Tractors Singapore Ltd v Pacific Ocean Engineering & Trading Pte Ltd

• Jurisdiction: Singapore
• Judge: Vincent Hoong J
• Judgment Date: 26 March 2020
• Neutral Citation: [2020] SGHC 60
• Published date: 31 March 2020
• Year: 2020
• Hearing Date: 16 October 2019,29 October 2019,31 October 2019,17 October 2019,17 February 2020,15 October 2019,30 October 2019,05 November 2019,11 October 2019,01 November 2019
• Plaintiff Counsel: Kirpalani Rakesh Gopal, Teo Wei Ling (Zhang Weiling), Oen Weng Yew Timothy (Drew & Napier LLC)
• Citation: [2020] SGHC 60
• Defendant Counsel: Ong Sie Hou Raymond, Koh Kok Kwang, Karin Lee (CTLC Law Corporation)
• Court: High Court (Singapore)
• Docket Number: Suit No 283 of 2018

Vincent Hoong J:Introduction

The defendant ordered shipbuilding equipment from the plaintiff under several contracts. The terms of these contracts permitted the defendant to advise the plaintiff on a delivery date and/or a port of destination for the equipment ordered. Subsequently, the equipment which had been contracted for was never delivered. The plaintiff alleges that its failure to deliver was caused by the defendant’s repudiatory breaches of implied terms of the contracts in dispute. The alleged implied terms include (a) a term requiring the defendant to advise the plaintiff on a delivery date within a reasonable time; and (b) a term requiring the defendant to nominate a port of destination within a reasonable time, that was sufficiently early to allow the plaintiff to effect delivery by the agreed delivery date. The defendant counterclaims that the plaintiff had wrongly terminated the contracts in question.

The key questions in this case, therefore, are whether the alleged implied terms exist, whether the defendant was in breach of these terms and whether the defendant’s breach of these implied terms entitled the plaintiff to terminate the contracts. Having considered the evidence and the submissions before me, I find that the plaintiff succeeds in its claim, and I dismiss the defendant’s counterclaim in its entirety. I set out the reasons for my decision below.

Facts The parties

The plaintiff is a Singapore-incorporated company. Its principal business is to distribute and provide services in relation to “Caterpillar”-brand machines, engines, propulsion systems and lift trucks.¹

The defendant is a Singapore-incorporated company engaged in the business of building and selling ships.² As part of its business strategy, the defendant would sometimes build ships without a ready buyer or charterer for them.³ This allowed the defendant to enjoy a competitive advantage by being able to offer its ships to buyers or charterers within a shorter period of time.

Background to the dispute

Prior to the commencement of this suit, the defendant had been the plaintiff’s customer for sixteen years. During this period, the defendant only purchased “off-the-shelf” equipment, ie standard production models, from the plaintiff.⁴ The procedure followed in respect of each these orders was usually as follows:Mr Gary Koh Teck Seng (“Koh”), a sales manager employed by the plaintiff, would prepare the plaintiff’s quotation for the equipment ordered on a standard template.⁵ This quotation would set out the approximate period during which the plaintiff expected the defendant to take delivery, as well as the plaintiff’s conditions of sale.Koh would then present the plaintiff’s quotation to Mr Quah Peng Wah (“Quah Peng Wah”), the defendant’s managing director.⁶Quah Peng Wah would sign the plaintiff’s quotation.⁷The defendant would then issue a Purchase Order (“PO”) in respect of the said quotation.⁸ The PO typically provided that the delivery date was “TBA”, ie to be advised by the defendant.⁹

The defendant’s evidence is that it regarded the plaintiff’s quotations as contracts¹⁰ which it would confirm in writing through the issuance of POs.¹¹ In accordance with this method of contracting, the plaintiff and the defendant entered into the ten contracts which form the subject-matter of this suit.¹² The key terms of these contracts are as follows:

S/N	Hull Number/PO Number	PO Date	Description of Equipment	Price	Delivery Date/Port (as stated in PO)
1	Hull 1610/PO 9968	3 January 2014	1 shipset of 3516C Main Propulsion Engine, C18 Main Generator Set, Azimuth Thruster CP Equipment, Xeropoint Hybrid Propulsion System, and Central Monitoring System	S$5,300,000	“TBA by POET” / “CIF China Major Port”13
2	Hull 1611/PO 9969	3 January 2014	1 shipset of 3516C Main Propulsion Engine, C18 Main Generator Set, Azimuth Thruster CP Equipment, Xeropoint Hybrid Propulsion System, and Central Monitoring System	S$5,300,000	“TBA by POET” / “CIF China Major Port”14
3	Hull 1630/PO 9992	5 August 2014	1 shipset of 4 C18 Main Generator Sets and 1 shipset of 1 C9 Emergency Generator Set	S$805,000	“March 2015 (Any change of date TBA by POET)” / “CIF China Major Port Only”15
4	Hull 1631/PO 10600	5 August 2014	1 shipset of 4 C18 Main Generator Sets and 1 shipset of 1 C9 Emergency Generator Set	S$805,000	“April 2015 (Any change of date TBA by POET)” / “CIF China Major Port Only”16
5	PO 10601	5 August 2014	1 shipset of 2 units of Caterpillar C18 Generator Sets	S$347,000	“TBA” / “a shipyard in China”17
6	Hull 1539/PO 11289	3 July 2015	1 shipset of 2 units of Caterpillar 3512C Main Propulsion Engines	US$860,000	“Jan 2016 (Any change of date TBA by POET)” / “CIF China Port”18
7	Hull 1540/PO 11290	3 July 2015	1 shipset of 2 units of Caterpillar 3512C Main Propulsion Engines	US$860,000	“Feb 2016 (Any change of date TBA by POET)” / “CIF China Port”19
8	Hull 1540/PO 11651	25 July 2016	1 shipset (2 units) of Caterpillar C7.1 Packaged Generator Set	US$136,000	“Jan / Feb 2017 (TBA)” / “CIF China Port”20
9	Hull 1517/ PO 8874	26 November 2012	1 shipset (4 units) of C32 Main Generator Set Engine	S$1,008,000	“September 2013 (Any change of date TBA by POET)” / “CIF China” 21
10	Hull 1518/PO 8875	26 November 2012	1 shipset (4 units) of C32 Main Generator Set Engine	S$1,008,000	“October 2013” (Any change of date TBA by POET)” / “CIF China”22

In order to fulfil its obligations under the contracts evidenced by POs 9968 and 9969, the plaintiff contracted with a sub-vendor, Aspin Kemp & Associates (“AKA”), to supply it with two battery-powered Xeropoint Hybrid Propulsion Systems (“the Hybrid Propulsion Systems”).²³

Based on the terms of all ten contracts, the defendant was required to make a 10% down-payment upon the confirmation of each order and was only obliged to pay the remaining 90% of the contract price upon delivery of the equipment ordered. It is undisputed that the defendant paid the 10% down-payment for each of the ten contracts. However, due to events which subsequently transpired, the equipment ordered was never delivered to the defendant.

The parties’ cases The plaintiff’s claim The plaintiff’s case

The plaintiff’s case is simple. In respect of the contracts evidenced by POs 9968 and 9969, the plaintiff alleges that the parties agreed, during a meeting which took place on 9 April 2016, that delivery of the equipment ordered under these contracts would take place in May 2017 and July 2017 respectively.²⁴ In respect of the contracts evidenced by POs 9992, 10600, 11289, 11290 and 11651, the plaintiff submits that the parties had agreed during a meeting which took place on or about 10 December 2015 that delivery of the equipment ordered under these contracts would take place by end 2016/January 2017.²⁵

The plaintiff further contends that the contracts evidenced by POs 9968, 9969, 9992, 10600, 11289, 11290 and 11651 should each be subject to an implied term that the defendant would nominate a port of destination within a reasonable time, which had to be sufficiently early to enable the plaintiff to effect delivery of the equipment by the agreed delivery date.²⁶ By failing to do so, the defendant was in repudiatory breach of these seven contracts.

The plaintiff acknowledges that the parties did not mutually agree on a delivery date for the contract evidenced by PO 10601. However, it submits that this contract should be read subject to an implied term that the defendant would advise on a delivery date within a reasonable time from the date of contract.²⁷ As the defendant failed to select a delivery date and/or inform the plaintiff of the same, the defendant was also in repudiatory breach of the contract evidenced by PO 10601.

On 13 October 2017, the plaintiff purported to accept the defendant’s repudiatory breaches and terminated the contracts evidenced by POs 9968, 9969, 9992, 10600, 10601, 11289, 11290 and 11651.²⁸ The plaintiff now claims the remaining 90% of the price of these eight contracts, less the amounts which it has recovered in mitigation.

The defendant’s case

The defendant argues that the two contracts evidenced by POs 9968 and 9969 were mutually terminated during a meeting between the parties on 9 April 2016.²⁹

The defendant avers that, even if these two contracts were not mutually terminated, its conduct did not amount to a repudiatory breach because of the following facts:It had in fact nominated a port of destination.³⁰It was the plaintiff who had first evinced an intention to “hold back” performance on both contracts.³¹Further or alternatively, the defendant was permitted, by way of an implied term or a “course of dealing”, to postpone delivery for both contracts in accordance with its ship construction schedule.In any event, the plaintiff was in breach of these two contracts because (i) it had failed to provide the defendant with American Bureau of Shipping (“ABS”)-approved drawings of the Hybrid Propulsion Systems; and/or (ii) it had failed to design, manufacture or procure the Hybrid Propulsion Systems in compliance with the contractual specifications.³² Accordingly, the defendant was not obliged to take delivery of the equipment ordered under these two contracts.

The defendant also posits that the plaintiff, by failing to insist on timely delivery of the equipment ordered, had either waived its right to, or was estopped from insisting, on strict adherence to the agreed delivery dates for the two contracts evidenced by POs 9968 and 9969. As such, it could not discharge or terminate the two contracts without giving the defendant reasonable prior notice of...