Man B&W Diesel v PT Bumi: Negligence, Economic Loss & Subcontractor Liability in Shipbuilding Contract

In Man B&W Diesel S E Asia Pte and Another v PT Bumi International Tankers and Another, the Singapore Court of Appeal heard two appeals arising from the same High Court decision. The primary legal issue was whether a ship owner, PT Bumi International Tankers ('Bumi'), could sue the engine manufacturers, Man B&W Diesel S E Asia Pte Ltd and Mirrlees Blackstone Ltd ('MBS' and 'MBUK'), for economic losses under tort of negligence, given express clauses in the main contract between Bumi and the vessel builder, Malaysian Shipyard and Engineering Sdn Bhd ('MSE'), limiting remedies for defects. The court allowed the appeal of MBS and MBUK, dismissing Bumi's claim, holding that Bumi was bound by the contractual limitations agreed upon with MSE.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal in CA 75/2003 allowed. Appeal in CA 79/2003 dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal: Ship owner's claim against engine manufacturers for economic loss due to defects was dismissed due to contractual limitations.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Mirrlees Blackstone LtdAppellantCorporationAppeal AllowedWon
PT Bumi International TankersRespondentCorporationAppeal DismissedLost
Man B&W Diesel S E Asia PteAppellantCorporationAppeal AllowedWon

3. Judges

Judge NameTitleDelivered Judgment
Chao Hick TinJustice of AppealYes
Tan Lee MengJudgeNo
Yong Pung HowChief JusticeNo

4. Counsels

Counsel NameOrganization
N SreenivasanStraits Law Practice LLC
Charles Lin Ming KhinDonaldson and Burkinshaw
Collin ChooStraits Law Practice LLC
Philip Tay Twan LipRajah and Tann

4. Facts

  1. Bumi contracted with MSE to build an oil tanker.
  2. MSE subcontracted with MBS for the supply of the engine.
  3. There was no direct contractual relationship between Bumi and MBS or MBUK.
  4. The main contract contained clauses limiting MSE's liability for defects.
  5. The engine gave trouble shortly after delivery and broke down completely in 1997.
  6. Bumi commenced an action in tort against MBS and MBUK for breach of duty of care.

5. Formal Citations

  1. Man B&W Diesel S E Asia Pte and Another v PT Bumi International Tankers and Another Appeal, CA 75/2003, 79/2003, [2004] SGCA 8

6. Timeline

DateEvent
Main contract made between MSE and Bumi
Engine delivered to MSE
Completed vessel delivered by MSE to Bumi
Major repairs of the engine took place
Engine broke down completely
High Court decision reported at [2003] 3 SLR 239
Judgment reserved

7. Legal Issues

  1. Duty of Care
    • Outcome: The court held that the engine manufacturers did not owe a duty of care to the ship owner under the specific contractual circumstances.
    • Category: Substantive
    • Sub-Issues:
      • Proximity of relationship
      • Assumption of responsibility
      • Foreseeability of harm
    • Related Cases:
      • [1932] AC 562
      • [1996] 1 SLR 113
  2. Pure Economic Loss
    • Outcome: The court held that pure economic loss was not recoverable in tort in this case, given the contractual limitations agreed upon by the parties.
    • Category: Substantive
    • Sub-Issues:
      • Recovery of economic loss in tort
      • Contractual limitations on liability
    • Related Cases:
      • [1991] 1 AC 398
      • [1996] 1 SLR 113
  3. Breach of Contract
    • Outcome: While the judge found that the engine supplied did not meet the standards prescribed in the specifications, the court did not rule on whether there was a breach of contract.
    • Category: Substantive
    • Sub-Issues:
      • Defective design
      • Poor workmanship

8. Remedies Sought

  1. Monetary Damages

9. Cause of Actions

  • Negligence

10. Practice Areas

  • Commercial Litigation
  • Construction Disputes
  • Shipping Disputes

11. Industries

  • Construction
  • Shipping

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
RSP Architects Planners & Engineers v Ocean Front Pte LtdCourt of AppealYes[1996] 1 SLR 113SingaporeCited as a key precedent in Singapore for establishing a tortious duty to avoid negligently causing pure economic loss.
RSP Architects Planners & Engineers (Raglan Squire & Partners FE) v Management Corporation Strata Title Plan No 1075Court of AppealYes[1999] 2 SLR 449SingaporeCited as reaffirming the principles established in Ocean Front regarding the imposition of a tortious duty to avoid causing economic loss.
Dutton v Bognor Regis Urban District CouncilEnglish Court of AppealYes[1972] 1 QB 373England and WalesCited as a starting point in the development of the law regarding liability for negligence causing economic loss.
Donoghue v StevensonHouse of LordsYes[1932] AC 562United KingdomCited as establishing the broad principle of negligence and duty of care.
Dorset Yacht Co Ltd v Home OfficeHouse of LordsYes[1970] AC 1004United KingdomCited in the context of policy considerations in determining on whom a loss should fall.
Anns v Merton London Borough CouncilHouse of LordsYes[1978] AC 728United KingdomCited for its two-step test to determine whether a duty of care arises, but noted as having been overruled.
Junior Books Ltd v Veitchi LtdHouse of LordsYes[1983] 1 AC 520United KingdomCited for its consideration of the proximity of relationship in determining a duty of care for economic loss, but noted as controversial and not followed in later cases.
D & F Estates Ltd v Church Commissioners for EnglandHouse of LordsYes[1989] AC 177United KingdomCited as holding that pure economic losses were not recoverable in tort.
Murphy v Brentwood District CouncilHouse of LordsYes[1991] 1 AC 398United KingdomCited as expressly overruling Anns and holding that pure economic losses were not recoverable in tort.
Bryan v MaloneyAustralian High CourtYes(1995) 128 ALR 163AustraliaCited as a case where the court refused to follow Murphy and allowed recovery for economic losses in relation to a house.
Invercargill City Council v HamlinNew Zealand courtsYes[1994] 3 NZLR 513New ZealandCited as a case where the New Zealand courts refused to follow D & F Estates and Murphy.
Winnipeg Condominium Corporation No 36 v Bird Construction CoSupreme Court of CanadaYes(1995) 121 DLR (4th) 193CanadaCited as a case where the Supreme Court of Canada took a similar stance to Invercargill City Council v Hamlin.
Simaan General Contracting Co v Pilkington Glass Ltd (No 2)Court of AppealYes[1988] QB 758England and WalesCited as a case where the court expressed doubts about the usefulness of Junior Books as a precedent.
East River Steamship Corp v Transamerica DelavalUS Supreme CourtYes476 US 858 (1986)United StatesCited for its extensive discussion on whether the Donoghue principle should be extended to cover economic losses arising from the supply of chattels.
Rivtow Marine Ltd v Washington Iron WorksBritish Columbia Court of AppealYes(1972) 26 DLR (3d) 559CanadaCited as a case where the manufacturers were not liable in tort to the hirers of a crane for the cost of repair when the crane was found to be dangerously defective in use.
Yuen Kun Yeu v Attorney-General of Hong KongPrivy CouncilYes[1988] AC 175Hong KongCited as a case where the Privy Council stated that the two-stage test in Anns is not always a suitable guide to the existence of a duty of care.
Governors of the Peabody Donation Fund v Sir Lindsay Parkinson & Co LtdHouse of LordsYes[1985] AC 210United KingdomCited for emphasizing the element of fairness in determining whether a duty of care exists.
Caparo Industries Plc v DickmanHouse of LordsYes[1990] 2 AC 605United KingdomCited for the proposition that there is no simple formula to determine whether the law will impose liability for negligence.
Henderson v Merrett Syndicates LtdHouse of LordsYes[1994] 3 WLR 761United KingdomCited for the proposition that a contractual chain may be inconsistent with an assumption of responsibility that short circuits the contractual structure.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Duty of care
  • Pure economic loss
  • Sub-contractors
  • Limitation of liability clauses
  • Negligence
  • Main contract
  • Vessel
  • Engine
  • Tort
  • Proximity
  • Assumption of responsibility

15.2 Keywords

  • negligence
  • economic loss
  • subcontractor
  • shipbuilding
  • contract
  • singapore

17. Areas of Law

Area NameRelevance Score
Breach of Contract90
Contract Law90
Duty of Care80
Negligence80
Pure Economic Loss75
Torts70
Damages Assessment60
Shipping Law40
Personal Injury5

16. Subjects

  • Contract Law
  • Tort Law
  • Construction Law
  • Shipping Law