BRAINCHILD PRODUCTIONS LIMITED v. KAM KWONG DESIGN COMPANY (a firm)

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

_____________

BETWEEN

_______________

JUDGMENT

_______________

1. This is an action for breach of contract in which the plaintiff claims relief in respect of an alleged failure by the defendant to erect works that he had agreed to perform. The plaintiff alleges that the defendant failed to complete the works by the stipulated time and that this amounted to a repudiation of the contract, which repudiation was accepted by the plaintiff.

2. The plaintiff seeks declarations that the defendant is not entitled to the contract price or to retain a sum of $100,000 stated to be a deposit and paid by the plaintiff to the defendant before the commencement of work. The plaintiff also seeks an order for the return of that sum.

3. It is alleged that such work that had been performed by the defendant before repudiation was basically unsound and failed in a number of respects to conform with design plans which formed the basis of the contract. Moreover, the plaintiff complains that certain materials were used that did not conform with those agreed upon by the parties, that workmanship was poor and that materials used were sub standard and of poor quality.

4. As a consequence of these alleged breaches of contract and repudiation the plaintiff was obliged to engage other workers to complete the works and was thus put to considerable inconvenience, trouble and expense. As an alternative to the claims for declarations that the defendant is not entitled to any part of the contract price or to retain the deposit, and for an order for the return of the deposit, the plaintiff claims the sum expended by it to complete the works. There is also a claim for general damages.

5. The defendant alleges that the plaintiff had committed a breach of the contract by wrongfully demanding modifications and additional works which caused undue delay in the completion of the contract. The defendant denies that there was any failure to complete or that there was any repudiation of the contract but alleges that if there had been such a failure it was due to the alleged wrongful modifications and additions. Moreover, the defendant alleges that if the plaintiff had in fact engaged additional workers it had done so as a consequence of either the wrongful modifications and additions or the delay caused by having them carried out.

6. The defendant counterclaims the balance due under the contract together with a sum which it alleges it performed in carrying out the modifications and additions demanded by the plaintiff. It also expressly seeks to set off so much of its counterclaim as is sufficient to satisfy or extinguish the plaintiff's claim.

7. Having stated the basic claims of the parties I now turn to a consideration of the evidence.

8. The plaintiff is a promotion company which specialises in the production of large scale live concerts. In 1983 the Hong Kong Philharmonic Society and Urban Council engaged the plaintiff to produce four concerts entitled Music Extravaganza which were to take place at the Hong Kong Coliseum from the 17th to 20th December of that year.

9. In return for its services in organising, producing and promoting the concerts the plaintiff was to receive a percentage of the gate. The plaintiff had been required to prepare and submit to the Hong Kong Philharmonic Society and Urban Council a budget for the production and promotion costs and was obliged to adhere to it. One of the budget items was a sum of $200,000 for the stage construction fee.

10. The plaintiff invited three contractors to submit quotations for the erection of stages for the concerts. The quotations were to be based on design plans drawn by Mr. Yanigasawa, a commercial designer who specialises in stage design.

11. Mr. Joseph Chow, a civil and structural engineer and director of the plaintiff, testified that in November, after quotations had been received by the prospective contractors, meetings were held with two of them so that Mr. Chow could satisfy himself that each contractor clearly understood the nature of the works for which he had quoted, and negotiations could be conducted as to the adoption of various options stated in the quotations.

12. During the course of these meetings Mr. Chow explained to each contractor the importance of time in erecting the stages. Apart from discussion on the quotations themselves, Mr. Chow and Mr. Poon, a producer then employed by the plaintiff, examined with each contractor Mr. Yanigasawa's design plans together with certain samples that had been submitted by the contractors for materials which they proposed to use.

13. According to Mr. Chow, the design plans drawn by Mr. Yanigasawa were lay out drawings which also specified the type of design materials to be used. Mr. Chow explained to the court that it is not the responsibility of a designer to prepare detailed working drawings relating to structural design details but to submit artistic design plans. Mechanical matters such as basic structural supports fall within the province of the contractor and this was particularly so in this instance because the designer was resident in Japan and therefore the local contractor was in a far better position to know what materials were readily available for basic structural purposes. Accordingly it would be the duty of the contractor to prepare detailed structural drawings of the construction plan. The situation may be illustrated by using a building contract analogy. A stage designer's design plans are the architectural drawings and the contractor's working drawings are the structural drawings.

14. Mr. Chow said that during the discussions with Mr. Wong Kam-kwong, the sole proprietor of the defendant firm to whom the contract was finally awarded, it was decided that prefabricated materials would be used as this method of construction would result in an enormous saving in time.

15. In a written quotation dated 18th November Mr. Wong specified that if the plaintiff supplied the construction plan he would reduce the overall contract price by $3,000.   Mr. Chow declined to accept this option. It was therefore agreed that the structural drawings would be prepared by Mr. Wong.

16. The time schedule in Mr. Wong's quotation stated that the works specified therein would be commenced at 9 a.m. and completed at 8 p.m. on 16th December, and that the dismantling operation would be completed on the night of the last concert performance. It is clear from Mr. Wong's written quotation that the works for which he quoted involved the erection of a main stage, an orchestra pit, catwalks and audience risers, and that the time schedule he proposed related to all of those works.

17. Bearing in mind that the first concert had been scheduled to commence at 7:30 p.m. on 17th December it is evident that construction would have to be completed well before the opening item commenced in order to leave adequate time for rehearsals and the testing of lighting and sound equipment. Since the plaintiff had booked the Coliseum from 9 a.m. on 16th December, it is abundantly clear that by proposing that he commence work at the earliest possible moment Mr. Wong had very much in mind the importance of time and the necessity of expediting the works.

18. However, due to overall pre concert programming requirements, it was essential to Mr. Chow that the stages be erected earlier than the completion time of 8 p.m. proposed by Mr. Wong. He told the court that he therefore discussed the problem with Mr. Wong and that Mr. Wong made the suggestion that construction work at the Coliseum should commence earlier. As a result it was agreed that the plaintiff would alter the hiring arrangements with the Coliseum so as to enable work to commence at 6 a.m. on the 16th December. The parties also agreed that Mr. Wong's proposed completion time be amended from 8 p.m. to 3 p.m. on 16th December.  As a consequence of extending the period of hire of the Coliseum the plaintiff incurred additional expenditure in the sum of $9,000. Later, at Mr. Wong's request the times were again altered to enable work to commence at 5.30 a.m. and to conclude at 4.30 p.m. on 16th December. The effect of this agreed amendment was that the time schedule was brought forward by three and a half hours from that stated in Mr. Wong's original quotation. However the time span remained the same, namely, 11 hours. Subsequently, the plaintiff relaxed the time program by permitting the defendant to erect the audience risers between 11 p.m. on 16th and 3 a.m. on 17th December. The relaxation did not apply to any of the other works.

19. Mr. Chow was positive that he had stressed to Mr. Wong the importance of time and that Mr. Wong was completely aware that the first concert was to commence at 7.30 p.m. on 17th December. I have not the slightest doubt that this was so and that Mr. Wong clearly understood and accepted that time was of the essence.

20. In his written quotation Mr. Wong stipulated that he required $178,000 for the works and requested that the plaintiff "pay 50% as deposit prior to construction; a second payment of 25% to be made on 16th December 1983; the rest payable within 10 days after the performance". Several days later Mr. Wong submitted a supplementary quotation to the plaintiff in which he offered to reduce his first quote by $32,000 if the plaintiff would agree to release him from erecting the audience risers. He also quoted a price of $16,000 in respect of gauze which had not been included in the original quotation and which was to be used to line the sides of the catwalks so as to conceal the loudspeakers located underneath. In the supplementary quotation Mr. Wong also offered to reduce the dismantling fee by $1,000 if the plaintiff would permit him to delay dismantling the stage until the morning following the last concert.

21. Mr. Chow accepted the quote for the gauze but rejected Mr. Wong's offer concerning the delayed dismantling of the works. Thus it was finally orally agreed that the contract price would be $194,000. Likewise, the plaintiff orally agreed to meet the terms of payment proposed by Mr. Wong in his original quotation, and by a cheque dated 30th November Mr. Chow paid Mr. Wong a deposit of $100,000.

22. Mr. Chow explained to the court that he paid this sum instead of a sum equal to 50% of the contract price in order to make the first payment a round figure. He also said that the terms of payment proposed by Mr. Wong were common in the trade and that the purpose of payment of a deposit of 50% of the contract price was to enable the contractor to purchase the materials for the works. Mr. Wong agreed that this was so.

23. After the contract had been concluded Mr. Wong submitted various working plans, one of which was given to the Coliseum management in order to enable its workers to erect a number of metal platforms owned by the Coliseum so that Mr. Wong could use them as a base on which to construct part of his own works. These metal platforms were to be erected by Coliseum staff prior to Mr. Wong commencing his work at the Coliseum. There is no dispute that these platforms were in fact erected at about 3 or 4 a.m. on the 16th December and that no problem arose concerning them.

24. Mr. Chow went on to tell the court that Mr. Yanigasawa's design plans provided for an open stage in the centre of the main stage from which performers could ascend to the main stage and that the contract with Mr. Wong was based on this design. After the contract had been concluded but well before construction began the plaintiff decided to abandon the open stage in favour of some steps which could function not only as a platform on which singers in a children's choir could stand but also as a means whereby performers could enter the main stage from a higher portion of the audience area. This evidence was not challenged in cross-examination. Mr. Chow explained that this simple arrangement eliminated the complexity involved in the construction of an open stage and that construction costs and time were thereby considerably reduced. It is clear that the parties had agreed to this amendment to the design plans well before any construction work had actually commenced because a working drawing prepared by Mr. Wong, and on which he placed great reliance, clearly shows that the open stage no longer remained as part of the design.

25. On 16th December Mr. Chow instructed Mr. Chik, an engineer employed by an associate company of the plaintiff, to be present at the Coliseum to observe the progress of work and to report to him periodically during the day. Mr. Chow himself arrived at the Coliseum at around 9.30 a.m. and remained there for approximately an hour. On arrival he observed that a large quantity of materials was already inside the Coliseum, that the metal platforms provided by the management had been placed in position and that the structural frames for the catwalks had been erected. He did not notice anything that caused him any concern. However, as a consequence of reports that he received from Mr. Chik later in the day he became aware that progress had begun to falter. On his return to the Coliseum around 5.30 p.m., approximately an hour after all work should have been completed, he found that although the orchestra pit had been finished, only 50% of the catwalk floors had been completed and that no flooring had been laid on the main stage as work was still proceeding on the erection of ten frames.

26. Mr. Chik and Mr. Peon, Mr. Chow's assistant manager, informed Mr. Chow that Mr. Wong had assured them that work would be completed at about midnight. Mr. Chow complained to Mr. Wong about the delay and Mr. Wong promised that he would bring in more workers and would aim at completion around midnight.

27. From his observation of the scene, Mr. Chow formed the view that the delay had been occasioned by the fact that Mr. Wong had not engaged a sufficient number of workmen and that the carpenters themselves were inexperienced. He also noticed that although many of the components had been prefabricated and were satisfactory, a large amount of carpentry work was being conducted in situ and was of poor quality.

28. Notwithstanding this situation Mr. Chow was not unduly alarmed. He was reassured by Mr. Wong's promise to engage additional workers, and on that basis entertained reasonable hopes that the work would indeed be completed by midnight. However, one consequence of the dealy was that a rehearsal scheduled for 7 p.m. that evening was hampered and the sound engineers were unable to carry out balancing tests.

29. Mr. Chow stayed on to observe the progress of work. Instead of the pace picking up, it began to flag even more and Mr. Wong succeeded in adding only a few workers to his workforce. Shortly after midnight Mr. Hong informed Mr. Chow that although he had been unable to finish by midnight as he had promised he would keep his men on the job and work through the night. Mr. Chow then left the Coliseum and instructed Mr. Chik to remain there and to report to him if it appeared that there was a danger that the delay would imperil the first concert. At the time of Mr. Chows departure the skeleton of the main stage had been erected and more floorboards had been laid on the catwalks.

30. At around 5.30 a.m. on 17th December Mr. Chik called Mr. Chow and told him that he had formed the view that unless the plaintiff intervened the stages would not be erected in time for the concert to be held that evening. Mr. Chow then instructed Mr. Chik to call in immediately as many carpenters as he could find because it would be difficult to engage them if contact was delayed until later in the morning.

31. Mr. Chow hurriedly arrived at the Coliseum at about 6 a.m. and saw that very little progress had been made on the stages since his departure and that work had virtually come to a standstill. Only two or three workers were actually working and others were lying in the Coliseum seats or sleeping on the floor. He immediately called a meeting in a conference room at the Coliseum. Present at the meeting were Mr. Chow, Mr. Poon and Mr. Chik from the plaintiff and Mr. Wong and several of his supervisors.

32. Mr. Chow told the court that he had asked Mr. Wong what he proposed to do about the delay and that Mr. Wong had said that he had nothing to say. Mr. Chow then asked Mr. Wong whether he could bring in more workers and Mr. Wong replied that he had stretched himself to the limit and was unable to obtain additional help.

33. Upon hearing this Mr. Chow announced that the only solution was for the plaintiff to bring in its own workers and Mr. Wong agreed that this should be done. He further agreed that as matters stood he would be unable to complete the stage and that therefore he would bear all the costs involved. Mr. Chow then requested Mr. Wong and his supervisors to carry on supervising the work. He explained to the Court that from his long experience in the construction industry he was fully aware of the difficulties involved in removing a sub-contractor and bringing in other men and that such a situation could even lead to violence.  Moreover, since he did not have sufficient working drawings or any supervisors who were familiar with the plans for the construction of the project he found himself forced to rely on Mr. Wong's supervisors. Mr. Wong and his supervisors were agreeable to this course and arrangements were then made for them to split into separate working groups to supervise different areas of the work.

34. At around 8 or 8.30 a.m. the workers enlisted by the plaintiff arrived at the Coliseum and since no work had been done on the audience risers, two groups from these workers were assigned to erect the risers while another group was directed to assist in the laying of floorboards on the catwalks. A fourth group assisted with the floorboards on the main stage. Work then proceeded at a satisfactory pace. Altogether the plaintiff had brought in some forty to fifty workers while Mr. Wong retained a total of about 8 to 10 of his own staff including the four supervisors. Since the plaintiff's carpenters were construction workers they were not skilled in decoration work and therefore that aspect of work on the stage was entrusted to Mr. Wong's men.

35. By 3 p.m. work on the main stage had still not been completely finished and as a full dress rehearsal involving musicians of the Hong Kong Philharmonic was scheduled to commence at that time all work had to come to a temporary halt. Mr. Chow explained to the court that it was essential to begin the rehearsal promptly due to the fact that the Philharmonic musicians work strictly to rule.

36. According to Mr. Chow the first item in the rehearsal was a dance routine featuring ten to twelve girls performing a can can. While this act was proceeding Mr. Chow was present with his workers who had assembled under the stage in order to be out of the way during the rehearsal. He heard cracking noises from the stage structure and observed that parts of it began to rock. Some of the horizontal members supporting the floorboards were loose and some members had separated from the vertical supports and were flapping. Many of the members had been fixed in such a way that they did not even reach their final support. Both vertical and horizontal members were flexing up and down at their mid points. Fearing that the flooring would give way Mr. Chow immediately ordered that the rehearsal be stopped. He performed a rapid check and found that other parts of the stage were likewise affected. Following this Mr. Chow and his workers used whatever loose timber scraps they could find to support the weakened members and they added new supports to several areas that were found to be unsound.

37. Mr. Chow discovered that in the affected areas there was a lack of adequate horizontal and diagonal bracing of the vertical members supporting the stage and that the nailing of the various supports had not been properly done. He therefore directed his workers to inspect every prefabricated frame for faulty workmanship and to secure them with additional nails or supports.

38. After some three quarters of an hour to an hour Mr. Chow felt sufficiently confident that this remedial work would prevent any major collapse. He therefore permitted the rehearsal to proceed and deferred further work on strengthening the various structures until the rehearsal had concluded.

39. At around 7.05 p.m. the Coliseum management insisted that the gates to the auditorium be opened to admit ticketholders for the concert. Mr. Chow estimated that the first thousand concertgoers who entered the auditorium would have heard the hammering from the remedial work which continued almost to the time of the opening item of the concert.

40. Mr. Chik and Mr. Mak Kwok-hon, a freelance stage manager engaged by the plaintiff for this venture, gave testimony that thoroughly corroborated Mr. Chow's evidence concerning the instability of the stage and of the events that followed after this condition had been detected. Both Mr. Chew and Mr. Chik told the court that the problems of instability continued until 19th December and that on 18th December steel jacks were brought in from a construction site to support the beams bearing the stage flooring. Mr. Mak was unable to recall whether work to rectify the instability continued on 19th December. He also said that he could not recall whether jacks were used on 17th or 18th.

41. During the first concert Mr. Chow stationed some thirty of his carpenters underneath the stage to watch for localised movements and to support the stage. Although the number of carpenters was reduced on the succeeding nights some of them were retained under the stage to carry on with their observations for movement and to do remedial work whenever necessary during the concerts held on 18th and 19th December.

42. Mr. Chow's evidence concerning the construction of the works and of the delays in the erection of the various items was supported by that of Mr. Chik and Mr. Mak. There were minor discrepancies in their respective accounts of the progress of events and of the various incidents that occurred but these are readily understand-able in view of the length of time that has elapsed since December 1983 and the fact that they each performed different functions and were not always present in one location at the same time. Thus their perception of events was not likely to be always the same.

43. Mr. Yanigasawa testified that it is incumbent on a contractor to follow a designer's design plans unless specifically authorised to depart from them and that he gave no permission to Mr. Wong to do so. He estimated that at the time when the first concert commenced the stage setting was only 20% to 30% complete in accordance with his design although the other aspects of the main stage, orchestra pit and catwalks were between 70% to 80% complete. Mr. Chow confirmed Mr. Yanigasawa's testimony as the extent to which the structural part of the works had been completed. However, he emphasized that this figure of 75% did not take into account the instability of the struc-ture. In other words, although Mr. Wong had completed 75% of what he had been required to do structurally, the work that he in fact performed was unstable.

44. Moreover, he told the court that he had been present at the Coliseum from about 1 p.m. on 16th December to the time of the first concert almost continuously except for brief periods when he took a snack or returned to his hotel to rest for an hour. During the time he was at the Coliseum he observed that Mr. Wong's workers were proceeding at too slow a pace and displayed no ability in constructing the stage in accordance with his design. Indeed, he went into considerable detail in his evidence in specifying the departures from his design. He complained that the workmanship was extremely poor, that the finish given to the work was "very bad and very dirty", that the workers walked onto the stage in dirty shoes, that their method of work was of "the lowest rank" and that the main stage had been so badly constructed that it was very weak and unsteady and constituted a danger to the performers. His observation concerning these matters was based on his experience with stages over a period of more than 30 years. He also said that even at the opening concert after remedial work had been done on the structural supports to the stage it was still in an unsteady state. In several other material aspects his evidence also supported the testimony given by the other witnesses for the plaintiff.

45. Mr. Poon, the assistant producer, testified that he had provided Mr. Wong with Mr. Yanigasawa's design plans at the time when tenders for the construction of the works were called for. When shown the five design plans he distinctly recalled having given four of them to Mr. Wong but was unable to recall if he had provided him with number 4 in the series.

46. He confirmed that although it had originally been agreed that the time for the erection of the works would be from 9 a.m. to 8 p.m. on 16th December, the parties both agreed to advance the booking time for the Coliseum to enable Mr. Wong to commence work earlier and thus complete earlier. Thus the amended agreement was that the works would be performed between 6 a.m. and 3 p.m. on 16th December. Subsequently the parties further amended the time table by agreeing that the stage was to be erected between 5.30 a.m. and 4.30 p.m. on 16th December and that the audience risers would be erected between 11 p.m. on 16th and 3 a.m. on 17th December. No doubt this further relaxation of time in respect of the audience risers was due to the fact that they would neither be required for rehearsals nor be involved in any of the necessary lighting and sound arrangements.

47. Mr. Poon denied that the contract was based on Mr. Wong's working plan and explained that such was merely a floor plan. He said that to construct the stage it would have been necessary to use Mr. Yanigasawa's design plans. He agreed that the plaintiff had requested Mr. Wong to perform certain additional works after the contract had been awarded to him. Mr. Poon stressed, however, that some of these items had not been completed and he was unable to say whether some of the others had been constructed by Mr. Wong's workers or by the workers brought in by Mr. Chow.

48. Mr. Poon agreed that although prior to Mr. Wong having submitted his quotation he had asked him economise on the cost of construction, this was nothing more than a request to Mr. Wong to give his best quotation and was perfectly normal in such circumstances.

49. He also told the court that prior to the awarding of the contract Mr. Wong had said that if he followed Mr. Yanigasawa's plans it would be very expensive and that there would be wastage of material. In this connexion Mr. Wong had referred to the overhanging ledges of the staircase steps specified in the design plans and observed that to implement this design would be far more expensive than to construct steps without the overhang. Mr. Wong also told him that the kerbing around both sides of the catwalk and the use of heavy timber specified in the design plans would be very expensive. Mr. Poon further explained that although he did not expressly tell Mr. Wong to follow Mr. Yanigasawa's design plans exactly, it was entirely unnecessary to do so as the normal procedure was that when a contractor submitted a quotation he would follow the designer's plans. Mr. Poon added that when the contract was finally awarded to Mr. Wong he did not expect that Mr. Wong would depart from Mr. Yanigasawa's design plans.

50. In his re-amended defence and counterclaim Mr. Wong contended that the contract between the parties was an oral agreement that he perform the required works in accordance with a design plan which he submitted to the plaintiff and which was approved by Mr. Chow and Mr. Poon. He also contended that the agreement stipulated that the works be completed no later than 8 p.m. on 16th December. This clearly implied that there had been no variation of the completion time as claimed by Mr. Chow and Mr. Poon.

51. Furthermore, in his pleading the defendant merely asserted that it had been agreed that the first payment of 25% of the purchase price payable after the initial deposit of 50% was to be made on 16th December. In his evidence, however, Mr. Wong insisted that it had been agreed that this payment would be made on the morning of 16th December after the delivery of materials to the Coliseum, and that on that morning he requested Mr. Chow to pay it to him but was put off by Mr. Chow who told him that he was too busy to attend to the matter. Mr. Chow denied this and Mr. Poon testified that he was unaware that any such request had been made.  If the position was as Mr. Wong claims it to have been it seems strange that he did not clearly state this in his pleadings.

52. In his re-amended defence and counterclaim the defendant further claimed that he had been delayed in carrying out the works as the result of wrongful demands by the plaintiff that he perform four modifications and some additional works valued at $7,050 that were not specified in the original contract.

53. The modifications related to the lowering of a piano platform in the orchestra pit, the changing of a floor cover from white carpet to white emulsion paint, the lowering of panels on two staircases leading to the main stage and the removal of panels already attached to the perimeter of the catwalk so that they could be reduced in height and then be re-attached.

54. Having heard witnesses for the plaintiff and the defendant testify as to these matters I am quite satisfied that the last three of these alleged modifications were brought about as a consequence of the defendant's failure to conform with the design plans. It is clear to me both on the evidence and as a matter of common sense that Mr. Wong not only submitted his quotations on the basis of these plans, and not his own plan which was merely a working plan, but that he had neither express nor implied authority to depart from the design plans.

55. If contractors were to be permitted to alter design features without authority in order to suit their own purposes the situation would be intolerable. The contract was based on the design plans and accordingly the contractor was obliged to adhere to them. I do not for one moment accept Mr. Wong's suggestion that at the time of providing him with design plans for the purpose of enabling him to make his quotation, Mr. Poon had in any way idnicated to him that he could depart from them. I have no doubt that in asking Mr. Wong to economise, Mr. Poon had merely been following the usual practice of exhorting the tenderer to submit his best price. Equally I am satisfied that Mr. Wong had received all five design plans before the contract was concluded. It is true that Mr. Poon could not recall whether he had handed one of these plans to Mr. Wong but Mr. Chow testified that Mr. Wong had had the five design plans. Mr. Poon quite frankly stated that that he was unable to remember or to remember clearly certain details of what had occurred. I do not find this to be surprising in view of the length of time that had elapsed between the events which took place and the trial.

56. I gained the distinct impression that Mr. Wong was developing his case as the trial progressed and that he seized upon and exploited by moulding into his own testimony certain matters which earlier witnesses had been unable to recall or on which they had given accounts that were not entirely congruent one with the other. For example it was significant that it had not been put to Mr. Chow, whose testimony preceded that of Mr. Poon, that only four of the five design plans had been given to Mr. Wong. Yet after Mr. Poon testified that he was unable to recall whether he had given plan number 4 to the defendant, Mr. Wong sought to make great use of this in his own evidence. I was unimpressed with Mr. Wong's evidence that after a very brief period spent in examining these plans with Mr. Poon in a fast food shop he had been able to pinpoint a number of minor discrepancies between them and yet had not noticed from the bold numbering on the top right hand corner of each plan that number 4 of the set was missing.  Moreover, at the top left hand corner of plan 5, which he admitted that he had been given, there appear the words "(A) Explain (Speaker box)" and directly below appears a large plan of the actual siting of a speaker box.  Plans 1 to 3 did not refer to or depict any speaker boxes. That this did not alert Mr. Wong to the absence of a plan is most surprising. Plan 4 actually shows the general location of the speaker boxes under the catwalk and calls attention to plan 5. It is plain to me that Mr. Wong did nto want to admit to having seen plan 4 because it is that plan which depicts the design of the staircases, a design which he did not follow.

57. The defendant claimed that he had completed all the works including the modifications and additional works at or about 6 p.m. on 17th December. I do not accept this. I am perfectly satisfied, that the works had not been completed by that time, that inferior materials had been used, that the workmanship was of an unacceptably inferior standard, that wilful departures had been made from the design plans to save time and money for the defendant and that work had proceeded at too slow a pace. In this connexion I rely both on the evidence of two experienced engineers Mr. Chow and Mr. Chik and on that of Mr. Yanigasawa whose experience of stage construction extends beyond 30 years.

58. These three witnesses, indeed every witness for the plaintiff, impressed me as being entirely truthful. There were naturally minor inconsistencies between them but these were not such as to cause me to doubt their reliability. Indeed it was plain that their evidence had not been rehearsed but had been given independently.

59. Regrettably, with the exception of Miss So, who struck me as being completely honest, I am unable to say the same of the defendant's witnesses.

60. In his pleadings the defendant denied that the plaintiff had engaged additional workers but went on to claim that if such workers had been engaged it had been entirely at the plaintiff's volition and that their engagement had been rendered necessary as a consequence of the plaintiff's wrongful modification of the works and its request that additional works be performed.

61. This denial that any additional workers had been engaged runs completely counter to the way in which the defendant conducted his case. Indeed the theme which he gradually developed in court was that any instability that might have existed in the stage was wholly due to the installation of metal jacks under the stage by the plaintiff's workmen. The defendant sought to persuade me that in order to instal these jacks the plaintiff's workmen actually sawed gaps in the horizontal and diagonal timber members which braced the vertical supports of the stage, so that the jacks could be sited immediately under the uppermost beams supporting the stage flooring. Mr. Wong and his witnesses also claimed that the plaintiff had installed the jacks on the 17th rather than 18th December. According to the defence evidence the stability of the stage would have been adversely affected by the gaps sawed in the bracings and that even the adjustment of a jack to a height in excess of one eighth of an inch above stage floor level would lift the floorboards.

62. The defendant could offer no plausible explanation as to why two experienced engineers such as Mr. Chow and Mr. Chik would see the need to instal jacks to support an entirely stable and properly erected stage. It is inconceivable to me that Mr. Chow would have resorted to such a measure unless it had become absolutely essential to do so. I also do not accept the evidence of Mr. Wong and his chief foreman supervisor Mr. Lo that when they discovered that the jacks were being installed on 17th December they made no attempt either to remonstrate with Mr. Chow or any of his senior staff or even to draw this matter to their attention on the possibility that the installation of the jacks may net have been performed as a consequence of a direction by the plaintiff but had occurred as a result of the unauthorised and misguided act of some of the plaintiff's newly arrived workmen. The defendant testified that although Mr. Lo had been gravely concerned about the jacks when he had become aware that they were being installed, he simply told Mr. Lo that it was not their responsibility but that of the plaintiff and thus no further action was taken.   Mr. Lo himself testified that when he saw the plaintiff 's workers fitting the jacks he formed the view that they were ruining the whole stage structure and that this would also have been obvious to Mr. Wong. Moreover he said that he had expressed this view to Mr. Wong. There cannot therefore be any doubt that if the jacks had been installed at this time Mr. Wong was under no illusions about their potentially damaging effect on the stage.

63. Not only do I find this to be an astonishing reaction by the defendant to an admittedly serious state of affairs but it also runs counter to Mr. Lo's testimony that at the meeting early on the morning of 17th December Mr. Chow had said that he was calling in additional workers to help the defendant and had requested the defendant to give instructions to these workers as to how they should perform their tasks. Later in cross-examination Mr. Lo reinforced this when he said that Mr. Chow had made it clear that the plaintiff's workers would be under the defendant's command. If the new workers had been placed under the control of Mr. Wong's supervisors as they undoubtedly had been, it is amazing not only that they would have been permitted to instal the jacks but that Mr. Wong would have taken the view that this was the plaintiff's responsibility.

64. Another remarkable feature of the defence evidence is that notwithstanding the allegations concerning the metal jacks and the serious interference by the plaintiff's workmen to the bracings of the stage underpinnings so that the jacks could be installed, Mr. Wong and Mr. Lo both testified that it had not been until this year that they had come to learn of the plaintiff's complaint that the stage had been unstable.

65. In the case of Mr. Wong, this cannot possibly be true because as early as 6th January 1984, very shortly after the concerts had concluded, Mr. Chow wrote Mr. Wong a letter of demand in which he clearly stated that the stage had been unsafe. I gained the impression that Mr. Wong had been attempting to lead the Court to believe that Mr. Chow had belatedly invented the allegation of an unstable stage to bolster his case. It appears, however, that Mr. Wong had forgotten about the allegation in Mr. Chow's letter about the unsafe stage and, when cross-examined en this matter, he prevaricated and unconvincingly told the court that he had handed the letter to a relative who had only explained the gist of it to him.

66. In cross-examination Mr. Lo said that after he had left the employment of the defendant and had established his own business in 1984 he had sent circular letters to various people, including Mr. Chow, in order to canvass business. As a consequence he received a telephone call from Mr. Chow inviting him to visit him at his office. Although he agreed that at the meeting which followed Mr. Chow had asked him to make a fair comment on the problem that had arisen over the construction of the stage for the Musical Extravaganza, he denied that he had told Mr. Chow that the problems had been caused by Mr. Wong and that Mr. Wong's own supervisors had pointed out to him that he had underestimated the work.   Mr. Lo also denied that he had told Mr. Chow that it had been silly for Mr. Wong to become involved in the present litigation because he, Mr. Wong, had done a poor job of work. He agreed however, that at this discussion Mr. Chow had not asked him to tell lies about Mr. Wong but had merely asked him to be fair in his comments.

67. As a result of Mr. Lo's denials counsel for the plaintiff applied for and was granted leave pursuant to section 13 of the Evidence Ordinance to recall Mr. Chow to testify as to what Mr. Lo had said in this conversation. I made it plain to both counsel that Mr. Chow's evidence in this connection was only relevant to Mr. Lo's credibility as a witness and that it could not be used as proof of the truth of anything that Mr. Lo had said concerning these matters.

68. Mr. Chow testified that at the meeting he had asked Mr. Lo to tell him honestly what had actually caused the trouble with the stage and that in reply Mr. Lo had said that Mr. Wong had underestimated the scale of the project and that his other supervisors had pointed out to him before construction had begun that he had not provided for an adequate labour force but that Mr. Wong would simply not listen to the advice given to him. Mr. Lo had also said that he thought that Mr. Wong had been quite silly in getting involved in legal action in view of his poor performance in constructing the stage. In cross-examination Mr. Chow agreed that what he had said that Mr. Lo had told him at this meeting in fact accorded with his own view of the matter.

69. I do not find this to be at all surprising. Indeed on the evidence I have heard it seems to me that Mr. Wong did underestimate the magnitude of the task he had agreed to perform. Mr. Wong himself agreed that he had never undertaken the construction of a stage as large as that for the Musical Extravaganza.

70. The defendant called two further witnesses. A Mr. Chui told the court that Mr. Wong had engaged him to attend the concerts in order to keep watch to see that that the gauze fronting to the stage did not come loose. He agreed that Mr. Wong had also instructed him to report to him immediately if anything went wrong. This suggests to me that Mr. Wong was very much alert to the possibility that something untoward might occur during the course of the performances and that such might well be of a serious nature, otherwise the requirement for Mr. Chui to make immediate reports would seem to be unnecessary as minor matters could easily have been handled by Mr. Chui and his co-worker without recourse to Mr. Wong.

71. However, the purpose in calling Mr. Chui to testify seems to have been so that he could tell the court that he had seen metal jacks supporting the stage during the course of the performance on the night of 17th December and that he had seen them even earlier that day.   This was important to the defendant's case as Mr. Chow had adamantly testified that the jacks had not been brought in and installed until 18th December, and the defendant was anxious to attribute any instability in the stage to jacks having been installed under it before the instability became apparent.

72. It was clear from Mr. Chui's evidence that he had been stationed on the outer side of the stage to maintain watch on a section of gauze cloth and that before each performance he and his co-worker had checked the gauze around the perimeter of the stage. Accordingly there was no apparent reason why he would have been required to go underneath the stage which was the only place from where he would have been able to see the supporting metal jacks.

73. His explanation as to how he had come to see the jacks was that while he had been examining the gauze prior to the performance on the night of 17th December he had pushed it aside and had taken a look underneath the stage. When cross-examined as to how he could possibly have pushed aside the gauze which had been fastened in sheets each to the other and secured to the outer wooden decorations to the stage, he claimed that a flap similar to a curtain had been installed at one location to enable people to go under the stage.

74. I regard this as being nothing more than a puerile attempt to provide an answer to the difficulty in which he found himself in cross-examination. At no time during the five weeks of evidence given at the trial was there any suggestion that anyone would enter or leave the stage in such a manner. Indeed the unchallenged evidence was that performers would enter the stage by an entirely different route. I can find no reason why anyone, be he performer or worker, should have entered in the manner suggested by Mr. Chui. There is no apparent reason why Mr. Chow's workers who had been stationed under the stage with Mr. Chow would not use the normal place of entry and exit. I consider that it would have been most unlikely that Mr. Chow would have sanctioned the use of such an unconventional mode of entry as it seems clear that one of his concerns was that the gauze facings should be taut and secure. Moreover, I found that Mr. Chui's insistence that he actually saw the jacks under the stage on the night of 17th December rather than on any of the other nights of the concert to be wholly unconvincing. He was unwilling to concede that it was possible that during the long period of time that had elapsed since the events of the Musical Extravaganza he could have confused the events of one night with those of another. I simply do not accept his evidence.

75. Miss So, one of the can can dancers at the Musical Extravaganza, testified that she had taken part in a dress rehearsal on the afternoon of 17th December but had not noticed any instability in the stage. She also attempted to give an estimate as to the time when various photographs in which she and her co-dancers were depicted must have been taken. The purpose of this latter evidence was to lend support to the defendant's contention as to the time at which various works were performed.

76. Although I have no doubt that Miss So was a truthful witness I found her to be most confused as to times and the sequence of events. She conceded that on many occasions during the orchestral rehearsal the dance had been performed intermittently and that only some of the dancers were involved on each occasion.

77. Bearing this in mind and the evidence of Mr. Chow that it was only at certain places that the stage had been observed to be moving during the rehearsal I am unable to say that Miss So's evidence contradicted the plaintiff's evidence as to the instability of the stage. Indeed, her evidence that the dance had been performed intermittently during the rehearsal serves, if anything, to reinforce the plaintiff's evidence that there were interruptions to the rehearsal due to the instability.

78. Miss So's evidence concerning the time when the photographs were taken relative to the dress rehearsal was confusing and contradictory. Ultimately she said that the dancers had not been wearing their costumes as depicted in the photographs at the time of the formal rehearsal with orchestral accompaniment. This is manifestly incorrect as an examination of the photographs reveals that the musicians were actually playing their instruments and were being conducted by the conductor at this time. The only other rehearsal that Miss So said had occurred on stage that afternoon was one in which the dancers performed to taped music. I am unable to find anything concrete in her evidence on which the defendant might rely to displace the testimony of the plaintiff. I found Mr. Chow to be a highly intelligent and scrupulously fair and honest witness who at no time sought to embroider his testimony in any respect. There were several occasions on which he went out of his way to point out matters whereby events might be seen in a light more favourable to the defendant. His evidence not only fits in far more readily with the known circumstances and the inherent probabilities of the situation but he is supported in many material respects by the testimony of credible and reliable witnesses. As I have already observed it is true that the recollection of each witness does not always dovetail with that of the others in respect of every event that occurred and was common to them. For example, Mr. Poon does net recollect hearing at the meeting on the morning of 17th December Mr. Chow and Mr. Wong agree that the cost of bringing in the extra workers was to be borne by Mr. Wong. Mr. Lo, Mr. Wong's own witness, said that the meeting had been conducted partly in Cantonese and partly in Shanghainese. Under such circumstances and in the light of the lapse of time between that meeting and the trial it would be surprising if every witness had been able to tell the court everything that had been said.

79. Although for obvious reasons I have not embarked on a detailed analysis of all the evidence given at the trial, there are several matters which are deserving of mention. The defendant had been at pains to establish that the various components of the stage including the frames for the catwalks had been prefabricated prior to 16th December at his workshop at Shatin. He sought to show that this was a potent indicator that such delay as there had been in the erection of the stage was not due to any fault on his part. There was evidence, however, from Mr. Poon that Mr. Wong's workers were actually making frames for the catwalks at the Coliseum. Moreover, the defendant's own documentary evidence relating to the purchase of timber indicated that large quantities had been delivered to the Coliseum. Try as he might, Mr. Wong was unable to explain satisfactorily the purpose of the delivery of this timber to the Coliseum. Although the use to which it had been put could not be conclusively shown I am satisfied on a con-sideration of all the evidence that Mr. Wong and Mr. Lo did not tell the truth about the extent of the prefabrication performed at Shatin, and that failure to prefabricate to the maximum at Shatin was a contributing factor to the delay in constructing the works.

80. The defendant also strenously maintained that although he had not followed Mr. Yanigasawa's design plans for the installation of the kerbing around the catwalks, he had raised the level of the vertical panels on the outer sides of the catwalks to the same distance above the level of the catwalk floor as that specified for the kerbing. He claimed that it had been as a result of the plaintiff's demand at a later stage that he detach all the panels and lower them to the height of the catwalk floor that the completion of the works had been greatly delayed.

81. This does not accord with the photographic evidence from which it can clearly be seen that workers were installing the vertical panels to the level of the catwalk floor and that panels which had not yet been cut and installed were free standing vertically in the positions at which the remaining vertical panels would ultimately be erected and fixed. I do not accept the defendant's lame explanation that these long uncut panels were not destined for use as vertical panels but were intended for use elsewhere. Moreover, the defendant was unable to explain satisfactorily why, if his version were correct, he had not erected any panels protruding above floor level on the inner side of the catwalks to correspond with the kerbing that Mr. Yanigasawa's design plans had indicated should have been installed there.

82. During the course of the defendant's evidence his counsel stated to the court that while there was no suggestion that Mr. Poon had told Mr. Wong that he could depart from any of Mr. Yanigasawa's design plans, it was the defendant's case that Mr. Poon had not instructed Mr. Wong to follow these plans exactly. However, when Mr. Wong found himself in difficulty in cross-examination he claimed that in fact Mr. Poon had told him that he need not follow the plans exactly. I found this evidence to be most unconvincing. His account of the alleged requirement for the plaintiff to pay 25% of the contract price on the morning of the 16th December before the defendant's workers commenced work and his explanation as to the manner in which he had expected payment from the plaintiff and that in which he himself would have paid his workers were equally unpersuasive.

83. I have also come to the conclusion that the plaintiff's request to lower the piano platform did not involve an operation as extensive as that alleged by the defendant. On the evidence I heard from the plaintiff's side I am perfectly satisfied that neither this modification to the original plan nor such minor additional works as the plaintiff had requested Mr. Wong to perform at the Coliseum after work had commenced had any material bearing on the inordinate delay in the erection of the works. I accept both Mr. Yanigasawa's and Mr. Chow's evidence as to the manner in which the work was carried out and find that the blame for the delay rests squarely with the defendant. Even if I had accepted the defendant's evidence as to the time taken to perform the modifications and additional works it would by no means have accounted for the gross delay in the erection of the works.

84. I am satisfied that it had been agreed that time was of the essence of the contract. I believe Mr. Chow's evidence that he stressed that time was all important and that Mr. Wong had accepted this when he entered into the contract. Indeed, a man of Mr. Wong's experience in building stages must surely have realised that a deadline would have to be met in order to enable rehearsals to be performed and the necessary lighting and sound installations to be carried out and tested. The fact that the time for entry into possession of the Coliseum had been brought forward to enable the earlier commencement of work must surely have focused attention on the importance of time.

85. However, the defendant's failure to comply with the time specified for completion and his admission to Mr. Chow that he was at the end of his resources does not play a determining role in the disposal of this action for I am of the view that although Mr. Chow would have been entitled to treat this breach, going as it did to the root of the contract, as a repudiation of the whole contract, and to have regarded the contract as discharged, he in fact elected not to do so. Not only did Mr. Chow not dismiss the defendant at the meeting on the morning of 17th December but he requested the defendant to remain on and direct Mr. Chow's newly enlisted workers as to the performance of their duties.

86. I have no doubt that the parties varied the terms of the contract at this meeting and that Mr. Wong agreed with Mr. Chow that he would be responsible for the cost of bringing in the extra carpenters to complete the erection of the works so that the concerts could take place as scheduled. Moreover, in the light of Mr. Wong's dismal failure to complete the erection of the stages thereby making it necessary for Mr. Chow to incur the expenditure of bringing in additional workmen in a desparate attempt to complete the stage by the opening time for the first concert, it does not seem to me to be in the least unlikely that the innocent party, Mr. Chow, would have demanded that Mr. Wong would be responsible for the extra costs involved and that Mr. Wong would have agreed to that demand. Furthermore, had the first concert been abandoned due to failure to erect the stage the financial consequences for Mr. Wong would have been most serious and he would no doubt have been fully aware of this.

87. At the time when the contract was thus varied the structural defects in the stage had not been discovered. It was not until the dress rehearsal began in the early afternoon of 17th December that the instability in the stage became apparent to Mr. Chow. Accepting as I do the evidence of the plaintiff's witnesses as to the nature and degree of the instability resulting in a positively unsafe structure, it is my view that the plaintiff would have been entitled to treat this grave breach as a repudiation of the whole contract and to have regarded the contract as having been discharged.

88. Although it is true that Mr. Chow testified that at this point of time he had "written off" Mr. Wong I have come to the conclusion that this did hot mean that he had dismissed Mr. Wong and thus discharged the contract but that he had come to a realisation that Mr. Wong had failed him badly and could no longer be relied upon, and that if the situation were to be saved he, Mr. Chow, would have to save it by dint of his own efforts.

89. I am fortified in coming to this conclusion by the fact that Mr. Chow kept Mr. Wong and his remaining workers on the job in order to complete the decorative as opposed to the structural aspects of the works. Mr. Chow agreed that his own men would have been unable to perform the decorative work. Even had they been able to do so, the time factor was such that they could not possibly have managed to perform both the outstanding structural and decorative work. I therefore do not accept the submissions by counsel for the plaintiff that the plaintiff had treated the defendant's successive grave breaches of contract either individually or collectively, as a repudiation of the whole contract and had accordingly regarded it as having been discharged. The contract, although varied at the meeting in the morning of the 17th December, was still alive and continued to be so at the commencement of the first concert.

90. Counsel for the plaintiff contended that at least by this time the plaintiff had dismissed the defendant because he had told him that he did not require his services during the concerts. However, the contract included the dismantling of the works by the defendant after the conclusion of the concerts. Mr. Chow testified that he and the defendant agreed that because the plaintiff had been forced to bring in additional timber materials, metal jacks for shoring and scaffolding tubes for cross bracing in order to rectify the instability of the stage, Mr. Chow's workers would dismantle the works so that this equipment could be returned to the site from where it had been borrowed. To my mind this clearly demonstrates that Mr. Chow had not dismissed Mr. Wong. Had he in fact done so there would have been no necessity for this agreement releasing Mr. Wong from the task of dismantling. I have no doubt, however, that there was an implicit understanding between the parties that the cost of the dismantling would be borne by Mr. Wong. In the context of what had happened it would be wholly unrealistic to view the matter in any other way. This cost was included in the plaintiff's claim for special damages.

91. I accept the plaintiff's evidence as to the expenditure incurred in bringing in the extra workmen. I am satisfied that the number of men employed and the wages paid to them was both necessary and reasonable. The plaintiff has proved to my satisfaction its claim for $96,777 special damages.

92. The plaintiff also claims the return of the deposit of $100,000.  Although both parties referred to this sum as a deposit it does not seem to me to have been a sum paid by the plaintiff in earnest to bind the contract. It is clear from the evidence that this sum was paid as an advance to the defendant in order to enable him to purchase the materials necessary for the completion of the works. In my view it was a part payment of the contract price and not, as contended for by counsel for the plaintiff, a sum paid by way of security to ensure that the plaintiff would not abandon the defendant. The realities of the situation were that materials had to be purchased and prefabrication work begun promptly. I feel sure that in all the circumstances the defendant did not even have in mind the possibility that the plaintiff would abandon him.

93. Counsel referred me to Chitty on Contracts General Principles 25th edition para 1971 where it is stated that if a sum of money paid under a contract is called a "deposit" then if nothing is said expressly about the conditions governing it, it will be taken to be required as a security for the completion of the contract by the payer and will be forfeited to the other party if the payer fails to perform his side of the contract. It seems to me, however, that this statement of principle must relate only to situations where there are no external circumstances to indicate the nature of the payment. If the surrounding circumstances, including the prevailing practice relating to such payments and the reasons therefor, are so well understood by the parties as to eliminate the need for them to state the obvious, I do not think that the parties' failure to enter into an explicit agreement as to the conditions governing the payment of such a sum requires the court to find that it was a security for the completion of the contract.

94. Counsel for the plaintiff conceded that if the $100,000 does not amount to a deposit then it follows from the decision in Hyundai heavy Industries Co. Ltd. v. Papadopoulos ⁽¹⁾ that for the plaintiff successfully to regain this sum he must show that there had been a total failure of consideration on the part of the defendant. In this connexion counsel contended that the stage was a temporary structure for a temporary purpose and that therefore there had been a total failure of consideration on the part of the defendant in providing a half completed stage for the first concert.

95. I must confess to having great difficulty in accepting this submission. I fail to see how it can really be said that the works which Mr. Wong provided, defective as they were, amounted to a total failure of consideration. Whatever the structural and decorative deficiencies the stage had, the first concert was able to commence at the scheduled time and all concerts were successfully concluded. Although it is true that the stage did not collapse due to the timely intervention and efforts of the plaintiff, it cannot be denied that the defendant provided a structure without which the concerts could never have been performed. The plaintiff cannot say that he did not enjoy the benefit of any part of what he had bargained for. I am unable to conclude that there was a total failure of consideration.

96. Finally, counsel for the plaintiff contended that even if the $100,000 was not a deposit but only a part payment of the purchase price and even if there had been no total failure of consideration such as to entitle the plaintiff to recover this sum, the defendant must fail in his claim to entitlement to the $94,000 balance of the contract price on the basis that he did not substantially perform the contract.

97. The principle is neatly set out in para 1402 of Chitty as follows:

"a builder who abandons work under a lump-sum contract can recover nothing; but if the work is substantially completed, and it is only in some minor details that the workmanship falls below the contractual specifications, the builder may recover the agreed price, less a deduction based on the cost of making good the defects or omissions. In considering whether there was substantial performance it is relevant to take into account both the nature of the defects and the proportion between the cost of rectifying them and the contract price. It is clear that the rule applies to unimportant matters of nonfeasance as well as to unimportant matters of misfeasance."

98. The cases from which this principle emerges are cited in Chitty and counsel also referred me to them.  They include Sumpter v. Hedges ⁽²⁾, Dakin (H) & Co. Ltd. v. Lee ⁽³⁾, Hoenig v. Isaacs ⁽⁴⁾, and Bolton v. Mahadeva ^(5).

99. I agree with counsel for the plaintiff that this was an entire contract. Although the parties had agreed that the plaintiff would pay two sums before the defendant had completed his obligations under the contract and that the balance of the contract price would be paid some days thereafter, I do not think that such an agreement created a divisible contract. This was not a case where certain sums were alloted to separate and distinct works to be performed independently of each other. The contract was not divisible in the sense that it created an obligation to pay for a divisible part of the performance which was independent of the performance of the other parts of the contract.

100. The principle enunciated in Chitty and stated above is clear. It is the application of that principle to the facts of each individual case that may cause difficulty. In Bolton v. Mahadeva ⁽⁵⁾ which was a case where the Court of Appeal in England held that having regard to the character of the defects in the installation of a hot water system and the costs of remedying them, the contractor for the work had not substantially performed the contract, Cairns LJ said at page 1011:-

"The main question in the case is whether the defects in workmanship found by the judge to be such as to cost £74 to repair-that is, between one third and one quarter of the contract price - (of £560) were of such a character and amount that the plaintiff could not be said to have substantially performed his contract.  That is, in my view, clearly the legal principle which has to be applied to cases of this kind."

The bracketed insertion is mine.

101. At page 1013 His Lordship, in referring to the cases of Eshelby v. Federated European Bank Ltd. ⁽⁶⁾ and Hoenig v. Isaacs ⁽⁴⁾, said:-

"and it may be material to note that in that case it was a contract for £1,500, payable in four instalments. The instalment which was the subject matter of the claim was £375, and the extent to which the work fell short of the standard required was valued at £80. That was held to be sufficient, at any rate in the judgment of Slesser L.J., who deals most positively with the point, to reach the conclusion that the work had not been duly executed in accordance with the agreement.

 

       Perhaps the most helpful case is the most recent one of Hoenig v. Isaacs [1952] 2 All E. R. 176. That was a case where the plaintiff was an interior decorator and designer of furniture who had entered into a contract to decorate and furnish the defendant's flat for a sum of £750; and, as appears from the statement of facts at p. 177, the official referee who tried the case at first instance found that the door of a wardrobe required replacing, that a bookshelf which was too short would have to be re-made, which would require alterations being made to a bookcase, and that the cost of remedying the defects was £55 18s 2d. That is on a £750 contract. The ground on which the Court of Appeal in that case held that the plaintiff was entitled to succeed, notwithstanding that there was not complete performance of the contract, was that there was substantial of performance of the con-tract and that the defects in the work which there existed were not sufficient to amount to a substantial degree of non-performance.

 

      In considering whether there was substantial performance I am of opinion that it is relevant to take into account both the nature of the defects and the proportion between the cost of rectifying them and the contract price. It would be wrong to say that the contractor is only entitled to payment if the defects are so trifling as to be covered by the de minimis rule.

 

      The main matters that were complained of in this case were that when the heating system was put on, fumes were given out which made some of the living rooms (to put it at the lowest) extremely uncomfortable and inconvenient to use; secondly, that by reason of there being insufficient radiators and insufficient insulation, the heating obtained by the central heating system was far below what it should have been. There was conflicting evidence about those matters. The judge came to the conclusion that because of a defective flue, there were fumes which affected the condition of the air in the living rooms, and he further held that the amount of heat given out was such that, on the average, the house was less warm than it should have been with the heating system on, to the extent of 10 per cent. But, while that was the average over the house as a whole, the deficiency in warmth varied very much as between one room and another. The figures that were given in evidence and, in so far as we heard, were not contradicted, were such as to indicate that in some rooms the heat was less than it should have been by something between 26 and 30 per cent.

 

      The judge, having made those findings, came to the conclusion that the defects were not sufficient in degree to enable him to hold that there was not substantial performance of the contract. He expressed that conclusion in these terms:

 

      '... the defendant's main complaints against the plaintiff's work i.e. the style of radiators, fumes from the boiler flue, and inadequacy of heat provided by the system, neither by themselves nor in com-bination amount to a sufficiently important part of the plaintiff's obligations to prevent there being substantial performance.'

 

       Now, certainly it appears to me that the nature and amount of the defects in this case were far different from those which the court had to consider in H. Dakin & Co. Ltd. v. Lee [1916] 1 K.B. 566 and Hoenig v. Isaacs [1952] 2 All E. R. 176. For my part, I find it impossible to say that the judge was right in reaching the conclusion that in those circumstances the contract had been substantially performed. The contract was a contract to instal a central heating system. If a central heating system when installed is such that it does not heat the house adequately and is such, further, that fumes are given out, so as to make living rooms uncomfortable, and if the putting right of those defects is not something which can be done by some slight amendment of the system, then I think that the contract is not substantially performed.

 

        The actual amounts of expenditure which the judge assessed as being necessary to cure those particular defects were £40 in each case. Taking those matters into account and the other matters making up the total of £174, I have reached the conclusion that the judge was wrong in saying that this contract had been substantially completed; and, on my view of the law, it follows that the plaintiff was not entitled to recover under that contract."

102. This lengthy extract from Cairns LJ's judgment is useful in that it summarises earlier decisions and illustrates how three courts dealt with three different situations in determining whether there had been substantial performance of the contract under consideration in each case.

103. In the present case I did not have the advantage of hearing evidence as to the estimated cost of rectifying the works, that is to say the cost of remedying and modifying the works actually provided by the defendant so as to put them in the state in which they should have been provided had the decorative and structural aspects of the design plans been followed, proper workmanship employed and materials of the required standard used to produce a stable and safe set of works. Indeed I am surprised that the plaintiff's legal advisers did not plead this as a head of special damages in the statement of claim. Had they done so the evidence to which I refer would have been before me and my task made easier. Perhaps they felt confident that at worst the evidence would disclose that even if there had not been a total failure of consideration there was certainly no substantial performance of the contract by the defendant and that consequently any counterclaim that he might make, and in the event did make, for the balance of the con-tract price would be rejected and thus absorb these special damages.

104. Be that as it may, I am left to decide on the evidence actually before me whether the defendant failed substantially to perform the contract. It is clear from the evidence of Mr. Yanigasawa and Mr. Chow taken as a whole that the defendant only completed between 20% and 30% of the decorative requirements sot out in the design plans and that even though approximately 75% the structural requirements had been followed, the stage was seriously unstable and did not become stable until the last night of the series of concerts.

105. Although no evidence was given as to the actual cost that the plaintiff would have incurred had he had the time to find another contractor to make such alterations and additions to the works to make them conform with the decorative requirements specified in the design plans, it seems plain from Mr. Poon's evidence of what Mr. Wong had said to him about the great expenditure involved in following certain aspects of the design plans, such as the protruding edges on the steps, the kerbing on the catwalks and the employment of heavy timbers, that the sums involved would have been substantial.

106. Notwithstanding that I am unable to reduce this factor to a concrete money sum I am satisfied, having regard, first, to the defendant's overall failure to perform the works in accordance with the decorative and structural specifications to the extent I have already mentioned, second, his abysmal failure to construct a stable stage with adequate materials of the required strength, and, third, the overall roughness and poor finish of the works, that he failed substantially to perform the contract. Accordingly I find that he is not entitled to the balance of the purchase price and that his counter-claim must fail to that extent.

107. I have already mentioned that the plaintiff pleaded that because of the breaches of agreement, it was obliged to engage another party to complete the works and was put to considerable inconvenience and expense and thereby suffered loss and damage. However, no specific reference to general damages was made in the prayer. Counsel for the defendant argued that such an omission precluded the court from making an award of general damages to the plaintiff. His argument was based on the provisions of Order 18 rule 15(1) of the Rules of the Supreme Court. I do not accept this argument. The issue of general damages clearly arose on the pleadings and, in my view, the mere failure of the plaintiff to make this claim the subject of a separate heading of claim in the prayer does not shut it out. In any event the court has power to award damages that the plaintiff has omitted to ask for if the justice of the case so requires. The defendant has not been taken by surprise as counsel for the plaintiff dealt with the claim for general damages in his opening address and the existence of such a claim is clear from the pleadings in general.

108. Having said all that, however, I have come to the view that I should not make any such award. Counsel for the plaintiff addressed me almost entirely on the heading of loss of reputation when he dealt with general damages in his closing address. This was not pleaded. Indeed it is clear from Addis v. Cranophone Co. ⁽⁷⁾ that any non-pecuniary loss through loss of reputation is not to be compensated. McGregor observes in para 74 of his work that "Nothing in the recent cases which have mapped out the retreat from the refusal of contract damages for mental distress has so far suggested any comparable retreat in the field of contract damages for tarnished reputations." Furthermore, I have no firm evidence before me that members of the audience or prospective clients of the plaintiff did or would have attributed any perceived flaws in the stage to the plaintiff. There was no evidence that any movement in the stage during the concerts would have been visible to members of the audience. There was no evidence to suggest that any observer would have considered that the decorative aspects of the stage reflected adversely on the plaintiff. After all, a producer can only operate within the limitations of his budget and there was nothing to indicate that details of the plaintiff's budget were available to outsiders to enable them to form a view as to whether the stage fell below the standard to be expected on that budget.

109. Other than Bolton v. Mahadeva ⁽⁵⁾ counsel did nto cite any cases directly in point which might assist me in making an award of general damages. Indeed, apart from contending that I should not admit a claim for general damages, counsel for the defendant did not address me on this matter.

110. Paragraphs 65 and 66 of McGregor on Damages 14th edition refer to the subject of damages for inconvenience and discomfort suffered as a consequence of breach of contract.  It appears that the law tends to confine awards made under this heading to physical incon-venience. Mere inconvenience of anger and disappointment is excluded. In paragraph 67' however, McGregor refers to the case of Piper v. Deybell Court-Cooper & Co. ⁽⁸⁾ where a defendant solicitor failed to reveal to the plaintiff a right of way existing over the premises which he was contemplating buying as a home, and damages were awarded to him for the inconvenience of having his neighbour crossing and re-crossing in front of his windows. In the instant case the plaintiff is an incorporated company. Counsel did not address me on this aspect but it seems to me that this in itself removes the case yet one step further away from the extent to which the law is prepared to go in making awards of damages for inconvenience. I therefore do not make an award of general damages.

111. Finally, I turn to a consideration of the defendant's counterclaim for damages in the sum of $7,050 for the alleged additional works requested by the plaintiff. On the evidence before me I have come to the conclusion that most of the values attributed to the items involved were greatly inflated. For example, the major item related to black gauze for which the defendant claimed a sum of $2,300. It is apparent from the invoices that this cost only $450. His penchant for inflating prices is also evident in respect of the grey gauze to which he assigned a price of $16,000 in the supplementary quotation. The invoice for the cloth revealed that he paid $1,020 for it. More important, however, I do not think that these works were really additional works. There was no evidence to the effect that there had been any express or implied agreement between the parties that the plaintiff would be required to pay extra for these works. In the erection of works on such a grand scale as those in this case it is only reasonable to assume that there would be agreed modifications, some of which would add to the expenditure and others which would reduce it. I am satisfied that when the defendant stipulated his price for the works they then included the construction of an open stage in the main stage. The cancellation by the plaintiff of this part of the works after the contract had been concluded must have been of considerable saving both in expenditure and time to the defendant; a saving which seems to me from the generalised evidence I have heard, would have exceeded any expenditure that the defendant might have been put to in performing the items of work in respect of which he has made his claim.  In my view these works formed part of the main contract in that they were performed as a consequence of a variation of that contract.

112. I would also observe that the claim relating to these works did not appear in the defendant's original counterclaim. It was only at the trial that this claim was inserted in the pleadings by way of an amendment. It does not seem therefore that the defendant himself had much confidence in the merit of his claim.

113. I am also satisfied that the three staircases for the children's choir for which the defendant claimed $1,000, were not fully completed in that the lockable wheels which the plaintiff had ordered were not attached to two of the three staircases. There were also other minor items claimed by the defendant which on the evidence before me I find he did not construct.

114. The defendant's counterclaim is dismissed. I give judgment for the plaintiff in the sum of $96,777 with interest thereon at the rate of 10% per annum from the date of the service of the writ to the date of judgment. I also order that the defendant pay the plaintiff's costs of the action and the counterclaim.

(1) [1980] 2 All E. R. 29

(2) [1898] Q.B. 673

(3) [1916] 1 K.B. 566

(4) [1952] 1 All E. R. 176

(5) [1972] 1 W.L.R. 1009

(6) [1932] 1 K.B. 423

(7) [1909] AC 488

(8) [1969] E to D 535