OCWS Logistics Pte Ltd v Soon Meng Construction Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 21 November 1998
• Neutral Citation: [1998] SGHC 382
• Date: 21 November 1998
• Subject Matter: Legal set-off,Civil Procedure,Whether there can be set-off if sum is unliquidated and from different contract,Defences,Closely connected with subject matter,Pleadings,Equity,Liquidated sum to be ascertained at time of pleading,Same transaction,Equitable set-off,Unliquidated damages
• Docket Number: DC Suit No 50715 of 1998
• Published date: 19 September 2003
• Defendant Counsel: Stephen Soh (Bernard Rada & Lee)
• Court: High Court (Singapore)
• Plaintiff Counsel: Tan Joo Seng (Chan Tan & Partners)

Judgment:

CHAO HICK TIN J

Pursuant to an agreement in July/August 1994 (`the 1994 contract`) the plaintiffs engaged the defendants as sub-contractors for the general repainting of certain buildings of the Ministry of Defence at Changi for a lump sum of $300,000. Under that contract the defendants were to obtain the supplies of materials from the plaintiffs and the latter were entitled to deduct the cost thereof from the contract sum. During the progress of the works, payments were made by the plaintiffs to the defendants. Upon completion of the contract, and on final computation, an amount of $144.458.65 was found to be owing from the defendants to the plaintiffs. This is not disputed by the defendants.

2.What the defendants claimed is that they have a defence of set-off which exceeds the $144,458.65 owed by them to the plaintiffs. This set-off arose under an agreement between the parties signed on 9 January 1995 (`1995 contract`) whereby the parties agreed to `work together and/or share resources for the purposes of carrying out sub-contracting works involving repainting and/or upgrading works.` Pursuant to the 1995 contract, works were undertaken and completed at three locations, namely, HDB Tampines site, HDB Bukit Panjang site and HDB Choa Chu Kang site. The defendants claimed that there is a sum of $397,969.95 due from the plaintiffs in respect of the works done in those three sites and sought to set it off against the sum of $144,458.65 due from them to the plaintiffs. In the alternative, the defendants counterclaimed for that sum.

3.However, the plaintiffs contended that under that 1995 contract not only is there nothing owed by them to the defendants, it is the defendants who are liable to pay to the plaintiffs to the tune of $925,772.25.

4.The plaintiffs applied for summary judgment in respect of their claim for $144,458.65 under the 1994 contract. The deputy registrar of the subordinate courts granted the application with no stay of execution pending the trial of the defendants` counterclaim. The defendants appealed. I dismissed the appeal and now give my reasons.

5.The defendants have not filed an affidavit to substantitate their defence of set-off. They relied wholly upon the defence filed. Of course O 14 r 4(1) provides that a defendant may show cause against an O 14 application by `affidavit or otherwise`. The burden is on the defendant. A bald assertion in a defence filed may not be sufficient. It would have to depend on the nature of the defence. As stated in para 14/4/4 of the Supreme Court Practice :

The use of the term `or otherwise` is not intended to open wide the door for giving leave to a defendant who has no real defence; the primary obligation remains on the defendant to `satisfy` the court that there is a triable issue or question or that there ought to be a trial for some other reason.

6.In general, any debt or liquidated sum due from a plaintiff to a defendant can be set-off against the plaintiff`s claim. This is the legal set-off or independent set-off. An unliquidated claim of the defendant for damages can be set-off if it arises from the same transaction as the claim of the plaintiff or is closely connected with the subject matter of the claim: see Hanak v Green [1958] 2 QB 9 and Morgan & Son Ltd v Martin Johnson & Co Ltd [1949] 1KB 107. This is the principle of equitable set-off. Order 18 r 17 of the Rules of Court does not create any right of set-off. It merely provides the mechanism whereby a set-off can be raised: see Bullen & Leake & Jacob`s Precedents of Pleadings (13th Ed) at p 1416.

7.The development of the law of set-off is far from satisfactory. Before 1873 two main sets of courts could claim jurisdiction over the same cause of action. However, they applied different rules. One applied common law and the other equity. The common law courts were less receptive to set-off than courts of equity. The Statute of Set-Off did not allow a set-off if either of the claims was unliquidated. Therefore, a...