Koh Tiam Ting v Soon Li Heng Civil Engineering Pte Ltd

• Jurisdiction: Singapore
• Judge: Vince Gui
• Judgment Date: 03 August 2020
• Neutral Citation: [2020] SGDC 172
• Court: District Court (Singapore)
• Docket Number: District Court Suit No. 3407 of 2017, Assessment of Damages No. 383 of 2018
• Published date: 18 August 2020
• Year: 2020
• Hearing Date: 03 February 2020,14 July 2020,11 October 2019,09 June 2020,07 August 2019,07 July 2020,23 July 2020
• Plaintiff Counsel: Yap Tai San Paul (Vision Law LLC)
• Defendant Counsel: Foo Yuk Lin (Foo Kwok LLC)
• Subject Matter: Tort,Negligence,Damages,Chattels,Constructive total loss,Whether damages should be measured based on cost of repair or diminution in value,Civil Procedure,Interest,Damages indemnified by third party,Whether pre-judgment interest is compensatory or restitutionary,Whether pre-judgment interest should be awarded
• Citation: [2020] SGDC 172

Deputy Registrar Vince Gui: Introduction

This action arose from a motor accident which resulted in property damage to the Plaintiff’s lorry. Interlocutory Judgment was entered in default of appearance. Parties appeared before me to assess damages.

The Plaintiff seeks to recover the repair bill in the sum of $55,105. The Defendant argued that the lorry, by the time of the accident, was worth only about $8,000, making the repair patently uneconomical. The central question to be addressed is whether the Plaintiff should have, in view of the prevailing market value of the lorry, scrapped the damaged lorry and acquired a replacement lorry instead. I begin my analysis by examining the market value of the lorry.

Market value and replacement cost

In support of the Defendant’s case, the Defendant relies on the expert evidence of Mr Melvin Lum, an automotive appraiser and loss adjustor in the employ of KOAYS Accident Reconstruction Pte Ltd. Mr Lum assessed the market value of the lorry at the time of the accident to be $8,246. When the accident occurred on 5 March 2014, the lorry, registered in 1996, was already close to 18 years old, and had only about two years left in its Certificate of Entitlement (“COE”). It is common ground that the lorry would have to be scrapped upon the expiration of its COE. Mr Lum observed that the lorry was in poor condition, evident from corrosion on its body panels and visible tears on its upholstery. It was in his view near the tail-end of its operational lifespan. To value the lorry, Mr Lum adopted what is called a “linear depreciation method”. Based on this approach, the value of the lorry is derived by multiplying the annual depreciation value by the number of years left in use. To calculate its annual depreciation value, Mr Lum referred to comparative models listed for sale on the open market, the closest being a lorry registered in January 2010, with its (renewed) COE valid till August 2029. Based on its listed price, that lorry had an annual depreciation of $4,260. Taking into consideration the subject lorry being much older as well as its poor physical condition, Mr Lum opined that its market value should be $8,246. The Plaintiff’s attempts to discredit Mr Lum’s assessment during cross-examination were largely unsuccessful. The Plaintiff also did not lead any evidence to contradict Mr Lum’s assessment. In my view, even buffering for some discount that may be applied to the listed price of the comparative lorry, there is no evidence to suggest that the estimated market value of $8,246 was unreasonable.

The Plaintiff argued that the sale listings relied on by Mr Lum, dated between late 2019 to early 2020, were not contemporaneous and thus unreliable. While I agree that the market value of the damaged lorry should be assessed at the time of the accident, the Plaintiff’s contention ignores the fact the sale listings tendered by the Defendant were the only relevant evidence before the court. In the absence of countervailing evidence, the assessment should be made based on the sale listings, along with Mr Lum’s testimony. Mr Lum further explained during cross-examination that while the prices may vary overtime, such variations are unlikely to be significant for the particular make and model of the subject lorry. Against this, there was no evidence to suggest that the market prices for the make and model of the lorry had plummeted between 2014 and 2020.

As opposed to its market value, the Plaintiff tried to value the lorry based on the loss of rental revenue. In this regard, he argued that the lorry could have been rented out for $150 a day, which would have fetched aggregate rental revenues as much as $113,550 for the rest of its lifespan (757 days multiplied by $150 per day), and even hypothesising a 70% rent-out rate at a discounted rental rate of $135 per day, the Plaintiff argued that the lorry could still have earned $71,536.50. With respect, this valuation is evidentially and conceptually flawed. First of all, the Plaintiff’s evidence is that he was in the business of transporting goods, not providing lorry rentals, and he further revealed during cross-examination that he had in fact transferred the subject lorry to his brother in April 2014, a month after the accident. The Plaintiff’s valuation rests on a hypothetical that is at odds with reality. The loss of revenue claim is therefore a non-starter. In any event, no evidence was led to prove that the Plaintiff would have garnered enough demand to rent out the lorry for 70% of the time in the span of two years. No evidence was also led on the expenses required to operate a lorry rental business which would include the costs of obtaining the necessary permits, insurance coverage, parking fees, marketing expenses, manpower and administrative costs, amongst others. This would no doubt reduce the net profit available, assuming there is even any left.

I therefore agree with Mr Lum that the subject lorry should be valued at $8,246. On a balance of probabilities, this is how much it would have cost to purchase a replacement lorry of the similar make, model and age from the open market at the time of the accident. In the present case, it is undisputed that the Plaintiff would also be entitled to a COE rebate of $2,066 upon scrapping the damaged lorry at the time of the accident. This amount should be deducted from the market value to avoid overcompensating the Plaintiff. After deducting the COE rebate, the replacement cost comes up to $6,181, which is the amount that the Plaintiff would have to fork out to acquire a replacement lorry from the open market.

Damages should assessed based on the replacement cost

The Defendant’s case is that the more economical course of action would have been to replace rather than repair the lorry. I agree that the Plaintiff had no good reason to repair the lorry for $55,105 when he could have replaced it for $6,181. What transpired was that he agreed to give the repairer full discretion to carry out the repairs and full authority to commence legal proceedings in the Plaintiff’s name to recover the repair costs, on the understanding that the Plaintiff would not be made out-of-pocket for the same. This probably explains why he did not consider the cheaper alternative.

A chattel is generally only economical to repair up to its market value. One of the leading authorities that illustrates this legal principle is the case of Darbishire v Warran [1963] 1 WLR 1068 (“Darbishire v Warran”) which involved similar facts. In that case, the plaintiff bought a used motor car for £330. The car was seriously damaged in a collision caused by the defendant. The plaintiff sued for the repair costs of £180. The defendant pointed out that a replacement vehicle would have cost only £85, and sought to limit the damages that amount. The English Court of Appeal refused to award the repair costs in full. Harman LJ explained the applicable legal principles as follows (at 1071 and 1072):

The principle is that of restitutio in integrum, that is to say, to put the plaintiff in the same position as though the damage had not happened. It has come to be settled that in general the measure of damage is the cost of repairing the damaged article; but there is an exception if it can be proved that the cost of repairs greatly exceeds the value in the market of the damaged article. This arise out of the plaintiff’s duty to minimise his damages. Were it otherwise it would be more profitable to destroy the plaintiff’s article than to damage it. …

… The true question was whether the plaintiff acted reasonably as between himself and the defendant and in view of his duty to mitigate the damages. …

Applying these principles, Harman LJ went on to find that the vehicle in question was not irreplaceable and since the cost of repairs greatly exceeded its value, it should be treated as a constructive total loss with the measure of damages being its value (at 1073).

In a concurring judgment, Pearson LJ explained that the duty to mitigate damages does not mean that the plaintiff is bound to adopt the “cheaper method” of restoring his original position. The plaintiff is fully entitled to be “as extravagant as he pleases but not at the expense of the defendant” (at 1075).

I pause to discuss some criticisms subsequently levelled against Darbishire v Warran in Coles and others v Hetherton and others [2013] 1 All ER (Comm) 453. In that case, the claimant’s insurers managed to repair the negligently damaged vehicles at a cost lower than what the policyholders would have had to pay in the open market. The defendants argued that the actual costs of repair incurred should form the measure of damages and that the claimant’s insurers ought to have mitigated their damages. Cooke J disagreed with this argument and found in favour of the claimant’s insurers. In arriving at this conclusion, Cooke J disagreed with the holding in Darbishire v Warran’s that the measure of damages is the cost of repair. In his view, the direct loss suffered is actually the diminution in the market value of the car, and the reasonable cost of repair is merely evidence of that diminution (at [32] and [38]). He elaborated as follows: [38] There is nothing unusual in a court assessing the diminution in value of an asset by whatever evidence is available although, as a matter of ordinary course, in a small claim, the production of a repair invoice is frequently the best way of doing that since the cost of repair is the prima facie measure of that loss. Where only part of an item is repaired or where the work does not restore the asset to its pre-accident value or the claimant does not repair at all or merely effects temporary repairs, the diminution in value must be assessed by reference to other materials. Nor can it be said that there is a rule of law that where repairs are effected, the cost of repair has to be taken subject to...