Stone World Sdn Bhd v Engareh (S) Pte Ltd

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 24 January 2013
• Neutral Citation: [2013] SGHC 22
• Published date: 13 February 2013
• Court: High Court (Singapore)
• Year: 2013
• Docket Number: Suit No 146 of 2011
• Plaintiff Counsel: Ong Lian Yi Gregory and Lim Lay See (David Ong & Co)
• Defendant Counsel: Lim Tong Chuan and Lee Wei Qi (Tan Peng Chin LLC)
• Subject Matter: Contract,Formation
• Citation: [2013] SGHC 22

Lai Siu Chiu J: Introduction

This was a case where Stone World Sdn Bhd (“the Plaintiff”) made a claim for an outstanding sum of $481,031.63 from Engareh (S) Pte Ltd (“the Defendant”) for goods sold and delivered and services rendered. The Defendant, on the other hand, contended that it had overpaid the Plaintiff and counterclaimed the sum of $84,453.09 from the Plaintiff.

The facts

The Plaintiff is in the business of supplying, fabricating and/or distributing various types of marble, stone and other related products. The Defendant is in the business of supplying natural stone and marble and was, at the material time, the appointed sub-contractor for the installation of fabricated marble and granite stone at the Paiza and Atrium areas of the Marina Bay Sands Integrated Resort (“MBS Project”). Seow Ah Mee (“Seow”) was/is the accounts manager of the Plaintiff, while Ali Baygan (“Baygan”) is the managing director and Amir Ranjbar (“Ranjbar”) the financial manager of the Defendant.

Before the MBS Project, the Plaintiff had had previous business dealings with an associated company of the Defendant viz, Engareh (M) Sdn Bhd (“Engareh (M)”) and the marketing representative of Engareh (M), which was BS Stone Sdn Bhd (“BS Stone”). Engareh (M) and BS Stone would engage the Plaintiff’s services in stone-processing and fabrication for various residential projects in Malaysia. The pricing for the Plaintiff’s services for these transactions was based on the rates set out in the Plaintiff’s letter of quotation to BS Stone dated 8 January 2008 (“the 8 January 2008 Quotation”).

In November 2007, one Michele Volpato (“Volpato”) contacted the Plaintiff in relation to the MBS Project. The Plaintiff and Volpato had incorporated Volpato-Stone World (S) Pte Ltd (“Volpato-Stone (S)”) for the purpose of the MBS Project for which the Plaintiff was the intended sub-contractor supplier of fabricated marble. Letters of quotation together with provisional bills of quantities were sent to ISG Asia (Singapore) Pte Ltd (“ISG”), the main interior design contractor for the MBS Project.

However, in or about June 2009, due to the financial crisis in America, the Plaintiff decided against undertaking the MBS Project. The Plaintiff then approached Baygan to see if he was interested in being appointed as the sub-contractor instead, with the Plaintiff being appointed as fabricators of the raw marble. At a meeting in July 2009 between Seow, Baygan and Volpato, Baygan agreed to take on the role of sub-contractor and engage the Plaintiff to process the marble to be supplied for the MBS Project.

Baygan then proceeded to incorporate the Defendant in July 2009 as one of the requirements of ISG was that a local Singapore company had to be incorporated to take on the MBS Project. As part of the agreement, Volpato was also employed by the Defendant as its general manager. It was agreed that the Defendant would be the contracting party with ISG for the MBS Project, and the Defendant would also engage the Plaintiff to supply marble and/or granite stone and also provide fabrication work on marble or granite stone for the MBS Project (“the Contract”).

The Defendant then submitted tender prices to ISG which were based upon a schedule of prices (“Schedule of Prices”) that was submitted earlier by the Plaintiff to ISG. The costing and prices in the Schedule of Prices (according to the Defendant) were based on the 8 January 2008 Quotation. ISG accepted the tender of the Defendant and awarded the stoneworks contract for the MBS Project to the Defendant.

The Contract between the Plaintiff and Defendant involved the Defendant importing marble or granite stone from overseas and storing them at the Plaintiff’s premises in Pasir Gudang, Malaysia (“the Pasir Gudang premise”). The Plaintiff also had its own inventory and supplies of marble and granite stones, which resulted in the marble blocks and granite stone of both the Defendant and the Plaintiff being stored at the Plaintiff’s factory at the Pasir Gudang premise. It is not disputed that, pursuant to the Contract, the Plaintiff supplied and rendered goods and services to the Defendant from September 2009 to May 2010.

The Plaintiff’s case

The Plaintiff’s claim against the Defendant for the sum of $481,031.63 was based on the Contract which the Plaintiff alleged was made partly orally and partly by a course of dealings premised on the actions and conduct of the parties. The alleged “actions and conduct” forming the Contract included contemporaneous and surrounding documents such as emails, correspondence, quotations, statement of accounts, delivery orders, purchase orders, invoices, as well as credit and debit notes which were exchanged between the parties from early July 2009 to July 2010.

According to the Plaintiff, due to the urgency and fast pace in which the MBS Project was moving, the Plaintiff and Defendant communicated mainly over the telephone or by way of email. When the Defendant’s marble blocks were utilised and fabricated by the Plaintiff, the Plaintiff would initially invoice the Defendant on the basis that the marble was supplied and fabricated by the Plaintiff (“the Initial Invoices”). The Initial Invoices were delivered to and received by the Defendant at the MBS Project work site together with the delivery orders. This allegedly took place between 14 September 2009 and 13 May 2010.

On 20 May 2010, the Plaintiff issued a set of credit and debit notes to the Defendant (“the Revised Invoices”). The credit notes were issued in favour of the Defendant by reversing the costs of the Defendant’s raw marble blocks which were, as conceded by the Plaintiff, mistakenly included in the Initial Invoices. The debit notes, on the other hand, were issued to charge the Defendant for the costs of the fabrication works performed by the Plaintiff for the Defendant as well as for the Plaintiff’s supply of raw marble blocks. The purpose of the Revised Invoices was therefore to correct the mistaken amount and reverse the excess charges (totalling $341,243.42) stated in the Initial Invoices which were issued between 14 September 2009 and 13 May 2010.

The Plaintiff said that there was no quotation at the start of the working relationship because the Plaintiff did not know the quantity or volume of marble and/or granite to be supplied or the extent and/or special requirements of the fabrication works to be performed. The Plaintiff claimed that the rates it charged on the invoices were nonetheless reasonable and were based on market rates which the Defendant was aware of and had accepted.

The Plaintiff also claimed that on or about 1 March 2010, the Plaintiff wanted the comfort of ensuring that the Defendant was aware of the Plaintiff’s charges. So the Plaintiff prepared a quotation listing its charges for the Defendant to sign (“the 1 March 2010 Quotation”). The Plaintiff alleged that when Baygan visited the Plaintiff’s factory at the Pasir Gudang premise, Seow had shown Baygan the 1 March 2010 Quotation which Baygan told Seow he would sign after he had inspected the Plaintiff’s fabrication works. However, after such inspection, Baygan left without signing the document.

Finally, the Plaintiff claimed that the Defendant had accepted and ratified the Plaintiff’s rates as charged in the invoices by making six “part payments” to the Plaintiff. Those payments (totalling $370,367.50) were undisputedly made on the following dates: 18 March 2010 ($50,082.50), 5 April 2010 ($50,082.50), 30 April 2010 (($50,082.50), 8 June 2010 (($50,000.00), 22 June 2010 ($100,120.00) and 26 July 2010 ($70,000). According to the Plaintiff, the Defendant’s witnesses were unable to provide a reasonable explanation as to why the payments were made. The Plaintiff submitted that the truth of the matter was that those part payments were made to reduce the outstanding amount due to the Plaintiff based on the Plaintiff’s invoices received by the Defendant. This was corroborated by the fact that the Defendant did not query or object to those rates in the course of the MBS Project.

The Plaintiff relied on a statement of account dated 1 September 2010 (“Statement of Account”) between the Defendant and itself which took into account: the Initial Invoices; the debit and credit notes of the Revised Invoices; the part payments made by the Defendant; and various invoices charged to the Defendant after May 2010. The balance of the above items added up to $481,031.63 in the Plaintiff’s favour which the Plaintiff claimed remained due and outstanding.

The Defendant’s case

The Defendant vigorously disputed the amounts stated on the respective invoices relied on by the Plaintiff. The Defendant submitted that the Contract between the parties which was concluded in early July 2009 could not be based on the rates the Plaintiff decided to charge on the subsequent invoices that it issued, but must be based on the 8 January 2008 Quotation which was previously agreed upon. The Defendant claimed that while the 8 January 2008 Quotation was drawn up between the Plaintiff and BS Stone in January 2008, it was subsequently extended to Engareh (M). Since the Plaintiff had all along treated its dealings with BS Stone, Engareh (M) and the Defendant as being with one entity, the 8 January 2008 Quotation was also the basis of the contractual relationship between the parties even though negotiations in relation to the MBS Project took place before the incorporation of the Defendant (see above at [6]).

The Defendant also claimed that the Initial Invoices were issued only in early May (despite their bearing dates commencing from September 2009) and the amounts raised were arbitrarily and wrongfully in breach of the agreed rates in the 8 January 2008 Quotation. It was only after the Defendant protested that the Plaintiff reduced the amounts charged to $805,081.94 as reflected in the Revised Invoices. However, the...