United Integrated Services Pte Ltd v Civil Tech Pte Ltd and another  SGHC 32
Decision Date: 14 Feb 2019
This case pertains to an application to the High Court by United Integrated Services Pte Ltd (“UIS”) to stay the enforcement of an adjudication determination obtained by Civil Tech Pte Ltd (“Civil Tech”) against UIS.
It deals with the parties’ rights in the situation when there are two existing adjudication determinations – an earlier determination in which a sum was awarded and a subsequent determination in which no amounts were awarded.
Can the claimant choose to enforce the earlier determination and ignore the subsequent adjudication? Read on to find out.
UIS was the main contractor in a factory development project. It had engaged Civil Tech to be its’ main sub-contractor in the project.
Civil Tech referred its payment claim no 6 (“PC6”) to adjudication under the Building and Construction Industry Security of Payment Act (“SOPA”). It succeeded and on 23 October 2018, obtained an adjudication determination for $1,369,987.02 plus interest and costs in its favour. (“the First AD”)
On 19 November 2018, Civil Tech was granted leave by the High Court to enforce the First AD.
Civil Tech had also submitted its payment claim no 7 (“PC7”) to adjudication. The adjudication determination, which was issued on 23 November 2018 (“the Second AD”) , was not in Civil Tech’s favour. The adjudicated amount was a negative sum of $1,176,050.67. This was due to the liquidated damages and back-charges, which had not been raised or considered in the first adjudication.
After the Second AD was issued; UIS applied to the High Court to stay the enforcement of the First AD.
The High Court agreed with UIS and decided to stay the enforcement of the First AD.
Civil Tech had argued that since both the First and Second AD had not been set aside; the ADs were valid and Civil Tech was entitled to select which AD to enforce.
Justice Chan Seng Onn rejected Civil Tech’s submissions.
His Honour held that adjudication determinations are cumulative in nature. As such, when there is a series of adjudication determinations; the final adjudication determination in the series would be conclusive of the amounts payable to the claimant if any. Only the final AD is enforceable.
To decide otherwise would result in a windfall to the claimant. This could not have been intended by the drafters of the SOPA.
Chan J explained his reasoning with the following illustration
“… consider the following scenario, in which a subcontractor completes the first tranche of work pursuant to a construction contract, and accordingly issues its Payment Claim for $2,000,000 (“PC1”). Thereafter, the main contractor disputes PC1, and the matter is submitted to adjudication. The adjudicator publishes an AD in favour of the subcontractor in the sum of $2,000,000. However, the subcontractor does not enforce the AD. Instead, it submits a further Payment Claim for $2,000,000 (“PC2”) in the next month for the same works it had previously completed, and which remains unpaid. PC2 is then subject to adjudication, and the adjudicator, after considering the prior AD, adopts the prior adjudicator’s decision and therefore issues an AD in the subcontractor’s favour for $2,000,000 (assuming no liquidated damages or back-charges have arisen yet). This process is repeated ad infinitum, and the subcontractor obtains multiple ADs each in the value of $2,000,000 in its favour.
20. All of these ADs have temporary finality. However, in coming to their AD, each adjudicator would have considered the decision of the prior adjudicator, and hence the final AD would be the cumulative result of all prior ADs. Yet, taking the Sub Contractor’s contention to the logical extreme, the subcontractor in this illustration can claim the value of all ADs in its favour, even though they relate to the same $2,000,000 works which it had completed. The subcontractor may therefore enjoy a windfall unless and until the ADs are reversed by a challenge in a court or tribunal or some other dispute resolution body.”
Thus, a claimant who has already obtained an AD in its favour should think more than twice before launching another adjudication application on a subsequent payment claim. A misstep in a subsequent adjudication application may possibly extinguish all the benefits accrued in an earlier adjudication determination. This rings particularly true in cases where in the first adjudication; the respondent had failed to put up a payment response and was unable to raise its set-offs or counterclaims in the adjudication. Typically; the respondent; would include its set-offs or counterclaims in its subsequent payment responses. issue its payment response to respond to subsequent payment claims. In such event, if the first adjudication determination is unpaid; the claimant may well be advised to take steps to enforce the first adjudication determination instead of lodging a subsequent adjudication application.
Tan Joo Seng