Y.H. CONSTRUCTION CO LTD v. KINGSCORD INVESTMENT LTD

DCCJ 16556/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 16556 OF 2001

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JUDGMENT

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Background

1. The dispute in this case arose out of the proposed building of an additional staircase between the Ground Floor and the First Floor of Celebrity Commercial Building at 64 Castle Peak Road, Kowloon, Hong Kong ("the Building"). Grand Inn Investments Limited ("the Landlord") was the landlord of the Building. The Defendant was the real estate development agent of the Landlord and responsible for all leasing matters of the Building. The Plaintiff, a building contractor, was engaged by the Defendant to carry out the works for the proposed addition of the new staircase ("the Works").

2. The Landlord was required to build the additional staircase because it had entered into a tenancy agreement dated 14 March 1999 ("the Tenancy Agreement") with Castle Peak Road Cambridge Nursing Home Limited ("the Tenant") to let Shop 1, Ground Floor, the whole of First Floor, Second Floor and Third Floor of the Building ("the Premises") to the Tenant for a term of 3 years commencing on 15 March 1999, and Special Condition (5) of the Third Schedule of the Tenancy Agreement stipulates that:-

"The Landlord agrees to open up the existing floor slab and construct a new staircase with a minimum width of 1300 mm. From Shop 1 of Ground Floor to 1st Floor as marked (A) in the attached Plan exact location of which shall be subject to Architect's opinion and to be mutually agreed by the Landlord and the Tenant."

3. It is not disputed that by a letter dated 5 March 1999 from the Defendant to the Plaintiff, an invitation to submit quotation for the Works was made and the Plaintiff submitted a quotation for the Works to the Defendant via its letter dated 8 March 1999. On 16 March 1999 the Defendant issued to the Plaintiff a Work Order, which provides inter alia that the Works were to be carried out at an agreed sum of HK$240,000 and completed on or before 10 August 1999. There would be a penalty of HK$3,000 per day for any delay in completion of the Works. The Plaintiff accepted the terms in the Work Order, and hence there was a binding contract ("the Contract") between the Plaintiff and the Defendant.

4. On 12 April 1999 the Plaintiff appointed Mr. Yeung Ka Sing Ben ("Mr. Yeung"), an architect, and Mr. Ko How Chi James, a structural engineer, as the Authorized Person and Registered Structural Engineer for the Works respectively. From March 1999 to September 1999 the Plaintiff carried out the Works, including making submissions to the Buildings Department and making reservation for material and labour for the Works.

5. On 18 September 1999, a meeting ("the Meeting") was held at the Defendant's office in the presence of Mr. Kwok Tung Keung Simon ("Mr. Kwok"), the Project Manager of the Plaintiff, Mr. Choy Chung Kuen Ringo ("Mr. Choy"), the Vice-President of the Defendant, Ms. Luk Ngai Ling Irene ("Ms. Luk") of the Tenant and Mr. Yeung. It is the Plaintiff's case that at the Meeting Mr. Choy orally informed the Plaintiff the Works was no longer required by the Defendant and the Tenant. By accepting the Defendant's repudiation, the Plaintiff requested for the payment of the works that had already been carried out and the same was agreed by the Defendant. Alternatively, the Plaintiff contends that a compromise between parties had been made at the Meeting to the effect that further performance of the contract was discharged and the Defendant would reimburse the Plaintiff for the work done not exceeding a sum of $100,000.

6. On 22 September 1999, the Plaintiff sent a letter of demand to the Defendant, stating the summary of the total cost spent on design, submission and preparation to be $98,000, i.e. $60,000 for the appointment of authorized person and design fee and $38,000 for the Plaintiff's preparatory works including coordination, liaison and documentation. On 3 December 1999, Mr. Choy informed the Plaintiff that an arrangement had been made with the Tenant whereby the Tenant would settle the sum of $98,000 directly. Despite repeated demands to the Defendant and the Tenant, the sum of $98,000 was not paid. Thus, in this action, the Plaintiff claims for the sum of $98,000 together with interest and costs.

7. The Defendant, however, contends that no oral agreement or compromise was reached at the Meeting. The Defendant had never informed the Plaintiff that the new staircase was no longer required at the Meeting. If there had been a compromise (which is denied by the Defendant), there was no consideration in support of the same. The contract for the Works is an entire contract, or alternatively, it is an implied term of the contract in order to give business efficacy to the contract that the agreed sum of $240,000 shall be paid as one lump sum upon the completion of work. The Defendant further contends that the Plaintiff is in breach of the contract by failing to complete the Works on or before 10 August 1999 and its repudiation is accepted by the service of the Amended Defence and Counterclaim. By reason of the Plaintiff's failure to complete the Works, the Contract had been discharged by abandonment. The Defendant therefore counterclaims against the Plaintiff for breach of contract. The alleged loss and damage suffered by the Defendant included the loss of submission fee paid to the Government in the sum of $22,745 and the fixed penalty for the delay of completion in the sum of $114,000. At the trial, the Defendant withdrew the claim for the fixed penalty and hence the counterclaim only concerns the submission fee of $22,745.

Issues

8. As submitted by the Plaintiff, the principal issue in this case boils down to "What had actually been said or agreed between the parties at the Meeting?" It is basically a question of fact. If it is found that there had been an oral agreement or compromise reached at the Meeting as alleged by the Plaintiff, and the agreement or compromise is supported by consideration, the defence of "entire contract", "the Plaintiff's breach of contract" and "abandonment" must fail.

The Plaintiff's Case

9. The Plaintiff called 5 witnesses to give evidence at the trial. They were Mr. Jim Yin Kwan Jackin ("Mr. Jim"), a director of the Plaintiff, Mr. Kwok, Mr. Choy, Mr. Yeung and Mr. Wong Chi Shing Christopher ("Mr. Wong"). However, only Mr. Kwok, Mr. Choy and Mr. Yeung were present at the Meeting. Mr. Kwok has been in the industry since 1983. He said that in about July 1999 Mr. Choy instructed him to suspend the construction work until further notice and the said instruction should be given after 23 July 1999. He was kept informed of the progress of the submission made to the Buildings Department by Mr. Yeung and realized that the pending application by Ms. Luk for a change of use of the Premises had caused the disapproval of plans by the Buildings Department. At the Meeting, Mr. Yeung explained the objections raised by the Buildings Department. Mr. Kwok was then informed by Ms. Luk that the construction of a new staircase was no longer required and she would reimburse the Defendant for the costs already incurred by the Plaintiff for a sum of not exceeding $100,000. After the Meeting, Mr. Kwok informed Mr. Jim of the outcome and an invoice for payment in the sum of $98,000 was issued by Mr. Jim on 22 September 1999. A demand for payment was sent directly to the Tenant on 7 December 1999 as directed by Mr. Choy. Further demands were sent on 26 July 2000 and 20 August 2001 respectively.

10. Mr. Choy left the Defendant in about July 2000 due to redundancy. His testimony is consistent with Mr. Kwok's evidence. He confirmed the oral agreement reached at the Meeting. He also said that prior to the Meeting, he had already spoken to the Board of Directors of the Defendant and was given to understand that if Ms. Luk refused to pay the costs incurred by the Plaintiff, the Defendant would make the payment.

11. Mr. Yeung's evidence also supports the Plaintiff's case. Exhibit "P2" confirmed that he had received his professional fee of $60,000. In cross-examination, when he was asked about the agreement reached at the Meeting, he said he recalled that Mr. Choy did ask Ms. Luk as to how the costs of around $100,000 incurred by the Plaintiff was to be settled and there was no disagreement. He however admitted that he could not recall what exactly Ms. Luk had said.

The Defendant's Case

12. The Defendant called 2 witnesses to testify at the trial, i.e. Ms. Luk and Mr. Poon Chi Hung ("Mr. Poon"). Ms. Luk was present at the Meeting and only her evidence can be used to contradict Mr. Kwok, Mr. Choy and Mr. Yeung's testimonies. Mr. Poon is the Project Manager of the Defendant, but was not present at the Meeting. In fact it was Mr. Choy who was representing the Defendant at the Meeting. In contrast with the Plaintiff's assertion, Ms. Luk said that she had never requested for the suspension of the construction of the staircase in July 1999 as alleged or at all. It is the Defendant's case that the Plaintiff had in breach of the Contract failed to complete the Works on 10 August 1999. As at 20 August 1999, the Plaintiff was not able to obtain the Buildings Department's consent to commence the Works. At the Meeting, Mr. Yeung reported that it was impossible to have the construction plans approved by the Buildings Department unless, inter alia, all the existing decorations at the Premises were removed and substantial remedial works were done to the floors and ceilings and within the Premises. As the Tenant's business of residential care home was then operating at the Premises, the Tenant would suffer great loss if the staircase were to be constructed in accordance with Mr. Yeung's suggestions. Ms. Luk informed all the attendants at the Meeting that there were negotiations for the sale of the Tenant's business at the Premises. Whilst Ms. Luk never mentioned that the construction of the staircase was not required, she made it clear that, owing to the problems raised by Mr. Yeung, she had no objection to have the Works withheld pending the outcome of the sale. Mr. Choy never said that the Defendant would terminate the contract. Subsequently, the sale was fallen through and, in view of the problems raised by Mr. Yeung, Ms. Luk did not pursue with the Works.

Assessing the Evidence

13. The Defendant submitted that Mr. Jim and Mr. Wong only derived the information from Mr. Kwok and Mr. Choy respectively. They did not have personal knowledge of the matter. Therefore, no weight should be given to their evidence. Mr. Yeung said that for simple projects such as the present case, he would apply for both approval of plans and consent for commencement of works at the same time. However, instead of lodging the applications within a few days, he applied for approval and consent on 8 April 1999 and 27 May 1999 respectively.

14. The Defendant also submitted that Mr. Yeung had inspected the premises and knew that it was to be used as residential care home. As apparent in paragraph 7 of the letter from the Buildings Department of 7 June 1999, Mr. Yeung must have known of the change of use. However, nothing was done by him to resolve the issue. Furthermore, the Buildings Department stated that it had no objection in principle. However, Mr. Yeung only made enquiry with Mr. Kwok in or about July and asked for all necessary information concerning the change of use. However, Mr. Kwok did not provide any information to him.

15. The Defendant submitted that notwithstanding Mr. Choy's instructions to suspend the construction of staircase, the Plaintiff still opted to continue making application to the Buildings Department. Despite the fact that the most important issue of change of use had not been resolved, Mr. Kwok still proceeded to apply not only for approval of building and structural plans, but also consent to commence the Works. According to Mr. Choy, Ms. Luk had informed him of the intended acquisition of the tenant's business by Quality Health Care Asia Limited in or about July 1999. However, Ms. Luk testified that she considered her application for change of use approval by the Buildings Department and a licence for operation of residential care home was granted by the Social Welfare Department on 10 August 1999. It was logical for her to negotiate the sale of business to Quality Health Care Asia Limited in or about early September 1999. Ms. Luk only informed Mr. Choy about the negotiation in relation to the proposed sale of business in early September 1999, and Mr. Choy could not possibly have requested the Plaintiff to suspend the Works in July 1999.

16. The Defendant further submitted that the purpose of the Meeting was to discuss the details of all the submissions and to obtain all the necessary information. Prior to the meeting, there was no indication that the staircase was not required by the Defendant or Ms. Luk. In addition, according to Mr. Yeung, Ms. Luk also showed him the two applications for licence and change in use. It could be seen that Ms. Luk was eager to have the staircase constructed. However, Mr Yeung explained that it was impossible to obtain the approval from the Buildings Department unless one of the two conditions was satisfied, i.e. either the premises were not to be used as residential care home; or the entire decoration was to be removed and substantial remedial works be done. In view of the potential sale of business and the difficulty in obtain approval from the Buildings Department, Ms. Luk made no objection to the suspension of construction of staircase. Given that it was the Defendant's obligations to provide the staircase to the Tenant at the Defendant's costs and expenses, it defies logic for Ms. Luk to agree to reimburse the Defendant of the amount paid to the Plaintiff.

17. The Defendant contends that, before entering into any tripartite agreement, Mr. Choy should have first considered whether the Plaintiff was entitled to lodge any claim against the Defendant and the reasonableness of its claim. He should, therefore, have consulted Mr. Edmond Yew ("Mr. Yew"), who was the Assistant Vice-President of the Defendant at the material time, other directors of the Defendant and his boss, Mr. Lam Pak Yan. There was just no need to pay the sum. Furthermore, it would be easier to ask Ms. Luk to settle the Plaintiff's invoice direct, just like what Mr. Choy had done on 3 December 1999 in instructing the Plaintiff to send the invoice for the settlement by Ms. Luk. Although Mr. Choy claimed that Ms. Luk, Mr. Kwok and him had reduced an agreement into writing, which was signed by them, Mr. Yeung indicated in his evidence that the parties did not sign any agreement to that effect. It is doubtful why the parties, who were experienced business people, did not put the settlement agreement into writing during the Meeting. No document was found to support the Plaintiff's version. Thus, Mr. Choy's evidence is incredible. On the other hand, Ms. Luk explained that in order to pay safe, she thought it necessary to enquire if the Landlord was willing to allow the transfer of the Tenancy Agreement to the potential buyer. If the Landlord refused to permit the transfer of the Tenancy Agreement, no sale of business was possible. It was in such circumstances that she wrote the letter dated 20 September 1999 on behalf of Cambridge Nursing Home Group.

18. The Plaintiff, however, submitted that Ms. Luk was an evasive witness and her evidence was wholly unreliable when tested against the documentary evidence. According to the correspondence exchanged between the Buildings Department and Mr. Yeung, the main reason for disapproval was the pending application for "change of use". Though Ms. Luk confirmed receipt of the letter dated 19 April 1999 from the Buildings Department, she said it was not necessary to comply with the contraventions stated therein. Being an experienced trader for 18 years and the Chairman of a group operating 20 residential care homes for elderly, it is totally unthinkable that she could regard her application as "successful" upon receiving the said letter.

19. The Plaintiff further submitted that Ms. Luk had in fact admitted that Mr. Choy did inform her as to the progress of the Works but never told her about the objections raised by the Buildings Department. Ms. Luk claimed that she was not even aware of the stiplulated completion date of the project. She explained that her inaction during the period from March to September 1999 was the result of her experience that it would take a long time to wait for approval from the Buildings Department. In cross-examination, she however agreed that the construction of a new staircase was solely for the benefit of her business.

20. The Plaintiff contends that Ms. Luk's indifferent attitude to the progress of the project is not consistent with her claim that she was "100%" in need of a new staircase at the time of the Meeting in September 1999. Secondly, the stipulated completion date must be a matter that the Defendant should have informed Ms. Luk. Thirdly, she said that the decoration work of the Premises lasted for about 3-4 months since March 1999. So the additional or alteration work of the Premises at an early stage of her business must be a concern to her. Fourthly, according to the letter dated 20 July 1999 from Mr. Yeung to Ms. Luk, it is stated that there was a "joint meeting" held at the Landlord's office with Mr. Yeung. In the said letter, Mr. Yeung reminded Ms. Luk to check with the compliance of the installation of disabled platform. When Ms. Luk was confronted with the said letter in cross-examination, she gave the excuse that the same was received by her staff and could not recall whether she had read it before. If Mr. Yeung had never informed Ms. Luk of the requirement requested by the Buildings Department, why was there such a letter? The only reasonable inference can be drawn is that Mr. Yeung not only in his letter but also at the "joint meeting" mentioned to Ms. Luk about the requirements requested by the Buildings Department. Furthermore according to the letter dated 7 June 1999 from the Buildings Department to Mr. Yeung, "disabled access ramp" was mentioned. Therefore logically speaking Mr. Yeung must be referring to the request made by the Buildings Department in his letter of 20 July 1999. Fifthly, in paragraph 10 of Ms. Luk's witness statement, she stated that "From time to time, I received copy letters issued by Buildings Department, Grand Inn and/or the Defendant. Mr. Ringo Choy ("Mr. Choy") of the Defendant also reported to me the progress of the construction work." In cross-examination, she denied the first sentence to be true and said that she was referring to "ordinary letters" from the Buildings Department. At that time the only application to the Buildings Department was the approval of plans seeking by Mr. Yeung (save the pending application for "change in use" in which she claimed no further follow-up action was required), there should be no other "ordinary Buildings Department's letters" forwarded to her by the Defendant. Sixthly, the only solution to the objection caused by the pending application for "change in use" must be a withdrawal by the Tenant. Under those circumstances, the only thing Mr. Yeung could do was to inform Ms. Luk of the situation in order to deal with the said objection. Bearing in mind that Mr. Yeung was the appointed Authorized Person for the construction of the new staircase only, there is absolutely no reason why he had to hide any information from an interested party.

21. Ms. Luk accused Mr. Yeung of his incompetence and said that he should have known at the very beginning that the application must fail because of the difference in use. Ms. Luk denied that the difference in use was caused by her application. She alleged that once Mr. Yeung knew that she was the tenant and that a residential care home for elderly was operating there, he should be aware of the difference in use. The Plaintiff submitted that Ms. Luk's accusation was totally unfounded and groundless. The fact that premises are carrying on a particular business does not necessarily suggest that that particular business falls within the use permitted by the Buildings Department. In cross-examination, Ms. Luk admitted that she had plenty of experience in making application for change of use. Given her background and experience in this trade, she must be aware of the conceptual difference between "actual/factual use" and "permitted use". The Plaintiff submitted that the only reason why she lied on this matter was to hide from the fact that the Tenant was in the course of negotiating with an intended buyer for the sale of the business and did not insist on the construction of the new staircase.

22. Furthermore, Ms. Luk complained of the poor quality of plans drawn by Mr. Yeung. In cross-examination, Ms. Luk admitted that she had never made any complaint about Mr. Yeung to the Landlord. She was also discontent with the design of the new staircase since it caused problem to the First Floor of the Building. Although she denied that it would cause a loss of numbers of beds, she said that the floor slab was "too big". However, she agreed that the Tenant had a "final say" to the project under the Tenancy Agreement. The Plaintiff submitted that Ms. Luk's alleged tolerance of her dissatisfaction was totally inconsistent with usual commercial sense, and that her main dissatisfaction must be the loss of numbers of beds.

23. Ms. Luk gave evidence that at the Meeting Mr. Yeung, for the first time, informed her of the objections raised by the Buildings Department but he did not mention or discuss her pending application for "change of use". After the Meeting, she was still holding the view that her application was "successful". The Plaintiff submitted that it was Ms. Luk's application that gave rise to the Buildings Department's objection. It is wholly unbelievable that Mr. Yeung as a professional architect would fail to elaborate the reasons underlying the Buildings Department's objection at the Meeting.

24. Ms. Luk also said that at the Meeting there was a bargain of terms with Mr. Choy and she felt she had no choice under those circumstances. In cross-examination, she admitted she did not mention the proposal in her witness statement because the lawyer did not specifically ask about this aspect. The Plaintiff submitted that this piece of evidence was given by Ms. Luk with an attempt to explain her application made in a letter dated 20 September 1999, and that it is clear from the wordings of the letter that the Tenant was in effect making an application to transfer the existing tenancy and asking for deletion of the "new staircase" clause in the new tenancy agreement. There must be a mutual understanding reached between the Tenant and the new tenant. On one hand Ms. Luk alleged that the Works were not made known to the new tenant, but on the other hand she considered the Works would not have any adverse effect on their negotiations. The truth, as submitted by the Plaintiff, must be that it was determined at the Meeting that the staircase was not required.

25. After negotiations with the new tenant had fallen through, Ms. Luk said that she would not insist on completion of the Works. The Plaintiff submitted that her evidence in this aspect is inconsistent with paragraph 17 of her witness statement, in which Ms. Luk stated that Mr. Choy did not ask her whether she still needed the staircase, nor did she tell Mr. Choy and/or the Defendant that the construction of the staircase was not necessary. Ms. Luk, however, said in her evidence that she did inform Mr. Choy over the phone as to her intention. The Plaintiff submitted that if one considers the obligation of the Landlord under the Tenant Agreement, it is hard to believe that the Defendant would not ask for any written confirmation from the Tenant so as to protect the interest of the Landlord. The Plaintiff therefore contends that the testimony of Ms. Luk is wholly unreliable and unbelievable.

26. I think this case all turns on the credibility of the witnesses. Having considered all the evidence and the aforesaid submissions of the parties, I come to the conclusion that the Plaintiff's version of the events is more probable than the Defendant's. I accept all the submissions made by the Plaintiff as aforesaid and find that Ms. Luk's evidence is not reliable at all. If Ms. Luk's evidence were to be accepted, it would mean that Mr. Kwok, Mr. Choy and Mr. Yeung were all lying, but I do not find it to be the case here. The Plaintiff's witnesses all impressed me as truthful and honest witnesses. In particular, I do not find that Mr. Choy, who was a former employee and in senior management of the Defendant, has any reason to lie against the Defendant. He has no interest in the outcome of the proceedings, and even though he was made redundant, there is nothing from the Defendant to suggest that he has any grudge against the Defendant so as to make him lie in court. Mr. Yeung is a professional architect. He has already received payment of his professional fee from the Plaintiff. Again, he has no interest in the outcome of the proceedings. The way he presented his evidence shows that he was trying to relate what actually happened to the Court without any exaggerations. I find him to be a credible witness. I do not accept the Defendant's criticism on the Plaintiff's evidence at all.

27. On the other hand, Ms. Luk has self-interest to serve in giving her evidence, even though her company, i.e. the Tenant, is not a party to the proceedings. If the Court finds that there was an agreement or compromise as alleged by the Plaintiff, it would mean that the Tenant might be liable to reimburse the Defendant for the sum claimed by the Plaintiff. Thus, Ms. Luk is obviously not an independent witness. Moreover, her evidence is full of contradictions as submitted by the Plaintiff. I do not accept her to be a credible witness. Her evidence is also unsupported by any other witnesses or documents. The other witness of the Defendant, Mr. Poon, who joined the Defendant as a Project Manager in July 1999, has very limited personal knowledge of the dealings in this case. His evidence renders no support to Ms. Luk's evidence and adds very little to the Defendant's case. As submitted by the Plaintiff, Mr. Poon admitted that Mr. Choy was more senior than Mr. Yew in terms of position in about September 1999. His oral evidence is inconsistent with paragraph 5 of his witness statement on the issue as to whether or not Mr. Choy had to seek approval from Mr. Yew when a decision was made. Furthermore he said that the Defendant had considered whether the amount of rent-free period was sufficient to cover the claim of the Plaintiff and did prepare to settle the payment. I find that his evidence in fact supports the Plaintiff's case rather than the Defendant's.

Whether oral agreement or compromise reached at the Meeting

28. Since it is my finding that the Plaintiff's evidence is the correct account of the events, I accept that the Plaintiff has proved the alleged oral agreement and compromise at the Meeting. That is to say, I find that Ms. Luk did at the Meeting inform the Plaintiff not to proceed with the construction of the staircase and agree to reimburse the Defendant a sum not exceeding $100,000 after the Defendant had paid the same to the Plaintiff.

Whether or not the oral agreement or compromise is supported by consideration.

29. It is clear to me that the oral agreement or compromise reached at the Meeting is supported with good consideration. By entering into the agreement, the Plaintiff and the Defendant were both discharged of the existing obligations and further performance of the Contract. The abandonment by each party of its right to performance or his right to damages provides the consideration. As said in paragraph 23-025 of Chitty on Contracts (Vol. 1), 28th ed.:-

"Where a contract is executory on both sides, that is to say, where neither party has performed the whole of his obligations under it, it may be rescinded by mutual agreement, express or implied. A partially executed contract can be rescinded by agreement provided that there are obligations on both sides which remain unperformed. Similarly, a contract which has been fully performed by one party can be rescinded provided that the other party returns the performance which he has received and in turn is released from his own obligation to perform under the contract. The consideration for the discharge in each case is found in the abandonment by each party of his right to performance or his right to damages, as the case may be."

Whether or not the Contract is an "entire" contract

30. The Plaintiff's case is basically relying on the oral agreement or compromise reached at the Meeting. As I have found in favour of the Plaintiff in this regard, it is unnecessary for me to examine the Contract to see whether it was an "entire" contract or not. It does not affect the outcome of the case one way or the other. Even assuming that the Contract was an "entire" contract, the Plaintiff is still entitled to rely on the oral agreement or compromise at the Meeting to claim against the Defendant a sum not exceeding $100,000 for the work done. Thus, I will not deal with this academic question.

Whether or not the Plaintiff was in breach of contract

31. Having ruled that there was an oral agreement or compromise reached at the Meeting, it is neither here nor there that the completion date of 10 August 1999 was not complied with. It is clear to me that the stipulated completion deadline was no longer relied upon by either party. The Defendant has in fact abandoned its counterclaim on the daily penalty at the trial. As to the counterclaim for the submission fee of $22,745, it again depends on whether the Plaintiff was in breach of the Contract. Since there was an oral agreement or compromise reached at the Meeting, even if there was such a breach on the part of the Plaintiff, the right to sue damages has been compromised. It is again an academic exercise to find out whether the Plaintiff was in breach of the Contract and I will not deal with the same.

Whether or not the contract had been discharged by abandonment

32. The Defendant must prove a long period of delay or inactivity on both sides in order to succeed on this defence: See paragraph 23-027 of Chitty on Contracts, ibid. The evidence in the present case does not suggest a long delay or inactivity at all. However, in view of my finding that there was an oral agreement or compromise reached at the Meeting, it is unnecessary to deal with this issue.

Whether the Plaintiff's Claim is Excessive

33. The Defendant contends that the Plaintiff can only recover on a quantum meruit basis for its partial performance and that its claim is excessive. The Defendant submitted that the Plaintiff did not provide a breakdown for the sum $38,000 until the beginning of the trial and no evidence that such sum, as well as the $60,000 for the appointment of Authorized Person and Design Fee were actually paid or incurred.

34. However, the Defendant did not raise this issue at all in its pleadings. It is trite law that the parties are bound by the pleadings. Without raising the issue that the amount was excessive, the Plaintiff would not be in a position to prepare its evidence to meet the challenge on the issue. The Defendant has only pleaded that the claim was not admitted, but the Plaintiff has now produced Exhibits P1 and P2 to substantiate the claim. I find that the Plaintiff has discharged the burden in proving the claim. In any event, I do not agree that the amount was excessive. The amount of $60,000 was the actual expense incurred for Mr. Yeung and the Plaintiff was actually receiving only $38,000. There were many submissions made by the Plaintiff to the Buildings Department. The sum of $38,000 can in no way be excessive compared to the work done. I do not therefore find any merit in this submission.

Conclusion

35. In view of the above findings, I am of the view that the Plaintiff has proved its case against the Defendant and the Defendant has failed in its counterclaim.

36. In the premises, I make the following orders:-

(1)	Judgment be entered for the Plaintiff against the Defendant in the sum of $98,000 together with interest thereon at judgment rate from the date of the Writ to the date of Judgment and thereafter at judgment rate until payment.
(2)	The Defendant's Counterclaim be dismissed.
(3)	Costs Order Nisi:- The Defendant do pay the costs of this action to the Plaintiff with certificate for counsel, to be taxed if not agreed. If there is no further application on costs within the next 14 days, the costs order nisi shall become absolute.