Bintai Kindenko Pte Ltd v Samsung C&T Corp

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 09 July 2018
• Neutral Citation: [2018] SGCA 39
• Plaintiff Counsel: Chong Kuan Keong and Sia Ernest (Chong Chia & Lim LLC)
• Date: 09 July 2018
• Docket Number: Civil Appeal No 211 of 2017
• Hearing Date: 09 April 2018
• Subject Matter: Principles,Adjudication,Dispute resolution,Breach of natural justice,Civil Procedure,Order 59 rule 8(1) Rules of Court (Cap 322, R 5, 2014 Rev Ed),Costs,Building and Construction Law,Setting aside of adjudication determination,Personal liability of solicitor for costs
• Published date: 12 July 2018
• Defendant Counsel: Aw Wei Keng Kelvin and Lee Kok Wee, Eugene (Morgan Lewis Stamford LLC)
• Court: Court of Appeal (Singapore)
• Citation: [2018] SGCA 39
• Year: 2018

Sundaresh Menon CJ (delivering the grounds of decision of the court): Introduction

It should by now be familiar to all stakeholders in the building and construction industry that the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”) was passed to facilitate cash flow in the industry by providing for an inexpensive and efficient mode for the resolution of payment disputes; and the courts promote this objective by ensuring limited curial intervention in the determination of such disputes where this has been done in accordance with the provisions of the Act. The rough nature of justice that sometimes emanates from this process is something we tolerate because these determinations are visited with the seemingly oxymoronic notion of temporary finality, in the sense that the determinations are final and binding on the parties to the adjudication temporarily until their differences are eventually resolved finally by litigation or arbitration.

But there are limits in terms of what will be tolerated. Where critical provisions of the Act are breached, even temporary finality cannot be accorded to a determination made under the Act. Such is the balance struck under the Act in service of its salutary aims. In general, curial intervention is justified where, among other things, it can be shown that the adjudicator has acted in breach of the rules of natural justice, including by failing to consider arguments that the parties have properly placed before him. The main question before us in this appeal pertained to an alleged failure by the adjudicator in this matter to consider some of the essential arguments that had been raised.

In this appeal, Bintai Kindenko Private Limited (“Bintai”) appealed the decision of the High Court judge (“the Judge”) to grant the application made by Samsung C&T Corporation (“Samsung”), the respondent in Originating Summons No 975 of 2017 (“OS 975/2017”), in Summons No 4276 of 2017 (“the Setting Aside Application”) to set aside: the adjudication determination dated 15 August 2017 (“the Adjudication Determination”) made by the adjudicator (“the Adjudicator”) appointed in Adjudication Application No 190 of 2017 (“the Adjudication Application”); and the order of court dated 30 August 2017 (“the Order of Court”) obtained by Bintai in OS 975/2017 granting Bintai leave to enforce the Adjudication Determination.

The Judge allowed the Setting Aside Application on the basis that the Adjudicator, in making Adjudication Determination, had failed to consider two issues raised in the adjudication response filed by Samsung (“the Adjudication Response”), and that this constituted a failure of natural justice and was contrary to s 16(3)(c) of the Act. Bintai appealed against the Judge’s decision.

On 9 April 2018, we heard and dismissed the appeal, fixing the party-and-party costs in favour of Samsung in the sum of $20,000 (including disbursements). However, we also found that counsel for both parties had incurred costs in respect of the appeal unreasonably and had failed to conduct the proceedings with reasonable competence and expedition. We therefore ordered, pursuant to O 59 r 8(1)(a) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the ROC”) that 90% of the photocopying charges and the stamp fees for the Agreed Bundle of Documents (“the ABD”) was not to be charged by Bintai’s counsel to Bintai, and that Samsung’s counsel was to contribute to 20% of the photocopying charges and stamp fees that Bintai’s counsel was to bear. As we indicated we would do when we dismissed the appeal, we now furnish the grounds of our decision.

Background

Samsung is a company incorporated in the Republic of Korea and registered in Singapore carrying on the business of building construction. Bintai is a company incorporated in Singapore carrying on the business of mechanical and electrical engineering.

The dispute

This dispute arose out of a contract for construction works in respect of additions and alterations to Suntec City’s convention centre and retail podium. Samsung was the main contractor for the project, while Bintai was engaged by Samsung as the subcontractor. Specifically in respect of the subcontract, Bintai was engaged pursuant to a letter of acceptance dated 3 December 2012 to supply and install mechanical, electrical and plumbing works. The subcontract was for the sum of $85,850,000.00 (excluding GST), with a further sum of $4,475,000.00 (excluding GST) for optional prime costs and provisional sum items.

On 19 May 2017, Bintai submitted Payment Claim No 59 (“PC 59”) for the claimed amount of $13,479,366.43. On 9 June 2017, Samsung submitted Payment Response No 59 (“PR 59”), stating a response amount of “($2,190,963.62)”. In short, Samsung claimed that far from having any liability to pay Bintai, there was in fact a net balance in Samsung’s favour.

The breakdown for the amount claimed in PC 59, the response amount in PR 59, and the difference between the two amounts may be seen as follows:

No	Description	PC 59 ($)	PR 59 ($)	Difference ($)
1	Subcontract works	85,850,000.00	85,850,000.00	-
2	Variation works	29,442,006.82	18,909,510.91	10,532,495.91
3	Omissions	(8,344,728.00)	(10,751,059.94)	2,406,331.94
4	Retention	(4,292,500.00)	(4,292,500.00)	-
5	Backcharges	-	(585,252.20)	585,252.20
6	Amount previously paid	(91,321,662.39)	(91,321,662.39)	-
7	Release of the first half of the retention monies	2,146,250.00	-	2,146,250.00
Total amount	13,479,366.43	(2,190.963.62)	15,670,330.05

The backcharges, comprising the sum of “($585,252.20)”, and which had been included in Samsung’s computation of its response amount in PR 59, were imposed by Samsung on Bintai for its failure to provide scaffolding. Samsung claims that this was part of Bintai’s scope of works under the subcontract. On the other hand, the variation works reflected under PR 59 concerned a reassessment of various payments which had previously been made by Samsung to Bintai pursuant to Payment Response No 57 in respect of work that had already been completed by Bintai.

The adjudication proceedings

On 7 July 2017, Bintai served notice of intention to apply for adjudication (“the NOI”), and lodged the Adjudication Application on the same day. The Adjudication Application and the supporting documents, including Bintai’s submissions made in support of the Adjudication Application (“the AA Submissions”), filled nine arch-lever files.

In the NOI, Bintai stated under the “Dispute Details” section that the payment response amount of “($2,190.963.62)” was “disputed”, and that Bintai only intended to seek payment of the sum of $2,146,250.00 (which is for the release of the first half of the retention monies) in the adjudication proceedings.

In the AA Submissions, Bintai reiterated that while it disputed Samsung’s computation of the response amount in PR 59 of “($2,190.963.62)”, it was only seeking payment of the sum of $2,146,250.00 in the adjudication proceedings, though it expressly reserved its right to claim the balance amount reflected in PC 59 in due course. Bintai then stated that there were three issues in dispute for the purpose of the Adjudication Application. These were said to be the following: (a) the retention monies; (b) the backcharges for scaffolding carried out during the project; and (c) the variation works that had been certified and paid in earlier payment responses but had been recomputed and reversed in PR 59. The remainder of the AA Submissions was organised in three distinct parts, each dealing with one of these three items and recognising that these were three discrete issues to be resolved in the adjudication.

The Adjudicator was appointed shortly after on 11 July 2017 by the Singapore Mediation Centre.

On 17 July 2017, Samsung filed the Adjudication Response, which consisted of two arch-lever files, and included its submissions in support of the Adjudication Response (“the AR Submissions”). In the AR Submissions, Samsung maintained its response amount of “($2,190.963.62)” as reflected in PR 59, and stated that its submissions would be organised in the following four sections: (a) a preliminary objection to the validity of the Adjudication Application; (b) the retention monies; (c) the backcharges for scaffolding; and (d) the variation works previously paid and re-assessed under PR 59. Samsung duly structured the remainder of the AR Submissions in four distinct parts. Thus, aside from raising the preliminary objection that the Adjudication Application failed to “contain such information or be accompanied by such documents as may be prescribed” as required under s 13(3)(c) of the Act, Samsung plainly joined with Bintai on the precise three issues that Bintai had identified in the AA Submissions.

The Adjudicator directed Bintai to provide a written response to the AR Submissions by 21 July 2017 and Samsung to file its reply by 22 July 2017, and fixed an oral conference on 25 July 2017.

Bintai filed its reply submissions on 21 July 2017, while Samsung filed its written reply to Bintai’s reply submissions on 22 July 2017. Both sets of reply submissions dealt with all four issues raised by Samsung in the AR Submissions (see [15] above).

The Adjudication Determination

On 15 August 2017, the Adjudicator rendered the Adjudication Determination, finding in favour of Bintai. Specifically, the Adjudicator ordered Samsung to pay Bintai the sum claimed by Bintai in the Adjudication Application, namely $2,146,250.00 (excluding GST) (“the Adjudicated Amount”), within seven days after the Adjudication Determination had been served on Samsung. The Adjudicator also ordered the costs of the adjudication proceedings, comprising the...