Desin Construction Pte Ltd v Cattel Engineering Pte Ltd

Kan Ting Chiu J:

[1] This case arose out of a contract between the plaintiff, Desin Construction Pte Ltd, and the defendant, Cattel Engineering Pte Ltd in connection with a construction project named “Diversion of Private Services at Jurong Island Highway (Phase 2) – Civil”.

[2] The owner of the project was the Jurong Town Corporation (“JTC”) and the project was managed by SembCorp Utilities (“SUT”). The defendant wanted to secure the project, and had obtained a complete set of tender documents and drawings from SUT. However, its intention was not to carry out the work itself. Discussions were held with the plaintiff for the plaintiff to execute the works, and a set of the tender documents and drawings were forwarded to the plaintiff.

[3] After receiving and studying the documents and drawings, the plaintiff submitted to the defendant its quotation. The first page of it read:

Thank you for invit[ing] us to quote for the project above.

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[5] The defendant accepted the plaintiff’s quotation of $11,512,000.00 and instructed the plaintiff to start work. No formal agreement was executed by the parties, nor was there any exchange of correspondence to record any terms with regard to the execution of and payment for the works. The paucity of written records and communications was to continue through the execution phase of the contract up to the end of the project, and this left matters in dispute in this case which contemporaneous records would have avoided.

[7] The defendant’s case was that the parts of the contracted works which the plaintiff was unable to carry out were withdrawn from the contract (the withdrawn works), and the plaintiff was left with the “excavation and Reinforced Concrete works”. The defendant then arranged with other contractors to complete the withdrawn works.

[8] The plaintiff pleaded in its statement of claim that the agreement was for “the lump sum amount of $11,512,000”, which was to be paid “within a reasonable time after the completion of the Diversion project or a particular part of the project and or upon submission of their progress claims or tax invoice.”

[9] The plaintiff claimed that although it had completed the project to the satisfaction of the defendant and had received some payments for the works, the defendant did not make full payment for them. The plaintiff set out its claim thus:

$11,512,000.00

Less:

a) 5% retention

$575,600.00

b) previous payments without GST

$2,987,248.70

Add:

c) deductions for materials purchased by Defendants on Plaintiffs behalf 7% GST

$5,186,616.07

$8,749, 464.77 ___________ $2,762,535.23 $193,377.46

$2,955,912.69

[10] Alternatively, the plaintiff claimed damages for breach of contract, or for payment on a quantum meruit.

[11] The defendant’s pleaded defence is that it was a condition that “payments were to be made only when work carried out by the Plaintiff was completed as and when they were approved by the Defendants and the superintending officer.” In its closing submissions, the defendant stated that payments were “subject to the basic premise that the Plaintiffs must have actually performed and satisfactorily completed the works before they are entitled to any payment whatsoever”, with no reference to the superintending officer’s approval. What was important was that by either formulation, the defendant only had to pay for work done to its satisfaction.

[12] The defendant’s case was that it had not only paid for the works the plaintiff had carried out, but it had overpaid the plaintiff to the sum of $577,304,09, and incurred a further $1,165,000 in rectifying the plaintiff’s works.

[13] This was explained in its closing submissions that:

[14] The plaintiff had worked out its claim as set out in para 9 above with the full contract amount of $11,512,000.00 as the starting point. From this, it deducted (a) the retention money, (b) the payments the defendant made to the plaintiff, and (c) payments the defendant made on the purchase of materials by the defendant on behalf of the plaintiff.

[15] While the plaintiff claimed that it had completed the contracted works, this was denied by the defendant which blamed the plaintiff for failing to perform its contractual obligations and leaving the defendant to complete the works instead.

[16] The plaintiff’s principal witness was its director, Chua Pea Hoo (“CPH”). In his affidavit of evidence-in-chief, CPH did not claim that the plaintiff had completed the contracted works, and he did not give any particulars on the execution and completion of the works. To the contrary, he deposed that $92,700 for work done for trial holes or trenches and $127,500 for work on a reinforced concrete drain were to be deducted from the full contract sum. (The plaintiff in its closing submissions accepted that a further $90,000 was to be deducted, bringing the total deductions to $312,200.) The acknowledgment that deductions were to be made for these items of work was significant as it was an admission that the plaintiff did not carry out all the contracted works.

[17] As the plaintiff was making a claim for payment, the burden was on it to prove that it was entitled to the payment claimed. Instead of producing proof of the works it had carried out, the plaintiff sought to rely on the fact that the contracted works were found to be complete or substantially complete at a final inspection on 18 February 2008 attended by representatives of JTC, SUT, the plaintiff and the defendant. The plaintiff submitted in its closing submissions that “(t)he importance of this inspection in confirming the substantial completion of the Plaintiffs works cannot be over emphasised.” There was a fallacy in this argument in that while the final inspection may have confirmed the substantial completion of the contracted works, but it did not confirm that all the contracted works were carried out by the plaintiff.

[18] The plaintiff also made the argument that it was entitled to payment because:

[21] In the circumstances, the plaintiff had to prove that it was entitled to any payment unless it was admitted by the defendant.

[22] CPH exhibited in his affidavit a summary of the payments of $3,131,511.14 the defendant made.

[23] Ong Chin Eik (“OCE”), a director of the defendant, deposed in his affidavit that the defendant had paid the plaintiff $2,977,248.71. He also exhibited the defendant’s payment vouchers for the payments made to the plaintiff. The payments recorded also added up to $3,131,511.14. These vouchers recorded that the payments were made as payments towards the plaintiff’s invoices, and as advance payments.

[24] The plaintiff’s alleged receipt of $2,987,248.70 and the defendant’s alleged payment of $2,977,248.71 were not reconciled. However, as the defendant’s case was that it only had to make payment for works that were satisfactorily completed, its statement on the payment of $2,977,248.71 was an admission that works to that value were done. Consequently, the plaintiff did not have to prove that it was entitled to the payment of $2,977,248.71, but it had to prove that it is entitled to any further payment.

[25] The plaintiff’s presentation of its claim was unsatisfactory. The plaintiff did not show positively the extent and value of the works it completed. Instead, it made its claim on the premise that the full contract amount was payable with deductions from payments made to it and to the suppliers of materials purchased on its behalf.

[26] The plaintiff should show (a) the value of the works it had completed, (b) the payments due from the works completed, (c) the payment it had received, and (d), that (b) minus (c) is $2,955,912.69. The plaintiff had not done that, and the defendant’s admission of $2,977,248.71 was the only evidence of the value of the works.

[27] For the foregoing reasons, the plaintiff’s claim for a further payment of $2,955,912.69, as well as the alternate claims for damages for breach of contract, or payment in quantum meruit, are dismissed.

[28] The claim pleaded in para 12 of the counterclaim state:

[29] OCE deposed in his affidavit of evidence-in-chief that the plaintiff had actually completed works of the value of $2,399,944.02, but he had not obtained the figure by adding up the value of the works the plaintiff completed. This figure was apparently arrived at by deducting from the full contract sum of $11,512,000 (a) the value of works the plaintiff failed to complete, and (b) the value of the works undertaken by the defendant due to the plaintiff’s omissions, but he did not set out the sums of the omissions and the works carried out by the defendant. Proceeding on the premise that the works carried out by the plaintiff had a value of $2,399,944.62, it followed that the payment of $2,977,248.71 was an overpayment of $577,304.07.

[32] The defendant’s payment records should also be looked at. In the cheque vouchers which approved payments to the plaintiff’s invoices for works carried out, there were no reservations that the payments were subject to verification or revision. If the payments were subject to such reservations, it would be logical for that to be inserted and acknowledged by the plaintiff when it received the payments. In contrast, when advance payments were made to the defendant, the related cheque vouchers specifically recorded that they were advance payments (and therefore not payments for work done.)

[33] The defendant made these payments after the plaintiff had submitted its invoices, and it made payment of the sums it approved and paid without qualification. No deduction should be made from the payment of $2,977,248.71 made to the plaintiff, and the claim for the overpayment is dismissed.

[34] This claim is pleaded in para 13of the counterclaim:

[35] The defendant subsequently gave further and better particulars of the defects it alleged the plaintiff had failed to rectify. The particulars were:

It is to be noted that three of the items were not defects. Items (c) and (g) were omissions, and item (f) related to delayed work.

[36] CJC produced a breakdown of this claim under seven items in his affidavit of evidence-in-chief. I set out a simplified version of it:

$10,000.00

All materials & works for cleaning and recoating of newly laid pipelines in culvert B (damage due to construction of top slab).

$20,000.00

$35,000.00

$200,000.00

All materials & works to rectify workmanship defects (wrong invert level) for 3.5m RC box drain at Teijin (Duration 35 days)

$500,000.00

$200,000.00

$200,000.00

[37] The plaintiff’s responses to the claims were:

Item 1 – disputed as there were no invoices produced.

Item 2 – disputed as there were no prior documented complaints, or invoices produced.

Item 3 – admitted.

Item 4 – $7,913 admitted, $192,087 disputed as no warranty was produced.

Item 5 – admit to $349,000 as quantified previously by the defendant.

Item 6 – claim was withdrawn by the defendant.

Item 7 – claim was for accelerated work and was not related to rectification works.

[38] The defendant replied to some of the plaintiff’s responses.

Items 1 and 2 – the defendant had tabulated the costs and expenses. (This did not address the plaintiff’s point that there were no invoices, and no letters of documented complaints for item 2.)

Items 3 to 5 – no reply.

Item 6 – the defendant did not withdraw this claim.

Item 7 – this was a claim for additional costs and expense incurred by the defendant and liabilities and risks the defendant faced because of the plaintiff’s failure to complete the contracted works.

[39] My findings on these items are:

Item 2 – I disallow this claim because there was no record of any complaint by the defendant of defective work when the plaintiff left the site.

Item 4 – I disallow the claim for $192,087. The amount claimed was for the costs for preparing and conducting 10 future inspections. There was no evidence that the inspections were necessitated by the rectification works.

Item 5 – I allow the $349,000. The defendant did not dispute this figure.

Item 6 – I disallow this claim. I agree with the defendant that the claim was not withdrawn, but I find that the claim was not for rectification works.

Item 7 – I disallow this claim. The defendant had not explained its nature and basis for it, and it had not shown that it was a claim for rectification works.

[40] Having examined the merits of the plaintiff’s claim and the defendant’s counterclaims, my orders are:

(ii) the defendant’s counterclaim for overpayment is dismissed with costs, and

(iii) there be judgment for the defendant’s counterclaim for rectification costs in the sum of $401,913 and costs.

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