Henderick Engineering (sued as a firm) v Kansai Paint Singapore Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 06 July 1992
• Neutral Citation: [1992] SGHC 184
• Court: High Court (Singapore)
• Published date: 19 September 2012
• Year: 1992
• Plaintiff Counsel: Tan Cheow Hin
• Defendant Counsel: Tan Hong Seng
• Citation: [1992] SGHC 184

Judgment:

Coram: Chao Hick Tin J

JUDGMENT

The plaintiffs are plumbing, sewerage and sanitary contractors. The defendants are paint manufacturers and suppliers as well as painting contractors. In this action the plaintiffs' main claim against the defendants is for a sum of $94,940.02, being the balance due under a sub-contract between them for the supply of labour, transport and material to carry out plumbing and sanitary works at the Changi Hospital Singapore (hereinafter referred to as "the Changi project" or "the project"). The defendants were the main contractors of the Public Works Department (PWD) in relation to the project.

The plaintiffs allege that the sub-contract was entered into with the defendants through the latter's agent, one Tay Ah Thiam (Ah Thiam). In the alternative, the plaintiffs claim that the defendants had held the plaintiffs out as their sub contractors or had by their conduct ratified the sub-contract with the plaintiffs. The plaintiffs also claim a sum of $3,500 being the agreed fee and disbursements incurred by the plaintiffs on the defendants' behalf in the applications to the Public Utilities Board for the requisite licences and permits to carry out the contract works and for inspection by PUB's inspectors and the necessary attendance thereto. In the further alternative, the plaintiffs claim for the said two sums of $94,940.02 and $3,500 on the basis of quantum meruit.

The defendants deny that they had engaged the plaintiffs to undertake the plumbing and sanitary works. They say that on or about 2 July 1985 they were awarded a contract by PWD to undertake general repairs and restoration of the Changi Hospital. They aver that prior to tendering for the project they had entered into a contract with Chin Leong Construction Pte Ltd (CLC) appointing the latter as the defendant's sub-contractor for the project. Under that sub-contract, CLC was to undertake all the works of the project. The defendants deny that they had engaged the services of the plaintiffs. They also deny that Ah Thiam was their agent; nor did they have any contractual relationship with Ah Thiam. Instead, they allege that Ah Thiam was a general contractor engaged by CLC as the sub-sub-contractor of the project. The services of the plaintiffs were in turn procured by Ah Thiam. The defendants aver that they had at no time held out the plaintiffs as their sub-contractors.

It is not disputed that the plaintiffs did complete the plumbing and sanitary works in relation to the Changi project. The question is really with whom did the plaintiffs enter into a contractual relationship. Was it with the defendants? The plaintiffs can only succeed if they can show that there was such a contractual relationship with the defendants. This, in turn, would also depend, inter alia, on the authority , actual or ostensible, of Ah Thiam. I will now turn to examine the evidence.

Plaintiffs' case The evidence tendered for the plaintiffs is as follows. Ah Thiam was a painter. Since 1976 he had bought paint from one Lim Ching Seng (LCS) of Chin Leong Paint and Chemical Pte Ltd (CLPC). According to Ah Thiam, LCS told him that LCS was the boss of the defendants and the defendants intended to bid for some works. LCS asked Ah Thiam if he was interested and, if so, to submit a quotation. Subsequently, Ah Thiam and LCS went to the defendants' office and met some Japanese there. As considerable plumbing works were involved in the project, Ah Thiam brought in the plaintiffs, of which one Quak Lik Chian (Quak) was and is the sole proprietor. Ah Thiam brought a copy of the quotation form for Quak to fill in in respect of that portion concerning plumbing and sanitary works. The other parts of the quotation, involving other works, were filled in by other tradesmen. When all parts of the quotation form were filled up, Ah Thiam brought it back to the defendants.

Ah Thiam told Quak that for recommending Quak to do the plumbing and sanitary works, he would expect a commission. In pursuance of that understanding, Ah Thiam and Quak signed a written note in Chinese (PB2). As the contents of this note are of some importance, I shall set out the English translation (PB3) in full:-

I, Tay Ah Thiam, i/c no 0115295/E, recommend Hendrick Engineering Co, as the contractor for the plumbing work at Changi Hospital. In the course of work all the plumbing installation and inspection work shall come under the direct supervision of Mr Quak Lik Chian of Henderick Engineering Co., Kansai Paint and PWD.

I wish to state that my term of recommendation for Hendrick Engineering Co. to undertake the plumbing work is that 8% of the total tender price for the plumbing work as accepted by the PWD be set aside as my allowance. The balance shall be reward to which the said Company (Hendrick Engineering Co.) is entitled.

I am the one who recommend Mr Quak Lik Chian to Kansai Paint to be its plumber (Re: PUB licenced plumber) for the duration of the contract with Changi Hospital. Hereafter whatever rewards he is entitled to and costs expended by him on Changi Hospital shall be borne by Kansai Paint."

Ah Thiam said that LCS was aware of his arrangements with Quak and that he had shown the note (PB2) to LCS. When work started at the end of July 1985, Ah Thiam's financial position was already bad as he owed money to various people. On 16 Nov 1985 a garnishee order nisi was issued by Build-Treat Pte Ltd against Ah Thiam for a judgment debt of $19,851.67. The stated garnishees were Kansai Paint (S) Pte Ltd and Standard Chartered Bank. In view of this, he was asked by LCS not to carry on the project. He was also asked to write a letter as follows:-

"M/s Chin Leong Construction Pte Ltd7 Dec 1985 2 Tanjong Penjuru Singapore 2260

Dear Sir

Re: Changi Hospital Project

I am to inform that I do not wish to continue the work with yourselves at Changi with effect from 7.12.85.

Yours faithfully

Tay Ah Thiam Renovation Work"

He explained that he addressed the letter to CLC because he was told to do so by LCS. But he admitted that the letter was prepared by his clerk on his instructions.

Ah Thiam said that at the work site instructions were given by PWD. He had a foreman on site, one Low Kheng Hock, otherwise known as "Ah Aw". One Leonard Lim was the representative of the defendants at site and one Jeffrey Ng was the representative of CLC.

Whenever Ah Thiam required progress payment he would ask LCS for it. Quak would inform Ah Thiam of the amount he would be claiming for his portion of the works. Until Ah Thiam left the project, all the cheques for progress payment (six or seven in all) were issued by CLC to Ah Thiam or his firm. He had never received any payment from the defendants. He said that he took upon himself the task of seeking payments from LCS for the plaintiffs because he had an interest in it, namely, his commission. Ah Thiam would pay to Quak from the sum Ah Thiam received from CLC. Ah Thiam alleged that he had told LCS that payments to Quak should be made through him. Quak had agreed to this arrangement.

This project was not the first occasion on which Ah Thiam had business dealings with Quak. In earlier projects Quak had always been the sub-contractor of Ah Thiam. But Ah Thiam claimed that for this project Quak was not his sub contractor. As regards the other tradesmen on the project, Ah Thiam said that they were his sub-contractors because he had engaged them to do the jobs. So for this project what Ah Thiam was saying was that there were two sub-contracts. First, there was a sub-contract between the defendants and the plaintiffs. Second, there was another sub-contract between Ah Thiam and the defendants in relation to works other than plumbing and sanitation.

Quak in his evidence said that he first heard of Kansai, the defendants, in 1984. He had done works for the defendants under a term contract which the defendants had with PWD. He heard from Ah Thiam that LCS was the boss of the defendants. In respect of the works done under the term contract, Quak agreed that he was the sub-contractor of Ah Thiam. However, in respect of the Changi Project, as the amount involved was large, it being of about $100,000 to $200,000, he wanted to deal directly with the defendants. He had then also heard that Ah Thiam was in financial difficulties. Quak said that as LCS trusted Ah Thiam and wanted to make payments only to Ah Thiam, he agreed to receiving payments through Ah Thiam. His arrangement with Ah Thiam was set out in PB2, which was written before he commenced work.

Quak said that in the course of carrying out the works he received instructions from the PWD officer, Tan Hock Lye, and Leonard Lim but never from Jeffrey Ng or from Ah Thiam. He received two payments from Ah Thiam. Thereafter, Ah Thiam ceased to have anything to do with the project. In Dec 1985, he stopped work because there were outstanding sums due to him for works already done. The PWD officer queried about this stoppage. Quak tried to contact LCS. One of the telephone numbers he was given was that of the defendants. Following a meeting on site and the assurances by LCS that payment would be forthcoming, Quak resumed work. By that assurance he took it to mean that the defendants would pay, as LCS was the boss of the defendants. Later, Quak was brought by Ah Thiam to see LCS at an office at 146, Rangoon Road. After work recommenced, he received small payments at site through Leonard Lim. In cross examination he agreed that he also received payments from Jeffrey Ng. Quak said that in his discussion with LCS, the name of CLC was never raised. However, he admitted that thereafter he received payments by cash and cheques and the cheques were those of the firm of Thian Hock Seng Construction. Cash payments were handed to him by Leonard Lim and Jeffrey Ng.

In cross-examination Quak further agreed that he did not submit his quotation direct to the defendants but through Ah Thiam. He also agreed that no one would know, by...