Newcon Builders Pte Ltd v Sino New Steel Pte Ltd

• Jurisdiction: Singapore
• Judge: Chan Wei Sern Paul AR
• Judgment Date: 11 June 2015
• Neutral Citation: [2015] SGHCR 13
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 228 of 2015
• Year: 2015
• Published date: 08 July 2015
• Hearing Date: 04 June 2015,14 May 2015
• Plaintiff Counsel: Joseph Lee and Tang Jin Sheng (Rodyk & Davidson LLP)
• Defendant Counsel: Wee Qianliang (Central Chambers Law Corporation)
• Subject Matter: Building and Construction Law,Statutes and regulations
• Citation: [2015] SGHCR 13

Chan Wei Sern Paul AR:

The plaintiff and the defendant were, respectively, the main contractor and sub-contractor engaged to erect a house. A dispute arose between them as regards a progress payment that the defendant claimed from the plaintiff and this issue was resolved by adjudication pursuant to the regime provided under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”). Dissatisfied with the award made by the adjudicator, the plaintiff sought to set aside the determination.

Two distinct grounds were proffered in support of the present application: (i) the adjudication application was made prematurely; and (ii) the adjudicator had acted beyond his powers in allowing the defendant to lower its claim during the adjudication. The central question to be addressed in these grounds of decision is whether the two grounds fell within the purview of the High Court’s supervisory jurisdiction in an application to set aside an adjudication determination.

This past April marks a decade since the Act came into operation. Since its enactment, many setting aside applications have been brought on the basis that timelines stipulated under the Act had not been complied with. Of these, a fair proportion involved adjudication applications that were allegedly submitted late; it is less common, although not altogether unprecedented, to find an application grounded in a premature adjudication application. This is the first case to examine such an application through the lens of the Court of Appeal’s seminal decision 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”).

The factual background The construction project

The plaintiff was the main contractor for a construction project properly described as the “Proposed Erection of A 2 Storey Detached Dwelling House with an Attic and a Swimming Pool on Lot 99188K NK 15 at 14 Cassia Drive”. In December 2008, two months after its own appointment, the plaintiff awarded a sub-contract for the defendant to provide materials and perform works relating to certain steel installations. Specifically, the defendant was responsible for “the design, supply, installation and testing of structural steel, roof purlins, steel cladding & steel windows…” The letter of engagement stated in no uncertain terms that the sub-contract works were to be executed in accordance with the conditions of the main contract (i.e., the contract between the plaintiff and the owner of the house).

After substantially completing its obligations under the sub-contract, the defendant served the plaintiff with the latest in a series of payment claims tendered throughout the engagement. Dated 31 December 2014, this payment claim was known as ‘Payment Claim No. 14’. The claim was for work done during the period 15 April 2009 to 20 December 2010 and was for the amount of S$208,783.96. In the usual course of events, payment would either be forthcoming or the recipient of a payment claim would submit a payment response, stating how and why it disagreed with the claim. In the instant case, however, the plaintiff sought further clarification of the claim and the provision of further supporting documents from the defendant.

Instead of obliging the request, the defendant served a Notice of Intention to Apply for Adjudication on the plaintiff whereupon the plaintiff immediately submitted its payment response. Had the plaintiff not done so, the adjudicator may well be entitled under the Act not to consider any reason for the plaintiff withholding payment on the claim. The payment response was submitted on 20 January 2015. On the very next day, the defendant lodged an application for adjudication to the Singapore Mediation Centre pursuant to the Act.

The adjudication proceedings

Events developed fairly rapidly thereafter. On 22 January 2015, the adjudication application was served on the plaintiff, the adjudicator was appointed and parties were informed of the same. The plaintiff filed its adjudication response, as required under the Act, on 29 January 2015 whereupon an adjudication conference was held over three days. A site inspection was also carried out to allow the adjudicator to come to a determination, which he did in short order.

The adjudication determination was issued on 13 February 2015 with the following determination: The plaintiff shall pay the defendant a sum of S$86,961.88 (including GST); The adjudicated amount is to be paid within 7 days of the service of the determination; The rate of interest payable shall be 5.33% per annum compounded on an annual basis from 21 February 2015 up to the date of payment; and The costs of the adjudication shall be borne 70% by the plaintiff and 30% by the defendant.

Pertinently, the adjudicator recorded that during the adjudication, an issue arose in connection with the rates payable for certain materials. As originally agreed, the plaintiff was to pay $300 and $550 per square metre for corten steel cladding and steel windows and doors, respectively, that the defendant was supposed to procure and install. However, it turned out that part of these materials was instead provided by the plaintiff itself, whereupon parties agreed to reduce the corresponding rates to $250 and $350 per square metre instead. This revelation was disclosed by the defendant, seemingly against its own interests, but its intentions were not altogether altruistic – it was made in response to a back charge by the plaintiff for the provision of the said materials. Given the circumstances, the adjudicator chose not to give credit for the back charge but instead applied the lower rates instead. The plaintiff took issue with this decision.

Issue

As intimated earlier, the plaintiff put forward two reasons for setting aside the adjudication determination. Firstly, it contended that the adjudication application filed on 21 January 2015 was submitted too early. Secondly, the plaintiff reckoned that the adjudicator had acted beyond his remit in applying a lower rate to the payment for works relating to corten steel cladding and steel windows and doors. Ordinarily, both these issues had two separate facets to be considered, one factual and the other legal. In the present case, however, the determination of the legal aspects of these issues was sufficient to dispose of the application. Hence, the overarching question for this court may be stated thus: whether the bases provided for setting aside the adjudication determination fell within the court’s supervisory jurisdiction.

The High Court’s Supervisory Function Starting premise

It has long been held that, under the common law, superior courts possess an inherent jurisdiction to control any inferior dispute settlement tribunal or body. This control is exercised via the court’s supervisory jurisdiction. As declared in R v Northumberland Compensation Appeal Tribunal [1952] 1 KB 338 (at 346-347), when the court “exercises its control over tribunals this way, it is not usurping a jurisdiction which does not belong to it. It is only exercising a jurisdiction which it has always had.” For that reason, the High Court in Haron bin Mundir v Singapore Amateur Athletic Association [1991] 2 SLR(R) 494 (at [19]), held that “[t]he expression ‘supervisory jurisdiction’ is a term of act. It is the inherent power of the superior courts to review the proceedings and decisions of inferior courts and tribunals or other public bodies discharging public functions.”

That this supervisory function extends to the adjudication regime under the Act may be inferred from section 27(5) of the Act which states:

Where any party to an adjudication commences proceedings to set aside the adjudication determination or the judgment obtained pursuant to this section, he shall pay into the court as security the unpaid portion of the adjudicated amount that he is required to pay, in such manner as the court directs or as provided in the Rules of Court (Cap 322, R 5), pending the final determination of those proceedings.

This section is supplemented by O. 95 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“ROC”) which sets out the procedural requirements for the filing of an application to set aside an adjudication determination. While the Act does not expressly set out the power of the High Court to set aside an adjudication determination, it cannot be gainsaid that both the Act and the ROC presumes the existence thereof. Perchance it is unnecessary to provide for such a power precisely because it is inherent. Be that as it may, it is now settled law that “the court, in hearing an application to set aside an [adjudication determination]…, is exercising its supervisory jurisdiction”: Citiwall Safety Glass Pte Ltd v Mansource Interior Pte Ltd [2015] 1 SLR 797 (at [51]).

However, the Act is silent about the circumstances under which this supervisory function may be invoked. This is significant because it is trite that the High Court’s supervisory jurisdiction is highly circumscribed. This is so in at least two respects. First, the restricted nature of the Court’s supervisory jurisdiction is one of the main distinguishing features that set it apart from the Court’s revisionary jurisdiction: see Re Mohamed Saleem Ismail [1987] SLR(R) 380 (at [7]). A leading academic has opined that “supervision generally is confined to questions not touching the merits of the case but revision will lie on errors of law and fact: see Tan Yock Lin, “Appellate, Supervisory and Revisionary Jurisdiction” in ch 7 of The Singapore Legal System, (Walter Woon ed) (Longman, 1989) (at pp 233-234).

Secondly, and specific to the regime under the Act, adjudication was never intended to be the final determination of a party’s rights. As is well-known, the scheme establishes an adjudication procedure to...