DORFIT PROPERTIES LTD v. FUJITA CORPORATION

CACV 346/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 346 OF 2002

(ON APPEAL FROM HCCT NO. 127 OF 1999)

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J U D G M E N T

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Hon Rogers VP:

1. This was an appeal from a judgment of Burrell J given on 26 July 2002. The matter before the judge was a claim by the plaintiff under a guarantee. By the date of trial, the amount claimed had been reduced to the sums of HK$5,087,052.71 and HK $734,145 plus interest. The plaintiff also claimed a declaration that the defendant should indemnify it "against all losses, damages, costs and expenses suffered or incurred by reason of any act, default or omission on the part of" Franki Contractors Limited ("Franki") (renamed B+B Construction Co. Limited) ("B+B").

2. The judge found in favour of the defendant and dismissed the plaintiff's claim. He did so on 2 grounds. In the first place he held, as a matter of construction, that the guarantee in question did not cover the claim made by the plaintiff. In the second place, the judge went on to consider a second ground of defence, namely promissory estoppel. That issue did not have to be decided in view of the judge's conclusion in respect of the first issue. Nevertheless, the judge held that the plaintiff's case failed on that basis also. At the conclusion of the hearing, this Court reserved its decision.

Background

3. The plaintiff is a property developer. In 1995 it acquired a site in Blue Pool Road for redevelopment. The plaintiff's intention was to build a 25 storey residential block on the site. By Articles of Agreement dated 28 November 1996, the plaintiff contracted with Franki for the construction of the foundation and basement up to and including part of the first floor of the building. The terms of the Articles of Agreement are not relevant for the purposes of the present dispute save that clause 17(1)(b) provided that Franki was not permitted to assign the contract without the written consent of the plaintiff. For convenience the work to be carried out under the terms of the Articles of Agreement will be referred to as "the Blue Pool Road project" and the Articles of Agreement will be referred to as "the Contract".

4. The defendant is a Japanese company. In 1996, it wanted to become involved in the Hong Kong construction industry. It approached Franki. On 16 December 1996 Franki and the Defendant entered a Joint Venture agreement with regard to Franki's undertaking in respect of the Blue Pool Road project. A business was duly registered under the name Franki-Fujita Joint Venture. The Joint Venture agreement recited the fact that Franki had entered the Contract with the plaintiff. The work to be carried out under the Contract was referred to as the "Works" and the Contract was referred to as the "Contract". The Joint Venture agreement provided that the defendant should have a 30% interest in "the rights, profits, benefits and obligations, risks, costs, liabilities and expenses, arising out of the Works or in any other way connected with the Works". The agreement went on to provide that the leading party in the Joint Venture would be Franki. Importantly, the agreement also provided that Franki should be responsible for the execution, completion and maintenance of the Works in accordance with the Contract. The Joint Venture agreement thus created rights and liabilities between Franki and the defendant. It did not create any rights and liabilities between the defendant and the plaintiff. Importantly, it did not constitute an assignment by Franki of the contract for which the plaintiff's written consent was required under clause 17(1)(b) of the Contract.

5. By letter dated 20 December 1996, Franki requested the plaintiff to give its written consent, pursuant to clause 17(1)(b), to the assignment of its contract to the Joint Venture. There was, evidently, some discussion amongst the parties and their advisers as to what and how any change in the contractual arrangements might take place. This was not a matter on which evidence was relevant at the trial, but there is correspondence and other documentation which indicates that, initially, the plaintiff probably favoured cancelling the original contract and entering a new contract with the Joint Venture and, at the same time, having joint and several guarantees given by the holding companies. There is indication in the documents that it was then appreciated that such a course would cause problems. Franki was the statutory registered contractor and the Joint Venture was not. Consent for bored piles had already been obtained. If there were to be any change in the contractor this would cause delay.

6. On 20 February 1997 Franki, who by then were renamed B+B Construction Co. Limited, were informed by Levett & Bailey, the quantity surveyors for the Blue Pool Road project, that the plaintiff agreed to the proposal that there should be an assignment of the existing contract to the Joint Venture subject to the provision of a joint and several guarantee from both of the parent companies. A copy of the proposed guarantee was attached to the letter of 20 February. There is one significant difference between the draft guarantee attached to that letter and the guarantee as it was eventually executed. In keeping with the requirement in the letter that the guarantee had to be provided by both parent companies, Bilfinger + Berger Bauakfiengesellschaft Group was the first named guarantor in the draft. The guarantee that is the subject of this action, was dated 24 March 1997. In that document B+B was the first named guarantor.

7. From a comparison of the 2 documents, it may thus be deduced that B+B's parent did not give a guarantee. Whether or not that was noticed at the time is not clear. B+B sent a signed copy of the guarantee to the quantity surveyors under cover of a letter of 29 April 1997. That was returned by letter of 5 May 1997 with the comment that it was not acceptable for 2 reasons:

(1) The guarantee was not signed and sealed by "B+B"

(2) The guarantee was required to be from "Fujita, Japan not Hong Kong Shanghai Branch signing the guarantee". The power of attorney together with a lawyer's certification was required.

The guarantee was only finally sealed by the defendant in July 1997. By letter of 17 July 1997, Levett and Bailey sent the original of the Joint Venture guarantee to the plaintiff stating that it had been authenticated and the company chop had been certified. That letter also expressed the view that the guarantee was "generally in order". But it cannot pass without comment that that observation was, of course, apparently made by quantity surveyors. Since the terms of the guarantee, the subject of the action, are important, they are set out in full below.

"JOINT-VENTURE GUARANTEE

THIS GUARANTEE is made the 24th day of March, 1997 between B+B CONSTRUCTION Co Ltd whose registered address is at Franki Centre, 320 Junction Road, Kowloon Tong, Hong Kong and FUJITA CORPORATION, company incorporated in Japan whose registered address is at 4-6-15, Sendagaya, Shibuya-ku, Tokyo 151, Japan (hereinafter collectively called 'the Guarantors') of the one part and Dorfit Properties Limited whose registered address is at Suite 1006, 10/F., Two Exchange Square, 8 Connaught Place, Central, Hong Kong (hereinafter called 'The Employer').

WHEREAS

1. This Guarantee is supplemental to the Contract for the construction of foundation and basement for the proposed residential development at 5-7 Blue Pool Road, Happy Valley, Hong Kong (hereinafter called 'the Contract') dated the 28th day of November 1996 and made between the Employer of the one part and Franki Contractors Limited (now incorporated as B+B CONSTRUCTION Co Ltd) the Contractor as defined in the conditions of Contract (hereinafter called 'the ex-Contractor') of the other part whereby the ex-Contractor agreed to execute and maintain the Works more particularly referred to in the Contract and in accordance with the provisions thereof :

2. In consideration of the Employer's consent allowing the ex-Contractor to assign the Contract to the Joint Venture ('FRANKI FUJITA JV') formed between B+B CONSTRUCTION Co Ltd and FUJITA CORPORATION on 16th December, 1996 (hereinafter called 'the Contractor'), the Guarantors hereby agree to guarantee jointly and severally the due performance of the Contract in the manner hereinafter appearing.

NOW the Guarantors hereby agree with the Employer as follows :-

1. The Guarantors hereby irrevocably and unconditionally guarantee to the Employer the due and punctual performance by the Contractor, its personal representative, its successors and assigns, under the Contract of each and all the obligations, and duties and undertakings of the Contractor under and pursuant to the Contract when and if such obligations, duties and undertakings shall become due and performable according to the terms of the Contract.

2. The Guarantors will indemnify the Employer against all losses, damages, costs and expenses suffered or incurred by it by reason of any act, default or omission on the part of the Contractor in performing and observing its obligations under and in connection with the Contract.

3. The Guarantors shall not be released from their obligations under this Guarantee by reason of the unenforceability, invalidity or termination of the Contract for any reason whatsoever.

4. The Guarantors shall be jointly severally liable for their obligations under this Guarantee and all references to the Guarantors shall take effect as references to all the Guarantors or any of them.

5. This Guarantee shall be construed and governed in accordance with the laws of Hong Kong."

8. There is no dispute that the Blue Pool Road project was carried out by B+B. In February 1998, Harris & Sutherland, who were the consulting engineers for the Blue Pool Road project, wrote to the "B+B/Fujita JV" advising it that the time for completion of the works had passed and that the plaintiff was entitled to liquidated damages as from 19 February. It might be noted in passing, that that letter has the distinction of being one of the few, if not the only, pieces of correspondence addressed to the Joint Venture, as such. There would appear to have been an extension until March. That was referred to in a letter of 25 June 1998 from the consulting engineers and addressed to B+B and the defendant individually. On 26 June 1998, the consulting engineers wrote, again addressing the letter to B+B and the defendant individually, complaining that "you" had ceased work and left the site with the contract unfinished and in need of urgent remedial work in respect of "short piling".

9. That letter was followed on 29 June 1998 by a letter from the plaintiff to the defendant. The terms of the letter appear to me to be important in view of the matters which were raised in this court. It read as follows:

"5-7 Blue Pool Road, Happy Valley, Hong Kong

Foundation and Basement Contract

Joint Venture Guarantee dated 24 March 1997

We write to inform you that the contractor has wholly suspended the carrying out of the Works under the Contract dated 28 November 1996. A copy of Harris and Sutherland (Far East) Limited's letter dated 26 June 1998 to your Hong Kong office is enclosed.

Pursuant to the above joint venture guarantee we hereby require you to complete the due and punctual performance of the Contract and all the obligations, duties and undertakings of the contractor thereunder including, without prejudice to the generality of the foregoing, the completion of the works and the rectification of any defects. We also require you to indemnify us against all losses, damages, costs and expenses suffered or incurred by us."

It will be noted that the claim was founded on the Joint Venture guarantee. It was not put on the basis that the defendant was a contracting party responsible for carrying out the Blue Pool Road project.

10. As the judge recorded, it was not surprising that matters became serious. On 29 September 1998 Fujita agreed to carry out the remedial works, but in their letter of the same date, addressed to Harris & Sutherland the consulting engineers, they made it clear that they would perform the remedial works as soon as it was learnt that consent had been obtained from the Building Authority for those works to proceed, but without any acceptance on their part that they were under any contractual obligation to do so. Their letter continued:

"By way of explanation of our position, please note that our involvement in the project as the joint venture partner of B+B is confined to the provision of certain funds to assist with the financing of construction. In return, we received (under our joint venture agreement) an entitlement to a 30% share in the Contractor's profits arising from the project (and a corresponding obligation to contribute 30% of any losses suffered). It was never intended that we would take on responsibility for execution of the Contractor's work."

11. The defendant not only completed the remedial works by 22 December 1998, but went on, later, to agree to complete the foundation and basement works. Those were completed on 29 June 1999.

12. The short piling by B+B caused a delay in the completion of the contract works. The plaintiff was able to recover some of its losses by calling on a bond of $3.1 million in respect of B+B's performance.

This action

13. This action was commenced by writ dated 19 October 1999. The statement of claim was endorsed on the writ. Although reference is made in the re-amended statement of claim both to the Contract and to the request made in December 1996 for written consent under clause 17(1)(b) to the assignment of the Contract to the Joint Venture, the claim in the writ and statement of claim was a claim under the guarantee. It was in respect of the unrecovered losses. There was no suggestion either in the statement of claim, whether as originally filed or as amended, or in any other pleading, that there had been an assignment, whether equitable or legal, of the Contract to the joint venture.

The judgment below

14. The judge's conclusion as to the construction of the guarantee may be summarised shortly. In the first place he pointed to the important distinction, which the recital made clear, that B+B was referred to in the guarantee as the ex-Contractor and the Joint Venture was referred to as the Contractor. Thus paragraph 1 of the guarantee provided that the Joint Venture partners would guarantee the performance of the Joint Venture's obligations and duties and undertakings under the Contract, that is the contract between B+B and the plaintiff. Furthermore, paragraph 2 of the guarantee provided that the Joint Venture would indemnify the plaintiff in respect of any act, default or omission on the part of the Joint Venture in performing and observing its obligations under and in connection with the Contract. Since the Joint Venture was not a party to and never had any obligations under the Contract, the claim failed. The judge summarised his conclusions in paragraph 18 where he said:

"In short, the guarantee contemplated a contract which never came into existence. That is, a contract in which the Joint Venture would perform the contract and acquire obligation etc. which would be performable by the Joint Venture. In fact, B+B performed the contract on its own until it left the site and Fujita finished the works by agreement without accepting any contractual liability to do so. Obligations etc. never became performable by the Joint Venture and B+B's obligations under the contract were never transferred effectively to the Joint Venture. The contract under which B+B carried out its defective works remained a contract between Dorfit and B+B. Fujita did not guarantee the performance of that contract. The rhetorical question is : why should Fujita guarantee the performance of a contract to which it was not a party and over which it had no control?"

15. In respect of the promissory estoppel argument, the judge said that it was necessary for the defendant to persuade the court that the answer to all the following questions were in the affirmative:

"(i) Did Mr S.T. Lee represent to Fujita that if they were to carry out the remaining works after B+B left (after Fujita had completed the remedial works) Dorfit would not seek any liquidated damages for delay against Fujita?

(ii) If he did, did Fujita rely on the representation when it decided to take on the remaining works?

(iii) If they did, is Dorfit estopped from seeking liquidated damages against Fujita under the Joint Venture guarantee?"

16. Importantly on this topic, the judge heard evidence from Mr Samuel Tak Lee, on behalf of the plaintiff, and also a Mr Suganuma and Mr Okumura, on behalf of the defendant. Whilst hearing their evidence he also had before him the copies of notes which had been made by Mr Lee, on the one hand, and Mr Suganuma, on the other. His conclusion as to the three witnesses was summarised in paragraph 26 of his judgment where he said:

"Mr Lee was an earnest and sincere witness but on this issue I felt compelled to rely on the evidence of Mr Suganuma and Mr Okumura. I found all Fujita's witnesses to be most impressive. I found them to be very careful businessmen of integrity. Witnesses whose evidence could be relied on."

17. The judge came to the conclusion that Mr Lee had said "L.D will be zero" in the context of the defendant agreeing to complete the contract. He held that the defendant had relied upon that representation when it decided to continue with the remaining works and that it had incurred very substantial costs and expenses in so doing. As a result, the plaintiff was estopped from seeking liquidated damages under the Joint Venture guarantee.

This appeal

18. On this appeal, Mr Cooney, on behalf of the plaintiff, took issue on both grounds upon which the judge held in the defendant's favour. The kernel of the case on behalf of the plaintiff on the first issue was that the guarantee should be interpreted on the basis that what was being guaranteed was the performance of the Contract by the Contractor and that, in the context, that meant the performance of the Contract by B+B.

19. In paragraph 20 of the judgment the judge referred to the court's acceptance that there was neither any novation nor effective legal assignment by which obligations under the Contract could have been transferred. When asked whether the plaintiff accepted that there had been no assignment, at first, Mr Cooney said there had been an equitable assignment. The point immediately arose that the matter had neither been raised in the notice of appeal nor in the skeleton arguments, nor was it apparent on the pleadings. Mr Reyes SC, on behalf of the defendant, rightly pointed that it was a question of fact as to whether there had been an equitable assignment. As such, since it had not been pleaded that there had been an equitable assignment and the matter had not been focused on at trial, there was no material for a court hearing an appeal to decide that there had been an equitable assignment. Mr Reyes pointed out that it would be necessary for there to be evidence from B+B that it had been their intention that there was an assignment. That was necessary because such an intention could not be deduced from the Joint Venture agreement alone: there was no clear wording in that of an intention to assign and, hence, the proposition would, at the least, have to be put to a witness.

20. I consider that Mr Reyes is correct. There are a number of matters which would need to be considered in deciding the question as to whether there had been an equitable assignment. As pointed out above, it was the plaintiff's requirement that the guarantee should be provided by both parent companies. In the outcome the guarantee was, apparently, only provided by B+B and, seemingly, not by its parent. It would be necessary for the plaintiff to show that despite the fact that its requirement of a parental guarantee had not been fulfilled it still, nevertheless, consented to the assignment. As pointed out above, whether the significance in the difference between B+B and Bilfinger + Berger Bauakfiengesellschaft Group was something of which the quantity surveyor had been aware is not known.

21. If the plaintiff had not given its consent to an assignment, clause 17(1)(b) prohibited any purported assignment taking effect, whether in equity or otherwise. The matter of the plaintiff's consent to substitution was, perhaps, no foregone conclusion. In Mr Samuel Tak Lee's note of the meeting of 17 February 1999, which took place between the plaintiff and the defendant, there is reference to the plaintiff pursuing B+B worldwide. Clearly a guarantee by a parent company is a very different thing from a guarantee by a local operating subsidiary.

22. Once Mr Reyes' objections were made known, Mr Cooney stated categorically that the plaintiff did not contend that there had been an equitable assignment. Had Mr Cooney not taken that position, this court would have had to consider whether to allow the point to be taken. If the point were to be taken it would, almost certainly, have entailed remitting the matter to the Court of First Instance for consideration. It could certainly be said that, if the matter had been pursued, this Court could not, on the material before it, have reached the conclusion that there had been an equitable assignment. There are a number of relevant considerations in this context. Apart from the fact, referred to above, that the plaintiff has previously always confined its claim to a claim under the guarantee, the history of the matter is consistent only with the fact that there had been no assignment of the Contract.

23. In the notes of a meeting of 5 March 1997, which was attended by representatives of B+B and Harris & Sutherland, the consulting engineers, but not by representatives of the defendant, it was recorded that

"Franki note that the name had been changed to B+B Construction Co Ltd. For contract matters, the contractor should be referred to as Franki Fujita Joint Venture. It was noted that, should problems occur with closing the venture agreement, the contractor's name would revert to B&B."

The minutes of a similar meeting of 23 April 1997 show that representatives of the defendant were present. On this occasion it is recorded at paragraph 1.2:

"L&B to finalise change from 'B+B' to 'B+B/Fujita JV' in the Contract."

This would give the impression that whatever consent was being given to the assignment, there was some understanding, at that stage, that there would be some formalisation of the change in the naming of the contracting party from B+B to B+B/Fujita JV.

24. Furthermore, although it is by no means clear that all documents relating to payment under the Contract were included in the bundles for this appeal, such documents as there were indicate that payment under the Contract was made to B+B and not to the Joint Venture. Certainly, until 25 January 1999 B+B remained the registered contractor.

25. The pre-action correspondence is likewise consistent with the claim being made on the basis of the Joint Venture guarantee alone. Harris & Sutherland, identifying themselves as "Architect under the Contract", served notice dated 25 January 1999 on B+B that unless their default was remedied their employment as "Main Contractor" would be determined. The only suggestion that the defendant was liable under the contract as a contracting party seems to have been in a letter of 21 August 1998 from Harris & Sutherland, seemingly as the consulting engineer. As already noted in paragraph 10 above, that was refuted in the defendant's letter of 29 September 1998. A year later, on 28 September 1999 the plaintiff wrote to the defendant making its claim, alleging liability under the Joint Venture guarantee. Finally, the letter before action from the plaintiff's solicitors of 14 October 1999 again put the claim on the basis of the Joint Venture guarantee. It goes on however to say:

"Dorfit did not agree to any novation of the contract. Fujita's letters dated 29 September and 8 December 1998 also state that Fujita never intended to take on responsibility for the Contractor's work. There is therefore no basis for Fujita's argument that its obligations pursuant to the Joint Venture Guarantee have not arisen."

26. These points are mentioned, also, because it was not altogether clear in the course of the oral argument that the plaintiff was not relying on an assignment of the obligations under the Contract. Mr Cooney's argument proceeded on the basis that the Joint Venture was unincorporated. As such, the defendant could not guarantee the performance of a different legal entity; what was guaranteed was the performance of the individual companies. Specifically it was said that the defendant was guaranteeing the performance of the Contract by B+B. In oral argument the matter was put a little differently:

"MR COONEY: Because of the joint venture agreement, the joint venture of Franki Fujita has taken on the obligation to set out in the manner set out such that B+B carries out the performance of the works, Fujita takes a liability towards Dorfit in connection with the performance of the works under the joint venture guarantee, provides funds as well, and such that by entering into a joint and several guarantee of the joint venture's obligations, the joint obligation, and the several obligation, is such that they have guaranteed the performance of the contract by B+B as contemplated under the joint venture agreement. And the obligations, duties and undertakings of the contractor are the obligations as set out in the joint venture agreement such that where the obligation is that of B+B, that is the obligation of the contractor, that is the joint venture.

YUEN JA: Are all those 'ex-contractor' and 'contractors' all superfluous? What's the point of differentiating between 'ex contractor' and 'contractor', it doesn't matter at all.

MR COONEY: It's a difference - a use in terminology - which recognises that the joint venture has taken on obligations under the contract.

YUEN JA: It hasn't. That's the problem. It hasn't, according to you, because there's been no novation and there's been no assignment, so that all the rights and obligations under the building contract with the employer were made solely to B+B. Because when you're talking about obligations to the employer, the only party with obligations to the employer is B+B, isn't it?

MR COONEY: It falls upon a construction of the joint venture agreement, because the guarantee refers back to the joint venture.

YUEN JA: Not to the agreement.

MR COONEY: But to understand what the joint venture as contractor is undertaking, the joint venture is defined as contractor is undertaking, one looks to the joint venture agreement and finds in that document the obligations of the contractor and the obligations which are guaranteed. I can't put it any more highly without now starting to..."

27. In my view, the construction of the Joint Venture guarantee is clear. I would refer, first of all, to the following matters:

(a) In the first place, it should be noted that this document was not a standard form document. It was a context-specific document, albeit adapted specifically for this particular Joint Venture and none other, from a standard form.

(b) In the second place, the 2nd recital clause makes clear that the Joint Venture guarantee was drafted with a view to the Contract being assigned to the Joint Venture.

(c) In the third place, there is a clear distinction drawn in the Joint Venture guarantee between the ex-Contractor and the Contractor.

(d) In the fourth place, this case can only proceed on the basis that there had never been either novation of the Contract or an assignment, whether legal or equitable, by which the obligations under the Contract had been transferred to the Joint Venture. In those circumstances, there never were any obligations or duties or undertakings by the Joint Venture. All such responsibilities remained at all times with B+B.

28. It seems to me that the points (a) to (c) above lead to the conclusion that, unless it was clearly necessary, the references in the Joint Venture guarantee to the "ex-Contractor" and the "Contractor" should be construed as they have been defined. In this context, it is, of course, clear that the term "Contractor" means the Joint Venture partnership. When, in paragraphs 1 and 2 of the guarantee, it is stated that "all the obligations, and duties and undertakings of the Contractor" and "any act, default or omission on the part of the Contractor in performing and observing its obligations", it must be taken that the reference to the "Contractor" was accurate. In other words the guarantee was given in contemplation of there being an assignment to the Joint Venture, and the guarantee was in respect of the Joint Venture's obligations as distinct from the obligations of one of the partners of the Joint Venture alone, particularly because that partner was identified by the specific reference "ex-Contractor". Thus although B+B was one of the Joint Venture partners, it was different from the partnership.

29. In this case, I am unable to see that it is appropriate to construe an obligation to provide for the default of the Joint Venture as covering the default of one of those parties, when that party is specifically and carefully defined, and the assignment of the contractual obligations contemplated by the guarantee had never taken place.

The estoppel

30. The plaintiff's case on this part of the appeal is that the defendant did not rely upon any representation given by Mr Lee on behalf of the plaintiff, but had determined to go ahead to complete the works even if the plaintiff did not waive any claim for liquidated damages. In this respect Mr Cooney drew attention to a number of factors which he said the judge had overlooked in coming to his conclusion. In so far as those factors relate to Mr Suganuma, I consider that they are irrelevant because, in the first place, Mr Suganuma was only the project manager. His official position in the defendant was manager, construction department. Mr Okumura was the General Manager of the Hong Kong office and in charge of negotiations. In the second place, Mr Suganuma's evidence is consistent with that of Mr Okumura in that if the plaintiff had not waived any claim for liquidated damages, the defendant would have stopped work.

31. In relation to the point as to whether the defendant's board had given blanket approval for the carrying out of the works, the point was clearly considered by the judge and the judge found as a fact that the defendant did rely on the representation. In paragraph 32 of the judgment the judge came to the conclusion that, although the defendant's Board of Directors in Tokyo had given their approval for the defendant to complete the works, that was not a blanket approval. It was an approval in principle. Importantly, it was subject to satisfactory and sensible terms being agreed. In this context, I have no doubt that the judge had in mind Mr Okumura's evidence on day 5 page 65 where it is recorded:

"Q: Would you agree with me that the Board's decision has been to execute the remaining works; in other words; to go on and do the remaining works and then at the same time to discuss the question of LD's?...

A; Can I look at the original document or, the Japanese one?

Q: Yes.

A: Depending on my opinion that their opinion or condition is stronger than what you said.

Q: It does not say 'proceed with the works subject to Dorfit agreeing not to impose LDs'; it does not say that, does it?

A: You said proceeding with the works?

Q: Yes.

A: In Japanese depending on my understanding before your are proceeding, before you are starting the work, this is the meaning.

Q: So the board's instructions is before you stop the work, what?

A: Discuss the damage and construction payment with Dorfit and also to reconsider for dealing with B+B very well."

32. In my view the judge was amply justified in coming to the conclusion to which he did. I see no grounds for disturbing his decision on either of the two issues. I would therefore dismiss this appeal and make an order nisi of costs in favour of the defendant.

Hon Le Pichon JA:

33. I agree.

Hon Yuen JA:

34. I agree.