that the estimated time for the erection of the steel frame was 30 days. This was just for the erection of the steel frame. It was explained that the steel frame should be built from the middle of the structure outwards with two teams of workers so that the workers could work at both sides at the same time. Bon Kok confirmed this in evidence. Both Derek and Graham Byard gave evidence that although it was first mentioned that the erection of the steel frame would take 30 days, it was then discussed and agreed that with the addition of an extra gang of men, i.e. using two gangs instead of one to do the erection and installation that the whole of the works could be completed within 30 days. Graham Byard was adamant that the 30 days period for the completion of the whole works by the Plaintiff was clearly defined and agreed at the 13 December meeting. This was denied by Frankie Kwa and Bon Kok.

16. A number of other matters were also discussed at the meeting. According to Frankie Kwa and Bon Kok, Derek Byard told the Plaintiff's representatives that the materials for the steel frame would be delivered in three separate shipments. Discussion then took place about the requirement of electric power on the site as well as the plant and equipment which the Plaintiff would provide for the erection and installation of the works. It was agreed that the Plaintiff would provide 1 or 2 crane lorries and a container. These would be transported by the Defendant to the site by sea. Also, the Defendant would provide vehicles for the daily transportation of the workers between the Tung Chung ferry pier and the site. A number of other details were discussed but nothing turns on these. The Defendant's evidence did not really dispute this.

17. As regards the price for the sub-contract works, there is also a dispute between the parties as to what transpired at the 13 December meeting. Graham Byard said that he raised the question of a discrepancy in the Plaintiff's quotation of 15 November 1996. This was confirmed by Derek Byard. The discrepancy was as regards the total area of 2460 sq. m. set out in the quotation for the paraglas and aluminium noise barrier panels. It was accepted by Bon Kok and Frankie Kwa in evidence that the figure of 2460 sq. m. was an error. Bon Kok agreed in cross-examination when he was shown the drawing that the correct area should have been 4930.20 sq. m. instead of the quoted 2460 sq. m. Frankie Kwa explained that he had left the calculation to his assistant and the figure of 2460 sq. m. was the figure arrived at.

18. Graham Byard said that he had discovered the error prior to the 13 December meeting and drew it to his son's attention. He did a physical calculation and he had a mental note that the total area for the glass and aluminium panels should have been something like 5000 sq. m. Although Derek Byard said that he would imagine there would be a spreadsheet somewhere showing this calculation, the document showing the calculation physically done by Graham Byard has neither been disclosed nor produced.

19. Graham Byard said that he raised this discrepancy at the 13 December meeting but that the Plaintiff's representatives would not admit that there was an error and that the quoted rate of HK$140 per sq. m. was a rate they would apply as a schedule of rates. This was not acceptable to Graham Byard. Both Graham Byard and Derek Byard gave evidence to the effect that the discussion about the discrepancy was a heated discussion. The discrepancy was not resolved and the question of price was left in abeyance with no agreement being reached as to price.

20. Both Frankie Kwa and Bon Kok, however, denied that the question of a discrepancy in the area for the paraglas and aluminium panels was ever raised at the 13 December 1996 meeting. According to them, the quantity was never discussed at that meeting. They were both of the view that the quantity quoted in the quotation of 15 November 1996 was subject to remeasurement in any event. It was their evidence that the quantity was not discussed at the meeting nor was there any mention that the quantity was subject to remeasurement. The quotation did not expressly state that the quantity was subject to remeasurement but Bon Kok said that it was normal practice in the construction industry for prices to be subject to remeasurement.

21. According to Frankie Kwa and Bon Kok the question of the discrepancy was only first raised by Graham Byard much later at a subsequent meeting on 29 March 1997 ("the 29 March meeting"). That was the next time the parties had a meeting with Frankie Kwa and Bon Kok representing the Plaintiff and Graham Byard representing the Defendant. It was at the 29 March meeting that the discrepancy was first raised by Graham Byard.

22. After discussing the other details at the 13 December meeting, Frankie Kwa and Bon Kok said that Graham Byard asked them whether the price on the quotation could be reduced to which Bon Kok said that it was already a low price. Graham Byard then said 'OK', it was the first time in his life that he gave a sub-contract to someone without further negotiation to which Bob Kok said 'Thank you' and asked whether they could start work. Bon Kok's evidence was that Graham Byard then said 'OK, go ahead'. Frankie Kwa's evidence was to the same effect. Frankie Kwa said he understood this to be a firm agreement that the Plaintiff would carry out the works approximately 3 weeks later and that all necessary arrangements should be made. Frankie Kwa also said that he took what Graham Byard said to mean that they could start to prepare their resources as the project had to be commenced in about 3 weeks time.

23. Bon Kok also said that he asked Graham Byard whether the Defendant would issue a confirmatory work order and Derek Byard said that his father would issue one to the Plaintiff later. Both Frankie Kwa and Bon Kok considered that there was a binding verbal agreement made with the Defendant for the Plaintiff to do the works.

24. Graham Byard denied ever saying 'OK, go ahead' or words to that effect. His evidence was that although there was agreement that the works would be completed in 30 days, no agreement was reached as to price as the question of the discrepancy in the area to be covered by paraglas and aluminium panels was not resolved. He did not consider that there was a binding agreement and it was his understanding that a verbal agreement was not a binding agreement and that it could only be binding when a written contract was drawn up.

25. Frankie Kwa and Bon Kok impressed me as honest and credible witnesses. I cannot say the same for Derek Byard and Graham Byard. I did not find their evidence credible. On the dispute of fact as to what transpired at the 13 December meeting, I believe Frankie Kwa and Bon Kok and accept their evidence. I disbelieve Derek Byard and Graham Byard and reject their evidence.

26. Both Graham Byard and Derek Byard made their own contemporaneous notes of the 13 December meeting. It is surprising that neither of them recorded any discussion about what they said was a heated discussion on the discrepancy as to the area to be covered by paraglas and aluminium panels. If indeed such a discussion did in fact take place I would have expected them to make a note of it. This was after all an important matter going to a fundamental term namely, the price for the works. It is also surprising that neither of them recorded that the parties had reached agreement that the time for the completion of the whole works was 30 days. This was also an important matter going to the other fundamental term namely, the time for completion of the works. The written contemporaneous notes of the 13 December meeting made by both Graham Byard and Derek Byard do not support their version of events on the two important terms of price and completion time.

27. Also, on 16 December 1996 Derek Byard sent a fax to the Plaintiff enclosing the preliminary schedule for the works and asking the Plaintiff to check through the same and to amend it as necessary. Although the 6 January 1997 date was not a firm commencement date, on the preliminary schedule it was provided that the works were to commence on 6 January 1997 with completion to around 12 February 1997. The Plaintiff immediately responded on the same day by fax with, inter alia, comments on the preliminary schedule and noting that the completion of the works would be on 24 February 1997. The period from 6 January 1997 to 24 February 1997 was the same period as set out in the fax dated 27 November 1996 from the Plaintiff to the Defendant and on the Plaintiff's case, there was already an agreement reached that the time for completion would be 40 working days being the period from 6 January 1997 to 24 February 1997. The Defendant did not dispute the Plaintiff's response by fax. This, in my view, supports the Plaintiff's case that the Plaintiff never agreed to complete the works within 30 days. Derek Byard said in evidence that he did not pick up on the fact that the Plaintiff had put in the date '24 February 1997' in its response to the Defendant. I do not believe him. It was an immediate response to an earlier fax of the same date from the Defendant asking the Plaintiff to make amendments as necessary. That the Plaintiff did and I do not believe Derek Byard when he said that he did not pick this up.

28. Both Frankie Kwa and Bon Kok said that the question of the discrepancy as to the area to be covered by paraglas and aluminium panel was first raised at the 29 March meeting between them and Graham Byard. Graham Byard agrees that it was raised at that meeting but said that it was first raised at the 13 December meeting. Between 13 December 1996 and 29 March 1997 there were a number of written communications between the parties regarding the works. It was clear that the commencement of the works was delayed through no fault of the Plaintiff or the Defendant but the parties did communicate with each other as regards factory visit, site visit, mobilisation of plant and equipment, preparation of method statement and other matters concerning the works. Yet in none of the written communications prior to the 29 March meeting was there any mention by the Defendant of the serious discrepancy in the Plaintiff's quotation in the area to be covered by paraglas and aluminium panels. The error was simply not mentioned in any of the written communications for this whole period until after the 29 March meeting. If indeed the error or discrepancy had been raised and left unresolved at the 13 December meeting it is surprising that no mention was made of this; this went to a fundamental term, namely, the price.

29. On 1 April 1997 the Defendant through Graham Byard sent a fax to the Plaintiff stating, inter alia:

"RCL admits that we had overlooked GEL's quantity for the Paraglas & Tubosider products and this was the cause of serious concern since the overall value of GEL's quotation would be considerably higher than those of their competitors using GEL's schedule of rates for this item. This item was the main subject of our joint meeting on the 29th March 1997."

This was faxed to the Plaintiff. There is no suggestion there at all that the discrepancy was first raised at the meeting on 13 December. In my view, what Graham Byard stated in the fax as set out above supports the Plaintiff's version that the error or discrepancy had been overlooked and was first raised at the 29 March meeting which was the meeting just before the fax of 1 April 1997 was sent and the very meeting referred to therein.

30. Where there is a conflict in the Plaintiff's evidence and the Defendant's evidence, I prefer the Plaintiff's evidence. As I have said, Frankie Kwa and Bon Kok struck me as honest and credible witnesses. Derek Byard and Graham Byard were not credible witnesses.

Was there a legally binding contract?

31. The Plaintiff's case is that the terms of the sub-contract were set out and evidenced by the Plaintiff's fax to the Defendant dated 15 November 1996 and as regards completion time, the Defendant's fax of 25 November 1996 and the Plaintiff's fax of 27 November 1996. I am satisfied on the evidence of Frankie Kwa and Bon Kok, which I accept, that the Plaintiff and the Defendant made an oral agreement at the 13 December meeting for the Plaintiff to carry out the works. The price was set out in the Plaintiff's letter dated 15 November 1996. This was at the unit rates and at the price set out therein. The time for completion was for the period from 6 January to 24 February 1997 which, after deducting Sundays and public holidays, was a period of 40 working days. This was a counter-offer made by the Plaintiff from the original 45 working days set out in the 15 November 1996 quotation. I find that there was never an agreement to complete the whole of the works within 30 working days. The Plaintiff's offer was accepted by Graham Byard at the meeting when after discussing the details with the Plaintiff he said to Bon Kok 'OK, go ahead'. This was, in my judgment, an acceptance by the Defendant of the Plaintiff's terms as to price and time for completion of the works. I am satisfied that the parties intended to enter into legal relations. In my judgment, there was a legally binding agreement made orally between the parties on 13 December 1996.

32. Although both Frankie Kwa and Bon Kok did at some stage in their evidence say that they regarded the completion time under the contract to be 45 days, I am satisfied that they were mistaken when they said this. The time for completion under the contract was in fact 40 working days being the period from 6 January to 24 February 1997 after deducting Sundays and public holidays.

33. The Plaintiff's witnesses were also cross-examined about the minutes of the Plaintiff's monthly meeting no. 54 dated 28 December 1996 where Osman Lee is recorded as having said that the works were scheduled to commence on 6 January 1997 but would have to be deferred until the Plaintiff received a letter of intent and sub-contract document from the Defendant. They were also cross-examined about other documents like the fax dated 31 January 1997 from the Plaintiff to the Defendant stating that it was not in a position to make any comment on the Defendant's earlier fax of 28 January 1997 subject to, inter alia, "issue of work order/letter of intent to us", and the letter dated 2 April 1997 from the Plaintiff to the Defendant which stated, inter alia, that the method statement would be submitted to the Defendant after receiving the Defendant's "work order/letter of intent".

34. I am satisfied that the request for a work order or letter of intent in the documents that the Plaintiff's witnesses were cross-examined on were made on the basis that it was obviously better to have a document confirming the oral agreement especially since the Plaintiff and the Defendant had never done business before. That does not mean, however, that there was no legally binding contract unless and until a written work order or letter of intent was issued. As Bon Kok said, without a work order the Plaintiff would still have to carry out the works if required by the Defendant. I accept this. As I have said, there was already a legally binding agreement made orally between the parties on 13 December 1996.

35. It is also pertinent to note that the Defendant, in its fax to the Plaintiff dated 6 January 1997, also informed the Plaintiff that it was preparing the work order which would be forwarded to the Plaintiff as soon as possible. This was not qualified in any way nor was it said to be dependent on a final agreement to be reached on the terms.

36. Osman Lee, the Plaintiff's project engineer for the works, also gave evidence, which I accept, that on or about 14 December 1996 he was informed by Frankie Kwa that the Plaintiff had succeeded in a tender for the works for the Defendant. He was told that the works would commence on 6 January 1997 and he was asked to make the necessary preparations. It was decided by the Plaintiff that Conquer Engineer Ltd ("Conquer") should sub-contract the works and Conquer was asked to submit a quotation. Frankie Kwa denied that the Byards had made it plain at the 13 December meeting that the Defendant would not accept a sub-contractor and I also accept Frankie Kwa's evidence on this. Osman Lee also considered the Defendant's preliminary schedule sent to the Plaintiff on 16 December 1996 and made certain suggestions as regards site visit, mobilisation of plant and equipment and this was noted on the preliminary schedule faxed back to the Defendant on 16 December 1996. He accepted Conquer's quotation on 18 December 1996. On or about 18 December 1996 he also told the Plaintiff's plant supervisor Leung Ming Kai to make the required plant and equipment available for the works which at that stage was still expected to commence on 6 January 1997. He also prepared the method statement for the works but such could not be finalised without a site visit to Tung Chung. He was unable to contact Derek Byard between 20 December 1996 and the beginning of January 1997 and it was expected that there would be a delay in the commencement of the works.

37. After the receipt of the Defendant's fax of 6 January 1997 informing the Plaintiff of a delay in the commencement of the works, Osman Lee was informed by Derek Byard in January 1997 that the delay was due to the foundation sub-contractor's fault. He also gave evidence about the factory visit to Guangzhou to inspect the mock up of the noise barrier on 18 February 1997 where Graham Byard was also present and the site visit on 19 March 1997 at Tung Chung where Derek Byard was also present.

38. Frankie Kwa also gave evidence about the steps taken and the preparations that were made for the works. On 6 January 1997 and again on 28 January 1997 the Defendant wrote informing the Plaintiff of delays in the commencement of the works. There were further communications between the Plaintiff and the Defendant in February and March 1997 concerning the factory visit to Guangzhou, the site visit, mobilisation of plant and equipment and further delays in the commencement of the works.

39. On 29 March 1997 Frankie Kwa and Bon Kok met Graham Byard at the Defendant's offices. Frankie Kwa and Bon Kok said that at the 29 March meeting Graham Byard drew the discrepancy or error in the area of the paraglas and aluminium panels as set out in the Plaintiff's quotation to their attention for the first time.

40. They confirmed that their calculation was different and confirmed that the rates would apply. The quotation had a rate of $140 per sq. m. for the area to be covered by paraglas and aluminium panels.

41. Frankie Kwa said that his immediate response was that the rates and conditions would be maintained as he felt this would be advantageous to the Plaintiff. He also said that Graham Byard agreed to issue the outstanding work order after the holidays.

42. Bon Kok also said that it was confirmed that the final contract sum would be subject to remeasurement.

43. The Plaintiff's letter dated 1 April 1997 faxed to the Defendant set out the matters discussed at the meeting. By its fax dated 2 April 1997 from the Defendant to the Plaintiff, the Defendant negotiated for a new unit rate for the area to be covered by paraglas and aluminium panels. The Defendant proposed $120 per sq. m. and by the Plaintiff's letter dated 2 April 1997 the Plaintiff revised the unit rate to $130 per sq. m. This was acceptable to the Defendant and was subject to remeasurement as confirmed in the Defendant's fax to the Plaintiff dated 8 April 1999. There were also negotiations for the cost of additional works.

44. Graham Byard denied that the question of the error or discrepancy in the area to be covered by paraglas and aluminium panels was raised for the first time at the 29 March meeting. He gave evidence that in the correspondence with the Plaintiff in early April 1997 he was trying to get the Plaintiff to agree to stick to the time of completion of 30 days which had been agreed at the 13 December 1996 meeting. He said that as at 8 April 1997 the price had been finally and completely agreed after negotiation between the parties. He also agreed that the price would be subject to remeasurement. The Plaintiff was unwilling to commit to completion of the works within 30 working days but eventually agreed, as confirmed by the Plaintiff's letter dated 9 April 1997 faxed to the Defendant, that it could reduce the time for completion to 35 working days. Frankie Kwa said that it was not possible to complete the works within 30 days and he refused to agree to this despite being offered $50,000 as an acceleration bonus. Graham Byard said that he offered $50,000 to the Plaintiff not as an acceleration bonus but purely to get the Plaintiff to stick to its agreed time for completion of 30 working days.

45. It is plain that by 8 April 1997, as Graham Byard said, agreement had been reached with the Plaintiff on all the outstanding matters and Graham Byard said that he felt the contract could go ahead but for the refusal of the Plaintiff to stick to the 30 days agreed completion period. Graham Byard said that if Frankie Kwa had agreed to 30 working days for completion of the works on 9 April 1997 he could have produced a contract and he may even have gone ahead and signed the acceptance clause at the end of the Plaintiff's letter dated 8 April 1997 to the Defendant. I do not believe that the Plaintiff ever agreed to complete the works within 30 working days at the 13 December meeting or at any other time. I see no plausible reason why the Plaintiff should refuse to accept a further $50,000 if it had in fact agreed to complete the works within 30 working days. I find that the offer of $50,000 by the Defendant to the Plaintiff was indeed an acceleration bonus to try and get the Plaintiff to agree to a period for completion of the works shorter than the 40 working days period which had been agreed. I believe and accept the Plaintiff's evidence and disbelieve and reject Graham Byard's evidence on this. I do not believe that he would have offered an extra $50,000 if indeed there had already been an agreement to complete the works within 30 working days. This, after all, was not an insignificant sum in view of the total contract sum which, as the Plaintiff's and Defendant's letters of 8 April 1996 accepted, was $1,178,580 without taking into account the cost of the additional works.

46. I do not think anything turns on the fact that the discrepancy or error was not pointed out until the 29 March meeting. There was already a legally binding contract made between the parties on 13 December 1996. After the parties discovered the error, the contract was not avoided. Instead, the parties renegotiated and reached agreement on the unit rate to be applied. This was varied for the area to be covered by paraglas and aluminium panels from the rate of $140 per sq. m. to $130 per sq. m. and it was also expressly agreed that the final contract sum would be subject to remeasurement.

Was the Defendant in breach?

47. The Defendant engaged another sub-contractor on 11 April 1997 to perform the works. By the Defendant's letter dated 18 April 1997 the Plaintiff was informed that another contractor had been engaged to do the works. The Defendant has, in my judgment, acted in repudiatory breach of its contract with the Plaintiff and is liable to the Plaintiff in damages.

48. In view of my finding that there was a legally binding contract between the parties made on 13 December 1996 and that the Defendant is in breach of contract, it is not necessary for me to consider the Plaintiff's alternative claim based on a quantum meruit.

Quantum

49. As the Defendant was in breach of contract the Plaintiff is entitled to damages. Mr Carolan, for the Plaintiff, submitted that the Plaintiff elected to claim wasted expenditure instead of loss of profits arising out of the Defendant's breach of the contract. The claim for loss of profits set out in the Re-amended Statement of Claim was abandoned and the Plaintiff relied entirely on wasted expenditure. As regards wasted expenditure, it is stated in Keating on Building Contracts, 6th Edition at p.215:

"Such losses may be recoverable if they are reasonably in the contemplation of the parties as likely to be wasted when the contract is entered into and the innocent party elects to claim wasted expenditure instead of loss of profits. A plaintiff claiming damages for breach of contract has an unfettered choice whether to claim loss of profits or wasted expenditure."

(See also para. 51 McGregor on Damages 16th Edition)

50. I am satisfied that the Plaintiff is entitled to claim for the expenses which have been wasted.

51. By entering into a contract on 13 December 1996 and asking the Plaintiff to go ahead, it was clearly within the reasonable contemplation of the Defendant that the Plaintiff would incur expenses in preparation for the works.

52. In December 1996 it was still expected that the works would commence on 6 January 1997 although it was not a fixed date. Even when there was a delay in the commencement date it was nevertheless anticipated that the works would soon commence. For instance, by the letter dated 28 January 1997 the Defendant informed the Plaintiff that they envisaged starting the installation "within the next few weeks". It was, in my judgment, within the reasonable contemplation of the parties that the Plaintiff would have to incur expenses to get ready for the commencement of the works. Also, the project involved work in connection with the airport and Frankie Kwa said that the plant and equipment for the works had to be modified for instance, by adding flashing lights, flag posts, siren and the modifications were actually done to the plant. In view of the delays from time to time from January to April 1997 on the commencement date for the works, it was, in my view, reasonable to keep the plant and equipment on hold for the contract with the Defendant. Osman Lee also said that when he was told on 6 January 1997 that there was to be a delay in the commencement of the works, the Plaintiff had already dedicated plant and equipment for the works. I accept their evidence. It was reasonable, in my judgment, for the Plaintiff to keep the plant and equipment on hold for the works and not use them for other projects.

53. The Plaintiff's claim is as set out in the re-amended costs breakdown in the Re-amended Quantum Schedule served with the Re-amended Statement of Claim ("the costs breakdown").

54. As regard item 1A in the costs breakdown, the lifting frame in sum of $4,560 is allowed. Osman Lee gave evidence that the quotation in the sum of $4,560 from Pioneer Technical Services for the design of the lifting frame was paid. The Plaintiff is entitled to recover this sum.

55. As regards items 1B, C and D in the costs breakdown, these are for the cost of materials and expenses for the lifting frame. The only satisfactory evidence adduced in respect of these items was the payment of the two invoices which was agreed, namely the invoices dated 12 April 1997 and 15 April 1997 from Conquer in the total sum of $33,150. I allow this sum in respect of the materials and expenses for the lifting frame.

56. As regard items 2 and 3 in the costs breakdown for the cost of materials and expenses for the supporting frame, the shim plate and wedge, the only satisfactory evidence adduced was the purchase order from the Plaintiff to Hung Kee Hong dated 9 April 1997 in the sum of $2,166. I allow this sum.

57. The Plaintiff's plant and equipment which had been ready for the commencement of the works on 6 January 1997 was left idle and was put on hold waiting for the commencement of the works until 12 April 1997, a period of 3.23 months. I have held that it was reasonable for the Plaintiff to keep plant and equipment on hold for the contract with the Defendant. In respect of items 4A-D in the costs breakdown, I will only allow items 4A and C namely, in respect of the 30T hydraulic crane and the 10T crane lorry. The other two items namely, 4B and D in respect of a 35T hydraulic crane and 12T flat lorry were not specified in the quotation of 15 November 1996 and there is no satisfactory evidence to show that they should have been included as equipment to be provided under the contract. The quantification of the cost for the 2 items allowed is contained in the joint experts' report which I accept. For item 4A, I allow the sum of $103,037 ($31,900 x 3.23). For item 4C, I allow the sum of $71,292.56 ($22,072 x 3.23).

58. As regards items 5 and 6 in the costs breakdown for the cost of other equipment, tools and hired scaffolding, I allow the sum of $4,300 only which I regard as reasonable based on the joint experts' report which I accept.

59. As for the claim under items 7 and 8 in the costs breakdown for the site visits and the preparation of method statement, both experts agreed that these items should be included with the allowance for head office overhead and no award should be made for these items. I do not propose to allow anything for these items.

60. Therefore, the total amount of damages by reference to the costs breakdown is follows:

Item 1A	$4,560.00
Items 1B, C, and D	$33,150.00
Item 4A	$103,037.00
Item 4C	$71,292.56
Items 5 and 6	$4,300.00
Total	$216,339.56 =========

I give judgment to the Plaintiff against the Defendant in the sum of $216,339.56. I also award interest on this sum at 1% above the prime rate from 18 April 1997 to judgment and thereafter at judgment rate.

61. I make an order nisi that the Defendant do pay the Plaintiff its costs of the action.