Teras Offshore Pte Ltd v Teras Cargo Transport (America) LLC

"For all these reasons, it is my conclusion that TO’s claims succeed in full, ie, TO is entitled to judgment against TCT" — Per Sir Henry Bernard Eder IJ, Para 61

Case Information

• Citation: [2017] SGHC(I) 04 (Para 0)
• Court: Singapore International Commercial Court (Para 0)
• Case Number: Suit No 1 of 2016 (Para 0)
• Coram: Sir Henry Bernard Eder IJ (Para 0)
• Hearing Dates: 13–16 February; 20 March 2017 (Para 0)
• Judgment Date: 04 April 2017 (Para 0)
• Counsel for the Plaintiff: Peter Doraisamy and Andrew Lee (Peter Doraisamy LLC) (Para 0)
• Counsel for the Defendant: Timothy Ross Lord (instructed) and Rajkumar Mannar (Peter Low LLC) (Para 0)
• Area of Law: Contract; breach; non-payment; contractual terms; scope of work (Para 0)
• Judgment Length: Not answerable from the extraction (not stated) (Para 0)

Summary

This dispute arose out of a commercial relationship between Teras Offshore Pte Ltd (“TO”) and Teras Cargo Transport (America) LLC (“TCT”) concerning work and services connected with the construction of three liquefied natural gas plants on Curtis Island. TO claimed reimbursement of advance payments and substantial back-charges for work it said it had performed under the parties’ subcontracting arrangements, while TCT resisted liability by contending that the contracts were all-inclusive and that payment was conditional on TCT first receiving corresponding payment from Bechtel. The court accepted TO’s evidence, rejected TCT’s principal defences, and entered judgment for TO in full. (Para 2) (Para 6) (Para 23) (Para 28) (Para 61)

The court’s reasoning turned on two linked questions: whether the disputed items were outside the contractual scope, and if so whether they were nevertheless recoverable because they had been requested, agreed, or accepted in practice. The judge held that the contracts were not all-encompassing, that some work was expressly excluded from scope, and that the evidence showed many disputed items were either out of scope or had been separately requested and accepted. The court also found that contemporaneous invoices, emails, and witness testimony supported TO’s case, while TCT’s decision not to call evidence left its position unproven. (Para 30) (Para 31) (Para 37) (Para 41) (Para 60)

A second major issue concerned TCT’s “pay when paid” defence under Clause 5. The court held that the burden lay on TCT to prove that it had not received the relevant payments from Bechtel if it wished to rely on that defence, and that TCT failed to discharge that burden. The result was judgment for TO for the advance payments and back-charges, together with interest and costs. (Para 59) (Para 61) (Para 62)

Why Did the Court Say TO’s Claims Succeeded in Full?

The judge’s ultimate conclusion was expressed in unequivocal terms: TO succeeded on all its claims, subject only to a minor point concerning the precise calculation of one back-charge figure. The court held that the evidence established entitlement to the advance payments and the back-charges, and that TCT’s defences did not withstand scrutiny. The judgment therefore resolved the dispute in TO’s favour on liability and quantum. (Para 46) (Para 61)

"For all these reasons, I am satisfied that TO is entitled to succeed in all its claims, subject to the second point of principle considered below." — Per Sir Henry Bernard Eder IJ, Para 46

The court’s conclusion was not reached by a single shortcut. It was the product of a detailed review of the contractual structure, the evidence of the witnesses, the invoices and emails, and the way the parties had conducted themselves during the projects. The judge repeatedly emphasised that TO’s witnesses were credible and that TCT had not produced contrary evidence on key matters. That evidential imbalance mattered because the dispute was not merely about the wording of the contracts, but about how the parties had actually administered the work in practice. (Para 12) (Para 24) (Para 37) (Para 60)

The court also rejected the notion that the contracts were so broad that they swallowed every item of work and every charge. Instead, the judge read the contractual documents as leaving room for excluded work, additional requests, and separate arrangements. That approach allowed the court to treat the disputed items as recoverable where the evidence showed they were either outside the original scope or had been separately authorised. (Para 30) (Para 31) (Para 34)

"both sets of Contracts were not all-encompassing and did not include certain work. That is made clear, in particular, by Clause 4 of Exhibit D of each of the Main Contracts headed “WORK NOT INCLUDED”" — Per Sir Henry Bernard Eder IJ, Para 30

What Were the Commercial Arrangements Between TO and TCT?

The dispute concerned work and services provided in relation to the construction of three LNG plants on Curtis Island. TO and TCT were related companies, but the court treated the dealings as arm’s length for the purposes of the dispute. TCT had the main contracts with Bechtel and then subcontracted work to TO under three sub-contracts entered into on 6 March 2012. The commercial structure therefore involved a chain of contracts, with TO performing work that was connected to TCT’s obligations upstream. (Para 2) (Para 18) (Para 19)

"The present proceedings concern disputes between TO and TCT in relation to work and services provided by TO in relation to the construction of three liquefied natural gas (“LNG”) plants on Curtis Island" — Per Sir Henry Bernard Eder IJ, Para 2

The court accepted that the parties’ relationship was not a simple one-off supply arrangement. The evidence showed a series of project-related dealings, including advance payments, back-charges, and invoicing for additional work. The judge’s analysis therefore had to address not only the text of the contracts but also the practical administration of the projects, including whether particular items were within the original scope or were separately requested and accepted. (Para 6) (Para 18) (Para 23)

That commercial context mattered because the parties’ dispute was not about whether work had been done at all; rather, it was about who should bear the cost of specific items and whether TCT could avoid payment by invoking contractual scope language or upstream non-payment. The court’s answer was that the evidence supported TO’s entitlement, and that TCT’s contractual defences failed on the facts and the burden of proof. (Para 31) (Para 59) (Para 61)

"On 6 March 2012, TCT entered into the three agreements with TO which are the main focus of the present proceedings (the “Sub-Contracts”)." — Per Sir Henry Bernard Eder IJ, Para 18

How Did the Court Approach the “Out of Scope” and “Special Agreement” Questions?

The court framed the central factual inquiry as a dual question: whether the disputed claims were “out of scope” and, if so, whether there was any special agreement or request by or on behalf of TCT in relation to them. That framing is important because the judge did not treat “out of scope” as automatically synonymous with recoverable. Instead, the court required TO to show the contractual or factual basis on which the extra work could be charged. (Para 34) (Para 31)

"the dual related questions, viz. (i) whether the particular claims are “out of scope” in the sense referred to above; and (ii) whether there was any, and if so, what “special agreement(s)” between TO and TCT or, at the very least, any, and if so what, requests made by or on behalf of TCT with regard thereto." — Per Sir Henry Bernard Eder IJ, Para 34

The judge made a further doctrinal point: even if work is outside the original scope, that fact alone does not entitle the contractor to recover its cost. The claimant still has to establish a basis for payment, such as a special agreement, a request, or some other contractual or factual foundation. This distinction prevented the case from becoming a simplistic “extra work equals payment” dispute and required the court to examine the evidence item by item. (Para 31) (Para 34)

"the mere fact that certain work done or services provided were “out of scope” does not, of itself, entitle TO to recover the cost of such work or services." — Per Sir Henry Bernard Eder IJ, Para 31

Applying that approach, the court found that the evidence supported TO on the disputed items. The judge accepted that the work had been performed, that invoices had been issued, and that many of them had not been contemporaneously disputed. The absence of contemporaneous objection was treated as probative, especially when combined with the witness evidence and the documentary record. (Para 37) (Para 41)

"the fact that the relevant invoices were never disputed contemporaneously is at least some and perhaps strong evidence that supports TO’s case" — Per Sir Henry Bernard Eder IJ, Para 37

Why Did the Court Reject TCT’s “All-Inclusive Contract” Argument?

TCT’s first major principle-based argument was that the main contracts and sub-contracts were all-inclusive, meaning that the contractual price covered everything and left no room for additional claims. The court rejected that submission because the contractual documents themselves showed that certain work was expressly not included. The judge pointed in particular to Clause 4 of Exhibit D in each of the main contracts, which was headed “WORK NOT INCLUDED”. That textual feature was inconsistent with the proposition that the contracts were wholly all-encompassing. (Para 27) (Para 30)

"The first main point of principle raised by Mr Lord was to the effect that all three Main Contracts and, in turn, all three Sub-Contracts were, by their express terms, “all-inclusive” contracts" — Per Sir Henry Bernard Eder IJ, Para 27

The court’s reasoning was therefore contractual and evidential. Contractually, the documents did not support TCT’s absolute reading. Evidentially, the parties’ conduct showed that some items were treated as additional or separately chargeable. The judge’s conclusion was not that the contracts were irrelevant, but that they did not exhaust the universe of possible work and charges. That left room for TO’s claims where the evidence showed the work fell outside the included scope or had been separately requested. (Para 30) (Para 34)

This mattered because TCT’s “all-inclusive” argument was the foundation for its attempt to defeat the back-charges. Once the court found that the contracts were not all-encompassing, TCT’s position lost much of its force. The judge then turned to the specific items and the evidence supporting them, rather than accepting a blanket contractual bar. (Para 30) (Para 46)

"both sets of Contracts were not all-encompassing and did not include certain work. That is made clear, in particular, by Clause 4 of Exhibit D of each of the Main Contracts headed “WORK NOT INCLUDED”" — Per Sir Henry Bernard Eder IJ, Para 30

How Did the Court Deal with the Evidence on the Disputed Back-Charges?

The court placed substantial weight on TO’s witnesses and documentary evidence. The judge expressly said he found TO’s witnesses “patently honest” and accepted their evidence, subject to the specific comments made in the judgment. That credibility finding was central because the disputed charges depended heavily on what had been requested, performed, and invoiced in the course of the projects. (Para 12)

"I found all these witnesses patently honest and, in relevant respect and subject to my comments below, I accept what they stated in their AEICs and in oral evidence." — Per Sir Henry Bernard Eder IJ, Para 12

The court also noted that TO’s evidence on quantum was not meaningfully challenged. The judge observed that he had no reason to doubt the veracity of TO’s witnesses and that TCT had not challenged them on quantum. In a commercial case of this kind, that absence of challenge was significant because it left TO’s figures standing largely uncontroverted. (Para 24)

"I have no reason to doubt the veracity of TO’s witnesses. Moreover, Mr Lord did not seek to challenge any of them so far as quantum is concerned and there is no other evidence to the contrary." — Per Sir Henry Bernard Eder IJ, Para 24

The judge also relied on the fact that TCT did not call evidence to contradict TO’s account. That omission was especially important where TCT sought to rely on settlement or payment-related defences, because the court found that TCT had deliberately chosen not to adduce evidence on those matters. The result was that TO’s evidence stood largely unrebutted. (Para 41) (Para 60)

"TCT deliberately decided to refrain from calling any evidence in order to prove such settlement(s) or otherwise in relation thereto." — Per Sir Henry Bernard Eder IJ, Para 60

What Did the Court Say About Contemporaneous Invoices, Emails, and the Absence of Objection?

The court treated contemporaneous documentation as an important indicator of how the parties themselves understood the work. In particular, the judge noted that invoices were not contemporaneously disputed, and that this supported TO’s case. The reasoning was practical: if TCT had genuinely regarded the items as non-payable or outside scope, one would expect contemporaneous protest or at least some documentary challenge. (Para 37)

Emails also played a role in the court’s analysis. The judge referred to email exchanges that supported the existence of back-charging arrangements and the parties’ understanding of the relevant work. Although the extraction does not reproduce the full email chain, the judgment’s treatment of the correspondence shows that the court regarded the documentary record as consistent with TO’s account rather than TCT’s. (Para 41)

"The evidence of Mr Gibson (which I accept) was that the requirement for a second fill of freshwater was mainly due to the delays in the LNG Projects works (through no fault of TO)" — Per Sir Henry Bernard Eder IJ, Para 40

The court’s approach to the invoices and emails was not merely evidential housekeeping. It went to the heart of whether the disputed items were truly contested at the time or whether TCT’s objections were raised only later, once the sums had accumulated. The judge’s conclusion was that the contemporaneous record supported TO and that TCT’s silence, or lack of contemporaneous dispute, was telling. (Para 37) (Para 41)

"TCT adduced no evidence to contradict it." — Per Sir Henry Bernard Eder IJ, Para 41

How Did the Court Handle the “Pay When Paid” Defence Under Clause 5?

TCT’s second major principle-based argument was that it had no obligation to pay TO unless and until Bechtel paid TCT the corresponding amount. The court treated this as a “pay when paid” defence under Clause 5. The judge did not accept that the clause operated as an automatic shield for TCT; instead, he held that TCT bore the burden of proving the factual precondition on which the defence depended, namely that it had not received the relevant payments from Bechtel. (Para 28) (Para 59)

"there was no independent obligation on TCT to pay unless and until TCT was itself paid the corresponding amount by Bechtel" — Per Sir Henry Bernard Eder IJ, Para 28

The court’s analysis of the authorities led to a burden-of-proof conclusion. The judge held that TCT had to demonstrate non-receipt of the relevant upstream payments in order to rely on Clause 5. Because TCT could not satisfy that burden, the defence failed. This was a decisive point: even if the clause were otherwise capable of delaying payment, TCT had not proved the factual basis needed to invoke it. (Para 59)

"it seems to me that (i) the burden of proof is on TCT to demonstrate that it has not received relevant payments from Bechtel in order to rely upon its Clause 5 defence; and (ii) such defence must here fail because it cannot satisfy that burden." — Per Sir Henry Bernard Eder IJ, Para 59

The judge also noted that TCT had not explained what steps, if any, it had taken to obtain payment from Bechtel. That omission mattered because the authorities discussed by the court contemplated not only non-payment but also the conduct of the party relying on the clause. The absence of evidence on efforts to recover upstream payment reinforced the conclusion that the defence was not made out. (Para 60)

"TCT has not sought to explain what, if any steps were taken to obtain payment from Bechtel" — Per Sir Henry Bernard Eder IJ, Para 60

Which Authorities Did the Court Consider on Cross-Examination Fairness and Pay-When-Paid Clauses?

On the evidential side, the court referred to the rule in Browne v Dunn as explained in Hong Leong Singapore Finance Ltd v United Overseas Bank Ltd. That reference arose in the context of whether TCT had fairly put its case to TO’s witnesses. The judge’s treatment of the issue indicates that the fairness of cross-examination was relevant to the weight the court could attach to TCT’s later objections. (Para 13)

"Mr Doraisamy relied upon the so-called rule in Browne v Dunn (1893) 6 R 67 (HL) as explained in Hong Leong Singapore Finance Ltd v United Overseas Bank Ltd [2007] 1 SLR(R) 292 at [42]." — Per Sir Henry Bernard Eder IJ, Para 13

On the contractual side, the court considered a line of authorities on “pay when paid” clauses, including Rira Bina, Brightside, Interpro, and Durabella. These cases were used to test the proper construction and operation of Clause 5, including the burden on the party relying on such a clause and the relevance of upstream payment mechanics. The judge’s conclusion was that TCT’s defence failed on the facts and the burden of proof. (Para 55) (Para 57) (Para 59)

"Mr Doraisamy relied, in particular, upon the decision of the High Court in Malaysia, Rira Bina Sdn Bhd v GBC Construction Sdn Bhd [2011] 2 MLJ 378 (“Rira Bina”) at [67]–[70]" — Per Sir Henry Bernard Eder IJ, Para 55

"These authorities are Brightside Mechanical & Electrical Services Group Ltd and another v Hyundai Engineering & Construction Co Ltd [1988] 1 SLR(R) 1 (“Brightside”) in particular at [16]; and Interpro Engineering Pte Ltd v Sin Heng Construction Co Pte Ltd [1997] 3 SLR(R) 668 (“Interpro”) in particular at [8]–[19]." — Per Sir Henry Bernard Eder IJ, Para 55

"Mr Doraisamy relied in particular upon the decision the English High Court in Durabella Ltd v J. Jarvis & Sons Ltd [2001] EWHC 454 (TCC) (“Durabella”) at [17]–[18] and also Interpro at [17]." — Per Sir Henry Bernard Eder IJ, Para 57

These authorities mattered because they supplied the doctrinal framework for the court’s treatment of Clause 5. The judge did not simply assume that a pay-when-paid clause automatically postponed liability; instead, he examined the authorities and concluded that TCT had not proved the factual basis for the defence. That made the clause ineffective on the evidence before the court. (Para 55) (Para 57) (Para 59)

How Did the Court Deal with the Evidence Act Objection to Documents?

At an earlier stage, the court considered whether it should exercise its discretion under the Evidence Act to exclude certain documents because witnesses had not been called. The extraction shows that the judge referred to s 32(1)(b)(iv) and s 32(3) of the Evidence Act in that context. The issue was whether the court should exclude documents as evidence at trial. (Para 10)

"pursuant to s 32(1)(b)(iv) of the Evidence Act (Cap 97, 1997 Rev Ed) (the “Evidence Act”)." — Per Sir Henry Bernard Eder IJ, Para 10

"I should exercise my discretion pursuant to s 32(3) of the Evidence Act in effect to exclude such documents as evidence in the trial." — Per Sir Henry Bernard Eder IJ, Para 10

The extraction does not provide a fuller account of the ruling on that evidential point, but it does show that the court was alive to the admissibility and weight of documentary material in the absence of live testimony. In the final analysis, however, the judge relied on the documents that supported TO’s case and on the oral evidence that he found credible. The practical result was that the documentary record reinforced TO rather than undermining it. (Para 10) (Para 12) (Para 37)

For practitioners, the significance lies in the interaction between admissibility, weight, and the decision whether to call witnesses. The court’s later findings show that a party who declines to call evidence may find itself unable to displace the opposing party’s documents and testimony. That is exactly what happened to TCT. (Para 10) (Para 60)

What Orders Did the Court Make on Liability, Interest, and Costs?

The court entered judgment for TO on the advance payments and the back-charges. On the advance payments, the judge accepted TO’s entitlement to US$3.5 million, as conceded by TCT. On the back-charges, the court awarded US$24,500,178.99 and A$619,339.91, subject to any further possible argument on the precise calculation of the total figure referred to in the judgment. Interest was also ordered. (Para 11) (Para 61)

"TO is entitled to judgment in the total sum of US$3.5 million, as TCT conceded, plus interest" — Per Sir Henry Bernard Eder IJ, Para 11

"US$24,500,178.99 and (subject to any further possible argument with regard to the appropriate calculation of the total figure of the back-charges as referred to in [47] above) A$619,339.91 plus simple interest from 20 May 2016" — Per Sir Henry Bernard Eder IJ, Para 61

The court also dismissed TCT’s counterclaim. That was consistent with the overall finding that TO’s claims succeeded and that TCT had not established a viable defence or countervailing entitlement. The judgment therefore resolved the dispute comprehensively in TO’s favour. (Para 11) (Para 61)

"TCT’s counterclaim should be dismissed." — Per Sir Henry Bernard Eder IJ, Para 11

As to costs, the judge ordered S$68,000, calculated on the basis of a four-day trial at a guideline rate of S$17,000 per day. The court described that figure as unobjectionable. This costs order reflects the court’s view that the trial length and rate were appropriate for the matter as tried. (Para 62)

"TO is entitled to costs in the sum of S$68,000. This is calculated on the basis that the trial lasted 4 days and a guideline rate of S$17,000 per day." — Per Sir Henry Bernard Eder IJ, Para 62

"In my view, this is unobjectionable; and I so order." — Per Sir Henry Bernard Eder IJ, Para 62

Why Does This Case Matter?

This case is significant because it shows how a court will analyse a commercial subcontract dispute where the parties disagree about the scope of work, the existence of separate requests or agreements, and the effect of upstream payment clauses. The judgment makes clear that a broad contract is not necessarily an all-inclusive one, and that the court will look closely at express exclusions, contemporaneous invoices, and the parties’ conduct. (Para 30) (Para 31) (Para 37)

It also matters because it illustrates the evidential consequences of not calling witnesses or not challenging the other side’s evidence on quantum. The judge’s repeated acceptance of TO’s witnesses, coupled with TCT’s failure to adduce contrary evidence, was decisive. For litigators, the case is a reminder that silence in the face of detailed documentary and oral evidence can be fatal. (Para 12) (Para 24) (Para 60)

Finally, the case is useful on “pay when paid” clauses. The court did not treat Clause 5 as a self-executing escape from liability. Instead, it required the party relying on the clause to prove the factual predicate for its operation. That approach has practical importance in construction and project disputes where payment flows depend on upstream receipts. (Para 59) (Para 60)

"the burden of proof is on TCT to demonstrate that it has not received relevant payments from Bechtel in order to rely upon its Clause 5 defence" — Per Sir Henry Bernard Eder IJ, Para 59

Cases Referred To

Legislation Referenced

• Evidence Act (Cap 97, 1997 Rev Ed), s 32(1)(b)(iv) (Para 10) [CDN] [SSO]
• Evidence Act (Cap 97, 1997 Rev Ed), s 32(3) (Para 10) [CDN] [SSO]

Source Documents

• Original Judgment — Singapore Courts
• Archived Copy (PDF) — Litt Law CDN
• View in judgment: "TCT adduced no evidence to contradict..."
• View in judgment: "In my view, this is unobjectionable;..."
• View in judgment: "Sir Henry Bernard Eder International Judge..."

This article analyses [2017] SGHCI 4 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.