Ademco (Far East) Pte Ltd v Ifocus Pte Ltd

• Jurisdiction: Singapore
• Judge: Tan May Tee
• Judgment Date: 26 September 2012
• Neutral Citation: [2012] SGDC 384
• Published date: 31 January 2013
• Hearing Date: 11 September 2010,31 August 2010,15 September 2011,30 August 2010,25 August 2010,21 July 2011,13 September 2010,23 June 2010,26 August 2010
• Docket Number: DC 3437 of 2008W
• Plaintiff Counsel: Ms Sunita Parhar (S.S. Parhar & Co)
• Court: District Court (Singapore)

District Judge Tan May Tee: Introduction

These grounds of decision are issued pursuant to the notice of appeal filed by the Plaintiffs after obtaining leave from the High Court. The High Court had granted the Plaintiffs leave to appeal out of time against only that part of my decision that dismissed the Plaintiffs’ claim for quantum meruit.

I had granted judgment in the Plaintiffs’ favour upon my finding that the Defendants were in breach of the contract entered into by the parties but had awarded the Plaintiffs damages in the sum of $30,887.20 only being the price they paid for the Defendants’ products. The other heads of the Plaintiffs’ claim were dismissed due to lack of evidence. The claim for quantum meruit was prayed for in the alternative as one of the reliefs in the statement of claim endorsed in the writ of summons.

Background facts

The Plaintiffs had claimed against the Defendants for breach of contract arising out of the supply of digital video recorders and associated software by the Defendants for use by the Plaintiffs’ client, a company called Gemplus Technologies Asia Pte Ltd. (“Gemplus”).

Sometime in January 2006, Gemplus had requested from the Plaintiffs a proposal for supply of digital recording equipment that would meet certain specifications, namely a RAID 5 HD system that would allow them to record at a speed of 6 frames per second and store recordings for up to 90 days. The Plaintiffs had on 6 January 2006 sought a quote from the Defendants based on Gemplus’ requirements. A tender interview was arranged at the premises of Gemplus. Representatives from both the Plaintiffs and Defendants attended the interview and a demonstration of the Defendants’ products was given. Gemplus subsequently awarded the project to the Plaintiffs, and the Plaintiffs in turn issued a purchase order to the Defendants in April 2006 for supply of 6 units of digital video recorders (DVRs) with the relevant software. On their part, the Plaintiffs were to provide the computers, storage servers, LAN switches, cables, power supply, and all other equipment and hardware.

In May 2006, the system comprising the various hardware components and equipment purchased by the Plaintiffs together with the DVRs supplied by the Defendants was installed at Gemplus’ premises. Prior to this, the system had been set up and the configuration completed and tested by the Defendants at their office. There were, however, many glitches in the system after its installation at the site.

The repeated failures in the system were not resolved to the Plaintiffs’ satisfaction and in January 2008, they replaced the Defendants’ DVRs and software with those of another supplier. They then gave notice to the Defendants that they were rejecting the goods supplied, leading to the claim in this action.

The Plaintiffs’ case

The Plaintiffs pleaded that it was an express or alternatively, an implied term of the contract that the system comprising the hardware and software would be reasonably fit for the requirements made known to the Defendants and of satisfactory quality. In breach of the term or terms, the goods were not suitable, fit for the purposes stipulated and were not of satisfactory quality. Particulars of the breach were stated as follows: From the date of its setup, the system was unable to perform continuous recording for a period of 90 days; The Plaintiffs had to attend at Gemplus’ premises repeatedly with the Defendants’ representatives to try to resolve the failure in the system without any success.

On account of the breach, the Plaintiffs claimed they were entitled to, and did reject the Defendants’ goods by way of their solicitors’ letter dated 22 January 2008. The Defendants had refused to take back their goods and repay the Plaintiffs the purchase price. The Plaintiffs claimed they had also suffered additional loss and expenses.

Accordingly, the Plaintiffs claimed the following sums: $30,887.20¹ being the purchase price paid to the Defendants; costs of $221,900.00 for deploying numerous members of their staff to attend to complaints by reason of the failure of the goods supplied by the Defendants to be quantified; this sum had been particularised in Annex A of the Statement of Claim; alternatively quantum meruit; the sum of $20,361.60 being the cost of storage servers which could not be reused. alternatively, damages to be assessed, together with costs and interest.

The Defendants’ case

The Defendants denied any liability to the Plaintiffs on the ground that they were not the system integrator for the DVR system at Gemplus. They were only the supplier of the DVR equipment and the related software pursuant to the purchase order issued by the Plaintiffs. They were not responsible to provide a ‘solution’ to Gemplus’ requirements. The ultimate responsibility to ensure the proper working of the system lay on the Plaintiffs while the Defendants’ function was merely to supply the Plaintiffs with the DVRs and the necessary software called the CMS/LDS software.

The supply and installation of the rest of the hardware and equipment for the project, such as cameras, cabling works, power supply, LAN switches, personal computers, RAID 5 and CMS storage servers did not fall within the Defendants’ purview. Hence, any assurances that the Defendants had given to the Plaintiffs were restricted to the supply of the DVRs and software only.

The goods had been accepted when the Plaintiffs’ IT Manager had signed on the functional checklist on 10 May 2006, the day that the system was installed at the premises of Gemplus. Further, as between Gemplus and the Plaintiffs, a system commissioning certificate had been issued on 23 February 2007 signifying that the system had been duly accepted and was fully functioning. If the system had failed as contended by the Plaintiffs, they would not have purchased additional units of the Defendants’ DVRs in April and August 2007.

Even if the Defendants had been in breach, the Plaintiffs had adduced no credible evidence to support their claim for damages. Alternatively, the evidence adduced by the Plaintiffs was clearly inadequate to discharge their burden of proof.

The issues at trial and my findings

From the parties’ respective pleadings, the issues which I had to determine at the trial were: What was the scope of the contract between the parties? Were the Defendants required to provide a ‘solution’ for Gemplus as contended by the Plaintiffs or were they merely equipment suppliers? Had the Defendants breached the express and/or implied terms of the contract? If the Defendants had breached the terms of the contract, had the Plaintiffs furnished proof of the loss and damages they claimed to have suffered?

I had found in the Plaintiffs’ favour for issues (1) and (2). However, for issue (3), other than the price paid to the Defendants for the DVRs and software which I held the Plaintiffs were entitled to be repaid, I agreed with the Defendants’ submissions that the Plaintiffs had not proven their claim for damages in the sum of $221,900 being lost man-hours by their staff, or for the sum of $20,361 being the cost of storage servers which could not be reused.

In order to give a complete picture, I set out below my findings on all the 3 issues, as well as brief reasons for rejecting several of the different heads of the claim including the alternative claim for quantum meruit which is the subject of the Plaintiffs’ present appeal.

Issue (1) - What was the scope of the contract between the parties?

From the evidence of the witnesses, especially that of the Defendants’ then general manager, one Peh Seng Huat (PW-4), who had been subpoenaed to testify for the Plaintiffs, I found that the Plaintiffs were the system integrator of the entire project and they were responsible to ensure that Gemplus’ requirements were met as contended by the Defendants. This role had been admitted to by the Plaintiffs’ IT manager at the material time, Keith Tan (PW-3), as well as the Plaintiffs’ Managing Director, Toby Koh (PW-2). However, in meeting Gemplus’ requirements, the Plaintiffs had communicated Gemplus’ specifications to Peh. They had obtained Peh’s participation at the tender interview with Gemplus, which subsequently led to the Purchase Order issued to the Defendants on 7 April 2006.

The Plaintiffs had also received Peh’s confirmation through various exchanges of emails² between the parties that the DVRs and software supplied by the Defendants were compatible with the hardware which the Plaintiffs wished to purchase, notwithstanding that the servers ultimately purchased and used for the project were different from PW-4’s initial configuration.

From the emails between Keith Tan and Peh, I found that the Defendants had been consulted on the suitability of the NAS or server hardware that the Plaintiffs wanted to use for the system. In particular, Peh had been asked whether the proposed NAS (network attached storage) was suitable. Internally, Peh had then sought verification on the Plaintiffs’ proposed NAS from the Defendants’ software developer who had replied affirmatively. This positive response³ was in turn communicated to Keith Tan.

On the basis of the email exchange, I found that the Defendants had approved the use of the servers proposed by the Plaintiffs. By their close involvement in the approval of the hardware and thereafter integrating the hardware with their proprietary software and DVRs, the Defendants had provided a customised solution for Gemplus’ requirements although their initial proposal of the network architecture was subsequently modified.

The Defendants’ contention that they were merely equipment suppliers and nothing more with no responsibility for the proper functioning of the system was unsustainable on the evidence adduced. The scope of the contract entered into by the parties was for the supply of the DVRs and the...