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  • W Y Steel Construction Pte Ltd v Osko Pte Ltd
    indeed an abbreviated process of dispute resolution in which payment claims and payment responses must be made within the stipulated deadlines to an adjudicator who is himself constrained to render a quick decision As a species of justice it is admittedly somewhat roughshod but it is fast and any shortcomings in the process are offset by the fact that the resultant decision only has temporary finality The party found to be in default has to pay the amount which the adjudicator holds to be due referred to in the Act as the adjudicated amount but the dispute can be reopened at a later time and ventilated in another more thorough and deliberate forum 23 In Macob Civil Engineering Ltd v Morrison Construction Ltd 1999 CLC 739 the first case dealing with the statutory adjudication process under the United Kingdom s Housing Grants Construction and Regeneration Act 1996 c 53 the UK Act Dyson J noted at 14 The timetable for adjudications is very tight see s 108 of the UK Act Many would say unreasonably tight and likely to result in injustice Parliament must be taken to have been aware of this It is clear that Parliament intended that the adjudication should be conducted in a manner which those familiar with the grinding detail of the traditional approach to the resolution of construction disputes apparently find difficult to accept But Parliament has not abolished arbitration and litigation of construction disputes It has merely introduced an intervening provisional stage in the dispute resolution process Crucially it has made it clear that decisions of adjudicators are binding and are to be complied with until the dispute is finally resolved emphasis added Interpretation of s 15 3 of the Act 24 Against this background we turn to the specific provisions of the Act which are relevant for the purposes of the present appeal The rapid fire nature of the statutory adjudication process is readily apparent from the various provisions prescribing time limits under the Act Section 11 1 requires that a payment response be filed either depending on the applicable circumstances a by the date specified or determined in accordance with the terms of the construction contract or within 21 days after the payment claim is served whichever is earlier see s 11 1 a or b where the construction contract does not stipulate a deadline or a means of determining the deadline for filing a payment response within seven days after the payment claim is served see s 11 1 b Section 11 4 b provides for a limited period of time within which a payment response may be varied Under s 11 3 c a respondent must explain in his payment response the difference between the response amount ie the amount which he proposes to pay in respect of the payment claim and the amount claimed and why this difference in amount is not being paid If no payment response is filed by the deadline stipulated in s 11 1 and if such response is still not filed by the end of the dispute settlement period as defined in s 12 5 the claimant is entitled under s 12 2 b to make an adjudication application Under s 13 3 a an adjudication application must be made within 7 days after the entitlement of the claimant to make an adjudication application first arises under section 12 Within seven days of receiving the adjudication application the respondent must lodge an adjudication response see s 15 1 Pursuant to s 17 1 the adjudicator must render his decision on the adjudication application either a in cases where no payment response and no adjudication response is filed or where the respondent fails to pay by the due date the response amount which has been accepted as correct by the claimant within seven days after the commencement of the adjudication see s 17 1 a or b in other cases within 14 days after the commencement of the adjudication or such other longer period as may have been requested by the adjudicator and agreed to by the parties see s 17 1 b Under s 18 2 an aggrieved respondent who wants to have an adjudication determination reviewed must apply for a review within seven days after the adjudication determination is served on him under s 18 6 a review adjudicator or panel of review adjudicators review panel must be appointed by the SMC the authorised nominating body for the purposes of Part IV of the Act within seven days after it receives an adjudication review application and under s 19 3 the decision of the review adjudicator or review panel as the case may be must be rendered either within 14 days after the adjudication review begins or within such longer period as may have been requested by the review adjudicator review panel and agreed to by the parties 25 These timelines are self evidently very tight and in most cases only the Minister as defined in s 2 1 of the Interpretation Act may vary them pursuant to s 39 This is entirely consistent with the purpose of the Act as enunciated in the Minister of State s speech at the second reading of the SOP Bill the second reading speech to facilitate cash flow by establishing a fast and low cost adjudication system to resolve payment disputes see the extract from Singapore Parliamentary Debates vol 78 col 1112 quoted at 19 above 26 We turn to s 15 3 of the Act against this background Local jurisprudence has spoken with one voice on its construction that it applies even in cases where a respondent has not filed a payment response or an adjudication response 27 In Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering Construction Co Ltd 2008 SGHC 159 Chip Hup Hup Kee AR the learned assistant registrar the Assistant Registrar dealt at some length with many of the same issues before this court and concluded at 84 that the dis application of s 15 3 of the Act to cases where no payment response was submitted would frustrate the apparent purpose of the legislation The reasoning of the Assistant Registrar proceeded in this way a First the second reading speech showed that Parliament intended to create an efficient adjudication process for building and construction disputes so that cash flow would be assured even in the event of such disputes This intention must influence how the rules of natural justice were applied in the context of the statutory adjudication scheme set out in the Act b Second provisions laying down tight deadlines and jurisdictional restrictions such as s 15 3 served this objective and should therefore be construed strictly Moreover this was in keeping with how statutory adjudication of building and construction disputes had been approached and applied by the courts in Australia and the United Kingdom If s 15 3 applied only to respondents who had tendered a payment response this would mean that such respondents would be in a worse position than respondents who had failed to tender any payment response This could not have been the intention of Parliament c Third the other provisions of the Act including s 16 7 did not have the effect of allowing an adjudicator to ignore the effect of s 15 3 28 This reasoning was approved on appeal to Judith Prakash J in Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering Construction Co Ltd 2010 1 SLR 658 Prakash J summarised the Assistant Registrar s judgment and concluded at 23 I have dealt with the Assistant Registrar s reasons for his rejection of the respondent s submissions and his refusal to set aside the Determination at some length since there has not been much judicial consideration to date of the provisions of the Act and therefore the Assistant Registrar s reasoning is useful for parties in the construction industry Further having studied the same I could find no fault with his conclusions on the correct interpretation of the relevant statutory provisions We agree with Prakash J and the Assistant Registrar with some qualifications to which we will come in due course 29 In Sungdo Engineering Construction S Pte Ltd v Italcor Pte Ltd 2010 3 SLR 459 Sungdo which was likewise heard by the Judge the Judge set out the scheme of the Act and noted that its provisions were consistent with its stated objectives of providing for a fast and low cost process of adjudication At 13 he noted 13 It bears emphasising that s 15 3 of the Act provides a very important constraint on the contents of the adjudication response This subsection prohibits the respondent from including in the adjudication response any reason for non payment unless such reason has been stated in the payment response To ensure its effectiveness it further provides that even if such reason is included the adjudicator is prohibited from considering it It is therefore very important for a respondent who disputes a Payment Claim or any part thereof to provide a payment response because if he does not do so then he will have no ground to resist payment before the adjudicator An omission on the part of the respondent to provide a payment response to a Payment Claim within the time allowed would be tantamount to conceding to an adjudication order on the Payment Claim emphasis added 30 The italicised portion above indicates that the Judge applied his mind to the situation where no payment response had been filed and concluded that s 15 3 applied even in such a case 31 Unsurprisingly in deciding OS 484 2012 in the court below the Judge affirmed his previous interpretation of s 15 3 see the GD at 9 9 T he A djudicator refused to take into account the points made in the adjudication response that W Y Steel had attempted to file on 2 May 2012 However W Y Steel had not suffered any prejudice because it had not filed any payment response which it was supposed to do under s 11 of the Act As I have pointed out in Sungdo at 13 and 21 this is potentially fatal to W Y Steel as s 15 3 of the Act precludes it from including in the adjudication response any reason for opposing the claim that was not in its payment response Not only that the adjudicator is prevented by the same provision from considering any reason not included in the payment response emphasis added 32 Finally in the recently decided case of Australian Timber Products Pte Ltd v A Pacific Construction Development Pte Ltd 2013 SGHC 56 Woo Bih Li J said at 26 26 Indeed a closer examination of the scheme of the Act lends support to the point that the respondent s arguments here were not properly for my consideration Pursuant to s 11 3 c of the Act any allegation by the respondent which would affect the determination of the adjudication amount eg that the claimant was double claiming that the contract price was unilaterally increased by the claimant or that the work done was not something for which payment could be claimed under the contract should be contained in a payment response This appears to be so central a pillar of the Act s adjudication mechanism that the adjudicator cannot consider such allegations at all unless they are included in a payment response s 15 3 a of the Act Given this statutory impetus on a respondent to raise his objections to the adjudication amount in a particular fashion and the serious consequences visited on the respondent for failing to do so I did not see why the court should now intervene to consider the respondent s protestations whether presented as outright attacks on the validity of Progress Claim No 9 or more subtly disguised as objections to jurisdiction emphasis in original 33 It is for good reason that not a single authority has taken the position that was urged upon us by W Y Steel In our judgment s 15 3 is jurisdictional in the sense that it curtails the power of an adjudicator to allow a respondent to raise new grounds for withholding payment that were not included in his payment response and for that matter an adjudicator s power even to consider such grounds at all This is literally what the provision provides and we should in our view give proper effect to it In view of the scheme of the Act it is clear that W Y Steel s argument viz that s 15 3 applies to exclude consideration of matters not contained in a payment response only where a payment response albeit an incomplete one has been filed and not otherwise cannot be right This reading would as the Assistant Registrar in Chip Hup Hup Kee AR astutely pointed out perversely favour a respondent who did not file a payment response at all over one who did and thus would incentivise conduct that defeats the very purposes of the Act 34 In our judgment Parliament intended that a respondent should ventilate his reasons for withholding payment within the timelines prescribed by the Act or suffer the consequences namely losing the opportunity to ventilate those reasons at all at the adjudication stage As the Minister of State said in the second reading speech see Singapore Parliamentary Debates vol 78 col 1112 Under the SOP Bill a claimant ie the party who is entitled to progress payment for work done or goods supplied serves the progress payment claims for work done to the respondent The respondent must then respond by stating the amount he will pay If the respondent does not wish to pay the full amount claimed he must give reasons in his response This is similar to the current practice of issuing the Architect s Certificate to main contractors for private sector projects or the issuing of the Superintending Officer s Certificate for public sector projects The SOP Bill requires the respondent to issue the payment response within 21 days of receiving the payment claim If the response period is not specified in a contract a default period of seven days has been prescribed in the SOP Bill This will ensure timely response to the claims emphasis added 35 W Y Steel also attempted to persuade us that a distinction should be drawn between reasons that went towards showing that a respondent was not liable on a payment claim and those that went towards showing that a respondent although liable in principle was entitled to withhold payment by reason of set offs or counterclaims On this basis it was argued that the injunction in s 15 3 applied only to the latter class of reasons This distinction W Y Steel argued was recognised in s 11 3 c of the Act which required a payment response to state where the response amount is less than the claimed amount the reason for the difference and the reason for any amount withheld emphasis added 36 This semantic distinction leaves no impression on us In the New South Wales Supreme Court case of Multiplex Constructions Pty Limited v Jan Luikens and Lahey Detailed Joinery Pty Ltd 2003 NSWSC 1140 Palmer J had to construe certain sections of New South Wales Building and Construction Industry Security of Payment Act 1999 the NSW Act Section 20 2B of that Act reads 2B The respondent cannot include in the adjudication response any reasons for withholding payment unless those reasons have already been included in the payment schedule provided to the claimant 37 This provision is similar to our s 15 3 the payment schedule under the NSW Act corresponds in broad terms to what we refer to as the payment response under the Act and has much the same effect In that case Palmer J said at 67 68 67 The evident purpose of s 13 1 and 2 s 14 1 2 and 3 and s 20 2B is to require the parties to define clearly expressly and as early as possible what are the issues in dispute between them the issues so defined are the only issues which the parties are entitled to agitate in their dispute and they are the only issues which the adjudicator is entitled to determine under s 22 It would be entirely inimical to the quick and efficient adjudication of disputes which the scheme of the NSW Act envisages if a respondent were able to reject a payment claim serve a payment schedule which said nothing except that the claim was rejected and then ambush the claimant by disclosing for the first time in its adjudication response that the reasons for the rejection were founded upon a certain construction of the contractual terms or upon a variety of calculations valuations and assessments said to be made in accordance with the contractual terms but which the claimant has had no prior opportunity of checking or disputing In my opinion the express words of s 14 3 and s 20 2B are designed to prevent this from happening 68 Section 14 3 requires that if the respondent to a payment claim has any reason for withholding payment it must indicate that reason in the payment schedule To construe the phrase withholding payment as meaning withholding payment only by reason of a set off or cross claim is to put a gloss on the words which their plain meaning cannot justify The phrase in the context of the subsection as a whole simply means withholding payment of all or any part of the claimed amount in the payment claim If the respondent has any reason whatsoever for withholding payment of all or any part of the payment claim s 14 3 requires that that reason be indicated in the payment schedule and s 20 2B prevents the respondent from relying in its adjudication response upon any reason not indicated in the payment schedule Correspondingly s 22 d requires the adjudicator to have regard only to those submissions which have been duly made by the respondent in support of the payment schedule that is made in support of a reason for withholding payment which has been indicated in the payment schedule in accordance with s 14 3 emphasis in original in italics emphasis added in bold italics 38 We agree with this approach and with the reasoning of Palmer J The words any reason for withholding any amount in s 15 3 of the Act are wide enough in themselves to cover any type of situation where a respondent does not meet a payment claim Moreover these words are immediately followed by the words including but not limited to which are self evidently expansive rather than restrictive in intent Consistent with this reg 6 1 d of the Building and Construction Industry Security of Payment Regulations Cap 30B Rg 1 2006 Rev Ed states that a respondent must in his payment response give in full his reasons for withholding payment of any amount specified in the payment claim and his calculations in support of those reasons and reg 8 1 d states that if a respondent wishes in his adjudication response to supplement the reasons for withholding payment which he earlier set out in his payment response his adjudication response must contain the additional computations and justifications In our judgment the purpose of these provisions generally and of s 15 3 of the Act in particular is to prevent a respondent from ambushing a claimant by raising any grounds for withholding payment which have not already been set out in his payment response whether or not these amount to reasons entitling him to withhold payment by way of a cross claim set off or counterclaim Litigation by ambush is almost always likely to delay the resolution of any dispute as the ambushed party would be forced to review the new material regroup and only then possibly regain its momentum To permit this would fly in the face of what the scheme of statutory adjudication sets out to achieve In our judgment the distinction proffered by W Y Steel at 35 above is illogical and neither the Act nor the Parliamentary debates on the SOP Bill support its legitimate existence 39 Next W Y Steel cited a raft of provisions of the Act under which it argued the Adjudicator was allowed even obliged to take into consideration its late submissions These provisions were s 16 3 c s 16 4 s 16 7 and s 17 3 We deal with this argument for completeness even though it follows that since we have already held that W Y Steel s reading of s 15 3 is incorrect this argument must fail 40 In our view none of these provisions either individually or collectively permit an adjudicator to ignore s 15 3 Section 16 sets out generally the rules relating to the commencement of an adjudication and the adjudication process Under s 16 3 c an adjudicator must comply with the principles of natural justice these must include the duty to give the parties adequate notice and an opportunity to be heard However these rules are always contextual We have already discussed the centrality of the concept of temporary finality to the adjudication scheme under the Act A respondent is given a chance to respond to a payment claim by producing first a payment response and then if the claimant proceeds to apply for adjudication of his payment claim an adjudication response If he fails to provide a payment response and if as a result the adjudicator is mandated not to consider material that he seeks to introduce later he has not been denied his right and opportunity to be heard Rather he has simply chosen not to exercise it and the rules of natural justice cannot then be called in aid Simply put in such a scenario the respondent has had his opportunity for the purposes of the hearing that culminates in the provisional ruling that has temporary finality to make his case and he has failed to take that opportunity 41 In Brodyn Pty Limited t as Time Cost and Quality v Philip Davenport and Dasein Constructions Pty Limited 2004 NSWCA 394 Brodyn the respondent Brodyn appealed to the New South Wales Court of Appeal against a primary judge s refusal to grant it an order quashing an adjudication determination made under the NSW Act Brodyn s grounds of appeal were that the claimant s payment claim was invalid and that there had been a denial of natural justice At 57 of Brodyn the New South Wales Court of Appeal per Hodgson JA said The circumstance that the legislation requires notice to the respondent and an opportunity to the respondent to make submissions ss 17 1 and 2 20 21 1 22 2 d confirms that natural justice is to be afforded to the extent contemplated by these provisions emphasis added 42 In our judgment this is correct Where the Act itself states that certain material is not to be considered in certain circumstances this must as a matter of logic have the effect of qualifying some other provision that imposes a general requirement that the principles of natural justice must be applied In this context there is no reason to construe s 16 3 c as foreclosing an adjudicator s power indeed his obligation to act exactly as the Act contemplates in s 15 3 We should not strain the natural construction of the Act to accommodate cases such as the present where a respondent has failed through his own lack of diligence to file a payment response Everyone in the building and construction industry must be aware or at least taken to be aware of the rigorous application of the timelines in the Act and if they ignore them they do so at their own peril 43 Turning to s 16 4 of the Act this sets out various powers of an adjudicator but this only spells out what an adjudicator is permitted to do as a general matter it cannot change and we do not construe it as changing what under some other provision of the Act he is not permitted to do Thus for instance it is true that under s 16 4 b an adjudicator may require submissions or documents from any party to the adjudication but it would be perverse and for that reason wrong to hold that under this provision an adjudicator may require submissions on matters that he is expressly proscribed from considering under s 15 3 44 As for s 16 7 of the Act W Y Steel s reliance on this provision was wholly misconceived this subsection merely empowers an adjudicator to proceed to determine an adjudication application undeterred by the failure of the respondent to file his payment response or his adjudication response and by the failure of either party to comply with his the adjudicator s instructions In no way does this lend support or assistance to W Y Steel s case 45 Finally we turn to s 17 3 of the Act which provides as follows 3 Subject to subsection 4 in determining an adjudication application an adjudicator shall only have regard to the following matters a the provisions of this Act b the provisions of the contract to which the adjudication application relates c the payment claim to which the adjudication application relates the adjudication application and the accompanying documents thereto d the payment response to which the adjudication application relates if any the adjudication response if any and the accompanying documents thereto e the results of any inspection carried out by the adjudicator of any matter to which the adjudication relates f the report of any expert appointed to inquire on specific issues g the submissions and responses of the parties to the adjudication and any other information or document provided at the request of the adjudicator in relation to the adjudication and h any other matter that the adjudicator reasonably considers to be relevant to the adjudication 46 This subsection sets out what an adjudicator is permitted to consider and expressly provides that he shall only have regard to those matters emphasis added In this context an adjudicator should consider the Act the contract to which the adjudication application before him relates the payment claim to which that adjudication application relates and the adjudication application itself see ss 17 3 a 17 3 c He must also consider the respondent s payment response and adjudication response if any see s 17 3 d In the present case the Adjudicator could not consider W Y Steel s responses to respectively Osko s payment claim and the Adjudication Application because there were none filed in accordance with the Act As there was no inspection by the Adjudicator see s 17 3 e there was no inspection report to consider Further there was no expert appointed and thus no expert report to take into account see s 17 3 f the Adjudicator also did not request any documents or other information from the parties see s 17 3 g The Adjudicator had to consider the submissions of the parties but given what we have said on the effect of s 15 3 there was not much that W Y Steel who had failed to file either a payment response or an adjudication response could properly say 47 However this is not to say that s 15 3 would bar a respondent who has failed to file a payment response from making any kind of submission whatsoever before an adjudicator We deal with this below 48 The crux of W Y Steel s argument in relation to s 17 3 was that it obliged the Adjudicator to consider all the submissions made before him He was not to apply an unthinking mind to Osko s payment claim just because no payment response had been filed There are two separate points here and it is incorrect to conflate them as W Y Steel appeared to do As will be apparent we agree that the Adjudicator could not blindly endorse Osko s payment claim He had to apply his mind to it But we do not think this helps W Y Steel s case because there was a limit to what material the Adjudicator could properly have considered We note that during the adjudication conference convened by the Adjudicator on 2 May 2012 W Y Steel made the following claims a there was some suggestion that the SMC the authorised nominating body for the purposes of Part IV of the Act had served the Adjudication Application on W Y Steel not on 20 April 2012 the date on which that application was filed but five days later Claim a b W Y Steel was unaware of the timelines prescribed in the Act Claim b c W Y Steel had filed what it considered to be its payment response viz the e mail of 23 April 2012 mentioned at 6 above Claim c and d for various reasons Osko was not entitled to the sum which it claimed Claim d 49 Claim a was considered and disposed of by the Adjudicator in Osko s favour Simply put there was no evidence to suggest that the Adjudication Application had in fact been served on W Y Steel only on 25 April 2012 rather than on 20 April 2012 Claim b was legally irrelevant Claim c was considered by the Adjudicator who was entitled to and did reject it Claim d went to the merits and was correctly held by the Adjudicator to be inadmissible under s 15 3 There was no other argument advanced to show that the Adjudicator had no jurisdiction to proceed to determine the Adjudication Application In particular there was no attempt to argue that there was some patent or manifest error on the face of the record or that Osko s payment claim was internally inconsistent or that having regard to the material that was properly before the Adjudicator it would have been evident that there was a patent error in that payment claim 50 Notwithstanding this we consider the question of whether it would even have been open to W Y Steel who had not filed a payment response to make a submission that Osko s payment claim was patently in error or for some reason fell outside the Adjudicator s jurisdiction assuming for the sake of this analysis that the facts had borne this out In this regard in Chip Hup Hup Kee AR the Assistant Registrar said at 93 94 93 My own view is that where there are no reasons provided in any valid payment response the adjudicator cannot examine whether the claimant s claim is supported by the documents Save for the permissible procedural or jurisdictional objections identified earlier the adjudicator must accept the claim at its face value 94 One might think this harsh what if the payment claim states an obviously incorrect amount either through innocent mistake or deliberate overcharging completely unsupported by the documents or the facts One answer to this is that the more obvious the error the more reason why the respondent could have simply pointed this out in a valid payment response Furthermore this approach avoids the problem of the adjudicator having to decide whether he is merely making sure that the claimed amount is supported by the documents or whether he is impermissibly addressing the respondent s reasons why he withheld payment In my mind making such distinctions will be a futile hair splitting exercise because it is evident that one generally applicable reason why the respondent would have withheld payment is because the claimed amount is not supported by any documentary evidence As I have stated in relation to s 15 3 of the Act I am of the view that a strict interpretation is more consonant with the overall purpose and structure of the Act emphasis added 51 With respect we do not think this is correct In our judgment under s 17 3 of the Act even where no response has been filed an adjudicator must make a determination and in doing so it is incumbent on him to consider the material which is properly before him and which he is permitted and indeed obliged to consider In such circumstances there is nothing to stop a respondent who has failed to file any payment response or adjudication response from raising patent errors on the face of the material properly before the adjudicator to contend that the payment claim should not be allowed in part or at all We reiterate that such errors must be plain and evident on the face of the material that is properly before the adjudicator 52 In our judgment an adjudicator is bound to consider the payment claim before him and cannot make his determination as if the fact that the respondent has not filed a response obviates the need for him to consider the material properly before him The adjudication does not become a mere formality The adjudicator is obliged to adjudicate and in discharging this obligation he must consider the material properly before him and make an independent and impartial determination in a timely manner see s 16 3 a He has seven days to do so where no payment response and no adjudication response have been lodged see s 17 1 a i In this regard the views of Brereton J in Pacific General Securities Ltd Anor v Soliman Sons Pty Ltd Ors 2006 NSWSC 13 Pacific General Securities at 82 are to the point T he adjudicator s duty is to come to a view as to what is properly payable on what the adjudicator considers to be the true construction of the contract and the NSW Act and the true merits of the claim and while the adjudicator may very readily find in favour of the claimant on the merits of the claim in the absence of a payment schedule or adjudication response or if no relevant material is advanced by the respondent the absence of such material does not entitle the adjudicator simply to award the amount of the claim without addressing its merits which as a minimum will involve determining whether the construction work identified in the payment claim has been carried out and what is its value emphasis added 53 Brereton J had to consider whether the aforesaid duty should be imported under the rubric of good faith or as a basic and essential element namely adjudication of a payment claim which requires as a minimum determination of whether construction work that is the subject of the claim has been performed and of its value see Pacific General Securities at 86 We have no need to engage in a similar exercise because the NSW Act does not have the equivalent of our s 16 3 Under s 16 3 a of the Act an adjudicator having regard only to the matters which he can properly consider and not those which he cannot must in a timely manner come to his own independent and impartial view of the payment claim before him 54 In the event this was not an issue in the case at hand W Y Steel was not seeking to rely on errors manifest from the material that was properly before the Adjudicator Rather it was seeking to remedy the irremediable consequences of its failure to file a payment response Significantly the Adjudication Determination expressly stated at 23 that the Adjudicator did consider the parties submissions and the matters an adjudicator can consider pursuant to the provisions of section 17 3 of the Act note 2 and there is nothing to indicate that he did not in fact do so Certainly there was nothing in the arguments presented before us

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  • Sungdo Engineering & Construction (S) Pte Ltd v Italcor Pte Ltd
    of receipt of the adjudication application the ANB is required to serve a copy of it on the respondent and appoint an adjudicator The respondent is required by s 15 1 of the Act to lodge a response adjudication response to the adjudication application within seven days The adjudication response cannot include as a reason for refusing payment anything that was not stated in the payment response see para 13 below The adjudicator is required under s 16 3 of the Act to act apart from the usual attributes of impartiality and natural justice in a timely manner and to avoid incurring unnecessary expense He is certainly required by s 17 1 a of the Act to make a decision within seven to 14 days after the commencement of the adjudication There is provision in s 18 of the Act for review of the adjudicator s decision by a single adjudicator or a panel of adjudicators and this process is also required by s 19 of the Act to adhere to strict timelines 12 It may be seen from the second reading speech in Parliament and the provisions of the Act set out above that the objective of the Act is to ensure that the cash flow of the claimants are not disrupted by disputes concerning liability and quantum so that construction works can proceed smoothly The Act seeks to achieve this primarily by putting in place a fast cheap and hopefully effective process whereby a neutral party would adjudicate on the disputed Payment Claim and impose a temporary finality on his determination Timelines for the various steps are kept short and both claimant and respondent are required to state their positions at the outset and are prohibited from deviating from it in order for the adjudication to proceed with expedition This no doubt goes a long way in ensuring that the process does not become bogged down by amendments to the claim or to the response midway in the adjudication Section 15 3 of the Act 13 It bears emphasising that s 15 3 of the Act provides a very important constraint on the contents of the adjudication response It provides as follows The respondent shall not include in the adjudication response and the adjudicator shall not consider any reason for withholding any amount including but not limited to any cross claim counterclaim and set off unless a where the adjudication relates to a construction contract the reason was included in the relevant payment response provided by the respondent to the claimant or b where the adjudication relates to a supply contract the reason was provided by the respondent to the claimant on or before the relevant due date This subsection prohibits the respondent from including in the adjudication response any reason for non payment unless such reason has been stated in the payment response To ensure its effectiveness it further provides that even if such reason is included the adjudicator is prohibited from considering it It is therefore very important for a respondent who disputes a Payment Claim or any part thereof to provide a payment response because if he does not do so then he will have no ground to resist payment before the adjudicator An omission on the part of the respondent to provide a payment response to a Payment Claim within the time allowed would tantamount to conceding to an adjudication order on the Payment Claim The next point to note is that the respondent has as little as seven days to provide a payment response and up to 21 days if the contract provides for it So while the claimant has as much time as he wishes to prepare the Payment Claim and there is no obligation on his part to inform the respondent in advance once he has served the Payment Claim on the respondent the latter has to not only find out the nature of the claim and consider it but also in the event that he disputes it to decide on the grounds for rejection and to ensure that all the grounds are stated in the payment response because he will not be able to rely on any additional ground before the adjudicator This part of the adjudication process has such great consequences that any interpretation of the provisions of the Act must take this into consideration The 2008 Letter 14 The 2008 Letter that the defendant claimed it had delivered to the plaintiff on 26 December 2008 comprised a one page covering letter and accompanying documents numbering some 164 pages These accompanying documents included a copy of the Contract documents and the four invoices described in para 3 above along with purchase orders quotations letters site instructions work orders and other documents in support of the defendant s claim for payment under those invoices It is important to set out the entirety of the one page covering letter which is on the defendant s letterhead This reads as follows Letter from Italcor to Sungdo Re SSWP FAB300 3 PROJECT We refer to the above project the contract of which comprising the commercial contract our quotation and your purchase order is attached at Tab A With regard to your questioning of whether we have done the work we wish to assure you that the work in respect of the following invoices have been done and we claim for payment for such work as follows S no Invoice No Date Amount Tab 1 Inv IPL 2007 10 0061 26 10 07 321 000 00 B 2 Inv IPL 2007 10 0062 05 10 07 256 919 84 C 3 Inv IPL 2007 12 0079 01 12 07 97 668 53 D 4 Inv IPL 2007 12 0080 01 12 07 448 603 92 E You have paid us for the following first 5 invoices for 80 of the work Copies of these invoices may be seen at Tab F a Inv IPL 2007 04 0031 13 04 07 78 750 00 b Inv IPL 2007 05 0039 18 05 07 594 30 c Inv IPL 2007 05 0040 23 05 07 315 000 00 d Inv IPL 2007 06 0042 20 06 07 472 500 00 e Inv IPL 2007 07 0046 27 07 07 401 250 00 We have substantially completed the works under the original agreement for which invoice 1 has been issued We have also completed the works under the variation orders in respect of invoices 2 to 4 Therefore the invoices specified at 1 to 4 above are due and payable With regard to the invoices at 2 to 4 above your approval for the variation works and the breakdown of the works and prices are attached to the respective invoices at Tabs C to E above Please therefore let us have your payment Finally we wish you greetings of the season Unintelligible signature 23 12 08 The 2008 Letter does not state it is Payment Claim 15 The plaintiff contended that the 2008 Letter did not amount to a Payment Claim within the meaning of s 10 of the Act as there was no indication that this was a payment claim under the Act The defendant s position was that the 2008 Letter amounted to a Payment Claim because it complied with all the requirements in s 10 3 of the Act which provides A payment claim a shall state the claimed amount calculated by reference to the period to which the payment claim relates and b shall be made in such form and manner and contain such other information or be accompanied by such documents as may be prescribed 16 With respect to sub para a the defendant contended that the 2008 Letter had stated the claimed amounts and the attached invoices showed the period to which they relate As for sub para b the defendant contended that it complied with all the requirements prescribed in R 5 2 of the Building and Construction Industry Security of Payment Regulations RG1 2006 Rev Ed the Regulations which provides Every payment claim shall a be in writing b identify the contract to which the progress payment that is the subject of the payment claim relates and c contain details of the claimed amount including i a breakdown of the items constituting the claimed amount ii a description of these items iii the quantity or quantum of each item and iv the calculations which show how the claimed amount is derived 17 The defendant contended that there was no requirement for the 2008 Letter to contain a statement that it was a payment claim under the Act for it to amount to one I agreed that there was no such requirement This is because one of the models of the Act the New South Wales Building Construction Industry Security of Payment Act 1999 the NSW Act contains such a requirement This is found in s 13 of the NSW Act which provides as follows 13 Payment claims 1 A person who claims to be entitled to a progress payment the claimant may serve a payment claim on the person who under the construction contract concerned is or may be liable to make the payment 2 A payment claim a must identify the construction work or related goods and services to which the progress payment relates and b must indicate the amount of the progress payment that the claimant claims to be due the claimed amount and c must state that it is made under this Act 3 The claimed amount may include any amount a that the respondent is liable to pay the claimant under section 27 2A or b that is held under the construction contract by the respondent and that the claimant claims is due for release 4 A payment claim may be served only within a the period determined by or in accordance with the terms of the construction contract or b the period of 12 months after the construction work to which the claim relates was last carried out or the related goods and services to which the claim relates were last supplied whichever is the later 5 A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract 6 However subsection 5 does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim 18 It can be seen that s 13 2 c of the NSW Act specifically provides that the payment claim must state that it is made under the NSW Act As there is no similar provision in the Act the absence of such a statement in the 2008 Letter does not of itself preclude it from being a payment claim under the Act This departure from the NSW Act is not explained anywhere in the Bill nor the Parliamentary debates However there is an interesting comment in Chow Kok Fong Security of Payments and Construction Adjudication LexisNexis 2005 at p 134 After noting that there is no requirement in our legislation unlike the NSW Act to declare that the claim is made under the Act the learned author said It is understood that during consultations leading to the drafting of the Building Construction Industry Security of Payment Bill the Building and Construction Authority accepted the suggestion from the subcontractors and suppliers lobby that such a requirement may conceivably result in creating a contentious atmosphere in the relationships between a main contractor and subcontractors straight away It is difficult to follow this line of argument It will be appreciated that in the normal course of a business various letters claims quotations negotiation proposals and exchanges will be encountered between the parties A claimant may submit a proposal for a payment arrangement or furnish a draft progress payment claim as a template for working through the computations and prices with the quantity surveyor on a project In the absence of a definitive statement of intention it is conceivable that a payment claim may be mistaken by the respondent for any one of these exchanges 19 I agreed fully with the comment at the second half of that passage that much confusion will arise from this omission in the Act Given the short timelines under the Act for a respondent to come out with a payment response once a Payment Claim is served the suggestion by the subcontractors and suppliers lobby does not bear scrutiny I cannot see how the omission of a requirement to state that the document is a payment claim under the Act furthers the aim of promoting a non contentious atmosphere when that would force a potential respondent to scrutinise every document submitted to him by a potential claimant to determine whether it falls within the definition of payment claim under s 10 of the Act Such an exercise would have to be carried out in the manner that the defendant has submitted in paras 15 to 16 above for every document that is potentially a Payment Claim a most impractical situation for a potential respondent Intention and communication necessary to be Payment Claim 20 Be that as it may since it is not a requirement under the Act the absence of a statement that a document is a Payment Claim does not of itself preclude that document from being one But the defendant s contention that any document that satisfies all the requirements under the Act and the Regulations as to how it is made and what it must contain would amount to a Payment Claim is quite another manner This would mean that a document containing all such information but also containing the statement This is not a payment claim under the Act would be a payment claim under the Act which would be contrary to commonsense To the argument that in such a situation the claimant is estopped from relying on it as a Payment Claim there are two responses The first is that this argument will not address the situation where the respondent out of an abundance of caution submits a payment response and therefore has not been prejudiced The second is a matter of principle surely intention must be a necessary element and such a document cannot be a Payment Claim even if it contains all the prescribed requirements for one simply because it was not intended to be one by the maker of the document In my view for a document to amount to a payment claim under the Act the party submitted it must intend it to be such and I so hold 21 Further as the respondent is given a limited period under the Act to make a payment response failing which he would effectively be precluded from any defence he might have to the claim see para 13 above subjective intention alone is not sufficient As a matter of policy such intention must be communicated to the respondent Otherwise the Act could be used as an instrument of oppression against potential respondents who would then have to scrutinise any document that can possibly amount to a payment claim under the Act and decide if it amounts to one Any document no matter how voluminous as is the case with the 2008 Letter would have to be carefully studied page by page to determine if it contains all the prescribed requirements in the Act for a Payment Claim And upon determining that it does constitute one the respondent would then have to check on the claim and produce a payment response All this would have to be done within as little as seven days And even if the respondent does not think it amounts to a Payment Claim so long as he is uncertain about it he would be well advised to make a payment response given the dire circumstances of being caught out without one At the end of every such exercise all would have been in vain if it turns out that the party submitting the documents had not intended it to be a Payment Claim in the first place I cannot see how Parliament could have intended such a chaotic situation to be the result of an Act enacted to promote cash flow in the construction industry 22 I would therefore hold that for any document to amount to a Payment Claim not only must it comply with the prescribed requirements for a Payment Claim it must be intended to be such by the party submitting it and importantly such intention must be communicated to the recipient Whether or not this communication has taken place in each case would be a question of fact to be determined according to the circumstances of that case Evidence of such communication may come from covering letters email exchange referring to the document in question or even oral communication Evidence could well come from the manner in which the respondent had dealt with the document eg he gives a payment response It would not be possible to set out all the circumstances under which a court would hold that such intention has been communicated and each case would have to be determined on the basis of its unique facts But certainly a statement in the document that it is a payment claim under the Act would be the most effective manner of communicating this intention Was the 2008 Letter a Payment Claim 23 On the facts of the present case I did not consider that the 2008 Letter was a Payment Claim even though arguably it contained the information prescribed in the Act and Regulations The reasons are as follows a The defendant did not communicate its intention to the plaintiff that it was a payment claim under the Act b The plaintiff did not treat it as a Payment Claim c Events prior to the service of the 2008 Letter suggested that this was not a Payment Claim d The contents of the

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  • Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd[2009] SGHC 237
    a construction contract a response to a payment claim made by a respondent under section 11 1 or 12 4 and that both of these provisions deal with the specific timelines within which a payment response may be provided Having considered these timelines the AR held that a payment response would be a response that was made during either of these two periods In this case as the Adjudicator himself had noted Payment Certificate No 5 was only issued after the expiry of both periods Therefore it could not be a payment response and a plain reading of s 15 3 supported the Adjudicator s decision not to consider at all any of the respondent s reasons why it withheld payment 18 The respondent argued before the AR that s 15 3 should not be interpreted in the aforesaid manner because such an interpretation would be inconsistent with natural justice and deprive it of an opportunity to have its case heard Instead the respondent argued the proper interpretation of s 15 3 would be to confine it to cases where a payment response had been tendered The AR accepted that there is an obligation to read the SOP Act in accordance with the rules of natural justice noting that adherence to those rules is prescribed in s 16 3 of the SOP Act itself However the literal reading of s 15 3 clearly supported the Adjudicator s decision Further he considered that the purposive interpretation also supported that decision 19 The AR recognised that the purpose of the SOP Act was to provide a speedy and low cost adjudication process in respect of payment disputes in the construction industry so as to facilitate the cash flow of the parties involved He also noted that the adjudication process was an intervening provisional stage in the dispute resolution process per Dyson J in Macob Civil Engineering Ltd v Morrison Construction Ltd 1999 CLC 739 at 14 and that the efficiency of the process placed time pressure on every party involved the claimant the respondent and the Adjudicator himself He considered that it was the very objective of the SOP Act to have strict deadlines which encourage parties to make their respective cases known to the other side as early as possible Allowing a respondent who has not provided its reasons for withholding payment in a recognised payment response will in effect mean that there is no penalty perhaps apart from costs for ignoring the deadlines see 55 of the GD Further if s 15 3 were to apply only to respondents who did tender a payment response it would result in the unfair situation where such respondents were in a worse position than respondents who did not tender any response at all 20 The AR also considered that the interpretation given to s 15 3 would not render the adjudication process contrary to natural justice in that it deprived the respondent of a fair opportunity to be heard He stated at 75 76 of the GD 75 natural justice requires that a respondent be given a fair opportunity to be heard There is no requirement that in every case a party is actually heard and it is entirely possible for a party to forfeit his right to be heard through some procedural default In the instant case it is clear that the SOP Act does afford a respondent the opportunity to be heard In regard to the hearing of a respondent s reasons why payment was withheld the SOP Act specifies that such hearing is contingent on the reasons being provided in the payment response tendered within certain timelines What has really happened in this case was that the Respondent chose not to avail itself of the opportunity to be heard on its reasons for withholding payment 76 But even if a respondent who failed to submit a payment response is not allowed to put forward its reasons why it withheld payment it does not follow that it would be denied any sort of hearing at all Quite unlike what the Respondent sought to suggest it is not the case that the adjudication process becomes a mere rubber stamping exercise in favour of the claimant The adjudicator is still obliged to exercise his discretion in a number of matters which a respondent is fully entitled to raise 21 The next issue was whether other provisions in the SOP Act required the Adjudicator to give consideration to Payment Certificate No 5 and the reasons contained therein The respondent relied on s 16 7 of the SOP Act which states 16 7 An adjudicator s power to determine an adjudication application is not affected by the failure of a the respondent to provide a payment response or lodge an adjudication response or b any of the parties to comply with the adjudicator s call for a conference of the parties or any other requirement made or direction issued by the adjudicator and in the event of any such failure the adjudicator may determine the application on the basis of the information and documents available to him The respondent s argument was that this provision directed the Adjudicator to give his consideration to whatever documents and arguments were before him In the instant case even if the respondent was prohibited from raising its reasons for withholding payment the Adjudicator still ought to have considered Payment Certificate No 5 and the reasons contained therein as well as the arguments raised at the hearing 22 The AR rejected this submission His holding at 87 of the GD was as follows 87 I do not accept this argument In the first place the provision is clearly permissive rather than mandatory Furthermore its obvious purpose was to enable an adjudicator to continue with the adjudication despite any attempts to hold up the process by any party It does not compel the adjudicator to give consideration to any matter not contained in s 17 3 of the SOP Act The learned author of Security of Payments and Construction Adjudication above at 33 explains at p 370 The intent of this subsection no doubt is that an adjudicator may proceed with the adjudication in the face of such non compliance and the adjudication determination may not be impeached merely on the basis that the adjudicator proceeded without the particular submission or information being received by the adjudicator or the attendance of one of the parties at the conference 23 I have dealt with the AR s reasons for his rejection of the respondent s submissions and his refusal to set aside the Determination at some length since there has not been much judicial consideration to date of the provisions of the SOP Act and therefore the AR s reasoning is useful for parties in the construction industry Further having studied the same I could find no fault with his conclusions on the correct interpretation of the relevant statutory provisions The appeal 24 Shortly after the AR rendered his decision the respondent changed its solicitor Its new solicitor filed a notice of appeal and subsequently a further affidavit on behalf of the respondent This affidavit was made by the respondent s engineering team manager Kim Jin Soo and was filed on 24 October 2008 Mr Kim averred that in addition to the reasons that had been given prior to the AR s decision the respondent had been advised that the Determination ought to be set aside on the ground that the Adjudicator had no jurisdiction to adjudicate on the application because a The claimant had failed to serve on the respondent a valid payment claim under the SOP Act and b The claimant had claimed items which fell outside the scope of the SOP Act and this had rendered the purported payment claim invalid When the appeal came on for hearing in April and May this year the above ground was the main ground of the appeal although the respondent also argued that the Adjudicator had wrongly interpreted s 16 7 of the SOP Act and the AR was incorrect in holding that in instances where there was no payment response an adjudicator must accept a payment claim at face value without satisfying himself as to the proof of the payment claim 25 The claimant apart from making substantive arguments in reply to the respondent also raised the issue of whether the respondent was entitled to challenge the Determination by disputing the validity of the payment claim and or the Adjudicator s jurisdiction when these questions had not been previously raised in either the adjudication proceedings or before the AR As this was a preliminary issue I had to consider it first before proceeding to the substantive issues Was the respondent entitled to raise new grounds on the appeal 26 The respondent submitted that there was no restriction on the ground upon which the court could set aside the Determination The SOP Act contained no provision which prescribed or limited the bases on which an adjudication determination could be set aside The only section of the Act dealing with such setting aside was s 27 5 and that provision simply required the applicant to pay into court the unpaid adjudication amount 27 In this case the respondent said the primary thrust of its objections to the Determination related to the Adjudicator s jurisdiction as opposed to objections to his findings in the Determination Thus the respondent could rely on authorities where appellants were permitted to raise arguments about jurisdiction at the appeal stage even though such arguments had not been raised at earlier stages of the proceedings The respondent cited in particular Koh Zhan Quan Tony v PP 2006 2 SLR 830 Koh Zhan Quan Tony and the English case of Contour Homes Ltd v Rowen 2007 1 WLR 2982 which concerned the jurisdiction of a tribunal set up under the UK Housing Act 1988 28 In the latter case Arden LJ made the following observations at 25 26 of her judgment 25 The jurisdiction of a rent assessment committee is entirely statutory As a matter of law statutory jurisdiction cannot unless the statue so provides be reduced or enlarged by parties by consent 26 We are concerned here of course not with a court but with a tribunal but by implication Parliament has provided that it is only to have jurisdiction to determine the rent if the landlord has served a notice complying with section 13 2 which can only be done where the tenancy complies with section 13 1 As neither of those requirements was in my judgment satisfied it was not possible for the parties to agree to confer jurisdiction on the Northern Rent Assessment Panel and likewise Contour could not in my judgment by analogy be estopped from denying that it did not have jurisdiction for those reasons Emphasis added 29 The respondent submitted that similarly the SOP Act had created a scheme in which the jurisdiction of the Adjudicator had been solely created by statute As a result an adjudicator appointed under the SOP Act could only have jurisdiction if the requirements of the legislation had been strictly complied with Such jurisdiction could not be bestowed on the adjudicator by the consent of the parties nor could the parties be estopped from arguing that jurisdiction did not exist Accordingly the respondent submitted it was entitled to question the Adjudicator s jurisdiction at any stage 30 The claimant in responding to the respondent s arguments drew to my attention various steps that the respondent had taken in the prior proceedings before the Adjudicator and the AR These were a Payment Certificate No 5 and the Adjudication Response did not dispute the validity of Progress Claim 5 the respondent s argument that Progress Claim 5 was an invalid document was the basis of its contention that the Adjudicator had no jurisdiction b In the adjudication proceedings the respondent had proceeded on the basis that Progress Claim 5 was valid and the Adjudicator had jurisdiction to adjudicate the matter c The respondent did not dispute the validity of the Payment Claim or the jurisdiction of the Adjudicator d The respondent had specifically raised the issue of whether the Adjudicator could proceed with the adjudication in view of the fact that the contract between the parties had been terminated and by this submission the respondent had accepted that apart from determination of the contract the Adjudicator did have jurisdiction e The respondent had filed a separate application in OS 930 of 2008 to stop the adjudication proceedings on the basis that the contract had been terminated f In SUM 3242 filed in these proceedings the respondent had asked for the Determination to be set aside and for the claimant s adjudication application to be fixed for a fresh adjudication thus showing that it was not the jurisdiction that was challenged but the findings and g In the affidavits initially filed in support of SUM 3242 the issue of jurisdiction was not raised at all 31 The claimant paid particular attention to the positions taken by the respondent in the first affidavit of Ahn Kook Jin which was filed in support of SUM 3242 It asserted that the respondent had taken the following positions in the same a It acknowledged that the claimant had served its payment claim dated 20 April 2008 which was the subject of the adjudication b It acknowledged the validity of the payment claim in conceding that it had to serve a payment response to the claimant s payment claim and explained that its delay in doing so was simply due to other pressing issues c It acknowledged the Adjudicator s jurisdiction to hear the matter by stating that the Adjudicator had failed to properly exercise his powers under s 16 3 and s 16 7 of the SOP Act and d In complying with O 95 r 3 1 of the Rules of Court Cap 322 R5 2006 Rev Ed by stating the grounds on which it was contended that the Determination should be set aside and not objecting to the validity of the payment claim or the jurisdiction of the Adjudicator the respondent conceded that the payment claim was valid and the Adjudicator had jurisdiction 32 I was satisfied on the above facts that the actions of the respondent both before the Adjudicator and before the AR were sufficient to establish a waiver of its right to challenge the Adjudicator s jurisdiction This was because the facts subsequently raised by the respondent to challenge the jurisdiction ie the alleged inadequacy of Progress Claim 5 must have been known to the respondent and its legal advisers if not at the time Progress Claim 5 was served then shortly thereafter The question that I had to consider was whether such facts could be relied on in law to constitute a waiver 33 In this connection I had to consider Koh Zhan Quan Tony and certain authorities cited by the claimant to support its contention that objections to jurisdiction could be waived 34 Koh Zhan Quan Tony was a criminal case The applicants there had been charged with murder but at the end of the trial had been convicted of the lesser charge of robbery On appeal by the prosecution the applicants were convicted of the original charge of murder The applicants then filed motions arguing that their convictions on the lesser charge had not amounted to acquittals and therefore the prosecution s appeal had fallen outside the language and the scope of s 44 3 of the Supreme Court of Judicature Act Cap 322 1999 Rev Ed SCJA The prosecution the respondent in the motions opposed the motions arguing that the Court of Appeal the CA did not have jurisdiction to hear the same It was held inter alia that the CA had the jurisdiction and power to entertain the motions and that since no ruling had been handed down by the CA in so far as the issue of its jurisdiction to hear the prosecution s appeal was concerned it was not functus officio on this particular issue Although this issue ought to have been taken earlier as a preliminary point of law such an objection from estoppel could not succeed in circumstances where the issue related to the CA s very jurisdiction itself 35 In the course of his judgment on behalf of the CA Andrew Phang Boon Leong JA stated at 13 and 19 13 However the situation in the present proceedings was different in this important respect this court was not being asked to re open the substantive merits of its previous decision as such but rather was being asked to rule that this court could not even have considered in Criminal Appeal No 2 of 2005 the substantive merits in the first instance as it did not have the jurisdiction to do so In this regard it is of the first importance to emphasise that the concept of jurisdiction is a threshold one inasmuch as it refers to the court s authority however derived to hear and determine a dispute that is brought before it 19 To reiterate what is involved in the present proceedings are Criminal Motions requesting this court to consider an issue of jurisdiction These applications ought ideally to have been raised and considered during the hearing of the appeal in Criminal Appeal No 2 of 2005 as a preliminary point of law as they relate to the threshold issue of jurisdiction Unfortunately they were not This is why the applications are before the court in the present proceedings At this juncture it might be argued that there is no reason in principle why this court should be precluded from considering applications which could clearly have been argued and heard as a preliminary point of law during the hearing of the actual appeal in Criminal Appeal No 2 of 2005 We find that there is indeed much force in such an argument unless it could be argued that there was some principle of waiver or estoppel that precluded the applicants from making the present applications Bearing in mind the fact that the present applications centre on the jurisdiction of this court to hear the appeal in Criminal Appeal No 2 of 2005 and not the substantive merits of the appeal itself there would appear to be no real reasons of principle as to why the applicants should somehow be estopped or debarred from making the present applications Indeed there is clear legal authority that supports the view just proffered It has been held that a party cannot be estopped from arguing that the earlier proceedings were conducted in excess of the jurisdiction of the court concerned Emphasis in original 36 The respondent also cited various academic texts to support the proposition that a statutory jurisdiction could not be increased or reduced by consent of the parties and that a party s ability to challenge jurisdiction could not be affected by waiver or estoppel For example in the text Estoppel by Conduct and Election Thomson Sweet Maxwell by K R Handley a Judge of the Court of Appeal of New South Wales it is stated at para 15 012 Statutory jurisdiction unless the statute so provides cannot be reduced or enlarged by consent or estoppel If the facts are clear and the absence of jurisdiction apparent on the face of the proceedings an objection taken for the first time on appeal may be allowed even in a court of final appeal Further in Sir William Wade and Christopher Forsyth Administrative Law Oxford University Press 9th Ed 2004 it is stated at p 237 The most obvious limitation on the doctrine of estoppel is that it cannot be involved so as to give an authority powers which it does not in law possess Nor can any kind of estoppel give a tribunal wider jurisdiction than it possesses 37 The claimant on the other hand cited a number of cases which appear to show that parties can waive their rights to object to jurisdiction The first of these is Parist Holdings Pty Ltd v Wt Partnership Australia Pty Ltd 2003 NSWSC 365 Parist The claimant considered Parist particularly apposite because it was a decision of the New South Wales Supreme Court on the Building Construction Industry Security of Payment Act 1999 NSW Act and the SOP Act is based on the NSW Act which in turn is based on the Housing Grants Construction and Regeneration Act 1996 of the United Kingdom the UK Act 38 In Parist the defendant sought a declaration that the plaintiff must pay to it an adjudicated amount determined by an adjudicator in adjudication proceedings under the NSW Act The plaintiff contended inter alia that the adjudicator had acted ultra vires in carrying out the adjudication and in making the determination and that therefore the determination was a nullity One ground of its argument was that the defendant s payment claim was invalid because it did not comply with the requirements of the relevant statutory provisions The plaintiff submitted that as a consequence of the invalidity of the payment claim the initiation and conduct of the statutory adjudication process was fatally flawed so as to deprive the adjudicator of jurisdiction to determine the amount to be paid The plaintiff however had not put in issue the validity of the statutory payment claim when it appeared before the adjudicator It only raised this issue when it filed its summons in the subsequent court proceedings 39 The court held that because the plaintiff had not raised the issue of jurisdiction earlier and had instead participated in the adjudication process it was no longer entitled to make this argument Nicholas J said at 35 35 By its payment schedule dated 23 January 2003 the Plaintiff disputed the payment claim In the course of the adjudication proceedings it invited the Adjudicator to determine the dispute in its favour by upholding its submissions in relation to the payment claim and accordingly holding that the amount payable to the Defendant was nil The Plaintiff thereby availed itself of the benefit of the statutory process which enabled the speedy determination of the dispute which had it been successful would have relieved it of liability to pay the amount claimed Its conduct evidences its submission to the jurisdiction of the Adjudicator to determine the amount if any payable under the payment claim whether or not it complied with the requirements of s 13 2 Compare for example Cowlin Construction Limited v CFW Architects a firm 2002 EWHC 2914 TCC paras 59 67 40 The case that Nicholas J referred to Cowlin Construction Limited v CFW Architects 2003 BLR 241 Cowlin was a decision of the High Court of England where the issue was whether the adjudicator who had conducted an adjudication under the provisions of the UK Act had had jurisdiction to do so The eponymous plaintiff in Cowlin had commenced the adjudication in question against the defendant CFW who had in turn served a counter notice which addressed points made by the plaintiff in its notice of adjudication Jurisdiction was challenged on the basis that first there was no construction contract and second there was no dispute capable of being referred to adjudication In relation to the challenge on jurisdiction the judge held that by its counter notice in the adjudication CFW accepted that the adjudicator had jurisdiction to determine the terms of the contract By so doing CFW made its election at a time when it was represented by solicitors CFW was bound by that election and had waived any right to object to the jurisdiction of the adjudicator In this respect the judge observed at 66 and 67 66 In Sea Calm Shipping Co SA v Chantiers Navals de L Esterel SA 1986 2 Lloyd s Rep 294 the court considered a case where a party sought to take a jurisdiction point in an arbitration very late in the day Hirst J quoted from the judgment of Devlin J as he then was in Westminster Chemicals where a party had submitted to the jurisdiction of an arbitrator then he was bound the award In Sea Calm Hirst J concluded that there had been positive affirmation of a contract and thus of an arbitration clause and that the defendant was bound by that election In this case one of the elements of waiver summarised in Sea Calm was present namely the unequivocal statement by CFW at an early stage that they accepted the adjudicator s jurisdiction 67 CFW made their election At the time they did so they were represented by solicitors Hugh James had been acting for CFW for some time before Cowlin served their notice to adjudicate as the correspondence demonstrates Whilst the adjudication process is rapid the questions whether there is a relevant contract between the parties and whether an adjudicator has jurisdiction would normally be at the front of the minds of those acting for parties Hugh James must be taken to have understood the rapid nature of the adjudication process and that any challenge to jurisdiction must be taken at the earliest possible opportunity CFW thus had sufficient knowledge to make an election to accept jurisdiction Hugh James served the counter notice on behalf of CFW Hugh James continued to correspond with Lee Crowder and the adjudicator on the assumption that the adjudicator had jurisdiction Hugh James indicated in the 28 September letter that the adjudicator may not have jurisdiction They then made their objection to jurisdiction at the first formal opportunity namely service of their response to Cowlin s notice of referral Miss Jefford submits that in circumstances where the adjudication process is rapid and often does not permit much time for a responding party to reflect on its position it would be a harsh result if CFW were estopped from denying the adjudicator s jurisdiction or were found to have waived altogether their right to object when they had raised their objection at a comparatively early stage I accept that such a result might be harsh However it seems to me that must be the result a court will generally conclude that once a party has made an election he is bound by it and has waived his right to object I therefore conclude that having elected to affirm the adjudicator s jurisdiction and expressly sought decisions by the adjudicator CFW waived its rights to object to the jurisdiction of the adjudicator CFW could not go back on that election Accordingly Mr Harris had jurisdiction to decide the matters which he dealt with 41 Cowlin was cited with approval in the subsequent English case of AC Yule Son Limited v Speedwell Roofing Cladding Limited 2007 BLR 499 where the court noted at 21 that courts have in the past criticised the conduct of a party in adjudication who has failed to bring a fact or issue to the attention of the other side or to the adjudicator in circumstances where much later in enforcement proceedings that party has sought to rely on that fact or issue to argue that the decision was unenforceable For example in Cowlin it was held that a party to adjudication who put in a counter notice thereby accepted that the adjudicator had the necessary jurisdiction and could not later object to his decision on the grounds that he lacked jurisdiction Similar points can be found in a number of other TCC cases in which the judges have made it plain that once a party has acknowledged the jurisdictional role of the adjudicator at any early stage that party cannot seek to go behind that acceptance later on once the adjudicator has produced a decision which they do not like 42 It is also noteworthy that the passage cited from Estoppel by Conduct and Election 36 supra by the defendant comprised the last two sentences of a passage from the text which recognised that objections to jurisdiction may be waived I quote therefore the full contents of para 15 012 Jurisdiction A defendant sued in an inferior Court who knew he could object to its jurisdiction but contested the action on its merits was refused prohibition after judgment A defendant sued in the wrong County Court which had jurisdiction if he did not object sought prohibition when the case was part heard but was held to have waived the objection A party to litigation who has failed to object that a condition attaching to the exercise of jurisdiction has not been satisfied may by reason of his subsequent participation in the proceedings be precluded from later raising the defect If a person entitled to diplomatic immunity commences proceedings or contests proceedings on the merits he waives his immunity and the Court has jurisdiction but the judgment cannot be enforced while diplomatic immunity subsists Statutory jurisdiction unless the statute so provides cannot be reduced or enlarged by consent or estoppel If the facts are clear and the absence of jurisdiction apparent on the face of the proceedings an objection taken for the first time on appeal may be allowed even in a court of final appeal All the statements about the findings of waiver were fully supported by reference to decided cases listed in the footnotes of the text 43 Considering the authorities cited by each party it appeared at first that they could not be reconciled On the one hand it was declared by high authority that parties could not be estopped from contesting jurisdiction and on the other hand there were numerous cases in which exactly that seemed to have happened There was however an answer to the quandary and it was provided by the claimant The claimant pointed out that the confusion arose from the way in which the word jurisdiction was used by the respondent Agreeing that parties could not confer or waive jurisdiction as explained in the authorities cited by the respondent the claimant averred that that was the case when jurisdiction was used in its narrow meaning of competence to hear When jurisdiction was used in a wider sense ie in reference to the manner in which the court s power was exercised then waiver or estoppel could be relied on The distinction between the two meanings of the word appears clearly from the following passage of the judgment of Deane J in Then Kang Chu v Tan Kim Hoe 1925 SSLR 4 By the jurisdiction of a Court is meant the authority which the Court has to decide matters litigated before it or to take cognizance of matters presented in a formal way for its decision Its limits are defined in the Statute Charter or commission constituting the Court and must be sought for there The last point to be dealt with is the argument that defendant having appeared in the lower Court and taken no objection to the jurisdiction is thereby estopped from pleading to it The principles governing the application of estoppel in such cases are well stated in Spencer Bower on Estoppel by Representation at page 187 Even the most plain and express contract or consent a fortiori therefore any mere conduct or inaction or acquiescence of a party litigant from which a representation may be implied such as to give rise to an estoppel cannot confer judicial authority on any of His Majesty s subjects not 18 already invested with such authority by the law of the land or add to the jurisdiction lawfully exercised by any judicial tribunal On the other hand where it is merely a question of irregularity of procedure or of a defect in contingent jurisdiction or non compliance with statutory conditions precedent to the validity of a step in the litigation of such a character that if one of the parties be allowed to waive or by conduct or inaction to estop himself from setting up such irregularity or want of contingent jurisdiction or noncompliance no new jurisdiction is thereby impliedly created and no existing jurisdiction is thereby impliedly extended beyond its existing boundaries the estoppel will be maintained and the affirmative answer of illegality will fail 44 Thus it seemed that when what was being alleged was an absolute lack of jurisdiction on the part of a particular tribunal or court to hear a particular dispute jurisdiction being used in the strict sense of capacity to hear then if the tribunal concerned does not have such jurisdiction any party to the dispute may assert the lack of jurisdiction at any stage and can never be held to be estopped from doing so or to have waived its right of protest On the contrary when it is a question of irregularity of procedure or contingent jurisdiction or non compliance with a statutory condition precedent to the validity of a step in the litigation such irregularity or non compliance can be waived because the effect of the waiver would not be to create or confer any jurisdiction that did not previously exist 45 It therefore appeared to me that I could not answer the preliminary question of whether the respondent was entitled to raise its challenges to jurisdiction until I determined whether or not such challenge related to competence to hear or only to the exercise of the jurisdiction I therefore had to consider the substantive question in order to determine the preliminary point Did the Adjudicator have jurisdiction to adjudicate on the adjudication application 46 The respondent contended that Progress Claim 5 was not a valid payment claim under the SOP Act and therefore the Adjudicator did not have jurisdiction to adjudicate on the adjudication application For the sake of the argument I proceeded on the assumption that Progress Claim 5 was not valid Before however I discuss the arguments I should summarise the relevant provisions of the SOP Act 47 First s 5 states that any person who has carried out any construction work under a contract is entitled to a progress payment A person who is entitled to a progress payment may make a claim for such payment by serving a payment claim under s 10 of the SOP Act Section 10 1 provides that a claimant may serve a payment claim in respect of a progress payment on the other person who under the contract concerned is or may be liable to make the payment The other sub sections of s 10 provide for the time of service of a payment claim and the particulars which it must include Once a payment claim has been served the respondent must respond by providing a payment response in accordance with s 11 Under s 12 2 where the claimant disputes a payment response or the respondent fails to provide a timely payment response the claimant is entitled to make an adjudication application under s 13 in relation to the payment claim if by the end of the dispute settlement period the dispute is not settled or no payment response comes in 48 Part IV of the SOP Act is entitled Adjudication of Payment Claim Disputes and contains the procedure relating to adjudication determinations Section 13 1 empowers a claimant to apply for the adjudication of a payment claim dispute by lodging the adjudication application with an authorised nominating body and this application must under sub s 3 c contain such information or be accompanied by such documents as may be prescribed The authorised nominating body upon receipt of the adjudication application must pursuant to s 14 1 refer the adjudication application to a person who is on the register of adjudicators and whom the authorised nominating body considers to be appropriate for appointment as the adjudicator Sub section 2 entitles the nominee adjudicator to agree or decline to determine the adjudication application If he accepts then the authorised nominating body must pursuant to sub s 3 serve a notice in writing confirming the appointment of the adjudicator on

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  • Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) and another appeal
    that it creates other obstacles to the smooth working of the legislative scheme If the Sungdo proposition is correct it may require the ANB to examine the validity of an adjudication application before making a nomination This issue was raised but not answered in Chase Oyster Bar v Hamo Industries 2010 NSWCA 190 Chase Oyster discussed below At 98 Basten JA noted 98 The structure of the NSW Act might suggest that it would be inappropriate to refer an invalid adjudication application to an adjudicator there would then be an implied obligation on the authorised nominating authority to consider the validity of the application made to it Arguably the duty to refer an application to an adjudicator see s 17 6 is limited to a valid adjudication application However as no party before this Court argued for that construction it may be put to one side In Sungdo this question did not arise and Lee J did not consider it as he was only concerned with whether the court had the power to review a jurisdictional issue arising from such facts But in any event how would the ANB go about finding out whether a purported payment claim is in substance a payment claim under the Act or whether it has been validly served on or under the Sungdo test communicated to the respondent These are factual issues which would be beyond the knowledge of the ANB unless it holds an inquiry to determine such questions and to hold it would delay the nomination of the adjudicator 35 These evidentiary and procedural problems suggest that the ANB s obligation under the Act is to nominate an adjudicator on the basis of documents submitted to it by the claimant having regard to the prescribed period it has to make the nomination Section 13 4 of the Act provides that an ANB shall upon receipt of an adjudication application serve a copy on the respondent and s 14 3 of the Act provides that it shall within 7 days after receipt of the adjudication application serve a notice in writing confirming the appointment of an adjudicator on the claimant the respondent the principal if known and the owner concerned These short timelines evince a legislative intention that the ANB s functions are largely administrative and that it should proceed to make a nomination so long as the adjudication application facially complies with the requirements of the Act There is no time for the ANB to check whether the claimant intends his payment claim to be an operative payment claim or whether the payment claim has been served on the respondent This interpretation would be consistent with the policy of the scheme to expedite the adjudication process Any issue of alleged invalidity for non compliance can be taken up in separate court proceedings or subsequently in proceedings under s 27 of the Act relating to the enforcement of the adjudication award In Sungdo the respondent commenced separate court proceedings 36 In our view if the respondent s objection to the jurisdiction or power of the adjudicator to conduct the adjudication is based on an invalid appointment such a jurisdictional issue should be raised immediately with the court and not before the adjudicator The reason is that since the objection is against the adjudicator s jurisdiction as an adjudicator he has no power to decide if he has jurisdiction or not He cannot decide his own competency to act as an adjudicator when such competency is being challenged by the respondent An adjudicator who decides the issue may face one or other of the following consequences If he accepts the respondent s objection and dismisses the payment claim the claimant may commence court proceedings against him to compel him to adjudicate the payment claim If he dismisses the respondent s objection and makes an award the respondent could still raise the same objection in enforcement proceedings with respect to his award Accordingly the adjudicator should proceed with the adjudication and leave the issue to the court to decide 37 We are of the opinion that the divergent judicial approaches discussed above have arisen because they were concerned with different legal questions Sungdo addressed the question of whether an adjudicator has been validly appointed to the office of adjudicator and therefore clothed with all the powers of an adjudicator under the Act Chip Hup Hup Kee was concerned with whether the adjudicator had exercised his powers correctly One is a threshold issue of competence and the other is a substantive issue of legality They can lead to the same outcome ie the setting aside of an adjudication award but it would be for entirely different reasons cf Sungdo and Chase Oyster 38 We note that the distinction between the issue of validity of an adjudicator s appointment and the issue of compliance with the requirements of the Act is also partially obscured by another issue relating to the kinds of issues an adjudicator and the court may decide under the Act In SEF Construction Prakash J held that the court s role is restricted to reviewing compliance with certain basic requirements and that the question of whether a purported payment claim is a payment claim under the Act is a question for the adjudicator and not the court to decide In Sungdo Lee J held that such an issue was subject to review on the basis of Wednesbury unreasonableness as it went to the competence of the adjudicator to adjudicate what might not be a payment claim at all which he found on the facts to be the case 39 In the light of our views set out above we would agree with Lee J s holding in Sungdo that if the validity of a payment claim or the service of a payment claim goes to the competence of an adjudicator to hear and determine an adjudication such issues must be subject to review by the court The critical word in Lee J s ruling is if and it gives rise to the question Does the non compliance with the requirements of the Act go to the competence of an adjudicator Hence the critical question is whether an invalid payment claim or an invalid service of a valid payment claim as distinguished from a non existent or inoperative payment claim or a payment claim which has not been served on the respondent at all goes to the validity of an adjudicator s appointment and his competence to adjudicate a payment claim The decision in Sungdo did not and cannot answer this question because there Lee J held that there was no payment claim Lee J equated a non existent or inoperative payment claim with an invalid payment claim The ratio in Sungdo should therefore be confined to cases of that type ie cases relating to non existent or inoperative payment claims In Chip Hup Hup Kee Prakash J proceeded on the basis that an invalid payment claim was merely a claim that did not comply with the requirements of the Act and that according to Brodyn this was an issue to be decided by the adjudicator and not the court 40 This brings us to the decision in Chase Oyster In that case the NSW Court of Appeal was concerned with the service of a payment claim that did not comply with a mandatory requirement of the NSW Act as to the period within which it was required to be served and the court held that as a consequence the adjudicator s award was also invalid The court there did not consider at least it was not argued the issue of whether the non compliance also resulted in the invalid appointment of the adjudicator The court held that the adjudicator who decided that the payment claim was served within the mandatory prescribed period made an error of fact which the court characterised as a jurisdictional error and that certiorari was available to quash or set aside the adjudicator s determination The court rejected the decision in Brodyn that the court should be restricted to reviewing whether the basic requirements essential conditions set out at 53 of Brodyn reproduced at 43 below had been complied with Instead Spigelman CJ referred at 37 38 to the traditional distinction between mandatory and directory conditions which had been replaced in Australia by the current test of whether it is the purpose of the legislation that an act done in breach of a provision should be invalid see Project Blue Sky Inc v Australian Broadcasting Authority 1998 HCA 28 Project Blue Sky at 93 reproduced at 52 below The legislative purpose can be discerned from the language of the provision itself and of the associated provisions 41 We will now discuss the decisions in Brodyn and Chase Oyster to determine their relevance to similar issues under the Act The decision in Brodyn 42 In Brodyn a subcontractor D served a payment claim on the second respondent B after the subcontract between D and B had been terminated B contended that the payment claim was invalid because it was not served in respect of a reference date within the meaning of s 13 5 of the NSW Act By s 8 2 of the NSW Act the reference date was either the date fixed by the contract for the making of progress claims or the last day of each month from the date when construction work was first carried out see summary of Brodyn at 128 of Chase Oyster The NSW Court of Appeal made inter alia the following rulings a that the Supreme Court of New South Wales SCNSW was not required to consider and determine the existence of jurisdictional error by an adjudicator in reaching a determination under the NSW Act ruling a b that an order in the nature of certiorari was not available to quash or set aside a decision of an adjudicator under the NSW Act but declaratory or injunctive relief could be given and c that the NSW Act expressly or impliedly limited the SCNSW s power to consider and quash a determination for jurisdictional error by an adjudicator in reaching a determination under the NSW Act ruling c 43 In respect of ruling a the NSW Court of Appeal per Hodgson JA held at 53 55 53 What then are the conditions laid down for the existence of an adjudicator s determination The basic and essential requirements appear to include the following 1 The existence of a construction contract between the claimant and the respondent to which the NSW Act applies ss 7 and 8 2 The service by the claimant on the respondent of a payment claim s 13 3 The making of an adjudication application by the claimant to an authorised nominating authority s 17 4 The reference of the application to an eligible adjudicator who accepts the application ss 18 and 19 5 The determination by the adjudicator of this application ss 19 2 and 21 5 by determining the amount of the progress payment the date on which it becomes or became due and the rate of interest payable s 22 1 and the issue of a determination in writing s 22 3 a 54 A question arises whether any non compliance with any of these requirements has the effect that a purported determination is void that is is not in truth an adjudicator s determination That question has been approached in the first instance decision by asking whether an error by the adjudicator in determining whether any of these requirements is satisfied is a jurisdictional or non jurisdictional error I think that approach has tended to cast the net too widely and I think it is preferable to ask whether a requirement being considered was intended by the legislature to be an essential pre condition for the existence of an adjudicator s determination 55 T he legislature did not intend that exact compliance with all the more detailed requirements was essential to the existence of a determination cf Project Blue Sky Inc v Australian Broadcasting Authority 1998 HCA 28 1998 194 CLR 355 at 390 391 What was intended to be essential was compliance with the basic requirements and those set out above may not be exhaustive In respect of ruling c the relevant parts of s 25 of the NSW Act state the following 25 Filing of adjudication certificate as judgment debt 1 An adjudication certificate may be filed as a judgment for a debt in any court of competent jurisdiction and is enforceable accordingly 4 If the respondent commences proceedings to have the judgment set aside the respondent a is not in those proceedings entitled i to bring any cross claim against the claimant or ii to raise any defence in relation to matters arising under the construction contract or iii to challenge the adjudicator s determination and b is required to pay into the court as security the unpaid portion of the adjudicated amount pending the final determination of those proceedings emphasis added It is pertinent to note that s 25 4 a iii of the NSW Act is not found in s 27 of the Act The decision in Chase Oyster 44 In Chase Oyster the NSW Court of Appeal had to determine the effect of non compliance with s 17 2 a of the NSW Act The relevant parts of s 17 of the NSW Act provide 17 Adjudication applications 1 A claimant may apply for adjudication of a payment claim an adjudication application if b the respondent fails to provide a payment schedule to the claimant under Division 1 and fails to pay the whole or any part of the claimed amount by the due date for payment of the amount 2 An adjudication application to which subsection 1 b applies cannot be made unless a the claimant has notified the respondent within the period of 20 business days immediately following the due date for payment of the claimant s intention to apply for adjudication of the payment claim and b the respondent has been given an opportunity to provide a payment schedule to the claimant within 5 business days after receiving the claimant s notice 45 In Chase Oyster Spigelman CJ Basten JA and MacDougall J delivered separate judgments in rejecting the decision in Brodyn as set out at 42 above The NSW Court of Appeal held that in the light of the decision of the High Court of Australia in Kirk v Industrial Relations Commission 2010 HCA 1 Kirk a the decision in Brodyn was incorrectly decided in so far as it held that the SCNSW was not required to consider and determine the existence of jurisdictional error by an adjudicator in reaching a determination under the NSW Act b an order in the nature of certiorari was available to quash or set aside a decision of an adjudicator under the Act and c the NSW Act did not expressly or impliedly limit the power of the SCNSW to consider and quash a determination for jurisdictional error by an adjudicator in reaching a determination under the NSW Act The decision in Kirk 46 In Kirk the High Court of Australia was concerned with the effect of a breach of s 15 1 of the Occupational Health and Safety Act 1983 NSW which required every employer to ensure the health safety and welfare of their employees at work A breach of s 15 1 is an offence that can be prosecuted in the Industrial Court The High Court of Australia held that the erroneous construction of s 15 1 and the failure to comply with the rules of evidence were jurisdictional errors and errors of law on the face of the record within the meaning of s 69 of the Supreme Court Act 1970 NSW requiring the grant of relief in the nature of certiorari to quash the convictions and sentences 47 The High Court of Australia held that an erroneous construction of s 15 1 was a jurisdictional error as it led the Industrial Court to misapprehend the limits of its functions and powers and to make orders beyond its power The Industrial Court had no power to convict and sentence the defendants because no particular act or omission was identified as constituting the offences 48 The majority of the High Court of Australia pointed out at 71 that i t is neither necessary nor possible to attempt to mark the metes and bounds of jurisdictional error However by reference to the decision in Craig v South Australia 1995 HCA 58 Craig at 177 180 the majority identified two categories of jurisdictional error Kirk at 72 a the mistaken denial or assertion of jurisdiction or in a case where jurisdiction does exist misapprehension or disregard of the nature of or limits on the inferior court s functions and powers and b entertaining a matter or making a decision of a kind that lies wholly or partly outside the limits on the inferior court s functions and powers as identified from the relevant statutory context 49 The majority further gave three examples of an inferior court entertaining a matter outside the limits of its functions or powers as follows a proceeding in the absence of a jurisdictional fact b disregarding something that the relevant statute requires to be considered as a condition of jurisdiction or considering something required to be ignored and c misconstruction of the statute leading to misconception of the nature of the inferior court s functions Of this last example it was said in Craig at 178 that the line between jurisdictional error and mere error in the exercise of jurisdiction may be particularly difficult to discern The majority also emphasised at 73 of Kirk that the reasoning in Craig is not to be seen as providing a rigid taxonomy of jurisdictional error and not to be taken as marking the boundaries of the relevant field 50 Applying the decision in Kirk the NSW Court of Appeal in Chase Oyster rejected the categorisation of conditions in the NSW Act as essential or non essential conditions Spigelman CJ after referring to Hodgson JA s judgment in Brodyn at 54 55 held the following at 24 33 24 There are three aspects of this reasoning which are of significance for present purposes 25 First insofar as his Honour referred to the specific requirements of s 17 relevantly for present purposes s 17 2 a his remarks were obiter The section did not arise in that case 26 Secondly his Honour s statement that the Parliament did not intend that exact compliance with all the more detailed requirements was essential emphasis added may not mean that none of the detailed requirements are essential It may leave open the possibility that some of these detailed requirements could be found to be essential His Honour made it clear that he was not purporting to set out all of the essential requirements by using the word include before identifying the list at 53 and by stating expressly that that list may not be exhaustive at 55 27 The third consideration is of particular significance The impact of the judgment in Kirk on his Honour s reasons arises from his rejection at 54 of the applicability of the distinction between jurisdictional and non jurisdictional error on the basis that it cast the net too widely His Honour went on to apply a test as to what statutory requirements constituted an essential pre condition That statement could be understood as the equivalent of jurisdictional error but it appears from the passage quoted at 22 above that that may not be what his Honour had in mind The concept of an essential precondition may have been intended to be encompassed within but narrower than the scope of jurisdictional error 29 The centrality of the distinction between jurisdictional and non jurisdictional error had been identified by the High Court in Craig The significance of Kirk is that it has given this distinction a constitutional dimension in State law to the same general effect as had earlier been established for Commonwealth law That has placed this distinction at the centre of Australian administrative law jurisprudence in a manner which is not consistent with the reasoning in Brodyn on one view of that reasoning 31 In Kirk after identifying the constitutional foundation of the supervisory jurisdiction of the Supreme Courts of the states the High Court concluded 100 T he observations made about the constitutional significance of the supervisory jurisdiction of the State Supreme Courts point to the continued need for and utility of the distinction between jurisdictional and non jurisdictional error in the Australian constitutional context 32 This new dimension of the distinction between jurisdictional and non jurisdictional error undermines the proposition in Brodyn if that is the correct interpretation of the passage set out at 22 above which suggests that as a matter of statutory interpretation a provision can constitute jurisdictional error but not constitute an essential pre condition 33 There is no single test or theory or logical process by which the distinction between jurisdictional and non jurisdictional error can be determined 51 The decision in Chase Oyster that on the basis of the decision in Kirk an order of certiorari was available to quash or set aside an adjudicator s award made on a jurisdictional error is not relevant to the scope of the Act as it concerned a constitutional issue which does not arise in Singapore under the Act As we explained earlier at 43 above s 27 of the Act is not in pari materia with s 25 4 a iii of the NSW Act What is of relevance to the courts in Singapore is whether they should follow Brodyn or Chase Oyster in dealing with a breach of the requirements of the Act Sungdo is not relevant to this issue as it concerned the narrow question of the non existence of a payment claim 52 In this respect Spigelman CJ held at 36 of Chase Oyster 36 The issue to be determined is whether the adjudicator had jurisdiction to determine an application which had been made without compliance with the mandatory in a negative sense terminology of s 17 2 The issue is not contrary to some of the submissions made whether the adjudicator had jurisdiction to determine that s 17 2 a had been complied with That section is not addressed to the adjudicator and is not a matter which he is directed to determine within s 22 1 of the Act It may be that it is a matter which he must consider as one of the provisions of the Act within s 22 2 a However that section confers no power to determine the issue Spigelman CJ then went on to hold Chase Oyster at 37 that s 17 2 of the NSW Act was a procedural requirement of the kind to which the High Court of Australia in Project Blue Sky referred in the following way 91 An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition The existence of the purpose is ascertained by reference to the language of the statute its subject matter and objects and the consequences for the parties of holding void every act done in breach of the condition Unfortunately a finding of purpose or no purpose in this context often reflects a contestable judgment The cases show various factors that have proved decisive in various contexts but they do no more than provide guidance in analogous circumstances There is no decisive rule that can be applied there is not even a ranking of relevant factors or categories to give guidance on the issue 92 Traditionally the courts have distinguished between acts done in breach of an essential preliminary to the exercise of a statutory power or authority and acts done in breach of a procedural condition for the exercise of a statutory power or authority Cases falling within the first category are regarded as going to the jurisdiction of the person or body exercising the power or authority Compliance with the condition is regarded as mandatory and failure to comply with the condition will result in the invalidity of an act done in breach of the condition Cases falling within the second category are traditionally classified as directory rather than mandatory 93 A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid In determining the question of purpose regard must be had to the language of the relevant provision and the scope and object of the whole statute Tasker v Fullwood at 24 emphasis added 53 The question therefore was whether it was the purpose of 17 2 of the NSW Act that an act done in breach thereof should be invalid having regard to its language and the scope and object of the NSW Act Applying this test Spigelman CJ held that the words cannot be made unless in s 17 2 of the NSW Act had mandatory effect With respect to the structure of the legislative scheme Spigelman CJ held that first the element of essentiality occurs at the application stage of the decision making process and not during the course of the decision making process itself It was an element which is an essential preliminary to the decision making process rather than a fact to be adjudicated upon in the course of inquiry see Chase Oyster at 43 citing Colonial Bank of Australasia v Willan 1874 LR 5 PC 417 at 443 Second the legislation provides for a precise sequence of a series of time stipulations which is Chase Oyster at 47 carefully calibrated to ensure expeditious resolution of any dispute with respect to payments in the building industry The time limits are a critical aspect of the scheme s purpose to ensure prompt resolution of disputes about payment It is commercially important that each party knows precisely where they stand at any point of time Such certainty is of considerable commercial value 54 For these reasons Spigelman CJ held a that the court had the power to determine whether s 17 2 of the NSW Act had been complied with b that s 17 2 a of the NSW Act which requires a 20 business days notice was a jurisdictional fact satisfaction of which was essential to the validity of an adjudication application and to the existence of the power to adjudicate and c that s 17 2 of the NSW Act had not been complied with and therefore the adjudicator s decision should be quashed or set aside by way of certiorari 55 In a concurring judgment Basten JA held Chase Oyster at 96 and 101 96 For the reasons given by the Chief Justice at 31 53 and by McDougall J I agree that compliance with the time limit specified in s 17 2 a is an essential condition for a valid adjudication application The language of the provision cannot be made unless is intractable neither the structure nor the purpose of the Act suggests a different conclusion 101 For these reasons the proper construction of the NSW Act is that it does not permit the adjudicator to determine the validity of the adjudication application The challenge in the present case must therefore be determined on the basis of facts found by the Court 56 McDougall JA in his concurring judgment also held that the adjudicator s determination in this case was vitiated by jurisdictional error In relation to whether s 17 2 a of the NSW Act was an essential condition or a jurisdictional fact His Honour held Chase Oyster at 149 178 199 211 212 218 149 The decision in Brodyn appears to assume that there is a distinction between a basic and essential requirement for the existence of an adjudicator s determination and a jurisdictional condition or jurisdictional fact However the decision does not analyse the relevant requirements of the Act in terms of jurisdiction the framework of analysis was restricted by the search for basic and essential conditions of validity 178 The fundamental issue on this point is whether s 17 2 a embodies as a criterion of jurisdiction a jurisdictional fact in the sense explained in Gedeon v Commissioner of the NSW Crime Commission 2008 HCA 43 at 43 see at 57 above If there is such a criterion and it is not satisfied then as the Court pointed out in the sentence immediately following that from which I quoted the decision purportedly made in exercise of the power or discretion will have been made without the necessary statutory authority required of the decision maker 199 The question which most divided the parties and the interveners in this case was whether s 17 2 a of the NSW Act stated a jurisdictional fact satisfaction of which was essential to the validity of an adjudication application and to the existence of the power to adjudicate 211 The language of s 17 2 is clear Where there has been no payment schedule and no payment an adjudication application cannot be made unless the requisite notice is given within the specified time The words cannot be made suggest strongly that in the absence of notice there is no right to make an application On the submissions for the first defendant that statutory prohibition may be disregarded an adjudication application cannot be made but if made can be considered and dealt with That is an unusual construction particularly taking into account the mandatory provisions of s 17 6 to which I refer in the next paragraph 212 What is made is an application for adjudication of a payment claim s 17 1 As s 4 points out it is that application that is an adjudication application It is an adjudication application so defined that is made to an authorised nominating authority s 17 3 b and referred by that authority to an adjudicator s 17 6 The authorised nominating authority has no discretion about referring the application to an adjudicator even if for example it is plain on the face of the application that the claimant has not complied with s 17 2 a On the contrary i t is the duty of the authorised nominating authority to do so as soon as practicable If that referral is accepted by the adjudicator s 19 1 the adjudicator is taken to have been appointed to determine the application s 19 2 Thereafter the adjudicator is required to determine that application by determining the matters set out in s 22 1 218 To my mind the weight of those factors favours the conclusion that the requirement of s 17 2 a are jurisdictional in the sense that the giving of notice within the requisite period is a condition that must be satisfied for a valid application to be made pursuant to s 17 1 Section 17 2 of the NSW Act contrasted with ss 13 2 and 13 3 of the Act 57 Section 17 2 a of the NSW Act provides that an adjudication application cannot be made unless a the claimant has notified the respondent within the period of 20 business days immediately following the due date for payment of the claimant s intention to apply for adjudication of the payment claim and b the respondent has been given an opportunity to provide a payment schedule to the claimant within five business days after receiving the claimant s notice In contrast ss 13 2 and 13 3 of the Act which correspond to s 17 2 of the NSW Act are structured differently These sections provide as follows 2 An adjudication application shall not be made unless the claimant has by notice in writing containing the prescribed particulars notified the respondent of his intention to apply for adjudication of the payment claim dispute 3 An adjudication application a shall be made within 7 days after the entitlement of the claimant to make an adjudication application first arises under section 12 b shall be made in writing addressed to the authorised nominating body requesting it to appoint an adjudicator c shall contain such information or be accompanied by such documents as may be prescribed d shall be accompanied by such application fee as may be determined by the authorised nominating body and e may contain or be accompanied by such other information or documents including expert reports photographs correspondences and submissions as the claimant may consider to be relevant to the application emphasis added 58 Like s 17 2 of the NSW Act s 13 2 of the Act is also directed at the claimant and not the ANB the adjudicator or the court The words shall not be made in s 13 2 of the Act are words of prohibition They have stronger force than the words cannot be made which are merely words of disablement Hence applying the reasoning in Chase Oyster it should follow that if s 13 2 of the Act is breached no valid adjudication application can be made However with respect to the time period within which an adjudication application may be made s 13 3 a of the Act provides that it shall be made within 7 days after the entitlement of the claimant to make an adjudication application first arises under s 12 Suppose the claimant makes an adjudication application on the eighth day after his entitlement arises does not the word shall connote a mandatory requirement One may reasonably contend that it should be treated as a directory requirement because far from prejudicing the respondent it actually benefits him in so far as the delay in making the application results in a corresponding delay in his having to pay a progress payment claim 59 By way of rebuttal it may be argued that even if the mandatory force of the words shall be made within 7 days prevents an application from being made outside the prescribed period no harm will be caused to the claimant because the claimant can still include the undetermined payment claim in a fresh payment claim where the application for the appointment of an adjudicator complies with s 13 2 of the Act The same reasoning would also apply to an invalid adjudication determination that has been set aside by the court as such payment claims would not have been rejected by the adjudicator on the merits In other words a breach of a mandatory provision of the Act will not bar the claimant from serving fresh payment claims but only delay their adjudication in accordance with the provisions of the Act 60 In this connection attention may be drawn to the observations of McDougall JA in Chase Oyster at 233 with reference to the NSW Act that the question of compliance with s 17 2 a is both relatively simple in a factual sense and something peculiarly within the knowledge of the claimant It is unlikely that the trap will be sprung by some esoteric piece of factual or legal analysis which has the result that a determination is found to be void 61 As no issue has arisen in this appeal that requires this court to determine the nature of the requirement under s 13 3 a of the Act we shall leave it for further consideration in an appropriate case in the future However it seems to us in the context of the different provisions and structure of the Act as compared with the NSW Act that the characterisation of an essential condition in Brodyn as a condition the breach of which would

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  • Admin Construction Pte Ltd v Vivaldi (S) Pte Ltd
    into which the parties had entered In reply Mecright claimed for the first time that the agreement reached had been made under duress 28 The court gave the declaratory relief sought by Shepherd Construction Three crucial holdings can be elicited from the court s judgment a First the court found that the settlement agreement was an agreement which but for the plea of economic duress would have the effect of extinguishing all the disputes that then existed on 15 March so that there could be no dispute capable of being referred to adjudication thereafter in relation to valuation at 12 Therefore there was no dispute about the subject matter of the settlement agreement which was capable of being referred to adjudication The court thus found that Mecright had no right to apply for adjudication and the adjudicator had no authority or jurisdiction to deal with the notice of 3 July at 13 b Secondly the court found that the settlement agreement was not inherently unenforceable and invalid While the settlement agreement could be avoided at the option of a party in this case Mecright if it was able to establish that it was entered into under economic duress the settlement agreement stood unless and until a court or arbitrator as the case may be holds that the agreement is void it could not be deprived of its effect simply because one party elected without more to avoid it In any case no election was made by Mecright until 12 July Therefore as at 3 July 2000 the date the adjudication was applied for the settlement agreement of 15 March 2000 governed the relationship of the parties and the purported reference to an adjudicator relating to a failure to value and pay the works done prior to 15 March 2000 was invalid or of no effect since there was no dispute capable of being referred to an adjudicator about any such matter at 16 c Thirdly in any event the court was of the view that a dispute about a settlement agreement of this kind could not be a dispute under the parties sub contract This was crucial because under the terms of the subcontract which incorporated the terms of the Standard Form of Sub Contract for Domestic Subcontractors DOM 1 or under the relevant statute governing statutory adjudication in this case parties could only refer a dispute arising under the construction subcontract to adjudication see clause 38A 1 of DOM 1 and s 108 1 of the Housing Grants Construction and Regeneration Act 1996 c 53 UK the UK Housing Act Here the court found that there could be no dispute under the sub contract as the settlement agreement had the effect of replacing Shepherd Construction s obligations to value and to pay Mecright under the sub contract the value of the work at 14 29 I note that there is no equivalent of clause 38A 1 of DOM 1 and s 108 1 of the UK Housing Act in either the sub contract or the Act Under the Act the entitlement to refer a dispute to adjudication stems from s 12 which reads Entitlement to make adjudication applications 12 1 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 2 Where in relation to a construction contract a the claimant disputes a payment response provided by the respondent or b 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 response as the case may be 3 A claimant who has served a payment claim in relation to a supply contract is entitled to make an adjudication application under section 13 in relation to the payment claim if a the claimant fails to receive payment by the due date of the claimed amount or b the claimant disputes the response amount where the response amount is less than the claimed amount emphasis added 30 Under the Act the right to invoke adjudication is not restricted to disputes under the sub contract but includes also disputes in relation to the subcontract Whilst the latter may appear wider than the former a closer reading of s 12 of the Act shows that the right to invoke the statutory adjudication regime is invariably linked to a payment claim and or a payment response which are premised on progress payments themselves which are in turn premised on the existence of a construction or supply contract see s 10 1 read with s 5 of the Act This means that the position in Singapore appears narrower than that in England Thus despite the difference in language between the operative clause in Shepherd Construction and s 12 of the Act Shepherd Construction is good authority and I adopt its ruling 31 As noted above the Settlement Agreement is ex facie valid and binding on parties and since Vivaldi has not taken any steps to set it aside accordingly as at 28 December 2011 the date of Vivaldi s adjudication application all disputes that existed between the parties on or before 31 January 2011 were extinguished There was therefore no dispute as at 28 December 2011 in relation to the Third PC capable of being referred to adjudication and Vivaldi had no right to apply for adjudication in relation to the Third PC 32 It follows that the Adjudicator had no authority or jurisdiction to deal with the adjudication application of 28 December 2011 Consequently I find that the Adjudicator had no jurisdiction to hear the dispute and the determination rendered by the Adjudicator must be set aside 33 Although that disposes of the matter I shall for completeness deal with the alleged irregularities of the Third PC Whether the Third PC is invalid by reason of the Sungdo Engineering test 34 Admin Construction relies on this Court s decision in Sungdo Engineering and contends that the Third PC is invalid because it was not intended to be a payment claim under the Act In Sungdo Engineering the Court held that a payment claim must satisfy two elements a it must be intended to be a payment claim under the Act and b the intention must be communicated to the recipient the Sungdo Engineering test However the Court of Appeal in Terence Lee recently restricted the applicability of the Sungdo Engineering test to alleged payment claims which are non existent or inoperative Terence Lee at 39 which is not the case advanced by Admin Construction vis à vis the Third PC 35 The Court of Appeal also made it clear that the Act does not require a payment claim to state that it is made under the Act The emphasis is not on the claimant s intention but on the respondent being given notice of certain information about the claim Terence Lee at 73 and 74 Since the Act does not require a payment claim to state that it is made under the Act the absence of such a statement cannot make it any less a payment claim if it otherwise satisfies all the formal requirements in s 10 3 a of the Act and reg 5 2 of the SOPR Terence Lee at 73 and 78 Accordingly Admin Construction s argument that the Third PC is invalid because it was not stated to be a payment claim under the Act or its argument that the Third PC was otherwise invalid under the Sungdo Engineering test must fail Whether the Third PC is invalid for being served out of time 36 I now turn to the next alleged irregularity of the Third PC Admin Construction claims that the Third PC was served out of time relying on the High Court s decision in Chua Say Eng formerly trading as Weng Fatt Construction Engineering v Lee Wee Lick Terence alias Li Weili Terence 2011 SGHC 109 Chua Say Eng In Chua Say Eng at 48 the High Court held that the Act contained a default position of requiring payment claims to be made at monthly intervals and that if payment for work done in a certain month was not claimed under the Act by the last day of the subsequent month then a claim in respect thereof was time barred by reg 5 1 and could not be made under the Act anymore 37 However on appeal to the Court of Appeal the Court disagreed with the Judge s interpretation that reg 5 1 of the SOPR read with s 10 2 of the Act created a limitation period for making payment claims and held that there was nothing in the language of reg 5 1 of the SOPR to compel a claimant to make monthly payment claims for work done in the previous month Terence Lee at 88 and 90 In the Court of Appeal s view the mandatory language of reg 5 1 of the SOPR in relation to service of the payment claim should be read with s 10 1 of the Act with the effect of imposing a maximum frequency of one payment claim per month Terence Lee at 90 Further the Court of Appeal was of the view that a payment claim which has not been paid or which was only partially paid before or without any adjudication under the Act was an unpaid claim under s 10 4 of the Act Terence Lee at 92 38 With this clarification from the Court of Appeal in Terence Lee Admin Construction s argument that the Third PC is invalid for being served out of time in contravention of s 10 2 of the Act read with reg 5 1 SOPR must fail 39 As to whether the Third PC was served out of time pursuant to Clause 14 1 I note that this issue was not addressed by the Adjudicator in the determination Since the parties take conflicting positions on when the work under the sub contract had stopped and I am without the assistance of the Adjudicator s findings on this point I make no finding as to whether the Third PC was served out of time pursuant to Clause 14 1 40 The issues raised by Admin Construction in argument at 15 b i and 15 b ii above do not strictly speaking arise for my decision However I voice my doubts obiter as to whether it should be permissible to issue a payment claim long after works have been completed and the contract or sub contract is at an end Admin Construction alleges that all works had ceased by January 2011 The sub contract completion date was stated to be 25 September 2010 The Second PC was dated 15 February 2011 and the claim documents in support of the claim show all works including variations completed Therefore even on Vivaldi s documents everything was complete as at that date On these facts and putting to one side the apparently valid Settlement Agreement is it permissible for Vivaldi to begin the adjudication process in November 2011 some nine to ten months after works have ceased 41 The aims of the Act are now well known and set out in various judgments including Terence Lee viz to ensure that contractors subcontractors and suppliers are paid timeously for work done and for materials supplied The mischief sought to be avoided was that prevalent in the construction industry prior to the passage of the Act where contractors subcontractors and suppliers were kept out of their money and this ran a significant number into financial distress and insolvency The Act established the principle that such parties were entitled to progress payments as of right and to this end made pernicious but then prevalent pay when paid clauses void The Act also created a process of statutory adjudication which enabled such parties to make payment claims in respect of progress payments to which they were entitled Such claims were then expeditiously adjudicated there were strict timelines and procedures set in place for disputing progress claims and if they were not complied with employers and upstream parties were precluded from raising them in the adjudication Once the adjudication determination was made it had to be paid The adjudication determination was final and binding on the parties for the time being but the parties were free to dispute or open up the same by later raising any defences to such claims or to ask for reassessment of the same or to claim set offs or counterclaims through the usual arbitration or court proceedings where all issues could be ultimately and conclusively determined at the end of the contract 42 The Court of Appeal ruled in Terence Lee that the Act also applies to final progress claims What I question is whether notwithstanding s 10 4 of the Act a party should be permitted to apply for adjudication under the Act long after contract works have been completed instead of making its claim in court or to an arbitrator Should it be permitted to gain an upper hand by using what is a temporary but speedy rough and ready mechanism of justice to resolve an entire building and construction dispute with its myriad of interlinked issues Do the considerations which led to the passing of the Act apply to such factual situations In my view the adjudication process is not a suitable procedure with its time pressures especially on the adjudicator to decide such complex and detailed disputes which are notorious for their involved and detailed documentation and evidence It might even be said that an application for adjudication which is filed long after the contract has ended which involves the determination of complicated issues of fact and law and which is plainly an attempt to overwhelm the respondent and indeed the adjudicator with voluminous submissions and extensive documentation is an abuse of process 43 It should also be noted that statutory adjudication was introduced as part of a scheme to preserve a claimant s right to progress payments under a building contract until the final determination of the parties rights through arbitration or in court after the contract works have come to an end Just as progress payment certificates are meant to have temporary finality so too are adjudication determinations However if the parties are still locked in dispute after the end of the contract for instance over the valuation of progress payment certificates and the enforcement of adjudication determinations if any all such issues and disputes can be raised at the final dispute resolution process of an arbitration or court proceedings At this stage all certificates and determinations can be opened up and they are not binding on the arbitrator or the court see eg para 6 page vi Foreword by Chan Sek Keong former Chief Justice to Chow Kok Fong Security of Payments and Construction Adjudication Lexis Nexis 2 nd Ed 2013 44 I recognise that drawing a line as to when the entitlement to make an adjudication application should cease if at all will be difficult If the measure to be adopted is that of a reasonable time what amounts to a reasonable time to bring an adjudication claim will vary with the facts of each case and two people could honestly arrive at different conclusions Quite often final accounts and claims take time to be finalised At times there will be employers or upstream parties who string along their downstream counterparts with endless meetings and negotiations They may and do call for multiple rounds of substantiating documentation A downstream party who enters into such negotiations in good faith should not be penalised by being disentitled from bringing his claims to adjudication He has by then been out of pocket for perhaps large sums of money for work already done and for material already supplied and installed He should be entitled to avail himself of the adjudication process However there may be as I have said instances where the rapid fire timelines of the adjudication process are abused to one party s detriment In my view this should be addressed by legislation the courts should not be left to develop some doctrine of reasonable time within which a claimant is entitled to apply for adjudication I note that the equivalent processes of statutory adjudication in New South Wales and Queensland limit the service of a payment claim at the latest to a period of 12 months after the construction work to which the claim relates was last carried out or the related goods and services to which the claim relates were last supplied see s 17 4 b of the Building and Construction Industry Payments Act 2004 No 6 of 2004 Qld and s 13 4 b of the Building and Construction Industry Security of Payment Act 1999 No 46 of 1999 NSW 45 It seems that the authoritative construction placed on s 10 1 s 10 4 and Regulation 5 1 by the Court of Appeal in Terence Lee has the effect of allowing a claimant to make a payment claim sit on it until some two years or so after all construction work in relation thereto has ended and only then spring an adjudication application It may well be counter argued that this is only a theoretical possibility as no contractor or subcontractor would wait for so long to be out of pocket Yet experience in the construction industry tells a different story 46 I say no more as there is insufficient evidence before me and this issue does not arise

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  • JFC Builders Pte Ltd v LionCity Construction Co Pte Ltd
    the AD The evidence at present was insufficient to establish whether the payment was made pursuant to the AD or not Accordingly on the available facts so far I did not think that the Defendant had established this contention Issue 3 Whether Progress Claim No 8 was an invalid payment claim under SOPA and if so its effect 45 As I mentioned above the AR was of the view that there was insufficient basis to support the setting aside of the AD on the ground that Progress Claim No 8 was a repeat identical claim Her reason was that in order to do so I would first have to consider as a matter of law whether a sum could be included in a fresh payment claim where no further works had been carried out after service of the original claim but the said sum had not been paid I would also have to consider as a matter of fact what the nature of the works originally claimed and what the nature of the works claimed in the allegedly repeat claim were This could entail a laborious process of looking at the breakdown of the claim and going into an understanding of how each item was incurred 46 I gather that the second reason ie the factual reason was the main reason why the AR was of the view that there was insufficient basis to decide whether Progress Claim No 8 was in fact a repeat claim in the first place 47 However the facts before me were clear and undisputed Mr Lam did not suggest that Progress Claim No 8 was not a repeat claim of Progress Claim No 7 I stress that my reference to a repeat claim is one which merely repeats an earlier claim without any additional item of claim whether for additional or repair work or otherwise although of course it may and should give credit for any payment received since the earlier claim was made 48 There was no doubt that Progress Claim No 8 was a repeat claim The question was whether it was a valid claim under SOPA Sections 10 1 and 4 SOPA state 10 1 A claimant may serve one payment claim in respect of a progress payment on a one or more other persons who under the contract concerned is or may be liable to make the payment or b such other person as specified in or identified in accordance with the terms of the contract for this purpose 4 Nothing in subsection 1 shall prevent the claimant from including in a payment claim in which a respondent is named an amount that was the subject of a previous payment claim served in relation to the same contract which has not been paid by the respondent if and only if the first mentioned payment claim is served within 6 years after the construction work to which the amount in the second mentioned payment claim relates was last carried out or the goods or services to which the amount in the second mentioned payment claim relates were last supplied as the case may be 49 Mr Chan submitted that s 10 1 implicitly precluded a claimant from making a repeat claim As for s 10 4 he submitted that s 10 4 allows an earlier payment claim to be included in a subsequent payment claim only if the earlier payment claim is part of a larger subsequent payment claim In other words s 10 4 does not allow a claimant to simply repeat an earlier claim 50 Mr Lam did not seem to dispute that s 10 1 implicitly precluded a claimant from making a repeat claim However he focussed on s 10 4 and submitted that it allows a claimant to make a repeat claim 51 The Adjudicator was of the view that s 10 4 did not prevent the Defendant from including in Progress Claim No 8 what had been claimed in Progress Claim No 7 see 19 and 20 of the AD He seemed to assume that the word include in s 10 4 allows the Defendant to make a repeat claim In fairness to him he might not have been aware of the argument about s 10 1 as the Plaintiff did not participate in the proceedings before the Adjudicator 52 SOPA is derived primarily from New South Wales legislation ie their Building and Construction Industry Security of Payment Act 1999 as amended in 2002 BCISOPA Amended 2002 53 In 2002 New South Wales introduced various provisions including a new section 13 5 and 6 5 A claimant cannot serve more than one payment claim in respect of each reference date under the construction contract 6 However subsection 5 does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim 54 As can be seen s 13 5 BCISOPA Amended 2002 is explicit about prohibiting a claimant from serving more than one payment claim whereas our s 10 1 does not have this express prohibition The argument before me was that the prohibition was implied Another difference is that the said s 13 5 talks about a payment claim in respect of each reference date under the construction contract whereas our s 10 1 talks about one payment claim in respect of a progress payment However the definition of a reference date in s 8 2 a BCISOPA Amended 2002 in turn refers to a progress payment as it means a date determined by the terms of the contract as the date on which a claim for a progress payment may be made 55 In Sandra Doolan and Stephen Doolan v Rubikcon QLD Pty Ltd 2007 QSC 168 Doolan the Supreme Court of Queensland was considering inter alia ss 17 5 and 6 of the Building and Construction Industry Payments Act 2004 which is similar to but not identical with ss 13 5 and 6 of BCISOPA Amended 2002 Fryberg J decided that a previous claim cannot be the sole item included in a later claim 56 In Dualcorp Pty Ltd v Remo Constructions Pty Ltd 2009 NSWCA 69 Dualcorp Allsop P of the New South Wales Court of Appeal said at 13 and 14 13 I see no warrant under either the contract or the Act s 8 for permitting a party in Dualcorp s position to create fresh reference dates by lodging the same claim for the same completed works in successive payment claims That is not the intended operation of the last phrase of s 8 2 b and the last day of each subsequent named month 14 Here the work had been done Dualcorp the subcontractor had left the site it claimed payment by six invoices six weeks later it repeated that claim by reference to the same invoices and in my view in respect of the same reference date Dualcorp was prevented from serving the second payment claim The terms of s 13 5 are a prohibition The words cannot serve more than one payment claim are a sufficiently clear statutory indication that a document purporting to be a payment claim that is in respect of the same reference date as a previous claim is not a payment claim under the Act and does not attract the statutory regime of the Act 57 Section 8 2 b of BCISOPA Amended 2002 states 2 In this section reference date in relation to a construction contract means b if the contract makes no express provision with respect to the matter the last day of the named month in which the construction work was first carried out or the related goods and services were first supplied under the contract and the last day of each subsequent named month emphasis in original 58 In Doo Ree Engineering Trading Pte Ltd v Taisei Corp 2009 SGHC 218 Doo Ree another Assistant Registrar Nathaniel Khng referred to various cases including Dualcorp and Doolan as well as Shellbridge Pty Ltd v Rider Hunt Sydney Pty Ltd 2005 NSWSC 1152 He decided that repeat claims are not allowed under SOPA AR Khng said at 20 20 The interpretation given in Shellbridge and Dualcorp would appear to be in line with the legislative intention behind the enactment of ss 13 5 and 13 6 which apparently was to limit the number of times a claim could be made in respect of each particular reference date in order to prevent abuse At the Second Reading of the Building and Construction Industry Security of Payment Amendment Bill 2002 NSW which sought to enact inter alia ss 13 5 and 13 6 Mr Morris Iemma the Minister for Public Works and Services Minister for Sport and Recreation and Minister Assisting the Premier on Citizenship stated New South Wales Legislative Assembly Parliamentary Debates 12 November 2002 at p 6543 We recognise the potential for claimants to abuse also the intent of the legislation Consequently the bill ie the Building and Construction Industry Security of Payment Amendment Bill restricts claimants to one payment claim under the Act in respect of each reference date emphasis in AR Khng s decision 59 So far the authorities mentioned above were in support of Mr Chan s contention However when the Defendant s appeal first came on for hearing before me on 6 September 2012 Mr Lam had discovered and referred to a contrary decision by the Queensland Court of Appeal in Spankie v James Trowse Construction Pty Ltd 2010 QCA 355 Spankie I have mentioned above that ss 17 5 and 6 of the Queensland legislation is similar to the New South Wales legislation I set out below ss 17 1 2 4 5 and 6 of the Queensland legislation 17 Payment claims 1 A person mentioned in section 12 who is or who claims to be entitled to a progress payment the claimant may serve a payment claim on the person who under the construction contract concerned is or may be liable to make the payment the respondent 2 A payment claim a must identify the construction work or related goods and services to which the progress payment relates and b must state the amount of the progress payment that the claimant claims to be payable the claimed amount and c must state that it is made under this Act 4 A payment claim may be served only within the later of a the period worked out under the construction contract or b the period of 12 months after the construction work to which the claim relates was last carried out or the related goods and services to which the claim relates were last supplied 5 A claimant cannot serve more than 1 payment claim in relation to each reference date under the construction contract 6 However subsection 5 does not prevent the claimant from including in a payment claim an amount that has been the subject of a previous claim 60 In Spankie the court of first instance rejected the contention that the law precluded the making of successive payment claims for identical amounts for the same work where the second payment claim related to a new reference date after the reference date for the first claim The Court of Appeal dismissed an appeal against that decision 61 The judgment of the Court of Appeal was delivered by Fraser JA He said at 23 I return to the provision which is critical for the appellant s argument s 17 6 In my respectful opinion the text of s 17 6 is wholly inapt to impose any restriction upon the generally expressed entitlement in s 17 1 When s 17 6 is read in the context of the preceding provisions as it should be its effect is merely to ensure that no implication may be drawn that s 17 5 precludes a claimant from making a payment claim for an unpaid amount claimed in a previous claim Section 17 6 does not provide that a payment claim may not claim only an unpaid amount of a previous payment claim and it should not be given that construction The prospect that claimants might cause respondents undue expense and inconvenience by using payment claims as rehearsals for a final claim is an insufficient basis for such a construction That concern should not be exaggerated Claimants will ordinarily have a powerful interest in putting their best foot forward in the earliest payment claim so as to obtain prompt payment In any event even on the appellant s construction s 17 6 permits repetitive claims if the subsequent payment claim also claims another amount That requires rejection of the appellant s argument that there is a general implication in BCIPA against any re agitation of a payment claim in a subsequent payment claim even where there has been no adjudication determination 62 As for the observations made by Allsop P in Dualcorp Fraser JA distinguished Dualcorp from Spankie on the basis that in Dualcorp the earlier claim was the subject of a valid AD 63 In view of the above authorities I asked counsel to do further research inter alia to see if there was any Parliamentary statement other than the one cited in Doo Ree in any of the various jurisdictions including Singapore which would shed more light on the issue Notwithstanding their diligence counsel were unable to uncover any such statement although Mr Lam came up with more cases which I will come to later 64 If one were to apply Fraser JA s observations about the said s 17 6 to s 10 4 of SOPA one might think that this would mean that our s 10 4 is also inapt to impose any restriction on repeat claims While this may be so I did not agree for the reasons stated below that a claimant in Singapore may rely on a repeat claim as the basis of an adjudication application 65 I did not think that our s 10 1 is a generally expressed entitlement On the contrary it stipulates that a claimant may serve one payment claim That restriction applies in respect of a progress payment 66 In Queensland s 17 1 is subject to s 17 5 which restricts one payment claim in relation to each reference date so that in the view of Fraser JA another payment claim can be made so long as it is in relation to a different reference date even though it is in respect of an identical sum for identical work previously claimed and no more 67 In my view s 10 1 does impliedly preclude a claimant from making a repeat claim Otherwise there would be no purpose in having s 10 1 Furthermore it is because s 10 1 contains this implied prohibition that s 10 4 starts off by stating Nothing in subsection 1 shall prevent If there is no prohibition in s 10 1 in the first place then the starting words in s 10 4 are unnecessary Furthermore Mr Lam did not suggest that s 10 1 imposed a prohibition other than the one contended by Mr Chan Indeed as mentioned above he appeared to accept Mr Chan s position on s 10 1 but not on s 10 4 68 It also seemed to me that it is an abuse to allow a claimant to make repeat claims which he will do if for example he has missed the deadline under SOPA to serve his earlier payment claim Indeed the deadline to do so would also be rendered largely nugatory if he can resurrect a new deadline by merely issuing and serving a repeat claim 69 I come now to the additional cases which Mr Lam cited to support the Defendant s position I need only mention four specifically 70 In Watpac Constructions v Austin Corp 2010 NSWSC 168 the facts were quite different The payment claim which was the subject of an AD included a claim for variation work which had been the subject of an earlier AD by another adjudicator The court decided that such an inclusion did not make the entire payment claim an invalid one 71 The second case is Olympia Group Pty Ltd v Tyrenian Group Pty Ltd 2010 NSWSC 319 Mr Lam relied on what Hammerschlag J said at 32 So far as abuse of process point is concerned I propose to follow what was said by the Court of Appeal in Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd 2006 NSWCA 259 In the judgment of Hodgson JA at par 36 his Honour held that the Act permits successive payment claims to be made for the same work This disposes of the first plaintiff s submission 72 The third case is Falgat Constructions Pty Ltd v Equity Australia Corporation Pty Ltd 2006 NSWCA 259 which was cited with approval by Hammerschlag J In that case Hodgson JA adhered to what he had said in Brodyn to the effect that after cessation of work there continue to be reference dates in respect of which successive payment claims can be made and that s 13 6 permits successive payment claims to be for the same work 73 However what Hodgson JA said in Brodyn was not in respect of a repeat claim as such What he said there was that successive payment claims could still be made even though no further work was done because an earlier claim may for one reason or another have excluded a claim for work done Hodgson JA said at 62 to 64 62 Brodyn s submission was that the payment claim served on 28 September 2003 was not a valid payment claim under the Act because the termination of the contract and cessation of the work under it meant that there was thereafter only one reference date in respect of which only one final payment claim could be made This submission

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  • Tiong Seng Contractors (Pte) Ltd v Chuan Lim Construction Pte Ltd[2007] 4 SLR 364; [2007] SGHC 142
    or for supplying related goods and services under a construction contract or c a payment that is based on an event or date known in the building and construction industry as a milestone payment emphasis added Our current version 14 Notably our current version of the Act does not capture all the amendments from the NSW Act but simply defines progress payment as a payment to which a person is entitled for the carrying out of construction work or the supply of goods or services under a contract and includes a a single or one off payment or b a payment that is based on an event or a date 15 The plaintiff accordingly seized on the specific omission of claims for final payment and concluded therefrom that the Act was not intended to extend to claims for final payment The defendant submitted otherwise on the basis that the broad ranging provisions of the Act do not expressly or impliedly exclude final claims 16 Indeed the present interpretative controversy has been exacerbated by conflicting views expressed by treatises the Building and Construction Authority BCA and adjudicators in subsequent mediations under the Act as can be seen in the following examples Includes adjudication of final payments 17 ln AU v AV 2006 SGSOP 9 a construction contract was terminated and a claim was made under the Act effectively amounting to a claim for final payment Philip Jeyaretnam SC concluded that he had jurisdiction under the Act to hear the claim His reasoning at 13 was as follows I also noted to both counsel in the course of the hearing that while the New South Wales Act expressly included within the definition of progress payment the final payment for construction work carried out our Act did not Nonetheless I am of the view that the Act does apply even after a contract is terminated First the intention to protect cash flow would not be achieved if the interpretation put forward by the Respondent is adopted If cash flow is blocked on one project that will affect a contractor or service provider s financial resources for other projects Secondly although one always speaks of termination of a contract when it is really the right and obligation to do work and be paid for it which is terminated for the future the contract continues to govern the relationship between the parties in relation to the work already done 18 Such a conclusion is further vindicated by the Building and Construction Industry Security of Payment Act 2004 Information Kit released by the BCA BCA website accessed 14 September 2007 the main proponent of the Act which states at cl 2 2 that Progress payment claims made after completion dates including claims for final payments where applicable are also covered under the Act The payment claims must be made in relation to the contract Excludes adjudication of final payments 19 In stark contrast to the foregoing conclusions Seah Choo Meng in BC v BD 2006 SGSOP 10 concluded that a final claim should not be dealt with under the Act In this regard he stated at 43 44 that I am satisfied that this is an ongoing dispute about possible variation and the final accounts It requires a detailed analysis of the provisions of the contract of the scope of works and a technical review of the works carried out These points together with the letters of 15 th June 2005 and 11 th August 2005 need to be examined carefully with other relevant parties being cross examined These are clearly matters that cannot sic be dealt with under provisions of the Act As the aim of the Act is to solve cash flow problems on monies unreasonably withheld it is clear to one that it cannot resolve every payment issue especially one as I have described in paragraph No 43 above The Claimant can not sic just disregard the entire event that had taken place and simply raise their Payment Claim in the hope that it will be dealt with and disposed of under the Act It must also be recognised that the payment obligations by the Respondent had largely been performed 20 Indeed the above extract appears to be in alignment with the holding in Jemzone Pty Ltd v Trytan Pty Ltd 2002 NSWSC 395 Jemzone which the plaintiff relied heavily on in which Austin J held at 37 that the NSW Act as it applied then did not extend to claims for final payment The definition of progress payment is unhelpful because s 8 confers an entitlement to payment only for a progress payment without further defining or explaining those words In my opinion the words progress payment when used in s 8 and other parts of the Act should therefore be given the meaning that they have under the construction contract That accords with the structure of the Act itself which generally leaves it to the construction contract to define the rights of the parties but makes default provisions to fill in the contractual gaps see Second Reading Speech at 1013 It also accords with the stated object of the Act If the Act was intended to apply in the case of the final payment on practical completion it would have been a simple matter for the drafter of the statement of the object of the Act in s 3 1 to refer to the entitlement to receive all payments due under the construction contract rather than only specified progress payment The Minister s concern with the cash flow of subcontractors Second Reading Speech at 1012 and 1013 also suggests that attention was focused on progress payments rather than the final balancing of account between the contracting parties 21 In a similar vein the author Chow Kok Fong in Security of Payments and Construction Adjudication LexisNexis 2005 suggested at p 72 several reasons why a final payment would reasonably be excluded from the ambit of the Act Firstly the certification of the final payment is expected towards the end of the contract when the risks associated with non payment are generally less likely to threaten the delivery and completion of the works Secondly it might be thought that since the final payment is an incident encountered at the end of the contract parties should be able to submit disputes relating to the final payment for final resolution by the courts or arbitration Thirdly quantity surveyors generally consider the final payment to constitute a definitive statement of the final financial position between the parties in respect of the subject contract and accordingly the final statement should not be subject to the same pressures of timelines as those encountered with the processing of progress payments There is some attraction in the force of these arguments on the policy consideration that the intention behind the legislation is to minimise disruptions to the progress of construction works arising from payment problems 22 Interestingly enough the author acknowledged the contrary view taken by the BCA and enunciated several opposing considerations mandating an opposite result discussed below at 35 In the light of the unsettled nature of this issue a determinative pronouncement from the courts is timely Resolving the conflict 23 Notwithstanding the undeniable merits of the plaintiff s interpretation I am of the view that the broader interpretation to the effect that the Act does encompass and provide for the adjudication of final progress payments is to be preferred Literal interpretation 24 Adopting a literal perspective such an interpretation is justified by the unambiguous wording of the Act which defines progress payments as a payment to which a person is entitled for the carrying out of construction work or the supply of goods or services under a contract the main limb Such a definition expressly includes a single or one off payment or a payment based on an event or date the supplementary limb 25 The plaintiff had submitted that the Act does not cover final claims on the basis that they are not expressly provided for I have several comments to make on this submission First the word includes alludes to the non exhaustive nature of the sub provisions that follow From this perspective the operative definition of progress payment should be centered on the main limb rather than the supplementary limb 26 The plaintiff appeared to have adopted the tack that final payments should not be included simply because they were not specifically identified in the supplementary limb as included within the main limb This approach with respect neglects the structure of the provision which unambiguously defines progress payments at the outset as payments to which a person is entitled for the carrying out of construction work under a contract 27 Looking at the structure and wording of the provision it appears that an exclusion of final payments from the ambit of the Act can only be justified by express wording to that effect It would not suffice to infer a legislative intention to exclude simply on the basis that final payments were not included in a non exhaustive supplementary definition ostensibly provided for clarification If the Legislature had intended to exclude final claims from the adjudicatory ambit of the Act it could have clearly included a proviso or provision to that effect In the absence of such express exclusion the primary broad ranging definition in the main limb must be determinative 28 In addition a plain reading of a payment that is based on an event or a date or a single or one off payment clearly encompasses final payments Such a conclusion is vindicated by the fact that the Act at no time makes any distinction between final claims and non final claims Implying such a distinction from the supplementary limb would severely impair the protection afforded by the Act as it would create a carte blanche for contractors to renege on the final stages of payment which would have an equally deleterious effect on cash flow affecting other ongoing construction projects 29 In the same vein Member of Parliament Dr Amy Khor Lean Suan in support of the Building and Construction Industry Security of Payment Bill Bill No 54 of 2004 the Bill at its second reading Singapore Parliamentary Debates Official Report 16 November 2004 vol 78 at cols 1121 1122 emphasised the broad scope of its application in the following terms Firstly wide scope of the Bill s application The SOP applies to the entire value chain of the construction industry not just contractors and sub contractors but also developers and consultants It applies not just to construction work done but also to related goods and services supplied in the industry and to any other related matter Construction work is given the broadest definition so that virtually all type of construction works fall within the Bill Making the proposed SOP Act applicable throughout the construction value chain will not only facilitate payments and cashflow but also help streamline industry practices instill discipline among the various key players and bring about a more orderly industry 30 The broader interpretation of the definition of progress payments which is couched in fairly wide terms see WongPartnership s Annotated Guide to the Building and Construction Industry Security of Payment Act 2004 to include final payments clearly accords with the legislative intent underscored by the above extract which brings me to the next point Purposive construction 31 Construing the relevant provisions purposively leads to a similar conclusion To begin with the preamble of the Act describes itself as a n Act to facilitate payments for construction work done or for related goods or services supplied in the building and construction industry and for matters connected therewith 32 The raison d être of the Act has been similarly clarified by the then Minister of State for National Development Mr Cedric Foo Chee Keng at the second reading of the Bill 29 supra at cols 1119 1120 as follows B y upholding the rights of any party in the industry to seek payment for work done or goods supplied this Bill will help to deter and weed out the practice of delaying or withholding payment without valid reasons The speedy and low cost adjudication process will expedite the resolution of genuine payment disputes so that cashflow will not be disrupted It will identify contractors who are facing financial difficulties early before they cause more problems downstream 33 From the above extract it appears that the Act is primarily directed at safeguarding the continued financial viability of contractors who are victims of payment delays or disputes made in bad faith perpetuated by upstream contracting parties From this perspective it makes no sense to draw an artificial distinction between allegedly final and non final payments as the withholding of either would create the exact same downstream ripple effect intended to be deterred and weeded out by the Act 34 Admittedly the Bill cannot be expected to resolve every payment issue or payment woe in the industry Nonetheless the avowed intention of the Legislature remains central in resolving the present controversy All things being equal an interpretation which best advances the legislative intent should be preferred 35 My interpretation is reinforced by Chow Kok Fong in Security of Payments and Construction Adjudication 21 supra who expressed at p 73 a similar opinion which merits reproduction in full I f the objective is to encourage good payment behaviour on the part of the various parties down the contractual chain there is little reason why the payment discipline intended by the BCISP Act should not be allowed to visit final payments as well The definition of progress payment in the Act expressly includes a payment that is based on an event or a date Furthermore the same considerations which justify the coverage of the Act to include contracts which provide for a single one off payment would apply to the security of the final payment as well It is considered that where the final payment is expressed to be triggered by reference to an event such as the issue of a Final Completion Certificate one view is that the claim for a final payment in such a situation would fall within the description of a payment that is based on an event or a date as stipulated in paragraph b of the definition of progress payment in the Act On this construction the definition of progress payment under the Act would extend to include a final payment claim made pursuant to the Final Certificate issued under clause 31 10 of the SIA Conditions of Building Contract and a payment claim following the Final Account Certificate issued under clause 32 5 7 of the Public Sector Standard Conditions of Contract 36 These compelling considerations make eminent sense in view of the legislative intent and the structure of the Act as a whole Final payments triggered by the issue of a completion certificate undeniably fall within the definition of a payment that is based on an event or a date To exclude such final payments on the sole basis of their finality would be to infer an illusory distinction unjustified by the clear and unambiguous wording of the Act Policy implications 37 Finally my analysis would not be complete without considering the broader policy implications or risks of such an interpretation In particular several concerns need to be addressed 38 The first relates to the availability of other apparently more appropriate avenues of final payment dispute resolution such as arbitration or the courts as was alluded to in Security of Payments and Construction Adjudication 21 supra I believe such a concern is not only overstated but has also been pre empted by s 34 1 of the Act which provides Effect on other proceedings 34 1 Nothing in this Act shall affect any right that a party to a contract may have a to submit a dispute relating to or arising from the contract to a court or tribunal or to any other dispute resolution proceeding b to apply for adjudication under this Act notwithstanding that the dispute is the subject of proceedings in a court or tribunal or the subject of any other dispute resolution proceeding 39 Indeed the above provision makes it clear that the availability of other dispute resolution proceedings is not determinative of the adjudicatory scope or ambit of the Act Rather the Act is meant to ease contracting parties through interim periods of constricted cash flow by providing a platform for swift and efficient adjudications of protracted payment disputes without prejudice to other available enforcement mechanisms 40 Adopting the plaintiff s position of excluding final claims from the scope of the Act would undermine the legislative objective of protecting subcontractors from unfair delays in payment resulting in potentially adverse downstream effects on other projects as upstream main contractors favouring delay could easily allege the finality of certain payments in an attempt to exclude it from the ambit of the Act Indeed in a worst case scenario our courts could potentially be beset with tactical applications seeking to set aside adjudication determinations based on finality 41 My conclusion is vindicated by the views held by the BCA above at 18 which develops and regulates Singapore s building and construction industry and would have acquired an important familiarity with industry practices and customs 42 The second obstacle which needs to be overcome relates to the underlying principle that risks associated with non payment are generally less likely to threaten the delivery and completion of the works and that the definitive statement of the final position between the parties should not be subject to the same pressure of timelines as those encountered with the processing of progress payment above at 21 43 Whilst a final payment claim is arguably subject to less pressing timelines than interim progress payments such a perspective appears to be premised on the assumption of discrete and independent stand alone construction projects which hardly reflects commercial reality these days

    Original URL path: http://www.singaporelaw.sg/sglaw/laws-of-singapore/case-law/free-law/high-court-judgments/13255-tiong-seng-contractors-pte-ltd-v-chuan-lim-construction-pte-ltd-2007-4-slr-364-2007-sghc-142 (2016-01-30)
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  • YTL Construction (S) Pte Ltd v Balanced Engineering & Construction Pte Ltd
    Project till the end of August 2013 The Plaintiff would not know the actual amount claimed from the original payment claim until the payment claim was amended with handwritten entries subsequently This amended payment claim was lodged by the Defendant together with its adjudication application stating the amount claimed Therefore when the Plaintiff was served with the payment claim on 6 September 2013 it would not know how much the Defendant was actually claiming The Defendant argued that the payment claim was in order as the SOP Act does not specify what constitutes a claim amount and what does not Furthermore the Defendant submitted that the Plaintiff is estopped from disputing the validity of the payment claim The Defendant also argued that the Plaintiff did its own calculation and in its payment response issued interim Payment Certificate 12 approving payment to the Defendant for 695 370 76 This was on 30 September 2013 25 How important is the payment claim under the SOP Act This requires a close perusal of s 10 of the SOP Act particularly s 10 3 that deals with payment claim 10 3 A payment claim a shall state the claimed amount calculated by reference to the period to which the payment claim relates and b shall be made in such form and manner and contain such other information or be accompanied by such documents as may be prescribed 26 From the above wordings it is clear that Parliament had mandated that the payment claim must state the claimed amount This is a basic requirement because the respondent and later on the adjudicator will want to know what is being claimed After all the main purpose of the SOP Act is to facilitate easy and quick processing of claims in the construction industry It is the payment claim that initiates the claim protocol under the SOP Act Therefore the payment claim must clearly state what the claim amount is It is very unfortunate that the Defendant had failed to indicate the exact amount it was claiming for the month of August 2013 This is a series of serious errors made by the Defendant Later when no payment was forthcoming despite the Plaintiff certifying the amount of 695 370 76 exclusive of GST the Defendant served the Notice of Intention to apply for adjudication on the Plaintiff on 15 November 2013 It did not indicate 695 370 76 exclusive of GST as the claimed amount but 897 889 83 instead When the Defendant lodged its adjudication application it once again claimed a different amount This time the Defendant claimed 1 328 536 83 What then is the actual amount that the Defendant was claiming At the hearing before me the Defendant submitted that it was claiming 695 370 76 exclusive of GST but this was not apparent when the Defendant initiated the claim proceedings under the SOP Act 27 It is common sense that for any claim or adjudication procedure to advance expeditiously and efficiently the claimed amount must be made known in the payment claim pursuant to s 10 3 a of the SOP Act If that is not the case it would be difficult for the respondent to serve a proper payment response How would one be able to decide on how much to pay another if he does not even know how much is demanded Further if there is a dispute as to the payment response the respondent will be unable to negotiate with the claimant since he is unaware of the claimant s position The adjudication process will then not be able to proceed in accordance with the envisioned framework of the SOP Act 28 Here it was not a situation whereby the figures provided in the payment claim would allow a person to logically ascertain what the actual claimed amount was at that point in time There was no indication of the amount claimed It was later at the adjudication application that figures were hand written and labelled as Amount approved previously and Retention 10 These were added on in the amended payment claim The amounts also did not correspond with any of the numbers in the Plaintiff s payment response Thus the Plaintiff would not have known the Defendant s claimed amount for the month of August 2013 In short it was impossible for the Plaintiff to have figured out what the Defendant s actual claim in its payment claim This explains why subsequently when the Plaintiff lodged its adjudication response at section B under Contract type it ticked the box Disputed payment response and for Nature of Dispute it ticked the boxes Disputed payment response and Paid amount disputed including nil payment note 12 In this case when the Plaintiff certified 695 370 76 exclusive of GST on 30 September in response to the payment claim it did so from its own calculation and understanding of the amount outstanding for the month of August 2013 It did not and could not do so based on the Defendant s understanding since the Defendant s payment claim failed to stipulate the claimed amount in breach of s 10 3 of the SOP Act Hence I find that the non compliance with s 10 3 a rendered the Defendant s payment claim invalid May the invalidity of the payment claim be waived 29 Despite the Defendant s failure to state the amount claimed in its payment claim the Defendant turned the table and argued that the Plaintiff is estopped or had waived the claim requirement under the SOP Act Is this a valid argument when it is the Defendant who had failed to comply with the SOP Act in its pursuit of its claim under the same Act 30 As held by Judith Prakash J in Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering Construction Co Ltd 2010 1 SLR 658 at 43 44 43 Considering the authorities cited by each party it appeared at first that they could not be reconciled On the one hand it was declared by high authority that parties could not be estopped from contesting jurisdiction and on the other hand there were numerous cases in which exactly that seemed to have happened There was however an answer to the quandary and it was provided by the claimant The claimant pointed out that the confusion arose from the way in which the word jurisdiction was used by the respondent Agreeing that parties could not confer or waive jurisdiction as explained in the authorities cited by the respondent the claimant averred that that was the case when jurisdiction was used in its narrow meaning of competence to hear When jurisdiction was used in a wider sense ie in reference to the manner in which the court s power was exercised then waiver or estoppel could be relied on The distinction between the two meanings of the word appears clearly from the following passage of the judgment of Deane J in Then Kang Chu v Tan Kim Hoe 1925 SSLR 4 By the jurisdiction of a Court is meant the authority which the Court has to decide matters litigated before it or to take cognizance of matters presented in a formal way for its decision Its limits are defined in the Statute Charter or commission constituting the Court and must be sought for there The last point to be dealt with is the argument that defendant having appeared in the lower Court and taken no objection to the jurisdiction is thereby estopped from pleading to it The principles governing the application of estoppel in such cases are well stated in Spencer Bower on Estoppel by Representation at page 187 Even the most plain and express contract or consent a fortiori therefore any mere conduct or inaction or acquiescence of a party litigant from which a representation may be implied such as to give rise to an estoppel cannot confer judicial authority on any of His Majesty s subjects not 18 already invested with such authority by the law of the land or add to the jurisdiction lawfully exercised by any judicial tribunal On the other hand where it is merely a question of irregularity of procedure or of a defect in contingent jurisdiction or non compliance with statutory conditions precedent to the validity of a step in the litigation of such a character that if one of the parties be allowed to waive or by conduct or inaction to estop himself from setting up such irregularity or want of contingent jurisdiction or noncompliance no new jurisdiction is thereby impliedly created and no existing jurisdiction is thereby impliedly extended beyond its existing boundaries the estoppel will be maintained and the affirmative answer of illegality will fail 44 Thus it seemed that when what was being alleged was an absolute lack of jurisdiction on the part of a particular tribunal or court to hear a particular dispute jurisdiction being used in the strict sense of capacity to hear then if the tribunal concerned does not have such jurisdiction any party to the dispute may assert the lack of jurisdiction at any stage and can never be held to be estopped from doing so or to have waived its right of protest On the contrary when it is a question of irregularity of procedure or contingent jurisdiction or non compliance with a statutory condition precedent to the validity of a step in the litigation such irregularity or non compliance can be waived because the effect of the waiver would not be to create or confer any jurisdiction that did not previously exist 31 Therefore in such an instance the question would then depend on whether the irregularity pertaining to the requirements of making a valid payment claim relates to jurisdiction in the narrow sense or the wider sense In relation to non compliance with s 10 3 of the SOP Act Quentin Loh J held in Admin Construction Pte Ltd v Vivaldi S Pte Ltd 2013 3 SLR 609 at 59 60 59 In discussing TPX Builders Woo Bih Li J said that a payment claim made in breach of the Act would undermine the jurisdiction of the adjudicator and therefore the validity of his rendered determination at 35 Accordingly neither s 15 3 of the SOP Act nor estoppel should preclude a respondent from challenging the validity of the payment claim in an action for setting aside Woo J pointed to Terence Lee at 64 65 for the proposition that a dispute over the validity of the payment claim was an issue to be determined by the court and not the adjudicator and repeated this reasoning in the recent case of Australian Timber Products Pte Ltd v A Pacific Construction Development Pte Ltd 2013 2 SLR 776 at 36 The formal validity of a payment claim under s 10 3 of the Act is therefore not a matter on which an adjudicator is entitled to decide and in this regard it would be superfluous to raise for the adjudicator s consideration any objection to validity stemming from the lack of detail in a purported payment claim No question of any estoppel can arise given that the adjudicator cannot decide on the point even if it is brought up for his consideration 60 I agree that in Terence Lee the Court of Appeal definitively clarified that a challenge to the validity of a payment claim amounts to a challenge to the validity of the appointment of the adjudicator ie a challenge to the adjudicator s jurisdiction rather than the exercise of such jurisdiction see 21 above 32 Therefore given that the irregularity here related to jurisdiction in the strict sense such that it affected the validity of the appointment of the adjudicator and his competence to hear the adjudication no defence of waiver or estoppel may be relied upon by the Defendant Woo Bih Li J also found that non compliance with s 10 1 of the SOP Act could not be waived in JFC Builders Pte Ltd v LionCity Construction Co Pte Ltd 2013 1 SLR 1157 at 43 Accordingly I find that non compliance with s 10 3 of the SOP Act cannot be waived as well I would also like to point out that the adjudicator could not have decided on the issue of waiver in his adjudication determination since he did not have the power to decide on issues related to the validity of his own appointment 33 In any event I do not think that the Plaintiff had waived compliance with s 10 3 a or had been estopped from complaining about it at any point in time of the adjudication The Plaintiff was never aware of the actual claim of 1 328 536 83 until the time the amended payment claim was lodged together with the adjudication application and forwarded to it by the SMC Upon discovery of this unexpected amount the Plaintiff then began to mount its complaints The serving of the payment response on the Defendant cannot be taken to mean that the Plaintiff had forgone its legal rights since it was all the Plaintiff could have done at that point in time other than refusing to respond to the Defendant The Plaintiff could not have challenged its validity because there was no forum for the Plaintiff to do so at that point in time This also applies to all the previous instances where the Defendant served a payment claim for an unspecified amount and subsequently accepted the Plaintiff s payment response 34 Therefore when SMC appointed George Tan as the adjudicator for this case it was unaware of the invalidity of the payment claim Hence this had affected the validity of the adjudicator s appointment He would then have no jurisdiction or competence to make an adjudication determination This itself is sufficient for the setting aside of the adjudication determination However I shall proceed to consider the other grounds of setting aside raised by the Plaintiff The adjudication application Was the adjudication application filed out of time 35 The Plaintiff submitted that as the Defendant claimed for 1 328 536 83 in its adjudication application an amount higher than that stated in its payment response the Defendant was in fact disputing the payment response provided by the Plaintiff Furthermore the Defendant had indicated in the Notice that it was claiming 897 889 83 Thus both these amounts claimed were higher than the payment response of 695 370 36 exclusive of GST In such a scenario the time for the Defendant to lodge an adjudication application is determined in accordance with s 12 2 and s 12 5 of the SOP Act which state that 12 2 Where in relation to a construction contract a the claimant disputes a payment response provided by the respondent or b 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 response as the case may be 12 5 In this section dispute settlement period in relation to a payment claim dispute means the period of 7 days after the date on which or the period within which the payment response is required to be provided under section 11 1 36 In this case the Plaintiff served the payment response on the Defendant on 30 September 2013 The dispute settlement period therefore started on 1 October 2013 and ended on 7 October 2013 Therefore the Defendant was entitled to lodge an adjudication application from 8 October 2013 onwards The time limit for lodging an adjudication application would then be within 7 days after 8 October 2013 in accordance with s 13 3 a of the SOP Act which states that 13 3 An adjudication application a shall be made within 7 days after the entitlement of the claimant to make an adjudication application first arises under section 12 37 The last day for the Defendant to lodge its adjudication application was on 15 October 2013 However in this case the adjudication application was only lodged with the SMC on 20 November 2013 Thus it was lodged out of time 38 However the Defendant submitted that the nature of the dispute was not in relation to the payment response but was instead based on the failure of the Plaintiff to pay the amount of 695 370 36 exclusive of GST stated in its payment response This was despite the fact that the Defendant had indicated its claimed amount as 1 328 536 83 which was higher than the Plaintiff s payment response amount In the Notice the claimed amount of 897 889 83 is also higher than the response amount Notwithstanding these facts the Defendant relies on the fact that in both the Notice and its adjudication application it had ticked the boxes beside the phrases Paid amount disputed including nil payment by the payment due date and Paid amount disputed include nil payment respectively The boxes ticked indicated the nature of the dispute in both forms The Defendant submitted that it did not tick the boxes with the phrases Payment response disputed applicable to construction contracts only and Disputed payment response in the Notice and its adjudication application respectively 39 According to the Defendant s submissions it was entitled to lodge its adjudication application on the day after the payment date for 695 370 36 exclusive of GST on 14 November 2013 had passed Section 12 1 of the SOP Act states that 12 1 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

    Original URL path: http://www.singaporelaw.sg/sglaw/laws-of-singapore/case-law/free-law/high-court-judgments/15627-ytl-construction-s-pte-ltd-v-balanced-engineering-amp-construction-pte-ltd-2014-sghc-142 (2016-01-30)
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