Tan Thuan Seng and Others v UMBC Insurans Sdn Bhd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 19 November 1997
• Neutral Citation: [1997] SGHC 302
• Docket Number: Suit No 1222 of 1994
• Date: 19 November 1997
• Published date: 19 September 2003
• Year: 1997
• Plaintiff Counsel: Monica Neo and Tan Joo Seng (Chan Tan & Partners)
• Citation: [1997] SGHC 302
• Defendant Counsel: Low Tiang Hock (Chor Pee & Partners)
• Court: High Court (Singapore)
• Subject Matter: Calculation of value,Claim for professional fees,Notice given to insurers by contractor not on plaintiffs' behalf,Insurance,Liability insurance,Whether sufficient notice given under terms of clause,Whether defendants' limited interpretation of clause applicable,General requirement of strict compliance,Whether plaintiffs entitled to recover such costs under removal of debris clause,Construction of phrase 'actual value of item immediately before occurrence of loss',Whether plaintiffs entitled to such fees under professional fees clause,Construction of clause,Claim for debris removal,Claim for loss and damage,Basis of settlement under terms of policy,Notice provision,Whether evidence of such value adduced,Contractors' all risks policy

Judgment:

JUDITH PRAKASH J

Cur Adv Vult

This claim arises under an insurance policy which the defendants issued in October 1992 and the questions which I have to decide are questions of the construction of the policy. There is little, if any, factual dispute.

2.The three plaintiffs are the owners, respectively, of the three terrace houses known as Nos 71, 73 and 75 Sophia Road (collectively `the properties`). The houses were first erected before the second world war and when the first plaintiff, Mr Tan Thuan Seng, purchased all three in 1985, the houses were still in their original state. In 1991, the Building Control Division approved plans submitted by Mr Tan for the restoration and renovation of the properties (`the project`). In early 1992, Mr Tan sold No 73 Sophia Road to the second plaintiff, Mr Anthony Lim, and No 75 Sophia Road to the third plaintiff, Mr Sun Yu-Li. It was a condition of these two sales that the second and third plaintiffs would proceed with the project in conjunction with the first plaintiff.

3.In August 1992, contractors were invited to tender for the project. The successful tenderer was M/s Hiap Tian Soon Contractor (`the contractor`). On 23 September 1992, the contractor entered into separate building contracts with each of the plaintiffs as the requirements and finishes for each of the properties were slightly different. The terms of the contracts were, however, identical. They provided, amongst other things, that the contractor would obtain in the joint names of itself and the plaintiffs as the employers under the building contracts, insurances covering third party liability to persons and property. Pursuant to this term, the contractor procured the issue by the defendants of the contractors` all risks policy no SNEC 000440 dated 9 October 1992 (`the policy`), which is the subject matter of the present claim.

4. Events leading up to the claim

The contractor commenced work on the project some time in September 1992. The addition and alteration works did not include the rubble retaining wall which then ran along the rear of the properties facing Adis Road. Adis Road was level with the top of the retaining wall, which was a steep wall of about five metres in height and sloping at about 80 degrees to the horizontal. The edge of Adis Road was about two metres from the top of the wall.

5.During the course of the project, the first plaintiff visited the site almost daily to monitor the progress of the works. On one of his visits, some time in October 1992, he saw a crane positioned on Adis Road overlooking the edge of the road with its stabilisers resting on the rubble wall. The contractor was using two tractors to clear rubbish and debris from the rear of the properties and these tractors had to be lowered down to, and lifted from, the properties by crane as the properties stood about 15 feet below Adis Road. Mr Tan was concerned that the positioning of the crane posed a danger to the retaining wall and Adis Road and expressed this concern to the contractor. The crane was not, however, removed.

6.On 5 January 1993, Mr Tan was informed that the rubble wall had collapsed. He rushed down to the properties to take a look. Once there, he noticed that the crane had collapsed onto No 75 Sophia Road and that about 40% of the whole rubble retaining wall had given way. The stretch of the wall behind No 75 had entirely collapsed and part of the stretch behind No 73 was damaged. There was no obvious damage to the stretch behind No 71. Neither was there any damage done to Adis Road.

7.Shortly thereafter, there was a meeting between the architect, the professional engineers for the project, then M/s Baikoff & Associates, the contractor and the first and second plaintiffs. They discussed the implications of the accident. It was decided that the engineers would approach the building authorities to obtain their approval for the reconstruction of the damaged rubble retaining wall. At that meeting, too, the contractor agreed to assume responsibility to repair the retaining wall. According to Mr Tan, the contractor also agreed to notify the defendants of the accident. On 9 January 1993, the contractor wrote to the defendants informing them that it would be lodging a claim for various items relating to replacement/remedial works in respect of the damage to the retaining wall.

8.The restoration of the rubble wall did not proceed smoothly. Various complications were encountered because of the structural requirements relating to the construction of a rubble wall. The initial plans which Baikoff & Associates submitted to the building authorities were rejected. In early 1994, the plaintiffs decided to engage another firm of structural engineers. At about this time too, the plaintiffs realised that the contractor would not rectify the wall and that they would have to do it themselves.

9.The new engineering firm, M/s KTP Consultants, was initially requested to consider the possibility of restoring the damaged parts of the wall using the old design. Dr Baily Wang, the engineer in charge, took the view, however, that this was not a good option because (a) the authorities would not approve the construction of a rubble wall and (b) it was not economical in the existing conditions where land was expensive and maximisation of space was crucial.

10.Dr Wang recommended that the plaintiffs construct a contiguous bored pile retaining wall instead as it required a minimum working space and time to install. Dr Wang testified that it was not possible to confine the reconstruction of the retaining wall only to the damaged portion. He said that he had tried to persuade the building authorities to allow the wall to be repaired, ie that the damaged portion should be replaced by the contiguous bored pile wall but that the remainder of the rubble wall which was still standing and stable should remain in place. The authorities, however, said that it would be better to construct a new wall all the way through.

11.In the event, the whole of the rubble wall was pulled down and a new bored pile retaining wall was constructed. The rectification works commenced some time in February 1995 and were completed a year later. The plaintiffs incurred approximately $175,118.75 to construct the wall and capping beams. Additional costs were: $12,000 to clear rubble, $5,500 to repair the boundary drain, $8,400 to construct the boundary wall and $43,000 in professional fees. These are the sums which the plaintiffs now seek to recover from the defendants under the policy. They accept, however, that their claim for professional fees is limited to $30,000 in accordance with the terms of the policy.

12. The defences

The defendants informed both the contractor and the third plaintiff in November 1993 that they were not admitting liability under the policy. In their re-amended defence, they raised various grounds for denying liability. Though in closing submissions seven issues were raised, these in fact fall under three heads: (1). whether the plaintiffs complied with the notification requirements under the policy;

(2). whether the condition of the wall was satisfactory before commencement of work on the project; and

(3). the true meaning and effect of various clauses of the policy as they relate to the quantum for which the plaintiffs are entitled to be indemnified.

I will consider each head in turn.

13. Notice requirement

In this connection, reference must be first made to the schedule of the policy which sets out the names and particulars of the insured parties. Against the item `Insured`s name` appear the following `Hiap Tian Soon Contractor as Contractor & sub-contractor and Mr Tan Thuan Seng, Mr Anthony Lim & Mr Sun Yu-Li as principal FTRR and I`. This means that each of the parties named was insured as an independent insured party for his respective rights and interest in the subject matter of the policy.

14.Secondly, two conditions appearing in the general conditions of the policy are material. The first is condition 1 which reads:

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 company.

Then there is the specific notice provision which is condition 5. This, so far as material, reads:

In the event of any occurrence which might give rise to a claim under this policy, the insured shall

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

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

15.It is not disputed by the plaintiffs that notice of loss must be given in accordance with condition 5. Nor have they sought to argue that it is not a condition precedent to the insurer`s liability. It is also not disputed that none of the plaintiffs ever directly gave any form of notice to the defendants. Despite this, they say the condition precedent cannot be invoked.

16.Their first argument is that the contractor gave notice on behalf of all the insured. This argument was based on the first plaintiff`s evidence that during the meeting that he had with the contractor after the accident, it was agreed that the contractor would notify the defendants of the collapse of the wall. Such notification was given first by telephone and then by the contractor`s letter of 9 January 1993 and was within the 14 day period required by condition 5. When the contractor`s letter is examined, however, it is plain that it was a notification by the contractor of a claim that he would be putting in. It did not purport to be a notification made on behalf of any of the other insured parties. I also take the view...