ACES System Development Pte Ltd v Yenty Lily

• Jurisdiction: Singapore
• Judgment Date: 04 October 2013
• Date: 04 October 2013
• Docket Number: Civil Appeal No 149 of 2012
• Court: Court of Appeal (Singapore)

ACES System Development Pte Ltd

Plaintiff

and

Yenty Lily (trading as Access International Services)

Defendant

[2013] SGCA 53

Sundaresh Menon CJ

,

Andrew Phang Boon Leong JA

and

V K Rajah JA

Civil Appeal No 149 of 2012

Court of Appeal

Damages—Assessment—Compensation—Whether user principle applicable—Whether user principle compensatory or restitutionary in principle

Restitution—Restitution for wrongs—User principle

Tort—Detinue—Party claiming damages for unlawful detention of goods

The appellant (‘the Appellant’) was the main contractor in a construction project involving works to the roofs of certain blocks of flats (‘the project’). On 10 July 2008, it entered into a contract (‘the subcontract’) with the respondent (‘the Respondent’), requiring the Respondent to provide mobile platforms for the project, and to erect and dismantle these platforms at various locations at the site. The platforms were to be made available to the Appellant for 16 months ending on 31 January 2010, and the Appellant was to provide the Respondent with financial assistance for their purchase. The Respondent was to repay the Appellant via monthly deductions from the progress payments due from it.

The platforms were purchased and the Respondent proceeded to carry out the subcontract works. By July 2009, there was an outstanding balance due to the Respondent. The Respondent stopped work on 3 July 2009, leaving the mobile platforms on site. The Appellant terminated the subcontract on 11 July 2009 and continued to use the platforms up to December 2009 when the project was completed and kept them in storage thereafter.

The trial judge found that the Appellant had wrongfully terminated the subcontract on 11 July 2009, and that the Respondent was entitled to terminate it on 3 July 2009. Interlocutory judgment was also entered for the Respondent for damages to be assessed on the basis of the lump sum of $850,000, less (a) cash payments received by the Respondent from the Appellant totalling $281,800; (b) the cost of the six platforms totalling $227,600.70; and (c) costs that would have been incurred by the Respondent to complete the project. The trial judge also ordered that damages be assessed for the Appellant's wrongful detention of the platforms as from 31 January 2010.

The assistant registrar (‘the AR’) assessed: (a) the costs of completing the project (‘Issue 1’) at $52,124.11; and (b) loss and damage for the platforms whilst in the possession of the Appellant (‘Issue 2’) at €9,420.70 for damages to the platforms and $3,748 for maintenance, servicing and retrieval fees in relation to the platforms. The AR disallowed the Respondent's claim for substantial damages in respect of the wrongful detention of the platforms (‘Issue 3’) and only awarded nominal damages of $100 on the basis that no loss was proved, and that the platforms had not been put to use (and, hence, the user principle was not applicable).

The Respondent appealed against all of the AR's holdings. The High Court Judge (‘the Judge’) varied the assessment of damages. For Issue 1, it was varied to $16,431.80. For Issue 2, the loss and damage was varied to €15,050.52, while the sum of $3,748 was upheld. Additionally, the Respondent was entitled to recover $695.50 for the cost of obtaining a list of the items collected and damaged. For Issue 3, the Judge disagreed with the AR's legal analysis of the user principle and allowed damages for the wrongful detention of the platforms on that basis. The Respondent was awarded $189,000, being the rental that she could have earned from February to October 2010.

The Appellant sought to the reinstate the AR's decision and appealed against the Judge's decision.

Held, dismissing the appeal:

(1) With respect to Issue 1 and Issue 2, the Judge was correct in arriving at the decisions she did. The Judge, in the de novo hearing, had the power to make her findings of fact and then exercise her discretion. Her discretion would only be upset if it was shown that she had erred in principle or had reached a conclusion that was manifestly wrong. In a registrar's appeal, the judge's discretion is not fettered by the registrar's discretion in coming to his or her decision: at [11] and [12] .

(2) With respect to Issue 3, the court agreed with the Judge's decision but differed from her reasoning. The court also disagreed with the AR and found that there was sufficient evidence that proved the Respondent's loss and which justified awarding the Respondent substantive damages based on the compensation principle. The findings of the Judge, albeit in relation to her understanding of the user principle, were upheld. That being the case, there was no need to turn to the user principle. The Respondent had been deprived by the Appellant of the use of the platforms for the purposes of her business and it was accepted that she had taken reasonable steps to mitigate her loss: at [13] and [16] to [18] .

(3) The quantum of damages was to compensate the Respondent for her deprivation of the use of the platforms for the purpose of her business by the Appellant. It followed that the computation of the damages to be awarded to the Respondent during the relevant period of detention ought (for the reasons the Judge found) to be based on reasonable market hire of those six platforms. Additionally, it was immaterial in awarding the Respondent compensation for her loss whether the Appellant had actually used the platforms or not: at [60] .

[Observation (on the nature of the user principle and its relationship to the compensation principle): The Judge's interpretation was an instance of the immense confusion that had surrounded the nature and function of the user principle due, in no small part, to the different views expressed by the judges in the seminal English Court of Appeal decision of Strand Electricand Engineering Co Ltd v Brisford Entertainment Ld[1952] 2 QB 246 (‘Strand Electric’). In Strand Electric, only Denning LJ (as he then was) was of the view that damages awarded pursuant to the user principle were restitutionary in nature. The restitutionary basis appeared to consist of the disgorgement of the benefit that the wrongdoer had obtained, where the benefit was for the ability to use the property. The quantification would be the fair price of hire. The user principle did not look to remedying the claimant's loss, but, rather, to disgorging the wrongdoer's gain or benefit: at [20] to [22] and [24] .

Both Somervell LJ and Romer LJ appeared to adopt a compensatory approach by focusing the user principle on the question of loss to the plaintiff: at [33] - [36] .

A possible alternative analysis(‘the Possible Alternative Analysis’) of Strand Electric was that Somervell LJ and Romer LJ were in fact referring to the compensation principle, and only Denning LJ had utilised the user principle in arriving at the decision. If so, then the user principle had restitution as its underlying rationale, and an objective calculation of the market hire to award damages did not detract from the rationale. A plaintiff could claim damages based on either the compensation principle or the user principle. The Possible Alternative Analysis allowed the user principle to be regarded as a wholly separate principle premised on a restitutionary basis: at [37] to [41] .

Under the Possible Alternative Analysis, as the user principle was a restitutionary remedy, the wrong was determined against the user rather than the use (if any), as the wrongdoer's fault lay in the unlawful detention of the goods concerned. Actual use was therefore not necessary. This was further supported by academic literature on the interference with the plaintiff's dominium: at [42] to [46] .

Even though the user principle could be utilised to award the plaintiff damages in a fact situation where the compensation principle could not, this did not mean that the user principle would always be an exception to the compensation principle. However, it would appear that at least one thing was clear: the amount of damages which a plaintiff could claim in restitution against the defendant pursuant to the user principle would be the amount of damages which the plaintiff would have to forego under the compensation principle. However, the plaintiff would also have to adduce sufficient evidence in order to establish its claim pursuant to the user principle: at [48] .

One possible measure of damages under the restitutionary rationale of the user principle would be the benefit of the Appellant unlawfully detaining the platforms, where there had been no actual use of the platforms by the Appellant. This would be measured by the market hire of the platforms. This measure of damages was simultaneously that which would be awarded to the Respondent pursuant to the compensation principle: at [49] .

The Possible Alternative Analysis drew a distinct line between the compensation principle and the user principle. Both principles would no longer necessarily have the relationship of general principle and exception. The user principle would be premised only on a restitutionary basis: at [51] .

In summary, the Possible Alternative Analysis viewed the user principle as being premised on a restitutionary basis. If so, then only Denning LJ should be considered as having invoked the user principle in Strand Electric,with Romer LJ and Somervell LJ being considered as having invoked the compensation principle instead. More specifically, the damages awarded in the context of the user principle where a tortious wrong consisting in the wrongful detention of the plaintiff's goods had been committed by the defendant ought to be measured by reference to the benefit which had accrued to the defendant (viz, the market hire of the goods), and the lack of actual use as such would not suffice to negate the existence of such a benefit. It should also be noted that the user principle could be invoked by the...