Jurong Town Corp v Wishing Star Ltd (No 2)

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 13 May 2005
• Neutral Citation: [2005] SGCA 25
• Docket Number: Civil Appeal No 111 of 2004
• Date: 13 May 2005
• Year: 2005
• Published date: 16 May 2005
• Plaintiff Counsel: K Shanmugam SC, Ho Chien Mien and J Sathiaseelan (Allen and Gledhill)
• Citation: [2005] SGCA 25
• Defendant Counsel: Christopher Chuah, Lee Hwai Bin and Toh Chen Han (Wong Partnership) and Tan Liam Beng and Eugene Tan (Drew and Napier LLC)
• Court: Court of Appeal (Singapore)
• Subject Matter: Recission,Whether due diligence conducted by appellant operating to preclude reliance element in establishing inducement to enter into contract,Respondent making fraudulent misrepresentations in tender documents for construction project,Respondent's fraudulent misrepresentations in tender documents for construction project subsequently incorporated as terms of contract,Whether misrepresentations inducing appellant to enter into sub-contract with respondent,Whether appellant making conditional election not to terminate contract,Appellant conducting due diligence prior to entering into sub-contract with respondent,Section 1 Misrepresentation Act (Cap 390, 1994 Rev Ed),Misrepresentation,Whether law requiring higher threshold to be met before finding of misrepresentation can be made in case of construction contract,Whether respondent's failure to satisfy condition meaning appellant's right of termination re-emerging,Whether more appropriate to sue for breach of contract,Contract,Whether appellant having knowledge of right to rescind contract,Inducement

13 May 2005 Judgment reserved.

Woo Bih Li J (delivering the judgment of the court):

Introduction

1 The appellant, Jurong Town Corporation (“JTC”), is a statutory body. The respondent, Wishing Star Limited (“WSL”), is a company registered in Hong Kong which carries on the business of a façade-cladding contractor.

2 JTC was developing the Biopolis which was to be a 185,000m² research complex housing key biomedical research institutes and biotechnological companies. The Biopolis was to comprise seven tower blocks and three basement levels. The vision for the Biopolis was that it would be a world-class biomedical sciences research and development hub in Singapore. As there was keen competition at an international level by various governments to promote their countries as such a hub, the Biopolis was to be developed on a fast track. Accordingly, the development of the Biopolis was to be completed within 19 months instead of the 30 months that a project of such a size would normally require.

3 The main contract was eventually awarded to Samsung Corporation (Engineering and Construction Group) (“Samsung”). An important part of the construction works was the façade works. The façade works were to be awarded by JTC to a nominated subcontractor (“NSC”). This meant that the NSC was to be nominated or selected by JTC after which the main contractor Samsung was obliged to enter into a contract with the NSC and be responsible for the NSC’s performance of the contract for the façade works, unless Samsung had valid objections against entering into such a contract.

4 JTC was assisted by its consultant, Jurong Consultants Pte Ltd (“JCPL”), which was a wholly-owned subsidiary of JTC. JCPL invited tenders for the façade works. WSL submitted its tender in April 2002. It was one of eight tenderers for the façade works. Its bid of $54m was the lowest. However, Samsung sought to dissuade JCPL from awarding WSL the subcontract for such works. Samsung was not familiar with WSL and WSL had no experience in doing such works in Singapore. Samsung preferred another subcontractor whose bid was for a much higher sum of $90m. This was the highest bid. The second lowest bid was $54,071,488. Notwithstanding Samsung’s views, the contract for the façade works was eventually awarded to WSL on 14 June 2002. However, Samsung resisted entering into any contract with WLS.

5 It was common ground between WSL and JTC that until Samsung entered into a contract with WSL, WSL’s contract remained with JTC. Eventually, for reasons which we shall elaborate below, JTC terminated its contract with WSL for, inter alia, misrepresentation and breach of contract.

6 WSL then commenced the present action against JTC for various reliefs, including damages for wrongful termination. Before the trial judge, JTC applied for the issue of misrepresentation to be tried first on the basis that if this issue was decided in JTC’s favour, it would be unnecessary to go into the various allegations of breach of contract. Notwithstanding WSL’s opposition to this application, the trial judge agreed to JTC’s application. After hearing evidence and submissions on the issue of misrepresentation, the trial judge decided that although WSL was guilty of misrepresenting some facts, JTC had not relied on the misrepresentations. Furthermore, the trial judge decided that JTC had affirmed the contract with WSL after it had knowledge of the misrepresentations: see Wishing Star Ltd v Jurong Town Corp (No 2) [2005] 1 SLR 339. JTC then appealed to the Court of Appeal against this decision. The rest of the trial was held in abeyance pending the outcome of JTC’s appeal.

Issues

7 The issues before us are:

(a) Whether certain representations made by WSL were false. If so, the following issues would be relevant.

(b) Whether the misrepresentations were made fraudulently.

(c) Whether JTC was induced by WSL’s misrepresentations to award the contract for façade works to WSL.

(d) Whether JTC had elected to affirm the said contract after it had become aware of the alleged misrepresentations.

Main players

8 As a number of people were involved, we set out below the names of the main players and their appointments:

(a) JCPL:

(i) Mao Whey Ying – Executive Vice-President (“EVP”) in charge of the Public Business Division (“PBD”) of JCPL. As EVP of PBD, she was also appointed as the Superintending Officer (“SO”) for all public sector projects undertaken by JCPL (save for demolition works). At any one time she might have been holding the appointment of SO for more than 100 projects concurrently.

(ii) Nick Chang Koong Chean – Principal Architect, Specialised Parks Department, PBD of JCPL. Appointed SO’s Representative of the Biopolis project.

(iii) Ong Tiong Beng – Vice President in JCPL. Appointed Project Manager (Building) of the Biopolis project.

(iv) Lim Lye Huat – Manager in JCPL. Qualified Internal Auditor certified by the Construction Industry Development Board. He is responsible for ensuring that all construction sites managed by JCPL comply with ISO standards.

(b) JTC:

(i) Dr Steven Choo Kian Koon – Board member of JTC. Also a member of Tender Board B of JTC between October 2001 and December 2002. Tender Board B was the ultimate authority approving the award of the contract to WSL.

(ii) Brigadier General (“BG”) Philip Su – Assistant Chief Executive Officer of JTC.

(iii) Spencer Lim – Deputy Director (Development & Marketing) of JTC.

(iv) Bruce Charles Wymond – Independent expert engaged by JTC.

(b) Samsung

(i) Harrison K H Park – Senior Project Manager in Samsung for the Biopolis project.

(c) WSL

(i) Carol Wen – Director of WSL.

(ii) Tong Che Hung (also referred to as C H Tong) – Architect by training. Initially assigned by WSL as Project Director of the Biopolis project and then reassigned as Senior Project Director.

(iii) Jack Koh – Assigned by WSL as Project Director for the Biopolis project when C H Tong was reassigned as Senior Project Director.

(iv) John Andrew Shillinglaw – Independent expert engaged by WSL.

The representations

9 JTC alleged that WSL had made ten representations knowing that such representations were false. The representations were:

(a) WSL had completed a curtain walling system of S$10m and above in a single project for the past five years;

(b) WSL had at least two project managers with 20 years’ experience for unitised curtain wall projects;

(c) WSL had a chief design manager with at least 20 years’ experience for unitised curtain wall projects;

(d) WSL’s facilities had an in-house production capacity of 10,000m² per month for curtain walls;

(e) WSL’s in-house facilities included a metal panel fabrication plant;

(f) WSL’s in-house facilities included a 3,000m² window and curtain wall plant;

(g) WSL’s in-house facilities included a 2,000m² stone fabrication plant;

(h) WSL’s in-house facilities included a 1,000m² polyester powder coating plant;

(i) WSL’s in-house facilities included a fluorocarbon coating workshop; and

(j) WSL’s in-house facilities included a test laboratory for cladding systems.

We will refer to these representations as representations (a) to (j) for convenience. The representations were made in an introduction of WSL which was submitted with its tender and/or letters from WSL before the award of the contract to WSL. WSL did not deny making the representations. We would add that the representations about its in-house facilities were in respect of its facilities located in Wishing Star Industrial Park (“WSIP”) at Dongguan, Guangdong Province, in the People’s Republic of China (“China”).

10 JTC’s case was that JCPL discovered that the representations were false when JCPL made a visit to China between 10 to 14 July 2002. We will elaborate on this visit and other visits when we come to the issue of election and affirmation.

11 Tenderers for the façade works had to meet various evaluation criteria. The criteria were grouped under “Critical Criteria” and “Other Criteria”.

12 It was common ground that representation (a) about WSL having completed a curtain walling system of $10m and above in a single project was in respect of a project in China and this was in response to a criterion under the Critical Criteria. Although JTC had claimed that this was a misrepresentation before the trial judge, it eventually dropped this allegation before us. Accordingly, we need say no more about it.

Whether the remaining representations by WSL were false

Representation (b) – WSL had at least two project managers with 20 years’ experience for unitised curtain wall projects

13 Representation (b) was to meet item (i) of the Other Criteria. The trial judge did not make any finding as to whether this representation was true or not.

14 WSL’s position was that at the time of tender, it did have two project managers with 20 years’ experience for unitised curtain wall projects. These project managers were Mr Cheung Tak Ming and Mr Tony Tang Chi Fai. However, at the trial, WSL did not produce either of these persons as witnesses.

15 As regards Mr Cheung, WSL alleged that he had passed away but did not produce his death certificate. WSL sought to establish that he had been employed by WSL by relying on letters of offer of employment dated 16 October 1982 and 16 February 1983 from WSL to Mr Cheung. WSL also relied on payment vouchers for Mr Cheung’s monthly basic salary between March to September 2002 and a résumé.

16 We are of the view that even if the letters of employment were genuine, they do not help WSL very much especially since they were dated many years before 2002 and the offers of employment were for the post of chief designer and not project manager. The payment vouchers referred to Mr Cheung’s department as “Technical” and could easily have been fabricated. In any event, they did not show that he had had 20 years’ experience as project manager for unitised curtain wall projects. There was a handwritten résumé of Mr Cheung with words in Chinese and English. Even if...