brief Round UP OF 2015

Happy New Year!

2015 must have been a busy year for construction lawyers and professionals involved in adjudication matters.

Over 465 adjudication applications were lodged with the Singapore Mediation Centre and a total 15 decisions were issued by the Supreme Court. (One  Court of Appeal decision; Two AR decisions and Thirteen judgments by Honourable Judges. If you wish to have a listing of the decisions, please email me)
 
In one of the High Court judgments, Aik Heng Contracts and Services Pte Ltd v Deshin Engineering & Construction Pte Ltd [2015] SGHC 293 in which I was the counsel for the Respondents – the Court re-iterated that adjudicators do not need to hear a respondent on any matter that the respondent ought to have put in a valid payment response but had failed to do so. However, an adjudicator must hear a respondent on any submission relating to patent errors on the documents or calculations or submissions of the claimant.  “patent” or “manifest” errors are errors which are “obviously capable of affecting the outcome of the determination and “admit no difference of opinion”. 
 
This observation is a timely reminder of the importance of a timely and proper payment response to a payment claim. Failure to issue a valid payment response will disentitle a respondent from challenging the merits of the claim and to raise any set-offs or counterclaims. This would conceivably result in the respondent facing an adjudication determination for the entire sum claimed by the claimant even in situations where the respondent has a valid set-off or counterclaim.
 
Another interesting decision was the case of Thian Sung Construction Pte Ltd v International Elements Pte Ltd [2015] SGHC 319.  It was held by the Court that a contractor who had assigned its “present and future trade debts” to a bank as security for credit facilities would still be entitled to seek recourse under the SOP Act as this right was not assignable. However, the contractor may not be entitled to enforce the adjudication determination since it had assigned all of its debts. Fortunately, this did not affect the claimant in this case since the bank had re-assigned the debts before the service of the payment claim.
 
It is common practice for banks to request for an assignment of trade debts and progress payments as security for project financing facilities offered to contractors. Contractors who have undertaken such arrangements should be aware that this may have an adverse impact on the contractors’ rights to enforce an adjudication determination.
 
Warmest Regards
 
Tan Joo Seng
3 January 2016