SGHC on intention to repair in cost of cure damages claims

Significance: the General Division of the Singapore High Court in JSD Corp Pte Ltd v Tri-Line Express Pte Ltd [2022] SGHC 227 (coram: Goh Yihan JC) clarified that a claimant’s intention to repair will be a very significant factor in the court’s assessment on whether to grant cost of cure damages in claims of breach of contract or negligent damage to property.

In breach of contract claims involving property or negligent damage to property claims, the claimant may claim either a diminution in value of the property or the cost of cure / repair of the property.

In negligent damage to property claims, the amount by which the value of the property is diminished is usually equated with the cost of cure / repair: [57].  However, in this analysis, the claim is really in diminution in value and thus, intention to cure does not factor.

However, if cost of cure / repair damages is sought, the objective reasonableness test in the locus classicus of Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344 (HL) is possibly applicable.

The Court clarified that the reasonableness test only applies if the cost of cure greatly exceeds the diminution in value (if any). Otherwise, a claimant has the right to freely elect between obtaining damages based on cost of cure or diminution in value: [86(a)].

The reasonableness test applies whether the claim is in contract or tort, or whether one is dealing with personal or real property: [86(b)].

Prior to this decision, there have been divergent lines of cases regarding the significance of the claimant’s intention to cure / repair the property at all. Was it a prerequisite? Was it just one factor to be assessed? If so, how weighty is this factor?

In this decision, the Court held that a party’s intention to carry out the outstanding repairs (or to effect the cure) is a factor to be considered as part of the Ruxley when claiming for such costs.

The intention to cure is a weighty factor in the overall analysis. Goh JC went so far as to say that the failure to prove an intention to cure would, absent very special countervailing factors, result in a plaintiff’s claim for cost of cure damages to be dismissed: [82].

In determining whether there is an intention to cure, all the facts will have to be considered. Indicators include e.g. the amount of time the claimant has left the damage or defect unrepaired, and whether certain steps have been taken to seek any replacement goods.

Other factors in the Ruxley reasonableness test include (at [85]):

a. Disproportionality between the cost of the cure and the benefit that will accrue to the injured promisee. If the cost of cure is disproportionate to the end to be attained, then ordinarily, only a diminution in value can be claimed.

b. The extent and seriousness of the damage or defect and its following consequences.

c. The nature and purpose of the contract, and the degree to which the contractual objective has been substantially achieved.

d. Any “consumer surplus” which would accrue to the promisee.

In the light of this clarification of the legal analysis, a claimant who has suffered a breach of contract or negligent damage to property and who wishes to claim for the cost of cure / repair of defects or damage (whether to real estate or personal property) which he has not in fact incurred must do two things.

First, he must show, on a balance of probabilities, that he intends to effect the outstanding cost of cure.

Second, he must still show that the choice to claim for cost of cure over the difference in value is reasonable. For example, if a claimant intends to undertake extensive repairs to his goods but those costs would greatly exceed the market value of the goods, and there is a ready supply of such similar goods on the market, the court may find his election to claim cost of cure damages is not reasonable.

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