Crown Construction Pte Ltd v Univel Hospitality Pte. Ltd.

CROWN Construction Pte Ltd was a sub-contractor on a 13-storey building project at Craig Road, and its work included supplying loose furniture. It sub-contracted the furniture to UNIVEL Hospitality Pte Ltd, which had it made in a factory in Indonesia. UNIVEL's tender price based on the consultant's specified materials was USD212,319.91, which exceeded CROWN's budget. After CROWN pressed for cheaper materials and goodwill discounts, the parties settled at USD140,000 on the basis of alternative materials that UNIVEL would propose and the interior design consultant would have to approve. A Letter of Acceptance of 4 November 2021 formed the subcontract.

Performance was mired in delays, mainly because the consultant repeatedly rejected the proposed materials. A first batch was delivered on 7 January 2023, which CROWN said was incomplete and largely defective. On 27 January 2023 UNIVEL issued a set of quotations (the Final Quotation), accepted on 30 January, which revised the price and required 50% before bulk production and the balance before shipping. Disputes over payment followed; CROWN paid USD24,472.14 under protest on 3 March 2023, but UNIVEL said USD10,852.86 remained outstanding and would not ship the second batch. On 31 March 2023 CROWN treated UNIVEL as having repudiated the subcontract and sued for damages in Originating Claim No 309 of 2023. UNIVEL said the subcontract was void for uncertainty and counterclaimed for wrongful termination.

1. Whether the subcontract was void for uncertainty, and whether CROWN could order variations under the REDAS Conditions
2. Whether the Final Quotation varied the payment terms of the subcontract
3. Whether UNIVEL committed the breaches relied on so as to justify termination
4. Whether UNIVEL proved the losses claimed in its counterclaim

The court found that delay in obtaining approvals was caused mainly by the consultant rejecting the proposed materials, not by UNIVEL. The REDAS Conditions were not incorporated: the reference to them related to the main contract, CROWN had described the relevant annex as "for info", and they suited construction rather than furniture supply; even if incorporated, CROWN was estopped from relying on them. Neither side could change the terms unilaterally. Because CROWN sought cheaper materials subject to approval, and the subcontract said nothing about what would happen if approval was refused, the court held it uncertain on this crucial term and unenforceable. The parties had not rescinded it by mutual agreement.

The exchange of emails of 27 and 30 January 2023 amended the payment terms by agreement.

None of the alleged breaches was made out. There was no contractual commitment to deliver by 30 November 2022. Under the revised terms each batch had to be paid in full before shipping, and the second batch had been enlarged with items from the third, so CROWN's payment fell short and UNIVEL could withhold delivery; it was likewise not obliged to deliver unpaid later batches. CROWN called no witness who dealt with the inspection, so the defects were not proven. The termination was therefore unjustified.

On the counterclaim, UNIVEL had to show its losses flowed from the wrongful termination. It gave no evidence of what it paid its supplier for the undelivered batches or of any attempt to sell them in mitigation, so only nominal damages were awarded.

The High Court dismissed CROWN's claim and allowed UNIVEL's counterclaim, but awarded only nominal damages of $1 because UNIVEL had not proven its losses. Costs were to be heard later.