YTL Construction (S) Pte Ltd v Balanced Engineering & Construction Pte Ltd

• Jurisdiction: Singapore
• Judge: Tan Siong Thye J
• Judgment Date: 15 July 2014
• Neutral Citation: [2014] SGHC 142
• Court: High Court (Singapore)
• Docket Number: Originating Summons No 1223 of 2013
• Year: 2014
• Published date: 15 July 2014
• Hearing Date: 01 April 2014
• Plaintiff Counsel: Abraham Vergis (Providence Law Asia LLC)
• Defendant Counsel: Ng Kim Beng, Hazel Tang, Gerald Wiyatno (Rajah & Tann LLP)
• Subject Matter: Building and Construction Law,Statutes and Regulations
• Citation: [2014] SGHC 142

Tan Siong Thye J: Introduction

This is an application by the Plaintiff, YTL Construction (S) Pte Ltd, to set aside an adjudication determination dated 11 December 2013 made pursuant to the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the SOP Act”). Under the adjudication determination, the Plaintiff was directed to pay the Defendant $754,111.22 (inclusive of Goods and Services Tax (“GST”)). This was the amount certified and payable by the Plaintiff to the Defendant for the work done and materials supplied.

Facts Background

The Adjudication between the parties arose out of a project for the construction of three 30,000 tonne cement silos and a four-storey office building with associated services at the existing Jurong Port Cement Terminal, Pulau Damar Laut, Singapore (“the Project”).¹ The Plaintiff was appointed as the main contractor for the Project on 15 December 2011. Subsequently, the Plaintiff entered into a sub-contract agreement with the Defendant for the Defendant to supply labour, machinery and equipment to install and complete structural works (“the Subcontract”). The original agreed value of the works to be executed by the Defendant was about $9m.²

The payment claim and payment response

On 6 September 2013, the Defendant served on the Plaintiff a payment claim for progress payment for work done under the Subcontract in August 2013 pursuant to s 10(1) of the SOP Act. The payment claim stated that the cumulative value of the work done by the Defendant from the start of the Project till August 2013 was $6,152,032.37. The payment claim did not specify the amount claimed for the month of August 2013.³

Nevertheless, the Plaintiff subsequently served its payment response on the Defendant on 30 September 2013 pursuant to s 11(1) of the SOP Act. The payment response certified that the cumulative value of the work done to be $5,608,268.53. It also provided that the payment amount certified for August 2013 was $695,370.76 (exclusive of GST).⁴

Under cl 17 of the Subcontract, the Defendant was required to prepare a tax invoice amount based on the response amount as stated in the payment response in order to obtain payment. On 9 October 2013, the Defendant issued its tax invoice to claim $744,046.71. However, the calculations in this tax invoice did not include the GST. Upon the Plaintiff’s request, the Defendant subsequently issued a revised tax invoice for $897,889.83 on 10 October 2013. This amount was set off against the Plaintiff’s cross invoice for $143,778.61. Hence a net sum of $754,111.22 (inclusive of GST) was payable to the Defendant.⁵

The adjudication application

The due date for payment of the $754,111.22 was 14 November 2013. When the Plaintiff failed to make payment by that date, the Defendant wrote to the Plaintiff on 15 November 2013 to give notice to the Plaintiff of its intention to apply for adjudication in relation to the payment claim (“the Notice”) in accordance with s 13(2) of the SOP Act. In the Notice, the Defendant indicated that it is claiming the invoice amount of $897,889.83 and for the dispute details it ticked the item “[p]aid amount disputed (including nil payment by the payment due date)”. The Defendant further described the dispute in the Notice as “[n]o payment received on the payment due date of 14 November 2013”.⁶

On 20 November 2013, the Defendant lodged its adjudication application with the Singapore Mediation Centre (“SMC”). In its adjudication application, the Defendant indicated the nature of dispute as “[p]aid amount disputed (include nil payment)”.⁷ However, the Defendant indicated the “Claimed Amount” to be $1,328,536.83, a sum higher than the payment response of $695,370.76 (exclusive of GST).⁸ This higher amount was the original amount that the Defendant was claiming from the Plaintiff in the payment claim and the adjudication application. As the original payment claim did not specify the claimed amount for August 2013, the Defendant had added handwritten notations to the original payment claim to derive a claimed amount of $1,328,536.83 from the cumulative value of work done indicated in the original payment claim.⁹ Instead of the original payment claim, the Defendant then lodged this amended payment claim together with its adjudication application.

On 26 November 2013, the SMC informed both the parties that Mr Tan Keok Heng George had been appointed to act as the adjudicator for the adjudication.¹⁰ The Plaintiff subsequently lodged its adjudication response, a summary sheet and a bundle of supporting documents with the SMC on 28 November 2013 after receiving the adjudication application on 21 November 2013.¹¹

The adjudication determination

At the adjudication proceedings, the Plaintiff argued that the payment claim was invalid because the original payment claim failed to specify the claimed amount for the reference period, ie, August 2013. The claimed amount of $1,328,536.83 was only provided for in the amended payment claim which was lodged together with the adjudication application on 20 November 2013.

The Plaintiff also argued that the claimed amount in the adjudication was for $1,328,536.83. This sum is higher than the amount stipulated in the payment response. Therefore, the Defendant was essentially disputing the payment response instead of disputing non-payment of the amount stated in the payment response as indicated in its adjudication application. This meant that, in accordance with s 12(2)(a), s 12(5) and s 13(3)(a) of the SOP Act, the 7-day time limit for the Defendant to lodge an adjudication application began after 8 October 2013. This is the date when the Defendant was first entitled to make an adjudication application after the expiry of the 7-day “dispute resolution period” which began after the receipt of the payment response on 30 September 2013. Therefore, the last day for the Defendant to lodge its adjudication application was 15 October 2013 and the adjudication application lodged by the Defendant on 20 November 2013 was lodged out of time.

The Plaintiff then submitted that the Defendant failed to include a complete copy of the payment response in its adjudication application as required by reg 7(2)(e) of the Building and Construction Industry Security of Payment Regulations (Cap 30B, Rg 1, 2006 Rev Ed) (“SOPR”). In its adjudication application, the Defendant only included one out of four printed pages of the payment response served on it by the Plaintiff.

For these three reasons, the Plaintiff urged the adjudicator to reject the adjudication application. The adjudicator agreed with the Plaintiff’s submissions that the payment claim was not in order, that the adjudication application was filed out of time and that the adjudication application failed to include a complete payment response. However, the adjudicator also took cognisance of the fact that the Plaintiff conceded in its adjudication response that the lower certified amount of $695,370.36 (exclusive of GST) stated in the payment response was payable to the Defendant. Therefore, the adjudicator only rejected the part of the claim of $1,328,536.83 that was in excess of $695,370.36 (exclusive of GST). He found that part of the claim should be allowed because the Plaintiff had, in relation to the sum of $695,370.36 (exclusive of GST), waived the formal requirements relating to the payment claim and adjudication application under the SOP Act.

The Defendant also expressed concern during the adjudication that the adjudication determination may have had to be rendered by 5 December 2013 within 7 days after the commencement of the adjudication in accordance with s 17(1)(a)(ii) of the SOP Act. This was because s 17(1)(a)(ii) would have applied if the adjudicator found the dispute to be one which concerned the failure to make payment in accordance with the payment response. However, the adjudicator found that as the original claim in the adjudication application was for an amount higher than the payment response, s 17(1)(b) of the SOP Act applied which allowed him a 14-day time limit to issue the adjudication determination. Therefore, he found that he only had to issue the adjudication determination by 12 December 2013.

Consequently, the adjudicator, in his adjudication determination dated 11 December 2013, held that the Plaintiff should pay the Defendant $695,370.36 (exclusive of GST) which translated to $754,111.22 after GST was included. He also ordered that interest on the sum of $754,111.22 be paid to the Defendant. The adjudication costs were ordered to be borne equally by the parties.

The Plaintiff was dissatisfied with the adjudication determination and therefore made this application seeking to set aside the adjudication determination.

The plaintiff’s submissions

The Plaintiff submitted that the adjudication determination should be set aside for the following reasons: That the payment claim failed to comply with s 10(3)(a) of the SOP Act by stating the claimed amount calculated by reference to the period to which the payment claim relates instead of the outstanding unpaid amount; That the adjudication application was lodged out of time and should have been rejected by the adjudicator in accordance with s 16(2)(a) of the SOP Act; That there was a failure by the adjudicator to comply with the principles of natural justice as required under s 16(3)(c) of the SOP Act; That the adjudication determination was rendered out of time.

Court’s decision The court’s role in a setting aside application

In deciding whether or not to set aside an adjudication determination it is not the court’s role to scrutinise the decisions of the adjudicator. However, an invalid appointment of the adjudicator will nullify an adjudication determination. There are also certain legislative provisions in the SOP Act that are so important that their breach may affect the validity of the...