Summary of the Case

In Ng Boo Han and another v Teo Boon Hiang Edward [2014] SGHC 267 (“Ng Boo Han”), the High Court held that there is no rule stating that damages may only be awarded in the case where rectification works had been carried out and paid for. Damages should be awarded on the basis that defects were present and that those defects require rectification.

Facts

The Appellants, Ng Boo Han and his wife, came across the Respondent’s house (that he built himself) and were so impressed that they decided to engage the Respondent, Teo Boon Hiang Edward, to renovate their house. The contract stated that the house was to be completed by 1 August 2011, and that the last balance payment would be made when the Appellants moved in.

By 1 August 2011, the house was still uncompleted. When the Appellants inspected the progress of the construction, they found numerous defects and refused to hand over the last balance payment. Subsequently, a series of disputes ensued between parties over the list of defects and quantum of payment, amongst other issues. As such, the Appellants hired another contractor to rectify the defects.

The Respondent thus commenced an action to recover the unpaid balance and to claim for additional works done. In turn, the Appellants counterclaimed for damages due to the alleged defective works.

The District Court’s decision

The District Judge (“DJ”) allowed the Respondent’s claim for the unpaid balance but rejected the claim for additional works done. As for the Appellants, their claim for damages was dismissed except for one item.

The DJ reasoned that since the contract gave the Respondent a “free-hand” in the construction, the Respondent was entitled to exercise his discretion in building the house. Besides, as the Appellants had agreed to build the house in a “rustic style”, they could not now allege that those “rustic” features were defects.

The DJ also found that the Appellants failed to prove their claim for alleged rectification works. The Appellants claimed $150,000 for rectification works but there were only three invoices totaling $90,000 before the District Court. Their claim for damages was also based on mere quotations and they did not prove that rectification works were actually carried out. As a result, the District Court disallowed the Appellants’ claim for damages.

The Appellants appealed against the Judge’s decision.

Decision

Whether the Appellants should be allowed to claim for damages

The High Court reversed the District Court’s finding, and held that the Appellants did not contract to build a “rustic house”. In any case, the Court found that “(the) argument in relation to rusticity cannot be used to whitewash every flaw in the Respondent’s work.” As such, the High Court went on to consider which items were considered “defects”.

The High Court relied on expert opinions and concluded that certain items were defects because:

• they were in breach of building regulations;
• deviated from industrial standards; or
• were incorrectly constructed.

On the other hand, the other items were not defects because:

• there were no functional problems with the work;
• it was a “matter of aesthetic preference”; or
• parties agreed for it to be that way.

Damages for rectification of defects

The High Court held that the basis for awarding damages should not depend on whether rectification work had been carried out and paid for, but instead, on whether there were any defects present.

It was also highlighted that even though there are rules governing the measure of damages where there are defects in construction, there has never been any rule that damages for defective work may only be awarded if the claimant proves that rectification works had in fact been carried out and paid for. The High Court held that it was not essential that the Appellants had carried out the rectification works, and even if the DJ disbelieved them, he could still have gone on to award damages based on the estimated cost of rectification. The Appellants were accordingly awarded damages for defects that they had proven were indeed defects.

Comments

With this ruling, claimants may be awarded damages caused by defects based on an estimate of rectification costs even where rectification works were not done or paid for. However, claimants must prove that the defects claimed for existed.

What constitutes “defects” and its effect on the assessment of damages

The High Court placed much weight on expert evidence in deciding whether the works deviated from industrial standards or breached building regulations; and thus whether it constituted “defects”. As such, it may be prudent for parties to document the defects as early as possible and to engage an independent surveyor. An independent surveyor’s expert opinion would play an important role in helping the court decide what constitute “defects”, and in deciding the quantum of damages by providing an estimate of the costs of rectification.