22 August, 2015
Lau Fook Hoong Adam v GTH Engineering & Construction Pte Ltd [2015] SGHC 141 (Singapore, High Court, 25 May 2015)
Facts
The plaintiff sought to resist enforcement of an adjudication determination made pursuant to the Security of Payment Act (“SOP Act”). He sought a declaration that the adjudication determination was null and void due to a breach of natural justice, or, alternatively, a declaration that the adjudicator lacked jurisdiction over the dispute as the payment claim was invalid. The defendant objected to the plaintiff’s application on the basis that the plaintiff was, in fact, seeking to set aside the adjudication determination, but was attempting to bypass the exclusive procedure for setting aside an adjudication determination as prescribed in Order 95 rule 3 of the Rules of Court (“ROC”). According to the Defendant, such an application was impermissible.
Decision
The Singapore High Court rejected the plaintiff’s application on the basis that the SOP Act read with Order 95 rule 3 of the ROC prescribed the exclusive avenue for setting aside an adjudication determination, and the application for a declaration could not be allowed as it would lead to a contravention of Parliament’s intention and the purpose of the SOP Act.
The Court scrutinised Parliament’s intention in respect of the setting aside procedure in the SOP Act and the ROC, specifically the requirement that an applicant must pay into court, as security, the sum that the other party had been found to be entitled to. Amongst other factors, the Court considered that:
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the SOP Act was intended to provide a quick and efficient means of deciding a claimant’s entitlement to the monies claimed;
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setting aside applications always delay a successful claimant’s entitlement to the monies claimed and this carries a risk of the respondent becoming insolvent or dissipating its assets in order to avoid payment;
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the requirement of payment into court was clearly to protect the successful claimant against such risks; and
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the provision of security would also ensure that the claimant would be paid immediately upon the conclusion of the setting aside application (which in certain situations take a substantial amount of time) in the event that the application is dismissed.
After considering the factors above, the Court concluded that Parliament had only intended for there to be a single procedure for setting aside an adjudication determination, as provided in Order 95 rule 3 and that the requirement of payment into court was fundamental to the underlying purpose and scheme of the SOP Act.
However, the Court found that the application for a declaration was, in fact, a disguised setting aside application, which bypassed the requirement for an applicant to pay into court the monies adjudicated upon as security. Without such security, the successful claimant would not be accorded the protections envisioned by Parliament, in respect of the applicant’s risk of insolvency and/or dissipation of assets, which in turn could result in non-payment or unjustly delayed payment to the claimant.
Accordingly, the Court held that it could not, and should not, allow parties to bypass the expressly and exclusively prescribed means of setting aside an adjudication determination.
Conclusion
It is important to note that the only way for a party to set aside an adjudication determination would be through the procedure in Order 95 rule 3 of the ROC, and that security in the form of payment into court must always be provided for such applications.
Ultimately, this case affirms and strengthens the protections accorded by the SOP Act to a successful claimant and ensures that a respondent cannot abuse the court process for its own advantage, to the detriment of the claimant.
For further information, please contact:
Christopher Chuah, Partner, WongParntership
christopher.chuah@wongpartnership.com
