Schindler Lifts (Singapore) Pte Ltd v Kajima Overseas Asia Pte Ltd (The Overseas Assurance Corp Ltd, Third Party)

• Jurisdiction: Singapore
• Judge: Sia Aik Kor
• Judgment Date: 03 March 2005
• Neutral Citation: [2005] SGDC 51
• Published date: 24 March 2005
• Court: District Court (Singapore)
• Plaintiff Counsel: Tan Joo Seng and Sean Say (Ang and Partners)
• Defendant Counsel: Ravi Chelliah (Chelliah and Kiang),Tang Khin Wai (Gee Tuan and Khin Wai)

3 March 2005

District Judge Sia Aik Kor:

This is the Plaintiffs’ claim for a sum of $124,716.52 which was subsequently reduced to the sum of $84,621.77 when affidavits were exchanged.

Background Facts

2 The Plaintiffs are a company that installs and services lifts and escalators. The Defendants are building contractors providing building and construction services in Singapore. The Defendants were the main contractors of the proposed redevelopment of Lot 109 and Lot 172 TS IX at River Valley Road (“the Project”). United Engineers Limited were the Employers of the Project.

3 By a sub-contract dated 21 April 1995 (“the Sub-Contract”) entered into between the Plaintiffs and the Defendants, the Plaintiffs were appointed the sub-contractors for the design, manufacture, supply, installation, testing, commissioning and maintenance of 39 lifts and 10 escalators (“the Sub-Contract Works”).

4 Clause 6 of the Sub-Contract provides

(a) The Sub-Contract Works (including materials and goods of the Sub-Contractor properly on site for incorporation in the Sub-Contract Works) shall as regards loss or damage by fire, storm, tempest, lightning, flood, earthquake, aircraft or anything dropped therefrom, aerial objects, riot and civil commotion be at the sole risk of the Contractor.

(b) In the event of any loss or damage caused by any one or more of the risks referred to in Sub-Clause (a) hereof to the Sub-Contract Works (including any of the materials or goods of the Sub-Contractor properly on site for incorporation in the Sub-Contract Works) the Contractor to the extent of such loss or damage shall pay to the Sub-Contractor the full value of the same, such value to be calculated in accordance with Clause 11 hereof together with the cost of any professional fees or services.

(c) The Contractor shall for the benefit of himself and the Sub-Contractor at all material times insure for the full replacement value thereof together with the cost of any professional fees or services of the Sub-Contract Works (including materials and goods properly on site for incorporation in the Sub-Contract Works) and keep them or have them kept insured against loss or damage by any of the risks referred to in Sub-Clause (a) hereof.

(d) The Sub-Contractor shall observe and comply with the conditions contained in the policy of insurance of the Contractor against loss or damage by any of the risks referred to in Sub-Clause (a) hereof.

(e)# (i) Subject to Sub-Clause (a) hereof, the Sub-Contractor shall be responsible for loss or damage to any materials or goods on site for the Sub-Contractor’s use until such materials and goods have been fully, finally and properly incorporated into the Works except for any loss or damage due to any negligence, omission or default of the Contractor, his servants or agents, or any other sub-contractor of the Contractor engaged upon the Works or any part thereof, his servants or agents or of the Employer or any person for whom the Employer is responsible.

(ii) Upon completion of the Sub-Contract Works, the Contractor will be responsible for loss or damage to the Sub-Contract Works properly completed and handed over except for any loss or damage caused thereto by the Sub-Contractor, his servants or agents.

(f) Nothing in Sub-Clauses (b) to (e) hereof shall in any way modify the Sub-Contractor’s obligations in regard to defects in the Sub-Contract Works as set out in Clause 10 hereof.

# The Sub-Contractor should consider whether the risks he assumes under the sub-clause e.g. theft or vandalism should be covered by his taking out insurance.

5 The Defendants took out a Contractors All Risk Policy with the Third Party naming the insured as “UNITED ENGINEERS LTD AS PRINCIPAL, KAJIMA OVERSEAS ASIA PTE LTD AS MAIN CONTRACTORS AND/OR SUB-CONTRACTORS FOR THEIR RESPECTIVE RIGHTS AND INTERESTS” (“the Policy”). The Policy provided for a deductible of $10,000 in respect of each and every claim arising out of one event. The deductible increases to $15,000 where the risk is earthquake, volcanism, tsunami, storm, cyclone, flood, inundation or landslide.

6 The General Conditions of the Policy provide

1. The due observance and fulfilment of the terms of this Policy in so far as they relate to anything to be done or complied with by the Insured and the truth of the statements and answers in the questionnaire and proposal made by the Insured shall be a condition precedent to any liability of the Insurers.

……..

5. In the event of any occurrence which might give rise to a claim under this Policy, the Insured shall

a) immediately notify the Insurers by telephone or telegram as well as in writing, giving an indication as to the nature and extent of loss or damage;

b) take all steps within his power to minimize the extent of the loss or damage;

c) preserve the parts affected and make them available for inspection by a representative or surveyor of the Insurers;

d) furnish all such information and documentary evidence as the Insurers may require;

e) inform the police authorities in case of loss or damage due to theft or burglary.

The Insurers shall not in any case be liable for loss, damage or liability of which no notice has been received by the Insurers within 14 days of its occurrence.

Upon notification being given to the Insurers under this condition, the Insured may carry out the repairs or replacement of any minor damage; in all other cases a representative of the Insurers shall have the opportunity of inspecting the loss or damage before any repairs or alterations are effected. If a representative of the Insurers does not carry out the inspection within a period of time which could be considered as adequate under the circumstances the Insured is entitled to proceed with the repairs or replacement.

The liability of the Insurers under this Policy in respect of any item sustaining damage shall cease if said item is not repaired properly without delay.

......

8. If a claim is in any respect fraudulent, or if any false declaration is made or used in support thereof, or if any fraudulent means or devices are used by the Insured or anyone acting on his behalf to obtain any benefit under this Policy, or if a claim is made and rejected and no action or suit is commenced within three months after such rejection or, in the case of arbitration taking place as provided herein, within three months after the Arbitrator or Arbitrators or Umpire have made their award, all benefit under this Policy shall be forfeited.

The Plaintiffs’ claim

7 The Plaintiffs’ claim concerned damaged items of the Sub-Contract Works, particulars of which are set out below:

Date	Sub-Contract Works affected	Amount claimed
19 June 1996	Escalator E1, Service Block	$27, 816.91
16 August 1996	Escalator Pits E1 & E2, Office Block
13 November 1996	Lift 13, Office Block	$1,706.16
3 December 1996	Lift Pit 13, Office Block	$1,706.16
December 1996 14 January 1997	Lift 12, Residential Block	$5, 291.13
25 December 1996	Basement 2, Residential Block	$38,779.67
30 January 1997	Lift 14, Office Block	$2,539.09
3 February 1997	Lifts 9 & 10, Residential Block	$4,017.14
2 April 1997	Lift 14, Office Block	$2,765.51
Total		$84,621.77

8 The Plaintiffs claimed that the Sub-Contract Works were damaged by fire and rainwater ingress which, pursuant to Clause 6 of the Sub-Contract, was at the sole risk of the Defendants. Alternatively, the damage was caused by the negligence, omission or default of the Defendants or their servants or agents.

The Defence

9 The Defence was manifold:

(a) The damage to the Sub-Contract Works were at the sole risk of the Plaintiffs and the Plaintiffs were accordingly obliged to take out their own insurance;

(b) The Plaintiffs failed or neglected to pursue their claims under the Policy and were in breach of the conditions of the Policy. As such, the Plaintiffs are estopped from pursuing or were not entitled to pursue any claim against the Defendants;

(c) The Plaintiffs failed to mitigate their damage by

(i) commencing proceedings against the Third Party for such sums that may have been due and payable under the Policy; and/or

(ii) failing to accept such sums that the loss adjusters of the Third Party had assessed as payable under the Policy; and/or

(iii) failing to justify the amount of their alleged loss or damage to the loss adjusters under the Policy;

(d) The damage was caused or contributed to by the negligence, omission or default of the Plaintiffs;

(e) The Defendants were not liable to the Plaintiffs for the fire by virtue of section 63 of the Insurance Act (Cap. 142);

(f) The Plaintiffs were obliged to obtain and maintain other insurance to provide coverage for the deductibles under the Policy;

(g) The Plaintiffs failed or neglected to make a claim and notify the Defendants of the same within 14 days of occurrence of the event and pursuant to clause 18 of the Letter of Award were deemed to have waived their rights to any loss, expense, damage or additional costs;

(h) The maximum amount recoverable against the Defendants is the deductible.

The Third Party’s position

10 The Third Party deny liability to the Plaintiffs or the Defendants, claiming that the Plaintiffs and/or the Defendants have breached the General Conditions of the Policy.

The Incidents of Damage

11 Evidence on the cause of damage came from the Plaintiffs’ witnesses, Mr Burhan Bin Mohamed Hussain (PW1) and Mr Ho Foo Rong (PW2) and the loss adjusters’ reports to the Third Party as confirmed by Mr Simon Ko Chi Man (TPW1) of Insight Adjusters and Surveyors Pte Ltd (“Insight”).

19 June 1996 – Escalator E1, Service Block

12 According to the evidence of PW2, at or around 9:00 a.m. on 19 June 1996, it was found that the escalator pit for Escalator E1 connecting the ground floor to the second floor of the Service Block was completely flooded. The escalator unit had already been placed into position for assembly at that time. PW2...