Benlen Pte Ltd v Authentic Builder Pte Ltd

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 19 March 2018
• Neutral Citation: [2018] SGHC 61
• Court: High Court (Singapore)
• Hearing Date: 23 October 2017
• Docket Number: Originating Summons No 1002 of 2017 (Summons No 4475 of 2017)
• Plaintiff Counsel: Lazarus Nicholas Philip and Toh Yee Lin Jocelyn (Justicius Law Corporation)
• Defendant Counsel: Ong Kok Seng Patrick and Chong Yi Mei (Patrick Ong Law LLC)
• Subject Matter: Building and Construction Law,Dispute resolution,Adjudication,Premature payment claim,Section 10(2) Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed),Setting aside of adjudication determination,Waiver,Contract,Variation
• Published date: 23 March 2018

Chan Seng Onn J: Introduction

Summons No 4475 of 2017 is an application taken out by Authentic Builder Pte Ltd (“Authentic”), the respondent in Originating Summons No 1002 of 2017 (“OS 1002/2017”), to set aside (“the Setting Aside Application”): the adjudication determination dated 23 August 2017 (“the Adjudication Determination”) in Adjudication Application No 211 of 2017 (“the Adjudication Application”); and the order of court dated 5 September 2017 (“the Order of Court”) obtained by Benlen Pte Ltd (“Benlen”), the applicant in OS 1002/2017, granting Benlen leave to enforce the Adjudication Determination.

The main controversies that lie at the heart of the Setting Aside Application are twofold. First, there is the question of the manner in which the obligation under s 10(2) of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the SOPA”) to serve a payment claim (also known as a progress claim) in accordance with the time specified in a contract may be met by parties seeking to rely on the adjudication mechanism under the SOPA to resolve their payment disputes. Second, there is also the question of whether any objection to a defect in the fulfilment of this obligation has been waived by the respondent to the claim or, put another way, whether the respondent is estopped from raising any objection to the validity of the service of the payment claim, having not raised such objection earlier.

Having heard the submissions of the parties, I reserved judgment. I now set out my decision and the accompanying reasons.

Background

This dispute arose out of a contract for the construction of a condominium development at Faber Walk. Authentic was the main contractor engaged by the developer of the project, World Class Land Pte Ltd, while Benlen was engaged by Authentic as a subcontractor for the project. Specifically, Authentic had engaged Benlen, pursuant to a letter of award dated 2 June 2015, to supply, install and maintain the mechanical ventilation and air-conditioning system for the project (“the Subcontract”).¹

The two most pertinent clauses under the Subcontract are cll 8 and 14. Clause 8 states as follows:² 8. PAYMENT 8.1 The Sub-Contractor shall submit progress claims to the Contractor at the times set out in Appendix 1 in the form directed by the Contractor. 8.2 The Contractor shall issue an Interim Payment Certificate certifying the value of each progress claim to the Sub-Contractor within the time limit set out in Appendix 1. 8.3 The Interim Payment Certificate shall indicate the amounts accepted for payment by the Contractor, less retention monies to be deducted at the rate set out in Appendix 1 and any sums to be set off by the Contractor. The aggregate retention monies to be deducted shall not exceed the maximum amount stipulated in Appendix 1. 8.4 The Contractor shall pay to the Sub-Contractor the sum certified in the Interim Payment Certificate within the time limit set out in Appendix 1. 8.5 The retention monies shall be released at such times as set out in Appendix 1.

[emphasis added in bold italics]

Appendix 1 in turn provides that the time for submitting progress claims pursuant to cl 8.1 shall be the “25th day of [every] Calendar Month”, while the time limit for the issuance of an interim payment certificate pursuant to cl 8.2 shall be 21 days.³ As for cl 14, it states as follows:⁴ 14. ENTIRE AGREEMENT 14.1 This Sub-Contract sets out the entire agreement of the parties and supersedes all prior agreements, warranties, representations, and undertakings, whether made verbally or in writing. 14.2 This Sub-Contract shall be varied or modified only with prior written consent from both parties.

[emphasis added in bold italics]

On 30 December 2015, Benlen served on Authentic Payment Claim 1, which was dated 12 November 2015.⁵

On 23 September 2016, Ms Shirley Foong (“Ms Foong”), a former employee of Authentic, sent the following email, titled “Faber Walk - Progress Claim Submission 23-25th Every Month (REMINDER)” to all 12 of its subcontractors, including Benlen (“the 23 September Email”):⁶

Dear All,

Gentle Reminder that kindly submit your Original Progress Claim to our Office 23-25th Every Month attached with proper breakdown and drawings duly certified work done only by my Project Manager Mr William Lim / Project Engineer Mr Guhul / Architectural Coordinator Ms Karen.

Early or Late Submission will not be accept[ed]. Your Cooperative is prompt appreciated [sic].

Thank you.

Best regards,

Shirley Foong

Senior QS

[emphasis in original removed; emphasis added in bold italics]

Subsequently, Benlen went on to serve the following payment claims on the following dates:⁷ Payment Claim 9, dated 23 September 2016, on 28 September 2016; Payment Claim 10, dated 22 October 2016, on 25 October 2016; Payment Claim 11, dated 22 November 2016, on 23 November 2016; Payment Claim 12, dated 23 December 2016, on 29 December 2016; Payment Claim 13, dated 23 January 2017, on 25 January 2017; Payment Claim 14, dated 23 February 2017, on 23 February 2017; Payment Claim 15, dated 22 March 2017, on 29 March 2017; and Payment Claim 16, dated 22 April 2017, on 24 April 2017.

On 23 June 2017, Benlen served on Authentic Payment Claim 19 (“PC 19”), which was dated 23 June 2017, for “works done during the period of August 2015 to March 2017” for the sum of S$262,262.35 (including GST).⁸

On 10 July 2017, Authentic served on Benlen its payment response to PC 19 for the sum of S$61,048.85. In this payment response, Authentic certified that the entire work done of S$1.3m had been completed, acknowledged that there were retention sums and previous certified payment, but disputed PC 19 by way of a cross-claim for liquidated damages for S$228,000. Authentic’s payment response did not mention any issue in relation to the date of service of PC 19.⁹

On 25 July 2017, Benlen served on Authentic Payment Claim 20.¹⁰

Procedural history

On 27 July 2017, Benlen decided to dispute Authentic’s payment response to PC 19, and thus commenced the Adjudication Application by serving its notice of intention to apply for adjudication on Authentic.¹¹ Immediately thereafter, Benlen lodged the Adjudication Application with the Singapore Mediation Centre (“SMC”).¹² In its written submissions accompanying the Adjudication Application, Benlen expressly referred to the fact that PC 19 was served on 23 June 2017 even though cl 8.1 read with Appendix 1 of the Subcontract provides that payment claims should be submitted on the 25th of every month, and explained that Authentic had, by the 23 September Email, varied the date on which payment claims could be served to between the 23rd and 25th of every month.¹³

The Adjudication Application was served on Authentic by the SMC on 28 July 2017. On 31 July 2017, the SMC informed the parties that Mr Tan Kian Hoon JP was appointed as the adjudicator for the dispute (“the Adjudicator”).¹⁴

On 7 August 2017, Authentic filed its adjudication response with the SMC.¹⁵ In its adjudication response, Authentic submitted that the only two issues for the consideration of the Adjudicator in the Adjudication Application were:¹⁶ (a) Whether [Authentic is] entitled to include, and the [A]djudicator is obliged to consider, the liquidated damages of $228,000.00 stated in [the payment response to PC 19]. (b) On what legal and factual basis [is Authentic] entitled to deduct a sum of $228,000.00 as liquidated damages from the claimed amount in [PC 19]. Once again, Authentic did not mention any issue in relation to the date of service of PC 19 in its adjudication response.

On 15 August 2017, the parties attended an adjudication conference as directed by the Adjudicator.¹⁷ At the conference, Benlen served its reply written submissions.¹⁸

On 23 August 2017, the Adjudicator issued the Adjudication Determination, deciding that Authentic was liable to pay Benlen the adjudicated amount of S$262,262.35 (inclusive of GST) and to bear the costs of the adjudication of S$8,346 (comprising the Adjudication Application fee of S$642 and the Adjudicator’s fee of S$7,704).¹⁹

On 24 August 2017, Benlen wrote to Authentic to demand payment of a total sum of S$278,954.35, comprising: (a) S$262,262.35, being the adjudicated amount; (b) S$8,346, being the costs of adjudication; (c) S$642, being the Adjudication Application fee; and (d) S$7,704, being the costs of the Adjudicator.²⁰ Authentic did not respond.

On 4 September 2017, Benlen filed OS 1002/2017, seeking an order of court granting it leave to enforce the Adjudication Determination in the same manner as a judgment, ie, the Order of Court. On 5 September 2017, Benlen obtained the Order of Court.²¹

On 5 September 2017 and 8 September 2017, Benlen again wrote to Authentic to demand payment of the adjudicated amount.²² Authentic failed to respond to any of the letters.²³

On 14 September 2017, Benlen issued a statutory demand pursuant to s 254 of the Companies Act (Cap 50, 2006 Rev Ed) seeking payment from Authentic of S$278,954.35..²⁴ On 15 September 2017, Authentic responded to the statutory demand, claiming to “dispute the validity of the Adjudication Determination” and announcing its intention to set aside the Adjudication Determination.²⁵ Benlen subsequently agreed to withdraw its statutory demand unconditionally if Authentic filed its application to set aside the Adjudication Determination by 28 September 2017.²⁶

On 27 September 2017, Authentic filed the Setting Aside Application.

The parties’ submissions

Moving on now to the parties’ respective arguments canvassed before me, Authentic’s main reason for asserting that the Adjudication Determination should be set aside is that PC 19 is invalid as it was served prematurely and out of time. Hence, as the Adjudicator had no jurisdiction to issue the...