DSL Integrated Solution v Triumph Electrical: Subcontract Termination Dispute

DSL Integrated Solution Pte Ltd ("DSL") sued Triumph Electrical System Engineering Pte Ltd ("Triumph Electrical") in the General Division of the High Court of Singapore, alleging breaches of a subcontract. DSL claimed Triumph Electrical wrongfully repudiated the agreement by stopping work in May 2021. Triumph Electrical counterclaimed for quantum meruit. The court, presided over by Justice Kwek Mean Luck, found that a binding agreement existed but that Triumph Electrical was justified in terminating the agreement due to DSL's failure to secure a performance bond, which resulted in non-payment for Triumph Electrical's work. The court dismissed DSL's claim for indemnity and loss of profit but allowed DSL's claim for the cost of engaging a full-time project manager and damages for inadequate manpower. The court allowed Triumph Electrical's claim for 92% of the value of the work done prior to termination.

1. Case Overview

1.1 Court

General Division of the High Court

1.2 Outcome

Plaintiff's claim dismissed in part; Defendant's counterclaim allowed in part.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

DSL Integrated Solution sued Triumph Electrical for breach of contract. The court found Triumph was justified in terminating the agreement.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
DSL Integrated Solution Pte LtdPlaintiffCorporationClaim dismissed in partPartial
Triumph Electrical System Engineering Pte LtdDefendantCorporationCounterclaim allowed in partPartial

3. Judges

Judge NameTitleDelivered Judgment
Kwek Mean LuckJudgeYes

4. Counsels

Counsel NameOrganization
Tan Joo SengTyto LLC
Ignatius LeeTyto LLC
Clarence Lun YaodongFervent Chambers LLC
Low Hong QuanFervent Chambers LLC

4. Facts

  1. DSL was the subcontractor for electrical works at the Forett Condominium Project.
  2. DSL subcontracted the Electrical Works to Triumph Electrical.
  3. Triumph Electrical commenced work in late September 2020.
  4. DSL failed to provide a performance bond to CNQC.
  5. CNQC withheld payments due to the lack of a performance bond.
  6. Triumph Electrical ceased work in May 2021 due to non-payment.
  7. DSL terminated the purported sub-contract on 2 June 2021.

5. Formal Citations

  1. DSL Integrated Solution Pte Ltd v Triumph Electrical System Engineering Pte Ltd, Suit No 519 of 2021, [2022] SGHC 221

6. Timeline

DateEvent
Edward approached Lawrence to find out more about the Project.
Lawrence sent Edward documents including the Plaintiff’s quotation to the Main Contractor.
Lawrence met Edward at the Plaintiff’s office.
Edward, the Plaintiff’s Mr Allan Tan and the Main Contractor’s representative attended a meeting at the Plaintiff’s office.
Edward issued a quotation for the provision of electrical installation works to Lawrence.
Lawrence, Gary, the Plaintiff’s Mr Dan Ling, Mr Allan Tan, and Edward met at the Defendant’s office.
The Plaintiff sent an email enclosing a revised version of the Defendant’s quotation to the Defendant.
Lawrence had a telephone call with Edward about the Revised Quotation.
Lawrence sent a WA message to Edward regarding man-year entitlement.
Edward sent an email to the Plaintiff regarding man-year entitlement and site dormitory.
The Defendant commenced work.
Edward sent an email to the Main Contractor stating that documents were compiled under Triumph Electrical as DSL sub-con.
The Plaintiff sent a copy of the Main Contract to the Defendant and requested a meeting.
Gary, Mr Dan Ling, and Edward met at the Plaintiff’s office.
Edward sent a WA message to Gary enquiring about the bond.
Edward sent a WA message to Gary chasing for various things.
The Defendant assisted the Plaintiff to prepare its first progress claim to the Main Contractor.
The Main Contractor issued its first payment response.
The Plaintiff submitted its second progress claim to the Main Contractor.
The Plaintiff was engaged in negotiations with the Main Contractor in respect of the on-demand performance bond.
The Plaintiff submitted its third progress claim to the Main Contractor.
Gary informed Edward that payment could be collected next week.
Edward sent a WA message to Gary enquiring on the status of the performance bond.
The Main Contractor issued its second payment response.
Gary asked if the Defendant would be keen to take over the Main Contract from the Plaintiff.
The Main Contractor issued its third payment response.
Gary informed Edward that the payment for another project was ready for collection.
Edward sent a series of WA messages to Gary.
Gary emailed Edward that the Plaintiff would require the Defendant to furnish a performance bond.
Edward responded to Gary’s email stating that the Defendant is unable to accept the performance bonds.
Edward sent a WA message to Gary stating that all works will stop this week.
Edward sent WA messages to Gary regarding voiding the contract.
The Defendant’s solicitors served the Defendant’s “Notice to Cease Work”.
The Plaintiff terminated the purported sub-contract through its solicitors.
Trial began.
Judgment reserved.
Judgment issued.

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that the Defendant was justified in terminating the agreement due to the Plaintiff's failure to secure a performance bond, which resulted in non-payment for the Defendant's work.
    • Category: Substantive
    • Sub-Issues:
      • Repudiation of contract
      • Failure to perform obligations
    • Related Cases:
      • [2007] 4 SLR(R) 413
      • [2021] 2 SLR 510
      • [2001] SGHC 243
      • [1994] 3 SLR(R) 1004
  2. Formation of Contract
    • Outcome: The court found that a binding agreement existed between the parties based on the Revised Quotation and the Confirmation Email.
    • Category: Substantive
    • Sub-Issues:
      • Acceptance
      • Counter-offer
      • Essential terms
    • Related Cases:
      • [2018] 1 SLR 50
      • [2010] 3 SLR 956
      • [2021] SGHC 220
  3. Quantum Meruit
    • Outcome: The Defendant is entitled to claim for 92% of the value of the work done prior to its termination of the works on 22 May 2021.
    • Category: Substantive

8. Remedies Sought

  1. Damages
  2. Indemnity
  3. Costs
  4. Interest

9. Cause of Actions

  • Breach of Contract
  • Quantum Meruit

10. Practice Areas

  • Construction Law
  • Commercial Litigation

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
OMG Holdings Pte Ltd v Pos Ad Sdn BhdHigh CourtYes[2012] 4 SLR 231SingaporeCited for the principle that the court may permit an unpleaded point to be raised, provided that the other party is not taken by surprise or irreparably prejudiced.
Lu Bang Song v Teambuild Construction Pte LtdHigh CourtYes[2009] SGHC 49SingaporeCited for the principle that the court may permit an unpleaded point to be raised, provided that the other party is not taken by surprise or irreparably prejudiced.
GIB Automation Pte Ltd v Deluge Fire Protection (SEA) Pte LtdCourt of AppealYes[2007] 2 SLR(R) 918SingaporeCited for the definition of a 'back-to-back' contract and the factors to consider when determining what is incorporated into a subcontract.
Comfort Management Pte Ltd v OGSP Engineering Pte Ltd and anotherHigh CourtYes[2020] SGHC 165SingaporeCited for the principle that despite words of incorporation appearing in a subcontract, the subcontract and the head contract remain distinct contracts.
Hi-Amp Engineering Pte Ltd v Technicdelta Electrical Engineering Pte LtdHigh CourtYes[2003] SGHC 316SingaporeCited to show that there was no back-to-back contract because the defendants did not furnish the main contract documents to the plaintiff when the parties signed the sub-contract, and the plaintiff was unaware of the terms of the main contract.
Toptip Holding Pte Ltd v Mercuria Energy Trading Pte Ltd and another appealCourt of AppealYes[2018] 1 SLR 50SingaporeCited for the principle that a contract may be formed despite the fact that some terms have not yet been finalised.
Norwest Holdings Pte Ltd (in liquidation) v Newport Mining LtdHigh CourtYes[2010] 3 SLR 956SingaporeCited for the principle that the determination of the essential terms in a contract is a factual inquiry that depends on the circumstances of the parties’ dealings with each other, including the nature of the transaction envisaged by the parties.
Tan Ngiap Tong v Tan Ngep HongHigh CourtYes[2021] SGHC 220SingaporeCited for the principle that typically, the essential terms of a contract would include the parties, the price, and the subject matter.
Drake and Scull Engineering Limited v Higgs and Hill Northern LimitedOfficial RefereeYes(1995) 11 Const LJ 214England and WalesCited for the principle that a binding contract can exist even if some terms are not agreed upon.
Hock Chuan Ann Construction Pte Ltd v Kimta Electric Pte LtdHigh CourtYes[1999] 2 SLR (R) 237SingaporeCited for the principle that in some cases, the battle is won by the man who fires the last shot, the other party being taken to have agreed to his terms by conduct in proceeding to perform the agreement without objection.
L & M Equipment Pte Ltd (formerly known as L & M Engineering Logistic Pte Ltd) v Hyundai Engineering & Construction Co Ltd and OthersHigh CourtYes[1999] SGHC 182SingaporeCited as an example where the court found that there was no contract between the sub-contractor and the sub-sub-contractor, notwithstanding the fact that latter had already commenced work at the former’s request.
RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appealCourt of AppealYes[2007] 4 SLR(R) 413SingaporeCited for the situations where an innocent party is entitled to terminate a contract.
Diamond Glass Enterprise Pte Ltd v Zhong Kai Construction Co Pte LtdCourt of AppealYes[2021] 2 SLR 510SingaporeCited for the principle that a persistent course of payment delays, or a protracted delay in the payment of a very substantial sum amounts to a repudiation of the contract.
AL Stainless Industries Pte Ltd v Wei Sin Construction Pte LtdHigh CourtYes[2001] SGHC 243SingaporeCited for the principle that non-payment can amount to a repudiatory breach if prolonged and substantial.
Jia Min Building Construction Pte Ltd v Ann Lee Pte LtdHigh CourtYes[2004] 3 SLR(R) 288SingaporeCited for the principle that a contractor/subcontractor has no general right at common law to suspend work unless this is expressly agreed upon, even if payment is wrongly withheld.
Brani Readymixed Pte Ltd v Yee Hong Pte Ltd and another appealCourt of AppealYes[1994] 3 SLR(R) 1004SingaporeCited for the principle that a delay in payment can amount to a repudiation of the contract if the circumstances suggest that the non-paying party did not intend to pay the other party at all.
Zhong Kai Construction Co Pte Ltd v Diamond Glass Enterprise Pte LtdHigh CourtYes[2021] SGHC 277SingaporeCited for the principle that there was no persistent course of payments delays which justified the defendant’s repudiation of the contract because prior progress claims were not fully rejected but certified for lower sums, and the plaintiff had substantially paid the amounts that were certified.
W Y Steel Construction Pte Ltd v Osko Pte LtdCourt of AppealYes[2013] 3 SLR 380SingaporeCited for the principle that cash flow is the life blood of those in the building and construction industry.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Building and Construction Industry Security of Payment Act 2004Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Sub-contract
  • Electrical Works
  • Performance Bond
  • Man-Year Entitlement
  • Repudiation
  • Termination
  • Quantum Meruit
  • Main Contract
  • Revised Quotation
  • Confirmation Email

15.2 Keywords

  • construction
  • contract
  • termination
  • subcontract
  • electrical works
  • performance bond

17. Areas of Law

Area NameRelevance Score
Construction Law95
Building and Construction Law95
Breach of Contract90
Building and Construction Contracts90
Termination90
Contract Law90
Contractors’ duties85
Repudiation of contract85
Formation of contract80
Contractual terms80
Acceptance75
Performance of Contract70
Quantum meruit65
Damages60
Interpretation60

16. Subjects

  • Construction Dispute
  • Contract Law
  • Termination of Contract