Yip Holdings Pte Ltd v Asia Link Marine Industries Pte Ltd

Belinda Ang Saw Ean J:

[2] The facts giving rise to these proceedings may be briefly stated as follows. The plaintiff in Suit No 399 of 2008 claimed damages for breach of contract in relation to, inter alia, damage caused to the plaintiff’s American Hoist 9280 crane (“the Crane”) that was kept at the defendant’s premises pursuant to an oral agreement made in 1999 (see Yip Holdings v Asia Link at [107] for the terms). The defendant admitted that on 17 February 2007, the plaintiff had requested access to the Crane in order to facilitate its removal, and that the defendant had instructed the Crane to be moved to another yard belonging to Haruki Machinery Pte Ltd (“Haruki”). Lai J found that the Crane was unilaterally moved from the defendant’s premises to another location on 18 April 2007, that the plaintiff had no prior knowledge of the defendant’s instructions to Haruki, and that the defendant did not inform the plaintiff that the Crane had been moved to another location until 7 May 2007.

[3] Haruki had demobilised and dismantled the Crane purportedly to carry out repairs to the Crane at No 48 Tuas Avenue 9, Singapore (“Haruki’s yard”). From what had been stated, the dismantling of the Crane involved taking out various parts of the Crane. However, repairs were never carried out. Instead, the defendant left the Crane in the open in its dismantled state at Haruki’s yard.

[4] The plaintiff’s managing director and major shareholder who testified at the trial was Yip Fook Chong also known as Ronald Yip (“Yip”). The defendant’s director and shareholder who testified on behalf of the defendant was Lim Seong Ong also known as Kenny Lim (“Lim”).

[5] I refer to the trial judge’s finding of facts and legal conclusions on the liability issue in Yip Holdings v Asia Link. The paragraphs that are relevant to the assessment of recoverable damages are set out hereunder:

[6] The undisputed facts as narrated by Lai J in Yip Holdings v Asia Link are as follows:

[7] The plaintiff’s Notice of Assessment of Damages, namely, NA 18 of 2008/W (“NA 18”) was listed for hearing before an Assistant Registrar (“AR”) over several tranches. The AR’s decision on the quantum of damages recoverable was given on 15 September 2010 (“the Order of 15 September 2010”). In particular, the AR awarded:

(a) Damage to the Crane at US$285,000;

(b) Loss of chance of rental at US$48,000;

(c) Cost of torque converter at US$6,000; and

(d) Outstanding amount on the Manitowoc crane at S$65,715.

[9] Both parties were dissatisfied with the quantum of damages assessed by the AR and Notices of Appeal to Judge in Chambers were filed. RA No 389 of 2010/J (“RA 389”) was filed by the Defendant and the scope of the appeal related to items (a) and (b) of the AR’s Order of 15 September 2010 (see [7] above). RA No 391 of 2010/E (“RA 391”) was filed by the plaintiff, and the appeal also related to items (a) and (b). In short, both parties did not appeal against items (c) and (d) of the Order of 15 September 2010. At the conclusion of the hearing, I made the following orders:

(a) The defendant to pay the plaintiff the sum of US$395,000 (equivalent to S$516,265) being the value of the Crane after deducting the sum of US$5,000. The defendant is to take over the plaintiff’s proprietary interest in the Crane “as is, where is”;

(b) No damages for loss of rental;

(c) No damages for loss of chance to rent out the Crane; and

(d) Each party to bear its own costs of appeal.

[10] I informed counsel at the hearing on 20 April 2011 that I would use the AR’s exchange rate of US$1 = S$1.307. For the plaintiff’s loss of the Crane being the value of the Crane, the amount of damages awarded in US Dollars was US$395,000 after deducting US$5,000. I was informed by Ms Jacob that in Singapore dollars, the quantum of damages would be S$516,265 (US$395,000 x S$1.307).

[11] Given the scope of the defendant’s appeal, I will only be publishing the reasons for my decision to award the sum of US$395,000 as damages to the plaintiff for the destruction of its Crane.

[12] To recap, the breaches were that the defendant had refused to allow the plaintiff to take away the Crane between 17 February and 30 March 2007, and thereafter the defendant failed to, inter alia, safeguard the Crane in Haruki’s yard. In April 2007, without the consent and authorisation of the plaintiff, the defendant unilaterally gave instructions to Haruki (acting on behalf of the defendant) to dismantle and move the crane to the latter’s yard which instructions were acted upon by Haruki. In the process of the move, the Crane, in its dismantled state, was damaged on 18 April 2007. The Crane was not reassembled and its condition deteriorated over time as it was left in the open at Haruki’s yard with its components exposed to the elements. Under these circumstances, the plaintiff is entitled to restitution in integrum. As Andrew Burrows in Remedies for Torts and Breach of Contract (Oxford University Press, 3 Ed, 2004) (“Remedies for Torts and Breach of Contract”) observed (at 232):

[14] The burden of proof is on the plaintiff as the party seeking to establish its entitlement to damages. As for the degree of proof required in respect of the loss claimed, I refer to and adopt the apt words of Andrew Grubb in The Law of Torts (LexisNexis, 2 Ed at para 6.5) where the author, rightly, observed:

[15] The impossibility of laying down any definitive rule as to what may constitute adequate proof of damage means that a court has to adopt a flexible approach with regard to the proof of damage. This approach was fully explained by Andrew Phang JA in Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd [2008] 2 SLR(R) 623 (“Robertson Quay”). The decision at [27] – [28] and [30] – [31] is particularly instructive:

[16] The plaintiff had in its Statement of Claim claimed damages comprising of:

(a) The cost of repairs/replacement;

Before the AR, the plaintiff’s former lawyers argued that the defendant should pay US$500,000 as it was the cost of cure, ie, the cost of repairs or the replacement cost. Before me, counsel for the plaintiff, Ms Susan Jacob (“Ms Jacob”), who was assisted by Mr Glenn Knight, explained that the plaintiff accepted the AR’s assessment of the value of the Crane at US$400,000, but she argued that, in awarding damages to the plaintiff, the AR was wrong to have deducted the scrap value of the Crane (ie, US$100,000) from its pre-accident value of US$400,000. Put another way, the plaintiff’s case at the appeal before me is that the defendant is liable to pay for the full pre-accident value of the Crane, and it is for the defendant to take over the Crane “as is, where is”.

[18] For expediency, I propose to discuss some of the defendant’s arguments here since they are short points and hence easily dealt with. First, the contention that there was no available market for this Crane and, as such, the value of the Crane undamaged was the same as the value of the Crane damaged, ie, its scrap value. Mr Ferix argued that it would be impossible to find a 40-year old 150 ton crawler crane in Singapore because the age of obsolescence of cranes in Singapore was 30 years. By reason of that norm, the Crane was obsolete and consequently, there would be no available market for such cranes in Singapore. Therefore, the value of the Crane would be its scrap value. Not only was the legal basis for his contention suspect (see [36]-[41] below), Mr Ferix appeared to have disregarded the evidence of the defendant’s own expert’s valuation of the Crane which was supposedly based on the comparable values of cranes with similar characteristics as the Crane (see [49]-[50] below).

[19] Second, Mr Ferix argued that the plaintiff had neither used the Crane for many years nor attempted to sell or rent the Crane. Developing his argument, Mr Ferix submitted that it would be akin to the plaintiff receiving a windfall if the latter was awarded as damages the value of the used Crane. Mr Ferix’s point was a nonstarter. The law in this area is quite clear and it is set out succinctly in “Butterworth’s Law of Damages” at para 14.03:

See also The Mediana [1900] AC 113 at 117.

[20] Earlier before the AR, the defendant argued that no damages should be awarded for the damage to the Crane because the plaintiff had failed to mitigate its losses. The AR summarised the defendant’s arguments on mitigation and her decision was as follows:

[22] Two points may be made. First, it seemed to me that the defendant was re-arguing the liability issue when the trial judge had expressly ruled against the defendant in Yip Holdings v Asia Link at [111] (see [5] above). Those findings should be read with [61], [113] and especially Lai J’s further observations at [93]-[94] of Yip Holdings v Asia Link:

[23] Second and more importantly, mitigation of damages as a defence must be properly pleaded and proved. Mr Ferix’s contention that the plaintiff’s loss was due to its failure to mitigate was raised at the hearing of NA 18. The AR should not have permitted and entertained the arguments because there was no plea of mitigation of damages in its Defence. The state of the defendant’s pleadings contravened the established procedural rule that an assertion that the plaintiff had failed to mitigate its loss must be pleaded and proved by the defendant relying on it (see Jia Min Building Construction Pte Ltd v Ann Lee Pte Ltd [2004] 3 SLR(R) 288 at [71] following Geest plc v Lansiquot [2002] 1 WLR 3111 at [16]; and recently The “Rainbow Star” [2011] 3 SLR 1 at [56]).

[24] There is no gainsaying the importance of a specific plea of mitigation of damages as a defence following the restatement of the principles of mitigation by the Court of Appeal in The Asia Star [2010] 2 SLR 1154. For present purposes, V K Rajah JA (delivering the judgment of the court), inter alia, observed at [24]: (a) mitigation of damages involves an inquiry as to the reasonableness of the innocent party’s action or inaction after the breach, and (b) ordinarily it is the defendant’s burden of proving that the innocent party had failed to take reasonable steps to mitigate its loss, and that the burden is not one that is easily discharged. In his overview of the law relating to mitigation of damages, Rajah JA pointed out at [31] that whilst the standard of reasonableness is said to be an objective one, it also takes into account subjective circumstances such as the aggrieved party’s financial position. Accordingly, the reasonableness inquiry falls short of being purely an objective one. Furthermore, since the question of mitigation is a question of fact, and the circumstances in which the plaintiff was placed by the breach dictated its action or inaction, they would be matters of materiality that must be pleaded with as much particularity as would be required in the circumstance.

[25] Significantly, two applications were taken out by the defendant late, long after RA 389 and RA 399 were filed. The defendant’s first application was related to mitigation of damages. Summons No 86 of 2011 (“SUM 86”) filed on 10 January 2011 was for leave to adduce further evidence by filing the Affidavits of Evidence-in-Chief of two persons from Haruki, namely, Lim Choon Bock and Samy Nathan, the defendant’s director and manager respectively. Interestingly, the defendant wanted to show through the two witnesses from Haruki that once the Crane was moved to Haruki’s yard, the defendant had nothing to do with the Crane, that it was a matter between Haruki and the plaintiff, that Haruki did not stop the plaintiff from accessing the Crane, and finally, that the condition of the Crane was not as bad as it was made out to be by the plaintiff. The application was dismissed by me on 31 January 2011. The defendant had not appealed against the dismissal of SUM 86. I was of the view that SUM 86 was made too late in the day, and above all, it was a veiled attempt to re-visit and re-litigate the liability issue which it could no longer do so. Neither could the defendant adduce evidence on failure to mitigate when mitigation was not pleaded in its Defence. Previously, Lai J had (a) commented on the glaring absence of Haruki’s representative as a witness in the liability trial despite the pivotal role of Haruki’s director, Lim Choon Bock, who dealt with the defendant’s Lim, and (b) recorded in the judgment the defendant’s acknowledgement that it was responsible for the state of disrepair of the Crane whilst it remained at Haruki’s yard (see Yip Holdings v Asia Link at [72] and [94]).

[26] The defendant must have realised that its pleadings were deficient for the latter on 28 January 2011 applied vide Summons No 431 of 2011(“SUM 431”) for leave to amend the Defence to plead that the plaintiff had failed to mitigate its loss. No particulars of the failure of the plaintiff to mitigate were provided. It was telling that Mr Ferix withdrew SUM 431 on 14 February 2011.

[27] In the premises, those parts of the defendant’s submissions that traversed the issues of liability and mitigation of damages were not considered by me.

[28] I now turn to the Assessment of Damages with the relevant legal principles in mind (see [12]-[15] above). In this particular case, the defendant refused to allow the plaintiff to move the Crane in February and March 2007 and the Crane was later dismantled. Due to the damage sustained by the Crane on 18 April 2007, the delay associated with the non-repair of the Crane, the neglect and abuse of the Crane, the plaintiff was permanently deprived of the Crane. Put another way, this damage to property is analogous to the pecuniary loss consequent on a breach of contract where the damaged property is said to correspond to a deprivation of the contractual benefit which, in this case was to, inter alia, safeguard the Crane (see Remedies for Torts and Breach of Contract at p 232).

[29] By way of background and clarification, the defendant at the hearing of NA 18 had initially adopted the position that the Crane was not in a working condition when it was kept at the defendant’s premises. However, midway through the hearing, the defendant changed its position, and Mr Ferix accepted that Lai J had made a finding of fact that the Crane was in a working condition. Consequently, an application was made for leave to file an affidavit from an expert witness, Mr Leng Kwang Chiang (“Mr Leng”) to testify on the value of the Crane in 2007 based on the value of a working crane of the type of crane in question. Mr Leng filed his Affidavit of Evidence-in-Chief on 16 June 2010. A supplementary affidavit was filed on 21 July 2010 to correct typographical errors in Mr Leng’s earlier affidavit.

[30] The evidence adduced at the hearing of NA 18 pertained to the following:

(a) repair of the Crane would be completely uneconomical as it would cost about US$500,000; and

(b) the value of the Crane as determined by the respective experts called by the parties.

I will consider the evidence in turn.

[35] The AR accepted that it was uneconomical to repair the Crane. She proceeded to assess damages based on the value of the Crane at the time and place of destruction. I agreed with the AR that the Crane was a constructive total loss.

[36] The Crane was manufactured in 1967. It was an old and second-hand crane that was no longer in production as its manufacturers were no longer in business. The market was unable to supply any close replica or suitable replacement of what had been lost. Damages were awarded for the loss of the Crane. In other words, the loss was prima facie the value of the Crane. A question for consideration is how is the value of the Crane to be assessed?

[37] One way of putting a monetary figure on the value of the chattel is to use “market value”. Market value is looked upon as the fairest way to objectively assess the value of a chattel destroyed at the place and the time of the wrong. The function of an available market as the basis upon which to determine compensation in damages in a case involving negligent damage to goods was explained by Coleman J in Derby Resources AG and another v Blue Corinth Marine Co Ltd [1998] 2 Lloyd’s Rep 410 (“Derby Resources”). Colman J’s explanation (which is of general application) states (at 416):

Thus, in cases where the chattel can be replaced in the market, evidence to assess compensation to the owner for the destroyed or lost chattel is easily available. It is not disputed that expert evidence may be given of the market value of the chattel as it was at the time and place of destruction (see The Harmonides [1903] P 1 at p 5-6).

[38] However, if the market value cannot be determined or will be inadequate because of the special or unique nature of the chattel, the value of the chattel must still be ascertained, and the court has to do the best it can on the available evidence. This is because the exercise required to quantify the damages would involve the same objective and principle: the value of the chattel at the time and place of destruction.

[39] I now come to what evidence the court can take into consideration if there is no meaningful market value. The commentary in para 14.11, Butterworth’s Law of Damages is instructive:

[40] Another suggestion that is instructive is gathered from Coleman J’s observations in Derby Resources (at 416 – 417):

[41] Finally as stated, the value of the Crane is assessed at the place and time of the wrong. This is the general rule that damages for tort or breach of contract are assessed as at the date of the breach. It is recognised in the cases that such an inquiry may be factually difficult, and should not be applied mechanistically in circumstances where assessment at another date may more accurately reflect the compensatory principle (see Dodd Properties (Kent) Ltd v Canterbury City Council [1980] 1 WLR 433). Thus, events occurring between the date of damage and the date of trial may fall to be taken into account (see Scrutton LJ in The Kingsway [1918] P 344 at 362).

[42] In the present case, the AR held that it was “fair to assess the value of damage to the crane by taking ... the value of the crane as at the date of breach (February/March 2007)”. In my view, what the AR meant to say was that she would determine the Crane’s pre-breach or pre-accident value, and she rightly identified the period to be in “February/March 2007”.

[43] I now come to the evidence of the expert witnesses.

[44] The plaintiff’s expert witness, Mr Banks, was the Managing Director and co-owner of Mobile Crane Asia Pte Ltd. The defendant’s expert witness, Mr Leng Kwang Chiang (“Mr Leng”), was the Director of Valuations, Asia of GoIndustry DoveBid Pte Ltd.

[45] Mr Banks stated at paragraph 4 of his Affidavit that he has had extensive experience working in the crane business industry having worked over 30 years, holding various roles in engineering, sales and senior management, in three of the largest companies in the industry, namely Grove Crane, Krupp and Demag Cranes, which was acquired by Terex Cranes in 2002.

[47] Based on his knowledge of the market in 2007, the figure of US$400,000 was what the Crane could be sold to his client in 2007, and on the assumption that the Crane was in a working condition. Mr Banks also explained that second-hand cranes were in demand between 2007 and 2009 because of a world-wide shortage.

[48] In cross-examination, Mr Banks was asked a second time how he had arrived at the figure of US$400,000:

[49] On the other hand, Mr Leng was of the view that the Fair Market Value of the Crane in 2007 would be S$150,000.00. Fair Market Value was defined in Mr Leng’s appraisal report as:

[50] Mr Leng’s valuation was on a “Desktop” basis (meaning that a physical inspection of the crane was not made). He considered that the closest guide to the Crane’s value was to be found in certain comparables which he had put together in a table. The table was annexed to his appraisal report. As stated earlier, the defendant was no longer disputing Lai J’s finding that the Crane was in a working condition when it was handed over to the defendant, and as such, Mr Leng’s evidence was based on comparable cranes in a working condition.

[51] Yip had testified that the Crane was meant for the offshore industry which was the plaintiff’s main business. He explained that the Crane was not “a standard production”. It had to be specially ordered for the offshore industry, and was thus unique. He said:

[52] Yip’s reference to Mr Banks’ evidence on the downgrading of the Crane for off-shore operations was further explained in cross-examination:

[53] Yip also gave evidence before the AR that there had been approaches to buy the Crane in 2007. I was mindful that the same evidence was previously noted to be undisputed by Lai J in [38] of her decision (see [6] above). One interested party was Skyboom from India, and the other was See Yong & Sons from Malaysia. Yip referred to his Affidavit of Evidence-in-Chief filed for the liability trial where he had recounted that between May and December 2007, one Ashni Suchdev of Skyboom was prepared to buy the Crane at US$400,000 if it was in a fully operational condition. Yip’s offer to Mr See Fann of See Yong & Sons was to sell the Crane, rebuilt by Haruki, at US$400,000. There was Haruki’s offer to buy the Crane “as is, where is” for S$330,000.

[54] In my view, the expert’s opinion of value in the present case had to operate on the basis of experience and judgment as opposed to having material on the basis of which to offer analytical approaches. I accepted the AR’s reasons for preferring the opinion of Mr Banks. Mr Banks had extensive knowledge, expertise and experience in the heavy crane industry for over 30 years where he had held various roles in engineering, sales and senior management in three of the largest companies in the industry. The Crane in question was built by the American Hoist Company. The American Hoist Company was acquired by Terex Cranes, of which Mobile Crane Asia Pte Ltd was the official agent. In this sense, Mr Banks had particular knowledge and experience of cranes manufactured by American Hoist Company.

[55] In contrast, Mr Leng’s experience as a licensed appraiser and valuer was more broad-based and general. Mr Leng possesses a certificate in ship building and engineering from Ngee Ann Polytechnic. During his career as an appraiser and valuer, he had valued cranes of different makes. In his report under the heading “Use of the Appraisal”, he wrote:

[56] The AR noted that Mr Leng had told the court that he made his assessment based on internet information and general sources from trade magazines. His answers at cross-examination assisted in evaluating his experience and expertise:

[58] Mr Leng was informed by the defendant that the length of the boom was 100 feet and based on that advice, Mr Leng commented that this length was impractical in the sense of its proportion and utility. When told that the Crane’s shorter boom was not for lifting but for offshore dredging purposes, he agreed with counsel’s statement. However, he claimed without explanation that the Crane could be used offshore as well as onshore and that it was not a dedicated offshore crane. In the end, he conceded that the Crane would have to be converted to be used for onshore operations. Later, when pressed by counsel for the plaintiff, Mr Leng accepted that if the Crane had the special features Yip talked about, the features would be considered as enhancements, and that his valuation would be different in the sense that the value would be dependent on the level of enhancement.

[59] From the overall evidence, Mr Leng’s evidence lacked probative value. In contrast, Mr Banks provided more cogent and convincing evidence. Besides, the monetary value of the Crane could be corroborated by the offer Yip received from Ashni Suchdev of Skyboom who was prepared to buy the Crane at US$400,000 if it was in a fully operational condition.