Ang Cheng Hock JLJH Construction & Engineering Company Pte Ltd v Chan Bee Cheng Gracie

• Jurisdiction: Singapore
• Judge: Ang Cheng Hock J
• Judgment Date: 20 September 2022
• Docket Number: Originating Summons No 784 of 2021 (Summons No 4487 of 2021)
• Court: High Court (Singapore)

LJH Construction & Engineering Co Pte Ltd

and

Chan Bee Cheng Gracie

[2022] SGHC 230

Ang Cheng Hock J

Originating Summons No 784 of 2021 (Summons No 4487 of 2021)

General Division of the High Court

Building and Construction Law — Dispute resolution — Setting aside adjudication determination on ground of adjudicator's failure to recognise patent errors — Absence of evidence of completion or value of construction works apart from quotations — Presence of multiple inconsistent quotations — Whether adjudicator breached duty to adjudicate in failing to recognise patent errors — Sections 17(2) and 17(4) Building and Construction Industry Security of Payment Act 2004 (2020 Rev Ed)

Building and Construction Law — Dispute resolution — Setting aside adjudication determination on ground of breach of natural justice — Adjudicator failing to afford respondent opportunity to respond to new material raised by claimant — Adjudicator omitting to request for extension of time to issue determination — Whether adjudicator breached fair hearing rule — Adjudicator failing to invite respondent to respond to matters raised by claimant

Building and Construction Law — Dispute resolution — Setting aside adjudication determination on ground of fraud — Claimant seeking payment for works done by another contractor which had been paid for by respondent — Claimant understating amount previously paid by respondent — Whether adjudication determination tainted by fraud

Building and Construction Law — Dispute resolution — Setting aside adjudication determination on ground of invalid service of payment claim — Claimant sending payment claim to respondent's e-mail address which respondent did not use or regularly check — Whether payment claim sent by e-mail validly served on respondent — Sections 37(1), 37(2) and 37(3) Building and Construction Industry Security of Payment Act 2004 (2020 Rev Ed)

Building and Construction Law — Dispute resolution — Severance of adjudication determination — Whether adjudication determination tainted by fraud severable — Whether adjudication determination affected by adjudicator's failure to recognise patent errors severable

Building and Construction Law — Statutes and regulations — Relationship between s 29B(4) Building Control Act 1989 (2020 Rev Ed) and Building and Construction Industry Security of Payment Act 2004 (2020 Rev Ed) — Whether person who had contravened s 29B(2)(a) Building Control Act 1989 prohibited by s 29B(4) Building Control Act 1989 from enforcing adjudication determination under s 27(1) Building and Construction Industry Security of Payment Act 2004 — Sections 29B(2)(a) and 29B(4) Building Control Act 1989 (2020 Rev Ed) — Section 27(1) Building and Construction Industry Security of Payment Act 2004 (2020 Rev Ed)

Held, allowing the application:

Whether the service of PC 21 by e-mail was valid

(1) Where a payment claim was not validly or properly served on a respondent, the appointment of an adjudicator pursuant to an adjudication application made on the basis of such a payment claim would be invalid, and the resulting adjudication determination would be null and void. However, where a payment claim was intended as a payment claim and in fact reached the respondent through service, but the mode of service did not comply with the agreed or applicable mode of service, the validity of the adjudicator's appointment would not be affected: at [36] and [38].

(2) In view of the strict timelines and serious consequences imposed by the SOPA in relation to payment claims, it was important that payment claims were served in a manner which effectively and expeditiously notified the addressee of the claim. Accordingly, service of a payment claim by e-mail would only be valid if it was likely to be effective in bringing the claim to the attention of the addressee in a reasonably prompt manner, and the sender bore the onus of proving this. To that end, where a sender wished to serve a payment claim on the last e-mail address known to the sender under s 37(3)(b) of the SOPA, the sender had to have some objectively ascertainable basis to believe that the last known e-mail address was one which the addressee used, or at least checked, regularly. In this regard, it was insufficient for the sender to have some subjective belief that the addressee used or checked a particular e-mail address regularly: at [46] and [47].

(3) The sending of PC 21 to the defendant through her e-mail address, gw.bc@hotmail.com, did not constitute proper and valid service of PC 21 as it was unlikely to have been effective in bringing PC 21 to her attention in a reasonably prompt manner. The plaintiff had no objectively ascertainable basis to believe that the defendant used or regularly checked that e-mail address. It followed that the appointment of the Adjudicator on the basis of PC 21 and consequently, the Adjudication Determination, were invalid and the Adjudication Determination was therefore set aside: at [55], [61] and [63].

Whether the Adjudication Determination was tainted by fraud

(4) For an adjudication determination to be set aside on the ground of fraud, the party seeking the setting aside of the determination (the “innocent party”) had to first establish: (a) the facts relied on by the adjudicator in arriving at the adjudication determination; (b) that those facts were false; (c) that the party making the payment claim either knew or ought reasonably to have known them to be false; and (d) that the innocent party did not subjectively know or have actual knowledge of the true position throughout the adjudication proceedings. Second, the innocent party had to establish that the facts in question were material to the adjudication determination: at [67] and [69].

(5) The plaintiff had falsely claimed in PC 21 that it was entitled to payment for various items of Variation Works that had been performed by Yong Chow for which payment had been made by the defendant to Yong Chow directly. The plaintiff knew, or ought reasonably to have known, that it was not entitled to payment for the Variation Works done by Yong Chow in the absence of any evidence that the plaintiff had paid or was liable to pay Yong Chow for those works, or that the defendant had failed to pay Yong Chow: at [79], [81], [82] and [84].

(6) The plaintiff had falsely understated in PC 21 the amount previously paid by the defendant to Dong Cheng and the plaintiff by $277,627.40. The evidence showed that the plaintiff knew, or ought reasonably to have known, that the defendant had made various payments to Dong Cheng and the plaintiff which the plaintiff failed to account for in PC 21: at [100] and [103] to [106].

(7) As the defendant was only informed of the adjudication proceedings on 15 June 2021 and appointed solicitors on 16 June 2021, there was insufficient time for her and her then-solicitors to review the plaintiff's Adjudication Application and the supporting documents. The defendant's submission that she did not have subjective or actual knowledge of the true position throughout the adjudication proceedings was thus accepted. Moreover, the false representations made by the plaintiff were material to the Adjudicator's decision as the outcome of the Adjudication Determination was likely to be different had the Adjudicator known the truth. Accordingly, the Adjudication Determination was liable to be set aside for being tainted by fraud: at [85], [86], [106], [108] and [127].

Whether the Adjudication Determination was affected by the Adjudicator's failure to recognise patent errors

(8) Sections 17(2) and 17(4) of the SOPA collectively gave rise to an adjudicator's general and independent duty to adjudicate the payment claim dispute before him, which was discharged by the adjudicator satisfying himself as to whether the claimant had established a prima facie case that the construction work forming the subject of the payment claim had been completed and, if so, what the value of that work was. The failure of an adjudicator to recognise patent errors (ie, errors that were obvious, manifest or otherwise easily recognisable from the material before him as opposed to errors committed by an adjudicator) would lead to the conclusion that the adjudicator had breached his duty to adjudicate: at [132] and [134].

(9) Mere quotations unsubstantiated by any other documentary proof could not constitute satisfactory evidence of construction works being completed. Save for one item of Variation Works, the Adjudicator had concluded that the Variation Works were completed (and the value of those works) solely based on various quotations and/or letters containing price quotes, which had not even been accepted by the plaintiff. While the plaintiff's claim in respect of one item of Variation Works was supported by a progress claim from Dong Cheng, that progress claim did not contain any evidence demonstrating the completion of the works claimed for and was not even signed by Dong Cheng. The absence of any evidence that the Variation Works were completed constituted a patent error: at [142] to [144] and [149].

(10) The presence of multiple inconsistent quotations for particular items of Variation Works in PC 21 constituted patent errors as they contradicted the claimed amount: at [151].

(11) Although the plaintiff purported to deduct $929,777.95 from its claim in PC 21 on account of both the sums previously paid by the defendant and the Retention Sum of $102,997, that figure of $929,777.95 did not in fact include the Retention Sum, and the total amount claimed by the plaintiff in PC 21 included the Retention Sum. This constituted a patent error: at [158], [160] and [161].

(12) The Adjudicator's failure to recognise these patent errors in rendering his Adjudication Determination meant that the Adjudicator had breached his duty to adjudicate under ss 17(2) and 17(4) of the SOPA, and the Adjudication Determination was thus liable to be set aside: at [166].

Whether the...