Raffles Town Club Pte Ltd v Tan Chin Seng and Others

JudgeChao Hick Tin JA
Judgment Date23 August 2005
Neutral Citation[2005] SGCA 40
Date23 August 2005
Subject MatterWhether lack of definite figures as to value of premier club and value of non-premier club as at date of breach barring claim for diminution in value,Whether sufficient evidence before court to prove applicable measure of damages,Whether club members entitled to claim for diminution in value of club membership due to club owner's breach of contract in failing to provide premier club,Assessment,Damages
Docket NumberCivil Appeals Nos 23 and 28 of 2005
Published date30 August 2005
Defendant CounselMolly Lim SC, Roland Tong, Wang Shao-Ing and Ambrose Chia (Wong Tan and Molly Lim LLC)
CourtCourt of Appeal (Singapore)
Plaintiff CounselK Shanmugam SC, Stanley Lai and Ler Min Hui Candace (Allen and Gledhill)

23 August 2005

Judgment reserved.

Chao Hick Tin JA (delivering the judgment of the court):

1 Before us are two cross-appeals lodged by both the plaintiffs and the defendant against the assessment of damages made by the High Court (reported at [2005] 2 SLR 302) pursuant to an earlier decision of this court (“the first appeal”) where we held that the defendant was liable to the plaintiffs for damages for breach of contract.

2 The ten plaintiffs sued on their own behalf as well as on behalf of another 4,885 persons named in a schedule to the Amended Statement of Claim pursuant to O 15 r 12(1) of the Rules of Court (Cap 322, R 5, 2004 Rev Ed). All the 4,895 plaintiffs are founder members of the Raffles Town Club (“RTC” or “the Club” as may be appropriate), a proprietary club owned by the defendant.

3 The full facts of the case giving rise to the action were set out in our judgment in the first appeal reported at [2003] 3 SLR 307. We held that in the light of the representations made in the promotional material which the defendant despatched to the plaintiffs, it was an implied term of the contract that the defendant would deliver to the plaintiffs a premier club and it had failed to do so. Instead, the defendant admitted a large number of people, totalling some 19,000, as members. At all material times, the plaintiffs were ignorant of the total number of persons who had become members of RTC.

4 However, in March 2000 when the Club opened its premises to members, there was a tremendous squeeze on its facilities. Even then, the plaintiffs did not know what was the exact cause. When queried, the chief operating officer of the defendant said that there were about 7,000 members. It was only in March 2001, in an unrelated action between the promoters of the Club, that it was divulged that the Club had a total of close to 19,000 members, making it the largest social or recreational club in Singapore by a wide margin. Besides, this number of 19,000 excluded family members. Accordingly, in terms of membership size, RTC has no peer.

5 In the first appeal we recognised that assessment of damages in the present case “could pose some difficulties, though not insurmountable”. We also noted that the depreciation in the price of membership due to the general weakened market condition for club memberships should be distinguished from that due to the breach.

6 Before the assessment judge, the position ultimately adopted by the plaintiffs was that they claimed for losses on the following two distinct bases:

(a) Diminution in value of the RTC membership due to the breach;

(b) Damages for loss of amenities, accessibility and enjoyment due to the large number of members.

7 In relation to the question of diminution in value, the plaintiffs assessed that to be in the sum of about $15,925, after disregarding the depreciation due to the general weakened market condition. For this purpose, the plaintiffs submitted that the proper date on which the diminution should be computed should be March 2001, as that was the date on which the plaintiffs, and in turn the public, came to know that the Club had such a large number of members. That should be taken to be the date of the breach; any other date would not be appropriate. We agree.

8 At the assessment, the defendant argued that under the first head of claim, the plaintiffs were not entitled to any substantial damages but only nominal damages. As for the second head, the defendant submitted that damages should only be assessed in the light of individual circumstances; damages should not and could not be awarded on the basis of a single uniform sum for all the plaintiffs as the condition of each individual member would be different. For example, how often each plaintiff would use the facilities of the Club would obviously not be the same. Based on subsequent usage figures, particularly the recent ones, the defendant contended that the facilities of the Club were, in fact, under-utilised and thus there could not have been any loss of enjoyment by the plaintiffs.

9 The judge refused the claim based on the first head on the ground that the plaintiffs had not satisfactorily proved the alleged diminution. However, she awarded each plaintiff damages of $1,000 for loss of amenities, accessibility and enjoyment of a premier club. She granted the plaintiffs the full costs of the assessment.

10 Both the plaintiffs and the defendant were dissatisfied with different aspects of the decision. The defendant filed its notice of appeal first, Civil Appeal No 23 of 2005 (“CA 23/2005”), challenging that part of the judgment granting to each plaintiff a sum of $1,000 for loss of amenities, etc as well as giving to the plaintiffs the full costs of the assessment. It contended that the award of $1,000 to each plaintiff was wrong in principle, and even if it were not wrong, the quantum given was excessive. The plaintiffs filed an appeal, Civil Appeal No 28 of 2005 (“CA 28/2005”), against that part of the judgment which refused to grant them damages based on the first head of claim.

Diminution in value

11 Although the defendant filed its notice of appeal before the plaintiffs, we think it is more logical to deal first with the question of the diminution in value of the RTC membership.

12 The gist of the plaintiffs’ claim is that as the defendant has failed to deliver a premier club to the plaintiffs, the plaintiffs should be entitled to be compensated in respect of the difference in value between a premier club and a non-premier club. The approach advanced by the plaintiffs was first to determine the market value of the RTC membership as at March 2001. Here, the plaintiffs relied upon the evidence of a club broker of 14 years’ standing, Ms Phua Geng Hoon (“Ms Phua”), whom they called as their witness. She gave evidence as to the market prices of 18 club memberships from 1996 to 2004, including that of RTC. According to the data, as of March 2001, the market price of an RTC membership was $10,800.

13 Next, the plaintiffs relied on their expert witness, an economics analyst and a professor in both the Schools of Computing and Business at the National University of Singapore, Dr Ivan Png Paak-Liang (“Dr Png”). Based on the sales data provided by Ms Phua, Dr Png made a study of eight comparable social clubs, namely, the American Club, the British Club, Europa Country Club, Fairway Club, Hollandse Club, Singapore Polo Club, Singapore Recreational Club and Superbowl Golf and Country Club (“Superbowl”). Dr Png found that the average decline in the price of the eight clubs over the period March 2000 to March 2001 was about 16.5% whilst RTC’s decline was about 66.3%. However, we ought to explain that in making that calculation, Dr Png took $32,000 as the price of RTC as at March 2000 because there was a transaction at that price at the time. Accordingly, he said that the RTC membership value suffered a larger decline than was generally the case and the excess decline of 49.8% must be due to the breach; a club with so many members, no matter how attractive its physical facilities, would have its value undermined as a result. In dollar terms, this 49.8% decline would work out to be a sum of about $15,925 (approximately 49.8% of $32,000), a loss which could not be attributable to the general weakened market.

14 The plaintiffs also called a club expert, Mr Robert Sexton, who, having compared the fall in price of the RTC membership with the position prevailing in international clubs outside Singapore, came to the conclusion that the RTC membership price suffered the dramatic decline because of the perception that it was not a club of excellence or premier standing. We would like to state here that we do not think this part of Mr Sexton’s evidence is really helpful to determine the values of clubs in Singapore. A question as to the price or value of membership of a club must depend on local conditions. You may have two clubs of equal excellence (even here there may be controversy as to what “excellence” means or entails) in two different countries, but it does not follow that their price movements must necessarily be in tandem. It is difficult enough to evaluate the worth of memberships of two clubs of similar standing in the same country, as so many factors would come into play. One would only compound the difficulties if one has to take into account the different economic conditions of two countries. The fact that a club of international standing in one country depreciated over a specified period by a low percentage has no relevance as far as a similar club in another country is concerned. No helpful conclusion can be drawn from their different rates of decline as to value.

15 The defendant called two expert witnesses, both basically accountants but specialising in corporate financing and restructuring and business valuation. They testified that based on their studies, the RTC membership did not suffer any diminution in value on account of the breach. The first expert was Mr Nicky Tan (“Mr Tan”). He used Pinetree Country Club (“Pinetree”) and Fort Canning Country Club (“FCC”) as index clubs and said that the RTC membership price fell less than those two clubs over the same period of March 2000 to March 2001. In his view, the price movements of the memberships of these two clubs offered the best comparables. The second expert was Mr Ong Yew Huat (“Mr Ong”), who used the Pinetree, FCC and another club, the Singapore Recreation Club (“SRC”), as comparables and he came to very much the same conclusion as Mr Tan.

The law

16 The principle governing damages for breach of contract is that they are to compensate the claimant for the loss or damage suffered by him on account of the breach. One of the earliest cases which enunciated this rule is Robinson v Harman (1848) 1 Exch 850; 154 ER 363 where Parke B said at 855:

The rule of the common law is, that where a party sustains a loss by reason of a breach of...

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