KINGCITY INVESTMENT LTD v. SPRING VICTORY LTD AND ANOTHER

DCCJ 561/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 561 OF 2009

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J U D G M E N T

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1.  In 1997, Kingcity (the Plaintiff) and Spring Victory (the 1^st Defendant) co-operated in redeveloping No.43 and No.45 Tin Hau Temple Road, Hong Kong which were adjoining parcels of land owned by them respectively. The project involved the demolition of the existing buildings and the construction of a multi-storey residential complex. LLT (the 2^nd Defendant) were the jointly appointed architect and authorised person in the project.

2.  Construction of the new development was completed at the end of 2002.  The completed development is now known as King Yu Court.  In early 2004, Kingcity started to complain that the designation of certain car parking space and its ownership under the deed of mutual covenant (“the DMC”) deviates from the owners’ agreement.  Kingcity requested for the assignment back of the space in question.  Spring Victory refused. Hence this action.

Background

3.  In respect of the joint redevelopment of the lands, the two owners executed a “memorandum of basic terms of agreement” dated 19 December 1997 (“the Memorandum”).  Amongst other things, the Memorandum recorded the owners’ agreement in respect of the division of ownership of the residential units and car parking spaces of the building to be constructed.

4.  There would be 2 units on each of the residential floors – Flats A and B, while the car park would be located on the G/F to 2/F.  It was agreed that all units marked as Flat B and 1 unit of Flat A together with half of the approved car parking spaces plus 1 should be allocated to Spring Victory.  The remaining units marked as Flat A and half of the approved car parking spaces less 1 should be allocated to Kingcity. The owners agreed to enter into a Joint Redevelopment Agreement before the end of February 1998.  The ratio apparently reflected the disparity in sizes of the 2 parcels of land.

5.  As agreed, the owners jointly appointed LLT as the architect and authorised person (“AP”) of the project.  Tsang Yin Sang (“Tsang”) was one of the partners of LLT who was essentially in charge of the project.

6.  It was only on or about 18 March 1998 when Kingcity and Spring Victory finally entered into the Joint Redevelopment Agreement (“the JR Agreement”).  The JR Agreement recapitulated (under clause 8) the owners’ agreement in respect of the division of ownership of the residential units and the car parking spaces in the new building as recorded in the Memorandum.

7.  On behalf of Kingcity and Spring Victory, LLT had since their appointment submitted to the Buildings Department (“BD”) building plans and applications for approval of the design as well as consent to commence the building work.  Insofar as the car parking spaces were concerned, LLT had instruction to maximize the number of car parking spaces permitted in the new building to be constructed.  Traffic consultants had also been engaged for advice for such purpose.

8.  On 5 March 1999, the BD approved the general building plans.  According to the approved layout plans, the car park would consist of 19 car parking spaces.  The approved layout plan for the car park on the 2/F is Plan A3/10.  This approved 2/F car park layout plan was annexed to the pleading and referred to as Plan A.

9.  On 16 November 1999, a special meeting was held which was attended by the representatives of the two owners, Xu Min Luo of Kingcity (“Xu”) and Loretta Lui or Mrs Lam of Spring Victory (“Lam”), as well as M S Chan of LLT.  The division of ownership of the various parts of the building to be constructed was agreed in detail; and for the first time identified (“the 16/11/99 Agreement”).

10.  In the record of that meeting, the agreed division of ownership the following parts of the building between the two parties was set out:

(1) the domestic flats;

(2) 19 car parking spaces;

(3) 6 motorcycle parking spaces;

(4) 4 staircase areas on 1/F and 2/F;

(5) 2 corner parking spaces on 1/F and 2/F; and

(6) 1 extra parking space on 2/F.

11.  In line with the JR Agreement, among the 19 numbered car parking spaces, Kingcity was supposed to own 9.5 less 1 while Spring Victory was supposed to own 9.5 plus 1.  To perfect the allocation of the car parking space being shared by both parties, Kingcity yielded its one half of such car parking space in favour of Spring Victory.  As compensation for that, Spring Victory agreed to pay to Kingcity a lump sum of HK$250,000.

12.  As a result, car parking space (CPS) Nos. 2, 4, 9, 10, 13, 14, 18 and 19 (all together 8 car parking spaces) were designated to belong to Kingcity while CPS Nos. 1, 3, 5, 6, 7, 8, 11, 12, 15, 16 and 17 (all together 11 car parking spaces) were designated to belong to Spring Victory.

13.  Besides, the owners would each own 3 motorcycle parking spaces on the G/F; 2 staircase areas on 1/F and 2/F; and 1 corner parking space under (3), (4) and (5) above.  The extra parking space on the 2/F under (6) above would belong to Kingcity.

14.  All the above areas of the new building designated to belong to the owners were identified by two different colours respectively marked on the copies of the approved plans annexed to the record of meeting: blue for Kingcity and red for Spring Victory.

15.  Insofar as the car park was concerned, the area coloured was not confined to that within the rectangular boundaries of the numbered car parking space but extended to cover their adjacent spaces.  These eventually became known as the Reserved Areas of the respective car parking spaces under the deed of mutual covenant (“DMC”).

16.  In Plan A, CPS Nos.15 to 19 were lined up side by side on one side of the car park on the 2/F.  As mentioned above, CPS Nos.15 to 17 (and their adjacent spaces) were designated to belong to Spring Victory while CPS Nos.18 to 19 (and their adjacent spaces) were designated to belong to Kingcity.

17.  Plan A had subsequently been amended and the amended plan approved.  According to the BD’s letter dated 1 June 2000, LLT had proposed to carve CPS No.19 and the spaces to its left and right into 2 car parking spaces to accommodate both CPS Nos.18 and 19.  Consequentially, CPS No.17 now occupies where CPS No.18 used to be; and CPS No.16 now occupies where CPS No.17 used to be.

18.  Kingcity made no complaint about the amendment.  In fact, the project continued and LLT continued to secure consent from the BD for commencement of building works.  As mentioned above, the construction of the project was completed in December 2002.

19.  When it came to the draft DMC, the space that used to be occupied by CPS No.18 and its adjacent spaces designated to belong to Kingcity now became CPS No.17 and Reserved Area 17a and 17b.  Pursuant to the 16/11/99 Agreement, CPS No.17, and now its Reserved Areas too, was designated to belong to Spring Victory under the DMC. Without any complaint about that, Kingcity and Spring Victory executed the DMC on 11 February 2003.  The 2/F car park layout plan annexed to the DMC is now annexed to Kingcity’s pleading as Plan B.

20.  A year later, in mid-February 2004, Kingcity’s then solicitors, Messrs Li Wong & Lam (“LWL”), for the first time complained that the space that used to be occupied by CPS No.18 and its adjacent spaces, that had been agreed to be designated to belong to Kingcity in Plan A, were now allotted as CPS No.17 and Reserved Areas Nos. 17a and 17b to Spring Victory in Plan B under the DMC.  LWL requested for rectification and assignment of those spaces back to Kingcity.

21.  Kingcity complained that LLT submitted to the BD the proposed amendment of Plan A for the change in numbering and varied layout of the car parking spaces without calling for a meeting to discuss and to clarify the matter; or informing Kingcity of the change.  The mistake was compounded by the incorporation of the mistaken numbering and wrong plans into the DMC without Kingcity realising the same. Kingcity claimed that the situation did not accord with the owners’ agreement and was unfair to it.

22.  On behalf of Spring Victory, Messrs Arthur Au & Co (“AC”), denied any mistake in the allotment under the DMC.  LLT pointed out that the numbering of car parking spaces strictly accorded with the latest approved building plans; and the allotment were agreed by the owners unconnected with LLT.

23.  The parties entered into negotiation to resolve the dispute.  In June 2004, LLT proposed that Plan B be amended.  According to the proposed amended plan, CPS Nos.18 and 19 would be restored to their original designated spaces as in Plan A.  The current CPS No.17 will be relocated to another Reserved Area on the floor belonged to Spring Victory.  The proposed amendment was eventually approved by the BD and LLT informed the owners of the same in October 2004.

24.  However only in early 2005 did LWL prepare a draft deed of variation and rectification supplemental to the DMC to reflect the relocation of CPS Nos.17 and 18 in accordance with the amendment recently approved by the BD.  In June 2005, AC replied that Spring Victory had disposed of some of the units in the building; and it would be difficult, if not impossible, to further vary the DMC.  In September 2005, LWL proposed a meeting to discuss the matter but AC replied that their client’s representative was unable to attend the meeting.

25.  Another year later, in August 2006, LWL again tendered a draft Assignment of the current CPS No.17 and Reserved Areas Nos. 17a and 17b for Spring Victory’s execution.  Spring Victory’s reply was not forthcoming.  In November 2007, LWL indicated Kingcity’s intention to wind up its affairs; and complained that Spring Victory’s delay might cause inconvenience and damage to Kingcity.

26.  By letter dated 19 November 2007, AC suggested that the allocation of car parking spaces had long been settled; and the DMC reflects the division of the car parking spaces as agreed.  Therefore Kingcity’s request for assignment back of the current CPS No.17 and Reserved Areas Nos.17a and 17b was refused.

27.  Since May 2008, LWL had, on behalf of Kingcity, repeatedly requested for a joint meeting with Spring Victory and LLT to resolve the dispute.  In the meantime, Wu Yi (Group) Limited (“Wu Yi”), the mother company of Kingcity, has been using the car parking space for free.

28.  Spring Victory was wound up by way of members’ voluntary winding up in February 2009.  Kingcity commenced the present action in the same month.

29.  The above background is evidenced by contemporaneous documents.  I find the same to be the fact.

Issues

30.  In the present action, Kingcity alleges breach of the owners’ agreement and unjust enrichment on the part of Spring Victory.  At the trial, the ground of unjust enrichment was dropped, leaving behind the contractual claim.

31.  According to the latest version of its pleading, Kingcity seeks assignment back of what is now CPS No.17 and Reserved Areas Nos.17a and 17b (which used to be designated as CPS No.18 and its adjacent spaces in Plan A) in specific performance of the 16/11/99 Agreement; or alternatively damages in lieu.

32.  In defence, Spring Victory contends that the current division of the car park is in fact consistent with the 16/11/99 Agreement.  In any event, Kingcity had consented to the variation as per what eventually became Plan B.  It relies on clauses 7 and 8 of JR Agreement.  Spring Victory also put forward a counterclaim; but the same was dismissed by consent before the trial commenced.

33.  Kingcity also claims against LLT as the architect and AP for breach of retainer and duty in tort that has allegedly caused the situation that Kingcity is now faced with.  In defence, LLT denies the alleged extent of duty.  In any event, Kingcity is said to have consented to the variation in a meeting in April 2000.  LLT also alleges contributory negligence and raises the defence of limitation.

34.  There are the following major issues to be determined:

(1) What was the agreement between Kingcity and Spring Victory in respect of the division of the car park;

(2) Is the variation of the layout of the car parking spaces on the 2/F deviation from the owners’ agreement?

(3) Did Kingcity consent to the variation?

(4) Is clause 7 or 8 of the JR Agreement relevant?

(5) If Spring Victory is liable, what should be the relief?

(6) What duties did LLT owe to Kingcity as the architect and AP?

(7) Whether LLT was in breach?

(8) Whether Kingcity was guilty of contributory negligence?

(9) Whether Kingcity’s claim against LLT is time-barred?

What was the agreement between Kingcity and Spring Victory in respect of the division of the car park?

35.  Mr Hoe for Spring Victory criticised Kingcity for revising its pleaded case.  His comment is understandable.  Arguably the reference to area other than the numbered car parking spaces may not be readily apparent from its pleadings.

36.  Mr Chain for Kingcity argued that his client’s case should be adequately understood by the time of the trial particularly with the explanation in witness statements.  In line with his client’s case, he sought leave to amend the pleading to cover Reserved Areas Nos.17a and 17b wherever CPS No.17 in Plan B is referred to.  In the circumstances of the present case, the amendment was allowed to ensure the real controversy as reflected in their pre-action correspondence.

37.  Mr Hoe for Spring Victory and Miss Yung for LLT stressed that both the Memorandum and the JR Agreement spoke of the owners’ agreement to share the approved car parking spaces without reference to any other area in the car park.  I agree with such observation.  However they went on to submit that therefore the relocation and re-numbering of the car parking spaces on the 2/F by way of Plan B never changed the owners’ respective entitlement as agreed.  I would be slowing in agreeing with such conclusion.

38.  Both the Memorandum and the JR Agreement stipulated that Spring Victory would have all Flats B whereas Kingcity would have all Flats A except for one which would also belong to Spring Victory.  That Flat A to be owned by Spring Victory would be at the mid-level of the new building, but exactly which floor was yet to be agreed then.

39.  Insofar as the car parking spaces are concerned, only the ratio of the division between the owners was agreed by the time of the Memorandum and the JR Agreement.  The number of car parking spaces and which of them would belong to which owner remained to be agreed.

40.  It was only during the meeting on 16 November 1999 when the Flat A allocated to Spring Victory was specifically agreed, namely, that on the 17/F.  The exact number of approved car parking spaces and their designations, namely, CPS Nos.1 to 19 were identified.  Only then did the owners agree on which car parking space should be allocated to which owner.

41.  Tsang denied that LLT had any involvement in the owners’ agreement in respect of the division of ownership of the car parking spaces.  The evidence of the representatives of the owners suggested otherwise.  According to both Xu and Lam, it was the representative of LLT who described the division to them.  Further it should be noted that it was M S Chan who represented LLT to attend that meeting.  Tsang also confirmed that it was pursuant to Chan’s report that he prepared the record of the meeting afterwards.

42.  The plans referred to during the meeting, according to Lam, were much simpler than those subsequently annexed to the record of that meeting.  2 days after the meeting, LLT forwarded to the owners for reference and record 2 sets of the coloured plans showing the division of the ownership of the car park.

43.  One set of plans were labelled as the “original building plan” showing the 19 approved numbered car parking spaces, 11 for Spring Victory and 8 for Kingcity.  In the other set of plans, “suggested unofficial parking spaces” were mapped out, 21 for Spring Glory and 18 for Kingcity. These unofficial parking spaces were mapped out on top of the numbered car parking spaces and their adjacent spaces.  Further other reserved areas such as the staircase areas were also designated as suggested unofficial parking spaces and thus adding up to the numbers.

44.  The record of the meeting on 16 November 1999 with the coloured car park layout plans followed.  As mentioned above, the areas coloured was not confined to the rectangular numbered car parking spaces but covered the adjacent spaces in line with the suggested unofficial parking spaces mapped out for the owners respectively.

45.  This explains Kingcity’s complaint through LWL by their letter dated 16 March 2004 before action.  Kingcity distinguished the “big car parking spaces” from “small car parking space” with reference to the coloured plan.  By “big car parking space”, Kingcity was referring to those approved numbered car parking spaces that has additional adjacent spaces so that 2 cars could be accommodated.

46.  Mr Hoe submitted that the 16/11/99 Agreement should be read subject to the JR Agreement so that only the approved numbered car parking spaces count as a matter of agreement.  In my view, both documents should be read together.  That being done, it should be clear that whilst the owners agreed to divide the ownership of the 19 approved car parking spaces, the division was premised on the big picture of possible use of their adjacent spaces as identified and coloured on the plan to belong to the owners respectively as well.  I find that this is in line with the effect of Lam’s evidence under cross-examination.

47.  This idea of maximising the use of the car park behind the 16/11/99 Agreement accorded with the express intention of the parties recorded in the Memorandum.  Further, the division of the suggested unofficial parking spaces between the 2 owners was also be in line with the ratio of division of ownership of the car park under the JR Agreement and the 16/11/99 Agreement.  In my view, all these were not thrown out by chance.

48.  Mr Hoe emphasized the choice of wordings in the record of the special meeting.  He suggested the use of “spaces” in describing car parking spaces and “areas” in describing staircase areas is indicative of different coverage intended.  In my view, the question of semantics cannot be emphasized too much in view of the above analysis.  Further the record was not prepared as a legal document by lawyer, but by Tsang upon the record or report of his colleague who attended that meeting.

49.  The subsequent allocation and division of undivided shares in the DMC also reflects the same understanding.  In Part II of the 2^nd Schedule to the DMC, those spaces to the left and right of the boundaries of the numbered car parking spaces were officially identified as the “Reserved Areas” corresponding to the relevant CPS Numbers.  Undivided shares and management shares were specifically allocated to those Reserved Areas.  The allocation of the undivided shares in respect of those Reserved Areas was in line with the above.

50.  The correspondence between the management company of the building and LWL in 2008 also suggests that car parking spaces are at present somehow designated in line with the idea of suggested unofficial parking spaces.  For instance, in the space occupied by CPS Nos.16 and Reserved Areas No.16a and 16b, 2 car parking spaces, namely, 16A and 16B were actually designated.  The same is true in respect of, among others, the area occupied by CPS Nos.15 and 17 and their Reserved Areas.

51.  I should perhaps mention that the division under the DMC and the present designation of car parking spaces at the building is not meant to be aid of construction of the 16/11/99 Agreement.  The issue here is what exactly the owners agreed.

52.  In agreeing to the distribution of the approved numbered car parking spaces between them, Kingcity and Spring Victory was designating both the numbered car parking spaces and their adjacent spaces in accordance with the ratio agreed under the JR Agreement.  This is my finding.

Is the variation of the layout of the car park on the 2/F deviation from the owners’ agreement?

53.  In terms of the numbered car parking spaces owned by the parties, Plan B did not bring about any change.  However, in terms of the areas identified and coloured in Plan A to belong to the owners respectively, Plan B effectively enlarged the space to be owned by Spring Victory at the expense of Kingcity.  That was also variation at the expenses of Kingcity in terms of the “suggested unofficial parking spaces” contemplated by the parties under the 16/11/99 Agreement.

Did Kingcity consent to the variation?

54.  The documents suggest that Kingcity has apparently agreed to the re-numbering and the revised layout of CPS Nos.15 to 19.  Kingcity had signed on the amended plan and eventually executed the DMC that incorporated the plans including Plan B.  The key complaint of Kingcity is that it did so without knowledge of the amendment allegedly made in secret.

55.  Clause 15 of the JR Agreement stipulated that LLT should prepare general building plans and specifications based on the draft building plans signed by the owners and annexed to the Memorandum and the JR Agreement.  Kingcity and Spring Victory undertook not to amend or alter the plans without the other’s written consent unless such amendments or alterations were required or imposed by the authorities.

56.  According to Tsang, it was due to the advice of the registered structural engineer of the project that CPS Nos.15 to 19 had to be relocated and re-numbered to their current positions since Plan B.  Such amendment of the approved Plan A was not a change required or imposed by the authorities.  Strictly, clause 15 of the JR Agreement required written consent of the owners for such amendment to Plan A.  There is no suggestion or evidence of such specific written consent of the owners.

57.  However Tsang recounted the practice of meeting with the representatives of the owners before LLT prepared the amended plan for submission to the BD.  Except for the site work meetings, most of the joint meetings were held at the office of Wu Yi. LLT’s case is that the amendment in question was discussed during a meeting in April 2000.

58.  Unlike other meetings, there is no written record of the alleged meeting in April 2000.  In his evidence, Tsang also could not say that the owners did specifically express their consent to the amendment or instructed LLT to proceed with submitting the same to the BD for approval.

59.  The contemporaneous documents show that the building plans had undergone many amendments throughout the redevelopment period.  Plan A3/10 had actually been amended numerous times, some prior to and some after the re-numbering and revised layout of the car parking spaces in question.  Tsang recounted that upon approval, the BD’s letters would invariably be copied to the owners.  The contemporaneous correspondence does evidence that.

60.  In October 2000, Kingcity specifically asked LLT for all the plans approved by the BD by then. Plan A3/10 was amongst those supplied to Kingcity on the same day.  In August 2001, Kingcity again received the up to date contract drawings when it also signed on them.

61.  In June 2002, LLT supplied to the owners and their solicitors the draft Assignment Plans and tables showing the allotment of undivided shares to various parts of the new development.  On behalf of Kingcity, LWL provided in the same month their draft DMC, management agreement and deed of exchange for Spring Victory’s comment.

62.  In August 2002, LLT again supplied to Kingcity at its request 2 sets of up to date amended building plans for the preparation of sale brochures.  In its reply, Kingcity confirmed that it had double checked the up to date amended building plans; and provided its revised calculation of the various floor areas and allocation of undivided shares.

63.  In January 2003, LWL also paid attention to compare the designation of ownership of CPS No.17 in the draft DMC and that as the owners agreed.  The DMC, which incorporated the Assignment Plans including Plan B, was eventually signed by the 2 owners on 11 February 2003.

64.  In view of the contemporaneous documents, I see nothing secretive about the amendment.  Indeed all the proposed amendments to the building plans were made in the open. However, while there seemed to be numerous opportunities for Kingcity or LWL to come to notice the varied layout of the car park on the 2/F, the question is whether Kingcity was in fact aware of the variation.

65.  Xu admitted that he would not study the plans and correspondence copied to him or Kingcity unless they contained anything that would affect its rights.  Insofar as the division of ownership was concerned, Xu described the situation as settled.  He was not specifically alerted by the documents or LLT that there was any change in that regard.  In particular, it was pointed out that LLT described their submission to the BD for the variation of the car park layout on the 2/F in April 2000 as “minor amendments”.

66.  In May 2002, LWL contacted LLT directly for the final versions of the building plans in order to proceed with drafting the DMC and the calculation of the undivided shares as well as their allocation.  The plans supplied that LLT supplied to LWL had to be those containing the already varied layout of the car park on the 2/F.  The correspondence between LWL and AC subsequent to that should be considered in the light of that.

67.  Whether there might have been negligence on the part of Kingcity or LWL in not discovering the variation, I do accept as a matter of fact that they were not aware of the variation as alleged.

Are clauses 7 and 8 of the JR Agreement relevant?

68.  Clause 7 of the JR Agreement provides that the new building and the lots on which the new building shall be divided into such number of undivided shares which shall be allotted to each part in such shares and proportions as the owners may agree and in default of such agreement, in such shares and proportions as may be determined by the Architect whose decision shall be final.  In my view, there is no premise for the operation of the last provision that the owners would have defer to the final decision of the architect, LLT, because of any disagreement.

69.  Clause 8 of the JR Agreement provides that the sole and exclusive right to use occupy and enjoy all the units and car park of the new building shall be allocated upon completion of the new building, which shall be deemed to take place upon the issuance of the Occupation Permit.  Spring Victory’s reliance on this clause does not seem to be relevant.

The relief

70.  As to Kingcity’s apparent consent to the variation, parties did not argue on the issue of valuable consideration.  On the other hand, there was also no argument on the issue of waiver or estoppel as a result of Kingcity’s lack of objection.  The fact is that the current layout of the car park on the 2/F deviates from the JR Agreement and the 16/11/99 Agreement.  There is no legitimate reason for Spring Victory to insist on the current layout contrary to parties’ agreement.

71.  For the purpose of quantum, parties have obtained joint valuation evidence in respect of the current CPS No.17 (which used to be CPS No.18).  The valuation report of AG Wilkinson & Associates dated 25 January 2010 contains the following summary of the market value of the current CPS No.17:

72.  There are reasons for obtaining the valuation as at the above dates.  Clause 8 of the JR Agreement (above) deemed the date of the occupation permit to be that of the completion of the construction of the new building when the sole and exclusive right to all the units and car park should be allocated.  But it was by executing the DMC did the owners actually commit to the allocation of the rights.

73.  However, Mr Chain submitted that the market value as at the date of the valuation report should be adopted as a substitute giving as nearly as may be what specific performance would have given in the circumstances of the present case.  Mr Chain cited Choy Nga Wai Nancy v Gentle Smart Ltd [2009] 4 HKLRD 75 in support.  I agree.

74.  No party suggests any adjustment or variation of that due to the passage of time between the date of the valuation report and that of trial.  While the expert noticed that the space occupied by CPS No.17 is currently subdivided into 2 car parking spaces by also utilising Reserved Areas Nos.17a and 17b, the property, subject matter of the valuation, remained to be CPS No.17 which represents 8 undivided shares of the building and the land.  The 2 undivided shares allotted to Reserved Areas Nos.17a and 17b were outside the valuation.  Nevertheless, Kingcity seems to be content with this figure.

What duties did LLT owe to Kingcity; and whether LLT was in breach?

75.  The pleaded case of Kingcity is that LLT owes a duty of care, in contract and in tort, to Kingcity to exercise all reasonable and professional skill care and knowledge, diligence and competence as the AP or architect to advise, protect and act for the best interest of Kingcity in and about the preparation for the project and the erection of the building as well as subsequent or ancillary matters.  If Kingcity is right, likewise LLT should owe the same duty to Spring Victory.

76.  Miss Yung relied on the statement of the High Court of Australia in Voli v Inglewood Shire Council [1963] CLR 74 as to the duty of an architect to his employer.  Essentially, an architect undertaking any work in the way of his profession accepts the ordinary liabilities of any man who follows a skilled calling.  He is bound to exercise due care, skill and diligence that is usual among architects practising their profession; but not extraordinary degree of skill or the highest professional attainment.

77.  Voli was not a case about an architect’s duty to his employer.  Instead the primary question was whether the architect could be liable in negligence for damage caused to a third party entering a building that was designed and constructed with the architect’s fault.  In any event, what that case says about the duty of an architect to his employer is generally reasonable care and skill as an ordinarily prudent practitioner possesses. Specifically each case will still have to be decided on its own facts.

78.  In the present case, the starting point is the terms of the appointment contained in or evidenced by LLT’s letter dated 8 January 1998 signed by all parties (“the Appointment Letter”). Mr Chain emphasized that LLT were not merely the architect but also the AP of the project.  This fact was expressly acknowledged in the Appointment Letter.

79.  The Appointment Letter was silent as to the duty to inform.  But I find that the duty of LLT to keep the owners informed of the progress of the project including the amendments to the building plans cannot be disputed.

80.  In view of the evidence, Mr Chain in his submission also accepted that LLT had sought the general consent from the owners in relation to proposed amendments to the building plans.  But it is contended that LLT had the duty to actively inform Kingcity of the specific change of the layout of the car park on the 2/F.

81.  As mentioned above, I reject the claim by Kingcity that the amendment of the car park layout plan was carried out in secret.  On the contrary, everything was done in open.  All the relevant documents and correspondence with the authorities in relation to the project were also copied to the owners.  But Mr Chain submitted that that was not sufficient discharge of the duty of LLT.

82.  Mr Chain relied on Christopher Moran Holdings Ltd v Carden & Godfrey (a firm) (1999) 73 Con LR 28.  In that case, the architects made a change in the building plans altering the angle of certain terrace, which was a significant change.  Copies of the amended building plans, as always, were provided to the employer but no particular attention was drawn to the specific change.  The learned Judge held that no lay client, even those as informed as that employer, can be expected to interpret changed technical measurements and levels on a drawing in that case. The lay client was entitled to know both the effect of the change and the reason for it together with any options there might be.  Therefore it was unlikely that a drawing alone in a situation like this would suffice unless the annotations and sketch work clearly depicted in lay terms the effect of the changes and use consequence.

83.  I do not accept the argument of Kingcity.  Unlike any technical change or measurements as those in Christopher Moran Holdings Ltd, the re-numbering of the car parking spaces and the change in layout should have been readily patent, had one read the amended plan.  In the proposed amended plan submitted in April 2000 and approved by the BD in June 2000, the crossing out of the approved numbering and their replacement by the proposed re-numbering was clearly shown.

84.  Wu Yi, the mother company of Kingcity, which was in the business of property development.  As the Vice General Manager of Wu Yi assigned to become the director of Kingcity specifically in charge of managing the redevelopment project, Xu was a civil engineer by training. The only reason he was not aware of the change and its effect was that he did not care to read it.

85.  Kingcity argued that because it relied on the professionalism and integrity of LLT to safeguard its interest and thus would not check each and every copy of correspondence sent by LLT unless specifically advised to do so.  By pleading, Kingcity suggests that by submitting the plans to it without specifically drawing its attention o the change, LLT was guilty of misrepresenting the apparent lack of change for attention.  Mr Chain emphasized the effect of LLT’s description of the change as a minor amendment of the approved plan in their submission to the BD. 

86.  I reject the alleged misrepresentation.  In describing the varied car park layout on the 2/F as minor amendment, LLT was obviously communicating to the BD with a view to expedient approval.  The very conduct of copying the same to the owners in discharge of the duty to inform contradicts the alleged misrepresentation that the owner could pay no heed to the same.

Contributory negligence

87.  By his own choice to select what to read and what not to read, Kingcity was the author of its own predicament.

Whether Kingcity’s claim against LLT is time-barred?

88.  Mr Chain conceded that his client’s cause of action against LLT for breach of the retainer accrued upon breach and hence has been time-barred by the time when the present action commenced.  He focused the claim in tort.

89.  There is no dispute that the cause of action in tort accrues not upon breach of duty but when damage is suffered.  The dispute lies in when this happened.  Mr Chain submitted that Kingcity did not suffer damage as a result of LLT’s breach of duty until the actual allocation of the residential units and car park.  This happened upon the execution of the DMC on 11 February 2003.  The present action was commenced on 5 February 2009, which, Mr Chain argued, was just within the limitation period.

90.  Miss Yung submitted that actionable damage occurred in June 2000 when the varied layout of the car park on the 2/F was approved by the BD.  Even assuming that Kingcity was not aware of that, it ought to have known in October 2000 when it specifically asked for the up to date plans.  Therefore, she argued, the action in tort has been time-barred for years.

91.  Miss Yung relied on Bell v Peter Browne & Co [1990] 2 QB 495.  In that case, the plaintiff contemplated divorcing his wife.  Pursuant to his solicitors’ advice, he agreed to transfer the matrimonial home, which was then in joint names with his wife, into the sole name of his wife while his share of interest in the proceeds in case of sale would be protected by way of a trust deed or mortgage.  He executed the transfer but his solicitors failed to prepare the trust deed or mortgage for execution as contemplated.  The ex-wife sold the matrimonial home afterwards.  The plaintiff sued the solicitors and they pleaded limitation in defence.  The English Court of Appeal held that the plaintiff’s cause of action in contract accrued upon breach at the time when the property was transferred without taking the protective steps.  The cause of action in negligence accrued at the same time because damage was suffered upon such transfer of property.

92.  Bell was referred to by the local Court of Appeal in Ko Ming Bor & Another v Lo & Lo [1997] HKLRD 749, which was cited by both Mr Chain and Miss Yung.  Again, the court found that the cause of action against the solicitors accrued upon the deceased’s purchase of the property in which she did not obtain good title as a result of the negligence of the solicitors.  That was when the damage was suffered.

93.  I do not think these authorities assist Miss Yung.  In both cases, actual damage in terms of the plaintiff’s interest or right was clearly occasioned when the property right departed or acquired with defect.  I do not see how the approval of the varied layout of the car park by the BD already caused damage to Kingcity’s interest or right to afford it with an actionable tort against LLT.  Miss Yung’s suggestion of the need and possible cost of remedying step to take with the BD does not fall into that category.

94.  Having said that, in view of my conclusion against Kingcity on liability against LLT, I do not propose to go further in respect of the issue of limitation.

Conclusion

95.  For the above reasons, I find that Kingcity is entitled to relief against Spring Victory; but its claim against LLT ought to be dismissed.

Order

96.  I order that Spring Victory do execute an assignment to transfer the rights, interest and title of the current CPS No.17 as well as the Reserved Areas Nos. 17a and 17b as identified in Plan B referred and annexed to the re-amended statement of claim herein.  In default, Spring Victory do pay damages in the sum of HK$729,000 to Kingcity.

97.  I dismiss Kingcity’s claim against LLT.

98.  Between Kingcity and Spring Victory, Spring Victory shall pay Kingcity’s costs of its claim against it.  Between Kingcity and LLT, Kingcity shall pay LLT’s costs of defending the claim.  Costs shall be taxed, if not agreed, with certificate for counsel.  In the absence of application within 14 days to vary, this costs order shall become absolute.