Sun Qi (formerly trading as Power King International) and another v Syscon Pte Ltd

• Jurisdiction: Singapore
• Judge: Quentin Loh J
• Judgment Date: 15 February 2013
• Neutral Citation: [2013] SGHC 38
• Court: High Court (Singapore)
• Docket Number: Suit No 775 of 2009
• Published date: 20 February 2013
• Year: 2013
• Hearing Date: 25 August 2011,26 August 2011,05 March 2012,23 April 2012,11 April 2012,24 August 2011,09 April 2012
• Plaintiff Counsel: Khor Wee Siong (Khor Thiam Beng & Partners)
• Defendant Counsel: Ram Chandra Ramesh and Tng Kim Choon (M/s C Ramesh)
• Subject Matter: Commercial Transactions,Sale of Goods,Right of Rejection,Contract,Misrepresentation Act,Discharge,Rescission
• Citation: [2013] SGHC 38

Quentin Loh J: Introduction

This action arises out of two agreements (“the Agreements”) between the plaintiffs and the defendant company, Syscon Pte Ltd (“Syscon”), for the sale and installation of three 30-ton overhead travelling cranes and two 20-ton overhead travelling cranes: an agreement on 9 September 2008 (“the first agreement”) for the supply and installation of three 30-ton overhead gantry cranes at $271,780.00 (including goods and services tax (“GST”)); and an agreement on 22 September 2008 (“the second agreement”) for the supply and installation of two 20-ton overhead gantry cranes at $164,780.00 (including GST).

Full payment was not made after the cranes were delivered. The plaintiffs have brought this suit to recover the outstanding payment of $436,560.00 and commissioning costs of $2,400.00 under the Agreements. Syscon counterclaims for rescission of the Agreements, for breach of the implied condition of satisfactory quality and for the return of the $100,800.00 which it paid to the plaintiffs under the Agreements. Alternatively, Syscon claims damages for misrepresentation or damages to be assessed for breach of contract.

Factual background The parties involved

The plaintiffs are a husband and wife who registered a partnership, Power King International (“Power King”), to supply China-made cranes to Singapore.

The second plaintiff, Wong Mai Jun, Eugene (“Mr Wong”), obtained a diploma in business administration from a private college, TMC, at the age of 17. As for his work experience, he testified that after his national service, he was employed by his father’s printing firm as a trainee. He was a little vague about what he did there, testifying that he would “follow up with sales” and with “hands on”, and that he did “designing, operating of computers … [and] changing of er, er, parts on the machines”. ¹ He was also a part-time used car salesman for a period of time. He then decided on the business of selling cranes as his wife was the daughter of one of the directors or owners of Hubei Power King Crane Manufacture Co Ltd (“Power King China”), a company based in the People’s Republic of China which manufactures cranes. When Mr Wong was questioned on his knowledge of Power King China’s cranes, he claimed to have “learnt a lot”, to have followed the installation team for on-site installation, and to have even done “hands-on servicing” and rectification of “electrical wiring diagram”.² He was vague as to what he had learned or what training he had received. He claimed that he learned about the cranes on two or three visits to Power King China, with each visit lasting one to two months,³ but later stated it was a “consolidated” period of three to four months. I therefore find that Mr Wong’s knowledge of these cranes and their components is rudimentary at best.

Syscon is in the business of manufacturing precast concrete slabs and bomb shelters for use in the construction of Housing and Development Board (“HDB”) prefabricated flats. At the material time, Syscon had just acquired a new factory and required permanent overhead travelling cranes to enable movement of the precast concrete slabs and bomb shelters from its factory floor onto trailers for loading and delivery to HDB worksites.

Mr Wong was introduced to Syscon by a friend from his teenage years, one Ho Shuwen, who was the son of Freddy Ho (“Mr Ho”), Syscon’s majority shareholder and director.

The Agreements

Sometime in March 2008, Mr Wong and the first plaintiff’s father met with Syscon’s Mohamed Sultan (“Mr Sultan”), who had been tasked with obtaining and operating the cranes in Syscon’s factory. A trial order was placed on 15 April 2008, pursuant to a quote given on 9 April 2008, for one 30-ton overhead travelling crane (“the first crane”) with a girder span of 13,500 mm at the price of $85,000.00 (excluding GST). A load-test for the first crane was conducted on 5 August 2008 and a Ministry of Manpower (“MOM”) Workplace Safety and Health Regulations Certificate of Test (“MOM certificate”) was issued on the same date. By 6 August 2008, the first crane had been fully delivered, installed and commissioned on line 9 of the first floor of Syscon’s new factory. The plaintiffs make no claim for the first crane, but Syscon seeks a rescission of this agreement also and seeks to have Power King dismantle and remove the first crane.

Syscon started using the first crane soon after installation and commissioning. There was one reported incident of breakdown on 18 October 2008. This was attended to by Power King’s technicians and remedied on the same day. Power King’s report dated 21 October 2008⁴ stated that the breakdown was due to excessive use by Syscon’s crane operators, which resulted in a high current surge to the motor and triggered the automatic overload safeguard to shut down the crane’s operation. At the time, Syscon accepted Power King’s report on the incident.⁵

The first agreement was made on 9 September 2008 for two types of 30-ton overhead travelling cranes with a lifting height of 12 metres. One 30-ton overhead travelling crane with a girder span of 13,500 mm was ordered at the price of $86,000.00 (before GST), and two 30-ton overhead travelling cranes with girder spans of 13,000 mm were ordered at the price of $84,000.00 (before GST) per unit. The total value of the first agreement was $254,000.00 (excluding GST).

The second agreement was made on 22 September 2008 for two types of 20-ton overhead travelling cranes. One 20-ton overhead travelling crane with a lifting height of 22 metres and a girder span of 13,500 mm was ordered at the price of $76,000.00 (before GST), and one 20-ton overhead travelling crane with a lifting height of 32 metres and a girder span of 13,000 mm was ordered at the price of $78,000.00 (before GST). The total value of the second agreement was $154,000.00 (excluding GST). Syscon initially claimed that the second agreement was only an agreement to sell and not a valid contract, but this claim was abandoned in the agreed statement of facts before this matter proceeded to trial.

Syscon claims that it was induced into entering into the Agreements by Mr Wong’s representations, specifically, that the cranes were of the highest quality, met international and local standards and were fit for their purpose.⁶ Mr Wong, on the other hand, averred that the Agreements were made only as a result of Syscon’s satisfaction with the high level of performance attained by the first crane.⁷ In any event, the plaintiffs submit that any representation as to the quality and standard of the cranes was a mere puff and not misrepresentation within the meaning of section 2 of the Misrepresentation Act (Cap 390, 1994 Rev Ed) (“the Misrepresentation Act”).⁸

The terms of both of the Agreements were, inter alia, as follows: warranty of 12 months from the date of commissioning; payment of 20% as a deposit upon confirmation of order, 60% upon arrival of the cranes and all component parts at Syscon’s factory, 15% upon commissioning and obtaining a Professional Engineer (“PE”) certificate and 5% one year after commissioning or obtaining the PE certificate, whichever was earlier; all cranes to be tested by Power King before shipment for compliance “with international standards”; provision of one experienced engineer from Power King on site to supervise crane installation, load-testing and commissioning; and provision of four workers from Syscon for one month, and provision of dead-weights and necessary equipment for Power King to conduct its load-test.

The three 30-ton cranes were delivered and installed on 13 December 2008, 16 December 2008 and 13 January 2009 at lines 8, 10 and 11 on the first floor of Syscon’s factory. MOM certificates for these three cranes were issued on 23 December 2008 (for the two cranes delivered and installed in December) and 14 January 2009 (for the crane delivered and installed on 13 January 2009), and thereafter, these three cranes were commissioned. The MOM load-test, conducted by one Cheng Shao Hing, revealed that each crane had a satisfactory travelling speed ⁹ and had a stable structure, notwithstanding its slow speed¹⁰ and lack of a distinctive serial number of make on its structure.¹¹ Syscon claimed, by a letter dated 27 March 2009, that it did not receive the MOM certificates.

The two 20-ton cranes were delivered in January 2009, but could not be installed and commissioned as the second floor of Syscon’s factory had not been fully constructed and lacked rails for installation and load-testing. On 23 April 2009, Mr Wong reminded Syscon by letter of the need to allow Power King to conduct the commissioning and load-test.¹² Syscon’s Ms Ang Soh Moi (“Ms Ang”) only addressed the issue of commissioning the two 20-ton cranes on 28 April 2009, when she requested structural crane detail drawings with PE endorsement, the electrical circuit diagrams of the cranes, the manual books and spare parts in order to conduct the load-test and commission the cranes.¹³

Under the terms of the first agreement (see [12(b)] above), 60% of the payment for the 30-ton cranes fell due on 13 December 2008, 16 December 2008 and 13 January 2009, when the cranes were delivered and installed, and 15% fell due on 23 December 2008 and 14 January 2009. A deposit of $50,800.00 had already been paid on 9 September 2008. This amounted to 20% of the purchase price of the cranes (excluding GST). As at 14 January 2009, there was an outstanding payment of $190,500.00 (excluding GST). A further $50,000.00 was paid by Syscon to Power King on 19 January 2009. The balance owing under the first agreement was $140,500.00 (excluding GST).

As the two 20-ton cranes under the second agreement had yet to be installed and commissioned, the amount due to Power King as at January 2009, including the 20% deposit at the time of the order, amounted to $123,200.00 (excluding GST). There were no...