Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 28 July 2009
• Neutral Citation: [2009] SGCA 34
• Docket Number: Civil Appeal No 134 of 2008
• Date: 28 July 2009
• Published date: 17 September 2009
• Year: 2009
• Plaintiff Counsel: Toh Kian Sing SC, Winston Kwek and Charmaine Lim (Rajah & Tann LLP)
• Citation: [2009] SGCA 34
• Defendant Counsel: Ian de Vaz and Joyce Ng (Wong Partnership LLP)
• Court: Court of Appeal (Singapore)
• Subject Matter: Both parties in breach,Party to contract failing to perform obligations,Whether party could rely on ground for termination which existed at time of termination but which was not relied on by that party at time of termination of contract,Whether there was wrongful termination of contract by one party,Discharge,Contract,Breach,Whether one party could terminate contract for repudiatory breach by other party if party was itself in breach,Grounds for termination of contract,Situations where innocent party entitled to terminate contract

28 July 2009 Judgment reserved.

Andrew Phang Boon Leong JA (delivering the judgment of the court):

Introduction

1 The present appeal concerns a dispute over a contract for the supply of sand between two Singapore companies. Alliance Concrete Singapore Pte Ltd (“the Appellant”) manufactures and supplies ready-mixed concrete to the construction industry. The Appellant is a joint venture between Asia Cement (Singapore) Pte Ltd, Supermix Concrete Pte Ltd and Sinhengchan Concrete Pte Ltd. Comfort Resources Pte Ltd (“the Respondent”) is a supplier of sand. It is a family business headed by Tan Seng.

2 By a contract evidenced in a letter from the Appellant to the Respondent dated 27 January 2006 and which the Respondent countersigned by way of acceptance on 6 February 2006 (“the Contract”), the Appellant agreed to purchase sand from the Respondent while the Respondent agreed to supply sand to the Appellant’s seven plants.

3 On 15 September 2006, the Respondent commenced Suit No 601 of 2006 against the Appellant. The Respondent claimed a sum of $401.448.79, being the price of sand sold and delivered by the Respondent to the Appellant. The Respondent further claimed for loss of profits for sand that the Appellant had allegedly under-ordered. The Respondent alleged that the Appellant’s repeated failure to order the requisite contractual quantities every month as well as its failure to pay for the May to July 2006 deliveries evinced an intention on the part of the Appellant to be no longer bound by the terms of the Contract. Therefore, the Respondent also claimed for the loss of the profit which it would have made had the Contract not been prematurely terminated by the Appellant’s breach.

4 On the same day, the Appellant commenced Suit No 604 of 2006 claiming a sum of $1,162,984.87 or, alternatively, damages for losses incurred by the Appellant. The Appellant claimed that the Respondent had repeatedly breached the Contract by failing to supply the contracted quantities of sand to the Appellant and subsequently terminating the supply altogether. The Appellant alleged that the Respondent had repudiated the contract through its letters dated 8 September 2006^{[note: 1]} and 14 September 2006.^{[note: 2]}The Appellant claimed to have accepted this repudiation through a letter dated 15 September 2006^{[note: 3]} that it subsequently sent to the Respondent. Therefore, it also claimed damages for the loss it had suffered because of the premature termination of the Contract by the Respondent.

5 The Respondent then applied for summary judgment in respect of its claim for the price of sand delivered to the Appellant in May, June and July 2006. The Appellant similarly applied for interlocutory judgment with damages to be assessed. Both applications were heard by an assistant registrar (“the AR”). The Respondent’s application was partly successful as the AR granted the Respondent final judgment in the sum of $287,430.27 for sand delivered to the Appellant in May and June 2006, but she granted the Appellant unconditional leave to defend with respect to a sum of $114,018.52 which was the sum the Appellant claimed for alleged short delivery by the Respondent. The AR granted the Respondent unconditional leave to defend with respect to the Appellant’s application.

6 Both parties appealed against the AR’s decisions. At the hearing of both appeals, the judge reduced the judgment sum of the Respondent from $287,430.27 to $237,752.12 to take into account the Appellant’s defence of set-off. The Appellant was also granted leave to defend the balance sum of $163,696.67 ($401,448.79 – $237,752.12) claimed by the Respondent, provided it paid the amount into court. The Appellant has since paid the judgment sum to the Respondent as well as the sum of $163,696.67 into court.

7 Thereafter, both suits were consolidated. This is an appeal against the decision of the trial judge (“the Judge”) in which the Judge awarded the Respondent final judgment in Suit No 601 of 2006 with damages to be assessed and dismissed the Appellant’s claim in its cross-suit in Suit No 604 of 2006 (see Comfort Resources Pte Ltd v Alliance Concrete Singapore Pte Ltd [2008] 4 SLR 848 (“the GD”)).

The factual background

8 The material clauses of the Contract are set out below (in the Contract, “the Purchaser” refers to the Appellant and “the Sub-Contractor” refers to the Respondent):^{[note: 4]}

The Sub-Contractor shall sell and the Purchaser shall buy the quantity of concreting sand at the price and to be delivered as follows:-

1. Price

	Location	Price per m/ton delivered
(i)	Sungei Kadut	S$12.40
(ii)	Kaki Bukit Plant	S$11.40
(iii)	Tampines	S$11.00
(iv)	Tanglin Halt (Queenstown)	S$12.20
(v)	Toa Payoh Rise	S$12.00
(vi)	Keppel	S$13.60
(vii)	Sentosa	S$14.00

The prices shall be held firm during the duration of this contract and no variations of [sic] whatsoever shall be entertained.

2. Quantity

The Sub-Contractor shall supply and deliver to the aforesaid plants an aggregate total quantity of 40,000 +/- 25% metric ton per month.

The Purchaser reserves the rights to adjust the quantity in any manner it deems fit to suit the production requirements/demand.

3. Contract Period

From 1 February 2006 to 31 January 2007 (1 year).

...

8. Terms of Payment

60 days from end of each month supply.

9 The Appellant also ordered sand from another supplier, Lim Chye Heng Sand & Granite Pte Ltd (“LCH”), under a similar contract (dated 23 February 2006, for a shorter period of six months until 31 August 2006) at 40,000 metric tonnes (“mt”) +/- 25% per month. The Appellant was therefore contractually bound to order (between 1 March 2006 and 31 August 2006) a minimum of 30,000mt and a maximum of 50,000mt of sand from both the Respondent and LCH, when the contracts with both these parties overlapped. The prices of sand supplied by the Respondent and LCH to each of the Appellant’s seven plants varied. The respective prices are set out in the table below:

	Plants	Respondent’s price	LCH’s price
(a)	Sungei Kadut	$12.40	$13.00
(b)	Kaki Bukit	$11.40	$12.40
(c)	Tampines	$11.00	$11.90
(d)	Queenstown	$12.20	$13.10
(e)	Toa Payoh	$12.00	$12.80
(f)	Keppel	$13.60	$13.10
(g)	Sentosa	$14.00	$13.70

10 While deliveries of sand were made every day (save for Sundays and public holidays), the Appellant was only invoiced weekly by the Respondent. Contrary to cl 8 of the Contract, the Appellant did not make payment within the stipulated 60 days from the end of each month of supply. The table below shows the due dates of the respective amounts and the payment dates.

Month (2006)	Amount Payable	Due Date	Payment Date
February	$229,934.49	29 April 2006	17 May 2006; (18 days late)
March	$246,605.13	30 May 2006	30 June 2006; (31 days late)
April	$197,136.07	29 June 2006	21 July 2006; (22 days late)
May	$171,786.78	30 July 2006	Unpaid
June	$174,125.88	29 August 2006	Unpaid
July	$55,536.13	29 September 2006	Unpaid

11 Payments by the Appellant for all the months were late and the Respondent received payment only after it had sent reminders to the Appellant. As a result, the Respondent’s executive director, Tan Wan Fen (“Ms Tan”), instructed Patrick Chua (“Chua”), the Respondent’s marketing manager, to meet with the Appellant’s representatives to press for payment of the outstanding invoices. There were two meetings between the parties, one held on 7 June 2006 (“the first meeting”) and the other on 20 July 2006 (“the second meeting”).

12 The Appellant, on the other hand, alleged that the Respondent consistently supplied less than the contracted quantity of sand from February 2006. The Appellant claimed that it had placed orders for the contracted quantity of 40,000mt per month but that the Respondent had failed to supply the requisite quantity of sand. The Appellant claimed to have sent various letters to the Respondent asking it to increase its supply of the sand.

13 During the first meeting, the Respondent was represented by Ms Tan’s brother, Tan Wei Leong (“Wei Leong”), and Chua while the Appellant was represented by its operations manager, Lincoln Lim (“Lincoln”). Not surprisingly, the parties proffered conflicting versions of what had transpired at the first meeting.

14 According to Wei Leong, after Chua had introduced him to Lincoln as the boss’s son, Chua inquired if Lincoln could do anything about the late payments. Lincoln replied that the Appellant was a merger of three ready-mix concrete companies and that they were having problems merging their computerised accounting systems. Lincoln then asked Wei Leong what he was going to do about the short deliveries of sand. Wei Leong, who was not an employee of the Respondent, was unaware of the actual situation. Consequently, he did not deny the accusation but expressed surprise and assured Lincoln that if there were short deliveries, his father would make up for them.

15 According to Lincoln, he had raised the issue of short deliveries at the first meeting. He alleged that Wei Leong apologised for the shortfall and explained that the reasons for the shortfall were delays in the commissioning of the Respondent’s new sand quarry and other logistics issues such as the non-availability of trucks. Lincoln claimed that Wei Leong had promised to deliver the contracted quantities in future and also requested that the Respondent be allowed to make up the shortfalls beyond the contracted period. Lincoln agreed to this on condition that the Respondent furnish a committed schedule of delivery in writing.

16 Wei Leong, on the other hand, explained that when Lincoln insisted that the Respondent must have supply problems, Wei Leong, in desperation, placated Lincoln by saying he had overheard that the Respondent had encountered delay in starting a new quarry.

17 Wei Leong then told Ms Tan about the...