Frontbuild v JHJ Construction: Security of Payment Act & 'Pay When Paid' Clauses
In Frontbuild Engineering & Construction Pte Ltd v JHJ Construction Pte Ltd, the Singapore High Court addressed the interplay between sections 4(2)(c) and 9 of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed). The plaintiff, Frontbuild, sought to set aside an adjudication determination in favor of the defendant, JHJ Construction. The court, presided over by S Mohan JC, dismissed the originating summons, holding that the adjudicator had properly considered the relevant provisions of the Act and that the 'pay when paid' clause in the terminated sub-contract was unenforceable under section 9 of the Act. The court ordered Frontbuild to pay costs to JHJ Construction.
1. Case Overview
1.1 Court
General Division of the High Court of the Republic of Singapore1.2 Outcome
Originating Summons dismissed with costs to be paid by the plaintiff to the defendant.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court case concerning the interplay between sections 4(2)(c) and 9 of 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 |
|---|---|---|---|---|---|
| Frontbuild Engineering & Construction Pte Ltd | Plaintiff | Corporation | Originating Summons dismissed | Lost | |
| JHJ Construction Pte Ltd | Defendant | Corporation | Originating Summons dismissed | Won |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| S Mohan | Judicial Commissioner | Yes |
4. Counsels
4. Facts
- Frontbuild was appointed by the People’s Association as the main contractor for construction works at Fengshan Community Club.
- Frontbuild appointed JHJ Construction as its sub-contractor for reinforcement concrete works via a Letter of Award dated 27 March 2019.
- Disputes arose in February 2020 regarding manpower deployment and access to the worksite.
- Frontbuild issued a notice of termination of the Sub-Contract on 12 March 2020.
- JHJ Construction issued Payment Claim No. PC 9 on 31 March 2020 for work done up to that period.
- The Adjudicator determined that a sum of $204,210.67 was payable by Frontbuild to JHJ Construction.
- Clause 9(b) of the Sub-Contract stipulated that no further payment shall be made until the whole of the Main Contract Works has been completed.
5. Formal Citations
- Frontbuild Engineering & Construction Pte Ltd v JHJ Construction Pte Ltd, Originating Summons No 1129 of 2020, [2021] SGHC 72
6. Timeline
| Date | Event |
|---|---|
| Letter of Award issued to JHJ Construction Pte Ltd as sub-contractor. | |
| Original date for completion of Sub-Contract Works. | |
| Plaintiff complained that the defendant did not deploy manpower to the worksite. | |
| Plaintiff issued written notice to defendant demanding resumption of works. | |
| Plaintiff issued notice of termination of the Sub-Contract. | |
| Defendant issued Payment Claim No. PC 9. | |
| Defendant issued Notice of Intention to apply for adjudication. | |
| Adjudication Determination issued. | |
| Defendant commenced enforcement proceedings in the State Courts. | |
| Defendant obtained leave to enforce the AD as an order of court. | |
| Leave Order served on the plaintiff. | |
| Defendant took steps to enforce the Leave Order by way of garnishee proceedings. | |
| Plaintiff filed Originating Summons No 1129 of 2020. | |
| Judgment in default of appearance entered by the plaintiff against the defendant in HC/S 1058/2020. | |
| Hearing of OS 1129. | |
| Oral grounds of decision delivered. | |
| Defendant to file application to set aside default judgment in Suit 1058. | |
| Written grounds for decision provided. |
7. Legal Issues
- Applicability of Building and Construction Industry Security of Payment Act
- Outcome: The court held that section 4(2)(c) of the Act does not take primacy over section 9, and 'pay when paid' provisions in terminated construction contracts are unenforceable.
- Category: Substantive
- Sub-Issues:
- Interplay between sections 4(2)(c) and 9 of the Act
- Enforceability of 'pay when paid' provisions in terminated contracts
- Validity of Termination of Sub-Contract
- Outcome: The court accepted the Adjudicator’s finding that the termination by the plaintiff on 12th March 2020 is valid at face value.
- Category: Substantive
- Service of Leave Order
- Outcome: The court found that the Leave Order was validly served on the plaintiff and exercised the court’s curative power to cure the defect in the Leave Order. The court also exercised its discretion in favor of allowing the plaintiff an extension of time until 9 November 2020 when OS 1129 was filed.
- Category: Procedural
- Sub-Issues:
- Defect in Leave Order
- Extension of Time
8. Remedies Sought
- Setting aside of Adjudication Determination
- Setting aside of Leave Order
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Construction Litigation
- Adjudication
- Commercial Litigation
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| 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 task is to assess whether any mandatory provision under the Act has been breached and that the court cannot consider the merits of the adjudication determination. |
| SEF Construction Pte Ltd v Skoy Connected Pte Ltd | High Court | Yes | [2010] 1 SLR 733 | Singapore | Cited by the plaintiff to argue that the Act did not apply to the Sub-Contract, having been terminated on 12 March 2020. |
| Grouteam Pte Ltd v UES Holdings Pte Ltd | High Court | Yes | [2016] 5 SLR 1011 | Singapore | Cited by the defendant to invite the court to make a finding that the plaintiff’s actions amounted to a repudiatory breach of the Sub-Contract. |
| Shimizu Corp v Stargood Construction Pte Ltd | Court of Appeal | Yes | [2020] 1 SLR 1338 | Singapore | Cited for the proposition that 'any termination must necessarily be prima facie valid' and that the Act limits parties’ freedom to contract by rendering 'pay when paid provisions' completely unenforceable. |
| Orion-One Residential Pte Ltd v Dong Cheng Construction Pte Ltd and another appeal | Court of Appeal | Yes | [2020] SGCA 121 | Singapore | Re-emphasised that the overarching role of the Act is only a 'gap-filling' one. |
| Woon Brothers Investments Pte Ltd v Management Corporation Strata Title Plan No 461 and others | High Court | Yes | [2011] 4 SLR 777 | Singapore | Cited for the rule that the 'same word is to bear the same meaning throughout' a given legislation. |
| Tan Cheng Bock v Attorney-General | Court of Appeal | Yes | [2017] 2 SLR 850 | Singapore | Cited for the correct approach to the purposive interpretation under s 9A of the Interpretation Act. |
| Far East Square Pte Ltd v Yau Lee Construction (Singapore) Pte Ltd | Court of Appeal | Yes | [2019] 2 SLR 189 | Singapore | Clarified that the rationale for requiring a contractor to show such contractual basis for progress payments is that the right to be paid must first crystallise pursuant to the underlying construction contract. |
| AMJ Pte Ltd v AMK Pte Ltd | Singapore Construction Adjudication | Yes | [2012] SCAdjR 581 | Singapore | Drew support for the conclusions reached at [47] from AMJ Pte Ltd v AMK Pte Ltd [2012] SCAdjR 581 (“AMJ”), which was a published adjudication determination of Mr Chow Kok Fong. |
| Baek Jae Pte Ltd v K-Inc Konstruct Pte Ltd | District Court | Yes | [2018] SGDC 11 | Singapore | Noted that the wording of s 9(2), and in particular, the use of the phrase “by whatever name called”, indicates that “the legislature intended to cast the net wide” with regard to the ambit and reach of s 9(1). |
13. Applicable Rules
| Rule Name |
|---|
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 2 r 2(1) |
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 2 r 2(2) |
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 13 |
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 95 r 2(4) |
| Rules of Court (Cap 322, R 5, 2014 Rev Ed) O 95 r 2(5) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) | Singapore |
| Building and Construction Industry Security of Payment Act s 4 | Singapore |
| Building and Construction Industry Security of Payment Act s 4(2)(c) | Singapore |
| Building and Construction Industry Security of Payment Act s 9 | Singapore |
| Building and Construction Industry Security of Payment Act s 17(3)(a) | Singapore |
| Building and Construction Industry Security of Payment Act s 36 | Singapore |
| Interpretation Act (Cap 1, 2002 Rev Ed) s 9A(1) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Building and Construction Industry Security of Payment Act
- Pay when paid provision
- Adjudication Determination
- Sub-Contract
- Termination
- Progress Payment
- Leave Order
- Main Contract Works
- Payment Claim
15.2 Keywords
- construction
- security of payment
- adjudication
- contract
- singapore
17. Areas of Law
16. Subjects
- Construction Dispute
- Contract Law
- Security of Payment
- Statutory Interpretation