Thode Gerd Walter v Mintwell Industry Pte Ltd and others

• Jurisdiction: Singapore
• Judge: Peh Aik Hin AR
• Judgment Date: 29 January 2010
• Neutral Citation: [2010] SGHC 33
• Court: High Court (Singapore)
• Docket Number: Suit No 351 of 2007 (Notice of Appointment for Assessment of Damages No 44 of 2009)
• Year: 2010
• Published date: 03 February 2010
• Hearing Date: 09 October 2009,20 November 2009
• Plaintiff Counsel: Sugidha Nithi and Renu Menon (Tan Rajah & Cheah)
• Defendant Counsel: Anthony Lee Hwee Khiam and Sarah Tan (Bih Li & Lee)
• Subject Matter: Contract,Damages,Tort
• Citation: [2010] SGHC 33

Peh Aik Hin AR: Introduction

The present assessment of damages arises out of two leases signed between the plaintiff, Mr Gerd Walter Thode, and the first defendant, Mintwell Industry Pte Ltd (“Mintwell”), for two units in Mintwell Building, an industrial building located at No 55 Ubi Avenue 3, Singapore 408864 (“Mintwell Building”). Although the hearing of the assessment of damages took only half a day before me, the parties subsequently raised a myriad of legal issues in their written and oral submissions. As will be demonstrated, most of these seemingly complicated issues can in fact be resolved having regard to first principles.

The facts

The facts of this case are undisputed and reference can be made to the judgment of the trial judge, Belinda Ang Saw Ean J, in Thode Gerd Walter v Mintwell Industry Pte Ltd [2009] SGHC 44 (“Thode Gerd Walter”) (at [1]–[13]). For purposes of the present proceedings, the facts can be briefly summarised as follows.

The plaintiff is the sole-proprietor of Euromal Precision Engineering (“Euromal”) and is in the business of mechanical engineering works. At the material time, Mintwell was the lessor of Mintwell Building and had granted leases of various units in Mintwell Building to others, including the plaintiff. The second defendant is Mr Seah Bak Kheow (“Seah”), who was alleged by the plaintiff, and found by Belinda Ang J in Thode Gerd Walter (at [46]), to be the key controlling mind behind Mintwell at the material time, notwithstanding that he was not a director of Mintwell. The third defendant is Mr Tan Kee Hock, Eddy (“Eddy”), a director of Mintwell at the material time.

Mintwell had granted the following two leases to the plaintiff: a lease dated 16 February 2005 for unit #01-02 at a monthly rent of $15,643.60, which commenced on 1 May 2005 and was for a period of two years up till 30 April 2007 with an option to renew for a further two years; and a lease dated 1 August 2006 for unit #03-02 at a monthly rent of $5,940.00, which commenced on 1 August 2006 and was for a period of 33 months up till 30 April 2007 with an option to renew for a further two years. The plaintiff had taken up the second lease for unit #03-02 as he needed more space to expand his growing business, and the term of the second lease was 33 months so as to ensure that the expiry dates of both leases would coincide.

Previously, Mintwell had mortgaged Mintwell Building to Overseas-Chinese Banking Corporation (“OCBC”) and covenanted, inter alia, not to let any part of the property without the consent in writing of the bank. Unknown to the plaintiff, OCBC had obtained an order of court dated 2 September 2002 against Mintwell for vacant possession of Mintwell Building (in Originating Summons No 1106 of 2002 (“OS 1106/2002”)) after Mintwell defaulted in mortgage repayments and had subsequently filed a writ of possession on 30 June 2006 to enforce the order. In breach of its covenant, Mintwell had also leased the two units to the plaintiff without the consent of OCBC.

It was only on 2 August 2006 when the plaintiff was served with a copy of Summons No 3453 of 2006 (“SUM 3453/2006”), an application by OCBC for the execution of the writ of possession, that the plaintiff first found out about the true situation. In order to avoid eviction, the plaintiff contested the summons at the hearing on 1 September 2006, but was unsuccessful. The Assistant Registrar ordered that OCBC be at liberty to enforce the order of court dated 2 September 2002 and to execute the writ of possession, albeit a stay of execution was granted until 1 December 2006, 4 pm.

The plaintiff eventually found alternative premises for his business at 45 Changi South Avenue 2, #03-01, Techplas Industrial Building, Singapore 486133 (“Changi South premises”) and entered into a lease for this new premises on or about 22 November 2006 at a monthly rent of $23,000. Prior to the Changi South premises, the plaintiff had considered another premises at 9 Tai Seng Drive (“Tai Seng premises”) but found the place unsuitable. The plaintiff vacated unit #03-02 at Mintwell Building on or about 4 October 2006 and vacated unit #01-02 on or about 28 November 2006. Although the plaintiff had incurred expenses renovating unit #03-02, he never commenced operations there.

On 8 June 2007, the plaintiff commenced the present action against the three defendants. He sued Mintwell for breach of contract (in respect of Mintwell’s breaches for the two leases), negligence and fraudulent and/or negligent misrepresentation and Seah and Eddy for fraudulent and/or negligent misrepresentation. On 25 August 2008, the parties entered into a consent judgment whereby interlocutory judgment was entered for the plaintiff against Mintwell for breach of contract with damages to be assessed by the Registrar. On 23 February 2009, Belinda Ang J, after the trial of the action, entered interlocutory judgment for the plaintiff against Mintwell and Seah for negligent misrepresentation with damages to be assessed by the Registrar. She, however, did not find Eddy liable. As such, the present proceedings are only against Mintwell and Seah (reference hereafter to “the defendants” in this judgment will refer only to Mintwell and Seah).

The present assessment of damages and the heads of damages claimed by the plaintiff

The present assessment of damages was a consolidated hearing (pursuant to an order of court dated 25 August 2009) for the assessment of damages due to the plaintiff under both judgments. The plaintiff claimed in total a sum of $251,902.53, which can be broadly divided into four categories: $191,195.38 for expenses incurred in relation to the move to the Changi South premises, which formed the bulk of the claim; $15,964 for expenses incurred for unit #03-02, in which operations never commenced there; $27,551.95 for labour costs (for the plaintiff’s staff and for the plaintiff himself) incurred in relation to the move to the Changi South premises; and $17,191.20 for legal costs incurred for contesting the eviction and title searches/conveyancing fees for the Tai Seng premises and the Changi South premises.

At the hearing of the assessment of damages, the defendants elected not to call their witness, ie, Eddy, to give evidence at the end of the plaintiff’s case. Eddy’s affidavit of evidence-in-chief (“AEIC”) was thus not admitted.

Preliminary issue – the measure of damages

Before I proceed with my decision on the damages to be awarded, it will be necessary to deal with a preliminary issue first.

At the start of the hearing of the assessment of damages on 9 October 2009, counsel for the plaintiff, Ms Sugidha Nithi (“Ms Nithi”), represented to me that parties have agreed that the assessment of the damages due under both judgments would result in the same figure, and no issue was raised by either party as to what was the proper measure of damages. Ms Nithi explained that this was also the reason why consolidation was sought in the first place and granted. However, at the oral submissions on 20 November 2009, counsel for the defendants, Ms Sarah Tan (“Ms Tan”), raised for the first time the issue that the plaintiff should elect his measure of damages and decide whether to proceed with damages in contract or tort. Although the defendants had alluded briefly to the different measures of damages in contract and tort in their written submissions¹, they had not explained the significance of such difference or what the consequences of non-election of the measure of damages were in this case. Indeed, the bulk of the defendants’ written submissions were focused on the legal issues of proof of damage, mitigation and remoteness.

At the oral submissions, Ms Tan explained that if the plaintiff chooses to proceed in tort, he would only be entitled to recover damages in respect of the expenses he incurred for the two units in Mintwell Building (it should be noted, however, that the plaintiff is only claiming for expenses incurred for one unit, ie, unit #03-02, as part of the total damages claimed (see [9] above)) and nothing more because the aim of damages in tort was to restore him to the position he would have been in if the tort (ie, the misrepresentation in this case) had not been committed. And if the tort had not occurred in the first place, she reasoned that the plaintiff would not have taken up the two leases at Mintwell Building and would have simply taken up another place. Consequently, he would not have had to move to the Changi South premises and incur all the other expenses claimed. His loss would therefore only be confined to the wasted expenditure for the two units in Mintwell Building. However, if the plaintiff chooses to proceed in contract, the plaintiff would be entitled in principle to claim for the expenses he expended for moving to the Changi South premises as well as the rest of the damages claimed here. She did not, however, submit that the plaintiff should choose the measure of damages in tort or that that was the correct measure for the present case. Rather, her position was simply that the plaintiff should make an election.

On the other hand, Ms Nithi reiterated the position at the start of the hearing of the assessment of damages. She contended that no election was necessary and that, in any event, the same amount of damages would be ascertained under either measure.

It does not appear to me that the defendants are pressing the point strongly that an election should be made or that the measure of damages in tort is the right measure. In any case, I do not agree with the defendants’ view that if the measure of damages is to be based in tort, then it follows that the plaintiff can only recover the expenses incurred for the two units at Mintwell Building and nothing more. This argument appears to be based on a misunderstanding of the principle that the aim of damages in tort is to put the claimant in a...