L & W Building Construction Pte Ltd v King Wah Construction Pte Ltd

• Jurisdiction: Singapore
• Judge: Woo Bih Li JC
• Judgment Date: 23 November 2000
• Neutral Citation: [2000] SGHC 246
• Court: High Court (Singapore)
• Published date: 14 March 2013
• Year: 2000
• Plaintiff Counsel: Edwin Lee (Chong Yeo & Partners)
• Defendant Counsel: Raymond Chan and Spring Tan (Chan Tan & Partners)
• Citation: [2000] SGHC 246

JUDGMENT:

Grounds of Decision

1. The Defendants are the developers of a 4-storey factory with basement carpark in Jurong Port Road (‘the Project’). The Plaintiffs are the main contractors.

2. The architects for the Project are WP Architects (‘the Architect’).

3. By a Completion Certificate dated 6 November 1998, the Architect certified that the works were completed.

4. There was some dispute about alleged outstanding defective works. By 11 January 2000, the Architect had called for tenders for rectification works and had decided to award the works to the lowest tenderer for $342,350.

5. The Architect issued a Certificate of Payment (Final) No 16 dated 8 February 2000 certifying $199,406.70 as being due to be paid to the Plaintiffs. In arriving at the figure of $199,406.70, the Architect made a deduction of $342,350 for defective works.

6. The Architect also issued a revised Certificate No 16A dated 20 March 2000. The Plaintiffs say that they did not receive Certificate No 16A nor does the Architect have any power to issue a revised final certificate.

7. Certificate No 16A was different from No 16 in that No 16A gave a break-down as to the source of payment for the $342,350 i.e. $209,593.04 from a retention sum and $132,756.96 by way of deduction. This difference is not material as the balance sum certified to be due to the Plaintiffs under Certificate No 16A is also $199,406.70.

8. As at the date of Certificate No 16, as well as the date of Certificate No 16A, the rectification works done by another contractor had not been completed or paid for. By July 2000, they were completed and paid for.

9. In any event, I will henceforth refer to Certificate No 16.

10. The Plaintiffs commenced this action to claim (a) the $199,406.70 and (b) the $342,350. The former was based on Certificate No 16 and the latter was based on the argument that the deduction was in breach of cl 31(1) read with cl 1(7) of the Conditions of Contract.

11. The Plaintiffs applied for summary judgment for both sums and the Defendants applied for a stay of proceedings pending arbitration pursuant to cl 37 of the Conditions of Contract.

12. Prior to the hearing before the Assistant Registrar, the Defendants paid the $199,406.70 to the Plaintiffs. Both applications continued as regards the sum of $342,350.

13. After hearing arguments, the Assistant Registrar granted judgment to the Plaintiffs for the sum of $342,350 with interest and dismissed the application for a stay of proceedings pending arbitration.

14. The Defendants appealed against both the decisions and after hearing arguments, I allowed both the appeals, set aside the decisions of the Assistant Registrar, and ordered a stay of proceedings pending arbitration.

15. The Plaintiffs are appealing against my decisions.

16. It is not in dispute that there is an arbitration provision in the Conditions of Contract which is applicable as between Plaintiffs and Defendants and that there are disputes regarding the alleged defective works. The real issue is whether the Plaintiffs are entitled to summary judgment for the $342,350. If so, the application for a stay would consequently be dismissed. If not, a stay of proceedings would have to be granted.

The Final Certificate and the relevant clauses in the Contract Conditions

17. The Final Certificate states:

‘CERTIFICATE OF PAYMENT FINAL

To (Building Owner): M/s KING WAH	Cert. No: 16
CONSTRUCTION PTE LTD	Date: 08-02-2000

Name of Job:

PROPOSED ERECTION OF A 4-STOREY SINGLE USER, SINGLE OCCUPER FACTORY WITH A BASEMENT CAR PARK ON LOT 497 (PLOT A16250) MUKIM NO. 6 AT JURONG PORT ROAD

We hereby certify that under the terms of the Building Contract the sum of Dollar ONE HUNDRED AND NINETY NINE THOUSAND, FOUR HUNDRED SIX AND CENTS SEVENTY ONLY is now due to M/s L & W CONSTRUCTION PTE LTD of 36 Senoko Road, Woodlands East Industrial Estate for work done and materials supplied up to January 2000			$199,406.70
	Value of work executed		$8,383,721.49
	Material on site		$ Nil
	Gross Valuation		$8,383,721.49
	Less - % retention (Max. limited Nil)		$ Nil
	Nett Valuation		$8,383,721.49
	Less Payment Previously certified (Cert. Nos. 1-15)		$7,697,772.75
	Less Liquidated and Ascertained Damages		$ 150,000.00
	Less Defects		$ 342,350.00
	Amount Due (without GST)		$ 193,598.74
	Add 3% GST		$ 5,807.96
	Amount Due		$ 199,406.70
	Date of Contract	June 1997
	Original Value of Contract	$7,500,000.00cts ’

[Italics added.]

18. Clauses 31(10)(a) and 31(11) of the Conditions of Contract state:

‘Final Certificate

31.(10)(a) Within 3 months of receipt from the Contractor of the documentation referred to in the preceding sub-clause of this Condition or of the Maintenance Certificate (whichever is the later) the Architect shall issue a Final Certificate. Such Certificate shall be supported by documents showing the Architect’s final measurement and valuation of the Works in accordance with all the terms of the Contract, and after setting out and allowing for all payments or other expenditure of the Employer or any permitted deductions by him shall state any final balance due from the Employer to the Contractor or from the Contractor to the Employer, as the case may be, which shall thereupon become a debt due. Such certificate shall also take account expressly of any outstanding permitted deductions not yet made by the Employer under the terms of Contract whether by way of liquidated damages or otherwise (unless the Employer shall inform the Architect of his decision to forego or postpone his right to the same).

…

Effect of Architect’s Certificates

31.(11) No certificate of the Architect under this Contract shall be final and binding in any dispute between the Employer and the Contractor, whether before an arbitrator or in the Courts, save only that, in the absence of fraud or improper pressure or interference by either party, full effect by way of Summary Judgment or Interim Award or otherwise shall, in the absence of express provision, be given to all decisions and certificates of the Architect (other than a Cost of Termination Certificate or Termination Delay Certificate under clause 32(8) of these Conditions), whether for payment or otherwise, until final judgment or award, as the case may be, and until such final judgment or award such decision or certificates shall (save as aforesaid and subject to sub-clause (4) of this Condition) be binding on the Employer and the Contractor in relation to any manner which, under the terms of the Contract, the Architect has as a fact taken into account or allowed or disallowed, or any disputed matter upon which under the terms of the Contract he has as a fact ruled, in his certificates or otherwise. The Architect shall in all matters certify strictly in accordance with the terms of the Contract. In any case of doubt the Architect shall, at the request of either party, state in writing within 28 days whether he has as a fact taken into account of or allowed or disallowed or ruled upon any matter in his certificates, if so identifying any certificate and indicating the amount (if any) taken into account or allowed or disallowed, or the nature of any ruling made by him, as the case may be.’

19. Although cl 31(11) refers to cl 31(4), the latter is not relevant for present purposes.

20. Clause 1(7) of the Conditions of Contract states:

‘Remedy on Non-Compliance by Contractor

1. (7) If within 7 days after receipt of a written notice from the Architect requiring the Contractor to comply with a written direction or instruction the Contractor fails to do so, the Employer may employ other contractors to do so under the supervision of the Architect and may upon the certificate of the Architect deduct the extra cost (if any) of doing so from any monies otherwise due under the contract or recover the same from the Contractor. Such certificate shall be called a "Certificate of Cost of Other Contractor’s Work", and any such deduction shall be recorded by the Architect in subsequent payment certificates under clause 31 of the Conditions provided that no extra cost shall be deducted under this clause in the case of an unjustified direction or one which should have been expressed as an instruction.’

21. I will refer to a certificate under cl 1(7) as a ‘Certificate of COCW’.

Submissions

22. Plaintiffs’ Counsel submitted that the court should consider not only the balance amount that is stated to be due under Certificate No 16. He submitted that the amount really due to the Plaintiffs was the value of the work executed i.e. $8,383,721.49. This was the sum which the Plaintiffs were entitled to be paid under Certificate No 16 subject to any valid deductions being made therefrom. He then proceeded to argue that the deduction of $342,350 was not validly made.

23. I did not agree with this approach.

24. If Plaintiffs’ Counsel’s submission was valid, this would mean that there are two sums due to the Plaintiffs under Certificate No 16. The first is the total value of the works i.e. $8,383,721.49 and the second is the balance due i.e. $199,406.70.

25. There is only one sum due to the Plaintiffs under Certificate No 16 i.e. $199,406.70. This is stated twice in Certificate No 16. Firstly, near the top it states:

‘We hereby certify that under the terms of the Building Contract the sum of Dollar ONE HUNDRED AND NINETY NINE THOUSAND, FOUR HUNDRED SIX AND CENTS SEVENTY ONLY is now due to M/s L & W CONSTRUCTION PTE LTD of 36, Senoko Road, Woodlands East Industrial Estate for work done and materials supplied up to January 2000’ $199,406.70

26. Secondly, it states near the bottom:

‘Amount Due $ 199,406.70’

27. For the purpose of cl 31(11) of the Conditions of Contract, this is prima facie the sum for which full effect is to be given to by way of summary judgment.

28. To get...