Mahtani and Others v Kiaw Aik Hang Land Pte Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash JC
• Judgment Date: 11 July 1994
• Neutral Citation: [1994] SGHC 182
• Docket Number: Suit No 2557 of 1987
• Date: 11 July 1994
• Year: 1994
• Published date: 19 September 2003
• Plaintiff Counsel: Shantini Ramachandra (Wee Ramayah & Pnrs)
• Citation: [1994] SGHC 182
• Defendant Counsel: Sim Eu Jin (Peter Yap & Co)
• Court: High Court (Singapore)
• Subject Matter: Rate of interest for agreed damages,Building and Construction Law,Period for which interest to be calculated,Construction torts,Sale of land before remedial work done,Date at which damages to be assessed,Damages for breach of contract to construct building in good and workmanlike manner,Consequences of delay in prosecution,Change of solicitor taken into account,Cost of remedial work or diminution in value basis,Basis for assessment,Damages

Cur Adv Vult

The defendants carry on the business of property developers. In the 1970s and early 1980s, they were engaged in developing the condominium project known as Amber Gardens located near the corner of Mountbatten Road and Tanjong Katong Road. They constructed five blocks of flats in two phases. Blocks A and B were built during the first phase and Blocks C, D, and E were built during the second phase. This action arises out of the sale by the defendants to the plaintiffs of a flat located on the seventh storey of Block E and now known as 1 Amber Gardens, #07-03 Block E, Maryland Park, Singapore (the flat).

In December 1980, the plaintiffs were granted an option to buy the flat for the sum of $465,900. The option was exercised on 9 February 1981, and an agreement for sale was thereupon entered into. In this agreement the defendants described the flat as being estimated to contain a floor area of 181.5 sq m and they also undertook, by cl 8, to construct the flat itself, the building project, and the common property, in a good and workmanlike manner.

The plaintiffs are three brothers residing in Indonesia. The purchase was handled by the first plaintiff, Mahtani Lakhmichand Gobindram (Lakhmichand), who, during a visit to Singapore in December 1980, had seen the project under construction. When Lakhmichand made enquiries at the defendants` office about the availability of flats in the project, he was told that the defendants had a sister company, Kiaw Aik Hang Finance Co Ltd (the mortgagee), which could finance a purchase at a better rate than a bank. He was also told that the defendants` lawyer was one Dr Phang and that if the plaintiffs used Dr Phang in the purchase as well, then their legal costs would be reduced by half. In the result, the plaintiffs decided to take a loan of $370,000 from the mortgagee to finance their purchase of the flat and they also appointed Dr Phang as their lawyer. Dr Phang thereafter acted for the defendants as vendors, the plaintiffs as purchasers and mortgagors, and the mortgagee as lender. The loan was secured by a mortgage of the property.

In March 1982, the subsidiary strata certificate of title in respect of the flat was issued. This showed its floor area to be 152 sq m and not 181.5 sq m. The certificate was received by the plaintiffs` solicitor and sent thereafter to the mortgagee. According to Lakhmichand, the plaintiffs were never given a copy of it and did not become aware until much later that there was a shortfall in the floor area. In the meantime, the sale of the property was completed in April 1982.

On 18 February 1987, the Development and Building Control Division of the Public Works Department served a notice on the Management Corp of Maryland Park stating that the Building Authority was of the opinion that Blocks C and E were dangerous. The Management Corporation was ordered to submit its professional engineer`s report and investigation on the buildings and to thereafter make the buildings safe. Subsequently, various engineers were appointed to investigate and make recommendations. In the result, the Management Corp accepted the reports of Dr YS Lau submitted in March 1989, October 1989 and March 1990, and appointed him to supervise certain remedial works to Blocks C, D and E. These were completed in August 1991.

In the meantime, the plaintiffs had defaulted in punctual payment of the instalments due to the mortgagee. In fact, all the instalments falling due from January 1986 onwards were not paid. The mortgagee therefore took action in July 1987 to enforce the mortgage. The flat was put up for sale by auction. At the auction, which was conducted on 20 August 1987, the flat was sold for a price of $295,000.

On 24 September 1987, the plaintiffs issued the writ in this action claiming damages against the defendants for their breaches of contract in relation to the shortfall in the area of the flat and their failure to construct the flat and the building in which it was contained in a good and workmanlike manner. Initially the defendants denied both claims. When this action first came on for trial in July 1993, however, the defendants conceded liability on the shortfall claim in the amount of $75,724.73 as claimed in the statement of claim. The defendants continued to dispute liability on the second claim.

The trial therefore proceeded on the basis that the plaintiffs had to establish the failure of the defendants to comply with their contractual obligations in relation to the construction of Block E and that, as a result thereof, they had sustained damage. Both these issues were hotly contested by the defendants. It should be noted that the defendants did not deny their duty to build the block and the flat in a good and workmanlike manner. What they denied was that they were in breach of this obligation.

Issue 1: were the defendants in breach of their obligation as builders?

In their re-amended statement of claim, the plaintiffs gave the following particulars of the alleged breach on the part of the defendants:

Particulars

The defendants used defective concrete which was insufficiently dense, weak, porous and unduly variable and contained insufficient cement in the construction of the concrete structures. This has necessitated the use of jackets to the columns which have shown signs of distress. Over the years moisture in the atmosphere and water from the wet areas seeps into the concrete and corrodes the main reinforcement of the structures through the porous concrete which has lost its alkalinity and is unable to protect the steel reinforcement from corrosion. Once the steel reinforcement begins to corrode, rust forms around the bar and, as this rust has a volume up to three times as great as that of the original steel, it generates considerable internal pressure which is greater than the tensile strength of concrete. This results in cracking and spalling of the structure and will eventually lead to a loss of strength which affects the achievement of design loads and the maintenance of safety factors.

The plaintiffs` main witness in connection with this part of the claim was Dr YS Lau, the engineer who had been brought in by the Management Corp as a consultant to investigate the alleged defects and advise them on what, if any, remedial action was required. In rebuttal, the defendants called Dr CK Murthy, another consultant engineer. Dr Murthy, however, laboured under the considerable disadvantage of not having carried out an investigation or even an inspection of the site at the material time. He therefore had to work from the reports of various investigators, including Dr Lau, who had themselves carried out the physical inspections.

The evidence before the court on this issue consisted of the four reports which Dr Lau gave to the Management Corp (three relating to his investigations and recommendations and the fourth being a report issued after the remedial works had been completed), Dr Murthy`s `Opinion Report on Alleged Defective Concrete in Blocks C, D and E at Maryland Park`, Dr Lau`s commentary on that report and the oral testimony of both experts. Thus a wealth of documentation and opinion was introduced. For the purpose of this judgment, it is not necessary to dwell on all the technical points raised. Instead I will summarize the main points that emerged.

(i) Differential settlement

Dr Lau found that the columns of Blocks C, D, and E (the buildings) had settled differentially and that there was a difference of 70-80mm in the levels of different columns. The differential settlement did not result in tilting or in cracks in the original structure other than in beams and slabs at two locations at the second storey floor of Block D. By the time Dr Lau came on the scene, the settlement had stabilized and had not affected the buildings.

Dr Murthy commented that the large differential settlement observed in the buildings should have given rise to severe damage. The fact that Dr Lau had observed cracks only in plaster and found the structural members to be free from cracks except at two locations showed that the quality of the concrete must have been good since it had sustained such a big differential settlement.

In response, Dr Lau pointed out that various cracks which had arisen from the differential settlement had been observed both by himself and by previous investigators. For example, there was wall cracking in Block C; vertical cracking of external columns and some columns inside the building in levels 3 and 5 of Block C; cracking or spalling of concrete in certain columns/walls in Blocks C, D, and E; diagonal cracks across slabs of very short spans which appeared to radiate from columns at the balconies and/or those surrounding the lifts shafts on many levels of the buildings and numerous shear cracks on beams at the first storey ceiling of all the buildings. He also pointed to maps and photographs of numerous cracks and other defects in columns, beams and slabs observed by his engineers. Dr Lau stated that the fact that structural cracks wider than 0.15mm were found at two locations meant that the cracking was well distributed by reinforcement and did not rule out the existence of narrower cracks or cracks which may have been repaired or covered with plaster. According to Dr Lau, his site records showed that at the end of the strengthening/repair contract, more than 900 metres of cracks in the concrete structures had to be grouted. Many of these cracks had, at the start, been hidden under hairline cracks in the plaster and were only discovered when the plaster was removed for the purpose of the rectification works.

(ii) Low concrete strength

The structural design of the columns was adequate but there was a serious deviation from the design which directly affected the load carrying capacities of the columns. This deviation was the use of concrete which was low and variable in strength. This resulted in columns with...