Singapore court confirms limited scope for adjudication set aside
In Mataban Development Pte Ltd v Black Knight Warrior Pte Ltd, a respondent-owner failed to serve a valid payment response under the Building and Construction Industry Security of Payment Act ('SOP Act'). The adjudicator thus disregarded the respondent's arguments. The Singapore High Court refused to set aside the adjudicator's decision. The decision confirms there is little leeway for respondents who fail to prepare a fully compliant and fully reasoned SOP Act payment response. This reflects the SOP Act's goal of enabling successful claimants to obtain payment quickly and efficiently. Background: SOP Act adjudication A summary of the SOP Act adjudication process in Singapore can be found in one of our earlier alerts, available here. Facts Black Knight engaged Mataban to carry out certain construction works. A payment dispute arose, and Mataban served a SOP Act payment claim. Black Knight responded, arguing the work was substantially incomplete and that it had incurred significant costs due to delay. Mataban commenced adjudication proceedings under the SOP Act. The adjudicator decided that Black Knight's initial response to the payment claim was not a valid 'payment response' under the SOP Act. He therefore disregarded Black Knight's subsequent response to Mataban in the adjudication (the 'adjudication response'). Under the SOP Act, a respondent must give reasons for withholding funds when it first responds to a payment claim (i.e. in its 'payment response'). Only reasons in the payment response can be considered in the adjudication. Here, the adjudicator found Black Knight's payment response was invalid under the SOP Act. The judgment suggests this was because Black Knight failed to: - expressly identify the relevant payment claim; - state the response amount (i.e. the amount Black Knight was prepared to pay, if any); or - respond to items in the payment claim with reasons. As the payment response was invalid, the adjudicator disregarded Black Knight's adjudication response. He therefore did not consider Black Knight's alleged reasons for non-payment. The adjudicator ordered Black Knight to pay Mataban the sum it sought. Mataban then obtained the court's permission to enforce the adjudicator's determination. Black Knight applied to the court to set aside the adjudication determination and the court's enforcement order. Black Knight argued that, by disregarding its arguments, the adjudicator made a 'jurisdictional error' or breached the rules of natural justice.
Issues The court identified three key issues:
i. What is the court's role in reviewing the adjudicator's decision on the validity of the payment response? ii. Was the adjudicator correct to find that the payment response was invalid?