How does one assess reasonable time, in a way that will not allow the employer to take advantage of its own fault, and also not give the contractor more time than that caused by the employer’s delay? Guidance was provided recently by the Appellate Division of the Singapore High Court in ICOP Construction (SG) Pte Ltd v Tiong Seng Civil Engineering (Pte) Ltd [2024] SGHC(A) 1.
There will also be references below to the 1st instance decision of the trial judge in ICOP Construction (SG) Pte Ltd v Tiong Seng Civil Engineering Pte Ltd [2022] SGHC 257. Paras of the trial and appeal decisions shall be phrased as “trial, para __” and “appeal, para __” respectively.
TSCE was the main contractor engaged in a project for the construction of a potable water pipeline in Singapore. TSCE appointed ICOP as its subcontractor for microtunnelling works to install pipes underground. The subcontract between them did not contain any general conditions of contract, as they were unable to agree on the same after execution of the letter of award and a supplementary letter (appeal, para 5).
During the course of the works, there were delays caused by TSCE and by ICOP. Both sets of delay were in issue in the court action brought by ICOP against TSCE in the Singapore High Court, and in which TSCE filed a counterclaim against ICOP. The trial judge found TSCE and ICOP to be liable for the respective critical delays caused by each of them. Where delay caused by ICOP was concerned, liability was in the form of liquidated damages awarded in favour of TSCE (appeal, paras 135, 136).
On appeal, the Appellate Division of the Court considered that as the subcontract did not contain any extension of time clause, the liquidated damages clause is unenforceable and time is set at large due to the acts of TSCE which prevented ICOP from completing its work on time (appeal, para 128). Consequently, the liquidated damages awarded by the trial court in favour of TSCE was set aside, and replaced with general damages (appeal, para 131).
A point raised by ICOP on appeal – in view of time being set at large – was that the trial judge did not consider what was a reasonable time to complete the work in question (appeal, para 235). In this regard, the Appellate Division endorsed the approach of assessing reasonable time by adding the effect of the employer’s delay to the contractual deadline (appeal, paras 236, 242). This is usually regarded as a fair method because “it is able to strike an appropriate balance between not allowing the employer to take advantage of its own fault, and not giving the contractor any other additional time other than that caused by the employer’s delay”, quoting Belinda Ang Saw Ean, J in Fongsoon Engineering (S) Pte Ltd v Kensteel Engineering Pte Ltd [2011] SGHC 82.
Although the trial judge did not expressly find what was the reasonable time for ICOP to complete the project, he did determine TSCE and ICOP’s respective liabilities for each individual delay event before ordering TSCE and ICOP to pay each other damages for the delay that they had each caused to the completion of the project. In so doing, the Appellate Division regarded the trial judge as having, in effect, applied the Fongsoon method of adding the effect of TSCE’s delay to the contractual deadline for the work. Following this, ICOP’s point was dismissed (appeal, paras 238, 242).
Comment
The decision of the Appellate Division in ICOP is noteworthy on at least two fronts. First, it provided detailed guidance on how one is to assess reasonable time, i.e. adding the effect of the employer’s delay to the contractual deadline.
Second, the decision demonstrates that a finding on reasonable time may be arrived at indirectly, via a determination of monetary liability for delay. In this case:
a) the monetary liability of ICOP for its delays was in the form of general damages in lieu of liquidated damages (appeal, para 131); and
b) the monetary liability of TSCE for its delays was damages in the form of standby costs incurred by ICOP (trial, para 135).
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