Case Summaries

Range Construction Pte Ltd v Goldbell Engineering Pte Ltd

SUPREME COURT OF SINGAPORE

9 April 2021

Case summary

Range Construction Pte Ltd v Goldbell Engineering Pte Ltd [2021] SGCA 34   
Civil Appeal No 91 of 2020

-----------------------------------------------------------------------------------------------------

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

Outcome: The Court of Appeal dismisses a contractor’s appeal against the decision of a High Court judge (“the Judge”) in which the Judge declined to set aside the part of an adjudication determination (“AD”) pertaining to the employer’s set-off for liquidated damages.

 Pertinent and significant points of the judgment

  • Prior to the amendments to the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the SOPA”) in 2019, an adjudicator had the jurisdiction to determine claims for set-offs for liquidated damages made by employers. This jurisdiction was conferred by ss 15(3)(a) and 17(3) of the pre-amendment SOPA.
  • The position has since changed under s 17(2A) of the current SOPA, which requires an adjudicator to disregard any part of a payment claim or a payment response relating to damage, loss or expense, save for certain stipulated exceptions.

 Background to the appeal

1 Pursuant to a letter of award of 19 April 2017 (“the Contract”), the appellant, Range Construction Pte Ltd (“Range”), was appointed by the respondent, Goldbell Engineering Pte Ltd (“Goldbell”), as its contractor for a construction project (“the Project”). The Contract incorporated the Real Estate Developers’ Association of Singapore Design and Build Conditions of Main Contract (3rd Ed, July 2013) (“the Conditions”). Clause 19 of the Conditions provided for the payment of liquidated damages if the Contractor (ie, Range) failed to complete the Project on time. The extended contractual completion date was 7 September 2018 and the Temporary Occupation Permit (“TOP”) was granted on 2 October 2018.

2 Range served a payment claim (“PC 28”) on Goldbell on 2 December 2019, before certain amendments to the SOPA took effect on 15 December 2019. Goldbell then submitted its payment response (“PR 1”) and Range lodged an adjudication application (“AA8”) under the pre-amendment SOPA. It was common ground between the parties that the adjudicator (“the Adjudicator”) was not required to find the exact date of completion of the Project. In his AD, the Adjudicator awarded Range $205,647.43, which sum was arrived at after deducting $852,000 in liquidated damages that he found to be payable by Range to Goldbell.

3 Per cl 19.1 of the Conditions, if Range failed to complete the Project on time, liquidated damages of $12,000 per day would be payable by Range to Goldbell for each day that elapsed between 7 September 2018 (ie, the extended contractual date of completion) and the date of issuance of the Handing Over Certificate (“HOC”). Despite Goldbell’s failure to issue the HOC to date, the Adjudicator found that Goldbell was entitled to liquidated damages as the issuance of the HOC was not a pre-condition for awarding liquidated damages.

4 In quantifying the liquidated damages payable, the Adjudicator relied on an e-mail dated 17 November 2018 (“the 17 November e-mail”) in which Range’s managing director had stated that “L3, L5 and Roof are ongoing and will be completed next week”. The Adjudicator understood this e-mail to mean that Range had not completed the Project as of 17 November 2018. He therefore found Range to be liable for liquidated damages totalling $852,000 for the period from 8 September 2018 to 17 November 2018.

5 Range applied to set aside (amongst other parts of the AD) the award of liquidated damages to Goldbell, primarily on the basis that the Adjudicator had no jurisdiction under the SOPA to award or consider liquidated damages. Range also argued that the Adjudicator had breached the fair hearing rule and the rules of natural justice.

The decision below

6 The Judge dismissed Range’s setting-aside application and found that the Adjudicator had not exceeded his jurisdiction by considering Goldbell’s claim for liquidated damages. Although Range had argued that payment claims could only be made in respect of construction work done, liquidated damages were claimed by employers in their payment responses. Under s 17(3)(d) of the SOPA, the Adjudicator’s jurisdiction to consider liquidated damages was derived from the fact that such damages were listed in PR 1.

7 The Judge also rejected Range’s argument that the Adjudicator had exceeded his jurisdiction and/or breached the fair hearing rule by identifying a completion date despite the parties’ agreement that he was not required to do so. The Adjudicator had not designated 17 November 2018 as the completion date; he had merely found that Range would have been liable for liquidated damages from 8 September 2018 to 17 November 2018 at the minimum.   

8 Finally, the Judge held that the Adjudicator did not breach the rules of natural justice by failing to consider relevant matters. No “clear and virtually inescapable inference” could be drawn that the Adjudicator had failed to consider Range’s pleading as to the significance of the issuance of the TOP.

9 Range appealed against the Judge’s decision in relation to Goldbell’s set-off for liquidated damages. While Range largely made the same arguments on appeal, it additionally referred to s 17(2A) of the current SOPA, which generally prohibits claims relating to damage, loss or expense, whether such claims are made in payment claims or in payment responses. Range submitted that the Minister of State had made it clear in a ministerial statement (“the Ministerial Statement”) that the position codified in s 17(2A) was merely declaratory and not new law. In other words, claims for damage, loss or expense made in payment responses were prohibited even under the pre-amendment SOPA.

The Court of Appeal’s decision

Whether the Adjudicator had jurisdiction under the SOPA to determine Goldbell’s set-off for liquidated damages

10 The Court of Appeal held that the Adjudicator’s jurisdiction to consider Goldbell’s set-off for liquidated damages was based on ss 15(3)(a) and 17(3) of the pre-amendment SOPA (at [27]). Section 15(3)(a) of the pre-amendment SOPA stated that where an adjudication related to a construction contract, the respondent could include in the adjudication response, and the adjudicator could consider, “any reason for withholding any amount, including but not limited to any cross-claim, counterclaim and set-off” [emphasis added in italics and bold italics], as long as that reason was included in the relevant payment response. Section 17(3)(d) of the pre-amendment SOPA in turn provided that an adjudicator ought to have regard to the payment response. It was undisputed that Goldbell’s set-off for liquidated damages was included in PR 1 (at [27]).

11 Range’s reliance on the Ministerial Statement was misplaced for two reasons (at [33]). First, ministerial statements did not have the force of law. Even if the Minister of State had suggested that s 17(2A) was declaratory of the pre-existing law, it remained for the court to determine if the Minister of State was correct in his assessment (at [34]). Second, the passage from the Ministerial Statement that Range premised its argument on was equally consistent with s 17(2A) having modified rather than merely clarifying the law (at [35]).

12 Moreover, if s 17(2A) were merely declaratory of the pre-existing legal position, s 15(3) of the pre-amendment SOPA would have been devoid of any substantive content (at [36]). If claims for damage, loss or expense were categorically prohibited under the pre-amendment SOPA, it would have been simply impossible for an employer to withhold any amount by way of set-off under s 15(3) and s 15(3) would have been legislated in vain (at [37]).

13 The Court of Appeal rejected Range’s argument that, even under s 15(3) of the pre-amendment SOPA, claims for damage, loss or expense could not be brought save for the two exceptions provided for in s 17(2A) (at [38]). The two exceptions stipulated in s 17(2A) were nowhere to be found in the express language of s 15(3) of the pre-amendment SOPA (at [38]).

14 Range’s argument also assumed that s 15(3) of the pre-amendment SOPA and s 17(2A) were to be read harmoniously. However, s 15(3) was amended to omit any reference to set-offs at the same time that s 17(2A) was enacted (at [40] and [41]). The amendments to s 15(3) further demonstrated that s 17(2A) had changed the law and was not merely declaratory (at [41]).

15 There was nothing incompatible about limiting payment claims to claims for construction work done or for goods and services supplied on the one hand, and permitting set-offs by employers for liquidated damages on the other (at [53]).

16 The Adjudicator had acted within his jurisdiction in adjudicating Goldbell’s entitlement to liquidated damages (at [42], [51] and [55]). The pre-amendment SOPA did not preclude the Adjudicator from determining Goldbell’s set-off for liquidated damages, but the Court of Appeal observed that the legal position had since changed pursuant to the enactment of s 17(2A) of the current SOPA (at [42]).

The Adjudicator’s finding that the Project remained incomplete as at 17 November 2018

17 Although Goldbell had claimed liquidated damages from 8 September 2018 to 30 November 2019, the Adjudicator was entitled to decide, based on the evidence before him, that liquidated damages were payable only up till 17 November 2018 (at [57] and [58]). It did not follow ipso facto from the fact that the Adjudicator was not required to identify the exact date of completion that he was precluded from awarding liquidated damages up till 17 November 2018 (at [59]).

18 It was not incumbent upon the Adjudicator to invite submissions on the context of the 17 November e-mail, which was self-explanatory (at [60]). In any event, Range could and did make submissions on how the 17 November e-mail ought to be interpreted (at [62] and [63]). The Adjudicator therefore did not breach the fair hearing rule (at [66]).

19 In finding that the Project remained incomplete as of 17 November 2018, the Adjudicator did not designate 17 November 2018 as the completion date (at [68] and [70]). The Adjudicator’s jurisdiction was conferred upon him by s 17(3) of the SOPA, under which he was bound to have regard to (among other things) the Contract, PC 28 and PR 1 (at [72]). It was well within his jurisdiction to determine Goldbell’s entitlement to liquidated damages since Goldbell’s claim for liquidated damages was reflected in PR 1 (at [72]).

Whether the Adjudicator acted in breach of natural justice

20 The Court of Appeal held that no breach of natural justice had occurred (at [78]). Range had submitted that the grant of the TOP was determinative of its entitlement to a HOC. The Adjudicator found that Range’s entitlement to a HOC was not dispositive of Goldbell’s entitlement to liquidated damages. In light of the Adjudicator’s findings, the significance of the grant of the TOP was not essential to the resolution of the dispute, and there was simply no need for him to have explicitly addressed Range’s submission thereon (at [76] and [78]).

 

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.

YOU MAY ALSO BE INTERESTED IN