Chuang Uming (Pte) Ltd v Setron Ltd and Another Appeal

• Judge: Chao Hick Tin JA
• Judgment Date: 01 November 1999
• Neutral Citation: [1999] SGCA 77
• Citation: [1999] SGCA 77
• Defendant Counsel: Andre F Maniam and Kirindeep Singh (Wong Partnership)
• Published date: 19 September 2003
• Plaintiff Counsel: Salem Ibrahim and Leong Why Kong (Salem Ibrahim & Partners),Engelin Teh SC, David Kong and Thomas Sim (Engelin Teh & Partners)
• Date: 01 November 1999
• Docket Number: Civil Appeals Nos 45 and 46 of 1999
• Court: Court of Appeal (Singapore)
• Subject Matter: Mitigation,Whether architects liable for supervision of clerk-of-works,Duties and liabilities,Whether building owner should have mitigated losses,ss 12(1), 15, 16(1) Civil Law Act (Cap 43),Whether liability and judgment should be separate or joint,Apportionment of liability between contractors and architects,Building owner employing clerk-of-works,Damages,Architects, engineers and surveyors,Damages for defects,Building and Construction Law

(delivering the judgment of the court): These two appeals before us pertain to the defective tiling works carried out on the fa+ade of a seven-storey light industrial building known as `Haw Par Technocentre` (`the building`) located at the junction of Commonwealth Avenue and Tanglin Halt Close. As both the appeals raise substantially the same issues, we propose to deal with them together in this judgment.

Facts

Setron Limited (`the owners`), a subsidiary of Haw Par International Ltd, are the owners of the building. The architects engaged by the owners to design the building were Lee Sian Teck Chartered Architects (`the architects`), and the terms of their engagement were governed by the Singapore Institute of Architects` Conditions of Appointment and Scale of Professional Charges 1985. The main contractors engaged in the construction of the building were Chuang Uming (Pte) Ltd (`the contractors`). The building contract between the owners and the contractors was made on or about 8 February 1991 and was governed by the Articles and Conditions of Building Contract (3rd Ed) published by the Singapore Institute of Architects. The contract period was 50 weeks from 14 November 1990, and the agreed date of completion was 30 October 1991. However, completion of the construction was delayed, and the works were practically completed only on 20 March 1992 and the certificate of practical completion was issued by the architects on 28 April 1992.

The fa+ade of the building was tiled with ceramic tiles, and the tiling works were carried out by a specialist tiling sub-contractor, Siwahin Decoration Contractors, engaged by the contractors and covered a period of 21 weeks from September 1991 to February 1992.

A clerk-of-works, Mr Tan Deng Wee, was engaged to supervise the construction of the building including the tiling works on the fa+ade. His emoluments were paid by the owners.

In mid-May 1992, approximately two months after the tiling of the fa+ade had been completed, some tiles began to `pop-out` or `debond` and fall onto the ground. At first, the debonding was sporadic, but the situation worsened progressively and became a cause for great concern. For a period of nearly a year, from June 1992 to May 1993, various meetings were held between the parties to discuss how to deal with the problem. Experts were consulted and reports were obtained, but nothing concrete was done to remove the potential hazards. In the words of the trial judge, `the parties ... were in a state of flux and having consulted their respective legal counsel and obtained expert reports as to what could have caused the debonding, started pointing fingers at each other, the [contractors] blaming the [architects] for the poor design and the [architects] maintaining that it was poor workmanship by the [contractors] that had brought about the fiasco.`

During this period of time, numerous requests were made by the owners and the architects to the contractors to remedy the defective fa+ade, but the contractors refused to comply. They maintained that the defects were caused by the architects` poor or defective design and by the fact that the tiles used were selected by the owners and were unsuitable. They took the position that they would only carry out the necessary repairs, if such repairs would be considered as additional works under the building contract for which they would be paid extra. The owners refused to concede this, and in mid-1993, the owners engaged a firm of contractors, Dokota Private Ltd, to remove the debonded tiles and put up safety nets around the building as a precautionary measure to prevent any accident or injury to persons from the falling tiles.

By December 1993, negotiations between the parties had irreparably broken down, and the owners engaged another firm of contractors, Brilliant General Building Construction (Pte) Ltd, to strip the entire fa+ade of all the tiles and coat it with a spray finish called `Eleganstone`. This was completed some time in July 1994. All in all, approximately 7748 out of 90,490 tiles or 8.6% of the tiles had debonded before all the tiles were removed.

The interim certificates

While the dispute over the falling tiles was ongoing, the architects, during the period between February and May 1993, issued several interim certificates in favour of the contractors relating to the release of retention monies held by the owners. As these certificates were pertinent to the contractors` claim, it is necessary to set out briefly the facts in relation to them.

On 19 February 1993, the architects issued an Interim Certificate No C18 certifying that $580,933.10 was due from the owners to the contractors, being the release of the first amount of the retention monies and other interim payments. However, the architects later took the view that the amount certified was incorrect as it failed to take into account the defects in the tiling of the external wall. At this point in time, they took the view that 5% of the tiling was defective, and on 31March 1993 issued a revised certificate, Interim Certificate No C19, in which they deducted $49,500, which meant to represent 5% of the defective works, from the amount certified in the Interim Certificate No C18, resulting in the amount of $531,433.10. No payment was made by the owners pursuant to this certificate. Subsequently, the architects considered that the tiling of the whole fa+ade was defective, and on 5 May 1993 issued a further certificate, Interim Certificate No C20, which made a further deduction of $750,000 from the amount certified in the Interim Certificate No C19, as a result of which an amount of $218,566.90 was then due from the contractors to the owners under this certificate. The figure of $750,000 was the architects` estimate of the cost of rectifying the defects in the tiling of the fa+ade. Finally, on 13 May 1993, the architects issued yet another certificate, Interim Certificate No C21 on the basis that the $750,000 in the Certificate No C20 had been erroneously deducted and they certified that the contractors owed the sum of $40,259.40 to the owners. This final sum was arrived at by deducting the amount of retention moneys of $580,933.10 due to the contractors from an amount of $621,192.50 which represented the cost of the tiling of the fa+ade.

The proceedings

In the meanwhile, on 24 April 1993, the contractors commenced proceedings in Suit. 883/93 against the owners claiming the sum of $580,933.10 as certified under the Interim Certificate No C18, or in the alternative, the sum of $531,433,10 as certified under the revised Interim Certificate No C19. The owners in their defence averred that on account of the defective fa+ade they were not obliged to make the payments certified as due, and counterclaimed against the contractors damages for breach of contract and/or for negligence. The contractors by their reply and defence to the counterclaim sought to attribute the liability for the defective works to the architects. Arising from this defence, the owners joined the architects as the third party for the purpose of seeking damages and an indemnity from the architects.

The action was tried before Rubin J. At the conclusion of the trial, the learned judge dismissed the contractors` claim and allowed the owners` claim for damages against the contractors and the architects, holding that the contractors and the architects were jointly liable for the defective tiling of the fa+ade and awarded damages in the sum of $1,979,526.18 after deducting the sum of $580,933.10 due to the contractors as retention moneys. Liability for the sum awarded was then apportioned as between the contractors and the architects inter se in the proportions of 20% to the contractors and 80% to the architects, the parties having recourse to each other for contribution to the extent of their respective liabilities. In addition, since the owners had retained the sum of $580,933.10 which, but for the defects, would have been due solely to the contractors and which was deducted in the award of damages, the contractors were entitled to claim by way of contribution from the architects 80% of this sum. The contractors and architects were also ordered to pay the owners interest on the sum due and their costs, in both cases in proportion to their respective liabilities.

The appeals

The contractors and the architects separately appeal against the decision of the learned judge. In the appeal filed by the contractors, CA 45/99, only the owners were joined as the respondents. However, the architects obtained an order declaring that they were a party affected by the appeal and directing that all the cause papers be served on them and that they be at liberty to file a case, as if they were a respondent. In that appeal, the contractors challenge the decision below on several grounds. First, they argue that the proportion of liability attributed to them, ie 20%, was too high. Secondly, they argue that whatever be the correct proportion, liability in this case should be separate and not joint. Thirdly, they argue that the learned judge erred in the assessment of damages. Fourthly, they raise a procedural point relating to a claim for interest on the `second retention sum`, which was paid to them by the owners after the action had commenced.

The architects in their appeal, CA 46/99, in which the contractors and the owners were joined as first respondents and second respondents respectively, raised the following grounds. First and foremost, they argue that the defects were caused mainly by the bad workmanship on the part of the contractors and accordingly the proportion of liability attributed to them (the architects) should be minimal and in any event the apportionment of 80% of the liability to them was much too high. Secondly, like the contractors, they argue that their liability to the owners should be separate and not jointly with the contractors. Thirdly, they argue...