Grouteam Pte Ltd v UES Holdings Pte Ltd

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 26 October 2016
• Neutral Citation: [2016] SGCA 59
• Published date: 29 October 2016
• Date: 26 October 2016
• Year: 2016
• Hearing Date: 26 July 2016
• Subject Matter: Dispute Resolution,Building and Construction Law
• Plaintiff Counsel: Radika Mariapan (IRB Law LLP)
• Defendant Counsel: Ian de Vaz, Tay Bing Wei and Chua MingHao (WongPartnership LLP)
• Court: Court of Appeal (Singapore)
• Citation: [2016] SGCA 59
• Docket Number: Civil Appeal No 210 of 2015

Sundaresh Menon CJ (delivering the judgment of the court): Introduction

This is an appeal against the decision of the High Court judge (“the Judge”) in Originating Summons No 649 of 2015 (“OS 649/2015”). The Judge allowed the respondent’s application to set aside an adjudication determination dated 19 June 2015 (“the AD”) made pursuant to the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”). The Judge’s decision is reported as UES Holdings Pte Ltd v Grouteam Pte Ltd [2016] 1 SLR 312 (“the Judgment”). Before the Judge, the respondent successfully contended that the documents on which the AD was based – namely, the payment claim, the adjudication application and the notice of intention to apply for adjudication – were not served in good time, thus rendering the AD invalid.

The present appeal raises some significant questions, including whether service of a payment claim outside the stipulated time for service is a ground on which an adjudication determination is liable to be set aside, and at what stage a party who receives a payment claim which it believes to be out of time should make its objection. We begin with a brief outline of the material facts.

The material facts Background

By a contract dated 12 July 2013 (“the Main Contract”), the respondent was engaged as the main contractor by Changi Airport Group (Singapore) Pte Ltd (“CAG”) for a project titled “Relocation of Pumphouse and Substation at Singapore Changi Airport”. The respondent, in turn, entered into a domestic sub-contract dated 30 August 2013 (“the Sub-Contract”) with the appellant for the latter to carry out certain works, including the civil, structural and architectural works for the new pumphouse and substation.

On 20 April 2015, the appellant served Payment Claim No 18 (“the Payment Claim”) on the respondent. Not having received a payment response from the respondent, on 20 May 2015, the appellant proceeded to serve a notice of intention to apply for adjudication (“the Notice of Intention”). In addition, the appellant lodged an adjudication application (“the Adjudication Application”) with the Singapore Mediation Centre (“the SMC”).

On the same day that it was served with the Notice of Intention, the respondent issued Payment Response No 18 (“the Payment Response”). On 21 May 2015, the SMC served the Adjudication Application on the respondent. An adjudicator (“the Adjudicator”) was duly appointed, and on 19 June 2015, he issued the AD ordering the respondent to pay $2,905,683.89 to the appellant. Shortly after, the respondent applied to the High Court by way of OS 649/2015 to set aside the AD.

The Sub-Contract

The construction of the Sub-Contract is central to the dispute between the parties. Unfortunately, this contract is a 507-page long document which the Judge described as “cobbled together”, “enigmatic” and “confusing” (at [5] of the Judgment). It is not difficult to see why. The Sub-Contract is a collection of different documents bundled together without much structure, and it seems to us to have been somewhat haphazardly assembled. To make matters worse, there is very little, if any, information in the affidavits filed by the parties as to the negotiations leading to the execution of the Sub-Contract and how the documents came to be assembled as they were. Hence, the court has little, if anything, by way of context to aid in the construction of the Sub-Contract.

The Sub-Contract is defined in clause 1.1 of the main body of the agreement (“the Sub-Contract Agreement”) as “this agreement together with such other documents as are specified in Section 6 of the First Schedule hereto” [underlining and emphasis in bold in original]. Turning to the documents that comprise the Sub-Contract, there are four key parts which are relevant for our purposes: The Sub-Contract Agreement: This is the first document in the bundle of contract documents. It is dated 30 August 2013 and spans 31 pages, with 28 clauses and four Schedules. Annex 1, titled “Summary of Contract Negotiations” (“SOCN”): This is the document that immediately follows the Sub-Contract Agreement in the bundle of contract documents. It is not disputed that the parties entered into the SOCN on 28 August 2013, just two days before the Sub-Contract was executed. General Conditions and Preliminaries (“Preliminaries”): It is not disputed that the 50-odd pages which comprise this part of the Sub-Contract are the same as the Preliminaries (General Conditions and Preliminaries) found in the respondent’s tender documents for the Main Contract. Two slightly different versions of the Preliminaries appear in the bundle of contract documents. In the first version, which is included as part of Annex 1 of the Sub-Contract, each item of the Preliminaries (at times, even parts of an item) is specifically bracketed and annotated with certain handwritten expressions next to it (namely, “Included”, “Not Included”, “NA”, “Noted” or “Under Main Contract”). It is also not disputed that the appellant went through this document and made these handwritten annotations on the right-hand side against each item. In the second version of the Preliminaries, which is included as part of Annex 4 (titled “Price Schedule & Rate Schedule”), the aforesaid handwritten annotations are typed out, with certain words such as “Noted” amended to read “Included”. The appellant’s stamp, along with the initials of its representative, appears at the bottom of each page of both versions of the Preliminaries. A purchase order (“the Purchase Order”): This is a one-page document dated 30 August 2013, the very day on which the Sub-Contract was entered into. The Purchase Order was for work described as the “Relocation of Pumphouse and Substation at Singapore Changi Airport”.

Given the voluminous nature of the Sub-Contract documents, the parties presumably envisaged the possibility of a conflict between some of the provisions. Section 6 of the First Schedule to the Sub-Contract (“Section 6”) purports to provide the means of resolving any such conflict. Section 6 starts by listing the various annexes to the Sub-Contract. The only two annexes that are relevant to the present appeal are Annex 1 and Annex 4, which, as mentioned earlier, are titled “Summary of Contract Negotiations” and “Price Schedule & Rate Schedule” respectively. Annex 1 contains both the SOCN and the version of the Preliminaries with the handwritten annotations, while Annex 4 contains the version of the Preliminaries with the typed annotations. After listing the various annexes to the Sub-Contract, Section 6 reads:

Notwithstanding anything stated in this Sub-Contract, in the event and to the extent of any inconsistency between two or more attachments which form part of this Sub-Contract, those attachments will be interpreted in the following order of priority: (a) clauses 1 to 28 of this Sub-Contract; (b) the Schedules (c) the documents set out in [this section] (of which references to the Main Contract shall prevail in the event of inconsistency between the said documents[)]

[underlining and emphasis in original omitted]

With this background in mind, we briefly discuss the relevant grounds on which the respondent challenged the validity of the AD before the Judge.

The respondent’s grounds for challenging the validity of the AD The Payment Claim was not served in good time

The respondent’s first ground for seeking to set aside the AD was that the Payment Claim was not served in good time. It argued that Item E of the page numbered “Sect 1.1/16” in the Preliminaries (“Preliminaries E”) was the applicable provision governing the service of payment claims, and in accordance with that provision, the appellant had to serve its payment claims within seven days from the end of each calendar month. As the Payment Claim was served on 20 April 2015, it was out of time.

The appellant, on the other hand, took the position that clause E of the SOCN (“SOCN-E”) was the applicable provision governing the service of payment claims. That was also the position taken by the Adjudicator in making the AD. SOCN-E provides that payment claims are to be served no later than the 20th day of each month. The text of these two provisions, Preliminaries E and SOCN-E, is reproduced at [29] below.

Various reasons were advanced by the parties in support of their respective cases. Notably, the respondent argued that SOCN-E was completely inapplicable as it was meant to be transitory in nature. It also said that SOCN-E dealt only with the submission of “invoices” and was not concerned at all with payment claims.

The appellant, on the other hand, contended that Preliminaries E was inapplicable on the basis that it could not be taken to govern the service of payment claims since it made reference to “the Contractor” and “the Superintending Officer”, both of which were undefined in the Sub-Contract. Further, it made reference to “the Employer”, which was defined in the First Schedule of the Sub-Contract as CAG (and not the respondent).

The appellant also argued that the respondent was estopped from challenging the timeline for submitting payment claims because the respondent had itself previously regarded SOCN-E as the applicable clause. In this regard, the appellant pointed to a previous occasion when it had served a payment claim on the respondent and the latter had replied by way of an email on 29 December 2014 (“the 29 December Email”) stating that “as per contract”, it had 21 days to issue its payment response. Such a position, the appellant argued, was only explicable on the basis that SOCN-E, which set out a 21-day period for the respondent to submit its payment response, was the applicable provision.

The Notice of Intention and the Adjudication Application were served out of time

The respondent’s second ground for seeking to set aside the AD was that the Notice of...