Sungdo Engineering & Construction (S) Pte Ltd v Italcor Pte Ltd

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 07 April 2010
• Neutral Citation: [2010] SGHC 105
• Plaintiff Counsel: S Magintharan and James Liew (S Magin & Co)
• Docket Number: Originating Summons No 231 of 2009
• Date: 07 April 2010
• Hearing Date: 31 March 2009,09 October 2009,19 August 2009
• Subject Matter: Building and Construction Law,Dispute resolution,Alternative dispute resolution procedures
• Year: 2010
• Citation: [2010] SGHC 105
• Defendant Counsel: Timothy Kho Thong Teck (One Legal LLC)
• Court: High Court (Singapore)
• Published date: 14 July 2010

Lee Seiu Kin J: Introduction

In this originating summons, the plaintiff applied to set aside an adjudication order (“the Adjudication Order”) dated 12 February 2009 made by Mr Koh Lee Meng James (“the Adjudicator”) in SOP Application No SOP/AA08 of 2009. The Adjudication Order was made pursuant to an application by the defendant under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”). On 9 October 2009, I allowed the plaintiff’s application and set aside the Adjudication Order on the ground that the defendant had not served a payment claim under s 10 of the Act (“Payment Claim”), and therefore, the Adjudication Order was null and void. I ordered the defendant to pay the plaintiff costs fixed at $10,000. The defendant had since filed a notice of appeal and I now give the grounds for my decision.

Background

There was some dispute as to the circumstances of the commencement of the matter and I shall deal with this later, at para 6. What was not in dispute is the following. The plaintiff was a subcontractor engaged by M+W Zander – Samsung JV, the main contractor in the construction of a wafer plant at Tampines Industrial Avenue (“the Project”). In March 2007 the plaintiff entered into a subcontract with the defendant (“the Contract”) to provide services for the chilled water piping of the Project, which included testing and commissioning, and supply of management and other staff (“the Contract Works”). The contract sum was $1.5m (“the Contract Sum”). The terms of payment in the Contract states: “No down payment. Progress claim 30 Days Nett”. This meant that the defendant was to submit progress claims which the plaintiff would pay within 30 days of submission. The Contract commenced on 1 March 2007 and from April to July 2007, the defendant submitted five “progress claims” in the form of invoices. The first invoice, dated 13 April 2007, was for $78,750; the second dated 18 May 2007, was for $594.30; the third dated 23 May 2007, was for $315,000; the fourth dated 20 June 2007, was for $472,500 and the fifth dated 27 July 2007, was for $401,250. For each of these five invoices, the plaintiff made payments within the 30 day period stipulated in the Contract.

Around September 2007 a dispute arose between the parties. The defendant claimed that it had carried out variation works (“the Variation Works”) under the Contract pursuant to instructions from the plaintiff. However the plaintiff alleged that it was the defendant who had breached the Contract; the defendant had delayed carrying out the works due to financial difficulties and the plaintiff had to advance monies to the defendant’s subcontractors to enable the works to be completed. The plaintiff accordingly informed the defendant that it would not pay on its claims. The defendant took this as a repudiatory breach, accepted it and terminated the Contract. The defendant left the work site at the end of September 2007. Thereafter the defendant submitted four further invoices. The first of these, which was the sixth invoice submitted, was dated 5 October 2007, for the sum of $256,919.84 for part of the Variation Works carried out. The seventh invoice, dated 26 October 2007, was for $321,000 being the balance works under the Contract that the defendant claimed had been completed by that date. The eighth invoice dated 1 December 2007 was for $97,750.00 and the ninth invoice, also dated 1 December 2007, was for $448,603.92. These last two invoices were for the remainder of the Variation Works. Not unexpectedly the plaintiff did not make any payment on these last four invoices. The plaintiff’s position was that it was not liable under the Contract to pay the seventh invoice as the defendant had not completed all its works under the Contract and had in fact been paid in excess of its entitlements under the Contract. As for the three invoices relating to Variation Works, the plaintiff’s position was that it had not authorised those works. The defendant’s position was that the plaintiff had given written instructions in respect of the “additional/variation works” and these had been carried out.

On 6 December 2007, the defendant’s solicitors, M/s Tan Lim & Wong (“TLW”) wrote a letter to the plaintiff demanding payment under the sixth and seventh invoices within seven days, failing which the defendant would institute legal proceedings. On 13 December 2007, the plaintiff replied to TLW, denying liability to pay the invoices on the ground that the defendant had failed to complete the works under the Contract. On 19 December 2007, the plaintiff wrote to the defendant requesting an explanation for the delay and giving notice that the plaintiff would take over the outstanding works if the defendant did not revert by 23 December 2007. The plaintiff claimed that it thereafter engaged other subcontractors to complete the Contract Works.

On 30 July 2008 the defendant filed the writ in Suit No 529 of 2008 (“the Suit”) in the High Court, claiming for payment under the sixth to ninth invoices. The plaintiff entered appearance in the Suit on 7 August 2008 and filed its Defence and Counterclaim on 25 August 2008. On 8 October 2008, the plaintiff filed further and better particulars of its Defence and Counterclaim in response to the defendant’s request by its letter of 5 September 2008. On 11 November 2008, the plaintiff filed an amended Defence and Counterclaim and on 25 November 2008 the defendant filed the Reply. Then on 9 December 2008 the defendant filed a notice of change of solicitors as well as an amended Statement of Claim. The discovery process was commenced on 19 December 2008 with the filing of an affidavit and list of documents by the defendant, followed by the filing of the corresponding affidavit and list of documents by the plaintiff on 22 December 2008. On 23 December 2008, the defendant filed further and better particulars of its amended Statement of Claim pursuant to the plaintiff’s request in its letter of 17 December 2008.

This was the status of the matter before the defendant fired the first salvo. I say “allegedly” because, as I had alluded in para 2, there was a dispute between the parties on this point. The defendant’s position was that on 26 December 2008, it served on the plaintiff a Payment Claim. This was in the form of a letter dated 23 December 2008 together with accompanying documents (collectively, “the 2008 Letter”). The defendant’s engineer, Ngo King Hwa (“Ngo”) deposed on affidavit that on 26 December 2008, he personally handed the 2008 Letter to the plaintiff’s agent, Kim Jin Yong (“Kim”). However Kim, in his affidavits, strenuously denied that this was done. Both sides drew attention to various factors supporting its position: the plaintiff said, inter alia, that by that time the parties were already embroiled in a suit in the High Court over the same subject matter and were represented by solicitors who would have undertaken the task of serving any Payment Claim; the defendant said, inter alia, that the plaintiff had not raised the issue of non-service to the Adjudicator. The ferocity of the allegations that the other side is lying would certainly call for cross-examination of the deponents to determine the truth in this respect.

Whatever the dispute between the parties concerning the service of the 2008 Letter, the parties agreed that there did not exist a written response of any kind to it by the plaintiff. The following facts were also agreed upon. On 16 January 2009, the defendant lodged an adjudication application (“the Adjudication Application”) under s 13 of the Act at the Singapore Mediation Centre (“SMC”). The SMC is an authorised nominating body (“ANB”) under the Act. On the same day, the defendant served on the plaintiff a notice of intention to apply for adjudication under the Act. In the Adjudication Application the defendant asserted that a Payment Claim had been served on the plaintiff on 26 December 2008 in the sum of $1,124,192.29 and that no payment response had been given by the plaintiff. The Adjudicator was appointed on 22 January 2009 and the plaintiff filed the adjudication response on 23 January 2009. After considering the submissions of the parties the Adjudicator made his determination on 12 February 2009. He found that the plaintiff was not liable in respect of the seventh invoice for $321,000 which was for the balance works under the Contract and the ninth invoice for $448,603.92 which was for part of the Variation Works. The Adjudicator found the plaintiff liable in respect of the sixth and eighth invoices totalling $354,588.37. On 25 February 2009 the plaintiff filed this originating summons.

First issue: whether the 2008 Letter served

The first question to be determined was an issue of fact: Whether Ngo had served the 2008 Letter on Kim. If the plaintiff’s version is true, then the defendant did not serve a Payment Claim and this would invalidate the Adjudication Order which was made pursuant to a Payment Claim purported to be served on 26 December 2008. This was a substantial dispute of fact that would require cross-examination of the principal witnesses of fact, Kim and Ngo, as well as the defendant’s director, Moon Chang Gook. However I was of the view that I could dispose of this application on the basis of my finding on the next question: whether the 2008 Letter amounted to a Payment Claim.

Second issue: whether the 2008 Letter a Payment Claim

The second issue was therefore this: assuming that the 2008 Letter was served on the plaintiff on 26 December 2008 as the defendant claimed, did it constitute a Payment Claim? To throw light on this question it is necessary to consider the relevant provisions of and background to the Act.

Scheme of the Act

The long title to the Act states that it is “[a]n Act to facilitate payments for construction work done or for related goods or services supplied in the building and...