Case Summaries

Audi Construction Pte Ltd v Kian Hiap Constructions Pte Ltd

SUPREME COURT OF SINGAPORE

22 January 2018

Case summary

Audi Construction Pte Ltd v Kian Hiap Constructions Pte Ltd
Civil Appeal No 136 of 2017

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Decision of the Court of Appeal (delivered by Justice Steven Chong):

Introduction

1              This appeal is about serving and responding to payment claims under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (the “Act”). The Act establishes a regime intended to ensure that contractors and subcontractors receive timely payment for work done and materials supplied. Under that regime, service by a claimant of a payment claim on a respondent initiates a process of dispute resolution governed by the Act which is intended to enable the claimant properly to recover what he is owed.

Background

2              In this case, the parties’ contract stipulated that the date for serving payment claims was to be the 20th day of each month. The appellant in November 2016 realising that the 20th day of that month was a Sunday and that the respondent’s office would be closed that day decided to serve a payment claim on the respondent two days earlier, on Friday, 18 November 2016. But the appellant dated the payment claim 20 November 2016. The respondent chose not to file a payment response. The matter proceeded to adjudication under the Act, and the adjudicator determined that appellant was to be awarded the sum it had claimed. ([6][7])

3              The appellant then applied to the High Court to enforce that award and the respondent filed an opposing application to set it aside. The High Court allowed the respondent’s application. It held that the parties’ contract provided that payment claims could be served only on, and not by, the 20th day of each month, and so the appellant had invalidly served the payment claim upon which the adjudication proceed. That was a breach of s 10(2)(a) of the Act, which required service of payment claims to be effected in accordance with the parties’ contract, and therefore the adjudication determination had to be set aside. The appellant appealed this decision. ([8][11])

Decision on appeal

4              The Court of Appeal allowed the appellant’s appeal on 13 November 2017. It has now released grounds to explain its decision.

5              The Court held that on the facts, the appellant had validly served the payment claim because it had a good reason to serve it before the contractually stipulated date for service, and because its dating the claim 20 November 2016 would have left no doubt in the respondent’s mind that it had intended service to be effected on that date. The appellant had therefore acted in compliance with the parties’ contract, and there was no breach of s 10(2)(a) of the Act. ([26][28])

6              The Court observed it would also have been proper for the appellant to have served the payment claim on 21 November 2016. This was because of the operation of s 50(b) read with s 50(c) of the Interpretation Act (Cap 1, 2002 Rev Ed), which provides that if a statutory obligation is to be performed on an excluded day – which includes Sundays and public holidays – that obligation may be performed on the next day. These provisions would have applied here because the obligation under s 10(2)(a) of the Act to effect service of a payment claim in accordance with the parties’ contract is a statutory obligation. ([35][36])

7              The Court went on to say that even if the payment claim had been invalidly served, the respondent was not entitled to make that objection. This was because he had waived his right to do so or was estopped from doing so.

8              In this regard, the Court first held that adjudicators under the Act have the power to decide matters which go towards their jurisdiction. Such matters, it is well-established, comprise whether certain cardinal provisions of the Act (known as mandatory provisions) have been complied with and whether the adjudicator’s appointment was proper. The Court’s earlier decision in Grouteam Pte Ltd v UES Holdings Pte [2016] 5 SLR 1011 (“Grouteam”) established that s 10(2)(a) of the Act was a mandatory provision, and the Court in the present appeal affirmed its observation in Grouteam that an adjudicator was entitled to decide whether that provision had been complied with. In so deciding, the Court entrenched its departure from reasoning to the opposite effect adopted in its earlier decision in Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) and another appeal) [2013] 1 SLR 401 (“Chua Say Eng”). ([45][46])

9              It followed from this premise that a party in the respondent’s position would have been entitled to object before an adjudicator to the validity of a payment claim’s service, given that the adjudicator would have been entitled to rule on such an objection. A number of decisions of the High Court which had adopted reasoning to the contrary, following Chua Say Eng, were therefore overruled. More importantly, a respondent’s entitlement to raise such an objection was held to be a right which it may waive or be estopped from exercising by virtue of its failing to raise the objection at the appropriate time. Accordingly, the question was when it may be taken to have done so. ([51], [63])

10           Both waiver and estoppel, the Court held, requires an unequivocal representation by a party of his decision not to exercise an available right. Silence will not normally amount to an unequivocal representation unless there is a duty to speak. In the context of the Act, there is a duty on the part of a respondent to include in the payment response any jurisdictional objection which it wishes to rely on. That is because by s 15(3)(a) of the Act, the issues which may be raised before an adjudicator are restricted to those issues which are stated in the payment response. This is in line with the policy of the Act to ensure timely payments between contractors because, among other things, it encourages a respondent to raise any jurisdictional objection it may have at the earliest opportunity so that the claimant has the chance to rectify the problem, eg by effecting proper service of a payment claim. ([57], [66] and [68])

11           In the present case, the respondent failed to file a payment response, and that constituted an unequivocal representation that he would not raise any objection to the payment claim. The appellant relied on that representation by omitting to re-file a payment claim. As a result, the respondent was estopped from raising any objection to the payment claim’s validity. ([71])

This summary is provided to assist in the understanding of the Court’s grounds of decision. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s grounds of decision.

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