ATS Specialized Inc. (trading as ATA Wind Energy Services) v LAP Projects (Asia) Pte Ltd

• Court: High Court (Singapore)
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 17 August 2012
• Neutral Citation: [2012] SGHC 173
• Citation: [2012] SGHC 173
• Docket Number: Suit No 559 of 2011
• Hearing Date: 23 April 2012,16 April 2012,18 April 2012,17 April 2012
• Plaintiff Counsel: Danny Chua Chok Wah and Walter Ferix Justine (Joseph Tan Jude Benny LLP)
• Defendant Counsel: Tan Poh Ling Wendy and Fu Simin Charmaine (Stamford Law Corporation)
• Subject Matter: Contract,Formation,Offer and Acceptance,Certainty,Consideration
• Published date: 27 August 2012

Belinda Ang Saw Ean J: Introduction

The present suit arises from debts owing from the defendant to the plaintiff for a set of trucking carriages. The sole issue before me is whether there was a tripartite set-off agreement reducing the quantum of this debt between the following parties: the plaintiff, ATS Wind Energy Services (“ATS”), its associate company, ATS International Service, Inc. (“ATSI”), and the defendant, LAP Projects (Asia) Pte Ltd (“LAP”). I found that there was no agreement and I now deliver full grounds for my decision.

ATS is a company incorporated in the USA. It is a wholly-owned subsidiary of Anderson Trucking Services, which also wholly owns ATSI. ATS and ATSI are independent companies although it became quite clear over the course of the trial that ATS and ATSI had some common interests in Asia, and communicated with each other. ATS and ATSI’s primary business is in freight and carriage of goods.

ATSI’s interests in Singapore included its non-exclusive agency with LAP Distribution Pte Ltd, now known as LAP Global Services Pte Ltd (“LAP Global”). Although this non-exclusive agency (“the Agency Agreement”) was for two years from 2007, ATSI considered this non-exclusive agency to have continued until 31 May 2011. However, LAP contended that the Agency Agreement ceased in 2009. In any event, for present purposes, business cooperation in Asia between ATSI, LAP and LAP Global ceased by 31 May 2011.

Events leading to this action

ATS’s claims under this action arise from a separate agreement entered into on 8 March 2011 for the provision of trucking services to LAP to carry machine parts from Houston, Texas to Ralls Wind Farm, Ralls, Texas (“the March 2011 Contract”). Pursuant to the March 2011 Contract and between 21 April 2011 and 12 May 2011, ATS conducted twenty-two such carriages and duly invoiced LAP. The March 2011 Contract provided for payment within 15 days.¹ It is undisputed that the balance sums owing under the March 2011 Contract are US$325,781.40 (not including interest).

On 27 May 2011, ATS’s director, Gene Lemke (“Lemke”) sent a chaser e-mail to LAP’s Managing Director, Than Chung Kiat (“Than”) demanding payment for the outstanding sums. LAP’s Finance Director, Foo Ha Sing also know as Joseph Foo (“Foo”) responded to this e-mail four days later, stating that LAP would need a further two weeks to pay. Lemke’s firm reply on the same day was to say that this was not acceptable. On 2 June 2012, Foo sent an e-mail, titled “ATS statement for SanyLap, 05/25/11”, to Lemke setting out a table which included payables by ATSI to LAP Global.² He wrote in this e-mail:³

The current sum due from LAP to ATS is current and we intend to offset the amount. Kindly confirm the amount and we will offset accordingly when we make the payment to ATS.

Foo deposed that this constituted LAP’s proposal to offset the accounts between ATS and LAP and ATSI and LAP’s affiliate, LAP Global.

Lemke responded on 3 June 2012 explaining that ATS and ATSI were separate companies and that the issues and payments owed to different entities should not be mixed.⁴

There was no further written response from LAP. Than claimed that he had a telephone conversation with ATSI’s Vice-President, Joe Goering (“Goering”), and in this conversation had proposed the set-off arrangement in Foo’s e-mail; that Goering had agreed to the proposal, and that Goering would speak to Lemke. This conversation was disputed by Goering. It was not disputed that Goering and Lemke spoke to each other and they recognised that an offset agreement would be a good way to settle accounts. Lemke e-mailed Foo and Than on 4 June 2011 with the following:⁵

After further discussion with Joe, let’s just keep this simple: LAP cuts a check for the difference between what LAP owes ATS and ATS (sic) owes LAP. Ling will discuss with you in the upcoming meeting. In the meantime we will audit the numbers you presented.

The “upcoming meeting” that was referred to in Lemke’s e-mail was the meeting of 6 June 2011 called by one Ling Lit Kwong (“Ling”) to resolve outstanding ATSI’s matters with LAP Global.⁶

I interrupt the narration of the chronology of events to explain briefly that ATSI set up a Singapore subsidiary, ATSI Projects Services (Asia) Pte Ltd (“ATSI Asia”), on 28 September 2010 as part of its business strategy in Asia. This restructuring of its Asia business required the examination of the nature of the overall business relationship between ATSI and LAP Global and LAP. Since May 2011 onwards, there were ongoing discussions between Ling, who was ATSI Asia’s Managing director, and LAP’s representative, Than, on various matters including the viability of a one-year agency with ATSI. When that proposal was rejected by Than who preferred to work with ATSI on a “case-to-case bases [sic] in the future”,⁷ the discussions turned to the process of unravelling the business relationship arising from the Agency Agreement which started in 2007 and, according to ATSI, ceased on 31 May 2011.⁸ This included the settlement of all outstanding accounts and the return of ATSI’s brochures, promotional materials, corporate gifts, unused bills of lading and any other materials belonging to ATSI. There was one other important matter. LAP Global had previously arranged shipments from China to USA of products manufactured for General Electric in China, but it continued to do so after 31 May 2011. Thus ATSI raised a further issue, which was contested by LAP’s Foo, in relation to unapproved issuance of ATSI’s house bills of lading for GE shipments after cessation of business relations (“the GE issue”).

Returning to the chronology of events, Ling, on behalf of ATSI, set up a meeting with Than on 6 June 2011 (“the 6th June meeting”) to discuss “all outstanding matters” from the Agency Agreement. Ling, Foo and one Sebastian Goh attended this meeting. The topics discussed at this meeting were recapped in Ling’s e-mail dated 4 July 2011.⁹

In June 2011, Karen Ong (going by Karen’s e-mail address Karen@lapd.com.sg, she was presumably from LAP Distribution now known as LAP Global) and ATSI’s import and export coordinator, Sarah Meidl (“Meidl”), began working on the total amounts payable to LAP (“AP”) and receivable to both ATS and ATSI (“AR”). On 14 June 2011, Meidl sent an e-mail to Than (at e-mail address ckthan@lapd.com.sg), Foo (at email address joseph.foo@lap-group.com) and Karen (at e-mail address karen@lapd.com.sg) and copied to Goering, Ling, Lemke and one Romelle Anfinson. In this e-mail, titled “ATS/LAP – Account overview & Offset Proposal 6/14/11”, she included a list of all open items with the necessary documentation and proposed an offset of US$179,078.96 which sum was payable by LAP to ATS. In the penultimate paragraph of this e-mail, she wrote:¹⁰

To reiterate we are requesting an offset in which the remaining balance then owed to us from LAP would be $179,078.96. We are holding firm that LAP either provides us a written commitment of the offset and remaining balance due via wire transfer by 6/17/2011 or confirms a face to face meeting with Mr Ling to resolve taking pla [sic] no later than 6/20/11.

This offer expired on 20 June 2011 without response from LAP. Just before expiration (midday 20 June 2011 Minnesota time), Meidl sent a “deal sweetener” with figures re-adjusted to reflect a lower offset figure of US$166,636.16.¹¹ Goering then sent an informal e-mail dated 21 June 2011 to LAP’s Than and Jim Than reminding them of the expiration of the offset agreement offer, and urging them to “engage and assist in settling the below outstanding matter”.¹² Than e-mailed back on the same date to affirm their commitment to resolving the outstanding issues between ATS and LAP.¹³ However, as Foo was on compassionate leave at the time, there was no further response on the figures from Foo until 8 July 2011. By this time, Goering had sent a further four e-mails relating not only to the outstanding payables and receivables, but also to unauthorised bills of lading relating to GE shipments (ie, the GE issue) and the Sany issue of an overbilling of US$56,730 in relation to ATS’s March 2011 Contract. Foo’s reply of 8 July 2011 showed that he wanted to contra what ATSI owed to LAP Global with what LAP was required to pay ATS. In his view, the Sany issue was an overbilling by ATS which LAP did not want to pay. As such, the Sany issue would affect the full offset sum.

On 12 July 2011, ATSI sent a formal letter to LAP. It is to be noted that Goering raised the matter of compensation for the unauthorised issuance of house bills of lading after 1 June 2011 in respect of GE shipments from China to USA in his letter dated 12 July 2011.¹⁴

On 13 July 2011, Ling sent an e-mail to Than, Foo and Sebastian Goh entitled “LAP Final Notice”, proposing a final meeting on 18 July 2011 to resolve all issues arising from the Agency Agreement and the possible related set-off for the March 2011 Contract.¹⁵ Foo counter-proposed a later date.¹⁶ Goering replied on 15 July 2011 with the proviso that he now believed “that the commercial efforts of ATSi [sic] to settle these matters direct with LAP has failed”, and asking for a written commitment to settle all issues arising from the Agency Agreement by the close of the proposed meeting.¹⁷ Foo replied on 16 July 2011 to affirm that LAP had “the intention to resolve the outstanding issues with ats [sic]” pending ATS’s reply to points raised by LAP.¹⁸ Goering’s replied on 17 July 2011 asking for clarification as to what these points were. When no reply was forthcoming, Goering wrote on 18 July 2011 in response to Foo’s 8 July 2011 e-mail. He clarified that:¹⁹ There was an issue of discontinuance of the use of ATSI’s house bills of lading; That there was no agreement on the Sany issue and its inclusion in the set-off agreement; and There were three payments due: one from LAP to ATS for the March 2011 Contract,...