Wiltopps (Asia) Ltd v Emmanuel & Barker

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 02 July 1998
• Neutral Citation: [1998] SGHC 226
• Docket Number: Suit No 911 of 1995
• Date: 02 July 1998
• Year: 1998
• Published date: 19 September 2003
• Plaintiff Counsel: David Liew and Ooi Oon Tat (Kenneth CP Tan & Liew)
• Citation: [1998] SGHC 226
• Defendant Counsel: Haridass Ajaib and Augustine Liew (Haridass Ho & Partners)
• Court: High Court (Singapore)
• Subject Matter: When does cause of action in tort accrue,s 6(1)(a) Limitation Act (Cap 163),Breach of duty,Advice by solicitors to accept bail bond for release of vessel,Whether solicitors negligent,Limitation of Actions,Bail bond inadequate to satisfy judgment sum,Particular causes of action,Tort,Negligence,Claim against solicitors for negligence

Judgment:

CHAO HICK TIN J

This is an action instituted by the plaintiffs (Wiltopps) against the defendants, a firm of solicitors, for damages for breach of duty and/or negligence, as solicitors for the plaintiffs, in the conduct of proceedings in relation to the arrest and release of a vessel.

2. Background

In November 1980 Wiltopps, through their Japanese solicitor, Hiratsuka, retained the defendants (M/s Emmanuel & Barker) as solicitors to institute admiralty proceedings in Singapore with a view to arresting any vessel belonging to Kyodogumi Co Ltd of Japan (KDG). The claim by Wiltopps against KDG was for damages for breach of a towage contract dated 2 February 1979 as well as for reimbursement of certain sums advanced by Wiltopps to KDG. Pursuant to the towage contract the tug SUMI MARU 9001 (SM 9001) was to tow two bulk carriers, the Clytia and Michael Carras, from Greece to Taiwan for scrapping. En route, SM 9001 abandoned its tow. On 29 January 1981, M/s Emmanuel & Barker instituted Admiralty in Rem No 68 (admiralty action) and two days later procured the arrest of SM 9001 in Singapore. The solicitor in the firm handling the matter was Mr Gregory Emmanuel.

3.Towards the last week of February 1981 there were negotiations with a view to providing security for the release of the vessel. Wiltopps` claim against KDG was for the sums of 670,000 and US$192,500, plus interest and costs. I do not propose at this juncture to set out in detail the negotiations. On 26 February 1981, M/s Drew & Napier submitted a guarantee which they issued on behalf of the Japan Shipowners Mutual Protection and Indemnity Association (`the P&I Club`) providing cover for up to US$238,700 and 830,000 (inclusive of interest at 8% for three years on the two sums claimed) and S$30,000 for costs. Eventually on 27 February 1981 a bail bond for the said sum was filed in court by KDG`s Singapore solicitors, M/s Drew & Napier. On the same day, upon advice, Wiltopps accepted the bail bond and SM 9001 was released.

4.The admiralty action came up for hearing in 1985 and 1986 and it was dismissed on 12 November 1986. Wiltopps appealed against the dismissal of the action. Thereafter, there were other interlocutory proceedings, which I need not go into, so much so that the appeal only came up for hearing in 1992. By a judgment dated 13 November 1992, the Court of Appeal allowed the appeal and judgment was entered for Wiltopps. Under this judgment, Wiltopps were entitled to recover damages (with interest at 11%) totalling 1,211,437.12. Wiltopps` costs of the action far exceeded S$30,000. Wiltopps recovered only the sums secured under the bail bond. Wiltopps could not recover anything at all from KDG, as the latter had in the meantime been wound up.

5.The complaint of Wiltopps in this action concerned the interest and costs components provided in the bail bond. Wiltopps say that M/s Emmanuel & Barker should have asked for an open-ended bond, without specifying any sums in so far as interest and costs were concerned. Wiltopps contend that M/s Emmanuel & Barker did not excise sufficient care and diligence when they advised Wiltopps to accept the bail bond instead of allowing it to be decided by the Registrar. Wiltopps averred in the amended statement of claim that:

(M/s Emmanuel & Barker) knew or ought to have ascertained about the nature of the claim and the likely issues, and having regard to the defendants` knowledge that the plaintiffs anticipated a long battle on the issue of abandonment, the defendants ought reasonably to have anticipated that the action might well involve an application for summary judgment and that an eventual trial might well involve four or five witnesses of fact and at least one or two expert witnesses on each side. On that basis, the defendants ought reasonably to have anticipated that the trial could well last for many days and not come on for hearing until well after three years. In those circumstances, the defendants ought not to have taken interest at a rate of 8% per annum for three years without also considering that the plaintiffs` claim is for a sum in foreign currencies. In addition, the defendants ought reasonably to have estimated that in those circumstances, the plaintiffs` costs of the action, taxed on a party and party basis, would be likely to far exceed S$30,000.

6. Limitation

The writ in the present action was only filed on 27 May 1995. Thus, the first defence raised by M/s Emmanuel & Barker is that of limitation, ie that Wiltopps` claims herein is barred by s 6(1) of the Limitation Act. That subsection provides:

Subject to this Act, the following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued:

(a) actions founded on a contract or on tort.

7.Wiltopps have conceded that their claim founded in contract is barred. The only question is whether their claim in tort is also barred. M/s Emmanuel & Barker accept that negligence is not actionable per se; there must be proof of damage.

8.The position taken by Wiltopps is that their cause of action in tort did not accrue and could not have accrued until the judgment of the Court of Appeal against KDG was delivered on 13 November 1992 (the CA judgment). This action, having been commenced on 27 May 1995, is within the six-year limitation period reckoned from 13 November 1992. Wiltopps suffered no relevant damage which was certain or quantifiable before the CA judgment had been given and KDG had failed to pay.

9.M/s Emmanuel & Barker accept that a cause of action in negligence accrues when actual damage is suffered but contend that in the present case that occurred when: (i). SM 9001 was released from arrest on 27 February 1981; or

(ii). the period of three years, for which interest was secured by the bail bond, expired on 26 February 1984; or

(iii). the plaintiffs sometime in 1986/87 knew that their own costs would exceed the sum of S$30,000 secured by the bail bond.

So the critical question in this connection is when did the cause of action in tort accrue to Wiltopps.

10.It is settled law that a cause of action for the tort of negligence only arises when there has been a breach of duty resulting in actual, as opposed to potential or prospective loss or damage. In Hopkins v Mackenzie [1994] TLR 546 Saville LJ said `what had to be shown was actual loss or damage, not future loss or damage, however likely it was that that would occur.` While the law is clear, and easily stated, its application to particular circumstances, especially where economic losses are involved, is often difficult as the following cases will show.

11.In Forster v Outred [1982] 1 WLR 86, the plaintiff in February 1973 executed a mortgage of her property in the presence of her solicitors as security for a loan made by a company to her son, who subsequently became a bankrupt. In January 1975, the plaintiff, following a demand made by the company in April 1974, repaid the loan. The English Court of Appeal held that the plaintiff had suffered actual damage through the solicitors` negligence by executing a mortage deed whereby her property was encumbered with a legal charge and she was subjected to a liability which might mature into a financial loss and therefore her cause of action accrued in February 1973 notwithstanding that she did not actually become liable for the repayment of the loan until the demand was made. Stephenson LJ said (at p 98):

... the plaintiff has suffered actual damage through the negligence of her solicitors by entering into the mortgage deed, the effect of which has been to encumber her interest in her freehold estate with this legal charge and subject her to a liability which may, according to matters completely outside her control, mature into financial loss - as indeed it did. It seems to me that the plaintiff did suffer actual damage in those ways; and subject to that liability and with that encumbrance on the mortgage property was then entitled to claim damages, not, I would think, an indemnity and probably not a declaration, for the alleged negligence of the solicitor which she alleges caused her that damage. In those circumstances her cause of action was complete on February 8, 1973, and the writ which she issued on March 25, 1980, was issued too late to come within the six years` period of limitation.

12.Dunn LJ who gave the second leading judgment in the case, while noting that the plaintiff was under no liability to the mortgagee to repay her son`s overdraft until a demand had been made under the mortgage, felt that a cause of economic loss should be distinguished from that based on physical and material damage. He felt that in cases of financial or economic loss the damage crystallized and the cause of action was complete at the date when the plaintiff, in reliance on negligent advice, acted to his detriment. He explained (at p 100) as follows:

In this case, as soon as she executed the mortgage the plaintiff not only became liable under its express terms but also - and more importantly - the value of the equity of redemption of her property was reduced. Before she executed the mortgage deed she owned the property free from encumbrances; thereafter she became the owner of a property subject to a mortgage. That, in my view, was a quantifiable loss and as from that date her cause of action against her solicitor was complete, because at that date she had suffered damage. The actual quantum of damages would, of course, depend on events between that date and the date when the damages had finally to be assessed, but the cause of action was complete when she executed the mortgage, without proof of special damage. [Emphasis added.]

13.In Baker v Ollard & Bentley [1982] 126 SJ 593 the plaintiff acquired a share in a property, rather than, as she ought to have received, the security of a long lease of one floor of the property. The amount of her loss would depend on the attitude of...