LENDLEASE SINGAPORE PTE LTD V M & S MANAGEMENT & CONTRACTS SERVICES PTE LTD [2019] SGHC 139
In the recent High Court decision of Lendlease Singapore Pte Ltd v M & S Management & Contracts Services Pte Ltd [2019] SGHC 139 (“Lendlease”), the High Court overturned the finding by the adjudicator below and held that the adjudication application was filed out of time and in breach of section 13(3)(a) of the Building and Construction Industry Security of Payment Act (“SOP Act”).
Background. The plaintiff, was the main-contractor for the a project titled “Paya Lebar Quarter” project. The defendant was engaged by the plaintiff to supply general labour for that the project.
Under the contract, payment claims were to be made on the 20th day of each month.
The contract also contained a clause providing that “If any notice is to be given, or any other act, matter or thing is to be done on a specified day, and that day falls on a day which is not a Business Day, then it must be given or done on the preceding Business Day ”
On 18 January 2019, a Friday, the defendant served on the plaintiff its payment claim no. 29 (“PC29”). PC29 was post-dated to 20 January 2019, a Sunday. This was because the latter date happened to be a Sunday.
Subsequently, the plaintiff served its payment response, and following which the defendant simultaneously served its notice of its intention to apply for adjudication on the plaintiff and lodged the adjudication application with the Singapore Mediation Centre.
The plaintiff then filed its adjudication response, disputing the jurisdiction of the adjudicator on the basis that the adjudication application was lodged out of time.
Was the operative date 18 January 219, or 20 January 2019. The dates on which the various steps were taken by the parties following the defendant’s service of its payment claim need not confine us as bBoth parties unreservedly agreed before the court that the adjudication application was lodged out of time if time had started running from 18 January 2019 when the payment claim was served, and conversely, that the adjudication application was lodged within time if time had started running from 20 January 2019 ([13] Lendlease).
Therefore, the only issue was whether the operative date of the payment claim was the date of service (18 January 2019) or the date the payment claim was post-dated to (20 January 2019) ([13] Lendlease).
Before the adjudicator, the plaintiff’s objections as to jurisdiction were dismissed and the adjudicator found that the Defendant defendant had lodged the adjudication application within time ([5] Lendlease).
Section 13(3)(a) of the SOP Act. Section 13(3)(a) of the SOP Act, which sets down the timeline as to when an adjudication application must be filed by, states as follows: “An adjudication application shall be made within 7 days….”. It is trite law that the section is “mandatory” in nature ([20] Lendlease).
This means that there is no de minimis exception to the stipulated timeline or the adjudicator would be placed in the unenviable position of determining “when an application is late but forgivable so as to accept the adjudication application, and late and unforgivable so as to reject it”, resulting in “an intolerable uncertainty which would considerably compromise the regime under the Act” (see Shin Khai Construction Pte Ltd v FL Wong Construction Pte Ltd [2013] SGHCR 4 at [27]). The same reasoning applies even where the adjudication application is “filed prematurely” (see Tienrui Design & Construction Pte Ltd v G & Y Trading and Manufacturing Pte Ltd at [22]).
A flavor of the mandatory nature of section 13(3)(a) of the SOP Act can also be seen from the consequences stipulated for a breach of the same, in section 16(2)(a) of the SOP Act, which states that the adjudicator “shall reject any adjudication application that is not made in accordance with section 13(3)(a)….”. In other words, a sub-contractor who whether by inadvertence or otherwise, overlooks this timeline, would effectively be surrendering his right to apply for adjudication for that payment claim.
In the same way, section 10(2)(a) of the SOP Act states that “A payment claim shall be served at such time as specified in or determined in accordance with the terms of the contract….”.
Therefore, it was strictly irrelevant that the dates of 18 January 2019 and 20 January 2019 were merely 2 days apart and strict compliance of service of the payment claim on the date stipulated in the contract was required.
Should the defendant have served its payment claim on 18 January 2019 or 20 January 2019? The High Court judgeheld that pursuant to aptly pointed to clause 7.1(c) read with “Annexture Part A” of the contract between both parties (the “Contract”), which stipulated that all payment claims were to be made on the 20th day of each month.
However, the Contract also stated at clause 1.1 that where “any notice is to be given, or any other act, matter or thing is to be done on a specified day, and that day falls on a day which is not a Business day, then it must be given or done on the preceding Business Day”.
ThereforeAs such, the High Court held that , as the preceding business day from 20 January 2019 was undeniably 18 January 2019, the defendant was required under contract and section 10(2)(a) of the SOP Act to serve its payment claim no. 29 on the plaintiff on the date of 18 January 2019.
In doing so, the High Court held that Audi Construction Pte Ltd v Kian Hiap Construction Pte Ltd [2018] SGCA 4 (“Audi”) was not applicable, since it concerned a situation where there was no express contractual provision on what happens if the date for service fefll on a Sunday.
Was the operative date of the payment claim 18 January 2019 or 20 January 2019? Following the fact that theHaving held that the payment claim was validly served by the defendant on 18 January 2019, the courtHigh Court then had to answer the question ofaddressed whether the operative date of the payment claim was 18 January 2019 or 20 January 2019.
The defendant’s case was that the operative date was 20 January 2019, the date the payment claim was dated, notwithstanding it had been served on 18 January 2019. The defendant relied on the case of Audi Construction Pte Ltd v Kian Hiap Construction Pte Ltd [2018] SGCA 4 (“Audi”) for support of this proposition.
The court High Court in Lendlease was not persuaded by the defendant’s submission and ruled in favour of the plaintiff. It distinguished Audi on the basis of one material fact; that the express terms of the contract there in Audi did not stipulate that where the payment claim falls on a non-business day, it would be required to be served the preceding business day.
Therefore, aAs the contract in this caseLendlease had clearly stipulated for the defendant to serve the payment claim on 18 January 2019, and the defendant had complied with the requirement, the operative date was 18 January 2019 and time would begin to run from the date thereof. As stated at [19] Lendlease, “… the plaintiff’s act of post-dating [the payment claim] cannot have any effect on the operative date of the payment claim.”
Finally, the court also remarked that the defendant’s act of post-dating the payment claim to 20 January 2019 “cannot have any effect on the operative date of the payment claim” ([19] Lendlease). This would necessarily mean that the operative date of a payment claim must be the date of its service. Curiously, by finding that the operative date was the date the payment claim was post-dated to, the court in Audi had to the contrary, respected the appellant’s act of post-dating the payment claim. A plausible explanation for this, would be that the ratio of Audi provides a true exception to the mandatory nature of the SOP Act.
Significance. This case Lendlease highlights the importance of ensuring that the contract between both parties clearly stipulate what the relevant dates pertaining to any payment claim should be. This would include providing for exigencies such as where it is impossible to effect service on the contractually stipulated date and what the practice should be for dates falling on non-business days.
This caseLendlease also highlights the importance of avoiding any post-dating of payment claimsensuring strict compliance with the relevant contractual terms. If the contract expressly provides for a service date, no act of post-datingrespondents would do well to read the contract carefully before attempting to rely on Audi lest they fall foul of Lendlease. The , which may end up in messy disputes on the operative date of the payment claim, where the date of service of the payment claim is divorced from that of the payment claim itself.
Tags: Payment claim; Adjudication application; Mandatory nature; Contractually stipulated date; Out of time; Within time, Post-dating, Operative date
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