Shimizu Corp v Stargood Construction: Payment Claims & Termination under SOPA

In Shimizu Corporation v Stargood Construction Pte Ltd, the Singapore Court of Appeal addressed whether a payment claim can be served after the termination of a construction subcontract. Shimizu terminated Stargood's subcontract, and Stargood subsequently served payment claims. The court held that the Building and Construction Industry Security of Payment Act (SOPA) does not provide an independent right to serve payment claims for works completed, regardless of the provisions of the underlying contract. The court allowed Shimizu's appeal, setting aside the lower court's orders and clarifying the relationship between SOPA and contractual terms.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore Court of Appeal addresses whether payment claims can be served after contract termination under the SOPA, clarifying its interaction with contract terms.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Shimizu CorporationAppellant, RespondentCorporationAppeal AllowedWon
Stargood Construction Pte LtdRespondent, ApplicantCorporationAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Tay Yong KwangJudge of AppealNo
Steven ChongJudge of AppealYes

4. Counsels

Counsel NameOrganization
Amanda Koh Jia YiEldan Law LLP
Yong Boon OnEldan Law LLP
Lee Shu QingEldan Law LLP
Chen ZhihuiDrew & Napier LLC
Christopher ChongDrew & Napier LLC

4. Facts

  1. Shimizu engaged Stargood as a subcontractor for a project at 79 Robinson Road, Singapore.
  2. The subcontract incorporated the Real Estate Developers’ Association of Singapore Design and Build Conditions of Contract.
  3. Shimizu appointed a project director to act on its behalf, including the certification of progress payments.
  4. Shimizu issued a notice of default to Stargood on 4 March 2019.
  5. Shimizu terminated the subcontract on 22 March 2019, citing breaches by Stargood.
  6. Stargood served Payment Claim No 12 on 30 April 2019, after the termination.
  7. Stargood served Payment Claim No 13 on 31 May 2019, also after the termination.

5. Formal Citations

  1. Shimizu Corporation v Stargood Construction Pte Ltd, Civil Appeal No 204 of 2019, [2020] SGCA 37

6. Timeline

DateEvent
Letter of acceptance issued to Stargood Construction Pte Ltd
Shimizu Corporation issued a notice of default to Stargood Construction Pte Ltd
Shimizu Corporation exercised its termination rights under cl 33.2 of the Subcontract
Stargood Construction Pte Ltd served Payment Claim No 12 on Shimizu Corporation
Stargood Construction Pte Ltd served Payment Claim No 13 on Shimizu Corporation
Stargood Construction Pte Ltd lodged Adjudication Determination No SOP/AA203/2019
Shimizu Corporation served payment response to Payment Claim No 13
Adjudication Determination No SOP/AA203/2019 was dismissed
Stargood Construction Pte Ltd lodged Adjudication Determination No SOP/AA245/2019
Adjudication Determination No SOP/AA245/2019 was dismissed
Stargood Construction Pte Ltd filed OS 1099 of 2019
Hearing date
Judgment reserved

7. Legal Issues

  1. Payment Claims After Termination
    • Outcome: The court held that the SOPA does not provide an independent right to continue serving payment claims for works completed regardless of the provisions of the underlying contract.
    • Category: Substantive
    • Sub-Issues:
      • Validity of payment claims served after termination
      • Effect of termination clauses on payment rights
  2. Interpretation of Contractual Termination Clauses
    • Outcome: The court interpreted the termination clauses of the subcontract to determine whether Stargood was entitled to serve payment claims after termination.
    • Category: Substantive
    • Sub-Issues:
      • Distinction between termination of employment and termination of contract
      • Effect of termination on payment certification process
  3. Functus Officio of Project Director
    • Outcome: The court made observations on whether the Project Director became functus officio but did not make a definitive ruling.
    • Category: Procedural
    • Sub-Issues:
      • Whether the project director's role ceased upon termination
      • Impact on the validity of payment claims

8. Remedies Sought

  1. Setting aside of adjudication determinations
  2. Declaration that Stargood was entitled to serve further payment claims

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Construction Law
  • Commercial Litigation
  • Arbitration

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Far East Square Pte Ltd v Yau Lee Construction (Singapore) Pte LtdCourt of AppealYes[2019] 2 SLR 189SingaporeCited as the basis for determining a contractor’s entitlement to submit payment claims under the SOPA, emphasizing the importance of the underlying construction contract.
Tienrui Design & Construction Pte Ltd v G & Y Trading and Manufacturing Pte LtdHigh CourtYes[2015] 5 SLR 852SingaporeCited by the respondent to support the position that a claimant has an independent right under the SOPA to serve a payment claim after termination of the underlying contract.
CHL Construction Pte Ltd v Yangguang Group Pte LtdHigh CourtYes[2019] 4 SLR 1382SingaporeCited by the respondent to support the position that a claimant has an independent right under the SOPA to serve a payment claim after termination of the underlying contract.
Choi Kum Peng and another v Tan Poh Eng Construction Pte LtdHigh CourtYes[2014] 1 SLR 1210SingaporeCited by the respondent to support the position that a claimant has an independent right under the SOPA to serve a payment claim after termination of the underlying contract.
LW Infrastructure Pte Ltd v Lim Chin San Contractors Pte LtdHigh CourtYes[2011] 4 SLR 477SingaporeCited in relation to the distinction between termination of a contractor’s employment and termination of a contract.
Engineering Construction Pte Ltd v Attorney GeneralN/AYesEngineering Construction Pte Ltd v Attorney General (No. 2) (1994)N/ACited in relation to the effect of contract termination on the powers of an architect or engineer to certify payments.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Payment Claim
  • Termination
  • Subcontract
  • Project Director
  • Functus Officio
  • Progress Payment
  • SOPA
  • Adjudication
  • Certification
  • Notice of Default

15.2 Keywords

  • construction
  • payment claim
  • SOPA
  • termination
  • adjudication
  • Singapore
  • contract law

17. Areas of Law

Area NameRelevance Score
Construction Law95
Building and Construction Industry Security of Payment Act90
Building and Construction Contracts80
Contract Law70
Termination of Contract60
Civil Procedure30
Arbitration25

16. Subjects

  • Construction Dispute
  • Security of Payment
  • Contract Law