LW Infrastructure v Lim Chin San: Liquidated Damages & Sub-Contract Termination

LW Infrastructure Pte Ltd (LW), the main contractor, appealed against an arbitral award concerning a dispute with Lim Chin San Contractors Pte Ltd (LCS), the sub-contractor, regarding a building project. The High Court of Singapore, with Judith Prakash J presiding, ruled on July 5, 2011, that the termination of the sub-contract did not extinguish LW's right to claim liquidated damages for delays that occurred before the termination. The court remitted the award to the arbitrator for reconsideration of the liquidated damages claim.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Appeal allowed in part.

1.3 Case Type

Civil

1.4 Judgment Type

Written Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding liquidated damages after sub-contract termination. Court held termination doesn't extinguish rights accrued before termination, remitting award.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Lim Chin San Contractors Pte LtdRespondentCorporationAppeal dismissed in partLost
LW Infrastructure Pte LtdAppellantCorporationAppeal allowed in partPartial

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudgeYes

4. Counsels

Counsel NameOrganization
Sean La’BrooyWongPartnership LLP
Alvin YeoWongPartnership LLP
Napolean KohWongPartnership LLP
Pamela TanWongPartnership LLP
Tan Liam BengDrew & Napier LLC
Soh Chun YorkDrew & Napier LLC

4. Facts

  1. LW was the main contractor and LCS was the sub-contractor for a building project.
  2. LW issued a letter of award to LCS on 14 May 2001.
  3. The formal sub-contract document was executed on 30 November 2001.
  4. LCS was required to complete the sub-contract works by 2 August 2002.
  5. LW terminated the sub-contract on 12 May 2003.
  6. LW served a notice of arbitration on LCS on 22 June 2004.
  7. The arbitrator issued his award on 29 June 2010.

5. Formal Citations

  1. LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd, Originating Summons No 759 of 2010, [2011] SGHC 163

6. Timeline

DateEvent
LW issued a letter of award to LCS.
Formal sub-contract document executed.
LCS was required to complete the sub-contract works.
LW terminated the sub-contract.
Temporary Occupation Permit granted.
LW served a notice of arbitration on LCS.
Mr. Johnny Tan Cheng Hye accepted appointment as the arbitrator.
Arbitrator issued his award.
LW requested an additional award.
Arbitrator rejected LW's request for an additional award.
Originating Summons No 759 of 2010 filed.
Judgment reserved.

7. Legal Issues

  1. Liquidated Damages
    • Outcome: The court held that the termination of the sub-contract did not extinguish LW's right to claim liquidated damages for delays that occurred before the termination.
    • Category: Substantive
    • Sub-Issues:
      • Accrual of liquidated damages
      • Termination of contract
      • Extension of time
    • Related Cases:
      • [1913] AC 143
      • [1989] 1 SLR(R) 5
      • [1994] 1 SLR(R) 125
  2. Termination of Contract
    • Outcome: The court clarified the distinction between termination of employment and termination of the contract, noting that termination of employment does not ipso facto affect the existence of the liquidated damages clause.
    • Category: Substantive
    • Sub-Issues:
      • Effect of termination on accrued rights
      • Termination of employment vs. termination of contract
    • Related Cases:
      • [1989] 1 AC 1056
      • [2002] 1 AC 185

8. Remedies Sought

  1. Liquidated Damages

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Construction Disputes
  • Arbitration
  • Commercial Litigation

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
British Glanzstoff Manufacturing Company, Limited v General Accident, Fire and Life Assurance Corporation, LimitedHouse of LordsYes[1913] AC 143United KingdomCited regarding whether a liquidated damages clause applies when the contractor has completed the contract and control of the contract has not passed out of their hands.
The British Glanzstoff Manufacturing Company, Limited v The General Accident, Fire, and Life Assurance Corporation, LimitedCourt of SessionYes[1912] SC 591United KingdomCited to examine the facts of the case and show that termination occurred before the agreed date of completion.
Bank of Boston Connecticut v European Grain and Shipping LtdHouse of LordsYes[1989] 1 AC 1056United KingdomCited for the principle that termination of a contract does not affect rights which have accrued before termination.
Hurst v Bryk and othersHouse of LordsYes[2002] 1 AC 185United KingdomCited for the principle that termination of a contract does not affect rights which have accrued before termination.
Re Sanpete Builders (S) Pte LtdHigh CourtYes[1989] 1 SLR(R) 5SingaporeCited regarding the validity of a claim for liquidated damages accruing prior to the termination of the contract.
Engineering Construction Pte Ltd v Attorney-GeneralHigh CourtYes[1994] 1 SLR(R) 125SingaporeCited regarding the employer's entitlement to deduct or recover liquidated damages in respect of any period during which the contractor was in delay before termination.
SMK Cabinets v Hili Modern Electrics Pty LtdFull Supreme Court of VictoriaYes[1984] VR 391AustraliaCited regarding the availability of a claim of liquidated damages to the extent that it was made in relation to the period before the acts of prevention had been committed.
Startup v MacDonaldN/AYes(1843) 6 Man & G 593N/ACited to support the principle that a contractor has until the last hour of the day fixed for completion in which to finish the works.
JF Finnegan Ltd v Community Housing Association LtdEnglish Court of AppealYes(1995) 77 BLR 22United KingdomCited regarding the construction and interpretation of a liquidated damages clause in a JCT contract which is in pari materia with cl 24 of the sub-contract.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdCourt of AppealYes[2008] 3 SLR(R) 1029SingaporeCited regarding the principle of objectively ascertaining the shared contractual intentions of the parties.
Marc Rich & Co AG v Beogradska Plovidba (The “Avala”)N/AYes[1994] 2 Lloyd’s Rep 363N/ACited regarding the power to vary ought ordinarily only to be used where the necessary fact-finding has already been completed by the arbitrator and the necessary answer is self-evident.
Fence Gate Limited v NEL Construction LimitedN/AYes(2001) 82 Con LR 41N/ACited regarding the power to vary ought ordinarily only to be used where the necessary fact-finding has already been completed by the arbitrator and the necessary answer is self-evident.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Arbitration Act (Cap 10, 2002 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Liquidated Damages
  • Sub-Contract
  • Termination
  • Completion Date
  • Extension of Time
  • Arbitration
  • Practical Completion
  • Notice of Termination
  • Sub-Contract Works
  • Main Contract

15.2 Keywords

  • Liquidated Damages
  • Construction
  • Sub-Contract
  • Termination
  • Singapore
  • Arbitration

17. Areas of Law

Area NameRelevance Score
Liquidated Damages95
Construction Law90
Contract Law85
Arbitration75
Construction Contracts70
Damages60

16. Subjects

  • Construction Law
  • Contract Law
  • Arbitration