Frontbuild Engineering & Construction Pte Ltd v JHJ Construction Pte Ltd [2021] SGHC 72

Decision date: 31 March 2021.

Introduction 
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The amendments to the SOP Act (“The Act”) in December 2019 introduced a new section 4 (2)(c), which provided that the Act will not apply to any terminated construction contract which has a clause suspending payment obligations upon termination until after the occurrence of a specified date or event (“Termination Suspension of Payment Clause” or “TSP Clause”).  

By virtue of s 4 (2)(c), once the TSP Clause takes effect, a contractor will not be entitled to make an adjudication application under the Act.  The contractor’s entitlement is reinstated only after the occurrence of the date or trigger event mentioned in TSP Clause. One example of a TSP Clause is clause 32 (8)(a) of the Singapore Institutes of Architects’ Articles and Conditions of Building Contract, 9th Ed, Lump Sum which stipulates that the contractors’ entitlement to payment are held in abeyance until the issuance a Cost of Termination Certificate by the architect.

Section 9 of the Act prohibits pay-when-paid clauses in construction contracts. Pay-when-paid clauses include clauses that makes the liability of the payee contingent or conditional on the operation of any other contract or agreement.  

A TSP Clause can fall within the definition of a pay-when-paid clause under s 9 of the Act if the specified date or event is to be determined by reference to a separate contract.
Under such circumstances, should the “pay when paid” TSP Clause be enforceable and would s 4 (2) (c) of the Act still apply?

This was the novel issue before the Court in the case of Frontbuild Engineering & Construction Pte Ltd v JHJ Construction Pte Ltd [2021] SGHC 72.
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It is an important issue for parties who are involved in construction contracts as it would set a framework for understanding their post-termination rights and provide valuable guidance in the drafting of TSP Clauses. 

​Sandy Island Pte Ltd v Thio Keng Thay [2020] SGCA 86
 
Decision Date: 22 May 2020
 

​INTRODUCTION

In my prevous post, I wrote about Thio Keng Thay v Sandy Island Pte Ltd [2019] SGHC 175 (“Sandy Island HC”).
 
The case involved a dispute between the purchaser and developer of a bungalow. The purchaser sued the developer for the costs of rectification of defects.
 
Some of the defects were admitted by the developer. However, the developer argued that it should not be liable the cost of rectification as the purchaser had breached the defect liability clause in the sale and purchase agreement (“SPA”) by imposing unreasonable conditions and refusing to grant access.
 
The High Court (“HC”) disagreed with the developer’s contention. The HC determined that the purchaser’s breach of the defect liability clause did not exclude his right to claim for damages for the defects.
 
The developer appealed to the Court of Appeal (“CA”) on this point but failed.
 
The CA published its decision on 22 May 2020 in Sandy Island Pte Ltd v Thio Keng Thay [2020] SGCA 86 (“Sandy Island CA”).
 
In its decision the CA expounded on the purpose and nature of defects liability clauses as well as the impact of such clauses on the parties’ rights and obligations.
 
In this post, I will discuss the key aspects of the CA’s decision.

Thio Keng Thay v Sandy Island Pte Ltd [2019] SGHC 175
 
Decision Date: 29 July 2019
 
INTRODUCTION
This case arose from a dispute between the owner and developer of a bungalow house on Sandy Island, Sentosa.  The owner, who was the plaintiff in the action, sued the developer for costs of rectification of defects. The developer disputed the claim and counterclaimed against the owner for libel.
 
At the trial; some of the defects raised by the owner were admitted by the developer to be defects.
 
However, the developer argued that it should not be held liable for the costs of rectification of such defects because the owner had breached the defect liability clause in the Sale and Purchase Agreement (“SPA”) by imposing unreasonable conditions on the developer and refusing to grant access to carry out rectification works.
 
In its decision; the High Court clarified the extent of the legal rights and remedies of an owner who had refused to allow contractors to return to the project to rectify defective works.

In this post; I will explain and examine this aspect of the High Court’s decision.