Effulgent Builder & Marketing Pte Ltd v Richard Huggins

• Jurisdiction: Singapore
• Judge: Chiah Kok Khun
• Judgment Date: 25 November 2014
• Neutral Citation: [2014] SGDC 435
• Court: District Court (Singapore)
• Hearing Date: 07 May 2014,06 May 2014,21 July 2014,08 May 2014,18 November 2013,19 November 2013
• Docket Number: District Court Suit No. 246 of 2012/G
• Plaintiff Counsel: Choh Thian Chee (M/s Optimus Chambers LLC)
• Defendant Counsel: Alfred Lim (M/s Quahe Woo & Palmer LLC)
• Subject Matter: Building contract,defects,delay- Legal and equitable set-off
• Published date: 09 April 2015

District Judge Chiah Kok Khun: Introduction

In land scarce Singapore there is a continual need for urban renewal. Old buildings are torn down to make way for new ones. Invariably, the plot ratio goes up with each old building that comes down. Low-rise housing is becoming a precious resource. Residents looking for less intense living conditions have limited options. In recent years one housing form that gained interest amongst some home owners is the old shophouse. These shophouses which are decades old, are reconstructed into dwelling houses. They provide another form of low-rise living in Singapore.

Richard Huggins (“Huggins”) purchased one such property, at No. 4 Ceylon Road Singapore (“Property”). He is the defendant. He engaged Effulgent Builder & Marketing Pte Ltd (“Effulgent”) to reconstruct the Property, including the building of a third storey and an attic (“the reconstruction”). Effulgent is the plaintiff. The contract for the reconstruction was awarded to Effulgent on 27 Sept 2010. The architect was Tow Juan Jay of JAL Atelia Pte Ltd (“Architect”) and the interior designer was Wendy Smith of Design Intervention Pte Ltd (“Designer”). The letter of award was dated 8 Oct 2010. The contract sum was $500,000. The contract period for completion was seven months from 8 Oct 2010 or the date of the BCA work permit, whichever was later.

Works for the reconstruction started sometime in October 2010. The BCA work permit was granted on 14 Oct 2010. 7 months from that date would be 13 May 2011. This would have been the date of completion of the reconstruction. It was on 12 July 2011 that Effulgent told Huggins that it was able to hand over the Property. The handing over took place on 23 July 2011.

The Claims and Counterclaims

Huggins paid on the 1st to 6th progress claims certified by the Architect in the course of the reconstruction. The 7th and 8th progress claims (which were not certified) were not paid. Effulgent claims for payment under the 7th and 8th progress claims. The quantum was stated in the statement of claim to be the sum of $94,254.41. However, in the course of the trial Effulgent’s counsel said that the quantum of the claim is the sum of $74,254.41. This is also the figure under the 8th progress claim.

Huggins’ case is that the progress claims were not certified by the Architect. He says the earlier progress claims were all certified at a lower amount. Further, there were outstanding works not deducted from the amounts claimed. There were also liquidated damages due to him for a 70-day delay in the completion of the contract at $500 a day. Moreover, there was an agreement for a reduction of $20,000 in the contract sum. The agreement was that the reduction would be given for the successful award of contract to Effulgent for works to No. 2, Ceylon Road, a neighbouring property. Huggins also counterclaims for costs of rectification of the work and the cost of hiring a boom crane to install the air-conditioning system.

The sum claimed by Huggins in the defence and counterclaim¹ for the delay is $55,000. The reduction of $20,000, the costs of hiring the boom lift and the costs of rectification and outstanding works were claimed as damages.

Huggins pleads a set-off of his cross-claim from Effulgent’s claim.

The Preliminary Issues

The parties raised a few preliminary issues. The first is raised by Effulgent. Effulgent says that the defence and counterclaim ought to fail because Huggins does not have the capacity to put up a claim for defective works. This is because Huggins had on May 2012 sold the Property. He leased the Property back from the new owners. Huggins is staying at the Property now as a tenant of the new owners. The Property was sold after Effulgent started this action. Effulgent’s position is that Huggins has no legal capacity to bring any claim and the counterclaim should be dismissed. The title to the Property has been transferred. He could no longer say he suffered damages as a result of the defects.

In my view the approach to this issue lies in the measure of damages. The measure of damages in contract is that the claimant is entitled to compensation for the loss of what he had bargained for under the contract.² The contract in question in this case is a building contract. If there is defective performance of the contract (resulting in defects), the measure of damages would be the amount of money that will put Higgins in a position if there were no defects in the works under contract. Whether Huggins has sold the Property or not and whether he still has title to the Property do not change the fact that he did not get what he had bargained for under the contract for the reconstruction. He had not bargained for defects in the reconstruction. He is entitled therefore to be compensated for the loss of the bargain under the contract for the reconstruction. Huggins’ arrangements, if any, with the purchaser of the Property concerning the defects is a matter between Huggins and his purchaser. Huggins has the locus standi to lay a counterclaim for breach of the contract for the reconstruction.

Effulgent raised a related objection that the particulars of the damages suffered were not pleaded.³ Huggins has pleaded in the defence and counterclaim filed on 28 February 2012 at paragraph 7(b) a claim for damages for outstanding works in respect of the reconstruction and the defects; to be assessed. Paragraph 2(e) of the defence and counterclaim stated the particulars of the outstanding works and the defects. The claim is for general damages to be assessed. I do not see in what way the pleading is defective in this regard. I therefore rule against Effulgent on this preliminary issue raised by them.

Next is the question of what documents made up the contractual documents. Both parties proceeded on the basis that there was disagreement on this question. Arguments were made on this in the respective closing submissions.⁴ However, in fact the parties are agreed that the following are part of the contract between the parties: Effulgent’s letter of 27 September 2010 enclosing the price breakdown.⁵ Letter of award dated 8 October 2010 (“Letter of Award”).⁶

Huggins also included a letter of 28 September 2010 from Effulgent as part of the contract. However nothing appears to turn on the contents of this letter.

Huggins’ position is also that the Singapore Institute of Architects 6th Edition standard form for lump sum contract (“SIA form of contract”) is incorporated by reference. Effulgent’s position is that the form of contract as between the parties is one based on the SIA form of contract.⁷ Both parties point to the Letter of Award as referring to the SIA form of contract.⁸ The parties’ respective positions on inclusion of the SIA form of contract might not be identical, but the difference that separates the parties in this regard does not affect the substantive issues in the dispute.

Substantively there is therefore no disagreement on what made up the contract documents.

The next issue is raised by Huggins, in relation to the calling of the Architect as a witness. The Architect was responsible for certifying the progressive claims for the reconstruction. The 1st to 6th progress claims were certified and paid by Huggins. The 7th and 8th progress claims were not paid by Huggins as he did not receive any certification for these 2 claims. Huggins says that as Effulgent’s case is that the reconstruction was completed and it is entitled to payment under the 7th and 8th progress claims, Effulgent ought to call the Architect to testify to this. It is for Effulgent to call the Architect to give evidence on the reason for not certifying the 7th and 8th progress claims. As it was, Effulgent did not subpoena the Architect.

Huggins invokes section 116 of the Evidence Act. He also relies on Cheong Ghim Fah and Anr v Murugian s/o Rangasamy [2004] 1 SLR(R) 628 “Cheong Ghim Fah”. Section 116 (g) of the Evidence Act states that the court “may presume that evidence which could be and is not produced would if produced be unfavourable to the person who withholds it”. This is the statutory embodiment of the common law concept of adverse inference. However, case law is clear that adverse inference is to be drawn only in respect of material evidence: Cheong Ghim Fah.⁹ Would the evidence of the Architect be material evidence? The Architect would be able to explain the reason for not certifying the 7th and 8th progress claims. More importantly, he would also be able to shed light on Effulgent’s case that the reconstruction was completed and that it is entitled to payment under the 7th and 8th progress claims. Payment under the 7th and 8th progress claims comprises Effulgent’s entire action. The Architect’s evidence is clearly material.

Other than informing the court through counsel that it tried without success to locate the Architect,¹⁰ Effulgent did not explain the steps taken to locate him, or why a subpoena was not taken out at all to secure his attendance in court. There is no reason to believe that the Architect is not available to give evidence. In the circumstances I draw an adverse inference in this regard against Effulgent in respect of the issue of whether the reconstruction was completed and that it is entitled to payment under the 7th and 8th progress claims.

The Substantive Issues

I turn now to the substantive issues in the case. The issues to be decided in this case are: Whether there is delay caused by Effulgent in the reconstruction; and if so whether Huggins is entitled to damages? Whether Huggins is entitled to withhold payment under the 7th and 8th progress claims; and in any event, is any amount payable to Effulgent? Whether there had been defects; and if so whether Effulgent had rectified the defects? If there are defects not rectified, what is the cost of rectification payable to Huggins? Whether Huggins is entitled to a...