WHEN IS A PAYMENT CLAIM SERVED UNDER THE SOP ACT IF THE CONTRACT HAS NO PROVISIONS ON SERVICE OF A PAYMENT CLAIM?
In the recent case of Asia Grand Pte Ltd v A I Associates Pte Ltd [2023] SGHC 175 (“Asia Grand”), the High Court addressed, among others, when a payment claim will be deemed to be served under s. 10 of the Building and Construction Industry Security of Payment Act 2004 when the contract in question does not contain any provision on the service of a payment claim.
Brief background. The claimant, Asia Grand Pte Ltd (“AGPL”), employed the defendant, A I Associates Pte Ltd (“AI”), to carry out works for a project at Bras Basah Road (the “Project”) via a letter of award dated 13 July 2022.
The contract did not contain provisions specifying when payment claims and payment responses were to be served, though the contract provided for “weekly progress claims”.
On 16 November 2022, AI served a payment claim on AGPL (the “PC”), claiming for $133,529.08 (inclusive of GST).
Then, on 13 December 2022, AI served a Notice of Intention to Apply for Adjudication in relation to the PC, and lodged an Adjudication Application on the same day which was registered by the Singapore Mediation Centre as SOP/AA 226 of 2022 (“SOP/AA 226 of 2022”).
AGPL then served a payment response (the “PR”) in relation to the PC on 14 December 2022, claiming that the payment response was served on time under the Building and Construction Industry Security of Payment Act 2004 (“SOP Act”).
SOP/AA 226 of 2022. The Adjudicator had to consider a few issues, including whether the Adjudication Application was premature.
The issue can be framed simply as this “Is the PC served on 16 November 2022, or is the PC served on 30 November 2022?”
This is because AGPL argued that even though the PC was actually served on 16 November 2022, ss. 10(2)(a)(ii) and 10(3)(b) of the SOP Act apply such that the PC is deemed to be served on the last day of the month, being 30 November 2022.
If AGPL’s argument was accepted, then the Adjudication Application would have been premature, given that it was lodged on 13 December 2022.
However, the Adjudicator determined that the date of service of the PC for the purposes of the SOP Act was 16 November 2022.
Dissatisfied, AGPL applied to set aside the Adjudication Determination.
Statutory Timelines. Teh Hwee Hwee JC held that, contrary to the Adjudicator’s determination, the PC should have been deemed as being served on 30 November 2022.
As set out in [35], Teh JC held that the effect of ss. 10(2)(a)(ii) and 10(3)(b) is that if a contract does not contain any terms specifying when a payment claim is to be served, any payment claim will be deemed to be served on the last day of the calendar month in which it was served, regardless of when, in fact, the payment claim was actually served.
“35 … In my view, the fact that reg 5(1) allows for a period in which a payment claim must be actually served does not detract from its separate effect of also deeming a service date for the purpose of s 10(3)(b). It bears emphasis that the Prescribed Date in s 10(2)(a)(ii), read with reg 5(1), is the same “prescribed date” referred to in s 10(3)(b). This is because s 10(3)(b) refers to the “prescribed date mentioned in subsection (2)(a)(ii)” of s 10. This means that the Prescribed Date in s 10(2)(a)(ii), that sets out the last day on which a payment claim may be served, is also the deemed date of service under s 10(3)(b). In light of my finding in [31] that the Prescribed Date is the last day of the relevant calendar month, the deemed date of service under s 10(3)(b) is therefore also the last day in the relevant calendar month. Accordingly, the effect of ss 10(2)(a)(ii) and 10(3)(b) is that if the contract does not contain terms that specify, or provide for the determination of, a service date or service period, then any payment claim will be deemed to have been served on the last day of the calendar month in which it was served, regardless of when it was actually served.”
(emphasis in original in italics; emphasis added in bold)
In this regard, we excerpt [45] below as Teh JC has helpfully set out in the judgment a table of scenarios to compare when a payment claim is actually served versus when the payment claim is regarded as being served under s. 10 of the SOP Act.
Given the above, Teh JC allowed AGPL’s application and set aside the Adjudication Determination.
Weekly progress claims. As an aside, AGPL had also submitted that as the contract provided for “weekly progress claims”, the contract was therefore outside the ambit of the SOP Act.
It suffices to say that Teh JC rejected this submission, agreeing with the Adjudicator that the provision for “weekly progress claims“ does not disentitle AI from serving payment claims under the SOP Act.
Teh JC stated that “… there is no issue of the “weekly progress claims” term being engaged in any way to thwart the operation of the SOPA or any part of the SOPA, or to contravene reg 5(1A)” (at [55]) and also commented that “… AI is not acting in contravention of reg 5(1A) of the SOPR when it combined its payment entitlements for work done under the Contract within a reference period that stretched from 19 July to 31 October 2022 when it submitted the PC for a “FINAL CLAIMED AMOUNT” on 16 November 2022…” (at [55]).
Conclusion. Teh JC’s decision in Asia Grand is important as it makes clear when payment claims will be deemed to be served under the SOP Act if the contract in question contains no provisions on the service of payment claims (or provisions for determining the service of payment claims). In this regard, the table of scenarios set out by Teh JC at [45] Asia Grand is useful as a simple and clear guide for determining when payment claims are to be regarded as being served under s. 10 of the SOP Act. It important to bear in mind that the actual date of service of a payment claim may (or may not) be the same as the deemed date of service of the said payment claim under s. 10 of the SOP Act.
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