Lim Boon Kwee (trading as BK Lim & Co) v Impexital SRL

JudgeChristopher Lau JC
Judgment Date17 March 1998
Neutral Citation[1998] SGHC 75
Date17 March 1998
Subject MatterGarnishee order,Judgments and orders,Civil Procedure,Whether 'debt due or accruing due' to judgment debtor from garnishee under their sub-contract with garnishee,O 49 r 1(1) Rules of Court 1996,Application for garnishee order absolute,Effect of mareva injunction on garnishee's right of set-off,No clear express unequivocal words excluding such right,Whether right can be excluded under contract,Garnishee's common law right of set-off against moneys due and payable to judgment debtor
Docket NumberSuit No 1990 of 1993
Published date19 September 2003
Defendant CounselLatiff Ibrahim and Christopher Da Costa (Khattar Wong & Partners)
CourtHigh Court (Singapore)
Plaintiff CounselPalakrishnan and Malathi Das (Palakrishnan & Partners)


The judgment creditor applied under O 49 r 1(1) of the Rules of Court 1996 for a garnishee order absolute to attach `any debt due or accruing due` from the garnishee to the judgment debtor up to a limit of $478,500 to satisfy a judgment obtained by the judgment creditor against the judgment debtor and for the costs of the garnishee proceedings.

2.I decided, after consideration of the evidence adduced by the parties and counsels` submissions, that there was no debt due or accruing due and discharged the judgment creditors` order nisi with costs. These are my reasons.

3.Chronology of material events 3.1. On 24 July 1991, the garnishee entered into a contract (the main contract) with HPL Properties Pte Ltd (the employer) as its main contractor to construct and complete the Four Seasons Hotel (the project). The main contract incorporated the Singapore Institute of Architects Articles and Conditions of Building Contract (Measurement) [conditions of main contract]. Mrs Tan Sooi Peng of SAA Partnership was the appointed architect under the main contract (the architect) and Mr Edward Tang of KPK Quantity Surveyors, the appointed quantity surveyor (the quantity surveyor).

3.2. On 27 August 1992, the garnishee entered into a nominated sub-contract with the judgment debtor to carry out the supply and installation of stonework [the sub-contract] for the project. The sub-contract incorporated the Singapore Institute of Architects Conditions of Sub-Contract for use in conjunction with the conditions of main contract [conditions of sub-contract].

3.3. On 29 March 1993, the judgment debtor sub-contracted part of the sub-contract with the garnishee to the judgment creditor (the judgment creditor`s sub-contract).

3.4. On 29 June 1993, disputes arose between the judgment creditor and judgment debtor. These led to the judgment creditor`s sub-contract being terminated by the judgment debtor.

3.5. On 5 October 1993, in Suit No 1990/93, the judgment creditor instituted an action in the High Court against the judgment debtor for the latter`s repudiation of the agreement and claimed inter alia, the total sum of $477,962.62.

3.6. In October 1993, the judgment debtor sub-contracted the installation of the stoneworks for levels 9-18 to a company known as Polybuilding (S) Pte Ltd (Polybuilding).

3.7. On 10 January 1994, in the garnishee`s certificate of sub-contract payment No 13, the garnishee retained the maximum retention permitted under the sub-contract in the sum of $249,750.

3.8. On 23 February 1994, an interim injunction was granted to the judgment creditor against the judgment debtor (the mareva injunction). It ordered, inter alia, that the judgment debtor whether by itself its servants or agents or otherwise howsoever be restrained from disposing of or charging or otherwise dealing with sums not exceeding S$210,000 payable by the garnishee to the judgment debtor.

3.9. On 1 March 1994, the garnishee was served with the mareva injunction.

3.10. On 2 March 1994, following the service of this injunction, the garnishee in a letter informed the judgment debtor that it had no alternative but to withhold S$210,000 from the payments accruing due to the judgment debtor until such time as the injunction was discharged.

3.11. On 16 August 1994, pursuant to condition 31(7) of the conditions of main contract, the architect certified payment and the release of the first half of the retention moneys in the sum of $124,875.00 to the garnishee with respect to the sub-contract works.

3.12. On 27 August 1994, payment of the first half of the retention moneys (with respect to the sub-contract works) in the sum of S$124,875 was received by the garnishee from the employer.

3.13. On 10 September 1994, pursuant to condition 13.1 of the conditions of sub-contract, the first half of the retention moneys of S$124,875 under the sub-contract was to be paid to the judgment debtor. It was not however released to the judgment debtor.

3.14. On 12 January 1995, the architect certified completion of the project under the main contract.

3.15. On 19 July 1995, the judgment creditor in Suit No 1990/93, obtained final judgment against the judgment debtor (the judgment) for, inter alia, a liquidated sum of S$477,962.41.

3.16. On 10 October 1995, a garnishee order nisi ex parte was obtained by the judgment creditor against the garnishee attaching all debts due or accruing due from the garnishee to the judgment debtor limited to the sum of S$478,500 to answer the judgment.

3.17. On 1 November 1995, the garnishee order nisi was served on the garnishee.

4. Issues

The central issues were: 4.1. whether there was `any debt due or accruing due` to the judgment debtor from the garnishee on 1 November 1995, that being the date of service of the order nisi on the garnishee; and

4.2. if there was, what was the amount of that debt?

5.These central issues turned on the following secondary issues: 5.1. Whether the judgment debtor`s retention moneys of $249,750 or any part thereof was a `debt due or accruing due` to the judgment debtor from the garnishee on 1 November 1995?

5.2. If it was, whether the garnishee had any set-off or counterclaim against the judgment debtor on 1 November 1995?

5.3. If it had such a set-off or counterclaim, what was its amount and was the garnishee entitled to set-off such amount against such debt as was due or accruing due to the judgment debtor from the garnishee on 1 November 1995?

6. Kedah Kelang Lee Kam Chun `Debt due or accruing due` 6.1. The garnishee accepted that the first half retention moneys of S$124,875 which had been paid by the employer to the garnishee on 27 August 1994 was a debt due to the judgment debtor on 10 September 1994 (which was 14 days after 27 August 1994) pursuant to condition 13.1 of the conditions of sub-contract but it said (as set out in paras 7 and 8 below) that as the judgment debtor owed it a sum of S$137,607.90 prior to the service of the garnishee order nisi, it could at common law set-off this sum against the first half retention moneys. It was a right that had not been excluded by the sub-contract or by the mareva injunction.

6.2. As for the balance of the retention moneys (the second half retention), the garnishee contended it was not a debt due or accruing due to the judgment debtor from the garnishee; it not being disputed by the parties that the second half retention had first to be certified for payment under condition 31(8) of the conditions of main contract, that the architect had not certified such release and that the garnishee had not received the second half retention from the employer.

6.3. Conditions 31(4), (5), (6), (7) and (8) of the main contract, which dealt with retention moneys under the main contract, provided:

(4) The architect shall have power to issue a further interim certificate at any time whether before or after completion, correcting any error in an earlier interim certificate (but not in any delay, termination of delay, further delay or any certificate other than an interim certificate) or dealing with any matter of which he was not aware, or which should have been dealt with, at the time of an earlier interim certificate, or revising any decision or opinion on which that certificate was based.

(5) In the case of the periodical valuation under art 2(c), the sums stated as due in interim certificate shall be calculated (unless otherwise stated in the appendix) at the rate of 90% of the value of work done in accordance with cl 31(2) hereof and at the rate of 80% of properly protected materials or goods delivered to the site but not yet fixed and not prematurely delivered, from the total of which shall be deducted all sums previously paid by the employer. In appropriate cases the architect shall have power to issue a negative certificate showing sums overpaid or otherwise due to the employer, which shall thereupon be a debt due to the employer.

(6) The percentages not paid pursuant to sub-cl 31(5) hereof shall be known as `retention moneys`, but shall be subject to the sum or percentage (if any) stated as the limit of retention in the appendix thereto. In [sic] this limit being reached, any further balance of retention moneys calculated pursuant to cl 31(5) shall be payable to the contractor.

(7) Subject to cll 25 and 26 of these conditions in regard to phased or stage completion or partial occupation, one-half of the retention moneys not yet paid shall be certified as due to the contractor on the issue of the completion certificate under cl 24(4) of these conditions, less only a sum sufficiently reasonably to cover the cost of the outstanding work (if any) not yet completed pursuant to cl 24(4) of these conditions at the date of the said certificate. Any sum so deducted shall be released to the contractor upon a further certificate of the architect given as soon as such outstanding work has been completed.

(8) Subject to cll 25 and 26 of these conditions, and to any special deduction under cl 27(4) of these conditions, any remaining unpaid balance of the retention moneys shall be certified and paid to the contractor under a further interim certificate issued by the architect at the expiry of the maintenance period for the whole work or upon the issue of the maintenance certificate under cl 27(5) of these conditions, whichever is the later.

6.4. These main contract conditions had to be read with condition 13 of the sub-contract for the purposes of payment under the sub-contract as condition 13 provided for payment under the sub-contract. Condition 13.1 provided as follows:

The sub-contractor will (unless the schedule hereto provides to the contrary) be paid within 14 days after payment or deemed payment of the main

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