Orion-One v Dong Cheng: Post-Termination Payment Claim Validity under SOPA and REDAS Conditions in Construction Contract Dispute
In Orion-One Residential Pte Ltd v Dong Cheng Construction Pte Ltd, the Court of Appeal of Singapore addressed two civil appeals concerning the validity of a payment claim served by Dong Cheng after the termination of their construction contract by Orion-One. The court allowed Orion-One's appeal (CA 13), setting aside the adjudication determination in favor of Dong Cheng, and dismissed Dong Cheng's appeal (CA 112). The court held that the payment claim was invalid because the contract's terms, specifically clause 2.5 of the Supplementary Agreement, under which Dong Cheng's employment was terminated, superseded clause 30.3 of the REDAS Conditions, which Dong Cheng had relied upon.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Allowed in CA 13 and appeal dismissed in CA 112.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Court of Appeal addressed the validity of a payment claim served after contract termination, emphasizing contract terms and the Building and Construction Industry Security of Payment Act.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Orion-One Residential Pte Ltd | Appellant, Respondent | Corporation | Appeal Allowed | Won | |
| Dong Cheng Construction Pte Ltd | Respondent, Appellant | Corporation | Appeal Dismissed | Lost | |
| SingBuild Pte Ltd | Other | Corporation |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | No |
| Tay Yong Kwang | Judge of Appeal | No |
| Steven Chong | Judge of Appeal | Yes |
4. Counsels
4. Facts
- Orion engaged SingBuild as the main contractor for a condominium project.
- The contract between Orion and SingBuild incorporated the REDAS Conditions.
- Dong Cheng replaced SingBuild as the main contractor via a novation agreement.
- Orion and Dong Cheng entered into a Supplementary Agreement with specific completion terms.
- Orion terminated Dong Cheng's employment based on clause 2.5 of the Supplementary Agreement.
- Dong Cheng served Payment Claim 25 on Orion after the termination.
- The adjudicator granted Dong Cheng's application in part, awarding $1,981,579.50.
5. Formal Citations
- Orion-One Residential Pte Ltd v Dong Cheng Construction Pte Ltd and another appeal, Civil Appeals Nos 13 and 112 of 2020, [2020] SGCA 121
6. Timeline
| Date | Event |
|---|---|
| Contract signed between Orion and SingBuild. | |
| Novation Agreement entered into by Orion, Dong Cheng, and SingBuild. | |
| Dong Cheng became the main contractor of the Project. | |
| Orion and Dong Cheng entered into a Supplementary Agreement. | |
| Orion terminated Dong Cheng’s employment as the main contractor. | |
| Orion engaged another contractor to undertake the outstanding works. | |
| Professional parties involved in the Project concluded their employment. | |
| The Project was completed. | |
| Dong Cheng served seven payment claims on Orion. | |
| Dong Cheng lodged Adjudication Application SOP/AA 318/2019. | |
| Adjudication determination granted Dong Cheng's application in part. | |
| Orion applied to set aside the adjudication determination. | |
| The Judge dismissed Orion’s application to set aside the adjudication determination. | |
| Court heard and allowed the appeal in CA 13 and dismissed the appeal in CA 112. | |
| Grounds of decision released. |
7. Legal Issues
- Validity of Payment Claim After Termination
- Outcome: The court held that the payment claim was invalid because the termination was based on clause 2.5 of the Supplementary Agreement, which superseded clause 30.3 of the REDAS Conditions.
- Category: Substantive
- Sub-Issues:
- Interpretation of contract clauses
- Application of REDAS Conditions
- Effects of termination for default
- Interpretation of Contractual Terms
- Outcome: The court interpreted the contract terms to determine whether Dong Cheng was entitled to serve a payment claim after termination, focusing on the interplay between the Supplementary Agreement and the REDAS Conditions.
- Category: Substantive
- Sub-Issues:
- Construction of termination clauses
- Effects of supplementary agreements
- Rights and obligations upon termination
8. Remedies Sought
- Monetary payment
- Setting aside of adjudication determination
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Construction Disputes
- Commercial Litigation
- Arbitration
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| CEQ v CER | High Court | Yes | [2020] SGHC 70 | Singapore | Cited by the High Court judge to support the proposition that payment claims made for work done prior to termination are valid, but this view was disagreed with by the Court of Appeal. |
| Stargood Construction Pte Ltd v Shimizu Corp | High Court | Yes | [2019] SGHC 261 | Singapore | Cited as a decision that was reversed by the Court of Appeal in Shimizu Corp v Stargood Construction Pte Ltd [2020] 1 SLR 1338. |
| Shimizu Corp v Stargood Construction Pte Ltd | Court of Appeal | Yes | [2020] 1 SLR 1338 | Singapore | Cited for the principle that the validity of payment claims must be determined by the terms of the contract, especially those governing rights upon termination. This case is central to the current judgment's reasoning. |
| Far East Square Pte Ltd v Yau Lee Construction (Singapore) Pte Ltd | Court of Appeal | Yes | [2019] 2 SLR 189 | Singapore | Cited by Orion to argue that PC 25 was invalid because the termination of the Employer's Representative rendered the ER functus officio. The Judge distinguished this case. |
| W Y Steel Construction Pte Ltd v Osko Pte Ltd | Court of Appeal | Yes | [2013] 3 SLR 380 | Singapore | Cited to support the point that an adjudication determination has only temporary finality. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Building and Construction Industry Security of Payment Act | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Payment Claim
- Termination
- REDAS Conditions
- Supplementary Agreement
- Adjudication Determination
- Progress Payment
- Termination Costs
- Escrow Account
- Novation Agreement
- Employer's Representative
15.2 Keywords
- construction
- payment claim
- termination
- SOPA
- REDAS
- contract
- adjudication
- Singapore
17. Areas of Law
16. Subjects
- Construction Dispute
- Contract Law
- Arbitration
- Building and Construction Industry Security of Payment Act