Compact Metal Industries v Enersave Power Builders: Wrongful Termination of Sub-Contract & Payment Dispute
In a suit before the High Court of Singapore, Compact Metal Industries Ltd (“Compact”) sued Enersave Power Builders Pte Ltd (“Enersave”) for wrongful termination of a sub-contract and for payment of work done. The dispute arose from a sub-contract for aluminium cladding and glazing works on the Kallang/Paya Lebar Expressway project. Compact claimed Enersave failed to certify and pay progress claims, leading to wrongful termination. Enersave counterclaimed for delays. The court found Enersave had breached the payment terms and wrongfully terminated the sub-contract, entering judgment in favor of Compact and dismissing Enersave's counterclaim.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Judgment for Plaintiff
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
High Court case between Compact Metal Industries and Enersave Power Builders regarding wrongful termination of a sub-contract and payment disputes. Judgment for Compact.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| DBS Bank Ltd | Defendant | Corporation | Action Discontinued | Dismissed | |
| Compact Metal Industries Ltd | Plaintiff | Corporation | Judgment for Plaintiff | Won | |
| Enersave Power Builders Pte Ltd | Defendant | Corporation | Counterclaim Dismissed | Lost | |
| AVIVA Ltd (formerly known as the Insurance Corporation of Singapore Limited) | Defendant | Corporation | Action Discontinued | Dismissed |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Andrew Ang | Judge | Yes |
4. Counsels
4. Facts
- Compact was subcontracted by Enersave for cladding works on the Kallang/Paya Lebar Expressway project.
- Enersave failed to certify and pay Compact's progress claims regularly.
- A settlement agreement was reached regarding payment terms, but Enersave continued to underpay Compact.
- Enersave terminated the sub-contract, citing delays and insufficient manpower.
- Taisei, the main contractor, terminated Enersave's contract due to delays.
- Taisei later engaged Compact directly to complete the remaining works.
- Enersave sought to impose a condition precedent on Compact for the procurement of Korean Materials.
5. Formal Citations
- Compact Metal Industries Ltd v Enersave Power Builders Pte Ltd and Others, Suit 182/2006, [2008] SGHC 201
6. Timeline
| Date | Event |
|---|---|
| Letter of Award issued to Compact Metal Industries Ltd by Enersave Power Builders Pte Ltd for sub-contract works. | |
| Enersave provided Compact with an advance sum of S$313,787.40. | |
| Compact provided Enersave with a banker’s guarantee for S$313,787.40 to secure the repayment of the advance payment. | |
| Compact commenced installation works. | |
| Compact provided Enersave with a performance bond for S$105,000. | |
| Advance Payment Bond was extended to expire. | |
| Compact and Enersave entered into a Settlement Agreement. | |
| Compact procured the issuance of a banker’s guarantee for S$60,000. | |
| Enersave issued a cheque for S$24,076.82 to Compact. | |
| Enersave issued a cheque for S$76,822.49 to Compact. | |
| Enersave sent a letter to Compact giving Compact a final opportunity to ‘catch up’ with the works. | |
| Enersave issued a notice of default to Compact. | |
| Enersave terminated the Sub-contract with Compact. | |
| Compact obtained an ex parte injunction. | |
| Taisei terminated the Enersave Contract. | |
| Ex parte injunction set aside. | |
| Compact made payment of the sums secured under the Performance Bond and the Guarantee in the aggregate sum of S$165,000. | |
| Actions vis-à-vis DBS and Aviva were discontinued by Compact. | |
| Court directed bifurcation of proceedings at trial. | |
| Judgment reserved. |
7. Legal Issues
- Breach of Contract
- Outcome: The court held that Enersave breached the payment terms of the sub-contract and the settlement agreement.
- Category: Substantive
- Sub-Issues:
- Failure to certify progress claims
- Failure to make progress payments
- Wrongful termination
- Wrongful Termination
- Outcome: The court held that Enersave wrongfully terminated the sub-contract.
- Category: Substantive
- Sub-Issues:
- Failure to provide adequate notice
- Lack of justification for termination
8. Remedies Sought
- Monetary Damages
- Refund of Performance Bond and Guarantee
- Retention Moneys
9. Cause of Actions
- Breach of Contract
- Wrongful Termination
10. Practice Areas
- Commercial Litigation
- Construction Law
- Performance Bonds
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| SG Industrial Pte Ltd v Eros Electrical Engineering & Construction Pte Ltd | High Court | Yes | SG Industrial Pte Ltd v Eros Electrical Engineering & Construction Pte Ltd Suit No 1187 of 1997 | Singapore | Cited for the principle that progress payments are the lifeblood of a contractor's business and the regularity of payments is essential. |
| AL Stainless Industries Pte Ltd v Wei Sin Constructions Pte Ltd | High Court | Yes | AL Stainless Industries Pte Ltd v Wei Sin Constructions Pte Ltd Suit No 221 of 2000 | Singapore | Cited for the principle that arbitrary withholding of payments due to a sub-contractor can be repudiatory conduct. |
| West Faulkner Associates v London Borough of Newham | Court of Appeal | Yes | West Faulkner Associates v London Borough of Newham [1994] 71 BLR 6 | England and Wales | Cited for the principle that failure to comply with an agreed program is not conclusive evidence of failure to proceed regularly and diligently. |
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
- Sub-contract
- Progress claims
- Settlement Agreement
- Wrongful termination
- Performance bond
- Advance payment bond
- Payment terms
- Korean Materials
- Manpower
- Certification
15.2 Keywords
- Construction
- Contract
- Termination
- Payment
- Singapore
- High Court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Breach of Contract | 90 |
| Contract Law | 85 |
| Wrongful Termination of Contract | 80 |
| Performance Bond | 70 |
| Commercial Disputes | 60 |
| Construction Contract Law | 50 |
| Jurisdiction | 30 |
16. Subjects
- Construction Dispute
- Contract Law
- Wrongful Termination