FT Plumbing Construction Pte Ltd v Authentic Builder Pte Ltd and another matter

• Jurisdiction: Singapore
• Judge: Elton Tan Xue Yang AR
• Judgment Date: 09 April 2018
• Neutral Citation: [2018] SGHCR 3
• Court: High Court (Singapore)
• Docket Number: Suit No. 1105 of 2017 (Summons No. 166 of 2018) and Originating Summons No. 1262 of 2017 (Summons No. 5753 of 2017)
• Published date: 14 April 2018
• Year: 2018
• Hearing Date: 08 February 2018,05 February 2018
• Plaintiff Counsel: Mr Tan Joo Seng (Chong, Chia & Lim LLC)
• Defendant Counsel: Mr Patrick Ong and Ms Chong Yi Mei (Patrick Ong Law LLC)
• Subject Matter: Building and construction law,Statutes and regulations,Building and Construction (Security of Payments) Act (Cap 30B, 2006 Rev Ed),Civil procedure,Stay of proceedings,Abuse of process
• Citation: [2018] SGHCR 3

Elton Tan Xue Yang AR: Introduction

The plaintiff and defendant are parties to a construction contract. The defendant succeeded in an adjudication against the plaintiff and sought to enforce the adjudication determination as a judgment debt. The plaintiff applied for a stay of the enforcement proceedings and commenced a suit against the defendant, seeking a final determination of the dispute between the parties. The defendant in turn applied for a stay of the suit, alleging that the plaintiff’s commencement of such proceedings amounted to an abuse of process of the court given that the plaintiff had not made payment of the adjudicated amount to the defendant. The plaintiff’s response to this allegation was twofold: (a) it was genuinely unable to pay the adjudicated amount due to its financial circumstances; and (b) it believed that the defendant was itself impecunious, such that any amounts paid to the defendant pending the determination of the underlying dispute might prove irrecoverable if the plaintiff eventually succeeded in that final determination. Out of these proceedings, two applications came before me for decision. The first was the defendant’s application for a stay of proceedings in the suit pending the plaintiff’s payment of the adjudicated amount. The second was the plaintiff’s application for an interim stay on enforcement pending the hearing of its application for a stay of the enforcement proceedings.

The Building and Construction Industry (Security of Payments) Act (Cap 30B, 2006 Rev Ed) (“the Act”) has been the subject of a considerable amount of judicial scrutiny in recent years. Various aspects of the Act – ranging from the jurisdiction of adjudicators and their duties in the conduct of the adjudication to the setting aside of adjudication determinations – have been reviewed by the courts, and an increasing body of case law has accrued to guide the conduct of the rapidly growing number of adjudications in Singapore.¹ The applications before me primarily concerned one of these aspects – namely, the right of a losing party in an adjudication to seek a final determination of the underlying dispute, notwithstanding the fact that it has not made payment of the adjudicated amount to the winning party. The question for my decision was whether it is an abuse of process for the losing party to commence proceedings in court to obtain a final determination despite not having paid the adjudicated amount, in circumstances where its non-payment of the adjudicated amount followed from two reasons: (a) its genuine inability to make such payment; and (b) its concern that due to the impecuniosity of the winning party, it will not be able to recover any amounts paid to the winning party if the underlying dispute is eventually decided in its favour.

Much of the argument before me centred on the recent decision of Foo Chee Hock JC in Lim Poh Yeoh (alias Aster Lim) v TS Ong Construction Pte Ltd [2017] 4 SLR 789 (“Lim Poh Yeoh”). Having considered the parties’ submissions and evidence, I granted the defendant’s stay application but subjected the stay to any decision made in the plaintiff’s application to grant a stay of enforcement of the adjudication determination pending the disposal of proceedings in the suit. I also granted the interim stay on enforcement sought by the plaintiff.

The plaintiff has appealed against my decision on the defendant’s stay application and has sought to adduce further evidence on appeal, such evidence pertaining to the plaintiff’s alleged inability to pay the adjudicated amount. I therefore explain my decision on the law and my findings on the evidence that was put before me.

Facts and procedural history

FT Plumbing Construction Pte Ltd (“FT”) carries on the business of plumbing and sanitary works. Authentic Builder Pte Ltd (“AB”) is in the business of building, renovating and remodelling residential, commercial and industrial spaces.²

On 3 June 2014, AB was engaged as main contractor for a housing development project. By way of a sub-contract (“the Sub-Contract”), AB engaged FT as its sub-contractor for works described as “Supply and Installation of Plumbing & Sanitary Works, Minor Sewer and Water Services System” which were comprised in the project. For its services, AB was to pay FT the contractual sum of $2.8m, excluding Goods and Services Tax (“GST”).³

FT commenced its works in July 2014.⁴ On 27 July 2017, AB was served with a copy of FT’s adjudication application.⁵ The subject of the adjudication application was FT’s Payment Claim No. 32 of 27 June 2017 (“the Payment Claim”), in which FT sought payment of $992,160.42 (inclusive of GST) for works done in the period from 25 September 2014 to 27 June 2017. In response to the Payment Claim, AB furnished a Payment Certificate No. 30 on 24 July 2017 (“the Payment Certificate”) as its payment response. In the Payment Certificate, AB did not merely deny FT’s entitlement to payment; it instead claimed that FT was liable to pay $2,791.31 (inclusive of GST) to it.⁶

On 14 September 2017, the adjudicator rendered his adjudication determination (“the Adjudication Determination”). The result was that AB was found liable to pay FT the sum of $888,693.42 (inclusive of GST). This was to be added to the adjudicator’s fees (which amounted to $33,544.40), the adjudication application fee ($642) and interest. I will refer to the total sum that AB was adjudged to pay FT as “the Adjudicated Amount”. The adjudicator held that FT had completed the Sub-Contract works, save for certain as-built drawings and operation manuals which he valued at $5,000.⁷ Another key aspect of the dispute in the adjudication had pertained to variation works allegedly completed by FT and for which FT sought payment. In this regard, the adjudicator found that AB had responded only to one disputed variation item in its Payment Certificate. As for the other disputed variation items, AB had not provided any response amount nor any reason for withholding payment.⁸ The adjudicator accordingly decided that s 15(3)(a) of the Act prohibited him from considering the reasons proffered by AB during the adjudication for withholding payment for those other disputed variation items, given that AB had not included those reasons in the Payment Certificate. Consequently, the adjudicator held that FT was entitled to the amounts it claimed for the variation works.⁹ He also rejected AB’s submission that FT was liable for liquidated damages for delay.¹⁰

On 7 November 2017, FT filed Originating Summons No. 1262 of 2017 (“the OS”), seeking leave to enforce the Adjudication Determination as a judgment pursuant to s 27(1) of the Act. The OS was granted by an assistant registrar the next day. Over the course of the next two months, FT proceeded to commence various enforcement proceedings against AB: Three sets of garnishee proceedings in respect of AB’s bank accounts with United Overseas Bank, Malayan Banking Berhad and Oversea-Chinese Banking Corporation Limited (Summons Nos. 5435, 5436 and 5438 of 2017); An application for AB’s interest in certain immovable property to be attached and taken in execution to satisfy the adjudication determination (Summons No. 5535 of 2017) (“the Seizure Application”); An application for the examination of Ler Peh Choo, a director of AB, to ascertain whether AB has any property or means (Summons No. 5536 of 2017); and Two further sets of garnishee proceedings against property developers that FT believed were indebted to AB (Summons Nos. 5858 and 5859 of 2017).

On 28 November 2017, AB commenced Suit No. 1105 of 2017 (“the Suit”) against FT. The claims advanced by AB in the Suit encompassed much of what it had previously canvassed before the adjudicator. For instance, AB claimed (as it had before the adjudicator) that FT’s claims for variation works were improper, that the variation works fell within the scope of the Sub-Contract works, and/or that the variation works had really been carried out in order to rectify defects in FT’s Sub-Contract works.¹¹ As mentioned at [8] above, the adjudicator had found that he was precluded by s 15(3)(a) of the Act from considering these submissions due to AB’s failure to raise them in its payment response. As before, AB disputed the value of the as-built drawings, warranties and manuals that FT had omitted to provide, claiming that those outstanding documents were worth $102,465 (rather than $5,000 as the adjudicator had decided).¹² AB also reiterated its claim for liquidated damages.¹³

On 6 December 2017, AB filed Summons No. 5571 of 2017 (“SUM 5571”) in the OS, seeking a stay on the execution or enforcement of the Adjudication Determination pending the disposal of the proceedings that AB had commenced in the Suit. Later that month, it also filed Summons No. 5753 of 2017 (“SUM 5753”), seeking an interim stay on the enforcement proceedings pending the hearing of the Main Stay Application.

On 8 January 2018, FT filed Summons No. 166 of 2018 (“SUM 166”) in the Suit. The relief sought by FT was the striking out of AB’s statement of claim in the Suit or, in the alternative, a stay of the Suit until AB had made full payment of all outstanding sums payable under the Adjudication Determination. SUM 5753 and SUM 166 came before me concurrently for hearing.

Parties’ submissions

The focus of parties’ submissions before me was on SUM 166; more specifically, on the question of whether proceedings in the Suit should be stayed or struck out altogether given that AB had not made payment of the Adjudicated Amount thus far. I was informed that despite the multiplicity of garnishee proceedings commenced thus far, FT had only managed to retrieve a total of $9,215.66 from AB’s bank accounts at the time of the hearing. This obviously represented only a fraction of the sum of more than $920,000 for which AB had been adjudged to be liable.

FT’s central contention in SUM 166 was that...