Sito Construction Pte Ltd (trading as Afone International) v PBT Engineering Pte Ltd

• Jurisdiction: Singapore
• Judge: Tan Siong Thye J
• Judgment Date: 14 January 2019
• Neutral Citation: [2019] SGHC 7
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 1069 of 2018 (Summons No 4328 of 2018)
• Year: 2019
• Published date: 19 June 2019
• Hearing Date: 01 November 2018,12 November 2018
• Plaintiff Counsel: Koh Yheoh Zhou Napolean Rafflesson and Chong Yi Mei (Patrick Ong Law LLC)
• Defendant Counsel: Wong Tze Roy (Goh JP & Wong LLC)
• Subject Matter: Building and Construction Law,Dispute resolution,Jurisdictional objection,Waiver,Patent errors
• Citation: [2019] SGHC 7

Tan Siong Thye J: Introduction

The respondent, PBT Engineering Pte Ltd, was a subcontractor for the building and construction project known as the “Proposed Development of Ancillary Building for Changi East to effect 3-Runway Operations at Singapore Changi Airport – Package One – Supply and Installation of RC Building Works and Drainage Works” (“the Project”).¹ On 1 April 2016, the respondent entered into a contract with a sole proprietorship, Afone International, to work on the Project (“the Contract”). At that time, Mr Loke Swee Wan (“Mr Loke”) was the sole proprietor of Afone International. About a month after the Contract, in May 2016, Mr Loke sold the business of Afone International to the applicant, Sito Construction Pte Ltd.² The applicant retained all the employees of Afone International. Mr Loke became an employee of Afone International after the sale of the business until August 2018.³ The applicant lodged a change of ownership of Afone International with the Accounting and Corporate Regulatory Authority (“ACRA”) only on 16 July 2018 and back-dated it to 1 July 2016, ie, more than two years after the change of ownership.⁴ It is undisputed that no notice was given to the respondent regarding this change of ownership and neither was there any novation of the Contract.

Under the new sole proprietor, Afone International continued to carry out its obligations under the Contract with the respondent. From July 2016 till August 2017, the applicant had done works under the Contract for the respondent and in turn, the respondent had paid the applicant $4,811,246.13. ⁵

Afone International issued Payment Claim No. 25 (“Payment Claim”) on 14 June 2018 and served it on the respondent. This Payment Claim was for the sum of $2,047,712.04 and it was for work done by Afone International pursuant to the Contract up till the date of the Payment Claim.⁶ The respondent did not serve any payment response in respect of the Payment Claim.⁷

On 17 July 2018, the applicant served on the respondent a Notice of Intention to Apply for Adjudication. On 18 July 2018 an adjudication application (“AA”) pursuant to s 13 of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“SOPA”) was lodged by the applicant.⁸

On 19 July 2018, the respondent did a business profile search of Afone International and learnt of the change in ownership of Afone International. ⁹ The respondent lodged its adjudication response on 26 July 2018. The applicant and respondent tendered further submissions on 31 July 2018 and 1 August 2018 respectively. An adjudication conference was held on 2 August 2018 and both parties made oral submissions. It is important to note that the respondent was legally represented at all times during the adjudication process. Throughout the adjudication process, the respondent did not dispute that the Contract was not binding between Afone International and the respondent.¹⁰

On 15 August 2018, the adjudicator issued his determinations (“the AD”) and held that the respondent was liable as follows: That the respondent pays to the applicant the adjudicated amount of $1,752,684.22 (inclusive of GST) (“the Adjudicated Amount”); That the due date of the payment for the Adjudicated Amount is 12 August 2018; That the respondent pays interest at the rate of 5.33% per annum on the Adjudicated Amount or any part thereof which remains unpaid. The interest is to run from 12 August 2018 up to the date of full payment; That the respondent is to pay the Adjudicated Amount and the interest thereon to the applicant within 7 days from the service of the AD; and That the respondent bears 70% of the Adjudication Application fee of $642 (inclusive of GST) and the adjudicator fee of $30,694.02 (inclusive of GST) (“Adjudication Costs”). The applicant bears the balance of 30%.¹¹

However, payment was not forthcoming from the respondent. Thus, the applicant’s solicitors wrote a letter dated 17 August 2018 to the respondent’s solicitors to demand payment of the Adjudicated Amount, the interest thereon as well as the respondent’s share of the Adjudication Costs. As at 28 August 2018, there was no reply from the respondent’s solicitors.¹²

Consequently, the applicant filed an ex parte originating summons HC/OS 1069/2018 (“the OS”) to enforce the AD under s 27 of SOPA. Its application was granted. On 4 September 2018, HRC/ORC 5818/2018 was extracted (“the Court Order”). On 19 September 2018 the respondent in turn filed summons HC/SUM 4328/2018 to, inter alia, set aside both the Court Order and the AD (“the setting aside application”).

After hearing the parties on 1 November 2018, I dismissed the setting aside application. On 2 November 2018, the respondent made a request with comprehensive submissions for further arguments, which I granted it. In reply, the applicant filed its further arguments on 5 November 2018. The respondent filed a reply on 7 November 2018.

On 12 November 2018, the parties came before me to make further oral arguments and upon considering their submissions, I maintained my decision to dismiss the setting aside application.

On 8 December 2018, about a month after my decision, the respondent appealed. I now give the grounds of my decision.

The parties’ cases

I shall first set out the respective parties’ cases, starting with the respondent who had filed the setting aside application.

The respondent’s case

First, the respondent argued that the AD was invalid for want of jurisdiction. The respondent submitted that the applicant had no cause of action and locus standi against the respondent under the Contract because it was not a party thereto. The respondent argued that the Contract was entered into between Mr Loke, trading as Afone International, and not the applicant, trading as Afone International. When Mr Loke sold the business to the applicant, the business of Mr Loke, trading as Afone International, ceased to exist. Since there was no novation or assignment agreement between the applicant, trading as Afone International, and the respondent, there was no contractual relationship between them. Therefore, there was no basis for the applicant to bring the AA under SOPA. Thus the resulting AD was invalid for want of jurisdiction.¹³ Hence, it follows that the Court Order in the OS was also invalid.

Second, the respondent argued that the applicant could not sue in its own name because it was a sole proprietorship and so must sue in the name of the sole proprietor. The respondent cited Order 77 rule 9 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”).¹⁴ Therefore, the respondent argued that the OS was invalid and the Court Order made therein should be dismissed. The respondent also argued that similarly, the AA filed by the applicant under SOPA was filed under the name of Afone International and not under the applicant’s name, ie, Sito Construction Pte Ltd. Thus, the AA was also invalid.¹⁵

Finally, the respondent argued that the AD was also invalid because there had been a patent error in the findings of the adjudicator. In particular, the adjudicator was wrong to find that there was no settlement agreement between the parties.¹⁶

The applicant’s case

In reply, the applicant argued that the respondent failed to raise the objection that there was no contractual relationship between the applicant and the respondent at the adjudication. Thus, the respondent could not raise this objection at the setting aside application.¹⁷

In any event, the applicant argued that it was the correct party to commence the AA pursuant to the Payment Claim because the signatories to the Contract was Afone International and the respondent. When the applicant bought over Afone International’s business, it continued trading under the business name “Afone International” and the applicant became the contracting party under the Contract. Hence, there was no requirement for the applicant to enter into a novation or assignment agreement with the respondent when it took over the business of Afone International.¹⁸

With regard to the respondent’s claim that the applicant had improperly brought this OS by not stating the name of the sole proprietor of Afone International, the applicant submitted that this was merely a procedural irregularity which could be remedied by amendment.¹⁹ The applicant also submitted that the Rules of Court did not apply to adjudication applications under SOPA. Hence, Order 77 rule 9 would not have applied in this case. Therefore, the AA was validly brought when it named the claimant as “Afone International” instead of the applicant, ie, Sito Construction Pte Ltd, “trading as Afone International”.²⁰

Finally, the applicant submitted that the adjudicator was correct to find that there was no settlement agreement entered into between the parties.²¹ In any event, the applicant submitted that the court should not review the merits of an adjudicator’s decision. Thus, the respondent was not entitled to raise this argument again at the setting aside application.²²

My decision

At the hearing on 12 November 2018, I considered the following issues: Were the parties bound by the Contract despite the fact that there was a change in the sole proprietor of Afone International one month after the Contract was executed? Was the respondent estopped from raising the jurisdictional objection that there was no contract between the parties at this setting aside application after having failed to raise it at the adjudication proceedings? Was there a patent error when the adjudicator found that there was no settlement agreement between the parties?

In my consideration, I also dealt with the preliminary issues as to whether the applicant, then identified only as Afone International, had been properly named in the OS and the AA. The respondent asserted that since Afone International is a sole proprietorship, the proper party for the...