Singapore: Clarifying The Law On Repeat Claims And Post-Termination Claims Under The Security Of Payment Act

Last Updated: 1 July 2016
Article by Paul Wong

A case study of Asplenium Land Pte Ltd v CKR Contract Services Pte Ltd [2016] SGHC 85

Introduction

The Singapore High Court's recent decision in Asplenium Land Pte Ltd v CKR Contract Services Pte Ltd [2016] SGHC 85 has perhaps finally put to bed the issue as to what constitutes a repeat claim that is prohibited under the Security of Payment Act (SOPA). The principle governing this issue is that any payment claim, even if "repeated" in more than one payment claim, can only be subjected to only one adjudication of its merits. The court also proceeded to consider what a determination on the merits constituted, in respect to whether a claim was repeated. Perhaps for the very first time, the Singapore High Court also had the opportunity to discuss the issue of whether post-termination claims fell within the ambit of the SOPA's adjudication scheme for payment claims.

Brief facts

Both Asplenium Land Pte Ltd (Asplenium) and CKR Contract Services (CKR) entered into a contract for the construction of a residential condominium development, which was terminated by Asplenium subsequently. The suit arose as a result of a payment claim (PC21) made by CKR (contractor) on Asplenium (employer) on 22 December 2014, and was the payment claim proceeded for adjudication under the SOPA (SOP/AA 27 of 2015) and a review of the adjudicator's determination (SOP/ARA03 of 2015), which resulted in a reduced adjudicated amount.

CKR subsequently filed a second payment claim (PC22) on 7 October 2015, and thereafter lodged another adjudication application (SOP/AA 423 of 2015) under the SOPA. In response, Asplenium filed originating summons seeking for relief that CKR withdraw SOP/AA 423; for a declaration that PC22 was invalid; that the adjudicator nominated in SOP/AA 423 had no jurisdiction to conduct the adjudication; that CKR be permanently restrained to prosecute any adjudication of claims or enforce any determination amount arising from SOP/AA 423; and that CKR be restrained from commencing further adjudication in relation to the dispute.

This case was primarily concerned about when a payment claim would be considered a repeat claim that was prohibited under the SOPA, and whether post-termination claims were prohibited under the SOPA.

The reasoning relied by Asplenium was that most of the claims in PC22 were repeat claims and were prohibited under the adjudication scheme under SOPA; and the claims made by CKR for the period after the termination of the contract also did not come under the adjudication scheme.

CKR's response was to submit various reasons and arguments to show that PC22 did not comprise repeated claims.

Findings of the court

Foo Chee Hock JC (Foo JC) in dismissing CKR's claims in PC22, held that the claim was essentially a repeat of PC21 and was unmeritorious given that it had already been adjudicated on its merits in SOP/AA 27.

In arriving at his decision, Foo JC considered the cases of Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) (Chua Say Eng) and another appeal and Admin Construction Pte Ltd v Vivaldi (S) Pte Ltd (Admin Construction) for guidance. Citing Quentin Loh's analysis in Admin Construction, there were four propositions to be made in relation to "repeat claims":

  1. A subsequent payment claim can include a sum which has been previously claimed, but has not been paid. This is evident in s 10(4) of the SOPA.
  2. Where a payment claim has been made, but has not been adjudicated upon, it remains an "unpaid" claim and can be part of a later payment claim and adjudication.
  3. A payment claim that has been dismissed for being served prematurely or as an untimely claim under reg 5(1) may still be valid for a subsequent adjudication provided it was not subject to prior adjudication and dismissed on its merits.
  4. A payment claim brought to adjudication and dismissed on its merits cannot be subject to a subsequent payment claim or adjudication.

The crux of the judgment therefore was that all payment claims could only be the subject of one adjudication of its merits.

In determining whether or not a payment claim has been adjudicated upon its merits, the court also held that a dismissal of a payment claim on the ground of insufficient or want of evidence is considered an adjudication on the merits.

On the issue of post-termination claims, Foo JC held that given that the contract had been terminated, the post-termination claims could not come under s 5 of the SOPA, ie they were not claims for carrying out of construction work or supply of goods and services under the contract. Additionally, under their contract, the parties had agreed that the only relief available to CKR upon a wrongful termination of the contract by Asplenium shall be by way of compensation in the nature of damages. The post-termination claims therefore did not fall under the jurisdiction of the adjudicator under the SOPA.

Issue of jurisdiction

Foo JC then discussed the issue where either party objects to the jurisdiction of the adjudicator. This was in light of the Court of Appeal decision of Chua Say Eng in which the SGCA held that where either party objects to the adjudicator on the basis of an invalid appointment, the jurisdictional issue should be raised to the court.

In such situations, the adjudicator should proceed with the adjudication and leave the jurisdiction issue to the court to decide instead of deciding on his own competency. On the facts, AA 423 was not "stayed" by an interim or order of court. However, the adjudicator decided "to hold in abeyance the proceedings" pending the court's decision. The learned judicial commissioner held that the adjudicator's decision was appropriate on the facts, given that the result of AA 423 would have been the same as in AA 27, leading to extra cost incurred.

Commentary

The High Court's decision serves to clarify what exactly constitutes a "repeat claim" that is prohibited under the SOPA. The common theme that seems to run through this decision and the decisions preceding it is that parties cannot have two bites of the cherry, that all claims can only be subjected to one adjudication of its merits.

It is also now clear that post-termination claims in the form of damages will not fall under the SOPA regime.

The author acknowledges and thanks Russell Quek for his contribution in the writing of this article.

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