Chin Ivan v H P Construction & Engineering Pte Ltd

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 12 March 2015
• Neutral Citation: [2015] SGCA 14
• Plaintiff Counsel: Lok Vi Ming SC, Joseph Lee and Aw Jansen (Rodyk & Davidson LLP)
• Docket Number: Civil Appeal No 125 of 2014
• Date: 12 March 2015
• Hearing Date: 30 January 2015
• Subject Matter: Building and Construction Law,Standard form contracts,Certificates and approvals,Architects, engineers and surveyors,Singapore Institute of Architects standard form contracts,Terms
• Year: 2015
• Defendant Counsel: John Chung and Tan Yi Yin Amy (Kelvin Chia Partnership)
• Court: Court of Appeal (Singapore)
• Citation: [2015] SGCA 14
• Published date: 18 March 2020

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

This appeal concerned issues relating to the validity and enforcement of Architect’s certificates issued pursuant to a building and construction (“B&C”) contract. The respondent, H P Construction & Engineering Pte Ltd (the plaintiff below), had mounted a claim founded on two Architect’s certificates (“the Disputed Certificates”) issued pursuant to a B&C contract between the parties which incorporated the Singapore Institute of Architects’ Articles and Conditions of Building Contract (Lump Sum Contract) (7th Ed, April 2005) (“the SIA Conditions”). Pursuant to cl 31(13) of the SIA Conditions, the respondent was entitled to seek payment, including by way of summary judgment, of the sums certified in any valid Architect’s certificate. The appellant, Mr Ivan Chin (the defendant below), resisted the claim by alleging that the Disputed Certificates had been procured by fraud on the part of the respondent. He consequently sought a stay of proceedings for the matter to be referred to arbitration pursuant to s 6(1) of the Arbitration Act (Cap 10, 2002 Rev Ed) as provided for in cl 37(1) of the SIA Conditions.

The judicial commissioner hearing the matter (“the Judge”) found that a prima facie case of fraud had been made out. However, he concluded that the alleged fraud affected only specific parts of the Disputed Certificates. In light of this, the Judge ordered a partial stay of proceedings and allowed the respondent to proceed with that portion of its claim which the Judge considered was not affected by the alleged fraud. The appellant appealed against the Judge’s decision to grant only a partial stay of proceedings. The Judge’s prima facie finding of fraud was not disputed on appeal, and the only issue before us was whether the entire proceedings should have been stayed and referred to arbitration in light of this. The Judge’s decision is reported as H P Construction & Engineering Pte Ltd v Chin Ivan [2014] 3 SLR 1318 (“the Judgment”).

At the conclusion of the appeal, we were satisfied that irregularities affecting the Disputed Certificates rendered them invalid and, hence, unenforceable, such that they should not be afforded even temporary finality. Further, we were also satisfied that there was no basis under the B&C contract between the parties (“the parties’ contract”) for dissecting or severing the Disputed Certificates. We therefore allowed the appeal, and ordered that the proceedings be stayed in their entirety and the respondent’s claim referred to arbitration. We now set out the grounds of our decision in full.

Background facts

The appellant employed the respondent as the main contractor for a building project in Sentosa Cove. As mentioned earlier, the parties’ contract incorporated the SIA Conditions. An Architect, Mr Philip Lee Pang Kee (“the Architect”), and a quantity surveyor, Turner & Townsend Pte Ltd (“the Quantity Surveyor”), were appointed for the purposes of the building project. The appellant also appointed a project manager to oversee the building project.

On 11 July 2012, the Architect issued two Architect’s instructions (“the AIs”) approving various items on the respondent’s list of proposed variation works. These items included claims for: (a) preliminaries for an extension of the time for completion of the project granted to the respondent (“the Extended Preliminaries Claim”); and (b) an extension of the defects liability period (“the Defects Liability Period Claim”). We refer to these two items collectively as “the Disputed Items”. As stated in each of the AIs, the variation works, including the Disputed Items, were approved on the basis that they were, “[a]s informed by [the respondent], … requested by [the appellant]/[the appellant’s project manager]”.¹ In other words, the AIs were issued by the Architect not on the basis of his professional judgment, but purely on the basis of the respondent’s representation that the variation works in question had been “requested by” the appellant.

The respondent, relying on the AIs, subsequently raised a payment claim for unpaid work done on the project up to 28 September 2012. The Disputed Items were included in this payment claim. The Architect duly instructed the Quantity Surveyor to provide a valuation of the Disputed Items as well as the other items listed in the payment claim. The Quantity Surveyor reverted with an interim valuation of $120,000 for the Extended Preliminaries Claim. No valuation was provided for the Defects Liability Period Claim. The Architect approved the Quantity Surveyor’s interim valuations and subsequently issued a progress certificate certifying that a sum of $321,383.94 (including the sum of $120,000 valued in respect of the Extended Preliminaries Claim) was payable by the appellant to the respondent (“the Progress Certificate”).

On 26 September 2013, the respondent raised its final payment claim, which again included the Disputed Items. On this occasion, the Quantity Surveyor valued the Disputed Items, including the Defects Liability Period Claim, at $334,000. The Architect subsequently approved the Quantity Surveyor’s valuations and issued a final certificate certifying a total sum of $720,417.28 as being payable to the respondent (“the Final Certificate”). This certified sum included the value of those of the Disputed Items that had not been included in the Progress Certificate. The Progress Certificate and the Final Certificate collectively constitute the Disputed Certificates mentioned at [1] above.

The dispute

The appellant refused to make payment of the sums certified under the Disputed Certificates for various reasons. The respondent first referred the dispute for adjudication under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the SOPA”), but was unsuccessful as the adjudicator found that the respondent had failed to act in accordance with the procedural provisions of the SOPA. The respondent then commenced court proceedings against the appellant claiming the total sum of $1,041,801.22 certified under the Disputed Certificates and interest. Pursuant to cl 31(13) of the SIA Conditions, the respondent was, “in the absence of fraud or improper pressure or interference by either party”, permitted to enforce, “by way of Summary Judgment”, its right to sums certified in certificates issued by the Architect in accordance with the parties’ contract.

The appellant, in response, applied for a stay of proceedings under s 6(1) of the Arbitration Act on the basis that the respondent’s claim was disputed and ought to be referred to arbitration pursuant to cl 37(1) of the SIA Conditions. At the hearing before the assistant registrar (“the AR”), the appellant argued that the Disputed Certificates had been procured by fraud on the part of the respondent. To establish a prima facie case of fraud, the appellant relied on a letter addressed to him by the Architect dated 21 March 2014 explaining why the Disputed Items had been included in the Disputed Certificates. The Architect said as follows in that letter:² 3. In or about … mid 2012, the [respondent] represented to me that [the appellant] had agreed to various proposed variations for which no Architect’s Instructions have been issued. These variations pertained to items numbered 163, 165 to 175, 220, 236, 242, 244, 245, 247, 249 to 251, 255 and 262 to 285 of the [respondent’s] list of proposed variations. The [respondent’s] claim for extended preliminaries arising from the extended completion date of the Project is set out in items 173 and 280 of the list. 4. As I was no longer in regular contact with [the appellant], I acted solely in reliance on 2 premises in regularizing the proposed variations. One was the [respondent’s] representation of [the appellant’s] purported consent where I issued two Architect’s Instructions nos. AI/131/HP/019 and AI/132/HP/019 on 11 July 2012 (AIs). Two was [the appellant’s] project manager’s monitoring of the project. Had there been any discrepancy, real or perceived in the AI[s], [the appellant’s] project manager as [the appellant’s] representative would duly notify me for further action. He would inform me or convey to me [the appellant’s] view when there was any issue that needed my attention. I did not receive any feedback since.

In essence, the Architect was saying that he had included the Disputed Items for valuation on the basis of: (a) the respondent’s representations that the appellant had consented to these items’ inclusion, even though no Architect’s instructions authorising the variation works in question had been issued earlier by the Architect as a matter of his own professional judgment; and (b) the failure of the appellant’s project manager to voice any objections to the inclusion of these items. The respondent denied making such representations. Indeed, the respondent accepted that the appellant had never consented to the inclusion of the Disputed Items for valuation purposes. The AR therefore found that there was a bona fide dispute as to whether fraudulent representations had been made and ordered that the proceedings be stayed entirely. The respondent appealed against the AR’s decision.

As alluded to at [2] above, the Judge below upheld the AR’s decision in so far as he agreed that there was a prima facie case of fraud. In this regard, the Judge acknowledged that the wording of cl 31(13) of the SIA Conditions seemed to suggest that an Architect’s certificate would be rendered invalid and unenforceable in the event of fraud. However, the Judge then departed from the AR’s decision and ordered only a partial stay of proceedings as he concluded that the alleged fraud only affected the Disputed Items, which had been quantified at $334,000 – an amount which he thought was “severable” from the full sum claimed by the respondent (see the Judgment at [66])....