China Railway v Zhao Yang: SOPA & Performance Bond Proceeds Dispute
In China Railway No. 5 Engineering Group Co Ltd Singapore Branch v Zhao Yang Geotechnic Pte Ltd, the High Court of Singapore addressed whether adjudication under the Building and Construction Security of Payments Act (SOPA) is the appropriate forum for disputes arising purely in relation to performance bond proceeds. The plaintiff, China Railway No. 5 Engineering Group Co Ltd Singapore Branch, engaged the defendant, Zhao Yang Geotechnic Pte Ltd, for construction works. After a dispute over Payment Claim 36 (PC36), which related solely to the proceeds of a performance bond, the adjudicator determined that the main contractor was to pay the sum of $281,441.95 to the sub-contractor. The plaintiff applied to set aside the adjudication determination, and the court allowed the application, holding that PC36 was not a valid payment claim under SOPA.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Application to set aside the adjudication determination allowed.
1.3 Case Type
Construction
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
The High Court held that adjudication under SOPA is not the appropriate forum for disputes arising purely from performance bond proceeds. The application to set aside the adjudication determination was allowed.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| China Railway No. 5 Engineering Group Co Ltd Singapore Branch | Plaintiff | Corporation | Application to set aside the adjudication determination allowed | Won | |
| Zhao Yang Geotechnic Pte Ltd | Defendant | Corporation | Application to set aside the adjudication determination allowed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Seng Onn | Judge | Yes |
4. Counsels
4. Facts
- China Railway engaged Zhao Yang to carry out works for the Thomson line.
- Zhao Yang issued Payment Claim 35 for $848,584.93.
- The adjudicator determined that $692,051.21 was payable by China Railway to Zhao Yang.
- China Railway called on a performance bond for $281,441.95.
- Zhao Yang served Payment Claim 36 for $301,142.89, being the value of the performance bond plus GST.
- The adjudicator determined that China Railway was to pay $281,441.95 to Zhao Yang.
- China Railway applied to set aside the adjudication determination.
5. Formal Citations
- China Railway No 5 Engineering Group Co Ltd Singapore Branch v Zhao Yang Geotechnic Pte Ltd, Originating Summons No 443 of 2019, [2019] SGHC 130
6. Timeline
| Date | Event |
|---|---|
| Works completed | |
| Sub-contractor issued Payment Claim 35 | |
| Adjudicator determined $692,051.21 payable by main contractor to sub-contractor | |
| Main contractor called on performance bond | |
| Sub-contractor served Payment Claim 36 | |
| Hearing date | |
| Judgment date |
7. Legal Issues
- Validity of Payment Claim for Performance Bond Proceeds
- Outcome: The court held that a payment claim purely for performance bond proceeds is not a valid payment claim under s 10(1) SOPA.
- Category: Substantive
- Related Cases:
- [2018] SGHC 133
- Whether s 10(1) SOPA is a mandatory provision
- Outcome: The court held that s 10(1) SOPA is a mandatory provision, breach of which mandates the setting aside of the adjudication determination arising therefrom.
- Category: Procedural
- Related Cases:
- [2018] 1 SLR 979
- [2013] 2 SLR 776
8. Remedies Sought
- Setting aside of adjudication determination
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Construction Disputes
- Commercial Litigation
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| SH Design & Build Pte Ltd v BD Cranetech Pte Ltd | High Court | Yes | [2018] SGHC 133 | Singapore | Distinguished from the present case; SH Design does not conclusively determine that any payment claim exclusively for the proceeds of the performance bond will be a valid payment claim that is within the confines of s 10(1) SOPA. |
| Comfort Management Pte Ltd v OGSP Engineering Pte Ltd | Court of Appeal | Yes | [2018] 1 SLR 979 | Singapore | Cited for the principle that the court's role in reviewing an adjudicator's determination is not to review the merits of the determination. |
| Australian Timber Products Pte Ltd v A Pacific Construction & Development Pte Ltd | High Court | Yes | [2013] 2 SLR 776 | Singapore | Cited for the principle of determining whether a SOPA provision is a mandatory provision. |
| Sungdo Engineering & Construction (S) Pte Ltd v Italcor Pte Ltd | High Court | Yes | [2010] 3 SLR 459 | Singapore | Cited for the principle that the adjudication process is predicated by a whole chain of events initiated by the service of a Payment Claim. |
| Grouteam Pte Ltd v UES Holdings Pte Ltd | High Court | Yes | [2016] 5 SLR 1011 | Singapore | Cited for the principle that a contractor may repeat a previous payment claim, this is only permissible when the repeated claim relates to “work done or goods supplied” and the “previous payment claim for the same work or goods was not in fact adjudicated on the merits” |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Building and Construction Security of Payments Act (Cap 30B, 2006 Rev Ed) s 10(1) | Singapore |
| Building and Construction Security of Payments Act (Cap 30B, 2006 Rev Ed) s 5 | Singapore |
| Building and Construction Security of Payments Act (Cap 30B, 2006 Rev Ed) ss 36(1) and 36(4) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Building and Construction Security of Payments Act
- SOPA
- Payment Claim
- Performance Bond
- Adjudication Determination
- Progress Payment
- Construction Work
15.2 Keywords
- SOPA
- Building and Construction Law
- Payment Claim
- Performance Bond
- Adjudication
17. Areas of Law
16. Subjects
- Construction Law
- Adjudication
- Contract Law
- Performance Bonds