Loke Hong Kee (S) Pte Ltd v United Overseas Land Ltd

• Court: Privy Council
• Judge: Lord Brandon of Oakbrook
• Judgment Date: 31 March 1982
• Neutral Citation: [1982] SGPC 3
• Citation: [1982] SGPC 3
• Defendant Counsel: Lord Bledisloe and M Brindle
• Plaintiff Counsel: Desmond Wright and CS Wu
• Published date: 19 September 2003
• Docket Number: Privy Council Appeal No 21 of 1980
• Date: 31 March 1982
• Subject Matter: Contract terminated,Matter referred to arbitration,Whether arbitrator entitled to review or revise architect's opinion,Building and construction contracts,Supplemental agreement containing provision for termination on recommendation of architect,Building and Construction Law,Turnkey contracts

This appeal comes before the Board from a judgment dated 25 July 1979 of the Court of Appeal in Singapore. By that judgment the court (Wee Chong Jin CJ, T Kulasekaram and FA Chua JJ) reversed a judgment of DC D`Cotta J and answered in favour of the respondents certain questions contained in a consultative case stated by the arbitrator in the course of arbitration proceedings in which the appellants are claimants and the respondents are respondents. [See [1978-1979] SLR 168 .]

The arbitration arises out of contractual arrangements between the parties concerned with the construction by the appellants, as contractor, for the respondents, as employer, of two blocks of flats at Cairnhill Plaza, Singapore. There are two contractual documents to be considered. The first of these (the main contract) was dated 8 March 1974. It was in the then current standard form of Singapore Institute of Architects, and it provided inter alia that the construction of the flats should be completed by 16 March 1976. The works were to be under the supervision of an architect, Mr William Chen, and were to be carried out and completed to his reasonable satisfaction.

Problems arose in the course of the works and on 23 March 1976 the parties entered into a supplemental agreement. This proceeded upon a narrative setting out inter aliathat the contractor was not expected to be able to meet the extended completion date of 4 May 1976 fixed by the architect, that the contractor had certain claims against the employer, that the contractor had failed to pay to various nominated sub-contractors substantial sums that were due to them, and that the contractor was in debt for almost $2m in respect of materials supplied to him. The supplement agreement went on to provide for such matters as financial assistance by the employer to the contractor, and for payments to be made direct by the employer to subcontractors and to suppliers of materials, such payments being deductible from contract payments from time to time due to the contractor.

Article V, under the heading `Progress of Works` provided, inter alia,as follows:

1 The contractor shall adhere to the progress of works specified in the Third Schedule hereto to ensure that completion of the works shall take place on or before the following:

(a) in respect of Block 1 - 30 April 1977

(b) in respect of Block 2 - 30 October 1977

2 The contractor shall carry out the works expeditiously and with every diligence and complete the same.

(3) In the event of the progress of the said works being in the opinion of the architect unsatisfactory and/or in the event of the contractor failing to adhere or maintain the progress of works as specified in the said Third Schedule and/or upon any breach of this agreement by the contractor then upon the recommendation of the architect in writing and in addition to the employer`s rights under the principal agreement the employer shall be at liberty to determine the employment of the contractor thereunder forthwith by notice in writing.

(5) Upon the said determination or upon any determination of the employment of the Contractor under the principal agreement the contractor shall forthwith remove all works from site and shall forthwith surrender the site to the employer and not retain possession thereof and not do any thing or carry any act of whatever kind to prevent the employer from taking possession of the site or from carrying out any works therein.

(6) Upon the employers regaining possession of the site the firm of Pakatan International Suckling McDonald of 37B Tanglin Road, Singapore 10 Tel: 648211/2358211 shall within two weeks from the date thereof measure the Works as completed by the Contractor and the valuation of the said quantity surveyor shall be binding on both parties and shall be final. The costs and fees of the said quantity surveyor shall be borne by the parties hereto equally.

Article VIII (1) provided:

1 Notwithstanding the provisions contained in this agreement the time for completion of the works unless extended by the architect under the principal agreement shall remain as 4 May 1976 and nothing herein shall effect or modify or diminish any right of the employer and the contractor of whatever kind against each other arising out of or any act or default of either party under the principal agreement the terms and conditions of which shall remain valid and binding on the parties hereto subject to the provisions of this agreement particularly the additional rights and benefits of the Employer provided in this agreement.

On 1 March 1977 the architect sent to the respondents, with copy to the appellants, a letter containing the following passage:

I am of the opinion that progress of the works is unsatisfactory and from my letters to Loke Hong Kee (S) Pte Ltd it is

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