Boonchai Sompolpong v Low Tuck Kwong

Philip Pillai J:

[1] The plaintiff, an architect practising in Singapore under the name and style of TAG Architects, following an introduction by a mutual friend Mr Yap Han Hoe (“Yap”), agreed to provide the defendant, a Malaysian client, with professional architectural services in two sequentially separate projects, viz, first a residential house in Perth, Australia (the “Joondalup Project”); and subsequently a second condominium complex in Balikpapan, Indonesia (the “Balikpapan Project”). Both projects did not proceed to construction.

[2] It is not disputed that there were oral and written agreements between the plaintiff and the defendant relating to the appointment of the plaintiff to provide professional architectural services for both projects, and that the plaintiff did provide the defendant with various designs for each project. The dispute is instead over the precise terms of the agreement, relating to the agreed payment terms, whether the plaintiff’s designs had been accepted by the defendant and if so, how the Singapore Institute of Architect’s Conditions of Appointment and Architect’s Services And Mode of Payment Terms (the “SIA Terms”) would operate with respect to payments claimed by the plaintiff.

[3] For clarity, I will set out the facts surrounding the Joondalup and Balikpapan Projects separately.

[4] The plaintiff, anxious to receive professional assignments for his Singapore practice, was introduced by Yap to the defendant, a Malaysian businessman engaged in building projects in Southeast Asia and Australia. Through correspondence with Yap via a letter dated 4 March 2003, the plaintiff offered his professional services to the defendant for the Joondalup Project, as follows:

[5] The plaintiff met the defendant on 15 March 2003 and thereafter proceeded with the brief for a project budgeted at A$10 million on a land area of 1.75 acres to build a 5-6 bedroom house with a 40,000 sq ft built in floor area.

[6] There is, however, some dispute over whether the lump sum fee should his design not be accepted was specified as S$50,000. It suffices here to note that in the letter dated 4 March 2003, there was no specification of the lump sum payable upon non-acceptance of the designs.

[7] On 30 May 2003, the plaintiff issued the first invoice under the Joondalup Project for S$30,000, labelling the payment as “Progress Payment #1”. The defendant subsequently paid the plaintiff S$20,000, in two separate payments of S$10,000 each. No conditions were stated or attached to these payments.

[8] On 31 December 2003, the plaintiff issued a receipt for the S$20,000 received under the first progress payment, characterising the received monies as “Progress Payment #1 billed as payment for work done”. The plaintiff also issued a further invoice for the cumulative sum of S$60,000, reflecting the previous payment of S$20,000, and stating the balance sum payable as S$40,000. The defendant subsequently paid, on 12 July 2004, a further sum of S$30,000 to the plaintiff. Again, no conditions were stated or attached to these payments. In all, therefore, the defendant made three payments (S$10,000, S$10,000 and S$30,000), amounting to a total payment S$50,000 (for convenience, hereinafter referred to as the “S$50,000 payment”).

[10] On 16 October 2004, the plaintiff, at the defendant’s invitation, attended the 10 Anniversary celebration of the Joondalup Country Club (the “Joondalup Meeting”). The defendant offered a lump sum fee of A$1 million to the plaintiff to complete the Joondalup Project. The plaintiff documented the Joondalup Meeting in a letter dated 22 October 2004, but later opted against the proposed A$1 million fee. On 1 December 2004, the plaintiff wrote to the defendant referring to the Joondalup Meeting, and gave a breakdown of the revised budget for the Joondalup Project. The defendant did not reply to this letter. On 27 January 2005, the plaintiff wrote to Yap, proposing to fix the fees for the Joondalup Project at a lump sum fee of S$150,000. The defendant did not respond to this letter. The plaintiff repeated this request on 15 September 2005. In this letter, the figures were tabulated to reflect that the S$50,000 paid by the defendant thus far was used as part of a “previous payment” for “design work”. Again, the defendant did not respond to the letter.

[11] On 28 July 2006, the plaintiff, by an AR Registered letter, informed the defendant inter alia that “[i]t had [sic] been over 18 months that my commission to design the above project had been completed satisfactorily with Scheme #9 dated 19 November 2004”. There was no response to the letter.

[12] In all, between April 2003 and November 2004, a total of nine schemes were provided by the plaintiff with regard to the Joondalup Project. As the plaintiff stated in his Affidavit of Evidence-in-Chief (“AEIC”), he often had to make substantial changes between designs to accommodate the feedback given and requests made by the defendant. By way of summary, the schemes were produced on the following dates:

[14] By letter dated 1 June 2003, by the plaintiff to Yap, the plaintiff recounted their meeting with the defendant on 30 May 2003 and set out his second terms of engagement as being:

[15] The plaintiff commenced work and produced architectural design plans for the 5-storey condominium, incorporating further changes requested by the defendant, right up to Scheme No. 4, and provided computer diskettes of this scheme for presentation to the mayor for feedback. Scheme No. 6 was finally submitted to the local authorities for approval. The approval was received on 15 March 2005.

[16] On 6 February 2004, the defendant’s representative, one Mr Lim Chai Hock (“Lim”), wrote an email to Loo, stating that after submission of the Balikpapan designs for planning approval, “a principle approval will be granted” and that the Balikpapan Project will “proceed with the EIA and structural design”. On 12 February 2004, the plaintiff was instructed by Loo to “proceed with the appointment of a local architect in Balikpapan and set-up a company there, if necessary, so as to make the submissions to the local authorities”. On 26 July 2004, Loo sent an email to inform the plaintiff that he was “[s]till chasing planning authority in Balikpapan”. On 28 July 2006, the plaintiff, by an AR Registered letter, informed the defendant that he had “completed the design Scheme #6 dated 8 October 2004 which had also received Planning and Building Plan Approvals”.

[18] In all, a total of six schemes were provided by the plaintiff with regard to the Balikpapan Project. These schemes were produced on the following dates:

[20] The defendant’s secretary contacted the plaintiff on 17 September 2007, requesting the plaintiff to provide details of his proposed fee based on a percentage basis. The plaintiff responded via two letters dated 21 September 2007, each rendering details of the scope of work and amount to be billed for the Joondalup and Balikpapan Projects respectively. The fees were computed as percentage fees pursuant to the SIA Terms, and were stated to be the sums of S$432,240 (Joondalup) and S$546,750 (Balikpapan).

[21] On 25 September 2007, Yap informed the plaintiff via fax that “[the defendant] did express to you that he was willing to pay you S$50,000 for his two projects in Australia and Balikpapan”. On 28 September 2007, the defendant responded to the plaintiff’s proposed fee structure alleging that both the Joondalup and Balikpapan designs were not accepted and that the previous payments aggregating S$50,000 were payments for the rejected designs.

[22] Following from the defendant’s refusal to pay the sums of S$432,240 (Joondalup) and S$546,750 (Balikpapan), the plaintiff instituted proceedings in this court to claim the abovementioned sums. However, with regard to the Joondalup Project fees, the plaintiff amended his Statement of Claim on 19 November 2009 to reflect a reduced claim of S$415,472. The plaintiff made the S$16,768 deduction because he erroneously assumed that the Joondalup Project’s professional engineer fees, which were reduced by S$16,768, were not charged separately to the defendant. In any case, the plaintiff has opted to stand by the amended claim of S$415,472 under the Joondalup Project.

[23] The plaintiff argues that he is entitled to payment pursuant to the SIA Terms on either of two grounds:

[24] With regard to the quantum of payment, the plaintiff claims

[25] There is no need to address the quantum meruit claim in this judgment (see [65] infra). I will deal with the contractual claim only.

[26] The issues which arise for determination are:

[27] I will address the issues in seriatim.

[28] The key issue on both parties’ pleaded cases is whether the defendant had accepted the plaintiff’s designs. It is mutually agreed by both parties in their pleadings that the implication of the defendant’s acceptance of the plaintiff’s designs is, that had there been an acceptance of the design, the defendant would be obliged to pay the plaintiff professional fees for the work done as provided in the SIA Terms. The determination of whether there was acceptance of the designs is a question of fact.

[29] The defendant admits that he is experienced and has retained architects to work for him. On these occasions he states that he has signed formal contracts which would set out the scope of works as well as the fees involved. He avers that he had paid the plaintiff S$50,000 and reimbursed all his travel expenses and that he had not accepted the designs for both projects. While it is standard industry practice for an architect to request and receive an express written acceptance of design, the absence of a letter of acceptance of design is not fatal provided evidence exists of the fact of such acceptance.

[30] I now proceed to consider the evidence relating to the characterisation of the S$50,000 payment and the defendant’s conduct during the correspondence with the plaintiff.

[31] The plaintiff’s characterisation of the defendant’s three payments amounting to S$50,000 is that these were made pursuant to invoices issued under the Joondalup Project, as a form of “progress payment”. The defendant characterised the S$50,000 payment as a rejection fee paid upon non-acceptance of the plaintiff’s design. On the evidence before me, I accept the plaintiff’s characterisation for the following reasons.

[32] The plaintiff continuously referred to the S$50,000 payment as “progress payment” in all the invoices. The defendant’s characterisation that he was only obliged to pay a lump sum fee if he did not accept the design does not square with his receipt of the invoices and instalment payments thereon. As a businessman having experience with building projects and architects, if such had been his understanding, the usage of the expression “progress payment” should have evoked a contemporaneous response or clarification from him at any time he made instalment payments.

[33] Next, although the parties agreed that a “lump sum” would be paid upon non-acceptance of the design, in none of the correspondence was the sum specified to be S$50,000. In fact, the defendant’s first and only characterisation of the S$50,000 as a lump sum rejection fee arose on 28 September 2007, more than three years after the final instalment of the S$50,000 was paid on 12 July 2004. If the S$50,000 payment was indeed paid as a lump sum rejection fee, the defendant would surely have explicitly stated so at an earlier date, especially keeping in view that the defendant must have been aware that the plaintiff was conducting himself (eg travelling to Perth) in a manner that reflected the plaintiff’s belief that his design had been accepted. Furthermore, the defendant was evasive when questioned about the S$50,000 payment. The defendant stated, in his Affidavit of Evidence-In-Chief, that the terms of the agreement were evidenced in the letters dated 4 March 2003 and 1 June 2003. He could not explain why the letters made no reference to a lump sum rejection fee of S$50,000, saying that “it may be a mistake”. He also could not satisfactorily explain why he did not make any changes to his AEIC to reflect the mistake. He first contended that he did not know he was going to court, but when questioned on why he did not make the necessary corrections after he knew he was going to court, he suggested that it was due to his limited grasp of the English language.

[34] Finally, the defendant at no time provided any explanation as to why the alleged lump sum rejection fee of S$50,000 was paid in three separate instalments spread over a 12 month period. If the S$50,000 payment was indeed paid as a lump sum rejection fee, it is unlikely that the defendant would have paid out by instalments without noting that such instalment payment signified non-acceptance or pending a decision as to acceptance.

[35] Beyond characterisation of the S$50,000 payment, I find that the defendant’s conduct during the course of correspondence with the plaintiff suggests that the defendant had in fact accepted the plaintiff’s designs for the reasons which follow.

[36] The defendant and/or his representatives indicated on several occasions that the Joondalup design was accepted, in at least four written communications:

[37] It is also likely that the Balikpapan design was accepted, because:

[38] Finally, on at least five instances during cross-examination, the defendant did not unequivocally state that he had rejected the plaintiff’s Joondalup and Balikpapan designs.

[40] The defendant raised three arguments to support his defence that he did not accept any of the designs.

[41] He contended that the plaintiff’s failure to point to a firm date of acceptance suggests that there was in fact no acceptance of his designs. However, I do not find this a compelling factor. Loo’s letter of 4 March 2004 would be sufficient evidence of an expressed acceptance of the Joondalup Project design and the 12 February 2004 communication by Loo instructed the plaintiff to proceed with appointing a local architect and to set up a company to make planning submissions to the local authorities; this would be sufficient evidence of an express acceptance of the Balikpapan Project design.

[42] With regard to the Joondalup Project, the defendant pointed out that the plaintiff was “materially inconsistent” in his evidence because the plaintiff provided at least three different dates of acceptance, namely (1) an “in principle” acceptance of Scheme No. 1; (2) an acceptance of Scheme No. 3 “onwards”; and (3) “written acceptance” of Scheme No. 5. The defendant suggested that such inconsistency evinced that there was no acceptance of the designs. In my view, the fact that the plaintiff proffered three possible dates of acceptance vis-à-vis the Joondalup Project does not unequivocally demonstrate that there was never, at some point in time, any acceptance of the plaintiff’s designs, especially in view of the weight of evidence pointing towards the defendant’s acceptance of the designs. Indeed it suffices for the purposes of this action that I find that the defendant accepted the design as of 4 March 2004.

[43] With regard to the Balikpapan Project, the defendant contended that the plaintiff’s failure to “issue any interim invoice in relation to the Balikpapan Project” was indicative of non-acceptance of the designs. Further, the defendant suggested that Scheme No. 4, which the plaintiff allegedly submitted for approval from the Indonesian authorities, was not accepted: according to the defendant, as the plaintiff had already started working on Scheme No. 5 when Scheme No. 4 was submitted for approval, this indicated that Scheme No. 4 had not been accepted. I do not place much weight on these arguments. Both the failure to issue an interim invoice vis-à-vis the Balikpapan Project as well as the fact that the plaintiff worked on Scheme No. 5 whilst submitting Scheme No. 4 for planning approval are equivocal: they provide little evidence that the designs were not accepted. They are outweighed by the defendant’s instructions thereafter to the plaintiff to submit the Balikpapan designs for approval from the authorities.

[44] The defendant next argues that the plaintiff shifts his case from that stated in the plaintiff’s pleadings. According to the defendant, the plaintiff’s contention that the terms of the agreement were contained in two documents (ie, the letters dated 4 March 2003 and 1 June 2003) departs from his Statement of Claim (Amendment No. 1), in which the plaintiff stated that the terms of the agreement were contained in a series of thirteen documents (Joondalup Project) and five documents (Balikpapan Project). The alleged inconsistency is, however, more apparent than real: (1) it was the defendant’s own contention, in his AEIC, that the terms of the agreement were contained in the two abovementioned documents; and (2) no evidence was adduced to demonstrate that the two documents were inconsistent with the remaining documents. In other words, the plaintiff’s focus on the two documents does not amount to any inconsistency with the plaintiff’s pleaded case.

[45] Finally, the defendant argues that the plaintiff’s making of substantial changes to the designs indicates that the designs were not accepted. However, while the making of further substantial changes could indicate non-acceptance of the designs, this factor is far outweighed by my finding that as from Joondalup Scheme No. 5 further changes were no longer substantive to the design but were confined only to refinements.

[46] On the totality of the evidence adduced, I find that the weight of evidence is in the plaintiff’s favour. First, on the balance of probabilities, the S$50,000 payment was not a rejection fee. The defendant appears to have subsequently and unilaterally considered this to be reasonable payment in light of the fact that both projects were not proceeding further to construction. Second, the defendant’s representatives’ express communications and his conduct indicate that the designs were accepted. Crucially, the defendant failed to satisfactorily account for his failure to communicate his non-acceptance, and did not attempt to otherwise explain his expanding the Joondalup Project brief or for asking the plaintiff to submit the Balikpapan Project design for planning approval. Third, the arguments relied upon by the defendant to demonstrate that the designs were not accepted were largely equivocal, and do not swing the balance of probabilities in his favour.

[47] Having found that the defendant accepted the plaintiff’s designs, within the meaning of the engagement letters, the operation of the SIA Terms is brought into play as they have been incorporated into the terms of engagement by express reference.

[48] The defendant first contends that the plaintiff’s failure to institute arbitration proceedings indicates the non-applicability of the SIA Terms. This I find to have little merit. Whether or not the parties ought to have chosen to resolve their dispute in arbitration is now moot in light of the step in the proceedings evinced by this trial: see Australian Timber Products Pte Ltd v Koh Brothers Building and Civil Engineering Contractor (Pte) Ltd [2005] 1 SLR(R) 168. In any event, it is not determinative of the contractual question whether or not the SIA Terms apply to these contracts.

[49] I find that the SIA Terms do apply. It was the defendant’s own contention, in his AEIC, that the terms of the agreement were contained in the two letters dated 4 March 2003 and 1 June 2003. As both documents explicitly incorporate the SIA Terms into the agreement, the defendant cannot now be heard to say that the SIA Terms do not apply.

[50] The defendant avers that if he accepted the plaintiff’s design, the projects would move forward as governed by the SIA Terms with specific terms to be agreed. It is open to the parties to agree on the fee arrangements between them for each project. That these two projects were not Singapore located projects they were at liberty to conclude any fee arrangement as might be agreed between them. The plaintiff did propose an alternative lump sum fee for the Joondalup Project on 27 January 2005 after the Asian tsunami hit Phuket, where the plaintiff was based, and he urgently needed funds. However the defendant did not respond to any of these proposals. In the absence of any other agreement between the parties, the engagement letters provided for the SIA Terms to operate.

[51] The SIA Terms Part 2 Architect’s Services and Mode of Payment sets out in Part 2.1 the Basic Services of the architect to consist of five stages: schematic design, design development, tender documentation, contract construction and final completion. Part 2.2 then sets out the mandatory mode of payment for basic services in stages. The SIA Terms’ sample Memorandum of Agreement between Client and Architect contemplates three alternative fee bases, viz, percentage, time charge or lump sum basis. SIA Terms (C) Recommended Scale of Professional Charges provides a default basis of fee calculation in the absence of other agreement between the architect and the client, and it reads as follows:

[52] The plaintiff’s pleaded claim is S$415,472 for the Joondalup Project and S$546,750 for the Balikpapan Project.

[55] Both the plaintiff and his expert, one Mr Peter Oscar Von Selkey (“Von Selkey”), have submitted that the SIA Terms entitle the plaintiff to charge the defendant separately for consultant’s fees and disbursements. However, the plaintiff has, in his Statement of Claim (Amendment No. 1), opted not to claim consultant’s fees and disbursements for both projects. Accordingly, the issue of whether the plaintiff may claim consultant’s fees and disbursements does not arise in determining the quantum of the claim under the contract.

[56] Three sub-issues are raised with regard to the plaintiff’s claim under the SIA Terms.

[57] Although the defendant argues that the plaintiff failed to demonstrate how he selected the percentage scale fee basis, I find that the plaintiff’s use of the percentage scale fee basis is warranted pursuant to the SIA Terms (C) (1), which provides the percentage basis as the default basis of calculation in the absence of other agreement between the architect and the client (see [51] supra).

[61] In calculating the quantum of professional fees due to the plaintiff, the plaintiff utilised “work stage percentage” figures that differed from those provided by the expert Von Selkey.

[64] The plaintiff stands by his own calculations, contending that Von Selkey’s interpretation of the SIA Terms was wrong. The plaintiff should have put his arguments to Von Selkey and have Von Selkey address them in Court. Because the plaintiff failed to do so, I am unable to come to a conclusion as to the correct “work stage percentage” figure to use. At this stage, I can only proceed on the basis of awarding the percentages that are agreed by both the plaintiff and Von Selkey, namely Conditions 2.2(a), (b), (c) and (d) for both projects, ie a work stage percentage of 21.5%. The percentages for the remaining Conditions will be determined by the Registrar.

[65] Having found that there is a contract between the plaintiff and the defendant, with the terms of remuneration being based on the SIA Terms, it is not necessary for me to consider the plaintiff’s quantum meruit claim.

[66] The plaintiff seeks interest in accordance with Clause 1.3(6) of the SIA Terms. Clause 1.3(6) reads:

[67] The plaintiff pleads two heads of interest claims:

[68] In view that the professional fees due to the plaintiff are to be ascertained by the Registrar, the first head of interest claims on the sum of S$962,222 (under invoices for both projects) is accordingly also to be determined by the Registrar. The defendant’s rigorous argument that no interest is claimable on consultant’s fees and disbursements is not relevant, because the plaintiff is claiming interest only for his professional fees of S$962,222.

[69] In respect of the second head of interest claims, the plaintiff is to be awarded interest on the sum of S$10,000 for the period dated 15 June 2003 to 1 October 2007.