Ncode Consultant Pte Ltd v We Are Perspective Pte Ltd

• Jurisdiction: Singapore
• Judge: Ng Tee Tze Allen
• Judgment Date: 26 June 2023
• Neutral Citation: [2023] SGDC 58
• Court: District Court (Singapore)
• Docket Number: District Court Suit No 794 of 2020 (Assessment of Damages No 328 of 2022), HC/DCA 20/2023
• Hearing Date: 23 November 2022,26 May 2023
• Citation: [2023] SGDC 58
• Year: 2023
• Plaintiff Counsel: Mr Ranvir Kumar Singh (UniLegal LLC)
• Defendant Counsel: Mr Lim Jun Hao Alvin (Withers KhattarWong LLP),
• Subject Matter: Contract,Remedies,Damages,Expectation damages,Reliance damages,Mitigation of damage
• Published date: 01 August 2023

District Judge Ng Tee Tze Allen: Introduction

This action concerns a contract wherein the plaintiff engaged defendant to design and develop an electronic hotel card system (the “System”) (the “Contract”).¹

Differences arose between the parties and the Contract was not completed. Both parties alleged that the other breached the Contract and made their respective claims and counterclaims. Broadly speaking, the plaintiff alleged that the defendant failed to design and deliver the relevant components of the System according to the contractual specifications. It also alleged that the defendant committed repudiatory breach for refusing to work. the defendant alleged that S$83,514.50 was due pursuant to various delivery orders and that the plaintiff had not paid up.

After I heard the trial of the action, I gave interlocutory judgment to the plaintiff with damages to be assessed. I also gave judgment for the defendant’s counterclaim for the sum of S$83,514.50.

Thereafter, I heard the assessment of damages of the plaintiff’s claim. This is my judgment for the same.

Background facts

The matters below are undisputed unless otherwise stated.

The electronic hotel card system

The plaintiff is a company which provides services relating to internet access and computer software development.² In or around 2017, the plaintiff embarked on a project to develop the System (the “Project”). It was envisaged that using this System, guests would be able to use their hotel cards to, amongst other things, access their hotel room doors as well as to receive information about the hotel’s goods and services.³

The defendant is a company which provides services relating to industrial design and engineering.⁴

In or around June 2017, the plaintiff invited the defendant to provide a proposal to develop the System.⁵ Negotiations ensued.

It is common ground that, ultimately the plaintiff intended to sell the System to hotels and that the defendant knew of this fact.⁶

The STB grant

On 10 August 2017, and in the course of the negotiations, the plaintiff informed the defendant that it intended to apply for a grant with the Singapore Tourism Board (“STB grant”) for the Project and that it intended to include the defendant as part of its “consortium” for the same. The defendant agreed.⁷

On 27 August 2017, the plaintiff applied for the STB grant. The defendant admitted that it knew that the plaintiff had applied for a grant from the STB but claimed not to know its quantum.⁸

On 24 November 2017, the STB responded to the plaintiff’s application with its “Letter of Offer for Grant”. Therein, the STB offered the plaintiff a grant of up to S$244,012. The grant would be disbursed in stages upon the incurrence of one or more qualifying costs and the achievement of various milestones.⁹

The plaintiff accepted the STB’s offer on 30 November 2017.¹⁰

The Contract

On 25 January 2018, the plaintiff entered into the Contract by accepting the defendant’s “Proposal for the Design & Development of Hotel Bluetooth Wifi Card, Multi Cards Charger & Bluetooth Wifi Beacon”.¹¹ I will return to the specific terms of the Contract as and where they are relevant in the course of my judgment. For present purposes, it is sufficient to note the following.

First, as its title indicated, the Contract obliged the defendant to design and develop the following components: Hotel Bluetooth Wifi Cards (the “I-Cards”): these are the hotel cards envisaged at [6] above. a Bluetooth Wifi Beacon (the “Beacon”): these Beacons were intended to be planted at strategic locations in the hotel. Controlled by a backend server, they would broadcast data into the I-Cards as and when a hotel guest reaches the relevant location. two types of chargers for the I-Card: (i) a Multi Card Charger (to be used by the hotel staff) that can charge up to 50 I-Cards concurrently, and (ii) a Single Charger (to be operated by hotel guests) that charges one I-Card at a time.

These components were to be developed in phases and payment became due as and when various milestones were met. I do not intend to set out each and every milestone payment. Instead, I will provide the consolidated figures based on the phases envisaged in the Contract.

In Phase 1, the parties were to work out the specifications of the components.¹² Phase 1 was to end with a “Requirement Confirmation review” and the defendant delivering a “Requirement Specification Document which covers Industrial Design Direction, Mechanical Requirement, Electronic Hardware / Firmware Requirement.”¹³

It is common ground that Phase 1 was completed on or around 27 February 2018 when the parties agreed that the components were to be designed according to a document titled “Product Requirement Document”. It is also common ground that this “Product Requirement Document” was the “Requirement Specification Document” required under the Contract.¹⁴ Upon completion of this phase, the defendant was entitled to charge: (a) S$22,060 for the I-Card,¹⁵ (b) S$14,600 for the two types of chargers,¹⁶ and (c) S$8,920 for the Beacon.¹⁷

In Phases 2 and 3, the defendant was to design and develop the components: Phase 2 concerned the components’ industrial design. In this phase, the defendant was to “develop the block level electronics and the high-level mechanical layout design.” Phase 2 was to end with a Preliminary Design Review.¹⁸ Upon completion of this phase, the defendant was entitled to charge: (a) S$33,090 for the I-Card,¹⁹ (b) S$21,900 for the chargers,²⁰ and (c) S$13,380 for the Beacon.²¹ Phase 3 concerned the electronics of the components. In this phase, the defendant was to “design and develop the detail[ed] electronics with schematics and the PCB [i.e., printed circuit board]”. The defendant was also to “design the 2D mechanical drawings for the prototype development.”²² Phase 3 was to end with an Intermediate Design Review. Upon completion of this phase, the defendant was entitled to charge a total of: (a) S$39,410 for the I-Card,²³ (b) S$29,660 for the chargers,²⁴ and (c) S$13,380 for the Beacon.²⁵

I turn to Phases 4 and 5. These phases involved fabricating prototypes of the components: Phase 4 was the first time that the defendant was to fabricate the components. This included “the electronic PCBs and PCBAs, and the mechanical enclosure”. Briefly, “PCB” refers to the printed circuit board of the relevant components with no electronic components attached. “PCBA” refers to printed circuit board assembly, namely, the finished board after all the components have been installed on the PCB. “Mechanical enclosure” refers to the casing of the relevant components.²⁶ After fabricating the prototypes, the defendant was to conduct integration testing of the hardware electronics, firmware and mechanical enclosures. Phase 4 was to end with a Prototype Acceptance and Delivery.²⁷ Thereafter, the defendant was entitled to charge a total of: (a) S$19,740 for the I Card,²⁸ (b) S$13,590 for the chargers,²⁹ and (c) S$8,920 for the Beacon.³⁰ Finally, in Phase 5, the defendant was to review the prototypes developed in Phase 4 and make minor refinements, if required. The phase was to end with a Prototype Review and Refinement Report.³¹ In this respect, it should be noted that Phase 5 only involved the I-Card and the chargers. It was not contemplated that a further prototype of the Beacon would be developed in Phase 5. The defendant was entitled to charge a total of: (a) S$11,300 for the I-Card,³² and (b) S$14,050 for the chargers.³³

The defendant appointed AOC Pte Ltd as its sub-contractor for electrical and electronics support as well as to manufacture the components.

Performance of the Contract The plaintiff’s dissatisfaction

The plaintiff did not allege breach of the defendant’s obligations under Phases 1 to 3. Instead, it accepted that the defendant had “provided certain deliverables … in purported compliance with its obligations”³⁴ but caveated that it was unable to verify them.³⁵ According to the plaintiff, it had accepted the deliverables “simply for the purposes of making progress payments” and “to enable [the defendant] to progress with the completion of the System.”³⁶

As for Phases 4 and 5, the plaintiff alleged that the defendant was obliged, but failed, to ensure that the components worked together as a fit and functional system.³⁷ It also alleged that the prototypes delivered under Phases 4 and 5 did not meet their contractual requirements.³⁸

The plaintiff was particularly dissatisfied with the I-Card. It alleged that: The initial prototype of the I-Card which the defendant produced in April 2018 under Phase 4 was an empty shell, did not accord with its design, and was improperly sealed.³⁹ The subsequent prototype of the I-Card produced in May 2018 under Phase 5 had fundamental problems with its battery life, thickness, and omitted core functionalities.⁴⁰ Due to the matters above, a third prototype of the I-Card had to be developed even though the Contract did not contemplate the same. However, even that was defective.⁴¹

For the avoidance of doubt, the plaintiff also took issue with the other components of the System. I do not propose to set out all of these issues at this stage. It suffices to note that my findings on these issues are set out at [35] below.

The plaintiff also alleged that the defendant had committed repudiatory breach of contract by October 2019 because, inter alia, the defendant had refused to do any more work.⁴² It alleged that the plaintiff had accepted the defendant’s repudiatory breach through its lawyer’s letter on 20 January 2020.⁴³

The defendant’s response

The defendant disagreed. It argued that it had not guaranteed the end result of the components. According to the defendant, the Product Requirement Document was a non-binding “wish list”.⁴⁴

The defendant also contended that it had completed all its obligations for the...