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Grounds publishedDecided 30 Apr 2012
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High Court

Compact Metal Industries Ltd v PPG Industries (Singapore) Pte Ltd

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[2012] SGHC 91Case no. Suit No 442 of 2005 (Registrar's Appeal Nos 43 and 49 of 2010)

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  1. Lai Siu Chiu J:

  2. [1] This was a construction dispute that was tried in two tranches in 2006 after which the court awarded interlocutory judgment in favour of Compact Metal Industries Ltd (“the plaintiff”) and ordered damages to be assessed against PPG Industries (Singapore) Pte Ltd (“the defendant”) in the plaintiff’s favour. Damages were subsequently assessed by an Assistant Registrar (“the AR”) for the plaintiff’s claim. The parties were subcontractors in a project of which Taisei Corporation (‘Taisei”) was the main contractor.

  3. [2] The defendant appealed in Registrar’s Appeal No 43 of 2010 (“the defendant’s appeal”) to set aside and/or reverse various awards of damages made by the AR while the plaintiff cross-appealed in Registrar’s Appeal No 49 of 2010 (“the plaintiff’s appeal”) against the AR’s decision in refusing to order that the defendant indemnify the plaintiff against any liquidated damages that may be payable by the plaintiff to Taisei.

  4. [3] The two Appeals came up for hearing before me. At their conclusion, I dismissed the defendant’s appeal but allowed the plaintiff’s appeal. I held that the plaintiff was entitled to be reimbursed by the defendant for any liquidated damages recovered by Taisei from the plaintiff. As the defendant has appealed against the whole of my decision (in Civil Appeal No 125 of 2011), I shall now set out my reasons.

  5. The facts

  6. [4] The parties were involved in the refurbishment of the Monetary Authority of Singapore (“MAS”) Building in 2004 (“the project”). As stated earlier, the project’s main contractor was Taisei. A company known as Facade Master Pte Ltd (“Facade”) was appointed as the nominated subcontractor for the supply and installation of the external cladding. Facade is a subsidiary of the plaintiff. Facade appointed the plaintiff to paint the aluminium panels to be used in the external cladding. The plaintiff in turn engaged another subsidiary Compact Metal Industries Sdn Bhd (“Compact Malaysia”) to carry out the painting work. Facade also contracted with yet another subsidiary of the plaintiff called Aluform Marketing Singapore Pte Ltd to fabricate the facade fins. It further contracted with Rotol Singapore Pte Ltd (“Rotol”) to do the coating works for the facade fins. Finally, Facade subcontracted out to Citiwall Installer Pte Ltd (“Citiwall”) the external cladding works viz installation of the panels and facade fins.

  7. [5] The paint for the aluminium panels was to be supplied by the defendant. However, the paint was not an ordinary paint. It was a customised paint that was featured in the defendant’s standard colour charts. It emerged during the course of the trial that the composition of the paint that was initially supplied was unique and had not previously been used. The defendant would only sell such paints to those it had approved as applicators. Compact Malaysia had been such an approved applicator.

  8. [6] Considerable difficulties were encountered by the defendant in achieving an acceptable and consistent finish with the paint that it initially supplied to the plaintiff. That paint was known as ‘Redwood Metallic’ (“the original paint”). This resulted in the parties seeking the approval of the project’s architects (RSP Architects, Planners & Engineers (Pte) Ltd) (“RSP”) to change the formulation of the paint, which approval was secured. Even then, it was only after many months of trial, error and adjustment that satisfactory quality of the paint was achieved. The plaintiff’s first attempt to replace the original paint with ‘Redwood Metallic II’ (“the second paint”) during the period October to December 2004 was similarly rejected. The paint that was eventually accepted and used for the panels was called ‘Redwood Metallic III’ (“the new paint”). Not surprisingly, due to the paint problem, the original completion date of 13 October 2004 was not met. The project was only completed 9 months or 273 days later on 13 July 2005.

  9. [7] The central question for the trial judge was, who should be responsible for the consequential loss and damages that resulted from the delayed completion of the project due to the difficulties involved in achieving an acceptable tonality for the paint applied to the panels?

  10. [8] After a 13 days’ trial involving seven witnesses including an expert, the trial judge held that the original paint supplied by the defendant was not in accordance with the conditions of the sale contract between the parties and that the plaintiff was entitled to reject the same and treat the contract as discharged. However, it was open to the plaintiff to affirm the contract subject to the defendant remedying the breach in an acceptable manner. In either case, the plaintiff was entitled to damages for the defendant’s breach of contract.

  11. [10] Assessment of damages due to the plaintiff took place in three tranches totalling 18 days:

  12. (a) 15 to 26 September 2008;

  13. (b) 28 October to 30 October 2008; and

  14. (c) 9 to 12 December 2008.

  15. At the end of the three tranches, the AR awarded $2,842,102.08 to the plaintiff in January 2010 comprising of:

  16. However, the AR disallowed the plaintiff’s claim to an indemnity from the defendant should Taisei impose liquidated damages on the plaintiff. In arriving at her awards, the AR inter alia accepted the report of the plaintiff’s expert Keith Pickavance (“Pickavance”) in preference to that of the defendant’s expert Richard H K Hardcastle (“Hardcastle”).

  17. The defendant’s appeal

  18. [13] For the assessment hearing, both parties called expert witnesses whose testimonies featured prominently in their appeals. The plaintiff’s experts on the issues of delay and quantum were Pickavance and Anand Jude Anthony (“Anthony”) respectively while the defendant’s experts on the same issues were Thomas Anthony Harker (“Harker”) and Hardcastle respectively. The factual witnesses who appeared for the plaintiff were: (i) Tan Hua Joo (“Tan”) the plaintiff’s executive director who is also Compact’s managing-director; (ii) Ling King Hwa (“Ling”), the general manager of Compact; and (iii) Eric Lo Shek Sum (“Lo”), Facade’s former general manager. I should add that both for the trial on liability as well as the assessment hearings, the plaintiff and its subsidiaries were treated by the court collectively as a single entity under the plaintiff’s umbrella although (at the assessment stage) the defendant took a contrary stand.

  19. The submissions

  20. The defendant’s appeal

  21. [14] At this juncture, it would be appropriate to look at the lengthy arguments that were presented by the parties for their respective appeals. I start first with the submissions for the defendant’s appeal, which correspond chronologically with the respective heads of claims listed at [11] above.

  22. (a) The award of $171,944.40 for excess labour charges

  23. (b) Recoating costs of $590,614.42

  24. (i) Compact Malaysia’s recoating costs of $153,086.08

  25. [21] As for the recoating rates, the plaintiff explained that initially it was Compact Malaysia that undertook the recoating works and invoiced Facade at $26 per sq m for the work. It was only in March 2005 when Compact was occupied with coating panels with the new paint that Facade decided to subcontract the recoating of internal panels to Rotol at a lower rate of $15.40 per sq m. Anthony adopted (after verification) the actual rates charged for recoating by Compact Malaysia and Rotol and they were accepted by the AR.

  26. (ii) Compact Malaysia’s recoating costs of $140,967.58 (between Oct-Dec 2004)

  27. [22] The defendant repeated its foregoing submissions based on Hardcastle’s testimony. It was argued that the AR had no definitive material to arrive at the plaintiff’s claim.

  28. (iii) Rotol’s recoating cost of $186,890.74

  29. (c) Abortive installation/dismantling/reinstallation costs of $495,277.33

  30. (i) Purchase order works (“PO works”) and additional scaffolding costs of $113,018.84

  31. (ii) Citiwall’s additional labour costs of $254,800.49

  32. [30] Once again, Anthony’s assessment of this item came in for heavy criticism by the defendant. The defendant contended that Anthony’s computation of this item was false as the defendant’s computation (based on 15,459 sq m x $17) came to $262,803.00.

  33. [31] The plaintiff explained that the figure $254,800.49 appeared in Citiwall’s final accounts as “labour claim”. Hardcastle had rejected this claim as he said it was a revision of the contract rate for installation. Again, the plaintiff attributed Hardcastle’s opinion to his lack of diligence in reviewing the source documents and/or his biasness.

  34. [33] Unlike Hardcastle, Anthony had undertaken a rigorous review of Citiwall’s progress claims and cross-referenced them to his verification of quantities of coated panels delivered to site. Indeed, Anthony had arrived at the same figure ($262,803) as the defendant, based on 15,459 sq m charged at the contract rate of $17 per sq m. However, he reduced the figure to $254,800.49 as a compromise and in so doing, he had excluded the claims for installation of the contract quantities to avoid double-counting for both the original and new paints.

  35. [34] The plaintiff submitted that Hardcastle’s report on quantum did not say he had examined Citiwall’s progress claims as part of the due diligence process to ascertain the basis of this claim. He had merely hazarded a guess of the basis when he was unable to identify the source. Lo, Facade’s general manager had testified that extensive work had to be carried out on-site due to the need to dismantle and reinstall panels as a result of the paint issue. Consequently, it was correct of the AR to allow this item of claim.

  36. (iii) Backcharges of $67,000 against Citiwall for labour costs and dismantling work not done

  37. [36] The plaintiff explained that Facade’s back-charging of this sum in turn to Citiwall was not disputed by the latter. The back-charge included dismantling work not done. Anthony had assessed there was about 4,000 sq m of excess panels that were not dismantled and for which Citiwall did not make a claim. It was also not disputed that Taisei required extra labour to be deployed by Facade on site to expedite the subcontract works. Indeed, Harker, the defendant’s expert on the delay issue had relied on this fact. It was not unreasonable of Facade to assist Citiwall (with its agreement) with extra manpower for installation of the panels. There was no double-counting involved as the defendant had assumed (without basis) that this item was the exact same backcharge for labour supplied by Taisei to Facade which it was not, although the figure was identical.

  38. (d) Site preliminaries of $1,040,662.35

  39. (i) Compact Malaysia’s site preliminaries of $207,603.00

  40. [40] The defendant pointed out that Anthony had used a “weighted” approach based on the square metre of coated materials for the project and weighted that against the entire square metre coating production every month for the coating factory for all the other jobs for 2004 and 2005. Anthony had opined that the defendant was liable for $173,409 (at $500 per day) for 2004 and $34,194 for 2005 (at $278 per day x 123 days). He proceeded on the basis that all coated panels in 2004 were rejected and therefore the work was abortive. For his 2005 assessment, Anthony had relied on Pickavance’s opinion that the defendant was responsible for 123 days of delay.

  41. [44] The defendant conceded however that Hardcastle had recognised that the defendant should be responsible for some productivity loss by Compact Malaysia during the months July to August and November 2004 (in the sum of $46,826.60). There was also confusion on the quantities of panels that Compact Malaysia had coated and/or rectified. The parties did not dispute that internal panels approximating 7,000 sq m were recoated by Rotol but there were no records or invoices evidencing the works purportedly carried out by Compact Malaysia except for 741.2 sq m identified by Hardcastle in his AEIC. The plaintiff had failed to explain why only some and not all invoices evidencing the coating works had been produced.

  42. [47] However, the plaintiff contended, as Hardcastle did not verify from the source documents the basis and/or accuracy of Anthony’s assessment, he was in no position to challenge Anthony’s figures. That being the case, the AR had to accept Anthony’s and reject Hardcastle’s assessment. The plaintiff contended that Hardcastle’s sweeping challenge on approach was baseless. Hardcastle himself had admitted during cross-examination that Anthony’s weighted approach was a fair basis. Anthony had only taken into account those portions of Compact Malaysia’s preliminaries that could logically be attributable to the project based on overall output. Moreover, Anthony had only allowed preliminaries for the 273 days of delay the plaintiff would have to bear in completing the project.

  43. (ii) Compact Malaysia’s overtime costs of $108,415.00

  44. [54] The plaintiff explained that the overtime charges were again computed by Anthony using the weighted approach and based on actual overtime payments (even though according to the testimony of Ling, the time and effort taken up by the paint issue would appear to indicate Anthony’s assessment was lower than actual time spent). Consequently, Anthony’s assessment which was fair and reasonable was accepted by the AR for the award of $108,415.00.

  45. [55] The plaintiff gave the following breakdown for the overtime figure:

  46. 2004: $83,189.00

  47. 2005: $25,266.00

  48. $108,415.00

  49. As for the defendant’s complaint that overtime was charged when no fabrication and coating works seemed to have been done in July and August 2004, the plaintiff explained that Anthony had used the labour claims presented by the subcontractor Shuang Lee for fabrication works while he computed coating charges based on delivery notes to site. Panels continued to be delivered to site in July and August 2004 for installation even if fabrication stopped on account of the paint problem.

  50. [56] The plaintiff submitted that Hardcastle’s comments should be disregarded since he had admitted that he was unaware that there was supporting documentation provided by the plaintiff. Hardcastle clearly did not verify Anthony’s figures or the quantum, his excuse being Harker had found that the defendant was not in critical delay and hence verification by him was not necessary. Hardcastle then contradicted himself by saying that if verification was required, he would need more information.

  51. (iii) Taisei’s backcharges for labour supplied of $227,625.58

  52. [57] The defendant pointed out this award was reduced from the plaintiff’s original claim of $352,015.30. It sought to rely on paragraph 5.2.3.6 in Anthony’s first report dated 15 February 2008 (“Anthony First Report”) (where Anthony had admitted he could not independently verify and determine the claims) to point out that Anthony had relied on: (i) Lo’s evidence; (ii) the records of Taisei on backcharges attributable to the defendant; and (iii) Taisei’s files for this claim. The defendant then highlighted that in cross-examination Lo had admitted that Taisei’s backcharge records did not describe the work done. The claims also did not sit well with Citiwall’s claim for additional labour of $254,800.49 and acceleration claim of $93,000 and were, according to the defendant, duplicitous. Hardcastle had observed that Taisei had complained on three occasions about the lack of manpower on site and had supplied manpower to do Citiwall’s work.

  53. [58] The plaintiff justified the claim on the basis that the additional manpower that Taisei insisted Facade provide was to accelerate the sub-contract works that had been substantially delayed due to the paint problem. This was evidenced by the correspondence from Taisei in the months prior to the actual date of completion even though Citiwall had deployed more manpower than contractually contemplated. The plaintiff explained that it did not charge to the defendant backcharges imposed by Taisei prior to the discovery of the paint problem or, after 13 July 2005, which was the date of practical completion. Hence, a deduction of $124,389.72 from the plaintiff’s original claim of $352,015.30. It added that the bulk of the back charges were for the critical period April to July 2005 when Facade and Citiwall were trying to expedite the installation works on site as required by Taisei. The plaintiff pointed out that in 2005, apart from the cladding works, Facade did not undertake any other major works for the project. Consequently, an adverse impact on the coating process would have a similar effect on the cladding works and in turn, on completion of the project. Accordingly, the AR was correct to award this claim to the plaintiff.

  54. (f) Costs

  55. (a) The plaintiff did not succeed on all its claims including those for (i) liquidated damages; (ii) Citiwall’s acceleration costs; (iii) some of Taisei’s back charges; (iv) Facade’s claim for overheads of its head office; (v) the plaintiff’s claim for overheads of its head office; and (vi) the plaintiff’s purported loss of goodwill;

  56. (b) In terms of quantum, the plaintiff’s original claim was for $6,862,439.80 (which included liquidated damages of $2,184,000). The figure was revised to $6,565,544.16 at the submission stage while the AR only awarded $2,842,102.08;

  57. (c) The defendant’s experts and lawyers spent considerable time dealing with the plaintiff’s unsuccessful issues which should not have been put forth in the first place; and Anthony had to revise his opinions and figures several times during the assessment proceedings;

  58. (d) The defendant’s experts, Hardcastle and Harker, had criticised the amount of duplication in the appendices attached to the reports of Anthony and Pickavance; and Harker had to discard ten arch lever files as unnecessary duplication;

  59. (e) The assessment proceeded on the basis no EOTs were granted but this premise was untrue, based on the late discovery of the letter dated 30 November 2007 from RSP to Taisei (“the RSP letter”). In that letter, Taisei was granted 168 days EOT by RSP from 13 October 2004 to 30 March 2005.

  60. [63] In regard to its claim for liquidated damages, the plaintiff had always maintained that it would be based on the actual quantum of liquidated damages it incurred. Until that could be ascertained, the plaintiff was left to seek the full potential sum on an indemnity basis.

  61. [66] As for the defendant’s complaint of duplication, the plaintiff contended this was a bare assertion and the defendant had not furnished any evidence in support. The plaintiff was not aware of any duplication. While the plaintiff’s evidence was indeed voluminous, it had a duty to give discovery within certain timelines and had handed to the defendant all the documents that were reviewed by the plaintiff’s experts. The defendant discarded the plaintiff’s documents at its peril as was evidenced in Hardcastle’s lack of due diligence found by the AR.

  62. The plaintiff’s appeal

  63. [67] Before I move on to address the plaintiff’s appeal, I should point out that the same was adjourned when it first came on for hearing (together with the defendant’s appeal). The adjournment was necessitated by the plaintiff’s application in Summons No 1461 of 2010 (“the plaintiff’s application”) which I heard and granted in August 2010.

  64. [68] The plaintiff’s application was for leave to adduce further evidence for the plaintiff’s appeal on the issue of liquidated damages imposed by Taisei on the plaintiff. In the affidavit filed in support thereof by its counsel, Mr Por, he pointed out that although the AR accepted that the defendant was liable for 273 days of critical delay to the project, she had disallowed the plaintiff’s claim to recover from the defendant liquidated damages deducted by Taisei from the plaintiff’s final account.

  65. [69] Mr Por deposed that prior to the commencement of the assessment hearing, the quantum of liquidated damages to be recovered by Taisei from the plaintiff had not yet crystallised even though Taisei had clearly indicated that it would be imposing liquidated damages on the plaintiff once the quantum had been agreed with the employer. Mr Por referred to his client’s exchange of correspondence with Taisei commencing in August 2008. Although the assessment hearing concluded on 12 December 2008, the last set of submissions was only filed on 20 May 2009 and the AR delivered her second grounds of decision on 27 January 2010. The plaintiff received Taisei’s Statement of Final Account dated 23 July 2009 (“Taisei’s Statement of Final Account”) on 24 July 2009 stating that delay was for 105 days amounting to $840,000. The plaintiff accepted the figure and paid the sum; it was significantly less than the 273 days of critical delay that the AR had found the defendant was liable for. On 24 July 2009, Mr Por wrote to inform the AR of Taisei’s Statement of Final Account and sought leave to adduce the said evidence so that the court could take the same into consideration when deciding the quantum of liquidated damages. The defendant’s solicitors by its letter dated 11 September 2009 objected to the admission of the said evidence.

  66. [70] In her first grounds of decision on 19 January 2010, the AR did not make a specific order on Taisei’s Statement of Final Account but disallowed the plaintiff’s claim for the liquidated damages of $840,000 it had paid to Taisei on the basis that no liquidated damages had been imposed on the plaintiff as at the time of the assessment.

  67. [71] The plaintiff pointed out that the said additional evidence on the issue of liquidated damages was not available during the assessment hearing as Taisei’s Statement of Final Account was issued seven months after the trial on liability concluded.

  68. [72] Counsel for the defendant inter alia argued that as the AR had not awarded liquidated damages to the plaintiff, it would not be appropriate for such a claim to morph into one for an indemnity against future liquidated damages that may be imposed. He contended that the basis of the claim was also speculative and too remote as, at the time of the assessment, no EOT had been awarded by Taisei nor had liquidated damages been imposed. The claim was not in the nature of general damages. Even if liquidated damages were imposed, it could not be ascertained if the cause was due to delay occasioned by the paint problem. Anthony had conceded that he would have to see the reasons and breakdown of the events giving rise to the delay before he could express an opinion on the liquidated damages imposed.

  69. [73] The defendant claimed that it had established during the assessment hearing that the sole reason for Taisei’s withholding monies from Facade was due to Taisei’s exercising its right to recover the loan (principal sum and interest) it extended to Facade under the financing arrangement made between them. It added that Anthony himself had reasoned that liquidated damages should not be backcharged to the defendant. (Anthony had set aside $2,184,000 for any liquidated damages imposed by Taisei).

  70. [74] The plaintiff countered that those extracts from the transcripts should not be taken out of context. It was not in dispute that as at the assessment stage, neither Mr Por nor the plaintiff’s representatives or their experts including Anthony were aware of the position vis-a-vis liquidated damages as neither Taisei nor RSP had kept them updated on the situation. Consequently, Anthony could only provide an estimate of the liquidated damages that may be imposed on the plaintiff.

  71. [75] The defendant on its part relied on Hardcastle’s report and referred to the points he had raised that were relevant to the issue of liquidated damages. These were:

  72. (a) Facade’s applications to Taisei for EOTs;

  73. (b) Taisei’s applications to RSP for EOTs;

  74. (c) The final accounts between Taisei and Facade; and

  75. (d) Evidence that the delay to the project was attributable to the defendant and not to any other factors.

  76. [76] Hardcastle went on to explain that the defendant should not be liable for liquidated damages because:-

  77. (a) The contract between the plaintiff and the defendant did not have a liquidated damages clause;

  78. (b) The subcontracts between Facade and Compact similarly did not have a liquidated damages clause;

  79. (c) While the subcontract between Taisei and Facade had a liquidated damages clause which expressly stated it was not a penalty, it did not state that it was a genuine pre-estimate of damages. The liquidated damages were fixed at $8,000 per day even though the MAS Building was occupied during the duration of the works;

  80. (d) The scale of the liquidated damages payable was not made known to the defendant until 25 December 2004, which was six months after the paint tonality problem had arisen; and

  81. (e) There was a duty on Facade to prosecute its case for an EOT for the benefit of parties further down the subcontract chain, who may suffer from liquidated damages that may be imposed.

  82. The defendant argued that on principle the plaintiff could not in any event claim liquidated damages in addition to its claim for general damages as that would amount to double recovery for the same breach. As a paint supplier, the defendant should not be worse off than the other contractors/subcontractors such as Facade who had expressly contracted on the basis of being liable for liquidated damages, which contract the defendant was not privy to. The first time the defendant was aware of the existence of liquidated damages in the project was when Taisei wrote to the defendant on 25 December 2004. Even then, there was only a fleeting mention of the potential exposure of $2m. Further, liquidated damages would be too remote in this case as the same was plainly unforeseeable by the defendant. Lo had testified that there was usually no liquidated damages clause in a paint applicator’s contract as such work was “so straightforward”. However, I should point out that Lo’s remark applies to ordinary and/or standard but not customised paints.

  83. [77] Notwithstanding the objections raised by counsel for the defendant, I granted the plaintiff’s application and allowed the plaintiff to adduce additional evidence on the issue of liquidated damages in relation to:-

  84. (a) The RSP letter dated 30 November 2007 (see above at [60(e)]);

  85. (b) RSP’s letter dated 13 March 2009 to Taisei enclosing the final completion certificate;

  86. (c) Taisei’s letter dated 23 July 2009 to the plaintiff enclosing the Statement of Final Account showing a deduction of $840,000 for liquidated damages;

  87. (d) RSP’s letter dated 28 July 2009 to Taisei constituting Payment Certificate No 25 (final) and confirming liquidated damages amounting to $840,000 had been imposed for 105 days of delay;

  88. (e) RSP’s letter dated 28 July 2009 to MAS confirming the final net sum payable to Taisei;

  89. (f) Taisei’s tax invoice dated 30 July 2009 to MAS for payment under Payment Certificate No. 25; and

  90. (g) Bank notification to Taisei dated 21 August 2009 confirming payment by MAS to Taisei of the stipulated sum at [77(f)] above.

  91. [78] I further directed the AR to determine the following issues:-

  92. (a) Whether liquidated damages of $840,000 imposed by MAS on Taisei were related to the defective paint viz the paint tonality for the external aluminium cladding panels (“Further Issue 1”);

  93. (b) Why Taisei did not grant any EOT to Facade when it had been granted 168 days EOT in the RSP letter and why Taisei did not disclose the EOT it received in its letter dated 23 July 2009 to Façade (“Further Issue 2”).

  94. [79] On 11 April 2011, at its behest, I granted the following additional orders to the plaintiff:

  95. (a) RSP was to furnish a breakdown by affidavit of the liquidated damages of $840,000 imposed on Taisei as well as a breakdown of the 168 days EOT it granted to Taisei; and

  96. (b) Taisei was to clarify on affidavit the questions raised in Further Issues 1 and 2.

  97. [80] In compliance with the above directions, an associate director of RSP who was the project’s director, one Chionh Teow Hwee (“Chionh”), filed an affidavit on 26 April 2011. Chionh deposed the contractual completion date of the project was 13 October 2004 and the project was substantially completed on 13 July 2005. As Taisei had been granted EOT of 168 days up to 30 March 2005, the actual delay amounted to 105 days for which liquidated damages were charged at $8,000 per day or $840,000 for 105 days.

  98. [81] On its part, the architectural manager Subramaniayer Narayanan (‘Narayanan”) of Taisei affirmed an affidavit on 28 April 2011. Narayanan deposed Taisei did not know whether the liquidated damages of $840,000 imposed by the employer were strictly related to the defective paint, as neither the employer nor RSP provided a breakdown of that figure. Neither did Taisei receive a breakdown of the EOT of 168 days it was granted.

  99. [82] Narayanan deposed that Taisei did not grant any EOT to Facade or disclose to Facade that it received EOT of 168 days in the RSP letter because of Facade’s delay in the cladding works. Taisei had also written to RSP who replied on 31 January 2011 confirming that none of the 168 days of EOT granted for the project related to the delay due to the cladding tonality issue.

  100. [83] Based on the two abovementioned affidavits, another hearing took place before the AR on 8 July 2011. After considering the two affidavits, the AR accepted the plaintiff’s argument that although there was no contractual provision governing the imposition of liquidated damages by the plaintiff on the defendant, the plaintiff could be compensated for such loss by way of general damages if it was a foreseeable loss flowing from the defendant’s breach (applying Hadley v Baxendale).

  101. [84] However, although the defendant must have known of the paint tonality problem, the AR did not think that the defendant could have reasonably foreseen that the employer would impose liquidated damages on the main contractor, the extent to which such liquidated damages would be imposed and that it would ultimately be passed down to Facade and then to the plaintiff. She opined that the facts in this case were too remote to support a claim for general damages. She noted that Taisei’s request for EOT included the paint tonality problem as one of the delaying events. The AR reiterated that it would have been inappropriate for her to deal with the issues of EOT and liquidated damages at the assessment hearing as these issues had not yet crystallised on 8 July 2011.

  102. [85] Consequently, the AR answered Further Issue 1 in the negative (given she had insufficient evidence to find otherwise) and on Further Issue 2, she made no finding given that Taisei had filed an affidavit stating that it did not feel obliged to pass onto Facade any EOT that it received from RSP.

  103. [86] I disagreed with the AR’s views. Consequently, I allowed the plaintiff’s appeal, for reasons which are set out at [112] to [117] below.

  104. The decision

  105. The defendant’s appeal

  106. [87] At the hearing, I had commented to counsel for the defendant, Mr Narayanan, that while he continuously criticised Pickavance’s (and more so Anthony’s) evidence in his submissions and argued that the testimonies of the defendant’s experts (Hardcastle and Harker) were to be preferred, that was not the view formed by the AR who had the advantage of seeing and hearing the witnesses unlike this court. Indeed, Mr Narayanan’s submissions appeared to have completely disregarded the AR’s assessment of the experts’ testimony.

  107. [88] It would be appropriate at this juncture to turn to the AR’s grounds of decision and refer to relevant extracts therefrom of her findings.

  108. [89] At pages 4 and 5 of her findings in her first grounds of decision (dated 19 January 2010), the AR had so observed:

  109. [90] Mr Por added that the AR had found Harker’s approach to mean that any delay in works meant a delay in completion; this being in contrast to Pickavance’s approach where “delay” was defined as that which resulted in a delay in completion. Consequently, if the AR had valid reasons for rejecting Harker’s testimony (on which I heard no submissions to the contrary from the defendant) this court would have no basis to prefer the evidence of Harker over that of Pickavance, as the defendant sought to argue. The defendant’s submissions which were premised on the acceptance of Harker’s testimony were thus flawed. Similarly, if Hardcastle had relied on Harker’s testimony (see above at [56]) for his own report, then Hardcastle’s evidence was equally flawed.

  110. [91] It was also clear from her first grounds of decision (dated 19 January 2010) that the AR had accepted Anthony’s testimony even though she did not expressly reject Hardcastle’s evidence. Indeed, the AR affirmed her acceptance of Anthony’s expertise on paint coverage at page 5 of her second grounds of decision (dated 27 January 2010) in relation to the defendant’s counterclaim. If the quantum of the defendant’s counterclaim allowed by the AR was also based on Anthony’s assessment (on which there was no appeal by either party), it did not lie in the defendant’s mouth to criticise Anthony’s assessment of the plaintiff’s claim – the defendant could not “blow hot and cold” simultaneously to suit its purpose. Consequently, this court could not fault the findings and awards made by the court below which were based on Anthony’s assessments.

  111. [92] It bears noting that although Hardcastle criticised Anthony’s approach, he did not offer an alternative method of quantification for the plaintiff’s claims, given his excuse that he did not have adequate information. When pressed by counsel for the plaintiff, Hardcastle said he did not ask for additional evidence or information to enable him to undertake his own quantification. The omission, to say the least, did not reflect well on Hardcastle.

  112. [93] There were other aspects of Hardcastle’s cross-examination that justifiably prompted the AR not to accept his testimony. I refer in particular to the statement of final accounts between Facade and the plaintiff (“Facade’s statement of final accounts”) which was as follows:-

  113. [94] Hardcastle had testified that dismantling and reinstallation works came under Section B – items 2, 4a and 4b of Façade’s statement of final accounts. Indeed, his entire findings were based on this document while counsel for the defendant agreed that the plaintiff was entitled to $113,000. It is to be noted from Facade’s statement of final accounts that no rates or quotations were given for the three items. The rates were to be found in the evaluation certificate of Facade (“Exhibit P-10”) tendered in court below. It was noted from Exhibit P-10 that Hardcastle had accepted that the plaintiff dismantled and reinstalled 400 sq m of panels but it was at the plaintiff’s contract rate of $17 per sq m and not at $21 or $23 as Hardcastle contended. Moreover, Exhibit P-10 did not state (as Hardcastle asserted) that the plaintiff’s claim for labour of $254,800.49 must be at a rate higher than $17 per sq m; Hardcastle had no evidence to support his opinion. Exhibit P-10 states:

  114. [95] Another aspect of Hardcastle’s testimony that was unsatisfactory was his contention that the plaintiff had no evidence to substantiate its overtime claim. Counsel for the plaintiff had pointed out to Hardcastle at the assessment hearing that such evidence was disclosed in discovery in relation to Anthony’s report. Hardcastle then admitted he had not considered such substantiation.

  115. [97] In my opinion such sweeping (and unwarranted) criticism of Anthony’s assessment/reports begs the question – if indeed Hardcastle thought Anthony’s information was so unreliable, why did he not go to the source/primary documents himself to verify the accuracy of Anthony’s information? As I understood it from counsel for the plaintiff, all the documents relied on by Anthony were discovered or discoverable to the defendant. In this regard, I note that Anthony’s First Report totalled 705 pages; excluding Appendices F to H. Anthony had further prepared a second report dated 22 August 2008 (“Anthony’s Second Report”) in response to Hardcastle’s Report. It was clear from Anthony’s two reports (and the corrections dated 19 September 2008 made to his first report) that unlike Hardcastle, Anthony had taken great care in reviewing all the necessary and voluminous documents involved before arriving at his assessment.

  116. [99] Some other shortcomings in Hardcastle’s Report have been noted earlier at [19], [26], [31] and [34]. I would add that in para 6.8 of his report, Hardcastle had again stated that he relied for his calculations on Anthony’s information in respect of preparing recoating works. He then analysed (with his colleague Lee Armstrong) the invoices selected by Harker and concluded that the total area of panels recoated by Compact Malaysia (at $26 per sq.m) and Rotol (at $15.40 per sq.m) were 741.20 sq.m and 6,952.10 sq m respectively. Hardcastle testified that he adopted those quantities for the purpose of his related evaluation, adding again that should further relevant records become available, he would be happy to undertake such review and analysis as the court may require. In my opinion, Hardcastle’s repeated excuse was unacceptable – he knew very well that he was the defendant’s expert on quantum for the assessment hearing. He could not expect the court to give him a second bite of the cherry and allow him/the defendant to render further reports for the court’s determination of the amount of damages to be awarded to the plaintiff, when all the documents required for his evaluation were available to him but not reviewed.

  117. [100] The shortcomings in Hardcastle’s report were highlighted in Anthony’s Second Report, some of which are set out in [101] to [102] below. It would not be possible or practical for this court to repeat Anthony’s many criticisms of Hardcastle’s Report. Suffice it to say Anthony’s criticisms were well founded. Consequently, I was of the view that the AR had valid reasons to prefer Anthony’s evidence to that of Hardcastle. I should also point out that while Hardcastle was a quantity surveyor, Anthony’s qualifications and credentials were far more varied. Besides being a civil engineer, Anthony holds two law degrees, has worked as a contracts administrator as well as a construction and project manager and more significantly, he has had experience in cladding works. Unlike Anthony, Hardcastle had never worked in Singapore and therefore had no knowledge of the local cladding industry.

  118. [101] Hardcastle’s review of the plaintiff’s documents was not only selective and cursory but his comments in relation thereto were occasionally misleading. Anthony noted that Hardcastle’s statement in para 4.4 of his report (see above at [96]) on inadequate documentation failed to state that the alleged “missing documents” or gaps in the plaintiff’s documentation were not critical or crucial to the formation of an expert opinion – they related to progress reports and some minutes of meetings.

  119. [102] It was Anthony’s view (with which this court agreed) that the thrust of an expert’s report for the assessment hearing should focus on three areas viz:-

  120. (a) The process of the coating system;

  121. (b) The overall impact of the paint tonality issue to the project as a whole; and

  122. (c) The Singapore cladding industry.

  123. In his second report, Anthony was mindful of the compensatory nature of the award of damages and that parties should be put into the position as if the contract had been properly performed. He referred to Hadley v Baxendale and prepared his computation of the plaintiff’s damages on that basis. As that was indeed the correct approach at law, Hardcastle’s disagreement with Anthony’s approach and method of assessment has very little merit. I could not see how the Court of Appeal’s decision in Hong Fok Realty cited by the defendant (see above at [16]) advanced its case or reinforced Hardcastle’s position that the excess labour charges ($171,944.40) incurred by the plaintiff should not have been allowed by the AR. That case did not detract from the principles of recoverability spelled out in Hadley v Baxendale.

  124. Recovery of damages in Hadley v Baxendale

  125. [103] It would be appropriate at this juncture to look at the law on recovery of damages as set out in Hadley v Baxendale. The two limbs of recovery in the case are best summed up in Alderson B’s judgment (at 354-355):

  126. [104] The first limb of recovery stipulates that normal losses that occur in the usual course of events are recoverable without the need to prove special knowledge on the part of the defaulting party; this recovery would be for general damages. For recovery under the second limb in Hadley v Baxendale for abnormal losses, it depends on whether the exceptional/special circumstances were within the reasonable contemplation of both parties at the time of the contract; such recovery comes under special damages.

  127. [105] All the items assessed by Anthony and which formed the subject of the defendant’s appeal were for general damages ie, direct losses under the first limb in Hadley v Baxendale. The plaintiff’s appeal on liquidated damages would be consequential losses, ie, special damages (and not general damages as counsel for the defendant asserted) that came under the second limb in Hadley v Baxendale. Consequently, the defendant’s argument (see above at [76] that the award of liquidated damages would be tantamount to double recovery of general damages to the plaintiff for the breach, is a misconception.

  128. [106] In summary, the defendant’s appeal on the following items was dismissed for the reasons stated:

  129. (a) Excess labour charges of $171,944.40 (see above at [15] to [17]). This head of claim was for abortive labour costs incurred as a result of the plaintiff or its subcontractors having to recoat panels that were coated with the original paint and which could not be accepted after they were installed. Consequently, this claim was clearly within the contemplation of the parties.

  130. (b) Recoating costs of $590,614.42 charged by Compact Malaysia and Rotol (see above at [18] to [26]). The AR clearly explained why she had made the award at page 2 of her first grounds of decision. I adopted her reasoning; in essence, the costs incurred were all attributable to the problem with the original paint supplied by the defendant. Consequently, those costs should be borne by the defendant. As for the quantum, the AR quite rightly accepted the plaintiff’s argument that invoices and delivery orders would be a reasonable source to derive the total area of panels coated and delivered as it would be illogical for unpainted panels to be delivered to site.

  131. (c) Citiwall’s additional labour costs of $254,800.49 (see above at [30] to [34]). This item appeared in Facade’s statement of final accounts (see above at [93]) which contained no rates. It had to be cross-referred to Exhibit P-10 (see above at [94]) for the rates. Hardcastle had rejected the claim because he (wrongly) assumed (without any supporting evidence) that Citiwall’s proposed revised rate of $23 per sq m had been accepted and used in the computation instead of the contract rate of $17 per sq m. Anthony on the other hand had cross-referenced Citiwall’s progress claims with quantities of coated panels delivered to site that he had verified. In fact he had arrived at the same figure of $262,803 as the defendant based on 15,459 sq m charged at $17 per sq m – a figure he reduced to $254,800.49 as a compromise. In so doing, Anthony excluded claims for installation of contractual quantities of panels to avoid double-counting of both the original and new paints.

  132. (d) Backcharges of $67,000 against Citiwall for labour costs (see above at [35] to [36]). There was no reason for the defendant to be given the benefit of this item as Facade incurred the expense of providing extra labour that Citiwall failed to provide. Hardcastle mistakenly assumed that it was for the same labour that Taisei provided to Facade and then backcharged to the latter.

  133. (e) Additional site preliminaries claim (see above at [47]). Hardcastle had agreed during cross-examination that Compact Malaysia was entitled to recover preliminaries costs when the production line was not in use due to paint trials. Hardcastle had assessed the preliminaries for Compact Malaysia at $46,000 by adopting the same weighted approach of Anthony, because he offered no alternatives to the court. Anthony had used actual overheads which were in fact lower than if he had adopted the Emden or Hudson formulae recommended in the textbooks.

  134. (f) Compact Malaysia’s overtime costs of $108,415 (see above at [55] to [56]). Anthony had calculated the claim based on actual overtime charges of the company. The defendant could not challenge the figures as Hardcastle was not even aware the figures were available for his verification until it was pointed out to him although he agreed that in principle the plaintiff was entitled to make such a claim.

  135. (g) Taisei’s backcharges of $227,625.58 (see above at [57] to [59]). The plaintiff had conceded before the AR that Taisei’s total backcharges of $350,000 were not attributable to the defendant, hence the reduction by $122,374.42 to $227,625.58. $227,625.58 was for additional labour from April to July 2005 when Taisei was rushing to complete the project. Taisei had insisted on Facade providing additional labour and provided it when Facade failed to do so. The fact that Pickavance found there were 62 days of acceleration proved that the increased manpower contributed to earlier completion of the project and avoided the penalty of more liquidated damages being imposed by Taisei on the plaintiff and in turn on the defendant.

  136. [107] The Hudson formula (see Stephen Furst, Keating on Construction Contracts ( Sweet & Maxwell, 9 Ed, 2012) at para 9-034) states:

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