This peer reviewed1 paper explores relevant legal devices available at common law in the hope to bridge the gap between nominated sub-contractors and employers and enabling legally valid direct payment in case of the insolvency of main contractor. Apart from the enforceability of a direct payment clause, the paper provides detailed analysis, based on recent decisions in the common law world, of the relevance and strength of the doctrines of unjust enrichment, implied contract and a Quistclose trust2 in supporting such a direct payment claim. The discussion suggests that the courts exhibit the clear tendency of denying sub-contractors’ entitlement to the direct payment by applying common law principles in a very restrictive fashion, and do not give much consideration to the realities of the construction industry. As a result, recent developments in this area of the law tend to favour the interests of the employer over those of sub-contractors. The unfortunate situation calls for judicial innovation and legislative intervention in the industry.

A salient feature in Hong Kong's local construction industry, like anywhere in the world, is sub-contracting. The owner or tenant (the employer) will set up a construction contract (the main contract) with one construction company (the main contractor) in respect of the whole project. The main contractor will later, usually upon the nomination of the employer, contract with one or more sub-contractors (the nominated sub-contractors) for a