NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd and another

• Jurisdiction: Singapore
• Judge: Debbie Ong J
• Judgment Date: 09 October 2017
• Neutral Citation: [2017] SGHC 250
• Date: 09 October 2017
• Docket Number: Suit No 1251 of 2015
• Published date: 08 September 2018
• Plaintiff Counsel: N K Rajarh and Cheong Wei Yang Daryl (Straits Law Practice LLC)
• Defendant Counsel: Kwek Yiu Wing Kevin and Tan Yiting Gina (Legal Solutions LLC)
• Court: High Court (Singapore)
• Hearing Date: 24 May 2017,23 May 2017,21 July 2017
• Subject Matter: Tort,Negligence,Pure economic loss,Duty of care

Debbie Ong J: Introduction

This claim arises from a collision of an airtug vehicle driven by the second defendant into a pillar at the underpass baggage handling area of the Changi Airport Terminal 2 Building (“T2 Building”) on 13 February 2014. As a result of the collision, the cantilever portion of the floor of the Terminal 2 Transit Lounge on level two of the T2 Building (“the Transit Lounge”) was damaged. The Building and Construction Authority (“the BCA”) issued a closure notice over the affected area of the Transit Lounge from 14 February 2014 to 30 July 2014. The plaintiff was a lawful tenant of the Changi Airport Group (Singapore) Pte Ltd (“CAG”) operating a food kiosk, Wang Café, which was situated in the affected area.

The plaintiff now sues in negligence to seek compensation for the following losses allegedly caused by the second defendant’s negligent act:

Particulars of loss	Quantum
Repair/replacement of damaged equipment	$5,909.85
Loss of gross profits for the duration of BCA’s closure notice (14 February 2014 to 30 July 2014)	$ 171,017.00
Rebuilding of the kiosk	$82,838.33 (including GST)
Rental from 7 August 2014 to November 2014 (pro-rated) (period of renovation of kiosk)	$183,429.89 (including GST)
Total losses allegedly incurred	$443,195.07

The plaintiff received a pay-out of $176,176.85 (which excludes a deductible sum of $750.00 paid by the plaintiff) from its insurers, NTUC Income Insurance Cooperative Ltd (“NTUC Income”) in respect of items (a) and (b) above. The plaintiff purports to claim this sum of $176,176.85 for these two heads of loss on behalf of NTUC Income pursuant to NTUC Income’s right of subrogation under the insurance policy. The plaintiff is claiming for itself the sum of $266,268.22 for items (c) and (d) above. In total, excluding the policy deductible, the plaintiff is claiming $442,445.07.

The second defendant is an employee of the first defendant and was driving the airtug vehicle as an employee of the first defendant when the accident occurred. It is not disputed that if the second defendant is found liable in negligence, the first defendant would be vicariously liable for his liability.

The defendants’ core defence is that they do not owe a duty of care to the plaintiff. They characterise the plaintiff’s losses as pure economic loss and argue that, on the applicable test for the duty of care in negligence, none of the indicia for proximity exist between the plaintiff and the defendants. If a duty of care is found to have been established, the defendants further raise issues of causation, remoteness and mitigation of damage. On the other hand, the plaintiff contends that it suffered economic losses consequent upon physical damage to the T2 Building and that there was sufficient physical, circumstantial and causal proximity to give rise to a duty of care.

Background

I briefly set out how the plaintiff’s losses came to be sustained.

The Transit Lounge was located on level two in a part of the T2 Building overhanging the underpass baggage handling area where the second defendant was operating the airtug on a lower floor. It is common ground that the airtug collided into, and damaged, a column located at the underpass baggage handling area of the T2 Building. It is also common ground that the cantilever portion of the floor of the Transit Lounge was damaged. Part of the floor near the kiosk caved in. It appears that the damaged part of the floor was located next to the column into which the airtug collided on the lower ground. The BCA issued a closure notice over the affected area. CAG, which owned the T2 Building, sustained physical damage to their property. CAG’s contractors carried out rectification works to ensure that the structural integrity of the T2 Building was safe. Upon completion of these rectification works, BCA inspected the T2 Building and lifted its closure notice on 30 July 2014.

Business closure during period of BCA’s closure notice

As the plaintiff’s kiosk was situated within the affected area, it could not operate its business during the period of BCA’s closure notice. This explains its claim for loss of gross profits for this period (ie, item (b) at [2] above). The plaintiff’s landlord, CAG, did not charge the plaintiff rent during the period of closure. CAG only resumed its rental charges from 7 August 2014, the date that the businesses at the Transit Lounge were to be reopened.

Rebuilding of the kiosk

The plaintiff did not resume its business operations on 7 August 2014 because it had yet to satisfy CAG’s requirement for it to certify the safety of the kiosk. Initially, when the plaintiff met with CAG on 18 March 2014, CAG expressed concern about damage to the waterproofing membrane and the existing support structure of the kiosk. The plaintiff was advised by its contractor that in order to redo the waterproofing, the kiosk would have to be dismantled and all equipment removed. CAG initially offered to cover the cost of the rectification works, but later redirected the plaintiff’s quotation to the loss-adjusters of the first defendant, who denied liability as well. Subsequently, on 23 July 2014, CAG informed the plaintiff that it would be permitted to commence business operations as long as it engaged a qualified person (“QP”) or professional engineer (“PE”) “to endorse the overall safety and operational readiness of the kiosk”. In other words, with a QP’s or PE’s endorsement, it would not be necessary to dismantle and rebuild the entire kiosk.

The plaintiff adduced evidence that it was unable to procure a QP or PE to provide the requisite endorsement. It maintained that no QP or PE was willing to undertake the job without information on the extent of the damage to the structure of the T2 Building, what rectifications were done to the T2 Building and how the kiosk structure was originally built. The defendants disputed this state of affairs. First, the defendants highlighted that, contrary to the account given in the affidavit of the plaintiff’s personnel, the plaintiff did not attempt to procure a QP or PE but relied on its contractors to address the matter. Second, and more critically, the defendants’ expert, Mr Poh Cher Seng Allan, testified that in order to endorse the kiosk’s structural safety, he would have carried out a visual inspection. To inspect the joints, he would have had to remove some plasters and finishes (which could be easily refitted), but not the entire structure. The lack of plans was not an insuperable obstacle because he was only concerned with the kiosk, a light and small structure which was “very easy to inspect”, and was not concerned with examining the entire T2 Building, which had already been certified safe.

In any event, the plaintiff’s position was that, in August 2014, the only way forward was to rebuild the kiosk. However, this course was not commercially viable given that its lease was expiring in eight months’ time. It was only after CAG agreed in October 2014 to grant the plaintiff a fresh 3-year lease that the plaintiff decided to undertake the renovation work. After completing the renovations, the plaintiff eventually resumed business sometime in November 2014. Its claims for items (c) and (d) (at [2] above) reflect the cost of the renovation work and the rent paid during the period of renovation.

Important in this suit is the plaintiff’s concession that none of its property, including the kiosk, suffered physical damage directly from the collision. In other words, it is common ground that the reason for the rebuilding of the kiosk was not that the kiosk was damaged. The plaintiff’s kiosk was examined by its insurers’ loss-adjusters, Cummingham Lindsey (Singapore) Pte Ltd (“Cunningham Lindsey”). Cunningham Lindsey’s reports clearly state that no physical damage to the plaintiff’s kiosk was detected and that the plaintiff “suffered no direct property damage … as a result of [the] incident” on 13 February 2014. The plaintiff did not engage a QP or PE to examine the kiosk for damage prior to dismantling and rebuilding it. The consequence of this is that there is no evidence before me that the kiosk was damaged or unsafe due to the collision. The fact that CAG was concerned to eliminate risks to safety does not in itself prove that the kiosk was damaged or unsafe.

Damaged equipment

Similarly, the plaintiff’s equipment was not damaged by the impact of the collision. The equipment was damaged due to dust, rust and the lack of electricity supply and other utilities while the affected area was closed and the plaintiff’s kiosk was not in operation. Thus, the damage to the equipment was a consequence of the closure of the affected area surrounding the damaged pillar of the T2 Building. To protect its equipment, the plaintiff would have had to engage contractors to dismantle and remove the equipment from the kiosk. Although CAG had planned to arrange for the plaintiff’s employees to do so in March 2014, arrangements for their entry into the closed area were not carried through. Even after the closure notice was lifted on 30 July 2014, the plaintiff did not immediately retrieve their equipment but only did so on 9 October 2014, after CAG agreed to extend the plaintiff’s lease for another 3-year period. The plaintiff gained entry to the kiosk to assess its equipment on 2 June 2014. Cunningham Lindsey carried out an inspection in August 2014. It was discovered that the following equipment was damaged: Hoshizaki ice maker (affected by dust and staining); Open chiller (affected by dust); Bain Marie and noodle boiler (faulty parts); 3-tap water boiler (container rusty and dented; faulty beyond repair); Electric toaster (could not be turned on, collection tray rusty, filament spoilt beyond repair); and Hoshizaki under-counter 2-door chiller (mouldy gaskets, rusty and strong odour, inoperable).

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