Case No. 1996 C. No. 2446
IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION
Date: 21/10/1999
Before: 

MR NICHOLAS STRAUSS QC 
(sitting as a Deputy Judge of the High Court)
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B E T W E E N :

COUNTRYWIDE COMMUNICATIONS LIMITED
Plaintiffs
- and -

ICL PATHWAY LIMITED
First Defendants
- and -

INTERNATIONAL COMPUTERS LIMITED
Second Defendants
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_____________________________

Mr. Charles Samek, instructed by Messrs. Alan Hamblett & Co, appeared for the plaintiffs.
Mr. David Garland, instructed by Messrs. Masons, appeared for the defendants.
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Judgment

Introduction

	In this case the plaintiffs ("Countrywide") claim damages of £375,000 for breach of contract, alternatively a quantum meruit in the sum of £55,481.74.  The claim arises from public relations and communications work done in connection with a successful bid by the first defendants ("ICL Pathway") for a contract to supply the Benefits Agency ("BA") and Post Office Counters Limited ("POCL") with a card system for the provision of benefits, and a system for the computerised payment of benefits, to operate throughout the United Kingdom.  This was a very large project, expected to last for about eight years.  Public relations was an important aspect of it, because of the need to communicate the effect of the new system to the millions of people entitled to benefits of one kind or another.  The timing of the various stages of the bid was as follows.

	BA/POCL placed an advertisement in the Official Journal of the European Community in August 1994.  On 19th November 1994, a consortium, consisting of ICL (the second defendants), De La Rue Group, Hambros Bank, An Post, Escher and Girobank, submitted a Capability Statement setting out the abilities and experience of its members.  This showed Girobank as the consortium partner responsible for marketing, public relations and commercial exploitation.  However, at this stage the members of the consortium were not in fact committed to go beyond the submission of the Capability Statement, and Girobank's role was not yet agreed.  Hambros, An Post and Escher dropped out at some time between January and March 1995.

	On 6th April 1995, each of the remaining members of the consortium was allotted shares in ICL Pathway, which was thereafter the legal entity by which it operated.  In June 1995, ICL Pathway submitted its initial proposal.  This was the first stage of the process, the object of which was to be put on the BA/POCL shortlist.  By this stage, the consortium, now consisting of ICL, Girobank and De La rue, was more firmly committed to the project.  Girobank remained responsible for public relations and communications.  The consortium was placed on the shortlist.  On 21st March 1996 ICL Pathway submitted its tender.  This was clarified at BA/POCL's request in April 1996.  In April 1996 -–that is, after the submission of the tender but before its acceptance – two members of the consortium, Girobank and De La Rue, withdrew, leaving only ICL.  ICL Pathway thus became a wholly owned subsidiary of ICL.  The contract was awarded to ICL Pathway on 15th May 1996.

	Countrywide worked on the project from October 1994 to June 1996.  Mr. John Orme, who is a director, was in charge throughout.  Initially, the public relations aspect of the bid was handled on behalf of the consortium by Mr. Stephen Jones, then the General Manager of Girobank.  In May 1995 he became Girobank's nominee director on the board of ICL Pathway and after that he was no longer involved at an operational level.  His place was taken by Mr. Stephen Hodgkins, previously Assistant to the Managing Director of Girobank.  Mr. Hodgkins was seconded to ICL Pathway as Business Development Director and remained in that position until Girobank withdrew in April 1996.  He was assisted by Mr. Dominic Barton, also originally a Girobank employee, who worked exclusively on this project from November 1994 and became the Marketing Manager for ICL Pathway in about April 1995.

	After the withdrawal of Girobank and De La Rue from the consortium in April 1995, Mr. Barton remained in his job, but Mr. Hodgkins' position as Business Development Director was assumed by Mr. Liam Foley.  He involved Ms. Anna Maria Campopiano, Head of Marketing Communication, who took up this position on 21st May 1996.  It was her assessment of Countrywide which led to their services being dispensed with in June 1996.

The facts

	To return to the beginning, in October 1994 Mr. Jones of Girobank, who had previously employed Countrywide as public relations consultants and had been impressed by their work, asked Mr. Orme to give him some preliminary advice.  This was before even the submission of the Capability Statement, and it was not certain that Girobank would handle public relations.  Mr. Jones was anxious to show the other members of the consortium that Girobank was capable of handling the public relations issues, and also wanted advice about the reputation of the second defendants ("ICL").  Countrywide provided Mr. Jones with briefing notes which highlighted the main issues.

	Countrywide allege that a binding agreement was concluded on 4th November 1994 at a meeting between Mr. Orme and Mr. Jones "for and on behalf of a number of companies including Girobank … De La Rue … and (ICL) (collectively known as Pathway)", whereby Countrywide were to provide public relations and communications advice and support services in relation to the bid; if the bid was successful, Countrywide were to be appointed as public relations and communications advisers to whichever entity or corporate vehicle was to implement the bid.  Countrywide also allege that they were to be paid in accordance with its usual rates for specific (or "substantive") items of work done during the bid, as opposed to general advice.  In fact, at this time, there were six members of the tentative consortium, and the name Pathway had not yet been suggested.

	I have no hesitation in finding that there was no binding agreement to appoint Countrywide if the bid succeeded, either at that meeting or subsequently.  In the first place, I accept Mr. Jones' evidence that he told Mr. Orme at the outset that he had no authority to commit the other members of the consortium to an agreement.  Secondly, even on Countrywide's case all that was agreed was that, if they continued to give advice and assistance until the bid was submitted, they would be appointed if it succeeded, presumably on the implied basis that they would be paid reasonable remuneration for their services.  It is common ground that all the detailed terms of the contract, including those relating to the scope of the work and the amount and timing of payment, remained to be negotiated.  Although it is not uncommon for courts to infer, from the circumstances of particular cases, that the parties intended to enter into a binding agreement notwithstanding that further terms remained to be negotiated, this would be an extreme case.  No detailed terms of any kind were negotiated, the meeting took place at a very early stage in the bid process, and nobody can have had any idea of what detailed requirements BA and POCL would have, or what budget would be available for public relations.  Further, some of the advice required by Mr. Jones at this stage related to Girobank's own position, and was not given for the benefit of the consortium as a whole.

	On the subsidiary point, there was in the end little if any difference between the evidence of Mr. Orme and that of Mr. Jones.  It was agreed that Girobank would pay Countrywide for specific or "substantive" work, as opposed to general advice.  However, this was an agreement between Countrywide and Girobank alone.  As will appear later in this judgment, the position changed when ICL Pathway became the corporate vehicle for the consortium in April 1995.

	Although there was no binding agreement to appoint Countrywide if the bid succeeded, I do not accept the main thrust of the defendants' case, that everything done by Countrywide from the outset was part of the ordinary process of bidding for the public relations and communications sub-contract or, as it was on occasions put, in the course of "pitching" for the work, and was accordingly speculative and entirely at their own risk.  Mr. Jones gave very clear evidence, which in this respect accords with that of Mr. Orme and which I accept, that it was the policy of all the members of the consortium to try to keep the costs of the bid as low as possible, in case it did not succeed.  It was part of this to encourage prospective sub-contractors, (such as Countrywide and McCann Erickson, advertising agents) to provide assistance in connection with the bid free of charge, on the basis of an assurance that, if they continued to assist throughout the bid process, they would be rewarded by a formal appointment if it succeeded.  This is what Mr. Jones told Mr. Orme at the outset.  For his part, Mr. Orme said – and I accept – that Countrywide would not have been prepared to assist throughout the long process of the bid merely to get on to a "pitch list".  The fact that such an inducement was offered, as a matter of consortium policy, suggests that it was recognised that otherwise potential sub-contractors would not provide their services during the bid without payment.

	The nature of the arrangement was described by Mr. Jones, in the course of his oral evidence, in the following terms :

		"… we were in a bid where we were collectively, potentially, going to spend 3 or £4 million that was purely speculative, so what we were looking to do was reduce the cost of that bid because no-one had any guarantee of success.  So what we were saying to potential suppliers was, you come along, stick with us, if you help us to get that contract and win the bid, then your reward will not be in heaven but with a contract after the bid had been successful.

		…

		My assumption was that if you were helping, if you were putting time in and you helped us make the bid, then the quid pro quo was you would get the contract at the end of the successful bid …

		…

		It was not a question of recommending.  Again I will go back to the principle.  We were trying to make the costs of the bid as low as possible, therefore, we were asking people to do work to then effectively defer their benefit until we had won.  So it would not be a recommend, it would be if you were involved and you did work for us which we did not pay for, then you would get your reward in the contract after we had won the bid.

	He said in one of his witness statements that he would have expected the consortium "to honour the informal arrangement" by giving Countrywide "a formal appointment in return for all the work done in preparing for (the) successful bid", and in his oral evidence that he was "amazed" that ICL Pathway had not done so.

	Mr. Jones also told Mr. Orme at the outset that the arrangement was subject to Countrywide's acceptance by the other members of the consortium.  His evidence in this respect is supported by an internal New Business Form completed by Mr. Orme on 12th January 1995, in which he states "Credentials and pitch presentation not required – Girobank (current client) is recommending Countrywide for the consortium work; a written proposal is required".  Although the terminology differs somewhat, in that Mr. Jones does refer in his written evidence to the need to "present credentials", in essence the arrangement was that Countrywide would prepare an outline proposal; if this was acceptable to the consortium, then they would continue to provide advice and services in connection with the bid on the basis of the assurance which they had been given.  Such advice and assistance was not merely to put Countrywide in a better position to "pitch" for the sub-contract if the bid was successful.  The consortium required advice and assistance for the purpose of formulating the public relations and communications aspect of the bid.  It also required a public relations consultant to be "up to speed" during the bid process (particularly so in the later stages) so as to be able to deal with particular points which might come up.  Although it is necessary to examine some of the individual items of Countrywide's quantum meruit claim, broadly its work was intended to be, and was in fact, for the benefit of ICL Pathway.

	On 19th January 1995, the minutes of a MarCom (Marketing and Communications) meeting included Countrywide as an "area of likely MarCom spend".  They also noted "Stephen Jones to finalise the brief for Countrywide by 30 January 1995".  On that date Mr. Orme wrote to Mr. Jones enclosing a document entitled "Pathway Communications Proposal – Towards the `Hole in the Wall' Generation?" which he referred to in the covering letter as "Countrywide's Pathway proposal".  It is clear from its text that the consortium at this stage still retained all its original members.

	The proposal summarised the communication tasks which Countrywide had identified "to support Pathway's progress in 1995 to achieve a successful outcome early in 1996" i.e. it was concerned with the bid process.  It stated that the brief and key assumptions summarised in Appendix One had been agreed with Mr. Barton and had been seen by Mr. Jones.  Parts of the proposal assume input from Countrywide's "public affairs partner", Government Policy Consultants ("GPC"), described by Mr. Orme as Countrywide's sister company.  This was despite the fact that the consortium already had public affairs consultants, Messrs. Bruce Naughton Wade.  The suggested budget to cover the period from February to December 1995 was between £192,000 and £252,000 if GPC's activities were included, otherwise between £137,500 and £162,500.  This was based upon hourly charges for different grades of personnel, the charge for a director's time being £170.  The documents referred to Girobank having briefed Countrywide fully "to propose an outline programme and budget to launch Pathway immediately" and set out a number of objectives, notably to ensure that POCL and BA were aware of Pathway and understood its strengths, to manage key audiences' understanding and expectations and to continue to provide issues and crisis management throughout the decision making period.

	Mr. Jones disliked the title of the document, which he thought was condescending and in any event missed the point of the proposal, and he regarded the budget as entirely unrealistic.  He also thought that there was an element of "pitching" for work, in the sense that Countrywide were naturally seeking to ensure that their role was as wide as possible.  In particular, it had not been agreed that GPC would be involved.  On 2nd February 1995, Countrywide submitted a revised version of the proposal entitled "Creating a Successful Reputation for Pathway", said to be based on a "verbal briefing and at subsequent meeting with Stephen Jones", but not stating that the brief and key assumptions had been agreed with Mr. Barton.  GPC's suggested role, and the budget attributable to this, were relegated to an appendix.

	Mr. Jones did not accept the budget suggested in the proposal.  It had no chance of being accepted and he did not propose it to MarCom.  He simply told Mr. Orme that there was no budget available.  However, Countrywide's "credentials" were accepted.  Their position as public relations and communications consultants to the consortium during the bid, on the basis of the informal arrangement that they would be rewarded by formal contract if the bid succeeded, was confirmed.  This, he said, happened "by the inclusion of Countrywide in meetings, requests for documents, requests for views on briefs" and he did not believe that "they had to reapply for the position every month".  As to the time when this happened, Mr. Jones said it was at about the time when they had "formed a proper consortium legally" which was before the initial proposal was submitted.  By reference to the Teaming Agreement between ICL, De La Rue and Girobank, this suggests that Countrywide's position was confirmed in about March 1995, and I so find.  The Teaming Agreement placed the responsibility for marketing (which included public relations) on Girobank.

	On 14th March 1995, Mr. Barton wrote to Mr. Orme, enclosing a document entitled "Image Development Brief", identifying the main elements of work required as a campaign plan for the work to be undertaken between June and October 1995, a 5 to 6 page overview of the campaign plan for inclusion in Pathway's proposal intended to be submitted to POCL/BA in May 1995, to be done by 28th April 1995 and a costs breakdown to be undertaken between June and October 1995.  Countrywide (and others) were asked to respond to this brief, detailing the relevant costs and time scales together with an "indicative feel" of the building blocks of the proposed campaign and the scale of costs required to fund it.  The reference to an "indicative feel" is consistent with the point mentioned a number of times during the evidence, namely that all parties were conscious of the risk of incurring excessive costs on a bid which might fail, and were therefore concerned not to do more detailed work than was necessary.  Countrywide responded on 24th March 1995.  Their suggested budget for their own services during the bid was reduced to £36,500 representing 30 days consultancy time "required to develop a full public relations programme", and including costs of £5,000.  A draft budget of 28th March 1995 (A378 in the bundle) shows that this figure was included in an overall Pathway budget, including the much larger costs of other consultants to whom the large Development Brief had been sent.  It was suggested in cross-examination to Mr. Orme that the response was so general as to be of little use, but I accept his evidence that it was what he was asked for and that he had received no criticism or feedback.  This applies to everything he was asked to do up to April 1996.

	As stated earlier, the three remaining members of the consortium subscribed for shares in ICL Pathway on 6th April 1995.  On 10th April 1995 Countrywide submitted its invoice to Girobank for "provision of strategic communications consultancy in relation to Girobank's involvement in the Pathway consortium" for the period November 1994 to 31st March 1995, in the sum of £16,749.63, including VAT.  In an internal note to Mr. Jones, Mr. Barton referred to this as being "fairly generous" for 9 days work by Mr. Orme with some support from another individual, but the invoice was paid.

	At about this time, or perhaps a little later, Mr. Jones was replaced by Mr. Hodgkins.  According to Mr. Barton's evidence, there was a meeting between Mr. Hodgkins, Mr. Orme and himself, at which Mr. Orme was told that there was no budget to meet any further fees for Countrywide during the bid, and that they would not be paid for their work during the bid unless payment for a particular piece of work was approved by the Managing Director or the Finance Director.  Mr. Orme agreed in substance with this evidence, except that he was not able to remember the precise form of approval which would be required; he accepted that Countrywide were not be paid for any work without some form of approval from within ICL Pathway.  However, Mr. Orme emphasised that this was on the basis, "reinforced at the meeting", that if the bid was successful Countrywide would be awarded the contract.  I accept this evidence, which is supported by that of Mr. Hodgkins to which I next refer.

	Mr. Hodgkins said that, at about the time he took over, there was a meeting at which Mr. Orme was told that sub-contractors (including Countrywide) could not charge their costs to ICL Pathway, but would have to meet them themselves, but that if they helped during the bid process "their reward would come later".  I accept his evidence on this point, which is consistent with his written statement that he believed that "it was generally envisaged by everyone at Pathway that Countrywide would be award a sub-contract by Pathway if Pathway were successful in winning the work for the Pathway project" as well as with Mr. Orme's evidence.  Although he did not say so expressly, I infer that, when he came into the job, he was told the nature of the arrangement made with sub-contractors generally (including Countrywide).

	I have now reached the point in time at which the work for which specific amounts are claimed begins, and it is I think helpful to deal with a number of specific matters at this stage.

	Payment for a number of items in the Scott Schedule (items 1, 2, 5-11, 13-15) is claimed on the basis of the original contractual term agreed with Mr. Jones, namely that Countrywide should be paid for specific or "substantive" work as opposed to general work.  Apart from one item, this claim must fail.  In November 1994 Mr. Jones contracted on behalf of Girobank alone and Girobank paid for the work claimed for up to 31st March 1995.  As from 6th April 1995, the work was done for ICL Pathway and it is common ground that Countrywide were not to be paid except for specific work for which payment was authorised, and that none was.  The only exception is for item 9, in relation to which Mr. Hodgkins states that oral authority was given for advice about the creation of management of a National Press Office.  I have been informed by the parties that a payment into court in respect of this item (of what amount I do not know) was made and accepted.  I therefore do not need to deal with this claim, which was for £3,000 plus VAT.

	Countrywide's alternative claim is for a quantum meruit.  I will deal with the question of principle later, but so far as the amount is concerned the claim is based upon time spent.  Mr. Orme's evidence (except in relation to item 6) is that the invoice submitted in May 1996 was based upon diary entries, which referred to main events such as meetings, and on extracting the relevant entries from his daily time sheets.  On the basis of these materials he had prepared a schedule in June 1996, which formed the basis of the invoice dated 19th June 1996.  However, in a supplementary witness statement served shortly before the trial began, he stated:-

		"The hours were recorded in my working diaries for 1994, 1995 and 1996; these diaries were the prime source of information for manual time sheets which I had at the time of preparing the invoice but which were subsequently routinely destroyed".

	Mr. Orme gave similar evidence orally, but it is manifestly incorrect; the diaries which had been disclosed much earlier in the action do not record hours worked.  However, I am satisfied that his evidence was honestly mistaken.  The invoice was properly based on the hours recorded in time sheets, available at the time but later destroyed.  His evidence was that the time sheets were usually completed at the end of each week.  It was submitted that – even on the assumption that I accepted his evidence as to the time sheets – some discount should be applied for the risk of inaccuracy in this procedure, but I accept the counter-submission that any inaccuracy could just as well produce an undercharge as an overcharge.

	Item 6 on the Scott Schedule, for £600, was not invoiced and is based on an estimate of 3 hours spent, which I accept is a fair estimate.  Item 12 was not invoiced either, but no time estimate has been given.

	So far as the rate is concerned, the charges represent time spent mainly by Mr. Orme, as well as some time spent by Mr. Bethell of GPC, and a director's rate of £200 per hour has been applied.  In Mr. Orme's supplementary witness statement, this is referred to as his hourly charging rate as at November 1994.  Countrywide's letter of 19th June 1996 enclosing their invoice states that the hourly rate was £180 in 1994 and £200 in 1995-6.  On the other hand, the budget submitted in Countrywide's proposal of January 1995 based Countrywide's estimated charges on a director's rate of £170 per hour.  This may have involved some discount because of the large total amount.

	Despite Countrywide's indication in their response to the Image Development Brief in March 1995, they were not in fact required to do a great deal of work during the remainder of 1995.  In part this was due to the slippage in the bid timetable, and in part to a decision that there should be no high profile media campaign.  Accordingly the time claimed for in the Scott Schedule in 1995 is relatively small, and consists of 7 hours relating to a planning meeting held on 17th April, 22 hours relating to a meeting with GPC on 26th April (including time spent by GPC), one hour relating to a telephone conversation with Mr. Hodgkins in July and 17 hours of general work between July and December.  These are items 1-4 of the Scott Schedule.

	By the beginning of 1996, the position was that the final bid was due to be submitted some time in March.  Mr. Hodgkins invited Countrywide to a planning meeting on 23rd January.  He said that the reason for inviting him was that the submission deadline was approaching and he therefore wanted to meet Mr. Orme again and bring him up to date with what had been happening, what the consortium was doing and what it expected from Countrywide.  For the purpose of this meeting, Countrywide prepared a series of slides, the first of which was headed "COUNTRYWIDE CREDENTIALS prepared for STEVE HODGKINSON (sic)".  Despite the heading, this was not for the purpose of presenting Countrywide's credentials; Countrywide had been accepted by the consortium and had been dealing with Mr. Hodgkins for several months by this stage.  The main purpose of the document was to present GPC's credentials, in order to try to obtain their appointment as consultants on political matters.  To this extent, Countrywide's and GPC's activity in relation to the meeting was for the purpose of "pitching" for work.  Item 5 of the Scott Schedule relates to this meeting.  Mr. Orme asked if Mr. Bethel could attend the meeting and Mr. Hodgkins agreed.

	On 29th January, Mr. Barton asked Mr. Orme to read and advise on a document called the Aspen Business Communications Marketing and Education Plan, which was produced by BA/POCL as the foundation of the communication plan to be developed with the contractor selected for the project.  Mr. Barton faxed this document to Mr. Orme marked "Urgent" and Mr. Orme gave his advice on the telephone.  Mr. Barton says in his witness statement that this advice was of no benefit to Pathway, although it helped him personally.  I do not see how such a distinction can validly be drawn, since Mr. Barton's involvement was entirely for ICL Pathway.  This is item 6 on the Scott Schedule.

	On 27th February, Mr. Hodgkins invited Mr. Orme to attend a development meeting on 5th March.  On 1st March, Mr. Orme wrote to Mr. Hodgkins, referring to a recent meeting and summarising Countrywide's views, focusing in particular on steps to be taken on the assumption that the bid was successful and giving an estimate of costs.  The purpose of the meeting was to prepare for a further meeting to take place the following week at which representatives of BA/POCL would be present.  This is part of item 7 of the Scott Schedule.

	Before that meeting, Countrywide produced a document entitled "PATHWAY COMMUNICATION SCHEDULE" dated 11th March 1996, including a detailed activity schedule summarising steps to be taken under various headings in the form of flow chart.  This was described by Mr. Orme as the most important part of the document.  Mr. Hodgkins described the document as a whole as "a brief high level synopsis of the PR work that would be involved in carrying out the contract after it had been won", and said that it would be of value after the bid was won, but no in the bidding process.  It included an outline budget dividing fees and costs into 4 phases, totalling between £915,000 and £1,015,000.  This is the other part of item 7 of the Scott Schedule.  At some point, Countrywide was "costed in" with a provisional budget in the sum of £780,000.

	The meeting on 12th March was at the offices of McCann Erickson.  A representative of BA/POCL was present.  Mr. Hodgkins asked Mr. Orme to attend although in the event there was no substantial discussion of public relations issues at the meeting.  This is item 8 of the Scott Schedule.

	At about this time, a written agreement was concluded between ICL Pathway and McCann Erickson for their appointment to carry out marketing and advertising activities, conditionally on the success of the bid.  There were also negotiations between Mr. Orme and Mr. Barton for a similar agreement.  Mr. Barton's evidence was to the effect that he wanted to conclude a conditional agreement with Countrywide as well, but failed for lack of time.  Mr. Orme said that he did not seek approval for specific items of work at this time because he expected the agreement to be concluded; if it had been (or if an agreement had been concluded after the bid was won), he probably would not have sought to charge for all the work done during the course of the bid.  He also said that there was one specific piece of work as to which there was some discussion about separate payment, although it was not concluded.  Other evidence establishes that this was the report on the creation and management of the National Press Office, for which instructions were given on 19th March 1996 and a report produced on 1st April 1996.  As I have said earlier, oral approval for payment for this was in fact obtained, although possibly not communicated to Mr. Orme, but I do not need to be concerned with the claim for the work on this, which has been resolved.  This is item 9 on the Scott Schedule.

	All the evidence shows that Mr. Jones, Mr. Hodgkins and Mr. Barton were satisfied with Countrywide's work, that they liked and trusted Mr. Orme and that they intended and expected Countrywide to be appointed as public relations consultants if the bid succeeded, on terms to be negotiated.  Although it was suggested to Mr. Orme in cross-examination that some of the work he did was not significant and lacked detail, there was no complaint at the time and I am satisfied that nothing more substantial was required.

	After the bid had been submitted, it was assumed that it would be successful and the work of planning for the implementation of the project continued on that basis.  So far as public relations was concerned, ICL Pathway wanted to make a start on customer education as soon as possible.  Countrywide were, as before, invited to Suppliers' Forum and Management of Change Planning meetings.  For example on 25th April 1996, Mr. Barton sent to Mr. Orme the agenda for a meeting on 9th May 1996 which included a review of Countrywide's activities.

	At some time in April Girobank and De La Rue disassociated themselves from the bid and ICL, the only remaining consortium partner, took control.  Mr. Foley replaced Mr. Hodgson.  Mr. Foley's understanding of the position of sub-contractors was very similar to that of Mr. Hodgkins.  Leaving aside those who were paid for their work during the bid, and those (such as McCann Erickson) who already had conditional contracts, sub-contractors provided services free on an assumption or expectation that they would be rewarded by an appointment if the bid succeeded.  He did not necessarily know which sub-contractors fell into which category, but if he had been told that Countrywide had not been paid, and had no conditional contract, then he would have known that this was on the basis that they would be rewarded by an appointment if the bid succeeded.

	On 26th April, Mr. Barton wrote to Mr. Orme in the following terms:

		"I think it is important for Liam Foley, our new Director of Sales & Marketing, to leave Countrywide on Wednesday, 1st May with a real understanding of the type of activities which I have proposed you and your team will be carrying out on our behalf, and of the value that they will deliver to the Pathway operation.

		Accordingly, I wondered if you would be able to give Liam a brief overview of each of the activities which we have discussed, and on that basis I have attached a list of activities distilled from your planning chart which I felt may be helpful as a basis for our discussions …"

	Mr. Orme, not unnaturally given the terms of the letter, saw this as an introductory meeting, at which he would meet the new "senior client contact" and explain for his benefit the work which Countrywide would do if the bid succeeded.  According to Mr. Barton, he spoke to Mr. Orme on the telephone before the meeting, to warn him that he had to "sell" Countrywide and that this was "in essence a sales meeting for John Orme to try to win the sub-contract".  He claimed that this was something which it was not appropriate to put in a letter.  I do not accept his evidence on this point.  He did tell Mr. Orme, as Mr. Orme accepted, that Mr. Foley was not convinced of the value of public relations in general, but I do not think it went further than this or that any doubt was expressed as to Countrywide's position.  As will be seen, Mr. Foley subsequently gave as one of his reasons for not contracting with Countrywide the fact that he met only Mr. Orme, but there was no suggestion in Mr. Barton's letter that anyone else should attend.  Nor did Mr. Barton say that he had suggested it on the telephone.

	Mr. Foley had been to a similar meeting with McCann Erickson on the morning of 1st May.  The meeting with Countrywide took place in the afternoon.  In the time available, some two hours, Mr. Orme made a presentation, which included the detailed activity chart which had been part of the Pathway Communications Schedule and was otherwise based upon a long list of headings provided by Mr. Barton, which he said he had distilled from Countrywide's planning chart.

	On 2nd May 1996, Mr. Barton wrote to thank Mr. Orme for "yesterday's briefing" which he described as "very useful" and attached ICL Pathway's most recent version of the Implementation Plan.

	According to Mr. Foley, he came away from the meeting with reservations about Countrywide, particularly because of the lack of detail in the presentation.  Asked whether he communicated these reservations to Countrywide, he said that it was not appropriate to communicate reservations to a company bidding for work.  I do not accept his evidence on this point.  He knew that Countrywide had been working on the tender throughout, and was not just an ordinary bidder for work.  I consider that, if Mr. Foley had had any serious reservations about Countrywide, he would have communicated them or asked Mr. Barton to communicate them.  There is no evidence to suggest that Mr. Barton did communicate them.  In any event, the suggestion that Countrywide's presentation lacked detail strikes me as a bit rich in circumstances in which Mr. Orme had been asked to give a "brief overview" on a total of about 30 listed topics in a couple of hours.

	On 9th May, there was a planning meeting attended by both Mr. Foley and Mr. Barton, at which there was discussion about the terms of a written contract and about Countrywide's fees.  Mr. Orme was asked to provide a breakdown of fees in terms which could be understood by an accountant, rather than in the marketing terms used in Countrywide's previous documents.  This (together with an earlier meeting on 1st May and later meetings on 15th and 21st May) are items 10 to 12 on the Scott Schedule.

	At the ICL Pathway Suppliers' Forum meeting on 15th May, it was announced that the bid had succeeded.  Later on in the meeting Mr. Barton told Mr. Orme that there might be a problem about appointing Countrywide.  I accept Mr. Orme's evidence that this was the first occasion on which any such doubts had been expressed.  Mr. Barton gave as the reason that ICL had not been happy with the performance of Countrywide's London office on some previous job.

	On 21st May, Ms. Campopiano was appointed Head of Marketing Communications and on the same day there was another planning meeting, which she attended.  Mr. Barton had told Mr. Orme on the telephone, a day or two earlier, that it was she who was concerned about Countrywide's reputation.  Mr. Orme saw her reserve at the meeting as being also due to the fact that she was new to the project and needed to absorb everything.  There is no evidence that Mr. Orme was asked to bring any other member of Countrywide's staff with him.

	Mr. Orme raised his concern about Countrywide's position with Mr. Foley at the end of the meeting, Mr. Foley said: "Don't worry, Countrywide is on".  This is inconsistent with Mr. Foley having had serious concerns about Countrywide's position going back to the initial meeting three weeks earlier.  Mr. Foley said that he had no recollection of saying this, but support for Mr. Orme's evidence on this point is to be found in the correspondence and internal memoranda in the following month and I am satisfied that it is accurate.  The minutes, prepared by Mr. Barton on the following day, identify the purpose of the meeting to include "to plan the way forward" and the final paragraphs reads :

		"All present to ensure that activities are developed in sufficient depth to be introduced to the planning process which the Project Office will facilitate at the next meeting."

	Thus, Countrywide having assisted ICL Pathway during the bid and in the interim period after it had been submitted, were now asked to continue to do so after the success of the bid had been announced.

	At this point, Ms. Campopiano was instructed by Mr. Foley to assess whether Countrywide were the right sub-contractor for the project, and to make her recommendation to him.  Her understanding was that Countrywide's involvement over the previous 14 months had been part of a long drawn out bidding process, and nothing more.  She was apparently unaware that Countrywide's work had been useful to ICL Pathway, or of the assurance which they had been given and which was the basis on which they had been prepared to work free of charge.

	In her witness statement, Ms. Campopiano said that, because of her previous knowledge of Countrywide, she approached them "with a slight degree of caution".  I think that this was a considerable understatement.  They had never impressed her, and they did not have a positive reputation with others at ICL either.  She felt that they were inexperienced on projects likely to involve issue management and other controversial matters.  They were not trusted by ICL's corporate press office, which she considered to be "key" in a project of this size and significance.  In view of all this, Ms. Campopiano must have been very strongly pre-disposed not to recommend the appointment of Countrywide if it could be avoided.

	At the same time, Ms. Campopiano had had experience of another organisation called Financial Dynamics Limited, which was very well regarded both by her and by others at ICL.  She said in the course of her evidence: -

		"Financial Dynamics are a company who are an ICL employed company and they are held in the highest regard within ICL.  ICL Pathway contract that we were delivering, was one of the most important contracts that ICL had ever signed.  It would make sense that we approached a company that was reputable".

	However, there was considerable pressure of time.  The first part of the work, Initial Go Live, had to be completed by September.  According to Ms. Campopiano, she did not speak to Financial Dynamics until after 4th June, when she had a meeting with Mr. Foley at which he, on her advice, took the decision to appoint that company and not Countrywide; earlier, she had no authority to approach any other company even informally.  I do not accept this part of her evidence.  I am sure that she could not have appointed another company without Mr. Foley's authority, but that would not have prevented her from making informal enquiries and, given the ICL view of Countrywide, it is inconceivable that she did not do so.  I do not think that I was given the full picture on this aspect of the case.  I infer from the evidence and as a matter of inherent probability that, between 24th May and mid-June, Ms. Campopiano was investigating the practicality of replacing Countrywide with Financial Dynamics, while at the same time trying to assess whether it would be possible, if necessary, to make do with Countrywide.  As will appear shortly, Countrywide were not told that their services were being dispensed with until some time after 4th June, even though both Ms. Campopiano and Mr. Foley say that the decision was taken on that date.

	The next relevant event after the meeting of 21st May was a further meeting, two days later, between Mr. Orme and Miss Campopiano.  As presented to Mr. Orme, the main purpose of this meeting was for him to provide her with all the background to Countrywide's work on the project.  It was very similar to the main purpose of the meeting with Mr. Foley on 1st May.  However, he was aware that Miss Campopiano had reservations about Countrywide which he would have to overcome, although their precise nature and extent was not explained to him.

	The meeting lasted several hours.  Mr. Orme repeated the presentation which he had given to Mr. Foley.  There was a considerable amount of detailed discussion, including discussions as to the best IT network solutions to ensure efficient communication between ICL Pathway's and Countrywide's offices.  Ms. Campopiano said nothing about her reservations about appointing Countrywide, and nothing about the possibility of appointing any other sub-contractor in Countrywide's place.  She said in the course of her evidence that, since she had no authority to make an appointment, it would not have been fair for her to say anything, and that she preferred to be non-committal.  This may have been part of the reason, but I think that the difficulty of appointing a replacement sub-contractor at this late stage also came into it.  Mr. Orme pressed for a formal contract.  Ms. Campopiano said she preferred to work on the basis of trust with suppliers.  What she did not say was that she was reluctant to employ Countrywide at all, or at least in considerable doubt whether to do so.  Eventually, she agreed that Countrywide should send a proposed contract.

	It is common ground that, in the course of the meeting, Ms. Campopiano asked Mr. Orme to do certain specific pieces of work.  There is some dispute as to precisely what, but they included preparation of a document defining Countrywide's brief and another relating to key audiences – and she said that Countrywide would pay for them on the same basis as previous work.  At one point in her witness statement, she said that she had asked for information partly to assess whether Countrywide should be appointed as a sub-contractor; later she said that any "deliverables" which she requested from Mr. Orme, and any meetings which she asked him to attend, were for the purpose of convincing her that Countrywide should be awarded a sub-contract.  This was not made clear to Mr. Orme.  Item 13 of the Scott Schedule relates to Mr. Orme's attendance at this meeting.

	Mr. Orme left the meeting under the impression that Countrywide's appointment had been confirmed.  I am satisfied that this was genuinely his impression, but it was derived from a combination of Ms. Campopiano's reticence about what were in fact her very considerable reservations and the detailed discussion about operational matters such as e-mail links, which would not be relevant unless Countrywide was being appointed.  As he put it, it was a combination of the detail discussed as to an agreed way of working, without her ever saying "this isn't happening".  Mr. Orme was sufficiently certain about the position to telephone the office from the car park to instigate a celebration of the appointment.  However, Ms. Campopiano did not expressly confirm that Countrywide would be appointed.  Mr. Garland's suggestion to Mr. Orme in cross-examination that he had read too much into the meeting was correct.  It is difficult to find a satisfactory explanation for Ms. Campopiano's lack of forthrightness as to her doubts about Countrywide, which according to her evidence were increased rather than allayed during the course of the meeting.  The most likely explanation is that she felt that she needed to keep Countrywide onside, in case no suitable replacement could be found.

	On 24th May, Mr. Orme wrote to Ms. Campopiano, confirming (as he thought) Countrywide's appointment based on an attached outline plan to be developed into a detailed programme and anticipating a formal contract based on the programme, timetable and budget indicated in the plan.  He also said that he would send his interpretation of Countrywide's brief, for which Ms. Campopiano had asked, and that Countrywide would start to research key audiences for the communications planning meeting on 31st May and would plan a "communications brainstorm session" for the following week.  Ms. Campopiano had no recollection of asking for the last of these, but I accept Mr. Orme's evidence on this point, since I can see no reason why he should have done this without being asked.  On 29th May, Mr. Orme sent some of the most recent background material to Ms. Campopiano, including a specific brief from Pathway prepared in April.

	Ms. Campopiano received both letters on 30th May, having been away from the office for some days before that.  She noted on the letter of 29th May "what do FD (Financial Dynamics) say views/thoughts", from which I infer contrary to her evidence that she had by this stage contacted them informally.

	On 30th May, she replied to the letter of 24th May in the following terms:

		"I too enjoyed meeting you and felt it might be wise to clarify our agreements.  I was interested in your approach before discussing matters fully with Liam, I can not commit to there being an ongoing relationship between Pathway and Countrywide.  Given this it is inappropriate for you to assume that contract is automatic and to engage staff for the purpose.

		As soon as I know more, I will of course be in touch.  In the interim I look forward to seeing you tomorrow.  I appreciate that you will have done some work for tomorrow and that the payment for this will be treated on the same basis as to work up until this point".

	As to the last sentence, Ms. Campopiano said that this was intended to be non-committal as to whether payment would be made or not.

	On receipt of this, Mr. Orme telephoned Ms. Campopiano and noted part of what she had said as follows:

		"No-one else in the frame.  Not clear on (sic) POCL/BA stood – they may still take it in-house".

	Ms. Campopiano said that she would not have used the expression "no-one else in the frame" and I accept this, but I find that there was a conversation to this effect, even if this particular phrase was not used.  On any view, Ms. Campopiano remained very reticent as to the true position.  For example, she did not say – as she now maintains was the case – that she had been unimpressed by Mr. Orme's responses at the meeting to one of the matters discussed with him (key audiences) and that Countrywide's appointment depended upon whether they impressed her at the next meeting.  The first sentence of the letter quoted above suggested that there was some kind of agreement, albeit that the second suggested that any commitment was subject to her having discussed matters fully with Mr. Foley.

	Mr. Orme and Ms. Campopiano met again on 31st May.  For the purpose of the meeting Mr. Orme prepared documents entitled "External Communications Brief", "Pathways Interest Group Matrix" and "Communications Brainstorm".  These and the letter of 29th May are item 14 of the Scott Schedule.  The meeting on 31st May and subsequent correspondence and events are item 15.  There is relatively little evidence about the meeting.  In her evidence, Ms. Campopiano made a number of criticisms of the documents prepared by Mr. Orme, especially the Pathways Interest Group Matrix and said that she was "disheartened" by them.  Mr. Orme was not cross-examined in any detail on these points.  I accept that Ms. Campopiano had some genuine reservations about the documents but I think that she made more of them in her evidence than was warranted.  They were not communicated to Mr. Orme at the time, and in my view they were not seen by her as being, and were not in fact, of great substance, nor were they entirely justified.  Ms. Campopiano's expectations as to the level of detail which Mr. Orme should have been providing were based upon her incorrect understanding of what had gone before, namely that he had been involved in a "continuous bidding process" for 14 months.  There was nothing in her evidence to indicate that she was aware of the general approach of all parties during its bidding process, which was to keep detailed work to a minimum.

	On 3rd June, Ms. Campopiano sent an e-mail to Mr. Foley recommending the appointment of Financial Dynamics.  Although there are references to the recommendation being based in part on what Countrywide had delivered, and their planning to date, the main emphasis is on their poor reputation within ICL and lack of relevant experience of political issues and public education campaigns.  Ms. Campopiano refers to having found "an individual" with relevant experience, which she said in her oral evidence was Financial Dynamics.  This again suggests that she had already made informal approaches to Financial Dynamics.  Although both Mr. Foley and Ms. Campopiano say that it was decided on the following day to appoint Financial Dynamics, nobody told Countrywide of this until much later in June (it is not clear precisely when).  I infer from this that, if for any reason it had not been possible to appoint Financial Dynamics, ICL Pathway would have stayed with Countrywide.  Financial Dynamics' formal appointment is dated July 1996, but the Commencement Date is specified as 17th June.

	On 6th June, Mr. Orme wrote to Mr. Foley complaining of confusion and doubt.  On 12th June ICI Pathway's managing director wrote to Mr. Orme about a Suppliers' Round Table which would be replacing Supplier Forums.  On 13th June, Countrywide's managing director, Mr. Lake, wrote to Mr. Foley, referring justifiably to his "increasing sense of confusion and concern about the sudden impasse in the relationship between our two companies" and to the pressing deadline of September and asking for the situation to be resolved.  On 19th June, having in the meantime spoken to Mr. Foley and arranged to meet the following week, Countrywide submitted its invoice, on which the present claim is based.  The accompanying letter refers to Mr. Foley having said on 21st May that "Countrywide was on".  Mr. Foley said in his witness statement that he had in the previous week told Mr. Lake on the telephone that it was Ms. Campopiano's role to be convinced of Countrywide's suitability.  He also told Mr. lake that one of his further concerns was that he had only met Mr. Orme, and nobody else from Countrywide.  This does not strike me as a legitimate criticism, since the only occasions on which he had met Mr. Orme were at the meetings on 1st and 21st May, to neither of which had Mr. Orme been asked to bring other members of his team.  It was probably in the conversation referred to in the letter of 19th June that Mr. Foley told Countrywide that they would not be appointed.

	Eventually Mr. Lake met Mr. Foley on 2nd July 1996.  Mr. Lake's notes evidence the reasons given by Mr. Foley as follows:

		"Uncomfortable (because) had seen only John and didn't see any back up team of quality.  Pathway doubts our ability to handle crisis management (and) issues … Liam did not feel we were willing and able to take on his workload".

The notes do not refer to deficiencies in the documents produced by Mr. Orme at Ms. Campopiano's request.  They do state that Mr. Foley confirmed that he had said that "Countrywide was on" on the 21st May.

	The notes also refer to Mr. Foley being committed to an early resolution of the "problem" of the invoice.  Mr. Lake wrote to him on 12th July chasing for payment.  On 19th July, Mr. Orme wrote to Mr. Foley confirming a telephone conversation to the effect that payment of the outstanding invoice would be resolved as soon as the Finance Director returned from holiday and asked Mr. Foley to let him know if he had misunderstood.  On 18th September Mr. Orme wrote to Mr. Foley confirming a conversation to the effect that he would make a proposal and discuss it on the previous Friday and asking him for details of the proposal.  A further letter of 25th September suggests that Mr. Foley had again promised to make a proposal but had then said that having discussed the issue with his finance director and managing director "their view appears to be, simply – no contract, no payment", to which Mr. Orme responded:

		"As you are aware, Countrywide's case is different.  The team has come out that the verbal promise has been: work with Pathway consortium to secure the BA/BOAC contract, and you will be a contracted supplier, earning revenues over a minimum of three years to offset the initial investment of committed effort to gain the contract.  Pathway's action in not appointing Countrywide despite your direct verbal assurance to me, and the agreement I reached with Anna Campopiano, recorded in my letter of 24 May 1996 have deprived Countrywide of the ability to generate that promised income.  Hence our commitment to recover the value of our time over two years, based on instructions from Alan to invoice Pathway for work incurred before, and since, be awarded the BA/BOAC contract to Pathway".

	At the foot of the letter, Mr. Orme has noted a telephone conversation with Mr. Foley, in which he disputed that he had agreed to submit a proposal, but stating that he would now "submit a proposal on the way forward".  However, on 9th October Mr. Foley wrote to say that in the absence of "direct verbal assurances" (i.e. denying "Countrywide is on" and any agreement with Ms. Campopiano), ICL Pathway was not responsible for Countrywide's speculative bid costs.  He added:-

		"It had certainly been our expectation that an on-going relationship would result from your efforts on our behalf, but as you know we found another company whose services we deem more suitable for our needs".

	This is of some significance, in that it acknowledges (contrary to ICL Pathway's present case) that Countrywide's efforts were not merely for the purpose of "pitching for work", but had been made on ICL Pathway's behalf.

	Countrywide then instructed solicitors and some further correspondence ensued, but without result.

Countrywide's claims

Contract

	Countrywide put their case in three ways.  First they submitted that a binding contract was entered into on 7th November 1994, and that it was confirmed on each later occasion on which they were asked for their services.  I have already said that I do not accept this submission.  A contract to employ Countrywide, if the bid succeeded, for reasonable remuneration would not be void for uncertainty, but no such contract was concluded.  Both Mr. Orme on the one side, and Mr. Jones, Mr. Hodgkins, Mr. Barton and Mr. Foley in succession on the other, knew that there would have to be detailed negotiations and there is nothing from which an intention to enter into a binding contract before the negotiations were concluded can properly be inferred.  All the circumstances point in the opposite direction.

	What did exist was a clear arrangement or understanding throughout the period November 1994 to May 1996 which, correctly analysed, was as follows.  If (a) Countrywide's "credentials" were accepted by the consortium, (b) Countrywide assisted the consortium with the bid until it was finally submitted and (c) the bid succeeded, then Countrywide would be offered the public relations and communication sub-contract, on terms to be negotiated.  In other words, there was an agreement under which (as from April 1995) ICL Pathway promised, if certain conditions were met, as they were, to negotiate.  It is trite law that such an agreement is unenforceable: see Walford v. Miles [1992] 2 A.C. 128.

Estoppel

	Secondly, Countrywide submitted that, having induced Countrywide to expect that they would be appointed if the bid succeeded, and having done nothing to disabuse it of that expectation, ICL Pathway are estopped from denying the contract alleged by Countrywide to have come into existence.  Accordingly, it is submitted, Countrywide should recover, as damages for breach of contract or possibly on a quantum meruit, the profit which they would have made if a contract had been concluded.  The calculation of the profit, they submit, should be based on the budget of £780,000 and this leads to an award of damages of £375,000; alternatively, the calculation of profit should be based upon the contract entered into with Financial Dynamics.

	In support of this submission, Countrywide relied on the decision of the High Court of Australia in Walton's Stores (Interstate) Limited v. Maher (1988) 164 C.L.R. 387, in which the owner of land, who was negotiating with a company to grant a lease on terms that a building on the land would be demolished, and a new one constructed to the company's specifications, demolished the building and began the construction of the new building at a time when the terms of the lease were fully negotiated but before exchange.  The company became aware that the demolition was proceeding, but did nothing to stop the owner.  When the building was about 40% complete, the company said that it did not intend to proceed.  The High Court of Australia held that, despite the absence of any binding agreement for the lease, the company was estopped from denying that it was bound by reason of its unconscionable conduct.  All five members of the Court held, although not on precisely the same grounds, that the company's acquiescence created what was in effect a contractual right; the owner was held to be entitled to enforce the agreement for a lease, just as if a binding agreement had come into existence.  The award of damages in lieu of an order for specific performance made by the trial judge was upheld.

	Countrywide also referred to the well known decision of the Court of Appeal in Amalgamated Investment & Property Co. Limited v. Texas National Bank [1982] Q.B. 84, in which it was held that the plaintiffs were estopped from denying that a guarantee in favour of the defendants extended to the indebtedness of a subsidiary of the guarantor, because the parties had acted upon an agreed assumption to that effect.  In order to meet the objection that Countrywide were in this case seeking to use estoppel as a sword rather than as a shield, reliance was in particular placed upon a passage from the judgment of Brandon L.J., in which he stated that the true proposition of law was that -

		"while a party cannot in terms found a cause of action on an estoppel, he may, as a result of being able to rely on an estoppel, succeed on a cause of action on which, without being able to rely on that estoppel, he would necessarily have failed.  That, in my view, is, in substance, the situation of the Bank in the present case."

	Similarly, passages in the opinion of Lord Templeman in A-G for Hong Kong v. Humphreys Estate (Queen's Gardens) Limited [1987] A.C. 114 at 124H-125A and 127H-128A suggest that, if the respondents in that case had encouraged the appellants to believe that they would not withdraw from an agreement which was "subject to contract", and if the appellants had acted on a belief so induced, the respondents might have been estopped from denying the existence of the agreement.

	In all these cases, the effect of the estoppel contended for was or would have been to leave the plaintiff with a right to enforce a concluded contract, in the Walton's case a fully negotiated lease, in the Amalgamated Property case a written guarantee containing detailed terms and in the Humphreys case a fully negotiated agreement for the exchange of property.  In this case, assuming everything else in Countrywide's favour, the effect of the estoppel would merely be to prevent ICL Pathway from resiling from or denying an unenforceable contract to negotiate.  This would not advance Countrywide's position at all.  The effect of the remedy which they suggest is appropriate, if granted, would be to estop ICL Pathway from denying a contract to employ Countrywide for a remuneration of £780,000.00, or alternatively on the terms negotiated with Financial Dynamics.  But ICL Pathway never led Countrywide to expect that they would be offered a contract on either of these bases or indeed on any particular basis.  There is therefore no warrant for giving effect to the suggested estoppel by awarding damages or a quantum meruit representing Countrywide's loss of profit.  There is no basis on which the loss of profit could properly be calculated.

	The decision of the Court of Appeal of New South Wales in Austotel Pty. Ltd. v. Franklyns Selfserve Pty. Ltd. (1989) 16 N.S.W.L.R. 582 supports this conclusion.  In that case it was held that a finding that there was no binding agreement for a lease, no rent having been agreed, was also fatal to a submission that the defendant was estopped from denying the existence of an agreement.  The point was put in this way by Kirby P. at 584E: -

		"I have reached the opinion that once it is determined that no concluded agreement was made between the parties (for want of a concluded term as to rent) the first ground of estoppel relied upon by the respondent must fail.  As Priestly J. A. and Needham J. (the trial judge) have pointed out, all that such an estoppel would do would be to prevent the defendant from denying the existence of an "agreement" which was not a legal agreement at all.  This would have no utility ..."

and in very similar terms by Priestly J. A. at 602E-D.

Quantum meruit

	Finally, Countrywide claimed a quantum meruit for the work done in anticipation of the contract which in the end was not awarded to them.  There is no doubt that, in most cases, a person who carries out work in the hope of obtaining a contract, for example a builder who prepares an estimate, cannot claim the cost of doing so.  In general, parties are free to withdraw from negotiations at any time before a contact is entered into for good or bad reasons, or for none at all, without incurring liability.  If it were otherwise, persons seeking quotes for work might routinely find themselves liable for the expenses of several disappointed bidders.  In most cases prospective contractors expressly (for example by offering a free estimate or when negotiations are "subject to contract") or impliedly do the work at their own risk.  As Barry J. said in William Lacey (Hounslow) Ltd v. Davis [1957] 1 W.L.R. 932, 934:-

		"... if a builder is invited to tender for certain work, either in competition or otherwise, there is no implication that he will be paid for the work - sometimes the very considerable amount of work - involved in arriving at his price: he undertakes this work as a gamble, and its cost is part of the overhead expenses of his business which he hopes will be met out of the profits of such contracts as are made as a result of tenders which prove to be successful.  This generally accepted usage may also - and I think does also - apply to amendments of the original tender necessitated by bona fide alterations to the specification and plans.  If no contract ensues, the builder is, therefore, without a remedy."

	However, it is clear that there are some exceptional cases in which the prospective contractor will be able to recover, not pursuant to an implied contract based on the actual or presumed intention of the parties, but because the court imposes an obligation to pay.

	Thus, in Lacey, Barry J, in rejecting the submission that the common expectation of the parties that the plaintiff's services would be rewarded under the contract which would ultimately be made negatived any suggestion that the parties had impliedly agreed that they would be paid for in any other way, said:-

		"This, at first sight, is a somewhat formidable argument which, if well founded, would wholly defeat the plaintiffs' alternative claim.  If such were the law it would, I think, amount to a denial of justice to the plaintiffs in the present case, and legal propositions which have that apparent effect must always be scrutinised with some care.  In truth, I think that Mr. Lawson's proposition is founded upon too narrow a view of the modern action for quantum meruit.  In its early history it was no doubt a genuine action in contract, based upon a real promise to pay, although that promise had not been agreed.  Subsequent developments have, however, considerably widened the scope of this form of action, and in many cases the action is now founded upon what is known as quasi-contract, similar, in some ways, to the action for money had and received.  In these quasi-contractual cases the court will look at the true facts and ascertain from them whether or not a promise to pay should be implied, irrespective of the actual views or intentions of the parties at the time when the work was done or the services rendered."

	Commenting on this, Professor Birks in his Introduction to the Law of Restitution at page 273 said:-

		"This judgment was an important advance.  There were, however, two matters in respect of which it left room for further explanation.  First, while it is right to say that the court will look at the true facts (as opposed to the facts traditionally recited in the declaration), it is a needless perpetuation of the old ways to say that on those facts the courts will decide whether to `imply a promise'.  Barry, J., uses the word `implied' in the sense of `imposed'.  A promise which is `imposed irrespective of the actual view or intentions of the parties'' is not a promise at all.  An `imposed promise' is a contradiction in terms.  So, the implied promise which survives in his vocabulary should more aptly have been an `imposed obligation'.  Beneath the words actually used, that is undoubtedly what he meant ..."

	However, identification of a unifying principle laying down when the court will impose an obligation to pay for work done in anticipation of a contract which does not materialise is not straightforward.  Thus, professor McKendrick in an essay published in `Restitution, Past Present and Future' 1998, ch. 11 pages 171-2 states that:-

		"It is generally agreed that a four-stage approach can be adopted to restitutionary claims: (i) the defendant must have been enriched, (ii) the enrichment must have been at the expense of the plaintiff, (iii) that enrichment must have been unjust and (iv) the defences must be considered.  Each element of the claim requires careful and methodical consideration, yet it must be conceded that this is not what we tend to see in the cases.  The plaintiff's claim is usually one to recover upon a quantum meruit and, where he recovers, he does so because the court has concluded that, on the facts, he deserves to do so.  The precise facts, or set of facts, which render him a deserving plaintiff are articulated, if at all, in rather general terms.  More needs to be done to set up a stable framework for analysis."

	He accepts that the issue as to what constitutes an "enrichment", or benefit conferred on the defendant, remains "shrouded in mystery": in a note in 1995 RLR page 103, he describes it as a "vexed issue".  In the essay, he also accepts at pages 178, 180-1 the possibility that in some cases liability may be imposed on a non-restitutionary basis for reliance loss which has not resulted in a benefit to the other party.

	In his essay on Ineffective Transactions in `Essays on Restitution' (ed. Finn), ch. 7 pages 211-2 Professor Carter describes the problem of services rendered under "contracts which do not materialise" as follows:-

		"An anticipated contract may fail to materialise for any number of reasons.  Every day negotiations which might ultimately lead to a contract break down.  The breakdown may be a source of disappointment, even bankruptcy, but normally no remedy is available. ...

		Where the negotiation process breaks down, one party - the plaintiff - may have justification for feeling aggrieved.  By the word "justification" I mean that there exists some supernormal factor which at least raises the possibility of a legal (or equitable) remedy.  The factors which may count as a justification all focus on the conduct of the defendant.  Apart from fraud, they are unconscionable conduct and the contravention of some statutory code of behaviour.  If we concentrate on restitution for a benefit received by the defendant, rather than restitution based on a wrong done, unconscionability must be the context of any restitutionary claim.  It takes three main forms:

		(a)	the contradiction of a promise, representation, or conventional state of affairs;

		(b)	the failure to disabuse the plaintiff of a mistake, or false expectation, usually in relation to the award of the contract itself; and

		(c)	the attempt to retain without payment a benefit conferred at the defendant's request in circumstances where the defendant knew that there was no intention to make a gift of the benefit.

		It is clear from the above description that the conferral of a benefit is not the primary source of the concern or "justification".  Reliance, expectation and, to put the matter broadly, "fault" clearly have roles to play.  The relevance of expectation in at least some of the no contract cases is enough to explode the myth that concepts of contract law have nothing to do with restitution ...

		... It has been said, with some justification, that neither contract nor restitution provides a satisfactory solution to the problems created.  This is hardly surprising given the reluctance of the common law to develop a doctrine of good faith in contract negotiation.  The focus of most of the debate in the law of restitution is the element of benefit."

	The relevant passage in Goff and Jones 5th ed. ch. 26 pages 664-5 is also tentative:-

		"The restitutionary claim: in principle

		It is not surprising, given that only in relatively recent years has the principle of unjust enrichment been expressly recognised, that the courts have inquired in general terms (a) whether the plaintiff's services had enriched the defendant, and (b) what is the basis of the plaintiff's claim, the unjust factor.

		(a)	What is meant by "benefit" in this context?

		As has been seen, there is little difficulty in concluding that a defendant has gained a benefit if he accepted goods and services which he requested, even though there may be no contractual obligation to make a payment.  Moreover, it is now accepted that he is enriched if he has received an incontrovertible benefit.  What is debatable is whether he is benefited if he requested another to perform services, but received no benefit from the other party's expenditure.  The resolution of this question, and the collateral question of the valuation of services rendered, is particularly important in this context.

		(b)	What is the "ground" (the unjust factor) of the restitutionary claim?

		There are a number of possible grounds of the restitutionary claim, which, as the law now stands, may depend on the nature of the benefit conferred.  These include free acceptance; mistake; total failure of consideration; and unconscionability, which may well be the basis of the doctrine of proprietary estoppel.

		Even if the plaintiff can demonstrate that the defendant has been enriched and that it would be unjust if his claim were denied, there is a third question which must be answered:

		(c)	Did the plaintiff take the risk that he would be reimbursed his expenditure only if there was a concluded contract?"

	Other academic writers take the view that there is no single principle and that liability is simply imposed if this is justified on the facts of the case.  For example, Mr. J.D. Davies, commenting on the New South Wales case of Sabemo Pty. Ltd v. North Sydney Municipal Council [1977] 2 N.S.W.L.R. 880 in 1 OJLS (1981), at 305 says:-

		"I want to suggest that Sheppard J. comes out on top.  In Sabemo he accepts that the law imposed liabilities outside the traditional categories.  By so doing he reduces artificiality and placed emphasis where it belongs.  There is no ascription of facts to categories of which they are not a natural part.  There is no expansion of categories to fill all needs.  Instead, there is analysis of the facts; and this ensures that the legitimate grounds for imposing a liability emerge.  There is no word magic; and any labels, or titles, that then get used to describe the results will be less liable to confuse.  This seems the best way of developing a comprehensive body of law."

	There is not a great deal of English authority.  The earliest case which needs consideration is the decision of the Court of Appeal in Jennings and Chapman Limited v. Woodman Matthews & Co [1952] 2 T.L.R. 409.  The plaintiffs, who were builders, were the lessees of shop premises which they proposed to sub-let to the defendant, a solicitor, after making alterations to render them suitable as offices.  The defendant was to pay the cost of the alterations and then take a sub-lease.  The landlords then, applying a provision of the head lease, about which the plaintiffs had not informed the defendant, refused consent to the alteration of user.  The plaintiffs sued for the price of the work, and the defendants submitted that it was an implied term of the agreement that he would not be obliged to pay for the alterations if the plaintiffs could not procure the sub-lease.  The Court of Appeal held that, in the fundamentally different situation from that contemplated by the parties, the contract ceased to be binding and that it was for the court to decide on which party the loss would fall, or in other words whether to impose upon the defendant an obligation to pay.  The Court of Appeal decided not to impose an obligation.  Somervell J.J. held that the defendant must be taken to have known that consent would be subject to satisfying the landlord that he was a responsible person, but not that consent was required to do the alterations and for the altered use of the premises, and that in these circumstances the risk of loss fell on the plaintiffs.  In addition, it was possible that the plaintiffs would derive some benefit from the alterations.  The judgments of Denning and Romer L.JJ. were to the same effect.  Denning L.J. said:-

		"What does the law say is to be done in the situation as it has emerged?  It is no use asking what the parties provided for it, for the plain fact is that they did not foresee it and did not provide for it.  It is no use asking what the parties would have provided for it if they had foreseen it, because they cannot say now what provision they would have made - one would have wanted one thing and one another and they might have compromised it ....

		In this situation ... the law itself must say what the rights of the parties are.  There is no other way.  The parties cannot help, so the law must solve it.  The solution is to be found, I think, by asking: on whom, in all the circumstances of the case, should the risk fall?  It seems to me that it should fall on the plaintiffs.  They were the people who held the lease of the premises.  They knew all the conditions which had to be fulfilled before they could grant a sub-lease.  The solicitor did not know those conditions until the word was half done ..."

	The decision is interesting, in that it suggests that the Court would, if the circumstances had been different, have imposed an obligation on the defendant to pay for the alteration. For example, such an obligation might well have been imposed if the reason why the lease fell through was that, for some reason not disclosed by the solicitor to the builders, the landlord objected to the subletting on the ground that the solicitor was not a responsible person.  If the Court had imposed an obligation on the defendant in such circumstances, the tenor of the judgments suggests that it would not have been contractual.  Nor could it easily have been regarded as restitutionary, since the defendant would have obtained no benefit whatsoever from the alterations to the plaintiffs' property.  The decision appears to suggest that, in appropriate circumstances, the court might have jurisdiction to impose an obligation on one party to a proposed contract to reimburse the other for the wasted expenditure, no doubt subject to a reduction to take account of any benefit derived by the party incurring the expenditure.  A possible rationalisation of the decision in restitutionary terms, had the claim succeeded, would have been that the mere fact that the work was done at the defendant's request meant that it was a benefit to him.  But there is force in the view expressed in Professor McKendrick's essay, supra, at pages 178 and 185, that such a benefit is "fictional" and the suggestion that a defendant in such circumstances would be enriched "dubious".

	In Brewer Street Investments Limited v. Barclays Wool & Co. Ltd [1954] 1 Q.B. 428, the parties were negotiating for a lease to be granted by the plaintiffs to the defendants, but the negotiations were still expressly "subject to contract".  In that situation the plaintiffs, the owners of the premises, agreed to make certain alterations to the premises at the defendants' request, and the defendants accepted responsibility for the cost.  The parties failed to agree on a term of the proposed lease, and negotiations failed.  The alterations, which were stopped when the negotiations failed, did not benefit the plaintiff.  Somervell L.J. held that the defendants were liable on the simple ground that the defendants had contracted to pay for the alterations, and that there was no basis for implying a term that this was subject to the lease being entered into, in circumstances in which the agreement had been made at a time when negotiations were expressly "subject to contract".  Denning L.J. however held that the plaintiffs could not claim in contract, because the work was never completed, nor could they claim on a quantum meruit "as ordinarily understood".  The claim was "on a request implied in law, or as I would prefer to put it in these days on a claim in restitution".  He therefore held that, just as in the Jennings and Chapman case, it was for the court to impose a solution.  If it could have been said that the breakdown in negotiations had been the "fault" of either party, that party should suffer the loss.  However, in circumstances in which the parties simply fell out over a term which could not be agreed, neither was at fault and the defendant should pay for the work because it had been "done to meet their special requirements and was prima facie for their benefit and not for the benefit of the landlords", subject to credit for any work shown to have been of actual benefit to the landlords.  Romer L.J. agreed with both judgments, and it is difficult to see from what he said whether his decision was based on contract or restitution.

	Denning L.J's judgment supports the view that a claim in restitution can be brought, where the "benefit" or "enrichment" consists of the performance of work at the defendant's request which, as it turns out, has not provided any actual benefit to the defendant at all.  The judgments of both Denning and Romer L.JJ., together with exchanges between both of them and counsel in argument, also suggest that "fault" is relevant.  On this, in the latest edition of Goff and Jones, 5th ed. at page 669 and 671, it is suggested that "fault" is a "shadowy sign-post which may point in more than one direction" and that the better test is whether "the plaintiff's services have manifestly benefited a defendant who has behaved unconscionably".

	Next, there is the decision of Barry J. in William Lacey (Hounslow) Limited v. Davies, to which I have already referred and on which Countrywide rely in this case.  The defendant in that case had bought a building in Fulham, with the benefit of a cost of works' claim under the War Damage Act, which he proposed to rebuild with business premises on the ground floor and residential flats above.  He obtained tenders from three firms of builders, of which the plaintiffs' was the lowest; the plaintiffs were told that they would be given the contract to rebuild the house.  Subsequently, a licence for the scheme having been refused, they prepared a further estimate, and substantial amendments to its resulting from changes proposed by the defendant which the judge considered to be beyond what a builder would ordinarily be expected to do free of charge.  They also prepared an estimate for a notional reconstruction of the premises in their original state before the war damage and a schedule of prices on which their original tender had been based, so as to enable the defendant to negotiate with the War Damage Commission.  This was nothing to do with the actual proposed reconstruction.

	The plaintiffs claimed on a quantum meruit for the work involved in revising the estimate and in connection with the war damage claim, on the basis that it had been done free of charge on the assumption that they would receive the contract for rebuilding, but had subsequently been told that the plaintiffs would employ another firm of builders although in the event the defendant sold the premises.

	Barry J. held that they were entitled to recover on a quantum meruit for the work connected with the war damage claim and the revised estimates on the ground that it "fell right outside the normal work which a builder, by custom and usage, normally perform gratuitously, when invited to tender for the erection of a building" and on the basis that the work had resulted in a real benefit to the defendant; it had been instrumental in obtaining the approval of the reconstruction plans, and the grant of a licence to build, as well as a much higher "permissible amount" for the war damage claim.  It was "perhaps justifiable to surmise" that this had had some influence on the price which the defendant obtained when he sold the building.  In normal circumstances, the defendant would have had to pay for such work and an obligation to do so was to be imposed in circumstances in which the work had been done "under a mutual belief and understanding" that the plaintiff was obtaining the contract to reconstruct the building.

	The decision is criticised in Goff and Jones at pages 666-9 on two grounds.  The first concerns Barry J's reliance on Craven-Ellis v. Canons Limited [1936] 1 K.B. 403, in which the Court of Appeal allowed the plaintiff's claim on a quantum meruit for work done under a contract which was void.  Barry J. said (ibid. at 939) that he could see no valid distinction between work done under a contract erroneously believed to be in existence and work done which was to be paid for out of the proceeds of the contract which both parties erroneously believed was about to be made.  As to this Goff and Jones says:-

		"... there is a critical distinction ... in the former case that services were requested and accepted by the defendant in circumstances where both parties thought the plaintiff was to be paid the contractual sum agreed.  But in the latter the defendant may well have expected to pay only if the contract was concluded.  Moreover, the plaintiff may well know that under a contract is concluded either party is free to withdraw from the negotiations".

	I would respectfully agree with this, but I am more doubtful about the other criticism:-

		"It is difficult to support the conclusion that in William Lacey the defendant received a benefit at the plaintiff's expense.  As Traynor C.J. (in Coleman Engineering Co. v. North American Aviation 420P. 2d 713, 729) once remarked: "[i]n fact the performance of services has conferred no benefit on the person requesting them, and it is pure fiction to base restitution on a benefit conferred".  The reality is that the award concealed a claim for loss suffered in anticipation of a contractual agreement which never materialised".

	It seems to me that this is a point which applies with more force to the Brewer Street case, or at least to the judgment of Denning L.J. in that case.  In Lacey the work done by the plaintiffs resulted in substantial benefits, namely the licence required to do the work and the agreed figure for the war damage claim, and Barry J. was entitled to infer that these had made the building more valuable.  Since the work had been provided free only on the basis of assurance that the plaintiffs would be given the contract to reconstruct the building, it was unjust or unconscionable, once the assurance was broken, that payment should be withheld.  Accordingly, it was right to impose an obligation to pay, although strict logic might have required the amount of the payment to be referable to the value of the benefit rather than (as it was) the extent of the services.  Further, on the question of benefit, it seems to me that there is much force in the brief comment of Professor McKendrick on Lacey, op.cit. at 179-180:

		"Where ... the defendant has made use of the plaintiffs' part performance he cannot then turn round and say that that part performance was not a benefit to him".

	In British Steel Corporation v. Cleveland Bridge and Engineering [1984] 1 All E.R. 504, there were negotiations for the supply by the plaintiffs to the defendants of a variety of cast-steel nodes for a construction project on which the defendants were engaged.  No contract was concluded, but the plaintiffs manufactured and delivered the nodes and delivery was accepted.  The plaintiffs successfully claimed on a quantum meruit.  Robert Goff J. held as follows at 511b-d:-

		"In my judgment, the true analysis of the situation is simply this.  Both parties confidently expected a formal contract eventually.  In these circumstances, to expedite performance under that anticipated contract, one requested the other to commence the contract work, and the other complied with that request.  If thereafter, as anticipated, a contract was entered into, the work done as requested will be retreated as having been performed under that contract; if contrary to that expectation, no contract was entered into, then the performance of the work is not referable to any contract the terms of which can be ascertained, and the law simply imposes an obligation on the party who made the request to pay a reasonable sum for such work as has been done pursuant to that request, such an obligation sounding in quasi contract or, as we now say, in restitution.  Consistently with that solution, the party making the request may find himself liable to pay for work which he would not have had to pay for as such if the anticipated contract had come into existence, e.g. preparatory work which will, if the contract is made be allowed for in the price of the finished work (cf William Lacey (Hounslow) Ltd v. Davies ...)  This solution moreover accords with authority: see the decision in Lacey v. Davies ... (my emphasis)"

	I agree with the view of Rattee J. expressed in Regalian Plc. v. London Docklands Development Corporation [1995] Ch. 212 at 230C that the decision of Robert Goff J. is distinguishable, in this case as in Regalian, because the work cannot be said to have been done "by way of accelerated performance at the anticipated contract".  But Robert Goff J.'s approval of the decision in Lacey is nevertheless significant.

	The next case to which I should refer is the decision of Judge Bowsher Q.C. in Marston Construction Co. Ltd. v. Kigass Limited [1989] 15 Con.L.R. 116.  The doubts expressed by Rattee J. in Regalian at 227H to 229C as to the decision to award a quantum meruit in this case may be correct, but I would gratefully adopt what Judge Bowsher Q.C. says (at 128-9) on the question of benefit:-

		"When considering benefit, a distinction has to be made between the delivery of money and goods on the one hand and the provision of services on the other.  Mr. Raeside submits that for there to be any recovery by the plaintiffs in this case they must show that the defendants have received an actual benefit, not a potential benefit that is never realised.  Mr. Raeside relies in particular on a passage in para 1943 of the chapter on Restitution in Chitty on Contracts (25th edn) written by Mr. J. Beatson:

		"The nature of the enrichment.  This may take the form of a direct addition to the recipient's wealth, such as by the receipt of money, or an indirect one, for instance by improving his property, other `pure' services do not.  The fact that services cannot be restored and the influence of the implied contract theory has meant that they were often not regarded as beneficial so as to give rise to a quantum meruit unless the defendant had requested the services or, knowing that they were to be paid for, had freely accepted them. Many but not all such cases are capable of analysis as a genuine implied contract.  These cases do not depend upon the service adding to the defendant's wealth, the service per se is treated as a benefit.  There is, however, also some authority that treats a service as beneficial where it results in an `incontrovertible benefit' to the defendant (Craven-Ellis v. Canons Ltd [1936] 2 KB 403, Greenwood v. Bennett [1973] 1 QB 195).  With the possible exception of necessitous intervention to preserve life or health, only services that result in an accretion to the defendant's wealth can constitute an incontrovertible benefit.  Goff and Jones state that incontrovertible benefit is established where the defendant has made `an immediate and realisable financial gain or has been saved an expense which he otherwise would have incurred."

		Although Goff and Jones refer to the gain as being "realisable" (pp.19 and 148) Birks argues that it must not be merely realisable but realised.  But I am not convinced by his argument despite Mr. Raeside's contention that there is no reported case in quasi-contract where there has not been actual benefit.

		It seems to me that in appropriate cases, the benefit may consist in a service which gives a realisable and not necessarily realised gain to the defendant particularly when, as here, the service is a part of what was impliedly requested."

	Before referring further to Regalian, I should mention the decision of Sheppard J. in the Sabemo case.  In that case the defendant Council had advertised that it wished to enter into a building lease in respect of a large plot of land and had invited tenders including the provision of administration space, a public hall and a library for the Council, free of charge.  The plaintiffs' tender was accepted, but it was agreed that this did not give rise to a binding contract.  Over a period of some 3 years, the plaintiffs did considerable work on the project, including the engagement of a number of expert employees to assist in the preparation of successive schemes.  In December 1973, the Council dropped the project.  Sheppard J. found (905F, 902G) that, although certain differences had arisen in the negotiations which had not been resolved by the time the Council decided to drop the scheme, if this decision had not been taken they would have been resolved and a binding agreement would have been concluded.

	Sheppard J, having reviewed the earlier authorities, held (901H-902B) that where two parties proceed on a project on the joint assumption that a contract will be entered into between them, and the first party does work beneficial to the project, and thus in the interest of both parties, which work the first party would not be expected, in other circumstances, to do gratuitously, the first party will be entitled by operation of law, notwithstanding that the parties did not intend, expressly or impliedly, that such obligation should arise, to compensation or restitution from the second party if the latter unilaterally abandons the project for reasons pertaining only to himself and not to the position of the other party, and not arising out of a disagreement as to the terms of the proposed contract between the parties.

	Sheppard J. expressly stated at 897E that the case was not a case of unjust enrichment.  At 902F he said (to my mind surprisingly) that he did not regard the benefit obtained by the defendant in Lacey as "going to the root of (the) decision" and at 903B he rejected the proposition that a claim of this kind must always fail unless the plaintiffs' work has been beneficial to the defendant.  In his view, what mattered was the reason why the transaction went off, which determined on whom the risk of loss was to fall.  He said at 901B:-

		"To my mind the defendant's decision to drop the proposal is the determining factor.  If the transaction had gone off because the parties were unable to agree, then I think it would be correct, harking back to the expression used by the judges in the Jennings and Chapman case and in the Brewer Street case to say that each party had taken a risk, in incurring the expenditure which it did, but the transaction might go off because of a bona fide failure to reach agreement on some point of substance in such a complex transaction.  I do not think it right to say that that risk should be so borne, when one party has taken it upon itself to change its mind about the entirety of the proposal".

	I share the doubts expressed by Rattee J. in Regalian as to the correctness of this decision.  In many cases the risk to both parties of incurring time and expense on a project which either side may abandon will be well known.  This is especially so if the project is a large one which is likely to take a long time to negotiate, as economic conditions may change.  An agreement to carry out actual building work in advance of the concluded contract is a much clearer indication that the parties will not capriciously or for their own reasons withdraw, than is the planning and general work of the kind done in Sabemo.  In the absence of any assurance or indication by the Council that it would not withdraw for its own reasons, and of any benefit to the Council resulting from the plaintiffs' work, it is difficult to see why liability should have been imposed.

	Finally, I must refer again to the decision in Regalian.  This was another long drawn out situation in which the plaintiffs did a considerable amount of work on a project which ultimately failed, in essence because the parties were unable to agree a price in circumstances in which market conditions had considerably changed.  Crucially, Rattee J. held (at page 225F) that the plaintiffs' work on the project had not resulted in any "ascertainable benefit" to the defendants.  He regarded the decision in Lacey as supportable only on the basis that the plaintiffs in that case had conferred a clear benefit on the defendants "quite outside the ambit of the anticipated contract" (225A).  However, in that case the plaintiffs also recovered for work which was within its ambit.  He held that Sabemo was distinguishable because the reason for the breakdown of negotiations in Regalian was the inability to agree on the price, and not the unilateral decision by one party to abandon the project (227D), but also considered (230F to 231C) that the principle enunciated by Sheppard J. was not established by any English authority and that, while English law restitution should be flexible and capable of development, it should not be extended to apply in a case in which negotiations are expressly conducted on terms that both parties may withdraw at any time.

	I have found it impossible to formulate a clear general principle which satisfactorily governs the different factual situations which have arisen, let alone those which could easily arise in other cases.  Perhaps, in the absence of any recognition in English law of a general duty of good faith in contractual negotiations, this is not surprising.  Much of the difficulty is caused by attempting to categorise as an unjust enrichment of the defendant, for which an action in restitution is available, what is really a loss unfairly sustained by the plaintiff.  There is a lot to be said for a broad principle enabling either to be recompensed, but no such principle is clearly established in English law.  Undoubtedly the court may impose an obligation to pay for benefits resulting from services performed in the course of a contract which is expected to, but does not, come into existence.  This is so, even though, in all cases, the defendant is ex hypothesi free to withdraw from the proposed contract, whether the negotiations were expressly made "subject to contract" or not.  Undoubtedly, such an obligation will be imposed only if justice requires it or, which comes to much the same thing, f it would be unconscionable for the plaintiff not to be recompensed.

	Beyond that, I do not think that it is possible to go further than to say that, in deciding whether to impose an obligation and if so its extent, the court will take into account and give appropriate weight to a number of considerations which can be identified in the authorities.  The first is whether the services were of a kind which would normally be given free of charge.  Secondly, the terms in which the request to perform the services was made may be important in establishing the extent of the risk (if any) which the plaintiffs may fairly be said to have taken that such services would in the end be unrecompensed.  What may be important here is whether the parties are simply negotiating, expressly or impliedly "subject to contract", or whether one party has given some kind of assurance or indication that he will not withdraw, or that he will not withdraw except in certain circumstances.  Thirdly, the nature of the benefit which has resulted to the defendants is important, and in particular whether such benefit is real (either "realised" or relisable") or a fiction, in the sense of Traynor C.J's dictum.  Plainly, a court will at least be more inclined to impose an obligation to pay for a real benefit, since otherwise the abortive negotiations will leave the defendant with a windfall and the plaintiff out of pocket. However, the judgment of Denning L.J. in the Brewer Street case suggests that the performance of services requested may of itself suffice amount to a benefit or enrichment.  Fourthly, what may often be decisive are the circumstances in which the anticipated contract does not materialise and in particular whether they can be said to involve "fault" on the part of the defendant, or (perhaps of more relevance) to be outside the scope of the risk undertaken by the plaintiff at the outset.  I agree with the view of Rattee J. that the law should be flexible in this area, and the weight to be given to each of these factors may vary from case to case.

	There is in my view considerable doubt whether an obligation can be imposed in a case in which the plaintiff has not provided a benefit of any kind, even of the "fictional" kind discussed earlier of performing services at the request of the defendant albeit without enriching him in any real sense.  Thus I doubt whether an obligation can be imposed on a contracting party to repay a plaintiff for expense incurred, reasonably or even necessarily, in anticipation of a contract which does not materialise, where this is not in the course of providing services requested by the defendant.  Such an obligation would not be restitutionary, and there is no English authority which would clearly support its imposition, except perhaps in circumstances similar to those suggested in the Humphreys Estate and Walton's cases where the defendant is precluded by estoppel from denying the existence of a binding contract.  If it were otherwise, there would often be a remedy against gazumpers, against whom it could always or at least usually be said that the buyer did not take the risk of expenditure wasted through the seller's decision to withdraw, having earlier accepted an offer "subject to contract", not for a reason connected with the negotiation of the contract, but because he had been offered more by someone else.  Similarly, in some cases there might be a remedy where "gazundering" has caused a contract to go off.  There is an interesting suggestion by Mr. Paul Key in 111 L.Q.R. at 180 that, even if the effect of an estoppel would not be to preclude denial of a binding contract, the court could do "the minimum equity" necessary to meet the circumstances, on the basis of the Court of Appeal decision in Crabb v. Arun District Council [1976] Ch. 179 and that this could include compensation for "reliance loss".  However, in view of my conclusions set out below, I do not need to reach a decision on this difficult question.

Conclusions on quantum meruit in this case

	I would regard it as most unjust if Countrywide were not appropriately recompensed for their work before and after the submission of the bid in March 1996.  Put shortly, this is because (1) they were induced to provide their services free of charge by an assurance, ultimately dishonoured, that ICL pathway would be prepared to negotiate a contract with them if the bid succeeded, and (2) their services provided ICL Pathway with a benefit for which (in the absence of such an assurance) they would otherwise have had to pay reasonable fees for time spent, namely advice and assistance in connection with the public relations and communications issues during the bid and subsequently.

	As I have already found, the members of the consortium had a policy from the outset of seeking the services of potential sub-contractors during the bid process free, on the basis that they would be assured of being rewarded by a sub-contract if they gave their help until the final bid was submitted and if it succeeded.  Such an assurance was given by Mr. Jones at the outset, and repeated by Mr. Hodgson in about April 1995, when ICL Pathway was formed.  This is important for two reasons.  In the first place, the formulation of this approach, and the giving of the assurance to Countrywide, suggest that the work which was to be expected from potential sub-contractors, and in particular from Countrywide, went beyond that which might be expected to be provided free by a sub-contractor who, if the bid succeeded, would merely be given a chance of bidding for the sub-contract.  Secondly, such an assurance takes the case as far from a typical "subject to contract" case, in which each party may be taken to have accepted the risk of withdrawal by the other and consequent waste of expenditure, as it could possibly be taken short of an actual contract.  Regalian is clearly distinguishable on this ground.

	As to the risk which Countrywide may be said to have accepted of unrecompensed work, clearly a degree of risk was accepted.  Countrywide accepted the risk that their work would be unrewarded if it was found to be unsatisfactory at any time before a final bid was submitted, if the bid failed, or if negotiations failed with ICL Pathway for the sub-contract.  As to the last, I think that it is most unlikely that this would have happened.  It is true that Ms. Campopiano would not have accepted the terms suggested in Mr. Orme's letter of 23rd May, 1996, or Countrywide's standard conditions, but I have no doubt that Mr. Orme would never have insisted on these terms, and would have been as flexible as necessary to obtain an important sub-contract of this kind.  It may be arguable that Countrywide also accepted other risks, for example that the consortium would decide not to proceed at all, or that BA/POCL would decide to do all the public relations/communication work themselves, and certainly they could not expected to be employed if their work was seriously defective at any stage.  But Countrywide did not accept the risk that they would be dismissed, following a change of personnel within ICL Pathway, because their reputation was now not considered to be satisfactory.  This is something which Countrywide were entitled to expect to be considered either by the consortium when they made their proposal in early 1995, or by ICL Pathway at the latest before the final tender was submitted.  They cannot fairly be said to have taken the risk of being dismissed for this reason not only after the final tender had been submitted, but after having provided further help in preparation for the implementation of the work for a further two or three months.

	On the question of benefit, the underlying position is not quite the same as in cases involving building contracts.  Countrywide were not bidding for specific work.  Rather, they were assisting ICL Pathway to formulate the correct approach to the public relations and communications work and to provide an estimate of costs for which allowance would be made in ICL Pathway's final tender.  The details of the scope of the work, and of Countrywide's remuneration, were always going to be negotiated after the bid succeeded.  From ICL Pathway's point of view, what they needed at this stage was advice and assistance, rather than a detailed final budget, and some of the work done before 21st March 1996 (for example attendance at meetings which were essentially so that Countrywide were up to date and in a position to advise on any issues which might arise suddenly), and all the work done after that date, was done principally to assist ICL Pathway, and not in the preparation of a bid or proposal for the sub-contract work.  Indeed, all the work done between April 1995 and the submission of the final tender on 21st March 1996 can be said to have been done for a dual purpose.  It was done to assist ICL Pathway in the formulation of their initial proposal and final tender, and therefore also, by enhancing the prospects of success of the latter, insofar as this depended upon its public relations content, to enhance the prospects of Countrywide being awarded the sub-contract.  Countrywide's work was of value to ICL Pathway, not merely because they performed services at ICL Pathway's request, but because these services provided ICL Pathway with advice which they needed, and for which (in the absence of an assurance of the kind they gave), they would probably have had to pay either Countrywide or some other public relations consultant.  Therefore, ICL Pathway was, in a real sense, enriched by Countrywide's work.  The gain was realised, not merely realisable.

	On the issue of benefit, this case is therefore distinguishable from Regalian, in which no benefit was conferred on the defendant.  It is less easy to distinguish it from Lacey.  It is true that Countrywide's work cannot be said to have conferred a benefit on ICL Pathway "quite outside the ambit of the anticipated contract", which Rattee J. said ([1995] 1 W.L.R. at 225A) was the basis on which Lacey was correctly decided.  However, I do not understand Rattee J. to have held that it was in all cases necessary that a benefit should have been conferred by the proposed contractor on the proposed employer which was "outside the ambit" of the anticipated contract.  Clearly, this was not true of the benefit conferred on the defendants in the British Steel Corporation case.  Indeed was it only partly true of the benefit conferred in Lacey.  In that case, the work connected with the war damage claim, which was based upon a notional reconstruction of the building in its original state, was outside the ambit of the proposed building work.  But the plaintiffs also recovered on a quantum meruit for revised estimates for the actual rebuilding, which was the subject matter of the anticipated contract.

	Finally, with reference to the circumstances in which the anticipated contract failed to materialise, I have already found that the principal reasons for this were Ms. Campopiano's distrust of Countrywide, from her own experience and from what she had heard from within ICL, and the availability of another contractor, Financial Dynamics, in whom she did have trust.  One could perhaps with some justice say that ICL Pathway (as opposed to Ms. Campopiano personally, who was not fully aware of the background and was simply following Mr. Foley's instructions) was "at fault" for not honouring the assurance which they had given.  But I think that the more logical question to ask is whether Countrywide took the risk of ICL Pathway reaching this conclusion after all the preparatory work, and indeed some work towards the implementation of the project, had been done.  Of course, in a sense, it follows from the very fact that no binding agreement was concluded that the plaintiffs did take this risk, but the effect of the authorities cited above is to require a broader view to be taken.  Otherwise no claim of this kind could ever succeed.  In my view, what happened was outside the various risks of working without recompense which Countrywide can fairly be said to have accepted.  Therefore I think that it is unjust that ICL Pathway have enriched themselves by not paying for Countrywide's services.  I would have held otherwise, if I had found that the, or even a, substantial reason for ICL Pathway's failure to offer Countrywide the sub-contract was a disagreement about terms.  I would also have held otherwise, if the reason had been that Countrywide offered work which, in the circumstances in which it was offered, was seriously defective.  However, they merely failed to provide work which was of sufficient excellence to overcome Ms. Campopiano's predisposition to recommend Financial Dynamics.  There was never much chance of their securing Ms. Campopiano's support if Financial Dynamics were available.

The amount of the claim

	On the facts of this case, the correct basis for calculating the amount of the claim is payment for time spent, with associated costs.  Countrywide's claim is based upon their invoice of 19th June 1996, which is supported by a schedule prepared at the time which shows 234 hours worked in the relevant period at a cost of £200 per hour.  In addition, there is a claim for £418.50 costs, which includes £62.50 for a lunch in Banbury.  The total is £47,218.50 plus VAT.  However, as already explained, item 9 on the Scott Schedule, a claim for £3,000, has been resolved, so that the remaining total is £44,218.50 plus VAT.  The Scott Schedule contains two items, nos. 6 (3 hours) and 12 (no specific time allotted), which are not reflected in the internal schedule prepared at the time of the invoice or in the amount claimed in the invoice. It seems fairly clear from the evidence that Countrywide have not claimed for every last part of the work they did: for example they spent time liaising with McCann Erickson, although the extent of this is not agreed, but no charge has been made; nor I think does the Scott Schedule take in every meeting, for example the one referred to in Mr. Orme's letter to Mr. Hodgson of 1st March 1996 is omitted.

	The Scott Schedule is formally proved in Mr. Orme's second statement, which states that it reflects the work done "supporting Pathway".  He was not cross-examined in great detail on every item and broadly I accept that the work itemised in the Scott Schedule was done to support Pathway and benefited ICL Pathway in the manner already described.  However there are some items which need to be looked at more carefully.

	The most important of these is item 5, relating to the meeting of 23rd January 1996, preparation for it and its aftermath.  Although Mr. Hodgkins invited Mr. Orme to attend the meeting so that he could be kept up to date with progress and available to deal with any points which might arise, it is clear on the evidence that Mr. Orme used the occasion to introduce Mr. Bethel of GPC with the object of obtaining a sub-contract for GPC, thus presumably ousting the existing public affairs consultant.  This part of the work done by Countrywide (and GPC) under item 5 was certainly not done at the request of ICL Pathway.  The attendance of Mr. Bethel of GPC at the meeting was not requested by Mr. Hodgkins.  Nor was it of any benefit to ICL Pathway.  Thus, this part of the claim could be justified, if at all, only as an expense reasonably incurred by Countrywide in bidding for work.  No claim in restitution can possibly be made.  Even if a claim for wasted expenditure, reasonably incurred but not involving the performance of any service requested, could be the subject of some form of quasi-contractual claim, or could arise from an estopel, the facts here do not justify it.  It was entirely speculative work which ICL Pathway neither sought nor could reasonably have foreseen.  Of the 36 hours claimed for this item I allow only 9 hours, consisting of 5 hours for Mr. Orme's attendance, 2 hours preparation and 2 hours follow-up.

	In addition, item 2 consists of 18 hours spent by Mr. Orme and Mr. Bethell and Angela Carter of GPC considering, and meeting to discuss, political issues in April 1995.  I accept Countrywide's submission that time spent by Mr. Orme in briefing himself on political issues was necessary to provide himself with relevant background for the work he was doing, but there is no evidence that Mr. Bethell's or Angela Casey's time was charged by GPC to Countrywide.  It is difficult to be precise as to the time to be allowed for this time, but doing the best I can I allow 8 hours and disallow 10 hours.  Other items include time spent by Mr. Orme in discussing matters with GPC, which I think is allowable; there is no indication that any other item includes a charge for GPC time.

	The next point is that item 6 is a claim for 3 hours estimated time, not recorded and not included on the invoice, for giving advice on the Aspen Business Communications Marketing and Education Plan in January 1996.  I allow this item.

	Item 7 includes the startling total of 32 hours spent by Mr. Orme on only 2 days, 6th and 7th March 1996, on the Pathway Communications Schedule.  This was challenged in cross-examination.  Having looked at the document, and accepting that a relatively short document may be the product of much detailed work including time spent simplifying it, I still find it difficult to accept that quite so much time was reasonably spent on this document.  Doing the best I can in the absence of detailed evidence about it, I allow 20 hours, and disallow 12 hours.

	Items 10-15 (other than the last part of item 15) concern the meetings in May 1996, which ICL Pathway submit were held in order to enable Mr. Orme to "sell" Countrywide's services.  I have found that the meetings on 1st and 23rd May were presented to Mr. Orme as being principally for the purpose of briefing Mr. Foley and Ms. Campopiano, who had recently become involved.  The meetings on 9th and 21st May were routine meetings for the purpose of planning the implementation of the project.  The meeting on 30th May took place to enable Mr. Orme to discuss further points which Ms. Campopiano had asked him on 23rd May to work on, on the basis that Countrywide would be paid.  Accordingly, I reject ICL Pathway's submission on these meetings.

	The last part of item 15 reads:-

		"8 hrs correspondence and internal planning by John Orme and David Lake to consider the implementation of the bid, the plaintiff's role in that implementation, and finally preparing and submitting invoice no. C0004326."

	This relates to the period from 30th May 1996 onwards.  Some of it must relate to the correspondence complaining about ICL Pathway's behaviour, rather than consideration of "the implementation of the bid".  However justified, correspondence complaining of ICL Pathway's behaviour cannot be said to have enriched them and the invoice was intended to have the opposite effect.  Again doing the best I can, I allow 4 hours and disallow 4 hours.

	Finally, on two small items, I allow an additional hour for item 12, and disallow the expense of the lunch, £62.50, which did not enrich ICL Pathway either.

	Subject to counsel correcting my calculations, Countrywide are accordingly entitled to claim for 170 hours at a reasonable rate which, in the light of the evidence to which I have referred earlier, I fix at £190, totalling £32,300, plus costs of £356, plus VAT at 171/2%, making £38,370.80 in all.

Deputy judge, Q.B.D.

	Pursuant to the Practice Statement issued by the Master of the Rolls on 9th July 1990 I hereby certify that the attached text records my judgment in this matter and direct that no further record or transcript of the same need be made.