Skip to content
laws.sgby aturio
Grounds publishedDecided 18 Jun 2003
Contents

High Court

Transnational Recycling Industries Pte Ltd v Semac Pte Ltd

Feedback & support

[2003] SGHC 130Case no. Suit 1330/2001, 676/2002

What happened, in plain English

There is no plain-English summary of this judgment yet.

Ask about this judgment

Laws this judgment relies on

Grounds of decision

Official text from eLitigation

  1. [1] These two actions, Suit No 1330 of 2001 (‘the 2001 action’) and Suit No 676 of 2002 (‘the 2002 action’), involving claims and counterclaims, were heard by me over 14 days. In both the suits, the plaintiffs were Transnational Recycling Industries Pte Ltd (‘Transnational’) and the defendants were Semac Pte Ltd (‘Semac’). Transnational’s claim against Semac was for about S$11.8 million. Both actions were, in substance, tried together and the evidence proffered in one action was by agreement used in the other.

  2. [2] From the pleadings and the facts presented, it would appear that sometime in 1998 or 1999, the Ministry of Environment, Singapore (‘ENV’) decided to privatise the collection of municipal waste in Singapore. For this purpose, ENV divided Singapore into nine sectors – Pasir Ris-Tampines, Bedok, Jurong, Clementi, Tanglin-Bukit Merah, Hougang-Punggol, Ang Mo Kio-Toa Payoh, Woodlands-Yishun and City and called for tenders from pre-qualified companies. Semac was one of the pre-qualified companies and was at all material times a public waste disposal collector to collect waste material from domestic and trade premises, as appointed by the Commissioner of Public Health. It was unsuccessful in its first two tenders for the sectors of Pasir Ris-Tampines and Bedok. It was, however, subsequently successful in securing the tenders for five other sectors, namely, Clementi, City, Hougang-Punggol, Ang Mo Kio-Toa Payoh and Woodlands-Yishun. As was the case, Semac teamed up with Transnational, a waste recycling company also registered with the Commissioner of Public Health in Singapore in relation to these five sectors.

  3. [3] The dispute in the two actions revolved around the acts and obligations of the parties arising from five separate written agreements entered into between them in relation to recycling services for the said five sectors. Of the five agreements, the first two were the subject matter of the 2002 action and the remaining three the subject of the 2001 action. They were:

  4. [4] For all intents and purposes, the terms of the said agreements were identical except in relation to the sector names and it would appear from the pleaded case that Transnational commenced providing recycling services for the Clementi sector from 23 April 2001 and for the City sector from 11 June 2001. As for the Hougang-Punggol and Ang Mo Kio-Toa Payoh sectors, Transnational was obliged to commence its services on 1 July 2001 and for the Woodlands-Yishun sector on 1 August 2001.

  5. [5] Except where occasion would warrant specific reference, the Clementi and City sectors will be referred to in this grounds as the “Existing sectors” and the other three as the ‘Remaining sectors’.

  6. [6] Insofar as material, a few significant terms of the agreement require reproduction and they are:

  7. …

  8. …

  9. [7] As it happened, matters did not proceed smoothly. Soon there was discord, arguments bred bitterness and bitterness led to the actions now being addressed. In order to understand the issues that require resolution in the disputes between the parties, it would be necessary to briefly set out the parties’ respective averments in their pleadings in both actions.

  10. [2001] action – Remaining sectors

  11. [8] In respect of the 2001 action concerning the Remaining sectors, the allegation by Transnational was that Semac had evinced an intention not to be bound by the relevant agreements and repudiated them. Particulars provided by Transnational in its statement of claim read:

  12. 8. By the Defendants’ conduct as particularised herein, the Defendants have evinced an intention no longer to be bound by the Agreements and have repudiated the same.

  13. PARTICULARS

  14. [9] Transnational averred that, as it was entitled to do, it accepted Semac’s repudiation and claimed damages for $8 million, comprising $1.9 million for expected profit from sale of recyclable materials and $6.1 million for amount receivable under cl 6 of the respective agreements entered into between them. (The final claim, however, was more. In relation to the Remaining sectors, the amount actually claimed was $8,761,426).

  15. [10] As regards the 2001 action, Semac’s declared position was (paras 7 and 8 of the amended defence) that in or about late May and early June, Semac decided, as it was entitled to under cl 7.3 of the agreements, to engage another recycling company to provide recycling services concurrently with the plaintiffs in the Remaining sectors. It averred that this decision was conveyed to Transnational during a meeting held on 11 June 2001 as well as in a letter dated 11 June 2001 from Semac to Transnational. On or about 26 July 2001 and 23 August 2001, Semac further confirmed that it would be engaging another recycling company to provide recycling services in the Remaining sectors concurrently with Transnational. Semac averred that since 1 July 2001, Semac Recycling Pte Ltd (‘Semac Recycling’) began preparations to provide recycling services in the Remaining sectors. Semac maintained that cl 7.3 of the agreements provided that Transnational ‘will not have exclusive rights to collect Recyclable Materials’ from the premises in the sectors. Alleging breaches on the part of Transnational (see para 16 to 25 of Semac’s amended defence and counterclaim filed in the 2001 action), Semac counter claimed against Transnational for damages and other relief.

  16. [11] Transnational in its reply and defence to counterclaim – amended on 30 October 2002 - denied that Semac was entitled to the position claimed by it, contending that cl 7.3 of the agreements did not confer on Semac any right to engage another recycling company to provide recycling services under the agreements. It further averred (see para 3 (1) of their reply and defence to the counterclaim) that at about the time the agreements were executed, the understanding between the parties was that Transnational would be the recycling company to provide the recycling services for all the sectors and cl 7.3 of the agreement (which provided that “[t]he Registered Recycler will not have exclusive rights to collect Recyclable Materials from the Designated Premises”) was included in the agreements on the understanding that the karang gunis operating in the sectors were beyond the control of both parties.

  17. [2002] action – Existing sectors

  18. [12] In respect of the 2002 action concerning the Existing sectors (Clementi and City), Transnational averred (paras 3 to 11 of the statement of claim) that under the terms of the agreements, it was told by Semac to commence recycling services with effect from May 2001 for the Clementi sector and from 1 June 2001 for the city sector. But whilst Transnational was still providing such recycling services pursuant to the agreements, Semac by its letter dated 12 March 2002, wrongfully terminated and repudiated the said agreements. The termination according to the said letter was to take effect on 15 April 2002. Transnational accepted the said repudiation by their letter dated 19 March 2002 and claimed damages. (The sum claimed as damages for the existing sectors was $3,125,334). The said letters dated 12 March 2002 from Semac and the reply from Transnational dated 19 March 2002 read as follows:

  19. [13] Semac’s defence was that it was Transnational who breached the terms of the agreements. Particulars of the alleged breaches on the part of Semac were set out in para 3 to 5 of Semac’s amended defence and counterclaim and they read:

  20. [14] Transnational in its reply (amended on 30 October 2002) averred that the breaches relied on by Semac were not material breaches (para 3) and at any rate (see paras 4 and 5 therein) that under cl 5.1 (a) of the agreements, it was a condition precedent that a 30-day notice in writing be given before the right of termination conferred under the said clause could be exercised. Transnational maintained that inasmuch as such a written notice in compliance with the said clause was not given to them, Semac’s claims were flawed for want of fulfilment of the said condition precedent.

  21. Evidence - Transnational

  22. [15] As stated at the outset, the evidence adduced by witnesses in one suit could be used for the purposes of the other suit. As for Transnational, there were altogether four witnesses: Mr Daron Liew Kuan Wye (‘Daron Liew’),their chairman and chief executive officer, Ms Irene Chan Geok Lian (‘Irene Chan’), their operations manager, Ms Ng Soh Cheng (‘Ng’), their finance manager and Mr John Nolan, an expert witness for Transnational, presently a director of an Australian company known as Nolan-ITU Pty Ltd.

  23. [16] The evidence of Daron Liew, insofar as was material, was to the following effect.

  24. [17] He is an accountant by profession and was not new to recycling. In 1977, he started a business known as Metascrap, a company specialising in the collection and recycling of scrap metal. Metascrap was converted into a private limited company and its name was changed on 21 June 1999 to Transnational Recycling Industries Pte Ltd. Transnational became a registered recycler with ENV on 28 July 2000. Subsequently, he initiated discussions with Mr Cheong Quee Wah, the president of Sembcorp Waste Management Pte Ltd (‘SembWaste’) to explore the possibility of Transnational collaborating with them in respect of tenders called by ENV in connection with the Singapore Government’s decision to privatise refuse collection. Discussions ensued between the parties. In the course of the discussion, he came into contact with one Kelly Landrum from Semac’s side. Kelly Landrum and Daron Liew were directly involved in the negotiations on the terms of the agreements that were finally signed between the parties.

  25. [18] During discussions, Daron Liew proposed that the amount to be paid to Transnational for each tonne of recyclable materials collected, be 80% of the prevailing ENV’s waste disposal fee. At that time, ENV charged a sum of $67 as waste disposal fee for each tonne of waste incinerated. The sum payable to Transnational worked out to $53.60. Kelly Landrum was agreeable to this. In the event, a draft agreement was received by him from one Ms Yee Pui Phing, a legal officer from SembWaste.

  26. [19] After going through the draft agreement in its entirety, it was clear to Daron Liew that the parties were intent on entering into a binding agreement to carry out recycling services for the entire sector in question for five years, unless the agreement was terminated under cl 5 therein. In other words, the relationship between the parties was meant to be exclusive. As a result, he took the view that the proposed inclusion of a non-exclusivity clause would not be helpful. So he called Kelly Landrum and told him about his proposal to delete cl 7.3. The reply from Kelly Landrum was that it was a standard clause stipulated by ENV to be included in any contract that was to be entered between the public waste collectors and the registered recycler. Kelly Landrum told him that he could well understand the need for such a clause, for there was no constraint on the karang gunis operating in the sector by either the Government/ENV or the public waste collectors, or for that matter, any other party. Kelly Landrum further clarified that without the inclusion of cl 7.3, it would have required Semac and ENV to prohibit the collection of recyclable materials by the karang gunis and any other third party, and that would have been an impossible task.

  27. [20] Daron Liew said that he understood the issue relating to the karang gunis, as Transnational had encountered the same problem in one of their first projects. He was also fully cognisant of the social and political dimension to the issue of karang gunis – by reason of the implementation of the recycling programme, the karang gunis, who have traditionally been the collectors of recyclable items, were potentially being deprived of their regular source of livelihood.

  28. [21] Daron Liew and Kelly Landrum also talked about the categories of recyclable materials that were to be collected. At the outset, he told Kelly Landrum that he could not agree to having glass and bottles included in the list of recyclable materials. He told him that from his previous experience, there was little resale value for such material. He told Kelly Landrum further that Transnational would be agreeable to subsequently including glass and plastic as the recyclable materials to be collected, if suitable buyers were found for them in the course of carrying out the recycling programme. Kelly Landrum appreciated the difficulties and was agreeable to the proposed exclusion. According to him, Kelly Landrum reassured him that it was not the intention of Semac to have two recyclers collect different recyclable materials from the premises in the same sector since such a scenario did not make commercial sense.

  29. [22] On various dates ie, 17 November 2000, 14 December 2000, 9 January 2001, and 7 February 2001, Transnational was informed by Semac that the latter had been awarded the public waste collection licence by ENV for the Clementi, City, Hougang-Punggol and the Woodlands-Yishun sectors. Transnational was then asked by Semac to plan the recycling programmes for the said sectors and consequently Transnational made the preparations for the roll-out of the recycling programmes (see para 84 of Daron Liew’s AEIC).

  30. [23] Semac provided Transnational with details of boundary, street names and household numbers in relation to the Existing sectors (Clementi and City) but details were not forthcoming from Semac in relation to the Remaining sectors. He said that the recycling programme for the Clementi sector commenced on 23 April 2001 for the landed properties and on 2 May 2001 HDB units, respectively.

  31. [24] On 5 May 2001, Irene Chan sent an e-mail requesting Semac to forward to Transnational, the details concerning Remaining sectors. But to Daron Liew’s surprise, on 22 May 2001, Wong Kan Por of Semac wrote to Transnational stating, ‘We have received some negative feedback on the recycling programme and would like to inform you that our senior management is reviewing our collaboration with your company’. Since the recycling programme for the City sector had yet to start, and as the programme had only been in effect in the Clementi sector for about a month, he was surprised by the contents of this letter. As such, he immediately asked his executives to look into this matter. No proper explanation was forthcoming from Semac. In the result on 11 June 2001, he and his team of executives had a meeting with the executives of Semac. He was much taken aback by the conduct of Semac’s team at this meeting. They seemed to be looking for reasons to renege on their obligations under the agreements with Transnational.

  32. [25] On 13 June 2001, Transnational received two letters from Semac. The first dated 11 June 2001 read: “We write to inform you that we will be engaging another recycling company to carry out recycling activities in Hougang-Punggol, Ang Mo Kio-Toa Payoh and Woodlands-Yishun. We will let you have the demarcation of boundary shortly”. The other letter dated 13 June 2001 said that Transnational had failed to comply with ENV’s requirements and Semac’s requests despite repeated reminders.

  33. [26] On 21 June 2001, an e-mail was sent by Semac to Transnational, enclosing a list of street names and the number of household units on each of the streets, for the latter to carry out the recycling programme in each of the Remaining sectors. Daron Liew noted that for each of the Remaining sectors, the number of units assigned to Transnational amounted to roughly 1% or less of all the household units within each of the said sectors. Subsequent developments confirmed to him that a subsidiary of SembWaste had started its recycling programmes in the Remaining sectors.

  34. [27] By its letter dated 25 July 2001, Semac enquired as to when Transnational would commence the recycling programme for the premises designated by them. The reply from Transnational was that since Semac had, by way of their letter dated 11 June 2001, purported to terminate the agreements in relation to the Remaining sectors, a clarification was required as to how Semac actually intended to proceed.

  35. [28] Two meetings took place between the parties on 26 July and 23 August 2001 since then. According to Daron Liew, at the meeting of 26 July 2001, one Jack Chuang of Semac told them, amongst other things, that Semac was unable to work with the agreement as it was one that was unfair. At the meeting on 23 August 2001, Jack Chuang insisted that Semac would not work with Transnational.

  36. [29] Given what had transpired, Daron Liew did not see any point in continuing with the relationship under the agreements in respect of the Remaining sectors. As such, on 9 October 2001, Transnational wrote to Semac setting out the events which had transpired with regard to the Remaining sectors and intimated that Semac’s conduct was clearly in repudiatory breach of the agreements and that Transnational accepted the repudiation and sought to claim damages as a result.

  37. [30] Daron Liew said that had Kelly Landrum confirmed or given him the understanding that Semac had a right to appoint other recyclers along with Transnational, he would never have executed the agreement in those terms, nor agreed to the said clause. He also said that the pricing formula proposed by him and agreed upon was made on the understanding that there was going to be an exclusive relationship between the parties; if not, he would have proposed a different pricing formula. He said that Semac should not be allowed to resile from the agreements. He added that as a consequence of Semac’s breaches, Transnational had suffered damages. He said that the damages aspect and the computation in relation thereto would be dealt with by Ms Ng and Mr John Nolan.

  38. [31] Irene Chan, the operations manager of Transnational had affirmed two affidavits of evidence in-chief, one in respect of the 2001 action and the other in respect of the 2002 action. The main aspects of her evidence can be summarised as follows.

  39. [33] On 4 April 2001, there was a meeting between the parties and Irene Chan was present at that meeting. The most contentious issue was whether Semac should be billed for newspapers collected by Transnational. This appeared to be a major issue given the fact that Transnational was paid according to the tonnage of recyclable materials collected, and newspapers constituted a substantial part of the total weight of all recyclable materials collected. Semac’s representatives contended that newspapers did not enter the waste stream and hence did not constitute waste. It was Semac’s opinion that residents preferred to sell their old newspapers to karang gunis.

  40. [34] Daron Liew, who happened to be in the adjoining room, came by and told Semac’s representatives that the issue had already been agreed to by Semac in the agreements. This explanation was grudgingly accepted by Semac’s representatives. In the event, the recycling programme for Clementi was eventually rolled out on 23 April 2001 for the landed units and on 2 May 2001 for the HDB units, as planned.

  41. [35] In connection with the planning of operations for the Remaining sectors, on 9 March 2001, Transnational sent a letter to Semac requesting the list of HDB units, landed units, condominiums, schools and the maps and boundaries of the sectors. Reminders were sent in April, May and June 2001. Semac did not respond.

  42. [36] In paras 33 to 99 of her principal affidavit of evidence-in-chief, Irene Chan purports to narrate how accommodating Transnational was in relation to its dealings with Semac. These are too long to be repeated here and it would suffice if I said that she claimed that Transnational was not the party in default. She further maintained that Semac’s allegations that Transnational had failed to comply with their obligations under the agreements were ill-founded.

  43. [37] The evidence of Ng, the financial manager of Transnational, was in relation to the amount Transnational would have been entitled to claim had the five recycling agreements continued for their entire duration. A few aspects of her evidence require highlighting. According to her, the participation rates by the households in the recycling programme was 20% in five sectors but this would rise to 50% by January 2004. In relation to the collected bag weight of recyclable materials, the current weight of 4kg would rise to 5kg by July 2005. Also in relation to composite sales price of recyclable materials, she opined that the current price which is $221.40 would rise to $250 by July 2002 per metric tonne. A summary of her assumptions and the basis of her computation of Transnational’s claim appears at page 24 of her affidavit of evidence-in-chief in respect of the 2001 action. Based on those assumptions, her views as expressed in paras 18 and 19 of her affidavit of evidence in chief in the 2001 action were as follows:

  44. [38] Mr John Nolan’s expert opinion based on the figures given in the affidavit of Ng, insofar as is material, is best stated in his own words. The relevant segments of his opinion as appears in paras 6 and 7 of his report are as follows:

  45. [6] Assessment of Assumptions

  46. In the calculation of the claim as presented in Section 4, several assumptions have been used to model the expected material yields and values during the disputed period. These assumptions are as follows:

  47. These assumptions are outlined and assessed below. Factors considered to be constant include:

  48. 6.1 Participation Rates

  49. In the data projections, initial participation rates are based on the historical data of participation rates recorded for the Clementi and City Sectors. In the projections it has been assumed that householder participation would have continued to increase in these two sectors, and that the remaining three sectors would have shown very similar participation patterns.

  50. In addition, if Transnational Recycling Industries were the sole collector in these areas under the amended legislation which comes into effect on 1 October 2002 (refer to Section 6.4, b), the recorded participation rates would increase, as householders would not be utilising other collection services in the designated areas.

  51. A conservative estimate of the participation rates for fortnightly recycling collection systems in Australia is 80% (Nolan-ITU, 2000). With continued education and service provision, therefore, Nolan-ITU considers the projected participation rate upper limit of 50% to be achievable and conservative within the contract time periods.

  52. 6.2 Average Bag Weights

  53. During the active contract period in the Clementi and City Sectors, average bag weights were recorded, and in both areas it has been demonstrated to Nolan-ITU that the bag weights have averaged between 4.88kg and 5.15kg per bag.

  54. Studies carried out by Nolan-ITU in Victoria, Australia have demonstrated that weekly bag collection systems resulted in an average of 3.01kg per household per week (averaged across all participating and non-participating households) (Nolan-ITU, 1998). With a fortnightly system which also includes additional materials that are not collected in Australia, this yield would be expected to be higher. Therefore the initial projected mass of 4kg per bag utilised in the calculation of the claim is considered to be conservative. The subsequent increase from this conservative starting point up to 5kg per bag at the end of the contract period is also therefore conservative.

  55. From the historical data and the commitment of Transnational Recycling Industries to on-going education programs, it would be expected that the actual average bag weights may have exceeded these projected weights. In addition, it would be expected that with increasing waste generation rates (average of 3.03% per year, Ministry of Environment 2000) that the generation of recyclables would also increase, leading to a further increase in bag weights over the contract period.

  56. 6.3 Composite Price of Sorted Materials

  57. Transnational Recycling have recorded data on the tonnes of materials collected during the active contract period and the sale price from these materials. Nolan-ITU has worked through in detail the modelling and projection of the composite price of materials. The Nolan-ITU calculated composite price based on historical material compositions and historical market prices for the period August 1999 to August 2002 for the respective materials is S$258/t. No attempt has been made to index this figure according to CPI increases or other inflationary indicators. Therefore, the composite material price utilised in calculating the claim is considered to be conservative.

  58. 6. Other Factors Considered

  59. Nolan-ITU have also considered the following factors in the assessment and verification of the claims.

  60. a) Householder Education

  61. In the projections of increasing participation rates and yields, an assumption has been made that on-going and effective education of householders as to materials designated for collection and collection dates would continue throughout the contract period. This would be backed by education and promotion from the Ministry of the Environment through the National Recycling Programme, the ‘Clean and Green Week’ program and environmental education programs as outlined in the Green Plan 2012.

  62. This is considered a fair and reasonable assumption, as the commitment to education from Transnational Recycling Industries was carried out during the active life of the contracts in the Clementi and City sectors. The implementation of commitments of government as outlined in the Green Plan 2012 to broad education is also considered a fair and reasonable assumption.

  63. It is the opinion of the independent consultants, that the education programs, bag labelling and promotion could be improved in Singapore, and would result in even higher participation and yields. The projections of increased participation and bag weights based on the above assumptions are therefore thought to be conservative compared to the potential if education methods were improved.

  64. b) Effect of the Amended Legislation

  65. It is understood by Nolan-ITU that currently several recycling collectors can be operating in one collection area, in addition to ‘rag and bone’ men who also collect materials from householders and in some cases from recycling bags which have been set out for collection. This situation would be expected to reduce the recorded participation rate by a single collector (as some householders may be utilising a different collection system) and reduce the average bag weight collected due to pilfering.

  66. Nolan-ITU understands that on 1 October 2002, the Environmental Public Health (General Waste Collection) (Amendment) Regulations 2002 will come into operation. Under this new legislation, permits must be obtained to collect recyclables from any premises, and only one permit will be issued for each collection area. It would be expected that with the introduction and enforcement of this regulation the recorded participation rates would increase for the licensee, as residents would not be utilising other collection systems and bags in those areas.

  67. The modelled projections of increased participation are therefore considered reasonable and conservative in the light of the potential effect of the implementation of the Environmental Public Health (General Waste Collection) (Amendment) Regulations 2002.

  68. c) Direct Operational Costs

  69. Nolan-ITU understands that Transnational Recycling Industries have actual operational costs incorporated into their claim. Nolan-ITU feels that it is not in a position to assess and verify Transnational Recycling Industries’ operational cost structure, as it has no direct experience with their specific recycling collection, transport and sorting operations. Therefore, Nolan-ITU expresses no opinion in regard to the direct operational costs utilised in calculating the claim.

  70. [7] Conclusions

  71. Nolan-ITU have independently checked, verified and assessed the assumptions made in the modelling and projections of the expected outcomes of the five terminated contracts if they had each been continued to the end of the contract period.

  72. From this assessment and verification, the following conclusions have been reached by Nolan-ITU:

  73. [39] So much for the evidence presented on behalf of Transnational. The aspects which emerged in cross-examination would be referred to if warranted at the appropriate stage.

  74. Evidence – Semac

  75. [40] For Semac there were five witnesses. They were Ms Yee Pui Phing (‘Ms Yee’), their in-house legal counsel, Mr Wong Kan Por (‘Wong Kan Por’) their general manager and executive vice president, Mr Toh Hean Siong (‘Toh’), their former operations manager, Mr Jack Chuang (‘Jack Chuang’), the chief operating officer of SembWaste and Mr Rick Reidinger (‘Reidinger’), the deputy managing director of an environmental consulting firm in Singapore known as Environmental Resources Management (S) Pte Ltd, Semac’s expert witness.

  76. [41] Ms Yee’s evidence can be summarised as follows.

  77. [43] Dealing with the Non-exclusivity clause (cl 7.3), she said that it was one of the standard clauses which ENV required the public waste collectors to incorporate into the contracts with the registered recyclers. This requirement was one of the tender conditions imposed by ENV. Consequently, when Daron Liew made a request to her sometime in August 2000 for a change to cl 7.3 and wanted Transnational to be appointed as the exclusive recycler, she did not agree to it. She explained to Daron Liew that it was not Semac’s policy to grant exclusivity and that in any case, it was an ENV requirement and therefore non-negotiable. She also informed Daron Liew that as long as Transnational was rendering its services satisfactorily, there could be no reason for Semac to appoint another recycler. Daron Liew accepted her explanation. The agreements were then signed.

  78. [44] In this connection, she also referred to Kelly Landrum’s e-mail dated 25 August 2000 addressed to Daron Liew which stated: “The contract states that the Recycler will not have exclusive right to collect recyclable materials, however, we currently have a strong preference towards not using more than one Recycler for the sector”. Daron Liew neither challenged nor disputed what was stated in the said e-mail. Miss Yee added that Kelly Landrum resigned his consultancy with Semac on 23 July 2001 and left Singapore on 2 September 2001. He is now living in the United States of America.

  79. [45] According to Miss Yee, not long after Transnational commenced its recycling operations in the Clementi sector, Semac received negative feedbacks on Transnational’s recycling programme. There were many complaints and Transnational’s poor conduct of the recycling programme was hurting Semac’s reputation. As a result, steps needed to be taken to resolve or mitigate the problem. Consequently, Semac’s management discussed the matter internally and considered exercising its rights under cl 7.3 to appoint another company to work in the Remaining sectors. Semac took the decision to appoint an additional recycler in the Remaining sectors, but did not do the same for the Existing sectors where the recycling services had already commenced. The reason was that by 11 June 2001, Transnational had implemented its programme in the Existing sectors. Semac felt that the introduction of another recycler at short notice would have confused the residents in the sectors. Given that Transnational had just commenced its recycling services in the Existing sectors, Semac considered it was best not to disrupt the status quo for the time being.

  80. [46] On 11 June 2001, there was a meeting at Semac’s premises between parties. The purpose of the meeting was to inform Transnational about its breaches and Semac’s intention to appoint another recycler to work concurrently with Transnational. At the commencement of the meeting, Miss Yee and Wong Kan Por reiterated Semac’s concern over the collection of old newspapers, in the context of recent publicity about how the recycling programme underway was depriving the karang gunis of their livelihood. Daron Liew remarked that karang gunis would go out of business very soon. Miss Yee expressed her concern that in that event, the newspapers would go into the waste stream collected by Semac.

  81. [47] In para 59 of her affidavit of evidence-in-chief, Ms Yee said:

  82. [48] When Semac informed Transnational that another recycler would be appointed and it would let Transnational have the demarcation boundaries shortly, Daron Liew remarked that the recycling agreements were exclusive. Miss Yee disagreed at once and reminded him that cl 7.3 was a standard condition imposed by ENV. Daron Liew’s response was that he would seek legal advice on it and in the meantime, he would reserve his rights. Commenting on an alleged notes of the said meeting produced by Transnational, Miss Yee said that those minutes were contrived. She then outlined how the rift widened between the parties and the exchange of letters in relation to the matter.

  83. [49] In the result, on 13 November 2001, in view of Transnational’s persistently unsatisfactory performance as the appointed recycler, Semac sought consent from ENV – as required under cl 5.1 (a) of the agreement between the parties – to terminate the recycling agreement for the Existing sectors. By its letter dated 4 March 2002, ENV consented to the termination of the agreements for the Existing sectors. By its letter dated 12 March 2002, Semac terminated the agreements for the Existing sectors (see para 12 herein for Semac’s letter dated 12 March 2002 and the reply dated 19 March 2002 from Transnational).

  84. [50] As regards the Remaining sectors, Ms Yee averred that about four months after Semac had sent its letter dated 11 June 2001 to Transnational, stating that Semac would be engaging another recycling company to carry out the recycling activities in the Remaining sectors, Transnational wrote to Semac on 9 October 2001, alleging that Semac had repudiated the recycling agreements for the Remaining sectors. The said letter purported to accept Semac’s alleged repudiation, thereby terminating the recycling agreements for the Remaining sectors. According to Ms Yee, as far as she was aware, no consent from ENV was sought by Transnational for the purported termination. She then dealt with the invoices rendered by Transnational for the Existing sectors. She said that Semac was not provided with satisfactory supporting documents for the said invoices. She denied that Semac was unreasonable in this regard. In any event, Semac had paid the full amount claimed by Transnational by 14 May 2002.

  85. [51] She maintained that Transnational’s present claims were without basis. Touching upon the counterclaim of Semac, she said that Semac had been incurring huge losses as a result of Transnational’s breaches which would be dealt with by her colleague Wong Kan Por.

  86. [52] Wong Kan Por’s evidence was in many respects a repeat of what Ms Yee said in her testimony. After narrating the background of the tender exercise and the eventual signing of the agreements between Transnational and Semac, he also averred that shortly after Transnational commenced operations in the Clementi sector, Semac received negative feedback on Transnational’s recycling programme. There were many complaints and instances of non-compliance as well as lack of co-operation on the part of Transnational in relation to ENV’s requirements and Semac’s requests. He said that these would be detailed by his colleague Toh. He felt that Transnational might have over-extended itself and lacked the resources to provide proper recycling services under the agreements.

  87. [54] He then narrated what transpired at the meeting held on 11 June 2001. His recounting of the events at that meeting, particulars of breaches by Transnational, and the events which led up to the termination of the agreements were no different to that of Ms Yee.

  88. [55] Dealing with Semac’s counterclaim, Wong declared that Semac had not made a single cent as a result of terminating Transnational contracts for the Existing sectors or by the appointment of an additional recycler in the Remaining sectors. According to him, Semac had been, and continued to be, worse off financially consequent to the breaches by Transnational. He then chronicled how Semac came to buy over a shelf company, renamed it Semac Recycling Pte Ltd (‘Semac Recycling’), and later SembVisy Recycling Pte Ltd (‘SembVisy’).

  89. [56] Further, according to him, Semac had been incurring and would continue for the remainder of the 5-year term to incur losses. He then provided the details (paras 99 to 118 of his affidavit in chief) which need not be reproduced here. In essence, he asserted that Semac suffered loss as a consequence of breaches by Transnational and that the revenue generated from the sale of recyclables is far from sufficient to cover the operating recycling services in Singapore.

  90. [57] Jack Chuang’s evidence, insofar as was material, could be recapitulated as follows.

  91. [58] He was present at a lunch meeting between the parties held on 26 July 2001. The purpose of the meeting was primarily for Wong Kan Por to introduce Daron Liew to him and for him to have a better understanding of Transnational’s position and how both parties could work together amicably. Having been briefed of the reported breaches by Transnational by his colleagues, he briefly spoke about Transnational’s breaches in the Existing sectors, such as why Transnational refused to collect everything and why they did not cover all areas. He told Daron Liew that in view of the breaches by Transnational, Semac had appointed another recycler to cover part of the Remaining sectors. Daron Liew did not deny the breaches but maintained that the Recycling Agreements were exclusive. Jack Chuang and Wong Kan Por, who were present at the meeting, did not agree.

  92. [59] He averred that the purported notes of the meeting held on 26 July 2001, produced by Transnational during discovery, were contrived or fabricated. He claimed that he never said at that meeting that the recycling agreement was “an unfair agreement” or that Semac was unable to “work with the agreement”. As far as he was concerned, the meeting was cordial and since no agreement or understanding could be reached between the parties, the meeting ended without any resolution as to how the parties could continue to work together for the Remaining sectors.

  93. [60] Toh’s evidence, insofar as is material, is as follows.

  94. [61] Semac entered into five contracts with Transnational under which the latter was required to provide recycling services in five sectors. Around late April or early May 2001, Transnational commenced recycling services for the Clementi sector. In June 2001, they commenced recycling services for the City sector. It was also obliged to provide recycling services for the Remaining sectors, 1 July 2001 for one part and 1 August 2001 for the other. However, it failed to do so.

  95. [62] On 23 March 2001, he and one of his colleagues attended a meeting with ENV at their request. At that meeting, one of the items discussed concerned the recycling programme. ENV wanted certain features to be incorporated in the programme such as the distribution of a cardboard box to each household for the storage of newspapers. ENV also informed Semac at this meeting that some private estates in the Clementi sector already had ongoing recycling programmes run by the Association for Educationally Sub-normal Children (‘ASPN’) and in the execution of the recycling arrangements with Transnational, Semac should leave those areas alone so that the ASPN recycling programme would not be disrupted.

  96. [64] His first meeting with Transnational was sometime in early April 2001. Other very senior management personnel from Semac were also present at that meeting. At that meeting Transnational was told that the recycling bags to be distributed to the households were to be green in colour with Semac’s logo on them. Transnational replied that it would not be able to comply with that requirement because it had ongoing recycling programmes with some community development councils (‘CDCs’) and they could not change the colours of the bags which the CDCs had already selected.

  97. [65] Transnational’s performance for the Existing sectors was found to be unsatisfactory from the outset. There were several breaches of obligations of the recycling agreements by Transnational. Apart from negative feedback from members of the public, there was also a lack of co-operation by Transnational with Semac. Particulars of the breaches, instances of non co-operation and instances of negative feedback from members of the public were detailed by him in paras 46 to 135 of his affidavit in chief.

  98. [66] The breaches highlighted were in relation to non-compliance with ENV code of practice (paras 48 to 53), non-collection of glass and plastic in breach of the provisions of the recycling agreements (paras 54 to 66), failure to replace recycling bags on dates of collection (paras 67 to 71), failure to provide a carton to each household to hold two recycling bags (paras 72 to 75), failure to compile returns (paras 76 to 83), failure to collect recyclable materials from all public housing units within the respective sectors (paras 84 to 89), failure to ensure that all collected recycling bags were placed in metal cage trolleys before being loaded onto the collection trucks to be transported to the sorting and processing centre (paras 90 to 93), failure to ensure that all recyclable materials were collected in plastic bags of the colour and design assigned to each sector (paras 94 to 100), failure to prepare a daily report showing the total net weight of recyclable materials brought in by collection trucks and net weight of the different recyclable materials sorted for each respective program and produce such reports to Semac upon request (paras 101 to 105), negative feedback from the public about Transnational’s omission (paras 106 to 122), and lack of co-operation with Semac (paras 123 to 135).

  99. [67] In the event, Toh provided Semac’s management with information on Transnational’s breaches and Semac decided to appoint an additional recycling company to handle recycling operations in the Remaining sectors concurrently with Transnational. Notification of Semac’s intention to appoint an additional recycler was sent to Transnational on 11 June 2001.

  100. [68] The result was that Transnational refused to perform its obligations in the Remaining sectors. In those sectors, Transnational only carried out recycling operations for the CDCs. Semac thus had to appoint its contractor to provide recycling services in the affected Remaining sectors.

  101. [69] According to him, it was clear that in respect of Transnational’s operation of the recycling programs in the Existing sectors, it had been uncooperative and had failed to comply with the terms of the recycling agreements. Further, Transnational refused to perform their obligations under the agreements for the Remaining sectors.

  102. [70] Reidinger, the expert witness for the defendants, said in his report (Contractual Disputes for Recycling Contracts: Independent Assessment of Claims) that many an assumption found in the report of the plaintiffs’ expert had little basis. Reidinger affirmed two affidavits, one in respect of the 2001 action and the other in respect of the 2002 action. Insofar as is material, the following segments of Reidinger’s views bear reproduction - the abbreviation “TRI” in his report stands for Transnational; “ERM” stands for Reidinger’s company, Environmental Resources Management (S) Pte Ltd; and “PWC” stands for public waste collector.

  103. Specific recommendations for revising the assumptions and TRI spreadsheet are presented in Table 3.1a.

  104. In summary, ERM concludes that:

  105. ERM’s explanation of the rationale for revised assumptions is provided in Table 3.1a.

  106. 3.2 Cost Assumptions

  107. ERM has also reviewed the cost data provided for the recycling service, which was not assessed by the Nolan ITU report. Nolan ITU qualifies this non-assessment on the basis that it has no direct experience on TRI’s recycling operations.

  108. However, without any input on TRI’s operational cost structure, ERM views that TRI’s claim cannot be completely justified. In this respect, based on ERM’s opinion of recycling operations in Singapore, ERM is of the opinion that a number of costs necessary for the successful completion of a domestic recycling have been omitted (such as capital costs and overhead costs), while others have been understated. Therefore, ERM have suggested alternative cost assumptions, which are presented, along with justification, in Table 3.1a.

  109. 3.2 Implication For The Analysis

  110. A copy of the TRI spreadsheet has been developed in order to assess the impact of the revised revenue and cost assumptions. This spreadsheet is attached in Annex A of this document.

  111. Using ERM’s revised assumptions, TRI’s claim would be the following:

  112. Remaining Sectors Claim

  113. Remaining

  114. TRI’s Claim

  115. ERM’s Projections

  116. Sales of material

  117. 14,533,856

  118. 6,427,984

  119. Total cost of operation

  120. 11,641,921*

  121. 9,046,250

  122. Profit/(Loss)

  123. (a)

  124. 2,891,935

  125. (2,618,266)

  126. Subsidy from SEMAC

  127. (b)

  128. 5,869,491

  129. 2,866,430

  130. Total Claim

  131. (a) + (b)

  132. 8,761,426

  133. 248,164

  134. Other Sectors Claim

  135. Others

  136. TRI’s Claim

  137. ERM’s Projections

  138. Sales of material

  139. 4,681,762

  140. 1,989,470

  141. Total cost of operation

  142. 3,460,646*

  143. 2,691,812

  144. Profit/(Loss)

  145. (a)

  146. 1,221,116

  147. (702,342)

  148. Subsidy from SEMAC

  149. (b)

  150. 1,904,218

  151. 907,921

  152. Total Claim

  153. (a) + (b)

  154. 3,125,334

  155. 205,579

  156. * ERM noted errors in TRI’s original cost calculations which resulted in TRI overstating their operational costs. This conversely resulted in a lower claim against SEMAC than should have been the case. These have been rectified in the spreadsheets in Annex A.

  157. 3.6 Final Conclusion

  158. Applying costs and revenue assumptions that in ERM’s expert judgement are more reasonable in the Singapore situation, it would appear that TRI would expect to make a substantially lower profit than as forecast in Ng’s Affidavit.

  159. According the this revised calculation, the total maximum potential liability to SEMAC for all five sectors combined is $453,743.00, subject to the qualifications as stated below.

  160. ERM notes the following qualifications to this report:

  161. 1. In arriving at his conclusion, ERM has also taken TRI’s composite sales price at face value and, for the reasons stated at S/N.5 and 21 above, ERM has not been able to verify the same with independent data or otherwise. If such composite sales price is not justified, it would further reduce the total claim figure.

  162. 2. Education costs have not been factored into the cost assumptions, for arriving at $400K.

  163. 3. It is noted that the cost of sorting is based on the capacity of the sorting system. However, as noted in Ng’s affidavit, the system will never reach capacity. This being the case, it would also be more valid to base the cost of sorting on actual throughput, which would result in a higher cost of sorting per tonne. This has not been done in this case (i.e., capacity is still used as the basis); however, were actual throughput used as the basis, it would further reduce the claim.

  164. ERM is of the view that such qualifications could reduce the overall claim of TRI into the negative, resulting in TRI making a loss in the provision of recycling services under the contracts, had TRI performed the contracts for the agreed period.

  165. Issues, arguments and conclusions

  166. [71] Lengthy arguments were presented by counsel for the defendants and plaintiffs at the end of the case. In my view, the broad issues to be determined in the two actions before me are these:

  167. (a) Have the recycling agreements entered into between the parties been breached?

  168. (b) Have the said agreements been terminated properly?

  169. (c) Has damage been suffered by either party?

  170. [72] In this regard, there are, inevitably, several sub-issues and they will be dealt with by me as they arise.

  171. [73] Now dealing first with the 2002 action concerning the Existing sectors, the first question that requires addressing is whether Transnational did carry out recycling services in accordance with the agreements. The second question is whether Semac was in breach of the notice provisions of the said agreements.

  172. [74] In regard to the first question, Semac’s averments concerning breaches on the part of Transnational (para 3 of the defence) appear to receive a somewhat indifferent response from Transnational. Apart from a general averment (para 8 of the statement of claim) that Transnational did carry out the recycling services in accordance with the agreements, there appears to be no specific denial of the said breaches. Even the evidence tendered on behalf of Transantional seemed to be ambivalent. The evidence of Irene Chan in her affidavit of evidence in-chief as well as in cross-examination tended in some important respects to weaken the claims of Transnational that it abided by the terms of the agreements. For example, as respects glass and plastics, a matter of concern raised by Semac, she conceded that they were recyclable materials, yet they were admittedly not collected by Transnational (pages 98 to 99 of the NE). There was also a tacit admission that Transnational did not comply with the ENV requirements as conveyed to it by Semac.

  173. [75] Also, the evidence of Daron Liew (pages 54 to 56 of the NE) that Transnational was not obliged to meet Semac's’ request since Semac had reportedly decided not to proceed with the contract was not very helpful to Transnational. In this regard, Semac’s letter dated 13 June 2001 (page 31 of Semac’s core bundle) where Semac had put Transnational on notice that the latter had failed to comply with certain requirements from ENV and requesting Transnational to comply with a few other aspects did not seem to have stirred Transnational at all into action. Surprisingly, there was also no reply challenging the said letter from Semac. In my determination, the matters complained of by Semac, most of them, if not all, were material aspects which seem to fall within the scope of duties under the recycling agreements and Transnational’s obvious indifference or inaction to address the said issues at the relevant time, rendered them open to a legitimate complaint that it was not intent on abiding by the terms of the recycling agreements in relation to the Existing Sectors. Take glass and plastics for example, if they are, as conceded by Irene Chan, recyclable materials, under the definition clause of the agreements, then failure to collect them constitutes a clear breach of the agreements. Moreover, Irene Chan also conceded during cross-examination that Transnational failed to comply with ENV directions which Semac had informed Transnational by its letter dated 25 June 2001. In my finding, Semac, on balance, has satisfied the court that the breaches listed by it were within the scope of the recycling agreements and that Transnational, by its inaction or unwillingness to perform then, was in clear breach of its obligations under the agreements.

  174. [76] Little wonder, in my view, that ENV appeared to have given its ‘go-ahead’ for the termination of the agreements.

  175. [77] Counsel for Transnational contended that Semac had not made out its case that Transnational committed the breaches complained of in Semac’s letter dated 25 June 2001 (page 33 of Semac’s core bundle). However, in reviewing the evidence of both Ms Yee and Toh , I am not persuaded by the arguments advanced by Transnational’s counsel. In my finding, there were several breaches by Transnational and Semac had indeed, on balance, established that Transnational had failed to abide by the terms of the agreements.

  176. [78] The court’s consideration moves next to whether the breaches complained of are material breaches and whether Semac had fallen foul of cl 5.1 (a) of the agreement which provides that:

  177. Breach

  178. Subject to the consent of the Commissioner of Public Health, and without prejudice to any other rights or remedies which the Parties may have one against the other, this Agreement may be terminated by either Semac or the Registered Recycler for breach of any terms and conditions of this Agreement if the breach which is capable of remedy is not remedied within 30 days after service of a written notice thereof.

  179. [79] By its pleadings and arguments in court, Transnational maintained that the breaches ascribed to it were not material and, in any event, that written notice in compliance with cl 5.1 (a) of the agreements was never given to Transnational; the requirements under the said clause were conditions precedent; and that Semac had not fulfilled them.

  180. [80] In my analysis, the plain reading of the said clause imports the construction that, subject to the other conditions stipulated in the said section, either party could terminate the agreement for breach of any terms or conditions. The clause which is agreed to between the parties does not say that the breach has to be a material breach. Be that as it may, I am persuaded in the face of the evidence adduced at the trial that the breaches complained of are not only material but they could also be rightly classified as persistent breaches.

  181. [81] The next question: Had Semac fallen foul of the said clause by allegedly not giving Transnational the requisite notice contemplated in the clause referred to?

  182. [82] I take the view that the submission by the counsel for Transnational that Semac had not fulfilled the notice requirement under the clause adverted to is not well made out. The chronology submitted to the court and the exchange of correspondence referred to therein present a picture that Semac had been asking Transnational to carry out certain matters under the agreements over a period of time. But admittedly, the matters required were not done by Transnational for reasons they give presently. However, the fact remains that there were demands and repeat of the said demands, but these demands were not met and there was and is no indication that Transnational was in fact willing to or would have carried out those matters asked of them by Semac.

  183. [83] Another noticeable aspect in this case is that there is curiously no specific averment by Transnational that the matters complained of by Semac were or would have been carried out by them. Daron Liew himself agreed that the matters complained of were not remedied within 30 days of Semac’s letter dated 25 June 2001. His position was that Transnational did not have to do that (page 77 of the NE). Given the background, the letters dated 13 June and 25 June by Semac addressed to Transnational, viewed objectively, create the impression that Transnational did not intend to or was not capable of putting things right. In the premises, Semac’s communication to ENV on 13 November 2001 seeking ENV’s consent for the termination of the agreements, the subsequent issuance of consent by ENV on 4 March 2002 and the letter of 12 March 2002 by Semac, giving notice to Transnational to terminate the recycling agreements with effect from 15 April 2002, do not fall foul of cl 5.1 (a) of the agreements, as has been contended by counsel for Transnational.

  184. [84] Counsel for Transnational placing reliance on Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, put forward a submission (see his opening statement as well as para 246 of his submission) that there was no notice from Semac which made it clear that if the breaches were not remedied within 30 days, Semac would terminate the recycling agreements.

  185. [85] In Mannai Investments, the House of Lords was concerned with the construction of a clause contained in a lease as regards notice of determination of the said lease. The clause concerned provided:

  186. [86] The issue in that case was whether a notice served by the tenant was valid. In deciding in favour of the tenant, their lordships by a majority held that the construction of the notices had to be approached objectively, and the question was how a reasonable recipient would have understood them, bearing in mind their context. Lord Steyn in his speech (page 768 B-C, supra) observed that “the real question is what evidence of surrounding circumstances may ultimately be allowed to influence the question of interpretation”. He commented further (p 768 G-H supra) that “[e]ven if such notices under contractual rights reserved contain errors they may be valid if they are “sufficiently clear and unambiguous to leave a reasonable recipient in no reasonable doubt as to how and when they are intended to operate. …That test postulates that the reasonable recipient is left in no doubt that the right reserved is being exercised.”

  187. [87] In the case at the hand, the principles articulated by the majority in Mannai Investments do not seem to assist Transnational at all. On the contrary, in the absence of any plea that the notice was unclear or that Transnational would have carried out the matters complained of, if given a 30-day window period, the arguments advanced on behalf of Transnational appear to have hardly any merit. In the end, my conclusion in relation to this issue is that the argument by Transnational that the Semac is in breach of cl 5.1(a) of the agreement or in repudiatory breach of the agreements is entirely misconceived. It follows then, that the so-called acceptance of the perceived repudiation was an exercise in futility and merely illusory.

  188. [88] Having decided that the breaches complained of by Semac are, by all measures, material and that Semac is not in contravention of the provisions of cl 5.1 (a) of the agreement, the next issue in relation to the 2002 action concerns the counterclaim by Semac. Suffice it, in this regard, if I made reference to paras 57 and 58 of Semac’s counsel’s executive summary of Semac’s submission claiming a total of $1,609,508.11 in respect of both actions. In my view, I find little basis to award any damages to Semac in relation to the matters complained of. The counterclaim aspect did not seem to have featured in the correspondence between the parties and even as late as July 2002, when Semac filed its defence, no doubt with advice from some very able counsel, this aspect, to use an oxymoron, was glaringly absent. It appeared for the first time on 15 October 2002, just 13 days before the commencement of the hearing of the two actions. In any case, Semac’s declared position at the trial had been that recycling was a losing proposition from the beginning and if this was correct, to award damages to them in the factual matrix of the dispute would not be right. I will deal more with the issue relating to damages after I have addressed with the main issues concerning the 2001 action.

  189. [89] Let me now deal with the 2001 action that concerns the Remaining sectors.

  190. [90] The principal question in relation to this case is whether Semac has a right to appoint other recyclers, as has been done by Semac, concurrently with Transnational. At the heart of the issue is the construction to be placed on cl 7.3 of the agreements which provides:

  191. [91] In relation to this issue, a segment of the submission by counsel for Transnational bears reproduction. He argues at paras 125 to 138 of his submission:

  192. [92] The submission by counsel for Semac in this connection (paras 156 to 171) was:

  193. TRI’s Claims in the Remaining Sectors (the 1 Suit)

  194. a. Whether the Recycling Agreements have been breached?

  195. [159] TRI’s case is that Semac was not entitled under the Recycling Agreements to appoint another recycler to work concurrently with TRI for the provision of recycling services in the Remaining Sectors under clause 7.3. Put another way, TRI asserts that it was entitled to exclusivity under the Recycling Agreements. By way of TRI’s letter dated 9 October 2001, TRI claimed that Semac was in repudiatory breach, and terminated the agreements.

  196. [160] The sole question for this Honourable Court’s determination is whether Semac was entitled under clause 7.3 to appoint another recycler to work concurrently with TRI in the Remaining Sectors. If the answer is yes, TRI’s claim in the 1 Suit falls in its entirety

  197. i. Clause 7.3 of the Recycling Agreements – Non-exclusivity

  198. [93] As stated in Chitty on Contracts (28th edition – para 12-042), the object of all construction of the terms of a written agreement is to discover therefrom the intention of the parties. The authors of Chitty on Contracts further comment (para 12-043 supra) that the cardinal presumption is that the parties have intended what they have in fact said, so that their words must be construed as they stand. That is to say the meaning of the document or of a particular part of it is to be sought in the document itself. One must consider the meaning of the words used, not what one may guess to be the intention of the parties. However, this is not to say that the meaning of the words in a written document must be ascertained by reference to the words of the document alone. In modern law, the court will, in principle, look at all the circumstances surrounding the making of the contract which would assist in determining how the language of the document would have been understood by a reasonable man [Emphasis added].

  199. [94] The principles by which contractual documents are nowadays construed are summarised by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at pages 912 to 913; [1998] 1 All ER 98 at 114 to 115, (re-affirming what was said by Lord Wilberforce in Prenn v Simmonds [1971] 1 WLR 1381 to 1386; (1971) 1 All ER 237 at 240 to 242 and in Reardon Smith Line Ltd v Hansen-Tangen, Hansen-Tangen v Sanko Steamship Co [1976] 1 WLR 989; [1976] 3 All ER 570) as follows:

  200. [95] From the evidence of Daron Liew, Ms Yee and others it was clear that there was a question raised by Daron Liew in relation to this particular clause. Daron Liew’s evidence, in substance, was that when he expressed his unhappiness and protested over the inclusion of this non-exclusivity clause to Kelly Landrum, he was assured by the latter that this clause was inserted at the instance of ENV; it was intended to cover the contingency that karang gunis were not excluded from their traditional activities and that there was no question of Semac appointing any other recycler to provide recycling services in the said five sectors.

  201. [96] Ms Yee, however, in her testimony, contradicted Daron Liew. She said that when Daron Liew requested of her some time in August 2000 to change the said clause and wanted Transnational to be appointed as the exclusive recyler, she did not agree to it and explained to him that it was not Semac’s policy to grant exclusivity and that, in any case, it was an ENV requirement and therefore non-negotiable. She also informed Daron Liew that as long as Transnational was rendering its services satisfactorily, there could be no reason for Semac to appoint another recycler. According to her, Daron Liew accepted the position. The question now is whose version is probable.

  202. [97] Kelly Landrum, the court is told, is no longer available in Singapore to throw any light on the actual conversation that took place between them. But there is a contemporaneous e-mail dated 25 August 2000 addressed to Daron Liew. The e-mail reads:

  203. [98] The phraseology of cl 7.3 is uncomplicated and unambiguous. Anyone reading it would immediately construe it as a contract which does not envisage or provide for any exclusive rights to the registered recycler. Transnational now urges the court to rule something quite against the plain and unambiguous phraseology of the clause. But does the natural and ordinary meaning of the clause flout business common sense? What is the background to this clause? Recalling the events, as he sees it, Daron Liew avers that he would not have signed the agreements but for the assurances forthcoming at the meetings by Semac’s management. He relies especially on an alleged assurance by Kelly Landrum. But Kelly Landrum’s e-mail does not seem to underpin Semac’s present contentions. The last sentence in Kelly Landrum’s e-mail says no more than this: ‘The contract says that the Recyler will not have exclusive right to recyclable materials, however, we currently have a strong preference towards not using more than one recycler for the sector’ [Emphasis added].

  204. [99] In my analysis, the foregoing letter does not augment the case advanced on behalf of Transnational. Apart from the express phraseology of cl 7.3 of the agreement, which, in my opinion, leaves scant room for any equivocation, the e-mail of Kelly Landrum, which is a contemporaneous document, supports the construction that Transnational has no exclusive rights under the agreements. There was, of course, an expectation of exclusivity by Transnational but since it was not accompanied by an expression of an unconditional commitment by Semac, the present contention by Semac is misconceived.

  205. [100] I have already dealt with the issue relating to whether Transnational was in breach of the recycling agreements as regards the Existing sectors. It was Semac’s position that these breaches led them to a commercial decision to have only a truncated arrangement with Transnational. In my view, Semac was entitled to take the course they adopted and the provision contained in cl 7.3 did not prohibit them to have other recyclers. Consequently, my finding is that Semac is not in breach of the agreements adverted to and it is not in repudiation of the agreements. In the circumstances, the letter dated 9 October 2001 by Transnational addressed to Semac, conveying its reported acceptance of what it perceived as repudiatory breaches by Semac, conveys nothing in fact.

  206. [101] To complete the sequence, there is one other argument by Semac which requires mention at this stage. Counsel for Semac contended that cl 5.1 (a) of the agreement made it obligatory for either party to obtain the consent of ENV before any notice of termination and inasmuch as Transnational did not seem to have obtained the said consent before it took steps to terminate the agreement, the said termination was by itself an act of repudiation. Although the issue posed is no longer a live issue, my view on this is that cl 5.1 (a) does not require the consent of ENV for a party to accept an act of repudiation, if there was one at all, on the part of the other.

The judgment continues past this page. Read the rest at eLitigation.