Hyundai Engineering and Construction Co Ltd v Rankine and Hill (Singapore) Pte Ltd

• Jurisdiction: Singapore
• Judge: Choo Han Teck J
• Judgment Date: 16 August 2004
• Neutral Citation: [2004] SGHC 178
• Docket Number: Originating Summons No 501 of 2004
• Date: 16 August 2004
• Year: 2004
• Published date: 19 August 2004
• Plaintiff Counsel: Vinodh Coomaraswamy and Kenneth Choo (Shook Lin and Bok)
• Citation: [2004] SGHC 178
• Defendant Counsel: Tan Lee Cheng and Kenneth Leong (Harry Elias Partnership)
• Court: High Court (Singapore)
• Subject Matter: Whether defendant's calculation of savings induced developer to breach its contract with plaintiff,Inducement of breach of contract,Whether defendant adopted wrong formula for calculation,Plaintiff's calculations differing from defendant's calculations of value of such savings,Originating processes,Whether matter of contract,Plaintiff to credit developer for money saved from changing piping material,Contract,Whether defendant in breach of any duty of care owed to plaintiff by calculating savings as such,Plaintiff commencing action in negligence by way of originating summons,Tort,Whether action should be commenced by way of writ of summons,Whether defendant contractually bound to certify savings or reimbursement,Breach of duty,Negligence,Civil Procedure

16 August 2004

Choo Han Teck J:

1 The plaintiff was the main contractor in the construction of the condominium known as Glendale Park. It was awarded the tender on 4 April 1997. Under this contract (“the main contract”) the material for the pipe work was specified to be “hubless” cast iron for all soil and waste pipes with diameters of 150mm, 100mm and 80mm, but uPVC (a type of plastic) for pipes 50mm in diameter. No other measurements were indicated for pipe sizes. The lump sum values of these pipes were set out in the plaintiff’s bill of quantities in items 5(a)(i) to (xii). It is important to note that in addition to the above stipulated work and tendered prices, the plaintiff also provided a document known as the schedule of rates in its contract documents. This schedule provided for the prices of materials that might have to be purchased on an ad hoc basis in the course of construction. That is to say, it was meant to provide a schedule of costs for items that had to be purchased which were not anticipated and set out in the bill of quantities. These would usually cover items or materials in variation works. There was a price differential between identical items in each of the two lists. The prices in the bill of quantities were lower because they were negotiated with suppliers on a “bulk purchase” basis.

2 The defendant was a company employed directly by the developer to be the mechanical and electrical consultant for the project. The defendant gave instructions on 18 March 1998 to change “all horizontal soil waste pipes from cast iron to uPVC”. Two days later, the architect for the project issued his instructions to the plaintiff to comply with the defendant’s instructions. The plaintiff duly implemented the changes as required. There were no complaints in respect of the completed work which was accepted as a variation. However, the change from cast iron to uPVC pipes was intended to and did result in a saving in costs to the developer. The plaintiff had, therefore, to credit the developer the difference, that is, the savings. The question was, how was the savings to be calculated? The problem arose in connection with this question.

3 The plaintiff made its calculations by using the differential between the costs of the uPVC pipes as set out in the schedule of rates (because these were variation items and had to be purchased ad hoc), and the price of the cast iron pipes as set out in the bill of quantities since these were the originally intended items. According to this calculation, the plaintiff had to credit or reimburse the developer the sum of $92,396. This was then submitted to the quantity surveyor in June 1998 after the work was completed. The defendant, however, valued the savings using a different formula based entirely on the bill of quantities, the defendant found the savings to be in the sum of $390,920.

4 The plaintiff rejected this valuation and commenced this action, by way of an originating summons, against the defendant. The plaintiff sought an order that on the true and proper construction of the main contract, the savings should be valued according to the formula used by the plaintiff and not any other – that is to say, that the formula used by the defendant was wrong. Secondly, the plaintiff sought a determination on whether in calculating the savings in the way it did, the defendant was “in breach of a duty of care in the tort of negligence”. In...