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Introduction
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[2025] SGMC 59
Magistrate's Court of Singapore7 Oct 2025
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What the court ordered
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Earlier cases and laws this decision relies on
“effect deduction of costs of rectification from stakeholding sum; Limitation of Actions – Particular causes of action – Whether vendor’s cause of action founded on a contract – Whether application of Limitation Act 1959 excluded by Singapore Academy of Law (Stakeholding) Rules (1998 Ed)”
“The Limitation Act does not apply to the claimant’s application”
“The legal principles in regard to this question were discussed by the High Court in Lau Soon and another v UOL Development (Dakota) Pte Ltd and another appeal [2021] SGHC 195 (“Lau Soon”). The High Court discussed the nature of a stakeholding agreement at [28] as follows:”
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Introduction
1
This is an application for the release of stakeholding monies held by the Singapore Academy of Law (“SAL”).
2
The claimant is a licensed housing developer of the project known as 50 Faber Walk Waterfront@Faber Singapore 128994 (the “Project”). The defendant entered into a sales and purchase agreement (“SPA”) on 11 June 2014 with the claimant for the purchase of a unit at the Project (the “Unit”) at a purchase price of $930,750.00 (the “Purchase Price”).
3
The defendant paid a sum of $46,537.50 to SAL to hold as stakeholder (the “Stakeholding Sum”) pursuant to clause 5.1.5(a)(i)(b) of the SPA. The Stakeholding Sum, being 5% of the Purchase Price was to provide for any possible deductions for rectification of defects in the Unit within the one-year defects liability period (“DLP”).
4
The claimant seeks under this application an order for the defendant to authorise SAL to release the Stakeholding Sum to the claimant pursuant to rr 17(4) and (5) of the Conveyancing and Law of Property (Conveyancing) Rules 2011. Alternatively, the claimant asks for an order that SAL releases the Stakeholding Sum to the claimant pursuant to r (7)(3)(b) of the Singapore Academy of Law (Stakeholding) Rules 1998 (“Stakeholding Rules”).
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The defendant contends that the application should be dismissed on the ground that the defects at the Unit, which were first raised during the DLP are not rectified.
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For the reasons below, I am allowing the claimant’s application.
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Issue to be determined
Costs
The issue to be determined by me in this application is whether the defendant has taken the requisite steps to effect a deduction of any costs of rectification of the alleged defects from the Stakeholding Sum.
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Analysis and findings
Costs
The determination of this application turns on the related questions of the nature of the Stakeholding Sum and the mechanism involved for deductions from it for costs of rectification of defects.
9
The payment of the Stakeholding Sum was made in the course of the defendant taking possession of the Unit. On 20 June 2017, the claimant's solicitors sent a letter containing the notice to take possession of the Unit to the defendant's solicitors. The defendant signed the taking over of the Unit on 21 July 2017. Pursuant to cl 17.1(a) of the SPA, the one-year DLP was therefore to start on 21 July 2017 and end on 20 July 2018. On 5 December 2017, the defendant, through her solicitors, paid the Stakeholding Sum to SAL by way of a cashier's order.
10
As alluded to above, the Stakeholding Sum paid to SAL was to provide for any possible deductions for defects rectification during the DLP. SAL was to release to the claimant the entire Stakeholding Sum or such balance amount after any authorised deductions for rectification works at the end of the DLP.
11
Turning to the question of defects rectification at the Unit, the evidence shows that the claimant was actively engaging the defendant to rectify defects which she had identified during the DLP. I note that there was a total of six defects inspection lists drawn up by the claimant to record the progress of the rectification works as follows:
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(a) Defects inspection list 1 which recorded the joint inspection of the Unit conducted on 16 August 2017; and the rectification works carried out at the Unit that were acknowledged by the defendant on 24 October 2017.
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(b) Defects inspection list 2 which recorded the joint inspection conducted on 24 October 2017; and the rectification works carried out that were acknowledged by the defendant from 25 November 2017 to 2 December 2017.
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(c) Defects inspection list 3 which recorded the joint inspection conducted on 2 December 2017; and the rectification works carried out that were acknowledged by the defendant from 3 January 2018 to 17 January 2018.
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(d) Defects inspection list 4 which recorded the joint inspection that was conducted on 6 April 2018; and the rectification works carried out that were acknowledged by the defendant from 12 May 2018 to 9 October 2018.
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(e) Defects inspection list 5 which recorded the joint inspection that was conducted on 12 May 2018; and the rectification works carried out that were acknowledged by the defendant on 9 October 2018.
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(f) Defects inspection list 6 which recorded the joint inspection that was conducted on 25 June 2018; and that the Unit was handed back over to the defendant on 3 November 2018. ln this list, a Mr Seah Chong Peng, a representative of the defendant, signed off that all identified defects had been rectified on 9 October 2018, including one new defect arising from existing work that was identified on 9 October 2018 and rectified on 3 November 2018.
12
As seen, rectification of the defects identified by the defendant was carried out at the Unit by the claimant. The rectification process undertaken spanned the DLP, and included six joint inspections of the defects rectified. I note the defendant signed off on the six defects inspection lists, acknowledging the rectification of the defects as listed.
Costs
On 11 June 2018, the defendant filed a deduction by purchaser form (“Form 3”) with SAL requesting for a deduction of the Stakeholding Sum to be paid to the defendant. This presumably would be on the basis of unrectified defects. In response, on 13 June 2018, the claimant filed through their solicitors, an objection by vendor to deduction form (“Form 3A”) requesting SAL to hold the Stakeholding Sum until it receives the earlier of: (a) final instructions, to be agreed by both the defendant and the claimant on payment of the Stakeholding Sum; or (b) a court order for its payment. On 19 June 2018, the claimant's solicitors wrote to the defendant's solicitors requesting for a detailed justification of the deduction amount of the Stakeholding Sum. On 27 June 2018, the defendant's solicitors responded to the claimant’s solicitors that they were not acting for the defendant in matters relating to defects at the Unit. However, the defendant thereafter did not respond with any justification, nor provide any evidence of costs incurred by her for rectification of defects at the Unit.
14
Some six years later, on 4 July 2024, the claimant’s solicitors wrote to the defendant requesting that the defendant sign the agreement to pay amount in dispute form (“Form 38”) for SAL to release the Stakeholding Sum to the claimant. The defects inspection list 6 was enclosed with the request. On 17 July 2024, the claimant’s solicitors sent a chaser by email requesting for the defendant to return Form 38. On 18 July 2024, the defendant responded to the claimant’s solicitors indicating that she required more time to run through the defects inspection list 6. The claimant’s solicitors sent a further email on 11 September 2024 requesting for the defendant to provide a response. The defendant did not respond thereafter. The claimant filed the present application on 14 July 2025.
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The defendant failed to comply with the requisite steps under cl 17 of the SPA
Costs
The defendant’s case is that the application should be dismissed, or stayed, pending resolution of the issues relating to the defects. The defendant contends that significant defects that arose during the DLP were not rectified; the as-built sanitary layout diverged from the approved plans; and her rectification costs and consequential losses remained unresolved. In my view however, the defendant faces an insurmountable hurdle in view of the prescribed mechanism for deductions from the Stakeholder Sum for defects rectification. The mechanism is set out in cl 17 of the SPA. Clause 17 states as follows:
Costs
As seen, under cl 17, the requisite steps that the defendant had to take to effect a deduction from the Stakeholding Sum are as follows. The defendant is to first notify the claimant of the defects within the DLP. If the claimant failed, within one month of receipt of the defendant’s notice of defects, to rectify the said defects; and the defendant was to inform the claimant of her intention to cause rectification works to be done, together with the estimated cost of carrying out those work. The defendant was to give the claimant an opportunity to carry out the proposed rectification works. If the claimant failed to carry out the rectification works to make good the defects within the period of 14 days as specified in cl 17, the defendant had the right to cause the rectification works to be carried out. In that event, the defendant may deduct the costs of the rectification works that was carried out at her behest from the Stakeholding Sum.
Costs
Clause 17 thus prescribed a protocol under which the costs of rectification of defects may be deducted from the Stakeholding Sum. In order for such deduction to take place, the prescribed protocol under cl 17 must be adhered to. In the present case, the defendant failed to take any steps under the prescribed protocol. In fact, the defendant has failed to even provide any evidence that she had incurred any costs of rectification.
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I note in this regard that the defendant’s further contention is that her signature on the defects inspection lists was limited to specific items actually inspected at the time and cannot constitute acceptance that the works complied with approved plans, or a waiver of unresolved and recurring defects and consequential loss. Moreover, she stated in her affidavit that during rainy weather, cockroaches were repeatedly observed emerging around the water closet and bathroom floor. She said that the presence of pests, together with continuing water ponding and chipped tiles, demonstrates that the rectification did not restore the bathroom to proper and sanitary working order. She also alluded to the as-built sanitary point and floor trap differing from the handover layout. She further referred to one of the bathroom floor tiles de-bonding and opined that it is consistent with improper substrate preparation or “movement accommodation”. She also alluded to the “whole-unit loss of use” as a result of the continuous rectification works.
Costs
However, these contentions of the defendant do not assist her in answering the present application. As discussed above, the SPA has prescribed a protocol for deduction of costs incurred for defects rectification from the Stakeholding Sum. The defendant did not avail herself of the protocol. She therefore has no basis to resist the application. For completeness, I note that the claimant takes the position that it has addressed and rectified all of the defendant's identified defects. However, for the reasons just discussed, I need not make a finding on the question of whether the defects were in fact rectified.
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In view of all of the foregoing, I find that I have no reason not to allow the claimant’s application.
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The Limitation Act does not apply to the claimant’s application
21
For completeness, I note that the claimant’s application, which is filed more than six years after its demand for the Stakeholder Sum, is not hampered by provisions of the Limitation Act 1959 (“Limitation Act”). The reason lies in the nature of the Stakeholder Sum.
22
The legal principles in regard to this question were discussed by the High Court in Lau Soon and another v UOL Development (Dakota) Pte Ltd and another appeal [2021] SGHC 195 (“Lau Soon”). The High Court discussed the nature of a stakeholding agreement at [28] as follows:
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In other words, the Stakeholding Sum is held by SAL under a tripartite contract. The three parties to this contract would be the claimant, the defendant and SAL.
24
The High Court went on to hold that the superimposition of the Stakeholding Rules onto the two-contract analysis of stakeholding arrangements result in there being no limitation period applicable to a vendor’s claim to the stakeholding monies held by SAL. This is despite the claim being one founded on contract. The High Court stated at [31]-[32] as follows:
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The High Court went on to analyse the application of r 7 of the Stakeholding Rules, at [34]:
26
As seen, the High Court held that r 7 of the Stakeholding Rules do not contemplate a limit to the period of extension of the stakeholding period and provides for payment out only upon the occurrence of one of two triggering events. The two triggering events would be the notifying of SAL of an agreement between the parties and the seeking of a court order respectively. It follows that these two triggering events would remain available to the parties for an indefinite period. As the seeking of a court order is one such triggering event, it must be intended that no limitation period is to apply in respect of the party’s action in court to do so. Since the terms of the tripartite contract must be consistent with r 7, it would also follow that the parties would have adopted the same intention when contracting and therefore contracted out of any limitation period that would apply to either party commencing an action under the tripartite contract. Thus, the limitation period has no application to stakeholding monies. In this regard, it should be noted generally that the applicability of the Limitation Act can be excluded by agreement of parties: Cytec Industries Pte Ltd v Asia Pulp & Paper Co Ltd [2009] 2 SLR(R) 806.
27
Therefore, in view of the nature of the Stakeholding sum, the Limitation Act does not apply to the claimant’s application, and it is not time-barred although it is a contractual claim commenced more than six years after the DLP.
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Any contractual claim for defects by the defendant would be time-barred
28
As well for completeness, much like the case of Lau Soon, I have no reason to exercise my discretion to convert the present application to an originating claim so that the defendant’s contentions could be adjudicated and a final determination may be made on whether the claimant is liable for unrectified defects in the Unit and the quantum of any such liability; before the court makes a final order to SAL to make appropriate payments out of the Stakeholding Sum to the parties. The reason is that any claims that the defendant might have against the claimant under the SPA in respect of defects at the Unit, ie, under the bilateral contract, was time-barred at the time the present application was filed. Any such claims would be for breach of contract, and s 6(1)(a) of the Limitation Act makes clear that actions founded on a contract or on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued.
29
In this regard, I note that by the defendant’s own case, the latest date by which she would have been cognisant of any alleged unrectified defects would be sometime in November 2018. As such, more than six years would have transpired by the time of the filing of the present application on 14 July 2025.
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Conclusion
Costs
The defendant has failed to take the requisite steps under cl 17 of the SPA to effect a deduction of any costs of rectification of the alleged defects from the Stakeholding Sum. I therefore have no basis not to allow the claimant’s application. In any event, any contractual claim for defects by the defendant would be time-barred.
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In the premises, I allow the application. I order SAL to release the Stakeholding Sum of $46,537.50 to the claimant.
Costs
At the end of the hearing of the application, I had asked parties to address me on the question of costs. I directed parties to submit on the costs that I should award in both the event of a favourable outcome, and the event of an adverse outcome, in respect of the application.
Costs
There is no reason why costs should not follow the event in this case. As the claimant succeeds in its application, costs should be awarded to the claimant. As regards the quantum of costs, App H of the State Courts Practice Directions 2021 at Pt IV, A2 provides for a range of $2,000-$15,000 for contested originating applications. Having considered the time that might be spent in preparing for the application, the time taken for the hearing, and the disbursements that would be incurred, I order that the defendant pays to the claimant the total sum of $3,000 all in (inclusive of disbursements) plus GST if any.
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