GIB Automation Pte Ltd v Deluge Fire Protection (SEA) Pte Ltd

• Judge: Sundaresh Menon JC
• Judgment Date: 02 April 2007
• Neutral Citation: [2007] SGHC 48
• Citation: [2007] SGHC 48
• Subject Matter: Limits to applicable principle,Breach,Whether truth of contents of document accepted as authentic still needing to be proved,Building and Construction Law,Construction of back-to-back provision,Admissibility of evidence,Applicable principles,Duty to mitigate losses,Whether actions of party in breach such that party may reasonably be taken to have renounced contract,Repudiatory breach,Whether party entitled to terminate contract on basis of own view of terms of contract,Sub-contracts,Mitigation of damage,Remedies,Evidence,Contract,Whether sub-contract entered into on back-to-back basis with main contract incorporating terms of main contract in its entirety,Hearsay,Incorporation of main contract terms
• Published date: 04 April 2007
• Court: High Court (Singapore)
• Plaintiff Counsel: N Kanagavijayan, S Rajan (Kana & Co)
• Defendant Counsel: Tan Teng Muan, Wong Khai Leng, Alia Mattar (Mallal & Namazie)

2 April 2007 Judgment reserved.

Sundaresh Menon JC

1 The parties in this case had a commercial relationship going back some years. At some stage, the relationship soured and this has given rise to the claims that are the subject of this suit as well as those in Suit No 1 of 2006 which involved related though not identical parties and which were also heard by me and is dealt with in my judgment in Jaya Sarana Engineering Pte Ltd v GIB Automation Pte Ltd [2007] SGHC 49.

Preliminary points

2 The present action was commenced by the plaintiff, GIB Automation Pte Ltd, a company in the business of, amongst other things; supplying, testing and commissioning a particular brand of fire detection and alarm systems known as Edwards System Technology (“EST”). The action related to three sets of transactions between the parties. Two of these are easily disposed of as preliminary matters.

a) Changi Prison Cluster “A” Project

3 The defendant, Deluge Fire Protection (SEA) Pte Ltd is also in the business of supplying fire protection systems and had been appointed as the main contractor to provide a fire protection system for the Changi Prison Cluster “A” Project. The defendant in turn awarded the plaintiff a sub-contract for the supply, testing and commissioning, and maintenance of the EST fire alarm system for the said project (“the Changi Prison contract”). This was stated to be for a lump sum of $860,000. The letter of award was dated 10 December 2001. It was not disputed that the defendant had paid a sum of $651,811.89 to the plaintiff. The plaintiff claimed payment of the balance sum of $220,878.11 (“the balance sum”).

4 The plaintiff’s claim was founded upon its assertion that the defendant’s representative, Mr Donald Cheo had informed the plaintiff’s managing director, Mr Benjamin Gan that the Changi Prison contract would be awarded as a fixed lump sum contract for a sum of $860,000. The plaintiff contended that the agreement between the parties was that the sum of $860,000 would be payable regardless of whether there were any additions or omissions to the plaintiff’s scope of work.

5 It may be noted that the plaintiff’s case was not pleaded in this way. The pleading on this issue was sparse to say the least. In particular, nothing was stated in the statement of claim as to any such agreement or understanding. This was a point taken by Mr Tan Teng Muan, who appeared for the defendant. It is well-established that a court may not make findings on the basis of facts that are not pleaded: see Multi-Pak Singapore Pte Ltd (In Receivership) v Intraco Ltd and others [1992] 2 SLR 793 at [22] to [24].

6 Furthermore, the material portion of the letter of award states as follows:

Your scope of work shall include but not limited to the design, supply, testing and commissioning, warranty and maintenance (12 monthly servicing with effect from issuance of Practical Completion Certificate by the Architect – together with Deluge maintenance team) of the above addressable fire alarm system. …

Any variation works, omission or addition, shall be back to back basis. Such variation claim shall be base on your unit price break down as per your quotation to us in appendix A. [emphasis added]

7 There is no dispute that the letter of award is to be construed as a whole. There is also no dispute that the plaintiff was a sub-contractor. The words “back to back basis” though not the most felicitous, are adequate in my view to convey the sense that any variations would be valued and taken into account if and to the extent a like adjustment was made in the defendant’s own contract. More importantly, the express terms of the latter paragraph quoted above make it clear that additions and omissions were liable to be valued and that this would be on the basis of the unit prices supplied by the plaintiff.

8 To the extent Mr Gan testified that the sum in question would be payable regardless of whether there was any addition or omission, this was inconsistent with the express terms of the letter of award and no evidence was lead to suggest that the letter of award had been consensually varied or in what circumstances this had transpired.

9 Further, Mr Gan’s evidence under cross-examination was that the way the contract was administered, the defendant would inform the plaintiff as and when specific items were required and when this transpired, the equipment in question would be delivered and invoiced. Indeed, the plaintiff accepted that it had been paid for all of the items that it had delivered.

10 More importantly, according to Mr Cheo, there had been omissions of material work amounting to $262,880 in respect of certain items of equipment. Mr Gan was not in a position to assist on this because he was not the person directly dealing with this issue. According to the plaintiff, they only became aware of the omissions after reading the affidavit of Mr Cheo but even then, they did not seek leave to adduce the evidence of any individual who did deal with this matter and who had the requisite knowledge.

11 In my judgment, having regard to the pleadings, the nature of the case advanced by the plaintiff, the express terms of the letter of award and the evidence in relation to the omissions, the plaintiff’s claim in this respect cannot be allowed. I therefore dismiss this part of the claim.

b) Miscellaneous claims

12 The statement of claim included a claim for a sum of $251,100.75. In common with the plaintiff’s claim under the Changi Prison contract, the statement of claim stated simply that the defendant was indebted to the plaintiff for the sum in question, under other contracts, projects and works for the supply of equipment, testing and commissioning as requested by the defendant. The documents relating to this claim were included in the agreed bundle, which was agreed as to authenticity but not as to truth of contents.

13 The documents related to claims made in connection with a number of projects and consisted of invoices, letters, purchase orders and similar documents. Further, Mr Gan in his affidavit of evidence-in-chief exhibited the documents with a brief description in two paragraphs of the sort of documents that were being put forward.

14 Mr Tan submitted that the plaintiff had adduced no direct evidence in respect of the claims. Furthermore, the plaintiff was seeking to make out its claim essentially on the basis of the documents. It was true that the documents in question in this case had been included in the agreed bundle. However, Mr Tan submitted that the defendant had not dispensed with the need to prove the contents of these documents. He relied in this regard on the recent decision of the Court of Appeal in Jet Holding Ltd and others v Cooper Cameron (Singapore) Pte Ltd and Another and other Appeals [2006] 3 SLR 769 (“Jet Holding”) where Andrew Phang Boon Leong JA said as follows at [75]-[78]:

We should point out at this juncture that even if the plaintiffs succeed on the various arguments as to authenticity (which we have held they do not), in order to prevail, they must also prevail on this particular issue. Indeed, our findings on the issue of authenticity render it, strictly speaking, unnecessary to consider the objections based on hearsay. However, in deference to the vigorous arguments rendered by counsel and, in particular, in deference to the efforts made by counsel for the plaintiffs, we turn now to consider the arguments centring on hearsay. However, we should point out at the outset that we do not find the arguments for the plaintiffs on this particular issue persuasive and we find that they therefore fail on this particular issue as well.

It is trite law that even where there is an agreed bundle of documents, the truth of the contents of the Documents nevertheless remains at issue and is subject to, inter alia, objections centring on the doctrine of hearsay.

However, it is also true that the rule against hearsay has come under increasing criticism and consequent calls for reform in many other jurisdictions … As we have already emphasised, however, any reform in this area, based as it must be on many policy factors, must necessarily be effected by the Singapore legislature, if at all. In other words, the plaintiffs in the present case must also be able to demonstrate that they can surmount any legal obstacles stemming from the rule against hearsay. [emphasis added]

As we have already mentioned, we are of the view that the plaintiffs fail on this ground as well. They did not bring themselves within any of the potentially applicable exceptions to the rule against hearsay. [emphasis in original]

15 This passage makes it clear that even if a document is accepted as authentic, the truth of its contents may not be proved by the document itself because of the hearsay rule. There may well be limits to the principle. If an invoice is accepted as authentic and if it is shown that it has been sent to and received by the addressee, it may well be the case that the invoice alone may not be relied upon to prove that the sum stated there is due and owing by the addressee. However, if it be shown for instance that the invoice had been sent and received and that part-payment had been made without demur by the addressee then it may well be that the court may infer that the debt has been sufficiently proved. This is obviously not put forward as a proposition of law but simply as an illustration that the principle may have limits.

16 None of this arises in this case however, because of the approach in fact taken by the plaintiff. I have already made reference to the brevity of the pleadings as well as the direct evidence on this issue. In addition, it may be noted that Mr Kanagavijayan, who appeared for the plaintiff, accepted that the effect of Jet Holding was that the truth of the contents of a document had to be proved. However, he then set about “proving” the truth of the contents of these documents in his closing submissions, essentially...