Written Answer by Minister for Law, Mr K Shanmugam, to Parliamentary Question on Claims Made Against Home Renovation Firms That Failed To Deliver After Accepting A Deposit

05 Apr 2021 Posted in Parliamentary speeches and responses

Mr Yip Hon Weng (Member of Parliament for Yio Chu Kang GRC)

Question
To ask the Minister for Law (a) in the past three years, how many claims have been made against home renovation firms that failed to deliver after accepting a deposit; (b) under what circumstances will the Ministry intervene should companies refuse to abide by the court’s judgment to refund payments and instead choose to wind down the business; and (c) whether company owners or directors who face multiple claims will be barred from registering new companies and have their existing companies listed on a registry for consumers to be wary of.

Written Answer:

1. Between January 2018 and December 2020, 627 cases pertaining to renovation disputes were filed with the Small Claims Tribunals, while 278 civil writs involving renovation disputes were filed with the State Courts. However, we do not have data to identify how many of these renovation disputes involve claims against home renovation firms that failed to deliver after accepting a deposit.

2. Where the Court has issued a judgment requiring a payment or deposit to be refunded, that judgment must be complied with. If not, the claimant can take steps to enforce the judgment.

3. If the renovation firm is unable to satisfy the judgment because it is insolvent, the firm may be wound up. The usual insolvency laws will then apply. In such a situation, a consumer who has obtained a court order that requires the payment of monies may file a proof of debt as a creditor of the company. The liquidator will realize the company’s assets and make appropriate distributions to the creditors if there are sufficient assets remaining for distribution.

4. There are various measures in place to protect consumers from errant contractors that become insolvent. For instance, under the Insolvency, Restructuring and Dissolution Act, it is an offence for a company to carry on business with the intent to defraud its creditors. It is also an offence for a company to incur a debt or other liability without reasonable prospect of meeting it in full. Directors or officers of a company that engages in fraudulent or wrongful trading can be liable on conviction to a term of imprisonment. These directors or officers can also be held by the Court to be personally liable for all debts or liabilities of the company arising from such fraudulent or wrongful trading.

5. Errant contractors who engage in unfair practices may also be dealt with under the Consumer Protection (Fair Trading) Act. For example, it is an unfair practice for a contractor to accept pre-payment for the supply of goods or services if that contractor knows or ought to reasonably know that it would be unable to supply the goods or services. Contractors that persistently engage in unfair trade practices could be referred to the Competition and Consumer Commission (“CCCS”) for investigation. Where warranted, the CCCS will seek a court injunction to restrain a contractor (or any other supplier of goods or services) from engaging in an unfair practice.

6. Nonetheless, it is not possible for the Government to intervene in cases where a company winds up as a result of genuine financial difficulties. The possibility of a company going under due to financial difficulties is a risk that is inherent in any transaction. It is caveat emptor. Consumers are therefore encouraged to conduct due diligence and proper research, so that they can make informed purchasing decisions. This is especially so if the transaction involves a significant prepayment.

7. In this regard, consumers can refer to the consumer advisories and company alert list that the Consumers Association of Singapore (“CASE”) publishes on its website against firms that have received multiple complaints.

8. Home owners who intend to carry out renovation works can also consider engaging renovation contractors that are accredited under the joint accreditation between CASE and Singapore Renovation Contractors (“CaseTrust-RCMA”). Such contractors are required to protect a customer’s deposit through the purchase of a deposit performance bond, that safeguards the deposit against closure, winding up or liquidation before the renovation is completed.

9. For major HDB renovation works, flat owners must also engage a renovation contractor listed in the HDB Directory of Renovation Contractors. A company convicted for offences such as cheating or that appears on CASE’s company alert list, cannot be listed in the Directory of Renovation Contractors, and will not be allowed to carry out major renovation works in HDB flats.

Last updated on 05 Apr 2021