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Grounds publishedDecided 31 Jul 2013
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High Court

Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd

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[2013] SGHC 148Case no. Suit No 373 of 2012

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  1. Vinodh Coomaraswamy J:

  2. Introduction

  3. [1] The plaintiff engaged the defendant to fabricate and deliver ten containerised diesel generators to the plaintiff under two purchase orders. The defendant delivered these generators either late or not at all. The plaintiff therefore commenced this action seeking a number of heads of relief in respect of the defendant’s breach of contract. The defendant in its counterclaims alleges that it was the plaintiff who breached the two purchase orders as well as a separate contract unrelated to these two purchase orders.

  4. [2] Having heard and considered the evidence and the parties’ submissions, I found the defendant to have been in breach of contract. I therefore granted the plaintiff most of the heads of relief it claimed and dismissed the defendant’s counterclaim. The defendant has appealed against my decision. I therefore set out now the grounds of my decision.

  5. Factual background

  6. Parties and personnel

  7. [3] The plaintiff is a Singapore company. Its principal business is to provide engineering services for rotating equipment in the oil and gas industry. Edward Law (“Mr Law”) is its managing director. James Stephenson (“Mr Stephenson”) is a director. Hener Oblenida Oracion (“Mr Oracion”) and Edwin Sarsale Podador (“Mr Podador”) are electrical engineers employed by the plaintiff. The plaintiff called all four men as witnesses at the trial.

  8. [4] The defendant is also a Singapore company. Its business is to design and fabricate containerised generators as well as to manufacture and repair marine engines and ship parts. Its general manager is Ramasamy Tanabalan (“Mr Tanabalan”). His wife Selvarajoo Mageswari is its sole director. Selvakumar s/o Ramasamy (“Mr Selvakumar”), Mr Tanabalan’s brother, is its project engineer. The defendant called all three of them as witnesses at the trial. The defendant called, in addition, two other witnesses to give what was said to be expert evidence at trial. I address the evidence of these two persons at [112] below.

  9. The purchase orders

  10. [5] On 9 March 2011, the Iran Offshore Engineering and Construction Company (“IOEC”) awarded the plaintiff a contract. Under this contract, the plaintiff was to supply four containerised diesel generators to IOEC. The plaintiff subcontracted the work to the defendant under purchase order AG65-20110065-REV00 (“PO 1”). Although PO 1 was dated 22 March 2011, the plaintiff and the defendant executed it in April 2011. Under PO 1, the defendant was to procure four “Caterpillar Diesel Generator package[s]” (“Caterpillar Generators”), incorporate them into containerised diesel generators to be fabricated to the plaintiff’s requirements and thereafter deliver the completed containerised diesel generators (“Completed Generators”) to the plaintiff. Delivery was to be no later than 1 October 2011. As consideration, the plaintiff agreed to pay the defendant US$315,000 per Completed Generator. For PO 1, therefore, the total consideration was US$1.26m in all.

  11. [6] On 3 May 2011, IOEC awarded the plaintiff another contract. Under this second contract, the plaintiff was to supply six additional containerised diesel generators to IOEC. The plaintiff again subcontracted the work to the defendant under purchase order AG65-20110068-REV00 (“PO 2”). PO 2 was dated 31 May 2011 and was signed by both parties on 2 June 2011. Under PO 2, the defendant was to procure six Caterpillar Generators, incorporate them into containerised diesel generators to be fabricated to the plaintiff’s requirements and thereafter deliver the Completed Generators to the plaintiff. The defendant was to deliver four of the Completed Generators no later than 1 November 2011 and the remaining two Completed Generators no later than 1 January 2012. As consideration, the plaintiff again agreed to pay the defendant US$315,000 per Completed Generator. For PO 2, the total consideration was therefore US$1.89m.

  12. [7] PO 2 was attached to an e-mail dated 31 May 2011 from Mr Law to Mr Tanabalan. In this covering e-mail, Mr Law informed Mr Tanabalan of a change to the delivery deadline specified in PO 1. The four Completed Generators under PO 1 were to be delivered no later than “end January 2012” instead of 1 October 2011. PO 1 was amended accordingly. I should note that, a few paragraphs later in the same e-mail, Mr Law wrote of PO 1, “delivery date end January 2012 (final date to be advised but not before end January 2012)”. I discuss later the effect of these words.

  13. [8] In summary, under PO 1 and PO 2 the defendant was to supply the plaintiff with a total of ten Completed Generators, which the plaintiff would then deliver to IOEC in performance of its own contract with IOEC. The deadline for delivery under PO 2 was earlier than the delivery deadline in PO 1, even though the parties entered into PO 2 after PO 1.

  14. [9] At this juncture, I make two points about the two purchase orders. First, under both PO 1 and PO 2, the plaintiff was to pay the defendant in stages in accordance with a schedule (“the Payment Schedule”). The Payment Schedule provided as follows:

  15. The second point is that the defendant’s work involved removing the standard factory-installed alternators in Caterpillar Generators (“SR4 Alternators”), and replacing them with alternators manufactured by Leroy-Somer (South East Asia) Pte Ltd (“LS Alternators”). The LS Alternators met IOEC’s specifications but the SR4 Alternators did not. I note that there is a dispute as to when the defendant learnt that its work would involve this task of replacing the alternators.

  16. Initial downpayments

  17. [10] On 4 May 2011, the plaintiff paid the defendant a sum of US$252,000, being 20% of the contract price of US$1.26m under PO 1. On 2 June 2011, the plaintiff paid the defendant US$378,000, being 20% of the contract price of US$1.89m under PO 2. Each payment was expressly made pursuant to the first stage of the Payment Schedule in each of PO 1 and PO 2. The plaintiff alleged that it made the payments even though the defendant had not, at the time, done what it was obliged to do in order to trigger its entitlement to the payments, ie, to submit the required documentation (see [9]) above. Not surprisingly, the defendant argued that the plaintiff’s payments indicated its acknowledgment that the defendant had fulfilled its obligations as to documentation.

  18. Deferment of PO 1 until completion of PO 2

  19. [11] The plaintiff’s pleaded case is that it “requested” that work under PO 1 be “deferred” until the completion of work under PO 2. The prioritisation of PO 2 over PO 1 was apparent from, at the latest, 31 May 2011, when Mr Law informed Mr Tanabalan by e-mail that the delivery deadline for PO 1 would be pushed back to end-January 2012 (see [7] above).

  20. Arrival of six Caterpillar Generators under PO 2

  21. [12] The defendant says that it purchased six Caterpillar Generators from a supplier in China for US$106,870.50 per Caterpillar Generator on 16 June 2011. On or around 21 July 2011, the defendant received delivery of these six Caterpillar Generators.

  22. [13] On 27 July 2011, Mr Tanabalan sought the second staged payment under PO 2 on the basis that the defendant had received delivery of six Caterpillar Generators. This payment amounted to US$567,000, being 30% of the contract price of US$1.89m. Mr Law replied on 1 August 2011 and informed Mr Tanabalan that the second staged payment required a “transfer of ownership to IOEC” of the six Caterpillar Generators. Mr Tanabalan responded on the same day, querying how he could make such a transfer of ownership when the 20% of the contract price received by the defendant under the first stage of payment was insufficient to make full payment for the Caterpillar Generators. Mr Law then replied, also on the same day. This reply reiterated the need to transfer ownership of the Caterpillar Generators to IOEC and assured the defendant that such a transfer of ownership would not be a “big problem”.

  23. [14] On 11 August 2011, Mr Law sent Mr Tanabalan by e-mail a draft “Transfer of Ownership” document. He asked Mr Tanabalan to review it and send it back with comments. Instead, Mr Tanabalan signed it and sent it back to Mr Law by e-mail on 14 August 2011. This document was in the form of a letter addressed to the plaintiff (“the Letter of Transfer”). It was dated 15 August 2011 and indicated that it had been signed on the same day. I will consider the Letter of Transfer more closely later in these grounds of decision.

  24. [15] The plaintiff then released the second staged payment to the defendant under PO 2 in two payments. It paid US$100,000 on 1 September 2011 and paid the remaining US$467,000 on 27 September 2011.

  25. Progress on PO 2 and eventual termination of purchase orders

  26. [16] The defendant’s progress under PO 2 was slower than originally envisaged. The defendant faults the plaintiff for the delay while the plaintiff blames the defendant. I deal with this dispute later; for present purposes it suffices to note that such a dispute exists.

  27. [17] On 15 September 2011, the plaintiff informed the defendant that IOEC had agreed to grant an extension of time under PO 2. As a result, the defendant was now to deliver two Completed Generators (which I will refer to as “the First and Second Units”) to the plaintiff no later than 14 November 2011, and the remaining four Completed Generators no later than 1 January 2012.

  28. [18] On 27 October 2011, the plaintiff informed the defendant that IOEC had agreed to a further extension of time for the First and Second Units. These were now due to be delivered to the plaintiff on 21 November 2011. At a meeting on 31 October 2011, Mr Law informed Mr Tanabalan that IOEC expected delivery of the First and Second Units by 26 November 2011.

  29. [19] The defendant failed to meet the 21 November 2011 deadline to deliver the First and Second Units to the plaintiff. Despite that, the defendant continued work under PO 2. Eventually, the defendant delivered the First and Second Units to the plaintiff on 16 January 2012. Earlier, on 5 January 2012, the plaintiff had made payment of US$315,000 to the defendant to get the defendant to release the First and Second Units.

  30. [20] Following the delivery of the First and Second Units, the defendant continued work under PO 2. This work was exclusively in respect of what I shall refer to as the “Third and Fourth Units”; no work was done on the remaining two units, which I shall refer to as the “Fifth and Sixth Units”. The progress of the work was unsatisfactory to the plaintiff. It therefore terminated both PO 1 and PO 2 by a letter from its solicitors dated 24 April 2012. In that letter, the plaintiff’s solicitors said the plaintiff had made a decision to “repudiate” both purchase orders. It is clear that what the plaintiff’s solicitors meant was that the plaintiff had made a decision to accept the defendant’s repudiatory breach and to terminate its contracts with the defendants. At the time that the plaintiff terminated the two contracts, the defendant had delivered no Completed Generators other than the First and Second Units.

  31. [21] I should say that I have at this point provided no more than a broad sketch of the parties’ dealings in respect of PO 2. This is because there exist a number of disputes of fact in connection with PO 2. It is not convenient now to resolve those disputes, and accordingly I leave them for later.

  32. Summary of the parties’ positions

  33. [22] In brief, the plaintiff’s case is that the defendant committed breaches of contract in respect of PO 1 and PO 2 by failing to deliver the Completed Generators by the stipulated deadlines. The plaintiff says further that by reason of those breaches, the plaintiff was entitled to terminate both contracts. To remedy the defendant’s alleged breaches, the plaintiff claims recovery of certain sums paid to the defendant, damages, and an indemnity against claims made against it by its own customer IOEC. The plaintiff further claims that it is entitled to take possession of the Caterpillar Generators, LS Alternators and SR4 Alternators still in the defendant’s possession. It therefore seeks an order that the defendant deliver up to it these items. To facilitate a full consideration of every one of the plaintiff’s claims, I reproduce here in full the heads of relief it claims (“Heads of Relief”):

  34. For convenience, I shall refer to the Heads of Relief by the numbers which the plaintiff has assigned to them.

  35. [23] The defendant denies that it breached either PO 1 or PO 2. It further alleges that it was the plaintiff who breached them because it terminated the purchase orders when it was not entitled to and because its conduct in a number of instances did not conform to the agreed terms. The defendant claims damages by way of counterclaim as a remedy for these alleged breaches by the plaintiff. The defendant further denies that the plaintiff is entitled to delivery up of the Caterpillar Generators, LS Alternators and SR4 Alternators in the defendant’s possession.

  36. [24] The defendant’s counterclaim against the plaintiff also asserts a claim against the plaintiff in respect of a separate contract, one unrelated to either PO 1 or PO 2. I will deal with this aspect of the defendant’s counterclaim after I have addressed the claims and counterclaims arising from PO 1 and PO 2.

  37. Issues to be determined on the plaintiff’s claim

  38. [25] The following issues arise in relation to PO 1:

  39. (a) Did the defendant commit breach of contract?

  40. (b) If so, was the defendant’s breach of contract of such a nature as to entitle the plaintiff to terminate the contract?

  41. (c) Is the plaintiff entitled to recover the US$252,000 which it paid to the defendant under the first stage of the Payment Schedule?

  42. [26] The following issues arise in relation to PO 2:

  43. (a) Did the defendant commit breach of contract?

  44. (b) If so, was the defendant’s breach of contract of such a nature as to entitle the plaintiff to terminate the contract?

  45. (c) If so, was the plaintiff precluded from terminating the contract by reason of waiver or estoppel?

  46. (d) If the defendant was in breach of contract, what remedies are available to the plaintiff?

  47. (e) Did the plaintiff commit breach of contract, and if so, what remedies are available to the defendant?

  48. (f) Is the plaintiff entitled to delivery up of the Caterpillar Generators, LS Alternators and SR4 Alternators in the defendant’s possession?

  49. [27] There is a final issue common to both PO 1 and PO 2: is the defendant liable to indemnify the plaintiff against all loss arising from IOEC’s claims against the plaintiff?

  50. Three preliminary points

  51. [28] Before I deal with the issues to be determined, I pause to address three preliminary points. First, I set out the established principles governing the question of when a party’s breach of contract entitles the counterparty to terminate the contract. This is an issue common to the analysis for both PO 1 and PO 2. Second, I make some remarks on a number of concepts in the law of contract – namely variation, estoppel, waiver, election, and affirmation – in the hope of clarifying the content of and relationship between these concepts. The parties used these concepts on occasion somewhat loosely. That resulted in parts of their written closing submissions being at cross-purposes to some extent. Third, I briefly examine what is meant when it is said that time is (or is not) of the essence in a contract. It was not always clear what was meant by that phrase as it was used in the present case.

  52. The right to terminate a contract for breach

  53. [29] There are four situations in which a breach of contract by a party entitles the counterparty to terminate the contract: see RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal [2007] 4 SLR(R) 413 (“RDC Concrete”) at [113]; Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd) v Wong Bark Chuan David [2008] 1 SLR(R) 663 at [155]–[157]; Sports Connection Pte Ltd v Deuter Sports GmbH [2009] 3 SLR(R) 883 (“Sports Connection”) at [24]; Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R) 602 at [32].

  54. [30] The first situation is where a contractual term clearly and unambiguously states that a party is entitled to terminate the contract if certain events occur and those events in fact occur.

  55. [31] The second situation is where the contract-breaker clearly conveys to the counterparty that the contract-breaker will not perform its contractual obligations at all, thereby renouncing the contract: RDC Concrete at [93]. I shall refer to this type of breach as a “renunciation”.

  56. [32] The third situation is where the contract-breaker breaches a term of the contract which is a condition of the contract. A term is a condition of the contract if the parties intended to designate that term as one so important to the parties that any breach would entitle the innocent party to terminate the contract. The focus here is on the nature of the term breached considered at the time of contracting rather than on the actual consequences of the breach: RDC Concrete at [97].

  57. [33] The fourth situation is when the breach is one that deprives the innocent party of substantially the whole benefit which it was intended the innocent party would obtain from the contract. Such a breach has variously been called a “fundamental breach” and a breach that “goes to the root of the contract”: RDC Concrete at [99]. The focus here is on the nature and consequences of the breach. I shall refer to this type of breach as a “repudiatory breach”. I do so to distinguish it from the now-discredited common law doctrine of “fundamental breach” as a rule of law which restricts the application of exclusion clauses. This doctrine was developed by the English Court of Appeal before statute intervened in the form of the Unfair Contract Terms Act 1977. An attenuated version of the doctrine survives to mitigate the effects of exclusion clauses, but only as a rule of construction rather than a rule of law: Sun Technosystems Pte Ltd v Federal Express Services (M) Sdn Bhd [2007] 1 SLR(R) 411 at [18]–[19].

  58. Clarification of some concepts in the law of contract

  59. Distinctions between variation, estoppel and waiver

  60. [34] When a party is alleged to have committed a breach of contract, and in particular a breach that entitles the innocent party to terminate the contract, the party allegedly in breach may, as in the present case, plead – or appear to plead – variation, estoppel and waiver as alternative defences to the innocent party’s claim. As has been pointed out by a leading text, the three concepts are similar in that they all operate to relieve a party from, or of, its pre-existing contractual obligations, or rights: see Sean Wilken QC & Karim Ghaly, The Law of Waiver, Variation, and Estoppel (Oxford University Press, 3rd Ed, 2012) (“Wilken & Ghaly”) at para 2.02. But there are differences of substance between the three. One of these is that variation effects a contractually-binding alteration of the terms of the contract whereas estoppel and waiver do not: see Wilken & Ghaly at para 2.03. And so, establishing a variation affords a defence if the act or omission would have been a breach of the original contract but is in conformity with the varied contract which has superseded the original contract.

  61. [35] Estoppel and waiver, by contrast, never give rise to new substantive obligations. Instead, they operate to prevent the innocent party from exercising the full range of his rights and/or remedies that have arisen by reason of the other party’s breach. A summary of the distinctions between estoppel and waiver may be found in Wilken & Ghaly at paras 3.11–3.12. These distinctions may, however, be more apparent than real (see the observations of V K Rajah JC, as he then was, in Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd [2004] 3 SLR(R) 288 at [28]).

  62. Variation

  63. [36] A variation of a contract, like the contract itself, requires offer, acceptance and consideration: Ong Chay Tong & Sons (Pte) Ltd v Ong Hoo Eng [2009] 1 SLR(R) 305 at [28]–[29]. A factual or practical benefit suffices to satisfy the requirement of consideration. This means that it is generally very easy to locate some element of consideration between contracting parties, especially in a transaction of a commercial nature: see the decisions of V K Rajah JC (as he then was) in Chwee Kin Keong and others v Digilandmall.com Pte Ltd [2004] 2 SLR(R) 594 at [139], Andrew Phang Boon Leong J (as he then was) in Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric (practising under the name and style of W P Architects) [2007] 1 SLR(R) 853 at [28]–[30], and the Court of Appeal in Gay Choon Ing v Loh Sze Ti Terence Peter and another appeal [2009] 2 SLR(R) 332 at [100]–[101].

  64. Estoppel

  65. [37] Estoppel is a protean concept. It is a genus consisting of a number of species. On the facts of this case, the relevant estoppel is what is usually referred to as “promissory estoppel”, although Wilken & Ghaly prefer the term “equitable forbearance” (at para 8.06). Promissory estoppel has three elements: first, a clear and unequivocal promise by the promisor, whether by words or conduct; second, reliance on the promise by the promisee; and third, detriment suffered by the promisee as a result of the reliance: see the decision of Philip Pillai J in Oriental Investments (SH) Pte Ltd v Catalla Investments Pte Ltd [2013] 1 SLR 1182 (“Catalla”) at [83]. Some cases describe the first element alternatively as a “representation” – see the decision of Woo Bih Li J in Centre for Creative Leadership (CCL) Pte Ltd v Byrne Roger Peter and others [2013] 2 SLR 193 (“CCL”) at [134] and that of Steven Chong Horng Siong JC (as he then was) in Lam Chi Kin David v Deutsche Bank AG [2010] 2 SLR 896 (“Lam Chi Kin”) at [50]. But what is meant by “representation” here is not a representation of present fact. What is meant is a representation as to future conduct: the party making the representation represents that he will hold in abeyance the enforcement of his strict legal rights. This distinguishes promissory estoppel from estoppel by representation: see Wilken & Ghaly at paras 8.03 and 8.05.

  66. [38] It is also said that a promisor is estopped by promissory estoppel only if it is “inequitable” for him to resile from his promise. The precise relationship between this requirement and the three elements just described is not altogether clear. On one view, this requirement is in addition to the three other elements. That appears to be the view of Pillai J in Catalla at [83]. On another view, this requirement is an alternative to the third element of detriment. That appears to be the view of Woo J in CCL at [134(c)]. Still another view sees the third element of detriment as a flexible one with the requirement that it be inequitable for the promisor to resile from his promise being an “overarching principle” which determines how broadly or narrowly detriment is defined in a given case. That appears to be the view of Chong JC in Lam Chi Kin at [57]. Perhaps a fourth view is that this requirement is merely a compendious way of summarising the necessary effect of all three subsidiary elements being satisfied. Fortunately, it is unnecessary for me to align myself with any one of these views in order to dispose of this case.

  67. Waiver, election and affirmation

  68. [39] Waiver, broadly speaking, is a “voluntary or intentional relinquishment of a known right, claim or privilege”; it is an “informed choice manifested in unequivocal conduct”: see Wilken & Ghaly at para 3.14. These authors classify waiver into four types. Adopting that classification for present purposes, the type of waiver relevant to this case is what they call “waiver by election”.

  69. [40] This brings me to the concepts of “election” and “affirmation”. Election is simply a choice between two inconsistent rights, the “element of choice being essential”: see Wilken & Ghaly at para 6.04. There may be many circumstances in which an election in that sense is made. The circumstance relevant for present purposes is when there is a breach of contract entitling the innocent party to terminate the contract. It is in this particular context that “affirmation” is relevant. Affirmation of a contract means no more than treating the contract as alive rather than terminated.

  70. [41] So a repudiatory breach of contract gives the innocent party an election between terminating the contract and affirming it. Once the innocent party has elected to affirm the contract notwithstanding a particular breach of that contract by the counterparty, he abandons and thereby loses his right to terminate the contract on grounds of that breach: see the speech of Lord Goff of Chieveley, with which all the other members of the House of Lords agreed, in Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The “Kanchenjunga”) [1990] 1 Lloyd’s Rep 391 (“Kanchenjunga”) at 397–398. Thus, an innocent party who is faced with a breach of contract and elects to affirm it instead of to terminate it thereby waives his right to terminate the contract. To put it another way, following the election, he is precluded by the doctrine of “waiver by election” from later seeking to terminate that contract on grounds of the same breach.

  71. [42] When does waiver by election operate to preclude an innocent party from terminating a contract for repudiatory breach? There are three requirements. First, the innocent party must have acted in a manner consistent only with affirming the contract, ie, treating the contract as still alive: see the decision of Belinda Ang Saw Ean J in The “Pacific Vigorous” [2006] 3 SLR(R) 374 at [15]. Second, the innocent party must have communicated his election, ie, his choice to affirm the contract, to the party in breach in clear and unequivocal terms: see Kanchenjunga at 398. Third, because the element of choice is essential, there must be sufficient knowledge on the part of the innocent party. He must at least be aware of the facts giving rise to his right to terminate the contract before his subsequent conduct will be taken as amounting to an election. It is not altogether clear whether he must, in addition, be aware of the right to terminate itself. Ang J in The “Pacific Vigorous” did not say that this knowledge was required (at [15]), while the English Court of Appeal in Tele2 International Card Company SA v Post Office Ltd [2009] EWCA Civ 9; [2009] All ER (D) 144 (Jan) appeared to take the view that it was required (at [53], point (2)). It should be observed, however, that the English Court of Appeal there purported to be summarising Lord Goff’s analysis in Kanchenjunga, whereas Lord Goff expressly left the question open on the basis that it was unnecessary for him to decide it (at 398). Our Court of Appeal also left the question open in Chai Cher Watt (trading as Chuang Aik Engineering Works) v SDL Technologies Pte Ltd and another appeal [2012] 1 SLR 152 at [34]. I likewise leave it open: I do not need to decide it to determine the issues in the present case.

  72. Meaning of “time is (or is not) of the essence”

  73. [43] The phrase “time is (or is not) of the essence” is not a term of art; it is simply a convenient shorthand that can be used to mean different things in different contexts. I confine my observations here to the negative usage of the phrase, ie, saying that “time is not of the essence”. All I seek to demonstrate is that this phrase is capable of a wide variety of meanings. First, it might mean that a contractual term as to time is not so important that it is a condition of the contract. Second, if a contractual term as to time is a condition and it has been breached, then describing the innocent party as one to whom “time was not of the essence” might mean that he waived his right to terminate which arose from the breach of condition. Third, it might mean that the innocent party has waived not just his right to terminate but also his right to claim damages for the breach. Fourth, it might mean that parties have agreed a variation of a contractual term as to time, whether that variation be an extension of definite length or of a more open-natured character, eg, the grant of reasonable time. There may be other possibilities, but it is not my concern to canvass them all.

  74. [44] Having dealt with these preliminary points, I turn now to consider the various issues to be determined.

  75. Issues pertaining to PO 1

  76. Whether the defendant committed breach of contract

  77. [45] It is not disputed that, when the plaintiff terminated both purchase orders on 24 April 2012, the defendant had not delivered to the plaintiff any of the four Completed Generators which it was obliged to deliver under PO 1. The original delivery deadline for these four Completed Generators was 1 October 2011 (see [5] above). I am satisfied, on the basis of the e-mail dated 31 May 2011 and the amendment to the text of PO 1 (see [7] above), that the parties agreed a variation of PO 1 on 31 May 2011. This variation superseded the originally-stipulated delivery deadline and established a new, later delivery deadline. From the plaintiff’s perspective, the consideration for this variation was the practical benefit of putting the defendant in a position where it was more likely to fulfil its obligations under PO 2 on time.

  78. [46] The question is then, what was the new delivery deadline agreed by the parties? The plaintiff argues that it was end-January 2012, while the defendant argues that the delivery deadline was set at large, or at least was pushed back to a reasonable time after it delivered all six Completed Generators under PO 2. The answer to this question depends on what was the objectively ascertained consensus between the parties as at 31 May 2011, the date on which the variation was agreed. My starting premise is that great weight must be ascribed to the fact that PO 1, ie, the contractual document itself, was amended to reflect a delivery deadline of end-January 2012. Next, I have regard to the e-mail dated 31 May 2011, which I am satisfied reflects the intention of the parties on that date. I note that Mr Tanabalan did not object to it in response. The second paragraph of that e-mail contains an unequivocal statement by Mr Law that the delivery deadline would be changed to end-January 2012, as follows:

  79. However, there is a part of the same e-mail just a few paragraphs down in which Mr Law tells Mr Tanabalan:

  80. I acknowledge that the words “final date to be advised” are curious given the prior unequivocal statement that the delivery deadline would be changed to end-January 2012. They are doubly curious because they immediately follow, in the same sentence, a clear re-affirmation that PO 1 was “with delivery date end January 2012”. But I am unable to accept the defendant’s contention that the words “final date to be advised” thereby negate the otherwise-clear agreement between the parties as at 31 May 2011 that the deadline for delivery would be end-January 2012, ie, 31 January 2012. At most, these words were intended to reassure the defendant that it would not unilaterally bring the delivery date forward and to indicate to the defendant a possibility that the plaintiff might at some future time agree with the defendant a further delay in the delivery deadline. The plaintiff never reached any such agreement with the defendant.

  81. [47] The defendant then relies on para 13 of the plaintiff’s Reply and Defence to Counterclaim, which reads:

  82. The defendant argues that it is inconsistent for the plaintiff to say, on one hand, that the delivery deadline was 31 January 2012, and on the other, that it had instructed the defendant to defer work on PO 1 until after the work on PO 2 was completed. As was then contemplated by the parties, the defendant was to have completed its work under PO 2 by 1 January 2012. A deadline of 31 January 2012 for PO 1 would, the defendant contends, give it an unreasonably short period of 30 days in which to complete the work on PO 1. This must mean that an extension of the deadline was implicit in the plaintiff’s instruction to defer the work on PO 1.

  83. [48] I reject the defendant’s argument. Just because 30 days might appear in retrospect to be an unreasonably short period in which to complete PO 1, it does not follow that it appeared that way to the parties on 31 May 2011. The fact is that the defendant did not object to the amendment of PO 1 to reflect a delivery deadline of 31 January 2012, nor did it object to Mr Law’s unequivocal statements in the e-mail dated 31 May 2011 that the new delivery deadline was 31 January 2012. I am satisfied that, at the time, parties contemplated that the defendant would arrange its affairs between 31 May 2011 and 31 January 2012 so as to enable it to complete both PO 2 by 1 January 2012 and PO 1 by 31 January 2012. Any unreasonable tightness of deadline stems from the defendant’s own failure to do as it could and should have done. The plaintiff’s instruction to defer the work on PO 1 is therefore entirely consistent with the parties having agreed on 31 May 2011 that the delivery deadline for PO 1 would be 31 January 2012. For this reason, I find that the parties agreed by a contractually-binding variation on 31 May 2011 that the delivery deadline for PO 1 would be 31 January 2012.

  84. [49] In connection with the plaintiff’s instruction to defer work on PO 1, there is perhaps another argument that the defendant could have raised in its favour, although I do not understand the defendant to have done so. This argument is that such an instruction amounted to a second, subsequent variation of the delivery deadline so that it was pushed back beyond 31 January 2012. Hypothetically speaking, if, for example, just days before 31 January 2012, as work on PO 2 was ongoing, the plaintiff instructed the defendant, “Complete PO 2 first and commence work on PO 1 after”, this might amount to replacing the deadline with an open-ended stipulation as to time of delivery. The context in which the instruction was given is all-important. But in the present case, the defendant has not shown me what that context was. All I have is language in the plaintiff’s pleadings saying that, at some unspecified point in time, in certain unspecified circumstances, such an instruction was given. Given that this is the extent of the material before me, I am unable to find on a balance of probabilities that the instruction from the plaintiff to defer work on PO 1 amounted to a subsequent variation of the delivery deadline such that it extended beyond 31 January 2012.

  85. [50] There are two more arguments put forward by the defendant that I should address:

  86. (a) The defendant points out that, in contrast to the volume of correspondence and amount of activity in relation to PO 2, there was no such correspondence and activity in relation to PO 1. For instance, the plaintiff did not take any steps towards delivering to the defendant the LS Alternators which the defendant required to fabricate the Completed Generators. If the delivery deadline was indeed 31 January 2012, the defendant argues, the plaintiff would at least have checked on the defendant’s progress and delivered the LS Alternators which the defendant required to complete the work. The fact that it did neither, the defendant submits, demonstrates that the deadline was not 31 January 2012. In my view, this argument was without merit. The defendant, in effect, was arguing that the plaintiff’s conduct after 31 May 2011 should be taken into account in ascertaining the parties’ intentions as at that date. This argument presupposes that it was unclear as at 31 May 2011 what the delivery deadline was. I do not think it was at all unclear. As I have said, I think it was clear that the parties had agreed on a delivery deadline of 31 January 2012. That being the agreement as at 31 May 2011, no subsequent silence or inaction on the plaintiff’s part could change the agreed delivery deadline, unless such silence or inaction itself amounted to a fresh variation of the delivery deadline, which cannot have been the case.

  87. (b) The defendant points out that the plaintiff, in its opening statement, alleged that the defendant’s breach of PO 1 was in the nature of an “anticipatory breach” rather than a completed breach. This, the defendant argued, demonstrated the plaintiff’s recognition that it was untenable to maintain that the delivery deadline was 31 January 2012. I cannot accept this argument. The delivery deadline depends on the intention of the parties at the time they entered into PO 1. I glean that intention from an objective consideration of the circumstances and the parties’ conduct at that time. That intention does not change with the position that the parties later choose to adopt at trial.

  88. [51] Having found that the deadline for delivery of the four Completed Generators under PO 1 was 31 January 2012, I therefore hold that the defendant committed a breach of contract by failing to deliver the Completed Generators to the plaintiff by this date.

  89. Whether the breach entitled the plaintiff to terminate the contract

  90. [52] In the absence of an express clause giving the plaintiff the right to terminate PO 1 on grounds of the defendant’s failure to deliver, the plaintiff has the right to terminate PO 1 only if the defendant’s breach was one or more of the following: a renunciation, a breach of condition, or a repudiatory breach (see [29]–[33] above).

  91. [53] In my view, the defendant’s breach was not a renunciation. There was simply no correspondence before me between the parties in relation to PO 1 after the e-mail dated 31 May 2011. On the facts of this case, that silence and inaction does not amount to the defendant conveying an intention not to perform its contractual obligations at all. I do not rule out the possibility that, on the facts of another case, silence and inaction may indeed convey intention not to perform. But in the present case, the mutual intention was that the defendant would work on PO 1 only after completing work on PO 2. Silence and inaction in relation to PO 1 while work was still ongoing under PO 2 would have been completely in keeping with that mutual intention. For this reason, that silence and inaction could not have been contemplated by the parties as evincing a new and distinct intention, viz, the defendant’s intention not to perform its obligations under PO 1.

  92. [54] I am also satisfied that this was not a breach of a condition. I find that the varied delivery deadline was not a condition because of the words “final date to be advised” in the e-mail dated 31 May 2011. As I have said at [47] above, these words do not negate a finding that the delivery deadline was end-January 2012. But they do indicate that the parties at the time did not view the deadline as a term so important that exceeding it by even a day would entitle the plaintiff to terminate the contract. Those words suggest a mutual understanding at the time that there was a more than fanciful possibility of the parties agreeing to a further delay in delivery at some future time. To that extent, parties did envisage at the time a degree of flexibility in the deadline, such flexibility to be achieved by future agreement. For this reason, the stipulated delivery deadline could not have been of such importance to the parties at the time as to qualify as a condition of PO 1.

  93. [55] I am, however, satisfied that the defendant’s breach was a repudiatory breach. When considering the question of whether a breach is a repudiatory breach, the analytical approach comprises two steps. First, identify what exactly constituted the benefit that the parties intended the innocent party to derive from the contract. Second, examine the actual consequences of the breach that occurred at the time that the innocent party terminated the contract: see Sports Connection at [62].

  94. [56] In this case, the benefit intended by the parties under PO 1 was that the plaintiff should receive delivery of four Completed Generators by 31 January 2012 in order that it might meet its own contractual obligations to its customer IOEC. The actual consequence of the defendant’s breach was that, as at 24 April 2012, the date of termination, the plaintiff had received nothing useful at all under PO 1. The defendant did not even commence fabrication and installation works. None of the Caterpillar Generators that the defendant purchased were even committed towards the fulfilment of PO 1. The plaintiff was no better off on 31 January 2012 or 24 April 2012 than when it entered into PO 1 an entire year earlier. What the plaintiff expected to receive and what it had actually received by the time that it terminated the contract leads me to the conclusion that, as at 24 April 2012, the plaintiff was deprived of substantially the whole of the benefit which it was intended by the parties to have obtained under PO 1. Indeed, I might say that it was deprived of all of the benefit that it was expected to receive under PO 1. On that basis, I hold that the plaintiff was entitled to terminate the contract when it did so on 24 April 2012. It follows that the defendant’s counterclaim for wrongful termination of PO 1 must fail.

  95. Whether plaintiff entitled to recover US$252,000 paid to the defendant

  96. [57] Having held that the defendant was in breach of contract, I turn to the remedies the plaintiff seeks as compensation for the breach. The plaintiff seeks to recover the sum of US$252,000 which it paid to the defendant pursuant to the first stage of payment under the Payment Schedule (see [10] above). It claims this sum of money under Heads of Relief 3 and 4. While not expressly stated to be so, it must be that these two Heads of Relief are pleaded in the alternative. Head of Relief 3 claims that this sum is held on trust for the plaintiff, while Head of Relief 4 claims that the sum is recoverable “being the deposit paid” under PO 1.

  97. Whether money held on trust

  98. [58] I consider first Head of Relief 3. In its closing submissions, the plaintiff identifies the alleged trust as a “constructive/purpose” trust. It then relies on the House of Lords decision of Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 (“Quistclose”). From this it is clear that the plaintiff’s contention is that the US$252,000 was the subject matter of what is now known as a Quistclose trust. The classification of the Quistclose trust within the taxonomy of trusts is not free from controversy. But the judicial consensus at the very least is that this type of trust arises because of the intention of the parties: see the speech of Lord Millett in the House of Lords decision of Twinsectra Ltd v Yardley and others [2002] 2 AC 164 (“Twinsectra”) at [69] and the decision of Belinda Ang Saw Ean J in Pacific Rim Palm Oil Ltd v PT Asiatic Persada and others [2003] 4 SLR(R) 731 (“Pacific Rim”) at [16], which was cited with approval by Lai Siu Chiu J in Singapore Tourism Board v Children’s Media Ltd and others [2008] 3 SLR(R) 981 at [88]. It arises when one party advances a sum of money to another and the intention of the parties is that: (a) this money should be applied for a specific purpose only; and (b) the beneficial interest in the money should remain in the party that advanced the money unless and until the purpose is fulfilled: see Lord Millett’s speech in Twinsectra at [100], which was cited with approval by Steven Chong Horng Siong J in Tee Yok Kiat and another v Pang Min Seng and another [2012] SGHC 85 at [28], and Ang J’s decision in Pacific Rim at [18].

  99. [59] The plaintiff then argues that the sum of US$252,000 that it paid to the defendant is held on a Quistclose trust because it was paid for the specific purpose of placing a deposit for four Caterpillar Generators under PO 1. I reject the plaintiff’s argument without hesitation. As Lord Millett said in Twinsectra at [73], payments in advance for goods or services might be paid for a particular purpose, but such payments are ordinarily intended to be at the free disposal of the party receiving them and treated as part of his cash flow; it is only in an extraordinary case that such payments will create a trust, for otherwise commercial life would be impossible. The plaintiff has not satisfied me in the least that the present case is such an extraordinary one. It has not attempted to show me any evidence at all that it impressed upon the defendant that the US$252,000 might be applied only towards placing a deposit for four Caterpillar Generators. In the result, I cannot find that there was a specific purpose for which the parties intended that this sum of money would be used, let alone that there was a mutual intention that the beneficial interest in that money should remain in the plaintiff until then. Therefore, the plaintiff’s claim for the US$252,000 on the basis of a Quistclose trust is a non-starter.

  100. [60] Although the plaintiff labelled the alleged trust as a “constructive/ purpose” trust at one point in its closing submissions, it did not advance any substantive submissions in support of a constructive trust. But for the sake of completeness I record my opinion that a constructive trust argument would have been as much of a non-starter as the Quistclose trust argument. For the avoidance of doubt, I am speaking here of an institutional constructive trust and not a remedial constructive trust: see the Court of Appeal decision of Ching Mun Fong (executrix of the estate of Tan Geok Tee, deceased) v Liu Cho Chit [2001] 1 SLR(R) 856 at [34]–[35] for an explanation of the difference. The definition and boundaries of the constructive trust are notoriously nebulous, perhaps deliberately so. But the broad concept of the constructive trust is clear – it is a trust arising in equity to satisfy the demands of justice and good conscience. A necessary – but not a sufficient – condition for such a trust to arise is that there be some “want of probity”: see the Court of Appeal decision of Rajabali Jumabhoy and others v Ameerali R Jumabhoy and others [1998] 2 SLR(R) 434 at [107], which was cited with approval, and expanded upon, by Kan Ting Chiu J in Comboni Vincenzo and another v Shankar’s Emporium (Pte) Ltd [2007] 2 SLR(R) 1020 at [56]–[60] and Woo Bih Li J in George Raymond Zage III and another v Rasif David and others [2009] 2 SLR(R) 479 at [19]–[21]. The plaintiff has not shown me anything on the evidence that even hints at a want of probity on the defendant’s part.

  101. [61] I therefore hold that the plaintiff’s claim under Head of Relief 3 fails because the US$252,000 is not held on a Quistclose trust, and there is no reason to impose a constructive trust over that sum of money.

  102. Whether money recoverable in any other way

  103. [62] I turn now to the plaintiff’s claim under Head of Relief 4. It is perhaps unfortunate that this claim was not drafted with greater precision. It simply asserts that the sum of US$252,000 was recoverable “being the deposit paid” without more. Be that as it may, in my view, the plaintiff was entitled to recover this sum of money as damages for the defendant’s breach of contract. Specifically, it is entitled to recover this sum as reliance damages. These damages protect the innocent party’s reliance interest or, to put it another way, compensate it for its reliance loss. By whatever name, this is the measure of damages which addresses the loss suffered by the innocent party due to his reliance on the counterparty’s unfulfilled promise to perform his contractual obligations. It aims to restore the innocent party to the position he occupied before he entered the contract: see Halsbury’s Laws of Singapore vol 7 (LexisNexis, 2012 Reissue) at para 80.545, and see also the decision of Belinda Ang Saw Ean J in Tan Chin Seng and others v Raffles Town Club Pte Ltd [2005] 2 SLR(R) 302 at [27].

  104. [63] Where the innocent party pays a sum of money to his counterparty pursuant to the contract, this sum of money is a form of wasted expenditure in reliance on the counterparty’s promise. Reliance damages are therefore available to make good that wasted expenditure: see Chitty on Contracts (H G Beale gen ed) (Sweet & Maxwell, 31st Ed, 2012) at paras 26-022 and 26-025, and see also the decision of Philip Pillai JC (as he then was) in PT Panosonic Gobel Indonesia v Stratech Systems Ltd [2010] 3 SLR 1017 at [6], as well as a decision of Hutchison J in the English High Court which Pillai JC cited, CCC Films (London) Ltd v Impact Quadrant Films Ltd [1985] 1 QB 16 at 32A–D. Returning to this case, the US$252,000 which the plaintiff paid to the defendant was a form of wasted expenditure incurred in reliance on the defendant’s promise to carry out its work under PO 1. I therefore hold that the plaintiff is entitled to recover that sum as reliance damages to remedy the defendant’s breach of contract.

  105. [64] The plaintiff claimed damages for breach of contract over and above the sum of US$252,000. This could only be a claim for damages to vindicate the plaintiff’s expectation interest, ie, to put it in the position it would have occupied had the contract been performed; such damages would compensate the plaintiff for loss of the profit expected under PO 1. In my view, the plaintiff’s claim for expectation-based damages cannot succeed. Having recovered reliance damages, the plaintiff is now in the position it would have occupied had the contract not been made. Allowing it to go further and recover expectation-based damages on top of reliance-based damages would be to give it the expected profit without its having incurred any (notional) expenditure. To put it simply, this would be giving the plaintiff something for nothing, which cannot be right.

  106. [65] It was also arguable on the pleaded facts that the plaintiff had a restitutionary claim to recover the US$252,000 as money paid on a total failure of consideration. But the plaintiff did not put its claim to me in this way. And it is unnecessary for me to consider it because I have held that the plaintiff is entitled to recover this money as reliance damages under ordinary contractual principles. I note only that “consideration” in this context must not be confused with consideration in the context of the essential elements of a binding contract. The test for whether there has been total failure of consideration is not “whether the promisee has received a specific benefit”, but rather “whether the promisor has performed any part of the contractual duties in respect of which the payment is due”: see the speech of Lord Goff in the House of Lords case of Stocznia Gdanska SA v Latvian Shipping Co and others [1998] 1 WLR 574 at 588D.

  107. [66] I accept that the defendant did do some work under PO 1. At the very least, it submitted some of the documentation required to trigger its entitlement to the first stage of payment, including the build and procurement programmes (whether or not the documentation was satisfactory is another matter). But at best, this work done would go towards resisting a claim of total failure of consideration. It does not furnish a basis on which to resist the plaintiff’s claim for the sum of US$252,000 as reliance damages, because the defendant’s work does not reduce or mitigate the plaintiff’s loss in any way, and therefore does not affect the quantum of damages needed to restore the plaintiff to its pre-contractual position.

  108. [67] It may appear unjust that the defendant goes uncompensated for the work, minimal though it was, that it did under PO 1. But this is because its counterclaim claimed only damages for what it alleged to be the plaintiff’s wrongful termination of the contract. That counterclaim fails. I have held that the defendant is not entitled to such damages because the plaintiff did not wrongfully terminate the contract. Curiously, the defendant’s counterclaim did not include an alternative claim for a quantum meruit.

  109. Conclusion on PO 1

  110. [68] In summary, I hold that the defendant breached PO 1 when it failed to deliver to the plaintiff four Completed Generators by 31 January 2012. I hold that the plaintiff was entitled to terminate the contract on 24 April 2012 because the defendant’s breach deprived it of substantially the whole benefit which it was intended to receive under PO 1. I hold that the plaintiff is entitled to recover the US$252,000 paid to the defendant as reliance damages. I hold that the plaintiff is not entitled to any additional damages for breach of contract.

  111. [69] Even though I do not understand the defendant to have pleaded waiver or estoppel in relation to PO 1, I should record that I have considered whether the plaintiff may be said to have waived any of its rights or be estopped from exercising the same. I am satisfied that this question should be answered in the negative. I turn now to PO 2.

  112. Issues pertaining to PO 2

  113. Detailed narrative of the facts

  114. [70] In my narrative of the factual background above, I provided only a broad sketch of the parties’ dealings in respect of PO 2. The analysis of the issues will be easier to follow if there is a firm factual foundation on which the analysis can proceed. Before I consider the various issues for determination, therefore, I pause here to flesh out that narrative on PO 2. In the course of doing so I raise and resolve the disputes of fact between the parties. The disputes of fact can be distilled to one central question: why did the work under PO 2 proceed so much slower than the parties had originally intended? Unsurprisingly, each party takes the position that the other is to blame for this slow progress.

  115. [71] I preface my findings with brief comments on the witnesses who gave evidence at trial. The principal witness for the defendant was Mr Tanabalan. His evidence spanned more than three days out of the six full days and two half-days of trial. I found Mr Tanabalan to be a thoroughly unreliable witness. He gave oral evidence on material facts which was inconsistent with or contradicted by contemporaneous documentation, which was contrary to the inherent probabilities, and which could not be found in the defendant’s pleadings or in his own affidavit of evidence-in-chief (“AEIC”). I will mention some of the unsatisfactory aspects of his evidence in the course of making my findings.

  116. [72] The principal witness for the plaintiff was Mr Stephenson. Although his evidence was not entirely without difficulty, on the material facts it was largely consistent with the contemporaneous documents and aligned with the inherent probabilities. In general, where the oral evidence of the plaintiff’s witnesses conflicted with that of the defendant’s witnesses and there was no contemporaneous documentation to test the conflicting evidence against, I preferred the evidence of the plaintiff’s witnesses.

  117. The parties’ dealings in respect of PO 2

  118. [73] To recapitulate, the plaintiff and the defendant both signed PO 2 on 2 June 2011. According to the contract terms, the defendant was to submit nine documents within 14 days of signing the contract. These documents included technical plans and work schedules. The plaintiff would then forward these documents to IOEC, and IOEC would, in accordance with the terms of the contract between the plaintiff and IOEC, pay the plaintiff a proportion of the contract price in accordance with an agreed schedule. The plaintiff, in turn, would be obliged under PO 2 to make payment to the defendant one banking day after receiving payment from IOEC. This payment from plaintiff to defendant would be the first stage of payment under the Payment Schedule (see [9] above), in the amount of US$378,000 being 20% of the contract price of US$1.89m. As it was, the plaintiff paid this amount to the defendant on the same day that the parties signed PO 2.

  119. [74] Before I go further, I should elaborate on the nature and scope of the defendant’s work under PO 2. Its ultimate obligation, of course, was to deliver to the plaintiff six Completed Generators by specified dates. In doing so, the defendant had to procure Caterpillar Generators and modify them. The modifications included replacing the factory-installed SR4 Alternators with heavier-duty LS Alternators. It had to fabricate containers to house these modified Caterpillar Generators. It had to procure or fabricate other component systems and parts. These included the electrical system, the heating, ventilation and air conditioning (“HVAC”) system and the Fire & Gas system. It had the option of delegating to subcontractors the work on the component systems and parts. It then had to put everything together into a final product by installing the modified Caterpillar Generators and the component systems and parts into the containers. The final product, then, is what I have referred to as the Completed Generators.

  120. [75] In addition to procurement, fabrication and installation work, the work on PO 2 also involved designing the containers and the various component systems and parts. The understanding was that personnel from the plaintiff, namely Mr Oracion and Mr Podador, would assist the defendant in this aspect of the work. They would work together to prepare these technical designs and drawings for submission to IOEC for approval. These technical designs and drawings would consist of, inter alia, the General Arrangement drawing, which sets out the planned overall layout and dimensions for each Completed Generator, and drawings for the individual component systems and parts, for instance, the HVAC and Fire & Gas systems.

  121. [76] Having set out this background, I can now deal better with the various allegations that the parties levelled at each other for the purpose of demonstrating that the other party was to blame for the slow progress on PO 2.

  122. Approvals granted by the plaintiff or obtained from IOEC

  123. [77] The defendant alleges that plaintiff was guilty of considerable delays in obtaining IOEC approval for the various technical designs and drawings. The defendant further alleges that the plaintiff approved the HVAC and Fire & Gas system specifications, as well as the installation of protection relays, late – at the end of September 2011 – when these specifications and plans had been submitted months earlier in June 2011. In October 2011, says the defendant, the plaintiff asked for even more changes to the HVAC and Fire & Gas systems. The defendant alleges that all this resulted in delays to its work.

  124. [78] I have difficulty believing the defendant’s allegations. In its closing submissions, it did not cite a single piece of supporting evidence, whether in its witnesses’ AEICs or in the contemporaneous documents. The defendant asserted these facts. The defendant therefore had the burden of proving these facts. It wholly failed to discharge its burden. Indeed, in making these allegations, the defendant’s case was internally inconsistent on at least one point. In its closing submissions, it said that the plaintiff “approved the design and dimension” of the Fire & Gas system in July 2011. But the defendant also said that it “had in fact submitted to the [plaintiff] the specifications for the Fire & Gas system sometime in June 2011 and had to wait well over two months to obtain the approval”. As for the allegation that the plaintiff was guilty of delay in obtaining approvals from IOEC, I am satisfied that, even if these approvals took longer to obtain than they should, the plaintiff is not to blame for the delays. I have regard, for instance, to e-mails in which the plaintiff, upon receiving plans and drawings from the defendant or the defendant’s subcontractors, indicated that it would forward these plans and drawings to IOEC immediately. I am therefore satisfied that the plaintiff was generally prompt in seeking IOEC approval.

  125. [79] To be fair, the defendant has identified an e-mail which suggests that the plaintiff was at least on one occasion dilatory in its conduct. This is an e-mail dated 17 October 2011 from one Mohan Vijayanaman (“Mr Mohan”) of Systemair (SEA) Pte Ltd (“Systemair”) and addressed to Mr Oracion. Systemair was the company to which the defendant subcontracted work on the HVAC system. In the e-mail, Mr Mohan complained that he had received neither “advice nor confirmation” from the plaintiff since submitting amended drawings for the HVAC system. I accept that the plaintiff might have been slower than it should have been on this occasion, but I am not satisfied that it caused any delay, let alone significant or causative delay, to the defendant.

  126. Alleged changes to technical specifications and scope of work

  127. [81] What then are these changes to the specifications which the plaintiff is alleged to have made? There are a number of them, but the defendant places greatest emphasis on the change from SR4 Alternators to LS Alternators. I address this first. According to the defendant, LS Alternators are larger and heavier than SR4 Alternators. The change from the latter to the former necessitated an increase in the dimensions of the containers housing the generators as well as a strengthening of the skid tank which forms the base of the containers. This meant that the defendant had to re-submit technical drawings of the containers and purchase additional materials towards increasing the size of the containers. In his AEIC, Mr Tanabalan said that the dimensions of the container as originally envisaged were 20 feet long and 8 feet wide and high. This had to be changed to 20 feet long and 10 feet wide and high.

  128. [82] I accept that LS Alternators are larger and heavier than SR4 Alternators and consequently require larger containers. And it is true that the purchase orders mention SR4 Alternators but not LS Alternators. But I am satisfied that, even before it signed PO 2 on 2 June 2011, the defendant knew that it would need to replace the factory-installed SR4 Alternators with LS Alternators. In an e-mail dated 29 Apr 2011, Mr Law asked Mr Tanabalan if the Caterpillar Generators could be supplied with LS Alternators in respect of PO 1 (the specifications for PO 1 were the same as those for PO 2, as Mr Tanabalan acknowledged). In e-mails dated 15, 16, 17 and 18 May 2011, Mr Tanabalan enquired about the dimensions of LS Alternators. He accepted under cross-examination that this was so that the defendant could prepare the General Arrangement drawing. Mr Tanabalan himself said in cross-examination that the plaintiff first informed him of the use of LS Alternators around the “end of May”. And so I find that the change from SR4 Alternators to LS Alternators was one agreed upon prior to the parties’ signing of PO 2 and that it was not an unexpected alteration sprung by the plaintiff in the course of the defendant’s work.

  129. [83] It follows from this that when the parties entered into PO 2, the defendant already knew that the container dimensions would have to be such as to accommodate the larger and heavier LS Alternators. Indeed, an e-mail from Mr Tanabalan to Mr Oracion dated 24 May 2011 clearly shows that, as at that date, the defendant had in mind a container of 20 feet long, 10 feet wide and 9 feet high, as opposed to the smaller dimensions that the defendant says would have been right for the original SR4 Alternators. Under cross-examination, Mr Tanabalan acknowledged that the dimensions as at 24 May 2011 already took into account the fact that LS Alternators would be used in lieu of SR4 Alternators. I am satisfied that the container dimensions were then approved by IOEC on 7 June 2011, based on an e-mail of that date from Mr Law to Mr Tanabalan. I am also satisfied that there were no further changes to the dimensions. The defendant in its closing submissions accepted that the “new dimensions” had been approved on 7 June 2011, and for this reason I disbelieve entirely Mr Tanabalan’s assertion in cross-examination that the container dimensions were finalised only in mid-August 2011. I therefore reject unreservedly the defendant’s allegation that the plaintiff made changes to the alternators and container dimensions which had not been agreed upon when the parties entered into PO 2.

  130. [84] The defendant then alleges that the plaintiff made a number of other changes to the specifications and scope of work which likewise resulted in delays to the defendant’s work. In his AEIC, Mr Tanabalan details these alleged changes:

  131. (a) modification of the Fire & Gas system by providing an advanced scope of supply instead of a standard scope of supply;

  132. (b) installation of a protection relay to the generator control panel in order to allow the generators to be operated from an unmanned platform;

  133. (c) installation of a twin motor HVAC system instead of a single motor HVAC system; and

  134. (d) installation of a three-cylinder six-start hydraulic system instead of a secondary single cylinder hydraulic start system in the engines.

  135. I am wholly unconvinced that there is any substance in these allegations. By this I mean that, while I am willing to believe that these tasks described by Mr Tanabalan were part of the work that the defendant did, I do not accept that the tasks arose out of unanticipated changes to the specifications that had been agreed upon when parties entered into PO 2. Mr Tanabalan’s AEIC makes reference to a number of e-mails which he claims supports his allegation that the specifications were changed. I fail to see how these e-mails on any reading provide any measure of support for his allegation. On the contrary, the sense I get from the e-mails is that the plaintiff was fairly fastidious about complying with the contractual specifications. In an e-mail dated 5 August 2011 from Mr Oracion to one Mr Nithin KB of Crystal Offshore Systems & Controls Pte Ltd, with whom Mr Oracion was liaising regarding the Fire & Gas system, Mr Oracion wrote, “This proposal is OK already as this is what the specs calls for” [emphasis added]. In an e-mail dated 11 August 2011 to Mr Mohan of Systemair, Mr Oracion asked, “how come a three winding motor as per your submitted drawing become single phase?” [emphasis added]. And in an e-mail dated 30 November 2011, Mr Oracion wrote that the differential pressure transmitters purchased by the defendant were not acceptable because they did not comply with specification “6.3 page 19 of 61”, the text of which Mr Oracion reproduced.

  136. [85] Under cross-examination, Mr Tanabalan asserted that evidence of the alleged changes might be found in the purchase orders and in the various e-mail exchanges. But he was unable to point to specific examples of such evidence. That leads me to believe that the evidence does not exist. Mr Selvakumar, likewise, was unable to put forward evidence of changes to the specifications besides his bare assertions. Under cross-examination, he accepted that, if he wished to say that there were specifications that had subsequently been changed, he ought to show what the specifications are and what the changes were. But he did not do so. Mr Selvakumar eventually fell back on the allegation that the container dimensions were changed, an allegation which I have already given my reasons for rejecting. Given all this, I find that the plaintiff did not make changes to the specifications and scope of work which were outside the parties’ contemplation when they entered into PO 2.

  137. The defendant’s obligation to submit documentation

  138. [86] I find that the plaintiff has made out its allegation that the defendant failed to meet its obligation to submit the nine documents required within 14 days of signing PO 2, as alluded to above at [73]. I further find that, even after the expiry of the 14-day period, the defendant was slow to submit those documents. Having regard to the contemporaneous e-mail correspondence, I find that two of the documents, viz, the procurement programme and build schedule (which the defendant appears to have amalgamated into a single document called the build schedule and procurement plan (“BSPP”)), were submitted on 7 June 2011 but were rejected by the plaintiff on 21 June 2011 for being unrealistic and for lacking detail. The BSPP was later re-submitted on 14 September 2011. The e-mails show that, as at 27 July 2011, four of the nine documents had not yet been submitted; and as late as 22 October 2011, there were still documents that had not been submitted. The defendant’s only argument in response is this: because its entitlement to the first stage of payment from the plaintiff depended on its submitting the nine documents required, the fact that the plaintiff made the first stage of payment is proof that it did submit those nine documents within 14 days of signing PO 2. I do not find this convincing in the slightest.

  139. The defendant’s progress on the work

  140. [87] I find also that the defendant’s progress on its work was far slower than it should have been and did not even meet the timelines that the defendant had set for itself. The defendant’s timelines are reflected in the BSPP which it prepared; according to this document, an unidentified number of Completed Generators would be ready for their Factory Acceptance Test (“FAT”, alternatively referred to as the “Final Acceptance Test”) by 31 October 2011. As it turned out, the defendant missed its own timelines by a significant margin.

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