Kelington Engineering v Gan Cheng Chuan: Parol Evidence Rule & Liquidated Damages

In Kelington Engineering (S) Pte Ltd v Gan Cheng Chuan, the Singapore High Court addressed a dispute over the commencement date of an employment agreement and the enforceability of a liquidated damages clause. Kelington sued Gan for breach of contract, claiming Gan repudiated the agreement. The court, presided over by Andre Maniam J, found that the commencement date was agreed to be 1 January 2021, not 1 December 2020 as Kelington argued. The court dismissed Kelington's claims, except for a previously entered consent judgment of RM24,000.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

All of Kelington's claims against Mr. Gan are dismissed, save for the consent judgment for RM24,000 which has already been satisfied by Mr. Gan.

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case between Kelington Engineering and Gan Cheng Chuan regarding contract commencement date and enforceability of liquidated damages clause.

1.7 Decision Date

25 April 2022

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Kelington Engineering (S) Pte Ltd	Plaintiff	Corporation	Claims Dismissed	Lost	Lee Ee Yang, Wong En Hui Charis
Gan Cheng Chuan	Defendant	Individual	Judgment for Defendant	Won	Gopalakrishnan Dinagaran, Lawrence Tan

3. Judges

Judge Name	Title	Delivered Judgment
Andre Maniam	Judge of the High Court	Yes

4. Counsels

Counsel Name	Organization
Lee Ee Yang	Covenant Chambers LLC
Wong En Hui Charis	Covenant Chambers LLC
Gopalakrishnan Dinagaran	Prestige Legal LLP
Lawrence Tan	Prestige Legal LLP

4. Facts

Mr. Gan agreed to be employed by Kelington as Country Manager (China) for KESH.
The LOA stated the commencement date as 1 December 2020.
Mr. Gan told Mr. Lim that the commencement date of 1 December 2020 was "tentative".
Mr. Gan had to serve three months' notice with his existing employer.
Mr. Gan signed and returned a copy of the LOA in October 2020.
Mr. Gan messaged Mr. Lim stating his start date had to be 1 January 2021.
Kelington sent Mr. Gan a letter of demand after he decided to stay with his existing company.

5. Formal Citations

Kelington Engineering (S) Pte Ltd v Gan Cheng Chuan, Suit No 62 of 2021, [2022] SGHC 90

6. Timeline

Date	Event
2020-08-01	Kelington began searching for a replacement Country Manager for KESH.
2020-08-11	Mr. Gan provided his resume to Mr. Lim.
2020-08-13	Mr. Lim conducted an interview with Mr. Gan.
2020-09-10	Mr. Gan indicated he was willing to be appointed to the position.
2020-09-14	Mr. Lim asked Mr. Gan about the commencement date.
2020-09-15	Mr. Lim forwarded a draft LOA to Mr. Gan.
2020-09-21	Mr. Gan responded, highlighting clauses he was not comfortable with.
2020-09-23	Mr. Lim sent Mr. Gan a revised draft of the LOA.
2020-09-26	Mr. Gan sent Mr. Lim a WhatsApp message to say, “Speaking to my boss today. Will sign off [the LOA]”.
2020-09-01	Mr. Gan communicated to Mr. Lim that he would be resigning from his existing employment.
2020-10-01	Mr. Gan sent Mr. Lim a WhatsApp message to say that he would send the LOA back that day.
2020-10-02	Mr. Gan sent Mr. Lim a signed copy of the execution page of the LOA.
2020-10-09	Mr. Lim received the executed copy of the LOA.
2020-10-06	Mr. Ong sent Mr. Wan a message regarding Mr. Gan's joining date.
2020-10-13	Mr. Gan liaised with Ms. Joan Au from Kelington’s human resource department.
2020-10-19	Mr. Lim and Mr. Gan discussed the possibility of Mr. Gan shortening his notice period.
2020-10-22	Kelington provided Mr. Gan with information and involved him in discussions.
2020-11-04	A transition plan was circulated by Mr. Wan.
2020-12-01	According to Kelington, Mr. Gan's employment commenced.
2020-12-06	Mr. Lim sent Mr. Gan a draft announcement.
2020-12-07	Mr. Gan told Mr. Lim about a counter offer from his existing employer.
2020-12-08	A staff announcement was made regarding the hiring of Mr. Gan.
2020-12-10	Mr. Lim sent Mr. Gan a message regarding the opportunity to join Kelington.
2020-12-19	Mr. Gan messaged Mr. Lim to say he decided to stay with his existing company.
2020-12-22	Kelington sent Mr. Gan a letter of demand.
2020-12-26	Mr. Gan responded, stating clause 9.4 of the LOA applied.
2021-01-01	According to Mr. Gan, his employment was to commence.
2021-05-25	A consent judgment was entered for the sum of RM24,000.
2022-01-25	Trial began.
2022-01-26	Trial continued.
2022-01-27	Trial continued.
2022-03-07	Trial continued.
2022-04-26	Judgment reserved.

7. Legal Issues

Breach of Contract
- Outcome: The court found that Mr. Gan repudiated the contract before the commencement of his employment.
- Category: Substantive
- Sub-Issues:
  - Repudiation of contract
  - Termination before commencement of employment
Enforceability of Liquidated Damages Clause
- Outcome: The court held that clause 1.5 was an unreasonable penalty clause.
- Category: Substantive
- Sub-Issues:
  - Penalty clause
  - Genuine pre-estimate of loss
Parol Evidence Rule
- Outcome: The court found that the parol evidence rule did not apply because the LOA was not intended to contain all the terms of the parties' agreement.
- Category: Procedural
- Sub-Issues:
  - Admissibility of extrinsic evidence
  - Intention of parties

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Contract

10. Practice Areas

Commercial Litigation

11. Industries

Engineering

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd	High Court	Yes	[2008] 3 SLR(R) 1029	Singapore	Cited for the principle that the court must determine whether the LOA was intended to contain all the terms of the parties’ agreement and may look at extrinsic evidence and apply the normal objective test.
Denka Advantech Pte Ltd and another v Seraya Energy Pte Ltd and another and other appeals	Court of Appeal	Yes	[2021] 1 SLR 631	Singapore	Cited for the principle that in determining whether clause 1.5 of the LOA is an unenforceable penalty clause, the focus is whether it provides a genuine pre-estimate of the likely loss at the time of contracting.
CLAAS Medical Centre Pte Ltd v Ng Boon Ching	High Court	Yes	[2010] 2 SLR 386	Singapore	Cited for the principle that the court will consider whether the sum stipulated is so extravagant, having regard to the range of damages which the innocent party was likely to suffer, that it was not a genuine estimate of the damages that the innocent party could have suffered.
Michael Vaz Lorrain v Singapore Rifle Association	Court of Appeal	Yes	[2020] 2 SLR 808	Singapore	Cited for the principle that when a judgment has been given on a cause of action, the cause of action merges with the judgment of the court and ceases to have an independent existence.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Evidence Act 1893	Singapore
Evidence Act 1893 section 93	Singapore
Evidence Act 1893 section 94	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Letter of Appointment
Commencement Date
Parol Evidence Rule
Liquidated Damages
Penalty Clause
Repudiation
Country Manager

15.2 Keywords

contract
employment
parol evidence
liquidated damages
singapore

16. Subjects

Contract Law
Employment Law
Evidence Law

17. Areas of Law

Contract Law
Parol Evidence Rule
Liquidated Damages