GA Engineering Pte Ltd v Sun Moon Construction Pte Ltd

• Judge: Vinodh Coomaraswamy J
• Judgment Date: 06 August 2020
• Neutral Citation: [2020] SGHC 167
• Citation: [2020] SGHC 167
• Court: High Court (Singapore)
• Published date: 14 August 2020
• Docket Number: Suit No 521 of 2017
• Plaintiff Counsel: Tan Beng Swee and Leonard Lee (CTLC Law Corporation)
• Defendant Counsel: Xhuanelado Owen (Kalco Law LLC)
• Subject Matter: Building and Construction Law,Building and construction contracts,Lump sum contract,Sub-contracts,Incorporation of main contract terms,Damages,Damages for defects
• Hearing Date: 04 July 2019,01 July 2019,02 July 2019,03 July 2019,09 September 2019

Vinodh Coomaraswamy J: Introduction

This action arises out of a lump sum contract which the plaintiff and the defendant entered into in June 2014 (the “Subcontract”).¹ Under the Subcontract, the defendant as subcontractor undertook to design, supply and install various furnishings for the plaintiff as main contractor (the “Works”). The Works included a glass curtain wall system, aluminium and glazing works and a feature wall for a freehold industrial development (the “Project”). The Subcontract price was $2.19m. ²

The Temporary Occupation Permit (“TOP”) for the Project was issued in June 2016. The architect issued the Certificate of Completion (“CoC”) in November 2016, but with retrospective effect from July 2016.³ From July 2016 to December 2016, the plaintiff handed over completed units to individual subsidiary proprietors. The Building and Construction Authority of Singapore (“BCA”) issued the Certificate of Statutory Completion (“CSC”) in August 2017.⁴

The parties’ claims

The plaintiff’s case is that the defendant has breached the Subcontract by:⁵ installing defective glass in the glass curtain wall; failing to submit as-built drawings and the 10-year warranty; failing to ensure the water-tightness of the glass curtain wall and/or the aluminium and glazing works; failing to install compliant doors at the seventh-storey; and failing to construct the feature wall in compliance with approved shop drawings.

The defendant rejects the plaintiff’s claim and brings a counterclaim for the following:⁶ an order that cll 2.6 and 2.12 of the Subcontract be struck out on the basis of both clauses being unenforceable for uncertainty; rectification of the Subcontract to add the word “certificate” after the words “main contract completion” at line 2 of cl 20.2 of the Subcontract; the following sums: $327,333.75 as the unpaid balance due to the defendant under the Subcontract; $24,717 for costs which the defendant incurred in Adjudication Application No 334 of 2016 arising out of the parties’ dispute (“the adjudication application”); $54,750 being 50% of the 5% retention sum which the plaintiff holds under cl 20.2 of the Subcontract;⁷ and an alternative claim for damages to be assessed in respect of the items at (c) above. The issues to be determined

This action has been bifurcated. Accordingly, I am in this trial concerned only with liability. There will be a separate assessment of damages to fix quantum.

The issues on liability which I have to determine on the plaintiff’s claim are: Whether the alleged defects in the glass curtain wall amount to a breach of the Subcontract (“Glass Defects Issue”)? Whether the defendant breached the Subcontract by failing to submit as-built drawings and the 10-year joint warranty (“Outstanding Submissions Issue”)? Whether the defendant breached the Subcontract by failing to ensure that the aluminium and glazing works were sufficiently watertight (“Water Tightness Issue”)? Whether the defendant breached the Subcontract by failing to ensure sufficient headroom for the doors at the seventh storey, as well as failing to orient the thresholds for the balcony doors at the seventh storey to ensure water tightness (“Doors Issue”)? Whether the defendant breached the Subcontract by installing non-compliant panels in the feature wall and by failing to supply a certificate of conformity for certain aluminium composite panels which the defendant installed in the Feature Wall (“Feature Wall Issues”)?

The issues on liability which I have to determine on the defendant’s counterclaim – insofar as those issues have not otherwise been dealt with in determining the plaintiff’s claim – are: Whether the defendant completed the Works, thereby entitling it to be paid the unpaid balance of the Subcontract price (“Completion Issue”)? Whether the defendant is entitled to have the plaintiff release to the defendant 50% of the 5% retention sum under the Subcontract (“Retention Issue”)? Whether the defendant is entitled to recover from the plaintiff the costs of the adjudication (“Adjudication Costs Issue”)?

Having considered the evidence and the parties’ submissions, I have arrived at the following findings on the defendant’s liability on the plaintiff’s claim: The defendant is liable to the plaintiff on the Glass Defects Issue, though not in respect of all of the breaches alleged by the plaintiff; The defendant is liable to the plaintiff on the Outstanding Submissions issue; The defendant is not liable to the plaintiff on the Water Tightness Issue; On the Doors Issue, the defendant is liable to the plaintiff for failing to ensure sufficient headroom for the doors at the seventh storey, but is not liable to the plaintiff for water ingress arising from the misoriented thresholds for the seventh-storey balcony doors; The defendant is liable to the plaintiff for the Feature Wall Issues.

I have also arrived at the following findings on the plaintiff’s liability on the defendant’s counterclaim: The defendant did complete the Works and is entitled to be paid the unpaid balance of the lump sum which has fallen contractually due under the Subcontract; The defendant is entitled to be paid 50% of the retention sum of 5% of the price of the Subcontract, amounting to $54,750; The defendant is not entitled to recover the costs it incurred in the adjudication application as damages in this action for the plaintiff’s breach of contract.

The Glass Defects Issue

The Glass Defects Issue concerns white spots, specks and bubbles which appeared on the glass panels (collectively, the “Glass Defects”) which the defendant installed as part of the glass curtain wall for the Project.⁸ It is common ground that the Glass Defects were not present when the glass was installed and began to appear only after TOP was issued in June 2016.⁹

The parties carried out a series of joint inspections on-site from July 2016 to October 2016. They were unable to resolve the issue. ¹⁰

The plaintiff initially employed the term “Delamination Defects” to describe the Glass Defects in its statement of claim. However, the plaintiff confirmed at a pre-trial conference that “delamination” was used as a shorthand term to refer to the Glass Defects and not in its technical sense to mean a defect such as the Polyvinyl Butyral (“PVB”) layer between the sheets of laminated glass becoming detached.¹¹ I shall proceed to determine the Glass Defects Issue on this basis.

The parties’ positions

The plaintiff argues that the appearance of the Glass Defects constitutes breaches of various terms of the Subcontract. The plaintiff accepts that it is the white spots and specks which form the bulk of the Glass Defects.¹²

The plaintiff’s case is that the Glass Defects are a failure to comply with cll 2.2.1(a) and 2.2.8(b) of the Architectural Specifications (“AS”) in the main contract as well as with cll 3.3.7(b) and 3.3.7(c) of the National Productivity and Quality Specifications (“NPQS”) in the main contract (collectively, “Glass Specifications”).¹³ These Glass Specifications are incorporated into the Subcontract by cll 8.1 and/or 2.2 of the Subcontract.¹⁴ The Glass Defects are also a failure to meet the specification contained in Appendix A of the Subcontract (“Appendix A Specification”).

The defendant submits that it has not failed to meet any of the Glass Specifications and the Appendix A Specification. First, the Glass Specifications and Appendix A of the Subcontract are of no contractual force between the plaintiff and the defendant because they were never validly incorporated into the Subcontract. Second, even if the Glass Specifications have been incorporated into the Subcontract by express reference: (a) the Glass Specifications are concerned only with the surfaces of the glass panels rather than the coating applied to them; and (b) the white spots have not caused any obstruction of vision and there is no suggestion that the emissivity function of the glass coatings is impaired.¹⁵ Third, the plaintiff refused to allow the defendant an opportunity to rectify and replace the glass panels.¹⁶

Is the plaintiff entitled to recover substantial damages?

I begin by considering a preliminary objection raised by the defendant. The defendant argues that the plaintiff is not entitled to claim substantial damages against the defendant because the Glass Defects caused no actual loss to the plaintiff. With the exception of a few replacement works that the plaintiff allegedly carried out in units #03-07, #05-05, #05-06 and #06-03 of the Project,¹⁷ the plaintiff has suffered no loss as a result of the Glass Defects. Further, neither the owner nor the individual subsidiary proprietors of any of the units in the Project have commenced any legal proceedings against the plaintiff or have sought to recover any damages from the plaintiff for the Glass Defects.¹⁸ The plaintiff thus has not suffered any loss. It should therefore not be entitled to recover damages from the defendant for the Glass Defects.

The general rule is, of course, that a plaintiff is entitled to recover damages only for loss which a breach of contract causes the plaintiff itself to suffer. The plaintiff, however, relies on the exceptions to that rule recognised by the Singapore Court of Appeal in Chia Kok Leong and another v Prosperland Pte Ltd [2005] 2 SLR(R) 484 (“Prosperland”) and Family Food Court (a firm) v Seah Boon Lock and another (trading as Boon Lock Duck and Noodle House) [2008] 4 SLR(R) 272 (“Family Food Court”).

In Prosperland, the Court of Appeal considered whether a developer was entitled to recover substantial damages from the architect it engaged to design and supervise the construction of a condominium. By the time of the action, the developer had divested ownership of the condominium to the MCST and the subsidiary proprietors. The developer had not spent any of its own money to...