Court of Appeal Decides On Liability For Workplace Accident

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1 Court of Appeal Decides On Liability For Workplace Accident Introduction The case of Tan Juay Pah v Kimly Construction Pte Ltd and others [2012] SGCA 17 arises from the fatal collapse of a tower crane at a worksite in The main issue before the Court was the question of who should bear civil liability for damages caused by the accident. The main contractor had brought the action against the sub contractor for damages arising from the collapse of the tower crane. The sub contractor in turn sought an indemnity from the mechanical engineer, who was engaged to inspect the tower crane, for any damages that may be payable by him to the main contractor. At trial, the High Court held that the mechanical engineer was to indemnify the sub contractor for the damages to be paid to the main contractor. However, the Court of Appeal overruled the decision of the High Court. The Court of Appeal found that the mechanical engineer did not owe any contractual or equitable duty to indemnify the sub contractor, who had engaged him in the first place. Further, the engineer did not owe any common law duty of care to the main contractor, and as such, was under no obligation to indemnify the sub contractor pursuant to section 15 of the Civil Law Act ( CLA ). The Court of Appeal took the opportunity to examine the Workplace Safety and Health Act ( WSHA ) and the duties of the various parties under the WSHA. It found that the role of the mechanical engineer in his capacity as an Authorised Examiner ( AE ) under the WSHA regime was to act as an additional layer of protection for the public and to catch any safety hazards the contractors may have missed; his duty was not to protect or indemnify the contractors. The mechanical engineer was successfully represented in this appeal by Lee Eng Beng S.C., Disa Sim and Ang Siok Hoon of Rajah & Tann LLP. Brief Facts: (1) This case arises from the collapse of a tower crane at a worksite, which resulted in the deaths of three workers. 1 Rajah & Tann LLP

2 (2) The main contractor for the project, Kimly Construction Pte Ltd ( Kimly ) sued the subcontractor, Rango Machinery Services ( Rango ), from whom it had rented the tower crane. (3) In turn, Rango sought an indemnity from Tan Juay Pah ( Tan ), the certifying mechanical engineer whom it had engaged to inspect the tower crane. Tan was registered as an AE under the WSHA. (4) Kimly and Rango both alleged that the collapse of the tower crane was caused by preexisting cracks in the tower crane s structure, and that Tan should be liable for the collapse as he had allegedly failed to detect the pre existing cracks in the tower crane. Holding of the High Court At trial, Rango did not seriously dispute its liability to Kimly. At the conclusion of the trial, the High Court allowed Kimly s claim against Rango. Tan made a submission of no case to answer with respect to Rango s claim against him. The High Court held that Tan s submission of no case to answer failed as Rango had presented a prima facie case against Tan, and that Tan was thus liable to indemnify Rango for the damages paid to Kimly. Tan filed an appeal to the Court of Appeal. Holding of the Court of Appeal The Court of Appeal considered whether the High Court had erred in finding that Rango had established a case for Tan to answer. This in turn depended on two further questions: Whether the evidence supported Rango s case that the collapse of the Tower Crane could have been prevented if Tan had inspected the mast anchors of the tower crane prior to its erection; and Whether Tan was under a legal obligation to indemnify Rango in respect of its liability to Kimly. The Court of Appeal found in favour of Tan and held that the two questions were separate and distinct. In this regard, the Court of Appeal held that even if all the evidential issues were resolved against Tan (i.e. question above), there was still no legal basis to find that Tan owed any obligation to indemnify Rango in respect of Rango s liability to Kimly, and that Rango s claim against Tan must fail. 2 Rajah & Tann LLP

3 Legal basis for indemnity Rango s pleaded case against Tan rested on the following alternative legal bases: An express or implied contractual right to indemnity from Tan; An equitable assumed promise to indemnify; and (iii) A right to contribution under s 15 of the CLA. The Court of Appeal quickly dismissed the first two bases. On the first ground, it found that the oral contract between Tan and Rango contained no express obligation of indemnity. There was also no implied obligation to indemnify Rango, as neither party could be said to have even remotely considered the issue of risk allocation between themselves and non parties to the contract. The Court of Appeal also dismissed Rango s claim of an equitable assumed promise to indemnify. The Court of Appeal was of the view that it would be a stretch, based on the evidence presented, to say that Tan s conduct was the sole reason why Rango was liable to Kimly. Further, Tan did not stand in a fiduciary relationship vis à vis Rango for the imposition of an equitable assumed promise to indemnify. S15 of the CLA The Court of Appeal concentrated on the third ground of Rango s case: s15 of the CLA, which provides that any person liable in respect of any damage suffered by another person may recover contribution from any other person liable in respect of the same damage [emphasis added] In the circumstances, the crucial question was whether Rango and Tan were both liable to Kimly for the same damage. For Rango to succeed, Tan had to be liable not only to Rango for the damage caused by the tower crane s collapse, but also to Kimly for that same damage. Therefore, it had to be shown that Tan directly owed Kimly a duty of care at common law. In this regard, the Court of Appeal held that an AE employed by a subcontractor, in the discharge of his duties vis à vis a tower crane at a worksite, did not owe the main contractor a common law duty of care because: There was insufficient legal proximity between the parties for a duty of care to arise. 3 Rajah & Tann LLP

4 Even if there was a prima facie duty of care, there were sufficient policy considerations to negate it. The Court of Appeal held that in considering whether there was sufficient legal proximity between the parties, the existence of a statutory duty is one of the many factors to be taken into consideration. However, the Court of Appeal also cautioned that the mere existence of a statutory duty of care is not in itself conclusive in establishing that there is a coextensive common law duty of care and each statute must be examined contextually. On this footing, the Court of Appeal examined the duties of an AE under the WSHA regime, as well as the purpose of the WSHA regime itself. The Court of Appeal held that there was insufficient legal proximity between an AE and the main contractor for a common law duty of care to arise because the office of the AE as established under the WSHA was not to protect main contractors or sub contractors from risk. As such, Kimly as the main contractor was not a person intended to be protected by the AE s statutory duties. In the circumstances, Tan did not owe Kimly a common law duty of care. The Court of Appeal further held that in any event, policy reasons would negate any prima facie duty of care because a finding that Tan was liable to indemnify Rango would be tantamount to converting an AE under the WSHA regime into an insurer (for an unlimited degree) for other private parties regardless of their individual responsibility for safety lapses. The imposition of a common law duty of care would also cut across and be inconsistent with the contractual relationships amongst Kimly, Rango and Tan in particular, the insurance arrangements made between Kimly and Rango, the low fee that Rango paid to Tan for his services, and the fact that there was no indication that Tan was covered by any professional insurance or had been requested to seek insurance coverage. Therefore, Tan did not owe Kimly a common law duty of care in the discharge of his statutory functions. In the circumstances, the Court of Appeal found that Rango s case against Tan had no basis and Tan was entitled to make a submission of no case to answer. Concluding Words The judgment provides a detailed analysis of the duties of an AE under the WSHA and its regulations and gives an overview of the purpose and legislative intent behind the WSHA regime itself. The judgment tackles the thorny issue of apportionment of liability between parties when the overall responsibility for the damage is unclear. This is particularly pertinent in the construction industry, where there can be numerous parties in a single worksite, many of which are contractually unconnected. The judgment illustrates that it is important to specify in a contract the party who should be liable for the losses suffered under any event, including (where applicable) a contractual indemnity clause. In the absence of such an express clause to indemnify, the courts would be slow to imply such an obligation as it is particularly onerous. 4 Rajah & Tann LLP

5 Contacts Lee Eng Beng SC Managing Partner D (65) F (65) [email protected] Disa Sim Partner D (65) F (65) [email protected] Please feel free to also contact the Knowledge and Risk Management Group at [email protected] Rajah & Tann LLP is the largest law firm in Singapore and Southeast Asia, with regional offices in Shanghai, Vientiane, Ho Chi Minh City and Bangkok, as well as associate and affiliate offices in Kuala Lumpur, Indonesia, Cambodia and the Middle East. Our Asian network also includes regional desks focused on Japan and South Asia. As a full service regional law firm, our knowledge, resources and insight can be your business advantage. Rajah & Tann LLP is firmly committed to the provision of high quality legal services. It places strong emphasis on promptness, accessibility and reliability in dealing with clients. At the same time, the firm strives towards a practical yet creative approach in dealing with business and commercial problems. The contents of this Update are owned by Rajah & Tann LLP and subject to copyright protection under the laws of Singapore and, through international treaties, other countries. No part of this Update may be reproduced, licensed, sold, published, transmitted, modified, adapted, publicly displayed, broadcast (including storage in any medium by electronic means whether or not transiently for any purpose save as permitted herein) without the prior written permission of Rajah & Tann LLP. Please note also that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. It is to your advantage to seek legal advice for your specific situation. In this regard, you may call the lawyer you normally deal with in Rajah & Tann LLP or the Knowledge & Risk Management Group at [email protected]. 5 Rajah & Tann LLP