ASPLENIUM LAND PTE LTD v CKR CONTRACT SERVICES PTE LTD [2016] SGHC 85

The Plaintiff and Defendant entered into a contract for the construction of a residential condominium development, based on the amended Singapore Institute of Architects Articles and Conditions of Building Contract (9th ed, Reprint, August 2011) (“Conditions of Contract”) (see para 5 of William Nursalim’s affidavit dated 18 November 2015). The Plaintiff terminated the contract on 24 October 2014 (see Notice of Termination dated 24 October 2014 and para 7 of William Nursalim’s affidavit dated 18 November 2015).

On 22 December 2014, the Defendant (contractor) served Payment Claim No 21 (“PC 21”) on the Plaintiff (employer) and this proceeded for adjudication in SOP/AA 27 of 2015 (“AA 27”) on 6 March 2015 (Tab 7 of Plaintiff’s Bundle of Documents (“PBOD”), see para 19). The adjudicator delivered his determination on 26 March 2015. On 2 April 2015, the Plaintiff lodged SOP/ARA03 of 2015 for a review of the adjudicator’s determination, which resulted in a reduced adjudicated amount. Then on 7 October 2015, the Defendant served Payment Claim No 22 (“PC 22”) on the Plaintiff. The Plaintiff provided their Payment Response No 22 (“PR 22”) on 30 October 2015. On 12 November 2015, the Defendant lodged SOP/AA 423 of 2015 (“AA 423”). Most of these, and other events were detailed in the Plaintiff’s chronology of events (see Plaintiff’s Written Submissions dated 10 February 2016 (“P’s WS”) at para 16).

On 19 November 2015, the Plaintiff filed this originating summons seeking inter alia the following reliefs:

The adjudicator had for his own reasons not proceeded with the hearing of AA 423 after being informed of the hearing of this originating summons (see correspondence at Tab 5 and 6 of P’s WS).

The Plaintiff relied on two main grounds for seeking the reliefs in the present originating summons. The first was that the bulk of the claims in PC 22 comprised repeat claims that were prohibited under the adjudication scheme in the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“SOPA”). I shall refer to these claims as “prohibited repeat claims”. Second, the Plaintiff argued that the remainder of the claims in PC 22, being claims for the period after the termination of the contract (“post-termination claims”), also could not come under SOPA’s adjudication scheme. To be sure, the post-termination claims were not repeat claims in that they did not feature in PC 21; the Plaintiff had separate arguments for submitting that they were “outside the purview of” SOPA.

The Defendant’s answer to the Plaintiff’s case on prohibited repeat claims was focused on (what we referred to in arguments as) the “four heads of claim”. What the Defendant did was to isolate various parts of PC 22 under each of the four heads and submit various reasons and arguments for saying that those claims were not prohibited repeat claims. The four heads had evolved after oral arguments and written submissions to their final form as set out in full at Annex A of the Defendant’s Written Submissions dated 18 February 2016 (“D’s WS”). These are summarised as follows:

(a) First head – Reassessment at more than adjudicated amount in AA 27 and payments made so far

The essence of this head related to the Plaintiff’s reassessment of the Defendant’s claims in PR 22, resulting in a “Final Valuation” which was more than the adjudicated amount and also what had been paid to the Defendant so far. The Defendant claimed the difference, asserting that the bulk of which consisted of “release of retention monies [for defects] under the Contract”.

(b) Second head – Reassessment at less than adjudicated amount

The Defendant contended further that the Plaintiff should not have revalued any items in PR 22 at less than the adjudicated amount in AA 27. In doing so, the Plaintiff had deprived the Defendant of a sum of over $900,000.

(c) Third head (Materials on site) – Reassessment at more than adjudicated amount

The thrust here focused on the line item at S/No 22 of PR 22. In PR 21, the Plaintiff certified this item at nil (see item 19), whereas in PR 22 a sum of over $300,000 was allowed. The amount claimed in PC 21 and PC 22 (both at S/No 6) was the same.

The Defendant further argued that this was not a prohibited repeat claim because there was no adjudication of this item on the merits.

(d) Fourth head (Tools and equipment withheld at site) – Reassessment at more than adjudicated amount; and post-termination claims

There were two parts under this head. The first concerned the line item at S/No 26 of PR 22. This item was certified at nil in PR 21 (item 26) but in PR 22, the Plaintiff allowed an amount of over $200,000.

The second part (also in S/No 26 of PR 22) comprised additional claims for rental and value of materials/tools/equipment (see item 10 of PC 22 (p 360 of PBOD)) for the period from 24 October 2014 to 30 September 2015, which was after the termination of the contract. These were the post-termination claims referred to above at [5]. As such they would be considered separately from the prohibited repeat claims.

The parties had canvassed numerous issues and had to reshape and redirect their arguments in response to new issues raised in the hearings and written submissions. In my view, the two essential issues that would be necessary and sufficient to determine this originating summons were:

Implied in each issue was whether judicial intervention was necessary and justified at this stage.

Prohibited repeat claims

To reiterate, the Plaintiff’s case was that the bulk of the claims in PC 22 were prohibited repeat claims under SOPA. It should be made clear that the discussion under this section covered all the four heads of claims, less the post-termination claims under the fourth head.

The logical starting point was to examine and compare PC 21 (Tab 3 of PBOD) and PC 22 (Tab 5 of PBOD). The following observations on the facts could be made: (a) the period covered in PC 21 was from 21 January 2013 to 24 October 2014 (when the Plaintiff terminated the contract); and (b) PC 22 was for the period from 21 January 2013 to 30 September 2015, which was almost a year after the termination of the contract. It could not be disputed that no further work was done by the Defendant after 24 October 2014, when they vacated the worksite.

Further, PC 22 was for the identical items of work, goods and services claimed in PC 21, save for some immaterial differences in the Defendant’s valuations and the inclusion of the post-termination claims. The Defendant did not deny this and the fact that the identical claims had previously been adjudicated in AA 27. There had also been no issue raised concerning the payment of the adjudicated amount by the Plaintiff to the Defendant.

Before going further, it was imperative to examine the law to pinpoint the type of repeat claims that was prohibited under SOPA.

Both parties cited the Court of Appeal’s decision in Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) and another appeal [2013] 1 SLR 401 (“Chua Say Eng”). I begin by setting out an important passage (at [92]) from the judgment:

In this regard, I found the Plaintiff’s reading of Chua Say Eng persuasive. A claimant may “roll-up” any payment claim which was not paid or paid in full (P’s WS at para 144) but the Court of Appeal was careful to exclude “for obvious reasons” claims which had been adjudicated on the merits (see emphasised part in judgment above), clearly contemplating the sort of situation posed by the present PC 22.

More guidance and light could be found in Admin Construction Pte Ltd v Vivaldi (S) Pte Ltd [2013] 3 SLR 609 (“Admin Construction”). I would have thought that Quentin Loh J’s succinct analysis should have put this issue to rest. Loh J stated at [52] and [53]:

In short, based on the authorities above and for our purposes, a repeat claim that was prohibited under SOPA was a payment claim which had previously been brought to adjudication and had been determined on its merits.

A separate question as to what a determination on the merits meant was raised by the Defendant under the third head. The claim therein - at S/No 6 of PC 22 - was dismissed by the adjudicator in AA 27 for insufficiency of evidence (see para 172 of Adjudication Determination). The Defendant argued that as such there was no adjudication on the merits, hence this claim was not a prohibited repeat claim. In my judgment, a dismissal of a claim for insufficiency or want of evidence must be an adjudication on the merits. There was no reason in principle for distinguishing between a dismissal of a claim based on absence of legal or factual basis; or acceptance or rejection of evidence; or insufficiency or lack of evidence. That clearly was the position reached in other jurisdictions when confronted with this issue: see for example, AE & E Australia Pty Ltd v Stowe Australia Pty Ltd [2010] QSC 135 at [45] and [46].

Section 10(1) of SOPA provided the legal basis for the prohibition against such repeat claims. The commentary by Chow Kok Fong in Security of Payments and Construction Adjudication (LexisNexis, 2nd Ed, 2013) (“Security of Payments”) at paras 5.21 and 5.22 was germane to this issue:

In JFC Builders Pte Ltd v LionCity Construction Co Pte Ltd [2013] 1 SLR 1157 (“JFC Builders”), Woo Bih Li J decided at [47], [48] and [76] that the repeat claim (in the sense of “one which merely repeats an earlier claim without any additional item of claim” but which may have accounted for payment received since the earlier claim) was invalid. The learned author Chow Kok Fong observed that Woo J had so decided, notwithstanding that the “claim items [in the first claim] had not been the subject of an earlier adjudication” (para 5.51 of Security of Payments).

In the light of Chua Say Eng and Admin Construction which expressly disagreed (at [48] – [51]) with JFC Builders, I would respectfully differ from the view expressed in JFC Builders and hold that a repeat claim was prohibited only if it had previously been adjudicated on the merits (see also Foreword to Security of Payments by former Chief Justice Chan Sek Keong, at para 12). However, JFC Builders was significant in deciding that the effect of such a repeat claim was that it was invalid and should be set aside. Woo J said at [76] of JFC Builders:

Earlier at [43], Woo J held that:

In the circumstances, I could not agree with the Defendant’s contention (see D’s WS at para 66) limiting the grounds of invalidity to breaches of s 10(3)(a) of SOPA and reg 5(2) of the Building and Construction Industry Security of Payment Regulations (Cap 30B, RG 1, 2006 Rev Ed) only.

That said, I found that the invalidity of a repeat claim was a matter that went to the jurisdiction of the adjudicator (see Admin Construction at [60]). In Chua Say Eng, after discussing the authorised nominating body’s obligation under the scheme in SOPA to nominate an adjudicator (at [35]), the Court of Appeal stated (at [36]):

When read in the context of the issue under discussion, what the Court of Appeal meant must be that the adjudication should proceed on the non-jurisdictional issues only, leaving the jurisdictional issues to be raised “immediately with the court and not before the adjudicator”. Hence, the judgment went on to discuss the consequences if the adjudicator proceeded to decide his own competency (see also [64] and [65] of Chua Say Eng amplifying on the role of the adjudicator).

The extra judicial comments by former CJ Chan in the Foreword to Security of Payments further clarified the position, as follows (at para 8):

The Defendant argued that the last sentence in [36] of Chua Say Eng “recognises that the adjudication should proceed and that this court should not stay the adjudication that has been filed”. I should answer the Defendant’s arguments directly on our facts. Even if the Defendant was correct that the adjudicator should have proceeded, I had to deal with the matter in the position that I found it. AA 423 was “stayed” not by any interim or other order of court, but because the adjudicator decided “to hold in abeyance the proceedings …” pending the Court’s decision here (Tab 5 and Tab 6 of P’s WS). This state of the proceedings was fundamentally different from Lau Fook Hoong Adam v GTH Engineering & Construction Pte Ltd [2015] 5 SLR 516 (“GTH Engineering”), which the Defendant relied on, where the adjudication proceeded and the adjudicator’s determination was issued subsequent to the filing of the originating summons but “prior to any determination of the jurisdictional issue by the court” ([6] of GTH Engineering).

It should be observed that accepting the authoritative statements at [36] of Chua Say Eng at face value, it would mean that if PC 22 had proceeded for adjudication, the adjudicator in AA 423, Mr Seah Choo Meng, would have redone exactly what the previous adjudicator in AA 27, Mr Naresh Mahtani, had done (ie, assess the value of the Defendant’s work, goods and services). Mr Seah would have been prohibited from considering as a threshold question the jurisdictional issue of prohibited repeat claims before he proceeds with his assessment. And yet in the normal course of events, an adjudicator may be faced with this unsatisfactory state of affairs since the scheme under SOPA, with its short timelines, could result in the adjudication determination being issued before the decision in the court proceedings. The situation will be ludicrous and obviously never intended by SOPA if a further repeat claim is filed to a third adjudicator before the court delivers its decision.

It was then argued by the Defendant that in clarifying [36] of Chua Say Eng, GTH Engineering had highlighted a policy concern that parties may deploy “dilatory tactics” in the guise of jurisdictional challenges and subvert the intent of SOPA (see in particular [5] and [9] of GTH Engineering). In my judgment, the Defendant’s argument did not take into account the differences in the positions between GTH Engineering and our case. Courts will always be vigilant, especially in the context of SOPA, for dilatory tactics (as could be seen in this issue being flagged for discussion early in this case). It was clear to me that the question of dilatory tactics did not arise on the part of the Plaintiff. They were entitled to take the point on jurisdiction and were supported by Chua Say Eng in raising the jurisdictional issue to the court immediately.

Two other subsidiary questions remain, the resolution of which will comprehensively determine the prohibited repeat claims issue. These are on the relevance of the payment response and s 17(5) of SOPA.

Relevance of the payment response

The first subsidiary question was the relevance of the Plaintiff’s payment response in PR 22. The determination of this question would effectively wipe out the Defendant’s four heads of claim relating to the issue of prohibited repeat claims. The post-termination claims under the fourth head will be considered and dealt with in a subsequent section.

I had some difficulty understanding the Defendant’s case here. The argument appeared to be that since the operative concept here was issue estoppel, and the Plaintiff had changed their valuation of the works in various instances in PR 22 (especially where these were increased), that had altered the issues and made PC 22 a different claim from PC 21, ie, precluded PC 22 from being a prohibited repeat claim.

I found that the Defendant’s case had several false premises. For one, the operative concept that invalidated repeat claims was not necessarily issue estoppel. Be that as it may, the Defendant chose only to accept the instances where the Plaintiff increased the valuations in PR 22 above the adjudicated amounts, willy-nilly rejecting the instances where the Plaintiff decreased the valuations. The Defendant could not show any basis for blowing hot and cold.

The firm answer to the Defendant’s reliance on the Plaintiff’s revaluations in PR 22 lay in the fact that the Plaintiff’s payment response stated clearly that PC 22 was a repeat claim – see PR 22 at p 418 of PBOD. That that was the primary position of the Plaintiff was clearly reserved – see letter dated 30 October 2015 from the Plaintiff to the Defendant. All the revaluations by the Plaintiff were made “without prejudice” to this primary position.

The Plaintiff submitted that the purpose of the revaluations in PR 22 was to take into consideration the latest position for consistency with the pending arbitration in May 2016. This was not challenged by the Defendant. Having stipulated that their primary defence was that PC 22 was a repeat claim, one could understand that the Plaintiff had to do this because of the nature of the scheme under SOPA, which allowed for “interim” payments which may be revisited in court proceedings or arbitration. Therefore, the revaluations in PR 22, having been submitted for a specific purpose, were irrelevant to the prohibited repeat claims issue.

Finally, taking a step back from the Defendant’s arguments, one would have thought that in deciding whether PC 22 was a prohibited repeat claim, the relevant documents would be PC 21 and PC 22; and not PR 22. While I could not rule that the payment response was irrelevant in all cases, I agreed with the Plaintiff that based on the way the case was argued by the Defendant, the different valuations in PR 22 were irrelevant. The fact that the Plaintiff changed some of the valuations in PR 22 did not change the nature of the claims in PC 22. Indeed it would be odd if the justiciability of PC 22 depended on a subsequent document (PR 22) which the Defendant could not even have foreseen. The solution was actually simple: references to and analysis of the two payment claims would establish the Plaintiff’s case that PC 22 (leaving aside the post-termination claims) was a prohibited repeat claim.

Section 17(5) of SOPA

The remaining subsidiary question related to the effect of s 17(5) of SOPA, which the Defendant relied on “directly”. Section 17(5) of SOPA reads,

The Defendant’s main argument appeared to be that the changes in PR 22 showed that the Plaintiff had changed their position. Therefore, the “facts surrounding the premise of the adjudicator’s decision” had changed (see Annex A of D’s WS, in particular under the third and fourth heads).

In my view, once the intent of, and the particular situation that s 17(5) was designed to apply to were understood, the support that the Defendant claimed from the section would vanish. In Security of Payments, the learned author provided the legal and industry view (at paras 16.58, 16.59 and 16.61) as follows:

The exception to s 17(5) applied where “the value thereof has changed since the previous determination”. The learned author of Security of Payments opined (at para 16.62) that the exception applied only “where the facts surrounding the premise of the valuation have changed”. This could conceivably apply (in my view) to situations where there were variations in or additions to the construction work, or the goods or services supplied. The exception must be “specifically raised” and required “compelling evidence” (see para 16.62 of Security of Payments) of the change in facts. I considered that the author’s views were sensible having regard to the obvious policy and purpose that the section served.

In our case, the Defendant failed to show that the facts surrounding the premise of the valuation in PC 21 had changed. In PC 22, the Defendant submitted the same claims which had been previously valued and adjudicated on their merits in AA 27. The Defendant was unable to show how the operative facts that formed the basis of the first valuation had changed such that the exception in s 17(5) applied. The Defendant’s argument, which was premised on the different valuations in PR 22, missed the point and was an instance of the Defendant’s misguided reliance on the payment response (see discussion above on the relevance of the payment response). The Defendant’s other argument on s 17(5) was tantamount to saying that it generally permitted repeat claims (see para 56 - 58 of D’s WS). That was a misreading that was contrary to s 10(1) of SOPA and the clear pronouncements in cases like Chua Say Eng and Admin Construction (see discussion above on prohibited repeat claims). This was sufficient to dispose of the Defendant’s reliance on s 17(5) of SOPA.

However, the Plaintiff raised the additional argument that s 17(5) operated only where there was ongoing work (paras 216, 217 and 221 of P’s WS). The Plaintiff relied on Security of Payments at para 16.61 (“... for the remainder of the project”) and para 16.62 (“where the facts … have changed”). Hence it could not apply here where the Defendant’s employment had been terminated on 24 October 2014 and no further works were carried out. I agreed with this contention. This was reinforced by the indisputable fact that the claims under the four heads (excluding the post-termination claims) were adjudicated and determined on their merits in AA 27.

Post-termination claims

The above determinations had dealt with the bulk of the Defendant’s claims in PC 22 under all four heads. The remaining post-termination claims under the fourth head (see [5] above) need to be examined now. The Plaintiff argued that these post-termination claims did not fall within SOPA’s adjudication scheme for payment claims. I was informed by counsel that this was the first time this issue was being decided in the Singapore High Court.

The Plaintiff relied on cl 32(8)(b) of the Conditions of Contract to entitle them to “make use of all temporary buildings, plant, tools, equipment, goods or unfixed materials upon the Site, all of which shall vest in and be deemed to be the property of the Employer”. In the event that this was challenged, it was for the Defendant to claim against the Plaintiff for damages at general law, with the possible causes of action being for breach of contract or the tort of conversion. Upon final completion of the project, the Defendant can remove his property pursuant to, and subject to the conditions in cl 32(8)(h).

Section 5 of SOPA spelt out the “[e]ntitlement to progress payments” as follows:

However since the contract here was terminated, the Defendant’s claim could no longer come under s 5 of SOPA for the carrying out of construction work or supply of goods and services under the contract and hence, the Defendant was not entitled to a progress payment under the same section. That being the case, and considering that s 10(1) provided that “a claimant may serve one payment claim in respect of a progress payment”, the above post-termination claims could not be the subject of a payment claim and the adjudicator had no jurisdiction to adjudicate them. In my view, the Plaintiff’s argument succeeded.

My conclusion was reinforced by the analysis of Applegarth J in McConnell Dowell Constructors (Aust) Pty Ltd v Heavy Plant Leasing Pty Ltd [2013] QSC 269 (“McConnell”). While I appreciated that the Queensland statutory adjudication regime did not operate identically with our SOPA, and it was not entirely clear whether the payment claim in McConnell was in respect of work done or the supply of goods and services after the termination of the “construction contract”, I found the reasoning in the following passage from McConnell most appropriate in supporting the Plaintiff’s position that the tools and equipment withheld at the site after the termination of the contract were not supplied “under a contract” pursuant to s 5 of SOPA (see also the D’s WS at paras 152 and 164):

In accepting the Plaintiff’s argument, I found further support in cl 32(5) of the Conditions of Contract, which reads as follows:

While I acknowledge that the label attached to the relief was not conclusive (see [41] of Coordinated Construction Co Pty Ltd v JM Hargreaves (NSW) Pty Ltd & Ors [2005] NSWCA 228 and also para 154(b) of D’s WS), I found that properly construed, the parties had agreed that the relief available to the Defendant upon a wrongful termination of the contract by the Plaintiff shall be by way of compensation in the nature of damages. In my judgment, the clause was properly invoked to exclude the adjudicator’s jurisdiction.

Order of Court

To conclude, I found that, leaving aside the post-termination claims under the fourth head, all the claims in PC 22 had been made in PC 21 and adjudicated on their merits in AA 27. For the reasons above, I was of the view that the Defendant’s arguments on the four heads of claim, premised essentially on the Plaintiff’s revaluations in PR 22 and s 17(5) of SOPA were unmeritorious and failed to show that these mentioned claims were permitted to be reventilated under the adjudication scheme of SOPA. Hence, these were all prohibited repeat claims.

Turning to the post-termination claims, I found that they could not be the subject of adjudication under SOPA because they could not be the subject of a payment claim.

With that in mind, I made the following orders:

For completeness, I should add that my findings above on the invalidity of PC 22 and the adjudicator’s lack of jurisdiction were final determinations, with the order to the Defendant to withdraw AA 423 (in its present position) flowing naturally from the findings. As such, the submissions on the considerations for the grant of interim injunctive relief (see P’s WS at paras 266 – 278, and D’s WS at paras 166 – 183) were not germane to our situation.