DMC v DMD

Facts

DMC was the main contractor for a road marking project for the Employer and, by two sub-contracts dated 28 June 2021, engaged DMD to paint road markings in the East and West sectors, with contract sums of $10,186,054.00 and $9,808,289.00 respectively. DMD began physical works only around late September and early October 2021. On unchallenged evidence, it had worked at only a small fraction of the locations by the end of June 2022, more than a year in. DMC and the Employer issued repeated warnings. DMC then deployed its own staff, bought equipment and hired third parties to take over or support work at many locations, and the works, including the fifth month field tests, were substantially completed in December 2023, after the completion date of 27 June 2023.

In Originating Claim No 868 of 2023, DMC claimed six backcharges (including the costs of taking over the works, third party costs, completion work after 27 June 2023, project personnel DMD was meant to provide, help with pre-condition reports and job proposal sheets, and a 15% profit and attendance charge on earlier agreed backcharges) and liquidated damages, a net $3,391,652.86. DMD disputed its scope of work and the charges, relied on suspension under s 26 of the Building and Construction Industry Security of Payment Act 2004, said the liquidated damages clause was a penalty, alleged unjust enrichment because DMC had been paid by the Employer, and counterclaimed $533,767.18 and $679,007.94 for work done.

Issues

1. Whether DMC had to give notice of specific locations before backcharging, and what the parties agreed at their 14 June 2022 meeting about administrative charges.
2. Whether the disputed expenses and amounts in the backcharges were recoverable, including whether s 26 of the Act barred the backcharge for work after 27 June 2023.
3. Whether DMC was entitled to liquidated damages, or whether the clause was a penalty.
4. Whether DMC's claims amounted to unjust enrichment, and whether DMD's counterclaim succeeded.

Holding

The court allowed DMC's claims for all six backcharges and for liquidated damages of $888,300 (excluding GST), and dismissed DMD's counterclaim. It awarded DMC pre-judgment interest at 5.33% per annum from the dates DMC proposed, less interest on the value of completed sub-contract work, post-judgment interest at the same rate, and costs.

Reasoning

Applying Vim Engineering Pte Ltd v Deluge Fire Protection (S.E.A.) Pte Ltd [2023] SGHC(A) 2, the backcharge clause contained no notice requirement, any lack of notice would not extinguish the general right to damages, and DMD had in any case been warned many times that DMC would step in. Its witness's claim that DMD could have caught up was badly shaken in cross-examination. On the meeting minutes, DMD's own witness said the waiver of administrative charges covered only backcharges already agreed, and although the 15% charge recorded there referred to third parties, that did not displace DMC's contractual right to profit and attendance.

The court accepted that depreciation on equipment bought to take over the work, dormitory, refreshment and other worker costs were reasonable and not duplicated. DMD bore the burden of proving the third party backcharge excessive and its director's later unaccompanied measurements did not displace figures the Employer had verified. Applying Audi Construction Pte Ltd v Kian Hiap Construction Pte Ltd [2018] 1 SLR 317, DMD waived suspension by election when it carried on the field tests and counterclaimed for them. The personnel clauses referring to the Contractor, carried over unchanged from the main contract, meant DMD, and DMC's email told DMD to stop only at specific locations.

The fifth month field tests were within the scope to be completed by 27 June 2023, and the delay was due to DMD's lack of resources. Distinguishing Denka Advantech Pte Ltd and another v Seraya Energy Pte Ltd and another and other appeals [2021] 1 SLR 631, the daily rate was triggered only by late completion and matched or was slightly below the main contract rate, so it was a genuine pre-estimate and not a penalty; actual loss need not be shown. Payment by the Employer arose under a separate bargain and was no windfall. The counterclaim for field tests lacked any supporting reports, and no retention sum was pleaded.

From the judgment