Throughout the course of this report, to determine if the plaintiff is owed a duty of care in negligence, we will adhere by the Singapore single test of negligence laid out in the case of Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency  SGCA 37;  4 SLR 100, which states that the following factors must be satisfied in order for a duty of care in negligence to arise: 1) Test for factual foreseeability 2) Test for proximity 3) Test for policy Case 1: MMBooks v Hamza Construction Ltd (‘HCL’).
Hamza Construction Ltd (‘HCL’) is doing some tunnel work for the MRT Circle line in the Bras Basah area. At about 11am one Friday morning, one of their workers excavated into some telephone and electricity cables. This affected a building down the road where a bookshop, MM Books is located. MMBooks had to close their shop for four hours because of the power outage. When power was restored at 3pm, MMBooks realized that all of their computers no longer worked. The computer technician they called, Larry Lim, said that a huge power surge had damaged the computers. Advise MMBooks.
In this case, our group has identified that we have to determine if MMBooks can claim for damages in tort of negligence as well as the type of damages that they can claim. 1. 1 Requirements for MMBooks to be able to claim in Tort of Negligence For MMBooks to take action in tort of negligence against ‘HCL’, a few legal requirements need to be fulfilled prior to that, which are: a) A duty of care owed by HCL to MMBooks must exist b) HCL breached its duty of care owed to MMBooks c) MMBooks suffered loss from the breach 1. 2 Legal Issue 1: Did HCL owe a duty of care to MMBooks?
“Referring to Spandeck Engineering (S) Pte Ltd v DSTA, “a single test is preferable in order to determine the imposition of a duty of care in all claims, irrespective of the type of damages claimed…” The test adopted is Ann’s test, tempered with the preliminary requirement of factual foreseeability. This test is to be applied incrementally. In other words, when applying the test at each stage, judges ought to refer to decided cases in analogous situations. ” Therefore, in establishing whether a duty of care exists between MMBooks and HCL, the Spandeck test must be applied.
As mentioned above, a pre-threshold issue of factual foreseeability (which is akin to the ‘neighbourhood principle’ in Donoghue v Stevenson) is to be satisfied before moving on to the test of proximity and test of policy. 1. 2. 1 Pre-threshold issue: Factual Foreseeability Factual foreseeability refers to the foreseeability that one’s negligent act or omission is likely to result in the damage suffered by the plaintiff from a factual perspective. It is akin to the neighbour principle in Donoughue v Stevenson.
In this case, ‘HCL’ was carrying out excavation works in the Bras Basah, which is located in the city, meaning that the work site is surrounded by buildings which require electricity. According to SP PowerGrid Ltd, Singapore’s electricity transmission and distribution cable network is fully-underground. Therefore, in this situation, HCL ought to have known that carelessness on their part during construction would possibly result in them excavating into underground electrical cables of neighbouring buildings (including where MMBooks was located) and thus, cutting off their electricity, which resulted in damage of MMBooks’ computers.
Hence, in this situation, the pre-threshold issue for the Spandeck test has been fulfilled. Thus, we can move on to the test of proximity. 1. 2. 2 Test of Proximity In Sutherland Shire Council v Heyman – Dean J described proximity as encompassing physical proximity, circumstantial proximity and causal proximity. In this particular case 1, it is unlikely for circumstantial proximity to exist due to the fact that the plaintiff and defendant had no relationship whatsoever (whether casual or in contract). However, it was mentioned in this case that “[The Power outage] affected a building down the road where MM Books is located.
” Seeing as how the term “down the road” is relatively vague, our group has defined parameters as the building located directly next to the construction site. Therefore, it is evident that physical proximity has been satisfied. As for causal proximity, it has been fulfilled because if not for the negligent act by Hamza, MMBooks would not have suffered from the power outage. Therefore, sufficient proximity has been established. Thus, according to the Spandeck test, once the pre-threshold issue of factual foreseeability and test of proximity have been satisfied, we can establish that there is a prima facie duty of care.
1. 2. 3 Policy Is there any policy considerations that negate the duty of care owed to MM Books by HCL? • Will imposing a duty of care lead to an indeterminate liability? Referring to the guidelines established in Ultramares Corporation v Touche (1931) for claims for economic losses (loss of profits in this context): 1) Class of persons that can claim – indeterminate If MM Books is allowed to claim for economic losses, the other shops in the vicinity that got affected by the power outage would be able to claim as well.
2) Amount that can be claimed – indeterminate It would be really difficult to ascertain the pure economic losses that can be claimed by MM Books. Could it be the employees’ salaries during the period of power outage? Rental loss during the period of power outage? This uncertainty will lead to an indeterminate amount that can be claimed. 3) Time period – determinate time The loss of profits that can be claimed is only limited to the 4 hour power outage. However, because we cannot determine the loss of profits, this guideline would not be relevant.
Therefore, considering indeterminate liability to amount that can be claimed and the class of persons that can claim, policy considerations clearly negate the duty of care HCL owes to MM Books in the context of economic losses. However, Court of Appeal in the Sunrise Crane (2004) noted that the law is more restrictive in imposing a duty of care for a claim in pure economic loss. Therefore, we advise MM Books to claim the physical damage to their computers and consequential economic losses that arose as a result of the physical damage because repair costs of computers and fees paid to technicians to restore the computer can be ascertained.
Consequently, these losses does not impose indeterminate liability against HCL, MM Books would succeed in their claim provided the next 2 requirements are met. 1. 3 Legal Issue 2: Breach of Duty of Care The legal principle: A Defendant who owes a duty of care will be considered to have breached that duty of care if he does not uphold the standard of care expected of him. Guidelines to established standard of care 1)Skill – Since excavation works is considered a highly specialised assignment that requires great expertise, a high level of skill is definitely required.
2)Likelihood – there is a high chance power outage will cause physical damage suffered by the computers because older, weaker, or lower quality components in the computer could actually be broken by power outages because such sudden spikes and dips in the power will contribute to wear and tear which can cause damage to computers. 3)Seriousness – highly likely that power surge would cause important data in computers to be lost. For example, there would be detrimental effects if the cash register of the MM Books is lost because this would mean the sales transactions is not recorded.
4)Cost of avoiding risk – compare cost vs risk Before commencing work, an on-site team review shall be carried out to address hazard management and implement control measures. These require a lot of effort, time and manpower, which equates to higher cost. Since the risk is high, no matter whether the cost is high, it still has to be incurred. With all the guidelines suggesting that HCL ought to maintain a high standard of care, it shows HCL have breached their duty of care, as they did not uphold to these standards given that the negligent act occurred. 1.
4 Legal Issue 3: Resulting Damage caused by Breach of Duty of Care 1) Causation ‘But-for-test’: MM Books would not have suffered harm ‘but for’ the negligence of the HCL. 2)Test for Remoteness of Damage Guideline – Wagon mound (No. 1) relates to whether the type of damages suffered by MM Books is foreseeable – Physical damage foreseeable because power outage can be foreseen to damage components of the computers and possibly lead to the computer being non-operational – Consequential economic losses foreseeable because it can be foreseen that repair costs will be incurred to restore the computer to its original condition.
1. 4. 1 Contributory negligence Under S3(1) of the Contributory Negligence and Personal Injuries Act, when any person suffers any injury partly of his own fault, damages recoverable shall be reduced to the extent as the court thinks it’s just and reasonable having regard to the plaintiff’s responsibility for the damage. In this context, HCL could have taken steps to prevent the losses caused by the power outage.
In fact, having a back-up generator to protect against power outages would be reasonably foreseeable to be of knowledge of many companies and these would be a substantial point that could be argued by the defendant, HCL, to reduce the amount of losses they have to compensate to MM Books. 1. 5 Conclusion Ultimately, the amount of losses that could be claimed by MM Books would be physical damages + consequential economic losses – amount that court thinks its fair considering contributory negligence. Case 2 (Part 1): Ms Zhang Ziyu v Westshore developer.
Ms Zhang Ziyu, a model from China, rents a unit in the newly-built Westshore. Ms Zhang is having a shower one day in her palatial master-bedroom bathroom, when she sees the glass of the entire shower enclosure shatter in front of her very eyes. In mortal fear of having her flawless skin sliced up by the falling glass shards, Ms Zhang let out a piercing scream. She is so stunned that she is in shock for several days after that. Even after recovering from her initial shock, she cannot get into glass enclosures without becoming completely hysterical.
Looking at glass mirrors also affects her in the same way. However, although Ms Zhang feared being cut by the glass, there was not much chance of that happening, as the tempered glass used for the enclosure (which was part of the original fittings of the unit) was of a kind that breaks into many small relatively harmless cubes. In fact, Ms Zhang did not even suffer a scratch. Discuss comprehensively whether Ms Zhang has a case against anybody. Any assumptions you make have to be logically supported.
In this case, our group has to identify if Ms Zhang can sue the manufacturer of the shower enclosure under tort of negligence for damages due to nervous shock. 2. 1 Legal Issue 1: Does Manufacturer of Shower Enclosure owe a duty of care to Ms Zhang Ziyu? Application of the Spandeck Engineering (S) Pte Ltd v DSTA’s single test to establish duty of care. 2. 1. 1 Pre-test threshold duty of care This tests if the manufacturer of the shower enclosure should have reasonably foreseen that the breaking of glass would cause psychotic trauma to Ms Zhang.
As the shattering of glass would cause a reasonable person to believe he is in danger of being injured, it is hence factually foreseeable that such an incident could result in physical or psychiatric injury. 2. 1. 2 Proximity The question on proximity is meant to identify the closeness between the manufacturer of the shower enclosure with Ms Zhang. It can be observed that there is a casual proximity between the two parties as it is due to the contractor’s act of negligence that Ms Zhang was harmed.
With the fulfilment of factual foreseeability and proximity, a prima facie duty of care is established. 2. 1. 3 Policy The last criterion is to ensure that the ruling of the court would not go against the public interest. In Ms Zhang case, there are no public policy reasons against the existence of a duty of care by the manufacturer of the shower enclosure. There is also no possibility of floodgate as there is a determinate amount of recovery (physical and economic loss), a determinate class of person (Ms Zhang) and no transmissible warranty.
Hence it can be concluded that the manufacturer of the shower enclosure owes a duty of care to Ms Zhang. 2. 1. 4 Primary victim Nonetheless, while the three steps used in accordance to Spandeck Engineering (S) Pte Ltd v DSTA is imposed for physical harm, the liability of nervous shock depends on the victim’s connection to the accident. In this case, we thus have to go one step further to identify Ms Zhang’s connection to the accident. As she was at the scene of the accident and suffered a recognizable psychiatric illness (hysteria/phobia), we conclude that she is a primary victim.
This fact automatically establishes a duty of care by the manufacturer of the shower enclosure. 2. 2 Legal Issue 2: Was there a breach of duty of care by the manufacturer of the shower enclosure? We now have to identify if the manufacturer had not met the appropriate standard of care when constructing the shower enclosure. 2. 2. 1 Standard of care In terms of skill level, it can be argued that the level of skill level is high as the manufacturer of the shower enclosure required specific expertise to construct such a solid structure of metal and glass, hence a high standard of care.
However, as stated in the case, there was not much change of injury if the glass were to shatter as “the tempered glass used for the enclosure (which was part of the original fittings of the unit) was of a kind that breaks into many small relatively harmless cubes”. This proves that the standard of care could be low as the likelihood and the seriousness of injury is relatively low. It can be seen here that the breach of duty of care is highly uncertain and there is insufficient evidence which can be given by Mz Zhang to prove so. As a result, we turn to the doctrine of Res Ipsa Loquitur. 2. 2.
2 Res Ipsa Loquitur Applying the case law in Scott v London & St Katherine Docks Co (1865), the doctrine of res ipsa loquitur states that the elements of duty of care and breach can sometimes be inferred from the very nature of an accident or other outcome, even without direct evidence of how any defendant behaved. The criteria for such a doctrine to be used is that the defendant was in full control of the situation when the accident occurred, the cause of the accident was unknown to the plaintiff and that such an accident does not happen in the ordinary course of things without negligence.
In the case of Ms Zhang, assuming that Ms Zhang did not hit the shower enclosure and that it had shattered on its own, the manufacturer of the shower enclosure was in full control of the situation as they fabricated the structure. It is also highly unlikely that the glass shower enclosure would shatter independently, if not for the negligent manufacturing of the structure. Lastly, from the case, it can be inferred that Ms Zhang did not know the actual cause of the accident.
Hence, the doctrine of res ipsa loquitur is applicable and the very fact that harm was caused is sufficient evidence to prove a failure by the manufacturer to exercise reasonable care. It should be noted that for this case, RIL raises a prima facie presumption of negligence against the defendant. However, if the manufacturer can explain how the accident could have happened without negligence, they would have rebutted the prima facie presumption and Ms Zhang must prove the defendants negligence according to the normal rules of breach of duty of care, causation and remoteness.
Nonetheless, we feel that the manufacturer would have much difficulty in proving so, considering the fact that glass does not normally shatter on its own unless it was poorly manufactured. 2. 3 Legal Issue 3: Did the breach of duty of care result in the damages suffered by Ms Zhang? Lastly, to establish an action in negligence and successful claim for damages, we have to prove that the psychiatric harm was directly caused by the breach of duty of care. This has to fulfil the “but for” test for single causation and the test for remoteness. 2. 3. 1 “But for “test
In Ms Zhang’s case, it is apparent that if not for the negligent production of the shower enclosure, the glass would not have shattered on its own and thus the psychiatric trauma would not have resulted, hence fulfilling the test. 2. 3. 2 Remoteness To successfully claim for damages due to nervous shock, we have to prove that the damages are reasonably foreseeable. To do so, we apply the case law used in Page v Smith (1996). The law in this case states that the plaintiff, being the primary victim, can recover for psychiatric injury as long as some form of personal injury was foreseeable to be flowing from the negligent act.
As previously established that Ms Zhang is a primary victim and the foreseeability of injury arising from the shattering of glass enclosure, the application of the case law in Page v Smith (1996) automatically hold the manufacturer of the shower enclosure liable to damages arising from nervous shock without the need to prove the foreseeability of Ms Zhang’s psychiatric injury. 2. 4 Legal Advice Ms Zhang can sue the manufacturer of the shower enclosure under tort of negligence for damages due to nervous shock. 2. 5. 1 Physical losses
The physical losses in Ms Zhang’s case refer to the broken shower enclosure and the nervous shock suffered by Ms Zhang. What is claimable would then be the consequential economic loss, which is the cost of repair for the shower enclosure, the medical fees for diagnosis as well as the treatment for hysteria. Such losses as they are reasonably foreseeable losses from the accident and is paid to Ms Zhang specifically with regard to the time of accident and such remedies cannot be transferable. 2. 5. 2 Pure economic losses.
According to the RSP Architects Planners & Engineers v Ocean Front Pte Ltd case, pure economic losses is claimable in Singapore, however there have to be an established duty of care and have to avoid the problem of floodgates. In the case of Ms Zhang, her job scope as a model operates on project basis, thus no fixed pay role. She will thus only be able to claim pure economic losses for the projects which she has be contracted to complete during the time she was in shock or unable to work due to her phobia of glass and mirrors.
Claims for the future income she would lose if she is unable to continue working as a model is not claimable as such a claim would open up the problem of floodgates as there is an indeterminate amount of recovery (no fixed payroll) and indeterminate time (in which the recovery will cover as she may never be able to continue working as a model). Case 2 (Part 2): Eric v Manufacturer of Glass Enclosure Assume now that Ms Zhang’s boyfriend Eric was brushing his teeth at the wash basin (which is a good ten feet away) while she was in the shower, and he looked up and saw and heard all that happened in b(i).
As a result of this, Eric suffers medically certified nervous shock. Is Eric owed a duty of care in negligence? 2. 6 Summary of Case 2 (Part 2) Eric is Zhang’s boyfriend who was brushing his teeth 3 meters away from Zhang who was showering. Eric witnessed the entire incident that happened to Zhang and consequently suffered a medically certified nervous shock. 2. 7 Legal Issue: Can Eric claim in tort of negligence against manufacturer of glass enclosure? As Eric suffered the nervous shock after witnessing the incident, he is classified as a secondary victim.
2. 8 Establishing Duty of Care in negligence To determine if Eric is owed a duty of care in negligence from the manufacturer of the glass enclosure, we must apply the Singapore single test of negligence. 2. 8. 1 Factual Foreseeability Given that the manufacturer of the glass enclosure ought to have known that victims in proximity to the incident could suffer damage from his carelessness in producing the glass enclosure, there is factual foreseeability on the manufacturer’s part. 2. 8. 2 Proximity.
In the test of proximity, we have adopted the guidelines found in the relevant case of McCloughlin v. O’Brian  where Lord Wilberforce ruled that the secondary victim has to satisfy three proximity requirements relating to: 1) The class of persons whose claims should be recognized (based on a close relationship between the plaintiff and the primary victim) 2) The proximity of secondary victims to the accident in time and space (i. e. through sight and sound of the event or its immediate aftermath).
3) The means by which the shock is caused in order to establish proximity between the primary and secondary victim. Based on the first requirement which states that the relationship of the plaintiff and primary victim must be close, in the eyes of the law, the court generally does not deem the relationship between a boyfriend and a girlfriend as a closing and loving relationship. Therefore, given the superficial facts of the case, Eric is not owed a duty of care in negligence by the manufacturer of the glass enclosure.
Note: However, if Zhang and Eric can prove that their relationship was indeed close and loving by showing that they have been together or cohabiting for a significant period of time such that their relationship is deemed substantially close by the court; then it could validate their proximity in relationship. Case 3: Mr Mani v HCL & Ms Nurul v HCL HCL is a publicly listed company. The company is looking for funds to expand. Two months ago, the directors of HCL issued a prospectus to existing shareholders describing HCL’s huge regional potential, to encourage them to take up a rights issue in HCL.
In particular, the prospectus mentioned large infrastructure contracts in the Malaysian state of Johor under the Malaysian government’s multi-billion dollar development plans for the state. The prospectus gave the impression that the public announcement that HCL had been awarded these contracts would be made very soon, which would, of course, lead to an increase in the price of HCL shares. Ms Nurul, a teacher and an existing shareholder, reads the prospectus and subscribes for the rights issue.
Her friend, Mr Mani, who works at the stock-broking firm Hills Securities, also reads the prospectus and immediately decides to purchase some HCL shares. He was not an existing shareholder. The first page of the prospectus states: ‘Important: This prospectus is for the private use of current shareholders only. The company, its officers, and agents shall not be held responsible in any way whatsoever for what is contained herein. ’ In reality, the promised contracts had only been very preliminarily discussed with the Malaysian government.
The Malaysian government has just announced that all infrastructure contracts would only be awarded to Malaysian-owned companies. This news results in a steep fall in the price of HCL shares. Both friends have suffered losses. Please discuss whether Ms Nurul and Mr Mani have any cause of action in tort. Case 3 (Part One): Mr Mani v HCL 3. 1 Facts of Case 3 (Part One) HCL issued a prospectus to encourage the take up of rights issue only in which states a disclaimer that limits the purpose and liabilities of the prospectus itself.
Furthermore, Mani was not an existing shareholder and had bought HCL shares instead of rights issues. 3. 2 Legal Issue: Can Mr Mani have any cause of action in tort of negligence against HCL? To determine if Mani have any cause of action in tort of negligence against HCL, he must first establish that HCL owes him a duty of care. 3. 2. 1 Establishing Duty of Care To establish a duty of care in negligence between HCL and Mani, we must apply the Singapore single test of negligence. 3. 2. 2 Factual Foreseeability.
The directors of HCL should have foreseen that their carelessness in the accuracy (negligent misstatement) of the prospectus could have cause pure economic loss to the readers who buy HCL rights/shares under the impression that HCL was to be awarded the infrastructure contracts from the Malaysian government. 3. 2. 3 Proximity In the test for proximity we have adopted the guidelines from the case of Hedley Byrne & Co Ltd v. Heller & Partners Ltd  where the court held that the following factors should be considered to establish a duty of care: 1) The skill and expertise of the maker of the statement.
2) Whether the maker knows or ought to know that the other person will rely on the statement; and 3) Whether the make of the statement voluntarily undertakes or assumes responsibility for making the statement 3. 2. 3. 1 Skill and expertise of the maker of the statement Generally speaking, a company’s board of directors possesses the relevant power and skills required to make informed statements about the company. Therefore, the directors of HCL possessed the relevant skills and expertise to make the statements found in the prospectus. 3. 2. 3.
2 Whether the maker knows that the other person will rely on the statement The directors of HCL issued the prospectus to existing shareholders of the company only. Given that Mani was not an existing shareholder of the company; therefore, the directors of HCL did not know that non-existing shareholders (i. e. Mani) will rely on the statement. 3. 2. 3. 3 Whether the maker of the statement voluntarily undertakes or assumes responsibility for making the statement It is essential to note that the first page of the prospectus clearly stated that: “Important: This prospectus is for the private use of current shareholders only.
The company, its officers, and agents shall not be held responsible in any way whatsoever for what is contained herein” This shows that the directors of HCL or in other words, the maker of the statement, did not voluntarily intend to undertake or assume responsibility for making the statement in fact that they included the disclaimer. 3. 2. 4 Policy Furthermore, should the court in any sense, hold that HCL owes a duty of care to Mani; and allow claims for pure economic loss in tort of negligent misstatement, the finding of duty of care in this case would inevitably lead to widespread litigation, which goes against public policy.
Therefore, in addition of the policy test, HCL does not owe Mani a duty of care in negligence. In conclusion, since Mani has failed the proximity and policy test and resultantly the (Spandeck) duty of care test, therefore he does not have any cause of action in tort in negligence against HCL. Case 3 (Part two): Ms Nurul v HCL 3. 3 Legal Issue: Does Ms Nurul have any action in tort of negligence against HCL? For her to claim damages, three points must be satisfied. The existence of the duty of care owed by the directors to her, the directors breached that duty of care and that this breach must have caused the damage she suffered.
The damage cannot be too remote, subjected to the test of remoteness. 3. 4 Establishing if Duty of Care exists There is only one test in establishing duty of care, the “proximity” test, which is whether a “special relationship” exists between Nurul and the directors. 3. 4. 1 Factual Foreseeability The pre-threshold test of factual foreseeability is satisfied as it can be factually foreseen that Ms Nurul would use the prospectus, resulting in economic losses for her. 3. 4. 2 Proximity This is a case of negligent misstatement causing pure economic loss and in determining proximity; the case of Caparo Industries plc v Dickman  is applied.
Factors deduced by Hedley Byrne & Co Ltd v Heller & Partners Ltd  are as follow: (1) The advice is required for a purpose, (2) the adviser knows it should be used by the advisee for that purpose, (3) the advice is likely to be acted upon without independent inquiry, and (4) it is acted upon by the advisee to his detriment. The prospectus is only issued to shareholders for investment purposes and Nurul relied on the prospectus to buy Rights Issue. We are unable to determine whether it would be acted with or without independent inquiry, but likely not because prospectus is self-explanatory and described as having “huge regional potential.
” She suffered a loss when the price of HCL shares dropped. There is a prima facie duty of care owed to Nurul. There is no public policy that will negate this duty of care and no public interest is compromised. 3. 5 Breach of duty of care by HCL Rights Issue is a type of stock more exclusive than shares and is bought only by shareholders. Thus, the standard of care in providing prospectus would be high. The level of skill of the directors is high; as they are deemed competent enough to issue a prospectus that is as accurate as possible. The likelihood of harm is high, as shareholders would most likely rely on this prospectus.
The seriousness of harm is high, as shareholders might invest a large amount of money. Lastly, the cost of avoiding risks is low compared to the cost of risk. The financial market inherently has a lot of risks and more measures should be taken to ensure that this risk is minimized to the lowest. Moreover, it is rather easy to provide factual information regarding the company’s financial situation. Lord Oliver mentions in Caparo “the duty imposed on the adviser extends to protecting the recipient against loss occasioned by an unfortunate investment decision which is based on carelessly inaccurate information”.
Applying the facts of the case, the impression that public announcement would be made very soon is very misleading since the contract is only in its preliminary phase. Shareholders might think that there is already a contract and the subsequent step of the company would be to release this information to the public. The directors provided “carelessly inaccurate information”, thus there is a breach of duty owed to Nurul. The prospectus gave misleading information, which induced Nurul to buy the Rights Issue. The information in the prospectus “caused” her economic losses. There is direct causation.
3. 6 Exemption Clause There is an exemption clause in the prospectus and for it to be valid, it must be properly incorporated, construed and must not be restricted by statutes, mainly Unfair Contract Terms Act (UCTA). It is incorporated by time of notice, which is upon reading the prospectus and it is more so adequate as it is on the first page of the prospectus. It is properly construed, as “The Company, its officers, and agents shall not be held responsible in any way whatsoever for what is contained herein. ” This shows that they are not liable in tort of negligence as we