Hyundai Engineering and Construction Co Ltd v Rankine and Hill (Singapore) Pte Ltd

Choo Han Teck J:

[4] The plaintiff rejected this valuation and commenced this action, by way of an originating summons, against the defendant. The plaintiff sought an order that on the true and proper construction of the main contract, the savings should be valued according to the formula used by the plaintiff and not any other – that is to say, that the formula used by the defendant was wrong. Secondly, the plaintiff sought a determination on whether in calculating the savings in the way it did, the defendant was “in breach of a duty of care in the tort of negligence”. In the alternative, the plaintiff sought a determination as to:

[5] Miss Tan Lee Cheng, counsel for the defendant, in written submission demurred that the action was misconceived because the payment of the contract sum and, by that same token, any reimbursement, is between the developer and the plaintiff. The defendant was not a party to the contract between the developer and the plaintiff. She disputed the allegations that the defendant was negligent or had induced a breach of contract. Mr Coomaraswamy argued that the defendant’s valuation was to be relied upon by the quantity surveyor, who in turn would report to the Architect and he, in his turn, would, on behalf of the developer, make a final determination of the sum payable. In this regard, counsel accepted that in principle, the quantity surveyor was not bound to agree with the valuation or the method of valuation of the defendant. Indeed, if he were to exercise his own judgment as he ought to, he would have to make his determination with reasoned grounds, and not simply adopt the assessment made by someone who was not contractually, or duty bound, to make such assessment. In the framework of the contractual structure, it appears that the person who was so bound was the quantity surveyor himself.

[6] Mr Coomaraswamy argued, however, that the defendant owed a duty of care to the plaintiff that when it took it upon itself to carry out the valuation of the savings, it was bound to adopt a fair and reasonable formula. Counsel relied on the High Court decision in Hiap Hong & Co Pte Ltd v Hong Huat Development Co [2000] SGHC 131 in which the court, relied on two court of appeal cases (RSP Architects Planners & Engineers v Ocean Front Pte Ltd [1996] 1 SLR 113 and RSP Architects Planners & Engineers (Raglan Squire & Partners FE) v Management Corporation Strata Title Plan No 1075 [1999] 2 SLR 449) for the proposition that a person who was charged with a duty to certify (in the cases cited it was the architect), was bound to discharge his duty with care and skill and owes a duty of care not to cause economic loss to the (in relevant cases) contractor. The Hong Huat decision on this point was not dealt with on appeal. The facts were also significantly different. The defendant here, who was not contractually bound to certify the savings or reimbursement, cannot be likened to the architect who was contractually bound to certify the satisfactory completion of work.

[7] On the simple and so far undisputed facts that gave rise to the questions to be determined, some intractable problems stand in the way of the plaintiff. The person who had to certify the savings had to be either the quantity surveyor or the architect but it was not specifically stated which. All that the parties had agreed on was that the defendant had “assumed” the task of ascertaining the savings with the view of reporting it to the quantity surveyor, who it appeared, was waiting for the report. Assuming that that was so, there was no evidence before me that the quantity surveyor had vowed to accept the defendant’s findings no matter what. It meant that at this point, it was not clear what the quantity surveyor would actually do. Thus, he might agree with the plaintiff, in which event, the plaintiff would have suffered no loss or damage. If the quantity surveyor adopted the defendant’s valuation, the proper recourse would be for the plaintiff to dispute it as a matter of contract between itself and the developer, assuming that the developer wished to accept the quantity surveyor’s certification. In that event, it would be questionable whether any cause of action would lie against the defendant. The issue as to how much the developer owes the contractor and how much reimbursement is due, are matters of contract between them.

[8] If the plaintiff alleges that the assessment of the savings by the defendant caused the developer to rely erroneously on it and thus incurred loss and damage to the plaintiff, the loss and damage must first be proved. No damage had been proved. Counsel’s argument that the quantity surveyor was almost likely to adopt the defendant’s valuation is not sufficient. The tort of negligence requires proof of damage. It is not a tort that is actionable per se. Economic loss or potential economic loss does not merit a quia timet injunction. Injunctions of that nature may be granted in cases where there is a risk of imminent or impending physical harm or damage.