Diamond Glass Enterprise Pte Ltd v Zhong Kai Construction Co Pte Ltd and another appeal

• Jurisdiction: Singapore
• Judge: Woo Bih Li JAD
• Judgment Date: 31 May 2023
• Neutral Citation: [2023] SGHC(A) 20
• Court: High Court Appellate Division (Singapore)
• Docket Number: Civil Appeal Nos 125 and 129 of 2021
• Hearing Date: 06 January 2023
• Citation: [2023] SGHC(A) 20
• Year: 2023
• Plaintiff Counsel: Chan Kah Keen Melvin and Yong Wei Jie Timothy (TSMP Law Corporation)
• Defendant Counsel: Kris Chew Yee Fong and Isabel Su Hongling (Zenith Law Corporation)
• Subject Matter: Building and Construction Law,Damages,Liquidated damages,Scope of works,Variations,Costs
• Published date: 08 June 2023

Quentin Loh SJ (delivering the supplementary judgment of the court): Introduction

This is a supplementary judgment for the cross-appeals in AD/CA 125/2021 (“CA 125”) and AD/CA 129/2021 (“CA 129”). They arise out of the decision of the High Court judge (the “Trial Judge”) in HC/S 1282/2019 (“S 1282”), published as Zhong Kai Construction Co Pte Ltd v Diamond Glass Enterprise Pte Ltd [2021] SGHC 277 (the “Trial Judgment”). The appeals were first heard on 21 July 2022 and judgment was delivered on 23 December 2022 (see Diamond Glass Enterprise Pte Ltd v Zhong Kai Construction Co Pte Ltd and another appeal [2022] SGHC(A) 44 (the “Appeal Judgment”)).

The background facts have been comprehensively set out in the Trial Judgment at [1]–[3] and [6]–[27]. We will therefore only highlight the pertinent facts.

Zhong Kai Construction Co Pte Ltd (“ZK”) engaged Diamond Glass Enterprise Pte Ltd (“DG”) as a subcontractor for the supply of materials, equipment and tools to carry out and complete the aluminium cladding of an external facade, blast/ballistic doors and windows, aluminium doors, and window works by a Letter of Award dated 7 November 2016 (the “Subcontract”). These works were for a project for the construction of equipment buildings and facilities at the Singapore Changi Airport.

In S 1282, ZK claimed against DG for liquidated damages arising from DG’s delays. ZK also claimed the sum of $340,233.10 against DG for replacement works arising from DG’s abandonment of the worksite around 6 June 2018 and for rectification works done. ZK further sought to overturn the adjudicated amount that was awarded to DG in Adjudication Determination No 339 of 2019 (“AA 339”) under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) issued on 15 November 2019 (the “AD”). DG counterclaimed for, inter alia, payments due under four variation orders (“VOs”) being DV0006 (“VO 6”), DV0008 (“VO 8”), DV00018 (“VO 18”) and DV00019 (“VO 19”).

The Trial Judge allowed ZK’s claims for liquidated damages and the costs of replacement and rectification works in part. The itemised claims were set out in the Trial Judgment at [220] and the Appeal Judgment at [93]. As for DG’s counterclaims, the Judge allowed DG’s counterclaim for payment due under VO 18 in the amount of $5,070 and disallowed DG’s counterclaims for payments in respect of VO 6, VO 8 and VO 19 (see Trial Judgment at [232] and [241] and Appeal Judgment at [6]).

We allowed DG’s appeal in CA 125 in part and ZK’s appeal in CA 129 in part and made, inter alia, the following orders (see Appeal Judgment at [7]): DG’s appeal against the award of $5,906.40 to ZK in respect of ZK’s claim for replacement and rectification works, was allowed, (see item 1(e), Appeal Judgment at [93]), and this award was accordingly set aside; ZK’s appeal against the dismissal of its claim for $27,735.47 in respect of its claim for replacement and rectification works (see item 4(a), Appeal Judgment at [93]), was allowed and ZK was awarded this sum; DG’s appeal against the dismissal of its counterclaim for payments in respect of variation order VO 6 (ie, the sum of $32,602.50) was allowed, and DG was awarded this sum; DG’s appeal against the dismissal of its counterclaim for payments in respect of variation order VO 8 (ie, the sum of $13,185) was allowed, and DG was awarded this sum; and DG’s appeal against the dismissal of its counterclaim for the retention sum for the Subcontract (the “Retention Sum”) in the amount of $27,902.75 was allowed, and DG was awarded this sum.

In this Supplementary Judgment, we address: two issues that were raised by DG’s solicitors, TSMP Law Corporation (“TSMP”) by way of letter after the Appeal Judgment had been issued; and the costs of the appeals.

Issues raised following the release of the Appeal Judgment

Following the release of the Appeal Judgment, the parties sent in various letters in relation to the Appeal Judgment. We set out the background and content of the various letters here.

Background TSMP’s 29 December 2022 Letter

On 29 December 2022, DG’s counsel, TSMP, sent a letter to court querying two aspects of the Appeal Judgment (“TSMP’s 29 December 2022 Letter”): First, DG highlights that in CA 125, DG had submitted that the Trial Judge erred in awarding ZK the relevant amounts of its claims for replacement works without accounting for and/or deducting the sums that ZK would have to pay DG, if DG had completed the works under the Subcontract. While the Appeal Judgment addressed the deduction of the Retention Sum of $27,902.75, this court did not address the remaining sums which ZK would have had to pay DG under the Subcontract, which amounted to $62,514.30 (the “Remaining Sums Issue”). Secondly, DG highlights an apparent calculation error in the Appeal Judgment (at [279]–[280]) and requested the court’s correction of the calculation error (the “Calculation Error Issue”).

In relation to the Remaining Sums Issue, DG states that it had quantified the remaining sums which ZK would have had to pay DG if the Subcontract was fully performed, amounting to the sum of $90,417.05 in their Appellant’s Case (“AC”) in CA 125, Respondent’s Case in CA 129 and Combined Skeletal Arguments for CA 125 and CA 129. This comprises the following items that ZK would have had to pay DG under the Subcontract: Remaining works for Aluminium Cladding without insulation: $129,143.00 - $116,228.70 = $12,914.30. Remaining works for Aluminium Glass Door (blast/ballistic resistant): $16,000 - $11,200 = $4,800. Remaining works for the installation of cabin glass: $51,200 - $6,400 = $44,800. Retention Sum of $27,902.75.

DG further highlights that these remaining sums accorded with claims which, as per the AD, DG was not fully entitled to. If ZK is not required to account for and/or deduct the sums that it would have to pay DG for the remaining 14 cabin glass panels under the Subcontract, ZK will reap a windfall. DG says this is because ZK will effectively have received the full benefit of the Subcontract without having to incur the full Subcontract price for the cost of supplying and installing the remaining 14 cabin glass panels under the Subcontract.

DG points out that this court had addressed the deduction of the Retention Sum (Appeal Judgment at [255]–[261]). However, the Appeal Judgment did not address the remaining works at [10(a)]–[10(c)] above, which amount to $62,514.30. DG thus requests clarification from this court on whether the remaining works in the sum of $62,514.30 are to be accounted for and/or deducted from the costs of the replacement and rectification works awarded to ZK.

Separately, DG highlights an apparent calculation error in the Appeal Judgment (at [279]–[280]). The Appeal Judgment (at [279]) states:

DG was entitled to only $146,647.33 ($197,522.83 less $50,875.5) out of the claimed amount of $264,789.08 (Judgment at [250]).

The figure of $50,875.50 was derived from the total sum for VO 6, VO 8 and VO 18, which the Trial Judge had set aside. However, the accurate total sum for VO 6, VO 8 and VO 18 is $50,857.50, and not $50,875.50. As such, DG suggests that paragraphs [279]–[280] of the Appeal Judgment should be corrected as follows (proposed corrections made in underline): 279. … DG was entitled to only $146,665.33 ($197,522.83 less $50,857.50) out of the claimed amount of $264,789.08 (Judgment at [250]). 280. As we have allowed DG’s claims for VO 6 and VO 8, DG is now entitled to $192,452.83 (the sum of $146,665.33, $32,602.50 and $13,185.00) out of the claimed amount of $264,789.08. …

DG also further highlights that the Judge had allowed VO 18 (which was not challenged by ZK) and therefore, DG is properly entitled to $197,552.83 (and not $192,452.83) out of the claimed amount of $264,789.08, which amounts to 74.6% of the claims made in AA 339. Accordingly, DG submits that [280] of the Appeal Judgment should be corrected accordingly (proposed corrections made in underlined): 280. As we have allowed DG’s claims for VO 6 and VO 8, DG is now entitled to $197,552.83 (the sum of $146,665.33, $32,602.50 and $13,185.00 and $5,070.00) out of the claimed amount of $264,789.08. This amounts to approximately 74.6% of the claims it made in the adjudication and DG had succeeded in the majority of claims it made. …

Zenith Law’s 11 January 2023 Letter

On 11 January 2023, ZK’s counsel, Zenith Law Corporation (“Zenith Law”) sent a letter to court responding to TSMP’s 29 December 2022 Letter (“Zenith Law’s 11 January 2023 Letter”). ZK’s position is that: In relation to the Remaining Sums Issue, ZK disagrees with DG’s argument that the remaining works in the sum of $62,514.30 should have been deducted from the costs of replacement and rectification works awarded to ZK. ZK points out that it was not part of the scope of DG’s appeal that any replacement and rectification costs, if eventually awarded to ZK following the outcome of the appeal, were to be reduced by the value of the remaining works not completed or abandoned. Furthermore, DG’s own pleaded case was confined to the balance sum based on the main works and variation works carried out by DG. In fact, DG did not even plead in the alternative (in its defence and/or counterclaim) that, should DG be found to have wrongfully terminated the subcontract and was in repudiatory breach of the subcontract, and be liable for any replacement and rectification costs, such costs awarded to ZK are to take into account the value of the remaining works under the subcontract not completed and abandoned by DG. On the Calculation Error Issue, ZK had no objections to DG’s proposed corrections of the figures.

Court’s directions on 1 March 2023

On 1 March 2023, the court directed that TSMP was to respond in writing to the following queries: whether the Remaining Sums Issue was pleaded below, and if so, that TSMP identify the...