ICOP Construction (SG) Pte Ltd v Tiong Seng Civil Engineering (Pte) Ltd

• Jurisdiction: Singapore
• Judge: Woo Bih Li JAD
• Judgment Date: 02 January 2024
• Neutral Citation: [2024] SGHC(A) 1
• Court: High Court Appellate Division (Singapore)
• Docket Number: Civil Appeal No 100 of 2022
• Hearing Date: 26 May 2023
• Citation: [2024] SGHC(A) 1
• Year: 2024
• Plaintiff Counsel: Lee Wei Han Shaun, Ng Khim Loong Mark, Adly Rizal bin Said and Gladys Yeo Li Min (Bird & Bird ATMD LLP)
• Defendant Counsel: Ho Chien Mien, Ng Wei Ying and Yew Kai Ning Sophia (Allen & Gledhill LLP)
• Published date: 05 January 2024

Quentin Loh SJ (delivering the judgment of the court):Introduction

This appeal, AD/CA 100/2022 (“AD 100”), arises from a construction dispute between ICOP Construction (SG) Pte Ltd (“ICOP”), a subcontractor for microtunneling works, and the main contractor, Tiong Seng Civil Engineering (Private) Limited (“TSCE”).

The trial below in HC/S 1086/2019 (the “Suit”) was bifurcated. This appeal arises from the decision of the judge below (the “Judge”) on the first tranche, dealing with liability both of ICOP’s claims as well as TSCE’s counterclaims. The Judge ordered TSCE to pay ICOP $1,333,298.52, and ICOP to pay TSCE $402,790.46 for delay damages. The Judge also found that ICOP had wrongfully terminated the subcontract. TSCE’s loss and damage for wrongful termination of the subcontract will proceed to the second tranche of the trial where damages will be assessed.

Background facts

The appellant, ICOP, is a company incorporated in Singapore. It is in the business of constructing, inter alia, water, gas, and sewage pipelines. The respondent, TSCE, is also incorporated in Singapore, and its business is in the provision of infrastructure engineering design and consultancy services, as well as the construction of civil engineering projects. TSCE belongs to a group of companies which includes Tiong Seng Contractors Pte Ltd (“TSC”).

In or around June 2016, TSC was engaged by the Public Utilities Board (the “PUB”) to construct a potable water pipeline in a project titled “Proposed 1600mm Diameter Pipeline from AYE/Henderson Road to River Valley Road” (the “Project”). The Project was part of a larger project for the construction of potable water pipelines from Jalan Kampong Chantek to Marina South and River Valley Road. TSC subcontracted the Project wholly to TSCE.

Around May 2017, TSCE subcontracted the microtunnelling works to ICOP (the “Subcontract”). This was done through the execution of a letter of award (“LOA”), as amended by a supplemental letter (“Supplemental Letter”), both of which were backdated to 15 April 2017. The reason for the backdating was that ICOP had commenced work before the execution of the LOA and Supplemental Letter. The parties were to subsequently agree upon a set of General Conditions of the Subcontract but they were unable to reach an agreement; consequently, the Subcontract did not have any General Conditions.

Under the Subcontract, ICOP’s scope of work was to install: “124m of DN1200mm Reinforced Concrete Composite Pipe with built in Mild Steel Collar” and “2229m of DN1600mm” of the same type of pipe but of a larger diameter (the “Subcontract Works”). “DN” refers to the internal diameter of the pipe. The installation method was microtunnelling.

The process of microtunnelling has been explained by the Judge in detail at [5] to [7] of his decision in ICOP Construction (SG) Pte Ltd v Tiong Seng Civil Engineering Pte Ltd [2022] SGHC 257 (the “Judgment”). For the purposes of this judgment, ICOP’s microtunnelling works under the Subcontract involved the following. Essentially, vertical shafts, called working shafts, were constructed at intervals along the proposed route of the pipeline (this work was carried out by TSCE). These shafts were sunk from ground level to the proposed depth of the tunnel. Tunnel boring would then be carried out by a microtunnel boring machine (“MTBM”) at the correct depth from the bottom of the shaft. This comprised a circular cutter head, or wheel, affixed to a trailing steel cylindrical section (often called a “trailing steel can”) containing the associated machinery; the cutter head rotated as it bored into the soil creating a tunnel for the proposed pipeline. The MTBM was pneumatically pushed forward and into the soil by a hydraulic jacking machine, also situated within the shaft. As the cutter head cut into the soil, rocks and soil were ground down in a chamber immediately behind the cutter head, mixed with a drilling fluid to form a slurry and transferred to the slurry circuit which removed the slurry of rocks and soil away from the cutter head. This slurry was then transported up to a “separator plant” (or a slurry treatment plant, “STP”) on the surface where the rock and soil were separated from the drilling fluid. The rock and soil were disposed off-site, and the drilling fluid recycled back to the MTBM. As the MTBM bored its way through the soil, it would stop at intervals for a section of the prefabricated pipe to be placed securely and accurately, initially, behind the cutter head’s trailing steel cylinder, and subsequently, into the end of the preceding fabricated pipe. These reinforced concrete composite pipes with built in steel collars were exactingly manufactured, so that one end of the pipe securely fitted into the other end of the preceding pipe, thereby forming a hydraulic joint. When a section of the pipe had been sufficiently jacked in, the construction process entered into a “by-pass” mode. The pneumatic jacking was stopped as the next section of the pipe was placed on guide rails ready for jacking in and the various piping lines, which included the slurry removal pipe and cables, were lengthened to cater for the extended length as the next section of the pipe was jacked into the tunnel. The pipe was thus constructed simultaneously as the cutter head progressed through the ground and it was also the means by which the jacking force is transmitted along the sections of the “laid” pipes to the cutter head. The cutter head would eventually break into the next shaft, called the receiving shaft, thereby completing that section, called a “drive”, of the pipe. To complete the picture, there was a control unit on the surface for operating the jacking machinery set within the jacking frame at the bottom of the shaft as well as various pieces of machinery connected to the cutterhead and the trailing steel cylinder. Other important parts of this microtunnelling process included the STP, the generators providing the electrical supply, high-capacity pumps and a crane to lower and raise equipment, machinery and sections of the pipes into and out of the shafts. There were also areas set aside for delivery and storage of pipes, a muck pit and access for lorries to remove the rock and soil.

The Subcontract envisaged that ICOP would install the pipes in four sequential “drives”. Each drive represented the MTBM moving from a launching or jacking shaft to a receiving shaft. The first drive (“Drive 1”) was from Shaft P5-1 (ie, the launching shaft for Drive 1) to Shaft P5-7 (ie, the receiving shaft for Drive 1). Drive 1 was for the installation of the shorter and smaller DN1200mm pipeline (the “DN1200mm Pipeline”). The other three drives were for the installation of the longer and larger DN1600mm pipeline (the “DN1600mm Pipeline”) as follows:Drive 2 was from Shaft P5-2 (ie, the launching shaft for Drive 2) to Shaft P5-1 (ie, the receiving shaft for Drive 2).Drive 3 was from Shaft P5-2 to Shaft P5-3.Drive 4 was from Shaft P5-4 to Shaft P5-3.

According to Appendix D of the Subcontract (ie, the Schedule of Work), the timelines for the four sequential drives were as follows:

	Commencement date	Completion date	Duration (days)
Drive 1	17 April 2017	2 June 2017	46
Drive 2	15 June 2017	24 October 2017	131
Drive 3	25 October 2017	8 February 2018	106
Drive 4	9 February 2018	7 August 2018	179

Notably, cll 2.1 and 2.2 of the LOA (as amended by the Supplemental Letter) provided that the scheduled commencement dates and completion dates in Appendix D are “tentative” and that the actual commencement date and completion date for each drive were subject to the parties’ mutual agreement, with TSCE issuing a Notice to Proceed to ICOP no less than 45 days prior to the actual commencement date.

As it transpired, the actual timeline of the Subcontract Works deviated rather substantially from the timelines provided in Appendix D. It suffices to note at this juncture that ICOP only commenced pipe jacking for Drive 1 on 3 June 2017, with the Notice to Proceed for Drive 2 only being issued on 29 December 2017. During Drive 2, the parties were already facing tensions and disagreements, so much so that after ICOP completed Drive 2 in early 2019, ICOP considered itself justified in terminating the Subcontract and did so on 13 March 2019.

Issues on appeal

There are 13 issues that arise for our consideration in this appeal:Issue 1: Whether the Judge erred in finding ICOP liable to pay damages of $83,790 to TSCE for causing 49 days of critical delay on the basis that ICOP did not have a valid legal basis to request the reconstruction of a headwall (Judgment at [35]–[36] and [90]–[94]).Issue 2: Whether the Judge erred in finding that ICOP had failed to establish a duty and/or breach on TSCE’s part in relation to the alleged defects in Shaft P5-1 (Judgment at [37]–[48]).Issue 3: Whether the Judge erred in finding that TSCE did not cause any critical delay between 24 February 2018 and 6 April 2018 (Judgment at [68]–[76]).Issue 4: Whether the Judge erred in finding that ICOP is not entitled to claim a daily MTBM rental rate of $9,120 for each day of critical delay caused by TSCE, prior to the expiry of an 18-month minimum rental period for the MTBM undertaken by ICOP to a third party (Judgment at [87]–[88]).Issue 5: Whether the Judge erred in finding that TSCE is entitled to claim liquidated damages for ICOP’s delays as opposed to general damages (Judgment at [94]).Issue 6: Whether the Judge erred in finding ICOP liable to pay damages of $54,244.27 to TSCE for causing 31.137 days of critical delay for failing to comply with noise restrictions so that pipe jacking works could be carried out at night (Judgment at [95]–[104]).Issue 7: Whether the Judge erred in finding that TSCE did not cause any delay by: (i)...