Highness Electrical Engineering Pte Ltd v Sigma Cable Company (Pte) Ltd

[1] The plaintiff’s claim was for loss and damage suffered as a result of various breaches by the defendant of a supply contract (“the original contract”) relating to a purchase order HE/PO/03/0175 from the plaintiff dated 8 December 2003 which the defendant accepted on 16 December 2003. Under the original contract, the defendant would supply to the plaintiff various types of electrical cables for delivery from December 2003 to the end of December 2005.

[2] The plaintiff obtained interlocutory judgment against the defendant on 29 June 2006 after a trial before Tan Lee Meng J: see Highness Electrical Engineering Pte Ltd v Sigma Cable Co (Pte) Ltd [2006] 3 SLR 640. The defendant’s appeal to the Court of Appeal against Tan J’s decision was dismissed on 24 January 2007. The Assistant Registrar, Leong Kwang Ian (“the AR”), assessed the damages and awarded the following amounts:

a.

$51,760.22

b.

$9,652.05

c.

$27,557.49

d.

$1,212,371.07

$1,301,340.83

$65,067.04

$1,366,407.87

$106,458.56

$1,472,866.43

[4] This head of claim was for the defendant’s failure to deliver cables under five DIs – HE/DI/04/0154, 0156, 0217 and HE/DI/05/0008 and 0015 (“the 5 DIs”) – issued by the plaintiff to the defendant prior to the plaintiff’s termination of the original contract on 3 February 2005. As a result of the defendant’s failure to deliver the cables, the plaintiff had no choice but to purchase the same from various other suppliers in order to meet the Temporary Occupation Permit (“TOP”) inspection schedule set by the plaintiff’s main contractor in the project. However, the defendant claimed that:

[6] The plaintiff claimed that it had to engage additional manpower and rent additional equipment to accelerate and complete the work leading to the deadline for the project and the TOP inspection. The original deadline for completion was on 17 January 2005 so that the TOP inspection could be carried out. The TOP inspection was delayed because the defendant did not deliver the cables on time. This resulted in a postponement of the TOP inspection to February 2005. The Building Control Authority of Singapore eventually issued the TOP on 18 February 2005. The architects issued the certificate of completion on 21 February 2005. Nevertheless the plaintiff’s evidence was that it still had to carry out further finishing works from 19 to 25 February 2005 when it handed the works over to the main contractors.

[7] I accepted the plaintiff’s explanation that the delay in the project works caused the project to run into the Chinese New Year holiday period on 9 and 10 February 2005, which made matters worse as no work could be carried out on those dates. Thereafter, the plaintiff was also not able to carry out any further works between 13 and 18 February 2005 as its alternative suppliers could not deliver any cables due to the holiday period. Given the circumstances, I had no reason to doubt the plaintiff’s evidence that it had no choice but to accelerate its work during the available dates between 4 and 25 February 2005 in order to complete its part of the project works.

[8] I was satisfied that sufficient credible evidence had been adduced from the person in charge of the day to day operations of the plaintiff, who had testified that the plaintiff had to deploy an additional 10 workers (2 supervisors and 8 skilled workers) to complete the works. Payslips were produced. Invoices for the rental of the additional equipment comprising the cable winch to pull the cables during the installation process and the scaffolding to assist these workers to access the areas where the cables were to be installed were produced. Accordingly, I saw no reason to disturb the AR’s award of $9,652.05 under this head of claim.

[9] The amount sought by the plaintiff under this head of claim totalled $27,557.49 and comprised the following:

$1,843.96

$3,693.60

$5,325.49

$3,873.02

$5,000.32

$4,277.80

$3,543.30

$27,557.49

[10] This claim related to the piecemeal purchases (supported by relevant invoices and purchase orders) made by the plaintiff between February 2005 and August 2005 from various third party suppliers after the plaintiff accepted the defendant’s repudiatory breach in February 2005 but before the plaintiff entered into the long term supply contract with Keystone Cable (S) Pte Ltd (“Keystone Cable”) on 29 September 2005 (“the Keystone contract”) for the remaining cables. The amounts listed above represented the loss suffered by the plaintiff each month arising from the difference between the prices that the plaintiff would have paid the defendant under the original contract and those eventually paid by the plaintiff to its third party suppliers.

[11] The AR agreed with the defendant’s submission that the plaintiff should not have waited for some seven months (until September 2005) before “locking in” the price of the cables with Keystone Cable in the face of a rising market trend. The AR therefore held that the plaintiff should have “locked in” the price as soon as was reasonably possible after it terminated the original contract with the defendant on 3 February 2005. The AR thus ordered damages to be awarded based on the prices offered by Keystone Cable in its April 2005 quotation for all cables delivered from May to August 2005. As this re-calculation yielded a higher claim, the plaintiff stood by its original claim of $27,557.49.

[12] I saw no reason to disturb the amount of damages awarded under this head of claim and accordingly dismissed the defendant’s appeal on this item.

[14] The defendant said that they were not liable to deliver cables beyond 31 December 2005 under the original contract, which was only for a fixed term of two years from December 2003 to December 2005. As such, the defendant contended that they were not liable for further losses beyond December 2005.

[15] The plaintiff asserted however that the original contract was for the defendant to supply the cables at the same unit prices even after December 2005 until the end of the building project, even if that completion was delayed. The AR disagreed with the plaintiff’s submission on this point. The AR correctly found that the original contract was for a fixed term ending on 31 December 2005. If the defendant wanted to raise substantially the unit prices for the cables to be supplied after 31 December 2005, the plaintiff would have the option of ordering the balance of all the cables before the expiry of the original contract so as to “lock in” the purchase at the original prices, provided of course the plaintiff had the financial means to do so at that time or would have been able to obtain the necessary financial assistance if it did not have sufficient financial resources of its own to do so.

[16] The AR noted that:

[17] Hence, on the issue of whether the plaintiff would have bought up all the remaining cables it needed for the project from the defendant before the end of 2005 should the defendant not agree to extend original contract beyond the end of 2005, the AR had in my view correctly found in the plaintiff’s favour that given the rise in the price of cables, the plaintiff would have in all probability purchased all the remaining cables from the defendant by the end of 2005 had the original contract not been repudiated.

[18] The plaintiff originally claimed $1,282,576.67 under this item. This was reduced to $1,212,371.07 as the AR felt that the loss should be calculated with reference to the (lower) unit rates in Keystone Cable’s quotation of April 2005 instead of the (higher) unit rates in Keystone Cable’s September 2005 quotation which the plaintiff eventually accepted. The AR decided that the plaintiff ought not to have delayed firming up the long term supply contract with Keystone Cable until September 2005 in the face of rising cable prices, which was readily apparent to the plaintiff. I had no reason to disagree with this part of the AR’s decision.

[19] Counsel for the defendant contended that:

[20] Accordingly, counsel for the defendant submitted that the plaintiff did not and was not likely to have either asked the defendant to extend the original contract or issued a DI for the remaining cables under the original contract.

[21] In my view, the real issue was the correct reference baseline to use for assessing and computing the loss arising from the plaintiff having to pay substantially more for the remaining cables that it in fact purchased from its substitute supplier, Keystone Cable (albeit the loss was ordered by the AR to be calculated based on the April 2005 quotation, and not on the September 2005 quotation which formed the basis of the plaintiff’s actual supply contract with Keystone Cable). By adopting the lower unit prices in Keystone Cable’s April 2005 quotation as the reference baseline, and not the higher unit prices in Keystone Cable’s September 2005 quotation, the AR had already penalised the plaintiff for not acting fast enough to mitigate its loss in the face of rising prices for cables.

[22] In assessing damages, it would sometimes be unavoidable to make certain reasonable assumptions based on matters that would be reasonably foreseeable. Otherwise, one would not be able to compute the loss. The AR rightly assumed, for the purpose of computing the damages, that if there was no repudiatory breach by the defendant resulting in the original contract being prematurely terminated, the plaintiff would have acted in its own commercial interest to order all the remaining items before the expiry of the original contract in December 2005 in order to “lock in” the supply of cables at lower prices if the plaintiff could not obtain favourable prices from the defendant to continue supplying cables after December 2005. Even if the defendant’s allegations that the plaintiff did not have sufficient cash to pay for the pre-order of cables before December 2005 were eventually borne out, it did not necessarily mean that the plaintiff would not be able to obtain external financing to do so. There was no evidence adduced at the hearing before the AR that the plaintiff would be unable to obtain financial assistance from the bank or from other third parties.