China Construction (South Pacific) Development Co Pte Ltd v Leisure Park (Singapore) Pte Ltd

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 09 October 1999
• Neutral Citation: [1999] SGHC 265
• Docket Number: Suit No 217 of 1999
• Date: 09 October 1999
• Year: 1999
• Published date: 19 September 2003
• Plaintiff Counsel: Tang King Kai (Tang & Partners)
• Citation: [1999] SGHC 265
• Defendant Counsel: Michael Chia and Yap Pett Chin (Drew & Napier)
• Court: High Court (Singapore)
• Subject Matter: Building and Construction Law,Whether issued in proper exercise of architect's powers,Whether contractors entitled to summary judgment on interim certificate,Whether set-off available for mistaken payments,Standard form contracts,Singapore Institute of Architects standard form contracts,Interim certificates,Whether interim certificates should be honoured,Issuance of correction certificate without complying with contractual requirements

:This is an appeal from a decision of the learned assistant registrar Miss Vivian Wong granting the plaintiffs summary judgment in the sum of $320,735.79 purportedly certified by the architect under a building contract.

The plaintiffs were the main contractors engaged by the defendant owners under a contract in the SIA standard form of contract for the building of a theme park on Sentosa Island at a lump sum of some S$8.146m. The provisions for the issue of interim certificates for payment for work executed by the plaintiffs under the contract were contained in cl 31 of the general conditions of contract as modified by the parties. This clause, read with the Appendix, provides for the certification of interim payments at monthly intervals on the 15th day of each month and for the honouring of the interim certificates by the employer within 21 days of their receipt.

Cl 31(2) of the general conditions provides that the interim certificates shall be based on aretrospective re-valuation of all the work carried out under up to a date not exceeding 7 days before the date of the certificate. It reads:

... such interim certificates shall ... be based on a retrospective re-valuation of all the work carried out under the contract up to a date (which shall be named in the certificate) not exceeding seven days before the date of issuing the certificate itself ...

However, by an addendum to the contract, a new cl 31(13) was added. It provided as follows:

Notwithstanding the foregoing provision, the issuance of each and every Interim Certificate by the Architect is conditional upon the Contractor having sent to the Quantity Surveyor a detailed statement and breakdown of the approximate value of the work executed and of unfixed materials on site, at least ten days before the date of each relevant Certificate.

As provided in the letter of award dated 31 May 1993, the commencement date of the contract was to be the date of issue by the relevant authority of the permit to commence work, and the contract period was 11 months. In the event, it appears that the commencement date was 13 July 1993 and the contract completion date was 12 June 1994. There is indication that the latter was extended to 15 January 1995. I do not know that for sure, but nothing turns on it. It seems not to be disputed that practical completion was certified on 15 January 1995.

Interim certificates were issued by the architect from time to time on progress claims submitted by the plaintiffs. On 7 October 1995, the plaintiffs submitted progress claim No 20, described as the `penultimate` claim, for the (cumulative) sum $6,568,910.27. The architect by right would in the normal course have issued one interim certificate in respect of the claim. However, he did not do so. Instead, he issued one (No 20) on 27 June 1996 for the cumulative sum of $4,621,575.75 and a net sum of $43,690 (after deducting the cumulative amount of $4,577,885.75 previously certified). He issued another document described as an interim certificate (No 21) on 13 January 1997 for a cumulative sum of $4,815,928.50 and a net sum of $194,352.75 (after deducting the $4,621,575.75 previously certified). Then, nearly two years later, on 10 December 1998, he issued interim certificate No 22 for the cumulative sum of $5,136,664.29 and a net sum of $320,735.79 (after deducting the $4,815,928.50 previously certified). This last certification was based on the quantity surveyor`s valuation made on 31 July 1997 contained in his valuation certificate No 22 dated 7 August 1997. The net certified sum of $320,735.79 is what the plaintiffs now claim from the defendants in these summary proceedings.

The reason why the plaintiffs` progress claim has been dealt with in this way has not been fully explained. It appears that the architect has explained to the defendants in a letter dated 7 January 1999 the reasons why he issued the interim certificate in question and why in his view the interim certificate was properly issued. The letter is no doubt in the possession of the defendants, but they have not produced it although they have had an opportunity to do so. Counsel for the defendants, however, tells me that the gist of the letter was that the interim certificate had been issued because of previous under-certification.

Defendants` contentions

The main contention for the defendants is that the architect has not certified interim certificate No 22 in accordance with the provisions of the contract. I hope I adequately summarise their counsel`s arguments as follows. First, counsel refers to cl 31(2), set out above. He raises points about the valuation date. He says that, contrary to this provision of the contract, the interim certificate does not show the valuation date. Note the words in parenthesis in the clause, set out above. The clause also requires the certification to be based on a valuation not more than seven days before the date of the certificate. Although he does not expressly say so, he seems to suggest that since the certificate was issued long after the date of valuation, it has not been issued in accordance with the contract. He also refers to the provision in cl 31(13) to the effect that the contractor has to submit a breakdown of the work `at least ten days before the date of the relevant certificate`. However, it is not absolutely clear what point he makes about this part of that sub-clause. Counsel refers to Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd [1989] SLR 610 [1989] 3 MLJ 216 in which interim certificates were struck down on the ground, inter alia, that it was issued long after the completion of the work and that they did not show the valuation date.

Secondly, counsel makes the general proposition that only one interim certificate can be issued on one progress claim. He says that this is implicit in cl 31(2) and it is also made clear in the added cl 31(13). The contract, counsel submits, does not allow more than one interim certificate to be issued in respect of one progress claim. But this is what the architect has done. There was no progress claim in respect of which the interim certificate in question could be issued.

Thirdly, counsel submits that interim certificates are intended to be issued during the progress of the works, and not after the contract has been completed. He points to the provision of cl 31(1), read with the Appendix, requiring the architect to issue interim certificates on the 15th day of every month. He points out that in this case, the works had been certified as having been completed on 15 January 1995. Progress claim No 20 (on the basis of which interim certificate No 22 was purportedly issued) had been presented as the penultimate claim. The previous certificate (No 21) had in fact been issued for the release of the full retention money, and the sum certified by that certificate ($194,352.75) had been paid to the plaintiffs on 13 January 1997. The plaintiffs had also submitted their final accounts. And now, counsel says, nearly four years after completion, the architect has purported to issue another interim certificate. This, counsel submits, is contrary to the scheme and provisions of the contract. Counsel refers to the Tropicon case, in which interim certificates were held to be invalid on account of having been issued more than two years after completion.

Whether valid as correction certificate

Clause 31(4) allows the architect to issue further interim certificates to correct earlier interim certificates. It reads as follows:

The Architect shall have power to issue a further Interim Certificate at any time, whether before or after completion, correcting any error in an earlier Interim Certificate (but not any Delay, Termination of Delay, Further Delay or any certificate other than an Interim Certificate) or dealing with any matter of which he was not aware, or which should have been dealt with, at the time of an earlier Interim Certificate, or revising any decision or opinion on which that Certificate was based.

Counsel for the plaintiffs relies largely on this clause, and contends that the interim certificate in question may be regarded as a certificate correcting the under-certification of progress claim No 20. Counsel for the defendants, on the other hand, submits that the certificate in question is not in form or in content a correction certificate properly issued under cl 31(4). Firstly, it does not state that it is a certificate issued under that sub-clause. Secondly, it is in exactly the same form as the earlier interim certificates No 20 and 21; it appears to be a continuation of those certificates, and it does not purport to correct anything in either of those certificates. Referring to the guidance notes issued by the SIA on the SIA articles and general conditions, counsel says that a proper correction certificate must

(i) identify the previous certificate it seeks to correct;

(ii) state the reasons for the correction; and

(iii) set out details of what is being corrected.

Instead, the certificate in question is in the form of an interim certificate, no different (except, of course, as to date, number and amounts) from the previous certificates. Counsel for the defendants refers to the Tropicon case, where LP Thean J [as he then was] held as invalid the alleged correction certificates for the reason that they did not contain the matters required to be set out.

A separate point: Interim certificate No 21: retention money

Clause 31(7) provides, so far as relevant, that one half of the retention money shall be certified as due to the contractor on the issue of the completion certificate. Clause 31(8) provides that the...