Insurance & Reinsurance
The Singapore Court of Appeal confirmed in PEX International Pte Ltd v Lim Seng Chye and Anor  SGCA 82 the importance of actions in nuisance. This case was a subrogated action pursued by property insurers and is a good illustration of how recoveries might be successful against neighbouring land users in the absence of actionable negligence.
The Defendant, PEX International, occupied and used commercial premises in Jurong, Singapore. In 2013, PEX engaged an independent contractor to undertake renovation works at the premises. As part of those works, the contractor undertook hot works (welding) at the boundary of the property (adjacent to Mr Lim's property). Sparks from the welding were blown by strong winds onto mattresses stored at Mr Lim's premises, causing a fire. Mr Lim's property insurers indemnified him for the fire damage and pursued a subrogated action against PEX in the Singapore High Court, claiming that PEX was liable in negligence or nuisance to Mr Lim.
Trial Judge's Decision
The trial judge determined that the welding caused the fire and that the contractor was negligent due to the manner in which it had performed that work. PEX was found to be not vicariously liable to Mr Lim for the contractor's actions (because it was an independent contractor). Mr Lim's / subrogated insurers' claim in negligence therefore failed, although the trial judge did find PEX liable for a private nuisance.
To establish a private nuisance, a plaintiff must demonstrate that the defendant has been an unreasonable user of his / her land, resulting in damage to the plaintiff. The trial judge found that the hot works undertaken at the boundary between the parties' premises in the presence of strong wind and in close proximity to the plaintiff's property (i.e. the mattresses) without any proper supervision was an unreasonable use. Therefore, it had committed a private nuisance and Mr Lim was entitled to damages (the quantum of which was to be determined at a separate hearing).
PEX appealed the trial judge's decision, in particular, that it could not reasonably foresee the fire and, therefore, could not be liable in private nuisance.
The Court of Appeal upheld the trial judge's decision, although found that the judge had incorrectly considered foreseeability as a matter of liability rather than in respect of remoteness of damage. The Court found this error to be immaterial in the trial judge's overall decision.
The Court restated that foreseeability of the risk of harm was irrelevant for a claim in private nuisance unlike in negligence actions. Private nuisance is a strict liability action. Foreseeability is relevant in private nuisance actions only when considering the remoteness of the damage claimed. When considering remoteness, a plaintiff can recover damages if the type of harm was reasonably foreseeable by the defendant.
The Court found that Mr Lim's claim was not too remote because the type of damage (i.e. damage due to fire) was reasonably foreseeable to PEX because it had authorised the contractor to undertake the renovation works (which included the hot works).
The Court also agreed that PEX was liable under the historic rule (although a sub-species of nuisance) in the English case of Ryland v Fletcher (requiring a non-natural use of the land by the defendant and an escape of a dangerous substance / object onto the plaintiff's land). The hot works were a non-natural use of the land that caused a dangerous object (fire) to escape onto Mr Lim's property, and the loss was not too remote (see above). Given that PEX had already been found liable in private nuisance, nothing turned on the finding of its liability under the rule in Rylands v Fletcher.
The case acts as a reminder that property insurers might have multiple causes of action available to them when looking to subrogate against third parties. Whilst negligence and breach of contract might be the more usual actions to explore, actions of private nuisance could be useful in circumstances such as the Lim v PEX case because of the strict liability nature of the action.
If you wish to discuss this case or our subrogation practice, please contact Nicholas Sykes. Nicholas is also able to carry out reviews of insurance claims to identify potential recoveries.