Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd and Another

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeChan Sek Keong CJ
Judgment Date29 February 2008
Neutral Citation[2008] SGCA 8
Citation[2008] SGCA 8
Subject MatterDate of commencement of interest for damages awarded by court,General rule that interest should run from date of accrual of loss,Whether interest incurred on construction loans due to delay in completion of construction project recoverable under first limb of rule in Hadley v Baxendale,Remoteness of damage,Contract,Whether hotel developer adduced sufficient evidence to prove that it had incurred additional interest as damage,Applicable guidelines to proof of damage,Whether such interest recoverable in law as damages,Applicable test for remoteness of damage in contract,Civil Procedure,Process of proving damage intensely factual,Negligence,Criticisms of rule in Hadley v Baxendale,Damages,Tort,Interest,Claimant must adduce before court most cogent evidence of loss in given circumstances,Interest incurred on construction loans during period of delay,Remedies,Rule in Hadley v Baxendale,Building and Construction Law,Delay in completion,Liability of construction professionals for additional interest incurred on construction loans due to delay in completion of construction project caused by their negligence,Whether interest should run from date of accrual of loss or from later date where there is unjustifiable delay on part of claimant in bringing action to trial,Section 12(1) Civil Law Act (Cap 43, 1999 Rev Ed),Flexible approach to proof of damage,Distinction between test of remoteness in contract and test of remoteness in tort,Whether allowing such loss to be recovered as damages in law would open floodgates for claims against construction professionals,Rules in awarding,Rationality and functionality of the rule in Hadley v Baxendale,Proof of damage
Defendant CounselMorris John (Drew & Napier LLC)
Plaintiff CounselChou Sean Yu and Chua Sui Tong (WongPartnership)
Published date04 March 2008
Date29 February 2008
Docket NumberCivil Appeal No 36 of 2007

29 February 2008

Judgment reserved.

Andrew Phang Boon Leong JA (delivering the judgment of the court):

Introduction

1 This is an appeal by Robertson Quay Investment Pte Ltd (“RQI”), the plaintiff in Suit No 324 of 2005 in the court below (“the originating suit”), against the decision of the trial judge (“the Judge”) in Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd [2007] SGHC 30 (“Robertson Quay”). Essentially, Robertson Quay concerned cross-appeals by the respective parties to this appeal against the award of damages made by the learned assistant registrar (“the AR”) in her oral judgment delivered on 7 December 2006 following an assessment of damages hearing (“the AD hearing”).

The facts

2 The facts of this case are largely undisputed. RQI is the owner and developer of the Gallery Hotel (“the Hotel”), a commercial development located at 76 Robertson Quay, Singapore 238254, consisting of a ten-storey hotel, basement car parks and adjourning commercial units in the form of restaurants and entertainment outlets.

3 The first respondent, Steen Consultants Private Limited (“Steen Consultants”), which was the first defendant in the originating suit, is the company that was engaged by RQI to provide civil and structural engineering services for the construction of the Hotel (“the Project”). The second respondent, Mr Shahbaz Ahmad (“Shahbaz”), who was the third defendant in the originating suit, was at all material times a director of Steen Consultants as well as the civil and structural engineer who was responsible for the design, planning and supervision of the Hotel’s structural works. (We will refer to Steen Consultants and Shahbaz collectively as “the respondents” in this judgment.)

4 The structural drawings of the Hotel were done in 1996 by Shahbaz, but the accredited checker employed by RQI, Mr Goh Joon Yap (“Goh”), the second defendant in the originating suit (although the action against him was discontinued prior to the AD hearing), found the drawings to be underdesigned. The drawings were therefore corrected and submitted to the relevant building authorities in 1997. Unfortunately, the respondents gave the building contractor the uncorrected 1996 version of the drawings instead (see Robertson Quay at [1]).

5 As a result of the above mistake (“the respondents’ mistake”), there were structural deficiencies in the Hotel, which required additional remedial and strengthening works (“the repairs”). The repairs delayed the completion of the Project by 101 days from 1 September 1999 to 10 December 1999 (“the period of delay”). The temporary occupation permit for the Hotel, which was originally to be issued at the end of December 1999, was eventually issued only in March 2000 instead.

6 It was undisputed both in the proceedings below and in this appeal that: (a) the period of delay was 101 days; and (b) the structural deficiencies in question existed and were caused by the respondents’ mistake. In respect of the latter, Steen Consultants had, before the commencement of the originating suit, admitted to RQI in writing on various occasions that there were structural deficiencies in the Hotel and had, in a letter dated 10 September 1999 to RQI, undertaken to pay for the costs of the repairs. Between February 2000 and November 2000, Steen Consultants certified payment of a total sum of $597,893.35 and paid that amount to the contractor carrying out the repairs.

7 On 10 May 2005, RQI filed its writ of summons (“the original writ”) and commenced the originating suit against Steen Consultants and Goh for loss and damage suffered and expenses incurred during the period of delay. RQI subsequently filed an amended writ of summons (“the amended writ”) on 4 July 2005 which added Shahbaz as a defendant. The statement of claim (“the SOC”) was filed and served on 19 September 2005.

8 For the purposes of this appeal, it would be helpful to set out in full RQI’s various heads of claim in the originating suit (as reflected in the SOC). They are as follows:

No

Item

Figure

i.

Main contractors’ preliminaries

$117,915.22

ii.

Management fee and remuneration for the
executive directors overseeing the Project

$49,612.77

iii.

Consultant’s charges

$19,935.48

iv.

Salaries of management staff of the Hotel

$88,147.37

v.

Clerk of works’ salary

$29,386.61

vi.

Interest on loans from RQI’s shareholders
and other related parties (“the Shareholder
Loans”)

$279,363.82

vii.

Interest on a term loan and an overdraft
facility (collectively referred to as “the
Bank Loans”)

$215,859.84

viii.

Loss of profits and/or loss of rental in
respect of the Hotel (including the
adjoining commercial units)

To be assessed

9 Subsequently, the respondents admitted liability and interlocutory judgment was entered by consent against them on 9 November 2005 for item (i) (ie, main contractors’ preliminaries), item (v) (ie, clerk of works’ salary) and other damages to be assessed.

10 At the AD hearing, RQI claimed the remaining items set out in [8] above (ie, items (ii), (iii), (iv), (vi), (vii) and (viii)), but, in respect of item (viii), it did not pursue its original claim for loss of profits. RQI submitted that these items constituted the proximate and natural damages arising from the respondents’ breach, and were thus within the first limb of the rule in Hadley v Baxendale (1854) 9 Exch 341; 165 ER 145 (“Hadley”) (see [52] below for an elucidation of the first limb of this rule (“the first limb of Hadley”)). After considering the arguments of both parties, the AR awarded RQI a total sum of $699,429.41, comprising the following items:

No

Item

Figure

i.

Management fee and remuneration for
the executive directors overseeing the
Project

$49,612.77

ii.

Consultant’s charges

$19,935.48

iii.

Salaries of management staff of the
Hotel

$88,147.37

iv.

Interest on the Shareholder Loans

$279,363.82

v.

Interest on the Bank Loans

$215,859.84

vi.

Loss of rental income in respect of the
Hotel’s adjoining commercial units

$46,516.13

Interest was also awarded on these damages at the rate of 6% per annum from the date of the original writ to the date of judgment.

11 It would appear clear from the preceding paragraph that the AR allowed most of RQI’s claims, save the claim for loss of rental income in respect of the Hotel itself. Dissatisfied with the AR’s assessment, the respondents appealed against her decision, while RQI cross-appealed against the dismissal of its claim for $276,882.00 for loss of rental income in relation to the Hotel. At the hearing of these registrar’s appeals, counsel for RQI, Mr Chua Sui Tong (“Mr Chua”), informed the Judge that RQI would proceed with its cross-appeal only if the respondents succeeded in their appeal (see Robertson Quay ([1] supra) at [3]).

12 The Judge affirmed the AR’s award of damages for most of the heads of claim, but set aside (at [8] of Robertson Quay) her award of $495,223.66 (viz, the sum of $279,363.82 and $215,859.84 (see [10] above)) for the interest which RQI had allegedly incurred on the Shareholder Loans and the Bank Loans (collectively referred to as “the Loans”). Given that the respondents succeeded on these two items, the Judge proceeded to consider RQI’s cross-appeal on the loss of rental income in respect of the Hotel. He eventually dismissed that cross-appeal on the ground that the loss claimed was too remote (see Robertson Quay at [9]). The Judge further ordered that the interest of 6% per annum was to run from the date of service of the SOC (ie, 19 September 2005) instead of from the date of the original writ (ie, 10 May 2005): see Robertson Quay at [10]. As a result of the Judge’s decision, the total monetary amount recovered by RQI was significantly reduced.

13 RQI thus appealed to this court against the following aspects of the Judge’s decision:

(a) the setting aside of the AR’s award of $495,223.66 for the interest incurred by RQI on the Loans;

(b) in the event of the appeal on item (a) failing, the Judge’s affirmation of the AR’s dismissal of RQI’s claim for $276,882.00 for loss of rental income in respect of the Hotel; and

(c) the Judge’s order that interest on damages was to run from 19 September 2005, instead of from 10 May 2005.

The respondents, on the other hand, did not file a cross-appeal against the Judge’s decision to affirm the AR’s award of damages for the other heads of claim (as set out at [10] above).

The issues on appeal

14 At the hearing of the present appeal, counsel for RQI, Mr Chou Sean Yu (“Mr Chou”), informed us that RQI was no longer proceeding with its claim for loss of rental income in relation to the Hotel (we should add that, in any event, we find the decisions by the AR and the Judge on this particular issue to be unimpeachable). The appeal by RQI is thus limited to two aspects of the Judge’s judgment, and since there has been no cross-appeal by the respondents, the two issues for the court’s decision in this appeal (which we will refer to hereafter as “the first issue” and “the second issue”, respectively) are:

(a) whether RQI is entitled to damages for the interest which it incurred on the Loans during the period of delay; and

(b) whether the interest on the damages awarded to RQI should run from the date of the original writ (ie, 10 May 2005), as ordered by the AR, or only from the date of service of the SOC (ie, 19 September 2005), as ordered by the Judge.

The claim for additional interest

Background

(1) The Loans

15 Since the claim for interest comes up to a substantial sum of $495,223.66, the first issue forms the crux of this appeal. Before addressing the issue, it is necessary to explain briefly how the Loans arose.

16 In a nutshell, RQI averred that it had borrowed money from its shareholders and United Overseas Bank Limited (“UOB”) to finance the Project. Under a facility agreement dated 18 September 1997 (“the Facility Agreement”), UOB agreed to extend to RQI the...

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