CAA Technologies Pte Ltd v Newcon Builders Pte Ltd

• Judge: Vinodh Coomaraswamy J
• Judgment Date: 29 November 2016
• Neutral Citation: [2016] SGHC 246
• Citation: [2016] SGHC 246
• Court: High Court (Singapore)
• Published date: 26 September 2017
• Docket Number: Suit No 1063 of 2013
• Plaintiff Counsel: Irving Choh, Lim Bee Li and Melissa Kor (Optimus Chambers LLC)
• Defendant Counsel: Joseph Lee and Tang Jin Sheng (Dentons Rodyk & Davidson LLP)
• Subject Matter: Building and construction law,Building and construction contracts,Sub-contracts,Compensation for delays,Terms,Implied terms
• Hearing Date: 26 May 2015,02 June 2015,29 April 2016,28 May 2015,27 May 2015,29 May 2015

Vinodh Coomaraswamy J:

The defendant was the main contractor for a substantial building project in Jurong. It sub-contracted the design, production and delivery of key structural elements of the project to the plaintiff. The plaintiff failed to deliver those elements as promised. The defendant revised the delivery schedule to accommodate the plaintiff’s failure. The plaintiff failed to meet even the revised schedule. Although the plaintiff eventually did deliver some of the elements, its delivery was out of sequence, incomplete and badly behind schedule. The defendant therefore terminated its contract with the plaintiff and engaged a substitute contractor. The plaintiff treated the defendant’s termination as a breach of contract.

In this action, the plaintiff seeks damages from the defendant for its breach of the parties’ contract in terminating their contract without basis. The defendant, in turn, counterclaims damages from the plaintiff for its breach of the parties’ contract in failing to deliver the structural elements as promised.

Having heard and considered the parties’ evidence and submissions, I have disallowed substantially the whole of the plaintiff’s claim and allowed substantially the whole of the defendant’s counterclaim.

The plaintiff has appealed against my decision. I now set out the reasons for my decision.

The facts The parties

The plaintiff is CAA Technologies Pte Ltd (“CAA”). CAA designs, produces and installs pre-cast concrete structural elements for building projects.¹ These structural elements include precast concrete hollow core slabs.

The defendant is Newcon Builders Pte Ltd (“Newcon”). Newcon is a main contractor for building projects.²

The letter of intent

By a contract entered into in 2012, the Jurong Town Corporation (“JTC”) engaged Newcon as the main contractor for a project to build a medical technology hub in Jurong.³ The defendant, in turn, sub-contracted to the plaintiff the production and delivery of all the precast concrete hollow core slabs for the project.

The origin of the legal relationship between the parties is a letter of intent dated 2 November 2012.⁴ The letter of intent is a brief three-page letter from Newcon to CAA. It is brief because the letter of intent itself enabled the parties to replace its terms with a comprehensive contract setting out their obligations in greater detail in terms to be agreed between the parties. The letter of intent refers to this comprehensive contract as the “letter of acceptance”. Despite this, however, it is common ground that the letter of intent has contractual force in and of itself. It is common ground, in other words, that the letter of intent is not a mere (and unenforceable) agreement to agree.

The letter of intent begins by informing CAA that Newcon has awarded to CAA the contract to design, produce and deliver slabs for the project as well as to provide ancillary services such as quality assurance and quality control.⁵ It then sets out the breakdown of the total contract value of just over $1.6m. The breakdown is in tabular form, and lists the dimensions of the four thicknesses of the slabs which CAA was to supply, the provisional quantity required of each type, the rate to be applied to each type and the total value of each type. The table also describes certain ancillary supplies and ancillary services and sets out their value.

On the second page of the letter of intent, immediately after the table, are the terms and conditions. These are set out in only eight numbered clauses. The only express term which deals with CAA’s obligation as to timely production and delivery is cl 2. That clause reads as follows:⁶

2) Overall main contract period shall be from 1st Nov 2012 to 31st Jan 2014 (15 months). You have agreed to follow the site progress and including any revisions to construction programme schedule for your Sub-Contract Works.

Immediately following the eight terms and conditions is Newcon’s formal instruction to CAA to commence work:⁷

This Letter of Intent shall be treated as the official “Instruction to Proceed”. You are to commence immediately with the submission of all necessary documents, samples and shop drawings for Consultants’ approval in accordance with the design intent, our requirements and timeline as below:-

…

The final sentence of the letter of intent, immediately above the signature block, reads: “The letter of acceptance for the Sub-Contract Works shall be sent to you for execution in due course.”⁸

The letter of intent has three attachments. The first attachment is a single page comprising an acknowledgment for CAA to countersign and return. The acknowledgment reads as follows:⁹

ACKNOWLEDGEMENT

The undersigned acknowledge [sic] receipt of the above letter (Ref: NCB/JTC/MTH/12/348 dated 2nd November 2012), a copy has been retained and hereby confirms that the terms and conditions herein are accepted and agreed to.

CAA’s General Manager, Mr Chen Linhui, countersigned the acknowledgment, dated it 17 November 2012 and returned it to Newcon.

The second attachment comprises extracts from the main contract between JTC and Newcon. These extracts set out the specifications for all the pre-cast concrete units required under the main contract. These units include the slabs which Newcon had engaged CAA to design, produce and deliver.

The third attachment to the letter of intent is the construction schedule referred to in cl 2.¹⁰ This schedule sets out, line by line, each item of work comprised in Newcon’s scope of works under the main contract and sets out the duration, start date and finish date for each item.¹¹ The schedule is presented in the diagrammatic form typical to construction contracts. It therefore shows which items of work are critical works and which items of work can proceed in parallel with other works.

One of the items of work in the construction schedule is the project’s superstructure works. The schedule shows the superstructure works to be critical works. The superstructure works are scheduled to start on 27 January 2013 and to finish on 18 October 2013.¹² The schedule expressly lists the installation of the plaintiff’s slabs – identified by the abbreviation “HCS” – as part of the superstructure works. The first reference to these slabs is in the item described as “2nd Sty Beam/Slab, HCS & Topping”. The schedule states expressly that this work was to begin on 26 February 2013 and to finish on 17 March 2013.

CAA’s slabs were essential part of the superstructure works. Those works could not commence, continue and complete on time unless CAA produced and delivered its slabs on time, in the correct numbers and in the correct sequence.

The letter of acceptance

On 11 January 2013, Newcon sent to CAA the letter of acceptance foreshadowed in the letter of intent (see [12] above).¹³ It is dated 28 December 2012. In contrast to the brief letter of intent, the letter of acceptance is a lengthy and detailed document comprising 153 pages in a 22-page main body with 131 pages of appendices. The main body expands in great detail on the eight terms and conditions set out in the three-page letter of intent.¹⁴ The appendices include drawings and specifications as well as the letter of intent itself and the construction schedule which was attached to it.

The first attachment to the letter of acceptance is a one-page acknowledgment for CAA to countersign, date and return to Newcon. It is common ground that CAA never signed the acknowledgment and, obviously, never returned it.¹⁵ CAA’s case, therefore, is that the parties’ contract is found only in the letter of intent, with the letter of acceptance forming no part of that contract. I resolve this dispute at [60] to [88] below.

It suffices for present purposes to describe only three clauses in the letter of acceptance. These three clauses deal expressly with: (i) CAA’s obligations to produce and deliver slabs; (ii) Newcon’s right to terminate the contract for breach; and (iii) CAA’s obligation to pay liquidated damages. None of these provisions appear in the letter of intent, not even in rudimentary form.

Clause 7.10 sets out expressly CAA’s obligations to produce and deliver slabs:

Programme Work

The programme for the Supply contract shall be in accordance with the time schedule as set out in our programme. You are required to liaise very closely with our Director/Project Manager regarding the schedule of work.

The Date of Commencement, Contract Period & Completion Date for our Main Contract Works : -

Date of commencement	:	1st November 2012
Overall Main Contract Period	:	15 months
Date of Completion	:	31st January 2014

The tentative delivery schedule for the precast hollow core slab … for the respective storey is as follows:-

No	Level	Delivery Schedule
Zone 1	Zone 2	Zone 3
1	2nd Storey	18th Feb 2013	23rd Feb 2013	28th Feb 2013
2	3rd Storey	1st Apr 2013	4th Apr 2013	9th Apr 2013
3	4th Storey	26th Apr 2013	29th Apr 2013	29th Apr 2013
4	5th Storey	18th May 2013	21st May 2013	21st May 2013
5	6th Storey	9th Jun 2013	12th Jun 2013	12th Jun 2013
6	7th Storey	1st Jul 2013	5th Jul 2013	N.A
7	8th Storey	23rd Jul 2013	26th Jul 2013	N.A
8	9th Storey	14th Aug 2013	18th Aug 2013	N.A
9	Roof	5th Sep 2013	9th Sep 2013	N.A

…

Clause 7.13 gives Newcon an express right to terminate the parties’ contract upon notice following an unremedied breach:

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