Wee Poh Hueh Florence v Performance Motors Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 02 March 2004
• Neutral Citation: [2004] SGHC 47
• Docket Number: Suit No 541 of 2002 (Registrar's Appeals Nos 234 and 278 of 2003)
• Date: 02 March 2004
• Published date: 05 March 2004
• Year: 2004
• Plaintiff Counsel: Kenneth Tan SC (counsel) and Leslie Phua (Phua Wai Partnership)
• Citation: [2004] SGHC 47
• Defendant Counsel: Indranee Rajah SC and Daryl Mok (Drew and Napier LLC)
• Court: High Court (Singapore)
• Subject Matter: Costs,Section 53(3) Sale of Goods Act (Cap 393, 1999 Rev Ed),Replacement goods of lower prestige and quality than goods contracted for,Mitigation,Date of assessment of damages,Assessment,Whether allowance to be given for use of goods,Civil Procedure,Section 39(4) Subordinate Courts Act (Cap 321, 1999 Rev Ed),Breach of warranty of quality,Damages,Correct amount of damages payable,Scales,Whether date of delivery or date of discovery of damage,Whether costs awarded should be taxed on Subordinate Courts scale,Remedies,Contract,Whether compensation should be given for subsequent loss of use,Whether failure to mitigate affected cut-off date for award of consequential damages

2 March 2004 Judgment reserved.

Judith Prakash J:

Background

1 This appeal is about the correct amount of damages payable to the purchaser of a luxury car which subsequently turned out to be defective.

2 The plaintiff, Ms Wee, purchased a top-of-the-line BMW car (then known as the BMW 728iA) from the defendant, Performance Motors Limited (“PML”), in November 1997. She drove the car without complaint for some one and a half years. In May 1999, the car’s engine experienced an abnormally high rate of loss of coolant. This was the first manifestation of the overheating complaint that was to bedevil the car thereafter. On this first occasion, Ms Wee lost the use of the car for two days while the problem was dealt with. The remedial measures taken proved to be short-term and the problem recurred thereafter at ever-decreasing intervals. Ms Wee complained that the coolant level indicator came on frequently and that she continually had to top up the coolant. Various work was done which did not rectify the problem. In 2001, the car was in the workshop for much of the year. It remained in the workshop until February 2002 when PML, having determined that the car could not be satisfactorily repaired, returned it to Ms Wee.

3 In May 2002, Ms Wee commenced these proceedings against PML for breach of warranty of quality. She asked for a declaration that she was entitled to reject the motor car and to be given a full refund of the purchase price. Alternatively, she wanted damages. After hearing the evidence, Woo Bih Li J found that PML was in breach of the contractual warranty of satisfactory quality in respect of the car. Woo J held, however, that Ms Wee was not entitled to reject it or obtain a full refund of the purchase price as she had affirmed the contract and had had the use of the car for a substantial period. He ordered that interlocutory judgment for damages to be assessed be entered in favour of Ms Wee. Woo J also directed that the costs of the action be dealt with by the Registrar in the course of the assessment.

4 The assessment of damages took place before the assistant registrar in July 2003. The damages claimed fell under two broad heads and that these were the correct heads of claim was not really disputed. What was hotly disputed was how each head was to be computed. The first head related to the correct measure of general damages and the second head related to the recovery of consequential loss. On behalf of Ms Wee it was contended that she was entitled to:

(a) the difference between the value of the car at the time of the discovery of the breach of warranty (June 1999) and the value that the car would have had at that time had it been of satisfactory quality and that, on the evidence before the assistant registrar, this sum was $137,511.94;

(b) loss of use of the car for 778 days calculated as amounting to $77,363,51; and

(c) loss of interest paid during the period when she was deprived of the use of the car calculated as amounting to $18,746.

Item (a) related to the first head of damage and items (b) and (c) related to the second head.

5 In relation to the first head, PML contended that the date at which the diminution in value had to be calculated was not June 1999 but was either February 2002 when it was clear that repairs were not possible or, at the latest, April 2002. On the evidence, if either of these dates had been adopted, the loss to Ms Wee would have been between $8,000 and $9,500. As for the claim for consequential damages, this was disputed on various bases that I do not need to detail here.

6 The assistant registrar held as follows:

(a) that the diminution in value should be assessed as at the time when repair attempts were abandoned and the defects were proclaimed as not being rectifiable and that although this determination took place in February 2002, the appropriate date was April 2002 as Ms Wee should be given a further two months to assess her position and take advice before scrapping the car;

(b) the difference in value between a defective car and a working car as at April 2002 was $8,000;

(c) Ms Wee should have mitigated her damages by selling or scrapping her car no later than mid-April 2002;

(d) Ms Wee was entitled to be compensated for 302 days’ loss at the rate of $2,000 a month so that the monetary value of the loss was $19,857.53. The assistant registrar arrived at this sum on the basis that Ms Wee was entitled to the use of a BMW 7 series car like her own and therefore the replacement vehicles that PML had provided her with did not compensate completely for her loss as they were only BMW 3 series or BMW 5 series cars. The difference in the rental costs of such vehicles and that of a BMW 7 series car was approximately $2,000 a month;

(e) Ms Wee was also entitled to recover $6,085.50 as the rental she expended on a substitute car between February 2002 and mid-April 2002 and road tax and insurance amounting to $549.10 for the same period; and

(f) the claim for bank interest was disallowed as the payment of this sum did not arise out of PML’s breach of contract.

The total amount awarded as damages under the foregoing paragraphs was $34,492.13.

7 On the issue of costs, having regard to the quantum of damages, the assistant registrar ordered that costs be fixed on the Subordinate Courts scale. He also took into account the fact that PML had made an offer to settle. He calculated that the damages awarded were effectively only $1,492.13 more than the value of the offer to settle and exercised his discretion to give lower costs to Ms Wee, the plaintiff, after the date of the offer to settle. The offer to settle was made on 10 September 2002 which the assistant registrar regarded as the mid-point in the getting up. Under the Subordinate Courts’ scale, a three-day trial would have merited costs of around $15,000. The assistant registrar awarded costs of $7,500 up to the date of the offer to settle and another $4,000 in costs from the date of the offer to settle to the date of the assessment. PML was ordered to pay Ms Wee total costs of $11,500 with reasonable disbursements incurred up to and including the date of the offer to settle.

8 Both parties were dissatisfied with the outcome of the assessment. Ms Wee appealed against all the orders made including the costs order. PML also appealed against the quantification of the damages but its appeal was directed particularly to the assessment of compensation for the loss of use of the car from June 1999 to February 2002 at $19,857.53. As a result, all the issues canvassed during the assessment were revisited during the appeal.

Issues arising on the appeal

Measure of general damages: legal principles

9 In an action for damages arising from breach of contract, the innocent party is entitled to recover such damages as may fairly and reasonably be considered as arising naturally, in the ordinary course of events, from such breach of contract. This was the measure laid down by the first rule in Hadley v Baxendale (1854) 9 Exch 341; 156 ER 145. In relation to the sale of goods, this first rule was incorporated as the normal measure of damages for breach of a contractual warranty by s 53 of the Sale of Goods Act (Cap 393, 1999 Rev Ed). Section 53 reads:

(1) Where there is a breach of warranty by the seller, or where the buyer elects (or is compelled) to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods; but he may —

(a) …

(b) maintain an action against the seller for damages for the breach of warranty.

(2) The measure of damages for breach of warranty is the estimated loss directly and naturally resulting, in the ordinary course of events, from the breach of warranty.

(3) In the case of breach of warranty of quality, such loss is prima facie the difference between the value of the goods at the time of delivery to the buyer and the value they would have had if they had fulfilled the warranty.

10 This was a case of breach of warranty of quality. Therefore, the first consideration was whether the measure of damages prescribed by s 53(3) had to be used to determine what was recoverable by Ms Wee. Applying that measure would mean determining the difference in the value of the car in its defective state at the time of delivery to Ms Wee and the value it would have had if it had been sound. It is clear from the section itself that what I will call “the s 53(3) measure” is only a prima facie measure and may not apply in every case. In Bence Graphics International Ltd v Fasson UK Ltd [1998] QB 87, the issue was whether the purchaser who had bought vinyl film for the production of decals for resale to end users was entitled to recover as damages for the defective film delivered by the seller the s 53(3) measure, or whether the damages were limited to the purchaser’s liability to the subsequent purchasers of the decals arising because of the defects. In that case, using the s 53(3) measure would have resulted in greater compensation being awarded to the purchaser. At first instance, the s 53(3) measure was applied but this decision was reversed on appeal. The UK Court of Appeal held, by a majority, that the s 53 measure would be displaced where it had been in the contemplation of the parties at the time the warranty was given that the goods sold would be used in making a product for resale. Otton LJ expressed the view that s 53(3) lays down only a prima facie rule from which the court may depart in appropriate circumstances and that the burden of proof will lie on the person who seeks such a departure (at 97). Auld LJ on the other hand considered that the starting point for a claim for a breach of warranty is not the determination of whether one or the other party has “displaced” the prima facie test in that sub-section but the Hadley v Baxendale principle reproduced in s 53(2). The evidence may be such that the prima...