Hua Rong Engineering v Civil Tech: Security of Payment Act & Cross-Contract Set-Off
In Hua Rong Engineering Pte Ltd v Civil Tech Pte Ltd, the Singapore High Court addressed whether the Building and Construction Industry Security of Payment Act (SOP Act) allows a respondent to raise cross-claims, counterclaims, and set-offs arising from a different contract in an adjudication application. Hua Rong Engineering (HRE) sought to enforce an adjudication determination against Civil Tech (CTP). CTP applied to set aside the determination, arguing that the adjudicator erred in excluding considerations related to a separate contract (C933) when assessing a set-off. The High Court dismissed CTP's application, holding that the SOP Act confines adjudication to matters concerning a single construction contract (T211), aligning with the Act's purpose of providing a swift and efficient resolution of payment disputes.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Application to set aside the adjudication determination dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Oral Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court judgment on whether the SOP Act allows cross-contract set-offs. Court held that the SOP Act limits adjudication to a single contract.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Hua Rong Engineering Pte Ltd | Plaintiff, Respondent | Corporation | Application to set aside the adjudication determination dismissed | Won | Ho Chye Hoon, Fong Wei Li |
| Civil Tech Pte Ltd | Defendant, Applicant | Corporation | Application to set aside the adjudication determination dismissed | Lost | Tan Tian Luh, Ngo Wei Shing |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tan Siong Thye | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Ho Chye Hoon | KEL LLC |
| Fong Wei Li | KEL LLC |
| Tan Tian Luh | Chancery Law Corporation |
| Ngo Wei Shing | Wu Weishen |
4. Facts
- Hua Rong Engineering (HRE) was a sub-contractor engaged by Civil Tech (CTP) to supply labour for two construction projects: T211 and C933.
- HRE submitted Daywork Claim No 13 for $601,873.40 for work done on the T211 project.
- CTP accepted the claim but certified a negative value, alleging HRE made false claims under the C933 contract and overpaid $1,468,276.32.
- CTP sought to set off the overpayment from the C933 contract against HRE's claim under the T211 contract.
- HRE lodged an adjudication application, and the adjudicator ruled CTP could not set off a counterclaim based on another contract.
- CTP filed SUM 1555 to set aside the adjudication determination, arguing the adjudicator should have considered the C933 contract.
5. Formal Citations
- Hua Rong Engineering Pte Ltd v Civil Tech Pte Ltd, Originating Summons No 289 of 2017(Summons No 1555 of 2017), [2017] SGHC 179
6. Timeline
| Date | Event |
|---|---|
| Hua Rong Engineering submitted Daywork Claim No 13 for $601,873.40. | |
| Hua Rong Engineering lodged an adjudication application. | |
| Adjudicator made the adjudication determination. | |
| Hearing took place. | |
| Hearing took place. | |
| Judgment reserved. |
7. Legal Issues
- Cross-Contract Set-Off
- Outcome: The court held that the Security of Payment Act does not allow cross-contract set-offs.
- Category: Substantive
- Related Cases:
- [2013] 3 SLR 380
- [2017] SGHC 34
- Jurisdiction of Adjudicator
- Outcome: The court held that the adjudicator did not exceed his jurisdiction by confining his deliberation to the T211 contract.
- Category: Jurisdictional
8. Remedies Sought
- Enforcement of adjudication determination
- Setting aside of adjudication determination
9. Cause of Actions
- Claim for payment under construction contract
- Application to set aside adjudication determination
10. Practice Areas
- Construction Law
- Commercial Litigation
- Arbitration
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| W Y Steel Construction Pte Ltd v Osko Pte Ltd | Court of Appeal | Yes | [2013] 3 SLR 380 | Singapore | Cited for the object and purpose of the Security of Payment Act, which is to provide a low-cost, efficient and quick process for the adjudication of payment disputes. |
| Gilbert-Ash (Norton) Limited v Modern Engineering (Bristol) Limited | N/A | Yes | [1974] AC 689 | N/A | Cited for the principle that one starts with the presumption that neither party intends to abandon any remedies for its breach arising by operation of law. |
| Rong Shun Engineering & Construction Pte Ltd v C.P. Ong Construction Pte Ltd | High Court | Yes | [2017] SGHC 34 | Singapore | Cited for the principle that a payment claim within the meaning of the Act must arise from one contract. |
| AJB Pte Ltd v AJC Pte Ltd | N/A | Yes | [2011] SCAdjR 588 | Singapore | Cited for the principle that each adjudication application is to relate to one payment claim, and each payment claim is to relate to one contract. |
| Perform (NSW) Pty Ltd v MEV-AUS Pty Ltd | N/A | Yes | [2009] NSWCA 157 | New South Wales, Australia | Cited for the observation that the adjudicator under the Act is intended to be a person skilled in the administration of construction contracts. |
| Downsouth Constructions Pty Ltd v Jigsaw Corporate Childcare Australia Pty Ltd | N/A | Yes | [2007] NSWC 597 | New South Wales, Australia | Cited as a case where the respondent had failed to properly set out its withholding reasons in the payment schedule and/or had failed to make out a set-off. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) | Singapore |
| Interpretation Act (Cap 1, 2002 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Security of Payment Act
- Adjudication
- Cross-contract set-off
- Payment claim
- Payment response
- Construction contract
- Temporary finality
15.2 Keywords
- Security of Payment Act
- Construction adjudication
- Cross-contract set-off
- Singapore
- Building and Construction Industry
16. Subjects
- Construction Dispute
- Adjudication
- Contract Law
- Security of Payment
17. Areas of Law
- Building and Construction Law
- Sub-contracts
- Security of Payment
- Civil Procedure