Case Commentary

The Interpretation of Defects Liability Provisions in Construction Contracts

The Singapore High Court decision in Thio Keng Thay v Sandy Island Pte Ltd [2019] SGHC 175 (the “Judgment“) addresses, inter alia, how a defects liability provision does not extinguish a claimant’s right to sue for damages at common law, rather than relying on the defects liability clause.

Other issues addressed in the Judgment are addressed in a concise case summary written by Wong Partnership published on Singapore Law Watch and available here.

At [112] of the Judgment, Justice Lee Sieu Kin held:

In my judgment, the approach in Pearce, which was affirmed by the Singapore Court of Appeal in Liang Huat Aluminium should be adopted. Thus, a defects liability clause does not extinguish a plaintiff’s right to recover damages under common law unless there is express language to the contrary in the contract. A plaintiff’s departure from the requirements of a defects liability clause will affect the quantum of damages he is entitled to recover (under the principle of duty to mitigate), rather than exclude his right to claim damages altogether.

[emphasis added in underline]

The passage of the Judgment quoted above may be instructive as to how future defects liability provisions are drafted. Specifically, the form of future defects liability provisions may be amended to expressly exclude the claimant’s right to sue for damages under common law.

Practically, this may enhance the contractor’s position as it would require the claimant to adhere to the strict terms of the defects liability provision, particularly to observe the contractor’s right to remedy the defects. As such, unless the contractor does not make good the defects to the standard expressly or implicitly required under the contract, a dissatisfied claimant cannot hire a third party to remedy the defects at the contractor’s cost.

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