30 August, 2015
The Singapore Court of Appeal ("CoA") has delivered its judgment in Citiwall Safety Glass Pte Ltd v Mansource Interior Pte Ltd [2015] SGCA 42. Overturning the High Court's decision, the CoA held that the time limits applicable in statutory adjudication under the Building and Construction Industry Security of Payment Act ("SOPA") are incredibly strict. The CoA therefore upheld the decision of the Adjudicator to disregard an Adjudication Response which was filed 2 minutes late. There was no applicable de minimis rule.
The CoA acknowledged that whilst its decision may appear on the face of it to be draconian, it was duty bound to give effect to the strict time limits in adjudication proceedings to ensure that proceedings are conducted swiftly and efficiently to ensure that any sums awarded are paid promptly.
Background
In December 2012, Mansource Interior Pte Ltd ("Mansource") awarded Citiwall Safety Glass Pte Ltd ("Citiwall") a subcontract for certain construction works. In August 2013, the Citiwall served a Payment Claim. Mansource submitted a Payment Response, disputing the majority of the Payment Claim (the "Disputed Sum”).
As a result, Citiwall commenced adjudication under the SOPA at the Singapore Mediation Centre (the "SMC") in respect of the Disputed Sum. Mansource was required to lodge its Adjudication Response (the "Response") with the SMC within seven days after it received the Adjudication Application from the SMC, which was by 5 September 2013 at 4.30pm in accordance with the SMC Adjudication Procedure Rules. Mansource lodged its Response at 4.32pm, two minutes after the official closing hours of the SMC. Rule 2.2 of the SMC Adjudication Procedure Rules states that the 'opening hours' of the SMC are from 9.00am to 4.30pm on weekdays and any document lodged after 4.30pm shall be deemed to have been lodged the next working day.
The Adjudicator took the view that the operation of Rule 2.2 meant that Citiwall only filed its Response on 6 September 2013. As the Response was filed out of time, the Adjudicator rejected it under section 16(2)(b) of SOPA and only considered Citiwall’s written submissions attached to its Adjudication Application. The adjudicator allowed Citiwall’s claim for the majority of the Disputed Sum together with costs. Mansource applied to the High Court to set aside the Adjudication Determination.
The Decision of the High Court
The High Court set aside the Adjudication Determination for the following reasons:
- as SOPA is silent as to time computations, the relevant act for computing them is the Interpretation Act which provides for day counting to begin the day after service (i.e. the seventh day falls one day later) and, therefore the Adjudication Response was filed in time;
- the reading of the definition of 'day' in SOPA can be taken to mean service at any point within the seventh day (i.e. up to 11.59pm on the seventh day) also meaning that the Adjudication Response was filed in time;
- the enactment of r 2.2 of the SMC Rules was ultra vires of the powers of the SMC under the SOPA; and
- by rejecting the Adjudication Response due to a two minute late filing, the Adjudicator had acted in breach of natural justice.
The Decision of the CoA
The CoA disagreed with the High Court and held that the Adjudicator had acted correctly in ignoring the Response as it had indeed been filed out of time.
In reaching this conclusion the CoA rejected all of the arguments put forward by Mansource. In particular:
- Rule 2.2 was not ultra vires s15(1) of SOPA. Rule 2.2 was supplementary to the SOPA framework. The SMC was therefore perfectly entitled to make rules which restricted the lodgement of documents on a particular day to 4.30pm and that the rules prescribed a clear and sensible arrangement as to how and when it will discharge its function under SOPA.
- The CoA rejected the argument that the filing of the Response late by only two minutes was de minimis. The Court held that the SOPA scheme is intended to "provide for speedy and temporary relief so as to minimise cash flow problems within the construction industry leaving the parties' substantive rights to be determined on another occasion". Consequently, there was no breach of natural justice.
- The CoA also rejected two further arguments from Mansource regarding the practical difficulties of lodging documents and the Adjudicator's power to decide the matter.
Practical impact
This case serves as a timely reminder to those in the construction industry that extreme care should be taken to comply with the strict timing requirements for statutory adjudication proceedings in Singapore.
By adopting a purposive approach to statutory interpretation, the Singapore courts have given effect to the clear statutory intention for statutory adjudication to be a speedy and economical process. Whilst the outcome may been seem harsh given the very short delay of only two minutes, it is important to remember that adjudication determinations are only interim, in the sense that a party is able to challenge the substance of the determination in subsequent court or arbitration proceedings.
Nonetheless, parties in adjudication proceedings should:
- pay close and careful attention to the deadlines specified under SOPA AND the SMC's Rules; and
- ensure that submissions are submitted well in time to avoid any risk of accidental late filing.
Failure to do so can result in expensive and time consuming further proceedings.
For further information, please contact:
Alastair Henderson, Partner, Herbert Smith Freehills
alastair.henderson@hsf.com
