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Introduction
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[2018] SGHC 194
General Division of the High Court of Singapore6 Sept 2018Suits No 532 and 736 of 2016
Published judgment text with court metadata, source links, and stable paragraph anchors.
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Introduction
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The defendant, Siemens Pte Ltd, engaged the plaintiff, GPE Pte Ltd, to undertake works in relation to the construction of customised, pre-assembled modular power substations, also known as “E-Houses”. The plaintiff was to fabricate, assemble and erect the structure and casing of three E-Houses. Each E-House would be the subject of a different project. The three projects are: (a) the Jangkrik Project; (b) the 030 Project; and (c) the 103 Project.
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Summary of claims and counterclaims
Costs
In relation to the Jangkrik Project, the plaintiff claims for losses arising out of delays allegedly caused by the defendant with damages to be assessed, as well as variation works that it had allegedly undertaken amounting to $248,253.17. The defendant in turn counterclaims for liquidated damages arising from delays in the project that it alleges were caused by the plaintiff amounting to $448,768.98, as well as back charges for costs that it had to incur to rectify the defects allegedly caused by the plaintiff amounting to $29,992.
Costs
In relation to the 030 Project, the plaintiff claims $432,573.48, which is equivalent to 60% of the original contract price, for fabrication works that it had purportedly completed. Additionally, it claims for variations works allegedly undertaken amounting to $32,796.22, as well as wasted costs due to the defendant’s wrongful removal of the erection portion of the contract after works had already commenced, the quantum of which is to be assessed. The defendant in turn counterclaims for $290,204.05 that had allegedly been overpaid to the plaintiff, on the basis that the fabrication works had not actually been completed. It also counterclaims back charges of $16,787.20 and $39,989.03 respectively for costs that it had to incur to rectify the defects allegedly caused by the plaintiff and to carry out additional testing works. The defendant also counterclaims for damages to be assessed arising from delays to the 030 Project.
Costs
In relation to the 103 Project, the plaintiff claims $109,206 for completed works that had been invoiced but yet to be paid by the defendant. It also claims for variation works allegedly undertaken amounting to $162,939.04, and losses incurred as a result of delays allegedly caused by the defendant, the quantum of which is to be assessed. The defendant counterclaims liquidated damages of $20,763.76 for delays to the project which it alleges were caused by the plaintiff, overpayment of $226,200 for acceleration of works which were ultimately not done, as well as back charges of $28,197.03 for costs that it had to incur to rectify the defects allegedly caused by the plaintiff.
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My decision
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Plaintiff’s claims for losses arising out of idle time due to alleged delays caused by the defendant in the Jangkrik and 103 Project
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Before I determine whether the defendant is liable for the plaintiff’s losses occasioned by the alleged delays caused by the defendant, there are three threshold issues that must first be resolved.
Costs
First, the defendant argues that the plaintiff’s claims for losses arising out of idle time due to the defendant’s alleged delays have not been pleaded. Therefore, this precludes the plaintiff from belatedly making such claims. The plaintiff’s statements of claim for both S 532/2016 and S 736/2016 merely indicate the planned completion dates of the various projects pursuant to the contracts between the parties, and state that due to the fault of the defendant the projects were not completed in time and damages are to be assessed due to the delays in the completion of the projects. Indeed, there is no explicit mention of any claim for idle or prolongation costs arising out of the delays in both the statements of claim.
Costs
However, in my view, the pleadings can be read broadly to encompass the plaintiff’s claim for losses arising out of idle time as a result of the defendant’s alleged delays. In this regard, I found some merit in the plaintiff’s argument that the only logical way that its pleadings could have been interpreted is that it is claiming for prolongation costs or costs for idle machinery and manpower due to the delays caused by the defendant in the completion of the projects. This is because the plaintiff in the present case is the contractor whilst the defendant is the employer and owner of the projects. Therefore, the late completion of the projects per se would be inconsequential to the plaintiff, except where the plaintiff has incurred prolongation costs or costs for idle machinery and manpower due to the delays caused by the defendant. Further, given that the pleadings are for “damages to be assessed” in favour of the plaintiff due to these alleged delays caused by the defendant, I find that it is of sufficient generality for me to adopt such a broad reading. Accordingly, I dismiss the defendant’s objection on the basis that the claim was not pleaded.
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The second preliminary issue to be addressed is the plaintiff’s allegation that the defendant has admitted to causing the delays. For this, the plaintiff relies on a letter from Ms Janice Khaw, the head of procurement for the defendant, sent to Mr Stephen Morris (“Morris”) of the plaintiff. The material part of this letter which the plaintiff alleges amounts to an admission states:
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In my view, this letter only goes as far as to indicate that the defendant is willing to enter into amicable negotiations with the plaintiff to resolve any disputes that they had. It does not by any means amount to an unequivocal admission of liability on the part of the defendant for causing delays to the projects. Accordingly, I reject the plaintiff’s assertion that the defendant has admitted to the delays.
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The third and final preliminary issue relates to the plaintiff’s assertion that the drawings have to be issued at least two months before the scheduled commencement dates for each part of the projects. The plaintiff relies on the fact that the defendant’s witness, Mr Prakash Krishnamoorthy (“Prakash”), had agreed with a statement that I suggested to him during trial, where I stated that as a matter of logic, the drawings would have to be issued two months in advance in order for the works to be completed in time.
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I do not find this to be conclusive evidence that the drawings must be issued at least two months in advance. First, if the plaintiff wanted to establish the fact that drawings must be issued at least two in months in advance, then it is incumbent upon counsel for the plaintiff to put that specific fact in his question to the witness. Further, I had suggested that statement to the witness as a question of logic, to which his agreement meant that he agrees with my logic and not with the exact time period of two months. The two-month figure which I had used was an arbitrary figure which is simply meant to illustrate the logic behind the proposition I was making: that fabrication drawings must be issued by the defendant to the plaintiff well in advance of the agreed completion date for the fabrication of the item so that the plaintiff has sufficient time to plan for the work, order the materials from the defendant, fabricate the item and then deliver the fabricated item to the defendant in time to meet the agreed completion deadline.
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Having dealt with the preliminary issues for this category of claims, I turn now to consider whether liability has been established for each claim. A tabulated summary of my decision for each of the plaintiff’s claims relating to the alleged delays caused by the defendant can be found in Table A1 below.
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Table A1: Losses arising from delays allegedly caused by the defendant in the Jangkrik and 103 Project
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Plaintiff’s other claims
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A tabulated summary of my decision for each of the plaintiff’s other claims in relation to the 030 Project and 103 Project, which do not relate to the alleged delays caused by the defendant, can be found in Table A2 below.
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Table A2: Plaintiff’s other claims
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Plaintiff’s claims for variation works
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With regard to the plaintiff’s claims for variations works that it had purportedly done, there is a preliminary question that first has to be answered. The defendant points out that cl 4 of its General Conditions of Purchase of Goods and Services, which forms part of the terms of the Jangkrik contract, states that the plaintiff is not to undertake any variation works unless there is prior written confirmation or agreement. Therefore, the defendant argues that since there is no evidence of such “prior written confirmation or agreement”, the plaintiff should not have undertaken any of the variation works which it now claims for, much less be paid for it.
Costs
In my view, cl 4 does not go so far as to deprive the plaintiff of payment for variation works that it had completed. The issuance of a revised drawing by the defendant to the plaintiff suffices as a confirmation in writing which satisfies cll 4.3 and 4.5. The only breach that is apparent to me is of cl 4.4, which states that the plaintiff, upon receiving a notification for a variation to be done, must provide a written statement within 14 days stating the changes to the dates, timescales, milestones and charges following such variation. There is no dispute that such a written statement was never issued by the plaintiff. That said, cl 4.4 is silent as to the consequences of a breach. The defendant argues that as a consequence of the plaintiff’s non-compliance with cl 4.4, it had been deprived of the opportunity to withdraw its revised drawings, for example if it had found that the cost of the variation works was too high. I accept that as a matter of principle the plaintiff had breached cl 4.4 of the Jangkrik contract, and damages for this breach could be assessed at the assessment stage. However, given that the defendant had not during the entire period of the construction of the E-Houses rejected any of the variations works on account of the plaintiff’s non-compliance with cl 4.4 and given that the defendant had in fact agreed to some of the plaintiff’s claims for variation works despite there not being any written statements issued to the defendant, I find that the defendant is estopped from relying on this clause to entirely disclaim liability now for the other variation works that are in dispute.
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Having dealt with this preliminary issue, I turn then to consider the plaintiff’s claims for variation works in the Jangkrik, 030 and 103 projects. A tabulated summary of my decision for each of the disputed claims can be found in Table A3 below. A list of the claims that parties have agreed to as to liability can be found in Table A4 below.
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Table A3: Liability on the variation claims in the Table below are disputed by defendant
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Table A4: Liability on the variation claims in the Table below are accepted by defendant
Costs
I had instructed counsel that in order for the plaintiff to successfully establish its variation claims for reworks, it would have to provide evidence of: (a) the date the original drawing was issued; (b) the date that the work based on the original drawing was finished; (c) the date that the revised drawing was issued; and (d) the completion of rework based on the revised drawing. The cost of undoing the original work (if any) plus the cost of the revised work under the revised drawing will constitute the total cost of the variation work for reworks. However, if the revised drawing was issued prior to the commencement of any work on the specific parts in the original drawings to be revised as indicated, for example, by “balloons” in the revised drawings, then the plaintiff cannot claim that there is a variation on account of rework because there would have been no rework required since work based on the original drawing has not even begun. But if the revised drawing shows any net additional work when compared with the original drawings, then this per se qualifies as variation work capable of giving rise to a claim. This involves a situation where the revised drawing may simplify certain parts of the work based on the original drawing and at the same time increase the complexity or extent of the work in other areas in the original drawing. In such a case, there is a need to determine the net additional work occasioned by the revised drawing for which the defendant would be liable. This is to be done at the assessment stage.
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Defendant’s counterclaims
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A tabulated summary of my decision for each of the defendant’s counterclaims can be found in Table A4 below.
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Table A4: Defendant’s counterclaims
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Conclusion
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A tabulated summary of my decision for each of the claims, organised according to projects, can be found in the Table A5 below.
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Table A5: Final summary of the judgment sums allowed and the interlocutory judgments granted for claims where damages are to be assessed by the Registrar
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I note that there are certain claims for which I have entered judgment of the final sum for which no assessment is needed. However, these judgments are to be stayed pending the outcome of the assessment hearing and the determination of the final sums to be allowed for the other claims and counterclaims for which I have granted interlocutory judgment with damages to be assessed. Ultimately, all judgments on the claims and counterclaims (including those where damages have to be assessed) for each project are to be consolidated and set off accordingly.
Costs
All costs and interest on the final sums to be allowed after set offs are to be reserved to the Registrar hearing the assessment.
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