Lam Hong Leong Aluminium v Lian Teck Huat: Guarantee, Construction Contract Dispute

Lam Hong Leong Aluminium Pte Ltd, specialist aluminium cladding contractors, sued Lian Teck Huat Construction Pte Ltd and Chew Joon Huat in the High Court of Singapore on March 10, 2003, for claims related to progress payments for work done under a subcontract. The court, presided over by Justice Lai Siu Chiu, found in favor of Lam Hong Leong Aluminium, awarding judgment against Lian Teck Huat Construction and holding Chew Joon Huat liable under a personal guarantee. The court dismissed the defendants' counterclaim.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Specialist aluminium cladding contractors sue building contractors for progress payments. Court considers guarantee and reasonable business meaning in construction contract.

1.7 Decision Date

9 March 2003

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Lam Hong Leong Aluminium Pte Ltd	Plaintiff	Corporation	Judgment for Plaintiff	Won	Lek Yi Siang of Drew & Napier LLC
Lian Teck Huat Construction Pte Ltd	Defendant	Corporation	Counterclaim Dismissed	Lost	Michael Por of Tan Lee & Partners Angeline Toh of Tan Lee & Partners
Chew Joon Huat	Defendant	Individual	Counterclaim Dismissed	Lost	Michael Por of Tan Lee & Partners Angeline Toh of Tan Lee & Partners

3. Judges

Judge Name	Title	Delivered Judgment
Lai Siu Chiu	Judge	Yes

4. Counsels

Counsel Name	Organization
Lek Yi Siang	Drew & Napier LLC
Michael Por	Tan Lee & Partners
Angeline Toh	Tan Lee & Partners

4. Facts

Lam Hong Leong Aluminium was subcontracted by Lian Teck Huat Construction for aluminium cladding work.
No formal subcontract was executed between the parties, despite a clause in the Letter of Award requiring it.
The plaintiffs submitted two applications for extensions of time, which were not responded to by the defendants.
The first defendants consistently underpaid the plaintiffs' progress claims.
Chew Joon Huat provided two guarantees for the payment of the plaintiffs' progress claims.
The first defendants alleged delays and defective workmanship on the part of the plaintiffs.
The Architects imposed liquidated damages on the first defendants due to delays in the project.

5. Formal Citations

Lam Hong Leong Aluminium Pte Ltd v Lian Teck Huat Construction Pte Ltd and Another, Suit 1497/2001, [2003] SGHC 53

6. Timeline

Date	Event
2000-01-14	Plaintiffs' quotation submitted
2000-03-03	Main contract commencement date
2000-04-06	Letter of Award from first defendants to plaintiffs
2000-05-11	Plaintiffs submitted colour chart
2000-05-19	Plaintiffs commenced submission of shop drawings for the Genting block
2000-06-05	Plaintiffs commenced submission of shop drawings for the Tannery block
2000-06-06	First defendants' master programme faxed to the plaintiffs
2000-06-07	Plaintiffs' installation programme starting date for the Genting block
2000-06-20	Plaintiffs responded with their own installation programme
2000-07-07	Architects selected four colours
2000-07-14	Architects selected another two colours
2000-07-28	Plaintiffs followed up with submission of colour samples
2000-09-06	Architects confirmed the colour location of the panels on Genting block
2000-10-18	Final submissions for the Genting block were made
2000-12-25	Plaintiffs' progress payments totalled $246,522.15
2001-02-10	Completion date for the subcontract works
2001-02-19	See Choon Howe Jeffrey met the second defendant
2001-03-07	Plaintiffs wrote to the first defendants to request for payment of $150,000 by 9 March 2001
2001-03-10	Completion date for the main contract works
2001-03-21	Outstanding progress claims totalled $529,875
2001-04-05	See met Chew and requested a personal guarantee from him
2001-04-05	First guarantee provided by Chew
2001-04-22	See met Chew again and procured a fresh guarantee
2001-04-22	Second guarantee from Chew
2001-06-01	Liquidated damages imposed on the first defendants retrospectively
2001-07-10	Plaintiffs submitted first application for extensions of time
2001-07-11	First defendants applied for EOT from the Architects
2001-08-10	First defendants failed to make any payment after this date
2001-08-27	Plaintiffs' 12th progress claim
2001-09-25	Plaintiffs' 13th progress claim
2001-10-25	Plaintiffs' 14th progress claim
2001-10-31	Plaintiffs submitted subsequent letter for extensions of time
2001-11-06	Defendants alleged that the plaintiffs stopped work
2001-11-22	Architects' letter giving notice that liquidated damages would be imposed on the first defendants retrospectively, from 1 June 2001
2001-11-27	Plaintiffs commenced proceedings
2002-01-03	Measurements for the Genting block were finally taken
2002-01-11	Plaintiffs requested site measurements to be taken of the Tannery block
2002-01-30	Summary judgment against the first defendants in the sum of $100,000
2002-02-11	Date of the defence
2002-04-22	Architects made further deductions of $204,298.29 and $76,368
2003-03-10	Decision Date

7. Legal Issues

Breach of Contract
- Outcome: The court found that the first defendants had breached the contract by failing to make timely and full progress payments to the plaintiffs.
- Category: Substantive
- Sub-Issues:
  - Failure to make progress payments
  - Delay in completion of works
Enforceability of Guarantee
- Outcome: The court held that the second guarantee was enforceable against Chew Joon Huat, finding that there was sufficient consideration and that the guarantee should be given a reasonable business meaning.
- Category: Substantive
- Sub-Issues:
  - Consideration for guarantee
  - Interpretation of guarantee terms
Incorporation of Main Contract Terms into Subcontract
- Outcome: The court ruled that the terms of the main contract were not incorporated into the subcontract between the plaintiffs and the first defendants because the plaintiffs were never shown the main contract documents and did not sign a subcontract with similar terms.
- Category: Substantive
- Sub-Issues:
  - Privity of contract
  - Express incorporation

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Contract
Enforcement of Guarantee

10. Practice Areas

Construction Disputes
Commercial Litigation

11. Industries

Construction

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Imperial Steel Drum Manufacturers Sdn Bhd v Wong Kin Heng	High Court	Yes	[1997] 2 SLR 695	Singapore	Cited for the principle that guarantees should be given a reasonable, business meaning and should not be construed so as to render the guarantee ineffective or illusory.
Hyundai Shipbuilding v Pournaras	N/A	No	Hyundai Shipbuilding v Pournaras [1978] 2 Lloyd's Rep 502	N/A	Commercial purpose of the guarantee was that the plaintiffs get their money from the defendant if they cannot get it from Automatic.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

Guarantee
Letter of Award
Progress Payments
Subcontract
Liquidated Damages
Shop Drawings
Clerk-of-Works
Extensions of Time
Site Measurements
Defective Works

15.2 Keywords

construction contract
guarantee
progress payments
aluminium cladding
Singapore
High Court

17. Areas of Law

Area Name	Relevance Score
Contract Law	90
Construction Law	85
Breach of Contract	80
Building and Construction Contracts	75
Guarantee	70
Construction Disputes	60
Damages	50
Progress Payment Claims	50
Building and Construction Industry Security of Payment Act 2004	40
Appeal	20

16. Subjects

Construction Dispute
Contract Law
Guarantee Law