Singapore: The Singapore High Court Clarifies The Scope Of Adjudication Review

The decision in Ang Cheng Guan Construction Pte Ltd v Corporate Residence Pte Ltd

Overview

For the first time, a Singapore court considered the question of the scope of an adjudication review under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (the Act). In Ang Cheng Guan Construction Pte Ltd v Corporate Residence Pte Ltd [2017] SGHC 9, the Singapore High Court held that a review adjudicator is entitled to review the entire adjudication determination rather than restricting himself to issues raised by the respondent. The court also further affirms that if the review adjudicator misdirects himself on a point of law in exercising his review, such review is liable to be set aside.

Background

Corporate Residence Pte Ltd (CR) had engaged Ang Cheng Guan Construction Pte Ltd (ACG) to carry out works as a main contractor for a project. ACG took out an adjudication application in relation to a payment claim. The net result of the adjudication application was that CR was found liable to pay ACG the sum of $467,428.69. Dissatisfied with the adjudicator's determinations in relation to two of the issues, CR lodged an adjudication review application pursuant to s18(2) of the Act. At the same time, ACG was also dissatisfied with certain determinations, and submitted separate and distinct issues for the review adjudicator to consider.

In rendering his review determination, the review adjudicator did not take into account ACG's issues as he felt that the Act did not allow a review adjudicator to review the entire adjudication determination. ACG thereby sought to set aside the adjudication review determination before the High Court.

Issues in dispute

The High Court was faced with two issues:

  1. What is the scope of an adjudication review; and
  2. Whether the adjudication review determination was liable to be set aside.

Scope of adjudication review

ACG submitted that a review adjudicator was entitled to review the entire adjudication determination (the Broad Interpretation). On the other hand, CR argued that an adjudication review was restricted to only the issues raised by the respondent (the Narrow Interpretation).

The court eventually accepted the Broad Interpretation in light of the reasons which will be elaborated in the paragraphs below.

Provisions of the Act support a Broad Interpretation

The court observed that there is nothing in the Act that explicitly spells out the scope of an adjudication review. However, the wording of s18(2) of the Act, which provides that a respondent who is aggrieved by the determination may lodge an application for the "review of the determination", prima facie refers to the entire adjudication determination and supports the Broad Interpretation.

The Act does not state that an adjudication review is limited to the issues raised by the respondent; neither does it state that it is not limited to these issues. What the Act does state, in s19(6)(a) of the Act, is that the review adjudicator shall only have regard to the adjudication determination under review and matters in s17(3)(a) to (h) of the Act. The court observed that if the Narrow Interpretation were intended, the draftsman could have easily inserted words into ether of these provisions to give effect to the Narrow Interpretation. Furthermore, s19(6)(a) made reference to the adjudication determination, not a part of it.

In addition, s19(5) of the Act does not expressly restrict a review adjudicator to simply maintaining or decreasing the adjudicated amount. Rather, the provision is broadly constructed and allows a review adjudicator the option to increase the adjudicated amount. Once again, this is consistent with the Broad Interpretation.

The court observed that the only provision that CR could rely on for the Narrow Interpretation is s18(2), which provided that only the respondent in an adjudication was entitled to apply for an adjudication review. However, the court noted that the provision did not state that such a review was limited to issues raised by the respondent. It was therefore, a "leap of logic" to conclude based on this that a Narrow Interpretation should be adopted.

Policy reasons support a Broad Interpretation

The court observed that the Act was to establish a quick and inexpensive regime for the resolution of disputes over payment claims that would facilitate cash flow in the construction industry. It is conceivable that once an adjudication review is set in motion, the entire adjudication determination is open for review and not just the parts that the respondent is dissatisfied with. It is entirely plausible that an adjudicator may get certain parts wrong, and it is unfair to permit a respondent to cherry-pick the parts which he is unhappy with, without a corresponding right on the part of the claimant to seek a review of the potentially wrong parts. A Narrow Interpretation, if adopted, would tend to encourage applications for adjudication review as there would be, in the words of the court, "nothing to lose, but everything to gain".

The court therefore concluded that in light of the provisions of the Act and policy reasons, a Broad Interpretation is the correct interpretation. Therefore, the entire adjudication determination is liable to be reviewed by the review adjudicator.

Setting aside of adjudication review determination

The court considered two potential grounds on which the adjudication review determination could be set aside: breach of natural justice and misdirection of law. The determination was eventually set aside on the ground of misdirection.

Breach of natural justice

ACG argued that by refusing to hear its arguments relating to the issues  raised, the review adjudicator had breached the rules of natural justice. The court rejected this argument. The review adjudicator did not consider ACG's issues because he was of the opinion that the Narrow Interpretation applied. It was entirely fair for the review adjudicator to take this position and base his review on it. Accordingly, there was no breach of natural justice.

Misdirection of the law

Since the review adjudicator accepted the Narrow Interpretation—which is the incorrect view of law—he did not consider the issues ACG raised. Citing the famous decision of Anisminic Ltd v Foreign Compensation Commission and another [1969] 2 AC 147, the court agreed that an error of law made by a public body would make its decision a nullity. Such an error might be reflected by taking into account irrelevant considerations, or not taking into account relevant considerations. The review adjudicator had misdirected himself on a point of law and ACG's issues were relevant considerations that he had failed to take into account. Accordingly, the adjudication review determination was set aside by the court on this basis.

Conclusion

This decision is interesting as it provides a clarification on the scope of adjudication under the SOP Act, thirteen years after its enactment. However, this effectively means that it is open for an original adjudication claimant to challenge aspects of an adjudication determination in a review even though that review is brought by the original respondent. More importantly, this widens the door (even if slightly) to setting aside an adjudication determination on the basis of an error of law.  As to where all of this will bring us, watch this space.

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