Engineering Construction Pte Ltd v Attorney General and Another

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeC R Rajah JC
Judgment Date25 June 1997
Neutral Citation[1997] SGHC 172
Citation[1997] SGHC 172
Defendant CounselSoh Tze Bian (Attorney General's Chambers)
Date25 June 1997
Plaintiff CounselPhilip Jeyaretnam and Neoh Sue Lynn (Helen Yeo & Partners)
Docket NumberOriginating Summons No 527 of 1992
Publication Date19 September 2003
SubjectDischarge,Agreement,Court to decide based on facts and circumstances,Notice of termination,Condition of performing contractual works with reasonable diligence,Meaning of 'seven days from date of notice',Merits of case,Contract
Judgment:

CR RAJAH JC

The background

Cur Adv Vult

The plaintiffs are building contractors. By a contract in writing dated 2 March 1990, the Government of the Republic of Singapore (the Government) awarded the plaintiffs a contract for the reconstruction of Jalan Ahmad Ibrahim Culvert and Jurong Tidegate (the contract) for a total contract sum of $12,070,282.08. The commencement date of the contract was 19 March 1990, ie the date the plaintiffs were to and did take possession of the contract site (the site) and the completion date was 21 months later on 18 December 1991. The proceedings herein by the plaintiffs against the Government were instituted against the first defendant, the Attorney General, under the provisions of the Government Proceedings Act (Cap 121) as representing the Government. The second defendants who were in the business of providing professional engineering services were the first defendant`s consultants for the contract and were the Superintending Officer (SO) for the contract. As such they were responsible for administering and supervising the contract.

2.Clause 31 of the contract provided for liquidated and ascertained damages (LAD) to be payable by the plaintiffs to the Government for delay beyond the completion date of 18 December 1991 or such extended completion date as allowed by the SO. The SO had extended the contract period by five days to 23 December 1991 on grounds of inclement weather during the contract period up to 30 November 1991. LAD was payable at $3,000 for each day of delay until completion of the contract.

3.Clauses 1(d) and 34(a) of the contract provided as follows:

1(d) Notwithstanding any provision to the contrary in these conditions contained, it is hereby agreed that the right to take action and/or initiate proceedings on behalf of the Government under cll 31, 32, 34, 35 or 40 hereof is expressly reserved to the Permanent Secretary/Director Environmental Engineering Ministry of the Environment.

34(a) Default - If the contractor shall make default in any of the following respects, namely:

(i) without reasonable cause wholly suspends the works before completion;

(ii) fails to proceed with the works with reasonable diligence;

(iii) refuses or to a substantial degree persistently neglects after notice in writing from the Superintending Officer to remove defective work or improper materials. then, if any such default shall continue for seven days after a notice sent by registered post to the contractor from the Superintending Officer specifying the same, the Superintending Officer may (without prejudice to any other rights herein contained) thereupon by notice sent by registered post determine the employment of the contractor; provided that notice hereunder shall not be given unreasonably or vexatiously and such notice shall be void if Government is at the time of the notice in breach of this contract.

4.Clause 34(a) therefore provided a two-notice system for the Government to terminate the contract on any of the defaults (i), (ii) and (iii) set out therein. The Government would have to send a first notice specifying which of the three defaults it was relying on and if the default continued for seven days after the first notice was sent, the Government could then send a second notice terminating the contract. No notice should be given unreasonably or vexatiously and any notice would be void if the Government was in breach of the contract at the time of the notice.

5.In the course of the contract, the Director, Environmental Engineering Department, Ministry of the Environment (the Director) sent the plaintiffs three first notices dated 20 July 1991, 1 April 1992 and 18 April 1992 respectively under cl 34(a)(ii) on the grounds that the plaintiffs had failed to proceed with the works under the contract (the works) with reasonable diligence. The Director did not proceed to issue any second notices, ie notices of termination in respect of the first two first notices but did so in respect of the third first notice of 18 April 1992. This second notice, which was dated 25 April 1992, was posted under AR Registered cover to the plaintiffs on the same day and was therefore sent one day before the required seven days from the sending of the first notice of 18 April 1992 had elapsed. A copy of the second notice was given by hand to the plaintiffs on 27 April 1992 and the notice sent by AR Registered Post was received by the plaintiffs on 28 April 1992. The plaintiffs treated the Government`s purported termination as an unlawful repudiation of the contract and accepted the repudiation on 30 April 1992 thereby terminating the contract.

6.The plaintiffs commenced the present proceedings on 9 June 1992 seeking, inter alia, the following declarations:

(a) that the Government`s second notice of 25 April 1992 was not issued in accordance with the provisions of cl 34 of the contract and was therefore null and void and the Government`s purported termination of the contract was an unlawful repudiation and breach of contract;

(b) that the Government is liable to the plaintiffs in damages by reason of its said unlawful repudiation and breach of contract;

(c) that the second defendants as SO are not entitled by cl 31 of the contract or otherwise to deduct LAD from amounts due to the plaintiffs under the said contract; and the following order:

(d) that the damages under (b) be assessed by the Registrar;

7.The first defendant admitted that the second notice of 25 April 1992 was sent one day too early and therefore invalid and consented to declarations (a) and (b) and order (d) at a hearing before Judicial Commissioner Lim Teong Qwee on 17 August 1992. Declaration (c) was disputed. After hearing arguments, LimTeong Qwee JC held that LAD should not be deducted from the amounts payable to the plaintiffs under the contract. The learned judicial commissioner found that cl 32 of the contract provided that LAD would only be payable if two conditions were satisfied. The first was that the contract remained uncompleted at the date due for completion, in this case 23 December 1991. This condition was satisfied. The second was that the SO must have certified in writing that in his opinion the works ought reasonably so to have been completed. No such certificate was given. The second condition was not met and therefore no LAD arose. The fact the SO subsequently issued such certificates on 2 September 1992 did not help the Government`s case because although cl 34 required the SO to issue these certificates, by virtue of cl 1(d) the certificates had to be issued by the Permanent Secretary or the Director. Therefore even if ex post facto certificates issued after LAD was imposed and after the contract was terminated could satisfy the second condition, on which issue the court reserved its opinion, the SO was not competent to do so. Under the terms of the contract only the Permanent Secretary or the Director were competent and they had not done so. The court therefore granted the declaration (c) sought by the plaintiffs.

8.Lim Teong Qwee JC`s judgment which was delivered on 17 September 1992 is reported in Engineering Construction Pte Ltd v A-G [1993] 1 SLR 390. His analysis of the role, duties and obligations of the SO under the contract set out in p 398 and reproduced below is relevant to the issues I will be dealing with later in this judgment:

The SO has many functions under the contract. Those under cl 34 have been noted. Throughout he acts as the agent of the government by whom he is appointed with responsibility expressly for the supervision and administration of the contract. The SO is not party to the contract. The parties are the government as employer and EC as contractor. In the exercise of many of his functions the SO has to form an opinion or make a decision which will determine the amount the contractor is entitled to be paid or the quality of the completed works that the employer has contracted for. In all these matters the parties enter into the contract on the understanding that the SO is the agent of the government but nevertheless will act fairly.

9.Following this judgment, the parties agreed to refer their other disputes arising out of the contract for arbitration and agreed to appoint Dr A Vijiaratnam as arbitrator. They also agreed to defer the assessment of damages by the Registrar until after the arbitration. There was no dispute that as at 30 April 1992 when the plaintiffs accepted the Government`s repudiation and terminated the contract, the works were far from being completed. One of the issues referred to the arbitrator was the question of who was responsible for the delay in the works insofar as it was relevant to the assessment of damages ordered. The parties also agreed to be bound by the arbitrator`s award in this regard subject to any right of appeal under s 28 of the Arbitration Act (Cap 10).

10.In their points of claim in the arbitration the plaintiffs set out a list of the reasons as to why the works were delayed by events beyond their control. They claimed that for these reasons they should have been granted as at 30 April 1993 an extension of time until 30 March 1993 to complete the works or, alternatively, that the time for completion of the works was set at large.

11.The arbitrator`s award was made in writing and dated 12 October 1994. His award, after considering the various claims made by the plaintiffs for an extension of time for the completion of the works, refused to allow any such extension. He also stated in p 55 of his award, where the plaintiffs are referred to as `the claimants`, as follows:

Having considered the contentions, arguments and evidences (sic) given by both parties I am satisfied that the progress of the works was delayed by the claimants` default ...

and later in p 56:

I therefore rule that as the delay was caused by the claimants` own default they must take full responsibility for carrying out the rectification works and to bear the
...

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1 cases
  • Aldabe Fermin v Standard Chartered Bank
    • Singapore
    • High Court (Singapore)
    • 22 April 2010
    ...party’s adopting such a route. This was rightly observed in Engineering Construction Pte Ltd v The Attorney General & Anor [1997] 2 SLR(R) 392 at [19]: In making this assumption, however, the Supreme Court held that regard must be given to the facts and relevant circumstances as to avoi......
1 books & journal articles
  • Building and Construction Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2001, December 2001
    • 1 December 2001
    ...of the Public Works Department Conditions of Contract that was analysed at length in Engineering Construction Pte Ltd v Attorney General[1997] 3 SLR 989. The condition provided, inter alia, for termination following (a) failure to proceed with due diligence and expedition after being requir......

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