[1965] HKLR 1103

Contract - preliminary issue - written agreement in Chinese -

provision for subsequent contract in English based upon it - English contract not
executed - whether Chinese agreement was an enforceable contract -
plaintiff not a registered contractor - effect of non-compliance with s. 7(1) of Buildings
Ordinance.

The defendant obtained the grant of a lot of land from the Crown and on 16th January, 1961, entered
into an agreement in Chinese for the plaintiff company to perform the site formation. The translation of
Clause 7 of the agreement was disputed but was found to be in these terms: -

"7. This contract is consented to mutually agreed to in principle by both parties; after being signed
it shall be handed to a law firm for the purpose of making a contract in English based upon the above
mentioned principle (which contract in English) shall be the standard."

K.M.F. the managing director of the plaintiff company who was also the majority shareholder, then
travelled to Taiwan and Japan for the purpose of obtaining machinery for the project. O. the person
representing the defendant in the negotiations assisted in the obtaining of travel facilities for K.M.F. O.
also assisted the plaintiff in getting electricity connected to the site and for an ancillary permit from the
Crown.

The plaintiff started work on the project in January 1962, about 1 month after possession of the site had
been handed over. An approach road was cut, heavy machinery was installed, working buildings and
blasting screens erected. and drilling and blasting carried out.

In July 1962 a contract in English was drawn up by the defendant's architect The plaintiff refused to
sign it because it contained far more onerous terms than the Chinese agreement from his point of view.
In September 1962 the plaintiff refused a request by the defendant's solicitors to sign a contract in
English for the same reason.

On 14th December, 1962, the defendant's architects ordered the plaintiff to stop work and so informed
the Building Authority. By then the defendant's architects estimated that the plaintiff had excavated
5,000 cubic yards of stone and earth.

The plaintiff claimed $961,620.50 damages for breach of the contract in Chinese of 16th January, 1961,
and it was ordered by consent that the question of liability be first tried and determined.

The defendant also took the point that the plaintiff was not a registered contractor as required by s. 7(1)
of the Buildings Ordinance.

Held:

1. It was quite clear from its contents that the Chinese agreement was intended by the
parties to be a binding contract until a formal contract was drawn up in precise and formal
language;

2. After its execution the parties by their actions showed that they considered themselves
bound by it;

3. The non-compliance with s. 7(1) of the Buildings Ordinance did not affect the validity of
the contract;

4. The Chinese agreement was a binding and enforceable contract and the defendant was
liable on it.

FLAT HILL QUARRY CO., LTD. AND THE EVANGELICAL LUTHERAN CHURCH OF HONG
KONG [1965] HKLR 1103, 15th December, 1965, Original Jurisdiction, Scholes, J.