Shin Khai Construction Pte Ltd v FL Wong Construction Pte Ltd

• Jurisdiction: Singapore
• Judge: Jordan Tan AR
• Judgment Date: 28 January 2013
• Neutral Citation: [2013] SGHCR 4
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 1134 of 2012/Y
• Published date: 20 June 2013
• Year: 2013
• Hearing Date: 11 January 2013
• Plaintiff Counsel: Edwin Lee Peng Khoon and Radika Mariapan (Eldan Law LLP)
• Defendant Counsel: John Lim Kwang Meng (Harry Elias Partnership LLP)
• Subject Matter: Building and Construction Law
• Citation: [2013] SGHCR 4

Jordan Tan AR: Introduction

This case raises the question of whether an adjudication determination may be set aside on the ground that the adjudication application was lodged later than the period of entitlement stipulated under s 13(3)(a) of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”). This was a question considered but left open by the Court of Appeal in Lee Wee Lick Terence @ Li Weili Terence v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) [2012] SGCA 63 (“Chua Say Eng”) (at [61]) as it was not in issue.

The plaintiff, Shin Khai Construction Pte Ltd (“SK”), filed this application to set aside an adjudication determination dated 15 November 2012 (“the Determination”) in respect of Adjudication Application No SOP AA0111 of 2012 (“the Adjudication Application”) on the grounds that the payment claim was formally defective and the Adjudication Application was lodged out of time.

Background

In February 2012, SK, a general contractor, appointed the defendant, FL Wong Construction Pte Ltd (“FL”), a renovation contractor, to carry out works for a project, which was described as the “Proposed Erection of a Single-Storey Single-User Light Industrial Development with a 4-Storey Ancillary Office Building on Lot 04167M MK 07 at Tuas Avenue 11”. FL was to be paid $768,768. Under cl 1 of the Letter of Award (“the Contract”), the works to be carried out are to be based on bills of quantities and are subject to re-measurement and re-calculation.

On 25 September 2012, FL sent Payment Claim No 8 (“the Payment Claim”) to SK. That claim reads as follows:

[emphasis in original]

The attachment referred to under the heading “Accumulated Progress Interim Claim” contained a detailed breakdown of the work done in the month of September 2012 but only stated the sum claimed for each month from February to August 2012. FL received no response and on 18 October 2012, gave notice of its intention to adjudicate and proceeded to lodge the Adjudication Application. On the same day, SK sent FL an email alleging that it had faxed its payment response to FL on 15 October 2012. The Determination was issued on 15 November 2012.

Dissatisfied with the Determination, SK sought to set it aside on the following grounds: The Payment Claim does not comply with the formal requirements under the Act and the relevant regulations; and Even if the Payment Claim is valid, FL had lodged its Adjudication Application out of time and that application should have been rejected by the adjudicator pursuant to s 16(2) read with s 13(3)(a) of the Act.

The parties’ submissions

With regard to the first ground, SK argued that the Payment Claim was defective because although it referred to the period “1.09.12 To 25.09.12”, it sought to claim payment for works done outside of that period, in particular, February to August 2012. SK also argued that the Payment Claim was defective because it only provided a detailed breakdown for September 2012 but not for February to August 2012. The Payment Claim therefore did not meet the requirements in s 10(3) of the Act and regulation 5(2) of the Building and Construction Industry Security of Payment Regulations (“the Regulations”) which read as follows:

[Section 10(3) of the Act]

(3) A payment claim – (a) shall state the claimed amount, calculated by reference to the period to which the payment claim relates; and (b) shall be made in such form and manner, and contain such information or be accompanied by such documents, as may be prescribed.

[Regulation 5(2) of the Regulations]

(2) Every payment claim shall – (a) be in writing; (b) identify the contract to which the progress payment that is the subject of the payment claim relates; and (c) contain details of the claimed amount, including – (i) a breakdown of the items constituting the claimed amount; (ii) a description of these items; (iii) the quantity or quantum of each item; and (iv) the calculations which show how the claimed amount is derived.

As for the argument that FL had lodged the Adjudication Application out of time, SK argued that under s 13(3)(a) of the Act, FL should have lodged the application sometime from 10 to 16 October 2012. SK’s argument was as follows. The Payment Claim was served on 25 September 2012. In the absence of a contractually agreed timeline for service of the payment response, s 11(1)(b) of the Act prescribed a default seven days and s 12(5) prescribed another additional seven days as the dispute settlement period. The combined fourteen day period after 25 September 2012 ended on 9 October 2012. Therefore, the seven day window to lodge the Adjudication Application which began immediately after that period was from 10 to 16 October 2012. FL lodged the Adjudication Application on 18 October 2012 and was thus out of time.

In response, FL argued that it was clear that the Payment Claim was a monthly progress claim for September 2012 which also included a claim for work done for previous months which had not been paid. It argued that it was entitled to include the claim for the previous months under s 10(4) of the Act. It also pointed out that the claim for the previous months was the subject of previous payment claims. As for the argument that it had filed the Adjudication Application out of time, FL argued that there was a contractual clause in the form of cl 49 which provided that SK had ten days after receipt of a payment claim to evaluate and issue a payment certificate. FL argued that this payment certificate is intended to function also as a payment response and that instead of the default seven days under s 11(1)(b) of the Act, the ten day period applied. Taking into account the seven day additional dispute settlement period, the time for service of a payment response only ended on 12 October 2012. Accordingly, the window for FL to lodge the Adjudication Application was from 13 to 19 October 2012. By lodging the application on 18 October 2012, FL was not out of time.

My decision Whether the Payment Claim was formally defective

It is clear that the court has the power to set aside an adjudication determination under s 27(5) of the Act and O 95 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) and in deciding whether to do so, may review the validity of a payment claim (see JFC Builders Pte Ltd v Lioncity Construction Company Pte Ltd [2012] SGHC 243 at [23]-[25]; see also, Chua Say Eng at [28], [31] and [37]).

On the first issue of whether the Payment Claim complied with the formal requirements, I disagree with SK that the Payment Claim was defective for not being in compliance with s 10(3) of the Act and regulation 5(2) of the Regulations. First, in my view, although the Payment Claim could have been better drafted, it met the requisite standard under s 10(3)(a) for the claimed amount to be calculated by reference to the period to which the payment claim relates. It was clear that the sum claimed was an accumulated sum as this was stated on the first page of the Payment Claim. This is allowed under s 10(4) of the Act (see Chua Say Eng at [92]). The attachment referred to then sets out those other months for which the claim was made in addition to the month of September 2012.

In totality, the use of the words “accumulated” on the first page of the Payment Claim accompanied by the reference to the attachment make it clear that: (1) the Payment Claim was in respect of an accumulated sum which included a period prior to September 2012, namely, February to August 2012; and (2) FL had added the sum claimed for the month of September 2012 to the outstanding sums.

As for providing a detailed breakdown as required under regulation 5(2) of the Regulations, I reject SK’s argument that FL needed to give a detailed breakdown for the other months in addition to the detailed breakdown for September 2012. As FL had rightly argued, those months were the subject of previous payment claims and there was no need to rehash the information previously provided to the same level of detail.

I note that FL had also sought to argue that the way SK had responded, in seeking to reduce the amount claimed by setting it off against sums incurred in months other than September 2012, showed that SK also understood that the Payment Claim was not limited to work done in September 2012. But, having found that the Payment Claim had complied with the formal requirements, there was no need for me to rely on this argument. After all, whether or not the respondent properly understood the Payment Claim was irrelevant to the court’s objective assessment as to whether the Payment Claim met the formal requirements of the Act and the Regulations. That said, in a case where a payment claim is not in accordance with the formal requirements, it...