Introduction

The question of responsibility for defects in the design and construction process has come under close scrutiny in recent times. When multiple parties are involved in the execution of a project, and defects are alleged thereafter, it is likely that parties may seek to engage in a blame game. To that end, some parties may seek to rely on the argument that they are not responsible in circumstances where an 'independent contractor' has been engaged.

The independent contractor defence protects an employer from vicarious liability for the negligence of an independent contractor. In the recent decision of MCST Plan No 3322 v Mer Vue Developments Pte Ltd and others [2016] SGHC 38, the High Court examined the applicability of the defence in the context of the construction industry.

The Court of Appeal had previously confirmed that developers are entitled to rely on the independent contractor defence. In this decision, the High Court held that main contractors and architects are also entitled to rely on this defence. For the reasons set out below, this decision can significantly impact the way in which risks may be allocated amongst employers, contractors, consultants and sub-contractors.

Brief Facts

This matter involved the Seaview Condominium (the “Development”). The management corporation (the “Plaintiff”) alleged that there were numerous defects in the Development, and brought an action against a number of defendants, including the Developer, the Main Contractor, and the Architect (the “Defendants”).

The Defendants all pleaded the independent contractor defence in response to the Plaintiff‟s claim based on tort. The High Court was invited to determine, as a preliminary question, whether the Defendants were entitled to rely on this defence.

The Independent Contractor Defence

The general position is that an employer is not vicariously liable for the negligence of an independent contractor. The employer may, however, remain liable for failing to exercise proper care in appointing an independent contractor.

The independent contractor rule is of particular significance in the construction industry, where it is common practice in any project for the developer and main contractor to employ a chain of sub- contractors due to the degree of specialisation needed.

There are certain exceptions to the independent contractor rule, where the employer owes some primary and personal non-delegable duty to the claimant. In such cases, the employer is not entitled to rely on the independent contractor defence and may be liable for the contractor‟s acts. Prior to this case, the Court of Appeal had held, in a dispute relating to another condominium, that developers are entitled to rely on the independent contractor defence.

In this instance, the High Court rejected the Plaintiff‟s submission that the Main Contractor and the Architect fell within the exception to the independent contractor rule due to non-delegable statutory duties under the Building Control Act (“BCA”). The BCA only imposes certain non-delegable duties on Qualified Persons (such as the Architect) and Builders (such as the Main Contractor), including ensuring building safety and construction in compliance with the relevant approved plans, building regulations, and BCA provisions. It was found that they are not prevented from relying on the independent contractor defence.

Each case is dependent on its own facts and, in this case, the Defendants in the Seaview dispute were allowed to rely on the independent contractor defence to avoid liability for the acts of their sub- contractors.

The court found that the Defendants had exercised proper care in appointing independent contractors and brief reasons include:

  1. The Developer had appointed the Main Contractor through a formal tender exercise, and both the Main Contractor and the Architect had extensive track records in the construction industry.
  2. The Main Contractor had appointed its own sub-contractors on the basis of past experience or track record, and there was no allegation that it had not taken proper care in raising objections to sub-contractors nominated by the Developer.
  3. The Architect had appointed qualified sub-contractors with expertise in areas outside of its own specialisation, and these sub-contractors had been expressly approved by the Developer.

While this decision settles the preliminary question of the Defendants‟ entitlement to rely on the independent contractor defence, it does not conclude on the issues of tortious liability or contractual liability. These will be determined at the main trial for this dispute.

Concluding Words

The court has to balance the interests of the various parties in a construction dispute. Particularly in a dispute involving residential property, it may be difficult for the claimants to identify all of the sub- contractors and to pursue individual claims. However, the High Court‟s decision here confirms that this does not over-ride the fundamental principle of tort that liability is based on fault.

Therefore, an employer will not be held liable for its contractor‟s acts unless the employer has committed some fault. Such fault may lie in the failure to properly appoint its sub-contractors, or in facilitating the contractor‟s negligence. The court will examine the appointment process and the relationship between the parties in the course of works. Care has to be taken to structure the procurement of the project and the administration of the same so that the ability to raise the defence of independent contractor will not be compromised.