JRP & Associates Pte Ltd v Kindly Construction & Services Pte Ltd

Chan Seng Onn J:

[2] On 20 November 2014, Kindly Construction paid into court a sum of $105,317.76 (being the Adjudicated Sum including GST). Kindly Construction now takes out Summons No 5789 of 2014 to set aside the Adjudication Determination and the AR’s Order.

[3] Kindly Construction was the main contractor of a project for the “Proposed Erection of 2-Storey Multi-user Motor Workshops at Kaki Bukit Avenue 2/Kaki Bukit Road (HDB Project)” (“the Project”). By a Letter of Intent dated 12 October 2012, Kindly Construction engaged JRP as the sub-contractor for the Project to carry out, inter alia, the “supply and installation of metal roofing system/roof gutters/translucent roof system and metal cladding system”. The quotation provided by JRP was $490,600.90 (“the Quotation Price”).

[4] The Project commenced. In the course of the Project, JRP made certain payment claims for progress payments in respect of work partially done and had issued four invoices. Kindly Construction paid JRP a total of $162,934.29 (“the Progress Payments”). The Project was delayed. The cause of the delay was disputed. The relationship between the parties soured, and on 6 August 2014, JRP stopped work. The Project was not completed at this point. On the same day, Kindly Construction wrote to JRP stating that they would engage other contractors to complete the work and would seek indemnification from JRP.

[5] On 29 August 2014, JRP submitted its payment claim for $222,647.92 to Kindly Construction pursuant to s 10 of the Act (“the Payment Claim”) for work done up till 6 August 2014. Kindly Construction sent its payment response (“the Payment Response”) on 12 September 2014, stating that no monies were due to JRP, but instead, it was JRP which owed Kindly Construction a sum of $220,009.37. On 19 September 2014, JRP lodged its adjudication application with an authorised nominating body, the Singapore Mediation Centre (“SMC”), pursuant to s 13(1) of the Act (“the Adjudication Application”). Kindly Construction received a copy of the Adjudication Application on 22 September 2014.

[6] SMC notified JRP, by a letter dated 25 September 2014, that the Adjudication Application had been assigned Adjudication Application Number SOP/AA292 of 2014 and Ong Ser Huan of Enkon International had been appointed as the adjudicator (“the Adjudicator”).

[8] The arguments raised by counsel for Kindly Construction to set aside the Adjudication Determination and the AR’s Order concern the conduct of the Adjudicator throughout the adjudication, and the manner in which he decided. It is thus useful to set out in detail the parties’ respective claims, the adjudication proceedings, and the decision of the Adjudicator.

[9] JRP claimed the sum in the Payment Claim for primarily two items. The first was for materials that remained on site which were to be used in connection with the Project. According to JRP, the value of these materials was $219,234.19. The second item was for the works that JRP actually did up till the time it stopped working on the Project. According to JRP, this amount was $246,470.78. From this amount, two deductions were necessary. First, was the amount for the Progress Payments. The second was the amount of $80,122.76 for certain materials on site. The outstanding amount from the two items after the various deductions was the sum stated in the Payment Claim (ie $222,647.92).

[10] Kindly Construction disputed the amount claimed by JRP on various grounds. In particular, it disputed the rates and measurements for quantification of claims for work done. It also asserted that JRP was double claiming in respect of materials on site because some of these materials had already been installed by JRP. In addition, Kindly Construction counterclaimed for various expenses including, inter alia, incomplete works eventually carried out by other sub-contractors, rectification works which had to be done due to JRP’s negligence, damages to materials on site which were caused by JRP’s negligence, and liquidated damages due to delays caused by JRP. According to Kindly Construction, the value of materials on site was $107,698.33. The value of work done by JRP was $189,113.54. The amount that ought to be deducted for incomplete works was $39,666.95. A further deduction of $263,160.00 was necessary for liquidated damages for delay caused by JRP. A deduction of $49,060.00 and $2,000.00 should also be made for a warranty of 10% of the Quotation Price, and for back charges for safety infringement by JRP, respectively. The final deduction to be made was for the Progress Payments. The total deduction to be made in favour of Kindly Construction’s was therefore $516,821.24, and the amount owed to JRP was $296,811.87. In sum, according to Kindly Construction, it was JRP which owed it $220,009.37.

[11] JRP’s Adjudication Application was made on 19 September 2014. This was in accordance with s 13 of the Act since the Payment Response was received on 12 September 2014.

[12] Kindly Construction, on the other hand, received a copy of the Adjudication Application on 22 September 2014. Under s 15 of the Act, Kindly Construction had until 29 September 2014 to lodge an adjudication response.

[13] On 25 September 2014, the Adjudicator issued Adjudicator’s Direction No 1 which stated that two adjudication conferences would take place on 29 September 2014 from 10.00 am to 7.00 pm, and on 30 September 2014 from 9.15 am to 6.15 pm.

[14] At the beginning of the adjudication conference on 29 September 2014, Kindly Construction’s solicitors highlighted to the Adjudicator that the adjudication had not commenced under s 16 of the Act. Section 16 provided that adjudication commences immediately upon the expiry of the period referred to in s 15(1) of the Act within which the respondent may lodge an adjudication response. This shall hereinafter be referred to as the “commencement of the adjudication”. According to Kindly Construction’s solicitors, this meant that the adjudication only commenced on the following day, 30 September 2014. The scheduled adjudication conference on 29 September 2014 began at 10am and ended early at 11.45am.

[15] Thereafter, on the same day, the Adjudicator issued Adjudicator’s Direction No 2, which stated that the meeting held earlier on 29 September 2014 was “agreed to be a Preliminary Meeting”, that the adjudication conferences would take place on 30 September and 1 October 2014, and that a site inspection would take place on 2 October 2014. On the same day, JRP’s solicitors requested for a vacation of the 30 September 2014 adjudication conference. The Adjudicator then issued Adjudicator’s Direction No 3 which stated that the adjudication conference would take place on 1 October 2014 and 10 October 2014 instead. In addition to the other directions in Adjudicator’s Direction No 2, Adjudicator’s Direction No 3 also stated that the Adjudication Determination would be made by 28 October 2014.

[16] Under s 17(1)(b) of the Act, the Adjudicator had to determine the adjudication application within 14 days of the commencement of the adjudication or “within such longer period as may have been requested by the adjudicator and agreed to by the claimant and the respondent.” Therefore, if the parties did not agree to any request of the Adjudicator to extend the period within which he was to render his Adjudication Determination, he had to determine the matter by 14 October 2014. This meant that after the completion of the Adjudication Conference on 10 October 2014, the Adjudicator would have only 4 days to render his Adjudication Determination.

[17] On 30 September 2014, Kindly Construction’s solicitors wrote to the Adjudicator clarifying that their clients had not agreed to any extension of time to render the Adjudication Determination.

[18] After the adjudication conference on 1 October, the site visit on 2 October, and the adjudication conference on 10 October 2014, the Adjudicator immediately issued Adjudicator’s Direction No 4, which directed both parties to submit their final submissions by 11am on 11 October 2014. Adjudicator’s Direction No 4 expressly stated that this was to meet Kindly Construction’s request to meet the deadline of the Adjudication Determination (ie 14 October 2014) agreed by both parties.

[20] The Adjudication Determination was subsequently rendered by the Adjudicator on 14 October 2014, and served on both parties. On 21 October 2014, Kindly Construction’s solicitors wrote to SMC again to raise objections to the Adjudicator’s fees which it argued were excessive and not commensurate for a matter of the scale that was before him.

[21] The Adjudicator noted that both parties had complied with all the timelines provided in the Act including the Payment Claim, the Adjudication Application, and the Payment Response. He further noted that a “Preliminary Meeting” was held on 29 September 2014, where all parties agreed that adjudication conferences would be held on 30 September and 1 October 2014.

[22] The Adjudicator explained that the “Preliminary Meeting” was for “all parties to meet, to plan for the schedule of the sessions and for [him] to gain a better understanding of the matter before the commencement of the Adjudication Conference.”

[23] Next, the Adjudicator detailed that he acceded to the request from JRP’s solicitors to adjourn the adjudication conference on 30 September 2014, and he re-fixed it to the next available date on 10 October 2014. The Adjudicator then went on to state that “[d]espite the granted adjournment, [Kindly Construction] however requested that the original Adjudication Determination date was to stay.”

[24] According to the Adjudicator, the site inspection carried out on 2 October 2014 was done in order to obtain a “balanced view” given the wide disparity between the positions taken by each party at the adjudication in relation to the site condition.

[27] As for the counterclaim by Kindly Construction for items mentioned above at [10], the Adjudicator found that both parties did not provide adequate substantiation on the issues. He therefore concluded that “the Liquidated Damages, warranty and other set-off and back charges as put up by [Kindly Construction] [were] beyond the ambit of the present Adjudication”.

[28] In arriving at the Adjudicated Sum, the Adjudicator deducted the Progress Payments from the amount he determined Kindly Construction owed JRP (see [26] above). He then concluded by making the orders mentioned in [7].

[29] Kindly Construction’s arguments to set aside the Adjudication Determination and the AR’s Order can be summarised as follows:

(a) The Adjudicator exceeded his powers under the Act by calling for an adjudication conference on 29 September 2014, before the commencement of the adjudication.

(b) The Adjudicator failed to comply with the principles of natural justice. Certain remarks made by the Adjudicator during the course of the adjudication displayed apparent bias. The Adjudicator deliberately attempted to restrict and hinder Kindly Construction’s preparation of its adjudication response. The Adjudicator failed to give the parties an equal opportunity to submit during the adjudication conference.

(c) The Adjudicator failed to comply with the principles of natural justice because he did not afford the parties an opportunity to address him on the method of valuation that was utilised in reaching his decision on the matter.

(d) The Adjudicator breached his duty to avoid incurring unnecessary expense. The Adjudicator should not have called for an adjudication conference on 29 September 2014 since the adjudication had not yet commenced. The Adjudicator’s fee of $20,000 (excluding GST) was not commensurate with a matter of the current scale. The third adjudication conference on 10 October 2014 was also not necessary since it was a rehashing of the same arguments made at the second adjudication conference on 1 October 2014. The site visit was also not necessary since it served no practical use and only served to increase costs.

[30] On the other hand, JRP’s arguments against setting aside the Adjudication Determination and the AR’s Order can be summarised as follows:

(a) The Adjudicator had the power to call for an adjudication conference on 29 September 2014. Furthermore, the adjudication conference on 29 September 2014 did not adversely affect the quality of Kindly Construction’s adjudication response since the meeting only lasted one hour and 45 minutes.

(b) The Adjudicator did not display apparent bias and thus the principles of natural justice were observed. The remarks of the Adjudicator were taken out of context. The adjudication conference was conducted in a fair manner, on an issue-by-issue basis, and parties were treated equally. In any event, the remarks were insufficient to show that there was apparent bias on the part of the Adjudicator. Furthermore, the final sum awarded by the Adjudicator was considerably less than the sum actually claimed by JRP. This also showed that there could not have been bias on the part of the Adjudicator.

(c) There was also no breach of natural justice because the Adjudicator did not go on a frolic of his own. The decision of the Adjudicator was based on evidence that was placed before him. The Adjudicator’s decision was based entirely on the parties’ agreement, with generous discounts given in favour of Kindly Construction. The Adjudicator’s application of broad-brush estimates and discounts was justified by the fast paced, interim nature of adjudication under the Act.

(d) All three conferences and the site visit were necessary. Each conference and the visit had specific purposes in order to resolve the dispute between the parties. Even on the assumption that the Adjudicator did incur unnecessary costs, this would not be a ground for setting aside the Adjudication Determination.

[31] The issues that have to be determined in the present case are:

(a) Did the Adjudicator act in excess of his powers in calling the 29 September 2014 meeting? If so, what are the consequences that follow?

(c) Did the Adjudicator fail to comply with natural justice by not providing the parties with an adequate opportunity to be heard when he decided on the amount due to JRP?

[32] Before dealing with the issues, it would be useful to set out the policy and purpose behind the Act, together with some general observations. Any decision on the specific issues before me would have to be made against the backdrop of the policy and purpose of the Act.

[34] The whole process of adjudication under the Act is characterised by strict time-lines (Terence Lee at [4]). As borne out by the passage above, even the adjudicator is constrained to render a quick decision. Any shortcomings of this quick and speedy approach can be countenanced only because the adjudicator’s decision is accorded temporary finality. It does not finally dispose of the rights of the parties.

[35] A respondent who is dissatisfied with the result of the statutory adjudication under the Act has the right, pursuant to s 18, to apply for an adjudication review. However, the respondent has to do so within seven days after the adjudication determination is served on him (s 18(2)). The respondent may not lodge an application for adjudication review until he has paid the adjudicated amount to the claimant (s 18(3)).

[36] The court thus has a limited role when it comes to setting aside an adjudication determination made under the Act given the speedy and economical nature of the adjudication procedure. The court’s role is not to look into the parties’ arguments before the adjudicator and determine for itself whether the adjudicator arrived at the correct decision (see SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733 at [41] (“SEF Construction”)).

[37] In SEF Construction, Judith Prakash J further distilled the court’s role in the context of setting aside an adjudication determination under the Act. She described it as follows:

[38] Although the list provided by Prakash J seems to be exhaustive of the situations in which the court may set aside an adjudication determination, the Court of Appeal in Terence Lee explained that there may be other grounds on which a court would set aside an adjudication determination:

[39] Therefore, the touchstone for determining if an adjudication determination should be set aside for breach of a provision or provisions under the Act is whether the provision or provisions breached are so important that it is the legislative purpose that an act done in breach of the provision or provisions should be invalid. The list of situations provided in SEF Construction in which a court may set aside an adjudication determination, although not exhaustive, still serves as a useful guide.

[40] With these general observations in mind, I now turn to the specific issues.

Did the Adjudicator act in excess of his powers in calling the 29 September 2014 meeting? If so, what consequences are to follow?

[42] Counsel for Kindly Construction relies on the decision in Quanta Industries to argue that the Adjudication Determination should be set aside since the Adjudicator had acted in excess of the powers conferred by the Act when he called for an adjudication conference on 29 September 2014, before the commencement of the adjudication.

[43] As mentioned above at [14], the adjudication was to commence on 30 September 2014. Prior to that, Kindly Construction had seven days to lodge an adjudication response, which was due by 29 September 2014. The Adjudicator was seized of jurisdiction on 25 September 2014, when he was appointed by SMC pursuant to s 14(1) of the Act (Chia Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd [2010] 1 SLR 658 at [54]). Once an adjudicator has been appointed, he can issue directions and orders in relation to the adjudication as long as the directions and orders are in compliance with the Act. Under s 16(4)(a), an adjudicator may conduct the adjudication in such manner as he thinks fit. Section 16(4)(e) confers on an adjudicator the power to call a conference of the parties. Section 16(6) provides that the parties “shall comply with any requirement made or direction issued by the adjudicator in accordance with this section”.

[44] While one reading of s 16(4) may suggest that an adjudicator has the power to call for a conference of the parties at any time, I am of the view that the powers that an adjudicator has to call a conference of the parties to deal with substantive matters (and not purely administrative matters) in relation to an adjudication must necessarily be tied to the commencement of the adjudication. I shall elaborate on this.

[45] The timelines provided under the Act are extremely short, and non-compliance with the timelines may be detrimental to the parties. If an adjudicator were to call a full-day conference to deal with substantive matters in relation to the adjudication before the time afforded to a respondent to file an adjudication response under the Act has expired, this would, in substance, shorten the seven days under the Act to lodge an adjudication response because a respondent would be pressured to file its adjudication response earlier so as to be in time for the adjudication conference. In my view, it cannot be the intention of the Act that an adjudicator has the power to shorten indirectly the already short time-period of seven days afforded to a respondent to lodge an adjudication response. Furthermore, it would not be fair and may well amount to a breach of natural justice for an adjudicator to go ahead and deal with substantive matters at the adjudication conference before a respondent has managed to lodge its adjudication response and before an adjudicator is even aware of what the respondent’s response is going to be, should the respondent fail to file its adjudication response in time for the adjudication conference. Therefore, an adjudicator does not have the power to call for an adjudication conference, to be held before the commencement of the adjudication, to deal with substantive matters in relation to the adjudication.

[47] On the facts of the present case, I am not persuaded by the Adjudicator’s re-labelling of the adjudication conference on 29 September 2014 as a “Preliminary Meeting”. It was clearly intended to be an adjudication conference to deal with substantive matters. Adjudicator’s Direction No 1 stated that the meeting on 29 September 2014 was to be held from 10am to 7pm. I cannot imagine that the “Preliminary Meeting”, which according to the adjudicator was held in order for “all parties to meet, to plan for the schedule of the sessions and for [him] to gain a better understanding of the matter before the commencement of the adjudication conference”, was envisaged to last a whole day.

[48] It was only after the objection of the solicitors for Kindly Construction that the Adjudicator decided to limit the 29 September 2014 conference to purely administrative matters. The Adjudicator adjourned the conference after an hour and 45 minutes and subsequently relabelled it as a “Preliminary Meeting”. The Adjudicator must have realised during the 29 September 2014 adjudication conference that he had made a mistake by ordering a full day adjudication conference on substantive matters to be held on the day before the commencement of the adjudication.

[49] As can be seen from the further directions given in Adjudicator’s Directions No 1 and 2, the Adjudicator had, from the very beginning, decided to set aside two full days for the adjudication conference in order to deal with substantive matters and had intended the first day to be on 29 September 2014. I therefore find that by directing and ordering the adjudication conference to take place on 29 September 2014 through Adjudicator’s Direction No 1 in order to deal with substantive matters, the Adjudicator had, technically, acted in excess of his powers under the Act. Notwithstanding this, I am of the view that the Adjudication Determination should not be set aside on the basis of this technical breach. It must be pointed out that upon receiving the objections of Kindly Construction, the Adjudicator did not proceed to deal with any substantive matters at the adjudication conference to the prejudice of Kindly Construction. At that point in time, Kindly Construction had yet to file its adjudication response since the time allowed under the Act for filing the adjudication response had not expired.

[50] In Quanta Industries, the adjudicator acted in excess of his powers when he ordered that the claimant pay the respondent a certain sum. He acted in excess of his powers in relation to an order which related to the very heart of the adjudication determination. The situation is patently different here. The Adjudicator had merely acted in excess of his power by calling a substantive adjudication conference before the statutorily stipulated date of commencement of the adjudication. When objections were raised, the Adjudicator decided not to deal with any substantive matters but only dealt with purely administrative matters. After this, two other full day adjudication conferences were legitimately called, ie, to be held after the statutorily stipulated date of commencement of the adjudication. While the adjudication determination made in excess of the adjudicator’s powers in Quanta Industries should be set aside, the same cannot be said of the present case, where the Adjudicator had only technically acted in excess of his powers by calling a substantive adjudication conference before the commencement of the adjudication under the Act. It must again be stressed that the Adjudicator realised his mistake during the 29 September 2014 meeting and did not deal with any substantive matters in relation to the adjudication. To adopt the language of the Court of Appeal in Terence Lee, the mere calling of an adjudication conference in excess of an adjudicator’s powers to deal with substantive matters, even if done in breach of s 16, is not a breach which is so important that it is the legislative purpose of the Act that the Adjudication Determination should be declared invalid.

[51] I therefore find that the Adjudication Determination should not be set aside on the ground that the Adjudicator had acted in excess of his powers under the Act by merely calling an adjudication conference to deal with substantive matters on 29 September 2014, before the statutorily stipulated date of commencement of the adjudication.

[52] Counsel for Kindly Construction also argues that the Adjudicator had displayed apparent bias when making the Adjudication Determination. If an adjudicator fails to act independently, impartially, or fails to comply with the principles of natural justice in accordance with s 16(3) of the Act, an adjudication determination will be set aside by the court (see SEF Construction at [45(f)] reproduced above at [37]).

[53] The rules of natural justice require that the Adjudicator act without bias—actual or apparent. The submissions by counsel for Kindly Construction focus on the conduct and certain remarks of the Adjudicator, which she argues show that the Adjudicator had displayed apparent bias. The test for apparent bias is set out in Re Shankar Alan s/o Anant Kulkarni [2007] 1 SLR(R) 85 at [76]. The test is whether a reasonable and fair-minded person knowing all the relevant facts would have a reasonable suspicion or apprehension that a fair trial for the party concerned is not possible. I will now deal with each of the allegations made against the Adjudicator which, according to counsel for Kindly Construction, displays apparent bias.

[54] Counsel for Kindly Construction submits that the Adjudicator had deliberately attempted to restrict and hinder Kindly Construction’s preparation of its adjudication response by holding the 29 September 2014 meeting before the commencement of the adjudication. I find that this is not made out by the evidence. As I have mentioned above at [49], it is likely that the Adjudicator made a mistake by calling the 29 September 2014 adjudication conference before the commencement of the adjudication. I find no support for the bare allegation that the conference was called to deliberately sabotage Kindly Construction’s preparation of its adjudication response.

[55] Counsel for Kindly Construction also highlights the fact that during the presentation of arguments by Kindly Construction, the Adjudicator constantly interrupted Kindly Construction to seek JRP’s clarification. It was only when Kindly Construction’s solicitor insisted that she be allowed to argue before JRP was entitled to respond, did the Adjudicator stop seeking JRP’s clarification. I find that this fact is not very material. An adjudication conference is not a hearing. Moreover, under s 16(4)(a), an adjudicator may conduct the adjudication in such manner as he thinks fit. Counsel for JRP submits that the adjudication was conducted on an issue-by-issue basis, where one party would make submissions on an issue, after which, the other party would be given an opportunity to respond. The Adjudicator is perfectly entitled to carry on the adjudication conference in such a manner. The Adjudicator’s constant interrupting of Kindly Construction’s solicitor by seeking clarification from JRP would not create a reasonable suspicion or apprehension of bias in the mind of a reasonable and fair-minded person. I agree with the submission of counsel for JRP that this allegation of bias by Kindly Construction is self-perceived and a clear afterthought in its bid to avoid payment.

[56] Next, counsel submits that the Adjudicator had responded to Kindly Construction’s arguments against the holding of the 29 September 2014 meeting by stating, “I am the master of the proceedings”. I find that this statement is neutral in its effect. As mentioned in the preceding paragraph, s 16(4)(a) states that an adjudicator may conduct an adjudication in such manner he thinks fit. In this regard, he is the master of the proceedings. Again, I fail to see how this leads to the conclusion that a reasonable and fair-minded person would entertain a reasonable suspicion or apprehension of bias.

[57] Counsel for Kindly Construction next points to certain remarks made by the Adjudicator against Kindly Construction, which she argues display his unhappiness (and thus apparent bias) at Kindly Construction’s refusal to agree to an extension of time for him to determine the adjudication under s 17(1)(b) of the Act. Counsel for Kindly Construction submits that she was harassed for 45 minutes during the 1 October 2014 meeting to agree to an extension. The submissions in relation to the specific remarks made by the Adjudicator and their effects are as follows:

(a) The Adjudicator said “there is a need to have mutual empathy” which according to Kindly Construction, insinuated it had none;

(b) The Adjudicator asked “Is this reasonable?”, referring to Kindly Construction’s objection to the extension of time to render the Adjudication Determination;

(c) The Adjudicator said that Kindly Construction was pressurising him and his whole schedule was upset; and

(d) The Adjudicator made a veiled threat when he asked, “Do you really want to start off the adjudication by making it so difficult”.

[58] Counsel for Kindly Construction also refers to the Adjudicator’s Direction No 4 which directed that “… [i]n order to meet the Respondent’s request to meet the dateline [sic] of the Adjudication Determination….the Final Submission by both parties … shall be by 11.00 am on 11 October 2014”. Finally, counsel points to a line in the Adjudication Determination itself which reads, “[d]espite the granted adjournment, the Respondent however requested that the original Adjudication Determination date was to stay”. According to counsel for Kindly Construction, the Adjudicator was implying that Kindly Construction was being unreasonable.

[59] Taking Kindly Construction’s case at its highest, and considering the effect of all of these statements as a whole, I do not see how apparent bias is made out. While some of the statements do point to unhappiness on the part of the Adjudicator because Kindly Construction did not agree to any extension of time for the Adjudicator to render his Adjudication Determination, most of the statements are neutral. In fact, nothing much can be inferred from the statements described in [57]–[58]. I do not agree with Kindly Construction’s strained interpretation of these phrases. Under s 17(b) of the Act, an adjudicator can only have more than 14 days from the commencement of the adjudication to render a determination if he requests for an extension and the parties agree. The starting point must be that whenever a request by an adjudicator is denied by one party, it does not automatically lead to apparent bias. This is in spite of the fact that some unhappiness is to be expected on the part of the Adjudicator when his request is turned down. In the present case, I find that the statements made by the Adjudicator do not establish more than this general unhappiness. I do not think this is sufficient to establish apparent bias leading to a breach of the rules of natural justice. In other words, looking at all the relevant facts, a reasonable and fair-minded person would not harbour a reasonable suspicion or apprehension of bias on the part of the Adjudicator against Kindly Construction.

[60] I thus find that the Adjudicator did not breach his duty to comply with the principles of natural justice. His acts do not raise a reasonable suspicion or apprehension of bias in the mind of a reasonable and fair-minded person, such that it can be said to be a breach of natural justice.

Did the Adjudicator fail to comply with natural justice by not providing parties with an adequate opportunity to be heard when he decided on the amount due to JRP?

[61] Counsel for Kindly Construction also argues that the Adjudicator had failed to comply with natural justice as he used a method of valuation which was not canvassed by the parties, and did not provide the parties an opportunity to submit or respond to the methodology used.

[62] I have already set out in detail, above at [25]–[26], the method used by the Adjudicator. I do not propose to do so again. It is not disputed that the method used by the Adjudicator was not argued or suggested by any party. The argument raised by counsel for Kindly Construction is one based on a breach of natural justice, and not on any error in the Adjudicator’s methodology or his decision on the merits. This is rightly so, given that it is not within the purview of this court to evaluate the merits, robustness, reliability or accuracy of the valuation method used by the Adjudicator. I must emphasise that it is not for the court (a) to analyse whether the Adjudicator had used an appropriate method of computation; or (b) to set aside the Adjudication Determination simply because the court is of the view that the Adjudicator’s method is not appropriate or is incorrect (see SEF Construction above at [36]).

[63] In Primus Build Limited v Pompey Centre Limited, Slidesilver Limited [2009] EWHC 1487 (“Primus”), the claimant’s claim for loss of profit was based on a 3% construction and management fee percentage identified in the contract. The defendants raised many points in opposition to the claim, including a submission that the 3% fee did not represent the claimant’s actual loss of profit. The adjudicator awarded the claimant 1.3%, which was a figure he calculated from the profit to sales ratio identified in the set of the claimant’s accounts which had been provided by the claimant. It was not a percentage that was expressly stated in the accounts. The defendants argued, inter alia, that this was in breach of natural justice since it was based on an approach neither side had raised, and was a basis of claim which the adjudicator had not given the parties a chance to deal with. The court held that the adjudicator was obliged to go back to the parties with his new calculation. The court reasoned that the adjudicator had rejected the entire approach advanced by Primus which was based on the 3% identified in the contract. According to the court, the adjudicator had agreed with the defendant’s principal case that proof of actual loss was required. In the circumstances of the case, the adjudicator had filled up gaps in the claimant’s case without any reference to the other side. The court explained as follows:

[64] In Balfour Beatty Construction Ltd v The London Borough of Lambeth [2002] EWHC 597 (“Balfour Beatty”), the adjudicator had, with the help of his own programming expert, provided a method to determine the critical path of the contract (a path of execution that is most significant and critical to establish the time needed to complete the works) without providing the defendant an opportunity to voice its views on the method. The court, in dismissing the application to enforce the adjudicator’s decision, explained as follows (at [33]):

The court in Primus had stated that the adjudicator in Balfour Beatty had been criticised for filling in the gaps in the claimant’s case without affording the other party an opportunity to respond.

[65] In Herbosh-Kiere Marine Contractors Limited v Dover Harbour Board [2012] EWHC 84 (“Herbosh-Kiere”) the court declined to enforce an adjudicator’s decision on the basis that the adjudicator had breached the rules of natural justice by deciding the case on a basis not argued by either party at any stage, and without giving the opportunity to each party to make submissions on the method adopted to resolve the dispute. The parties had made submissions on the basis that individual contract resource rates would be applied to determine the delay for each individual resource in order to decide the final account between the parties. However, the adjudicator had applied a composite overall rate for all resources to determine the delay. By not allowing the parties to address him on this methodology, the adjudicator had breached the rules of natural justice.

[66] In Joseph Musico (aka Giuseppe Musico) and Ors v Philip Davenport and Ors [2003] NSWSC 977, the Supreme Court of New South Wales, in the context of the Building and Construction Industry Security of Payment Act 1999 (which is in pari materia with the Act), made the following observations:

[67] Locally, in the context of arbitration proceedings, an arbitrator is entitled to embrace a middle path in making a determination as long as it is based on evidence that is before the arbitrator. The arbitrator is not bound to adopt an either/or approach. In Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR 86 (“Soh Beng Tee”), the Court of Appeal distilled several principles in the context of arbitration proceedings, which are relevant for the present purposes. They are as follows:

[68] In AQU v AQV [2015] SGHC 26 (“AQU v AQV”), the party seeking to set aside the arbitration award argued that there was a breach of natural justice because the arbitrator had radically departed from the position taken by the other party in its pleadings and submissions when the arbitrator found that “there was an oral agreement in April 2008, which was formalised by way of Annotation on 20 May 2008” (at [14]). Prakash J, in dismissing this argument, explained the applicable principles as follows:

[69] The principles that emerge from the preceding discussion of the cases are clear. An adjudicator should not fill in gaps or fundamental deficiencies for the claimant after rejecting an approach or claim advanced by the claimant, without first giving an opportunity to the other side to respond to the proposed method (Primus at [39] and Balfour Beatty at [33]). He should not make bricks without straw (Soh Beng Tee at [64]). The adjudicator should not find “a method of assessment which formed no part of the dispute referred to him” without giving each party an opportunity to make submissions (Herbosh-Kiere at [27] and [34]). However, an adjudicator can, without being in breach of the rules of natural justice, adopt a middle path between the parties, or come to his own conclusions or inferences from the primary facts and evidence placed before him in making his decision. He is not compelled to adopt an either/or approach (Soh Beng Tee at [64]) as long as he arrives at a conclusion which reasonably flows from the parties’ arguments (AQU v AQV at [18]). At the end of the day, this is always a matter of fact and degree (Primus at [40]).

[70] Further, in my opinion, considerable latitude should be given to adjudicator who makes an adjudication determination under the Act. Section 17(1) provides as follows:

As is immediately apparent, the timelines given to an adjudicator to make a determination are tight. This is in line with the purpose of the Act which is to facilitate cash flow by providing a swift and effective adjudication mechanism. An adjudicator should not be subject to allegations of breach of natural justice as long as he makes a determination which reasonably flows from the parties’ arguments, and his conclusions or inferences are drawn from the primary facts and evidence placed before him. The rules of natural justice must be applied in the context of the Act, and in particular, the need for a quick method of adjudication to facilitate cash flow (see Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd [2008] SGHC 159 at [84], cited with approval in Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd [2010] 1 SLR 658 at [23] and by the Court of Appeal in WY Steel at [28]). In Primus, Coulson J said (at [29]):

Any deficiency in the reasoning or methodology of the adjudicator is tolerable because of the concept of temporary finality. The parties are at liberty to seek a fuller ventilation of their arguments regarding the dispute at another more thorough and deliberate forum (see WY Steel at [22]).

[71] In this case, I find that the Adjudicator had made the Adjudication Determination from the primary facts and evidence that were before him, and the Adjudication Determination reasonably flowed from the parties’ arguments. He did not fill up any fundamental deficiencies in the claimant’s case. The Adjudicator was appointed to decide the sum of money owed by Kindly Construction to JRP for materials on site and for work done up till 6 August 2014. He was not appointed to determine if JRP’s method or Kindly Construction’s method of valuation was correct. To my mind, framing the dispute in such a manner is too narrow.

[73] Before I leave this point, I must add that JRP had claimed a total of $222,647.92 after deducting the Progress Payments of $162,934.29. In response, Kindly Construction contended that the valuation for materials and the partial work done was $296,811.87. On Kindly Construction’s own valuation, the amount due to JRP after deducting the Progress Payments would be $133,877.58. As it turned out, the Adjudicated Sum came out to be only $98,427.81. This is in fact $35,449.77 less than what Kindly Construction contended it owed to JRP for the materials provided and work done. The Adjudicator thus used a conservative method which turned out favourably for Kindly Construction. Oddly enough, it is Kindly Construction which seeks to set aside the Adjudication Determination on the basis that it was not given an opportunity to submit or respond to the method used by the Adjudicator when it is manifestly apparent the conservative method adopted was in its favour. This argument is plainly an opportunistic attempt to get around the deficiencies in the substantiation of Kindly Construction’s own counterclaim, which was dismissed by the Adjudicator, and thus avoid paying JRP the Adjudicated Sum. In any event, as explained above, this argument of Kindly Construction leaves no favourable impression on me.

[75] In SEF Construction, Prakash J said at [46]:

I am in full agreement with the above passage. To use the touchstone provided in Terence Lee, the duty to avoid incurring unnecessary expense is not one which is so important that it is the legislative purpose of the Act that an adjudication determination made in breach of such a duty should be declared invalid.

[78] Therefore, I dismiss Kindly Construction’s application in Summons 5789 of 2014 in its entirety. The AR’s Order is to remain and the money paid into court by Kindly Construction is to be released to JRP.