THIO KENG THAY V SANDY ISLAND PTE LTD [2019] SGHC 175
In the recent decision of Thio Keng Thay v Sandy Island Pte Ltd [2019] SGHC 175 (“TKT v SI”), one of the issues addressed by the High Court was whether the breach of a defects liability clause removed the right to claim for damages.
Background. In brief, a dispute arose between the plaintiff and the defendant (developer) concerning a property purchased by the plaintiff from the developer.
One of the arguments ran by the defendant was that the plaintiff had prevented the defendant from exercising its right to rectify defects during the defects liability period. As such, the defendant submitted that the plaintiff was therefore precluded from claiming for damages in respect of the defects which the defendant could have rectified but for the plaintiff’s actions.
Defects liability clause does not extinguish right to claim for damages. The High Court found that the existence of the defects liability clause does not extinguish the plaintiff’s right to recover for damages under common law unless there is express language to the contrary ([112] TKT v SI).
The High Court observed that while a plaintiff’s departure from the requirements of the defects liability clause may affect the quantum of damages recoverable (due to the principle of duty to mitigate) ([112] TKT v SI), the general principle as set out in Gilbert-Ash (Northern) Limited v Modern Engineering (Bristol) Limited [1974] AC 689 is that a common law right cannot be abrogated unless by express wording ([114] TKT v SI).
The High Court also found that even if the requirements of the defects liability clause were not fulfilled, if a contractor has breached its contractual obligation, that would give rise to a right to claim for damages ([114] TKT v SI).
Significance. While this may not be a novel point being canvassed, employers would do well to take note of the High Court’s observation that failure to accord opportunities to the contractors/sub-contractors to rectify defects under the defects liability clause can affect the amount of damages recoverable.
This is a practical point: often, it is more expensive to engage a third-party contractor to rectify any defects. As such, barring special circumstances, generally it would be sensible to allow a contractor to rectify the defects the contractor is willing to rectify.
In this regard, the High Court’s observation at [102] TKT v SI is important to bear in mind “Notwithstanding the disagreement between the parties, the plaintiff should have allowed the defendant to rectify the defects that it was willing to rectify, while reserving his position on the rest of the items which were disputed by the defendant…” This is a sensible way of addressing disputes over defects.
Tags: Building and construction; Defects liability clause; Right to damages
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