Batu Kemas Industri Sdn Bhd v Kerajaan Malaysia & Anor Batu Kemas Industri Sdn Bhd v Kerajaan Malaysia & Anor COURT OF APPEAL, PUTRAJAYA CIVIL APPEAL NO: A 01 16 01/2013 MOHD ZAWAWI SALLEH JCA, VERNON ONG LAM KIAT JCA, ABDUL RAHMAN SEBLI JCA 2 JULY 2015 [2016] 1 CIDB-CLR 47 The Plaintiff operated a brick-producing factory. Pursuant to a supply of electricity contract ( the Contract ), the Second Defendant ( Tenaga ) supplied electricity to the Plaintiff. Before execution of the Contract, Tenaga required the Plaintiff to construct a power substation. The substation housed the Plaintiff s switch gear and relay systems, which functioned as a protection system against internal fault. On or about 13 October 1997, the Jabatan Kerja Raya ( JKR ), under the control of the First Defendant, embarked on constructing a rest and recreation area ( the Project ) on the Ipoh Kuala Lumpur highway ( the Project Site ). The First Defendant wrote three (3) letters to Tenaga requesting all electricity cables along the Project site be removed so that construction could be carried out at the Project Site without hindrance or interruption. There was no evidence that Tenaga proceeded to take the necessary steps to comply with the requests made by the First Defendant. In any event, the First Defendant failed to follow-up with Tenaga on the matter. On 5 August 1998, the First Defendant s Contractor, whilst carrying out works on the Project Site, struck an 11kV underground cable belonging to Tenaga. The cable was damaged and interrupted the supply of electricity to the Plaintiff s factory. The operations in the Plaintiff s factory ceased and the Plaintiff s equipment was damaged. The Plaintiff commenced an action against the First Defendant and Tenaga for damages for negligence and breach of contract. The High Court dismissed the Plaintiff s claim for damages and the Plaintiff appealed to the Court of Appeal. Held, allowing the appeal with costs: (1) On the uncontroverted facts, the Contractor was negligent in damaging the Cable. The Contractor ought reasonably to have foreseen that, if it damaged the Cable, the supply of electricity to the factory would likely to be interfered with and the Plaintiff, would likely suffer loss and damages, including injury to its property. (2) The Judicial Commissioner ( JC ) failed to consider whether the Defendants owed the Plaintiff a duty of care in the first place. Apart from the element of the foreseeability of damage, it was also necessary to consider: (i) the question of proximity or neighbourhood between the 47
CIDB Construction Law Report 2015 parties, and (ii) the question of whether it was fair, just and reasonable to impose a duty of care in the circumstances. In the circumstances of the instant case, the damage was foreseeable. The First Defendant s witness ("DW1") confirmed the fact that the First Defendant had control over the supervision of the Project works. DW1 said that JKR was the sole party responsible for the supervision of the Project works. Further, JKR had requested Tenaga to relocate the Cable on the Project site so that the cable would not interfere with the Project works. (3) A non-delegable duty of care is an exception to the rule that an employer is not liable for the negligence of an independent contractor. In the instant case, the First Defendant owed a non-delegable duty of care to ensure that the Project works done would not injure third parties. In the discharge of that duty, the First Defendant was obliged to take all necessary precautions; in the context of the present case, to obtain sufficient information on the Project site and the potential hazards such as the existence of underground cables. Further, subsections 7(2) and (3) of the Government Proceedings Act 1956 allowed a claim to be brought against the First defendant for negligence. (4) It must have been within the contemplation of Tenaga that under the Contract, the Plaintiff was reliant on Tenaga for a consistent supply of electricity to its factory for the purposes of manufacturing bricks. Tenaga had been notified by JKR that the Project works would be carried out on the Project site. Three (3) letters had been sent by JKR to Tenaga asking them to remove and/ or to relocate the electrical cables and or poles in the vicinity of the Project site. There was no evidence to indicate whether having been notified of the same, Tenaga took any action to comply with JKR s requests. It was thus reasonably foreseeable that the Project works could cause damage to the Cables belonging to Tenaga and that any corresponding damage flowing therefrom was also reasonably foreseeable. (5) Due to the nature of the Contract and bearing in mind the dangerous nature of electricity, great care must be taken when dealing with electricity and a higher standard of care is expected of those controlling electricity. (6) Apart from the field of law, the Court itself had no other expertise. Thus in cases involving technical, scientific or medical issues which required specialized knowledge, the Court frequently had to rely on the evidence of experts. This was a case in which the Court had no expertise and thus the evidence of an expert was called for to assist the Court in arriving at a correct decision. The key issues in the instant case were highly technical and required experts with proper qualifications, in-depth and specialised knowledge and experience in the field of electrical power installations, power equipment reliability condition assessment, electrical system disturbance/faulty investigation, system protection coordination analysis 48
Batu Kemas Industri Sdn Bhd v Kerajaan Malaysia & Anor and investigation and analysis of power equipment breakdown and preventive measures. (7) It is the primary duty of an expert to assist the Court in arriving at the right decision; even if he compromises the case of the party who called him and who is paying for his services. This duty overrides any obligation to the party from whom the expert has received instructions or by whom he is paid. The evidence of an expert should not only be independent but should also be seen to be independent. The opinions of experts are relevant facts only insofar as they can assist the Court in forming an opinion upon the issues in the case. As an independent aid to the court, it is essential that an expert witness possesses and retains a standard of absolute personal integrity. (8) Before the court can accept the testimony of an expert, the competency of the expert must be established. When expert opinions are in conflict with one another, the court is obliged to assess the evidence and accept if necessary the most reliable parts in forming its decision. In that process the court may put relevant questions to the expert for the purposes of clarification or eliciting further information. (9) In the instant case, the trial Judge had referred to the evidence of experts PW8 for the Plaintiff and DW5 and DW7 for the Defendants. The evidence of PW4 - an expert for the Plaintiff - was not referred to by the trial Judge. Further, there was nothing in the Grounds of Judgment to indicate that the JC had preferred the evidence of the Defendant s experts and if so, the reasons therefor. The JC had erred in failing to conduct any assessment of the conflicting evidence of the experts. (10) The Court of Appeal would not agree with Tenaga s contention that the Plaintiff s evidence was inconsistent with its (Plaintiff s) pleaded case that the incident caused a power shortage and/or power surge and/or massive voltage surge at the Plaintiff s premises. The Plaintiffs experts view that the severe voltage transient was identified as the cause of the surge actually supported the Plaintiff s case that the incident caused a power surge to occur at the Plaintiff s premises. Had the JC evaluated the competing views, the JC would have found there to be reason to discount the opinion of DW5 for the Defendants. DW5 was not an independent expert as he had received a monetary grant from Tenaga and had been appointed a consultant for the TNB Research Team. Further, DW7 for the Defendants was not an independent or reliable witness and DW7 s opinion was not uninfluenced by the exigencies of litigation. DW7 s evidence ought to have been discounted. On the other hand the Plaintiff s experts evidence did not shift under cross-examination, nor were their views discredited. The views of the Plaintiff s experts ought to have been accepted as they were wholly plausible having regard to all the circumstances. 49
CIDB Construction Law Report 2015 (11) Apart from the Tenaga s failure to act on the 3 letters from the First Defendant for the removal of the cables in the Project Site, it was evident that Tenaga had also failed to maintain a visible cable marker. The only marker according to DW2 was a slab marker that was underground and it was to protect the cable. If piling work was carried out (and not digging works), the workers would not know that there was a slab marker in that area. As such, Tenaga ought to have informed the JKR of the position of the cable without any specific request. (12) On a balance of probabilities, the incident led to a surge and not an undervoltage as contended by Tenaga. It (Tenaga) had also failed to put in place a protection scheme to protect it s users against a surge. Had there been a surge protection scheme put in place, it was probable that damage would not have been caused to the Plaintiff s equipment. (13) The Plaintiff in the instant case had in place a protective system to protect against under-voltage, which was a mandatory requirement. As such, the question of whether the Plaintiff was contributorily negligent did not arise. COMMENTARY by Rodney Martin Managing Director Charlton Martin Consultants Sdn Bhd Duty of Care Associated with Relocation of Utility Supplies Introduction The Plaintiff, Batu Kemas Industri Sdn Bhd ("Batu Kemas") operated a factory in Tanjong Malim producing bricks. The factory was served by an 11kV electricity supply provided by the Second Defendant, Tenaga Nasional Berhad ("TNB"). All was well until one day a contractor engaged by Jabatan Kerja Raya ("JKR"), under the control of the First Defendant, Kerajaan Malaysia, to construct a rest and recreation area along the Ipoh to Kuala Lumpur highway ("the Project"), struck the 11kV underground cable belonging to TNB causing damage to the cable. As a result of the damage to the cable, the electricity supply to the Batu Kemas factory was interrupted causing operations in the factory to cease and equipment to be damaged as a result of a surge consequent upon the damage caused to the cable. 50
Batu Kemas Industri Sdn Bhd v Kerajaan Malaysia & Anor Batu Kemas commenced an action in the High Court against Kerajaan Malaysia and TNB for damages for negligence and breach of contract which was dismissed. The High Court dismissed the action on three main grounds: (1) Batu Kemas provided no evidence that it had a protection system in place to protect its machines; (2) There was no duty of care and breach of duty by TNB; (3) Even if such a breach of duty did exist, Batu Kemas s contributory negligence was absolute. Batu Kemas then appealed this decision in the Court of Appeal. There was no question on the facts that the contractor who damaged the cable was negligent in doing so. The contractor ought to have foreseen that if it damaged the cable, the likely interruption of electricity supply to the factory would result in Batu Kemas likely suffering loss and damage. The Court of Appeal examined whether the Defendants owed the Plaintiff a duty of care in the first place. Apart from need for foreseeability, the question of proximity arose as well as whether it was fair and reasonable to impose a duty of care in the circumstances. The Court of Appeal decided the damage was indeed foreseeable. Not only did JKR have sole control over the supervision of the Project works, they had actually requested that TNB relocate the cable on the Project site to avoid interfering with the Project works. Although three letters had been sent by JKR to TNB requesting that they remove or relocate the cable, there was no evidence of any action in this regard having been taken by TNB. It was thus reasonably foreseeable that the Project works could cause damage to the cable belonging to TNB and that any corresponding damage flowing therefrom such as that suffered by TNB s customer, Batu Kemas, was also reasonably foreseeable. Due to the dangerous nature of electricity, great care must be taken when dealing with electricity and a higher standard of care is expected of those controlling it such as TNB. As for the other Defendant, Kerajaan Malaysia, there is a general rule that an employer is not liable for the negligence of an independent contractor. However there are often exceptions to any rule and one such exception applied here. A non-delegable duty of care is an exception to the rule that the employer is not liable for the negligence of an independent contractor. In this case Kerajaan Malaysia had to discharge 51
CIDB Construction Law Report 2015 this duty by taking all necessary precautions such as obtaining sufficient information on the Project site and the potential hazards such as the existence of underground cables or other utility services. Apart from TNB s failure to act on the 3 letters from JKR requesting the relocation or removal of the cables from the Project site, it was evident that TNB had also failed to maintain a visible cable marker. TNB had an obligation to inform JKR of the position of the cable without any specific request. Batu Kemas had in place a protection system for its equipment to protect against under voltage, which was a mandatory requirement. As such the question of whether Batu Kemas claim failed due to contributory negligence did not arise. Lessons learnt from the case The execution of construction work brings with it a high degree of risk due to the nature of the enterprise. This risk is more pronounced when work is being executed in the ground where utility services or artificial obstructions may be present. Great care must be taken by those responsible for maintaining utility supplies as well as those with the responsibility for supervising the execution of construction work upon any site, to ensure systems are in place to minimise damage to existing utility services and consequent loss arising therefrom. This judgement demonstrates the special non-delegable duty of care which is owed by those in control of the supply of utility services and those supervising any construction activity which may cause damage to the said utility services if not adequately supervised. Suggested best practices to be adopted Those responsible for arranging any kind of construction work to be undertaken on their behalf relating to development work or any other purpose must be mindful of the fact that existing utility services may well need to be relocated to accommodate such construction work. A duty of care arises to ensure such relocation is undertaken without loss or damage to the utilities or persons or property. There is also an obligation on the part of the utility providers to ensure adequate identification of underground utility services is provided to minimise the possibility of loss or damage arising. From the outset of any construction work, priority must be put on activities associated with undertaking relocation work, with adequate resources being deployed to ensure the duty of care is met. 52