Chia Kok Leong and Another v Prosperland Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 16 March 2005
• Date: 16 March 2005
• Docket Number: Civil Appeal No 76 of 2004
• Court: Court of Appeal (Singapore)

Chia Kok Leong and another

Plaintiff

and

Prosperland Pte Ltd

Defendant

[2005] SGCA 12

Yong Pung How CJ

,

Chao Hick Tin JA

and

Tan Lee Meng J

Civil Appeal No 76 of 2004

Court of Appeal

Civil Procedure–Limitation–Burden of proof in case where s 24A of Limitation Act applicable–Whether developer's claim against architects for damage to wall tiles time-barred–Section 24A Limitation Act (Cap 163, 1996 Rev Ed)–Contract–Breach–Developer of condominium no longer owner of condominium–No actual loss suffered by developer in respect of defects in condominium–Whether developer can claim against architects for substantial damages in respect of defects

The respondent (“Prosperland”) was the developer of a condominium, while the appellants were the architects engaged in the design and supervision of the project. The construction of the condominium was completed in August 1993. In May 1998, the Management Corporation Strata Title Plan No 2201 (“the MCST”) was constituted, and it became the proprietor of the common property of the condominium.

On 2 May 2002, Prosperland commenced an action against the main contractor for the construction of the condominium, Civic Construction Pte Ltd (“Civic”), for defective works. It also claimed against the appellants for breach of contract which resulted in the defective works. However, by this time, Prosperland was no longer the owner of the condominium. Prosperland had not yet spent any money to effect the repairs and had not been sued by the MCST in respect of the defects.

In the light of these undisputed facts, the two issues in this appeal were: (a) whether Prosperland could claim against the appellants for substantial damages, even though Prosperland had suffered no loss and the MCST had a direct legal remedy in tort against the appellants; and (b) whether Prosperland's claim against the appellants for alleged de-bonding of the wall tiles forming the external façade of the building was time-barred.

Held, dismissing the appeal:

(1) The general rule in law was that a plaintiff was entitled to claim damages only for the actual loss suffered on account of a breach of contract. However, there were exceptions: at [10].

(2) One exception was “the narrow ground”, which postulated that where it was in the contemplation of the parties that the proprietary interests in goods might be transferred from one owner to another after the contract had been entered into and before the breach which caused damage to the goods, an original party to the contract, if such be the intention of them both, was to be treated in law as having entered into the contract for the benefit of all persons who might acquire an interest in the goods before they were damaged. He was entitled to recover by way of damages for breach of contract the actual loss sustained by these persons: at [12].

(3) Another exception was “the broad ground”, which allowed one to recover substantial damages for the loss of his “performance interest” in not receiving the bargain for which he had contracted. The measure of damages would be the cost of securing the performance of that bargain: at [17] and [19].

(4) The present case fell within the narrow ground. The fact that subsequent purchasers of the units in the condominium had a limited right to claim in tort against Civic and the appellants, could not justify taking away the contractual rights of the building employer under this first exception. Such a limited right did not remove the legal black hole completely. To deprive a building employer of this exception, there had to be an express contractual right in favour of a third party or something akin to it: at [45].

(5) The broad ground was probably more consistent with principle. The only problem that could arise, which was more apparent than real, was that the builder could be exposed to double liability. The solutions proffered by Lord Millett in Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 met this “problem”. Further, the court could always join a third party to the proceedings: at [52] and [56].

(6) The broad ground had nothing to do with the “filling up” of a legal black hole. It should not be a prerequisite for the application of the exception under the broad ground that the building employer had to show that he had already carried out the repairs or intended to do so: at [55] and [57].

(7) As Prosperland instituted the present action in May 2002, under s 24A of the Limitation Act (Cap 163, 1996 Rev Ed), it was for Prosperland to prove it acquired the relevant knowledge on or after May 1999, and the appellants would have to show knowledge on the part of Prosperland on an earlier date. Prosperland could not be expected to prove a negative: at [67].

(8) The trial judge was amply justified to hold that the de-bonding of one tile in August 1997 was an isolated incident which would not have warranted the taking of further actions other than stepping up periodic visual inspections of the façade, which were in fact carried out: at [68].

Albazero, The [1977] AC 774 (folld)

Alfred McAlpine Construction Ltd v Panatown Ltd [2001] 1 AC 518 (refd)

Darlington Borough Council v Wiltshier Northern Ltd (1994) 69 BLR 1 (folld)

Dunlop v Lambert (1839) 6 Cl & Fin 600; 7 ER 824 (refd)

Nash v Eli Lilly & Co [1993] 1 WLR 782; [1993] 4 All ER 383 (folld)

Radford v De Froberville [1977] 1 WLR 1262 (refd)

Rolls-Royce Power Engineering plc v Ricardo Consulting Engineers Ltd [2004] 2 All ER (Comm) 129 (refd)

RSP Architects Planners & Engineers v Ocean Front Pte Ltd [1995] 3 SLR (R) 653; [1996] 1 SLR 113 (refd)

RSP Architects Planners & Engineers v MCST Plan No 1075 [1999] 2 SLR (R) 134; [1999] 2 SLR 449 (refd)

St Martins Property Corporation Ltd v Sir Robert McAlpine Ltd [1994] 1 AC 85 (refd)

Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277 (folld)

Land Titles (Strata) Act (Cap 158, 1988 Rev Ed)

Limitation Act (Cap 163,1996 Rev Ed)s 24A (consd)

Rules of Court (Cap 322,R 5, 2004 Rev Ed)O 15r 6

Bills of Lading Act 1855 (c 111) (UK)

Steven Chong SC and Sim Kwan Kiat (Rajah & Tann) for the appellants

Thio Shen Yi, Adrian Tan and Linnet Choo (TSMP Law Corporation) for the respondents.

Judgment reserved.

Chao Hick Tin JA

(delivering the judgment of the court):

1 This is an appeal against certain rulings given by Judith Prakash J in Prosperland Pte Ltd v Civic Construction Pte Ltd [2004] 4 SLR (R) 129, in relation to a number of preliminary points of law which arose from the action instituted by the respondent against the appellants and one other party.

2 The respondent (“Prosperland”), the plaintiff in the action below, was the developer of a condominium at 7 Claymore Road, Singapore (“the condominium”). The first defendant, Civic Construction Pte Ltd (“Civic”), was the main contractor for the construction of the condominium. The second and third defendants, Mr Chia Kok Leong (“Chia”) and D Exodus Architects & Planners Pte (“Exodus”), the appellants herein, were the architects engaged in the design and supervision of the project, with Chia being the person in charge of the project.

3 The construction of the condominium was completed in August 1993. In May 1998, the Management Corporation Strata Title Plan No 2201 (“the MCST”) was constituted, which, by virtue of the Land Titles (Strata) Act (Cap 158, 1988 Rev Ed), became the proprietor of the common property of the condominium.

4 On 2 May 2002, Prosperland commenced an action against Civic for defective works, ie, de-bonding of the tiles forming the external façade of the building and damage of the glass blocks installed in the lobbies and stairways. In the action, it also claimed against Chia and Exodus for breach of contract in failing to exercise due care in the design and supervision of the project which resulted in the defective works.

5 However, by the time the defects appeared and the action was instituted, Prosperland was no longer the owner of the condominium. The individual units in the condominium had been transferred to third parties. The common areas of the condominium had become vested in the MCST. Prosperland had not yet spent any money to effect the repairs. Neither had it been sued by the MCST in respect of the defects. While Prosperland was placed under voluntary liquidation in December 2002, the MCST has not, to date, filed any proof of debt with the liquidators of Prosperland to date.

6 It should be noted that Civic and the supplier of the adhesives gave Prosperland a ten-year warranty by way of a deed guaranteeing the construction and the adhesive used in the construction of the external wall tile façade. The MCST was not a party to this deed of warranty.

7 In the light of these undisputed facts, Civic and the appellants asked the court to rule on two sets of preliminary issues. They were:

(a) whether the claims in respect of the external façade of the building and the glass blocks were time-barred; and

(b) whether Prosperland was the proper party to sue in respect of these claims.

8 On the first issue, the judge held that Prosperland's claim in respect of the glass blocks was time-barred but its claim in respect of the wall tiles was not. On the second issue, the judge held that Prosperland was the proper party to sue the defendants and could claim for substantial damages.

9 Civic did not appeal against the aforesaid rulings. Neither did Prosperland with regard to the ruling on the time bar in respect of the glass blocks. However, Chia and Exodus, being dissatisfied, have taken the matter on appeal before us. Thus, the issues which require the determination of this court are:

(a) whether Prosperland can claim against the appellants for substantial damages, even though Prosperland has suffered no loss and the MCST has, following two decisions of this court, a direct legal remedy in tort against the appellants; and

(b)...