What is the ruling of Islamic law regarding a case where a person borrowed gold, then painted the lender's house at double the price, and deducted the value of the gold at its old price, while the paint is peeling, causing damage to the lender?

If you have been harmed by the paint peeling, your relative is liable for this if he was negligent or exceeded the bounds in choosing the appropriate time, or in the quality or materials used. The reference for this is experts in the field. If he was not negligent and did not exceed the bounds, then he is not liable.

As for the wage, the contract is invalid if the wage is unknown, and the worker is then entitled to the wage of the like (أجرة المثل).

As for gold jewelry, scholars have differed on the permissibility of lending it. The preponderant opinion is that it is permissible if its characteristics are precisely defined and it is not a circumvention of usury. Its like should be returned if a like can be found; otherwise, its value on the day of possession should be returned. Disputes should be referred to Sharia courts or Sharia arbitration.