Fastest Law Search Engine

If you have any question you can ask below or enter what you are looking for!

18 SINGAPORE

Chapter 18
Singapore




Building and Construction Industry Security of Payment Act 2004



“‘Contrariwise’, continued Tweedledee, ‘if it was so, it might be; and if it were so, it would be: but as it isn’t; it ain’t. That’s logic’.”1


18.1 Construction adjudication was introduced into Singapore by Parliament’s enactment of the Building and Construction Industry Security of Payment Act 2004 (the SOPA) [Appendix 19.1].2 The SOPA was introduced in 2004, when the construction industry in Singapore was “going through a difficult time3 and payments to “subcontractors and suppliers further downstream” were being withheld, or delayed, causing the “downstream” subcontractors and suppliers severe financial problems, crippling them and leading them into insolvency.


18.2 The intention of the SOPA was to ensure a smooth cash flow4 across the country and to provide a quick and effective (albeit, temporary) remedy to “downstream” contractors and suppliers in the construction industry. In effect, the SOPA assimilated the merits of the Latham Report’s recommendations into Singapore, in particular, (1) a contractor’s entitlement to progress payment for construction works carried out under a construction contract, and (2) the provision of a “fast and low cost adjudication system”, with temporary binding and enforceable effect.5


18.3 The SOPA regulates both progress claims under a “construction contract” and claims under a “supply contract” for construction works in Singapore.6 A construction contract is defined widely under the SOPA7 and includes both a contract where one party undertakes to carry out construction works (whether including the supply of goods or services) and where a party agrees to supply goods for construction works (“supply contract”). A “supply contract” is defined as an agreement where one party undertakes to only supply goods to another party that is engaged in the business of carrying out construction works and for the purpose of construction work.8


18.4 The SOPA is modelled upon the New South Wales, legislation9 in Australia, but there are significant differences.10 The Act applies to any construction contract, as set out under section 2 thereof, which is made in writing, whether, or not, the contract is expressed to be governed by the law of Singapore.11 The contract shall be treated as being made in writing if:




18.5 Where a contract is not wholly made in writing, the contract shall be treated as being made in writing if the matter in dispute between the parties thereto is in writing.13 The existence of a valid construction contract is essential for the claimant to rely on and invoke his right, including commencement of any adjudication application, under the SOPA. In Admin Construction Pte Limited v Vivaldi (S) Pte Limited,14 the Singapore High Court held, inter alia, in setting aside an adjudication determination, that a settlement agreement extinguished and cancelled all rights under a construction contract, the claimant had no right to commence any adjudication application under the SOPA and the adjudicator had no jurisdiction to make any adjudication determination because no construction contract existed under the SOPA from the date on which the settlement was reached and prior to the claimant commencing the adjudication application.


18.6 The SOPA entitles a party, who has carried out construction works, and/or supplied goods for construction works, to enforce his entitlement under it and to invoke the “fast and low cost adjudication system” for the dispute of payment arising out of the construction contract at any time. The parties may even do so where actions have already commenced in a Singapore court, arbitration, or any other “dispute resolution proceeding”, subject only to the condition that the adjudication proceedings must be terminated, if “the dispute is determined by a court or tribunal, or at any other dispute resolution proceeding15 before the adjudicator has rendered his own decision.



Construction adjudication process


18.7 The SOPA expressly abrogates the rather controversial common law concept of “argue now, pay later” and replaces it with the principle of “pay now, argue later”,16 by providing a statutory right to entitle a person, who had carried out construction work, or supplied any goods or services, to make a progress/payment claim.17 A party executing construction works, or having supplied goods for construction works, is entitled to serve one18payment claim19 for the month of work within the period that is stipulated in the construction contract. If there is no such provision “such time as may be prescribed”, then the party should serve the claim “by the last day of each month following the month in which the contract is made”.20 The party making the payment claim is the claimant. The claimant is entitled to make a payment claim with the details prescribed by the SOPA21 for all works and costs arising out of, under and in accordance with the construction contract. This includes progress and final claims,22 prolongation and preliminary costs for delayed works,23 claim for part and/or full retention,24 withheld under the terms of the contract and due to the claimant for all works carried out, and costs incurred in the process and for all outstanding retention monies, if the contract is fully completed, terminated, or repudiated.25 Pure damages for breach of contract (ie loss of profit)26 are excluded. The service27 of a valid payment claim on the party “liable to make a progress payment”, the respondent (see s 2 of the SOPA), triggers the adjudication process in Singapore under the Act.28


18.8 Upon the due service of a valid payment claim,29 the respondent is mandated to serve a valid “payment response30 upon the claimant, in accordance with the date specified in the construction contract (maximum of 21 days). If no date is specified in the construction contract, the payment response must be served “within seven [7] days31 from the receipt of service of the payment claim. The payment response must contain the mandatory details prescribed by the SOPA.32 The respondent is mandated33 to “give in full his reasons for withholding payment of any amount specified in the payment claim and his calculations in support of those reasons”.34 A failure to do so results in a number of draconian35 consequences for the respondent: (1) They are automatically deemed to have conceded “to an adjudication order on the Payment Claim”; (2) “[they] will not be able to rely on any additional ground before the adjudicator”;36 and (3) the adjudicator does not have the “jurisdiction”, and is precluded from considering, any reason not contained in the payment response.37 In Singapore, it is therefore imperative that the respondent, who is served with a payment claim, must serve his valid payment response upon the claimant within the prescribed time-lines.38 The respondent is entitled to raise “any reason for withholding any amount including, but not limited to, any cross-claim, counterclaim and set-off39 in his payment response to dispute the amount claimed in the payment claim, provided such “reasons” are limited to those arising from the same construction contract upon which the payment claim is based.40


18.9 The service of a valid payment response and the expiry of the “period within which the payment response is required to be provided under [section] 11(1)41 has the following important consequences on the claimants under the SOPA:42



  1. It triggers a statutory “dispute settlement period43 of seven days during which the claimant can seek clarification from the respondent on the payment response and negotiate to settle the payment claim dispute,44 and the respondent is allowed to serve a payment response upon the claimant; if they had not done so earlier, as required under section 11(1) of the SOPA.45
  2. It triggers the claimant’s entitlement to commence an adjudication application46 under section 13(1) of the SOPA if the claimant fails to “receive” the “payment by the due date of the response amount which he has accepted”,47 or where the claimant disputes the payment response provided, or when the respondent fails to provide a payment response within the statutory required period.48


18.10 Upon the expiry of the statutory dispute settlement period of seven days, or upon the respondent’s failure to make payment of the accepted payment response within the due date, the claimant is entitled49 to “make an adjudication application” with the “authorised nominating body”,50 subject to compliance with the following conditions:



  1. The claimant serves upon the respondent “a notice in writing, containing the prescribed particulars” before the filing of the adjudication application with the nominated body, notifying the “[r]espondent of its intention to apply for adjudication of the payment claim dispute”;51
  2. The claimant makes the adjudication application to the SMC within seven days52 after the claimant’s “entitlement arises under section 1253 of the statute;
  3. The claimant’s application is made “in writing addressed to the authorised nominated body,54 requesting it to appoint an adjudicator”. It must “contain such information, or be accompanied by such documents as may be prescribed”.55 Unlike with the payment claim, the claimant is allowed to apply to the appointed adjudicator to amend the adjudication application;56
  4. The claimant’s application shall be “accompanied by such application fees as may be determined by the authorised nominating body57 and the application is “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”.58


18.11 The nominating body (the SMC), upon receipt of the adjudication application and “application fees” (including the prescribed “initial adjudicator’s fees”) in accordance with sections 13(3)(a)–(e) of the SOPA, assigns an adjudication application number to the application. It is further mandated59 to:



  1. Serve a copy of the claimant’s adjudication application upon the respondent;60
  2. Serve upon the “principal (if known) and upon the owner concerned a notice in writing that the application has been made”;61
  3. Appoint an adjudicator62 within seven days, whom the SMC considers “to be appropriate for the appointment as the adjudicator to determine the adjudication application”; and
  4. Give notice of the appointment of the adjudicator to the claimant, the respondent and the principal.63


18.12 The claimant is entitled to withdraw his adjudication application “at any time”, by serving a notice of withdrawal upon the adjudicator, the authorised nominating body and the respondent.64


18.13 The respondent is required65 to file his adjudication response to the claimant’s adjudication application with the SMC within seven days from the date of receipt of the adjudication application from the SMC. The required form and contents of the adjudication response is prescribed under the SOPA.66 As in the case of the adjudication application, but subject to the mandatory requirement of section 15(3) of the SOPA, the respondent is allowed to apply to the appointed adjudicator to amend the adjudication response.67 However, the draconian provision of section 15(3) of the statute precludes the respondent from raising, and the adjudicator from considering, “any reason for withholding any amount, including, but not limited to any cross-claim, counterclaim and set-off” in the adjudication response, “unless” the reasons are in the “payment response” (for construction contracts), or when such reasons were given “within the relevant due date” (for supply contract).68 The adjudicator is also bound to reject any “adjudication response [which] is not lodged within” the prescribed period.69



Commencement of statutory adjudication and adjudication procedures


18.14 Statutory adjudication under the SOPA commences “immediately upon the expiry of period” for the respondent to file his adjudication response.70



The rôle of the adjudicator


18.15 The rôle of the adjudicator in Singapore is set out clearly in the SOPA.71 However, the Singapore Court of Appeal, in its first and seminal decision relating to construction adjudication, Chua Say En g,72 set out the important restrictions upon the rôle of the adjudicator in emphatic terms:



  1. The adjudicator is “not competent to decide whether [they were] validly appointed to adjudicate the matter”.73 The court held that the issues relating to the validity of the payment, and/or payment response, were jurisdictional issues that went to the validity of the appointment of the adjudicator. As such, the court held that the adjudicator was, under the SOPA, not competent to decide on the validity of his own appointment. The Court of Appeal decided that, as the validity (and due service thereof) of the payment claim and payment response affected the jurisdiction and validity of the adjudicator’s appointment under the SOPA, only the High Court of Singapore was competent and had jurisdiction to decide their validity;
  2. The Court of Appeal held that the “function of an adjudicator” was only to decide “(a) whether the adjudication application in question is made in accordance with sections 13(3) (a)–(c) of the Act”.74If the adjudication application complies with sections 13(a) – (c) thereof, the adjudicator should proceed with the adjudication.” In the premises, the rôle of the adjudicator in Singapore is only to decide if the adjudication application:

    • 3.1 Is taken within the mandated seven days after the entitlement first arose: see section 13(3)(a) of the SOPA;
    • 3.2 Is made in writing addressed to the SMC requesting the appointment of an adjudicator: see section 13(3)(b) SOPA; or
    • 3.3 Contains such information or accompanied by such documents as may be prescribed”: see section 13(3)(c) SOPA and to proceed to determine the adjudication application if it complied with the sections 13(a)–(c) SOPA conditions.



The Court of Appeal held that, if the adjudication application did not comply with the mandated requirements of section 13(3)(a)–(c) of the SOPA, then the adjudicator is bound to reject the adjudication application75 under section 16(2)(a) thereof.


18.16 Furthermore, in a more recent Singapore Court of Appeal decision in WY Steel Construction Pte Limited v Osko Pte Limited,76 the court also considered the rôle of the adjudicator in relation to an adjudication application, in the event that the respondent failed to serve the mandated payment response, as set out under section 15(3) of the SOPA, and laid down the following important principles:



  1. The prohibition in section 15(3) of the Act77 was “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”.78 As such, the rôle of the adjudicator, in determining the defence to the claimant’s payment claim, is strictly restricted to any such reason, or defence, raised in full in the payment response: see section 11(1) of the SOPA;
  2. However, even in a case where the respondent has not served a payment response, the respondent is still entitled to raise, and the adjudicator is bound to consider, any “material which is properly before him and which he is permitted and, indeed, obliged to consider”: see section 17(3) thereof. The respondent is not precluded from raising and the adjudicator is bound to consider, “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”;79
  3. In all cases, including a case where the respondent has not served his payment response, as mandated under section 11(1) of the SOPA, the adjudicator is “bound to consider the payment claim before [them] and cannot make [their] determination as if the fact that the response has not filed a response obviates the need for [them] to consider the material properly before him”;80
  4. In all cases, the adjudicator, “having regard only to matters which [they] can properly consider and not those which [they] cannot, must, in a timely manner, come to [their] own independent and impartial view of the payment claim”.81



The duties of the adjudicator


18.17 The adjudicator’s duties are expressly prescribed by the statute,82 as follows:



  1. The adjudicator is bound to reject the adjudication application if it fails to comply with the mandatory requirement of sections 13(a)–(c) of the SOPA;83
  2. The adjudicator is also bound to reject the adjudication response if it is not lodged within the prescribed period.84


18.18 The adjudicator is bound85 to discharge his duties of determining the merits of the adjudication application:



  1. Independently, impartially and in a timely manner;86
  2. Avoid unnecessary expense,87 and
  3. Comply with the principles of natural justice.88


18.19 In considering the merits of the adjudication application, the adjudicator dispenses a “rough and ready type of justice”,89 but is duty bound90 to consider the following:



  1. The provisions of the SOPA;
  2. The provisions of the construction contract to which the adjudication application relates;
  3. The payment claim to which the adjudication application relates, the adjudication application and the accompanying documents thereto;
  4. The payment response to which the adjudication application relates (if any), the adjudication response (if any) and the accompanying documents thereto;
  5. The results of any inspection carried out by the adjudicator of any matter to which the adjudication relates;
  6. The report of any expert appointed to inquire on specific issues;
  7. The submission 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
  8. Any other subject-matter that the adjudicator reasonably considers to be relevant to the adjudication.91



The powers of the adjudicator and the conduct of the adjudication proceedings


18.20 In Singapore, the adjudicator, once appointed by the SMC, is given wide statutory powers92 in order to carry out their statutory duty to consider the merits of the claimant’s adjudication application and to make an enforceable determination in writing. They are the “master of the proceedings” and can conduct the adjudication in the manner which they deem fit, so long as they comply with the SOPA, act with impartiality and give both parties a fair hearing.93 The parties are bound to “comply with any requirement made, or direction issued, by the adjudicator”.94 The adjudicator’s power is, however, subject to their lack of jurisdiction and power to consider the validity of the payment claim, the validity of the payment response and the validity of his appointment.95


18.21 The adjudicator takes control of the adjudication process upon their appointment and the SOPA grants the adjudicator wide powers to enable them to carry out their duties with the objective of the Act and to render an enforceable adjudication determination within the strict time-lines set out in the SOPA with the objective to provide “fast and low costs adjudication system”.


18.22 The adjudicator is granted the powers96 to:



  1. Conduct the adjudication in such manner as they think fit;
  2. Require submissions,97 or documents, from any party to the adjudication;
  3. Set deadlines for the submissions, or documents, to be provided by any party and for the submissions, or responses thereto, by any other party;
  4. Appoint, after notifying the parties, an independent expert to inquire and report on specific issues relevant to the adjudication;
  5. Call a conference of the parties;98
  6. Carry out an inspection of any construction work, construction site, goods, or any other matters, to which the adjudication relates;
  7. Issue such directions as may be necessary, or expedient, for the conduct of the adjudication.99


18.23 In practice, the adjudicator will invariably, upon their appointment, confirm their appointment with the parties, confirm the scheduled date at which the adjudication determination is to be completed, appoint an early date for the parties and their representatives to attend before them for a hearing on the merits of the adjudication conferences, hear parties on the merits of the adjudication application, discuss with the parties on the need of an extension of time, if required, request for any such extension at the conference and record the parties’ consent or lack of consent.


18.24 The SOPA mandates100 that “all statements, or documents, created, or made, for the purpose of an adjudication” must be “confidential”. There are important exceptions to the rule of “confidentiality”,101 particularly when such information is required for proceedings before a court, or tribunal, when the matter is proceeding, or intended to proceed, for final determination.102



The adjudication determination process


18.25 The adjudicator is bound103 to determine the adjudication application within seven days104 after the commencement of the adjudication, if the adjudication relates to a construction contract, and the respondent either has failed to serve a payment response and lodge an adjudication response,105 or has failed to pay the response amount that was accepted by the claimant by the due date.106


18.26 In all other cases, the adjudicator is bound to determine the adjudication application within 14 days, or within such period as may be requested by the adjudicator and agreed by the claimant and the respondent.107


18.27 The adjudicator is bound108 to determine the amount (if any) to be paid by the respondent to the claimant,109 the date when the adjudicated amount is payable,110 the interest payable on the adjudication amount111 and the “portion of the costs of the adjudication payable by each party to the adjudication”.112


18.28 The adjudicator (and the SMC113) is afforded statutory “protection from liability114 with respect “to anything done, or omitted to be done, in good faith in the discharge, or purported discharge, of his functions or duties under the Act”.



The adjudication determination


18.29 A valid adjudication determination under the SOPA must comply with the following conditions.115 The determination must:



  1. Be made within and in accordance with the strict time-lines set out in sections 17(1)(a) and (b) of the SOPA;116
  2. Be in writing;117
  3. Contain all reasons for the determination;118 and
  4. Be a final determination, which cannot be amended by the adjudicator, save for minor “clerical mistake”, “accidental slip or omission”, or “a defect in form”.119



Adjudication review process and determination


18.30 Unlike other construction adjudication régimes, such as England, Australia, New Zealand and recently, Malaysia, Singapore has a “unique120 procedure for respondents121 to apply for a review of the merits of the adjudicator’s determination.


18.31 The rôle and functions of the review process were succinctly set out by the Singapore High Court in SEF Construction Pte Limited v Skoy Connected Pte Limited:122



“The adjudication review procedure provides parties123 with an opportunity to re-argue their respective cases with regard to both the facts and the law. The review adjudicator is able to go into the substantive merits of the original adjudicator’s decision. The adjudication review procedure is therefore a species of appeal albeit limited to cases in which a particular monetary qualification is reached.124



18.32 The following mandatory conditions125 must be fulfilled before the adjudication review procedure can be invoked by the respondent:



  1. Only the respondent is entitled to apply for the adjudication review;126
  2. The respondent is only allowed to exercise the right to review if they have filed a payment response;127
  3. The right to apply for review can only be exercised if the adjudicated amount exceeded the amount in the payment response (if any) by the “prescribed amount”, currently at S$100,000;128
  4. The respondent must lodge the adjudication review application in the prescribed form, with the prescribed details129 together with the prescribed review application fees130 with the SMC within seven days131 from the date of the service of the adjudication determination by SMC on the respondent;
  5. Prior to being entitled to apply for the adjudication review application, the respondent is mandated to pay to the claimant the adjudicated amount – which is being reviewed, failing which the respondent is not allowed to lodge their adjudication review.132


18.33 The SMC is required,133 within seven days of the respondent filing their adjudication review application, to serve a copy of the adjudication review application upon the claimant, serve “a notice in writing” of the application upon the principal and/or owner of the project134 and to appoint “a review adjudicator, or a panel of [three] review adjudicators”,135 to determine the respondent’s review application.


18.34 The review tribunal process is as follows:



  1. Within seven days after receipt of the adjudication review application from the respondent, the SMC is required to appoint a review adjudicator, or panel of review adjudicators, and to give notice in writing of the appointment to the parties, the principal and/or owner concerned of the project;136
  2. The adjudication review commences “on the date immediately after” the SMC’s service of the notice in writing on the parties, the principle (if known) and the owner of the appointment of the review adjudicator, or the panel of review adjudicators;137
  3. The review adjudicator, or review panel, is bound to reject the review application if:138

    • 3.1 The respondent fails to file the review application within seven days from the date on which the adjudication determination was served by the SMC upon the respondent;139
    • 3.2 If the adjudication review application does not comply with the mandatory requirements, ie to be in writing, addressed to the SMC, “requesting the appointment of one, or more, review adjudicators to determine the application”,140 and does not contain the prescribed information,141 or the prescribed fees.142



18.35 The review adjudicator, or the review tribunal, must determine the adjudication review application “within 14 days after the commencement of the adjudication review, or within such longer period as may have been requested by the review adjudicator, or the panel of review adjudicators, as the case may be, and agreed to by the claimant and the respondent”.143


18.36 The review adjudicator, or review panel, will hear full arguments from the parties on the whole merits of the original adjudication determination144 and adjudicated amount. They have full discretion and power to145substitute146 the adjudication determination, which is the subject to the adjudication review, for any other determination as is considered “appropriate”, or to refuse the adjudication review application.147


18.37 The review adjudicator, or the review panel,148 is bound to determine the adjudicated amount149 (if any) to be paid by the respondent to the claimant, if the amount determined under the review is “different150 from the adjudicated amount in the adjudication determination that is subject to review, “the date on which the difference in amount is payable”, the interest payable on any such amount151 and the proportion of costs of the adjudication review payable by each party to the adjudication review.152


18.38 As in the case of the original adjudication determination,153 a valid, reviewed adjudication determination under the SOPA must be made in accordance with the strict time-lines set out in section 19(3), must be in writing,154 must contain all reasons for the determination155 and must constitute a final determination,156 which cannot be amended by the adjudicator, save for minor “clerical mistake”, “accidental slip or omission”, or “a defect in form”.157



Enforcement of adjudicated amount


18.39 In the English case of Macob Civil Engineering Limited v Morrison Construction Limited,158 Dyson J (as he then was) succinctly emphasised that the “plain” intention of Parliament, in enacting the HGCRA159 for construction adjudication, was to allow the contractors to obtain a decision “on a provisional interim basis, and requiring the decision of the adjudicators to be enforced pending the final determination of disputes by arbitration, litigation, or agreement”. The clear intention of the Singapore Parliament, in enacting the SOPA, similarly is to provide fast cash flow relief to contractors and the Singapore courts have consistently reinforced and reiterated Parliament’s intention.160


18.40 The SOPA provides that, if the respondent fails to pay the whole, or any part, of the adjudicated amount, when it is due and payable, the claimant is entitled, subject to the prescribed conditions, to enforce161 the adjudicated amount by the following non-legal and legal means:162



  1. Direct payment from the principal;163
  2. Creating a statutory lien on the “unfixed” goods supplied by the claimant;164
  3. Providing the claimant with a statutory right to suspend work, or supply of goods, under the construction contract,165 or
  4. Enforcement of adjudication determination as a judgment debt.166



The rôle of the courts in construction adjudication under the SOPA


18.41 The Singapore courts have, time and again, reiterated and applied the broad policy of the SOPA to ease the “cash flow” of the contractor and to provide them with an adjudication determination with “temporary finality” and enforceable in law.167 The Singapore Court of Appeal, in the rather extreme case of Citiwall Safety No 2,168 reiterated the principle of temporary finality over issues of breach of natural justice and the de minimis rule in the following emphatic terms:



“30. While the way we had applied r 2.2. might seem harsh in the light of the fact that the [r]espondent’s filing of the Adjudication Response was merely two minutes late, we were of the view that having regard to the principle of temporary finality undergirding the SOPA, the strict application of the rule did not seem draconian. Proceedings under the SOPA are meant to proceed at a good pace, and sums due under adjudication determination are to be honoured and paid promptly. That was the whole object of the scheme. There might be a case for applying the de minimis rule if the substantive rights of the parties have been impinged, but here clearly the parties will have another chance to obtain redress by filing a substantive suit on the merits or have the matter submitted to arbitration. Accordingly, we held that there was no place for the de minimis rule to apply in this case ….”


(emphasis added)



18.42 The Singapore Court however, plays an essential rôle in the SOPA in four situations:



  1. Parties are allowed to “submit a dispute relating to, or arising from, the contract to a court, or tribunal, or to any other dispute resolution proceedings” before the appointment of the adjudicator, or concurrently, but before the adjudication determination is delivered;169
  2. Parties are entitled to seek recourse from the Singapore Court, or arbitration, and challenge the adjudication determination in the final determination of the parties’ rights under the construction contract, including, or unlimited to, the correctness of the adjudication determination, and seek relief for repayment of the adjudicated amount with interest from the date of the adjudicated determination;170
  3. The claimant is entitled to apply to the court to enforce an adjudication as a judgment of the courts;171
  4. The respondent is entitled, subject to paying the “unpaid adjudicated amount” as security in court, to apply to the High Court to set aside the adjudication determination.172



Recourse to courts to “submit a dispute relating to, or arising from, the contract” before an adjudication determination


18.43 The SOPA allows parties to commence concurrent actions in the Singapore courts in relation to “any dispute arising from the contract to a court or tribunal”.


18.44 Parties are allowed to “submit any dispute” relating to the construction contract under which the claimant may seek to invoke the adjudication determination173 to the Singapore Court for decision.


18.45 The Singapore Court of Appeal, in Chua Say Eng,174 endorsed this right when it held that the adjudicator was “not competent to decide whether he was validly appointed to adjudicate the matter” and was not competent to consider jurisdictional challenges. The Court of Appeal held that only the High Court of Singapore had the power to consider jurisdictional challenges under the SOPA – namely the validity and service of the payment claim, the validity and service of the payment response which affected the validity of the appointment of the adjudicator. The Court of Appeal also held that challenges to the validity of the appointment “can be taken up in separate court proceedings, or subsequently in proceeds under section 27 of the Act”, whilst the “adjudicator should proceed with the adjudication and leave the court to decide”.


18.46 As such, the SOPA allows the respondent to commence an application before the High Court, even before the adjudication is determined by the adjudicator, and to seek relief in the form of a declaration, and/or injunction, on jurisdictional grounds that the claimant is not allowed to proceed with the adjudication application and the appointment of the adjudicator is “null and void”.175



The parties’ right to challenge the adjudication determination at the final determination before the court or in arbitration


18.47 It is clear from the SOPA that the “fast and low cost adjudication system” is intended to be temporary finality, temporarily binding on the parties176 and the parties are not precluded from commencing any action, either prior to the adjudication, or after the adjudication determination, under the existing construction contract for the court, or arbitrator, to finally determine all the disputes under the construction contract.


18.48 The SOPA expressly allows the claimant to invoke the “low cost adjudication system” before, after, or even concurrently with, the parties’ commencement of legal proceedings before the Singapore courts, or in arbitration, for the final determination of all disputes arising from the construction contract, including the subject matter of the adjudication application, arising from the construction contract between the parties.177


18.49 However, the SOPA expressly mandates that the adjudicator “must terminate the adjudication proceedings” on a dispute arising to or arising from the contract “if, before the adjudicator determines the dispute, the dispute is determined by a court, or tribunal, or any other dispute resolution proceedings”.178


18.50 The court, arbitral tribunal, or other dispute resolution proceeding, in deciding the final rights of the parties under the construction contract, is not bound by any of the findings of the adjudicator and “must be able to look at the whole dispute”, whilst the “adjudicator’s actual reasoning has no legal, or evidential, weight” on the court.179


18.51 The SOPA allows the parties to re-argue and challenge the whole merits of the adjudicator’s determination before the court, or arbitral tribunal, and the court, or arbitrator(s), may accept the adjudication determination, the adjudicated amount, as part of its determination of the parties’ final rights under the construction contract,180 and, in considering whether the costs in the adjudication proceedings was reasonably incurred, to be awarded in the final determination of the dispute.181


18.52 The court, or the arbitral tribunal, is also fully entitled to reject, vary, or amend, the merits of the adjudication determination and adjudicated amount. The court, or arbitral tribunal, has the right to decide that the determination and adjudicated amount were made in error and to order the repayment, or refund, of the adjudicated amount, or any part thereof, to the respondent. If the court, or arbitral tribunal, declares that the adjudication determination and adjudicated amount were made in error and the amount is to be repaid to the respondent, the latter acquires a right, from the date of final declaration, under the “implied terms” of the construction contract and under the law of restitution, to claim the full refund along with interest from the date of the final determination.182



The claimant’s entitlement to apply to the court to enforce an adjudication determination as a court judgment


18.53 The main objective of the construction adjudication régime is to ease the cash flow of the contractor and to provide them with a “fast and low costs adjudication system” of a temporary binding nature that is enforceable in law.


18.54 In tandem and to facilitate the said objective, the SOPA provides the claimant with the right to invoke the assistance of the judicial process in Singapore to enforce the adjudication determination, albeit temporarily binding, as a judgment of the Singapore courts.183


18.55 The procedure184 for “converting” the adjudication determination into a judgment, or order, of a court in Singapore under section 27(1) of the SOPA is enacted in Order 95 of the Rules of Court.185


18.56 The SOPA gives the respondent the right to apply to the High Court judge to set aside the adjudication determination within 14 days from notification of the claimant’s application for leave to enforce the adjudication determination.186



The court’s rôle in setting aside an adjudication determination


18.57 In an application to set aside an adjudication determination, the courts are invariably called upon to balance between the broad policy of Parliament to provide a “fast and low cost adjudication system” and their duty to prevent injustice.187


18.58 In Singapore, the Court of Appeal has succinctly set out the rôle of the Singapore Court, when considering applications for setting aside adjudication determination made under the SOPA,188 in four recent seminal decisions:



  1. Only the High Court of Singapore has the jurisdiction to hear applications for the setting aside of adjudication determination189 and the High Court is exercising its original and supervisory powers in hearing such setting aside applications.190 The Court of Appeal held that an application to set aside an adjudication application was “akin to judicial review”;
  2. An application to set aside an adjudication determination is not an appeal on its merits and therefore it is not the rôle of the court to review the merits of the adjudicator’s determination, including the manner in which the adjudicator conducts the adjudication, unless it gives rise to jurisdiction issues including a breach of natural justice;191
  3. The rôle of the High Court under the SOPA is only to consider jurisdictional challenges192 when considering to set aside applications, comprising of the following:

    • 3.1 The validity and service of the payment claim, payment response and the validity of the appointment of the adjudicator;193
    • 3.2 Whether the adjudicator had conducted the adjudication proceedings “independently, impartially, in a timely manner, avoided unnecessary costs, or in breach of the rules of natural justice”;194
    • 3.3 Whether the adjudicator exceeded their jurisdiction and did not have the jurisdiction to decide the adjudication application;195 or
    • 3.4 Whether the adjudicator exceeded their jurisdiction196 in failing to comply with the “essential”, or “mandatory” requirements of the SOPA.197




Conclusion


18.59 The SOPA in Singapore has brought about a radical, but welcome, change to the undesirable practices in the construction industry in which main contractors and owners utilise the grinding legal process to delay and deprive contractors, who have carried out the construction works, of their “life blood”, namely, cash flow. In practice, since its inception in 2006, the SOPA has reversed the “tables” with its “fast and low costs adjudication system”, temporary finality against the main contractors and owners and armed the downstream contractors with formidable remedies to recover due payments for works carried out promptly, albeit temporarily. Construction adjudication is on the rise198 and a very fast developing area of law in Singapore.


Notes


1 Lewis Carroll, Through the Looking Glass, chapter 4.


2 The SOPA entered into force on 31 January 2006. The Act is binding on the government (section 35 SOPA) subject to the minister’s right to “exempt (a) any person or class of person (b) any contract, agreement, matter or transaction, or any class thereof from all or any of the provisions of this Act …” (section 38 SOPA). Regulations were passed by the Minister for National Development (the Minister) on 1 April 2015, exercising his powers under section 41 SOPA, to prescribe the form, manner, appointment of nominating bodies and conduct of adjudicators which are contained in the Building and Construction Industry Security of Payment Regulations 2005 (as amended in 2012), hereinafter referred to as the SOPR.


3 Singapore Parliamentary Debates, Official Report (16 November 2004) Vol 78 at cols 1112–1120 per Cedric Foo Chee Keng, Minister of State for National Development.


4 Cash flow is indeed the “life blood” of the construction industry as per Lord Denning MR in Modern Engineering (Bristol) Limited v Gilbert-Ash (Northern) Limited (1973) 71 LGR 162 at 167 and reiterated in Dawnays Limited v FG Minter Limited and Trollope and Colls Limited [1971] 1 WLR 1205 at 1209 G-1210A. There is much practical wisdom in the dicta of Lord Denning MR, which was recently acknowledged by the Singapore Court of Appeal in WY Steel Construction Pte Limited v Osko Pte Limited [2013] 3 SLR 380 at [21] per Menon CJ. It is also vindicated by the findings of the Latham Report: Sir Michael Latham, Constructing the Team, Final Report July 1994, HMSO (Latham Report) and by its quick and ready assimilation into the Commonwealth countries of Australia, New Zealand, Singapore and Malaysia by the enactment of their statutory Acts to enforce the “pay now, argue later” principle within their jurisdictions.


5 These salutary objectives have been judicially repeated, affirmed and applied by the Singapore Courts – see Sungdo Engineering and Construction (S) Pte Limited v Italcor Pte Limited [2010] 3 SLR 459 at [10]–[12]; SEF Construction Pte Limited v Skoy Connected Pte Limited [2010]1 SLR 733 at [15]; Admin Construction Pte Limited v Vivaldi (S) Pte Limited [2013] 3 SLR 609 at [43]; Tienru Design and Construction Pte Limited v G and Y Trading and Manufacturing Pte Limited [2015] SGHC 243 at [30]. WY Steel Construction Pte Limited v Osko Pte Limited [2013] 3 SLR 380 at [18]–[23], CA.


6 Section 2 SOPA.


7 Section 2 SOPA.


8 But is not required to “assemble, construct, or install, the goods at, or on, the construction site”: see section 2 of the SOPA. It must be noted that the SOPA draws a distinction between a claim for progress payment for construction works and a claim under a “supply contract”. Nevertheless, the underlying objective of ensuring that a contractor (the supplier), carrying out construction works (supplying goods for construction work), is entitled to payment and having recourse to a “fast and low cost adjudication system” with temporary binding and enforceable effect, is adhered to in the SOPA. The distinction drawn in the SOPA between a construction contract and a supply contract is important because the time-lines are provided differently in the Act. Generally, the SOPA provides a stricter and shorter time-line for construction contracts for supply contracts. This important distinction featured in the recent Singapore High Court case of Eng Seng Precast Pte Limited v SLF Construction Pte Limited [2015] SGHC 252 in which the High Court set aside an adjudication determination on the basis that the claimant had wrongly commenced the adjudication application based on the time-lines set for supply contract when the contract for “the supply of prefabricated components for building works, with offsite manufacture and not involving any work onsite” fell within the definition of a construction contract. The High Court at [27]–[32] therefore set aside the whole adjudication determination and held that a contract for works, falling within the ambit of both a construction contract and a supply contract, must be regarded as a construction contract for the purposes of the time-lines set out in the SOPA and must be strictly complied with; failing which the adjudication application and adjudication determination will be set aside on jurisdiction grounds under section 16(2)(a) SOPA.


9 Building and Construction Industry Security of Payment Act 2002 (as amended in 2006).


10 Sometimes unnecessarily causing confusion in the construction industry and spewing reviews before the High Court. In the first case in Singapore, in which the High Court set aside an adjudication determination, Sungdo Engineering and Construction (S) Pte Limited v Italcor Pte Limited [2010] 3 SLR 459, Justice Lee Sieu Kin highlighted the unsatisfactory omission of the requirement on the claimant to expressly state in his payment claim that it was a claim under the SOPA (contained in its New South Wales Model) because such failure encouraged ambush, allowed the SOPA to be used as a “tool of oppression” and called for an urgent review of the SOPA. This “mystery” is further exasperated by the Singapore Court of Appeal’s decision in Lee Wee Lick Terrence v Chua Say Eng [2013] 1 SLR 401 (Chua Say Eng) at [69]–[77] casting a gloss to the principles set out by the High Court in Sungdo Engineering and Construction (S) Pte Limited v Italcor Pte Limited [2010] 3 SLR 459 (the Sungdo principles), restricting its application to abuse cases and requiring a respondent to treat all progress claims as payment claims (whether, or not, it that it was intended to be a payment claim under the SOPA), despite recognising the “hardship” caused to the respondent. See also the criticism of SOPA in S Magintharan, “Setting Aside of Payment Claims and Jurisdictional Issues in Singapore – The ‘Sungdo Principles’” [2011] Const LJ 506; see also S Magintharan, “Construction Adjudication in Singapore – Lee Wee Lick Terrence v Chua Say Eng” [2014] Const LJ 73. The Learned Judge again reiterated the unresolved shortcoming recently in LH Aluminium Industries Pte Limited v Newcon Builders Pte Limited [2015] 1 SLR 648 at [49] as per Lee Sieu Kin J, pointing out to the “mysterious” difference namely, the omission of the need to specify in the payment claim that it was a payment claim under the SOPA, which caused “confusion” and again called for urgent review of the Act. Likewise, in Admin Construction Pte Limited v Vivaldi (S) Pte Limited [2013] 3 SLR 609 at [63]–[69], Loh J, pointed out various ambiguities in the SOPA and also called for urgent review. Most recently, the Singapore Court of Appeal in Citiwall Safety Glass Pte Limited v Mansource Interior Pte Limited [2015] 1 SLR 797 (Citiwall Safety Glass (No 1)) at [82] referred to the “unsatisfactory” situation in the differences of procedures, relating to the enforceability of an adjudication determination and the setting aside adjudication determination procedures under the SOPA, which “might trip many a solicitor”. In the recent High Court decision of Eng Seng Precast Pte Limited v SLF Construction Pte Limited [2015] SGHC 252 at [34], Lee Sieu Kin J, pointed out another discrepancy in SOPA’s departing from the SOP Act (NSW) in the definition of “in providing for two types of contracts, construction and supply, with two different timelines. But this would not have been a problem if the SOPA had adopted a simple and logical dichotomy, ie whether, or not, the contract entails work to be carried out on the site.” Acting on these judicial calls, the Building and Construction Authority is presently reviewing amendments to the SOPA, and/or SOPR, to resolve these ambiguities.


11 Section 4(1) SOPA. However, under section 4(2)(b)(ii) SOPA, the Act excludes construction contracts which deal with “construction works carried out outside Singapore, or goods, or services supplied, in relation to construction work carried out outside Singapore”. As such, statutory adjudication in Singapore under the SOPA is only limited to construction works and supply contracts carried out within Singapore. Section 4(2) SOPA also excluded any construction works carried out, or supply of goods, in relation to (a) any “residential property (within the meaning of Residential Property Act…)” and (b) any construction works carried out by an “employee” (under the Employment Act). The test as to whether the construction works related to a “residential property” is to be decided by ascertaining the intention of the parties at the time of entering into the construction contract: see Coulson J in Westfields Construction v Lewis [2013] 1 WLR 337 at [23] and [24].


12 Section 4(3) SOPA.


13 Section 4(4) SOPA.


14 Admin Construction Pte Limited v Vivaldi (S) Pte Limited [2013] 3 SLR 609 at [25]–[32]. The Learned Judge also held at [31] that a full and final settlement agreement reached under a construction contract is not a construction contract, so long as the settlement agreement is still valid, enforceable and has not been set aside. The Singapore High Court approved and applied the English High Court decision of Sheppard Construction Limited v Mecright Limited [2000] BLR 489. The decision of the Singapore High Court was affirmed by the Singapore Court of Appeal comprising of Menon CJ, VK Rajah JA and Lee Sieu Kin J in Civil Appeal No 63 of 2013 (unreported). See also: RJT Consulting Engineering Limited v DM Engineering (Northern Ireland) Limited [2002] 1 WLR 2344; Pergam Shopfitters Limited v Tally Weiji (UK) Limited [2004] 1 WLR 2082 where the English Court of Appeal set aside an adjudication determination because there was a dispute as to the nature of the construction contract under which the dispute arose. cf Glendalough Associated SA v Harris Calman Construction Co Limited [2014] 1 WLR 1751.


15 Section 34(1)–(4) SOPA: It must be noted that the SOPA establishes a “dual railroad track system”, “consisting of the statutory régime under the [SOP Act] which operates concurrently with, but is quite distinct from, the contractual régime (TransGrid v Siemens [2004] NSWSC 87 at [56])” as per Lee Sieu Kin j in the recent High Court case of Tienrui Design and Construction Pte Limited v G and Y Trading and Manufacturing Pte Limited [2015] SGHC 243 at [30]. The parties have distinct rights both under the construction contract, as well as under the SOPA, save that, in a case where the claimant invokes the SOPA, the parties contractual rights are circumscribed and limited by the provision of the SOPA and contractual provision which amount to “contracting out” of the SOPA are “void” under section 36(1)–(2) thereof. See: the Choi Peng Kum v Tan Poh Eng Construction Pte Limited [2014] 1 SLR 1210 at [25], where the Singapore High Court emphasised the “dual tracks” rights of the parties that held that the claimant is not precluded from proceeding with his rights under the SOPA even if the contract is terminated. See also the unreported Singapore High Court Case in OS No 370 of 2013 Shinsung Construction Pte Limited v Dian Fatt Construction Pte Limited, Lee Sieu Kin J reiterated the “dual railroad track system” and dismissed a setting aside application on the ground that the claimant was not precluded from serving the payment claim under section 10(1) of the SOPA, even if progress payment was not due and payable under the construction contract (section 8(a) of the SOPA) and therefore the payment claim was valid. The Learned Judge held that the claimant’s right to serve the payment claim arose from sections 5 and 10(1) of the SOPA and not the construction contract and therefore the due date of a progress payment under the construction contract was irrelevant. See also the recent Malaysian High Court case of Bina Puri Construction Sdn Bhd v Hing Nyit Enterprise Sdn Bhd [2015] BKI-24–6/1–2015, in which the court, at pp 13 and 14, expresses similar views. It must be noted that in the recent Singapore High Court Tienrui Design and Construction Pte Limited v G and Y Trading and Manufacturing Pte Limited [2015] SGHC 243, Lee Sieu Kin J held at [30]–[54] that, if the parties intended the contractual timelines and conditions to apply to their rights under the SOPA, they must be expressly state so and such contractual provisions must comply with the terms and nomenclature of the SOPA. In view of the same, the High Court held that a contractual provision making reference to service of an “interim certificate” is not sufficiently clear to relate to the statutory “payment response”. This case must be contrasted with another recent High Court decision of Newcon Builders Pte Limited v Sino New Steel Pte Limited [2015] SGHC 226 in which the court held that a reference to an “interim certificate” in the main contract was sufficiently incorporated into the sub-contract and was sufficient to amount to a “payment response” under the SOPA. The High Court in Newcon Builders did not refer, or consider, the earlier decision of Tienrui Design and Construction Pte Limited.


16 As succinctly described by Ward LJ in RJT Consulting Engineering Limited v DM Engineering (Northern Ireland) Limited [2002] 1 WLR 2344 at [1], as the purpose of the statutory adjudication in England under the Housing Grants, Construction and Regeneration Act 1996, affirmed by May LJ in Pegram Shopfitters Limited v Tally Weiji (UK) Limited [2004] 1 WLR 2082. This principle that the SOPA reinforces the rationale of “pay now, argue later” was affirmed by the Singapore Court of Appeal recently in WY Steel Construction Pte Limited v Osko Pte Limited [2013] 1 SLR 389 at [20] per Menon CJ.


17 Section 5 of the SOPA: It must be noted that only a person who has carried out works under the construction works and entitled to a progress claim (ie the claimant) is entitled to invoke the SOPA; see section 2 SOPA. The respondent who is liable “make a progress payment” under the contract with the claimant is not entitled to invoke the “fast and low cost adjudication system” under the SOPA and is not entitled to obtain any payment under the SOPA. See the recent High Court case of Quanta Industries Pte Limited v Strategic Construction Pte Limited [2015] 2 SLR 70 at [10] and [11], in which the Singapore High Court set aside an adjudication determination on the basis of excess of jurisdiction, when the adjudicator in an adjudication application commenced by the claimant determined that the claimant should pay the respondent the sum of S$141,508.56. See also discussion at fn 108 below, below. SOPA also abrogates and renders void the undesirable construction practices of “pay when paid” clauses (section 9(1) SOPA), imposing unreasonable contractual terms as to when progress payments are due (section 8 SOPA which now fixed the maximum of 35 days as the due day for progress payment) and all attempts to impose onerous clauses in construction contracts in order to “contract out” of the SOPA (section 36 – such terms are void). The claimant is required to have legal capacity to enter and enforce his/their contractual rights under the SOPA and, as such, infants, adjudged bankrupts and companies, which have been declared insolvent by the High Court, have no right to invoke the SOPA, unless they fall within the legal exceptions, or have obtained the necessary sanctions.


18 Section 10(1) SOPA expressly limits the claimant to make “one payment claim” in respect of a progress payment. SOPA prohibits the claimant from making more than one claim for the same month of the construction works. See also the recent Singapore High Court case of Libra Building Construction Pte Limited v Emergent Engineering Pte Limited [2015] SGHC 279 where the court held that that SOPAcontemplates only one payment claim” in “each payment claim period” and that the claimant was precluded, under section 10(1) of the SOPA and reg 5(1) SOPR, from serving more than one payment a month, regardless as to whether the payment claims were in respect of other reference periods. The High Court at [32]–[73] held that to allow a claimant to make multiple payment claims for different reference periods, but within the payment claim period under section 10(1) of the SOPA, was an abuse of adjudication process. See Caledonian Modular Limited v MarCity Development Limited [2015] EWHC 1855 (TCC) at [48]; Hill as Trustee for the Ashmore Superannuation Benefit Fund v Halo Architectural Design Services Pty Limited [2013] NSWSC 865; Rail Corporation of NSW v Nebax Constructions [2012] NSWSC 6; Kitchen Xchange v Formacon Building Services [2014] NSWSC 1602; Southern Han Breakfast Point Pty Limited v Lewence Construction Pty Limited [2015] NSWSC 502; LH Aluminium Industries Pte Limited v Newcon Builders Pte Limited [2015] 1 SLR 648 at [49]. However, section 10(1) of the SOPA does not compel the claimant to issue payment claims for monthly progress payments and the claimant may choose with impunity whether to treat his progress claim as a payment claim under the SOPA and whether to proceed to invoke the adjudication process under the SOPA. The respondent, however, is mandated to “treat every claim submitted by a claimant that satisfies the requirements of the Act as a payment claim and respond accordingly” per Chan CJ in Chua Say Eng, above, at [76]. See criticism of this view in S Magintharan, “Construction Adjudication in Singapore – Lee Wee Lick Terrence v Chua Say Eng” [2014] Const LJ 73. A claimant, however, is prohibited by section 10(1) of the SOPA from issuing a “repeat claim” as a payment claim. A repeat payment claim was held by the Court of Appeal, in Chua Say Eng, above, at [92], to be a “previous claim which have been adjudicated upon on their merits”. The Court of Appeal also held that “[a] payment claim which has not been paid, or partially paid, before, or without, any adjudication is an unpaid claim” and not a “repeat claim” and therefore the claimant was not precluded to re-issue such a “rolled-up” unpaid claim under section 10(4) of the SOPA for progress payment, even though it is substantially similar to a previous payment claim. See also Admin Construction Pte Limited v Vivaldi (S) Pte Limited [2013] 3 SLR 609 at [47], [52] and [55], LH Aluminium Industries Pte Limited v Newcon Builders Pte Limited [2015] 1 SLR 648 at [46]–[48]. See also JFC Builder Pte Limited v Lion City Construction Co Pte Limited [2013] 1 SLR 1157 at [40] and [41]. A payment claim is defined under section 2 of the SOPA as a “claim made by a claimant for a progress payment under section 10 SOPA”.


19 A “progress payment” is also defined under section 2 SOPA as “a payment to which a person is entitled for carrying out construction works, or supply of goods, or services, under a contract” including a “single or one-off payment”, or “a payment that is based on an event or a date”. Section 6(a) and (b) of the SOPA provide that a claimant is entitled to a progress payment under a contract for “(a) the amount calculated in accordance with the terms of the contract, or (b) if the contract does not contain such provision, an amount calculated on the basis of the value of the construction works carried out, or goods and services supplied”. In Libra Building Construction Pte Limited v Emergent Engineering Pte Limited [2015] SGHC 279 the Singapore High Court held at [78], adopting a “robust” view, that a claimant was entitled to unilaterally and impliedly withdraw a payment claim, substitute, or replace, it with another payment claim. With respect, this aspect of the decision is wrong for the Learned Judicial Commissioner failed to consider the serious consequences to the statutory time-lines that would be caused by such amendments/withdrawal/substitution. It is submitted that, unless the construction contract allows such amendments and has a deeming provision that any payment claim submitted, or amended, or substituted, is deemed to take effect from a particular date, the claimant is, under section 10(2)(b) of the SOPA, not entitled to amend his payment claim because it will inevitably cause confusion to the respondent who is left in the dilemma as to when they are required to serve their mandated payment response under section 11 of the SOPA and amended payment claims are an instrument of abuse to the adjudication process. See Kitchen Xchange v Formacon Building Services [2014] NSWSC1602; LH Aluminium Industries Pte Limited v Newcon Builders Pte Limited [2015] 1 SLR 648 at [49]. It is submitted that the claimant is not in any way prejudiced by their inability to amend for they are allowed under the SOPA to re-start the whole payment claim again the following month incorporating their “amendments” and claim for other reference periods, so long as the previous payment claim has not been adjudicated upon. See section 10(4) of the SOPA, Chua Say Eng, above, at [92].


20 Section 10(2)(a), (b) SOPA and reg 5(1) SOPR. The construction contract may contain express terms when the payment claim should be served. Such contractual time-lines must be complied with, unless they amount to “contracting out” of the SOPA and are void: see section 36 SOPA. In Singapore, it is usual for parties to incorporate the standard contract terms contained in Singapore Institute of Architects (SIA – presently, 9th edition), or Public Sector Standard Conditions of Contract for Construction Works 2008 (the PSSCOC), into their construction contract containing express time-lines for the service of the payment claim. In the recent case of Tienrui Design and Construction Pte Limited v G and Y Trading and Manufacturing Pte Limited [2015] SGHC 243, the High Court held at [30]–[54] that, if the parties intended for their contractual provisions to govern the payment claim and payment response provisions of the SOPA, the contractual terms must clearly comply with the terms and nomenclature used in the SOPA. As stated in fn 14, above, this case must be contrasted with another recent decision of the High Court in Newcon Builders Pte Limited v Sino New Steel Pte Limited [2015] SGHC 226 in which it held at [54] that “what is crucial is the intention of both parties to contract” and that a reference in the sub-contract providing that the sub-contractor must comply with the terms and conditions as set out in the main contract was sufficient, based on the conduct of the parties, to incorporate the terms and timelines of the main contract into the sub-contract. If the construction contract does not stipulate the time when the payment claim should be served then reg 5(1) SOPR provides that “where a contract does not contain any provision specifying time at which a payment claim shall be served or by which such time may be determined, then a payment claim made under the contract shall be served by the last day of each month following the month in which the contract is made” (emphasis added). In Singapore, it was considered that reg 5(1) SOPR imposed a one-month limitation period for a claimant to issue his payment claim for the previous month’s claim failing which the contractor lost his right to make a claim for the said period. See the High Court decision of Chua Say Eng v Lee We Lick Terrence [2010] SGHC 333 at [49] and [50]. However, this decision was on appeal overruled by the Singapore Court of Appeal in Chua Say Eng at [88]–[92]. The Court of Appeal held that there was no “compulsion” at [90] on the claimant, under section 10(1) of the SOPA, to make monthly claims and that reg 5(1) SOPR did not impose any such requirement. The Court of Appeal held, at [94] rather curiously, that the requirement of reg 5(1) SOPR does not apply when the claimant makes a claim for that period of works after the two months and that the claimant was entitled, under section 10(4) of the SOPA, to make his claim at any time within the limitation period (at [89]–[91]), provided that claim had not been adjudicated upon on its merits. See S Magintharan, “Construction Adjudication in Singapore – Lee Wee Lick Terrence v Chua Say Eng” [2014] 30 Const LJ 73 at 92 and 93 for a critique on the decision of the Singapore Court of Appeal’s decision in this respect. In the recent Singapore High Court case of UES Holdings Pte Limited v Grouteam Pte Limited [2015] SGHC 275 at [39]–[47], the court set aside the whole adjudication determination because the claimant had failed to serve the payment claim (and, consequently, the adjudication application) within the contractual time-line set in the PSSCOC. The High Court held that compliance with the requirement of section 10(2)(a) SOPA (along with section 13(3)(a) of the SOPA) was mandatory and jurisdictional.


21 Section 10(3) of the SOPA and reg 5(2) SOPR stipulate that the prescribed particulars required for a valid payment claim under the SOPA. Failure to comply with the mandatory requirements render the payment claim and any adjudication determination, giving effect to the same to a jurisdictional challenge in the High Court. See the recent High Court decision of Newcon Builders Pte Limited v Sino New Steel Pte Limited [2015] SGHC 226 in which the court, in setting aside an adjudication determination, held at [36] that “if a party wishes to avail itself of this scheme to obtain speedy payment, then it has to ensure that its conditions and timelines are complied with. The steps, their required content and timelines are key features of this scheme and must be complied with” (emphasis by the court). If, however, the payment claim merely fails to comply with details which are not mandatory under the SOPA and the SOPR, then the question is for the High Court to decide whether the failure was intended by SOPA to be mandatory, or merely directory, and whether there is any prejudice caused to the respondent. See Chua Say Eng (above at [34] and [67]). See also Chase Oyster Bar v Hamo Industries [2010] NSWCA 190 at [98]; Australian Timber Products Pte Limited v A Pacific Construction and Development Pte Limited [2013] 1 SLR 776 at [12], [29] and [30]; Progressive Builders Pte Limited v Long Rise Pte Limited [2015] SGHC 223 at [45]–[55]. In Singapore, there have been many challenges against adjudication determinations before the High Court in an attempt to set aside adjudication applications, and/or adjudication, determinations on the basis that the payment claim is “invalid”, and/or not served in accordance with the contract, and/or the SOPA, on the basis that (1) it is a “repeat claim” (more than one claim for each month of work) – see Doo Ree Engineering and Trading Pte Limited v Taisei Corp [2009] SGHC 218; JFC Builders Pte Limited v Lion City Construction Pte Limited [2013] 1 SLR 1157, Admin Construction Pte Limited v Vivaldi (S) Pte Limited [2013] 3 SLR 609 and most recently in LH Aluminium Industries Pte Limited v Newcon Builders Pte Limited [2015] 1 SLR 648 and Libra Building Construction Pte Limited v Emergent Engineering Pte Limited [2015] SGHC 279. (2) that the payment claim was invalid because it failed to contain the mandated particulars and was not served within the prescribed time under the SOPA – see Chip Hup Hup Kee Construction Pte Limited v Ssangyong Engineering and Construction Pte Limited [2010] 1 SLR 658; Sungdo Engineering and Construction Pte Limited [2010] 3 SLR 459; Australian Timber Projects Pte Limited v A Pacific Construction and Development Pte Limited [2013] 2 SLR 776; Admin Construction Pte Limited v Vivaldi (S) Pte Limited [2013] 3 SLR 609; YTL Construction (S) Pte Limited v Balanced Engineering and v Construction Pte Limited [2014] SGHC 142; LH Aluminium Industries Pte Limited v Newcon Builders Pte Limited [2015] 1 SLR 648; Progressive Builders Pte Limited v Long Rise Pte Limited [2015] SGHC 223 at [45]–[55] and most recently UES Holdings Pte Limited v Grouteam Pte Limited [2015] SGHC 275.


22 The Singapore High Court in Tiong Seng Contractors (Pte) Limited v Chuan Lim Construction Pte Limited [2007] 4 SLR 364 at [27] applied a purposive interpretation to the definition of a payment claim and held that it included both a progress payment claim for ongoing works and also a final claim for construction works carried out and goods supplied. The Singapore Court of Appeal in Chua Say Eng [2013] 1 SLR 410 at [95] approved and affirmed the interpretation that the payment claim under section 10(1) of the SOPA included both a progress claim and a final claim.


23 This issue has not been decided by the Singapore courts, but it is submitted that as the prolongation costs and the attendant preliminaries costs arise from the claimant’s right for an extension of time under the construction contract (both under the express and implied terms of the construction contract), such costs falls within the definition of progress payment under section 2 of the SOPA, to which the claimant is entitled to make a payment claim. See sections 6 and 7 SOPA. See also Walter Construction Group Limited v CPL (Surey Hills) Pty Limited (2003) NSWSC 266; Leighton Contractor Pty Limited v Campbelltown Catholic Club Limited [2003] NSWSC 1103; Parkview Constructions Pty Limited v Sydney Civil Excavations Pty Limited (2009) NSWSC 61; Broyden Pty Limited v Davenport [2004] NSWCA 394 at [64]; Coordinated Construction Co Pty Limited v JM Hargreaves (NSW) Pty Limited [2005] NSWCA 228 at [40] and [41]; Beatty Construction Limited v Lambeth London Borough Council (2002) 84 ConLR 1; Try Construction Limited v Eton Town House Group Limited (2003) 87 ConLR 1.


24 This issue, as to whether the claimant is entitled to claim retention as part of a progress claim, has also not been decided in Singapore. It is submitted that, since retention monies in law belonged to the contractor and represent works carried out under the construction contract and the right to withhold and claim retention arises from the construction contract, provided the right has arisen under the contract, a payment claim for the retention sum, when it becomes due under the contract, falls within the definition of the progress payment under sections 2, 5 and 6 of the SOPA to which the claimant is entitled under section 10 SOPA to issue a payment claim. See Wates Construction (London) Limited v Franthom Property Limited [1991] 53 BLR 23, CA at p 31; Cleveland Bridge UK Limited v Multiplex Constructions (UK) Limited

Only gold members can continue reading. Log In or Register to continue