JFC Builders Pte Ltd v Permasteelisa Pacific Holdings Ltd

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 07 November 2016
• Neutral Citation: [2016] SGHC 247
• Plaintiff Counsel: Li Jiaxin (Michael Por Law Corporation)
• Date: 07 November 2016
• Docket Number: Originating Summons No 622 of 2016
• Hearing Date: 09 September 2016
• Subject Matter: Adjudication,Building and construction law,Dispute resolution
• Year: 2016
• Defendant Counsel: Teo Kah Wee (Chan Neo LLP)
• Court: High Court (Singapore)
• Citation: [2016] SGHC 247
• Published date: 23 November 2016

Lee Seiu Kin J:

This was the plaintiff’s application to set aside an adjudication determination under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”) dated 24 May 2016 (“the AD”). The AD was in respect of Adjudication Application No SOP/AA168 of 2016. The plaintiff’s basis for its application was that the defendant’s works did not fall within the definition of “construction work” under the Act.

Background facts

The plaintiff was the main contractor for a hotel development at Telok Blangah Road (“the Development”). By way of a quotation dated 16 August 2010 (“the Quotation”), the plaintiff engaged the defendant to carry out certain works at the Development. The subject matter of the present dispute pertained to two variation orders dated 26 July 2011 (“VO 1”) and 3 November 2011 (“VO 2”).

VO 1 comprised a list of omitted works and, more importantly for present purposes, a list of additional works. The additional works were as follows (with the minor details omitted): 1 To supply, fabricate and install for following built-in fitment a Bay Window in selected laminate finish b Study Table with 2 drawers & flit-up for power point and side return, internally in selected laminate finish c Full height wardrobe c/w door, mini fridge compartment internally in laminate finish, additional pull-out trays above refrigerator and additional drawer for safe d To replace laminate finish to existing vanity cabinet (internal carcass in laminate finish) e Full height box-up for TV are. f Additional wall panelling with laminate finish g Additional timber shelf

VO 2 comprised the following additional works (with the minor details omitted):

To supply, fabricate and install for following built-in fitment.

1 Additional work to drill wire holes 2 Amendment of Fridge’s backing 3 Mirror backing in show room (2 room) 4 Mirror glass panel in Unit 02-35 show unit 5 Demolish fridge’s backing 6 Supply labour to install stone vanity top 7 Additional 880mm width side plate and plywood for Vanity Counter 8 Additional Vanity Cabinet 9 Supply and install timber box support for study lamps installed at headboads [sic] with drill wire holes (For Small Room) 10 Amendment of opening for plugs on table top and drill opening for power point and plugs on full height cabinet with supply 4 nos black grommet for each room 11 Additional compartment/extension of existing full height cabinet 12 Timber plywood mirror backing 13 Additional extension of full height cabinet @ Unit 207 and additional drawers (wall mounted) for study table @ Unit 501 Unit 701, Unit 801, Unit 901 and Unit 1001 14 Supply labour to box up full height cabinet with 15mm thk [sic] plywood and laminate finish @ Suite Room

In the AD, the Adjudicator decided in favour of the defendant.

The issues

At the hearing, counsel for both parties agreed that the primary issue was whether the works carried out by the defendant, based on which the payment claim was made, fell within the definition of “construction work” in s 3(1) of the Act.

Consequently, there were two issues that arose for my determination. First, what were the defendant’s works? Second, did the defendant’s works fall within the definition of “construction work” in s 3(1) of the Act? I now turn to consider these issues ad seriatim.

What were the defendant’s works?

The plaintiff submitted that VO 1 and VO 2 were essentially for the carrying out of “extremely minor works”. On the other hand, the defendant submitted that its works consisted of “supplying, fabricating, and installing various furniture and fitment”. The defendant further submitted that: Its scope of works was to prefabricate to measure the components described in the Quotation and VO 1 and VO 2, and then affix them to the hotel rooms. The objective purpose of affixing the furniture and fitments to the hotel rooms was to enhance the value and utility of the rooms, and thus the Development. The furniture and fitments, being fixed items of furniture made especially for the hotel rooms, were obviously not intended to be easily repositioned or removed from the hotel rooms, but had instead been installed with a high degree of permanence.

On my part, it was clear that the defendant’s works in VO 1 and VO 2 were for the supply, fabrication and installation of furniture that was attached to the building, with such attachment intended to be permanent. This is indicated both by the individual descriptions of the works and also the general description that the furniture to be supplied, fabricated and installed was “built-in”. I therefore found that the defendant’s works were for the supply, fabrication and installation of furniture that was attached to the building, and intended to be permanently attached thereto.

Did the defendant’s works fall within the definition of “construction work” in s 3(1) of the Act? Parties’ submissions Plaintiff’s submissions

The plaintiff submitted that the defendant’s works did not fall within the definition of “construction work” in s 3(1) of the Act.

In this regard, the plaintiff relied on the decision of Judge Richard Seymour QC in Gibson Lea Retail Interiors Ltd v Makro Self Service Wholesalers Ltd [2001] BLR 407 (“Gibson Lea”). In that case, the claimant (“Gibson Lea”) carried on business as a supplier and installer of shop fittings while the defendant (“Makro”) carried on business as a cash and carry wholesaler. Makro employed Gibson Lea to undertake the supply and installation of shop fittings in four of its stores. Judge Seymour QC had to consider whether the works were “construction operations” as defined in s 105(1) of the UK Housing Grants, Construction and Regeneration Act 1996 (c 53) (UK) (“the UK Act”). This definition is broadly similar to the definition of “construction work” in s 3(1) of the Act. It seems that the pertinent provisions in that case were ss 105(1)(a) and (c) of the UK Act, which refer, respectively, to the “construction … of … structures forming, or to form, part of the land (whether permanent or not)” and the “installation in any building or structure of fittings forming part of the land”. These correspond to ss 3(1)(a) and (c) of the Act.

Judge Seymour QC held that the phrase “forming part of the land” imported the common law on fixtures. He observed (at [15]) that:

… What might be involved in a structure or fittings “forming part of the land” is not something which is addressed in the [UK] Act. However, in the context of the law of real property the concept of a fixture is well-established, and it seems to me that that to which the parts of the definition of “construction operations” in section 105(1) of the [UK] Act which I have just set out is directed is whether the particular structure or fittings will, when completed, amount to a fixture or fixtures. In the law of real property one of the factors which is relevant to a determination of whether a chattel attached to a building is a fixture or not is whether the attachment is intended to be permanent … [emphasis added]

This observation was subsequently reiterated when he noted (at [20]) that “it does appear that the intention of Parliament was to introduce into the [UK] Act by means of the words “forming part of the land” the existing law as to fixtures” and (at [22]) that:

… I have already indicated my view that the effect of referring to “forming, or to form, part of the land” is to import into section 105(1)(a) of the [UK] Act the concepts and tests of the law relating to fixtures. … In my judgment it is clear that the words in section 105(3) of the [UK] Act “fittings forming part of the land” is a reference to fixtures.

Parenthetically, I should point out that this last reference to s 105(3) of the UK Act appears to be a typographical error and it is likely that Judge Seymour QC had intended to refer to s 105(1)(c) of the UK Act instead.

On the facts, Judge Seymour QC concluded (at [23]) that none of the items supplied by Gibson Lea to Makro were, as and in so far as installed, fixtures. Consequently, the works done by Gibson Lea for Makro were not “construction operations”.

I pause to note that Judge Seymour QC’s view is shared by Chow Kok Fong in Security of Payments and Construction Adjudication (LexisNexis, 2nd Ed, 2013), where the learned author writes (at para 3.74) as follows:

The [Act] is silent on what is meant by the expression ‘form part of the land’ but the courts may be expected to determine this on the basis of the common law principles relating to fixtures.

Defendant’s submissions

The defendant, on the other hand, submitted that its works were for the installation of fittings that form part of the land and the prefabrication of components to form part of the building, which were an integral part of the said installation. It was submitted that these constituted “construction work” under the Act. In particular, the defendant relied on limbs (c) and (d)(v) of the definition of “construction work” in s 3(1) of the Act.

Two cases were relied on by the defendant. The first was the decision of Akenhead J in Savoye and another v Spicers Ltd [2015] Bus LR 242 (“Savoye”). In that case, Spicers Ltd (“Spicers”) had engaged the claimants (“Savoye”) to design, supply, supervise and commission a new conveyor system at its existing factory site. Savoye sought to enforce an adjudicator’s decision in its favour against Spicers, and the only issue was whether the underlying contract between the parties was a construction contract involving “construction operations” as defined in s 105 of the UK Act. The focus in that case was on ss 105(1)(a) to (c) of the UK Act, which read as follows:

(1) In this Part “construction operations” means, subject as follows, operations of any of the following...