MCST 3322 v. Mer Vue Development Pte Ltd & Ors [2016] SGHC 38
Keywords: MCST Claim - negligence- tort - defects - independent contractor
Introduction
This is one of the reported cases in a lengthy legal conflict between the MCST of the Sea View Condominium (MCST) and its Developers, Main Contractors, Architects and M&E Consultants.
The conflict was keenly watched and known to many in the construction and real estate industry. It has spawned two appeals to the Court of Appeal; even before the final trial on the merits of the claim.
This case report touches on the independent contractor defence that was considered by the High Court as a preliminary issue.
Facts
The MCST sued all the Defendants in the tort of negligence.
Three of the Defendants, namely the Developer; the Architect and the Main Contractor; raised the independent contractor defence.
These Defendants pleaded that they had engaged competent independent contractors were not responsible in tort for the tortious conduct of their respective independent contractors.
The Developer said that the Main Contractors; Architects and all other consultants were its independent contractors.
The Main Contractors said that its specialist nominated and domestic sub-contractors were its independent contractors.
The Architects said that its sub consultant, who was the M&E Consultants were its independent contractors.
The MCST disagreed and the issue of whether the three Defendants could raise the independent contractor defence was heard as preliminary issue by the High Court.
Decision
After a nine-day trial on the preliminary issue, the High Court agreed with the three Defendants.
In respect of the Developers’ defence, the Court was of the view that the Main Contractors and Architects were the Developers’ independent contractors and it had exercised proper care in selecting and appointing them considering their respective track records and reputation. As such, the Developers would not be liable for the tortious actions of the Main Contractors and Architects. A similar finding was made in relation to the Main Contractors and the Architects.
The Control and Independent Business Test
The Court relied principally on two “tests” to assess the “independence” of the engaged party – the “Control Test” and the “Independent Business Test”.
Under the “Control Test”; the focus was on the “right to control how the work was done i.e., the way the work was to be actually executed by the contractor”.
Under the “Independent Business Test”; the key lies in “whether the contractor was performing services as a person of business on his own account”. Factors which can be taken into consideration include – whether the contractor provides his own equipment and hires its own helpers; and the degree of financial risk undertaken.
On the facts of this case, the Court found that the “Control and Independent Business Test” were satisfied.
The Developers’ involvement in specifying and making decisions on the design brief; and aesthetics of the development; communicating directly with the main contractors and sub-contractors; and having staff with overlapping expertise did not amount to sufficient control under the “Control Test”.
The Main Contractors’ general supervisory control in terms of the co-ordination of its sub-contractors did not establish the necessary control under the “Control Test”. “The nature of the work sub contracted was largely specialist and dependent on the subcontractor’s proprietary system”.
The Architects’ role as the lead consultant was akin to that of the Main Contractors. Its control of the sub-consultants was only administrative in nature. It had no expertise in the sub-consultants’ area of practice.
The requirements of the “Independent Business Test” was easily fulfilled as all the sub-contractors and sub-consultants were operated as separate businesses without any links to the Developers; Main Contractors or Architects.
This is one of the reported cases in a lengthy legal conflict between the MCST of the Sea View Condominium (MCST) and its Developers, Main Contractors, Architects and M&E Consultants.
The conflict was keenly watched and known to many in the construction and real estate industry. It has spawned two appeals to the Court of Appeal; even before the final trial on the merits of the claim.
This case report touches on the independent contractor defence that was considered by the High Court as a preliminary issue.
Facts
The MCST sued all the Defendants in the tort of negligence.
Three of the Defendants, namely the Developer; the Architect and the Main Contractor; raised the independent contractor defence.
These Defendants pleaded that they had engaged competent independent contractors were not responsible in tort for the tortious conduct of their respective independent contractors.
The Developer said that the Main Contractors; Architects and all other consultants were its independent contractors.
The Main Contractors said that its specialist nominated and domestic sub-contractors were its independent contractors.
The Architects said that its sub consultant, who was the M&E Consultants were its independent contractors.
The MCST disagreed and the issue of whether the three Defendants could raise the independent contractor defence was heard as preliminary issue by the High Court.
Decision
After a nine-day trial on the preliminary issue, the High Court agreed with the three Defendants.
In respect of the Developers’ defence, the Court was of the view that the Main Contractors and Architects were the Developers’ independent contractors and it had exercised proper care in selecting and appointing them considering their respective track records and reputation. As such, the Developers would not be liable for the tortious actions of the Main Contractors and Architects. A similar finding was made in relation to the Main Contractors and the Architects.
The Control and Independent Business Test
The Court relied principally on two “tests” to assess the “independence” of the engaged party – the “Control Test” and the “Independent Business Test”.
Under the “Control Test”; the focus was on the “right to control how the work was done i.e., the way the work was to be actually executed by the contractor”.
Under the “Independent Business Test”; the key lies in “whether the contractor was performing services as a person of business on his own account”. Factors which can be taken into consideration include – whether the contractor provides his own equipment and hires its own helpers; and the degree of financial risk undertaken.
On the facts of this case, the Court found that the “Control and Independent Business Test” were satisfied.
The Developers’ involvement in specifying and making decisions on the design brief; and aesthetics of the development; communicating directly with the main contractors and sub-contractors; and having staff with overlapping expertise did not amount to sufficient control under the “Control Test”.
The Main Contractors’ general supervisory control in terms of the co-ordination of its sub-contractors did not establish the necessary control under the “Control Test”. “The nature of the work sub contracted was largely specialist and dependent on the subcontractor’s proprietary system”.
The Architects’ role as the lead consultant was akin to that of the Main Contractors. Its control of the sub-consultants was only administrative in nature. It had no expertise in the sub-consultants’ area of practice.
The requirements of the “Independent Business Test” was easily fulfilled as all the sub-contractors and sub-consultants were operated as separate businesses without any links to the Developers; Main Contractors or Architects.