Yap (Clifton) v Raymond Hugh and Mirage Entertainment Ltd

CourtCourt of Appeal (Jamaica)
Date13 March 2003
Dr Lloyd Barnett and Andre Earle instructed by Rattray, Patterson & Rattray for appellant
Ransford Braham and Ms Daniella Gentles instructed by Livingston, Alexander & Levy for respondent

CONTRACT - Professional services - Contract of employment - Acquisition of shares in company offered in lieu of professional fees - Whether agreement was a concluded and enforceable contract


This is an appeal from the judgment of W. James, J. on December 10 1999, entering judgment for the respondent for professional architectural services rendered in the sum of $4,230,191.93 with interest at the rate of 20% from December 14, 1994, to December 10, 1999, and costs to be agreed or taxed.


The relevant facts are that the appellant, intending to construct a discotheque nightclub at Sovereign Centre, Liguanea, in about October, 1990, engaged the services of the respondent, a registered architect, to provide his professional architectural services to the project. It was agreed that the respondent would be paid fees calculated at 13.5% of the total construction costs of the building project.


In confirmation of this agreement the respondent wrote the appellant by letter dated October 25, 1990, (exhibit 1), detailing the architectural services to be provided, the said fee of 13.5% of construction costs, and continued:

"The construction cost shall be the total cost or estimated cost of all work designed, specified and/or supervised by the architect/interior designer. The cost of air conditioning equipment, kitchen equipment. Standby generator, and audio/visual equipment will not be included in the assessment of fees, unless they are an integral part of the construction work.

Labour or materials furnished by the client for the project shall be included in the construction cost.

The selection of furnishings and accessories will not be included unless specifically requested by the client."


The letter further referred to the schedule of payment, stated which expenses were reimbursable and ending said:

"I trust that the foregoing meets with your approval, and in acknowledgment of this, please sign and return the letter copy enclosed along with a retainer fee of $16,000.00."


The respondent received a cheque for $16,000.00 from the appellant and the respondent commenced working on the project. The primary contract of employment of the respondent to provide professional architectural services probably commenced in October 1990.


A company called Mirage Entertainment Ltd. was incorporated by the appellant on February 27, 1991. The certificate of incorporation, exhibit 2, is dated February 27, 1991. The appellant in examination-in-chief, at page 34 of the Record, with reference to the date of February 27, 1991, said:

"At that time the plaintiff was already doing the preliminary drawings for the Club."


This confirms that the said contract with the respondent probably commenced in 1990. During the construction there were changes to the project. The appellant provided material and labour.


In 1991, according to the appellant, or in 1992 according to the respondent, the appellant invited the respondent to acquire shares in the company in lieu of payment of his fees for the said professional architectural services. The respondent agreed.


Consequently, by letter dated September 27, 1993, exhibit 3, the respondent wrote to the appellant, stating inter alia:

"As previously discussed and agreed, it is my intention to use accrued fees on this project to purchase equity in the disco, however, I would like out of pocket expenses to be paid separately."


The tone and content of this letter suggests that the discussion in relation to the acquisition of shares probably took place in 1992, as the respondent suggests.


The construction project was completed in 1994, and the discotheque was opened on June 29, 1994, under the name of Mirage Disco and Club.


By letter dated October 10, 1994, exhibit 4, the respondent wrote to the appellant seeking to complete the negotiations. It read:

"Dear Raymond:

I would like to meet you as soon as possible to finalize the following:

  • 1) Architectural/Interior design fees.

  • 2) Overall project costs.

  • 3) Share equity value of fees and timetable for issuing of shares.

  • 4) Shareholders rights and access to financial information.

  • 5) Cash flow projections to estimate payback of investments, etc.

While I realize that you have been busy, it is important that we meet and I would appreciate it if you would call to set this up during this week."


The appellant did not respond to this letter, exhibit 4, nor was any meeting held.


The respondent by letter dated December 14, 1994, exhibit 5A, wrote to the appellant, expressing his dissatisfaction. It read:

"Over two years ago when you offered me shares in Mirage, I agreed in principle to leave my accrued fees as equity in the project.

I had agreed to this because I was an integral part of it's creation and I looked forward with pride to being involved in a meaningful way as a shareholder/director of the Company.

As it has turned out, although the club has now been opened for nearly six months, and I wrote you on the matter in my letter dated October 10, 1994, you have not responded with any information requested, regarding the issuing of shares to me.

Further, my involvement as a shareholder/director is non-existent as I have never been invited to attend any meetings, nor have I been asked my opinion about any matters concerning its operations.

I have therefore decided that it is in our mutual interest that I resign as a director of Mirage Entertainment Ltd. (assuming that I was formally appointed), and that, I be paid for my architectural and interior design services, as the matter of share equity has not been quantified or formalized.

Enclosed herewith is an estimated invoice of accrued fees, and I look forward to your settling of this matter in the shortest possible time."


The enclosed "estimated invoice of accrued fees" claimed a sum due of $5,203,462.50.


Prior to the opening of the discotheque in June 1994, the appellant told the respondent that he had made him, the respondent, a director of the company. Consequently, the respondent received a business card with his name thereon as a director of the company.


However, the articles of association of the company did not include the name of the respondent as a director, there was no register of directors, no formal meetings of the company were held nor was any resolution passed appointing the respondent as a director. The appellant agreed in cross-examination that he never in fact appointed the respondent as a director nor treated him as a director.


In response to the respondent's letter of December 14, 1994, Judy Hugh, the acting managing director of Mirage Entertainment Ltd. and sister of the appellant, replied by letter dated December 20, 1994. It reads, inter alia:

"We received your letter dated December 14, 1994, regarding your desire to resign as a shareholder of Mirage. It is with sincere regret that such a decision has been reached, but we understand the events that transpired that induced this decision. Therefore, as Managing Director of Mirage Entertainment Limited (I) am to blame and would like to explain a few details of the operations of the club to you and allow you to ponder carefully about this decision. This way it allows you to get a better understanding of what we at Mirage are up against."


The letter referred to staff changes and continued:

"Over the past month, Mirage's management team has undergone a lot of changes. We have had several management personnel turnover (four persons to be exact) because they were not able to fulfill their job requirements. Just recently, a couple weeks ago, our main accountant has resigned because of not being able to meet these criteria and not being able to organize herself thus the pressures of work made her resigned.

Over the past months, we had spoken briefly about the reconciliation of the total expenditure of Mirage investment. The total amount is still not reconciled due to the fact of our accountant has not been able to work this matter. It is stressful and tedious on my part to constantly remind the accountant to work on this matter. We have hired another accountant who will not be able to start work till January 3, 1995. Thus we are at a standstill temporary. Until the total expense has been reconciled, we cannot give an accurate number of shares. It would not be fair for any of the shareholders, if we decide to give you an X amount of share because we think that is what we spent on the club . Therefore we ask for your patience and bear with us for a little while longer."

(Emphasis added)


Further construction problems were detailed, attributing some blame to the respondent, and the letter, in the concluding paragraph reads:

"If after you read this letter and would like to discuss this matter with me further, I would be more than happy to meet with you on a person to person basis. Again, my apologies for not informing you of matters at hand. Please arrange to meet early next year to discuss this matter."


By letter dated January 13, 1995, the respondent rebutted the allegations of Miss Judy Hugh, and repeated his request for the settlement of the payment of his fees.


A statement undated, exhibit 8, at page 56 of the record, was sent to the respondent showing details of the "Total Expense" of the "Mirage" construction, and in particular, in conclusion reads:

"Clifton Yap Architect's service includes items 6, 8, 12, 14, 18, 19 * 13%...

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