Singapore Telecommunications Ltd v Starhub Cable Vision Ltd

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 06 February 2006
• Neutral Citation: [2006] SGCA 5
• Docket Number: Civil Appeal No 58 of 2005
• Date: 06 February 2006
• Year: 2006
• Published date: 07 February 2006
• Plaintiff Counsel: Tan Kok Quan SC, Kannan Ramesh, Sean Tan Kim Kang and Lam Sin Yee (Tan Kok Quan Partnership)
• Citation: [2006] SGCA 5
• Defendant Counsel: Philip Jeyaretnam SC, Low Chai Chong and Ajinderpal Singh (Rodyk and Davidson)
• Court: Court of Appeal (Singapore)
• Subject Matter: Exclusion clauses,Damages,Whether respondent breaching lease agreement by such conduct,Remedies,Admissibility of evidence,Whether common assumptions arrived at prior to execution of contract admissible as evidence of factual background to aid in interpretation of contract,Respondent tapping into leased facilities to transmit cable television signals to other types of properties,Clause excluding liability for "any indirect, incidental, consequential, or special damages (including, without limitation, damages for harm to business, lost revenues, or lost profits)",Lease of appellant's facilities to respondent for cable television roll-out to high-rise residential properties,Whether compensatory damages for breach of contract may be awarded where no loss resulting from breach,Whether exclusion clause precluding appellant's claim for loss of revenue from prospective lease of facilities to respondent for cable television roll-out to properties not covered by existing lease,Breach,Whether any estoppel by convention arising from such common assumptions so as to bar appellant from challenging respondent's tapping,Contractual terms,Contract

6 February 2006 Judgment reserved.

Belinda Ang Saw Ean J (delivering the judgment of the court):

1 This appeal arose from an alleged breach of the Network Lease Agreement dated 16 June 1995 (“the NLA”) made between the appellant, Singaproe Telecommunications Limited (“SingTel”), and the respondent, Starhub Cable Vision Ltd (“SCV”). The hearing below was confined to liability only, with assessment of damages, if ordered, to proceed separately. The trial judge found that SCV had breached the NLA, but held that SingTel could not recover the damages pleaded due to an exemption clause (“Art 8.5(a)”) in the NLA. SingTel appealed against the trial judge’s interpretation of Art 8.5(a). SCV, on its part, invited this court to endorse the trial judge’s interpretation of Art 8.5(a) and further relied on three alternative grounds for affirming the dismissal at first instance of SingTel’s claim.

Background

2 In June 1994, as part of the Government’s plan to promote the use of information technology, SCV was designated as the vehicle through which cable television was to be rolled out in Singapore. To facilitate the speedy implementation of this project as well as to avoid the duplication of expensive resources, SingTel was to lease its extensive island-wide network of optical fibres and underground ducts (“the Facilities”) to SCV on a long-term basis for the latter’s use in transmitting cable television signals.

3 It is not disputed that as SCV had difficulties confirming its technical requirements for cable television roll-out to commercial and landed properties, the parties decided to proceed with a lease of the Facilities in respect of high-rise residential properties first. Accordingly, Exhibit A of the NLA delineated the types of properties covered by the contract as follows:

1.2 The building category covered under this lease agreement is only the high-rise residential apartments in public and private housing estates. High-rise residential apartment blocks are defined as having more than 3-storeys. Shop-houses in HDB estates are classified under the high-rise apartment category as well.

1.3 The building categories which are not included in this lease agreement are single family units or landed properties, schools and other educational institutions, libraries, hospitals, government buildings, commercial buildings, hotels, URA conservation projects and any other category of buildings.

In this judgment, we have referred to the properties listed in cl 1.2 as “Permitted Properties”, and those listed in cl 1.3 as “Excluded Properties”.

4 Negotiations on a lease of the Facilities for cable television roll-out to Excluded Properties continued after the NLA was concluded. In a letter dated 8 July 1996, Tan Kwi Yong, SCV’s Vice-President (Finance), sought SingTel’s confirmation that the lease charges in respect of Excluded Properties would be calculated on an “incremental costs” basis. In other words:

[T]he subsequent “commercial and landed properties” lease would be computed based on the additional fibers and ducting requirement only. The common portion of the network already covered under the “high-rise residential properties” lease [“the Common Portion”], such as the digital ring and the fibers to the MDFs etc., shall not be charged again.

Tan Kwi Yong also requested that the preferential lease rates applicable to Permitted Properties be extended to Excluded Properties under the same terms and conditions.

5 SingTel replied in a letter dated 17 July 1996 from its Director (Corporate Account Management), Andrew Buay. SingTel confirmed that:

[T]he pricing for the commercial and landed properties would be based on the additional fibres and ducting, and not include the Common Portion of the network already implemented for the high-rise residential properties. However, [SingTel] would also like to point out that the previous pricing for the Common Portion was contracted on the basis of restricted use. [emphasis added]

In addition, Andrew Buay highlighted that the charges for SCV’s lease of the Facilities in respect of Excluded Properties would be fixed at “commercially agreed terms, and no longer based on preferential pricing treatment”.

6 Andrew Buay wrote to Tan Kwi Yong again on 14 August 1996 with details of SingTel’s revised lease charges for landed properties. Although these rates were lower than those earlier offered by SingTel, SCV felt that they were still too high and, in a letter dated 29 August 1996, referred the matter to the Telecommunication Authority of Singapore (“TAS”) for moderation. Pending its review of the proposed charges for landed properties, TAS wrote to SCV on 27 September 1996 suggesting that it “seriously consider” SingTel’s offer at least where commercial properties were concerned. TAS also mentioned that SCV had “a separate option to self-provide”. We shall be discussing the effect of the various communications later (see [39] below).

7 SCV remained dissatisfied with the terms quoted by SingTel even after they had been moderated by TAS. Following TAS’s confirmation that SCV could lay its own telecommunication links, SCV informed SingTel in a letter dated 14 March 1997 that it had decided not to lease the Facilities for cable television roll-out to landed properties, but would instead either build its own infrastructure where necessary or, where such construction would not be viable, lease the Facilities from SingTel on a case-by-case basis. In reply, SingTel sent a letter dated 2 April 1997 stating:

We respect SCV’s decision in building its own infrastructure to serve the landed property residents, and therefore withdraw all our previous offers on the lease of ducting and fibre for the same said purpose.

8 As for commercial properties, negotiations on a lease of the Facilities continued, but again, no agreement was eventually concluded.

9 In November 2001, SingTel discovered that SCV had been using the Facilities leased under the NLA to provide cable television services to Excluded Properties. This led to SingTel’s suit against SCV for breach of the NLA. SingTel claimed that its loss and damage by reason of such breach was the “loss in revenue that [it] would otherwise have earned from [SCV’s] lease of commercial dark fibre for the transmission of the Cable Services to the Excluded Properties”.

10 To understand how SCV conveyed cable television signals to Excluded Properties, it is necessary to first have an overview of the way in which these signals were sent to Permitted Properties. In simplified terms, cable television signals were carried from SCV’s headend via the Facilities to SCV’s optical receivers (“ORs”), which were typically housed in selected high-rise residential apartment blocks. The segment of the transmission infrastructure thus far is termed the Common Portion and is that portion of the Facilities covered by the NLA. From the ORs, the signals were transmitted by SCV’s co-axial cables, which were located in SingTel’s underground ducts, to SCV’s lead-in pipes at individual high-rise residential apartment blocks. The signals reaching each lead-in pipe then travelled through further co-axial cables and ducts constructed and owned by SCV to the various units in each apartment block. This last segment of the transmission infrastructure – ie, the co-axial cables and ducts connecting the lead-in pipe with the individual residential units (“the Last-Mile Network”) – was constructed and owned by SCV and lay outside the Common Portion. What SCV did was to build extensions from the Last-Mile Network. The cable television signals reaching Permitted Properties were conveyed onwards to Excluded Properties through these extensions.

11 For ease of reference, we have used the word “tapping” in this judgment to describe SCV’s transmission of cable television signals to Excluded Properties via its extensions from the Last-Mile Network. In this respect, we note counsel’s concern that the use of this term, which carries a connotation of trespass, might prejudice SCV’s case. Counsel’s fears were unfounded as the key players in this dispute had themselves used the term “tapping” without, as far as we could see, attributing any negative connotations to it. We note that SCV itself freely spoke of “tapping” in its letter to SingTel dated 10 April 2002. By that time, SCV would have known that there was a possibility of litigation arising from its provision of cable television services to Excluded Properties. That SCV nonetheless referred to its own conduct as “tapping” indicated that it could not have been unduly concerned about any negative inferences which might be drawn against it from the use of this term. As stated, we have used this expression strictly as an abbreviated way of describing SCV’s method of transmitting cable television to Excluded Properties.

The decision at first instance

12 At the trial, SCV advanced several lines of defence. Those which are relevant to this appeal are the following.

13 First, SCV submitted that the NLA, on its true construction, did not contain any express or implied prohibition on tapping.

14 Second, SCV invoked the doctrine of estoppel by convention to preclude SingTel from challenging the tapping which was carried out, claiming that the parties’ dealings rested on two underlying common assumptions. The first related to the charges which SCV was to pay under the envisaged lease of the Facilities in respect of Excluded Properties. SCV alleged that the parties had agreed at a meeting on 7 September 1994 to calculate these charges on an incremental costs basis (“the Incremental Costs common understanding”). This agreement was later reaffirmed by SingTel in its letter dated 17 July 1996 (see [5] above). The second common assumption concerned SCV’s right to “self-provide” (“the Self-Provide common understanding”). It was said that SingTel had by the letter dated 2 April 1997 (see [7] above) confirmed SCV’s right to “self-provide” – ie, to “extend its...