Kosui Singapore Pte Ltd v Kamigumi Singapore Pte Ltd and another

Quentin Loh J:

[1] The Defendants have appealed against my oral judgment with brief reasons delivered on 31 October 2011. I now set out my reasons for my decision.

[2] The 2 Defendant, Kamigumi Co Ltd, is a company incorporated in Japan with one of its divisions engaged in the building and construction industry. It has a separately incorporated entity in Singapore, the 1 Defendant, (collectively, “the Defendants”). Sometime in early June 2008, the Defendants heard of and decided to try and secure the theme park contract for the Universal Studios Singapore’s (“USS”) show and ride attractions (“the USS contract”). They were successful. USS awarded the Defendants the contract to erect and install the theme park’s eight show and ride attractions at USS (“the eight attractions”):

(a) Water World (“WW”);

(b) Jurassic Park River Adventure (“JPR”);

(c) Revenge of the Mummy (“ROM”);

(d) New York Special FX Spectacular (“SFX”);

(e) Journey to Madagascar (“JTM”);

(f) Dragon Junior Coaster (“DJC”);

(g) Canopy Tour (“C Flyer”); and

(h) Pteranodon Flyer (“P Flyer”) – also called the Kiddy Jeep Ride.

[3] The Plaintiff is a company incorporated in Singapore carrying on the business of building and construction. It is owned by Mr Ito Fumiyuki (“Mr Ito”). In this case, the Plaintiff became the labour subcontractor, supplying labour to the Defendants in the circumstances set out below (“the USS labour subcontract”). Which Defendant it contracted with is one of the disputes in this case. The Plaintiff’s first quotation was addressed to and accepted by the 2 Defendant (“the 1 Agreement”), and subsequently there was a second, identical quotation, backdated to the date of the first quotation, addressed to and accepted by the 1 Defendant (“the 2 Agreement”) (collectively, “the Agreements”). The other issue is, broadly speaking, the amounts, if any, owed by the parties to each other in respect of various claims.

[4] The parties have resolved two issues:

(a) The Plaintiff has admitted to the 1 Defendant’s Counterclaim of $125,149.87 (inclusive of GST) being paid by the 1 Defendant to K2 Specialist Services Pte Ltd for the bolt torque works.

(b) The Defendants, as they informed me on 25 April 2011, have decided not to pursue their Counterclaim in respect of the sums paid to one Mr Oshita.

[5] The parties have also helpfully agreed on the remaining six issues:

(i) Whether the 1 Agreement between the Plaintiff and 2 Defendant remains valid and enforceable, or the 2 Defendant has been discharged of all its obligations under the 1 Agreement following the execution of the 2 Agreement between the Plaintiff and 1 Defendant.

(ii) Whether, under the 1 Agreement and/or the 2 Agreement, the Plaintiff is entitled to claim the total value of man hours incurred less the sums paid to the Plaintiff by the 1 Defendant in the light of Note (1) of the terms and conditions, which reads as follows: “During work progress, if there are changes which are more than your original BOQ, we will charge you accordingly based on our rate first quote to you.”

(iii) Whether the Plaintiff is estopped by convention from relying on the Agreements to claim the total value of man hours incurred less the sums paid to the Plaintiff by the 1 Defendant

(iv) Whether the Plaintiff has discharged the burden of proving, on a balance of probabilities, that it has supplied additional manpower valued at $3,134,965.50 (excluding GST).

(v) Whether the 1 Defendant is liable to pay the Plaintiff for its use of the lorry, and if so, the rate to be paid, having regard to the fact that there was no discussion on the rate to be charged

(vi) Whether Mr Hideaki Iwaki (“Mr Iwaki”) was in breach of his duties as the Attraction Manager for the JPR attraction, and, if so, whether the Plaintiff is liable for the sum of $74,900 incurred by the 1 Defendant in engaging CUL M&E Pte Ltd to provide an assistant for Mr Iwaki.

[6] The following facts are not really in dispute. Insofar as they are, the following paragraphs constitute my findings of fact. In early to mid-June 2008, the 2 Defendant’s Mr Terayama, who eventually became the Defendants’ project manager for the USS project, heard about USS’s plans for a Universal Studio attraction on Sentosa Island and alerted his colleague in Singapore, Mr Kamimura, a director of the 1 Defendant. Mr Kamimura, an economics graduate, had no actual construction site experience whether in Singapore or elsewhere. The Defendants decided to bid for the USS contract.

[7] The 2 Defendant had successfully worked with the Plaintiff’s Mr Ito before, especially in Dubai, and turned to him for its labour supply. Mr Kiyohara was a director in the 2 Defendant’s building and construction division and was in charge of the 2 Defendant’s Tsurusaki Branch in Japan. Mr Terayama was actually employed by Hoei Sangyo Co Ltd and was seconded at the material time to the 2 Defendant’s Tsuruki Branch. He reported to Mr Kiyohara. Since he started work at the age of 18, Mr Terayama has worked and been involved in installation work of entertainment facilities in Japan. However, he has never worked in Singapore.

[8] In August 2008, the 1 Defendant’s Mr Kamimura met with Mr Sakaniwa of Resort World Sentosa (“RWS”, or “the Employer” in building parlance) to discuss the Defendants’ interest in the contract. Mr Kamimura brought along the Plaintiff’s Mr Ito and Mr Michinaka to this meeting. Thereafter there were more meetings between the Defendants and the Plaintiff. Mr Terayama was the person in the Defendants with the experience in building show and ride attractions, having been involved in a similar project in Universal Studios Japan. It was not disputed that the Plaintiff and Mr Ito had never done such work before. Mr Ito left the details of the USS labour subcontract to Mr Michinaka to work out. It was soon apparent that the Plaintiff and Mr Michinaka were having difficulty doing so as they had never done this kind of work before. This too was not disputed.

[9] There was an important fax with attachments dated 31 October 2008 from Mr Kamimura to Mr Michinaka copied to Mr Ito, setting out in spreadsheet format the Plaintiff’s quote, with:

(a) a list of the numbers and type of worker required for each attraction (eg, lifting supervisor, foreman, mechanic electrician, welder, rigger, signalman, fitter and forklift driver);

(b) the number of days work for each attraction;

(c) the number of man hours required of each category of worker, (based on “10 working hour(s): 8.00 - 19:00, Lunch 12:00 – 13:00”);

(d) a request to multiply the man hours by 1.5 as the estimates were based on experienced Japanese workers as compared to Singapore workers without the experience; and

(e) the start and end dates for each attraction;

It was not disputed that Mr Terayama prepared these attachments with the foregoing details and figures based on his experience. This is clearly illustrated from Mr Terayama’s initial inclusion of an electrician as part of the required workforce of the Plaintiff. Whilst it is common for a Japanese contractor to include electricians in their workforce, in the Singapore context and practice, electricians are from separate electrical subcontractors who have to be separately licensed by a statutory undertaker. Hence, no electrician was included in the Plaintiff’s quote.

[10] Mr Michinaka worked on the quotation, no doubt discussing the final figure with Mr Ito. A meeting was held on 20 November 2008 between Mr Ito and Mr Michinaka from the Plaintiff and Mr Terayama and Mr Kamimura from the Defendants to discuss the Plaintiff’s pending quote. I find that Mr Michinaka had worked out the pricing on a Bill of Quantities (“BOQ”) which was based on and incorporated all the details and figures from the attachment referred to above at [9], and this was discussed at the meeting. The original BOQ can no longer be found, but the figures agreed upon are in the Plaintiff’s quotation, which I will discuss below.

[11] On 25 November 2008, the Plaintiff sent the 2 Defendant its quotation for its supply of labour and installation of equipment for the USS contract, marked to the attention of Mr Kiyohara. This was “Agreed and Accepted” and signed by Mr Kiyohara for and on behalf of the 2 Defendant (this was the 1 Agreement). This formed the contract between the parties and consisted of a three-page letter form with terms and a detailed breakdown for each of the eight attractions, indicating the type of workers to be supplied, the sub-totals and totals of man-days per type of worker, the number of hours per category of worker (based on an eight-hour work day from 8 am to 5 pm), the unit rate and the amount to be charged therefor, a two-hour overtime provision per category of worker, the hours and unit rate and overtime amounts to be charged therefor, and three pages covering the scope of works items the Plaintiff would cover. It bears repeating that other than the pricing, these details and figures were based on those worked out by Mr Terayama and referred to above at [9]. It is important to note that the text included the following:

[12] The next important fact occurred on 19 March 2009 when Mr Maeda of the 2 Defendant sent an email to the Plaintiff’s Mr Ito which was copied to Mr Terayama, Mr Michinaka, Mr Kiyohara, Mr Kamimura and one Mr Morishita. The subject heading was “Re: Regarding to Agreement” [sic]. This email went on to say:

The only point I would make is that at the paragraph numbered “2” above, the phrase “shall be still valid” appears to have been inaccurately translated; I accepted the Interpreter’s interpretation during the trial that the phrase should more accurately read: “will be maintained”. Counsel for Plaintiff and the Defendants accepted and did not dispute this.

[13] Mr Ito complied and sent a quotation on identical terms, backdated to 25 November 2008, to the 1 Defendant, marked for the attention of Mr Kamimura who then “Agreed and Accepted” the same by signing beneath that phrase on behalf of the 1 Defendant (this is the 2 Agreement). Issue (i) arises from this transfer of payment obligations. It is undisputed that the first or first few invoices were addressed to the 2 Defendant, but these were subsequently reissued and the 1 Defendant paid all sums invoiced by the Plaintiff.

[14] There were delays to the project and the USS contract which were not caused by the Plaintiff. This is not really disputed by the Defendants. Insofar as it is, I find and hold that this has been proven by the Plaintiff, (see [33] below). Consequently, there was a very low take-up rate of man hours that had been catered for, unutilised labour in the first few months of the contract, and a subsequent need to accelerate works to make up for lost time. The Plaintiff put in more workers and their workers often worked overtime. The contract period overran the scheduled end date. The identity of the party who requested the acceleration, the existence of an agreement to pay for this acceleration, and the amount incurred for acceleration were some of the issues that arose out of the USS labour subcontract. At one point in time, RWS requested acceleration for the SFX attraction and extra work due to unscheduled stockpiling of material at one part of the site, and the Plaintiff put in the labour to do so. The Plaintiff raised an invoice for this work, RWS paid the 1 Defendant, and the 1 Defendant, in turn, paid the Plaintiff.

[16] During the course of construction, the 1 Defendant used the Plaintiff’s lorry and driver to transport its workers at the work site. This was not catered for in the quotation. During the course of the contract, the Plaintiff did not submit any periodic interim claim in respect of this lorry and driver, but contended that it was understood that the 1 Defendants would not use the lorry for free. Issue (v) turns on what, if anything, had actually been agreed between the parties as to the use of the lorry and driver and whether the 1 Defendant is liable to pay for the same.

[17] Another dispute related to one Mr Iwaki, who was supplied by the Plaintiff to the 1 Defendant as the Attraction Manager for JPR. The 1 Defendant claimed that they were very dissatisfied with Mr Iwaki’s performance and contended that because of Mr Iwaki’s poor work performance, they had to hire an assistant attraction manager from CUL M&E Pte Ltd to assist Mr Iwaki. The Plaintiff was therefore liable for this additional expense. Issue (vi) arose out of this dispute.

[18] I now turn to deal with the Agreed Issues.

(i) Whether the 1 Agreement between the Plaintiff and the 2 Defendant remains valid and enforceable or the 2 Defendant has been discharged of all its obligations under the 1 Agreement following the execution of the 2 Agreement between the Plaintiff and the 1 Defendant

[19] The terms and conditions of the Agreements were identical save for the contracting parties, the signatories for the 1 and 2 Defendants and the backdating of the second quotation.

[20] The Plaintiff claimed that it entered into a contract with the 2 Defendant and the 2 Defendant subsequently asked it to allow the 1 Defendant to be used for Goods and Services Tax (“GST”) purposes. The Plaintiff contended that save for the invoicing and payment, it was agreed that the original contract would remain valid and during discussions to reissue invoices to the 1 Defendant, the Plaintiff claimed that Mr Ito’s condition that the 2 Defendant was to guarantee payment by the 1 Defendant to the Plaintiff was acceded to.

[21] The Defendants claimed that there was a substitution of the 2 Defendant with the 1 Defendant through the sending and acceptance of the second quotation in the name of the 1 Defendant. The 2 Defendant was thereafter discharged from performance of the contract. The Defendants contended that the email of 19 March 2009, properly construed, meant that the original terms and conditions of the 1 Agreement with the 2 Defendant would remain unchanged, except that the 1 Defendant would perform the contract.

[22] It is common ground that the 1 Agreement was made between the Plaintiff and the 2 Defendant. However, once the work commenced, the Defendants must have realised that they were going to suffer a great financial disadvantage if they could not offset the GST amount in the Plaintiff’s bills as the USS contract was between RWS and the 1 Defendant, whilst the USS labour subcontract was between the Plaintiff and the 2 Defendant. This was something entirely of the Defendants’ own doing. Hence, on 19 March 2009, the 2 Defendant made a request for a change. The contents of the request for this change speak for themselves. In the first paragraph of the translated email dated 19 March 2009 (see [12] supra), the 2 Defendant stated that the contract amount and the “terms and conditions shall still be valid but the payment will be made through Kamigumi Singapore considering the GST matter” [emphasis added]. The second paragraph is even more telling. The 2 Defendant unequivocally stated that the agreement between the Plaintiff and their “Tsurusaki Branch in the original contract” shall

The meaning of that paragraph is incapable of any construction other than that the 1 Agreement still remains afoot. As noted above, this was made even clearer when, during trial, the Interpreter pointed out that the word “valid” in the second paragraph was not a correct translation. The Japanese word was more accurately translated as “maintained”. This was the Defendants’ own document. I therefore cannot accept the Defendants’ contention that the 2 Agreement was meant as a discharge of the 1 Agreement and the 2 Defendant from the USS contract.

[23] Further, under cross-examination, Mr Kamimura admitted: “My understanding is that the contract remains valid.” Mr Kiyohara admitted that when he approached Mr Ito for a change in contracting party, Mr Ito’s condition for agreeing was a guarantee from Kamigumi Japan, ie, the 2 Defendant. Mr Kiyohara replied to Mr Ito that he would consider this and he did. But he did not reply or follow through because at the end of March 2009, the Tsurusaki Branch was closed and he was transferred to the Kamigumi Head Office at Kobe. However, Mr Kiyohara then went on to say that he discussed the 19 March 2009 email with Mr Maeda before the latter sent it out. Although Mr Kiyohara did not inform the Head Office about Mr Ito’s condition for substituting the 1 Defendant with the 2 Defendant, he did tell Mr Maeda of Mr Ito’s condition: “I told him that parent’s company’s guarantee is required.” Mr Maeda then told Mr Kiyohara to consider “[t]he process of getting parent company’s guarantee [sic].” I find Mr Kiyohara’s evidence on this point quite unsatisfactory. Thereafter his evidence was nothing but dodging about each question in an effort to undo what he had just said. I also do not accept his reason for not pursuing the guarantee, viz, the fact that the payments from the 1 Defendant were “successfully done” thereby implying that a Head Office guarantee was no longer necessary. He chose not to answer questions and kept beating about the bush, in an effort to justify the Defendants’ contention that a substitution had taken place. I therefore do not accept his evidence on this point. I find that for his own purposes and reasons, he did not pursue the guarantee with the Head Office. I find that he knew Mr Ito had imposed a condition for the substitution, and he discussed the contents of the 19 March 2009 email with Mr Maeda before Mr Maeda sent it out. That email speaks for itself.

[24] Accordingly, I find and hold that the 1 Agreement between the Plaintiff and the 2 Defendant remains valid and enforceable. The 1 Defendant and 2 Defendant are jointly and severally liable to the Plaintiff for all sums that are or may be due to it. For all sums due and payable by the Plaintiff to the Defendants, payment by any one Defendant will be good discharge of the other.

[25] Much was made of the fact that a guarantee was never eventually issued. I find that as the parties were all Japanese, there was an element of trust between them. Many matters were dealt with verbally or informally and there was little or no follow-up or documentation.

[26] The issue of the guarantee does not really arise unless the 1 Defendant fails to pay any sum due to the Plaintiff under the USS labour subcontract. Insofar as it is necessary, having considered the evidence, I find and hold that the Plaintiff required a guarantee of payment by the 2 Defendant in the event that it was not paid by the 1 Defendant, for acceding to the GST arrangements requested for by the 2 Defendant. This guarantee was promised with the statement that Mr Kiyohara would inform Mr Ito of “further detail”. In cross-examination, Mr Ito testified, and I accept his evidence, that he understood from this that the 2 Defendant was to provide payment guarantee:

[27] Mr Kamimura agreed that the phrase “… will inform you of further details…” did not mean that the Plaintiff would not be getting a guarantee:

[28] In any event Mr Kiyohara failed to follow up and Mr Ito did not pursue the matter as he was in the thick of subcontract performance. Insofar as it is necessary, if the Plaintiff had asked for specific performance, they would be entitled to it. If so, the 2 Defendant’s defence which relies on s 6, Civil Law Act (Cap 43, 1999 Rev Ed) would fall away.

(ii) Whether the Plaintiff is entitled to claim the total value of man hours incurred less the sums paid by the 1 Defendant in the light of Note (1) of the terms and conditions

[31] My following findings of fact, set out below, were not really in dispute, especially for those leading up to the contract:

(a) It is common ground that the Plaintiff, to the knowledge of the Defendants, did not have any experience in this kind of work. The quotations in the 2 Agreement were provided by the Defendants as an estimate of what would be required. Mr Terayama (as an employee albeit on secondment) of the 2 Defendant and who had experience with this kind of work, testified in his affidavit that

(b) There was a series of meetings in the latter half of 2008, during which Mr Michinaka, who had been tasked by Mr Ito to work on the quotation, asked Mr Kamimura for material and data as he was having difficulty working out a quotation. Mr Kamimura liaised with Mr Terayama, who represented the 2 Defendant.

(c) As noted at [9] supra, pursuant to these communications, the 2 Defendant sent the Plaintiff an email on 31 October 2008, containing enclosures and asking the Plaintiff to quote as a labour subcontractor to the 2 Defendant. The format of some of these documents was provided by RWS to the 2 Defendant, but it was the 2 Defendant (mainly Mr Terayama and Mr Kamimura) who prepared the documents and put in the figures for the amount of labour required. This included, for each attraction, the required labour in terms of man days, man hours, type of labour (foreman, rigger, welder, fitter, etc), start and end dates, and the T&C periods. Mr Michinaka adopted the figures for the man days per attraction but made adjustments to the particular categories of labour and/or their number.

(d) Based on the numbers, in particular the total man days per attraction, the material and data put forward by Mr Terayama, through Mr Kamimura, and the adjustments (noted at [(c)] supra) by Mr Michinaka, the Plaintiff came up with a BOQ which was discussed at a meeting on 20 November 2008, and the parties agreed on the figures. I accept Mr Michinaka’s evidence that his low range was about 19,000 man-days and his high range was about 23,000 man-days, and the figure finally adopted was 20,611 man days. This BOQ no longer exists, but the data, figures and numbers for each attraction from this BOQ went into the manpower schedule quoted to Kamigumi and prepared by Mr Terayama - this was not really in dispute. These documents set out for each attraction the type of labour required, the number of workers for each category of labour, the number of man days per category of worker, the unit rates (including those for normal time and overtime) and the total amounts. I find and hold that this was, for all intents and purposes, having been taken from the BOQ initially discussed, the BOQ referred to in the Plaintiff’s quote dated 25 November 2008 which was accepted by the Defendants.

(e) The contractual provision in Note (1) reads:

The meaning of these words is clear and unambiguous. It says “if there are changes which are more” than the original BOQ [emphasis added], then the Defendants will be charged for this extra work at the rates set out in the quotation. It can hardly be clearer. This is clearly not the wording of a lump sum or fixed price contract where the contractor has promised to carry out and complete a set piece of work for a fixed sum agreed in advance.

(f) The contract sets out in detail, for each attraction, the man days required per category of worker, their respective unit rates or cost, the normal eight hour day charge and a two hour overtime charge per day, with appropriate totals and subtotals. For example, for the Canopy Flyer, the Plaintiff would supply one Site Supervisor, for 122 man days in return for the sums of$30,256 (for 122 MD for eight hours a day at $31 which is the normal rate) and $11,346 (for the daily two hours overtimefor 122 MD at $46.50 per hour, being the overtime rate of 50% more than the normal rate), making it a total of $41,602 for the Site Supervisor for the envisaged period. The other workers were worked out in a table similar to the building up of a BOQ. Contractually this meant that if the Defendants required the Site Supervisor for the Canopy Flyer for more than the 122 MD, they had to pay more based on the rates set out in the manpower schedule.

(g) The Defendants accepted the quote without demur and signed the contract beneath the annotation which says “Agreed & Accepted”. The contract is in a simple letter form. The terms, albeit after translation, were simple and brief. The Defendants did not question that provision or said that it was wrong. Neither did they ask for rectification in the alternative, if indeed that was the common understanding. In fact they signed a second agreement with identical wordings and Note (1), again without demur. The contract cannot, on any construction, be construed as a lump sum or fixed price contract in the sense that the Plaintiff would only charge the set price of $4,326,707 for the work it was to do: the Plaintiff would suffer a loss if the work turned out more than envisaged and would receive a windfall if the same turned out less than envisaged.

(h) Mr Kamimura accepted that “changes” in Note (1) could mean an increase in workers; and that “original BOQ” referred to the document that was discussed at the 20 November 2008 meeting:

(i) None of the Defendants’ witnesses provided any satisfactory explanation (if there was any explanation at all) as to why they said this was a lump sum contract despite the obvious contradiction in Note (1) with that construction or contention. Mr Kiyohara stopped short of saying he was, or thought he was, signing a lump sum contract. Rather, his evidence was that he “wanted” a lump sum contract, that such an understanding was “consistent with Kamigumi’s agreement with RWS,” that the manpower schedule was “essentially” provided on a lump sum basis, and that the contract was “basically” a lump sum contract. Mr Kiyohara only said once that the contract definitively “was” a lump sum contract. Even then, he qualified this by saying that it was subject to RWS’s willingness to pay for additional labour:

Similarly, Mr Terayama’s evidence was that he “expected” the contract to be on a lump sum basis, and that the margin given above the estimated labour requirement meant that the manpower schedule was “essentially” provided on a lump sum basis. Mr Kiyohara specifically said he left all matters of the BOQ to Mr Terayama and did not check it before accepting the quotation. The evidence tendered by the Defendants’ witnesses was disingenuous, and did not go far toward supporting the interpretation that the Defendants’ understanding was that their contract was on a lump sum basis.

(j) These were all experienced building contractors. First, it is a well known basic fact that the lump sum contract, in the sense contended by the Defendants, is normally used where the construction design is well developed and where the quantities can be estimated with some degree of accuracy. This is certainly not the case here, not for installations of this nature, and, a fortiori, not the case for such installations in Singapore where no such installations have been erected before. Secondly, seasoned building contractors do not make such basic mistakes like construing the words used in Note (1) to mean a true lump sum contract. Even if I give an allowance for non-familiarity with English, which I do not for the purposes of my judgment as the key witnesses showed a fair working knowledge of English during the trial, there can be no mistaking the meaning of Note (1) and confusing it with a true lump sum contract formulation and language.

(k) The Defendants’ first attempt to get around this was to put forward a theory that a margin had been built in for contingencies and unexpected difficulties, thereby ensuring that this was a true lump sum contract and the risk was passed on to the Plaintiff. I do not believe the Defendants’ witnesses’ evidence of the meeting in Singapore on 19 January 2009 where they allegedly asked Mr Ito for his confirmation that his quote covered contingencies, delay and/or difficulty of work – “essentially that it was provided on a lump sum basis” - and Mr Ito allegedly responded “I understand”, thereby signifying his agreement. I note that even this is couched in language that is less than positive: eg, “...essentially…provided for...” instead of it “was” a lump sum contract, and, “I understand” instead of “I agree.” I do not accept their evidence on this score. It bears noting that initially the Defendants’ witnesses all deposed that 9 December 2008 was the date of this important meeting in all their Affidavits. But upon receiving the Plaintiff’s reply Affidavit, which proved that Mr Ito was not in Singapore on that date, and therefore could not have been present at that meeting, the Defendants’ witnesses changed their evidence just prior to cross-examination, stating the date to be 19 January 2009 instead. The Defendants’ witnesses obviously gave the earlier date to show that the lump sum nature of the agreement was agreed on before the work started. However, by 19 January 2009, the work had already started. I find it implausible that such an important detail as whether or not the contract was a lump sum agreement was not discussed at the earlier meetings in October and November 2008, but only introduced after the work had started in January 2009. I find that it is more likely that the dates were deliberately changed in the Affidavits to reflect the more favourable position for the Defendants that some agreement on lump sum was made before the works started. There were also other inconsistencies which surfaced during the cross-examination of the Defendants’ witnesses. Mr Terayama, for example, gave evidence that he had not communicated his estimate of 17,000 man-days until the 19 January meeting, and that he did not explain to the Plaintiffs and Mr Kiyohara how he had arrived at this figure. Just one page earlier, it had been his testimony that he had explained that this figure was arrived at by taking a 15% margin of 20,000. Given the discrepancy in Mr Michinaka’s figure of 19,000, it is unlikely that this number would have been accepted without question if it had been brought up. Yet, Mr Terayama testified that he was not questioned on how he had arrived at this figure:

(l) I also do not accept their evidence on the 17,000 man hours estimate and the increase of the figures to 20,611 man days to cater for contingencies; I accept Mr Michinaka’s evidence that that figure was never discussed or even brought up. I find that it was an afterthought and an ex post facto calculation to justify an alleged margin for contingencies and bolster the lump sum theory. The objective evidence shows, and on his own evidence Mr Terayama said, that he estimated 2,556 man weeks which translated into 12,780 man days, and after multiplying that by 1.5 to cater for the difference in quality between Japanese labour and labour in Singapore, he reached the figure of 19,170 man days. This came close to the 20,611 man days settled upon at the 20 November 2008 meeting which found its way into the quotation. I have referred to Mr Michinaka’s evidence at paragraph (d) above, which I accept, as to how this figure was arrived at.

(m) The second attempt was to contend that this was a ‘pay-when-paid’-type contract. When the Defendants’ witnesses were hard pressed under cross-examination, they brought up this theory that even if the fault in incurring the additional labour was RWS’s and not the Plaintiff’s, the Plaintiff was not entitled to payment therefor unless RWS paid the Defendants for the same. Both Mr Kamimura and Mr Kiyohara’s cross-examination on this point is very telling – if the Defendants were not paid, then no matter what happened at site, or the facts of the matter, the Plaintiff would not get paid. When pushed on this point, Mr Kamimura could not explain why this should be so.

Mr Kiyohara conceded that there was no ‘pay-when-paid’ provision written in this contract:

I do not accept this contention at all; it is entirely without basis and there is nothing at all in the contract that even starts to hint at such a provision.

[32] I therefore find and hold that this was a contract to supply the categories of workers set out in the manpower schedule, and at the rates and for the duration in man-days (comprising an eight-hours day from 8 am to 5 pm and two hours overtime from 5 pm to 7 pm) therein. If at the end of the day, the Plaintiff was required to supply more labour, work longer hours or both to complete the installation, then the Defendants would have to pay the Plaintiff for the extra labour at the rates set out in the manpower schedule.

[33] There was a significant amount of evidence suggesting that the installation of the eight attractions was delayed by various causes not related to or caused by the Plaintiff or the Defendants. These included the late completion of foundations by the main civil contractor to RWS, design changes, and delay in delivery of material to site, followed by a sudden over-delivery of material to site for the SFX and JTM attractions, and consequent prolongation of the installation period to mid-March 2010. I need only refer to the evidence of Mr Terayama himself where he admitted to there being numerous delays, specifically in the completion of the foundations, the site conditions, design changes and the like, and acceleration measures undertaken. He also unreservedly accepted paragraph 13 of Mr Ito’s Affidavit of Evidence-in-Chief which sets out the various delays. There were many other witnesses, including Mr Kusano and Mr Sundar Ramachandran, whose evidence was unchallenged on this point and who attested to the same - the slow start, and the huge increase in manpower from the Plaintiffs in September onwards. The same may be said of Mr Saminathan Supramaniam (“Mr Saminthan”), the sole proprietor of Standard Rigging (“SR”), who were the main labour supplier to the Plaintiff and later became the sole supplier. Mr Saminathan was not cross-examined and his evidence was therefore unchallenged. Many of the other witnesses gave the same evidence, which I accept. I therefore find as a fact that there was a slow start to this contract for the reasons which include those set out above in the evidence. There were also instructions to catch up in September, which went into October, November and December, with the result that the contract period was prolonged and extended into March 2010.

(iii) Whether the Plaintiff is estopped by Convention from relying on the Agreements to claim the total value of man hours incurred less the sums paid to the Plaintiff by the 1 Defendant

[34] The Defendants contended that the Plaintiff’s billing on a percentage completion basis and the use of a “Final Invoice” embodied a practice, and therefore an assumption, that the parties treated this as a lump sum contract. That assumption was also supported by the Plaintiff’s non-submission of time sheets for interim billing and the Defendants’ payment of on such invoices without requiring time sheets. The Defendants also did not verify or check the number and categories of workers on site at any time, leaving the Plaintiff to deploy the workers as required. The Defendants relied on the fact that at the one time when “extra” work was ordered by RWS (for the SFX attraction) which was therefore outside the lump sum, the Plaintiff agreed, supplied the extra labour and later submitted its invoice and the required particulars therefor, and the Plaintiff was duly paid by RWS through the Defendants. In contrast, no invoices and required particulars were submitted immediately following the supply of additional labour at the other sites.

[35] The Plaintiff contended that there could not be any estoppel by convention because there were oral communications between the parties which assured the Plaintiff of payment. The Plaintiff said that, at all material times, it was understood that the Defendants would pay the Plaintiff for the additional labour required for the works, which was why the final invoices were not prepared till much later.

[36] The parties accepted the requirements to establish an estoppel by convention as laid down in Singapore Telecommunications Ltd v Starhub Cable Vision Ltd [2006] 2 SLR(R) 195, namely that –

(a) The parties to a transaction act on an assumed state of facts or law;

(b) The assumption is either one which both parties share or one which is made by one party and acquiesced by the other; and

(c) There is either an “agreement or something very close to it” in respect of a shared assumption.

[37] The Defendants submitted that they have satisfied these requirements and the Plaintiff is estopped from denying that the contract was a lump sum contract. I cannot and do not accept that submission.

[38] The fact that interim billing is rendered on a percentage completion basis does not invariably mean that the contract is a lump sum contract. Parties may adopt this method of interim payment for other different reasons, for example, as a matter of convenience and cutting down time-consuming paper work. This was the very reason Mr Ito gave in his evidence, and I accept his evidence in this respect:

It was easier to just look at the stage of completion and set the percentage for interim payment; it cut out a lot of paperwork and verification and certification procedures. Moreover, this basis of interim payment was specifically provided for in the contract:

It should be noted that a major assumption of manpower utilisation was based on Mr Terayama’s figures and data which contained start and end dates for each attraction, bar charts for utilisation of labour, a bell curve with a maximum number of workers for June and July 2009 and with an end date of 30 January 2010. This term sat together with Note (1) on page 1 (referred to at [11] supra) in a simple contract that was essentially 2-pages long and almost in point form. As noted at [31(e)] supra, the meaning and import of Note (1) are clear and unambiguous.

[39] The Plaintiff’s failure to keep detailed timesheets is also explicable on the above grounds. Mr Ito’s evidence was that he had not addressed his mind to the financial issues until required, as all his time and effort had been spent on ensuring a “smooth and speedy progress of the Works” which had been severely disrupted. The Plaintiff conceded that it had been remiss in keeping these records, but that the task of keeping the records was shared:

[40] Importantly, I also find the immediate reaction of the Defendants when the Plaintiff presented its claim telling. Mr Terayama did not protest that this was a lump sum contract and the Plaintiff could not present such a claim, ie, as if it was a measurement contract, and neither did Mr Kiyohara until a later stage. Their reactions at the stage of service were merely to check the figures, and to attempt to persuade Mr Ito to reduce his claim. This is not the behaviour of parties who believed that they had contracted on a lump sum basis.

[41] There was another incident that goes against the Defendants’ contention of a lump sum contract. I accept the evidence of Mr Kusano who testified that RWS asked Mr Terayama, in his presence, and Mr Terayama, in turn, asked the Plaintiff to deploy more workers for the JTM and SFX attractions in a bid to clear a sudden surge in delivery or material for those attractions, the storage of which was causing congestion problems at the site:

[42] Four things are noteworthy:

(a) First, the Plaintiff was asked and did provide time sheets for a claim for the deployment of extra workers for SFX; the Defendants received payment therefor and the Plaintiff was paid in turn. If this was a lump sum contract as contended by the Defendants, then it is strange that the Plaintiff was paid for the deployment of extra workers for the SFX attraction.

(b) Secondly, the Plaintiff was able to produce time sheets and other information to support their claim and these documents were obviously acceptable to the Defendants, who paid them for these claims.

(c) Thirdly, although the acceleration order was for both the SFX and JTM attractions, the Plaintiff inexplicably got paid for one but not the other. The reason is clear and I find that it was because RWS paid the Defendants for one but not the other, and the Defendants took the untenable stand that this contract was also a pay-when-paid contract: since they were not paid for the JTM attraction, they did not have to pay the Plaintiff.

(d) Fourthly, I accept the evidence of an independent sub-subcontractor, Kobo Design’s Mr Onodera, who testified that there were a lot of problems on site, many instances when work was interrupted or suspended, and his workers had to work overtime to make up for the delay. He was asked by Mr Terayama at the site, in the presence of Mr Michinaka, Mr Ito and one Mr Mizota, to compile his delays, variation and extra work done for the murals for the attraction, again for submission to RWS. This was certainly not behavior indicative of a lump sum contract.

[43] I find that the root of the Defendants’ problems lay in their agreeing with RWS to do the work on a lump sum basis. Mr Kiyohara, under cross-examination, said:

[44] Mr Kamimura explained that the Defendants claimed about $15 million from RWS, but it appears that the Defendants compromised this claim for only $4 million and, reading between the lines, this sum was insufficient to pay all their subcontractors’ claims:

[45] I therefore find and hold that there was no estoppel by convention as contended by the Defendants which prevents the Plaintiff making this claim.

(iv) Whether the Plaintiff has discharged the burden of proving, on a balance of probabilities, that it has supplied additional manpower to the value of $3,134,965.50

[46] The Plaintiff claimed that the total value of labour supplied by it amounted to $7,474,272.00. This figure was calculated by taking into account the Defendants’ daily records, the Plaintiff’s time sheets recorded by Mr Sundar A/L S Ramachandran (“Mr Sundar”) and the attendance sheets prepared for Mr Johnson Cher (“Mr Johnson”), the 1 Defendant’s Site Safety Officer. The Plaintiff accepted that it did not keep proper records but has, in effect, reconstructed its claim from the documents and information of other parties, especially its subcontractor, Mr Sundar. The Plaintiff claimed that when one looks at these various records and information, they tally and this proves the unpaid ‘balance’ of $3,134,965.50.

[47] The Defendants relied heavily on the Plaintiff’s own admission that it did not keep proper records; they contended that this failure was very telling and showed how unreliable the Plaintiff’s claim was. Further, the fact that these records were not produced prior to the trial showed that they were an afterthought and could not prove that these sums were in fact owed by the Defendants to the Plaintiff. These claims were unverified and improperly recorded. The Defendants accordingly contended that the Plaintiff had failed to discharge its burden of proof.

[48] Both counsel have informed me that quantum is to be decided on the basis of the burden of proof. As I was informed, going for an assessment of damages will not change anything as the state of the evidence cannot be improved upon. I proceeded accordingly to determine whether or not, on a balance of probabilities, the Plaintiff has proved its entitlement to its claim.

[49] I also proceeded on the submissions as made by the parties. The Defendants, after the hearing on evidence was concluded, stated that they looked at the documents and noticed discrepancies in the figures which were not put to the witnesses during cross-examination as they did not realise their significance. A compromise was reached: rather than allow further cross-examination, the Defendants were allowed to put in submissions and the Plaintiff was allowed to reply thereto.

[50] As noted above, the Defendants themselves have admitted and insofar as they have not been made above, I so make the following additional findings of fact that:-

(a) there was a slow start to the project, many attractions were not ready for installation according to the programme and some workers were idling in the first few months from February 2009;

(b) during the course of the works, there were numerous disruptions and delays caused to the works resulting from, amongst other things, delays in readiness of the site for the installation work to begin, late completion of the foundations, delays in the main contractor’s works, design changes and delays in the delivery of materials and equipment to the site;

(c) there were orders, and I accept the evidence of Mr Kusano (see paragraph [41] supra) as well as other witnesses, (see [33] and [42(c)] supra), including Mr Terayama’s admission under cross-examination, to increase manpower and accelerate works; the manpower of the Plaintiff increased dramatically from September to December 2009 and there are many different documents which support this; and

(d) the Plaintiff’s works did not complete by 30 January 2010 but extended into mid-March 2010.

[51] The Plaintiff candidly admitted that it did not keep proper records by way of time sheets during the course of the works. However, the Plaintiff did not keep any permanent work force (except for a very few key employees like Mr Thuriraj at the supervisor/project manager level), and obtained their supply of labour from their labour subcontractors. In late September or early October 2009, Mr Ito centralised all labour he provided for the works under SR. Mr Saminathan explains this in his Affidavit

It is important to note that this evidence was unchallenged in cross-examination. SR kept their time records of labour supplied. Mr Thuriraj also kept his own time sheets recording his time spent working on site. It was from this record that the Plaintiff constructed its claims. The Plaintiff basically took the total amounts in terms of time charged by its labour subcontractors and subtracted the payments made by the Defendants, leaving a balance which comprised their claim.

[52] There were also other attendance records that were kept. These were taken from the Daily Toolbox Briefings held every morning and evening when there was appropriate work, and these recorded the workers present, who signed against their names, and were submitted to the Defendants. It was also clear that the Defendants kept their own records, which were more organised and detailed and were submitted to RWS. The ‘Johnson Records’ show this clearly. Despite Mr Terayama’s attempt to say that the Johnson Records were only estimates and they did not need to be accurate, Mr Johnson Cher admitted that the records he submitted were largely accurate:

[53] Mr Terayama also testified that he had never told RWS that these were meant to be estimates. To the contrary, his evidence was that they were accurate enough for RWS to challenge that the records showed three workers at one of the attractions but they were not present:

[54] In fact, Mdm Nasimah, Mr Ito’s wife and Plaintiff’s accounts executive, put forward a table comparing the entries on SR’s time sheets and the Johnson Records, and for those months which enabled a comparison (July to 30 December 2009), the figures were quite close.

[55] The Defendants attacked the accuracy of the Plaintiff’s records from its labour suppliers. They pointed to a seemingly impossible claim for 30.5 hours per day when the maximum seemed to be only 27.5 hours in a 24 hours day. When this was put to Mdm Nasimah in cross-examination was stumped. But Mr Sundar, a supervisor from SR, convincingly explained without hesitation how that came about:

[57] As noted at [49] supra, after the evidence was completed, the Defendants asked for a further hearing to make submissions because they noticed errors and inaccuracies in Mdm Nasimah’s tables, the significance of which they had not realised during the hearing. As it was too late to re-open the hearing, and it would have caused significant prejudice to the Plaintiff to have their witnesses go through the details of the claim when those questions could have been put to the witnesses during the trial, I allowed the Defendants the opportunity to put in submissions to point out these errors and inaccuracies and gave the Plaintiff the right to respond.

[58] The Defendants alleged overcharging of some $752,000 on the Plaintiff’s own evidence, as some workers were classified in the ‘Sundar Timesheets’ as riggers ($17 per hour) but were classified differently in Mdm Nasimah’s table as supervisors ($23 per hour). They tabulated some of these alleged detected differences in Annex 1 of their Further Submissions. The Plaintiff’s response was that a perusal of the Sundar Timesheets would show only 2 classes of workers: “Lifting Supervisors” or “Riggers”. They explained that, under law, both these categories of workers had to be trained and certified to perform these tasks, and in SR’s case, many of their workers were trained and certified to perform both tasks. However there is no requirement under the law for Site Supervisors and Foremen to have special training or certification. The Plaintiff was able to point to a letter dated 2 December 2008 where the Plaintiff had identified some of SR’s workers to be Site Supervisors and Foremen for the USS project. These workers were also Lifting Supervisors and Riggers. Mr R Thankapandian, who was singled out as an example by the Defendants, was identified as one of the suitable candidates in the 2 December 2008 letter. The Plaintiff says, with some merit, that they did have Site Supervisors and Foremen on site; there was no evidence of any complaint by the Defendants that the Plaintiff did not have such people on site. I therefore accept this explanation. I also do so for the more fundamental issue. These questions could have been put to the appropriate witnesses but they were not. This is especially so in the case of Mr Saminathan, the sole proprietor of SR, but the Defendants chose not to cross-examine him.

[59] On a balance of probabilities, I therefore find and hold that the Plaintiff has made out its claim for the sum of $3,134,965.50 (excluding GST).

(v) Whether the 1 Defendant is liable to pay the Plaintiff for its use of the lorry, and if so, what is the rate to be paid, having regard to the fact that there was no discussion on the rate to be charged

[60] The parties did not dispute that the Plaintiff provided a lorry and a driver to drive the Defendants’ engineers and staff around the site, which was spread out over a few kilometres. This request arose at a dinner meeting on 15 September 2008. The Plaintiff’s Mr Ito agreed to let the Defendants use the lorry and the driver, but the price therefor was not discussed. Mr Terayama thought it was provided gratis; Mr Kusano, the Attraction Manager for JTM, who was at that dinner, did not think it was for free.

[61] Having considered the evidence, including the documents that exist and the witnesses on this point, I find and hold that the Defendants’ use of lorry and the driver was not gratis and that the Defendants would have to pay for its use. I do not accept Mr Terayama’s evidence on this point. I note that in Mr Terayama’s Affidavit, he never mentioned that the lorry was offered to the Defendants for free. Rather, his evidence was that Mr Ito did not say that it would be chargeable, nor did he invoice the Defendants for it. Mr Terayama stopped short of saying that he understood that the lorry was being offered for free, and instead gives his evidence as a hypothetical, suggesting an ex post facto rationalisation of the situation:

[62] Mr Ito gave evidence that the lorry was primarily used to transport workers and was parked at the site when not in use.

The notion that the parked lorry was not idle, contrary to Mr Terayama’s evidence, was consistent with Mdm Nasimah’s evidence that the driver was used during the day to transport tools within the site at a later stage. This was also consistent with Mr Kusano’s evidence that the Defendants had 2 lorries, but that one was not there during the day, and the other was not used for ferrying people. It was undisputed that the lorry was used to transport the Defendant’s workers. Given the additional distance that the lorry would have had to go to do so, and the disingenuous nature of Mr Terayama’s evidence, I prefer Mr Ito’s and Mr Kusano’s evidence.

[63] As to the quantum of rent to be paid for the use of the lorry, I find that the driver was separately charged under the Time Sheets (“NAS-2” in Mdm Nasimah’s “Affidavit), and his name appeared from June 2009 to 14 March 2010. I find that the main use of the driver and the lorry was to ferry the Plaintiff’s workers to and from the site in the mornings and evenings or at night, and, at a later stage, to transfer tools and equipment to and from the eight attractions. The meeting was in mid-September 2009 and I find that the lorry was used to ferry the Defendants’ engineers and site staff about 1 week later; this continued to 14 March 2009. The important point to note is that it was also used by the Plaintiff and the Plaintiff owned the lorry; it was not hired from a third party.

[64] I find and hold that a reasonable charge for the lorry, bearing in mind its use and taking into account that the driver was charged separately, would be 40% of $500 per day multiplied by 172 days (being 1 week in September 2009, 6 months from October 2009 to February 2010 and 14 days in March 2010); this amounts to $34,400 (excluding GST). The Defendants must pay the Plaintiff $34,400 (excluding GST) for the use of the lorry YN405X.

(vi) Whether Mr Iwaki was in breach of his duties owed as the Attraction Manager for the JPR attraction, and if so, whether the Plaintiff is liable for the sum of $74,900 incurred by the 1 Defendant in engaging CUL M&E Pte Ltd

[65] Having considered the evidence and the rival contentions of the parties, I find that Mr Iwaki was not delinquent in carrying out his duties to the extent that the Defendants had to hire CUL M&E Pte Ltd to carry out Mr Iwaki’s duties.

[66] Some of the factors which brought me to this finding include, first, the evidence of Mr Ito and Mr Michinaka, whose evidence I prefer over Mr Terayama’s evidence, and the obvious inconsistencies in Mr Terayama’s evidence and performance under cross-examination. In particular, Mr Ito specifies in his Affidavit the exact days when Mr Iwaki was absent from work, and this was not challenged by the Defendants. Mr Ito also provided a persuasive explanation for why Mr Iwaki was not seen at the weekly meetings:

This effectively refuted the basis for part of Mr Terayama’s claim, which was that he was personally cognisant of Mr Iwaki’s absences through his own personal observations and the observations of others.

[67] More importantly, Mr Terayama only gave discovery of daily toolbox meeting records, which verified that Mr Iwaki was on site at the material times, after the commencement of trial proceedings. Even then, Mr Terayama was evasive and maintained that these records, along with the Johnson records, were not accurate. Mr Terayama’s evidence also failed to include details beyond the assertion that Mr Iwaki “took frequent and unjustifiable medical leave and emergency leave at critical times, including in April, May and June 2009.”Throughout the proceedings and on cross-examination, the Defendants failed to challenge Mr Ito’s evidence, and Mr Terayama has not produced the documents supporting his claims:

[68] Secondly, the Defendants never asked for Mr Iwaki to be replaced. On the contrary, they admitted that they attempted to retain Mr Iwaki after his contract expired in November 2009.

[69] Thirdly, the evidence was that Mr Iwaki did not get on with some of the RWS staff. The email dated 10 June 2009 tells the true story. When RWS wanted to increase manpower, Mr Iwaki insisted on proper instructions, and RWS’s strong complaint to the Defendants was: “he (Mr Iwaki) is constantly playing the contractual game with us. When we ask him to increase the manpower, he is saying that we need to pay for it.” To this very strongly worded complaint by RWS, the Defendants’ response was: “We believe that his working attitude towards job is not wrong [sic]. However, we apologize for any inconvenience caused.”

[70] Fourthly, the Johnson Records showed Mr Iwaki’s attendance at site and I do not believe the attempt to resile therefrom by Mr Terayama under cross-examination (see [52] supra).

[71] Fifthly, Mr Terayama admitted that he never wrote any emails or letters to Mr Iwaki complaining about his work or his need to improve. Inexplicably, Mr Terayama gave evidence that he never made it clear to Mr Iwaki that his conduct and work performance were not up to standard:

[72] Sixthly, there was the coincidental withdrawal of the claim for Mr Oshita after Mr Kamimura’s cross-examination, an appointment which Mr Ito said, and I believe him, that he knew nothing about.

[73] I find the Defendants’ claim for payment to CUL M&E Pte Ltd an unwarranted attempt to make a claim that was without merit. Mr Michinaka explained the 1 Defendant’s real reasons for engaging CUL M&E Pte Ltd:

[74] Mr Terayama disagreed with this statement when it was put to him in cross-examination, but, tellingly, he did not offer an alternative explanation, nor did he attempt to defend his position. In the light of the reasons given above, I accept the evidence of the Plaintiff and find that the Defendants engaged CUL M&E Pte Ltd to accommodate RWS, and not to make up for Mr Iwaki’s poor performance. Having done so, they cannot now attempt to recover the same from the Plaintiff. I therefore dismiss the Defendants’ counterclaim against the Plaintiff on this issue.

[75] My answers to those issues in relation to construction of the contract and the parties to the contract have been set out above. As for the monetary claims (including GST), I find and hold that:

(a) There will be judgment for $125,149.87 (inclusive of GST) against the Plaintiff in respect of the Defendants’ counter claim for the payment by the 1 Defendant to K2 Specialist Services Pte Ltd;

(b) there will be judgment for the sum of $3,134,965.50 (excluding GST) against the Defendants in favour of the Plaintiff in respect of Issue (iv) above;

(c) there will be judgment for the sum of $34,400.00 (excluding GST) against the Defendants in favour of the Plaintiff in respect of the use of lorry YN405X;

(d) the Defendants’ claim for $74,900 incurred by the 1 Defendant in engaging CUL M&E Pte Ltd is dismissed.

[76] The Defendants are entitled to interest on the sum of $125,149.87 at the rate of 5.33% p.a. from the date of the filing of the Counterclaim to payment. The Plaintiff is entitled to interest on the sums of $3,134,965.50 and $34,400 at the rate of 5.33% p.a. from the date of the filing of the Writ to the date of payment.