Deputy Registrar Lewis Tan:
Introduction
The question posed in this judgment is ostensibly simple: should a vehicle damaged close to the expiry of its Certificate of Entitlement (“COE”) be considered a constructive total loss, thus restricting the plaintiff’s claim to the cost of replacement plus consequential losses, or should the plaintiff be allowed to claim for the higher repair costs?
Such an assessment has been complicated because reasonableness, stemming from a plaintiff’s duty to mitigate, has been introduced in the analysis of determining whether the vehicle or chattel ought to have been repaired.
However, as I explain in this judgment, the cost of repair is but a proxy for assessing the plaintiff’s loss, being the diminution in value of the chattel. Where it is uneconomic to repair the chattel, the cost of repairs would not be the relevant proxy because the chattel would be deemed a constructive total loss, and so the plaintiff in such circumstances would often be limited to the cost of replacing the chattel, this being the better proxy for measuring his loss.
Reasonableness, as it turns out, features little, if at all, in assessing whether the chattel is uneconomic to repair and thus a constructive total loss.
Brief facts
This is Ms Lock Lay Chin’s (“the Plaintiff’s”) claim for cost of repairs and loss of use flowing from an accident caused by the Mr Kwan Jheng Ein Joseph’s (“the Defendant’s”) negligence on 11 February 2018. Interlocutory judgment on liability on a 100% basis has been obtained.
The key issue before me, and on which parties differed, is whether the Plaintiff should be awarded the cost of repairing her vehicle, or whether such claim should be restricted to the economic loss that she would have suffered had she scrapped her vehicle and bought a replacement vehicle.
In this regard, the Defendant submits that “it was not economical to repair the Plaintiff’s vehicle” and hence, “the Plaintiff’s vehicle should be considered a constructive total loss”, such that she ought to be awarded the cost of replacing her vehicle only.
Applicable principles
As a matter of principle, where property is damaged, “the amount by which the value is diminished is usually equated with the cost of repair” [emphasis added]. “However, where the chattel has been destroyed or is a constructive total loss in the sense that it would be uneconomic to repair, the prima facie measure of damages is the value of the chattel at the time and place of destruction, plus any other consequential losses” [emphasis added]: Yip Holdings Pte Ltd v Asia Link Marine Industries Pte Ltd [2012] 1 SLR 131 (“Yip Holdings”) at [13].
Discussion of authorities: Arithmetic exercise or reasonableness analysis?
What renders a chattel “uneconomic to repair”, such that it becomes deemed a constructive total loss? A review of the authorities reveal that this assessment is often dependent on whether the repair costs exceed the market value or replacement cost of the vehicle. Such an arithmetic exercise can be seen in the following decisions where the vehicle was found to have been a “constructive total loss” as the cost of repairs exceeded the vehicle’s market value: In Masterfox Connections Pte Ltd v N & I Transporation and another [2008] SGMC 5, a claimant who sued to recover a repair bill of $24,000, which was in excess of the net market value of the damaged chattel ($3,700) was found to have acted unreasonably in proceeding with the repair. In Luxx Newhouse Pte Ltd v Big-Foot Logistic Pte Ltd and another [2021] SGMC 72 (“Luxx Newhouse”), the Deputy Registrar held that a vehicle was a “constructive total loss” because the cost of repair (being $20,500) clearly exceeded the market value of the vehicle less its COE rebate (being $10,200) (at [89]). As such, the diminution in value of the vehicle was assessed to be $10,200, being the loss in market value less the COE rebate. In Koh Tiam Ting v Soon Li Heng Civil Engineering Pte Ltd [2020] SGDC 172 (“Koh Tiam Ting”), the cost of repairing the lorry ($55,105) far exceeded its replacement cost ($6,181) and the plaintiff failed to give any good reason for unreasonably repairing the lorry at this “exorbitant sum”. In the circumstances, the Deputy Registrar found that the lorry was a constructive total loss, and that the plaintiff’s damages ought to be confined to the replacement cost (at [30]). In Liew Yong Chian (formerly known as Liew Ka Song) t/a T Zone Towing & Recovery Services v Xia Guang Bin and another [2021] SGDC 36 (“Liew Yong Chian”), the Deputy Registrar found that the truck was a constructive total loss, and that the plaintiff ought to have mitigated his loss by replacing rather than repairing the truck. This was because the replacement measure of loss ($34,019) was considerably lower than the repair measure of loss (at least $44,716.16). In the circumstances, “proceeding with the repairs was clearly not a reasonable option”, and so the plaintiff’s measure of loss was restricted to the cost of replacement plus the time needed to replace the truck (at [7]).
Against the above authorities is the decision of Ong Boon Tin Mrs Moh-Ong Boon Tin v Bernard Wu Kweng Mun [2021] SGMC 47 (“Ong Boon Tin”). At the time of the accident in that case, the car’s COE had about 19 days to go before it expired. Nonetheless, the car was certified to be in “good” condition, and was of sentimental value to the plaintiff (at [42]). However, the cost of repairs of the car was $8,346, and this greatly exceeded its economic repair value or limit (“ERL”) of $500. This ERL had been calculated by taking the pre-accident market value of the plaintiff’s vehicle ($7,809) and subtracting the rebates provided by the Land Transport Authority (“LTA”) of $7,309.
Notwithstanding the significant disparity between the repair cost and the ERL, the learned Deputy Registrar held that the car was not a constructive total loss, and that the “plaintiff was reasonable, under the circumstances, to choose to repair her case” (at [39]). The reasons provided were threefold: First, there was no necessity to limit the life of the car to a mere 10 years as the COE scheme permits the renewal of a car once it is at its 10th year (at [36]). Second, and relatedly, the car was merely damaged and not destroyed (at [37]). Third, the evidence showed that the plaintiff had every intention to renew the COE of her car whether or not she met with the accident, and she did renew the COE for five years (at [44]). In those circumstances, and “[g]iven that there [was] still much usefulness of the car”, the judge “was unable to find that the plaintiff had acted unreasonably when she chose to repair her car” (at [45]). As such, the measure of damages was that of the cost of repairs, and not the ERL.
The Defendant submits that Ong Boon Tin was wrongly decided.
Duty to mitigate and the reasonableness analysis
Before considering the correctness of Ong Boon Tin, it is important to refer to the frequently cited decision of Darbishire v Warran [1963] 1 WLR 1067 (“Darbishire”). In that case, the plaintiff bought a car for £330. He kept the car in good repair, but it was badly damaged in a collision for which the defendant admitted liability. Despite advice from the plaintiff’s repairer that repairing the vehicle would be “uneconomic”, the plaintiff proceeded to have his car repaired for £192. In the plaintiff’s evidence, he had not attempted to find a comparable car (which could be had for £80 to £100) as he knew his car to be reliable and suitable to his needs. The county court judge held that the plaintiff was reasonable in repairing his vehicle. However, this decision was reversed by the English Court of Apppeal (“ECA”) based on the plaintiff’s duty to mitigate. As Harman LJ explained in Darbishire at 1076:
In my view it is impossible to find from the evidence that the plaintiff took all reasonable steps to mitigate the loss, or did all that he reasonably could do to keep down the cost. He was fully entitled to have his damaged vehicle repaired at whatever cost because he preferred it. But he was not justified in charging against the defendant the cost of repairing the damaged vehicle when that cost was more than twice the replacement market value and he had made no attempt to find a replacement vehicle. [emphasis added]
Per Darbishire, reasonableness is at the heart of inquiry when considering the measure of damages that may be awarded to the innocent party. This focus on reasonableness stems from an innocent party’s duty to mitigate. As the Court of Appeal explained in the seminal decision of The “Asia Star” [2010] 2 SLR 1154 (“Asia Star”) at [32]: “The concept of reasonableness in the context of mitigation is a flexible one. In essence, it bars an aggrieved party from profiting or behaving unreasonably at the expense of the defaulting party…” [emphasis added].
Viewed through this lens of reasonableness, the decision in Ong Boon Tin is easily reconcilable. There, in answering the question of whether the plaintiff’s car was a constructive total loss, the learned Deputy Registrar stated: “[t]he question now is, whether the plaintiff was reasonable, under the circumstances, to choose to repair her car” (Ong Boon Tin at [39]).
Having posed the question as such, it appears that much weight was then placed on the fact that the plaintiff had formed an intention to renew her car’s COE independently of the accident. Her evidence in this respect was clear (Ong Boon Tin at [41]):
I had no intention to scrap the car at all, and so, I never thought of that question. My idea was to renew the COE, whether got accident or not. So, it was never my intention of scrapping the car.
Seen alongside the fact that the vehicle’s COE would expire in a very short period of about 19 days, that the vehicle was indubitably well maintained and suitable for a ten-year extension, the judge concluded at [45]...
