Redland Precast Concrete Products (China) Ltd v. Permasteelisa Hong Kong Ltd
Read the full judgment text of HCCT 35/2018 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 6 August 2020 before Hon Mimmie Chan J.
Contract law — Construction contract dispute — Whether binding pre-bid agreement or subcontract between Plaintiff and Defendant existed — Application of principles from Shanghai Tongi regarding inference of contracts from conduct — Confidentiality Agreement expressly negated contractual commitment — Documents and correspondence consistent with negotiations and evaluation, not concluded contract — Plaintiff’s work considered part of Defendant’s tender analysis and due diligence — No acceptance by Defendant of Plaintiff’s offer on crucial terms such as price — Quantum meruit claim rejected as no implied payment obligation due to lack of mutual confidence that contract would eventuate — Estoppel claim dismissed for lack of clear and unequivocal representation — Outcome: Plaintiff’s claims dismissed with costs to Defendant.
Legal issues: Existence of Pre-bid Agreement · Quantum meruit claim for work performed · Estoppel by representation
Outcome: Plaintiff’s claims dismissed; costs awarded to the Defendant.
Cited by 2 cases · Cites 3 cases
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HCCT 35/2018 [2020] HKCFI 1820 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 35 OF 2018 ______________
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______________ J U D G M E N T ______________ Background 1.These proceedings were commenced by Redland Precast Concrete Products (China) Limited (“Plaintiff”) against Permasteelisa Hong Kong Limited (“Defendant”), on the basis that there existed between them a contract, whereby the Defendant agreed to appoint the Plaintiff as its subcontractor for works to be carried out on the “M+ Museum Project” (“Project”). The Defendant denies that such a contract existed so as to bind the Defendant. 2.The Project was instituted by the West Kowloon Cultural District Authority (“Employer”), with a joint venture company comprising TFP Farrells Ltd, the architect, and Ove Arup Partners Hong Kong Limited as their consultant on the Project. On 26 September 2015, the Employer awarded the Main Contract for the Project to Hsin Chong Construction Company Limited (“HC”). On 22 October 2015, the Defendant was appointed the subcontractor for the design, supply, fabrication and installation of the curtain wall, skylight, precast ceramic façade system, and the LED lighting and associated works (“Subcontract Works”), by virtue of a letter of acceptance dated 22 October 2015 of the Defendant’s final offer for the execution of the Subcontract Works at the agreed price. The formal Subcontract signed between HC and the Defendant was dated 18 April 2016 (“Subcontract”). 3.On the Plaintiff’s case, a sub-subcontract and/or agreement was made between the Plaintiff and the Defendant, in respect of the part of the Subcontract Works, identified as the design, supply and delivery of the precast concrete façades (“Works”), which was to be integrated with the curtain wall forming part of the exterior façade system of the Subcontract Works to a tower and podium of the Project. The Plaintiff claims that it had agreed with the Defendant to undertake the Works at a consideration of $79,432,305. 4.The Plaintiff’s pleaded case is contained in paragraphs 3 to 5 of the Amended Statement of Claim (“SOC”). It needs no explanation as it is trite, that this defines the Plaintiff’s case, and not the witness statement of the Plaintiff’s witness. 5.According to paragraph 3 (a) of the SOC, the Plaintiff entered into a pre-bid agreement with the Defendant (“Pre-bid Agreement”), that “should the Defendant be awarded the Subcontract Work, the Defendant shall sublet (the Works) to the Plaintiff”. The Plaintiff pleads in paragraph 3 (a) that the Pre-bid Agreement was contained in and/or evidenced by: (1) a confidentiality agreement entered into between the Plaintiff and the Defendant dated 10 June 2015 (“Confidentiality Agreement”); (2) the Defendant’s emails of 23 June and 25 June 2015 (“June Emails”); (3) a letter dated 25 June 2015 from the Plaintiff (“25/6 Letter”); and/or (4) a pre-bid agreement which was made between HC and the Defendant dated 31 August 2015 (“HC/Defendant Pre-bid Agreement”). These documents are referred to hereinafter collectively as “4 Documents”. 6.The Plaintiff claims that the Subcontract Work had been awarded to the Defendant by HC’s letter of acceptance dated 22 October 2015 (“Letter of Acceptance”). It claims (in paragraph 3 (c) SOC) that “by virtue of the Pre-bid Agreement, the Plaintiff had entered into a sub‑subcontract with the Defendant” to carry out the Works (“Sub‑subcontract”). 7.In paragraph 4 of the SOC, the Plaintiff pleads that the Sub‑subcontract was contained in and/or evidenced by such terms and conditions as are set out in the HC/Defendant Pre-bid Agreement and the Letter of Acceptance, in so far as applicable to the Works, and/or the Plaintiff’s quotation dated 15 May 2015 (“Quotation 1”). 8.As part of its plea in paragraph 4 of the evidence of the Sub‑subcontract, the Plaintiff pleads in paragraph 4 (c) as follows:
The Plaintiff then listed details of the Works carried out by it, such as reviewing the Subcontract work program, the preparation and submission of manufacturing quality plans, etc. 9.In paragraph 5 of the SOC, the Plaintiff set out the terms and conditions of the Sub-subcontract, namely, that it should carry out the Works at the price of $79,432,305 (“Price”), subject to the adjustments set out in the email correspondence between HC and the Defendant, and further, that the unit rates of the Works set out in Quotation 1 was to be adjusted as set out in the correspondence. 10.The Plaintiff claims that the Defendant was in breach of the Sub-subcontract when it terminated or repudiated the same, by its letter to the Plaintiff dated 8 June 2016 and its email of 11 June 2016. The Plaintiff claims that it is entitled to the amount due under the Sub‑subcontract, or damages for the Defendant’s breach, and alternatively, to a reasonable price on quantum meruit basis. 11.In short, the Defendant denies that there was any pre‑bid agreement entered into with the Plaintiff, as alleged by it. Counsel for the Defendant highlights the fact that the Plaintiff’s case is premised on an agreement being inferred from the 4 Documents pleaded in paragraph 3 of the SOC, and on the 3 matters referred to in paragraph 4 of the SOC as evidencing the Sub-subcontract (namely, the terms and conditions of the HC/Defendant Pre-bid Agreement and the Letter of Acceptance, Quotation 1, and arguably the Plaintiff’s performance of the Works). On behalf of the Defendant, it was argued that such an inference cannot be made, and that on the facts, there was no Pre-bid Agreement reached between the Plaintiff and the Defendant. The Defendant claims that at the material time, the Plaintiff and the Defendant had been in preliminary discussions and were still at the stage of evaluation as to the suitability of the Plaintiff as a sub-contractor of the Defendant in respect of the execution of the Subcontract Works. The applicable legal principles 12.Both parties rely on the decision in Shanghai Tongi Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79, where the Court of Final Appeal set out the legal principles on the relevant considerations for inferring a contract from the conduct of the parties. At paragraph 36 of the judgment, Ribeiro PJ observed:
13.Ribeiro PJ also highlighted, at paragraph 38 of the judgment, the burden of proof and the evidence required:
14.The applicable legal principles are accordingly not disputed in this case, as to whether a contract can be inferred from the conduct of the parties, and from the existence or issuance of the documents relied upon by the Plaintiff as evidence of the existence of the Pre‑bid Agreement contended. The 4 Documents relied upon by the Plaintiff: the background thereof 15.The Confidentiality Agreement is the first document relied upon by the Plaintiff. This was sent in draft by the Defendant to the Plaintiff on 9 June 2015, for review. It was signed by the Plaintiff and returned to the Defendant on 10 June 2015. 16.The Confidentiality Agreement was in fact preceded by meetings and discussions which had been held between the Plaintiff and Defendant in May 2015. According to the agreed chronology of events, the Plaintiff had in fact been approached even earlier, in February 2014, when it was invited by one of the consultants of the Project to attend a meeting with the façade design team working on the Project. Technical issues were discussed and further meetings between the Plaintiff and the design team were held in 2014, but nothing further was heard by the Plaintiff in connection with the Project. 17.The Plaintiff claims that it was a year later, in 2015, when it was approached by HC, which had by then been invited to submit a tender for the Main Contract for the Project, and HC proposed a site visit to the Plaintiff’s casting yard. The purpose of the visit, according to the Plaintiff, was for HC to ascertain whether the Plaintiff was technically qualified to be a subcontractor for the fabrication of the precast concrete panel with ceramic tiles and finishing (“Precast Concrete Panel”) for the Project. The Precast Concrete Panel was planned to be integrated with the curtain wall forming part of the entire exterior façade system (“Exterior Façade”) to the tower and podium of the Project. After the visit, HC provided the Plaintiff with a set of the tender documents for the Main Contract relating to the Precast Concrete Panel. 18.On the Defendant’s side, it was explained that HC had been shortlisted by the Employer in early 2015 as one of the pre‑qualified bidders for the Project. The Defendant had been in negotiation with HC as early as March 2015, on the basis of the Defendant being the subcontractor responsible for the design, supply, fabrication and construction of the Exterior Façade and associated works for the Project. However, HC suggested to the Defendant instead that it should coordinate the works in relation to the design, supply and delivery of the Precast Concrete Panel as well, and that such works should be included in the Subcontract being negotiated. A meeting was held between HC and the Defendant on 5 May 2015 to discuss such proposed change of scope of the Subcontract Works. 19.The Defendant claims that it had approached a potential contractor for the Precast Concrete Panel works (“Beilida”), but it invited HC to arrange meetings to be held with at least 3 potential contractors for the Precast Concrete Panel works, including but not limited to the Plaintiff. It is not disputed, that such a meeting was held on 15 May 2015, and attended by HC, the Plaintiff and the Defendant, when the Plaintiff was introduced formally to the Defendant. 20.The Plaintiff explained that at the material time in May 2015, it had been invited, first, by tenderers for the Main Contract (other than HC) to submit its own quotations for the Precast Concrete Panel, which it did, on the understanding that if any of its quotations was accepted, the Plaintiff would become a subcontractor to one of these tenderers for the Main Contract. Further, the Plaintiff had also been invited by companies (including the Defendant) to submit its quotation for the Precast Concrete Panel works, for inclusion in these companies’ tenders for the Exterior Façade works, on the understanding that it would be a subcontractor to one of these tenderers, should such tenderer be awarded the subcontract of the Exterior Façade works. 21.It is not disputed that on 15 May 2015, the Plaintiff submitted Quotation 1 to HC, for the Plaintiff’s execution of the Works at a sum of $89,449,653. The amount was later reduced to the Price of $79,432,305, with the exclusion of 6 items of work. Quotation 1 was at the same time submitted by the Plaintiff to the Defendant. According to the Plaintiff, Quotation 1 was based upon the tender documents it had been given by HC. 22.The Plaintiff claims that at a meeting in late May or early June 2015, which was attended by Mr Liu and Mr Tai of the Plaintiff and Mr Li of HC, Mr Liu was told that the quotation for the Precast Concrete Panel was to be included in the tender for the Exterior Façade, such that if the Plaintiff was successful in its tender, it would become a subcontractor of the Defendant, which would in turn be a subcontractor of HC. It was explained to Mr Liu at the meeting that such an arrangement would better serve coordination, incorporation and management of the Project works. The Plaintiff’s evidence is that the Defendant was not present at the meeting. 23.It is not disputed that the Confidentiality Agreement was sent by the Defendant’s email to Mr Liu of the Plaintiff on 9 June 2015, and that it was duly signed by the Plaintiff and returned to the Defendant on 10 June 2015. This recites the fact that the Defendant had been invited to tender for the Main Contract for the Project, and that a “Conforming Design” of the Project had been received by the Defendant from HC. The Confidentiality Agreement further states, at recital C:
24.“Confidential Information” is widely defined in clause 1 of the Confidentiality Agreement, to include all information whether oral, written, electronic, visual or in any other recorded form of proprietary ideas, design, design drawings, technical information including but not limited to drawings, plans, technical studies, data, statistics, calculations, and trade secrets. It also includes any plans and/or strategy of the Defendant for tendering for the Main Contract, and business plans and models “and/or otherwise related to each of the parties exchanged, disclosed and/or otherwise provided under (the Confidentiality Agreement), and/or jointly developed by the parties during the discussion between the parties for achieving the Objective by the Defendant set out in paragraph C of the Recitals”. 25.The parties to the Confidentiality Agreement undertook, by clause 2, to strictly protect the confidentiality of and not to disclose the Confidential Information disclosed and provided under the agreement to any third party. 26.The Plaintiff’s use of the Confidential Information under the Confidentiality Agreement was limited, by clause 3, to the Objective, and not otherwise. 27.Clause 6 of the Confidentiality Agreement states that the agreement “shall remain valid until the termination of the Parties’ discussion for the Objective… or the date of submission of the Main Contract Tender if (the Plaintiff) is proposed as the domestic specialist subcontractor under (the Defendant’s) scope of works for further developing the Conforming Design and for the installation of (the Subcontract Works), whichever is later”. 28.The Defendant highlights and relies in particular on clause 8 of the Confidentiality Agreement, which provides as follows:
29.The Defendant’s evidence is that it was its standard practice to ask potential subcontractors to enter into a standard form confidentiality agreement. This was for the purpose of preventing the bidders to divulge to third parties during the tender stage confidential information of the project as would be exchanged between the parties. The Defendant claims that this was a common practice in the construction industry. It denies that the execution of the Confidentiality Agreement demonstrates the existence of any pre-bid agreement as is alleged by the Plaintiff, or any agreement at all, as the contents demonstrate the contrary intention. The Defendant highlighted the fact that it was only after and pursuant to the Plaintiff’s execution of the Confidentiality Agreement that the Defendant requested from, and provided to, the Plaintiff documents, drawings and information in connection with the Defendant’s tender to and its negotiations with HC in respect of the Subcontract Works. 30.It is not disputed that on 11 June 2015, the Defendant made its “best offer” to HC for the Subcontract Works, for $660,021,300 (“Defendant Best Offer”). The Plaintiff highlights the fact that the Defendant Best Offer included a quote of $99,565,000, for the precast concrete work of the Plaintiff. 31.The Plaintiff next relies on the June Emails as evidence of the existence of the Pre-bid Agreement. 32.On 23 June 2015, Mr Leung of the Defendant emailed the Plaintiff at 10:33 am, in the following terms:
33.The Plaintiff places reliance on the fact that the email referred to the fact that the Defendant was working on the pre-bid agreement for the Plaintiff to team up with the Defendant and HC, and that the Defendant asked for the Plaintiff’s best offer based on such a pre‑bid agreement. Whilst the Defendant argued that the Plaintiff did not provide its best offer, as requested in the email, the Plaintiff’s case is that it had confirmed in reply, by its email to Mr Leung of 23 June 2015 at 10:59 am, that there was no change from its previous price, such that the previous price quoted was the Plaintiff’s best offer. 34.The third document on which the Plaintiff places reliance is the 25/6 Letter. 35.On 23 June 2015, the Defendant submitted to HC its “final best offer” for execution of the Subcontract Works for the sum of $659,000,888 (“Final Best Offer”). This included the Plaintiff’s quotation of $99,565,000 for the precast concrete works. It is not disputed, that this was reduced to $630,000,888 on 24 June 2015. 36.Following the submission of the Final Best Offer, HC requested the Defendant and each of its suppliers to provide a letter, as required by the conditions of tendering for the Main Contract works, by which the subcontractor/supplier was to confirm its agreement to carry out the respective works, should HC’s tender for the Main Contract be accepted (“Letter of Intent”). The Defendant emailed the Plaintiff on 25 June 2015, asking the Plaintiff to issue the Letter of Intent, to be addressed to HC. The Letter of Intent was duly signed and issued by the Plaintiff in the specified form, pursuant to the request made in the Defendant’s email. The Plaintiff was originally asked to issue a Letter of Intent to confirm its willingness to act as the key domestic subcontractor of HC for the provision of precast concrete façade panel fabrication to the Project, if the contract should be awarded to HC. It was then asked to issue the Letter of Intent to the Defendant, to confirm its willingness to act as the domestic supplier of the Defendant for the provision of precast concrete façade panel fabrication, if the contract should be awarded to the Defendant. 37.The Plaintiff argued that it is clear from the Defendant’s request for the Letter of Intent from the Plaintiff, that the intention was for the Plaintiff to be the Defendant’s subcontractor, should HC be awarded the Main Contract, and the Defendant be awarded the Subcontract. 38.The final documentary evidence claimed by the Plaintiff to evidence the existence of the Pre-bid Agreement between the Plaintiff and the Defendant is the HC/Defendant Pre-bid Agreement which was signed by the Defendant and HC on 31 August 2015. 39.The correspondence shows that a draft pre-bid agreement was the subject of the emails exchanged between Mr Li of HC and Mr Leung of the Defendant on 5 June, 19 June, 22 June and 23 June 2015. In the email to HC dated 5 June 2015, Mr Leung of the Defendant stated:
40.On 19 June 2015, Mr Li of HC sent to Mr Leung by email HC’s draft of the pre-bid agreement. In another email dated 22 June 2015, Mr Li again enclosed the “HC version of pre-bid agreement” and referred to the confidentiality clause therein. The correspondence between HC and the Defendant culminated in the 23 June 2015 email sent by the Defendant to the Plaintiff at 10:33 am, which is relied upon by the Plaintiff, and in which the Defendant informed the Plaintiff that it had received the HC version of the pre-bid agreement, that it was reviewing same, and that it was working on a pre-bid agreement for the Plaintiff to team up with HC and the Defendant. 41.It is not disputed that no pre-bid agreement was signed between the Plaintiff and the Defendant, after and notwithstanding the 23 June 2015 email. The Main Contract was awarded to HC on 26 September 2015, and the Subcontract was awarded by HC to the Defendant, by a letter of acceptance dated 22 October 2015. Whether the 4 Documents constitute the agreement contended 42.The terms of the Confidentiality Agreement are clear. The parties acknowledge, by recital C, that they were engaged in discussions and negotiations, whereby they were mutually exploring and evaluating the appropriateness and possibility of the Plaintiff’s involvement as the proposed specialist subcontractor of the Defendant in the tender for the Main Contract of the Project, stated to be the Objective of the Confidentiality Agreement. They further acknowledged and agreed, by clause 8, that the provision and exchange of information under the agreement would not commit or bind either party to any present or future contractual relationship, and further, that the Defendant had no obligation under the agreement to enter into any contractual arrangement with the Plaintiff - including but not limited to any pre-bid agreement for engaging the Plaintiff as the Defendant’s specialist subcontractor. 43.The Defendant emphasized that throughout the negotiations during the tender period, from May 2015 until the award of the Main Contract to HC in September 2015, and thereafter until the Defendant itself was awarded the Subcontract in October 2015, the Defendant was in truth assessing the capabilities of the Plaintiff and whether it would be appropriate for the Defendant to appoint the Plaintiff as its subcontractor for the Precast Concrete works. Ultimately, the Defendant decided that the Plaintiff was not suitable and appointed another party instead, as it was at liberty to do, since the parties had acknowledged by the Confidentiality Agreement that the Defendant had no obligation to enter into any contractual arrangement with the Plaintiff. 44.With the express provisions of the Confidentiality Agreement in mind, and taking into account the fact that the burden is on the Plaintiff to establish the existence of the Pre-bid Agreement it alleges in these proceedings, it requires very convincing and unequivocal evidence for the Court to accept that, notwithstanding the parties’ acknowledgment contained in the Confidentiality Agreement, they had indeed entered into and concluded the Pre-bid Agreement. 45.On behalf of the Plaintiff, Counsel argued that the effect of the above provisions of the Confidentiality Agreement is only that the execution of the Confidentiality Agreement itself does not commit or bind the parties to any contractual agreement. According to Counsel, that does not preclude the parties from subsequently concluding an oral binding agreement, or from entering into an agreement by their conduct, for the Plaintiff’s execution of the Works. 46.First, there is no pleading of an oral agreement between the Plaintiff and the Defendant. Mr Liu’s testimony, in cross-examination, that the Plaintiff’s Quotation 1 issued on 15 May 2015 was only confirmation of an oral agreement already made, or an understanding reached, of a Pre-bid Agreement between the Plaintiff and the Defendant, is not the Plaintiff’s pleaded case. 47.As for the conclusion of an agreement by the parties’ conduct, the Court of Final Appeal highlighted in Shanghai Tongi Science & Technology Industrial Co Ltd v Casil Clearing Ltd that the Court will not imply a contract lightly, in the absence of conduct which is unequivocally referable to the contract sought to be inferred. 48.The June emails are equivocal, and do not show the conclusion of any agreement between the Plaintiff and the Defendant. Mr Leung only stated that the Defendant was reviewing the pre‑bid agreement which it had received from HC, and that it was working on a pre-bid agreement with the Plaintiff. There was no mention of the terms of the proposal for the “teaming up” of the Plaintiff with the Defendant and HC. As the Defendant highlighted, even in the email of 23 June 2015, the Defendant had pointed out that some of the main contractors to which the Defendant had submitted its tender were not agreeable to the inclusion of the Plaintiff’s precast concrete works in the Defendant’s package tender for the Exterior Façade works. The email did not express any commitment to the inclusion of the Plaintiff’s Precast Concrete Panel works in the Defendant’s contractual arrangement with any main contractor including HC. “Teaming up” is itself a general and vague term. It does not invariably have the meaning that the Plaintiff contends: that should the Defendant be awarded the Subcontract, it shall “sublet the Subcontract work” to the Plaintiff (paragraph 3(a), SOC). The Plaintiff, HC and the Defendant may “team up” in different ways, to work on the Project. 49.The Plaintiff places emphasis on the 25/June Letter it had issued, at the Defendant’s request made in the June Emails. By these, the Plaintiff was asked to confirm its willingness to act as the key domestic subcontractor of HC, and as the key domestic supplier of the Defendant, for the provision of the Precast Concrete Panel works for the Project. There is no evidence submitted as to which version of the Letters of Intent was used in HC’s tender to the Employer for the Main Contract, but the Plaintiff argued that the Defendant’s request for the letters demonstrated the Defendant’s intention and agreement to enter into a Sub-subcontract with the Plaintiff, should HC be appointed the main contractor and it in turn engages the Defendant as the Subcontractor. 50.On its part, the Defendant highlighted in its evidence that by 23 June 2015, the Defendant had not accepted the offers submitted by the Plaintiff for its execution of the Works, which was why no pre-bid agreement was signed and no agreement concluded with the Plaintiff. 51.In respect of the tender period up to the award of the Main Contract to HC on 26 September 2015, there was no evidence of any discussion between the Plaintiff and the Defendant on the terms of the alleged back-to-back pre-bid agreement arrangements. Even the evidence of Mr Liu is scanty in this regard. The meeting in late May or early June 2015 to which Mr Liu referred in his witness statement, when he was told that the quotation for the Precast Concrete Panel works was to be included in the External Façade tender, so that “if successful the Plaintiff would become a subcontractor of the Defendant who in turn (would become) a subcontractor of HC”, was not attended by the Defendant. The said representation was made by Mr Li of HC. Mr Liu only stated that he trusted that HC should have already informed the Defendant of such a contractual arrangement. There is no evidence from Mr Liu, that the Defendant had ever made such a representation to him or the Plaintiff. The alleged understanding, or “intention” to team up or to have a Pre-bid Agreement, to which Mr Liu referred in his testimony, was also totally lacking of specifics as to when and how this understanding or intention arose, and who had such intention. 52.It was on the basis of the discussion between Mr Liu and Mr Li of HC at the meeting in late May / early June 2015, that Mr Liu, in paragraph 27 of his witness statement, claimed the existence and explained the basis of the pre-bid agreement to which the Defendant had referred in the June Emails. According to Mr Liu, such pre-bid agreement was to provide a “back‑to-back undertaking between the Plaintiff and Defendant”, to bind the Plaintiff to assisting the Defendant, and hence HC, in preparing its tender for the Main Contract and to “secure the award of the Main Contract to HC, and to becoming a subcontractor to the Defendant should the Defendant enter into a Subcontract with HC”. 53.The June Emails made no such provision as Mr Liu contends. It only stated, equivocally, that the Defendant was reviewing the pre-bid agreement it had received from HC, which can only concern HC and the Defendant, and that the Defendant was “working on” a pre-bid agreement for the Plaintiff to team up with the Defendant and HC. Such pre-bid agreement between the Plaintiff and the Defendant could be entirely separate to and on totally different terms to the pre-bid agreement between the Defendant and HC. No further terms of the pre-bid agreement between the Defendant and the Plaintiff were ever proposed to the Plaintiff after the June Emails, let alone accepted by the Plaintiff. As Counsel for the Defendant highlighted, it is not even the Plaintiff’s pleaded case that its pre-bid agreement with the Defendant was back-to-back to, and on identical terms as, the pre-bid agreement between the Defendant and HC. 54.The Defendant further highlighted the fact that as at 5 June 2015, the Defendant was still requesting the Plaintiff to submit its best offer, in order for the Defendant to enter into pre-bid agreements with main contractors generally, namely, parties other than HC. This is evidenced by the email dated 5 June 2015 from Mr Leung of the Defendant to the Plaintiff. There was no indication of any intention on the Defendant’s part of having any arrangement which would commit the Defendant to contracting with the Plaintiff, should HC become involved. 55.The Plaintiff argued that the Defendant had accepted the Plaintiff’s offer, by including a quotation of $99,565,000 in its own best offer to HC of $616,021,300 on 11 June 2015, and in its final best offer to HC of $659,888 on 23 June 2015, covering the Plaintiff’s Precast Concrete Panel works. I do not agree that there is any evidence of acceptance which can constitute the conclusion of a binding agreement, when there is no evidence of any discussion and agreement between the Plaintiff and the Defendant on the important term of the price for the Plaintiff’s work. This is particularly so, when the Defendant’s quotation to HC was subject to a significant global discount, which the Defendant had not informed or consulted with the Plaintiff with regard to the works covered by the Plaintiff’s quote. 56.Counsel for the Plaintiff argued that the Defendant’s acceptance of the Plaintiff’s offer was subject to “further adjustments”, but there is no evidence from Mr Liu to support that, nor to explain what adjustments these would be. There is no evidence at all, that the Plaintiff and the Defendant had discussed the programme for the Works, or any method of variation or valuation of the Works. Materially, there is no evidence at all from the Plaintiff as to when the Defendant’s alleged acceptance of the Plaintiff’s offer or price for the Works had been communicated to the Plaintiff, for any alleged agreement to be concluded in law. 57.Having reviewed the June Emails, the Defendant’s provision to the Plaintiff of the HC version of the draft pre-bid agreement, and the Defendant’s request for the Plaintiff’s best offer based on a pre-bid agreement with HC and the Defendant, I accept the Defendant’s submissions that the documents and information provided to and requested from the Plaintiff all fall within “Confidential Information” as defined in clause 1 of the Confidentiality Agreement. They related to strategy for tendering for the Main Contract for the Project, and also related to the parties concerned in the tender. The Defendant’s provision of the draft pre-bid agreement received from HC, and the Defendant’s request for the best offer from the Plaintiff, are consistent with the Objective set out in recital C to the Confidentiality Agreement, such that the Defendant’s issue of the June Emails and the subsequent issue by the Plaintiff of the 25/6 Letter cannot be said to be conduct which is “unequivocally referable” to the Pre-bid Agreement and the Sub-subcontract claimed by the Plaintiff. The matters relied upon by the Plaintiff as evidence of the Pre-bid Agreement are consistent with the Objective as stated in the Confidentiality agreement signed by the Plaintiff: for the Defendant’s consideration of the Plaintiff as a suitable subcontractor to be proposed as a specialist subcontractor, and for inclusion in the tender for the Main Contract and under the Plaintiff’s scope of works. The conduct is, in my view, just as consistent with there being no pre-bid agreement between the parties. 58.The 25/6 Letter is not sufficient to tilt the scales in favour of the existence of the Pre-bid Agreement contended for. On the Plaintiff’s argument, the Defendant’s request for the Plaintiff’s issue of the 25/6 Letter is clear acknowledgment of the Plaintiff’s role as its sub‑subcontractor in the Project. This is because the Employer’s conditions of tendering for the Main Contract require a tenderer to include the name of one key domestic subcontractor for each key domestic subcontract, as well as confirmation by the named key domestic subcontractor, indicating its agreement to carry out the part of the work in question. The Conditions of Tendering Appendix CT.K (“Appendix”) state as follows:
59.The conditions of tendering further specify that after award of the contract, the tenderer “shall enter into” a subcontract with the respective key domestic subcontractors. 60.There is no evidence of the relevant tender submitted by HC, to ascertain whether the name of the Defendant, or of the Plaintiff, had been inserted in respect of the Precast Concrete Panel works. The Defendant emphasized that it was not in possession or power of HC’s tender documents to be in a position to make discovery. The Plaintiff suggested that, in any event, as evidenced by the email of 25 June 2015 sent at 13:29 pm, the Defendant had required the Plaintiff to confirm its willingness to act as the key domestic supplier of the Defendant, and the Plaintiff must accordingly be regarded as having been chosen as the selected key domestic sub‑contractor/supplier for the Precast Concrete Panel works. The Plaintiff argued therefore that the 25/6 Letter evidences the Pre-bid Agreement and the Defendant’s acceptance of the Plaintiff as its subcontractor. 61.On the available evidence, the conditions of tendering to which the parties have referred only govern the tender for the Main Contract, and the contracting relationship between the main contractor and the subcontractor, and not the dealings between the subcontractor and its sub-subcontractor. The conditions of tendering only bind HC. Even if the name of the Plaintiff had been included as the name of the selected key domestic subcontractor or supplier in the Appendix, it was only HC’s agreement and commitment to the Employer, that HC would enter into a subcontract with the named key domestic subcontractor/supplier, and that after award of the Main Contract, HC would not change the key domestic subcontractor without proper justification. In a similar way, the 25/6 Letter only committed the Plaintiff to act as the key domestic supplier for the provision of the Precast Concrete Panel works. There is no unequivocal agreement expressed by the Defendant, that it would enter into a contract with the Plaintiff, if the Defendant was awarded the Subcontract. The issue of the June Emails, and the Defendant’s request for the Letter of Intent from the Plaintiff, is not conduct which is unequivocally referable to the existence of the Pre-bid Agreement. 62.Even in the absence of such a Pre‑bid Agreement, bearing in mind the discussions and meetings which had (on the Plaintiff’s own case) taken place between the Plaintiff and HC in early June 2015, the Plaintiff would have issued the Letter of Intent upon HC’s request for the Plaintiff’s cooperation and assistance, to procure the award of the Main Contract to HC, without any commitment on the part of the Defendant. Mr Liu was apparently happy to rely on HC’s assurances of the Plaintiff being given a role in the Project, without any direct agreement made with or confirmed by the Defendant. It was obviously in the Plaintiff’s interest to provide documents and information, and even to sign the 25/6 Letter requested by the Defendant, in order to be included in the tender to be submitted to the Employer for the Works, whether the tender should be made by HC, or by the Defendant directly - even if there was no Pre-bid Agreement concluded between the Plaintiff and the Defendant. 63.The Defendant’s request for the Plaintiff’s 25/6 Letter is also consistent with the request for and provision of information which falls within the Confidential Information set out in clause 1 of the Confidentiality Agreement, exchanged and provided during the discussions between the Plaintiff and the Defendant for achieving the Objective defined in the Confidentiality Agreement, namely, the exploration of the possibility of involving the Plaintiff as a proposed specialist subcontractor of the Defendant in the tender for the Project. Even in the absence of the Pre-bid Agreement alleged by the Plaintiff, the parties would have issued the June Emails and the 25/6 Letter, as it was in their interests to do so in order to be included in HC’s tender for the Project. 64.Finally, the HC/Defendant Pre-bid Agreement adds nothing to the evidence. It is by itself simply an agreement made between the Defendant and HC, on its own terms and conditions, and makes no provision for any commitment by the Defendant or the Plaintiff to enter into a Sub-subcontract. Even in the absence of a Pre-bid Agreement between the Plaintiff and the Defendant, the Defendant would just as likely have entered into the HC/Defendant Pre-bid Agreement. 65.To conclude, I reject the contention that there was a Pre-bid Agreement made between the Plaintiff and the Defendant, contained in and/or evidenced by the 4 Documents referred to in paragraph 3 (a) of the SOC. Post-tender period and work done 66.According to the pleading in paragraph 3 (c) of the SOC, it was by virtue of the Pre-bid Agreement that the Sub-subcontract was entered into. 67.It is not clear from paragraph 4 (c) of the SOC that the Plaintiff’s pleaded case is that its performance of the Works is evidence or the constitution of the Sub-subcontract alleged. The Defendant argued that paragraph 4 (c) only pleads the Plaintiff’s performance of the Works and the particulars of such performance. Even if a generous reading of paragraph 4 (c) is warranted, I do not accept that the Plaintiff’s execution of the Works, as particularized in paragraph 4 (c), is sufficient to justify a finding by the Court that the Sub-subcontract/Pre-bid Agreement can be inferred or implied from the Plaintiff’s conduct. In this regard, it has to be borne in mind again that for the Court to infer a contract from the conduct of the parties, the conduct must be unequivocally referable to the contract sought to be inferred (Shanghai Tongi). It is necessary to identify conduct which is referable to the contract contended or, at the very least, conduct inconsistent with their being no contract made between the parties to the effect contended (The Aramis). The parties’ conduct “must be consistent only with there being a … contract implied, and inconsistent with there being no such contract” (Mitsui & Co Ltd v Novorossiysk Shipping Co). 68.The Plaintiff places reliance on the fact that, after the award of the Main Contract to HC and the Subcontract to the Defendant, the Plaintiff had prepared and submitted mockup samples, produced manufacturing quality plans, prepared and submitted information, plans and drawings and attended meetings and workshops from December 2015 to June 2016, all of which the Plaintiff claims was work performed within the scope of the Sub-subcontract. The issue is whether such conduct is consistent only with there being a Sub-subcontract. 69.On the Defendant’s part, it claims that all the work carried out by the Plaintiff and the conduct on which the Plaintiff relies was solely for the purpose of allowing the Defendant to ascertain whether the Plaintiff was suitable to be appointed as its subcontractor for the Works (paragraph 7.1 of the Defence). In paragraph 7.3 of the Defence, the Defendant pleads that it was its practice to invite quotations and then to evaluate tenderers and potential candidates by way of assessments and due diligence, before any award of contract. 70.In its evidence, the Defendant claims that it was its standard internal procedure, after being awarded a contract, to pass matters relating to the contract from the tender team to the procurement and design teams of the Defendant, for selection of the suitable subcontractor(s). At this stage, the Defendant’s usual practice was to undertake a tender analysis, to evaluate all the potential candidates to be appointed as the Defendant’s subcontractors (“Tender Analysis”). The Defendant explained that the Tender Analysis was to ensure that the potential subcontractor selected would be able to meet the Defendant’s various selection criteria, including criteria as to price, equipment, experience, and ability to meet the client’s requirements and safety standards, which are all project specific. All potential candidates to be appointed would be subjected to such evaluation. 71.The Defendant’s evidence is that the standard Tender Analysis was embarked upon in this case, after HC awarded the Subcontract to the Defendant on 22 October 2015. It had requested the Plaintiff, and a few other named potential precast concrete suppliers, to submit their quotations for the Precast Concrete Panel works, in late December 2015 to early January 2016. 72.According to the Defendant, as part of the Tender Analysis and selection and evaluation of the subcontractor to be selected, it had also asked the Plaintiff (and other candidates) to provide information, comments and preliminary drawings and to arrange for inspections, all with a view to the Plaintiff’s demonstration, and the Defendant’s evaluation, of the Plaintiff’s design and engineering capabilities for the Works, its quality assurance and quality control abilities when executing the Works, its abilities to properly hoist and/or handle the completed façade panels should the Works be subcontracted to the Plaintiff, and the Plaintiff’s capabilities to fulfill the requirements of the Employer and its consultant team, through the provision of samples and mockups of the façade units. 73.Prior to asking for quotations, on 24 November 2015, the Defendant had conducted an inspection of the Plaintiff’s casting yard. Counsel for the Defendant emphasized that this was the first occasion on which the Defendant had visited the Plaintiff’s factory and its production facilities. It was argued that it was beyond belief, in view of the Defendant’s usual and standard practice of Tender Analysis, and given the complexity and scale of the Project and the Subcontract Works involved, that any binding contract, pre-bid agreement or otherwise, would have been made by the Defendant before it had the opportunity to visit the Plaintiffs factory, and of being satisfied as to the Plaintiff’s production capabilities. 74.On the evidence, the Defendant had also emailed Mr Liu on 30 November 2015, to ask for the Plaintiff’s quality control documents for the Defendant’s perusal by 4 December 2015. These documents included a quality control plan in manufacturing. In reply, the Plaintiff submitted the documents requested to the Defendant, on 4 December 2015. Pertinently, the Manufacturing Quality Plan (“MQP”) submitted by the Plaintiff to the Defendant for supply and delivery of precast façade for the Project was expressly stated to be for “tender”. This is inconsistent with the Plaintiff’s contention that there already existed, since May/June 2015, a Pre-bid Agreement and binding contract between the Plaintiff and the Defendant, pursuant to which the alleged Sub-subcontract was entered into. 75.The Plaintiff did issue a letter to the Defendant, on 10 December 2015, by which it referred to the Subcontract which had been awarded to the Defendant by HC, and the intention of the Plaintiff and the Defendant “to jointly pursue the precast façade curtain wall works”. The letter concluded that it was “reasonable to imply that under (their) cooperation intention”, the Plaintiff should obtain the subcontract from the Defendant for the Precast Concrete Panel works, stating that the Plaintiff was awaiting the Defendant’s confirmation. 76.On 22 December 2015, the Defendant sent to the Plaintiff a report concerning its inspection of the Plaintiff’s casting yard on 8 December 2015, and identified 7 negative findings. 77.On 29 December 2015, the Plaintiff wrote to the Defendant again, stating that a pre-bid agreement existed between HC and the Defendant, and between the Defendant and the Plaintiff. The Plaintiff claimed that as the Defendant was inviting tenders and quotations for works which should fall under the subcontract between the Plaintiff and the Defendant, the Defendant was in blatant breach of the pre-bid agreement and the Sub-subcontract, and that it would take appropriate action to protect its interests. 78.In reply, the Defendant issued a letter to the Plaintiff on 6 January 2016, refuting the allegation of existence of a Pre‑bid Agreement with the Plaintiff. The Defendant referred to the Confidentiality Agreement, clause 8 thereof, and reiterated that it had no binding commitment to the Plaintiff. The Defendant stated in the letter that it would take the Plaintiff’s knowledge on the Project into account during its tender analysis. 79.It was on 30 December 2015, that the Defendant emailed Mr Liu of the Plaintiff, inviting the Plaintiff to submit its “most competitive quotation” for the Works. A “Request for Quotation” (“RFQ”) was issued to the Plaintiff on the same day. The RFQ reads:
80.The statement contained in the RFQ was consistent with the Defendant’s stance, that the parties were still in the stage of Tender Analysis. 81.I accept that it is to be expected, for any construction project, that a contractor has to be satisfied with the performance and capabilities of the subcontractor it is to appoint for any part of its work. The contractor would normally seek to be so satisfied either by making its own assessment of the candidate, either on the basis of the candidate’s demonstration of its abilities and willingness to work with the contractor, or from the contractor’s previous experience of working with the candidate being considered. This is more to be expected and can be taken to be the usual if not necessary course, for a particularly complex and large scale scheme such as the Project in this case. 82.I have borne in mind the Plaintiff’s assertion that on the Defendant’s case, the alleged Tender Analysis was ongoing for 6 months, until early June 2016. 83.The Defendant has highlighted the complexity of the Project and the demanding specifications of the Subcontract Works and the Works which fall within the scope of the alleged Sub-subcontract in this case. The scope of the relevant work included the design, testing, supply and installation of the building façade. The tender and initial contract drawings and specifications prescribed only the minimal performance requirements for the façade works, and the subcontractor had to undertake design development work in order to comply with the contractual performance requirements. There was a duty to warn under the specifications, in that any discrepancies or contradictions in the drawings and specifications had to be brought to the attention of the design and build contractor and its consultant team by the subcontractor, for clarification during the tender period. Upon award of the Subcontract, the subcontractor was to be responsible for further developing the Works in accordance with the drawings, and this may be either the subcontractor’s development of the system illustrated in the contract drawings, or the subcontractor’s alternative system which would satisfy the design intent, subject to the review and approval of the consultant team. As Counsel for the Defendant emphasized, it was not a simple contract for the supply and installation of façade panels or precast concrete panels. In his cross‑examination, Mr Liu of the Plaintiff acknowledged and accepted that the Project was unique and demanding. 84.Further, in the evidence of Mr Turnbull adduced for the Defendant, it was explained that the Defendant was already developing a design during the tender stage which was different from the drawings approved by the Buildings Department. The drawings initially approved did not take into account the curtain wall works which formed part of the Subcontract. The Defendant accordingly had to re-engineer all the drawings, to prepare and develop an amended design which could combine the Defendant’s curtain wall works with the precast concrete works (“Developed Design Intent”). 85.Mr Turnbull explained that the Developed Design Intent involved the creation of façade panels by joining together the precast concrete façade and the aluminum curtain wall, which involved two very different kinds of materials. This was, according to Mr Turnbull, a very rare and non-typical combination of materials used in a construction project, and the design for the Subcontract Works is very unique and bespoke. For that reason, the Defendant as the aluminum curtain wall fabricator had to be extremely careful to ensure that the precast concrete façade units fabricated by the precast concrete supplier would be compatible with the Defendant’s own aluminum curtain wall system, and that the completed structure would be safe, functional, aesthetically appealing, economical and acceptable to the client. To achieve this, Mr Turnbull explained that the Defendant had to carry out extra inspections and high-level due diligence works on the production capacity of the candidates for the precast concrete supplier, to ensure that such supplier had the necessary engineering and design skills, and the expertise to meet the Defendant’s requirements for the combined structure. Workshops had to be conducted and were conducted for these purposes. 86.On the totality of the evidence, the time and attention taken for the Defendant to undergo and complete its Tender Analysis after the award of the Subcontract can be appreciated. 87.On the Defendant’s evidence, the meetings held with the Plaintiff were for the purposes of explaining the Developed Design Intent to the Plaintiff, and discussing the precast concrete façade details and the technical issues involved, to ensure that the Plaintiff would understand the allowable tolerances for joining the precast concrete façade and the aluminum curtain wall, as a prerequisite of the design development of the Subcontract Works. 88.Mr Turnbull therefore explained that the Defendant had to conduct enhanced due diligence on the engineering and design abilities of both the Plaintiff and the other candidate being considered for the Subcontract (“HL”). The details of the meetings, discussions and information exchanged in the course of the Defendant’s Tender Analysis were set out in Mr Turnbull’s witness statement. I find them to be credible and inherently probable, in view of the technicality and complexity of the Subcontract Works involved and also because, as the Defendant explained, it did not have any prior experience of working with the Plaintiff. 89.Significantly, when the Defendant invited the Plaintiff on 30 December 2015 (by the RFQ) to submit its most competitive quotation for the Works, the Defendant had expressly stated that the quotation was “to assist in the evaluation” of the Plaintiff’s bid. This is consistent with the Defendant’s case, that there was no binding Subcontract, and that the Plaintiff was still being evaluated as a bidder for the Subcontract. The Plaintiff’s quotation of 8 January 2016, for $79,822,596, was submitted to the Defendant on such basis, and with express reference to the Defendant’s RFQ. 90.On the totality of the evidence, I do not accept that the parties’ conduct after the award of the Main Contract to HC in September 2015 and the award of the Subcontract to the Defendant in October 2015, is unequivocally referable to the existence of a Pre-bid Agreement or a binding Sub-subcontract between the Plaintiff and the Defendant. The submission of the Plaintiff’s 4th quotation on 8 Jan 2016 (“Quotation 4”), the MFP, the meetings held between the Plaintiff and the Defendant and the Plaintiff’s submission of technical details and samples, are equally consistent with the Tender Analysis being conducted by the Defendant on the Plaintiff’s capabilities and suitability as a possible subcontractor for the Works. 91.As Counsel for the Defendant pointed out, the Plaintiff had already invested time in familiarizing itself with the tender documents and the tender drawings, and involvement as a subcontractor or supplier in the Project was a lucrative prospect. It defies commercial and common sense that the Plaintiff would stonewall any request for information, or even samples, from the Defendant, and refrain from carrying out any of the work it relies upon as relevant conduct, unless the alleged Pre‑bid Agreement/Sub-subcontract was in existence. Counsel pointed out, and Mr Liu agreed, that the direct costs the Plaintiff had incurred, in performing the work it did, were modest. The pre-tender period, from October 2015 until June 2016 when the Defendant allegedly repudiated and terminated the agreement with the Plaintiff, was about 6 months in duration. The direct costs claimed by the Plaintiff, in the region of $480,000, came to less than $70,000 per month. On the evidence, I consider that the Plaintiff would have acted as it did, even if there was no contract as contended. I am not satisfied that the conduct sought to be relied upon by the Plaintiff is referable ONLY to there being the Pre-bid Agreement and Sub-subcontract in existence. 92.I fail to see how the internal email correspondence amongst the Defendant’s personnel, on 31 December 2015 and early January 2016, as to the existence or otherwise of a binding Pre-bid Agreement between the Plaintiff and the Defendant, can advance the Plaintiff’s case. Any individual’s understanding or misunderstanding as to the effect of the documents signed and whether, as a matter of law, a contract had been concluded is not binding on the Court. In any event, the conclusion made by the Defendant in the correspondence was that there was no pre-bid agreement, and no binding contract between the parties. It is also the finding made by this Court. 93.There was much debate as to whether the Plaintiff’s production of a louver mockup for the tower façade constitutes performance of the Work within the scope of the alleged Sub-subcontract. The Plaintiff relies on the fact that the MJV Factory Inspection Report issued on 8 April 2016 (“MJV Report”), in respect of an inspection and visit to the Plaintiff’s production facility on 24 March 2016, evidences the fact that by then, the Plaintiff had produced a partial louver mockup of the tower façade, which was inspected by representatives of the consultants, the Plaintiff and the Defendant. The MJV Report stated that the consultants were pleased with the mockup, and that the prototype produced by the Plaintiff “was a good first attempt at the required sample to be submitted according to Schedule 2 of the Façade Particular Specifications” of the Subcontract. 94.The Subcontract between HC and the Defendant includes a Schedule 2, setting out the samples required to be submitted by the Subcontractor. These examples include the submission: firstly, at the time of the tender submission, of “precast and ceramic compound ‑ Louver” of specified dimensions, which were to be retained and used as control samples; and further, after the award of the Subcontract, of a series of benchmark façade assemblies representative of the complete project, to be developed and mounted to the existing concrete visual mockup, for approval by the consultants. Such post‑award assemblies included a tower prototype, a GF prototype and a podium prototype. 95.The MJV Report refers to the completion of a “partial” mockup of the tower façade louver. It was clearly recorded that the Plaintiff was planning yet to cast an additional trial mockup of the tower façade, and further, that there were no trial mockups which had been done for the podium façade. The photographs of what had been completed by the Plaintiff depict a mockup of 2 tiers. The Defendant emphasized that the partial mockup of the tower façade louver produced by the Plaintiff by the time of the inspection on 24 March 2016 was not what was required under Schedule 2, for production after the award of the Subcontract, and as alleged by the Plaintiff to be evidence of performance of the Work within the scope of the Sub‑subcontract. 96.To the contrary, the Defendant pointed out that on 18 February 2016, the Defendant had issued a purchase order for the Plaintiff’s supply and delivery, by 28 March 2016, of the precast concrete for the tower façade mockup (“Purchase Order”), and that such Purchase Order stated expressly that the mockup was a “Due-Diligence Mockup (Sample)”. On the Defendant’s case, the Plaintiff failed to produce the completed mockup specified in the Purchase Order by the delivery date of 28 March 2016. The mockup referred to in the MJV Report, which was inspected on 24 March 2016, was only a partial mockup. 97.The Plaintiff has not been able to establish, by the available evidence and on a balance of probabilities, that its production of the mockup which was inspected on 24 March 2016 was performance of the Sub-subcontract alleged. It is equally probable that the mockup was only produced by the Plaintiff for the tender submission, as part of the due diligence undertaken in the Defendant’s Tender Analysis, and for the purpose of establishing the Plaintiff’s capacity to carry out the work contemplated to be subcontracted by the Defendant. The comments made by the consultants in the MJV Report do not take the Plaintiff’s case much further. The consultants only noted that the prototype produced and inspected “was a good first attempt at the required sample to be submitted according to Schedule 2”. This is equally consistent with the process of due diligence and Tender Analysis being undertaken, for the Plaintiff to demonstrate to the consultants and the Defendant, to their satisfaction, that the Plaintiff was capable of achieving the standards required to the appointed as the sub-subcontractor for the Works. 98.As the Defendant pointed out, the Plaintiff was at one stage the fore-runner in the bid for the Sub-subcontract, and it is conceivable that positive comments would have been made on the Plaintiff in the materials prepared at the Tender Analysis stage. References to the Plaintiff as “our specialist subcontractor” or “our supplier” in the correspondence or the documents in the course of the Tender Analysis cannot be taken as unequivocal evidence proving that the Plaintiff had already been awarded the Sub-subcontract contended for. 99.It is clear from the evidence that from February to May 2016, the Plaintiff and the Defendant were still discussing and in negotiations on the price (in Quotation 4 issued on 8 January 2016) for the Works to be carried out and on the terms and conditions of their working arrangement, with the submission of drafts of the purchase agreement for the supply of the precast concrete panels in February and April 2016, and drafts of the letter of intent for the Sub-subcontract on 16 and 24 March 2016. It is not disputed that the terms were not agreed, and no purchase agreement or Sub-subcontract was signed by the Plaintiff. 100.The draft letter of intent submitted by the Defendant to the Plaintiff on 24 March 2016 contained a conditional acceptance of Quotation 4, subject to the client’s formal approval of the Plaintiff as the contractor for the Works, and approval of the Plaintiff’s sample as per the Purchase Order. The Defendant claims that this was entirely consistent with the fact that there was still an ongoing assessment and evaluation of the Plaintiff’s suitability as the subcontractor for the Works. The draft letter of intent also included a provision that, in the event that a formal Sub-subcontract for the Works was not entered into by 30 April 2016, or such later date as may be agreed in writing between the Plaintiff and the Defendant, the Defendant would pay to the Plaintiff “all of its proven and reasonable direct and documented costs incurred, up to a maximum sum of $5 million” which may be increased by the Defendant at its sole discretion (“Payment Condition”). 101.The letter of intent was signed by the Plaintiff, but with the Payment Condition deleted. 102.The Defendant finally decided in June 2016 to appoint HL as the Sub-subcontractor, recommended such choice to HC, and the appointment was approved. In his evidence, Mr Turnbull explained that the Defendant’s decision was due to various reasons he set out in his witness statement, which included the Plaintiff’s reluctance to revise its designs submitted at the tender stage, and its reluctance to carry out further assessment, engineering work and precast tolerance calculations based on the Defendant’s latest and developed designs. In short, Mr Turnbull explained that at the end of the Tender Analysis, the Defendant had doubts as to the Plaintiff’s abilities to fulfill the requirements relating to the design of the precast concrete works, and as to the Plaintiff’s design and engineering capability to manage such works. 103.As Counsel for the Defendant submitted, and I accept, the parameters of the parties’ negotiations were clearly set by and specified in the Confidentiality Agreement. This was signed by the parties at arm’s length. The Plaintiff was entitled to be as economical as it chose in the provision of information and in the submission of such calculations and drawings as may be requested of it. Whether it chose to do so would of course involve the Plaintiff’s consideration of whether its chances of obtaining the award of the Sub‑subcontract would be enhanced, or diminished, by the attitude it adopts and the assistance it furnishes, or refrains from furnishing. The Plaintiff was also entitled to protect its own interests by making such amendments as it may consider appropriate to the Confidentiality Agreement, or by securing the execution of such other contract as may be necessary to provide for the limits to the services and materials it can be required to provide, or by ensuring that it would be reasonably and fairly compensated for any work or service which was required of it. The Payment Condition could have been included by the Plaintiff at an early stage of the negotiations. When it was introduced in the draft letter of intent submitted by the Defendant in March 2016, the Plaintiff decided to exclude the provision. At the end of the day, the parties have to be bound by the contractual arrangement to which they had agreed, and the Court is not in a position to rewrite their contract. 104.The Confidentiality Agreement clearly sets out (in clause 8) the parties’ acknowledgment and agreement that they were not bound to any present or future contractual relationship save for carrying out and continuing with the negotiations on the involvement of the Plaintiff as a proposed specialist subcontractor in the tender for the Main Contract. The fact of the parties’ negotiations on the terms of the Plaintiff’s involvement and appointment as the Sub-subcontractor, and the work carried out by the Plaintiff after the award of the Subcontract to the Defendant, are not unequivocally referable to the fact that a binding Sub‑subcontract had been concluded, as contended by the Plaintiff. Such work was, on the balance of probabilities, part of the continuing process of due diligence and Tender Analysis conducted by the Defendant, as to the appropriateness of appointing the Plaintiff as its subcontractor. 105.I therefore conclude, on the pleadings and the evidence, that there is no Pre-bid Agreement and no Sub-subcontract made between the parties such as would entitle the Plaintiff to any payment. Quantum meruit claim 106.Having found that there was no contract between the parties, it follows that there was no breach or wrongful termination of contract, as alleged. The Plaintiff claims, as an alternative to damages for breach of contract, payment of a reasonable price for the works carried out on quantum meruit basis. 107.I have found that the work carried out by the Plaintiff and for which payment is claimed was for the purpose of the Tender Analysis and due diligence carried out by the Defendant, and for its objective of obtaining and securing the Sub‑subcontract from the Defendant. On the facts and evidence, the work carried out by the Plaintiff was not requested by the Defendant in contemplation of the Sub-subcontract being executed, nor in anticipation of the execution of the Sub-subcontract. The Defendant’s RFQ of 30 December 2015 required the Plaintiff to submit its quotation for the Works, to assist in the evaluation of the Plaintiff’s bid. The Plaintiff’s Quotation 4 dated 8 January 2016 was submitted by reference to the RFQ. As Counsel for the Defendant highlighted, the evidence shows that the Plaintiff had unreservedly agreed thereafter to participate in the Defendant’s Tender Analysis. The MQP was sought by the Plaintiff in November 2015, and the MQP submitted by the Plaintiff in response was stated to be for “tender” purposes. The updated MQP on 23 March 2016 was likewise prepared as a tender document. The work carried out by the Plaintiff in 2016 was pursuant to requests stated by the Defendant to be for due diligence and Tender Analysis, and understood by the Plaintiff as such when it performed the work for which payment now is claimed. The circumstances and facts are accordingly distinguishable from those in the cases relied upon by the Plaintiff to support its claim for payment on quantum meruit. 108.In Goff & Jones “The Law of Unjust Enrichment”, 9th Edition, the authors stated at paragraph 16-04:
109.In British Steel Corp v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504 at 511B-D, Goff J explained:
110.Keating on Construction Contracts, 10th edition, stated, at paragraph 4-034:
111.There was no express reservation of the parties’ negotiations being “subject to contract” in this case, but the terms of the Confidentiality Agreement made it clear that the parties were not committed to any present or future contractual relationship, and that there was no obligation on the part of the Defendant to enter into any agreement with the Plaintiff. The work was performed by the Plaintiff in 2016 after it had been invited to submit its quotation to assist in the Defendant’s evaluation of its bid. By then, the Defendant had also unequivocally stated its position in the letter of 6 January 2016, that there was no pre‑bid agreement, nor any binding commitment to the Plaintiff. The Defendant had also stated in the 6 January 2016 letter that there was a tender analysis being undertaken, in which the Plaintiff’s knowledge of the Project would be taken into account. 112.As the Defendant highlighted, even in the Plaintiff’s own letter of 26 February 2016, the Plaintiff had shown that it was acutely aware of the fact that there was no Sub-subcontract awarded to it, when it stated that it would only update the MQP once the Defendant awarded the contract to it. It can hardly be said that both parties confidently expected at the time that a formal contract was bound to eventuate. 113.Significantly, the Payment Condition which had been included in the draft letter of intent was deleted by the Plaintiff on 12 April 2016. The Defendant cannot be taken to have understood that any services carried out by the Plaintiff would have to be remunerated in any way. 114.In the circumstances, I find that there was no implied agreement that the work carried out by the Plaintiff should be paid on quantum meruit or any other basis. Estoppel 115.The Plaintiff pleads, in its Reply, that the Defendant is estopped from denying that there was a Sub-subcontract between the Plaintiff and the Defendant. It claims that by requiring the Plaintiff to perform and carry out the Works, the Defendant had made a clear and unequivocal promise or representation to the Plaintiff, that the Sub‑subcontract existed, or that the Works were performed by the Plaintiff as subcontractor, and alternatively, that the parties had acted upon a common assumption of the existence of the Sub- subcontract. 116.The Plaintiff argued that the necessary elements to estoppel have all been pleaded and established, referring to Mo Ying v Brillex Development Ltd [2014] 3 HKLRD 224, paragraph 144 of the judgment. 117.No detailed submissions have been made by Counsel, but I can readily reject the claim of estoppel. The passage of the judgment cited refers to the essential elements of estoppel by representation, as being: (1) a representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made; (2) an act or omission resulting from the representation, whether actual or by conduct, by the person the representation is made; and (3) detriment to such person as a consequence of the act or omission. 118.On the evidence in this case, there is no clear and unequivocal representation or conduct on the part of the Defendant, that a Sub-subcontract existed, or that the Works were to be carried out by the Plaintiff as a subcontractor to the Defendant. Far from such a case, the Defendant made it clear to the Plaintiff in the Confidentiality Agreement, at the tender stage, that the information, documents, calculations and assistance sought from the Plaintiff was for the Objective defined in the Confidentiality Agreement, of mutual exploration and evaluation, that there was no commitment by either party to any present or future contractual relationship, and that the Defendant had no obligation to enter into any contractual arrangement with the Plaintiff. At the post‑tender stage, the Defendant also made it clear, in its letter to the Plaintiff of 6 January 2016, that there was no Pre-bid Agreement and no binding commitment to the Defendant, and that there was a Tender Analysis. The production of the tower façade mockup, which was the subject matter of the Purchase Order of 18 February 2016, was also stated to be for “due diligence”. 119.The essential element of a clear and unequivocal representation, for the doctrine of estoppel by representation to operate, does not exist. 120.On the Defendant’s evidence, there was certainly no assumption on its part, that a binding Sub-subcontract existed, for any estoppel to apply. Disposition 121.The Plaintiff’s claims for relief are all dismissed, with costs to the Defendant.
Ms Queenie WS Ng, instructed by KH Lam & Co, for the plaintiff Mr Jonathan Wong, instructed by Ince & Co, for the defendant |
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