Mansource Interior Pte Ltd v CSG Group Pte Ltd

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 08 March 2017
• Neutral Citation: [2017] SGHC 41
• Docket Number: Suit No 1155 of 2013
• Date: 08 March 2017
• Published date: 18 October 2017
• Plaintiff Counsel: Edwin Lee, Poonaam Bai and Charles Tay (Eldan Law LLP)
• Defendant Counsel: A Rajandran (A Rajandran)
• Court: High Court (Singapore)
• Hearing Date: 20 January 2016,19 January 2016,28 March 2016,26 July 2016,21 January 2016,22 January 2016,21 March 2016
• Subject Matter: Building and Construction Industry Security of Payment Act,Statutes and regulations,Sub-contracts,Building and Construction Law,Measurement contracts,Building and construction contracts,Claims by sub-contractor

Vinodh Coomaraswamy J: Introduction

The plaintiff seeks judgment against the defendant in the sum of $904,530.53 (including goods and services tax), being the amount by which the plaintiff has overpaid the defendant under two subcontracts between the parties in relation to a project at Changi Business Park.¹ The defendant, in response, has mounted a counterclaim principally for variations under the subcontracts.

I have found in favour of the plaintiff and against the defendant.² I have therefore entered judgment in the plaintiff’s favour for the principal sum of $904,530.53 (including goods and services tax). I have also dismissed the defendant’s counterclaim in its entirety.

The defendant has appealed to the Court of Appeal against my decision. I therefore now set out my reasons.

Background facts The parties and their subcontracts

The plaintiff is an interior renovation company.³ The defendant is a building contractor specialising in glazing works.⁴

In December 2012, Shimizu Corporation Pte Ltd as the main contractor awarded to the plaintiff the subcontract⁵ for interior fitting out works for a section of the Changi Business Park project.⁶ By two subcontracts, the plaintiff subcontracted to the defendant the wall finishes work and the joinery work for the same section of the project.⁷ The wall finishes subcontract had a value of $1,252,750.⁸ The joinery subcontract had a value of $1,550,000.⁹

Both subcontracts are re-measurement contracts by express provision. The effect of the re-measurement clause is that each subcontract sum was subject to re-measurement and recalculation when drawing up the final account. The re-measurement clause reads as follows:¹⁰

22) Others

…

This Sub-Contract is a re-measurement contract. Accordingly, the amount stated as Sub-Contract Sum shall be subject to re-measurement and recalculation in the event that the actual quantities of the work executed and materials supplied differ from the quantities or estimates provided by either party prior to the letter of award. In the event there is material which deviate in the specification and approved by Consultant, we reserve our right for the cost adjustment.

Each subcontract also provides expressly that it is back-to-back with the main contract. One consequence of that is that the defendant was precluded from advancing a variation claim under either subcontract unless the main contractor authorised and approved the variation:¹¹

17) Variation Claim

This Sub-Contract shall be on a back-to-back basis to the contract between [the plaintiff] and [the main contractor] and there shall be no claim whatsoever unless it is a variation work authorised and approved by [the main contractor] only.

The defendant duly commenced work under each subcontract.¹²

Payment claims The wall finishes subcontract

On 5 August 2013, the defendant served on the plaintiff a payment claim under the wall finishes subcontract for the sum of $322,536.65.¹³ On 21 August 2013, the plaintiff certified the sum of $93,732.10.¹⁴ (This, like all sums of money which I set out in this judgment, excludes goods and services tax unless otherwise stated.)

On 28 August 2013, the defendant made an adjudication application under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”) for the sum of $228,804.55 said to be due under the wall finishes contract.¹⁵ That sum was the difference between the defendant’s payment claim and the plaintiff’s certificate for the wall finishes work.

On 12 September 2013, the defendant obtained an adjudication determination in its favour in the sum of $223,956.50 for wall finishes work.¹⁶

The joinery subcontract

Also on 5 August 2013, the defendant served on the plaintiff a payment claim under the joinery subcontract for the sum of $324,812.68.¹⁷ The plaintiff issued a payment certificate dated 9 July 2013 certifying the sum of $56,267.90.¹⁸ On 28 August 2013,¹⁹ the defendant made an adjudication application under the Act for the sum of $268,544.78 said to be due under the joinery subcontract. That sum was the difference between the defendant’s payment claim and the plaintiff’s certificate for the joinery work.²⁰

On 12 September 2013, the defendant obtained an adjudication determination in its favour in the sum of $296,719.58 for joinery work.²¹

The defendant enforces the adjudication determinations

A little over a week after securing the two adjudication determinations, the defendant applied for²² and secured leave to enforce each determination as a judgment of the court.²³ The plaintiff was therefore adjudged liable to pay the defendant – albeit only with interim finality – the sum of $243,485.46 for the wall finishes work and $323,909.95 for the joinery work.²⁴

The plaintiff attempted to set aside both judgments and both determinations. Both attempts ultimately failed.

The plaintiff has paid to the defendant the sum of $317,992.62 (including goods and services tax) under the adjudication determination on the joinery claim.²⁵ The defendant also recovered from the plaintiff by levying execution the sum of $26,405.73 (including goods and services tax) under the judgment arising from the adjudication determination on the wall finishes subcontract.²⁶

The plaintiff commenced this action on 18 December 2013, claiming that the final account between the parties showed that the plaintiff had paid the defendant under each subcontract more than the defendant was contractually entitled to and seeking judgment for the amount of the overpayment.²⁷

The parties’ claims and counterclaims

I now set out a breakdown of the sums that the parties claim against each other.

The plaintiff‘s claim The wall finishes subcontract

The plaintiff claims that it has overpaid the defendant a sum of $567,793.76 (including goods and services tax) under the wall finishes subcontract.²⁸ That overpayment arises because the plaintiff’s interim payments to the defendant were made on the basis that the plaintiff was obliged to pay for openings in the walls even though there was no finish involved. However, the plaintiff now takes the position that the wall finishes contract permits it to exclude openings in the walls when calculating the defendant’s entitlement to payment.

The sum of $567,793.76 (including goods and services tax) claimed under the wall finishes contract is computed as follows:²⁹

Item	Amount (including goods and services tax)
Amount paid under the wall finishes subcontract	$1,352,029.86
Amount recovered by the defendant in execution proceedings	$26,405.73
Total paid (A)	$1,378,435.59
LESS
Sum actually due under the contract on re-measurement	($787,521.71)
Direct supply item which the plaintiff agreed to pay for	($22,221.32)30
Agreed variation	($898.80)
Total due (B)	($810,641.83)
Amount overpaid (= A – B)	$567,793.76

The joinery subcontract

The plaintiff also claims that it has overpaid the defendant a sum of $336,736.77 (including goods and services tax) under the joinery subcontract. ³¹ That sum is computed as follows:

Item	Amount (including goods and services tax)
Amount paid under the joinery subcontract	$1,607,537.93
Payment pursuant to adjudication determination	$317,992.62
Total paid (C)	$1,925,530.55
LESS
Sum actually due under the contract on re-measurement (D)	($1,588,793.78)
Amount overpaid (= C – D)	$336,736.77

The plaintiff adds these two sums together and claims that it has overpaid the defendant a total of $904,530.53 (including goods and services tax) under both subcontracts.³²

The defendant’s counterclaim Counterclaim arising from the subcontracts

The defendant’s counterclaim is for monies said to be due from the plaintiff under both subcontracts.

Under the wall finishes subcontract, the defendant’s counterclaim in substance is for: The sum of $4,848.05 being excess back charges deducted by the plaintiff for rectification of mosaic tiling;³³ and The sum of $38,141.94 being the 2.5% of retention sum held by the plaintiff.³⁴

Under the joinery subcontract, the defendant’s counterclaim in substance is for the sum of $44,141.32, being the 2.5% of retention sum held by the plaintiff under the joinery subcontract.³⁵

In the general alternative, the defendant claims damages to be assessed in respect of the work done, services rendered, and material that it supplied to the plaintiff on the account of both the wall finishes and the joinery subcontracts.³⁶

Counterclaim arising from the payment claims

In addition to the defendant’s counterclaims under the subcontracts which I have summarised at [23] – [26] above, the defendant also attempts to assert by way of counterclaim one of the following three alternative counterclaims: (i) its original payment claims issued under each subcontract; (ii) the adjudication determinations issued in its favour under each subcontract; or (iii) the judgments under s 27 of the Act founded on those adjudication determinations.

The defendant also seeks to recover by way of counterclaim: Damages to be assessed or taxed, in the form of costs and expenses incurred by the defendant in the adjudication applications, including solicitors’ fees, pursuant to s 30(4) of the Act;³⁷ Damages to be assessed or taxed, in the form of costs and expenses, including solicitors’ fees, in respect of the litigation resulting from the defendant’s applications to enforce the adjudication determinations and consequential applications;³⁸ and Damages arising from having to engage Mr Lim Yan San (“Mr Lim”), the defendants’ project manager for the subcontracts, from August 2013 to December 2013, at a sum of $5,000 per month.³⁹

The heads of the defendant’s counterclaim which I have summarised at...