Civil Tech v Hua Rong: Security of Payment Act & Cross-Contract Set-Offs
Civil Tech Pte Ltd appealed against the decision to dismiss its application to set aside an adjudication determination under the Building and Construction Industry Security of Payment Act. The Court of Appeal dismissed the appeal, holding that a respondent to a payment claim may not withhold payment based on a claim or asserted set-off which does not arise from the contract on which the payment claim is based. The grounds of decision were delivered by Sundaresh Menon CJ.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The Court of Appeal held that under the SOPA, a respondent to a payment claim may not withhold payment based on a claim from a separate contract.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Hua Rong Engineering Pte Ltd | Respondent | Corporation | Appeal Dismissed | Won | |
| Civil Tech Pte Ltd | Appellant | Corporation | Appeal Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | Yes |
| Tay Yong Kwang | Judge of Appeal | No |
| Steven Chong | Judge of Appeal | No |
4. Counsels
4. Facts
- Civil Tech was the main sub-contractor for two Land Transport Authority construction projects.
- Civil Tech engaged Hua Rong as its sub-contractor for labour on both the T211 and C933 projects via separate contracts.
- Hua Rong submitted a payment claim for work under the T211 Contract.
- Civil Tech issued a payment response claiming Hua Rong owed it a substantial sum due to fraudulent claims under the C933 Contract.
- Civil Tech sought to set-off the payment claim based on the alleged fraudulent claims under the C933 Contract.
- The adjudicator determined that the Act did not permit setting-off claims from another contract.
- Civil Tech applied to set aside the adjudication determination, arguing the adjudicator erred in refusing to consider the set-off.
5. Formal Citations
- Civil Tech Pte Ltd v Hua Rong Engineering Pte Ltd, Civil Appeal No 153 of 2017, [2018] SGCA 12
6. Timeline
| Date | Event |
|---|---|
| Hua Rong submitted a payment claim to Civil Tech | |
| Civil Tech issued a payment certificate/response | |
| The adjudicator released his determination | |
| Hua Rong applied for and obtained leave to enforce the Adjudication Determination | |
| Civil Tech applied to court to set aside the Adjudication Determination | |
| Hearing of Civil Tech’s application | |
| Hearing of Civil Tech’s application | |
| Judge dismissed the application | |
| Court of Appeal heard the appeal | |
| Court of Appeal issued grounds of decision |
7. Legal Issues
- Set-off
- Outcome: The Court of Appeal held that a respondent to a payment claim may not withhold payment based on a claim or asserted set-off which does not arise from the contract on which the payment claim is based.
- Category: Substantive
- Interpretation of Statutes
- Outcome: The court interpreted the Building and Construction Industry Security of Payment Act to determine whether cross-construction contract claims are valid withholding reasons.
- Category: Procedural
8. Remedies Sought
- Setting aside of adjudication determination
9. Cause of Actions
- Breach of Contract
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 | High Court | Yes | [2013] 3 SLR 380 | Singapore | Cited for the purpose of the Act to provide the construction industry with a low-cost, efficient and quick process for the adjudication of payment disputes. |
| Hua Rong Engineering Pte Ltd v Civil Tech Pte Ltd | High Court | Yes | [2017] SGHC 179 | Singapore | The Judge held that in an adjudication under the Act, a respondent to a payment claim may only rely on reasons for withholding payment arising out of the Payment Claim Contract. |
| Rong Shun Engineering & Construction Pte Ltd v CP Ong Construction Pte Ltd | High Court | Yes | [2017] 4 SLR 359 | Singapore | Cited for the 'one payment claim, one contract' rule. |
| Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd | House of Lords | Yes | [1974] AC 689 | England and Wales | Cited for the principle that a respondent to a payment claim was entitled to rely on its remedies at common law, including the right of set-off, to withhold payment unless such remedies had been clearly excluded by contract. |
| Kum Leng General Contractor v Hytech Builders Pte Ltd | High Court | Yes | [1996] 1 SLR(R) 310 | Singapore | Cited as a case that followed Gilbert-Ash. |
| Hiap Tian Soon Construction Pte Ltd and another v Hola Development Pte Ltd and another | High Court | Yes | [2003] 1 SLR(R) 667 | Singapore | Cited as a case that followed Gilbert-Ash. |
| Dawnays Ltd v F G Minter Ltd and Trollope and Colls Ltd | Court of Appeal | Yes | [1971] 1 WLR 1205 | England and Wales | Cited as a case overruled by Gilbert-Ash. |
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 |
15. Key Terms and Keywords
15.1 Key Terms
- Security of Payment Act
- Payment Claim
- Payment Response
- Adjudication Determination
- Cross-Construction Contract Claim
- Set-off
- Construction Contract
15.2 Keywords
- construction
- payment
- adjudication
- security of payment act
- set off
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Construction Law | 90 |
| Building and Construction Contracts | 80 |
| Breach of Contract | 50 |
| Contract Law | 50 |
| Arbitration | 30 |
| Civil Procedure | 20 |
16. Subjects
- Construction Dispute
- Arbitration
- Contract Law