Tan Chin Seng and Others v Raffles Town Club Pte Ltd (No 2)

• Jurisdiction: Singapore
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 23 February 2005
• Neutral Citation: [2005] SGHC 38
• Docket Number: Suit No 1441 of 2001
• Date: 23 February 2005
• Published date: 23 February 2005
• Year: 2005
• Plaintiff Counsel: Molly Lim SC, Roland Tong, Wang Shao-Ing and Ambrose Chia (Wong Tan and Molly Lim LLC)
• Citation: [2005] SGHC 38
• Defendant Counsel: K Shanmugam SC, Stanley Lai and Candace Ler (Allen and Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Assessment,Whether plaintiffs entitled to claim for diminution in value of club membership,Whether plaintiffs entitled to claim for damages for loss of amenity, accessibility and enjoyment of club facilities,Damages

23 February 2005

Belinda Ang Saw Ean J:

1 Following the favourable outcome of the plaintiffs’ appeal in Civil Appeal No 148 of 2002 on the issue of liability, the plaintiffs in this representative action came before me to assess damages for breach of contract. This assessment raises issues of some importance and of some difficulty.

2 Briefly, this action was commenced in the name of ten plaintiffs, each suing on his or her behalf (as the case may be) and on behalf of the remaining 4,885 members whose names are listed in Schedule 2 to the Amended Statement of Claim. All the plaintiffs are founder members of the defendant, the Raffles Town Club Pte Ltd.

3 During the introductory membership launch of the Raffles Town Club (“the Club” or “RTC”) in November 1996, each of the plaintiffs purchased a founder membership for a special entrance fee of $28,000. Although the defendant accepted 18,992 applicants as founder members, only 17,761 applicants paid the entrance fee of $28,000. There were further membership launches for ordinary memberships at $40,000 and $48,000 in March 1997 and July 1997 respectively. The defendant accepted 83 applications for individual ordinary membership at $40,000 and more. Between December 1996 and March 2000, there was a moratorium on the sale of RTC membership.

4 The Club commenced operations in March 2000. The plaintiffs learned of the size of the membership (ie, 19,048 members) in March 2001. Before then, while crowdedness was experienced at the Club premises, the plaintiffs were unaware of the true strength of the membership. The plaintiffs sued on 15 November 2001. The plaintiffs led evidence that at the opening of the Club, the members were either told that information on the number of members was confidential or that the number was between 5,000 and 7,000 members. On the “About the Club” information sheet, the “Total Membership” was stated to be “approx 7,000 members”. Mr Ali Alavi, the defendant’s Chief Operating Officer, disclosed the figure of 7,000 after the fourth plaintiff, Kong Cheong Hin Steven, inquired on 31 January 2001 about the membership size of the Club. In the circumstances, the plaintiffs contend that damages should be assessed in this case as of March 2001 and not March 2000, which the defendant advocates should be used as being the time of breach.

5 The Court of Appeal has found the defendant to be in breach of contract. Upon that finding, a secondary obligation to pay damages arises. The extent of the defendant’s obligation to pay damages (ie, quantum of damages) determined in an assessment of damages is a question of fact guided by general principles of law applied to the particular case and the different kinds of claim that are made. At times, their application can be difficult.

6 There are certain broad general principles on awarding damages for breach of contract that are well settled. Damages are not to exceed the plaintiffs’ loss and no damages are recoverable if the plaintiffs suffered no loss. The plaintiffs have the task of proving on a balance of probabilities the loss suffered and that the loss was due to the breach. The plaintiffs can then claim to be compensated for such loss on the principle that they are entitled to be placed, so far as money can do it, in the same situation as they would have been in if the contract had been performed in accordance with its terms: see Robinson v Harman (1848) 1 Exch 850 at 855; 154 ER 363 at 365. The kind of losses recoverable in an action for breach of contract are subject to the limitation as formulated by the rule in Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145. The Robinson v Harman principle is also subject to the qualification that the defendant cannot be called upon to pay for avoidable losses that will result in an increase in the quantum of damages payable to the plaintiffs. Hence, there is a duty on the plaintiffs to mitigate losses. Mitigation, however, is not an issue in this assessment.

Reasons for the appellate court’s judgment on liability

7 The Court of Appeal has made findings of fact on liability and those findings are particularly pertinent and necessary for determining the amount of damages recoverable by the plaintiffs. It is convenient, at this juncture, to cite some of the relevant passages of the judgment delivered by Chao Hick Tin JA (see Tan Chin Seng v Raffles Town Club Pte Ltd (No 2) [2003] 3 SLR 307).

33 What comes out clearly from the promotional materials is that the public (selected customers of financial institutions who were appointed as agents) were invited to join a club which was to be a premier club, described as “without peer in terms of size, facilities and opulence.” That was the central theme. We accept that a term should not be implied unless it is necessary to give the contract business efficacy, or unless it was a term which was so obvious that if any of the appellants were at the time to have asked RTC Ltd whether, notwithstanding the wide discretionary power conferred upon it [by r 6.1 of the Club’s Rules and Regulations], it would exercise those powers to ensure that the Club would, at all times, remain a premier club, [unequalled] in size, facilities and opulence, we would have no doubt that the answer given would be in the affirmative. …

35 In our present case, while we recognise that the term “premier” is not one which can be defined with precision, we do not think it so obscure and vague a term that it should not be implied. It does convey the sense that it will be a club of distinction and pre-eminence, contrasting it to that of a run-of-the-mill type. It differentiates such a club from the ordinary club.

…

37 In our judgment, it must be implied into the contract which each appellant entered into with RTC Ltd that the Club would be a premier club, with first class facilities and that the discretion vested in RTC Ltd by the Rules would always be exercised in a manner consistent with the maintenance of the Club as a premier club.

…

50 Bearing in mind that we are here concerned with a “premier” club, it is clear that its facilities are inadequate to cater for the need of 19,000 members (plus their spouses, families and guests) in three major areas, the food outlets, the swimming pool and the gym; and probably also the bowling alley. The test of a premier club must surely be, besides the physical aspect, the ease with which members can gain access to facilities. While the occasional wait, such as [during] festive seasons, is acceptable, it should not be a regular feature on weekends and public holidays. It is plain logic that where you have a large number of members, the pressure on facilities will naturally increase, even though members may not turn up all at the same time or at the same regular intervals.

51 At 19,000 members, RTC is the biggest club in Singapore and the next biggest club trails very much behind at 11,000 to 12,000. By failing to control the number of people RTC Ltd had admitted as members, it has breached its obligation of delivering a premier club to those who are admitted. Even the most luxurious of facilities will be turned into a “noisy market place”, in the words of some witnesses, if the number of members are just too large. …

8 A potential problem of quantification of damages was apparently raised at the appeal. Chao JA, at [55], responded to that concern. In so doing, he touched on the decline in the price of RTC membership as compared with other clubs and also commented on a “dip” in price due to market conditions as something that is not recoverable as damages. It is clearly evident that the Court of Appeal did not lay down any basis for assessing damages.

The heads of claim

9 Unlike the variety of claims raised and pursued in their Opening Statement and at the assessment, the plaintiffs have in their Closing Submissions confined themselves to two main types of damage claims:

(a) Diminution in value of the membership which is computed at $15,925; and

(b) Damages for loss of amenity, accessibility and enjoyment.

Diminution in value

10 The plaintiffs’ claim for diminution in value is formulated on the basis that the breach of the implied term has resulted in the diminution in the value of the membership. In this formulation, the value of the membership is equated with price. Their counsel, Ms Molly Lim SC, contends that with 19,000 members, the Club had “degenerated into an ordinary or worse than an ordinary club” and had it not been for the breach, the value of RTC membership would still hold good today and would not have depreciated to the extent that it had. Ms Lim argues that diminution in value of the membership as reflected in the reduction in the price of RTC membership is the appropriate measure of the plaintiffs’ loss.

11 The plaintiffs called Phua Geng Hoon (“Phua”), a partner of Tee-Up Marketing Enterprises and a club broker of 14 years experience. Her job entails the buying and selling of club memberships. She testified on the fall in the price of RTC membership after the Club opened in March 2000. Her evidence is that there were many sellers so much so that the price of RTC membership dropped. In May 2000, the price of RTC membership was about $28,000, but it went down to $16,000 in June 2000. It continued to decline steadily to $13,000 in December 2000 and then to $10,800 in February 2001. When the membership size of 19,000 became public, the price of RTC membership was $10,000. As at October 2003, the transacted price of RTC membership, based on her record, was about $7,300. In re-examination, she explained that presently, she received on average three to five telephone calls daily from RTC members who wished to sell their membership. On the other hand, there were few inquiries from buyers interested in RTC membership. Since January 2004 until September 2004, she had had about 600 members in hand wanting to sell their RTC memberships. She completed very few sale transactions for...