Precise Development Pte Ltd v Holcim (Singapore) Pte Ltd

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 17 November 2009
• Neutral Citation: [2009] SGHC 256
• Date: 17 November 2009
• Subject Matter: Contract
• Docket Number: Suit No 424 of 2008
• Published date: 23 November 2009
• Defendant Counsel: N Sreenivasan and Shankar s/o Angammah Sevasamy (Straits Law Practice LLC)
• Court: High Court (Singapore)
• Plaintiff Counsel: Tan Liam Beng, Tan Kon Yeng Eugene and Soh Chun York (Drew & Napier LLC)

17 November 2009 Judgment reserved.

Lai Siu Chiu J:

1 This dispute arose out of a contract for the supply of ready-mixed concrete by Holcim (Singapore) Pte Ltd (“the defendant”) to Precise Development Pte Ltd (“the plaintiff”). The plaintiff is a construction company while the defendant is a manufacturer and supplier of concrete to the construction industry.

The facts

2 By a Contract dated 10 November 2006 (“the Contract”), the plaintiff engaged the defendant to supply ready-mixed concrete (“concrete”) for a warehouse project located at No. 24 Penjuru Road” (“the project”).

3 The Contract required the defendant to supply 90,000 cubic metres (+/- 15%) of concrete to the plaintiff for the project. Amongst the grades of concrete included in the Contract was Grade 30 for which the defendant quoted a price of $65 per cubic metre. The Contract contained the following salient terms:

Clause 3 The Purchaser must provide sufficient advance notice in confirming each order. The Supplier shall be under no obligation to supply the concrete if the said supply has been disrupted by virtue of inclement weather, strikes, labour disputes, machinery breakdowns, riots, and shortage of material, Acts of God or any other factors arising through circumstances beyond the control of the Supplier. Clause 10 The Supplier reserves the right to terminate the Contract giving one month’s written notice to the Purchaser stating the reasons for the termination.

4 In January 2007, the Indonesian Government suddenly announced a ban on the export of sand (“the sand ban”), which was to take effect on 6 February 2007. On 26 January 2007, the defendant sent a letter informing the plaintiff of the sand ban. In that letter, the defendant informed the plaintiff that the supply of sand to Singapore for concrete manufacturers was reliant solely on sand imports from Indonesia and that the sand ban would lead to a scarcity of materials. The defendant also cautioned the plaintiff that it might not be able to supply concrete should it run out of sand. However, the defendant also indicated that it was meeting the Building & Construction Authority (“BCA”) to discuss alternative options and that it would update the plaintiff on developments thereto.

5 On 1 February 2007, the defendant sent a letter to the plaintiff informing the latter that it was unable to supply concrete based on the prices in the Contract because of a shortage of sand caused by the sand ban. The defendant informed the plaintiff that the BCA would be releasing sand from the national strategic stockpile and sand would be available with effect from 1 February 2007. Attached to the letter was a quotation (“the 1 February quotation”) which the defendant required the plaintiff to sign. The prices of concrete stated in the 1^st February quotation were about 30% to 50% higher than those in the Contract. In particular, the quoted price for Grade 30 concrete was $90 per cubic metres, an increase of $25 on the Contract price.

6 The plaintiff refused to sign the 1 February quotation. In a letter to the defendant dated 5 February 2007, the plaintiff took the view that clause 3 of the Contract only released the defendant from its contractual obligations if the supply of materials was disrupted by circumstances beyond the defendant’s control. The plaintiff asserted that there was no disruption of sand supply within the meaning of clause 3 because BCA would be releasing the government’s stockpile of sand from 1 February 2007 onwards.

7 On 26 February 2007, the defendant sent another letter to the plaintiff to say that the supply of aggregates to Singapore had been stopped by the Indonesian navy. It cautioned the plaintiff that its aggregates supply was limited and that it may not be able to supply concrete to the plaintiff.

8 On 1 March 2007, the defendant sent yet another letter to the plaintiff. In this letter, the defendant informed the plaintiff that the supply of sand and aggregates from Indonesia had ceased entirely and BCA had imposed a price of $60 per ton for sand and $70 per ton for aggregates. Attached to the letter was a quotation (“the 1 March quotation”) which the defendant required the plaintiff to sign. The prices stated in the 1 March quotation were about 200% higher than those in the Contract. In particular, the quoted price for Grade 30 concrete was $185 per cubic metres, an increase of $123 on the Contract price. The defendant also indicated to the plaintiff that if the plaintiff was able to obtain sand and aggregates, it would credit back to the plaintiff the value of the sand and aggregates at $63 and $73 per ton respectively.

9 On 19 March 2007, a meeting was arranged between the plaintiff’s and defendant’s representatives. The meeting was attended by

(a) Ong Yan Wah (“Ong” known as Oliver) a representative of the employer that had awarded the plaintiff the project;

(b) Peh Soon Li, the plaintiff’s project manager;

(c) Oh Beng Hwa, the plaintiff’s project director;

(d) Soh Kee Yong (“Soh”) the defendant’s marketing manager; and

(e) Leong Chee Chow, one of the defendant’s employees.

10 It is common ground that the subject matter of the 19 March meeting (“the meeting”) was to resolve the dispute between the defendant and the plaintiff. However, the plaintiff and the defendant disagreed on what transpired at the meeting.

11 According to the plaintiff, it had proposed supplying manufactured sand and aggregates to the defendant at pre-sand ban prices and in exchange the defendant would supply concrete to the plaintiff at the Contract prices. There was no agreement reached at the meeting because the defendant’s representatives had to discuss the proposal with its head office.

12 The defendant claimed on the other hand that the parties concluded a new agreement at the meeting, the terms of which were encapsulated in a quotation it sent to the plaintiff on 2 April 2007. What transpired at the meeting is of crucial importance to this case and needs to be closely examined. I will do so at a later stage of this judgment.

13 The discussions that had taken place at the meeting were soon overshadowed by a series of letters between the parties that seemed to be at cross purposes.

14 To elaborate, the plaintiff wrote to the defendant on 20 March 2007 in reply to the defendant’s letter of 1 March 2007. In the letter, the plaintiff informed the defendant that it disagreed that the latter was entitled to revise the prices of concrete as set out in the Contract. However, the plaintiff also indicated that due to its urgent needs, it would be willing to pay the revised prices (based on the 1 March quotation) without prejudice to its rights under the Contract.

15 On 2 April 2007, the defendant sent another quotation (“the 2 April quotation”) to the plaintiff. This quotation was different from the 1 March quotation which the plaintiff had indicated that it was willing to pay (albeit under protest) in its letter dated 20 March 2007. Here, the defendant quoted a price of $55 per cubic metre for Grade 30 concrete, which was lower than that in the Contract. This price however came with a catch: the defendant required the plaintiff to supply sand and aggregates to the former without charge.

16 Not unexpectedly, the plaintiff did not (totally) accept the 2 April quotation. Instead, it sent another letter to the defendant on 9 April 2007 wherein the plaintiff indicated that it would be willing to accept the 2 April quotation with additional terms. The terms were that the defendant was required to purchase aggregates from the plaintiff at $50 per ton for a minimum period of 6 months at approximately 15,000 tons per month. Further, the plaintiff reserved to itself the right to set up its own concrete mixing facilities or to obtain concrete from other sources. In other words, the plaintiff wanted the right but not the obligation, to purchase concrete from the defendant at the prices stated in the 2 April quotation.

17 The defendant did not agree to the plaintiff’s proposal of 9 April 2007. Finally, on 26 April 2007, the plaintiff issued an ultimatum to the defendant. In this ultimatum, the plaintiff indicated that it would supply sand and aggregates to the defendant at pre-sand ban prices so that the defendant could manufacture and supply concrete to the plaintiff at the Contract prices (without prejudice to its rights). It also stated that if the defendant did not accept this proposal, the plaintiff would claim all damages from the defendant.

18 The defendant rejected the plaintiff’s ultimatum on the same day it was sent. The defendant reiterated its position that it was not required to supply concrete to the plaintiff because the sand ban amounted to an abnormal situation that was covered by clause 3, and that any new proposals would be subject to mutual agreement.

19 The defendant’s stand ended all negotiations between the parties and the plaintiff commenced this suit on 19 June 2008.

The pleadings

20 The plaintiff’s case was that the defendant had breached the Contract by evincing an intention not to supply concrete at the prices stipulated in the Contract. The plaintiff asserted it had accepted this repudiation when its ultimatum of 26 April 2007 at [17] was rejected by the defendant.

21 The defendant on its part raised three defences to deny liability. First, the defendant claimed that its obligation to supply concrete at the prices stipulated in the Contract was discharged under clause 3 of the Contract when the sand ban disrupted its supply of raw materials. Second, the defendant claimed that the Contract had been discharged by mutual agreement at the meeting. Third, the defendant claimed that clause 10 of the Contract allowed it to terminate the Contract upon giving one month’s written notice and it had given such notice by its letter to the plaintiff dated 1 February 2007

The issues

22 Accordingly, the court was required to determine these issues:

(a) Did clause 3...