Vinod Kumar Ramgopal Didwania v Hauslab Design & Build Pte Ltd

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 17 March 2017
• Neutral Citation: [2017] SGCA 19
• Plaintiff Counsel: Steven Lam, Madeline Choong (Templars Law LLC)
• Date: 17 March 2017
• Docket Number: Civil Appeal No 15 of 2016
• Hearing Date: 19 January 2017
• Subject Matter: Building and Construction Law,Dispute Resolution,Alternative Dispute Resolution Procedures,Building and Construction Contracts,Building and Construction Industry Security of Payment Act,Novation,Statutes and Regulations
• Published date: 22 March 2017
• Defendant Counsel: Rey Foo Jong Han, Munirah Mydin (KSCGP Juris LLP)
• Court: Court of Appeal (Singapore)
• Citation: [2017] SGCA 19
• Year: 2017

Sundaresh Menon CJ (delivering the grounds of decision of the court): Introduction

This was an appeal brought by Vinod Kumar Ramgopal Didwania (“the Appellant”) against the decision of the High Court judge (“the Judge”) in Originating Summons No 312 of 2015 (“OS 312/2015”) (see Hauslab Design & Build Pte Ltd v Vinod Kumar Ramgopal Didwania [2017] 3 SLR 103 (“the Judgment”)). The Judge dismissed the Appellant’s application to set aside an Order of Court dated 8 April 2015 (“the Order”), which granted Hauslab Design & Build Pte Ltd (“the Respondent”) leave to enforce an adjudication determination that had been rendered in respect of a dispute between the parties (SOP/AA081 of 2015 dated 20 March 2015). Among the main issues that were raised in this appeal was the question of the standard of proof that the Appellant had to meet, in relation to the defences that he mounted in his attempt to resist the Respondent’s claim for payment. After hearing the parties, we dismissed the appeal with a brief statement of our reasons. We now furnish the detailed grounds for our decision.

The relevant factual background

The Appellant is the owner of Lot 6950A MK 17 at 202A Lornie Road Singapore 298732.

On 15 April 2013, the Appellant entered into a contract with Hauslab D&B Pte Ltd (“D&B”) which required D&B to design and build on his property a two-storey detached house with an attic and an open roof terrace (“the Construction Contract”). Under the Construction Contract, the Appellant was the “Employer”, and D&B was the “Builder” and “Contractor”. The contract sum was $5,098,411.67.

Although D&B and the Respondent have similar names, in fact, they are separate entities. Both D&B and the Respondent are wholly-owned subsidiaries of Hauslab Holdings Pte Ltd (“Hauslab Holdings”). Mr Tan Sinn Aeng Ben (“Mr Tan”) is a director of both D&B and of Hauslab Holdings; but he is not a director of the Respondent.

A week after signing the Construction Contract, the Appellant formally appointed his wife, Ms Nidhi Vinod Didwania (“Mrs Didwania”), as his nominee, giving her the authority to “issue direct instructions relating to the works to [D&B], on [his] behalf and also act on [his] behalf with respect to all payment matters moving forward”.

The Novation Agreement

It was not disputed that sometime in December 2013, Mr Tan produced a draft novation agreement (“the Novation Agreement”) dated 1 December 2013 and handed it to either the Appellant or Mrs Didwania. D&B wanted to novate the entire Construction Contract to the Respondent through the Novation Agreement. The Novation Agreement provided that the Appellant would “release and discharge [D&B] from any and all obligations and liabilities owed to [the Appellant] under the [Construction Contract]”; and that in D&B’s place, the Respondent would “be bound by the terms of the [Construction Contract] in every way as if [it] was, and had been from the inception, a party to the [Construction Contract] in lieu of [D&B]”.

According to Mr Tan, he had raised the possibility of novating the Construction Contract from D&B to the Respondent sometime between August and October 2013. Subsequently, in December 2013, he personally handed the Novation Agreement to the Appellant or Mrs Didwania. Mr Tan’s evidence was that the Appellant “fully agreed” to the Novation Agreement. The Appellant also assured Mr Tan that he (that is, the Appellant) would sign the Novation agreement and return it after his daughter, a lawyer in private practice, had reviewed it. Mr Tan therefore left the Novation Agreement with the Appellant. His evidence was that the Novation Agreement was never returned to him.

The Appellant disagreed with Mr Tan’s version of the facts. His evidence was that Mr Tan had handed the Novation Agreement to Mr Didwania, but no agreement was reached. Both the Appellant and Mrs Didwania refused to sign it because they were “unwilling to hand over the redevelopment of [their] home to some other company on a whim”, especially one in which Mr Tan (who had been recommended to them by their property agent) was not a director. According to the Appellant, the Novation Agreement was returned unsigned to D&B on the very next day after Mr Tan handed it Mrs Didwania.

The application for permission to carry out structural works

In the meantime, on 4 November 2013, Alan Yap Engineers & Associates Pte Ltd, the Structural Engineer under the Construction Contract (“the Structural Engineer”), sent a letter to the Building and Construction Authority (“BCA”). The letter was titled “Joint Application for Permit to Carry out Demolition Works (Change of Builder)”. It enclosed a form signed by the Appellant re-applying to the BCA for permission to carry out structural works under s 6 of the Building Control Act (Cap 29, 1999 Rev Ed) (“the Re-application Form”). Both the letter and the Re-application Form identified the Respondent as the Builder under s 8(1)(c) of the Building Control Act, either by name or by identifying its Unique Entity Number (“UEN”) (201327267G). The letter also attached a copy of the Respondent’s builder licence issued by the BCA, and a certificate issued by D&B stating the percentage of works it had completed and the types of works which were outstanding in respect of the Appellant’s property. Apart from this certificate, there was no other mention of D&B in the joint application. We pause to emphasise that the entire point of the application, which as we have noted, was signed by the Appellant, was to secure the permission of the BCA for the Respondent to carry out the remaining works under the Construction Contract.

On 14 November 2013, the BCA issued a permit to carry out structural works on the Appellant’s property, naming only the Respondent as the Builder of the project. The permit was addressed to several parties, including the Appellant.

Progress claim no. 18

On 2 February 2015, the Respondent served Progress Claim No. 18 (dated 31 January 2015) on the Appellant for the sum of $396,875 (inclusive of GST) for work done between April 2013 and 31 January 2015. It was undisputed that the Appellant had satisfied all the previous 17 progress claims. The payments in respect of Progress Claim Nos. 10 to 17 had been made by cheques issued by or on behalf of the Appellant to the Respondent.

On 3 February 2015, Mrs Didwania informed the Respondent that the Appellant’s contract was with Mr Tan of D&B and not with the Respondent. She therefore questioned the basis on which Progress Claim No. 18 had been issued by the Respondent.

The Appellant also gave evidence that D&B’s works at the property had come to a standstill sometime in January 2015, shortly before Progress Claim No. 18 had been presented. D&B eventually abandoned the worksite on 16 March 2015 and there has been no official handover of the premises. According to the Appellant, the subcontractors have also refused to complete the work because D&B has withheld payment due to them for the work they had thus far completed. The Appellant submitted, in the circumstances, that the Respondent was not entitled to any payment. The Appellant therefore did not provide any payment response or make any payment in respect of Progress Claim No. 18.

The adjudication

On 5 March 2015, the Respondent served on the Appellant its Notice of Intention to Apply for Adjudication. On the same day, the Respondent lodged its Adjudication Application with the Singapore Mediation Centre. The Adjudication Application was served on the Appellant the next day. The Adjudicator was appointed on 9 March 2015. On 13 March 2015, the Appellant lodged his Adjudication Response.

The adjudication determination was issued on 20 March 2015. The Adjudicator determined that the Respondent succeeded fully in its claim for $396,875 and ordered that the Respondent pay the entire sum comprised in Progress Claim No. 18 together with interest.

The Adjudicator held that because no payment response had been provided by the Appellant, he was not entitled to raise any justification to withhold payment of the claimed amount in the Adjudication Response. Based on the evidence before him, the Adjudicator also found that the Appellant had agreed to novate the Construction Contract from D&B to the Respondent. This was evidenced in the Appellant’s conduct in drawing cheques in favour of the Respondent rather than of D&B when making payment of a number of progress claims between 23 May 2014 and 15 December 2014.

The Respondent subsequently applied for leave to enforce the adjudication determination. The Order granting such leave was issued by an Assistant Registrar on 8 April 2015.

On 28 April 2015, the Appellant applied to the High Court to set aside the adjudication determination as well as the Order granting leave to enforce the adjudication determination.

The decision below

The Appellant’s application before the High Court rested on two grounds. First, that the Adjudicator had no jurisdiction to adjudicate the dispute between the parties, because the Appellant had never entered into a contract with the Respondent, within the meaning of s 4 of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”). The Appellant contended that his contract was with D&B and this had never in fact been novated. Second, he argued that the Adjudicator had breached his duty under s 16(3) of the Act to comply with the principles of natural justice. For the avoidance of doubt, the latter ground was not pursued on appeal.

The Appellant also raised a preliminary issue, which concerned the standard of proof that is required of a party seeking to set aside an adjudication determination and the order of the Court granting leave to enforce the adjudication determination. On this, the Appellant maintained that the applicable standard of proof should be that which applies to a summary judgment application so that...