CEQ v CER

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 14 September 2020
• Neutral Citation: [2020] SGHC 192
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 1412 of 2019
• Year: 2020
• Published date: 29 December 2020
• Hearing Date: 11 June 2020
• Plaintiff Counsel: Ng Hweelon and Valliappan Subramaniam (Veritas Law Corporation)
• Defendant Counsel: Chong Chi Chuin Christopher, Kelvin Teo and Josh Samuel Tan Wensu (Drew & Napier LLC)
• Subject Matter: Building And Construction Law,Building and construction contracts,Appeal,Pending stay of execution
• Citation: [2020] SGHC 192

Lee Seiu Kin J: Introduction

The present application flows from my previous decision in CEQ v CER [2020] SGHC 70 (“CEQ v CER”) involving the same parties. In that decision, I dismissed the application to set aside an adjudication determination made pursuant to the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (the “Act”).

The Applicant subsequently applied for a stay of enforcement pending the appeal of my decision and the disposal of proceedings in the Singapore International Arbitration Centre (“SIAC”) arbitration SIAC ARB 429/19. This further application provided me with an excellent opportunity to examine the situations in which a stay of enforcement of an adjudication determination should be granted, as set forth in W Y Steel Construction Pte Ltd v Osko Pte Ltd [2013] 3 SLR 380 (“W Y Steel Construction”).

Having heard the parties, I granted the stay of enforcement. I also ordered a sum of S$500,000 to be released to the Applicant’s solicitors, to be utilised towards the Respondent’s legal fees and disbursements in both the appeal and arbitration. My reasons are as follows.

Background to the application

The facts resulting in the dispute are canvassed in detail in CEQ v CER at [2]–[7]. In essence, the Applicant was the owner and developer of a residential flat development, for which the Respondent was engaged as the main contractor. This employment relationship was terminated by the Applicant on 2 March 2017.

Over two years later, from 7 March 2019, the Respondent began serving payment claims on a monthly basis. Of particular relevance to this application is Payment Claim 25, lodged on 5 August 2019 for the sum of S$3,262,740.23. This was subject to adjudication determination SOP/AA 318/2019, and was awarded in part to the Respondent, of a sum of S$1,981,579.50. Following this, as mentioned at [1]–[2] above, the Applicant then applied to have the adjudication determination set aside. I dismissed this attempt on 6 April 2020, and the Applicant has filed an appeal against my decision.

Issues to be determined

Two issues arise to be determined in this application: whether a stay of execution of the adjudication determination should be granted pending appeal and the disposal of proceedings in the arbitration (the “Stay Issue”); and if a stay is granted, whether it should be on terms that the Respondent is granted a partial release of the monies held in court (the “Partial Release Issue”).

I deal with the issues in turn.

The Stay Issue

Ordinarily, where an application to set aside an adjudication determination is refused, that determination will be enforced. The successful claimant will also be entitled to the adjudication amount that was paid into court pursuant to s 27(5) of the Act: Lau Fook Hoong Adam v GTH Engineering & Construction Pte Ltd [2015] 4 SLR 615 at [26]. Notwithstanding this, the court clearly retains the power to stay the enforcement of such an adjudication determination. This power flows from the provisional nature of the adjudication determination, which only provides temporary finality until the rights of parties are fully and finally determined: W Y Steel Construction at [60]–[69].

In W Y Steel Construction at [70], the Court of Appeal identified that a stay of an adjudication determination “may ordinarily be justified” where: there is clear and objective evidence of the successful claimant’s actual present insolvency; or the court is satisfied on a balance of probabilities that if the stay were not granted, the money paid to the claimant would not ultimately be recovered if the dispute were resolved in the respondent’s favour.

I pause to note that the above are alternative situations where a stay should be granted. In the course of arguments, the Respondent sought to argue that these situations were two limbs of a test that are “not entirely disjunctive” – in that the first limb of the test was a “useful indicator” of whether the second has been fulfilled. I am unable to agree with this interpretation. I accept that the inquiry under the second situation is broader in nature and will necessarily encompass instances where the successful claimant’s actual present insolvency is established. However, where a party seeking a stay of enforcement is able to produce clear, objective evidence of the other party’s actual present insolvency, that suffices to give pause to the enforcement process of the adjudication determination. There is no need to produce further evidence of the possibility of non-recovery, as the term “useful indicator” would suggest. Conversely, even where actual present insolvency is not established, it should remain open to a party seeking a stay to produce some other evidence to convince the court of its case in accordance with the second situation above. To hold otherwise would unduly tip the balance in favour of a successful claimant far beyond what was envisioned by the Court of Appeal in W Y Steel Construction.

To be specific, I do not consider that the second situation espoused by the Court of Appeal in W Y Steel Construction requires a closed category of specific financial events to occur or be present before the court grants the relief of a stay. It ought to be more properly recognised as a guiding principle that is to be applied in every case that comes before the court: the court must countenance and ameliorate any potential for impossibility of recovery by a successful appellant, ie, a respondent who loses at first instance but succeeds on appeal. This principle must be applied flexibly. Thus, if a successful claimant is found, at the enforcement stage, to be in circumstances indicating, for example, a real risk of dissipation of the disputed funds awarded to it, the court must intervene. The same may be said if there is any prima facie evidence or suspicion that the claimant had been using its claim as an abuse of process. A failure to grant a stay in such circumstances may lead to a miscarriage of justice if the appellant is subsequently successful on appeal.

In this vein, it bears emphasising that these situations are not the only considerations that the court may have regard to in deciding whether to grant a stay. Indeed, as the Court of Appeal observed in W Y Steel Construction at [70]:

… Further, we agree … that a...