Beow Hock Engineering Pte Ltd v Goh Eng Huat and another

• Jurisdiction: Singapore
• Judge: James Leong Kiu Yiu
• Judgment Date: 17 February 2023
• Neutral Citation: [2023] SGDC 31
• Court: District Court (Singapore)
• Docket Number: District Court Originating Application 78 of 2022
• Hearing Date: 19 January 2023,20 January 2023
• Citation: [2023] SGDC 31
• Year: 2023
• Plaintiff Counsel: Samuel Pang and Jonathan Lim (Dentons Rodyk & Davidson LLP)
• Defendant Counsel: Chester Su (Drew & Napier LLC),Christine Chiam (Titanium Law Chambers LLC)
• Subject Matter: Building and Construction Law,Building and construction related contracts,Guarantees and bonds,Credit and Security,Performance bond
• Published date: 13 June 2023

District Judge James Leong Kiu Yiu: Introduction

This is the contractor claimant’s application to restrain the first defendant beneficiary’s call on a performance bond (“bond”) issued by the second defendant. The bond was issued with respect to works that the first defendant homeowner engaged the claimant contractor to undertake under a Letter of Award (“LOA”) dated 5 October 2020 for the continuation of the proposed erection of a 3-Storey Envelope Control Detached House on the first defendant’s property. In response to the call on the bond for $ 147,988.80 on 12 September 2022, the claimant filed the present application and DC/SUM 2924/2022 (“SUM 2924”) for an interim injunction against the first and second defendants. SUM 2924 was heard in the presence of all parties and granted by the Learned District Judge Tan May Tee on 23 September 2022.

After hearing submissions from counsel for the claimant and the first defendant (with counsel for the second defendant in attendance content to abide by the decision of the court), I find myself in broad agreement with the submissions of counsel for the claimant on the authority of the High Court decision in CEX v CEY and another [2021] 3 SLR 571 (“CEX”) that the call is rooted in illegality and therefore unconscionable.

Facts

Under the LOA, the value of the works was $ 1,479,988.00, the designated Architect was Mr Freddie H K Chia (“Mr Chia”) of Freddie H K Chia Architects while the Quantity Surveyor was BKG Consultants Pte Ltd. The LOA provided that the form of contract would be the Singapore Institute of Architects’ Articles and Conditions of Building Contract (Without Quantities) (2016) – 1st Edition (Updated 2017) (“SIA Conditions”).

Pursuant to the LOA, the claimant was engaged by the first defendant in October 2020 to take over the building works from the first defendant’s previous contractor following the demise of Mr Juan Peck Foon (“Mr Juan”), who was the Design Consultant for the project to redevelop the first defendant’s existing family home. The claimant had been recommended to the first defendant by Ms Frances Ng Poh Joo, the wife of Mr Juan who agreed to assist and was involved in the project between July 2020 and late February 2021.

The Building and Construction Authority Permit to Commence Works (“BCA Permit”) for the project was issued on 12 November 2020. It listed Mr Chia as the Qualified Person for Architectural Work (“Architectural QP”).

The LOA dated 5 October 2020 provides for a contract period of eight (8) calendar months from the date of the BCA Permit. Based on a Final Quotation dated 7 October 2020, the claimants say it should be nine (9) calendar months. Given that the LOA was signed on 5 October 2020, eight (8) months appear to be what was contractually agreed although nothing turns on this for present purposes since both dates have been clearly exceeded.

This was followed by a series of events that culminated in the first defendant’s call on the bond and termination of the contract on 12 September 2022. While parties dispute the effect of the correspondence, they do not dispute the fact of the correspondence as outlined below. By a letter dated 15 July 2022, the first defendant informed the claimant that Mr Ho Yan Yoy (“Mr Ho”) of YY Architects had been appointed to “… take over Freddie H K Chua Architects (sic) as the Architect for the purposes of the contract…”.¹ By a letter dated 18 July 2022, Mr Ho informed the claimant that he had been “… appointed as Architect to assist Freddy H K Chia to supervise, complete the project and obtain TOP and CSC for the client.”² On 27 July 2022, Mr Ho issued a Delay Certificate under Clause 24 (1) of the SIA Conditions indicating that the contract completion date was 11 July 2021 which had not been met till date. On 8 August 2022, Mr Ho issued an Architect’s Direction to the claimant that was followed by a site meeting on 15 August 2022. On 17 August 2022, the claimant issued a notice by email to the first defendant to “… temporarily suspend our work because of the non payment and non issuance of interim valuation.”³ On 18 August 2022, BKG Consultants recommended that no monies should be paid to the claimant under their Progress Claim No. 8 dated 5 August 2022 for $ 136,610.40. On 18 August 2022, the claimant received a payment certificate from Mr Chia stating that no payments were due to the claimants. This was subsequently clarified to have been sent in error. The claimant subsequently received a payment certificate from Mr Ho dated 29 August 2022 stating that no payments were due to the claimants.

On 9 September 2022, Mr Ho issued a Termination Certificate stating that the owners were entitled to terminate the contract. On 12 September 2022, the claimant received the first defendant’s notice of termination and call on the bond.

The claimants’ position

As outlined in the claimant’s written submissions and elaborated at the hearing, the claimants submit that: The firstdefendant’s call on the bond is rooted in illegality on the authority of CEX as the appointment of Mr Ho to take over as Architect on 15 July 2022 was not notified to the BCA as required under s 8(2) of the Building Control Act 1989 (2020 Revised Edition) (“BCA 1989”). The BCA Permit therefore lapsed, rendering any work on the project and the actions of Mr Ho illegal. The capacity of the original Architect Mr Chia to serve as the Architectural QP for the purposes of the BCA Permit was also called into question given that as at 14 September 2022, Mr Chia had been living in a nursing home for almost a year with faltering memory and possible dementia. The first defendant was responsible for various delays to the works including securing utilities supply and making changes to the original designs for plumbing and sanitary works, aluminum works, façade and timber door works, electrical works, swimming pool and courtyard works. There were issues with the lightning protection system that the claimant says was completed and certified by Mr Edward Woo (“Mr Woo”) the Professional Engineer on 25 April 2022 although Mr Woo has since revised his opinion on 31 October 2022. There were also issues regarding delays to the lift works that the claimant contends were caused by Covid-19 supply issues and the nominated lift sub-contractor. The first defendant’s current stance of seeking liquidated damages from 15 July 2021 is inconsistent with oral assurances not to impose such damages which the claimant relied upon in not applying for extensions of time, and the letter of 6 December 2021 from the first defendant that liquidated damages would only be imposed from 15 December 2021. The first defendant’s losses are subject to the threshold of reasonableness, and it is evident that the two quotations relied upon are...