Sunray Woodcraft Construction Pte Ltd v Like Building Materials (S) Pte Ltd

JurisdictionSingapore
JudgeAng Cheng Hock JC
Judgment Date10 September 2018
Neutral Citation[2018] SGHC 200
Plaintiff CounselValliappan Subramaniam (United Legal Alliance LLC)
Date10 September 2018
Docket NumberOriginating Summons No 555 of 2018
Hearing Date13 June 2018,11 June 2018
Subject MatterAdjudication,Dispute resolution,Contract,Contractual terms,Building and construction law
Year2018
Defendant CounselLew Chen Chen (Chambers Law LLP)
CourtHigh Court (Singapore)
Citation[2018] SGHC 200
Published date23 November 2018
Ang Cheng Hock JC: Introduction

This was an application to set aside an adjudication determination that was made under the Building and Construction Industry Security of Payment Act (Chapter 30B, 2006 Rev Ed) (the “Act”). The ground for the application was that the adjudicator acted without jurisdiction because a mandatory condition under the Act for the adjudication application had not been satisfied. After hearing the parties, I set aside the determination and provided the parties with brief oral grounds for my decision. I now set out the detailed grounds of my decision.

Background to the dispute

Sunray Woodcraft Construction Pte Ltd (“the Applicant”) and Like Building Materials (S) Private Ltd (“the Respondent”) are both construction companies incorporated in Singapore.

The Applicant was a sub-contractor for a project named “Proposed Marina South Mixed Development – Residential & Commercial Tower for Marina One – Hyundai-GS Joint Ventures” (the “Project”). By a Letter of Award dated 22 June 2015 (the “LOA”), but which was only executed and issued on 14 August 2015 for the reasons I will explain later, the Applicant awarded the Respondent the sub-contract works for the design, supply and installation of metal ceiling and secondary supports for the Project (the “Sub-Contract”). The Project has since been completed and the temporary occupation permit issued.

On 22 March 2018, the Respondent served its Payment Claim No. 27 (“PC 27”) for the sum of S$680,441.12 (inclusive of 7% GST) on the Applicant by way of email.

On 11 April 2018, the Respondent served on the Applicant its intention to apply for adjudication. The Respondent filed an adjudication application with the Singapore Mediation Centre on the same day. This was Adjudication Application No. 143 of 2018. The adjudication application was served on the Applicant on 12 April 2018 and the SMC appointed the adjudicator for the application that same day.

On 13 April 2018, the Applicant served its Payment Response No. 17 (“PR 17”) on the Respondent.

On 18 April 2018, the Applicant lodged its adjudication response with the SMC.

The adjudication conference took place on 25 April 2018.

On 4 May 2018, the adjudication determination was issued. The adjudicator allowed the amount claimed in full. She found as follows: The Sub-Contract did not provide for when a payment response ought to be served by the Applicant on the Respondent in respect of a payment claim. This meant that, under s 11(1)(b) of the Act, the Applicant’s payment response was due within seven days after being served with the Respondent’s payment claim, that is, by 29 March 2018. No payment response was served in accordance within this timeline. The Applicant also failed to serve its payment response within the dispute settlement period, which was the period of seven days after 29 March 2018, that is, from 30 March to 5 April 2018. While PR 17 “clearly had the attributes of a payment response with the meaning of” the Act1, it was served on the Respondent only on 13 April 2018, after the time permitted under the Act. The contents of PR 17 should thus be disregarded as required under s 15(3) of the Act because it was not a valid payment response.

In short, the adjudicator was of the view that she was prohibited by the provisions of the Act from considering the reasons set out in PR 17 because it was served out of time. Implicit in her determination was that the Respondent’s entitlement to make the adjudication application had arisen by 6 April 2018, and the application lodged on 11 April 2008 was not premature. This, in turn, was because she had found that there was no provision in the Sub-Contract setting out when the Applicant ought to have served its payment response.

The parties’ cases

The Applicant’s case was that the parties had contractually agreed to a timeline for a payment response. While a draft of the LOA was ready on 22 June 2015, what in fact happened was that parties continued to negotiate until 14 August 2015 when the LOA was finally signed and issued by the Applicant and acknowledged by the Respondent. During the course of these negotiations, the parties had agreed to certain additional terms and variations to the unit rates for the materials used in the Project. Agreement on these changes were recorded in two documents called the Base Tender Offer (“BTO”) and the Technical Bid Evaluation (“TBE”).

In the TBE, item A.12 provided: Payment Claim: the 25th day of each month Payment Certification: within 21 days of receipt of payment claim Payment: within 35 days from the date of receipt of the Sub-Contractor’s tax invoice.

The Applicant argued that the reference to “payment certification” was intended by the parties to refer to the payment response to be issued by the Applicant in the context of the circumstances of the case and the terms of the Sub-Contract.

Based on this, the Applicant argued that the deadline for the service of its payment response to PC 27 was on 12 April 2018, which was 21 days from the date of service of PC 27. Thus, the Respondent’s entitlement to apply for an adjudication determination had not yet arisen as at the date it filed the application, which was on 11 April 2018. It followed that the adjudicator had acted without jurisdiction given that the Respondent did not have the right to seek an adjudication determination on the date that it did so. I should add that no issue was taken by the Applicant at the adjudication proceedings or before me that PC 27 was served on 22 March 2018, rather than on 25 March 2018 as per item A.12(1) of the TBE. The Applicant also proceeded on the basis that it had 21 days from 22 March to serve its payment response, and not from 25 March.

The Respondent’s case was that the TBE was not a contractual document. The LOA specifically set out, at clause 2.1, the documents which together represented the entire agreement between the parties and the TBE was not listed as one of the documents. Alternatively, even if the TBE was part of the Sub-Contract, the parties never intended for “payment certification” to mean “payment response”. Thus, according to the Respondent, there was in fact no agreement between the parties as to when the Applicant must serve its payment response to a payment claim. Under the Act, therefore, such payment response should have been served by 29 March 2018, or at the latest, within the seven-day dispute settlement period that followed.

The Respondent’s entitlement to apply for adjudication had thus arisen since 6 April 2018, the day after the seven-day dispute settlement period. It follows that the Respondent was entitled to apply for an adjudication application on 11 April 2018, which was within seven days of when the entitlement to make the application first arose. Since the Applicant only served its payment response on 13 April 2018, this was rightly disregarded by the adjudicator when she made her determination.

Issues to be determined

The overarching issue before me was whether the adjudicator had jurisdiction to make the adjudication determination pursuant to the Respondent’s application made on 11 April 2018. This depended on whether the parties had contractually agreed to when the Applicant had to serve a payment response to a payment claim from the Respondent.

To answer this question, I had to decide the following sub-issues: Was the TBE part of the agreement between the Applicant and the Respondent? If the answer to (i) was affirmative, was the phrase “payment certificate” at A.12 of the TBE a reference to the “payment response” to be served by the Applicant, as stipulated by the Act, in reply to a payment claim from the Respondent?

The relevant provisions of the Act

Given that much of this case turns on the provisions of the Act as to when a claimant becomes entitled to apply for an adjudication application, it would be apposite to carefully examine the relevant statutory provisions in question.

Section 10(2) sets out when a payment claim can be served. It provides: A payment claim shall be served – at such time as specified in or determined in accordance with the terms of the contract; or where the contract does not contain such provision, at such time as may be prescribed.

Section 11(1) sets out when the respondent who has been served with a payment claim must respond. It provides: A respondent named in a payment claim served in relation to a construction contract shall respond to the payment claim by providing, or causing to be provided, a payment response to the claimant – by the date as specified in or determined in accordance with the terms of the construction contract, or within 21 days after the payment claim is served under section 10, whichever is the earlier; or where the construction contract does not contain such provision, within 7 days after the payment claim is served under section 10.

[emphasis added]

Section 12 then provides when the claimant’s right to apply for an adjudication determination arises. The relevant portions state: Subject to subsection (2), a claimant who, in relation to a construction contract, fails to receive payment by the due date of the response amount which he has accepted is entitled to make an adjudication application under section 13 in relation to the relevant payment claim. Where, in relation to a construction contract – the claimant disputes a payment response provided by the respondent; or the respondent fails to provide a payment response to the claimant by the date or within the period referred to in section 11(1),

the claimant is entitled to make an adjudication application under section 13 in relation to the relevant payment claim if, by the end of the dispute settlement period, the dispute is not settled or the respondent does not provide the payment...

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2 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2018, December 2018
    • 1 December 2018
    ...Court of Appeal decision of MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553 at [34] with approval. 53 [2019] 3 SLR 285. 54 Cap 30B, 2006 Rev Ed. 55 Sunray Woodcraft Construction Pte Ltd v Like Building Materials (S) Pte Ltd [2019] 3 SLR 285 at [45], citing the C......
  • Building and Construction Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2018, December 2018
    • 1 December 2018
    ...of action to be revived on breach by the contractor and the façade subcontractor of their duties under the settlement agreement.172 1 [2019] 3 SLR 285. 2 Lee Chee Wei v Tan Hor Peow Victor [2007] 3 SLR(R) 537 at [41]. 3 Lee Chee Wei v Tan Hor Peow Victor [2007] 3 SLR(R) 537 at [45]. 4 Lee C......

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