Poh Cheng Chew v K P Koh & Partners Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 30 January 2014
• Date: 30 January 2014
• Docket Number: Suit No 682 of 2012
• Court: High Court (Singapore)

Poh Cheng Chew

Plaintiff

and

KP Koh & Partners Pte Ltd and another

Defendant

[2014] SGHC 20

Lionel Yee JC

Suit No 682 of 2012

High Court

Contract—Contractual terms—Illegality and public policy—Clause in settlement agreement prohibiting owner of property from making complaint to Professional Engineers Board—Whether clause enforceable—Whether clause breached

Contract—Contractual terms—Owner of property entering into settlement agreement with defendants to rectify defective works done by defendants to property—Settlement agreement providing for appointment of professional engineer to determine scope and specifications of rectification works and to award tender for said works to be paid for by defendants—Defendants disputing award made by professional engineer and refusing to make further payments—Whether defendants in breach of settlement agreement—Whether grounds existing for setting aside appointment of professional engineer or award made by professional engineer—Whether implied term not to interfere with or influence professional engineer breached—Whether defendants entitled to counterclaim for additional works allegedly carried out prior to settlement agreement

Tort—Conspiracy—Whether owner of property in conspiracy to injure or cause loss to defendants with professional engineer appointed under settlement agreement

The plaintiff engaged the defendants to carry out additions and alterations (‘the A&A Works’) to a property owned by the plaintiff. The first defendant was an architecture and engineering firm whereas the second defendant was a building contractor. Both defendants were run by one Koh Kok Peng (‘Koh’), a professional engineer.

A dispute arose between the parties regarding the A&A Works, which the plaintiff alleged were defective and incomplete. The dispute was resolved through mediation and the parties entered into a settlement agreement, which provided that a professional engineer was to be appointed to set out the scope and specifications of works required to rectify the defects (‘the Rectification Works’), prepare and call for a tender for the said works, evaluate the tenders, and award the contract. The scope and specifications of the Rectification Works were to be ‘based on’ two consultants' reports previously commissioned by the plaintiff, and were to be set out ‘on the basis of the most efficient manner to rectify the defects so as to ensure that the works comply with the required statutory regulations and are of a standard commensurate with the price paid by the [plaintiff] for the original works’. Under the settlement agreement, the defendants were to pay the fees of the professional engineer, the costs of the Rectification Works, and other related costs, and the plaintiff was to refrain from filing any complaint with the Professional Engineers Board (‘the PEB’).

One Chan Yaw Fai (‘Chan’) was appointed as the professional engineer under the settlement agreement. After conducting two tenders, Chan awarded the contract for the Rectification Works to Crystallite Construction & Engineering Pte Ltd (‘Crystallite’). The defendants were dissatisfied with Chan's decision and did not make any further payments under the settlement agreement. As a result, the Rectification Works were never started. After unsuccessful further mediation, the plaintiff commenced the present suit and on the same day, filed a complaint to the PEB against Koh.

The plaintiff pleaded that he had suffered loss and damage as a result of the defendants' breach of the settlement agreement. The defendants contested this and prayed for orders setting aside Chan's appointment and the award to Crystallite on the grounds that Chan was not independent and had materially departed from his instructions in awarding the contract to Crystallite. The defendants further pleaded that the settlement agreement had been repudiated or terminated since the plaintiff had breached: (a) the fundamental term that he refrain from filing a complaint to the PEB; and (b) the implied term that he (and/or his agents) would not interfere with or exert any influence over the professional engineer. Alternatively, the defendant pleaded a conspiracy on the part of the plaintiff and Chan to injure or cause loss to the defendants by, inter alia, increasing the scope and specifications of the Rectification Works beyond that prescribed in the consultants' reports. Additionally, the defendants counterclaimed certain sums due for additional works on the plaintiff's property allegedly carried out by them prior to the settlement agreement.

Held, dismissing the claim and allowing the cross-claim in part:

(1) Chan's appointment as the professional engineer under the settlement agreement was a form of expert determination: at [30] and [31] .

(2) There was no reason to set aside Chan's appointment since the defendants' case on this point was only that Chan had acted in a biased manner and aligned his interests with those of the plaintiff. These concerns did not relate to the circumstances of Chan's appointment but were more relevant to his determinations under the settlement agreement: at [34] .

(3) In determining whether an expert's determination should be set aside on the ground of a material departure from instructions, the first step was to ask what the parties had agreed to remit to the expert. The second step was to inquire into the nature of the mistake made; if the mistake constituted a material departure from instructions, then the expert's determination was not binding. The test of materiality was that any departure from instructions would be regarded as material unless the departure could be characterised as trivial or de minimis when analysed with respect to the instructions: at [38] , [39] and [42] .

(4) Chan did not materially depart from his instructions. Chan's instructions under the settlement agreement did not restrict him to the consultants' reports in preparing the scope and specifications of the Rectification Works and the settlement agreement as a whole indicated that the parties intended to give him a measure of discretion in preparing the scope of the Rectification Works: at [50] to [54] .

(5) However, Chan's award of the contract to Crystallite had to be set aside as Chan had failed to act impartially and fairly as between the parties. Chan had favoured the interests of the plaintiff in carrying out his duties under the settlement agreement due to his own mistaken view that he was to act as the plaintiff's agent: at [70] to [78] .

(6) There was no breach of the implied term in the settlement agreement that parties would not interfere with or influence the professional engineer in his course of work. There was insufficient evidence that the plaintiff and/or his agents had controlled Chan's fees or that they had made improper attempts to influence Chan or interfere with Chan's independence: at [61] , [82] - [88] .

(7) As Chan's award of the contract to Crystallite was to be set aside, the plaintiff's claim that the defendants were in breach of the settlement agreement by refusing to pay the balance of Chan's fees and the costs of the Rectification Works could not succeed: at [90] .

(8) The clause in the settlement agreement which sought to prohibit the plaintiff from making a complaint to the PEB was illegal and unenforceable because it allowed a professional engineer to effectively contract out of regulatory oversight of his professional conduct under statute. Accordingly, the plaintiff could not be regarded as having acted in breach of this clause. The illegality did not render the entire settlement agreement void since the offending portion of the clause could be severed from the rest of the agreement: at [92] to [100] .

(9) Since the award of the contract to Crystallite was to be set aside and neither party was in breach of the settlement agreement, a replacement professional engineer should be appointed in a similar manner to undertake the relevant tasks under the settlement agreement: at [101] to [104] .

(10) The defendants' claim on conspiracy failed in limine since there was no evidence of collusion on the part of Chan and the plaintiff and/or his agents: at [107] .

(11) The defendants were not entitled to their counterclaims in respect of the additional works since the parties had expressly agreed that all claims or disputes would be superseded by the settlement agreement: at [111] .

AJU v AJT [2011] 4 SLR 739 (refd)

Amec Civil Engineering Ltd v Secretary of State for Transport [2005] 1 WLR 2339 (folld)

Baber v Kenwood Manufacturing Co Ltd and Whinney Murray & Co [1978] 1 Lloyd's Rep 175 (refd)

Barrett v Universal-Island Records Ltd [2006] EWHC 1009 (Ch) (refd)

Bernhard Schulte Gmb H & Co KG v Nile Holdings Ltd [2004] EWHC 977 (Comm) (refd)

Campbell v Edwards [1976] 1 WLR 403 (refd)

Evergreat Construction Co Pte Ltd v Presscrete Engineering Pte Ltd [2006] 1 SLR (R) 634; [2006] 1 SLR 634 (folld)

Hiap Hong & Co Pte Ltd v Hong Huat Development Co (Pte) Ltd [2001] 1 SLR (R) 458; [2001] 2 SLR 458 (folld)

Holland House Property Investments Ltd v Crabbe [2008] CSIH 40 (refd)

HSBC Institutional Trust Services (Singapore) Ltd v Toshin Development Singapore Pte Ltd [2012] 4 SLR 738 (refd)

Johnson v Moreton [1980] AC 37 (folld)

Jones v Sherwood Computer Services plc [1992] 1 WLR 277 (folld)

Macro v Thompson (No 3) [1997] 2 BCLC 36 (refd)

Man Financial (S) Pte Ltd v Wong Bark Chuan David [2008] 1 SLR (R) 663; [2008] 1 SLR 663 (folld)

Manjit Singh s/o Kirpal Singh v AG [2013] 4 SLR 483 (refd)

Mercury Communications Ltd v Director General of Telecommunications [1996] 1 WLR 48 (refd)

Nikko Hotels (UK) Ltd v MEPC plc [1991] 2 EGLR 103 (folld)

Norwich Union Life Insurance Society v P&O Property Holdings Ltd [1993] 1 EGLR 164 (refd)

Oriental Insurance Co Ltd, The v Reliance National Asia Re Pte Ltd [2009] 2 SLR (R) 385; [2009] 2 SLR 385 (folld)

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