Anti-Corrosion Pte Ltd v Berger Paints Singapore Pte Ltd

Judgment Date02 November 2011
Date02 November 2011
Docket NumberCivil Appeals Nos 224 and 240 of 2010 (Suit No 989 of 2009)
CourtCourt of Appeal (Singapore)
Anti-Corrosion Pte Ltd
Plaintiff
and
Berger Paints Singapore Pte Ltd and another appeal
Defendant

Chao Hick Tin JA

,

Andrew Phang Boon Leong JA

and

VK Rajah JA

Civil Appeals Nos 224 and 240 of 2010 (Suit No 989 of 2009)

Court of Appeal

Commercial Transactions—Sale of goods—Breach of contract

Contract—Breach—Whether defects in paint were but for cause of discolouration

Contract—Contractual terms—Parol evidence rule—Whether manufacturer's verbal assurances to subcontractor formed part of contract

Contract—Contractual terms—Warranties—Exclusion clauses—Whether express warranty overrode exclusion clauses in contract—Evidence—Burden of proof—Legal burden—Evidential burden—When shifted—Evidence—Tactical burden—Meaning of—Shifted by process of eliminating other likely causes—How discharged

A paint manufacturer supplied a painting subcontractor with paint on four occasions. On the fourth occasion, there was serious discolouration of the internal surfaces at various parts of a building project that the subcontractor had painted. The parties disputed whether latent defects in the paint supplied had led to the discolouration. The subcontractor eventually sued for its losses. The manufacturer in turn counterclaimed for the balance sum due on the paint sold to the subcontractor.

A High Court judge (‘the Judge’) found that the subcontractor had not established on a balance of probabilities that defects in the paint had caused the discolouration. Accordingly, he dismissed the subcontractor's claim and allowed the manufacturer's counterclaim. In an earlier contract for a separate building project, the manufacturer had provided a warranty which the Judge noted, in obiter, also applied to the current dispute. On appeal, the subcontractor submitted the Judge had erred on the issue of causation while the manufacturer claims the Judge's findings on the warranty were mistaken.

Held, allowing the appeal and dismissing the cross-appeal:

Breach of contract

(1) The manufacturer had verbally assured the subcontractor that a sealer coat need not be used and that a warranty would be provided: at [22].

(2) As the tax invoices and delivery orders of the manufacturer did not comprise the entire contractual relationship between the parties, the parol evidence rule did not prevent the manufacturer's verbal assurances from forming part of the contract: at [24] and [25].

(3) If a representation was made for the purpose of inducing the other party to act on it and actually does so, there was an inference that it formed part of the contract. The manufacturer's advice was clearly important to the subcontractor, without which the latter would not have contracted with the manufacturer. Given the manufacturer's greater expertise and knowledge of its own product, the inference that the manufacturer's statements were intended to be a warranty was not rebutted. Therefore, the manufacturer's verbal assurances were held to be express terms of the contract: [27].

(4) The parties had agreed that there were only three possible causes of the paint discolouration: defects in the paint's formulation, the condition of the internal surfaces being painted and/or poor workmanship. With poor workmanship and the surface conditions eliminated as possible causes, it was more likely than not that defects in the paint had caused the discolouration: [28], [30], [31] and [36].

(5) The tactical burden of proof was one borne by the opponent of the issue after the proponent had discharged his evidential burden. Once the evidence logically demonstrated that the paint was prima facie the likely cause of the discolouration, the tactical burden fell on the manufacturer to show that the paint it supplied was not defective. It failed to do so: at [37] and [38].

Defects in the paint were the but for cause of the discolouration

(6) The but for test of causation in tort also applied in ascertaining whether there has been factual causation for the purposes of contract law: at [39].

(7) It appeared that the test of factual causation the Judge applied was whether the defective paints were proven on a balance of probabilities to bethe only possible cause, rather than the but for cause: at [40].

(8) The causal inquiry was therefore considered afresh. With poor workmanship and surface conditions eliminated as possible causes, defects in the paint were the but for cause of the paint discolouration: at [42].

The Respondent's liability was not contractually limited

(9) The warranty letter of the manufacturer stated it applied ‘in any of your up coming project [sic]’. The warranty thus applied to the current project: at [6] and [44].

(10) It was well established that an exemption clause contained in a written contract could be overridden by an express warranty given at or before the time the contract was concluded. The express warranty provided by the manufacturer meant that it could not rely on the exemption clauses contained in the tax invoices or delivery orders: at [45] to [47].

Couchman v Hill [1947] KB 554 (refd)

Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] 1 WLR 623 (refd)

Heilbut, Symons & Co v Buckleton [1913] AC 30 (refd)

Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric [2007] 3 SLR (R) 782; [2007] 3 SLR 782 (refd)

Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR (R) 1029; [2008] 3 SLR 1029 (refd)

Sale of Goods Act (Cap 393, 1999 Rev Ed)

Unfair Contract Terms Act (Cap 396, 1994 Rev Ed)

Philip Fong Yeng Fatt, Jonathan Yuen Djia Chiang and Joana Teo Swee Ling (Harry Elias Partnership LLP) for the appellant in CA 224/2010 and respondent in CA 240/2010

Ang Cheng Hock SC, Sathiaseelan s/o Jagateesan, Kenneth Lim Tao Chung and Ramesh Kumar Ramasamy (Allen & Gledhill LLP) for the respondent in CA 224/2010 and appellant in CA 240/2010.

Judgment reserved.

VK Rajah JA

(delivering the judgment of the court):

Introduction

1 This appeal and cross-appeal concern a dispute between a paint manufacturer and a painting subcontractor on whether latent defects in the supplied paint led to the serious discolouration of the internal surfaces at various parts of a building project. The subcontractor sued for losses, ie,expenses which it had incurred in repainting the affected surfaces. The manufacturer in turn made a counterclaim for the balance sum due on the paint sold to the subcontractor.

2 A High Court judge (‘the Judge’) dismissed the subcontractor's claim and allowed the manufacturer's counterclaim for the sum of $72,676.62; see Anti-Corrosion Pte Ltd v Berger Paints Singapore Pte Ltd [2010]SGHC 351 (‘the judgment’). In dismissing the claim by the subcontractor, the Judge found at [19] of the judgment that ‘the [appellant] has not proven on balance of probability [sic] that the defects in [the paint] had caused the discolouration’. Pertinently, at [21] of the judgment, the Judge also determined:

... that if I had to decide on the issue of the warranty, I would have found that [the Respondent]] had warranted all its products used in any of the plaintiff's projects for a period of 5 years provided that the use was based on a proposed paint system by the defendant.

Both parties now appeal against different aspects of the judgment below. The subcontractor contends that the Judge had erred on the issue of causation while the manufacturer is appealing against the above-mentioned dictum of the Judge on a warranty purportedly given by it to the subcontractor. We now give our decision and the reasons for it.

Background

Parties to the dispute

3 The subcontractor is Anti-Corrosion Pte Ltd (‘the Appellant’). It provides construction and renovation services, which include paint application works. Its managing director is Lim Choon Lin Vincent (‘Vincent Lim’). Among the Appellant's personnel, he was the one who liaised most often with the Respondent's representatives.

4 Berger Paints Singapore Pte Ltd (‘the Respondent’) is the paint manufacturer and supplier. Its sales representative, Joseph Yong, conducted the sale negotiations with Vincent Lim. Rajeev Goel is the Respondent's regional technology manager who was in charge of the Respondent's investigations after the paint discolouration occurred. Its superior was Jaideep Nandi, the chief executive officer of the Respondent.

Facts

5 The Respondent supplied the Appellant with paint on three separate occasions prior to the project in question. The first time it did so was in 2005 for the painting of the external surfaces of a Toh Guan dormitory. The project was completed without any complaints.

6 Subsequently, in January 2006, the Respondent proposed to the Appellant and supplied a paint system for the Toh Guan Road East Capital One project (‘the Toh Guan project’). Unlike the earlier project, the painting works were for external and internal surfaces. The Respondent's Decora Emulsion paint (‘the paint’) was used for the internal surfaces. The Respondent's product data sheet stated, inter alia, that the Appellant was to ‘ [a]pply a suitable sealer coat such as Berger Plastaseal or Berger Water-Based Sealer’ prior to the application of the paint. Despite this, the Respondent's proposed paint system for internal surfaces did not include a sealer coat. It merely stated:

  1. 2. Internal Concrete Surfaces Including Ceiling

    Primer Coat:

    1 coat of Berger Decora Emulsion

    Finishing Coat:

    1 coat of Berger Decora Emulsion

On receipt of the Respondent's proposal, Vincent Lim expressed concerns over the necessity of applying a sealer coat. His concerns were quickly brushed aside by Joseph Yong, vide a letter dated 12 January 2006:

Subject:Proposed Paint System for Toh Guan Road East Capital One

With reference to the above subject and our discussion regarding the coating for the internal concrete surfaces including ceiling.

We...

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