Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 18 May 1989
• Date: 18 May 1989
• Docket Number: Suit No 2423 of 1987
• Court: High Court (Singapore)

Tropicon Contractors Pte Ltd

Plaintiff

and

Lojan Properties Pte Ltd

Defendant

[1989] SGHC 51

L P Thean J

Suit No 2423 of 1987

High Court

Building and Construction Law–Standard form contracts–Singapore Institute of Architects standard form contracts–Interim certificates–Set-off against amounts owing under certificates–Whether revised certificates to replace original certificates valid–Whether extension of time issued in accordance with SIA conditions–Whether delay certificate complied with SIA conditions–Whether owners entitled to liquidated damages

The plaintiff contractor and the defendant owner entered into a contract to build a condominium development. The contract incorporated the standard form of the Singapore Institute of Architects conditions of contract. The development was not completed on 14 May 1984 as agreed. On 6 March 1985, the architects gave to the plaintiff “final extensions to the contract” as follows: (a) to 31 December 1984 for completing the main building works; and (b) to 18 February 1985 for completing the swimming pool and external works. The certificate of practical completion was issued by the architects on 1 July 1985.

The architects had issued altogether 28 interim certificates and the defendant had paid the first 16 interim certificates, leaving the remaining 12 certificates, unpaid. The total amount due under these 12 certificates was $1,785,294.32. The plaintiff instituted proceedings against the defendant claiming the sum of $1,785,294.32 and interest thereon.

After the writ had been served, the defendant applied for a stay of all further proceedings on the ground that the plaintiff and the defendant had agreed to refer to arbitration the matters in respect of which the action was commenced. At or about the same time, the plaintiff took out an application under O 14 for summary judgment against the defendant for the amount claimed.

While both applications were pending, the defendant wrote to the architects expressing doubts as to the correctness of the interim certificates. On 2 December 1987, the architects notified the plaintiff that the contract completion date was to be extended only by 17 days to 31 May 1984 for piling works, as this was the only matter in respect of which the plaintiff had given a requisite notice pursuant to cl 23 (2) of the conditions of contract. Consequently, all previous extensions of time previously granted to the plaintiff were null and void for non-compliance with cl 23 (2). At the same time, the architects also issued to the plaintiff a delay certificate stating that the plaintiff was in default in not having completed the works by 31 May 1984. On 15 December 1987, the architects also issued 17 revised certificates (numbers 12A to 28A) to replace the original interim certificates bearing corresponding numbers, and one further interim certificate (number 29).

Before the senior assistant registrar, the defendant relied upon these documents to raise the defence of set-off and counterclaim and to show that since there was a genuine dispute as to the plaintiff's claim, the matter should be referred to arbitration. The senior assistant registrar dismissed with costs the application by the plaintiff for summary judgment, and allowed with costs the applications by the defendant for a stay of further proceedings in this action. The plaintiff appealed against this decision. The main issue was whether the amount of $1,785,294.32 or any part thereof was due to the plaintiff.

Held, allowing the plaintiff's appeal:

(1) In seeking to revise these interim certificates by “recording”, but in effect deducting, the amounts of liquidated damages the architects were wrong and did not revise them in accordance with cl 31 (4) of the conditions of contract; so far as liquidated damages were concerned none were deductible and there was no error to be corrected; nor were they a matter of which the architects were not aware or which should be dealt with at the material times: at [11].

(2) Most of the original interim certificates were issued more than two years ago prior to the issue of the revised interim certificates. These certificates were accepted by the plaintiff and the defendant; they had a series of negotiations on the basis of the amount due under these certificates. At no stage throughout the period of construction had the defendant complained or challenged in any way the original interim certificates issued by the architects. Only after the commencement of this action did it raise its doubts as to the correctness of the interim certificates. The interim certificate number 29 was not issued in compliance with cll 31 (1) and 31 (2) of the conditions of contract. Accordingly, all the revised interim certificates and the interim certificate number 29 were invalid: at [12] and [13].

(3) Clause 31 (1) of the conditions of contract entitled the plaintiff to payment of the sum stated in the interim certificate within 21 days from the receipt of the certificate by the defendant. Subject to any deduction or set-off as provided expressly in the contract, the amounts certified in the interim certificates were due and payable to the plaintiff: at [15].

(4) On the true construction of cl 23 (2), the architects were not obliged to give any extension of time until the plaintiff had given the requisite notice thereunder. But once an extension of time was given by the architects, it mattered not whether such requisite notice had been given by the plaintiff. After a lapse of more than two and a half years, it was not open to the plaintiff to declare such an extension as “null and void” on the ground of absence of the requisite notice: at [19].

(5) Clause 23 (3) of the conditions of contract required the architects to notify the plaintiff of their decision “as soon as any delaying factor” in respect of which an extension of time was permitted by the contract had ceased to operate. The extension of the contract completion to 31 May 1984 was manifestly not in compliance with this provision as the “delaying factor” had occurred more than three years ago: [21].

(6) As the extension of the contract completion date to 31 May 1984 was flawed, it followed that the delay certificate issued on that basis was also flawed. The delay certificate was issued more than two and a half years after date of completion had elapsed. It was therefore not issued in compliance with cl 24 (1) and it was invalid: at [22] and [23].

(7) The issue of a valid delay certificate was by reason of cl 24 (2) of the conditions of contract necessary to found a claim for liquidated damages. Since the delay certificate issued by the architects was invalid, the claim by the defendant for liquidated damages must fail: at [25].

(8) The defendant had raised an arguable claim for the costs of rectification of defective works which the plaintiff had failed to rectify under the terms of the contract, and under cl 1 (7), this amount, if established, was deductible from the amount due to the plaintiff. As for the amount paid to the nominated subcontractors, under cl 30 (4), this amount was also deductible from the amount due to the plaintiff. The alleged loss of rentals consequent upon the delay and alleged poor workmanship and the potential liability for further defects were not deductible: at [26] and [27].

Arbitration Act (Cap 10, 1985Rev Ed)s 7

Rules of the Supreme Court1970, TheO 14

Warren Khoo and Susan Lim (Warren Khoo & Co) for the plaintiff

Michael Rabindran Doraisamy (Ramdas & Wong) for the defendant.

Judgment reserved.

L P Thean J

1 The plaintiffs are building contractors and the defendants are building owners. On 2 March 1983, they entered into a contract whereby the plaintiffs undertook the construction and completion of a condominium development comprising town houses on Lots 61-2 and 61-1 of town sub-division 28 situate at Gilstead Road, Singapore. Subsequently, the parties executed a formal agreement in writing dated 23 June 1983 (“the contract”) which is in the standard form of the Singapore Institute of Architects. Forming part of and attached to the formal agreement are, inter alia, the conditions of contract (“the conditions of contract”).

2 Under the contract the date of completion of the development was 14 May 1984. As it often happens in the construction industry, the development was not completed within the time as agreed, and on 18 February 1985, the plaintiffs pursuant...