CMC Ravenna Singapore Branch v CGW Construction & Engineering (S) Pte Ltd

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 23 October 2017
• Neutral Citation: [2017] SGHC 263
• Date: 23 October 2017
• Docket Number: Originating Summons No 466 of 2017 (Summons No 2219 of 2017)
• Published date: 03 March 2018
• Plaintiff Counsel: Lee Peng Khoon Edwin and Fong Lee Cheng Jennifer (Eldan Law LLP)
• Defendant Counsel: Chan Kah Keen Melvin and Yvonne Mak Hui-Lin (TSMP Law Corporation)
• Court: High Court (Singapore)
• Hearing Date: 29 June 2017
• Subject Matter: Building and Construction Law,Setting aside,Adjudication,Dispute resolution,Building and Construction Industry Security of Payment Act,Adjudication review determination,Statutes and regulations

Chan Seng Onn J: Introduction

Summons No 2219 of 2017 is an application taken out by CGW Construction & Engineering (S) Pte Ltd (“CGW”), the respondent in Originating Summons No 466 of 2017 (“OS 466”), to set aside (“the Setting Aside Application”): the adjudication review determination dated 12 April 2017 (“the Review Determination”) in Adjudication Review Application No 1 of 2017 (“the Review Application”); and the order of court dated 28 April 2017 (“the Order of Court”) obtained by CMC Ravenna Singapore Branch (“CMC Ravenna”), the applicant in OS 466, granting CMC Ravenna leave to enforce the Review Determination.

The application raises certain issues concerning the extent of review that a court should undertake when invited to set aside an adjudication review determination pursuant to s 27(5) of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the SOPA”).

Background

The present dispute arose out of a contract involving the construction of the Tampines West Station and tunnels for Stage Three of the Mass Rapid Transit Downtown Line project (“the Project”). CMC Ravenna was engaged by the Land Transport Authority (“LTA”), the employer, to be the main contractor of the Project, while CGW was engaged by CMC Ravenna as the sub-contractor.¹

Specifically, CMC Ravenna had initially engaged CGW pursuant to a letter of award dated 15 May 2015 (“the Letter of Award”) to, inter alia, supply skilled and general workers, equipment and minor tools for the fixing and installation of the rebar to the skin wall abutting the D-wall at the site.² Under the Letter of Award, the works were valued at S$1,008,666.30.³

Subsequently, CMC Ravenna and CGW entered into an Addendum to the Letter of Award dated 2 October 2015 (“the Addendum”), which increased CGW’s scope of works from that originally specified under the Letter of Award to include the provision of skilled workers for, inter alia, rebar installation, formwork installation and the placing of concrete for Entrance B of the site, as well as rebar installation for the service slab at the site.⁴ The working period was expressly specified to be for “2 months”,⁵ and the works were valued at S$944,404.80.⁶ The payment terms were stated as follows:⁷ 2. Payments:

Payment will be made for completed works on a monthly progress basis. A 5% Retention shall be retained on all progress payments. The retention shall be released upon practical completion of the subcontract works to the satisfaction of CMC [Ravenna] and LTA upon finalization of the subcontract accounts.

The Subcontractor [CGW] shall submit the progress claim at the end of each month. The Contractor [CMC Ravenna] shall issue a progress payment certificate within 21 days from the date of [the Subcontractor CGW’s] submission of the progress claim, and the Contractor [CMC Ravenna] shall release payment within 21 days from the date of the payment certificate and the receipt of original tax invoice from the Subcontractor [CGW].

Failure to complete the subcontract work within the stipulated working period will [be] liable to imposition of Liquidated damages at S$2,500 per day.

[emphasis added]

According to CGW, it only signed the Addendum on 8 January 2017.⁸

On 31 October 2016, pursuant to the payment terms set out under the Addendum, CGW served Progress Claim 16 for “Works Done Up To And Including 31st October 2016” (“PC 16”) on CMC Ravenna for the sum of S$410,325.16 (inclusive of GST).⁹ This meant that CMC Ravenna was supposed to pay CGW S$410,325.16 (inclusive of GST).

On 7 November 2016, CMC Ravenna served its Interim Payment Certificate (Payment Response) No 16 (“PR 16”) on CGW, which confirmed CMC Ravenna’s receipt of PC 16. PR 16 indicated that the “DUE AMOUNT (GST Excluded)” was “(735,378.93)”.¹⁰ This meant that the response amount was (S$735,378.93) (excluding GST), or a negative S$735,378.93 (excluding GST). In essence, CMC Ravenna was responding that CGW was instead owing it a sum of S$735,378.93 (excluding GST) and therefore, there was nothing for CMC Ravenna to pay CGW under PC 16.

Procedural history

On 5 December 2016, CGW commenced Adjudication Application No 469 of 2016 by first serving a notice of intention to apply for adjudication on CMC Ravenna,¹¹ and thereafter lodging an adjudication application (“the Adjudication Application”) with the Singapore Mediation Centre (“SMC”), which is an authorised nominating body (“ANB”) under the SOPA.¹² The payment claim was revised from S$410,325.16 (inclusive of GST) to S$381,705.78 (inclusive of GST).¹³

On 9 December 2016, the SMC informed the parties that Ms Khoo Jing Ling was appointed as the adjudicator for the dispute (“the Adjudicator”).¹⁴

On 13 December 2016, CMC Ravenna lodged its adjudication response (“the Adjudication Response”) with the SMC.¹⁵ In the Adjudication Response, CMC Ravenna justified its response amount of “(S$735,378.93)” by disputing CGW’s claimed amount of S$381,705.78 (inclusive of GST) and proposing deductions in the sum of S$1,076,815.22. In particular, the bulk of the deductions in the Adjudication Response comprised the liquidated damages in the sum of S$547,500.00 that CMC Ravenna had allegedly suffered due to CGW’s alleged delay in completing the Addendum works (“the Liquidated Damages Claim”).¹⁶

On 7 March 2017, the Adjudicator issued her adjudication determination. A revised version of the adjudication determination was issued on 16 March 2017 to account for some calculation errors made by the Adjudicator (“the revised Adjudication Determination”). In the revised Adjudication Determination, the Adjudicator found in favour of CGW and determined that CMC Ravenna was to pay the sum of S$340,515.61 (plus GST) to CGW (“the Adjudicated Amount”).¹⁷

Dissatisfied with the revised Adjudication Determination, CMC Ravenna commenced the Review Application by paying the Adjudicated Amount to CGW on 17 March 2017¹⁸ and lodging the Review Application with the SMC on 21 March 2017.¹⁹ In the Review Application, CMC Ravenna stated the response amount as “NIL [-S$735,378.93 (excluding GST)]”.²⁰ On 28 March 2017, the SMC informed the parties that Mr Chia Chor Leong was appointed as the review adjudicator for the Review Application (“the Review Adjudicator”).²¹

On 29 March 2017, the Review Adjudicator convened a preliminary conference, during which CGW challenged the jurisdiction of the Review Adjudicator to hear and determine the Review Application on the basis that pursuant to s 18(5)(b) of the SOPA read with reg 10(3) of the Building and Construction Industry Security of Payment Regulations (Cap 30B, Rg 1, 2006 Rev Ed) (“the SOPR”), a panel of three review adjudicators should have been convened instead.²² The Review Adjudicator made certain observations about CGW’s jurisdictional challenge, but ultimately declined to make a ruling and ordered the parties to proceed with the Review Application.²³

On 12 April 2017, the Review Adjudicator issued the Review Determination. The Review Adjudicator found in favour of CMC Ravenna, determining that there is no amount payable by CMC Ravenna to CGW under the Adjudication Application and that the Adjudicated Amount of S$340,515.61 (plus GST) as determined by the Adjudicator should be substituted with the Adjudicated Amount of “Nil”.²⁴

On 27 April 2017, CMC Ravenna commenced OS 466, which is an ex parte application for leave to enforce the Review Determination in the same manner as a judgment or order of court. CMC Ravenna obtained the Order of Court on 28 April 2017. On 2 May 2017, the Order of Court was served on CGW.

Subsequently, on 16 May 2017, CGW filed the Setting Aside Application.

Issues to be determined

Based on the arguments canvassed by the parties, the two main issues that have arisen for my determination in this application are: whether the Review Determination should be set aside because a panel of three review adjudicators instead of a sole review adjudicator should have been appointed to hear and determine the Review Application (“the Appointment Issue”); and whether the Review Determination should be set aside because the Review Adjudicator had misdirected himself on a point of law (“the Misdirection Issue”).

Succeeding on either issue will be sufficient for CGW to succeed in the Setting Aside Application.

The applicable legal principles

At the outset, I note that there is limited guidance for the setting aside of adjudication review determinations from the existing corpus of SOPA case law. Applications to set aside adjudication review determinations have rarely arisen for our courts’ consideration: to the best of my knowledge, the only two decisions involving the setting aside of an adjudication review determination that have been issued in the High Court are the recent decisions of Ang Cheng Guan Construction Pte Ltd v Corporate Residence Pte Ltd [2017] 3 SLR 988 (“Ang Cheng Guan”) and Mataban Development Pte Ltd v Black Knight Warrior Pte Ltd [2017] SGHCR 12 (“Mataban Development”). Also, the adjudication review procedure provided for under the SOPA has no statutory analogue in any of the other jurisdictions that have introduced similar regimes to expedite payments in the construction industry, ie, the United Kingdom, Australia and New Zealand: Ang Cheng Guan at [11], citing SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 (“SEF Construction”) at [24].

Having said that, the paucity of case law in this regard is not in itself a major concern because the grounds for setting aside adjudication review determinations are broadly similar to those for setting aside adjudication determinations, which have been the subject of numerous High Court and Court of Appeal decisions since the SOPA’s inception (see [36] below). Rather, what causes some difficulty is the identification of the precise grounds on which adjudication determinations may be set...