Diamond Glass Enterprise Pte Ltd v Zhong Kai Construction Co Pte Ltd: Liquidated Damages, Variations & SOPA
In Diamond Glass Enterprise Pte Ltd v Zhong Kai Construction Co Pte Ltd, the Appellate Division of the High Court of Singapore heard cross-appeals arising from a dispute over a subcontract for aluminium cladding works at Changi Airport. Zhong Kai Construction Co Pte Ltd claimed liquidated damages and replacement costs against Diamond Glass Enterprise Pte Ltd, who counterclaimed for payments under variation orders and the retention sum. The court allowed both appeals in part, adjusting the liquidated damages, replacement costs, and awarding payments for certain variation orders and the retention sum to Diamond Glass. The question of Diamond Glass's entitlement to its legal costs for the adjudication was remitted back to the Judge for his determination.
1. Case Overview
1.1 Court
Appellate Division of the High Court1.2 Outcome
DG's appeal in CA 125 allowed in part and ZK's appeal in CA 129 allowed in part.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore court case involving Diamond Glass and Zhong Kai over liquidated damages, variation orders, and SOPA claims. Appeals allowed in part.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Diamond Glass Enterprise Pte Ltd | Appellant, Plaintiff in counterclaim, Respondent | Corporation | Appeal allowed in part | Partial | |
| Zhong Kai Construction Co Pte Ltd | Respondent, Plaintiff, Defendant in counterclaim, Appellant | Corporation | Appeal allowed in part | Partial |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Woo Bih Li | Judge of the Appellate Division | No |
| Quentin Loh | Judge of the Appellate Division | Yes |
| Hoo Sheau Peng | Judge of the High Court | No |
4. Counsels
4. Facts
- ZK engaged DG as a subcontractor for aluminium cladding works at Changi Airport.
- The Subcontract was divided into Phase 1 and Phase 2A works.
- ZK claimed liquidated damages from DG for delays in completing the works.
- DG counterclaimed for payments due under variation orders and the retention sum.
- DG abandoned the worksite on 6 June 2018.
- ZK engaged third parties to complete the remaining works and remedy defects.
- DG commenced Adjudication Application No 339 of 2019 under the SOPA.
5. Formal Citations
- Diamond Glass Enterprise Pte Ltd v Zhong Kai Construction Co Pte Ltd, Civil Appeal Nos 125 and 129 of 2021, [2022] SGHC(A) 44
6. Timeline
| Date | Event |
|---|---|
| Letter of Award issued for the Subcontract. | |
| ZK claims DG began to show signs of delay. | |
| SCB states DG has not placed order for cabin glass. | |
| DG sends letter cancelling purchase order for cabin glass. | |
| DG states there was no delay by DG and demands payment. | |
| DG demands payment of $149,436.99 by 12.00pm. | |
| DG abandons the work site. | |
| DG states it had no choice but to accept ZK’s repudiatory breach. | |
| ZK states figures in DG's letter are untrue and misleading. | |
| DG serves a progress claim on ZK. | |
| ZK commences Suit No 917 of 2019. | |
| ZK responds to DG’s progress claim. | |
| DG commences Adjudication Application No 339 of 2019. | |
| Adjudication Determination issued. | |
| ZK commences Suit No 1282 of 2019. | |
| DG obtains court order to enforce the AD as a judgment debt. | |
| DG serves a statutory demand on ZK. | |
| ZK files Originating Summons No 223 of 2020. | |
| DG commences CWU 95 to wind up ZK. | |
| ZK files HC/SUM 1577/2020 to dismiss CWU 95. | |
| OS 223 and SUM 1577 heard in the High Court. | |
| Court of Appeal upholds decision to stay CWU 95. | |
| Judgment reserved. | |
| Judgment date. |
7. Legal Issues
- Liquidated Damages
- Outcome: The court adjusted the liquidated damages awarded to ZK for Phase 1 works, reducing the amount by $165,600.
- Category: Substantive
- Variations
- Outcome: The court allowed DG's counterclaims for payments in respect of VO 6 and VO 8.
- Category: Substantive
- Building and Construction Industry Security of Payment Act
- Outcome: The court dismissed ZK's claim for overturning the main works allowed by the adjudicator in the AD.
- Category: Substantive
- Repudiation of Contract
- Outcome: The court found that DG wrongfully terminated the Subcontract.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
- Overturning of Adjudicated Amount
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Construction Law
- Commercial Litigation
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Diamond Glass Enterprise Pte Ltd v Zhong Kai Construction Co Pte Ltd | Court of Appeal | Yes | [2021] 2 SLR 510 | Singapore | Upheld the decision to stay CWU 95 until the determination of the Consolidated Suit and any appeal thereof. |
| Zhong Kai Construction Co Pte Ltd v Diamond Glass Enterprise Pte Ltd | High Court | No | [2021] SGHC 277 | Singapore | The present dispute concerns two cross-appeals arising out of the decision of the High Court judge in this case. |
| LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd | High Court | Yes | [2011] 4 SLR 477 | Singapore | Cited for the principle that no liquidated damages accrue once a contract has been terminated, in the absence of express contractual provision to the contrary. |
| Triple Point Technology Inc v PTT Public Co Ltd | UK Supreme Court | Yes | [2021] AC 1148 | United Kingdom | Affirmed the proposition that the accrual of liquidated damages comes to an end on the termination of the contract. |
| Ho Pak Kim Realty Co Pte Ltd v Revitech Pte Ltd | High Court | No | [2010] SGHC 106 | Singapore | Cited regarding the condition precedent for an extension of time. |
| Gaymark Investments Pty Ltd v Walter Construction Group Ltd (formerly Concrete Constructions Group Ltd) | Northern Territory Supreme Court | No | [1999] NTSC 143 | Australia | Cited regarding liquidated damages and extension of time clauses. |
| Multiplex Constructions (UK) Ltd v Honeywell Control Systems Ltd (No 2) | Technology and Construction Court | Yes | [2007] EHWC 447 (TCC) | England and Wales | Considered Gaymark and cast significant doubt on its correctness. |
| Tat Seng Machine Movers Pte Ltd v Orix Leasing Singapore Ltd | High Court | No | [2009] 4 SLR(R) 1101 | Singapore | Cited regarding appellate intervention. |
| Wei Ho-Hung v Lyu Jun | High Court | No | [2022] SGHC(A) 30 | Singapore | Cited regarding a new case on appeal. |
| GA Engineering Pte Ltd v Sun Moon Construction Pte Ltd | High Court | No | [2020] SGHC 167 | Singapore | Accepted that the operation of s 30(4) of the SOPA allows a party to an adjudication to claim for legal costs incurred by them as damages. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Liquidated Damages
- Variation Orders
- Retention Sum
- Subcontract
- Adjudication Determination
- Phase 1 Works
- Phase 2A Works
- Aluminium Cladding
- Repudiatory Breach
- Security of Payment Act
15.2 Keywords
- construction law
- liquidated damages
- variation orders
- SOPA
- Singapore
- Changi Airport
- aluminium cladding
17. Areas of Law
16. Subjects
- Construction Dispute
- Contract Law
- Arbitration Law