Steel Industries v Deenn Engineering: Architect's Certificate, Waiver, and 'Pay When Paid' Clause in Construction Sub-Contract
In Steel Industries Pte Ltd v Deenn Engineering Pte Ltd, the High Court of Singapore addressed a dispute over payment for kitchen equipment installation in a construction project. Steel Industries, the plaintiff and nominated sub-contractor, sued Deenn Engineering, the defendant and main contractor, for $376,302.70, claiming it was the balance due under an architect's interim certificate. The court considered the validity of the architect's Interim Certificate no. 19 and a Certificate of Payment, as well as the interpretation of a 'pay when paid' clause in the sub-contract. The High Court dismissed the plaintiff's appeal and stayed the action pending arbitration, finding that there were valid disputes between the parties that needed to be resolved through arbitration.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Appeal dismissed; action stayed pending arbitration.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Dispute over payment for kitchen equipment installation. High Court examines validity of architect's certificates and 'pay when paid' clause.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Steel Industries Pte Ltd | Plaintiff, Appellant | Corporation | Appeal dismissed | Lost | |
| Deenn Engineering Pte Ltd | Defendant, Respondent | Corporation | Application allowed | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | Judge | Yes |
4. Counsels
4. Facts
- Steel Industries was the nominated sub-contractor for kitchen equipment installation.
- Deenn Engineering was the main contractor for the project.
- The sub-contract incorporated the SIA Conditions of Sub-Contract.
- The architect issued Interim Certificate no. 19 almost five years after works completion.
- The architect issued a Certificate of Payment stating Deenn Engineering was deemed paid.
- The architect later withdrew the Certificate of Payment.
- The employers were placed under judicial management during the dispute.
5. Formal Citations
- Steel Industries Pte Ltd v Deenn Engineering Pte Ltd, Suit 1201/2002, RA 26/2003, [2003] SGHC 167
6. Timeline
| Date | Event |
|---|---|
| Steel Industries became nominated sub-contractors. | |
| Main contract works certified as completed. | |
| Deenn Engineering submitted final claim of $7,696,389. | |
| Steel Industries’ sub-contract works certified as completed. | |
| Deenn Engineering commenced arbitration proceedings against the employers. | |
| Architect issued Interim Certificate no. 19. | |
| Employers placed under judicial management. | |
| Architect issued Certificate of Payment of Main Contractor. | |
| Payment was due to Steel Industries. | |
| Steel Industries started action for $376,302.70. | |
| Architect wrote to Steel Industries regarding the Certificate of Payment. | |
| Steel Industries’ application was dismissed but Deenn Engineering’s application was allowed and the action was stayed pending arbitration. | |
| Architect withdrew and cancelled his Certificate of Payment. | |
| Decision Date |
7. Legal Issues
- Validity of Architect's Interim Certificate
- Outcome: The court found Interim Certificate no. 19 to be invalid.
- Category: Substantive
- Sub-Issues:
- Compliance with SIA Conditions of Sub-Contract
- Timeliness of certificate issuance
- Deficiencies in certificate format
- Related Cases:
- [2000] 1 SLR 622
- [1989] 3 MLJ 216
- Validity of Certificate of Payment
- Outcome: The court found the Certificate of Payment to be invalid.
- Category: Substantive
- Sub-Issues:
- Basis for issuance of certificate
- Architect's power to issue certificate after commencement of arbitration
- Compliance with clause 30(2) of Main Contract Conditions
- Related Cases:
- [1994] 1 SLR 687
- Interpretation of 'Pay When Paid' Clause
- Outcome: The court held that the plaintiffs had entered into a 'pay when paid' contract and therefore had to share the risk of the employers' insolvency.
- Category: Substantive
- Sub-Issues:
- Conditions for payment to sub-contractor
- Risk of employer's insolvency
- Effect of employer's counterclaim against main contractor
- Waiver of Strict Compliance
- Outcome: The court found that the defendants had waived strict compliance with certain conditions but not with respect to the issuance of a corrective certificate.
- Category: Substantive
- Sub-Issues:
- Habitual non-compliance with contractual terms
- Acceptance of non-compliance by payment without objection
- Related Cases:
- [2000] 1 SLR 622
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Construction Law
- Commercial Litigation
- Arbitration
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| China Construction (South Pacific) Development Co Pte Ltd v Leisure Park (Singapore) Pte Ltd | High Court | Yes | [2000] 1 SLR 622 | Singapore | Cited regarding the conduct of parties and the architect in the matter of certifications and payment, and the waiver of strict contractual requirements. |
| Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd | Unknown | Yes | [1989] 3 MLJ 216 | Malaysia | Cited to support the argument that an interim certificate issued two years after completion of works is invalid. |
| Engineering Construction v Attorney General | Unknown | Yes | [1994] 1 SLR 687 | Singapore | Cited to support the argument that the architect had no power to issue a Certificate of Payment once arbitration proceedings had commenced. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Interim Certificate
- Certificate of Payment
- SIA Conditions of Sub-Contract
- Pay When Paid Clause
- Nominated Sub-Contractor
- Waiver
- Judicial Management
- Arbitration Clause
15.2 Keywords
- construction law
- interim certificate
- payment
- arbitration
- sub-contractor
- building
- engineering
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Construction Law | 90 |
| Contract Law | 70 |
| Breach of Contract | 60 |
| Arbitration | 50 |
16. Subjects
- Construction Dispute
- Contract Law
- Arbitration