Burwill Trading Pte Ltd v Panwah Steel Pte Ltd

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 27 December 2005
• Neutral Citation: [2005] SGHC 234
• Published date: 27 December 2005
• Court: High Court (Singapore)
• Plaintiff Counsel: Prem Gurbani and Bernard Yee (Gurbani and Co)
• Defendant Counsel: Josephine Chong and Aqbal Singh (UniLegal LLC)

27 December 2005 Judgment reserved.

Woo Bih Li J:

Introduction

1 In this action the plaintiff, Burwill Trading Pte Ltd (“Burwill”), claims $1,400,403.54 for the supply of reinforcing steel bars (“rebars”) to the defendant, Panwah Steel Pte Ltd (“Panwah”). Burwill’s claim relates to three contracts:

Date	Contract No	Description
23.5.02	C020483(03)	Changi Agreement
11.3.03	C030107	First Term Contract
4.12.03	C030626	Second Term Contract

2 In the course of the trial, Panwah accepted liability for $1,394,953.65 in respect of these three contracts. As the balance was for a relatively small sum of $5,449.89, Burwill decided not to pursue the balance. Accordingly, the remaining disputes revolve around Panwah’s counterclaim against Burwill for non-delivery of rebars under the following four contracts:

Date	Contract No.	Description
23.5.02	C020483(03)	Changi Agreement
10.10.03	C030520	Yung Sheng Agreement
18.6.04	C040283	First Burmese Agreement
2.7.04	C040329	Second Burmese Agreement

3 At the trial, the following witnesses gave evidence:

For Burwill:

(a) Chang Meng – Executive Vice President

(b) Jeffrey Ng Chang Sin (“Jeffrey Ng”) – Accounts Manager

(c) Jonathan Soh Wit Chee (“Jonathan Soh”) – Senior Vice President

(d) Michael Thio Sin Chang (“Michael Thio”) – General Manager

For Panwah:

Lim Seow Yi (“Lisa Lim”) – Manager (although in her Affidavit of Evidence-in-Chief (“AEIC”) she had referred to herself as Deputy Manager).

Although Lim Hua Seng (“Mr Lim”), the Managing Director of Panwah, had started to give evidence, Panwah decided not to require him to continue to do so as he was ill. Accordingly, it was agreed that his entire evidence would not be admissible.

The Changi Agreement

4 By an agreement dated 23 May 2002 (“the Changi Agreement”), Burwill agreed to sell to Panwah 39,000mt of rebars for a proposed Changi Water Reclamation Plant C3A at Tanah Merah Coast (“C3A”). Panwah had purchased the rebars in order to supply the same to the main contractor of C3A, Koh Brothers Building & Civil Engineering Contractor (Pte) Ltd (“Koh Brothers”). I will refer to Panwah’s contract with Koh Brothers as “the KB Agreement”. Although it was dated 26 April 2002, it was signed by Panwah on 31 May 2002, some seven days after the date of the Changi Agreement. For reasons best known to Panwah, the duration of the supply under the Changi Agreement was for one and a half years from 1 June 2002 to 31 December 2003 whereas the duration of the supply under the KB Agreement was for two years from June 2002 to June 2004.

5 Consequently, in December 2003, Panwah sought an extension of the Changi Agreement up to 30 June 2004. The respective representatives met on 8 December 2003. As Burwill was not aware of the terms of the KB Agreement, Burwill requested that Panwah obtain a written confirmation from Koh Brothers that the KB Agreement was until June 2004. Panwah obtained the confirmation on or about 12 December 2003 and Burwill then agreed to the extension at the prevailing prices under the Changi Agreement even though the prices of raw materials had increased from January 2003 and steel prices were soaring from December 2003. Panwah suggested that if Burwill had not done so, Panwah would have immediately purchased the outstanding balance then and Burwill would have suffered an immediate loss. It was suggested that by agreeing to the extension, Burwill was hoping that the price of steel would drop so that Burwill’s losses would not be severe. In my view, this suggestion ignored the point that the price of steel could also go up. Indeed, this was more likely because as at December 2003, the price was trending upwards, not downwards. Furthermore, if Panwah had issued an immediate order for the balance before the end of December 2003, Panwah would have had to fork out more than $9m based on the then outstanding balance of 22,000mt and using the price of US$415 per metric tonne as it was the lower of two prevailing prices under the Changi Agreement. Also, the rebars would have to be stored at the C3A site because Burwill made its deliveries to the site or Panwah would have had to store the rebars until Koh Brothers issued their purchase orders for the same. I am of the view that Burwill had extended the Changi Agreement to 30 June 2004 at the prevailing prices under the Changi Agreement as a favour to Panwah in view of the business relationship between them.

6 In any event, whatever the reason might have been, there was no dispute that the Changi Agreement was extended to 30 June 2004 at the prevailing prices. Burwill’s position was that the extension was on the basis stated in its telefax to Panwah dated 15 December 2003 which states, inter alia, that the supply “shall be as per the progress requirement of the site” (“the Condition”). The Condition was not stated in Panwah’s earlier telefax of the same date to Burwill. Up to the commencement of the trial, Panwah did not accept that they had agreed to the Condition. However, in the course of the trial, Panwah accepted this. The primary dispute regarding the Changi Agreement was what the Condition meant or entailed.

7 In my view, it is clear what the Condition meant but it is less clear what it entailed. In other words, how would Panwah show that the purchase orders it was to issue after 31 December 2003 would be in accordance with the progress requirements of rebars at the C3A site? The parties had not discussed this when the extension was agreed.

8 At a meeting on 16 January 2004 at the C3A site involving representatives from Burwill, Panwah and Koh Brothers, Koh Brothers agreed to provide structural drawings and details to Burwill so as to allow Burwill to monitor the progress of the works and in particular the rebar requirements of the site. However, the drawings were not forthcoming. Subsequently, Burwill requested for additional documents all of which were not provided. A CD-ROM which was provided by Koh Brothers yielded no information as it was corrupted.

9 Problems arose regarding the Condition because Burwill had noticed that the amounts being ordered by Panwah was increasing greatly in 2004. For example, for the whole of 2003, Panwah had ordered 17,975mt of rebars. However, between April and June 2004, Panwah ordered 13,739mt. When representatives from Burwill visited the site, they noticed rebars being stocked up, unused, at various locations at the site. This aroused their suspicions even further and they thought that Panwah was intent on stocking up the rebars. Eventually, Burwill ceased delivery of rebars on 25 June 2004, although the formal notification of cessation was dated 1 July 2004. By then, the extension had expired on 30 June 2004 and the remaining balance undelivered was 8,126.459mt (using Koh Brothers’ figure which was less than the figures provided by Burwill and by Panwah). Burwill was not satisfied that the purchase orders of Panwah were indeed as required by the progress of works at the site.

10 As it turned out, Burwill was correct in that the rebars which Koh Brothers had ordered from Panwah and which Panwah had in turn ordered from Burwill were not required for the works at the site. What had happened was that Koh Brothers had a surplus of rebars from another site and it had deployed the surplus to the C3A site. As a result, it did not require the balance of about 8,000mt for the C3A site but wanted the same for redeployment to other job sites. At all material times, Burwill was unaware of this and had suspected that it was Panwah who was stockpiling the rebars. At all material times, Panwah was apparently also unaware of Koh Brothers’ real intentions.

11 As between Koh Brothers and Panwah, Koh Brothers were insisting on delivery of the balance. The KB Agreement did not specifically have the Condition. Consequently, Koh Brothers withheld payment to Panwah of about $1.4m for rebars already delivered and also claimed damages of about $3m against Panwah. This is the subject of Suit No 746 of 2004 which was heard also by me after the trial of the present action. Although Panwah denied liability to Koh Brothers for reasons which I shall state in my judgment for that action, Panwah has sought, inter alia, an indemnity from Burwill for any sum which Panwah may be found to be liable to Koh Brothers in respect of the omission by Burwill to deliver the balance of the rebars. For the Changi Agreement, Panwah claims:

(a)	Loss of profit	$ 216,867.00
(b)	Non-payment by Koh Brothers for rebars already delivered to site	$1,447,833.83
(c)	Claim by Koh Brothers	$2,961,365.94
		(plus interest and costs)

Item (b) above is the sum withheld by Koh Brothers and item (c) above is the claim for which Panwah seeks an indemnity from Burwill.

12 Panwah asserted that the Condition was satisfied each time Panwah received a purchase order from Koh Brothers. Panwah said that it was not disputed that Koh Brothers had issued purchase orders for the balance. They relied on the practice, before the extension was agreed, whereby upon issuance of Koh Brothers’ purchase orders, Panwah would issue its own purchase orders and Burwill would deliver to the site whereupon Koh Brothers would then acknowledge receipt of the delivered rebars. Panwah submitted that since Burwill’s fear was of Panwah profiteering from the extension, Burwill should have no problem with delivering the rebars to the site since the site was under the control of Koh Brothers and not Panwah. Also, if there was any ambiguity in the Condition, it should be construed contra proferentem against Burwill who had imposed the same.

13 I note that although it is true that Burwill’s primary concern was that Panwah should not profiteer from the extension, the Condition was not worded in those terms. It stipulated that Burwill’s supply would be “as per the progress requirement of the site”. Secondly, although delivery to the site...