WHEN CAN AN SO’S DETERMINATION UNDER THE PSSCOC GROUND A CALL ON A PERFORMANCE BOND?
In SH Design & Build Pte Ltd v Jurong Port Pte Ltd [2026] SGHC 159, Lee Seiu Kin SJ restrained a call on a performance bond because the Superintending Officer ("SO") never rendered a valid decision under clause 35.1 of the PSSCOC within the mandatory 30-day deadline, so that the premise of the bond call was "false" (Judgment [39]).
The Background. Jurong Port Pte Ltd (“R1”) engaged SH Design & Build Pte Ltd (the “Applicant”) as main contractor for a ready mixed concrete ecosystem project at Jurong Port, under a contract incorporating the PSSCOC (7th Ed, 2014) pursuant to a letter of acceptance dated 14 May 2020 and an agreement dated 25 January 2021 (collectively, the “Contract”) (Judgment [4]–[5]).
Pursuant to clause 4.5 of the PSSCOC, the applicant furnished R1 with a performance bond dated 1 August 2020 (“PB”), issued by R2 in R1’s favour, for the sum of $12,569,800.00 (Judgment [9]).
The project was divided into 5 phases each with different completion dates. It was undisputed that the completion of 3 phases were substantially delayed, though it was disputed whether the applicant was entitled to extensions of time under the Contract (Judgment [6]).
On 17 May 2025, the applicant lodged its Payment Claim No 57. R1 responded with a Payment Response No 57 with a response amount of zero. In it, among others, R1 indicated a claim for liquidated damages of almost $20 million. (Judgment [10]).
The applicant commenced adjudication on 30 June 2025 (“AA153”), and by way of a letter dated 3 July 2025, R1 made a demand to R2 for the full sum of $12,569,800.00 (“First Demand”) (Judgment [10]).
R2’s lawyers replied stating that the PB was a conditional bond and that R1 was required to state where the applicant failed to fulfil the terms of the Contract (Judgment [10]).
Subsequently, on 21 July 2025, the applicant and R1 entered into a framework agreement. This agreement, among others, provided for the suspension of the First Demand until 15 September 2025. The parties also agreed to refer their dispute to mediation (Judgment [11]).
Disputes arose, leading to the applicant filing HC/OA 860/2025 to restrain R1 from receiving monies under the First Demand. HC/OA 860/2025 was eventually withdrawn, as on 13 August 2025, R1 informed the applicant it was agreeable to withdrawing the First Demand (Judgment [11]).
The reference to SO. Relevantly, on 6 August 2025, R1 had, pursuant to Clause 35.1 of the PSSCOC, made a reference to the SO (the “SO Reference”), requesting the SO to “… give his decision pursuant to PSSCOC clause 35.1 on “the total amount of liquidated damages payable by the [applicant] for its delay and/or breach in failing to complete the Works … in accordance with the Contract”.” (Judgment [17]).
The applicant provided its submissions for the SO Reference on 15 August 2025, raising various objections (Judgment [18]).
On 5 September 2025, the SO gave his “preliminary response” (the “SO Decision”), the gist of which was to say that the “… SO had no powers under the PSSCOC to determine liquidated damages” (Judgment [19]).
On 18 September 2025, R1 wrote to the SO requesting that he clarify his decision, and specifically, to “state his decision on the question posed in the SO Reference, which was the quantum of liquidated damages that was payable by the applicant for delays in the Project” (“Clarification Request”) (Judgement [20]).
This Clarification Request was not copied to the applicant (Judgment [35]).
On 6 October 2025, the SO issued replied (the “SO Clarification”), where he stated that the total amount of liquidate damages was assessed to be $13,224,962.47 (Judgment [21]).
On 14 October 2025, relying on the SO Decision and the SO Clarification, R1 made a second demand for the full sum of the PB (Judgment [25]).
While on 16 October 2025 the applicant had filed a second adjudication application (“AA 290”), there was no evidence before Lee SJ as to its outcome (Judgment [24]).
The application. The second demand led to the applicant taking up an application to restrain R1 from calling on the PB on 24 October 2025 (Judgment [1]; [12]).
And in short, the key issue before Lee SJ was whether R1 was entitled to rely on the SO Decision and/or the SO Clarification to support its call on the PB.
The clause 35.1 regime. Lee SJ held that clause 35.1 is “fast-track dispute resolution mechanism of temporary finality”: any dispute “of whatsoever kind” (save for termination, repudiation, and abandonment disputes) must first be referred to the SO, who must decide within 30 days, and the parties must give effect to that decision forthwith unless and until it is revised in arbitration (Judgment [14]–[15]).
Given the policy of expedition, it is “imperative” that the SO decides within the 30-day limit (Judgment [29]).
Not entitled to rely on SO Decision or SO Clarification. Lee SJ found that the SO Reference was a valid clause 35.1 reference (Judgment [27]–[28]).
However, notwithstanding this, Lee SJ found that R1 was not entitled to rely on either the SO Decision or the SO Clarification to call on the PB.
The SO Decision did not answer the question. On the SO Decision:
Lee SJ held that mothing turned on the “preliminary response” label. As the SO was asked to determine the question referred, then if the SO had written a further response before the 30-day deadline after his “preliminary response”, then it would have been appropriate to ignore the preliminary response (Judgment [31]).
But as that did not occur, and the SO had “proceeded to set out the submissions from both sides and his findings on the related issue of extensions of time for the various phases of the project”, this meant that the “preliminary response” was the SO’s “final response” (Judgment [31] – [32]).
And Lee SJ found that since “[a]t paragraph 16 of the SO Decision, the SO seemed to say that he did not have power under the Contract to determine the quantum of liquidated damages [he] therefore did not provide an answer to the sole question posed in the SO Reference” (Judgment [33]).
Therefore, since the SO Decision made no decision in respect of the quantum of liquidated damages payable by the applicant to R1, there was no decision by the SO on this which bound the parties (Judgment [37]).
The SO Clarification was invalid. On the SO Clarification:
Lee SJ found that the SO Clarification was tainted by a breach of natural justice. As the Clarification Request was not provided to the applicant, and the SO made the SO Clarification “without affording the applicant the opportunity of providing a response”, the SO Clarification was therefore made in breach of natural justice (Judgment [35]).
Lee SJ made clear that this arose “… not only under common law, but implied from the specific requirement under clause 35.1 that a copy of the reference be sent to the other party” (Judgment [35]).
Lee SJ further found that the SO Clarification, to the extent that it contains a decision of the SO, was made in breach of the 30-day deadline in answer to a question posed in the SO Reference, and was hence invalid (Judgment [36] – [37]).
Call failed. As the Parties agreed that the PB was a conditional bond on the authority of AXA Insurance Pte Ltd v Chiu Teng Construction Co Pte Ltd [2021] 2 SLR 549, as Lee SJ set out in Judgment [38] – [39], Lee SJ’s findings on the SO Decision and SO Clarification meant that R1’s premise for calling on the PB was “false” and hence the demand on the PB was not valid.
Implications. A few points stand out.
A valid SO determination under clause 35.1 can ground a call on a performance bond. Lee SJ, in obiter, stated that if an SO makes a determination in time and in compliance with the requirements of clause 35.1 on the amount of liquidated damages payable by a contractor, then “that decision is binding on the parties pursuant to the same clause. In my view, the employer would be entitled to rely on this determination to form the basis of a demand on the PB” (Judgment [41]).
However, the time-lines under clause 35.1 are strict. Lee SJ stated that “given the rigid deadline under the clause 35 regime, I would venture to suggest that even a one-day delay would invalidate the late decision” (Judgment [36]).
There is a distinction between a clarification to a decision made, versus making a decision after the deadline. An SO may, in appropriate circumstances, make a clarification after the 30-day deadline, but the SO cannot make a decision after the said deadline (Judgment [36]).
If you are on the receiving end of a reference, you need to respond. Lee SJ stated that “if the other party declines to provide a response, or does not do so in time for the SO to take it into account, then the SO must proceed with his decision on the reference even without the benefit of a response.” (Judgment [29]).
The reference procedure therefore it offers speed and temporary finality. However, the 30-day deadline is unforgiving, and procedural fairness (such as copying the other side on every reference and clarification request) is a fundamental condition of validity.
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