Kay Lim Construction & Trading Pte Ltd v Soon Douglas (Pte) Ltd and another

• Jurisdiction: Singapore
• Judge: Quentin Loh J
• Judgment Date: 10 September 2012
• Neutral Citation: [2012] SGHC 186
• Court: High Court (Singapore)
• Docket Number: Suit No 58 of 2011
• Year: 2012
• Published date: 13 September 2012
• Hearing Date: 23 February 2012,22 February 2012,21 February 2012,10 April 2012
• Plaintiff Counsel: Richard Tan, Diana Xie and Chia Aileen (Tan Chin Hoe & Co)
• Defendant Counsel: Michael Eu and Pak Waltan (United Legal Alliance LLC),Leong Kit Ying Melissa (Genesis Law Corporation)
• Subject Matter: Contract,Implied Terms,Illegality,Exclusion Clause,Unfair Contracts Terms Act
• Citation: [2012] SGHC 186

Quentin Loh J: Facts

The Plaintiff, Kay Lim Construction & Trading Pte Ltd (“Kay Lim”) carries on the business of building and construction and secured a contract from the Housing & Development Board (“HDB”) to construct seven blocks of public residential buildings and associated works for an HDB project known as the Punggol East Contract 18 (“the C-18 project”). The 1st Defendant, Soon Douglas (Pte) Ltd (“Soon Douglas”), carries on the business of renting and leasing out inter alia, tower cranes. Soon Douglas is accredited by the Ministry of Manpower (“MOM”) as an Approved Crane Contractor (“Approved Crane Contractor”) under the Workplace Safety and Health (Operation of Cranes) Regulations.¹

Kay Lim entered into a Rental Agreement No. SDPL-0462 dated 26 June 2008 (the “Rental Agreement”) with Soon Douglas for the lease of seven Jaso J240 tower cranes (the “Tower Cranes”) for use at the C-18 Project worksite. Under the Rental Agreement, Soon Douglas was responsible for the delivery, erection, as well as the dismantling and removal of the Tower Cranes from the site. After erection, each tower crane had to be tested and approved by an Authorised Examiner, a professional engineer, who would then have to issue a Certificate of Test/Thorough Visual Examination of Lifting Equipment² before it could be used. Thereafter, Kay Lim’s workmen would operate the Tower Cranes during the course of construction.

The relevant tower crane, Tower Crane JASO J240DR S/N 0036 (“Tower Crane 4”) was delivered and erected at the worksite close to Block 610B on 24 February 2009.

What follows is not really in dispute. Insofar as they are or are outside the agreed facts, they constitute my findings of fact.

Unknown to Kay Lim, Soon Douglas had entered into an agreement, dated 12 February 2010, with the 2nd Defendant, Chit Guan Engineering Resources Pte Ltd (the “Subcontract” and “Chit Guan” respectively) to provide labour to Soon Douglas for the erection and dismantling of the Jaso Tower Cranes.³ It was common ground that Soon Douglas subcontracted the delivery, erection, dismantling and removal of the Tower Cranes to Chit Guan. Chit Guan was also an MOM Approved Crane Contractor.⁴ One Bohari bin Juahir (“Bohari”) and one Tachajaroen Chaiwat (“Chaiwat”) were under the employ of Chit Guan. Chit Guan is apparently no longer active in the market and its insurers have repudiated liability.⁵

The crane collapse

Sometime in December 2009 or January 2010, when the C-18 project was near completion, Kay Lim requested Soon Douglas to remove the Tower Cranes. Three Tower Cranes were dismantled and removed without mishap.

On 17 March 2010, Chit Guan sent a team of workers, including Chaiwat and Bohari, to dismantle and remove Tower Crane 4 from the worksite using the jacking down method. Bohari was responsible for supervising the workers and overseeing the dismantling works. At about 5.15 pm, Tower Crane 4 suddenly collapsed whilst it was being jacked down (the “Accident”). One worker was killed and three others were injured.

There is also no real dispute over the cause of the collapse. The Accident was due to the failure of Chit Guan’s team of workers to adhere to the safe method of dismantling and jacking down of the tower crane. Jacking cage brackets were used in the jacking down method to secure the top section of the crane to the top mast section, and the safe method of jacking down was to secure the four jacking cage brackets to the slewing table by using eight jacking cage pins before removing the four mast pins, which secured the top section of the tower crane to the top mast section. For some unknown reason, Bohari instructed the workers to remove the four mast pins before securing the slewing table to the jacking cage brackets. As a result, the top section of the crane was free and unsecured and merely resting on the top mast section. It was in this state when Chaiwat, an unregistered crane operator, climbed into the crane cabin and, as part of the jacking down process, operated the crane by swinging the jib and moving the trolley attached to the jib.⁶ The top section of the crane tipped backwards and toppled to the ground. The Accident was caused by these fatal series of errors by Chit Guan’s team of workers in dismantling Tower Crane 4.⁷

Events Subsequent to the Accident

Following investigations into the Accident by the MOM, Bohari and Chit Guan were charged under s 15(3) and s 12(1) of the Workplace Safety and Health Act (Cap 354) respectively. Both pleaded guilty. The director of Chit Guan, one Koh Hwa Khoon, also pleaded guilty to a charge under s 48(1)(b) read with s 12(1) of the same Act.⁸

Kay Lim subsequently commenced the present action against Soon Douglas. After Soon Douglas’s defence was filed, Kay Lim amended the Writ of Summons by adding Chit Guan as a second defendant to the proceedings. Kay Lim alleged that the negligence of Chit Guan’s servants or agents had caused Tower Crane 4 to collapse, thereby causing them loss and damage. Chit Guan failed to enter a defence and Kay Lim entered interlocutory judgment against Chit Guan under O 19 of the Rules of Court (Cap 332, R5, 2006 Rev Ed) (“ROC”) on 9 September 2011.

Soon Douglas also served a third party notice pursuant to O 16 r 1 of the ROC on Chit Guan to indemnify Soon Douglas against any liability in respect of Kay Lim’s claim. Judgment in default of appearance was entered under O 13 of the ROC against Chit Guan on 6 September 2011.

The only issue before me in the present action is the liability of Soon Douglas to Kay Lim for breach of contract. The quantum of damages is to be assessed at a separate hearing. I gave oral judgment on 8 August 2012. I give these reasons to aid the assessment of damages and in the event any party wishes to take this further.

Kay Lim’s Claim

Kay Lim’s claim against Soon Douglas is founded in contract, viz, there was a breach of implied terms of the Rental Agreement that Soon Douglas would provide properly skilled and qualified labour and trained personnel to dismantle the Tower Cranes and that Soon Douglas would ensure that the dismantling and removal of the Tower Cranes would be done in a skilful and proper manner in accordance with any operating instructions issued for them, thereby causing Kay Lim, inter alia, the following heads of loss: damage at the work site; damage to: equipment and building materials on the C-18 project work site; the gondola(s) hanging at the external wall of Block 601C; the external wall of Block 601C; the parapet wall and roof fascia at Block 601C; the roof slab on the top floor of Block 601C; canopies at Block 601C; architectural works at Block 601C; the ceiling and wall of the unit #16-632 at Block 601C; and the roof fascia and the canopy of a unit at Block 601B; the delay of the C-18 project caused by a Stop Work Order issued by the Building and Construction Authority as a result of the accident and subsequent rectification works to rectify the damages; and losses resulting from the restriction placed on Kay Lim from tendering for HDB projects for three months with effect from 1 April 2010.

Soon Douglas’s Defence

Soon Douglas claimed that the accident was not caused by them but by Chit Guan, who were independent contractors. Soon Douglas was not responsible or vicariously liable for the latter’s negligence. Upon Kay Lim’s confirmation that its claim was solely based on contract, the independent contractor issue fell away.

Soon Douglas denied the existence of the alleged implied terms in the Rental Agreement; and even if there were such implied terms, it was denied that they had breached the implied terms or that the Accident was caused by the breach of those terms.

Soon Douglas contended in the alternative that it was entitled to rely on the following express terms of the Rental Agreement: Kay Lim’s claim against Soon Douglas was excluded by the operation of Cl 3.7.2; Soon Douglas was entitled to claim an indemnity from Kay Lim under Cl 3.7.1; Kay Lim was in breach of Cl 3.4.2 by failing to procure insurance for Soon Douglas; and Soon Douglas was entitled to set off-in diminution or extinction of Kay Lim’s claim the indemnity Soon Douglas was entitled to under Cl 3.7.1 and/or damages for breach of Cl 3.4.2 by Kay Lim.

The issues

The agreed issues were formulated as follows: whether there were implied terms in the Rental Agreement that: Soon Douglas would provide properly skilled and qualified labour and trained personnel to dismantle and remove the Tower Cranes from the site; and Soon Douglas would ensure that the dismantling and removal of the Tower Cranes would be done in a skilful and proper manner in accordance with any operating instructions issued for it; if there were such implied terms, whether Soon Douglas had breached the same; and whether the express terms in the Rental Agreement were such that: Kay Lim’s claim against Soon Douglas was excluded; Soon Douglas was entitled to an indemnity from Kay Lim against Kay Lim’s claim; and Kay Lim was obliged to insure Soon Douglas as a joint assured against all liability arising from the use, possession or operation of the Tower Cranes.

The Implied Terms

The Rental Agreement was on the standard terms and conditions of Soon Douglas. There can be no doubt that Kay Lim and Soon Douglas knew they carried on their respective businesses within the statutory and regulatory regimes in Singapore in relation to work sites, safety, construction practices and codes and the licensing of various trades and kinds of workmen. Moreover the Rental Agreement stipulated the site to be: “HDB Ponggol East C18”. It is well known that the HDB, along with other statutory undertakers in Singapore, has a system of demerit points for breaches of safety and other regulatory codes; a contractor may be debarred from participating in HDB contracts if it accumulates...