E-Tech Services Ltd. v. United Centre Development Ltd.

DCCJ4866/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4866 OF 2001

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JUDGMENT

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1. The plaintiff's claim is for $170,000 as balance of the contract price for work done and material supplied to the defendant, and in the alternative for quantum meriut.

2. The defendant denies any contractual relationship with the plaintiff.

3. The plaintiff is the landlord and "nominated contractor" for a building known as Prestige Tower, No. 23 & 25 Nathan Road, Kowloon, in respect of air-conditioning, electrical work, plumbing and drainage works (the works), in addition to fire services installation.

4. The defendant entered into a tenancy agreement with the landlord, Benefit Plus Company Limited, for 3 years, starting from 18th September 2000, for 6th Floor of Prestige Tower (the suit premises).

The plaintiff's case

5. The plaintiff's case was that a company known as CTL International Ltd. (CTL), acting as the defendant's agent or on the defendant's behalf, agreed that the plaintiff should carry out the works at the suit premises. On 14th November and 20th November 2000, CTL accepted 3 quotations, and on 29th December 2000 issued a Purchase Order, for additional work. The plaintiff received a total of $110,000 from CTL as deposit for 2 of the invoices. The balance of the 3 invoices and the Purchase Order came to $170,000.

6. It is the plaintiff's case that all the works contracted for were completed. However, the balance was not paid. Because the defendant was the principal of CTL, its agent, or that CTL entered into agreement with the plaintiff on the defendant's behalf, the defendant is liable to the plaintiff for the balance of $170,000. Alternatively, the defendant should pay the plaintiff the $170,000 on the basis of quantum meriut; in that even if there were no contract between the plaintiff and the defendant, the plaintiff had carried out work at the request of, and for the benefit of the defendant.

The defendant's case

7. The defendant admitted that MP Hong Kong Ltd., on behalf of the defendant, had appointed CTL as the defendant's independent contractor, with the approval of the landlord, to carry out the interior design and renovation of the suit premises.

8. The letter dated 30th October 2000, to Prestige Property Services Ltd. the Building Manager, stated that the defendant had "appointed CTL International Ltd., as interior designer and renovation contractor to carry our related jobs in" the suit premises. The defendant expected the appointment to be effective from 30th October 2000 to 22nd December 2000.

9. The defendant had given instructions to CTL to comply with the landlord's requirements under the tenancy agreement and the related Fit Out Guide. The defendant had taken no part in the appointment of the plaintiff as the nominated contractor. The appointment came from CTL. The plaintiff was CTL's sub-contractor. There was no contract between the plaintiff and the defendant. There was no evidence that CTL was the defendant's agent when appointing the plaintiff. Payments made under the quotations, signed by CTL, were made by CTL. There was no payment made by the defendant to the plaintiff. The defendant had only dealt with CTL, and paid CTL.

10. It was the defendant's case that, since there had never been any contractual relationship between the plaintiff and the defendant, which was rendered unenforceable for some reason, quantum meriut cannot apply. Any work done by the plaintiff in the suit premises were done under the contract between the plaintiff and CTL.

11. The contract between the plaintiff and CTL was valid and subsisting, the plaintiff should sue CTL for the balance of the contract price.

Findings

12. The tenancy agreement between the landlord and the defendant provided under the Fourth Schedule Clause 2 (f) that:

"No work shall be carried out by the contractor other than contractors designated by the Landlord or such contractors approved by the Landlord in writing ......"

13. Clause 2 (j) provided that:

"The Tenant shall observe and comply with the provisions set out herein and the Tenant Fit Out Guide in the execution of such fitting out works ......"

14. The Tenant's Fit Out Guide at para. 3.14 named the nominated contractors. Tenants "are required to engage the ...... nominated building services contractors for" the air-conditioning, electrical work, fire services installation, plumbing and drainage work. The plaintiff was the nominated contractor for those works.

15. These are not in dispute and are found as facts of the case.

16. There was no dispute that the defendant had benefited from the work done by the plaintiff. The issue is, whether the work done was at the request of the defendant, and whether the agreement between the plaintiff and CTL was in fact between the plaintiff and the defendant.

17. It must be noted that the status of the plaintiff as the "nominated contractor" arose from the landlord's requirement under the tenancy agreement and the related Fit-Out Guide. The defendant as the tenant had to comply with the landlord's requirement to engage the plaintiff.

18. The defendant's argument was that while as the tenant, it was "required to engage" the plaintiff, there was no stipulation that the defendant must directly engage the plaintiff in the defendant's own capacity. The tenancy agreement at 2(f) of the Forth Schedule, allowed works to be carried out by "contractors approved by the landlord". The defendant had appointed CTL to be its contractor, and informed the building manager, there was no objection from the landlord. This is accepted and found as a fact of the case. CTL was therefore the contractor approved by the landlord.

19. CTL was an independent contractor, with the defendant's instructions to comply with the Fit-Out Guide in undertaking the renovation of the said premises. Any agreement made, was made between the plaintiff and CTL, independent of the defendant. The defendant was not a party. There was no privity of contract between the plaintiff and the defendant regarding the works.

20. CTL's scope of work under the contract was for "Design, Project Management and Fitting-Out".

21. It was also provided that "CTL shall exclusively employ qualified design, management and construction personnel to carry out the work hereunder...."

22. The contract stated that "CTL is an independent contractor and is not an employee or agent of" the defendant.

23. The quotation from CTL to the defendant did not include fire services, telephone, security, IT and AV systems. Salon basin and tap and loose furniture were also excluded. It was stipulated that since those items were not included in the quotation, final payment must be according to the site measurement.

24. The contract did not provide for direct payment by the defendant relating to any of the works not included in the quotation.

25. The contract sum could be adjusted where there were quantity adjustment, design amendment, addition or deduction of works, with the defendant's approval.

26. Apart from the periodic payment provision, there was a provision for final payment, where CTL was to "provide the final payment request and other information" to the defendant "within 7 days after the final inspection". The defendant was to examine, verify and make payment with 7 days after receiving the request.

27. The only documents signed by the plaintiff and CTL were 3 quotations prepared by the plaintiff, and a purchase order, prepared by CTL.

28. The plaintiff addressed the quotations to the defendant, "c/o CTL International Ltd." at CTL's address, attention of Mr. Eric Chiu, CTL's senior project manager. They were "Confirmed and Accepted by" CTL.

29. The Purchase Order was signed "for and on behalf of CTL International Ltd."

30. There was no representation from CTL that it was acting for and on behalf of the defendant, or as the defendant's agent.

31. It was the plaintiff's contention that the defendant's letter to the building manager, informing it that the defendant had appointed CTL as the defendant's interior designer and renovation contractor, was the defendant's representation that CTL was the defendant's agent and acting on the defendant's behalf.

32. It was not so stated in the letter. It was also directly contrary to the expressed intention of the contract between the defendant and CTL.

33. It was accepted by the plaintiff that there had been no contract between the plaintiff and the defendant, until a meeting on 15th January 2001, when CTL abandoned its position.

34. In the absence of any provisions in the main contract to the contrary, the contractual relationship between the defendant and CTL, and between CTL and the plaintiff are quite distinct and separate. Unless there was a valid assignment from the contractor, CTL, the plaintiff would not be able to sue the defendant for material supplied or work done under the plaintiff's contract with CTL.

35. In the present case, there had been no such assignment.

36. For quantum meriut to be applicable, the plaintiff would have to prove that the work done and material supplied were at the request of and for the benefit of the defendant. While there is no dispute as to the benefit, there is no evidence that the request came from the defendant.

Judgment

37. The plaintiff's claim is dismissed.

38. Costs to the defendant on party and party basis to be taxed if not agreed.