Rong Shun Engineering & Construction Pte Ltd v C.P. Ong Construction Pte Ltd

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 28 February 2017
• Neutral Citation: [2017] SGHC 34
• Plaintiff Counsel: Daniel Koh, Poonaam Bai, and Lorenda Lee (Eldan Law LLP)
• Date: 28 February 2017
• Docket Number: Originating Summons No 253 of 2016 (Summons No 1596 of 2016)
• Hearing Date: 28 June 2016,27 May 2016
• Subject Matter: Claims by sub-contractor,Sub-contracts,Statutes and regulations,Building and Construction Law
• Year: 2017
• Defendant Counsel: Tan Tian Luh and Ngo Wei Shing (Chancery Law Corporation)
• Court: High Court (Singapore)
• Citation: [2017] SGHC 34
• Published date: 29 December 2017

Vinodh Coomaraswamy J:

Before me is the typical application and cross-application arising out of an adjudication determination under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”). The determination is dated 1 March 2016 and requires the respondent to pay the applicant the principal sum of $379,530.80. The applicant has applied for and obtained leave ex parte under s 27 of the Act to enforce the determination as though it were a judgment to the same effect. The respondent now applies to have the determination set aside.

The respondent seeks to set aside the adjudication determination on three alternative grounds: the adjudicator exceeded his jurisdiction by adjudicating upon a claim for payment which did not arise from a single contract. the adjudicator exceeded his jurisdiction by adjudicating upon the applicant’s claim to recover a $37,000 retention sum when the applicant did not advance that claim in the payment claim.¹ the adjudicator breached the rules of natural justice by determining this retention sum claim without hearing from the respondent.² The respondent argues further that, if any one of these grounds is upheld, the entire determination must be set aside. In particular, if either of the respondent’s two challenges to the adjudicator’s determination of the retention sum claim is upheld, the respondent’s argument is that I have no power to set aside only that part of the determination as relates to the retention sum.

Having heard the parties’ submissions and considered the evidence, I have decided as follows: (i) for a claim for payment to be a “payment claim” within the meaning of the Act, it must arise from a single contract; (ii) the applicant’s payment claim in this claim did in fact arise from a single contract; (iii) the adjudicator exceeded his jurisdiction by adjudicating upon the retention sum claim; (iv) that aspect of his determination is therefore a nullity; (v) on the facts of this case, the respondent’s natural justice challenge to the determination on the retention sum claim adds nothing to its jurisdictional argument; (vi) I have the power, under the common law doctrine of severance, to sever that part of the determination as deals with the retention sum claim and to uphold the remainder; and (vii) this is a case in which that power ought to be exercised.

I have therefore set aside only the part of the determination which deals with the retention sum claim. The remainder of the determination continues to carry interim finality for the applicant’s interim benefit.

The respondent has appealed against my decision. I therefore now set out my reasons.

I begin with the facts.

Background facts The parties’ contractual relationship

On 28 December 2012,³ the Housing & Development Board of Singapore (“HDB”)⁴ engaged the respondent as the main contractor to carry out addition and alteration works to 15 car parks in the eastern part of Singapore.⁵ The main contract obliged the respondent to commence work on 28 January 2013 and to finish work within precisely a year, on or before 27 January 2014. The respondent’s scope of works under the main contract included electrical works and fire alarm works.

Before the award of the main contract, during the tender phase in November 2012, the respondent had invited selected contractors to submit quotations for the electrical works and the fire alarm works.⁶ The applicant was one of those contractors. It responded to the respondent’s invitation by submitting two written quotations in two separate documents dated 20 December 2012. It quoted $550,108.57 for the electrical works and $289,334 for the fire alarm works.⁷ Unless otherwise stated, all sums of money I shall set out in this judgment exclude goods and services tax.

The respondent made a counter-offer of $500,000 for the electrical works and $240,000 for the fire alarm works.⁸ The applicant accepted the counter-offer. The total agreed price for both scopes of work was therefore $740,000.

On 7 January 2013, the applicant issued two revised quotations⁹. They were in terms virtually identical to the original quotations save that they each now bore the reduced prices for each scope of work as agreed.

The applicant commenced work in or about April 2013. It appears that the work was physically completed in April 2015.¹⁰ In the course of carrying out the work, however, a dispute arose between the respondent and the applicant. The cause of the dispute was the applicant’s use of metal conduits with Class 3 protection against corrosion instead of metal conduits with Class 4 protection, as the contract specified.¹¹ As a result, the respondent claimed a cost adjustment for the omission and also the right to back charge to the applicant liquidated damages for the resulting delay in completing and handing over the works to the HDB.¹²

The progress claims and payment history

As a result of these disputes, the respondent initially delayed and eventually ceased payment to the applicant.¹³ Between April 2013 and January 2016, the applicant submitted 24 progress claims to the respondent. The respondent paid a total of $409,000 to the applicant against its first ten progress claims¹⁴ but paid nothing against its last 14 progress claims. The respondent’s last payment to the applicant was on 30 December 2014 for progress claim 10 dated 14 February 2014.

The last progress claim presented by the applicant was progress claim 24 dated 20 January 2016 in the sum of $342,530.80.¹⁵ It was an omnibus claim in two senses. It covered all work done from the commencement of the works in April 2013 until 20 January 2016. It also covered both scopes of work, i.e. both the electrical works and the fire alarm works.¹⁶

The respondent did not pay progress claim 24, whether in whole or in part.¹⁷ It also did not provide a payment response, either within seven days as required by s 11(1)(b) of the Act or before the dispute settlement period under s 12(5) of the Act expired on 3 February 2016.

The applicant applies for adjudication

On 5 February 2016, the applicant served notice on the respondent under s 13(2) of the Act that it intended to apply for adjudication in respect of progress claim 24.¹⁸ In this notice, the applicant invited the adjudicator to adjudicate upon the applicant’s claim to recover the retention sum. The applicant extended this invitation to the adjudicator even though the retention sum claim was not advanced in progress claim 24. Indeed, the applicant had expressly deducted the retention sum from its claim in progress claim 24 (see the computation reproduced at [93] below).

The applicant duly lodged its adjudication application with the Singapore Mediation Centre (“SMC”)¹⁹ and served it on the respondent. ²⁰ The SMC appointed an adjudicator.²¹ The respondent lodged an adjudication response.²²

The parties attended an adjudication conference on 23 February 2016.²³ Neither party was legally represented at the adjudication conference, or indeed in the entire adjudication. The adjudicator permitted the applicant to present its case. He prevented the respondent from making any submissions, holding that s 15(3) of the Act barred the respondent from addressing him on any issues because it had failed to serve a payment response.²⁴

The adjudicator rendered his determination on 1 March 2016.²⁵ He awarded the applicant both: (i) the principal sum claimed in progress claim 24 in its entirety, i.e. $342,530.80; and (ii) the $37,000 retention sum.²⁶ The total value of the determination in the applicant’s favour was therefore $379,530.80, leaving aside goods and services tax, interest and costs.

With the adjudication determination in hand, the applicant applied and obtained: (i) an order granting it leave to enforce the determination in the same manner as a judgment; and (ii) an order that judgment be entered against the respondent in terms of the determination. The respondent, in turn, applied to set aside the determination.

The respondent argues that the determination should be set aside on the three alternative grounds set out [2] above. The first two grounds relate to jurisdiction and the third relates to natural justice.

The respondent neither raised nor reserved the two jurisdictional grounds in the course of the adjudication. The respondent submits²⁷ that this is immaterial: a failure to raise a jurisdictional ground in a payment response or otherwise in the course of an adjudication does not estop a respondent from taking that point before a court when applying to set aside a determination or when resisting an application to enforce a determination (see JFC Builders Pte Ltd v LionCity Construction Co Pte Ltd [2013] 1 SLR 1157 at [35] (“JFC Builders”); Australian Timber Products Pte Ltd v A Pacific Construction & Development Pte Ltd [2013] 2 SLR 776 at [46]). I accept that submission. I must therefore consider the two jurisdictional grounds on their respective merits.

I therefore now deal with each of the respondent’s three grounds in turn.

First ground: validity of the payment claim Three subsidiary questions

It is common ground that, as a result of the events I have outlined at [8] – [10] above, the respondent engaged the applicant as its contractor under a construction contract within the meaning of the Act for two scopes of work: the electrical works and the fire alarm works.²⁸ What is in dispute is whether the parties entered into one contract or two.

The applicant’s case is that the parties entered into a single contract comprising two scopes of work. The respondent’s case is that the parties entered into two separate contracts, each comprising a single scope of work. On that premise, the respondent argues that it is contrary to s 5, when it is read together with ss 10(1) and 10(3) of the Act,²⁹ for a payment claim to arise from more than one contract. Accordingly, the...