WHARF PROPERTIES LTD AND ANOTHER v. ERIC CUMINE ASSOCIATES, ARCHITECTS ENGINEERS & SURVEYORS (a firm) AND OTHERS

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J U D G M E N T

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Fuad, V.-P.:

1. This is an appeal by the Plaintiffs from a Judgment of. Godfrey, J. dismissing their claim in an action for damages professional negligence and breach of duty against a firm of architects. The hearing occupied some 60 days between 2 June and 23. July 1987 and between 12 October and to 13 November 1987. The judge gave his reserved judgment on 16 December 1987.

2. The Plaintiffs are Wharf Properties Ltd. and the Wharf (Holdings) Ltd. ("Wharf"). The only defendant concerned in this appeal is Eric Cumine Associates, a firm of architect engineers and surveyors ("ECA").

3. The part of the action from which this appeal arises concerns only ECA. Wharf's essential claim is that the advice they were given by ECA, and the advice ECA failed to give them, in connection with the development of their site, Kowloon Marine Lot 11 ("KML 11") resulted in a commitment to a development which did not utilise the site to the best commercial advantage in terms of capital value and potential letting revenue.

4. The rest of the action with which we are not concerned involves a multiplicity of claims against FCA and 16 other defendants.

5. In my judgment the issues which divide the parties appeal cannot, in the real world, he approached without first observing that the judge's formidable task was easier by the fact that (except from Mr. Peter Woo who testified about a meeting he had with Mr. E.B. Cumine of ECA at the end of September 1978) very little oral evidence was led on behalf of Wharf about their thinking, knowledge, understanding and wishes as this huge and costly development proceeded through nearly all its stages. The evidence shows that Mr. H.M.G. Forsgate and Mr. W. McLuskie, both of Wharf, were intimately involved which the instructions which were given to ECA at different times and the advice which Wharf received on a continuing basis. The judge did, however, have the evidence of Mr. O. Madar, also of Wharf, taken on commission in Canada. His evidence as produced on behalf of ECA.

6. Mr. Forsgate was General Manager of Wharf for 20 years until June 1979. For the last 4 year of that period he was also a director. He has been Chairman of the Urban Council for a number of years. Mr. McLuskie, who is a chartered accountant, was the Finance and Deputy General Manager of Wharf at all material times until 1 July 1979 when he succeeded Mr. Forsgate as. General Manager and became a director of Wharf, positions which he retained until his resignation in April 1982. The terms of office of Mr. Forsgate and Mr. McLuskie spanned all the time material to this action. Mr. Madar was the Property Manager of Wharf for 11 years until February 1977.

7. The judge had the benefit of hearing the evidence of Mr. T.A. Roberts, a partner of ECA, who played a major part in advising on the development until April, 1976 when Mr. B.C. Penman, another ECA partner took charge of its design and administration. The judge did not have Mr. E.B. Cumine before him. He was the senior partner of ECA and was deeply involved in the events we need to examine. His absence from the witness box was accounted for by a medical certificate showing that he was unfit to give evidence. It was evidently the intention of ECA to call him as a witness but this became impossible after he had a stroke at the end of September l987 while the action was part heard. We were also told from the Bar that for some time during the hearing he was in a coma.

8. It was not of course necessary for Wharf to explain why they did not call such apparently important witnesses as Mr. Forsgate and Mr. McLuskie but during one exchange between Mr. O'Brien and a member of this Court, he said he would not be "abashed" at having to do so. He did however mention that Mr. Forsgate was Mr. Roberts' "friend". It is not necessary to conjecture what implication might he read into this remark. As regards Mr. McLuskie, we were, told simply that he was abroad at the time of the hearing.

9. Parties are entitled to call what witnesses they wish. The judge, however, would no doubt have found it particularly helpful to know from Mr. Forsgate and Mr. McLuskie (had they been made available by either side) since they had each played so prominent a role in the story as it unfolded, whether they felt that the advice they were given was in any way inadequate and did not enable them to give informed instructions to ECA or informed reports to their Board.

10. The judge did not draw any specific adverse inferences from the failure by Wharf to call either Mr. Forsgate or Mr. McLuskie. I do not say for one moment that he should have done, but speaking for myself, although it would be quite wrong to speculate what either gentleman would have said had he been called, I do think that Wharf's claim calls for the closest scrutiny without necessarily inferring that their evidence would not have helped Wharf's case.

11. Wharf issued their writ on 4 November 1983. I feel bound to say that in my view allegations of professional negligence and breach of duty of the kind we have here about the plot ratio achieved, which were not canvassed in correspondence or raised until this massive development project, to plans approved by Wharf, had virtually been completed and which, as presently formulated, were not advanced in the original Statement of Claim (filed on 18 July 1984), not appearing in their present form until the pleading was amended on 13 August 1984, do not make a very auspicious start.

12. There are suggestions in the grounds of appeal (not strongly pressed upon us) that certain advice given to Mr. Forsgate should not have been regarded as advice given to the Board of Wharf; that certain knowledge possessed by him should not have been attributed to the Board; that certain views which may have been held by him should not have been equated to views held by the Board and that Mr. Forsgate lacked authority to take certain decisions allegedly taken by him. I will say at once that in my judgment, on the evidence as a whole (and in the absence of evidence to the contrary) ECA was fully entitled to regard Mr. Forsgate as the agent of Wharf for all material purposes. And I think that it was clearly established that the thinking, knowledge and wishes of Mr. Forsgate throughout could be taken as those of the Board. This fact, as I find it to be, highlights how helpful Mr. Forsgate's evidence would have been had a decision been made to call him by one or other of the parties.

13. I also wish to state at this early stage of my judgment that while preparing it I have had in the forefront of my mind the principles upon which a Court of Appeal acts in relation to findings of fact by a judge sitting without a jury. I am here particularly referring to the evidence of Mr. Roberts who was, we are told, in the witness-box for some 8 days or, so. Most of the leading authorities were reviewed by this Court in a recent case: The Hong Kong and Shanghai Banking Corporation v. Chan Yiu Wah and Another [1988] H.K.L.R. 1 457. I will not discuss them again and content myself by citing from the speech of Lord Thankerton in Watt (or Thomas) v. Thomas [1947] A.C. 484, 487-8:

"I do not find it necessary to review the many decisions of this House, for it seems to me that the principle embodied therein is a simple one, and may he stated thus: I. Where a question of fact has been tried by a judge without a jury, and there is no question of misdirection of himself by the judge, an appellate court which is disposed to come to a different conclusion on the printed evidence, should not do so unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses, could not be sufficient to explain or justify the trial judge's conclusion; II. The appellate court may take the view that, without having seen or heard the witnesses, it is not in a position to come to any satisfactory conclusion on the printed evidence; III. The appellate court, either because the reasons given by the trial judge are not satisfactory, or because it unmistakably so appears from the evidence, may be satisfied that he has not taken proper advantage of his having seen and heard the witnesses, and the matter will then become at large for the appellate court. It is obvious that the value and importance of having seen and heard the witnesses will vary according to the class of case, and, it may be, the individual case in question."

14. Particularly since Mr. Roberts (Who had been out of the profession for some years) was testifying about events which occurred many years previously,it was, of course, essential for the judge (and it is now for us) to test his evidence against the contemporary documents, of which there were many, and to have regard to inherent probabilities. The judge's impression of Mr. Roberts as a witness was expressed in these terms:

"Mr. Roberts did not exhibit a high degree of clarity of thought or expression in giving his evidence; but the matters to which he was deposing took place many years ago and all things considered I found him a reliable witness."

15. Wharf holds the site KML 11 under a 999 year Crown lease. They first carried on business as a wharfinger and wharehouseman from godowns erected on the land, but later they expanded their activities. They held other land next to KML 11 and on partof that land they built the Ocean Terminal which was opened in March 1966. On another part, by July 1969, the Hong Kong Hotel was erected; Messrs. Faber and Cumine were employed for this development.

16. In September 1969 Wharf gave consideration to the development of KML ll. ECA were first approached about this project in January 1970 and were eventually retained for the purpose. They were asked by a letter from Mr. Forsgate to investigate the potential of Wharf's KML 11 property and to put forward a proposal for discussions. Mr. Roberts first turned his attention to a scheme put forward by Mr. Madar but this was very soon dropped. Soon afterwards, Mr. Roberts' suggestion that he should prepare an outline development plan and feasibility report for part of KML 11 was accepted and on 6 May 1970 he sent Wharf a preliminary development report. This report spoke of the theory of "highest and best use" being "fundamental to the concept of value" and that there was a need to consider what was "most likely to produce the greatest net return to the land and buildings over a given period of time"; subject to "not denigrating your interests in the Ocean Terminal and the Hong Kong Hotel." The advantages of erecting high quality "European-type" flats with office/commercial blocks were canvassed.

17. On the following day a meeting was held at which Wharf decided to incorporate their existing godowns in the development. On 15 August 1970 ECA produced a preliminary feasibility report suggesting three possible schemes for the development of part of Wharf's land and discussing each in detail. Under the heading "Development Concept" was the consideration that Ocean Terminal should be integrated with the proposed development; there should be no denigration of the continued commercial viability of the Ocean Terminal and the Hong Kong Hotel, and provision should be made for a measure of adaptability in an ever-changing market. The report also considered integration problems, essentially in connection with pedestrian and vehicular traffic. Mention was made of the special plot ratio concessions available for developers of hotels.

18. By November, 1970 Wharf had selected a project which involved the construction of an hotel complex on part of KML 11. In the course of the next month ECA sent Wharf a presentation proposing a wing-glass shape4 envelope for the hotel complex. ECA were instructed to prepare a preliminary sketch design for this project. This they did in November 1971.

19. ECA then had discussions with the authorities about the plot ratio which might be accented and reported to Wharf upon them. On 4 February 1972 ECA sent plans with calculations to the Building Authority for approval in principle of the proposals for the hotel project and there was a further submission by ECA of plans for what by now was called the Marco Polo Hotel, on 8 February 1973, again for approval in principle. In the meantime ECA had received formal notification that the authorities would approve lease modifications to permit hotel use.

20. Also in February 1973, ECA turned their attention, on instructions, to the development of the northern section of KML 11, to he called "Merrylea." They sent Wharf a preliminary report with schematic drawings on this project on 12 February - five exercises ware included.

21. On 13 April 1973 the Building Authority indicated approval in principle to the Marco Polo hotel plans; these plans were formally submitted on 15 May and were approved on 29 August.

22. ECA had been considering the problem of the appropriate plot ratio for Merrylea and on 18 February 1974 they wrote to Wharf giving their reasons for suggesting that they be authorised to negotiate with the authorities for their acceptance of a plot ratio of 8.

23. On 19 February 1974 Wharf decided on economic grounds to abandon the Marco Polo Hotel project on the southern part of KML 11 and to go instead for an office/shopping complex on that part of the plot. A preliminary report on this new project was sent to Wharf on 6 March by ECA. Following a meeting on 14 March, Wharf decided that this new development, now to be called the "Ocean Plaza", should retain the wine glass shaped envelope shape of the design for the Marco Polo hotel. On 25 May Wharf sent ECA their formal instructions to prepare schematic layout plans for the Merrylea development and autherised them to negotiate with the authorities for the plot ratio "in the region" of 8, which had been suggested by ECA. These instructions were accepted and confirmed by ECA on 12 June.

24. During July 1974 there was published a draft town plan which designated KML 11 for commercial use only. Up until then the permitted use had been commercial/residential/warehousing.

25. On 31 August 1974 ECA submitted a report on Merrylea with drawings and a model. Wharf approved them on 23 September and the first submission to the authorities on this project was made by ECA on 16 September. The Merrylea project was renamed "Harbour City" in October.

26. On 29 October 1974 ECA submitted draft plans to the authorities for Harbour City showing a plot ratio of 8. On 9 November Mr. Roberts was called to the Building Ordinance Office by a Mr. Lau, a Government Surveyor, and figures shown on the plan were altered. On 12 November 1974 ECA sent the authorities a drawing showing the plot ratio calculations for Harbour City. The authorities indicated on 25 November that the calculations on these drawing relating to the plot ratio were acceptable in principle.

27. On 13 December 1974 the authorities approved the plans ECA had submitted for the Ocean Plaza. On 3 April 1975 the Ocean Plaza became the "Ocean Centre". On 31 October the authorities approved the plans RCA had re-submitted for Ocean Centre following an earlier submission in June, with revised plot ratio calculations.

28. On 15 December 1975 ECA submitted the Harbour City plans to the authorities. These were approved on 15 January 1976.

29. On 12 April 1976 ECA were instructed to prepare revised plans for Harbour City. These instructions were confirmed by Wharf on 18 October based on a scheme which by then had become three curved residential blocks, six office blocks and an hotel, with a plot ratio of approximately 7.9. At this stage the proposed development was based on schematic plans save for Phase I in respect of which the drawings were to he taken to the stage of obtaining "consent to commence work."

30. In July 1976 another draft town plan was published which amended the designation of KML 11 from solely commercial to residential and. commercial.

31. On 7 January 1977 the Town P1anning Board informed Wharf's solicitors that they would withdraw their earlier proposal (of July 1976) that the praya owned by Wharf on the sea-front be treated as a public open space if an undertaking were to be given that there would be an elevated pedestrian walkway over the praya, open to the public at reasonable times.

32. On 26 August 1977 ECA submitted amended general building plans for Harbour City based on an overall plot ratio of 8. There followed successions of applications for the approval of numerous plans relating to the three phases of the Harbour City development (Phases I, III and IV - there was no Phase II), the last of these applications (relating to Phase IV) being approved on 4 June 1985.

33. The occupation permit for Ocean Centre was issued on 26 November 1977.

34. In relation to Harbour City, occupation permits were issued for Phase III on 2 September 1981; for Phase I on 4 March 1983 and for Phase IV on 12 December 1983.

35. Thus by the end of 1983 there had been built a mixed commercial and residential development now known as Ocean Centre and Harbour City. It includes residential flats, shops, offices and two hotels - the (new) Marco Polo and the Prince.

36. As we have seen, Wharf issued their writ against ECA on 4 November 1983.

37. The importance and magnitude of Wharf's claim can be appreciated when one notes the damages assessed by the judge if he were held to be wrong and they should have succeeded on the issue of liability - $1.5 billion on the claim generally. If Wharf had succeeded on the claim relating to the seeking and utilising of exemptions, concessions etc., but had otherwise failed, $105,651,100 damages would have been awarded.

38. The evidence led before the judge deals with the development of the whole of KML 11.As we have seen, there was the Ocean Centre development which had earlier envisaged a hotel to be called the Marco Polo and which was later for a time named the Ocean Plaza. Wharf by this action, do not complain that what became the Ocean Centre was underdeveloped through the negligence of ECA. Their claim relates almost entirely to that part of KML 11 upon which Harbour City is now which we know was for a time intended to be called Merrylea.

39. The judge set out, in the following manner, the legal principles that he would apply (which he said were not disputed) "so that the facts may he viewed in the light of these principles":

"1. An architect retained by a client to advise a client as to the proposed development of a site owes a duty to the client to do so with a reasonable degree of skill and care.

2. The standard of skill and care required of the architect is that of the ordinary architect holding himself out as competent to offer the same or similar advice.

3. The duty of the architect is a continuing duty, so that, if he discovers he has made a mistake, he is under a duty to the client to correct it, or at least to inform the client of the mistake and (if his services continue to be retained) to exercise the same standard of skill and care in attempting to correct the consequences.

4. An architect retained by a client to advise him about the development of a site in Hong Kong is under a duty in particular to advise him with a reasonable degree of skill and care in relation to matters affecting plot ratio (and exemptions and compensatory bonuses available in that connection)."

He went on to say:

"In the light of these principles, throughout my consideration of the facts, I have attempted at all times to keep in mind the following (and, in my view, the crucial) question: Did the architects, in the performance of their duties, fall short, either generally or in any particular respect, of the standard of skill and care to be expected of them?"

He then observed:

" I must emphasise that the duty of an architect is merely to carry out his instructions with a reasonable degree of skill and care. If he does so, he is not liable to the client for breach of duty because he makes a mistake, or because he has been guilty of an error of judgment (although of course a mistake, or an error of judgment, may be due to a failure to exercise a reasonable degree of skill and care). Not every reasonable exercise of judgment is right, and not every mistaken exercise of judgment is unreasonable. Like every other professional man, an architect undertakes to bring to the exercise of his profession a reasonable degree of care and skill; but he does not undertake to use the highest possible degree of skill: see Lanphier v. Phipos (1838) 8 C. & B. 475. Again, like every other professional man, an architect will not be held to warrant that he will achieve the best possible result, which is of course what his client desires (unless, no doubt, the client has expressly stipulated for and obtained such a warranty): see Greayes and Co. v. Baynham Meikle [1975] 1 WLR 1095.

    And I must emphasise also that the degree of skill and care an architect practising in Hong Kong must bring to the task he undertakes is that degree of skill and care that is usual among architects practising their profession in Hong Kong."

40. The Judge then cited a long passage from the judgment of Tindal C.J. in Chapman v. Walton (1833) 10 Ring. 56, at p.63 (an action against an insurance broker for negligently effecting an insurance). I think the passage merits setting out in full:

"The action is brought for the want of reasonable and proper care, skill and judgment shewn by the defendant under certain circumstances in the exercise of his employment as a policy broker. The point, therefore, to be determined is, not whether the defendant arrived at a correct conclusion upon reading the letter but whether, upon the occasion in question, he did or did not exercise a reasonable and proper care, skill and judgment. This is a question of fact, the decision of which appears to us to rest upon this further inquiry, viz, whether other persons exercising the same profession or calling, and being men of experience and skill therein, would or would not have come to the same conclusion as the defendant. For the defendant did not contract that he would bring to the performance of his duty, on this occasion, an extraordinary degree of skill, but only a reasonable and ordinary proportion of it; and it appears to us, that it is not only an unobjectionable mode, but the most satisfactory mode of determining this question, to shew by evidence whether a majority of skilful and experienced brokers would have come to the same conclusion as the defendant. If nine brokers of experience out of ten would have done the same as the defendant under the same circumstances, or even if as many out of a given number would have been of his opinion as against it, he who only stipulates to bring a reasonable degree of skill to the performance of his duty, would be entitled to a verdict in his favour. And there is no hardship upon the plaintiffs by this course of proceeding, for they might have called members of the same profession or trade to give opposite evidence, if the facts would have warranted it; and the jury would then have decided upon such conflicting testimony, accordingly to the relative skill or experience of the witnesses on either side, or according to the strength of the reasons which were advanced by the witnesses in support of their respective opinions."

41. The judge then observed (as exemplified by that decision) that the question was one of fact for the Court. He discussed the function of expert witnesses, applying the principles stated, which I will not here repeat, in Joseph Crossfie1d & Sons Ltd. v. Techno-Chemical Laboratories Ltd. Laboratories Ltd. (1913) T.L.R. 378 and noted that he had drawn the attention of Counsel to them and had borne then in mind when preparing his judgment. The following are Godfrey, J.'s own observations:

"The evidence of an expert witness will carry great weight with the court, particularly evidence, not of what the witness himself would have done (which is of limited value) nor of what he thinks the defendant should have done (which is a matter for the court alone and is inadmissible as evidence from the witness) but of what he can say is general practice among architects. (Of course, if the practice is considered by the Court to be an unreasonable one, it will be of no use to the architect to prove by such evidence that it is general.)"

42. I do not discern, in this case, any issue as to the possible inroads made upon the principles applied in Crossfield by legislative intervention. I have in mind here s.58 of the Evidence ordinance (s.3 of the Civil Evidence Act 1972 (U.K.)).

43. Except, perhaps, in one particular, it has not been suggested (nor in my respectful opinion can it be) that the judge misdirected himself upon the general principles applicable to the issues before him. It is, however, submitted that the judge had ignored the contention advanced by Wharf at the trial that ECA, as a multi-disciplinary firm, had held themselves out as having given as good advice as a client could get in Hong Kong with their particular experience in plot ratio and gross floor area entitlements so that the standard of skill and care which was to he expected of them was higher than that to be expected generally. With respect, I do not accept this proposition and am satisfied that the judge applied all the right tests.

44. The complaint made on this appeal is, of course, that the judge failed to apply these principles properly to the evidence before him. Had he done so, it is submitted, he would have found for Wharf.

45. The Crown lease, dated 12 March 1910, under which Wharf held KML 11 included a reservation to the Crown of the right to maintain sewers and drains under the land from two named roads to the sea, and the usual what I will call "offensive trades covenanted" by Wharf. I need only mention that, inter alia, Wharf covenanted not use the premises for the "trade or business" of "victualler or tavern-keeper" without the previous licence of [the stipulated Authority].

46. Other constraints upon building development are imposed by certain provisions of the Building Ordinance, Cap.123 ("the Ordinance") and of the Building (Planning) Regulations ("the Regulation") made under the enabling powers of s. 38(1) (c) (iii) of the Ordinance. I will refer to the provisions relevant to the issues before us.

47. Part II of the Ordinance deals with the "Control of Building". Section 14 requires the approval and consent of the Building Authority before any building works are commenced or carried out. Section 16 sets out the grounds upon which the Building Authority may refuse approval or consent: I will set out paragraphs (d), (g) and (p) of subsection (1) of that section:

"(d) the carrying out of tire building works shown thereon would contravene the provisions of this Ordinance or of any other enactment, or would contravene any approved or draft plan prepared under the Town Planning 0rdinance;

(g) the carrying out of the building works shown thereon would result in a building differing in height, design, type or intended use from buildings in the immediate neighourhood or previously existing on the same site;

(p) in the case of building works to be carried out on a site which in his opinion ought to be provided with streets having adequate connexion to a public streets, he is not satisfied that such streets are or will he provided."

Para. (p) was inserted by Ordinance 59 of 1973 which came into Force on 3 August 1973.

48. The Building Authority is given certain powers ofexemption by s.42 of the Ordinance, subsection (1) of which is in the following terms:

"42(1) Where in the opinion of the Building Authority special circumstances render it desirable he may, on receipt of an application therefor and upon payment of the prescribed fee, permit by notice in writing in the prescribed form modifications of the provisions of this Ordinance."

49. Part III of the Regulations contains provisions relating to Permitted site coverage and permitted plot ratio regulations 19, 19A, 20 and 21, read with the First Schedule, are relevant. They, together with the Schedule, are fully set out in an appendix to Godfrey, J,'s judgment and I will not read them here.

50. The expression "plot ratio" is defined in regulation 21(3) of the Regulations as the ratio obtained by dividing the gross floor area of the building by the area of the Site on which the building is erected. If, for example, a site is 1,000 sq. metres in area, and the plot ratio permitted for the building is 10, 10,000 sq. metres of floor area can be built on the site.

51. The permitted plot ratio depends upon three factors: (i) the classification of the site into "A", "B" or "C" (this is governed by the number of streets which abut the site) (ii) the height of the proposed building and (iii) whether the building is "domestic", "non-domestic" or a combination of the two. Once the height is determined, the plot ratio will depend on the height of the building. However, KML 11 was subject to a height limitation of 200 feet imposed by the Hong Kong Airport, (Control of Obstructions) Ordinance, Cap. 301.

52. In respect of buildings like hotels which of ten combine domestic and non domestic features the Regulations set out an arithmetical formula so that the appropriate plot ratio for each feature can he ascertained, resulting in a composite plot ratio.

53. I will mention one more expression used in the Regulations. "Site coverage" is defined as "the area of the site which is covered by the building that is erected thereon ..." The First Schedule to the Regulations gives the permitted site coverage figures in percentage terms.

54. Certain Practice Notes (they used to be called Circular Letters) have from time to time been issued by the Building Authority for the guidance of authorised architects and others. I will summarise some of them.

55. Practice Note 1974.13 (in its various editions), explained how the Building Authority would interpret the expression "or any similar service" which was to be found in regulation 23(3) of the Regulations. Paragraph (1) of that regulation (since replaced) was in these terms:

"(3) In determining for the, purposes of regulation 20, 2l or 22 the gross floor area of a building, the Building Authority may take no account of any floor space that he is satisfied is constructed or intended to be used solely for the parking, or for the loading or unloading, of motor vehicles or occupied solely by machinery or equipment for any lift, air-conditioning or heating system or any similar service."

56. By Practice Note 1975.23, the Building Authority (I would mention that he is now the Director of Buildings and Lands under the Ordinance) indicated that in certain circumstances he might be prepared to exercise his power of modification under s. 42 of the Ordinance in relation to the gross floor area as defined in what was then regulation 23(1)(b) of the Regulations, so that some voids otherwise included by that regulation for the purposes of determining the gross floor area, would be excluded.

57. The combined effect of Circular Letters 45 and 48 is to intimate that the Building Authority might be prepared once again to exercise the power of modification granted by s.42 of the Ordinance, this time especially to benefit developers of building intended to he used as "bona fide hotels" in relation to ground level setting down areas, hotel basement areas and site coverage. If the modifications are applied, hotel developers would, by calculations applied to the plot ratio and site coverage in the manner specified, gain additional floor area and greater site coverage than would ordinarily be applicable under the Regulations. Circular Letter 45 was issued on 17 October 1968 and Circular Letter 48 on 23 September 1969.

58. Circular Letter 49, which concerned, inter alia, density zoning, was issued on 6 December 1969. It told interested persons that the density zoning plans and schedules previously issued by the Superintendent of Crown Lands and Surveys were to be revised and indicated that Note 1 (which related to developments over 20 storeys) would be replaced by a note in the following terms:

"Any development above 20 storeys should not have a plot ratio in excess of that permitted for 20 storeys and such plot ratio shall be calculated as defined in the Building (Planning) Regulations i.e. by dividing the gross floor area of the building by the area of the site on which the building is erected."

It also announced that Note 6 would be amended to read:

"Control will be exercised by means of lease conditions or section 16(1)(g) of the Buildings Ordinance, Cap. 123."

59. Then, on 20 May1971 Circular Letter 58 was issued. This Circular Letter ("CL 58") and its effect upon the development of KML 11 was and remains of crucial importance to the main part of Wharf's allegations of professional negligence.

60. In his judgment the judge explained that the background to CL 58 was that for many years the Government had felt it to be in the public interest to adopt a policy of systematic density zoning. This policy was made known by means of a Circular dated 1 April 1966 from the Director of Public Works of the day (Mr. A.M.J. Wright) and addressed to all authorised architects. It concerned the density of domestic development in particular zones and indicated that the control of density was to be exercised by means of lease conditions or by invoking the provisions of the precursor of s. 16 (1)(g) of the Ordinance, then s.9(B)(1)(f). It will have been notice that Circular Letter 49 echoed this indication. Mr. Wright's letter also informed his addressees, that in certain districts, buildings were to be subject to further control where features such as internal roads were necessary. These further controls were to be applied to "large sites".

61. CL 59 concerned mainly "large sites" (i.e. sites exceeding 40,000 sq. Feet in area – KML 11 was such a site). It was in these terms: -

    "To All Authorised Architects.

Density Zoning

    Density zoning plans and schedules were first issued in 1966 under cover of Mr. Wright's letter dated 1.4.66 to all authorised architects and to other interested parties. This was at a time when little real estate development was in progress, and consequently development was in progress, and consequently developers and their professional advisers may have overlooked the implications of para.5 of the notes to the schedules. In particular Note 5(c) refers to the further restrictions which would apply to large sites and it is felt that the considerations adopted by the P.W.D., in dealing with applications in respect of large sites should now be circulated to all interested parties.

2. In respect of this note I advise you that any site exceeding 40,000 sq. ft. in area is regarded as a large site and for such sites certain additional controls reducing the density below the standard scale may be applied in all Zones. In certain cases, and at my discretion, the area of existing or proposed roads within the site may be deducted from the site area and the extent of development of the remaining area calculated on the standard scale.

3. The intention is to ensure that there shall not be an abnormal density of development on large sites where normal road patterns do not exist, and any relevant lease conditions, or provision of the Building Ordinance will, at my discretion, be applied in pursuance of this intention. Generally, in the case of development of sites exceeding 40,000 sq.ft. in area, early enquiry should be made at the Crown Lands & Survey Office in order to ascertain the density permitted. It is to be note that the considerations under Notes 5(b) and 5(c) are now applicable to sites in Zone 1 as well as Zones 2 & 3.

4. Additionally, Circular Letter No.49 to all authorised architects dated 6.12.69 was issued in order to clarify Note 1 to the schedules and to revise Note 6 to the schedules. On 9.10.70 Circular Letter No.54 to all authorised architects dealt with the subject of site coverage of car parks in Zones 2 and 3. The opportunity has been taken following the issue of those letters to revise the schedules additionally to correct other references which are obsolete or do not state fully the present position.

5. There are no changes in the boundaries to the respective zones shown in the plans which were originally enclosed with Mr. Wright's letter of 1.4.66. Should you not be in possession of these plans a limited number of copies are available at the Crown Lands & Survey Office at the price of $l per sheet.

………….."

62. There were three appendices to this Circular; Appendix II and Appendix III are set out as Annex 2 to Godfrey, J.'s judgment, and only these are relevant. Appendix II contained a set of schedules relating to large sites which had not hitherto been issued. Appendix III contained notes which are revised versions of the notes which had first appeared in Mr. Wright's Circular five years earlier. It can be seen that one of the notes, (6), states:

"Control will be exercised by means of lease conditions or any relevant provisions of the Building Ordinance and Regulations."

63. The judge noted that in the summer of 1971 there was concern in the architectural profession about CL 58. Its policy seemed misguided to some on planning grounds since it was seen to discourage the comprehensive development of large sites and, to use the judge's words, "its interpretation, particularly on matters of enforceability, seemed uncertain."

64. There had been a meeting on 1 June 1971 between representatives of the Public Works Department and of the Authorised Architects Liaison Group during which CL 58 was discussed. On 4 August 1971 the Hong Kong Society of Architects sent its members a report of that meeting. One of the points raised and agreed was expressed in this way:

"Where any possible difficulty is foreseen you should, in the first instance, discuss the matter with the Crown Lands and Survey Office" [the office which would be responsible for considering a request for a modificiation of a lease]" and preferably follow this by submitting a tentative scheme to the [Building Ordinance Office] for agreement."

65. On 24 November 1972 an appeal tribunal appointed under s.43 of the Ordinance made a determination, in the judge's words: "to which considerable importance was attached in the argument for the clients" and which "seems to have led (rightly or wrongly) to the confirmation or formation of some gloomy views within Government about the potential utility of Circular 58."

66. The tribunal is established to determine appeal by persons prejudiced by a decision of the Building Authority in the exercise of a discretion granted him under the Ordinances. The tribunal consists of not less than three members appointed by the Governor - one member is to be nominated by the Building Authority, one must be an "authorised person" (as defined in s.2(l) of the Ordinance), and one must be a representative of property owners. The Governor in Council has power, under s.46 of the Ordinance, in limited circumstances, to review a determination by the appeal tribunal.

67. The judge's account of what happened, which is a useful summary, was that the Building Authority had rejected certain plans submitted on behalf of Hung Lee Estates Ltd. in respect of a section of New Kowloon Inland Lot 53 ("NKIL 53") of 39,967 square feet in area, purporting to exercise his discretion under s.16(l)(g) of the Ordinance, having taken the view that the proposed building differed in height from others in the neighbourhood. On an appeal to the tribunal, it was submitted on behalf of the developers that the evidence showed that the Building Authority had made use of s.l6(1)(g), not on any ground relating to the height of the proposed building, but on the ground that it would constitute a more intensive development than permitted by Circular 58. The tribunal found as a fact that the ground upon which the Authority had rejected the developer's plans was that approval of them would lead to over-intensive development. Since the Authority had, exercised his Discretion improperly, his decision to withhold his approval could not stand.

68. I will not set out all the letters, reports etc. which passed between the parties. They are meticulously reviewed in the judgment. The evidence before the judge showed that ECA at all material times, from the time the original Marco Polo hotel was being planned right until September 1978, put forward their Proposals and plans to the authorities, and have written advice to Wharf, on the basis that CL 58 applied.

69. I pause here to observe that we were given some interesting figures which are common ground. Harbour City was built on a site of 39,829 sq. metres. The division was 48.39% domestic and 51.61% non-domestic. The actual composite plot ratio achieved was 7.9722. If the same proportion between domestic and non-domestic were to be adhered to, but the full Plot ratio Permitted by the First Schedule to the Regulations applied, then the plot ratio would rise to 8.6226 if the unused capacity were applied to domestic building, and to 9.1391 if the unused capacity were applied to non-domestic building. This would be respectively a gain of 257,725 sq. feet or 472,496 sq. feet in gross floor area. In percentage terms it would result in an increase of only 0.6 or 1.1 upon the plot ratio actually achieved.

70. If, however; the CL 58 reductions could be insisted upon, and were applied to their fullest extent, the plot ratio would be reduced to 5.16 or 5.46, being respectively 60% of 8.6 or 60% of 9.1, so that when compared with a plot ratio of 8, 1,219,899 or 1,091,103 sq. feet less gross floor area would be available.

71. The judge summarised the attitude of Mr. Roberts to CL 58 in this way:

"I find that Mr. Roberts did not believe that the 1egal status of Circular 58 was the same as that of the Building (Planning) Regulations but that he did believe it was right to act on the footing that the Government did have the powers it claimed to have."

72. As to Mr. Cumine's recorded views on CL 58, notes he prepared on 5 February 1973 include the following comment:

"This as an act of adjustment of the Building Ordinance; not, I would say legally (not easy to substantiate). But of course, in any dealings with Public Works Department; the obstructive value of their delays is tremendous and not worthwhile incurring."

73. One of the observations made by the judge about CL 58 was:

"It is to be noted that (save perhaps to Mr. Roberts on 9th November 1974) at no stage had anybody on behalf of any of the Government departments involved indicated to anybody on behalf of the architects that the provisions of circular 58 could be ignored, whatever views were being expressed within the Government. The letter dated 15th November 1974 from Mr. Bell to Mr. Cumine rather suggests the contrary; a reader of this letter would be entitled to conclude that if it had been Mr. Bell's intention to impose further restrictions under the provisions of circular 58, he would have felt himself empowered to do so."

74. The words in parenthesis refer to an occasion on that date when Mr. Roberts spoke to a Mr. Lau, an official in the Buildings Ordinance Office, about the Ocean Plaza project. I will have to return to what took place between Mr. Roberts and Mr. Lau later.

75. The judge was satisfied that, although the decisions of the Appeal Tribunal are not reported, Mr, Cumine and Mr. Roberts learnt "soon enough" of the decision made on 21 November 1972. He went on to say:

" Neither however thought, or had cause to think, that the determination rendered circular 58 a dead letter. Indeed, on 9th January 1973 the Building Authority itself initially put forward Circular 58 to another developer's architects in relation to another site as if it were applicable and enforceable (see the letter of that date from the Building Authority to Messrs. Harriman Architects, about the tramways Depot site, Sharp Street).

    Within the Government there was much anguished discussion of the problem of controlling over-intensive development. Although a number of Government officers appreciated that this was a Town Planning Ordinance problem, not a Building Ordinance problem, nothing was done about it in the end other than to introduce section 16(1)(p) into the Building Ordinance, thus confusing Matters still further. For no provision of the Building Ordinance could be used for the predominant motive of controlling what the Government perceived as over-intensive development.

    If the provision relied on, whichever one it was, was invoked by the Building Authority for purposes of density control the developer would have been entitled to have the decision of the Building Authority reversed or quashed. But, having regard to the diversity of views about all this held both within the profession and within the Government, I am satisfied that it would have been reasonable for a competent architect to take the view, at this time (as the architects here did), that his client would be well advised to respect the provisions of Circular 58. He could, no doubt, advise his client to take legal advice about the matter; but I reject the view that not, to do so would show the want of a reasonable decree of skill and care. Much wider commercial considerations were also involved. Architects in the real world have enough to do without encouraging their clients to litigate with the Government over doubtful questions concerning the Government's powers. The evidence led on both sides satisfies me that a competent architect would advise either compliance with circular 58 or the submission of a scheme for sub-division, which Wharf did not want to propose."

76. As to the Wharf's view of CL 58 and the advice given by ECA which assumed its applicability, the judge noted that Mr. Mader of Wharf, in his evidence taken on commission, had said that he told Mr. Forsgate that in his view the Circular Letter would not stand up in Court and that "we could circumvent the problem by cutting the site into [areas of] 39,999 square feet each." He also expressed the view: "the Government, if it chooses, can impose all kinds of conditions and eventually we can argue them out but it is a long negotiation period." He said that at the time he felt that neither Mr. Forsgate nor Mr. McLuskie had any very strong objections to CL 58, and that Mr. Forsgate did not want "a very high density development"... he wanted "more open space." The judge indicated that the evidence had left him with the impression that these two gentlemen (who had not given evidence) shared Mr. Madar's views about the Government's power.

77. The judge set out the material parts of a letter dated 9 January 1974 written by Mr. Roberts to Mr. Forsgate about the Merrylea project enclosing a preliminary report. In his letter Mr. Roberts said, inter alia:

"As you will appreciate at the preliminary stage we are concerned with conceptual aspects, viability and acceptability by the Government planners, before becoming involved with the deeper analysis of the project. Basically, the whole exercise is to sound them out as to what would be acceptable and we shall then proceed from there to a more aesthetic conception nearer to your environmental targets."

78. His report included the following paragraph:

"One of the main objects of my informal discussion was to determine their agreement in principle to consideration being given to permitting an overall plot ratio and not to a piecemeal plot ratio related to Individual areas. In other words, not to subdivide the site, but to grant an overall plot ratio with its distribution to be as per an overall concept of development. This principle was in fact agreed by Mr. Potter and he explained that such a procedure had already been agreed in the redevelopment of Holt's Wharf and Taikoo Docks."

79. The judge's interpretation of the letter was that it carried the following necessary implications: (i) the fixing by agreement of an "overall" plot ratio which would differ from that which would be achieved if Wharf elected actually or notionally to divide KML 11 into a number of separate sites for site coverage any plot ratio purposes and (ii) that the net lettable floor area which would be achieved if his approach were accepted might fall short of that which could be achieved if Wharf to decide, notwithstanding the concerns of Government, to seek to obtain the maximum plot area on each part of KML 11. The judge then said:

"Mr. Roberts did not expressly point out to Wharf that it was a matter for Wharf whether or not it wished to accept his recommendation, but I am satisfied that up to this point there is nothing in the conduct of Mr. Roberts that can fairly be criticized as demonstrating a want of a reasonable degree of skill and care. On the contrary, I am of the view that his proposals were eminently sensible. Neither side called either Mr. Forsgate or Mr. McLuskie as a witness. Certainly, I have no reason to believe that Mr. Forsgate complains about the way in which the matter was put to him by Mr. Roberts back in January 1974 or for that matter at other time. Nor have I any reason to believe that Mr. Forsgate, who had been intimately concerned with the development of the Ocean Terminal and the Hong Kong Hotel, should have been so ignorant of site coverage and plot ratio matters as to have failed to recognise what I have referred to as the necessary implications contained in the report of Mr. Roberts."

80. The judge noted that according to Mr. Madar's evidence, Mr. Forsgate had felt that a plot ratio of 8 was more than Wharf could have got if CL 58 had been applied and that Mr. Forsgate was happy with the figure. Mr. Madar himself felt that Wharf should have taken on the Government but accented that any such action would have taken a long time and Wharf did not want to take on the Government.

81. The judge referred to the appendix of a report sent by Mr. Roberts to Mr. Forsgate on 12 March 1974. This contained ECA's appreciation of the improvement development potential which could be obtained by the adoption of sub-divided areas. In his forwarding letter, Mr. Robert said, inter alia, "I have made no conclusion or recommendation, the reason being related to the unknown attitude of Government to grant a waiver of provisions of [CL 58] or the delay which could be experienced in negotiations to effect the waiver ....". As to the advice given in that letter, the judge observed:

"In my judgment, Mr. Roberts, here, is laying it on the line. He is expressing a view, but indicating with clarity that the decision is one for Wharf to take. I do not think that, at this stage, either, Mr. Roberts can be held to have been guilty of the want of a reasonable degree of skill and care."

82. In June 1974 Jones Lang Wootton, property consultants, recommended to Wharf that the Ocean Plaza, as then planned should he completely re-designed. Their view was that the present plans "would adversely affect the return on investment for all time … [a re-design] would far more than outweigh the setback incurred by re-planning the building at this time." Inter alia, they told Wharf that the floor layout as currently proposed would lead to much less than optimum development.

83. What the judge called "unhappy differences" developed between Jones Lang Wootton and ECA. On 13 August 1974 Mr. Cummine wrote to Wharf but the letter was on a personal level to Forsgate. He expressed his concern "at the implication of certain changes in the planning resulting from the acceptance of Jones Lang Wootton's proposals." He accented that decisions had been made but he wanted to be sure that Mr. Forsgate himself had appreciated the points he raised in his letter. One of his points was:

"(a) Increase Shopping Space - 2nd & 3rd Floors

This area was formally designated as Restaurant/Exhibition Area. It is considered that to adopt the procedure of multiplying that space by a unit rent figure in order to calculate income is somewhat fallacious. Our observation is that the quality of space declines, the unit rate drops and tenants become over competitive and usually resort to hustling tactics owing to the limited range of shops that one can accommodate, breaks such as restaurants, etc. whilst resulting in cheaper rents are a draw and a necessity relative to interest and wariety. Another point is that the double height feature provides for flexibility. At present no flexibility exists."

And he said this in the final paragraph of his letter:

"(2) It must also be remembered that we shall be negotiating with Government for a plot Ratio which will cover both Domestic and Non-Domestic. It is very necessary therefore that the Ocean Plaza scheme be not stuffed with shopping, and open spaces retained which will provide added interest. One should not forget the problems experienced by the Sheraton Shopping Complex."

84. Mr. Forsgate's letter in reply dated 16 August 1974 is important and will set it out in full:

" The decisions made resulting in the changes in the lower floors of this project, were, I can assure you, not made lightly, but only after much agonising re-appraisal. It was not easy for us to agree to these changes, as many of the points you are now making, were, in fact, our own concepts originally. However, I told you when the Marco Polo Hotel project was dropped, that our Board had expressed extreme misgivings about the viability of developing a building designed for hotel purposes into an office/commercial complex. I was warned of the dangers of making a virtue out of expediency. There is no doubt in all our minds over here that Jones, Lang and Wootton's submission has made an effective contribution to improving the commercial viability of the scheme. We all have our sacred cows. The swimming pool was mine; no doubt the double height feature was yours. None of us can see that its demise has resulted in loss of flexibility. In any case, it was my firm understanding that you were under no illusions that the usage and therefore ultimate design of the lower floors was subject to reconsideration as our ideas and demands for space were firmed up. If you were under the impression before you left Hong Kong that the reverse was the case and design frozen, then I apologise for you having been misled.

    It's ironical in a way that you are now in the position that our Consulting Architects were in those far-off days when the Ocean Terminal superstructure design was reaching its final stages. As my adviser behind the scenes, you were instrumental in advocating drastic changes to the usage that caused the Architect to tear his hair. The economic results were, as events proved, worth the tears and tribulation at the time, and I have every faith in the ability of your office now to take these changes in your stride.

    Your points on plot ratio were fully discussed, and we realise the implications, but trust that when you have a go at the authorities, we might get away with it all.

    I think you have misunderstood our attitude to the shopping aspect. Our instructions were, and still are that these must not be overdose. Bearing in mind our adjacent interests, a proper balance must be struck. The interior architecture should be able to create space illusion, and we have confidence in your ability to achieve this. Also, the provision of a promenade with shops and air-conditioning, may be more attractive than an open-air promenade, where strollers would be buffeted by strong monsoon winds. You will recall our concern on this feature in the previous design.

    The link between the Ocean Terminal and Ocean Plaza is vital to the success of the scheme, and I would appreciate you bringing your considerable talents to bear on this, problem. I don't think it has yet had the attention it deserves, as no matter what effects are created in Ocean Plaza, these will he lost if the potential client is not attracted into it from the Ocean Terminal.

    You have been instructed by Mr. Nolan to take up our case in objecting to the draft Town Planning proposals on the basis of discussions previously held between your office and Government. We are objecting to the principle advocated by their proposals, and we do not appreciate how the changes proposed for the interior of the Ocean Plaza have any hearing. You should also take steps to forestall the Government's proposals by submitting building plans for the area involved. He would also consider, if you think it advisable, paying the premium laid down in our various leases for building over the praya.

    In conclusion, I would like you to know that we are always open to constructive ideas, suggestions and advice. Some we take, some we don't on our heads be it."

85. In my view this letter is revealing for a number of reasons. It does not give the impression that Mr. Forsgate was mere cipher in ECA's hands. It demonstrates that Mr. Forsgate was confident about his own judgment. He shows every indication of being fully informed and capable of taking decisions while welcoming advice. He manifests confidence, too, in Mr. Cumine's abilities at least at that time, if indeed, he has now changed his opinion. The letter also shows that Mr. Forsgate was concerned about the aesthetic quality of Wharf's property developments and not interested simply in the amount of lettable floor area.

86. Upon the main issue in the action the judge's overall conclusions were expressed as follows:

"I have reached the clear conclusion upon them that the architects did nothing to justify the reproach that they exhibited any want of reasonable skill and care in the discharge of their duties. Indeed, in my judgment they deserve rather to be commended for their achievement. I find that Wharf was at all times anxious to get on with the development of KML 11 with the minimum of delay, at the same time keeping all its options open as far as possible. It wanted to maintain its Wharfing, operations on KML 11 as long as it suited itself to do so. It wanted to maintain the integrity of KML 11 and keep the praya within KML 11 under its own control. It wanted to avoid the constraints which it feared, reasonably, the Government might try to impose, on it if it got into a confrontation with the Government over density of development. And it wanted the sort of development which would do it credit even if it involved (to borrow the words of Mr. McLuskie) 'by Hong Kong standards a lavish use of land'. In all this Wharf, with the assistance of the architects, succeeded."

87. Mr. O'Brien, on behalf of Wharf, submits that it is essential to approach the plot ratio issue in the context of CL 58 from the standpoint that ECA fully appreciated that it did not have the force of law. They never questioned or suggested there would be any merit in questioning the legality or enforceability of CL 58 to Wharf. Any doubts they might have had were never passed on. In their dealings with the Government authorities ECA always proceeded upon the pasts that CL 58 had to be complied with and never raised any questions about its applicability. Instead, they tamely accepted that CL 58 did apply and then sought the exercise of a discretion to modify its terms. Wharf were led to believe that there had been elaborate negotiations which had led to the acceptance by the authorities of the plot ratio of 8 whereas there had been none.

88. It is contended that if ECA did not believe that CL 58 had the force of law (according to the judge's finding) their duty was to leave the commercial decision as to whether the restrictions imposed by CL 58 should or should not she accepted and not arrogate such a decision to themselves. ECA were not authorised to be, in effect, the arbiters of what was in Wharf's interests.

89. It is suggested that the judge was wrong in equating advising a client to seek legal advise with encouragement to take on the Government in litigation.

90. There was the clearest possible evidence, Mr. O'Brien submitted, that when confronted with doubtful questions involving law, it was the duty of an architect to advise his client to seek legal advice - as was expressly anticipated by the RIBA Conditions (clause 1.22, 1971 Edition). That clause is to be found in section 1.2 and is in these terms:

        "1.2 Consultants

1.20 Normal Services do not include quantity surveying, town planning, civil, structural, mechanical, electrical or heating and ventilating engineering or similar consultants' services. Where the provision of such services is within the competence of the architect's own office or where they are provided by consultants in association with the architect, fees shall be in accordance with the scales of fees of the appropriate professional bodies, but all time charges shall be in accordance with Part 5 of these Conditions.

1.21 Where the services of more than one profession are provided by a single firm or consortium, fees shall he the sum of the appropriate fees for the individual professional services rendered.

1.22 The architect will advise on the need for independent consultants and will be responsible for the direction and integration of their work but not for the detailed design, inspection and performance of the work entrusted to them.

1.23 Independent consultants and quantity surveyors should be nominated or approved by the architect in agreement with the client. They should be appointed and paid by the client."

91. I will say at once that it may well be that the duty formulated by Mr. O'Brien exists, but if it does, it is not derived from the RIBA Conditions. When the relevant section is read as a whole it seems to me, that as a matter of construction, it plainly appears that clause 1.22 does not contemplate legal advice, or legal practitioners as consultants.

92. There were, it is submitted, no provisions in the Ordinance or in the Regulations could successfully have been invoked by the authorities to insist upon large site reduction in respect of Harbour City. The lease conditions were capable of easy modification (as in fact happened) and they could not have been used to enforce large site reduction.

93. If ECA had displayed the ordinary competence expected of them, it was urged upon us, they should themselves have had very grave doubts about the enforceability of CL 58. They knew about the Appeal Tribunal decision and should have inferred from it that s.16(1) of the Ordinance could not be prayed in aid in an attempt to control density. Mr. Roberts had himself been the authorised architect for another part of the site which was the subject of that decision.

94. It was suggested that the only evidence that had been given about the doubtful validity of CL 58 was at a very early stage - when the building of the original Marco Polo hotel was discussed (the plan later abandoned) when no question arose of the need to achieve a plot ratio above that ostensibly permitted by CL 58. There was no evidence that the authorities had ever positively asserted that they had powers to enforce compliance with CL 58. There was no evidence, it was argued, to support the judge's finding that Wharf were sufficiently informed to decide for themselves whether or not the authorities had the powers they claimed to have by way of CL 58. The mention by Mr. Roberts in his preliminary report dated 12 March 1974 of the Appeal Tribunal's decision, did not explain its implications, and misrepresented its relevance, to Wharf.

95. In my judgment, it is important for the central issue in this appeal to examine the thinking of the various Government officials involved with the Development of large sites, and their attitude to CL 58. It is revealed by various letters and minutes, of which deal with the development with which we are concerned, some with other projects, and some with general policy. The judge refers to the more important of these in his judgment.

96. There is a minute dated 31 July 1972 by the Government Town Planner in relation to a development called "Holt's Wharf" saying ".... we can apply the large sites rules in full and we should do so."

97. In the notes dated 7 September 1972 of a meeting of the PWD Land Conference (again about Holt's Wharf), there is a reference to CL 58 and it is stated that since each site involved was in excess of 40,000 sq.ft. "....they are subject to the density zoning large site rules."

98. On 12 October 1972, another meeting of the PWD Land Conference was held. The notes prepared for the meeting about density zoning showed that it was still the policy of the Government, when the opportunity arose, to limit plot ratios by continuing to apply the "large sites" reduction factor provided for in CL 58.

99. [It will be retailed that the Appeal Tribunal gave its decision on 24 November 1972]

100. In a minute dated 7 December 1972 the Director of Public Works notes that he had "checked the file to confirm my recollection that it was clearly established Government policy to apply the large site reduction formula … and to take all necessary measures at our disposal to prevent owners dividing their sites ... to avoid reducing the area available for development."

101. On 13 April 1973 in response to a letter dated 8 February 1973 from Mr.Roberts about the earlier Marco Polo hotel project, seeking approval in principle, the Building Authority replied:

"I have studied your proposals and found them to be generally in order under the Building Ordinance insofar as basic planning criteria are concerned and having regard to density zoning - Application to Large Sites as covered by circular letter 58."

102. On 28 June 1973 the architects retained for the development of the Tramways Depot site in Sharp Street resisted the Building Authority attempts, initially put forward on 9 January 1973, to apply CL 58. The Government eventually accepted that the rules it contained were not applicable since they applied only to residential developments and the project in question was for a commercial development; and on 23 November 1973 the Building Authority confirmed that the rules would not be applied "to this project".

103. There is a memo dated 5 October 1973 from the Principal Government Building .Surveyor attaching a draft circular intended for all Authorised Architects (which was never sent out). The draft refers to CL 58 and states that amendments to the Ordinance and the Regulations had been designed to ensure, in the interests of good planning, that the mere carving up of sites below the stated maximum (40,000 sq.ft) would not he sufficient to escape the new regulations.

104. The Principal, Government Highways Surveyor commented on the draft circular in a minute dated 29 November 1973 that it was "agreed" as far as it went.

105. On 29 January 1974 the Government Building Surveyor recorded his understanding that the amendment of the Ordinance (the insertion of s.16(1)(p)) was "to plug the loophole in the large site reduction rules."

106. On 16 October 1974, Mr. Parsons, the Chief Building Surveyor, Kowloon, minuted to Mr. Kennard, the Princinal Government Building Surveyor on the Merrylea (later to become the Harbour city) project. He mentioned the permitted plot ratio/site coverage figures, for domestic and non-domestic use. He pointed out that ECA had referred to the restrictions imposed by CL 58 in their Development Report, and about CL 58 he commented:

"This letter (which embodies a 40% reduction factor on the plot ratio/site coverage figures quoted above) was effectively declared to be 'ultra vires' by the Appeals Tribunal and consequently section 16(1)(f)) of the Building Ordinance was enacted which empowered the Building Authority to refuse plans where he thought a site was not adequately provided for in terms of roading. Notwithstanding this, the architects (and they are not alone in this) appear to be under the impression that the circular 58 large site reduction factors are mandatory since, apart from reference to circular 58 in their Report, they have applied these factors to the Ocean Plaza submission, as they did also to the Marco Polo submission......."

107. Later in his minute, Mr. Parsons says:

"The architects on page 8 of their Report suggest concessions to provide for a composite, plot ratio of 8 - this being the zone 1 class A over 200 ft. domestic factor, probably having in mind that but for the Airport restrictions development in excess of 200 ft. P.D. would be possible. In this connection a 'concession agreement' already exists, of course, insofar as airport restricted height hotel building are concerned, leaving a factor in the commercial/residential complexes for concession consideration. .However, no matter the foundation for, the proposed P.R. of 8, if the permitted plot ratio factors of 12.2. non-domestic and 6.8 domestic are applied to the gross floor areas quoted in the Report (which combined give a composite P.R. of 8) the following calculation emerges" [the calculations are then set outs] "In addition to this unused area, there is also the unused area of 632,450 sq. ft. on the Ocean Plaza site - in other words well over 1 million sq. ft. of floor space :is being given away in respect of KML 11 as a whole and by the same token in 'accepting' the proposed composite P.R. of 8, no concessions, are in fact being, given under the Buildings Ordinance. …."

108. The report of the Principal Government Town Planner, Mr. Meyers, dated 6 November 1974 on the Merrylea, later the Harbour City, project addressed to the Director of Lands and Surveys contained the following paragraph:

"The site is in a Zone 1 area and the scheme does not represent full development under the Buildings Ordinance. The large site reduction rules, have not been strictly applied. The Appeals Tribunal has recently declared the large site rules to be 'ultra vires' and section 16(1)(p) of the Building Ordinance his been enacted in lieu. These rules can therefore be ignored in this context. The height limit above P.D. is 200 ft. P.D. and this has given the developers maximum of 17 storeys throughout and composite plot ratio of 8. Although up to 2 storevs 64% coverage over the whole site is obtained, above this level the coverage is only 41.8%. The building coverage is acceptable."

109. On 15 November 1974, a letter from the acting Director of Works, Mr. Bell, addressed to Mr. Cumine included the following paragraph:

"The plot ratio and site coverage shown on your drawings is acceptable and there is no intention on my part to impose any further restriction under the large sites rules."

110. In a minute dated 6 January 1975, Mr. McAteer, a Government Building Surveyor noted:

"I think no-one in the [Building Ordinance Office] has ever been happy with [CL58] and it has been the source of considerable, trouble, delays and misunderstanding …. perhaps the greatest confusion has arisen because [architects] and their clients have tended to regard density zoning and the large site reduction factors as requirements under the Buildings Ordinance …..even some of the Buildings Ordinance Office professional staff have tended to forget that they are not …. In my opinion [CL 58] should be cancelled and replaced by a new practice note ….."

111. On 12 September 1975, Mr. Meyers sent a memorandum to the Principal Government Land Agent saying:

" The large site red action factors are not entirely replaced by section 16(1)(p) …. as they take account of density and amenity as well as road components …. The Reduction Factor was originally prepared to give guidance in assuming and determining development potential of large sites in the absence of detailed layouts …. When considering the development of large sites of over 40,000 sq.ft. for which there are no detailed layouts indicating access roads amenity areas, open spaces, etc. which are not count[ed] for [site] coverage and plot ratio calculations, a certain percentage must be assumed and deducted from the area when working out the net building area, and the amount of development. Without this guidance, developers would find it very difficult to assess the approximate development potential of large sites unless detailed layouts are prepared and agreed. The present rules are well known to developers ….

    It should be appreciated that the 'Large Site Reduction Factors' were introduced for three main purposes: firstly, to provide adequate internal roads, secondly, to reduce the possibility of abnormally high densities of development which would otherwise be possible on large sites, and thirdly, to enable assessments to be made of the development potential in the absence of a detailed layouts.

    To sum up, I suggest that the 'Large Site Reduction' rules should remain despite the introduction of Section 16(1)(p) of the Buildings Ordinance."

112. On 26 January 1977 there was a Government meeting about proposed sites for the Home Ownership Scheme. It happened that Mr. Forsgate and Mr. Cumine were present at the meeting. An intervention by the Principal Government Town Planner is recorded in this way:

"As the site was over 1 acre in area, P.G.T.P. stressed the importance of developing it in accordance with large site rules. The criteria should not be relaxed or else there would no doubt be complaints from other private developers who had to comply with these rules."

113. As late as 4 October 1977 the notes of a Land Conference Meeting to discuss Phase I of Harbour City states the "problem" as being "this site exceeds 3,500 sq.metres" and adds "Remedies/Powers s.16(1)(p) of the Ordinance." The notes go on to record, that adequate internal drives had been provided within the lot for traffic and that the Conference had agreed that the proposals were acceptable under s.16(1)(p) of the Ordinance.

114. I think this is a convenient moment to set out some of the testimony, of which the judge made mention, given by Mr. J.G. Stean who gave evidence on behalf of ECA. He is a Fellow of the Royal Institute of Chartered Surveyors and an Associate of the Chartered Institute of Arbitrators. He joined the Buildings Ordinance, Office in 1958. He worked there until 1974 by which time he had became the Principal Government Building Surveyor. He was then prompted and became the Director of Building Development. He held this post until he became Deputy Director of Public Works. During this period he sometimes acted as Director of Public Works.

115. This is part of the transcript of what he said in answer to the judge, and to Mr. Thomas, in-chief:

"Court: Are you also saying it was reasonable to adopt the figure of 8, or is that not part of your answer?

A. That is part of my answer. I am saying in terms of the development proposed by Mr. Cumine.

Court: Yes.

A. It was reasonable to adopt this figure of 8.

Q. But when you say, Mr. Stean, in terms of the development proposed, what aspect of that, proposal do you have in mind when you say that 8 seemed reasonable? That is in domestic/non-domestic plan.

A. Yes. I can find somewhere in the report in refers to - I think it's two thirds non-domestic and one third domestic.

Q. Mr. Stean, given, the views that you held about large site restrictions at that time, what would your response have been if this proposal had come to you squarely within schedule 1, that is, without excuse, without explanation, just put forward in terms of schedule l?"

A. I would have recommended to the Director of Public Works that it be rejected under grounds of Section 16(1)(p).

Q. It may sound a rather unnecessary question. But why would you have done that?

A. Because it would have been following Government policy to ensure that large site reductions were achieved.

Q. Mr. Stean, during your time with Government and while Circular 58 was in publication, shall we say, namely 1971 to 1983, did you personally at any time come across a case where its existence was disregarded by a proposing architect who simply submitted plans under schedule 1 which were then accepted without question?

A. Not without question, but it certainly happened in the case of the Tramways site.

A. My question was as limited as the words can make, which was then and there accented'. Do you follow me?

A. I can't recall such a case.

Court: Mr. Thomas, the question was quite complicated, but I have got an answer to it.

Mr. Thomas: Yes, you've got an answer.

Court: And I want to see if I've got it right. 'I can't recall a case in which a large site submission ignoring Circular 58 was accepted."

A. Without question.

Court: 'was accepted without question, but such a submission was made in respect of the Tramways site.'

A. My Lord, I think I was correct. In the case of the Tramways site a submission was made but it was questioned."

116. I think it is relevant, too, to note some of the answers Mr. K.B.O. O'Sullivan have to Mr. Thomas during his cross-examination, but of course they must be read in the context of the whole of his evidence. Mr. O'Sullivan was one of Wharf's experts. He is an Associate of the Royal Institute of (British) Architects and a member of the Hong Kong Institute of Architects. He is a Chartered Architect in Hong Kong and an Authorised Person under the Ordinance. He joined the Building Ordinance Office in 1958 and became Senior Building Surveyor in 1963. He was promoted to Chief Building surveyor in 1969 and Government Building Surveyor in 1973. He was transferred on promotion to PWD headquarters to 1975 as Building Survey Adviser.

117. Mr. O'Sullivan accented that leaving aside any problems about proper methods of enforcement, it was the policy of the PWD that CL 58 be complied with, and subject to the same point this had remained policy throughout. It seems clear to me from all the material before us that this was so. The differences in opinion in Government circles was not so much whether density control was desirable but how best to achieve their objectives.

118. I earlier summarised some of the evidence referred to by the judge about ECA's views of the status of CL 58 and his conclusion as to Mr. Roberts' attitude to it. We have been taken through many passages of the lengthy transcript and in my judgment there is ample evidence to justify what was essentially a finding of fact-that while Mr. Roberts did not believe that the status of CL 58 was the same as that of the Regulations, he did believe that it was right to act on the footing that the Government had the powers it claimed to have.

119. The next question I address is whether Wharf were misled by ECA about the effect of CL 58. In this context, I think it is important to recall what Mr. Roberts said in cross-examination to Mr. O'Brien when he was asking him why he had edited out of one of his reports to Wharf, Mr. Cumine's notes of 5 February 1973 where he had suggested that CL 58 might not easily be enforced. This is the exchange:

"Q. Why then was that matter edited out from the report that you drafted and sent out?

A. Well, I presume it was edited out because they already knew about the legality of it. In fact, we'd already presented it to the Chairman and we had already discussed it in full. Presumably, that's why it was edited out. As far as the Wharf company were concerned it was very much surplus to what their requirements might be. They already knew that Circular Letter 58 did not have the force of law.

Q. But the whole of the child's guide that you did set out was not edited out. That was sent. I call the child's guide pages, 242 to 245.

A. I realise what you are referring to. I think you are looking far too much into that. Because basically it doesn't materially affect the issue. As far as I can see it the point is that we come back to the situation all the time. The Wharf company at the meeting that I had with them following the issue of Circular Letter 58 - we went through the whole implications of Circular Letter 58. They, as I have already mentioned, appeared to have full information to the affect that Circular Letter 58 did not have the force of law, even before I discussed it with them. We then went through the whole parody again; the whole matter of going through Circular Letter 58. It was decided by then at that particular point in time not to challenge Government. And that's basically that's all I can say in relation to Circular Letter 58. And I've said this time and time again."

120. I will not rehearse all that Mr. Roberts said on this subject both in chief and in cross-examination but it is quite clear that the judge believed him and, it must be said, neither Mr. Forsgate nor Mr. McLuskie gave their views of CL 58.

121. The judge was entitled on the evidence as a whole, both oral and written, to his conclusion that "Wharf wanted to avoid the constraints which it feared reasonably, the Government might try to impose on it if it got into a confrontation with Government over density of development." It seems to me that this finding cannot possibly be assailed.

122. I next discuss the question whether ECA's advice and conduct should have changed after the Appeal Tribunal's decision made on 24 November 1972. Of course, the reasonable skill that an architect must demonstrate includes a fair knowledge of building control requirements whether, set out in legislation or in practice notes etc. He must, too, take account of leading decisions on relevant legal matters.

123. Without disparaging the importance of the role of the Appeal Tribunal, the Tribunal is not a court of law. It has a particular and limited function and it must be noted that the procedure laid down in the first Schedule to the Ordinance (I am here referring to the provisions of sub-paragraph (1) of paragraph 3 of that Schedule) severely restricts the effective presentation of submissions on points of law, subject always to the Tribunal's discretion. No court of law making binding decisions has declared CL 58 to be ultra vires.

124. I would first observe that on the face of it, since CL 58 applied to "large sites" over 40,000 sq. feet in size, the Circular did not affect the subject site which was of some 39,000 sq. feet. There was, of course, no suggestion in the decision that the authorities could not properly apply regulations 16(1)(g) or 16(1)(p) of the Regulations to sites of any size. When one reads those regulations one can see how widely drawn they are, and if a decision to withhold approval from a project were made after adequate inquiry and upon valid considerations, it would be difficult, even on judicial review, to challenge the decision.

125. The full parameters of the decision might well have been appreciated by a lawyer but I venture to say that even amongst lawyers there might have been reasonable competitive views on the matter.

126. Apart from what Wharf suggests happened at the Lau/Roberts meeting in November 1974, as the judge noted, there was no pronoucement from the Government upon the changed status of CL 58. We have seen how various officials viewed the position. No hint of this was given to ECA by any of the officials involved in the development as it proceeded through all its stages. CL 58 was not withdrawn until September l983 some 11 years after the Tribunal announced its decision. And it is to be noted, the Hong Kong Society of Architects did not think it necessary to modify the advice it had even to members in the August 1971 circular letter, following the decision.

127. As a post-script, it is of passing interest to read part of what the Appeal Tribunal said in their decision of 16 November 1973 in a case which concerned a development in Robinson Road (not a "large site"). Two of the members who sat on this occasion were members of the Tribunal which gave the decision of 24 November 1972 about which so much has been said in this appeal:

"Whilst we need not consider the Density Zoning Schedules established by Circular Letter 58 … Circular Letters are the means whereby all Authorised Architects are kept informed of changes in policy. Every architect is on notice that if plans are submitted which do not conform with the Density Zoning Schedules he will be inviting rejection under Section 16(1)(g). Whether mere non-conformity with the relevant Density Zoning Schedule is a ground for proper exercise of the discretion vested in the Building Authority to reject plans under Section 16(l)(g) is debatable, but does not have to be decided on the facts of the present case".

128. A matter which I will now address is the history of the discovery made about ECA's own copy of the report of the Appeal Tribunal's decision on NKIL 53C. We were taken right through the history by Mr. O'Brien.

129. The solicitors for Wharf questioned the absence of that decision from ECA's List of Documents. In their third letter (March 1987) they explained why they were interested: "… it appears … that your clients know of this decision but no documents have been disclosed as to the reasons of that knowledge or any subsequent knowledge that may have been acquired ….". There was, what Mr. O'Brien called "a vague response", to this.

130. On 10 April 1987 a summons was issued seeking discovery, inter alia, of ECA's copy of the decision. ECA's that solicitors stand was that they say no reason why all the Appeal Tribunal's decision should be disclosed, even if ECA had them. They only had the report of the NKIL 53 derision and surprise was expressed that Wharf did not have their own copy. ECA's copy contained no information relevant to ECA's means of knowledge and so did not press then for disclosure of that document.

131. Mr. O'Brien says that the first intimation Wharf had that ECA intended to deny that they had a copy of the decision was an inference to be drawn from the cross-examination of Wharf's expert witness, Mr. O'Sullivan, and this was on the 24th day of the trial of the action.

132. On the 37th day of the trial, when Mr. Roberts was being examined-in-chief he had said that he did not know whether he had heard about the decision as a rumour or had seen it in print.

133. On the 39th day of the trial, Mr. O'Brien cross-examined Mr. Roberts extensively about his knowledge of and involvement in the re-development of NKIL 53. In the light of some of his answers, an undertaking was given to the judge at his request to file and serve an affidavit about ECA's file on NKIL 53 and the presence or otherwise of the decision on their relevant client's file. The cross-examination continued and on the 4lst day Counsel for ECA (Mr. Thomas) said that he had been instructed that a copy of the decision had been on an office file and not a client's file. On the next day, Counsel told the Court, on behalf of ECA, that it was no longer possible to identify the original copy of the decision that had been received as it had been copied and placed in several personal files.

134. A further undertaking was sought and obtained that ECA should provide an affidavit about this matter in terms wider than the earlier one supplied. When this new affidavit was seen, on the evening of the 44th day of the trial, a copy of the tribunal's decision was annexed to it and upon that copy more found to be the following words, in Mr. Roberts' handwriting: "Katherine/File: Job 1508" with his initials against the inscription. On behalf of ECA the relevant affidavit said. The copy of the decision had been removed from the file in which it had originally been placed so that copies could be made for those advising ECA and for others working in the case; the original copy had not been returned to the NKIL 53 file and could not be located.

135. Mr. O'Brien contended that the way the judge should have looked at the circumstances surrounding the discovery was this: he should have regarded the importance of the document was to he measured by the steps taken to conceal it. The judge should therefore have concluded that ECA realised that their advice to Wharf should have been different if it were established that they did have a copy of the decision at the relevant time.

136. It will he recalled that the judge delivered his reserved judgment on 16 December 1987. The judge made an order on 24 February 1988 that the costs of this part of the action should he taxed and paid by Wharf on the normal basis of taxation, rejecting an application by ECA that they should be taxed on a common fund basis. On the next day the remainder of the costs application was heard and the judge dealt with a submission made on behalf of Wharf that ECA should he deprived of part or all of their costs.

137. In his judgment on this part of the application the judge briefly reviewed what had happened about the copy of the Appeal Tribunal's decision which had been received by ECA and the discovery relating to it and then went on to observe (I think it to be important to read the judge's own words):

" The whole matter is unsatisfactory; but I have not the least doubt that I ought to acquit the Defendants in general, and Mr. Roberts in particular, of the charge of deliberate concealment made against them. I also acquit the solicitors and counsel who acted for and presented the case of the Defendants in so far as such a charge of deliberate concealment was also made against them. I do not for a moment think that happened. I think that the approach of the Defendant's legal advisers to this was wrong; but I think their judgment was clouded by a misapprehension of the significance of the decision. It was not, as I have said, the decision itself, but the degree of awareness of it possessed by Mr. Roberts, which might have led the Plaintiffs to place a particular significance on the copy endorsed by Mr. Roberts which they were deprived from doing until after the hearing had commenced and, eventually, this copy was produced.

    Even at the end, the position in which the Court was left by the Defendants was unsatisfactory; for one member of their firm deposed that the copy which was eventually produced had been removed from the file and had been itself a photostat copy. It had, the defendant said, been removed from the file after the institution of the proceedings for the purposes of making a number of copies so that the Defendants' legal advisers, and others working on the case, would have copies. Despite that sworn statement it turned out in the end that the copy being used for the purposes of preparation of the architect's case was (so I understand it) another copy altogether. I cannot, therefore, show much enthusiasm for the approach of the "Defendants' adviser's to the question of discovery on this point. But not only do I acquit them of any attempt at deliberate concealment; I would express my understanding how difficult it was to get every point right on discovery or otherwise when the action had escalated, in the interlocutory stages, out of all proportion to the real difficulty of the issues. I do not think it right therefore to deprive of the defendants of any part of their costs in this respect, important though I agree it is that parties should obey the rules and in particular should make proper discovery without being pushed to do so. None of the other points about discovery seem to me to warrant the depriving the Defendants of the whole or part of their costs." [Emphasis added]

138. It seems to me quite hopeless to invite an appellate court to find that there had been dishonest concealment when the trial judge, with all the material before him and having heard all the oral evidence (tested by very full and able cross-examination by Mr. O'Brien and aided by his forceful submissions) categorically refused to come to such a conclusion. I decline to take a different view.

139. I now turn to examine what happened at the meeting between Mr. Roberts and Mr. H.K.T. Lau (one of the Government Building Surveyors at the time), at the latter's office on 9 November 1974. It will be readily appreciated why Wharf attach such importance to this meeting. Wharf submit that the evidence before the judge showed in the Plainest terms that as a result of the meeting Mr. Roberts (whatever he might have thought before) fully appreciated that the authorities would not seek to apply CL 58.

140. On the appropriate file Mr. Lau had minuted on 4 November 1974: "Spoke, with Chief Building Surveyor. Letter 58 now invalid." After Mr. Roberts had attended upon him, there is the further minute: "Mr. Roberts called a.m. at my request to amend plans in regard to deleting area deduction as large site factor does not apply."

141. One of the further and better particulars given by Wharf stated that ECA were under a duty to appreciate and advise Wharf on the significance of the fact that: "Mr. Roberts was invited to the Building Ordinance Office to amend the Ocean Centre plans on 9 March 1974 because CL 58 did not apply."

142. Mr. Lau's evidence, which was not challenged by cross-examination, was that although he could not recollect what had been said on that occasion, it was his practice to inform architects of the reasons for asking them to change their plans. This is what the judge said about this:

"On 9th November 1974, Mr. Roberts attended at the Building Ordinance Office. He was invited to amend the plans for Ocean Plaza, which had included plot ratio calculations worked out in accordance with the provisions of circular 58. He was invited to substitute in this connection the figures for plot ratio given by the Building (Planning) Regulations Mr. Roberts did so. This gives rise to the one conflict of oral evidence I have had to resolve. Mr. Roberts says that this was a device to get over the problem he had had over the provision of the 4th floor terrace mentioned above. The officer on whom he attended, Mr. Lau had no recollection of the meeting, but his contemporaneous notes suggest that the only point of it was to cause the plot ratio and site coverage calculations to reflect his belief as to the inapplicability of Circular 58 (on the basis of which they had been prepared). The point made by Mr. Roberts was not put to Mr. Lau. My finding is that, nevertheless, the actual recollection of Mr. Roberts is to be preferred."

143. Mr. O'Brien submitted that if Mr. Lau's contemporary notes were correct, then the version given by Mr. Roberts must have been false. The notes were evidence in their own right under the Evidence Ordinance. It had not been suggested to Mr. Lau either that his notes were inaccurate or that he might, upon that occasion, have departed from his usual practice.

144. Mr. Lau was, it was pointed out, a disinterested and independent witness. The decision not to cross-examine Mr. Lau must have been one deliberately taken, after an over night adjournment. Mr. Roberts had been in court most of the time and the version he subsequently gave of the incident was not put to Mr. Lau had a different version been put to Mr. Lau, as it should have been, it must have impaired the credibility of Mr. Roberts on the point when he came to give evidence. Had that version been put to Mr. Lau, his memory may have been jogged so that he might have been able to confirm or deny Mr. Roberts' version and Mr. Lau might have been able to refute the version because had it been true he could not have failed to remember it, or he would have recorded that version, or because he would never have recorded what he did had it be true.

145. Mr. O'Brien contends that ECA should not be allowed to be in a better position by having elected not to challenge Mr. Lau. It was not thereafter open to ECA to invite the .judge to reject Mr. Lau's evidence. The judge should also, it is said, have attached particular weight to the undisputed contemporary record of such an independent witness about events which occurred so long ago.

146. Mr. O'Brien drew attention to the fact nothing had been produced to rebut the inference that should have been drawn of late fabrication, by Mr. Roberts, and no suggestion had been put forward at the trial that the omission to cross-examine Mr. Lau had been due to an oversight or to a misunderstanding. It is suggested that the judge, in the circumstances, should have advised himself, at the conclusion of Mr. Lau's testimony, that ECA had no contrary version to advance. There had been no request to recall Mr. Lau for further cross-examination.

147. Mr. O'Brien also submits that by the way Mr. Thomas dealt with this issue in his closing address to the judge he had conceded in terms that Mr. Lau did say that CL 58 was invalid or had been cancelled.

148. We have been taken through what Mr. Lau said in examination-in-chief. He told the judge he could not remember how he had come to know that CL 58 was "invalid" or "cancelled". He explained that they would normally call in the Authorised Person to amend the plans if they thought that the plans were "approvable" with only minor amendments. "Normally" the reasons could he given.

149. So important is precisely what Mr. Lau said in answer to Mr. O'Brien and to the judge when he sought to clarify the matter, that I think it is necessary to burden this judgment with several extracts from the transcript.

150. There was the following exchange between Mr. O'Brien and the witness, in chief:

"Q. Now, we have seen in this case that there were several other matters on your pink sheet in respect of which you were either asking for a Form 20 or some other similar matter, but in relation to site coverage, what was the problem and how was it going to be resolved? You have made the entry which we have seen that circular letter 58 now invalid or circular letter, standard letter 58 cancelled against the problem of site coverage. How was that problem resolved and how would you have put it to the authorised person?"

A. I would have said to the authorised person that the large site reduction factor does not apply and he could use the calculations as stated under Planning Regulation."

151. Mr. O'Brien then took him through the alterations which, it was common ground, Mr. Roberts had made and initialled, to the figures on the too left hand corner of the plan under the heading:"CALCULATION OF PLOT RATIO AND PERCENTAGE OF SITE COVERAGE", and the transcript continues:

"Q. Now, are you able to say what conversation is likely to have taken place, again so far as at this point of time you can remember or say, using these documents to refresh your memory, what other conversation would have taken place about that, dealing firstly with the area dedication?

Mr. Thomas: My Lord, I am really not at all sure about that, because the question is very fairly put in terms of what conversation is likely to have taken place, I have no complaints about it, but query whether on that basis one can get a satisfactory answer.

Court: I wonder if you could perhaps try and examine him as to what he does actually remember in the first instance and then move on if you find it unsatisfactory to ...

Mr. O'Brien: Yes.

Q. Apart from what you read in these documents and on the plan that you have seen, do you have any independent recollection of this incident?

A. No, I can't remember anything at all.

Court: I think you have found the right to go on and try and get him to speculate within limits- obviously within very short simple questions that will assist him to answer you.

Mr. O'Brien : Yes.

Q. What I want you to do is, subject to what you have just said, to give his Lordship the best indication that it is now possible for you to give as to the conversation that would have taken place. You have told us about circular letter 58. I want to go on and deal with such conversation as would have related to deletion of the area dedication. Can you tell us, for instance, why the dedication would have been deleted at all?

A. I'm sorry, I can't remember.

Q. Very well.

Court: Mr. O'Brien, I wonder if you will forgive me. You see a number of alterations have been made to the calculations at the left-hand side of the plan and we know that these alterations were made after you invited Mr. Roberts, I think it was, to come in.

A. Yes.

Court: And you can't recollect exactly what happened.

A. No, I'm sorry, I can't remember anything at all, your Lordship.

Court: It may be possible for you just to look at the alterations that are made and, to be blunt about it, hazard a guess, if you can, as to what led to the making of each alteration as we look at them one by one. You may not be able to do so, but if you are, then it might he helpful, The first alteration we see is, I think, this - on the fourth line permitted site coverage non-domestic. Do you see that?

A. Yes.

Court: And you see certain alterations made there.

A. Yes.

Court: Do you think you could help me by telling me what you think might have led to that alteration?

A. I think the alterations would have been made very automatically, because every authorised person would have known what the site coverage would be for that type of building and he would probably - I mean I am only speculating. All I need to say is that (if?) large site area reduction dose not apply, then he would automatically make all the alterations by himself.

Court : That would follow, from what you're saying if large site reduction figure does not apply, then you'd see in front of you, I think you're saying, the alteration we do see on line 4.

A. I think without myself mentioning what to alter, he would have automatically done this.

Court: By reference to the Building (Planning) Regulation.

A. That's right.

Court: Now, go to line 5, that's the one that says 'Area dedicated to the public passage.'

A.    Yes.

Court: That doesn't, I think, have anything to do, does it, with circular 58?

A. No.

Court: Now, although you can't recollect the incident, can you again speculate as to what may have led to that? Again you may sell not he able to.

A. I don't know. May be he doesn't want to utilize the dedication, may be he doesn't want to use the bonus or it could have been that the dedication is not required by the Highways Office.

Court: I have heard that. It may not be worth much, but at least that's what you think are the possibilities.

Q. Looking at those figures that are set out there, did the authorised person need to use the bonus to get his plans to comely, assuming that he makes a correction in the site coverage and the plot ratio to remove the large site reduction factors? Did he need to have the area dedication in order to have a plan that could be passed?

A. I can't remember the exact procedure at that time, but I can recollect that you must have the area dedicated before you can obtain approval of the plans.

Q. Well, we'll come on to another entry about that in a moment, but it is some time since you were doing this sort of work, is it?

A. Yes, because that was a long time ago."

152. We were referred to a number of cases of high authority in the Commonwealth which discuss the well-known duty of Counsel to cross-examine an opponent's witness in certain circumstances. The leading authority is perhaps Browne v. Dunn 6 R.67(H.L.). Broadly stated the principle is that if a court is to be invited to disbelieve a witness on some relevant part of his evidence, he should be cross-examined or, at the least, it should be made plain, before he leaves the witness box that his evidence is not accepted. The failure to cross-examine a witness on some material part of his evidence, or at all, may be regarded as an acceptance of the truth of his evidence.

153. A close scrutiny of what Mr. Lau actually said is necessary to determine whether Mr. Thomas had a duty to cross-examine him. It is not, I think, unreasonable to observe at the outset that despite a skilful, but perfectly fair, examination-in-chief, Mr. Lau did not say, perhaps what Wharf had hoped he would say - that he had told Mr. Roberts that CL 58 was no longer in force. And this, it will have been seen, despite several very helpful interventions by the judge. Mr. Lau had every opportunity of doing so but, as we have seen, he told the judge on more than one occasion that he could not remember anything at all about the conversation between him and Mr. Robert s. Moreover, despite what he had said was his invariable practice (to tell architects the reason for asking them to change their plans) and with the assistance of his contemporaneous notes, coupled with the altered figures on the plan before him, he did not say that he mist have told Mr. Roberts, that CL 58 was "now invalid". In effect, Wharf were inviting the judge (as they now invite us) to draw an inference that the witness was not able, or was not prepared, to draw himself.

154. Understandably, Mr. Thomas was not seeking to challenge the accuracy of Mr. Lau's notes. They do not positively suggest that they are a record of what he said to Mr. Roberts. Since Mr. Lau could remember nothing of the conversation, this was not a case precisely like Browne v. Dunn, as readily appears from a short passage I will read from Lord Herschell's speech at p.70:

"Now, my Lords, I cannot help saying, that it seems to me to be absolutely essential to the proper conduct of a cause, where it is intended to suggest that a witness is not speaking the truth on a particular point, to direct his attention to the fact by some questions put in cross-examination showing that that imputation is intended to be made, and not to take evidence and pass it by as a matter altogether unchallenged, and then, when it is impossible for him to explain, as perhaps he might have been able to do if such questions had been put to him, the circumstances which, it is suggested, indicate that the story he tells ought not to be believed, to argue that he is a witness unworthy of credit. My Lords, I have always understood that if you intend to impeach a witness, you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but it is essential to fair play and fair dealing with witnesses."

155. There was, in my view, no need to cross-examine Mr. Lau on his practice when he himself had not said that by following his normal practice he would undoubtedly had informed Mr. Roberts of the invalidity of CL 58. It seems to me that Mr. Lau's first answer in the passages from the transcript I have set out must not be read in isolation but in the light of all that he said later.

156. I now approach the matter upon the assumption (the soundness of which I am by no means convinced) that Mr. Thomas, though not seeking to impeach Mr. Lau's credit, was bound by some broader principle to have put to Mr. Lau that part of ECA case which concerned him. If this was indeed a failure on the part of Mr. Thomas it would have entitled Mr. O'Brien to recall Mr. Lau & rebut what Mr. Roberts had said about the conversation, if Mr. Lau was able to do so. I mean no disrespect when I say that the decision not to make, such an application to the judge must have been as deliberate as that made by Mr. Thomas not to cross-examine Mr. Lau.

157. Even if Mr, O'Brien is right, I know of no authority which holds that the judge was precluded from receiving and accepting the testimony of Mr. Roberts on this point (the observations of Newton, J. in the Supreme Court of Victoria in Bulstrode v. Trimble [1970] V.R. 840, at p.147 are the other way), and as we have seen the judge considered that evidence bearing in mind the fact that the version of the conversation later given. By Mr. Roberts had not been put to Mr. Lau.

158. As to the submission that by the way Mr. Thomas had addressed the judge he had expressly conceded that Mr. Lau had told Mr. Roberts that CL 58 had been cancelled, one needs to read all that Mr. Thomas said on the subject. While it is true that Mr. Thomas invited the judge to consider what it would mean if Mr.Lau had indeed told Mr. Roberts that CL 59 was invalid (either Mr. Roberts clearly understood this and had deliberately sabotaged his client's interests, or Mr. Roberts had not clearly understood that CL 58 was a dead letter) he had earlier invited the judge to assess Mr. Roberts as a witness, hearing in mind that he was giving evidence about a conversation that had taken place 13 years earlier; and there is later the following exchange between Mr. Thomas and the judge:

"Judge: What if I find you were called in by Mr. Lau and told so [that CL 58 was regarded by the authorities as invalid or cancelled]?

Mr. Thomas: …. I am suggesting this plainly did not happen because of Mr. Roberts' evidence of his understanding of the thing.

Judge: If I accept his evidence, yes."

159. At the end of a long case it is not right, in my view, to analyse Counsel's addresses as if they were pleadings. The judge obviously did not regard Mr. Thomas as having made a concession of the kind suggested. As I see the matter, wrong to have done so without clarifying the matter with him. What would have been a most important concession should not be given effect to unless it was that it was being made.

160. Despite Mr. O'Brien's careful, complete and forceful submissions, I am quite unable to hold that the judge's acceptance of Mr. Roberts' evidence about his meeting with Mr. Lau can legitimately be assailed.

161. I will say here that I am far from satisfied that Wharf have discharged the heavy burden of demonstrating that Godfrey, J. was wrong in his assessment of Mr. Roberts as a witness (both as to his reliability and his integrity) in the action as a whole, even where it was inconsistent with the evidence given on commission Mr. Madar. Mr. Roberts was subjected to a very long and penetrating cross-examination (though it was entirely fair) and it is quite impossible to conclude, as has been suggested, that the judge failed to use, or misused, the advantage, denied to us, of having seen and heard Mr. Roberts over so many days. There were no glaring improbabilities in his evidence, and here I include, the evidence Mr. Roberts gave about what was called in the appeal "the back of the envelope calculations" when he was explaining how the plot ratio of 8 had been arrived at before it was put forward to Wharf. His evidence was not, in my view, falsified by any of the documentary material before the Court.

162. I hope I shall not be thought to be presumptuous if I echo something Lord Morris of Borth-y-Gest said in his speech in Onassis and Calogeropoulos v. Vergottis [1968] 2 Ll.L.Rep. 403 for he expresses, in more felicitous language than is at my commands what I felt about this case. He said, at p.421:

"The second line of approach consisted of a careful and full scale review of all the evidence and all the features of the case in support of a contention that in the balancing one ration, which is of the very essence of the judicial function, the learned Judge had at this and that point and in reference to this or that factor assigned either inadequate or excessive weight. As I listened - with ever-continuing admiration - to the development of the argument, the thought kept constantly recurring that the emergent issues in the case could really only be resolved by someone who over a period of many days had the advantage of hearing words spoken by persons who could constantly be observed."

163. Wharf says that the judge, having at the start of his judgment acknowledged that it was necessary to inquire whether or not other architects would have acted and advised in the same manner as did ECA, reached his conclusions without reference to the evidence of how other architects would have approached the question of plot ratio on large sites "ostensibly affected" by CL 58.

164. They say that there was no evidence before the judge:

(a) to support his finding that as an alternative to advising that a scheme for sub-division of the site could be submitted, a competent architect would advise that CL 58 be complied with;

(b) that any other architect had ever advised that a reduction in gross floor area in compliance with CL 58 should be accepted by any developer on any large site with lease conditions of the kind applying to KML 11 – such a finding was contrary to all the expert evidence, including that of ECA's own expert (Mr. Haffner) who had testified that his firm would have, and had, ignored CL 58 once they knew of the Appeal Tribunal's decision;

(c) that any other architect had thought that a client would be well advised to comply with the terms of CL 58 - the evidence showed that every developer of every other large site in Hong Kong had not accepted the reduction contained in CL 58, except, perhaps, where there were lease conditions of a type which were not present in Wharf's lease;

(d)    that any architect, whether competent or not, would have given, or had given, the sort of advice that Mr. Cumine had given to Mr. Woo (of Wharf) at their meeting in September 1978; or

(e) that any competent architect who knew about one particular development (Holt's Wharf) would have given the advice which was given.

165. Wharf also relies on the fact that when ECA were advising and working upon three other developments, no question of compliance with CL 58 had arisen. These were named as the China Engineers, the Hennessy Centre and the United Centre Development.

166. In approaching this aspect of the case, I think it is helpful to recall what Oliver, J. (as he then was) said in Midland Bank v. Hett, Stubbs & Kemp [1979] 1 Ch. 384. This was a solicitors professional negligence/ breach of duty action. At p.402 he said:

"As to this, I have heard the evidence of a number of practising solicitors. Mr. Harman modestly contented himself with calling one; but Mr. Gatehouse mindful, no doubt, of what is said to be the divine preference for big battalions - called no less than three. I must say that I doubt the value, or even the admissibility, of this sort of evidence, which seems to be becoming customary in cases of this type. The extent of the legal duty in any, given, situation must, I think, he a question of law for the court. Clearly, if there is some practice in a particular profession, some accepted standard of conduct which is laid down by a professional institute or sanctioned by common usage, evidence of that can and ought to be received. But evidence which really amounts to no more than an expression of opinion by a particular practioner of what he thinks that he would have done had he been placed, hypothetically and without the benefit of hindsight, in the position of the defendants, is of little assistance to the court; Whilst evidence of the witnesses' view of what, as a matter of law, the solicitor's duty was in the particular circumstances of the case is, I should have thought, inadmissible, for that is the very question whch it is the court's function to decide."

167. Mr. O'Brien took us painstakingly through the material which showed how other architects (and in some instances how ECA themselves) had dealt with other large sites, to demonstrate what the usual and proper practice was. He at this material showed three different approaches to CL 58: (i) sub-dividing the site in one of two ways (ii) arguing the question of its enforceability with the authorities and (iii) ignoring it.

168. I do not think it is necessary to refer to the developments of any site where approvals were given before CL 58 was issued, or to any site which was less than 40,000 sq. feet in area.

169. The first site with which I will deal is the Holt's Wharf site - it is upon what was done on this site that Mr. O'Brien places special reliance. This development, he said, (KML 88) was a true comparable with KML 11 because:

(a) both sites enjoyed prominent positions on the harbour front in Kowloon;

(b) both sites were over 100,00 sq. feet in area;

(c) the leases of both contained merely "offensive trades" clauses;

(d) both developers wished to construct a mixed commercial/residential/hotel complex.

170. Mr. O'Brien pointed out that at no stage had the architects proposed or accented a reduction in the gross floor area of any scheme below the entitlement under the First Schedule of the Regulations. They had exerted gentle but steady pressure on the authorities and had conceded nothing in relation to their clients' statutory entitlement. This had resulted in the approval of a figure of 2,500,000 sq. feet for the gross floor area, being an overall plot ratio of 12.5 applied to a site of 200,000 sq.feet; this did not include a further 450,000 sq.feet for car parking. It is said that the architects, unlike ECA, had sought and achieved the maximum development potential of the site and demonstrated what competent architects could do.

171. The evidence showed that the original idea was to carve up the sites into sites of less than 40,000 sq.feet, and at one time the architects were arguing that sub-division with separate ownership of the sub-divided plots overcame CL 58. The developers had other land next door, some 160,000 sq.feet in size. By surrender and re-grant they eventually (after the passage of some 2½ years) obtained an other 69,000 sq.feet which added up to 43,000 sq.feet.

172. After this additional land was acquired, the gross area of 2,500,000 sq.feet for KML 88, applying the First Schedule figures, was regarded, says Mr. Thomas, the maximum permissible on all this land put together. KML 88 was taken as a notional core site for applying a first Schedule plot ratio despite the fact that the entire lot was eventually more than twice its size. There is a reference in one document which says that the permitted Gross floor area of 2,500,000 sq.feet is "no greater than could be achieved under the Building Ordinance on the existing KML 88" [Emphasis added].

173. The interpretation we are asked by Mr. Thomas to give to all the material referred to us is, I think, a reasonable one. Moreover, it is supported in my view, by evidence of Mr. Stean who was then the Principal Government Building Surveyor and in charge so far as PWD were concerned, with the project. When asked whether it was envisaged that KML 88 would actually be developed alone to the plot ratio agreed without touching any other land, he answered: "It had been expected for some time that there would be additional land of some part. It wasn't clear [what land] but I am quite clear that there was going to additional land of some sort." Later he said that he did not think that there was ever a stage where the development of KML 88 on its own was thought to be a realistic possibility. Later still, he agreed that "in practical terms" 2,500,000 sq.feet was more than could have been built on KML 88 itself and that the figure was only notionally attached to the Holt's Wharf site because it was always anticipated that the development would include surrounding areas. Be all that as it may, I think that this development was quite out of the ordinary and that no conclusions in favour of Wharf can safely be drawn from what happened.

174. The next site I will examine is the Sharp Street (Tramways) development for which the architects achieved a full First Schedule plot ratio. The architects proposed a division of the plot into notional sub-sites each under 40,000 sq.feet in size. In January 1973 the Building Authority wrote to the architects saying, inter alia:

"(h) Large site considerations apply to these combined lots in accordance with [CL 58] and the division of the lots into three hypothetical areas will not be accepted."

175. The architects replied pointing out that this was a genuine division and each sub-site was owned by a different company. They submitted that each site being under 40,000 sq.feet in area should not be considered a large site for the purposes of CL 58. In a later letter they say: "We can find no legal basis for the proposal to restrict development of these sites by the imposition of the so-called 'large site factor'". Eventually, in November 1973, as we have seen, the Building Authority in a letter signed by Mr. Stean informed the architects:

"I confirm that the redevelopment of a number of lots which forms one site may be regarded as a joint development for a composite commercial building with a plot ratio of 15 and I also confirm that the sliding scale for a large site will not be applied for this project."

176. Mr. John Lei a member of the firm of architects concerned with the Sharp Street development told the Court his views on CL 58. He saw it as an indication of Government policy with no statutory basis. He explained that solicitors were consulted and that this was why he had written the "no legal basis" letter to the Building Authority. He said that if the Building Authority had insisted upon the application of CL 58, and their clients had wanted to, the matter would have been taken to the courts.

177. In his evidence Mr. Stean spoke of various meeting held with the developers of the Sharp Street site. He mentioned discussions which had led to the withdrawal of certain town planning objections. As far as he could remember, he had been instructed to abandon the stand they had been taking about applying large site reductions because that had not formed part of the deal reached earlier over the town planning matters. He seemed to blame himself for the concession that had been made.

178. Before I deal with the three large sites with which ECA were involved, and where in each case full First Schedule plot ratios and site coverage were achieved, I think it is right to observe that there are Large sites and large sites. The maxim CL 58 reduction (40%) applies only to sites of 100,000 sq.feet and above in area. There is a sliding scale of reductions for sites of between 40,000 and 100,000 sq.feet. The figures put forward to us by Mr. Thomas are revealing and demonstrate how different can be the impact of CL 58 on smaller large sites, so to speak. Thus only 6% would be the full CL 58 reduction on a site of, say, 45,000 sq.feet. Based on a permitted plot ratio of 8.5 under the First Schedule, the permitted gross floor area would only be reduced from 382,500 to 359,550 sq.feet.

179. The Hennessy Centre site was the only one mentioned by the judge:

"On 10 July 1974, William Ling of the architects drew up some calculations for the Merrylea project showing a plot ratio of 8. In his notes he mentioned also a completely different project, at Hennessy Road, in which the architects were concerned, and on which, although it was a large site, they worked, not on the plot ratio provided for by circular 58, but on the plot ratio provided for by the Building (Planning) Regulations; but, in my judgment, nothing turns on this."

180. This was a site of just over 47,000 sq.feet. Mr. Roberts told the court that since this site was approximately 1/10th of the size of the Harbour City site he did not think that they could fairly be compared. Although he was the Authorised Architect for the project, the actual work was done by someone else in his firm and he could not remember much about it. He said that, as it was well known, the large site reduction factor was a matter of discretion and that presumably a member of his firm had gone to the authorities and checked whether they were going to apply CL 58 reductions.

181. There was very little evidence about the United Centre, the site area of which was 42,872 sq.feet. Mr. Roberts was not involved. Mr. Thomas suggests that if Mr. Roberts supposition about the authorities' approach to the Hennessy Road site were correct, discretion may have been exercised in the same way.

182. The China Engineering site was 56,945 sq.feet in size. The figures show that on the CL 58 sliding scale for this size of site, a 12% reduction could be imposed no the First Schedule plot ratio of 11, bringing it down to 9.68. In the event the site was developed to a plot ratio of only 8.5. Mr. Thomas suggests that nothing of any value emerges from this example.

183. I will not review the other evidence and material drawn to our attention to support the contention, that in relation to Harbour City, ECA had not followed the established architectural practice which even they had adhered to on other developments. I will merely say that in my judgment the evidence fell far short of that which would indicate that ECA had fallen below the accepted standard of conduct in their treatment of, and advice about, CL 58, and therefore did not advance Wharf's case. Clearly the judge did not think so; otherwise he would surely have referred to the evidence put before him. I do not accept that he did not consider it.

184. Although every case where professional negligence is in issue depends very much on its own facts and it is dangerous to attempt to extract principles of general application from such cases, B.L. Holdings Ltd. v. Robert J. Wood and Partners (1979) 10 B.L.R. 3 (C.A.) is of value when considering the standards to be expected of architects in advising their clients upon matters which involve legal questions.

185. That case involved the development of a derelict site which was in an area zoned in the relevant development plan for commercial use. An Act of 1961 was then applicable so that unless an Office Development permit had first been obtained, any planning permission for a building for office use would be "of no effect." However, such permit was not required unless the office floor space exceeded 10,000 sq. feet (gross). The Act melt out how the relevant floor space was to be calculated. A ministerial circular had been issued which drew attention to the provisions of the Act and which emphasised, inter alia, that car parking space within a building might require to be included in the calculations.

186. The defendant architects had been asked first to advise the plaintiffs, "from the planning aspect". The defendants advised their clients that they could not claim the necessary permit since they had lot identified a potential occupant in the area with an approved need for office space.

187. An officer of the planning authority told the defendants that the largest building that would be allowed on the site would be one of about 15,000 sq. feet in size and car parking space would have to be provided in the basement. The defendants were also informed that the planning authority would not take the parking space into account when deciding whether or not a permit was necessary. This statement surprised a Mr. Chapman of the defendants because they have previously thought otherwise but he did not pass on his thinking to the plaintiffs and the architects went ahead with a design which included four floors of office space as well as car parking space in the basement.

188. When the design was submitted to the planning authority the defendants were told that a building on that site required an additional floor but that if the design included a top floor which was a self-contained residential unit, such a floor would also not be taken into account for the purposes of the permit calculations. The defendants were then authorised by their clients to add a caretaker/showroom on the roof 1,000 sq. feet, in size. The defendants believed that the question whether or not a permit was required in these circumstances was a matter to be left to the decision of the planning authority.

189. The defendants duly applied for planning permission for a building comprising five floors with a basement car park, of 16,000 sq. feet in all; the four floors of office space took up 10,000 sq. feet.

190. No permit was obtained and planning permission was granted in February 1971, the building being completed in July 1972. In November 1973 a tenant interested in leasing the new building raised the question of the absence of a permit. The plainiffs then tried to regularise the position but it was not until 1976 (the building had remained unoccupied in the meantime) that they succeeded and only because the exemption limit for a permit was raised from 10,000 to 50,000 square feet.

191. The plaintiffs instituted an action against the architects for breach of their duty and negligence. They succeeded before Gibson, J. [10 B.L.R. 48] but his decision was reversed by the Court of Appeal. Browne, L.J., who gave the leading judgment, reviewed the facts and noted that Gibson, J. had concluded on the evidence that the planning department concerned had been following "a wrong and unlawful policy" ever since the Act of 1965 had come into force. He cited several passages from Gibosn, J.'s judgment. I will set out two of these passages which Sufficiently explain Gibson, J.'s reasoning, at pp.9-10 of 12 B.L.R.:

"'It remains, therefore, in my judgment, the plain and obvious duty of Mr. Chapman to have warned his clients of the danger of this planning application, as provisionally formulated, being of no effect in law, unless upon any other available evidence or by reference to any other principles it should appear to me that my provisions opinion may be setting too high a standard of care and of judgment for an ordinarily competent architect who, as I have said, had the misfortune to encounter such a policy as this planning department of the Country Borough of Brighton was operating in 1970. I have much in mind that the burden of proof on these matters is upon the plaintiffs to prove positively that the defendants were in breach of duty. I think that not a few architects engaged in this work would have been misled exactly as Mr. Chapman was and I think that he might well have been followed in error by some lawyers. Mr. Chapman was acting with complete devotion to his clients. He had negotiated what, if the law as I have found it to be disregarded, was a magnificent answer to their request for the best possible office development without an ODP. The attitude of the planning authority, which in my judgment was wrong and contrary to law, had not been brought about by anything said by Mr. Chapman. His planning application and drawings described the intended development with entire accuracy and candour. It may be thought by some to be 'hard' to require of an architect that he know more law than the planning authority or at least have a sufficient awareness of what may be bad law when enunciated by such an authority as to make him advise his clients to check up on it' (see 10 B.L.R. at pp.77-78)."

""Having considered as best I can all the relevant matters which appear to me to bear upon the question, I am left with the clear conviction that I have not on the facts set too high a standard of care or judgment for an ordinarily competent architect who in 1970 was undertaking to advise in planning matters relating to office development. Indeed I an convinced that the standard which the law sets, namely that of the ordinarily competent and skilled architect, certainly required of Mr. Chapman that he should at least have given that advice and warning to his clients. It would be wrong in my judgment to excuse an architect in these circumstances on the ground that he was entitled to rely upon and accent the views of the planning officers. The client pays the independent professional adviser for independent and skilled advice and the payment due should he sufficient to recognise the burden and obligations which the independent professional adviser assumes. The giving of independent and competent professional advice upon the facts of this case, as I have found them to be, required of Mr. Chapman that he advise his clients that the attitude of the planning officers of Brighton, as expressed by Mr. Linecar, was or might well be wrong in law and that any planning permission granted in reliance upon Mr. Linecar's advice would be or might be of no effect in law. There is no doubt that he did not give any such advice' (see 10 B.L.R. at p.80)."

192. This is how Browne, L.J. saw the issue on the appeal. I read from p.13:

" As I have said, I do not think in this case we need decide the questions as to construction of the office development provisions of the 1971 Act which were decided by the judge. The question is not whether Mr. Chapman or the Brighton planning officers or the Planning Committee misconstrued the Act, but whether Mr. Chapman was negligent in not warning the plaintiffs that the planning officers and the Committee might he wrong and that the planning application and permission might be invalid.

    I hope I do not do Mr. Goldblatt's argument injustice if I say that it seems to me to come down to this the words 'of no effect' in section 74(1) and the attitude of the planning officers ought to have shown Mr. Chapman what Mr. Goldblatt called 'the yellow light' or 'set the alarm bells ringing' that something might be wrong in law, and so he ought to have advised the plaintiffs to seek legal advice. He says that it was Mr. Chapman's duty to give this advice at two stages: (1) before the planning application was made; and (2) after the planning permission was granted, that duty continuting until November, 1973.

    Mr. Chapman accented that he was aware of the office development permit provisions of the Act and of the provisions of Circular 64/65 issued by the Minister of Housing and Local Government on 25th August, 1965. Although Mr. Chapman was surprised at what he was told by the manning officers, his view was that the final decision would be made by the Planning Committee, who would, he no doubt assumed (rightly), have legal advice, and that that decision would be conclusive."

193. Browne, L.J. had read several passages from the transcript of the evidence before the trial judge. He later read further passages. I will refer to one passage from Mr. Chapman's evidence which was an exchange between him and the judge. It is to be found reproduced at pp. 14-15 of Browne, L.J.'s judgment:

"(O)    As J. gather your evidence altogether, at one stage you thought that there was as it were an argument upon the basis of which the local authority might be able to take the few that the car parking was not to he lumped with the office content and that was if it was open. You then discovered, you told the court, in a subsequent discussion that the planning officers were not bothered about that, that they were just simply willing to ignore it. What was the basis that you understood that they were going to ignore it? Was it simply that they said so that was it, or did you understand that there had to be some reason, some basis of decision upon which they could ignore it?

(A) Yes, the basis of decision being in my understanding of my discussions that they accepted it was part of the offices but did not accept that it was part of an ODP calculation.

(O) They accepted it as part of the offices but not part of the ODP calculation?

(A) Yes, my Lord.

(O) Was that because you thought that there was as it were some special rule in Brighton or that that was a correct view of the meaning of the law which related to office development control?

(A) I was of the understanding that the planning authority understood the full position and were prepared to make that decision as a fact presented to them.

(O) What does that mean, that they were prepared to ignore what you understood to he the law?

(A) Yes, my Lord, but I was never really clear that the law was as concise as that because I felt that there was an element here of opinion and that the law in fact was leaving it, or the recommendations, or whatever one calls them, in 64/65, was leaving it for the local authority to make a specific decision related to particular sits or problem. I had never understood the Act to be absolutely categoric on this matter. I thought that …..

[Then the judge interrupts, saying:]

'I think that sounds if - I am not sure - you thought that there was a discretion in the local authority to reach a decision on a particular application?

(A) Indeed'."

194. Browne, L.J. said that he found it quite impossible to say that Mr. Chapman was negligent in holding and acting on these views. His interpretation of the relevant paragraphs of the circular was at least not unreasonable (p.15). Referring to the content certain instructions formulated by the plaintiffs' solicitors when seeking counsel's opinion during negotiations with the prospective tenants for the office accommodation, and other evidence, Browne, L.J. observed: "How, in the face of this the plaintiffs can say that Mr. Chapman was negligent in not realising that the application and the permission might be 'of no effect' passes my understanding". He also held, on the facts that Mr. Chapman was not negligent in failing to warn the plaintiffs after planning permission was granted. It did not matter whether he was right or wrong in law in his view - the question was whether he was negligent in holding it.

195. Lawton, L.J. and Megaw, L.J. agreed that the appeal should be allowed.

196. Megaw, L.J. saw the plaintiffs case in this way (at p.20):

" The essence of the plaintiffs' claim, as it finally became distilled before us, is that, if Mr. Chapman had conformed with the standard of competence reasonably to be expected of an architect who had undertaken work of the nature which Mr. Chapman undertook in this case, he would have realised, in the circumstances of which he was or ought to have been aware, that there was a real danger that a purported grant of planning permission would or might be invalid, or might reasonably be so regarded by prospective purchasers or tenants, and that therefore the defendants should have advised the plaintiffs to seek legal advice on this matter. This, of course, to begin to found a cause of action for negligence, must be on the basis that the plaintiffs themselves, despite all the expertise of all the persons employed or consulted by them in this matter, did not realise this thing which, it is said, the defendant architects were negligent in not realising. The whole of this case, which occupied so many days before Gibson, J., with 6 days of evidence and over 1100 pages of documents, before us in the end, as I see it, has shrunk to that little measure. This proposition involves a number of factors. One essential factor is knowledge by Mr. Chapman of the words of section 74(1) of the Town and Country Planning Act, 1971: '... an application … shall not of no effect'. Mr. Chapman agreed that he was aware of that subsection and of those words extracted from it. It was not, or at least it is not now, in dispute that Mr. Chapman did not realise that there was such a danger, if planning permission were granted, or what purported to be planning permission were granted. (No. question arises here of any had faith on the part of the planning authority or its officers or Mr. Chapman, and therefore considerations which might have arisen in that sort of context simply do not arise here, and never did arise).

    The proposition on which the plaintiffs rely involves, as another essential factor, that Mr. Chapman, in not so realising, fell short of the appropriate standard of care; and, accordingly, he was negligent in failing to suggest to the plaintiffs' representatives that, in the light of, that danger, they should seek legal advice.

    I am quite unable to accept, with very great respect to the learned judge, that, on the material before us, Mr. Chapman was negligent in failing to realise the existence of such a danger - the possibility that planning permission might be, or might reasonably be thought to be, void."

197. The present case is easily distinguishable on the facts but I have cited extensively from the judgments because, as I have said, they appear to me to give some guidance as to the proper approach to the standard of care and judgment to she expected of an ordinarily competent architect in relation to the regime of law controlling building. It is, of course, essential to bear in mind first and last that the question is not whether the architect was wrong in his views but whether he was negligent in holding them.

198. The R.L. Holdings case shows that in appropriate circumstances an architect is entitled to assume, in his dealings with the authorities, represented by senior officials, that they are acting in good faith, know what they are about, and are not disregarding the statutory provisions which govern the duties they are there to perform; and this is so even though the architect might be somewhat surprised at something he is told.

199. In our case, as we have seen, and as the judge found, no warning bells were sounded at any time that should have caused ECA to think that CL 58 was a dead letter and could therefore safely be ignored, and this, even after the Appeal Tribunal's decision in November 1972.

200. In my judgment, despite the evidence before the Court of the thinking of some members of the architects' profession about the effect of the Tribunal's decision, it would he setting too high a standard of care to hold, that once they themselves had read the decision, ECA should have realised that CL 58 had lost its teeth (or should, at least, have entertained doubts about its efficacy) so that their retainer required them to advise Wharf to seek legal advice. Wharf is a large and sophisticated organisation with plenty of development experience, and we know that they had their own solicitors to whom they turned when they wanted help, for example, over the modificiation of the lease conditions and the threatened draft town plan. It seems to me quite unreal to suggest that they needed to be told that they should consult their solicitors if they were doubtful or concerned at any time about the impact of CL 58 on their enormous development project.

201. On the evidence as a whole, I am not prepared to accept that Wharf were misled by the advice they were given to conclude that CL 58 could not, as a matter of law, be challenged, so that "it had to he obeyed". It seems to me that the, evidence of Mr. Madar and. Mr. Roherts indicates that. Wharf did not wish to take on the Government, and there is no evidence to the contrary.

202. In my view, the judge was clearly entitled on the evidence to hold (as we have seen) that Wharf "wanted to avoid the constraints which it feared, reasonably, the Government might try to impose on it if it got into a confrontation with the Government over density of development". If this he right, and Wharf understood the position, I do not see how it can be said that the written advice to Wharf which mentions reductions for large sites, restrictions imposed by CL 58, concessions which were needed to be obtained etc. must be taken to mean that CL 58 had to be obeyed. Certainly, Mr. Forsgate who was in charge did not come forward to say that that is how he understood these letters and that it was only because of Wharf's misapprehension of the true position that they decided to accept a plot ratio of 8 rather than going after a First Schedule ratio.

203. I entertain no doubt that when Mr. Forsgate wrote his letter of 25 May 1974 to ECA saying "… you may enter into negotiation with the Government to obtain concessions for acceptance by them of a plot ratio in the region of 8…" (I will have to read the whole letter later in another connection) Wharf, through him, had been properly advised and were therefore fully informed to enable them to make the commercial decision involved themselves. This was the important letter conveying clear instructions to ECA about the plot ratio which they faithfully carried out. The judge's express finding cannot be faulted:

"In seeking these instructions, and in obtaining them on 25th May 1974, I am of the opinion that the architects did not fall short of an exercise of a reasonable degree of skill and care. On the contrary, I think, once again, that their recommendations were eminently sensible."

204. I have reached the conclusion that Wharf failed, and by a wide margin, to discharge the burden of showing that ECA had been negligent or in breach of their duty in any advice they gave or omitted to give to Wharf on the impact of CL 58 or in respect of their own approach to CL 58, at any rate until September 1978 when a meeting took place between Mr. Peter Woo of Wharf and Mr. Cumine, which I will now discuss.

205. What took place at this meeting was an important plank in Wharf's case. Indeed, it is contended that had the judge properly evaluated the evidence led about the meeting and appreciated its significance there would have been a verdict for Wharf on this part of the case even if the issues already discussed had correctly been found in ECA's favour.

206. Present at that meeting (which lasted about 45 minute) were Mr. Cumine, Mr. McLuskie, Mr. Peter Woo and Mr. Stephen Pan. At the time he was giving evidence (June 1987) Mr. Woo was the Chairman and Managing Director of The Wharf (Holdings) Ltd. as well as the Chairman of two other companies. When the meeting was held Mr. Woo was a non-executive director of Wharf. He was concerned on behalf of Sir Y.K. Pao who had acquired 10 per cent of the shares in Wharf. He had yet to attend his first board meeting (of Wharf). Mr. Pan was a director of another company and was later appointed as an alternate director to Sir Y.K. Pao.

207. Mr. Woo told the Court that earlier that month he had discussed the Harbour City development with Mr. McLuskie. As a result of this discussion a meeting with Mr. Cumine had been arranged in Mr. McLuskie's office.

208. I will now cite passages from the transcript - exchanges between Mr. Denis Chang, Q.C. (who was then one of Wharf's Counsel) and the witness:

"Woo: It was a very cordial meeting. Mr. Cumine congratulated me for being appointed as a Director of the Wharf Company and then be told me that he knew my father who also was an architect, and he told me about the architect, and he told me about the background of his association with the Wharf Company. I asked him, I said, I don't remember the exact words: I do not have any plans of any alterations or whatever but for my information, can you tell me is it too late to change it or is it passible? Mr. Cumine told me no, it was not too late but it would be regrettable because he had spent a long time on this project. He had worked with Government to get them to agree to that project and worked with the company to see that it had been done properly. So he said no, it was not too late. The second question was about the maximisation of the land and the development on top of it. I said to him, basically, well, my family have put a lot of money into this, company and we are not property people and I said I would like to know from you what was the background behind this development. I understand from Mr. McLuskie that plot ratio was 8 and that is the maximum we can have. To paraphrase what happened, he said yes, it is a specially negotiated deal with Government, the plot ratio was 8 and that was the maximum that the company could get. The Wharf Company is lucky to get that 8. He mentioned that he was not the type of architect who designs boxes. He has a very special design which is a composite design, a complex with apartments, office, shopping arcades and hotels. He went into the point about if you are considering changing the design of the Harbour City project, it could even jeopardize what he had negotiated before and that, when I asked him about a possible re-negotiation he again confirmed what Mr. McLuskie had said that if you re-negotiate, you might get less.

209. Mr. Woo then explained what little he knew up to then about plot ratios. The transcript continues:

"DC : Did you doubt Mr. Cumine's explanation?

Woo: No. At that time I think I knew that Mr. Cumine was a well-respected architect in Hong Kong and the firm was one of the top firms in Hong Kong and had done many important jobs. Also I heard from my father of Mr. Cumine's name and. Mr. Cumine being in my father's generation. I didn't know Mr. Cumine, personally at that time other than by reputation. We had a very firm confirmation by Mr. Cumine so I had no reason to doubt that what he was saying to me was untrue.

DC : Did you believe that the plot ratio was maximised?

Woo: Yes, I did.

DC : Now following that meeting, it was the Board Meeting we referred to earlier, we turn now again to the meeting of 9th October, the minutes on page 1117. At that meeting, did you raise any query in relation to plot ratio at all?

Woo: No, it was not raised.

DC: Why not?

Woo: After the meeting with Mr. Cumine, Mr. Pan and I came back and, given such a firm confirmation by Mr. Cumine, of the development plans of Harbour City, we both felt that there was nothing in it to pursue with regard to this matter with the Board. Also, I think that, at that time, my feeling was that the development itself is right to hold it as a long term investment and not as a trading property as suggested by K.S. Li. It was a concept that was explained to us. We thought that, yes, it is a good project. Given that the whole thing bas been taken care of by professionals, we thought it best not to pursue this.

DC : It was not pursued?

Woo: It was not pursued."

Later, the transcript continues:

"DC : If Mr. Cumine had told you that the plot ratio had not been maximised, what would you have done?

Woo: Actually, when I started asking him about the point of maximisation, I pointed out that my family had invested a lot of money into this company, I said of course my family as any landowner would like to see the property always maximised in terms of earning potential and also its development potential. I made that very clear to him so he knows why I asked the questions.

DC : Had he told you that it had not been maximised, what would you have done?

Woo: No, he certainly tried to make me feel that this thing was definitely the best that the Wharf Company can do. Had he told me that actually there was some room to go, I would have said fine, let us go into this in detail and see how much further we can go. The matter is a serious matter if this thing is not maximised and I had no idea of the scale of the missed plot ratio or whatever but certainly at that time it would have been an issue that we would have taken to the Board. It would have made a very important business decision for the Board to make."

210. In cross-examination, Mr. Woo accepted that he knew that there was a maximum plot ratio under the Building Regulations, which was different for residential and non-domestic premises. He also knew about the Airport height Restrictions applying to the whole of Kowloon. We knew, too, that 8 was not the statutory maximum plot ratio. I will not review all that Mr. Woo then said. I set out one more passage from the transcript:

"NT : You knew that there were statutory maxima. You knew that 8 was not the statutory maximum. There you are, not on the trail of enquiry, did you ask him why he did not apply for a statutory maximum?

Woo: I believe that the explanation on that particular point was given by him - this is a very special design where you have a composite of offices, hotels and apartments and because it is composite you can not look at the overall limits. He thought that 8 is the maximum we can do and that is very good for the company.

NT :    In this conversation that you told us about, the falling below the maximum statutory figure was attributed by Mr. Cumine to the fact that this was a particular kind of mix of development?

Woo: No, I would not look at it that way. If it is all residential the plot ratio is actually below 8. I would say that somewhere between 8 and 12 seems reasonable.

NT :    But nothing was said to you about the Government policies which inhibited here the attainment of the statutory maximum?

Woo: Mr. Cumine said that this is a negotiated deal. There were long protracted negotiations and finally they had not the Government to agree to it.

NT : You said, on the trial of enquiry I said a moment ago, you were not keen to penetrate the reasoning behind that a little further and determine why more had not been achieved?

Woo: I think that if Mr. Cumine's comments were to be shaky or unsure, I would probably do that. But I think he is very sure of himself his comments were very unequivocal. He said if you go into it at the end of the day I might even lose that 8.

NT :    And that assurance given at the first opportunity - you could have received it as a director of the company - kept you content, did it, for the next 5 years?

Woo: Certainly did."

211. About all this, Mr. O'Brien submits, firstly, that unlike other issues where the judge made specific finding that no negligence had been established, here the judge did no more than recount what occurred at the meeting and indicate that he accepted Mr. Woo's evidence. He failed to consider whether the advice then given by Mr. Cumine fell short of the reasonable decree of skill and care to he expected of ECA.

212. Mr. O'Brien emphasises that when the meeting took place, although some site work had been done and some foundations begun, the building of Harbour City had not yet started. Contrary to the advice given by Mr. Cumine, it is suggested, the plot ratio of 8 was not the maximum which could have been achieved; there had been no specially negotiated deal; it could not be said that Wharf were lucky to get a plot ratio of 8; there was no justification for the suggestion that this plot ratio might be reduced if there was a change of design or for the assertion that ECA's scheme had achieved the maximum earning and development potential and was the best that Wharf could expect. All this, to ECA's knowledge, it is contended, was wrong.

213. Mr. O'Brien pointed out again that the maximum plot ratio was governed by the Regulations as set out in the First Schedule. The judge had expressly held that there was no specially negotiated deal. It could not be said that Wharf were lucky to get the plot ratio of 8 when the evidence should that they were the only developers ever to suffer the restraints supposedly imposed by CL 58.

214. The authorities had at no time suggested that the offensive trades clause in the lease or the drainage reservations might be employed to require adherence to the CL 58 limitations; the necessary modifications, in any event, had been granted well before the meeting.

215. One of the pointers to the fact that the KML 11 site had not in any event been "maximised" was that ECA's scheme did not utilise the hotel bonus concessions despite the fact that there had been no suggestion that the approval of plans in principle to an overall plot ratio of 8 meant that these bonuses would not thereafter be available. Nor had any benefit been gained from the fact that ECA's treatment of the pavement in Canton Road gave Wharf an entitlement to a bonus of floor area. All these additional development potentials were not explained to Wharf. Wharf had relied on Mr. Cumine's advice. Mr. Woo's evidence made it plain that had Wharf known the true position they were in a position to change their plans to take advantage of the potentials which had been ignored. The judge had made no finding that Wharf knew all they needed to know to appreciate that there had been an underdevelopment of their site so that they could consider what should be done.

216. I will say here, and with respect, that in my judgment Mr. O'Brien makes too much of the judge's finding that there had been no specially negotiated deal. The judge had read part of a letter dated 23 January 1976 from Mr. McLuskie to ECA (which referred to the plot ratio) and added: "We take this opportunity of thanking you for the concentrated effect and successful conclusion to the many prolonged negotiations which you conducted on our behalf") and then commented:

"It is fair to observe that 'negotiations' on a plot ratio figure had never really taken place at all. Mr. Cumine had had a meeting with Mr. Bell and had put forward a proposal for an overall plot ratio. Much work had gone into formulating this proposal and in obtaining the final approval of the Government to the plans for the proposed development: but a 'negotiation' on the overall plot ratio figure, properly so-called, was never held."

217. I do not read these remarks as suggestion that ECA had misled Wharf at any time by describing all their discussions etc. with the appropriate authorities by the word "negotiations", simply because ECA's suggested plot ratio was seen by them to be reasonable and was accepted without demur. All that had happened was that ECA had put forward plans which, from their experience, they felt the authorities were likely to approve.

218. Of course, if ECA had been shown to have been guilty of professional negligence/breach of duty at any stage before this meeting, the evidence of what took place would not have been needed to support Wharf's main case. The question is whether any new liability was created by the advice that Mr. Cumine then gave.

219. I must express some surprise that it seems to have been accepted that in fact Mr. Cumine was advising Wharf on this occasion. I am not at all sure that this was so. At the time of the meeting, Mr. Forsgate was still General Manager of Wharf, and a director. There was no evidence that the authority Wharf had given him to be primarily responsible on their behalf for the whole development had been withdrawn. Certainly Mr. Cumine was not told so. Both he and Mr. McLuskie {who was present) knew how the plot ratio of 8 had been reached. Their knowledge and appreciation of the position was that of Wharf. Mr. Cumine would have been forgiven, by reason of the way in which Mr. Woo introduced the discussion, if he had thought that this was more in the nature of a personal enquiry. Can it fairly be contended that he had a duty on that occasion to recount the whole history of the matter and all the factors that had led to the proposal and later acceptance by Wharf of the plot ratio of 8? Was he bound to go into the whole question for the benefit of each director of Wharf, executive and non-executive, new and old, whenever he was asked about it?

220. Whether or not Mr. Cumine could rightly be said to have been advising the company, there could have been no joubt in Mr. Woo's mind that Mr. Cumine was expressing (although in firm terms) no more than his opinion. It must have been apparent to Mr. Woo that considerations of a legal nature were embraced in that advice. Since Mr. Cumine was not a lawyer, Mr. Woo could have sought legal advice had he wished to do so. It seems to me quite unreal to suggest that Mr. Cumine should have advised him of this self-evident fact. Mr. Woo did nothing for 5 years.

221. Approaching this aspect of the case upon the basis that Mr. Cumine was indeed advising Wharf, since, for the reasons I have given, I believe the judge was right to find no earlier breach of duty by ECA on the plot ratio issue, and since nothing had happened in the meantime (on the view both he and I have taken of the evidence) which should have caused Mr. Cumine to re-think or theme his opinion, he could not be guilty of a breach of duty by continuing to hold the same opinion. He was telling Wharf nothing new. The point is not whether by the time the spoke to Mr. Woo his opinion was wrong (it probably was) but whether he was negligent in continuing to hold it. No question arises, surely, of Mr. Cumine's integrity.

222. I entertain no doubt at all that the Woo/Cumine meeting did nothing whatever to advance Wharf's claim. This must have been the view of the judge and explains why he contented himself by merely giving an account of the meeting. The judge had made it very clear at the beginning of his judgment that the duty of an architect was a continuing one (see his "principle" No.3).

223. I will add that I am quite unable to accept the submission that what Mr. Woo told Mr. Cumine at this meeting amounted to "instructions to maximise". With very great respect, such a contention seems to be to be quite fanciful.

224. I will now consider that part of Wharf's claim which relates to the failure by ECA properly to advise Wharf so that they lost the opportunity of taking advantage, in the Harbour City (earlier, Merrylea) development, of the shortfall in the development potential which had occurred at the Ocean Centre. Wharf say 636,000 sq.feet of gross floor area was in fact lost to them, and using the measure of discount adopted by the judge of the full value of the lost chance on the main plot ratio claim, they estimate their damages under this head at something over $384 million. I will merely comment here that this claim depends to some extent on the CL 58 point.

225. Wharf accent that they had originally decided against treating the whole of KML 11 as one site. The potential benefit of submitting plans based on KML 11 as one site first arose, they say, in March 1974 when it was decided that the "envelope" designed for the abandoned Marco Polo hotel should be retained for the planned commercial complex.

226. In view of my conclusions on this issue, I do not propose to discuss all the evidence and the arguments and counter-arguments. I think it is helpful first to set out in full Mr. Forsgate's letter of 25 May 1974 to ECA:

" I refer to your two letters dated 18th February 1974 relative to your suggested approach to Government, and the formulation of an acceptable brief as to the nature and type of development on the above and subsequent lots of our Tsimshatsui property.

    Your approach and brief are approved in principle, although as you point out, the Master Plan must, out of necessity, be flexible and relate to the existing and pronosed development on this and our adjoining properties, and, in particular, the_decision made on Ocean plaza, which does not fully utilise the area involved, but can, we understand, be compensated in Merrylea?

    As per our recent discussions, I now confirm that you are instructed to prepare for our consideration and approval, schematic layout plans, and relevant planning information to accord with the details outlined in Para. A of your letter dated 18th February 1974, and to include examination of the Macau Terminal project feasibility study. Ultimately you may enter into negotiation with the Government to obtain concessions for acceptance by them of an overall Plot Ratio in the region of 8, and our comment above re Ocean Plaza refers. Necessary perspectives and models indicating the suggested development should also be prepared." [Emphasis added]

227. It is important to note that Mr. Forsgate himself had added the passages I have emphasised to a suggested draft of this letter sent to him by ECA on 18 February 1974.

228. There was much competitive argument about what Mr. Forsgate meant by the words he used in his letter about compensation in Merrylea. Unfortunately Mr. Forsgate was not before the Court to explain precisely what he had in mind. I think, however, it is fair to say that Mr. Roberts' impression is not wholly unreasonable. He was examined and cross-examined at length on the matter and I choose just two passages from the transcript which I think, adequately indicate what he thought:

229. In examination-in-chief, in said:

"Q. Well let me ask it this way then. What did you take those last 2½lines to mean. That is: [Reads] 'The decision made on Ocean Plaza ….. be compensated.'

A. I see, yes. What I took that to mean was that relative to the Ocean Plaza decision there was to he a measure of compensation considered in relation to the development on Merrylea.

Q. Now, how is that argument going to be paraded. What are we envisaging would happen?

A. Well, I would envisage what would happen was that when we were negotiating for the plot ratio of 8 with Government, if a situation developed whereby we had to introduce an argument in order to achieve the eight, this question of the development on the Ocean Plaza not being fully utilised would be brought into play as a negotiating point.

Q. Because that you have said consistently in the correspondence is, not a plot ratio of 8 but a plot ratio in the region of 8. It appears in this letter and I think on other occasions when we looked at it.

A.    Yes."

230. In cross-examination he said:

"A. I saw it as this. That I was told or instructed that in the event of my having to present arguments to Government in order to achieve that plot ratio of 8 I would use, whether it was done as a figure or whether it was done as an aside by saying 'Well look, we didn't fully develop the plot ratio on the Marco Polo site, so you know, what about, you know, giving us something in return.' And that something in return could well have been less than eight but fortunately Government, recognising that it was a good scheme, accepted the figure of eight. So, we didn't have any discussions about that, in reality. Well, I didn't anyway."

231. In my view, Mr. Thomas was right to emphasise that the plot ratio figure of 8 had not even been agreed in principle until November 1974. On 8 February 1975 the plans which have been submitted two months earlier had been formally disapproved for a number, or reasons. Mr. Cumine's letter of 12 April 1975 to Mr. Forsgate speaks of the need to get Government to agree a plot ratio. On 16 December 1975 Mr. Cumine writes to Wharf: "The target in all this exercise is to confirm the plot ratio of the site and this is the agreement we wish to obtain from the authorities". Mr. Cumine's letter of 2 January 1976 to Mr. Forsgate mentions ensuring the determination of a plot ratio. The approval of an application based on a plot ratio of 8 was signified on 15 January 1976.

232. In my judgement it is not reasonable to have expected ECA (or for them to so advise Wharf) to consider submitting a plan for the whole of KML 11 which might jeopardise the attainment of the plot ratio they were hoping to have approved for the Harbour City site. If ECA were not negligent over their actions and advice, taking account CL 58, to reach the plot ratio of 8, I question whether it was ever sensible or practicable to make new submissions treating KML 11 as one site.

233. It is true that the judge did not mention this issue separately in his judgment. I assume that this was because he considered it as part of the plot ratio issue. Without the assistance of the author of the 25 May 1974 letter it is not, in my view, too far-fetched to conclude that the instructions it contained were carried out for Wharf were "compensated" by the plot ratio achieved. However that may be, on considering all the evidence and material before us, I am not satisfied that Wharf has established (even if ECA did not do what some would now say they should have done) that ECA were in any way in breach of duty in respect of this part of the action.

234. I now turn to the final part of Wharf's appeal which relates to exemptions, concessions and bonuses.

235. I have earlier set out the provisions of regulation 23(3) of the Regulations and have summarised the terms of the Circular Letter which intimates how the Building Authority is minded to interpret the expression "or any similar service" at the end of that regulation. The Regulations have the effect that certain areas will he excluded, in view of their function, from the calculation of the gross floor area of a building when determining whether or not the statutory plot ratio has been exceeded. These areas are simply non-accountable, and may properly be called exemptions.

236. However, under the legislative regime, as we have seen, the Building Authority has power to grant modifications so that additional floor area is gained which would otherwise exceed that which is available in terms of the plot ratio. These might be usefully be named concessions or bonuses.

237. The result is that the development potential of a site is increased. The developer obtains greater flood area because (i) he becomes entitled to a higher plat ratio or, (ii) he is allowed to treat certain areas as exemptions or (iii) he becomes eligible for concessions or bonuses.

238. Godfrey, J. summarised the issue in the action regarding exemptions in this way:

"Although the legislation imposes plot ratio constraints, in some particular instances 'exemptions' from them are provided, some by way of administrative concession. The clients lay that the architects' proposals not to and accented by the clients failed to utilize these exemptions to the best or at least the proper advantage, and that this failure was negligent. The architects do not accept this."

239. When he came to deal with this issue in his judgment, the judge observed that there were, at least, two possible approaches to the matter of exemptions. He found that ECA's approach was to claim and utilize only such exemptions as were needed to satisfy the requirements of the design approved by the owner of the building, as might be varied from time to time. This approach, he said, left available an unquantified reserve of unclaimed exemptions which could be claimed and utilized as occasion demanded. Thus there was no risk of "over-designing" the building by claiming more exemptions than could ultimately be justified, a course which might involve exceeding the permitted plot ratio involving the risk of the refusal of an occupation permit on this ground.

240. The alternative approach, said the judge, was to design to the limit of the plot ratio on the basis of all available exemptions including those open to doubt, leaving it to the Building Authority to reject the plans if it objected to the extent of the claim for exemptions. That approach treated as the paramount consideration the achievement of a building of a gross floor area utilizing the whole of the permitted plot ratio. The objective was to maximise plot ratio "spot on"; if there were a risk of excess, one could, for example, leave out part of the final floor of a building. At all states the building owner had to be kept informed of available exemptions and advised as to their utilization. His instructions had to be obtained if for any reason the maximum gross floor area could not be achieved.

241. The judge observed that the ECA's expert witness Mr. C. Haffner had supported the approach adopted by the ECA and explained by their Mr. Penman. He referred to Mr. Haffner's evidence that that approach was one of two or more which, would be acceptable; it was a valid and safe approach which had a lot in its favour. Mr. Haffner (who had practised as an architect in Hong Kong for 29 years) in answer to questions put by the judge, told him that he had experience of plans produced by other architects for submission to the Building Authority in relation to exemptions. The judge then noted: "I asked him about claiming exemptions only so far as necessary to satisfy the Building Authority in relation to a particular design for which the architect was seeking approval. He said 'that might well be described as the more normal practice'."

242. The judge had observed that Wharf's expert witnesses (Mr. K.B. O'Sullivan, Mr.S.R. King and Mr. Lei) had all supported the alternative approach but, the judge remarked, when Mr. O'Sullivan had been asked in cross-examination about what ECA had done: "to draw on exemptions as and when they felt they needed them (1) to achieve the design objective and (2) to achieve it within the plot ratio" and had been asked whether that was "fundamentally wrong" he had answered: "No, no." The judge also referred to the way Counsel for Wharf had put two particular questions to ECA"s witness, Mr. Haffner, and said that in the light of the stand thereby taken "Counsel seemed to me to recognise … the legitimacy of the architects' approach".

243. The judge then made this finding:

"On the evidence, I am not satisfied that the architects were guilty of a want of a reasonable degree of skill and care in adopting their preferred approach. In these circumstances there is in my judgment nothing left in the claim against them in relation to exemptions, for in the end they achieved (as I find) what they set out to achieve."

244. The judge then indicated that had the only proper approach been the alternative one he could have upheld the charge of negligence in that ECA would have failed to exercise a reasonable degree of skill and care in claiming and utilizing the available exemptions.

245. I think it is not irrelevant to mention how this part of the claim been and was later developed. By their original Statement of Claim, Wharf averred that they had lost the opportunity of utilising a lost 27,397 sq. feet of gross floor area, on account of available exemptions. By an amendment made on 13 May 1987, two weeks or so before the trial of the action began, the alleged loss was raised to 64,836 sq. feet. Mr. O'Brien explained that Wharf had not managed to obtain copies of all the vast quantity of plans and data when the claim was first put forward.

246. The reason, why the hotel bonus and set-back dedication bonus were not claimed by the original Statement of Claim and were advanced for the first time on 13 May 1987 was not so readily apparent. These added alleged lost floor areas of 28,675 sq. feet, and 21,394 sq. feet respectively.

247. I think that ECA were entitled to be disconcerted when they saw the amended Statement of Claim (of 13 May 1987 ) and realised for the first time, and so late in the day, that substantial claims were being made against them in relation to particular bonuses, and that Wharf's original claim in respect of exemptions etc. (on Wharf's own assessment) had swollen by some $87 million.

248. The evidence led by Wharf was to the effect that the proper and competent practice was that an architect would prepare his plans for each submission to the Building Authority indicating the accountable and non-accountable areas. If, after preparing plans and making calculations, an entitlement to more gross floor area than had been utilised was revealed, then it was the duty of the architect to turn to his client for instructions as to whether and how the extra floor area should be used.

249. Wharf say that due to ECA's breach of duty, they were never told of very significant areas of exemptions, concessions and bonuses that were available but which had never been claimed on their behalf. Indeed, even ECA themselves, it is said, did not bother to find out what was Wharf's full entitlement.

250. Mr. O'Brien pointed out that the evidence on the two different approaches to exemptions had nothing to do with set-back and dedication bonuses or with hotel concessions and submitted that the judge was wrong in apparently assuming that it did. He said that the judge had failed to consider whether ECA's practice was consistent with their actual instructions to maximise. These were Wharf's instructions certainly following the Woo/Cumine meeting - I have already commented on this particular proposition which I regard as untenable.

251. It is contended on Wharf's behalf that the judge should not have allowed a defence to be advanced which first came to light mid-trial (that ECA's duty was to claim and utilise only such exemptions as were required to satisfy the design approved by the developer) and which had not been pleaded. The judge had wrongly ruled that the averment of this limited duty was permitted by the general traverse in the amended Defence of the duty to maximise exemption claims pleaded by Wharf.

252. This was one of a number of points raised on the pleadings by Mr. O'Brien. It must be said that the pleadings (on both sides) were far from perfect but after carefully considering all these points, I have reached the conclusion that any defects there may have been in the Defence should not be permitted to affect the result of this appeal. I cannot see how Wharf were prejudiced by any of the defects to which our attention has been drawn. The limited duty in question had peen foreshadowed in para. 2(h) of Mr. Haffner's Supplemental Deport dated 1 June 1987. All the facts were before the Court and all the issues were, in the event, fought as if they had properly been raised on the pleadings. It is difficult to see how the controversy between the parties could more exhaustively have been investigated at the trial (and, I hone, on this appeal). Wharf were denied no opportunity of meeting any new matter said to have arisen. It has not been suggested that any other or additional evidence would have been led.

253. It is argued that the judge should have asked himself whether ECA's alleged practice (which involved keeping their clients in ignorance of an unascertained hoard of exempt areas) was a reasonable one, for they were entitled to know the full development potential of their site. On the evidence, Wharf had never agreed to the adoption of such a practice. Moreover, the judge had ignored Mr. Haffner's opinion that no claim or allowance a significant amount of exempt area should he omitted without instructions from the client.

254. Mr. O'Brien also pointed out that the evidence had revealed that ECA did not in fact adopt their alleged practice for they find claimed too little at first, informing Wharf at one stage that Phase IV would be smaller than Phase I. They had then claimed an excess over requirement and had had to think of a way of using it up.

255. It is also argued on behalf of Wharf that ECA's conduct had been described by the judge as illogical and unsystematic and would have a finding of negligence but for his finding as to the nature of the duty. All I need say about this submission is that I do not understand the judge's words, which I will now set out, in the same way:

"If I had come to the contrary conclusion, [that ECA were guilty of a want of skill and care in adopting their perferred approach] I would have line to consider the question of detail to which I have referred. If the only proper approach had been the alternative approach I would have found almost entirely justified the criticisms made by the clients of the architect's actions (or inactions) in relation to exemptions. On this basis, the architects' conduct would have been illogical and unsystematic, and I would have upheld, the clients' charge of negligence against the architects. I would have found they had failed to exercise a reasonable of skill and care in claiming and utilizing the available exemptions."

256. I do not think that Wharf can gain any assistance from what the judge is here saying. The grammar is against it.

257. Mr. O'Brien submits that the judge was mistaken in thinking that the approach advocated by Wharf involved claiming more exemptions than could ultimately be justified, or involved a risk of a refusal of the occupation permit. If the claims for exemptions, concessions or bonuses had been made when they should have been made, it is suggested, they would then have been allowed or disallowed and appropriate steps could have been taken well before the time for the issue of the occupation permit. If any problems of delay arose, it was for Wharf to decide whether or not to go for the greater area.

258. It is contended, too, that ECA's argument was a circular one, for Wharf had approved the design for Harbour City without requiring it to be altered because they were under the impression that the maximum development potential had been achieved. I would observe here that while this might be a matter of inference neither Mr. Forsgate nor Mr. McLuskie said so.

259. It is also submitted that the evidence had clearly established that advantage could have been taken of the available hotel concessions without altering the shape of the hotel, contrary to the stand ECA had taken at the trial. It is suggested that the judge had implicitly rejected ECA's arguments that Wharf had not wished to make any dedication to enable a claim to be made for set-back and dedication bonus, and, that unless a road-widening scheme was involved, such a dedication would not have been accepted.

260. There can be no doubt at all that Mr. O'Brien's submissions, on this part of the appeal, which I have only been able to summarise, are powerful. Before I address them, I permit myself to wonder whether, in a development of the size, kind and quality we have been examining, an expert with the experience and diligence of Mr. O'Brien, once set the task he was given, would not be able to find a number of exemptions etc. of which advantage had not been taken, unless, of course, the developers had been bent on making use of all available areas, and had so instructed their architects.

261. We must not, I think, be mesmerised by the figures. The "lost" area is huge but so is the development.

262. It is all too easy to be wise after the event. I will here gratefully adopt what Megarry, J. (as he then was) said about the dangers of employing hindsight in Duchess of Argyll v. Beuselinck [1972] 2 Ll. Rep. 172 at p.185:

"In this world there are things that could not have been better done if done with hindsight. The advantages of hindsight include the benefit of having a sufficient indication of which of the many factors present are important and which are unimportant. But hindsight is no touchstone of negligence. The standard of care to be expected of a professional man must be based on events as they occur, in prospect and not in retrospect."

263. It seems to me that this part of the appeal cannot properly be considered without examining the nature of the instructions ECA received. There was no evidence that ECA were instructed to squeeze every square foot of floor area into their designs of the development as a whole. No doubt, in every commercial development the paramount aim will be to utilise the full potential of the site. But there will be other considerations. It would not be too surprising to find a developer who considered that a feeling of spaciousness would enhance the quality of his property, notwithstanding a resulting loss of total floor area. It might well be that the units in his property, be they flats or shops, will thereby command more rent. If they he hotels, more discerning, and perhaps more affluent, guests might he attracted.

264. No evidence was called by Wharf to indicate their thinking at the relevant time but, it seems to me, that there are clues to he found in two pieces of documentary evidence. First, there are the notes Mr. McLuskie prepared for a meeting on 1 May 1972 about the original Marco Polo hotel project:

"We have decided on hotel development in order to retain and improve on the standard already set by the Ocean Terminal/Hong Kong Hotel complex. We intend to construct a 1370 room first class hotel on approximately 120,000 sq. ft. of KML 11. By existing Hong Kong standards, this is a lavish use of land, hit it is felt the higher standard envisaged necessary, and which the site itself commends, is worthwhile. Examination of the plans with reveal the operation facilities for absorbing its own traffic flow and contained within the hotel precincts, surpasses anything yet envisage in Hong Kong."

265. Then there is Mr. Forsgete's letter to Mr. Cumine of 16 August 1974 (which I have earlier set out) where we saw this in his 4th paragraph: "I think you misunderstood our attitude to the shopping aspect. Our instructions were, and still are that these must not be overdone. Bearing in mind our adjacent interests, a proper balance must he struck. The interior architecture to create space illusion, and we have confidence in your ability to achieve this."

266. Although both Mr. McLuskie and Mr. Forsgate were writing about the development of KML 11 before Harbour City, we do not know whether the considerations they then felt were important were ever abandoned. When lid the wish "to maximise" manifest itself? I have already sought to explain why I do not consider that either Mr. Forsgate's letter of 25 May 1974 (congtaining his instructions to enter into negotiations for a plot ratio of 8) or what was said by Mr. Woo at his meeting with mr. Cumine at the end of September 1978 could properly be regarded as "instructions to maximise".

267. What the documentary evidence, supported by Mr. Penman's testimony, shows quite clearly is that when, for one reason or another more floor area was needed, it was looked for and used to the extent necessary for the design then under consideration. The judge accented Mr. Penman to be a reliable witness.

268. Mr. Penman is an architect with British and New Zealand qualification. He joined ECA as a partner in 1966. I will not attempt to deal with all his evidence. We told the Court that the first occasion upon which it was necessary to search for more floor area was when the desires for phase IV of Harbour City had been drawn up and it seemed that what was left of the unutilised plot ratio on the earlier phase, for use in Phase IV, would not be enough to build the part of the development to the same gross floor area as was to be found in Phase I. The problem was eventually solved.

269. Wharf then took a decision in 9 November 1979 to seek to increase the number of shops which had originally been planned for Phase IV. Mr. Penman was told this by Mr. McLuskie and asked to review the plans and see if there was some way that the area for retail shopping could be increased. When he showed his tentative proposals to Mr. McLuskie he was asked whether there Wharf could have more floor area. He went through the plans for Phases I and IV again, and found extra floor area from exemptions which had not been applied for in Phase I. He came to the conclusion that if the hitherto unclaimed hotel bonus were to be utilised, there would be a surplus over the current design requirements, even when extra shops were taken into account.

270. Further investigations by Mr. Penman revealed that more gross floor area was available without needing to use the hotel bones. The extra space found was used to construct a link between the two towers in Phase IV.

271. I will set out two passages from Mr. Penman's examination-in-chief. The first demonstrates that Mr. McLuskie was concerned with the appearance of the buildings:

"A. As a result of doing the search though the plans, Phase I, and knowing more about what were the exempt areas in Phase IV, we found that the calculation of the exempt area showed a gross floor area more than was needed to fulfil the showing space which the Wharf Company had asked me to find. I pointed this out at one of my regular meeting I had with Mr. McLuskie and I asked him what did he want, if anything, to do about the extra area. I said to him that one possibility that occurs to me is to join two of the office buildings together with a link. He did not seem very enthusiastic about the suggestion because he said to me. 'Well, what's that going to look like, do you think?' And I said to him: 'Well, I believe if the connection of the block is set back and not made at the frontage, at the road frontage, if it's set back from that, and as also it's restricted in its height to some floors below the roof levels, it will be relatively inconspicuous.' And he agreed that I should proceed with the planning on that basis, which is what I did."

272. The second passage seems to me to give some indication that Wharf (through Mr. McLuskie) knew that it might be possible to find more spare floor area and did not insist upon taking it all up:

"Q. Not compared to the third but compared to the first. Were you under the impression that he had at that stage squeezed everything out of the building by way of exemptions.?

"A. No. I was aware that there was still some margin left in the calculations in the way of exemption areas which had not been accounted for in that search, and I recall that I mentioned this to Mr. McLuskie at the time I had the discussion with him on this so-called link block. I put it to him that: 'I feet sure that you're going to ask for some changes somewhere along the line' [and he replied] you'd better have something up your sleeve.'"

273. There were many changes of plan during the development of Harbour City. Wharf were not tyros in the field of property development. I am unable to accept that in the absence of specific "instructions to maximise", it was the duty of ECA to keep going back to Wharf to ask them if they wanted more or, indeed, to tell them that they should seek more. Wharf knew what they were doing; the designs were approved and the buildings went up.

274. Whatever Wharf now asserts, on the evidence it is by no means clear that Mr. Forsgate (on behalf of Wharf) would have wished for a development of the kind for which Mr. King later drew up plans. His plans, as his report shows, there based on his experience in Hong Kong of always maximising the plot ratio by designing to the maximum permitted by the First Schedule to the Regulations and by exploiting exemptions an concessions to the full. He said (in paragraph 72) that he knew of no development "where environmental considerations (such as having a more attractive development) [had] taken precedence over the commercial objectives of miximising profits." Such evidences as there was pointed towards the possibility, if not the probability, that those in Wharf's driving-seat at the material time so far as ECA were concerned, had different ideas.

275. In this context I have in mind, particularly, certain evidence given by Mr. Roberts and by Mr. Penman, both of whom were found by the judge to be reliable witnesses. Mr. Thomas referred Mr. Roberts, in chief, to a letter (to which I have earlier referred) he had written to Mr. Forsgate on 9 January 1974 which ended: "Basically, the whole exercise is to sound [the Government planners] out as to what would be acceptable and we shall then proceed from there to a more aestetic conception nearer to your environmental targets". Mr. Thomas then asked the witness what were these environmental targets. Mr. Roberts replied:

"Mr. Forsgate really wanted to have a scheme of development which he could be proud of really I suppose. He wanted a good circulation; aesthetically pleasing and something which he and the Board could be pleased with, and you know, he was very concerned on making sure there was still a certain amount certain amount of open spare surrounding the buildings and things like that, it wasn't all cluttered up - I don't think his philosophy was, shall we say, maximisation of space."

After an intervention by the judge to confirm that he had made an accurate note of this piece of evidence, Mr. Roberts added:

"I think he wanted a quality development. When one tries to define a quality development it becomes very complicated, but his whole attitude was really that - I think it sums it up. He personally wanted to be proud of the development which he or the Board were associated with, as far as the Wharf company were concerned."

276. And when Mr. O'Brien was cross-examining Mr. Penman about the options put forward to Wharf which involved the plot ratio, the transcript shows that one of Mr. Penman's replies was:

"Yes, but the approval that [Wharf] gave to this scheme in all the discussions that I had with them that led up to it, was based on the planning of the scheme. The question of whether we had a plot ratio of 7.9 or 7.8 or 8 was not really a topic of conversation in those discussions. The discussions always hinged around the planning features of the development itself."

277. It seems to me, with respect, too facile to that since the judge, in that part of his judgment which deals with the damages he would have awarded had he found for Wharf, held that Mr. King's design was for a development of "comparable quality to the existing development", it necessarily follows that that sort of development was what Mr. Forsgate and Mr. McLuskie wanted, on Wharf's behalf. If ECA had been instructed to do what Mr. King did, they could just as well have designed something on the lines of Mr. King's plans.

278. I will deal very shortly with the remaining issues. It is perfectly plain from all the material through which we were taken that Wharf were very well informed about the availability tof hotel bonus. It was constantly discussed and arose (I) when there were proposals to develop that part of KML 11 upon which the Ocean Centre now stands as the Marco Polo hotel (ii) when the possibility of erecting a hotel on Phase IV of Harbour City was being gone into and (iii) during the time that Harbour City was being constructed. There is a mass of ducumentary evidence which indicates that Wharf knew all about hotel bonus. Mr. Madar's evidence also shows that he did. As I have remarked before, Wharf approved the designs and Harbour City was built. I am bound to say, in passing, that it was with considerable surprise that I read the following letter to ECA from the Project Manager of Wharf dated 14 December 1983, a month or so after the writ was issued:

    "Dear Sirs,

Harbour City Phase TV

    OP is finally issued. Thanks to the hard work and contributions from all parties involved. It's a job well done and we hope you will continue to impress on the contractors to rectify the defects and complete all outstanding work expeditiously. Please express our gratitude again to GBCL and other consultants who are involved in the project.

279. As to the set-back dedication claim, which also came so late, the plans for Ocean Centre and Harbour City all along showed the line of the buildings on Canton Road set back from the boundary line of KML 11. After the Lau/Roberts meeting, all the plans sent to Wharf showed figures which did not show this dedications. It is not possible, in the absence of any evidence from Wharf, to hold that Mr. Forsgate and Mr. MeLuskie were ignorant about the matter when instructions were given to go for a plot ratio of 8. It is difficult to see how this claim was discovered so late.

280. I am not persuaded that the judge overlooked these matters. There was so much evidence and argument about them. He had discussed the availability of hotel bonus earlier in his judgment and he later assessed the damages he would have awarded in respect of hotel bonus and dedication bonus. As I understand the pattern of his judgment, when he said, at the foot of page 96: "I return now to the matter of exemptions...", he was indicating that this was the only issue on liability left to he determined. I have already set out the passage on the same page which occurs immediately before that observation, and which, it will he recalled, concluded with these words:

"… And it wanted the sort of development which would do it credit even if it involved (to borrow the words of Mr. McLuskie) 'by Hong Kong standards a lavish use of land.' In all this Wharf, with the assistance of the architects, succeeded."

281. I am confident that this important finding, which was to the effect that Wharf had not what they wanted, embraces every "lost" area except exemptions properly so called.

282. I would observe here that during the hearing of the appeal, it was suggested that Mr. Forsgate had no authority "to give away" the huge potential revealed by Mr. King's exercise. If what Mr. Forsgate or Mr. McLuskie did, or allowed, can fairly be described as giving away anything, and Mr. Forsgate or Mr. McLuskie really did lack authority (of which there is not the slightest evidence) to take the decisions they did which resulted in the "loss" now asserted, Wharf would have to look to them for redress.

283. I have not dealt with all the submissions made to us over a period of 4 weeks on the 98 grounds of appeal. I have addressed the matters which I think are decisive. There was little or no law in the case. Godfrey, J. clearly heard the action with anxious care and, for reasons I have sought to explain, he came to conclusions which I find are mpossible to disturb. I am left in no doubt whatever on all the oral and documentary evidence to which we have been referred that Wharf's claim was rightly dismissed.

284. In my judgment, this appeal fails and must be dismissed.

Kempster, J.A.:

285. The evidence meticulously canvassed before this Court over a period of some 20 days renders inescapable the conclusion that during the 13 year beriod of the defendants' relevant employment the attitude of the plaintiffs to the development of Kowloon Marine Lot 11 changed profoundly. Under what might be described as the Forsgate regime which, Mr. Roberts said, was extremely satisfied with the defendants' efforts, their concerns had included the contribution of a significant addition to Hong Kong's limited architectural heritage and the avoidance of high density residential development. Under that of Mr Woo those concerns became subordinated to the wish fully to exploit the economic potential of the site at the possible expense of quality in the sense of spaciousness. The defendants' designs are impugned not because they failed to result in a 20th century equivalent of the works of Bramante or Palladio but because they did not provide the optimum lettable floor space permitted by the Building Ordinance and Regulations (Cap 123). In Hong Kong, Government controls density of development by means of limiting plot ratio; that is the ratio which the site area bears to the gross floor area of the buildings to be erected on it.

286. This appreciation, which derives as well from the evidence of Mr Madar as from the documents, was apparently shared by the trial judge who concluded that the plaintiffs "wanted the sort of development which would do it credit" and referred to a passage in notes made by Mr McLuskie in about April 1972, relative to the proposed development of what in due course, became Ocean Centre as an hotel which read

"…. by existing Hong Kong standards this is a lavish use of land ….".

By letter dated 12th March 1974 the defendants told the plaintiffs that a greater development potential on the Ocean Centre site might be realised by sub-division but at the meeting held on 14th or Forsgate instructed them to retain the present design and "to proceed with all necessary action to maintain continuity of construction".

287. While Mr Woo and the plaintiffs' board are not to be criticised for subsequently adopting the contrasting attitude normally to be expected of developers whether in Hong Kong or elsewhere the change, with attendant possibilities for misunderstanding, may to some extent explain aspects of the defendants' work in designing what has been described as one of the world's largest multi-use developments which, quite legitimately, have been subject to the most rigorous inquisition.

288. The first written invitation given by the plaintiffs to the defendants to consider the development of KML 11 appears in a letter written by Mr Forsgate on 5th January 1970 again with reference to that part of the lot now known as Ocean Centre. During the years that followed many oral discussions must have taken place, some referred to in correspondence and in the evidence of Mr Roberts among others and some not, between Mr Forsgate or Mr McLuskie or Mr. Madar on the one site and Mr Cumine or Mr Roberts on the other. Mr Forsgate and Mr McLuskie were not called at trial and Mr Cumine could not be. Only Mr Madar, on commission, and Mr Roberts respectively were available to give evidence in such regard. Paragraphs 4 and 5, "Development Concept" and "Planning Concept and Data" of the defendants' Preliminary Report dated 4th May 1970 are material

"Fundamental to the concept of value is the theory of highest and best use. Briefly this can be defined as that use which at the time of consideration is most likely to produce the greatest nett return to the land and buildings over a given period of time. In your case however any redevelopment of your land must be geared to the business generated by your wharfing interests particularly when hearing in mind your proposed entry into containerisation in Kwai Chung and also to the all important element of not denigrating your interests in the Ocean Terminal and the Hong Kong Hotel. In effect your land could be more valuable if one considered a high rise low cost housing development, but then its overall effect would be such as to result in developments on the lines of Mirador Mansions etc which I feel sure you would not wish to be involved in …. In considering the nature, type and location of the high rise apartments, a number of schemes were considered. Eventually, however, the conclusion we reached was that the site was such that high quality European type flats having an approximate nett area of 2,500 sq ft per flat would result in the best use of the site, virtually, with the completion of the Ocean Terminal Hong Kong Hotel and Star House, the area has dramatically chapped and it is considered that apartments located in such strategic position and having full advantage of harbour views, would have a higher return because of the willingness of the market to pay a premium for these aesthetics …".

In his covering letter dated 6th May Mr Roberts wrote :

" .... It should be noted that the estimated value of the land represents the minimum - a more intensified development would result in an increased value".

In his notes of a meeting held on 22nd October, by which time the hotel development, in concert with Hong Kong and Shanghai Hotels Ltd, was envisaged he recorded that Mr Bland of the plaintiffs,

" .... felt that a block based on a I plan combined with the Hong Kong Hotel, Star House and phase II of the future Domestic development would present a solid mass which was not really desirable".

Generally Mr Robert stated that neither Mr Forsgate nor Mr McLuskie wanted

"to make waves ... they wanted to get government on their side".

289. On 18th February 1974 Mr Roberts wrote to Mr McLuskie to the effect that the defendants would be seeking an overall plot ratio of 8 for KML 11. This suggestion the plaintiffs accepted by letter of 25th May. On 19th the Board of the plaintiffs had resolved that Ocean Centre should be developed as an office and shopping complex.

"Completion was important before competing developments came on stream".

That is why the defendants recomnended and the plaintiffs accented the adoption of the exterior design prepared with an hotel in mind. At that stage the plaintiffs could well have sought legal advice. I agree with the trial judge that the defendants were not negligent in failing to suggest that such advice be sought.

290. No specific warranty being alleged the nature of the duty of care owed by the architects to the clients who retained them has never been in dispute and is not diminished by reason of their being "authorised persons" as defined in the Ordinance and of their obligations under section 4. Like physicians and surgeons they were required to brine to their work the reasonable degree of skill expected of members of their profession as illustrated by the practice of other colleagues in good standing. In particular, as Godfrey J held,

"an architect retained by a client to advise him about the development of a site in Hong Kong is under a duty .... to advise him with a reasonable degree of skill and care in relation to matters affecting plot ratio and exemptions and compensatory bonuses available is that connection".

By this appeal the plaintiffs seeks to challenge his finding that in relation to their designs for the development of KML 11 the defendants discharged such obligations in every respect.

291. The plaintiffs' case can be starkly expressed. That part of the development known as Harbour City was found, after careful analysis, to be some 93,000 square meters short of the gross floor area permitted by law and which. A different design could have provided. Further the ultilization of this additional area, the judge found, would have added $1842.63 m to the value of the development. The defendants were negligent, it is contended, both in representing to the plaintiffs throughout the period of their engagement that circular letter 58 issued by the Director of public Works on 20th May 1971 and not withdrawn until November 1983 was effective to impose enforceable restraints on the plot ratios and therewith the gross floor area, prima facie available under the primary and secondary legislation and in drawing their plans on this premise. In the alternative it is contended that the defendants were negligent throughout that period in failing to claim all the exemptions, concessions and bonuses available in law which, the judge found, would have added 16,254 square meters to the permissible gross floor area.

292. The material terms of circular letter 58 are set out in the judgment of Fuad V.-P. To a lawyer, particularly one who had had the advantage of reading the determination on 24th November 1972 of the Appeal Tribunal appointed pursuant to section 43 of the Buildings Ordinance it would be apparent that the policy of restraining the density of development on large sites in certain areas of Hong Kong was enforceable only where lease conditions, or conditions imposed and accented in consideration of the modification of those existing, were applicable or, incidentally, by reason of genuine objections made pursuant to section 16(1) of the Ordinance including any arising from the provisions of sections 13 and 16 of the Town Planning Ordinance (Cap 131): Hang Wah Chong Investment Co Ltd v Attorney Ceneral [l981] HKLR 336. Certainly this opinion was common to the responsible offices of the Building Authority albeit they were at pains to keep it to themselves and, indeed, to encourage the views held by a number of architects and others that lawful means of enforcing the policy were or might generally be available. Letters of 9th January and 13th April 1973 and 15th November 1974 to Messrs Harrimans and to the defendants respectively are examples. At a meeting held at Central Government Offices on 26th January 1977, attended both by Mr Forsgate and by Mr Cumine, the Principal Government Town Planner stressed that the development of a site for the Home Ownership Scheme should comply with the large site rules to avoid complaint from private developers who were bound by them. In his expert's report Mr Haffner stated that he did not become aware of the 24th November 1972 decision until much later it being "something which slowly filtered out through the grape-vine". I am far from satisfied that, on reading the decision, as architect would be entitled conclusively to assume that the circular letter was not legally enforceable apart from lease conditions existing or imposed.

293. As is apparent from his internal memorandum made during February 1973 Mr Eric Cumine had doubts as to the enforceability of the circular letter while Mr. Roberts, whose evidence was accepted by the trial judge, did not believe it had the force of law. Mr Penman did not concern himself either with plot ratio or the circular letter because, when he came upon the scene, the plaintiffs had told him not to upset the arrangements which had been made by Mr Cumine on their behalf. None of those engaged in the project on the defendants' behalf was found conclusively to know that the policy of restricting density was not generally enforceable at law though disclosed notes prepared By Mr Lau of the Building Ordinance Office for and his memorandum relating to a pleaded meeting with Mr Roberts on 9th November 1974, all being admissible under the Evidence Ordinance, strongly suggested that he revealed to him the view of Government that circular letter 58 was "cancelled". This suggestion was not directly supported by Mr Lau's evidence because he had no recollection of the meeting but he did say that it was his practice to provide reasons for any invitation to change a plan. Such a practice was consistent with Mr Roberts' alteration of the submitted plans for Ocean Centre at the meeting to accord rather with the applicable legislation than with the terms of the circular letter.

294. Having reminded himself of the more significant of these considerations and of Mr Roberts' confused account of the meeting, to the effect that he was not told of Government's opinion and that the alterations were made to resolve a problem about site coverage on the 4th floor, evidence which had not been put to Mr Lau, the trial judge accepted his testimony on the point. He had found that this witness

"did not exhibit the high degree of clarity of thought or expression in giving his evidence. … the matters to which he was deposing took place many years ago and all things considered I found him a reliable witness".

The judge did so despite the fact that a calculation relating to another development, Holts' Wharf, showing a plot ratio of 9.03 had been found in his file. No application was made to recall Mr Lau.

295. In the light of the real value of contemporaneous documents where the terms of a conversation which had Occurred over 13 years before the trial were in issue the judge's conclusion is not one to which I would have come on the basis of the record and of the materials available to us. None the less I am not persuaded that this is one of those rare occasions when an appellate court would be justified in finding that the trial judge, who had heard the witnesses over periods of weeks rather than days, had formed a wrong opinion on a matter of fact despite that advantage. As was made plain by Lord Simmonds in Watt v Thomas [1947] AC 484 at p.402 we

"are entitled and bound, unless there is compelling reason to the contrary, to assume that he has taken the whole of the evidence into his consideration".

296. I find no compelling reason to the contrary.

297. Even if not told but none the less believing that the policy of the circular letter might well not generally be enforceable in law the conduct of the defendants in proceeding throughout, as they undoubtedly did, on the hypothesis that by contrived delay, obstruction or contrivance it could effectivley be applied remains the subject of allegations of negligence. Their conduct falls in the first instance to be tested by reference to the approach adopted to the circular letter, in the context of the few large sites being developed at the time, by their professional colleagues. Concurrently to be remembered are the considerations peculiar to KML 11.

298. The plaintiffs wished to be able to continue their business as wharfingers and to develop KML 11 in a manner that would not be detrimental to the interests of the Hong Kong Hotel, Star House or Ocean Terminal. The lease contained provisions inhibiting noisy, noisome or offensive trades (the tavernkeepers' clause), building on the waterfront of the site, known as the praya, and giving the Crown a drainage wayleave for foul water with provisions against building-over at certain points. Construction on the lot was inevitably subject to height restrictions by reason of the Hong Kong Airport (Control of Obstructions) Ordinance (Cap 301). In July 1974 a draft town plan was published zoning the site only for commercial purposes. Time was important. Maximum site coverage, for example by godowns, does not always constitute the most profitable development.

299. The evidence disclosed no other instance in which the density of a large site had been reduced below the levels permitted by Schedule 1 to the Buildings Ordinance by reason of the application of the circular letter but certain of the examples given by the plaintiffs showed that its possible incidence was avoided by the contrivances of dividing such sites into smaller lots each of less than 40,000 sq ft and of reducing the development area by the introduction of streets pursuant to Building (Planning) Regulation 23(2)(a). It was not to be expected that any example would offer an exact parallel to the particular problems constraints or instructions with which the defendants were contending.

300. By letter to the Building Authority dated 28th June 1973 in relation to "Tramway Depot Site" Messrs Harrimans stated in terms

"We can find no legal basis for the proposal to restrict development of these sites by the imposition of the so-called 'large site factor'".

At a Land Conference held on 28th August following, the members of the Public Works Department present minuted that

"the large site rules only applied to residential development and, since all the development proposed was commercial, the rules were inapplicable".

On 23rd November 1973 Mr Stean, for the Building Authority, confirmed that the sliding scale for a large site would not be applied to the project.

301. In the concurrent commercial development of Holts' Wharf, details of which were known to the defendants, a plot ratio of 12.5 was negotiated being calculated on the area of the original site albeit additional land was provided by Government. Be that as it may, however, it is apparent that no concession was made to the principles of the circular letter. Even in developments for which the defendants were responsible in 1977 and 1978, Hennessy Centre and United Centre, Government did not insist on circular letter deductions.

302. The nub of the plaintiffs' complaint is really that throughout the currency of their retainer the defendants failed to volunteer all the relevant information and considerations so as to allow them, rather than the architects, to make the critical commercial decisions as they arose. In particular, it is argued, the defendants failed to disclose their doubts as to the enforceability of the circular letter; a submission which has particular relevance to the circumstances of a discussion between Mr Eric Cumine on behalf of the defendants and Mr Peter Woo, Mr McLuskie and Mr Pan on behalf of the plaintiffs at the end of the September 1978. Mr Woo asked if it was too late to change the existing design for Harbour City and whether such design incorporated the maximum plot ratio obtainable. Mr Cumine replied that it was not too late but that any attempt at revision would be regrettable as it might prejudice the negotiated plot ratio of 8 allowed for a particular design and which, in substance, provided for the optimum exploitation of the lot that the Building Authority could countenance. He added that the plaintiffs were lucky to have achieved such a plot ratio. He did not mention his reservations about the legal enforceability of the circular letter, the effect of the 24th November 1972 decision of which, as Mr Roberts' communication of 12th March 1974 suggests, the defendants were aware or the "loss" of some one million square feet of usable floor space which compliance with the circular letter involved. In his report Mr Haffner expressed the opinion that this plot ratio of 8 none the less gave a fair balance between the density and the quality of the development.

303. The plaintiffs had no occasion to doubt the accuracy of Mr Cumine's representions until June 1984 when they real an affidavit sworn by Mr O'Sullivan; one of their expert witnesses at the trial. On 13th August they amended their Statement of Claim in this action, which had been commenced on 4th November 1983, accordingly.

304. As their telex to consulting engineers of 6th February 1980 shows the defendants considered modification of their drawings subsequently and were fully alive to the plaintiffs' wish to maximise the plot ratio. Mr Cumine cannot fairly be criticised for failing to mention that modifications of the tavernkeepers clause and of the drainage wayleave had been granted by September 1978, the overall deisgns having been found acceptable, since it would hardly have been consistent with the defendants' professional integrity to renege on proposals once the Buidling Authority had surrendered its bargaining position.

305. Mr Roberts gave evidence that the plaintiffs were giving instructions on the basis not only of the defendants' advice but also fo their own appreciation of the situation.

"They were not naive in property matters" he observed. Indeed, Faber & Son had sent Mr Madar a copy of the circular letter on 9th July 1971. What is more the expert report of Mr Haffner contains the passage

"Architects do not if they can help it adopt an antagonistic attitude towards Government and by the same token all circular letters or other instructions are indications from the Building Authority to members of the construction industry of what kind of approach will get a plan passed … circular letters … are in effect advance warnings designed to save time …. I myself, and indeed most architects in Hong Kong as far as I am aware assumed that circular 58 was legally enforceable … the established pattern of response in the industry was to comply with it. ECA would have been untypical if they had advised their clients to ignore it".

In his oral evidence he stated that clients did not always demand designs absorbing the whole of the permitted plot ratio while Mr O'Sullivan conceded in cross-examination that in 1971 an architect who had read the letter from the Hong Kong Society of Architects dated 4th August 1971, suggesting discussion with the Building Ordinance Office and the submission of a tentative scheme for agreement, would have accepted the circular letter until and unless he learnt of and appreciated the result of the Appeal Tribunal hearing in November 1972. From this evidence Godfrey J was entitled to find that other architects of good standing would, even in 1973, have set about or proceeded with the relevant commission in like manner and therefore to acquit the defendants of negligence in relation to their approach to the circular letter.

306. In his letter of 25th May 1974 Mr. Forsgate suggested to the defendants that the underutilisation of the Ocean Centre site, of which he was obviously aware, might he used to facilitate Government agreement to the plot ratio of on the Harbour City site. Accepting Mr Roberts' evidence the judge found that such plot ratio was agreed by the Building Authority without the need to pray this or any other factor, bonus or exemption in aid. The designs were sufficient commendation in themselves. "Negotiations … had never really taken place at all".

307. The plaintiffs contended that the whole of KML 11 should have been designed as one site, showing Ocean Centre as the completed part of a phased development, so that the shortfall, eventually calculated at some 6,000,000 sq ft on the basis of Mr Roberts' plans amended by Mr Lau, could be made available in the development of the rest of the lot. While there is no specific reference to this part of the claim in the judgment otherwise than in the notional computation of damages I consider that it was implicitly held irrelevant in the light of the finding that the defendants had received instruction to submit and seek approval for a design for Harbour City with a specific overall plot ratio and that, again as Mr Roberts said, the plaintiffs orally expressed a preference for development by way of separate sites.

308. As for hotel bonus, what became the Marco Polo hotel was designed as an office block and the foundation contractor had already started work before the plaintiffs determined on a change of user. Mr Penman, for the defendants, was specifically instructed by Mr Forsgate, who remarked on his knowledge of such bonus by reason of his involvement with the Ocean Centre development, to design an hotel within the profile already prepared without any addition and as quickly as be could; the Ocean Centre situation in reverse. Further bonuses could certainly have been obtained when the plans for Ocean Centre and Harbour City were originally submitted had the plaintiffs been willing to dedicate to the public the area between the buildings and the lot lines on Canton Road and many exemptions in the strict sense of the word could have been sought and granted had the defendants' instructions been solely to maximise the exploitation of KML 11. If Godfrey J had found the defendants so instructed he would have found negligence and held them liable to pay damages amounting to $105,651,100. This figure is not in dispute as such.

309. The issue before us on the plaintiffs' alternative claim is whether or not the judge was right in holding that the defendants were under no duty to claim and utilise all possible bonuses, concessions carry-overs and exemptions. He held as he did on the basis that one of several equally acceptable professional approaches to these questions, including that for which the plaintiffs contended, was to claim and utilise only such carry-overs, bonuses and exemptions as were needed in order to ensure that the design approved by the clients might be realised in terms of steel and concrete as quickly as possible. This, Mr Penman stated, was what the defendants did. Mr Haffner adopting, I think, the same broad brush as the judge when using the word "exemptions" in answer to questions from the Court said that this "might well be described as the more normal practice". Mr O'Sullivan, called by the plaintiffs, said, at least in relation to exemptions in the strict sense of that word, that such an approach would not be fundamentally wrong. In this regard also the judge was entitled to rely upon the expert evidence to which he specifically referred.

310. In my opinion, formed after anxious consideration of issues arising in what has really been a retrial on paper, none of the formidable grounds relied upon by the plaintiffs entitle us to fault the judge's findings as to acceptable architectural practice and the defendants' compliance with it in relation to either head of claim.

311. I too would dismiss this appeal.

Clough, J.A.:

312. I have had the benefit of reading in draft the judgment delivered by Fuad, V.P. in which be deals comprehensively with the issues ariging in this appeal. I agree with his judgment and have nothing to add. For the reasons stated by him I also would dismiss this appeal.

Fuad, V.-P.:

313. In handing down these judgments dismissing the appeal, we make an order nisi that the Appellants must pay the Respondents' costs.