Diamond Glass Enterprise Pte Ltd v Zhong Kai Construction Company Pte Ltd
| Jurisdiction | Singapore |
| Judge | Woo Bih Li JAD,Quentin Loh JAD,Hoo Sheau Peng J |
| Judgment Date | 23 December 2022 |
| Docket Number | Civil Appeals Nos 125 and 129 of 2021 |
| Court | High Court Appellate Division (Singapore) |
Woo Bih Li JAD, Quentin Loh JAD and Hoo Sheau Peng J
Civil Appeals Nos 125 and 129 of 2021
Appellate Division of the High Court
Building and Construction Law — Damages — Liquidated damages — Liquidated damages arising from subcontractor's delays — Which contractual completion date should apply — Whether contractor should be awarded liquidated damages for period following termination of subcontract — Whether contractor's non-compliance with condition precedent for extension of time affected contractor's entitlement to liquidated damages
Building and Construction Law — Scope of works — Variations — Requirement for agreement to variations — Whether there was waiver of requirement of agreement for variation works — Whether subcontractor entitled to claim costs of variation works
Building and Construction Law — Statutes and regulations — Costs of adjudication — Whether subcontractor entitled to claim legal costs associated with adjudication determination under s 30(4) Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) or as damages — Section 30(4) Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed)
Building and Construction Law — Termination — Repudiation of contract — Subcontract terminated by subcontractor — Whether subcontractor's termination of subcontract was repudiatory breach — Whether contractor should be awarded liquidated damages for period following termination of subcontract
Held, allowing CA 125 in part and CA 129 in part:
[Editorial note: The paragraphs enclosed within parentheses in the holdings below are not reported; they can be found in the unreported version of the judgment ([2022] SGHC(A) 44) on LawNet. The “Case(s) referred to” and “Legislation referred to” below list the cases and legislation referred to in the headnote and/or the paragraphs reported below.]
ZK's claim for liquidated damages
(1) ZK was entitled to LD for Phase 1 works as cl 6 of the Subcontract applied. The wording of cl 6 showed that, objectively, the parties had intended for it to govern the ascertainment of when delays started and the calculation of LD. This was further reinforced by the fact that the dates therein coincided with period applicable to calculating LD in the contract between ZK and its employer: at [42], [44] and [45].
(2) Since cl 6 applied, LD started to run from 29 December 2017 for Phase 2A works and from 16 March 2018 for Phase 1 works. ZK was therefore entitled to LD for Phase 1 works. Since actual completion was achieved before 29 December 2017 under cl 6, it followed that ZK was not entitled to LD for Phase 2A works: at [46] and [48].
(3) Although ZK withheld payment of $5,127.66 from DG, this small sum did not, of its own, show a persistent course of payment delays or a protracted delay in the payment of a substantial amount on ZK's part that would justify DG's termination of the Subcontract: at [53] and [54].
(4) DG's wrongful termination of the Subcontract was a repudiatory breach on DG's part, which ZK could accept for termination of the Subcontract to occur. Accordingly, the Subcontract was terminated only on 30 June 2018, when ZK accepted DG's repudiatory breach by informing DG that it would need to engage third parties to complete the remaining works: at [55].
(5) ZK was not entitled to claim LD after termination of the Subcontract. From the authorities and on first principles, this had to be the case. The LD period should be reduced by a period of 92 days, being the period from 1 July 2018 to 30 September 2018 (both dates inclusive). This amounted to a reduction of $165,600: at [56], [57], [62] and [62].
(6) DG submitted that there were three other periods of delay which were attributable to ZK and the LD period should be reduced by these three purported delay periods. These purported delay periods were not specifically pleaded. The court need not consider such a new case on appeal: at [69] and [82].
(7) From the weight of authority and on first principles, a contractor had to fulfil the condition precedent for an extension of time before it could avail itself of an extension of time clause; the contractor's non-compliance with such a condition precedent did not prevent the employer from claiming LD. Since DG had admitted that it did not make any extension of time application while the Subcontract subsisted, it did not fulfil the condition precedent for an extension of time as required by cl 4 of the Subcontract. DG's reasons for their being delayed were therefore irrelevant for the purposes of whether the LD period should be reduced: at [91].
ZK's claim for replacement and rectification works
DG's appeal against the items awarded to ZK
(8) ZK appealed against the Judge's dismissal of its claims for items 1(b), 1(c), 2(a), 2(b), 3(a), 3(b) and 4(a). DG made three submissions: (a) first, DG was entitled to terminate the Subcontract and therefore ZK was not entitled to any claims for the items allowed by the Judge; (b) second, even if DG had wrongfully terminated the Subcontract, ZK was not entitled to the items which the Judge had allowed save for item 4(c) and in respect of items 5(a)–5(c) ZK was only entitled to claim a sum of $85,804.84; and (c) third, ZK was not entitled to impose the 15% administrative charge for items 1(d), 1(e) and 5(a). The court was of the view that DG's first submission need not be considered because DG had wrongfully terminated the Subcontract. In respect of DG's second submission, save for items 1(d) and 1(e), DG had not been able to show any ground for appellate intervention for the other items allowed by the Judge: (at [94] to [97]).
(9) As for DG's third submission, it was immaterial that such works were conducted after the termination of the Subcontract. Pursuant to items 16.9 and 16.10 of Annex B of the Subcontract, ZK would have been able to claim for the administrative charges if it had ordered materials or done works on DG's behalf while the Subcontract was subsisting. The measure of damages was to put ZK in the position it would have been in had the Subcontract been performed. ZK should be allowed to claim for the administrative charges. ZK was entitled to claim the administrative charges, which was fairly standard practice in the construction industry: (at [98], [105] and [106]).
The parties' cross-appeals against the items
(10) ZK had not shown that the Judge's finding in respect of item 1(b) was plainly wrong or against the evidence. The documents adduced in support of item 1(b) contained an unexplained reference to a different project name. The Judge's decision to disallow ZK's claim for item 1(c) was upheld for the same reason: (at [112] to [114] and [116]).
(11) There was corroborating evidence for item 1(d), but it was unclear that such evidence was adduced for item 1(e). ZK adduced an invoice with the description of “Hired Third party to supply labour to install cabin glass” and “YJ International” for the sum of $22,540. This invoice was dated 27 September 2018, which was the same date for the invoice pertaining to Item 1(d). Hence, DG's appeal against item 1(e) was allowed, but the decision to award ZK's claim for item 1(d) was upheld: (at [124]).
(12) ZK did not address the evidential deficiencies in its case for item 2(a) because they did not address: (a) whether the work done for a project with a different name was related to DG's works under the Subcontract; and (b) the discrepancy between the amount in the invoice to DG and the amount paid to the replacement subcontractor. There was nothing to indicate that the Judge's finding on item 2(a) was plainly wrong or against the weight of the evidence: (at [129] and [130]).
(13) Like item 1(b), the purchase order for item 2(b) referred to a project of a different name and the significance of this was not explained by ZK. In the absence of such explanation, it appeared more likely that the works were unrelated to DG's works under the Subcontract. The Judge's decision to disallow ZK's claim for item 2(b) was upheld: (at [136]).
(14) ZK had not shown that the Judge's finding on item 3(a) was plainly wrong or against the weight of the evidence. It was unclear that the works described in the documentary evidence related to the works described under item 3(a): (at [144] and [145]).
(15) ZK had not addressed the evidential deficiencies in its claim for item 3(b). ZK had not shown, on a balance of probabilities, that the aluminium capping works in the quotation from the replacement subcontractor related to DG's works. The Judge's decision to disallow ZK's claim for item 3(b) was upheld: (at [151]).
(16) Considering the evidence in totality, the works done by the replacement subcontractor were related to DG's works under the Subcontract. ZK's appeal in respect of item 4(a) was allowed: (at [164]).
(17) In respect of items 5(a)–5(c), there was no evidence to show that DG would have claimed the works in question as variation works. There was also no evidence to show that delivery by sea freight were part of its Subcontract obligations. Under the Subcontract, DG would have been obliged to incur the costs for delivery by airfreight in any case, which was a more expeditious means. The Judge's decision to award items 5(a)–5(c) to ZK was therefore upheld: (at [180] to [182], [185] and [186]).
ZK's claim to set aside the Adjudicated Amount
(18) ZK had not shown, through its reliance on certain points of the evidence of one of its witnesses, that the Judge's findings were plainly wrong or against the weight of the evidence. The Judge's decision to dismiss ZK's claim for overturning the main works allowed by the adjudicator in the AD was upheld: (at [204], [218], [220] and [221]).
DG's counterclaim for the VOs
(19) From the correspondence between DG and ZK as well as the parties'...
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