P & P Engineering & Construction Pte Ltd v K ori Construction (S) Pte Ltd [2018] SGHC 277

The plaintiff, P & P Engineering & Construction Pte Ltd (“PPE”), provides manpower and other services for the construction industry. The defendant, Kori Construction (S) Pte Ltd (“Kori”), is involved in construction activities.

PPE sued Kori to recover $376,334.93 for supplying manpower to the latter and $893,273.36 for steel fabrication work allegedly done by it at the latter’s request. The manpower supplied and the steel fabrication work done by PPE was for Kori’s construction works as a sub-contractor in relation to the Thomson Mass Rapid Transit (“MRT”) Line in Singapore.

Kori, which contended that PPE owed it $719,165.83 for the purchase of 560.098 metric tonnes of excess fabricated steel materials to PPE in July 2016, counterclaimed for this amount and also sought to recover a small sum of $543.73, which relates to various charges paid by it on behalf of PPE.

Background

The dispute between the parties concerns construction work carried out in relation to the Marina Bay MRT Station, which is a part of the Thomson MRT Line.

The main contractor for the Marina Bay MRT Station was Taisei Corporation (“Taisei”), a Japanese company. In 2015, Taisei appointed Kori as its sub-contractor for construction work at the Marina Bay MRT Station. Kori was required by the sub-contract to supply, fabricate, lease and remove temporary walers, struts, utilities supports and kingposts and to undertake ancillary works.

Under its sub-contract with Taisei, Kori was entitled to employ sub-sub-contractors to perform its contractual obligations. Kori entered into two contracts with PPE. The first contract was a “Manpower Contract” for the supply of manpower to Kori for construction work. The second was a “Fabrication Contract” for the fabrication of steel materials required by Kori to fulfil its contractual obligations to Taisei.

The terms of the Manpower Contract are partly set out in the former’s quotation dated 30 March 2015 and in Kori’s Purchase Order dated 25 September 2015. The agreed rates of payment for manpower provided by PPE were $11.50 per hour for welders and fitters, $9.50 per hour for riggers and signalmen and $9.00 per hour for general workers. Not all the workmen supplied to Kori by PPE under the Manpower Contract were its own workers. A number of the said workers were supplied to PPE by another company, Sha Engineering & Contractors Pte Ltd (“Sha Engineering”), which is managed by Kori’s own employee, Mr Nallusamy Ramados (“Mr Ramados”). Kori claimed that it was unaware until after the commencement of the present action that some of the workers supplied under the Manpower Contract had in fact been supplied by its own employee.

Disputes arose between the parties regarding payments due to PPE under the Manpower Contract. Kori blamed PPE for discrepancies in the names of workers supplied to it and for charging it twice for the same workers or at higher rates than those provided in the Manpower Contract. It also complained that PPE had not given it sufficient information on whether or not the workers supplied to it under the said contract were legally permitted to work in Singapore. The differences between the parties in relation to claims under the Manpower Contract formed an important part of PPE’s claim in this action.

The second contract (“Fabrication Contract”), which concerned steel fabrication work to be done by PPE, is evidenced by Kori’s Letter of Award dated 21 October 2015 to PPE. The scope of work under this contract involved fabrication, loading and unloading in relation to steel strutting works. It was agreed that Kori would pay PPE at the rate of $350 per metric tonne for main members fabricated by the latter and that all accessories, as shown in the construction drawings, were deemed to be inclusive.

Under cl 5 of the Fabrication Contract, PPE was required to submit progressive claims monthly to Kori for the latter’s verification and certification. Clause 5 of the said contract required Kori to pay PPE within 45 days of the certification. PPE did not follow the procedure and Kori issued interim payment certificates as and when a stack of so-called “delivery orders” were received from the former. Although the claim documents submitted by PPE to Kori for verification and certification were described as “delivery orders”, these documents did not record the actual delivery of fabricated steel materials to Kori and none of them contained any acknowledgement of delivery of the said goods. As such, PPE’s delivery orders are not to be confused with the usual delivery orders. As there was no contemporaneous verification of the actual quantity of fabricated materials delivered, Kori verified the quantities that PPE claimed to have delivered to it against the construction drawings and issued interim certificates to PPE. Thereafter, PPE issued its tax invoices on the basis of the said certificates.

The delivery orders submitted by PPE to Kori in December 2015 and February 2016 were duly certified by Kori for the sums of $86,028.00 and $52,323.00, inclusive of GST in March 2016, after which PPE issued its tax invoices to Kori. PPE was paid $86,028.00 in May 2016 but Kori retained the remaining $52,323.00 to set off its counter-claim in relation to the excess fabricated steel materials sold to the latter in July 2016.

Although the Fabrication Contract provided that Kori was to pay PPE $350 per metric tonne of fabricated steel materials, Kori used the rate of $300 per metric tonne when it certified PPE’s December 2015 and February 2016 claims because PPE did not have a license to fabricate the steel materials. PPE agreed to the lower rate of payment at the material time and issued its tax invoices in relation to the said claims on the basis of $300 per metric tonne of goods supplied.

After March 2016, PPE submitted many delivery orders for verification and certification on four occasions, namely on 7 May 2016, 12 July 2016, 7 October 2016 and 7 November 2016. These delivery orders covered steel fabrication work that was carried out after March 2016. Kori retained all the delivery orders but took no steps to verify or certify the claims. Strangely, although PPE was making claims in these delivery orders for several hundred thousand dollars in relation to fabricated steel materials that Kori subsequently claimed were never delivered to it, the latter did not write to PPE to question the validity of the said delivery orders or return the documents to PPE until 18 November 2016, more than six months after receiving the first set of the said delivery orders in May 2016.

On 14 November 2016, PPE’s lawyers, Andrew LLC, sent a letter of demand to Kori in relation to unpaid sums due to it under the Manpower Contract.

A few days later, on 18 November 2016, Kori, which, as mentioned, had never written to PPE about the delivery orders for steel fabrication work done after March 2016, finally wrote to PPE to ask the latter to take back the delivery orders that were forwarded to it in May, July, October and November 2016 on the ground that the goods were not received by it.

After legal proceedings were started by PPE, Kori claimed in para 7 of its Defence and Counterclaim filed on 21 December 2016 that it had terminated the Fabrication Contract on 3 April 2016 by way of a letter dated 31 March 2016. PPE, which asserted that it never received the said termination letter, contended that the alleged termination was concocted after the commencement of legal proceedings to avoid liability for steel fabrication work done by it after March 2016.

Yet another dispute between the parties, which is also the subject of Kori’s counterclaim concerns a rather small sum of $543.73 for various charges and expenses paid by it on behalf of PPE, administrative charges on such payments and 7% Goods and Services Tax. The sum claimed is with respect to expenses incurred by Kori for two security passes for PPE’s employees, the payment of monthly inspection fees for electrical tools used by PPE in January 2016 and the medical fees of one of PPE’s employees.

The issues

At the commencement of the trial, the issues were as follows:

(a) whether PPE is entitled to $376,334.93 for the cost of manpower supplied to Kori under the Manpower Contract;

(b) whether PPE fabricated steel materials for Kori after 3 April 2016 and, if so, whether it is entitled to have its claims for payment verified and certified by the latter;

(c) whether the rate of payment for the fabricated steel materials is $350 per metric tonne or $300 per metric tonne;

(d) whether the excess fabricated steel materials were sold by Kori to PPE at $1,200 per metric tonne, as alleged by Kori or at $245 per metric tonne, as alleged by PPE; and

(e) whether Kori is entitled to $543.73 for various charges and expenses incurred on behalf of PPE.

The second issue that was settled during the trial concerns the counterclaim by Kori for the sum of $543.73 for various charges and expenses. On the second day of the trial, PPE finally confirmed that it would pay the sum claimed by Kori. PPE must be taken to task for not admitting this claim earlier and for agreeing to pay the $543.73 only after time was wasted on the cross-examination of PPE’s director, Mr Krishnamoorthy Pugaz (Mr Pugaz”) on the charges and expenses in question.

Costs in relation to PPE’s claim under the manpower contract

In regard to the identity of some of the workers, Kori put its position at para 16 of its Opening Statement as follows:

The dispute between PPE and Kori on the particulars of the workers supplied to Kori was complicated by the fact that some of the workers supplied by PPE to Kori were in fact the workers of Sha Engineering, which, as mentioned earlier, is run by Kori’s own employee, Mr Ramados, who has been with Kori for 19 years and is presently its site supervisor. PPE contended that as far as proof of valid work permits was concerned, the problem related primarily to workers supplied to it by Sha Engineering. In its Opening Statement, PPE stated its position at para 15 as follows:

Kori’s managing director, Mr Hooi Yu Koh (“Mr Hooi”), claimed that his company did not know that Mr Ramados’ workers were supplied to PPE to work at Kori’s work site until after legal proceedings in this case had been commenced. He pointed out there is no evidence that his company and Sha Engineering were acting in concert and that the fact that Sha Engineering is run by Kori’s employee is irrelevant to the contractual obligations of PPE under the Manpower Contract.

Kori further asserted that a request for evidence of valid work permits for the workers supplied to it is not unreasonable. It is pertinent to note that Kori had to apply for an order requiring PPE to disclose important documents relating to the latter’s manpower claim. On 15 February 2017, Assistant Registrar Scott Tan ordered PPE to disclose the following documents within seven days:

[emphasis added]

Kori pointed out that as PPE’s counsel had confirmed to the court that a “settlement” in relation to the manpower claim was reached, the latter cannot assert that it had “admitted” liability on this claim. In the context of the settlement reached by the parties in relation to the manpower claim, the question of awarding PPE interest on the settlement amount does not arise.

PPE’s claim under the Fabrication Contract

PPE claimed that Kori owes it $893,273.36 for steel fabrication work undertaken for the latter under the Fabrication Contract from April 2016 onwards.

Kori, which rejected PPE’s claim, contended that it did not receive the goods and added that it had terminated the Fabrication Contract on 3 April 2016, after which it gave no instructions to PPE to fabricate steel materials.

PPE has the burden of proving that it fabricated the steel materials on Kori’s behalf under the Fabrication Contract after the alleged termination of the said contract on 3 April 2016. It is highly disturbing that the parties should have such different versions as to whether or not steel fabrication work under the Fabrication Contract was carried out after April 2016. At the outset, it must be pointed out both parties’ cases were beset with evidential problems.

Deficiencies in PPE’s evidence

PPE adduced no evidence of any request or instruction by Kori to fabricate steel materials after 3 April 2016. Neither did it adduce any evidence of any acknowledgement by Kori that it had carried out any steel fabrication work or delivered steel fabricated materials to the worksite after March 2016. Surely, some of the supervisors and workers who undertook the steel fabrication work could and should have been called as witnesses to testify that they were on site to carry out steel fabrication work for Kori between April and September 2016.

PPE’s director, Mr Krishnamoorthy Pugazendhi (“Mr Pugaz”), testified that he had time cards to show that his workers were at Kori’s yard to carry out welding work during the relevant period. Why these documents were not included as evidence to support PPE’s claim for fabrication work done after March 2016 cannot be readily understood. When cross-examined, Mr Pugaz stated as follows:

Although Mr Pugaz offered to check his records and produce the documents in question, Kori’s counsel, Mr Twang Kern Zern (“Mr Twang”), objected to the introduction of the documents at such a late stage.

Shortly before the second tranche of the trial, PPE attempted to bolster its case by furnishing a third Supplementary List of Documents filed on 22 January 2018. The said documents did not advance PPE’s case as they concerned work permits, qualifications and work records for a group of workers listed in various tables dated January 2016 to November 2016 that were entitled “Workers Work Under P & P Engineering Construction Pte Ltd”. Although Kori’s counsel, Mr Twang, had objected to the introduction of new documents by Mr Pugaz, he did not wish to prolong any argument on whether or not the introduction of the Third Supplementary Bundle should be allowed because he found that the documents were in any case totally irrelevant to the issues at hand. Kori pointed out as follows in para 48 of its closing submissions:

PPE also furnished an invoice for lifting gear and another invoice for oxygen and cutting equipment, all of which were delivered to the Marina Bay MRT worksite after the alleged termination of the Fabrication Contract on 3 April 2016. This, PPE claimed, showed that it must have continued fabrication work at the said Worksite. In his AEIC, Mr Pugaz explained at para 9 as follows:

Although Mr Pugaz stated in para 9 of his affidavit that PPE ordered lifting gear from WKS Industrial Gas Pte Ltd (“WKS”), he appeared bewildered when he was cross-examined and admitted that he did not order any such equipment from WKS. The relevant part of the proceedings is as follows:

[emphasis added]

Mr Pugaz then claimed that he ordered lifting gear from other companies instead. However, no evidence was furnished to the court with respect to this matter.

As for the order for oxygen and cutting equipment that was furnished to the court, which was intended to show that the said equipment was required for steel fabrication work for Kori, such equipment was also required by PPE for non-fabrication work at the site and could have been used for such work instead of steel fabrication work. Kori explained in its reply submissions at para 17 as follows:

[emphasis in original)

Kori’s silence and inaction after receiving PPE’s delivery orders

While PPE certainly could have done more in advancing its claim that it carried out steel fabrication work for Kori after March 2016, it strongly argued that the latter’s silence and inaction after receiving its delivery orders for certification of such work done after March 2016 showed that there was more than meets the eye and that the Fabrication Contract had not, as alleged by Kori, been terminated on 3 April 2016.

After the alleged termination of the Fabrication Contract, PPE submitted delivery orders for completed steel fabrication work to Kori on four occasions. The relevant dates are 7 May 2016, 12 July 2016, 7 October 2016 and 7 November 2016. Kori, which did not deny that it received the said documents, did not verify the claims or certify them. However, although the delivery orders indicated that PPE was claiming several hundred thousand dollars from Kori, the latter retained the delivery orders and did not challenge their validity until after PPE’s lawyers, Andrew LLC, sent it a letter of demand on 14 November 2016 to settle the outstanding manpower charges incurred under the Manpower Contract. Why Kori held on to the delivery orders without writing to PPE early in the day to state that the contract had already been terminated and the goods in question had not been received cannot be fathomed.

Undoubtedly, Kori’s thundering silence and inaction for such a long time after receiving from PPE a large number of delivery orders must be taken into account, and especially so since the former’s explanation for its silence and inaction after receiving the numerous delivery orders as early as May and July 2016 only served to undermine the credibility of its defence.

In relation to the first set of delivery orders, which were handed over by PPE to Kori on 7 May 2016, Mr Hooi claimed that Kori had not taken any action to disclaim liability for payment of the fabricated steel materials referred to therein because one of its unnamed employees failed to notice that these documents were placed below another document called “Material Checklist”. As such, the whole set of documents, including the delivery orders, was allegedly filed away in a file on technical matters without anyone realising that the delivery orders in question were also filed in that file. However, Mr Hooi could not name the employee who failed to separate the delivery orders from the top technical document and Kori did not call the employee who made the alleged filing mistake as a witness. As such, PPE’s counsel, Mr Andrew Hanam (“Mr Hanam”), took Mr Hooi to task for giving hearsay evidence. In any case, even if the delivery orders were placed below a document that showed that it was a “Material Checklist”, someone in the office must have had the task of looking at the contents of the checklist and if he or she had gone through the stack of documents, it would be evident that the stack contained delivery orders. Interestingly, although the delivery orders had been allegedly filed in the wrong file by some employee who did not check the stack of documents, Mr Hooi refused to acknowledge that there had been a mix-up of documents at his office. The relevant part of the cross-examination is as follows.

The next set of PPE’s delivery orders dated 4 July 2016 were submitted to Kori on 12 July 2016, some three months after the latter had allegedly terminated the Fabrication Contract on 3 April 2016. When cross-examined on why Kori did not return the documents to PPE immediately and make it clear to the latter that the contract had already been terminated and that the goods covered by these delivery orders had not been not been received, Mr Hooi was rather combative but did not advance Kori’s position in any way. He claimed to have called for a meeting with Mr Pugaz on 27 July 2016 to tell the latter to take back the delivery orders. The relevant part of the proceedings is as follows:

[emphasis added]

Although Mr Hooi claimed to have called a meeting on 27 July 2016 to discuss, among other things, the delivery orders submitted by PPE to Kori, there was no reference to this in his AEIC. Instead, what was stated therein was that the meeting concerned the sale by Kori to PPE of scrap steel, which is the subject matter of Kori’s counterclaim.

Mr Pugaz testified that he only dealt with the scrap metal issue at this meeting. His testimony in relation to the said meeting on 27 July 2016 is as follows:

I prefer the evidence of Mr Pugaz. PPE’s counsel, Mr Hanam, cross-examined Mr Hooi on this new revelation on the additional purpose for the 27 July 2016 meeting. The relevant part of the cross-examination is as follows:

[emphasis added]

Had Mr Hooi called a meeting on 27 July 2016 to ask PPE to take back the delivery orders, this would have surely been mentioned in his AEIC. This is a very material point and had he informed his lawyers about the dual purpose of the meeting on that day, his lawyers would not, as he alleged, have advised that this be left out in his AEIC.

It also appears from Mr Hooi’s testimony that he did not ask Mr Pugaz to take back the May 2016 and July 2016 delivery orders on 27 July 2016. When cross-examined, he stated as follows:

As for what Mr Hooi claimed to have said to Mr Pugaz on 27 July 2016 about the delivery orders for goods that were allegedly not received, he testified as follows:

If Mr Hooi had indeed called the meeting on 27 July 2016 to discuss the May 2016 and July 2016 delivery orders for goods which he claimed were never delivered to Kori, a question arises as to why he did not stop Mr Pugaz from leaving as the delivery orders involved a grave matter that should have been sorted out urgently. I believe Mr Pugaz’s evidence that there was no conversation between the parties about the delivery orders on 27 July 2016.

After the meeting of 27 July 2016, PPE delivered to Kori yet another set of delivery orders for steel fabrication work on 7 October 2016. Again, Kori did not ask PPE to take back these delivery orders or make any reference in any contemporaneous correspondence to the alleged termination of the Fabrication Contract. All that Mr Hooi could say to justify Kori’s inaction in relation to these delivery orders in October 2016 was that he was “accumulating all the documentation to see how far this is going”. His testimony is as follows:

[emphasis added]

Mr Hooi’s explanation on why Kori did not reject the delivery orders submitted in October 2016 timeously is most unpersuasive. There is no basis for Mr Hooi to say that “[b]y October 2016, we were having doubts” because by October 2016, PPE had already submitted what must, by Kori’s reckoning, be numerous blatantly fraudulent delivery orders in May and July 2016, and had claimed hundreds of thousands of dollars for steel fabrication work that, according to Kori, had not been done. It is thus baffling that Kori’s position was that it would sit back and accumulate documentation “to see how far this is going”. As such, it cannot be believed that Kori only became “suspicious” of Mr Pugaz’s actions by October 2016.

It is also quite unbelievable that if the delivery orders submitted by PPE to Kori in May and July 2016 were indeed fraudulent, the latter would continue to deal with Mr Pugaz as if things were normal.

Strangely, Mr Hooi testified that in July 2016, he still regarded Mr Pugaz as a “partner” and that he believed that Mr Pugaz was not a person who wanted to “cheat” his company. The relevant part of his testimony is as follows:

Despite the allegedly blatant attempt by PPE to charge Kori large amounts of money for goods that were not delivered to the latter, Mr Hooi went so far as to testify that Kori still trusted Mr Pugaz in September 2016, as the latter was allowed in that month to take delivery of excess fabricated steel materials from his company. Mr Hooi testified that if he did not trust Mr Pugaz, “would we have allowed him to collect [the] material?” Subsequently, when cross-examined on why Kori did not ask PPE to confirm the price of the excess steel materials that the latter agreed to buy from it on 27 July 2016, Mr Hooi returned to the theme of a partnership with PPE despite the latter’s presentation of allegedly bogus delivery orders. He testified as follows:

[emphasis added]

On 7 November 2016, PPE handed over to Kori the final set of delivery orders. A week later, on 14 November 2016, its lawyers. Andrew LLC, wrote to Kori regarding the non-payment of amounts due under the Manpower Contract. It was after receiving Andrew LLC’s letter that Kori finally stirred and wrote to PPE for the first time on 18 November 2016 to ask the latter to collect back the numerous delivery orders submitted to it after March 2016 on the ground that it did not receive the goods covered by the said delivery orders.

Evidently, Kori had no credible explanation as to why it did not return or dispute the delivery orders submitted by PPE from April to November 2016 until 18 November 2016 despite the fact that PPE would have been guilty of fraud if Kori’s assertion that no steel fabrication work had been carried out by PPE after March 2016 is to be believed. The irresistible inference must be that steel fabrication work was carried out by PPE after that date.

Whether the Fabrication Contract was terminated by Kori

Kori sought to advance its case on the ground that there could not have been any steel fabrication work done by PPE after March 2016 because it terminated the Fabrication Contract on 3 April 2016. However, this assertion was not supported by the evidence presented to the court and also served to undermine Kori’s defence.

Mr Hooi testified that the termination letter was posted to PPE, which claimed that it did not receive the said letter. PPE pointed out that although Kori had been put on notice in its pleadings that it did not receive the letter of termination, the latter took no steps to call the employee who allegedly sent out the termination letter to testify that the said letter had indeed been posted.

Further, PPE questioned why the termination notice was not sent to it by email in the same way other documents were usually sent to it. In his AEIC, Mr Pugaz stated at para 8 that Kori “usually sends by email notification to me” and “[i]t is curious that this notice was not send [sic] by email”. When cross-examined on this matter, Mr Hooi could give no convincing answer. The relevant part of the proceedings is as follows:

[emphasis added]

Mr Hooi’s testimony that the letter of termination was not emailed to PPE because Kori did not want its staff to see the contents of the said notice made no sense whatsoever. He did not claim to have typed the letter himself and as such, the employee or employees involved in the preparation and posting of the alleged letter of termination would have known about its contents regardless of whether it was sent by post or email.

As Mr Hooi testified that Kori preferred to send important documents, such as a letter of termination, by post, he was asked why the termination letter was not sent by registered post. Again, he had no answer. The relevant part of the proceedings is as follows:

Kori is a large company and while it has the discretion whether or not to send a particular letter by registered post, it is quite unlikely that a company will have a blanket policy not to send any letter, regardless of its importance, by registered post.

In its closing submissions, Kori contended that PPE must have received the termination letter because Mr Hooi testified that the said letter was posted together with Kori’s Debit Note No KDN/2016-0304 and Mr Pugaz admitted that PPE received the said debit note. This argument lacks foundation unless it was proven that the termination letter was actually posted together with the debit note. Mr Hooi, who admitted that he did not post Kori’s letters, had no actual knowledge of what was posted to PPE, and it cannot be assumed that both the letter of termination, if posted, and the debit note were posted together in the same envelope. Furthermore, while Mr Pugaz admitted that PPE received the said debit note, he was not asked how that document came into his hands and whether it was sent to him by post or email or whether it was handed over to him when he called at Kori’s office.

As mentioned, Kori did not ask PPE to take back the numerous delivery orders for work done after March 2016 until 18 November 2016. Significantly, in its letter of 18 November 2016, Kori’s stated reason for asking PPE to take back the delivery orders was that the goods in question had not been received. The crucial fact that Kori had allegedly terminated the Fabrication Contract on 3 April 2016 was not, as one would have expected, stated in the said letter, the contents of which are as follows:

As no such goods were received, kindly collect back the documents from our office.

Thank you.

[emphasis added]

Undoubtedly, if the Fabrication Contract had been terminated on 3 April 2016, this would have been stated in Kori’s letter of 18 November 2016. When questioned as to why there was no reference to the termination of the Fabrication Contract in the said letter, Mr Hooi avoided the question by saying that it was unnecessary for such a reference to be made. The relevant part of the proceedings is as follows:

[emphasis added]

I find that Kori’s assertion that the Fabrication Contract was terminated on 3 April 2018 was not supported by the evidence. As the evidence regarding Kori’s purported termination of the Fabrication Contract was rather contrived, it was detrimental to the credibility of Kori’s case and clothed PPE’s claim with a measure of respectability.

Whether Kori can rely on proceedings in third party discovery application

PPE asserted that Kori was not entitled to rely on the matters raised in its application for third party discovery and on the affidavit filed by Taisei’s Project Manager at the Marina Bay MRT Station worksite, Mr Takeshi Hara (“Mr Hara”), in those proceedings because these were not introduced as evidence during the trial. As neither PPE nor Kori called Mr Hara as a witness to test the assertions in his affidavit and neither this affidavit nor Mr Pugaz’s affidavit in HC/SUM 5237/2017 were introduced as evidence at the trial, no reliance is placed in this judgment on the respective positions taken by Taisei and PPE in the said third party discovery proceedings.

Conclusion on the claim under the Fabrication Contract

While the cases advanced by both PPE and Kori were hampered by evidential shortcomings, I am satisfied after considering all the circumstances of the case that it is more probable than not that the Fabrication Contract was not terminated by Kori on 3 April 2016 and that PPE did undertake steel fabrication work for Kori under the said contract after March 2016. As such, PPE’s delivery orders for steel fabrication work done under the said contract that have not been verified and certified must be verified and certified by Kori in accordance with the terms of the Fabrication Contract and the procedure previously adopted by the parties. The parties may apply to the court for further orders if there are problems arising from this.

Price of the fabricated steel materials

For the purpose of settling the accounts between the parties in relation to the steel fabrication work under the Fabrication Contract, a question arises as to the price that has to be paid for the fabricated steel materials supplied by PPE to Kori.

Although the Fabrication Contract fixed the price for the fabricated steel materials at $350 per metric tonne, PPE invoiced Kori at the rate of $300 per metric tonne in relation to the delivery orders already certified by the latter. PPE alleged in its Statement of Claim that Kori had failed to certify the progress claims made by it correctly and sought to recover the additional $50 per metric tonne. On the other hand, Kori insisted that the parties had reached an agreement for the reduction of the price of the fabricated steel materials from $350 to $300 per metric tonne.

Apparently, Kori informed Mr Pugaz that as PPE had no licence to undertake steel fabrication work, the contract price would be reduced by $50 per metric tonne. For this reason, Kori certified the amounts payable to PPE for the fabricated steel materials at $300 per metric tonne for the goods. PPE did not object to the reduction of the price at the material time and it issued its tax invoices to Kori on the basis of the certified amounts.

In considering whether PPE is entitled to payment for the fabricated steel materials supplied to Kori, a distinction ought to be made between two types of delivery orders. The first concerns the delivery orders that have been verified and certified by Kori at the rate of $300 per metric tonne, in respect of which PPE had issued tax invoices at the lower rate of $300 per metric tonne (the “first category”). The second relates to the delivery orders that have yet to be certified by Kori (the “second category”).

I will deal with the first category of delivery orders at this juncture. The pleadings and evidence as to why PPE is entitled to recover the difference between what it had already invoiced Kori and the contract price left much to be desired. The decision to make this claim was obviously made because of the decision of the Court of Appeal in Nam Hong Construction & Engineering Pte Ltd v Kori Construction (S) Pte Ltd [2016] 4 SLR 604 (“Nam Hong”) in July 2016. In that case, the Court of Appeal, which overruled the court below, held that the licensing requirements under the Building Control Act (Cap 29, 1999 Rev Ed), which prohibit the carrying out of specialist building works without a licence, did not apply to sub-contractors. PPE relied on this decision, which involved a dispute between Kori and another sub-sub-contractor, and contended that as it is now clear that it did not require a license to fabricate the steel materials for Kori, it is entitled to claim from Kori an additional $50 per metric tonne with respect to the goods covered by delivery orders that have been verified and certified. Mr Pugaz testified that when he agreed to the reduction of the price for the fabricated steel materials, he believed that Kori was entitled to deduct $50 from the contract price because he had no licence to fabricate the said materials. However, now that the law is clear that he does not require a license, he wants to claim back the $50 per metric tonne from Kori.

Whatever the reason for Mr Pugaz’s agreement to accept $300 per metric tonne as the price for the fabricated steel materials and notwithstanding the fact that the decision of the Court of Appeal in Nam Seng, it is incumbent on PPE to make clear its legal basis for reneging on the said agreement and claim another $50 per metric tonne for the goods in respect of which its own tax invoices had been issued. In relation to the claims that have already been verified and certified, all that PPE pleaded at para 9 of its Statement of Claim was that Kori had failed to certify the progress claims “correctly”. In its Reply and Defence to Counterclaim, PPE further pleaded at para 2 as follows:

[emphasis added]

Although PPE contended that Kori failed to certify the first category of delivery orders correctly and had unilaterally imposed reductions without justification, the fact remains that Mr Pugaz testified that he had agreed to the said reductions. When re-examined by his counsel, Mr Hanam, Mr Pugaz testified as follows:

Parties who make arrangements on the basis of what they perceive the law to be at the material time cannot, without more, renege on the arrangements merely because a court of law subsequently takes a different view of what the law actually is. PPE did not plead that Mr Pugaz’s agreement to accept the lesser sum cannot be enforced on the ground of lack of consideration or that it was vitiated by duress. Furthermore, PPE asserted that Mr Pugaz agreed to the reduction of $50 per metric tonne for the two certifications by Kori because he had the mistaken belief that Kori was legally entitled to the reduction, PPE did not allege in its pleadings that there was any mistake, misrepresentation or any other vitiating factor in relation to what Mr Pugaz admitted was his agreement to accept $300 per metric tonne as the rate of payment for delivery orders in the first category.

In the face of PPE’s pleadings, I have no basis whatsoever to interfere with the rate of payment in relation to the first category of delivery orders, in respect of which tax invoices had already been issued by PPE.

I now turn to the second category of delivery orders. In respect of the price of the fabricated steel material in this category, much depends on what was agreed upon by the parties when Kori proposed that the price of the fabricated steel materials be reduced to $300 per metric tonne. While Kori claimed that the agreement covers all delivery orders, including those to be issued in the future, this was vehemently denied by PPE.

It ought not be overlooked that PPE pleaded in para 3 of its Statement of Claim that the contract price for the fabricated steel was $350 per metric tonne and that Kori’s response to this plea in para 2 of its Defence is as follows:

[emphasis added]

Despite its pleadings, Kori asserted that the agreement to reduce the price to $300 per metric tonne was made in relation to all present and future claims under the Fabrication Contract. This would necessarily involve a variation of the Fabrication Contract. However, such a variation was not pleaded by Kori. In fact, even in relation to the already certified claims, Kori did not plead any variation to the Fabrication Contract in its Defence and Counterclaim. Instead, it merely pleaded at para 13 of its Defence and Counterclaim that PPE was estopped from saying that it had failed to certify the December 2015 and February 2016 claims correctly because no objections had been made to its interim payment certificates for these claims and PPE had submitted tax invoices to it on the basis of the certifications in question. Kori’s focus in its pleadings was thus only on the December 2015 and February 2016 claims made by PPE and on the assertion that the certification for these claims must be correct since the latter did not object to the said certification and issued its tax invoices on the basis of the said documents.

After taking all circumstances into account, I find that it was not established that PPE had agreed to amend the Fabrication Contract and reduce the price of the fabricated steel materials to $300 per metric tonne for future claims as well. As such, in relation to the second category of delivery orders that have not been certified by Kori, PPE is entitled to be paid at the contractual rate of $350 per metric tonne.

Kori’s counterclaim

It is common ground that at a meeting on 27 July 2016 between Mr Hooi and Mr Pugaz, Kori offered to sell PPE a quantity of the said goods. It was not disputed that PPE accepted the offer and took delivery of 560.098 metric tonnes of the excess fabricated steel materials. It was also not disputed that both parties agreed that the amount due to Kori for the goods would be set off against amounts payable by Kori to PPE under their contracts.

What is disputed is the price of the excess fabricated steel materials sold by Kori to PPE. While Kori claimed that the agreed price was $1,200 per metric tonne, PPE asserted that it was only $245 per metric tonne.

In its Opening Statement, Kori outlined its counterclaim with respect to the price of the excess steel materials as follows:

In support of Kori’s version of events, Mr Hooi stated in his AEIC (at paras 32 to 35) as follows:

Kori asserted that there was no reason for it to sell the excess steel materials to PPE if it was to enable the latter to re-sell it as scrap metal as it could easily have sold the said goods directly to NatSteel Recyling Pte Ltd (“NatSteel”) and fetch a higher price by eliminating two middle-men, namely, PPE and Neo Hardware Pte Ltd (“Neo Hardware”).

PPE’s account of the discussions between Mr Pugaz and Mr Hooi on the price of the excess fabricated steel materials differed markedly from the latter’s account. Mr Pugaz claimed that he did not receive from Kori the quotation for the excess steel materials dated 27 July 2016 and alleged that the said quotation was manufactured after this action was commenced. He asserted that the agreed price for the excess steel materials was only $245 per metric tonne and that PPE was required to pay Kori only $137,244.01 for the 560.098 metric tons of excess fabricated steel materials supplied by Kori. In para 22 of his AEIC, Mr Pugaz, who claimed that he agreed to take over the goods only because Kori was unable to pay his bills, stated as follows:

Regardless of whether or not Kori’s quotation was sent to PPE or received by the letter, it is for Kori to prove its case that the agreed price for the excess fabricated steel materials was indeed $1,200 per metric tonne and it clearly failed to do so. Kori could have asked PPE to confirm its acceptance of the offer to sell the goods at $1,200 per metric tonne by signing the quotation and returning it but it did not do so.

Kori submitted that it is not possible that it had agreed to sell the excess metal to PPE for only $245 because it had offered the same type of excess metal to other buyers for $1,200 per metric tonne. However, Kori could only point to one other company, namely Fuchiang Construction Pte Ltd (“Fuchiang”), which, according to it, had purchased its excess fabricated steel materials at $1,200 per metric tonne. A copy of Kori’s delivery order and tax invoice with respect to this sale to Fuchiang, a company in which Kori’s holding company was formerly a shareholder, was furnished to the court. However, no one from Fuchiang was called by Kori to prove the documents. When cross-examined on why no one from Fuchiang was called to testify and prove Kori’s claim that excess fabricated steel materials were sold to that company at $1,200 per metric tonne, Kori’s Mr Hooi’s testimony was not helpful as he merely stated as follows:

Kori could have called an expert witness to testify that the excess fabricated steel materials that it sold to PPE was worth $1,200 per metric tonne in the market or any amount near this figure.

PPE contended that the excess fabricated steel materials were used for scrap steel of such short lengths that they were only useful if they were melted down. As such, the scrap steel could not have been sold at the price suggested by Kori. It introduced evidence to show that it sold the goods to Neo Hardware for only $245 per metric tonne and asserted that it could not have agreed to pay $1,200 per tonne as this would have resulted in a massive loss to it.

PPE’s witness, Mr Neo Cheng Kang (“Mr Neo”), the director of Neo Hardware, who has been in the business of buying and selling scrap metal for 40 years, stated in paras 5 and 6 of his AEIC as follows:

When cross-examined on his purchase of the excess fabricated steel materials from PPE, Mr Neo explained that after inspecting the goods that PPE wanted to sell to him, he found that the steel was only fit to be sold as scrap. He also explained that most of the pieces of steel were shorter than 7 metres and that the steel was less valuable as they were not “clean” in the sense they had attachments such as welded joints and brackets. The relevant part of his evidence during cross-examination is as follows:

Admittedly, Mr Neo was not consistent on some matters. For instance, he initially accepted that he only bought and sold scrap but subsequently said that when he gets good steel, he would also buy and sell the same. Notwithstanding this, I accept that there would be no reason for a professional scrap metal dealer such as Mr Neo to sell the excess steel materials in question to Natsteel for $280 per metric tonne if the said materials were, as Kori claimed, worth as much as $1,200 per metric tonne.

I find that Kori did not prove that the excess steel was sold to PPE at $1,200 per metric tonne and I accept PPE’s evidence that the price of the excess fabricated steel materials was $245 per metric tonne. As such, the sum of $137,224.01 payable by PPE to Kori for the said goods should be taken account in determining the amount payable by Kori to PPE for the steel fabrication work under the Fabrication Contract.

Costs