Smart Glove International Pte Ltd v Full Support Healthcare Ltd [2025] SGHC 168

Introduction

At the height of the Covid-19 pandemic, the defendant engaged the plaintiff to produce and deliver nitrile powder-free gloves under a supply agreement and three purchase orders. There were delays in the deliveries.

The defendant argues, as part of both its defence and its counterclaim, that these delays, among other events, constituted repudiatory breaches by the plaintiff, which it accepted through an email sent on 20 April 2021. It seeks reliefs, including damages and the refund of certain monies paid to the plaintiff (which it argues are refundable advance payments).

On the other hand, the plaintiff argues, in its claim and its defence to the defendant’s counterclaim, that it was the defendant who was in breach of its obligations by refusing to continue performing its obligations after the email was sent. It asks for reliefs, including damages and specific performance. Additionally, the plaintiff also seeks to retain all monies received from the defendant (arguing that they are forfeitable deposits).

Having heard the parties and considered the evidence, I find that both parties were in breach of the contracts. Further, I find that the monies paid in advance by the defendant to the plaintiff are refundable advance payments. These are my reasons.

Facts

The parties

The plaintiff, Smart Glove International Pte Ltd (“SGI”), is a Singapore-incorporated company in the business of selling and distributing medical equipment, including gloves. SGI is wholly owned by Smart Glove Holdings Sdn Bhd (“SGH”), a company incorporated in Malaysia. SGH is also the ultimate holding company of a group of companies, including Smart Glove Corporation Sdn Bhd (“SGC”), GX Corporation Sdn Bhd (“GX”), Platinum Glove Industries Sdn Bhd (“PGI”), and Sigma Glove Industries Sdn Bhd (“Sigma”). In this judgment, I will refer to SGH and its subsidiary companies collectively as the “Smart Glove Group” or “SGG”.

Within the Smart Glove Group, SGI is the sales and distribution arm. SGC, GX, PGI and Sigma (collectively, the “SGG Manufacturers”) are the companies which operate factories and/or plants manufacturing, inter alia, nitrile gloves. All gloves produced under the disputed agreements in this case were produced by the SGG Manufacturers.

SGI called three factual witnesses to prove its case. These were Mr Long Say Sing (“Mr Long”), the General Manager of SGI, Mr Hew Yew Fook (“Mr Hew”), the Chief Operating Officer of SGH, and Mr Ahmad Faizi Mohd Kamil (“Mr Faizi”), the Chief Corporate Officer of SGH. SGI also called Mr Dawin Tang Keng Wai (“Mr Tang”), a director at PKF Covenant Equity Consulting Sdn Bhd and a Chartered Accountant, as its expert witness to quantify the parties’ claims and counterclaims.

The defendant, Full Support Healthcare Ltd (“FSH”), is a United Kingdom-incorporated company. Its business includes buying and selling personal protective equipment.

FSH called five factual witnesses to prove its case. They were Ms Sarah Jane Stoute (“Ms Stoute”), the Chief Executive Officer of FSH, Ms Zheng Bikun (“Ms Zheng”), FSH’s Head of Finance, Ms Sarah Jane White (“Ms White”), FSH’s Commercial Director, Mr Sarbjit Singh Mahli (“Mr Mahli”), FSH’s Insight Inventory Controller, and Ms Ruth Elizabeth Roper (“Ms Roper”), FSH’s Quality and Improvement Director. FSH also called Mr Oliver Alexander Richard Watts (“Mr Watts”), a Partner at Osborne Partners, who is also a Chartered Financial Analyst and a Chartered Accountant.

Background to the dispute

As alluded to at [1] above, the dispute centres on a supply agreement and three sets of purchase orders entered into between FSH and SGI, which I will now detail.

The Supply Agreement

In May 2020, FSH enquired with SGI on the supply of powder free nitrile gloves. On 11 June 2020, following some discussions, SGI and FSH entered into a Memorandum of Agreement for the Supply of Medical Examination Gloves (the “Supply Agreement”). While the agreement was expressed to be between SGI and “Full Support Group”, the parties have always understood the agreement to be between SGI and FSH.

The parties differ on the interpretation of various aspects of the Supply Agreement. However, the agreement effectively provides for the tentative sale and purchase of 1,300,000,000 Gen-X 3mil nitrile powder-free blue gloves (“3mil gloves”) as follows:

As regards the prices and payment, the Supply Agreement provides for a default price of US$82.50 per 1,000 pieces of gloves, for a total contract sum of US$107,250,000:

The Supply Agreement also contains certain warranties made by SGI regarding the quality of the gloves supplied:

Finally, the Supply Agreement contains clauses pertaining to force majeure, variation of terms and waiver:

The first purchase order

After the Supply Agreement was concluded, FSH issued a purchase order to SGI dated 12 June 2020 for a total of 1,302,000,000 pieces of 3mil gloves (“PO1”), comprising 372 orders, as well as a summary page headed “Summary of Orders for Blue Nitrile PF Disposable Gloves”. This summary page contains tables reflecting a “Monthly Summary” and “Weekly Schedule” respectively.

On 16 June 2020, FSH issued a revised purchase order increasing the number of 3mil gloves to 1,306,500,000 pieces at US$82.50 per 1,000 gloves, for a total sum of US$107,786,250 (“PO1.2”), comprising 390 orders. FSH also issued a signed summary page headed “Summary of Orders for Blue Nitrile PF Disposable Gloves” (“PO1.2 Summary Page”). Again, this summary page contains tables reflecting a “Monthly Summary” and “Weekly Schedule” respectively.

More specifically, the “Monthly Summary” for PO1.2 reads as follows:

By a Proforma Invoice, which was also dated 16 June 2020, SGI accepted PO1.2 (“1st PI”). The 1st PI contains a table setting out the amounts due to be paid by FSH to SGI on various dates: upon issuance of the orders, as well as on the first and last day of each month from 30 June 2020 to 31 December 2020.

The 1st PI also contains some “Remarks/Special Instruction[s]” pertaining to the delivery of and payment for the gloves:

The 1st PI also stipulates that in the event of late payment by FSH, “interest at the rate of 1.5% per month is chargeable for any invoiced amount not paid in accordance with the agreed payment terms from its due date to the date of payment …”.

On 17 June 2020, pursuant to PO1.2 and the 1st PI, FSH transferred US$33,165,000 to SGI.

On 29 June 2020, SGI issued a revised Proforma Invoice (“Revised 1st PI”). The terms in the Revised 1st PI remain largely similar to those in the 1st PI, save that some revisions were made to the schedule of payments.

Subsequently, on 21 August 2020, FSH issued a further revised purchase order revising the size mix per container for the 1,306,500,000 pieces of 3mil gloves (“PO1.3”), comprising 390 orders, as well as a summary page headed “Summary of Orders for Blue Nitrile 3Mil PF Disposable Gloves” (“PO1.3 Summary Page”). FSH requested for the change of size mix earlier the same month.

The PO1.3 Summary Page contains at least three material differences from the summary pages in the previous two purchase orders. First, the revised size mix for certain containers were stipulated. More specifically, whereas the PO1.2 Summary Page provided that each container was to contain 670 cases of small-sized gloves, 1,675 cases of medium-sized gloves and 1,005 cases of large-sized gloves, the PO1.3 Summary Page provided that for 297 out of the total 390 orders, the containers were to contain 100 cases of small-sized gloves, 1,400 cases of medium-sized gloves, 1,200 cases of large-sized gloves, and 650 cases of extra-large-sized gloves.

Second, the table containing the “Monthly Summary” (see [18] above) became relabelled as the “Orginal [sic] Monthly Summary”, though its contents remained the same.

Third, the table which was originally inserted under the “Weekly Schedule” was struck out. In its place, the following line was inserted:

The reference to “Yeoh” is to Mr Yeoh Yao Zhi (“Mr Yeoh”), a Customer Service Executive from SGI.

From this juncture, I will refer to PO1, PO1.2 and PO1.3 collectively as the “1st PO”. Between June 2020 and April 2021, several transactions took place under the 1st PO. The table below summarises these transactions. The parties agree to proceed on the contents stated in the table. However, the characterisation of the 80% paid upfront by FSH for each tranche of orders is disputed. While SGI contends that these are forfeitable deposits, FSH argues that these are refundable advance payments.

Ultimately, SGI did not adhere to the delivery schedules set out in the PO1.3 Summary Page, although the parties are in dispute as to whether SGI was obligated to do so.

The 5mil purchase order

In July 2020, SGI and FSH further discussed the supply of 5 mil Nitrile Dark Smart Blue gloves to FSH.

On 4 August 2020, FSH issued a purchase order to SGI for a total of 346,590,000,000 pieces of “Gen-X 5mil Dark Smart Blue Regular Cuff & One order for Long Cuff” gloves (“5mil gloves”), comprising 141 orders for regular cuff gloves (at US$86 per 1,000 gloves) and one order for long cuff gloves (at US$110 per 1,000 gloves), for a total sum of US$29,867,940. FSH also issued a signed summary page headed “Summary of Orders for Gen-X 5mil Dark Smart Blue Regular Cuff & One order for Long Cuff”. This summary page contains tables respectively reflecting a “Monthly Summary” and a “Weekly Schedule Regular Cuff”.

On 6 August 2020, FSH issued a revised purchase order for the 5mil gloves (the “5mil PO”), along with a signed summary page headed “Summary of Orders for Gen-X 5mil Dark Smart Blue Regular Cuff & One order for Long Cuff- now with updated Exfactory dates” (the “5mil PO Summary Page”). The two purchase orders differ in the details under the tables respectively reflecting the “Monthly Summary” and “Weekly Schedule Regular Cuff”.

Under the 5mil PO Summary Page, the “Monthly Summary” is reflected as such:

On 10 August 2020, SGI accepted the 5mil PO by issuing two proforma invoices for:

On 5 October 2020, SGI issued a revised Proforma Invoice (the “Revised 1st 5mil PI”), under which the prices of the 5mil gloves (regular cuff) were revised so that the total sum is US$31,036,800.

In the 1st 5mil PI, 2nd 5mil PI, and Revised 1st 5mil PI (collectively, the “5mil PIs”), the following “Remarks/Special Instruction[s]” are stated:

All three Proforma Invoices also contain a late payment interest clause similar to that found in the 1st PI (see [21] above).

Between September 2020 and April 2021, several transactions took place under the 5mil PO. The table below summarises these transactions. Again, parties agree to proceed on the contents stated in the table, and are only disputing the characterisation of the 80% of monies already paid by FSH.

The second purchase order

Between June and November 2020, while the 1st PO and the 5mil PO were being performed, SGI and FSH discussed the further supply of 3mil gloves for 2021. In November 2020, FSH informed SGI that it was looking to order at least 50 containers of gloves per month, in addition to the original orders under the 1st PO.

On 19 November 2020, FSH therefore issued a purchase order for an additional 469,000,000 pieces of 3mil gloves at US$93.50 per 1,000 gloves for a total of US$43,851,500 (the “2nd PO”), comprising 140 orders. FSH also issued a signed summary page headed “Summary of Orders for Gen-X 3mil Nitrile Baby Blue” (the “2nd PO Summary Page”).

In the 2nd PO, unlike in the 1st PO and the 5mil PO, the column titled “Estimated Ex-Factory Date From Smart” was left blank.

Moreover, there was no “Weekly Schedule” table reflected in the 2nd PO Summary Page. There was, however, still a “Monthly Schedule” table:

On 20 November 2020, SGI accepted the 2nd PO through a Proforma Invoice (the “2nd PI”). The 2nd PI stipulated the following “Remarks/Special Instruction[s]”:

The 2nd PI also contained a similar late interest payment provision as the other Proforma Invoices previously issued (see [21] and [37] above).

Between November 2020 and April 2021, several transactions took place under the 2nd PO. The table below summarises these transactions. Again, the parties agree to proceed on the contents stated in the table, and only dispute the characterisation of the 80% paid upfront by FSH.

Ultimately, SGI did not adhere to the delivery schedules set out in the 2nd PO Summary Page, although the parties disagree whether it was SGI’s obligation to do so.

FSH’s 20 April 2021 termination email and the events leading up to it

On 20 April 2021, Mr Matthew Simpson (“Mr Simpson”), a “Hand Protection Specialist” from FSH, sent an email to Ms Angeline Hew (“Ms Hew”) of SGI’s Business and Development Department, purporting to “cancel all of [FSH’s] existing 3mil orders” (the “20 April 2021 Email”):

Prior to this email being sent, certain events happened which are material to the proceedings. Apart from SGI’s non-adherence to the delivery schedules set out in the 1st PO Summary Page and 2nd PO Summary Page (see [29] and [46] above), the prices of both the 3mil gloves and 5mil gloves were also revised upwards several times, and FSH had requested for SGI to produce the EN455 shelf life certification for certain batches of 3mil and 5mil gloves pursuant to cl 3.2 of the Supply Agreement (see [14] above).

More specifically, between September 2020 and April 2021, SGI sought to revise the price of 3mil gloves to be supplied each month, which FSH accepted at each relevant time. Although the surrounding circumstances and the validity of the revision of prices are disputed, the actual revision of prices are not, and can be summarised as follows:

The prices of 5mil gloves were also revised upwards during a similar period, which FSH had accepted at each relevant time. Again, the parties disagree over the surrounding circumstances and the validity of the price increases, but not the fact of the increases.

Separately, on 19 March 2021, FSH’s Quality Assurance/Quality Control Manager, Ms Esther Barrows (“Ms Barrows”), wrote to SGI’s Ms Hew to ask about the shelf life of certain 3mil and 5mil gloves which had been delivered under lots GT20J01 and GT20K02:

On the same day, Ms Hew replied Ms Barrows stating that she would “revert … by next week”, and attached a “Technical Report for Three Year Shelf Life for 9” (3 mil) Powder Free Nitrile Gloves (EN455-4) [Stability Study Under Accelerated Aging Condition]” dated 12 February 2019.

There was further correspondence on this matter, both externally, between FSH and SGI, as well as internally, within FSH and SGI. Subsequently, on 1 June 2021, SGI provided FSH with the required EN455 shelf-life certifications for the 3mil and 5mil gloves.

Events following FSH’s 20 April 2021 Email

Following the 20 April 2021 Email, FSH began declining to take delivery of 3mil gloves. However, the parties continued corresponding to negotiate the price of 3mil gloves, although they disagree whether such negotiations went towards the possibility of concluding a fresh agreement (which is FSH’s position), or whether the negotiations came under the existing Supply Agreement, 1st PO and/or 2nd PO (which is SGI’s position).

On 6 July 2021, FSH’s Procurement and Supplier Relationship Manager, Ms Shiah Yoong (“Ms Yoong”) sent an email to SGI’s Ms Hew (“6 July 2021 Email”), stating that FSH wished to “cancel all the open POs”:

While Ms Yoong’s email has quantified the 80% of purchase price which FSH already paid to SGI for 3mil gloves which remain undelivered at US$59,654,915.20, parties accept that this amount is in fact US$64,782,300, being the total amount under the 1st PO (ie, US$45,988,800) and the 2nd PO (ie, US$18,793,500) (see [28] and [45] above). To date, this sum remains with SGI.

On 22 January 2022, SGI commenced the present suit against FSH. Apart from defending the claim, FSH lodged a counterclaim.

The parties’ cases

I now summarise SGI’s claims against FSH, FSH’s defence and counterclaim against SGI, as well as SGI’s defence to FSH’s counterclaim and FSH’s reply.

SGI’s claims

SGI’s primary case is that FSH has committed a breach and/or repudiatory breach of the Supply Agreement, the 1st PO and the 2nd PO. SGI was always ready, willing and able to fulfil its obligations under these agreements. However, after sending the 20 April 2021 Email, FSH:

(a) failed, refused, and/or neglected to arrange for shipment of some 77,050,000 and 15,509,000 pieces of 3mil gloves which SGI had produced under the 1st PO and the 2nd PO respectively (totalling 92,559,000 pieces), and/or to take delivery of them;

(b) repeatedly demanded price reductions for the 3mil gloves under the Supply Agreement, 1st PO and 2nd PO, for gloves which have yet to be shipped (the “open orders”), as well as for these price reductions to apply retrospectively to gloves already shipped, and threatened to otherwise cancel all open orders; and

(c) sent the 6 July 2021 Email.

SGI has not accepted FSH’s repudiation of the Supply Agreement, the 1st PO and the 2nd PO, and continued to perform, and/or remained ready, willing and able to perform the same, by procuring the production of the remaining 619,750,000 and 235,741,000 pieces of 3mil gloves under the 1st PO and the 2nd PO respectively (totalling 855,491,000 pieces).

In light of FSH’s alleged breaches, SGI seeks specific performance of the Supply Agreement, the 1st PO and the 2nd PO. In this regard, while SGI pleads that they require FSH to “take delivery of and pay for the remaining 3mil Gloves produced and/or procured by [SGI], and/or to be produced and/or procured”, it appears from their written submissions that they only claim for specific performance in relation to the 855,491,000 pieces of 3mil gloves which remain unproduced.

Further and alternatively, SGI seeks damages caused by FSH’s alleged breach of the Supply Agreement, the 1st PO and the 2nd PO.

FSH’s Defence and Counterclaim

FSH denies that it committed any breach. Instead, FSH’s case is that through the 20 April 2021 Email (reiterated again in the 6 July 2021 Email), FSH was merely terminating the Supply Agreement, the 1st PO and the 2nd PO after accepting SGI’s repudiatory breaches of the same, which comprise:

(b) the increases in prices of the gloves; and

Following its purported termination of the agreements on 20 April 2021, FSH argues that it was no longer obligated to accept any delivery of gloves or to make further payments for any undelivered gloves.

FSH also denies that it committed a repudiatory breach of the Supply Agreement, the 1st PO and the 2nd PO by seeking price reductions. It explains that these requests were made due to SGI’s increases in price despite being in breach and/or repudiatory breach of the same agreements, which caused FSH to need to pay more to SGI for the gloves, and/or to need to sell the gloves when market prices had fallen substantially.

Finally, FSH accepts that it has not paid the remaining sum of US$5,127,384.80 due under the 1st PO, the 5mil PO and the 2nd PO for gloves already delivered. However, its position is that these amounts should be set off against the monies paid to SGI in relation to any undelivered gloves (ie, US$45,988,800 under the 1st PO and US$18,793,500 under the 2nd PO) which are refundable “advance payments”. The balance should then be refunded to FSH.

Alternatively, FSH argues that it is entitled to restitution of these sums because SGI has been unjustly enriched by them. Beyond seeking a refund of the monies it paid to SGI, FSH also claims that, as a result of SGI’s breaches, it has suffered losses.

SGI’s defence to FSH’s counterclaim and FSH’s reply

In its defence, SGI denies any breach of the Supply Agreement, the 1st PO, the 2nd PO and the 5mil PO. In any event, any breach of these contracts was waived by FSH. On the other hand, FSH denies any waiver on its part.

Issues to be determined

Based on the parties’ cases as canvassed above, the following broad issues arise for my determination:

Preliminary issue: relationship between the Supply Agreement, and the 2nd PO and the 5mil PO

Before addressing these substantive issues, there is a preliminary question which I must first address − the relationship between the Supply Agreement, and the 2nd PO and the 5mil PO. This issue is important because it determines whether the parties can rely on the terms in the Supply Agreement to argue their cases concerning the 2nd PO and the 5mil PO.

Parties’ arguments

FSH’s position is that the Supply Agreement was the master agreement governing the 1st PO, the 2nd PO and the 5mil PO. It relies on the Court of Appeal decision of Sintalow Hardware Pte Ltd v OSK Engineering Pte Ltd [2017] 2 SLR 372 (“Sintalow”) (at [46] and [59]) to argue that the Supply Agreement, being the first contractual document signed by FSH and SGI, is the master document setting out the general terms and conditions governing the intended supply of gloves under purchase orders issued by FSH and accepted by SGI.

FSH further highlights that the conclusion of the Supply Agreement was contrary to SGI’s usual practice, and was specifically done to safeguard SGI’s interests given the size of FSH’s intended orders. It also argues that to hold otherwise would contradict SGI’s pleaded case.

On the other hand, SGI contends in its closing submissions that the Supply Agreement only applied to the 1st PO, but not the 2nd PO and the 5mil PO. It relies on the wording in the 2nd PO, the 2nd PI, the 5mil PO, and the 5mil PIs. It further relies on the facts that the use of formal supply agreements runs contrary to SGI’s usual business practice, and that the Supply Agreement served a different commercial purpose from the 2nd PO and the 5mil PO. It also seeks to analogise the present case to Saha Ram Krishna and others v Tan Tai Joum (acting in his capacity as the personal representative of the estate of Tan Hee Liang, deceased) [2024] SGHC 9 (“Saha Ram”), and to distinguish the present case from Sintalow.

My decision

I turn first to consider the 2nd PO. In this regard, I agree with FSH that this case should proceed on the basis that the 2nd PO was governed by the terms of the Supply Agreement. This is so for at least two reasons.

First, and importantly, I find that SGI’s case is not entirely consistent. For instance, in response to FSH’s pleaded allegation that by failing to meet the delivery schedule for the 2nd PO, SGI was “in breach and/or repudiatory breach of the Supply Agreement and the [2nd PO]”, SGI merely responds that it was “not in breach and/or repudiatory breach of the Supply Agreement and/or the [2nd PO]”. There was no denial that the Supply Agreement did not apply. Further, in its closing submissions, while it takes the position that the Supply Agreement did not apply to the 2nd PO and 5mil PO (see [75] above), it in fact repeatedly relies on the terms of the Supply Agreement to argue that it did not breach the 2nd PO (without framing this as an alternative argument). For instance, it relies on:

(a) Clause 4.4 to argue that it should be excused from the delays in deliveries of 3mil gloves under both the 1st PO and the 2nd PO because they were caused by reasons beyond SGI’s control; and

(b) Clause 3.2 to argue that there was no implied term in relation to the provision of the EN455 shelf-life certificates.

From SGI’s broader case, SGI seems to proceed on the basis that the 2nd PO is governed by the Supply Agreement.

Second, I find that throughout their performance of the contract, parties have proceeded on the mutual understanding that the 2nd PO was governed by the Supply Agreement, notwithstanding that the contracts did not make any express reference to each other. Apart from SGI’s repeated reliance on the provisions in the Supply Agreement as highlighted in the preceding paragraph, this is most clearly evidenced by how SGI approached FSH’s request for the EN455 shelf-life certificates.

When asked to clarify on the shelf-life of certain 3mil gloves delivered, the ambit of the request included gloves delivered under the 2nd PO, eg, the batch GT20J01, which included gloves delivered under order number FSH17581 of the 2nd PO. Yet, in its contemporaneous response (and throughout the course of proceedings), SGI did not seek to distinguish its obligations relating to the EN455 certificates under the 1st PO and the 2nd PO. It did not make the point that it was not required under the 2nd PO to provide the certificates within reasonable time because it was not governed by the Supply Agreement, and hence Clause 3.2.

I hence proceed on the basis that the 2nd PO is governed by the terms of the Supply Agreement. In coming to this finding, I note again that nothing in the Supply Agreement contemplates the 2nd PO, and that nothing in the 2nd PO and the 2nd PI refers to the Supply Agreement. In this regard, it might be said that the present case is analogous to Saha Ram.

In Saha Ram, two tenancy agreements were concluded between the plaintiff tenants and the defendant landlord. An issue which arose was whether the plaintiffs took their tenancy under a single contract or under two independent contracts (Saha Ram at [45]). The High Court agreed with the defendant that the two tenancy agreements were separate, explaining that nothing in either tenancy agreement made any reference to the other, each agreement was commercially workable on its own terms, each agreement served a separate (albeit complementary) commercial purpose, and the plaintiffs themselves treated the two agreements as independent (Saha Ram at [49]–[52]). I note that the first plaintiff tenant’s appeal was later allowed in part. However, the High Court’s findings in this regard remained undisturbed.

While at first glance, the facts of the present case might appear analogous to those in Saha Ram, it must be highlighted that in that case, the defendant had, from the outset, consistently pleaded that the two tenancy agreements were separate (see Saha Ram at [35]). The defendant had also informed the plaintiffs from the outset that they would have to enter into separate tenancy agreements for the first storey, and for the second and third storeys of the premises (Saha Ram at [49]). However, as earlier explained, these factors are absent here. Therefore, Saha Ram does not assist SGI.

For completeness and clarity, while I agree with FSH that this case should proceed on the basis that the 2nd PO is governed by the Supply Agreement, I disagree that this is so because the parties had, from the outset when concluding the Supply Agreement, intended for it to govern all future contracts between SGI and FSH. Relatedly, I also disagree that this case is analogous to Sintalow.

In Sintalow, the parties signed a letter which contained the general terms and conditions applicable to the supply of sanitary ware by the plaintiff supplier, Sintalow, to the defendant purchaser, OSK (the “Master Contract”) (Sintalow at [15(e)]). The Court of Appeal held that the Master Contract contained the default terms intended to apply to any specific agreements which were subsequently concluded, subject to any terms set out in these specific agreements (Sintalow at [46] and [58]–[59]).

The present Supply Agreement is distinguishable from the Master Contract in Sintalow. There, the Master Contract contemplated the conclusion of the specific contracts subsequently entered into (see Sintalow at [15(e)], [48] and [52]). However, the Supply Agreement was not concluded in contemplation of the 2nd PO. To give a more specific example, whereas the Master Contract in Sintalow neither mentioned any quantity nor expressly imposed obligations on either party to place and/or accept orders (Sintalow at [15(e)]), Clauses 1.1 and 2.1 of the Supply Agreement expressly contemplate the quantity and price of the gloves respectively, which coincide with those under the 1st PO. It is improbable that the parties could have intended for the Supply Agreement to also apply to the 2nd PO from the outset. However, this does not contradict my finding that at the time of concluding the 2nd PO, parties agreed that the Supply Agreement would (to the extent that it was not overwritten by more specific provisions in the 2nd PO) govern the 2nd PO.

I turn next to consider the 5mil PO, which I also find to be governed by the Supply Agreement. This is supported by the context against which it was entered into (see [30]−[34] above). By SGI’s own case, not long after the 1st PO was concluded, and:

Even when the 5mil PO was concluded on 10 August 2020, discussions on the 2nd PO were also still ongoing (see [39] above). The proximity in time between the conclusion of the 5mil PO, and that of the 1st PO and the Supply Agreement, coupled with the overlapping discussions between the 5mil PO and the 2nd PO (which I have just found to be governed by the Supply Agreement), suggest on balance that the 5mil PO was, in general, similarly governed by the terms of the Supply Agreement.

From all of the above, the implication is that the parties can rely on the general provisions in the Supply Agreement to advance and/or defend their cases with respect to the 1st PO, the 2nd PO and the 5mil PO. On the other hand, any argument to the effect that the provisions of the Supply Agreement do not apply to the 2nd PO or the 5mil PO would fail, unless it can be shown that these general provisions were overwritten by more specific provisions in the 2nd PO and the 5mil PO.

Issue 1: whether SGI breached the Supply Agreement, the 1st PO, the 2nd PO and/or the 5mil PO

I now consider whether SGI breached the Supply Agreement, the 1st PO, the 2nd PO and/or the 5mil PO. In this regard, FSH submits that SGI committed three main breaches:

I will now address each of these alleged breaches in turn.

Whether SGI used all reasonable endeavours to meet the delivery schedules

The applicable principles

In KS Energy Services Ltd v BR Energy (M) Sdn Bhd [2014] 2 SLR 905 (“KS Energy”), the Court of Appeal held (at [62]) that an “all reasonable endeavours” clause should be interpreted similarly to a “best endeavours” clause. As such, the standard which the former imposes is similar to that imposed by the latter, which is established in Travista Development Pte Ltd v Tan Kim Swee Augustine and others [2008] 2 SLR(R) 474 (“Travista”).

More specifically, the Court of Appeal in KS Energy summarised the substance of this standard as follows:

There was no breach under the 5mil PO

As alluded to earlier (at [64]), it appears that FSH is no longer pursuing its claim arising from SGI’s late deliveries in relation to the 5mil PO. In any event, there was no breach of Clause 1.2 for SGI to use all reasonable endeavours to ensure punctual deliveries under the 5mil PO. The orders were in fact completed ahead of schedule. This was conceded by Mrs Stoute at trial. As such, I turn next to consider the 1st PO and the 2nd PO.

Parties’ arguments in relation to the 1st PO and the 2nd PO

It is not disputed that SGI did not meet the delivery schedules set out in the 1st PO and the 2nd PO (see [29] and [46] above). SGI argues in its defence that:

More specifically, with regards the penultimate argument, by providing a monthly account of events, SGI explains that the delays were caused by issues beyond its control, including shipping-related issues caused by FSH, utility disruptions, issues relating to the supply of packaging materials, FSH’s request to prioritise the production of 5mil gloves over 3mil gloves, FSH’s request to revise the size mix per container of 3mil gloves to include a higher proportion of L and XL gloves coupled with the delay in the supply of formers (ie, moulds) required to produce L and XL gloves, and a mechanical breakdown of one of the thermal oil heaters in one of SGC’s plants.

FSH accepts that SGI’s obligation with regard to the adherence to delivery schedules under the 1st PO is qualified by Clause 1.2 of the Supply Agreement to “use all reasonable endeavours”. However, it submits that SGI did not use all reasonable endeavours to fulfil its obligations because:

More specifically, FSH alleges that SGI should have, among other things, approached alternative former suppliers, built up stockpiles of formers to ensure it was able to meet FSH’s orders, rearranged its production lines or re-allocated production capacity to other manufacturers who had adequate capacity to produce L and XL sized gloves, and/or simply asked FSH if it was prepared to adjust the size mix slightly so that more containers could be filled.

In response, after highlighting that the issue with formers is not easily surmountable, SGI submits that it took all reasonable endeavours to resolve this issue, including doing its best to push its former supplier to deliver the formers, sourcing for alternative former suppliers, and actively exploring solutions with FSH and its other customers to resolve the issue. SGI also argues that it had no obligation to source for alternative suppliers, and/or that such attempts would have been impracticable. Neither did it need to have a stockpile of formers, nor to open additional production lines. Finally, SGI argues that it prioritised FSH’s orders to the extent that was reasonable, and that FSH was in fact satisfied with SGI’s conduct.

My decision

(1) SGI’s obligations under the 1st and 2nd PO

To reiterate, FSH has accepted that the 1st PO is qualified by Clause 1.2 of the Supply Agreement. Since I have found that the 2nd PO was similarly governed by the Supply Agreement (which would include Clause 1.2), I proceed on the basis that SGI did not need to strictly adhere to the delivery schedules under both the 1st PO and the 2nd PO, but nonetheless needed to use all reasonable endeavours to adhere to them. In other words, pursuant to Clause 1.2, the issue in question is whether SGI had “use[d] all reasonable endeavours to meet all orders … in accordance with the agreed terms of delivery” in relation to both the 1st PO and the 2nd PO.

This would mean that SGI’s first broad contention – that it need not strictly adhere to the delivery schedules under the 2nd PO – has been addressed, with my finding being aligned with SGI’s position (although SGI relied on different reasons). This would also mean that SGI’s second broad contention – that the original schedules were adjusted and superseded with FSH’s agreement – is rendered somewhat moot. Regardless of whether the original schedules were superseded, SGI’s obligation under Clause 1.2 remained that of using all reasonable endeavours to punctually deliver the gloves. Put another way, even if there was any valid variation of the delivery schedules, SGI’s obligation to satisfy the deliveries punctually using all reasonable endeavours remains unchanged. The focus remains on whether the endeavours undertaken by SGI were reasonable, rather than whether the gloves were delivered punctually. With that, I turn now to consider parties’ remaining arguments.

(2) SGI’s reliance on Clause 4.4

Clause 4.4 on force majeure is set out at [15] above, and it excuses parties from “any delay or failure in performance”. Regardless of whether the reasons cited by SGI for the delays are true, they would, in themselves, be insufficient to excuse any breaches of Clause 1.2. This is because Clause 4.4 does not excuse SGI’s obligation under Clause 1.2 to use all reasonable endeavours to deliver the gloves punctually. SGI’s reliance on Clause 4.4 is thus misplaced. To be clear, this does not mean that the circumstances surrounding SGI’s performance of the agreements are irrelevant. Instead, they would already be factored into the factual matrix when the court determines if SGI used all reasonable endeavours to deliver the gloves punctually. In this regard, I make two observations regarding the arguments made by SGI in reliance of Clause 4.4.

First, while SGI has detailed a variety of reasons explaining the delays, SGI has also conceded that most of these reasons were relatively temporary, and that the main reason causing the large-scale and persistent delays was FSH’s request to change the size mix of each container, coupled with the lack of formers. For instance, as highlighted by FSH, SGI’s Mr Hew testified as follows:

This is also confirmed by Mr Long’s testimony:

More specifically, according to SGI, FSH had requested for a change in the size mix of each container in August 2020 to include more L and XL gloves (see [25] above). However, SGG’s supplier of formers, CeramTec Innovative Ceramic Engineering (M) Sdn Bhd (“CeramTec”), was affected by domestic Covid-19-related restrictions, and could not supply sufficient L and XL-sized formers to SGI. This was made known to SGI on 20 August, when CeramTec told SGI that it had “a big challenge with the labor (skilled)”. There were thus delays in the delivery of 3mil gloves.

For reasons which I will come to in the next section, even if relevant, I am unable to accept the reliance on this reason.

Second, I note that to justify the delay in 3mil gloves, SGI also points to FSH’s requests to prioritise the delivery of the 5mil gloves in exchange for some delays in the delivery of the 3mil gloves.

I accept that FSH told SGI multiple times that it could prioritise delivering the 5mil gloves over the 3mil gloves, and it could accept some delays in the delivery of 3mil gloves. However, I find that the understanding between the parties was that such delays would be on a limited scale. Certainly, SGI did not indicate that it was willing to tolerate a large-scale delay of the deliveries of the 3mil gloves. This is evident, for instance, from how, in one of his earlier emails to SGI discussing the supply and purchase of 5mil gloves, FSH’s Mr Simpson stated that FSH:

On 3 August 2021, one day before the original purchase order concerning the 5mil gloves was issued (see [31] above), SGI’s internal emails revealed that it was aware that FSH was not going to give it any purchase orders in respect of any 5mil gloves if SGI would default too heavily on its obligations under the 1st PO:

This understanding of the limitation placed on FSH’s concession was also conceded by SGI’s Mr Long during the trial:

Indeed, SGI does not appear to rely on this argument too heavily, except in relation to the delays in September 2020.

(3) Whether SGI oversold its capacity

I accept FSH’s primary case that SGI oversold its capacity. Therefore, SGI cannot be said to have used all reasonable endeavours to deliver the gloves punctually; it breached Clause 1.2.

In coming to my decision, I note that the delays in SGI’s delivery of 3mil gloves were large-scale and persistent. While this does not directly show that SGI has breached Clause 1.2, it is relevant in supporting the inference of such a breach.

In this regard, my findings are summarised in the table below, where I compare the original agreed number of deliveries to be made as set out in the 1st PO Summary Page and the 2nd PO Summary Page (see [18] and [42] above respectively), to the actual number of deliveries made each month, up till April 2021. I also set out, in italics, the anticipated numbers for the same categories after April 2021. These are based on an email sent by SGI’s Mr Yeoh to FSH on 19 April 2021 (one day before FSH sent the 20 April 2021 Email) (the “19 April 2021 Schedule”), containing SGI’s revised plan for the delivery of 3mil gloves from April 2021 to June 2021 (see [351] below).

I make three observations from the table. First, even before the 20 April 2021 Email was sent by FSH, SGI did not once hit the number of deliveries originally envisioned by the parties. In fact, it persistently fell far short.

Second, by the time the 20 April 2021 Email was sent, SGI had merely delivered 178 out of 390 of the due containers (around 46%) under the 1st PO, and 61 out of 100 of the due containers (61%) under the 2nd PO. The parties also agree that as of end-April, SGI had delivered 182 out of 390 of the due containers (around 47%) under the 1st PO, and 65 out of 100 of the due containers (65%) under the 2nd PO.

Third, even after June 2021, SGI would, if the projected deliveries in May 2021 and June 2021 were adhered to, still be short of 161 out of 390 of the due containers (around 41%) under the 1st PO, and 28 out of 140 of the due containers (20%) under the 2nd PO. Assuming that SGI’s projected deliveries in the first week of July are similar, the state of affairs would remain similar at the time when FSH sent the 6 July 2021 Email.

Given these, I find that regardless of what SGI’s obligations pertaining to the delivery schedules were, it can hardly be disputed that SGI was underperforming for the most (if not whole) period, especially after October 2020. But was that the case despite SGI having employed all reasonable endeavours to meet the original deadlines? I do not think so.

Pertinently, between June 2020 and July 2021, SGI’s production output had, in fact, curiously increased:

At trial, Mr Long initially testified that these gloves went towards fulfilling orders which were placed by SGI’s customers which came in before FSH:

However, SGI did not, despite an order for the production of, inter alia, “Correspondence and Documents … relating to the allocations of [SGI’s] stock and/or inventory of Gloves produced or supplied by the Glove Suppliers towards the two billion 3 and 5mil Gloves ordered by [FSH], for the period from June 2020 to July 2021”, produce any documentary evidence to explain how these gloves were being distributed amongst its customers.

In fact, the documentary evidence suggests that Mr Long’s initial testimony is untrue. In this regard, FSH highlights a total of 32 invoices which included orders for L and XL-sized 3mil gloves, even though these invoices were issued pursuant to purchase orders issued after SGI realised CeramTec’s inability to change the size mix of formers to include more for L and XL-sized gloves on 20 August 2020 (see [104] above). I have summarised the contents of these invoices in the table below:

For completeness, in addition to the invoices summarised above, there was one more issued pursuant to a purchase order dated July 2020, and two more which were issued pursuant to undated purchase orders.

These invoices were disclosed by SGI in support of an unrelated point, ie, to show that it would collect deposits of 50% to 100% from its customers. Indeed, there could be more invoices of a similar nature, including invoices issued pursuant to purchase orders dated up till and even after June 2021. In coming to this finding, I have drawn an adverse inference against SGI for failing to comply with the order to produce documentary evidence explaining how the gloves produced between June 2020 and July 2021 were distributed amongst its customers.

In other words, the evidence suggests that SGI continued to accept new orders (in fact, a large number of them) even after encountering issues with meeting FSH’s orders under the 1st PO and the 2nd PO, and began to divert some of its production capacity towards fulfilling some of these new orders. By doing so, SGI caused itself to become severely overcommitted. Worse still, these new orders contained orders for L and XL-sized 3mil gloves. On SGI’s apparent own case, the lack of formers for these sizes was the main reason limiting its timely deliveries under the 1st PO and the 2nd PO.

I place emphasis on the word “apparent”, because it appears that SGI’s position on this issue of fact changed over the course of proceedings. In this regard, SGI’s Mr Hew originally testified that SGI was:

However, during trial, Mr Hew seemed to suggest that it was mainly formers for the XL-sized gloves which were in shortage. Then, in its closing submissions, SGI says that it was unable to procure sufficient formers to produce L and XL-sized gloves.

That said, I do not need to comment on these inconsistencies. The fact remains that SGI accepted many more new purchase orders for 3mil gloves which included the size(s) for which it allegedly faced a shortage of formers. Applying the test in Travista (see [92] above), it can hardly be said that a prudent and determined man, acting in the interests of FSH and anxious to procure the deliveries of 3mil gloves under the 1st PO and the 2nd PO within the delivery schedules originally agreed between the parties, would have acted in the way SGI did. SGI has thus breached Clause 1.2, and such breach persisted, minimally, into July 2021.

In this regard, the additional authorities cited by FSH are also helpful. In Kea Investments Ltd v Watson and others [2020] EWHC 2599 (Ch), Nugee LJ held (at [43]) that one way a person could breach an obligation to use best endeavours is “if the person has not been genuine in his efforts to achieve the required objective”. Similarly, in Hospital Products Ltd v United States Surgical Corporation and Others [1985] LRC (Comm) 411, the High Court of Australia held (at 428) that:

By continuing to overcommit itself at the expense of severely compromising its fulfilment of the 1st PO and the 2nd PO, I find that SGI has breached Clause 1.2 of the Supply Agreement. For clarity, in coming to this decision, I am not saying that SGI is obligated to reject any new orders after accepting the 1st PO and the 2nd PO. As held in KS Energy, an obligor is allowed to consider its own interests in fulfilling a best endeavours obligation. However, the extent to which this is allowed is not without limits. At the minimum, an obligor should not, in considering its own interests, actively be taking steps which harm the interests of the obligee in respect of the obligation it is precisely expected to take all reasonable endeavours to fulfil. Here, SGI has crossed the line.

(4) The endeavours SGI undertook to resolve the delays in deliveries

Given my findings above, I need not consider whether the steps taken by SGI to resolve the delays in deliveries of 3mil gloves under the 1st PO and the 2nd PO were sufficient. Any such steps would be overshadowed by SGI’s large-scale continued acceptance of purchase orders for 3mil gloves in the face of the multiple problems it was facing in fulfilling its obligations under the 1st PO and the 2nd PO. SGI should not be allowed to actively behave in a way which compromises its obligation to use all reasonable endeavours to punctually deliver the 3mil gloves, but yet be excused from liability just because it also took some remedial steps in other aspects.

SGI’s increase in prices

The next breach which FSH alleges against SGI is SGI’s increase in the prices of gloves.

Parties’ arguments

SGI denies any breach, and argues that:

(a) it is entitled under the Supply Agreement, 1st PO, 2nd PO and/or the 5mil PO to increase the prices of the gloves, albeit for different reasons. Under Clause 2.1 of the Supply Agreement which only applied to the 1st PO, the price of gloves is “fixed for the full quantity unless there are extenuating circumstances beyond [SGI’s] control that both parties agree warrants a change”. Under the 2nd PO and 5mil PO, the stated prices are expressly subject to change in accordance with the 2nd PI and 5mil PIs;

(b) there were extenuating circumstances warranting an increase in price under Clause 2.1 of the Supply Agreement, such as the increase in price of raw materials; and

(c) FSH had agreed to each increase in price.

On the other hand, FSH argues that:

(a) pursuant to Clause 2.1 of the Supply Agreement, the price for 3mil gloves under the 1st PO was fixed;

(b) there were no extenuating circumstances warranting an increase in price; and

(c) while FSH had agreed to the price increases, this was done on the belief that there were in fact extenuating circumstances and that there would be no further delays in deliveries, which it was misled by SGI into believing. SGI had also threatened to otherwise withhold deliveries.

My decision

(1) Price increases under the 5mil PO and the 2nd PO

Since I have earlier found that there was no breach of Clause 1.2 in relation to the 5mil PO (see [93] above), there can be no corresponding breach of Clause 2.1 given the way FSH’s case is framed:

In any event, as I will now explain, SGI was entitled to increase the prices under the 2nd PO and the 5mil PO.

While I have found that the 2nd PO and the 5mil PO are governed by the Supply Agreement (see [76] and [86] above), I further find that Clause 2.1 of the Supply Agreement was overwritten by the more specific terms contained in the 2nd PI and the 5mil PIs. Specifically, these invoices contained the express term that the prices stated within them were “subject to change” (see [36] and [43] above). That the prices under the 2nd PO and the 5mil PO were indeed meant to be subject to change becomes clearer when one compares the 2nd PI and the 5mil PIs to the 1st PI, which does not contain a similar provision.

In this connection, the present case is analogous to Sintalow (see [84] above), where the Court of Appeal held that certain general terms in the Master Contract were overwritten by more specific provisions in the agreements which were subsequently concluded (Sintalow at [119(d)]).

Thus, SGI was entitled to increase the prices under the 2nd PO and the 5mil PO, which were not fixed. Indeed, in FSH’s submissions on this issue, it has only argued that “[t]he price for all orders under the 1st PO was fixed”, but not that the position was the same for orders under the 2nd PO or the 5mil PO. For completeness, I note that FSH also advances a related argument that increasing the price of gloves which were delivered late would, in and of itself, constitute a breach. I do not agree. In the 2nd PI and the 5mil PIs, it is stated that “the final price will be notified to the buyer prior to the confirmed date of delivery” (see [36] and [43] above). This allowed SGI to change the price, even when a particular delivery is delayed, until the confirmed date of delivery, when the final price would be notified to the buyer. I therefore find that SGI was entitled to increase the prices under the 2nd PO and 5mil PO even for orders that should have been delivered earlier.

(2) Price increases under the 1st PO

On the other hand, under the 1st PO, any price increase would be contractually allowed under Clause 2.1 of the Supply Agreement only if: (a) there were extenuating circumstances beyond SGI’s control; and (b) the parties agreed to it. I now consider if Clause 2.1 was engaged.

Essentially, SGI argues that the extenuating circumstances beyond its control were the significant increases in the price of raw materials. I disagree for two reasons.

First, I agree with FSH that before the Supply Agreement was concluded, the parties had considered any potential increases in the price of raw materials during the duration of the 1st PO from June 2020 to December 2020, and SGI made a commercial decision to bear this risk. In a letter to FSH’s Mr Simpson dated 9 June 2020, SGI’s Ms Hew stated that:

While there might not be anything inherently wrong with such an arrangement in a general commercial context, it puts into question here whether the increases in prices were in fact due to extenuating circumstances which would avail SGI of Clause 2.1.

This same observation applies to the subsequent price increases. SGI’s Mr Faizi testified that the price of latex “increased significantly” from June 2020, peaking at US$2.7900 per kg from February 2021 to April 2021, as follows:

At this juncture, I note that SGI argues that its price increases were reasonable, and consistent with industry practice during the material time. This misses the point. What Clause 2.1 requires before parties can agree to a change in price is the presence of extenuating circumstances beyond SGI’s control, and not that any proposed increase in prices must be reasonable.

Before leaving this point, I also find, for completeness, that SGI should not be allowed to rely on any price increases in raw materials after December 2020 to justify its increases in the prices of 3mil gloves. This is because the 3mil gloves under the 1st PO should have been delivered by the end of December 2020, and the price increases were a result of delays occasioned by SGI. As I found that the delays were the result of SGI overselling its capacity, which is a situation eminently within SGI’s control (see [111]–[129]) above), the price increases after December 2020 could not have been effected pursuant to extenuating circumstances beyond SGI’s control.

Given my finding that there were no extenuating circumstances which would have triggered the operation of Clause 2.1, it is unnecessary for me to decide if FSH had agreed to any consequent price increases. Any agreement to increase the price of 3mil gloves pursuant to Clause 2.1 would have been based on an impermissible premise, given that, pursuant to the phrasing of Clause 2.1, an agreement must be premised on an extenuating circumstance. Hence, I find that SGI breached Clause 2.1 of the Supply Agreement by increasing the price of 3mil gloves delivered under the 1st PO.

Whether SGI produced the EN455 certificates within reasonable time

The last breach allegedly committed by SGI is in failing to produce the EN455 certificates in relation to certain 3mil and 5mil gloves within reasonable time upon FSH’s request. FSH’s request was made on 19 March 2021, and the certificates were provided by SGI on 1 June 2021.

Parties’ arguments

FSH argues that:

On the other hand, SGI argues that:

The applicable law

In Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal [2013] 4 SLR 193 (“Sembcorp Marine”), the Court of Appeal set out the three-stage process through which the implication of terms in fact should be considered:

More specifically, under the first step of the framework, a “true” gap would only arise if parties did not contemplate the issue at all and so left a gap. There would be no gap if parties contemplated the issue but chose not to provide a term for it because they mistakenly thought that the express terms of the contract had adequately addressed it, or if parties contemplated the issue but chose not to provide any term for it because they could not agree on a solution (Sembcorp Marine at [93]–[97]).

My decision

Applying the framework in Sembcorp Marine, I find that there cannot be any implied term in the Supply Agreement, because there is no “true” gap. Clause 3.2 already provides that SGI is obligated to provide EN455 certificates upon FSH’s request. While there is no specific timeline stipulated, this was probably the case because parties had mistakenly thought that the express terms of Clause 3.2 had adequately addressed this issue. As such, the proper remedy in this situation should be an equitable rectification of the Supply Agreement (Sembcorp Marine at [94(b)] and [96]).

In this regard, I find that the actual intention of parties was to impose on SGI an obligation to supply any EN455 certificates requested for by FSH within a reasonable time, which should be within a few days of FSH’s request. Clause 3.2 of the Supply Agreement should thus be so rectified. This must be the case as a matter of common and commercial sense. Otherwise, Clause 3.2 would be rendered useless.

This also appears to have been conceded by SGI’s Mr Long at trial:

While the remedy of equitable rectification is not pleaded by either party, given how this issue has been ventilated at trial, I see no prejudice to SGI in relying on this doctrine. I find that SGI breached its obligations under the rectified Clause 3.2 in relation to all the agreements by taking more than two months to provide the EN455 certificates upon FSH’s request.

I add that the EN455 certificates were not, objectively speaking, particularly difficult to obtain, since they had been prepared sometime between 2012 and 2013, prior to FSH’s request. The certificates already existed. While SGI has explained that the delay was caused due to a high workload and internal miscommunications, such internal issues do not excuse SGI’s obligations under the rectified Clause 3.2. To hold otherwise would mean that parties can be excused from fulfilling their contractual obligations when they have internal operational issues. That cannot be right.

Issue 2: whether SGI’s breaches were repudiatory in nature

By the above, I have found that SGI committed three breaches:

(a) breach of Clause 1.2 of the Supply Agreement to use all reasonable endeavours to ensure punctual deliveries of gloves in relation to the 1st PO and the 2nd PO;

(b) breach of Clause 2.1 of the Supply Agreement for increasing the price of 3mil gloves between October 2020 and April 2021 in relation to the 1st PO; and

(c) breach of Clause 3.2 of the Supply Agreement for failing to produce the EN455 certificates in respect of gloves to be delivered under the 1st PO, the 2nd PO and the 5mil PO within a reasonable time upon FSH’s request.

The next question is whether these breaches are repudiatory, in the sense that they would have entitled FSH to terminate the agreements. In this regard, I observe that only the 1st PO and 2nd PO were purportedly terminated by FSH (see [47] and [55] above). Thus, the focus will only be on SGI’s breaches in relation to these two contracts.

The applicable law

In RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal [2007] 4 SLR(R) 413 (“RDC Concrete”), the Court of Appeal set out the four situations entitling an innocent party to terminate a contract (at [113]):

(a) In a “Situation 1” case, the contractual term breached clearly states that, in the event of certain event or events occurring, the innocent party is entitled to terminate the contract.

(b) In a “Situation 2” case, the defaulting party renounces the contract by clearly conveying to the innocent party that it will not perform its contractual obligations at all.

(c) In a “Situation 3A” case, the defaulting party has breached a condition (as opposed to a mere warranty) of the contract. A “condition” is a term that parties intended, at the time of contracting, to be so important that any breach, regardless of the actual consequences of such a breach, would entitle the innocent party to terminate the contract (RDC Concrete at [97] and [100]). A “warranty” is a term that parties intended, at the time of contracting, to be not so important so that no breach will ever entitle the innocent party to terminate the contract (even if the actual consequences of such a breach are extremely serious) (RDC Concrete at [98] and [100]).

(d) In a “Situation 3B” case, which should only be applied after the condition-warranty approach in Situation 3A is applied, the defaulting party has committed a breach, the consequences of which will deprive the innocent party of substantially the whole benefit which it was intended that the innocent party should obtain from the contract.

Since parties are not relying on Situation 1, I will move on to analyse whether a Situation 2 scenario is made out.

Situation 2

Parties’ arguments

FSH’s case is that SGI’s conduct by early to mid-April 2021 was a renunciation of the Supply Agreement, the 1st PO and the 2nd PO. By not using all reasonable endeavours to meet the agreed delivery schedules, SGI demonstrated an intention to continue delivering the remaining orders under the 1st PO and the 2nd PO in a way that was radically different from what was agreed.

FSH then argues that if a defaulting party evinces an intention to perform a contract, “but the performance proffered is substantially inconsistent with that party’s obligations” under the contract (which I will refer to as committing a “substantial breach”), this amounts to evincing an intention not to perform, ie, a renunciation (Chitty on Contracts (Hugh G Beale gen ed) (Sweet & Maxwell, 34th Ed, 2023) at paras 28-048; RDC Concrete at [93] and [95]–[96], Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd [2014] 3 SLR 857 (“Alliance Concrete”) at [59]; Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2017] 4 All ER 124 at [77] and [87]).

On the other hand, SGI denies any renunciation of the contracts, arguing that it tried its best to work with FSH for the delivery of the gloves. Relying on Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd [2013] 4 SLR 409 (“Aero-Gate”) and Government of the City of Bueno Aires v HN Singapore Pte Ltd and another [2023] SGHC 139 (“Bueno Aires”), SGI argues that the delays did not mean that SGI had renounced the contracts. In fact, it remained ready to perform its contractual obligations at all times.

My decision

I accept SGI’s submission that it did not renounce the Supply Agreement, the 1st PO or the 2nd PO. While SGI had breached its obligation to use reasonable endeavours to ensure the punctual delivery of gloves in accordance with the agreed schedules, the evidence suggests that it continued to be committed to completing the deliveries, albeit at its own pace.

This can be gleaned from the emails which SGI sent FSH in early to mid-April 2021 (when SGI’s conduct had allegedly evinced an intention to renounce the contracts). For instance, on 19 April 2021 (one day before FSH sent the 20 April 2021 Email), SGI’s Mr Yeoh sent FSH the 19 April 2021 Schedule. Such conduct is inconsistent with that of a party seeking to renounce a contract.

In this connection, I agree with SGI that analogies can be drawn to Aero-Gate and Bueno Aires. In Aero-Gate, the plaintiff engaged the defendant to fabricate and deliver ten diesel generators under two purchase orders (Aero-Gate at [8]). Under the first purchase order, the defendant had to deliver four generators by, initially, 1 October 2011, and then subsequently after an extension of time was granted, end-January 2012 (Aero-Gate at [5] and [7]). Under the second purchase order, the defendant had to deliver six generators: four by 1 November 2011, and two more by 1 January 2012 (Aero-Gate at [6]). The defendant was later granted two extensions for the generators due under the second purchase order – first, to deliver two generators by 14 November 2011 and the remaining four by 1 January 2012; and subsequently, to deliver the first two generators by 21 November 2011 (Aero-Gate at [17]–[18]).

The defendant failed to meet its delivery deadlines under the second purchase order but continued work thereafter. It eventually delivered two generators pursuant to the second purchase order on 16 January 2012 (Aero-Gate at [19]). On 24 April 2012, the plaintiff terminated both purchase orders. At that time, the defendant was working on two more generators and had procured a further two generators to be worked on pursuant to the second purchase order (Aero-Gate at [20]). It had not started work on the first purchase order.

In finding that the defendant had not renounced the second purchase order, the High Court explained that:

In Bueno Aires, the plaintiff engaged the first defendant, HN Singapore, to import and supply 182,475 Covid-19 test kits by 26 April 2020 (Bueno Aires at [15]). HN Singapore failed to do so (Bueno Aires at [17]). Following that, between 27 April 2020 and 16 May 2020, the plaintiff repeatedly sought confirmation of the delivery date of the test kits. HN Singapore was unable to do so. However, its sole director and shareholder Mr Eng, the second defendant, stated that the defendants maintained the utmost dedication to seeing the deal through (Bueno Aires at [23]). HN Singapore was subsequently unable to import the test kits, and the plaintiff terminated the agreement on 27 May 2020 (Bueno Aires at [25]).

The High Court held that although HN Singapore had failed to deliver the test kits by 26 April 2020, this did not constitute a renunciation of the contract, because it did not evince an intention to no longer be bound by the contract:

Similarly, in the present case, while SGI repeatedly failed to meet the delivery timelines, its communications with FSH suggest that it remained committed to seeing the deal through (albeit at its own pace). A reasonable person would not conclude that SGI no longer intended to be bound at all by the provisions of the Supply Agreement, the 1st PO and the 2nd PO.

As for FSH’s proposition that a substantial breach amounts to renunciation under Situation 2, I am unable to agree that it is supported by the local authorities. To begin with, this proposition is not consistent with the test for renunciation under Situation 2: whether the defaulting party conveys an intention that “it will not perform its contractual obligations at all” [emphasis in italics in original; emphasis added in bold italics] (RDC Concrete at [93]; Alliance Concrete at [155]).

Indeed, in RDC Concrete, the Court of Appeal expressed a tentative preference of leaving the analysis pertaining to any substantial breaches to the next stage, under Situations 3A and 3B:

I acknowledge that in Alliance Concrete, the Court of Appeal seemed to suggest that a substantial breach could amount to a renunciation under Situation 2:

However, the emphasis of the court in both Alliance Concrete and San International Pte Ltd (formerly known as San Ho Huat Construction Pte Ltd) v Keppel Engineering Pte Ltd [1998] 3 SLR(R) 447 (“San International”) was on the italicised portion, viz, whether the action or actions of the party in default are such as to lead a reasonable person to conclude that he no longer intends to be bound by its provisions, and not on the portion in bold, which is what would have supported FSH’s contention.

Indeed, in Alliance Concrete, the Court of Appeal proceeded on the basis that the test for renunciation was whether the appellant had evinced a clear intention to breach the contracts, and not on whether there had been a substantial breach:

Similarly, in San International, the Court of Appeal framed the issue as follows:

In Bueno Aires, the High Court also applied the test in San International in a similar way (see [175] above). Therefore, I find that FSH’s proposition that a substantial breach amounts to renunciation under Situation 2 is not supported by local authorities. SGI did not commit a Situation 2 breach.

Situation 3A

FSH appears to have relied on a Situation 3A breach as an alternative argument only with regard to the 2nd PO in the event that it is not governed by the Supply Agreement. In other words, FSH seems to accept that if the Supply Agreement governed the 1st PO and the 2nd PO, then the delivery schedules originally agreed between parties would not constitute conditions which would entitle it to terminate the agreements upon any breach by SGI.

Similarly, SGI’s position is that the delivery schedules in the Supply Agreement, the 1st PO, and the 2nd PO were not conditions.

Since I have found that the Supply Agreement governed the 1st PO and the 2nd PO, and, correspondingly, that the delivery schedules originally agreed between parties were qualified by the obligation in Clause 1.2 to use all reasonable endeavours (see [99] above), the parties’ arguments in respect of a Situation 3A scenario are rendered moot. I thus make no further comments, except to note that FSH did not argue that Clause 1.2 of the Supply Agreement was itself a condition under Situation 3A.

Situation 3B

In considering whether SGI’s conduct constituted a Situation 3B breach, the court should proceed in two steps. First, identify the exact benefit that parties intended the innocent party to derive from the contract. Second, examine the actual consequences of the defaulting party’s breach that occurred at the time when the innocent party terminated the contract, to ascertain if the latter was indeed deprived of substantially the whole benefit of the contract (Bueno Aires at [90], citing Sports Connection Pte Ltd v Deuter Sports GmbH [2009] 3 SLR(R) 883 at [62]).

Parties’ arguments

While FSH has pleaded three breaches committed by SGI, for which I have largely found in favour of FSH (see [162] above), it appears to only rely on SGI’s breaches of Clause 1.2 and Clause 3.2 to argue that these two breaches collectively constitute a Situation 3B breach:

Specifically, FSH argues that the “entire commercial purpose” of the Supply Agreement, the 1st PO and the 2nd PO was for FSH to receive regular monthly deliveries of gloves within definite timeframes:

This would allow FSH to capture the wave of heightened market demand and prices during the pandemic, and to build a customer base in the second half of 2020 and first half of 2021.

FSH further argues that SGI’s breaches deprived FSH of substantially the whole benefit of the contracts, destroying the commercial benefit originally contemplated: to on-sell gloves to meet a specific commercial need under specific timeframes. By early April 2021, the prices in the glove market started to decrease rapidly. Yet, 53% of the orders under the 1st PO remained undelivered four months after they were due, and only 65% of the orders under the 2nd PO due by April 2020 had been delivered, with no fixed end point in sight. FSH could not continue taking deliveries without making significant losses. Moreover, FSH argues that SGI’s late deliveries were also exacerbated by SGI’s inconsistent and erratic delivery schedules, which hindered FSH from pre-selling or managing market risks.

SGI rejects these arguments. Its position is that the benefit intended by the parties under the agreements was for FSH to receive delivery of the gloves, in accordance with the agreed terms of delivery (including any updated purchase orders). As of the date of FSH’s purported termination of the agreements on 20 April 2021, FSH received, inter alia:

FSH therefore cannot be said to have been deprived of substantially the whole benefit of the contracts.

SGI further argues, citing English and local authorities, that it is “intrinsically difficult” for the innocent party to establish a Situation 3 breach if the defaulting party is making an effort to perform the contract: Astea (UK) Ltd v Time Group Ltd [2003] All ER (D) 212 (“Astea”) at [151]; Tractors Singapore Pte Ltd v Pacific Ocean Engineering & Trading Pte Ltd [2021] 4 SLR 44 (“Tractors Singapore”).

SGI also argues that FSH’s conduct at and after the time it purported to terminate the contract is relevant. However, I consider this argument to be more appropriately dealt with below under the issue of waiver. In any case, the authority cited by SGI in support of this argument, Valilas v Januzaj [2015] 1 All ER (Comm) 1047 (at [66]), is one where the common understanding of parties from the outset was that time was not of the essence (at [29]). As I will soon explain, the situation in the present case is quite different.

Finally, in respect of SGI’s breach of Clause 3.2 to provide the EN455 certificates within reasonable time, SGI submits that this breach did not deprive FSH of substantially the whole benefit of the contracts at the time when FSH terminated the contracts. As of 20 April 2021 (when FSH sent the 20 April 2021 Email), the consequences of any breach by SGI would have been minimal at best. As of 6 July 2021 (when FSH sent the 6 July 2021 Email), the certificates had already been provided. FSH’s right to elect to accept any repudiation by SGI in this regard would have ended.

My decision

As will be explained below (at [284]−[290]), I find that FSH terminated the Supply Agreement, the 1st PO and the 2nd PO only on 6 July 2021 via the 6 July 2021 Email.

For present purposes, the implication of this is that FSH cannot rely on SGI’s breach of Clause 3.2 to supply the EN455 certificates to terminate the contracts. The certificates were duly supplied on 1 June 2021 (see [53] above). Under such circumstances, I accept SGI’s submission that any right which FSH had to terminate the contracts pursuant to this breach would have ended before 6 July 2021: see Stocznia Gdanska SA v Latvian Shipping Co and others (No. 3) [2002] EWCA Civ 889 at [87], which has also been cited with approval locally in Singapore Airlines Ltd v CSDS Aircraft Sales & Leasing Inc [2021] 5 SLR 26 (at [81]).

I turn now to consider if SGI’s breach of Clause 1.2 constituted a Situation 3B breach.

(1) The benefit intended for FSH

I accept FSH’s characterisation of the benefit which parties intended for FSH to gain under the Supply Agreement, the 1st PO and the 2nd PO (see [189] above). This is evident from the parties’ negotiations surrounding the entry into the Supply Agreement.

In FSH’s first enquiry email to SGI, FSH’s Mr Simpson stated that

He also stated that FSH had “a large amount of money available to buy product immediately”. In other words, from the outset, FSH had already emphasised the urgency of its prospective order for 3mil gloves.

When SGI’s Ms Marini first told FSH’s Mr Simpson on 28 May 2020 that SGI’s production capacity for 3mil gloves was fully booked until March 2021, Mr Simpson’s reply again made it clear that FSH was trying to ride on the booming market demand for gloves at that time:

FSH’s other emails to SGI also made this same message clear. On 2 June 2020, Mr Simpson stated in his email to SGI that the UK Government had put in an official request for 500 million gloves in June 2020, 500 million gloves in July 2020, and at least 200 million gloves per month in subsequent months. He then stated that FSH:

Clearly, FSH was communicating the urgency of its prospective order to SGI. This was again clear from Mr Simpson’s later email the same day, when he even offered to pay a premium to gain SGI’s orders urgently:

On 6 June, which was a Saturday, Mr Simpson wrote to SGI again to effectively chase for an update on SGI’s proposed payment terms:

On 8 June, SGI’s Ms Marini replied to confirm that SGI agreed to FSH’s proposed six-month timeline, to which Mr Simpson again emphasised that he “look[ed] forward to getting everything sorted and getting those P.O.’s over to [SGI] ASAP to get things rolling”.

It is against the above context that the Supply Agreement was concluded on 11 June. And the 1st PO was subsequently concluded pursuant to the Supply Agreement. As I have earlier found, the parties also had in mind the Supply Agreement subsequently when concluding the 2nd PO.

In fact, by then, it would have become even more obvious to SGI that the 2nd PO was time sensitive. On 5 November 2020, pursuant to discussions on the 2nd PO, Mr Simpson stated that:

In her reply, SGI’s Ms Marini acknowledged FSH’s urgency, stating that SGI “understand[s] the urgency of this matter”.

Given all of the above, I find that throughout their contractual relationship, FSH and SGI had always understood the urgency of the Supply Agreement, the 1st PO and the 2nd PO. Thus, it was the parties’ intention that FSH was to receive the gloves punctually.

At this juncture, I pause to note that SGI points to the terms in the actual Supply Agreement, the 1st PO and the 2nd PO, to argue that the words used in these agreements suggest that there was no absolute obligation to adhere to the delivery schedules set out therein. As held above, I agree that any obligation to adhere to the delivery schedules originally set out under the 1st PO and the 2nd PO is qualified by Clause 1.2, ie, the obligation to use all reasonable endeavours. However, this does not detract from the fact that the parties well understood that the agreements were time sensitive. It is with this understanding that SGI was obligated to use all reasonable endeavours to deliver the gloves punctually under Clause 1.2.

What then about SGI’s argument that the parties understood that SGI would be constrained, inter alia, by the challenges and uncertainties brought about by the pandemic? Again, while I can accept this argument, it does not negate my finding that the parties also understood that SGI was obligated to use all reasonable endeavours to deliver the gloves under Clause 1.2 under the time-sensitive 1st PO and 2nd PO.

In this regard, my finding is fortified by the fact that Mr Long knew of FSH’s urgency with the Supply Agreement, the 1st PO and the 2nd PO, given the context in which they were concluded. For example, Mr Long admitted to this in relation to the 1st PO:

Similarly, in relation to the 2nd PO, Mr Long stated the following:

Given the above, it cannot be the case that the benefit which the parties had intended for FSH to gain under the Supply Agreement, the 1st PO and the 2nd PO was simply the delivery of a certain quantity of gloves in accordance with timelines which the parties will, without reservation, continually revise and agree upon along the way. Instead, regard must be had to the time-sensitive nature of the contracts, which were concluded for FSH to commercially exploit the simultaneous surge in demand and limitation in supply of gloves during the height of the pandemic. Hence, I accept FSH’s characterisation of the intended benefit for it (see [189] above).

(2) Whether FSH was deprived of substantially the whole benefit of the agreements when it terminated them

I find that FSH was deprived of substantially the whole benefit of the Supply Agreement, the 1st PO and the 2nd PO. As explained above (at [113]–[117]), as at the date of termination on 6 July 2021 (see [290] below), FSH had practically not received any 3mil gloves in accordance with the delivery schedules originally contemplated under the 1st PO and the 2nd PO.

To reiterate, under the 1st PO, only 140 out of 390 containers (around 35.9%) were delivered by December 2020, when the orders under the 1st PO were originally envisioned by the parties to be fulfilled by. In no month did FSH receive the quantity of gloves originally intended by the parties for it to receive. Even by end-June 2021, there would, even assuming the projected May 2021 and June 2021 schedules presented under the 19 April 2021 Schedule were adhered to (see [351] below), still have been around 161 out of 390 containers (around 41%) undelivered. By this time, SGI would have taken twice as long as originally intended to fulfil the orders.

Given SGI’s track record, it is also unlikely that this number would change significantly by 6 July 2021. Even if SGI might, as it had projected itself of being able to do in the last two weeks of June 2021, delivered seven more containers in the first week of July, there would still be around 39.5% of orders which would have remained unfulfilled.

Similarly, under the 2nd PO, SGI fell short in its scheduled delivery in each month. Assuming the projected May 2021 and June 2021 schedules presented under the 19 April 2021 Schedule (see [351] below) were adhered to, there would still be around 28 out of 140 of orders (20%) unfulfilled by end-June 2021 (which was the original end date for the 2nd PO). Even if SGI delivered another seven containers in the first week of July (as it projected itself of being able to do in the last two weeks of June) , there would still have been 15% of orders left unfulfilled.

The contemporaneous evidence also suggests that by around April 2021, FSH lost the commercial benefit which parties had envisioned for FSH to gain from the time-sensitive agreements, ie, the capitalisation on the glove shortage and demand surge at the height of the pandemic for profits. By that time, the market price for gloves was decreasing sharply.

I hence find that SGI’s breach of Clause 1.2, which continued into July 2021 (see [127] above) resulted in consequences which deprived FSH of substantially the whole benefit which it was intended that FSH should obtain from the contracts. This was a Situation 3B breach, which would have entitled FSH to terminate the Supply Agreement, the 1st PO and the 2nd PO via the 6 July 2021 Email.

Before leaving this issue, I address SGI’s contention that it is “intrinsically difficult” for an aggrieved party to establish a Situation 3 breach if the defaulting party is making an effort to perform the contract.

In Astea, the Technology and Construction Court of England and Wales held (at [151]) that:

While the italicised portion of the quote seems to support SGI’s contention at first glance, on closer analysis, it is not entirely helpful. As observed in Aero-Gate:

Here, the benefit contemplated by parties that FSH would gain was not simply to have gloves delivered to it. Rather, the benefit was time-sensitive in nature. Given this, the broad proposition expounded in Astea is of limited assistance. Similarly, Tractors Singapore does not assist SGI. There, the High Court was considering a situation where time was not of the essence. Where time is not of the essence and where the party said to be in breach by delay is nevertheless making an effort to perform the contract, the High Court stated that “it will be intrinsically difficult for the aggrieved party to establish a Situation 3(b) breach if the party in breach is making an effort to perform the contract” [emphasis in original] (Tractors Singapore at [133], citing Shawton Engineering Ltd v DGP International Ltd [2006] BLR 1). Again, in contrast, the contracts here are time sensitive ones. And based on the fact-sensitive inquiry undertaken above, I find that a Situation 3B breach of the agreements occurred.

Issue 3: whether FSH waived its rights consequent to SGI’s repudiatory breaches

Having found that SGI breached Clause 1.2 (which breach was also repudiatory), as well as Clause 2.1 and Clause 3.2, the next issue which arises is whether FSH then waived its rights consequent to these breaches.

The applicable law

There are two forms of waiver: waiver by election and waiver by estoppel. As explained by the Court of Appeal in Audi Construction Pte Ltd v Kian Hiap Construction Pte Ltd [2018] 1 SLR 317 (“Audi Construction”):

In other words, to establish waiver by election, the defaulting party needs to establish three elements (see also Aero-Gate at [42]):

(a) the innocent party must have acted in a manner consistent only with affirming the contract, ie, treating the contract as still alive;

(b) the innocent party must have communicated his election, ie, his choice to affirm the contract, to the party in breach in clear and unequivocal terms; and

(c) there must be sufficient knowledge on the part of the innocent party; it must minimally be aware of the facts giving rise to its right to terminate the contract, but it remains unclear if it needs to also be aware of the right to terminate itself.

On the other hand, to establish election by estoppel, the defaulting party needs to establish the following two elements (Audi Construction at [64] and Aero-Gate at [37]–[38]):

It is well-established that mere silence or inaction will not normally amount to an unequivocal representation. However, silence might amount to such a representation if there is a duty to speak (Audi Construction at [58]).

It should also be noted that when a party commits a repudiatory breach of a contract, the innocent party has at least two rights: the right to terminate the contract and the right to claim damages arising from the breach. A waiver of one right does not translate into a waiver of the other (see Aero-Gate at [120]–[121]).

SGI’s repudiatory breach of Clause 1.2

As I have found at [220] above, SGI committed a Situation 3B repudiatory breach of Clause 1.2 in respect of the Supply Agreement, the 1st PO and the 2nd PO. Based on these breaches, FSH would have accrued the right to terminate these agreements and the right to claim damages arising from the breaches.

Parties’ arguments

SGI argues that FSH waived all its rights consequent to its breach of Clause 1.2, whether it was by election or by estoppel. SGI explains that the original delivery schedules were adjusted and superseded with FSH’s agreement, to accommodate FSH’s various requests.

Moreover, SGI argues that between June 2020 to April 2021, FSH did not once disagree with the revised schedules issued by SGI, but accepted them following regular discussion between parties. FSH also did not, prior to the commencement of proceedings, once allege that SGI did not comply with the original delivery schedules in the Supply Agreement, the 1st PO and the 2nd PO. By its conduct between June 2020 to April 2021, FSH waived all its rights.

Finally, SGI highlights that FSH, in their contemporaneous emails to SGI, did not rely on the delay in deliveries as a ground for termination.

On the other hand, FSH submits that there was no waiver because it did not have full knowledge of the facts, and was misled by SGI as to the reason for the delays. Moreover, there was no waiver because the elements were not made out on the facts. In any event, FSH’s conduct was, at best, a temporary waiver while it was assessing the consequences of SGI’s breach, conditional upon SGI exercising all reasonable endeavours to catch up within a reasonable time.

In addition to the above, FSH also relies on Clause 4.6 of the Supply Agreement on “waiver” (and Clause 4.5 on “variation”), the applicability of which SGI disputes.

My decision

It is important to remember from the outset that SGI’s breach was not in failing to adhere strictly to the original delivery schedules under the 1st PO and the 2nd PO. Rather, it was in failing to use all reasonable endeavours to do the same. This breach was a continuing one. With this in mind, I find that FSH did not waive any of its rights arising from SGI’s repudiatory breaches of Clause 1.2 by election or estoppel. This is so for the following reasons.

(1) FSH did not have the requisite knowledge to waive its rights

First, FSH did not have the requisite knowledge to waive its rights. As held at [129] above, throughout the duration when the 1st PO and the 2nd PO were supposed to have been performed, SGI continued to take on a large number of new orders, thus overcommitting itself severely. This was something SGI did not tell FSH, and which FSH only discovered by chance subsequently (see [123] above).

Indeed, an internal email from SGI’s Mr Yeoh suggests that SGI had not been completely forthcoming with FSH with regard to the reason for SGI’s delays:

Without the requisite knowledge of SGI’s breach in failing to use all reasonable endeavours to punctually deliver the gloves (ie, the fact giving rise to FSH’s right to terminate the agreements), FSH could not have made any election to affirm the agreements.

Similarly, without such knowledge, there could have been no waiver by estoppel. This is because SGI, being the party with knowledge of the fact that it was overcommitting itself, could not seriously have placed any detrimental reliance on any of FSH’s representations.

In this regard, this case is analogous to Lim Ah Mee and Another v Summerview Developement Pte Ltd (formerly known as Raymond Yong & Associates Pte Ltd) and Another [1998] SGHC 87 (“Lim Ah Mee”). There, the plaintiffs executed an option to purchase a property in favour of the first defendant, Summerview (Lim Ah Mee at [7]). The option was however not validly accepted by Summerview in time (Lim Ah Mee at [74]).

Summerview seemingly argued that while this was the case, the plaintiffs were nevertheless estopped from contending that the option lapsed because Summerview had made various payments pursuant to the option and the plaintiffs knew that those payments were made (Lim Ah Mee at [90]). However, the High Court rejected this argument, explaining as follows:

In other words, there was no estoppel by the innocent party because unlike the defaulting party Summerview, which had full knowledge of its wrongdoing, the innocent plaintiffs did not. Summerview thus could not have detrimentally relied on any representations or conduct by the plaintiffs.

Similarly, in the present case, SGI, with full knowledge that it had continued to overcommit itself, could not have detrimentally relied on any representations by FSH (which had no knowledge of the same) in relation to any of SGI’s breaches of Clause 1.2. Instead, SGI merely continued to produce the gloves under the 1st PO and the 2nd PO in pursuit of its self-interest. It hoped that it could continue to keep all its profits under these agreements, while not needing to adhere to Clause 1.2 of the Supply Agreement. There can be no waiver by estoppel.

(2) FSH’s conduct does not suggest waiver

SGI cites several pieces of correspondence to suggest that FSH has “waived all its rights in respect of the delays in deliveries”. This argument is both misplaced and unsustainable.

Insofar as the argument is that FSH has waived its right to insist on strict adherence to the delivery schedules (which appears to be the case), it is misplaced, because SGI’s obligation was not to ensure strict adherence to the delivery schedules. Again, I emphasise that SGI’s obligation was to use all reasonable endeavours to ensure punctual delivery of the gloves.

SGI’s argument is also unsustainable because the pieces of correspondence cited do not suggest that FSH waived its rights arising from SGI’s breaches of this obligation. I deal with some of these.

On 21 June 2020, FSH’s Mr Simpson sent an email to SGI’s Ms Marini, stating that:

I find that there was no waiver in this email. In fact, Mr Simpson was expecting an approximate date of delivery from SGI for the first batch of deliveries since SGI had resolved its issues. If anything, this suggests that FSH was expecting SGI to use all reasonable endeavours to make the deliveries as soon as it could in light of SGI’s resolution of its internal issues.

On 1 July 2020, in response to Ms Marini’s update on the expected delivery schedule for July 2020, Mr Simpson sent an email to Ms Marini saying “Many Thanks for the below updates ‐ great news on the delivery schedule”. Again, this email does not suggest any waiver. Instead, I find that it is merely an expression of relief that deliveries were finally going to begin after no deliveries were made in June.

This becomes further evident from how Ms Marini’s update email was sent in response to Ms Stoute’s email highlighting the urgency of the situation:

On 19 September 2020, FSH’s Ms Zheng sent an email to SGI’s Mr Yeoh asking SGI to “[p]lease continue [SGI’s] delivery according to production plan”. At trial, Ms Zheng explained that she was “telling Smart Glove to please stick to their delivery schedule that they had just provided to [FSH]”.

Again, this does not suggest any waiver of SGI’s breach of Clause 1.2. Instead, Ms Zheng was asking SGI to use all reasonable endeavours to adhere to the revised delivery schedule provided by SGI, which FSH thought SGI had come up with in the exercise of its best endeavours to adhere to the original delivery schedule as originally contemplated under the 1st PO.

On 14 September 2020, SGI’s Mr Yeoh sent FSH a revised shipment schedule, under which the number of gloves to be shipped in September would be decreased. In response, FSH’s Ms Yoong replied to confirm that FSH:

Again, I am unable to see how this email would have constituted a waiver of SGI’s breach of Clause 1.2. If anything, FSH was again re-emphasising that SGI needed to fulfil its obligations under Clause 1.2.

On 1 April 2021, SGI’s Mr Yeoh sent FSH the revised delivery schedule for April 2021 to June 2021 (the “1 April 2021 Schedule”). In response, FSH’s Ms Yoong stated:

While FSH appears to have accepted the revised schedule, ie, not insist on strict adherence to the original delivery schedules contemplated, there was again no indication that FSH suggested to SGI that it no longer needed to use all reasonable endeavours to adhere to the revised schedule, which FSH also believed was revised with the aim of fulfilling all the orders under the 1st PO and the 2nd PO as soon as possible.

Apart from those set out above, SGI also cites many more pieces of correspondence between SGI and FSH where FSH seemingly accepted the revised delivery schedules provided by SGI. SGI also cites several instances when Mrs Stoute, amongst other officers of FSH, had suggested during cross-examination that they accepted SGI’s revised schedules.

Regardless of whether FSH actually accepted the revised schedules, or treated the original delivery schedules as superseded, the fact remains that in none of these pieces of correspondence or evidence does FSH suggest, even remotely, that it is waiving any right to SGI’s breach of Clause 1.2, or that SGI no longer needed to continue using all reasonable endeavours in delivering the gloves in accordance with the original delivery schedules.

In fact, the evidence demonstrates that FSH was constantly emphasising the urgency of the deliveries. FSH also made its displeasure with the delays known to SGI (see, eg, [239] above). Any concessions by FSH were made on the basis that SGI was doing its best to catch up with the original delivery schedules, in accordance with Clause 1.2.

(3) FSH’s non-reliance on SGI’s delays as a ground for termination

I accept that FSH did not appear, at any point in time, to have relied on SGI’s delays in delivering the gloves, or on its breach of Clause 1.2 of the Supply Agreement, to terminate the Supply Agreement, the 1st PO and the 2nd PO. Such a ground was not raised in the 20 April 2021 Email or the 6 July 2021 Email. Neither was it raised in a letter of demand sent by FSH’s Malaysian lawyers to SGI and GX. The question is whether FSH would be precluded from relying on the breach of Clause 1.2 as a ground for termination. I do not think so.

In Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd [2009] 4 SLR(R) 602 (“Comfort Resources”), the Court of Appeal endorsed the well-established principle that:

This right is subject to two qualifications:

(a) First, a party who initially gives one ground for his refusal to perform may, by his conduct, be precluded from setting up a different ground later where it would be unfair or unjust to allow him to do so. This exception is premised on waiver and estoppel (Comfort Resources at [65]).

(b) Second, the innocent party will not be entitled to rely on a ground not raised at the time of termination if the party in breach could have rectified the situation had it been afforded the opportunity to do so (Comfort Resources at [67]).

In the present case, even if FSH had given a wrong reason to terminate the contracts, this does not deprive it of a justification which in fact existed, viz, SGI’s breach of Clause 1.2, whether or not FSH was aware of it. As earlier explained, there can also be no question of waiver or estoppel. Neither does the evidence suggest that SGI could or would have rectified the situation had it been afforded the opportunity to do so. The fact that FSH did not once raise SGI’s delay in deliveries or breach of Clause 1.2 to justify its termination of the Supply Agreement, the 1st PO and the 2nd PO does not preclude it from doing so.

(4) Any waiver by FSH was only for the time being

For completeness, I find that even if FSH had waived any right consequent to any breaches by SGI (and even if SGI’s original obligation was to adhere to the original schedules instead of just using all reasonable endeavours to ensure the same), this was only so for the time being, rather than for all time. The difference between these two situations was explained and illustrated in Aero-Gate, the background facts of which have been summarised (at [171]–[172]) above.

In that case, even though the plaintiff “continued to treat [the second purchase order] as alive” well after the defendants failed to meet the delivery deadlines, and “persistently pressured the defendant to carry on its work on [the remaining two generators due under the second purchase order] and to fix dates for testing them” (Aero-Gate at [122]), the High Court found (Aero-Gate at [124]) that this does not mean that the plaintiff irrevocably waived its right for all time to terminate the second purchase order.

Instead, the High Court explained that the plaintiff’s waiver was only for the time being:

Similarly, in Bueno Aires (see facts at [174]–[175] above), the High Court held (at [97]) that although the plaintiff continued to treat the contract as alive after the delivery deadline had lapsed, this did not amount to a waiver, and explained that:

In the present case, although FSH similarly made “commercial decisions” to keep the Supply Agreement, the 1st PO and the 2nd PO alive at multiple points in time, and (as will be explained below at [290]) even up till just before the 6 July 2021 Email was sent, this does not mean that it waived all its rights pursuant to any breaches which SGI might have committed. Instead, FSH was entitled to keep the contracts alive for the time being to assess its position. It was also entitled to terminate the contract only at the point in time when it assessed that it had been deprived of substantially the whole benefit of the contracts.

(5) Clause 4.5 and Clause 4.6 of the Supply Agreement are inapplicable

Given that I have already found that there was no waiver by FSH under the common law, either by estoppel or election, and that the issue of variation of the delivery schedules is not relevant (see [100] above), I do not need to consider FSH’s alternative arguments relying on Clause 4.5 and Clause 4.6 of the Supply Agreement (see [15] above), which respectively concern variation and waiver.

SGI’s breach of Clause 2.1

As set out at [151] above, SGI breached Clause 2.1 in respect of the Supply Agreement and the 1st PO. However, FSH did not seek to argue that this constituted a repudiatory breach (see [188] above). Accordingly, consequent to this breach, I need only consider if FSH has the right to claim damages.

Parties’ arguments

SGI argues that FSH waived all its rights in relation to this breach because it had agreed to and continued to accept deliveries at the increased prices from October 2020 to April 2021 without further protest. Neither did FSH allege, until the commencement of the present suit, that SGI’s price increases amounted to breaches of the Supply Agreement.

FSH does not appear to have raised fresh arguments directly in response.

My decision

I am unable to accept SGI’s arguments. There can be no waiver by election or estoppel again because of FSH’s lack of the requisite knowledge. As earlier explained (at [145]), the reason given by SGI for the price increases was the increase in the price of raw materials, which SGI was no longer able to absorb without sustaining losses. However, as explained (at [143]–[148] and [149]–[151] above), this is, on the balance of probabilities, not true.

Applying a similar analysis regarding why FSH did not have the requisite knowledge to waive SGI’s breaches of Clause 1.2, I similarly find that FSH did not have the requisite knowledge to waive its right to claim damages in respect of SGI’s breach of Clause 2.1. This is so whether it is in relation to waiver by election or by estoppel (in the sense that SGI, as the party with knowledge of its own wrongs, could not have relied on any representations made by FSH).

There is also nothing in the evidence to suggest that FSH was not going to claim damages from SGI in respect of the price increases, or that FSH was satisfied with them. In fact, the evidence suggests otherwise. This is evident, for instance, from the 20 April 2021 Email. Even before that, by 12 April 2021, FSH was already voicing its concerns to SGI that SGI was “pricing [FSH] out of the market in both the UK and across Europe”.

These pieces of evidence, together with the continued price negotiations between SGI and FSH before FSH validly terminated the contracts on 6 July 2021 (see [284]−[290] below), also demonstrate that FSH had given SGI the opportunity to rectify the situation. SGI’s argument that the price increases were not cited as a reason for terminating the contracts is thus, for the same reasons as why this argument fails in respect of Clause 1.2 (see [265] above), a non-starter.

SGI’s breach of Clause 3.2

I have previously found (at [160]) that SGI breached Clause 3.2 in respect of the Supply Agreement, the 1st PO, the 2nd PO and the 5mil PO. I also found (at [196]) that FSH would not be able to rely on these breaches to terminate the 1st PO and the 2nd PO. Hence, FSH would only have accrued the right to claim damages arising from SGI’s breaches of Clause 3.2.

The parties do not seem to have raised direct arguments on this. For completeness, I add that FSH did not waive its right to claim damages arising from the breaches of Clause 3.2. The contemporaneous evidence suggests that FSH was constantly pressing SGI for the EN455 certificates.

Issue 4: whether and when FSH validly terminated the Supply Agreement, the 1st PO, and the 2nd PO

While FSH did not waive its right to claim damages or to terminate the Supply Agreement, the 1st PO and the 2nd PO, an issue still arises as to whether FSH in fact terminated these contracts, and if it did, when it did so.

Parties’ arguments

FSH argues that these contracts were validly terminated by the 20 April 2021 Email, highlighting the various steps it took thereafter to effect the termination.

On the other hand, as evident from its previous arguments on waiver, and as will become evident from its arguments in the next section, SGI’s position is that it was FSH which committed repudiatory breaches of the contracts. This was done via the 6 July 2021 Email and by FSH refusing to take delivery of any gloves following the 20 April 2021 Email (which fact is not disputed: see [54] above).

My decision

In my view, the 20 April 2021 Email cannot constitute an election to terminate the agreements by FSH. Crucially, following this email, there was correspondence where parties negotiated the prices of 3mil gloves. As such, FSH cannot possibly be said to have terminated the contracts on 20 April 2021.

If that was not the case, then FSH would be allowed to have it both ways. If, post-20 April 2021, the parties reached an agreement on price, FSH would have been able to “revoke” its termination of the contracts. Otherwise, it would have been able to continue treating the contracts as terminated as of 20 April 2021. This must be wrong.

FSH also suggests that the negotiations following the 20 April 2021 Email are for a fresh, independent contract. I disagree. The parties’ correspondence clearly indicates that they were operating on the basis that the Supply Agreement, the 1st PO and the 2nd PO were still alive.

For example, in an email sent on 1 May 2021, FSH’s Mr Simpson stated that:

If, as FSH claims, its price negotiations with SGI following the 1 April 2021 Email were in respect of a fresh contract, by 1 May 2021, there would be no subsisting “future orders” to “cancel” and no monies which were already paid by FSH that could be “refunded”.

In fact, even in the 6 July 2021 Email, FSH continued to use similar language. Thus, I find that the parties were still negotiating the prices under the Supply Agreement, the 1st PO and the 2nd PO following the 20 April 2021 Email. The 20 April 2021 Email did not validly terminate the agreements.

Instead, FSH only validly terminated the contracts via the 6 July 2021 Email. It was only after this email was sent that FSH unequivocally demonstrated by its behaviour that it had elected to terminate the contracts following SGI’s repudiatory breaches by treating them as extinguished. The implication of this finding is that between 20 April 2021 to 6 July 2021, FSH’s obligations under the contracts were still alive.

Issue 5: whether FSH committed a breach and/or repudiatory breach of the Supply Agreement, the 1st PO and/or the 2nd PO

As just alluded to, FSH’s obligations under the contracts were still alive between 20 April 2021 to 6 July 2021. Therefore, FSH would be liable to SGI if it breached any of its obligations during this period of time.

Following the 20 April 2021 Email, FSH began declining to take delivery of 3mil gloves. While FSH has explained that it did so following its termination of the contracts on 20 April 2021, I have found against FSH on this issue.

FSH’s conduct between 20 April 2021 and 6 July 2021 clearly constitutes a Situation 2 breach, as FSH clearly conveyed to SGI that it will not perform its contractual obligations at all (to accept delivery of the delivered gloves). Pursuant to this breach, SGI would have accrued the right to terminate the Supply Agreement, the 1st PO and/or the 2nd PO, and to claim damages arising from the breaches. For clarity, the position I arrive at does not defeat FSH’s right to subsequently terminate the contracts via the 6 July 2021 Email. This is because SGI’s Situation 3B breaches had continued to persist (see [127] above). These breaches were also independent of FSH’s own breaches. Also, SGI did not terminate the agreements following FSH’s repudiatory breaches.

However, it would follow that FSH will be unable to make any claims for gloves which were supposed to have been delivered between 20 April 2021 and 6 July 2021. This is because any losses suffered by FSH during this period would have been a result of its own breaches by failing to take delivery of the gloves. It is well-established that absent an agreement to the contrary, a party cannot insist on his contractual rights when he had himself caused the non-performance of a contractual event. This is more commonly known as the “prevention principle”: Ng Koon Yee Mickey v Mah Sau Cheong [2022] 2 SLR 1296 (“Mickey Ng”) at [69]−[82].

Issue 6A: the appropriate remedies arising from FSH’s breaches

Having determined that FSH breached the Supply Agreement, the 1st PO and the 2nd PO, the next issue is what the appropriate remedies for SGI should be.

SGI’s claims fall into three broad categories, which it seeks to prove through its expert, Mr Tang:

I turn to consider these claims in detail.

The Unpaid Invoices Claim

Under the Unpaid Invoices Claim, SGI claims for the amounts due under the unpaid invoices totalling US$5,127,384.80, as well as contractual interests at 1.5% per month, comprising:

(a) US$2,096,524 under the 1st PO;

(b) US$1,624,032 under the 2nd PO;

(c) US$1,406,828.80 under the 5mil PO; and

(d) contractual interests of US$2,871,860.96 from the due date of each invoice up to the time when Mr Faizi’s affidavit of evidence-in-chief was filed on 23 January 2022, with interests continuing to accrue.

FSH accepts that US$5,127,384.80 is outstanding under the 1st PO, the 2nd PO, as well as the 5mil PO, in respect of the delivered gloves. However, it argues that this should be set-off against the 80% advance payments it has already made.

FSH also argues that Mr Tang’s calculations are wrong because: (a) they wrongly assume that the outstanding invoices could not be set-off against the monies already paid by FSH as Clause 2.4 of the Supply Agreement permits otherwise; and (b) they incorrectly assume that the “due date” of payment from which contractual interests run was the date of the commercial invoice issued by SGI, when the payment date for the 20% balance of each month’s shipment was the last day of each month.

Having considered this issue, I find that there should be no contractual interests awarded on the outstanding sum owed by FSH to SGI. As I will later explain (see [450] below), I find that the advance payments made by FSH to SGI in respect of the undelivered gloves were not deposits, but were refundable advance payments.

That being the case, the 80% payments advanced by FSH to SGI for gloves which were yet to be delivered (which were due from SGI to FSH) always exceeded the US$5,127,384.80 which FSH owed SGI. From the outset, FSH did not deny that it owed SGI the latter sum, but wanted to set-off the latter amount using the former amount. Indeed, this was expressly communicated by FSH to SGI on 21 April 2021. Put another way, FSH was not unwilling to make payment of the outstanding sums using monies which it had already advanced to SGI. Indeed, pursuant to Clause 2.4 of the Supply Agreement, SGI was entitled to effect such a set-off. Having refused to accept payment on this basis, SGI should not later attempt to claim contractual interests. I find that contractual interests did not accrue in SGI’s favour.

I hence award US$5,127,384.80 to SGI under the Unpaid Payment Claim, with no contractual interest.

The Produced Gloves Claim

(a) US$8,028,610.00 or US$6,356,625 for 77,050,000 pieces of 3mil gloves which were produced but undelivered under the 1st PO, depending on whether the quantum is calculated using the last agreed selling price between parties before FSH started refusing to take delivery of the gloves as alleged by SGI, at US$104.20 per 1,000 pieces (the “Alleged Final Price”) (see [49] above), or the original selling price stipulated in the Supply Agreement, at US$82.50 per 1,000 pieces (see [49] above);

(b) US$1,616,037.80 or US$1,450,091.50 for 15,509,000 pieces of 3mil gloves which were produced but undelivered under the 2nd PO, depending on whether the quantum is calculated using the Alleged Final Price, or the original selling price stipulated in the 2nd PO, at US$93.50 per 1,000 pieces (see [40] above);

(c) RM789,101.50 for costs of storing the produced but undelivered gloves from May 2021 to the time when Mr Faizi’s affidavit of evidence-in-chief was filed on 15 May 2024, with storage costs continuing to accrue at RM2,641.92 per month; and

(d) a subtraction of US$2,000,414.50, being the sum earned by SGI from selling 87,060,000 pieces of the produced but undelivered 3mil gloves to other third-party customers between March 2022 and April 2023 in mitigation of SGI’s losses.

FSH disagrees with SGI on multiple fronts. I turn to consider each of these disagreements, which I will also address in turn.

Whether there is evidence that the gloves were produced for FSH

First, FSH argues that there is no evidence that the 92,559,000 pieces of 3mil gloves (being the sum of 77,050,000 gloves under the 1st PO and 15,509,000 gloves under the 2nd PO) were produced for FSH by 20 April 2021. On the day before, SGI had sent out the 19 April 2021 Schedule (see [351] below), projecting the delivery of only eight orders of 3mil gloves in the last week of April 2021 (or 26.8 million gloves). In fact, it is implausible that SGI had the production capacity to produce this quantity of 3mil gloves, and the lack of evidence of production is fatal to SGI’ case.

I reject FSH’s argument. Indeed, SGI produced copies of the relevant daily packing output records evidencing the production of these gloves by SGC.

Whether SGI’s claim should be limited to its net profits but for FSH’s breach

In other words, while SGI claims for the revenue (or gross profit) it would have earned from FSH under the 1st PO and the 2nd PO, FSH’s position is that SGI should only be entitled to claim its (net) profits under the same. To determine the correct approach, the case of Intertek Testing Services (Singapore) Pte Ltd v Haidir bin Mohamad Khir [2023] SGHC 320 is instructive. There, the High Court explained that:

Further, and importantly, I agree with FSH that as of 6 July 2021, SGI has probably not purchased any of the gloves under the Produced Gloves Claim from the SGG Manufacturers. As FSH highlights, SGI has not produced evidence to show any such purchase. In fact, I would observe that the evidence adduced by SGI suggests that no such purchase had occurred. Instead, the practice was for SGI to only purchase the gloves from the SGG Manufacturers after they are shipped to the end-customer.

As explained by Mr Faizi, between early 2020 and mid-2021, “SGI had initially issued 129 POs to the SGG Manufacturers, and the SGG Manufacturers had issued corresponding PIs, for 129 out of 389 containers shipped to FSH under the 1st PO, the 2nd PO and the 5mil PO” [emphasis added]. More tellingly, 27 of the purchase orders issued by SGI to the SGG Manufacturers in respect of gloves shipped to FSH were dated 14 September 2021, which was well after 6 July 2021.

For completeness, I observe that SGI is not able to make any claims for the losses suffered by virtue of potential claims from the SGG Manufacturers, or for any loss of its performance interest. While these arguments were not made in relation to the Produced Gloves Claim, SGI has raised these arguments in relation to the Cancelled Gloves Claim, and FSH has addressed them. I thus deal with this issue next.

(1) Potential claims from the SGG Manufacturers

Under the Cancelled Gloves Claim, SGI seeks to claim “losses from potential claims for loss of profits from the SGG Manufacturers” due to the cancelled orders. In response, FSH argues, inter alia, citing Freight Connect (S) Pte Ltd v Paragon Shipping Pte Ltd [2015] 5 SLR 178 (“Freight Connect”), that the courts will not grant an indemnity against hypothetical claims. These arguments could similarly be raised in relation to the Produced Gloves Claim.

On this issue, I agree with FSH. In Freight Connect, the Court of Appeal held (at [53]−[54]) that where a claimant faces a potential claim against a third party who has not made the claim, it would be inappropriate to order an indemnity against the defendant. Instead, the issue should be reserved with liberty to apply for directions when the real issues can be determined and damages quantified. I grant SGI liberty to apply for directions when any real issues, ie, how any claims by SGG Manufacturers against SGI would translate into damages which SGI can claim against FSH, can be determined and damages quantified.

(2) Claim for loss of performance interest

Under the Cancelled Gloves Claim, another argument made by SGI is that it should be allowed to claim substantial damages pursuant to the “broad ground” as canvassed in the case of Family Food Court (a firm) v Seah Boon Lock and another (trading as Boon Lock Duck and Noodle House) [2008] 4 SLR(R) 272 (“Family Food Court”), since it had a genuine and reasonable expectation interest that FSH would fulfil all the orders under the 1st PO and the 2nd PO. . This argument could equally be made in relation to the Produced Gloves Claim.

However, I am unable to accept this argument. In Family Food Court, the Court of Appeal observed (at [51]) that two exceptions to the general rule that a claimant can only recover nominal damages for breaches of contract where he has suffered no loss, referred to as the “narrow ground” and the “broad ground”, are recognised locally:

(a) The “narrow ground” allows a claimant to recover substantial damages on behalf of a third party, and applies where it was in the contemplation of the contracting parties that the proprietary interest in the contractual subject matter may be transferred from the claimant to the third party after the contract had been entered into and before the defendant’s breach occurred (Family Food Court at [31] and [40]).

(b) The “broad ground” allows a claimant to recover substantial damages for his own loss, in the form of his performance interest, ie, his interest in the contract being performed and (consequently) his receiving the benefit which he had contracted for (Family Food Court at [31] and [34]).

The two grounds are conceptually inconsistent with each other and cannot apply simultaneously (Family Food Court at [56]). In relation to the “broad ground”, which is what SGI relies on, the Court of Appeal further held (at [53]) that the performance interest claimed by the claimant must be a genuine one. In this regard, the applicable test is an objective test of reasonableness to the performance interest claimed so as to curb what would otherwise be a windfall accruing to the claimant. There is no need for the claimant to demonstrate any intention to utilise the damages sought to realise the performance interest which was the subject matter of the contract.

Applying the objective test of reasonableness to the Produced Gloves Claim, I find that SGI should not be entitled to this head of loss on the “broad ground”. To hold otherwise would confer a windfall upon it. To understand why this is so, it would be helpful to examine instances when the courts have allowed losses to be claimed under the “broad ground”. This is helpfully illustrated in Ho Chee Kian v Ho Kwek Sin [2024] 3 SLR 888 (“Ho Chee Kian”), where the High Court held (at [59]) that:

In Ho Chee Kian, the beneficiary was a third-party charity. The present case is distinguishable. SGI’s losses under the Produced Gloves Claim can be framed in purely financial terms, and that is the profits it would have earned from the produced but undelivered gloves, which I have already determined above. There is thus no more room for a further claim on the “broad ground”.

The price which should be used to calculate SGI’s losses

Moving on, FSH argues that the Alleged Final Price was never agreed on. FSH explains that SGI’s Mr Faizi had conceded at trial that “the prices from May 2021 would depend on the parties’ discussions and how the market turned”, and highlights that between April to June 2021, SGI had offered FSH several lower prices: (a) on 16 April 2021, a price of US$98 per 1,000 gloves; (b) on 19 May 2021, a price of US$79 per 1,000 gloves; and (c) on 10 June 2021, a price of US$64 per 1,000 gloves. However, none of these prices were accepted by FSH. FSH also highlights that SGI had in fact applied the price of US$83.50 per 1,000 gloves for the last two sets of invoices issued on 15 April 2021, for the last two shipments it had made under the 1st PO and the 2nd PO.

In my view, any attempt to assess SGI’s actual losses under the Produced Gloves Claim would contain some degree of speculation. Nonetheless, I find that it would be appropriate to calculate SGI’s but-for revenue using a value of US$82.50 per 1,000 pieces for the 77,050,000 gloves produced under the 1st PO, and using a value of US$83.50 per 1,000 pieces for the 15,509,000 gloves produced under the 2nd PO.

As I have earlier found (at [151] above), SGI’s price increases under the 1st PO were in breach of the Supply Agreement and the 1st PO. SGI should not be allowed to base its claims under the 1st PO at a price higher than the originally stipulated price of US$82.50 per 1,000 pieces. On the other hand, while FSH had, on 9 May 2021, requested for the price of US$62 per 1,000 gloves, and while SGI had, on 19 May 2021 and 10 June 2021, offered the lower prices of US$79 and US$64 per 1,000 gloves respectively, these negotiations had only taken place after FSH’s breach started on 20 April 2021. They should be disregarded for purposes of assessing the Produced Gloves Claim. FSH should not be allowed to benefit from its own breach.

The lowest price offered by SGI, before FSH had breached the contracts, was thus US$83.50 per 1,000 gloves. This was in relation to the last two sets of invoices issued by SGI for shipments under the 1st PO and the 2nd PO on 15 April 2021. Since the prices under the 2nd PO were not fixed, and in any event this price is lower than the originally agreed price of US$93.50 per 1,000 gloves, it would be appropriate to adopt this price for the 3mil gloves produced under the 2nd PO.

Given my findings thus far, SGI’s losses under the Produced Gloves Claim would prima facie be US$382,581.325:

Whether SGI incurred storage costs

Whether SGI reasonably mitigated its losses

FSH’s last argument is that by only starting to sell the 92,559,000 gloves in March 2022, SGI did not reasonably mitigate its losses. Instead, SGI should have started selling the gloves in April 2021 (when FSH started refusing to take delivery of the gloves), or, at the latest, by July 2021, when it believed that FSH had terminated the contracts. SGI should also have accepted more realistic prices for the gloves, instead of insisting on selling them at prices above the prevailing market value.

I disagree. I instead accept SGI’s explanation for the delays in selling the 3mil gloves. Between 20 April 2021 and 6 July 2021, the parties were still in negotiations on the prices, and the contracts were not validly terminated by FSH yet. There was therefore no obligation on SGI to have started any mitigation of its losses: The Enterprise Fund II Ltd v Jong Hee Sen [2020] 3 SLR 419 at [98].

Thereafter, SGI explains that it did not immediately sell off the 3mil gloves (or sell them at lower prices) even after 6 July 2021 for a few reasons:

(a) SGI had to decide whether to sell the gloves which were produced specifically for FSH, or to ship the gloves to FSH nonetheless and demand payment of the remaining sums (in other words, whether to elect to terminate or affirm the contracts).

(b) The 92,559,000 gloves were produced at a time when material costs were high, and SGI wanted to avoid incurring losses from selling them to third parties. Given the volatile conditions of the market, it wanted to wait and see if another wave of the pandemic would hit and drive up demand (and hence prices) again.

(c) SGI could not start selling off the 92,559,000 gloves for too low a price as it would have a negative knock-on effect on SGI’s other businesses.

I accept that these reasons, when taken together, show that SGI did not act unreasonably in delaying its sale of the 92,559,000 gloves. These were legitimate commercial considerations that could reasonably have operated on SGI’s mind when FSH breached the 1st PO and the 2nd PO. As SGI argues, the High Court in OCBC Securities Pte Ltd v Phang Yul Cher Yeow and another action [1997] 3 SLR(R) 906 observed (at [86]), after surveying the cases and academic authorities, that the standard of reasonableness required is not a high one, and SGI is under no “obligation to do anything other than in the ordinary course of business”.

I accept SGI’s argument that it would be appropriate to subtract the sum of US$2,000,414.50 (and not more), being the sum earned by SGI from selling 87,060,000 pieces of the produced but undelivered 3mil gloves to other third-party customers between March 2022 and April 2023 in mitigation of SGI’s losses. Based on my analysis at [329] above, this sum should be deducted from US$7,651,626.50 to arrive at US$5,651,212. Further, given my finding that SGI is only entitled to claim for 5% for its net profit, SGI’s loss is, therefore, US$282,560.60 (this is also derived by reducing US$382,581.325 by US$100,020.725).

For completeness, I note Mr Watts’ observation that the total quantity of gloves in the invoices displayed by Mr Tang to evidence SGI’s mitigation efforts is larger than the quantity of gloves which Mr Tang has assessed SGI to have sold in mitigation, and that the sale of XS gloves has been excluded from Mr Tang’s assessment even though the exhibited invoices include some XS gloves. Mr Watts also states that had SGI’s revenue been calculated on a strict adherence to the figures displayed in the exhibited invoices, this value would have been US$416,293 more.

In my view however, these discrepancies do not mean that Mr Tang’s calculations are wrong, for two related reasons. First, FSH did not order any XS-sized 3mil gloves under the 1st PO and the 2nd PO. SGI therefore would not have produced such gloves for FSH, or sold them in mitigation of FSH’s breach. Second, the 3mil gloves which SGI sold in mitigation following FSH’s breach could simply have been a subset of the total quantity of gloves sold under the invoices exhibited by Mr Tang. Mr Watts’ observation therefore does not necessarily translate into an error with Mr Tang’s calculations of SGI’s mitigation efforts. Indeed, FSH does not appear to have pursued this point in its written submissions.

The Cancelled Gloves Claim

Finally, SGI seeks the specific performance of the open orders under the 1st PO and the 2nd PO (comprising 619,750,000 pieces of gloves under the 1st PO and 235,741,000 pieces of gloves under the 2nd PO, for a total of 855,491,000 pieces of gloves − see the combined figures at [28] and [45] above of 948,050,000 undelivered gloves less the 92,559,000 gloves produced but undelivered) or damages in lieu of performance, comprising:

(a) SGI’s loss of profits due to the cancellation of orders;

(b) potential claims for loss of profits by the SGG Manufacturers against SGI; or

(c) in the alternative to these two heads of damages, the difference between the price which SGI would have made under the 1st PO and the 2nd PO for the remaining gloves as compared to the prevailing market price; and

(d) in addition to the above heads of damages, the costs wasted by SGI on purchasing latex to produce the remaining gloves.

FSH has raised arguments targeting each of these components. I turn first to address the arguments on specific performance.

Specific performance

FSH argues that specific performance should not be granted because it is impracticable, and because SGI has not proven that damages will not be an adequate remedy.

I agree. Since the contracts have been validly terminated by FSH on 6 July 2021 following SGI’s Situation 3B breach of Clause 1.2, they no longer subsist, and there can be no specific performance.

I also reject SGI’s explanation as to why damages would not be an adequate remedy. Specifically, SGI argues that but for FSH’s breach, “SGI would not only earn its profit, it would procure for the SGG Manufacturers, the revenue and profits that it was intended that they would obtain”. SGI then points out that FSH has however taken the position that SGI is not entitled to claim substantial damages in respect of losses suffered by the SGG Manufacturers or under the alternative computation based on the difference in price. Damages would, according to SGI, therefore not be sufficient to restore SGI to the position it would otherwise have been in but for FSH’s breach.

This position is wholly untenable. The question of whether damages are an adequate remedy should only be answered in relation to the party itself (ie, SGI), and not any other party (ie, the SGG Manufacturers). To hold otherwise would allow specific performance to be used to override well-established principles on the privity of contract.

Damages in lieu of performance

As specific performance is not appropriate, I turn to consider damages in lieu of performance. Preliminarily, I highlight again that FSH’s breach was from 20 April 2021 to 6 July 2021, after which the 1st PO and the 2nd PO were validly terminated pursuant to SGI’s repudiatory breaches of Clause 1.2 of the Supply Agreement.

It is well-established that when an innocent party terminates a contract following the defaulting party’s repudiatory breach, all outstanding primary obligations cease to exist (The Law of Contract in Singapore (Andrew Phang Boon Leong gen ed) (Academy Publishing, 2nd Ed, 2022) at para 17.304; see also Darsan Jitendra Jhaveri v Lakshmi Anil Salgaocar (administratrix of the estate of Anil Vassudeva Salgaocar, deceased) and another and another suit[2024] SGHC 276 at [56]). It follows that all primary obligations under the Supply Agreement, the 1st PO and the 2nd PO would cease following the 6 July 2021 Email.

Given this, the only pieces of gloves under the open orders which are relevant under the Cancelled Gloves Claim are those which were produced during the period of FSH’s breach. In this regard, SGI’s case is that all gloves under the open orders “would be produced and delivered similarly to the produced but undelivered [g]loves if not for the cancellation of the open orders” by May 2021.

FSH disagrees. Mr Watts instead offers three alternative situations:

(a) that SGI would have delivered the remaining gloves at the same average rate that it delivered the gloves to FSH before the purported termination of the contracts on 20 April 2021, ie, 82,745,000 pieces (or 24.7 orders) per month;

(b) that SGI would have delivered the remaining gloves at the same rate that it delivered the gloves to FSH in April 2021, again just before the purported termination on 20 April 2021, ie, 93,800,000 pieces (or 28 orders) per month; and

(c) that SGI would have delivered at the same rate as in August 2020, when it had the highest delivery rate, ie, 160,800,000 pieces (or 48 orders) per month.

FSH argues that the first situation is the most probable, given “the known unreliability” of SGI’s deliveries.

On the other hand, SGI does not appear to have made arguments on this particular point.

Even so, I do not entirely agree with FSH. As will be explained below under Issue 6B, when presented with a situation where both parties are in breach, the court should, when assessing each party’s damages, take into account each party’s own breaches.

Here, the closest indication of SGI’s projected schedule during the period of FSH’s breach from 20 April 2021 to 6 July 2021 would be the 19 April 2021 Schedule (see [113] above). The schedule states as follows:

In my view, it would be most appropriate and least speculative to adopt the quantities stated for the whole of May and the first two weeks of June, and to proceed on the basis that in the last two weeks of June and the first week of July, SGI will, similar to the first two weeks of June, continue to produce and ship seven orders’ worth of 3mil gloves under the 1st PO and the 2nd PO each. Thereafter, no more gloves will be produced and shipped, since FSH had validly terminated the contracts on 6 July 2021.

(1) Mitigation

With that, I turn to consider an important preliminary argument which FSH raises: that SGI in fact suffered no losses under the Cancelled Gloves Claim because it fully mitigated its losses by re-allocating its production capacity to satisfying new orders. SGI fails to prove any loss beyond that which it recouped by re-allocating its production capacity, which is limited to the difference between the profits it would have earned and the profits under the new orders. In so arguing, FSH cites the English case of Charter v Sullivan [1957] 2 QB 117 (“Charter”).

I accept this argument. In Charter, the defendant ordered a “Hillman Minx” car from the plaintiff dealer, but refused to accept delivery of the same (Charter at 132). The car was put back into the plaintiff’s showroom and was sold within a week or ten days at the same retail price to another customer (Charter at 133). The plaintiff sought damages for the defendant’s breach, arguing that but for the breach, he would have earned the profits for two cars: one sold to the defendant and another to the other customer (Charter at 132). However, the plaintiff’s sales manager gave evidence that he could sell all the “Hillman Minx” cars he could get (Charter at 134).

The court rejected the plaintiff’s argument and awarded him only nominal damages (Charter at 136), explaining (at 134–135, per Sellers LJ) that:

In a similar vein, the Court of Appeal held in The “Asia Star” [2010] 2 SLR 1154 (at [24]) that:

Here, I am satisfied that on the evidence adduced by FSH, SGI indeed mitigated its losses under the Cancelled Gloves Claim fully.

First and most tellingly, the evidence shows that even after 20 April 2021, SGI’s production output remained relatively consistent at around 500,000,000 pieces of gloves each month (see the table at [118] above).

As FSH highlights, Mr Long has agreed that production of around 500,000,000 pieces of gloves a month is “stable”. Mr Hew also agreed that the quantities summarised in the table referenced above reflect the capacity SGI expected to reach. Thus, it appears that SGI’s production output did not materially decrease, suggesting, on a balance of probabilities, that it had managed to mitigate its loss by re-allocating production lines to producing gloves for other customers.

Indeed, on 23 April 2021, Mr Long wrote to SGI’s Business Development team to state:

This was in response to an internal email by GX stating that:

In fact, as FSH highlights, on 14 June 2021, SGI contracted with another customer to supply it with 1.82 billion gloves, and shipped a total of 202 orders’ worth of gloves from August 2021 to September 2021 pursuant to this agreement. When posed with the proposition that SGI “did re-allocate its capacity for [FSH’s] orders to other customers after April 2021”, Mr Faizi could only say that he “cannot comment”. These matters strengthen my finding that SGI had managed to successfully re-allocate its manufacturing capacity.

Summary

In summary, SGI should be awarded damages totalling US$5,409,945.40:

(a) under the Unpaid Invoices Claim: US$5,127,384.80;

(b) under the Produced Gloves Claim: US$282,560.60; and

(c) under the Cancelled Gloves Claim: US$0.

Issue 6B: the appropriate remedies arising from SGI’s breaches

I turn to the next issue. FSH’s claims broadly fall into four categories:

I turn to examine these claims in detail.

Late delivery claim

Agreed formula to calculate FSH’s losses

Under the Late Delivery Claim, FSH’s expert, Mr Watts, has computed FSH’s losses using the following formula:

FSH’s actual profits (comprising: (a) FSH’s total revenue from sale of the delivered 3mil gloves – (b) amount paid to SGI for all 3mil gloves – (c) associated shipping costs) (the “Actual Scenario”) – FSH’s profits but for SGI’s breaches, ie, if all deliveries had been made punctually and were not quarantined (comprising the same three components) (the “But For Scenario”)

SGI’s expert, Mr Tang, confirms that he has “no comments” on this formula per se. Similarly, I accept this formula.

The Actual Scenario

(1) The quantities of gloves delivered and received

Under the Actual Scenario, FSH summarises the number of gloves delivered and when FSH received the gloves, under the 1st PO and the 2nd PO respectively, as follows:

Mr Tang confirms that these quantities match those under SGI’s records. I will hence proceed on the basis that these quantities are accurate.

(2) FSH’s revenue

Based on the above-mentioned figures (at [370] above), FSH argues that its revenue earned was US$60,853,122.92, based on the following sales quantities sold and prices:

Mr Tang does not dispute these figures. Mr Tang also highlights that based on these figures, the weighted average price per 1,000 pieces of 3mil gloves for gloves sold between August 2021 and May 2023 would have been US$17.34, which is derived from taking the rounded total revenue divided by the rounded number of gloves sold. Mr Watts confirms that this approach is reasonable.

For now, I turn to SGI’s argument that FSH’s loss is too remote under both limbs of the test set out in Hadley v Baxendale (1854) 9 Exch 341 (“Hadley”) (see [377] below). Specifically, SGI argues that SGI contracted with FSH on the basis that FSH had a fixed contract with the NHS, which turned out to be untrue, and SGI would not have expected that the fluctuations in market price would cause loss to FSH if it was behind on the deliveries.

In response, FSH argues that its loss is not too remote since FSH never communicated to SGI that the potential contracts with NHS England would be on a fixed price basis, and FSH’s losses in profits arising from the inability to sell the gloves are a direct and natural consequence of SGI’s protracted delays regardless of who FSH’s customer was. The first limb of the Hadley test is thus fulfilled.

In Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd and another [2008] 2 SLR(R) 623, the Court of Appeal summarised (at [81]–[82]) the test for both limbs of the Hadley test:

(a) Damage which falls under the first limb of Hadley (which may be termed “ordinary” damage) ought to be well within the reasonable contemplation of all contracting parties concerned. Put another way, the damages which an innocent party ought to receive in respect of a contractual breach should be such as may fairly and reasonably be considered as either arising naturally, ie, according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach of it (Hadley at 355).

(b) Damage which falls under the second limb of Hadley (ie, “extraordinary” or “non-natural” damage) is not, by its very nature, within the reasonable contemplation of the contracting parties. However, if the contracting parties, having had the opportunity to communicate with each other in advance, had actual knowledge of the special circumstances which resulted in the “extraordinary” or “non-natural” damage, then it is neither unjust nor unfair to hold the contract-breaker liable in damages for such damage.

I accept FSH’s arguments that the first limb of the test in Hadley is satisfied for two related reasons. First, I accept that there was no mention by FSH that under its contracts with NHS, the price for gloves would be fixed. Second and relatedly, the loss of profits by FSH arose naturally, and would well have been within the contemplation of parties. They were not by any means extraordinary. The first limb of the test in Hadley is thus satisfied, and I will proceed on the revenue figures agreed by parties’ experts (see [372]−[373] above).

(3) FSH’s costs incurred for the 3mil gloves

Mr Tang does not dispute these figures per se, but opines that the amounts already paid by FSH for the undelivered gloves (comprising US$45,988,800 and US$18,793,500) should be excluded because this sum may be forfeited to SGI. Mr Tang also opines that the monies which FSH owes SGI for gloves which have already been delivered (comprising US$2,096,524 under the 1st PO and US$1,406,828.80 under the 2nd PO) should be excluded. This would bring the sums paid by FSH for the 3mil gloves to US$67,680,627.20.

(4) FSH’s shipping costs incurred

Mr Tang confirms that “there appears to be no variance between [SGI and FSH’s] records in terms of ex-factory date and shipping date”. However, Mr Tang highlights a computation error in the average shipping price for May 2021, which however “does not appear to have a significant impact on [Mr Watts’] computations and conclusions”.

(5) Loss suffered by FSH

In sum, under the Actual Scenario, FSH has made a loss of US$11,763,136.08 (US$60,853,122.92 – US$71,183,980 – US$1,432,279).

(6) FSH’s net gain under the 5mil PO

For completeness, I note that in his expert report, Mr Watts also opines that FSH has, due to SGI’s initial late delivery of the 5mil gloves, made a net gain of around US$1,255,598.42, which Mr Watts has used to offset against FSH’s other losses. I do not consider such set off to be appropriate. These gains relate to a different contract, ie, the 5mil PO, and for which I have found no breach of Clause 1.2 by SGI (see [93] above).

The But For Scenario

(1) Whether FSH should be allowed to claim damages arising after 20 April 2021

Before proceeding to consider the But For Scenario, an important preliminary issue must first be addressed. As earlier alluded to (at [369] above), SGI argues that FSH should not be allowed to make any claims for losses suffered under the 2nd PO after it had terminated the contracts, which SGI has taken to be 20 April 2021. FSH does not appear to have made any arguments directly in response. Instead, its primary case is that it did not breach the contracts, but merely terminated them following SGI’s repudiatory breaches.

However, FSH’s primary case is no longer tenable since I have found that it only validly terminated the contracts on 6 July 2021, and committed a repudiatory breach which spanned from 20 April 2021 to 6 July 2021. Thus, the preliminary issue whether FSH should be allowed to claim for losses it purportedly suffered between 20 April 2021 and 6 July 2021 arises.

To resolve this issue, the case of Saha Ram (see [81]−[82] above) is instructive. There, one of the claims made by the defendant landlord was the loss of future rent under the second tenancy agreement. This is the rent which would have fallen due from the plaintiff tenants to the defendant under the second tenancy agreement for the 34 months and 28 days from 3 January 2020 to 30 November 2022 (Saha Ram at [118]). However, the defendant himself had breached an implied term under the same agreement warranting that the third storey of the building was constructed lawfully (Saha Ram at [66]).

The High Court disallowed the defendant’s claim in this regard, and explained that in assessing the damages accruing to one party, the court must also consider that party’s own breaches of contract:

Similarly, in my view, FSH’s losses here must be assessed in light of its own breaches. This also harkens back to the prevention principle which I have alluded to earlier (see [294] above). In the Actual Scenario, FSH wrongfully refused to take deliveries of the 3mil gloves during the period from 20 April 2021 to 6 July 2021. In light of its own breaches, no gloves were delivered to FSH during this period, and no revenue was earned by FSH (see [370] above). To account for FSH’s own breaches, for the calculation of FSH’s revenue in the But For Scenario, I will discount the following quantities of gloves meant for delivery to FSH during this period of FSH’s breach (see [398] below):

(a) two-fifths of the 3mil gloves due to be shipped in April 2021, being the gloves which should have been shipped between 20 April 2021 and 30 April 2021 (since there are five Fridays in that month, and Mr Watts’ calculations are based on the assumption that the orders would be delivered evenly over every Friday of each month – see [396(a)] below);

(b) all the 3mil gloves due to be shipped in May 2021 and June 2021; and

(c) one-fifth of the 3mil gloves due to be shipped in July 2021, under the 2nd PO, being the gloves which should have been shipped on the first Friday of July 2021 (collectively, the “Excluded Gloves”).

For clarity, while I have assessed that SGI suffered no loss in respect of the Cancelled Gloves Claim (which would include orders for the Excluded Gloves), this is on the basis that SGI fully mitigated its losses (see [363] above). It does not change my analysis that FSH should not be allowed to claim for the period when it was in breach of its obligations. With that in mind, I turn to consider the But For Scenario proper.

Under the But For Scenario, FSH argues that it would have earned a profit of US$49,855,089 on the 3mil gloves.

To this end, Mr Watts opines that the number of gloves delivered and received, under the 1st PO and the 2nd PO respectively, would have been as follows:

Mr Watts further explains that in arriving at these quantities, he has assumed that:

Mr Tang confirms that he has “no comment” on these figures, which I will hence also proceed to adopt. However, as just alluded to (see [391]−[392] above), the But For Scenario should be assessed in light of FSH’s own breach in refusing to accept gloves from 20 April to 6 July 2021. To this end, I will exclude any gloves that would have been delivered (as opposed to received) from 20 April 2021 to 6 July 2021, adopting Mr Watts’ two assumptions in doing so.

Based on my computation, the relevant quantities would therefore be:

(2) FSH’s revenue

Based on the above-mentioned figures submitted by Mr Watts (see [395] above), FSH argues that its revenue earned would have been US$206,589,032. Mr Watts arrived at this sum on two bases:

(a) the assumptions stated at [396] above, as well as the assumption that FSH will be able to fully sell any gloves it receives in the same month when they arrive in the UK; and

(b) basing the sale price in each month on a monthly price index from August 2020 to June 2021, constructed based on the average monthly price of 3mil gloves sold by FSH (see [372] above).

According to Mr Watts, FSH’s revenue of US$206,589,032 is derived as follows:

Mr Tang disagrees with Mr Watt’s first assumption (at [399(a)] above), opining that FSH has proven itself to be consistently unable to sell its 3mil gloves received from SGI. Specifically, Mr Tang summarises the percentage of 3mil gloves sold by FSH as follows (the “Percentage Sales Summary”):

Applying these percentages to the quantity of gloves which FSH would have received under the But For Scenario, Mr Tang opines that FSH would merely have earned US$77.54 million, broken down as follows:

In its written submissions, SGI further highlights that Mr Watts and FSH’s Ms White have conceded during the trial that despite the high demand, FSH was unable to sell all the 3mil gloves received. Hence, “even if SGI had delivered all the [3mil gloves] on time, FSH would still not be able to sell more than they actually did”.

SGI further argues that there is no evidence that SGI’s late deliveries caused FSH’s reputation to become damaged. Neither is there evidence, or is it logical, for FSH to claim that “SGI’s erratic and limited deliveries had disrupted its ability to make pre-sales, and that FSH ceased making pre-sales because of SGI’s delays in deliveries”.

In addition, SGI also disagrees with the second basis of Mr Watts’ assessment of FSH’s revenue in the But For Scenario (see [399(b)] above), arguing that FSH has not proven that it could sell the additional 3mil gloves at the same prices as it had done under the Actual Scenario.

In response, FSH highlights that Mr Tang lacks the necessary relevant expertise, and argues that Mr Tang’s approach has mischaracterised FSH’s sales figures. Instead, one should look at the total amount of gloves delivered by SGI cumulatively by a certain time, and the total cumulative amount sold by the corresponding time. Read this way, FSH had sold 97% of 3mil gloves it received as at end January 2021.

Further, FSH argues that but for SGI’s late deliveries, FSH would have been able to supply all the 3 mil gloves in response to the UK Cabinet Office’s initial request. FSH’s ability to sell gloves was severely disrupted by SGI’s erratic and limited deliveries beginning late-2020. Although FSH’s actual sales slowed down from February 2021, these figures must be seen against the backdrop of FSH’s earlier inability to commit to the pre-sales of whole containers due to SGI’s late deliveries, and failure to produce the necessary EN455 certificates within a reasonable time. Mr Watts’ assumption that FSH would have sold the 3mil gloves within the month of their arrival in the UK is thus reasonable and realistic.

Having considered the evidence and the parties’ submissions, I do not entirely agree with either party’s submissions.

First, on the selling price of the 3mil gloves, I accept the prices adopted by Mr Watts as being appropriate for calculating FSH’s revenue in the But For Scenario. These prices represent the average (mean) of FSH’s actual prices sold, and is fair in the circumstances. SGI has also provided no alternative.

Second, I disagree with FSH that had SGI delivered the gloves punctually, FSH would have secured the agreements with the UK NHS to sell all the 3mil gloves it received (at least under the 1st PO). The contemporaneous evidence suggests instead that the UK NHS had in any event become overstocked.

For instance, on 13 August 2020, Mr Simpson had written to Mr Marini stating that “[s]ome not all of the goods which arrive from Sept. onwards will be sold to other customers due to the English NHS over-stocking themselves”. At this point in time, FSH did not view SGI’s late deliveries as being so unacceptable as to deprive it of substantially the whole benefit of the 1st PO yet. It is thus improbable that FSH would have, prior to this, refrained from committing itself to the NHS due to SGI’s late deliveries in June and July.

Third, the evidence suggests that in the But For Scenario, FSH would neither have sold off 100% of the 3mil gloves in the same month of their arrival to the UK, nor sold off a monthly percentage as low as that opined by Mr Tang.

This becomes clear when one examines, as FSH submits, the cumulative number of 3mil gloves sold by FSH each month as against the cumulative number of gloves received by FSH each month, which more accurately reflects FSH’s sales figures. For clarity, a distinction also ought to be drawn between the percentage sales for 3mil gloves delivered under the 1st PO, and those delivered under the 2nd PO.

Under the 1st PO, it appears from the Percentage Sales Summary that from the time FSH first received deliveries under the 1st PO in August 2020, it took around four months (between August 2020 and November 2020) before FSH started consistently maintaining a percentage of subtotal gloves sold (as against the subtotal number of 3mil gloves received) at a general minimum rate of 90%. This percentage peaked in January 2021 at 97%, and started decreasing sharply from March 2021. In the first two months, this percentage was approximately one-third, and it increased to around two-thirds in the third month. These statistics are summarised in the table below (the “Revised Percentage Sales Summary”):

Given this, and on the basis that FSH’s monthly sale rates as calculated from the month it starts receiving gloves from SGI will remain the same in the But For Scenario (under which FSH will start receiving gloves a month earlier, in July 2020 – see [398] above), I find that under the But For Scenario, FSH would have sold:

(a) one-third of the subtotal number of 3mil gloves each month in July 2020 and August 2020;

(b) two-thirds of the subtotal number of gloves in September 2020;

(c) 92% of the subtotal number of gloves each month from October 2020 to February 2021 (being the mean percentage of the subtotal number of gloves sold from November 2020 to February 2021 under the Actual Scenario); and

(d) all of the final 8% of the remaining gloves in March 2021.

By applying the selling prices adopted by Mr Watts (see [400] and [409] above), the sales percentages per month (see [415] above) to the quantities of 3mil gloves received by FSH under the 1st PO each month (see [398] above), I compute FSH’s revenue to be US$154,971,955.17 as set out below:

Next, from the Revised Percentage Sales Summary, one can glean that from March 2021, FSH’s sale of 3mil gloves started declining sharply. It stagnated at around 57% between May 2021 to July 2021, before declining even more sharply thereafter, when it took 23 months to sell the remaining 3mil gloves, averaging 1.82% in terms of the percentage of subtotal gloves sold as against the subtotal gloves received each month. FSH was unable to sell more gloves thereafter.

While that is the case, I accept FSH’s argument that it had, after realising that the NHS would not be taking the full quantity of 3mil gloves, originally started pre-selling the gloves to other customers, but that such pre-selling came to a halt subsequently following SGI’s continuously late and erratic deliveries. FSH’s Mr Mahli has adduced some contemporaneous evidence documenting such pre-selling, ie, spreadsheets dated October and November 2020 recording FSH’s pre-sales and potential customers, which probably also explains FSH’s high rate of sales under the 1st PO.

I also find that this would have been the case for the remaining orders under the 2nd PO. While SGI purports to highlight that Mrs Stoute conceded at trial that even if SGI had delivered in accordance with the original delivery schedule in May 2021 and June 2021, FSH would still have lost money on these containers, this must be read in context.

Properly understood, Mrs Stoute was not saying that FSH would have made losses on the 3mil gloves under the 2nd PO in May 2021 and June 2021 in the But For Scenario. Instead, she was saying that in the Actual Scenario, even if these gloves were delivered in accordance with the 1 April 2021 Schedule, FSH would still have made a net loss on all the 3mil gloves, because “cumulatively it’s the same product as the first order [ie, the 1st PO], which was a 45% completion at that point”.

While SGI seeks to argue that by the time FSH had started pre-selling gloves, it already knew of the delays, this is not inconsistent with how FSH could have ceased the pre-sales subsequently after the extent of the late deliveries became too serious.

The situation was exacerbated by SGI’s late provision of the EN455 certificates, on 1 June 2021, following FSH’s request on 19 March 2021.

Given these, I find that under the 2nd PO (for which FSH would have started receiving deliveries from January 2021), it would be appropriate to assess damages on the basis that FSH would have sold 92% of the subtotal number of gloves each month from the outset (ie, using the same mean monthly percentage of sales as was used in relation to the later months under the 1st PO), and the remaining 8% of the gloves in July 2021.

Again, I compute FSH’s revenue under the 2nd PO using these sales percentages, the selling prices (see [400] and [409] above) and the quantities of 3mil gloves received by FSH under the 2nd PO each month (after excluding the Excluded Gloves to account for FSH’s own breach: see [391]−[392] and [397]−[398] above), and arrive at US$39,327,841.47:

In sum, under the But For Scenario, FSH’s revenue would have been US$194,299,796.64 (being the sum of US$154,971,955.17 under the 1st PO and US$39,327,841.47 under the 2nd PO).

(3) FSH’s costs incurred for the 3mil gloves

Mr Tang disagrees with this approach, opining that it is “inconsistent with the actual scenario, where [SGI] had increased its prices and [FSH] had agreed to the increase in prices”.

As I have held (at [138] and [151] above), SGI has breached the Supply Agreement and the 1st PO by increasing the prices of the 3mil gloves under the 1st PO. There is no such breach in relation to the 2nd PO. It would hence be appropriate to adopt the price of US$82.50 per 1,000 pieces of 3mil gloves for gloves under the 1st PO, and the prices paid by FSH each month under the Actual Scenario in relation to gloves due under the 2nd PO. It is, in my view, also appropriate to proceed on the basis that the price of 3mil gloves under the 2nd PO would be US$83.50 for the months of May 2021 and June 2021, in line with my finding with regard to SGI’s losses (see [325]−[328] above).

In this case, while I have earlier applied the prevention principle to prevent FSH from positively obtaining a benefit from its own breach by discounting any revenue it would have earned for the Excluded Gloves (see [397]−[398] and [424] above), there is still a need to apply the same principle to prevent FSH from benefiting from its breach by avoiding its existing obligations. At first glance, this might appear to doubly penalise FSH for its breach. However, such concerns are misguided.

(4) FSH’s shipping costs incurred

(5) Summary

In sum, under the But For Scenario, FSH would, discounting the Excluded Gloves, have made a profit of US$39,476,513.94 (US$194,299,796.64 less $152,602,729.40 less US$2,220,553.30). After adding this to FSH’s losses in the Actual Scenario (ie, US$11,763,136.08), FSH would be entitled to damages of US$51,239,650.02 for SGI’s breaches of Clause 1.2 and Clause 2.1.

The Storage Claim

While this does not appear to be raised in SGI’s written submissions, I also note that SGI has pleaded that FSH failed to mitigate its losses by choosing to quarantine the entire shipment of gloves regardless of whether they were labelled as having a 3-year or 5-year shelf life, and/or failing to re-label the gloves as having a 3-year shelf life, and/or sell the gloves on the basis of a 3-year shelf life.

On the other hand, FSH explains that the alleged mitigatory steps it could have taken are commercially impracticable and unreasonable. It also explains that it continued to suffer losses from 3 June 2021 to 21 August 2022 due to limited demand (and quality issues), and the former issue arose because FSH was not able to sell off the gloves earlier.

I accept SGI’s position that FSH has not proven its loss. The documentary evidence shows that between 17 May 2021 and 30 May 2021, the number of pallets in storage had in fact decreased. This is plainly inconsistent with FSH’s position. Neither Mr Watts nor Mr Mahli was able to explain this. I thus reject FSH’s claim on this head of loss.

The Indemnity Claim

FSH next asks for liberty to seek an indemnity for any claims from UMS, one of FSH’s customers. According to FSH, due to SGI’s failure to provide the EN455 certificates within reasonable time, on 19 May 2021, FSH had to cancel certain purchase orders UMS had issued to it. UMS then issued a letter of demand to FSH on 25 May 2021, demanding damages over FSH’s breach of the purchase orders. The limitation period for UMS’ claim in England will not lapse until May 2027.

On the other hand, SGI argues that FSH should not be granted any indemnity, citing, inter alia, the case of Freight Connect.

I reject SGI’s submission, which is based on a misreading of FSH’s claim and of Freight Connect. FSH is not claiming for an indemnity per se. Rather, it is claiming for liberty to apply to seek an indemnity. I thus grant FSH liberty to apply for directions when the real issues, ie, how UMS’ potential claim against FSH would translate into damages which FSH can claim against SGI, can be determined and damages quantified (see [319] above).

Issue 7: whether the monies already paid to SGI by FSH are refundable

The next issue which arises for my consideration is whether the monies which FSH paid to SGI under the 1st PO, the 2nd PO and the 5mil PO, which parties agree amount to US$64,782,300 (see [56] above), are refundable. In gist, FSH argues that they are, because they are advance payments, by way of equitable relief against forfeiture, and/or because SGI would otherwise be unjustly enriched. SGI also cannot rely on any defence of change of position. SGI disagrees, arguing that the sum is a forfeitable deposit, that FSH cannot rely on the doctrines of equitable relief and unjust enrichment, and in any event that SGI can avail itself to the defence of change of position. I turn to consider the parties’ arguments.

Whether the monies already paid to SGI by FSH are forfeitable deposits

The applicable law

The parties do not dispute that the applicable framework for determining if a payment is a forfeitable deposit is that set out in Li Jialin and another v Wingcrown Investment Pte Ltd [2024] 2 SLR 372 (“Li Jialin”) (at [73]):

(a) First, the court determines whether there is an express or implied contractual right to forfeit the sum alleged to be a deposit upon the payer’s breach. Where there is an express forfeiture clause to this effect, this will be sufficiently clear. Where there is no such clause, the right of forfeiture may nonetheless be implied from the use of words such as “deposit”. A reference to a sum described as a deposit being compensatory as liquidated damages could displace the inference that it is intended to be a deposit which is forfeitable upon breach. If there is no contractual right to forfeit, then there is no need to make any further inquiry as to the reasonableness of the sum. Its recoverability will be determined under the general law notwithstanding the payer’s breach.

(b) Second, where there is a contractual right to forfeit, the court determines whether the sum is a true deposit. The test is whether the sum is reasonable as an earnest. The sum will be reasonable if it is customary or conventional. If it is higher than customary, it may nevertheless be reasonable if the vendor can show special circumstances to justify the deposit.

(c) Third, if the sum is reasonable as an earnest, it is a true deposit and can be forfeited. However, if the sum is not reasonable as an earnest, it is not a true deposit and cannot be forfeited. The right to forfeit, whether express or implied, is thus unenforceable and the claimant’s right to recovery of the deposit will be left to be decided under the general law.

Parties’ arguments

SGI argues that the US$64,782,300 which FSH has already paid SGI constitutes a forfeitable deposit on an application of the Li Jialin framework:

(a) In relation to the first stage, SGI argues that a proper interpretation of the Supply Agreement, the 1st PO and the 2nd PO suggests that SGI is expressly entitled to forfeit the sum, considering (i) the unprecedented demand for and low supply of gloves; (ii) the large commitment required from SGG; (iii) the absence of any prior commercial relationship between the parties (hence necessitating an assurance that FSH would honour its commitment, which assurance has been communicated to and acknowledged by FSH); and (iv) the common practice in the rubber glove industry for payment of substantial deposits. Alternatively, SGI’s right of forfeiture may be implied. Beyond the earlier-mentioned factors, the payments were contractually denoted as “deposits” or “down payment”. The three-stage Sembcorp Marine test for implying terms in fact (see [155] above) is also satisfied.

(b) In relation to the second stage, SGI argues that the sum was a true deposit as it was reasonable as an earnest since it was customary and conventional. Even if the 80% deposits were higher than customary, they are still reasonable given the special circumstances present, which include those just canvassed above under argument (a).

FSH makes the converse arguments:

(a) In relation to the first stage, FSH argues that the relevant contracts do not state that the payments are forfeitable. The Sembcorp Marine test is also not satisfied due to the lack of any true gap in the parties’ intentions. In any event, the evidence demonstrates that the parties did not consider the 80% payments to constitute forfeitable deposits.

(b) While the second and third stages would therefore not apply, they would in any event not be satisfied − an 80% sum is simply unreasonable as an earnest because it is wholly disproportionate to the function of an earnest in terms of percentage and absolute amount. The recoverability of the sum will thus be determined under the general law.

My decision

I agree with FSH that on application of the Li Jialin framework, the sum of US$64,782,300 which FSH paid SGI is not a forfeitable deposit.

(1) Stage 1

At the first stage, I agree with FSH that there is neither an express nor implied contractual right to forfeit this sum. By SGI’s own concession, nothing in the Supply Agreement, the 1st PO and the 2nd PO expressly states that the sum is forfeitable.

Further, as FSH argues, there is no true gap in the parties’ intentions in respect of whether the sum is forfeitable. Instead, the parties understood that such payments would merely constitute advance payments. As both parties point out, when SGI raised the issue of how payments were to be made by FSH to SGI, it had asked FSH if it was “open to work on advance payment” [emphasis added]. While FSH responded to state that they were “open on the payment terms as [they] understand that there is a commitment needed from both parties”, I find that this does not amount to FSH saying that any advance payment would constitute an earnest and, in turn, a forfeitable deposit. This is so especially when SGI did not even raise the proposition that any advance payments would be forfeitable.

Indeed, FSH points to several pieces of evidence suggesting that SGI’s contemporaneous understanding of the advance payments was that they were meant to facilitate its purchase of raw materials for the production of the gloves. For example, on 23 October 2020, Mr Long sent an email to FSH clarifying a “miscommunication” in respect of the schedule of payment (wherein the requirement for FSH to pay 80% in advance is contained). In that email, he explained that “[t]he down payment schedule … was to assist in the supply chain in totality … to ensure that [SGI] could purchase materials upfront without hitches”. This runs contrary to the purpose of forfeitable deposits, ie, that of deterring a breach on the part of the party who has paid the deposit: Li Jialin at [43] and [45]. This also satisfactorily explains why SGI would have required “advance payment [to be] done” before the contract is “[considered] in place”.

While I can accept that, given the factors identified by SGI (at [448(a)] above), a commercial party might in theory wish to seek an earnest before entering into a significant agreement with a counterparty, this does not change the fact that in this case, the evidence suggests that SGI did not in fact do so, let alone seek such a large amount. I also find that SGI did not prove that it is common practice in the rubber glove industry for payment of substantial deposits. Apart from the assertions by Mr Long and Mr Faizi, SGI has not adduced objective evidence to show such practice. While SGI has exhibited its invoices to other customers, which require 50 to 100% of upfront payments, these invoices do not specify whether such upfront payments constitute forfeitable deposits or refundable advance payments. Put another way, these invoices do not address the issue at stake here.

Relatedly, it does not assist SGI to argue that FSH itself required substantial deposits from its customers. This says nothing about whether SGI sought a deposit from FSH. It also says nothing about the practice among glove manufacturers, since FSH is a distributor. It also does not assist SGI to point to Mr Simpson’s opinion that the payment terms of “80% with P.O. and 20% on shipping … is kind of the industry standard”. This is because Mr Simpson said nothing about whether the 80% to be made with the purchase order is, under the industry standard, a forfeitable deposit or a mere advance payment.

SGI also emphasises the use of the phrases “deposits” or “down payments” on various occasions by parties when referring to the 80% payments which FSH was to make in advance. However, as FSH observes, these labels were not consistently used (see, eg, [452] and [453] above). In any event, it is well established that the court can (and will) go behind whatever labels that parties chose to put on their transactions, to ascertain their true nature and purport: E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd and another (Orion Oil Ltd and another, interveners) [2011] 2 SLR 232 at [77].

Tellingly, I also observe that Clause 2.4 of the Supply Agreement gives SGI the right to, inter alia, “set-off any of the advance payment against any outstanding invoices” if FSH does not make prompt payment. This makes it inherently implausible that SGI could have intended for any payments made in advance to constitute forfeitable deposits. If the advance payments were forfeitable deposits, it would not have made commercial sense for SGI to set off the damages arising from FSH’s late payments against amounts already paid, which would already have become forfeited independently. A similar observation was also made in Li Jialin (at [73(a)]; see [447(a)] above).

I hence find that there was no implied contractual right of forfeiture because there was no gap in the parties’ intentions in relation to any right to forfeiture. In any event, the second and third stages of the Sembcorp Marine framework are also not satisfied:

(a) While it might have been a good to have for SGI, a forfeitable deposit is not commercially necessary to give the Supply Agreement and the subsequent purchase orders efficacy. These agreements could have functioned equally efficaciously if the 80% payments made by FSH were refundable advance payments.

(b) It is also commercially improbable that the 80% payments being forfeitable deposits is a term which the parties, having regard to the need for business efficacy, would have responded “Oh, of course!” had the proposed term been put to them at the time of the contract.

Since there is no contractual right to forfeit, the recovery of the US$64,782,300 which FSH has already paid to SGI falls to be determined under the general law.

(2) Stage 2

Given my findings in Stage 1, there is technically no need to make any further inquiry as to the reasonableness of the sum of US$64,782,300 as an earnest to be paid by FSH to SGI. I nonetheless observe, for completeness, that the sum of 80% would not be reasonable as an earnest.

SGI’s arguments on this sub-issue broadly overlap with its arguments in relation to Stage 1 of the Li Jialin framework (see [448(a)] and [448(b)] above). I have already addressed these arguments in the context of Stage 1 (see [454]–[455] above), and would repeat my finding that SGI has failed in proving that such a high sum is customary or conventional.

More fundamentally, I am also unconvinced that the circumstances under which the agreements were concluded would justify an 80% deposit amounting to US$145,204,552. Such an amount is, both in terms of percentage of the total price and in absolute terms, simply so large that it cannot be objectively justified by reference to the functions which a true forfeitable deposit is supposed to serve: Polyset Ltd v Panhandat Ltd [2002] HKCU 145 at [165]. This is so even in the face of the factors raised by SGI.

Specifically, even if:

the quantum of the purported deposit would still be unreasonable. This is especially when considered with the fact, as FSH points out, that the gloves were a product under SGI’s own general brand, which can readily be on-sold to other customers (given the disparity between demand and supply) should FSH cancel any order. Indeed, by SGI’s own case, it tried “to allocate some of the larger sized [3mil gloves] from other customers to FSH’s orders”. The converse would have been equally feasible should FSH renege on the purchase orders. And indeed, I have earlier found (at [363] above) that SGI had fully mitigated its losses in relation to its Cancelled Gloves Claim by re-allocating production lines to producing gloves for other customers. The sum of 80% therefore cannot be reasonable as an earnest, and FSH’s right to recover the advance payments will be left to be decided under the general law.

Whether FSH can recover the advance payments made

Since the 80% advance payments made by FSH are not deposits, FSH’s right to recover it will be left to be decided under the general law. In this regard, FSH argues that it is entitled to such payments under a claim in unjust enrichment. Beyond denying such entitlement, SGI also relies on the defence of change of position. I turn to address these arguments.

The applicable law

In Esben Finance Ltd and others v Wong Hou-Lianq Neil [2022] 1 SLR 136 (at [125], citing Wee Chiaw Sek Anna v Ng Li-Ann Genevieve (sole executrix of the estate of Ng Hock Seng, deceased) and another [2013] 3 SLR 801 at [98]), the Court of Appeal reiterated the well-settled elements of a claim in unjust enrichment: (a) that the defendant has benefitted or been enriched; (b) the enrichment was at the expense of the plaintiff; and (c) the enrichment was unjust. One situation where the enrichment would be unjust would be when there was a total failure of consideration, and the inquiry to this end has two parts: first, what was the basis for the transfer in respect of which restitution is sought; and second, did that basis fail: Benzline Auto Pte Ltd v Supercars Lorinser Pte Ltd and another [2018] 1 SLR 239 (“Benzline”) at [46]−[54].

On the other hand, for the defence of change of position to be made out, three elements need to be established:

(a) that the payee has changed his position;

(b) that the change is bona fide; and

(c) that it would be inequitable to require him to make restitution or to make restitution in full: Management Corporation Strata Title Plan No 473 v De Beers Jewellery Pte Ltd [2002] 1 SLR(R) 418 at [35].

Parties’ arguments

FSH argues that the elements of unjust enrichment are satisfied because: (a) SGI has benefitted from the advance payments; (b) which were paid by FSH; even though (c) there was a total failure of consideration as regards the gloves which have not been delivered.

On the other hand, SGI repeats its argument that the amounts were paid “as an assurance of FSH’s commitment to fulfil the purchase of all the gloves under its [purchase orders]”, and highlights that there was in any event no total failure of consideration since a considerable number of gloves have been delivered (and FSH has in fact refused to take delivery of some of them).

Further, SGI argues that the defence of change of position is made out, because in good faith, it utilised the advance payments to purchase and produce the gloves ordered by FSH under the purchase orders. FSH, on the other hand, argues that SGI has not changed its position in reliance on the receipt of FSH’s advance payments, and in fact applied the monies for SGI’s own operations. Any continued payments to the latex suppliers and to the SGG Manufacturers after FSH made clear on 20 April 2021 that no more gloves were to be shipped were also not made bona fide.

My decision

I agree with FSH that the elements of unjust enrichment are made out. As FSH argues, it cannot be doubted that the first two elements are established: (a) SGI has been enriched by US$64,782,300; and (b) at the expense of FSH. The key inquiry therefore rests on whether (c) the enrichment was unjust due to a total failure of consideration. In this regard, it is well-established that where a contract is divisible such that it can be said that there has been a total failure of the consideration for a discrete part of that contract, a claim in unjust enrichment would be made out with respect to that discrete part of the contract: Benzline at [53], citing Max Media FZ LLC v Nimbus Media Pte Ltd [2010] 2 SLR 677 at [24].

Here, I am of the view that the 1st and 2nd POs, under which the sum of US$64,782,300 was paid by FSH to SGI as advance payments, were divisible. This can be seen by how, starting from the fourth month of each contract coming into operation, the 80% advance payments were to be paid (and were in fact paid) in tranches which correspond to each month of delivery (see [20], [28], [43] and [45] above). Further, it is evident from the way that SGI had regularly (and in fact, monthly) changed the number of orders to be delivered each month (see, eg, [113] above), that the parties understood each order to constitute divisible parts of the contracts under which deliveries could be adjusted (albeit within reasonable limits). Each individual order hence constituted a divisible part of the broader contract under the 1st and 2nd PO.

Given this, in relation to the US$64,782,300 paid by FSH to SGI for 208 unfulfilled orders and 75 unfulfilled orders under the 1st PO and the 2nd PO respectively, there has been a total failure of consideration. SGI would thus have to return these monies, which it had not earned: Li Jialin at [80]. For clarity, SGI would not be prejudiced because I have already awarded the appropriate remedies for any expenses it might already have incurred under its claims against FSH.

Issue 8: whether pre-judgment interests should be awarded to FSH

Lastly, FSH seeks pre-judgment interests under s 12 of the Civil Law Act 1909 (the “CLA”), both on the losses it is entitled to (which I have assessed to be US$51,239,650.02 arising from SGI’s breaches of the 1st PO and the 2nd PO), as well as for the advance payments totalling US$64,782,300 paid to SGI from 20 April 2021 – the date it purported to terminate the agreements.

More specifically, FSH argues that the default rate of interest of 5.33% per annum used in relation to judgment debts should be adopted as an appropriate proxy of the value of money, and that pre-judgment interests should run from 20 April 2021 to the date of judgment.

SGI does not appear to have made submissions on this issue.

In Grains and Industrial Products Trading Pte Ltd v Bank of India and another [2016] 3 SLR 1308 (“Grains”), the Court of Appeal explained (at [137]−[138]) that the basis for awarding pre-judgment interests lies in the fact that the unsuccessful defendant had wrongfully kept the successful claimant out of moneys to which he has been shown to be entitled, during which time, the defendant instead had the use of it. It follows that as a general rule, damages should commence from the date of accrual of loss.

I am satisfied that FSH has, as a result of SGI’s breaches, been kept out of the advance payments it has made of US$64,782,300. That said, I note that from the outset, FSH had intended to set-off US$5,127,384.80 owing to SGI under the Unpaid Payment Claim from the advance payments made. As I found at [302]–[303], SGI should have adopted this approach, and accordingly, I do not award contractual interests to SGI on the Unpaid Payment Claim. Given this position, for clarity, I state that from US$64,782,300 owing by SGI, the amount of US$5,127,384.80 may be deducted. Thus, I award FSH pre-judgment interests for only US$59,654,915.20 (ie, US$64,782,300 less US$5,127,384.80) at 5.33% per annum from 6 July 2021, being the date when FSH first acquired the right to have these monies returned following its valid termination of the contracts.

In relation to FSH’s losses assessed at US$51,239,650.02, in my discretion, I decline to award pre-judgment interests from 6 July 2021 (when FSH validly terminated the agreements). There was much uncertainty surrounding the situation the parties found themselves in. As can be seen above, the assessment of damages was a complex endeavour, especially since FSH was also in breach by failing to take deliveries of the 3mil gloves from 20 April 2021 to 6 July 2021. Further, in assessing FSH’s losses, I did not accept FSH’s position in its entirety. For these reasons, I grant pre-judgment interests only from the date of writ.

Conclusion

To summarise, SGI has breached: (a) Clause 1.2 of the Supply Agreement to use all reasonable endeavours to ensure punctual deliveries of gloves in relation to the 1st PO and the 2nd PO; (b) Clause 2.1 of the Supply Agreement for increasing the price of 3mil gloves between October 2020 and April 2021 in relation to the 1st PO; and (c) Clause 3.2 of the Supply Agreement for failing to produce the EN455 certificates in respect of gloves to be delivered under the 1st PO, the 2nd PO and the 5mil PO within a reasonable time upon FSH’s request.

The first of these breaches constituted a Situation 3B repudiatory breach. FSH had not waived any of its consequent rights, and had validly terminated the agreements, ie, the Supply Agreement, the 1st PO and the 2nd PO on 6 July 2021. SGI has also been unjustly enriched by the payments comprising 80% of the purchase price of the undelivered and/or unproduced gloves paid to it in advance by FSH, which does not constitute a forfeitable deposit.

Given these, I award FSH the following amounts of damages:

(a) for SGI’s breaches of the 1st PO and the 2nd PO, US$51,239,650.02, with interests at 5.33% per annum from the date of writ to the date of this judgment; and

(b) for SGI’s unjust enrichment by US$64,782,300, the amount of US$59,654,915.20 (ie, US$64,782,300 less US$5,127,384.80 under the Unpaid Invoice Claim), with pre-judgment interests at 5.33% per annum for the period between 6 July 2021, being the date when FSH first acquired the right to have these monies returned following its valid termination of the contracts, and to the date of this judgment.

As for FSH, it has also committed a Situation 2 repudiatory breach of the 1st PO, the 2nd PO and the Supply Agreement between 20 April 2021 and 6 July 2021 (although SGI did not exercise its consequent right to terminate the agreements). For FSH’s breach of the agreements, I award SGI US$282,560.60, with interests at 5.33% per annum from the date of writ to the date of this judgment. I also award SGI US$5,127,384.80, with no interests. That said, this amount is to be set-off from the advance payments of US$64,782,300 to be returned to FSH.

In addition, in relation to potential claims against the parties, I grant SGI liberty to apply for directions when any real issues, ie, how any claims by SGG Manufacturers against SGI would translate into damages which SGI can claim against FSH, can be determined and damages quantified (see [319] above). I grant the same remedy to FSH in relation to any potential claim by UMS against FSH (see [445] above).