Case Details
- Citation: [2025] SGHC(A) 4
- Court: Appellate Division of the High Court of the Republic of Singapore (SGHCA)
- Date: 26 February 2025 (full grounds); hearing date: 24 October 2024
- Judges: Woo Bih Li JAD, Kannan Ramesh JAD and See Kee Oon JAD
- Appellate Division / Civil Appeal Nos: Civil Appeals No 2 of 2024 and No 4 of 2024
- Suit No: HC/S 173 of 2022
- Parties (Appellant/Respondent): Terrenus Energy SL2 Pte Ltd (Appellant in AD/CA 2/2024; Plaintiff below) and Attika Interior + MEP Pte Ltd (Respondent in AD/CA 2/2024; Defendant below)
- Parties (Cross-appeal): Attika Interior + MEP Pte Ltd (Appellant in AD/CA 4/2024) and Terrenus Energy SL2 Pte Ltd (Respondent in AD/CA 4/2024)
- Plaintiff/Applicant: Terrenus Energy SL2 Pte Ltd
- Defendant/Respondent: Attika Interior + MEP Pte Ltd and another appeal (as reflected in the appellate caption)
- Legal Areas: Building and Construction Law; Contractors’ duties; Extension of time (EOT) and liquidated damages; Damages; Measure of damages; Contract; Cost of cure
- Judgment length: 44 pages, 13,700 words
- Lower court decision referenced: Terrenus Energy SL2 Pte Ltd v Attika Interior + MEP Pte Ltd [2023] SGHC 333
- Contractual framework: Main Builder Agreement (MBA) dated 5 April 2021; termination without default under cl 14.3; payment milestones under Annex F; delay regime under cl 5.5 and cl 17.1
Summary
This decision of the Appellate Division of the High Court arose out of a solar power generation construction project in Changi Business Park. Terrenus (the main builder) sued Attika (the main contractor) for defective works and delay-related losses. The central appellate question concerned whether a claimant who seeks “cost of cure” damages for defective construction is entitled to such damages where it does not intend to rectify the defects. The court addressed this alongside issues of proof of non-compliance, entitlement to liquidated damages and general damages for delay, and the proper treatment of contractual deductions from the unpaid balance after termination.
On the merits, the court upheld the judge’s approach to defective works: Terrenus proved some non-compliance in the embedding depth of solar mounting “PEG Rods”, but failed to establish the extent of non-compliance and the risk of structural failure attributable to that non-compliance. The court therefore declined to award substantial damages and left only nominal damages. On delay, the court confirmed that, in the absence of granted EOTs, liquidated damages were limited by the EOT entitlement that Attika should have received under the contract. It also affirmed that general damages for delay were not recoverable in addition to liquidated damages under the contractual scheme. Finally, the court allowed Attika’s appeal on the payment mechanics, holding that Attika was entitled to the balance sum subject to agreed deductions arising from neutral evaluation.
What Were the Facts of This Case?
On 5 April 2021, Terrenus and Attika entered into a Main Builder Agreement (“MBA”) for the construction of a solar power generation facility at Changi Business Park (“Project”). The contract sum was $5,100,000. Under the MBA, Attika was engaged as the main contractor and was responsible for installing, testing and commissioning the Project, while Terrenus was responsible for supplying solar panels and two power grid substations. The works were set out in Annex A, and payment was structured in milestones under Annex F, including 40% based on monthly progress, 20% upon issuance of the Temporary Occupation Permit (“TOP”) by the Building and Construction Authority (“BCA”), and 40% upon issuance of the Certificate of Statutory Completion (“CSC”) by the BCA.
Time obligations were governed by cl 5.5 and related provisions. The MBA fixed a “Date of Completion” of 31 July 2021 and defined “Partial Completion” as the time for completion of part of the works to commission and energise at least 70% of the Project on or before 30 June 2021. Attika could submit requests for extensions of time (“EOTs”), and Terrenus could accept or reject them. Clause 17.1 provided for liquidated damages for delay beyond the Partial Completion and/or Date of Completion, set at 0.1% of the contract sum per day of delay. Clause 17.1.4 further allowed recovery of other losses and damages not covered by the liquidated damages.
During the Project, Terrenus failed to pay certain portions of the contract sum, leading to adjudication proceedings under the Building and Construction Industry Security of Payment Act 2004 (2020 Rev Ed). On 12 January 2022, the BCA issued the TOP. On 3 February 2022, Terrenus terminated Attika’s engagement on a without-default basis under cl 14.3. The CSC was obtained from NParks on 6 July 2023 and issued on 13 July 2023.
Terrenus commenced the suit seeking damages for defective works and delay. Its primary defective-works allegation concerned the solar panel mounting structure rods (“PEG Rods”). Terrenus contended that Attika failed to ensure that the PEG Rods were embedded at least 500mm below ground, as required by the MBA. Terrenus argued that this failure created a risk of structural failure during high winds and sought the cost of rectification (“cost of cure”). Attika responded that Terrenus failed to prove both the extent of non-compliance and the risk of structural failure. Terrenus also claimed liquidated damages and general damages for delay. Attika countered that substantial delay was caused by Terrenus and that Attika was entitled to EOTs, although it was not granted any EOTs despite requests. Attika further counterclaimed for the unpaid balance of the contract sum, primarily the balance 40%.
What Were the Key Legal Issues?
The appeals required the Appellate Division to determine several interlocking issues. First, on Terrenus’ appeal, the court had to decide whether Terrenus was entitled to substantial damages for Attika’s non-compliance with the contractual minimum embedding depth for the PEG Rods. This involved two sub-issues: whether Terrenus discharged its evidential burden to prove the number and extent of non-compliant PEG Rods, and whether Terrenus proved that the non-compliance gave rise to a risk of structural failure during high winds sufficient to justify substantial damages.
Second, the court had to consider whether Terrenus could recover “cost of cure” as damages where Terrenus did not intend to rectify the defects. This was framed as a central question: does a claimant’s intention to cure matter to the availability of cost-of-cure damages, even though contractual damages aim to put the claimant in the position as if the contract had been performed?
Third, the court had to address delay damages. It considered whether Terrenus was entitled to general damages for delay in addition to liquidated damages, and whether the contractual wording (including cl 17.1.4) permitted such recovery. Fourth, on Attika’s appeal, the court had to decide whether the judge erred in deducting certain sums from the amount payable to Attika, where the deductions related to items subject to neutral evaluation.
How Did the Court Analyse the Issues?
The court began by situating the appeals within the broader principles governing contractual damages in construction disputes. The court emphasised that the overarching objective of contractual damages is compensatory: to place the claimant in the position it would have been in had the contract been performed. However, the court also acknowledged an “intuitive reluctance” to award cost of cure where the claimant does not intend to effect the cure. The court noted that the law on this point has not spoken with one voice and that the present appeals provided an opportunity to clarify the approach.
On the defective-works claim, the court agreed with the judge that Terrenus did not make out its case for substantial defects. While Terrenus established that some PEG Rods were not embedded to the requisite depth, it failed to prove the extent of non-compliance. The court treated this as a matter of evidential burden: damages for defective works require proof not only of breach but also of the scope of the breach and the loss flowing from it. Without reliable evidence as to how many rods were non-compliant (and to what extent), the court was not prepared to quantify substantial damages.
More importantly, the court also found that Terrenus failed to prove the risk of structural failure during high winds attributable to the non-compliance. In construction litigation, the causal link between the defect and the claimed risk or consequential loss is often contested. Here, Attika’s position was that Terrenus had not shown that the embedding-depth deviation translated into a meaningful structural risk. The court accepted that Terrenus did not discharge the burden of proof on this risk element. As a result, the court upheld the award of nominal damages of $1,500 for breach without sufficient proof to support substantial damages.
Although the extracted text focuses on proof and quantification, the court’s framing of the “cost of cure” question indicates that it considered whether intention to rectify is relevant. The court’s reasoning reflects the tension between compensatory theory and practical fairness. In principle, cost of cure is often awarded where the claimant intends to repair or where the cost represents the reasonable measure of the loss of having received defective performance. Where the claimant does not intend to cure, the court’s analysis suggests that the award may be constrained by the requirement to show that the cost represents recoverable loss rather than a windfall. In the present case, even setting aside intention, Terrenus’ failure to prove extent and risk meant that substantial cost-of-cure damages could not be sustained.
On delay, the court analysed the contractual EOT and liquidated damages regime. It was not disputed that Attika was not granted any EOTs despite requests. The judge had calculated that, absent EOTs, Attika would have been in delay until 22 November 2021, amounting to 146 days. However, the judge held that Attika was entitled to an EOT of 140 days, leaving Terrenus entitled to liquidated damages for only six days, totalling $30,600. The Appellate Division upheld this approach, reflecting that the contractual mechanism for EOT entitlement affects the computation of delay and therefore the quantum of liquidated damages.
The court also addressed whether Terrenus could claim general damages for delay in addition to liquidated damages. The judge had held that cl 17.1.4, which allowed recovery of “other losses and damages” not covered by liquidated damages, did not permit general damages for delay where liquidated damages already addressed delay losses under cl 17.1.2. The Appellate Division agreed. It reasoned that the contract’s allocation of delay risk and remedies must be respected: where the contract provides liquidated damages for delay, the claimant cannot circumvent that bargain by recharacterising delay losses as general damages, unless the claimant can bring the loss within the category of “other losses and damages” not covered by the liquidated damages.
Finally, on the payment dispute, the court considered the balance sum payable after termination. The judge held that Attika was entitled to the balance sum but that payment should be net of deductions for three items: replacement costs for fencing using concrete stumps, damaged solar panels, and ponding (the “Three Deducted Items”). These items were subject to neutral evaluation, and the deductions were quantified at $49,861 and US$85,920.90 (the “Deducted Sums”). On Attika’s appeal, the Appellate Division allowed the cross-appeal, indicating that the judge had erred in the way deductions were applied. The practical effect was that Attika’s entitlement to the balance sum was adjusted in accordance with the correct contractual and procedural treatment of the neutral evaluation deductions.
What Was the Outcome?
The Appellate Division dismissed Terrenus’ appeal (AD 2) and allowed Attika’s appeal (AD 4). Terrenus therefore did not obtain substantial damages for the PEG Rod embedding-depth non-compliance, and the nominal damages award remained the appropriate outcome on that issue. The court also confirmed that Terrenus was limited to liquidated damages for the short period after accounting for Attika’s EOT entitlement, and that Terrenus could not recover general damages for delay in addition to liquidated damages under the MBA.
On the counterclaim and payment mechanics, the court allowed Attika’s appeal and corrected the deductions from the balance sum. The result was that Attika was entitled to the unpaid portion of the contract sum, subject to the properly determined neutral-evaluation deductions for the Three Deducted Items. The decision thus rebalanced the parties’ financial positions in line with the contractual termination and payment provisions.
Why Does This Case Matter?
This case is significant for construction practitioners and litigators in Singapore because it addresses, in a structured way, the availability of “cost of cure” damages in defective construction claims. The court’s discussion highlights that while contractual damages are compensatory, courts remain cautious about awarding cure costs where the claimant does not intend to rectify. Even if intention is not the sole determinant, the decision underscores that claimants must still prove the scope of non-compliance and the causal link between the defect and the risk or loss claimed. In other words, cost-of-cure is not a substitute for evidential proof.
For lawyers advising on defective-works claims, the decision reinforces the importance of expert evidence that can quantify the extent of non-compliance and establish the relevant risk or consequential damage. Where the claimant cannot show how widespread the defect is, or cannot show that the defect produces the asserted risk (such as structural failure under high winds), substantial damages will likely fail even if breach is established.
For delay disputes, the decision confirms that contractual EOT and liquidated damages provisions operate as a coherent remedial scheme. Claimants cannot readily obtain general damages for delay on top of liquidated damages where the contract already allocates delay losses. Practitioners should therefore carefully analyse the wording of the liquidated damages clause and any “other losses” carve-out, and ensure that any additional heads of loss are properly pleaded and supported by evidence of remoteness, causation, and mitigation.
Legislation Referenced
Cases Cited
- (Not provided in the supplied extract. The full judgment likely contains additional authorities on contractual damages, cost of cure, liquidated damages, and remoteness/mitigation.)
Source Documents
This article analyses [2025] SGHCA 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.