Hong Huat Development Co (Pte) Ltd v Hiap Hong & Company Pte Ltd

• Judge: Woo Bih Li JC
• Judgment Date: 06 July 2000
• Neutral Citation: [2000] SGHC 131
• Citation: [2000] SGHC 131
• Court: High Court (Singapore)
• Plaintiff Counsel: Lawrence Teh (Rodyk & Davidson)
• Defendant Counsel: John Chung (Khattar Wong & Partners) and Sharon Tay (Donaldson & Burkinshaw)
• Published date: 12 March 2013

JUDGMENT:

Cur Adv Vult

1. This is an appeal by Hong Huat Development Co. (Pte) Ltd against part of an award by an arbitrator.

Background

2. The Appellants are the owners of a 6 storey shopping centre in Upper Serangoon Road. In 1979, they had entered into a written agreement with the Respondents Hiap Hong & Company Pte Ltd dated 27 January 1979 (‘the Contract’) for the Respondents to build the shopping centre. The Respondents were the main contractors. The Contract incorporated, inter alia, the 1979 Singapore Institute of Architects Standard Conditions. In the Contract, the Appellants are referred to as ‘the Employer’ as is frequently the case in building contract documents. However, the Appellants do not, strictly speaking, employ the Respondents. They engage the Respondents to build the shopping centre.

3. The firm of architects engaged by the Appellants was Chen & Associates Architects (‘the Architect’). Counsel for each of the parties referred to the Appellants as ‘the Employers’ of the Architect and generally referred to owners who engage a firm of architects as ‘the employers’. The same description is used in textbooks. While this may be a convenient description, it is, strictly speaking, not correct when the architects are in private practice.

4. Disputes arose between the parties and such disputes were referred to an arbitrator.

5. In the arbitration proceedings, the Appellants (before me) were the Respondents and the Respondents (before me) were the Claimants.

6. After a very long delay, the arbitrator eventually published his award on 24 December 1994.

7. The Appellants were dissatisfied with parts of the award and sought leave under s 28 of the Arbitration Act (Ch 10) to appeal to the High Court. On 21 March 2000, such leave was eventually granted by the Court of Appeal on a question of law.

8. In paragraph 55 of its Judgment, the Court of Appeal said that,

‘The appeal will be on the question what is the nature or extent of the term to be implied as regards the duties of the appellants as employers in relation to the certifying functions of the architect under the SIA Conditions.’

9. It is not disputed that in the question framed, the reference to the architect means the Architect who is engaged (and not employed) by the Appellants. The use of the description ‘employers’ arose probably because that was the label used by Counsel for each party.

10. Naturally, the question framed must be considered in the context of the claims for which the award was made in favour of the Respondents and which are the subject of the appeal before me. As it was, the award was in respect of six main claims but Mr Teh said that the appeal before me concerned five of them only. Furthermore, as regards one of the five claims, only part of it was the subject of the appeal before me.

11. The five relevant claims as set out in the Re-Amended Points of Claim, were:

‘5. In breach of clause 30(1) of the Schedule of Conditions, the Architects were repeatedly late in issuing their Interim Certificates of Payment, and in breach of the same provision, the Respondents were repeatedly late in honouring the Certificates that were issued. As a result of such delays the Claimants suffered financial loss amounting to $163,819.51 $397,788.88. Full particulars will be given to the Respondents when they are ready. It is an implied term of the Schedule of Conditions that the Respondents as Employers will ensure the proper discharge by the Architects of their duties as prescribed under the Schedule of Conditions. The Architects having failed to discharge their duties in compliance with clause 30(1) as aforesaid, the Respondents are in breach of this implied term. [I will refer to this claim as "Item (a)".]

6. In breach of clause 30(2) of the Schedule of Conditions, the Architects issued several Interim Certificates of Payment which allowed greater amounts to be deducted as retention money than as provided under clause 30(3) of the Schedule of Conditions. This wrongful withholding of such greater amounts than permitted caused the Claimants to suffer a financial loss, amounting to $1,799.70. Full particular will be given to the Respondents when they are ready. It is an implied term of the Schedule of Conditions that the Respondents as Employers will ensure the proper discharge by the Architects of their duties as prescribed under the Schedule of Conditions. The Architects having failed to discharge their duties in compliance with clauses 30(2) and (3) as aforesaid, the Respondents are in breach of this implied term. [I will refer to this claim as "Item (b)".]

7. In breach of clause 30(4)(b) of the Schedule of Conditions, the Architects failed to issue to the Claimants a Certificate for one moiety of the total amounts retained by the Respondents on the issuance of the Certificate of Practical Completion. In breach of clause 30(4)(c) of the Schedule of Conditions, the Architects also failed to issue to the Claimants a Certificate for the residue of the amounts retained by the Respondents as prescribed in the said clause. The failure to issue the two Certificates as prescribed in the said clause 30(4)(b) and (c) caused the Claimants to suffer a financial loss amounting to $26,351.40. Full particulars will be given to the Respondents when they are ready. It is an implied term of the Schedule of Conditions that the Respondents as Employers will ensure the proper discharge by the Architects of their duties as prescribed under the Schedule of Conditions. The Architects having failed to discharge their duties in compliance with clause 30(4)(b) and (c) as aforesaid the Respondents are in breach of the implied term. [I will refer to this claim as "Item (c)".]

8. In breach of clause 30(6) of the Schedule of Conditions, the Architects failed to issue the Final Certificate before the expiration of three (3) months from the end of the Defects Liability Period. This failure to issue the Final Certificate as aforesaid caused the Claimants to suffer a financial loss amounting to $27,679.73 $176,210.50. Full particulars will be given to the Respondents when they are ready. It is an implied term of the Schedule of Conditions that the Respondents as Employers will ensure the proper discharge by the Architects of their duties as prescribed under the Schedule of Conditions. The Architects having failed to discharge their duties in compliance with clause 30(6) as aforesaid the Respondents are in breach of the implied term. [I will refer to this claim as "Item (d)".]

9. The Architects issued an Interim Certificate of Payment dated 21^st June 1982 bearing reference No. S74/Con/26 certifying an amount of $392,467.69. The Respondents paid the same to the Claimants but subsequently demanded from the Claimants a refund of $12,982.94, which the Respondents alleged to be the amount of over certification in the Architects’ Certificate No. S74/Con/26. The Claimants refunded the said sum of $12,982.94 but without prejudice to their rights to claim the same in the subsequent certificates. No adjustments were made to reflect the said refund in subsequent certificates. In the premises, the Claimants are entitled to a sum of $12,982.94 in addition to the sums of $711,661.45 and

$146,235.46 which are set out in paragraph 4 above. [I will refer to this claim as "Item (e)".] ’

12. Although the Re-Amended Points of Claim refers to ‘the Schedule of Conditions’, it should refer to ‘the Conditions of Building Contract’.

13. Item (a) was actually a claim in two parts. The first part was for $351,576.28 being interest for the alleged delay by the Architect in issuing Interim Certificates as the Respondents received the monies later than it should have. The second part was for $46,212.60 being interest for the Appellants’ delay in honouring Interim Certificates. The appeal before me concerned the first part but not the second part.

14. Item (b) was apparently a claim for interest too but not for delay by the Architect in issuing certificates but for the over-certification of sums to be retained as retention money.

15. Items (c) and (d) were also claims for interest for the delay by the Architect in issuing other certificates which he apparently issued late.

16. It is more difficult to understand what Item (e) was about. The Re-Amended Points of Claim alleged that after the Appellants had paid a certain sum, the Appellants demanded the refund of $12,982.94 as over-certification on a certificate. The Respondents refunded the $12,982.94 but without prejudice to its right to claim it in subsequent certificates. No adjustments were made to reflect the refund in subsequent certificates. The Respondents then claimed to be entitled to this sum.

17. I asked both Counsel (a) whether the Architect was asked to amend the certificate in question for Item (e) i.e. Certificate No 754/Con/26 to reflect the refund and (b) whether this sum was in any event included in the Final Account and in the Final Certificate. Unfortunately neither Mr Teh nor Mr Chung were acting for their respective clients at the time when the arbitration hearing took place and neither could assist me further on Item (e).

18. Clause 30(1) to (4) and (6) of the Conditions of Building Contract states:

‘30(1) At the period of Interim Certificates named in the appendix to these Conditions the Architect shall issue a certificate stating the amount due to the Contractor from the Employer and the Contractor, shall, on presenting any such certificate to the Employer, be entitled to payment therefore within the Period for Honouring Certificates named in the appendix to these Conditions.
Interim valuations shall be made whenever the Architect considers them to be necessary for the purpose of ascertaining the amount to be stated as due in an Interim Certificate.

(2) The amount stated as due in an Interim Certificate shall, subject to any agreement between the parties as to stage payments, be...