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Dental chain Smile wins over $600k for flawed fitting works

Dental chain Smile wins over $600k for flawed fitting works

Source: Straits Times
Article Date: 12 Nov 2019
Author: K.C. Vijayan

Renovation firm liable for breaches that led to closure of Suntec City mall clinic for 321 days.

A dental services chain that signed a $158,010 contract for fitting works at its clinic in Suntec City mall will get $621,621 in damages from the renovation firm instead.

The High Court awarded the sum to Smile Inc Dental Surgeons in judgment grounds yesterday, after assessing the damages payable by OP3 International for breaches that led the clinic to close for three extended periods, between 2013 and 2015.

Smile had sued OP3 for alleged defective design and construction of the clinic and in 2017, it was found liable for the three periods totalling 321 days.

The judge in yesterday's decision grounds assessed the amount OP3 had to pay after a five-day hearing that stretched over several months.

The periods of closure comprised 50 days in 2013 for delayed completion of fitting works, 51 days in 2014 and another 220 days in 2015 after two floods in 2014 caused by OP3's failure "to ensure the works were designed and executed in a manner that was fit for its intended purpose", the judge said.

As a result of the second flood, Smile found mould had grown again on the same walls of the filing room in the clinic on July 21, 2014.

On July 29, 2014, Smile closed the clinic, which was repossessed by the landlord in March 2015.

Justice Chan Seng Onn said Smile's claims were "aplenty, ranging from its expenses flowing from the removal and storage of equipment and items in the Suntec clinic, to expenses it had incurred to remedy the impact of the floods".

He noted Smile also claimed for loss of profits suffered during the three "blackout periods", among other things, and the total sum sought was more than $1,312,407.87.

In an 84-page judgment, the judge dealt with each item claimed grouped into four categories and assessed sums for each of them.

These included $80,573 for flood investigation and remediation costs, and $151,384 for wasted depreciation expenses from March 2015 till the end of the lease in September 2016.

The court rejected Smile's claim for $265,399.38 for "loss of management time and expense" allegedly suffered due to the first and second floods. But it awarded the biggest single item, loss of patient revenue, as a result of the blackout periods.

The judge estimated the average patient revenue per day for the Suntec clinic was $2,076.91 per operational day based on the $454,843.44 revenue earned for the 219 days it operated.

Hence, the total patient revenue deemed lost for 321 blackout days came to $666,688.

From this sum, the judge deducted $400,013 for variable expenses based on an average ratio of expense to revenue for an indicated period and found the sum payable for patient revenue loss to be $266,675.

But lawyers Vijai Parwani and Nicholas Chandra argued that Smile suffered no patient revenue loss during the blackout periods as they were diverted to Smile's other dental clinics.

Smile, represented by lawyers Ho Chien Mien and Samantha Teong, countered, among other things, that the patients were not automatically diverted to Smile's other clinics when the Suntec outlet was closed. Justice Chan accepted there was at least some diversion to Smile's other clinics but the actual proportion "is an entirely different question".

The judge rejected the argument that there was no loss suffered by Smile during the repeated closures, noting that the diversion effect would be cancelled out by the "opposing disruption effect" on the clinic caused by the repeated and intermittent closures.

Justice Chan allowed $87,432 to OP3 in its counterclaim for the unpaid balance of renovation work done to be deducted from the amount payable to Smile.

The total sum eventually due to Smile would be $534,189.


$1.3m

Total sum Smile Inc Dental Surgeons was claiming in its lawsuit against OP3 International.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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