Poh Cheng Chew v K P Koh & Partners Pte Ltd and another

• Judge: Lionel Yee JC
• Judgment Date: 30 January 2014
• Neutral Citation: [2014] SGHC 20
• Citation: [2014] SGHC 20
• Court: High Court (Singapore)
• Published date: 17 February 2014
• Docket Number: Suit No 682 of 2012
• Plaintiff Counsel: Chew Yee Teck Eric (Archilex Law Corporation, formerly from JLim & Chew Law Corporation)
• Defendant Counsel: Derek Kang Yu Hsien, Tan Jin Wang Ross and Alvin Liong Wei Kiat (Rodyk & Davidson LLP)
• Subject Matter: Building and construction law,Building and construction contracts,Renovation contracts and contracts for minor works,Dispute resolution,Expert Determination
• Hearing Date: 27 September 2013,28 November 2013,15 November 2013,13 December 2013,20 September 2013,18 November 2013,21 November 2013,26 September 2013,25 September 2013,26 November 2013,19 November 2013,22 November 2013,27 November 2013,24 September 2013,20 November 2013,27 December 2013,14 November 2013

Lionel Yee JC:

This case raises issues relating to expert determination and breach of contract which arise out of a settlement agreement made between the parties on 12 March 2012 (“the Settlement Agreement”) pursuant to a dispute over renovations works for a property at Sentosa Cove owned by the Plaintiff (“the Property”).

Background facts

The First Defendant is an architecture and engineering firm, whereas the Second Defendant is a building contractor (collectively, “the Defendants”). Mr Koh Kok Peng (“Koh”) is a professional engineer and the principal partner in the First Defendant; Koh also runs the Second Defendant.

On or about 8 April 2010, the Plaintiff engaged the Defendants to carry out additions and alterations (“the A&A Works”) to the Property. The First Defendant provided consulting engineer services for the A&A Works whereas the Second Defendant carried out the A&A Works. A quotation issued on 21 June 2010 (“the 21 June Quotation”) stated the contract price for the A&A Works as $367,800.¹ Subsequent amendments to the scope of works in the 21 June Quotation were made in a revised quotation attached to a letter from the Second Defendant to the Plaintiff dated 20 August 2010 (“the Revised 21 June Quotation”).² The contract price, however, remained unchanged and it is not disputed that the Plaintiff has made full payment of the contract price for the A&A Works.³

A dispute arose between the parties regarding the A&A Works. The Plaintiff, alleging that the A&A Works were defective and incomplete, commissioned two companies to prepare reports on the A&A Works. The first report dated May 2011 was done by Building Appraisal Pte Ltd (“Building Appraisal”) and described defects in the A&A Works (“the Building Appraisal Report”).⁴ The second report dated January 2012 was done by Lee Consultants and identified the discrepancies between the actual “as-built” work on site and the approved plans for the A&A Works (“the Lee Consultants Report”).⁵ For ease of reference, I will refer to the Building Appraisal Report and the Lee Consultants Report collectively as “the Consultants’ Reports”.

On 8 February 2012, the Plaintiff through his solicitors issued a letter of demand to the First Defendant, claiming a sum of $111,330 as inter alia compensation for defective works done to the Property.⁶ On the same date, the Plaintiff’s solicitors wrote to the Professional Engineers Board (“PEB”), making a complaint against the First Defendant and Koh and requesting the PEB to investigate the matter and take necessary action against Koh.⁷ It appears that the Plaintiff also wrote to the Building and Construction Authority (“BCA”) on 20 February 2012 making a complaint against Koh.⁸

The dispute was resolved through mediation on 12 March 2012 and the Settlement Agreement was entered into between the Plaintiff and the Defendants. Pursuant to the Settlement Agreement, 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, and evaluate the tenders and award the contract. The scope and specifications of the Rectification Works were to be “based on” the Consultants’ Reports 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”.⁹

Under the Settlement Agreement, the Defendants were to pay: the fees of the professional engineer; the costs of the Rectification Works; the costs of 2 “Somerset” service apartments of 3 bedrooms each (or equivalent) and the costs of storage of the Plaintiff’s chattels for the duration of the Rectification Works; and $20,000 to the Plaintiff as compensation for moving and costs. As for the Plaintiff, he was to refrain from filing any complaints (presumably against Koh or the Defendants) with the PEB.

Pursuant to the Settlement Agreement, the Defendants duly paid the Plaintiff $20,000 as compensation for moving and costs and Mr Chan Yaw Fai (“Chan”) was appointed as the professional engineer.

Chan quoted a lump sum of $88,000 for his fees, which was to be paid progressively in instalments.¹⁰ Chan’s appointment on these terms was confirmed in a letter from the Plaintiff’s solicitors dated 19 March 2012.¹¹ Subsequently there was some discussion between the parties regarding Chan’s fees, which the Defendants felt were too high. Around the end of March 2012, the Defendants’ solicitor at that time, Mr Low Chai Chong (“Low”), wrote to the Plaintiff’s solicitors stating that Chan’s quotation was far too high and seeking the Plaintiff’s consent for Koh to contact Chan to see if Chan could “give a discount” and also to clarify Chan’s scope of works.¹² The Plaintiff had no objections.

On 28 March 2012, Koh, together with Mr Freddie Chia (“Chia”), another partner in the First Defendant, met with Chan to discuss his fees (“the 28 March 2012 Meeting”). There is some disagreement as to what transpired at that meeting but what is not disputed is that after the meeting, Chan agreed to give Koh what was in effect a discount of $8,000 on his fees.¹³ The Defendants subsequently paid Chan $19,260, this sum being the first instalment of his fees, and Chan returned $8,000 in cash to the Defendants.¹⁴

Chan conducted site visits to the Property on 3 and 4 April 2012.¹⁵ He produced a set of tender documents for the proposed Rectification Works (“the Tender Document”), which he forwarded to the parties for their comments.¹⁶ A few amendments were made to the Tender Document pursuant to some comments from the Plaintiff, to which the Defendants did not object.¹⁷ On 10 May 2012, Chan sent out invitations to tender to various contractors. A site show-round of the Property (“the First Site Show-round”) was conducted by Chan on 17 May 2012. The first tender was opened on 31 May 2012 and four contractors submitted tenders based on the Tender Document as follows: Winning Flag Enterprise Pte Ltd (“Winning Flag”) at $188,800; Builders Alliance Pte Ltd (“Builders Alliance”) at $210,350; Effulgent Builder & Marketing Pte Ltd (“Effulgent”) at $542,318; and Crystallite Construction & Engineering Pte Ltd (“Crystallite”) at $623,500.

Initially, Chan called for a tender interview with only the two higher bidders, Effulgent and Crystallite. However, after objections from the Defendants, all four tenderers were invited for a tender interview.¹⁸ Three were interviewed on 19 June 2012 whereas one (Builders Alliance) failed to turn up for the tender interview. The three tenderers were then asked to go for another site show-round on 21 June 2012 (“the Second Site Show-round”). Either during the tender interview or the Second Site Show-round, Chan handed a two-page questionnaire relating to certain items in the Tender Document (“the Tender Questionnaire”) to each contractor.¹⁹

The second tender was then opened on 26 June 2012. The revised bids were as follows: Winning Flag at $498,000; Effulgent at $542,318; Crystallite at $566,200.

On 6 July 2012, Chan awarded the contract for the Rectification Works to Crystallite for $498,000.²⁰ The Defendants were dissatisfied with Chan’s decision and did not make any further payment to the Plaintiff under the Settlement Agreement. After unsuccessful further mediation, the Plaintiff commenced the present suit on 16 August 2012. On the same date, the Plaintiff filed a complaint to the PEB against Koh by way of a statutory declaration.²¹ It is not in dispute that the Rectification Works have never started.

The pleadings

The Plaintiff pleaded that he had suffered loss and damage as a result of the Defendants’ breach of the Settlement Agreement and thus claimed the following sums from the Defendants:²² $718,476.80, made up as follows: $74,900 being Chan’s outstanding fees (inclusive of goods and services tax (“GST”)); $532,860 being the costs of the Rectification Works (inclusive of GST); $96,000 being the rental already incurred for two Sentosa Cove apartments for four months; ²³ $14,716.80 being storage costs for four months; Rental of $24,000 per month (being the average rental for two “Somerset” service apartments) for four months being the duration of the Rectification Works to be carried out;²⁴ and Storage costs of $3,679.20 per month from October 2012 until the completion of the Rectification Works.

The Defendants denied that the Plaintiff was entitled to any payment and prayed for orders that Chan’s appointment as professional engineer under the Settlement Agreement and the award of the contract to Crystallite be set aside.²⁵ The thrust of the Defendants’ argument on this point was that Chan was not independent and was controlled by or acting under the influence of the Plaintiff and/or his agents, and had also materially departed from his instructions in awarding the tender to Crystallite. The Defendants further prayed for a declaration that the Settlement Agreement had been repudiated or terminated, alleging that the Plaintiff had breached: (1) the fundamental term that he refrain from filing a complaint to the PEB; and (2) the implied term that he (and/or his agents) would not interfere with or exert any influence over the professional engineer in the course of his work.

Alternatively, the Defendants’ case was that the Plaintiff (by himself and/or through his agents) had conspired with Chan to inter alia fix Chan’s fees at the unreasonable amount of $88,000, increase the scope and specifications of the Rectification Works beyond that prescribed in the Consultants’ Reports, and award the contract to a higher bidder instead of to Winning Flag following the first tender on 31 May 2012.²⁶

The First Defendant therefore counterclaimed the sum of $35,260 from the...