Chip Hup Hup Kee Construction v Ssangyong: SOP Act Adjudication & Natural Justice

In Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd, the High Court of Singapore addressed whether an adjudicator's interpretation of the Building and Construction Industry Security of Payment Act (SOP Act) was compatible with natural justice. Chip Hup Hup Kee Construction Pte Ltd ("the Claimant") sought adjudication after Ssangyong Engineering & Construction Co Ltd ("the Respondent") failed to provide a timely payment response. The adjudicator, Mr. Goh Phai Cheng SC, awarded the Claimant the full amount, precluding consideration of the Respondent's reasons for withholding payment under s 15(3) of the SOP Act. The Respondent applied to set aside the adjudication determination, arguing the adjudicator misinterpreted s 15(3) and breached natural justice. The High Court dismissed the application, finding no breach of natural justice and upholding the adjudicator's interpretation of the SOP Act.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Application dismissed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

High Court case regarding the interpretation of the SOP Act and whether an adjudicator's decision was compatible with natural justice.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Chip Hup Hup Kee Construction Pte LtdApplicantCorporationWonWon
Ssangyong Engineering & Construction Co LtdRespondentCorporationLostLost

3. Judges

Judge NameTitleDelivered Judgment
Lim Jian YiAssistant RegistrarYes

4. Counsels

Counsel NameOrganization
Lim Hui Li DebbyTSMP Law Corporation
Melvin Chan Kah KeenTSMP Law Corporation
Rahayu MahzamHeng Leong & Srinivasan
Srinivasan V.N.Heng Leong & Srinivasan

4. Facts

  1. Chip Hup Hup Kee Construction Pte Ltd was the sub-contractor for reinforced concrete structural works.
  2. Ssangyong Engineering & Construction Co Ltd was the main contractor for the hotel portion of the Marina Bay Sands Integrated Resort project.
  3. A sub-contract was awarded to Chip Hup Hup Kee Construction Pte Ltd on 3 September 2007 for $12,000,000.
  4. Chip Hup Hup Kee Construction Pte Ltd served Progress Claim No. 5 on Ssangyong Engineering & Construction Co Ltd for $1,616,207.14 on 21 April 2008.
  5. Ssangyong Engineering & Construction Co Ltd did not serve a payment response within the stipulated time.
  6. Chip Hup Hup Kee Construction Pte Ltd submitted an Adjudication Application for Progress Claim No. 5.
  7. Ssangyong Engineering & Construction Co Ltd provided Payment Certificate No. 5 to Chip Hup Hup Kee Construction Pte Ltd after the deadline for payment response.

5. Formal Citations

  1. Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering & Construction Co Ltd, OS 894/2008, [2008] SGHC 159

6. Timeline

DateEvent
Sub-contract awarded to Chip Hup Hup Kee Construction Pte Ltd.
Chip Hup Hup Kee Construction Pte Ltd served Progress Claim No. 5 on Ssangyong Engineering & Construction Co Ltd.
Deadline for Ssangyong Engineering & Construction Co Ltd to submit payment response.
Chip Hup Hup Kee Construction Pte Ltd reminded Ssangyong Engineering & Construction Co Ltd to provide its payment response.
Chip Hup Hup Kee Construction Pte Ltd gave Ssangyong Engineering & Construction Co Ltd a Notice of Intention to Apply for Adjudication and submitted its Adjudication Application for Progress Claim No. 5.
Singapore Mediation Centre served a copy of the Adjudication Application on Ssangyong Engineering & Construction Co Ltd and Ssangyong Engineering & Construction Co Ltd provided a copy of Payment Certificate No. 5 to Chip Hup Hup Kee Construction Pte Ltd.
Singapore Mediation Centre notified Chip Hup Hup Kee Construction Pte Ltd that Mr Goh had been appointed as the Adjudicator.
Ssangyong Engineering & Construction Co Ltd submitted Adjudication Response SOP/AA22/2008.
Ssangyong Engineering & Construction Co Ltd commenced Suit No. 379 of 2008 against Chip Hup Hup Kee Construction Pte Ltd and applied for an interim injunction.
Interim injunction granted to Ssangyong Engineering & Construction Co Ltd.
Chip Hup Hup Kee Construction Pte Ltd's solicitors wrote to the Adjudicator objecting to the inclusion of Payment Certificate No. 5.
Ssangyong Engineering & Construction Co Ltd's solicitors wrote back, disagreeing with Chip Hup Hup Kee Construction Pte Ltd's solicitors' position.
Parties attended an Adjudication Conference at the Adjudicator’s office.
Adjudication Determination issued in favour of Chip Hup Hup Kee Construction Pte Ltd.
Chip Hup Hup Kee Construction Pte Ltd commenced originating summons pursuant to s 27 of the SOP Act.
Suit No. 379 of 2008 was discontinued.
Judgment reserved.

7. Legal Issues

  1. Interpretation of Section 15(3) of the SOP Act
    • Outcome: The court held that the adjudicator's interpretation of s 15(3) of the SOP Act was correct.
    • Category: Substantive
  2. Breach of Natural Justice
    • Outcome: The court held that there was no breach of natural justice.
    • Category: Procedural

8. Remedies Sought

  1. Setting aside of Adjudication Determination
  2. Fresh adjudication

9. Cause of Actions

  • Failure to provide payment response
  • Failure to make payment

10. Practice Areas

  • Construction Law
  • Commercial Litigation
  • Adjudication

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Musico v DavenportNew South Wales Supreme CourtYes[2003] NSWSC 977New South WalesCited regarding judicial review of an adjudicator’s determination for non-jurisdictional errors of law.
Brodyn Pty Ltd v DavenportNew South Wales Court of AppealYes[2004] NSWCA 394New South WalesCited for the principle that an adjudication determination must comply with basic and essential requirements, including natural justice.
AMEC Capital Projects Ltd v Whitefriars City Estates LtdN/AYes[2005] BLR 1United KingdomCited as an example of a case where a breach of natural justice was a reason not to enforce an adjudication determination.
Waugh v PedneaultN/AYes[1949] 1 WWR 14N/ACited for the principle that the Legislature cannot be presumed to act unreasonably or unjustly.
Lloyd v McMahonN/AYes[1987] AC 625N/ACited for the principle that the requirements of fairness depend on the character of the decision-making body and the statutory framework.
Kay Swee Pin v Singapore Island Country ClubCourt of AppealYes[2008] 2 SLR 802SingaporeCited for the principle that procedural fairness requires an impartial decision-maker and a fair opportunity to be heard.
R v University of CambridgeN/AYes(1723) 1 Str 557N/ACited for the principle that every man has a right for his defence to be heard.
Wiseman v BornemanN/AYes[1971] AC 297N/ACited for the principle that natural justice requires a fair procedure and that courts can supplement legislation where necessary.
Macob Civil Engineering Ltd v Morrison Construction LtdN/AYes[1999] CLC 739United KingdomCited for the principle that the intention of Parliament was to introduce a speedy mechanism for settling disputes in construction contracts on a provisional interim basis.
R v Gaming Board for Great Britain ex p. Benaim and KhaidaN/AYes[1970] 2 QB 417N/ACited for the principle that it is not possible to lay down rigid rules as to when the principles of natural justice are to apply.
Re Pergamon Press LtdN/AYes[1971] Ch 388N/ACited for the principle that in the application of the concept of fair play there must be real flexibility.
AWG Construction Services Ltd v Rockingham Motor Speedway LtdN/AYes[2004] TCLR 6United KingdomCited regarding whether it is possible to do natural justice for a respondent in the timelines given in cases of exceptional complexity.
Company BO v Company BPN/AYes[2006] SGSOP 12SingaporeCited for the principle that the relevant payment response of section 15(3) must be made before the adjudication application in accordance to the time frame allowed for in the Act.
AA Pte Ltd v AB Pte LtdN/AYes[2005] SGSOP 1SingaporeCited for the principle that Section 15(3) of the Act provides that in such a situation “the adjudicator shall not consider any reason for withholding any amount, including but not limited to any cross-claim, counterclaim and set off”.
AR Pte Ltd v AS CorpN/AYes[2006] SGSOP 6SingaporeCited for the principle that in the absence of any payment response or adjudication response from the Respondents, I have no grounds to reject the rates adopted by the Claimants in their variation claims and in their claim for the Works as deviating from the terms of the Sub Contract.
Taylor Projects Group Pty Limited v Brick Dept Pty Limited and OrsNew South Wales Supreme CourtYes[2005] NSWSC 439New South WalesCited for the principle that it is simply critical for a rigid approach to be taken to compliance with the terms of the Act.
Multiplex Constructions Pty Ltd v Luikens and AnotherNew South Wales Supreme CourtYes[2003] NSWSC 1140New South WalesCited for the principle that the parties must define clearly, expressly and as early as possible what are the issues in dispute between them.
AU v AVN/AYes[2006] SGSOP 7SingaporeCited for the principle that a respondent can raise procedural arguments based on facts which had arisen only after the due date for a payment response has passed.
Company BQ v Company BRN/AYes[2006] SGSOP 13SingaporeCited for the principle that the respondent’s failure to provide a payment response did not stop him from hearing the respondent’s arguments on whether the subcontract was excluded from the SOP Act.
Company CH v Company CIN/AYes[2006] SGSOP 18SingaporeCited regarding whether the adjudicator can consider the reasons in the 9th November Letter despite the fact that the reasons in the adjudication response could not.
Company BZ v Company CAN/AYes[2006] SGSOP 16SingaporeCited regarding whether the adjudicator may determine the application on the basis of the information and documents available to him in accordance with section 16(7).
Pacific General Securities Ltd and Another v Soliman and Sons Pty Ltd and OthersNew South Wales Supreme CourtYes[2006] NSWSC 13New South WalesCited regarding the adjudicator's duty to come to a view as to what is properly payable.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed)Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 15(3)Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 16(3)Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 11Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 12Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 2Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 13Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 16Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 17Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 18Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 19Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 21Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 27Singapore
Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) s 34Singapore
Building and Construction Industry Security of Payment Act 1999New South Wales
Housing Grants, Construction and Regeneration Act 1996United Kingdom

15. Key Terms and Keywords

15.1 Key Terms

  • Adjudication
  • Payment Response
  • Payment Claim
  • SOP Act
  • Natural Justice
  • Adjudication Determination
  • Construction Contract
  • Progress Claim

15.2 Keywords

  • SOP Act
  • Adjudication
  • Construction
  • Payment
  • Natural Justice

17. Areas of Law

Area NameRelevance Score
Construction Law95
Statutory Interpretation60
Administrative Law50
Contract Law40

16. Subjects

  • Construction Dispute
  • Adjudication
  • Security of Payment
  • Natural Justice