Multistar Holdings Ltd v Geocon Piling & Engineering Pte Ltd

• Jurisdiction: Singapore
• Court: Court of Three Judges (Singapore)
• Judge: Sundaresh Menon CJ
• Judgment Date: 11 January 2016
• Neutral Citation: [2016] SGCA 1
• Citation: [2016] SGCA 1
• Docket Number: Civil Appeal No 28 of 2015
• Hearing Date: 21 October 2015
• Subject Matter: Pleadings,Amendment,Civil Procedure
• Published date: 16 January 2016
• Defendant Counsel: Leo Cheng Suan and Teh Ee-Von (Infinitus Law Corporation)
• Plaintiff Counsel: Govind Asokan (Gabriel Law Corporation)
• Date: 11 January 2016

Chao Hick Tin JA (delivering the grounds of decision of the court): Introduction

This appeal arose from the decision of the High Court judge (“the Judge”) as reported in Geocon Piling & Engineering Pte Ltd (in compulsory liquidation) v Multistar Holdings Ltd (formerly known as Multi-Con Systems Ltd) and another suit [2015] 3 SLR 1213 (“the GD”). The Appellant, Multistar Holdings Ltd (“Multistar”), contended that the Judge erred in granting the Respondent, Geocon Piling & Engineering Pte Ltd (“Geocon”), leave to amend its statement of claim to include a new claim which was time-barred.

One of the central concerns where amendments are sought to be made after the expiry of the limitation period is whether they seek to introduce a new cause of action. An amendment that does not advance a new cause of action but rather makes good the error of failing to tell the complete story at the outset would be allowed, whereas attempts to include a claim which is distinct from those originally pleaded under the guise of an amendment would be denied where in the meantime limitation has set in in relation to that claim. In the court below, Geocon sought leave to make two sets of amendments to its statement of claim. Based on the parties’ written submissions, we initially had the impression that the first set of amendments that Geocon sought to introduce into its statement of claim fell within the latter category, until counsel for Geocon, Mr Leo Cheng Suan (“Mr Leo”), in the course of his oral submission before us drew our attention to the particulars contained in an annexure that was appended to the original statement of claim. While we observed that Geocon’s pleadings left much to be desired, we were satisfied that certain particulars contained in this annexure on the cause of action that Geocon was seeking to introduce by way of the amendment was not really “new”. Hence, we dismissed the appeal.

These grounds are issued because, while we did not overturn the Judge’s decision, some aspects of the Judge’s reasoning needed further reconsideration. First, we thought the Judge erred in defining what constitutes a new “cause of action” within the meaning of O 20 r 5(5) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the ROC”). Second, the Judge fell into the error of treating the amendment as a routine application under O 20 r 5(1) of the ROC when the correct provision to apply in relation to the application should have been O 20 r 5(2) read with r 5(5) of the ROC, which requires a different test to be applied. In fact, because of this misconception, the Judge refused to even hear Multistar’s request to make further submissions on the latter set of provisions, and decided the matter solely on the basis of O 20 r 5(1). Our analysis on these two points follows hereunder.

Facts The trial below

In the suit, Geocon claims for reimbursement from Multistar for works done in respect of two stages of a construction project. These were duly completed but the amount owing to Geocon for its services remained outstanding. Upon Geocon being wound up by its creditors, the liquidator commenced the suit to recover the debt owed by Multistar. Multistar refused to pay, and a trial was held to determine its liability to Geocon. The trial reached the submissions stage, when a ruling by the Judge on the amendment issue brought about the present appeal.

Multistar is the parent company of a group of companies in the engineering and construction business. Geocon was a wholly-owned subsidiary of Multistar. Until Geocon went into compulsory liquidation in 2006, it was the specialist piling sub-contractor in the Multistar group of companies.

In 2001, the Land Transport Authority (“LTA”) awarded a contract known as C421 to SembCorp Engineers and Constructors Pte Ltd (“Sembcorp”). Sembcorp’s scope of work under C421 was to construct part of the Kallang Paya Lebar Expressway (“KPE”) from the East Coast Park (“ECP”) to Nicoll Highway. Its scope of work included, but was not limited to, the bored piling at all locations along this stretch of the KPE.

Sembcorp subcontracted the entire scope of its bored piling works under C421 (“subcontract works”) to Multistar. The Sembcorp-Multistar subcontract was a lump sum contract, subject to variations, valued at $27.48m.

Multistar in turn sub-contracted the entire scope of its work under the Sembcorp-Multistar subcontract to Geocon. The Multistar-Geocon subcontract stipulated a price of $26m, but was otherwise expressed to be on the same terms as the Sembcorp-Multistar subcontract. Therefore, it was also a lump sum contract subject to variations.

Geocon, further subcontracted its entire scope of work under the Multistar-Geocon subcontract to a third party called Resource Piling Pte Ltd (“Resource Piling”), valued at $18.7m. Multistar was to pay the difference of $7.3m to Geocon as a project management fee.

In the carrying out of the subcontract works, Multistar bypassed the chain of subcontracts and dealt directly with Resource Piling as if the latter was a direct contractual counterparty. Resource Piling presented its progress claims directly to Multistar and in turn, progress payments were paid directly by Multistar to Resource Piling.

Resource Piling did not follow through with the subcontract works to completion. It stopped works in two stages. By late 2002, Resource Piling stopped all work at a location known as “ECP South Location”. However, it continued its work at all other locations until the end of April 2004 when it stopped work even at these other locations. At the trial below, the case that Geocon ran was that on each occasion when Resource Piling stopped work, it took over and continued the uncompleted subcontract works.

According to Geocon, the total costs incurred by Geocon for the project were recorded in Geocon’s accounting books with two separate cost ledgers:¹ GC1063, which stated Geocon’s costs incurred from January 2002 until the end of April 2004. GC1077, which stated Geocon’s costs incurred from May 2004 to the end of 2005.

In 2004, Multistar sued Resource Piling for breaching its contractual obligations on the basis that the parties were in direct contractual relationship. Resource Piling in turn sued both Multistar and Geocon. Both actions were tried together. Resource Piling emerged victorious in this set of litigation; Geocon was found liable to pay damages to the tune of $3.3m to Resource Piling. The Judge referred to this set of litigation in his GD as the “2004 Litigation”.

Geocon did not pay its judgment debt due to Resource Piling and was as a result wound up in June 2006. A liquidator was appointed for Geocon and he instituted the present action against Multistar for monies due to Geocon under the Multistar-Geocon subcontract.

The total claim which Geocon made in the present action against Multistar is for the sum of $10.9m. The original statement of claim filed on 31 January 2011 (“the Original SOC”) disclosed that this figure was arrived at as follows:² $1.8m as being the sum due to Geocon in respect of GC1063; $6.75m being the total sum due to Geocon in respect of GC1077; and $2.3m being the amount overcharged by Multistar.

Multistar in its defence averred that Geocon’s claims were barred by limitation; moreover, even if limitation were not applicable to the claims, whatever claims Geocon was entitled to should be based on the rates specified in the Multistar-Geocon subcontract which was entered into between the parties and not on a reimbursement basis.³

Geocon’s application to amend its SOC

The action proceeded to trial. Evidence was adduced by both Geocon and Multistar over seven days. It was only after written submissions had been tendered by both parties that Geocon applied to amend the Original SOC. To provide some context to the proposed amendments, it will be recalled that Resource Piling stopped work in two stages – first in 2002 at the ECP South Location (“the First Stage”) and second in 2004 in respect of the remaining locations (“the Second Stage”) (see [11] above). The case ran by Geocon at the trial below was that on both occasions, it took over from Resource Piling and completed the works. However, the problem is that in the Original SOC, Geocon only set out – in clear terms – facts relating to the Second Stage. The fact that it had taken over Resource Piling’s work in 2002 was not pleaded, at least not in clear and express terms.

The Original SOC read as follows: 11. Sometime around April 2004, disputes arose between Resource Piling / the Defendants over the Resource Piling Sub-contract. As a result, Resource Piling ceased work for Contract C421. 12. Following Resource Piling’s exit, the Defendants engaged the Plaintiffs to complete the remaining work at Contract C421. This contract was referred to internally between the Plaintiffs and the Defendants as GC1077.

...

14. In [the 2004 litigation], the following evidence was given by Tan [a witness for both Multistar and Geocon which were then still related] in his Affidavit of Evidence in Chief dated 8 November 2005 (“Tan’s AEIC”):

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(ii) After Resource Piling ceased the works for Contract C421, the Defendants engaged the Plaintiffs to complete the remaining works for Contract C421 “on a purely reimbursement basis” (Paragraph 47 of Tan’s AEIC).

[emphasis in bold added; emphasis in italics original]

At the trial below, Geocon led evidence on the works done in relation to the First Stage, and it was evident that Geocon wanted Multistar to reimburse it for that part of the works, on top of the works that it had done at the Second Stage. The relevant amended parts of the statement of claim read (“the Amended SOC”): 11. Sometime around October 2002 April 2004, disputes arose between Resource Piling and the Plaintiffs / the Defendants over the Resource Piling Sub-contract. As a result, Resource Piling ceased work ...