Broadley Construction Pte Ltd v Alacran Design Pte Ltd
Jurisdiction | Singapore |
Judge | Judith Prakash JA |
Judgment Date | 16 May 2018 |
Neutral Citation | [2018] SGCA 25 |
Plaintiff Counsel | Eugene Thuraisingam and Syazana Binte Yahya (Eugene Thuraisingam LLP) |
Docket Number | Civil Appeal No 139 of 2017 |
Date | 16 May 2018 |
Hearing Date | 20 March 2018 |
Subject Matter | Misrepresentation,Contract,Fraudulent,Unilateral mistake |
Published date | 19 May 2018 |
Defendant Counsel | Ng Hweelon and Ibsen Low (Veritas Law Corporation) |
Court | Court of Appeal (Singapore) |
Citation | [2018] SGCA 25 |
Year | 2018 |
The conclusion of most written agreements is typically preceded by oral discussions and/or negotiations. In situations where the parties contemplate that the agreement would eventually be reduced into writing, not infrequently, the written text may vary or even contradict what parties believed was orally agreed. To the question as to what terms would govern the contractual relationship between the parties, the answer would almost invariably be the express terms of the written agreement. Should the position be any different if one of the parties, in the course of the oral discussions, indicates a different understanding of the agreement and the other party remains silent in the face of such indication? On these bare facts, the position may not be altogether clear as a host of imponderables may affect the outcome.
This dispute concerned a case where the party who allegedly remained silent had, following the meeting at which the alleged understanding was conveyed, produced a draft written agreement which contained a clause in direct contradiction to the other party’s alleged understanding. Instead of rejecting the clause or seeking clarification, that other party signed the written agreement without any reservation or qualification. Under these circumstances, is it open to that other party to renounce the terms of the written agreement on the basis that by keeping silent, the party who drafted the written agreement is precluded from relying on the written text on account of fraudulent misrepresentation and/or unilateral mistake? For the reasons set out below, we hold that the answer is in the negative.
FactsIn July 2013, the appellant, Broadley Construction Pte Ltd (“Broadley”), entered into a contract with the respondent, Alacran Design Pte Ltd (“Alacran”), for Alacran to supply equipment for the construction of a residential development project (“the Contract”). Broadley was Singbuild Pte Ltd (“Singbuild”)’s sub-contractor and used the equipment supplied under the Contract to fulfill its obligations under its contract with Singbuild.
Broadley began defaulting on payments to Alacran in 2015 because Singbuild, in turn, was not paying Broadley. Mr Lin Zhonghan (“Mr Lin”), Alacran’s former business development manager, chased Mr Govindaraju Elanthiriyan (“Mr Govin”), Broadley’s managing director, for the payments. They met twice to discuss Broadley’s payment of the outstanding sum of $423,407.34 (“the Outstanding Sum”). They first met in August 2015 (“the First Meeting”) and again three months later in November 2015 (“the Second Meeting”). Certain facts regarding the meetings are disputed. For the First Meeting, it is not disputed that Broadley issued post-dated cheques (for September 2015) to Alacran for the Outstanding Sum (“the Cheques”), to be encashed by Alacran only after Singbuild had paid Alacran. What is disputed is who suggested the issuance of the Cheques. Mr Lin and Mr Govin point to each other.
The main factual dispute arises from the Second Meeting:
Two days after the Second Meeting, on 6 November 2015, Broadley (through one Ms Chatterly, a senior quantity surveyor at Broadley) sent a draft of the undertaking to Mr Lin via email. The email stated “please find draft Undertaking letter which we [Broadley] will send to SingBuild”.1 The undertaking is a one-page letter (“the Undertaking”), on Broadley’s letterhead and addressed to Singbuild. When the draft of the Undertaking was sent to Mr Lin on 6 November 2015, it had not been signed by any of the parties. Broadley (through Mr Govin) and Singbuild signed the Undertaking at a subsequent site meeting. Mr Lin then took the Undertaking back to his office and signed it on behalf of Alacran.2 No changes whatsoever were made to the text of the Undertaking. It read as follows:
RE: UNDERTAKING LETTER FOR SWITCHES & ELV SYSTEMS OUTSTANDING BALANCE
We, [Broadley] … has appointed [Alacran] … to supply … [equipment] for the above mentioned project. Two payments has been issued to Alacran, and to date we have outstanding balance amounting to S$423,407.35, including GST. This amount is final and has been agreed with Alacran and no further claims shall be submitted in relation to this contract.
We, [Broadley] … hereby authorises [Singbuild] … to pay on our behalf, the total outstanding balance due to Alacran, which sums to S$423,407.35 including GST, details as attached and agreed by the supplier. We agree that this amount be deducted from our Remaining Contract Amount with Singbuild Pte Ltd.
This agreement has been agreed by [Singbuild], [Broadley] and [Alacran]. This letter indemnifies [Broadley], and is free of any responsibility and is no longer liable with regards to the outstanding balance with [Alacran].
Both Mr Lin and Mr Govin state that the Undertaking was meant to reflect what they had discussed at the Second Meeting. Mr Lin’s evidence was that he believed that the Undertaking only authorised Singbuild to pay on behalf of Broadley without releasing Broadley from liability for the Outstanding Sum, whereas Mr Govin’s evidence was that the purpose of the Undertaking was for Singbuild to assume all of Broadley’s liability to Alacran and to absolve Broadley from all liability to Alacran. In other words, Mr Govin understood the Undertaking as effecting an assignment of the debt,
Eventually, Singbuild did not pay Alacran and Alacran sued Broadley for the Outstanding Sum. Broadley predictably relied on the Undertaking, arguing that it was absolved from any liability in respect of the Outstanding Sum to Alacran. In response, Alacran pleaded that:3
The Judge found in favour of Alacran. Her judgment is published as
Based on the above factual findings, the Judge found that the Undertaking was a valid agreement in the sense that the parties intended to create legal relations and sufficient consideration was furnished.5 But the Undertaking could be rescinded for fraudulent misrepresentation or alternatively, it was void for unilateral mistake. She found that Mr Govin had, through his silence at the Second Meeting, fraudulently misrepresented to Mr Lin that...
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