LAU KAI MING t/a GRANDEUR COMPANY v. CHEUNG KAM PUI AND ANOTHER

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JUDGMENT

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Sir Alan Huggins, V.-P.:

1. Although this matter has been argued at considerable length and the Notice of Appeal has been amended to include no less than eleven grounds of appeal, there is in fact only one short point which has to be decided.

2. There was a contract for the doing of some work in taking earth from one place to another. The head contract was made by the Plaintiff with a third party. The Plaintiff then contracted with the Defendant for the doing of the work. Difficulties arose and further agreements were made between the Plaintiff and the Defendant, the original contract between them having been an agreement in writing.

3. The short question is whether the judge was entitled to find, as he did, that that original contract had been novated and, therefore, that the Plaintiff's claim on the basis of that original written contract must fail.

4. The original written contract provided for the Defendant to do all the work that the Plaintiff had undertaken to do for the third party, and in consideration thereof the Plaintiff was to pay the Defendant $15.50 per cubic metre of earth moved.

5. The difficulties arose because of the non-payment of drivers engaged in the work. The judge has found that very substantial changes took place in the relationship between the parties. He came to the conclusion that not only were the terms on which payment was to be made to the various persons involved in the work to be different - that is to say that the Plaintiff was allocate $120 for each lorry load, of which he would pay $90 to the driver and $20 to the Defendants, he retaining the last $10 for himself - but that the liabilities which the Defendants had undertaken to be responsible for the whole of the work, including the finishing work on the hill from which the earth had been borrowed, should now go back to the Plaintiff, where they lay under the contract with the third party. The judge expressly found that the finishing work was now to be done by the Plaintiff himself and he found, and there was evidence to this effect, that the $10 retained was payment for that particular work. The judge emphasized that, after these various alterations in the relationship, the Plaintiff had in fact taken back responsibility for the whole contract and from then on played a very active role: he was no longer acting in the position of a head contractor who had sublet all his rights and obligations to a third party.

6. In those circumstances it seems to me that the judge was entitled to say that the change in the relationship between the two parties was so fundamental that the original written contract could not still exist and he therefore rightly implied a novation of that contract. The difficulty which we saw originally was that he was unable on the evidence to decide, as he said, "clearly" what was the eventual relationship between the parties. By that I understand him to mean that although he could be certain as to the matters which I have outlined so far, there were other matters of detail upon which he could believe neither the Plaintiff nor the Defendant; but it was open to him to believe part of the evidence of the Plaintiff and part of the evidence of the Defendant and in my view there was sufficient evidence for him to make the findings that he did make as to the changes in the relationship and to conclude therefrom that, the original contract must have been discharged. That is enough to justify the conclusion which he reached, that the claim of the Plaintiff must be dismissed. We are not concerned with the counterclaim.

7. I would therefore dismiss this appeal.

Kempster, J.A.:

8. I agree and have nothing to add.

Clough, J.:

9. I also agree and have nothing to add.

2nd May 1986