1 : The plaintiff`s claim against the defendants is for damages for breach of their duty of care in the delivery of a Stencillaser machine (`the machine`) from the first defendant`s warehouse at the Changi Cargo Complex to the plaintiff`s factory on the third level of the industrial building at 164, Kallang Way, [num ]03-24, Singapore. At the close of the hearing, I found for the plaintiff. I awarded it S$218,143.27 being costs of replacement of the damaged parts inclusive of installation, less the salvaged value. This sum is to carry interest at the rate of 6% per annum from the date of service of the Writ. I also awarded costs to the plaintiff. The defendants have appealed to the Court of Appeal [the appeal was withdrawn - Ed]. I now give my reasons.

2  The parties

3 

4 The plaintiff is a company incorporated in Singapore. It is engaged in producing stencils for use as solder paste printing in circuit boards.

5 The first defendant is a freight forwarding company incorporated in Singapore. It is associated with another freight forwarding company, Danzas GmbH, Hanover-Airport, Germany (`Danzas GmbH`).

6 The second defendant undertakes the transportation of cargo for the first defendant within Singapore as its subcontractor providing vehicles, equipment and manpower.

7  Events leading to these proceedings

8 

9 In January 1995, the plaintiff purchased the machine from its manufacturer LPKF CAD/CAM SYSTEME GmbH, Hanover, Germany (`LPKF`) for DM497,000 inclusive of installation and commissioning, FOB Hanover. It was to be used for cutting stainless steel into stencils. The accuracy required is 20 micron. It is therefore a very high precision and sensitive equipment.

10 For airfreighting the machine from Hanover to Singapore, LPKF entrusted the job to Danzas GmbH. Danzas GmbH informed first defendant of this on or about 16 January 1995.

11 On receipt of the information, the first defendant`s Senior Sales Executive, Steven Ong, made an appointment to see Ms Koh Mui Khim (`Ms Koh`), the plaintiff`s Accounts Supervisor.

12 On 17 January 1995, Steven Ong called on Ms Koh, offering the first defendant`s services for airfreighting the machine from Hanover to Singapore and then transporting it to the plaintiff`s factory.

13 Subsequent to the meeting with Ms Koh, Steven Ong submitted a quotation for, inter alia, the following:

14 (i) airfreighting the machine from Hanover Airport to Singapore Changi International Airport (`Changi Airport`) at DM 2.50 per kilo.

15 (ii) transporting same from Changi Airport to plaintiff`s factory at S$0.15 per kilo.

16 (iii) charges for the use of a Hiap crane - S$150.

17 (iv) uncrating and disposal of crates - $120.

18 The Hiap crane was required because the weight of the consignment was about three and a half tons. The quotation contained a clause (`the incorporating clause`) at the bottom. It read:

19 Clauses 15 and 16 of SAAA`s Standard Trading Conditions read:

20 As LPKF had entrusted the airfreighting of the machine from Hanover to Singapore to Danzas GmbH with `freight collect` at Singapore, the plaintiff accepted the first defendant`s quotation.

21 In the meantime, in mid-January 1995, Tony Wong Cheok Ban (`Tony Wong`), a service engineer, and Azman Shah (`Azman`), an engineer, of the plaintiff, were sent to LPKF`s plant in Hanover to familiarise themselves with and be trained in the operation of the machine. While on attachment, they tested the machine and witnessed the packing. They returned to Singapore on 30 January 1995. The machine arrived the next day. The first defendant took delivery of the machine consigned in three crates from the Airfreight Terminal and stored them in its warehouse at the Changi Cargo Complex on 1 February 1995. The crates had markings of an arrow pointing upwards, umbrella and glass. The arrow marking denotes that the crate must face upwards. The umbrella marking means that the cargo should not be allowed to come into contact with water. The glass marking indicates the fragility of the contents.

22 The first defendant engaged as its subcontractor the second defendant to transport the machine from its warehouse to the plaintiff`s factory.

23 On the morning of 4 February 1995 at around 1000 hours, the three crates arrived at 164, Kallang Way on board two trucks. Two smaller crates containing the control unit and the laser board were on board the bigger truck with a fixed canopy cover. It was driven by Yap Peng Huak. The bigger crate containing the marble table and the X-Y positioner (`the X-Y unit`) was on board the smaller truck which did not have a fixed canopy cover. It was driven by Chua Cheng Huat. The crate was covered with a canvas sheet. It was a wet day in the vicinity of Kallang Way, with alternating rain and drizzle.

24 On arrival at 164, Kallang Way, the two trucks were parked at the rear loading bay. The crate containing the control unit was unloaded onto the loading bay where it was unpacked. The control unit, mounted on wheels, was pushed to the plaintiff`s factory and placed in position pointed out by Azman. The second crate was similarly unloaded and moved into position by the second defendant`s workers using a pellet jack.

25 The crate containing the X-Y unit could not be unloaded without the Hiap crane. The Hiap crane had been ordered by the second defendant. But it arrived late.

26 While waiting for the arrival of the Hiap crane, the second defendant`s workers removed the canvas sheet covering the crate. They then removed two side panels of the crate. The X-Y unit wrapped only with a plastic sheet, was thus exposed to the rain.

27 Seeing that the two side panels had been removed, Azman checked and found the X-Y unit wet with rain water. He informed Steven Ong who touched it and confirmed it was wet.

28 When the Hiap crane eventually arrived, it could not operate at the rear loading bay because of an overhead shelter. So the truck with the X-Y unit on board was driven round the building to the front loading bay. This was done without the side panels and without the canvas sheet being put back in place. There was also a thick piece of wood resting on it.

29 After the truck arrived at the front loading bay, the X-Y unit was uncrated. A belt was slung around it. It was then lifted by the Hiap crane from the truck and placed on the loading bay.

30 The second defendant`s workers then discovered that their pellet jack was not of suitable size and could not be used to move the X-Y unit from the loading bay to the plaintiff`s factory. Chua Cheng Huat then went to look for a suitable pellet jack. Pending his return, the X-Y unit was left on the loading bay. All this while, it was still raining/drizzling.

31 When Chua Cheng Huat returned later with a suitable pellet jack, the X-Y unit was transported and placed in position in the plaintiff`s factory as directed by Azman.

32 According to the plaintiff, the whole operation was completed at 1900 hours. The delay was caused by the late arrival of the Hiap crane at 1500 hours and the lack of a suitable pellet jack. The defendants however said that the Hiap crane arrived at 1300 hours and the delivery was completed at 1500 hours. At 1900 hours, Azman spotted rust on the X-Y unit indicating that corrosion, due to contact with water, had taken place. Azman informed Tony Wong who then tried unsuccessfully to remove the rust by wiping it with a piece of cloth.

33 On 5 February 1995, LPKF`s engineers arrived to reassemble, hook up and commission the machine. They installed it on 6 February 1995 and tested it. The cutting was wavy. The machine had lost its required accuracy due to the corrosion of the X-Y unit. On 7 February 1995, they tried unsuccessfully to repair it by fine-tuning. The X-Y unit was eventually replaced, on the advice of LPKF that repairs could not restore the machine to its required accuracy.

34  These proceedings

35 

36 On 25 October 1995, these proceedings were commenced against the first defendant. The writ with the statement of claim was then amended to join the second defendant. The claim against the defendants is for breach of duty of care.

37 The issue before me was whether the corrosion was caused by contact with water when the X-Y unit was exposed to the rain/drizzle during the unloading operation as contended by the plaintiff or was it caused by condensation on the flight from Hanover as contended by the defendants.

38 In support of their case, the defendants relied on the evidence of Dr Daniel John Blackwood, a senior lecturer at the Department of Materials Science, National University of Singapore. In his affidavit of evidence-in-chief, Dr Blackwood gave his opinion as follows:

39 Dr Blackwood`s evidence was discredited by an experiment conducted in court by the plaintiff`s expert witness, Mr David Tay Yew Huat of Matcor Technology & Services Pte Ltd. The experiment began at 1140 hours with samples as follows:

40 The samples were exposed to water. Two and a half hours later, all four samples showed visible signs of corrosion in the form of rust formation. Dr Blackwood`s opinion that condensation during the flight from Hanover to Singapore was the most likely cause of the corrosion is also not consistent with the absence of corrosion on the components packed in the other two crates that arrived on the same flight with the crate containing the X-Y unit.

41 I was therefore of the opinion that the corrosion on the X-Y unit was caused by contact with rain water because the X-Y unit was exposed to rain/drizzle from the time it arrived at 1000 hours at 164, Kallang Way until it was delivered to the plaintiff`s factory, be it at 1500 or 1900 hours.

42 Who then was to blame for allowing the X-Y unit to be exposed to the rain/drizzle during the unwarranted delay in the unloading operation due to the lack of proper equipment.

43 The first defendant was awarded the job by the plaintiff because of its expertise in the transportation of sensitive equipment. This was the evidence of Steven Ong:

44 Paragraph 5 of the first defendant`s amended defence also stated that `its servants or agents exercised due care as regards the concerned cargo`. In its further and better particulars given thereunder, the first defendant stated that it `provided adequate personnel who were properly supervised at the delivery site ...`. In line with the first defendant`s defence, Steven Ong in his affidavit of evidence-in-chief stated:

45 The first defendant`s pleadings and Steven Ong`s affidavit of evidence-in-chief were consistent with the first defendant having a contractual duty to take reasonable care of the machine. This included the duty to supervise the unloading operation. Notwithstanding this, Steven Ong, tried to distance himself from the unloading operation. This was what he said:

46 Under cross-examination, Steven Ong was evasive in his answers. On no less than 30 occasions, his answers were either `cannot recall` or `cannot remember`. When he did give substantive answers, he was not forthcoming with the truth. See for example his evidence, when questioned as to whether he had reconnoitred the vicinity of the plaintiff`s factory to assess the accessibility of the equipment thereto:

47 The truth came out only after further cross-examination:

48 Steven Ong was then asked if he took measurements of the lift, this was his evidence:

49 Under further cross-examination, this was what he said:

50 Having said that Ms Koh could not advise him of the dimension of the crates, he went on to say that she told him to uncrate the bigger crate `downstairs`, that is, at the loading bay:

51 There were so many other instances of such unsatisfactory evidence coming from Steven Ong that I found him not a witness of truth. I will now deal with the evidence of Chua Cheng Huat and Yap Peng Huak.

52 It was quite clear that Steven Ong, Chua Cheng Huat and Yap Peng Huak had agreed to take a common stand that Azman took charge of the whole unloading operation with Steven Ong being a mere bystander. Azman was said to have shown them how to sling the belt around the X-Y unit for it to be lifted by the Hiap crane. See the evidence of Chua Cheng Huat:

53 This was not consistent with his earlier evidence:

54 In their joint affidavit of evidence-in-chief, Chua Cheng Huat and Yap Peng Huak affirmed as follows:

55 But in his eagerness to absolve themselves from blame for exposing the X-Y unit to rain by uncrating in the rain/drizzle, Chua Cheng Huat alleged that they received instructions from the plaintiff three days before delivery to uncrate the cargo. This evidence is all the more incredible when one bears in mind that the second defendant received the delivery order from the first defendant only one day before the delivery. The second defendant never dealt with the plaintiff. The plaintiff was not even aware that the first defendant had subcontracted the job to the second defendant. But this was what Chua Cheng Huat said:

56 In the case of Yap Peng Huak, when cross-examined on his joint affidavit of evidence-in-chief wherein he stated that Azman directed the unloading operation, this was what he said:

57 Steven Ong, Chua Cheng Huat and Yap Peng Huak were all badly discredited. I therefore rejected their evidence that Azman took charge of the unloading operation in the process of which the X-Y unit was exposed to rain/drizzle and thereby sustained damage.

58 I will now deal with the exemption and limitation of liability cll 15 and 16 of the SAAA`s Standard Trading Conditions relied on by the defendants.

59 The transaction giving rise to these proceedings was the first dealing between the plaintiff and the first defendant. The incorporating clause appeared at the bottom of the first defendant`s faxed quotation of 17 January 1995 to the plaintiff following Steven Ong`s meeting with Ms Koh. It had not been brought to the attention of Ms Koh. It was in very small print and was not legible as admitted by Steven Ong:

60 As the local sector of the transportation of the machine would be subcontracted to the second defendant, the machine would not be in the `actual custody` of the first defendant. If cl 15 of SAAA`s Standard Trading Conditions was incorporated, the first defendant would not be liable to the plaintiff even for non-delivery by the second defendant. Under cl 16, if there was any liability, it was limited to $3,500 for the entire consignment with a value of DM497,000.

61 The incorporating clause read with the exemption and limitation of liability clauses therefore should have been brought to the attention of Ms Koh.

62 In Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433, the plaintiffs ran a photographic transparency lending library. Following a telephone inquiry by the defendants, the plaintiffs delivered to them 47 transparencies together with a delivery note containing nine printed conditions. Condition 2 stipulated that all the transparencies had to be returned within 14 days of delivery otherwise a holding fee of £5 a day and value added tax would be charged for each transparency retained thereafter. The defendants, who had not used the plaintiffs` services before, did not read the conditions and returned the transparencies four weeks later whereupon the plaintiffs invoiced the defendants for £3,783.50. The defendants refused to pay and the plaintiffs brought an action and obtained judgment for this sum in the county court. The defendants appealed to the Court of Appeal. In allowing the appeal Dillon LJ stated at p 436:

63 The first defendant having undertaken the assignment might delegate its performance to the second defendant but the first defendant could not delegate the contractual responsibility it owed the plaintiff.

64 In Metaalhandel JA Magnus BV v Ardfields Transport [1988] 1 Lloyd`s Rep 197, the plaintiffs were dealers in non-ferrous metals and scrap and were based in Amsterdam. On 12 January 1984, they purchased about 2 tons of thoriated tungsten rods packed in 12 sealed drums from sellers in Brighton. At that time the plaintiffs had no sub-sale in view and they wanted to store the goods in or near London. They sought quotations for the collection and storage of the goods from among others the first defendants (Ardfields) with whom they had done infrequent business in the past. In due course Ardfields` quotation was accepted. There followed an exchange of telexes which resulted in a contract whereby Ardfields undertook to transport the plaintiffs` goods from Brighton and store them at their warehouse in St Albans. On 25 January, Ardfields advised the plaintiffs by telex that as there was no space at the St Albans warehouse the drums would be placed at the warehouse of the second defendants, Jones Transport. Unknown to the plaintiffs and apparently unknown to Ardfields the goods were removed from Jones Transport`s warehouse on 8 August 1984 and could not be traced. The matter came to light only when the plaintiffs having arranged to sell part of the goods telexed Ardfields on 10 October 1984 asking them to quote for transporting them to another destination. In delivering his judgment, Gatehouse J stated at pp 202-203:

65 Turning now to the second defendant, he could not rely on the said exemption and limitation of liability clauses even if they were applicable as between the first defendant and the plaintiff. This is because there was no privity of contract between the plaintiff and the second defendant. The plaintiff was not even aware that the first defendant would subcontract its assignment to the second defendant. The plaintiff`s claim against the second defendant was one based on breach of duty of care of a bailee to take reasonable care of the consignment in its custody.

66 In Morris v CW Martin & Sons Ltd [1966] 1 QB 716, the plaintiff sent a mink stole to a furrier to be cleaned. With the plaintiff`s consent, the furrier, who did no cleaning himself, delivered the fur to the defendants, who were well-known cleaners, to be cleaned. The contract between the furrier and the defendants, which was made by the furrier as principal and not as agent for the plaintiff, contained printed conditions of trading with exemption from liability clauses. Whilst the fur was with the defendants, it was stolen by one of their servants whose duty it was to clean the fur. The fur was never recovered. The plaintiff claimed damages against the defendants for breach of their duty to return the fur to her and to exercise reasonable care in its custody and, alternatively, for wrongfully depriving her of the fur. The county court judge found that the defendants had taken proper steps to safeguard the fur and were not negligent in employing the servant; and he held that the defendants were not liable because the act of the servant in stealing the fur was not done `in the scope of his employment`. The plaintiff`s appeal to the Court of Appeal was allowed on the ground that the defendants, being sub-bailees for reward, owed to the plaintiff, the owner of the fur, the duties of a bailee for reward to take reasonable care of the fur and not to convert it. In delivering his judgment, Lord Denning MR stated at p 729:

67 
My decision

68 

69 As the defendants were liable for the damage to the X-Y unit and were not protected by cll 15 and 16 of the SAAA`s Standard Trading Conditions, I entered judgment for the plaintiff for S$218,143.27 being costs of the replacement inclusive of installation less the salvaged value of the damaged X-Y unit. I also awarded the plaintiff interest on the award at the rate of 6% per annum from the date of service of the Writ and costs. I disallowed the claim for $7,671.00 being adjuster`s fees paid by the plaintiff`s insurers on the ground that it was not an item of loss sustained by the plaintiff as a result of the defendants` breach of duty. Therefore, the plaintiff`s insurers who were prosecuting this claim in the name of the plaintiff could not obtain recovery of this item by way of subrogation.

70 Outcome:

71 Plaintiff`s claim allowed.