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

• Jurisdiction: Singapore
• Judge: Woo Bih Li JAD
• Judgment Date: 12 January 2023
• Neutral Citation: [2023] SGHC(A) 2
• Citation: [2023] SGHC(A) 2
• Docket Number: Civil Appeal No 29 of 2021
• Published date: 17 January 2023
• Year: 2023
• Plaintiff Counsel: Avinash Vinayak Pradhan and Jasmine Thng Khai Fang (Rajah & Tann Singapore LLP)
• Defendant Counsel: Namazie Mirza Mohamed and Tay Jing En (Mallal & Namazie)
• Subject Matter: Building and Construction Law,Building and construction contracts,Scope of works,Variations
• Hearing Date: 10 September 2021,27 August 2021
• Court: High Court Appellate Division (Singapore)

Quentin Loh SJ (delivering the judgment of the court): Introduction

This appeal arises out of a construction project in relation to the building located at 5 Shenton Way, Singapore 068868 (“the Building”).

Facts

The developer of the project, UIC Investments (Properties) Pte Ltd, engaged Samsung C&T Corporation (“Samsung”) as its main contractor to redevelop the Building into both a commercial and residential property comprising, among other things, a 23-storey office and a 54-storey residential block, (comprising Towers A and B). In around July 2015, Samsung engaged the respondent, Deluge Fire Protection (S.E.A.) Pte Ltd (“Deluge”), as a subcontractor in respect of the design, supply and installation, engineering, project management and testing and commissioning of plumbing, sanitary and gas work for the project.¹ On 23 February 2016, Samsung complained of “severe schedule delay” in Deluge’s work.² In an effort to ameliorate the delays, Deluge engaged the appellant, Vim Engineering Pte Ltd (“Vim”), sometime in March or April 2016, to carry out a limited scope of plumbing works, namely, the installation and testing of sanitary pipes on and above the 20th storey of the residential block.³

Subsequently, in July 2016, Deluge agreed to pay Vim $1.75m to complete a specified scope of plumbing and sanitary works (excluding payment for variations) in respect of the project. This agreement was set out in a subcontract (“the Subcontract”), which made reference to a purchase order (“the Purchase Order”), a set of tender clarifications (“Tender Clarifications”)⁴ and a quotation (“the Quotation”). In the event of any discrepancies in the terms and conditions the order of precedence, in descending order, would be the Subcontract, the Purchase Order, the Tender Clarifications, and finally the Quotation.

The temporary occupation permit (“TOP”) was obtained on 20 October 2017. Owing to disagreements with Deluge, Vim left the project site on 5 February 2018 and did not complete any further work. On 19 October 2018, the defects liability period (“DLP”), which ran for 12 months from the date the TOP was obtained, expired.

Arguments and decision below

The dispute below featured two heads of claim and two heads of counterclaim. Vim’s claims were made pursuant to (a) sums promised under the Subcontract; or (b) in the alternative, a reasonable sum based on quantum meruit. The two heads of claim comprised: Main works, which referred to the original scope of works set out in the Subcontract that Deluge had engaged Vim to perform. Variation works, which referred to work outside the original scope of works set out in the Subcontract and these included additions or modifications that Vim had to carry out.

Deluge’s counterclaims were predicated on the terms of the Subcontract, and the two heads of counterclaim were: Rectification works, which referred to works that Deluge had to complete or attend to during the remaining DLP after Vim had left the worksite (ie, between 5 February 2018 and 19 October 2018). Back-charges, which referred to additional costs incurred by Deluge due to Vim’s breaches or failure to complete the original scope of works that it had been engaged to do, and these included: (i) Deluge’s and Samsung’s manpower costs; and (iii) penalties imposed on Deluge by Samsung for Vim’s safety infractions.

main works

Vim’s argument below was that cll 4 and 5 of the Subcontract read with the Quotation entitled it to payment for the original scope of works worth $1,750,000. This was not seriously contested. Neither did Deluge dispute that the value of the main works that had been completed at the time Vim left the site (ie, 5 February 2018) was $1,742,537.74, which was $7,462.26 less than the contractually stipulated value of $1.75m. However, the parties disagreed on how much Deluge had in fact paid Vim: Deluge initially claimed that it had paid Vim $1,288,624.80 up to 30 August 2017 (and so $453,912.94 remained outstanding), and that no payment was made on the subsequent payment certificates because of back-charges owed by Vim. In closing submissions, however, Deluge claimed to have paid Vim $1,293,104.90 (and so $449,432.84 remained outstanding).⁵ Following the Judge’s request for clarification on this change of position, Deluge clarified that the lower sum was the correct figure.⁶ Subsequently, however, Deluge in further submissions reverted to its position as pleaded in its defence – that it had paid Vim $1,288,624.80 (and so $453,912.94 remained outstanding). Vim initially claimed that Deluge had paid $1,283,764.89 (and so $458,772.85 remained outstanding) but later submitted in the alternative – yet without retracting its earlier position – that Deluge had paid a greater sum of $1,291,987.72 (and so $450,550.02 remained outstanding).

The Judge accepted Deluge’s explanation that there had been clerical errors in the certification process which had “led to incorrect figures being certified for payment, and that the correct figure for what Deluge paid Vim for the main works is $1,288,624.80”: see [15] of the GD. Since the value of main works up to the point Vim left the site was $1,742,537.74 (see [7] above), Deluge owed Vim the balance of $1,742,537.74 - $1,288,624.80 = $453,912.94 in respect of main works. Vim, rightly so, does not appeal against this aspect of the Judge’s decision.

variation works

As regards Vim’s claim for variation works, Vim claimed $697,130.58. Deluge contested liability for variation works and later submitted, in the alternative, that Deluge was liable only for $106,579.51 worth of variation works.⁷ The Judge agreed with Deluge and held that Deluge was not liable to Vim for any variation works: see GD at [19].

It should be noted that each variation work claim comprised of two components: (a) an invoice which contained the breakdown of the cost of the variation; and (b) a form that included a signed acknowledgment by the project manager or site engineer.

In support of its claim for $697,130.58 of variation works, Vim invoked cl 16 of the Subcontract, which provided that:⁸ 16 VARIATIONS

Any variation works such as addition[s] or omission[s] or modification[s], shall be on a back-to-back basis with the Main Contract. Such variation shall be carried out only with written instruction[s] from [Deluge’s] Project Manager and the unit rates are in accordance with the agreed SOR for this Subcontract.

[Vim] shall be entitled to ninety percent (90%) or shall or shall [sic] allow a discount of 10% (Profit & Attendance) for [Deluge], on any approved variation claim for additional work orders.

Where rates are not contained therein or are not applicable then the amount shall be such sum as in all circumstances be reasonable and agreed by the parties. Notwithstanding any disputes in the [sic] as to the adjustments, [Vim] shall immediately carry out all variation orders, as instructed by [Deluge] pending valuation of the variation order.

To show that Deluge had given Vim written instructions, Vim adduced in evidence drawings that Deluge had furnished to it, which Vim claimed to constitute a type of written instruction. But even assuming that Deluge had not given Vim written instructions, Vim argued that “a gentleman’s word is his bond”,⁹ and that Deluge had given oral instructions for such variation works to be carried out. In particular, it was claimed that Deluge’s director Mr Tan Ann Kiong (“Mr AK Tan”) had orally promised that Vim would be paid at meetings in October 2017, May 2018, and September 2018.¹⁰ Furthermore, Deluge’s representatives had signed the variation works forms. In these circumstances, the requirement of Deluge’s written instructions under cl 16 had been waived or, alternatively, that Deluge was estopped from enforcing the writing requirement because Vim had relied, to its detriment, on representations made by Deluge that the latter would pay Vim in respect of the variation works. In this regard, Vim tendered in evidence its variation works forms which Deluge’s representatives had signed.

Deluge mounted two complete defences to liability and one defence to quantum in respect of the variation works claim. First, Deluge contended that the claimed “variation works” were actually main works falling within the scope of cll 2, 4, and 5 of the Subcontract or rectification works (see [16] below). This was contended to be consistent with Deluge’s conduct because it had never accepted the works disclosed in Vim’s variation works invoices to be variation works.¹¹ Secondly, in any event, Deluge never issued Vim any written instructions in respect of variation works as required under cl 16 of the Subcontract (see [11] above), and the language of cl 16 was plainly a condition precedent for a claim in variation works. Finally, even if Vim had a valid claim for variation works, the quantum should be confined to $106,579.51 owing to Vim’s: (a) baseless 15% “admin charge”; (b) wrongful inclusion of works disclosed in 17 of 49 variation works invoices/forms that had already been completed; and (c) excessive rates and man-hours spent in its variation works invoices.¹²

The Judge disallowed Vim’s claim for variation works in its entirety and Vim appeals against this aspect of the Judge’s decision. In arriving at his decision, the Judge accepted Deluge’s argument that no written instructions had been provided as required under cl 16 of the Subcontract. At trial, both of Vim’s witnesses, Arun Meyyappan (“Mr Arun”) and Muruganandham Mathi Selvan (“Mr Anand”), admitted that Vim did not receive written instructions for the alleged variation works:¹³ see GD at [23]. Moreover, Vim’s contention that drawings could constitute written instructions did not succeed because: (a) the drawings were received from Samsung and not Deluge (at [24] of the GD); (b) Vim did not plead that the drawings were written instructions (at [25] of the GD); and...