DEFECTS

WHAT ARE DEFECTS?

Defect can be simply defined as “The want or absence of some legal requisite: deficiency; imperfection; insufficiency” (Black Law Dictionary). Succinctly, a defect is the absence or lack of
completeness of perfection for which the thing is or to be used for intended purpose.

In the construction industry, the team defects or defective works as referred to in many standard form of construction contract, is usually collectively referred to as defects, imperfections,
shrinkages or any other faults in the construction works. Essentially, defective works is about the works failing or being deficient in standard and quality of workmanship, materials and/or design
as specified in the contract. Defects may also occur in failing to comply with the requirements of the drawings, bill of quantities, specifications, etc.

Defect can be classified into two broad categories, namely Patent Defect and Latent Defect, as described and explained below.

Patent Defect

Patent defect is defined as “a defect which is discoverable by reasonable inspection” (Powell-Smith).

Such defects are defective works which can be discovered through carrying out of normal inspection, observation, testing and/or examination in a simple manner or as specified in the contract.

In construction contracts, the Superintending Officer or relevant project consultants such as Architect or Engineer (depending on the form of contract used, but hereinafter referred as “SO”),
sometimes assisted by a Clerk of Works, do carry out or instruct for relevant inspection, observation, testing and/or examination to ensure that the construction works executed by the Contractor
are in compliance with the contract requirements prior to certifying practical completion. Typical examples are concrete honeycombing, hairline plaster cracks, uneven flooring, etc.

Latent Defect

Latent defect is defined as “a defects which is not discoverable during the course of ordinary and reasonable examination but which manifest itself after a period of time” (Powell-Smith).
Essentially, such defects are defective works that cannot be seen or discovered by normal inspection, observation, testing and/or examination.

Latent defects are usually neither obvious nor apparent during the defects liability period but become apparent or manifest themselves after the expiry of the defects liability period. Typical
examples are rainwater leakage through roof, damp wall, structural crack, tilted foundation, electrical wiring faults, etc.

In order to discover or to establish such defects, it may be necessary to subject the defective works to exhaustive and meticulous inspection, testing and/or detailed examination instead of normal
inspection, observation, testing and/or examination as defined under patent defect above. Usually, it is unlikely to be latent defect if it can be discovered by normal inspections and/or tests
specified in the contract.

However, in some cases, latent defects may become patent or undiscovered patent defects discovered or surfaced after handing over of the works to the Employer. Such defects, where the
Contractor is culpable, are breaches of contract which the latter is liable and must put right or otherwise be subject to diminution in value.

Outstanding or Non-Compliant Work

There are distinctions or differences between outstanding and not compliant works against defective works, both patent and latent in nature. Outstanding and non-compliant works are essentially
works that are part of the contract, which a contractor has undertaken to carry out and complete accordingly prior to certification of practical completion, but had failed to do so. If the Contractor
had carried out and complete the works accordingly, and should there be any defects in the works, then the Contractor shall be contractually obliged or responsible and liable to rectify or remedy
these defects during the defects liability period under the contract.

However, in practice, the distinction between outstanding and non-compliant works against defective works are often confused, blurred and/or mixed up by many SOs and project consultants, so
much so that such confusion and ambiguity have led to unnecessary delays in the certifying of practical completion. Often these outstanding and/ or non-compliant works are expressly stated or
included as defective works in schedule or list of defects to be rectified/ remedied by the Contractor concern.
The following tabulations are examples of outstanding/ non-compliant works against patent and latent defects commonly occurring during construction and after completion of a building:

Building Element Outstanding/ Patent Defects Latent Defects

Non-compliant works
Substructure • Incomplete excavation for pad footings • Slight pad footings misalignment • Sinking foundation
• Deviated piles installed • Honeycombing in concrete stumps • Broken installed piles
• Incorrect reduced levels • Uneven slab surfaces • Poor hardcode compaction
• Unsafe temporary works • Poor construction joints • Structural cracks on floor slabs, causing tiled floor to crack
• Sand blinding not laid • Concrete spilling on beams concealed above suspended ceiling
• Blocked subsoil drainage due to building debris, etc
Structural & Walls • Column sizes incorrect • Concrete surface cracks • Concrete spilling caused by corroded steel bar due to
• Beam not casted • Honeycombing in columns & beams insufficient concrete cover
• Uneven suspended slab • Concrete bulging and uneven surfaces • Structural cracks in beams & columns
• Several curtain wall glass panel not fixed • Efflorescence in walls • Lack of or improperly laid damp proof courses to walls
• Broken facing bricks to external wall causing dampness to rise above
Finishes • Insufficient screed thickness to concrete floor • Uneven floor tiling • Water seeping through tiled floor due to no waterproofing
• Incorrect floor tiles laid • Cracked tiled floor • Dampness in plastered wall surfaces
• Plastering without base coat as specified • Uneven plastered surfaces • Painting discolouration after handover
• Walls not flat – out of tolerance • Plaster hairline cracks • Suspended ceiling partial collapse of the ceiling
• Ceiling tiles not fully installed • Paint peeling off from the painted plaster walls
• Uneven suspended ceiling level
Roof • Wrong type of timber trusses used • Discoloured roof finish • Rainwater penetration through roof
• Wrong colour roof coverings used • Broken roof tiles • Roof tiles dislodged during high winds
• Slope of roof pitch incorrect • Dented metal decking installed • Undersized roof trusses leading to roof sagging
• Sisalation not installed • Flashing not installed properly • Gutters do not drain, causing rainwater overflow
• Roof trusses not connected and bolted in • Rainwater downpipe not connected properly causing
properly flooding
Windows & Doors • Aluminium window frame thickness not to • Broken glass panels to window • Broken rubber seals around window causing rainwater
specification • Warped timber door entry
• Windows opening not to size • Installed door cannot open • Window frame not properly fixed, causing the window
• Incorrect window location • Too large gap at door edges to wobble
• Aluminium windows should be bronze • Loosen door hinges • Warping of timber door panels
anodised as specified not natural finish as • Lockset not functioning • Delamination of power coated paint surfaces to
installed aluminium doors and windows
• Incorrect sizes of timber doors • Paint on painted door peeling due to no undercoat
• Substandard painting works to timber surfaces applied
Electrical & • MCB/ELCB incorrectly installed • Faulty switches • Flickering of light from light fittings after switching on
Plumbing • Incomplete electrical wiring works • Malfunctioned electrical fittings • Frequent electrical short circuiting/tripping
• Wiring installed not as specified • ELCB not working • Switches do not work (no power)
• wrong type switches installed • Waste and soil pipes blocked • Concealed electrical wiring out of alignment
• WC position installed wrongly • Water leakages from water pipes • Breakage in underground sewerage pipes
• Fittings installed not to specification • Broken rubber seals in WC • Incorrect manhole invert levels
• Water pipes not clipped to walls • Incorrect sewer pipe gradient
• Dampness and mould in toilet walls
• Clogged and stagnant water in drains
• Waste water leakage from kitchen sink into cabinet
WHO IS RESPONSIBLE FOR THE DEFECTS?

Under most standard forms of construction contract, the Contractor is liable to make good, remedy or rectify any defective works which are non-compliant with the contract requirements. However, if
the defective works are not the results of the Contractor’s fault or breach of contract, then the Contractor is to be paid for the making good, remedial or rectification works. In the event, the Contractor
fails or is reluctant to undertake such works, the Employer can employ a third party contractor to do so and set-off any costs associated with such works from the Contractor’s payment account or
recover as a debt due, thereafter.

Defects, for which the Contractor is contractually responsible to put right, are described in various other terms such as imperfections, shrinkages, any other faults, etc. Defects, irrespective of whether
they are patent or latent, usually occur in the quality of materials, standard of workmanship and design (Harban Singh):

• Quality Of Material
The quality of material expected of the Contractor are either expressly stated or implied. The former being in the documents such as the specifications and the latter can be implied to be of
`merchantable’ and fit for their purpose.

• Standard of Workmanship
The standards of workmanship expected of the Contractor are as prescribed in the contract and/or implied to be of `workmanlike quality’ reasonably expected of an ordinarily skilled and experience
Contractor.

• Standard of Design
Where the Contractor undertakes some aspects of the design, the standard of design expected are as stipulated in the contract and/or implied that the works to be fit for their purpose.

Therefore if the Contractor breaches either the express or implied obligations, he is responsible and liable for the rectification and the defects that had occurred.
Notwithstanding, not all defects are the responsible of the Contractor. The following are the categories of defects for which the Contractor is neither responsible nor liable for under most construction
contracts (Harban Sigh):

• Fair Wear and Tear

Defects arising from `fair wear and tear’ are due to the deterioration of the works from reasonable use, ageing, environmental conditions, etc.

• Misuse and/or Abuse

The use of the works in a manner that was not intended to be used or for the purpose which it was not constructed or designed for. An example would be the installation of overhead gantries onto
roof beams causing cracks and failure.

• Works not within the Contractor’s Responsibility

Defects arising from works, for which the Contractor is not responsible or are outside the scope of the contract, such as works directly carried out by the Employer, works undertaken by artists and
tradesmen employed by the Employer and/or implemented by statutory undertakers/authorities.

• Out of Time or Statute Barred

The Contractor’s contractual liability for defective works covers only the defects liability period and will end on expiry of such period with the appropriate certification. Claims for redress for defective
works after the certified date will be out of time and are unenforceable. Under the Contractor’s common law liability, claims arising from defective works after the time limits imposed by statues such
as the Limitation Act 1953 (Rev. 1981) cannot be pursued as they are statute barred, subjected to certain prescribed statutory exception such as fraudulent concealment, mistakes, etc.

• Waiver by Employer
When the Employer, at his absolute discretion, had waived his rights, whether express or implied, to seek redress for defective works either under the Contractor’s contractual liability or common law
liability, the Employer cannot then make the Contractor responsible and/or liable or the consequences of the said defective works.

• Dominant Cause of Defect not attributed to the Contractor

When there are a number of causes for the defect but the dominant cause is not attributed to the Contractor.
RELEVANT LEGAL CASES
The following are the several legal cases on defects in relation to Quality of Materials, Standard of Workmanship and Conclusiveness of Final Certification.
a. Quality if Materials

Young & Marten v McManus Childs Ltd [1969] 1 AC 454

The defendant, the roofing subcontractor, had entered into contract with the Plaintiff for the supply and install of roofing by using specified roof tiles. No defects were found when the roof
tiles ware supplied; the roof tiles were found defective only when the defect manifested itself later. The plaintiff, the main contractor, filed a lawsuit against the defendant for supplying and
installing defective roof tiles.

The House of Lord clarified that under the implied term of the Sale of Goods Act 1893 and the successor to this Act, the Supply of Goods Act 1973, the seller should warrant that their goods are
fit for purpose if the buyer had disclosed the purpose of goods ordered to the seller and the goods should be merchantable quality.

For this particular case, the House of Lord decided that the defendant was excluded the obligation of fit for purpose because the tiles was specified by the Plaintiff. However, the defendant
was held liable for roof tiles which not of merchantable quality.

b. Standard of Workmanship

Usahabina v Anuar Bin Yahya [1998] 7 MLJ 69

The plaintiff entered into an agreement with the defendant for the construction of a house according to drawings and specifications prepared by the plaintiff’s architect. The plaintiff had
commenced proceedings against the defendant to recover the amounts due for works completed under the agreement. The defendant’s complaints were the plaintiff’s defective workmanship
and the use of sub-standard materials.

It was held that there was no provision in the agreement whereby the plaintiff must execute the works to the satisfaction of the defendant. The only instructions that the plaintiff may comply
with were those of the architect’s.

Teh Khen On & Anor v Yeoh & Wu Development Sdn Bhd & Ors [1995] 2 MLJ 663

The plaintiffs, the purchasers, entered into a sale and purchase agreement with the first defendant, the builder, to purchase a house which was found to be defective. The builder admitted his
liability and carried out repairs to remedy the problems, but was ineffective.

The purchasers then brought an action against the builder for, inter alia, rescission of the agreement, refund of the purchase price and damages. As a defence, the defendants argued that they
were not liable, as the damage had occurred after 12-month defect liability period under clause 23 of the agreement.

It was held that the builder was in breach of an express condition in the agreement which provided that the house must be constructed in a good and workmanlike manner. The builder was
also in breach of the three implied conditions of the agreement, i.e. that it would do its work in a good and workmanlike manner, that it would supply good and proper materials, and that the
house would be reasonably fit for human habitation. The expiry of the 12-month defect liability period provided in the contract, would not take away the right of the purchaser to sue for
defects which were not discoverable within that period.

c. Conclusiveness of Final Certification

From the aforesaid standard forms, since the Architect/Engineer/SO is not entitled to issue further written instructions to the Contractor to make good defects after the issuance of Schedule of
Defects or after fourteen days from Defects Liability Period expiry, is the Contractor still liable for rectification of latent defects after this period, even after Final Certification?