Aoki Corp v Lippoland (Singapore) Pte Ltd

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 22 February 1995
• Neutral Citation: [1995] SGHC 50
• Docket Number: Suit No 751 of 1994
• Date: 22 February 1995
• Year: 1995
• Published date: 19 September 2003
• Plaintiff Counsel: George Tan and Monica Neo (Chan Tan & Pnrs)
• Citation: [1995] SGHC 50
• Defendant Counsel: Christopher Chuah and Tan Liam Beng (Drew & Napier)
• Court: High Court (Singapore)
• Subject Matter: Extension of time and liquidated damages,Delay certificate,Building and Construction Law,Interim certificates,Whether delay in issuing certificate per se rendered certificate invalid,Nature and purpose of architect's certificates,Whether failure to make in-principle intimation rendered extension invalid,Approach of court to proceedings relating to such certificates,Whether condition precedent to valid extension,Validity,Contractors’ duties,Architect's in-principle intimation of whether or not to allow extension

Cur Adv Vult

These two appeals from decisions of the Senior Assistant Registrar involve a determination of the validity of a delay certificate issued by the architect under a building contract in the standard Singapore Institute of Architects (SIA) form.

The contractors sued on two interim payment certificates for sums totalling $992,413.80. The employers pleaded by way of set-off and counterclaim a sum of $1,080,581.29 for liquidated damages by reason of delay in the completion of the works.

The senior assistant registrar gave the contractors judgment in the sum claimed by them, but ordered a stay of the employers` counterclaim for liquidated damages pending arbitration. The employers appeal against both decisions of the senior assistant registrar.

Provisions of the contract

Clause 23 of the SIA conditions of contract deals with the matter of extension of time for completion of the building works. Clause 23.1 provides a list of events, acts and omissions for which extensions of time may be granted.

Clause 23.2 provides as follows:

It shall be a condition precedent to an extension of time by the architect under any provision of this contract including the present clause (unless the architect has already informed the contractor of his willingness to grant an extension of time) that the contractor shall within 28 days notify the architect in writing of any event or direction or instruction which he considers entitles him to an extension of time together with a short statement of the reasons why delay to completion will result. Upon receipt of such notification the architect shall inform the contractor in writing within one month of its receipt whether or not he considers the event or instruction or direction in principle entitles the contractor to an extension of time.

Clause 23.3 provides as follows:

As soon as any delaying factor in respect of which an extension of time is permitted by the contract has ceased to operate and it is possible to decide the length of the period of extension beyond the contract completion date (or any previous extension thereof) in respect of such matter, the architect shall notify the contractor of his decision and estimate of the same, provided that where two or more such factors are operating concurrently the architect need not so notify the contractor until the last of such matters has ceased to operate.

Clause 24.1 provides for the issue by the architect of a delay certificate in the event the contractor fails to complete the building work by the date for completion originally fixed by the contract or by the extended date for completion. So far as relevant, it reads as follows:

24.1 As soon as the latest date for completion of the works ... has passed, then if at the said date there are no other matters entitling the contractor to an extension of time and the works nevertheless remain incomplete, the architect shall issue a certificate setting out the contract completion date ... ; the total period of extension of time (if any); the consequential extended contract completion date (if any); and certifying that the contractor is in default in not having completed the works by the stated completion date or extended completion date (as the case may be). Such certificate shall be issued to the employer with a copy to the contractor, and is hereinafter called a `delay certificate`.

Clause 24.2 provides for the deduction of the liquidated damages from moneys due to the contractor. It reads:

24.2 Upon receipt of a delay certificate the employer shall be entitled to recover from the contractor liquidated damages calculated at the rate stated in the Appendix to the conditions from the date of default certified by the architect for the period during which the works shall remain incomplete, and may but shall not be bound to deduct such liquidated damages, whether in whole or in part, from any moneys due under the contract at any time up to and including the final certificate.

What cll 23.2 and 23.3 require of the architect may be summarized as follows. After the contractor notifies the architect of the event direction or instruction which the contractor considers entitles him to an extension, the architect has to do two things. Within a period of one month he has to tell the contractor in writing whether or not he considers that such notified event in principle entitles him to an extension. It is not necessary for him to decide how much an extension he is prepared to give, if he is prepared to give any. Then, as soon as possible after the delay event has ceased to operate and it is possible to decide the length of the extension, he must decide the length of the extension, and inform the contractor.

What happened in this case is that at various dates, mostly in 1992, the contractors wrote to the architect letters in varying terms referring to possible delays. It suffices to say for present purposes that in none of these cases did the architect indicate in writing whether or not the contractors were in principle entitled to an extension as required by the second sentence of cl 23.2. In regard to all of the contractors` letters except one, the architect did eventually give his decision refusing extension. In the single instance where he did purport to grant an extension of 15 days, he had not at any time before that indicated whether in principle the contractors were entitled to any extension.

The contentions

The contractors contend that because the architect did not deal with that particular notification of the contractors within the one-month period provided, his subsequent decision in regard to the extension of time of 15 days was invalid. It follows, so they say, that the delay certificate (predicated as it was on a valid extension of time) was also invalid, and the employers cannot validly deduct liquidated damages. They say that if there were any delays in the completion of the works entitling the employers to damages, the employers could still claim in an arbitration such damages as general damages, but they cannot set up such a claim against the contractors in these summary judgment proceedings on the interim payment certificates. The contractors say that they have a good defence to the employer`s claim for damages for delay as the architect wrongfully failed to give them the extension of time to which they were entitled. The employers` claim, according to the contractors, should therefore be stayed, while summary judgment should be given for the contractors` claim on the interim payment certificates.

The issue I have to decide boils down simply to this. Does the fact that the architect failed to give his intimation in principle within the one-month period render his subsequent determination on the extension of time invalid for the purpose of the summary judgement proceedings?

I am of the view that it does not, or in any event does not in this case. Firstly, on a plain reading of cl 23.2, the contract does not make the in-principle intimation within the one-month period a condition for the validity of the determination. It is, in my view, of some significance that while notification by the contractor of a delay event within 28 days of its occurrence is expressly made a condition precedent to an extension of time, the architect`s in-principle intimation within the one-month period is not expressed to be a condition precedent to the validity of his subsequent decision on the quantum.

There is good reason for making the timely notification by the contractor of a delay event a condition precedent to extension of time. This is to enable the employer or the architect to verify the claim for extension and to monitor the event and its impact on the progress of the works. In the case of the in-principle intimation by the architect, however, it must have been thought by the draftsman that there is no compelling need to make it a condition precedent. One possible reason for not doing so is that it is often not possible for the architect to come to or commit himself to a view that `in principle` the...