Case Details
- Citation: [2018] SGCA 39
- Case Title: Bintai Kindenko Private Limited v Samsung C&T Corporation
- Court: Court of Appeal of the Republic of Singapore
- Date of Decision: 9 July 2018
- Procedural History: Appeal against High Court decision allowing Samsung’s setting aside application in relation to an adjudication determination under the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed)
- Judges: Sundaresh Menon CJ, Tay Yong Kwang JA and Steven Chong JA
- Appellant: Bintai Kindenko Private Limited (“Bintai”)
- Respondent: Samsung C&T Corporation (“Samsung”)
- Originating Summons: Originating Summons No 975 of 2016 (“OS 975/2017” as referenced in the extract)
- Setting Aside Application: Summons No 4276 of 2017
- Adjudication Application: Adjudication Application No 190 of 2017
- Adjudication Determination: Dated 15 August 2017 (“Adjudication Determination”)
- Order of Court: Dated 30 August 2017 granting leave to enforce the Adjudication Determination
- Payment Claim: Payment Claim No 59 (“PC 59”) dated 19 May 2017
- Payment Response: Payment Response No 59 (“PR 59”) dated 9 June 2017
- Adjudicated Amount: $2,146,250.00 (excluding GST)
- Key Statutory Context: Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“the Act”)
- Key Procedural Context: Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”), in particular O 59 r 8(1)(a)
- Judgment Length: 34 pages, 10,002 words
- Cases Cited (as provided): [2009] SGHC 260; [2010] SGHC 80; [2015] SGHC 293; [2015] SGHC 26; [2017] SGHC 321; [2018] SGCA 39; [2018] SGHC 76
Summary
This Court of Appeal decision concerns the narrow but important circumstances in which the courts may set aside an adjudication determination made under Singapore’s Building and Construction Industry Security of Payment regime. The Building and Construction Industry Security of Payment Act (“the Act”) is designed to facilitate cash flow by providing an inexpensive and efficient mechanism for resolving payment disputes. Consistent with that legislative purpose, adjudication determinations are intended to have “temporary finality”, meaning they are binding on the parties for the interim period pending final resolution by litigation or arbitration.
However, the Court of Appeal emphasised that temporary finality is not absolute. Where critical provisions of the Act are breached—particularly where the adjudicator fails to observe natural justice—curial intervention is justified. In this case, the High Court had set aside the adjudication determination on the basis that the adjudicator failed to consider two essential issues raised by Samsung in its adjudication response, amounting to a breach of natural justice and a contravention of s 16(3)(c) of the Act. The Court of Appeal, after hearing the appeal, dismissed Bintai’s appeal and upheld the setting aside.
What Were the Facts of This Case?
The dispute arose from a construction project involving additions and alterations to Suntec City’s convention centre and retail podium. Samsung C&T Corporation was the main contractor, and Bintai Kindenko Private Limited was engaged as a subcontractor for mechanical, electrical and plumbing works. The subcontract was based on a letter of acceptance dated 3 December 2012. The subcontract sum was $85,850,000.00 (excluding GST), with additional sums for optional prime costs and provisional items amounting to $4,475,000.00 (excluding GST).
On 19 May 2017, Bintai submitted Payment Claim No 59 (“PC 59”) seeking $13,479,366.43. Samsung responded on 9 June 2017 with Payment Response No 59 (“PR 59”), stating a response amount of “($2,190,963.62)”. In substance, Samsung’s position was that it owed Bintai nothing and that there was a net balance in Samsung’s favour. The difference between PC 59 and PR 59 reflected multiple components, including variation works, omissions, backcharges, and the effect of amounts previously paid and retention monies.
Two categories of dispute are particularly relevant to the adjudication and the subsequent setting aside: (1) backcharges imposed by Samsung on Bintai for alleged failure to provide scaffolding; and (2) variation works that had been certified and paid in earlier payment responses but were recomputed and reversed in PR 59. Samsung’s backcharges were reflected as “($585,252.20)” in PR 59. Samsung characterised these backcharges as falling within Bintai’s scope of works under the subcontract. Bintai, by contrast, disputed Samsung’s entitlement to these backcharges.
Adjudication proceedings were initiated by Bintai. On 7 July 2017, Bintai served a notice of intention to apply for adjudication (“NOI”) and lodged the Adjudication Application on the same day. In the NOI, Bintai indicated that it disputed the payment response amount of “($2,190,963.62)” but intended to seek payment of only $2,146,250.00, which related to the release of the first half of retention monies. In its adjudication submissions, Bintai reiterated that it was seeking only the retention release amount in the adjudication, while reserving its right to claim the balance amount later.
What Were the Key Legal Issues?
The central legal issue was whether the adjudicator’s determination should be set aside for breach of natural justice. The High Court had found that the adjudicator failed to consider two issues raised by Samsung in its adjudication response. The question for the Court of Appeal was whether that failure amounted to a breach of natural justice within the meaning of the Act, and whether it justified setting aside the adjudication determination under s 16(3)(c) of the Act.
More specifically, the Court of Appeal had to examine the adjudication process and the adjudicator’s reasoning to determine whether the adjudicator had in fact considered the essential arguments properly placed before him. The Court’s analysis also required attention to the Act’s structure: adjudication is meant to be efficient and limited in curial intervention, but the Act nonetheless imposes procedural safeguards. If those safeguards are breached in a material way, the courts must intervene even though adjudication determinations are meant to have temporary finality.
A related issue concerned costs and the court’s approach to counsel conduct. The Court of Appeal dismissed the appeal but also made specific orders under O 59 r 8(1)(a) of the ROC, reflecting that both parties’ counsel had incurred unreasonable costs and had not conducted the proceedings with reasonable competence and expedition. While costs are not the substantive legal issue of adjudication, the Court’s treatment of costs underscores the judiciary’s expectation of disciplined litigation practice in adjudication-related appeals.
How Did the Court Analyse the Issues?
The Court of Appeal began by reiterating the legislative purpose of the Building and Construction Industry Security of Payment Act. The Act was passed to facilitate cash flow by providing an inexpensive and efficient mode for resolving payment disputes. The courts, in turn, promote this objective by ensuring limited curial intervention where adjudication determinations have been made in accordance with the Act. The Court acknowledged that adjudication can produce a “rough” form of justice, which is tolerated because adjudication determinations are intended to be temporarily final—binding on the parties until their disputes are eventually resolved finally by litigation or arbitration.
Nevertheless, the Court stressed that there are limits to what can be tolerated. Where critical provisions of the Act are breached, temporary finality cannot be accorded to the determination. In general, curial intervention is justified where it can be shown that the adjudicator acted in breach of the rules of natural justice, including by failing to consider arguments that the parties have properly placed before him. This framing is important: the Court did not treat natural justice as a mere formality. Instead, it treated the duty to consider essential arguments as a substantive requirement that protects the integrity of the adjudication process.
Applying these principles, the Court focused on the High Court’s finding that the adjudicator had failed to consider two issues raised in Samsung’s adjudication response. The Court examined the structure of the adjudication submissions and the way Samsung had organised its response. Samsung’s adjudication response had included a preliminary objection to the validity of the adjudication application and then addressed the retention monies, the scaffolding backcharges, and the variation works previously paid and recomputed under PR 59. Bintai and Samsung both joined issue on the same three core items identified by Bintai in its adjudication application: retention monies, backcharges for scaffolding, and variation works.
The Court then considered what the adjudicator actually did in the Adjudication Determination. The extract indicates that the adjudicator addressed the preliminary issue and then made findings on two issues, rather than all essential issues raised. The High Court had concluded that two issues were not considered. The Court of Appeal agreed with that conclusion. The reasoning reflects a key natural justice concept in adjudication: an adjudicator must engage with the essential arguments that are properly before him. Where an adjudicator’s determination does not show that he considered such arguments, the determination is vulnerable to being set aside.
In addition, the Court’s analysis implicitly addressed the relationship between the adjudication framework and the Act’s statutory requirements. Section 16(3)(c) of the Act provides a basis for setting aside an adjudication determination where the adjudicator has not complied with the Act’s requirements, including where a breach of natural justice occurs. The Court’s approach demonstrates that the Act’s “temporary finality” is balanced against procedural fairness: efficiency cannot come at the expense of a party’s right to have its essential case considered.
Finally, the Court’s decision also addressed the conduct of the parties and their counsel in the appeal. While the appeal was dismissed, the Court found that counsel incurred unreasonable costs and failed to conduct the proceedings with reasonable competence and expedition. This led to a partial costs adjustment under O 59 r 8(1)(a) of the ROC, including orders relating to photocopying charges and stamp fees for the agreed bundle of documents. This aspect of the decision serves as a practical reminder that procedural discipline and cost control are expected, particularly in appeals that arise from time-sensitive adjudication processes.
What Was the Outcome?
The Court of Appeal dismissed Bintai’s appeal. The effect was that Samsung’s setting aside application succeeded, and the Adjudication Determination dated 15 August 2017 was set aside. The Court also upheld the High Court’s reasoning that the adjudicator’s failure to consider two essential issues raised by Samsung constituted a breach of natural justice and was contrary to s 16(3)(c) of the Act.
In relation to costs, the Court fixed party-and-party costs in favour of Samsung in the sum of $20,000 (including disbursements). However, the Court also made specific orders under O 59 r 8(1)(a) of the ROC to prevent Bintai’s counsel from charging 90% of photocopying charges and stamp fees for the agreed bundle to Bintai, and to require Samsung’s counsel to contribute 20% of those charges that Bintai’s counsel was to bear. This combination of dismissal and costs adjustment reflects both the substantive outcome and the Court’s disapproval of unreasonable and inefficient litigation conduct.
Why Does This Case Matter?
This case matters because it reinforces the boundary between permissible curial restraint and impermissible procedural unfairness in adjudication under the Act. The Court of Appeal’s remarks about “temporary finality” are not merely rhetorical. They articulate a structured approach: courts will generally tolerate the roughness of adjudication, but they will not tolerate breaches of critical statutory requirements, particularly natural justice failures. For practitioners, this means that adjudication is not a “black box” immune from review; rather, it is reviewable where the adjudicator fails to consider essential arguments.
From a drafting and advocacy perspective, the decision underscores the importance of ensuring that adjudication submissions are clearly organised and that essential issues are properly raised and tied to the adjudication response. Samsung’s ability to identify the two issues that were not considered illustrates how parties can build a setting aside case by pointing to omissions in the adjudicator’s engagement with the arguments. Conversely, for adjudicators and counsel supporting adjudication determinations, the case highlights the need for determinations to demonstrate that essential arguments were considered, even if the adjudicator does not accept them.
Finally, the costs orders provide a practical lesson for litigation strategy. Appeals arising from adjudication determinations are often time-sensitive and document-heavy. The Court’s willingness to make targeted costs adjustments under O 59 r 8(1)(a) signals that counsel should manage costs and conduct with reasonable competence and expedition. For law students and practitioners, this decision therefore offers both doctrinal guidance on natural justice in adjudication and procedural guidance on costs discipline in appellate litigation.
Legislation Referenced
- Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed), in particular s 13(3)(c) and s 16(3)(c)
- Rules of Court (Cap 322, R 5, 2014 Rev Ed), O 59 r 8(1)(a)
Cases Cited
- [2009] SGHC 260
- [2010] SGHC 80
- [2015] SGHC 293
- [2015] SGHC 26
- [2017] SGHC 321
- [2018] SGCA 39
- [2018] SGHC 76
Source Documents
This article analyses [2018] SGCA 39 for legal research and educational purposes. It does not constitute legal advice. Readers should consult the full judgment for the Court's complete reasoning.