Adjudication timelines, estoppel and ultra vires

(1) THE CASE AND ITS ISSUES

1.???? The case of Hiap Seng Building Construction Pte Ltd v Hock Seng Contractor Pte Ltd [2024] SGHC 50 dealt with three issues which are discussed here. The three issues are: (1) whether a payment response which was served earlier than the payment claim was valid (2) whether the party issuing a defective payment response is estopped from relying on it to set aside an adjudication determination and (3) whether the adjudicator acted ultra vires by awarding a higher amount than that stated in the payment response. ?

?(2) THE BRIEF FACTS

2.???? The brief facts of the case are that:

a.???? On 5 July 2023, Hock Heng, the subcontractor served a payment claim on Hiap Seng, the main contractor.

b.???? On 27 July 2023, the main contractor submitted a payment response certifying a total value of works of $16,861.60 (including GST).

c.???? On 8 September 2023, the subcontractor commenced an adjudication application on the basis of non-payment of the response amount.

d.???? The adjudicator determined in favour of the subcontractor.

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(3) THE COURT'S DECISION

3.???? On the first issue, the Court held that the Subcontract does not contain a date for service of the payment claim and hence the reading of s 10(2)(a)(ii) SOPA, regs 5(1) and 5(3) of the SOPR together with the deeming provision under s 10(3)(b) of the SOPA would mean that the payment claim was actually served on the last day of the calendar month in which it was served, i.e. 31 July 2023 under the SOPA. Since the payment response of 27 July 2023 predated the deemed date of service of the payment claim, it was defective under s 11(1)(b) of the SOPA.

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4.???? As to the second issue, the Court held that the main contractor was estopped from challenging the determination on the basis of the invalid payment response. The main contractor had a duty to speak earlier in this context when the deadline for service of a payment response was reached or when the tax invoice was issued to the applicant. The mere silence and inaction by the main contractor amount to unequivocal representation that it would not insist on its legal right to serve its payment response later (i.e. within 14 days after the deemed service date of the payment claim). The subcontractor then relied on the representation to its detriment and it was inequitable for the main contractor to go back on its representation.

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5.???? On the final issue, the Court held that subcontractor had relied on the sum of $16,861.60 on multiple occasions in the course of corresponding with the main contractor. The principle of “fixing the parameters of the substantive content of an adjudication application” in Rong Shun was applicable in this case.

?(4) KEY TAKEAWAYS

6.???? The Court was of the view that the first and third issues relate to trite law and the issue to focus on was on the point of estoppel. From this case, it can be seen that the Court will not allow a respondent to rely on its defective payment response to escape payment under the adjudication regime where it had led the claimant to believe it was entitled to payment. This is particularly since under s 12(1) read with s 12(3) of the SOPA, a claimant is entitled to accept a payment claim in writing. Since the claimant did accept the payment claim in writing through the issuance of a tax invoice, it coheres with estoppel principles that the respondent had an obligation to respond.