CIK V CIL: SETTING ASIDE AN ADJUDICATION DETERMINATION BY THE CLAIMANT
The recent High Court decision of CIK v CIL [2020] SGHC 274 (“CIK v CIL”) is a rare instance where a claimant applied to set aside an adjudication determination rendered under the Building and Construction Industry Security of Payment Act (“SOP Act”).
Salient facts. The plaintiff was appointed by the defendant as a specialist sub-contractor for the design-and-build of a pneumatic food waste management system at the Fernvale CC Project’s hawker centre ([4] – [5] CIK v CIL).
Disputes arose between the parties, and the plaintiff commenced an adjudication under the SOP Act. The adjudicator determined that he had no jurisdiction to hear the dispute, as there was no contract between the parties ([1] CIK v CIL).
The plaintiff applied to the High Court to set aside adjudication determination on the basis that the adjudicator “made an erroneous determination on jurisdiction”, or, alternatively, that the adjudicator had breached the principles of natural justice “by failing to consider the plaintiff’s arguments” ([2] CIK v CIL).
AD set aside. The High Court set aside the adjudication determination on the basis that there was in fact jurisdiction as a written contract did exist ([3] CIK v CIL).
While CIK v CIL is on appeal, there are some important points to note.
Existence of a written contract. Firstly, the High Court held that an email from the defendant to the plaintiff, termed as the 17 October 2018 email, amounted to an acceptance of an offer that was made in a 17 October 2018 meeting between the parties ([14] – [15] CIK v CIL).
The email states as follows ([5] CIK v CIL).
“…
We [the defendant] write to confirm on the award Pneumatic Food Waste Management System to [the plaintiff] in the Lump Sum amount of $444,000.00 (Singapore Dollars: Four Hundred and Forty-Four Thousand Dollars only) for Fernvale CC project which subject to Architect’s approval.
Please find attached revised quotation, procurement checklist and Specimen of Contract Performance Bond for your further action, kindly revert to us on your signed copy for our preparation of formal Letter of Award. We shall forward you our Specimen of Down Payment Bond in due course.
You shall commence your services IMMEDIATELY and coordinate closely with our project teams and Consultants for all necessary submission and/or presentation for approval. Kindly submit your project organization chart and work programme to us WITHIN 7 DAYS from this email.
…”
(formatting in bold and capitals as per original)
The High Court at [15] CIK v CIL gave weight to the phrase “confirm on [sic] the award” as signifying acceptance or agreement as to the terms of the 17 October 2018 meeting.
Requirement for written contract. This is important because under the SOP Act, a contract can be made in writing so long as it fulfils one of the requirements in s. 4(3) SOP Act, or if it fulfils the requirement in s. 4(4) SOP Act.
Hence, CIK v CIL is a useful reminder that you do not need a “formal sub-contract” to have a contract in writing for the purposes of the SOP Act.
As the High Court stated at [18] CIK v CIL:
“18 The defendant cannot blow hot and cold in this regard. Given that it had previously, correctly, adopted the view that the 17 October 2018 Email constituted contract acceptance, it cannot now seek to withdraw from that. The “formal” LOA as referred to in the 17 October 2018 Email was exactly that – a formality between parties. This, in no way, detracted from the fact that a contract had already been formed on 17 October 2018”
Claimant can set aside. Secondly, CIK v CIL is an application taken up by the claimant to set aside an unfavourable adjudication determination.
This is important because while most setting aside applications are taken up by the respondent, claimants can also set aside an adjudication determination (see s. 27(5) SOP Act).
Claimants should bear this in mind because if a claimant receives an unfavourable adjudication determination, e.g., such as when the adjudicator determines that the claimant is not entitled to commence an adjudication, the claimant should consider whether that adjudication determination should be set aside (bearing in mind also s. 17(5) SOP Act).
Conclusion. While CIK v CIL is a short judgment, it throws up quite a few interesting issues, including that the High Court appeared to have accepted that if an adjudicator makes an error in determining that whether there is a contract for the purposes of the SOP Act, it is a ground for setting aside.
However, practically, CIK v CIL is important as a reminder that (a) the requirement for a contract in writing under the SOP Act does not require the conclusion of a “formal sub-contract” so long as the requirements under the SOP Act are met, and (b) that a claimant can also set aside an adjudication determination.
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