區域法院（民事）Deputy District Judge Patrick Siu26/9/2024[2024] HKDC 1578
DCCJ5696/2018
A A
B B
DCCJ 5696/2018
C [2024] HKDC 1578 C
D D
IN THE DISTRICT COURT OF THE
E HONG KONG SPECIAL ADMINISTRATIVE REGION E
CIVIL ACTION NO 5696 OF 2018
F F
G ------------------------------ G
BETWEEN
H H
HENLEY ENGINEERS LIMITED Plaintiff
I I
and
J JEBSEN & JESSEN Defendant J
TECHNOLOGY(S) PTE LIMITED
K K
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L L
M Before: Deputy District Judge Patrick Siu in Court M
Dates of Trial: 14-16, 19-20 & 22 August 2024
N N
Date of Judgment: 27 September 2024
O O
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P P
JUDGMENT
Q ------------------------------ Q
R R
S S
T T
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Introduction
C C
1. The Defendant conducts a business of providing turnkey
D D
solutions to its customers, and its industrial services division is engaged in
E the supply, installation, testing and commissioning of equipment or E
solutions to customers covering railway maintenance and aerospace
F F
projects.
G G
2. The Defendant has appointed the Plaintiff as the manpower
H H
contractor for a project of the MTR Corporation Ltd (“MTR”) known as
I “Express Rail Link, Contract 860A – Depot Equipment for Shek Kong I
Stabling Sidings – Train Wash” (“MTR Project”).
J J
K 3. In this action, the Plaintiff claims against the Defendant the K
sums allegedly due under four unsettled invoices issued for the MTR
L L
Project. At the end of the trial I reserved judgment, which I now hand
M down. M
N N
Background
O O
4. Mr Nelson Wong is the general manager and the sole
P P
shareholder and director of the Plaintiff, a company incorporated in Hong
Q Q
Kong. Mr Wong started the business of the Plaintiff in 2005, and since
R
then the Plaintiff has been engaged in the business of provision of multi- R
disciplined engineering services and products.
S S
T
5. The Defendant is incorporated in Singapore. It operates T
under the parent company Jebsen & Jessen SEA, which is part of a global
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family enterprise originated from a trading partnership formed in Hong
C Kong in 1895. The Defendant has various divisions including industrial C
services, offshore and marine cables, pumps, scientific and turf and
D D
irrigation.
E E
6. Mr Chee Min Lick is the regional director of the industrial
F F
services division of the Defendant. Mr Chee first came to know Mr Wong
G of the Plaintiff in around 2007, when the Defendant engaged the Plaintiff G
as a subcontractor in an aerospace project for Hong Kong Aero Engine
H H
Services Ltd (“HAESL Project”). The HAESL Project commenced in
I around 2007 and various sub-contractors including the Plaintiff were I
engaged. The Plaintiff’s role was to provide the necessary manpower and
J J
engineering services and materials as ordered by the Defendant.
K According to an internal document which the Defendant could retrieve, K
between March 2010 and February 2011, the Defendant issued around 27
L L
purchase orders to the Plaintiff.
M M
7. Subsequent to the HAESL Project, the Defendant has also
N N
engaged the Plaintiff in some other smaller projects as a subcontractor,
O before the Defendant engaged the Plaintiff as a subcontractor for the MTR O
Project in 2015.
P P
Q
8. In around 2012, the Defendant’s tender for the MTR Project Q
R
was accepted by MTR. Under the main contract between them, the R
Defendant was to provide certain electrical and mechanical engineering
S S
works for the MTR’s depot in Shek Kong, Hong Kong and the contract
T
sum payable to the Defendant was around HK$19.68 million. T
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9. The date of commencement of the electrical and mechanical
C works was 19 March 2012. Mr Chee as the general manager of the C
industrial services division back then was responsible for overseeing the
D D
operations of all railway projects in the entire South East Asia region.
E The day-to-day operations of the MTR Project were carried out by Mr E
Chee’s subordinates, namely Mr Alan Koh and Mr Ong Ming Ming, who
F F
were project engineers reporting directly to the project manager Mr Darrell
G Ang. G
H H
10. According to Mr Chee, Mr Ang was responsible for handling
I matters relating to the contractual and commercial arrangement between I
MTR and the Defendant, and it was the project managers Mr Koh and Mr
J J
Ong who would liaise with the subcontractors and verify the time sheets
K and invoices submitted by them. K
L L
11. By a letter dated 5 January 2015 (“Appointment Letter”), the
M Defendant appointed the Plaintiff as the manpower contractor for the MTR M
Project, and the Appointment Letter stated the following:-
N N
O “Jebsen & Jessen Technology(s) Pte Ltd would appoint Henley O
Engineers Limited to be the manpower contractor for Express
Rail Link Contract 860A Depot Equipment for Shek Kong
P P
Stabling Sidings – Train Wash Plant with effect from 5 Jan 2015.
Q Please also find enclosed Terms and Conditions that would be Q
attached to all purchase orders from Jebsen & Jessen
Technology(s) Pte Ltd.”
R R
S 12. There is an appendix to the Appointment Letter setting out the S
scope of works for the Plaintiff as the manpower contractor. In sum, the
T T
Plaintiff shall supply manpower to assist the Defendant in the installation
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of, among others, rails, metal poles, auxiliary systems, water pipes,
C pneumatic pipes and electric cables in the train wash plant. C
D D
13. The terms and conditions mentioned in the Appointment
E Letter contain 10 terms of purchase (“Terms and Conditions”). Of E
relevance to this case are clauses 1, 2 and 10 therein, which provide as
F F
follows:-
G G
“1. Applicable Terms: The terms and conditions set out
H hereunder shall apply to all purchases contracted by Buyer H
whether or not expressly referred to in other documents of
purchase, sale, invoices or delivery notes issued by Seller or
I Buyer. Seller’s terms of sale shall expressly accepted (sic) by I
Buyer in writing. II (sic) be applicable only to the extent that
J they have been The (sic) unconditional acceptance of goods or J
services or the making of payments shall not constitute a
recognition by Buyer or any terms deviating from Buyer’s terms
K of purchase. K
L
2. Binding Contract: Buyer’s written order shall constitute L
the binding contract concerning the goods or services purchased
hereunder.
M M
…
N N
10. Validity of Contract: In case individual terms of this
contract should be modified, replaced or become partly or
O wholly invalid by mutual consent of Seller and Buyer, all other O
terms shall remain in force and the contract shall be deemed
amended accordingly. In case individual terms of this contract
P should be modified, replaced or become partly or wholly invalid P
due to any governmental law, regulation, order oraction (sic),
Q Seller and Buyer shall forthwith try to find an equitable valid Q
replacement for the term thus changed or invalidated. If no
mutual consent concerning suchreplacement (sic) can be
R reached, Buyer shall have the option to either accept thechanged R
(sic) term or the invalidation of thereof (sic) and thereby keep
the thus amended contract in force or terminate this contract by
S S
written notice to Seller.”
T T
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14. Not long after being appointed as the Defendant’s manpower
C contractor, the Plaintiff submitted the following four invoices to the C
Defendant, who settled them in full on or around 12 February 2015:-
D D
E (1) Invoice number 90815 dated 2 February 2015, relating E
to the provision of labour for the period from 6 January
F F
2015 to 31 January 2015 in the total sum of
G HK$324,560. G
H H
(2) Invoice number 90816 dated 2 February 2015, relating
I to the provision of materials and engineering service for I
the period from 6 January 2015 to 31 January 2015 in
J J
the total sum of HK$102,865.09.
K K
(3) Invoice number 90818 dated 9 February 2015, relating
L L
to the provision of materials and engineering service in
M the total sum of HK$57,203.30. M
N N
(4) Invoice number 90819 dated 9 February 2015, relating
O to the provision of materials and fabrication service in O
the total sum of HK$50,150.
P P
Q Q
15. The present dispute relates to four other invoices all dated 30
R
August 2018 with the following details (“Subject Invoices”):- R
S S
(1) Invoice number 91111, relating to the provision of
T
labour for the period from 1 February 2015 to 15 T
August 2015 in the total sum of HK$1,860,427.50.
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A A
B B
C (2) Invoice number 91112, relating to the provision of C
materials and engineering service from February to
D D
August 2015 in the total sum of HK$160,721.03.
E E
(3) Invoice number 91113, relating to the provision of
F F
materials and engineering service from February to
G April 2015 in the total sum of HK$24,778.48. G
H H
(4) Invoice number 91114, relating to the provision of an
I engineer to attend a training course in March 2015 and I
the design of three items carried out from May to
J J
August 2015, namely air tubing shield cover,
K submersible pump installation at pretreatment K
underground tanks and servicing platform for train
L L
wash equipment in the total sum of HK$39,500.
M M
16. The Subject Invoices were submitted in the following
N N
circumstances:-
O O
(1) On 6 April 2018, Mr Nelson Wong issued an email to
P P
Mr Darrell Ang to ask about the status of the MTR
Q Q
Project. Mr Wong stated that the Plaintiff was
R
conducting a finance audit and would have to close the R
job file for the MTR Project, so the Plaintiff would
S S
submit outstanding invoices by mid May 2018.
T T
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(2) On 13 April 2018, Mr Ang informed Mr Wong that the
C Defendant had already closed off the accounts for the C
MTR Project, and he had no recollection that there was
D D
outstanding scope of work. He asked Mr Wong to
E advise him on the amount of the outstanding invoice E
and the scope of work covered by the invoice.
F F
G (3) Mr Wong replied on the same day, saying that the G
details of those labour and materials of which invoice
H H
had not been issued should have been recorded by the
I Defendant’s site supervisor. The Plaintiff would have I
to review its account records to determine the
J J
outstanding sum payable, and the Plaintiff would
K provide the details later. K
L L
(4) On 30 August 2018, the Plaintiff’s finance director Ms
M Amy Tsang told Mr Ang that the Plaintiff had finalized M
the account for the MTR Project and she sent the
N N
Subject Invoices to Mr Ang.
O O
17. Mr Wong purportedly explained that the Subject Invoices
P P
were submitted only in 2018 because he had been busy in the relevant
Q Q
period. I am wholly unconvinced by this explanation, but as will become
R
clear, the reason for the late submission is not important. The crux is R
whether the Plaintiff has actually provided the manpower, materials and
S S
services, and whether the Plaintiff would lose its entitlement to payment
T
because of its lateness regardless of the reason for such lateness. T
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B B
Issues in Dispute
C C
18. The Plaintiff’s case as pleaded in its Re-Amended Statement
D D
of Claim is simply about outstanding payment under the Subject Invoices
E or alternatively quantum meruit if there is no contract between the parties. E
It is thus more instructive to discern the various lines of defence pleaded
F F
by the Defendant to determine the real issues in dispute that this Court has
G to resolve. G
H H
19. In its Re-Amended Defence, the Defendant apparently
I contends that there was no contract between the parties regarding the I
Subject Invoices. The relevant pleas are as follows:-
J J
K (1) While the Appointment Letter itself did not give rise to K
any contractual relationship between the parties and
L L
was not a purchase order, it provided that the Defendant
M would issue purchase orders to the Plaintiff in the future M
in accordance with the Terms and Conditions, and
N N
clause 1 therein provided that any terms of sale by the
O Plaintiff shall be expressly accepted by the Defendant O
in writing.
P P
Q Q
(2) The Defendant admitted that the Subject Invoices were
R
first issued by the Plaintiff in August 2018, but it R
averred that no purchase orders had been issued by the
S S
Defendant for the services stated in those invoices, and
T
the terms of sale by the Plaintiff had not been expressly T
accepted by the Defendant in writing.
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A A
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C 20. Further, the Defendant argues that the Defendant is not C
entitled to payment of the Subject Invoices as it is in breach of the parties’
D D
agreed basis and/or an implied term in relation to the Plaintiff’s provision
E of engineering services. The agreed basis / implied term as suggested by E
the Defendant operates as follows (to be referred to as “Agreed Basis” and
F F
“Implied Term” below respectively):-
G G
(1) The Plaintiff is under an obligation to submit its
H H
invoices together with the timesheets and other
I documentary proof to the Defendant’s project manager I
for verification within a reasonable time after the
J J
relevant completion of works and in any event before
K the conclusion of the relevant project, failing which the K
Plaintiff is barred from seeking payments from the
L L
Defendant.
M M
(2) Any benefit conferred by the Plaintiff to the Defendant
N N
would only be paid for when there was a fair and
O reasonable opportunity for the Defendant to verify the O
existence and extent of such benefit.
P P
Q Q
21. The Defendant did not positively deny that the Plaintiff
R
provided the labour, materials or services under the Subject Invoices, save R
that in relation to invoice number 91111, the Defendant avers that the
S S
Plaintiff has failed to duly and properly provide the purported cable pulling
T
works. T
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A A
B B
22. In light of the defence raised by the Defendant, and drawing
C reference from the joint statement of issues in dispute filed by the parties, C
I consider that there are the following issues to be determined:-
D D
E (1) Was there a contractual relationship between the E
Plaintiff and the Defendant in relation to the Subject
F F
Invoices, and if yes, has the Plaintiff performed its
G contractual obligations? G
H H
(2) If there is no contract between the Plaintiff and the
I Defendant in relation to the Subject Invoices, but the I
Plaintiff has provided the labour, materials and
J J
services, is the Plaintiff entitled to be paid on the basis
K of quantum meruit? K
L L
(3) Were there the Agreed Basis and/or Implied Term, and
M if yes, how is the Plaintiff’s claim affected? M
N N
Issue (1) – Contractual Relationship between the Parties
O O
23. To recapitulate, the Defendant’s case is that it has not issued
P P
written orders for the for the services stated in the Subject Invoices, and in
Q Q
any event the terms of sale by the Plaintiff had not been expressly accepted
R
by the Defendant in writing. As the formality requirement under the R
Terms and Conditions have not been complied with, there is no contract in
S S
relation to the Subject Invoices.
T T
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A A
B B
24. The Plaintiff contends that it has never been the intention of
C the parties that the Terms and Conditions would have to be strictly C
followed. Rather:-
D D
E (1) The Defendant would agree with the Plaintiff on the E
unit rates for the supply of labour by email or orally.
F F
Based on the agreed rates, the Defendant would
G through its representatives in Hong Kong, Mr Alan Koh G
and Mr Ong Ming Ming, submit orders for manpower
H H
services to the Plaintiff, who would then arrange for the
I required manpower. I
J J
(2) For the procurement of materials, the Plaintiff would
K submit quotations to Mr Koh and Mr Ong for their K
comments and approval before proceeding with
L L
procuring the requisite materials.
M M
(3) The Defendant would also ask for design and technical
N N
solutions from the Plaintiff, who would provide the
O solutions accordingly. O
P P
25. The first point I note is that on the Defendant’s own pleas, the
Q Q
Appointment Letter itself is not a contract, so the terms therein do not bind
R
the parties. Further, in the Appointment Letter, the Defendant merely R
stated that the Terms and Conditions would be attached to all its purchase
S S
orders. The Defendant was not saying that the Terms and Conditions
T
would be applicable to all its future orders. The distinction is important T
and the effect is that if the Defendant chooses to attach the Terms and
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Conditions to its purchase orders, then the formality requirement may
C apply and there may not be a binding contract without the Defendant C
making its order in writing and accepting the Plaintiff’s terms in writing.
D D
However, the Defendant is not precluded from choosing not to attach the
E Terms and Conditions to its orders, such that the parties may enter into E
contracts less formally, which is understandable given the nature of the
F F
work – the Defendant may require manpower or materials in short notice
G and there could be frequent variations. G
H H
26. In any event, I accept the Plaintiff’s contention that the
I Appointment Letter was just for the Defendant’s onward submission to I
MTR to fulfil the latter’s requirement, and that the Plaintiff and the
J J
Defendant never intended to have their relationship governed by the Terms
K and Conditions:- K
L L
(1) While the Appointment Letter was dated 5 January
M 2015, Mr Nelson Wong sent the signed version of it M
signifying the Plaintiff’s agreement to the scope of
N N
works to Mr Alan Koh only by email on 27 April 2015.
O Prior to that day, the Plaintiff has already submitted O
four invoices to the Defendant. As noted above, those
P P
four invoices related to the provision of labour,
Q Q
materials and engineering services, and the Defendant
R
has promptly settled those invoices. It is clear that the R
parties were content with dealing with each other
S S
without regard to the Terms and Conditions.
T T
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A A
B B
(2) For the four settled and undisputed invoices, Mr
C Wong’s evidence is that the Defendant made its orders C
without following the Terms and Conditions. Mr
D D
Chee, the only factual witness for the Defendant, did
E not suggest otherwise. E
F F
27. In the premises, whether the parties complied with clause 1 or
G clause 2 of the Terms and Conditions is not relevant to the question of G
whether there is a contractual relationship between them. The pertinent
H H
question, rather, is whether the Plaintiff has by words or conduct offered
I to provide the manpower or materials, and whether the Defendant has by I
words or conduct accepted the offer, thereby giving rise to a binding
J J
contractual relationship. To answer this question, I would have to analyse
K the parties’ correspondence regarding the manpower or materials K
requirements under the Subject Invoices.
L L
M 28. If there is a contract, I would then have to determine if the M
Plaintiff has discharged its burden in proving that it has performed its
N N
contractual obligations, since the Defendant has put the Plaintiff to proof
O (save for the cable pull work labour under invoice number 91111, to which O
the Defendant has put forward a positive defence).
P P
Q Q
Invoice number 91111
R R
29. Invoice number 91111 relates to the provision of 10 kinds of
S S
manpower by the Plaintiff with details as follows:-
T T
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Item Description Quantity Rate Amount
C (man-day) (HK$) (HK$) C
1 Mechanical work 54 2,700 145,800
D D
supervisor
E E
2 Mechanical worker 74 2,390 176,860
F F
3 Pipework supervisor 52 2,620 136,240
G G
4 Pipe welder 49 2,390 117,110
H H
5 Pipe worker 7 2,120 14,840
I I
6 Electrical work supervisor 72 3,125 225,000
J J
7 Electrician 169.5 2,625 444,937.50
K K
8 Electrical worker 0 2,000 0
L L
(general)
M M
9 Cable pull work 33 2,730 90,090
N supervisor N
O 10 Cable pull work electrical 237 2,150 509,550 O
worker
P P
Total: 1,860,427.50
Q Q
R 30. The Plaintiff first submitted to the Defendant by email its R
quotation of the rates of the various kinds of manpower on 16 December
S S
2014. On 23 December 2014, the Plaintiff submitted a revised quotation
T to the Defendant with the unit rates of items 1 to 8 (ie manpower other than T
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the two kinds of cable pull work labour), which correspond to the rates
C stated in invoice number 91111. C
D D
31. According to the unchallenged evidence of Mr Wong:-
E E
(1) Mr Ong Ming Ming of the Defendant orally accepted
F F
the aforesaid unit rates, which is corroborated by an
G email from Mr Ong dated 23 December 2014. It is G
also notable that the same rates were adopted for
H H
invoice number 90815, which the Defendant has settled
I without dispute, demonstrating the Defendant’s I
acceptance of the unit rates.
J J
K (2) Between 23 December 2014 and 15 August 2015, Mr K
Ong and Mr Koh submitted the Defendant’s orders for
L L
manpower under items 1 to 8 to Mr Wong orally or
M through WhatsApp messages. M
N N
32. With the above evidence, I am satisfied that the Defendant has
O accepted the Plaintiff’s offer of provision of the manpower under items 1 O
to 8 with the specified unit rates as stated in invoice number 91111.
P P
Q Q
33. The Plaintiff has produced the site labour working record for
R
the months of February, March, April, July and August 2015 showing the R
provision of those manpower. Further, the Plaintiff has engaged two
S S
subcontractors for the provision of those labour, namely Kin Tat Engineers
T
Limited and Wing Fat Mechanical Works Limited, and the Plaintiff has T
produced the invoices produced by them (with their unit rates redacted, but
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A A
B B
the redaction does not matter since the rates those subcontractors charged
C the Plaintiff are not relevant to the Defendant). The owner of Kin Tat (Mr C
Lam Chak Cheung) and an employee of Kin Tat (Mr Alex Lee) also
D D
testified to corroborate the Plaintiff’s case, and their evidence was not
E really challenged. I am satisfied that the Plaintiff did provide the E
manpower as stated in the invoice.
F F
G 34. Regarding the cable work pull labour (ie items 9 and 10), the G
Plaintiff submitted its quotation of the unit rates to the Defendant on 27
H H
July 2014, which correspond to the rates shown in the invoice. According
I to the unchallenged evidence of Mr Wong, in July and August 2015, Mr I
Ong and Mr Koh submitted the Defendant’s orders for those two types of
J J
manpower to Mr Wong orally or through WhatsApp messages. It is clear
K that the Defendant has accepted the Plaintiff’s offer of provision of the K
cable work pull manpower with the specified unit rates. The Plaintiff has
L L
also called Mr Chan Chung Hin, one of the shareholders of Sun Gleam
M Engineers Limited, to give evidence on Sun Gleam’s provision of cable M
pulling workers to the Plaintiff, who provided the same to the Defendant.
N N
O 35. In its Re-Amended Defence, the Defendant averred that it had O
repeatedly complained to the Plaintiff that the labour provided by the
P P
Plaintiff did not work for the agreed hours causing delay to the works.
Q
Eventually this led to the Defendant’s suspension on 13 August 2015 of Q
R
the Plaintiff’s appointment as the manpower contractor. The Defendant R
thus contends that the Plaintiff has not performed its obligations. Mr
S S
Chee as the witness of the Defendant is not able to substantiate this
T
complaint, as he was not responsible for the day-to-day management of the T
MTR Project.
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A A
B B
C 36. That said, it can be seen from the documents that on 11 August C
2015, Mr Ong told Mr Nelson Wong by email that the workers did not
D D
work for the agreed hours. On 12 August 2015, the Defendant did issue
E a letter to the Plaintiff to complain about the workers’ attitude problem. E
In response, Mr Wong issued an email to Mr Ong on 13 August 2015,
F F
saying that the workers had been giving their best efforts, but they were
G hindered by the limited tools and resources that were made available by the G
Defendant. Mr Wong also pointed out that unsatisfactory workers could
H H
be replaced at the Defendant’s instructions. On the same day, Mr Ong
I responded by saying that changing the workers would produce the same I
result, as the problem was that there was no agreed end date for completing
J J
the cable pulling works. He also seemed to acknowledge that some parts
K of the site might not be ready for the workers, but he said the workers could K
have other contingency plans.
L L
M 37. Having considered the above evidence, I am satisfied that the M
Plaintiff has proven that it provided the cable pull work manpower as
N N
claimed. The core of the Defendant’s complaint, as shown in Mr Ong’s
O emails, is not that the Plaintiff did not provide the workers, but that the O
workers’ work performance was not satisfactory. There is no solid
P P
evidence on the quality of the work performed by those workers, the delay
Q Q
caused by the workers or whether the delay was attributable to the workers
R
or the Defendant. In any event I agree with the Plaintiff that its obligation R
was confined to providing qualified workers to the Defendant, which the
S S
Plaintiff has discharged. The Plaintiff has no obligation to ensure that the
T
workers under the Defendant’s management could complete the work T
within a certain time.
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A A
B B
C Invoice number 91112 C
D D
38. Invoice number 91111 relates to the provision of 14 items of
E materials and service by the Plaintiff with the following details:- E
F F
Item Description Amount
G (HK$) G
H 1 HDG steel cable tray 8,482.30 H
I 2 5 ton crawler crane 22,300 I
J 3 Aluminum enclosure 8,580.05 J
K 4 1.5mm SS304 mount plate 480 K
L 5 HDG steel cable tray 18,344.30 L
M 6 CCG cable glands 14,631 M
N 7 SWL 1000kg mobile “A” frame 20,000 N
O 8 “Furse” copper earthing conductor tape 37,650 O
P 9 “TIBOX” stainless steel 5,217.27 P
Q 10 HDG steel cable tray 2,541 Q
R 11 HDG steel cable trunking 19.60 R
S 12 Load test and examination of portable gantry 1,500 S
T 13 HDG steel cable trunking 11.90 T
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A A
B B
Item Description Amount
C (HK$) C
14 Engineering service charge 20,963.61
D D
E
Total: 160,721.03 E
F F
39. The liaison between the parties relating to the aforesaid 14
G items can be summarised below with reference to the unchallenged G
evidence of Mr Nelson Wong:-
H H
I (1) Item 1: In February 2015, Mr Koh was informed by the I
site supervisors that steel cable trays would be required.
J J
The Plaintiff was then asked to purchase them for the
K Defendant, and it did so at the approved rates. K
L L
(2) Item 2: In February 2015, Mr Koh was directly liaising
M with Kanson Crance & Heavy Transport Co Ltd for the M
hiring of crawler cranes, and Mr Koh designated the
N N
Plaintiff as its Hong Kong representative. On 26
O February 2015, the Plaintiff sent Kanson’s invoice to O
the Defendant. On 26 and 27 February 2015, the
P P
Plaintiff confirmed with Mr Koh that the cranes would
Q be available for use at the revised dates as per the Q
Defendant’s request. On 14 March 2015, Mr Ong
R R
instructed that the cranes would be deployed on some
S later dates. The procurement costs were HK$22,300 S
T
as shown in Kanson’s invoice, which the Plaintiff did T
settle.
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A A
B B
C (3) Item 3: On 28 February 2015, Mr Koh sought the C
Plaintiff’s quotations for various materials, which the
D D
Plaintiff provided on 5 March 2015. On 5 March
E 2015, Mr Koh accepted the quotations by telephone. E
The Plaintiff proceeded with the purchase on 12 March
F F
2015 and settled the invoice in the sum of
G HK$8,580.05. G
H H
(4) Item 4: On 5 March 2015, Mr Koh requested mount
I plate for aluminum enclosure mounting, and I
subsequently Mr Wong gave him an oral quotation,
J J
which Mr Koh accepted. At the Defendant’s
K instruction, the Plaintiff purchased the item on 17 K
March 2015 and settled the invoice in the sum of
L L
HK$480.
M M
(5) Item 5: In March 2015, the site supervisors requested
N N
and the Defendant agreed that the Plaintiff should
O purchase additional steel cable trays. The Plaintiff’s O
draft purchase order dated 14 March 2015 was accepted
P P
by the Defendant on 27 March 2015. On 28 March
Q Q
2015, the Defendant made some variations to the
R
purchase order and asked the Plaintiff to proceed with R
the revised purchase order. The Plaintiff executed the
S S
purchase order and settled the invoice in the sum of
T
HK$18,344.30. T
U U
V V
- 22 -
A A
B B
(6) Item 6: By various emails dated 28 February, 29 May
C and 4 June 2015, Mr Koh asked the Plaintiff to C
purchase cable glands. On 23 July 2015, Mr Wong
D D
submitted a quotation through WhatsApp, which was
E accepted by Mr Koh. The Plaintiff proceeded with the E
purchase and settled the invoice in the sum of
F F
HK$14,631.
G G
(7) Items 7 and 12: On 11 July 2015, Mr Koh requested the
H H
Plaintiff to purchase an A-frame. On 12 July 2015,
I Mr Wong provided a quotation to Mr Koh on phone, I
and Mr Koh accepted it. On 23 July 2015, the
J J
Plaintiff arranged for the delivery of the A-frame, and
K it settled the invoice in the sum of HK$20,000. The K
Plaintiff also procured the incidental test and
L L
examination service in order to comply with the
M statutory requirement, and the Plaintiff settled the M
invoice in the sum of HK$1,500.
N N
O (8) Item 8: On 4 June 2015, Mr Koh asked Mr Wong to O
buy a list of things, including item 8. On 31 July
P P
2015, Mr Wong submitted a quotation by email, which
Q Q
was accepted by Mr Koh by email on 4 August 2015.
R
Later that day, Mr Koh changed the quantities required R
and asked the Plaintiff to proceed. The Plaintiff did
S S
procure the materials and settled the invoice in the sum
T
of HK$37,650. T
U U
V V
- 23 -
A A
B B
(9) Item 9: In July 2015, the site supervisors and workers
C asked the Defendant to purchase additional steel C
enclosure. On 23 July 2015, the Plaintiff submitted a
D D
quotation by email, which was accepted by Mr Ong by
E email on 27 July 2015. Subsequently, on 5 August E
2015, the Plaintiff asked the Defendant to choose the
F F
materials among the available options, which Mr Ong
G did on the same day. The Plaintiff procured the G
materials and settled the invoice in the sum of
H H
HK$5,217.27.
I I
(10) Items 10, 11 and 13: On 23 July 2015, the Plaintiff
J J
relayed the workers’ request for additional purchases to
K the Defendant, and Mr Ong asked the Plaintiff to go K
ahead with the purchases. The Plaintiff bought those
L L
materials and settled the three invoices in the respective
M sum of HK$2,541, HK$19.6 and HK$11.90 M
respectively.
N N
O (11) Item 14: In the Plaintiff’s quotations for manpower O
provision (see paragraphs 30 and 34 above), there was
P P
a remark stating that for local purchases of materials,
Q Q
the Plaintiff would charge a 15% service charge. As
R
noted above, the Defendant has accepted the Plaintiff’s R
quotations. Item 14 is the 15% service charge for
S S
items 1 to 13.
T T
U U
V V
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A A
B B
40. The Plaintiff has produced sufficient evidence to substantiate
C the contractual relationship between the parties relating to invoice number C
91112 and the Plaintiff’s performance of its contractual obligations.
D D
E Invoice number 91113 E
F F
41. Invoice number 91113 is concerned with the provision of
G tools and materials and the corresponding service charge:- G
H H
Item Description Amount
I (HK$) I
J 1 Materials, tools and sundry expense 21,546.50 J
K 2 Engineering service charge 3,231.98 K
L Total: 24,778.48 L
M M
42. According to Mr Wong, site supervisors or workers would
N from time to time incur sundry expenses for the purchase of materials and N
tools on behalf of the Defendant with the Defendant’s approvals. The site
O O
supervisors or workers would submit the receipts and invoices to the
P Plaintiff, and the Plaintiff would settle such expenses on the Defendant's P
behalf. The Defendant has paid the Plaintiff similar fees under invoice
Q Q
number 90816.
R R
43. For item 1, the Plaintiff has produced the various invoices and
S S
receipts submitted by the site supervisors or workers. As to item 2, this
T is again the 15% service charge stipulated under the Plaintiff’s quotations T
U U
V V
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A A
B B
which were accepted by the Defendant. I am satisfied that the Plaintiff
C has proved its contractual claims. C
D D
Invoice number 91114
E E
44. Invoice number 91114 contains four items:-
F F
G Item Description Quantity Rate Amount G
(man-day) (HK$) (HK$)
H H
1 Engineer 2 2,000 4,000
I I
2 Design of air tubing shield - - 2,500
J J
cover
K K
3 Design of submersible - - 8,000
L pump installation L
M 4 Design of servicing - - 25,000 M
platform for train wash
N N
equipment
O O
Total: 39,500
P P
45. By an email dated 4 March 2015, Mr Koh directly asked two
Q Q
engineers of the Plaintiff to attend a two-day training course organized by
R MTR in order that they could work as site supervisor for the Defendant. R
Item 1 relates to the fees for one of the engineers who attended the course
S S
on 12 and 13 March 2015 at the Defendant’s instructions.
T T
U U
V V
- 26 -
A A
B B
46. However, while the Plaintiff did provide an engineer to attend
C the course in response to the Defendant’s request, I do not see any evidence C
to the effect that the parties have discussed the fees chargeable by the
D D
Plaintiff for deploying the engineer, let alone agreeing on the fees.
E E
47. Similarly, for items 2 to 4, the parties did not seem to have
F F
discussed the fees that the Plaintiff would charge, even though I accept that
G the Plaintiff carried out design works pursuant to the Defendant’s G
demands:-
H H
I (1) Item 2: On 5 May 2015, Mr Ong requested the Plaintiff I
to provide a drawing of the air tubing shield cover.
J J
The Plaintiff provided the drawing the next day. It
K can be seen from Mr Ong’s email dated 5 August 2015 K
that the Defendant did consider the drawing and was
L L
contemplating to make use of it.
M M
(2) Item 3: On 13 July 2015, Mr Koh instructed the
N N
Plaintiff to provide a design of the submersible pump
O installation. On 31 July 2015 and 4 August 2015, the O
Plaintiff submitted respectively a first sketch and a
P P
revised sketch drawing. While the Plaintiff did
Q Q
submit some quotations on 24 July 2015 relating to the
R
materials to be used on the submersible pump, they are R
not about the design fees.
S S
T
(3) Item 4: On 29 May 2015, Mr Koh instructed the T
Plaintiff to work on the design drawing, and the
U U
V V
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A A
B B
Plaintiff submitted the drawing on 3 August 2015. Mr
C Ong did follow up on the drawing by making enquiries C
through his email dated 5 August 2015.
D D
E 48. Without the parties having discussed and agreed on the fees E
chargeable by the Plaintiff, I cannot say that the Plaintiff and the Defendant
F F
have reached a binding contractual agreement regarding the fees payable
G for the services as listed in invoice number 91114. G
H H
Conclusion
I I
49. I conclude that the Plaintiff and the Defendant have reached
J J
an agreement for the provision of manpower, materials and services as
K listed in the three invoices number 91111, 91112 and 91113. The K
Plaintiff is entitled to claim against the Defendant the agreed fees pursuant
L L
to those three invoices, subject to the Defendant’s defence based on the
M Agreed Basis and Implied Term, which will be addressed below. On the M
other hand, I have come to the view that there is no contractually agreed
N N
sum payable for the provision of manpower and design service as listed in
O invoice number 91114. O
P P
Issue (2) – Quantum Meruit
Q Q
R
50. In its Re-Amended Statement of Claim, the Plaintiff pleaded R
an alternative case if it is held that there is no contract formed between the
S S
Plaintiff and the Defendant. It avers that it would claim against the
T
Defendant the outstanding sums on the basis of quantum meruit as the sums T
represent reasonable fees and costs.
U U
V V
- 28 -
A A
B B
C 51. The following principles relating to quantum meruit are well C
established (see Keating on Construction Contracts (11 Ed) at §§4-031 –
th
D D
4-033):-
E E
(1) The expression quantum meruit means the amount one
F F
deserves or what the job is worth, and in most cases
G denotes a claim for a reasonable sum. It has been G
defined as a restitutionary claim which can be made
H H
where there is no contract. A claim on a quantum
I meruit cannot arise if there is an existing contract I
between the parties to pay an agreed sum.
J J
K (2) Where there is no contract, the correct approach to the K
amount to be paid by way of a quantum meruit is to ask
L L
whether the defendant has been unjustly enriched and
M if so, to what extent. Four questions have to be M
considered: Has the defendant been enriched? Was the
N N
enrichment at the plaintiff’s expense? Was the
O enrichment unjust? Are there any defences available to O
the defendant?
P P
Q Q
(3) If there is a contract between the parties but the amount
R
of payment is not spelled out, the law will normally R
imply a term into the agreement that the remuneration
S S
will be reasonable in all the circumstances. If a
T
contractor does work under a contract and no price is T
fixed by the contract, it is entitled to be paid a
U U
V V
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A A
B B
reasonable sum for its labour and the materials supplied
C pursuant to an implied term. C
D D
52. For invoice number 91114, the scenario is akin to the parties
E having reached a contract which nevertheless does not spell out the amount E
of payment, such that the law will imply a term of reasonable remuneration.
F F
I see no reason why the Defendant should not be liable to pay the
G reasonable fees and costs to the Plaintiff for those services, after having G
instructed the Plaintiff to provide those services.
H H
I 53. Indeed, Mr Tommy Cheung, counsel for the Defendant, has I
in all fairness not suggested that the Plaintiff should be denied reasonable
J J
remuneration if the Plaintiff can prove that it has provided the services
K (subject to his arguments on the Agreed Basis and Implied Term). His K
focus insofar as invoice number 91114 is concerned, rather, is on the
L L
quantum of the reasonable fees and costs.
M M
54. The Plaintiff has produced expert evidence on quantum by
N N
way of a report on quantum compiled by Mr Honby Chan, a registered
O professional surveyor. Mr Chan has given his opinion on the reasonable O
fees and costs for the services, labour and materials provided by the
P P
Plaintiff. Regarding the services and labour provided under invoice
Q Q
number 91114, he has the following opinion:-
R R
(1) He has reviewed the relevant salary survey for
S S
engineers in 2015 and he has decided to use the average
T
engineer’s rates for assessment. He observed that the T
U U
V V
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A A
B B
average rate of an engineer was HK$1,389 per day,
C whereas the rate of a senior engineer was HK$2,170. C
D D
(2) Applying the above rates, he considered that the
E reasonable fees for item 1 of the invoice should be E
HK$2,778 (ie engaging an engineer for two days to
F F
attend a course).
G G
(3) For items 2 to 4 of the invoice, he opined that the
H H
reasonable man-day required for the design work
I would be one, three and 10 respectively, and that it I
would be appropriate to engage a senior engineer to
J J
carry out the design work. Therefore, the reasonable
K fees for the three items are HK$2,170, HK$6,510 and K
HK$21,700 respectively.
L L
M (4) Taking into account the 15% service charge, the total M
sum of the reasonable fees payable for invoice number
N N
91114 would be HK$38,131.70.
O O
55. The Defendant has not adduced expert evidence on quantum.
P P
Mr Cheung for the Defendant has made two general criticisms of Mr
Q
Chan’s expert report:- Q
R R
(1) Mr Chan should have taken the initiative to look into
S S
the relevance and impact of the dispute between the
T
Plaintiff and the Defendant over the Plaintiff’s T
U U
V V
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A A
B B
performance of the cable pulling works, with a view to
C making downward adjustments of the quantum meruit. C
D D
(2) Where the Plaintiff has engaged subcontractors but has
E not disclosed the fees charged by those subcontractors, E
Mr Chan should have obtained external data and
F F
statistics to independently and impartially assess the
G quantum of a reasonable sum. G
H H
56. These criticisms are not relevant to Mr Chan’s opinion on the
I reasonable fees payable for invoice number 91114. After all, those I
services are not related to the cable pulling works, and Mr Chan did obtain
J J
independent and objective data in assessing the reasonable fees. In the
K circumstances, I would hold that the Plaintiff is entitled to claim against K
the Defendant HK$38,131.70 as the reasonable fees for that invoice.
L L
M 57. As noted above, I find that there are contractually agreed fees M
payable for those labour, materials and services provided by the Plaintiff
N N
as listed in invoices number 91111, 91112 and 91113, so it is not necessary
O for me to assess the quantum meruit for those items. For the sake of O
completeness, I would record that the Defendant has not adduced any
P P
evidence to rebut the opinion of Mr Honby Chan, and has not suggested
Q Q
any alternative figures, other than having made the two general criticisms
R
as summarized in paragraph 55 above. Insofar as it had been necessary R
for me to assess the quantum meruit, I would have adopted the figures
S S
proposed by Mr Chan for the three other invoices as well.
T T
U U
V V
- 32 -
A A
B B
Issue (3) – Agreed Basis / Implied Term
C C
58. I have set out in paragraph 20 above the content of the
D D
Defendant’s alleged Agreed Basis and/or Implied Term. On the
E Defendant’s pleaded case, the Agreed Basis / Implied Term were E
necessary, of a nature that goes without saying and/or needed to give effect
F F
to business efficacy of the relationship between the Plaintiff and the
G Defendant in view of the following circumstances:- G
H H
(1) It was in line with the common practice and standard of
I the construction industry in Hong Kong. I
J J
(2) The payer, who commonly engages a number of
K contractors to work in a project, would have to verify K
the quantum, quality and other aspects of any works
L L
and services said to be delivered before payment can be
M fairly and accurately made. M
N N
(3) The payee, who commonly has to pay its other workers
O would also have its best interests served when a request O
for payment with full supporting evidence is made
P P
within a reasonable time.
Q Q
R
(4) The payer, who commonly has to source the funds from R
its own superior contractor or others would have to
S S
prepare proper documentation and/or rolling budget for
T
financing purposes, and submissions made after the T
lapse of a reasonable time would render such
U U
V V
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A A
B B
preparation impracticable, infeasible and/or financially
C impossible. C
D D
(5) The nature of a project in the construction industry is
E usually that subsequent works and services would E
easily remove, replace, modify and/or adjust the works
F F
and/or services previously delivered, unless there is
G timely documentary record on those works and services G
delivered for further project planning and giving of
H H
instructions to other contractors.
I I
(6) The payer, who commonly has to comply with
J J
budgetary restraints imposed for a project, may be in
K breach of contract(s) between the payer and other third K
parties if a payment request by any payee is not
L L
reflected timely on the rolling budget but is made only
M after the lapse of a reasonable time. M
N N
(7) The payer and its agent (such as its project engineer)
O would require the timely submissions of a request for O
payment for the purposes of properly conducting the
P P
necessary verifications and/or managing the project in
Q Q
question.
R R
(8) The payer and its agent (such as its project engineer)
S S
would require the timely submissions of a request for
T
payment for the purposes of properly discharging his T
duties.
U U
V V
- 34 -
A A
B B
C (9) The payee would only be fairly given an opportunity to C
dispute the payer’s checks and/or verifications of any
D D
works and/or services said to be done by the payee
E when the request for payment is made within a E
reasonable time.
F F
G (10) Both the payee and the payer require a fair and G
reasonable opportunity to document their financial
H H
and/or business dealings in a timely manner just in case
I there is any construction dispute between them in the I
future, which is common in a construction project in
J J
Hong Kong.
K K
59. It may be noted from the above that the Defendant has not
L L
really distinguished between the Agreed Basis and the Implied Term.
M However, by “agreed basis” the Defendant is necessarily saying that the M
parties have expressly agreed by words or by conduct that the Plaintiff must
N N
submit its invoices together with the supporting documents within a
O reasonable time, otherwise it would not have been necessary for the O
Defendant to also rely on the doctrine of implied terms.
P P
Q Q
60. Insofar as express agreement is concerned, there can be no
R
dispute that the Agreed Basis is not mentioned in the Appointment Letter, R
Terms and Conditions or any of the parties’ written correspondence. The
S S
Defendant has also not suggested that there was any oral discussion
T
relating to the Agreed Basis. The only relevant evidence that I can see is T
Mr Chee’s saying that the Defendant paid the Plaintiff in accordance with
U U
V V
- 35 -
A A
B B
the Agreed Basis for the HAESL Project and the four settled invoices for
C the MTR Project. C
D D
61. Nevertheless, Mr Chee’s evidence can go only so far as to
E establish that the Plaintiff used to submit its invoices and the supporting E
documents timely and regularly. There was in the past no incident where
F F
the Plaintiff submitted its invoice after a considerable lapse of time, such
G that this Court can discern what the consequences would be if the Plaintiff G
did not submit its invoice timely. Taken to the highest, Mr Chee’s
H H
evidence can at best show that there was an agreement between the parties
I for the Plaintiff to submit the invoices and supporting documents within a I
reasonable time, but there is no evidence substantiating the Defendant’s
J J
case that there was an agreement that the Plaintiff would be debarred from
K claiming the fees if it submits the invoices late. K
L L
62. Coming back to the Defendant’s case on implied terms, it may
M be noted from the pleadings that while the Defendant contends that the M
Implied Term is necessary, it argues at the same time that the Implied Term
N N
is necessary because it is in line with the trade practice in Hong Kong.
O The Defendant has conflated the two doctrines of implied terms, but the O
tests for implying terms by virtue of necessity and by virtue of trade
P P
practice are different. In light of the pleadings, I can only take the
Q Q
Defendant to mean that it is relying on both doctrines.
R R
63. For implication of terms from usage or custom, the general
S S
principles are as follows (see Chitty on Contracts (35th Ed) at §17-036;
T
McMeel on the Construction of Contracts (3rd Ed) at §12.11):- T
U U
V V
- 36 -
A A
B B
(1) If there is an invariable, certain and general usage or
C custom of any particular trade or place, the law will C
imply on the part of one who contracts or employs
D D
another to contract for him upon a matter to which such
E usage or custom has reference a promise for the benefit E
of the other party in conformity with such usage or
F F
custom, provided there is no inconsistency between the
G usage and the terms of the contract. G
H H
(2) To be binding, the usage must be notorious, certain and
I reasonable, and it must also be something more than a I
mere trade practice. When such usage is proved, it
J J
will form the basis of the contract between the parties
K and their respective rights and liabilities are precisely K
the same as if without any usage they had entered into
L L
a special agreement to the like effect.
M M
(3) The usages are incorporated on the assumption that the
N N
parties did not mean to express in writing the whole of
O the contract by which they intended to be bound, but a O
contract with reference to those known usages, or on
P P
the ground that the courts are spelling out what both
Q Q
parties know and would unhesitatingly agree to be part
R
of the bargain. R
S S
(4) Even in cases where the party alleged to be liable upon
T
an implied promise, arising solely from the established T
usage of a particular trade, is not shown to have been
U U
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A A
B B
cognisant of the usage, he can still be held to be liable
C by virtue of it on the basis that a person who deals in a C
particular market must be taken to deal according to the
D D
custom of that market.
E E
64. Both the Plaintiff and the Defendant have adduced expert
F F
evidence on these questions concerning trade practice (reflecting the
G content of the Implied Term as alleged by the Defendant):- G
H H
(1) In the construction industry in Hong Kong, in the
I context of provision of manpower and/or electrical I
and/or engineering services by a sub-contractor to a
J J
main contractor, is there any trade custom or common
K practice that the sub-contractor shall submit its invoices K
together with relevant timesheet (for manpower
L L
services) and/or documentary proof to the main
M contractor for verification within a reasonable time M
after the relevant completion of works and/or services
N N
and in any event before the conclusion of the relevant
O project? O
P P
(2) If so, what is the reasonable time? Further or
Q Q
alternatively, how is a reasonable time determined?
R R
(3) If so, what are the usual consequences of non-
S S
compliance with the said trade custom or common
T
practice? T
U U
V V
- 38 -
A A
B B
65. The Defendant has called Mr Ricky Chan, a registered
C professional surveyor, a chartered quantity surveyor and a chartered C
builder, as its expert. Mr Ricky Chan’s evidence can be summarized as
D D
follows:-
E E
Question 1
F F
G (1) Various standard forms used in the construction G
industry (including the Standard Form of Building
H H
Contracts (“SFBC”) published by the Hong Kong
I Institute of Architects / the Hong Kong Institute of I
Construction Managers / the Hong Kong Institute of
J J
Surveyors, the General Conditions of Contract
K published by the Hong Kong government, and the K
Standard Form of Domestic Sub-Contract published by
L L
the Hong Kong Construction Association Ltd (“HKCA
M Standard Form”) contain express provisions for making M
timely payment applications for products purchased
N N
and services rendered by the main contractor for the
O employer. O
P P
(2) In particular, the SFBC and the HKCA Standard Form
Q Q
have detailed provisions setting out the requirement for
R
the contractor or subcontractor to make a timely R
payment application to the employer or main contractor
S S
and the necessary information required for making
T
payment application. T
U U
V V
- 39 -
A A
B B
(3) Mr Ricky Chan has also referred to a domestic sub-
C contract used by a well-known construction company C
in Hong Kong, which provides that a subcontractor
D D
should make its payment application on a monthly
E basis. E
F F
(4) In the Practice Notes for Quantity Surveyors –
G Valuation for Interim Payment, it was stated that most G
commonly the stipulated interval for interim payments
H H
is one month.
I I
(5) Taking into account the above matters, Mr Ricky
J J
Chan’s conclusion is that timely payment application
K with supporting documents by a subcontractor is a very K
important common practice in the construction
L L
industry. He opines that there is a trade custom or
M common practice that a subcontractor shall submit its M
invoices together with all daily records or attendance
N N
sheets or documentary proof to the main contractor for
O verification within a reasonable time after the relevant O
completion of works and/or services and in any event
P P
before the conclusion of the relevant project.
Q Q
R
Question 2 R
S S
(6) Mr Ricky Chan opines that the main contractor can
T
reasonably and expressly request that payment T
application be made within seven days. In the
U U
V V
- 40 -
A A
B B
absence of such an express request, the reasonable time
C would be one calendar month. C
D D
Question 3
E E
(7) For labour-only subcontracts, the subcontractors would
F F
be paid for their works and services if payment
G application with supporting document is made timely. G
A slight delay beyond the reasonable time shall not
H H
mean that the subcontractor is automatically not
I entitled to payment for its works. I
J J
(8) However, if the delay is serious, eg beyond three
K months after the completion of the subcontractor’s K
work or beyond six months if a very lenient approach
L L
is adopted, the subcontractor is not entitled to payment.
M The rationale is that it is impracticable for the main M
contractor to verify the works of the labour-only
N N
subcontractor after six months.
O O
66. The Plaintiff’s expert, Mr Honby Chan, has given the
P P
following opinion on the three questions:-
Q Q
R
(1) In context of provision of manpower, electrical services R
or engineering services by a subcontractor to a main
S S
contractor, unless the contract clearly specifies the time
T
limit, there is no trade custom or common practice that T
the subcontractor shall submit its invoices together with
U U
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- 41 -
A A
B B
underlying documents for verification within a
C reasonable time after the completion of works and/or C
services and in any event before the conclusion of the
D D
relevant project.
E E
(2) In light of his opinion on question 1, questions 2 and 3
F F
do not arise. He supplements that he has handled
G hundreds of final accounts including main contract G
final accounts and subcontract final accounts. It is
H H
common that many final accounts are settled some
I years (in some cases, over 10 years) after the practical I
completion of the projects.
J J
K 67. I have no problem with accepting the proposition that it is a K
good practice for a subcontractor to submit its payment application with
L L
supporting documents within a month, especially considering the mode of
M operation between contractors and subcontractors and Mr Ricky Chan’s M
meticulous references to the various standard contracts commonly used in
N N
the construction industry. However, I have difficulties in accepting that
O it constitutes a trade practice:- O
P P
(1) If there were such a notorious trade practice, one would
Q Q
expect the Defendant to mention it or at least make
R
reference to it in its Terms and Conditions. R
Nevertheless, even though clause 6 of the Terms and
S S
Conditions is titled “Time of Essence”, it is only about
T
the seller’s obligation to deliver its goods within the T
U U
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- 42 -
A A
B B
agreed time. There is no stipulation as to when the
C Plaintiff should submit its payment application. C
D D
(2) As noted above, the Plaintiff has given two written
E quotations to the Defendant for the provision of E
manpower. The quotations contain a clause on
F F
payment terms (“bi-weekly basis against invoice”),
G which on the face of it means the Defendant has to settle G
the invoice within two weeks. There is however no
H H
provision governing when and how often the Plaintiff
I should issue its invoices. I
J J
(3) The parties’ conduct in this case is also illuminating.
K For instance, on 27 July 2015, Mr Ong from the K
Defendant issued an email to Mr Nelson Wong, asking
L L
the Plaintiff to, among others, provide the outstanding
M invoices from February to April 2015. There was no M
mention of a practice or requirement that the Plaintiff
N N
should have submitted its invoices within one month.
O Quite the contrary, the Defendant was asking for O
invoices from several months ago.
P P
Q Q
68. More importantly, even if there were a trade practice that a
R
subcontractor must submit its invoices and supporting document within R
one month, the more pertinent question is what the consequence is if the
S S
Plaintiff fails to do so. In other words, of the three questions put to the
T
experts, it is question 3 that assumes particular importance. While Mr T
Ricky Chan has supported his answer with his reasons (ie the difficulty in
U U
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A A
B B
verifying the work done after six months), none of the standard contracts
C cited by him contain clauses to the effect that a subcontractor would be C
denied payment if it submits its invoices after six months.
D D
E 69. It may also be noted that Mr Ricky Chan’s opinion that a E
subcontractor would be denied payment if it submits its invoices after a
F F
lapse of six months is inconsistent with his opinion under question 1, where
G he opined that a subcontractor could submit its invoice within a reasonable G
time after the relevant completion of works or before the conclusion of the
H H
relevant project.
I I
70. I am perfectly aware that with the lapse of time, a main
J J
contractor would be faced with increasing difficulties in verifying a
K payment claim submitted by a subcontractor. This difficulty, however, K
would exist in practically all kinds of trade. The safeguard is that the
L L
plaintiff would still have to discharge its burden in proving the actual
M provision of goods or services, and there is a statutory time bar under the M
Limitation Ordinance. In this connection, I agree with the submission of
N N
Mr Solomon Lam, counsel for the Plaintiff, that even if there were a trade
O practice that a subcontractor would lose its entitlement to payment if it O
submits its invoice after six months, it is so unreasonable that this Court
P P
would not imply this trade practice as a term of the contract between the
Q Q
Plaintiff and the Defendant.
R R
71. For the aforesaid reasons, I do not agree with the Defendant
S S
that the Implied Term should be implied into the relationship between the
T
Plaintiff and the Defendant by virtue of custom or trade practice. T
U U
V V
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A A
B B
72. As to implication of terms by virtue of necessity, the
C principles have been authoritatively set out by the Court of Final Appeal in C
in Kensland Realty Ltd v Whale View Investment Ltd (2001) 4 HKCFAR
D D
381 at §23. In sum, any term to be implied must comply with the
E following requirements:- E
F F
(1) It must be reasonable and equitable;
G G
(2) It must be necessary to give business efficacy to the
H H
contract, so that no term will be implied if the contract
I is effective without it; I
J J
(3) It must be so obvious that “it goes without saying”;
K K
(4) It must be capable of clear expression; and
L L
M (5) It must not contradict any express term of the contract. M
N N
73. Subsequently, in Marks and Spencer plc v BNP Paribas
O Securities Services Trust Co (Jersey) Ltd [2016] AC 742 at §21, the O
Supreme Court of the United Kingdom has elaborated the above
P P
requirements in the following manner (which has been endorsed by the
Q Q
Court of Appeal in Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd [2019]
R
HKCA 261 at §§31-32):- R
S S
(1) Implication of a term is not critically dependent on
T
proof of an actual intention of the parties when T
negotiating the contract. If one approaches the
U U
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A A
B B
question by reference to what the parties would have
C agreed, one is not strictly concerned with the C
hypothetical answer of the actual parties, but with that
D D
of notional reasonable people in the position of the
E parties at the time at which they were contracting. E
F F
(2) A term should not be implied into a detailed
G commercial contract merely because it appears fair or G
merely because one considers that the parties would
H H
have agreed to it if it had been suggested to them.
I Those are necessary but not sufficient grounds for I
including a term.
J J
K (3) It is questionable whether the first requirement, ie K
reasonableness and equitableness, will usually, if ever,
L L
add anything. If a term satisfies the other
M requirements, it is hard to think that it would not be M
reasonable and equitable.
N N
O (4) Although the requirements are otherwise cumulative, O
business necessity and obviousness, ie the second and
P P
third requirements, can be alternatives in the sense that
Q Q
only one of them needs to be satisfied.
R R
(5) If one approaches the issue by reference to the officious
S S
bystander, it is vital to formulate the question to be
T
posed by him with the utmost care. T
U U
V V
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A A
B B
(6) Necessity for business efficacy involves a value
C judgment. The test is not one of “absolute necessity”. C
It is more helpful to put it this way – a term can only be
D D
implied if, without the term, the contract would lack
E commercial or practical coherence. E
F F
74. Applying the above test, I do not consider that the Implied
G Term should be implied into the relationship between the Plaintiff and the G
Defendant:-
H H
I (1) As I have noted above, the Implied Term effectively I
shortens the limitation period to six months, which is
J J
unreasonable.
K K
(2) The Defendant argues that the Implied Terms “goes
L L
without saying” because it is in line with the trade
M practice in Hong Kong, which I have already held M
otherwise.
N N
O (3) As to the other reasons put forward by the Defendant, O
they may be relevant in establishing that it would be
P P
fair to the parties to have the Implied Term, or that the
Q Q
parties would have agreed to it if it had been suggested
R
to them. However, the contract remains effective and R
coherent without the Implied Term – just that the
S S
parties may have to incur more time and effort in
T
verifying the claims. T
U U
V V
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A A
B B
Conclusion
C C
75. For the above reasons, I rule in favour of the Plaintiff and hold
D D
that the Defendant is liable to pay the Plaintiff HK$2,045,927.01 as the
E contractually agreed sum under invoices number 91111, 91112 and 91113, E
and HK$38,131.70 as quantum meruit for invoice number 91114.
F F
G 76. I make the following orders:- G
H H
(1) The Defendant do pay HK$2,084,058.71 to the
I Plaintiff; and I
J J
(2) The Defendant do pay interest on the sum of
K HK$2,084,058.71 at the HSBC prime rate plus 1% per K
annum from 13 December 2018 (ie the date of the Writ
L L
of Summons) to the date of judgment and thereafter at
M judgment rate until payment. M
N N
77. Costs should follow the event. I make an order nisi that the
O Defendant do pay the Plaintiff’s costs of the action (including all costs O
reserved) on party and party basis, to be taxed if not agreed, with certificate
P P
for counsel.
Q Q
R R
S S
T ( Patrick Siu ) T
Deputy District Judge
U U
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A A
B B
C Mr Solomon Lam, instructed by Kwok Hei Law Office, for the Plaintiff C
D Mr Tommy Cheung, instructed by W K To & Co, for the Defendant D
E E
F F
G G
H H
I I
J J
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V V
HENLEY ENGINEERS LTD v. JEBSEN & JESSEN TECHNOLOGY(S) PTE LTD
A A
B B
DCCJ 5696/2018
C [2024] HKDC 1578 C
D D
IN THE DISTRICT COURT OF THE
E HONG KONG SPECIAL ADMINISTRATIVE REGION E
CIVIL ACTION NO 5696 OF 2018
F F
G ------------------------------ G
BETWEEN
H H
HENLEY ENGINEERS LIMITED Plaintiff
I I
and
J JEBSEN & JESSEN Defendant J
TECHNOLOGY(S) PTE LIMITED
K K
------------------------------
L L
M Before: Deputy District Judge Patrick Siu in Court M
Dates of Trial: 14-16, 19-20 & 22 August 2024
N N
Date of Judgment: 27 September 2024
O O
------------------------------
P P
JUDGMENT
Q ------------------------------ Q
R R
S S
T T
U U
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-2-
A A
B B
Introduction
C C
1. The Defendant conducts a business of providing turnkey
D D
solutions to its customers, and its industrial services division is engaged in
E the supply, installation, testing and commissioning of equipment or E
solutions to customers covering railway maintenance and aerospace
F F
projects.
G G
2. The Defendant has appointed the Plaintiff as the manpower
H H
contractor for a project of the MTR Corporation Ltd (“MTR”) known as
I “Express Rail Link, Contract 860A – Depot Equipment for Shek Kong I
Stabling Sidings – Train Wash” (“MTR Project”).
J J
K 3. In this action, the Plaintiff claims against the Defendant the K
sums allegedly due under four unsettled invoices issued for the MTR
L L
Project. At the end of the trial I reserved judgment, which I now hand
M down. M
N N
Background
O O
4. Mr Nelson Wong is the general manager and the sole
P P
shareholder and director of the Plaintiff, a company incorporated in Hong
Q Q
Kong. Mr Wong started the business of the Plaintiff in 2005, and since
R
then the Plaintiff has been engaged in the business of provision of multi- R
disciplined engineering services and products.
S S
T
5. The Defendant is incorporated in Singapore. It operates T
under the parent company Jebsen & Jessen SEA, which is part of a global
U U
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-3-
A A
B B
family enterprise originated from a trading partnership formed in Hong
C Kong in 1895. The Defendant has various divisions including industrial C
services, offshore and marine cables, pumps, scientific and turf and
D D
irrigation.
E E
6. Mr Chee Min Lick is the regional director of the industrial
F F
services division of the Defendant. Mr Chee first came to know Mr Wong
G of the Plaintiff in around 2007, when the Defendant engaged the Plaintiff G
as a subcontractor in an aerospace project for Hong Kong Aero Engine
H H
Services Ltd (“HAESL Project”). The HAESL Project commenced in
I around 2007 and various sub-contractors including the Plaintiff were I
engaged. The Plaintiff’s role was to provide the necessary manpower and
J J
engineering services and materials as ordered by the Defendant.
K According to an internal document which the Defendant could retrieve, K
between March 2010 and February 2011, the Defendant issued around 27
L L
purchase orders to the Plaintiff.
M M
7. Subsequent to the HAESL Project, the Defendant has also
N N
engaged the Plaintiff in some other smaller projects as a subcontractor,
O before the Defendant engaged the Plaintiff as a subcontractor for the MTR O
Project in 2015.
P P
Q
8. In around 2012, the Defendant’s tender for the MTR Project Q
R
was accepted by MTR. Under the main contract between them, the R
Defendant was to provide certain electrical and mechanical engineering
S S
works for the MTR’s depot in Shek Kong, Hong Kong and the contract
T
sum payable to the Defendant was around HK$19.68 million. T
U U
V V
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A A
B B
9. The date of commencement of the electrical and mechanical
C works was 19 March 2012. Mr Chee as the general manager of the C
industrial services division back then was responsible for overseeing the
D D
operations of all railway projects in the entire South East Asia region.
E The day-to-day operations of the MTR Project were carried out by Mr E
Chee’s subordinates, namely Mr Alan Koh and Mr Ong Ming Ming, who
F F
were project engineers reporting directly to the project manager Mr Darrell
G Ang. G
H H
10. According to Mr Chee, Mr Ang was responsible for handling
I matters relating to the contractual and commercial arrangement between I
MTR and the Defendant, and it was the project managers Mr Koh and Mr
J J
Ong who would liaise with the subcontractors and verify the time sheets
K and invoices submitted by them. K
L L
11. By a letter dated 5 January 2015 (“Appointment Letter”), the
M Defendant appointed the Plaintiff as the manpower contractor for the MTR M
Project, and the Appointment Letter stated the following:-
N N
O “Jebsen & Jessen Technology(s) Pte Ltd would appoint Henley O
Engineers Limited to be the manpower contractor for Express
Rail Link Contract 860A Depot Equipment for Shek Kong
P P
Stabling Sidings – Train Wash Plant with effect from 5 Jan 2015.
Q Please also find enclosed Terms and Conditions that would be Q
attached to all purchase orders from Jebsen & Jessen
Technology(s) Pte Ltd.”
R R
S 12. There is an appendix to the Appointment Letter setting out the S
scope of works for the Plaintiff as the manpower contractor. In sum, the
T T
Plaintiff shall supply manpower to assist the Defendant in the installation
U U
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-5-
A A
B B
of, among others, rails, metal poles, auxiliary systems, water pipes,
C pneumatic pipes and electric cables in the train wash plant. C
D D
13. The terms and conditions mentioned in the Appointment
E Letter contain 10 terms of purchase (“Terms and Conditions”). Of E
relevance to this case are clauses 1, 2 and 10 therein, which provide as
F F
follows:-
G G
“1. Applicable Terms: The terms and conditions set out
H hereunder shall apply to all purchases contracted by Buyer H
whether or not expressly referred to in other documents of
purchase, sale, invoices or delivery notes issued by Seller or
I Buyer. Seller’s terms of sale shall expressly accepted (sic) by I
Buyer in writing. II (sic) be applicable only to the extent that
J they have been The (sic) unconditional acceptance of goods or J
services or the making of payments shall not constitute a
recognition by Buyer or any terms deviating from Buyer’s terms
K of purchase. K
L
2. Binding Contract: Buyer’s written order shall constitute L
the binding contract concerning the goods or services purchased
hereunder.
M M
…
N N
10. Validity of Contract: In case individual terms of this
contract should be modified, replaced or become partly or
O wholly invalid by mutual consent of Seller and Buyer, all other O
terms shall remain in force and the contract shall be deemed
amended accordingly. In case individual terms of this contract
P should be modified, replaced or become partly or wholly invalid P
due to any governmental law, regulation, order oraction (sic),
Q Seller and Buyer shall forthwith try to find an equitable valid Q
replacement for the term thus changed or invalidated. If no
mutual consent concerning suchreplacement (sic) can be
R reached, Buyer shall have the option to either accept thechanged R
(sic) term or the invalidation of thereof (sic) and thereby keep
the thus amended contract in force or terminate this contract by
S S
written notice to Seller.”
T T
U U
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A A
B B
14. Not long after being appointed as the Defendant’s manpower
C contractor, the Plaintiff submitted the following four invoices to the C
Defendant, who settled them in full on or around 12 February 2015:-
D D
E (1) Invoice number 90815 dated 2 February 2015, relating E
to the provision of labour for the period from 6 January
F F
2015 to 31 January 2015 in the total sum of
G HK$324,560. G
H H
(2) Invoice number 90816 dated 2 February 2015, relating
I to the provision of materials and engineering service for I
the period from 6 January 2015 to 31 January 2015 in
J J
the total sum of HK$102,865.09.
K K
(3) Invoice number 90818 dated 9 February 2015, relating
L L
to the provision of materials and engineering service in
M the total sum of HK$57,203.30. M
N N
(4) Invoice number 90819 dated 9 February 2015, relating
O to the provision of materials and fabrication service in O
the total sum of HK$50,150.
P P
Q Q
15. The present dispute relates to four other invoices all dated 30
R
August 2018 with the following details (“Subject Invoices”):- R
S S
(1) Invoice number 91111, relating to the provision of
T
labour for the period from 1 February 2015 to 15 T
August 2015 in the total sum of HK$1,860,427.50.
U U
V V
-7-
A A
B B
C (2) Invoice number 91112, relating to the provision of C
materials and engineering service from February to
D D
August 2015 in the total sum of HK$160,721.03.
E E
(3) Invoice number 91113, relating to the provision of
F F
materials and engineering service from February to
G April 2015 in the total sum of HK$24,778.48. G
H H
(4) Invoice number 91114, relating to the provision of an
I engineer to attend a training course in March 2015 and I
the design of three items carried out from May to
J J
August 2015, namely air tubing shield cover,
K submersible pump installation at pretreatment K
underground tanks and servicing platform for train
L L
wash equipment in the total sum of HK$39,500.
M M
16. The Subject Invoices were submitted in the following
N N
circumstances:-
O O
(1) On 6 April 2018, Mr Nelson Wong issued an email to
P P
Mr Darrell Ang to ask about the status of the MTR
Q Q
Project. Mr Wong stated that the Plaintiff was
R
conducting a finance audit and would have to close the R
job file for the MTR Project, so the Plaintiff would
S S
submit outstanding invoices by mid May 2018.
T T
U U
V V
-8-
A A
B B
(2) On 13 April 2018, Mr Ang informed Mr Wong that the
C Defendant had already closed off the accounts for the C
MTR Project, and he had no recollection that there was
D D
outstanding scope of work. He asked Mr Wong to
E advise him on the amount of the outstanding invoice E
and the scope of work covered by the invoice.
F F
G (3) Mr Wong replied on the same day, saying that the G
details of those labour and materials of which invoice
H H
had not been issued should have been recorded by the
I Defendant’s site supervisor. The Plaintiff would have I
to review its account records to determine the
J J
outstanding sum payable, and the Plaintiff would
K provide the details later. K
L L
(4) On 30 August 2018, the Plaintiff’s finance director Ms
M Amy Tsang told Mr Ang that the Plaintiff had finalized M
the account for the MTR Project and she sent the
N N
Subject Invoices to Mr Ang.
O O
17. Mr Wong purportedly explained that the Subject Invoices
P P
were submitted only in 2018 because he had been busy in the relevant
Q Q
period. I am wholly unconvinced by this explanation, but as will become
R
clear, the reason for the late submission is not important. The crux is R
whether the Plaintiff has actually provided the manpower, materials and
S S
services, and whether the Plaintiff would lose its entitlement to payment
T
because of its lateness regardless of the reason for such lateness. T
U U
V V
-9-
A A
B B
Issues in Dispute
C C
18. The Plaintiff’s case as pleaded in its Re-Amended Statement
D D
of Claim is simply about outstanding payment under the Subject Invoices
E or alternatively quantum meruit if there is no contract between the parties. E
It is thus more instructive to discern the various lines of defence pleaded
F F
by the Defendant to determine the real issues in dispute that this Court has
G to resolve. G
H H
19. In its Re-Amended Defence, the Defendant apparently
I contends that there was no contract between the parties regarding the I
Subject Invoices. The relevant pleas are as follows:-
J J
K (1) While the Appointment Letter itself did not give rise to K
any contractual relationship between the parties and
L L
was not a purchase order, it provided that the Defendant
M would issue purchase orders to the Plaintiff in the future M
in accordance with the Terms and Conditions, and
N N
clause 1 therein provided that any terms of sale by the
O Plaintiff shall be expressly accepted by the Defendant O
in writing.
P P
Q Q
(2) The Defendant admitted that the Subject Invoices were
R
first issued by the Plaintiff in August 2018, but it R
averred that no purchase orders had been issued by the
S S
Defendant for the services stated in those invoices, and
T
the terms of sale by the Plaintiff had not been expressly T
accepted by the Defendant in writing.
U U
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A A
B B
C 20. Further, the Defendant argues that the Defendant is not C
entitled to payment of the Subject Invoices as it is in breach of the parties’
D D
agreed basis and/or an implied term in relation to the Plaintiff’s provision
E of engineering services. The agreed basis / implied term as suggested by E
the Defendant operates as follows (to be referred to as “Agreed Basis” and
F F
“Implied Term” below respectively):-
G G
(1) The Plaintiff is under an obligation to submit its
H H
invoices together with the timesheets and other
I documentary proof to the Defendant’s project manager I
for verification within a reasonable time after the
J J
relevant completion of works and in any event before
K the conclusion of the relevant project, failing which the K
Plaintiff is barred from seeking payments from the
L L
Defendant.
M M
(2) Any benefit conferred by the Plaintiff to the Defendant
N N
would only be paid for when there was a fair and
O reasonable opportunity for the Defendant to verify the O
existence and extent of such benefit.
P P
Q Q
21. The Defendant did not positively deny that the Plaintiff
R
provided the labour, materials or services under the Subject Invoices, save R
that in relation to invoice number 91111, the Defendant avers that the
S S
Plaintiff has failed to duly and properly provide the purported cable pulling
T
works. T
U U
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- 11 -
A A
B B
22. In light of the defence raised by the Defendant, and drawing
C reference from the joint statement of issues in dispute filed by the parties, C
I consider that there are the following issues to be determined:-
D D
E (1) Was there a contractual relationship between the E
Plaintiff and the Defendant in relation to the Subject
F F
Invoices, and if yes, has the Plaintiff performed its
G contractual obligations? G
H H
(2) If there is no contract between the Plaintiff and the
I Defendant in relation to the Subject Invoices, but the I
Plaintiff has provided the labour, materials and
J J
services, is the Plaintiff entitled to be paid on the basis
K of quantum meruit? K
L L
(3) Were there the Agreed Basis and/or Implied Term, and
M if yes, how is the Plaintiff’s claim affected? M
N N
Issue (1) – Contractual Relationship between the Parties
O O
23. To recapitulate, the Defendant’s case is that it has not issued
P P
written orders for the for the services stated in the Subject Invoices, and in
Q Q
any event the terms of sale by the Plaintiff had not been expressly accepted
R
by the Defendant in writing. As the formality requirement under the R
Terms and Conditions have not been complied with, there is no contract in
S S
relation to the Subject Invoices.
T T
U U
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A A
B B
24. The Plaintiff contends that it has never been the intention of
C the parties that the Terms and Conditions would have to be strictly C
followed. Rather:-
D D
E (1) The Defendant would agree with the Plaintiff on the E
unit rates for the supply of labour by email or orally.
F F
Based on the agreed rates, the Defendant would
G through its representatives in Hong Kong, Mr Alan Koh G
and Mr Ong Ming Ming, submit orders for manpower
H H
services to the Plaintiff, who would then arrange for the
I required manpower. I
J J
(2) For the procurement of materials, the Plaintiff would
K submit quotations to Mr Koh and Mr Ong for their K
comments and approval before proceeding with
L L
procuring the requisite materials.
M M
(3) The Defendant would also ask for design and technical
N N
solutions from the Plaintiff, who would provide the
O solutions accordingly. O
P P
25. The first point I note is that on the Defendant’s own pleas, the
Q Q
Appointment Letter itself is not a contract, so the terms therein do not bind
R
the parties. Further, in the Appointment Letter, the Defendant merely R
stated that the Terms and Conditions would be attached to all its purchase
S S
orders. The Defendant was not saying that the Terms and Conditions
T
would be applicable to all its future orders. The distinction is important T
and the effect is that if the Defendant chooses to attach the Terms and
U U
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A A
B B
Conditions to its purchase orders, then the formality requirement may
C apply and there may not be a binding contract without the Defendant C
making its order in writing and accepting the Plaintiff’s terms in writing.
D D
However, the Defendant is not precluded from choosing not to attach the
E Terms and Conditions to its orders, such that the parties may enter into E
contracts less formally, which is understandable given the nature of the
F F
work – the Defendant may require manpower or materials in short notice
G and there could be frequent variations. G
H H
26. In any event, I accept the Plaintiff’s contention that the
I Appointment Letter was just for the Defendant’s onward submission to I
MTR to fulfil the latter’s requirement, and that the Plaintiff and the
J J
Defendant never intended to have their relationship governed by the Terms
K and Conditions:- K
L L
(1) While the Appointment Letter was dated 5 January
M 2015, Mr Nelson Wong sent the signed version of it M
signifying the Plaintiff’s agreement to the scope of
N N
works to Mr Alan Koh only by email on 27 April 2015.
O Prior to that day, the Plaintiff has already submitted O
four invoices to the Defendant. As noted above, those
P P
four invoices related to the provision of labour,
Q Q
materials and engineering services, and the Defendant
R
has promptly settled those invoices. It is clear that the R
parties were content with dealing with each other
S S
without regard to the Terms and Conditions.
T T
U U
V V
- 14 -
A A
B B
(2) For the four settled and undisputed invoices, Mr
C Wong’s evidence is that the Defendant made its orders C
without following the Terms and Conditions. Mr
D D
Chee, the only factual witness for the Defendant, did
E not suggest otherwise. E
F F
27. In the premises, whether the parties complied with clause 1 or
G clause 2 of the Terms and Conditions is not relevant to the question of G
whether there is a contractual relationship between them. The pertinent
H H
question, rather, is whether the Plaintiff has by words or conduct offered
I to provide the manpower or materials, and whether the Defendant has by I
words or conduct accepted the offer, thereby giving rise to a binding
J J
contractual relationship. To answer this question, I would have to analyse
K the parties’ correspondence regarding the manpower or materials K
requirements under the Subject Invoices.
L L
M 28. If there is a contract, I would then have to determine if the M
Plaintiff has discharged its burden in proving that it has performed its
N N
contractual obligations, since the Defendant has put the Plaintiff to proof
O (save for the cable pull work labour under invoice number 91111, to which O
the Defendant has put forward a positive defence).
P P
Q Q
Invoice number 91111
R R
29. Invoice number 91111 relates to the provision of 10 kinds of
S S
manpower by the Plaintiff with details as follows:-
T T
U U
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A A
B B
Item Description Quantity Rate Amount
C (man-day) (HK$) (HK$) C
1 Mechanical work 54 2,700 145,800
D D
supervisor
E E
2 Mechanical worker 74 2,390 176,860
F F
3 Pipework supervisor 52 2,620 136,240
G G
4 Pipe welder 49 2,390 117,110
H H
5 Pipe worker 7 2,120 14,840
I I
6 Electrical work supervisor 72 3,125 225,000
J J
7 Electrician 169.5 2,625 444,937.50
K K
8 Electrical worker 0 2,000 0
L L
(general)
M M
9 Cable pull work 33 2,730 90,090
N supervisor N
O 10 Cable pull work electrical 237 2,150 509,550 O
worker
P P
Total: 1,860,427.50
Q Q
R 30. The Plaintiff first submitted to the Defendant by email its R
quotation of the rates of the various kinds of manpower on 16 December
S S
2014. On 23 December 2014, the Plaintiff submitted a revised quotation
T to the Defendant with the unit rates of items 1 to 8 (ie manpower other than T
U U
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A A
B B
the two kinds of cable pull work labour), which correspond to the rates
C stated in invoice number 91111. C
D D
31. According to the unchallenged evidence of Mr Wong:-
E E
(1) Mr Ong Ming Ming of the Defendant orally accepted
F F
the aforesaid unit rates, which is corroborated by an
G email from Mr Ong dated 23 December 2014. It is G
also notable that the same rates were adopted for
H H
invoice number 90815, which the Defendant has settled
I without dispute, demonstrating the Defendant’s I
acceptance of the unit rates.
J J
K (2) Between 23 December 2014 and 15 August 2015, Mr K
Ong and Mr Koh submitted the Defendant’s orders for
L L
manpower under items 1 to 8 to Mr Wong orally or
M through WhatsApp messages. M
N N
32. With the above evidence, I am satisfied that the Defendant has
O accepted the Plaintiff’s offer of provision of the manpower under items 1 O
to 8 with the specified unit rates as stated in invoice number 91111.
P P
Q Q
33. The Plaintiff has produced the site labour working record for
R
the months of February, March, April, July and August 2015 showing the R
provision of those manpower. Further, the Plaintiff has engaged two
S S
subcontractors for the provision of those labour, namely Kin Tat Engineers
T
Limited and Wing Fat Mechanical Works Limited, and the Plaintiff has T
produced the invoices produced by them (with their unit rates redacted, but
U U
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A A
B B
the redaction does not matter since the rates those subcontractors charged
C the Plaintiff are not relevant to the Defendant). The owner of Kin Tat (Mr C
Lam Chak Cheung) and an employee of Kin Tat (Mr Alex Lee) also
D D
testified to corroborate the Plaintiff’s case, and their evidence was not
E really challenged. I am satisfied that the Plaintiff did provide the E
manpower as stated in the invoice.
F F
G 34. Regarding the cable work pull labour (ie items 9 and 10), the G
Plaintiff submitted its quotation of the unit rates to the Defendant on 27
H H
July 2014, which correspond to the rates shown in the invoice. According
I to the unchallenged evidence of Mr Wong, in July and August 2015, Mr I
Ong and Mr Koh submitted the Defendant’s orders for those two types of
J J
manpower to Mr Wong orally or through WhatsApp messages. It is clear
K that the Defendant has accepted the Plaintiff’s offer of provision of the K
cable work pull manpower with the specified unit rates. The Plaintiff has
L L
also called Mr Chan Chung Hin, one of the shareholders of Sun Gleam
M Engineers Limited, to give evidence on Sun Gleam’s provision of cable M
pulling workers to the Plaintiff, who provided the same to the Defendant.
N N
O 35. In its Re-Amended Defence, the Defendant averred that it had O
repeatedly complained to the Plaintiff that the labour provided by the
P P
Plaintiff did not work for the agreed hours causing delay to the works.
Q
Eventually this led to the Defendant’s suspension on 13 August 2015 of Q
R
the Plaintiff’s appointment as the manpower contractor. The Defendant R
thus contends that the Plaintiff has not performed its obligations. Mr
S S
Chee as the witness of the Defendant is not able to substantiate this
T
complaint, as he was not responsible for the day-to-day management of the T
MTR Project.
U U
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A A
B B
C 36. That said, it can be seen from the documents that on 11 August C
2015, Mr Ong told Mr Nelson Wong by email that the workers did not
D D
work for the agreed hours. On 12 August 2015, the Defendant did issue
E a letter to the Plaintiff to complain about the workers’ attitude problem. E
In response, Mr Wong issued an email to Mr Ong on 13 August 2015,
F F
saying that the workers had been giving their best efforts, but they were
G hindered by the limited tools and resources that were made available by the G
Defendant. Mr Wong also pointed out that unsatisfactory workers could
H H
be replaced at the Defendant’s instructions. On the same day, Mr Ong
I responded by saying that changing the workers would produce the same I
result, as the problem was that there was no agreed end date for completing
J J
the cable pulling works. He also seemed to acknowledge that some parts
K of the site might not be ready for the workers, but he said the workers could K
have other contingency plans.
L L
M 37. Having considered the above evidence, I am satisfied that the M
Plaintiff has proven that it provided the cable pull work manpower as
N N
claimed. The core of the Defendant’s complaint, as shown in Mr Ong’s
O emails, is not that the Plaintiff did not provide the workers, but that the O
workers’ work performance was not satisfactory. There is no solid
P P
evidence on the quality of the work performed by those workers, the delay
Q Q
caused by the workers or whether the delay was attributable to the workers
R
or the Defendant. In any event I agree with the Plaintiff that its obligation R
was confined to providing qualified workers to the Defendant, which the
S S
Plaintiff has discharged. The Plaintiff has no obligation to ensure that the
T
workers under the Defendant’s management could complete the work T
within a certain time.
U U
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A A
B B
C Invoice number 91112 C
D D
38. Invoice number 91111 relates to the provision of 14 items of
E materials and service by the Plaintiff with the following details:- E
F F
Item Description Amount
G (HK$) G
H 1 HDG steel cable tray 8,482.30 H
I 2 5 ton crawler crane 22,300 I
J 3 Aluminum enclosure 8,580.05 J
K 4 1.5mm SS304 mount plate 480 K
L 5 HDG steel cable tray 18,344.30 L
M 6 CCG cable glands 14,631 M
N 7 SWL 1000kg mobile “A” frame 20,000 N
O 8 “Furse” copper earthing conductor tape 37,650 O
P 9 “TIBOX” stainless steel 5,217.27 P
Q 10 HDG steel cable tray 2,541 Q
R 11 HDG steel cable trunking 19.60 R
S 12 Load test and examination of portable gantry 1,500 S
T 13 HDG steel cable trunking 11.90 T
U U
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A A
B B
Item Description Amount
C (HK$) C
14 Engineering service charge 20,963.61
D D
E
Total: 160,721.03 E
F F
39. The liaison between the parties relating to the aforesaid 14
G items can be summarised below with reference to the unchallenged G
evidence of Mr Nelson Wong:-
H H
I (1) Item 1: In February 2015, Mr Koh was informed by the I
site supervisors that steel cable trays would be required.
J J
The Plaintiff was then asked to purchase them for the
K Defendant, and it did so at the approved rates. K
L L
(2) Item 2: In February 2015, Mr Koh was directly liaising
M with Kanson Crance & Heavy Transport Co Ltd for the M
hiring of crawler cranes, and Mr Koh designated the
N N
Plaintiff as its Hong Kong representative. On 26
O February 2015, the Plaintiff sent Kanson’s invoice to O
the Defendant. On 26 and 27 February 2015, the
P P
Plaintiff confirmed with Mr Koh that the cranes would
Q be available for use at the revised dates as per the Q
Defendant’s request. On 14 March 2015, Mr Ong
R R
instructed that the cranes would be deployed on some
S later dates. The procurement costs were HK$22,300 S
T
as shown in Kanson’s invoice, which the Plaintiff did T
settle.
U U
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A A
B B
C (3) Item 3: On 28 February 2015, Mr Koh sought the C
Plaintiff’s quotations for various materials, which the
D D
Plaintiff provided on 5 March 2015. On 5 March
E 2015, Mr Koh accepted the quotations by telephone. E
The Plaintiff proceeded with the purchase on 12 March
F F
2015 and settled the invoice in the sum of
G HK$8,580.05. G
H H
(4) Item 4: On 5 March 2015, Mr Koh requested mount
I plate for aluminum enclosure mounting, and I
subsequently Mr Wong gave him an oral quotation,
J J
which Mr Koh accepted. At the Defendant’s
K instruction, the Plaintiff purchased the item on 17 K
March 2015 and settled the invoice in the sum of
L L
HK$480.
M M
(5) Item 5: In March 2015, the site supervisors requested
N N
and the Defendant agreed that the Plaintiff should
O purchase additional steel cable trays. The Plaintiff’s O
draft purchase order dated 14 March 2015 was accepted
P P
by the Defendant on 27 March 2015. On 28 March
Q Q
2015, the Defendant made some variations to the
R
purchase order and asked the Plaintiff to proceed with R
the revised purchase order. The Plaintiff executed the
S S
purchase order and settled the invoice in the sum of
T
HK$18,344.30. T
U U
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A A
B B
(6) Item 6: By various emails dated 28 February, 29 May
C and 4 June 2015, Mr Koh asked the Plaintiff to C
purchase cable glands. On 23 July 2015, Mr Wong
D D
submitted a quotation through WhatsApp, which was
E accepted by Mr Koh. The Plaintiff proceeded with the E
purchase and settled the invoice in the sum of
F F
HK$14,631.
G G
(7) Items 7 and 12: On 11 July 2015, Mr Koh requested the
H H
Plaintiff to purchase an A-frame. On 12 July 2015,
I Mr Wong provided a quotation to Mr Koh on phone, I
and Mr Koh accepted it. On 23 July 2015, the
J J
Plaintiff arranged for the delivery of the A-frame, and
K it settled the invoice in the sum of HK$20,000. The K
Plaintiff also procured the incidental test and
L L
examination service in order to comply with the
M statutory requirement, and the Plaintiff settled the M
invoice in the sum of HK$1,500.
N N
O (8) Item 8: On 4 June 2015, Mr Koh asked Mr Wong to O
buy a list of things, including item 8. On 31 July
P P
2015, Mr Wong submitted a quotation by email, which
Q Q
was accepted by Mr Koh by email on 4 August 2015.
R
Later that day, Mr Koh changed the quantities required R
and asked the Plaintiff to proceed. The Plaintiff did
S S
procure the materials and settled the invoice in the sum
T
of HK$37,650. T
U U
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A A
B B
(9) Item 9: In July 2015, the site supervisors and workers
C asked the Defendant to purchase additional steel C
enclosure. On 23 July 2015, the Plaintiff submitted a
D D
quotation by email, which was accepted by Mr Ong by
E email on 27 July 2015. Subsequently, on 5 August E
2015, the Plaintiff asked the Defendant to choose the
F F
materials among the available options, which Mr Ong
G did on the same day. The Plaintiff procured the G
materials and settled the invoice in the sum of
H H
HK$5,217.27.
I I
(10) Items 10, 11 and 13: On 23 July 2015, the Plaintiff
J J
relayed the workers’ request for additional purchases to
K the Defendant, and Mr Ong asked the Plaintiff to go K
ahead with the purchases. The Plaintiff bought those
L L
materials and settled the three invoices in the respective
M sum of HK$2,541, HK$19.6 and HK$11.90 M
respectively.
N N
O (11) Item 14: In the Plaintiff’s quotations for manpower O
provision (see paragraphs 30 and 34 above), there was
P P
a remark stating that for local purchases of materials,
Q Q
the Plaintiff would charge a 15% service charge. As
R
noted above, the Defendant has accepted the Plaintiff’s R
quotations. Item 14 is the 15% service charge for
S S
items 1 to 13.
T T
U U
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A A
B B
40. The Plaintiff has produced sufficient evidence to substantiate
C the contractual relationship between the parties relating to invoice number C
91112 and the Plaintiff’s performance of its contractual obligations.
D D
E Invoice number 91113 E
F F
41. Invoice number 91113 is concerned with the provision of
G tools and materials and the corresponding service charge:- G
H H
Item Description Amount
I (HK$) I
J 1 Materials, tools and sundry expense 21,546.50 J
K 2 Engineering service charge 3,231.98 K
L Total: 24,778.48 L
M M
42. According to Mr Wong, site supervisors or workers would
N from time to time incur sundry expenses for the purchase of materials and N
tools on behalf of the Defendant with the Defendant’s approvals. The site
O O
supervisors or workers would submit the receipts and invoices to the
P Plaintiff, and the Plaintiff would settle such expenses on the Defendant's P
behalf. The Defendant has paid the Plaintiff similar fees under invoice
Q Q
number 90816.
R R
43. For item 1, the Plaintiff has produced the various invoices and
S S
receipts submitted by the site supervisors or workers. As to item 2, this
T is again the 15% service charge stipulated under the Plaintiff’s quotations T
U U
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A A
B B
which were accepted by the Defendant. I am satisfied that the Plaintiff
C has proved its contractual claims. C
D D
Invoice number 91114
E E
44. Invoice number 91114 contains four items:-
F F
G Item Description Quantity Rate Amount G
(man-day) (HK$) (HK$)
H H
1 Engineer 2 2,000 4,000
I I
2 Design of air tubing shield - - 2,500
J J
cover
K K
3 Design of submersible - - 8,000
L pump installation L
M 4 Design of servicing - - 25,000 M
platform for train wash
N N
equipment
O O
Total: 39,500
P P
45. By an email dated 4 March 2015, Mr Koh directly asked two
Q Q
engineers of the Plaintiff to attend a two-day training course organized by
R MTR in order that they could work as site supervisor for the Defendant. R
Item 1 relates to the fees for one of the engineers who attended the course
S S
on 12 and 13 March 2015 at the Defendant’s instructions.
T T
U U
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A A
B B
46. However, while the Plaintiff did provide an engineer to attend
C the course in response to the Defendant’s request, I do not see any evidence C
to the effect that the parties have discussed the fees chargeable by the
D D
Plaintiff for deploying the engineer, let alone agreeing on the fees.
E E
47. Similarly, for items 2 to 4, the parties did not seem to have
F F
discussed the fees that the Plaintiff would charge, even though I accept that
G the Plaintiff carried out design works pursuant to the Defendant’s G
demands:-
H H
I (1) Item 2: On 5 May 2015, Mr Ong requested the Plaintiff I
to provide a drawing of the air tubing shield cover.
J J
The Plaintiff provided the drawing the next day. It
K can be seen from Mr Ong’s email dated 5 August 2015 K
that the Defendant did consider the drawing and was
L L
contemplating to make use of it.
M M
(2) Item 3: On 13 July 2015, Mr Koh instructed the
N N
Plaintiff to provide a design of the submersible pump
O installation. On 31 July 2015 and 4 August 2015, the O
Plaintiff submitted respectively a first sketch and a
P P
revised sketch drawing. While the Plaintiff did
Q Q
submit some quotations on 24 July 2015 relating to the
R
materials to be used on the submersible pump, they are R
not about the design fees.
S S
T
(3) Item 4: On 29 May 2015, Mr Koh instructed the T
Plaintiff to work on the design drawing, and the
U U
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A A
B B
Plaintiff submitted the drawing on 3 August 2015. Mr
C Ong did follow up on the drawing by making enquiries C
through his email dated 5 August 2015.
D D
E 48. Without the parties having discussed and agreed on the fees E
chargeable by the Plaintiff, I cannot say that the Plaintiff and the Defendant
F F
have reached a binding contractual agreement regarding the fees payable
G for the services as listed in invoice number 91114. G
H H
Conclusion
I I
49. I conclude that the Plaintiff and the Defendant have reached
J J
an agreement for the provision of manpower, materials and services as
K listed in the three invoices number 91111, 91112 and 91113. The K
Plaintiff is entitled to claim against the Defendant the agreed fees pursuant
L L
to those three invoices, subject to the Defendant’s defence based on the
M Agreed Basis and Implied Term, which will be addressed below. On the M
other hand, I have come to the view that there is no contractually agreed
N N
sum payable for the provision of manpower and design service as listed in
O invoice number 91114. O
P P
Issue (2) – Quantum Meruit
Q Q
R
50. In its Re-Amended Statement of Claim, the Plaintiff pleaded R
an alternative case if it is held that there is no contract formed between the
S S
Plaintiff and the Defendant. It avers that it would claim against the
T
Defendant the outstanding sums on the basis of quantum meruit as the sums T
represent reasonable fees and costs.
U U
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A A
B B
C 51. The following principles relating to quantum meruit are well C
established (see Keating on Construction Contracts (11 Ed) at §§4-031 –
th
D D
4-033):-
E E
(1) The expression quantum meruit means the amount one
F F
deserves or what the job is worth, and in most cases
G denotes a claim for a reasonable sum. It has been G
defined as a restitutionary claim which can be made
H H
where there is no contract. A claim on a quantum
I meruit cannot arise if there is an existing contract I
between the parties to pay an agreed sum.
J J
K (2) Where there is no contract, the correct approach to the K
amount to be paid by way of a quantum meruit is to ask
L L
whether the defendant has been unjustly enriched and
M if so, to what extent. Four questions have to be M
considered: Has the defendant been enriched? Was the
N N
enrichment at the plaintiff’s expense? Was the
O enrichment unjust? Are there any defences available to O
the defendant?
P P
Q Q
(3) If there is a contract between the parties but the amount
R
of payment is not spelled out, the law will normally R
imply a term into the agreement that the remuneration
S S
will be reasonable in all the circumstances. If a
T
contractor does work under a contract and no price is T
fixed by the contract, it is entitled to be paid a
U U
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A A
B B
reasonable sum for its labour and the materials supplied
C pursuant to an implied term. C
D D
52. For invoice number 91114, the scenario is akin to the parties
E having reached a contract which nevertheless does not spell out the amount E
of payment, such that the law will imply a term of reasonable remuneration.
F F
I see no reason why the Defendant should not be liable to pay the
G reasonable fees and costs to the Plaintiff for those services, after having G
instructed the Plaintiff to provide those services.
H H
I 53. Indeed, Mr Tommy Cheung, counsel for the Defendant, has I
in all fairness not suggested that the Plaintiff should be denied reasonable
J J
remuneration if the Plaintiff can prove that it has provided the services
K (subject to his arguments on the Agreed Basis and Implied Term). His K
focus insofar as invoice number 91114 is concerned, rather, is on the
L L
quantum of the reasonable fees and costs.
M M
54. The Plaintiff has produced expert evidence on quantum by
N N
way of a report on quantum compiled by Mr Honby Chan, a registered
O professional surveyor. Mr Chan has given his opinion on the reasonable O
fees and costs for the services, labour and materials provided by the
P P
Plaintiff. Regarding the services and labour provided under invoice
Q Q
number 91114, he has the following opinion:-
R R
(1) He has reviewed the relevant salary survey for
S S
engineers in 2015 and he has decided to use the average
T
engineer’s rates for assessment. He observed that the T
U U
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A A
B B
average rate of an engineer was HK$1,389 per day,
C whereas the rate of a senior engineer was HK$2,170. C
D D
(2) Applying the above rates, he considered that the
E reasonable fees for item 1 of the invoice should be E
HK$2,778 (ie engaging an engineer for two days to
F F
attend a course).
G G
(3) For items 2 to 4 of the invoice, he opined that the
H H
reasonable man-day required for the design work
I would be one, three and 10 respectively, and that it I
would be appropriate to engage a senior engineer to
J J
carry out the design work. Therefore, the reasonable
K fees for the three items are HK$2,170, HK$6,510 and K
HK$21,700 respectively.
L L
M (4) Taking into account the 15% service charge, the total M
sum of the reasonable fees payable for invoice number
N N
91114 would be HK$38,131.70.
O O
55. The Defendant has not adduced expert evidence on quantum.
P P
Mr Cheung for the Defendant has made two general criticisms of Mr
Q
Chan’s expert report:- Q
R R
(1) Mr Chan should have taken the initiative to look into
S S
the relevance and impact of the dispute between the
T
Plaintiff and the Defendant over the Plaintiff’s T
U U
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- 31 -
A A
B B
performance of the cable pulling works, with a view to
C making downward adjustments of the quantum meruit. C
D D
(2) Where the Plaintiff has engaged subcontractors but has
E not disclosed the fees charged by those subcontractors, E
Mr Chan should have obtained external data and
F F
statistics to independently and impartially assess the
G quantum of a reasonable sum. G
H H
56. These criticisms are not relevant to Mr Chan’s opinion on the
I reasonable fees payable for invoice number 91114. After all, those I
services are not related to the cable pulling works, and Mr Chan did obtain
J J
independent and objective data in assessing the reasonable fees. In the
K circumstances, I would hold that the Plaintiff is entitled to claim against K
the Defendant HK$38,131.70 as the reasonable fees for that invoice.
L L
M 57. As noted above, I find that there are contractually agreed fees M
payable for those labour, materials and services provided by the Plaintiff
N N
as listed in invoices number 91111, 91112 and 91113, so it is not necessary
O for me to assess the quantum meruit for those items. For the sake of O
completeness, I would record that the Defendant has not adduced any
P P
evidence to rebut the opinion of Mr Honby Chan, and has not suggested
Q Q
any alternative figures, other than having made the two general criticisms
R
as summarized in paragraph 55 above. Insofar as it had been necessary R
for me to assess the quantum meruit, I would have adopted the figures
S S
proposed by Mr Chan for the three other invoices as well.
T T
U U
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A A
B B
Issue (3) – Agreed Basis / Implied Term
C C
58. I have set out in paragraph 20 above the content of the
D D
Defendant’s alleged Agreed Basis and/or Implied Term. On the
E Defendant’s pleaded case, the Agreed Basis / Implied Term were E
necessary, of a nature that goes without saying and/or needed to give effect
F F
to business efficacy of the relationship between the Plaintiff and the
G Defendant in view of the following circumstances:- G
H H
(1) It was in line with the common practice and standard of
I the construction industry in Hong Kong. I
J J
(2) The payer, who commonly engages a number of
K contractors to work in a project, would have to verify K
the quantum, quality and other aspects of any works
L L
and services said to be delivered before payment can be
M fairly and accurately made. M
N N
(3) The payee, who commonly has to pay its other workers
O would also have its best interests served when a request O
for payment with full supporting evidence is made
P P
within a reasonable time.
Q Q
R
(4) The payer, who commonly has to source the funds from R
its own superior contractor or others would have to
S S
prepare proper documentation and/or rolling budget for
T
financing purposes, and submissions made after the T
lapse of a reasonable time would render such
U U
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A A
B B
preparation impracticable, infeasible and/or financially
C impossible. C
D D
(5) The nature of a project in the construction industry is
E usually that subsequent works and services would E
easily remove, replace, modify and/or adjust the works
F F
and/or services previously delivered, unless there is
G timely documentary record on those works and services G
delivered for further project planning and giving of
H H
instructions to other contractors.
I I
(6) The payer, who commonly has to comply with
J J
budgetary restraints imposed for a project, may be in
K breach of contract(s) between the payer and other third K
parties if a payment request by any payee is not
L L
reflected timely on the rolling budget but is made only
M after the lapse of a reasonable time. M
N N
(7) The payer and its agent (such as its project engineer)
O would require the timely submissions of a request for O
payment for the purposes of properly conducting the
P P
necessary verifications and/or managing the project in
Q Q
question.
R R
(8) The payer and its agent (such as its project engineer)
S S
would require the timely submissions of a request for
T
payment for the purposes of properly discharging his T
duties.
U U
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A A
B B
C (9) The payee would only be fairly given an opportunity to C
dispute the payer’s checks and/or verifications of any
D D
works and/or services said to be done by the payee
E when the request for payment is made within a E
reasonable time.
F F
G (10) Both the payee and the payer require a fair and G
reasonable opportunity to document their financial
H H
and/or business dealings in a timely manner just in case
I there is any construction dispute between them in the I
future, which is common in a construction project in
J J
Hong Kong.
K K
59. It may be noted from the above that the Defendant has not
L L
really distinguished between the Agreed Basis and the Implied Term.
M However, by “agreed basis” the Defendant is necessarily saying that the M
parties have expressly agreed by words or by conduct that the Plaintiff must
N N
submit its invoices together with the supporting documents within a
O reasonable time, otherwise it would not have been necessary for the O
Defendant to also rely on the doctrine of implied terms.
P P
Q Q
60. Insofar as express agreement is concerned, there can be no
R
dispute that the Agreed Basis is not mentioned in the Appointment Letter, R
Terms and Conditions or any of the parties’ written correspondence. The
S S
Defendant has also not suggested that there was any oral discussion
T
relating to the Agreed Basis. The only relevant evidence that I can see is T
Mr Chee’s saying that the Defendant paid the Plaintiff in accordance with
U U
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A A
B B
the Agreed Basis for the HAESL Project and the four settled invoices for
C the MTR Project. C
D D
61. Nevertheless, Mr Chee’s evidence can go only so far as to
E establish that the Plaintiff used to submit its invoices and the supporting E
documents timely and regularly. There was in the past no incident where
F F
the Plaintiff submitted its invoice after a considerable lapse of time, such
G that this Court can discern what the consequences would be if the Plaintiff G
did not submit its invoice timely. Taken to the highest, Mr Chee’s
H H
evidence can at best show that there was an agreement between the parties
I for the Plaintiff to submit the invoices and supporting documents within a I
reasonable time, but there is no evidence substantiating the Defendant’s
J J
case that there was an agreement that the Plaintiff would be debarred from
K claiming the fees if it submits the invoices late. K
L L
62. Coming back to the Defendant’s case on implied terms, it may
M be noted from the pleadings that while the Defendant contends that the M
Implied Term is necessary, it argues at the same time that the Implied Term
N N
is necessary because it is in line with the trade practice in Hong Kong.
O The Defendant has conflated the two doctrines of implied terms, but the O
tests for implying terms by virtue of necessity and by virtue of trade
P P
practice are different. In light of the pleadings, I can only take the
Q Q
Defendant to mean that it is relying on both doctrines.
R R
63. For implication of terms from usage or custom, the general
S S
principles are as follows (see Chitty on Contracts (35th Ed) at §17-036;
T
McMeel on the Construction of Contracts (3rd Ed) at §12.11):- T
U U
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- 36 -
A A
B B
(1) If there is an invariable, certain and general usage or
C custom of any particular trade or place, the law will C
imply on the part of one who contracts or employs
D D
another to contract for him upon a matter to which such
E usage or custom has reference a promise for the benefit E
of the other party in conformity with such usage or
F F
custom, provided there is no inconsistency between the
G usage and the terms of the contract. G
H H
(2) To be binding, the usage must be notorious, certain and
I reasonable, and it must also be something more than a I
mere trade practice. When such usage is proved, it
J J
will form the basis of the contract between the parties
K and their respective rights and liabilities are precisely K
the same as if without any usage they had entered into
L L
a special agreement to the like effect.
M M
(3) The usages are incorporated on the assumption that the
N N
parties did not mean to express in writing the whole of
O the contract by which they intended to be bound, but a O
contract with reference to those known usages, or on
P P
the ground that the courts are spelling out what both
Q Q
parties know and would unhesitatingly agree to be part
R
of the bargain. R
S S
(4) Even in cases where the party alleged to be liable upon
T
an implied promise, arising solely from the established T
usage of a particular trade, is not shown to have been
U U
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A A
B B
cognisant of the usage, he can still be held to be liable
C by virtue of it on the basis that a person who deals in a C
particular market must be taken to deal according to the
D D
custom of that market.
E E
64. Both the Plaintiff and the Defendant have adduced expert
F F
evidence on these questions concerning trade practice (reflecting the
G content of the Implied Term as alleged by the Defendant):- G
H H
(1) In the construction industry in Hong Kong, in the
I context of provision of manpower and/or electrical I
and/or engineering services by a sub-contractor to a
J J
main contractor, is there any trade custom or common
K practice that the sub-contractor shall submit its invoices K
together with relevant timesheet (for manpower
L L
services) and/or documentary proof to the main
M contractor for verification within a reasonable time M
after the relevant completion of works and/or services
N N
and in any event before the conclusion of the relevant
O project? O
P P
(2) If so, what is the reasonable time? Further or
Q Q
alternatively, how is a reasonable time determined?
R R
(3) If so, what are the usual consequences of non-
S S
compliance with the said trade custom or common
T
practice? T
U U
V V
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A A
B B
65. The Defendant has called Mr Ricky Chan, a registered
C professional surveyor, a chartered quantity surveyor and a chartered C
builder, as its expert. Mr Ricky Chan’s evidence can be summarized as
D D
follows:-
E E
Question 1
F F
G (1) Various standard forms used in the construction G
industry (including the Standard Form of Building
H H
Contracts (“SFBC”) published by the Hong Kong
I Institute of Architects / the Hong Kong Institute of I
Construction Managers / the Hong Kong Institute of
J J
Surveyors, the General Conditions of Contract
K published by the Hong Kong government, and the K
Standard Form of Domestic Sub-Contract published by
L L
the Hong Kong Construction Association Ltd (“HKCA
M Standard Form”) contain express provisions for making M
timely payment applications for products purchased
N N
and services rendered by the main contractor for the
O employer. O
P P
(2) In particular, the SFBC and the HKCA Standard Form
Q Q
have detailed provisions setting out the requirement for
R
the contractor or subcontractor to make a timely R
payment application to the employer or main contractor
S S
and the necessary information required for making
T
payment application. T
U U
V V
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A A
B B
(3) Mr Ricky Chan has also referred to a domestic sub-
C contract used by a well-known construction company C
in Hong Kong, which provides that a subcontractor
D D
should make its payment application on a monthly
E basis. E
F F
(4) In the Practice Notes for Quantity Surveyors –
G Valuation for Interim Payment, it was stated that most G
commonly the stipulated interval for interim payments
H H
is one month.
I I
(5) Taking into account the above matters, Mr Ricky
J J
Chan’s conclusion is that timely payment application
K with supporting documents by a subcontractor is a very K
important common practice in the construction
L L
industry. He opines that there is a trade custom or
M common practice that a subcontractor shall submit its M
invoices together with all daily records or attendance
N N
sheets or documentary proof to the main contractor for
O verification within a reasonable time after the relevant O
completion of works and/or services and in any event
P P
before the conclusion of the relevant project.
Q Q
R
Question 2 R
S S
(6) Mr Ricky Chan opines that the main contractor can
T
reasonably and expressly request that payment T
application be made within seven days. In the
U U
V V
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A A
B B
absence of such an express request, the reasonable time
C would be one calendar month. C
D D
Question 3
E E
(7) For labour-only subcontracts, the subcontractors would
F F
be paid for their works and services if payment
G application with supporting document is made timely. G
A slight delay beyond the reasonable time shall not
H H
mean that the subcontractor is automatically not
I entitled to payment for its works. I
J J
(8) However, if the delay is serious, eg beyond three
K months after the completion of the subcontractor’s K
work or beyond six months if a very lenient approach
L L
is adopted, the subcontractor is not entitled to payment.
M The rationale is that it is impracticable for the main M
contractor to verify the works of the labour-only
N N
subcontractor after six months.
O O
66. The Plaintiff’s expert, Mr Honby Chan, has given the
P P
following opinion on the three questions:-
Q Q
R
(1) In context of provision of manpower, electrical services R
or engineering services by a subcontractor to a main
S S
contractor, unless the contract clearly specifies the time
T
limit, there is no trade custom or common practice that T
the subcontractor shall submit its invoices together with
U U
V V
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A A
B B
underlying documents for verification within a
C reasonable time after the completion of works and/or C
services and in any event before the conclusion of the
D D
relevant project.
E E
(2) In light of his opinion on question 1, questions 2 and 3
F F
do not arise. He supplements that he has handled
G hundreds of final accounts including main contract G
final accounts and subcontract final accounts. It is
H H
common that many final accounts are settled some
I years (in some cases, over 10 years) after the practical I
completion of the projects.
J J
K 67. I have no problem with accepting the proposition that it is a K
good practice for a subcontractor to submit its payment application with
L L
supporting documents within a month, especially considering the mode of
M operation between contractors and subcontractors and Mr Ricky Chan’s M
meticulous references to the various standard contracts commonly used in
N N
the construction industry. However, I have difficulties in accepting that
O it constitutes a trade practice:- O
P P
(1) If there were such a notorious trade practice, one would
Q Q
expect the Defendant to mention it or at least make
R
reference to it in its Terms and Conditions. R
Nevertheless, even though clause 6 of the Terms and
S S
Conditions is titled “Time of Essence”, it is only about
T
the seller’s obligation to deliver its goods within the T
U U
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A A
B B
agreed time. There is no stipulation as to when the
C Plaintiff should submit its payment application. C
D D
(2) As noted above, the Plaintiff has given two written
E quotations to the Defendant for the provision of E
manpower. The quotations contain a clause on
F F
payment terms (“bi-weekly basis against invoice”),
G which on the face of it means the Defendant has to settle G
the invoice within two weeks. There is however no
H H
provision governing when and how often the Plaintiff
I should issue its invoices. I
J J
(3) The parties’ conduct in this case is also illuminating.
K For instance, on 27 July 2015, Mr Ong from the K
Defendant issued an email to Mr Nelson Wong, asking
L L
the Plaintiff to, among others, provide the outstanding
M invoices from February to April 2015. There was no M
mention of a practice or requirement that the Plaintiff
N N
should have submitted its invoices within one month.
O Quite the contrary, the Defendant was asking for O
invoices from several months ago.
P P
Q Q
68. More importantly, even if there were a trade practice that a
R
subcontractor must submit its invoices and supporting document within R
one month, the more pertinent question is what the consequence is if the
S S
Plaintiff fails to do so. In other words, of the three questions put to the
T
experts, it is question 3 that assumes particular importance. While Mr T
Ricky Chan has supported his answer with his reasons (ie the difficulty in
U U
V V
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A A
B B
verifying the work done after six months), none of the standard contracts
C cited by him contain clauses to the effect that a subcontractor would be C
denied payment if it submits its invoices after six months.
D D
E 69. It may also be noted that Mr Ricky Chan’s opinion that a E
subcontractor would be denied payment if it submits its invoices after a
F F
lapse of six months is inconsistent with his opinion under question 1, where
G he opined that a subcontractor could submit its invoice within a reasonable G
time after the relevant completion of works or before the conclusion of the
H H
relevant project.
I I
70. I am perfectly aware that with the lapse of time, a main
J J
contractor would be faced with increasing difficulties in verifying a
K payment claim submitted by a subcontractor. This difficulty, however, K
would exist in practically all kinds of trade. The safeguard is that the
L L
plaintiff would still have to discharge its burden in proving the actual
M provision of goods or services, and there is a statutory time bar under the M
Limitation Ordinance. In this connection, I agree with the submission of
N N
Mr Solomon Lam, counsel for the Plaintiff, that even if there were a trade
O practice that a subcontractor would lose its entitlement to payment if it O
submits its invoice after six months, it is so unreasonable that this Court
P P
would not imply this trade practice as a term of the contract between the
Q Q
Plaintiff and the Defendant.
R R
71. For the aforesaid reasons, I do not agree with the Defendant
S S
that the Implied Term should be implied into the relationship between the
T
Plaintiff and the Defendant by virtue of custom or trade practice. T
U U
V V
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A A
B B
72. As to implication of terms by virtue of necessity, the
C principles have been authoritatively set out by the Court of Final Appeal in C
in Kensland Realty Ltd v Whale View Investment Ltd (2001) 4 HKCFAR
D D
381 at §23. In sum, any term to be implied must comply with the
E following requirements:- E
F F
(1) It must be reasonable and equitable;
G G
(2) It must be necessary to give business efficacy to the
H H
contract, so that no term will be implied if the contract
I is effective without it; I
J J
(3) It must be so obvious that “it goes without saying”;
K K
(4) It must be capable of clear expression; and
L L
M (5) It must not contradict any express term of the contract. M
N N
73. Subsequently, in Marks and Spencer plc v BNP Paribas
O Securities Services Trust Co (Jersey) Ltd [2016] AC 742 at §21, the O
Supreme Court of the United Kingdom has elaborated the above
P P
requirements in the following manner (which has been endorsed by the
Q Q
Court of Appeal in Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd [2019]
R
HKCA 261 at §§31-32):- R
S S
(1) Implication of a term is not critically dependent on
T
proof of an actual intention of the parties when T
negotiating the contract. If one approaches the
U U
V V
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A A
B B
question by reference to what the parties would have
C agreed, one is not strictly concerned with the C
hypothetical answer of the actual parties, but with that
D D
of notional reasonable people in the position of the
E parties at the time at which they were contracting. E
F F
(2) A term should not be implied into a detailed
G commercial contract merely because it appears fair or G
merely because one considers that the parties would
H H
have agreed to it if it had been suggested to them.
I Those are necessary but not sufficient grounds for I
including a term.
J J
K (3) It is questionable whether the first requirement, ie K
reasonableness and equitableness, will usually, if ever,
L L
add anything. If a term satisfies the other
M requirements, it is hard to think that it would not be M
reasonable and equitable.
N N
O (4) Although the requirements are otherwise cumulative, O
business necessity and obviousness, ie the second and
P P
third requirements, can be alternatives in the sense that
Q Q
only one of them needs to be satisfied.
R R
(5) If one approaches the issue by reference to the officious
S S
bystander, it is vital to formulate the question to be
T
posed by him with the utmost care. T
U U
V V
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A A
B B
(6) Necessity for business efficacy involves a value
C judgment. The test is not one of “absolute necessity”. C
It is more helpful to put it this way – a term can only be
D D
implied if, without the term, the contract would lack
E commercial or practical coherence. E
F F
74. Applying the above test, I do not consider that the Implied
G Term should be implied into the relationship between the Plaintiff and the G
Defendant:-
H H
I (1) As I have noted above, the Implied Term effectively I
shortens the limitation period to six months, which is
J J
unreasonable.
K K
(2) The Defendant argues that the Implied Terms “goes
L L
without saying” because it is in line with the trade
M practice in Hong Kong, which I have already held M
otherwise.
N N
O (3) As to the other reasons put forward by the Defendant, O
they may be relevant in establishing that it would be
P P
fair to the parties to have the Implied Term, or that the
Q Q
parties would have agreed to it if it had been suggested
R
to them. However, the contract remains effective and R
coherent without the Implied Term – just that the
S S
parties may have to incur more time and effort in
T
verifying the claims. T
U U
V V
- 47 -
A A
B B
Conclusion
C C
75. For the above reasons, I rule in favour of the Plaintiff and hold
D D
that the Defendant is liable to pay the Plaintiff HK$2,045,927.01 as the
E contractually agreed sum under invoices number 91111, 91112 and 91113, E
and HK$38,131.70 as quantum meruit for invoice number 91114.
F F
G 76. I make the following orders:- G
H H
(1) The Defendant do pay HK$2,084,058.71 to the
I Plaintiff; and I
J J
(2) The Defendant do pay interest on the sum of
K HK$2,084,058.71 at the HSBC prime rate plus 1% per K
annum from 13 December 2018 (ie the date of the Writ
L L
of Summons) to the date of judgment and thereafter at
M judgment rate until payment. M
N N
77. Costs should follow the event. I make an order nisi that the
O Defendant do pay the Plaintiff’s costs of the action (including all costs O
reserved) on party and party basis, to be taxed if not agreed, with certificate
P P
for counsel.
Q Q
R R
S S
T ( Patrick Siu ) T
Deputy District Judge
U U
V V
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A A
B B
C Mr Solomon Lam, instructed by Kwok Hei Law Office, for the Plaintiff C
D Mr Tommy Cheung, instructed by W K To & Co, for the Defendant D
E E
F F
G G
H H
I I
J J
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V V