Sun Electric Pte Ltd v Menrva Solutions Pte Ltd

JurisdictionSingapore
CourtHigh Court (Singapore)
JudgeVinodh Coomaraswamy J
Judgment Date07 May 2021
Docket NumberSuit No 200 of 2016 (Assessment of Damages No 6 of 2019)

[2021] SGHC 101

General Division of the High Court

Vinodh Coomaraswamy J

Suit No 200 of 2016 (Assessment of Damages No 6 of 2019)

Sun Electric Pte Ltd and another
and
Menrva Solutions Pte Ltd and another

Lim Chee San (TanLim Partnership) for the plaintiffs and defendant-in-counterclaim;

Ng Lip Chih (Foo & Quek LLC) (instructed), Jennifer SiaandRezvana Fairouse (NLC Law Asia LLC) for the defendants and plaintiff-in-counterclaim.

Case(s) referred to

Aijaz v Ramsarup A 1931 O 54 (refd)

Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84 (refd)

Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 (refd)

Cold Storage Holdings plc v Overseas Assurance Corp Ltd [1988] 1 SLR(R) 255; [1988] SLR 368 (folld)

DS-Rendite-Fonds Nr 106 VLCC Titan Glory GmbH & Co Tankschiff KG v Titan Maritime SA [2013] All ER (D) 224 (refd)

East v Pantiles (Plant Hire) Ltd [1982] 2 EGLR 111 (refd)

Edwards Jason Glenn v Australia and New Zealand Banking Group Ltd [2012] SGHC 61 (distd)

Emjay Enterprises Pte Ltd v Skylift Consolidator (Pte) Ltd [2006] 2 SLR(R) 268; [2006] 2 SLR 268 (distd)

Frederick E Rose (London) Ltd v William H Pim Junior & Co Ltd [1953] 2 QB 450 (refd)

FSHC Group Holdings Ltd v GLAS Trust Corp Ltd [2020] Ch 365; [2020] 2 WLR 429 (refd)

Industrial & Commercial Bank Ltd v PD International Pte Ltd [2003] 1 SLR(R) 382; [2003] 1 SLR 382 (refd)

JJ Huber Ltd v The Private DIY Co Ltd [1995] NPC 102 (refd)

Kok Lee Kuen v Choon Fook Realty Pte Ltd [1996] 3 SLR(R) 182; [1997] 1 SLR 182 (refd)

MCH International Pte Ltd v YG Group Pte Ltd [2019] 2 SLR 837 (refd)

Ng Swee Hua v Auston International Group Ltd [2008] SGHC 241 (distd)

Oxley Consortium Pte Ltd v Geetex Enterprises Singapore (Pte) Ltd [2020] SGHC 235 (folld)

Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193 (refd)

Simpson Marine (SEA) Pte Ltd v Jiacipto Jiaravanon [2019] 1 SLR 696 (refd)

Soon Kok Tiang v DBS Bank Ltd [2011] 2 SLR 716 (refd)

Sun Electric Pte Ltd v Menrva Solutions Pte Ltd [2018] SGHC 264 (refd)

Sun Electric Pte Ltd v Menrva Solutions Pte Ltd [2019] SGCA 51 (refd)

Swainland Builders Ltd v Freehold Properties Ltd [2002] 2 EGLR 71 (refd)

Turf Club Auto Emporium Pte Ltd v Yeo Boong Hua [2018] 2 SLR 655 (folld)

V Nithia v Buthmanaban s/o Vaithilingam [2015] 5 SLR 1422 (folld)

Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd [2015] 5 SLR 1187 (folld)

Yap Son On v Ding Pei Zhen [2017] 1 SLR 219 (folld)

Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029; [2008] 3 SLR 1029 (folld)

Legislation referred to

Civil Law Act (Cap 43, 1999 Rev Ed) s 12(1)

Evidence Act (Cap 97, 1997 Rev Ed) ss 95, 97, 99 (consd); ss 94, 94 proviso (a), 98, 105

Civil Procedure — Pleadings — Defendant-in-counterclaim failing to plead defences affecting quantum of damages —Whether defendant-in-counterclaim entitled to raise defences at assessment of damages

Contract — Contractual terms —Common law rectification —Abbreviation defined as one entity —Whether use of abbreviation in payment clause was clear mistake on face of contract —Whether common law rectification restricted to clear mistake on face of contract —Whether broader test in Chartbrook Ltd v Persimmon Homes Ltd[2009] 1 AC 1101 consistent with Evidence Act (Cap 97, 1997 Rev Ed) —Sections 97 and 99 Evidence Act (Cap 97, 1997 Rev Ed)

Contract — Contractual terms —Interpretation —Agreement drafted by lay persons —Abbreviation defined as one entity —Whether abbreviation meant or included another entity

Contract — Contractual terms —Interpretation —Agreement for consultancy services —Clause providing that consultant invest in client or in client's projects —No evidence regarding consultant's hypothetical investments —Whether consultant or client bore burden of proving value of hypothetical investments

Contract — Contractual terms —Interpretation —Reliance on evidence of subsequent conduct to interpret clause on fee structure —Parties treating gains from third-party contract as affecting amount of fees —Whether subsequent conduct assisted interpretation

Equity — Remedies — Rectification —Contract providing fee structure as percentages of payments —Parties knowing that third party would receive payments —Whether common mistake

Facts

Sun Electric Pte Ltd (“Sun Electric”) had been found liable to Menrva Solutions Pte Ltd (“Menrva”) for breach of contract. Under the contract, Menrva had provided consultancy services regarding activities carried out by Sun Electric's subsidiary, Sun Electric Power Pte Ltd (“SEP”). The contract had been drafted by both parties' directors, who were not legally trained.

Clause 3(b) of the contract prescribed the fees that Sun Electric was to pay Menrva by reference to “net positive payment”. Clause 3(a) referred to “SE” receiving a “net positive payment” from third parties. The contract also defined “SE” to mean “Sun Electric Pte Ltd”. Only SEP, however, received the net positive payments.

Clause 4 of the contract obliged Menrva to invest in Sun Electric's projects or in Sun Electric itself. Neither party adduced evidence as to how much Menrva would have invested or the likely current value of those hypothetical investments.

After Sun Electric and Menrva entered into the contract, SEP on the advice of Menrva entered into contracts for differences (“CFDs”) with a third party. Only the first CFD made a gain. Sun Electric paid a percentage of that gain to Menrva.

At the assessment of damages, Sun Electric argued that Menrva was entitled only to nominal damages or to substantially less than its best case on damages on three grounds: (a) Menrva would have received no fees under the contract because Sun Electric was not the entity that received the net positive payments (“the entity ground”); (b) Menrva was obliged to take into account SEP's gains and losses on the CFDs in calculating its fees (“the CFD ground”); and (c) the quantum of damages had to take into account the likely current value of the investments envisaged by cl 4 (“the Clause 4 ground”). Sun Electric had not pleaded the entity ground or the Clause 4 ground.

Held:

(1) Sun Electric was entitled to raise the entity ground at the assessment of damages even though it had not been raised at the trial on liability. The entity ground affected only the quantum of damages that Menrva could recover, not liability: at [19], [21] and [22].

(2) Sun Electric was entitled to raise the entity ground even though it contradicted its position at the trial on liability. A party was entitled to take a position adopting a res judicata even if doing so contradicted its position in the proceedings leading up to the res judicata: at [23] and [24].

(3) Sun Electric's failure to plead the entity ground caused no prejudice to Menrva. Menrva had been granted leave to amend its pleadings to advance an alternative defence that met the entity ground: at [28] and [29].

(4) The contract was drafted by lay persons. As such, it was appropriate to adopt a “common sense approach” to interpreting the contract rather than a technical or legalistic approach that unduly focused on its structure and language. The interrelated commercial and contractual concepts in cl 3 taken as a whole and in context established that the contractual trigger for Menrva's right to receive fees was the receipt of payments by “SE”: at [41] and [42].

(5) The text of the contract provided no basis to read “SE” in cl 3(b) as meaning anything other than Sun Electric. The meaning of the text of cl 3 was so clear that there was no scope for the context to prevail over its meaning. That was so even though the meaning of the text led to the wholly absurd and uncommercial result that Menrva was obliged to provide services to Sun Electric with no possibility of receiving any fees: at [49] and [58].

(6) The first element for common law rectification in East v Pantiles (Plant Hire) Ltd[1982] 2 EGLR 111 (“East v Pantiles”) was not made out. There was no clear mistake on the face of the contract. On the face of cl 3, it was perfectly possible for Sun Electric to receive payments and to pay Menrva fees based on those payments: at [62] and [64].

(7) Menrva was entitled to equitable rectification of “SE” in cll 3(a) and 3(c)–3(e) on the ground of common mistake. The parties negotiated the payment structure in cl 3(b) with a continuing common intention that Menrva would be paid a percentage of the net positive payments received by SEP. The entire agreement clause did not preclude rectification: at [81], [91] and [94].

(8) On the CFD ground, Menrva was entitled to damages without taking into account SEP's gains and losses on the CFDs. Clauses 3(a)–3(d) showed that gains and losses on the CFDs were not part of the “net positive payment”: at [99] to [101].

(9) The evidence that Sun Electric had paid Menrva a percentage of the gain on the first CFD was evidence of subsequent conduct. Assuming the evidence was admissible as an aid to interpreting the contract, it did not assist Sun Electric. The evidence did not support the inference that the parties had intended the phrase “net positive payment” in the contract to include gains and losses on CFDs. There were alternative explanations for their subsequent conduct: at [103], [105] and [107].

(10) Sun Electric's failure to plead the Clause 4 ground caused no prejudice to Menrva. Menrva had had the opportunity to prepare and present its defence on the Clause 4 ground: at [32].

(11) Clause 4 imposed an obligation on Menrva to invest in Sun Electric or its projects. Because only Sun Electric made an assertion about the current value of the investments that Menrva would have made, it was Sun Electric that bore the burden of proving that those investments would now be worthless. Sun Electric adduced no evidence of the value of its projects or of its equity over time. There was therefore no basis on which to assess how much Menrva...

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