Hauslab Design & Build Pte Ltd v Vinod Kumar Ramgopal Didwania

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 11 October 2016
• Neutral Citation: [2016] SGHC 222
• Published date: 24 March 2017
• Date: 11 October 2016
• Year: 2016
• Hearing Date: 11 February 2016,20 November 2015
• Subject Matter: Alternative dispute resolution procedures,Dispute resolution,Building and construction law
• Plaintiff Counsel: Lam Wei Yaw and Koh En Da, Matthew (Rajah & Tann Singapore LLP), Foo Jong Han Rey (KSCGP Juris LLP)
• Defendant Counsel: Lam Kuet Keng Steven John (Templars Law LLC)
• Court: High Court (Singapore)
• Citation: [2016] SGHC 222
• Docket Number: Originating Summons No 312 of 2015 (Summons No 2030 of 2015)

Vinodh Coomaraswamy J: Introduction

The plaintiff served a payment claim under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”) on the defendant. The defendant failed to satisfy the claim. The plaintiff proceeded to have its claim adjudicated. The defendant resisted the adjudication on the ground that one of the Act’s fundamental requirements was not fulfilled. His position was that he had no contract at all with the plaintiff. He accepted that he had entered into a contract which did fulfil the requirements of the Act, but argued that the counterparty to that contract was not the plaintiff but another entity entirely. He argued, further, that he had never agreed to that other entity novating his contract to the plaintiff.

The adjudicator rejected the defendant’s argument and found that the defendant had indeed agreed to his contract being novated to the plaintiff. He therefore determined the adjudication in the plaintiff’s favour. The plaintiff then applied for and secured leave ex parte to enforce the adjudication determination as a judgment or order of the court.

The defendant now applies to set aside that leave.

The defendant rests his setting-aside application on two submissions. First, he submits that the adjudicator had no jurisdiction to issue the determination against him because the defendant has never had a contract with the plaintiff within the meaning of s 4 of the Act. Second, he submits that the adjudicator breached his duty under s 16(3) of the Act to comply with the principles of natural justice.

Having heard the parties and considered their submissions, I have dismissed the defendant’s application with costs. The defendant has appealed against my decision. I therefore set out my grounds.

Background The contract

The defendant is the owner of a substantial property in District 11. In April 2013, he entered into a construction contract with a company known as Hauslab D&B Pte Ltd (“D&B”). The contract names the defendant as the “Employer” and D&B as the “Builder”¹ and the “Contractor”.² It obliges D&B to design and build for the defendant on his property a two-storey detached house with an attic and an open roof terrace. The contract’s value is a little under $5.1m.³ I shall refer to this contract as “the construction contract”.

Both D&B and the plaintiff are wholly-owned subsidiaries of a company known as Hauslab Holdings Pte Ltd (“Holdings”). Mr Tan Sinn Aeng Ben (“Mr Tan”) is a director of both D&B and of Holdings⁴ but is not a director of the plaintiff.⁵ Mr Tan describes himself as the “CEO” and “Principal Designer” of “the Hauslab Group”.⁶

It will be immediately apparent that the names of the plaintiff and of D&B are confusingly similar. D&B’s full name (Hauslab D&B Pte Ltd) would ordinarily be intended and would ordinarily be read as being nothing more than an abbreviation of the plaintiff’s full name (Hauslab Design & Build Pte Ltd). But D&B is in fact and in law an entity entirely separate from the plaintiff.

Also in April 2013, soon after he signed the construction contract, the defendant formally authorised his wife, Ms Nidhi Vinod Didwania (“Ms Nidhi”), to issue instructions and to act on payment matters under the contract on his behalf. He did this by a letter on his personal notepaper addressed and sent to D&B in the following terms:⁷

I, Vinod Kumar Ramgopal Didwania, the Employer and also the Employer’s Representative set out in the contract, hereby authorize my wife, Nidhi Vinod Didwania, to issue direct instructions relating to the works to you, the Contractor, on my behalf and also act on my behalf with respect to all payment matters moving forward.

The evidence shows that Ms Nidhi did in fact personally give substantially all of the instructions under the contract to Mr Tan or his team. She also personally received and paid all of the progress claims issued under the contract.⁸ The plaintiff curiously denies having received this letter of authorisation. Be that as it may, the fact remains that the defendant accepts – and indeed asserts – before me that Ms Nidhi gave instructions and dealt with payment under the construction contract as his agent. All of her acts in this regard are therefore attributable to him.

The draft novation agreement

It was the plaintiff’s case in the adjudication and before me that the defendant agreed to novate the construction contract to the plaintiff on or about 1 December 2013. The parties are on common ground on only two points connected to this alleged novation. They agree that Mr Tan produced a draft novation agreement in December 2013 and handed it either to the defendant or to Ms Nidhi. They agree also that the defendant never signed the draft. All of the other facts underlying the alleged novation are disputed.

According to Mr Tan, between August and October 2013, he raised with the defendant the possibility of novating the defendant’s construction contract from D&B to the plaintiff.⁹ Mr Tan followed up on this proposal by personally handing a draft novation agreement either to the defendant or to Ms Nidhi in December 2013.¹⁰ Mr Tan later visited the defendant at his office to explain the rationale for the novation.¹¹ He told the defendant that a sister company of D&B was pursuing a number of disputed claims under an unrelated contract in relation to an unrelated project. As D&B was the builder in that project, Mr Tan was concerned that the owner there might bring cross-claims against D&B and that that might lead the Building & Construction Authority (“BCA”) to order D&B to suspend work on all its ongoing projects, including the defendant’s. Mr Tan therefore proposed the novation in order to protect the defendant by insulating his project from the possible consequences of those unrelated disputes.¹²

Mr Tan’s evidence is that the defendant agreed orally to a novation and to the plaintiff taking over from D&B as the builder on the defendant’s project. The defendant assured Mr Tan that he would sign the draft novation agreement and return it to the plaintiff after the defendant’s daughter, a lawyer in private practice, had reviewed it. Relying on the defendant’s assurance, and anticipating the return of the novation agreement duly signed, Mr Tan left it with the defendant.¹³

The defendant’s and Ms Nidhi’s evidence is, not surprisingly, contrary to Mr Tan’s and consistent with each other’s. They say that Mr Tan personally handed a draft novation agreement to Ms Nidhi sometime in December 2013.¹⁴ The defendant and Ms Nidhi rejected any possibility of novation at all because they were not willing to hand over the construction of their new home to a company other than D&B “on a whim”. They were especially concerned that Mr Tan, who had been personally recommended to them by their property agent, was a director of D&B but was not even a director of the plaintiff and therefore had no management control over it.¹⁵ Accordingly, Ms Nidhi returned the draft to Mr Tan the very next day, unsigned.¹⁶

Mr Tan does not accept that Ms Nidhi ever returned the unsigned draft.¹⁷

The application for permission to carry out structural works

It appears that from the date of the construction contract until at least November 2013, D&B performed its obligations under the contract without any incident, or at the very least, without any incident which is material to the application before me.

In November 2013, the defendant signed a one-page form addressed to the BCA re-applying for permission to carry out structural works on his property under s 6 of the Building Control Act.¹⁸ The form named the new builder for his project as the plaintiff (Hauslab Design & Build Pte Ltd) and specified the plaintiff’s unique entity number (201327267G). I analyse this form in greater detail at [114] below.

Under cover of a letter dated 4 November 2013 from the project engineer to the BCA, the engineer submitted to the BCA electronically the defendant’s re-application form accompanied by the engineer’s own application.¹⁹ The subject heading of the engineer’s cover letter read “Joint Application for Permit to Carry out Demolition Works (Change of Builder)”. Like the defendant’s application, the engineer’s application was also framed as a re-application for permission to carry out structural works arising from a change of builder.²⁰ The seventh page of this form also named the plaintiff as the new builder and gave the plaintiff’s unique entity number.²¹

The project engineer included two other enclosures with his cover letter. One was a copy of the plaintiff’s builder’s licence issued on 29 October 2013 by the BCA.²² The second was a certificate issued by D&B under s 11(1)(f) of the Building Control Act certifying that it had completed, as at 1 November 2013, 65% of the structural work, 15% of the air-conditioning work, 18% of the electrical work and 15% of the plumbing work for the project in accordance with the plans supplied by the qualified person and in accordance with the Building Control Act and Regulations, leaving outstanding only the brickworks, doors, windows, swimming pool structure and ceilings.²³

Apart from this certificate, D&B did not feature in this joint application by the defendant and the project engineer to the BCA.

The next day, the defendant received a system-generated email from the BCA acknowledging receipt of his application.²⁴ He immediately forwarded the acknowledgment by email to Mr Tan and his team.

Just over a week later, on 14 November 2013, the BCA issued a permit to carry out structural works in response to this application which named the plaintiff as the builder of the project.²⁵ D&B was not referred to at all in the permit.

The progress payment claims

Over the 17-month period from July 2013 to November 2014, the defendant received 17 progress claims, issued at monthly intervals. Ms Nidhi, paid these 17 progress...