Airtrust (Hong Kong) Ltd v PH Hydraulics & Engineering Pte Ltd [2015] SGHC 307
Significance: punitive or exemplary damages awarded for breach of contract by way of delivery of a defective manufactured good.
The court held that the defendant had breached its contract by delivering a defectively manufactured machine (reel drive unit).
The plaintiff sought punitive damages to be awarded against the defendant. The court referred to the Canadian decision of Whiten v Pilot Insurance Company [2002] 1 RCS 595 which posits that punitive damages would generally be awarded against a defendant “in exceptional cases for ‘malicious, oppressive and high-handed’ misconduct that ‘offends the court’s sense of decency’”. It involves “misconduct that represents a marked departure from ordinary standards of decent behaviour”: [260].
The rationale of punitive damages is to “give a defendant his or her just desert (retribution), to deter the defendant and others from similar conduct (deterrence), and to mark the community’s collective condemnation (denunciation) of what has happened”: [261].
The court held that the courts should ordinarily have a residual power to award exemplary damages for breach of contract in “truly exceptional situations when the defendant’s conduct has been outrageous”: [263].
The court noted that the Singapore Court of Appeal recently recognised the possibility of recovering exemplary damages in the context of breaches of contract in MFM Restaurants Pte Ltd v Fish & Co Restaurants Pte Ltd [2011] 1 SLR 150, where the Court of Appeal noted that “there is an arguable case, in principle, for the award of punitive damages in contract law” though the question is “still an open one”: [254].
The court then held that unless there was a Court of Appeal decision ruling out the availability of punitive damages for breach of contract, it was inclined to hold that the court has the power in an exceptional case to award punitive damages in the context of a breach of contract, when the defendant’s conduct in breaching the contract has been so highly reprehensible, shocking or outrageous that the court finds it necessary to condemn and deter such conduct by imposing punitive damages: [264].
On the facts, the Defendant had asked a junior engineer to copy an RDU design which at that time was not yet tested, built or certified by any third party agency: [266]. The Defendant fraudulently misled the third party certification agency by submitting a model of the two towers of the RDU which misrepresented what the Defendant intended to build: [267].
The court found that the Defendant’s overall conduct was sufficiently outrageous and reprehensible to call for an imposition of punitive damages and that the threshold to award punitive damages had been crossed, that this was an exceptional case; what was done was “blatantly irresponsible designing, engineering and manufacturing”: [272].
On procedure, the judge Chan Seng Onn J also stated that he was arranging for a standard Word document template to be developed so that e-submissions with full hyperlinking can be prepared by the parties appearing before him in future using the court’s template, so that there will then be no difficulty with the functioning of the hyperlinking facility when the electronic submissions are received from the parties and opened by the court subsequently: [277].