GTMS Construction Pte Ltd v Ser Kim Koi

• Jurisdiction: Singapore
• Judge: Tan Siong Thye J
• Judgment Date: 04 November 2014
• Neutral Citation: [2014] SGHC 232
• Year: 2014
• Date: 04 November 2014
• Published date: 22 June 2016
• Hearing Date: 04 September 2014
• Plaintiff Counsel: Thulasidas s/o Rengasamy Suppramaniam (Ling Das & Partners)
• Citation: [2014] SGHC 232
• Defendant Counsel: Yeo Boon Tat and Danna Dolly Er (MPillay),Chia Ho Choon and Wong Xunai (Khattarwong LLP)
• Court: High Court (Singapore)
• Docket Number: Suit No 50 of 2014 (Registrar's Appeal No 199 of 2014)

Tan Siong Thye J:Introduction

The defendant, Ser Kim Koi, employed the plaintiff, GTMS Construction Pte Ltd, as the contractor for a building project. In the course of the project, the defendant refused to pay the plaintiff under two interim payments, notwithstanding that these sums were certificated and approved for payment by the defendant’s architect.

The defendant alleged that the certificates issued were tainted by “fraud, improper pressure or interference” as stated in cl 31(13) of the terms under the Singapore Institute of Architects Conditions of Building Contract (Lump Sum Contract, 9th Ed, 2011 Reprint) (“the SIA conditions”). If they were, the certificates could be set aside and the plaintiff would not be entitled to payment. The plaintiff disagreed and sued for payment.

At the hearing below, the plaintiff applied for summary judgment under O 14 r 1 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the ROC”). His application was granted by the AR. Dissatisfied with the AR’s decision, the defendant appealed. I heard the appeal and dismissed it. He has appealed against my decision and I now give my reasons.

The factsThe Project

The defendant is the owner of Lot 98388L Mukim 04 at Leedon Park (Bukit Timah Planning Area).¹ He engaged the plaintiff to build three two-storey detached houses on that plot of land (“the Project”).²

Chan Sau Yan Associates (“the Architect”) was engaged by the defendant as the architects of the Project via a Memorandum of Agreement dated 16 June 2009.³ The Architect is the second third party to these proceedings. The first third party to this action is the proprietor of the Architect, Chan Sau Yan.

The plaintiff was engaged as the Project’s building contractor pursuant to an open tender.⁴ Its contract with the defendant contained the SIA conditions.⁵ The dispute concerns the interpretation of certain terms found in the SIA conditions, particularly, cl 31(13).

The dispute

On or about 3 September 2013 and 6 November 2013, the Architect issued Interim Certificates (“IC”) No 25 and 26 (collectively known as “the Certificates”) for the payment of $390,951.96 and $189,250.21 respectively.⁶ Pursuant to the Certificates, the Plaintiff issued Invoice No 25 and 26 for $418,318.60 (inclusive of Goods and Services Tax (“GST”) of $27,366.64) and $202,497.72 (inclusive of GST of $13,247.51) respectively.⁷ In total, the claimed sum was $620,816.30.

The defendant refused to pay the claimed sums and missed the 30-day period within which he was required to pay the plaintiff.⁸ He felt that the Architect and the plaintiff had been acting together so that the Certificates were issued when they should not have been.

The defendant alleged that the Certificates had been tainted by the plaintiff’s fraud, improper pressure or interference as it had caused the Architect to issue the Certificates even though there were work defects, the Completion Certificate (“CC”) was prematurely issued and unwarranted time extensions were granted, inter alia.⁹ Since the defendant refused to pay the plaintiff, the latter filed a writ of summons and statement of claim against him on 13 January 2014 claiming $620,816.30. After the defendant filed his defence, the plaintiff filed for summary judgment against the defendant on 28 February 2014.¹⁰

The plaintiff took the view that it was unjustified for the defendant to withhold payment that was certified by the Architect. It argued that cl 31 of the SIA Conditions entitled it to full payment of the claimed sum. The relevant portions of cl 31 reads as follows:31.(1) The Contractor shall be entitled to interim payments for the Works carried out or supplied under this Contract by way of:…(b)periodic valuation of the Works or part thereof carried out by the Contractor.…31.(13)No certificate of the architect under this contract shall be final and binding in any dispute between the Employer and the Contractor, whether before an arbitrator or in the courts, save only that, in the absence of fraud or improper pressure or interference by either party, full effect by way of Summary Judgment or Interim Award or otherwise shall, in the absence of express provision, be given to all decisions and certificates of the architect … whether by payment or otherwise …

[emphasis added]

The plaintiff’s view was that the issues raised by the defendant did not show fraud, improper pressure, or interference. As the third party to the action, the Architect’s evidence (on behalf of both himself and the first third party) was also that the Architect had not been fraudulent or subject to any improper pressure or interference when he issued the Certificates.

The AR’s decision

The plaintiff’s summary judgment application was heard by the AR on 23 May 2014.¹¹ The application was granted by the AR, who ordered that:the defendant pay the plaintiff a total of $620,816.32;the defendant pay the plaintiff interest on the plaintiff’s total claim at 5.33% per annum from the date of judgment to the date of final payment; andthe defendant pay the plaintiff $10,000 for the costs of the application plus reasonable disbursements.

The AR held that cl 31(13) made it clear that the court should not be concerned with “shoddy, poor or unsatisfactory workmanship”.¹² Rather, the issue was whether the Certificates had been tainted by dishonesty or impropriety so that it was inequitable for them to stand.

The AR’s view was that the evidence did not raise any question regarding the Architect’s legitimate intentions in issuing the Certificates. Therefore he granted summary judgment to the plaintiff and the defendant appealed.

The issues

The defendant’s appeal raised three issues arising from the Architect’s issuance of the Certificates despite the presence of work defects, an alleged premature issuance of the CC and unwarranted timeline extensions:whether the Certificates were tainted by fraud;whether the Certificates were tainted by improper pressure; andwhether the Certificates were tainted by interference.I answered all the questions in the negative.

O 14 r 1 of the ROC reads as follows:

1. Application by plaintiff for summary judgment (O. 14, r. 1)

Where a statement of claim has been served on a defendant and that defendant has served a defence to the statement of claim, the plaintiff may, on the ground that that defendant has no defence to a claim included in the writ, or to a particular part of such a claim, or has no defence to such a claim or part except as to the amount of any damages claimed, apply to the Court for judgment against that defendant.

For a summary judgment to be granted, the plaintiff needs to show that there is plainly no defence to the claim: Ganesan Carlose & Partners v American Home Assurance Co[1994] 1 SLR(R) 223 and Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd (in liquidation) [[1990] 1 WLR 153 at 158. When the ICs were issued, the plaintiff had the benefit of “temporary finality” in that he would be entitled to payment on the basis of the ICs: H P Construction &amp Engineering Pte Ltd v Chin Ivan[2014] SGHC 137 (“H P Construction”) at [17]. The question was whether the defendant could show that his defence was an arguable one.The defendant’s appeal

The defendant alleged that the plaintiffs were not entitled to payment as the Architect who issued interim payment certificates had been influenced by the plaintiff’s fraud, improper pressure or interference.¹³ That being the case, temporary finality should not be a shield against excesses or abuses of power by the certifier (H P Construction & Engineering Pte Ltd v Chin Ivan). Thus summary judgment should not be granted: Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd[1989] 1 SLR(R) 591 (“Tropicon (HC)”) at [15]. The defendant argued that he had a fair case or reasonable grounds for his defence. Thus he ought to have been given leave to defend.¹⁴

The Certificates were tainted by fraud

The defendant submitted that the Certificates were tainted by fraud. The Court of Appeal in Panatron Pte Ltd and another v Lee Chew Lee and another[2001] 2 SLR(R) 435 (“Panatron”) at [13] held that the definition of fraud is a deliberate intention to deceive, an absence of honest belief or recklessness such as amounts to lack of honest belief. (see also Hudson’s Building and Engineering Contracts (Nicholas Denys, Mark Raeside and Robert Clay gen eds) (Sweet & Maxwell, 12th Ed, 2010) at para 4–046 (“Hudson’s”)).¹⁵ Fraud can be inferred via circumstantial evidence: Wu Yang Construction Group Ltd v Zhejiang Jinyi Group Co Ltd and others[2006] 4 SLR(R) 451 (“Wu Yang”).¹⁶ The circumstances giving rise to this submission are found at [20]–[33] below.

The Certificates were tainted by improper interference or pressure

The defendant also alleged that the Certificates were tainted by improper interference or pressure. In his view, a certifier must act fairly, independently and professionally, without the influence of any party in the certification process: Hiap Hong & Co Pte Ltd v Hong Huat Development Co (Pte) Ltd[2001] 1 SLR(R) 458.¹⁷ The defendant basically had to cast doubt on the certifier’s independence to defect this application for a summary judgement (Hudson’s at para 4-053).

The circumstances giving rise to the defendant’s allegations

The defendant argued that the Architect had shown a “consistent pattern of reckless conduct” in his certification duties during the course of the Project.¹⁸ The following acts of the Architect could not have been done with honest belief, or without the influence of improper pressure or interference.

The CC was issued prematurely

First, the defendant submitted that cl 24(4) of the SIA conditions provided that the CC should only be issued when the Project appeared to be complete and complied with the contract in all respects.¹⁹ Conditions that had to...