JFC Builders Pte Ltd v Permasteelisa Pacific Holdings Ltd [2016] SGHC 247

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):

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

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:

(a) 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.

(b) 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.

(c) 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:

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:

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:

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:

I pause to note that there is some difference in s 105(1)(b) of the UK Act as set out in Gibson Lea, on the one hand, and in Savoye, on the other. However, this difference was immaterial.

Akenhead J considered Gibson Lea but declined to follow the approach taken by Judge Seymour QC. He held (at [24]) as follows:

After an extensive survey of the authorities relating to fixtures and the ownership of buildings and the like, Akenhead J summed up (at [36]) the “law and practice” in a number of points, including the following:

On the facts, Akenhead J concluded (at [44]) that the conveyor system was to and did form part of the land for the purposes of s 105 of the UK Act.

The second case relied on by the defendant was J & D Rigging Pty Ltd v Agripower Australia Ltd & Ors [2013] QCA 406 (“Agripower”). That case concerned a large treatment and storage plant. The owner of the plant and equipment sold it to the respondent, who engaged the appellant to dismantle the plant and to remove it from the site. When the respondent did not pay the appellant after being served with a payment claim, the matter went to an adjudication, which was decided in favour of the appellant. The respondent brought proceedings to have the adjudication decision declared void. It alleged that the contract in question was not for “construction work” within the meaning of s 10 of the Queensland Building and Construction Industry Payments Act 2004 (Qld) (“the Queensland Act”). Under the Queensland Act, “construction work” is defined to include “dismantling of buildings or structures, whether permanent or not, forming, … part of land”. The “substantial issue” in that case was whether the phrase “forming, or to form, part of land” in s 10(1) of the Queensland Act should be interpreted in the context of that statute by reference to rules about fixtures in the law of real property.

Applegarth J, with whom Holmes JA and Boddice J agreed, observed (at [18]) that the issue should be resolved having regard to the subject matter of the Queensland Act and the context in which the words appeared. With regard to the former, he held (at [19]) that the Queensland Act was concerned with interim payments for the carrying out of construction work and it was not apparent why common law rules about the ownership of property should be imported into s 10 of the Queensland Act. He said (at [21]) that he was not persuaded that rules about the ownership of fixtures should be adopted in interpreting s 10 of the Queensland Act. As for the latter, he held (at [27]) that the immediate context of the words suggested that common law rules were not imported. He further held (at [28]) that the context of the statute as a whole also did not suggest otherwise. He concluded (at [57]) that the words of s 10 of the Queensland Act did not call for an inquiry into whether the plant formed part of land according to common law rules about the ownership of fixtures, and that the requirements of the law of real property about ownership of things affixed to land were not imported into s 10 of the Queensland Act. Instead, the degree of annexation would be relevant to the issue of whether or not a thing formed part of land.

On the facts, Applegarth J found (at [60]) that the contract between the appellant and the respondent was a contract, agreement or other arrangement by which the appellant undertook to carry out “construction work” within the meaning of s 10 of the Queensland Act.

My decision

As mentioned earlier, the defendant relied on limbs (c) and (d)(v) of the definition of “construction work” in s 3(1) of the Act. These provide as follows:

It was clear to me that in the present context, limb (d)(v) had to be read with limb (c). Thus, the crux of the issue was the meaning to be ascribed to the phrase “fittings that form, or are to form, part of the land” in limb (c).

The purpose of the Act

I was of the view that the meaning to be ascribed to the phrase “fittings that form, or are to form, part of the land” in limb (c) had to be determined with reference to the purpose of the Act. In this regard, s 9A(1) of the Interpretation Act (Cap 1, 2002 Rev Ed) states as follows:

It is uncontroversial that the purpose of the Act is to preserve cashflow in the construction industry, so that construction projects are not disrupted or delayed. In his speech at the second reading of the Building and Construction Industry Security of Payment Bill 2004 (Bill 54 of 2004), then Minister of State for National Development Mr Cedric Foo Chee Keng said as follows (Singapore Parliamentary Debates, Official Report (16 November 2004) vol 78 at cols 1119–1120):

This same point was recognised by Court of Appeal in W Y Steel Construction Pte Ltd v Osko Pte Ltd [2013] 3 SLR 380 when it observed (at [18]) that:

The present case

Having regard to the purpose of the Act, I was of the view that the phrase “fittings that form, or are to form, part of the land” in limb (c) clearly includes furniture that is attached to, and that is intended to be permanently attached to, the building. First of all, there is no reason to exclude such furniture from the ambit of this phrase. Secondly, it should be noted that limb (c) expressly includes the installation of “systems of heating, lighting, air-conditioning, ventilation, power supply, drainage, sanitation, water supply or fire protection, and security or communications systems”. Contractors undertaking the installation of furniture that is attached to, and that is intended to be permanently attached to, the building are as engaged on the site as those undertaking the installation of these fittings and cash flow is equally important to all of them. There is no reason to treat the installation of such furniture differently.

As stated earlier, the defendant’s works included the installation of furniture that was attached to, and that was intended to be permanently attached to, the building (see [9] above). Consequently, they fell within limb (c).

The defendant’s works also included the fabrication of furniture that was attached to, and that was intended to be permanently attached to, the building (see [9] above). Therefore, they also fell within limb (d). Such fabrication doubtlessly “form[ed] an integral part of, [was] preparatory to, or [was] for rendering complete” the installation of such furniture. However, it was less clear if the defendant’s works fell within limb (d)(v). Although there may be some overlap between the two concepts, the fabrication of furniture (which is what is mentioned on the face of VO 1 and VO 2) is obviously not synonymous with the prefabrication of the same (which is what the defendant submitted its works included (see [8(a)] and [15] above), and which is also what is required under limb (d)(v)). Nonetheless, this point was moot as I was satisfied that the defendant’s works, to the extent that they included fabrication, fell squarely within limb (d) even without reference to limb (d)(v).

As regards the English and Australian authorities cited by counsel, I agreed with Akenhead J in Savoye and Applegarth J in Agripower that the common law on fixtures is not imported into the definition of “construction work” in s 3(1) of the Act. First, the phrase “fittings that form, or are to form, part of the land” in limb (c) does not unambiguously import the common law on fixtures. As Akenhead J alluded to in Savoye, Parliament did not use the word “fixtures” even though it could have done so (see [17] above). Second, neither does the purpose of the Act suggest that the common law on fixtures should be imported. As Applegarth J observed in Agripower, the common law on fixtures has to do with ownership of property (see [21] above). Thus, whether something is a fixture in law is an inquiry that is, with respect to Judge Seymour QC in Gibson Lea, quite beside the point.

The ambit of limb (c) beyond the present case

I must emphasise, however, that my decision in this case is not intended to lay down a rule that the furniture installed or to be installed must be furniture that is attached to, and that is intended to be permanently attached to, the building before it can come within the ambit of limb (c). While it was clear to me that the installation of such furniture by the defendant fell on the right side of the metaphorical line, this does not mean that the installation of anything else will necessarily fall on the wrong side of the same. Where exactly the line should be drawn (if indeed a line should be drawn) is a question best answered by a future court which has the benefit of full arguments on the matter.

That said, I note, purely by way of observation, that the delivery of furniture not attached to the building would probably fall on the wrong side of the line. It would strain the statutory language to consider chairs or coffee tables as “fittings that form, or are to form, part of the land”. Moreover, any disruption or delay from contractor failure would not be as serious because it would not involve any work to detach the furniture from the building. As to whether something that has a less permanent attachment to the building (eg, a refrigerator with an ice maker which requires a water pipe to be connected to it) falls within the ambit of limb (c), this is something that will have to be determined by a future court.

Conclusion and consequential orders

In addition to what has already been set out, the plaintiff had, in its written submissions, also complained about the defendant’s alleged delay in lodging its claim under the Act. However, it was clear to me that the plaintiff was not relying on this as a separate ground to set aside the AD. In light of this, as well as my findings above, the plaintiff’s sole ground for setting aside the AD was not established and it was therefore also unnecessary for me to consider the defendant’s other grounds for opposing the application, which were set out in the defendant’s written submissions.