Man B&W SEAsia v. PT Bumi CofA
DMC Category Rating: Developed
This Case Note was contributed by Ang & Partners, the Website’s International Contributors for Singapore
PT Bumi contracted only with MSE. The contract provided that MSE would assume responsibility for the work and the design of heir sub-contractors, and MSE gave a limited guarantee for parts and equipment.
The engine encountered problems during sea trials and continued to give problems after delivery until it finally broke down. The essel was laid
up after that. PT Bumi suffered pure economic loss,
including loss of hire and
the costs of replacing the engine. PT Bumi sued Man B&W and Mirrlees
Blackstone in negligence, alleging
At first instance, the judge found in favour of PT Bumi. Man
B&W and Mirrlees Blackstone appealed.
1. In RSP Architects v Ocean Front  1 SLR 113, the Court of Appeal held that the developer of a condominium was liable in tort for pure economic losses suffered by the management corporation of the development. It adopted the two-step test advanced by Lord Wilberforce in Anns v Merton London Borough Council  AC 728. The first step was to determine whether there existed a degree of proximity that would give rise to a duty of care and to determine the scope of that duty. The second step was, having found such a degree of proximity, to consider whether there was any material factor or policy which precluded such a duty from arising.
2. It was important to bear in mind that the court had been at pains in Ocean Front to explain the special position of the management corporation, which was in fact the creation of the developers. It was in this very special factual matrix that the court came to the view that a remedy in tort should be made available to the management corporation, which would otherwise have been without a remedy.
3. Extreme caution had to be exercised in extending the Donoghue
principle (that a person who appreciates that his careless act or omission may
cause physical injury to others, owes a duty to those people to exercise
reasonable care to avoid such careless act or omission) or the decision in Ocean
Front to new situations, particularly to a scenario which is essentially
contractual. Foreseeability of harm does not automatically lead to a duty of
care. Ocean Front should be treated as a special case in the context of the
statutory scheme of things under the Strata Act* or at least be confined to defects in
4. It was unnecessary to make a general pronouncement that the Donoghue principle should not be extended at all to a claim for economic loss in respect of chattels because, in the light of special circumstances here, Man B&W and Mirrlees could not have owed a duty of care to PT Bumi.
5. Though Man B&W and Mirrlees supplied the engine, PT Bumi
made MSE solely responsible under the contract for any defect that could arise.
Under the contract, PT Bumi had bargained for a limited warranty, limited to
defects discovered within 12 months of delivery, and the obligation of MSE was
only to repair the defects. It was PT Bumi’s deliberate choice
6. The grounds for denying PT Bumi’s claim became
stronger when the court took into account the fact that PT Bumi had
contractually agreed to limit their recourse should the vessel, including its
engine, fail to meet the specifications. What was involved in this regard was
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