Skip to content
laws.sgby aturio
Grounds publishedDecided 5 Nov 2013
Contents

High Court

Resource Piling Pte Ltd v Geospecs Pte Ltd

Feedback & support

[2013] SGHC 231Case no. Suit No 343 of 2011

What happened, in plain English

There is no plain-English summary of this judgment yet.

Ask about this judgment

Grounds of decision

Official text from eLitigation

  1. Quentin Loh J:

  2. [1] The plaintiff, Resource Piling Pte Ltd (“Resource Piling”), carries on the business of a piling contractor and also conducts related engineering works. The defendant, Geospecs Pte Ltd (“Geospecs”), is a company which specialises in soil investigation works, slope stabilisation, laboratory testing and related works. Resource Piling is suing Geospecs in tort, alleging that Geospecs had negligently carried out soil investigation works and had produced inaccurate borehole logs which Resource Piling relied upon to tender for a piling contract.

  3. Background facts to the dispute

  4. The soil investigation contract

  5. [2] HH Properties Pte Ltd (“the Developer”), wanted to develop two hotel blocks of 15 and 18-storeys, a 13-storey office block and basement car parks (“the Project”) on a site between Balestier Road and Ah Hood Road, Lot 09941T Mukim 17 (“the Site”). The Developer engaged Longrove & Associates (“Longrove”) as its consultant civil structural engineer and Longrove required the usual soil information and data to design the foundations. The Developer, through Longrove, called for tenders for the soil investigation. On 15 June 2009, Geospecs submitted a tender to carry out the required soil investigations works at the Site. On 7 July 2009, Longrove – on behalf of the Developer – awarded the soil investigation contract to Geospecs for the sum of $20,500 excluding GST and rock coring (“the Soil Investigation Contract”).

  6. [3] The site was divided into two plots by a reserve along which the Mass Rapid Transit (“MRT”) line between Novena and Toa Payoh stations ran. The larger polygonal plot lay to the West of the reserve (“the Western Plot”) whilst the smaller polygonal plot lay to the East (“the Eastern Plot”). Geospecs conducted a field exploration programme from 20 August 2009 to 23 September 2009 and drilled a total of 11 boreholes on the Site, BH-1 to BH-11. On the Western Plot, BH-1 and BH-2 were to the west with BH-1 to the north of BH-2. BH-3 and BH-4 were in the centre, with BH-3 to the north of BH-4. BH-5, BH-6 and BH-7 were drilled in a line along the eastern edge with BH-5 to the north and BH-7 to the south. On the smaller Eastern Plot, BH-8 and BH-9 were on the western side with BH-8 to the north of BH-9, and on the eastern side, BH-10 was to the north of BH-11.

  7. [4] On 29 September 2009, Geospecs submitted its site investigation report (“the Report”) – which included borehole logs for the 11 boreholes (“the Geospecs Logs”) and the usual soil test data and analyses – to Longrove. The Geospecs Logs indicated that rock was only encountered in two of the boreholes, BH-5 and BH-6 (which were at the North-eastern corner of the Western plot), at depths of 18.00m and 18.70m respectively.

  8. The Piling Contract

  9. [5] On 5 October 2009, Resource Piling received a letter from Longrove inviting tenders for the piling work which called for bored piles ranging from 600mm to 1200mm in diameter. The tender documents issued by Longrove (“the Tender Documents”) contained the following general specifications (“the General Specifications”):

  10. The Tender Documents also contained the following specifications relating to the bored piles (“the Bored Pile Specifications”):

  11. The Geospecs Logs were included in the appendix to the Tender Documents but the full Report including the soil test data and analyses were not included. Resource Piling allegedly relied on the Geospecs Logs to calculate the tender price and submitted its tender to the Developer on 21 October 2009, the closing date for the tender, which was about 16 days after the date of the invitation to tender.

  12. [6] Resource Piling was successful and the Developer awarded the piling contract to Resource Piling for the sum of $3,608,488.41 (“the Piling Contract”) on 24 December 2009. The contract price was calculated according to per metre rates based on the provisional lengths of the bored piles. The material terms of the Piling Contract are set out below as follows:

  13. Clause 2(c) of the Piling Contract incorporated both the General Specifications and Bored Pile Specifications as terms of the Piling Contract.

  14. The piling construction

  15. [7] Sometime in January 2010, prior to the commencement of the piling works and in accordance with the Building and Construction Authority’s (“BCA”) requirements, Resource Piling drilled and constructed an ultimate test pile (“the UTP”). The purpose of the UTP was to verify the pile design submitted by the project engineer to the BCA as the UTP would be constructed and tested to at least 2.5 times of the working load under the pile design. Resource Piling drilled the UTP somewhere near the vertical midpoint between BH-10 and BH-11, and discovered that rock was encountered from 19.00m onwards.

  16. [8] Upon the UTP performing satisfactorily, Resource Piling proceeded to carry out the piling works, and claimed to have encountered ground conditions that were materially different from the conditions indicated in the Geospecs Logs. Resource Piling subsequently engaged Soil & Foundation Pte Ltd (“S & F”) sometime around March or April 2010 to conduct additional soil investigation works on the Site. Three additional boreholes, NBH-1, NBH-2 and NBH-3, were drilled. The soil investigation report prepared by S & F dated 22 April 2010 (the “S & F Report”) indicated the presence of rock in all three boreholes, which were located in the vicinity of areas where, according to the Geospecs Logs, rock was unlikely to be encountered.

  17. [11] Resource Piling wrote two letters to the Developer on 27 October 2010, repeating its position that it had a contractual right to the extra payment for socketing into rock and stressing that the Geospecs Logs were “completely inaccurate”. In a letter dated 12 November 2010 from Longrove to Resource Piling certifying interim progress payments under the Piling Contract, Longrove rejected Resource Piling’s “variation claim” of $1,188,554 on the grounds that the contract price was inclusive of any coring or socketing into rock and covered Resource Piling’s obligations under the Piling Contract and all work and expenditure necessary to carry out the works to completion; the contract sum was firm notwithstanding the amount or quantity of work assigned to Resource Piling. Longrove further stated that the Geospecs Logs had been provided to Resource Piling for information only and Resource Piling was deemed to have inspected and examined the site – any risks arising from the works were therefore to be borne by Resource Piling.

  18. [12] Sometime in November 2010, Resource Piling was allegedly informed by one Mr Babu, the Project Manager of the Developer, that Geospecs would be drilling two boreholes adjacent to BH-1 and BH-11, numbered BH-1A and BH-11A respectively, to prove that the Geospecs Logs were accurate. The drilling was done in the absence of a representative from Resource Piling. The borehole logs for BH-1A and BH-11A did not differ materially from the earlier Geospecs Logs for BH-1 and BH-11 and indicated that no rocks were present in both boreholes up to a depth of 27.02m. Resource Piling subsequently requested S & F to drill another borehole about 0.567m away from BH-11A, numbered BH-11B. This borehole log indicated the presence of rock from 21.50m below the surface.

  19. [13] On 21 December 2010, Resource Piling sent a letter to the Developer stating that the soil profile indicated in the borehole log for BH-11B was entirely different from those indicated in the borehole logs prepared by Geospecs for BH-11 and BH-11A. Resource Piling requested an explanation from Geospecs for the difference, and stated that if no explanation was forthcoming, it would file an official report with the BCA that the Geospecs Logs were completely wrong and a misrepresentation to Resource Piling at the tendering stage. On 24 December 2010, Geospecs responded to the issues raised in Resource Piling’s letter in an email to a representative of the Developer. Geospecs maintained that the borehole logs for BH-11 and BH-11A were correct, and that the apparent differences in the soil profiles may be attributable to differential weathering of the underlying rock.

  20. [14] Following Geospecs’ response, the Developer sent a letter in reply to Resource Piling on 4 January 2011, firmly stating that the Geospecs Logs were accurate, and that, in any event, there were no sums due and payable to Resource Piling for the rock socketing works. Resource Piling replied on 10 January 2011, reiterating that the Geospecs Logs were inaccurate and that it was contractually entitled to the extra payment that it was claiming for. There is no further record of any subsequent correspondence between Resource Piling and the Developer.

  21. The issues

  22. [16] The parties jointly requested, and I granted, an order for bifurcation of issues and the trial proceeded only on issues of liability. Although the lead counsels’ statements list some 15 or 16 agreed factual issues and some three to seven agreed legal issues, as well as additional minor non-agreed issues, these can be essentially distilled into the following broad factual and legal issues:

  23. (a) Factual Issues:

  24. (i) What is the generalised soil profile at the Site?

  25. (ii) What is the definition of “rock”?

  26. (iii) Are Resource Piling’s records of the soil profiles of the boreholes accurate in that it encountered rock in the construction of about 326 bored piles or 77% of the total number of piles where no rock was expected?

  27. (iv) Were the Geospecs Logs accurate in approximately profiling the soil at the Site and the soil conditions in the vicinity of BH-1 to BH-11?

  28. (v) Did Geospecs carry out its soil investigation works and compilation of the Geospecs Logs properly and to the expected standard of a competent soil investigator?

  29. (b) Legal Issues:

  30. (i) Did Geospecs owe Resource Piling a duty of care to ensure that the Geospecs Logs it prepared were accurate?

  31. (ii) If Geospecs did owe Resource Piling a duty of care, did Geospecs breach that duty?

  32. The parties’ respective cases

  33. [17] Resource Piling’s claim rests on the allegation that Geospecs had negligently carried out the soil investigation works, prepared the Geospecs Logs that did not accurately profile the kind of soil at the Site and failed to show rock near BH-1, BH-2, BH-3, BH-4, BH-7, BH-8, BH-9, BH-10 and BH-11 when there was rock in the vicinity of these boreholes, and provided a soil profile in the Geospecs Logs that was vastly different from the actual soil conditions at the Site. Resource Piling alleged that around or more than 77% of the piles in the zones adjacent to these nine boreholes had to be socketed into rock, contrary to what was to be expected when considering the soil profiled in the Geospecs Logs.

  34. [18] Resource Piling pleaded that Geospecs owed it a duty of care to ensure that the Geospecs Logs were accurate and reliable and had breached that duty in its negligent conduct of the soil investigation and preparation of inaccurate Geospecs Logs. Resource Piling was a prospective piling contractor bidding for the piling work for the Site, and Geospecs knew that Resource Piling would be provided with the Geospecs Logs by the Developers to tender for the piling contract and would price its tender based on Geospecs’ inaccurate soil information. Geospecs allegedly breached this duty by:

  35. (a) failing to give a proper and accurate assessment of the soil conditions at the Site;

  36. (b) failing to advise that there was rock present in the areas of the Site surrounding BH-1, BH-2, BH-3, BH-4, BH-7, BH-8, BH-9, BH-10, BH-11; and

  37. (c) failing to detect the presence of rocks in the areas of the Site surrounding BH-1, BH-2, BH-3, BH-4, BH-7, BH-8, BH-9, BH-10, BH-11.

  38. Resource Piling alleges that because of the widespread presence of rock, Longrove was able to reduce the length of the piles generally, which reduced Resource Piling’s payment as it was based on measured pile lengths. Additionally, Resource Piling incurred greater cost in pile construction by having to socket the piles into rock, causing delays and construction difficulties. This resulted in economic loss to Resource Piling as the Developer refused to pay for such additional construction costs, alleging that the risk was on Resource Piling under the terms of the Piling Contract. While a number of factual allegations were made in the affidavits and in the course of oral testimony that Resource Piling had not been able to claim extra payments for the additional socketing works because Geospecs had incorrectly informed the Developer that the Geospecs Logs were accurate, Resource Piling did not additionally plead this as a basis of negligence, and I will put this aspect aside.

  39. [20] Geospecs also averred that it had not been negligent in the preparation of the Geospecs Logs and that the Geospecs Logs were accurate. This was confirmed by the drilling of two more boreholes in October 2010, BH-1A and BH-11A, which was witnessed by representatives of the Developer and the Resident Engineer. Geospecs claimed that Resource Piling’s alleged encounter with rock was only reported to it by the Developer ten months later on 7 October 2010 and not when it was first allegedly detected in January 2010. It was possible for the soil profiles of a particular area to differ greatly from that of neighbouring areas due to the differential weathering of different types of rocks and formations. Geospecs also questioned the accuracy of Resource Piling’s records documenting that “rock” had been encountered in the course of constructing the bored piles.

  40. Does a duty of care arise?

  41. [21] I first address the preliminary and threshold issue of law, viz, whether a duty of care in respect of the damage suffered by Resource Piling was owed by Geospecs to Resource Piling. In Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency [2007] 4 SLR(R) 100 (“Spandeck”), the Court of Appeal held that a single test should apply to determine the imposition of a duty of care in all claims arising out of negligence, irrespective of the type of damages claimed (at [71]) (hereafter referred to as the “Spandeck Test”). There was no justification for a general exclusionary rule against recovery of economic losses (at [69]). The Court of Appeal described the two-stage Spandeck Test as follows (at [73]):

  42. I now turn to consider each limb of the Spandeck Test.

  43. Factual foreseeability

  44. [22] Geospecs argued that the loss suffered by Resource Piling, ie, the economic loss suffered as a result of the miscalculation of the tender price, was not foreseeable as Geospecs was not aware that the Geospecs Logs would form part of the tender documents provided by Longrove to potential bidders for the Piling Contract. Further, Geospecs could not have foreseen that Longrove would provide only the Geospecs Logs without the rest of the Report which would have indicated the presence of boulders. Geospecs also could not have foreseen that the piling contractor would suffer losses due to its inability to claim extra payment from the employer for additional rock socketing because of the terms of the contract it had entered into.

  45. [25] In Spandeck, the Court of Appeal described legal proximity (at [78]–[79]) as a “composite idea, importing the whole concept of the necessary relationship between the claimant and the defendant”, and cited with approval Deane J’s observations in the High Court of Australia’s decision in Sutherland Shire Council v Heyman (1985) 60 ALR 1 that the requirement of proximity embraced the notions of physical proximity, circumstantial proximity and causal proximity, including the closeness of the parties, the directness of the relationship between the parties as well as the assumption of responsibility and reliance (at 55–56); the relative importance of each factor and the combinations of the factors was a legal question to be determined on the basis of legal reasoning, induction and deduction.

  46. [26] The Court of Appeal further held that the two-stage test premised on legal proximity and policy considerations was to be applied incrementally by reference to analogous situations to see how courts have reached their conclusions for these stages to determine whether the current limits of liability should be extended: see [43] and [73] of Spandeck. The lack of a factual precedent should not preclude the court from extending liability where it is just and fair to do so, taking into account the relevant policy consideration against indeterminate liability against a tortfeasor (ibid). I note that although the Court of Appeal in Spandeck set out a single test for a duty of care and enunciated a number of broad proximity considerations (at [77]–[82]), the factors to be considered in ascertaining whether the requisite proximity exists depends on the precise factual circumstances, including the type of harm: see for example, Spandeck, which emphasised the traditional test of assumption of responsibility and reliance in Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 (“Hedley Byrne”) in the context of economic loss; cf. Ngiam Kong Seng, which applied the three factors in McLoughlin v O’Brian [1983] 1 AC 410 within the context of the first proximity stage in the Spandeck Test for a claim involving a duty of care not to cause psychiatric harm. The case before me is one involving economic loss, and I analyse the factual circumstances primarily through the prism of the twin criteria of assumption of responsibility and reasonable reliance, but with reference to other considerations where relevant.

  47. Statutory duty of a qualified person carrying out soil investigation works

  48. [27] Resource Piling laid great emphasis on a change in the legal regulatory landscape in relation to the conduct of soil investigations. Counsel for Resource Piling, Mr Leo Cheng Suan (“Mr Leo”), submitted that in the aftermath of the infamous tilting of the Samsung Hub building in Church Street, the BCA now imposed an express statutory duty for site investigation to be carried out in a proper and adequate manner and made it mandatory for a professional engineer to sign off any site investigation report. Mr Leo relied on reg 31 of the Building Control Regulations 2003 (S 666/2003) (“BCR”), which provides as follows:

  49. Resource Piling submitted that changes were introduced by the Building Control (Amendment) Regulations 2008 (S 54/2008) (“Building Control (Amendment) Regulations 2008”) to place a duty on soil investigators to carry out site investigation works properly and accurately, and that the intended class of direct beneficiaries of this statutory duty included contractors who relied on borehole logs produced as part of the site investigation to tender for and carry out their works. It was contended that the existence of this statutory duty “enhanced” the legal proximity between Resource Piling and Geospecs, such that the latter owed the former a common law duty of care in negligence in addition to its statutory duty. Geospecs disagreed and argued that no issue of public safety arose on the facts; the present case simply involved a commercial contract which was more expensive to perform than one party had originally anticipated.

  50. [28] It is well-established that the existence of a statutory duty does not ipso facto give rise to a common law duty of care in negligence, although it may form part of the contextual backdrop or be a relevant factor in favour of or militating against the imposition of a duty of care (see Animal Concerns Research & Education Society v Tan Boon Kwee [2011] 2 SLR 146 (“Animal Concerns”) at [22]). In particular, the statutory duty may establish that the duty of care does not extend to the losses arising from a transaction falling outside the purpose for which an allegedly negligent statement was made (see the observations of Lord Jauncey of Tullichettle and Lord Oliver of Aylmerton in Caparo Industries plc v Dickman [1990] 2 AC 605 (“Caparo Industries”) at 661D–E and 651F respectively). Alternatively, the imposition of a common law duty of care may support or undermine the legislative intention behind the statutory regime (see Tan Juay Pah v Kimly Construction Pte Ltd [2012] 2 SLR 549 (“Tan Juay Pah”) at [53]–[54]). For present purposes, I will confine my discussion to the former, viz, the relevance of the statutory framework under the Building Control Act (Cap 29, 1999 Rev Ed) (“Building Control Act”) and BCR in so far as the nature and purpose of the statutory duty may implicitly create a special or close relationship in the form of circumstantial or causal proximity or support an inference of assumption of responsibility, such that legal proximity under the first limb of the Spandeck Test is established.

  51. [29] The present reg 31 was inserted by the Building Control (Amendment) Regulations 2008, and had replaced the previous reg 31 on site investigation which stated:

  52. The amended reg 31 extended the duty to apply to the construction of “tunnels” and “site formation (including excavations)”. It imposed a more specific and detailed set of duties on those qualified to undertake site investigation works, including the requirements in reg 31(2) that site investigation works have to be done properly and adequately in accordance with the prevailing standards and codes of practice and by conducting adequate investigation boreholes and other appropriate investigation means: see also the explanatory note to the proposed amendment of reg 31 in Annex A of the circular issued by the Commissioner of Building Control dated 10 December 2007. Further, it engrafted an additional layer of checks in reg 31(4), which mandates that the accuracy of the results of the site investigation have to be verified and certified by a Professional Engineer. Regulation 50 of the BCR imposes criminal liability for the contravention of, inter alia, regs 31(1), 31(2) and 31(3), but the BCR is otherwise silent on any concomitant civil liability.

  53. [30] The Building Control (Amendment) Regulations 2008 followed the amendments made by the Building Control (Amendment) Act 2007 (Act No 46 of 2007) (“BCAA 2007”) to the Building Control Act. Mr Leo relied on the parliamentary debates during the passing of the Building Control (Amendment) Bill 2007 (“the Bill”) in support for the submission that the purpose of introducing the requirement for a Professional Engineer to verify the accuracy of the site investigation reports was to “prevent the “Church Street incident” from recurring”. Mr Leo cited the speech of a Member of Parliament, Mrs Lee Bee Wah (“Mrs Lee”), a Professional Engineer and former President of the Institution of Engineers (see Singapore Parliamentary Debates, Official Report (20 September 2007) vol 83 (“the 20 September 2007 Parliamentary Debates”) at col 2082):

  54. The Church Street incident in 2002, which is well known to those in the construction industry, involved the 30-storey Samsung Hub building that started to tilt during construction as the superstructure was loaded, ie, being built. There were allegations in relation to the soil investigation, the characterisation of the soil substratum and possible piling construction shortcomings. It caused great alarm as there were completed buildings nearby. However, it should be noted that the introduction of the requirement for a Professional Engineer (Geotechnical) to supervise specific types of works in the BCAA 2007 followed the inquiry into the Nicoll Highway collapse in 2004 and relates only to “geotechnical building works”, which do not include foundational works for buildings which are less than 30-storeys high: see the definition in s 2(1) of the Building Control Act and the then Minister of State for National Development, Ms Grace Fu’s (“Ms Fu”) explanation of the regulation of underground building works in the BCAA 2007 (see the 20 September 2007 Parliamentary Debates at cols 2055-2056).

  55. [31] The comments that Mr Leo cited followed Mrs Lee's speech where she queried the need to introduce the requirement of a Professional Engineer (Geotechnical) for piling works for projects of 30-storeys and above as professional civil engineers had been designing the foundations of high-rise buildings for many years, and suggested that the employment of a second professional engineer was impractical and unnecessary: see the 20 September 2007 Parliamentary Debates at cols 2068-2069. Ms Fu responded to this concern by explaining that any structural problems with the foundations of high-rise buildings could have very serious consequences, and cited the Church Street incident as an example: see the 20 September 2007 Parliamentary Debates at col 2074. It is difficult to see how Mrs Lee’s comments support Mr Leo’s position; on the contrary, Mrs Lee was arguing that the Church Street incident could not have been prevented even with the input of a Professional Engineer (Geotechnical). Mrs Lee’s comments were not directed at any proposed amendments to the Building Control Act that directly considered the duties of those engaged in specialised site investigation works.

  56. [32] It is evident that the overarching purpose of the BCAA 2007, and the subsequent amendments to the BCR, were to “strengthen the building control regulatory framework to uplift professionalism, standards of safety and quality in the construction industry”: see Ms Fu’s speech in the 20 September 2007 Parliamentary Debates at col 2053. Apart from this broad statement of purpose, the BCAA 2007 was silent on the duties of a soil investigator, although the constant reference to the Church Street incident suggests that it perhaps formed part of the catalyst for the BCAA 2007. (I should add that the Nicoll Highway collapse in April 2004 must have also been a major contributor but from a slightly different angle.) The BCAA 2007 introduced a requirement for those engaged in site investigation works to be licensed as a specialist builder (see s 29G of the Building Control Act) and additional duties on a soil investigator were inserted in the BCR by the amended reg 31. These changes undoubtedly followed the overall purpose of the 2007 amendments in improving the accountability and competence of those engaged in site investigation works to strengthen safety standards. However, I do not think that there is anything to suggest that the changes introduced by the BCAA 2007, or indeed the building regulatory regime as a whole under the Building Control Act, additionally have the statutory objective of protecting the economic interests of the various participants in the construction industry or to define the scope of their responsibilities vis-à-vis each other. The financial risks potentially incurred by contractors who rely on work done by other contractors in the same project are not regulated under the Building Control Act. While it is clear that specialised site investigators in the position of Geospecs owe an express statutory duty to carry out proper and adequate site investigation under reg 31(2), in my view, there is nothing that can plausibly support a suggestion that Parliament intended for this duty of competence to extend equally to contractors who rely on geological information provided by site investigators to price their tenders.

  57. [33] Contractors are not within the class of persons intended to be protected by the statutory duty to carry out adequate and proper site investigation works, and I am thus of the view that reg 31 of the BCR is of minimal assistance to Resource Piling in establishing that the parties were brought into a close and direct relationship or that Geospecs had assumed any responsibility, as part of its statutory duty, towards Resource Piling in relation to the accuracy of its soil investigation logs.

  58. Assumption of responsibility, reasonable reliance and the contractual framework

  59. [34] Resource Piling submitted that Geospecs was a soil investigation specialist and had to expect that Resource Piling – as a potential bidder for the Piling Contract – would rely on the Geospecs Logs to price its tender. Resource Piling was also constrained to rely on the Geospecs Logs due to the short window of time within which tenders for the Piling Contract had to be submitted. There was therefore sufficient proximity between the parties.

  60. [35] Geospecs argued that there was no proximity between itself and Resource Piling. The Geospecs Logs contained only facts and did not purport to give any advice or make any representation to third party contractors. Further, Resource Piling was aware, at the time it submitted the tender for the Piling Contract, that it should not rely on the Geospecs Logs but should instead satisfy itself of the actual ground conditions.

  61. [38] Resource Piling’s argument can be characterised as a claim of assumption of responsibility by Geospecs and corresponding reliance by Resource Piling. Although of considerable vintage, Hedley Byrne continues to be the starting point in many other Commonwealth jurisdictions for claims involving negligent misstatements. Lord Devlin’s formulation of the test as to when a duty of care not to cause economic loss by making negligent statements arises can be found at 528–529 of Hedley Byrne:

  62. The Hedley Bryne elements have been incorporated as part of the first proximity limb of the Spandeck Test at [81]:

  63. Assumption of responsibility is to be understood in a legal rather than factual sense. It therefore refers to “the circumstances in which the law will deem the maker of the statement to have assumed responsibility to the person who acts upon the advice” (per Lord Griffiths in Smith v Eric S. Bush and Harris v Wyre Forest District Council [1990] 1 AC 831 at 862; see also the observations of Phang J (as he then was) in Sunny Metal & Engineering Pte Ltd v Ng Khim Ming Eric (practising under the name and style of W P Architects) [2007] 1 SLR(R) 853 at [63], citing Andrew Phang, Cheng Lim Saw and Gary Chan, "Of Precedent, Theory and Practice - The Case for a Return to Anns" [2006] Sing JLS 1 at pp 47-48 that the concept of proximity is “not merely factual but is, rather, legal in nature”).

  64. [39] I first dispose of the argument that was repeatedly stressed by Geospecs in its submissions, viz, that Resource Piling could not claim to have been negligently misled by the Geospecs Logs as the Geospecs Logs contained purely factual statements. The basis of liability for negligent misstatements, either under the Hedley Bryne principle or the Spandeck Test, is that one party may owe a duty of care to another not to provide information negligently; it is not dependent on whether such information may be classified under the semantic categories of “facts” or “advice”. I am, with respect, unable to comprehend how this apparent distinction changes the character of any responsibility that Geospecs may have undertaken with respect to Resource Piling or the nature of Resource Piling’s reliance on the Geospecs Logs. In this regard, I need only refer to the observations of Lord Steyn in Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830, at page 834D-H:

  65. The Hedley Bryne principle is conceptually premised on assumption of responsibility and a corresponding reliance, and does not turn on minute classification of what was said or done.

  66. [40] The present claim by Resource Piling against Geospecs, who provided geological or subsoil information or conditions to the Developer, is a novel one and neither counsel directed me to any previously decided case in a Commonwealth jurisdiction where a duty of care was held to exist on materially similar facts. In accordance with the incremental approach of reasoning by analogy endorsed by the Court of Appeal in Spandeck (at [82]), I now consider earlier cases where the courts have answered this broader question: does a professional owe a duty of care to a contractor where the contractor tenders for a contract on the faith of information prepared by the professional who does so under a separate contract with the contractor’s employer, but with whom the contractor has no contractual relationship?

  67. [42] In my view, Miller is of limited guidance because it was decided at an interlocutory stage on summary judgment principles. It arose from a motion by the defendant to dismiss the claim against it as disclosing no merit. It was therefore decided as a matter of law only on the basis of the assumed facts set out in the preceding paragraph, including the plaintiff’s pleading that the defendant soil engineer had intended for the report to provide information for prospective contractors bidding for the project. The summary judgment granted in favour of the soil engineering firm at first instance was accordingly reversed and the issue of negligence was sent for trial.

  68. [43] A similar conclusion and reasoning was adopted in Edgeworth Construction Ltd v ND Lea & Associates Ltd (1993) 107 DLR (4) 169 (“Edgeworth”), a decision of the Supreme Court of Canada. The Supreme Court held that an engineering firm which had prepared specifications and construction drawings for a highway project and the relevant tender documents incorporating such plans owed a duty of care to a contractor who had successfully tendered for the project and incurred economic losses as a result of errors in the specifications and drawings. McLachlin J, delivering the leading judgment of the court, made the following observations on the assumption of responsibility by the engineering firm at [5]:

  69. McLachlin J then considered whether the contract between the contractor and the employer negated this prima facie duty of care, and held (at [9]) that although the specifications provided by the engineering firm had been incorporated in the contract and had also become representations of the employer, they did not cease to be representations of the engineering firm. The contractor continued to rely on the accuracy of the specifications and did not assume the risk of errors in the work of the engineering firm. The presence of a clause in the main contract between the contractor and the employer negating any warranty of the accuracy of the information provided in the tender documents also did not extend to protect the engineering firm from liability (at [10]) and did not oust any possible duties in tort that the engineering firm owed to the contractor (at [12]).

  70. [44] I am hesitant to draw any statement of general principle from Edgeworth as it similarly concerned a striking out application at an interlocutory stage. The Court of Appeal in Spandeck cited Edgeworth for the proposition that (at [107]):

  71. From the very brief comment that Edgeworth drew from the Court of Appeal in Spandeck, it appears that the Court of Appeal gave a qualified and cautious interpretation of the decision as requiring a statement to the contractor instead of mere conduct of the third party professional in preparing the tender documents. The observations of McLachlin J (at [5]) that appear to suggest that the professional’s knowledge that the purpose of supplying the information was to allow contractors to prepare a tender could amount to an undertaking by the professional must be read in the context of the factual scenario in Edgeworth. Edgeworth concerned a situation where the professional provided the information for the specific purpose of preparing a tender package that would be relied upon by potential contractors and was involved in the preparation of the tender package; this may, depending on the facts, go beyond mere knowledge and foreseeability.

  72. [46] In the Court of Appeal, Henry and Keith JJ agreed and upheld the decision of the High Court that the engineers did not owe a duty of care to the contractor. There had been a careful allocation of risk for the negligence of the engineers (at [26]) and the imposition of a duty of care would “cut across and be inconsistent with the overall contractual structure defining the relationships of the various parties” (at [32]). Applying the principles in Hedley Bryne, the majority further held (at [28]–[30]) that the engineers were not possessed of a special skill that the contractor was relying upon, and there was thus no justification for holding that the engineers had voluntarily assumed a responsibility to the contractor. Notably, the majority distinguished Edgeworth and expressly departed (at [35]) from the approach of the Supreme Court of Canada in finding a prima facie duty of care that may subsequently be negated by the relevant contractual framework; instead, the imposition of the duty would depend on a consideration of all the circumstances, including the contractual framework.

  73. [47] Thomas J issued a robust dissent, disagreeing with the findings of the majority that the engineers had not assumed responsibility for the accuracy of the specifications or that the contractor had not reasonably relied on the specifications (at [84] and [86]). Thomas J also held (at [109]) that the contractual structure did not preclude the liability of the engineers to the contractor on the basis of the principles in Hedley Byrne, and approved (at [120]) of the basic logic underlying the reasoning of the Supreme Court of Canada in Edgeworth, viz, that proximity was made out once the elements of assumption of responsibility and reliance were satisfied and the tort law of negligence would as, a general rule, apply unless negated by contract.

  74. [48] I now turn to two English cases, a decision of the Court of Appeal in J Jarvis and Sons Ltd v Castle Wharf Developments and others [2001] EWCA Civ 19 (“J Jarvis”) and a more recent High Court decision in Galliford Try Infrastructure Ltd and another v Mott MacDonald Ltd [2008] EWHC 1570 (“Galliford Try”).

  75. [49] J Jarvis involved facts that are not found in the usual building contracts. The employer was engaged to provide an office tower for Northcliffe, a newspaper company. The tower was in a prominent and sensitive location in Nottingham and was constrained by planning requirements; the town planners, who wanted to retain Northcliffe’s commercial presence in Nottingham, took a close interest in the approval of plans for that tower. The employer was determined to obtain planning permission but nonetheless wanted the least expensive scheme satisfactory to Northcliffe. The planners, on the other hand, wanted to exercise control to ensure high quality design and architecture and imposed unusually onerous conditions for approval. The employer and their architects, Franklin Ellis, had many meetings with the planners over the planning approval and design of the tower. The employer also engaged the defendant, Gleeds, a quantity surveyor, to coordinate the construction project and pass information to contractors. When the employer thought it had planning approval on a certain basis, it got Gleeds, on its behalf, to invite Jarvis to tender for the design and construction of the tower. That invitation enclosed various documents, plans and drawings and Employer’s Requirements which was expressed to contain a summary of known constraints to assist Jarvis in formulating proposals and submitting a tender. The contract was eventually awarded to Jarvis and many problems subsequently ensued in the obtaining of planning permission. Jarvis brought claims alleging that the employer, Franklin Ellis and Gleeds had been negligent. The relevant aspect of this case involved Jarvis’ claim that Gleeds owed it a duty not to misrepresent that the scheme contained in its contractor proposals would comply with the planning permission that had been obtained and that Jarvis had relied on such misrepresentations. After an 18-day trial on the preliminary issues, the trial judge held that, inter alia, Jarvis was entitled to recover for loss and damage caused by negligence for which the employer and Gleeds were responsible and dismissed the defence that Jarvis was contributorily negligent. On appeal, the Court of Appeal allowed the appeal and dismissed Jarvis’s claim against Gleeds.

  76. [50] The Court of Appeal recognised (at [51]) that the English courts had been slow to recognise a duty of care where a professional agent provides information to a third party with whom his principal has, or is about to enter into, a contractual relationship. However, the court went on to state that it was prepared to assume, without deciding the point, that Gleeds could owe a duty of care to the plaintiff contractor who tendered on the basis of the information provided, and made the following statement of general principle (at [53]):

  77. After going through the facts in great detail, the Court of Appeal held that the factual findings of the trial judge, who had sadly died in the meanwhile, were uncertain and the court was unable to reach a conclusive decision that the quantity surveyor did in fact owe the contractor a duty of care (at [59]). The Court of Appeal therefore did not provide any detailed reasoning for the preliminary conclusion that a duty of care was not strictly precluded, nor did it make any affirmative finding on this basis. I note that the Court of Appeal confined the potential liability to negligent misstatements that were made by the agent to induce the contractor to tender; it did not include any misstatement that came to the contractor’s knowledge or was conveyed to him.

  78. [51] Galliford Try involved a claim by a contractor, who undertook a design-and-build project, for economic losses it had suffered as a result of delays and additional redesign work that it had not adequately factored into its contract price due to carelessly provided information by the consulting engineers. Although the engineers had liaised extensively with the contractor and had provided tender information directly, Akenhead J held that the engineers did not owe the contractor a duty of care as there was no assumption of responsibility by the engineers, who were at all material times employed only by the main developers of the project and had not been involved in the contractor’s pricing plans. Akenhead J further observed (at [315]):

  79. The judgment in Galliford Try comprised some 424 paragraphs where the judge went into great detail to analyse the evidence and facts to see whether a duty of care arose under the Hedley Byrne principles. His judgment bears reading also because the learned judge was a leading construction silk in his day.

  80. [52] Two threads are discernible from the above cases. First, in my view, statements made or information prepared by third party consultants employed by the employer that is given to prospective contractors are not, without more, to be treated as statements or information which constitute Hedley Byrne type statements, information or advice leading to liability. It is normal in the context of a building contract for consultants to convey information and, without more, there is no imputation of any assumption of responsibility by the consultants. Secondly, the manner in which the various contracts are structured and how risk has been allocated between the various parties forms the indispensable context and is an important factor in analysing whether the contractual relationships show or support intentions regarding the assumption or allocation of risk or responsibility inconsistent with the claimed duty in tort. The various contractual provisions which bind different parties have to be considered. Building and construction contracts for larger projects are all about the allocation of risk and responsibility; often, tied to that risk is the responsibility of insuring risks that are insurable. In referring to claims under the Hedley Byrne principle, Akenhead J made the following observation (at [190(c)] of Galliford Try):

  81. Whilst factually most contractors will rely on information gleaned from tender documents, including the drawings and specifications, what is relevant is the issue of legal assumption of responsibility and reliance.

  82. [53] With these principles in mind, I now turn to the facts of the case. Four factors stand out in relation to Resource Piling’s claim that Geospecs owed it a duty of care.

  83. [55] Secondly, in the context of the Singapore building construction industry, Geospecs would reasonably expect and know that at least the Geospec Logs would be made available to the contractors tendering for the piling and superstructure works. Geospecs initially pleaded that it did not know that the Geospecs Logs would be incorporated into the Tender Documents; fortunately for their credibility, Mr Tan candidly conceded during cross-examination that he was aware that the Geospecs Logs would be provided to the piling contractors to price their bids:

  84. It would have been entirely unrealistic for Mr Tan to contend otherwise given the prevalent industry practice. Geospecs therefore must have foreseen and was probably aware at the material time that the Geospecs Logs would be relied upon in some form by a contractor in the position of Resource Piling or the main contractor for the superstructure. It is my experience, and I can additionally take judicial notice of the fact, that in the larger construction contracts, the borehole logs are invariably included as part of the tender and eventual contract documents.

  85. [56] Thirdly, although cl 1.6 of the General Specifications stated that Resource Piling was given the option to conduct its own soil investigations before tendering if it so wished, piling contractors are seldom given enough time to carry out soil investigations of their own in the short time interval between collecting the tender documents and the deadline for the submission of tenders. This necessitates piling contractors relying on the borehole logs of soil investigators to submit their tender bids. Resource Piling alluded to this in the evidence of Mr Foo, who claimed that although Resource Piling was contractually entitled to conduct its own soil investigation, it was not practically possible to do so within the two week time frame to submit its tender; Resource Piling therefore had no choice but to rely on the Geospecs Logs. This is the reality in Singapore’s building contract environment, and I recognise that this is a necessary constraint under which most, if not all, contractors have to operate.

  86. [59] Fourthly, there was no disclaimer of responsibility or a notation or clause – which is sometimes found in soil investigation reports – to the effect that the Report was prepared solely for and for the purposes of the developer and its consultant and that the maker expressly accepts no responsibility towards any other third party whatsoever and who relies on the same at his own risk. The terms on which Geospecs provided the soil investigation results to Longrove or the Developer clearly did not contain an express disclaimer as to the accuracy of the Geospecs Logs. Although Mr Tan asserted that Geospecs had preserved its position in this respect, he could only point to a single line in the Report when cross-examined:

  87. This statement was clearly not in the nature of an unambiguous and unequivocal disclaimer of responsibility that sufficed to exclude a prima facie assumption of responsibility.

  88. [60] However, in my judgment, although I am satisfied that Resource Piling was not practically able to ascertain the accuracy of the Geospecs Logs and that Geospecs had knowledge that the information contained in the Geospecs Logs would be conveyed to and relied upon by Resource Piling to price their tenders, these per se are not sufficient to establish proximity. On the contrary, there are at least five other countervailing factors that militate against a finding that there was an assumption of responsibility by Geospecs or a corresponding reasonable reliance by Resource Piling.

  89. [61] First and foremost, Geospecs was engaged by the Developer to conduct soil investigations, ascertain water table measurements, record field Standard Penetration Test (“SPT”) values, obtain undisturbed samples to enable tests to be carried out to obtain information on moisture content, bulk density, Atterberg limits, shear strength in triaxial compression and consolidation and other data for the Developer and its consultant for the purposes of pile design. This was expressly stated in the scope of works in the Soil Investigation Contract and the articulated purposes of the investigation. I accept that once the engineer has decided on the choice of piles and the foundation design based on the Report, information from this Report, including the Geospecs Logs, would be used to prepare the tender specifications and drawings for tender.

  90. [62] Secondly, the Soil Investigation Report was not primarily for tendering purposes and neither was it for any express purpose of enabling the piling tenderer to calculate his price. The Report consisted of some 203 pages. The Geospecs Logs for the 11 boreholes only comprised some 22 pages. The Report itself comprised 11 pages. The rest, which formed the bulk of the Report, were mainly detailed test data and results, graphs and laboratory test results which were clearly intended not for a piling contractor’s use but for Longrove’s use in designing the foundations. The Report also contained Geospecs’ recommendations for the type of soil encountered and the recommended pile to be used. There was no passing of such information directly from Geospecs to Resource Piling, and neither was the Report addressed directly or indirectly to Resource Piling as the successful piling tenderer. In fact, there was no evidence before me that there was any immediate contact between Geospecs or Resource Piling right up to the time that the writ of summons was filed. All communications took place through the Developer or Longrove.

  91. [63] Thirdly, and consequent upon the second reason, only a small part of the entire Report was made available to Resource Piling, namely, the Geospecs Logs. Clause 1.6 of the General Specifications stated that “an extract of the Soil Investigation Report [was] enclosed…for information” [emphasis added], and it was thus clear that the full Report was not included. It is noteworthy that soil investigation, if properly done, only gives a snapshot of the cross-section of the soil which the bore went through. It does not say what the soil is ten metres away. If another borehole is sunk 20 metres away, then only a very approximate extrapolation of the likely soil profile is obtained by placing these borelogs at two ends of a page and connecting the layers. Sometimes, three or more borelogs are used in this fashion when extrapolating the likely soil profile along a longer axis. The point is, the analysis is not continuous, and because this is after all an extrapolation, it cannot show exactly the precise different soils or boulders or rock which may exist between any two boreholes. It has to be remembered that soil investigation borelogs are by their very nature limited in number across a much larger site and do not necessarily accurately profile the subsoil at a site; that is why employers and their consultants in Singapore always provide that the risk of different or adverse soil conditions is on the piling or superstructure contractor. Geospecs sank 11 boreholes whereas Piling Resources had to construct 442 bored piles across the site. These are facts, general as well as particular, that have to be weighed in deciding whether the first test of proximity can be satisfied.

  92. [64] It is therefore erroneous for Resource Piling to say that only two (BH-5 and BH-6) out of the 11 boreholes drilled by Geospecs indicated the presence of rock and that they could therefore anticipate that approximately only 18% of their piles would encounter rock, or that two out of 11 of the boreholes, which were adjacent to each other, indicated the presence of rock and that Resource Piling could therefore safely extrapolate that it would not encounter rock elsewhere across the Site. That was therefore an assumption Resource Piling made. It accordingly took the risk, in the contractual context, of that assumption being wrong. Mr Foo’s evidence clearly bears out his extrapolation and therefore assumptions he made in working out his tender price. Geospecs also pointed out (in my view very validly so, given the context), that they did not know the Report was not made available to Resource Piling. The Report stated at p 11 that:

  93. Although this does not say rock can be expected, it clearly opines that boulders can be expected, ie, drilling or coring through boulders may have to be carried out before reaching the layers below them. Therefore, while I would accept that it was reasonable for Resource Piling to have relied on the Geospecs Logs as one of the considerations in preparing their tender, I do not think it can be said with equal strength that it was reasonable to rely on the Geospecs Logs as enabling them to determine with accuracy that only 18% of the piles would hit rock. There was an element of risk that is inherent in extrapolating the overall soil profile of the Site based on 11 data points, and I believe that Resource Piling must have been aware of that.

  94. [65] Fourthly, also of importance is that there are different ways in which piling contractors price their works and Geospecs would not know which pricing structure would be adopted as between the Developer and Resource Piling. For bored piles, tenderers can price their piles by length and diameter of the pile with different rates for boring through soil, boring through soft soils (where there might be a need for additives to help stabilise the surrounding soil) and boring through rock or large boulders when they are encountered in the subsoil. They can also make provision for underground obstructions, like old structures sunken in the subsoil. There was no suggestion at all that Geospecs was aware how Longrove would structure the pricing for the tender or that Resource Piling would price their tender purely by the length and diameter of the pile, irrespective of the type of soil it encountered in its construction of the bored piles. I note that in the case of Geospecs, it protected itself by providing that its lump sum quote did not include rock coring and if required it would charge $150 per metre subject to a minimum of three metres per borehole. The bill of quantities issued by Geospecs also stipulated that boring in soil would be priced at a rate of $20 per metre whereas diamond drilling through solid rock or material with SPT results of not less than 100 blows per 300mm was at a rate of $180 per metre. I do not think there was evidence of any close relationship between the parties as there apparently was in Miller or Edgeworth that would support the imputation of an assumption of responsibility on the part of Geospecs in relation to Resource Piling’s reliance on the Geospecs Logs for tendering purposes. It had not participated in the drawing up of the tender documents or specifications or prepared the Geospecs Logs with the intention that it be used by Resource Piling.

The judgment continues past this page. Read the rest at eLitigation.