HP Construction & Engineering Pte Ltd v Chin Ivan

• Jurisdiction: Singapore
• Judge: Edmund Leow JC
• Judgment Date: 10 July 2014
• Neutral Citation: [2014] SGHC 137
• Year: 2014
• Date: 10 July 2014
• Published date: 03 September 2014
• Hearing Date: 12 June 2014,23 May 2014
• Plaintiff Counsel: John Chung and Priscylia Wu (Kelvin Chia Partnership)
• Citation: [2014] SGHC 137
• Defendant Counsel: Joseph Lee, Tan Yee Siong and Ross Tan (Rodyk & Davidson LLP) defendant/respondent.
• Court: High Court (Singapore)
• Docket Number: Suit No 180 of 2014 (Registrar's Appeal No 124 of 2014)

Edmund Leow JC:

This is an appeal against the decision of the Assistant Registrar to grant a stay of proceedings pursuant to s 6 of the Arbitration Act (Cap 10, 2002 Rev Ed).

The plaintiff/appellant, H P Construction & Engineering Pte Ltd (“the Plaintiff”), was the main contractor for the construction of two detached houses on two lots of land located at Sentosa Cove, Singapore. The defendant/respondent, Ivan Chin (“the Defendant”), had employed the Plaintiff under a building contract dated 5 May 2009 (“the Contract”) for a sum of $8,000,000.

The Contract incorporated the Singapore Institute of Architects Articles and Conditions of Building Contract (Lump Sum Contract) 7th Edition, April 2005 (“the SIA Conditions”). Under the SIA Conditions, the Plaintiff was entitled to progress payments by way of periodic valuation of works carried out which were certified by the architect appointed for the project.¹ The architect appointed for the project was Philip Lee Pang Kee (“the Architect”), and the quantity surveyor was Turner & Townsend Pte Ltd (“the Quantity Surveyor”).²

On 11 July 2012, the Architect issued two Architect’s Instructions (AI/131/HP/019 and AI/132/HP/019) (“the AIs”), one for each parcel of land. The AIs approved a number of items on the Plaintiff’s list of proposed variation works, including the items numbered 173, 174, 280 and 281 (“the Disputed Items”). These Disputed Items related to claims for: ³ Preliminaries for an alleged extension of time granted to the Plaintiff to complete the project (“the Extended Preliminaries”); and An alleged extension of the Defects Liability Period.

Subsequently, the Plaintiff raised Payment Claim No 32 claiming for a sum of $1,171,646.37 pertaining to work done on the project up to 28 September 2012.⁴ Of that sum, the amount of $614,375 related to the Disputed Items.⁵ The Quantity Surveyor provided an interim valuation of $120,000 for the Extended Preliminaries claims .⁶ The Quantity Surveyor did not provide an interim valuation for the extension of the Defects Liability Period claims.⁷ The Architect then certified the Quantity Surveyor’s interim valuation in Progress Certificate No 32 which amounted to the sum of $321,383.94,⁸ for which the due date of payment was 10 December 2012.⁹

Close to a year later, on 26 September 2013, the Plaintiff raised its final payment claim for the sum of $720,417.29. This claim also contained the Disputed Items.¹⁰ The Quantity Surveyor valued the Disputed Items at $334,000 (this time including the extension of Defects Liability Period claim).¹¹ Subsequently, the Architect certified the Quantity Surveyor’s valuation in Final Certificate No 33 dated 27 September 2013 for the sum of $720,417.28,¹² for which the due date of payment was 5 November 2013.¹³

However, despite repeated requests, the Defendant did not pay the sum amounting to $1,041,801.22 (“the Outstanding Certified Sum”) which is the total sum that the Architect had certified as being due from the Defendant to the Plaintiff under Progress Certificate No 32 and Final Certificate No 33.¹⁴

The Defendant refused to pay the said sums for various reasons, including the allegation that the works carried out by the Plaintiff were defective and should not have been certified by the Architect in the first place. The Defendant also alleged that he had a counterclaim for loss of rental, liquidated damages and rectification works that had to be carried out by third parties.¹⁵

On 29 October 2013, the Plaintiff referred the dispute for adjudication under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the SOP Act”) for the Outstanding Certified Sum, but the adjudicator dismissed the Plaintiff’s claims for ignoring or failing to recognise the timelines for the Defendant’s payment response as stipulated under the SIA Conditions.¹⁶ The Defendant alleged that it was only when the Plaintiff commenced adjudication proceedings against him that he was served a copy of the Plaintiff’s final payment claim.¹⁷

Subsequently, on 13 February 2014, the Plaintiff brought Suit No 180 of 2014 against the Defendant claiming for the Outstanding Certified Sum, as well as interest amounting to $30,700.34.¹⁸

In response, on 7 March 2014, the Defendant applied, inter alia, for a stay of proceedings under s 6 of the Arbitration Act. However, at the hearing before the Assistant Registrar on 28 March 2014, the Defendant’s basis for the stay was premised on a fresh allegation that the Certificates had been procured by fraud.¹⁹

The Defendant’s allegation of fraud was primarily premised on a letter dated 21 March 2014 from the Architect replying to the Defendant’s queries as to why he had to pay for the Disputed Items (“the Letter”). The Architect’s response was, in substance, as follows:²⁰ It was the Plaintiff who represented to the Architect in or about the middle of 2012 that the Defendant had agreed to various proposed variations for which no Architect’s Instructions had been issued, and those included the Disputed Items. As the Architect was no longer in regular contact with the Defendant, the Architect relied on the Plaintiff’s representation of the Defendant’s alleged consent. He also relied on the fact that the Defendant’s project manager did not give him any feedback on the matter, because project manager, as the Defendant’s representative, would have informed the Architect if there was any discrepancy. He left the valuation of the claims to the Quantity Surveyor, as he had stated in the AIs, and simply certified as the Quantity Surveyor recommended. The AIs had the following footnote:²¹

As informed by HP Construction & Engineering Pte Ltd, the above items covered are requested by Owner/ID Axis and to be verified by QS Towner and Turner.

He was not aware that the Defendant had in fact not agreed to the Plaintiff’s claim for Extended Preliminaries until the Defendant subsequently informed him of this.

In summary, the Defendant’s case before the Assistant Registrar was that the Plaintiff had misrepresented to the Architect that the Defendant had agreed to, inter alia, the Disputed Items as variation works, when he had not given such consent (“the Alleged Misrepresentations”). He also alleged that the Architect had relied on the Alleged Misrepresentations when he issued the AIs, retrospectively approving the Disputed Items and other claims as variations to the Contract.

In his 3rd affidavit, the Plaintiff’s managing director, Mr Seah Hwa Peng, denied making the Alleged Misrepresentations to the Architect.²² It was also confirmed at the hearing before the Assistant Registrar that there was no such agreement between the parties.²³

After hearing the parties, the Assistant Registrar granted the stay sought on the basis that there appeared to be a bona fide dispute as to whether any fraudulent misrepresentations were made to the Architect which resulted in the issuance of the Certificates. The Assistant Registrar also ordered that the Plaintiff pay the Defendant costs of $1,500 plus reasonable disbursements.²⁴

The Plaintiff filed a Notice of Appeal on 10 April 2014.

Clauses of the Contract

In the present proceedings, it is clear that unless the Defendant is able to show that the validity of the Certificates is in dispute, no stay of proceedings can be granted in respect of the Plaintiff’s claim, which is based on the Certificates. The reason for this is because Certificates issued by the Architect under the Contract enjoy “temporary finality” pursuant to cl 31(13) of the SIA Conditions, which states:

No certificate of the Architect under this Contract shall be final and binding in any dispute between the Employer and the Contractor, whether before an arbitrator or in the Courts, save only that, in the absence of fraud or improper pressure or interference by either party, full effect by way of Summary Judgment or Interim Award or otherwise shall, in the absence of express provision, be given to all decisions and certificates of the Architect (other than a Cost of Termination Certificate or a Termination Delay Certificate under clause 32(8) of these Conditions), whether for payment or otherwise, until final judgment or award, as the case may be, and until such final judgment or award such decision or certificates shall (save as aforesaid and subject to sub-clause (6) of this condition) be binding on the Employer and the Contractor in relation to any matter which, under the terms of the Contract, the Architect has a fact taken into account or allowed or disallowed, or any disputed matter upon which under the terms of the Contract he has as a fact ruled, in his certificates or otherwise. The Architect shall in all matters certify strictly in accordance with the terms of the Contract. In any case of doubt the Architect shall, at the request of either party, state in writing within 28 days whether he has as a fact taken account of or allowed or disallowed or ruled upon any matter in his certificates, if so identifying any certificate and indicating the amount (if any) taken into account or allowed or disallowed, or the nature of any ruling made by him, as the case may be. [emphasis added]

In other words, under cl 31(13) of the SIA Conditions, no certificate of the architect shall bind the employer and contractor permanently. However, architect’s certificates do have temporary effect, for they bind the parties in the interim period pending final determination of the dispute by arbitration or court proceedings. In the meantime, architect’s certificates may be enforced by way of summary judgment or interim award—unless there is fraud, improper pressure or interference by either party, or an express provision stipulating otherwise. As explained by L P Thean J in Tropicon Contractors Pte Ltd v Lojan Properties Pte Ltd [1989] 1 SLR(R) 591 (“Lojan Properties (HC)”) at [15] (in reference to an...