Airtrust (Hong Kong) Ltd v PH Hydraulics: Breach of Contract & Indemnity Costs

Airtrust (Hong Kong) Ltd sued PH Hydraulics & Engineering Pte Ltd in the High Court of Singapore for breach of a sale and purchase agreement regarding a 300-ton reel drive unit (RDU). The court found in favor of Airtrust, holding that PH Hydraulics had breached the agreement by delivering an RDU that was not of merchantable quality and fit for its purpose. Airtrust sought costs on an indemnity basis, arguing that PH Hydraulics' conduct of the case was morally reprehensible. The court rejected this submission and ordered PH Hydraulics to pay Airtrust's costs on the standard basis. PH Hydraulics appealed against aspects of the decision, including the finding of reckless, dishonest, or fraudulent conduct and the award of punitive damages.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Costs awarded to the plaintiff on the standard basis.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Airtrust sued PH Hydraulics for breach of contract. The court found PH Hydraulics liable but denied Airtrust's request for indemnity costs.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Airtrust (Hong Kong) LtdPlaintiffCorporationCosts awarded on the standard basisPartialTan Chuan Thye, Avinash Pradhan, Alyssa Leong, Arthi Anbalagan
PH Hydraulics & Engineering Pte LtdDefendantCorporationCosts to be borne on the standard basisLostTan Chee Meng, Josephine Choo, Wilbur Lim

3. Judges

Judge NameTitleDelivered Judgment
Chan Seng OnnJudgeYes

4. Counsels

Counsel NameOrganization
Tan Chuan ThyeRajah & Tann Singapore LLP
Avinash PradhanRajah & Tann Singapore LLP
Alyssa LeongRajah & Tann Singapore LLP
Arthi AnbalaganRajah & Tann Singapore LLP
Tan Chee MengWongPartnership LLP
Josephine ChooWongPartnership LLP
Wilbur LimWongPartnership LLP

4. Facts

  1. Plaintiff and defendant entered into a sale and purchase agreement for a 300-ton reel drive unit (RDU) in 2007.
  2. The defendant was to ensure the RDU was of merchantable quality and fit for its intended purpose.
  3. The defendant was aware the RDU was to be leased to Trident Offshore Services for laying undersea umbilical.
  4. The RDU was delivered in April 2008 and mounted on the “Maersk Responder”.
  5. In May 2009, a major failure occurred during the laying of a second reel of umbilical.
  6. The plaintiff commenced Suit No 219 of 2013 against the defendant seeking damages for breach of contract.
  7. The defendant misrepresented that it had obtained full and proper certification of the RDU.

5. Formal Citations

  1. Airtrust (Hong Kong) Ltd v PH Hydraulics & Engineering Pte Ltd, Suit No 219 of 2013, [2016] SGHC 167

6. Timeline

DateEvent
Plaintiff entered into a sale and purchase agreement with the defendant.
RDU was delivered to the plaintiff.
Major failure of one of the gearbox assemblies occurred.
Plaintiff commenced Suit No 219 of 2013 against the defendant.
Trial for Suit No 219 of 2013 was heard.
Trial for Suit No 219 of 2013 was heard.
Judgment delivered in favor of the plaintiff.
Oral submissions on costs were heard.
Grounds of decision issued.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court held that the defendant breached the sale and purchase agreement.
    • Category: Substantive
    • Sub-Issues:
      • Failure to deliver goods of merchantable quality
      • Failure to deliver goods fit for purpose
  2. Indemnity Costs
    • Outcome: The court declined to award indemnity costs, ordering costs on the standard basis instead.
    • Category: Procedural
    • Sub-Issues:
      • Failure to give full and proper disclosure
      • Suppression of important facts
      • Insistence on unmeritorious arguments

8. Remedies Sought

  1. Damages for breach of contract
  2. Costs

9. Cause of Actions

  • Breach of Contract
  • Misrepresentation

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Marine
  • Oil and Gas

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Airtrust (Hong Kong) Ltd v PH Hydraulics & Engineering Pte LtdHigh CourtYes[2016] 1 SLR 1060SingaporeThe judgment being appealed against in relation to costs.
PT Sandipala Arthaputra v STMicroelectronics Asia Pacific Pte Ltd and othersN/AYes[2016] 1 SLR 748SingaporeCited by the plaintiff in support of their argument for indemnity costs.
Wong Meng Cheong and another v Ling Ai Wah and anotherN/AYes[2012] 1 SLR 549SingaporeCited by the plaintiff in support of their argument for indemnity costs.
Tan Chin Yew Joseph v Saxo Capital Markets Pte LtdHigh CourtYes[2013] SGHC 274SingaporeCited by the defendant to emphasize the high burden for indemnity costs.
CCM Industrial Pte Ltd v Uniquetech Pte LtdN/AYes[2009] 2 SLR(R) 20SingaporeCited for the principle that indemnity costs are an exception and must be exceptionally justified.
Lee Kuan Yew v Vinocur John and othersN/AYes[1996] 1 SLR(R) 840SingaporeCited for the principle that costs on the indemnity basis should only be ordered in a special case or where there are exceptional circumstances.
Amoco (UK) Exploration Company v British American Offshore LimitedN/AYes[2002] BLR 135England and WalesCited as an example where indemnity costs were awarded due to the plaintiff's ulterior purpose in commencing the action.
Three Rivers District Council v The Governor and Co of the Bank of England (No 6)N/AYes[2006] EWHC 816 (Comm)England and WalesReferred to for the observation that a plaintiff taking a high risk can expect to pay indemnity costs when their claim fails.
Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others (Tung Yu-Lien Margaret and others, third parties)N/AYes[2011] 1 SLR 582SingaporeCited as a case where the court found that the plaintiff's conduct did not warrant a departure from the usual basis of costs.
Heng Holdings SEA (Pte) Ltd v Tomongo Shipping Co LtdN/AYes[1997] 2 SLR(R) 813SingaporeCited to demonstrate that even if the losing party failed to disclose relevant material, this does not mean that indemnity costs ought to be awarded to the winning party as a matter of course.
Ng Eng Ghee and others v Mamata Kapildev Dave and others (Horizon Partners Pte Ltd, intervener) and another appealN/AYes[2009] 4 SLR(R) 155SingaporeCited for the proposition that costs on a standard basis may be ordered notwithstanding a material non-disclosure of facts.
Australian Commercial Research and Development Ltd v ANZ McCaughan Merchant Bank LtdN/AYes[1989] 3 All ER 65England and WalesCited as an example of a case where indemnity costs were awarded because the plaintiff commenced two sets of proceedings relating to the same subject matter.
Tjong Very Sumito and others v Antig Investments Pte LtdN/AYes[2009] 4 SLR(R) 732SingaporeCited as a case where indemnity costs were awarded because the appellants pursued an entirely unmeritorious appeal.
Beckkett Pte Ltd v Deutsche Bank AGN/AYes[2011] 2 SLR 96SingaporeCited as a case where the Court of Appeal found blatant abuse but did not order indemnity costs due to the respondent's conduct.
A v B (No 2)N/AYes[2007] 1 Lloyd’s Rep 358N/ACited with approval for the principle that breach of an arbitration clause causing legal costs should result in an award of the whole of the opposing party's reasonable legal costs.
Reid Minty (a firm) v Gordon TaylorN/AYes[2002] 2 All ER 150England and WalesCited for the principle that indemnity costs are not only awarded if there has been some sort of moral lack of probity or conduct deserving of moral condemnation on the part of the paying party.
Victor Kermit Kiam II v MGN LimitedN/AYes[2002] 2 All ER 242England and WalesCited for the principle that conduct, albeit falling short of misconduct deserving of moral condemnation, can be so unreasonable as to justify an order for indemnity costs.
Noorani v Calver (No 2/Costs)N/AYes[2009] EWHC 592 (QB)England and WalesCited for the principle that indemnity costs are no longer limited to cases where the court wishes to express disapproval of the way in which litigation has been conducted.
Clark v Associated NewspapersN/AYes[1998] EWHC Patents 345England and WalesCited as an example of conduct which had led to an order for indemnity costs, such as the making of an unjustified personal attack.
Wates Construction Limited v HGP Greentree Alchurch Evans LimitedN/AYes[2006] BLR 45England and WalesCited as an example of conduct which had led to an order for indemnity costs, such as the pursuit of a hopeless claim.
Excelsior Commercial & Industrial Holdings Limited v Salisbury Hammer Aspden & Johnson (a firm) and anorN/AYes[2002] EWCA Civ 879England and WalesCited for the suggestion that there may be cases where an order of indemnity costs is appropriate even though the losing party’s conduct cannot be described as unreasonable.
Goh Eileen née Chia and another v Goh Mei Ling Yvonne and anotherN/AYes[2014] 3 SLR 1356SingaporeCited as a case where the court considered the context and nature of the dispute in ascertaining whether the case was of such an exceptional nature that it was appropriate to depart from the standard basis of costs.
Balmoral Group Limited v Borealis (UK) Limited and orsN/AYes[2006] EWHC 2531 (Comm)England and WalesCited as a case where the plaintiff was ordered to pay the defendant’s costs on an indemnity basis only in respect of the work of the defendant’s expert in dealing with the report of the plaintiff’s expert.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Rules of Court (Cap 322, R 5, 2014 Rev Ed)Singapore
Rules of CourtSingapore

15. Key Terms and Keywords

15.1 Key Terms

  • Reel Drive Unit
  • RDU
  • Sale and Purchase Agreement
  • Indemnity Costs
  • Standard Basis
  • Merchantable Quality
  • Fitness for Purpose
  • ABSG Certification
  • STAAD.Pro analysis

15.2 Keywords

  • breach of contract
  • indemnity costs
  • sale and purchase agreement
  • reel drive unit
  • RDU
  • Singapore
  • High Court

16. Subjects

  • Contract Law
  • Civil Procedure
  • Costs

17. Areas of Law

  • Civil Procedure
  • Costs
  • Contract Law
  • Sale of Goods