China Construction v Spandeck: Lump Sum Contract Dispute in Construction Project

In a dispute before the High Court of Singapore on 29 April 2005, China Construction (South Pacific) Development Co Pte Ltd sued Spandeck Engineering (S) Pte Ltd regarding a building and construction contract for a Housing and Development Board (HDB) project. China Construction claimed that the contract was not a lump sum contract and sought payment of $479,613.57. Spandeck Engineering counterclaimed for overpayment and other costs. The court ruled in favor of China Construction, finding that the contract was not a lump sum contract and awarding China Construction the claimed amount, less deductions for Spandeck's 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

China Construction sued Spandeck over a construction contract dispute. The court determined the contract was not a lump sum and ruled in favor of China Construction.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
China Construction (South Pacific) Development Co Pte LtdPlaintiffCorporationJudgment for PlaintiffWon
Spandeck Engineering (S) Pte LtdDefendantCorporationCounterclaim Allowed in PartPartial

3. Judges

Judge NameTitleDelivered Judgment
Andrew AngJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Joseph Liow Wang WuStraits Law Practice LLC
Yusfiyanto YatimanStraits Law Practice LLC
Glenn ChengKelvin Chia Partnership

4. Facts

  1. China Construction was not pre-qualified to tender for a Housing and Development Board project.
  2. Spandeck Engineering was pre-qualified to tender for the project.
  3. The parties agreed that China Construction would be the main subcontractor.
  4. The parties exchanged letters to formalize their agreement.
  5. The 26 January letter included Appendix I, which detailed the calculation of the contract sum.
  6. The 27 January letter stated the total contract sum was $31,966,375.
  7. The defendant made numerous payments to the plaintiff according to the method of computation set out in Appendix I.

5. Formal Citations

  1. China Construction (South Pacific) Development Co Pte Ltd v Spandeck Engineering (S) Pte Ltd, Suit 872/2003, [2005] SGHC 86

6. Timeline

DateEvent
China Construction approached Spandeck Engineering to collaborate on a Housing and Development Board project.
Parties entered into an initial agreement.
China Construction sent a letter to Spandeck Engineering outlining the terms of the agreement.
Spandeck Engineering replied to China Construction's letter, engaging them as the main subcontractor.
Spandeck Engineering sent a letter to China Construction spelling out additional conditions.
China Construction completed works under the agreement.
Spandeck Engineering sent a letter to China Construction regarding management fees.
China Construction completed works under the agreement.
Housing and Development Board issued a provisional final account to Spandeck Engineering.
Spandeck Engineering received final payment from Housing and Development Board.
Spandeck Engineering pleaded set-off and counterclaim.
Judgment issued by the High Court.

7. Legal Issues

  1. Interpretation of Contract
    • Outcome: The court held that the contract price payable to the plaintiff was to be calculated in accordance with Appendix I to the 26 January letter.
    • Category: Substantive
    • Sub-Issues:
      • Inconsistent description of contract sum
      • Whether plaintiff's letter formed part of contract
      • Circumstances surrounding parties' agreement
    • Related Cases:
      • [1976] 1 WLR 989
      • [1998] 1 WLR 896
      • [2005] 1 SLR 379
      • [1971] 1 WLR 1381
  2. Estoppel by Convention
    • Outcome: The court held that the defendant was estopped from asserting that the agreement between the parties was a fixed sum or lump sum contract.
    • Category: Substantive
    • Sub-Issues:
      • Defendant's payments to plaintiff
      • Whether defendant estopped from asserting lump sum contract
    • Related Cases:
      • [1970] AC 583
      • [1982] QB 84
      • [1997] 1 SLR 248
  3. Breach of Contract
    • Outcome: The court found that the defendant had breached the contract and was liable to pay the plaintiff the sum of $479,613.57.
    • Category: Substantive
    • Related Cases:
      • [1997] 3 SLR 795
  4. Limitation
    • Outcome: The court agreed with plaintiff’s counsel that prolongation costs could only be claimed from 23 September 1997.
    • Category: Procedural
    • Related Cases:
      • [2004] 4 SLR 129

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Construction Contracts
  • Commercial Litigation

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Reardon Smith Line Ltd v Hansen-TangenUnknownYes[1976] 1 WLR 989England and WalesCited for the principle that the court should consider the surrounding circumstances when interpreting a commercial contract.
Investors Compensation Scheme Ltd v West Bromwich Building SocietyUnknownYes[1998] 1 WLR 896England and WalesCited for the principles of contractual interpretation, including the consideration of background knowledge reasonably available to the parties.
MAE Engineering Ltd v Fire-Stop Marketing Services Pte LtdCourt of AppealYes[2005] 1 SLR 379SingaporeCited for the approach to the admission of extrinsic evidence forming part of the factual matrix in contract interpretation and the principle of estoppel by convention.
Prenn v SimmondsUnknownYes[1971] 1 WLR 1381England and WalesCited regarding the exclusion of evidence of prior negotiations in contract interpretation.
James Miller and Partners Ltd v Whitworth Street Estates (Manchester) LtdHouse of LordsYes[1970] AC 583United KingdomCited for the principle that a court may look at the subsequent conduct of the parties to interpret a written agreement where the conduct amounted to a variation of contract or gave rise to an estoppel.
Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank LtdCourt of AppealYes[1982] QB 84England and WalesCited for the principle that parties are bound by their interpretation of a contract through their course of dealing.
Singapore Island Country Club v HilborneCourt of AppealYes[1997] 1 SLR 248SingaporeCited for the criteria for establishing estoppel by convention.
Lim Check Meng v Orchard Credit (Pte) LtdUnknownYes[1997] 3 SLR 795SingaporeCited for the proposition that the cause of action in respect of a breach of contract accrues when the breach occurs.
Prosperland Pte Ltd v Civic Construction Pte LtdUnknownYes[2004] 4 SLR 129SingaporeCited regarding the period of limitation, but found to be inapplicable to the present case.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Limitation Act (Cap 163, 1999 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Lump Sum Contract
  • Subcontract
  • Precast Components
  • Civil Defence Shelter Doors
  • Appendix I
  • Estimated Contract Sum
  • Total Contract Sum
  • Estoppel by Convention
  • Prolongation Costs
  • Security Bond

15.2 Keywords

  • construction contract
  • lump sum
  • estoppel
  • Singapore
  • building contract

17. Areas of Law

Area NameRelevance Score
Building and Construction Contracts95
Construction Law90
Contract Law80
Breach of Contract75
Estoppel by Convention65
Estoppel60

16. Subjects

  • Construction Dispute
  • Contract Law
  • Estoppel