Nam Kee Asphalt Pte Ltd v Chew Eu Hock Construction Co Pte Ltd

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin JC
• Judgment Date: 20 March 2000
• Neutral Citation: [2000] SGHC 45
• Published date: 14 August 2007
• Court: High Court (Singapore)
• Plaintiff Counsel: Leow Tiat Hong (T H Leow & Co)
• Defendant Counsel: Lee Chin Seon (C S Lee)

1 The Plaintiffs and Defendants are companies registered in Singapore. The Plaintiffs are road contractors and suppliers of graded aggregates, asphalt premix and other road building materials. The Defendants are general contractors and at the material time were a partner in the joint venture ("the JV") that was awarded a contract by the Land Transport Authority for a certain stretch of the North-East Mass Rapid Transit line designated as the MRTC704 NEL contract ("the MRT contract").

2 The Plaintiffs and Defendants entered into two written contracts, both dated 1 October 1997, which provide for the supply, delivery and laying of graded aggregates ("the Aggregates Contract") and of asphalt premix ("the Premix Contract"). Graded aggregates are stones of various sizes, ranging from coarse to fine, that form the base layer of our bituminous roads. Asphalt premix is a mixture of fine stones and asphalt, or bitumen, that forms the top layer of such roads.

3 Under the Aggregates Contract, the Defendants ordered and paid for 8,643.42 tonnes of graded aggregates. The Plaintiffs claim that the Defendants were obliged to consume a total 40,000 tonnes under this contract and seek in this action to recover loss of profits on the unsold balance of 31,356.58 tonnes amounting to $260,259.61.

4 Under the Premix Contract, the Defendants ordered and paid for 3,962.22 tonnes of grade B1 asphalt premix and 6,292.63 tonnes of grade W asphalt premix. The Plaintiffs claim that the Defendants were obliged to consume 60,000 and 8,000 tonnes respectively of grade B1 and grade W asphalt premix. The Plaintiffs therefore seek to recover loss of profits on the unsold balance of 56,037.78 tonnes of grade B1 and 1,707.37 tonnes of grade W asphalt premix amounting to $648,357.10 and $20,334.77 respectively.

5 In total, the Plaintiffs' claims in this action amount to $928,951.48, plus interest and costs. At the end of the trial and after hearing submissions by counsel I dismissed the Plaintiffs' action with costs. The Plaintiffs appealed on 23 February 2000 and I now give my grounds of decision.

Parol Evidence

6 Both contracts take the form of a letter of offer from the Plaintiffs to the Defendants dated 1 October 1997. The letters set out certain terms of the offers and are signed by the Plaintiffs' General Manager. One of the directors of the Defendants accepted the offers by signing at the acknowledgement section provided at the last page of the letters. The acceptances are dated 9 October 1997.

7 The first question is whether the parties are entitled to adduce any evidence relating to the terms of these contracts apart from the two letters of 1 October 1997. Sections 93 and 94 of the Evidence Act are relevant in this regard. They provide as follows:

"93. When the terms of a contract … have been reduced by … the parties to the form of a document, … no evidence shall be given in proof of the terms of such contract … or of such matter except the document itself, or secondary evidence of its contents in cases in which secondary evidence is admissible under the provisions of this Act."

"94. When the terms of any such contract … have been proved according to section 93, no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument … for the purpose of contradicting, varying, adding to, or subtracting from its terms subject to the following provisions:

…

(b) the existence of any separate oral agreement, as to any matter on which a document is silent and which is not inconsistent with its terms, may be proved; in considering whether or not this proviso applies, the court shall have regard to the degree of formality of the document;"

8 The Plaintiffs were quite prepared to proceed on the basis of the written contracts with no other evidence to be adduced in respect of their terms. However the Defendants took the position that they had evidence admissible under section 94(b). I allowed the Defendants to adduce such evidence the admissibility of which I would determine after hearing submissions. The Defendants' witnesses gave evidence that in the course of the negotiation leading to the contracts, the Plaintiffs' representative had agreed that the Defendants would not be bound to take the entire quantities specified in the contracts nor would they be bound to take all their requirements of graded aggregates and asphalt premix from the Plaintiffs. In the course of his submissions, counsel for the Defendants conceded that this evidence would not be admissible under section 94(b). I therefore need not consider any evidence of the terms of the contracts apart from the Aggregates Contract and the Premix Contract.

The Aggregates Contract

9 The Plaintiffs claim that the Defendants were in breach of the following terms of the Aggregates Contract:

(a) the Defendants must purchase at least 40,000 tonnes of graded aggregates from the Plaintiffs ("the minimum quantity clause"); and

(b) the Defendants must purchase all the graded aggregates that they require in respect of the MRT contract from the Plaintiffs ("the exclusivity clause").

In respect of the minimum quantity clause, counsel for the Plaintiffs said that it was an express term of the contract. As for the exclusivity clause, he at first contended that it was also an express term. However he was unable to point to such term in the contract and eventually conceded that it was an implied term.

10 I first set out the provisions of the Aggregates Contract which are as follows:

"[To:] Chew Eu Hock Construction Co Pte Ltd

MRT C704 NEL (MARCH 1998 – MARCH 2001)

SUPPLY, DELIVERY & LAYING OF GRADED AGGREGATES

We thank you for the invitation to quote for the above-mentioned job and submit herewith our quotation and terms and condition as follows:

Estimated Quantity : 40,000 Tonnes

Mat Thickness : 250 mm and above

W/O sensor (Unless otherwise stated) : Yes

Day Work (Unless otherwise stated) : Day/Night

Rate – 1 Aug 1997 to 31 Aug 1999 : $21.00 per tonne

Rate – 1 Sep 1999 to 31 Aug 2000 : $22.00 per tonne

Rate – 1 Sep 2000 to 31 Aug 2001 : $23.00 per tonne

Est date of commencement : Early 98*

The price quoted does not include GST or other fees which shall be payable by you as required by any law or rules at any point of time.

* Please give 2 weeks advance notice before date of commencement.

TYPE OF MATERIAL (GRADED AGGREGATES)

The graded aggregates shall consists of graded crushed, clean and hard angular aggregate complying with the requirements of SS 31 and conforming to the gradation showing on Table 17.7 of PWD General Specification.

SITE CONDITION

The underlying course shall be checked and accepted by the relevant authority before placing and spreading of the Graded Aggregates. Any ruts or soft, yielding places due to improper drainage conditions, hauling or from any other courses shall be corrected and rolled to the required density prior to placing of the Graded Aggregates.

The levels of subgrade shall be within the appropriate tolerances stated in Table 17.2 of PWD General Specification.

SCOPE OF WORK

The material shall be transported directly to the point where it is to be laid and shall be deposited and spread by a paver finisher in lanes in a uniform layer without segregation of size to such loose depth that, when compacted, the thickness of the compacted layer shall not exceed 250 mm.

After spreading the lose material shall be thoroughly compacted. The rolling shall continue until the material is compacted to a dry density of not less than 98% of the maximum dry density as determined by BS1377 Test No 14.

OTHER CONDITIONS

This agreement shall not be assigned in part or in whole to any other persons without the written consent of our company.

All delivery notes acknowledge and signed by your site staff shall be considered as final proof of receipt of goods delivered and as ordered under your instructions. You are also advised to have all delivery notes stamped with your company’s seal.

Payment shall be made on the actual quantity of graded aggregates delivered and acknowledge on the delivery notes.

PAYMENT TERM

60 days from date of supply.

Interest at the rate of 1% per month will be charged on overdue accounts.

The supplier shall be entitled to withhold further deliveries of premix without notice if any invoice shall be found unpaid on the due date. In such case the company may terminate this agreement with immediate effect and not withstanding the credit term hereby agreed and in recovering such outstanding payments, plus all legal costs and expenses together with interest accrued thereon.

COMPENSATION FOR DELAY

Nam Kee shall strictly adhere to your work schedule given to us not later than 2 weeks in advance.

In the event Nam Kee fails to comply with work schedule or within such reasonable time other than those listed below:

(a) Force majeure

(b) Exceptionally adverse weather conditions the assessment of which shall be in accordance with the relevant provision in the specifications.

(c) Industrial action by workmen, strikes, lock-outs or embargoes affecting any of the trades employed upon the works or in the preparation, manufacture or transportation of materials or goods required for the works and provided the same are not due to any reasonable act or default of the contractor or of any subcontractor. Provided that this event shall only apply if the industrial action by workmen, strike, lock-out or embargo causing the delay is in Singapore.

(d) Compliance with the requirements of any law, regulation, by-law or public authority or public service company.

(e) Fire, storm, lightning, high winds or flooding.

Nam Kee shall compensate the main contractor the difference in price and cost if the same work is being executed by another contractor under this circumstance.

VALIDITY PERIOD

The validity of this quotation shall be for 14 days from the date of this Sales Quotation, subject to fluctuation of materials costs. Any amendments to the...