LH Aluminium Industries Pte Ltd v Newcon Builders Pte Ltd

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 28 November 2014
• Neutral Citation: [2014] SGHC 254
• Plaintiff Counsel: Daniel Koh and Jin Shan (Eldan Law LLP) and Richard Yeoh Kar Hoe (David Lim & Partners LLP)
• Docket Number: Originating Summons No 159 of 2014 (Registrar’s Appeal No 180 of 2014)
• Date: 28 November 2014
• Hearing Date: 18 August 2014
• Subject Matter: Building and Construction Law
• Published date: 16 December 2014
• Citation: [2014] SGHC 254
• Defendant Counsel: Joseph Lee and Tang Jin Sheng (Rodyk & Davidson LLP)
• Court: High Court (Singapore)
• Year: 2014

Lee Seiu Kin J: Introduction

This is an appeal against the decision of the assistant registrar (“the AR”) dismissing the defendant’s application to set aside the adjudication determination dated 7 February 2014 under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”).

Facts

The defendant is the main contractor for the project described as “Additions and Alterations to Existing 3 Storey Commercial Development/Light Rapid Transit System Depot cum Station on Lot 3496C MK11 at Choa Chu Kang/Woodlands Road”. The plaintiff was appointed as the sub-contractor for the aluminium and glazing installation works for the project by virtue of the letter of award dated 21 January 2011 (“the Contract”). It is not disputed that the Contract incorporated the Singapore Institute of Architects Conditions of Sub-Contract (3rd Ed, 2005) (“the SIA Conditions”).

On 22 June 2013, the plaintiff served on the defendant “Payment Claim No 24” for the sum of $631,683.71. The defendant responded by issuing a payment response for the sum of $0. On 22 July 2013, the plaintiff served on the defendant another payment claim also entitled “Payment Claim No 24” for the same sum. No new work had been carried out by the plaintiff since June 2013. Again, the defendant issued a payment response for the sum of $0. On 22 August 2013, the plaintiff served a similar payment claim for the third time, to which the defendant issued a similar payment response. This was repeated by the plaintiff on 22 September, and 22 November 2013 which elicited the same payment response of $0 from the defendant. And on 2 December 2013, the plaintiff again served on the defendant “Payment Claim No 24” for the sum of $631,683.71 for work done up to 22 November 2013 (“the Final Payment Claim”). The defendant issued a payment response for the sum of $0 on 20 December 2013 (“the Final Payment Response”). This time round, the plaintiff submitted an adjudication application (“the Adjudication Application”) on 3 January 2014, pursuant to which the defendant submitted an adjudication response (“the Adjudication Response”) on 13 January 2014. The adjudication determination (“the Adjudication Determination”) was made on 7 February 2014 in favour of the plaintiff.

On 24 February 2014, the plaintiff applied ex parte in originating summons no 159 of 2014 for leave to enforce the Adjudication Determination pursuant to s 27 of the Act. Leave was granted on 25 February 2014. On 14 March 2014, the defendant applied in summons no 1385 of 2014 to set aside the Adjudication Determination. The AR dismissed the application and the defendant appealed. I heard submissions by counsel for both parties on 18 August 2014 and I now give my decision.

Issues

The issues arising on appeal are: whether the Adjudication Application was premature because the “dispute settlement period” under s 12(2) of the Act had not ended; whether the Final Payment Claim was a “repeat claim” made in breach of s 10(1) of the Act; and whether the dispute between the parties had been substantially settled such that the plaintiff was not entitled to make the Adjudication Application.

Whether the Adjudication Application was premature

The defendant submits that pursuant to s 12(2) of the Act, the plaintiff is entitled to make an adjudication application only if the dispute is not settled or the payment response not provided by the end of the dispute settlement period.¹ The dispute settlement period is defined under s 12(5) of the Act as the period of seven days after the date on which or the period within which the payment response is required to be provided under s 11(1) of the Act. The defendant contends that since the Adjudication Application was not made within the period of seven days after the expiry of the dispute settlement period, as required by s 13(3)(a) of the Act, the adjudicator ought to have rejected the Adjudication Application under s 16(2)(a) of the Act.²

The defendant’s case, therefore, turns on this question: what is the date on which or period within which the Final Payment Response is required to be provided under s 11(1) of the Act?

I first consider the relevant terms in the Contract which relate to the service of payment claims and payment responses. Clauses 10.2 and 10.3 of the Contract provide as follows: 10.2 Payment Terms

You are required [sic] present your monthly payment claim for work done to us, in time for checking and inclusion in our overall monthly progress claim for Main Contract and in any event shall be not later than 22nd day of each month

10.3 Payment Response

Within 21 days after the payment claim is served, or the date stipulated for the service of a payment claim, whichever is later, the Payment Response shall be issued.

[emphasis in original]

In addition, cll 14.4 and 14.5 of the SIA Conditions, which are incorporated into the Contract, state that: 14.4 (a) The Sub-Contractor shall be entitled to serve on the Contractor a payment claim as follows:

(i) where pursuant to clause 14.1(a), the progress payment is to be based on periodic valuation, the Sub-Contractor shall submit the payment claim on the last day of each month following the month in which the Sub-Contract is made; or

(ii) where pursuant to clause 14.1(b), the progress payment is to be by stage instalments, on the certified completion of the relevant stage.

(b) If the time for the submission of any payment claim under the preceding paragraph falls due on a day which is Saturday, Sunday, Statutory or Public Holiday the Sub-Contractor shall submit the payment claim either on the day before or next following that date which itself is not a Saturday, Sunday, Statutory or Public Holiday.

(c) Provided that if the Sub-Contractor submits a payment claim before the time stipulated herein for the making of that claim, such early submission shall not require the Architect to issue the interim certificate or the Contractor his payment response in respect of that payment claim earlier than would have been the case had the Sub-Contractor submitted the payment claim in accordance with the Contract.

14.5 The Contractor shall respond to the payment claim by providing, or causing to be provided, a payment response to the Sub-Contractor within 21 days after the payment claim is served by the Sub-Contractor or the time by or the day on which the Sub-Contractor is required under clause 14.4 to submit his payment claim. This clause shall not apply to a supply contract, which shall be governed by clause 14.6 hereof.

It is not disputed that the Final Payment Claim was served on 2 December 2013.³ However, the defendant submits that the 21-day period under cl 10.3 of the Contract for the service of the payment response only started running from 22 December 2013. This is because cl 10.3 clearly contemplates that there is a “date stipulated for the service of a payment claim”, and that date is provided in cl 14.4 of the SIA Conditions as the last day of each month following the month in which the contract is made.⁴ Since the Contract was dated 21 January 2011 ([2] above), the date stipulated for service of a payment claim would be the 21st day of each month.⁵ Further, as the plaintiff had served the Final Payment Claim on 2 December 2013, earlier than the 21st day of the month, such “early” service of the payment claim would be deemed to be served on the 21st day of the month by virtue of cl 14.4(c) of the SIA Conditions.⁶ If this is correct, it follows that the Final Payment Response and the Adjudication Application were premature.⁷

I am unable to agree with the defendant. The defendant’s submission is premised upon a convoluted reading of cll 10.2 and 10.3 of the Contract and cl 14.4 of the SIA Conditions which presupposes that they are consistent with each other. However, I do not think that they are consistent with each other insofar as “effect cannot fairly be given to both clauses” (see Chitty on Contracts vol 1 (Sweet & Maxwell, 31st Ed, 2012) (“Chitty”) at para 12-078). In my view, cll 10.2 and 10.3 of the Contract and cll 14.4 and 14.5 of the SIA Conditions are two distinct and independent sets of rules governing the service of payment claims and payment responses. They have different dates for service of payment claims. It is also clear that cll 14.4 and 14.5 of the SIA Conditions were meant to be read as a whole. As such, it would be artificial to treat cll 10.2 and 10.3 of the Contract and cll 14.4 and 14.5 of the SIA Conditions as consistent and capable of being read harmoniously together.

In Law Relating to Specific Contracts in Singapore (Michael Hwang SC, editor-in-chief) (Sweet & Maxwell Asia, 2008), it was observed at para 5.3.7 that:

Priority of documents On a construction project of any substantial size, the sheer weight of detail which is found in the contract documentation gives ample scope for discrepancies and inconsistencies. These may arise within one particular document, as where the contract bills contain two inconsistent provisions. They may also arise between two documents, as where something in the bills conflicts with something in the conditions. Inconsistencies can, to a large extent, be resolved if the contract expressly provides an order of precedence between the different documents or specifies that a certain class of documents should prevail over others. When no order of precedence is specified, the more specific document ought to prevail over a standard form document. Words in writing would also usually prevail over any printed terms.

[emphasis added]

In the present case, cl 3 of the Contract provides for, inter alia, the order of precedence in the event of conflict or inconsistency: 3.0 NOMINATED SUB-CONTRACT

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This Letter of Acceptance, your tender submission, the specifications thereto and the following letters, faxes and other...