Management Corporation Strata Title Plan No 1166 v Chubb Singapore Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 21 July 1999
• Date: 21 July 1999
• Docket Number: Suits Nos 1448 and 1449 of 1992
• Court: High Court (Singapore)

Management Corporation Strata Title Plan No 1166

Plaintiff

and

Chubb Singapore Pte Ltd

Defendant

[1999] SGHC 192

G P Selvam J

Suits Nos 1448 and 1449 of 1992

High Court

Commercial Transactions–Sale of Goods–Breach of contract–Contractual terms to supply and install security system–Whether contract for sale of goods–Whether standard of duty one of strict liability or due diligence–Commercial Transactions–Sale of Goods–Effect of breach–Appropriate basis for awarding damages–Commercial Transactions–Sale of Goods–Merchantable quality–Whether goods met requirements of fitness for purpose warranty–Whether strict liability rule applies when goods not fit for purpose–Section 14 Sale of Goods Act 1979 (c 54) (UK)

The developer of a condominium complex entered into an agreement with the defendant, Chubb Singapore Pte Ltd (“Chubb”), on 10 July 1985 to supply, install, test and commission a security and communication system. It was an entire contract for a lump-sum price. Chubb subcontracted the design and construction of the system to a sibling company, Chubb Electronics. In September 1986, the system was ready for use by the condominium's management office and the residents. There were two maintenance agreements which expired in 1993. However, lightning crippled the entire system which broke down and remained out of commission from December 1988. The plaintiff, the Management Corporation Strata Title Plan No 1166 (“MCST”), sued Chubb in two separate actions - Suit No 1448 of 1992 for breach of the agreement dated 10 July 1985 and, alternatively, damages for negligence in connection with the supply and installation of the system and Suit No 1449 of 1992 for breach of the maintenance agreements and, alternatively, damages for negligence in the performance of those maintenance agreements.

Held, allowing the plaintiff's claim in Suit No 1448 of 1992 with no order as to Suit No 1449 of 1992:

(1) The principal contract between the parties was a sale of goods contract. Obligations of strict liability would apply to it: at [85].

(2) The strict liability rule imported duty and liability without fault or negligence. Obligations could be breached despite the exercise of all due care on the contractor's part: at [37].

(3) The MCST could avail itself of the advantage of the strict liability rule if it simply founded its claim in contract. There was no advantage in asserting its claim in tort at the same time: at [45].

(4) On the facts, Chubb was in breach of its contractual obligations to supply a safe and efficient system. It was aware of the deficiencies in the system but chose to close its eyes when it discovered the problems. The fact that it “very strongly recommended” Chubb Electronics replace the system was clear proof of its unfitness and deficiency. Thus, the videophone system supplied by Chubb failed to meet the requirements of the warranty of fitness for purpose. Since the strict liability rule applied, the reason why it failed was irrelevant to Chubb's liability so long as the MCST and the developers were not the authors of it. Chubb's contentions against the MCST were unfounded and devised for the purpose of the litigation with a view to defeating the patently clear case against it: at [87], [88], [89] and [93].

(5) It was unnecessary for the MCST to give notice of the defects during the defects liability period as Chubb was aware of those defects from installation date. For latent defects, the appropriate time to determine non-merchantable quality and unfitness was at the time of the trial. Further, the issue that Chubb did not provide adequate lightning protection became a non-issue because of the strict liability rule: at [95] and [99].

(6) By the terms of contract, by common law and by statute, Chubb was under an obligation to design, fabricate and install an all-weather videophone system. It had to pay damages for its breach when it failed in its obligation: at [100].

(7) As to damages, the appropriate basis would be the amount of money required to place the MCST in the same position as it would have been in if the contract had been performed according to description and specifications of the purpose the system was required for. However, it would be unreasonable to award the plaintiff the cost of replacement of the system, estimated at the time of the trial at $1,624,500, some ten years after the breach because it was not clear the plaintiff would spend that amount and embark on a replacement project. The plaintiff's claim for the price paid ($1,024,769.70) was eminently reasonable and that sum would be awarded in Suit No 1448 of 1992 with costs to the plaintiff to be agreed or taxed and interest at 6% per annum from 1 November 1991 when Chubb gave up: at [106], [107] and [108].

Ashington Piggeries Ltd v Christopher Hill Ltd [1972] AC 441 (folld)

Barr v Gibson (1838) 3 M & W 390; 150 ER 1196 (not folld)

Barrett Bros (Taxis) Ltd v Davies [1966] 1 WLR 1334; [1966] 2 All ER 972 (folld)

British Oil and Cake Co v Burstall & Co (1923) 39 TLR 406 (refd)

Cammell Laird and Co Ltd v Manganese Bronze and Brass Co Ltd [1934] AC 402 (folld)

Crowther v Shannon Motor Co [1975] 1 WLR 30; [1975] 1 All ER 139 (folld)

G H Meyers & Co v Brent Cross Service Co [1934] 1 KB 46 (folld)

Grant v Australian Knitting Mills Ltd [1936] AC 85 (refd)

Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 (folld)

Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31 (folld)

Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129; [1980] 2 All ER 29 (refd)

Jacob & Youngs v Kent 129 NE 889 (1921) (folld)

James Drummond & Sons v E H Van Ingen & Co (1887) 12 App Cas 284 (refd)

Ruxley Electronics & Construction Ltd v Forsyth [1996] AC 344 (folld)

Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd [1986] AC 80 (folld)

Watson v Buckley, Osborne, Garrett & Co Ltd [1940] 1 All ER 174 (refd)

Wren v Holt [1903] 1 KB 610 (folld)

Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454 (folld)

Application of English Law Act (Cap 7A, 1994 Rev Ed)

Civil Law Act (Cap 43, 1994 Rev Ed) s 5

Sale of Goods Act 1979 (c 54) (UK) s 14 (consd);ss 2, 13 and 53

Supply of Goods and Services Act 1982 (c 29) (UK) ss 1 (1), 4

Richard Tan and Shalita Jayakumar (Lee & Lee) for the plaintiff

Indranee Rajah and Christopher Chuah (Drew & Napier) for the defendant.

Judgment reserved.

G P Selvam J

The contract

1 The apple of discord in this case is a crippled custom-built intercom videophone system which was installed at a cost of over $1m at 1985 value. The prelude to the dissension went as follows.

2 Some four decades ago Singapore was a city full of slums. Then it underwent a radical facelift. In consequence, it became a city full of plums. Mandarin Gardens, a huge luxury condominium complex constructed a decade and a half ago near a large park, is one such plum. It is located on the eastern sector of Singapore close to the sea. The East Coast Parkway separates it from the sea. It receives the rays of the rising sun from the South China Sea. It is bounded by Marine Parade, Siglap Road and East Coast Parkway. The land area of the condominium is 25.5 acres (123,000sq ft). There are nine high-rise blocks and eight low-rise blocks. All told there are 1,006 apartments. In addition, there are special purpose buildings. It has two entrances for vehicles - one at Marine Parade and the other at Siglap Road.

3 The developers of the condominium, Mandarin Gardens Pte Ltd, wanted a sophisticated security system to monitor the entry of residents and visitors to the condominium. The defendants, Chubb Pte Ltd (“Chubb”), tendered for the supply of the system. Their tender opened with these words:

We, Chubb Singapore Pte Ltd the undersigned offer to undertake the supply, delivery, installation, testing, commissioning and free maintenance for a period of twelve (12) months all the Works described in your Specification for the Supply, Installation of Security Communication Systems for Proposed Condominium Housing Development at Marine Parade/East Coast Parkway/Siglap Road, Singapore and further stipulate that a responsible person of our organization has read the entire Specification and agree to all conditions stated therein and evaluate the whole of the Works in conformity with the said Specification.

4 Eventually they secured a commission for supplying and installing the videophone system and a few other items including close circuit television (“CCTV”), main gate video recording and main gate boom and control.

5 The name “Chubb” needs no introduction. It is seen islandwide. Their alarm systems warn thieves and trespassers to turn away from their targets. Their CCTV cameras keep a sharp eye on those who might be tempted to try. Their name, for well over a century, has been connected with safes and security systems. Their name and the very fact that they tendered for the sophisticated videophone system bespoken by the developers is clear evidence that they were specialist contractors and that the developer relied on their expertise and experience. In the Yellow Pages (Singapore Buying Guide) Chubb flourished this claim: “For 180 years, the international Symbol for total Security”. So they had a long-standing reputation to preserve.

6 Aformal contract between the parties called “articles of agreement” was executed on 10 July 1985. It was an entire contract for a lump-sum price. It incorporated “the conditions” attached to it. Very few of the conditions applied to Chubb's contract however.

The system

7 The videophone system was to be constituted by an audio-video communication system. It was to allow visitors to the condominium to call and talk to residents in their individual apartments on their videophone from a visitor call unit (“VCU”) located at the Siglap Road and Marine Parade entrances. Residents in their apartments were also to be able to communicate with the...