High Court · Decided 22 August 2013

Longyuan-Arrk (Macao) Pte Ltd v Show and Tell Productions Pte Ltd and another suit

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[2013] SGHC 160Case no. Suit Nos 81 and 592 of 2011

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Grounds of decision

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Belinda Ang Saw Ean J:
Overview
[1] This is a dispute between the Plaintiff nominated sub-contractor and its sub-contractor, the Defendant, over the fabrication and installation of signage works for the Universal Studios project at Sentosa. In Suit No 81 of 2011 (“Suit 81”), the Plaintiff, Longyuan-Arrk (Macao) Pte Ltd, is suing the Defendant, Show and Tell Productions Pte Ltd, for breach of contract and defamation. In Suit No 592 of 2011 (“Suit 592”), the Defendant is suing the Plaintiff for the release of a retention sum. The parties have filed counterclaims against each other.
[2] It is common ground between the parties that Resort World at Sentosa Pte Ltd (“RWS”) wanted the Universal Studios project to be completed and ready for opening on 14 February 2010, the first day of the Lunar New Year. Unsurprisingly, in the midst of the chaotic rush amongst all contractors to meet the deadline, short cuts were taken in the sense that some contractual terms were not observed. For instance, the standard written approvals for acceptance of fabricated signage were not obtained because of time constraints and, in the interest of expediency and practicality, the signage was installed first and defects, if any, rectified later.
[5] Both actions were heard together over three tranches. The first tranche of five days was from 14 to 18 May 2012; the second tranche of seven days started on 3 September 2012 until 11 September 2012; and the third tranche was for two days from 30 to 31 October 2012.
[6] Mr Kelvin Chia and Mr Timothy Ng represented the Plaintiff. Ms Mimi Oh and Mr Nair Rajan represented the Defendant.
Chronology of events leading to Suit 81
[7] A proper understanding of this action and Suit 592 require the background facts of the main dispute to be set out in some detail. A chronological account of the relevant events is as follows.
[8] RWS as employer appointed China Jingye Engineering Corporation Limited (Singapore Branch) (“CJY”) as its main contractor for the Universal Studios project at Sentosa.
[9] The Plaintiff was a nominated subcontractor engaged by CJY for three sets of works: (a) the construction of the themed facade and area development works for the Hollywood, New York City, Sci-Fi City and Universal Globe zones; (b) interior fitting out work for F&B outlets and retail/merchandise outlets for the Hollywood zone; and (c) the design, fabrication and installation of signage for the zones identified in (a) and the area known as Entrance Plaza.
[10] On 31 August 2009, the Plaintiff and Defendant signed the letter of award for the design, supply, fabrication and installation of signage at selected zones for a lump sum price of $2.5m (“the Sub-Contract”). Forming part of the Sub-Contract were drawings and specifications as well as some clauses from the main contract between CJY and RWS (“the Main Contract”).
[11] Eventually, the contract price was $2.3m after deducting a sum of $200,000 for preliminary works already undertaken by the previous sub-contractor.
[12] Clause 9 of the Sub-Contract stipulated that all materials and workmanship had to be of the kind and quality described in the Sub-Contract (inclusive of all relevant specifications under the Main Contract). It is common ground that the Main Contract specification required steelwork for the signage to be treated for rust using the hot-dip galvanisation method. The Defendant does not dispute that hot-dip galvanisation was within its scope of work under the Sub-Contract.
[13] It is also not disputed that that the signs fabricated by PT Intermega (“Intermega”), the Indonesian company engaged by the Defendant, were not hot-dip galvanised (“the Galvanisation Issue”). According to the Defendant, Intermega did not have the capacity in its factory to hot-dip galvanise steel frames that spanned 2m or more in length. Intermega raised the Galvanisation Issue in an e-mail dated 7 November 2009 addressed to CJY and the Plaintiff (and later forwarded to the Defendant). On 28 November 2009, CJY’s project director, Peter Lim (“Peter”), replied to Intermega (with copies to the Plaintiff and later forwarded to the Defendant) stating that the Galvanisation Issue was a deviation from the contract specification, that CJY had no authority to accept the deviation, and that in order to obtain the approval of RWS’s consultants, the alternative anti-rust method had to be submitted to CJY by 1 December 2009. By 28 November 2009, the Intermega signs were fabricated and delivered to site at Sentosa.
[14] The next day, on 2 December 2009, the Plaintiff’s project manager, Ivan Ho (“Ivan), wrote to the Defendant’s general manager, Jason Teo Kek Seng (“Jason”) in connection with the Galvanisation Issue as follows:
[15] Sometime between 2 and 3 December 2009, representatives from CJY, the Plaintiff and the Defendant met to discuss the Galvanisation Issue. During the meeting, Peter asked Jason to submit the specifications and method statement for the alternative anti-rust method for RWS’s approval.
[16] The Defendant agreed that it was asked by CJY and Ivan to submit an alternative anti-rust coating method for RWS’s approval. On 10 December 2009, Jason e-mailed Ivan (with copies to the Plaintiff’s commercial manager, CS Lim and the Plaintiff’s project director, Johnny Ong Geok Chye (“Johnny Ong”) the technical specifications and method statement for the alternative anti-rust treatment that involved coating the steel surfaces of the signs with a type of epoxy paint (“the Epoxy Anti-rust Method”). Jason wrote:
[17] Ivan replied on the same day. His e-mail (with copies to CS Lim and Johnny Ong) reads as follows:
[18] Between 24 and 30 December 2009, the Defendant’s staff e-mailed CS Lim some documents on the Epoxy Anti-rust Method for endorsement by the Professional Engineer including the specification and H52-33 paint system.
[19] Against the backdrop of these e-mail exchanges was a hive of activity amongst everyone involved in the project to meet the opening date of Universal Studios. As alluded to earlier, Toh Sze Chong, the architect from DP Architect Ltd (the Contract Administrator) explained that in the three months before the opening date on the first day of the Lunar New Year on 14 February 2010, short cuts were taken such as the omission to obtain written approvals for the acceptance of fabricated signage. The common expectation of everyone was for the signs to be installed first and defects, if any, rectified later. It is obvious that exigencies and practicalities necessitated contractual terms to be applied flexibly and even departed from.
[20] During the period described by Mr Toh, between 11 and 13 December 2009, the Plaintiff instructed the Defendant to proceed with the installation of the signs. Nothing else was expressly said about whether approval had been granted for the Epoxy Anti-rust Method. The Defendant acted on the instructions and completed installation of all the signs by the first week of January 2010.
[21] By end January 2010, the Universal Studios project had reached practical completion. Universal Studios at Sentosa opened on 14 February 2010.
[22] On 1 March 2010, the Plaintiff’s executive general manager, Edgar Chan (“Edgar”), wrote to the Defendant proposing to pay the outstanding progress payment sum in three tranches in mid-March ($250,000), mid-April ($250,000) and end May 2010 (remaining balance and variation orders). On 12 March 2010, Edgar again wrote to the Defendant for an extension of a few more days to make the mid-March instalment payment because of cashflow problems. Despite the Defendant’s indulgence, the Plaintiff did not make any of the proposed instalment payments.
[23] It transpired that the Plaintiff’s cashflow problems culminated in the commencement of winding up proceedings against the company on 23 March 2010, and this state of affairs continued for ten months before the winding up proceedings were withdrawn on 25 January 2011. Several events occurred during this period of ten months. They are set out in [24] to [29] below.
[24] On 24 September 2010, Jason signed the SFA with Plaintiff’s commercial manager, CS Lim, which denoted a final sum of $489,681.03 as owing to the Defendant. The scope of the SFA and, in particular, its impact on the Defendant’s liability for Plaintiff’s claims in Suit 81 will be examined in due course.
[25] Despite signing the SFA, the Plaintiff did not pay the Defendant. Instead, on 8 November 2010, the Plaintiff wrote to the Defendant claiming that 14 of the signs installed by the Defendant were not hot-dip galvanised as required under the Sub-Contract. The Plaintiff gave the Defendant seven days from the date of the letter to replace the Non-compliant Signs (without disrupting the operations of Universal Studios) failing which the Plaintiff would engage other contractors to rectify the defective works and back-charge the Defendant in full.
[26] The Defendant was not pleased to hear that it would not be receiving payment of the Final Amount that had been stated as due. The Defendant replied on 15 November 2010 pointing out that some of the signs in the photographs sent under cover of the Plaintiff’s letter of 8 November 2010 were not fabricated in Indonesia (“the Non-Indonesian Signs”) and that the Non-Indonesian Signs complied with the hot-dip galvanisation method. As for the photographs of signs fabricated in Indonesia (“the Indonesian Signs”), the substitute Epoxy Anti-rust Method was accepted by the Art Director from RWS. To support the Defendant’s claim, three separate Defects Lists issued by the Art Director, two in April 2010 and one in September 2010 were sent to the Plaintiff. None of the Defects Lists regarded the substitute anti-rust method as a defect issue. The Defendant pointed out that the 8 November 2010 notice was issued after the Plaintiff had repeatedly failed to make payment as agreed. In any case, there was no credence to the Plaintiff’s notice seeing that it would be impossible to carry out and complete rectification works within one week without affecting the daily operations of Universal Studios. The letter ended with the Defendant giving notice of its intention to apply for adjudication of its payment claim under s 13 of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed).
[27] On 16 November 2010, Jason wrote the following letter (“the 16 November Letter”) to one Ben Yee of Sentosa Leisure Group (“SLG”):
[28] A scanned copy of the 16 November Letter was sent as an e-mail attachment to one “Ben Ee Seck Yong” from RWS with copies to other representatives from the Plaintiff, CJY and RWS on 8 December 2010 (“the 8 December E-mail”). Jason wrote:
[29] On 11 January 2011, the Defendant received a “Neon & Signage Defects list as 11 Jan 2011” from Ivan. The e-mail referred to an attachment comprising the defects, but no such attachment was produced in the trial bundles. On 12 January 2011, the Defendant replied stating that it would not provide any further assistance to the Plaintiff unless the latter informed the Defendant of when it would make payment. The Plaintiff read the Defendant’s reply as a refusal to remedy the defects and in its reply on 17 January 2011 accepted the Defendant’s refusal as a repudiation of the Sub-Contract. The Plaintiff treated the Sub-Contract as terminated on 17 January 2011.
[30] On 28 January 2011, the Plaintiff engaged Seiho Engineering & Contracts Pte Ltd (“Seiho”) to replace the Non-compliant Signs and rectify other defects under the Sub-Contract. On 10 February 2011, the Plaintiff informed the Defendant that it would engage a third party to remedy the defective works. On the same day, the Plaintiff commenced Suit 81.
[31] The Defendant commenced Suit 592 on 25 August 2011 after the retention sum of $62,500 (“the Retention Sum”) was allegedly due for release after expiry of the defects liability period (“DLP”) on 30 June 2011.
[32] It is common ground that leaving aside the claim in defamation, the main issues in the both actions (including the counterclaims) overlapped, and that the determination of these issues in Suit No 81 (including the counterclaim) would resolve the main action and the counterclaim in Suit 592.
The Plaintiff’s case
[33] As stated, the Plaintiff’s stance at the trial was that the Defendant had breached the Sub-Contract and after set-off and deduction from the Final Amount for various sums arising from the Defendant’s breach, the Defendant still owes the Plaintiff money. Its position is the same even if there is a ruling in favour of the Defendant for the release of the Retention Sum.
[35] The following table sets out the expenses and back-charges claimed by the Plaintiff:
[36] Finally, the Plaintiff claims damages for defamation identifying the contents of the 16 November Letter and its republication in the 8 December E-mail as defamatory.
The Defendant’s case
[38] Alternatively, if the SFA did not settle the issue of the Non-compliant Signs, back-charges and other matters, there was no breach of the Sub-Contract in respect of the Non-compliant Signs for the following reasons:
(a) The whole issue of 14 Non-compliant Signs was a sham that was made to avoid paying the Final Amount owed to the Defendant.
(b) The Epoxy Anti-rust Method was approved as a substitute by a representative from RWS during a factory visit in Indonesia.
(c) It was not necessary for the Plaintiff to replace the Non-compliant Signs because neither RWS nor CJY had instructed the Plaintiff to do so.
(d) The Plaintiff is estopped from suing on the issue of the Non-compliant Signs as breach of contract. CS Lim was aware that the signs were non-compliant but had nonetheless instructed the Defendant to install them without telling the Defendant that it would have to replace them if RWS did not approve the Epoxy Anti-rust Method.
(e) Of the 11 allegedly Non-compliant Signs replaced by Seiho, three were Non-Indonesian Signs manufactured by a local company and they were not in breach of the contract specification.
[39] In relation to the direct payment from CJY, the Defendant asserts that the payment was for work outside the scope of the Sub-Contract, and/or is not recoverable because of the settlement in the SFA.
[40] Finally, in relation to the Plaintiff’s defamation claim, the Defendant denies that it had defamed the Plaintiff in the 16 November Letter and the 8 December E-mail. Even if the publications were defamatory, the Defendant relies on the defences of justification and qualified privilege.
[41] In Suit 592, the Defendant is suing for the return of the Retention Sum of $62,500. Under the Sub-Contract, the Plaintiff was entitled to retain up to 5% of the Sub-Contract price, with 2.5% to be released within one month of completion and the remaining 2.5% to be released at the end of the DLP. The Defendant’s case is that the DLP was for 18 months from the completion date, which was certified as 31 December 2009, thereby rendering the Retention Sum due for release on 30 June 2011.
[42] However, the Plaintiff argues that the DLP only expires when the Maintenance Certificate is issued by CJY, which had not when the Defendant filed Suit 592 or indeed as at the time of the trial. The Plaintiff further argues that it is entitled to withhold the Retention Sum since the Defendant had not provided the “as built drawings” required under the Sub-Contract. This is a new allegation which arose from a late amendment to the Plaintiff’s Defence and Counterclaim in Suit 592 during the first tranche of the trial on 18 May 2012.
Issues
[43] The factual issues covered many areas of dispute. Fortunately, it is not necessary for this court to decide every factual issue in dispute. Significantly, counsel agreed that the question of the Plaintiff’s alleged entitlement to the set-off its claims against Final Amount entails the determination of the following issues:
(a) Whether the SFA was a final account agreement in full and final settlement of the Sub-Contract such that the SFA itself precluded the Plaintiff’s claims listed in the table at [35], or alternatively that the said claims were barred by the settlement.
(b) Whether the Plaintiff can legitimately deduct or set-off its claims against the Final Amount, or withhold the Final Amount; and if so, whether such a set-off or deduction was, on a true construction, precluded or barred by the SFA.
[44] Other issues are as follows:
(a) Whether the Sub-Contract was properly terminated. The Plaintiff argued that that the Defendant was guilty of a repudiatory breach of the Sub-Contract that entitled it to terminate the sub-Contract.
(b) Whether each of the Plaintiff’s claims in Suit 81 are made out, viz:
(i) the costs of replacing the Non-compliant Signs;
(ii) the costs of hiring Seiho to rectify defects during the DLP;
(iii) the machinery back-charges; and
(iv) CJY’s direct payment to the Defendant.
(c) Whether the Retention Sum was due for release on 30 June 2011; and
(d) Whether the Defendant had defamed the Plaintiff in the 16 November Letter and the 8 December E-mail, and if so, whether the Defendant is entitled to any defences.
Discussions and decision
[45] I will deal with each of the issues in [43] to [44] in turn.
The nature and scope of the SFA
[46] The SFA was drafted by the Plaintiff. It was signed by the Plaintiff and the Defendant on 28 September 2010. After listing the various additions and deductions to the original Sub-Contract sum and arriving at the Final Amount of $489,681.03, the SFA reads as follows:
[47] The principles that apply to the construction of a written contact are those summarised by the Court of Appeal in Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR 1029 (“Zurich Insurance”). The Court of Appeal in Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another [2013] SGCA 43 (“Sembcorp Marine”) revisited the contextual approach to the interpretation of terms in a contract, and the observations made in Zurich Insurance were supplemented in Sembcorp Marine. Sundaresh Menon CJ delivering the judgment of the court in Sembcorp Marine reminded litigants that whenever a contextual approach to construction of a contract is sought, the relevant background facts relied on must be pleaded with specificity and extrinsic evidence limited to the matters pleaded must be disclosed. In this regard, Menon CJ’s provided four requirements as guidelines (at [73]):
[48] In the context of the present case, the Plaintiff’s pleaded case is that the SFA was void for the Defendant’s fraudulent misrepresentations that the works were completed when they were not. As stated above at [4], this plea was abandoned completely at trial. Consequently, the Plaintiff accepted that the agreed Final Amount was due to the Defendant, but claimed that it was entitled to withhold payment in order to set-off the Plaintiff’s claims against the Final Amount. The concession at trial meant that there was acceptance of a valid and binding final account agreement, and that payment of the Final Amount was due. The Plaintiff is, however, seeking to argue that the SFA did not preclude the Plaintiff’s claims, and that, in law, it could still set-off for unliquidated damages for breach of contract against the admitted debt (ie, the Final Amount”). I will deal with the issue of set-off in due course, but I turn first to the nature and ambit of the SFA.
[49] The first consideration is the scope of the SFA that the parties signed. This is a question of construction applying the principles set out above. In the context of this case, I must consider the background knowledge which would reasonably have been available to the parties in the situation they were at in September 2010, as gleaned from their pleadings. The Defendant had completed the installation of the signage in January 2010. To all intents and purposes, there was practical completion of Universal Studios which opened on 14 February 2010. On 1 March 2010, the Plaintiff was proposing to pay the Defendant at least $500,000 in two instalments (mid-March and mid-April), and thereafter, the third instalment at the end of May 2010 for the remaining balance and value of variation works. It is not disputed that the Plaintiff experienced cashflow woes which culminated in winding up proceedings commenced against the Plaintiff in March 2010. The winding up proceedings were withdrawn in January 2011. In September 2010, a commercial settlement for an apparent lesser amount was reached. The SFA expressly stated that the Final Amount was “based entirely on a commercial settlement” (see [46] above).
[50] The Final Amount of $489,681.03 was an agreed figure in the SFA. The agreed final statement in the SFA had the effect that payment of the amount notified (ie, the Final Amount) was due to the Defendant. The expressions used by the parties, viz “Final Sub-Contract Sum”, “Final Account Agreement”, “final account”, and “final statement of account” all have one thing in common: they were intended and would have been taken by a reasonable businessman as final. The amount notified as the Final Sub-Contract Sum” or “final account” due from the Plaintiff would be the latter’s view of the final value of work taking into account any factors that affect the true value of the work, such as the state of completion and execution of the work. Any amount that was due from the Defendant, for example, a back-charge for labour and machinery supplied at the Defendant’s request, would also be taken into account so as to arrive at the final account. Therefore, the word “final” denoted the end of an accounting process between the parties.
[51] Not only was the final account and statement reached by agreement, it was in “full and final settlement of all matters in connection with this Sub-Contract” except for the specific reservations in the SFA. Notably, the agreement in the SFA effected a full and final settlement of any claims that the Defendant may have had against the Plaintiff under the Sub-Contract and described in the SFA as “all variations, claims and any other matters arising from the Sub-Contract”. Similarly, any amount due by the Defendant in relation to “all variations, claims and any other matters arising from the Sub-Contract” would have been taken into account. The SFA also expressly states that the Defendant’s acceptance of the “Final Account Agreement” (ie, the commercial settlement) “will discharge all liabilities in full between [the Plaintiff and Defendant] under this Sub-Contract” with the exception of the reservations stipulated.
[52] The confirmation that the acceptance of the Final Amount by the Defendant would serve to discharge in full all liabilities between the parties in combination with the phrase that the agreement was intended to achieve full and final settlement of all matters in connection with the Sub-Contract reinforce the point that the combination of these phrases was intended to take the settlement further than a financial statement between the parties. I will elaborate on the impact of this construction on the Plaintiff’s table of claims at [35] in due course.
[53] Turning to the related question whether the agreement in the SFA relieved the Defendant of liability for defects in its performance, or otherwise precluded the Plaintiff from raising those defects: the answer to this question is it did not. This is borne out by the express reservations in the SFA (see [46] above). In addition, this view is consistent with the state of affairs at the time the SFA was signed. The Defendant was clearly not released from its responsibilities and obligations to rectify defective works during the DLP. According to the Sub-Contract Completion Certificate dated 20 December 2010 (the Plaintiff received this from CJY on 1 February 2011), CJY certified that the Sub-Contracts Works were completed on 31 December 2009 which meant that the DLP which started on 1 January 2010 would end on 30 June 2011.
[54] The meaning of “defective work” is explicated in Hudson’s Building and Engineering Contracts (Nicholas Dennys, Mark Raeside & Robert Clay gen eds) (Sweet & Maxwell, 12 Ed, 2010) at para 4-107 as follows:
This definition of defective work is consistent with the relevant terms of the Sub-Contract:
[55] It is clear that the dispute in relation to the Non-compliant Signs (which is equated to the Galvanisation Issue) is a “defect” within the meaning of cl 15(a) above, and was defective work duly reserved in the SFA. The penultimate and last paragraphs of the SFA admit of no other interpretation, and expressly encompassed events which could arise before the end of the DLP. As an aside, the Defendant’s conceded in its Closing Submissions that a defect or non-compliance with the Sub-Contract works could be legitimately raised for rectification during the DLP.
[56] The Defendant’s principal witness, Jason, claims that the Galvanisation Issue was expressly brought up while he and CS Lim were negotiating the SFA and that CS Lim had agreed that the matter was “water under the bridge”:
[58] In fact, the evidence shows that less than a month after the SFA was concluded, Ivan reminded Jason that the Galvanisation Issue was still outstanding on 19 October 2010. Ivan wrote:
[59] From the Plaintiff’s viewpoint, the Galvanisation Issue was not closed and resolved by the SFA. Jason’s answer in cross-examination is telling. He admitted that he did not reply to the e-mail but offered no explanation for why he did not do so in light of his claim that the Galvanisation Issue was settled by the SFA:
[60] For the reasons stated, the SFA did not settle the issue of Non-compliant Signs which was intended to be treated as defective work to be resolved during the DLP. Accordingly, the Plaintiff is permitted to raise allegations and make claims of defective work in relation to the Non-compliant Signs, and for the Defendant’s failure to observe its duty to remedy other defects notified during the DLP that might qualify in law as entitling the Plaintiff to the rights prescribed in the Sub-Contract.
Right of Set-off
[61] The Plaintiff in its Closing Submissions asserts “rights of set-off”, and maintains the position that rights of set-off exist in that they were not excluded since clear words in the SFA were needed to take away such rights. However, it is not clear whether the Plaintiff is relying on equitable set-off as a substantive defence and claiming that this defence is available in the present case. There is no definitive assertion of this in the Plaintiff’s pleadings or Closing Submissions, and the court is left to guess what was intended from the Plaintiff’s reliance on Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd [2004] 3 SLR(R) 288 (“Jia Min”) at [43] where V K Rajah JC (as he then was) said:
[62] In Suit 81, the Plaintiff claims damages against the Defendant for breach of contract and the Defendant counterclaimed in debt (ie, the Final Amount) due under the SFA. The Plaintiff pleaded that under the Sub-Contract it was entitled to withhold payments. The plea did not make reference to cl 15(c) of the Sub-Contract. By cl 15(c), all payments due under the Sub-Contract could be withheld pending full rectification of the defects. I must point out that the Plaintiff did not pursue and develop this contractual right to withhold in evidence and in its Closing Submissions. This is not surprising as the Final Amount was due under the SFA and not under the Sub-Contract for cl 15(c) to be invoked (see [118] below for the text of this clause). Besides, the Plaintiff had all along claimed that it had no knowledge of the existence of the SFA until 8 March 2011 after the action had started and that the Plaintiff’s contracts manager, Tao Mudong (“Mr Tao”) (who took over after CS Lim left the Plaintiff), found a copy of the SFA in the file.
[63] In contrast, the Defendant’s pleaded case is that the Final Amount was payable forthwith or at the latest by or on 28 October 2010 in accordance with cl 4(d) of the Sub-Contract. By cl 4(d), the Plaintiff is to pay the Defendant “such sum as certified in the Payment Certificate... within 30 days after the date of the Payment Certificate”. In the Plaintiff’s Defence to the Counterclaim, set-off was relied upon as a defence in diminution or extinction of the Defendant’s counterclaim.
[64] The Plaintiff’s contention presupposes that a right of set-off exists without more. Whilst a defence of set-off is allowed in O 18 r 17 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (the “ROC”) read with s 18(2) of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed), the Plaintiff is still required to establish as a matter of law that its claim is the subject matter of a set-off be it a legal set-off, an equitable set-off or a set-off as a matter of abatement. Confusion arises if the important threshold question of whether the Plaintiff as a matter of law is able to establish that that its claim is the subject matter of a set-off is not addressed first. The subsidiary question that follows is whether, on a true construction of the SFA, the right of set-off was precluded or barred by terms of the SFA. At this stage of the analysis, if the set-off is part of general law, it can only be excluded by clear provisions to that effect.
[65] I begin with the threshold question. In the present case, the Plaintiff’s claim for damages exceeded the Final Amount and the claim for damages was advanced by way of set-off against the Final Amount. In other words, the Plaintiff seeks to set-off or withhold payment of the Final Amount against a claim for damages for breach of contract. The issue is whether either the common law doctrine of equitable set-off or a contractual set-off clause permits the Plaintiff to do that before judgment. It is not controversial that clear words in a contract permitting the set-off against a sum otherwise due will usually be required. Other than an allowable contractual set-off, the doctrine of equitable set-off, which is a substantive defence, allows a set-off to be raised before judgment. An important feature of the doctrine of equitable set-off is that it is usually raised as an answer to a liability to pay money otherwise due before the debtor’s own cross-claim is determined. The debtor’s cross-claim, however, must be closely connected with the demand for payment of the debt such that it would be manifestly unjust to allow enforcement of payment without taking into account the cross-claim. (The formulation of the test for equitable set-off in Federal Commerce & Navigation Co Ltd v Molena Alpha Inc [1978] QB 927 (“The Nanfri”) which was applied in Pacific Rim Investments Pte Ltd v Lam Seng Tiong and another [1995] 2 SLR(R) 643 was restated, freed of any reference to the concept of impeachment, in Geldof Metaalconstructie NV v Simon Carves Ltd [2011] 1 Lloyd’s Rep 517). As stated earlier, the Plaintiff did not deal with the application of the test for equitable set-off to the facts of the present case.
[66] In the final analysis, the set-off plea in the Defence to the Counterclaim (a set-off as a matter of abatement) was not advanced in Closing Submissions. If anything, the court is looking at a set-off by judgment. This happens after cross-liabilities are each established by judgment, and there can be a set-off by judgment where one sum is netted off against another leaving one single liability for the balance sum. The observations of George Leggatt QC sitting as a deputy High Court judge in Fearns (trading as Autopaint International) v Anglo-Dutch Paint & Chemical Co Ltd and others [2011] 1 WLR 366 on the powers of the court to set-off by judgment is apposite and I gratefully adopt them. Judge Leggatt said (at [36]–[37]):
[67] Accordingly, the subsidiary question of whether the SFA has excluded an equitable set-off is moot because the court here is dealing with a set-off by judgment which is a matter of the court’s inherent jurisdiction.
The Defendant’s repudiatory breach
[68] The Plaintiff proceeded to terminate the Sub-Contract at common law on 17 January 2011, alleging that the Defendant was guilty of repudiatory breach when it refused to replace the Non-compliant Signs and remedy other defects until it was paid the Final Amount.
[69] The question is whether the Sub-Contract was properly terminated. However, the parties seem to accept in their respective Closing Submissions that this question would be answered by a determination of the dispute on the Non-compliant Signs even though it embraced a number of issues. To elaborate, the Plaintiff’s Closing Submissions do not deal with the termination of the Sub-Contract on 17 January 2011. The arguments were confined to the Defendant’s breach in failing to replace the Non-compliant Signs and remedy the other defects. Similarly, the Defendant did not directly challenge the termination on 17 January 2011 in its Closing Submissions. Broadly, the Defendant’s position is that it had valid reasons for not replacing the Non-compliant Signs and the Plaintiff was informed of the reasons on 15 November 2010 and 11 January 2011, and hence it was not in breach. Furthermore, the purported termination of the Sub-Contract prevented it from carrying out any remedial work during the DLP. As for the Defendant’s contention that it was improper to terminate the Sub-Contract for completed signage works and further arguments on the effect of the SFA on the Non-compliant Signs, these points have been addressed in my discussions on the nature and scope of the SFA.
[70] In addition, the thread of e-mails on 11 January 2011 is pertinent. A closer study of the thread of e-mails on 11 January 2011 revealed that the request to rectify the “Neon & Signage Defects as 11 Jan 2011 originated from RWS to CJY, and the relevant e-mail from RWS reads:
[71] Ivan wrote to the Defendant and Jason on the same day. Ivan’s e-mail dated 11 January 2011, that was titled “FW: Neon & Signage Defects as 11 Jan 2011”, reads:
[72] The attachment comprising the list of signage defects referred to in the e-mails above was not produced in the trial bundles. Be that as it may, Jason’s response is pertinent. His e-mail dated 12 January 2011, that was titled “Re: Neon & Signage Defects as 11 Jan 2011”, reads:
[73] What did Jason’s 12 January e-mail demonstrate? The message conveyed in the e-mail was that the Defendant did not intend to perform its remaining obligations under the Sub-Contract any time soon or in the future. In doing so, Jason did not distinguish between the Galvanisation Issue and other defects in relation to the signage works: his position was that the Defendant was no longer going to work with the Plaintiff because of the latter’s persistent failure to pay what was due to the Defendant, and that it was looking to CJY to take over the remaining part of the Sub-Contract (as suggested by Jason’s use of the phrase “novation of the remaining liabilities to CJY”).
[74] Accordingly, I accept the Plaintiff’s case that the sending of the Defendant’s e-mail dated 12 January 2011 amounted to a repudiation of the remaining part of the Sub-Contract in relation to signage works that was expressly reserved in the SFA.
[75] To the extent that the proposition in Jia Min (see [61] above) is relevant, I agree that there is no general right at common law to stop or suspend work unless expressly agreed. Therefore the contractor/sub-contractor cannot stop or suspend work even if payment is wrongly withheld (see Jia Min at [55]–[57]). Chitty on Contracts vol 2 (Sweet & Maxwell, 31 Ed, 2012) at para 37-221 states:
[76] For the sake of completeness, I should mention the Defendant’s plea that the Plaintiff’s persistent failure to make payment is a repudiatory event. In March 2010, winding up proceedings were commenced against the Plaintiff on account of the latter’s inability to pay its debts. Those proceedings were not withdrawn for ten months, and during this period, the Defendant received no payment of the Final Amount. In a proper case, a failure by the contractor to pay its sub-contractor may amount to a repudiatory event. However, there is no evidence that the Defendant accepted the repudiatory breach in an attempt to put an end to the contract. On ordinary principles, if the innocent party does not treat the contract as at an end, but affirms the contract, the contract continues with all its terms effective.
The Plaintiff’s various claims
(a) The Non-compliant Signs
Did RWS or CJY instruct the Plaintiff to replace the signs?
[78] The Plaintiff’s project director, Johnny Ong admitted in cross-examination on 4 September 2012 that there was no Architect’s Direction to replace the signs. Johnny Ong was not wrong that there was no Architect’s Direction after the handover. However, later on 10 September 2012, he pointed to the Architect’s Direction to CJY dated 18 January 2010 (“the AD of 18 January 2010”) to, inter alia “verify all signage installed on site and identify the non-conforming signage and rectify accordingly”. The AD of 18 January 2010 was issued before the handover of the site to RWS on 31 January 2010. According to Johnny Ong, the AD of 18 January 2010 was only received by the Plaintiff around 15 March 2010. The Plaintiff’s Reply was amended in the second tranche of the trial to plead the AD of 18 January 2010.
[79] As I understand it, the Defendant is making a distinction between an Architect Direction issued after handover which is governed by cl 26(b) of the Main Contract which was incorporated in the Sub-Contract, and the AD of 18 January 2010.
[80] There is some force in the Defendant’s contention seeing as there was practical completion and handover of Universal Studios to RWS. The Plaintiff’s 8 November letter and e-mail of 11 January 2011 were sent after handover and during the DLP. Insofar as the AD of 18 January 2010 was pre-handover, the Defendant maintains that there was no proper Architect’s Directions.
[82] To reinforce my view that the updating of the list of minor outstanding works on 27 January 2011 was one of form, for completeness and consistency, the list of minor outstanding works that was attached to the Main Contractor’s Direction dated 17 December 2010 was similarly updated on 27 January 2011. In these circumstances, even though CJY did ask the Plaintiff to replace 11 rusty signs in a Main Contractor’s Direction dated 17 December 2010, the evidence shows that the list was updated to include the Non-compliant Signs on 27 January 2011 and that this updated list and the Main Contractor’s Direction dated 17 December 2010 were received by the Plaintiff on 1 February 2011 well after the Plaintiff terminated the Sub-Contract on 17 January 2011.
[83] Returning to the Defendant’s contention that there was no obligation to replace the Non-compliant Signs as there was no Architect’s Direction issued after handover of possession of the site to RWS, it seems to me that this contention was not an issue at the material time. The e-mail sent by Jason on 12 January 2012 was clear evidence that the Defendant’s position on the Sub-Contract was because of the non-payment issue rather than a contractual right pertaining to directions from RWS or CJY (ie, cl 27(6) of the Main Contract). In my view, the evidence does not support the Defendant’s argument that its obligation to rectify or replace the Non-compliant Signs was contingent on an express direction from RWS or CJY.
[84] As stated, a closer study of the thread of e-mails on 11 January 2011 revealed that the request to rectify the “Neon & Signage Defects as 11 Jan 2011 originated from RWS to CJY, and was eventually passed down the line to the Defendant who responded on 12 January 2011. Jason’s reason for wanting CJY to step in to take over the Plaintiff’s Sub-Contract with the Defendant was the Plaintiff’s non-payment of the Final Amount.
Is the Plaintiff estopped from suing the Defendant for the Non-compliant Signs?
[85] According to the Defendant, the Plaintiff instructed the Defendant to install the signs without notification that it would have to replace them if RWS did not approve its Epoxy Anti-rust Method. The Defendant pleads that the Plaintiff is therefore estopped from alleging that it had breached the Sub-Contract by failing to hot-dip galvanise those signs.
[86] The Defendant is not asserting that the galvanisation requirement had been waived; rather, the Defendant appears to be arguing that the Plaintiff is estopped by virtue of its silence when it permitted the Defendant to put up the Non-compliant Signs. The allegation, from a legal perspective, is that the Plaintiff’s conduct is best characterised as silence in the face of a continuing contractual relationship.
[87] Although estoppel by representation usually requires a clear and unequivocal statement by the representor that he will not be insisting on his strict legal rights, silence can amount to such a representation if there is a duty to speak in the circumstances. As Chitty on Contracts, vol 1 (sweet & Maxwell, 31 Ed, 2012 ) states (at para 3-092):
[88] The Court of Appeal in Tacplas Property Services Pte Ltd v Lee Peter Michael (administrator of the estate of Lee Ching Miow, deceased) [2000] 1 SLR(R) 159 observed (at [62]–[64]):
[89] In this case, no duty to speak is alleged. Furthermore, the Defendant’s did not address the two e-mails in December 2009 (see [14] and [17] above) reserving the Plaintiff’s right to have the Defendant replace the signs if no approval for the substitute method was granted by RWS. There is also no evidence that the Plaintiff made any further representations subsequent to those e-mails to change the Defendant’s understanding of this position. In the circumstances, the assertion of an estoppel is rejected.
Did RWS approve the Epoxy Anti-rust Method?
[90] It is common ground that only RWS had the authority to approve any deviation from the contract specification. Jason claimed on the stand that the Epoxy Anti-rust Method was approved by RWS’s Gina Nanong during a factory visit in Indonesia:
However, he conceded that he had no written documentation to support his claim that approval was given by RWS. The problem with this is that cl 3(1)(B)(m) of the Particular Conditions of Main Contract requires the approval of any “Alternative Design Proposal” by RWS to go through the Architect.
[91] Mr Toh, the Architect-In-Charge for the RWS project, stated in his Affidavit of Evidence-in-Chief that structural changes to the steel frame could only be approved by the Architect, and no approval had been given:
[92] The Defendant also relies on two documents to support its claim that approval was given: (a) the epoxy anti-rust paint methodology that was submitted to the Plaintiff, and (b) the indemnities and warranties of 5 years given by the Defendant for signs fabricated in Indonesia. However, Jason admitted under cross-examination that the documents relating to (b) were not in evidence before the court. In any case, it is clear that neither of these documents actually evidences RWS’s approval; rather, the documents were submitted by the Defendant in the hope of obtaining approval for its Epoxy Anti-rust Method.
How many signs were non-compliant?
[93] The parties disagree over the exact number of signs that were not hot-dip galvanised. A production manager from Seiho, Woo Fock Wah (“Mr Woo”), deposed that (a) he had personally supervised the replacement of the 11 signs; (b) all of them were rusty; and (c) he did not believe the signs were hot-dip galvanised because if they were, they would not have rusted at all. On the stand, he also added to his Affidavit of Evidence-in-Chief a sentence stating that if the signs were hot-dip galvanised, “there would be shine”. Mr Woo was called as a witness of fact and not an expert witness. It was too late in the day to have him take the stand as an expert witness. Besides, proper information on his credentials to qualify him as an expert was not available. As far as Mr Woo was concerned, his eye-witness account was that 11 signs appeared to be rusty.
[94] For its part, the Defendant has admitted that eight of the 11 signs were not hot-dip galvanised. Jason testified as follows:
[95] There was some controversy over the origins of the remaining three signs, namely Hollywood China Bistro, Brown Derby and Super Candies. The Defendant said that they were made in Singapore and therefore had nothing to do with the Indonesian Signs that were not hot-dip galvanised. The Plaintiff, on the other hand, maintained that they were Indonesian Signs (and was able to adduce evidence to show that Hollywood China Bistro and Super Candies were fabricated by Intermega), but argued that in any event, the origin of the signs did not matter because they were, as a matter of fact, not hot-dip galvanised. I am inclined to agree with the Plaintiff – even if the signs were made in Singapore, it did not necessarily mean that they were hot-dip galvanised.
[96] Jason’s evidence on whether the three disputed signs were hot-dip galvanised was confused and inconsistent. He initially admitted that the three signs did not comply with the contract specification:
However, he subsequently recanted and claimed that they were in fact compliant:
[97] Jason’s evidence was that two of the three signs were hot-dip galvanised, and that the remaining sign that was not galvanised – Brown Derby – was made of aluminium instead of steel and thus need not be hot-dip galvanised, because there was no way that aluminium could corrode. Although the original design called for a hot-dip galvanised mild steel structure, Jason asserted that the Defendant was allowed to substitute it with a superior product like aluminium. However, the evidence does not bear out Jason’s assertion that approval was given for this substitute. Moreover, his disbelief that there could be rust because the frames were aluminium was contradicted by Mr Woo who had personally examined all 11 signs and testified they were all rusty (see [93] supra).
(b) Other defects remedied by Seiho
[100] The Defendant maintained that it was prevented or obstructed by the Plaintiff from carrying out the remedial works because the Plaintiff had terminated the Sub-Contract on 17 January 2011. However, this contention is clearly a non-starter. The evidence show that it was the Defendant who first wrote the Plaintiff on 12 January 2011 stating that it would not rectify any defects pending payment from the Plaintiff. It was in response to the Defendant’s refusal to remedy defects that the Plaintiff decided to treat the Sub-Contract as repudiated. There is therefore no basis for the Defendant to claim that it was prevented from remedying the defects.
(c) The machinery back-charges in the sum of $211,271.50
[102] Under the Sub-Contract, the Defendant was obliged to supply its own machinery to carry out the signage works. Clause 3(j) of the Sub-Contract provides that the scope of the Sub-Contract works include the provision of “installation, labour, support materials, machinery, plant and equipment including all necessary diesel”. Clause 3 goes on to state that “the scope of work shall include ... the provision of all labors [sic], materials, goods, plants/machineries/equipment/tools temporary works [sic], for the complete supply, delivery, installation, construction and maintenance of the whole of sub-contract works including work in connection therewith...”.
[103] It is not disputed that the Defendant used the Plaintiff’s machinery and equipment to carry out the Sub-Contract works. Jason deposed in his Affidavit of Evidence-in-Chief that the Defendant had installed the signs using scaffoldings, boom-lifts or cranes provided by or set up by the Plaintiff, and he further confirmed this in cross-examination.
[104] The burden of proof is on the Plaintiff to establish that its claim for machinery back-charges in the sum of $211,271.50 was not settled in the final account settlement. In my view, the Plaintiff has failed to appreciate the nature of the SFA, and I find that the Plaintiff has not discharged the burden of proof. Johnny Ong admitted that he has no personal knowledge of the back-charges in question. In addition, the Plaintiff’s contracts manager, Mr Tao (who took over after CS Lim left the Plaintiff), raised the claim on the basis that the SFA was void. He conceded that if the SFA was valid and binding on the Plaintiff the back-charges should not be allowed.
[105] In my view, any amount that is due by the sub-contractor (ie, the Defendant) for a back-charge for labour and machinery supplied at the sub-contractor’s request would have been be taken into account so as to arrive at the final account in the SFA. Bearing in mind that the SFA was signed on 28 September 2010 some nine months after the signs were installed in January 2010, the Defendant’s use of machinery and equipment supplied by the Plaintiff was something that the Plaintiff would have known about before it signed the SFA. If the Plaintiff wished to reserve its right to back-charge the Defendant for the use of its machinery, it should have expressly said so in the SFA (as it did with the issue of defects). In any event, even if there is any ambiguity in the words used by the Plaintiff in the SFA (which I do not accept), then that ambiguity must be resolved against the Plaintiff in accordance with the contra proferentem principle, seeing as the wording of the SFA was the Plaintiff’s.
[106] Accordingly, I find that the machinery back-charges of $211,271.50 were already settled by the SFA and the Plaintiff’s claim for $211,271.50 is disallowed.
(d) CJY’s direct payment to the Defendant
[108] On 13 April 2010, CJY issued a Works Order (“CJY Works Order”) to the Defendant for the supply and installation of certain signs. This CJY Works Order was based on the Defendant’s quotation dated 2 March 2010. For installing those signs, the Defendant was paid $271,697 by CJY on 27 August 2010. The Plaintiff wants to back-charge the Defendant because CJY had back-charged the Plaintiff for the same amount.
[109] The Defendant’s position is that the direct payment from CJY was in respect of a totally separate contract, ie it was for work that fell outside the scope of the Sub-Contract between the Plaintiff and the Defendant. Thus, the Defendant submits that there is no basis for offsetting this payment against what the Plaintiff owed the Defendant under the Sub-Contract. In any case, this back-charge is not recoverable by reason of the settlement in the SFA.
[110] The Plaintiff’s contention is to the contrary. First, there was a substantial overlap between the signs listed in the CJY Works Order and the signs listed in Appendix C to the Sub-Contract being within the scope of the Sub-Contract works. Second, the signs listed in the CJY Works Order were virtually identical to the signs contained in a list of defective and/or incomplete works that were rectified by the Defendant for the Plaintiff. Jason agreed in cross-examination that the two lists were identical save for one item (which the Plaintiff’s lawyer pointed out – correctly in my view – was a typographical error):
[111] The Plaintiff further contended that if the direct payment by CJY was not recoverable as a back-charge, the Defendant would be benefiting from an unwarranted windfall at the Plaintiff’s expense.
[112] There is evidence that the direct payment from CJY was made on behalf of the Plaintiff and should be accounted for in the accounts between the Defendant and the Plaintiff.
[113] First, CJY’s Mr Ip, the projects director for the Universal Studios project, testified that the payment to the Defendant was for work that fell within the scope of the contract between CJY and the Plaintiff and consequently, it was back charged to the Plaintiff:
[114] Second, Jason sought CS Lim’s permission to back-charge CJY’s payment to the Plaintiff in an e-mail dated 28 June 2010 (the e-mail is titled “FW: Final Claim For Works Order Ref: MCC/QS/WO/JH/769”, which is the reference number for the CJY Works Order):
As a matter of logic, there would be no need for the Defendant to obtain the Plaintiff’s endorsement for the back-charge if the work done by the Defendant under the CJY Works Order was a totally separate contract that had nothing to do with the Plaintiff.
[115] Third, the Defendant had pleaded in its Defence and Counterclaim (Amendment No 2) that CJY had “interfered” and paid the Defendant “at least $200,000” because the Plaintiff was having cash flow problems and was unable to pay up (at para 22.3):
It is more likely than not that the Defendant’s own pleadings alluded to the CJY Works Order and that the payment was made by CJY on behalf of the Plaintiff.
[116] However and more importantly, in relation to the SFA, the burden of proof is on the Plaintiff to establish, on a balance of probabilities, that this claim for back-charges was not settled in the final account agreement recorded in the SFA. The alleged windfall – that the Defendant would effectively be paid twice for the same work – once by CJY and once by the Plaintiff if the Plaintiff’s claim is disallowed misses the point.
[117] I have already discussed the true meaning and legal effect of the agreement recorded in the SFA, and I apply the same reasoning with the same full force and effect to the Plaintiff’s claim for $271,697. The difficulty faced by the Plaintiff is with the binding final account agreement between the parties. The SFA recorded the agreement between the parties pursuant to which the Defendant agreed to accept the Final Amount in full and final settlement of all matters in connection with the Sub-Contract, and the Defendant’s acceptance of the Final Amount would serve to discharge in full all liabilities between the parties (see [52] above). In addition, the SFA made use of the phrase “in connection with the Sub-Contract” rather than a narrower phrase like “under the Sub-Contract”. The phrase “in connection with” has generally been held to be very broad, encompassing all matters that had a direct or indirect nexus with the agreement in question (see Sabah Shipyard (Pakistan) Ltd v Government of the Islamic [2004] 3 SLR(R) 184 at [18]; Re Rasmachayana Sulistyo (alias Chang Whe Ming), ex parte The Hongkong and Shanghai Banking Corp Ltd and other appeals [2005] 1 SLR(R) 483 at [41]). Thus, the settlement agreement in the SFA is capable of a wider interpretation to encompass the direct payment of $271,697 to the Defendant in respect of the CJY Works Order. At the time the SFA was signed on 24 September 2010, the parties were aware that the Defendant had been paid by CJY for the CJY Works Order (see Jason’s e-mail to CS Lim on 28 June 2010 at [114] above). The Plaintiff has not established that the sum of $271,697 is recoverable from the Defendant. Accordingly, this claim fails.
Retention Sum
[118] The issue here is whether the Defendant is entitled to be paid the Retention Sum of $62,500. The relevant provisions are cll 4(g), 5 and 15 of the Sub-Contract:
(I should note that the reference to “clause 12” in cl 15(c) appears to be a typo, because cl 12 deals with the unrelated issue of illegal foreign workers.)
[119] The Sub-Contract Certificate of Completion was issued by CJY on 20 December 2010 stating that the Sub-Contract works were completed on 31 December 2009. Therefore, the DLP ended on 30 June 2011 and the Retention Sum is prima facie due for release.
[120] The Plaintiff makes two arguments as to why the Retention Sum is not to be released:
(a) the Sub-Contract Maintenance Certificate has not been issued by CJY and hence the DLP has not yet expired; and
(b) further or in the alternative, the Plaintiff is entitled to withhold payment under cl 15(c) since the Defendant had failed to submit “as-built” drawings as requested.
[121] As regards the first argument, the Plaintiff is referring to the Sub-Contract Maintenance Certificate mentioned in cl 12.1(a) of the “Conditions of Sub-Contract” between the Plaintiff and CJY. Clause 12.1(a) provides that the maintenance period only commences upon the issue of the Sub-Contract Maintenance Certificate:
[122] However, the Conditions of Sub-Contract is an agreement between the Plaintiff and CJY, and the Plaintiff has not demonstrated that this cl was incorporated as term of the Sub-Contract between the Plaintiff and the Defendant. The Sub-Contract made clearly stated that the DLP is to end 18 months after “[c]ompletion of the works”, which is evidenced by the Sub-Contract Certificate of Completion issued by CJY.
[123] As for the second argument, this arose from a late amendment of the pleading. Jason agreed in cross-examination that the Defendant was obliged under cl 3(t) of the Sub-Contract to provide “as-built” drawings. Its failure to do so was therefore a breach of contract. However, cl 15(c) of the Sub-Contract only allows the Plaintiff to withhold the Retention Sum pending full rectification of defects. It did not confer on the Plaintiff a general right to withhold the monies for any kind of breach. It would be straining the word “defect” (whose meaning I have examined earlier at [55] above) to regard the non-provision of “as-built” drawings as an outstanding defect that entitled to the Plaintiff to retain the Retention Sum.
The claim in defamation
The meanings of the words complained of
[124] The Plaintiff is claiming damages for libel in respect of words contained in written communications published by the Defendant. The first communication was the 16 November Letter addressed to a single addressee and the second communication was the 8 December E-mail (see [27]–[28] above) that was copied to several individuals. The alleged offending portions in the 16 November Letter and the 8 December E-mail (collectively referred to as “the Disputed Words”) are as follows:
(a) The 16 November Letter:
(b) The 8 December E-mail:
[125] The 16 November Letter had only one addressee: “Ben Yee” of SLG. The 16 November Letter was sent as an attachment to the 8 December E-mail that was copied (ie, published) to 12 names. In the Plaintiff’s Closing Submissions, the Plaintiff stated that seven representatives of RWS and CJY received the 8 December E-mail.
[126] The Plaintiff pleaded that the natural and ordinary meanings of the Disputed Words used in the 16 November Letter meant and were understood to mean the following:
(a) The Plaintiff was dishonest (“Meaning (1)”).
(b) The Plaintiff was not trustworthy (“Meaning (2)”).
(c) The Plaintiff had resorted to fraudulent means to avoid payment to the Defendant (“Meaning (3)).
[127] In relation to the 8 December E-mail, the Plaintiff relies on the same facts relied on in relation to the 16 November Letter (ie, Disputed Words) and for purposes of this action, the Plaintiff pleaded Meaning (1), Meaning (2) and Meaning (3), in addition to a further meaning, namely, “the Plaintiff could not be relied upon to honour its word (“Meaning (4)”)”.
[128] For its part, the Defendant pleaded a lesser meaning:
The legal principles
[129] The natural and ordinary meaning of the Disputed Words may be either the literal meaning or an implied, inferred or indirect meaning. It is a meaning that does not require the support of extrinsic facts surpassing the general knowledge of the ordinary reader. The Court of Appeal summarised the principles for determining the natural and ordinary meaning of the offending words in a defamation action in Chan Cheng Wah Bernard and others v Koh Sin Chong Freddie and another appeal [2012] 1 SLR 506 as follows (at [18]):
[130] After determining the natural and ordinary meaning of the offending words, the court turns to consider whether that meaning ascribed to the offending words is defamatory. A statement that is untrue is not necessarily defamatory: see Halsbury’s Laws of Singapore vol 18 (LexisNexis, 2009 Reissue) at para 240.091.
[131] In determining the meaning of the words complained of, the court is not limited by the meanings which either the plaintiff or the defendant seeks to ascribe to them (see Lucas-Box v New Group Newspapers Ltd [1986] 1 WLR 147 at 152).
[132] In general, a statement is defamatory if it tends to: (a) lower the plaintiff in the estimation of right-thinking members of society generally, (b) cause the plaintiff to be shunned or avoided, or (c) expose the plaintiff to hatred, contempt or ridicule: see Gary Chan Kok Yew & Lee Pey Woan, The Law of Torts in Singapore (Academy Publishing, 2011) at para 12.014. I pause here to refer to two decisions that were released one after the other in 2010: Kay Swee Pin v Singapore Island Country Club and other [2010] 4 SLR 288 (“Kay Swee Pin”) and Segar Ashok v Koh Fonn Lyn Veronica and another suit [2010] SGHC 168 (“Segar Ashok”). Kumaralingam Amirthalingam and Gary Chan Kok Yew, writing in the Singapore Academy of Law Annual Review of Singapore Cases (2010) 11 SAL Ann Rev 557, commented at paras 23.41 and 23.43 that both cases applied a test that was materially different from the test worded in (a) above. In Kay Swee Pin, the statement in question was held to be defamatory “as it is enough to induce an ill opinion of KSP in the mind of the hypothetical reasonable reader of the Notice and to cause KSP to be shunned or avoided as a result of these words” (at [53]). In Segar Ashok at [54], the e-mail message in question was held to be defamatory as hypothetical reasonable reader of the e-mail was called to judge Dr Segar and what was written there was “enough to induce an ill opinion of Dr Segar in the minds of the recipients and to deprive him of their society.” All I want to say, for now, is that the definition of “defamatory” in the terms of the phraseology used in (a) has its origin in Sim v Stretch [1936] 2 All ER 1237 at 1240 (hereafter (a) is referred to as the “Sim v Stretch definition”). The editors of Duncan & Neill on Defamation, 2 Ed, para 7.07 worded the Sim v Stretch definition as follows: a statement would be taken as defamatory if it “would be likely to affect a person adversely in the estimation of reasonable people generally”. The phrase “induces an ill opinion of the plaintiff” merely paraphrases without changing the meaning of the Sim v Stretch definition. This paraphrase should likewise attract the same acceptability as the following reworded version of the Sim v Stretch definition with no change in the definition’s meaning: a statement that tends to make reasonable people think the worse of the plaintiff (see David Price, Korieh Duodu and Nicola Cain, Defamation: Law, Procedure and Practice (Sweet & Maxwell, 4 Ed, 2010) at pare 2-16, who also observed that the definition enunciated in Sim v Stretch in (a) above incorporates an element of discredit or moral blame. The same element resides in the paraphrase “induces an ill opinion of the plaintiff”).

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Longyuan-Arrk (Macao) Pte Ltd v Show and Tell Productions Pte Ltd and another suit

Grounds of decision

Overview

Chronology of events leading to Suit 81

The Plaintiff’s case

The Defendant’s case

Issues

Discussions and decision

The nature and scope of the SFA

Right of Set-off

The Defendant’s repudiatory breach

The Plaintiff’s various claims

(a) The Non-compliant Signs

Did RWS or CJY instruct the Plaintiff to replace the signs?

Is the Plaintiff estopped from suing the Defendant for the Non-compliant Signs?

Did RWS approve the Epoxy Anti-rust Method?

How many signs were non-compliant?

(b) Other defects remedied by Seiho

(c) The machinery back-charges in the sum of $211,271.50

(d) CJY’s direct payment to the Defendant

Retention Sum

The claim in defamation

The meanings of the words complained of

The legal principles