Marina Centre Holdings Pte Ltd v Pars Carpet Gallery Pte Ltd

• Judge: Karthigesu JA
• Judgment Date: 28 August 1997
• Neutral Citation: [1997] SGCA 40
• Court: Court of Three Judges (Singapore)
• Published date: 19 September 2003
• Subject Matter: Whether landlord absolved from liability for negligence by exemption clause contained in lease,Contractual terms,Contract,Exclusion clauses,Effectiveness and ambit
• Year: 1997
• Plaintiff Counsel: Anthony Lee and Amy Lai (Bih Li & Lee)
• Defendant Counsel: Liew Teck Huat and Ravindra Samuel (Niru & Co)
• Citation: [1997] SGCA 40

(delivering the grounds of judgment of the court):

The appellants were the landlords, and the respondents, the tenants of the premises [num ]03-134 of Marina Square (`the premises`) under a lease dated 1 March 1991 for a term of three years (`the lease`). The respondents used the premises for the sale and display of their carpets and rugs.

On the morning of 17 April 1992, which was a public holiday, water came through the false ceiling above the premises and damaged a substantial portion of the respondents` stock of carpets and rugs. It was subsequently discovered that a chilled air conditioning water pipe within the false ceiling of the neighbouring unit, namely, [num ]03-138A, had given way and this resulted in the pressurised water escaping from the air conditioning pipes, seeping through the corridors and into the premises causing damage to the respondents` goods.

The respondents had insured their goods, and their claim for the damage had been met by the insurers, who subsequently instituted an action in the district court against the appellants in the name of the respondents in exercise of their right of subrogation. The respondents claimed that the appellants were in breach of the covenants for quiet enjoyment and repair as contained in the lease, and that they were negligent at common law. The appellants denied the breach and negligence and averred that in any event they were absolved from any liability by the exemption clauses contained in the lease, in particular, cl 36.1(b).

Decisions below

In the district court, the trial judge found that the appellants were negligent at common law and were also in breach of the covenants of quiet enjoyment and repair. However, the trial judge held that cl 36.1(b) exempted the appellants from `all three heads of liability` and dismissed the respondents` claim. The respondents appealed to the High Court. On appeal, there was no challenge against the finding of negligence, and the sole question before the appellate judge was whether cl 36.1(b) exempted the appellants from liability for their negligence. The appellate judge held that the clause did not absolve the appellants from liability for negligence. He therefore allowed the appeal and awarded the respondents the sum of $87,688 as claimed and interest thereon amounting to $9,006 and costs [see [1997] 2 SLR 486]. Against that decision, the appellants appealed.

The appeal

Before us the main contention of the appellants was that cl 36.1 of the lease and, in particular, para (b) thereof, absolved the appellants from their liability in negligence to the respondents. This contention succeeded and we allowed the appeal. We now give our reasons.

It is convenient at this stage to set out the relevant part of cl 36.1 of the lease, which reads as follows:

It is hereby agreed between the Landlord and the Tenant that the Landlord and its officers, servants, employees or agents shall not be liable or in any way responsible:

(a) for any damage to property (whether belonging to the Tenant or to others) entrusted to the Landlord`s officers, servants, employees or agents in the SHOPPING CENTRE or MARINA SQUARE;

(b) for any injury or damage to persons or property or any consequential loss resulting from short circuit of electrical wiring, explosion, falling plaster, steam, gas, electricity, water sprinkler, rain plumbing or other pipe and sewerage system, leaks from any part of the SHOPPING CENTRE or MARINA SQUARE, the roof, street, sub-surface or any other place, dampness, or any appurtenances being out of repair unless caused by the wilful misconduct of the Landlord or its officers, servants, employees or agents;

(c) for any damage caused by other tenants or persons in the SHOPPING CENTRE or MARINA SQUARE or by buildings or other operations in the neighbourhood;

(e) for any loss, damage or injury howsoever caused in the PREMISES, the SHOPPING CENTRE or MARINA SQUARE;

...

(g) to the Tenant or others in respect of any act, omission or negligence of any porter, attendant or other servants or employees of the Landlord in or about the performance or purported performance of any duty relating to the provision of the said services or obligations or any of them;

The main arguments advanced on behalf of the respective parties centred on the construction of cl 36.1(b). In construing this clause both the trial judge and the appellate judge applied the guidelines or tests laid down by the Privy Council in Canadian Steamship Lines Ltd v The King [1952] AC 192 , which was a decision on an appeal from the Supreme Court of Canada. The facts there were briefly these. The Crown leased a freight shed on a wharf in the harbour of Montreal to a lessee, and the relevant provisions of the lease, namely, cll 7, 8 and 17, so far as relevant, provided as follows:

7 That the lessee shall not have any claim or demand against the lessor for deteriment, damage or injury of any nature to the said land, the said shed, ...

8 That the lessor will, at all times during the currency of this lease, at his own cost and expense, maintain the said shed, ...

...

17 That the lessee shall at all times indemnify ... the lessor from and against all claims ... by whomsoever made ... in any manner based upon, occasioned by or attributable to the execution of these presents, or any action taken or things done ... by virtue hereof, or the exercise in any manner of rights arising hereunder.

A fire broke out at the shed owing to the negligence of the servants of the Crown and destroyed the shed and the goods stored there. To a claim by the lessee and others for damages the Crown pleaded cll 7 and 17 in defence. The Supreme Court of Canada concurred with the finding of the trial judge that the Crown`s servants were negligent, but held that cll 7 and 17 of the lease barred the claims brought against the Crown and entitled the Crown to an indemnity from the lessee. On appeal, the Privy Council reversed the decision of the Supreme Court. On cl 7 of the lease the Privy Council held that it was wide enough to cover negligence but there were at least three heads of claim not based on negligence which could be covered by that clause. Reading cll 7 and 8 together, it held that it was most unlikely that cl 7 was intended to protect the Crown from claims for damage resulting from negligence of its servants in carrying out the very obligations which were imposed by cl 8. As for cl 17, the intent thereof was to protect the Crown against the claims of third parties but the ambit of that clause was limited by the concluding part: `in any manner based upon, occasioned by or attributable to` any one of the three matters stated therein, which were not wide enough to cover negligent acts of the Crown`s servants which caused the damage.

Lord Morton of Henryton in delivering the judgment of the Board laid down the following rules on the construction of exemption clauses at p 208:

Their Lordships think that the duty of a court in approaching the consideration of such clauses may be summarized as follows:

(1) If the clause contains language which expressly exempts the person in whose favour it is made (hereafter called `the proferens`) from the consequence of the negligence of his own servants, effect must be given to that provision. Any doubts which existed whether this was the law in the Province of Quebec were removed by the decision of the Supreme Court of Canada in The Glengoil Steamship Co v Pilkington (1897) 28 SCR (Can) 146.

(2) If there is no express reference to negligence, the court must consider whether the words used are wide enough, in their ordinary meaning, to cover negligence on the part of the servants of the proferens. If a doubt arises at this point, it must be resolved against the proferens in accordance with ar 1019 of the Civil Code of Lower Canada: `In cases of doubt, the contract is interpreted against him who has stipulated and in favour of him who has contracted the obligation.`

(3) If the words used are wide enough for the above purpose, the court must then consider whether `the head of damage may be based on some ground other than that of negligence,` to quote again Lord Greene in the Alderslade case [1945] KB 189, 192. The `other ground` must not be so fanciful or remote that the proferens cannot be supposed to have desired protection against it; but subject to this qualification, which is no doubt to be implied from Lord Greene`s words, the existence of a possible head of damage other than that of negligence is fatal to the proferens even if the words used are prima facie wide enough to cover negligence on the part of his servants.

These rules of construction have been held to be merely guidelines and not principles of law. In Smith & Anor v South Wales Switchgear Co Ltd [1978] 1 WLR 165 at p 168, Viscount Dilhorne said:

... while the tests formulated by Lord Morton are a useful aid to construing such clauses, they must not be interpreted as if they were provisions in a statute. At the end of the day one must construe the clause in the light, inter alia, of other provisions of the contract.

In The Raphael; Lamport & Holt Lines Ltd v Coubro & Scrutton (M & I) Ltd & Ors [1982] 2 Lloyd`s Rep 42 at p 45, Donaldson LJ after referring to the pronouncement of Lord Morton said:

Although the Judicial Committee was concerned with the law of Canada, Lord Morton`s remarks are equally applicable to the law of England, and have indeed been applied by this court in Gillespie Bros & Co Ltd v Roy Bowles Transport Ltd [1973] 1 Lloyd`s Rep 10; [1973] QB 400, and by the House of Lords in Smith v South Wales Switchgear Co Ltd [1978] 1 WLR 165 . On the other hand, it would be a fatal error to regard them as if they were the words of a codifying and, still worse an amending, statute. They provide a very lucid and useful summary of well settled law, but have to be construed in the light of that law.

In E...