Spandeck Engineering (S) Pte Ltd v China Construction (South Pacific) Development Co Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 27 December 2005
• Neutral Citation: [2005] SGCA 59
• Court: Court of Appeal (Singapore)
• Year: 2005
• Published date: 28 December 2005
• Plaintiff Counsel: Gopinath Pillai and Jacqueline Teo Lin (Tan Peng Chin LLC)
• Defendant Counsel: Joseph Liow Wang Wu and Yusfiyanto Yatiman (Straits Law Practice LLC)
• Subject Matter: Contract,Contractual terms,Parties forming contract by exchange of correspondence,Whether letter from respondent to appellant part of contract,Whether contract sum payable from respondent to appellant estimated or fixed,Equity,Estoppel by convention,Whether appellant estopped from asserting that agreement between parties was fixed sum contract,Limitation of Actions,When time begins to run,Whether cut-off date for time bar six years before date of filing of set-off and counterclaim or six years before date of filing of writ of summons,Whether s 24A Limitation Act applicable to facts of case,Sections 24A, 31 Limitation Act (Cap 163, 1996 Rev Ed)
• Citation: [2005] SGCA 59

27 December 2005 Judgment reserved.

Tay Yong Kwang J (delivering the judgment of the court):

1 Both parties in this appeal are in the building construction industry. In the court below, Andrew Ang JC (as he then was) gave judgment for the respondent in the sum of $479,613.57 (“the amount claimed”) and allowed the appellant’s counterclaim in part amounting to some $60,300. The judge also ordered interest at 6% per annum on the net amount payable to the respondent, such interest to run from the date of the Writ of Summons to the date of payment.

2 Sometime in 1994, the respondent was interested in tendering for a Housing and Development Board (“HDB”) project to build 492 apartments in Hougang under a contract known as the Hougang Neighbourhood 9 Contract 6 (“the N9C6”). However, the respondent was not pre-qualified to tender for a project of that value. The respondent therefore approached the appellant, which was so pre-qualified, to see if the two companies could collaborate on the N9C6. They decided to co-operate in the tender exercise with the appellant tendering for the project and the respondent working very closely with it as the intended main subcontractor. The plan was for the respondent to carry out all the works, with the appellant supplying and installing the pre-fabricated components as well as the Civil Defence shelter doors.

3 The appellant was successful in the tender. Prior to the submission of the tender, the parties entered into an agreement dated 16 November 1994 but this was superseded by three letters in January 1995 between the parties. The first letter dated 26 January 1995 from the respondent’s managing director, Chen Guo Cai (“Chen”), to the appellant’s managing director, Dr Tony Chi, was in the following terms:

We are pleased to quote to you the scope of work as follows:

(1) Total construction of the Building, Sanitary, Plumbing and Civil Engineering works except for

(a) precast pantry/store, (including supply & install Civil Defence Shelters’ Doors)

(b) precast lightweight partitions

which will be supplied and delivered by you (See attached Appendix I). We will carry out the works as in accordance to the conditions and specifications in the HDB’s contract.

(2) A Project Manager will be appointed under Spandeck and he will be paid by us. The Project Manager will represent Spandeck regarding the operations as well as the weekly projections and all the necessary inspection forms and material requirements. His work will be assigned by China Construction and China Construction will be responsible for all the action he takes, letters, instruction, costs etc.

(3) The proposed sub-contract will be a back to back with the HDB’s contract and all its terms, conditions, drawings specifications and other contract documents which will apply to this sub-contract and responsible for all the schedules and penalties as specified in HDB’s contract.

(4) The estimated contract sum shall be $31,966,375.00 (See attached Appendix I)

(5) We will furnish a Security Bond for the amount of $1,835,854.00 required under the HDB contract in favour of the HDB in your name and a second Security Bond for the same sum on the same terms in your favour to secure our obligations to you under the Sub-Contract.

4 The said “Appendix I” referred to in the 26 January 1995 letter provided:

APPENDIX I

BUILDING CONTRACT AT HOUGANG N’HOOD 9 CONTRACT 6

Contract Sum = $36,717,070.00

Less:

(a) Management Fees :

(i) Spandeck’s Cost & Overheads = $717,070.00

(ii) Project Manager (Estimated) = $147,000.00
($7,000 x 21 months)

(iii) Site Quantity Surveyor
(Lump sum) = $105,000.00
($5,000 x 21 months)

(b) Supply and delivery of precast = $2,706,000.00
pantry/store @ $5,500 per no.
(Total : 492 nos)
Unloading by China Construction within
one hour, any addition time waiting is $50
per hour and storage space of minimum one
storey space shall be provided by China Construction.

(c) Supply and install Civil Defence = $350,000.00
Shelter Doors to precast pantry/store
(Total : 492 sets)

(d) Supply and deliver precast lightweight = $725,625.00
partitions for

(i) 75mm thick 20,600m2 @ $30/m2

(ii) 90mm thick 3075m2 @ $35/m2

Revised Contract Sum $31,966,375.00

Notes :

(1) For items (a) ii, (b), (c) & (d), the contract sum is approximate only and will be subjected to final measurement of actual cost or quantities. All unit rates are fixed and will be used for pricing the quantities.

(2) For item (a) i, payment of management fees by us to Spandeck will be on a monthly basis of $34,000 per month for 21.09 months.

(3) The above prices does [sic] not include Goods & Services Tax.

5 The appellant replied on 27 January 1995 as follows:

Per your offer dated 26 Jan 1995, we are very happy to inform you that we would like to engage you as our main sub-contractor for the above project. Your scope of work will be as follows:

1) As stated in your letter of 26 Jan 1995, you should carry out the work based on the condition and specification as specified in HDB’s contract. You will also be responsible for the schedule as tabulated in the HDB contract.

2) The project manager on site shall report to our manager (in Spandeck main office) regarding the daily operation as well as weekly projection and all the necessary inspection form and material requirement should be prepared accordingly and you are to execute the contract without any excuse for delay. This sub-contract shall be back to back with the HDB contract and all its terms, conditions, specifications, drawings and other contract documents shall apply to this sub-contract; which means that if HDB penalise us, you will receive the same penalty with administration charges if there is any; you will only be paid when we receive payment from HDB.

3) You should provide the site office (12 x 15ft min.) for our management team and supply us with all the utilities such as fax machine, telephone (minimum one line for our site use), typing service and etc. You also have to provide these facilities to our client, HDB as per contract specification.

4) The total contract sum shall be S$31,966,375 excluding G.S.T.

5) By 7/2/95, you will at your cost and expense obtain and furnish a Security Bond for the amount required under the HDB contract in favour of the HDB in our name and furnish a Second Security Bond for the same sum and upon the same terms (with suitable changes) in our favour to secure your obligations to us under the sub-contract.

If the above offer is agreeable to you, please counter sign this letter and the legal document shall be prepared and signed between both parties. Based on this letter, you can proceed to make all the necessary preparation. Please submit your site organisation chart, construction program and site office layout to us in one week’s time.

Upon acceptance of this contract, all the previous letters and understanding will be void.

The terms of this letter were accepted by Chen on behalf of the respondent. Chen was also asked to initial at the end of para (4), where the “total contract sum” was indicated.

6 On 28 January 1995, in its letter entitled “HDB Hougang N9C6 Project – Supplement Contract”, the appellant sought to impose the following additional conditions:

Further to our offer letter dated ref: SDE/HOUG/043/95 dated 27 January 1995, the following are the additional conditions added to the letter.

1) The other management team which is going to carry Spandeck’s namecard is only permitted to use the namecard subject to the following condition:

a) You have to write down his or her responsibility and also a [sic] give us a guarantee letter that your company will be responsible for them for all the management result and hold Spandeck free of liability. We will only grant you to print the namecard upon receiving this guarantee letter.

2) We will let your people to use the Spandeck letterhead for Hougang project but you also have to give us a letter to guarantee and hold Spandeck free from the consequences arising from these letters.

3) You have to carry out the site management, hire management team with R.E. etc. at your cost, to carry out works according to agreed, schedulling [sic] and reply to HDB’s request etc. and such other terms as we may require to reflect your responsibilities as a subcontractor.

4) The project manager on site shall be appointed by us and paid by you. You shall bear all responsibility for the actions of the project manager.

5) You will also by 7/2/95, at your cost and expense obtain and furnish a contractors All Risk Insurance Policy, in a form acceptable to us in the joint names of HDB, ourselves and yourselves together with the premium receipt.

You are not allowed to release the content of the offer letter and this additional condition to a third party without our written permission otherwise you will be responsible for the consequences.

A postscript was added as follows:

All the necessary cost at site such as utilities bill, insurance premium and etc. shall be paid by China Construction.

China Construction shall be responsible for the project management team and site staff’s insurance, medical and hospitalisation bill etc. and all other costs related to this construction.

These additional conditions were also accepted by the respondent.

7 The N9C6 had different completion dates for the various buildings. The respondent completed its agreed works between 1996 and 1997. On 7 January 1998, HDB issued to the appellant a provisional final account. This was subsequently finalised and the appellant was paid in full by HDB sometime after 29 September 2000. The respondent computed the final account between itself and the appellant on the basis of the final account between the appellant and HDB. From this computation, the amount claimed was found due to the respondent. This formed the subject of the action commenced by the respondent.

8 The appellant denied that the amount claimed was payable to the respondent. Instead, it claimed that it had...