SECC Holdings Pte Ltd v Helios PV (Asia Pacific) Pte Ltd (Sinohydro Corporation Limited (Singapore Branch), garnishee)

• Jurisdiction: Singapore
• Judge: Lim Mei Yee Elaine
• Judgment Date: 02 October 2023
• Neutral Citation: [2023] SGDC 225
• Court: District Court (Singapore)
• Docket Number: District Court Originating Summons No 19 of 2022
• Hearing Date: 04 September 2023,24 May 2023,25 May 2023,30 May 2023,18 April 2023
• Citation: [2023] SGDC 225
• Year: 2023
• Plaintiff Counsel: Vishi Sundar (WongPartnership LLP)
• Defendant Counsel: Sim Chee Siong, Ching Meng Hang and Lee Tze En Chrystal (Rajah & Tann Singapore LLP)
• Subject Matter: Contract,Formation,Intention to create legal relations,Whether tripartite agreement was 'subject to contract',Certainty of terms,Whether consensus reached at meetings amounted to oral agreement,Acceptance,When acceptance of written tripartite agreement was effectively communicated,Choses in action,Assignment,Whether there was a manifested intention to assign the chose as opposed to a mere mandate to pay,Whether future choses can be assigned in equity,Credit and Security,Remedies,Garnishee orders,Burden of proving existence of debt due or accruing due,Evidence,Whether drawing of adverse inferences warranted
• Published date: 06 January 2024

District Judge Lim Mei Yee Elaine: Introduction

This suit involves three parties to a construction project named “C9355 A & A Works for Additional PV System Capacity in Rail Depots” (the “Project”): the garnishee, Sinohydro Corporation Limited (Singapore Branch) (“Sinohydro”), which was engaged by the employer, the Land Transport Authority of Singapore (“LTA”), as the main contractor for the Project; the defendant, Helios PV (Asia Pacific) Pte Ltd (“Helios”), which was engaged by Sinohydro as a subcontractor for the Project; and the plaintiff, SECC Holdings Pte Ltd (“SECC”), which was engaged by Helios as a sub-subcontractor for the Project.

In this suit, SECC had obtained a judgment against Helios for the sum of $249,560.94 due and owing to it for works done in the Project plus interest and costs, based on an adjudication determination made in its favour. Thereafter, SECC commenced garnishee proceedings and obtained a provisional garnishee order against Sinohydro attaching all debts due or accruing due from Sinohydro to Helios up to the sum of $251,012.38 plus interest, to answer the judgment debt (the “PGO”). To obtain the PGO, SECC’s project director, Mr Lim Seng Beng, had affirmed an affidavit setting out his belief that Sinohydro owed Helios a progress payment in the sum of $475,051 which the former had certified in the latter’s favour in December 2021 (the “Progress Payment”).

SECC served the PGO on Sinohydro on 10 March 2023 at 1.18pm.

During the show cause stage of the garnishee proceedings, Sinohydro strenuously contested its liability to Helios for the Progress Payment, which amounted to $508,304.57 (after including GST on the sum of $475,051). Sinohydro’s key contentions were that at the time of service of the PGO: only $12,948.21 of the Progress Payment was due and owing to Helios; as for the rest of the Progress Payment, $256,105.23 (the “256K Sum”) had been assigned to Nexon Engineering Pte Ltd (“Nexon”), another of Helios’ subcontractors for the Project, and the remaining $239,250.93 (the “239K Sum”) was a contingent debt that could not be garnished as it had been temporarily reserved as on-site implementation costs and would only be released after Helios had completed all its outstanding works for the Project.

The learned Deputy Registrar Lewis Tan (the “Learned DR”), who presided over the show cause hearing, found that it could only be said for certain that $12,948.21 of the Progress Payment remained due and owing from Sinohydro and Helios, and made the PGO final for that amount. As regards the remainder of the PGO, the Learned DR ordered a trial to determine whether there was any remaining debt due or accruing due, and in what amount, from Sinohydro to Helios at the time of service of the PGO. The reasons for the Learned DR’s decision have been comprehensively set out in his judgment in SECC Holdings Pte Ltd v Helios PV (Asia Pacific) Pte Ltd (Sinohydro Corporation Limited (Singapore Branch), garnishee) [2022] SGDC 258. Pursuant to the Learned DR’s decision, Sinohydro paid the sum of $12,948.21 to SECC.

The issue of what was the remaining debt due or accruing due (if any) from Sinohydro to Helios at the time of service of the PGO was tried before me on 18 April, 24, 25 and 30 May 2023. After considering the evidence and submissions of the parties, I find that there was no remaining debt due or accruing due from Sinohydro to Helios at the time the PGO was served on Sinohydro. These are the reasons for my decision.

Background facts

The critical background facts may be summarised as follows.

In December 2021, Sinohydro issued an interim certificate for the sum of $508,304.57 (i.e. the Progress Payment) in favour of Helios for the original contract works. However, Sinohydro refused to release the Progress Payment to Helios, taking the position in its letter to Helios dated 20 December 2021 that:¹ the progress payment arrangement was based on the normal and smooth implementation of the works for the Project. However, Helios had ceased on-site works from 3 December 2021, which necessitated the engagement of a third party to undertake Helios’ uncompleted work; it was deeply concerned about the complaints it had received from Helios’ subcontractors that they had received little payment from Helios over the past two months; and it would therefore withhold payment of the Progress Payment until “the third party completes the work and confirm[ed] the actual cost [of the work]” and Helios “provide[d] clear evidence of payment to [Helios’] subcontractors”.

Sinohydro also did not approve Helios’ claim for variation works in the sum of $532,000.²

Sinohydro’s refusal to release the Progress Payment rendered Helios unable to make progress payments to its own subcontractors, which included Nexon and SECC. At Helios’ suggestion,³ Nexon reached out to Sinohydro by letters dated 24 December 2021 and 13 January 2022, requesting that Sinohydro make direct payment to Nexon of the outstanding sums due and owing from Helios to Nexon.⁴ When Nexon did not receive any response from Sinohydro, it then wrote to the LTA on 25 January 2022 to seek its assistance in relation to Helios’ failure to pay Nexon.⁵ This led to a meeting between Sinohydro, Helios, Nexon and the LTA on 27 January 2022, during which Sinohydro agreed to take the lead to resolve the non-payment of Nexon’s claim for work done in the Project amicably and expeditiously. Shortly after that meeting, the LTA requested Sinohydro to promptly provide an update on the actions that would be taken to resolve the issue by 4 February 2022.⁶

Concurrently, in January 2022, Helios had various discussions with Sinohydro in which it attempted to resolve Sinohydro’s refusal to make payment to Helios, so that Helios could pay its subcontractors. One of the options raised in these discussions was for an agreement to be negotiated for Sinohydro to make direct payment on Helios’ behalf to the latter’s subcontractors, out of the sums Sinohydro owed to Helios.⁷

On 3 February 2022, at Sinohydro’s invitation, Helios and Nexon attended a virtual meeting with Sinohydro to discuss a potential tripartite agreement between the parties pursuant to which Sinohydro would make direct payment on Helios’ behalf to Nexon (the “3 Feb Meeting”). At the meeting: Sinohydro was represented by its Authorised Representative Mr Li Yi, its project director Mr Wang Hao (also known as Vincent), Mr Li Qie (also known as Tom), and Ms Andrea Zhao; Helios was represented by its directors, Mr Ng Chun Ee (Huang Jun Yi) (“Mr Ng”, also known as Vince) and Dato Ken Ong (“Dato Ong”); and Nexon’s representatives included its administrative director Ms Ho Zie Mei (“Ms May Ho”) and its director and project manager Mr Loong Mun Seng (“Mr Loong”).⁸

On 9 February 2022, another virtual meeting took place between Sinohydro, Helios and Nexon (the “9 Feb Meeting”). The meeting was attended by Sinohydro’s Mr Wang Hao and Mr Li Qie, Helios’ country director and project director Mr Dave Guo (“Mr Guo”), and several of Nexon’s representatives (including Ms May Ho and Mr Loong). The parties made further progress in their discussions, with Mr Wang Hao informing the other attendees that Sinohydro would prepare a written tripartite agreement and provide the agreement by 11 February 2022.⁹

On 11 February 2022, Mr Li Qie circulated, by email, a draft tripartite agreement (the “11 Feb Draft”), seeking Helios’ and Nexon’s execution of the agreement and insertion of their bank account details in the agreement.¹⁰

In or around mid-February 2022, Helios and Nexon proposed various amendments to the 11 Feb Draft. Helios (through Mr Guo) proposed to insert a term that “all the VO will be back to back”,¹¹ while Nexon (through Ms May Ho) circulated an revised version of the 11 Feb Draft on 15 February 2023.¹² All these proposals were rejected by Sinohydro:¹³ Mr Li Qie circulated, by email, the final draft tripartite agreement (the “Written Agreement”) on 17 February 2022 for Helios’ and Nexon’s execution.¹⁴

The Written Agreement contained four main clauses – Items A, B, C and D – which set out the following salient terms: “The actual outstanding works of the [Project] [are] as following: [sets out a table listing nine items of outstanding works and the estimated cost of each item, which add up to the 239K Sum]” (see Item A). “Helios promised to complete the outstanding works described in Item A [the “Outstanding Works”] within two months” (see Item C). The 239K Sum “will be temporary reserved as estimated on-site implementation cost and will be released after Helios has completed all outstanding works. Hence, the current total available amount is SGD$269,053.64 (incl. GST)” (see Item A). I will refer to this provision as the “239K Clause”. “[T]he final debt amount [owed by Helios to Nexon] was $412,105.23 [the “412K Sum”] … in order to expedite the debt payment of Helios and Nexon, the three parties have reached the following agreement” (see Item B): “Helios entrust Sinohydro to transfer [the 256K Sum] in Item A to Nexon directly and the corresponding fee will be deducted from Helios’ contractual rights” (see Item B). I will refer to this provision as the “256K Clause”. “Helios entrust Sinohydro to transfer the amount of SGD$56,000 (incl. GST) [the “56K Sum”] to Nexon directly after completed all outstanding works, the corresponding fee will be deducted from Helios’ contractual rights” (see Item C). I will refer to this provision as the “56K Clause”. “Helios entrust Sinohydro to transfer the amount of SGD$100,000 (incl. GST) [the “100K Sum”] from retention between Sinohydro and Helios to Nexon directly after Project DLP (2 March 2023), the corresponding fee will be deducted from Helios’ contractual rights” (see Item D). I will refer to this provision as the “100K Clause”. The “defects liability period of the [Project] corresponding to the scope...