Aero-Gate v Engen Marine: Breach of Contract for Diesel Generators

Aero-Gate Pte Ltd sued Engen Marine Engineering Pte Ltd in the High Court of Singapore on 31 July 2013, for breach of contract related to two purchase orders for containerised diesel generators. Aero-Gate claimed Engen Marine delivered the generators late or not at all. Engen Marine counterclaimed, alleging Aero-Gate breached the purchase orders and a separate contract. The court, presided over by Justice Vinodh Coomaraswamy, found Engen Marine in breach of contract, granted Aero-Gate most of the relief claimed, and dismissed Engen Marine'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

Aero-Gate sued Engen Marine for breach of contract regarding containerized diesel generators. The court found Engen Marine in breach and dismissed their counterclaim.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Aero-Gate Pte LtdPlaintiffCorporationJudgment for PlaintiffWon
Engen Marine Engineering Pte LtdDefendantCorporationCounterclaim DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Vinodh CoomaraswamyJC (as he then was)Yes

4. Counsels

Counsel NameOrganization
Navinder SinghNavin & Co LLP
Palaniappan SundararajStraits Law Practice LLC
Ramesh BharaniStraits Law Practice LLC

4. Facts

  1. Aero-Gate engaged Engen Marine to fabricate and deliver ten containerised diesel generators under two purchase orders.
  2. Engen Marine delivered the generators either late or not at all.
  3. Aero-Gate terminated both purchase orders due to Engen Marine's failure to deliver.
  4. Aero-Gate paid Engen Marine US$252,000 under PO 1 and several payments under PO 2.
  5. Engen Marine failed to meet the delivery deadlines stipulated in the purchase orders.
  6. The Letter of Transfer reflected the defendant’s acceptance of the plaintiff’s offer to “transfer ownership” in the Caterpillar Generators from the defendant to the plaintiff.

5. Formal Citations

  1. Aero-Gate Pte Ltd v Engen Marine Engineering Pte Ltd, Suit No 373 of 2012, [2013] SGHC 148

6. Timeline

DateEvent
Iran Offshore Engineering and Construction Company awarded Aero-Gate a contract.
Aero-Gate issued purchase order AG65-20110065-REV00 (PO 1) to Engen Marine.
Aero-Gate and Engen Marine executed PO 1.
IOEC awarded Aero-Gate another contract.
Aero-Gate paid Engen Marine US$252,000 under PO 1.
Aero-Gate issued purchase order AG65-20110068-REV00 (PO 2) to Engen Marine.
Aero-Gate and Engen Marine signed PO 2.
Aero-Gate paid Engen Marine US$378,000 under PO 2.
Engen Marine purchased six Caterpillar Generators.
Engen Marine received delivery of six Caterpillar Generators.
Engen Marine signed and sent back the Letter of Transfer to Aero-Gate.
Aero-Gate paid Engen Marine US$100,000.
Aero-Gate paid Engen Marine US$467,000.
Engen Marine delivered the First and Second Units to Aero-Gate.
Aero-Gate paid Engen Marine US$315,000 to release the First and Second Units.
Aero-Gate terminated PO 1 and PO 2.
Aero-Gate secured a freezing injunction against Engen Marine.
Engen Marine applied to set aside the injunction.
High Court issued the decision.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found the defendant in breach of contract for failing to deliver the goods by the stipulated deadlines, which constituted a repudiatory breach entitling the plaintiff to terminate the contract.
    • Category: Substantive
    • Sub-Issues:
      • Failure to deliver goods by stipulated deadline
      • Repudiatory breach
      • Wrongful termination
    • Related Cases:
      • [2007] 4 SLR(R) 413
      • [2008] 1 SLR(R) 663
      • [2009] 3 SLR(R) 883
      • [2009] 4 SLR(R) 602
  2. Termination of Contract
    • Outcome: The court held that the plaintiff was entitled to terminate the contract due to the defendant's repudiatory breach and that the plaintiff did not waive its right to terminate.
    • Category: Substantive
    • Sub-Issues:
      • Right to terminate for repudiatory breach
      • Waiver of right to terminate
      • Estoppel
    • Related Cases:
      • [1990] 1 Lloyd’s Rep 391
  3. Damages
    • Outcome: The court allowed the plaintiff's claim to recover reliance damages but declined to award expectation damages or specific sums of money claimed under Heads of Relief 5, 6 and 7.
    • Category: Substantive
    • Sub-Issues:
      • Reliance damages
      • Expectation damages
      • Liquidated damages
  4. Delivery Up
    • Outcome: The court held that the plaintiff was entitled to delivery up of the items claimed under Heads of Relief 1 and 2 based on the transfer of ownership and the doctrine of accession.
    • Category: Substantive
    • Sub-Issues:
      • Transfer of ownership
      • Relativity of title
      • Doctrine of accession

8. Remedies Sought

  1. Delivery up of unit packages
  2. Delivery up of Caterpillar engines with alternators
  3. Declaration of trust
  4. Recovery of deposit
  5. Recovery of payment for late delivery
  6. Return of final payment
  7. Recovery of additional costs
  8. Indemnity against IOEC's claims
  9. Damages to be assessed

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Construction Litigation

11. Industries

  • Engineering
  • Construction
  • Oil and Gas

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appealCourt of AppealYes[2007] 4 SLR(R) 413SingaporeCited for the four situations in which a breach of contract entitles the counterparty to terminate the contract.
Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd) v Wong Bark Chuan DavidCourt of AppealYes[2008] 1 SLR(R) 663SingaporeCited for the four situations in which a breach of contract entitles the counterparty to terminate the contract.
Sports Connection Pte Ltd v Deuter Sports GmbHCourt of AppealYes[2009] 3 SLR(R) 883SingaporeCited for the four situations in which a breach of contract entitles the counterparty to terminate the contract and for the analytical approach to determine whether a breach is a repudiatory breach.
Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte LtdCourt of AppealYes[2009] 4 SLR(R) 602SingaporeCited for the four situations in which a breach of contract entitles the counterparty to terminate the contract.
Sun Technosystems Pte Ltd v Federal Express Services (M) Sdn BhdCourt of AppealYes[2007] 1 SLR(R) 411SingaporeCited to explain the attenuated version of the doctrine of fundamental breach.
Jia Min Building Construction Pte Ltd v Ann Lee Pte LtdHigh CourtYes[2004] 3 SLR(R) 288SingaporeCited for the observation that the distinctions between estoppel and waiver may be more apparent than real.
Ong Chay Tong & Sons (Pte) Ltd v Ong Hoo EngCourt of AppealYes[2009] 1 SLR(R) 305SingaporeCited for the principle that a variation of a contract requires offer, acceptance and consideration.
Chwee Kin Keong and others v Digilandmall.com Pte LtdHigh CourtYes[2004] 2 SLR(R) 594SingaporeCited for the principle that a factual or practical benefit suffices to satisfy the requirement of consideration.
Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric (practising under the name and style of W P Architects)High CourtYes[2007] 1 SLR(R) 853SingaporeCited for the principle that a factual or practical benefit suffices to satisfy the requirement of consideration.
Gay Choon Ing v Loh Sze Ti Terence Peter and another appealCourt of AppealYes[2009] 2 SLR(R) 332SingaporeCited for the principle that a factual or practical benefit suffices to satisfy the requirement of consideration.
Oriental Investments (SH) Pte Ltd v Catalla Investments Pte LtdHigh CourtYes[2013] 1 SLR 1182SingaporeCited for the elements of promissory estoppel.
Centre for Creative Leadership (CCL) Pte Ltd v Byrne Roger Peter and othersHigh CourtYes[2013] 2 SLR 193SingaporeCited for the elements of promissory estoppel.
Lam Chi Kin David v Deutsche Bank AGHigh CourtYes[2010] 2 SLR 896SingaporeCited for the elements of promissory estoppel.
Motor Oil Hellas (Corinth) Refineries SA v Shipping Corporation of India (The “Kanchenjunga”)House of LordsYes[1990] 1 Lloyd’s Rep 391England and WalesCited for the principle that an innocent party who elects to affirm a contract notwithstanding a particular breach of that contract by the counterparty, he abandons and thereby loses his right to terminate the contract on grounds of that breach.
The “Pacific Vigorous”High CourtYes[2006] 3 SLR(R) 374SingaporeCited for the requirement that the innocent party must have acted in a manner consistent only with affirming the contract.
Tele2 International Card Company SA v Post Office LtdEnglish Court of AppealYes[2009] EWCA Civ 9England and WalesCited for the principle that there must be sufficient knowledge on the part of the innocent party.
Chai Cher Watt (trading as Chuang Aik Engineering Works) v SDL Technologies Pte Ltd and another appealCourt of AppealYes[2012] 1 SLR 152SingaporeCited for the principle that there must be sufficient knowledge on the part of the innocent party.
Barclays Bank Ltd v Quistclose Investments LtdHouse of LordsYes[1970] AC 567England and WalesCited for the requirements of a Quistclose trust.
Twinsectra Ltd v Yardley and othersHouse of LordsYes[2002] 2 AC 164England and WalesCited for the requirements of a Quistclose trust.
Pacific Rim Palm Oil Ltd v PT Asiatic Persada and othersHigh CourtYes[2003] 4 SLR(R) 731SingaporeCited for the requirements of a Quistclose trust.
Singapore Tourism Board v Children’s Media Ltd and othersHigh CourtYes[2008] 3 SLR(R) 981SingaporeCited for the requirements of a Quistclose trust.
Tee Yok Kiat and another v Pang Min Seng and anotherHigh CourtYes[2012] SGHC 85SingaporeCited for the requirements of a Quistclose trust.
Ching Mun Fong (executrix of the estate of Tan Geok Tee, deceased) v Liu Cho ChitCourt of AppealYes[2001] 1 SLR(R) 856SingaporeCited for the explanation of the difference between an institutional constructive trust and a remedial constructive trust.
Rajabali Jumabhoy and others v Ameerali R Jumabhoy and othersCourt of AppealYes[1998] 2 SLR(R) 434SingaporeCited for the principle that a necessary condition for a constructive trust to arise is that there be some “want of probity”.
Comboni Vincenzo and another v Shankar’s Emporium (Pte) LtdHigh CourtYes[2007] 2 SLR(R) 1020SingaporeCited for the principle that a necessary condition for a constructive trust to arise is that there be some “want of probity”.
George Raymond Zage III and another v Rasif David and othersHigh CourtYes[2009] 2 SLR(R) 479SingaporeCited for the principle that a necessary condition for a constructive trust to arise is that there be some “want of probity”.
Tan Chin Seng and others v Raffles Town Club Pte LtdHigh CourtYes[2005] 2 SLR(R) 302SingaporeCited for the principle that reliance damages compensate for reliance loss.
PT Panosonic Gobel Indonesia v Stratech Systems LtdHigh CourtYes[2010] 3 SLR 1017SingaporeCited for the principle that reliance damages are available to make good wasted expenditure.
CCC Films (London) Ltd v Impact Quadrant Films LtdEnglish High CourtYes[1985] 1 QB 16England and WalesCited for the principle that reliance damages are available to make good wasted expenditure.
Stocznia Gdanska SA v Latvian Shipping Co and othersHouse of LordsYes[1998] 1 WLR 574England and WalesCited for the test for whether there has been total failure of consideration.
National Skin Centre (Singapore) Pte Ltd v Eutech Cybernetics Pte LtdHigh CourtYes[2001] 3 SLR(R) 801SingaporeCited for the principle that when a party elects not to terminate the contract after the other party is in breach, time is set at large and is no longer a condition.
Astea (UK) Ltd v Time Group LtdEnglish Technology and Construction CourtYes[2007] Lloyd’s Rep PN 21England and WalesCited for the principle that it may be very difficult to conclude that a party is in repudiatory breach if they are continuing to perform at a speed considered by the other party to be unreasonably slow.
Shawton Engineering Ltd v DGP International Ltd and anotherEnglish Court of AppealYes[2006] Build LR 1England and WalesCited for the principle that where time is not of the essence and where the party said to be in breach by delay is nevertheless making an effort to perform the contract, it is intrinsically difficult for the other party to establish a fundamental breach.
Charles Rickards Ld v OppenhaimEngland and Wales Court of AppealYes[1950] 1 KB 616England and WalesCited for the principle that when one party waives a contractual deadline, he is thereafter prevented from setting up the deadline against the other party.
E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd and another (Orion Oil Ltd and another, interveners)High CourtYes[2011] 2 SLR 232SingaporeCited for the principles of duress.
Wong Seng Kwan v Public ProsecutorHigh CourtYes[2012] 3 SLR 12SingaporeCited for the concept of relativity of title in the law of personal property.
Antariksa Logistics Pte Ltd and others v McTrans Cargo (S) Pte LtdHigh CourtYes[2012] 4 SLR 250SingaporeCited for the principle that delivery up was available only in an action for detinue.
Hilti Far East Pte Ltd v Tan Hup GuanHigh CourtYes[1991] 1 SLR(R) 711SingaporeCited for the principle that an order for delivery up was granted in favour of a party which was entitled to possession of a car.
The “Safe Neptunia”High CourtYes[1988] 1 SLR(R) 314SingaporeCited for the principle that property rights over minor chattels would not pass to the owner of the principal chattel if the owner of the minor chattels did not intend those rights to pass.
Frank Stewart Sandeman & Sons v Tyzack and Branfoot Steamship Co LtdHouse of LordsYes[1913] AC 680England and WalesCited for the approach of doing practical justice rather than rigid adherence to fixed rules in cases involving the mixture of goods.
Indian Oil Corporation Ltd v Greenstone Shipping SA (Panama)England and Wales High CourtYes[1988] 1 QB 345England and WalesCited for the approach of doing practical justice rather than rigid adherence to fixed rules in cases involving the mixture of goods.
Glencore International AG and others v Metro Trading International IncEngland and Wales High CourtYes[2001] 1 Lloyd’s Rep 284England and WalesCited for the approach of doing practical justice rather than rigid adherence to fixed rules in cases involving the mixture of goods.
Jones v De MarchantManitoba Court of AppealYes28 DLR 561CanadaCited for the application of the doctrine of accession.
Thomas v RobinsonSupreme CourtYes[1977] 1 NZLR 385New ZealandCited for the application of the doctrine of accession.
McKeown v Cavalier Yachts Pty Ltd and anotherSupreme Court of New South WalesYes13 NSWLR 303AustraliaCited for the application of the doctrine of accession.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Containerised diesel generators
  • Purchase order
  • Breach of contract
  • Delivery deadline
  • Completed Generators
  • Caterpillar Generators
  • LS Alternators
  • SR4 Alternators
  • Payment Schedule
  • Letter of Transfer
  • Repudiatory breach
  • Reliance damages
  • Doctrine of accession

15.2 Keywords

  • Breach of contract
  • Diesel generators
  • Construction
  • Engineering
  • Singapore
  • Commercial litigation
  • Damages
  • Delivery
  • Termination
  • Purchase order

17. Areas of Law

Area NameRelevance Score
Breach of Contract95
Contract Law90
Damages70
Contractual terms60
Construction Law30
Engineering Services25
Marine Engineering20

16. Subjects

  • Contract Law
  • Construction Law
  • Commercial Law
  • Engineering
  • Sale of Goods