Sentosa Building Construction Pte Ltd v DJ Builders & Contractors Pte Ltd

Colin Seow AR:

[1] “This is a case of much interest to practitioners. It concerns the effect of an order which has been drawn up and expressed to be “by consent””. Those were the opening words of Lord Denning MR in his leading judgment in Siebe Gorman & Co Ltd v Pneupac Ltd [1982] 1 WLR 185 (“Siebe Gorman”) – and words indeed which are about to be echoed yet again by this court nearly three and a half decades later, thousands of miles away from the courts of England and Wales.

[2] The parties are companies incorporated in Singapore. Sentosa Building Construction Pte Ltd (“the Plaintiff”) is a general contractor whose principal activities are building construction, including major upgrading works, and renovation works. DJ Builders & Contractors Pte Ltd (“the Defendant”) is a building and construction contractor.

[3] The Plaintiff has taken out an application to set aside an Order of Court (“ORC 7785/2014”), expressed to be made “by consent” before an Assistant Registrar (“the AR”) in Originating Summons No 920 of 2014 (“OS 920/2014”). ORC 7785/2014 reads as follows:

[4] The undisputed facts leading to ORC 7785/2014 can be summarised as follows.

[5] The Plaintiff was contractually engaged by the Defendant in 2012 to carry out certain works for a residential construction project undertaken by the Defendant. A dispute subsequently arose between the parties in relation to certain alleged overdue payments for the Plaintiff’s work done under its contract with the Defendant.

[6] The dispute between the parties eventually culminated in the Plaintiff lodging Adjudication Application No SOP/AA148 of 2014 (“the Adjudication Application”) on 2 May 2014 with the Singapore Mediation Centre (“SMC”) pursuant to the provisions of the Building and Construction Industry Security of Payments Act (Cap 30B, 2006 Rev Ed) (“the SOPA”). The Adjudication Application was served by the SMC on the Defendant on 5 May 2014. On 29 May 2014, an adjudicator (“the Adjudicator”) issued an Adjudication Determination dated 28 May 2014, in the Defendant’s favour.

[7] On 9 June 2014, the Plaintiff filed Originating Summons No 170 of 2014 (“OSS 170/2014”) in the State Courts, seeking an order on the following prayers:

[8] In the affidavit supporting the application in OSS 170/2014, the Plaintiff argued that the Adjudication Determination should be set aside because, inter alia:

[9] OSS 170/2014 was later transferred to the High Court upon the Plaintiff’s application in Originating Summons No OS 755 of 2014, thereby giving rise to OS 920/2014 which contained prayers identical to those set out in OSS 170/2014 (see [7] above). OS 920/2014 was fixed for hearing on 20 November 2014 before the AR.

[10] At the hearing of OS 920/2014, the AR granted, inter alia, a “by consent” order-in-terms of the first prayer in OS 920/2014. It is not disputed that the AR had granted the order as such after the parties drew the AR’s attention to a report of a Complaints Panel in the SMC released on 5 August 2014 finding the Adjudicator to be in breach of the principles of natural justice as alleged by the Plaintiff (see [8] above). The report of the Complaints Panel was issued following a complaint lodged earlier by the Plaintiff against the Adjudicator for his alleged conduct in arriving at the Adjudication Determination.

[11] The originating process which began in OSS 170/2014 and later transferred to OS 920/2014 thus concluded in those circumstances.

[12] Thereafter, convinced that the order of the AR in OS 920/2014 would warrant a full refund of the Adjudicator’s fee in respect of the Adjudication Application, the Plaintiff’s solicitors forwarded a copy of ORC 7785/2014 to the SMC by way of an email dated 24 November 2014, requesting a full refund of the Adjudicator’s fee in the sum of $4,815.00.

[13] On 25 November 2014, the SMC responded to the Plaintiff’s solicitors by way of an email, seeking clarification as to the provision of the SOPA upon which the request for the refund was being sought, given that ORC 7785/2014 on its face stated that the Adjudication Determination had been set aside “by consent of the parties”.

[14] The Plaintiff’s solicitors replied with a fairly detailed explanation to the SMC by email on 3 December 2014, stating as follows:

[15] To this, the SMC responded by way of an email on 9 December 2014, rejecting the Plaintiff’s request for the refund of the Adjudicator’s fee. The material parts of the SMC’s response read as follows:

[16] This eventually led to the filing of the present application by the Plaintiff on 22 January 2015 in Summons No 352 of 2015 (“the Application”), wherein the Plaintiff prayed for the following:

[17] For completeness, section 17(1)(b) of the SOPA, which is referred to in prayer 3 of the Application, states as follows:

[18] The Application came before me for hearing on two separate dates, during which counsel – to their credit – addressed me extensively on their submissions on the relief sought by the Plaintiff. Judgment was reserved, and I now render my decision with the grounds attached.

[19] In essence, the Plaintiff’s ultimate goal in taking out the Application is to obtain a court order that would guarantee the Plaintiff’s refund of the Adjudicator’s fee pursuant to section 31(2) of the SOPA which provides:

[20] In order to achieve that outcome, the Plaintiff would necessarily have to succeed in the following two important regards which in turn define the issues to be disposed of in this court:

(a) firstly, to have ORC 7785/2014 set aside (“the first threshold”); and

(b) in addition to the first threshold, to make good its case before this court that the Adjudicator had indeed failed to determine the Adjudication Application pursuant to section 17(1)(b) of the SOPA which required the Adjudicator to determine the Adjudication Application “within 14 days after the commencement of the adjudication” (“the second threshold”) (see [17] above).

[21] It is trite that a consent judgment or consent order is generally binding and cannot be set aside save for exceptional reasons (see Poh Huat Heng Corp Pte Ltd and others v Hafizul Islam Kofil Uddin [2012] 3 SLR 1003 (“Poh Huat Heng Corp”) at [18]). However, it has also been accepted that genuine issues may arise as to whether a consent judgment or consent order is in truth “a consent order of a “no objection” kind” or “a binding contract type of consent order” (see Bakery Mart Pte Ltd v Ng Wei Teck Michael [2005] 1 SLR(R) 28 (“Bakery Mart”) at [13]), with the implication that a consent order of the former type may arguably be set aside on relatively wider grounds.

[22] The distinction between “a consent order of a “no objection” kind” and one which is of “a binding contract type” has its roots tracing back to Siebe Gorman (see [1] above), where the English Court of Appeal essentially held that despite their terminology, orders expressed to be made “by consent” are not invariably orders born out of a “real contract” between the parties concerned (per Lord Denning MR at 189F):

[23] The case of Siebe Gorman has been reported in the Singapore Law Reports as having been followed in several local decisions, such as Poh Huat Heng Corp (see [21] above), Wiltopps (Asia) Ltd v Drew & Napier [1999] 1 SLR(R) 252 (“Wiltopps”) and Wellmix Organics (International) Pte Ltd v Lau Yu Man [2006] 2 SLR(R) 117 (“Wellmix”), although I should note that in Poh Huat Heng Corp at [18], the Court of Appeal held as follows:

[24] At first blush, it would appear that the italicised words in the quoted passage above run counter to the maintaining of a distinction between “a consent order of a “no objection” kind” and “a binding contract type of consent order”. However, as is patent in the same quote, the Court of Appeal in Poh Huat Heng Corp did at the same time refer to Lord Denning MR’s observations in Siebe Gorman with approval as the basis for its holding.

[25] In my view, it is possible for the quoted passage in Poh Huat Heng Corp to be reconciled with Siebe Gorman in the following manner. In Poh Huat Heng Corp, the Court of Appeal in adopting the terminology “consent judgment” and “consent order” was referring to a scenario where a judgment or an order has been obtained by the consent of the parties concerned. That is different from referring to a situation where a judgment or an order has been expressed to be made “by consent” of the parties – a situation which, as contemplated in Siebe Gorman (and for that matter, Bakery Mart as well (see [21] above)), may arise from either (a) the parties consenting in the true and literal sense to the making of the judgment or order, or (b) the parties not objecting to the making of the judgment or order.

[26] That the Court of Appeal in Poh Huat Heng Corp was discussing the state of the law in the context of the following statement it made earlier in its judgment furthers my view in [25] above:

[27] In any case, I note that the distinction between “a consent order of a “no objection” kind” and one which is of “a binding contract type” still appears to be drawn from time to time by our courts post-Poh Huat Heng Corp (see, eg, a recent decision in Airtrust (Singapore) Pte Ltd v Kao Chai-Chau Linda [2014] 2 SLR 693 (“Airtrust”) at [22]-[23], where the High Court used the term “contractual consent order” in its analysis). I am therefore convinced on the whole that such a distinction as outlined in Siebe Gorman remains to be good law in Singapore today. The corollary of this conclusion is that it is still acceptable practice for orders of a “no objection” kind to be expressed to be made “by consent” of the parties when such orders are formally drawn up and extracted – although, speaking for myself, such practice should ideally be minimised as much as possible to avoid any potential confusion at a later time.

[28] Based on the foregoing analysis, the question that must be addressed is whether the “by consent” order in OS 920/2014 is that of a “no objection” kind or that which is of “a binding contract type” (hereafter referred to in shorthand as “uncontested consent order” and “contractual consent order” respectively). Put in another way, the issue is whether there was a true contractual foundation underlying the AR’s order in OS 920/2014.

[29] In order for an order expressed to be made “by consent” to be found to have a true contractual foundation, the order must satisfy the ordinary requirements for the formation of a valid and binding contract. As explained in David Foskett, The Law and Practice of Compromise (7ed, Sweet & Maxwell, 2010) at para 3-01:

[30] In relation to the requirement of offer and acceptance in contract-making, it is apposite to refer to Templeman LJ’s concurring judgment in Siebe Gorman (see [1] above) where he expressed the view that service of a summons “was not an offer and was not intended to create or result in a contractual relationship”, explaining thus (at 192G-193B):

[31] What, then, is capable of constituting an offer and acceptance in the current context? As case law would suggest, the answer must necessarily depend on the facts of each case.

[32] In Siebe Gorman (see [1] above), for instance, the defendant had taken out a summons against the plaintiff seeking specific discovery of documents. In the summons, the defendant included a prayer for an order that the plaintiff “do within ten days from the date of such order make and file an affidavit”, and that “in default of complying with the order the plaintiffs’ claim against the defendants be struck out”. On the date of the hearing of the summons and prior to entering the door to the master’s chamber, counsel for the parties apparently had a brief oral discussion amongst themselves and apparently agreed to an arrangement whereby the plaintiff was to file the affidavit requested by the defendant within 10 days “from the date of the mutual inspection of documents” (presumably in general discovery) instead. Before the master in chamber, an order was granted on those terms with apparently no mention of the ‘unless’ order described earlier. The defendant thereafter drew up and extracted the master’s order as a “by consent” order with the ‘unless’ order included. The plaintiff defaulted on the 10-day deadline and a dispute arose as to whether the plaintiff’s action ought to be struck out pursuant to the master’s order as extracted.

[33] On appeal to the Court of Appeal, Lord Denning MR (with whom Eveleigh and Templeman LJJ concurred) had this to say (at 190D):

[34] In an earlier case of Purcell v FC Trigell Ltd and another [1971] 1 QB 358 (“Purcell”), the plaintiff sued the defendants seeking damages for skull and spinal injuries he sustained from a workplace accident where he fell from a height. The defendants failed to answer certain court-sanctioned interrogatories within time. The plaintiff took out a summons seeking judgment to be entered on the basis of the defendants’ default. This was followed by a series of letters being exchanged between the parties’ solicitors, wherein the defendants’ solicitors invited the plaintiff to agree to having an ‘unless’ order entered with a deadline of 14 days for the defendants to answer the interrogatories instead. The plaintiff’s solicitors wrote back to indicate that the plaintiff would be prepared to agree to an ‘unless’ order entered with a seven-day deadline. A telephone conversation ensued between the solicitors, and parties finally arrived at a landing to have an ‘unless’ order entered with a 10-day deadline. The order was entered accordingly in court. After the defendants provided what were allegedly inadequate answers to the interrogatories within the 10-day deadline, the plaintiff sought and obtained judgment against the defendants. Events that followed eventually led to the defendants succeeding before a judge in obtaining an extension of time to appeal the original ‘consent’ order. The plaintiff appealed to the Court of Appeal.

[35] In allowing the appeal, Lord Denning MR (with whom Winn and Buckley LJJ) paid heed to the letters exchanged between the parties’ solicitors and held that the ‘consent’ order “was deliberately made, with full knowledge, with the full agreement of the solicitors on both sides” (see Purcell at 362B-D and 364A-B).

[37] On 25 August 2014, the Plaintiff’s solicitors replied by way of letter stating, inter alia, that “[o]ur clients do not accept your clients’ proposal”. This was followed by a response letter from the Defendant’s solicitors on 27 August 2014 which stated, inter alia, the following:

[38] This prompted a further reply letter from the Plaintiff’s solicitor on 27 August 2014 stating, inter alia, the following:

[40] Given the account of what had transpired in the course of proceedings leading up to the AR’s decision in OS 920/2014, there is absolutely no doubt in my mind that the “by consent” order in OS 920/2014 is in the nature of an uncontested consent order as opposed to a contractual consent order. Indeed, I would in reliance of the authority of Purcell (see [34]-[35] above) have very much been prepared to rule otherwise if the Plaintiff’s solicitors had in writing accepted the Defendant’s offer contained in the letter dated 22 August 2014 (see [36] above). But that was not what happened here. The offer was expressly rejected in writing by the Plaintiff’s solicitors, and the “by consent” order in OS 920/2014 was entered on the basis of the Defendant not contesting the setting aside of the Adjudication Determination.

[41] Having found that the “by consent” order in OS 920/2014 is in the nature of an uncontested consent order as opposed to a contractual consent order, the question that is now to be determined is whether the order as such should be set aside. But before I proceed any further, I think it is appropriate to touch briefly on one procedural point for completeness.

[42] In the course of the hearings before me, counsel was asked to confirm if there was any dispute between the parties in respect of the manner in which the present Application was taken out against the Defendant, in particular whether the Application should have been made by way of commencing a fresh legal action instead of a summons in OS 920/2014. This query was posed to counsel because of the holding of the High Court in Wiltopps (see [23] above) which stated as follows (per Lee Seiu Kin JC (as he then was) at [23]):

[43] Counsel for the parties unequivocally indicated in their responses that they have no disputes in that regard, and that in any event they would prefer for the court to instead focus directly on the substantive arguments relating to the setting aside of the “by consent” order. The query thus became moot in the present case in those circumstances.

[44] With that, I now move on to address the merits relating to the Application seeking to set aside what I have found to be essentially an uncontested consent order.

[45] In its submissions, the Plaintiff takes the position that the AR’s order in OS 920/2014 is in the nature of an uncontested consent order. Counsel for the Plaintiff made the following arguments:

[46] I find no reason to depart from the holding in Airtrust that the court retains a residual discretion – even in the case of a contractual consent order – to vary the terms of the order where this is necessary to prevent injustice. This stated principle of law is eminently justified by O 92 r 4 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”) which provides that “nothing in [the ROC] shall be deemed to limit or affect the inherent powers of the Court to make any order as may be necessary to prevent injustice or to prevent an abuse of the process of the Court” (see also Airtrust at [23]). In my view, the same position should in principle a fortiori hold true vis-à-vis uncontested consent orders.

[47] However, it must at the same time be appreciated that application of the principle enunciated in Airtrust does not invariably lead to a uniform outcome in all cases. This point can be illustrated by referring to the earlier case of Bakery Mart (see [21] above) where the High Court refused to interfere with a consent summary judgment simply on a ground argued by the defendant that an unfairly prejudicial result had since arisen as a result of the defendant having obtained unconditional leave to run essentially the same defence in a related parallel court proceeding (see Bakery Mart at [9]). At [20], the High Court held (per Belinda Ang J):

[48] Coming back to the present case, the Plaintiff is effectively seeking a setting aside of an order which it had previously obtained by its very own application in OS 920/2014. The reason for the taking of this latest course of action is so that the Plaintiff can secure a refund of the Adjudicator’s fee pursuant to section 31(2) of the SOPA (see [19] above), after it has failed to convince the SMC to acquiesce in the said refund by barely relying on the “by consent” order extracted in OS 920/2014 (see [12]-[15] above).

[49] It is true that the Plaintiff’s supporting affidavit in OS 920/2014 did raise arguments contending that the Adjudicator had failed to determine the Adjudication Application pursuant to section 17(1)(b) of the SOPA which required the Adjudicator to determine the Adjudication Application “within 14 days after the commencement of the adjudication” (ie, arguments relating to the second threshold (see [20(b)] above)). Indeed, this contention also occupied a significant portion of the Plaintiff’s skeletal submissions for the hearing before the AR in OS 920/2014.

[50] The Defendant, in turn, also made relatively extensive arguments in relation to the second threshold in the skeletal submissions which it tendered for the hearing of OS 920/2014. However, as gleaned from the certified transcripts of the proceedings before the AR in OS 920/2014 (see [39] above), the second threshold did not at all turn out to have been contentiously argued by the parties before the AR. This is confirmed by the Plaintiff’s email to the SMC dated 3 December 2014 stating, inter alia, that “[d]uring the hearing, [the AR] informed parties there would be no written grounds of decision unless the setting-aside application was contested vigorously. The setting aside application was not contested.” (see [14] above)

[51] Having regard to the totality of the circumstances leading to the “by consent” order in OS 920/2014, I find that there is insufficient basis for me to conclude that the “by consent” order is of the type envisaged in Bakery Mart, viz. one that “turned out to be a bad decision for one side” (see [47] above). I fail to see how better the Plaintiff could have done in getting the AR to render a determination on the second threshold when such a need was obviously obviated by its adversary in OS 920/2014 (ie, the Defendant) not contesting the setting aside of the Adjudication Determination (given the SMC Complaints Panel’s report finding the Adjudicator to be in breach of the principles of natural justice (see [10] above)).

[52] However, at an even more fundamental level, I am equally unable to detect any injustice or unfairly prejudicial result arising from the “by consent” order made in OS 920/2014 which is of such character that it properly ought to be considered as warranting the Plaintiff to seek the court’s interference via the commencement of a proceeding against the Defendant. Issues pertaining to the refund of an adjudicator’s fee or expense pursuant to section 31(2) of the SOPA (see [19] above) are, in my view, matters that can and should properly be taken on by the party requesting the refund with the SMC in its capacity as the authorised nominating body under section 28 of the SOPA, of which subsection (4) reads:

[53] That nothing in section 31(2) of the SOPA stipulates that an adjudicator’s disentitlement to be paid or retain any fee or expense must be preceded by a court determination to such effect (or for that matter, even a court order setting aside an adjudication determination) lends support to this view. Indeed, in the present case, the SMC Complaints Panel’s report (see [10] above) did consider the Plaintiff’s contentions relating to the second threshold (see [20(b)] above) – ie, contentions which clearly would have had a direct consequential impact on the question of refund. But instead of rejecting those contentions on the ground that such matters were categorically not within the SMC’s competency to determine, the SMC Complaints Panel stated the following:

[54] To the Plaintiff’s credit, it did subsequent to the SMC Complaints Panel’s report raise a request directly with the SMC for the refund of the Adjudicator’s fee (see [12]-[14] above). However, the Plaintiff’s request for the refund was roundly rejected by the SMC on essentially the ground that the SMC “has no basis or power under the [SOPA] to withhold all or part of the Adjudicator’s Fee” (see [15] above). With the greatest of respect, this explanation does not seem to square well with the observations made in [53] above, and as such I regret to say that this court is not able to endorse the SMC’s views on this score.

[55] In sum, the Plaintiff may feel that an unfairly prejudicial result has been occasioned by the SMC’s refusal to grant the refund of the Adjudicator’s fee. But however aggrieved the Plaintiff may feel towards the stance adopted by the SMC, I do not see any injustice or unfairly prejudicial result of a kind that has arisen which merits the Plaintiff to now invite the court to reopen and revisit the AR’s “by consent” order in a proceeding which names the Defendant as the respondent – all with a view towards possibly bringing about a change of the SMC’s mind as to whether the refund of the Adjudicator’s fee should be allowed.

[56] Accordingly, I hold that neither the holding in Airtrust nor the holding in Bakery Mart (as distinguished) (see [46]-[47] above) comes in aid of the Plaintiff when applied to the present Application.