In Chuang Long Engineering Pte Ltd v Nan Huat Aluminium & Glass Pte Ltd [2019] SGHC 55, the issue of the proper interpretation of Section 7(2)(c) SOPA, i.e. whether one is entitled to claim for materials which had not been delivered or installed, was raised before the courts for the first time.
The respondent subcontractor filed a payment claim for unpaid works, including the value of materials which, while fabricated by the respondent for the purposes of the project, had not been delivered nor installed by the respondent ("the uninstalled materials"). During adjudication, it was determined that the respondent was entitled to the claim for the uninstalled materials. In arriving at the determination, the adjudicator relied on s7(2)(c) SOPA which provided for the valuation of "materials or components that are to form part of any building, structure or works arising from the construction work ... that ... on payment, will become the property of the party for whom the construction work is being carried out".
The applicant argued that the value of the materials cannot be claimed unless property in the goods had passed, that is, only materials that had been incorporated in or affixed to a building. However, this runs contrary to s7(2)(c) SOPA which states that valuation of materials is possible as long as they are materials that will, "on payment, become the property" of the payor.
Notably, the SGHC held that under s7(2)(c) SOPA, "materials could be subject to valuation even if they have neither been delivered nor affixed to the building/structure, as long as they were fabricated for the construction contract". That said, it ought to be noted that the principles of valuation under s7(2) SOPA only operate when the contract contains no terms that govern the valuation of materials.
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