Wishing Star Ltd v Jurong Town Corp
| Jurisdiction | Singapore |
| Judge | Chan Sek Keong CJ |
| Judgment Date | 09 April 2008 |
| Neutral Citation | [2008] SGCA 17 |
| Court | Court of Appeal (Singapore) |
| Published date | 22 April 2008 |
| Year | 2008 |
| Plaintiff Counsel | Tan Liam Beng, Tan Kon Yeng Eugene, Ling Vey Hong and Sandra Tan Pei May (Drew & Napier LLC) |
| Defendant Counsel | Ho Chien Mien and Sheik Umar Bin Mohamed Bagushair (Allen & Gledhill LLP) |
| Subject Matter | Contract,Misrepresentation,Fraudulent,Land developer entering into transaction in reliance upon fraudulent misrepresentations of contractor,Whether land developer furnishing sufficient proof or evidence of loss,Whether losses suffered by land developer recoverable,Scope of recovery of damages for fraudulent misrepresentation,Damages,Measure of damages,Contract and tort,Different objectives in awarding damages in contract and tort respectively,Possible coincidence in quantum between respective measures of damages more by way of factual coincidence,Tort,Fraud and deceit,Loss flowing directly as a result of entry by land developer (in reliance upon fraudulent misrepresentation) into transaction in question, including all consequential loss,Loss recoverable even if not reasonably foreseeable |
| Citation | [2008] SGCA 17 |
| 9 April 2008 |
Judgment reserved. |
Introduction
1 This is an appeal against the award of damages made by the judge in the court below (“the Judge”) in favour of the respondent, Jurong Town Corporation (“JTC”), for fraudulent misrepresentations on the part of the appellant, Wishing Star Limited (“WSL”) (see Wishing Star Ltd v Jurong Town Corp
2 At the heart of this appeal lies a crucial question: What losses did JTC suffer as a result of the fraudulent misrepresentations by WSL? However, even before this question arises for determination, what is implicitly (and necessarily) assumed is that another more fundamental question – viz, whether JTC has sufficiently proved its losses – has already been answered in the affirmative. It is a cardinal requirement in the law of damages that the plaintiff must prove its loss before it may be awarded damages for the same.
Background
3 The facts giving rise to the appeal are not in dispute and can be briefly stated. JTC was to develop a large research complex housing key biomedical research institutes and biotechnological companies (“the Biopolis”). The Biopolis was to comprise seven tower blocks as well as three basement levels, and the vision was for it, when completed, to be a world-class biomedical sciences research and development hub in Singapore. There was great urgency in this project (“the Project”) as various other governments were vying at that time to promote their respective countries as such a hub. As a result, the Biopolis was to be developed on a fast-track basis. This meant that its development was to be completed within 19 months instead of the 30 months that a project of such a size would normally require.
4 The main contract was eventually awarded to Samsung Corporation (Engineering and Construction Group) (“Samsung”). One important facet of the construction works comprised the design, supply, delivery and installation of curtain walling and cladding systems for the seven tower blocks (“the façade works”). The façade works were to be awarded by JTC to a nominated subcontractor; this entailed JTC nominating or selecting a subcontractor, after which Samsung, as the main contractor, would be obliged to enter into a contract for the façade works with the nominated subcontractor and would be responsible for the latter’s performance of that contract. There was, however, a caveat to this arrangement: Samsung could voice any valid objections to entering into such a contract.
5 JTC was assisted in the Project by its consultant, Jurong Consultants Pte Ltd (“JCPL”), which was a wholly-owned subsidiary of JTC. JCPL invited tenders for the façade works. The tenderers were required to meet certain evaluation criteria imposed by JTC (“the evaluation criteria”) for the purposes of shortlisting and selecting potential subcontractors. This tender exercise (“the original tender exercise”) drew a total of eight bids. Amongst these tenderers was WSL, which was a company registered in Hong Kong carrying on the business of a façade-cladding contractor.
6 WSL submitted its tender in April 2002 and its bid of $54m was the lowest. However, Samsung sought to dissuade JTC from awarding WSL the contract for the façade works as it (Samsung) was not familiar with WSL. Samsung was of the view that WSL had no experience in doing such works in Singapore. Notwithstanding Samsung’s views, JTC awarded the contract for the façade works to WSL on 14 June 2002. However, Samsung resisted entering into any contract with WSL and, hence, the contract for the façade works was between JTC and WSL only. As it turned out, JTC did not make a wise decision.
7 In its bid, WSL made a number of representations of compliance with various items under the evaluation criteria. After the contract for the façade works was awarded, JCPL grew increasingly concerned about the truth of WSL’s representations. After conducting further investigations and inspecting WSL’s facilities in China, JCPL concluded that WSL’s representations were false. It then immediately sounded the alarm to JTC.
8 On 9 September 2002, JTC terminated its contract with WSL (“the WSL Contract”) for, inter alia, misrepresentation and breach of contract. JTC then engaged a new contractor, Bovis Lend Lease (“BLL”), to take over and complete the façade works. The total amount to be paid to BLL under this contract (“the BLL Contract”), which was awarded without any public tender, was $61.81m.
9 WSL subsequently commenced an action against JTC for various reliefs, including damages for wrongful termination. JTC counterclaimed for damages for fraudulent misrepresentation. The trial judge tried the issue of misrepresentation first and decided that although WSL was guilty of misrepresenting some facts, JTC had not relied on the misrepresentations to award WSL the WSL Contract (see Wishing Star Ltd v Jurong Town Corp (No 2)
10 JTC appealed against the trial judge’s decision and succeeded before the Court of Appeal (see Wishing Star (No 2) ([1] supra)). The Court of Appeal found that WSL had indeed made numerous fraudulent misrepresentations. The court also held that JTC had validly terminated the WSL Contract. It therefore followed that WSL’s claim against JTC for wrongful rescission and/or termination necessarily failed. Accordingly, the Court of Appeal set aside the trial judge’s decision and ordered WSL to pay JTC damages to be assessed.
11 In the assessment of damages, JTC claimed damages under the following heads:
(a) the sum of $7.81m, being the difference between the value of the WSL Contract and that of the BLL Contract (“item (a)”);
(b) the sum of $1,036,983, being the expenses incurred by JTC as a result of JCPL administering the BLL Contract (“item (b)”);
(c) the sum of $18,223.97, being the expenses incurred by JTC for JCPL’s three trips to China to inspect WSL’s facilities, which took place in the course of the WSL Contract (“item (c)”);
(d) the sum of $313,600, being the expenses incurred by JTC as a result of JCPL having to attend to WSL in the course of the WSL Contract (“item (d)”);
(e) the sum of $8,000, being the costs of engaging a surveyor for JTC’s inspection of WSL’s facilities in China on 3 September 2002 (“item (e)”); and
(f) the sum of $3,003, being the abortive costs for site occupational licences (“item (f)”).
12 The Judge allowed all of the above claims, save for item (b) and item (f), viz, the claims for the sums of $1,036,983 and $3,003, respectively.
13 Being dissatisfied with the Judge’s decision, WSL filed this appeal. It should be noted that JTC did not appeal against the Judge’s decision.
The issues on appeal
14 There are two broad categories of damages which we have to deal with in this appeal. The first is in relation to the award of damages of $7.81m, being the difference between the value of the WSL Contract and that of the BLL Contract, to JTC under item (a); the second is in respect of what are, collectively, the additional expenses incurred by JTC as a result of WSL’s fraudulent misrepresentations, viz, item (c), item (d) and item (e). Dealing with the latter category first, the only argument raised by WSL was that these expenses had not been sufficiently proved by JTC. We are unable to agree with WSL’s contention, which we find to be a feeble, and ultimately vain, attempt to attack the Judge’s decision. In our judgment, the Judge’s decision in respect of this category of claims was both logical and persuasive. Consequently, we dismiss the appeal in relation to the Judge’s award of damages for item (c), item (d) and item (e).
15 There is, therefore, only one issue that remains for determination in the present appeal, namely, the award of damages of $7.81m to JTC under item (a). In particular, what is in issue is whether the sum of $7.81m was the loss suffered by JTC as a result of the fraudulent misrepresentations of WSL. It will therefore be necessary to set out briefly the law relating to fraudulent misrepresentation first.
The law relating to fraudulent misrepresentation
16 The classic formulation of the tort of fraudulent misrepresentation or deceit is to be found in the judgment of Lord Herschell in the leading House of Lords decision of Derry v Peek (1889) 14 App Cas 337, where the learned law lord observed as follows (at 374):
First, in order to sustain an action of deceit, there must be proof of fraud, and nothing short of that will suffice. Secondly, fraud is proved when it is shewn that a false representation has been made (1) knowingly, or (2) without belief in its truth, or (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement [from] being fraudulent, there must, I think, always be an honest belief in its truth. And this probably covers the whole ground, for one who knowingly alleges that which is false, has obviously no such honest belief. Thirdly, if fraud be proved, the motive of the person guilty of it is immaterial. It matters not that there was no intention to cheat or injure the person to whom the statement was made.
17 The principles enunciated in Derry v Peek have, in fact, been adopted in the local context (see, for example, the...
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