Bridgeman Pte Ltd v Dukim International Pte Ltd

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 24 October 2013
• Neutral Citation: [2013] SGHC 220
• Court: High Court (Singapore)
• Hearing Date: 06 August 2013,24 September 2013,07 August 2013,20 August 2013
• Docket Number: Suit No 767 of 2012/S
• Plaintiff Counsel: Valerie Ang and Vithyashree (Straits Law Practice LLC)
• Defendant Counsel: S Magintharan and James Liew (Essex LLC)
• Subject Matter: Contract,Breach,Damages
• Published date: 30 October 2013

Lai Siu Chiu J : Introduction

This was a claim for goods sold and delivered. Bridgeman Pte Ltd (“the plaintiff”) is a wholesaler of petrochemical products, including Automotive Diesel Oil (“ADO”). Dukim International Pte Ltd (“the defendant”) is in the business of, inter alia, supplying ADO. Sometime in June 2009, the plaintiff and the defendant entered into an oral agreement (“the Agreement”), whereby the plaintiff was to supply and deliver ADO to the defendant’s customers.

Under the Agreement, the plaintiff obtained its supply of ADO directly from an oil company, viz, the Singapore Petroleum Company (“the SPC”). The plaintiff then sold the ADO to the defendant who in turn on-sold the ADO to its customers (which were mainly Korean companies). As the defendant did not have its own transportation fleet, it was agreed that the plaintiff would deliver the ADO directly to the defendant’s customers. The plaintiff would then bill the defendant based on the quantities of ADO delivered. Thereafter, the defendant would invoice its own customers.

Between June 2009 and October 2011, the plaintiff delivered ADO to the defendant’s customers upon the defendant’s requests. The defendant had also paid the plaintiff based on its invoices but ceased doing so sometime in August 2011. Notwithstanding the defendant’s non-payment, the plaintiff continued to supply ADO to the defendant’s customers until sometime in October 2011

In this suit, the plaintiff claims the sum of $576,957.12 against the defendant, being unpaid amounts for ADO supplied between 2 August 2011 and 14 October 2011. The defendant in turn raised a counterclaim for damages and/or restitution on the premise that it had been overcharged by the plaintiff for the supply of ADO. If the counterclaim succeeds, it operates as a set-off to the plaintiff’s claim.

The Dispute

For ease of reference later in this judgment, I shall first identify the dramatis personae involved in the dealings between the parties: Yeo Ching Joo (“Yeo”), a director of the plaintiff; Sng Chee Beng Andrew (“Sng”), a manager of the plaintiff; Moon Ki Kim (“Moon Ki”), the managing director of the defendant, and Kim Eon (“Kim”), the Senior Marketing Manager of the defendant.

In these proceedings, it is not disputed that the plaintiff had delivered ADO to the defendant’s customers between 2 August 2011 and 14 October 2011. It is also not in dispute that the defendant had not paid the plaintiff for the supply of ADO during this period. Rather, the thrust of the defendant’s counterclaim is that the plaintiff had overcharged the defendant for the supply of ADO on various occasions between June 2009 and October 2011.

In his affidavit of evidence in chief (“AEIC”), Moon Ki said that the Agreement was entered into after a meeting between the plaintiff and the defendant. Moon Ki said that both Kim and he had attended the meeting, while Yeo and Sng were the plaintiff’s representatives. More pertinently, Moon Ki said that it was agreed at the meeting that the price (per litre) for the supply of ADO to the defendant was 5 cents (which was later reduced to 4 ½ cents) above the price (per litre) paid by the plaintiff to SPC for the ADO (“the SPC ADO price”). Furthermore, this price included all ancillary charges such as transportation and service fees.

The defendant alleged that during the course of their dealings, the plaintiff had misrepresented the daily SPC ADO price. Subsequently, the plaintiff had overcharged the defendant by rendering invoices based on those prices. Hence, the defendant counterclaimed for damages for breach of contract (“the Counterclaim for Breach of Contract”). In the alternative, the defendant counterclaimed for damages for misrepresentation (“the Counterclaim for Misrepresentation”). The defendant’s third claim which was in the further alternative, was that the plaintiff had been unjustly enriched at the defendant’s expense by overcharging for the ADO (“the Counterclaim for Unjust Enrichment:). The defendant sought restitution in the sum of $990,177.22, being the total amount of the alleged overcharging.

The plaintiff denied it had overcharged the defendant for the supply of ADO under the Agreement. In his AEIC, Yeo disputed Moon Ki’s evidence as regards how the Agreement came about and the terms of the Agreement. Yeo claimed that the Agreement was concluded after three meetings between the plaintiff and the defendant. Yeo also said that Kim was not present at any of the three meetings. More pertinently, Yeo denied that the agreed price for the supply of ADO to the defendants was pegged to the SPC ADO price in any way. Instead, it comprised of the plaintiff’s own ADO price (per litre) to the defendant (“the Bridgeman ADO price”) plus a service and transportation charge of 6 cents (which was later reduced to 5 cents and thereafter, 4 ½ cents) per litre.

The Counterclaim for Breach of Contract Admissibility of evidence of subsequent conduct

Before turning to the parties’ submissions, I wish to briefly deal with a preliminary issue. In these proceedings, both parties have made submissions which relied on evidence of the conduct of the parties subsequent to the Agreement, to establish the agreed ADO price. This raises the issue of whether the court is entitled to look at the subsequent conduct of the parties in ascertaining the agreed price for ADO under the Agreement.

The law in Singapore in this regard is not clear. In Midlink Development Pte Ltd v The Stansfield Group Pte Ltd [2004] 4 SLR(R) 258 (“Midlink”), V K Rajah JC suggested (at [53]) that regard could be had to subsequent conduct in ascertaining contractual terms. Similarly, in Econ Piling Pte Ltd v NCC International AB [2008] SGHC 26 (“Econ Piling”) at [63], Chan Seng Onn J took into account the conduct of the parties, after entering into an alleged agreement to dissolve a partnership, in determining whether such an agreement existed in the first place.

Midlink and Econ Piling were considered by Woo Bih Li J in Sundercan Ltd and another v Salzman Anthony David [2010] SGHC 92 (“Sundercan”). In Sundercan, Woo Bih Li J observed (at [26]) that:

As for the plaintiff’s argument that the defendant’s conduct subsequent to 23 October 2008 was consistent with the existence of a concluded contract, it is not entirely clear as to whether the courts can look at conduct subsequent to the time of the formation of the contract to determine whether a contract was concluded. The plaintiffs relied on two cases, namely [Econ Piling] and [Midlink] to support the proposition but the point was not argued there. The courts there appeared to have assumed that subsequent conduct could be considered to determine the existence of a contract. I would add that estoppel by convention is a different matter.

Woo J later appeared (at [27]) to express the view that in most cases subsequent conduct could not be used to determine the existence of a contract. In any event, nothing turned on this as Woo J held that the defendant’s subsequent conduct did not support the plaintiff’s assertion that such conduct was unequivocal evidence of a concluded contract.

As regards the admissibility of evidence of subsequent conduct in the interpretation of a contract, the Court of Appeal, in Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029 (“Zurich Insurance”) at [132(d)], said:

…[T]he principle of objectively ascertaining the contractual intention(s) remains paramount. Thus, the extrinsic evidence must always go towards proof of what the parties, from an objective viewpoint ultimately agreed upon. Further, where extrinsic evidence in the form of prior negotiations and subsequent conduct is concerned,… there should be no absolute or rigid prohibition against evidence of previous negotiations or subsequent conduct, although, in the normal case, such evidence is likely to be inadmissible for non-compliance with the requirement set out at [125] and [128-129] above. (We should add that the relevance of subsequent conduct remains a controversial and evolving topic that will require more extensive scrutiny by this court at a more appropriate juncture.)

[emphasis added]

In effect, the appellate court in Zurich Insurance held that evidence of subsequent conduct would only be admissible if it is relevant to the exercise of ascertaining the objective intention of the contracting parties.

Although Zurich Insurance concerned the interpretation of a contract, I am of the view that the principles enunciated there can equally apply to the present case. Like the interpretation of contractual terms, the ascertainment of the terms of a contract involves an inquiry as to what the parties had objectively and ostensibly agreed upon. As contractual terms are to be determined at the time the contract was entered into, evidence of subsequent conduct would usually be irrelevant to this exercise, and therefore, inadmissible as direct evidence of contractual terms.

However, as neither party made submissions on this issue, I am prepared to assume that evidence of subsequent conduct is admissible as direct proof of contractual terms. This however, is subject to the caveat that the subsequent conduct relied upon must be unequivocal evidence of the existence of the alleged contractual term.

For completeness, I would add that evidence of subsequent conduct would also be relevant is assessing the credibility of a witness. This is a pertinent point in cases like the present where the contract was not in writing and where the parties’ versions of the terms of the contract are diametrically opposite.

The evidence at trial

To establish that the agreed price for the supply of ADO was pegged to the SPC ADO price, the defendant purported to rely on evidence of industry practice. In his AEIC, Moon Ki deposed that it was industry practice for wholesalers to supply ADO at a...