newsletter . volume one .

issue No 2

july - december 2014

MALAYSIAN SOCIETY
OF ADJUDICATORs

Contents

MALAYSIAN SOCIETY
OF ADJUDICATORs

Published by
THE MALAYSIAN SOCIETY OF ADJUDICATORS
Kuala Lumpur Regional Centre for Arbitration
Bangunan Sulaiman
Jalan Sultan Hishamuddin
50000 Kuala Lumpur, Malaysia
Tel: +603.2271.1000 Fax: +603.2271.1010

This Newsletter is periodically published for distribution

to its members and to those who are interested in the
adjudication of disputes under the Construction Industry
Payment & Adjudication Act of 2012 (CIPAA 2012). The
logo of the MSA symbolizes the functions and constraints
of adjudication: three arches represent a simpler, cheaper,
and faster summary passage through the payment dispute
resolution process via adjudication; grey signifies the
integrity, independence, and impartiality of the adjudicator;
and blue stands for the adjudicators fair-minded, open,
and even approach towards the parties, mindful of justice,
perseverance, and vigilance.
The Newsletter is intended to serve as the leading forum
for the thoughtful review, analysis, and improvement of
adjudication under CIPAA 2012. Accordingly, submissions
of articles and information are invited. The views
presented in the Newsletter are those of the individual
authors, and do not necessarily represent the views of the
MSA, which takes no responsibility for any statement or
opinion in this Newsletter. That being said, the MSA makes
no representation, express or implied, that the contents
are accurate, complete, or correct, and similarly disclaims
all liability whatsoever for the content in the Newsletter.
Submissions may be made by email to enquiries@klrca.org
Permit Number: PP18529/07/2014 (033945)

Contents

MSA Newsletter Vol. 1

Issue 2
JULY - DEC 2014

PRESIDENTS PAGE

The Presidents Message

EDITORS DESK

Aligning with CIPAA 2012!

PODIUM

Five Questions - Four Respondents

Chang Wei Mun, Rodney Gomez, Suriana Abdul Hamid, Tai Choon Seng

IN FOCUS

Judicial Review of Adjudication Under CIPAA An Australian Perspective

on The Obligation of An Adjudicator to Comply with Natural Justice
by John K. Arthur

14

IN FOCUS

Issues in Construction Adjudication in Singapore

Lessons and Challenges for CIPAA
by S. Magintharan

26

IN FOCUS

Adjudicators Jurisdiction and Natural Justice in Adjudication in Singapore

by Lawrence Tan Shien Loon and Teo Yi Hui

36

ADJUDICATORS CORNER

Being An Adjudicator: Are You Up to the Mark?

by Daniel Tan Chun Hao

40

ADJUDICATORS CORNER

CIPAA The Magic Wand of Payment Woes?

by Tan Swee Im

49

ADJUDICATORS CORNER

The Timely CIPAA Adjudication Decision: Mission Impossible?

by John Wong

52

SIDEBAR

The Journey Towards Security of Payment Legislation in Hong Kong

by Christopher To

56

SIDEBAR

Mansource Interior Pty Ltd v Citiwall Safety Glass Pte Ltd [2014] SGHC 87:
Natural Justice: Re-Balancing the Rights of the Parties under the Building
and Construction Industry Security of Payment Act (Chapter 30 B)
by Timothy Ng Wai Keong

60

DECISION NOTES

Capitol Avenue Development Sdn Bhd v. Bauer (M) Sdn Bhd (24C-5-09/2014)
and UDA Holdings Bhd v. Bisraya Construction Sdn Bhd (24C-06-09/2014)

61

HAPPENINGS

KLRCA CIPAA Circular 02 (Amended 1st August 2014)

63

HAPPENINGS

KLRCA CIPAA Circular 1A (11 November 2014)

64

HAPPENINGS

Bayview Hotel, Penang / 15 August 2014 Construction Industry Payment

& Adjudication Act 2012 (CIPAA 2012) Talk

65

HAPPENINGS

Renaissance Hotel, Kuala Lumpur / 5 July 2014 #1 Practical Drafting

& Defending of Adjudication Claims

ii

presidents page

A Word from the President

Dear Members,
5 July 2014 marks the first year of the existence of the
Malaysian Society of Adjudicators (MSA). The MSA
was set up to promote adjudication as a means of
dispute resolution for the construction industry.
Accordingly earlier this year, the MSA collaborated
with the Kuala Lumpur Regional Centre for Arbitration
(KLRCA) to organise two well-received Construction
Industry Payment & Adjudication Act (CIPAA 2012)
Conferences in Kuala Lumpur. The first annual
general meeting of the MSA was held in June 2014 in
conjunction with the second CIPAA 2012 Conference.
Contemporaneously with the first annual meeting and
the June 2012 CIPAA Conference, the inaugural edition
of the Newsletter of the MSA was published and
distributed to the participants of the June 2014 CIPAA
2012 Conference and to the members of the MSA.
There have been several watershed events in 2014 for
the construction adjudication community. The first
was the triggering of the operative date for CIPAA
2012 on 15 April 2014. This accelerated the movement
towards alignment by all stakeholders with CIPAA 2012.
As of 3 November 2014, one consequence has been
the submission of more than a dozen notices to the
Director of the KLRCA to register adjudications under
CIPAA 2012 and the filing of three actions in the Kuala
Lumpur High Court relating to adjudication matters
under CIPAA 2012. On 31 October 2014 the High Court
orally ruled that CIPAA 2012 has a retrospective effect
with section 41 applying only to limit its applicability to
exclude proceedings that had been commenced in any
court or arbitration before 15 April 2014. This landmark
decision makes CIPAA 2012 applicable to a payment
claim notwithstanding when the construction contract
was signed or when a payment dispute crystallised or
otherwise occurred. This ruling significantly expands
the reach of CIPAA 2012 beyond the scope provided for
in KLRCA CIPAA Circular 01.

01

As shown by the Contents page in this Newsletter, indepth examinations of principles of natural justice and
judicial review in the context of CIPAA and other forms
of statutory construction adjudications are found in
the In Focus section. Submissions on several questions
and issues that have arisen or may arise under CIPAA
2012 are set forth in responses by four adjudicators to
five questions in the Podium section. The articles in
the Adjudicators Corner and in the Sidebar sections
offer insights from adjudicators writing from several
different professional and national experiences and
perspectives. We are privileged to have in this issue
the writings of adjudicators from Australia, Hong Kong,
Malaysia, and Singapore.
I trust and hope that you will enjoy reading the
informative and relevant articles in this Newsletter and
look forward to an exciting 2015 as the adjudication and
construction communities continue to align practices
and procedures with the mandates of CIPAA 2012 that
are designed to facilitate regular and timely payment,
to provide a mechanism for speedy dispute resolution
through adjudication, to provide remedies for the
recovery of payment in the construction industry and
to provide for connected and incidental matters.

Datuk Professor Sundra Rajoo

President
Malaysian Society of Adjudicators

editors page

Editors Desk
By Michael Heihre

Aligning with CIPAA 2012! is the title of the second

issue of the MSA Newsletter. It was selected to stress
the predominant dynamic of the phase of CIPAA
2012 that started on 15 April 2014. True, the process
of aligning operations, practices, procedures, and
contractual documentation with CIPAA 2012 began
in earnest with the enactment of CIPAA in 2012. But
this process was a comparatively measured one, due
in large part to the conceptual structure of section 1(2)
authorising the Minister of Works to appoint a future
date to bring CIPAA 2012 into operation.
Unsurprisingly, quite a few questions were voiced
during the initial phases of preparing and training for
the implementation of CIPAA 2012. Some questions
turned on interpretations of the statutorily defined
scope and content of payment claims under section
5 (such as, for one example, whether costs relating to
extensions of time should be cognizable pursuant to
section 5). Similarly questions regarding appropriate
grounds for exemptions pursuant to section 40 were
extensively mooted. Likewise, considerable energy
was invested in analyzing questions on the application
of CIPAA 2012 to contracts or payment disputes
commenced before the operative date to be set by
the Minister. Relatedly, the language of the savings
provision in section 41 was minutely examined. In the
absence of an operative date, however, these questions
lacked the bite of an immediate reality.
On 15 April 2014, the Minister of Works established 15
April 2014 as the operative date, promulgated CIPA
Regulations 2014, and issued CIPA [Exemption] Order
2014. This provoked a new urgency to align operations,
practices, procedures, and contractual documents with
the requirements of CIPAA 2012, CIPA Regulations 2014,
and the CIPA [Exemption] Order 2014. In this context,
hypotheticals yielded to concrete controversies as
payment claims and notices of adjudication were
served by parties to written construction contracts.

Between 15 April 2014 and 31 October 2014, a dozen

plus notices to register adjudications were lodged with
the Director of the KLRCA. Most of the notices were
registered and adjudicators appointed. But the Director
declined to register payment disputes that did not arise
under a construction contract on or after 15.4.2014. In
these instances, the Directors interpretation of CIPAA
2012 adhered to Circular 01.
Compared to positions taken by some observers that
CIPAA 2012 should apply only to construction contracts
signed after 15 April 2014, the Directors position
reflected in Circular 01 was broader. Conversely, the
Directors view on the applicability of CIPAA 2012 was
narrower than the stance advocated by commentators
who argued that CIPAA 2012 should apply to all
payment disputes brought within the period of
limitations that were not the subject of a proceeding in
court or arbitration commenced before 15 April 2014.
The existence of discordant positions on the important
question of the applicability of CIPAA 2012 to payment
disputes and contracts pre-dating 15 April 2014 meant
that ultimately the different views would have to be
resolved by judicial decision. This occurred when an
important oral ruling on CIPAA 2012 was issued by the
High Court in Kuala Lumpur (Commercial Division)
on 31 October 2014. This decision is the subject of
Decision Notes.
On 11 November 2014, the KLRCA announced that it
would comply with and administer adjudication cases
in accordance with the decision of the High Court and
therefore issued Circular 1A to supersede Circular
01. Circular 1A is included in Happenings with the
permission of the KLRCA.
To start this issue, the Podium sets forth five highly
relevant and pressing questions that were put to
four accomplished members of the adjudication and
construction community to obtain the benefits of

02

editors page
their insights. Their views were obtained before the
31 October 2014 oral ruling by the High Court and
consequently do not reflect that development. The
questions touch upon issues arising from the meaning
of payment and Government used in section 4,
CIPAA 2012, and in CIPA [Exemption] Order 2014. The
Podium also solicited views from the four participants
on the interpretation and scope of section 41, CIPAA
2012.

The Adjudicators Corner in this issue concentrates on

practical suggestions for adjudicators to improve the
process of adjudication.

In Focus and Sidebar, the Newsletter offers thoughtful

articles that suggest relevant lessons from Australia
and Singapore - jurisdictions that preceded Malaysia by
earlier adopting statutory schemes with aims similar to
CIPAA 2012. Special attention is given in these articles
to one of the anchoring principles of adjudication natural justice.

As noted in the first issue, this Newsletter is written

to inform, stimulate interest, provoke thought, and
contribute to the betterment of adjudication practice
and procedure under CIPAA 2012. We hope that you
find that this issue furthers those goals and leads
readers to submit articles that contribute to the success
of CIPAA 2012.

From Hong Kong, there is an article discussing the

genesis and emergence of a regime of statutory
adjudication of construction disputes that is featured
in Sidebar. With its vibrant construction industry,
adjudication in Hong Kong should provide valuable
experiences for other jurisdictions with statutory
adjudication schemes to consult for guidance and
information.

03

In Happenings, highlights of CIPAA related activities

in the second half of 2014 are featured. For a timely
and convenient reference, KLRCA Circular 1A issued
on 11 November 2014 is included in this section of the
Newsletter.

podium

Five Questions Four Respondents

Question 1:
In your view, should the definition of payment used in CIPAA 2012 be read to
include: loss and expense, loss of profit, prolongation and delay costs, extensions of
time, provisional sum items, and contingent sum items?

Chang Wei Mun:

Suriana Abdul Hamid:

No. CIPAA is meant to be a quick fix with temporary

finality to improve cash flow by dealing with simple
claims for payment for work done or services rendered
(see definition of payment in section 4). It should
not be used to deal with complex claims needing more
mature considerations. Provisional Sum and Contingent
Sum claims should be included as long as they are claims
in respect of work done or services rendered under the
express terms of a written construction contract.

No, because the current definition of payment in

section 4 only refers to work done or services rendered
under the express terms of a construction contract. In
contrast, loss and expense, loss of profit, prolongation
and delay costs, and extensions of time are costs that
are related to the works or services rendered which the
contractor may be entitled to claim as a result of certain
events under the construction contract, but they are
not categories of compensable items payable directly
for work done or services rendered. Therefore, in this
context it would be reasonable to include these items in
the definition of payment under CIPAA by legislatively
amending the present definition of payment in section
4. Otherwise, it is my reading of section 4 that these
categories do not presently fall within the plain meaning
of payment as used in CIPAA 2012.

Tai Choon Seng:

Rodney Gomez:

Generally, I agree that the definition of payment should

include loss and expense, loss of profit, prolongation
and delay costs because time is money and vice versa.
However, because CIPAAs main objective is to ease
obstacles to cash flow in the construction industry,
the definition of payment should not include claims
for time related losses. Furthermore, I dont think the
Adjudicator has sufficient time to evaluate the time
related losses due to the time limitations to resolve
claims provided in CIPAA.

Yes, it should provided the construction contract

expressly provides for the aforesaid items.

04

podium
Question 2:
In your view, as a matter of sound public policy, should CIPAA 2012 be legislatively
amended to expand the scope of a payment dispute to include those items
referenced in the preceding question or any difference between the parties to a
construction contract or a construction consultancy contract along the lines of
the Housing Grants, Construction and Regeneration Act (1996) as amended?

Suriana Abdul Hamid:

Yes. Although disputes arising from claims for loss and
expense, loss of profit, prolongation and delay costs and
extensions of time often require lengthy negotiation and
time-consuming examination of voluminuous supporting
documentation, the amount of money in controversy is
similarly large. For this reason, they comprise an important
component of the cash flow demands arising from a
project. Since the CIPAA is aimed at facilitating regular and
timely cash flows by providing a mechanism for speedy
dispute resolution and rough justice, expanding the
scope of payment disputes to include these items should
provide additional options for contractors and consultants
to choose for resolution of important cash flow issues
depending on the particular nature of a dispute.
The inclusion of these items in the definition of
payment may have the added benefits of widening the
pool of adjudicators to attract individuals with significant
construction and consultancy
backgrounds and
experiences. These individuals are often more familiar
than many lawyers with these types of construction related
disputes. This potentially greater expertise may lead to
faster and more accurate adjudication decisions. In turn,
this should result in a dispute resolution environment that
is more encouraging and less intimidating to participants,

Rodney Gomez:
There is no need to amend as CIPAA 2012 has clearly
provided what falls within the ambit of payment, i.e. the
same must be expressly provided for in the contract.
Chang Wei Mun:
No, and for the same reasons stated above in my response
to question 1. The definition of payment in section 4,
which will apply to sections 5, 6 and 27 to limit the type of
claims that can be made, should remain as it is.

05

particularly smaller scale contractors. At the same time,

the larger scale contractors who are more experienced in
formal dispute resolution processes would have the option
to go straight to arbitration or litigation.
Furthermore, payment disputes relating to variation order
works can sum up to 15 to 20% of the monthly interim
amount claimed by a contractor. Contractors may have
no choice but to carry out the variation works before the
rates for the variation can be agreed. It is not uncommon
for there to be no agreement on rates even though the
works have been completed and no payment received
by the contractor for the variation work. Under these
circumstances, most contractors would prefer to have the
payment definition in CIPAA enlarged to include the
extended categories of claims referenced in this question.
In any event, it is my view that section 7 and related
provisions of the CIPAA should be further improved by
providing clearer wording. This would help to minimize
costly legal arguments over whether these items are
covered and focus the parties on the cash flow issues
rather than on the meaning of words used in the legislation
intended to resolve cash flow problems.

Tai Choon Seng:

No. We should test the effectiveness of CIPAA in operation
first before making any amendments.

podium

Question 3:
In your view, should the exemption given to a Government construction contract
as specified in the First Schedule of the Construction Industry Payment and
Adjudication [Exemption] Order 2014 be read to include related subcontracts, supply
agreements, labour agreements, and construction consultancy contracts?

Rodney Gomez:

Chang Wei Mun:

No. In my view, the Exemption should not include related

subcontracts, supply agreements, labour agreements and
construction consultancy contracts as such interpretation
would limit the application of CIPAA 2012.

Yes. That would be the fair thing to do. Otherwise, the

burden of not being able to adjudicate will lie solely with
the Main Contractor. The Exemption Order is not clear as
to whether the exemption extends to related contracts.

Suriana Abdul Hamid:

Tai Choon Seng:

Yes, because these related contracts and agreements serve

to achieve the purposes of the Government construction
contracts that have been exempted and the exemption
could be frustrated or cause unnecessary confusion if part
of the process is exempt and other parts are not exempt.

Yes. This is because logically any exemption pertaining

to the Main Contract should have the same effect on the
related subcontracts. Otherwise, it is not fair to the Main
Contractor. Furthermore, some good intentions reflected
in CIPAA i.e. stop work due to non-payment, requests
for direct payment from the principal, etc. may not work
practically if the exemption is only given to the Main
Contractor.

06

podium
Question 4:
Should the word Government as defined in section 4, CIPAA 2012 and as used in
in CIPA [Exemption] Order 2014 be read to include government linked companies,
government owned companies, and statutory bodies of the Government?
Rodney Gomez:

Chang Wei Mun:

No. In my view, government linked companies,

government owned companies or statutory bodies of the
government should not be included as this would restrict
the application of CIPAA 2012.

The exemption should not apply to Companies

incorporated under the Companies Act irrespective of who
owns or controls them. However, I am not sure whether
the exemption should apply to statutory bodies since some
of them do play a direct governmental/administrative role
e.g. local authorities.

Suriana Abdul Hamid:

In general, no. The current definition of Government
appears to be very broad, covering both the Federal and
State Government. It would be useful to list exactly the
identities of the relevant government bodies or agencies
included in the definition of Government in the CIPAA.
Preferrably, the definition of Government should not
include government linked companies, government owned
companies, or statutory bodies and local councils. This
is because a significant portion of public infrastructure,
built environment, and facilities/maintenance works in
Malaysia are tendered out through these agencies.
The value of works out-sourced for tenders through
these agencies allows for participation by various
classes of contractors from Class A (> RM10 million)
down to Class F (below RM200k) involving bumiputra

contractors. The latter class of contractors frequently

are the most vulnerable to non-payment disputes owing
to lack of understanding of contract provisions and poor
documentation. If these agencies are included within the
meaning of Government, the main objective of easing
cashflow problems in the construction industry may not
be achieved in the long run and the most needy elements
of the industry may not be effectively assisted by the
CIPAA.
In my view, an expansive definition of Government
should not be adopted. Instead, it should be sufficient
to use the Governments power under section 40 to
issue exemptions on a case by case basis taking into
consideration the primary objective of the CIPAA to
facilite regular and timely payment.

Tai Choon Seng:

No, because a GLC is considered to be a private company
in many respects. A GLC may be considered to be the
Governments investment company, but nevertheless, it is
not the same as being the Government. My interpretation
of Government in CIPAA is that it should be limited to

the State Governments and the Federal Government.

Additionally, there will be too many exemptions for CIPAA
to have the intended beneficial consequences for the
construction industry if GLCs are considered to be entitled
to the status of the Government under CIPAA.

Rodney Gomez is an accredited adjudicator with the Kuala Lumpur Regional Centre
for Arbitration. He is a partner in Messrs Shearn Delamore & Co and specializes in
building and construction law. He has appeared as counsel in arbitration, mediation,
adjudication and Court proceedings.

Wei Mun practices law as a partner of Messrs Raja, Darryl & Loh where he heads
the construction and energy practice group. He is an accredited adjudicator and
an experienced arbitrator. He has been involved in the dispute resolution process
involving international airports, oil, gas and petrochemical facilities, dams and power
stations, water treatment plants, and many other major projects. He is listed as a
recommended lawyer for construction work in Asia Pacific Legal 500, Chambers Asia
and Asialaw Profiles.

07

podium
Question 5:
In your view, should CIPAA 2012 be read to apply to construction contracts and
construction consultancy contracts made before 15 April 2014?

Chang Wei Mun:

Rodney Gomez:

Yes and No.

The procedural aspects should have
retrospective effect. Those aspects that affect substantive
rights (i.e. the abolition of the pay when paid clause)
should not.

Yes it would apply. The problem is whether the Act

actually applies to a payment dispute that may be subject
to an arbitration or court proceedings before the coming
into operation of the Act. This is unclear. If there was no
arbitration or court proceedings then, it is clear that CIPAA
still applies.

Suriana Abdul Hamid:

Tai Choon Seng:

Yes, as mooted by KLRCA in its circulars, CIPAA should

apply to disputes arising after 15 April 2014 regardless of
whether the contract was made before or after 15 April
2014 provided such contracts have not expired at the
time of the start of the adjudication process. Otherwise,
going for arbitration or litigation may be the better option,
especially once the project is completed because the
contractors interim cashflow would no longer be the
driving factor for completion at that stage.

Yes. CIPAA was approved by Parliament in 2012. In my

opinion, CIPAA benefits the construction industry in
many aspects and it is intended to remedy significant
deficiencies in the present payment system. For these
reasons, CIPAA should be enforced as early and as broadly
as possible.

Tai Choon Seng, MBA (Finance) Dip. Tech (Building), is an accredited adjudicator with
Kuala Lumpur Regional Centre for Arbitration. He is the Project Director of Desa Parkcity
Kuala Lumpur Office and a specialist in property development and project management.

Suriana is the Head of Procurement and Contract Division of OPUS International (M) Bhd, a
project management consultancy and asset management company. She has over 20 years
of experience in project management and construction contract administration. She is a
Quantity Surveyor (QS) registered with the Malaysian Board of Surveyors and a member of
the Royal Institute of Surveyors Malaysia, the Australian institute of Quantity Surveyors,
Australian Institute of Building and the Malaysian Institute of Management. She is also on
the KLRCAs panel of Mediators and Adjudicators and a CIDB accredited Mediator.

08

in focus

Judicial Review of Adjudication Under

CIPAA An Australian Perspective on The
Obligation of An Adjudicator To Comply
with Natural Justice
By John K. Arthur

introduction
1. Under the new Malaysian Construction Industry
Payment and Adjudication Act 2012 (CIPAA) parties
to construction contracts will be subject to compulsory
statutory adjudication1. The policy of (CIPAA) is pay
first, argue later in order to facilitate payment and
cash flow in the construction industry2. CIPAA, and
the various Australian models of security of payment
legislation, as well as the New Zealand, Singapore, UK
and other Commonwealth models3 seek to achieve
similar objects, through similar legislative means,
although there are also distinct differences4. For
instance, unlike most of the jurisdictions which have
adopted security of payment legislation, in Malaysia
an aggrieved party to adjudication proceedings under
CIPAA is given express recourse to apply to the High
Court to set aside an adjudication decision on one or
more of the grounds set out in s. 15 (a)-(d) CIPAA5. In
Western Australia and the Northern Territory, rather
than granting the contractor a statutory entitlement
to progress payments6, the legislation implies terms
into construction contracts dealing with a contractors
entitlement to claim progress payments in absence of
express provision.7 There are many other differences
between the various Acts8.

09

2. In most jurisdictions, absent an express right of

recourse to the courts, an aggrieved party must
primarily rely on internal review by a review
adjudication if provided for under the adjudication
legislation9, or judicial review (seeking relief or remedy
in the nature of certiorari, mandamus, prohibition
or quo warranto), and if the legislation concerned
permits, resisting enforcement of adjudication
decisions on equivalent grounds10.
3. As the Malaysian Act gives an express right of recourse
against the adjudication decision under s. 15 CIPAA, it
remains to be seen whether Malaysian courts will be
willing to admit a separate right to seek judicial review
under O. 53 of the Rules of Court 2012, or in resisting
enforcement of adjudication decisions under s. 28
CIPAA.


4. Subject to the distinct nature of CIPAA and its
differences with the Australian and other models of
security of payment legislation in the Commonwealth,
the Australian experience over the past decade or
more with statutory adjudication may provide helpful
guidance to Malaysian courts and practitioners by
way of comparison and analogy in interpreting and
applying the Malaysian legislation.

in focus

Judicial review in the

Australian context
5. Under the Australian legislation (except for limited
rights under the WA and NT legislation), there are no
express legislative rights of recourse to the courts.
In the context of the statutory adjudication model,
there are several important factors which suggest
that full judicial review should not be available.
The legislation was intended to provide a relatively
quick and inexpensive process11 for the recovery of
progress payments by persons who carry out work
or supply goods or services in the construction
industry.12 Significantly, the statutory regime was
designed to operate on an interim basis and therefore
may be adjusted or even reversed in further or other
proceedings in a court, or arbitral tribunal or other
form of dispute resolution under the contract13.
6. Despite these factors, it has been held in Australia that
judicial review of an adjudication determination made
under the legislation is available14:
(a) by certiorari15 on all of the grounds available under
the writ, including for jurisdictional error, or error
on the face of the record, and such relief is not
excluded either expressly or by implication16;

(b) where the basic and essential requirements of the
Act for a valid determination are not met (which
may be equated with jurisdictional error);
(c) if it is not a bona fide attempt to exercise power
under the Act17; and

The obligations of an
adjudicator under CIPAA to
comply with natural justice
7. One of the principal grounds relied upon by Australian
courts for setting aside an adjudication determination
is where a substantial denial of the measure of natural
justice required under the Act18 is established.
8. Clearly an adjudicator under CIPAA has a duty to
comply with the principles of natural justice19.
9. Under the Malaysian Act, at the time of acceptance
of appointment, an adjudicator must make a written
declaration that there is no conflict of interest in
respect of his appointment20, that he shall act
independently, impartially and in a timely manner
and avoid incurring unnecessary expense21, he
shall comply with the principles of natural justice22
and there are no circumstances likely to give rise to
justifiable doubts as to the adjudicators impartiality
and independence23.
10. Where there has been a denial of natural justice, or the
adjudicator has not acted independently or impartially,
an aggrieved party has an express right to apply to the
High Court to set aside an adjudication decision24.
There may be a further right to resist enforcement
under s. 28 CIPAA on the same grounds that would
give a right to relief by way of judicial review (that
the adjudicator exceeded his jurisdiction and failed to
comply with the rules of natural justice)25, and ordinary
judicial review may also be available.

(d) where there has been a substantial denial of the

standard of procedural fairness which is required
under the Act (which is also a jurisdictional error).

10

in focus
What are the principles of
natural justice which apply
to statutory adjudications in
Australia?
11. While, unlike CIPAA, there is no express reference to
the rules or principles of natural justice in any of the
Australian models of security of payment legislation26,
it has been held by courts around Australia that
an adjudicator is under a duty to comply with the
principles of natural justice27, taking into account the
purpose and provisions of the various Australian Acts.
While this is the case28:
(a) the particular content of the rules that will apply is
derived from the context of the legislative regime
established by the legislation enactments, including
taking into consideration the truncated timetable in
which the determination must be made29; and
(b) the denial of natural justice in each case must be
material or substantial in the sense that it must
have made a difference to the outcome30.
12. In South Australia the position is that an adjudicator
is required to afford natural justice to the parties
and a failure to do so will result in the adjudication
determination being a nullity31. The position is to
the same effect in Queensland32, in Tasmania33 and in
Western Australia34.

What is the content

of the requirement to
afford natural justice in
adjudication proceedings?
13. There are many examples of the requirement to afford
natural justice in an adjudication context35 which are
illustrative of the measure required:
(a)
if an adjudicator is contemplating making a
determination on a different basis from how the
parties conducted the case, the adjudicator must
inform the parties of that prospect so they have an
opportunity to address any new issue, and a failure
to do so will ordinarily result in a denial of natural
justice or procedural fairness36;
(b) a failure by an adjudicator to have regard to relevant
facts may amount to a denial of natural justice as the
concern of the law is to avoid practical injustice37;
(c) if an adjudicator does not read the parties
submissions at all38, or does not consider the
adjudication response39, or possibly when the
adjudicator fails to mention a critical issue40, there
will be a denial of natural justice;

11

(d) a party is not permitted to add new claims, adduce

new evidence or arise new arguments when the
other side has no opportunity to respond41;
(e) the adjudicator has no jurisdiction to reach a
decision that was not responsive to the issues
referred in the adjudication or decide matters that
were not referred,42 or was on a basis which was
not advanced by either party43, or on the basis of
evidence that was not before the parties44;
(f) the adjudicator may draw on the adjudicators own
knowledge and expertise (see, s. 25(d) CIPAA), but
must notify the parties of this intention and give
them equal opportunity to comment and a failure
to do so will be a breach of natural justice45;
(g) there is no requirement to hold a hearing46.

What are the consequences of

a finding that the principles
of natural justice have been
contravened?
14. If the principles of natural justice are contravened in
respect of a particular adjudication, the court may:
(a) refuse relief on the basis that the denial of natural
justice could not possibly have made a difference
to the outcome47, or the party asserting a denial of
natural justice had created the confusion which
resulted in the alleged unfairness48; or
(b) find that the adjudication determination is invalid,
and make a declaration of invalidity, or grant relief
in the nature of certiorari to quash the adjudication
determination or decision. The court may also
remit the matter back to the adjudicator to be
determined in accordance with law49.

Conclusion:
15.
With the recent commencement of CIPAA,
practitioners, stakeholders, and interested observers
will need to wait to see to what extent Malaysian
Courts are prepared to intervene in the adjudication
process, what principles and tests will be applied in
relation to setting aside, judicial review, and/or refusal
of enforcement, of adjudication decisions, and how
this will work for the operation of CIPAA. Given the
commonalities between the various models of security
of payment legislation and subject to their respective
differences, it is to be expected (or at least hoped) that
a distinct regional/Commonwealth jurisprudence will
emerge which will assist practitioners and stakeholders
across the region. The next step . . . harmonisation?50

in focus
endnotes
1.

KLRCA Adjudication Training Programme Training Manual Units 1

and 2, p. 5.

9.

By another adjudicator in an expeditious manner, eg Part 3, Div 2A

of the Victorian Act.

2.

Ibid.

10.

3.

In Australia there are 8 different legislative models owing to the

federal nature of the Australian legal system. There are stated to
be 15 Commonwealth jurisdictions which have enacted statutory
adjudication regimes: Best Practice in Construction Disputes, P Gerber
and BJ Ong, LexisNexis, Aust., 2013 at para [16.14]. New South Wales
was the first state to enact security of payment legislation in 1999
with the Building and Construction Industry Security of Payment
Act 1999 (NSW) which was based on the adjudication provisions of
the Housing Grants, Construction and Regeneration Act 1996 (UK)
which grew out of the report by Latham, M. (July 1994) Constructing
the Team - Final report of the government/industry review of
procurement and contractual arrangements in the UK construction
industry, The Department of the Environment, HMSO. The other
legislation which followed was: Building and Construction Industry
Security of Payment Act 2002 (Vic); Building and Construction
Industry Payments Act 2004 (Qld); Construction Contracts (Security
of Payments) Act 2004 (NT); Construction Contracts Act 2004 (WA);
Building and Construction Industry Security of Payment Act 2009
(Tas); Building and Construction Industry Security of Payment
Act 2009 (ACT); Building and Construction Industry Security of
Payment Act 2009 (SA). Note also the Construction Contracts Act
2002 (NZ) and the Building and Construction Industry Security of
Payment Act 2004 (Singapore). See Security of Payment Legislation
in Australia, Differences between the States Vive la Diffrence?
Hon. Justice Peter Vickery, Building Dispute Practitioners Society 12
October 2011; and Towards Harmonisation of Construction Industry
Payment Legislation: A Consideration of the Success Afforded
by the East and West Coast Models in Australia plus Addendum,
Australasian Journal of Construction Economics and Building, 10
(3) 14-35, Coggins, J; Elliott, RF; Bell, M. See Statutory Adjudication
Under Nine Commonwealth JurisdictionsA Users Perspective on
Legislative Drafting Style by N A N Ameer Ali and Associate Professor
Dr. S. Wilkinson, see http://www.opc.gov.au/calc/docs/Loophole_
papers/Ali_Dec2010.pdf. For a summary of the Victorian Act, see
Building and Construction Industry Security of Payment Act 2002
What Does it Do and How Does it Work? Available at http://www.
gordonandjackson.com.au/ online-library. For general reference,
see Security of Payment in New South Wales and Victoria, J. Wilson,
Lexis Nexis, 2014 and Adjudication in the Building Industry by
Phillip Davenport, 3rd Ed., The Federation Press, 2010.

See for example, Cantillon Ltd v Urvasco Ltd [2008] EWHC 282 (TCC)
(Akenhead J), para [55]ff.

11.

Which is free from excessive legal formality, and not bedevilled by

unnecessary technicality: Hickory Developments Pty Ltd v Schiavello
(Vic) Pty Ltd (2009) 26VR 112; [2009] VSC 156 at [46], and Grocon (No
2) ibid at n. 5, [112] cited with approved in Pearl Hill Pty Ltd v Concorp
Construction Group (Vic) Pty Ltd [2011] VSCA 99 at [11].

12.

The view has been expressed by one commentator that while

the underlying intent of the act was to provide a simple means of
facilitating cashflow, it is by no means a straight-forward task to
navigate the legislation and its judicial consideration, Security of
Payment in Victoria An Update, Vicbar and Commercial Bar Assoc,
Construction Law Section, 13 Sept., 2010, by Matthew Bell, p. 12. The
problem is compounded for practitioners operating across states and
territories in Australia, ibid.

13.

See s. 47(2), (3) and Grocon (No. 2), ibid, n. 5 at [110]-[111] cited with
approval in Pearl Hill , n. 11 at [16]-[17].

4.

5.

6.

7.
8.

CIPAA is economically contained in 41 sections (27 pages), but

for example, the Victorian Act has 53 sections (and is spread over
76 pages). The NSW Act is spread over an economical 38 sections
in 31 pages. The definition of construction work under CIPAA is
seemingly broader under than under the Victorian or NSW Acts.
Under the latter acts the definition of construction work does not
include drilling for, or extraction of, oil or natural gas (s. 5(2) of
each act). In Victoria, once the adjudicator accepts the nomination
(s. 20(1), the adjudicator has the capacity to determine facts which
go to his or her jurisdiction except for the case where the basic and
essential requirements of the Act for a valid determination are not
met, or where the determination is not a bona fide attempt to exercise
the power granted under the act, ibid, Grocon Constructors v Planit
Cocciardi Joint Venture (No 2) [2009] VSC 426; 26 VR 172 at 203) he
or she has 10 business days (or up to 15 business days if the claimant
agrees) to determine the adjudication application (the amount of
the progress payment to be paid the respondent (if any) and the date
when it is payable, and the rate of interest payable under s. 12(2):
s. 23). Under CIPAA, the adjudicator has 45 days from the service
of the adjudication response, or reply to such response, whichever
is the later, or 45 days from the expiry of the prescribed period for
service of the adjudication response if none is submitted: s. 12(2)
CIPAA. The differences between acts in the various Commonwealth
jurisdictions have been subject to adverse comment and a push
towards harmonisation: see n. 2, Coggins, J; Elliott, RF; Bell, M. For
a table of the differences in the Australian Acts, see, ibid Hon. Justice
Peter Vickery, n. 3.
This is also the case in Singapore, see s. 27(5) Building and
Construction Industry Security of Payment Act (SG) although
the grounds are not expressly stated. See Sungdo Engineering &
Construction (S) Pte Ltd v Italcor Pte Ltd [2010] SGHC 105.
Eg s 5 Singapore Act; s. 16 NZ Act; S. 9 Victorian Act; s. 8 NSW Act; s.
12 Qld Act; s. 12 Tas Act; s, 8 SA Act cf s. 36 CIPAA unless otherwise
agreed right to progress payment.
S. 15 WA Act; s. 18 NT Act.
For a table of the differences between the Australian Acts, see, ibid
Hon. Justice Peter Vickery, n. 3; and between the NSW and Victorian
Acts, see , ibid, J. Wilson, n. 3.

14. See Maxstra Constructions Pty Ltd v Gilbert & Ors [2013] VSC 243 per
Vickery J, [15] stating the law under the Victorian Act which subject
to the differences in legislation between the Australian states and
territories may be taken to apply Australia wide mutatis mutandis.
15.

Ibid, Hon Justice Peter Vickery, at [61] citing ibid, Grocon (No 2) at n
5. The view has been expressed that Grocon (No 2) does not change
the legal landscape much, as reviewable jurisdictional error derived
from Brodyn Pty Ltd (t/as Time, Cost and Quality) v Davenport (2004)
61 NSWLR 421 and other cases already encompass the adjudicators
failure to comply with the basic and essential requirements to make
a bona fide attempt to exercise the power granted under the act or
to accord natural justice: ibid, Matthew Bell at p. 8 referring to T.
Shnookal, Security of payments in Victoria its use as an effective
payment tool (2010) 38 Building Dispute Practitioners Society
Newsletter 18.

16.

The relief is sought under the local rules of court in each jurisdiction
that are equivalent to O. 53 of the Malaysian Rules of Court 2012; See,
ibid, Hon Justice Peter Vickery at [50] citing Hickory Developments
and Grocon (No 2) at n. 5. Subsequently confirmed in Metacorp
Australia Pty Ltd v Andeco Construction Group Pty Ltd (2010) 30 VR
141; [2010] VSC 255. And see Maxstra Constructions Pty Ltd v Gilbert
& Ors [2013] VSC 243 per Vickery J, [15]. In New South Wales since
Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd (2010) 78 NSWLR
393, certiorari is available to set aside an adjudicators determination
on the ground of jurisdictional error (which overturned Brodyn Pty
Ltd, ibid at n. 14, largely applying Grocon (No 2) at n. 5). The situation
is similar in other States, see eg. A J Lucas Operations Pty Ltd v MacAttack Equipment Hire Pty Ltd [2009] NTCA; Perrinepod Pty Ltd v
Georgiou Building Pty Ltd [2011] WASCA 217 at [96], [113]; Northbuild
Construction Pty Ltd v Central Interior Linings Pty Ltd [2012] 1 Qd R
525; Built Environs Pty Ltd v Tali Engineering Pty Ltd and Ors [2013]
SASC 84 at [209]; Skilltech Consulting Services Pty Ltd v Bold Vision
Pty Ltd [2013] TASSC 3 at [7].

17.

Ibid, Brodyn Pty Ltd at n. 14 part of which decision was applied

by Vickery J in Hickory; and Grocon (No 2) at n. 5, [166], ibid. See,
Building balances into progress payments, by Ben Patrick (2010)
85 LIJ 28. See also Asian Pacific Building Corporation Pty Ltd v
Aircon Duct Fabrication Pty Ltd [2010] VSC 300 at [25]; Claude Neon
Pty Ltd v Rhino Signmakers Pty Ltd [2010] VSC 619; and Maxstra
Constructions, ibid at n. 15, [15] where availability of judicial review
and of associated remedies in respect of adjudication determinations
made under the Act is summarised. The availability of judicial
review and of associated remedies for adjudication determinations
made under the security of payment legislation in Victoria have been
authoritatively stated in Maxstra Constructions , ibid at [15].

18. Ibid, Maxstra Constructions Pty Ltd v Gilbert & Ors at n. 15.
19.

S. 24(c) CIPAA.

20. R. 3(c) Kuala Lumpur Regional Centre for Arbitration Adjudication

Rules and Procedure (revised 1 August, 2014); Reg. 5(4) Construction
Industry Payment and Adjudication Regulations 2014.
21.

S. 24 (b) CIPAA.

22. S. 24 (c) CIPAA.

23. S. 24 (d) CIPAA.
24. S. 15(b), (c) CIPAA.

12

in focus
endnotes
25. Which is the case in the UK, see for example, Cantillon Ltd v Urvasco
Ltd [2008] EWHC 282 (TCC) (Akenhead J), para [55]ff. For Singapore
position, see n. 5 above.
26. Adjudication in the Building Industry by Phillip Davenport, 3rd Ed.,
The Federation Press, 2010 at p. 238.
27.

For example, Brodyn, ibid at n. 14; [2004] NSWCA 394 per

Hodgson JA at [55]; Reiby Street Apartments Pty Ltd v Winterton
Constructions Pty Ltd [2005] NSWSC 545 per Macready AsJ at [22];
Metacorp Australia, ibid at n. 15; Allpro Building Services Pty Limited
v Micos Architectural Division Pty Limited & Ors [2010] NSWSC 474.
The right to seek to have an adjudication decision reviewed for
breach of natural justice has been subject to criticism from at least
one commentator who has argued that as an adjudicators role is
that of essentially a certifier, there is no reason why the principles of
natural justice should apply. It is argued that each of the Australian
Acts has a provision similar or identical to s. 22(2) of the NSW Act
which provides that in determining an adjudication application,
the adjudicator is to consider certain matters only including the
provisions of the act, the provisions of the relevant construction
contract, the relevant payment claim, together with all submissions
(including relevant documentation) that have been duly provided
by the parties and the results of any inspection carried out by the
adjudicator of any matter to which the claim relates. It is argued
that courts have no need to go further than these principles in
determining an adjudication application: Ibid, Davenport at p. 238.

28. The rules of natural justice also generally apply to adjudication under
the UK legislation: Amec Group Limited v Thames Water Utilities
Limited [2010] EWHC 419 (TCC) at [21], [54] (per Coulson J) citing
see Discain Project Services Limited v. Opecprime Developments
Limited [2001] BLR 287 and RSL (South West) Limited v. Stansell
Limited [2003] EWHC 1390 (TCC).

Investment Holdings Pty Ltd v James Trowse Constructions Pty Ltd

(No 2) [2010] QSC 166 at [10].
33. Skilltech ibid at n 15, [26]ff.
34. MRCN Pty Ltd (t/as Westforce Constructions) v ABB Australia Pty Ltd
[2014] WASAT 59 at [48].
35. Sourced from KLRCA Adjudication Training Programme Training
Manual Unit 1 and 2, pp. 16-17.
36. Musico v Davenport [2003] NSWSC 977, [107]-[108]; Seltsam Pty
Ltd v Ghaleb [2005] NSWCA 208, [78]-[79] per Ipp JA with Mason P
agreeing, referred to in Skilltech ibid at n. 15at [24]-[26].
37.

Procorp Civil Pty Ltd v Napoli Excavations and Contracting Pty Ltd
[2006] NSWSC 205 at [10], point (xiv).

38. Timwin Construction Pty Ltd v Faade Innovations Pty Ltd (2005) 21
BCL 383 [2005] NSWSC 548 cited in Skilltech, ibid at n 15, [76].
39. Reiby Street Apartments v Winterton Constructions [2006] NSWSC
375 cited in Skilltech, ibid at n 15.
40. Brook Hollow Pty Ltd v R & R Consultants Pty Ltd [2006] NSWSC 1,
[57]-[58] cited in Skilltech, ibid at n 15.
41. McAlpine PPS Pipeline Systems Joint Venture v Transco Plc [2004]
EWHC 2030 (TCC); [2004] BLR 352 at 356, per Judge Toulmin GMG
QC; London and Amsterdam Properties Ltd v Waterman Partnership
Ltd [2003] EWHC 3059 (TCC); [2004] BLR 179 at 201 per Judge Wilcox.
42. Principle referred to in McAlpine PPS Pipeline Systems Joint Venture
at n. 40.

29. Watpac Construction (NSW) Pty Ltd v Austin Corp Pty Ltd [2010]
NSWSC 168 at [142] per McDougall J. According to a recent authority
from New South Wales provided there has been a bona fide attempt
by the adjudicator to exercise the relevant power and no substantial
denial of natural justice of the kind required by the Act, the courts
approach should be not to apply an overzealous analysis to the
determination of an adjudicator, but rather to take a practical
approach, concentrating on the effect of the determination and
the reasons of the adjudicator: Maxstra NSW Pty Ltd v Blacklabel
Services Pty Ltd [2013] NSWSC 406 per Rothman J (at [79] also see
Grocon No. 2, ibid at n. 5 at [143]; Watpac Constructions, ibid , [147].

43. Ardmore Construction Ltd v Taylor Woodrow Construction Ltd

[2006] CSOH 3.

30. John Holland Pty Ltd v TAC Pacific Pty Ltd [2009] QSC 205 ; [2010]
1 Qd R 302 (at [40]) per Applegarth J relying upon Stead v State
Government Insurance Commission and Ex parte Aala; Trysams
Pty Ltd v Club Constructions (NSW) Pty Ltd [2008] NSWSC 399 per
McDougall J at [52]; Maxstra NSW , ibid at n. 28at [79]. Recently in
Anderson Street Banksmeadow Pty Ltd v JCM Contracting Pty Ltd
[2014], Ball J. summarised the relevant principles (at [46]).

45. Carillion Utility Services Ltd v SP Power Systems Ltd [2011] CSOH
139; Hyder Consulting (UK) Ltd v Carillion Constructions Ltd [2011]
EWHC 1810 (TCC).

31.

Built Environs Pty Ltd v Tali Engineering Pty Ltd and Ors [2013] SASC
84 , [128] (Blue J) citing by way of example, John Holland Pty Ltd v
Cardno MBK (NSW) Pty Ltd [2004] NSWSC 258 at [10], [40][41] per
Einstein J; Brodyn , ibid at n. 14 at [57]; Grocon (No 2) at n. 5 at [133]
[139] per Vickery J.

32. James Trowse Constructions Pty Ltd v ASAP Plasterers Pty Ltd and
Ors [2011] QSC 145, [45] relying upon David & Gai Spankie & Northern

44. See Hyder Consulting (UK) Ltd v Carillion Constructions Ltd

[2011] EWHC 1810 (TCC); and for a similar Australian decision, see
Metacorp Australia, ibid at n 15 where there was found to be a breach
of natural justice by the adjudicator when claimant raised new issue;
respondent requested opportunity to respond and the adjudicator
refused. The new matter was material to the adjudicators decision.
See also TQM Design & Construct Pty Ltd v Dasen Constructions Pty
Ltd [2004] NSWSC 1216 at [26]-[31].

46. ROK Building Ltd v Celtic Composting Systems Ltd [2009] EWHC
2664 (TCC).
47. Eg Shorten v David Hurest Constructions Pty Ltd Ltd [2008] NSWSC
546 at [23] and see Watpac, ibid at [147].
48. Veolia Water Solutions v Kruger Engineering [2007] NSWSC 46 at
[53].
49. Metacorp, ibid at n. 15.
50. See ibid, Coggins, J; Elliott, RF; Bell, M at n. 4.

John K. Arthur, BA, LLB, DipICArb, FCIArb, Barrister, Isaacs Chambers, Melbourne, is a
Fellow of CIArb and ACICA, and empanelled on the KLRCAs arbitration, adjudication
and mediation panels. John is a member of the Victorian Bar of over 24 years standing.
His principal area of practice is general commercial litigation including contracts, sale
of land, property, equity, corporations, and estates. He is a Nationally Accredited
Mediator (ACDC) and a trained adjudicator (KLRCA). For his full profile, go to: http://
www.vicbar.com.au/Profile?2419. John is keen for lawyers to embrace harmonisation of
Australian law and ADR, especially international and domestic commercial arbitration,
and to reach out to, and build professional, cultural and personal links with Asia.

13

in focus

Issues In Construction Adjudication In

Singapore
Lessons And Challenges For CIPAA*
By S. Magintharan

Introduction
Construction adjudication was adopted by Singapore
in 2004 with the Singapore Parliament enacting the
Building and Construction Industry Security of Payment
Act [Cap 30B (hereinafter referred to as SOPA]1. SOPA
was modelled after the New South Wales Act, Australia2
which in turn found its inspiration in the English SOP [E]
Act3. Malaysia is the most recent jurisdiction to accept
construction adjudication with the enactment of the
Construction Industry Payment & Adjudication Act 2012
[CIPAA]4 by the Malaysian Parliament on 22 June 2012
and the establishment of an operative date of 15 April
2014.5
However, the provisions of SOPA are not pari materia that
is, read as one - with the statutory adjudication schemes
of the SOP [NSW] and/or the SOP [E] and/or CIPAA and
since its enactment there have been significant legal
issues raised relating to the validity of payment claims
and jurisdictional challenges resulting in divergent views
expressed in the Singapore High Courts.5
On 2 November 2012, the Singapore Court of Appeal in Lee
Wee Lick Terence v Chua Say Eng [hereinafter referred to
as Chua Say Eng]6 sought to resolve these divergent and
conflicting views which had persisted for several years
in Singapore and laid down important principles with
significant implications for construction adjudication
in Singapore. This article summarizes the legal issues
encountered in Singapore with regard to its statutory
construction adjudication scheme and from this history
highlights lessons and potential challenges under CIPAA.

Significant Issues Prior to the

Singapore Court of Appeals
Decision in Chua Say Eng
Prior to the Singapore Court of Appeals decision in Chua
Say Eng, there were five [5] main areas of controversy in
construction adjudication in Singapore:7
1. The first significant issue concerned the question
as to whether the High Court had the jurisdiction to
determine if there was a valid payment claim and
to set aside an adjudication determination. Justice
Judith Prakash in a trilogy of cases in the High Court of
Singapore8 held that whether there was a valid payment
claim was a question only for the adjudicator to decide
and was not a subject for the High Court to review. On
the contrary, Lee Sieu Kin J in Sungdo Engineering &
Construction (S) Pte Ltd v Italcor Pte Ltd9 (hereinafter
referred to as Sungdo) disagreed and held that it was
a question for the High Court to determine and review
and the decision was subject to judicial review.
2. The second issue was whether the application for
setting aside or a challenge to the adjudication award
in the High Court was to be determined by a High Court
Judge or by an Assistant Registrar of the High Court10.
Both the SOPA and its Regulations do not provide any
indication on the nature and process for setting aside
an adjudication determination by the High Court
[ what and how, if not why ] albeit there is an
express provision for an unique11 review procedure
to challenge the merits of the adjudicators decision
before an adjudication review tribunal. Even Order
95 Rule 3 of the Rules of Court, Singapore12, which was
introduced to facilitate the applications to enforce
and setting aside adjudication determination to the
High Court under SOPA, is unclear as to whether the
application is in the nature of a judicial review and
whether it should be heard by a High Court judge
thereby contributing to the unsatisfactory practice of
setting aside applications continuing to be heard in the
first instances by Assistant Registrars of the High Court
instead of the High Court Judges.

14

in focus
3. The third significant issue concerned the controversy
as to whether there was a requirement under the SOPA
for the claimant to subjectively communicate to the
respondent that the payment claim was issued under
the SOPA. This issue arose because SOPA, unlike its
model SOP [NSW]13, did not expressly mandate that
the Claimant shall state in the payment claim [as
opposed to a progress claim] that it was a payment
claim under the SOPA. In Sungdo, Lee J laid down, as
part of the Sungdo principles14 that even though the
SOPA did not have such a stipulation, the claimant had
to subjectively communicate to the respondents that
the payment claim is in fact a payment claim under
the SOPA in order to prevent the SOPA from being
used as an instrument of oppression15. Tay J at the
first instance in the Singapore High Court in Chua Say
Eng disagreed with the view that there was a need for
the claimant to subjectively communicate to the
respondent that the payment claim was under the SOPA
for it was not expressly mandated by Parliament16.
4. The fourth controversy was whether s.10 [2] (b)
SOPA read with SOPA Reg. 5[1] imposed a one-month
limitation period on the claimant to serve the
payment claim for works done (unless a contrary
provision is contained in the construction contract) in
relation to works in the previous month by the last
day of each month following the month in which the
contract was made, failing which the claimant was
barred from making any payment claim for the works
done in respect for the same period.17 The High Court
in Chua Say Eng disagreed with the decision of the
Assistant Registrar in refusing to set aside the payment
claim on the basis that the payment claim was served
later than the one-month limitation period18.
5. The fifth controversy concerned what amounted to a
repeat claim under the SOPA and therefore debarred
under s.10 [1] SOPA. Section 10 [1] SOPA expressly
provided that a claimant may serve one payment claim
in respect of a progress payment and section 10 [2]
SOPA provided that the payment claim shall be served
at such time specified or determined in accordance
with the terms or if the contract did not provide such
a provision, at such a time as may be prescribed. In
Doo Ree Engineering & Trading Pte Ltd v Taisei Corp19,
the Assistant Registrar of the Singapore High Court was
of the view that the payment claim was a repeat claim
under the SOPA even though the previous payment
claim was not adjudicated upon20.

15

Brief Facts of Chua Say Eng

Chua Say Eng (C) was a civil engineering contractor.
Lee Wee Lick Terence (L) was the owner of a property.
L employed C to convert his two-storey house into a
three-storey house. Disputes arose which resulted in L
terminating the contract on 26 April 2010. In 2 June 2010,
C served a document described as Payment Claim No: 6
(PC 6) on L claiming the sum of S$140,450.40 for work
done for the period June 2009 to 26 April 2010. There was
no reference in PC 6 that it was a payment claim made,
or served under the SOPA. L did not serve a payment
response as required under s. 11 SOPA. C then applied for
adjudication under s.13 SOPA on the ground that there
was no payment response and under s.15 (3) SOPA, L was
precluded and the adjudicator prohibited from considering
any of Ls reason for withholding any amount, including
but not limited to any cross-claim and set-off since L had
failed to serve the mandated payment response.21
The adjudicator, who was appointed under s.14 SOPA,
made an adjudication determination in favour of C in
the sum of S$125,450.40. L did not pay the adjudication
amount and C applied under s. 27 (1) SOPA for leave to
enforce the said determination. L on the other hand
commenced an application to set aside the adjudication
determination on, inter alia, the grounds that (a) PC
6
was not a valid payment claim under the Act and (b) PC 6
was served out of time.
The application to set aside the adjudication determination
came before the Assistant Registrar of the High Court of
Singapore but was dismissed22. L appealed against the
decision of the Assistant Registrar to the High Court and
reiterated his arguments that:
a. PC 6 was not a valid payment claim under the SOPA
because:
i. PC 6 was not a valid payment claim under the SOPA
for it did not expressly state that it was a payment
claim under the Act and
ii. C had not subjectively communicated to L the
intention to make a payment claim under the
SOPA23.
b. PC 6 was served out time because it was not served
within the limitation period of one month from the
last day of each month following the month in which
the contract is made under s.10(2) SOPA, read with
Reg. 5(1).

in focus
The Decision of The Singapore
High Court In Chua Say Eng24
Ls appeal came before Justice Tay Yong Kwong [Tay
J]. His Honour, inter alia, held as follows in allowing Ls
appeal in part:
a. At the outset, his Honour considered the preliminary
issue: What should the court review? and the
controversy as to whether the High Court had the
jurisdiction to review and set aside adjudicators
determination if there was no valid payment claim .
Tay J agreed with and followed the view expressed by
Lee J in Sungdo Engineering that High Court had the
jurisdiction to review the decision of the adjudicator
as to the validity of a payment claim25. However,
recognising conflicting views in the High Court, the
Learned Judge26 granted leave for the parties to appeal
to the Court of Appeal in order to clarify the law.
b. On the issue as to whether PC 6 was a valid payment
claim under the SOPA the Learned Judge dismissed Ls
appeal on the ground that:
i. PC 6 was a valid payment claim and that under the
SOPA the payment claim does not need to contain
a stipulation that it was a payment claim under the
SOPA.
ii. There was no statutory requirement under the
SOPA for the claimant to subjectively communicate
to the respondent that the intention was to make a
payment under the SOPA27.
c. On the limitation period, the Learned Judge allowed
Ls appeal for he interpreted s.10 (2) (b) SOPA and SOPA
Reg. 5 (1) as imposing a one-month limitation period
on the claimant to serve the payment claim by the last
day of each month following the month in which the
contract was made. On the facts of Chua Say Eng, the
Learned Judge held that the construction contract was
made on 31 November 2008 and as such Cs payment
claim for work done in April 2010 should be served not
later than 31 May 2010. The Learned Judge held that,
on the facts, since the payment claim was only served
on 2 June 2010, it was served out of time for the April
2010 claim and therefore out of time.
Both parties appealed to the Court of Appeal, with leave,
from the decision of the High Court. L appealed against
the High Courts decision that PC 6 was a valid payment
claim and C appealed against the High Courts decision
that held that PC 6 was served out of time.

The Decision of The Singapore

Court of Appeal and
Relevance to CIPAA
The Singapore Court of Appeal heard full arguments on
17 October 2011; took time to deliberate on the important
issues with reference to the SOPA model of SOP [NSW]
and the New South Wales Court of Appeal decisions of
Brody Pty Ltd v Davenport28 and Chase Oyster. The Court
of Appeal delivered its judgment on 2 November 201229
setting out the following significant principles governing
construction adjudication in Singapore.

[1] Resolution of divergent views on whether

the High Court had jurisdiction to review the
decision of the adjudicator
The Court of Appeal at the outset sought to resolve the
conflicting approaches adopted by the Singapore High
Court in Chip Hup Hup Kee and Sungdo Engineering.
The Court of Appeal reconciled the different approaches
adopted by the High Courts on the legal basis that they
dealt with different issues and therefore were both
correct for the following reasons:
a. The Court of Appeal held that the approach taken by
the High Court in Sungdo Engineering concerned
the validity of a payment claim which went to the
appointment of the adjudicator and thus a jurisdictional
issue and therefore the High Court had the jurisdiction
to review the adjudicators determination30.
b. Whereas, the Court of Appeal held, that the approach
taken by the High Court in Chip Hup Hup Kee [and
the related cases] concerned a situation where there
was a valid payment claim but the payment claim was
defective for non-compliance with the requirements
of the Act which the Court of Appeal held goes to
the validity of the adjudication determination [merits
of the adjudication] and therefore was not a jurisdiction
question reviewable by the High Court31.
c. The Court of Appeal held that when there is a challenge
to the validity of the appointment of an adjudicator
[including whether there was a valid payment claim],
such questions were jurisdictional issues and only the
High Court [and not the adjudicator] had the power
and duty to review the adjudication proceedings. On
the other hand, the Court of Appeal held that in the
case of the challenge to the validity to the adjudication
determination [merits], then the issue was not one
that went to the jurisdiction of the adjudicator and
therefore one for only the adjudicator to decide
[subject to review to the review tribunal] and not one
for the High Court to review32.

16

in focus
This aspect of Chua Say Eng was quickly embraced and
applied by the Singapore High Courts and the Singapore
Court of Appeal in WY Steel Construction Pte Ltd v Osko
Pte Ltd33.
In Admin Construction Pte Ltd v Vivaldi (S) Pte Ltd34,
Quentin Loh J, reiterated and applied the principles set
out by the Court of Appeal in Chua Say Eng and set aside
an adjudication determination on the basis, inter alia,
that the payment claim upon which the adjudication
determination was made was invalid because there was
no existing construction contract at the time the payment
claim was served for the parties had entered into and
compromised all their claims prior to the payment claim.
The Learned Judge held that the compromised agreement,
which was ex facie valid at the time the payment claim
was served, extinguished all the claimants claims under
the construction contract and as such the claimant had
no legal right to invoke the SOPA and the adjudicator no
jurisdiction to make any adjudication determination under
the SOPA. The Learned Judge held that the question as to
whether there was an existing construction contract was a
jurisdictional question to be determined by the High Court
and not the adjudicator. The decision of the Singapore
High Court was affirmed in the Court of Appeal35.
Similarly, in the recent case of YTL Construction (S) Pte
Ltd v Balanced Engineering & Construction Pte Ltd36,
Tan Siong Thye J, the Singapore High Court applied the
principles stated by the Court of Appeal in Chua Say Eng
and set aside an adjudication determination on the basis,
inter alia, that the payment claim was invalid for it did
not state the amount claimed by reference to the period
to which the payment related [as required under s.10 (3)
(a) SOPA] and that such irregularity could not be waived
as it was jurisdictional37. The High Court also held that an
adjudicator under s.16 (2) (a) SOPA was bound to reject an
adjudication application which was commenced out of
time38.
Unlike the SOPA, the role of the High Court in setting aside
the adjudication determination is much clearer under
the CIPAA. Section 15 CIPAA expressly provides for an
aggrieved party to apply to the High Court to set aside an
adjudication decision on four [4] grounds39 all of which
are public law and jurisdictional grounds. It follows
therefore that under CIPAA the role of the High Court is
similar to that under SOPA - supervisory, prerogative and
the process is by way of judicial review. It is respectfully
submitted that the principles laid by the Singapore Court
of Appeal in Chua Say Eng that the High Court will only
decide jurisdictional challenges [including validity of
payment claim and payment response] and not the merits
of the adjudication determination [unless it falls within
Wednesbury unreasonableness] would equally apply to
an application to set aside an adjudicators determination
under the CIPAA.

17

[2] Roles of the adjudicator nominating body

[ANB], adjudicator, and the high court
clarified
Treating the case before it as a test case, the Singapore
Court of Appeal proceeded to clarify and limit the roles of
the ANB, Adjudicator, and the High Court as follows:
a. The Court of Appeal limited the role of the ANB to
merely administrative in nature when appointing
an adjudicator. The ANB merely served as an
administrative body under the SOPA40 for the receipt
of the adjudication application, appointment of
the adjudicator and the adjudication process. The
Singapore Court of Appeal emphatically stated that the
ANB had no legal obligation to consider the validity of
the payment claim or process in the following terms41 :
The ANB has no obligation to consider the bona fides
of the claimants request by looking into or questioning
whether the payment claim is intended to be a payment
claim, whether it has been served or properly served
on the respondent, or whether it complies with all the
requirements of the Act [Emphasis mine]
The essential role played by the KLRCA under CIPAA is
similar to that of the ANB in Singapore and serves merely as
an administrative body in the appointment of adjudicators
and administering of the adjudication process rather than
in any judicial or quasi-judicial capacity. In the premises,
it is respectfully submitted that the dicta of the Singapore
Court of Appeal in Chua Say Eng on the limited role of the
ANB in Singapore is equally applicable to the limited role of
the KLRCA under the CIPAA. In particular, it is submitted
that it is certainly not the role of the KLRCA to consider the
validity of the payment claim/payment response.
b. The Singapore Court of Appeals clarification on the role
of the adjudicator under SOPA is rather controversial42
for the following reasons:
i. The Court of Appeal held that the function of the
adjudicator under the SOPA was limited to:
[1] deciding whether the adjudication application
in question was made in accordance with
section 13 [3] (a) to (c) SOPA.
[2] that if the adjudication application complied
with the requirements under s.13 (3) (a) (c)
SOPA, to determine the adjudication application
in accordance with s.17 (2) SOPA.
ii. The Court of Appeal held that the adjudicator was
not competent to decide whether he was validly
appointed to adjudicate the matter and that such
argument should be made to the court43.

in focus
The present author respectfully reiterates his submission
elsewhere (see endnote 42) that the Singapore Court of
Appeals ruling that the adjudicator was not competent and
did not have the jurisdiction to decide on the validity of
the payment claim/payment response and consequently,
his appointment, is wrong for the adjudicator is mandated
under 17 (3) (a) (h) SOPA to decide such questions which
are the basic and essential conditions imposed by
SOPA.44
The stance taken by the Singapore Court of Appeal is
also, it is respectfully submitted, contrary to the role of
the adjudicator under CIPAA. The jurisdiction of the
adjudicator under the CIPAA is clearly set out in s.27
CIPAA and it is mandated that the adjudicator jurisdiction
is limited to adjudicating on the payment claim [under
section 5 CIPAA] and payment response [under section
6 CIPAA] unless the jurisdiction is extended in writing
under section 27 [2] CIPAA by the parties. It is therefore
submitted that, unlike the position in SOPA [as set out
in Chua Say Eng], under CIPAA the adjudicator has the
jurisdiction to decide on the validity of the payment
claim and the payment response. It is submitted that
under CIPAA, the validity of the payment claim and the
payment response are basic and essential conditions
which have to be decided by the adjudicator, failing which
the adjudication decision will be void and not voidable
[as per Hodgson JA in Brodyn Pty Ltd v Davenport [2004]
NSWCA 394 at [52] [55]). However, unlike the SOPA and
SOP [NSW], CIPAA, under section 27 [3], expressly bestows
on the adjudicator a statutory discretion not to decide
the jurisdictional challenge [including the validity of the
payment claim and the payment response] and to proceed
with and complete the adjudication proceedings despite
the jurisdictional challenge. As such, it follows that under
section 27 (3) CIPAA the adjudicator is not bound to decide
the basic and essential conditions as to the validity of the
payment claim and payment response. It is respectfully
submitted that section 27 (3) CIPAA is a very unusual
provision indeed. Although the clear intention behind
section 27 (3) CIPAA, is to reiterate the underlying purpose
of CIPAA to provide a speedy and low cost adjudication,
it is respectfully submitted that, it will be counterproductive to the whole intention of CIPAA and a complete
waste of costs to the parties for an adjudicator to exercise
his discretion not to decide on the validity of the payment
claim and/or the payment response and to proceed with
and complete an adjudication application when it is
clear from the evidence at the outset that the payment
claim is invalid. It is further respectfully submitted that
the prudent and proper exercise of discretion will be for
the adjudicator to decide any jurisdictional challenge on
the validity of the payment claim and/or response or any
other jurisdictional issues under s 27 [1] CIPAA and only
to proceed with the adjudication when such challenges
are unsubstantiated or invalid or unclear. Finally on this
point, it is respectfully submitted that a deliberate refusal
by an adjudicator under CIPAA to consider whether to
exercise the statutory discretion may by itself amount to
a fettering of the adjudicators statutory discretion and be

subject to judicial review in the High Court.

c. The Singapore Court of Appeal held45 that the
High Courts role in setting-aside an adjudicators
determination is as follows:
i. The High Court should not review the merits of the
adjudicators determination.
ii. The High Court has the power [and duty] to
decide matters which go to the jurisdiction of
the adjudicator and affect the validity of the
adjudicators appointment in particular where
there is no payment claim or service of the
payment claim, the appointment of the adjudicator
will be invalid, and the resulting adjudication
determination would be null and void.46
It is respectfully submitted that for reasons stated
above, the principles laid by the Singapore Court of
Appeal in Chua Say Eng that the High Court will only
decide jurisdictional challenges [including validity of
payment claim & payment response] and not the merits
of the adjudication determination [unless it falls within
Wednesbury unreasonableness] are relevant and equally
applicable in setting aside the adjudicators determination
under section 15 of the CIPAA for it is by way of a judicial
review and it is trite law that the role of the High Court in a
judicial review is only to review the legality of the decision
and not its merits.

[3] The gloss on the Sungdo Principles

The Singapore Court of Appeal considered the Sungdo
Principles holding that, despite the lack of an express
stipulation in the SOPA [unlike the SOP (NSW) and
CIPAA], the claimant was required to communicate the
subjective intention to the respondent that the claim
served on the respondent is in fact a payment claim under
the SOPA.47 The Singapore Court of Appeal recognized that
the lack of a stipulation or communication in the payment
claim would result in a certain amount of inconveniences
and even hardship on potential respondents who are
considering what action to be taken to protect their interest
in the context of the Act48. Notwithstanding the potential
hardship to the respondent, the Court of Appeal refused to
approve the Sungdo principles; instead holding that since
Parliament had deliberately omitted49 to impose such a
requirement on the claimant, the respondent is to treat
every claim submitted to the claimant that satisfies the
requirement of the Act as a payment claim and respond
accordingly50. The Singapore Court of Appeal imposed a
gloss on the Sungdo principles and limited their application
to its own peculiar facts where the court is seeking to
prevent unscrupulous contractors who take advantage of
the legislative scheme.
The decision of the Court of Appeal is very unfortunate51,
especially since the respondent under section 15 [3] SOPA
[and s 15(4) & 20 SOP (NSW)] is subject to the draconian

18

in focus
consequence of not being able to raise any defence, setoff, cross-claim for withholding payment unless it is
contained in the payment response served within the
strict time-lines under the SOPA. This draconian effect
is further exasperated by the recent Singapore Court of
Appeal decision in WY Steel Construction Pte Ltd v Osko
Pte Ltd52 which confirmed that the respondents failure to
serve a payment response is a jurisdictional issue and
held that respondent is precluded from raising and the
adjudicator had no jurisdiction to consider any defence,
cross-claim or set-off not raised by the respondent in the
payment response.
The draconian consequences to respondents under s 15
[3] SOPA [SOP [NSW] & SOP [E]) is thankfully anticipated
and avoided under the CIPAA by the express stipulation
under s 5 (d) CIPAA that the payment claim shall include
a statement that it is made under the Act [as in the case
of s. 13(3) (c) SOP [NSW]), the unusual provision of s.6(4)
CIPAA which expressly provides [unlike the SOP [E], SOP
[NSW] & SOPA] that a non-paying party who fails to
respond to a payment claim in the manner provided under
this section is deemed to have disputed the entire payment
claim [emphasis mine] and the glaring absence of the
equivalent draconian provision contained in of s 15[3]
SOPA, s 15(4) & 20 SOP (NSW) & s 111 SOP (E) in the CIPAA.

[4] The was no one month limitation period

for the service of a payment claim under the
SOPA
The Singapore Court of Appeal then considered Cs appeal
against the High Courts interpretation of section 10 (2)
(b) SOPA and SOPA Reg. 5 that imposed a limitation
period53 on the claimant and the claimant had to serve the
payment claim for monthly works by the last day of each
month following the month failing which the claimant
was debarred from making a claim for preceding months
construction works carried out. The Court of Appeal
disagreed54 with the High Court that Cs payment claim
was debarred and served out of time for the following
reasons:
a. On the facts, the Court of Appeal held55 that the
High Court Judge had erred in failing to take into
consideration the supplemental agreement dated
3 Dec 2008 which determined the reference period
for the following months of claim under s 10 (2) (b)
SOPA and SOPA Reg. 5. The Court of Appeal held that
the effective date was the date of the supplemental
agreement and the last date for the claimant to serve
the payment for works carried out in April 2010 was 3
June 2010 and not 31 May 2010 as held by the Learned
Judge. Consequently, since on the facts C had served
the payment claim on 2 June 2010, the claim was served
within time and valid.
b. The Court of Appeal interpreted s 10 (2) (b) SOPA and

19

reg. 5 and held that these provisions did not impose any
obligation on the claimant to make monthly claims by
the last day of each month following the month and
therefore there was no limitation period imposed by
s 10 (2) SOPA and reg. 5 as held by the Learned Judge.
The Court of Appeal held that 10 (2) (b) SOPA did not
compel a claimant to make monthly payment claims
for work done in the previous month, whether he
wants to or not56. It therefore follows that in Singapore
there is no definite period within which a claimant
must make a monthly payment claim and a claimant
can refrain from making a prompt payment claim for
works carried out and commence an application under
the SOPA long after the contract is completed57.
Section 10 (2) (b) & SOPA Reg 5 was clearly intended to
provide a statutory time-line for the service of the payment
claim when the construction contract failed to specify the
same. However, the decision of the Singapore Court of
Appeal in Chua Say Eng renders the statutory time-lime
for the service of the payment claim otiose for there is no
compulsion on the claimant to make monthly claims. The
claimant is allowed to serve a payment claim for previous
claims long after the works are carried out - so long it is
within the Limitation period.
Unlike s 10 (2) (b) & Reg 5 SOPA, s 5 (1) CIPAA does not seek
to impose any statutory limitation period and delegates
the date of service of the payment claim to the parties
under the construction contract. Section 5 [1] CIPAA
expressly stipulates that the service of the payment claim
shall be pursuant to a construction contract and under
section 5 [2] CIPAA the payment claim shall include
the due date for the payment claimed.58 However, the
provision under s 5(1) CIPAA begs the question: what if
there was no due date for the service of the payment claim
provided under the construction contract? There is a clear
lacuna in the CIPAA in this regard bearing in mind that
most construction contracts under which sub-contractors
are engaged [at least in Singapore] are not Standard Form
Contracts and may not contain the due dates for service of
payment claims. The Regulations under the CIPAA also do
not provide for any specific time-frame for the service of
the payment claim [as stipulated by Reg 5 SOPA]. In fact,
it is respectfully submitted that any attempt to resolve this
lacuna will require an express amendment to the CIPAA
and inclusion in s 5 CIPAA for the Rules to prescribe such
time-line [as in the case of S 10[2] (b) SOPA and SOPA Reg 5]
for it is questionable whether the Regulations under CIPAA
could impose any such limitation when the parent Act [s
5 CIPAA] does not provide as in the case of s 10[2] (b) SOPA]
any such limitation period. It is further respectfully
submitted that there is an urgent need to amend CIPAA to
stipulate a prescribed time-line for the Claimant to serve
the payment claim if the construction contract does not
contain such specific time-frame failing which claimants
will be in the dilemma when to serve the payment claim
under the CIPAA. The alternative and default position, as

in focus

It is further respectfully submitted that the prudent and proper

exercise of discretion will be for the adjudicator to decide any
jurisdictional challenge on the validity of the payment claim
and/or response or any other jurisdictional issues under s 27
[1] CIPAA and only to proceed with the adjudication when such
challenges are unsubstantiated or invalid or unclear.
held by the Singapore Court of Appeal in Chua Say Eng,
is that the claimant can serve their payment claim at any
time so long as it is within the Limitation period.

[5] Repeat claims clarified Doo Ree Engineering

& Trading Pte Ltd v Taisei Corporation
overruled.
In the course of its decision, the Singapore Court of Appeal
considered the issue of what amounted to a repeat claim
prohibited under the SOPA. Section 10 (1) SOPA provided
that A claimant may serve one payment claim in respect
of a progress payment. (Emphasis mine]
In Doo Ree Engineering & Trading Pte Ltd v Taisei
Corporation, the High Court Assistant Registrar held
that service of a payment claim which was similar to and/
or substantially similar to a non-adjudicated previous
payment claim was a repeat claim prohibited under the
SOPA. The Court of Appeal in Chua Say Eng reviewed and
overruled Doo Ree Engineering59 The Court of Appeal
interpreted ss 10 (1) & 10(4) SOPA and defined a repeat
claim as a subsequent payment claim for amounts already
previously adjudicated upon under the SOPA. The Court
of Appeal held that the SOPA only prohibited a claimant
from serving a payment claim which was the same and/
or substantially the same as one which was previously
adjudicated. The Court of Appeal held that the SOPA did
not prohibit a claimant from including in a payment claim
under SOPA claims for unpaid or partially paid amounts
contained in previous claims, provided the previous
claims were not adjudicated under the SOPA and inclusion
of such unpaid or partially unpaid did not amount to
repeat claim.60 The provisions of ss 10 (1) & 10(4) SOPA
are materially different from that contained in section 5
CIPAA. In particular, CIPAA does not have the rolled-up
provision as contained in section 10(4) SOPA, which was
instrumental to the Singapore Court of Appeals holding
that the claimant was not prohibited from including in
a payment claim unpaid and partially unpaid amounts
contained in previous payment claims.
Section 5 [1] CIPAA however, does provide that an unpaid
party may serve a payment claim on the non-paying
party for payment pursuant to a construction contract
unlike the clearer provision under section 10 [1] SOPA
which provides that A claimant may serve one payment

claim in respect of a progress payment...61 [Emphasis

mine]. The situation under section 5 CIPAA begs two
questions: [a] Is the claimant limited to serve one [1]
payment claim for a period for works for which it is due
under the construction contract and [b] Can the claimant
make a rolled-up claim in and/or consisting of an
adjudicated amount?
With respect to first question, it is submitted that even
though CIPAA does not contain the clear prohibition
contained in s.13 (5) SOP [NSW] and/or s 10[1] SOPA, the
reference to the claimants right under section 5(1) CIPAA
to serve a payment claim limits the claimant to only one
payment claim for work carried out for each reference
period [or progress claim] under the construction contract.
This interpretation accords with the principles applied
under the SOPA and SOP [NSW] prohibiting a claimant
from issuing more than one payment claim for each period
of work done and avoids repeat claims that would be
tantamount to an abuse of the CIPAA62.
With respect to the second question, it is respectfully
submitted that even though CIPAA does not contain any
express provision allowing roll-up claims as in the case
of s. 10(4) SOPA and s.13 (6) SOP [NSW], CIPAA does not
prohibit the claimant from making a rolled-up claim
against the respondent, including claims not previously
paid or partially paid. In fact, support for CIPAA allowing
a rolled-up claim [despite section 5] is contained in the
definition of unpaid party [s.4 CIPAA] which is defined
as a party who claims payment of a sum which has not
been paid in whole or in part under a construction contract.
[Emphasis added]. Nevertheless, the definition of a
repeat claim by the Singapore Court of Appeal in Chua
Say Eng [derived from the NSWCA decision of Dualcorp
Pty Ltd v Remo Construction Pty Ltd [2009] NSWCA at
[53]), consisting of a claim for a sum previously adjudicated
upon amounted to a repeat claim and is prohibited
should be applicable under the CIPAA. It is respectfully
submitted that for a claimant to make a payment claim
under s. 5 CIPAA, either in the form of a rolled-up claim or
a new claim consisting of amounts which have already
been adjudicated upon clearly amounts to an abuse of the
CIPAA and is a repeat claim prohibited by CIPAA.

20

in focus
[6] Final claims subject to adjudication under
SOPA
The Singapore Court of Appeal in Chua Say Eng
considered63 the important question [although not raised
by the parties] as to whether a final claim (as opposed to a
progress claim) fell within the SOPA for adjudication, for
PC 6 was a final claim and not a progress claim. The issue
first arose in Singapore before the High Court in Tiong
Seng Constructors (Pte) Ltd v Chuan Lim Construction
Pte Ltd64 wherein it was, inter alia, argued that that the
SOPA applied only to a progress payment and not to a
final payment.65 The Singapore High Court in Tiong Seng
Construction (Pte) Ltd v Chuan Lim Construction Pte Ltd
adopted a purposive interpretation of a progress claim
in s 2 SOPA66 to include a claim for payments.
In Chua Seng Eng, the Singapore Court of Appeal
approved67 the purposive approach adopted by the
Singapore High Court in Tiong Seng Construction (Pte) Ltd
and held that the definition of a progress claim under s.
2 SOPA was wide enough to include a payment, albeit
final, to which a person is entitled to for the carrying out of
construction work.
CIPAA does not contain any definition of payment
claim and/or progress claim as set forth in SOPA or
SOP [NSW]. The question whether a payment claim
would include a final claim is therefore open to dispute.
However, guidance on the definition of a payment claim
can be deduced from the definition of a payment
means a payment for work done or services rendered
under the express terms of a construction contract and
unpaid party means a party who claims payment of
a sum which has not been paid in whole or in part under
a construction contract [s. 2 CIPAA]. It is respectfully
submitted that the definition of a payment and
unpaid party reinforces the whole object and purpose
of CIPAA to facilitate regular and timely payment and
to provide remedies for recovery of payment in the
construction industry [preamble to CIPAA]. Bearing in
mind these salutary objectives and purposes of CIPAA, it
is respectfully submitted that the purposive interpretation
by the Singapore Court of Appeal in Chua Say Eng for a
payment claim to include a final payment should also
apply under the CIPAA for the obvious reason that a final
claim is also a claim under the construction contract and
it would be untenable for the CIPAA to be applicable to
progress claims but not to a final claim, which rise from
the same construction contract - especially since it was
not excluded by Parliament.

21

[7] No resolution on the nature of challenge and

who is to decide setting aside applications in
Singapore
Andrew Burr in his editorial in Construction Law Journal
[2014]68 pointed out that at the outset of the introduction
of the SOP [E], following Sir Michael Lathams report,
there were a host of unanswered questions what
and how, if not why [nature of challenge and who is to
decide setting aside applications] - which were resolved
over twenty years since the introduction of construction
adjudication in England. These unanswered questions
similarly prevail even today after ten years following the
introduction of SOPA in Singapore. This is particularly so
because there is no indication whatsoever in the SOPA on
the nature of challenges to adjudication and the lack of
guidance from the Singapore High Court.
In Chua Say Eng the Singapore Court of Appeal was
presented with an opportunity to resolve this deficiency
but unfortunately, it is respectfully submitted, it skirted
the whole issue and focussed on merely on seeking to
reconcile the two approaches on when the High Court
should review an adjudication determination. It is
unclear from the whole decision whether the nature of the
challenge is a judicial review. Although it is reasonable to
assume that the Singapore Court of Appeal proceeded on
the basis that the application to set aside the adjudication
determination was in the nature of a judicial review69,
the Court left this essential question unanswered. The
resulting lack of clarity is unfortunate70 because it is an
essential, practical consideration for parties to consider
whether the application for setting aside is susceptible to
challenge in the first place in the High Court [i.e. whether
to challenge the determination on jurisdictional grounds
or on the merits]. The lack of clarification has continued
to perpetuate the wrong and unsatisfactory conduct of
Assistant Registrars of the High Court of Singapore hearing
and deciding applications for setting aside adjudication
determination in the first instance when they must be
heard and determined by the High Court Judge exercising
supervisory and preparative powers.71
Unlike the SOPA, the role of the High Court in setting aside
the adjudication determination is much clearer under the
CIPAA. Section 15 CIPAA expressly provides the remedy
for an aggrieved party to apply to the High Court to set
aside and adjudication application on four [4] grounds72
all of which are public law and jurisdictional grounds.
It follows therefore that under CIPAA the role of the High
Court is clearly supervisory, prerogative and the process is
by way of judicial review. Consequently, the application
must be heard before a High Court judge as it is an exercise
of the High Courts prerogative and supervisory powers
over an inferior tribunal [the adjudicator under the
CIPAA] and hopefully the wrongful practice persisting
in Singapore of Assistant Registrars hearing applications
to set aside n adjudication determination would not be
followed or allowed in Malaysia.

in focus
Conclusion
In conclusion, the law relating to construction
adjudication in Singapore has been significantly clarified
and laid down by the decision of the Singapore Court of
Appeal in Chua Say Eng. However, as pointed out by the
present author elsewhere73, this decision of the Singapore
Court of Appeal is really a quagmire. Although intended
to comprehensively resolve all the pending High Court
controversies existing at time of its decision, Chua Say
Eng has sown the seeds for future controversies affecting
statutory adjudication in Singapore. In spite of this
limitation, Chua Say Eng can serve as a useful guide and
approach in the interpretation of principles in construction
adjudication under CIPAA subject, of course, to the view
of its utility and persuasiveness taken by the Malaysian
Courts.
*This article is a summary and synopsis of the detailed views expressed by the present author and published in S. Magintharan:
Construction Adjudication in Singapore Lee Wee Lick Terence v Chua Say Eng [2014] 30 Constr. LJ 73 [hereinafter referred to as
S. Magintharan: Chua Say Eng] and S. Magintharan: Setting Aside of Payment Claims and Jurisdictional Issues in Singapore The
Sungdo Principles [2011] 27 Constr. LJ 506 [hereinafter referred to as S. Magintharan: Sungdo Principles].
endnotes
1.

Building and Construction Industry Security of Payment Act [Cap 30B]

[hereinafter referred to as SOPA]. Regulations were passed under
the SOPA and are contained in the Building and Construction Industry
Security of Payment Regulations [Cap 30B, reg 1, 2006 Rev Edn],
hereinafter referred to as SOPA Reg.

2. Building and Construction Industry Security of Payment Act 1999 [Act

46 of 1999] (NSW), hereinafter referred to as the SOP [NSW] Act.
3. Housing Grants, Construction and Regeneration Act 1996 as amended
by ss.143 145 of the Local Democracy, Economic Development and
Construction Act 2009 [hereinafter referred to as the SOP [E] Act].
4. The Construction Industry Payment & Adjudication Act 2012 which
came into force on 15 Apr 2014 along with the Construction Industry
Payment and Adjudication Regulations [CIPAA Reg].
5. Please refer to the present authors views expressed in both S.
Magintharan: Sungdo Principles and S. Magintharan: Chua Say Eng
wherein the details of the divergent views were discussed.
6. Lee Wee Lick Terene (alias Li Weilic Terence) v Chua Say Eng (formerly
trading as Weng Fatt Construction Engineering) and another appeal
[2013] 1 SLR 401; [2012] SGCA 63
7. Please see S. Magintharan: Chua Say Eng at pages 73 75. The
problems were aptly described by the Editor of Construction Law
Journal, Andrew Burr, in his editorial to CLJ [2014] 30 Vol 2 page 71 as
what and how, if not why. The present author is indebted for
the comments made by Mr Michael Heihre on the draft of this article
but all views expressed in this article are solely the personal views and
responsibility of the present author.
8. Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering &
Construction Co Ltd [2010] 1 SLR 658; SEF Construction Pte Ltd v Skoy
Connected Pted Ltd [ 2010] 1 SLR 733 and AM Associates (Singapore)
Pte Ltd v Laguna National Golf & Country Club Ltd [2009] SHHC 260.
9.

Sungdo Engineering & Construction (S) Pte Ltd v Italcor Pte Ltd [2010]
3 SLR 45 [hereinafter referred to Sungdo]. This view was approved
by Tay Yong Kwang J at first instance in Chua Say Eng v Lee Wee Lick
Terence [2010] SGHC 109 at [28]. The present author was counsel who
acted for Sungdo before the Singapore High Court. Sungdo is the first
Singapore High Court decision where an adjudication determination
was set aside. The High Court held that the question as to the validity
of a payment claim was a jurisdictional issue which the High Court
could review. In Sungdo, the High Court set aside the adjudication
determination on, inter alia, the ground that the payment claim was
invalid because it did not contain any indication that it was a payment
claim under the SOPA. Please refer to S. Magintharan: Sungdo
Principles [2011] 27 Constr. LJ 506.

10. In fact SOPA & SOP Reg are rather cryptic as the nature of the
application to the High Court. Section 27 [5] SOPA makes reference

to an application to set aside the adjudication determination whilst

section 34 [1] [a] & [b] SOPA preserves the parties concurrent rights to
a court or tribunal. There is regrettably no specific provision in the
SOPA dealing with the nature of the application or to which court the
application should be made. This lacuna had resulted in an application
to set aside an adjudication determination under SOPA to be taken
out in the Subordinate Courts [now the State Courts of Singapore];
the subordinate Courts rejection of the same and affirmation that
the nature of the application was a judicial review and that such
application had to be taken in the High Court: Liao He Pte Ltd v JFC
Builder Pte Ltd [2012] SGDC 23.
11. Sections 18 22 SOPA & Regulations 10 provide a redress to only the
Respondent to challenge the merits of the adjudicators determination
when the award exceeds S$100,000.00 to a review panel comprising
of three [3] review adjudicators who have powers to inter alia,
substitute the adjudication determination. However, one of the
practical shortcoming of this review process is that the Respondent
is not allowed to invoke the review process unless he paid the
adjudicated amount to the claimant prior to lodging of the review and
evidenced the same. There is no safeguard provided under the SOPA
for the return of the payment under the adjudication determination if
upon review the full or substantial amount is determined to be returned
to the Respondent. On the contrary, Section 27 [5] SOPA and Order 95
Rule 3 [2] Rules of Court, Singapore [2006 Edn] provides a safeguard
to the Respondent and requires the payment of the adjudicated
determination into the High Court as security on an application to set
aside the adjudication determination thereby enabling the Respondent
to lock-up the adjudicated amount which is disputed until the final
determination determination by the High Court and/or the Court of
Appeal. It is a practical and real concern of Respondent that his payment
of the adjudicated amount is safeguarded because once the payment
is made to the claimant it is almost impossible to seek a return of the
amount paid from the sub-contractor regardless as to the decision
of the review tribunal or the High Court. As the result, in practice it
is more practical to seek to set aside the adjudication determination
on jurisdictional grounds and at the same time challenge the merits on
the ground on Wednesbury principles Associated Provincial Picture
Houses Ltd v Wednesbury Corp [1948] 1 KB 223 [ie. no reasonable
tribunal, would have arrived at the adjudication determination], if
possible, rather than to invoke the review process. CIPAA does not
provide for any review procedure as contained in the SOPA. However,
ss 15, 16 & 28 CIPAA are clear and unequivocal that the jurisdiction to
review the adjudication determination is in the High Court. It is
respectfully submitted that, as in the case of the SOPA, the review and
setting aside by the High Court is in the exercise of its supervisory and
prerogative powers over inferior tribunals [adjudication determination
under the CIPAA] and therefore only the High Court judge should have
the jurisdiction to review and set aside an adjudication determination
under the CIPAA.
12. Order 95 Rule 3 Rules of Court [2006 Edn] which deals with
an application before the High Court to set aside adjudication
determination or judgment under the SOPA is not helpful for it does

22

in focus
endnotes
not stipulate the nature and who should be hearing an application to
set aside an adjudication determination. This lacuna has in Singapore,
it is submitted, led to the present incorrect and unsatisfactory practice
of applications for setting aside adjudication application being
heard and determined by Assistant Registrars of the High Court of
Singapore instead of High Court Judges. See for example the cases
of Taisei Corp v Doo Ree Engineering & Trading Pte Ltd [2009] SGHC
156 where the application to set aside the adjudication was heard and
adjudication determination set aside by the Assistant Registrar of the
Singapore High Court. See also Associate Dynamic Builder Pte Ltd v
Tactic Foundation Pte Ltd [2013] SGHC 16; Shin Khai Construction Pte
Ltd v F L Wong Construction Pte Ltd [2013] SACHCR 4 and recently
LH Aluminium Industries Pte Ltd v Newcon Builders Pte Ltd [2014]
SGHCR 10 as persisting instances of Assistant Registrars hearing and
determining applications to set aside adjudication determination.
As set out in S. Magintharan: Sungdo Principles, supra at fn 63 and S.
Magintharan: Chua Say Eng, supra at fn 16 & page 46 it is reiterated
that the nature and power exercised in setting aside of an adjudication
determination is by way of the High Courts Supervisory/Prerogative
powers of judicial review and as such only the High Court Judges
must hear and determine any application to set aside an adjudication
determination and none other. This point was argued by the present
author before the Singapore High Court in Admin Constructions Pte
Ltd v Vivaldi (S) Pte Ltd [2013] 3 SLR 609 but no definitive decision was
made by the High Court Judge, although the Learned Judge, Quentin
Loh J, at [65] questioned the feasibility of such setting aside application
being heard before the Assistant Registrar in the context that it would
entail an additional layer in the appeal proceedings, cause delay and
be contrary to intent SOPA to provide a quick and speedy remedy to
contractors.
13. Section 13[2] [c] SOP [NSW] Act. This significant issue, fortunately,
does not arise under CIPAA for section 5 [2] [d] CIPAA mandates that
a valid payment claim shall contain, inter alia, a statement that
it is made under the Act. In Singapore, it seems that Parliament,
deliberately omitted to mandate for such an express stipulation
following suggestions from subcontractors and suppliers lobby that
such a requirement may conceivably result in creating a contentious
atmosphere in the relationship between the main contractor and
subcontractor straight away: K.F. Chow, Security of Payment and
Construction Adjudication [Lexis Nexis, 2005] at pp 134 135. In
Sungdo at page 467 [11] Lee J held that the suggestions by the
subcontractors and suppliers lobby does not bear scrutiny in view
of the short timelines under the Act for the respondents to come out
with a payment response. See also S. Magintharan: Sungdo Principles
at pages 513 & 514, where the present author had criticised the lack
of such a stipulation which propagates ambush by the claimants and
amounts to a breach of natural justice [fair notice]. Unfortunately as
noted in S. Magintharan: Chua Say Eng, supra, at pages 86 & 87, the
Singapore Court of Appeal in Chua Say Eng had put a gloss over the
Sungdo principles and rejected the Sungdo principles in the light of the
deliberate omission by Parliament of such a stipulation.
14. A term coined by the present author in S. Magintharan: Sungdo
Principles [supra] at pages 512 & 513.
15. Sungdo [supra] at page 473 at [21] and [22].
16. At first instance in Chua Say Eng [2011] SGHC 109 at [28] although the
Learned Judge conceded that such a stipulation was a statement of
best practice.
17. There is no such limitation period provided under CIPAA although
section 5 [1] CIPAA expressly stipulates that the service of the payment
claim shall be pursuant to a construction contract and under section
5 [2] CIPAA the payment claim shall include the due date for the
payment claimed.
18. The decision of the Assistant Registrar is reported in Chua Say Eng v
Lee Wee Lick Terrence [2009] SGHC 333.
19. Doo Ree Engineering & Trading Pte Ltd v Taisei Corp [2009] SGHC 218.

23

[2000] 75 Con. LR 92 and Australia Walter Construction Group Ltd v

CPL (Surrey Hills) Pty Ltd [2003] NSWCA 266; Leighton Contractors Pty
Ltd v Campbelltown Catholic Club [2003] NSWSC 1103; Parist Holdings
Pty Ltd v WT Partnership Australia Pty Ltd [2003] NSWC 365; Multiplex
Construction Pty Limited v Jan Luikens and Lahey Detailed Joinery Pty
Ltd [2003] NSWSC 1140.
22. It is respectfully reiterated that this is yet another case where an
application to set aside the adjudication determination was wrongly
heard and determined by an Assistant Registrar of the High Court at
the first instance instead of the High Court Judge.
23. L was relying entirely on the Sungdo Principles as set out in Sungdo
Engineering & Construction Pte Ltd [2010] 3 SLR 459. See also S.
Magintharan: Sungdo Principles, supra, 510 514.
24. Chua Say Eng v Terene Wee [2011] SGHC 109. See S. Magintharan: Chua
Say Eng, supra, pages 77 81.
25. The divergent views in Chip Hup Hup Kee Construction Pte Ltd v
Ssangyong Engineering & Construction Co Ltd [2010] 1 SLR 658; SEF
Construction Pte Ltd v Skoy Connected Pted Ltd [2010] 1 SLR 733 and
AM Associates (Singapore) Pte Ltd v Laguna National Golf & Country
Club Ltd [2009] SHHC 260 expressed by Prakash J and that of Lee J
in Sungdo Engineering & Construction (S) Pte Ltd v Italcor Pte Ltd
[2010] 3 SLR 45. Tay J considered the controversy in the light of the
recent Australian Court of Appeal decision of Chase Oyster Bar v Hamo
Industries [2010] NSWCA 190 [Chase Oyster].
26. Chua Say Eng v Terrence Wee [2011] SGHC 109 at [27] [29].
27. The Learned Judge rejected the Sungdo principles although he
recognised that it was a statement of best practice.
28. Brodyn Pty Ltd t/a Time Cost and Quality v Davenport [2004] NSWCA
394 (Brodyn).
29. In the interim, the parties had actually settled the dispute but the Court
of Appeal found it necessary to proceed with the appeal in the public
interest because the two judicial approaches have created difficulties
amongst adjudicators on the proper approach to adopt, for this reason
it is desirable for this court to express its view on the state of the law:
per Chan Sek Keong CJ in Lee Wee Lick Terrence v Chua Say Eng [2013]
1 SLR 401 at [18].
30. Chua Say Eng v Terence Wee [2013] 1 SLR 401 at [31], [37] [39]. See
also S. Magintharan: Chua Say Eng, supra, at pages 78 80.
31. Chua Say Eng at [30] [32].
32. Subject to the situation where the adjudicator had failed to comply
with one or more of the provisions under the Act which was so
important that it was the legislative purpose that an act done in breach
of the provision should be invalid, whether it be labelled as an essential
condition, or mandatory condition. A breach of such a provision would
result in the adjudication determination being invalid per Chan CJ in
Chua Say Eng at [67].
33. WY Steel Construction Pte Ltd v Osko Pte Ltd [2013] 3 SLR 380.
34. Admin Construction Pte Ltd v Vivaldi (S) Pte Ltd [2013] 3 SLR 609;
[2012] SGHC 95.
35. Admin Construction Pte Ltd v Vivaldi (S) Pte Ltd [2013] 3 SLR 609
at [19] [32]. The present author was counsel who acted for Admin
Construction before the High Court of Singapore and the Singapore
Court of Appeal. The Singapore High Court approved and followed the
English High Court decision of Sheppard Construction Ltd v Mecright
[2000] BLR 489. The decision of the Singapore High Court was
affirmed by the Singapore Court of Appeal comprising of Sundaresh
Menon CJ, VK Rajah JA and Lee Sieu Kin J in Vivaldi (S) Pte Ltd v Admin
Construction Pte Ltd [2013] Unreported Civil Appeal No: 63 of 2013.

20. The Learned Assistant Registrar had relied on the Australian cases of
Shellbridge Pty Ltd v Rider Hung Sydney Pty Ltd [2005] 1152; Dualcorp
Pty Ltd v Remo Construction Pty Ltd [2009] NSWCA 69 and Doolan v
Rubikon (Qld) Pty Ltd [2008] R 117 in arriving at his interpretation that
repeat payment claims were not allowed under section 10 [1] SOPA.

36. YTL Construction (S) Pte Ltd v Balanced Engineering & Construction
Pte Ltd [2014] SGHC 142 judgment released on 15 July 2014.

21. In Singapore this draconian effect of s.15 (3) SOPA set out by Lee
J in Sungdo Engineering & Construction Pte Ltd v Italcor Pte Ltd
[2010] 3 SLR 459 at [13] was approved and applied by the recent [and
second] Singapore Court of Appeal decision of WY Steel Construction
Pte Ltd v Osko Pte Ltd [2013] 3 SLR 380 at [24] [54]. As noted in S.
Magintharan: Chua Say Eng, supra at fn 15 the law in construction
adjudication in Singapore in this regard is draconian but in line with
the SOP regimes of England Rupert Morgan Building Services (LLC)
v Jervis [2003] EWCA Civ 1563; [2004] B.L.R. 18; VHE Construction
Plc v RBSTB Trust Co Ltd [2000] B.L.R. 187; QBD (TCC); Whiteways
Contractors (Sussex) Ltd v Impressa Castelli Construction UK Ltd

38. YTL Construction, supra, at [43] [49] applying the New South Wales
Court of Appeal decision of Chase Oyster, supra.

37. YTL Construction, supra, at [32]. The High Court in any event found
that there was no waiver of the irregularity.

39. Section 15 (a) (d) CIPAA (a) adjudication improperly procured

through fraud or bribery, (b) denial of natural justice (c) adjudicator had
not acted independently or impartiality [biasness] and (d) adjudicator
acted in excess of his jurisdiction See also reasons and authorities S.
Magintharan: Sungdo Principles at pages 516 518 & authorities cited
in fn 5239. Chua Say Eng [2013] 1 SLR 401 at [62] [68].
40. Sections 14 & 15 SOPA. The views expressed by the Singapore Court

in focus
endnotes
of Appeal in respect to the ANB is also, it is respectfully submitted,
applicable to the role of the KLRCA prescribed under sections 21 23,
32 & 33 of CIPAA.
41. Chua Say Eng [2013] 1 SLR 401 at [63]. Sections 12, 21- 23 CIPAA.
42. See S. Magintharan: Chua Say Eng at pages 88 93 wherein the present
author had respectfully submitted and reiterates that the Court of
Appeal in Chua Say Eng was wrong in holding that the adjudicator was
not competent to decide the validity of the payment claim, payment
response and provisions of the SOPA in particular the matters set out
in ss 17 (3) (a) (h) SOPA. See also the decision of Hodgson JA (with
whom Mason P and Giles JA agreed) in Brodyn Pty Ltd v Davenport
[2004] NSWCA 394 at [52] [55] wherein the New South Wales Court
of Appeal held that the adjudicator was bound to determine the
basic and essential conditions contained in ss 22(2) (a) (e) SOP
[NWS], which are similar to that contained in ss 17 (3) (a) (h) SOPA,
failing which the adjudicators determination will be void and not
voidable.
43. Chua Say Eng [2013] 1 SLR 401 at [64] and [65]. The point that the
adjudicator was not competent to decide validity of the payment claim
was applied by the Singapore High Courts in Admin Construction v
Vivaldi (S) Pte Ltd [2013] 3 SLR 609 at [22] and YTL Construction (S)
Pte Ltd v Balanced Engineering & Construction Pte Ltd [2014] SGHC
142 at [32] without hearing full arguments set out in fn 42 and S.
Magintharan: Chua Say Eng at pages 88 93.
44. See sections 17 (3) (a) (h) SOPA. See also the decision of Hodgson
JA (with whom Mason P and Giles JA agreed) in Brodyn Pty Ltd v
Davenport [2004] NSWCA 394 at [52] [55] wherein the New South
Wales Court of Appeal held that the adjudicator was bound to
determine the basic and essential conditions contained in ss 22(2)
(a) (e) SOP [NWS], which is similar to that contained in ss 17 (3) (a)
(h) SOPA, failing which the adjudicators determination will be void
and not voidable. It is respectfully reiterated that the decision of
the Singapore Court of Appeal in Chua Say Eng that the adjudicator is
not competent to decide the validity of the payment claim or matters
which decided his jurisdiction is in variance with principles stated by
the New South Wales Court of Appeal in Brodyn, supra, and Chase
Oyster, supra, and contrary to section 17 (3) SOPA.
45. Chua Say Eng [2013] 1 SLR 401 at [66] & [67]. The Court of Appeal
conflated and applied the principles laid by the Singapore High Court
in SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR
at [14] and Sungdo Engineering & Construction (S) Pte Ltd v Italcor
Pte Ltd [2010] 3 SLR 459 at [20] [22]. See S. Magintharan: Sungdo
Principles, supra at pages 512 514.
46. Chua Say Eng [2013] 1 SLR 401 at [32]. See also the recent High Court
decisions of Admin Construction Pte Ltd v Vivaldi (S) Pte Ltd [2013]
3 SLR 609 and YTL Construction (S) Pte Ltd v Balanced Engineering
& Construction Pte Ltd [2014] SGHC 142 where the adjudicators
determinations were set aside on jurisdictional grounds.
47. Chua Say Eng [2013] 1 SLR 401 at [76].
48. Chua Say Eng [2013] 1 SLR 401 at [76].
49. Chua Say Eng [2013] 1 SLR 401 at [76].
50. Consequently Ls appeal against the High Courts decision that the
payment claim was invalid since it did not stipulate that it was a
payment clam under the SOPA was dismissed and the High Courts
decision affirmed. Hence in Singapore, all progress claims which
satisfy the requirements of SOPA would amount to a payment claim
under the SOPA even it was not intended by the claimant. This fails
to appreciate the essential difference between a progress claim and a
payment claim under the SOPA. A claimant can now issue insidious
claims without any indication that it is intended to be a payment
claim under the SOPA in order to ambush and mislead the respondent
into believing that the claim was not intended to be a payment claim
under the SOPA and rush to adjudication when the respondent does
not serve a payment response and enforce the draconian effect of
section 15 [3] SOPA.
51. See S. Magintharan: Chua Say Eng at pages 81, 82, 86 88, for a
critique on the decision of the Court of Appeal in imposing the
gloss on the Sungdo principles. The author respectfully reiterates
that the Court of Appeal had unfortunately adopted an hands-off
approach and allowed the broad brush of policy to prevail over
the legal principles of natural justice and failed to prevent the real
and potential injustice that would be caused to the respondent with
claimants ambushing unsuspecting respondents by serving insidious
letters or claims without any indication that they were seeking to
invoke the SOPA and relying on the draconian provision of s 15 (3)
SOPA to preclude the respondent from raising any defence, set-off and
counterclaim not contained in any payment response.
52. WY Steel Construction Pte Ltd v Osko Pte Ltd [2013] 3 SLR 380 at [26],

[33] & [34].

53. There is a similar provision in s 13(4) (b) SOP [NSW] but the limitation
period is for a period of twelve [12] months from the date when the
works were carried out.
54. Chua Say Eng [2013] 1 SLR 401 at [79] [90]. Consequently, the Court
of Appeal allowed Cs appeal against the High Courts decision that the
payment claim was served out of time.
55. Chua Say Eng [2013] 1 SLR 410 at [94].
56. Chua Say Eng [2013] 1 SLR 410 at [89]. Sections 10 (1) & (2) (a), (b) SOPA
provides that a Claimant may serve one payment claim in respect of
a progress payment on (a} at such time as specified in or identified
in accordance with the terms of the contract for this purpose; or (b)
where the contract does not contain such provision, at such time as
may be prescribed. Reg 5 SOPA provides that where the contract
does not contain a provision specifying the time at which a payment
claim shall be served or by which such time may be determined, then a
payment claim made under the contract shall be served by the last day
of each month following the month in which the contract is made.
57. This aspect of the Singapore Court of Appeal, with respect, goes
against the whole object of the SOPA which was introduced to
facilitate payment for construction work and to facilitate cash
flow and to enable the claimants to invoke the fast and low cost
adjudication system to recover claims for works already carried out
and completed. In Admin Construction Pte Ltd v Vivaldi (S) Pte Ltd
[2013] 3 SLR 609, Quentin Loh J at [45] voiced the concerned that the
Court of Appeals decision in this respect has the effect allowing the
claimant to make a payment claim, sit on it until some two years or
so after all construction work in relation thereof has ended, and only
then spring an adjudication application. See also S. Magintharan:
Chua Say Eng at pages 92 & 93 on the critique of this aspect of Chua
Say Eng.
58. It should be noted that section 36 (1) (4) CIPAA seek to provide
default provisions for the absence of terms of payment but these
provisions deal with the question as to when payment is due to the
Claimant as part of the progress payment [not payment claim], in
the absence of express terms in a construction contract. Such a
provision is similar to that contained in section 8 SOPA [due date
for payment]. Section 36 CIPAA, it is submitted, however does not
address the lacuna as to when the Claimant is required to serve his
payment claim [not when payment is due for a progress payment]
in the absence of express terms in the construction contract as was
the issue dealt with by the Singapore Court of Appeal in Chua Say Eng.
59. Chua Say Eng [2013] 1 SLR 401 at [92].
60. Chua Say Eng [2013] 1 SLR 401 at [97]. The Court of Appeal arrived at
the said conclusion having considered s 10(4) SOPA which allowed for
rolled-up payment claim to include previously unpaid or partially
unpaid amounts.
61. See the express prohibition contained in section 13(5) SOP [NSW]
which provides: A claimant cannot serve more than one payment
claim in respect of each reference date under the construction
contract and section 13 (6) which provides: However, subsection
(5) does not prevent the claim from including a payment claim an
amount that had been the subject of a previous claim. MacFalan JA
in the New South Wales Court of Appeal in Dualcorp Pty Ltd v Remo
Construction Pty Ltd [2009] NSWCA at [53] interpreted the sections
and held that the section 13 (5) precluded a payment claim of amount
previously adjudicated. The Singapore Court of Appeals decision in
Chua Say Eng seems to follow such an interpretation. See also Doolan
v Rubikcom (Qld) Pty Ltd [2008] 2 Qld R 117.
62. See statement of Mr Morris Iemma, the Minister for Public Works and
Services, Minister for Sports and Recreation, and Minister Assisting
the Premier on Citizenship in New South Wales, Legislative Assembly,
Parliamentary Debates (12 November 2002] at page 6543 on the
introduction of the SOP [NSW] reference to s 13 (5) SOP [NSW] alluded
that Parliament recognised the potential for claimants to abuse
the SOP [NSW] making more than one [1] claim and the SOP {NSW]
restricts claimants to one payment under the Act in respect of each
reference date. See also Dualcorp Pty Ltd v Remo Construction Pty
Ltd [2009] NSWCA at [53] and Doolan v Rubicon (Qld) Pty Ltd [2008]
2 Qld R 117.
63. Chua Say Eng [2013] 1 SLR 401 at [95].
64. Tiong Seng Contractors (Pte) Ltd v Chuan Lim Construction Pte Ltd
[2007] 4 SLR 364 at [27].
65. The High Court acknowledged the conflicting views taken by
adjudicators under the SOPA at the material time. In AU v AV [2006]
SGSOP 9 the adjudicator held that the SOPS was applicable to final
claims whilst in BC v BD [2006] SGSOP 10 the adjudicator held that

24

in focus
endnotes
the SOPA only applied to progress payments and not final claims.
The Singapore High Court at [27] acknowledged that the definition
of payment claim under the SOP [NSW], prior to its amendment on
22 November 2002, did not apply to final claim as held by Austin J in
Jemzone Pty Ltd v Trytan Pty Ltd [2002] NSWSC. However, the High
Court noted that the NSW Parliament had intervened and that section
4 SOP [NSW] was amended in 22 November 2002 to expressly include
a final claim as a progress claim and reversed the interpretation given
in Jemzone Pty Ltd v Trytan Pte Ltd.
66. Tiong Seng Contractors (Pte) Ltd v Chuan Lim Construction Pte Ltd
[2007] 4 SLR 364 at [12] [51]. Section 2 defined a progress claim
to include (a} a single or one-off payment; or (b) a payment that is
based on an event or a date.
67. Chua Say Eng [2013] 1 SLR 410 at [94] & [95].
68. Construction Law Journal [2014] Vol 30 page 71.
69. With the Singapore Courts of Appeal approval of the principle set out
in Sungdo that the High Court had the power to review and set aside
the adjudicators determination if there was a jurisdictional error
[validity on his appointment] and not the merits of the determination
[unless it is subject to the Wednesbury unreasonableness. See fn 11
supra.
70. Please refer to S. Magintharan: Chua Say Eng [2014] at pages 85 & 85
and S. Magintharan: Sungdo Principles [2011] for a critique on the lack
of guidance from the Singapore Court on the nature and process of
challenges to adjudication determinations.
71. Please refer to S. Magintharan: Sungdo Principles [2011] at fn 63; S.
Magintharan: Chua Say Eng [2014] at fn 16, pages 85 & 86 for a critique
on this unsatisfactory practice still persisting in Singapore. See the
following recent cases where application for setting aside continue
to be heard and determined by Assistant Registrar in the Singapore
High Court JFC Builder Pte Ltd v Lion City Construction Company
Pte Ltd [2012] SGHCR 12 ; Shin Khai Construction Pte Ltd v FL Wong
Construction Pte Ltd [2013] SGHCR 4. In fact Chua Say Eng itself was
a case which was determined by the Assistant Registrar in the first
instance but no comment was made by the Singapore Court of Appeal
on this practice.
72. Section 15 (a) (d) CIPAA (a) adjudication improperly procured
through fraud or bribery, (b) denial of natural justice (c) adjudicator
had not acted independently or impartiality [bias] and (d) adjudicator
acted in excess of his jurisdiction.
73. S. Magintharan: Chua Say Eng [2014] supra, pages 85 -94

Mr. S. Magintharan is a graduate of the University of

Essex, England with 2nd Class Upper Honours, a Barristerat-Law of the Inner Temple, a holder of the Diploma
in International Arbitration awarded by the Chartered
Institute of Arbitrators, a Fellow of the Chartered Institute
of Arbitrators, a Fellow of the Singapore Institute of
Arbitrators, an accredited panel arbitrator of the Singapore
Institute of Arbitrators and the Kuala Lumpur Regional
Centre for Arbitration, a certified Adjudicator (KLRCA),
and a Fellow of the Malaysian Society of Adjudicators.
He is the Managing Director of Essex LLC, Singapore.
He was called to the Singapore Bar in 1992 and he has
been engaged in active practice as counsel for more than
twenty-three years undertaking substantial construction
adjudication, arbitration, and litigation in Singapore. A

25

number of his cases are reported in the Singapore Law

Reports. He was counsel in the first Singapore High Court
decision wherein an adjudication determination was set
aside [Sungdo Engineering & Construction (S) Pte Ltd
v Italcor Pte Ltd] and the SOPA was considered by the
High Court in detail leading to the setting of important
principles for construction adjudication in Singapore.
He was counsel in Admin Construction Pte Ltd v Vivaldi
Pte Ltd [2013] 3 SLR 609. Mr. S. Magintharan has written
extensively on construction adjudication in Singapore in
the Construction Law Journal [Const. LJ].

in focus

ADJUDICATORS JURISDICTION AND NATURAL

JUSTICE IN ADJUDICATION IN SINGAPORE
By Lawrence Tan Shien Loon and Teo Yi Hui

Introduction
This article is to consider the various recent cases
dealing with the duties of an adjudicator in respect of his
jurisdiction and the role of natural justice in adjudication.
An examination of the recent case authorities in Singapore
reveals that a partys challenge against an adjudication
determination made pursuant to the Building and
Construction Security of Payment Act (Cap 30B) (the
SOPA) is typically advanced either on a partys allegation
that the adjudicator has breached of the principles of
natural justice or on jurisdictional grounds.
This article also explores the Singapore courts authority
to set aside an adjudication determination made under
the SOPA due to a breach of natural justice, and will focus
principally on the maxim audi alteram partem. In addition,
this article will also consider an alternative but related
ground for setting aside an adjudication determination,
namely, where an adjudicator has been found to have
exceeded his jurisdictional limitations imposed by the
SOPA.

Breach of Natural Justice

(i)

The Meaning of Natural Justice?

The SOPA expressly sets out the principles governing

an adjudicators exercise of power in the making of an
adjudication determination under s 16 of the SOPA.
In particular, s 16(3)(c)1 expressly requires the adjudicator
to comply with the principles of natural justice. The SOPA
does not elaborate further on the meaning of natural
justice, but this concept of natural justice is broadly
understood to relate to the fairness of the procedures

adopted for arbitration or trial proceedings. The various

principles underpinning the rule of natural justice are
derived substantially from administrative law and, as
will be seen, are intended to minimise any risk of bias or
partiality, whether actual or apparent.
In this regard, Marks J in the case of Gas & Fuel Corporation
of Victoria [1978]2 at [396] helpfully distilled the essence
of the two pillars of natural justice in the following terms:
The first is that an adjudicator must be
disinterested and unbiased. This is expressed in
the Latin maxim -nemo judex in causa sua. The
second principle is that the parties must be given
adequate notice and opportunity to be heard. This
in turn is expressed in the familiar Latin maxim audi alteram partem. In considering the evidence
in this case, it is important to bear in mind that
each of the two principles may be said to have subbranches or amplifications. One amplification
of the first rule is that justice must not only be
done but appear to be done....Sub-branches of the
second principle are that each party must be given
a fair hearing and a fair opportunity to present its
case. Transcending both principles are the notions
of fairness and judgment only after a full and fair
hearing given to all parties.
[Emphasis added]
In short, there are two limbs to the concept of natural
justice. The first of these requires a tribunal to act fairly or
impartially as between the parties. The second limb is the
right of each party to be heard.
Although both limbs do not encapsulate the full extent
of the requirements of natural justice as laid down under

26

in focus
common law, a review of case law reveals that actions for
the breach of natural justice tend to be largely formulated
on one or both of these limbs.
Where the adjudicator failed to comply with the rules
of natural justice, the courts will intervene to set aside
the adjudication determination. In this regard, a party
challenging an adjudication determination as having
contravened the rules of natural justice had to establish:
(a) which rule of natural justice was breached; (b) how it
was breached; (c) in what way the breach was connected
to the making of the award; and (d) how the breach
prejudiced its rights.3

(ii)

Setting Aside an Adjudication

Determination

In respect of an application to set aside an adjudication

determination, it is established law that it is not an
appeal and that the court should not be concerned with
substantive issues.
In the case of Chip Hup Hup Kee Construction Pte Ltd4
[2008] (Chip Hup Hup Kee), the High Court stated in
respect of the courts power to review the merits of the
case that:
What is clear is that the setting aside application
is not an appeal. The SOP Act already provides
a limited right of reviewing the substantive
correctness of the adjudication determination
through the adjudication review procedure under
ss 18 and 19. (I say it is limited because there is
only such a right for the respondent, and then only
if the adjudicated amount exceeds the relevant
response amount by a prescribed amount: s 18(1)
of the SOP Act. The prescribed amount is presently
$100,000: s 10(1) of the Building and Construction
Industry Security of Payment Regulations (Cap
30B, Regulation 1) (the SOP Regulations). Section
18(1) of the SOP Act presupposes that there has
been a payment response made and thus is also not
available to respondents who fail to give a payment
response.) The panel of review adjudicators may
substitute their determination of the appropriate
adjudication amount for the previous adjudication
determination.
Given the availability of the
adjudication review procedure, it is not surprising
that a court considering a setting aside application
should not be concerned with substantive issues.
..5

(iii) Principles of Natural Justice in the Context

of the SOPA
When determining if there has been a breach of natural
justice, it is useful to bear in mind the following principles
as set out by the Court of Appeal in the case of Soh Beng
Tee & Co Pte Ltd (Soh Beng Tee) [2007]6 at [42]-[65]
where the subject of natural justice was considered in

27

relation to an arbitration award:

First, parties to arbitration had, in general, a right to be
heard effectively on every issue that might be relevant to
the resolution of a dispute. The overriding concern was
fairness.
Second, fairness, however, was a multidimensional
concept and it would also be unfair to the successful party
if it were deprived of the fruits of its labour as a result of
a dissatisfied party raising a multitude of arid technical
challenges after an arbitral award had been made. The
courts were not a stage where a dissatisfied party could
have a second bite of the cherry.
Third, the latter conception of fairness justified a policy of
minimal curial intervention, which had become common
as a matter of international practice.
Fourth, the delicate balance between ensuring the
integrity of the arbitral process and ensuring that the
rules of natural justice were complied with in the arbitral
process was preserved by strictly adhering to only the
narrow scope and basis for challenging an arbitral award
that had been expressly acknowledged under the Act.
Fifth, it was almost invariably the case that parties
proposed diametrically opposite solutions to resolve a
dispute. The Arbitrator, however, was not bound to adopt
an either-or approach.
Sixth, each case should be decided within its own factual
matrix. It had to be always be borne in mind that it was
not the function of the court to assiduously comb an
arbitral award microscopically in attempting to determine
if there was any blame or fault in the arbitral process;
rather, an award should be read generously such that only
meaningful breaches of the rules of natural justice that
had actually caused prejudice were ultimately remedied.
In respect of this last principle, it is foreseeable that this
approach would be even more appropriate in the context of
adjudication in Singapore under the SOPA, given that the
risk of injustice is mitigated by the ability of a respondent
to apply for an adjudication review pursuant to s18 of the
SOPA.7
In addition, what is required by natural justice depends
heavily on the context in which it operates. The operation
of these principles underpinning the rule of natural justice
must be considered in relation to the context of statutory
adjudication under the SOPA. In Chip Hup Hup Kee
[2008]8 the High Court stated as follows: Justice, whether
performed by a court, a tribunal or any quasi-judicial
body, is a balancing exercise between thoroughness
and timeliness. More formal settings, such as litigation
through a court, would tend to emphasise the former. The
adjudication process under the SOPA instead chooses a
quicker, but somewhat less thorough, means of achieving
justice. This is a general theme which pervades the SOPA
and in itself in not a ground for saying that natural justice
has been denied...9

in focus
With the operation of these principles in mind, this article
will now go on to examine situations where a party has
alleged that the adjudicator is in breach of natural justice
by (a) failing to act fairly or impartially as between the
parties and (b) failing to give a party the right to be heard.

(iv) Failing to Act Fairly or Impartially as

Between the Parties
In addition to being one of the integral limbs of natural
justice, the duty of the adjudicator to act fairly and
impartially is also expressly encapsulated in s 16(3)(a)
of the SOPA which provides that an adjudicator shall act
independently, impartially and in a timely manner.
The maxim, nemo judex in causa sua, requires that the
decision-maker should not be biased or prejudiced in a
way that precludes a genuine and fair consideration being
given to the arguments or evidence presented by the
parties.
S 29(2) of the SOPA provides a good starting point to
understanding the concepts of fairness and impartiality by
setting out instances in respect of when a candidate may
not be eligible to be an adjudicator:
Eligibility criteria for adjudicators
29. (2) A person is not eligible to be an adjudicator in
relation to a contract
(a) if the person is a party to the contract, or is
otherwise related to a party to the contract in such
manner as may be prescribed; or
(b) if there exists such circumstances as may be
prescribed.
(3) A person who is in any way, whether directly
or indirectly, interested in any contract or other
matter which relates to an adjudication application
referred to him by the authorised nominating body
under section 14 or 18 shall immediately disclose the
nature of his interest to the authorised nominating
body.
Regulation 11(2) of the SOPA further elaborates on the
circumstances in s 29(b) of the SOPA by prescribing
other relationships and situations where a person may be
deemed to be in conflict if appointed as an adjudicator:
Eligibility criteria for adjudicators
11(b)(2). For the purposes of section 29 (2) of the
Act, a person is not eligible to be an adjudicator in
relation to a contract if the person is related to a
party to the contract in the following manner:
(a) the person is an employee or a partner of the
party, or where the party is a corporation, the person
is a director or a shareholder of the corporation;
(b) the person is an employee, a director, a partner
or a shareholder of any corporation which owns or
is owned by the party;
(c) the person is a parent, spouse or sibling of the
party; or

(d) the person has assisted the party to prepare any

document for, or has provided any advice to, the
party in relation to the contract.
Further, s 29(3) of the SOPA provides that an adjudicator
who is in any way whether directly or indirectly, interested
in any contract or other matter which relates to an
adjudication application referred to him by the authorised
nominating body shall immediately disclose the nature of
his interest to the authorised nominating body.
The learned author of Security of Payment and
Construction Adjudication (2nd edition) opined that the
independence of an adjudicator may be usefully viewed
at two levels. At the first level, the requirement is that
the adjudicator must adjudicate independently and may
not be influenced by any person in the exercise of his
powers. The second level requires that the adjudicator
should not have financial or other interests in either the
parties or in the outcome of the dispute referred to him for
determination.10
While there has not been an incident in Singapore where
an adjudication determination made pursuant to the SOPA
has been challenged for want of fairness and impartially
on the part of the adjudicator, it is probable that such an
allegation will not be easy to prove. Guidance may be
drawn from the recent case of TMM Division Maritima
SA de CV [2013] 11 (TMM) where the High Court refused
to set aside an arbitral award under the International
Arbitration Act.
In TMM, the appellants had applied to set aside an arbitral
award on the grounds that there was a breach of natural
justice in connection with the making of the award. The
appellant argued that the presence of egregious errors
of law and fact from such an experienced arbitrator
pointed to a reasonable suspicion that he was biased.
Unsurprisingly, the High Court rejected this argument
on various grounds, and noted that at its highest, the
appellants case merely suggested that the Arbitrator may
have committed certain errors of fact and law. However,
while the appellant may lament those higher standards
are usually expected of an experienced arbitrator of the
Arbitrators calibre, this was not sufficient to make out a
case for apparent bias.

(v)

Failing to Give a Party the Right to be

Heard

It is a cardinal principle of justice that no man shall

be condemned unless he has been given notice of the
allegations against him and a fair opportunity to be heard,
and in particular, to make oral or written representations
to the body which will make a decision affecting him.12
However, the maxim audi alteram partem does not afford a
party a complete an unrestricted right to be heard in every
circumstance. In this respect, the concept of audi alteram
partem may be described as an open-textured concept
which depends on the character of the decision-making

28

in focus
body, the kind of decision it has to make and the statutory
or other framework in which it operates.13
A review of recent case law in Singapore reveals that the
Singapore courts are not easily persuaded that there has
been a breach of natural justice on this ground. While
the cry for natural justice is a strong and emotive one,14
the Singapore courts will always look to the scheme and
objective of the SOPA as a guide in determining if there has
indeed been a breach of natural justice in each situation.
What then are some of the restrictions recognized by the
Singapore Court in respect of the principle that every party
ought to be given the right to be heard?

(vi) Adjudicator Not Required to Explicitly

Address Each and Every Point
Often, the failure by an adjudicator to mention in his
reasons for determination a critical issue (as distinct from
a subsidiary or non-determinative issue) gives rise to the
inference that the adjudicator has overlooked it and that
the adjudicator has failed to give consideration to the
parties submissions. Even so, an adjudicators oversight
must be distinguished from a lack of good faith. An error
in identifying or addressing issues, as distinct from lack of
good faith in attempting to do so, cannot be a ground of
invalidity of the adjudication determination.15 Such was
the position taken by the High Court in the case of SEF
Construction Pte Ltd [2010]16.
In the above case, Skoy Connected Pte Ltd (Skoy) and
SEF Construction Pte Ltd (SEF) had a dispute as to
the Skoys right to receive payments for work done on a
construction project.
SEF applied to set aside the adjudication application. It
appeared before the District Judge and argued that the
adjudicator breached his duties under the SOP Act for,
inter alia, breaching the rules of natural justice by failing
to consider SEFs submissions on two out of the four
jurisdictional issues. The District Judge rejected SEFs
arguments and SEF appealed to the High Court.
In response, Skoy advanced the argument that because
an adjudicator only has a short time to render his
determination, it would place an unduly onerous duty on
him if he is expected to formulate detailed reasons for his
decision on each and every one of the submissions before
him.
The High Court rejected SEFs arguments, noting that the
adjudicator had called for submissions from both parties
and that SEF had the opportunity to present its case before
it. In doing so, the Court held that the adjudicator had
clearly observed the rule that he was required to hear both
sides cases.
Where the adjudicator has dealt with most of the issues,
an omission to deal with one issue because he does not
believe it to be determinative of the result, is unlikely

29

to be considered a breach of natural justice. The High

Court ruled that there could be a breach of natural justice
just because the adjudicator did not explicitly give
responses on all submissions made. It might have been
an accidental omission, or he might have found the points
so unconvincing that he had thought it was not necessary
to explicitly state his findings. The principle only requires
that parties should be heard.

(vii) Principles of Natural Justice Do Not

Mandate a Particular Result
The case of AM Associates (Singapore) Pte Ltd [2009]17
involved an appeal against the assistant registrars refusal
to set aside an adjudication determination obtained by
A.M. Associates (Singapore) Pte Ltd (AMA) against
Laguna National Golf and Country Club Ltd (Laguna).
Laguna was not satisfied with the adjudication
determination. It did not, however, make an application
for an adjudication review. Nor did it pay the adjudicated
amount or any part of the same. Accordingly, on 12 March
2009, AMA filed the originating summons herein for
leave to enforce the adjudication determination against
Laguna and for judgment to be entered in its favour for the
adjudicated amount with interest and costs. One of the
grounds for setting aside the adjudication determination
which Laguna relied on was that the adjudicator had
failed to comply with the rules of natural justice because
in coming to the adjudication determination, he had failed
to take into consideration and/or give proper weight to
material evidence tendered by AMA which showed a
discrepancy in AMAs claim. Laguna argued that if the
adjudicator had given proper consideration and weight
to such discrepancy and had taken into consideration the
relevant evidence tendered by the parties, he would have
held that all payment claim made by AMA had been made
prematurely.
The High Court opined that it would not lightly interfere
with an adjudication determination on the ground of
natural justice as the aggrieved respondent could seek a
review of the adjudication determination under s 18 of the
SOP Act.
Further, the High Court held that the respondent not
complaining about failure on the adjudicator to hear both
sides of the dispute, but rather a failure to decide the
dispute as it thought should be decided. The principles of
natural justice are concerned with the provision of a fair
hearing to contending parties. They do not mandate any
particular result. In the absence of evidence to show that
a party who is dissatisfied with the decision on its merits
cannot use the principles of natural justice to have the
decision set aside.

in focus
(viii) Right to be Heard May Be Forfeited by
Inadvertence
The case of RN & Associates Pte Ltd [2013]18 involved a
payment dispute arising out of an agreement between
the plaintiff, RN & Associates Pte Ltd (RN), and the
defendant, TPX Builders Pte Ltd (TPX), wherein RN
subcontracted to TPX addition and alteration works to
an existing block of 11-storey flats at Nassim Road. TPX
served a payment claim on RN on 31 January 2012 for
$996,899.08. RN served its payment response on TPX
on 1 February 2012, disputing the payment claim. On
21 February 2012, TPX filed an adjudication application
pursuant to s 12(2)(a) of the SOPA.
On 2 March 2012, three days after the adjudication response
was to be filed under s 15(1)19 of the SOP Act, RN tendered
a supplementary bundle of documents. RN tendered two
further supplementary bundles of documents on 13 March
2012, alleging that these three supplementary bundles
were essential to prove their counterclaim against TPX
in the Adjudication. TPX opposed the inclusion of the
bundles into evidence, and the adjudicator subsequently
rejected the supplementary bundles and decided in favour
of TPX.
RN was dissatisfied and subsequently applied to court
to set aside the adjudicators determination. One of
grounds RN relied on to set aside the adjudication was
that there had been a breach of natural justice because
of the adjudicators refusal to accept and consider the
supplementary bundles.
The High Court subsequently held that the adjudicators
refusal to consider RNs supplementary bundles was not
a breach of natural justice. The adjudicators discretion
to exclude the supplementary bundles was properly
exercised because the supplementary bundles were
submitted outside the statutory time limit of 7 days given
in s 15(1)20 read with s 16(2)(b)21 of the SOP Act due to RNs
own default. In addition, TPX also had not had, and would
not have, the chance to respond to the allegations made
in the supplementary bundles and would be unfairly
prejudiced by their inclusion.
In conclusion, the court found that RNs concept of audi
alteram partem was simply too broad. The right to have
ones case heard is not a right to have an adjudicator
consider all material which the parties think are relevant.
The barring of a defence outside of time limits cannot be
deemed a breach of natural justice, without more.
In Chip Hup Hup Kee [2008]22, Ssangyong Engineering
& Construction Co Ltd (the Respondent) did not serve
a payment response on Chip Hup Hup Kee Construction
Pte Ltd (the Claimant) within the stipulated time.
Before the adjudicator, the Respondent sought to raise
certain reasons why it was justified in withholding
payment. These reasons had been included in a payment
certificate (provided to the Claimant after the time for

making a payment response had passed) as well as in an

adjudication response. Unfortunately for the Respondent,
the adjudicator took the view that he was precluded by s
15(3)23 of the SOP Act from giving any consideration to such
reasons as they had not been contained in any payment
response made within the stipulated time.
The Respondent applied to set aside the adjudication
determination on the basis that the adjudicator had
wrongly interpreted s 15(3) of the SOP and this constituted
a failure to carry out his quasi-judicial responsibilities to
ensure that justice was done. In particular, the adjudicator
had offended the rules of natural justice by denying the
Respondent the opportunity to be heard.
However, the High Court held at [75] that its interpretation
of s 15(3) was not inconsistent with the requirement of
natural justice and stated as follows:
In my view, there are two points which should
be borne in mind. The first is that natural
justice requires that a respondent be given a fair
opportunity to be heard. There is no requirement
that in every case a party is actually heard and it
is entirely possible for a party to forfeit his right
to be heard through some procedural default. In
the instant case, it is clear that the SOP Act does
afford a respondent the opportunity to be heard. In
regard to the hearing of a respondents reasons why
payment was withheld, the SOP Act specifies that
such hearing is contingent on the reasons being
provided in the payment response tendered within
certain timelines. What has really happened in
this case was that the Respondent chose not to
avail itself of the opportunity to be heard on its
reasons for withholding payment.24
[Emphasis added]
It should be noted however, the High Courts ruling above
does not mean a respondent who failed to submit a payment
response would be denied any sort of hearing at all. In such
a situation, it is not the case that the adjudication process
becomes a mere rubber-stamping exercise in favour of
the claimant. The fact that a respondent had not filed a
response did not obviate an adjudicators obligation to
consider the material properly before him.
While it is clear from the above authorities that the rules of
natural justice cannot be called in aid where a party chose
not to use its rights under s 16(3)(c) SOPA25 to be heard,
parties in adjudication continue to attempt to find creative
ways to evade the strict timelines imposed by the SOPA.
In the recent Court of Appeal case of W Y Steel Construction
Pte Ltd [2013]26 , the respondent in the adjudication
determination failed to file a payment response and
the adjudicator rejected its adjudication response in
accordance with s 15(3) of the SOP Act. The respondent
then cited a raft of provisions of the Act under which, it

30

in focus
argued, the adjudicator was allowed - even obliged - to take
into consideration its late submissions. These provisions
were s 16(3)(c), 16(4)27, 16(7)28 and 17(3)29.
In respect of 16(3)(c), the Court of Appeal confirmed that
the respondent had his opportunity to make his case, but
failed to take that opportunity and an allegation of breach
of natural justice cannot then be called in aid.
In respect of s 16(4) of the Act which sets out various
powers of an adjudicator, the Court of Appeal held that
the provision only spells out what an adjudicator is
permitted to do and it cannot change what, under some
other provision of the Act, he is not permitted to do.
Accordingly, the Court of Appeal found that it would be
perverse and, for that reason, wrong to hold that under
this provision, an adjudicator may require submissions on
matters that he is expressly proscribed from considering
under s 15(3).
As for s 16(7) of the Act, W Y Steels reliance on this
provision was wholly misconceived.
The Court of
Appeal found that this subsection merely empowers an
adjudicator to proceed to determine an adjudication
application undeterred by the failure of the respondent
to file his payment response or his adjudication response,
and by the failure of either party to comply with his
(the adjudicators) instructions. In no way did this lend
support or assistance to the respondents case.
The crux of W Y Steels argument in relation to s 17(3)
was that it obliged the adjudicator to consider all the
submissions made before him. The Court of Appeal quickly
dismissed this argument and found that the provision did
not help the respondents case because there was a limit
to what material the adjudicator could consider as the
respondents payment response was filed out of time.
In conclusion, sections 16(3)(c), 16(4), 16(7) and 17(3) of the
Act did not either individually or collectively permit an
adjudicator to ignore s 15(3). The Court of Appeal further
stated that the natural construction of the Act should not
be strained to accommodate cases such as the present,
where a respondent has failed through his own lack of
diligence to file a payment response.

(ix) Recent Case of Mansource Interior Pte Ltd

The recent High Court decision in Mansource Interior Pte
Ltd [2014]30 (Mansource) provides a rare insight into
the circumstances where the courts will indeed find that
the maxim audi alteram partem has been breached by the
adjudicator.
In Mansource, the respondent lodged the adjudication
response at 4.32 pm on the last day of the filing deadline.
Section 15(1) of the SOP Act stated that a respondent to an
adjudication claim shall, within 7 days after receipt of a
copy of an adjudication application under s 13(4)(a), lodge
with the authorised nominating body a response to the

31

adjudication application. There was no provision under

the SOP Act to explain the computation of time.
The adjudicator, following the rules of the Singapore
Mediation Centre (SMC) which provides that any
document lodged after 4.30 pm would be treated as being
lodged the next working day, ruled that the adjudication
response had been filed a day late and therefore could not
consider it.
Ultimately, the High Court held that it was not the role of
the SMC to create rules that stipulated that a document
lodged at 4.32 pm on 5 September 2013 was deemed to
be lodged out of time on 6 September 2013. It was for the
adjudicator to determine, in accordance with the SOP Act,
whether a document was deemed to be lodged within time.
In this regard, the adjudicator ought not to have relied
on the SMC Rules to reject the appellants adjudication
response. Instead, s 50(a) of the Interpretation Act (Cap 1,
2002 Rev Ed) which provided the default position for the
computation of time ought to apply.
Under the time limit stipulated by the Interpretation Act
(Cap 1, 2002 Rev Ed), the adjudication response was filed
within the seven-day time limit as prescribed under the
SOPA. The High Court found that in this situation where
an adjudication response was deemed by the adjudicator
to be lodged out of time wrongly and rejected, the party
who lodged the response would then be wrongly denied
his opportunity to be heard. That party could then rely
on the rules of natural justice and have the adjudication
determination set aside.

Exceeding Jurisdiction
As previously stated, the courts are not allowed to review
the merits of an adjudicators decision. Instead, an
application to set aside an adjudication determination
must be premised on issues relating to the jurisdiction of
the adjudicator.
In the recent case of Admin Construction Pte Ltd [2013]31
the main contractor (the Plaintiff) applied to set aside
the adjudicators determination on the basis that as the
Plaintiff and the sub-contractor (the Defendant) had
previously settled their dispute by way of a settlement
agreement. The settlement agreement was evidenced by
a letter of acceptance from the Defendant to the Plaintiff
dated 31 January 2011, irrevocably and unconditionally
accepting the sums of $165,271.80 and $34,125 as full and
final settlement for all the works under the subcontract.
The court held that the settlement agreement was valid
and binding on parties and since the Defendant has not
taken any steps to set it aside, and accordingly, as at the
date of the Defendants adjudication application, all
disputes that existed between the parties on or were
extinguished. There was therefore no dispute capable of
being referred to adjudication and the Defendant had no
right to apply for adjudication.

in focus
Accordingly, the High Court found that adjudicator had
no authority or jurisdiction to deal with the adjudication
application and consequently, the determination rendered
by the adjudicator had to be set aside.

(i)

Jurisdiction is Predicated on the Existence

of a Payment Claim

The jurisdiction of an adjudicator is vested in him by his

appointment by an Authorised Nominating Body (ANB)
under s 14(1)32 of the SOPA. The power of the ANB to make
this appointment is in turn founded on the existence of a
payment claim. In situations where there is no payment
claim, the adjudicator will be found to be lacking in
jurisdiction to determine an adjudication application.
In this regard, the Court of Appeal in the case of Chua Say
Eng [2013]33 made the following observations at [66] [67]:
66 Turning now to the courts role in a settingaside action, we agree with the holding in SEF
Construction ([14] supra) that the court should
not review the merits of an adjudicators decision.
The court does, however, have the power to decide
whether the adjudicator was validly appointed. If
there is no payment claim or service of a payment
claim, the appointment of an adjudicator will
be invalid, and the resulting adjudication
determination would be null and void.
67 Even if there is a payment claim and service of
that payment claim, the court may still set aside the
adjudication determination on the ground that the
claimant, in the course of making an adjudication
application, has not complied with one (or more) of
the provisions under the Act which is so important
that it is the legislative purpose that an act done
in breach of the provision should be invalid,
whether it is labelled as an essential condition or a
mandatory condition. A breach of such a provision
would result in the adjudication determination
being invalid. [Emphasis in original].
[Emphasis added]
If there is no payment claim or if a payment claim is not
served on the respondent, the payment claim had not
come into existence and the adjudicator would not have
the competence to hear and determine the adjudication.
Instead, such a challenge ought to be immediately raised
with the court. On the other hand, where a payment claim
was allegedly defective for not having complied with the
requirements of the SOPA, this defective payment claim
would still be within the adjudicators purview.
The court will only review an adjudicators decision
in respect of whether a payment claim is valid or not
on the basis of Wednesbury Unreasonableness. In
such a situation, the court will have the power to quash

administrative decisions where a decision is so outrageous

in its defence of logic or accepted moral standards that no
sensible person who applied his mind to the question to be
decided could have arrived at it, or no reasonable person
could have come to such a view.
This distinction between the existence of a payment claim
and the validity of a payment claim was also highlighted
in the case of RN & Associates Pte Ltd [2013]34. Here, the
High Court held that the SOPA was introduced to provide
a faster and less costly way of allowing subcontractors
to get paid and to weed out the practice of delaying or
withholding payment without valid reasons. Accordingly,
the High Court found that the Legislature could not have
intended for the jurisdiction of the adjudicator to be
ousted where the main contractor was relying on his own
delay and withholding of payment to dispute the validity
of a payment claim.
The High Court confirmed that there was a crucial
difference between the existence of a payment claim and
its validity. The question of existence asks whether the
payment claim is, on its face, a claim for progress payments
outstanding. The question of validity asked whether the
payment claim was in its proper form.
Given that the adjudicators jurisdiction was only over a
payment claim dispute, the relevant question in this case
was not whether there had been a valid payment claim, but
whether there had been a payment claim which resulted in
a payment claim dispute.

(ii) Estoppel
In Chip Hup Hup Kee [2010]35, the High Court found
that jurisdiction could be used in the narrow or wide
sense. When jurisdiction is used in the narrow sense it
simply means competence to hear. On the other hand,
jurisdiction used in a wider sense refers to the manner
in which the courts power was exercised.
The importance of the aforementioned distinction in
respect of a partys ability to raise the doctrine of estoppel
becomes clear in the following paragraph from Chip Hup
Hup Kee [2010]36 at [43]:
Thus, it seemed that when what was being alleged
was an absolute lack of jurisdiction on the part of
a particular tribunal or court to hear a particular
dispute, jurisdiction being used in the strict sense
of capacity to hear, then if the tribunal concerned
does not have such jurisdiction, any party to the
dispute may assert the lack of jurisdiction at any
stage and can never be held to be estopped from
doing so or to have waived its right of protest. On
the contrary, when it is a question of irregularity
of procedure or contingent jurisdiction or noncompliance with a statutory condition precedent
to the validity of a step in the litigation, such
irregularity or non-compliance can be waived

32

in focus
because the effect of the waiver would not be to
create or confer any jurisdiction that did not
previously exist.
[Emphasis added]
However, recent decisions suggest that Singapore courts
tend to take a restrictive view of what may amount to an
irregularity which may be waived.
In the case of JFC Builders Pte Ltd [2013]37, the High Court
was of the view that a payment claim in breach of s 10(1)38
SOPA was not an irregularity which could be waived. The
High Court in this decision did elaborate on its reasons for
holding as such.
In the case of Australian Timber Products Pte Ltd [2013]39,
the claimant made the argument that as the defendant did
not object to the adjudicator regarding the lack of detail
in the claimants progress claim No.9, the defendant was
now estopped from raising that view before the court.
The High Court rejected the claimants argument and held
that the formal validity of a payment claim under s 10(3)40
of the Act was not a matter on which an adjudicator was
entitled to decide.
In doing so, the High Court quoted the following passage
from Chua Say Eng [2013]41 at [64]:
We are of the opinion that the only functions of an
adjudicator are to: (a) decide whether the adjudication
application in question is made in accordance with s
13(3)(a), (b) and (c)42 of the Act (see s 16(2)(a)); and (b) to
determine the adjudication application (see s 17(2)). If the
adjudication application complies with s 13(3)(a), (b) and
(c), the adjudicator should proceed with the adjudication.
He is not competent to decide whether he was validly
appointed to adjudicate the matter

33

In the recent case of YTL Construction (S) Pte Ltd [2014]43,

the High Court stated that the question of whether an
irregularity could be waived depended on whether the
irregularity pertaining to the requirements of making a
valid payment claim relates to jurisdiction in the narrow
sense or the wider sense. In relation to non-compliance
with s 10(3) of the SOP Act44, the High Court found that the
irregularity here related to jurisdiction in the strict sense,
such that it affected the validity of the appointment of the
adjudicator and his competence to hear the adjudication.
Accordingly, no defence of waiver or estoppel could be
relied upon by the defendant.

Conclusion
The various principles concerning breach of natural justice
and lack of jurisdiction continue to be refined with each
application to the courts to set aside an adjudication
determination.
However, one unifying theme that
underpins the development of these principles is that the
courts will always seek to uphold the legislative intention
underlying SOPA, namely, to improve cash-flow in the
construction industry by giving parties the right to seek
progress payment for work done, and providing fast and
low-cost adjudication to resolve payment disputes.

in focus
endnotes
1. Commencement of adjudication and adjudication procedures
16. (3) An adjudicator shall

(a) act independently, impartially and in a timely manner;

(b) avoid incurring unnecessary expense; and

(c) comply with the principles of natural justice.

2. Gas & Fuel Corporation of Victoria v Wood Hall Ltd & Leonard Pipeline
Contractors Ltd [1978] VR 385.
3. Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3
SLR(R) 86 at [29].
4. Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering &
Construction Pte Ltd [2008] SGHC 159.
5. Ibid, at [25] and [36].
6. Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3
SLR(R) 86.
7. Chow Kok Fong, Security of Payment and Construction Adjudication,
at page 653.
8. Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering &
Construction Pte Ltd [2008] SGHC 159.
9. Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering &
Construction Co Ltd [2008] SGHC 159 at [50].
10. Chow Kok Fong, Security of Payment and Construction Adjudication,
at Page 562.
11. TMM Division Maritima SA de CV v Pacific Richfield Marine Pte Ltd
[2013].
12. Halsburys Laws of Singapore vol 1 (LexisNexis, 2005) at paragraph [
10.059].

25. Commencement of adjudication and adjudication procedures

16. (3) An adjudicator shall

(a) act independently, impartially and in a timely manner;

(b) avoid incurring unnecessary expense; and

(c) comply with the principles of natural justice.

26. W Y Steel Construction Pte Ltd v Osko Pte Ltd[2013] 3 SLR 380.
27. Commencement of adjudication and adjudication procedures
16. (4) Subject to subsection (3), an adjudicator may do all or any of
the following in relation to an adjudication:

(a) conduct the adjudication in such manner as he thinks fit;

(b) require submissions or documents from any party to the

adjudication;

(c) set deadlines for the submissions or documents to be provided by

any party and for the submissions or responses thereto by any other
party;

(d) appoint, after notifying the parties, an independent expert to inquire

and report on specific issues relevant to the adjudication;

(e) call a conference of the parties;

(f) carry out an inspection of any construction work, construction site,

goods or any other matter to which the adjudication relates;

(g) issue such directions as may be necessary or expedient for the

conduct of the adjudication.

28. Commencement of adjudication and adjudication procedures

16. (7) An adjudicators power to determine an adjudication
application is not affected by the failure of

13. Lloyd v McMahon [1987] 1 AC 625 at [702].

(a) the respondent to provide a payment response or lodge an

adjudication response; or

14. RN & Associates Pte Ltd v TPX Builders Pte Ltd [2013] 1 SLR 848.

15. Brookhollow Pty Ltd v R&R Consultants Pty Ltd[2006] NSWSC 1 (at [57][58]).
16. SEF Construction Pte Ltd v Skoy Connected Pte Ltd [2010] 1 SLR 733.
17. AM Associates (Singapore) Pte Ltd v Laguna National Golf and Country
Club Ltd[2009]SGHC 260.
18. RN & Associates Pte Ltd v TPX Builders Pte Ltd [2013] 1 SLR 848.
19. Adjudication responses
15. (1) A respondent shall, within 7 days after receipt of a copy
of an adjudication application under section 13 (4) (a), lodge with
the authorised nominating body a response to the adjudication
application.
20. Ibid.
21. Commencement of adjudication and adjudication procedures
16. (2) An adjudicator shall reject

(b) any of the parties to comply with the adjudicators call for a
conference of the parties or any other requirement made or direction
issued by the adjudicator, and in the event of any such failure,
the adjudicator may determine the application on the basis of the
information and documents available to him.

29. Determination of adjudicator

17. (3) Subject to subsection (4), in determining an adjudication
application, an adjudicator shall only have regard to the following
matters:

(a) the provisions of this Act

(b) the provisions of the contract to which the adjudication application

relates;

(c) the payment claim to which the adjudication application relates, the
adjudication application, and the accompanying documents thereto;

(d) the payment response to which the adjudication application relates

(if any), the adjudication response (if any), and the accompanying
documents thereto;

(a) any adjudication application that is not made in accordance with

section 13 (3) (a), (b) or (c); and

(e) the results of any inspection carried out by the adjudicator of any
matter to which the adjudication relates;

(b) any adjudication response that is not lodged within the period
referred to I in section 15 (1).

(f) the report of any expert appointed to inquire on specific issues;

(g) the submissions and responses of the parties to the adjudication,

and any other information or document provided at the request of the
adjudicator in relation to the adjudication; and

(h) any other matter that the adjudicator reasonably considers to be

relevant to the adjudication.

22. Chip Hup Hop Kee Construction Pte Ltd v Ssangyong Engineering &
Construction Pte Ltd [2008] SGHC 159.
[2008] SGHC 159
23. Adjudication responses
15. (3) The respondent shall not include in the adjudication response,
and the adjudicator shall not consider, any reason for withholding any
amount, including but not limited to any cross-claim, counterclaim
and set-off, unless

(a) where the adjudication relates to a construction contract, the

reason was included in the relevant payment response provided by
the respondent to the claimant; or (b) where the adjudication relates
to a supply contract, the reason was provided by the respondent to the
claimant on or before the relevant due date.

24. Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering &
Construction Pte Ltd [2008] SGHC 159 .

30. Mansource Interior Pte Ltd v Citiwall Safety Glass Pte Ltd [2014] 3 SLR
264.
31. Admin Construction Pte Ltd v Vivaldi (S) Pte Ltd [2013] 3 SLR 609.
32. Appointment of adjudicator
14. (1) The authorised nominating body shall, upon receipt of an
adjudication application, refer the adjudication application to a person
who is on the register of adjudicators established under section 28 (4) (a)
and whom the authorised nominating body considers to be appropriate
for appointment as the adjudicator to determine the adjudication
application.

34

in focus
endnotes
33. Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly
trading as Weng Fatt Construction Engineering) and another appeal
[2013] 1 SLR 401.
34. RN & Associates Pte Ltd v TPX Builders Pte Ltd [2013] 1 SLR 848.
35. Chip Hup Hup Kee Construction Pte Ltd v Ssangyong Engineering &
Construction Co Ltd [2010] 1 SLR 658.
36. Ibid.
37. JFC Builders Pte Ltd v LionCity Construction Co Pte Ltd [2013] 1 SLR
1157.
38. Payment claims
10. (1) A claimant may serve one payment claim in respect of a
progress payment on

(a) one or more other persons who, under the contract concerned, is or
may be liable to make the payment; or

(b) such other person as specified in or identified in accordance with the

terms of the contract for this purpose.

39. Australian Timber Products Pte Ltd v A Pacific Construction &

Development Pte Ltd[2013] 2 SLR 776.
40. Payment claims
10. (3) A payment claim

(a) shall state the claimed amount, calculated by reference to the period
to which the payment claim relates; and

Called to the Singapore bar in 1994, Lawrence Tan

conducts cases in court, arbitration and adjudication
hearings. He is one of the founding partners in the law
firm Eldan Law LLP. Lawrence is an accredited adjudicator
with the Singapore Mediation Centre for the purposes of
the Security of Payment Act, and a Principal Mediator /
Trainer with the Singapore Mediation Centre (SMC). He
is a lecturer with the Singapore Institute of Management
(in conjunction with the Royal Melbourne Institute of
Technology). Lawrence trains students in advocacy for
the National University of Singapore and the Singapore
Institute of Legal Education (SILE). Whos Who Legal:
Singapore 2008 lists Lawrence as a leading lawyer in
the field of construction and is described as one of the
best around and does first-class drafting of contracts.
Lawrence is listed in the The International Whos Who of
Commercial Mediation 2012 to 2014.

35

(b) shall be made in such form and manner, and contain such other
information or be accompanied by such documents, as may be
prescribed.
41. Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly
trading as Weng Fatt Construction Engineering) and another appeal
[2013] 1 SLR 401.
42. 13. Adjudication applications
(3) An adjudication application

(a) shall be made within 7 days after the entitlement of the claimant to
make an adjudication application first arises under section 12;

(b) shall be made in writing addressed to the authorised nominating

body requesting it to appoint an adjudicator;

(c) shall contain such information or be accompanied by such

documents as may be prescribed.
43. YTL Construction (S) Pte Ltd v Balanced Engineering & Construction Pte
Ltd [2014] SGHC 142.
44. Payment claims
10. (3) A payment claim

(a) shall state the claimed amount, calculated by reference to the period
to which the payment claim relates; and

(b) shall be made in such form and manner, and contain such other
information or be accompanied by such documents, as may be
prescribed.

Teo Yi Hui graduated with LLB (Hons) from the University

of Leeds, UK, in 2012 and is an Advocate and Solicitor
of the Supreme Court in Singapore. As an associate in
Eldan Law LLP, Yi Huis current practice covers a diverse
range of dispute resolution matters with an emphasis in
building and infrastructure-related litigation, arbitration
and adjudication. In addition, Yi Hui enjoys the rigour
of reviewing and drafting contract documentation and
advising clients in respect of the same.

adjudicators corner

Being An Adjudicator:
Are You Up To The Mark?
By Daniel Tan Chun Hao

With the Construction Industry Payment and Adjudication

Act 2012 (CIPAA) now in effect, the industry should ensure
that proper infrastructure is in place for administering
these statutory adjudications. The infrastructure must
include competent adjudicators that rise to the mark of
high standards properly demanded by CIPAA.
Apart from disputants having to familiarise themselves
with CIPAA and its regulations, it is imperative that a pool
of adjudicators exist from which disputants may appoint
(either by themselves or through an institution such as the
Kuala Lumpur Regional Centre for Arbitration (KLRCA))
a competent, well-trained adjudicator to make reasoned
and sound adjudication decisions.
Being a relatively new form of dispute resolution in
Malaysia, there was no ready-made pool of trained
adjudicators to choose from before CIPAA was enacted
in 2012. Training courses for the making of adjudicators
have recently been conducted by various institutions.
The KLRCA with a statutory function under CIPAA (as
the adjudication authority) has led the way with the
training of adjudicators, offered conversion courses to
its panel of arbitrators, and subsequently developed a
pool of adjudicators comprised of suitably qualified and
experienced individuals involved in the construction
industry.
The purpose of this article is to take a brief look at CIPAA
and the requirements imposed by it on adjudicators
to identify attributes of a person who is likely to be a
competent and effective adjudicator in deciding disputes
under CIPAA. As mandated by CIPAA, (see Section 15 of
CIPAA) an adjudicator:

Cannot allow the adjudication decision to be tainted

with fraud or bribery;
Must apply the rules of natural justice;
Must act independently and impartially (this is
reiterated in Clause 1 of Schedule II (Standard Terms
of Appointment) of the KRCA Adjudication Rules and
Procedure; and further elaborated upon in Clauses 1
and 2 of Schedule IV (Adjudicator Code of Conduct) of
the KLRCA Adjudication Rules and Procedure); and
Must not act in excess of his jurisdiction.
There is an abundance of written materials on principles
pertaining to these attributes, but it is not the intention of
this article to delve into these sources. Instead, this article
will look at adjudicators from a perspective that is not
often found in textbooks and other written authorities.
From common sense and experience perspectives,
this article lists some of the likely attributes of a good
adjudicator deciding disputes with the framework of
CIPAA. In no particular order of importance and by no
means exhausting the universe of relevant attributes, here
are 15 virtues of a good adjudicator:

Decision making. It is surprising how much

people like to procrastinate in making a decision.
However, the primary function of adjudicators is
to make decisions, and to make them timely and
efficiently. The disputants in adjudication appoint an
adjudicator for this sole purpose and if you are fickle
and not good in making definitive reasoned decisions,
then you may want to look at a different role in the
adjudication process.

1.

36

adjudicators corner
We usually know the
deadlines for making a decision. Under CIPAA, there
is little room for the extension of critical deadlines,
so it is imperative for decisions to be made before
the time allowed expires. Often however, decisions
are prematurely made without taking issues through
the requisite deliberative process, e.g. jumping to
conclusions without considering all the evidence and
hastily arriving at a view that is inconsistent with a
reasoned decision. If a decision is reached either too
late or too early, the probability is high that it will be
challenged, set aside, or ignored.

2.

Timely decisions.

Effective communication. Most commercial

transactions in Malaysia are in the English language
and the conduct of most adjudications, therefore, will
likely be in English. But whatever language is used, a
good adjudicator should be proficient in the respective
language, particularly in writing clearly and coherently.
Proficiency in the language will determine how well
you are able to understand the case as it is presented
to you, how well you understand and apply the law
to the relevant facts, and how well you are able to
ultimately communicate your decision to the parties.
Any limitation in effective communication during
any phase of the case will inevitably have an adverse
impact on the quality and correctness of your decision
and, very importantly, acceptance of your decision by
the parties.

3.

Knowledge of the law. Without knowledge

of the relevant law, you will not be able to apply the
law correctly when making your decision. If you
have no basic knowledge about contract law and the
interpretation of contracts, you need to do something
about it as soon as possible if you are going to correctly
adjudicate cases under CIPAA. Sure, the disputants are
supposed to submit to you on the law, but quite often
the position taken by the disputants diametrically
oppose one another, and you must know if you are
to accept one position over another or even apply a
legal position that neither party has taken. Although
Section 25(d) of CIPAA empowers an adjudicator to
draw on personal knowledge and expertise, if doing
so raises a new legal issue (or any other new issue)
not previously tabled by the disputants, the prudent
and fair adjudicator should give both disputants an
opportunity to address the new issues before making a
decision.

4.

Procedure. How an adjudicator decides to

conduct the adjudication is left quite open by CIPAA,
subject to the principles of natural justice. It is
therefore up to you to ascertain, based on the available
information presented to you, the best way to deal with
the issues at hand so that you can eventually make your
decision. A few areas you need to consider would be:
should you call for a preliminary meeting and if so what

5.

37

needs to be discussed at the meeting; how evidence is

to be submitted to you; any limitation on the volume of
documents to be submitted by the disputants; should
there be a hearing and if so, the number of days; do you
still require further submissions (on arguments and/
or evidence) from the disputants on top of what has
already been submitted to you.

Evidence. Receiving evidence is an area that

needs to be managed well. You need to decide: if you
can proceed with a documents only adjudication; if
you need to limit documents; if witness statements
are required; if oral examination is required; whether
discovery and production of documents is necessary;
when to draw on your own knowledge and expertise;
when to appoint independent experts; whether to
inspect work, etc. (see section 25 of CIPAA). The
powers of the adjudicator in respect of evidence are
very wide, but injudicious use of the powers can make
the process a lot more difficult to manage unless the
powers are exercised prudently and appropriately by
the adjudicator.
7.
Delay analysis. There are differing views on
whether delay analysis is an area that is within the
jurisdiction of adjudicators given that CIPAA is confined
to payment disputes. In the event a delay analysis is
required to ascertain entitlement to, say, prolongation
costs or to decide a claim for liquidated damages due
to delay, there may be no way to avoid deciding issues
arising from the analysis of delays. Delay analysis is
one particular area of competence and experience
where many adjudicators are likely to be quite weak,
given that this area is often regarded as a specialised
expertise. It can be a very time consuming process to
understand work programmes and the critical path of
programmes. Delay analysis often involves forensic
modelling of the dynamic behaviour of the critical path
during the course of the works. Disputants almost
always have different competing models to identify
the critical path in a project. Finding the right answer
to a delay claim often requires you to apply your own
understanding of the facts to the work programmes.
This understanding needs to be informed by a sound
grounding in the analysis of delay claims. If you do
not have a firm grasp on the basic principles of delay
analysis, now is the time to sign up for a course to
educate yourself.
6.

Payment computations. CIPAA is all about

payment disputes, and payment disputes are all about
numbers. Understanding how contracts are priced,
how works are valued, and how payment certificates
are drawn up are essential. People working in the
construction industry should be quite familiar with
this process. Accordingly, adjudicators who are not
familiar with payment computations need to get up
to speed. Adjudicators have to understand that there
is no one universal way of dealing with pricing and
valuation. Instead, there are different methods. A

8.

adjudicators corner
sound adjudicator should have a basic understanding
of lump sum contracts, contracts with quantities, and
contracts without quantities. Be cautioned, however,
that quantity surveyors, engineers, and lawyers all
have their own views on these contracts and you will
have decide for yourself the correct view in a particular
situation.

Punctuality. CIPAA has numerous deadlines

which are non-negotiable. Keeping to the deadlines
is therefore crucial. As a start, demonstrating to the
disputants that you are able to meet all timelines and
deadlines generally, e.g. punctuality at meetings,
attending to correspondence promptly, respecting the
time demands on the parties, is essential in maintaining
the confidence of the disputants and showing that you
can meet the crucial CIPAA timelines and deadlines.

9.

Patience. It is said that patience is a virtue.

Despite tight statutory timeframes and deadlines
imposed on adjudicators, the disputants may not
present their cases in the manner and the way thought
best by you. You need patience to carefully consider
and understand why a party has done things in a
particular way. There is almost always a reason for it
that may not be apparent at the beginning. If you lack
patience, you may jump to conclusions which will be
difficult to undo later and it may appear that you have
prejudged the facts or developed a bias for or against
one of the disputants. It is best to allow the process to
take its course before making up your mind. Hear both
sides first before taking any position. Be patient.

10.

Psychology. As an adjudicator, you are providing

a service to the disputants. In this sense, the
disputants are like your customers. Your customers
may not always be right, but you must provide the
service for which they have paid or will be paying.
Reading their (and their counsels) behaviour may
be required to ensure that you know their needs and
expectations. Whilst you will not meet every need or
expectation of a disputant, you should readily oblige
those needs and meet those expectations when you
can do so consistently with your statutory duties and
the underlying intent of CIPAA.

11.

Taking criticism.
On occasion, one or
sometimes even both disputants will take issue with
a decision made by an adjudicator. It should not

12.

be an everyday occurrence and hopefully it will be

sparingly encountered, but it is a part of the process.
It may be a simple expression of dissent or a formal
challenge made in court. It may be made politely and
respectfully. Or it may be laden with criticism and
personal attacks on your intelligence, fairness, and
expertise. Bear in mind that challenges to a decision
may be frivolous, but usually challenges will be due to
a genuine difference in views towards your decision. It
is important that all challenges not be taken personally.
If you have discharged your obligations and duties as
an adjudicator to the best of your ability and consistent
with CIPAA, that is all you and the parties can expect
of you. Taking the matter personally will only hamper
your ability to learn, impair your credibility as a neutral
and unbiased adjudicator, and slow your progress in
elevating your skills as an adjudicator, particularly if
the challenge is not without merit.

Handling public perception. The adage that

justice must not only be done, it must be seen to be
done also applies to an adjudicator. Clause 2.1 of
Schedule IV (Adjudicator Code of Conduct) of the
KLRCA Rules & Procedure requires an adjudicator to
be impartial and fair to the parties, and be seen to be
so. The manner in which an adjudicator acts in a case,
and also in public, particularly when in the presence
of counsel or the disputants, must be such that there
can be no doubt that the adjudicator will be impartial
and fair to the disputants and counsel. Perceptions are
very subjective. For this reason alone, it is usually best
to err on the side of caution when there is a question
of conduct to avoid disputants jumping to the wrong
conclusions (which they are entitled to do, but not
you!).

13.

Commanding respect. To have full control of

the adjudication process (at least where it is possible),
the adjudicator must command the respect of the
disputants and their counsel. Respect is something
that is earned, and being an adjudicator by itself will
not be sufficient to generate entitlement to respect.
The way you communicate with the disputants, the
manner in which you deal with issues that have arisen,
and your overall conduct of the proceedings will
determine if respect has been duly earned. Without
respect, your task will be much more difficult and the
tendency of the disputants to challenge your decisions
will be greater.

14.

How an adjudicator decides to conduct the adjudication is left

quite open by CIPAA, subject to the principles of natural justice.
It is therefore up to you to ascertain, based on the available
information presented to you, the best way to deal with the
issues at hand so that you can eventually make your decision.

38

adjudicators corner

It is important that all challenges not be taken personally.

If you have discharged your obligations and duties as an adjudicator to
the best of your ability and consistent with CIPAA, that is all you and the
parties can expect of you.
Fraud and bribery. In an ideal world, these
factors need not be mentioned at all. However, as we
live in a less than an ideal world, situations involving
fraud and bribery may arise but hopefully in only very,
very rare occasions if at all. If they do arise, offenders
beware. The dispute resolution fraternity is small, and
word spreads like wildfire. If you are ever associated
with such conduct, the system will relentlessly weed
you out. The consensual nature of the appointment
of adjudicators, be it through an appointing authority
or directly by the disputants, will ensure that the
offender will never again receive another appointment
or be credible in any adjudication proceeding. These
consequences will be over and above the wrath of what
the law separately has in store for the offender.

15.

Daniel Tan Chun Hao, BE (Civil), LLB, FCIArb, FSIArb,

FMIArb, FMSAdj, and Barrister-at-Law is a Fellow of the
Chartered Institute of Arbitrators, panel arbitrator and
accredited mediator with the Kuala Lumpur Regional
Centre for Arbitration, and an accredited mediator with
the Construction Industry Development Board, Malaysia.
Daniel is the principal of the law firm Messrs TAN CHUN
HAO. He holds dual qualifications in civil engineering and
law, and is a practising lawyer. Admitted to the Malaysian
Bar in 1993, Daniel has over 20 years experience in the
provision of contractual advice to local and international

39

Being an adjudicator who is up to the mark expected by

CIPAA 2012 will not be an easy task. This is particularly
so in a jurisdiction such as Malaysia where statutory
adjudication and CIPAA are still relatively new
developments. Consequently, the adjudicators path to
a proper, reasoned, and timely decision may be akin to
sailing in unchartered waters. The attributes discussed
above are not meant in any way to discourage anyone
from being an adjudicator. On the contrary, listing these
fifteen attributes is intended to help all of us be better
adjudicators, to properly navigate the adjudication
process, and to evaluate where we are in relationship to
the mark where good adjudicators stand. And for the
already good adjudicators, perhaps this list will function
as an aide memoire. Nobody is perfect, but surely we
should all strive to be, and all towards ensuring that CIPAA
is effectively implemented.

contractors and owners in the engineering and

construction industries. He has been principally involved
in arbitrations and other forms of dispute resolution,
contract management, and advisory services on a wide
spectrum of projects. He acts as advocate in arbitrations
and sits as arbitrator.

adjudicators corner

CIPAA The Magic Wand

of Payment Woes?
By Tan Swee Im

The word on everyones lips since 15th April 2014 has been
CIPAA, the battle cry of every unpaid contractor has
been CIPAA!
Indeed a milestone to be lauded and a big step in the right
direction for our beloved but beleaguered construction
industry in Malaysia.
But lets take pause for a moment and examine what CIPAA
means in real life and in real time. What are the practical
aspects of CIPAA that we have to take cognisance of and
what transformational changes do we have to embrace in
light of CIPAA?
This is not written with the lawyers in mind, this is written
with CIPAA users in mind.

Mindset
Lets start with mindset. All too often in the last 6 months
since the advent of CIPAA, I have had people responding
that no, they have never heard of CIPAA and do not know
what it is. How can that be? The very same people who
complain loud and often of non-payment do not know of
this Magic Wand called CIPAA?
Once they know the basics of CIPAA then the next common
reaction is that oh, if a contractor takes me to adjudication,
I will blacklist him and make sure he never gets another
job! And the reaction from the complaining contractor? Oh
cannot, if I go legal then I will not get jobs.
Why is it that contracts and laws are put in place and yet
the mindset is that if the contract or the law is followed,
it is a bad contractor who should be blacklisted? Why is a
contractually aware contractor labelled a claims conscious
contractor? Isnt that what contracts and laws are in put in
place for? To regulate the rights and obligations of parties
in given situations?
Surely its time for our industry to grow up. Time to mature
into an industry where professionalism is the norm and
contracts and laws are respected for what they do; regulate
the rights and obligations of parties. Of course lawyers
will always look for loopholes and conjure up weird and

wonderful arguments they are testing the boundaries of

the contract and the law which is no bad thing, it is part of
the growth. So along comes CIPAA and horror of horrors,
one is expected to pay for work done on a regular basis and
in a timely manner? And one has to make that payment
regardless of not having received the corresponding
payment from the party in the head contract? Well yes, is
the answer, pure and simple.
Pay now, argue later.
However on the other side of the fence lies the perennially
optimistic contractor who is always in wait of the payment
that is on the way and soon to be made. Time to
wake up! If payment is not made, CIPAA is one method of
realising your optimism!
So lets reboot and recognise that work done and services
rendered must be paid for. And paid for on a regular basis
and in a timely manner. Paying parties cash up! Unpaid
parties utilise your rights!

Documents, Documents,
Documents
So, mindset rebooted and parties all ready to rush out
and utilise CIPAA! But all too often, there is a dearth of
documents which tell the story which is so well articulated
in discussion. The story articulated is often not the story
one finds from the documents. Why is that?
Many Malaysian organisations have a fear of the written
word it would seem notices and letters are often not
issued as required by the contract or as required by the
circumstances. Employers and consultants have been
known to tell contractors not to write so much.
But without documents, parties in a CIPAA adjudication
are at a disadvantage. The adjudication decision is to be
delivered within 45 working days of the last pleading. The
adjudicator may not call for an oral hearing, and even if
held, there is no unlimited time for oral examinations.
Therefore the evidential value of documents is higher in
such limited time adjudications.

40

adjudicators corner
CIPAA is no magic wand it a right to be utilised, and it
rewards the diligent.
There is little point for all to charge on the battle cry of
CIPAA, but fail to prepare the arsenal to follow through.
What is this arsenal? Its simply the normal documents
that are required for competent contract administration.
Its the familiar

Letters
Faxes
Memos
Emails
SMS
Whatsapp / Etc.
Drawings
Written Instructions
Confirmation of Verbal Instructions
Minutes of Meetings
Progress Reports
Site Diary
NCR
Photos

It is also the perennial question of whether the document

prepared was in fact sent out? Needless to say a drawerful
of unsent drafts is of little help.
How about the contents of these reams of documents?
What do they say? Often, too little in that they are so
general that they are vague and dont provide support for
the point in question. Or too much in that they contain a
litany of admissions of wrongdoing.
Parties cannot be reminded enough to put emphasis on
the documents which are required by the contract, be they
progress reports, programmes, notices or applications for
payment and confirmations of variation instructions.
The nature of CIPAA adjudication demands a greater
emphasis of telling the story through the documents. If
you will just put yourself in the shoes of the adjudicator,
coming in cold to a project he knows nothing about, to be
met with conflicting versions of events and to have only
45 working days to deliver a decision, you will see the
relevance of the story told through the documents.
The ability to produce copies of the documents presumes
that copies have been kept. It is not uncommon to
hear contractors explain that they had submitted the
originals of invoices, payment vouchers, etc as required
by the consultants, and failed to keep copies as it was too
voluminous. You dont have much time for discovery in
adjudication, and besides the adjudicator may not order
it. CIPAA is there to assist you to get payment in a timely
manner it is self-defeating if the process for getting
payment is hampered by the Unpaid Parties themselves.

41

Document Management
However, having the raw documents is only the start of the
process. How about assembling them in an order that the
adjudicator can understand the story, the issues and arrive
at a decision. 100 lever arch files of documents may look
impressive in an arbitration hearing room but it is of little
use to an adjudicator who has to cut through the chaff,
get to the issues and opposing views, analyse them and
make a decision. So help the adjudicator to help you! Can
technology make this exercise an even better experience?
How about also giving the adjudicator a thumbdrive of the
documents which are indexed and word searchable?

Challenges on Jurisdiction
The start of CIPAA has not been exactly smooth. Excitement
was high with KLRCAs CIPAA seminars attracting 1,000
people each time, and the more contractually aware parties
making Payment Claims and appointing adjudicators.
However, the excitement was short lived when challenges
to the jurisdiction of the appointed adjudicator were
made, and adjudication proceedings suspended.
There were several challenges filed in the courts. The
challenges have centred on fundamental issues relating to:
Whether CIPAA has retrospective effect or only
prospective effect
Whether claims which arose prior to the effective date
of CIPAA can be subjected to CIPAA adjudication
Whether claims for Extension of Time fall within the
purview and ambit of CIPAA
The issue of retrospective or prospective effect impacts
on KLRCA Circular 01 which provides for CIPAA to apply
to payment disputes which arose after 15th April 2014,
regardless of whether the construction contract was made
before or after 15th April 2014. KLRCA participated as
amicus curiae to explain the basis of Circular 01.These
arguments have focussed on the less than clear provisions
of CIPAA and the courts decision and reasoning will have
great impact on the CIPAA adjudications ongoing and
contemplated.
Breaking news! Dato Mary Lim J, Judge of the Construction
Court in KL High Court delivered her decision on 31st
October 2014. She held that CIPAA has retrospective effect.
In short, CIPAA will apply to qualifying construction
contracts made before and after 15th April 2014.
The only exception from retrospective effect is by way
of section 41 in respect of payment disputes which are
already the subject of court or arbitration proceedings as
at 15th April 2014.

adjudicators corner
That decision is very impactful as it opens up pretty
much all payment disputes to be resolved through CIPAA
adjudication, regardless of whether the construction
contract was made before or after 15th April 2014 and
regardless of whether the payment dispute arose before
or after 15th April 2014. It also means that the defence of
pay when paid clauses cannot be relied upon. Unpaid
Parties who were previously nervous of making Payment
Claims in contradiction to KLRCA Circular 01 are now
empowered to proceed.
It remains to be seen if this decision will be taken on
appeal. But nevertheless, as time progresses, arguments
on the retrospective or prospective effect of CIPAA will
naturally fall away as payment disputes referred to CIPAA
adjudication will increasingly arise from contracts made
and payment disputes arising, after 15th April 2014.
As for whether the ambit of CIPAA can include a claim for
Extension of Time, the argument for, is that a claim for
EOT is so linked to entitlement to payment for work done
that is should naturally become a concern under CIPAA,
whereas the argument against is simply that the wording
of CIPAA makes it applicable only to payment claims or
disputes and not time. This argument will not fall away
with the passage of time, and if anything will intensify.
Following the KL High Courts decision on 31st October
2014, this matter has been left to be dealt with by the
appointed adjudicators.
So what do users of CIPAA do? Well, the world is an
imperfect place and we get on with life anyway. CIPAA is
a vast improvement on the sluggish arbitration system of
dispute resolution. Our construction courts are doing a
great job, but they are weighed down by heavy caseloads.
Both are susceptible to delays for legitimate reasons.
This may be contrasted to the provisions of CIPAA which
provide for each stage to progress regardless of one party
dragging its feet. Once the CIPAA train leaves the station,
it moves on and waits for nobody.
Admittedly the first few CIPAA trains seem to have been
derailed somewhat by the challenges on jurisdiction.
So those unwilling to take the risk of challenges to
jurisdiction as we have seen filed in court, could do well to
take a practical view of which payment disputes to take to
CIPAA adjudication. The most obvious would be to only
prosecute payment disputes which arose after 15th April
2014 on a construction contract made after 15th April 2014.
But since most of the current existing payment disputes
are in relation to contracts made prior to 15th April 2014,
therefore it may seem like too long a wait to qualify on
both criteria. So the obvious runner-up will be to at least

for the payment dispute to have arisen after 15th April

2014 even if the contract was made prior. This would at
least bring such a payment dispute within the ambit of
KLRCA Circular 01.
Having said that, one cannot ignore the fact that CIPAA is
not the only route to the resolution of payment disputes.
In fact users must be reminded that arbitration remains
the primary form of dispute resolution in construction
contracts and that a CIPAA adjudication decision is
binding only until the said dispute is finally decided in
arbitration (or the decision set aside or settled). Therefore
the choice of CIPAA adjudication although on the face of
it is attractive due to its shorter time frame and pay first
argue later philosophy, may not always be the best route.
The fact that the adjudication process from service of
payment claim to delivery of adjudication decision takes
about 100 working days which translates into about
5 calendar months, is in itself a practical matter to be
considered. Given the usual monthly cycle of payment
applications, certificates and payment due dates, as
each month passes the number of payment applications,
certificates and payment due dates will accumulate,
rendering the payment claim all too soon out of date. This
may perhaps be why the payment disputes referred to
CIPAA adjudication have been largely in respect of final
accounts and claims. But more likely that at this time, the
only payment disputes which have matured beyond the
tolerance of the Malaysian contractors ever-optimistic
outlook are those arising out of older contracts for which
work has been long completed but final payments not
received.

Transformation of
Operational Practices
CIPAA is upon us. It may not be perfectly worded, it may be
challenged, but imperfections and all, CIPAA is a reality.
With that reality, organisations could do well to step up and
face up to everyday realities that CIPAA brings. Standard
operating procedures which are out of step with payment
obligations in the construction contract will fall victim to
CIPAA payment claims. Illogical as it may sound there are
organisations whose internal procedures immediately set
them in default of the payment terms of the constructions
contracts they enter into. This is especially prevalent
in respect of variations validly instructed where the
requirement to carry out the work is significantly ahead
of internal approval procedures for the same. Given that
almost all construction contracts require work properly
executed to be included in the next payment certificate,

So lets reboot and recognise that work done and services rendered
must be paid for. And paid for on a regular basis and in a timely manner.
Paying parties cash up! Unpaid parties utilise your rights

42

adjudicators corner
the lag in internal approvals mean that it is not so included.
CIPAA allows for payment claims to be made for such work
executed, and lack of internal approvals which are not a
condition for payment in the construction contract are no
defence.
There are many other common instances of internal
procedures not matching contract requirements, not least,
lack of budget allocation. Attached as Appendix 1 is a
mindmap of what I presented at the CIDB Roadshows on
CIPAA summarising some of the thinking on these issues.
If these organisations could in the past hide behind
the comfort of contractors reluctance to commence
arbitration, the right to pursue such payment claims in
CIPAA adjudication will remove much of that comfort.

As for challenges on jurisdiction, they will not stop. Legal

minds set to work for their clients will continue to go into
overdrive and keep testing the boundaries. That is how
the law develops. But it should not deter the entitled from
utilising CIPAA, and does not enable bad paymasters to
keep hiding.
But until and unless users of CIPAA realise that they have
to help CIPAA help them, the useful new rights accorded
by CIPAA will remain but words in a statute.
CIPAA is not the magic wand of payment woes; it is a tool
which with knowledge, diligence and organised thought,
can be made to work hard for you.

Moving Ahead
So where does all this lead us to?
It is suggested that despite the criticisms of the
imperfections or inadequacies of CIPAA, it is a significant
step forward in the right direction towards addressing the
payment problems that are endemic of the construction
industry in Malaysia.
But a contractor starved of cashflow needs to do more
than chant CIPAA, CIPAA he needs to work hard at
making CIPAA work. He needs to understand what CIPAA
says and what CIPAA requires. He needs to know what
CIPAA means in practice. And he needs to take the action
to actuate CIPAA.

Tan Swee Im, Senior Partner of Tan Swee Im, P.Y. Hoh &
Tai, is a Barrister-at-Law from the Middle Temple and
an Advocate and Solicitor of the High Court of Malaya, a
Fellow of the Chartered Institute of Arbitrators, a Fellow
of the Malaysian Institute of Arbitrators, a Fellow of the
Chartered Institute of Building, a Fellow of the Malaysian
Society of Adjudicators, an arbitrator, adjudicator and
mediator on the panel of the Kuala Lumpur Regional
Centre for Arbitration, a qualified adjudicator, a CIDB
Accredited Mediator, and holds a Diploma in International
Commercial Arbitration. She was a key member of the
drafting team on the first independent power plants in
Malaysia, the KL International Airport, the MalaysiaSingapore Second Crossing projects, and many other major
projects in Malaysia. An active contributor to the Master
Builders Association of Malaysia and very involved in the

43

drafting of the CIDB Form of Contract for Building Works,

she led the drafting for the new standard form of design
and build contract promoted by the CIDB. She is a council
member of the Society of Construction Law Malaysia and
a member of the committee developing the Malaysian
Construction Protocols for delay, disruption and other
construction related issues. Miss Tan and her firm prepared
the Working Guide, Standard Forms and Checklists on the
Adjudication Process under the CIPAA published by CIDB
to assist parties to make and defend payment claims under
CIPAA. Her international experience extends to Cambodia
and Myanmar, when she participated in the negotiation
of their international airport contracts and projects in the
Middle East, South Africa and Papua New Guinea. Miss
Tan is 1 of only 5 lawyers in Malaysia named in Whos Who
Legal for the practice area of Construction.

adjudicators corner
Appendix 1

TAN SWEE IM, P.Y. HOH & TAI

ADVOCATES & SOLICITORS

Transformation
of
Operational
Practices

Transformation
of Operational
Practices for
Alignment
with CIPAA

CIPAA

ADJUDICATION

Original scope
VO
'An Act to facilitate regular and timely
payment to provide a mechanism for speedy
dispute resolution through adjudication
to provide remedies for the recovery of
payment in the construction industry and
to provide for connected and incidental
matters'

Monthly valuation - of the works

properly executed and of unfixed
materials and goods delivered to or
adjacent to the Site

Contract

JKR 203
/203A

Interim Certificate - to be issued

within 14 days from the date of
valuation - stating the amount
due to the Contractor from the
Government

works properly
executed
unfixed
materials and
goods

Payment - within a number of days

as stated in Appendix (or if none
stated then within thirty (30) days
of the issue of any such Interim
Certificate), the Government shall
make payment to the Contractor

Payment
terms
CIPAA S36 Default
Provisions

Adjudication
Remedies to Enforce
Adjudication Decision

Monthly - for construction work

and construction consultancy
services
Upon delivery - for supply,
for the supply of construction
material, equipment or workers
in connection to the contract

44

adjudicators corner
Interim

TAN SWEE IM, P.Y. HOH & TAI

ADVOCATES & SOLICITORS

Non Payment

Payment
Dispute

Original scope
VO

Final
Works properly
executed
Unfixed materials
and goods

FOR

Certified but not paid

Under Certified

amount

Not Certified
Payment
Claim

due

In accordance with the Contract

Monthly Valuation
Monthly issuance of IPC
Payment within Period of
Honouring IPC

Payment
response

notice of
adjudication

APPOINTMENT
OF
ADJUDICATOR

Legitimate
Reasons
adjudication
CLAIM

adjudication
RESPONSE

SUBSTANTIATION

adjudication
REPLY
LAW

adjudication
PROCEEDING

adjudication
DECISION

Slow down or suspend work

ENFORCEMENT
OF
adjudication
DECISION

45

Direct Payment from Principal

Enforce as court judgment

adjudicators corner

Not Certified

S.O shall issue a Certificate of NonCompletion to the Contractor

Not yet evaluated

Amount not approved
COMMONLY
ENCOUNTERED

Approval not yet signed

VO not approved by VO Committee
No Budget

E.g LAD

CI 40

What does Contract say?

Prior to the issuance of the Certificate

of Non-Completion, the S.O shall issue
a notice to the Contractor informing
the Contractor the intention of the
Government to impose Liquidated and
Ascertained Damages to the Contractor
if the Contractor fails to complete the
Works by the Date for Completion or
within any extended time granted
Recover from the Contractor Liquidated
and Ascertained Damages calculated
at the rate stated in Appendix from the
period of the issuance of the Certificate
of Non-Completion to the date of
issuance of Certificate of Practical
Completion or the date of termination
of this Contract

BUT

Regardless of Internal Procedures

and Difficulties

Legitimate reasons for non payment

NEEDED

E.g JKR 203A

Non compliance with SO Instructions

E.g Deductions
Allowed by Contract

In lieu of Performance Bond

Failure of Contractor to Insure
Failure of Contractor to pay SOCSO
Default of Contractor to remedy

Contract

Standard Conditions

Defects

Amended / Supplementary Terms

Certificate of Termination Cost termination for Contractor default

Bill No.1

Provisions

Initial Notice

Letters

Conditions Precedent

Faxes

Follow Up Details

Memos

Time Frame

Emails

What to be submitted

SMS

Additional Submissions

Whatsapp / Etc

Responses

Drawings

Evaluations

Written Instructions

Certificates

Confirmation of Verbal Instructions

Minutes of Meetings
Progress Reports

Documents, documents, documents

Site Diary
NCR
Photos

46

adjudicators corner
TAN SWEE IM, P.Y. HOH & TAI

Any contractor who takes me to CIPAA adjudication is blacklisted

ADVOCATES & SOLICITORS

I am in charge
I can pay what I think is fair to me
I dont have budget so I cannot pay you, its not my fault

Attitude

I have not been paid, how to pay you?

I dont have authority to approve payment to you
VO Committee has not approved payment
For sure I will pay you, give me time

KNOW what
the Contract
requires of
you

TRANSFORM
internal processes
to enable FULL
COMPLIANCE with
the Contract

Process of approving interim payment certificates

Process of approving final account and final payment
Process of approving release of retention sum

DOCUMENT
generation and
control

TIMELINESS

Tracking time of what needs to be done by whom

What work Contractor has carried out - regardless of whether certified

AWARENESS
of what is
happening
and when by
whom

Work which has been instructed to contractor

- by consultants / internal department / site staff
Valuations - by consultants / internal department
Whether valuations = work done

ACT to comply
with Contract

MANAGE to avoid
disputes

If not then potential CIPAA Payment Claim

Regardless of Internal Procedures - must comply with Contract

Manage Internal Procedures - to enable compliance with Contract

Know what is going on - really going on,

not what you want to hear No problem Boss
Know when payment disputes are brewing
Documentation - to be complete and kept updated at all times

CARE to see both

sides of the story

47

No party is entirely correct or entirely wrong

Dont believe everything you are told

adjudicators corner
NOT - we always do it this way
NOT - but its not fair
Change your
attitude -

CIPAA is here

NOT - Ya lah Contract says must pay for VO when work done, but we have to get approval
from VO Committee first and they only meet every 2 months, but work is urgent

READ the Contract!

Standard Conditions
Amended / Supplementary Terms

Contract

Appendix to COC
Bill No.1 / Prelims

Limits on authority - made known

to Contractor / part of Contract

No VO is valid if exceeds stated authority

Contractor beware

Limits on authority - internal and

not part of Contract

VO valid when issued to Contractor, but

payment is not approved or delayed

Employer beware

Process of approving VO
REMEMBER - Monthly valuation
of the works properly executed
means inclusive VO works

Letters
Faxes
Memos

Documents, documents, documents

Evidence

Emails

Do they reflect the facts?

SMS

Who is your letter writer?

Are the documents prepared, actually sent out?

And sent out in a timely manner?

Whatsapp / Etc

Where are your document kept?

Are they all in one place?

Is there a log?

Drawings

Who keeps your documents?

What about email?

Whose laptop is it on?

Any record?

Confirmation of Verbal Instructions

What about SMS / Whatsapp?

Whose phone is it on?

Any record?

Minutes of Meetings

Written Instructions

Progress Reports

What happens when someone is transferred / resigns

Site Diary
NCR

Contractor applications for payment

Photos

Contractor applications for payment of VO

Valuation of applications for payment - by consultants / internal departments
Issuance of payment certificate

Partial payments

Payment of certified amounts

Deductions

KNOW when payment for work done is due under the Contract

If not paid then potential CIPAA Payment Claim

Real time tracking system

- e.g Excel sheet with time frames built in - orange and red warnings

If not then potential CIPAA Payment Claim

If not then potential CIPAA Payment Claim

You have 10 working days for Payment Response

You have 10 working days for Adjudication Response
You have no time for Let me check Let me ask the consultants
/ I will check with my staff / I will get it done next week
/ Annual Leave / Emergency Leave / MC / Kursus

The truth usually lies somewhere in between

Do you know what actually happened?
Do you know the real facts?

Can your version be evidenced?

Remember; with
great power,
comes great
responsibility

48

adjudicators corner

The Timely CIPAA Adjudication

Decision: Mission Impossible?
By John Wong

Abstract
An adjudicator has 45 working days under CIPAA to decide the dispute and deliver the adjudication decision. Even if
the complexity of the dispute involves multiple facets of the construction process such as variations, extensions of time,
contract administration, and legal issues, it is still very possible - albeit challenging - for the adjudicator to deliver the
decision within the statutory period of 45 working days by drawing on the personal knowledge, experience, and skill of
the adjudicator and drawing judiciously upon the powers granted to the adjudicator by section 25, CIPAA 2012.

Introduction
The main objective of the Construction Industry Payment
and Adjudication Act 2012s (CIPAA 2012) is to provide a
new, expedited legal avenue to resolve cash flow-related
problems in the construction industry. CIPAA 2012
provides for an adjudicator to decide the construction
dispute and deliver an adjudication decision within
the statutory period of 45 working days from service
of an adjudication response or an adjudication reply if
a reply is served, whichever is later. With the operative
effect of CIPAA 2012 on 15 April 2014, this article asks the
question whether it will be a Mission Impossible to deliver
a reasoned adjudication decision within the statutory
period when the dispute involves multiple and complex
questions on the valuation of variations, the assessment
of extensions of time, contract administration, and the
application of principles of Malaysian construction law.

Complex Issues in Dispute

CIPAA 2012 provides for a payment claim to be initiated by
an unpaid party, say, a Contractor. In this instance, assume
that the payment claim is for construction work done
pursuant to the express terms of a written construction
contract. For example, the Contractor performed variation
work pursuant to an Architects Instruction, but no contract
rate of payment is applicable to the variation work. Then,
upon application for payment, the Architect only certified
for payment 50% of the Contractors variation claim on
the ground that the Contractors rate was excessive and
inflated above the market rate. The Contractor disputed
the Architects certification as an under-certification and
claimed the balance of its variation claim against the
Employer as a payment claim under CIPAA 2012. The
Employer served a payment response on the Contractor
under CIPAA 2012 denying any under-certification and
counter-claiming for liquidated damages arising from
delays alleged to have been caused by the Contractor.

49

In view of the Employers dispute of the Contractors

payment claim, the Contractor commenced an
adjudication proceeding. After the appointment of the
adjudicator, the Contractor served an adjudication claim
upon the Employer claiming the full variation claim
amount. The Employer served an adjudication response
disputing the Contractors rate and contending that the
Architects certification and the Quantity Surveyors
valuation accurately reflected the market rate for the
variation. Further, the Employer counter-claimed for
liquidated damages for the Contractors delays. In reply
to the Employers counter-claim, the Contractor served an
adjudication reply denying responsibility for the delays
and attributing the delays to the variation work instructed
by the Architect thus claiming an extension of time by
way of a critical path method of delay analysis. Finally,
the Contractor asserted that the Architect had not issued a
valid Certificate of Non-Completion, which is a condition
precedent to the Employers deduction of liquidated
damages and, moreover, that the Employer had suffered
no actual losses relating to the delay. As evident from this
summary of a hypothetical dispute, the dispute increased
in complexity as the adjudication process unfolded. For
this reason, the adjudicator must decide four main issues
in dispute:
(i) Whether the variation claim should be valued based
on the Architects rate or the Contractors rate;
(ii) Whether the Contractor has proven an entitlement to
an extension of time by way of its critical path method
of delay analysis;
(iii) If the Contractor is not entitled to any extension
of time, whether the Architect has issued a valid
Certificate of Non-Completion; and
(iv) If so, whether the Employer is entitled to deduct
liquidated damages from payments otherwise due to
the Contractor.

adjudicators corner

Decision Making Factors

The adjudicator has a statutory period of 45 working
days or any other extended period agreed by both the
Contractor and the Employer to make and deliver an
adjudication decision that deals with the issues in dispute.
To make a reasoned decision in respect of the issues in
dispute, the adjudicator has to consider the following
factors:
a) In respect of issue (i), the adjudicator has to consider
what the reasonable market rate is and then use it as
a basis to decide whether the Architects rate or the
Contractors rate is a reasonable rate for the valuation
of the variation. In this instance, the adjudicator may
pursuant to section 25(e) of CIPAA 2012, appoint, with
the consent of the parties, an independent expert to
give evidence on the reasonable market rate. In many
instances, however, there may be inadequate time to
appoint an independent expert, such an appointment
may be disproportionately costly compared to its
benefits, or the parties may object to the exercise of
the power granted to the adjudicator by section 25(e)
in the particular circumstances of the dispute. In this
event, the adjudicator should then use the powers
provided by section 25(d) and (i) to analyze and decide
the dispute. Section 25(d) permits the adjudicator to
draw upon the adjudicators personal knowledge and
expertise and section 25(i) allows the adjudicator to
question the parties and witnesses to develop the
information needed to make the correct decisions on
the issues presented to the adjudicator by the parties.
The adjudicator must, however, provide the parties
with an opportunity to respond to the adjudicators
analysis based on the adjudicators personal knowledge
and expertise and the adjudicator ought to conduct
any inquisitorial questioning with a judicious and fairminded attitude free of the appearance of bias and prejudgments of the issues.
b) In respect of issue (ii), the adjudicator must analyse
pre-impact and post-impact programmes in the critical

path method of delay analysis so as to ascertain the

extent of any impact of the variation work on milestone
completion dates. Similar to paragraph (a) above, the
adjudicator may appoint, subject to the consent of the
parties, an independent delay analysis expert to assess
the Contractors extension of time claim and to submit
the analysis to the adjudicator and the parties. In the
absence of an independent expert, the adjudicator may
draw on personal knowledge and expertise and on
evidence adduced in the adjudication process to decide
whether the Contractor is entitled to an extension of
time. As with other issues, the adjudicator should
closely consider and then carefully apply the powers
of the adjudicator set forth in section 25 of CIPAA, and
particularly those in section 25(d) (personal knowledge
and expertise) and section 25(i) (inquisitorially take
the initiative to ascertain the facts and the law required
for the decision.).
c) In respect of issue (iii), the adjudicator should
consider the form and content of the Certificate of
Non-Completion and compare those factors to the
requirements prescribed in the construction contract
to decide whether the certificate was validly issued.
In this instance, the adjudicator should take into
account case-law authority submitted by the parties in
this respect. Here again, section 25 has equipped the
adjudicator with several powers to properly decide
this issue. By carefully tailoring the statutory powers
to the dispute, the adjudicator can deploy personal
knowledge and expertise (section 25(d)), with the
consent of the parties, independent experts (section
25(e)), inquisitorial initiatives (section 25(i)), and
review and revise any certificate (section 25(m)) to
timely and correctly decide the dispute.
d) In respect of issue (iv), the adjudicator has to consider
the present authorities in Malaysian construction law
to determine whether the Employer is required to
prove actual loss and whether the condition precedent
to the deduction of liquidated damages has been
fulfilled under the construction contract in deciding
the Employers entitlement, if any, to liquidated

50

adjudicators corner
damages. The tasks here are similar to those described
in the preceding paragraph of this article. In addition,
it will be likely that the adjudicator will be presented
with the question of whether a claim for an extension
of time or for liquidated damages is within the
jurisdiction of the adjudicator. For resolution of this
challenge, the adjudicator should consider directing
the parties to submit memoranda on the jurisdictional
question pursuant to the adjudicators power to issue
any direction as may be necessary or expedient (section
25(j)). In this context, the adjudicator may exercise
discretion under section 27(3) and proceed to complete
the adjudication proceedings without prejudice to
the rights of the parties to set aside the adjudication
decision or to oppose an application to enforce the
adjudication decision.

Conclusion
In light of the above, it may be concluded that if the
adjudicator is to decide a complex dispute and deliver
the adjudication decision within the statutory period of
45 working days likely, quite a short period of time - it
should be possible for the adjudicator to render a sound
and reasoned decision by judiciously exercising the
powers of the adjudicator under section 25, particularly
subsections (d), (e), (i), (j) and (m). If feasible, assistance
from independent experts may be especially helpful
to reach a timely and reasoned decision if the parties
consent to the appointment of the experts. Even in the
absence of assistance by experts, a successful completion
of a Mission Impossible adjudication assignment calls for
the adjudicator to draw upon the adjudicators personal
knowledge and expertise; consider taking the initiative to
inquisitorially ascertain the facts and the law required to
make a reasoned and timely decision; assess whether to
direct the parties to submit on specific questions of fact
and law; and review and revise disputed certificates based
on the evidence provided by the parties. As with the
challenge posed to the actors in the movie and television
series Mission Impossible, the adjudicators successful
acceptance of the task to make a well-reasoned decision
within the statutory period of 45 working days is quite
possible, albeit challenging.

John Wong, BSc (Hons) LLB (Hons) Dip. Int. Arb, FCIArb, FMSAdj, MRISM, is a legally
qualified Registered Quantity Surveyor who specializes in construction claims and
forensic delay analysis. In his previous employment as a claims specialist, he had
the rare privilege of assisting a seasoned construction lawyer in arbitration counsel
work from whom he obtained valuable experience. He is a director of Charlton Martin
Consultants Sdn Bhd. His email address is john.wong@charltonmartin.com

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sidebar

The Journey Towards Security of

Payment Legislation in Hong Kong
By Christopher To

Introduction
Work has commenced in Hong Kong on the drafting of
new legislation to enhance the security of payments
in construction-related contracts and provide for
adjudication for speedy resolution of disputes. The target
of the government is to introduce the Bill to the Legislative
Council in 2015/161. This article reviews the background
and status of the proposed legislation.
The construction sector is a major driving force behind
Hong Kongs economy. In 2012, it contributed about 3.6%
of the citys GDP. Currently, it employs over 300,000
persons and has over 1,200 construction sites across
Hong Kong. Figure 1 below shows the construction
expenditure forecast for 2014/15 to 2023/24 prepared by
the Construction Industry Council (CIC) Hong Kong.
With considerable demand for infrastructure and housing,
it is estimated that the total construction expenditure
will exceed $150 billion annually in the coming few years.
Hence, the adoption of fair and good payment practices is
conducive to the healthy and sustainable development of
the construction industry in Hong Kong.
As with many other jurisdictions, subcontracting has
been widely adopted in the construction industry of Hong
Kong. Under the traditional practice of pay if/when
paid, subcontractors are not paid until the contractor is
paid. Whether due to the upper-tier contractors not being
paid on time or other reasons, subcontractors are often not
paid timely for the works performed. As a result, payment
problems become so complex and deep-rooted that the
issues are very difficult to resolve amicably.
Over the years, several surveys and studies aimed at
ascertaining and rectifying the industrys longstanding
payment problems have been conducted:

Survey on General Building

Contractors and Specialist
Contractors Status on Cash
Flow and Other Related Issues

In 2008, the Hong Kong Construction Association

commissioned a Survey on General Building Contractors
and Specialist Contractors Status on Cash Flow and
Other Related Issues to collect information on the extent
of cash flow problems faced by main contractors and
specialist contractors. The survey revealed that over 60%
of the respondents regarded outstanding payment from
the other contract parties as a serious problem affecting
their companies. The result of the survey, whilst helpful,
covered only limited groups of industry stakeholders and
the survey was not seen to have done enough to identify
the main causes of late or non-payment within the
construction industry as a whole.

Survey on Problems of
Outstanding Payments in
Construction Supply Chain
In 2009, with an aim to identify possible causes of
outstanding payment and cash flow problems, the CIC
commissioned a Survey on Problems of Outstanding
Payments in Construction Supply Chain. The survey
covered a full spectrum of stakeholders in the construction
industry from employers/developers, consultants,
contractors, subcontractors, to suppliers. The survey
revealed the following five major causes of payment
problems:
late resolution of disputes;
continuation of work while arrears were not settled;
late settlement of final account;
delay in certification of interim payments; and
other obstacles to payment.

52

sidebar

CONSTRUCTION
EXPENDITURE
FORECAST FOR PUBLIC
AND
PRIVATE SECTORS
(2014/15 TO 2023-24)

ACTUAL EXPENDITURE(2004/05 TO 2013/14) & MID-TERM

Public
SECTOR

PRIVATE
SECTOR

LONG-TERM
Public PRIVATE
SECTOR + SECTOR

electrical & mechanical works

repair, maintainance, alteration & additional works
civil works
building works
UPPER BOUND LINE
LOWER BOUND LINE

ACTUAL EXPENDITURE
(2004/05 TO 2013/14)

MID-TERM FORECAST

HK$
Billion
260

LONG-TERM FORECAST

80

80

60

60

40

40

20

20

0
20
23

20
21

20
1

20
1

20
1

20
1

20
1

20
1

20
1

1-1

20
1

20
1

20
0

40

20
0

20
0

-2
4

100

20
22
-2
3

100

-2
2

120

20
20
-2
1

120

920

140

819

140

718

160

617

160

516

180

415

180

314

200

200

213

220

607
20
07
-0
8
20
08
-0
9
20
09
-10
20
10
-11

220

240

06

240

5-

CONSTRUCTION EXPENDITURE
(IN SEPTEMBER 2013 PRICES)

HK$
Billion
260

YEAR
Figure 1 Construction Expenditure Forecast for Public and Private Sectors in Hong Kong (2014/15 to 2023/24)2

The survey also revealed that payment problems were

more serious in the private sector than the public sector. A
rough projection undertaken by the researcher indicated
that outstanding payments held up by the upper-tier
contracting parties to the contractors and subcontractors
could be in the region of more than HK$10 billion. The
projected figures, albeit rough, were quite alarming.
Further detailed investigation was hence called for and a
Task Force on Security of Payment Legislation was set
up by the CIC in 2010 to take up this task in collaboration
with the Development Bureau (DevB) of the Government
of the Hong Kong Special Administrative Region.

Survey on Payment Practice in

the Construction Industry
In 2011, the DevB, with the support of the CIC and
the governments Census and Statistics Department,
commissioned another industry-wide Survey on Payment
Practice in the Construction Industry. The survey covered
some 8,100 companies from across the construction
supply chain; and, unlike the previous surveys, this one
extended the scope to collect stakeholders view on the
effectiveness of possible legislative and administrative
measures to secure payments in the construction supply

53

chain. It revealed that:

Subcontracting was prevalent in the construction
industry 90% of main contractors had sub-contracted
construction works to subcontractors; 60% of subcontractors had sub-contracted construction works
to sub-sub-contractors; and 68% of consultants had
engaged sub-consultants;
Cash flow throughout the supply chain was a serious
issue difficulty in receiving payments existed within
the industry. Subcontractors appeared to have suffered
the most from problems due to cash flow issues. 57% of
the subcontractors considered payment problems to be
either very serious or serious, whilst 49% of suppliers,
45% of main contractors, and 37% of consultants
shared the same view;
Quantum of outstanding payments was substantial
the average outstanding payments per annum for
the reference period between 2009 and 2010 were
HK$9.4 billion for main contractors (equivalent to
8% of total business receipts), and HK$9.9 billion for
subcontractors (equivalent to 12% of total business
receipts);

sidebar
Adoption of pay if/when paid conditional payment
practices was prevalent - 50% of the respondents in
the subcontractor and consultant sectors said that
the practice of conditional payments in this form was
imposed upon them by upper-tier parties; 39% of
main contractors adopted such conditional payment
practice in contracts with lower-tier parties; and 16% of
subcontractors engaged in similar practice with lowertier parties;
Payment problems were more serious in contracts
adopting pay if/when paid conditional payment
clauses;
The majority of subcontractors (74%) and suppliers
(79%) considered conditional payment practices as not
acceptable/not reasonable;
Disagreements and disputes between contracting
parties were the major reasons for payment problems
encountered by the main contractors, subcontractors,
and consultants; and
In general, it was considered by the respondents that
both administrative and legislative measures would
be very effective or effective in resolving payment
problems with regard to public works; while only
legislative measures would be very effective or effective
with regard to private works.

The CIC Report on Security

of Payment Legislation to
Improve Payment Practices in
the Construction Industry
In September 2012, the CIC submitted a Report on Security
of Payment Legislation to Improve Payment Practices in
the Construction Industry to the DevB reaffirming the
construction industrys views and urging the government
to look at enacting Security of Payment legislation in Hong
Kong. In broad outline, the stakeholders views were:
Developer - In an effort to maintain the principle of
big market, small government in Hong Kong, The
Real Estate Developers Association of Hong Kong set
out that legislative measures should only be proposed
when all other administrative measures have been
exhausted and proved ineffective.
Main Contractor - The Hong Kong Construction
Association pointed out that the implementation of
various administrative measures adopted in recent
years was only modestly effective in curing the
payment problems within the public sector, and
ineffective within the private sector. Legislation was
therefore considered as the most efficient way to tackle
the extensive and widespread problems arising from
disputes that impacted payments in the construction
industry.

Specialist Subcontractor - The Hong Kong Federation

of Electrical and Mechanical Contractors Limited noted
that legislative measures and administrative measures
were not mutually exclusive. Enhanced administrative
measures could be introduced and adopted in
parallel with the development of Security of Payment
legislation.
Domestic Subcontractor - The Hong Kong Construction
Sub-Contractors Association felt that legislation was
necessary as various administrative measures adopted
by the industry had not provided an adequate and
effective means to improve the underlining payment
practice along the construction supply chain.

Drafting Security of Payment

Legislation
In October 2012, the DevB followed up the survey results
and CICs recommendations by forming a Working Group
on Security of Payment Legislation for the Construction
Industry to take forward the preparatory work for
enacting the Security of Payment legislation. The Working
Group is chaired by the DevB and comprises members from
across the construction industry, including employers/
developers, main contractors, subcontractors, as well as
the CIC, the Hong Kong International Arbitration Centre,
and professional bodies.
As at the time of writing this article in late October 2014,
work has begun on the drafting of the proposed Security of
Payment legislation and the government has announced a
target of 2015/16 for introducing the Bill to the Legislative
Council. The government originally proposed to start
public consultation in 2014, but there have been signs
of slippage. The tentative consultation period has been
revised from April to July 2015.
Although the exact form of the proposed Security of
Payment legislation in Hong Kong is currently under
review, it is quite possible that it will contain, in some
form, the following provisions:
Statutory right to progress payment;
Ban on pay if/when paid conditional payment
clauses;
Statutory right to suspend work for non-payment;
Statutory adjudication process to settle disputes during
the construction project; and
Enforcement of the adjudication decision.
If statutory adjudication is introduced in Hong Kong, it is
likely that dramatic changes on how disputes are handled
and resolved in the local construction industry will result.

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sidebar
Looking Ahead
The construction supply chain has long been suffering
from the difficulty or failure to receive timely payment for
works performed. This reality is reflected in the survey
results and comments from industry stakeholders. The
CIC Hong Kong recognises the need to put in place a form
of Security of Payment legislation for the construction
industry and has been urging the government to press on
with legislative drafting work. A solution to longstanding
payment problems is imminently needed given the slew
of ongoing construction projects and those that are in the
pipeline.

construction enterprises to invest and carry out business

in Hong Kong, thereby improving the citys infrastructure
delivery capacity and increasing competition.
As
employers improve their cash flow, it is also hoped that the
proposed legislation will combat wage arrears.
Further information will be published as developments
occur in Security of Payment legislation in Hong Kong, so
stay tuned.

Enacting Security of Payment legislation will likely have

a transformative effect on the local construction industry,
changing longstanding payment practices and protecting
the vulnerable position of the lower-tier contracting
parties. Although the exact form and effect of the future
Security of Payment legislation are yet to be seen, it is
hoped that, as the Secretary of Development put it , the
proposed legislation will enhance the cash flow of the
construction supply chain and attract more overseas

As employers improve their cash flow, it is also hoped that the

proposed legislation will combat wage arrears.
endnotes
1.

Government of the Hong Kong Special Administrative Region,

Legislative Council Panel on Development Initiatives of Development
Bureau in the 2014 Policy Address and Policy Agenda, January 2014.

2. Construction Industry Council, Construction Expenditure Forecast for

Public and Private Sectors - 2014/15 to 2023/24, August 2014.
3.

Government of the Hong Kong Special Administrative Region,

Upcoming Consultation Exercises.

http://www.gov.hk/en/theme/bf/consultation/upcoming.htm
(accessed on 22 October 2014).
4. Government of the Hong Kong Special Administrative Region,
Speaking Notes on Works Policy Areas of the Secretary for
Development tabled at the Finance Committee Special Meeting of the
Legislative Council, 10 April 2014.

Christopher To is the Executive Director of the Construction Industry Council in

Hong Kong. He is an independent mediator and arbitrator who is on the panels of
various leading global alternative dispute resolution bodies. He has handled a variety
of complex international cases as mediator and arbitrator. Mr. To was previously the
Secretary-General of the Hong Kong International Arbitration Centre and currently is
the Chairman of the East Asia Branch of the Chartered Institute of Arbitrators, an AtLarge Council Member of the Inter-Pacific Bar Association, an Executive Committee
Member of the Hong Kong Corporate Counsel Association, a Council Member of the
Hong Kong International Arbitration Centre and the Asian Domain Name Dispute
Resolution Centre.

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Mansource Interior Pte Ltd v Citiwall

Safety Glass Pte Ltd [2014] SGHC 87: Natural
Justice: Re-balancing the Rights
of Parties under the Building and
Construction Industry Security of
Payment Act (Chapter 30 B)
By Timothy Ng Wai Keong

Introduction
1. The Building and Construction Industry Security of
Payment Act (SOPA) seeks to improve cash-flow in
the construction industry by giving parties the right to
seek progress payments for work done, and providing
fast and low-cost adjudication to resolve payment
disputes. Like all construction industry adjudication
processes, it prescribes tight timelines with a view to
improve cash-flow. This inevitably leads to parties
trying to make use of these tight timelines to weaken
the presentation of their opponents cases. This
has led to cases where adjudicators have made their
determinations based on procedural grounds and
parties were by reason of the draconian rules prevented
from fully presenting their entire case.1
2. In the recent case of Mansource Interior Pte Ltd v
Citiwall Safety Glass Pte Ltd [2014] SGHC 87, the High
Court held that the Singapore Mediation Centre, as
an Authorised Nominating Body under SOPA, had no
authority to reject documents lodged at the Singapore
Mediation Centre after its closing hours and that parties
serving documents pursuant to SOPA have the right to
serve documents up until 11:59 pm on the final day for
lodgment of documents. Denying parties the full time
to file documents was viewed by the High Court as a
breach of natural justice.
3. Litigation involving such points is not common in
adjudication cases. This is because there are very high
stakes when it comes to adjudication, the process is
swift, and the timelines are strictly enforced. As such,
many practitioners err on the side of caution and serve
the relevant documents well within the specified time
frame. Even though an adjudication determination
is not final and may be reversed at trial or arbitration,
cash flow is important for all parties to construction
contracts. Notwithstanding that there have been
numerous opportunities for litigation on points of this
nature, conservative practice is so prevalent that those
opportunities have not been taken up by parties2. As
the courts can only decide on issues referred to it by

the litigants, fundamental points of natural justice in

this context have only recently been examined by the
Singapore Courts.
4. The decision in Mansource is significant not only
because of its impact on the practice of filing
adjudication applications, but also for the relief it gives
to practitioners who often find it difficult to take on
adjudication responses due to a relatively limited pool
of resources and the very demanding schedule set for
responsive submissions in the adjudication process.

Facts of the Case

5. The appellant, Mansource Interior Pte Ltd, and
respondent, Citiwall Safety Glass Pte Ltd, were
involved in an adjudication conducted in accordance
with the SOPA.
6. During the course of the adjudication, the appellant
lodged its adjudication response (AR) with the
Singapore Mediation Centre (SMC) at 4:32 pm on
5 September 2013. It had received the adjudication
application at 5:25 pm on 29 August 2013. The
adjudicator rejected the appellants AR when coming
to his determination. The adjudicator relied on Rule
2.2 of the Singapore Mediation Centres Adjudication
Procedure Rules (SMC Rules) which provided that
the opening hours of the SMC are from 9:00 am to
4:30 pm on weekdays and that any document lodged
after 4:30 pm shall be treated as being lodged the next
working day. On this basis, the adjudicator found that
the AR was lodged on 6 September 2013. Since the
last day for lodging an AR was 5 September 2013, the
response was out of time and accordingly rejected by
the adjudicator pursuant to s 16(2)(b) of the SOPA.
7. The appellant appealed on the ground that the
adjudicator wrongly rejected its AR. The appellant
also relied on two other grounds, fraud and an alleged
failure of the adjudicator to consider the material
before him. These points, however, were discussed
and dismissed by the High Court.

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sidebar

Denying parties the full time to file documents was viewed by

the High Court as a breach of natural justice.

Holding
8.
The High Court set aside the adjudication
determination on the ground that the adjudicators
failure to consider the AR constituted a breach of
natural justice3. According to the court, the adjudicator
had incorrectly relied on Rule 2.2 of the SMR Rules and
rejected the AR that was lodged at 4:32 pm on the final
day for lodgment as being out of time. Tan Siong Thye
JC (as he then was) held that the adjudicator was wrong
to have rejected the AR as this was a breach of natural
justice. Instead, parties should have until 11:59 pm on
the final day for lodgment to lodge their documents
because the operative provision on timing is s. 15(1) of
SOPA, not Rule 2.2 of the SMC Rules4.

Analysis
9. It is very clear from the case law that the grounds for
setting aside an adjudication determination are limited
and that the court will not review the merits of an
adjudication determination.5
10. However, just as an applicant deserves not to have its
payment improperly withheld, the respondent also
deserves its chance to present why it is entitled to
withhold payment to the applicant. This recent ruling
by the High Court in Mansource demonstrates the
courts disapproval of the treatment of adjudication
submissions under the SMC rules and re-aligns the
process with the time limits contemplated by SOPA.
This correctly re-balances the rights of the parties
under SOPA and secures a just outcome consistent
with principles of natural justice.
11. The ruling by the High Court is not surprising given
the backdrop of key cases leading to this case. In
Mansource, Tan JC (as he then was) relied on the Court
of Appeal (CA) decision in W Y Steel Construction
Pte v Osko Pte Ltd [2013] 3 SLR 380 which affirmed the
High Court decision in the same case where Justice Lee
Sieu Kin J noted at [8]:
The SMCs role is only to accept whatever document
is filed and to note the time and date of filing. The
decision whether it is late, and the consequence of
that, should be left to the adjudicator to make.6

57

12. This language from the High Court decision in W Y

Steel was quoted with approval in the CA decision7, but
the CA ruled that nothing turned on the submission of
the adjudication response after 4:30 pm as W Y Steel
had emailed its AR directly to the adjudicator on the
evening of the last day of lodgment. Two propositions
can be inferred from this ruling.
13. Firstly, as Tan JC ruled in Mansource, parties have
until 11:59 pm on the last day of lodgment to lodge the
relevant documents under SOPA. Secondly, it suggests
that the CA is open to allowing parties to lodge
documents directly by email with the adjudicator,
thereby bypassing the Authorised Nominating Body.
14. The first proposition is well-founded on section 16(3)
(c) of the SOPA, when it is read to give a plain and
ordinary meaning to the word day as the entire 24hour period.8
15. The second proposition is also based on section 16(3)
(c) of the SOPA. Under section 15(1) of the SOPA, the
respondent must lodge the adjudication response with
the Authorised Nominating Body; however, section
16(2)(b) only directs an adjudicator to reject an AR that
is not lodged within the period referred to in section
15(1), which is seven (7) days. It does not direct the
adjudicator to reject an adjudication response because
it was lodged with a person other than the Authorised
Nominating Body as specified in section 15(1). This
reasoning nicely fits the situation where the respondent
in the adjudication application is willing and able to
lodge its adjudication response within seven (7) days,
but the Authorised Nominating Body is not available
and/or open to receive it. Natural justice provides
that the respondent should be allowed to lodge its
adjudication response, but since the Authorised
Nominating Body is not open and consequently the
respondent cannot comply with section 15(1), it would
be just to allow the respondent to directly lodge the
adjudication response with the adjudicator.

sidebar

The Right to Present Ones Case

and the Tactical Abuse of
Process Reducing the Time for
Adjudication Responses to Be
Lodged
16. It is not uncommon for adjudication applications to
be filed for tactical advantages immediately before
public holidays or weekends, thereby reducing time for
respondents to respond. Illustratively, the applicant
lodges its adjudication application on a Friday. The
respondent will have to lodge its adjudication response
within the next seven (7) days, i.e. by the next Friday.
However, if there is a public holiday that falls within
this seven (7) day period, then under the SOPA9 it is
not considered to be a day. The respondent would
technically have until Saturday to lodge its adjudication
response. However, the SMC is not open on Saturday
for the respondent to lodge the necessary documents,
and the respondent would therefore have to lodge the
documents by that Friday. This problem of shortening
the respondents time frames would be aggravated if
the public holiday happens to fall on the last day for
filing, i.e. the following Friday. In such event, based on
SOPA, the respondent is entitled to file its adjudication
response by Saturday. However, as the SMC is not
open during the weekends and as the previous day,
Friday, is a public holiday, the respondent would have
to file its adjudication response by Thursday. This
effectively denies the respondent one full day. Instead
of getting an extra day (i.e. 8 days) to file by virtue of a
public holiday interposing the seven (7) calendar day
response period, the respondent now has only six (6)
calendar days to file the adjudication response.
17.
Furthermore, this timing problem is compounded
by the need to retain counsel. It is important to
note that not all adjudication respondents have
solicitors on retainers, and amongst those who do,
not all have solicitors who are immediately ready to
prepare adjudication responses and adhere to the
strict timelines under the SOPA. Accordingly, it is not
uncommon for litigants to lose at least one day before
they secure solicitors who are able to act on their behalf,
after sieving through those who are conflicted out or
who simply do not have the time and/or resources to
take on the engagement. Amongst those who actually
do take on the job, not all have the luxury of a large

team to service the client. These lawyers and their

clients would greatly benefit from not having their
timelines shortened more than is required by the SOPA.
Moreover, clients may be pleased that the decision
in Mansource may have an impact on reducing fees,
as their lawyers are given more breathing space. It is
market practice that lawyers who take on adjudication
response cases tend to charge at least twice their
ordinary hourly rates because of constrained time
limits under SOPA. Any measure that gives relief to
help clients reduce these rates will allow them greater
access to legal representation and likely function to
decrease the overall costs of adjudication.

Practical Ramifications
18. The decision of the High Court sends a strong message
to the Authorised Nominating Body that it plays a
facilitative role in the adjudication process and should
not, therefore, adopt rules that affect the substantive
rights of the parties. As this case has shown, the SMC
has no authority to reject documents and deem them
lodged the next day simply because they are submitted
after its office hours. In this context, the SMC should
re-consider another of its rules that is likely to be struck
down as breaching natural justice. This is rule 2.1 of
the SMC Rules, which states that all documents must
be lodged by hand.10 Section 37(1) of the SOPA states
that documents may be served, lodged, provided, or
submitted by either (1) personal delivery, (2) leaving
it during normal business hours at the usual place of
business of the person or (3) by sending it by post or
facsimile transmission to the usual or last known place
of business of the person. The obvious tension here
is that the SMC closes at 4:30 pm on weekdays, and
does not open on weekends and public holidays. If
the ruling Tan JC in Mansource is correct, then the two
propositions in W S Steel should kick in simultaneously
to achieve the practicable result that the relevant
documents may be served directly on the adjudicator
by 11:59 pm on the last day of lodgment.

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Conclusion
19.
It has been common practice for lawyers and
their clients to force fit their work within reduced,
conservative timelines established by the SMC. But
Mansource stands for the proposition that shortened
deadlines that are inconsistent with SOPA may
constitute a breach of natural justice. The tactical
employment of early closing times on weekdays
and closures on weekends and public holidays to
further shorten already constricted timelines given to
adjudication respondents is obviously an abuse of the
adjudication process and timelines stipulated by the
SOPA that ought to be evaluated and re-balanced using
sound principles of natural justice.
20. Notwithstanding Mansource, it is prudent for parties
to lodge documents within the timelines stipulated by
the SMC Rules as this case is pending appeal and the
Court of Appeal may reverse the High Courts decision.
Moreover, it is costly to appeal an adjudication
determination to the High Court and/or the Court of
Appeal and, on balance, it may be more economical
to simply pay a higher premium for work to be done
on an urgent basis than to file an appeal. It is hoped,
however, that the Court of Appeal will affirm the High
Courts rejection of this unfairness in the adjudication
process which arbitrarily unbalances the rights of the
parties, prejudices adjudication respondents, rewards
tactical games playing, and breaches the natural rights
of responding parties.

endnotes
1. For instance under section 15(3) of SOPA, the adjudicator is precluded
from considering defences raised by the respondent in the adjudication
response, which were not previously stated in the corresponding
payment response. Such defences, if raised in court or arbitration
would certainly not be excluded by reason of the respondent not raising
such defences prior to the court or arbitration proceeding.
2. For example, in Choi Peng Kum and another v Tan Poh Eng Construction
Pte Ltd [2013] SGHC 272, an adjudication involving adjudication
responses lodged out of time, Justice Woo Bih Li observed, at paragraph
[16], that neither party raised the issue of whether the adjudicator was
wrong in rejecting the adjudication response as out of time.
3. [2014] SGHC 87, at paragraph [29].
4. [2014] SGHC 87, at paragraphs [15] and [23].

5. Lee Wee Lick Terence v Chua Say Eng [2013] 1 SLR 401 at [66][67].
6. WY Steel Construction Pte Ltd v Osko Pte Ltd [2012] SGHC 194, at
paragraph [8].
7. W Y Steel Construction Pte v Osko Pte Ltd [2013] 3 SLR 380, at paragraph
[9].
8. [2014] SGHC 87, at paragraph [15].
9. SOPA section 2.
10. Singapore Mediation Centre Adjudication Under The Building And
Construction Industry Security Of Payment Act (Cap 30b) (Rev Ed 2006)
Adjudication Procedure Rules, Rule 2.1.

Timothy Ng Wai Keong is an accredited adjudicator and arbitrator with the KLRCA and
has also been appointed to the panel of arbitrators of several institutions in Singapore.
He is the managing director of Timothy Ng LLC, a boutique law corporation focusing
on corporate and commercial disputes. Timothys principal areas of practice are
construction, professional negligence, and shareholder disputes. He is frequently
instructed to act as counsel by fellow practitioners and clients and also accepts
appointments as arbitrator and adjudicator. Timothy teaches construction law at the
National University of Singapore where he is an adjunct assistant professor. Timothy
would also like to thank Mr Lee Yu Ming who was a trainee in Timothy Ng LLC for his
assistance in the production of this article.

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decision notes
Capitol Avenue Development Sdn Bhd v Bauer (Malaysia) Sdn
Bhd (24C-5-09/2014)(Capitol Avenue)
UDA Holdings Berhad v Bisraya Construction Sdn Bhd and
MRCB Engineering Sdn Bhd (24C-06-09/2014)(UDA Holdings)

On 31 October 2014, an oral decision of the High

Court of Malaya at Kuala Lumpur (Commercial
Division), was announced by Dato Mary Lim, J.,
in Capitol Avenue Development Sdn Bhd v Bauer
(Malaysia) Sdn Bhd, Originating Summons No.:
24C-5-09/2014, and UDA Holdings Berhad v Bisraya
Construction Sdn Bhd and MRCB Engineering Sdn
Bhd, Originating Summons No.: 24C-06-09/2014.
The written decision had not been released when
this Newsletter was submitted to its graphics and
printing consultants. The following summary is
believed to be accurate, but caution is recommended
until the release of the official written decision of the
High Court.*
The Capitol Avenue proceeding stemmed from an
adjudication administered by the KLRCA between
Sara Timur Bauer JV (Claimant) and Capitol Avenue
Development Sdn Bhd (Respondent).
Capitol
Avenue Development Sdn Bhd filed the originating
summons as plaintiff and named Bauer (Malaysia)
Sdn Bhd as defendant. In relevant part, plaintiff
submitted that CIPAA 2012 was inapplicable to the
payment dispute and the construction contract at
issue because (1) the payment dispute arose before
the operative date of CIPAA 2012 and, similarly, (2)
the construction contract under which the payment
dispute arose was entered into before the operative
date of CIPAA 2012.

The UDA Holdings case also emerged from an

adjudication administered by the KLRCA. In the
adjudication proceeding, Bisraya Construction
MRCB Engineering Consortium asserted claims
against UDA Holdings Berhad. Thereafter, UDA
Holdings Berhad filed the originating summons
as plaintiff seeking, inter alia, to set aside the
adjudication proceedings and/or to have the
adjudication proceedings declared null and void.
In support of its positions, UHA Holdings Berhad
submitted that the payment claims at issue arose
before 15 April 2014 and therefore were not subject
to CIPAA 2012. UDA Holdings Berhad further
submitted that costs relating to extensions of time
are not within the meaning of payment as the
word is defined in section 4, CIPAA 2012.
On 31 October 2014, the High Court orally ruled
that CIPAA 2012 applies to construction contracts
entered into before 15 April 2012 and to payment
disputes arising before 15 April 2012 with section 41
carving out from the application of CIPAA 2012 only
those payment disputes that had been commenced
in court or arbitration before 15 April 2014. As for
the extension of time issue, the court left it to be
resolved in the first instance by the adjudicator.

*This article was compiled from several sources who attended the hearing on 31 October 2014 and kindly
provided summaries from their notes on the oral ruling by the court. Any errors that may occur in this article,
however, are those of the editor.

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happenings

KLRCA CIPAA CIRCULAR 02

CIRCULAR ON KLRCAS RECOMMENDED
SCHEDULE OF FEES (Amended as at 1st August 2014)
The Construction Industry Payment and Adjudication Act
2012 (CIPAA) and Construction Industry Payment and
Adjudication Regulations 2014 (Regulations) came into
effect on the 15th April 2014.
The Schedule of Fees under the Regulations sets out the
standard fees for services and expenses of an adjudicator
as imposed by the Ministry of Works.
The KLRCA is of the view that the schedule of fees under
the Regulations may not be reasonable enough to attract
qualified and experienced people capable of working
under the very tight deadlines imposed by the CIPAA 2012.
The KLRCA highlighted its concerns to the Ministry of
Works that should the scale fee be set too low there is a
high likelihood that the selected adjudicator will try to
negotiate with the parties to agree on a reasonable fee
acceptable to the selected adjudicator, and decline the
appointment if such an agreement cannot be reached.
However, the Ministry of Works did not incorporate our

comments and concerns in the imposition of the standard

fees under the Regulations.
Therefore the KLRCA recommends an alternative
adjudicator fee schedule to reduce the likelihood of
adjudicators declining appointment due to the low fees.
The recommended adjudicator fees takes into account
factors such as the quality of professionalism required of
an adjudicator, the timeline within which an adjudicator
will be required to complete the adjudication as well as the
claimed amount involved in an adjudication.
The adjudicator and parties can agree to adopt the KLRCA
Recommended Schedule of Fees at any time during the
negotiations of the adjudicators terms of appointment
and fees chargeable.
KLRCAs Recommended Adjudicator Fee Schedule is set
out below:

1.1 KLRCAs recommended adjudicator fee schedule

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Amount In Dispute

Adjudicators Fees (RM)

Up to 150 000

8 400

150 001 to 300 000

8 400 + 3.5% of excess over 150 000

300 001 to 800 000

13 650 + 1.3% of excess over 300 000

800 001 to 1 300 000

20 150 + 1.25% of excess over 800 000

1 300 001 to 1 800 000

26 400 + 1.1% of excess over 1 300 000

1 800 001 to 2 300 000

31 900 + 0.7% of excess over 1 800 000

2 300 001 to 2 800 000

35 400 + 0.5% of excess over 2 300 000

2 800 001 to 3 300 000

37 900 + 0.683% of excess over 2 800 000

3 300 001 to 5 000 000

41 315 + 0.65% of excess over 3 300 000

5 000 001 to 10 000 000

52 365 + 0.365% of excess over 5 000 000

10 000 001 to 15 000 000

70 615 + 0.38% of excess over 10 000 000

Over 15 000 000

89 615

happenings

1.2 Adjudicator fees to be paid by the parties as directed by

the adjudicator.

2.3 The expenses covered by the per diem above shall

include the following items:

1.3
Adjudicator fees prescribed in sub-paragraph
1.1 excludes the 10% administrative support fee
prescribed in Schedule III of the KLRCA Adjudication
Rules & Procedure and all taxes as may be imposed by
the Government of Malaysia on the fee earned by the
adjudicator.

2. Expenses
2.1 An adjudicator who is required to travel outside his
place of residence to conduct a site visit and the like
will be reimbursed with an economy class airfare,
reasonable mileage claim (as agreed by both parties) or
as prescribed by KLRCA or any other reasonable fare
for mode of transportation (as agreed by both parties)
whichever is applicable, subject to the submission
of invoice, receipt or in original or such evidence
acceptable to the KLRCA.
2.2 A per diem of RM1800 shall be paid to an adjudicator
who is required to travel outside his place of residence
to conduct a site visit and the like, whenever overnight
accommodation is required. Where no overnight
accommodation is required, a per diem of RM900 shall
be paid.

Hotel accommodation
Meals/beverages
Laundry/dry cleaning/ironing
City transportation (excluding airport transfers)
Communication costs (telephone, fax, internet
usage etc)
Tips

2.4 Expenses to be paid by the parties as directed by the

adjudicator.
A copy of the KLRCA Recommended Schedule of Fees
together with the complete set of the KLRCA Rules &
Procedure can be found at: www.klrca.org

Dated 1st August, 2014.

PROFESSOR DATUK SUNDRA RAJOO

DIRECTOR OF KLRCA

62

happenings

KLRCA CIPAA CIRCULAR 1A

CIRCULAR BY KLRCA ON THE SCOPE OF APPLICATION
OF CIPAA AND THE ADMINISTRATION OF
ADJUDICATION CASES BY KLRCA

The KLRCA through Circular 01 issued on 23rd April

2014 had advised that the KLRCA would administer
adjudication cases in accordance with the position taken
therein.

Given that the issue relating to the scope of the application

of CIPAA 2012 has been determined by the High Court, the
KLRCA will comply and administer adjudication cases in
accordance with the decision of the High Court.

On the 31st October 2014, the High Court in UDA HOLDINGS

BHD V BISRAYA CONSTRUCTION SDN BHD (24C-609/2014) and CAPITAL AVENUE DEVELOPMENT SDN BHD
V BAUER (M) SDN BHD (24C-5-09/2014), had determined
that CIPAA 2012 was intended to apply retrospectively,
namely, subject to sections 3 and 41 of the Act, the Act
applies to every construction contract made in writing
within the meaning of Section 4 of the Act regardless of
when it was made and under which a payment claim is
made.

Therefore the KLRCA will henceforth register and

administer adjudication cases filed with it under CIPAA
2012 provided that the relevant requirements of the KLRCA
Adjudication Rules & Procedure are complied with.

Section 3 provides that CIPAA 2012 shall not apply to a

construction contract entered into by a natural person for
any construction work in respect of any building which is
less than four storeys high and which is wholly intended
for his occupation.
Section 41 provides that CIPAA 2012 shall not affect the
proceedings relating to any payment dispute under a
construction contract which had been commenced in
Court or Arbitration before the coming into operation of
the Act.

63

This Circular 1A supersedes Circular 1 issued on 23rd April

2014 with immediate effect.

Dated this 11th November 2014.

PROFESSOR DATUK SUNDRA RAJOO

Director of KLRCA

happenings
Majestic Hotel, Kuala Lumpur
/ 9 13 August 2014
KLRCA Adjudication Training Programme

The Construction Industry Payment & Adjudication Act (CIPAA

2012), the CIPAA Regulations 2014, and the CIPAA Exemption
Order 2014 became operative as of 15 April 2014.
Regulation 4 of the Construction Industry Payment & Adjudication
Regulations 2014 (CIPAA Regulation) prescribes that
The competency standard and criteria of an adjudicator are as
follows (a) the adjudicator has working experience of at least seven years
in the building and construction industry in Malaysia or any
other fields recognised by the KLRCA;
(b) the adjudicator is a holder of a Certificate in Adjudication
from an institution recognised by the Minister;
(c) the adjudicator is not an undischarged bankrupt; and
(d) the adjudicator has not been convicted of any criminal offence
within or outside Malaysia.
As a result of the operation of CIPAA and the CIPAA Regulations,
it is imperative that there be adequate numbers of well-trained
adjudicators for the KLRCA and stakeholders in the construction
industry may call upon to conduct adjudications.

For the eighth time since the first training programme in

September 2012, the flagship KLRCA Adjudication Training
Programme was conducted on 9 13 August 2014. The venue was
the Majestic Hotel in Kuala Lumpur.
The adjudication training programme continues to focus on CIPAA
2012, but this focus is now supplemented by attention to the
Regulations, the Exemption Order, and the KLRCA Adjudication
Rules & Procedure. The training programme continues to
underscore the form and substance of a well-written adjudication
decision.
The KLRCA awards Certificates in Adjudication in accordance
with Regulation 4(b) to those who pass the written examinations,
thereby evidencing their attainment of competency standard
sand criteria requirements of the CIPAA Regulations.
For the eighth session of the training programme, there were
twenty-eight participants from backgrounds such as law,
engineering, quantity surveying, architecture, and contracting.
Experienced experts in the fields of construction dispute
resolution and adjudication, Ir Harbans Singh, Mr Lam Wai Loon,
and Mr Chong Thaw Sing, conducted the training programme.

In anticipation of the operation of CIPAA and prior to 15 April

2014, the KLRCA had conducted seven training programmes
to train adjudicators and provide a Certificate in Adjudication
to those who successfully passed the examinations given to
participants in the training programmes. Approximately fourhundred participants successfully participated in the previous
seven training programmes and have been certified by the KLRCA
as adjudicators under CIPAA.

64

happenings
Bayview Hotel, Penang / 15 August 2014
Construction Industry Payment & Adjudication Act 2012
(CIPAA 2012) Talk

In light of the operative date of CIPAAA 2012 on 15th April 2014, on

15 August 2014, a Construction Industry Payment & Adjudication
Act 2012 (CIPAA 2012) talk was organised by the KLRCA in Penang
at the Bayview Hotel Georgetown. An enthusiastic crowd of more
than 150 people from all the stakeholders in the construction
industry in Penang crowded the Sri Gangsa Hall to hear Ir Harbans
Singh, Mr Lam Wai Loon, and Ms Lai Jen Li speak on CIPAA 2012.

and questions presented by CIPAA 2012 and the accompanying

Regulations. The apt title of his talk was CIPAA 2012: Issues
on Implementation. Mr Lam Wai Loon guided the audience
through the adjudicatory process contemplated by the CIPAA
Regulations and the KLRCA Adjudication Rules & Procedure in his
discussion titled Understanding the CIPAA Regulations & KLRCA
Adjudication Rules.

Ms Lai Jen Li, the Acting Head of Legal Services of KLRCA,

started the discussion with her talk titled CIPAA The Past,
Present & Future. Ir Harbans Singh then spoke on several Issues

The audience engaged the speakers with thoughtful questions

during the question and answer session that followed the
prepared presentations by the speakers.

Renaissance Hotel, Kuala Lumpur / 5 July 2014

#1 Practical Drafting & Defending of Adjudication Claims

As the official adjudication authority under the Construction

Industry Payment & Adjudication Act 2012 (CIPAA 2012), the
KLRCA designed a new course intended to be experienced as
a practical workshop on drafting and defending adjudication
claims.

in accordance with CIPAA 2012 sections 5 & 6,; starting the

adjudication stage controlled by CIPAA 2012 Part II; selecting
and appointing adjudicators pursuant to sections 21-23; and the
written submissions that are called for in each of these phases of
adjudication under CIPAA 2012.

It was offered for the first time on 5 July 2014 at the Renaissance
Hotel Kuala Lumpur. Close to 80 participants drawn from almost
all sectors of the construction industry affected by CIPAA 2012
attended the first session of this course which is contemplated to
be given periodically through the year.

Mr. Chong Thaw Sing offered Typical Payment Dispute Claim

Scenarios before dividing the participants into six working
groups for workshop sessions. In two separate workshop sessions,
participants were given case scenarios to analyse and discuss in
the first instance with tutors and in a subsequent second session
using a hypothetical case study as the foundation for completing
the CIPAA 2012 forms accurately and correctly.

KLRCAs Director, Professor Datuk Sundra Rajoo, opened the

workshop with a speech welcoming the participants, reviewing
the history of CIPAA 2012, and stressing the critical role in the
adjudication process played by the payment claim and response
submissions.
Ir Harbans Singh and lawyer Lam Wai Loon guided the
participants through a series of presentations that stressed
the practical components of making and responding to a claim

65

In concluding the course, Professor Datuk Sundra Rajoo, Ir

Harbans Singh, Mr. Lam Wai Loon, Mr. Chong Thaw Sing, Mr.
Daniel Tan, Mr. Thayananthan, and Ms. Samrith Kaur convened
an authoritative question and answer session that provided a
fitting ending to an informative and interesting day.

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