Golden Pacific International & Holdings (S) Pte Ltd v JL Marine & Engineering Pte Ltd

• Jurisdiction: Singapore
• Judge: Lim Mei Yee Elaine
• Judgment Date: 31 January 2023
• Neutral Citation: [2023] SGDC 32
• Court: District Court (Singapore)
• Docket Number: District Court Suit No 767 of 2021
• Hearing Date: 04 October 2022,06 October 2022,12 January 2023
• Citation: [2023] SGDC 32
• Year: 2023
• Plaintiff Counsel: Lim Zhi Ming, Max (Rajah & Tann Singapore LLP)
• Defendant Counsel: Twang Kern Zern, Simone Bamapriya Chettiar (Central Chambers Law)
• Subject Matter: Contract,Breach,Remedies,Damages,The broad ground 'exception',Cost of cure,Loss of amenity,Evidence,Admissibility of evidence,Hearsay,Weight of evidence
• Published date: 22 November 2023

District Judge Lim Mei Yee Elaine:

The present proceedings arise from two agreements between the parties for the design, supply and installation of two shipsets of Heating, Ventilation and Air Conditioning (“HVAC”) systems (each an “Agreement” and collectively, the “Agreements”), one for the vessel TK 343 (also known as “Go Koi”) and the other for the vessel TK 344 (also known as “Golden Honour”) (collectively, the “Vessels”).

The plaintiff claimed against the defendant for failing to supply and install HVAC systems for the Vessels in accordance with the contractual specifications. By the time of this decision, the only live claims are the “Temperature Claim”, and the “Mist Eliminators Claim”, as defined below. The defendant counterclaimed for the balance unpaid contract price of $26,800 under the Agreement for TK 344.

After considering the pleadings, evidence and submissions of the parties, I allow the Temperature Claim but award only nominal damages to the plaintiff, and allow the Mist Eliminators Claim and the counterclaim their entirety. The reasons for my decision are set out below.

The undisputed facts

The plaintiff is a Singapore company in the business of ship-owning and chartering. The defendant is a Singapore company in the business of engineering design, supply, installation, servicing, testing and commissioning of HVAC and refrigeration provision systems for the marine and offshore industries.¹

On or about 28 January 2014, the parties entered into the Agreements, under which the defendant agreed to sell, design, supply and install, among other things, two shipsets of HVAC systems (one for each Vessel) for the contract price of $268,000 per Vessel.² The Agreements were contained in the defendant’s quotations dated 11 January 2014, which were accepted and confirmed by the plaintiff on or about 28 January 2014.³ The terms of the Agreements were identical save that they pertained to different Vessels.

For the purposes of this Suit, the material terms in each of the Agreements are as follows: the following clause in the section titled “Part A) Main Air Conditioning And Ventilation System” (the “Temperature Requirement”):⁴

	Outside Condition	Inside Condition
Summer Season Condition
Dry Bulb Temp	40°C	22°C
Humidity	70%	50%
Winter Season Condition
Dry Bulb Temp	0°C	20°C
Fresh Air Circulation / Air Re-circulation	~ 30% / ~ 70%

Clause A)1.2 of the section titled “Our scope of work and supply” (the “Condenser Requirement”):⁵

Two (2) Units of ‘JLM’ SM-6012 ‘Marine Type’ sea water-cooled condenser of 90/10 Cu/Ni tubes and bronze cover material construction material construction suitable for seawater application, inclusive of receiver, safety valve and purge valve.

Clause A)1.9 of the section titled “Our scope of work and supply” (the “Mist Eliminators Requirement”):⁶

Mist Eliminators, Weather-Tight Louvers and Ventilators: One (1) Complete Set

One (1) complete set of Mist Eliminators, Weather-tight louvers, Mushroom and Gooseneck Ventilators shall be provided including Engine Room Fan Louvers. The Mist Eliminators for AHU and Engine Room Fans Fresh Air Intake shall be of stainless steel S/S 316L material construction.

the following clause titled “Terms of Payment”:⁷

20% Payment Upon Order Confirmation

40% Payment Upon Delivery of Equipment

30% Payment Upon Delivery of Site Installation Material

20% Progressive (Pending Site Installation)

10% Upon Commissioning of Systems

pursuant to section 13(1) of the Sales of Goods Act (Cap. 393, Rev. Ed. 1999) (“SGA”), an implied condition that the goods correspond to the description in the Agreements (the “section 13(1) implied condition”); and pursuant to section 14(3) of the SGA, an implied condition that the goods are reasonably fit for the particular purpose of the goods which was made known to the defendant (the “section 14(3) implied condition”).

On or about 27 February 2015, the parties agreed to vary the Agreements to upgrade the cooling capacity of the HVAC systems of the Vessels from 150 Kw to 200 Kw, in exchange for the plaintiff’s payment to the defendant of an additional $20,000 per shipset.⁸ This variation was contained in the defendant’s quotations dated 18 December 2014, which were accepted and confirmed by the plaintiff on or about 27 February 2015.⁹ The terms of the variation of the Agreements were identical save that they pertained to different Vessels.

At the time the Agreements were concluded and subsequently varied, the plaintiff was the owner of the Vessels.¹⁰

The Vessels were constructed at a yard in Batam, Indonesia (“the yard”). Sometime in the second half of 2015, the defendant delivered its purported mist eliminators for the Vessels to the yard. In June 2016, the defendant installed the HVAC systems of the Vessels.¹¹ The installation was completed by no later than 24 June 2016.¹² The HVAC systems of the Vessels are identical.¹³

In early December 2017, the defendant conducted commissioning testing for the HVAC system of TK 343, during which it measured the temperatures produced by the system during the testing. These temperatures were recorded in a commissioning report dated 10 December 2017 (the “Commissioning Report”).

Since early 2018, TK 343 has been chartered to GO Marine and deployed in Broome, Australia.

In or around May 2021 and March 2022, the plaintiff sold TK 344 and TK 343 respectively. The plaintiff did not carry out any repairs to the HVAC systems of the Vessels before the Vessels were sold.

The parties’ cases The plaintiff’s case

The plaintiff pleaded three heads of claim against the defendant. The defendant breached the Temperature Requirement, the section 13(1) implied condition, and the section 14(3) implied condition, by supplying and installing HVAC systems in the Vessels which could not achieve an inside temperature of 22°C.¹⁴ (the “Temperature Claim”) The defendant breached the Condenser Capacity Requirement, the section 13(1) implied condition and the section 14(3) implied condition, by supplying and installing ‘Marine Type’ sea water-cooled condensers which only had a capacity of 157 kW for the HVAC systems of the Vessels.¹⁵ (the “Condenser Claim”) The defendant breached the Mist Eliminators Requirement, the section 13(1) implied condition and the section 14(3) implied condition, by supplying non-compliant mist eliminators for the HVAC systems of the Vessels.¹⁶ (the “Mist Eliminators Claim”)

In its Statement of Claim, the plaintiff identified the following losses arising from these heads of claim: In relation to the Temperature Claim and the Condenser Claim:¹⁷ the costs of surveying, checks and testing to ascertain the condition of the HVAC systems and investigate the cause(s) of them being unable to achieve the specified temperature and capacity under the Agreements (the “Survey and Testing Costs”); and the costs of repairs and/or reinstallation to bring the HVAC systems to the specified temperature and capacity under the Agreements. These costs were not quantified in the Statement of Claim. However, in its Opening Statement, the plaintiff quantified the costs of repairs and/or reinstallation at $380,000 per shipset based on the quote provided by Mr Hendri Kho (“Mr Hendri”) of PT Hilux Dewi Indonesia (“PT Hilux”) to the plaintiff.¹⁸ In relation to the Mist Eliminators Claim, the sum of $50,000 incurred by the plaintiff to purchase replacement mist eliminators (at $25,000 per shipset) and the sum of $774.91 incurred by the plaintiff to transport these mist eliminators from Singapore to the yard in Batam.¹⁹

The plaintiff claimed $250,000 in damages, or alternatively, damages to be assessed.²⁰

In its Defence to Counterclaim, the plaintiff denied that the balance contract price of $26,800 under the Agreement for TK 344 is payable to the defendant.²¹ The plaintiff also pleaded that even if it is liable for the balance contract price of $26,800: the HVAC systems supplied by the defendant did not meet the contractual specifications and were not fit for the particular purpose made known to the defendant; and further or alternatively, it is entitled to a set-off in extinguishment of the counterclaim, such that the defendant is not entitled to the sum of $26,800.²²

In its closing submissions, the plaintiff no longer pursued the Condenser Claim, or the Survey and Testing Costs in relation to the Temperature Claim. However, the plaintiff sought the following additional remedies for the Temperature Claim:²³ As an alternative to the cost of repairs and/or reinstallation based on Mr Hendri’s quote, damages equivalent to the price of two split unit air-conditioners; Further or alternatively, loss of amenity in the sum of $26,800.

The plaintiff also submitted, as its sole defence to the counterclaim, that the defendant’s non-compliance with the Temperature Requirement afforded it a complete defence pursuant to section 53(1) of the SGA. This was because the diminution in value of the HVAC systems on account of the defendant’s breaches is the entire contract price under the Agreements.²⁴

The defendant’s case

The defendant denied the plaintiff’s claims and pleaded the following defences:²⁵ In relation to the Temperature Claim: The defendant denied the existence of the section 13(1) implied condition and the section 14(3) implied condition.²⁶ The Commissioning Report for TK 343, which was accepted by the plaintiff, showed that an inside temperature of 22°C was achieved.²⁷ For TK 344, the plaintiff did not allow the defendant to carry out a commissioning report in 2015 when the systems/equipment were delivered and installed.²⁸ The earliest that the plaintiff alleged that the HVAC systems did not achieve an inside temperature of 22°C was in an email from Mr Samuel Lee on 8 October 2018, long after the...