SOPA TIME-LINES POST TERMINATION
In CHL Construction Pte Ltd v Yangguang Group Pte Ltd  SGHC 62 (“CHL v YG”), Justice Chan Seng Onn considered the question of whether, in relation to claims under the Building and Construction Industry Security of Payment Act (“SOPA”), contractual provisions relating to SOPA timelines survive termination of the contract.
Brief facts: The claimant sub-contractor, Yangguang Group Pte Ltd (“Sub-Contractor”), entered into a sub-contract with the main contractor, CHL Construction Pte Ltd (“Main Contractor”).
On 9 July 2018, the Sub-Contractor completed the works.
On 10 July 2018, a Certificate of Substantial Completion was received.
On 20 July 2018, the Sub-Contract was terminated.
On 30 August 2018, the Sub-Contractor served its Progress Claim 10 (“PC10”), claiming for works done until 30 August 2018 and for release of half of the retention monies.
On 24 September 2018, an adjudication application was lodged in respect of PC10.
The adjudicator awarded sums to the Sub-Contractor. The Main Contractor applied to set aside the Adjudication Determination.
The key issue. The key issue before the High Court was whether PC10 was served in contravention of s. 10(2)(a) SOPA: if so, then the Adjudication Determination would be rendered invalid, and the Main Contractor would succeed in its setting aside application.
The key clause. In this regard, the key clause was Cl. 37 of the Sub-Contract, while provided that the Sub-Contractor had to “withhold its penultimate payment claim “until three months after the Certificate of Substantial Completion has been received by” the Main Contractor” (emphasis in original;  CHL v YG).
As such, per  CHL v YG, if Cl. 37 survives termination and provides for the time-line for service of the penultimate payment claim, then PC10 would have been premature and invalid.
SOPA timelines apply notwithstanding termination. The High Court then proceeded to reason that:
(a) A SOPA payment claim must be served in accordance with the timeline in s. 10(2) SOPA ( CHL v YG);
(b) “… termination of the contract subsequent to the point of time the statutory entitlement to payment had arisen and accrued does not alter the timeline for service of a SOPA payment claim that applies to that contractor’s accrued statutory entitlement to payment. Instead, the timeline for service is determined at the point the statutory entitlement to payment arises; if the contract stipulates such a timeline, the contractual time-line applies…” ( CHL v YG);
(c) On the facts, when the works were completed and CSC was obtained, the Sub-Contract was subsisting. So the Sub-Contractor’s entitlement to payment had arisen and accrued as of that date, and the SOPA time-lines would follow that which was specified in s. 10(2) SOPA read with Cl. 37 – hence, PC10 was served prematurely ( –  CHL v YG).
Contractual time-lines post termination. CHL v YG is an interesting decision, as there are not many decisions that deal with post-termination claims.
For respondents, CHL v YG is an important decision as it affirms that contractual time-lines can operate post-termination (at least in certain factual scenarios).
However, prudent respondents should also take note of the Court of Appeal decision in Audi, and how jurisdictional objections should be raised as early as possible.
Food for thought. We leave by observing that in an earlier decision of Lau Fook Hoong Adam v GTH Engineering & Construction Pte Ltd  SGHC 141, the High Court in obiter considered at  that “… A stipulation for payment claims to be filed at certain timings necessarily implies that payment claims are not to be filed outside those timings … it is, at the very least, arguable that a payment claim issued at any time after the issuance of the final claim or final payment claim and thus not in accordance with the SIA Conditions 2005 or the SIA Conditions 2011 respectively, is invalid as it fails to comply with s 10(2)(a) of the SOPA. …”
CHL v YG would appear to also suggest that in certain scenarios, the parties can “limit” the timing for service of a payment claim (see in particular the discussion on s. 36(2) SOPA and the reference to the New South Wales decision of John Holland Pty Ltd v Coastal Dredging & Construction Pty Limited & Ors in CHL v YG).
We query to what extent can parties attempt to do so, appearing in mind s. 36(2) SOPA, and the fact that there is a “default” time-line in SOPA to cater to instances where the parties had failed to address time-lines in their contract.
Tags: Building and Construction Industry Security of Payment Act; Adjudication; Payment Claim; Time-line; Validity; s. 10(2)(a); Post-termination.
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