Walter Wright Mammoet (Singapore) Pte Ltd v Resources Development Corp Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 24 January 1995
• Neutral Citation: [1995] SGCA 9
• Date: 13 January 1997
• Docket Number: Civil Appeal No 107 of 1996,Civil Appeal No 3 of 1993,Civil Appeal No 91 of 1993
• Year: 1995
• Published date: 19 September 2003
• Plaintiff Counsel: KS Lo and Andrew Wu (Allen & Gledhill)
• Defendant Counsel: Harry Elias and Yap Teong Liang (Harry Elias & Pnrs)
• Court: Court of Appeal (Singapore)
• Citation: [1995] SGCA 9
• Subject Matter: Insurance,Whether clause enured to benefit of both parties to contract,Contract,Construction of contractual clause,Accident insurance,Contractual terms,Whether insurance clause a bar to claims in negligence and breach of contract from other contracting party,Interpretation and construction,Obligation to procure insurance

Cur Adv Vult

This is an appeal against the decision of the High Court on a trial of a preliminary issue. The facts giving rise to this appeal are not in dispute before us and are briefly set out below.

The facts

Resources Development Corp Ltd (the respondents) were the main contractors of Mass Rapid Tran?sport Corp of Singapore for the construction of the eastern track, and Walter Wright Mammoet (Singapore) Pte Ltd (the appellants) were the sub-contractors of the respondents. By an agreement made by exchange of correspondence between the appellants and the respondents (the contract), that is, the letter of 29 June 1987 from the appellants to the respondents and the letter of 2 July 1987 from the respondents in reply, the respondents engaged the appellants to lift a maximum of 13 precast concrete viaduct beams to form part of the raised railway track at the junction of Upper Changi Road and Bedok South Ave 1. The appellants` letter, in so far as material, stated as follows:

Further to our meeting on 26 June 1987, we are pleased to quote you the following:

Scope of work

1 To lift up 12 pieces precast beams from the trailer and place on top of the crosshead ([plusmn]) 3mm from final resting point.

2 To lift down one piece precast beam presently sitting on top of another beam and later lift it up and place on top of the crosshead.

3 Total numbers: 13 pieces of beams for period of nine days lifting operation. Dimension L30m x W5m x H2.2m weight 165 ton each.

WWMS [the appellants`] responsibilities

E Insurance of our equipment and personnel.

F Insurance of the beam upon during lifting operation.

RDC [the respondents`] responsibilities

D Ground preparation work to be well compacted and levelled as per our requirements. Ground bearing 20 ton per sq m.

Our lump sum price of S$48,000 based on nine days` operations work inclusive of the above. Two piece beams to be launched daily. Any delay beyond WWMS control will be charged at S$4,000 per day for stand-by.

The material portion of the respondents` letter in reply read as follows:

We are pleased to award to you the launching of a maximum number of 13 viaduct beams at a lump sum price of S$48,000 subject to the terms and conditions as stated below:

5 Provide insurance for the beam, all equipment, machinery, and personnel.

We shall be responsible for the following:

(b) Ground preparation.

In the event of the work being terminated, payment shall be made on per beam as calculated based on the above price.

On 8 July 1987, during a lifting operation, the ground under the crane subsided and as a result the crane tilted forward and the beam, which was then being lifted, fell and hit the ground, and the boom of the crane hit the crosshead. In consequence, the beam, the boom of the crane and also the main body of the crane were damaged. After the accident, all further activities of the appellants came to a stop and were not resumed subsequently.

The appellants were compensated by their insurers for the damage they had sustained. Thereafter, in exercise of their right of subrogation, the insurers took out an action in the name of the appellants against the respondents to recover the loss of the appellants. The claim was based on negligence, breach of contract and repudiation of the contract. The respondents denied negligence or breach of contract or repudiation of the contract on their part and averred that the ground for the works was properly and adequately levelled, compacted and prepared. The respondents counterclaimed that the appellants and their servants or agents were negligent and that the appellants had breached the contract. The respondents further pleaded a defence based on the appellants` obligation under cl 5 of the respondents` letter to provide insurance (the insurance clause). They averred that the appellants by reason of the clause were not entitled to pursue their claim against the respondents.

Before the commencement of trial, counsel for both parties asked the learned judge to give a ruling on the defence based on the insurance clause, and in that connection the parties had agreed, inter alia, that for the purpose of determining the preliminary issue of law it was assumed that the respondents were negligent in that they did not properly and adequately prepare, compact and level the ground for the crane to traverse while loading the beams. On that basis, the hearing proceeded and the learned judge gave his decision on that issue.

Decision below

The learned judge held that the insurance clause disentitled the appellants (and their insurers) from proceeding against the respondents for negligence and breach of contract. In his grounds of decision, the learned judge said:

the obligation to procure insurance in respect of the crane and the beam is an integral term of contract. It is a contractual obligation imposed on the plaintiffs. It was a bargain between the parties. The obligation was one of the items for which the defendants paid a consideration of $48,000. In other words the premium for the insurance to be secured by the plaintiffs was included in the total consideration paid by the defendants. Accordingly, if the plaintiffs failed to procure the insurance they would be in breach of contract.

He next turned to consider the kind of insurance the appellants were required to take, and on the authority of , held that the appellants were obliged to take out insurance `current in the trade`. He then considered the two Canadian cases, and , the English case of and the New Zealand case of and held that the principle decided in these cases applied. He said [see [1994] 3 SLR 121 at p 128]:

The principle clearly applies to the case before me. The insurance clause was not for the benefit of the plaintiffs alone as otherwise the inclusion of the plaintiffs` obligation as a covenant for consideration would have no subject matter to bite. The insurance clause in the present case makes the defendants` position stronger by stipulating that insurance for the beams was to be procured by the plaintiffs. The plaintiffs relied on principles governing exemption clauses. As explained in the case, the provision does not seek to exempt the defendants from liability but states how the parties agreed to deal with such liability. It stands apart from the principles governing exemption clauses and is governed by the regime created by the case.

The appeal

There is only one issue before us, and that is whether the insurance clause, upon its true construction, precludes the appellants from recovering from the respondents damages for negligence and breach of contract. Before us, the appellants submitted that the insurance clause was a mere undertaking to insure, and that such a provision would not be sufficient to relieve the respondents from liability for damage or loss caused by their negligence and breach of contract. There was...