CAA Technologies v Newcon Builders: Termination of Sub-Contract & Compensation for Delays in Construction Project

CAA Technologies Pte Ltd appealed against the High Court's decision in favor of Newcon Builders Pte Ltd, regarding the termination of a sub-contract for the design, production, and installation of pre-cast concrete hollow core slabs for a medical technology hub project. The Court of Appeal, with Judges Judith Prakash JA, Tay Yong Kwang JA, and Steven Chong JA, found that Newcon was justified in terminating the sub-contract due to CAA's breaches of contract. However, the court allowed the appeal in part, setting aside the order for CAA to pay $407,000 to Newcon for liquidated damages paid to JTC.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal allowed in part. The order for CAA to pay $407,000 to Newcon for liquidated damages paid to JTC was set aside.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding termination of a sub-contract for pre-cast concrete hollow core slabs. The court examined breaches of contract terms and damages.

1.7 Decision Date

17 September 2017

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
CAA Technologies Pte Ltd	Appellant	Corporation	Appeal allowed in part	Partial	Edwin Lee Peng Khoon, Jennifer Fong Lee Cheng, Irving Choh Thian Chee, Christine Chuah Hui Fen, Kor Wan Wen Melissa
Newcon Builders Pte Ltd	Respondent	Corporation	Partial Win	Partial	Lok Vi Ming, Joseph Lee Sien Liang, Tang Jin Sheng

3. Judges

Judge Name	Title	Delivered Judgment
Judith Prakash	Judge of Appeal	No
Tay Yong Kwang	Judge of Appeal	No
Steven Chong	Judge of Appeal	Yes

4. Counsels

Counsel Name	Organization
Edwin Lee Peng Khoon	Eldan Law LLP
Jennifer Fong Lee Cheng	Eldan Law LLP
Irving Choh Thian Chee	Optimus Chambers LLC
Christine Chuah Hui Fen	Optimus Chambers LLC
Kor Wan Wen Melissa	Optimus Chambers LLC
Lok Vi Ming	LVM Law Chambers LLC
Joseph Lee Sien Liang	LVM Law Chambers LLC
Tang Jin Sheng	LVM Law Chambers LLC

4. Facts

Newcon was the main contractor for a medical technology hub project in Jurong.
Newcon sub-contracted the production and delivery of HCS to CAA via a Letter of Intent.
The Letter of Intent required CAA to follow the site progress and revisions to the construction programme schedule.
A Letter of Acceptance was sent to CAA but never signed.
CAA failed to meet the initial delivery schedules for the HCS.
Newcon issued revised delivery schedules, but CAA still failed to comply.
Newcon terminated the sub-contract with CAA due to the delays.

5. Formal Citations

CAA Technologies Pte Ltd v Newcon Builders Pte Ltd, Civil Appeal No 63 of 2016, [2017] SGCA 53

6. Timeline

Date	Event
2012-11-02	Letter of Intent signed between Newcon and CAA.
2012-11-17	CAA signed and returned the Letter of Intent.
2013-01-11	Newcon sent the Letter of Acceptance to CAA for signature.
2013-01-30	Newcon asked CAA to submit items before commencing production of HCS.
2013-02-26	First casting of the HCS took place.
2013-03-01	Newcon sent CAA an email containing a revised schedule for the delivery of the HCS.
2013-03-16	Delivery of the HCS commenced.
2013-03-18	HCS for area 2a were delivered.
2013-03-21	Newcon sent CAA another email containing a proposed delivery schedule.
2013-03-22	Meeting took place between Newcon and CAA.
2013-03-23	Newcon sent CAA an email to put CAA on notice that Newcon was ready to receive the HCS at area 2a but that CAA had failed to deliver.
2013-03-25	Newcon emailed CAA a letter of termination.
2013-11-21	CAA commenced Suit No 1063 of 2013 against Newcon.
2015-04-13	Interim final payment certificate No 9 issued by Jurong Consultants Pte Ltd to Newcon.
2017-07-03	Judgment reserved.
2017-09-18	Judgment delivered.

7. Legal Issues

Breach of Contract
- Outcome: The court found that CAA breached clause 2 of the Letter of Intent and that this breach deprived Newcon of substantially the whole benefit of the Sub-Contract.
- Category: Substantive
- Sub-Issues:
  - Failure to follow site progress
  - Failure to adhere to construction programme schedule
  - Failure to proceed with due diligence and expedition
- Related Cases:
  - [2016] SGHC 246
  - [2009] 4 SLR(R) 602
  - [2007] 4 SLR(R) 413
Termination of Contract
- Outcome: The court held that Newcon was justified in terminating the Sub-Contract due to CAA's breaches.
- Category: Substantive
- Sub-Issues:
  - Justification for termination
  - Effect of notice of termination
  - Repudiatory breach
- Related Cases:
  - [2009] 4 SLR(R) 602
  - [2007] 4 SLR(R) 413
Implied Terms
- Outcome: The court expressed reservations about implying terms of due diligence and expedition in construction contracts, finding it unnecessary in this case.
- Category: Substantive
- Sub-Issues:
  - Due diligence
  - Expedition
  - Time is of the essence
- Related Cases:
  - [2013] 4 SLR 193
Damages
- Outcome: The court set aside the order for CAA to pay $407,000 in liquidated damages, finding that Newcon had not proven that CAA's breaches were the sole cause of the delay.
- Category: Substantive
- Sub-Issues:
  - Causation
  - Liquidated damages
  - Reliance costs

8. Remedies Sought

Damages for breach of contract
Payments accrued up to the date of termination

9. Cause of Actions

Breach of Contract

10. Practice Areas

Construction Contracts
Sub-contracts
Commercial Litigation

11. Industries

Construction

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
CAA Technologies Pte Ltd v Newcon Builders Pte Ltd	High Court	Yes	[2016] SGHC 246	Singapore	The appeal arises from the decision of this case.
Alliance Concrete Singapore Pte Ltd v Comfort Resources Pte Ltd	Court of Appeal	Yes	[2009] 4 SLR(R) 602	Singapore	Cited for the principle that an innocent party can rely on any existing ground for termination unless waiver/estoppel applies or the breaching party could have rectified the situation.
RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd	Court of Appeal	Yes	[2007] 4 SLR(R) 413	Singapore	Cited for the test to determine whether a term is a condition of a contract and for the analysis of repudiatory breach.
Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd) v Wong Bark Chuan David	Court of Appeal	Yes	[2008] 1 SLR(R) 663	Singapore	Cited for the principle that courts are more likely to classify contractual terms as conditions in mercantile transactions, especially those relating to timing.
Lim Chin San Contractors Pte Ltd v Sanchoon Builders Pte Ltd	High Court	Yes	[2005] SGHC 227	Singapore	Cited regarding issues of reasonableness typically arise for determination where the revisions to the construction programme seek to “accelerate” and thereby shorten the original schedule.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal	Court of Appeal	Yes	[2013] 4 SLR 193	Singapore	Cited for the test for implication of terms in Singapore law.
Leander Construction Ltd v Mullalley and Company Ltd	Technology and Construction Court	Yes	[2011] EWHC 3449 (TCC)	England and Wales	Cited for the discussion on the implication of a term of due diligence and expedition in the construction context.
Greater London Council v Cleveland Bridge & Engineering Company Ltd	N/A	Yes	(1984) 34 BLR 57	N/A	The Judge expressly noted that this case did not support the proposition of implying a term of due diligence.

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

Hollow core slabs
Letter of Intent
Letter of Acceptance
Construction programme schedule
Delivery schedule
Termination
Liquidated damages
Due diligence
Expedition

15.2 Keywords

construction
contract
sub-contract
termination
damages
hollow core slabs
delay
letter of intent
letter of acceptance

16. Subjects

Building and Construction
Contract Law
Civil Procedure

17. Areas of Law

Building and Construction Law
Contract Law