Building surveyors are often engaged by building owners or council of management corporation when they are confronted with defects particularly those developments that are newly completed. The surveyors will be required to produce a building defects survey report which can be used in multiple ways including identifying the root causes of those defects, proposed rectification measures, as well as an estimation of associated remedial costs. These building defects related information are helpful for the purposes of negotiation with contractors, building developers, suppliers and even to serve as evidence in case legal actions are warranted. 

This article is part four of a series of articles examining reports produced by experts for the purposes of resolution of construction disputes. The focus of this article relates to general building defects for residential apartments, condominiums or strata titled mixed development. Whilst the objective of such report may appear straightforward, there are several tricky elements that had to be considered during the production of such report including legal implications that may not be obvious in the first instance. This article includes some of the tips and traps associated with efforts leading to the issuance of such report.

One of the more obvious questions that ought to be raised prior to engagement of any building surveyor is whether the newly completed development is still under maintenance period or defects liability period. This is the period within which the main contractor responsible for constructing the development undertakes to rectify any reasonable defects within its scope of responsibility. This period is usually 12 to 18 months after the achievement of practical completion and should be expressly stated in the sales and purchase agreement. Unless the defects in question are believed to be caused by design negligence which a main contractor typically is not responsible for, most defects will be attended to within this period. It is also customary for certain scope of works to be covered with an extended warranty lasting beyond the said defects liability period, such as 5 or even 10 years after practical completion. Examples of such scope of works include anti termite treatment to basement or foundation works, waterproofing works to wet areas, prevention of spalling of concrete etc. Where defects coverage is available, it is unlikely that building surveyor is needed in this regard. 

One of the tricky aspects in dealing with building defects particularly deciding if the service of a building surveyor is warranted is when the defects are latent in nature that usually becomes apparent after a considerable period of time beyond defects liability period. To this end, these defects manifest themselves in the form of physical damage to the building much later or often described using legal parlance as “not discoverable until sometime after it accrues”. Most jurisdictions under English common law system including Singapore adopts Limitation Act which prescribes a basic limitation period of six years from the date on which the ‘cause of action’ accrued. This effectively imposes a six years time frame within which any legal action shall commence. This time bar mechanism will be elaborated further in the later part of this article. 

In view of the above, prior to engagement of the services of any building surveyor, the claimant ought to perform some basic research such as availability of extended warranty, whether any defects liability period is in place and an estimation if any potential legal action may be time barred. One of the main values in commissioning a survey report is in the identification of the root cause of any given defects so that the claimant can be effective and accurate in identifying party or parties that it wishes to seek remedy from. After all the claimant who avers liability bears the burden of proof. If it is established that there is no appetite to commence any legal action due to financial constraints or lack of desire to pursue accountability, the building owner or council of management corporation could have proceeded to directly hire contractors to fix the defects without the need for any reports. Therefore the commissioning of survey report may be deemed as a pre-legal action posture.

Contract Documentation From Consultants, Main Contractors, Subcontractors And Suppliers

The presence of defective parts in a building does not necessarily suggests that the contractor is legally liable. It may well be that the specifications included in the construction contracts had been moderated or scale down in order to keep the selling price of the property affordable. It could also be the case where the contractors had been compliant with the specifications stipulated but the specification that was provided by the designer was inappropriate. These background information and context are essential for the purposes of the building survey report since it facilitates the identification of the right party or parties to negotiate with prior to any decision to commence legal action. The types of remedial measures recommended in the report may also be influenced by the nature of the specifications prescribed. The mere reliance on visual inspection may not be sufficiently insightful. It should be noted that if the claimant is not judicious in naming various defendants or respondents to its legal action, the legal costs may escalate disproportionately. 

In view of the above, it is important to identify the architects, engineers, interior designers, main contractors, subcontractors etc that were involved in the construction of the development concerned. The first hand purchasers of the property would naturally rely on their contract with the property developer if necessary. However since various parties listed above do not have contractual relationship with the claimant, the premise of any legal action shall be establishment of liability under tort of negligence. Having identified the parties to the construction project, the next step is to gain access to the relevant contract documents in respect of these parties. These contract documents are important for a few key reasons. Firstly the specifications included therein provide insight into the levels of design and workmanship stipulated relevant for their respective scope of works. Secondly, if there are certain limitation of liability clauses under those construction contracts, it may arguably in some way affect the scope of tortious liability. Thirdly, where possible the schedule of defects included in the survey report should be organised and exhibited according to scope of contractual responsibility of various parties identified. This is to ensure clarity in attribution of responsibilities as part of discharging burden of proof.

It cannot be overemphasised that since these construction contracts are not publicly available documents, gaining access to these information are not as straightforward as it should be. It often requires commencement of legal proceedings first to provide the legal “nudge” for the relevant parties to disclose the necessary document in the spirit of negotiation in good faith. In this regard, the commissioning of survey report may need to proceed first notwithstanding the absence of the necessary documents. 

Scope of Survey Report

The nature and severity of defects may vary significantly depending on circumstances. Certain defects are superficially obvious where visual inspections are sufficient to identify its root cause and remedial follow up measures. Other defects however may require more invasive inspection measure such as the use of borescope which is an optical tool to inspect areas that are impossible to look at by direct line of sight. Where necessary certain isolated parts of the building installations that are defective may need to be dismantled to facilitate a thorough inspection. There could also be certain defects that may require a step further by extraction of sample to be sent for laboratory analysis to identify the chemical composition of the defects concerned. On the extreme end, there may be certain structural defects that could pose health and safety risk which require a separate specialist to carry out an in-depth technical examination that goes beyond the regular scope of services of a building surveyor. Such specialist examinations are usually for systemic defects or structural integrity issue that may implicate the development in its entirety e.g. building facade system. 

The problem however is precisely setting out the scope of services of the building surveyor when the very nature and severity of defects manifested are not entirely known from the outset. Certain defects that may appear aesthetic in nature may well be a symptom of a much deeper systemic problem. However the root cause of the problem may not be readily discoverable until such time when the initial aesthetic focused remedial measures are found not effective, prompting the need to examine the defects even deeper. Therefore, building owners or council of management corporations could enter into services agreement with building surveyor based on multiple iterations of reports, with options for additional laboratory tests or expertise to be enlisted where required. Without such options, the survey report may conclude by merely recommending further investigations on certain defects, which in and of itself does not provide any closure.

As alluded to earlier, survey reports are deemed pre-legal action posture. It would therefore be reasonable to include in the survey report a cost estimation for any follow up rectification works. This will provide an assessment of the overall damages that are likely to be incurred as a result of such defects. Such financial damages could be broken down and split in accordance with the varying scope of contractual responsibilities of different parties involved in the construction works. The accuracy of these financial assessments will be largely dependent on whether the strategy is to first incur the remedial cost to actually fix the defects or to recover compensations first (either through negotiations or outcome of legal actions) before commencing on the rectification works based on sums actually recovered. If the strategy is the former, it is likely that the building surveyor may only be advising the costs by referring to quotations issued by certain contractors/ suppliers based on provisional remedial measures. 

It is also not conventional for scope of services of building surveyor to include carrying out actual rectification works. Building owners should be mindful to put in place check and balance where the party identifying the defects is not responsible for rectifying the defects and subsequently certify its completion. After all, building surveying firms do not usually have in-house capability of carrying out rectification works, and are rightly expected to outsource these functions if contracted to do so. Therefore, the scope of services of building surveyor should include a certification responsibility upon completion of the rectification works undertaken by third parties. This also provides an incentive for the building surveyor to put forward a more prescriptive remedial measures to be followed by third party contractors. 

What if the defects rectification measures are carried out prior to the conclusion of any negotiations or legal proceedings with parties involved in the construction of the development concerned? Will the rectification works therefore “tamper” with the evidence of the defective works? It is not uncommon for the respondent to the legal proceedings to request for an independent inspection of the alleged defects in order to defend their position. Some may argue that the building defects survey report that usually includes photographic evidence may be deemed as a credible and independent evidence that can be utilised by all parties to the legal action. This however may not be sufficient in view of the potential criticism of whether there is actual independence on the part of the building surveyor if it had been involved in the actual rectification works. Based on this criticism, the building defects survey report may only be deemed at best as factual evidence adduced by the claimant rather than an independent expert evidence. On the other hand, such criticism plainly ignores the fact that the efforts associated with negotiations and subsequent legal action if any, could be time consuming. Building owners should not be expected to put up with disamenities or even health and safety risks for an extended period of time when they are, rightly or wrongly the aggrieved parties. 

Limitation Act

As mentioned earlier, Limitation Act stipulates a maximum period of six years from the date on which the ‘cause of action’ accrued. Any legal action in the tort of negligence brought beyond such stipulated period will be time barred. There are several important nuances in its legislative mechanism. Firstly, this period commences upon damages being suffered by the claimant. In general, this is triggered by the date of issuance of the building defects survey report. It is through this survey report that the claimant would have the necessary knowledge that the defects in hand is due to negligence of certain party or parties as opposed to general wear and tear, thereby allowing cause of action to be accrued. Secondly, there is an alternative period of three years applicable which commences from the date upon which the claimant is deemed to have the necessary knowledge required to bring an action for damages. This is particularly relevant if it is established at a later time that instead of Party A who was originally deemed responsible for such defect, Party B was in fact liable. It may well be the case that when Party B was subsequently identified, the six years limitation had expired. In this case, the claimant could rely on an alternative period of three years, commencing from the date upon which Party B was newly identified. This is relevant for construction related latent defects where the real root cause became evident much later. There is however a catch here as regards the alternative three years period. There is a question of whether there were circumstances that would have reasonably prompted the claimant to investigate the real root cause earlier. In other words, could the claimant have identified Party B earlier based on reasonable standard. This is to avoid situation where the claimant could ‘game the legal system’ by being wilful in its inaction in order to extend the limitation period to its advantage. 

It is quite clear that the different legal scenarios above including how various limitation periods are triggered are largely influenced by the manner in which the survey report is worded. This in turn is dependent on the scope of services stipulated during the engagement of the building surveyor. It is essential that the building surveyor is specific in identifying the root cause of the defect so that the building owner could benefit by being able to ascribe such defect to a party or even parties that may be responsible. The root cause should be sufficiently specific in terms of whether it is workmanship related or design related and if so, which construction trades are implicated in this regard. By way of example, if there are complaints of odour emitting from certain wet areas of residential units such as toilets or kitchens, it is critical to identify the source of the odour and whether the sewage pipes (plumbing construction trade) were sealed correctly during installation (workmanship issue). It is also relevant to further investigate whether the pipes had been installed with sufficient gradient as it could indicate whether it is a design or workmanship issue. This in turn may require cross referenced to the as-built drawings to understand whether the gradient stipulated is in compliance with any relevant building code. The building owner will thus be able to conclude whether root cause of the odour was a design engineering issue or poor workmanship. 

It is not uncommon for the initially conceived rectification measure carried out for a given defect is found to be inadequate resulting in the discovery of a subsequent cause of defect that overrides the initial finding. By way of example the panels of external cladding of a building facade may exhibit signs of warping and discolouration. This was initially concluded as workmanship error due to inadequate protective surface treatments to the panels in issue. However the problem persists after the initial round of remedial measures resulting in a detail examination of the facade system as a whole. It was subsequently found that the choice of facade system was not compliant with the relevant building codes and regulations. This then led to the identification of the facade consultant as potentially being liable. In order for the claimant to preserve its right to pursue remedy in view of the limitation period, it is important that the survey report is structured appropriately. This is because, the alternative period of three years from the identification of a new defendant is contingent upon whether the claimant actually had the requisite knowledge or ought to have the requisite knowledge to carry out a detail examination sooner. The primary way that could have prompted the claimant to investigate further is based on the advice given by the building surveyor through his report. Whilst the requirement to carry out a more thorough and potentially invasive examination could be costlier, it may be wise to do so given the negative legal consequences of any inaction. The scope of services of the building surveyor should include the additional option of enlisting the services of an appropriate external specialist where necessary. Any additional fee should be negotiated and agreed in advance. Such additional fee should be inclusive of any follow up inspections after a pre-determined period of time. As some of these expenses may require significant capital outlay and are incurred on a non recurring basis, management corporations may be expected to raise contributions to sinking funds. This increase in contributions from subsidiary proprietors may be subject to approvals via ordinary resolutions during annual general meeting. Therefore, there are significant amount of planning expected in terms of ensuring funding availability prior to the engagement of building surveyor services. The council of management corporations may enjoy less flexibility and liberty as compared to single owner commercial property in this regard. Any failure to plan amounts to planning to fail.

Conclusion

Most prospective property owners do not dedicate much time in anticipating any potential defects in their property at the point of transaction. Most property owners probably spend more time in dealing with other aspects of property ownership such as rental income potential, financing options, location of property etc. Therefore it is quite common for them to expect that  if and when defects arise, the engagement of a building surveyor should be the be-all and end-all to resolving all the woes arising from such event. This could not be any further from the truth.




Koon Tak Hong Consulting Private Limited