You want to renovate your property and have engaged a contractor to carry out the renovations on a "turnkey" basis.
In other words, this contractor assumes responsibility for the entire project and will engage any subcontractors and/or apply for approvals as required to get the work done.
While carrying out the works, the contractor negligently caused damage to your neighbour's property.
Now your neighbour is suing you.
Can you be made liable for the damage? We consider 3 possible claims your neighbour may bring against you.
NEGLIGENCE IN CHOOSING AND APPOINTING THE CONTRACTOR
Your neighbour may choose to sue you for being negligent in the way you had selected the contractor to carry out the renovation work.
In such a situation, the question will be whether you had exercised reasonable care when appointing the contractor. The court will look at objective factors such as:
- The prevailing industry practices in relation to "turnkey" projects
- What a reasonable person in your position would have done
The courts have held that the engagement of contractors for projects on a "turnkey" basis is an accepted industry practice in Singapore.
However, it is still necessary for you to exercise due diligence when choosing your contractor.
You must ensure that the contractor was certified and licensed to carry out the type of construction work they were being hired for.
You may be found liable for negligence if you fail to discover reasonably that the contractors were not licensed to carry out the works which resulted in damage to your neighbour's property.
Even if you yourself were not negligent in selecting and appointing your contractor, your neighbour may attempt to hold you vicariously liable for the negligence of the main contractor in renovating your property.
This form of liability is typically imposed on employers in cases where employees commit torts (i.e. civil wrongs) during the course of their employment.
As a result, the employers are held liable for their employees' acts.
In order for vicarious liability to be imposed, 2 requirements must be satisfied:
The existence of a "special relationship" between the tortfeasor (i.e. the party who committed the tort) and the defendant (i.e. the party being sued for the tortfeasor's acts) which makes it fair, just and reasonable to impose liability on the defendant for the tortfeasor's wrongful acts.
Whether this "special relationship" created or significantly enhanced the risk of the tort being committed.
A well-regarded exception to vicarious liability is when the tort had been committed by an independent contractor.
Independent contractors are parties who provide their services on an ad hoc basis under a contract for service, instead of being hired as an employee to serve an employer under a contract of service.
You can read about the differences between contracts of service and contracts for service in our other article.
In such a situation, vicarious liability will not be imposed as doing so will not serve to advance the policy behind vicarious liability.
This policy is namely to encourage employers to take steps to prevent similar incidents from happening again in the future.
However, independent contractors work independently of their clients' control, making it difficult for clients to prevent independent contractors from committing torts.
Generally, if you hire a main contractor for "turnkey" projects, the main contractor will likely be regarded as an independent contractor.
If so, this will exclude you from incurring vicarious liability for any torts committed by the main contractor during the course of the renovations.
BREACH OF NON-DELEGABLE DUTY OF CARE
Your neighbour may also allege that you owe and have breached a non-delegable duty of care to him/her to ensure that the contractor takes reasonable care in performing the work.
This is even if you were not negligent in selecting the contractor or cannot be held vicariously liable.
This is because a non-delegable duty is considered a personal duty, where the legal responsibility for performance of the duty resides in the party owing the duty and cannot be delegated.
Determining whether one party owes another party a non-delegable duty involves a 2-stage test.
For the first stage of the test, either of the following has to be proven:
The case falls within one of the established or recognised categories of non-delegable duties.
For example, the English courts (but not the Singapore courts) have recognised that non-delegable duties will arise in respect of "ultra-hazardous acts".
The case contains all of the following 5 features:
1. The party suing was especially vulnerable or dependent on the protection of the party being sued to avoid the risk of injury. For example, if the party suing was a patient or a child.
2. There was a pre-existing relationship between both parties, which placed the suing party in the care of the party being sued. It can also be inferred from this pre-existing relationship that the party being sued had assumed a positive duty to protect the suing party from harm.
3. The suing party had no control over how the party being sued chose to perform this positive duty, whether personally or through third-parties.
4. The party being sued had delegated some function integral to the positive duty to a third-party. In addition, the third-party was exercising that delegated function at the time of the tort.
5. The third-party had been negligent not in some collateral respect, but in the performance of the very function assumed by the party being sued and which had been delegated to him.
The second stage is that the court will decide whether it would be fair and reasonable to impose such a non-delegable duty, and whether there are any policy considerations for or against doing so.
In the context of homeowners being sued for damage done by their contractor to their neighbours' property, your neighbour is unlikely to be especially vulnerable or dependent on your protection against the risk of injury.
If so, it is unlikely that you will owe a non-delegable duty to your neighbour for you to breach.
CASE STUDY: NG HUAT SENG V MUNIB MOHAMMAD MADNI
In Ng Huat Seng v Munib Mohammad Madni, a homeowner hired a contractor on a "turnkey" basis to demolish and rebuild property on his land.
While carrying out the demolition works however, the contractor caused damage to the property of the homeowner's neighbour.
The neighbour then sued the homeowner for damages on the basis of:
Negligence in selecting and appointing the contractor
Breach of a non-delegable duty in ensuring that the contractor took reasonable care in performing the work
However, all 3 claims failed. The court found that:
1. THE HOMEOWNER HAD NOT BEEN NEGLIGENT IN SELECTING AND APPOINTING THE CONTRACTOR
The "turnkey" approach to hiring a contractor was not an inappropriate practice, given that it was a "common choice for homeowners in Singapore".
In addition, the contractor had been licensed to carry out the works it had been engaged for.
2. THE HOMEOWNER WAS NOT VICARIOUSLY LIABLE FOR THE CONTRACTOR'S ACT
This was because the contractor was an independent contractor:
The contractor concluded contracts with consultants and subcontractors in its own name.
It hired its own employees and was solely responsible for their management and supervision.
It had taken out insurance in its own name.
Also, it maintained a separate account from the homeowner and retained regularly-received lump sum payments from the homeowner as its own profits.
3. THE HOMEOWNER DID NOT OWE A NON-DELEGABLE DUTY TO HIS NEIGHBOUR
The homeowner had not assumed responsibility to the neighbour.
Neither was the neighbour especially vulnerable such that he could only rely on the homeowner to avoid harm.
The court concluded that the relationship between the homeowner and his neighbour was "essentially that which would ordinarily exist between neighbours".
If you find yourself being sued for damage done to your neighbour's property by your contractor, your neighbour could find it very hard to pin liability on you.
As a result, you generally should not have to worry about being made liable for such damage.
Also in most cases, contractors are covered by insurance which can usually be used to compensate an aggrieved neighbour.
This should make a lawsuit against you unnecessary in the first place.
However if your neighbour persists in suing you, you may consider getting in touch with a renovation claims lawyer to assist you in defending the claim.
This article was first published in SingaporeLegalAdvice.
SingaporeLegalAdvice.com is a legal platform for individuals and small business owners needing legal help. The information provided above does not constitute legal advice and is to be followed at your own risk. You should obtain specific legal advice from a lawyer before taking any legal action.