Kay Swee Pin v Singapore Island Country Club

1. [1]

   [1] This is an assessment of the amount of damages payable as a result of the invalid suspension of a club membership. It raises important and interesting issues on the law of damages, including whether intangible and non-pecuniary harm such as mental distress, humiliation and the like are recoverable in a contractual setting. It also brings into question the recoverability of exemplary or punitive damages in our private law.

2. Background

3. [2]

   [2] The plaintiff, Madam Kay Swee Pin (“Mdm Kay”), was a member of the prominent Singapore Island Country Club (“the SICC”). Her membership was suspended for one year from 2006 to 2007 by the club. She brought an application in the High Court for the club’s decision to be set aside, but failed. On appeal, the Court of Appeal reversed the High Court’s decision, declaring that the suspension order was invalid and ordering damages to be assessed by the Registrar.

4. [3]

   [3] The detailed facts of the case are set out in the Court of Appeal’s grounds of decision: see Kay Swee Pin v Singapore Island Country Club [2008] 2 SLR 802. As the events leading up to and following the suspension of Mdm Kay’s membership are relevant to the assessment of damages, I shall provide a brief outline of the factual matrix.

5. [4]

   [4] Mdm Kay became a member of the SICC in 1992. In her application form to be a member, Mdm Kay had stated as her spouse Mr Ng Kong Yeam (“Mr Ng”), with whom she had undergone a Chinese customary marriage in Johor in 1982. As a spousal member, Mr Ng was also entitled to enjoy the facilities of the club. They have a daughter who was able to make use of the club facilities as well as a junior member.

6. [5]

   [5] In August 2005, Mdm Kay decided to contest the elections for the Lady Captain of a lady golfer’s sub-committee. Shortly thereafter, rumours surfaced as to her marital status. The SICC membership office then requested Mdm Kay to produce her marriage certificate. She produced a certificate showing that she had married Mr Ng on 24 August 2005 in Las Vegas. Although Mdm Kay had gone through the customary marriage rites with Mr Ng in Malaysia way back in 1982, they did not have a formal marriage certificate. As such, they decided to register their marriage in Las Vegas in order to furnish the necessary certificate to satisfy the club’s membership office. Notably, Mdm Kay had not been asked to produce a marriage certificate at the point when she first applied to be a club member in 1992.

7. [6]

   [6] A few days before the election, a member of the club Mr John Lee (“Mr Lee”), the husband of the incumbent Lady Captain of the lady golfer’s sub-committee, made a complaint to the General Committee (“the GC”) of the SICC. He said that there were concerns among members as to Mdm Kay’s marital status which had to be investigated on an urgent basis especially since Mdm Kay was seeking lofty office within the club. Mdm Kay did not know about the complaint until the eve of the election when the general manager of the SICC informed her of it and warned her against running in the election. Mdm Kay nevertheless took part in the election and lost.

8. [7]

   [7] A series of events then transpired which left Mdm Kay so aggrieved that she decided to come to the courts to seek redress. On the basis that Mr Ng could not have been the husband of Mdm Kay at the time she joined the club in 1992 since their marriage certificate only came into existence in 2005, the GC decided to institute disciplinary proceedings against Mdm Kay. The charge which Mdm Kay had to answer before the SICC’s disciplinary committee (“the DC”) was that she had acted in a way prejudicial to the interests of the club by falsely declaring Mr Ng as her husband in order for him to make use of the club’s facilities. It should be mentioned that even before the DC began its proceedings, the GC did some independent research of its own to discover that Mdm Kay was actually married to one Mr Koh Ho Ping (“Mr Koh”) in 1977.

9. [8]

   [8] In the disciplinary proceedings, Mdm Kay’s defence was that even though she had only formally registered her marriage with Mr Ng in 2005, this did not mean that they were not married before then. They were clearly husband and wife for over 20 years and acknowledged by everyone to be so. They had a daughter to the marriage who was already 18 years old. As for her first marriage, Mdm Kay said that it was dissolved more than 20 years ago long before she became a member of the SICC. She could not recall the exact date of the dissolution nor did she have any documents relating to that, because it took place a long time ago and she did not want to remember such an unhappy period in her life. Significantly, Mdm Kay added that if the SICC had insisted on the submission of a marriage certificate at the time she applied to be a member in 1992, she and Mr Ng could easily have complied by registering their marriage at that time.

10. [9]

    [9] To the DC, the material issue was whether Mdm Kay had been divorced from her first husband at the time when she joined the club. Based on documents from the Supreme Court registry (which interestingly were obtained by the GC), Mdm Kay’s divorce petition was filed in 1982, with the decree nisi and decree absolute granted on 28 November 1983 and 2 March 1984 respectively. This showed that Mdm Kay was already divorced from Mr Koh at the time of joining the SICC. On that basis and also in view of her customary marriage to Mr Ng in Malaysia, the DC recommended that the charge be withdrawn. It must be noted that the DC specifically stated in its findings that it was unable to confirm whether Singapore law recognised the Malaysian customary marriage between Mdm Kay and Mr Ng in 1982 in light of the fact that Mdm Kay’s divorce was only completed in 1984.

11. [10]

    [10] For some reason, Mr Lee came to know about the DC’s findings and recommendations even before the GC met to deliberate on the same. He sent an email to the President of the SICC, who then forwarded it to the GC. In the email, Mr Lee essentially set out his own interpretation of the disciplinary matter. He asserted that as Mdm Kay was still lawfully married to Mr Koh when she went through the customary rites with Mr Ng in Johor, it was obvious that not only was the customary marriage of 1982 void but there was also a contravention of the Penal Code. Mr Lee then proceeded to frame the issue before the GC as follows: whether Mdm Kay was a married woman within the meaning of the laws of Singapore and of Malaysia when she applied to join the club and included Mr Ng as a spousal member.

12. [11]

    [11] In its deliberations, the GC appeared to have assumed that the DC had found Mdm Kay not guilty of the charge because the DC was satisfied that there had been a valid customary marriage between Mdm Kay and Mr Ng. That was incorrect, as the DC had specifically said it was unable to determine the issue of the validity in Singapore of that customary marriage in Johor. As the Court of Appeal noted at [30] of its decision, such an assumption “completely changed the basis of the DC’s finding that [Mdm Kay] was not guilty as charged. The DC’s finding was not based on the customary marriage being valid, but on its being satisfied on the evidence that the appellant had given a credible explanation as to why she could not have made or intended to make a false declaration as to her marital status to cheat the Club”. Proceeding on that erroneous assumption, the GC decided that Mdm Kay could not have validly married Mr Ng in 1982, based on essentially the same reasoning as put forth by Mr Lee, viz that the second marriage was invalid since the first was not yet dissolved. Accordingly, the GC remitted the case back to the DC with the direction that the DC makes its recommendations based on the fact that Mr Ng was not a spouse of Mdm Kay at the time of her application, and to take into account any relevant mitigating factors.

13. [12]

    [12] Eventually, the DC recommended that Mdm Kay compensate the SICC for the green fees which the club could have collected from her for Mr Ng’s golf games, totalling $12,500. The GC adopted that recommendation, but in addition decided to suspend Mdm Kay’s club membership for one year.

14. [13]

    [13] When Mdm Kay saw notices of her suspension posted all over the club premises, she wrote to the GC expressing her shock at not being first informed of the suspension before the notices were put up. In the letter, she said that she and her husband had been seriously maligned because they were clearly validly married in Malaysia in 1982. The SICC replied to say that it was not the club’s practice to put up suspension notices only after the member in question had been notified. Extremely upset, Mdm Kay wrote a second letter to the GC setting out her arguments as to why there had been a serious miscarriage of justice, notable of which was that she could not have a false declaration when she did not know at the point of making that declaration that it was false, since she believed in good faith that she was validly married to Mr Ng at that time. She pointed out that no one had ever suggested that their marriage was invalid until the impending election for the Lady Captain. Moreover, she asserted that they were financially strong and having paid $190,000 for the membership, would not go to the extent of lying just to save some green fees which they could well afford.

15. [14]

    [14] Receiving no response from the SICC, Mdm Kay wrote a third letter requesting that the club’s annual general meeting (“AGM”) pass a resolution to revoke her suspension. When the club rejected that request, Mdm Kay wrote a fourth letter stating that the club’s rules allow the AGM to discuss any matter where seven clear days’ notice was given. The SICC replied to say that her request was out of order, and since during the period of suspension she was not permitted to enter the club’s premises, she would not be allowed to participate in the forthcoming AGM.

16. [15]

    [15] These events culminated in Mdm Kay’s application to the High Court to set aside the SICC’s decision to suspend her membership. She sought the following relief:

17. (a) That the order made by the GC of the SICC to suspend my spouse, my daughter and myself be revoked forthwith;

18. (b) That the SICC compensates me for the loss of use of club facilities during the period of suspension;

19. (c) That the SICC refunds the sum I have paid as subscription fees to the club for the period when I was not allowed to make use of club facilities and barred from entering the club’s premises;

20. (d) Costs;

21. (e) Such further or other reliefs as the Court shall deem fit.

22. [16]

    [16] The High Court dismissed her application. On appeal, Chan Sek Keong CJ delivering the decision of the Court of Appeal, laid down the rules of natural justice which had to be complied with when a club expels its members. According to the Court of Appeal, there should be a more rigorous application of these natural justice rules in this case because the SICC’s own rules confer on the GC very general and extensive disciplinary powers over its members. The Court of Appeal decided that the suspension order should be set aside on broadly three grounds. First, the GC had erred in failing to focus on whether the charge was made out and its decision was irrational and unreasonable. The essence of the charge was that Mdm Kay had made a false declaration, which necessarily meant that it had to be proved that when she filled in the name of Mr Ng as her spouse in the application form, she knew that it was a false statement and that she did it deliberately so that Mr Ng could make use of the club’s facilities. That was clearly not shown as the GC addressed their minds instead to the wrong question of whether Mdm Kay had a valid marriage with Mr Ng in 1982. The Court of Appeal’s conclusion on this point is succinctly put by Chan CJ at [64] in the following terms:

23. [17]

    [17] Second, there was breach of the rules of natural justice because the GC had failed to give Mdm Kay an opportunity to respond to Mr Lee’s interpretation of the DC hearing. In particular, she was not given the chance to respond to the allegation that her customary marriage was void or to explain why it did not matter to the charge against her even if that were indeed the case. The GC had therefore breached its duty to give a fair hearing to Mdm Kay. Third, the charge was inherently defective because the club’s rules only applied to members, and at the time Mdm Kay named Mr Ng as her spouse, she was not yet a member of the club. For these reasons, the Court of Appeal allowed the appeal and declared the suspension order invalid. In addition to ordering a refund of all sums paid by Mdm Kay pursuant to the GC’s decision, the court also awarded her damages to be assessed by the Registrar.

24. The assessment proceedings

25. [18]

    [18] In the proceedings before me, Mdm Kay sought three separate heads of damages against the SICC. These were:

26. (a) Damages for deprivation of her rights and privileges as a member (including the loss of use of the facilities of the SICC);

27. (b) Damages for the humiliation, embarrassment, anguish and mental distress caused by the wrongful suspension; and

28. (c) Aggravated, exemplary and punitive damages.

29. [19]

    [19] In her affidavit of evidence-in-chief filed for the purpose of the assessment hearing, Mdm Kay said that she and her husband Mr Ng had decided to join the SICC because it was the foremost leading club in Singapore. In addition to enjoying its excellent recreational facilities, membership at the club was also indicative of one’s standing in the community and top social circles in Singapore. Being a member at the SICC further provided much business opportunities. Mdm Kay described how she, her husband and her daughter made extensive use of the club’s facilities. She in particular was a very active member of the golfing fraternity, playing golf about two to three times a week. She served one year as a committee member and two years as the Vice-Captain of the lady golfer’s sub-committee. As a result of the suspension, her family was deprived of all such rights and privileges. For the entire one year period, they were denied access to the club premises and could not go to the club even as guests of members, hence effectively being treated as worse than non-members who could enter the club as guests. Mdm Kay went on to list the types of activities that they could not undertake at the club during the one year, ranging from golfing to swimming at the SICC pools to pilates and dancing classes held at the club. She also could not attend the 43rd AGM which was held during the period of suspension.

30. [20]

    [20] In addition to the above loss, Mdm Kay deposed as to the other effects of the suspension on her. Mdm Kay and her husband had to decline numerous invitations from business associates and friends to have meals at the SICC because they could not enter the premises, and she said that having to explain why they could not accept the invitations was a constant source of embarrassment. She elaborated on the distress and humiliation she suffered because of the suspension:

31. [21]

    [21] According to Mdm Kay, to get away from the stress and strain which they felt, she and Mr Ng decided to join a club outside Singapore. They paid $40,000 for a lifetime membership at a country club in Phuket, Thailand.

32. [22]

    [22] Mdm Kay further alleged in her affidavit that the SICC’s conduct after finding her guilty was also aggravating, especially in that the SICC did not even have the courtesy of informing her of the suspension and instead went around posting news of her suspension on the notice boards all over the club. Mdm Kay said that insofar as the notices of suspension constituted a serious defamation of her, she had instructed her solicitor to commence the necessary legal action for damages for the defamation.

33. [23]

    [23] During the hearing for the assessment of damages, counsel for the SICC, Mr Ramesh Selvaraj asked Mdm Kay to confirm that she had not prayed specifically for aggravated and punitive damages under her reliefs sought in the originating summons. Mdm Kay said that this would already be covered under prayer (e) which was for any other relief the court deems fit (see [15] above). Mr Selvaraj then went on to ask a series of questions relating to the membership of Mdm Kay and her husband at the Tanglin Club, another prestigious club in Singapore. In essence, Mr Selvaraj sought to establish that many of the facilities which Mdm Kay and Mr Ng enjoyed at the SICC were also available at the Tanglin Club. The next part of the cross-examination was on the communication of the suspension to Mdm Kay. Mdm Kay’s evidence was that while she probably did receive a letter from the SICC notifying her that she had been suspended, she was definitely certain that the letter arrived only when everybody at the club already knew about it because of the notices put up at the club’s premises.

34. [24]

    [24] The other witness who testified was the present Chief Executive Officer of the SICC, Mr Sylvan Braberry. The crux of his testimony was that while it is definitely true that Mdm Kay and her family were deprived of using the club facilities for one year, she had not produced any documentary proof such as receipts for additional expenses that she incurred as a result. He said the SICC would be happy to reimburse her for such expenses if supported by documentary evidence, but the only document that they had was in relation to the $40,000 entrance fee paid by Mdm Kay for the country club in Phuket. Mr Braberry however did not deny that the suspension was a source of humiliation and embarrassment for Mdm Kay, saying that it would likely be so for any member who was subjected to the same plight. Mr S H Almenoar, acting for Mdm Kay, asked Mr Braberry why Mdm Kay’s notice of suspension was put up for the entire duration of one year, to which Mr Braberry explained that it was the standard practice of the SICC to leave the notices of suspension on the notice boards for the whole suspension period.

35. General observations on damages

36. [25]

    [25] I begin my analysis with some preliminary observations on the rationale and limits of awarding damages. The general principle, as stated by Lord Blackburn in Livingstone v Rawyards Coal Co (1880) 5 App. Cas. 25 at 39, is that damages refers to “that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation or reparation”. In the context of contract, that role of damages would be to place the claimant, so far as money is able to do so, in the same position he would have been in had the contract been duly performed: Parke B. in Robinson v Harman (1848) 1 Ex. 850. Therefore, it will be seen that the object of awarding damages is largely compensatory in nature.

37. [26]

    [26] But there are clear limits to such recompense by monetary means. Many a times, it is in the inherent nature of the damage or loss suffered that it cannot be suitably quantified in money terms. Lord Halsbury L.C. commented in The Mediana [1900] AC 113 at 116, in the context of granting damages to compensate for pain and suffering, as follows:

38. [27]

    [27] Even where we are speaking of pecuniary losses which are susceptible to arithmetic calculation, such calculation may often not be accurate as there are almost always bound to be evidential difficulties of proof. Yet, there are practical constraints and the law knows generally of no other forms of restoration of the claimant’s original position. An assessment of damages payable is therefore not an endeavour at achieving “perfect” justice, but rather to bear in mind that “the rules as to damages can in the nature of things only be approximately just”: Rodocanachi v Milburn (1886) 18 QBD 67 at 78.

39. Basis for the award of damages

40. [28]

    [28] It is important at the outset to clarify and properly understand the basis for the Court of Appeal’s award of damages in favour of Mdm Kay, as it would determine the measure of damages that is applicable.

41. [29]

    [29] As the case appeared at first glance to involve the review by the court of a disciplinary decision, I requested parties to submit on the applicable principles on the recovery of damages in an action for judicial review, and in particular, whether the appropriate measure of damages should be contractual, tortious or some other alternative.

42. [30]

    [30] Mr Selvaraj helpfully pointed out that this was not a case involving judicial review, there not having been any application taken up pursuant to O 53 of the Rules of Court (Cap 322, R5, 2006 Rev Ed). Instead, the liability of the SICC stemmed from a breach of contract, the contract being embodied in the constitution and rules of the club. Accordingly, as submitted by Mr Selvaraj, the contractual measure of damages should apply. He further said that if indeed this was an action for judicial review, no private remedies, particularly an award of damages, would have been available under Singapore law: Re Application by Dow Jones (Asia) Inc [1988] 1 MLJ 222; Chan Hiang Leng, Colin v Minister for Information and the Arts [1996] 1 SLR 609. Mr Almenoar, on the other hand, contended that it is inappropriate and unnecessary to characterise the measure of damages as contractual or tortious, and seemingly advocated a unique mode of assessing damages for judicial review actions. I note however that the Mr Almenoar did rely primarily on contractual cases in putting forth the case that substantial damages are payable under Mdm Kay’s three heads of claim.

43. [31]

    [31] After consideration, it is clear to me that this case is not about judicial review in the sense of an application under O 53 for the review of a public body’s decision and to obtain public law remedies like certiorari and mandamus. It is true that the Court of Appeal had referred at [44] of its decision to the fact that Mdm Kay had applied to the High Court for judicial review of the club’s decision. The headnote of the decision also classified the case as one involving judicial review and administrative law. “Judicial review” used in this context does not however denote the exercise of the court’s supervisory jurisdiction to review the proceedings and decisions of tribunals or other public bodies of the nature understood in public or administrative law. The SICC is a private country club and evidently not discharging any public functions. Having brought the action in the form of an ordinary originating summons and having prayed for damages, Mdm Kay’s claim is clearly in the form of a private law action, which in the circumstances must quite inevitably be characterised as one for breach of contract although this was not expressly stated in the originating summons. Indeed, this was the conception of the Court of Appeal when it noted at [2] that:

44. [32]

    [32] In the earlier decision of Haron bin Mundir v Singapore Amateur Athletic Association [1992] 1 SLR 18 (“Haron bin Mundir”), which involved the suspension of membership of an athletic association, the High Court also treated the case as one concerning a breach of contract as encapsulated in the rules of the association:

45. [33]

    [33] Thus, in a similar vein, Mdm Kay’s claim properly understood is one in breach of contract, ie that the SICC had wrongfully suspended her membership in breach of the terms of contract found in the constitution and rules of the club. There is a “judicial review” of the decision of the GC of the club to the extent of questioning whether it is in line with the rules of natural justice for the purpose of determining if there had been a breach of the contract, such natural justice rules being either expressly or in this case impliedly provided for under the contract in the form of the SICC’s constitution. The principles of administrative law that were applied by the Court of Appeal, such as the audi alteram partem principle and those relating to the irrationality of the decision-making process, can therefore be seen as being applied by analogy to a private law context for the purpose of deciphering whether there had indeed been a breach of contract. Properly conceived, the claim for damages hence arises from a contractual breach, and it is therefore to the contractual principles of damages that recourse should be had in assessing the quantum of damages that is payable in this case.

46. Procedural objections by the SICC

47. [34]

    [34] Before examining whether damages are recoverable under each of Mdm Kay’s three heads of claim, it is pertinent to first address certain threshold objections raised by counsel for SICC in connection with the second and third heads of claim: viz damages for the humiliation, embarrassment, anguish and mental distress; and aggravated, exemplary and punitive damages. Broadly, Mr Selvaraj made two essentially procedural arguments.

48. (i) That the Court of Appeal did not make an order in respect of such types of damages

49. [35]

    [35] Mr Selvaraj’s submission was that the Court of Appeal did not make an order in respect of the kind of damages sought under the second and third heads of claim, and the assessing court is not at liberty to vary or modify the judgment. He pointed out that what Mdm Kay had prayed for was the revocation of the suspension order and payment for the loss of use of facilities for one year. That is true, but it must be remembered that Mdm Kay also asked for “such further or other reliefs as the Court shall deem fit” (see [15] above). Even though such a blanket prayer for any other relief which the court thinks should be ordered is frequently included at the end of a series of specific prayers, and may almost seem like a routine standard prayer, that does not mean that it should therefore be devoid of any effect. Due regard and consideration must still be paid to the fact that it was included. In the event, the Court of Appeal made the following orders:

50. [36]

    [36] Mr Selvaraj contended that the Court of Appeal did not expressly say that damages should be assessed in respect of humiliation and mental distress, or that aggravated and exemplary damages are payable. However, on the other hand, the court likewise did not expressly limit the damages to be assessed to be that of the loss of use of facilities. In my view, and with respect, a reading of the Court of Appeal’s decision and the orders made suggests that the damages to be awarded are consequential to the setting aside of the suspension order. In other words, there is force to the submission by Mdm Kay’s counsel Mr Almenoar that the order was for damages to be paid for all losses flowing from the wrongful suspension of membership provided that such losses are recoverable as a matter of law, and subject to the usual rules on remoteness, causation and so forth. To the extent that any such damages may not be specifically set out, they would come within the relief that “the Court shall deem fit”, corresponding to the Mdm Kay’s prayer (e). Mr Selvaraj’s construction of the order for damages made is too narrow in the circumstances. Awarding damages under Mdm Kay’s second and third heads of claim will not, in my view, be inconsistent or constitute a variation of the Court of Appeal’s judgment.

51. (ii) That Mdm Kay’s failure to specifically pray for such damages bars her from claiming such relief

52. [37]

    [37] The next point raised by Mr Selvaraj was that Mdm Kay had not prayed specifically for her second and third heads of claims in the initial originating summons which she filed to set aside the SICC’s suspension order. This, as submitted by Mr Selvaraj, prevents her from making such claims now in the assessment of damages. He relied on the following commentary by Professor Jeffrey Pinsler in Singapore Court Practice 2006 (Singapore, Malaysia, Hong Kong: LexisNexis, 2006) at para 18/15/3:

53. In addition, reference was also made by Mr Selvaraj to established English authorities on the importance of pleadings: Farrel v Secretary of State (1980) 1 All ER 166; Esso Petroleum Co. Ltd v Southport Corporation (1956) AC 218.

54. [38]

    [38] There can certainly be no quarrel with the general principles on pleadings, and there is no doubt that pleadings are essential to define the issues and inform all parties of the case they have to meet. But a few initial observations are apposite at this juncture. First, we are dealing with an originating summons in which there are no pleadings. The rules referred to are of course laid down in the context of writ actions. Second, it must be borne in mind that at the time Mdm Kay filed this action, she was not represented by counsel but acting in person. Third, the commentary by Professor Pinsler relied upon only applies specifically to aggravated damages: there was no mention at all of damages for mental distress and humiliation. There is also the question of whether exemplary or punitive damages should be regarded as distinct from aggravated damages. I shall deal with this issue later, but for present purposes, it would suffice to note that the SICC’s position appears to be that there is such a distinction. Hence, for exemplary or punitive damages, Mr Selvaraj instead relied on the English case of Cassell & Co Ltd v Broome [1972] 1 All ER 830 for the proposition that such damages must also be specifically pleaded. According to him, this position has since been endorsed by an amendment of the civil procedure rules in England. However, he acknowledged that there has been no such similar amendment to Singapore’s rules of court. Mr Selvaraj nevertheless submitted that the underlying rationale of the rule – which is to prevent surprise to the other party –necessitates the same conclusion in Singapore law.

55. [39]

    [39] The above considerations raise some doubts as to the strict application of the requirement of specific pleadings or prayers to Mdm Kay’s second and third heads of claim. Be that as it may, in determining if and how this rule of pleading is applicable to our present case, it is ultimately the substance and rationale of the rule that is more important. As rightly pointed out by Mr Selvaraj, the requirement to specifically plead arises because of the need to prevent the other party from being caught by surprise and prejudiced as a result. That much is clear from the above quote from Singapore Court Practice 2006 itself. Reference can also be made to O 18 r 8 of the Rules of Court, which states:

56. [40]

    [40] In general, in considering a claim for damages, whether or not the other party would be so surprised will depend largely on whether the damages sought are in the nature of general or special damages. Special damages differ from general damages in that they do not flow naturally from the breach and will hence require the necessary particulars to be pleaded so that other party will be on notice. This distinction is made clear by Chao Hick Tin J (as he then was) in The Shravan [1999] 4 SLR 197 at [77], citing from Bullen & Leake on Precedents of Pleading (12th ed):

57. [41]

    [41] If special damages are sought without first giving the other party notice of the particular facts which are supposed to give rise to it, then the other party is prejudiced in not being able to prepare to rebut these allegations. The view expressed in Singapore Court Practice 2006 (see [37] above) is therefore that aggravated damages are generally in the nature of such special damages which must accordingly be specifically pleaded with sufficient notice to the other party, unless they are the necessary and immediate consequence as in defamation cases: see Lee Kuan Yew v Vinocur [1995] 3 SLR 477.

58. [42]

    [42] Dealing first with Mdm Kay’s second head of claim, it is an arguable issue whether the alleged mental distress, humiliation, anguish and embarrassment can be said to flow naturally from the wrongful suspension. If it can be so said, then her second head of claim does not even come within the ambit of “special damages” in the above sense and accordingly need not be specifically prayed for. In any event and more importantly, the SICC’s argument of surprise must be tested in context. Here we are dealing with allegations of intangible “mental harm” like distress and humiliation, which in their very nature concern the state of mind, experience and emotions of the plaintiff. In this case, the proceedings had been bifurcated. Separate timelines were taken for the assessment of damages and separate affidavits of evidence-in-chief for the assessment were filed. In Mdm Kay’s affidavit for the assessment, she elaborated on her feelings of anguish, humiliation and distress (see [20] above). Counsel for the SICC would have had time to digest these allegations and prepare for the cross-examination of Mdm Kay to assess the veracity of her claims. This is not a situation where there are allegations of plentiful new facts and events by the plaintiff, which the defendant, in not having been given notice earlier, is put in a position where he cannot put forward his own version of events and call witnesses to rebut the plaintiff’s story. As mentioned, only the state of mind and emotions of Mdm Kay are in issue, and her evidence on this was available prior to and at the assessment hearing to be dissected by the SICC’s counsel. As it turned out however, Mr Selvaraj at the hearing did not seriously challenge her allegations of mental distress. In fact, the SICC’s own witness Mr Braberry agreed with Mdm Kay’s counsel that such feelings of humiliation and anguish can only be expected of someone whose membership had been suspended. In these circumstances, one struggles to see how the SICC can be said to be prejudiced in having to deal with Mdm Kay’s claim for damages under the second head.

59. [43]

    [43] My view is therefore that Mdm Kay’s initial failure to specifically pray for damages in respect of her mental distress, humiliation, anguish and embarrassment does not now bar her from seeking such damages at the stage of assessment. This conclusion is buttressed by the approach taken by Chao J in The Shravan, where the defect in pleading was clearly regarded by him as not fatal but rather capable of being rectified. There, the challenge brought by the defendant was that an alternative method of calculation of the loss of revenue relied upon by the plaintiff was not pleaded, and that it had to be because the claim was in the nature of one for special damages. Chao JA agreed that it was a claim in special damages, but decided as follows at [78] to [79]:

60. [44]

    [44] Equally in the present case, the critical issue is not whether Mdm Kay complied strictly with the black letter of the rule on specific pleading (assuming it applies), but instead whether the SICC was in fact prejudiced and caught by surprise as to the claim for damages for distress and humiliation. For the reasons highlighted above, I am of the view that the SICC could not be said to be so surprised and prejudiced.

61. [45]

    [45] Moving on to Mdm Kay’s third head of claim, it is much more obvious that aggravated damages, as well as exemplary or punitive damages, are in the character of special damages since they do not usually flow automatically from the fact of breach. Other circumstances, particularly those pertaining to the conduct of the defendant in breaching the contract, would of course be relevant. The defendant must be given adequate notice of this in the plaintiff’s pleadings or prayers. In the present case however, as is evident from both the Court of Appeal decision and the High Court proceedings, all the circumstances of the suspension, including the entire disciplinary process and how the GC’s decision was taken and conveyed to Mdm Kay, were already canvassed in detail for the purpose of liability (ie in deciding whether the suspension should be set aside). In other words, the aggravating conduct of the SICC was already addressed at length during the hearings for liability. Crucially, the substratum of facts upon which Mdm Kay’s claim for aggravated and exemplary damages now rests is generally the same as that considered by the Court of Appeal. Moreover, this being in the nature of an originating summons, and as is also clear from the record of proceedings, there does not appear to be any dispute of the factual circumstances surrounding the suspension. It follows that the SICC can scarcely maintain the assertion that it is caught unaware by these facts relied upon by Mdm Kay to show the aggravating conduct of the SICC both prior and after the decision to suspend her membership. Mdm Kay’s failure to pray specifically for aggravated and exemplary damages in her originating summons therefore should not deny her from making such claims for the purpose of ascertaining the quantum of damages to which she is entitled.

62. [46]

    [46] Having disposed of the procedural objections raised by the SICC, what follows is to consider whether as a matter of the substantive law on damages, the three heads of claim sought by Mdm Kay are recoverable, and if so what the appropriate quantum should be.

63. Damages for deprivation of member’s rights and privileges (including loss of use of facilities)

64. [47]

    [47] It was not in dispute that as a result of the one-year suspension, Mdm Kay was deprived of all the rights and privileges as a member and could not make use of the club’s facilities from 19 May 2006 to 18 May 2007. In addition to the loss of use of the club’s facilities by Mdm Kay and her family, she was also deprived of the right to attend the AGM and to vote at the meeting. As mentioned above, Mdm Kay and her husband joined another country club in Phuket after the suspension of her membership at the SICC. Notably though, she did not claim for the membership fees of that club in Thailand. For the deprivation of her rights and privileges as a member of the SICC for one year, Mdm Kay claimed for $52,500.

65. [48]

    [48] The SICC’s challenge to her claim under this head is a simple one: that she had failed to prove that she had suffered any pecuniary loss and is therefore entitled to only nominal damages. Mr Selvaraj argued that she had produced no evidence whatsoever of any pecuniary loss suffered. As Mr Selvaraj sought to establish during the hearing, first, Mdm Kay and her husband were members of the Tanglin club, and they could simply have made use of the facilities there instead. Second, Mdm Kay had not produced any receipts or other evidential proof showing that they had incurred additional expenses in having to entertain their guests at other venues or having to use facilities elsewhere as a result of the suspension of her membership.

66. [49]

    [49] It is difficult to see how the SICC is able to justify an argument that no pecuniary loss has been suffered by Mdm Kay in having her membership at the club suspended for one year. She purchased the lifetime membership at a price of $190,000, and it seems obvious that there is a clear pecuniary component to the membership. As the Court of Appeal commented at [4] of its grounds of decision:

67. [50]

    [50] There can be little doubt that the loss of membership for one year does constitute a pecuniary loss, the membership being clearly one with financial value. The true nub of the difficulty lies in quantification. And it would seem that the real objection by the SICC is that the loss of Mdm Kay had not been precisely quantified accurately in monetary terms. Both Mr Braberry during the hearing and Mr Selvaraj in submissions referred to how Mdm Kay had failed to tender receipts and other documentary evidence showing the substitute expenses that were incurred as a result of the suspension. That misses the point. Mdm Kay is quite plainly not claiming for damages for such expenses incurred. Of course, it appears that expenses caused by a breach of contract are recoverable as a matter of law (see for e.g., McGregor on Damages (London: Sweet& Maxwell, 17th ed., 2003) at para 2-030), and if Mdm Kay indeed is claiming for this, then it is true that she will need to adduce the necessary evidence that such expenses were indeed incurred. But the fact is that Mdm Kay is not claiming for such expenses. This is made clear by how she did not seek to claim, for example, for her membership fees at the club in Thailand. The following testimony of Mdm Kay during the assessment hearing indicates that what she is claiming for is the fact that she was deprived of her right of using the SICC’s facilities:

68. [51]

    [51] Mr Selvaraj emphasised that damages for breach of contract do not exist at large and are dependent on proved loss. He further relied on Bonham-Carter v Hyde Park Hotel (1948) 64 TLR 177 for the proposition that the plaintiff bears the burden of proving such loss. This general principle is eminently correct: it is trite law that a person who claims for damages must prove his loss. But this hardly equals to a proposition that the losses in question must be calculated with mathematical precision before damages can be awarded. Mr Selvaraj has not shown me any authority to that effect. He cited the House of Lords decision of Bonsor v Musicians’ Union [1955] 3 All ER 518, which involved similar facts concerning the wrongful suspension of a member from an association. Yet, I fail to see how that decision assists him as the House of Lords held that the expelled member there was entitled to all remedies available to a breach of contract, including damages. The dicta of Lord Somervell of Harrow did suggest that only special damages can be claimed in such a case, but neither he nor the other Law Lords said that such special damages must be capable of proof to the precise amount. Nor, in fact, was it made amply clear by Lord Somervell what exactly he meant by the term “special damages”.

69. [52]

    [52] To the contrary, there are authorities which say that difficulties of proof do not bar an award of damages. In Robertson Quay Investments Pte Ltd v Steen Consultants Pte Ltd [2008] 2 SLR 623, the Court of Appeal described the process of proving damage in this way (at 639 to 640):

70. [53]

    [53] Specifically with regard to contractual damages, in Chitty on Contracts (London: Sweet & Maxwell, 29th ed, 2004), it is said at para 26-007 that:

71. [54]

    [54] Therefore, a flexible approach is warranted when it comes to an assessment of damages. The fact that precise quantification is a challenge should not mean that there is to be no recovery. The law does not require absolute certainty in the quantum of loss before an award will be made, but rather the court does its best in the circumstances to give a fair award in the interests of justice. This principle is no different whether we are considering damages in tort or in contract. That an award of damages should lay in the present case seems compelling if one considers a hypothetical case where membership fees are not payable upfront for a life term, but rather payable for each year on the basis of a fixed annual fee. One would then surely be hard-pressed to deny that the member should be entitled to recover for that one year fixed annual fee if he was wrongfully suspended for a year. The mere fact that in Mdm Kay’s case the mode of payment of fees was different and took the form of an upfront lump sum payment, which happens to make it more difficult to quantify what is the value of that membership for one year, ought not to preclude her from recovery.

72. [56]

    [56] Mr Selvaraj alluded to Mdm Kay’s lifetime membership in the Phuket country club, and said that its value of $40,000 should be pro-rated to reflect what its value would be for a year. But in my opinion, the price of membership at the country club in Thailand is less instructive, not least because we are talking about a club in another country. Also, there was not much information at all on the facilities available there and how they compare to those of the SICC.

73. Damages for mental distress, humiliation, embarrassment and anguish

74. [58]

    [58] It does not appear to be seriously disputed that Mdm Kay had indeed suffered much distress and undergone a difficult period as a result of the wrongful suspension of her membership. She described in her affidavit how she suffered constant humiliation and embarrassment, especially in having to explain to friends and relatives about why she was suspended, and how there had as a result been much anguish and mental distress for her. As already stated, counsel for the SICC during cross-examination did not challenge these allegations to any extent, and the SICC’s Mr Braberry seemed to accept that she had indeed experienced such emotional and mental suffering. The SICC’s objections laid more in the procedural objections (which has already been dealt with above) and the argument that damages for such kinds of losses and damage are not recoverable in contract as a matter of law.

75. [59]

    [59] Before examining in detail the law on whether such losses are recoverable in respect of a contractual breach, it is convenient to first quickly dispose of a line of argument by Mr Selvaraj apparently premised on the availability of relief for Mdm Kay in a claim for defamation. During the assessment hearing, Mdm Kay was questioned as to whether she had instructed her counsel to commence an action in defamation against the club, and whether she had the intention to proceed with such a claim. Her answer was that she had indeed consulted her lawyers on this, and was keeping her options open. Mr Selvaraj then argued in submissions that the damages sought under this head are properly within the province of a defamation claim instead and should be pursued separately.

76. [60]

    [60] However the simple answer to Mr Selvaraj’s objection is that there is a distinction between the damages sought for reputational losses on the one hand, and damages for mental distress, humiliation and so forth on the other. These constitute separate categories of losses: the recovery of one should not deprive the pursuit of the other. To be sure, the following exchange between Mr Selvaraj and Mdm Kay during the assessment hearing must be referred to:

77. [61]

    [61] One must however read the above bearing in mind that Mdm Kay is a lay person who is unlikely to fully appreciate that the law recognises different categories of losses which in turn are recoverable pursuant to different types of causes of action. Even accepting that there is some overlap between the losses claimed in this action and that in a possible defamation suit, this fact alone ought not to preclude recovery by Mdm Kay here. This is best put across by Andrew Phang Boon Leong JA writing extra-judicially in 2003, where in the context of considering the argument that recovery ought to be denied if damages sought for mental distress were in reality damages for defamation, he stated as follows [see Andrew Phang, “The Crumbling Edifice? The Award of Contractual damages for Mental Distress” [2003] JBL 341 at 342-343]:

78. [62]

    [62] Furthermore, as pointed out by Mr Almenoar, any claim for defamation is at best speculative at the moment. For these reasons, Mr Selvaraj’s argument based on the availability of an alternative avenue of redress in defamation does not hold water.

79. The general prohibition and its exceptions

80. [63]

    [63] It is not inconceivable that a breach of contract can potentially cause the innocent party to experience feelings of distress, anguish, humiliation and embarrassment. Such intangible emotional harm or undesirable sensory experiences, the subject matter of Mdm Kay’s second head of claim, would be referred to hereinafter collectively as “mental distress”. The general position as a matter of English law is that damages for such mental distress are not recoverable where the action is one for a breach of contract. The leading authority cited for this proposition is frequently the House of Lords decision of Addis v Gramophone Co [1909] AC 488 (“Addis”) (see Chitty on Contracts at para 26-074; McGregor on Damages at para 3-019). In that case, it was held that damages could not be awarded to an employee for his hurt feelings in having been wrongfully dismissed, even if the dismissal had been carried out in a harsh and humiliating way. The decision in Addis has been accepted in Singapore: see Teo Siew Har v Lee Kuan Yew [1999] 4 SLR 560 (“Teo Siew Har”); Haron bin Mundir; Arul Chandran v Gartshore [2000] 2 SLR 446 (“Arul Chandran”).

81. [64]

    [64] A close reading of the Addis decision reveals however that its specific ground for refusing recovery is not that there should be no compensation for such mental distress, but rather that damages should not be awarded as punishment for causing such distress through the contractual breach. In other words, punitive or exemplary damages should not be awarded for causing mental distress. Such was the interpretation of the decision by our Court of Appeal in Teo Siew Har. Chao Hick Tin JA, delivering the judgment of the court, said at [55]:

82. [65]

    [65] The precise ruling in Addis is therefore more pertinent to the third head of Mdm Kay’s claim, which will be dealt with later. The question for now remains whether damages can nevertheless be ordered in respect of mental distress as a matter of compensation. The English Court of Appeal in Watts v Morrow [1991] 1 WLR 1421 would suggest that the answer to this question is also in the negative. Bingham LJ stated as follows (at 1445):

83. [66]

    [66] Framed as such a general principle, it seems clear that the prohibition in the law extends to all attempts at recovering damages for mental distress in a contractual claim, whether such damages are regarded as compensatory or punitive in character. Our High Court in the cases of Haron bin Mundir and Arun Chandran has endorsed Bingham LJ’s general statement of principle. This general prohibition is grounded in legal policy: mental distress constitutes a category of loss which is not recoverable in contractual actions as a matter of law because of certain policy considerations. GP Selvam J in Arul Chandran referred (at [17]) to the following passage from an American book (Howard O Hunter, Modern Law of Contracts, (1999 Rev Ed)) which highlights four possible policy considerations against recovery of damages for mental distress:

84. The policy against recovery is particularly strong in commercial cases. In Johnson v Gore Wood & Co [2001] 2 WLR 72, Lord Cooke commented that “[c]ontract-breaking is treated as an incident of commercial life which players in the game are expected to meet with mental fortitude”.

85. [67]

    [67] However, in England, there developed exceptions to this general rule prohibiting recovery, the most well-known of which is that embodied in the so-called “holiday” cases. In Jarvis v Swan Tours [1973] QB 233, the defendant travel agent had promised the claimant a very attractive holiday package with excellent facilities. The trip turned out to be a huge disappointment hardly matching the standard advertised. The English Court of Appeal awarded damages as compensation for the disappointment, distress and frustration experienced by the claimant. Lord Denning said that in a proper case damages for mental distress can be recovered in contract, such as where it is a contract for a holiday or any other contract to provide entertainment and enjoyment. Even though such damage is difficult to assess in terms of money, it is no different from the assessment which the court has to make in personal injury cases for loss of amenities. The case was subsequently followed and applied to similar facts in other cases involving spoiled holidays: Jackson v Horizon Holidays [1975] 1 WLR 1468; Jackson v Chrysler Acceptances [1978] RTR 474.

86. [68]

    [68] This exception is not limited to only contracts for holidays. In the relatively recent House of Lords decision of Farley v Skinner [2001] 3 WLR 899, the defendant employed by the claimant to survey a house was specifically asked about whether the property was affected by aircraft noise. The defendant surveyor negligently failed to investigate and discover that the property was indeed so affected. But the problem for the claimant was that the purchase price he paid was found to match the market value of the house even taking into account the aircraft noise interference, such that he could not have suffered any pecuniary loss. The House of Lords nevertheless held that an award of damages was justified in respect of his disappointment at the loss of a pleasurable amenity and his distress in having to cope with the excessive aircraft noise. Their Lordships took the view that the peace of mind and quiet which the claimant wanted to enjoy at the premises was a major or important part of the contract.

87. [69]

    [69] Thus, recovery for mental distress is possible where the object of the contract was to provide pleasure and enjoyment but the exact opposite result occasioned instead because of a breach of the contract. Bingham LJ in Watts v Morrow described the exception (at 1445) as such:

88. [70]

    [70] For convenience, such contracts falling within this exceptional category shall hereinafter be referred to as contracts that have as their object the provision of “mental benefits”. Farley v Skinner establishes that it is sufficient that the provision of the “mental benefits” is a major or important object of the contract: it need not be the sole or entire purpose of the contract. And since this is the important decision by the House of Lords which recognises the existence of this exception and clarifies its scope (in particular confirming that its reach is not limited to only the “holiday” cases), this exceptional category where mental distress sounds in damages will be labelled below as the “Farley v Skinner exception”.

89. The parties’ arguments

90. [71]

    [71] Both parties appear to be in broad agreement with the law as stated, and their differences lay in how the present case fits into the above scheme of things. In seeking damages for mental distress, Mr Almenoar relied principally on the Malaysian decision of Florence Bailes v Dr Ng Jit Leong [1985] 1 MLJ 374 (“Florence Bailes”), which concerned facts very similar to that in the present case. The plaintiff in Florence Bailes was found to have been wrongfully suspended from a club in Penang by the club’s committee in breach of the rules of natural justice. The court awarded her damages in the sum of RM10,000 for the embarrassment, distress and humiliation which she suffered as a consequence of the wrongful suspension. In addition, Mr Almenoar also referred to the English decisions of Watts v Morrow, Jarvis v Swan Tours and Farley v Skinner and said that these were relevant and instinctive in considering the damages to be awarded. Presumably, Mr Almenoar’s contention was that Mdm Kay’s claim for damages for mental distress falls within the exceptional category of contracts as recognised in these cases.

91. [72]

    [72] Mr Selvaraj on the other hand submitted that Florence Bailes is a case which should be confined to its own special facts, and that in any event it may not even be a good precedent in Singapore because of our local decisions in Arul Chandran and Teo Siew Har. He essentially emphasised how the general rule against recovery for mental distress had been endorsed by our courts, and that it should be applied in the present case to deny recovery by the plaintiff. The cases of Jarvis v Swan Tours and Farley v Skinner were sought to be distinguished.

92. Whether the Farley v Skinner exception applies in the present case

93. [73]

    [73] As mentioned above, it is definitely true that our local courts have adopted the same general rule that precludes recovery of damages for mental distress in a breach of contract case. However, it is also equally clear that there is recognition of the Farley v Skinner exception where the contract is one for the provision of “mental benefits”. Specifically, both Selvam JC in Haron bin Mundir and the Court of Appeal in Teo Siew Har made reference to the “holiday” cases as examples of this exception to the general rule, although the exception was found to be inapplicable on the facts of the individual cases. And contrary to Mr Selvaraj’s submissions, the Malaysian case of Florence Bailes is not inconsistent with our local courts’ approach and is reconciliable as a case which falls within the scope of the Farley v Skinner exception. GP Selvam JC in Haron bin Mundir, after alluding to the cases of Jarvis v Swans Tour and Jackson v Horizon Holidays Ltd, said of the Florence Bailes case (at [43]):

94. The case of Haron bin Mundir itself was clearly distinguishable on the facts from Florence Bailes, since the former involved the suspension of a member of an athletics association, where the relationship between the association and its members cannot be said to be one which has as its object the provision of “mental benefits”. The exception was therefore not triggered and the general rule prevailed.

95. [74]

    [74] The pertinent question that arises is whether the present case falls within the Farley v Skinner exception. There seems little doubt that the SICC club membership contract does come under the class of contracts which provides for “mental benefits”. Indeed, Mr Selvaraj did not appear to contend that the membership contract is not one to provide pleasure and enjoyment. However, he maintained that the cases like Jarvis v Swans Tours and Farley v Skinner can be distinguished such that damages for mental distress is not recoverable by Mdm Kay. It was argued that while one of the objects of the contract between the SICC and Mdm Kay is for the latter’s enjoyment of the club’s facilities, any loss of such enjoyment (if proved) would already be considered under her first head of claim. Mr Selvaraj also contended that the Mdm Kay’s mental distress was not with respect to the enjoyment of the club’s facilities itself, but rather arose because of the club’s actual act of wrongful suspension and in particular the placing of suspension notices for the duration of her suspension.

96. [75]

    [75] These arguments by Mr Selvaraj are persuasive at first glance, but ultimately are, with respect, misconceived. For a start, it is not immediately obvious whether there can indeed be a meaningful distinction drawn between mental distress caused by being deprived of the enjoyment of the club’s facilities on the one hand, and mental distress caused by the actual act of suspension on the other. Suspension of membership necessarily entails and is the reason why one is deprived of the use and enjoyment of the club’s facilities. Potentially, although not argued expressly, Mr Selvaraj could be distinguishing between the effect of the suspension of membership and the manner in which that suspension was carried out. Presumably, the argument could be that mental distress suffered as a result of the effect of the contractual breach (ie the feelings of distress in being denied the use and enjoyment of the club facilities) is recoverable under the Farley v Skinner exception, but mental distress caused by the manner of breach (ie the way the suspension was carried out) is not. That analysis unfortunately cannot withstand scrutiny because it is clear that the exception applies in both of those situations. The general principle stated by Bingham LJ in Watts v Morrow is that damages will be awarded for mental distress “if the fruit of the contract is not provided or if the contrary result is procured instead [emphasis added]”. Hence, the SICC membership contract being one for the provision of “mental benefits”, and mental distress having resulted instead, damages are recoverable whether or not the distress can be attributed to the loss of use of facilities or the way in which the suspension was carried into effect.

97. [76]

    [76] Mr Selvaraj’s other submission, that any such damages of the nature recognised under the exception would already be subsumed under Mdm Kay’s first head of claim for loss of enjoyment of the club’s facilities, also misses the point. It fails to recognise the different nature of the first and second heads of claim. Under the first, Mdm Kay is claiming for damages to reflect the loss she sustained as a result of having been deprived of the access and use of the club. She is seeking compensation for not having been able to physically step into the premises and make use of the facilities, as was her right as a member. There is further a financial value attached to this, as recognised by the Court of Appeal which opined that the membership has both social and economic value. At the same time, there are also the more intangible benefits of the club membership in terms of the pleasure, relaxation and comfort that can be derived. Undoubtedly, Mdm Kay was equally denied of such “mental benefits” as well during the period of suspension. Over and above that, she was subjected to quite the opposite feelings of mental distress. And it is for that damage which Mdm Kay seeks compensation under the second head of claim. The two heads of claim are therefore separate and distinct and should not be conflated in determining what should be the appropriate compensation. They compensate her for different aspects of her loss.

98. [77]

    [77] The above analysis becomes clearer when the facts in other cases are considered. In Jarvis v Swans Tours, it must be borne in mind that the claimant did get to travel to and stay at the ski resort in Switzerland as promised by the travel agents. Accordingly, there could have been no issue of compensating him for any loss in terms of not having been able to go for the holiday trip. However, the English Court of Appeal awarded him substantial damages because the quality of that holiday fell far below the standards promised. It is noteworthy that the House of Lords awarded him damages of £125 when the contract price of the holiday was only £63.45. Obviously then, their Lordships were dealing with something over and above just the ticket price of the trip. As Lord Denning’s grounds of decision makes clear, damages were awarded for the enjoyment and entertainment promised but not delivered and the consequent mental distress that resulted. Similarly in Farley v Skinner, although it was found that there was no pecuniary loss because the aircraft noise did not reduce the market value of the house, the House of Lords nevertheless recognised that the claimant there should be compensated for the mental distress he suffered in having to live with the additional noise level, again an intangible and non-pecuniary aspect of his loss.

99. [78]

    [78] Accordingly, in my view, compensation for the deprivation of the rights and privileges as a member (including the loss of use of facilities) does not preclude recovery for damages for mental distress arising from the wrongful suspension. Like Florence Bailes, this claim for damages to compensate for mental distress comes within the Farley v Skinner exception and recovery should be allowed. I would add that this result is justified not only as matter of case authority, but also as a matter of policy and principle.

100. [79]

     [79] Returning to the policy objections against recovery of contractual damages for mental distress referred to by the court in Arul Chandran (see [66] above), the first is that such losses are not directly related to the economic effect of the breach. This contention assumes that we are dealing with commercial contracts where only economic interests are at stake. As explained above, the club membership in our case is not such a contract, but rather has as one of its important object the provision of “mental benefits”. Where the opposite result of mental distress is procured instead, it is eminently reasonable as a matter of principle that compensation should follow. The second policy concern that such claims are open to speculation is not invalid but should probably not be given undue weight. It has already been pointed out that difficulties of assessment have never proved an insurmountable obstacle in the law on damages. The attainment of justice as best as the law can should be the overriding consideration. If it were otherwise and awards for intangible losses be disallowed because of the impossibility of precise calculation, damages for pain and suffering and the like in tortious cases would not have been possible. Third, it is said that extending the reach of damages to cover mental distress may open the floodgates to frivolous claims. Yet the exception is limited and narrow, and there is little risk of indeterminate liability. Recovery in the present case is only permissible because the SICC membership constitutes a contract which has as its central focus the provision of pleasure, enjoyment and other “mental benefits”. The majority of contracts entered into do not fall within such an exceptional category.

101. [80]

     [80] Thus far, the issue has been posed as one of policy: viz whether there are certain types of losses which are regarded as not recoverable as a matter of the law of contract because of various underlying policy considerations. But it would be seen that one of those considerations, the fourth point in the passage referred to in the Arul Chandran decision, relates to whether the loss was in fact within the reasonable contemplation of parties. One should immediately recall that this factor is what is also typically examined at the stage of ascertaining whether the damage sustained is too remote. Indeed, while the traditional analysis in this area of the law is to identify categories of losses which are recoverable and those that are not as a matter of policy, there is an increasing trend both in case law as well as academic literature to approach the issue instead from the perspective of remoteness of damage.

102. Alternative analysis based on remoteness of damage

103. [81]

     [81] The blanket rule prohibiting recovery of damages for mental distress in contractual actions (subject to some narrowly defined exceptions) is not without controversy. Specifically with regard to employment contracts, there are indications in English cases that the general rule in Addis may not be totally secure. In Johnson v Gore Wood & Co [2002] 2 AC 1, Lord Cooke commented that he would “take leave to doubt the permanence of Addis in English law”, after noting that damages were awarded for mental distress for breaches of employment contracts in Canada and in New Zealand. Lord Hoffmann in Johnson v Unisys Ltd [2003] 1 AC 518, after similarly referring to Canadian developments in this area, said that to follow the Canadian approach would involving overcoming the obstacle of Addis, a task that he was prepared to perform if called upon to do so.

104. [82]

     [82] It would appear that one of the main problems with the current state of the law is that it fails to adequately address the fact that some contracts do not have a purely commercial dimension but may involve other interests as well. This makes a blanket general prohibition against any relief for mental distress caused by contractual breaches difficult to justify. As observed in McGregor on Damages at para 3-020:

105. [83]

     [83] Indeed, a forceful argument can be made that the proper approach should not be for the law to identify certain types of losses as being absolutely non-recoverable in contract, but rather for the law to focus the inquiry on whether such losses in terms of mental distress or other types of intangible harm are too remote to warrant recovery. This is because there can be a myriad of different types of contract. While the majority of them can be expected to have commercial considerations at their hearts, some of them do not only entail business interests but also other non-pecuniary aspects as well. It is however difficult to try and carve out carefully defined exceptions to cater for each and every of these different types of contract. There could be much uncertainty and problems of characterisation. As the law stands, it is not always an easy task to draw a clear distinction between contracts that are purely commercial in nature with a view to profit, and those that seek to provide enjoyment, pleasure and other “mental benefits” (which would trigger the Farley v Skinner exception). These difficulties with the current approach of having a general prohibitory rule with ad hoc exceptions have been considered in detail by Andrew Phang Boon Leong JA in his 2003 article referred to above (see above at [61]). Phang JA argued persuasively in favour of an alternative approach which reverses the general rule: all losses arising from a breach of contract, including mental distress, are recoverable but subject to the usual rule of remoteness. In commercial cases, there can be a rebuttable presumption that damages for mental distress will be too remote. Phang JA explained the reasons for such an approach (at 372-373):

106. [84]

     [84] There are indications in recent English decisions of a similar approach. In Johnson v Unisys Ltd, Lord Millett suggested (at [70]) that the rationale behind non-recovery for mental distress in contract cases has to do with the fact that parties would not have had such consequence within their reasonable contemplation:

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