Vim Engineering Pte Ltd v Deluge Fire Protection (S.E.A.) Pte Ltd

• Jurisdiction: Singapore
• Judge: Woo Bih Li JAD,See Kee Oon J,Quentin Loh SJ
• Judgment Date: 12 January 2023
• Docket Number: Civil Appeal No 29 of 2021
• Court: High Court Appellate Division (Singapore)

Vim Engineering Pte Ltd

and

Deluge Fire Protection (S.E.A.) Pte Ltd

[2023] SGHC(A) 2

Woo Bih Li JAD, See Kee Oon J and Quentin Loh SJ

Civil Appeal No 29 of 2021

Appellate Division of the High Court

Building and Construction Law — Building and construction contracts — Sub-subcontractor leaving project site — Sub-subcontractor claiming payment for main works and variation works carried out — Whether sub-subcontractor's claims for main works and variation works should be allowed

Building and Construction Law — Building and construction contracts — Subcontractor completing rectification works during remaining defects liability period — Subcontractor incurring additional costs — Subcontractor counterclaiming for rectification works and back-charges — Whether subcontractor's counterclaims for rectification works and back-charges should be allowed

Building and Construction Law — Scope of works — Variations — Sub-subcontractor claiming payment for variation works carried out — Whether failure to comply with contractual clause bar against right to claim for payment

Held, allowing the appeal in part:

[Editorial note: The paragraphs enclosed within parentheses in the holdings below are not reported; they can be found in the unreported version of the judgment ([2023] SGHC(A) 2) on LawNet. The “Case(s) referred to” and “Legislation referred to” below list the cases and legislation referred to in the headnote and/or the paragraphs reported below.]

(1) In general, to claim for work as a variation under a contract, the claimant needed to establish that: (a) the work was an “extra”; (b) there was an express or implied promise to pay for the work; (c) the work was instructed by a person with authority to vary the contract; and (d) any condition precedent to payment had been fulfilled: at [29].

(2) Every contract had to be construed on its particular terms and where necessary within the context in which it was entered into. Unless it was stated that strict compliance with the contract was required failing which a variation claim would fail, failure to comply with a contractual clause might not amount to an absolute bar against a right to claim for payment of the variation works: at [33] to [35].

(3) Clause 16 of the Subcontract required written instructions from Deluge's project manager in order for variation works to be carried out. However, cl 16 did not state that in the absence of written instructions Vim would forfeit payment. Therefore, it was open to Vim to show that compliance with cl 16 had been waived by Deluge: at [32], [33] and [35].

(4) When a party unequivocally chose not to exercise one of two inconsistent rights, and he was aware of the circumstances giving rise to the existence of that right, he would be deemed as having elected to waive that right: at [43].

(5) Deluge's representatives had signed on the majority of the variation work claims by Vim, and had written comments on the forms that the claims would be subject to Samsung's approval. This was a clear acknowledgment that Deluge was waiving compliance with the requirement in cl 16 of the Subcontract to obtain written instruction before carrying out variation works. In addition, Deluge did not contend at trial that Samsung had denied Vim's variation work claims: at [44] and [45].

(6) As Deluge did not plead a want of authority on the part of its representatives who had signed Vim's variation works claims, it could not raise the argument that those representatives did not have authority to waive the written instruction requirement in cl 16: at [46], [49] and [53].

(7) As Deluge did not contest that the variation works had been completed by Vim, the evidential burden was on Deluge to show how the works completed came within the scope of main works under the Subcontract. The scope of main works as set out in the Subcontract, the Tender Clarifications and the Quotation was limited to the works in the Quotation, which set out with great particularity the works Vim had agreed with Deluge to carry out. Moreover, Deluge's conduct suggested that it did not consider the variation works to be main works: (at [58] and [61] to [63]).

(8) As Vim had substantiated the quantum sought for in respect of the variation work invoices and forms, the appeal against the Judge's decision to reject Vim's variation works claim in the sum of $388,428 was allowed: (at [67]).

(9) Deluge's counterclaim against Vim for rectification works amounting to $105,037.74 was not supported by evidence. As Deluge had not made out its claim in respect of the rectification works, Vim's appeal on this issue was allowed: (at [69] to [72]).

(10) The requirement for notice to be given in relation to defects clauses gave the contractor an opportunity to cure or remedy the defect. This requirement was based on the fact that the contractor was usually in the best position to carry out any remedial work at a lower cost. Failure to comply with a stipulation to provide notice in a defects clause might preclude an employer from relying on the defects clause as against the contractor, but the employer's right to damages in respect of the cost of repairs would not be extinguished. Where the employer did not provide the contractor with a contractual opportunity to rectify defects during the defect liability period, the employer could still recover the cost of repairing the defects, but the sum that the employer could recover might be limited to how much it would have cost the contractor to rectify the defects: (at [80] to [82]).

(11) Under cl 19 of the Subcontract, Deluge was required to first notify Vim of the defective work. Should Vim indicate its unwillingness to remedy the defects or does not do so within a reasonable time, Deluge could then proceed to give written notice of its intention to perform or secure performance of the remedial work. After which, Deluge would notify Vim of any work performed, and would have the contractual right to claim such amounts from Vim: (at [84], [85] and [87]).

(12) The “global” approach by Deluge and the Judge in relation to the back-charges did not distinguish between delays caused by Vim and delays caused by Deluge or others. This was especially relevant where the sub-subcontract was but a subset of the subcontract works: (at [90]).

(13) There was some evidence to show that the requirement of written notice had been satisfied as regards the most substantial back-charges. While some of the back-charges were not supported by any form of notification from Deluge to Vim, Vim did not argue that had it been informed of the back-charges it would have performed those works more cost-effectively: (at [91], [94], [97] and [98]).

(14) In order to establish Vim's liability for the back-charges, the burden of proof was on Deluge to provide sufficient evidence to establish its claim for the back-charges imposed on Vim. Deluge had to first be able to provide sufficient evidence to show that back-charges were an expense that had actually been incurred by it, that the scope of the back-charge fell within the terms of the Subcontract or the Tender Clarifications, and that the evidence was sufficient to show that the claimed loss had been caused solely by Vim. Should all the preceding requirements be met, the burden then shifted to Vim to provide evidence to rebut Deluge's case, failing which liability would be imposed on Vim: (at [101] and [103]).

(15) The Judge's approach to the issue of liability was too generalised, had failed to consider the fact that Deluge's claim lacked the requisite particulars, and had placed reliance on Vim's lack of manpower which did not adequately address the issue of whether Vim was the sole cause of these delays and defects. The issue of causation could not be argued and dealt with at a generalised level; it had to descend into the details with regard to each back-charge and to every defence raised: (at [108], [110] to [113] and [115]).

(16) Deluge had failed to discharge its evidential burden in relation to BC1, BC2, BC3, BC4, BC5, BC8, BC9, BC10, BC11, BS12, BC14, BC15, BC16, BC16A, BC18 and BC19. Deluge's claims in these back-charges were therefore disallowed: (at [120], [123], [127], [130], [131], [183], [188] and [191] to [193]).

(17) Deluge's claims in BC13, BC17-3, BC17-4 and BC17-7 were allowed and Deluge was entitled to back-charges in the sum of $41,788.80. Deluge had discharged its evidential burden in relation to these back-charges and Vim had not rebutted Deluge's case on these back-charges: (at [135], [147], [150], [154], [157], [169], [170], [194] and [195]).

(18) Setting off the claims (inclusive of Vim's claim below for main works that was not the subject of appeal) against the counterclaims, Deluge was liable to Vim for a net sum of $453,912.94 (main works) + $388,428 (variation works) – $41,788.80 (back-charges) = $800,552.14: at [197].

Case(s) referred to

Audi Construction Pte Ltd v Kian Hiap Construction Pte Ltd [2018] 1 SLR 317 (refd)

Comfort Management Pte Ltd v OGSP Engineering Pte Ltd [2018] 1 SLR 979 (refd)

GIB Automation Pte Ltd v Deluge Fire Protection (SEA) Pte Ltd [2007] 2 SLR(R) 918; [2007] 2 SLR 918 (refd)

Mansource Interior Pte Ltd v CSG Group Pte Ltd [2017] 5 SLR 203 (refd)

Myers v Sarl [1860] 3 E & E 306 (refd)

PT Prima International Development v Kempinski Hotels SA [2012] 4 SLR 98 (refd)

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

Facts

In around July 2015, Samsung C&T Corp (“Samsung”) subcontracted the plumbing, sanitary and gas works for a construction project to Deluge Fire Protection (S.E.A) Pte Ltd (“Deluge”). Due to delays in Deluge's work, sometime in March or April 2016, Deluge engaged Vim Engineering Pte Ltd (“Vim”) to carry out certain plumbing and sanitary works for the sum of $1,750,000. This agreement was set out in a subcontract (“the Subcontract”), which made reference to a purchase order (“the Purchase Order”), a set of...