Contract: High Court dismisses claim for breach of contract

Amberwork Source Pte Ltd v QA Systems Pte Ltd and another [2023] SGHC 92

1. Introduction

Following four (4) full days of trial in the High Court, the Honourable Justice S. Mohan found in favour of the defendants and dismissed the plaintiff’s claims in breach of contract by way of alleged non-delivery of goods. The plaintiff was represented by a senior counsel from a big firm. The defendants were represented by our Chooi Jing Yen and Chen Yongxin.

Our client was a company, QA Systems Pte Ltd (“QA Systems”). The plaintiff was a company called Amberwork Source Pte Ltd (“Amberwork”). Amberwork sued QA Systems during the pandemic in 2020, claiming breach of contract for an alleged non-delivery of goods.

When Amberwork sought and failed to obtain summary judgment against QA Systems in 2021, they sued an additional defendant (a director of QA Systems), adding her to the litigation. Amberwork also amended its pleadings to bring alternative claims in misrepresentation and dishonest assistance. Unfortunately, none of this worked as all of its claims were dismissed.

2. Background

Amberwork and QA Systems were involved in a series of back-to-back transactions for sale of goods that they had never seen.

The key protagonist in this dispute unfortunately passed away in tragic circumstances before the suit’s commencement. He was the sole director and shareholder of Weroc Group Pte Ltd (“Weroc”) and acted as the middleman structuring the transactions between Amberwork and QA Systems.  

Weroc had informed Amberwork that it wished to purchase goods for on-sale to its customers in China but lacked the necessary capital. Amberwork’s role was to first purchase these goods to sell them on to Weroc but on deferred payment terms of 60 days, effectively providing trade financing to Weroc.  

On the other hand, Weroc informed QA Systems that it wished to sell goods to customers (in this case, Amberwork) in Singapore but could only do so through an established enterprise acting as an authorised reseller. QA Systems was to fulfil this role.

Amberwork thus understood itself to be purchasing goods from QA Systems, to on-sell it to Weroc. For both of these back-to-back transactions, the manner of delivery contemplated was ex-factory collection in China – i.e., once the goods are collected from the factory itself, delivery is considered fulfilled under the contract.

When Weroc defaulted on its payments to Amberwork, Amberwork proceeded to sue QA Systems for an alleged failure of its obligations to deliver the goods, relying primarily on the absence of signed delivery orders in its claim.

3. Dismissal of Amberwork’s claim in breach of contract

The High Court found that signed delivery orders merely provide a way of evidencing that delivery occurred – all relevant evidence must be considered by the court to conclude whether delivery did in fact take place. The issuance and signing of delivery orders are not conclusive of whether delivery in fact occurred, and the converse applies.   

In a contractual claim, the claimant bears the burden of proving breach of contract – i.e., proving the failure on the part of the defendant to perform its obligations under the contract. In finding that Amberwork failed to discharge its burden of proof, the High Court accepted our submissions on the following: –

1. QA Systems did send a delivery order to Amberwork but it was not signed by them.
2. Amberwork’s explanation for not signing QA System’s delivery orders – that Weroc did not commit to Amberwork’s delivery orders pertaining to the same goods – was untrue.
3. Weroc did in fact commit to signing Amberwork’s delivery orders and requested for them to be prepared and sent over.
4. Amberwork’s delivery orders were never sent to Weroc for signing. While its delivery orders were prepared, it confirmed in the course of discovery that no cover emails to Weroc enclosing the same existed. On the stand, its representative also conceded that she did not send its delivery orders to Weroc.
5. There was no allegation of non-delivery made by either Amberwork or Weroc in the correspondence between the two.

An important point also accepted by the High Court was that if Amberwork took the view that it was entitled to payment from Weroc, then it must also consider QA System’s delivery obligations to be fulfilled. This is because delivery at both legs of the back-to-back transactions occurred simultaneously through ex-factory collection. Amberwork could only demand payment from Weroc if Weroc collected the goods from the factory, and this would only be possible if QA Systems fulfilled its obligation under the contract to ensure that the goods were ready to be collected.

The correspondence reflected Amberwork demanding for payment from Weroc and had threatened legal action. Thus, the High Court found the facts to be more consistent with the finding that QA Systems had fulfilled its obligation to Amberwork to deliver the goods. Amberwork’s recourse was therefore properly against Weroc rather than the Defendants. 

The High Court did not find it necessary to determine Amberwork’s alternative claims in misrepresentation and dishonest assistance given its finding that there were concluded contracts between the parties.

Read the Judgment here.