NEGLIGENCE. THE PT BUMI CASE The claimants, PT Bumi International Tankers (Bumi), had purchased a ship from Malaysian Shipyard and Engineering Sdn

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1 NEGLIGENCE PURE ECONOMIC LOSS IN A COMMERCIAL CONTEXT PERSPECTIVES FROM SINGAPORE Man B&W Diesel SE Asia Pte Ltd v PT Bumi International Tankers [2004] 2 SLR 300 Associate Professor and Director, Kumaralingam Amirthalingam International Programmes, Faculty of Law, National University of Singapore INTRODUCTION The late John Fleming observed over a decade ago that tort law has become virtually obsessed with the question of negligent economic loss. 1 The tort jurisprudence across the common law jurisdictions in the years since that statement was made only lends further support to his view. The leading common law countries have adopted various approaches to pure economic loss cases. England has taken a conservative stand, with recovery for pure economic loss largely restricted to the traditional Hedley Byrne 2 and professional negligence categories, 3 while Australia has taken a more liberal position, allowing recovery in several categories, including relational economic loss 4 and defective buildings. 5 The High Court of Australia, in last year s decision of Woolcock Street Investments Pty Ltd v CDG Pty Ltd, 6 held by a 6:1 majority, that in the absence of evidence of vulnerability, in the sense of an inability to protect itself, a commercial purchaser of premises is not entitled to rely on Bryan v Maloney 7 to recover damages in the tort of negligence for economic loss resulting from defects. 8 Three weeks before the High Court s Woolcock judgment was released, the Singapore Court of Appeal delivered its latest decision on pure economic loss in the case of Man B&W Diesel SE Asia Pte Ltd v PT Bumi International Tankers 9 (PT Bumi). The PT Bumi decisions (trial and appeal) examined, among other things, the role of negligence liability in commercial contexts and the interaction between torts and contracts. 10 This interaction has been the subject of considerable academic interest, 11 and is the focus of this note. Should torts, with its general obligations, or contracts, with its private obligations, prevail in situations of conflict? 12 These conflicts often occur in economic loss cases involving defective structures where the defective part has been built or supplied by a subcontractor. 13 The main contractor may either be insolvent or have limited liability under the contract and therefore the claimant sues the subcontractor in tort. PT Bumi was also a novel case as it considered whether the principles developed in the defective buildings cases could be applied to a defective chattel, in this case, a ship. A brief introduction to the Singaporean position on negligence and economic loss may be helpful to set the stage for the discussion of the PT Bumi decisions (trial and appeal). The law on negligence in Singapore generally follows that of England. 14 However, the English approach to economic loss and defective buildings in Murphy v Brentwood District Council 15 was rejected by the Singapore Court of Appeal in RSP Architects Planners & Engineers v Ocean Front Pte Ltd 16 (Ocean Front). Ocean Front relied on Anns v Merton London Borough Council 17 and Junior Books Ltd v Veitchi Co Ltd, 18 as well as the proximity approach in Bryan v Maloney. Despite criticism of Ocean Front s reliance on the discredited authorities of Anns and Junior Books, the Ocean Front approach was subsequently reaffirmed by the Court of Appeal. 19 There is thus some confusion as to whether it is the Anns two stage approach or the three stage approach enunciated in Caparo Industries Plc v Dickman 20 that applies in Singapore. 21 THE PT BUMI CASE The claimants, PT Bumi International Tankers (Bumi), had purchased a ship from Malaysian Shipyard and Engineering Sdn 6 AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #107 MARCH/APRIL 2006

2 Bhd (MSE). MSE had ordered the main engine from Man B&W Diesel SE Asia Pte Ltd (MBS), which sold and serviced engines manufactured by its UK parent company, Mirrlees Blackstone Ltd (MBUK). Bumi had contracted with MSE for the supply of a 6500 tonne oil tanker to be built to certain specifications. MSE subcontracted with MBS for the supply of an engine that met Bumi s specifications. There was no contract between Bumi and MBS or MBUK, although Bumi was involved in approving MBS and MBUK as the subcontractors and had numerous dealings with them throughout the design, construction and testing of the engine. The engine was defective and, although it did not result in any physical damage to the ship, it did cause pure economic loss through frequent breakdowns and delays. Bumi sued MBS and MBUK in negligence. It was unable to sue MSE because its contract with MSE limited any liability to defects discovered within 12 months of delivery and excluded liability for consequential losses, including loss of time, profits or earnings arising from defects or remedial works. The critical issue was whether the claimants, the owners of a specially built vessel, were entitled to sue the subcontractors, the engine manufacturers, for economic losses under the tort of negligence when there were express clauses in the main contract between the owners and the vessel builder limiting the remedies available to the owners for any defect. 22 The trial judge found in favour of the claimants, holding that the Singapore line of authorities and general principles of negligence pointed to the existence of a duty on the part of the defendants to prevent pure economic loss to the claimants. The Court of Appeal reversed this decision, holding that no duty arose on the facts and that the existing Singapore authorities should not be extended to support a duty of care with the scope contended for in PT Bumi. The trial judge found that MBS and MBUK had placed themselves in a relationship of proximity with Bumi through their conduct: Among the more important facts are MBUK s knowledge that the vessel was being custom built to meet a specific owner s requirements and that that owner had discussions with their sole agent [MBS] and was relying on the expertise of MBUK as a specialist manufacturer of engines to produce an engine that was suitable for the vessel. MBUK could also foresee that if the engine was defective and continually broke down or required excessive maintenance and repair work, Bumi would suffer economic loss from disruptions in the use of an income producing chattel. 23 On the facts, the trial judge found that Bumi had relied on MBUK and that MBS had assumed responsibility by asserting that the engine was reliable. The reasoning and approach to duty resonates with the approach that is gaining favour in the High Court of Australia since Perre v Apand Pty Ltd, 24 where judges have eschewed any universal test for duty, preferring instead to identify salient features from the totality of the relationship that defined the existence and scope of any duty. 25 It is instructive to reproduce from the trial judgment the various factors that the judge found to be supportive of a relationship of proximity, which was sufficient to overcome the contractual matrix and justify a duty of care in torts on the defendant subcontractors: Liability in negligence for pure economic loss remains an area of controversy, especially in commercial settings. Claimants in such cases are not prima face vulnerable and often a conflict arises between contractual and tortious liability. The extent to which the contractual matrix defines any tortious liability is unclear. AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #107 MARCH/APRIL

3 In this context, the relevant facts are: (a) before the contract for the engine was placed by MSE: (i) there were meetings between Mr Donald Chua of MBS and Bumi and MSE and he told the parties that the engine was reliable and had not previously experienced problems; (ii) MBS sent their final terms and conditions for the supply of the engine directly to Bumi and were notified by Bumi that they would be accepting that offer in early August 1993; and (iii) MBS were actively marketing the engine to MSE and Bumi; (b) MBUK were experienced designers and manufacturers of engines for industrial and marine use; (c) MBS were selected as the supplier of the engine by Bumi because they were the sole distributor in this region for engines manufactured by MBUK; (d) MBS (and, therefore, MBUK) knew that the engine was required for an oil tanker that MSE were manufacturing for Bumi and that under the ownership of Bumi, this vessel would be on a long term charter to Pertamina and drawings and information were sent by MSE to MBS and MBUK (both at the request of MBUK themselves and also on the initiative of MSE) so that they could decide how best to incorporate the engine into the vessel; (e) before MBS tendered for the supply of the engine to MSE, they had received detailed specifications of the type of engine that MSE required and such specifications must have been passed on to MBUK so that both defendants knew exactly what product was required by MSE and Bumi; (f) both defendants knew that MSE were constructing the hull only and that both Bumi and MSE were relying on them to supply an engine that would be suitably designed and manufactured for the requirements of the vessel; (g) Mr Chua conceded that he knew that if there were problems with the engine, it was Bumi who would suffer and therefore MBS knew that if the engine could not perform as required, it was Bumi who would suffer loss; (h) as the manufacturer of the engine selected by Bumi for the vessel, MBUK must have known that Bumi were relying upon their skill and experience and, Bumi s representatives having visited the factory to observe the testing of the engine, MBUK, like MBS, must have known that if there were problems with the engine it was Bumi who would suffer by having to expend money upon the remedial measures as a consequence of which Bumi would suffer financial loss; and (i) for what it is worth, when problems subsequently arose with the engine and there were correspondence and meetings between Bumi and MBUK and MBS, not once did either of the latter reject the complaints of Bumi on the basis that they did not owe Bumi any duty of care to supply a properly designed and manufactured engine. 26 The defendants argued that the chain of contracts was deliberately structured to avoid a direct relationship between the claimant and defendant. 27 Further, it was argued that the contract between MSE and Bumi regulated the scope and extent of liability. The relevant clauses were cl 14, which limited liability to defects discovered within 12 months and further limited the extent of liability by excluding consequential losses such as loss of time, loss of profit or loss of earnings; cl 17, which imposed full responsibility on MSE for acts and omissions of their subcontractors; and cl 22, which said that nothing in the contract would create any contractual relationship between Bumi and any subcontractor of MSE. 28 The Court of Appeal accepted the defendants argument and held that Bumi could not have relied on MBUK or MBS, as cl 17 clearly stipulated that only MSE was to be held responsible for any losses and Bumi [had] elected to distance itself from all the subcontractors, including MBS and MBUK. 29 Support for this view was found in Henderson v Merrett Syndicates Ltd, 30 a leading English decision on economic loss and the coexistence of tortious and contractual duties, where Lord Goff held that there is generally no assumption of responsibility by the subcontractor or supplier direct to the building owner, the parties having so structured their relationship that it is inconsistent with any such assumption of responsibility. 31 It is argued here that the critical issue should be the intention of the parties and the purpose of the contractual structure. If a particular contractual structure was set up for the purpose of, for example, tax avoidance, then that should not automatically negate a tortious duty existing between the non contracting parties. 32 However, if the contractual structure was designed to allocate liability between the parties, then that should, as a general rule, oust a tortious duty of care. 33 The trial judge took the view that cl 17 imposed full contractual liability on MSE and that cl 22 merely precluded any contractual rights between Bumi and the subcontractors. Neither clause operated to deprive Bumi of 8 AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #107 MARCH/APRIL 2006

4 any claim in tort against the subcontractors, which the general law granted to them. 34 The mere fact that a chain of contracts existed did not automatically mean that each party in the chain was limited to suing the party with whom there was privity of contract. 35 The Court of Appeal disagreed: the correct approach is not to ask whether there is any justification for depriving Bumi of the remedy or whether the clauses in the main contract had provided that Bumi lost all rights to sue the subcontractor, but whether there are any compelling reasons to extend the law and to afford such a separate remedy to Bumi. If it is justice that we are seeking to obtain, and that must be so, we do not see how affording the remedy to Bumi would promote justice. 36 This seems to be a chicken and egg problem. Should the contractual matrix be seen as limiting pre existing tortious rights or as giving rise to a relationship that creates tortious obligations? It is suggested that the reasoning on this point by the trial judge is to be preferred, although the policy considerations in the Court of Appeal are compelling. It may, in fact, be argued that the Court of Appeal s statement above should be confined to the particular facts of PT Bumi, as in a later case involving physical damage, the Court of Appeal held that remedies in tort will not automatically become unavailable simply because the claimant may have a remedy in contract against another party. 37 Since tortious liability is imposed generally by law and contractual liability is created privately by the parties, it stands to reason that the contractual structure should be seen as controlling, rather than creating tortious liability. In a commercial context, it may well not be legitimate for a party to use the tort of negligence to better a bargain it has made. 38 All the parties, Bumi, MSE, MBS and MBUK, had allocated risks and liabilities through negotiation and had fixed the prices of their contracts based on those agreements. To hold MBS or MBUK liable in negligence when such liability was precluded under the contractual agreements would be to grant Bumi an unfair benefit. The price Bumi was willing to pay would logically have reflected the warranties they were negotiating; Bumi was trying to get more than it had bargained for and that is a sound policy reason to deny a duty of care. However, this policy consideration may be a double edged sword. Just as it is arguable that Bumi was trying to get more than it had bargained for, it may be argued that MBS and MBUK were exploiting the contractual structure to make representations and offer inducements without having to take responsibility for them in the event of any negligence. By choosing to create a close and direct relationship with Bumi, 39 it may be argued that MBS and MBUK forfeited the protection of the contractual matrix. Courts should go beyond the contractual matrix to determine the actual relationship between the parties, as for example, is done in the vicarious liability cases. Courts regularly go beyond the contractual description of a party as an employee or independent contractor and determine for themselves whether the party should be treated as an employee or independent contractor for the purpose of vicarious liability. 40 There are two other minor issues in PT Bumi that deserve mention. There is recognition that commercial parties are not the classic vulnerable claimant Courts should go beyond the contractual matrix to determine the actual relationship between the parties, as for example, is done in the vicarious liability cases. Courts regularly go beyond the contractual description of a party as an employee or independent contractor and determine for themselves whether the party should be treated as an employee or independent contractor for the purpose of vicarious liability. AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #107 MARCH/APRIL

5 with whom the tort of negligence is primarily concerned. The High Court of Australia and the House of Lords have implicitly recognised this. 41 However, so far, none of the courts have drawn a bright line separating commercial and non commercial claimants in economic loss cases, 42 preferring the classic common law solution of leaving matters to be decided on a case by case basis. The trial and appellate courts in PT Bumi also diverged on the issue of extending the principles in the defective buildings cases such as Bryan v Maloney and Ocean Front to chattels. The trial judge stated: I realise that by imposing a duty on the defendants to avoid causing Bumi to suffer financial loss... I am extending the class of cases to which the principles established in the Ocean Front decision apply.... As the facts here involve a large and expensive piece of equipment custom made for a particular ship which was to operate in particular conditions and the persons who would be owning and operating the vessel were known to and in contact with the defendants,... I do not think that my decision is an extreme extension of the applicable principles. Instead, it is an incremental extension of the law and is appropriate on the facts. 43 Although it was a chattel, it was not an everyday consumer product. It [was] an expensive engine custom made for a particular ship and for a particular owner with specific requirements that were made known to the defendants. 44 The Court of Appeal took the view that the defective buildings cases should be limited to real property and should not be extended to defective chattels. 45 The policy reasons for allowing economic loss with respect to real property were not as persuasive with respect to defective chattels. The court referred to a US admiralty case, East River Steamship Corp v Transamerica Delaval, 46 which had factual similarities to PT Bumi. 47 In East River, the charterers of supertankers sued the turbine manufacturers for economic loss due to defective turbines. The United States Supreme Court rejected the claim and held that policy considerations did not support this type of recovery, 48 which should remain solely within the province of contract law, and not be infringed upon by tort law. 49 The view taken by the Court of Appeal in PT Bumi was that there was a real danger that allowing such recovery would destroy the proper role of contractual warranties, 50 or risk creating an indefinitely transmissible warranty. 51 CONCLUSION The decision of the Singapore Court of Appeal in PT Bumi provides support for the primacy of contract approach in cases of overlapping contractual and tortious duties, whereas the decision at first instance favours the view that tort law should prevail unless specifically excluded by contractual provisions. The two decisions also demonstrate that the scope of duty is dependent not only on legal principles and policy, but also on the judicial attitude toward the scope of negligence. There is much to be said for denying a duty of care, or at least ensuring that the scope of duty in tort does not exceed the contractual obligations of parties within a contractual matrix. Equally, it may be fair to suggest that when a party leapfrogs a contractual matrix and creates a separate, proximate relationship with a subcontracting party, that could legitimately give rise to a separate duty of care in negligence. REFERENCES 1. JG Fleming Tort in a Contractual Matrix (1995) 3 Tort L Rev Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465; [1963] 2 All ER See e.g. Henderson v Merrett Syndicates Ltd [1995] 2 AC 145; [1994] 3 All ER 506; White v Jones [1995] 2 AC 207; [1995] 1 All ER See e.g. Caltex Oil (Australia) Pty Ltd v The Dredge Willlemstad (1976) 136 CLR 529; 11 ALR 227; Perre v Apand Pty Ltd (1999) 198 CLR 180; 164 ALR Bryan v Maloney (1995) 182 CLR 609; 128 ALR (2004) 216 CLR 515; 205 ALR (1995) 182 CLR 609; 128 ALR For commentary on the decision, see G Coveney Buyer Beware: Limiting the Liability of Builders for Latent Defects (2004) 12 TLJ 187; B Codd, R Hinchey and V Nase An Alternative View of Woolcock Street Investments v CDG Pty Ltd (2004) 12 TLJ [2004] 2 SLR It should be noted at the outset that the interaction between torts and contracts occurs in two ways: there can be concurrent duties in torts and contracts owed by one contracting party to the other and there may be duties owed in torts by one contracting party to a non contracting party. See generally RP Balkin and JLR Davis Law of Torts 3rd ed. LexisNexis Butterworths, Sydney, 2004 at It is the latter type of situation that was at issue in PT Bumi and which is the subject of this note. 11. See Fleming above n1; F Reynolds Contract and Tort: The View from the Contract Side of the 10 AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #107 MARCH/APRIL 2006

6 Fence (1993) 5 Canterbury L Rev Admittedly, this characterisation of torts and contracts in terms of general and private obligations is an over generalisation, but it does serve as a useful delineation of the two fields of obligations, at least for the purposes of this discussion. See W Poulton Tort or Contract (1966) 82 LQR Fleming, above n1 at Pang Koi Fa v Lim Djoe Phing [1993] 3 SLR 317 at [22] per Amarjeet JC: The courts in Singapore are not strictly bound by decisions of the English courts in the sense that the courts in England are not part of the hierarchy of courts in Singapore, this being especially true since legislative amendments have limited appeals to the Judicial Committee of the Privy Council; nonetheless, in respect of decisions in common law, particularly in the area of tort in general and negligence in particular, decisions of the highest court in England should be highly persuasive if not practically binding. 15. [1991] 1 AC 398; [1990] 2 All ER [1996] 1 SLR [1978] AC 728; [1977] 2 All ER [1983] AC 520; [1982] 3 All ER RSP Architects Planners & Engineers (Raglan Squire & Partners FE) v Management Corporation Strata Title Plan No 1075 [1999] 2 SLR 449 (Eastern Lagoon). For commentary on these decisions see, D Ong Defects in Property Causing Pure Economic Loss: Management Corp Strata Title No 1272 v Ocean Front Pte Ltd [1995] SJLS 256; D Ong Defects in Property Causing Pure Economic Loss: The Resurrection of Junior Books and Anns [1996] SJLS 257; D Ong The Test of Duty for Defective Property Causing Pure Economic Loss [1999] SJLS [1990] 2 AC 605; [1990] 1 All ER See K Amirthalingam The Sunrise Crane Shedding New Light or Casting Old Shadows on Duty of Care? [2004] SJLS 551 at Cf London Drugs Ltd v Kuehne & Nagel International Ltd [1992] 3 SCR PT Bumi International [34] 24. (1999) 198 CLR 180; 164 ALR See Balkin and Davis above n10at and references therein. 26. PT Bumi International [33] 27. See J Smillie The Foundation of the Duty of Care in Negligence (1989) 15 Monash University L Rev 302 at 323, who argues that a duty of care should be owed by a subcontractor in cases involving a chain of contracts where the defendant s contractual undertaking is not only intended to benefit the individual plaintiff but is also paid for indirectly by the plaintiff through the contractual intermediary. Cf Smith v Eric Bush [1990] 1 AC 831; [1989] 2 All ER PT Bumi International [39] [42] 29. Man B&W Diesel SE Asia Tankers [2004] 2 SLR 300 at [48] 30. [1995] 2 AC 145; [1994] 3 All ER Ibid at AC 196. See Simaan General Contracting Co v Pilkington Glass Ltd (No 2) [1988] QB 758; [1988] 1 All ER See e.g. the recent decision of Mirant Asia Pacific Ltd v OAPIL [2004] EHWC 1750 (TCC) at [398] [405] 33. See e.g. Rolls Royce New Zealand Ltd v Carter Holt Harvey Ltd [2005] 1 NZLR 324 (CA) 34. PT Bumi International [42] 35. Ibid at [36] 36. Man B&W Diesel SE Asia Tankers [2004] 2 SLR 300 at [53] 37. Owners of the Sunrise Crane v Cipta Sarana Marine Pte Ltd [2004] 4 SLR 715 at [34]. The Court of Appeal, in a different context, has recently again noted the interaction of torts and contracts: Chia Kok Leong v Prosperland Pte Ltd [2005] 2 SLR 484. Here, the claimant (respondent) was the developer of a condominium and the defendant (appellant) was the architect who designed and supervised the project. The construction of the condominium was completed in 1993; in 1998 the Management Corporation Strata Title Plan No 2201 was constituted and, under the Land Titles (Strata) Act (Cap 158, 1988 Rev Ed), this entity became the proprietor of the common property of the condominium. The claimant brought an action for breach of contract in 2002 against the defendant alleging defective work with respect to certain parts of the common property. Although, the claimant was no longer the owner of the condominium and the Management Corporation, which was the owner, was entitled to sue the defendants in negligence for the defects under the authority of RSP AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #107 MARCH/APRIL

7 Architects Planners & Engineers (Raglan Squire & Partners FE) v Management Corporation Strata Title Plan No 1075 [1999] 2 SLR 449 (Eastern Lagoon), the Court of Appeal nevertheless held that the claimant could recover for breach of contract under the rule in Dunlop v Lambert (1839) 6 CL & Fin 600; 7 ER 824. The mere fact that there were overlapping duties in contract and torts was not fatal to the claim. 38. Man B&W Diesel SE Asia Tankers [2004] 2 SLR 300 at [50] 39. See text at nn See e.g. Hollis v Vabu Pty Ltd (2001) 207 CLR 21; 181 ALR 63 at [24]: It should be added that the relationship between the parties, for the purposes of this litigation, is to be found not merely from these contractual terms. The system which was operated thereunder and the work practices imposed by Vabu go to establishing the totality of the relationship between the parties; it is this which is to be considered. The High Court found that the bicycle couriers were employees for the purpose of vicarious liability although, in a separate matter, the New South Wales Court of Appeal had found that couriers of the same company were independent contractors for taxation purposes (see Vabu Pty Ltd v Federal Commissioner of Taxation (1996) 33 ATR 537). It should, however, be noted that the two cases may be distinguished on the basis that in the taxation case, the couriers included those who used bicycles, motorcycles and motor vehicles and bore the considerable expense of providing, maintaining and insuring their vehicles, thus suggesting that they were independent contractors; whereas the vicarious liability case concerned a bicycle courier, where any maintenance costs could hardly be termed a very considerable expense (Hollis v Vabu Pty Ltd (2001) 207 CLR 21; 181 ALR 63 at [22]). 41. Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515; 205 ALR 522; Cf Caparo Industries Plc v Dickman [1990] 2 AC 605; [1990] 1 All ER 568 (commercial claimant) and Smith v Eric Bush [1990] 1 AC 858; [1989] 2 All ER 514 (vulnerable consumer) 42. In Woolcock above n 41, the majority disposed of the appeal by holding that there was no duty on the facts. Only McHugh J explicitly held that there was no duty with respect to commercial buildings (at [71] and [110]) and Callinan J emphasised the primacy of contractual relations and commercial enterprise (at [210] and [227]). In PT Bumi, the Court of Appeal noted the difficulty in distinguishing between commercial and non commercial purchasers and left it at that (Man B&W Diesel SE Asia Pte Ltd v PT Bumi International Tankers [2004] 2 SLR 300 at [26]). 43. PT Bumi International [45] 44. Ibid at [36] 45. Man B&W Diesel SE Asia Tankers [2004] 2 SLR 300 at [44] US 858 (1986) 47. It is questionable whether it was appropriate to refer to a US decision, given that the US position on economic loss is out of kilter with the general jurisprudence of the Commonwealth courts. See J Stapleton, Comparative Economic Loss: Lessons from Case Law Focused Middle Theory (2002) 50 UCLA L Rev 531 at US 858 at 871 (1986) per Blackmun J: When a product injures only itself the reasons for imposing a tort duty are weak and those for leaving the party to its contractual remedies are strong. The tort concern with safety is reduced when an injury is only to the product itself. When a person is injured, the cost of an injury and the loss of time or health may be an overwhelming misfortune, and one the person is not prepared to meet.... In contrast, when a product injures itself, the commercial user stands to lose the value of the product, risks the displeasure of its customers who find that the product does not meet their needs, or, as in this case, experiences increased costs in performing a service. Losses like these can be insured. 49. See H Bernstein Civil Liability for Pure Economic Loss under American Tort Law (1998) 46 Am J Comp L 11 for a critical discussion of this case and a general overview of US law on pure economic loss and negligence. 50. Man B&W Diesel SE Asia Tankers [2004] 2 SLR 300 at [41] 51. The trial judge acknowledged this concern but held that it was not a problem given the peculiar facts of the case: PT Bumi International Tankers v Man B&W Diesel SE Asia Pte Ltd [2003] 3 SLR 239 at [36] Associate Professor Kumaralingam Amirthalingam s article was previously published in (2006) 14 Torts Law Journal 1. Reprinted with permission. 12 AUSTRALIAN CONSTRUCTION LAW NEWSLETTER #107 MARCH/APRIL 2006