Comfort Resources Pte Ltd v Alliance Concrete Singapore Pte Ltd and another suit

• Jurisdiction: Singapore
• Judgment Date: 05 August 2008
• Date: 05 August 2008
• Docket Number: Suits Nos 601 and 604 of 2006
• Court: High Court (Singapore)

Comfort Resources Pte Ltd

Plaintiff

and

Alliance Concrete Singapore Pte Ltd and another suit

Defendant

[2008] SGHC 122

Lai Siu Chiu J

Suits Nos 601 and 604 of 2006

High Court

Contract–Breach–Sale of goods–Plaintiff contracting to sell sand to defendant buyer–Buyer failing to make timely payment and failing to order minimum quantities of sand–Buyer claiming seller short delivered sand–Whether buyer or seller in repudiatory breach of contract–What was test for repudiation–Section 31 (2) Sale of Goods Act (Cap 393, 1999 Rev Ed)

The defendant buyer contracted to purchase sand from the plaintiff seller. By the terms of the contract, the buyer was supposed to make payment within 60 days of delivery. The buyer was also contractually bound to order a specified minimum amount of sand from the seller every month.

The seller alleged that the buyer repeatedly failed to order the requisite contractual quantities every month and also failed to make prompt payment for the sand delivered. The seller pressed for payment and informed the buyer that it would not be making any further deliveries of sand until it received the outstanding payment from the buyer. When the buyer still failed to pay, the seller informed the buyer that it treated its conduct as amounting to a repudiation of contract.

The buyer denied the allegations of under-ordering and late payment. Instead, the buyer claimed that the seller had repudiated the contract by making short deliveries.

The seller commenced an action to claim for the price of sand delivered to the buyer and for loss of profits due to the buyer's failure to order the requisite contractual quantities. The buyer commenced another action to claim for damages for the losses it incurred as a result of the alleged failure by the seller to supply the contracted quantities of sand to the buyer.

The seller applied for summary judgement in respect of its claim for sand delivered. The buyer similarly applied for interlocutory judgement with damages to be assessed. The assistant registrar granted partial judgement to the seller for sand delivered but gave the buyer unconditional leave to defend the remaining sum. Both parties appealed these decisions. On appeal, the judge reduced the judgement sum for the seller and granted the buyer unconditional leave to defend the remaining sum claimed by the seller provided it paid this sum into court. Both suits have subsequently been consolidated.

The issue for determination by the court was which party was in repudiatory breach of the contract.

Held, allowing the seller's claim:

(1) On a balance of probabilities, the buyer had failed to show that the seller had short delivered its orders: at [87].

(2) To constitute repudiation under s 31 (2) of the Sale of Goods Act (Cap 393, 1999 Rev Ed), the breach by the buyer must be fundamental or go to the very root of the contract or it must have deprived the party of substantially the whole benefit it would have received under the contract: at [101].

(3) The seller had put the buyer on notice that timely payment of its invoices was made the essence of the contract notwithstanding that the contract was silent on the point: at [111].

(4) The buyer's continued refusal to pay for the sand amounted to a repudiation of contract which the seller accepted by a letter to the buyer: at [112].

(5) To determine whether the buyer's conduct substantially deprived the seller of the whole benefit of the contract such that it would constitute a repudiation of the contract under s 31 (2) of the Sale of Goods Act, the court had to consider two factors: (a) the ratio quantitatively which the breach bore to the contract as a whole and (b) the degree of probability or improbability that such a breach would have been repeated: at [114].

(6) On the facts of the case, it was clear that Alliance would have persisted in its under-orders for the balance of the contract period: at [115].

(7) The buyer was in repudiation of the contract by its continuous and persistent under-orders of sand from the seller: at [118].

Brani Readymixed Pte Ltd v Yee Hong Pte Ltd [1994] 3 SLR (R) 1004; [1995] 1 SLR 205 (refd)

Browne v Dunn [1893] 6 R 67 (folld)

Decro-Wall International SA v Practitioners in Marketing Ltd [1971] 1 WLR 361; [1971] 2 All ER 216 (distd)

Kool Team Marketing v Pacific Sunwear Pte Ltd [1999] 2 SLR (R) 331; [2000] 2 SLR 243 (distd)

Maple Flock Company, Limited v Universal Furniture Products (Wembley), Limited [1934] 1 KB 148 (folld)

Rules of Court (Cap 322, R 5, 2006Rev Ed)O 22A

Sale of Goods Act (Cap 393, 1999Rev Ed)s 31 (2)

John Seow and Lim Ming Yi (Drew & Napier LLC) for the plaintiff in Suit 601/2006 and defendant in Suit 604/2006

Winston Kwek and Eileen Lam (Rajah & Tann LLP) for the defendant in Suit 601/2006 and plaintiff in Suit 604/2006.

Judgment reserved.

Lai Siu Chiu J

1 These actions concern a dispute over a contract for the supply of sand between two Singapore companies. Comfort Resources Pte Ltd (“Comfort”) is a sand supplier and has its principal place of business at 51, Shipyard Road, Singapore. It is a family business of the Tans (headed by Tan Seng) who have another company called Sin Tung Resources Pte Ltd (“Sin Tung”) in the shipping business. Alliance Concrete Singapore Pte Ltd (“Alliance”) which is a joint venture between three parties, manufactures and supplies ready-mixed concrete and has its place of business at 72, Sungei Kadut Street 1, Singapore. Alliance was a major customer of Comfort at the material time. Comfort obtains its sand from its quarry at Dabo-Singkep (“the quarry”) in the Riau Islands, Indonesia.

2 In Suit No 601 of 2006 (“the first suit”) Comfort sued Alliance for $401,448.79 for sand sold and delivered to Alliance in 2006 and for loss of profits totalling $567,690.49 for sand Alliance under-ordered, pursuant to a contract evidenced in a letter from Alliance to Comfort dated 27 January 2006 and which Comfort countersigned as acceptance on 6 February 2006 (“the contract”).

3 In Suit No 604 of 2006 (“the second suit”), Alliance sued Comfort for the sum of $1,162,984.87 alternatively for damages, for losses incurred by Alliance as a result of Comfort's failure to supply contracted quantities of sand to Alliance. Alliance alleged that Comfort had, by its letter dated 14 September 2006 stating it would not make further deliveries of sand, repudiated the contract, which repudiation Alliance purportedly accepted by its solicitors' letter dated 15 September 2006.

4 On 15 January 2007, Comfort applied for summary judgment in respect of its claim for the price of sand delivered to Alliance in May, June and July 2006 (“Comfort's application”). Alliance similarly applied on 19 January 2007 for (interlocutory) judgment with damages to be assessed (“Alliance's application”) for Comfort's alleged repudiation of the contract. Both applications came on for hearing on the same day before the assistant registrar (“AR”). Comfort's application was partly successful as the AR granted the company final judgment in the sum of $287,430.27 for sand delivered to Alliance in May and June 2006, but she granted Alliance unconditional leave to defend $114,018.52 as that was the sum Alliance claimed for alleged short delivery by Comfort. The AR granted Comfort unconditional leave to defend on Alliance's application.

5 Both Comfort and Alliance appealed against the AR's decisions. At the hearing of both appeals, the judge reduced the judgment sum of Comfort from $287,430.27 to $237,752.12 to take into account Alliance's defence of set-off. Alliance was also granted leave to defend the balance $163,696.67 ($401,448.79 - $237,752.12) claimed by Comfort provided it paid the amount into court. The judge dismissed Alliance's appeal. Alliance has since paid Comfort the judgment sum as well as the sum of $163,696.67 into court.

6 Thereafter both suits were consolidated. The trial before me lasted seven days and it was only to determine liability for which 18 witnesses testified. In this judgment, I shall deal with the first suit as its outcome will decide the fate of the second suit.

The facts

7 Under the contract, Alliance appointed Comfort as its subcontractor to supply sand to its seven plants,viz, (a) Sungei Kadut, (b) Kaki Bukit, (c) Tampines, (d) Queenstown, (e) Toa Payoh Rise, (f) Keppel and (g) Sentosa (“the seven plants”) at prices that ranged from $11 to $14 per metric ton.

8 The material clauses of the contract are the following:

Clause 2 - Quantity

[Comfort] shall supply an aggregate and deliver to [the seven plants] an aggregate total quantity of 40,000 +/- 25% metric ton [sic] of sand every month

Clause 3 - Contract period

1 February 2006 to 31 January 2007 (“the contract period”).

Clause 8 - Terms of payment

60 days from end of each month supply.

Clause 10 - Liquidated damages

In the event of failure by [Comfort] to deliver the quantity of aggregate as stated in Clause 2 when conveyed by [Alliance] either orally or in writing within the stipulated time of delivery, [Alliance] shall be entitled to purchase the shortfall from the open market and any price difference plus administration fee shall be charged to the account of [Comfort].

Clause 11 - Force Majeure

11.1 - [Comfort] shall not be liable for any failure to sell, deliver the said aggregate or any loss, damage, injury or delay due to any cause beyond its control including (without prejudice to the generality of the foregoing expression) act of Government on the prohibition in the said operation and export of aggregate by the Authorities on [Comfort]. strikes, fire, floods, riots, loss at sea, or any act of God …

9 It emerged from the evidence adduced in court that besides ordering sand from Comfort, Alliance also ordered sand during (part of) the contract period from another supplier Lim Chye Heng Sand & Granite Pte Ltd (“LCH') under a similar contract...