UES Holdings Pte Ltd v Grouteam Pte Ltd

• Jurisdiction: Singapore
• Judge: Quentin Loh J
• Judgment Date: 26 October 2015
• Neutral Citation: [2015] SGHC 275
• Plaintiff Counsel: Ian de Vaz and Melanie Chew (WongPartnership LLP)
• Docket Number: Originating Summons No 649 of 2015
• Date: 26 October 2015
• Hearing Date: 21 August 2015
• Subject Matter: Statutes and Regulations,Building and Construction Law
• Year: 2015
• Citation: [2015] SGHC 275
• Defendant Counsel: Radika Mariapan (IRB Law LLP)
• Court: High Court (Singapore)
• Published date: 04 November 2016

Quentin Loh J: Introduction

By this originating summons, UES Holdings Pte Ltd (“the Plaintiff”) seeks to set aside an adjudication determination under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”).

The Plaintiff was engaged as a main contractor by Changi Airport Group (Singapore) Pte Ltd (“CAG”) for a project entitled “Relocation of Pumphouse and Substation at Singapore Changi Airport”¹ (“the Main Contract”). The Plaintiff then entered into a domestic sub-contract (“the Sub-contract”) with Grouteam Pte Ltd (“the Defendant”) to carry out, inter alia, the civil, structural and architectural works of the new Pumphouse and Substation.²

On 20 April 2015, the Defendant served Payment Claim No. 18 (“the Payment Claim”) on the Plaintiff.³ Not having received a payment response from the Plaintiff, on 20 May 2015, the Defendant proceeded to serve a notice of intention to apply for adjudication (“the Notice of Intention”) and lodged an adjudication application (“the Adjudication Application”) with the Singapore Mediation Centre (“SMC”).⁴ Upon receipt of the Notice of Intention, the Plaintiff then issued Payment Response No. 18 (“the Payment Response”) on 20 May 2015.⁵ The SMC served a copy of the Adjudication Application on the Plaintiff on 21 May 2015.⁶ An adjudicator was appointed and on 19 June 2015, the adjudicator rendered his determination (“the Adjudication Determination”) ordering, inter alia, that the Plaintiff pay the Defendant the sum of $2,905,683.89.⁷

The Plaintiff is applying to set aside the Adjudication Determination on three alternative grounds:⁸ the Payment Claim was defective as it was served out of time (“the First Ground of Challenge”); the Notice of Intention and/or the Adjudication Application were defective as they were served out of time (“the Second Ground of Challenge”); and the Adjudication Application was defective and/or invalid as it did not contain an extract of the terms and conditions of the Sub-contract that are relevant to the dispute (“the Third Ground of Challenge”).

It is necessary to make some comments on the Sub-contract. It is exhibited in the 1st Affidavit of Chua Kok Liang, filed on 9 July 2015 (“1st CKL Affidavit”), and it runs for some 507 pages, from pp 85–592. The phrase “cobbled together” is an apt description, so are the words “enigmatic” and “confusing”. There were quite a number of documents that were bundled together; some parts of which sat ill with another and the language used was at times wanting and difficult to comprehend. This is unfortunately not all that unusual in some of the construction contracts that end up in arbitration or the courts.

The affidavits give little or no information on the negotiations leading up to the Sub-contract or how some important documents came to be included in the Sub-contract. The context is thus largely missing. The more relevant parts of the Sub-contract, dated 30 August 2013, are as follows: It starts with a ‘Sub-contract Agreement’, dated 30 August 2013, comprising some 31 pages with 28 clauses and four Schedules.⁹ It is followed by Annex 1, entitled “Summary of Contract Negotiations” (“the SOCN”), which is signed by the parties, dated 28 August 2013 and envisaged the subsequent placing of a purchase order. A two page document from the Defendant, also dated 28 August 2013,¹⁰ follows; this appears to be a third revision of a quotation for the Sub-contract works following upon a joint site inspection with a revised price in manuscript of $8,300,000 (the previous price was $8,800,000 with the $500,000 difference being characterised as the “goodwill discount”). A typed notation: “Confirmed and Accepted by:” at the bottom right hand corner was not signed or stamped. It is common ground that the next 50 pages (pp 128–181 of the 1st CKL Affidavit) were the Preliminaries (General Conditions and Preliminaries) from the tender documents of the Main Contract. The Defendant accepts that they are a “reproduction in whole of the Plaintiff’s Main Contract tender documents”.¹¹ Its significance is that each item or part thereof, as the case may be, was specifically bracketed and was annotated with handwritten words next to it such as “Included”, “Not Included”, “NA”, “Noted” or “Under Main Contract”. It was alleged by Mr Ian De Vaz, counsel for the Plaintiff, and it was not denied by Ms Radika Mariapan, counsel for the Defendant, that the Defendant went through this document and made written annotations on the right hand side against each item; the handwriting was thus by “the Defendant”¹². The Defendant’s stamp, which was initialled, appeared on each of these pages of the Preliminaries. I am told, and this is not denied, that a discussion and marking of these pages allegedly took place before the signing of the SOCN.¹³ I accept Mr De Vaz’s submission that the parties had obviously applied their minds by going through each and every item or sub-item in the Preliminaries of the Main Contract and specifically deciding whether it was part of the Sub-contract or otherwise. This same document appears at pp 215–268 of the 1st CKL Affidavit but with the words “INCLUDED” typed in for the applicable items and sub-items with the same stamp and initials of the Defendant at the bottom of each page. It should be noted that some items, which originally had the handwritten notation “NOTED” written against it, had been amended in the typed version of the Preliminaries to “INCLUDED”; each of these pages in the typed version of the Preliminaries also carried the stamp and initials of the Defendant. The items of note include the following: Item A of Sect1.1/1, under the heading “GENERALLY” which provided that “The Conditions of Contract used are the Public Sector Standard Conditions of Contract for Construction Works 2008 (Sixth Edition December 2008)…” (“PSSCOC”) was “INCLUDED”. Item G of Sect1.1/11, which was titled “Clause 32. Progress Payments and Final Account” was “INCLUDED”. Item A of Sect.11/10, under the heading “CONDITIONS OF CONTRACT” which provided, inter alia, that the Conditions of Contract would comprise the PSSCOC was “INCLUDED”. A purchase order was also executed on 30 August 2013 (“the Purchase Order”) and this appears at p 1149 of the 1st CKL Affidavit.

I should mention at this juncture that Section 6 of the First Schedule to the Sub-contract Agreement contains a ‘priority’ or ‘precedence’ clause which provides for inconsistencies between the attachments which form the Sub-contract:¹⁴

Notwithstanding anything stated in this Sub-Contract, in the event and to the extent of any inconsistency between two or more attachments which form part of this Sub-Contract, those attachments will be interpreted in the following order of priority:

(a) clauses 1 to 28 of this Sub-Contract; (b) the Schedules (c) the documents set out in Section 6 of the First Schedule (of which references to the Main Contract shall prevail in the event of inconsistency between the said documents

[emphasis in original]

Section 6 of the First Schedule will play a crucial role as some parts of the Sub-contract appear, inter alia, to contradict other parts or to use different phrases or clauses to provide for possibly the same situation. I now turn to the parties’ respective cases.

The First Ground of Challenge The Plaintiff’s Case

The Plaintiff’s First Ground of Challenge (ie, the Payment Claim was served out of time), is that item E of Sect1.1/16 of the Preliminaries (“Preliminaries E”) provides for the timeline in which a payment claim must be submitted. Preliminaries E provides that Defendant is only entitled to submit payment claims within seven days from the end of each calendar month.¹⁵ The Payment Claim, which was served on 20 April 2015, was therefore served out of time.

Preliminaries E appears at Sect1.1/16 of the Preliminaries under the heading “INTERIM PAYMENTS”. Item D appears under that heading as well and precedes Preliminaries E; item D is headed “The Reference Schedule” and caters for valuation of progress claims by reference to items within a “Reference Schedule” based on the percentage completion of each item therein. It reads:

For the purposes of clause 32 of the [PSSCOC], the Contractor shall allow in his price for progress payments to be valued by reference to the items set out in the Reference Schedule for the Valuation of Progress Payments (“the Reference Schedule”). The valuation for each progress payment shall be based on the percentage completed of each of the items set out in the Reference Schedule in a reference month and multiplying the said percentage by the value of the item.

[emphasis added]

Preliminaries E, which follows item D, provides as follows:

Within 7 days from the end of each calendar month (hereinafter “the reference month”), the Contractor shall deliver to the Employer (with copies to the Superintending Officer), a payment claim in a form which shows a breakdown of the amount claimed by reference to the items as set out in the Reference Schedule. In addition to the requirements set out in clause 32.1(1) of the [PSSCOC], the payment claim shall also state:

(1) Amounts paid previously under the Contract; and

(2) The balance arising out of the Contract in respect of the reference month which is due to the Contractor or the Employer, as the case may be.

[emphasis added]

In contrast, the Defendant disagrees and contends instead that clause E of the SOCN (“Negotiations E”) is the applicable provision that governs the submission of payment claims.¹⁶ As noted above, the SOCN is set out in Annex 1 of the Sub-contract. Clause D of the SOCN sets out a Payment Schedule which breaks down the payment of the contract price into stages by percentage. Under this Schedule, 5% is payable upon receiving the Performance Bond, 5% upon submission of shop drawings, 75% “[u]pon monthly...