Ang Cheng Guan Construction Pte Ltd v Corporate Residence Pte Ltd

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 24 January 2017
• Neutral Citation: [2017] SGHC 9
• Plaintiff Counsel: Edwin Lee, Yong Boon On, Jasmine Chan and Amanda Koh (Eldan Law LLP)
• Date: 24 January 2017
• Docket Number: Originating Summons No 774 of 2016
• Hearing Date: 28 October 2016,20 September 2016
• Subject Matter: Adjudication,Building and construction law,Dispute resolution
• Year: 2017
• Defendant Counsel: Chuah Chee Kian Christopher, Tan Li Hsiang Pamela, Chen Hong Lynn and Jin Shan (WongPartnership LLP)
• Court: High Court (Singapore)
• Citation: [2017] SGHC 9
• Published date: 19 April 2017

Lee Seiu Kin J:

In this originating summons, the applicant, Ang Cheng Guan Construction Pte Ltd (“ACG”), seeks to set aside the adjudication review determination dated 13 July 2016 (“the Adjudication Review Determination”) in adjudication review application no SOP/ARA 03 of 2016 (“the Adjudication Review Application”). After hearing submissions from counsel for the parties on 20 September and 28 October 2016, I reserved judgment. I now give my decision.

Background

The respondent, Corporate Residence Pte Ltd (“CR”), had engaged ACG to carry out works in a construction project. On 18 March 2016, ACG took out adjudication application no SOP/AA 102 of 2016 (“the Adjudication Application”) in relation to a payment claim dated 22 February 2016 (“the Payment Claim”). Five issues (“the AA Issues”) were determined by the adjudicator (“the Adjudicator”) in the resulting adjudication (“the Adjudication”): Whether the Adjudication Application was invalid in that the Payment Claim was served out of time (“the 1st AA Issue”). Whether the first and second payment responses provided by CR in response to the Payment Claim (“the Payment Responses”) were valid (“the 2nd AA Issue”). Whether ACG was entitled to extension of time (“EOT”) in excess of what was granted by the architect (“the 3rd AA Issue”). Whether the delay certificate dated 27 November 2015 issued by the architect against ACG was invalid and of no effect and therefore liquidated damages were wrongfully imposed (“the 4th AA Issue”). Whether any, and if so what, amounts were payable to ACG for work done and for variations/prolongation claims (“the 5th AA Issue”).

In relation to the 1st AA Issue, the Adjudicator found in favour of ACG and determined that the Payment Claim was not served out of time. With respect to the 2nd AA Issue, the Adjudicator found that the Payment Responses were valid. On the 3rd AA Issue, ACG had claimed that it was entitled to EOT for four delay events characterised as: (a) “Piles Removal Delay”; (b) “Piles Re-Casting Delay”; (c) “Drawings Delay”; and (d) “ERSS Delay”. The Adjudicator determined that ACG was entitled to an additional EOT of 133 days beyond what was granted by the architect for the first delay event (ie, “Piles Removal Delay”), but did not award any additional EOT for the remaining three delay events. As for the 4th AA Issue, the Adjudicator determined that he did not have the power to overturn the delay certificate and to declare it invalid. However, he also found that in light of the additional EOT he had granted, CR was not entitled to impose liquidated damages for late completion. With regard to the 5th AA Issue, the Adjudicator found that ACG was entitled to certain amounts under various heads.

The net result was that CR was found liable to pay ACG the sum of $467,428.69 (“the Adjudicated Amount”). The Adjudicator also awarded interest and ordered that CR bear 70% of the costs of the Adjudication.

On 19 May 2016, CR lodged the Adjudication Review Application pursuant to s 18(2) of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”). In compliance with s 18(3) of the Act, CR paid the Adjudicated Amount to ACG prior to the lodgement. A review adjudicator (“the RA”) was appointed by the Singapore Mediation Centre.

At the adjudication review (“the Adjudication Review”), CR sought a review of two of the Adjudicator’s determinations: In relation to the 3rd AA Issue, that ACG was entitled to EOT of 133 days in addition to the EOT granted by the Architect. In relation to the 4th AA Issue, that CR was not entitled to impose liquidated damages.

In connection with the review of these two determinations, CR framed the following issues for determination by the RA (“CR’s Issues”): Whether the Adjudicator had erred in determining that the “Contract Variation Notice” constituted a valid and/or proper notice in compliance with cl 23(2) of the Conditions of Contract (“CR’s 1st Issue”). Whether the Adjudicator had erred in determining that ACG was entitled to 133 days of EOT for “Piles Removal Delay” (“CR’s 2nd Issue”).

In respect of CR’s 1st Issue, the RA found that the “Contract Variation Notice” did not constitute a valid and/or proper notice which complied with cl 23(2) of the Conditions of Contract. On CR’s 2nd Issue, the RA found that the Adjudicator was wrong to have found that ACG was entitled to an additional EOT of 133 days. In consequence of this finding, the RA held that CR had validly imposed liquidated damages on ACG for delayed completion.

At the same time, ACG was also dissatisfied with the Adjudicator’s determinations in relation to some of the AA Issues. At the Adjudication Review, ACG submitted the following issues for the RA’s determination (“ACG’s Issues”): Whether the Adjudicator should have granted further EOT for “Piles Re-Casting Delay” and “Drawings Delay”. Whether the Adjudicator should have determined that time had been set at large (“ACG’s 2nd Issue”). Whether the Adjudicator should have allowed ACG’s claim for: (a) all preliminaries expended during the original 24 months; (b) all additional preliminaries and/or prolongation costs incurred as a result of extensive delays due to CR; and (c) all idling costs incurred by ACG.

However, the RA formed the view that his jurisdiction was limited to the determination of the issues raised by CR in the Adjudication Review (ie, CR’s Issues). It is principally in respect of this view taken by the RA that ACG has taken out the present originating summons. The RA further determined that: Subject to certain observations on ACG’s 2nd Issue, ACG’s Issues were completely separate and distinct from CR’s 1st Issue and CR’s 2nd Issue and were not inextricably linked to either CR’s 1st Issue or CR’s 2nd Issue. In relation to ACG’s 2nd Issue: The issue of whether or not the Adjudicator should have determined that time had been set at large by reason of “Piles Re-Casting Delay”, and/or “Drawings Delay”, and/or “ERSS Delay” was an issue which was completely separate and distinct from CR’s 1st Issue and CR’s 2nd Issue and was not inextricably linked to CR’s 1st Issue or CR’s 2nd Issue. The issue of whether or not the Adjudicator should have determined that time had been set at large by reason of “Piles Removal Delay” was inextricably linked to CR’s 1st Issue and CR’s 2nd Issue.

Scope of an adjudication review

This is the first time that the question of the scope of an adjudication review has come up before the High Court. As noted in SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 (“SEF Construction”) (at [24]), the adjudication review procedure is unique to Singapore and is not found in other jurisdictions with similar regimes to expedite payments in the construction industry. As such, no guidance is available from precedent cases whether from Singapore or abroad.

At the heart of the matter is the question: what is the scope of an adjudication review? ACG submitted that a review adjudicator is entitled to review the entire adjudication determination (“the Broad Interpretation”). On the other hand, CR submitted that an adjudication review is restricted to only the issues raised by the respondent (“the Narrow Interpretation”) because of the following factors: Under the Act, only the respondent in an adjudication determination is entitled to apply for an adjudication review. The adjudication review process is analogous to an appeal in court proceedings, where it is well established that the respondent is not permitted to raise any matter on appeal unless he has filed a cross-appeal.

It is convenient at this point to dispose of the second factor submitted by CR. The adjudication regime is a creature of the Act, which establishes an entirely new regime for the purpose of providing a fast but interim means for resolving payment disputes in the construction industry. It is therefore incorrect to draw an analogy to appeals in court proceedings which are not only governed by different legislation but, more importantly, provide for a final decision arrived at after a comprehensive process that ensures that all relevant facts and legal arguments are fully ventilated. These are two entirely different processes. The correct approach to resolving the question in the present case is to consider the provisions in the Act and the Building and Construction Industry Security of Payment Regulations (Cap 30B, Rg 1, 2006 Rev Ed) (“the Regulations”), secondary materials such as Parliamentary debates, as well as the policy behind the Act.

With this in mind, I turn to consider the provisions in the Act and the Regulations which relate to adjudication review. They are found in ss 18 and 19 of the Act and reg 10 of the Regulations.

Sections 18 and 19 of the Act provide as follows:

Adjudication review applications

18.—(1) This section shall apply to a respondent who is a party to an adjudication if the adjudicated amount exceeds the relevant response amount by the prescribed amount or more.

(2) Subject to subsection (3), where a respondent to whom this section applies is aggrieved by the determination of the adjudicator, the respondent may, within 7 days after being served the adjudication determination, lodge an application for the review of the determination with the authorised nominating body with which the application for the adjudication had been lodged under section 13.

(3) Where the respondent is required in consequence of the adjudication determination to pay an adjudicated amount to the claimant, the respondent shall not lodge any application for the review of the determination unless he has paid the adjudicated amount to the claimant.

(4) An adjudication review application — (a) shall be made in writing addressed to the authorised nominating body requesting it to appoint one or more review adjudicators to determine the application;...