CAMERON MICROSYSTEMS LTD. v. BLOOMVILLE TRADING LTD.

IN THE DISTRICT COURT OF HONG KONG

CIVIL JURISDICTION

ACTION NO.24 OF 1987

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BETWEEN

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J U D G M E N T

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1. Mr. Vandenbroucke is the Managing Director of the Defendant Bloomville Trading Limited ("Bloomville''). It is a company in the garments business with an annual turnover of about $49 million. By the end of 1985 it had 4 merchandisers including Mr. Vandenbroucke. It was then apparent to them that some sort of computerised data storage and retrieval system was going to be necessary for Bloomville in order to provide an efficient service to their clients.

2. It was about this time that Mr. Vandenbroucke got in touch with Mr. Cameron of the Plaintiff, Cameron Microsystems Limited ("CML") which is a consultant firm in the field of system information and technology for computers. Mr. Vandenbroucke and Mr. Cameron got along quite well in the following 3 months to the extent that they were in contact with each other on or about every other day. Basically Mr. Vandenbroucke sought Mr. Cameron's advice on what sort of computer system Bloomville should install to suit its requirements. It was quite clear from the outset that Mr. Vandeibroucke was looking for a "Multi-User" system. As far as I understand it means a system with a number of simultaneous access terminals for all the merchandisers or users to process and reach the database in the central system. Thus each merchandiser could put in data to and retrieve the same from the database which would be kept up-to-date. This would be extremely useful in the "Order Tracking' for and by the merchandisers instead of having to refer everything to "hard copy" files.

3. In the beginning of 1986 Mr. Cameron recommended a system produced by Data General (''D.G.") which included the hardware and the software. That was a Multi-User system but was quite expensive. Bloomville actually contracted for the same but that was subject to available finance which was not forthcoming or could not be arranged. Consequently in March 1986, Mr. Cameron recommended another less powerful system with a different configuration. That recommendation and the agreement between Cameron Microsystem Limited and Bloomville led up to a letter dated 19th March 1986 together with its enclosed charts written by Mr. Cameron to Mr. Vandenbroucke. There were some minor disputes between the parties as to the exact dates and terms of the agreement between the parties. In this respect I accept Mr. Franklin's submission and found that the agreement was contained in and evidenced by this letter which was accepted by Mr. Vandenbroucke.

4. By this recommendation Mr. Cameron advised Mr. Vandenbroucke that Bloomville could purchase hardware produced by Compaq which was a kind of personal computer ("P.C.") and software program produced by Oracle which could be run on the Compaq. In addition Bloomville should purchase 6 Polos (also hardware P.C.) in 9 weeks times (2 on each of the 1st, 5th and 9th week). The idea was to link or hook up the Polos to the Compaq in order that one (and only one at a time) could use the Polo as a terminal to reach the database in the Compaq. In that event another software called Multi-Link would be required for the Polos.

5. The whole project would cost about $282,000.00 to be paid over 14 weeks time as per p.15a. The aforesaid configuration was recommended for the following reasons: -

a.    The system, though less power and efficient than the one produced by Data General, was less expensive.

b.    Installment payment was possible for the Compaq and purchase of the Polos could be spread out into the aforesaid 9 weeks.

c.    Oracle software which run under the MS-DOS operating system was also cheaper than the system intended to be used for the Data General.

6. However the Oracle software could not be used in a truly Multi-User system for the simultaneous access of 2 or more merchandisers as aforesaid. It could only be used by one at a time. This was intended to be an interim measure after the Polos were linked up to the Compag and was called a Multi-Terminals Single-User system in the trial of this case. From the totality of evidence I found that this Multi-Terminal Single-User system or configuration must be a condition (as opposed to a mere warranty) of the agreement between Mr. Cameron and Mr. Vandenbroucke since it was already a second best or an interim meaure for Blomville.

7. That interim measure was recommended and in turn accepted since Mr. Cameron had been previously informed by the oracle people that oracle would be producing in about 6 months time a Multi-User P.C. version to run under MS-DOS. Actually Oracle had already had a multi-user version run under the UNIX operating system. This UNIX system was no purchased by bloomville simply because it was much more expensive in the order of about US$6,000.00 more in 1986.

8. It was further recommended by Mr. Cameron and accepted by Mr. Vandenbroucke that one Tissa Systems limited headed by Mr. Cheuk KWAN be contracted to develop the Order Tracking program system on the Oracle software running on the Compaq for $80,000.00. It was required since the Oracle software would not be "tailored made" to fit Bloomville's specific requirements and situations. (Mr. Kwan actually had already committed Tissa as early as 8th February 1986 to develop the same system but under Data General MV2000 system when Bloomville intended to purchase the Data General products as per p.5 of the Agreed Bundle).

9. Mr. Cameron in his said letter of 19.3.86 contended that his fees for his works and advice would be as folows: -

a.     $15,000.00 for his works up to the date of the letter which he said was orally agreed at $10,000.00 plus $10,000.00 per month for February and March less $5,000.00 as comity allowance.

b.     $10,000.00 per month for April, May and June.

10. According to the letter his role as a consultant in the project after 19.3.86 to the end of June would be forfold as listed at p.11, namely: -

"1.    To manage the developement and implementation on [Bloomville's] behalf to ensure a satisfactory and timely conclusion.

2.    To investigate areas mentioned [in the letter] above and assist [Bloomville] With various decisions.

3.    To contribute to conceptual systems problems in the development and advise [Bloomville] on internal O&M [Organization and Management] system.

4. To assist in the introduction of the system and the training of [Bloomville's] staff."

11. The aforesaid $15,000.00 consultant fee was paid on or about 26.3.86 by Bloomville against an invoice tendered together with the said letter. It was around the same time that Mr. Vandenbroucke asked Mr. Cameron whether the subsequent monthly fee could be paid on the 10th of each subsequent month and Mr. Cameron agreed.

12. Pursuant to the aforesaid advice and recommendation Bloomville purchased the said Compaq from PC Plus, 6 Polos from Repromac in the aforesaid manner and the Oracie software from Transfinfo Services Limited and Mr. Kwan and his team started their works at Bloomville’s office on 26.3.86.

13. Thereafter according to Mr. Cameron Bloomville did not pay the monthly fees for April, May and June and he instituted this action for $30,000.00 on 23.10.86 for work done and services rendered.

14. According to Mr. Vandenbroucke as appeared in the Re-amended Defence and Counterolaim. Bloomville denied any work done or services rendered by Mr. Cameron in accordane with the original agreement between the parties in these said 3 months and contended that Mr. Cameron was in breach of the said agreement. Thus, they said, Mr. Cameron was not entitled to be paid the said sum of $30,000.00.

15. Further Bloomville counterclaimed Cameron Microsystems Limited and Mr. Cameron on the ground that the aforesaid recommendations and advice were give negligently and therefore in breach of the said agreement. This allegation was made because, they said: -

a.     The Polos could not conveniently or at all be "hooked up" or linked to the Compaq using the Oracle software program and the Compaq/Polo system could not meet Bloomville’s requirement so as to allow each of Bloomville’s 4 merchandisers direct access to the database by means of terminals on each of their desks.

b.    Oracle had not produced the said Multi-User version as predicted by Mr. Cameron that would enable the Polos to be used with the Compaq on a simultaneous access basis.

16. This is an allegation of professional negligence and misrepresentation on contractual basis.

17. Mr. Cameron gave evidence and denied the aforesaid allegations of Bloomville. He said that after 19.3.86 it was not expected that he should attend Bloomivlle on a regular basis and certainly not as before. It was not his duty and responsibility to develop the software program as Mr. Kwan and his team was there. He said he was just to "oversee" the whole project. He said he spent quite some times in investigating the telex interface (i.e. using the Polo to include a function as a telex machine) which was abandoned later on and the various options of linking the Polos to the Compaq. He referred to his spread sheet at p.15a and said that sundries items of $25,000.00 were spread out into 5 unnamed slots. The first one on the 1st week of April of $2,000.00 was, he believed, meant to be spent on installation. The second one on the 4th week of-April of $4,000.00 was for a voltage regulation as he said the electricity voltage in the Kowloon side was notoriously low and unstable. The third item of $6,000.00 in the 2nd week of June was for the Multi-Link which would cost about $5,000.00 and it would be about that time to implement the said "hook up'' of the Polos to the Compaq. He said he had made some investigations into the various options of linking the Polos and a decision had to be made by Mr. Vandenbroucke. By the 2nd week of June it would have been just a simple matter if Mr. Vandenbroucke opted for the Multi-Link he would just have to tell him and he would have implemented it within his retainer fee.

18. However, he said, by the 2nd week of June Bloomville had not paid his "retainer fee" for April and May. Thus he did not make his recommendation to Mr. Vanderbroucke in respect of linking the Polos and did not link up the Poles. The invoice for his April fee was presented to Mr. Vandenbroucke on or about 17th May 1986 and the May fee on or about 22nd July 1986 enclosed with his last letter to Mr. Vandenbroucke. But he expected Mr. Vandenbroucke would pay his fee on 10th of each subsequent month as aforesaid without any invoice which he used in this case at a later day as a sort of reminder. In fact by his letter of 22.7.86, he only asked for his April and May fees and not in respect of his June fee. But in respect of linking up the Poles he said a new arrangement would have to be made between the parties.

19. Mr. Vandenbroucke said he expected to see Mr. Cameron more often after 19.3.86. He said Mr. Cameron had not done anything or anything significant visible to his eyes as agreed in supervising the whole project after 19.3.86. He had just met Mr. Cameron once on 1st April 1986 over a dinner Meeting called by Mr. Vandenbroucke himself and another meeting on 17th May 1986 also when he requested Mr. Cameron to come to Bloomville’s office. On that day Mr. Cameron tried to connect 2 Polos together by a cable but failed. He could only manage to connect a Polo through the telephone line to a computer centre somewhere in Hong Kong. He asked Mr. Cameron when could the Polos be connected to the Compaq but did not receive any direct or definite answer from him. He said from day one, it was perfectly clear that the Polos were meant to be connected to the Compaq albeit on a Multi-Terminal single-User basis but even that Mr. Cameron failed to do it. In the end bloomville only got a Compaq with the Oracle software developed by Mr. Kwan and everyone in the company had to walk to the Compaq system and operate from its terminal whenever he wanted to operate the Order Tracking or other functions whereas the 4 Polos delivered were just lying around in the office. So he did not pay for the 2 invoices for April and May when they wer tendered in May and July as aforesaid and considered Bloomville not liable to the $30,000.00 fees of Mr. Cameron.

20. In short Mr. Cameron is saying that he had not been paid and therefore he did not link up the Polos whereas Mr. Vandenbroucke is saying that the Polos had not been linked up and therefore he did not pay. This is very similar to the "chicken-or-egg" situation. In order to resolve the dispute one would have to decide what were actually agreed by the parties and what were their respective responsibilities.

21. From the totality of the evidence before me including the said letter of 19.3.86 the responsibilities of Mr. Cameron, as I see it, were twofolds, namely: -

1.     To supervise the whole project until the end of June including the works of Mr. Cheuk KWAN and to advise Bloomville on any matter incidental to the project; and

2.     To link up the Polos to the Compaq in order to implement the interim stage of having a Multi-Terminal Single-User system at Bloomville.

22. Mr. Cameron said for these responsibilities he should be paid his "retainer" fees. (This kind of retainer fee is quite different from what we understand from a Counsel's retainer fee) Mr. Cheuk KWAN gave evidence and said he had only seen Mr. Cameron on 1st April 1986 over the dinner Meeting (anal perhaps once or twice on the telephone before that and after 18th March) and on 17th May 1986 at Bloomville's office In between these 2 dates he only had a short talk with Mr. Cameron. Thereafter he had only contacted Mr. Cameron in June for the software for Polo using as a word processor. If Tissa run into any problem in the program development Mr. Cameron's role would be to make sure Tissa was not lying to Bloomville who was not knowledgible enough in computer matters. Mr. Cameron's role was not like an architect to a contractor in the building industry but rather like a producer to a director in the film industry in that Mr. Kwan got a more free hand in his program development.

23. Further Mr. Kwan frankly said he himself would prefer nobody looking over his shoulder frequently. However in his opinion the infrequent contacts from Mr. Cameron would not be sufficient to check whether Tissa's job was satisfactory or not. If he were a consultant like Mr. Cameron, he would supervise on a more regular basis say on a weekly oasis. It was quite surprising that Mr. Cameron had not even tested the program developed by Tissa at any time.

24. Tissa headed by Mr. Kwan actually had promptly proceeded to develop the program on the Oracle software by working on the Compaq and produced a "Bloomville Order Tracking System Procedures" on 25th April 1986 concerning "Information Update and Tracking as per p.47 to 49. It is a glossary of what the Oracle program could do on the Compaq. By 6th May 1986 they have completed their work on the Order Tracking system in respect of reviewing its operation in Bloomville, designing and setting up of its database, developing and implementing screens and reports and setting-up major procedural guidelines. This contained in their letter dated 6th may 1986 at pp.55 and 56. By then data could be put in e.g. for Order Tracking. By 9th June 1986 they had completed the whole Order Tracking system and Order Tracking was fully functional in Bloomville. (See Tissa's letter dated 10th June 1986 at p.58) But it was restricted to the Compaq only since the Polos were not connected to them and therefore there was limited accessibility to the system.

25. Mr. Vandenbroucke also said he only saw Mr. Cameron on 1st April and 17th May although he said during April he himself was 3 times out of Hong Kong for a total of 9 days and in June 4 days. In May all his buyers were in Hong Kong. Admittedly he was very busy himself during these 3 months. But he received no telephone call or message thereof from Mr Cameron

26. Mr. Cameron said he could not be specific about dates, calls and meetings after 19th March 1986. He said he had called Mr. Vanderbroucke. He said that also in his letter of 22nd July 1986. It was not necessary for him to attend Bloomville office or contact Mr. Vandenbroueke frequently after 19th March in order to supervise the project. He could not remember what installation items were purchased under the originally designated amount of $2,000.00. He could not remember whether a voltage regulator was purchased though he recalled that the computer was plugged in an unsatisfactory manner. He said he was busy elsewhere in investigating the telex interface and various options of linking the Polos in April and May.

27. I found that the supervision work of Mr. Cameron was probably not enough. He should have attended to the system in Bloomvilie office more frequently than he did. Further and more importantly, he should have at least tested the system once at an intermediate stage and at the completion stage. But the case I think is more concerned with Mr. Cameron's second duty in linking the Polos to the Compaq.

28. Mr. Cameron said the earliest time for connecting the Poles was the 2nd week of June. He said that investigation had to be done by him for the linking up and a decision would have be made by Mr. Vandenbroucke upon his further recommendation. That was why under "Notes" at p.15a Multi-Link was described as "may or may not be needed''. That decision was not made by Mr. Vandenbroucke.

29. Mr. Vandenbroucke said the letter of 19th March 1986 only set out the various options which could be summarised as follows: -

1.     Eventually Bloomville could replace the Compaq by the said DG MV2000 or install the same in addition to the Compaq.

2.     If Oracle produced the multi-user version of the software in 6 to 12 months time the present configuration could be used as a fully Multi-User system. (That was the 5th the 6th paragraphs of the letter of 19th March at p.10 under "Firstly'' and "Secondly'' which are the same alternative.

3.     In the meantime (i.e. beofe 1% or 2% above) The Polos could and therefore would be linked to the Compaq by using Multi-Link on the Polos in order to have an interim measure of a Multi-Terminals Single-Usr system.

30. He did not condsider nor was he informed that Mr. Cameron had to investigate the various options under (3%) alone above and a further decision would not have to be made to achieve the linking up. That decision was made long time ago or at least by 19th March. He could not accept that p. 15a meant the linking up would only take place on the 2nd week June and in any event that was never explained to him including the various items under sundries. He could not accept that Multi-Link might or might not be needed, although he himself did not know where to buy them and how to install them. He asked rhetorically if the Polos were meant to be connected only by the second week of June, why should he purchased 2 at the outset and another 2 in the 4th week of April and 6 altogether by the 4th week of May?

31. I accept Mr. Vandenbroucke's aforesaid contention. Although one might say some training is required to operate the Polos as a P.C. or as a terminal to Compaq as (according to Mr. Kwan) at least the keyboards for the 2 are different, the linking up implementation should not be as late as June. The original idea was to have a link up in May so that Mr. Vandenbroucke's client could appreciate the system linked to his office when they appeared in May. It might probably be that some items under sundries especially the latter 3 sums of money therefor might or might not be necessary but not for the connecting software. This is how I construe the Schedule and the Notes at p.15a. This could also be found in the fact that by 17th May, Mr. Vandenbroucke was not satisfied with the 4 Polos lying around in his office and he requested Mr. Cameron to come and to link the Polos to the Compaq. Mr. Cameron did come and go ahead to link up 2 Polos together but failed. If that was not yet the time for linking the Polos to the Compaq he would have clearly said so there and then. If a decision was required from Mr. Vandenbroucke Mr. Cameron should ask Mr. Vandenbroucke to decide by putting various options to him. Eeven if Mr. Cameron was by then not ready to recommend various options that should be made clear to Mr. Vandenbroucke and a time should be fixed for such implementation. What happened was after 17th May Mr. Cameron had not communicate with Mr. Vandenbroucke until his letter of 22nd July. It might probably be true that Mr. Cameron tried to call Mr. VandenDroucke who did not respond at all one way or another e.g. either Mr. Cameron said he would call again or he was misunderstood as such by the operator on the telephone message system departed from the usual practice of Bloomville. However that was as I Would find in any event near 22nd July 1986 rather than the early period since 19th March 1986. I found that it is more reasonable to infer from the totality of evidence that the linking up should be implemented in May 1986.

32. Further Mr. Spicer for Bloomville submitted that Mr. Cameron could not say in June that he did not link up the Polos to the Compaq because he could not be paid assuming the linking up should be in June. There was no evidence to suggest that in respect of payment of Mr. Cameron's fees time was the essence. That was not a term of the said agreement. He submitted that the general rule is that unless a different intention appears from the terms of a contract for the sale of goods, stipulations as to time of payment are not of the essence of the contract. He relied on para. 1418 of Chitty on Contracts, 25th Edition. He submitted that there are 3 exceptions as stated in para 1391 but they and not applicable to this case.

33. I accept Mr. Spice-'s submisnion. Although Mr. Vandenbroucke agreed to pay on the 10th of each subsequent month, one could hardly say he would have committed a repudiatory breach by his delay in payment entitling Mr. Cameron to terminate the contract and his obligation to linking-up ceased. In any event no commurication of his acceptance of repudiation was given to Bloomville. Thus by June 1986 when Mr. Cameron was ready and able to make his recommendation he could not say since Bloomville had not paid him, he did not link up the Polos to the Compaq. He could not just demand for his fees for April and May only as according to him he had discharged his duty in investigating various options of linking up but refused to make his recommednation and the linking up therefore since his investigation was not divisible from his recommendation and the eventual linking up. (See Chitty paragraph 1625).

34. The third exception in the said paragraph 1391 is however relevant: "where time was time was not originally of the essence of the contract but one party has been guilty of undue delay, the other party may give notice requiring the contract to be performed within a reasonable time". The first available notice from Mr. Cameron would be 22nd July by which time he should have fulfilled his obligation of linking up. He should in any event have performed or prepared to perform his obligation to link up the Polos before he was entitled to his fees. He could not say, as he said in his Letter of 22.7.86, that he had investigated the various software packages and spoke with Repromac (who sold the Polos) about the strange communications phenomena he was getting, but if Bloomville still wanted to have the Polo/Polos connected then they should come to a different arrangement. He there and then proceeded to demand his fees for April and May only. He did not offer to reveal his investigation and proceed to link them up upon payment of his fees. His obligations were not divisible and he could not just charge his fees for investigations in April and May without even revealing what they were.

35. Accordingly I found that Mr. Cameron is not entitled to his fees for the aforsaid 3 months as no services rendered or works done, in accordance with the said agreement between the parties.

36. The next question is whether Mr. Cameron was guilty of negligent in his original recommendation and advice or of misrepresention and therefore in breach of the said agreement.

37. All 3 experts who appeared before me (i.e. Mr. Cameron himself, Mr. Gibson and Mr. Kwan) are highly qualified and very experienced in the computer field. On one side Mr. Cameron and Mr. Gibson said the recommended configuration was the best possible solution as an interim measure when the project was limited by the available finance and time constraints. In March 1986 it was not unreasonable for Mr. Cameron to expect Oracle releasing a multi-user version to operate under MS-DOS within the time frame of to 12 months

38. On the other hand Mr. Cheuk Kwan attacked this recommendation. He also had a very impressive c.v. He had lesser experience in Polos, and had not worked on a Compaq/Polo configuration. He objected to it at the outset in early March 1986. He did not object on its feasibility but found it cumbersome. His objection, as far as I understand, was in the practical side from the end-user's point of view i.e. Bloomville. He said Bloomville was not a sophisticated user. It was its first time to use computer and there was no resident expert in this company. It would be cumbersome for it to maintain or operate different types of connected computers. More problems world arise if one item broke down. The configuration recommended was feasible but not "cheaper" because he said client would end up having to pay more in terms of time, frustrations and replacements. Mr. Gribson did not cover this area in his report and he was not cross-examined therefor.

39. Mr. Kwan however did not say what he would recommend instead given the financial and time restraints. I suppose he would advise his clients to wait and fix to one brand when they are more ready and able. In other words the 2 different expert's views are reconcilable is terms of feasibility but different only in terms of practical viewpoints.

40. In respect of misrepresentation Mr. Kwan said in his report that as at March 1986 there was no good grounds for supposing that Oracle would soon be producing a version of their software that would enable the Polo P.Cs. to be linked to the Compaq P.C.on a full multi-user basis. However there is no evidence in this case to suggest that Oracle people did not or could not have passed those pieces of information to Mr. Cameron in early 1986 which he said was the main reason for his representation. Mr. Kwan said he was subjective in concluding that Mr. Cameron could not link up the Polos to the Compaq only because Mr. Cameron brought up the more inferior option of Crosstalk instead of the original Multi-link on 17th May 1986. In addition to Mr. Cameron, Mr. Gibson said he himself had seen Polos used as a terminal and linked to Comapq by Multi-Link. At one time I suggested a demonstration of such linkage to be made by Mr. Cameron but Mr. Picer conceded that Mr. Cameron can do it to-day but argued that if he can do it to-day he might not be able to perform or it was not yet being able by anyone to such a linkage in 1986. I find on the concession of the Defence that if Mr. Camberon can do it now he could probably do it in 1986 and I accept mr. Gibson’s opinion that the Polos were not linked up to the Compaq for reasons other than technical.

41. Accordingly I would find that Mr. Cameron was not guilty of any professional negligence according to the test laid down by the House of Lords in Whitehouse v. Jordan [1981] 1WLR, 246, HL.

42. In respect of misrepresentation Mr. Spicer was quite aware of the difficulty he was facing i.e. Mr. Cameron’s recommendation of Oracle probably woud by producing a Multi-user verson in 6 to 12 months time was only a statemenbt of opinion or statements as to the future. As a general rule they could not by regarded as representation of fact – see para 394 of Chitty. The fact that Mr. Cameron now doubted it (though he was still told by the Oracle people about 6 months ago it was on the line) because there has been some change in the hardware already, and Zenix (a multi-user verions) has marked down its price and they are very competitive now.

43. In fact in the middle of this trial, Mr. Spicer informed me that he would not lead any further evidence In respect of negligence and misrepresentation and he did not pressfor anything thereunder in his final submission. Accordingly I found Mr. Cameron not guilty of any misreuresentatio either.

44. That seems to dispose of the Counterclaim but it was not quite so. Mr. Spicer in his final submission contended that Mr. Cameron was in breach of the agreement in not linking the Polos to the Compaq and thus Bloomville would claim for damages flowing therefrom. That was not so in Bloomvilie's Defence and Counterclaim which claimed damages only on the grounds of professional negligence and misrepresentation and breach of agreement was only was respect of these 2 grounds. The additional breach of not linking the Polos was only pleaded in a Re-joinder put in at the beginning of the trial.

45. It is trite law to say that a cause of action can only arise in a claim or counterclaim. A reply or a re-joinder, as the case may be cannot constitute a cause of action. Thus the Re-joinder here in could not operate as an aditional cause of action against Cameron Micro-systems Limited and/or Mr. Cameron. But I think Bloomville has more difficulties to face rather than this technicla rule.

46. Mr. Vandenbroucke said after 17th May, 1986 he had not seen or contact Mr. Cameron at all until he received Mr. Cameron's letter of 22nd July, 1986. He did not reply to this letter. There was no contact between the 2 of them until the letter of the Plaintiff's solicitors dated 2nd September, 1986 and the writ in October 1986. Mr. Cameron agreed that he considered himself to be still linked to Mr. Vandenbroucke until 22nd July 1986 end thereafter their relationship was severed.

47. In short there was a complete silence between the parties. Mr. Vandenbroucke did not press for any performance of tine linking-up and Mr. Cameron did not proceed to link up or give notice to Mr. Vandenbroucke for the linking up apart from his letter of 22nd July 1986 which amounted only to a demand for his April and June fees. In fact he had by this letter unilaterally forgone his fee for July and asked for a new arangement for the linking up.

48. Is Bloomville entitled to claim damages without any demand for the performance of the linking up? I think they are not entitled to do so. In any event there is no damages glowing directly therefrom or those items sought by Ploomville as their damages are either too remote or otherwise should not be allowed.

49. It has been said that "discharge from liability is not necessarily coincident with a right to sue for damages" (Chitty para. 1591). Due to the failure to link up the Polos, Bloomville would be excused from further performance of their primary obligations under the contract, i.e. to pay the "retainer" fees. If they did not treat themselves as discharged and if the contract was still executory, they might elect to treat it as continuing as in the case of affirmation. Alternatively, they might also accept the repudiation of the other party and sue for damages therefor.

50. In the case of election to continue the contract, "the contract, with all its terms and conditions remain alive for the benefit of the wrongdoer as well as of himself. The wrongdoer is entitled to complete the contract, and to take advantage of any subsequent events which would excuse him from or diminish his liability. The innocent party is likewise entitled to hold the other to his bargain and to continue to tender due performance on his part " (See Chitty para 1592). This kind of affirmatiommay may be express or implied. "It will be implied if, with knowledge of the breach, he does some unequivocal act from which it may be inferred that he intends to go on with the contract regardless of the breach or from which it may be inferred that he will not exercise his right to treat the contract as repudiated..... Mere inactivity after breach does not of itself amount to affirmation, nor (it seems) does the commencement of an action claiming damages for breach. But if the innocent party continues to press for performance, or accepts performance, by the other party after becoming aware of the breach, he will be held to have affirmed the contract" (Chitty para. 1593).

51. In this case the total silence of Mr. Vandenbroucke could be anything but affirming the contract or continuing to press for performance. He did not continue on to perform the contract for Bloomville by paying Mr. Cameron's fees and could not be said to have elected to continue the contract or affirmed the same.

52. The alternative of having accepted the repudiation of Mr. Cameron was not the case here either. For where there is an anticipatory breach, or the breach of an executory contract, and the innocent party wishes to treat himself as discharged, he must normally make his decision known to the party in default ("accept the repudiation''). Unless and untill this is done the contract continues in existence, for "an unaccepted repudiation is a thing writ in water''. Acceptance of a repudiation must be clear and unequivocal. (Chitty para. 1598). No acceptance of repudiation and communication thereof was ever made by Bloomville to Mr. Cameron.

53. Thus one could not say whether damages should be flowing from affirmation or accepting a repudiation. The lack of communication or giving notice to the other side is fatal. If Mr. Vanaenbroucke gave notice of demanding performance from Mr. Cameron, he could elect to go on linking up the Polos or not and to take the consequences of his election. If Mr. Vandenbroucke gave notice of treating Mr. Cameron’s failure to link up the Polos as a repudiatory breach, it would still be open to Mr. Cameron to mitigate Mr. Vandenbroucke’s damages by offering to link up the Polos in June or July 1986.

54. The measure of damages would be an illustration that due to the lack of demand from anyone of parties for some times it would be unfair to allow any damags. The alleged breach was a failure to perform and here it concerned with the linking up of the Polos to the Compaq. The measure of damages would be how much it would cost in the computer market in June/July 1986 for such linking up including advice therefor if the contract was performed. No evidence was led in this respect. In face there was evidence to suggest tht the linking-up software Multi-Link was readily available in the market at that time. If the appropriate cable was used (the lack of which accounted for the strange phenomena Mr. Cameron was getting at that time) it would be an easy job for a computer technician to link up the hardwares. Mr. Gibson had also seen it at or before that time. (Mr. Kwan was not very concerned with Polos and had not seen it before). If a notice was given, it would be quite easy for Mr. Cameron to comply with such a request without causing any more expenses to Bloomville. The "loss'' in respect of re-selling the Polos would not even arise. The "loss'' of wages due to extra work would either not arise since Mr. Cameron complied with Bloomivlle's request for performance or just limited to a short period of time in case of repudiatory breach.

55. Incidentally on one hand I would say the resale "losses'' of the Polos, if allowed as an item of damages, would be as claimed by Bloomville since Mr. Cameron had adopted an indignant attitude in not revealing the identity of the prospecitve purchaser willing to pay a much higher prioe and he should stand or fall by the actual re-sale value. However on the other hand the wages for Miss Linda Sum who was employed by Bloomville way back in March 1986, again if allowed as an item of damages, would be allowed for a short period only from the notice of acceptance of repudiatoin or expiry of a reasonable period from the notice of demanding performance from Bloomville until either the actual performance of Mr. Cameron or failing which the time which Bloomville could reasonably be expected to find another consultant or even technician to link up the Polos to the Compaq. The fact that Bloomville had after July 1986 made a practival decision to abandon the Compaq/Polos configuration for the D.G. MV 2,000 which could only be installed by January 1988 could not possibly render Mr. Cameron liable for part of Milss Sum’s wages for the entire period.

56. In conclusion, judging from the totality of evidence I would found in this case that there was only a failure of performance in the linking up of the Polos which would render the other party discharged from his obligation to pay the fees therefor. 'Failure of performance, whether total or partial, may in certain circumstances entitle the other party to the contract to treat the contract as discharged'' (Chitty para. 1616) "Thus, where one party failed to perform a perform a peromise which went to the whole of the consideration, the other party was released from performance as the former had not performed that which was a condition precedent to the latter's liability.'' (Chitty para. 1619). "any failure of performance which constitutes a breach of condition [as apposed to a warranty] entitles the innocent party to treat himself as discharged from further liability under the contract'' (Chitty para. 1621).

57. There are two further matters which behoves me to say before I come to the end of my judgment. Firest Mr. Spicer at the outset of his final submission contended that the Court could give a ruling in this case which would not require any finding of intentional dischonesty and there could be no doubt that both parties to this action were determined and sincere. I accept his submission. Both Mr. Cameron and Mr. Vandenbroucke were not dischonest in their testimony. In fact far from it they were trying to be as accurate as possible. Both could not be certain on the dates and exact words used during their conversations and meetings. They just disagreed on those minor details e.g. who actually ordered the recommended items from the vendors, which did not affect the main outcome of the case. Both of them could probably be true in that Mr. Cameron informed the vendors to contact Mr. Vandenbroucke but those vendors just send a messenger along for Mr. Vandenbroucke to sign on the Purchase Order before or at the time of delivery.

58. The outcome of the case actually hinged on a misunderstanding of their respective rights and obligations. Should each one of them just walk one step further in June or July 1986, the matter would not have ended up as ti was.

59. Secondly I must thank both counsel appearing before me in their assistance and their reasonable attitude displayed throughout the trail which invloved quite technical matters of computer hardwares and softwares withotu which the trail could not be as expeditions as it was in the circumstances.

60. By reason of the aforesaid matters I would dismiss the claim and the counterclaim. It has been agreed between the parties that the Court should proceed to make an Order nisi on costs which would become absolute after 14 days from the date of receipt of this written judgment.

    "Where claim and counterclaim are both dismissed with costs, upon taxation the rule is that the claim should be treated as if it stood alone and counterclaim should bear only the amount by which the costs of the proceedings have been increased by it. No costs not incurred by reason of the counterclaim can be costs of the counterclaim. In the absence of special directions by the Court, there should be no apportionment. (See the White . Book 62/3/18 and Medway Oil and Storage Company v.Continental Contractors [1929] A.C.88, H.L.).

61. In this case the claim and counterclaim are closely connected with each other. The allegation of professional negligence and misrepresentation was maintained until the middle of the trial when Bloomville just leave the matter as it was without actually withdrawing the allegation. Bloomville also dwelled on Mr. Cameron's breach of the agreement in his failure to link-up the Polos and pressed for damages. The counterclaim has increased the costs of the trial by about 50%.

62. In the end if I order costs to follow the event, I would apportion the claim to 50% of the trial and 50% to the counterclaim. One would then offset the other. I therefore would and hereby do make "no order as to costs" and each party should bear its own costs which I think is a just and fair result in the circumstances of the case. This Order nisi in repect of costs will become absolute in 14 days time after the receipt of this written judgement and in the mean time each party is at liberty to give notice to the other side and to fix a date to ask the Court to make a different Order should they wish to do so.