Rong Shun Engineering & Construction Pte Ltd v C.P. Ong Construction Pte Ltd [2017] SGHC 34

Before me is the typical application and cross-application arising out of an adjudication determination under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”). The determination is dated 1 March 2016 and requires the respondent to pay the applicant the principal sum of $379,530.80. The applicant has applied for and obtained leave ex parte under s 27 of the Act to enforce the determination as though it were a judgment to the same effect. The respondent now applies to have the determination set aside.

The respondent seeks to set aside the adjudication determination on three alternative grounds:

(a) the adjudicator exceeded his jurisdiction by adjudicating upon a claim for payment which did not arise from a single contract.

(b) the adjudicator exceeded his jurisdiction by adjudicating upon the applicant’s claim to recover a $37,000 retention sum when the applicant did not advance that claim in the payment claim.

(c) the adjudicator breached the rules of natural justice by determining this retention sum claim without hearing from the respondent.

The respondent argues further that, if any one of these grounds is upheld, the entire determination must be set aside. In particular, if either of the respondent’s two challenges to the adjudicator’s determination of the retention sum claim is upheld, the respondent’s argument is that I have no power to set aside only that part of the determination as relates to the retention sum.

Having heard the parties’ submissions and considered the evidence, I have decided as follows: (i) for a claim for payment to be a “payment claim” within the meaning of the Act, it must arise from a single contract; (ii) the applicant’s payment claim in this claim did in fact arise from a single contract; (iii) the adjudicator exceeded his jurisdiction by adjudicating upon the retention sum claim; (iv) that aspect of his determination is therefore a nullity; (v) on the facts of this case, the respondent’s natural justice challenge to the determination on the retention sum claim adds nothing to its jurisdictional argument; (vi) I have the power, under the common law doctrine of severance, to sever that part of the determination as deals with the retention sum claim and to uphold the remainder; and (vii) this is a case in which that power ought to be exercised.

I have therefore set aside only the part of the determination which deals with the retention sum claim. The remainder of the determination continues to carry interim finality for the applicant’s interim benefit.

The respondent has appealed against my decision. I therefore now set out my reasons.

I begin with the facts.

Background facts

The parties’ contractual relationship

On 28 December 2012, the Housing & Development Board of Singapore (“HDB”) engaged the respondent as the main contractor to carry out addition and alteration works to 15 car parks in the eastern part of Singapore. The main contract obliged the respondent to commence work on 28 January 2013 and to finish work within precisely a year, on or before 27 January 2014. The respondent’s scope of works under the main contract included electrical works and fire alarm works.

Before the award of the main contract, during the tender phase in November 2012, the respondent had invited selected contractors to submit quotations for the electrical works and the fire alarm works. The applicant was one of those contractors. It responded to the respondent’s invitation by submitting two written quotations in two separate documents dated 20 December 2012. It quoted $550,108.57 for the electrical works and $289,334 for the fire alarm works. Unless otherwise stated, all sums of money I shall set out in this judgment exclude goods and services tax.

The respondent made a counter-offer of $500,000 for the electrical works and $240,000 for the fire alarm works. The applicant accepted the counter-offer. The total agreed price for both scopes of work was therefore $740,000.

On 7 January 2013, the applicant issued two revised quotations . They were in terms virtually identical to the original quotations save that they each now bore the reduced prices for each scope of work as agreed.

The progress claims and payment history

As a result of these disputes, the respondent initially delayed and eventually ceased payment to the applicant. Between April 2013 and January 2016, the applicant submitted 24 progress claims to the respondent. The respondent paid a total of $409,000 to the applicant against its first ten progress claims but paid nothing against its last 14 progress claims. The respondent’s last payment to the applicant was on 30 December 2014 for progress claim 10 dated 14 February 2014.

The last progress claim presented by the applicant was progress claim 24 dated 20 January 2016 in the sum of $342,530.80. It was an omnibus claim in two senses. It covered all work done from the commencement of the works in April 2013 until 20 January 2016. It also covered both scopes of work, i.e. both the electrical works and the fire alarm works.

The respondent did not pay progress claim 24, whether in whole or in part. It also did not provide a payment response, either within seven days as required by s 11(1)(b) of the Act or before the dispute settlement period under s 12(5) of the Act expired on 3 February 2016.

The applicant applies for adjudication

On 5 February 2016, the applicant served notice on the respondent under s 13(2) of the Act that it intended to apply for adjudication in respect of progress claim 24. In this notice, the applicant invited the adjudicator to adjudicate upon the applicant’s claim to recover the retention sum. The applicant extended this invitation to the adjudicator even though the retention sum claim was not advanced in progress claim 24. Indeed, the applicant had expressly deducted the retention sum from its claim in progress claim 24 (see the computation reproduced at [93] below).

The applicant duly lodged its adjudication application with the Singapore Mediation Centre (“SMC”) and served it on the respondent. The SMC appointed an adjudicator. The respondent lodged an adjudication response.

The parties attended an adjudication conference on 23 February 2016. Neither party was legally represented at the adjudication conference, or indeed in the entire adjudication. The adjudicator permitted the applicant to present its case. He prevented the respondent from making any submissions, holding that s 15(3) of the Act barred the respondent from addressing him on any issues because it had failed to serve a payment response.

With the adjudication determination in hand, the applicant applied and obtained: (i) an order granting it leave to enforce the determination in the same manner as a judgment; and (ii) an order that judgment be entered against the respondent in terms of the determination. The respondent, in turn, applied to set aside the determination.

The respondent argues that the determination should be set aside on the three alternative grounds set out [2] above. The first two grounds relate to jurisdiction and the third relates to natural justice.

The respondent neither raised nor reserved the two jurisdictional grounds in the course of the adjudication. The respondent submits that this is immaterial: a failure to raise a jurisdictional ground in a payment response or otherwise in the course of an adjudication does not estop a respondent from taking that point before a court when applying to set aside a determination or when resisting an application to enforce a determination (see JFC Builders Pte Ltd v LionCity Construction Co Pte Ltd [2013] 1 SLR 1157 at [35] (“JFC Builders”); Australian Timber Products Pte Ltd v A Pacific Construction & Development Pte Ltd [2013] 2 SLR 776 at [46]). I accept that submission. I must therefore consider the two jurisdictional grounds on their respective merits.

I therefore now deal with each of the respondent’s three grounds in turn.

First ground: validity of the payment claim

Three subsidiary questions

It is common ground that, as a result of the events I have outlined at [8] – [10] above, the respondent engaged the applicant as its contractor under a construction contract within the meaning of the Act for two scopes of work: the electrical works and the fire alarm works. What is in dispute is whether the parties entered into one contract or two.

The applicant’s case is that the parties entered into a single contract comprising two scopes of work. The respondent’s case is that the parties entered into two separate contracts, each comprising a single scope of work. On that premise, the respondent argues that it is contrary to s 5, when it is read together with ss 10(1) and 10(3) of the Act, for a payment claim to arise from more than one contract. Accordingly, the respondent submits, the determination is fundamentally and fatally flawed and must be set aside.

Because the respondent did not raise this point in the adjudication, everyone involved – each party, their respective representatives and advisers, and the adjudicator – proceeded on the unspoken and unexamined assumption that it was unnecessary to determine how many contracts the parties had entered into. As a result, the adjudicator made no express finding on this issue. Despite that, it is obvious from the tenor of his determination that he made an implicit finding that there was only one contract between the parties comprising two scopes of work with a total contract value of $740,000. Thus, he says (at [6]):

The parties’ submissions on this first ground raise three subsidiary questions:

(a) Must a payment claim within the meaning of the Act arise from only one contract?

(b) If so, am I precluded from inquiring into whether progress claim 24 arose from only one contract, given that the adjudicator implicitly found that it did?

(c) If not, does progress claim 24 in fact arise from two contracts or from only one contract?

Must a payment claim arise from only one contract?

The parties’ submissions

The respondent’s argument on the first subsidiary question is primarily a textual argument. It submits that the text of the Act manifests a legislative intent that an adjudication application must be founded on “one payment claim for one progress payment for work done under one contract” (emphasis original).

The applicant does not, in response, deal directly with this question, focusing instead on the remaining two questions on this first ground.

My decision: a payment claim must arise from only one contract

It is my view that the respondent is correct, subject only to a small qualification (see [37] below). The applicant is therefore wise not to contend otherwise.

It is true that no provision in the Act expressly stipulates that a payment claim within the meaning of the Act must arise from only one contract. However, the Act in all but one section consistently uses only the singular noun “contract” coupled with either the singular article “a” or “the”. There is only one section in the entire Act which refers to “contracts”, i.e. in the plural. That is s 4(2)(c). But that section deals only with the disapplication of the Act to a prescribed “class of contracts”. That provision is not relevant to this question or to the analysis of it which follows in this judgment.

I begin the analysis by considering four sections which are fundamental to the scheme of the Act. I consider them only insofar as they relate to construction contracts within the meaning of the Act, leaving aside for the moment supply contracts. These four sections are ss 2, 5, 10 and 12. They define or establish, in turn: (i) a progress payment, (ii) a claimant’s entitlement to a progress payment; (iii) a claimant’s power to serve a payment claim in respect of a progress payment; and (iv) a claimant’s entitlement to make an adjudication application.

Section 2 defines a “progress payment”. It speaks expressly of a progress payment as a payment arising under “a contract”:

Section 5 confers, for present purposes, a statutory entitlement to a progress payment on every person who carries out construction work. It too speaks expressly of an entitlement to a progress payment arising under “a contract”:

A person who is or claims to be entitled to a progress payment under s 5 is defined by s 2 of the Act as “a claimant”. A claimant has the power, under s 10(1) of the Act, to serve a payment claim in respect of “a progress payment”. Both ss 10(1)(a) and 10(1)(b) again refer expressly to “the contract”:

The purpose of these subsections is to stipulate on whom a payment claim must be served, rather than to tie one payment claim back to one contract. But the clear tenor of the subsections is that the service which they contemplate takes place pursuant to only one contract in connection with any one payment claim.

Section 10(3)(b) then requires the payment claim to be “made in such form and manner…as may be prescribed”. The form and manner is prescribed by rule 5 of the Building and Construction Industry Security of Payment Regulations (Cap 30B, Rg 1, 2006 Rev Ed). Rule 5(2)(b) once again contemplates a payment claim arising from only one contract. It requires a payment claim to “identify the contract to which the progress payment that is the subject of the payment claim relates” (emphasis added).

Finally, s 12(1) of the Act establishes a claimant’s entitlement to make an adjudication application subject to certain conditions being met. This provision too uses the singular: “a … contract”:

The respondent is therefore correct that the Act mandates that a “payment claim” within the meaning of s 10 of the Act must arise from one contract. The respondent goes too far, however, when it asserts that the Act mandates “one payment claim for one progress payment for work done under one contract” (emphasis in original). It is possible under the Act for a payment claim to comprise more than one progress payment, i.e. a claim for payment arising over more than one reference period. That can happen either when the conditions in s 10(4) of the Act are satisfied or under the principle in Libra Building Construction Pte Ltd v Emergent Engineering Pte Ltd [2016] 1 SLR 481 (“Libra”) at [42(f)].

I would therefore recast the respondent’s statement of principle as follows: the Act mandates that one adjudication application be founded on one payment claim which arises from one contract. That is in fact an alternative way in which the respondent puts the principle on which it relies.

This principle is consistent with the two Australian cases on which the respondent relies.

The first case is the decision of McDougall J of the Supreme Court of New South Wales (“NSW”) in Rail Corporation of New South Wales v Nebax Constructions Australia Pty Ltd [2012] NSWSC 6 (“Nebax”). In Nebax, the respondent argued that the adjudicator lacked jurisdiction over an adjudication because the applicant had either: (i) relied on one payment claim to initiate multiple adjudication applications; or (ii) submitted multiple payment claims under the same contract for the same reference period at the same time.

McDougall J considered the equivalent in the NSW security of payment legislation to ss 5, 10, 11, 12 and 13 of our Act. He upheld the respondent’s jurisdictional objection in principle. In the course of doing so, he expressed the view that the NSW Act requires one payment claim to arise from a single contract (at [44]):

Although we have no statutory equivalent in the Act to s 13(5) of the New South Wales legislation, the same result has been achieved in Singapore by the interpretation put upon our Act by 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”) and Libra ([37] supra).

The view expressed by McDougall J in Nebax ([40] supra) was undoubtedly obiter. Neither party contended in that case that there was more than one contract between the parties. But McDougall J adopted this dictum as part of his ratio in his decision in Class Electrical Services Pty Ltd v Go Electrical Pty Ltd [2013] NSWSC 363 at [6] and [39]. Further, Douglas J of the Supreme Court of Queensland adopted McDougall J’s view as part of his ratio in the second case on which the respondent relies: Matrix Projects (Qld) Pty Ltd v Luscombe [2013] QSC 4 at [17] – [18].

It is true that the NSW security of payment legislation considered in Nebax ([40] supra) differs from our Act in certain respects. But that legislation was the model for our Act and is underpinned by the same policy. In my view, there is no material difference between the two acts on this issue. McDougall J’s remarks, albeit against the backdrop of different security of payment legislation, are equally applicable in Singapore.

It is also true that s 2(1) of the Interpretation Act (Cap 1 2002 Rev Ed) provides that “unless there is something in the subject or context inconsistent with such construction…words in the singular include the plural…” Section 2(1) does not operate, in my view, to permit me to read the singular – “a contract” or “the contract” – as including the plural, i.e. more than one contract. That construction would be inconsistent with the subject and context of the Act.

A requirement that an adjudication be founded on a single contract safeguards the respondent in the same way as the requirement that a claimant present only one payment claim in any given payment claim period and for any given reference period. The purpose of the safeguard is to ensure that the respondent is able, within the limited time allowed by the Act, to examine and verify the facts and calculations relating to a payment claim and either to satisfy the claim or to serve a payment response (see Chow Kok Fong, Security of Payments and Construction Adjudication (LexisNexis, 2nd Ed, 2013) at [5.150]).

By contrast, requiring one adjudication application to be founded on one payment claim which arises from one contract does not, in the vast majority of cases, create unnecessary technicality or a trap for the unwary. It is not a heavy administrative or financial burden to require a claimant who has several contracts with a respondent to issue a separate payment claim under each contract and, thereafter, to make a separate adjudication application founded on each payment claim. The rule, no doubt, gives respondents an incentive to argue for tactical rather than substantive reasons that the parties’ contractual relationship arises from multiple contracts. But it will be tolerably clear in all but the most ambiguous of cases whether that assertion is correctly made. And that risk does not, in my view, outweigh the considerable and real prejudice that the contrary interpretation would cause to respondents as a class and to the purposes of the Act.

It therefore appears to me that the Act, both on its face and in its underlying purpose, does require a claim for payment to arise from a single contract in order to be a “payment claim” within the meaning of the Act. A consideration of s 2(1) of the Interpretation Act does not lead me to a different conclusion.

What is the effect of the adjudicator’s implicit finding?

The parties’ submissions

The second subsidiary question is a point taken by the applicant. The applicant submits that I should not go behind the adjudicator’s implicit finding (see [25] above) that progress claim 24 arose from a single contract.

The respondent argues that I am not only free but obliged to examine the underlying facts and to determine for myself whether progress claim 24 arises from one contract or from two contracts. That is because that question is a question of fact which goes to a jurisdictional issue. An adjudicator, under our Act, has no power to determine his own jurisdiction.

My decision: the adjudicator’s implicit finding is not binding

At the outset, I must say that it is not clear to me how I can find myself bound by what is at most an implicit finding in an adjudicator’s decision on an issue to which he never applied his mind because it was never raised to him in the course of the adjudication. Be that as it may, I will consider the applicant’s submissions on this issue on their merits.

The applicant relies heavily on Air Design ([51] supra). In that case, the respondent in an adjudication took the point that the adjudicator had no jurisdiction over the parties’ disputes because they arose out of several separate contracts, only the first of which contained an agreement to adjudicate. The claimant’s response was that the agreement to adjudicate in the first contract covered even the disputes under the later contracts because they were not separate contracts at all but were simply variations to the first contract. The adjudicator decided in favour of the claimant on both jurisdiction and on the substance of the disputes. The applicant commenced proceedings in the English High Court seeking summary judgment in the same terms as the adjudicator’s decision. The respondent resisted summary judgment relying on the same jurisdictional point.

Akenhead J accepted that the adjudicator did not have the power to determine his own jurisdiction. But he held also that the issue of whether the later contracts were separate contracts or merely variations of the first contract was an issue which went both to jurisdiction and also to the substance of the parties’ disputes. He found, therefore, that where “substance and jurisdiction overlap … it is within the [a]djudicator’s jurisdiction to decide as matters within his or her substantive jurisdiction whether there have been in effect variations to the contract pursuant to which he or she has properly been appointed [a]djudicator” (Air Design ([51] supra) at [22]).

Air Design ([51] supra) is authority for the proposition that, under the English security of payment scheme, where a single issue goes both to the substance of the dispute between the parties and to the adjudicator’s own jurisdiction, the adjudicator’s decision on that issue will bind the parties on both substance and jurisdiction notwithstanding the general rule that an English adjudicator has no power to determine his own jurisdiction. In those circumstances, an error by the adjudicator in arriving at his decision on that single issue will not deprive him of the jurisdiction to decide the substance of the parties’ dispute.

The applicant invites me to apply that proposition to the present case. It argues that the issue of whether the respondent engaged the applicant under a single contract or under two contracts is an issue which the adjudicator had to decide in order to arrive at his determination on the substance of the dispute between the parties. As long as the adjudicator asked himself the right question, he acted within his jurisdiction. That is so even if he got the answer to that question wrong. The applicant therefore submits that the respondent is precluded from arguing before me that there were in fact two contracts between the parties.

I do not accept the applicant’s submission. The respondent is correct that the proposition in Air Design ([56] supra) has no application in the context of our security of payment scheme. That is because the Air Design proposition is inconsistent with the comprehensive and considerable authority of Chua Say Eng ([42] supra) by which I am bound.

In Chua Say Eng ([42] supra), the Court of Appeal drew a distinction between two types of argument on a setting-aside application: (i) an argument asserting that an adjudicator was not clothed with the statutory authority to determine an adjudication application (at [37] and [66]); and (ii) an argument conceding that the adjudicator was clothed with that authority, but asserting that the claimant contravened a provision of the Act in invoking that authority (at [67]) or that the adjudicator contravened a provision of the Act in exercising that authority (at [37]).

If an argument of the first type is well-founded, the inevitable result is that the adjudication application and any determination which results from it is a nullity (Chua Say Eng ([42] supra) at [66]). If an argument of the second type is well-founded, nullity is not the inevitable result. Instead, invalidity is the result. And even invalidity ensues only if the provision in question is so important that there is a legislative purpose to invalidate an act done in contravention of that provision (Chua Say Eng at [67]).

Whichever type of argument a respondent raises, a court will have to assess and determine the argument for itself. It is not in any way bound to defer to any view the adjudicator may have expressed on it.

The proposition in Air Design ([51] supra) is inconsistent with Chua Say Eng ([42] supra). The foundation of the Air Design proposition is an implied agreement between the parties that interim finality should attach to an adjudicator’s determination of an issue which touches on both substance and also to jurisdiction. The parties’ agreement has that effect in the English security of payment scheme because the juridical basis of the English security of payment scheme is the parties’ agreement. The agreement is either an express agreement between the parties or an agreement imputed to them by the English security of payment legislation through the mechanism of implied terms. So while the English scheme, like ours, takes as its starting point that an adjudicator has no power to determine his own jurisdiction, the origin of that bar is different. In the English scheme, the bar originates from the parties’ agreement. So too, the interim finality which is attached the adjudicator’s decision in the English scheme originates from the parties’ agreement. The parties’ agreement, express or implied, therefore suffices to lift that bar and to allow interim finality to attach to an English adjudicator’s determination of an issue which touches on his own jurisdiction.

The juridical basis of adjudication in Singapore is statutory. The powers of an adjudicator under our security of payment scheme are fixed by the Act. The parties cannot enlarge those powers by any agreement of any kind, whether express or implied. Chua Say Eng ([42] supra) makes clear (at [36]) that an adjudicator has no power under the Act to decide his own jurisdiction. An adjudicator cannot gain the power to decide his own jurisdiction by the mere fact that an issue which goes to his jurisdiction happens also to go to the substance of the parties’ dispute. In an exceptional situation, the adjudicator’s statutory obligation under s 16(2)(a) of the Act to reject an adjudication application which has not been made in accordance with ss 13(3)(a), 13(3)(b) or 13(3)(c) of the Act may coincide with a respondent’s argument on jurisdiction (Chua Say Eng at [64]). But even in that exceptional situation, the adjudicator’s determination carries interim finality and binds the parties not because of their agreement but because the Act has empowered him to decide that issue. The statutory basis of adjudication in Singapore means that the Air Design proposition cannot apply to an adjudication under the Act.

It is also significant to me that the Air Design proposition ([56] supra) is not supported by any Singapore authority. Indeed, as the respondent points out, the proposition is positively contradicted by Loh J’s approach in UES Holdings Pte Ltd v Grouteam Pte Ltd [2016] 1 SLR 312 (“UES”). The respondent in UES alleged that a payment claim had not been served “at such time as specified in or determined in accordance with the terms of the contract” as required by s 10(2)(a) of the Act. As in Air Design, that issue went both to the substance of the parties’ dispute and also to jurisdiction. Loh J, hearing the respondent’s application to set aside the determination, did not consider himself bound by the adjudicator’s finding that service of the payment claim complied with the parties’ contract. Instead, he construed the contract himself to determine the issue afresh. Having done so, he concluded that service of the payment claim did not comply with the parties’ contract as required by s 10(2)(a). He held further that that provision was so important that invalidity was the legislatively-intended consequence of non-compliance (see UES at [39] – [47]). As a result, he set aside the determination.

I therefore accept the respondent’s submission that I must determine for myself afresh whether the parties’ contractual relationship comprises one contract or two.

Does the progress claim arise from one or from two contracts?

The respondent’s submissions

The respondent submits that the parties’ intention, ascertained objectively from their conduct, was to contract separately for two separate scopes of work. It relies on the following factors to make good this submission.

The respondent invited separate tenders for, and the applicant submitted separate quotations for, each scope of work. Each quotation expressly limited its scope to the tender breakdown attached to it. That excluded all other works (including the works comprised in the other quotation) from its scope. The prices which the respondent counteroffered were written separately on, and countersigned separately on, the separate quotations for each scope of work.

When the applicant issued revised quotations incorporating the counteroffered prices on 7 January 2013, it once again issued a separate revised quotation for each scope of work. The reference numbers on each revised quotation differed from each other, suggesting that the applicant viewed them as separate contracts. Further, the revised quotations were no longer on identical terms. The quotation for the fire alarm works included a new clause – relating to a dry riser system – which was absent from the revised quotation for the electrical works and also from both original quotations.

The applicant consistently submitted separate progress claims for each scope of work. It was only after disputes had arisen and after payment had slowed that the applicant started issuing consolidated progress claims covering both scopes of work.

For all these reasons, the respondent submits that progress claim 24 arises from two contracts instead of one.

The applicant’s submissions

The applicant submits that the parties’ intention, ascertained objectively from their conduct, was to enter into a single contract comprising two scopes of work. It relies on the following factors to make good this submission.

The respondent invited the applicant to tender for both scopes of work together, in a single telephone call. That call was initiated by the respondent’s managing director, Ong Chow Peng (“Ong”), to the applicant’s managing director, Chua Hoi Teck (“Chua”).

The original quotation for the two scopes of work were both dated 20 December 2012, both bore the same reference number (RSEC-1212151) and were submitted together on the same day by Chua to Ong at his office. Ong and Chua entered into and concluded a single set of negotiations for a discounted price for both scopes of works on the same day. The parties in their negotiations treated both scopes of work as being contained in a single contract because they arose from the same main contract and were to be performed at the same locations. Although the applicant submitted separate quotations for the two scopes of works, it was the applicant’s practice to do so. This practice cannot change the fact that both works were governed by a single contract.

During the period when the applicant issued a separate progress claim for each scope of work to the respondent, the applicant nevertheless served the separate progress claims together and the respondent always processed them as one.

For all these reasons, the applicant submits that its payment claim arises from one contract instead of two.

My decision: the progress claim arose from one contract

I accept the applicant’s submissions. In my view, an analysis of the evidence shows that the parties’ conduct evinced an intention, objectively ascertained, to enter into only one contract comprising two scopes of work.

I begin the analysis with the tender phase. The respondent’s evidence is that it made a separate invitation to tender for each scope of work and suggests that it is therefore a mere coincidence that the applicant was awarded both scopes. The respondent has not, however, produced any documentary or other independent evidence to support its suggestion. I do not accept it. I accept instead the applicant’s evidence that the respondent extended a single invitation to the applicant to tender for both scopes of work. This is consistent with the respondent’s own evidence that, in the course of preparing its tender to the HDB for the main contract, the respondent “sent out invitations to different contractors, inviting them to quote for the electrical installation works … and for the fire alarm installation works…” That approach is, to my mind, more consistent with the commercial realities at the time, bearing in mind that the two scopes of work arose from one main contract and were to be carried out in conjunction with each other at the same locations.

I now turn to the quotations themselves. The two original quotations, both dated 20 December 2012, bore the same reference number, i.e. “RSEC-1212151”. This indicates to me that the applicant viewed the two quotations as, in contractual substance, capable of giving rise to a unified obligation.

This is fortified by the heading for each quotation: “ADDITION & ALTERATION WORKS TO MULTI-STORY CAR PARKS (BATCH 7)”. This heading repeats verbatim the title of the main contract between the respondent and the HDB, leaving out only the HDB’s internal contract number. This indicates to me that the applicant attached paramount significance to the fact that both quotations arose from the same main contract and not to the fact that each quotation comprised a different scope of work. In this regard, I accept the applicant’s evidence that its practice was to submit separate quotations for separate scopes of work even if those separate scopes of work were to be governed by a single contract.

It is true that the applicant: (i) issued two separate quotations for each scope of work on 20 December 2012; (ii) each quotation incorporated a clause expressly providing that that quotation included only the items specified in the tender contract breakdown attached to that quotation; and (iii) that each quotation had annexed to it a different tender contract breakdown for each scope of work. That does suggest, as the respondent submits, that the parties entered into two contracts and not one. But in my view, none of these facts suffices to outweigh objectively the weight of the evidence I have analysed above pointing in the other direction. In my view, the quotations were separated for administrative convenience rather than with contractual effect. Further, the clause in question is a pro forma clause in the pro forma parts of the applicant’s quotations. It is therefore difficult to ascribe any specific objective intent to the applicant from the incorporation of that clause in these quotations as to whether it intended to form one contract or two with the respondent. It also appears to me that the objective intent of the parties, ascertained in context, was for the tender contract breakdown and the clause which referred to it to govern the content of the parties’ contract rather than its formation. Those breakdowns do not, therefore, advance the respondent’s submission that the parties’ objective intent was to enter into two contracts rather than one.

I therefore find that the parties’ objective intent, when the applicant accepted the respondent’s counteroffer during their negotiations on 20 December 2012, was to enter into a single contract comprising two scopes of work.

Post-contractual events, by definition, come after a contract is formed. A contract is formed when acceptance meets offer supported by consideration. Acceptance met offer in this case on 20 December 2012, when the applicant accepted the respondent’s counteroffer supported by consideration. The parties’ contractual relationship therefore formed on 20 December 2012. I have found that contractual relationship to consist of a single contract comprising two scopes of work. Nothing which occurred after 20 December 2012 can, in any contractual sense, split the single contract which I have found the parties to have entered into into two separate contracts short of a contractually-binding variation. The respondent does not suggest that there was any such variation.

It is strictly speaking, therefore, unnecessary for me to deal with the parties’ post-contractual conduct. This conduct includes the revised quotations dated 7 January 2013. It also includes the manner in which the parties dealt with progress claim submission, with progress claim payment and with invoicing. Nevertheless, since the parties have made submissions on these points, I will touch on them. I am also conscious that, although the parties’ post-contractual conduct is not admissible as an aid to construing or interpreting the content of their contractual obligations, that is not the task I am now undertaking. My task is to ascertain contractual formation, not contractual content.

As I have said, the revised quotations are, on my findings, post-contractual. It is thus irrelevant that the revised quotations, unlike the original quotations, contained different reference numbers. It is also irrelevant that the revised quotation for the fire alarm works included a new term. The effect of that new term was to exclude a dry riser system from the fire alarm works. That term no doubt became incorporated into the content of the parties’ contract on and from 7 January 2013, probably as a binding variation. But, as I have said, the content of the parties’ contract is not the question before me. The question before me is whether the parties objectively intended to enter into one contract or two. A dry riser system is relevant only to the fire alarm works. It has no relevance to the electrical works. To my mind, incorporating this new term in the revised quotation for the fire alarm works but not in the revised quotation for the electrical works validates the applicant’s practice of confining each quotation to a single scope of work for administrative convenience. Incorporating this new term does not go so far as to suggest that the parties believed, in January 2013, that they had entered into two separate contracts for two separate scopes of work in December 2012.

The applicant initially issued separate progress claims for each scope of work. This was the case from progress claim 1 (dated 29 April 2013) until progress claim 17 (dated 30 November 2014). The respondent suggests that this supports its submission that the parties intended their contractual relationship to consist of two contracts. As against that, however, I must set four points.

First, even when the applicant issued separate progress claims, i.e. from April 2013 to November 2014, it issued and submitted those separate progress claims to the respondent together, on the same day, under cover of the same email or fax transmission.

Second, starting with progress claim 18 (dated 12 March 2015) , the applicant included both scopes of work in a single, consolidated progress claim. The applicant presented consolidated progress claims in this way from progress claim 18 until the final progress claim, i.e. progress claim 24 dated 20 January 2016.

Third, the respondent without exception made each of its payments to the applicant (against progress claims 1 to 10) by a single cheque for both scopes of work.

Finally, the applicant, also without exception, upon receipt of each cheque, issued a single tax invoice to the respondent covering the respondent’s single payment for both scopes of work. There were thus 10 tax invoices, each one covering both scopes of work, for the 10 progress claims which the respondent paid. The respondent did not object to receiving a single tax invoice for each payment. Each of these 10 tax invoices was headed “Proposed A & A Works to Multi-Storey Car Parks (Batch 7)”. That is, of course, the title of the main contract. Each tax invoice made no reference to the two scopes of work. Instead, each invoice tracked the parties’ cumulative progress payments and progress claims for both scopes of work against a single consolidated contract price of $740,000. That sum, of course, is the sum of the price agreed for both scopes of work.

To the extent that I am permitted to look at the parties’ post-contractual conduct to ascertain the parties’ objective intention when they formed their contractual relationship in December 2012, it appears to me that their conduct is more indicative of a desire to keep the accounting for the two scopes of work separate for administrative convenience than it is of an objective intention to enter into two separate contracts.

For these reasons, I find that progress claim 24 arose from a single contract. It was therefore a “payment claim” within the meaning of s 10 of the Act. The adjudicator was properly clothed with the statutory power to determine the substance of the parties’ dispute arising from that payment claim.

I therefore reject the respondent’s first ground for setting aside the determination.

Second ground: the retention sum claim

The factual background

The respondent’s second ground arises from the adjudicator’s decision to accept the applicant’s invitation to adjudicate upon the applicant’s claim for the $37,000 retention sum. In progress claim 24, the applicant computed its claim for $342,530.80 as follows:

Description

Amount

Original contract amount

$740,000.00

Additional variation works done

$51,530.80

Less omission

($3,000.00)

Less payment amount received

($409,000.00)

Less retention (-5%)

($37,000.00)

Total claim amount

$342,530.80

The last line item of this computation expressly deducted from the applicant’s claim a retention sum of 5% of the total agreed price for both scopes of work, i.e. $37,000 being 5% of $740,000.

In paragraph 7 of its notice under s 13(2) of the Act, the applicant invited the adjudicator to determine the retention sum claim even though it acknowledged it was not part of its payment claim. I set out the whole of paragraph 7 together with the concluding sentences of paragraph 6 for context:

Despite these paragraphs in the s 13(2) notice, the applicant did not include any claim for the retention sum in the adjudication application which followed. Indeed, Section E of the application expressly advanced the same final figure as set out in the payment claim. Thus, the application again quantified the applicant’s claim as “S$342,530.80 (Exclude GST)” under “Payment Claim No. 24”. But attached to the application was a copy of the applicant’s s 13(2) notice which, as I have said, included the invitation I have quoted above. In that indirect sense, therefore, it could be said that the application repeated the applicant’s invitation to the adjudicator to determine its retention sum claim.

The adjudicator accepted the applicant’s invitation and adjudicated upon the retention sum claim. Having done so, he determined that the applicant was entitled to recover the retention sum because the parties’ contract did not give the respondent a right to retain it. His reasons are set out at [35] and [36] of the determination:

The parties’ submissions

Against this factual background, the respondent advances its second ground for setting aside the adjudication determination. That ground is that the adjudicator had no power to determine the retention sum claim because it was not part of the applicant’s payment claim. The respondent argues that that is the result of s 13(1) of the Act, s 17(3)(c) of the Act and the proposition that an adjudicator’s jurisdiction is framed by the payment claim and the payment response: Libra ([37] supra) at [36].

In response, the applicant submits that the adjudicator was empowered to determine the retention sum claim by ss 17(3)(b), 17(3)(c) or 17(3)(h) of the Act.

I accept the respondent’s submission and hold that the adjudicator exceeded his jurisdiction by adjudicating upon the retention sum claim.

My decision: the adjudicator exceeded his jurisdiction

I start once again with the provisions of the Act. Section 12(2) entitles a claimant to make an adjudication application arising from construction contract only in relation to its “payment claim”. Section 13(1) provides that the subject-matter of an adjudication is a “payment claim dispute”.

The language of ss 12(2) and 13(1), by relying on the term of art “payment claim” and incorporating it in the concept of a “payment claim dispute”, limits the subject-matter of an adjudication application to one or more disputes which arise from a “payment claim”. The payment claim therefore fixes the parameters of the substantive content of an adjudication application, subject only to any additional issues introduced by a duly-served payment response.

Any other interpretation would be grossly unfair to a respondent. Section 15(3) bars a respondent from raising in its adjudication response any reasons for withholding payment that were not set out in its payment response. If a claimant were allowed to add a new claim to an adjudication application after it had served its payment claim on a respondent, s 15(3) would operate to bar a respondent who had not served a payment response from defending that claim. That bar would operate even though the respondent could not have foreseen that the claimant would make a new claim, could not have foreseen the content of that new claim and may have valid reasons for withholding payment on that new claim which it could and would have put in a payment response if that new claim had been made in the payment claim itself. An outcome which is unfair in that way cannot have been the intention of the Act. A respondent must be able to ascertain from the payment claim with completeness and certainty – at the time it receives the payment claim – each claim which it will have to address in its payment response if it chooses not to satisfy that claim. It must also be able to ascertain with completeness and clarity when it receives a payment claim the precise scope of the bar which will attach under s 15(3) if it chooses not to serve a payment response in accordance with the Act.

In the case before me, the applicant did not merely omit a claim from its payment claim. The applicant went further and expressly excluded the retention sum claim from its payment claim. That amounts to an unsolicited admission by the applicant that the sum was not due. Whatever the reason, the essential fact remains that the retention sum claim did not form part of the applicant’s payment claim. As a result, the applicant had no entitlement under s 12(2) of the Act to apply for the retention sum claim to be adjudicated upon. No payment claim dispute within the meaning of s 13(1) arose in connection with the retention sum claim, or could arise once the respondent failed to serve a payment response. The adjudicator was never clothed with the statutory power to deal with the retention sum claim.

The applicant argues that ss 17(3)(b), 17(3)(c) or 17(3)(h) empowered the adjudicator to adjudicate upon the retention sum claim. These provisions permit the adjudicator, in determining an adjudication application, to have regard to matters extraneous to the payment claim. The extraneous matters covered by these three subsections are, respectively: (i) the provisions of the contract to which the adjudication application relates; (ii) the adjudication application and the documents accompanying it; and (iii) any other matter which the adjudicator reasonably considers to be relevant to the adjudication. Thus, the applicant argues, the adjudicator was empowered by the Act to have regard to the following material in order to allow the retention sum claim: (i) the applicant’s s 13(2) notice – as a document accompanying the adjudication application – which invited the adjudicator to award the retention sum to the applicant; (ii) the parties’ contract, and the fact that it made no provision for a retention sum; and (iii) the applicant’s submissions on the issue.

I cannot accept the applicant’s submission. It is no doubt true that s 17(3) of the Act empowers the adjudicator to have regard to the matters extraneous to the payment claim which are set out in s 17(3)(a) to (h), including the three specific matters on which the applicant relies. But the adjudicator’s powers under s 17(3) do not arise in a vacuum. Section 17(3) rests on the fundamental underlying premise that the adjudicator is exercising those powers to determine a payment claim dispute within the meaning of s 13(1) which is properly part of the subject-matter of an adjudication application made by a claimant entitled to do so under s 12(2) of the Act. Where that fundamental underlying premise is false, s 17 does not permit him to determine that dispute. An adjudicator is not properly seised of a payment claim dispute under the Act if the dispute does not arise from the payment claim read together with any payment response: Libra ([37] supra) at [96]. That was precisely the position of the retention sum claim in this adjudication.

The adjudicator adjudicated upon the retention sum claim when he was not clothed with the statutory authority to do so. The result is that that determination is null and void (Chua Say Eng ([42] supra) at [66]). The next question is whether it is the entirety of the determination which is null and void or whether the adjudicator’s determination on the retention sum claim can be severed from the remainder of his determination and annulled without affecting the interim finality attached to the remainder.

I consider that question after dealing with the respondent’s natural justice ground.

Third ground: breach of natural justice

As an alternative to its second ground, the respondent submits that the adjudicator breached his obligation under s 16(3)(c) of the Act to comply with the principles of natural justice because he adjudicated upon the retention sum claim while barring the respondent from being heard on that claim. It is not in dispute that the adjudicator did bar the respondent from raising any reasons to justify withholding payment to the applicant on progress claim 24, including any reasons to justify withholding the retention sum, on the basis that it had failed to serve a payment response and was therefore subject to the bar in s 15(3) of the Act. For the reasons which follow, however, it is not necessary to analyse the respondent’s third ground in detail.

I have upheld the respondent’s second ground and found that the adjudicator was not clothed with the statutory authority to adjudicate upon the retention sum claim. If I am right in that, no question of natural justice arises. The successful jurisdictional challenge wholly overshadows the natural justice challenge. It makes no sense to ask, let alone to decide, whether the adjudicator breached the rules of natural justice in determining a claim which he had no statutory authority to determine.

If I am wrong in my holding, and the adjudicator was clothed with the statutory authority to adjudicate upon the retention sum claim, then the bar in s 15(3) is a complete answer to the respondent’s natural justice ground. The Act requires a respondent who intends to advance reasons for withholding payment in response to a valid payment claim to set those reasons out in a payment response served within the prescribed time. If a respondent fails to do that – either by omitting a particular reason from its payment response or by failing to serve a payment response at all – the bar in s 15(3) will operate not only to prevent the respondent from advancing those omitted reasons but also to curtail the adjudicator’s jurisdiction even to consider any such reasons (see W Y Steel Construction Pte Ltd v Osko Pte Ltd [2013] 3 SLR 380 at [33] – [34]).

To the extent that the respondent argues that this would be a result unfair to respondents as a class, I have accepted that argument in my holding that s 13(1) must be construed as precluding a claimant from adding to its claim for payment after it has served its payment claim (see [102] above).

For these reasons, it is my view that the respondent’s third ground adds nothing to its second ground.

The proper order to be made: severance

The result of my findings at this point in the analysis is that the adjudicator had the statutory authority to adjudicate upon the applicant’s payment claim but had no authority at all to adjudicate upon the applicant’s retention sum claim, that claim being outside its payment claim.

That error is a jurisdictional error, not an error within jurisdiction. While it is certainly true that the adjudicator failed to comply with s 17(3) of the Act, that is not the gravamen of his error. His breach of s 17(3) did not come in the course of determining a claim which was properly before him. The gravamen of his error is that he purported to determine a claim which was never in law before him. His failure to comply with s 17(3) came in the course of committing the far more fundamental jurisdictional error and is wholly subsumed within it. In relation to the retention sum claim, therefore, the adjudicator committed an error of the first type in Chua Say Eng, not of the second type (see [59] above). Nullity must therefore the consequence.

The question then is whether it is only the adjudicator’s determination of the retention sum claim which is a nullity or whether his entire determination is a nullity.

The parties’ submissions

The respondent submits that I have no power to do anything but set aside the entire determination as a nullity. Relying on Australian authority from NSW, Queensland and Western Australia, the respondent argues that an adjudicator has a statutory duty to determine the amount which a respondent is to pay to a claimant. If he falls into jurisdictional error in determining any component of that amount, the entire determination is tainted and cannot stand. That is so even if that component is a severable part of the determination and the remainder of the determination is untainted by error.

In response, the applicant’s primary submission is that I have a discretion to withhold the remedy of a setting aside order and that I should on the facts of this case exercise that discretion to uphold the entire determination, including the determination on the retention sum claim. I reject that submission. I start by accepting that such a discretion exists, while pointing out that it is to be exercised only rarely. In Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190 (“Chase Oyster”), McDougall J referred to the relevant decisions in NSW and the Australian High Court and confirmed that the discretion extends at common law to permit a court to decline the remedy of certiorari sought to quash a decision tainted with jurisdictional error in extraordinary cases (at [275]):

I do not consider it appropriate, on the facts of this case, to exercise the discretion and uphold the entire determination. I bear in mind the fundamental jurisdictional nature of the error. I also bear in mind that the amount involved in that error – $37,000 – is not on any view de minimis.

The applicant’s alternative submission, relying on English authority, is that an adjudication determination is severable. I therefore have the power to sever and set aside only that part of the determination which I have found to be a nullity due to jurisdictional error. The remainder of the determination, being untainted by error, will stand and continue to carry interim finality. For the reasons which follow, I have accepted that alternative submission.

The position under the Act

My starting point is that the power to set aside an adjudication determination is a common law power which exists outside the Act. The Act brings into effect an entirely new and bespoke adjudication regime. To that end, it makes detailed statutory provision for every aspect of that regime from creating a new statutory entitlement to a progress payment in s 5 to setting out a statutory right to enforce an adjudication determination as a judgment of the court in s 27. But nowhere in the Act does it create a power to set aside an adjudication determination, let alone define the grounds on which that power ought to be exercised. There is thus no provision in the Act equivalent to s 48 of the Arbitration Act (Cap 10, 2002 Rev Ed) or to article 34(1) of the UNCITRAL Model Law on International Commercial Arbitration read with s 24 of the International Arbitration Act (Cap 143A, 2002 Rev Ed). The power to set aside an adjudication determination is not part of the bespoke adjudication regime created by the Act. It is created by and regulated by the common law.

In Citiwall Safety Glass Pte Ltd v Mansource Interior Pte Ltd [2015] 1 SLR 797 (“Citiwall”) the Court of Appeal confirmed that the power to set aside an adjudication determination is a common law power. It is an aspect of the High Court’s supervisory jurisdiction, i.e. the inherent power at common law of a superior court “to review the proceedings and decisions of inferior courts and tribunals or other public bodies discharging public functions” (see at [42]). The Court of Appeal also confirmed in Citiwall that an application to set aside an adjudication determination is akin to judicial review and that the remedy for a successful challenger is akin to a quashing order (at [50]). A quashing order is, of course, the current name for the ancient prerogative writ of certiorari.

The applicant submits that a superior court has the power at common law to grant certiorari, not only against the whole of an inferior tribunal’s decision, but also against a severable part of that decision. By analogy therefore, and on the authority of Citiwall ([120] supra), the High Court has the power to set aside an adjudication determination either in its entirety or in a severable part.

The applicant cites two authorities for that proposition. The first is the decision of the House of Lords in Director of Public Prosecutions v Hutchinson [1990] 2 AC 783 (“Hutchinson”), a criminal law case which turned on administrative law principles. The second is a decision of Akenhead J at first instance in Cantillon Limited v Urvasco Limited [2008] BLR 250 (“Cantillon”), a security of payment case under the English scheme.

I now analyse each of the two cases relied upon by the applicant in turn.

The English approach

Hutchinson

The applicant relies on Hutchinson ([122] supra) to argue that, at common law, a court before which a measure is successfully challenged in part need not quash the entire measure but may sever and quash only its offending part while upholding the remainder of the measure as valid and subsisting.

The actual question before the House of Lords in Hutchinson ([122] supra) was whether certain subsidiary legislation which the House had found to be ultra vires in part and intra vires in part was severable so as to support the defendants’ convictions of criminal offences under the part that was intra vires. The House of Lords held unanimously that there was a power at common law to sever and annul in part. On the facts, however, the House of Lords held unanimously that the subsidiary legislation in question did not come within the principles on which that power could be exercised. The defendants’ convictions were therefore quashed.

Lord Bridge delivered the leading speech. He held that the test of severance at common law is a double test comprising textual severability and substantial severability. He defined each aspect of the double test as follows (at 804):

Although the House of Lords in Hutchinson ([122] supra) was unanimous in the result, the law lords divided on the principles on which the power to sever could be exercised at common law. The division was between Lord Bridge for the majority and Lord Lowry in the minority. The issue which divided them was whether it is possible to modify the text of the measure in question in order to achieve severance when textual severance proves impossible. Lord Bridge’s view (at 811) was that textual modification is possible, so long as it leaves unaltered the substantial purpose and effect of the impugned measure:

Lord Lowry’s view (at 818) was that textual modification could not be used to achieve substantial severability. In other words, there could be no severance without textual severance:

Lord Bridge’s approach gained the agreement of all the law lords save for Lord Lowry. It was also adopted and applied by the Privy Council in Commissioner of Police v Davis [1994] 1 AC 283 at 298 to 299 per Lord Goff. I therefore take Lord Bridge’s approach as correctly expressing the common law position.

Hutchinson ([122] supra) is not, of course, directly applicable to the case before me. It analyses the severability of delegated legislation in administrative law. It does not analyse a superior court’s inherent supervisory power to quash the decision of an inferior tribunal. But my function in exercising that power is analogous to the House of Lords’ function in Hutchinson. As in Hutchinson, I have to determine the consequence which should properly follow when a decision-maker exercises a power which Parliament has delegated to it contrary to Parliament’s intent in one respect and in accordance with that intent in another respect.

Further, the House of Lords in Hutchinson ([122] supra) did not see a conceptual distinction between severance when striking down subsidiary legislation in part and severance when quashing the decision of an inferior tribunal in part. Thus, Lord Lowry cited (at 815) with approval the decision of McNeill J in R v Secretary of State for Transport ex parte Greater London Council [1986] QB 556 (“ex parte GLC”). That case establishes (at 581) that the remedies of both declaration and certiorari are available to quash an unlawful and divisible part of an order or decision while upholding the remainder. What precisely is a divisible – and therefore severable – part of that order or decision is left to be determined in English law on the principles in Hutchinson.

The common law power of severance which the House of Lords recognised in the field of administrative law in Hutchinson ([122] supra) is in fact a power which runs through the common law as a whole. In Gantley Pty Ltd v Phoenix International Group Pty Ltd [2010] VSC 106 (“Gantley”), Vickery J in the Supreme Court of Victoria had to consider whether a payment claim served under the Victorian security of payment legislation was severable. He held that it was, taking the view (at [101] – [104]) that Hutchinson was merely one aspect of a general common law doctrine of severance:

Hutchinson ([122] supra) read with ex parte GLC ([131] supra), Gantley ([132] supra) and Citiwall ([120] supra) suffices as authority for the proposition that the High Court hearing an application to set aside an adjudication determination issued under the Act has the power to quash the determination in part, provided that the part to be quashed meets Lord Bridge’s test of severability in Hutchinson.

The respondent submits that dicta in two decisions of the Court of Appeal preclude me from equating the power to set aside an adjudication determination to a writ of certiorari. The two decisions are Chua Say Eng ([42] supra at [51]) and Citiwall ([120] supra at [50]). I reject this submission. The respondent has misconstrued what the Court of Appeal said in each case.

At [51] of Chua Say Eng ([42] supra), the Court of Appeal said:

The constitutional issue which required the NSW Court of Appeal in Chase Oyster ([117] supra) to reject Brodyn ([136] supra) does not arise and cannot arise in Singapore. Apart from anything else, s 27 of our Act contains no provision which could be read as barring a respondent from challenging an adjudication determination on grounds of error, whether jurisdictional or otherwise, on an application to set it aside. Our Court of Appeal was therefore making the simple and indisputable point at [51] of Chua Say Eng ([42] supra) that it was not similarly compelled by a constitutional argument to reject Brodyn and adopt Chase Oyster in Singapore.

Chua Say Eng ([42] supra) is most certainly not authority that the common law principles which govern certiorari have no application to the power to set aside an adjudication determination which is akin to certiorari. No doubt the two bodies of principles are not necessarily identical. And no doubt the two bodies may well develop in future along different lines at common law. But Chua Say Eng is not authority that the two bodies have nothing at all in common. The principles which they have in common include the doctrine of severance and the discretion to withhold its grant in an extraordinary case where there is an equally effective and convenient alternative remedy.

The respondent has also misconstrued Citiwall ([120] supra). The point made by the Court of Appeal at [50] in Citiwall is that the Act and the subsidiary legislation made to support it – including s 27 of the Act and O 95 of the Rules of Court (Cap 332, R 5, 2004 Rev Ed) – have modified the procedure by which the High Court’s supervisory power is invoked to set aside an adjudication determination. The Court of Appeal in Citiwall said nothing about the content of that power.

The view I have taken of the power to set aside a determination is neither endorsed nor contradicted directly by anything in the Act or in the case law interpreting and applying the Act. There is nothing in the Act or the case law which requires a court to exercise its power to set aside a determination by setting aside the entire determination. Equally, there is nothing in the Act or the case law which prohibits a court from setting aside a part of a determination which it finds to be severable. That is not surprising. As I have already mentioned, the Act makes no attempt to describe, prescribe or circumscribe in any respect the content of the court’s power to set aside an adjudication determination. And the question of severability has not been considered in any case law under the Act to date.

Given that the Act has left setting aside to the common law, and given that Chua Say Eng ([42] supra) and Citiwall ([120] supra) do not exclude the operation of the common law doctrine of severance in exercising the power to set aside, it appears to me that it is entirely appropriate that that power should be exercisable against a severable part of an adjudication determination. The doctrine of severance is based on the principle of ut res magis valeat quam pereat. Applying that principle to an adjudication determination permits the court to give the maximum effect permitted by law to an adjudication determination, and thereby to advance the purposes of the Act.

Cantillon

The second case on which the applicant relies to argue that an adjudication determination can be set aside in part is the decision of the English High Court in Cantillon ([122] supra). Akenhead J concluded in that case, albeit obiter, that an adjudicator’s decision under the English security of payment scheme was severable, but only along the same lines, and to the same extent, as the disputes before the adjudicator were several. Akenhead J formulated (at [63]) the following six principles of severability under the English security of payment scheme:

I will refer to these principles as Cantillon principles (a) to (f).

The respondent submits that I cannot adopt and apply the approach in Cantillon because the juridical basis of adjudication in England is different from that in Singapore . I accept that distinction, of course. As I have already pointed out and accepted, the juridical basis of adjudication in England is the parties’ agreement whereas the juridical basis of adjudication in Singapore is statute. But that distinction in my view assists the applicant rather than the respondent. It explains why Cantillon principles (a) to (f) turn on the distinction between a single-dispute adjudication and a multiple-dispute adjudication rather than on Hutchinson severability, without in any way detracting from the availability of Hutchinson severability in Singapore.

I begin by observing that Cantillon principle (e) is the analogue of Hutchinson’s test of textual severability. But principles (c), (d) and (f) are not analogues of substantial severability. Instead, those principles make severability turn entirely on the distinction between a one-dispute adjudication and a multiple-dispute adjudication. That distinction is artificial. But that distinction is also necessary because adjudication in English law is founded on the parties’ agreement – express, implied or imputed.

The modification is artificial because it makes severance on Cantillon principles (c), (d) and (f) available only in a multiple-dispute adjudication. But every dispute comprises a cascade of sub-disputes. Whether a claimant has referred to adjudication one indivisible dispute made up of sub-disputes or several distinct and divisible disputes is a question which depends in large part, if not entirely, on the level of generality with which one undertakes the inquiry necessary to answer it. There is therefore a real risk of artifice in the Cantillon approach: the answer will always be in the eye of the beholder. To that extent, Cantillon principles (c), (d) and (f) could be said to be artificial in that they elevate form over substance.

But this artificial distinction is entirely necessary in English law. The parties’ agreement is the sole basis for attaching interim finality to an adjudicator’s decision and for enforcing that finality by entering summary judgment on the decision. The parties’ agreement is therefore the only basis on which to justify attaching interim finality to part only of an adjudicator’s decision and then enforcing that finality by entering summary judgment for that part. In other words, it is impossible to effect severance in English law without undermining interim finality and enforceability unless it is possible at the same time to separate the parties’ agreement to interim finality and enforceability. The parties’ agreement can be separated only where the disputes can be separated. It is for that reason that Akenhead J was compelled to hold in Cantillon ([122] supra) that a court can cleave an adjudicator’s decision in English law only along the same lines and to the same extent as it can cleave the disputes before the adjudicator.

The English approach after Cantillon

The English cases which have come after Cantillon ([122] supra) have recognised to a certain extent the artificiality inherent in Cantillon principles (c), (d) and (f). They have begun by recognising that Cantillon principle (f) is not absolute and that even a decision on a one-dispute adjudication may be severed. These English cases, all of which the applicant relies on, are Quartzelec Ltd v Honeywell Control Systems Ltd [2008] EWHC 3315 (TCC), Cleveland Bridge (UK) Ltd v Whessoe-Volker Stevin Joint Venture [2010] EWHC 1076 (TCC), Pilon Ltd v Breyer Group plc [2010] BLR 452, Working Environments Ltd v Greencoat Construction Ltd [2012] BLR 309 (“Greencoat”), Lidl UK GmbH v R G Carter Colchester Ltd [2012] EWHC 3188 (TCC) (“Lidl”), Beck Interiors Ltd v UK Flooring Contractors Ltd [2012] BLR 417 and Stellite Construction Ltd v Vascroft Contractors Ltd [2016] EWHC 792 (TCC).

It suffices for present purposes to consider only two of these decisions.

In Greencoat ([147] supra), a claimant referred a single dispute to an adjudicator. The respondent served a withholding notice under the parties’ contract, i.e. outside the adjudication, raising 12 items of claimed deductions. The adjudicator took all 12 items into account in his decision in the adjudication. Akenhead J, hearing the claimant’s application to enforce the decision, held that the adjudicator had rightly taken 10 of those items into account but had committed a jurisdictional error in taking the remaining two into account. Cantillon principle (e) was satisfied. But principle (f) was not, because only one dispute had been referred to the adjudicator. Akenhead J nevertheless severed the part of the decision tainted by the adjudicator’s error and allowed the claimant’s application to enforce the remainder. Akenhead J did not, however, make clear how severance on these facts could be reconciled with Cantillon principle (f).

Lidl ([147] supra) was again a one-dispute adjudication. A claimant referred a dispute over liquidated and ascertained damages to adjudication. It was common ground before Edwards-Stuart J that the adjudicator had exceeded his jurisdiction by answering a question on liquidated damages which was not put to him. The claimant argued that it was nevertheless entitled to enforce the adjudicator’s decision on the basis that that part of the decision could be severed. The respondent relied on Cantillon principle (f) to argue that the adjudicator’s decision was entirely unenforceable because the claimant had referred only one dispute – a dispute over liquidated damages – to adjudication. Edwards-Stuart J rejected this argument, severed the adjudication decision and permitted the claimant to enforce that part of the decision unaffected by error.

Edwards-Stuart J expressly acknowledged in Lidl ([147] supra) that Cantillon principle (f) is not absolute. Where an adjudicator exceeds his jurisdiction by deciding a matter which the parties have not referred to him, severance is permissible by way of exception to Cantillon principle (f), so long as Cantillon principle (e) is satisfied (at [61]):

In Construction Act Review: Adjudicators’ Decisions – Severability Update [2014] Const LJ 249 by Peter Sheridan, the author analyses Greencoat, Lidl and the other cases listed at [147] above. The same author also wrote Construction Act Review – Severability of Adjudicators’ Decisions [2004] Const LJ 71 which influenced Akenhead J’s decision in Cantillon. In his later article, the author concludes that Cantillon principle (f) is no longer absolute. He therefore proposes to reformulate as follows:

This formulation comes very close to approximating Lord Bridge’s test of substantial severability in Hutchinson (see [126] above), with its language adapted to the specialised field of adjudication. However, even with this proposed revision, the Cantillon principles still rest on the distinction between a one-dispute adjudication and a multiple-dispute adjudication. For that reason, even the proposed revision to Cantillon principle (f) restricts itself to jurisdictional error. If the domain of principle (f) is confined to the one-dispute adjudication, then it is axiomatic that a breach of natural justice would undermine the validity of the entirety of the adjudicator’s decision on that single dispute. It is for that reason that Cantillon principle (f) does not attempt to accommodate a breach of natural justice.

The Singapore approach

Synthesising a principle for jurisdictional error

The power to set aside an adjudication determination in part under our security of payment scheme is no more than the court’s common law power to quash the decision of an inferior tribunal in part. In applying that power to the specialised field of adjudication in Singapore, it is not necessary to draw an artificial distinction between a one-dispute adjudication and a multiple-dispute adjudication in order to have a juridical basis for attaching interim finality and enforceability to the remaining part which is upheld. Both of those consequences result in Singapore from the force of statute, not the agreement of the parties. Those two consequences continue to attach by force of statute even if a determination is set aside in part.

It appears to me, therefore, that an adjudication determination under the Act is severable for jurisdictional error on the following principles, drawing on both Hutchinson ([122] supra) and Cantillon ([122] supra) and adapted to the local context:

(a) The court may set aside a severable part of an adjudication determination (what is a severable part being ascertained in accordance with paragraphs (b) to (d) below) for jurisdictional error without undermining by that act alone the interim finality and enforceability of the remainder of the determination under the Act.

(b) Subject to paragraph (e) below, a part of a determination is severable for jurisdictional error only if it is both textually severable and substantially severable from the remainder of the determination.

(c) A part of a determination is textually severable if the textual elements of the adjudicator’s determination on that part, including his reasons in writing supporting that part given under s 17(2) read with s 16(8) of the Act, may be disregarded, with what remains of the adjudicator’s reasons still being grammatical and coherent.

(d) A part of a determination is substantially severable if the remainder of the determination which is to be upheld as valid and which is to carry interim finality and be enforced may be identified in terms of liability and quantum, without adjustment or contribution to the content of the valid part by the court.

(e) By way of exception to paragraphs (c) and (d) above, the court may modify the text of the adjudicator’s determination in order to achieve severance if the court is satisfied that it is effecting no change in the substantial effect of the adjudication determination after accounting for the jurisdictional error and its necessary editorial consequences.

I have accommodated in these principles only a challenge which succeeds for jurisdictional error. I have not attempted to accommodate a challenge which succeeds on natural justice grounds. There is no doubt that, in a suitable case, a severable part of a determination which is tainted by a breach of natural justice may be set aside without disturbing the remainder. But identifying when that can occur is unnecessary for my decision and is best done when the issue actually arises for decision.

The respondent submits strenuously that by severing an adjudication determination on these principles, I am guilty of judicial legislation. I do not accept that characterisation. As I have held, the Act leaves the content of the power to set aside an adjudication determination entirely to the common law. At common law, the power to quash includes a power to quash in part. No parliamentary legislation is required to create that power. No judicial legislation is involved in recognising and applying it.

The retention sum claim is severable on this principle

Applying the principles at [155] above to the case before me, it seems to me that the adjudicator’s determination on the retention sum claim is both textually severable and substantially severable.

The adjudication determination is textually severable because the adjudicator gave his reasons for allowing the retention sum claim in only two paragraphs of his determination and nowhere else. If I disregard those paragraphs and the reasons they comprise entirely, the remainder of his reasons remain both grammatical and coherent.

There is a slight difficulty with textual severance in that the adjudicator awards to the applicant in paragraph 37 of his reasons the sum of $379,530.80. That figure is the sum of the principal value of the payment claim ($342,530.80) plus the value of the retention sum claim ($37,000). In that same paragraph, the adjudicator certifies the adjudicated amount to be $406,097.96, being the composite figure of $379,530.80 with goods and services tax added to it at 7%. This adjudicated amount also appears in paragraph 3.1 of the determination. I cannot textually sever these figures in these two paragraphs of the determination without disposing of the entire adjudicated amount and discarding the essential content of the determination.

I am satisfied, however, that the principle at [155(e)] above permits me to substitute the figure $342,530.80 for $379,530.80 in paragraph 37; and, having added goods and services tax of 7% to this smaller figure, to substitute the figure $366,507.96 for $406,097.96 in both paragraphs 3.1 and 37 as the adjudicated amount.

The adjudication determination is also substantially severable. It is not mere happenstance that the adjudicator’s decision on the retention sum claim is textually severable. The content of the applicant’s payment claim and the content of the retention sum claim are entirely separate and involve separate considerations of fact and law. With respect to the applicant’s payment claim, the adjudicator considered whether the works carried out by the applicant justified the payment claim. With respect to the retention sum claim, the adjudicator considered whether the parties had contractually agreed that the respondent was to withhold a retention sum. The adjudicator’s decision on the retention sum can be severed from the remainder of the determination without any interference with his determination on the applicant’s payment claim and without the court adjusting to or contributing to the content of the valid part of the determination apart from, as I have mentioned, the arithmetical consequences of the jurisdictional error.

The effect of severance is to quash the adjudicator’s determination on the retention sum claim and to uphold the remainder of the determination as being valid and as carrying interim finality. That remainder can be identified easily and with certainty both in terms of liability and quantum. Liability remains with the respondent despite severance. For the reasons I have given above, the quantum of the remaining claim is precisely $366,507.96, including goods and services tax.

The Australian approach

The respondent argues that my approach to severance is heterodox and urges me to adopt instead the approach taken in the Australian cases. The submission is that the Australian cases are of more persuasive authority than the English cases because the various Australian state jurisdictions, like Singapore, have a security of payment scheme which is statutory rather than one based on the parties’ agreement.

The respondent submits that the effect of the Australian cases is to establish that, in a jurisdiction which has enacted a statutory security of payment scheme, an adjudication determination is not severable unless there is specific statutory authority permitting severance. There is specific statutory authority only in the Victorian and in the Queensland security of payment legislation. More specifically, the NSW security of payment legislation – which served as a model for our own legislation – has no such statutory authority.

The Australian cases on which the respondent relies, in chronological order, are:

(a) the NSW cases of Multiplex Constructions Pty Ltd v Luikens [2003] NSWSC 1140 (“Multiplex”), Lanskey Constructions Pty Ltd v Noxequin Pty Ltd (in liq) [2005] NSWSC 963 (“Lanskey”) and Watpac Construction (NSW) Pty Ltd v Austin Corp Pty Ltd [2010] NSWSC 347 (“Watpac”);

(b) the Queensland cases of James Trowse Constructions Pty Ltd v ASAP Plasterers Pty Ltd & Ors [2011] QSC 145 (“James Trowse”) and BM Alliance Coal Operations Pty Ltd v BGC Contracting Pty Ltd & Ors [2013] QCA 394 (“BM Alliance”); and

(c) the Western Australia case of Alliance Contracting Pty Ltd v James [2014] WASC 212 at [87] (“Alliance Contracting”).

I have considered each of these cases. None of them is authority contrary to the position which I have taken on severability.

I make three overarching points which touch on the decisions in all of these cases before I consider each case in turn.

The first overarching point I make is that in none of these cases did the claimant argue that the power at common law to quash a decision of an inferior tribunal in part could be exercised to quash an adjudicator’s determination in part. None of these case therefore considered – let alone rejected – the very point which the claimant canvasses before me and which I have accepted. To that extent, therefore, none of these cases is even persuasive authority that the common law power to quash in part does not apply to the court’s power to set aside an adjudication determination.

The second overarching point is that none of these Australian cases contemplates a situation such as the present, where an adjudicator exceeds his jurisdiction by determining a claim which he had no statutory authority whatsoever to determine. That was precisely the scenario which the English court had to consider in Greencoat ([147] supra) and Lidl ([147] supra). That is the type of case in which severance poses the least conceptual difficulty. For that reason, I consider the English approach to be more persuasive. I do not consider that purposes of the Act are advanced by denying outright any power to sever even in the straightforward case – such as a case involving a clear jurisdictional error like the one before me – simply because severance will be difficult and may be impossible in more complex cases. I consider that the purposes of the Act are advanced by recognising the common law doctrine of severance as applying to any application to set aside an adjudication determinations for jurisdictional error, subject to satisfying the tests of textual severability and substantial severability which have been set out.

The third overarching point is related to the first two. Each of these Australian cases proceeds on the assumption that – because adjudication is a creature of statute – a power to quash an adjudication determination in part must also be created by statute. That argument from statute has been addressed in the case before me by my finding that our power under our Act to set aside an adjudication determination is not a creature of statute at all; and also by my acceptance of the authority of Hutchinson ([122] supra) and Cantillon ([122] supra) at common law.

In my view, Vickery J in Gantley ([132] supra) took the correct approach to the question, albeit in the context of a payment claim rather than an adjudication determination. He too was presented with a submission that the court had no power to sever a payment claim because the Victorian security of payment legislation did not permit it. He did not hesitate to reject this submission as being contrary to the purposes and objects of security of payment legislation generally (at [115]):

The respondent submits that I should not place any weight on Gantley ([132] supra) because s 23(2B) of the Victorian security of payment legislation contains an express power to permit a court to set aside an adjudication determination in part, i.e. “to the extent that it has been made in contravention” of the Victorian equivalent of s 17(3) of the Act. That distinction is not, to my mind, to the point. The fact is that Vickery J held that the common law doctrine of severance applied to a payment claim because the Victorian legislation did not expressly or impliedly prohibit severance of a payment claim. So too, in the case before me, I have held that the common law doctrine of severance applies to an adjudication determination because the Act does not expressly or impliedly prohibit severance of an adjudication determination.

I will now deal with each of the Australian cases in turn.

Multiplex

In Multiplex ([173(a)] supra), Palmer J found that an adjudicator had made a jurisdictional error in relation to one item worth $99,609 in a determination worth over $529,000. He held, however, that the court had no power to dissect the adjudicated sum in order to quash the determination in part because arriving at the “adjudicated amount” was a duty imposed on the adjudicator by the NSW equivalent of s 17(2) of our Act (at [91]):

Having held that he had no power to sever the adjudication determination, however, Palmer J did not leave unresolved the practical problem which that finding gave rise to. He relied (at [94]) on the “well-established [principle] that relief in the nature of the prerogative writs may be withheld in the Court’s discretion if there is another ‘equally effective and convenient remedy’”. He declined, however, to exercise that discretion on the facts of the case because: (i) the amount in question was high, almost 20% of the total value of the determination; (ii) there was no evidence that the dispute was in the process of being resolved with full finality; and (iii) there was no evidence how long it would take for their dispute to be resolved with full finality. He accordingly quashed the determination in its entirety.

It appears to me, with respect, that the inevitable pragmatic difficulties which are posed by an adjudication determination which is valid in part and void in part are best resolved by accepting that the common law power to quash in part extends to adjudication determinations rather than by relying on the discretion to withhold the power to quash on the basis that there is an equally effective and convenient alternative remedy. Where an adjudication determination is void in part, i.e. affected by the first type of error in Chua Say Eng ([42] supra), it would be an affront to the scheme of the Act to exercise a discretion to withhold an order confirming that part as being void by quashing it. But it would, in my view, be equally an affront to the scheme of the Act to quash even the valid parts of a severable determination when a power exists at common law to quash only a part of it and when there is nothing in the Act to exclude that power.

Lanskey

In Lanskey ([173(a)] supra), a claimant put forward a payment claim which was final in nature. It was therefore essential that the adjudicator ascertain the value of the work which the claimant had actually completed. The respondent advanced 69 deductions in response to the payment claim. The adjudicator mischaracterised all 69 of the deductions as being in the nature of a set-off for defective work. In fact, a number of the deductions were not for defective work but were for incomplete work. These deductions totalled in value A$12,435.39 out of the determination’s total value of A$145,849.90. As a result of his mischaracterisation, the adjudicator failed to determine the value of the work completed. This error led Associate Justice Macready to hold that the adjudicator had denied the respondent natural justice (at [15]) and had failed exercise his power bona fide to determine the dispute before him (at [19]). The judge also held, following Palmer J’s reasoning in Multiplex ([173(a)] supra), that he had no power to sever the adjudication determination (at [20] – [22]).

Lanskey ([173(a)] supra) simply followed Multiplex ([173(a)] supra) without adding to Palmer J’s analysis. For the same reason I have given above, and in light of the three overarching points I have made about all the Australian cases, I do not consider that Lanskey is authority against the approach I have taken in this case.

Watpac

In Watpac ([173(a)] supra), McDougall J quashed an adjudication determination in its entirety even though a breach of natural justice affected only a part of it. In the course of his judgment he said this (at [27] – [29]):

The key point about Watpac ([173(a)] supra) is that it dealt with the difficult issue of a breach of natural justice. A breach of natural justice can be of many types and can have many consequences. Some breaches may affect the determination of every aspect of every dispute before the adjudicator. It must follow in such a case that the entire determination must to be set aside. Some breaches may affect only what is clearly a severable part of a determination. It suffices in such a case to sever and set aside only that part. Yet other breaches may affect a severable part of a determination but do so in a manner which suggests that the adjudicator misapprehended his entire task. It may follow, but not necessarily so, that the entire determination must be set aside. A further difficulty in analysing the difficulties in a breach of natural justice case is that the counterfactual analysis necessary to effect severance is far more complicated. That analysis carries a great risk of the court contributing to the content of the determination or of the court substituting its judgment for that of the adjudicator. It is for these reasons that I have left it to a case in which the issue actually arises for an error consisting of a breach of the rules of natural justice to be accommodated within the principles I have ventured to suggest at [155] above.

A jurisdictional error is of an entirely different nature. A jurisdictional error is far more likely to result in nullifying or invalidating only a severable aspect of the determination. The jurisdictional error in the case before me illustrates this. The part of the determination which is affected by the error is severable both as to liability and quantum. The counterfactual is obvious beyond doubt. What the adjudicator’s determination would have been if he had not fallen into jurisdictional error can be ascertained with absolute certainty. There is no danger of the court substituting its own decision on the content of the dispute for the adjudicator’s determination.

For all these reasons, therefore, it appears to me that Watpac ([173(a)] supra) is not persuasive authority against the approach I have taken.

James Trowse

In James Trowse ([173(b)] supra), an adjudicator determined that a claimant was entitled to A$167,522.32. The respondent applied for judicial review of the determination alleging that the adjudicator had made a number of errors. Atkinson J held that the determination was unaffected by error save that the adjudicator had breached the rules of natural justice in awarding the claimant A$22,101 for a particular variation claim. As a result, she quashed the entire determination, holding (at [56]) that severance was not possible under the Queensland security of payment scheme. She relied on s 26(1)(a) of the Queensland legislation – to the same effect for present purposes as s 17(2)(a) of our Act – to hold (at [57] – [59]) that the Queensland statute: (i) empowers and obliges the adjudicator to arrive at a single sum which by statute carries interim finality and bind the parties; and (ii) does not, in the absence of express statutory authority to that effect (as there was in Victoria), allow a Queensland court to dissect that sum:

I make only one point on James Trowse ([173(b)] supra) in addition to my three overarching points. Atkinson J herself accepted (at [55]) that her all-or-nothing approach was “not necessarily an attractive result”. That is why, no doubt, the Queensland security of payment legislation was thereafter amended by introducing a new s 100(4) which expressly empowers a Queensland court to set aside an identifiable part of an adjudicator’s decision on grounds of jurisdictional error while allowing the part of the decision not affected by the error to remain binding on the parties. There appears to me to be no reason that Singapore law should countenance such an unattractive result and wait for legislative cure when the common law power to quash in part offers an immediate solution and is not prohibited by our Act.

BM Alliance

The next case which the respondent relies on is the decision of Muir JA in the Queensland Court of Appeal in BM Alliance ([173(b)] supra). That was an appeal from a decision of Applegarth J at first instance (at [2013] QSC 67). In BM Alliance, a respondent applied for a declaration that an adjudication determination was void as a result of three jurisdictional errors. Applegarth J upheld only one of those three errors. That error affected a claim worth A$4.3m out of the total award of A$28m. Instead of declaring the entire determination void, however, Applegarth J accepted the claimant’s undertaking to repay the A$4.3m to the respondent as an adequate alternative remedy for the respondent. He therefore exercised his discretion to withhold certiorari to declare the entire determination void. The respondent appealed.

The Queensland Court of Appeal allowed the appeal and declared the entire determination to be void. Muir JA, giving the principal judgment, held that: (i) an administrative decision arrived at in jurisdictional error lacks legal foundation and has no legal effect whatsoever unless statute intends to the contrary (at [62] and [66]); (ii) there was no basis in the provisions of the Queensland statute or in its underlying purposes or policy to find such a contrary intent (at [68] and [76]); and (iii) the respondent therefore had a right to have the entire determination declared void and not just the A$4.3m tainted by jurisdictional error (at [77]).

BM Alliance ([173(b)] supra) is not a decision on the applicability of severance to adjudication determinations. Applegarth J’s decision at first instance did not sever the adjudication determination. Nor did Muir JA on appeal hold that adjudication determinations are not severable. Instead, the case turned on whether it is appropriate to exercise the court’s discretion to withhold prerogative relief even though jurisdictional error has been established, on the grounds that there is a more convenient and satisfactory remedy available to the respondent. The decision of the Queensland Court of Appeal reaffirms that the remedy of certiorari is to be withheld only in extraordinary cases. That is not the approach I have taken to the retention sum claim.

Alliance Contracting

In Alliance Contracting ([173(c)] supra), a claimant referred a number of disputes over variations to adjudication. The respondent raised a number of set-offs and cross-claims in its response. The adjudicator resolved the rival contentions and found that the net result was that the claimant owed the respondent the net sum of A$6.2m. But he held that he had no jurisdiction, on an adjudication commenced by a claimant, to award a sum against the claimant. He therefore determined merely that the claimant was not entitled to recover any sum from the respondent.

The respondent sought judicial review of the adjudicator’s determination. The respondent confined its challenge to the adjudicator’s determination that he had no jurisdiction to award a sum against the claimant. By doing that, the respondent sought to leave intact his determination that the claimant owed the respondent A$6.2m. Beech J in the Supreme Court of Western Australia held that: (i) the adjudicator was correct in determining that he had no power to award a sum against the claimant (at [75]); and (ii) that if the respondent were correct and the adjudicator had committed jurisdictional error, the entire determination would have to be quashed, there being no power to sever (at [91]).

Alliance Contracting ([173(c)] supra) does not support the respondent’s submissions to me. First, Beech J dismissed the application because the adjudicator had not been guilty of any jurisdictional error. What he said about severance was clearly and merely obiter. Second, what the respondent was trying to do in that case, rather audaciously, was not to sever the adjudicator’s decision along lines of divisible substance on the Hutchinson principles. Instead, the respondent was attempting to sever and nullify the adjudicator’s reasoning on a single issue: whether he had the power to award a sum against the claimant. As Beech J himself said (at [91]) the power of severance does not allow a party to cherry-pick favourable findings within even a divisible part of an adjudication determination (at [91]):

Conclusion on the Australian authorities

For the reasons I have given, I do not find the respondent’s submissions based on the Australian authorities to be persuasive. There is nothing in the Australian cases which demonstrates to me that I do not have the power to sever the determination or that I should not exercise the power to order that the determination be set aside in part, i.e. to the extent of the retention sum of $37,000 plus $2,590 goods and services tax, and upheld as to the remainder.

Conclusion

I conclude by repeating and summarising my holdings and findings. The applicant’s payment claim was based on a single contract. The adjudicator did not act in excess of jurisdiction in determining the payment claim. But the retention sum claim was not part of the payment claim. The adjudicator therefore exceeded his jurisdiction in purporting to determine the retention sum claim. That is an error of the first type in Chua Say Eng ([42] supra). That aspect of the determination is therefore a nullity. I have declined to permit the entire determination to stand by exercising my discretion to withhold the remedy of setting aside. But I do have the power to set aside a severable part of the determination rather than the entire determination. The determination of the retention sum claim is a severable part of the determination. It is both textually severable and substantially severable. Although some editorial adjustments are necessary to carry through the arithmetical consequences of the severance, those adjustments are permissible and do not detract from severability. I have therefore exercised the power to sever in order to set aside that part – and only that part – of the determination, comprising $37,000 plus $2,590 in goods and services tax.

The applicant is entitled to have released to it the sum of money which the respondent paid into court as security under s 27(5) of the Act. However, in ordering the release of that sum, I must reflect my decision to set aside the determination to the extent of the retention sum claim. The sum paid by the respondent into court has an element of post-determination interest calculated in accordance with the adjudicator’s determination. I cannot, therefore, simply order that the Accountant General release $37,000, with or without goods and services tax, to the respondent.

The retention sum claim ($37,000) represents 9.749% of the adjudicated amount ($379,539.80). I have therefore ordered the Accountant General to release to the respondent 9.749% of the sum which the respondent paid into court together with the further interest accrued on that part of the money while it has been held by the Accountant General. The balance of the sum paid into court by the respondent together with the further interest accrued on it must be released to the applicant.