Fairview Developments Pte Ltd v Ong&Ong Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 20 January 2014
• Date: 20 January 2014
• Docket Number: Civil Appeals Nos 51 and 52 of 2013
• Court: Court of Appeal (Singapore)

Fairview Developments Pte Ltd

Plaintiff

and

Ong&Ong Pte Ltd and another appeal

Defendant

[2014] SGCA 5

Chao Hick Tin JA

,

Andrew Phang Boon Leong JA

and

V K Rajah JA

Civil Appeals Nos 51 and 52 of 2013

Court of Appeal

Building and Construction Law—Dispute resolution—Limitation of actions—Whether architect's claim for abortive works was time-barred—Whether there had been acknowledgment of debt—Whether acknowledgment made after expiry of limitation period could restart limitation clock—Section 26 (2) Limitation Act (Cap 163, 1996 Rev Ed)

Building and Construction Law—Termination—Developer engaging architect for development of land—Architect succeeded by another entity—Developer later terminating other entity's services—Whether termination was wrongful

Fairview Developments Pte Ltd (‘Fairview’) was the developer of a plot of land (‘Lot 248’). It engaged Ong & Ong Architects (‘OOA’) to be the architect for the development of Lot 248 in the 1970 s. OOA was eventually succeeded by Ong & Ong Pte Ltd (‘OOPL’) in 2001. In 2009, Fairview terminated OOPL's services. Proceedings arose thereafter. Fairview filed Civil Appeal No 51 of 2013 (‘CA 51’) against the decision by the judge (‘the Judge’) to allow OOPL's claim for fees for abortive works on a quantum meruit basis. OOPL filed Civil Appeal No 52 of 2013 (‘CA 52’) against the Judge's decision to dismiss its claim for Fairview's termination of its services.

Held, dismissing CA 51 and allowing CA 52:

(1) On an objective (and contextual) view, Fairview had, in the discussions referred to in its letter dated 7 June 1983, offered to retain OOA as the architect for the entire development of Lot 248. This offer was accepted by OOA in (sufficient) consideration of a reduced sum in full settlement of some earlier abortive works. The mere fact that the representatives of OOA and Fairview dealt with each other on a somewhat informal basis, had goodwill, and knew each other personally, did not detract from the inexorable fact that the parties were essentially dealing with each other on a commercial basis with an undoubted intention to create legal relations. An agreement to retain OOA as the architect for the development of the entire Lot 248 (‘the 1983 Agreement’) therefore existed: at [42] .

(2) The term ‘novation’ referred to the process by which the contract between the original contracting parties was discharged through mutual consent and substituted with a new contract between the new parties. A novation was therefore to be distinguished from an assignment. In a novation, both the benefits and the burdens of the original contract were transferred to the new contracting parties, essentially because the original contract was extinguished and a new contract was formed. The new contract could, of course, be either between the same parties to the original contract or between different parties: at [46] .

(3) In an assignment, however, only the benefits of the contract were transferred to the assignee. The assignor remained bound to perform the obligations under the contract. The assignee did not become a party to the contract, which continued to subsist as between the contracting parties. Accordingly, in an assignment, the consent of the other contracting party was not necessary for a contracting party to assign the benefits under the contract to a third party: at [46] .

(4) The determination of whether there had in fact been a novation turned on the ordinary principles of contractual interpretation: at [47] .

(5) Having regard to OOA's letter dated 3 April 2001 (informing Fairview about the succession by OOPL) in its entirety against the backdrop of its context, this letter could not reasonably be construed in any other way other than that OOPL was to take over OOA entirely - lock stock and barrel. OOA's intention for such a wholesale succession was so clear and certain that the absence of a specific reference to the 1983 Agreement was not significant: at [48] .

(6) There was sufficient consideration flowing from OOPL to Fairview so as to support the novation of the 1983 Agreement. The Judge erred in venturing into the issues of the adequacy of the consideration: at [51] .

(7) The 1983 Agreement itself had already expressly provided that OOA/OOPL could not be terminated as the architect for the development of Lot 248 without just cause. That being the case, Fairview clearly had no right under the terms of the 1983 Agreement to terminate OOPL's services in the manner that it did. The conclusion that inexorably followed was that Fairview's termination was wrongful: at [57] .

(8) OOA's entitlement to fees in respect of its share of later abortive works had been novated to OOPL: at [65] .

(9) Fairview and OOA had agreed in 1983 that OOA (and by extension, OOPL) would be paid on a percentage and not quantum meruit basis for all works including those that were aborted, but excluding works that were aborted by reason of regulatory disapproval.The exact percentage was subsequently varied in 1993 and further varied in 1996 back to the original terms in the 7 June 1983 letter (ie, 4.5% for all works pertaining to Lot 248): at [82] .

(10) Once Fairview wrongfully terminated OOPL's services on 1 October 2009, r 6 (1) of the Architects (Professional Conduct and Ethics) Rules (Cap 12, R 2, 2003 Rev Ed) (‘r 6 (1) ’) was triggered, thereby causing the cause of action founded upon contract to arise. OOPL's cause of action therefore arose only on 1 October 2009. Accordingly, the time-bar defence was not applicable: at [90] to [91] .

[Observation: Even if Fairview was able to rely on the time-bar defence, there had been a valid acknowledgment of debt by Fairview which resulted in the fresh accrual of action pursuant to s 26 (2) of the Limitation Act (Cap 163, 1996 Rev Ed) (‘the Limitation Act’): at [92] .

Under s 26 (2) of our Limitation Act, an acknowledgment made after the expiry of the limitation period could restart the limitation clock: at [125] .]

Benjamin Scarf v Alfred George Jardine (1882) 7 App Cas 345 (refd)

Chuan & Company Pte Ltd v Ong Soon Huat [2003] 2 SLR (R) 205; [2003] 2 SLR 205 (folld)

Chung Meng Soon v Lee Kai Investment (Pte) Ltd [1993] SGHC 26 (refd)

Chwee Kin Keong v Digilandmall.com Pte Ltd [2004] 2 SLR (R) 594; [2004] 2 SLR 594, HC (refd)

Chwee Kin Keong v Digilandmall.com Pte Ltd [2005] 1 SLR (R) 502; [2005] 1 SLR 502, CA (refd)

Dwr Cymru (Welsh Water) v Carmarthenshire County Council [2004] EWHC 2991 (TCC) (refd)

Gay Choon Ing v Loh Sze Ti Terence Peter [2009] 2 SLR (R) 332; [2009] 2 SLR 332 (refd)

Gee&Co (Woolwich) Ltd, Re [1975] Ch 52 (refd)

Kim Eng Securities Pte Ltd v Tan Suan Khee [2007] 3 SLR (R) 195; [2007] 3 SLR 195 (folld)

PT Bakrie Investindo v Global Distressed Alpha Fund 1 Ltd Partnership [2013] 4 SLR 1116 (refd)

Rainforest Trading Ltd v State Bank of India Singapore [2012] 2 SLR 713 (refd)

Sunny Metal&Engineering Pte Ltd v Ng Khim Ming Eric [2007] 1 SLR (R) 853; [2007] 1 SLR 853, HC (refd)

Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric [2007] 3 SLR (R) 782; [2007] 3 SLR 782, CA (refd)

Architects (Professional Conduct and Ethics) Rules (Cap 12, R 2, 2003 Rev Ed) r 6 (1)

Limitation Act (Cap 163, 1996 Rev Ed) s 26 (2) (consd)

Limitation (Amendment) Act 1992 (Act 22 of 1992)

Limitation Act 1939 (c 21) (UK) s 23 (4)

Limitation Act 1980 (c 58) (UK) s 29 (7)

Hri Kumar Nair SC, Shivani Retnam and Harsharan Kaur Bhullar (Drew&Napier LLC) and Yap Neng Boo Jimmy (Jimmy Yap&Co) for the appellant in CA 51/2013 and the respondent in CA 52/2013

Mohan Reviendran Pillay, Joanna Seetoh Wai Lin and Ang Wee Jian (MPillay) for the respondent in CA 51/2013 and the appellant in CA 52/2013.

Andrew Phang Boon Leong JA

(delivering the grounds of decision of thecourt):

Introduction

1 The present appeals (Civil Appeal No 51 of 2013 (‘CA 51’) and Civil Appeal No 52 of 2013 (‘CA 52’)) were brought, respectively, by the defendant (Fairview Developments Pte Ltd (‘Fairview’)) and the plaintiff (Ong&Ong Pte Ltd (‘OOPL’)) in respect of the decision by the judge (‘the Judge’) in Suit No 369 of 2011. The proceedings below arose out of a dispute between OOPL and Fairview in relation to architectural services provided by OOPL and its predecessor, Ong&Ong Architects (‘OOA’). The Judge delivered a detailed oral judgment (‘the Judgment’), in which he: (a) dismissed OOPL's claim for Fairview's termination of its services; (b) allowed OOPL's claim for fees for abortive works on a quantum meruit basis; and (c) dismissed Fairview's counterclaim against OOPL.

2 At the hearing before us, we dismissed Fairview's appeal in CA 51 and allowed OOPL's cross-appeal in CA 52. We now give the detailed grounds for our decisions.

3 Indeed, the present appeals raised a number of significant legal issues, a few of which are broadly as follows.

4 First, when the text and the context of the express terms of a contract clearly express the intention of the parties, the court ought to give effect to that intention. This is not only logical and commonsensical but also just and fair. Indeed, as we shall see, this was a central motif in the present appeals before this court. The facts in the present appeals were in fact the converse of that referred to recently by this court in PT Bakrie Investindo v Global Distressed Alpha Fund 1 Ltd Partnership[2013] 4 SLR 1116 (‘Bakrie’) (especially at [2] - [4]), as there were several instances where the text and the context of the contract were, contrary to what counsel suggested, irrefutably clear.

5 Another central motif in the present appeals was the doctrine of novation. As we shall see, although the general legal principles are generally clear and uncontroversial, the difficulty lies - as is the case with most (if not all) legal doctrines - in the sphere of the application of the law to the relevant facts.

6 A couple of issues pertaining to the law of...