A belated Happy New Year! to everyone.
Yet another year has passed; another completed revolution around the Sun. Everywhere and everyone - hopes for a better year ahead; new wishes; new resolutions; new ambitions and projects.
2017 for construction lawyers, was, in my humble view, yet another busy year.
Conversations with industry colleagues suggest that a total of about 415 adjudication applications were lodged with the Singapore Mediation Centre (“SMC”) in 2017. This is a significant number, albeit, lower than the numbers of adjudications lodged in 2016 (about 460) and 2017 (about 500). There were however only 2 adjudication review applications (“ARA”).
On the legal front, there were 13 written judgments issued by the Supreme Court and one by the Court of Appeal.
Two of the judgments; namely. Ang Cheng Guan Construction Pte Ltd v Corporate Residence Pte Ltd  SGHC 9 (“Ang Cheng Guan”) and CMC Ravenna Singapore Branch v CGW Construction & Engineering (S) Pte Ltd  SGHC 263 (“CMC Ravenna”) stemmed from applications to set aside adjudication review determinations.
These decisions clarified several legal aspects concerning adjudication review applications.
Ang Cheng Guan considered the extent of a review adjudicator’s jurisdiction in considering issues raised by the claimant in an adjudication review and has been discussed in my January 2017 post. (See: my January 2017 post) )
CMC Ravenna dealt with two issues – (1) what are the grounds for setting aside adjudication review determinations (2) when is it appropriate to appoint a panel of three review adjudicators instead of a sole review adjudicator.
For the first issue, the Honourable Justice Chan Seng Onn opined that the Court’s approach and the grounds for setting aside an adjudication review determination are largely similar as the considerations for the setting aside of an adjudication determination; namely:
a) The Court would not review the merits of the review adjudicator’s determination;
b) The Court may set aside the review adjudicator’s determination if:
(i) there was a breach of natural justice.
(ii) the review adjudicator was not properly appointed.
(iii) the respondent, in the course of making an adjudication review application, has not complied with one (or more) of the provisions under the SOP Act which is so important that it is the legislative purpose that an act done in breach of the provision should be invalid, which causes the review adjudicator to lack substantive jurisdiction; or
(iv) The review adjudicator commits a patent error on the face of the record.
The answer to the second issue turned on the interpretation of the phrase “relevant response amount” found in regulation 10(3) of the Building and Construction Industry Security of Payment Regulations (“SOP Regulations”).
This regulation provides that the SMC shall appoint one review adjudicator if the adjudicated amount exceeds the relevant response amount by $100,000.00 or more but less than $1 million or appoint a panel of 3 review adjudicators if the adjudicated amount exceeds the relevant response amount by $1 million or more.
In this case, the adjudicated amount was $340,515.61 while the response amount was a negative sum of $735,378.93. The SMC took the position that for the purpose of computing the relevant response amount, the response amount should be taken as “nil” and, as such, the relevant response amount was $340,515.61.
The Court held that the SMC’s approach was correct. This is in light of section 2 of the Building and Construction Industry Security of Payment Act (“SOP Act”) which defines “response amount” as “the amount that a respondent proposes to pay to a claimant in a payment response”. Since it is not logically possible for a respondent to propose to pay a negative amount to a claimant, the definition of “response amount” under s 2 of the SOP Act envisages a “relevant response amount” under regulation 10(3) of the SOP Regulations to carry only positive values or a nil value but not a negative value.
The decisions in Ang Cheng Guan and CMC Ravenna will, I believe be welcomed with open arms by practitioners for providing much needed guidance on several key issues in particular the extent of a review adjudicator’s jurisdiction and the interpretation of the relevant response amount.
Tan Joo Seng
22 January 2018
This section of my website contains summaries and commentaries of judgments and other developments relevant to infrastructure, construction, engineering and construction law. .
The information is provided for information only. It should not be relied on or taken as legal advice.