Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) and another appeal

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 02 November 2012
• Neutral Citation: [2012] SGCA 63
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeals Nos 44 and 46 of 2011
• Published date: 14 November 2012
• Year: 2012
• Hearing Date: 17 October 2011
• Plaintiff Counsel: Wong Soon Peng Adrian, Nelson Goh Kian Thong and Liew Mei Chun (Rajah & Tann LLP) and Koh Kok Kwang (CTLC Law Corporation)
• Defendant Counsel: Edwin Lee Peng Khoon and Poonaam Bai d/o Ramakrishnan Gnanasekaran (Eldan Law LLP)
• Citation: [2012] SGCA 63

Chan Sek Keong CJ (delivering the judgment of the court): Introduction

Civil Appeal No 44 of 2011 (“CA 44 of 2011”) is an appeal by Lee Wee Lick Terence (“TL”) and Civil Appeal No 46 of 2011 (“CA 46 of 2011”) is a cross-appeal by Chua Say Eng (“CSE”) against the decision of a High Court Judge (“the Judge”) to set aside an adjudication determination made in favour of CSE under s 17 of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”) (see Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) v Lee Wee Lick Terence (alias Li Weili Terence) [2011] SGHC 109 (“the GD”)).

The background of the Act

Before addressing the facts of this case, we ought to briefly set out the policy behind and the purpose of the Act and the scheme of adjudication that it provides for. According to the second reading speech for the Building and Construction Industry Security of Payment Bill 2004 (Bill 54 of 2004) (“the Bill”), the Bill was passed to solve a common problem in the construction industry of contractors (especially sub-contractors) going unpaid for work done or materials supplied. To help facilitate the cash-flow of contractors, the Act sought to establish “a fast and low cost adjudication system to resolve payment disputes” (see Singapore Parliamentary Debates, Official Report (16 November 2004) vol 78 at col 1112 (Cedric Foo Chee Keng, Minister of State for National Development) (“the second reading speech”)).

Generally, the scheme prescribed by the Act has the following features. To paraphrase the Explanatory Statement attached to the Bill, the Act provides that any person who has carried out construction work or supplied goods or services under a construction contract or supply contract has a statutory entitlement to payment. The Act also establishes an adjudication procedure by which such a person may claim payment as well as provides for remedies when the adjudicated amount is not paid. A contractor obtains the right to seek adjudication after serving a payment claim in the prescribed form on the customer (ss 10 and 12 of the Act), to which the customer has to serve a payment response or else be barred from contesting the amount claimed before the adjudicator (ss 11 and 15(3)(a) of the Act). The adjudicator’s decision as to the payable amount is binding in an interim manner (s 21(1) of the Act).

This whole process is characterised by strict time-lines. After adjudication, the adjudicated sum is payable within a short time (s 22(1) of the Act) and enforceable through various means (ss 23–27 of the Act), thus facilitating the contractor’s cash-flow. However, the adjudication outcome can be disputed (and any errors as to the amount payable accounted for) at a later arbitration or litigation that finally determines the parties’ contractual rights (ss 21(3) and 34(4) of the Act). Some of the provisions of the Act form the subject of this appeal and will be discussed below in greater detail.

Concerning the origin of the scheme under the Act, the then Minister of State for National Development stated the following in the second reading speech:

This Bill is modelled after similar legislation in other countries such as Australia, UK and New Zealand. For more than a year, the Building and Construction Authority (BCA) has consulted extensively with various stakeholders in the industry. These include the developers, professionals, main contractors, subcontractors, suppliers, and Government procurement agencies. The features of this Bill have been adapted to suit local conditions and have taken the stakeholders’ suggestions and views into account.

In the debate that followed the second reading speech, frequent comparison was made between the Bill and the Building and Construction Industry Security of Payment Act 1999 (Act 46 of 1999) (NSW) (“the NSW Act”). This piece of New South Wales legislation has a similar structure and purpose to the Act and seems to have informed the work of the Act’s drafters, although there are important differences between them. Facts

The material facts are as follows. On 16 August 2008, TL engaged CSE, a contractor, to convert his two-storey house at 1 Pasir Ris Heights into a three-storey house. Disputes arose, and this resulted in TL terminating the contract on 21 April 2010. In the letter of termination, TL required CSE to vacate the construction site by 12.00pm on 26 April 2010, which CSE did.

The Act applied to the contract between TL and CSE (“the Contract”) because it was a written contract for the carrying out of construction work on a residential property which required the approval of the Commissioner of Building Control under the Building Control Act (Cap 29, 1999 Rev Ed) (see ss 4(1) and 4(2)(a) of the Act).¹

On 2 June 2010, CSE served a document described as “PAYMENT CLAIM NO. 6” (“PC6”) on TL by leaving it at TL’s last known address as stated in the Contract. PC6 was a claim for $140,450.40 for work done from June 2009 to 26 April 2010. There was no reference in PC6 that it was made or served under the Act. The contents of PC6 are as follows:

PAYMENT CLAIM NO. 6

CONSTRUCTION WORKS TO NO. 1 PASIR RIS HEIGHT SINGAPORE

QUOTATION REF: WFCE/1022/08 ACCEPTED ON 16 AUGUST 2008

ADDITIONAL WORKS FOR 2ND FLOOR

QUOTATION DATED 5 NOV 2008 ACCEPTED ON 3 DECEMBER 2008

We submit our payment claim number 6 for work done from June 2009 to 26 April 2010:

Amount claimed:	$350,450.40
Less payment:	$210,000.00
Amount due/claimed:	$140,450.40

Details of the amount claimed are attached (2 pages).

We note that the details provided in the attachments to PC6 did not show when the works described were completed.

TL did not serve on CSE a payment response within seven days as required by s 11(1)(b) of the Act. On 18 June 2010, CSE served a notice of intention to apply for adjudication under s 13(2) of the Act on TL at the same address. On 22 June 2010, CSE filed an adjudication application with the Singapore Mediation Centre (“SMC”), an authorised nominating body (“ANB”) for adjudicators under the Act. The SMC served the adjudication application on TL on the same day at the same address. TL did not file an adjudication response with the SMC under s 15(1) of the Act. An adjudicator (the “Adjudicator”) was then appointed under s 14 of the Act. The Adjudicator communicated with the parties and held a conference on 2 July 2010 to hear them on their respective positions.

Ultimately, the Adjudicator identified the following issues to be determined by him: whether CSE had effected valid and proper service of PC6 on TL on 2 June 2010; whether PC6 was served out of time; whether PC6 was invalid for failure to state that it was issued for the purposes of the Act; and the extent to which an adjudicator may assess the amount claimed in a payment claim as being properly due to a claimant where there is no payment response and adjudication response.

At the conference, TL indicated that issues (a), (b) and (c) (see [10] above) were in the nature of jurisdictional challenges based on the decision of the High Court in Sungdo Engineering & Construction (S) Pte Ltd v Italcor Pte Ltd [2010] 3 SLR 459 (“Sungdo”), ie, they related to the jurisdiction of the Adjudicator to make a determination on PC6. The Adjudicator rejected a submission by CSE that TL should not be allowed to raise jurisdictional and/or procedural issues at the adjudication if these arguments had not been stated in a payment response on the ground that they constituted “reasons for withholding payment” under s 15(3) of the Act. He accordingly proceeded with his adjudication and, in his adjudication determination dated 7 July 2010 (“the AD”), awarded CSE the sum of $125,450.40. In relation to issues (a) to (d) (see [10] above), he held as follows: (a) PC6 was properly and validly served; (b) PC6 was not served out of time; (c) PC6 was not invalid for not stating that it was issued for the purposes of the Act; and (d) he was bound to conduct his own independent assessment as to the amount due to CSE even where there was no payment response or adjudication response by TL.

Upon TL’s failure to pay the amount awarded to CSE under the AD, CSE made an ex parte application to the Registrar under O 95 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) for leave to enforce the AD under s 27(1) of the Act as a judgment of the court. Leave was granted and the order of court was served on TL. In response, TL applied under s 27(5) of the Act to set aside the order granting leave as well as the AD on the following grounds: PC6 was not a valid payment claim under the Act; PC6 was not served on him in accordance with the Act; and PC6 was served out of time.

Decisions of the Assistant Registrar and the Judge

The Assistant Registrar (“AR”) found in favour of CSE on all three of the grounds at [12] above (see Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) v Lee Wee Lick Terence @ Lee Weili Terence [2010] SGHC 333). TL appealed against the AR’s decision on the first and third grounds. The Judge decided the appeal on the first ground against TL, but the appeal on the third ground in TL’s favour. Accordingly, the Judge allowed TL’s appeal.

Before addressing the merits of the appeal, the Judge first considered the preliminary question of whether he could review the Adjudicator’s decision on the two issues raised by TL, viz, whether PC6 was a valid payment claim and whether PC6 was served out of time. In this regard, he compared two distinct approaches taken in the Singapore courts. The first approach was developed in the cases of Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd [2010] 1 SLR 658 (“Chip Hup Hup Kee”), SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 (“SEF Construction...