Newcon Builders Pte Ltd v Sino New Steel Pte Ltd

• Judge: Quentin Loh J
• Judgment Date: 21 September 2015
• Neutral Citation: [2015] SGHC 226
• Citation: [2015] SGHC 226
• Court: High Court (Singapore)
• Published date: 24 September 2015
• Docket Number: Originating Summons No 228 of 2015 (Registrar’s Appeal No 179 of 2015)
• Plaintiff Counsel: Lok Vi Ming SC, Lee Sien Liang, Joseph, Tang Jin Sheng (Rodyk & Davidson LLP)
• Defendant Counsel: Twang Kern Zern and Wee Qianliang (Central Chambers Law Corporation)
• Subject Matter: Building and Construction Law,Statutes and Regulations
• Hearing Date: 24 July 2015

Quentin Loh J:

This Registrar’s Appeal arises from an adjudication determination under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”). It raises two issues: first, whether an adjudication application can be made before the expiry of the dispute settlement period, and if not, whether that adjudication determination is liable to be set aside by the court (“the Jurisdiction Issue”); and secondly, whether the terms of the main contract were incorporated into the sub-contract thereby rendering the adjudication application premature as it was made before the expiry of the dispute settlement period (“the Construction Issue”).

I reserved judgment after hearing the parties on 24 July 2015 and I now give my decision and reasons therefor.

Background

The plaintiff, Newcon Builders Pte Ltd (“the Plaintiff”), was engaged under a contract with the employer (“the Main Contract”) as main contractor for demolition works and then construction of a “2 Storey Detached Dwelling House with an Attic and a Swimming Pool on Lot 99188K MK15 at 14 Cassia Drive” (“the Project”).¹ The Plaintiff entered into a sub-contract (“the Sub-contract”) with the defendant, Sino New Steel Pte Ltd (“the Defendant”) for some structural and architectural steel works for the Project.

Clause 3.0 of the Sub-contract detailed the scope of works which the Defendant was engaged to carry out and provide:

SCOPE OF WORKS

The scope of the Sub-Contract Works shall include … the design, supply, installation and testing of structural steel, roof purlins, steel cladding & steel windows, including any other Works & Accessories deemed necessary for the proper execution of this Sub-Contract in accordance with the Conditions of Contract, Specifications, Contract Drawings of the Main Contract and the Main Contractor’s Program including any revision thereof. [emphasis added]

The clause made clear that the Sub-contract works were to be executed in accordance with the terms and conditions and drawings and specifications of the Main Contract. Further, cl 6.0 required all works carried out to comply with the specification and drawings unless otherwise agreed by the architect.

The Sub-contract works were carried out and substantially completed sometime around 20 December 2010.² On 31 December 2014, the Defendant served Payment Claim No 14 (“the Payment Claim”) on the Plaintiff for work done during the period 15 April 2009 to 20 December 2010. The amount claimed was $208,783.96 (inclusive of GST).³ In response, the Plaintiff sought clarification of the Payment Claim and asked for certain documents for their assessment.⁴ The Defendant, however, did not reply to the Plaintiff’s request. Instead, on 20 January 2015, the Defendant served on the Plaintiff a notice of the Defendant’s intention to apply for adjudication.⁵ Following this, on the same day, the Plaintiff submitted a document headed “Statement of Final Account”, which it claims to be its payment response to the Payment Claim (“the Statement of Final Account”).⁶

The Defendant filed an adjudication application with the Singapore Mediation Centre on 21 January 2015 (“the Adjudication Application”).⁷ The Adjudication Application was served on the Plaintiff on 22 January 2015. On that same day, Mr Ong Ser Huan was appointed as the adjudicator (“the Adjudicator”).⁸ The Plaintiff filed its adjudication response on 29 January 2015.⁹

This was followed by an adjudication conference which was held over the course of three days (ie, 2, 3 and 5 February 2015). The Adjudicator also conducted a site inspection on 6 February 2015.¹⁰

Shortly after this, the Adjudicator issued his adjudication determination on 13 February 2015 (“the Adjudication Determination”) with the following determination:¹¹ the Plaintiff shall pay to the Defendant a sum of $86,9681.88 (including GST); this amount is to be paid within 7 days after the determination is served on the Plaintiff; the rate of interest payable shall be at 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.

The Plaintiff, being dissatisfied with this decision, commenced Originating Summons No 228 of 2015 (“OS 228/2015”) to set aside the Adjudication Determination. This summons was heard before an assistant registrar (“the AR”) on 14 May 2015 and 4 June 2015. The Plaintiff put forward two reasons for setting aside the Adjudication Determination: the Adjudication Application filed on 21 January 2015 was submitted too early; and 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.

The AR delivered his written decision on 11 June 2015 dismissing the Plaintiff’s application to set aside the Adjudication Determination (“the AR’s Decision”). He concluded that the grounds relied upon by the Plaintiff did not justify the exercise of the court’s supervisory jurisdiction (see [52] of the AR’s Decision). The AR concluded that: the issue of whether an adjudication application was filed prematurely was not one that fell to be considered by the High Court in a setting aside application; and the issue of whether the Adjudicator was entitled to allow the Defendant to lower one of its claims during the Adjudication cannot be considered by the High Court as it entails a review on the merits of the Adjudication Determination. It is against this backdrop that the Plaintiffs commenced Registrar’s Appeal No 179 of 2015 (“RA 179/2015”).

The parties’ arguments The Plaintiff’s case

From the Plaintiff’s written and oral submissions, it would appear that it is no longer challenging the Adjudication Determination on the basis that the Adjudicator was not entitled to lower one of the Defendant’s claims during the Adjudication. The Plaintiff’s main submission is that the Adjudication Application had been filed prematurely and therefore this court is entitled to set aside the Adjudication Determination on that basis.¹²

The Plaintiff argues first, that the supervisory jurisdiction of the court in a setting aside application includes the jurisdiction to examine whether an adjudication application had been filed prematurely.¹³ To support this position, the Plaintiff relies on 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”) where the Court of Appeal noted (at [66]) that while the court should not review the merits of an adjudicator’s decision, the court does have the power to decide whether the adjudicator was validly appointed. Further, the court may also set aside an adjudication determination on the ground of non-compliance with one or more provisions under the Act which is so important that it is the legislative purpose that an act done in breach of the provision should result in the adjudication determination being invalid (see [67] of Chua Say Eng). According to the Plaintiff, the premature filing of the Adjudication Application, which is in breach of 13(3)(a) of the Act, is one such breach which should render the Adjudication Determination invalid.

The Plaintiff further relies on the decision of Taisei Corp v Doo Ree Engineering & Trading Pte Ltd [2009] SGHC 156 (“Taisei Corp”) where the assistant registrar held (at [81]) that a premature adjudication application was ground for setting aside an adjudication determination.

Secondly, the Plaintiff contends that the terms of the Sub-contract allowed the Plaintiff to submit a payment response within a period of 14 days from service of a payment claim.¹⁴ This is significant because in the absence of such a term, s 11(1)(b) of the Act only gives the Plaintiff a seven-day period to submit its payment response. If the Plaintiff only had seven days to submit its payment response, then the Adjudication Application would not have been premature. Therefore, the Plaintiff’s submission that the Adjudication Application was filed prematurely hinges on a finding that it did have 14 days, after the Payment Claim was served, to submit the Payment Response.

The Plaintiff submits that cl 5.0 of the Sub-contract incorporates the terms of the Main Contract; cl 5.0 provides:¹⁵

CONDITIONS OF SUB-CONTRACT

The Conditions of this Sub-Contract shall comply fully with all the terms and conditions as set out in the Main Contract, a copy of which is available for your inspection upon request. …

Under cl 2.2 of the Main Contract, after the claimant serves his payment claim, the respondent has 14 days to issue an interim certificate.¹⁶ According to the Plaintiff, the term “interim certificate” was a reference to a payment response and that because this clause was incorporated into the Sub-contract through cl 5.0, the Sub-contract similarly allowed the Plaintiff 14 days to issue a payment response.

Therefore, according to the Plaintiff, the relevant timelines would be as follows:

Event	Stipulated Date
Service of payment claim	On (or before) the last day of each calendar month (submitted on 31 December 2014 – not in dispute)
Service of payment response	Within 14 days after 31 December 2014 (i.e., 1 January 2015 to 14 January 2105)
Dispute settlement period	The period of seven days after 14 January 2015 (i.e., 15 January 2015 to 21 January 2015)
Submission of adjudication application	Within seven days after 21 January 2015 (i.e., 22 January 2015 to 28 January 2015)

By filing the Adjudication Application on 21 January 2015, the Defendant had done so within the dispute resolution period and therefore prematurely. The Defendant’s case

The Defendant argues that the court is not allowed to set aside the Adjudication Determination on...