Choi Peng Kum and Another v. Tan Poh Eng Construction Pte Ltd[2013] SGHC 272
Keywords: Termination – Clause 32 (8)(a) SIA Conditions – Entitlement to payment - SOP Act – Dual track payment - Setting aside
Facts
The Plaintiffs appointed the Defendants, Tan Poh Eng Construction Pte Ltd as their main contractors for the construction of their house. The main contract incorporated the Singapore Institute of Architects Articles and Conditions of Building Contract (Lump Sum Contract, 9th Ed)(“SIA Conditions”).
Disputes arose soon after completion. As a result, the Plaintiffs terminated the main contract. The Defendants submitted a final payment claim to the Plaintiffs after the termination. The Plaintiffs did not provide a payment response. Subsequently, the payment claim was submitted to adjudication under the SOP Act by the Defendants. The Defendants obtained an adjudication determination ordering the Plaintiffs to pay the full amount claimed in the payment claim.
The Plaintiffs were unhappy with the adjudication determination and applied to the High Court to set it aside. In its application, the Plaintiffs relied mainly on clause 32(8)(a) of the SIA Conditions, which states: -
“In the event of the termination of the employment of the Contractor under Sub-Clause (2), or (6) or (7) hereof:
(a) no further sum shall be certified as due to the Contractor until the issue by the Architect of the Cost of Termination Certificate hereinafter mentioned in this Sub-Clause nor shall the Employer be bound to pay any sums previously certified if not already paid; …”
The Plaintiffs’ argued that considering this clause an the termination of the main contract; the Defendants were not entitled to payment under main contract and were thus not entitled to submit an adjudication application.
The Defendants disagreed and contended that its right to payment arose under Section 5 of the SOP Act and was independent of the parties’ rights under the main. There was a dual track scheme of payment; one contractual and the other, pursuant to the SOP Act. The Defendants could pursue its claim for progress payments in either or both payment tracks
Decision
The High Court agreed with the Defendants and dismissed the Plaintiffs, application. It held that Clause 32 (8)(a) applied to the contractual payment track and to the architect’s certifications. It did not and could not operate to prevent a contractor from claiming for payment for work done pursuant to the SOP Act. If Clause 32(8)(a) had such an effect, it would in any case be considered void and unenforceable pursuant to Section 36 (1), 36 (2)(a) and 36(2)(b) of the SOP Act which states: -
“36. (1) The provisions of this Act shall have effect notwithstanding any provision to the contrary in any contract or agreement.
(2) The following provisions in any contract or agreement (whether in writing or not) shall be void:
(a) a provision under which the operation of this Act or any part thereof is, or is purported to be, excluded, modified, restricted or in any way prejudiced, or that has the effect of excluding, modifying, restricting or prejudicing the operation of this Act or any part thereof;
(b) a provision that may reasonably be construed as an attempt to deter a person from taking action under this Act. “
The Plaintiffs appointed the Defendants, Tan Poh Eng Construction Pte Ltd as their main contractors for the construction of their house. The main contract incorporated the Singapore Institute of Architects Articles and Conditions of Building Contract (Lump Sum Contract, 9th Ed)(“SIA Conditions”).
Disputes arose soon after completion. As a result, the Plaintiffs terminated the main contract. The Defendants submitted a final payment claim to the Plaintiffs after the termination. The Plaintiffs did not provide a payment response. Subsequently, the payment claim was submitted to adjudication under the SOP Act by the Defendants. The Defendants obtained an adjudication determination ordering the Plaintiffs to pay the full amount claimed in the payment claim.
The Plaintiffs were unhappy with the adjudication determination and applied to the High Court to set it aside. In its application, the Plaintiffs relied mainly on clause 32(8)(a) of the SIA Conditions, which states: -
“In the event of the termination of the employment of the Contractor under Sub-Clause (2), or (6) or (7) hereof:
(a) no further sum shall be certified as due to the Contractor until the issue by the Architect of the Cost of Termination Certificate hereinafter mentioned in this Sub-Clause nor shall the Employer be bound to pay any sums previously certified if not already paid; …”
The Plaintiffs’ argued that considering this clause an the termination of the main contract; the Defendants were not entitled to payment under main contract and were thus not entitled to submit an adjudication application.
The Defendants disagreed and contended that its right to payment arose under Section 5 of the SOP Act and was independent of the parties’ rights under the main. There was a dual track scheme of payment; one contractual and the other, pursuant to the SOP Act. The Defendants could pursue its claim for progress payments in either or both payment tracks
Decision
The High Court agreed with the Defendants and dismissed the Plaintiffs, application. It held that Clause 32 (8)(a) applied to the contractual payment track and to the architect’s certifications. It did not and could not operate to prevent a contractor from claiming for payment for work done pursuant to the SOP Act. If Clause 32(8)(a) had such an effect, it would in any case be considered void and unenforceable pursuant to Section 36 (1), 36 (2)(a) and 36(2)(b) of the SOP Act which states: -
“36. (1) The provisions of this Act shall have effect notwithstanding any provision to the contrary in any contract or agreement.
(2) The following provisions in any contract or agreement (whether in writing or not) shall be void:
(a) a provision under which the operation of this Act or any part thereof is, or is purported to be, excluded, modified, restricted or in any way prejudiced, or that has the effect of excluding, modifying, restricting or prejudicing the operation of this Act or any part thereof;
(b) a provision that may reasonably be construed as an attempt to deter a person from taking action under this Act. “