Kingsford Construction Pte Ltd v A Deli Construction Pte Ltd

• Jurisdiction: Singapore
• Judge: Tan Siong Thye J
• Judgment Date: 20 July 2017
• Neutral Citation: [2017] SGHC 174
• Court: High Court (Singapore)
• Docket Number: Originating Summons Nos 460 and 362 of 2017 (Summons No 1738 of 2017)
• Published date: 28 July 2017
• Year: 2017
• Hearing Date: 25 May 2017
• Plaintiff Counsel: Luo Ling Ling (Aequitas Law LLP)
• Defendant Counsel: Swah Yeqin, Shirin and Chong Kuan Keong (Chong Chia & Lim LLC)
• Subject Matter: Building and construction law,Statutes and regulations,Building and Construction Industry Security of Payment Act,Dispute resolution,Adjudication,Breach of natural justice,Stay of enforcement pending appeal
• Citation: [2017] SGHC 174

Tan Siong Thye J: Introduction

Kingsford Construction Pte Ltd (“Kingsford”) had two applications, namely, Summons No 1738 of 2017 (“SUM 1738”) and Originating Summons No 460 of 2017 (“OS 460”), to set aside two separate adjudication determinations (“AD”) obtained by A Deli Construction Pte Ltd (“Deli”) against Kingsford. One AD was for the adjudicated sum of $251,455.41¹ and the other AD was for $219,929.72.² It was not disputed that Kingsford did not file its payment responses in relation to both.

After hearing arguments from Kingsford and Deli, I ruled that the two Payment Claims No 15 served by Deli were in compliance with s 10 of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“SOPA”). Furthermore, Kingsford could not raise other issues such as the invalidity of the payment claims, set-off, or that wrong rates were applied for some items in Adjudication Application No 45 of 2017 (“AA45”) as it had not filed its payment responses in accordance with the SOPA. Accordingly, I dismissed Kingsford’s applications with costs fixed at $5,000 for both cases.

Thereafter, Kingsford sought to stay the execution of my order pending appeal. I also dismissed this application and ordered that the payment into court by Kingsford be released to Deli forthwith.

The period to appeal had lapsed and there was no appeal lodged.

Background

Kingsford was the main contractor appointed by Kingsford Development Pte Ltd for the construction works at Hillview Peak.³ Deli was a subcontractor appointed by Kingsford to supply labour, small tools and equipment for wet trades at Hillview Peak.⁴ There were two subcontracts between the parties. One subcontract was for Blocks 103 and 105 at Hillview Peak for the contract sum of $1,150,440 by way of a Letter of Acceptance dated 13 August 2015 (“the 13 August subcontract”).⁵ The other subcontract was for Block 101 also at Hillview Peak for the contract sum of $1,117,490 by way of a Letter of Acceptance dated 15 August 2015 (“the 15 August subcontract”).⁶

On 20 January 2017, Deli served its Payment Claim No 15 under the 13 August subcontract and also its Payment Claim No 15 under the 15 August subcontract (collectively, “the two Payment Claims No 15”).⁷ Kingsford did not lodge payment responses for both claims.⁸ On 13 February 2017, Deli issued a Notice of Intention to Apply for Adjudication in respect of AA45 for the sum of $219,929.72 (excluding GST).⁹ On 15 February 2017, Deli issued a Notice of Intention to Apply for Adjudication in respect of Adjudication Application No 43 of 2017 (“AA43”) for the sum of $419,599.16 (also excluding GST).¹⁰

The ADs were delivered by two different adjudicators on separate occasions. On 23 March 2017, the adjudicator in AA43, Mr Giam Chin Toon SC, delivered his AD and directed Kingsford to pay Deli the sum of $251,455.41 (inclusive of GST) plus other charges.¹¹ On 31 March 2017, the adjudicator in AA45, Mr Christopher Chuah, delivered his AD and directed Kingsford to pay the sum of $219,929.72 (exclusive of GST) plus other charges.¹²

Kingsford failed to pay the adjudicated amounts and Deli applied to the court to obtain leave to enforce both the ADs in Originating Summons No 362 of 2017 and DC/OSS 56 of 2017.¹³ In response, Kingsford filed SUM 1738 and OS 460 to set aside the two ADs in relation to the 13 August subcontract and 15 August subcontract respectively.

Parties’ submissions Kingsford’s submissions

In the applications to set aside Deli’s two ADs, Kingsford made two main arguments. First, Kingsford submitted that the two Payment Claims No 15 were invalid as they were payment claims made after the finalisation of accounts. The two Payment Claims No 14 were the final claims. Further, the two Payment Claims No 15 did not fall within the ambit of allowable ‘repeat claims’, such claims could be allowed even after the finalisation of accounts, as they were materially distinct from the two Payment Claims No 14.¹⁴ As the two Payment Claims No 15 were invalid the adjudicators had no jurisdiction to determine the adjudication.

Secondly, Kingsford also submitted that the two adjudicators breached natural justice in issuing the ADs. For SUM 1738, Kingsford said that the adjudicator failed to consider the differences between Payment Claim Nos 14 and 15 under the 13 August subcontract, namely, that Kingsford had a set-off comprising liquidated damages, the cost of rectification works, back charges for material wastage, and administrative charges for Deli’s failure to adhere to certain rules and failure to provide sufficient code trade personnel.¹⁵

For OS 460, Kingsford similarly contended that the adjudicator breached natural justice by failing to consider Kingsford’s right to set-off Deli’s claims against its back charges,¹⁶ by failing to consider Kingsford’s claims for liquidated damages founded on Deli’s failure to furnish workers of sufficient skill and its lack of timely progress under the 15 August subcontract,¹⁷ and by arriving at an erroneous adjudicated sum by using wrong rates for certain items in Payment Claim No 15.¹⁸

Kingsford additionally submitted that it was not precluded from challenging the ADs on the above two grounds although it did not file payment responses for both ADs. This was on the basis that the adjudicators did not consider patent errors arising on the face of the materials properly before them. Kingsford argued that it did not file payment responses for both ADs as it thought that the two Payment Claims No 14 were the final payment claims and hence Deli was precluded from filing further payment claims.¹⁹

Deli’s submissions

Deli submitted that the two Payment Claims No 15 were valid and that Kingsford had waived its right to challenge the jurisdiction of the adjudicators. First, Deli contended that on the authority of the Court of Appeal case of Grouteam Pte Ltd v UES Holdings Pte Ltd [2016] 5 SLR 1011, parties should raise the issue of the adjudicator’s lack of jurisdiction at the “earliest possible opportunity” (at [64]) so as not to delay the proceedings. Otherwise, the party who failed to raise the objection would be taken to have waived it. In this case, Kingsford did not file the payment responses. Hence it was deemed to have waived its objection that the adjudicators did not have jurisdiction.²⁰

Secondly, even if Kingsford did not waive its right to challenge jurisdiction, the two Payment Claims No 15 were valid as they fulfilled the formal requirements set out in the SOPA and the Building and Construction Industry Security of Payment Regulations (Cap 30B, Rg 1, 2006 Rev Ed) (“the SOPA Regulations”).²¹

The court’s decision

Kingsford challenged the two ADs of Deli basically on two grounds: The two Payment Claims No 15 were invalid and thus the adjudicators had no jurisdiction to adjudicate the payment claims. There was a breach of natural justice as the adjudicators failed to consider Kingsford’s set-off and counterclaim. I rejected both submissions and I shall now explain each in turn.

Were the two Payment Claims No 15 valid?

A payment claim is valid as long as it fulfils the formal requirements set out in SOPA and the SOPA Regulations. This was expressed by the Court of Appeal in Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) and another appeal [2013] 1 SLR 401 (“Chua Say Eng”) at [78]:

… the correct test for determining the validity of a payment claim is whether a purported payment claim satisfies all the formal requirements in s 10(3)(a) of the Act and reg 5(2) of the SOPR. If it does, it is a valid payment claim …

[emphasis added]

The relevant requirements in the SOPA are contained in s 10, which reads:

Payment claims

10.—(1) A claimant may serve one payment claim in respect of a progress payment on — (a) one or more other persons who, under the contract concerned, is or may be liable to make the payment; or (b) such other person as specified in or identified in accordance with the terms of the contract for this purpose.

(2) A payment claim shall be served — (a) at such time as specified in or determined in accordance with the terms of the contract; or (b) where the contract does not contain such provision, at such time as may be prescribed. (3) A payment claim — (a) shall state the claimed amount, calculated by reference to the period to which the payment claim relates; and (b) shall be made in such form and manner, and contain such other information or be accompanied by such documents, as may be prescribed. (4) Nothing in subsection (1) shall prevent the claimant from including, in a payment claim in which a respondent is named, an amount that was the subject of a previous payment claim served in relation to the same contract which has not been paid by the respondent if, and only if, the first-mentioned payment claim is served within 6 years after the construction work to which the amount in the second-mentioned payment claim relates was last carried out, or the goods or services to which the amount in the second-mentioned payment claim relates were last supplied, as the case may be.

Regulation 5 of the SOPA Regulations complements s 10 of the SOPA by prescribing the required form, manner and contents of a payment claim as follows:

Payment claims

5.—(1) Where a contract does not contain any provision specifying the time at which a payment claim shall be served or by which such time may be determined, then a payment claim made under the contract shall be served by the last day of each month following the month in which the contract is made.

(2) Every payment claim shall — (a) be in writing; (b) identify the contract to which the progress payment that is the subject of the payment claim relates; and (c) contain details of the...