MAYCAS GARMENT MANUFACTURER v. ARIES INVESTMENT LTD. AND OTHERS

HEADNOTE

Sale of Goods - Time of the essence - whether arrangements for "final inspection" of the goods beyond date fixed for delivery amounted to waiver of the date.

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J U E G M E N T

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Litton, J.A

1. This is the judgment of the court.

2. This appeal from a judgment of Jones J. given on 10 March 1992 concerns a number of contracts for the manufacture and sale of boys' pants and men's jeans entered into by the parties in 1988. The plaintiff, a firm wholly owned by Mr. Lam Kwok Hing ("Mr. Lam"), was the manufacturer. The purchaser, House of Nations Limited (3rd defendant) a New York corporation, was controlled by

3. Mr. Leon Spiegel. Wide World Exports Limited (2nd defendant) an associated company of the 3rd defendant acted as the buying agent in Hong Kong. The 1st defendant, Aries Investment Limited, another company controlled by Mr. Spiegel, held the export quotas and was accordingly the exporter in the transactions in question.

4. When legal proceedings were commenced by the plaintiff in 1988, a total of six contracts were sued upon. However, the dispute regarding two of the six contracts was compromised so that when the matter came before Jones J. for trial there were only four contracts in issue. They were referred to as the third, fourth, fifth and sixth contracts.

5. All the contracts were in the defendants' standard form containing a number of conditions printed at the back. Originally, a number of these were relied upon by the defendants. By the time the matter came before us on appeal, only one of the printed conditions remained relevant, namely, clause 1 which provided that in relation to the plaintiff's obligation to deliver the goods within the time limited by the contract, time was of the essence of the contract; if the defendants should extend the delivery date, time remained of the essence of the contract.

6. In relation to each of the contracts the material for the manufacture of the garments was supplied by the defendants. At the time the contract was signed the defendants gave to the plaintiff a cost breakdown indicating the price of the material supplied. It was the plaintiff's obligation to pay for such material at the time when the garments were shipped.

7. The 1st and 2nd defendants were Hong Kong companies. Miss Loretta Cheung was the manageress of both companies. However, for all major decisions including extensions of time for delivery of the garments, Miss Loretta Cheung had to seek instructions from the 3rd defendant in New York. As regards the plaintiff, Mr. Lam made all the major decisions, but production was in the charge of his wife Mrs. Lam. Mr. Lam's command of English was poor and in relation to problems arising from the contracts he would normally telephone the 2nd defendant and speak to either Miss Loretta Cheung or Miss Amy Chan.

Proceedings at trial

8. After a trial lasting 8 days Jones J. found that the 5th contract was discharged by the parties by mutual agreement and that the 3rd, 4th and 6th contracts were lawfully terminated by the defendants by reason of the plaintiff's breach. By subsequent proceedings the damages claimed by the defendants on their counterclaim were assessed at US$42,064.20 together with interest at the rate of one per cent over prime rate from the date of filing of the counterclaim.

Sixth Contract

9. In terms of time, the sixth contract came first. In Dated 6 April 1988, it was for the delivery on 15 June 1988, F.O.B. Hong Kong, of 900 dozen boys' 100% cotton pigment canvas pants. The defendants delivered the fabrics (referred to in the evidence as "piecegoods") on time, but problems arose in the course of the manufacture of the 900 dozen boys' pants. Mass production of the pants was suspended for a time. The plaintiff asked for an extension of time for delivery of the goods. The 2nd defendant sought instructions from New York. In a fax dated 2 June from the 2nd defendant to the 3rd defendant, the 2nd defendant said that after discussion with the plaintiff the "best shipment" for the goods under the sixth contract was 30 June and asked New York to confirm whether it was "O.K. or not". The reply from the 3rd defendant in New York the next day was to confirm that as the "final shipment date". The fax went on to say: "put on your calendar otherwise advise Maycas we will air freight": the implication being that the cost of air freight would be for the account of the plaintiff. On 3 June the 2nd defendant issued a formal "Contract Change Notice" amending the date for delivery under the sixth contract to 30 June 1988.

10. Later on in the month Mr. Lam asked for a further extension of the date of delivery to 3 July. By a fax dated 25 June 1988 the 2nd defendant told the plaintiff that "after review with US office" such departure date was acceptable.

11. In the meanwhile, as can be seen from the daily inspection reports, the manufacture of the 900 dozen boys' pants was progressing. By 25 June 1988 all 900 dozen had been cut. The daily inspection report of 1 July 1988 stated that, of the 900 dozen to be manufactured, 150 dozen were finished and the remainder "semi-finished".

12. Further discussions took place between the plaintiff and the 2nd defendant regarding the delivery date for the goods. By a fax dated 28 June 1988 from 2nd defendant to the plaintiff, the 2nd defendant said in effect this (spelling out in this judgment the abbreviated words of the telex):

.... as per our telephone conversation this morning, if the [sixth contract] can be maintained to ship per 3 July 1988 vessel, we can accept you to delay three days only. That means this order must definitely be ready on 6 July 1988. This is the latest day we can accept. Please note. Very important...."

13. The learned judge found as a fact (and this is not challenged on appeal) that on the extended date for delivery; namely 6 July 1988, the plaintiff was not ready. This finding is plainly supported by the evidence.

14. The plaintiff's case is that during this time they were in constant telephone communication with the 2nd defendant and that the goods under the sixth contract were daily inspected by a quality controller sent by the 2nd defendant. The evidence also clearly indicated that by 6 July 1988 although the whole of the 900 dozen boys' pants was not ready for delivery, by far the larger proportion had been made and packed in export cartons, ready for shipment.

15. It is worth emphasizing that by 28 June 1988 the 2nd defendant had told the plaintiff that, in relation to the other contracts, the New York office had instructed cancellation but, in relation to the 900 dozen under the sixth contract, the New York office had kept the contract alive by extending the shipment date to 6 July 1988.

16. The plaintiff's case in effect was this : some time in early July 1988 the plaintiff was told that final inspection of the goods under the sixth contract would take place on 8 July 1988; the normal procedure in the dealings between the parties (which had been going on for about 18 years) was that final inspection would take place one or two days before shipment. The plaintiff was therefore led to believe that, although the fax of 28 June 1988 stipulated that the goods must "definitely be ready on 6 July 1988" and that this was the "latest date" which the defendants could accept, delivery on 8 July was acceptable. Accordingly, by implication, the date for delivery under the sixth contract had been further extended to 8 July 1988. The plaintiff's case as put in the court below was that the goods were in fact ready for delivery on 8 July 1988 but, on that day, the defendants by registered mail purported to cancel the contract. In the letter which accompanied the "cancellation notice" the ground stated for the cancellation was that the plaintiff had sub-contracted the order for manufacture to China : despite the fact that the defendants' quality controller was in daily attendance at the plaintiff's factory and had kept a written daily report of progress. In the cancellation notice itself two reasons were given for the cancellation, one being "late shipment" and the other "sub-contracted".

17. In his conclusions concerning the sixth contract, the judge said this:

"The plaintiff also failed to complete the goods for the 6th contract by the time prescribed in the contract and Mr. Lam has admitted that the goods were not ready on the 6th July 1988 following the variation made in the date. The contention that the final inspection by the defendants on the 8th July 1988 amounted to a waiver was without foundation. I accept the evidence of the defendants' witnesses that it was necessary for an inspection to take place for the goods were the property of the 2nd defendant and the 2nd defendant had to inspect them to ascertain their condition. I therefore find that the plaintiff was in breach of the 6th contract".

18. The reason attributed by the judge to the need for inspection, namely, that the goods "were the property of the 2nd defendant", is plainly unsound. Although the fabric belonged to the 2nd defendant at the time when it was delivered to the plaintiff for the purpose of manufacture, there was no reservation of title in relation to the fabric. Once it had been made into garments, the "piecegoods" were no longer identifiable as such. To be fair to the judge, he probably meant no more than to say that, the fabric not having been paid for, the defendants had a substantial interest in the garments, from a layman's point of view, and this was a shorthand way of stating that proposition.

19. The judge made no findings as regards the arrangements for the inspection of the goods in early July. Nor did he refer to the testimony of Mrs. Lam to this effect: a few days prior to 6 July 1988 she spoke to Miss Loretta Cheung on the telephone and she (Mrs. Lam) was told to proceed with the production for the sixth contract and that on 8 July someone would be sent to the factory to make a final inspection. Mrs. Lam knew, of course, that the delivery date had been extended to 6 July 1988. When Miss Cheung told her that final inspection would take place on 8 July 1988 she said she understood that the deadline for delivery of the goods had been extended to 8 July 1988. She added that if Miss Cheung had insisted on the delivery date of 6 July, she knew she could not have finished the goods by that date and would have stopped production.

20. If there was indeed such a conversation the implication that the parties had agreed further to extend the date for delivery - to the 8 July, after the final inspection - would have been strong. Unfortunately for the plaintiff, the case put in this way was never pleaded. The plaintiff's case in the court below was confined to the fact that arrangements were made for final inspection on 8 July, not representations by the manageress of the 2nd defendant that the plaintiff should continue with production despite their inability to meet the last agreed deadline.

21. At the hearing of the appeal Mr. Benjamin Yu, counsel for the plaintiff, sought leave to amend the statement of claim to include an averment that Miss Cheung had made the representation as stated above. An application to amend the pleadings after judgment would only be acceded to if the court is satisfied that no injustice would result to the other party. The difficulty facing the plaintiff is this : in the court below Mrs. Lam's evidence, as summarised above, was never challenged in cross-examination. Counsel for the defendant could, in the state of the pleadings as they stood, legitimately have taken the view that the evidence was outside the issue as pleaded, and that Mrs. Lam's testimony had all the hallmarks of a late invention and carried no weight. The judge never adverted to this evidence in his judgment, although he had set out extensively the effect of the evidence adduced on behalf of both parties.

22. In our judgment, the application to amend came far too late in the day. If the application had been made in the court below, prior to judgment, it is possible that witnesses might have been recalled. At the hearing of the appeal we deferred giving our ruling on Mr. Yu's application to amend. In our judgment, the application to amend should be refused.

23. This leaves the issue of waiver in the same state as in the court below.

24. To constitute an effective waiver of the stipulated time for delivery, namely 6 July 1988, the act relied upon must be unequivocal. It must be such as to lead a reasonable seller to believe that the buyer was extending the date for delivery: see observations of Lord Salmon to this effect in Bremer v. Vanden [1978] 2 Lloyd's Report 109 at 126. An example of a buyer found to have waived time for delivery stipulated in the contract is Hartley v. Hvmans [1920] 3 K.B. 475 at 495 where McCardie J said:

"Inasmuch as the defendant led the plaintiff to believe by letter, as well as by conduct, that the contract was still subsisting, and inasmuch as the plaintiff acted on that belief at serious expense to himself, it would be unjust to allow the defendant to assert that the delivery period ended on [the day stipulated]".

How do these principles apply in the light of the evidence in this case?

(i)     Miss Cheung testified, with regard to the final inspection on 8 July, that the 2nd defendant would "usually give the inspector a file for inspection" and the inspector "had to complete all inspections"; so that if, by the deadline (say, 6 July) the goods were still not finished, the inspector would nevertheless "complete the file" by "doing inspection one or two days after the deadline".

(ii)    Miss Cheung further said that sometimes both parties agreed to have the date for delivery extended, on terms such as having the goods sent by air freight (at extra expense to the plaintiff) or reducing the price : in these circumstances the manufacture of the goods might proceed beyond the deadline.

(iii)    Miss Cheung further said that, in this case, there was in fact no discussion (prior to 8 July) concerning sending the goods by air or reducing the price. It was, she said, necessary to "complete" the inspection file (because those possibilities existed.

25. The effect of Miss Cheung's evidence is that the inspection continued because even if the goods were not ready on 7 July despatch by air freight or a reduced price could have been negotiated obviously, if the goods were found satisfactory and Mr. Spiegel was so willing. Although the judge did not refer to this in his judgment there is no reason why he should have rejected Miss Cheung's testimony in this regard.

26. Were these matters, then, reasonably within the plaintiff's contemplation? Having regard to Miss Cheung's evidence as summarised in paragraph (ii) above, we think they were. Miss Cheung's evidence is, in effect, strengthened by the fact that there were subsequent negotiations concerning the 3rd and 4th contracts : a matter relied on heavily by the Judge for his conclusions.

27. In our judgment, although the judge's reasoning concerning the final inspection is unsound - that such inspection was "necessary" as the goods "were the property of the 2nd defendant" - the evidence at trial was not sufficiently cogent to support a waiver of the contractual date, 6 July 1988. The conduct of the 2nd defendant - causing the inspection to continue beyond 6 July, and arranging for final inspection on 8 July - was not unequivocally to lead the plaintiff to believe that the deadline had been waived. Time was, and remained, of the essence. The Judge's conclusion was therefore correct. Accordingly this part of the appeal must fail.

Third and Fourth Contract

28. The 3rd and 4th contracts bear the same date, namely, 25 Apri1 1988. They also related to the same , description of garments : boy's 100% cotton woven pigment dyed canvas pants. The stipulated date of delivery was the same : 30 June 1988. The 3rd contract was for 180 dozens, and the 4th contract was for 240 dozens. The material for these two contracts was not delivered to the plaintiff until 17 May 1988 and shortly thereafter the plaintiff proceeded with cutting the material in relation to the 3rd contract. Cutting never took place in relation to the 4th contract. In about early or mid June the plaintiff discovered that there were problems with the specifications for the pants. In a fax from Loretta Cheung to New York dated 20 June she reported that the plaintiff was having problems and had discussed the matter with Amy Chan for almost a week. In the fax Loretta Cheung asked for approval of the new specifications. She also said that, in the meanwhile, Mr. Lam had asked to postpone shipment for the 4th contract to 15 July 1988 and asked the New York office for confirmation. Then followed some internal communications, as between the 2nd defendant and the 3rd defendant. The outcome of all these, as far as written communication was concerned, was that a fax was sent by the 2nd defendant to the plaintiff in the early afternoon of 25 June 1988 to this effect : After review with the US office, the defendants now accepted shipment dates as follows:

29. The communications ended with this statement : "please must keep above shipments, please be reminded that no more further delay (even one day) can be allowed. Please note. Important ... " By "departure date" the defendants meant "date for shipment".

30. In terms, the extension of time to respectively 12 and 15 July 1988 was quite unequivocal. In their pleadings, the defendants positively asserted in relation to the 3rd contract (para 20 of the defendant's counterclaim) that there was a "novation and/or variation of the contract by agreement with the plaintiff wherein it was agreed that the third contract would subsist with all its terms save that the delivery date would be 12 July 1988". This remained the state of the pleadings until the first day of trial, when in the course of the evidence-in-chief of Mr. Lam, counsel for the defendant sought leave from the judge to withdraw the admission in para. 20 of the defendant's counterclaim, which the judge allowed.

31. In the outcome, the case for the defendants, regarding the extensions of time for the 3rd and 4th contracts was this : that the extensions of time, as communicated in the fax of 25 June 1988, were subject to an oral condition communicated to the plaintiff to the effect that the extensions of time were subject to the plaintiff agreeing to a price reduction of US$3 per dozen.

32. On this aspect of the case the judge's analysis of the evidence was far from complete. In his findings, he said:

"Mr. Lam admitted that he was running behind time for the 3rd and 4th contracts and I accept the defendants' evidence that the goods could not have been completed by the time prescribed in the contracts so that the defendants were justified in cancelling them. Although the defendants were prepared to extend the time for delivery, I am satisfied and find that it was to be on condition for a reduction in the price. Mr. Lam never accepted this reduction nor did he respond to the letter from the defendants of 18th August 1988."

33. It is not clear why the judge in this passage of his findings referred to the defendant's letter of 18 August 1988 which was written long after the purported repudiation of the contracts. In that letter Mr. Spiegel made an offer to take the goods under the 3rd contract provided that Mr. Lam agreed to a price reduction of US$6 per dozen. This could not possibly have constituted evidence that the plaintiff knew, on receipt of the fax of 25 June extending the date for delivery under the 3rd and 4th contracts, that the extension was subject to the plaintiff accepting a reduction in price of US$3 per dozen.

34. In his recitation of the evidence adduced by the plaintiff, the judge said this:

"Mr. Lam also admitted that this contract [the 4th contract] was running late and that he had been informed by Miss Cheung on the 28th June before he received the telex [cancelling the contracts] that a reduction of US$3 was required for this contract in consideration of the extension".

35. Mr. Mackay, Counsel for the defendants on the appeal, accepts that the judge was in error in this regard and that Mr. Lam made no such admission. Indeed, the evidence from Mr. Lam was to the effect that at the material time he was in Kwun Tong and had no such conversation.

36. Miss Cheung's evidence was to the effect that on 24 June she raised the question of a US$3 reduction with Mr. Lam and Mr. Lam's response was that he would talk to Mr. Spiegel when he came to Hong Kong. This evidence is consistent with a fax of the same date from the 2nd defendant to New York in which, with reference to the suggested US$3 per dozen reduction in price, it stated:

"Mr. Lam insist to wait for Mr. Spiegel's return to Hong Kong and discuss with him".

37. The reply from New York, received in Hong Kong on 25 June, was this : "regarding the [3rd and 4th contracts] tell [the plaintiff] that Mr. Spiegel's arrival would not change anything. [The defendants] want $3 per dozen. As regards the revised shipping schedules put the goods on Americium President Line .... [The defendants] want US$3 per dozen for the third and fourth contracts".

38. Miss Cheung's testimony concerning this fax was this:

"I told Mr. Lam of reply. When spoke to Mr. Lam about this he said he would speak to Mr. Spiegel when he came back to Hong Kong from New York".

39. The judge made no specific findings that he accepted this aspect of Miss Cheung's testimony (beyond a general statement to the effect that where Miss Cheung's evidence differed from that of Mr. Lam he preferred Miss Cheung's) But, even assuming that Miss Cheung's evidence in this regard was right, it in no way qualified the unequivocal statement in the fax of 25 June. It said in terms : after review with the US office, the defendants now accepted the shipment's dates for the 3rd and 4th contractsas respectively 12th and 15th July 1988.

40. In the absence of clear findings by the judge and in the light of his error in attributing to Mr. Lam an admission which he never made, we must look at the evidence afresh to see if his conclusion is justified.

41. In looking at the notes of Miss Cheung's testimony, nowhere does she state that what she said in her fax of 25 June 1988 was qualified by a condition that the extensions of time were subject to the plaintiff agreeing a US$3 per dozen reduction. Nor does she say that she communicated this condition orally to either Mr. or Mrs. Lam. The judge was plainly in error when he said:

"Miss Cheung informed Mr. Lam that a reduction in price of US$3 per dozen was required for the 3rd and 4th contracts on the 24 June 1988 as a condition for the extension ....."

42. The evidence simply did not support this finding.

43. Whilst it might well have been Mr. Spiegel's wish that the extensions of time for the 3rd and 4th contracts should be subject to the condition that the plaintiff accepted the US$3 reduction in price, (although the faxes exchanged between the 2nd and the 3rd defendant did not unequivocally say that such a condition was to be imposed) no such condition was communicated to the plaintiff.

44. In the course of his judgment, the judge repeated the provisions of clause 7 of the standard form of contract which stated:

7.     No alteration or cancellation of part or the whole of this contract shall be valid unless agreed in writing by the parties hereto. Agreement in writing must be signed by Mr. L Spiegel or Mr. Frankie Lau or Mr. Tong."

45. To some extent, the judge might have been influenced in arriving at his decision by the provisions of this clause. However, no such reliance has been placed by counsel for the defendants in the course of the appeal and it was common ground that although the 3rd and 4th contracts were in writing, stipulations as to the time for delivery of the goods could be waived or varied without any express agreement in writing by Mr. Spiegel or the other two persons mentioned in clause 7.

46. In our judgment, the date for delivery under the 3rd and 4th contracts had on the evidence plainly been extended to respectively 12th and 15th July 1988.

47. By telex dated 28 June 1988 the 2nd defendant told the plaintiff that the 3rd and 4th contracts had been cancelled by the US office and this was followed by a letter dated 11 July enclosing a formal cancellation notice for those contracts.

48. On the evidence, the judge should have found that the defendants were in breach in relation to these two contracts and should have entered judgment for the plaintiff, with an order that the damages be assessed.

The Fifth Contract

49. The 5th contract was entered into much later than the preceding three. It is dated 20 May 1988, for the delivery of 2470 dozen of men's denim jeans on 30 July 1988. Later, the parties agreed to change the delivery date as follows:

1270 dozen on 30 July 1988 (the original delivery date)

1200 dozen on 10 August 1988.

50. On 24 June the 2nd defendant instructed the plaintiff by fax to change the style for the back pocket of the jeans and asked the plaintiff to proceed accordingly for both the samples for approval and the bulk production, apologizing for any inconvenience caused. Four days later, on 28 June 1988, the 2nd defendant told the plaintiff by fax that "advised by US office, this order has been cancelled, please stop everything". It appears from an internal fax between the 2nd and 3rd defendant that, the day before, the plaintiff had been replaced by another manufacturer in relation to the same goods.

51. On the face of the written material it seems to be a plain case of unilateral repudiation on the part of the defendants. On the pleadings, the defendants in effect produced two defences:

Para 6 of the Defence

that on about 28 June the plaintiff told the 2nd defendant that it would be unable to deliver the goods on the agreed date and the plaintiff was thereby in anticipatory breach of the 5th contract.

Para 49

alternatively, "on or about 28 June 1988 the plaintiff orally informed Miss Loretta Cheung ..... that it would be unable to meet the delivery date as varied ....... accordingly by mutual agreement between the plaintiff and the second defendant the fifth contract was rescinded and the obligations of the defendants thereunder came to an end".

52. As regards the averment that the defendant was told by the plaintiff that they would be unable to meet the delivery date, no attempt was made at the trial to substantiate this.

53. The case for the defendants therefore rested upon the bare assertion that the 5th contract was cancelled by mutual agreement.

54. The evidence for the defendants, which the judge accepted, was to this effect:

Due to the delays which had arisen with regard to the 3rd, 4th and 6th contracts, the defendants were not confident that the plaintiff would be able to complete the 5th contract. This was for a large quantity : the largest contract ever concluded between these parties. On instructions from Mr. Spiegel, Miss Cheung then spoke to Mr. Lam and, at the same time, sent an inspector Miss Leung to check if the plaintiff had bought the accessories relating to the 5th contract. At that time manufacture of the jeans under the 5th contract had not vet started. After discussion with Mr. Lam it was agreed that the contract should be cancelled. Shortly thereafter the piecegoods were taken back from the plaintiff's premises and sent to another factory for the jeans to be manufactured. In evidence-in-chief Miss Cheung said:

"Mr. Lam gave me the impression that he was very cooperative and willing to give the piecegoods back. He never complained to me about the cancellation."

55. This evidence does not sit well with the fax of 28 June 1988 which purported simply to cancel the 5th contract, without any reference to an agreement between the parties that all rights and obligations were discharged. The fax said (spelling out the abbreviated words in it) :

"Advised by US office, this order also been cancelled. Please stop everything."

56. When Miss Cheung was cross-examined about this, she was vague as to when the agreement to cancel had taken place: from her evidence-in-chief this seems to have taken place around 25th or 26th June (that is, a few days before the written cancellation was sent). However, under cross-examination Miss Cheung appears to have settled on the 29 June, that is, the day after the date of the cancellation by fax.

57. Unfortunately, Jones J's judgment on this issue was terse to the extreme. The judge simply accepted the testimony of Miss Cheung that the contract was cancelled by mutual agreement, without any analysis of the conflict in the evidence.

58. This court must have regard, however, to the fact that we have not seen and heard the witnesses. Mr. Lam's evidence was that he told Miss Cheung that the 5th contract could not be cancelled and that all the material necessary for the manufacture of the jeans had been purchased. This evidence clearly conflicts with that of Miss Cheung, who said that Mr. Lam was very cooperative and agreed to the discharge of the 5th contract. As we view the matter, there is nothing inherently improbable in Mr. Lam having agreed to cancel the contact, as alleged by Miss Cheung. The denim for the manufacture of the jeans had been supplied by the defendants and valued by the parties at US$38.27 per dozen, was in fact the larger part of the price of US$66.84 per dozen put as the f.o.b. value of the jeans. If manufacture had not, in fact, commenced (and this was common ground), then the plaintiff's loss at that point arising out of the cancellation was unlikely to be very great.

59. Another piece of evidence tending to support Miss Cheung's version of events is this : in about mid July 1988 Mr. Lam and Mr. Spiegel met to discuss the disputes which had arisen. No mention whatever was made of the 5th contract. If Mr. Lam was still maintaining at that time a claim for damages for wrongful repudiation, it seems most unlikely that he would not have raised this claim for discussion and resolution at that meeting. Or at least have complained of the defendants' unilateral conduct.

60. In all the circumstances and having regard to Jones J's findings on credibility of the witnesses we are of the view that the judge's findings with regard to the 5th contract cannot be disturbed.

Conclusion

61. In accordance with this judgment, the judgment of Jones J. dated 10 March 1992 should be set aside and following orders substituted:

(i)     that the plaintiff's claim in the consolidated action be allowed with regard to the third and fourth contracts and dismissed with regard to the fifth and sixth contracts;

(ii)     that the award of damages in favour of the defendants in the sum of US$42,064.20 together with interest thereon at the rate of 1% over prime rate, set out in the order dated 29 July 1992, be set aside in so far as the award related to the third and fourth contracts;

(iii)    that the plaintiff's claim for damages arising out of the defendants' breach of the third and fourth contracts be assessed;

(iv)     that there be an order nisi that the order for costs in favour of the 1st, 2nd and 3rd defendants in the judgment dated 10 March 1992 be set aside and in place thereof an order that each party pays its own costs in the consolidated action. There should further be an order nisi that the defendants do pay half of the plaintiff's costs of the appeal.