Wisma Development Pte Ltd v Sing - The Disc Shop Pte Ltd

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 18 March 1994
• Neutral Citation: [1994] SGCA 43
• Date: 04 August 1994
• Docket Number: Civil Appeal No 132 of 1993
• Published date: 19 September 2003
• Year: 1994
• Plaintiff Counsel: P Selvadurai and Jessie Thong (Rodyk & Davidson)
• Citation: [1994] SGCA 43
• Defendant Counsel: Foo Yuk Lin (Tang & Pnrs)
• Court: Court of Appeal (Singapore)
• Subject Matter: Flooding of premises due to landlords' negligence,Whether landlords liable,Landlord and tenant,Construction of "insurance clause" in lease agreement,Clause requiring tenants insure premises and all tenants' property,Subrogation,Whether the risk of damage by flooding was assumed by the tenants by virtue of "insurance clause",General principles,Breach of duty,Insurance,Whether landlords liable to insurers,Flooding of demised premises because of failure to close stop valve in fire hose-reel,Whether insurance was effected for the joint benefit of landlords and tenants,Tort,Negligence

Cur Adv Vult

The facts

The appellants were the landlords and the respondents, the tenants, of units 01-16/17 of Wisma Atria (the premises) under a three-year lease dated 24 January 1986 (the lease). Sometime between 15 and 17 July 1986, the tenants took possession of the premises; renovation and interior decoration of the premises amounting to $49,682 were subsequently effected by the tenants. On 15 August 1986, water leaked from a fire hose-reel adjacent to the premises and, as a result, flooded the premises, causing damage to the tenants` property. The tenants had taken out insurance which included the risk of `bursting or overflowing of water tanks/pipes`. The tenants gave notice of the flooding damage to the insurers and made a claim on them. The claim was met by their insurers, who subsequently instituted an action in the district court against the landlords in the name of the tenants in exercise of their right of subrogation. The thrust of their claim was that the flooding was caused by the landlords` negligence.

The claim was resisted by the landlords. First, they denied that the flooding was caused by their negligence or that of their servants or agents. Secondly, they maintained that even if the flooding had been so caused, the contractual effect of cl 10(a) (`the insurance clause`) of the lease was that the tenants assumed the risk of such damage and consequently had no claim against them. As the tenants had no right of action against the landlords, their insurers, likewise, were unable to pursue such an action.

Decisions below

In the district court, the trial judge found that the landlords` negligence had caused the damage. He further held that the tenants had not assumed the risk of damage by flooding by virtue of the insurance clause. The insurance clause was construed by the trial judge in the light of cl 11(a) of the lease, which released the landlords from all claims and demands by the tenants unless they resulted from the landlords` negligence. Further, the trial judge also relied on cl 21(h) of the lease, which excluded any term from being implied into the lease, and held that, by reason thereof, it could not be implied into the insurance clause that the tenants assumed the risk of damage by the landlords` negligence. He allowed the claim of the tenants and gave judgment to them in the sum of $41,916 with interest and costs.

On appeal to the High Court, Punch Coomaraswamy J agreed with the trial judge`s finding that the landlords had been negligent and also held that, on its true construction, the insurance clause did not protect the landlords against any damage caused by their negligence. He found that since the insurance clause was merely a `covenant at large`, the tenants could not be sued even if they had failed to effect any insurance. Thus, the learned judge held that the insurance effected by the tenants was not for the benefit of the landlords. Accordingly, he held that the landlords were not absolved from their liability in negligence. He dismissed the appeal with costs. [See [1993] 3 SLR 781 .]

The appeal

Against the decision of the learned judge, this appeal has been brought. Before us, the landlords appealed on two main grounds. Firstly, they averred that the learned judge had erred in finding that the landlords were negligent, and secondly, that the learned judge had erred in holding that the insurance clause did not absolve the landlords from their liability in negligence. The first is a question of fact, and the second a question of law.

Negligence

Before us, it was submitted on behalf of the landlords that they had not been negligent and had not breached any duty of care owed to the tenants. They contended that the standard of care imposed on them by the courts below was akin to an absolute duty, when what the law required of them was only the standard of reasonable care and skill of a landlord.

To deal with this issue, it is necessary to rehearse in some detail the evidence relating to the flooding that took place. On 15 August 1986, at about 10.15am, the tenants` managing director, Leong Loon Wah (Leong), received information that their premises had been flooded. He proceeded to the premises to check the extent of damage and also called for his insurers` surveyor. The insurance surveyor, Phee Thian Chye (Phee), a mechanical engineer with ARIECS Pte Ltd, arrived at the premises at 11am the same morning and investigated the damage. He discovered that the premises were flooded with water up to two inches above the ground, and calculated that there must have been at least 5200 cubic litres of water in the premises. He also discovered that there was a fire hose-reel adjacent to the premises, and that there was a slit of about 4cm on the hose at a point, about 7-8cm from the metal drum end of the hose. Phee`s evidence was that there were two linings in the fire hose, an outer lining and an inner lining, and that the slit on the outer lining of the hose was smooth and that on the inner lining was rough. He opined that there must have been initially a smooth slit on the outer lining of the hose and water pressure within the hose must have pushed through the inner lining to meet the slit on the outer lining, thus allowing water to escape and cause the flooding.

The landlords called an expert witness at trial, Ng Kok Yan, a senior scientific officer with the Singapore Institute of Standards and Industrial Research, who agreed that probably the slit was initiated from outside and it was the water pressure that had caused the inner slit. There was no evidence as to what caused the outer slit.

Evidence was also adduced by the landlords that, on 27 May 1986 and 2 June 1986, officers from the Fire Safety Bureau inspected the fire fighting equipment, including the hose-reels, for the purpose of issuing a clearance temporary occupation permit. Major Choy Marn Khoon (Choy), head of inspection and enforcement branch of the Fire Safety Bureau, gave evidence. He said that the checking of hose-reels was carried out at random. He could not say if the hose-reel in question was checked. However, stop cocks and stop valves were checked to see if they were in a closed position; if they were in an open position, they would not pass the test. Choy, in the course of his testimony, brought to the court`s attention cl 8.5.4.1. of the `Code of Practice Regulating the Use and Maintenance of Hose-reel`, which provides as follows:

When the tests in sub-cll 8.5.2 and 8.5.3 have been satisfactorily completed, the system should be restored to its normal operating state. Reels should never be left under pressure and, where practicable, hoses should be drained prior to being returned to drum.

He further testified that if a stop valve was left in an open position, there would have been water in the hose and this would lead to deterioration of the hose tube.

At the material time, the maintenance of the building was under the charge of 2M Property Consultants Pte Ltd, whose maintenance manager was Raymond Choo (Choo). Choo arrived at the scene at about 8am on the day of the incident, and he prepared a report of his investigation to the landlords. In it, he described the events leading to the discovery of the flooding. According to his report, two security guards were on patrol at about 4am on 15 August when they heard water sounds as they were walking down from the second to the first storey. They discovered that water was flowing from the hose-reel adjacent to the tenants` premises, and that the stop valve in the open position. This was immediately closed by the guards. The guards then informed the security officer who then contacted Johnny Chua (Chua), the duty mechanic at the Fire Command Centre. Both men then proceeded to investigate the cause of the flooding.

The Fire Command Centre in the building housed the fire alarm panels and the building automation system, which was designed to monitor the starting and stopping of equipment, including water pumps. Whenever a water pump was activated (ie when water is flowing out of a hose-reel), this information would be printed on the computer. The computer, however, would not identify the exact hose-reel from which water was flowing, and a physical check was necessary, and the person on duty in the Fire Command Centre would then either have to search for the defective hose personally or alert the security guards to do so. According to Choo, the activation of the pumps had been recorded on the printout from the computer in the Fire Command Centre. But he could not say the time that was on the printout.

Chua`s version of the facts was that he had heard the buzzer alarm indicating the activation of the pumps, and he had alerted the security guards to do a physical check. According to Chua, he was informed of the exact location within 10 minutes by the security guards. The trial judge rejected Chua`s evidence as he found it unbelievable that more than 5200 cubic litres of water could flow out of a 4cm slit in merely ten minutes. The trial judge found that it was the security guards who had informed Chua of the leak on the first storey. The trial judge also found that even though Chua was on duty at the Fire Command Centre, he had failed to note the activation of the pumps, and had not taken immediate steps to locate and stop the leak. In effect, the trial judge found that Chua, as the landlords` servant, was negligent in not reacting to the leakage within a reasonable time. It was his duty to deal with such activation of the pumps, but he had failed to take action to remedy the situation, even after an alarm was received indicating the flow of water from one of the hose-reels.

It was common ground that the water that caused the flooding and damage to the premises emanated from the slit in the hose, and that, for such large quantity to have flowed out of the slit hose, the stop valve must have been in an open position. The learned trial judge...