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Resolving a Controversy: How to Calculate Adjudication Eligibility under the SOPA: H P Construction v Mega Team [2024] SGHC(A) 5
In this article, we discuss the recent decision of the Appellate Division of the High Court of Singapore in Hw P Construction & Engineering Pte Ltd v Mega Team Engineering Pte Ltd [2024] SGHC(A) 5, which clarified the period within which an adjudication application must be filed under the Building and Construction Industry Security of Payment Act 2004 (2020 Rev Ed) (the “SOPA”).
Background of the case
The case arose from a dispute between HP Construction & Engineering Pte Ltd (“HP”) and Mega Team Engineering Pte Ltd (“Mega Team”) over a payment claim for construction works done by HP for the Mega Team. HP served a payment claim on Mega Team on 28 June 2023, and Mega Team responded with a payment response on 12 July 2023. HP was dissatisfied with the payment response and issued a notice of intention to apply for adjudication on 13 July 2023. Mega Team then issued a notice of dispute settlement on 14 July 2023, invoking the dispute settlement mechanism under section 13(2) of the SOPA.
Under section 13(2) of the SOPA, if a respondent issues a notice of dispute settlement within two working days after receiving a notice of intention to apply for adjudication, the parties must attempt to resolve their dispute within seven working days after the date of service of the notice of dispute settlement. This is known as the “dispute settlement period”. If the parties fail to resolve their dispute within this period, the claimant may apply for adjudication within seven days after the end of the dispute settlement period. This is known as the “eligibility period” under section 13(3)(a) of the SOPA.
In this case, the dispute settlement period ended on 23 July 2023, and HP filed its adjudication application on 30 July 2023. Mega Team challenged the validity of HP’s adjudication application on the ground that it was filed out of time, as it should have been filed by 29 July 2023 instead.
The issue before the High Court
The main issue before the High Court was how to calculate the eligibility period under section 13(3)(a) of the SOPA. Specifically, whether the day after the end of the dispute settlement period should be included or excluded from the seven days.
HP argued that the day after the end of the dispute settlement period should be excluded from the seven days, following the general rule of interpretation that where a period is expressed to begin from a particular day, that day is excluded from the computation. Therefore, HP contended that its adjudication application was filed within time, as it had eight days (from 24 July to 31 July 2023) to do so.
Mega Team argued that the day after the end of the dispute settlement period should be included in the seven days, following the specific rule of interpretation that where an act is required to be done within a specified number of days after or from a specified date, both that date and the date on which compliance is required are excluded from the computation. Therefore, Mega Team contended that HP’s adjudication application was filed out of time, as it had only seven days (from 24 July to 30 July 2023) to do so.
The decision of the High Court
The High Court ruled in favour of Mega Team and held that HP’s adjudication application was filed out of time. The High Court adopted a purposive approach to interpreting section 13(3)(a) of the SOPA and considered its legislative history, policy objectives and practical implications.
The High Court noted that section 13(3)(a) was amended in 2018 to introduce a fixed seven-day period for filing an adjudication application after a failed dispute settlement attempt, instead of a variable period depending on when a notice of adjudication was served. The High Court also noted that one of the main objectives of the SOPA was to provide a speedy and efficient mechanism for resolving payment disputes in the construction industry.
The High Court reasoned that excluding the day after the end of the dispute settlement period from the seven days would undermine these objectives, as it would effectively extend the eligibility period to eight days and prolong the adjudication process. The High Court also reasoned that including the day after the end of the dispute settlement period in the seven days would promote certainty and consistency in the application of the SOPA, as it would align with the interpretation of other periods under the SOPA, such as the two-working-day period for issuing a notice of dispute settlement under section 13(2).
The High Court also rejected HP’s argument that excluding the day after the end of the dispute settlement period would be more consistent with the general rule of interpretation and the common law position. The High Court held that the general rule of interpretation did not apply to section 13(3)(a) of the SOPA, as it did not use the word “from” to indicate the start of the seven days. The High Court also held that the common law position was not relevant to section 13(3)(a) of the SOPA, as it was a statutory provision that created a special regime for adjudication.
The High Court also dismissed HP’s argument that including the day after the end of the dispute settlement period would be unfair to claimants, as it would reduce their time to prepare and file an adjudication application. The High Court held that this argument was based on a false premise, as claimants would have already prepared their case during the dispute settlement period and would only need to formalise their application after its expiry. The High Court also held that this argument was outweighed by the need to ensure expeditious resolution of payment disputes and avoid unnecessary delays in adjudication.
The High Court also distinguished HP’s argument that excluding the day after the end of the dispute settlement period would be more consistent with international practice, as it would follow the approach adopted by other jurisdictions with similar security of payment legislation, such as Australia and New Zealand. The High Court held that this argument was not persuasive, as the wording and context of section 13(3)(a) of the SOPA differed from those of the corresponding provisions in other jurisdictions. The High Court also held that this argument was not conclusive, as there was no uniform approach among different jurisdictions on how to calculate the eligibility period for adjudication.
Conclusion
The decision of the High Court in H P Construction & Engineering Pte Ltd v Mega Team Engineering Pte Ltd [2024] SGHC(A) 5 is significant, as it resolves a long-standing controversy over how to calculate the eligibility period for filing an adjudication application under section 13(3)(a) of the SOPA. The decision also provides clear guidance to parties and practitioners on how to comply with the statutory deadline and avoid invalidating their adjudication applications.
The decision also reaffirms the underlying principles and objectives of the SOPA, which are to facilitate prompt payment and speedy resolution of payment disputes in the construction industry. The decision also reflects the purposive approach adopted by the courts in interpreting the SOPA, which is to give effect to its legislative intent and policy goals.
References:
: [2024] SGHC(A) 5
: https://www.elitigation.sg/gdviewer/s/2024_SGHCA_5
: https://www.lexology.com/library/detail.aspx?g=753c3cd0-2ff8-4bb7-beec-849df8276f62
- The High Court clarified that the eligibility period for filing an adjudication application under the SOPA is seven days, starting from the day after the end of the dispute settlement period.
- The High Court adopted a purposive approach to interpreting the SOPA, taking into account its legislative history, policy objectives and practical implications.
- The High Court resolved a long-standing controversy over how to calculate the eligibility period, which had resulted in different approaches by adjudicators and various agencies.
