When the Singapore Court of Appeal passed judgment on Spandeck Engineering v. Defence Science Technology Agency (DSTA), [2007] 1 Sing. L.R. 720 [Spandeck] in August this year, there was little attention given to the low profile case. After all, it was one of the many pure economic loss cases which passed through local courts.

The facts were relatively straight-forward: Spandeck Engineering sued DSTA as the consultants DSTA had employed were negligent and had undervalued the works Spandeck Engineering was to carry out for DSTA, causing Spandeck Engineering to fail to complete the contract due to “insufficient incentive”.

But when judgment was passed on 8th August, it was hailed as one of the most significant developments in the tort of negligence in Singapore, drawing the attention of academics and practising lawyers.

The court held that there was no duty to care for the plaintiff and laid down the universal test for duty of care in all negligence cases, regardless of whether it is psychiatric harm, economic loss, or simply physical harm.

Proximity, a concept first established in Caparo Industries Plc. v. Dickman, [1990] 2 A.C. 605, is the first stage of the test, while the second stage questions if there are policy considerations which would limit or negate the duty established under the first stage. Both stages are to be approached with reference to the facts of decided cases, though the absence of such cases would not prevent courts from finding a duty of care.

The test of reasonable foreseeability established in Anns v. Merton London Borough Council, [1978] A.C. 728 is rendered to a preliminary factual enquiry and will no longer be included as part of the legal test.

Previously, there had been no judgment in England and Australian courts which took the bold step in seeking to set a universal test for all areas of negligence.

The impact of this may be significant. Besides putting to an end to the uncertainties that have plagued the tort of pure economic loss, the holding may also, to a certain extent, set the tone for change in other Commonwealth courts. At the very least, the judgment proposes a single, logical test that seems practical in a world of many variations.

“The decisions have, as with the case in England, applied different tests to different types of damages claimed,” said Chief Justice Chan Sek Keong who sat alongside Judges of Appeal V.K. Rajah and Andrew Phang in the Court of Appeal.

“Why should there be two different tests, and what difference does it make, since the final result the courts wish to achieve is the same, viz., that which is fair and just between the parties without imposing an unacceptable economic cost to the public,” he added.

Ng Sook Zhen is a first year law student and the Deputy Juris Editor.