PAM Northern Chapter pCPD 

CIPAA + ArchitectsAr David CheahAr David Cheah6 Dec 20146 Dec 2014

CONTENTS slides

1.0 INTRODUCTION 1 - 8

1 1 Adjudication : definitions & meaning1.1 Adjudication : definitions & meaning1.2 Type of adjudication, essential features, subject matters1.3 Statutory Adjudication : general features & legislation1.4 Procedural steps1 5 Principal Aims of Adjudication1.5 Principal Aims of Adjudication

2.0 CONSTRUCTION CONTRACTS 9 - 11

2 1 S4 CIPAA 20122.1 S4 CIPAA 20122.2 Type & Nature2.3 Adjudicability

3.0 MISCELLANEOUS ISSUES IN STATUTORY ADJUDICATION 12 - 14

3.1 Commencement 3.2 Contracting out3.3 Parties3.4 Modes of Service

CONTENTS slides

4.0 SCOPE OF SUBJECT MATTER 15 - 18

4.1 Payment & Non-payment Issues4 2 What is payment ?4.2 What is payment ?4.4 Conditional payment4.5 Default provisions in the absence of terms of payment

5.0 IMPACT ON CONSTRUCTION INDUSTRY & CONTRCTING PARTIES, ON 3RD PARTIES & IMPACT OF CIPAA 19 - 21

6.0 PRINCIPAL COSTS 22 - 24

6.1 Cost of adjudication proceedings6.2 Costs of reference6.3 Costs of decision6.4 Costs of KLRCA6.5 Adjudicator’s fees & expenses

7.0 RIGHT TO ADJUDICATE 25 - 32

7.1 Making of Claim 7.2 Response to Claim7 3 D i i f U id P t7.3 Decision of Unpaid Party7.4 Decision to initiate Adjudication7.5 Initiation of Adjudication7.6 Notice of Adjudication

CONTENTS slides

8.0 APPOINTMENT OF ADJUDICATOR 33 - 35

9.0 COMMENCEMENT OF PROCEEDINGS 36 - 42

9.1 Adjudication Claim & supporting documents9.2 Adjudication Response9.4 Adjudication Reply9 5 C d t f Adj di ti di9.5 Conduct of Adjudication proceedings

10.0 JURISDICTION & JURISDICTIONAL CHALLENGES 43 - 49

11.0 MAKING & DELIVERY OF ADJUDICATION DECISION & POST-PUBLICATION OF DECISION 50 - 54

12.0 ENFORCEMENT 55 - 600 O C 55 60

13.0 CONFIDENTIALITY 61 - 62

14 0 IMMUNITY 6314.0 IMMUNITY 63

15.0 CONSOLIDATION OF PROCEEDINGS 64

1.0 INTRODUCTION

ADJUDICATION :DEFINITIONS AND MEANING

1

O S G

DEFINITION BY DEFINITION BYDEFINITION BYB.BENTLEY

DEFINITION BYD. SIMMONDS MEANING/PROCESS

• is a process where an independent 3rd

party is given

A procedure whereby :-

• when a dispute b t t ti

• is a procedure that refers disputes in a contract to an agreed/selected 3rd personp y g

power

• to make an interimdecision

between contracting parties arises

• a neutral person who has no connection

• the 3rd person is independent and impartial

• the 3rd person has a limited• within a short

period of time

on disputes

has no connection with either side

• is engaged to examine the arguments of the

• the 3 person has a limitedamount of time in which to decide or determine

• the decision or• on disputes arising under a contract between the parties

the arguments of the parts, and

• to decide the dispute

• the decision or determination is binding in the interim unless subsequently overruled by parbitration or the courts.

TYPES OF ADJUDICATION 2

COMMON TYPES AD-HOC CONTRACTUAL STATUTORY

3 main types :-

- Ad-Hoc

- Contractual

Also known as ‘Consensual’ Adjudication

Agreed ‘voluntarily’ by the parties

• Arises out of a specific express term or provision of the contract

eg :

- Clause 34 0 PAM

• Mandated by law eg by a specific legislation

eg :

- HGCRA 1996 (Housing- Statutory

Distinct and having different characteristics, procedures and effects

Mode of agreement

- Oral or

- Preferably ‘in writing’

Scope of reference to

Clause 34.0 PAMContract 2006 (with & without quantities)

- Clause 7.2 CIDB Form for sub-contract work

E i i t t

HGCRA 1996 (Housing Grants, Construction and Regeneration Act 1996)

- New South Wales SOPA (Security of Payment Act) 1999Scope of reference to

adjudication of :

- Future disputes; or

- Disputes that have ccrystallised

• Express provision states :

- Scope and nature of disputes

- Procedural issues

Effect of decision/

1999

- Construction Contract Act 2002 (NZ)

- SOPA 2004 (Singapore)

- CIPAA 2012 (Malaysia) Recommended minimum

contents of agreement

- Effect of decision/ determination

• May or may not be a condition precedent to reference to other ADR

( y )

• The Act and Regulations will stipulate :

- scope and nature of disputes

- procedural issues

- effects of decision / determination

- miscellaneous matters

• It prevails over any ‘ad-hoc’ and or ‘contractual’ adjudication arrangement between the parties

COMPLEMENTS ARBITRATION AND/OR 

LITIGATION

3

LITIGATION

SHORT TIME FRAME FROM REFERENCE TO 

DECISION

INTERIM/INTERMEDIATE SOLUTION

ADJUDICATION : ESSENTIAL FEATURES

CAN BE INQUISITORIAL AND ADVERSARIAL IN 

NATURE

NO NEGOTIATIONS INVOLVED

FEATURES

STATUTORY OR CONTRACTUAL

MANAGEMENT OF DISPUTES

INFORMAL & SUMMARY PROCEDURE

CONTRACTUAL PROCEDURE

PROCEDURE

PAYMENTS

4

MATTERS UNDER STATUTE / CONTRACT / PARTIES’ AGREEMENT

EXTENSION OF TIME

ISSUES & SUBJECT

MATTERS OF

VARIATION ORDERS AND VALUATIONS

ADJUSTMENT OF CONTRACT SUM eg. SET 

OFFS, etc

ADJUDICATION

WITHHOLDING / DELAY

VALIDITY OF 

WITHHOLDING / DELAY OF CONSENTS / APPROVALS, etc

ARE WORKS PROPERLY EXECUTED

INSTRUCTIONS

EXECUTED

DISPUTE RESOLUTION PROCESS FOR DISPUTES UNDER CONSTRUCTION

5

UNDER CONSTRUCTION CONTRACTS

IS A JUDICIAL PROCESS AND NOT A JUDICIAL 

PROCEDURE

PROCESS IS MANDATED BY LAW (see next slide)

STATUTORY ADJUDICATION :

GENERAL

DISPUTE REFERRED TO AN AGREED OR SELECTED IMPARTIAL 3RD PARTY

DOES NOT REQUIRE PARTIES’ AGREEMENT 

TO COMMENCE

GENERAL FEATURES

ADJUDICATOR ACTS ON

RIGHTS AND REMEDIES PRESCRIBED AND

ADJUDICATOR ACTS ON ‘FAST‐TRACK’ BASIS AND 

ISSUES OUT ‘ROUGH JUSTICE’

COMPLEMENTS OTHER DISPUTE RESOLUTION 

METHODS eg. ARBITRATION, 

PRESCRIBED AND ENFORCEABLE BY LAW

O S eg O ,LITIGATION, etc

BUILDING & CONSTRUCTION 

HOUSING GRANTS, CONSTRUCTION AND 

REGENERATION ACT 1996 (UK)

6

INDUSTRY SECURITY OF PAYMENT ACT 1999 (NSW)

BUILDING & CONSTRUCTION

CONSTRUCTION CONTRACTS ACT 2002 

(NZ)

CONSTRUCTION CONTRACTS ACT 2004

BUILDING & CONSTRUCTION INDUSTRY PAYMENTS ACT 

2004 (Queensland)

(NZ)

CONTRACTS ACT 2004 (WA)

STATUTORY ADJUDICATION :LEGISLATIONS

CONSTRUCTION CONTRACTS (SECURITY OF PAYMENT ACT) 

2004 (N T it iLEGISLATIONS 2004 (New Territories, Australia)

CONSTRUCTION CONTRACTS ACT 2004 

(Isle of Man)

BUILDING & CONSTRUCTION INDUSTRY SECURITY OF PAYMENTS ACT 2004 

(Singapore)BUILDING & CONSTRUCTION 

(Isle of Man)

INDUSTRY SECURITY OF PAYMENT ACT 2006(Victoria)CONSTRUCTION INDUSTRY 

PAYMENT & ADJUDICATION ACT 2012 (Malaysia)

7

STAGE 1 STAGE 4STAGE 3STAGE 2 STAGE 5

PRELIMINARY STAGE

INITIATION OF ADJUDICATION 

STAGE

APPOINTMENT OF 

ADJUDICATOR STAGE

CONDUCT OF ADJUDICATION PROCEEDINGS 

STAGE

POST‐DECISION STAGE

• S5 to 7

• 3 sub-stages :

• S21 to 23

• 2 sub-stages :

• S9-12, 14, 17, 19, 20 & 24-27

• Part IV, S15-17

• 3 sub-stages :

• S7 and 8

• 2 sub-stages :3 sub stages :

- making of payment claim

- payment response to claim

2 sub stages :

- selection of adjudicator

- appointment of adjudicator

• 3 sub-stages :

- commencement of adjudication proceedings

• 3 sub-stages :

- post publication of decision

- enforcement of decision

2 sub stages :

- decision to initiate adjudication

- which has not p

- decision of unpaid party

j- submissions

- determination

decision

- enforcement of other remedies

been paid

- initiation of adjudication process

PRINCIPAL AIMS OF ADJUDICATION 8

IMPROVED PAYMENT IMPROVED

PROVIDE DEFAULT

EXPEDITE DISPUTE

MAKE RECOVERY PAYMENT

PROCESS

IMPROVED CASH FLOW

DEFAULT PAYMENT

MECHANISM

DISPUTE RESOLUTION

OF PAYMENT EFFECTIVE

• for Construction Contracts (as defined in S4 CIPAA)

• to prohibit conditional payment terms eg.

• in the absence of express payment provisions in the construction

• adjudication as an alternative dispute resolution

• upon the conclusion of adjudication

t idC )

• to facilitate :

- regular and

- timely

eg

- pay if paid

- pay when paid

- back to back

co st uct ocontract

• to provide default payment terms

eso ut oprocedure that is :

- speedy

cheaper

• to provide remedies for the recovery of payment

payment- cheaper

2.0 CONSTRUCTION CONTRACTS

CONSTRUCTION CONTRACT (S4 CIPAA 2012)9

CONSTRUCTION WORK CONTRACT CONSTRUCTION CONSULTANCY CONTRACT

MEANING CONSTRUCTION WORK : SCOPE MEANING

CONSTRUCTION WORK : SCOPE

SERVICES COVERED

TYPES OF DISPUTES

• Contract to carry out ‘Construction

• See next page : Type & Nature

• Contract to carry t C lt

• Planning & f ibili d

• Professional • See next page : out Construction Work’

Type & Nature out Consultancy Services by consultants and sub-consultants

• Services to be in relation to

feasibility study

• Architectural Work

• Engineering

S i

negligence

• Generally complex

• In UK adjudication procedure to

Type & Nature

relation to ‘Construction Work’ accounting services provided for the

• Surveying

• Exterior & Interior Decoration

• Landscaping ; and

procedure to follow the Model Adjudication Procedure published by the Construction I d t C ilfor the

construction firm is excluded

• Project Management Services

Industry Council (CIC)’

CONSTRUCTION WORK : TYPE & NATURE S4 CIPAA 2012

10

TYPE OF WORK NATURE

PROCUREMENTPREPARATORY/INTEGRAL/TEMPORARY WORKS

PERMANENT WORKS

• Construction

• Extension

For Categories (a) to (e) including :

- Site clearance

1. People’s Park Chinatown Development Ltd v Schindler Ltd (S) Pte Ltd

For Categories (a) to (e) for :

- Construction materials • Extension

• Installation

• Repair

• Maintenance

• Renewal

• Renovation

- Soil investigation and improvement

- Earth-moving - Excavation - Laying of foundation - Site restoration; and - Landscaping

Question : fixtures & fittings ?

Schindler Ltd (S) Pte Ltd (1993) : Though the escalators were held down by their own weight, CA held they were permanent features

2. Gibson Lea Retail Interiors Ltd v Makro Self Service Wholesalers Ltd

- Equipment - Labour

(1) Herbert Construction Co Ltd v Reinforcing Steel & Mesh Ltd (2013) : fabrication of customised steel mesh for specific construction project is “construction work”

• Alteration

• Dismantling

• Demolition

Question : fixtures & fittings ?

Answer : it does not depend on the method of fixing but on the existence of an intention to incorporate the components and materials as part of the works.

(2001) : supply & installation of shop fittings for stores are not fixtures

(2) RA Pte Ltd v RB Company (2009) : Claimant not registered with Singapore CIDB but can recover payment for its steel fabrication work

CATEGORY (e)CATEGORY (d)CATEGORY (c)CATEGORY (b)CATEGORY (a)

• Building

• Edifice

• Road

• Harbour works

• Drainage work

• Irrigation work

• Electrical work

• Mechanical work

• Bridge

• Viaduct• Edifice

• Structure

• Wall

• Fence

• Chimney

• Harbour works

• Railway

• Cableway

• Canal

• Aerodrome

• Irrigation work

• River control work

• Mechanical work

• Water work

• Gas work *

• Oil work *

• Petrochemical work *

Viaduct

• Dam

• Reservoir

• Earthworks

• Pipeline

• Sewer

• Aqueduct

Whether constructed :

1. Wholly or partly

2. Above or below ground level

• Telecommunication work

(* include pipework)

• Culvert

• Drive

• Shaft

• Tunnel

• Reclamation work

ADJUDICABILITY 11

ADJUDICABLE (S 2 & 4 CIPAA) NOT ADJUDICABLE (S 3 & 40 CIPAA)

CONSTRUCTION CONTRACT

TERRITORIAL JURISDICTION

PARTIES COVERED

EXCLUDED UNDER SECTION 3

EXEMPTED UNDER SECTION 40

• Includes :-

1. Construction work contract

• Construction work carried out :

1. wholly or 2. partially

• All construction contracts in private sector

• All contracts in

• Only to ‘natural person’ i.e. an individual and not a juristic person

• Small & simple contract for policy consideration, processes in the Act is technically demanding, & steps may

• By whom : Minister in charge of Works

• 2 Forms : S40(a) : any person/ class of

persons contract

2. Construction consultancy contract

• Form : Made ‘in iti ’

p y

in Malaysia

eg. Fabrication of oil rig partly, those in Malaysia is covered

public sector :

1. Federal Government

2. State Government

be overlooked & hence prejudiced

• For construction work for any building

• Not engineering infra works

• Building to be less than 4 storeyshigh, basements are considered storeys (Mezzanine floor?) no upper

[person = corporation and natural person, class of persons = persons belonging to a particular profession, trade or sector in the construction industry]

S40(b) : Any contract matterwriting’

• Precondition : valid contract under Malaysian Law

is covered

• Includes :-

1. Sabah 2. Sarawak 3. West Malaysia

Government

• Also include :

1. Government Depts

2. GLCs

storeys (Mezzanine floor?), no upper bound to contract value, floor space or height

• Building must be wholly intended for his occupation i.e. not for rent, lease, sale, etc

• Occupation is an “on-going’ event –

S40(b) : Any contract, matter, transaction or any class

• Extent : 1. From all provisions, or 2. From any provisions

• Power exercised : upon considering the recommendations2. GLCs

3. Statutory bodies

Occupation is an on going event Westfields Construction Ltd v Clive Lewis (2013)

• Consultancy services by individuals for his personal use & not for commercial purpose

• Edenbooth Limited v CR8

considering the recommendations of KLRCA : - Minister’s power not unfettered,

must be reasonable - Consultative process

• Right : to prescribe terms and conditions eg. Exemption for a Edenbooth Limited v CR8

Developments Limited (2008) : a company cannot be a residential occupier

prescribed period of time or for some government or national policy

• Mode : by order published in the Gazette

3.0 MISCELLANEOUS ISSUES IN STATUTORY ADJUDICATION

MISCELLANEOUS ISSUES IN STATUTORY ADJUDICATION (SA)

12

STATUTORY ADJUDICATION (SA)

COMMENCEMENT OF SA

DESCRIPTION OF PARTIES

CONTRACTING OUT OF CIPAA

MODES OF SERVICES OF NOTICES AND

DOCUMENTS : UNDER SA

• Governing Provision

• Date : to be decided by…

M th d b

• Any express provision prohibiting contracting out

• Possible under the

• Parties variously described under different stages of adjudication

• Governing Provision

• Scope : Sets out the procedures for the service under the SA :• Method : by

notification in the ‘Gazette’ or ….

Doctrine of Freedom to Contract ?

• Appears not ibl if CIPAA i

• Stages involved :

1. During contract payment stage

2 During adjudication

under the SA :

1. Notices; and

2. Other documents

• Mandatory requirementspossible if CIPAA is construed as a whole

• Any other way ? By seeking Minister’s

2. During adjudication stage

3. During enforcement of Adjudicator’s decision stage

y

seeking Minister s exemption

decision stage

STAGE DESCRIPTION OF PARTIES REMARKS

13

STAGE DESCRIPTION OF PARTIES REMARKS

1. During Contract Payment Stage NON-PAYING PARTYUNPAID PARTY S4

2. During Adjudication Stage RESPONDENTCLAIMANT S4

3. During Enforcement Stage PLAINTIFF * DEFENDANT *

(Party in whose favouradjudication decision was made) **

(Party against when adjudication decision was made) **

* Terms used where applications made to H. Ct for either stay (S16) or enforcement (S28)

** For enforcement of other remedies by S29 and 30

• Chart based on, G BayleyG.Bayley“Adjudication in New Zealand’

MODES OF SERVICES OF NOTICE AND DOCUMENT (S38 CIPAA)

14

AND DOCUMENT (S38 CIPAA)

PERSONAL DELIVERY (S38(a))

DELIVERY BY POST (S38(c))

DELIVERY AT PLACE OF

BUSINESS (S38(b))

OTHER MEANS (S38(d))

1 P l d li 1 L i t t ’ 1 Sent by registered

WHAT IS A DOCUMENT ?

S38 “ ” i l d 1. Personal delivery

2. To the party

• Acknowledged by the party, date & time of service,

1. Leaving at party’s usual place of business (i.e. the company)

2. During party’s normal business

1. Sent by registered post

2. To party’s usual or last-known place of business

• Any other methods agreed by parties eg. fax, e-mail, etc

• Also any of the modes in (a), (b) & (c)

t ith t di th t

S38 : “party” includes a company

• S350 Companies Act 1965 (CA1965) : “A document may be

d,

name & signature

• If signing is refused, record the circumstances of

normal business hours

• Written acknowledgment attested with the company stamp

• Most convenient mode

• Post office records offer essentially conclusive

notwithstanding that the contract provided for a particular mode of service

• Agreement to be ‘in writing’

served on a company by leaving it at or sending it by registered post to the registered office of the Company”

the situation company stamp, signatures & name of person receiving documents on behalf of the

evidence of service

writingp y

• S4 CA1965 : document includes summons, orders & other legal process, & notice or register.

intended recipient.“Legal process” to include ejusdemgeneris notices & documents under CIPAA.

4.0 SCOPE OF SUBJECT MATTER

SCOPE OF SUBJECT MATTER(Payment and Non-Payment Issues)

15

PAYMENT ISSUES NON-PAYMENT ISSUES

PROHIBITION OF CONDITIONAL PAYMENT

ADJUDICATION OF PAYMENT DISPUTES APPLICABLE PROVISION

(S b ti 27(2))FORM AND TIMING

(“Pay when paid”) (S35) (Parts II to IV)

• Prohibits all conditional payments terms in construction

• Main subject matter of Act

(Sub-section 27(2))

• Precondition : By agreement

DEFAULT PAYMENT

terms in construction contracts

EXAMPLES OF ISSUES

agreement between parties

• Nature : To extend adjudicator’s jurisdiction

• Claims such as :DEFAULT PAYMENT PROVISIONS (S36)

• Default provisions in the absence of

• Timing : Only after adjudication proceedings have started

C a s suc as

1. Extra-contractual/ Common Law

2. Ex-gratia

• Non Payment Issues eg:in the absence of express terms of payment in construction contracts

• Non Payment Issues eg:

1. Extension of time and damages

2. Liens

3. Technical issues

4. Site possession issues, etc

WHAT IS PAYMENT 16

EXCLUSIONWHAT IS INCLUDEDDEFINITION (S4)

• Payment for : • Progress/Interim payments

Pa ments on Pen ltimate and Final Certificates

• Payment under express terms of construction contract but not for actual work done/services rendered eg :

1. Work done i.e. construction work, or

2. Services rendered i.e. consultancy service

• Payments on Penultimate and Final Certificates

• Tiong Seng Contractors (Pte) Ltd v ChuanLim Construction Pte Ltd (2007) SGHC142- Final claim from earthworks subcontract :

$481,156 - Main contractor paid S$210,554, balance

1. Loss and expense

Note :

(a) Australia & New Zealand case laws uphold claims for extended costs due to prolongation of the contract period. These are costs which inevitably arise from carrying out the work It is not

• Such payment only if :

1. The work done or services rendered

2. Are stated as express

Main contractor paid S$210,554, balance S$270,602

- Adjudication decision : S$182,542 - Main con took out OS to set aside decision.

The Act does not apply to “final claims”, adjudicator no jurisdiction

inevitably arise from carrying out the work. It is not necessary that every amount claimed in the payment claim can be directly linked to a physical task involved in the construction of the building or structure. Cash flow was intended to be protected by the Act & it is to be interpreted so as to achieve its object of speeding up payments.

terms

3. Under a construction contract

• Proviso : Unless the default i i f S36 l

H. Ct : progress payments include “final payments” on a purposive construction of the Act. It can only be excluded if expressly provided in the Act

George Developments Ltd v CanamConstruction Ltd (2006), approving NSW’s decision of Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd (2004)

(b) UK Authorities

- Balfour Beatty Construction Ltd v London provisions of S36 apply

(S36 : absence of express terms of payment)

• Payment for varied work/changes

• Payment for :

1. Prime Cost (PC) Sums

2. Provisional Sums

Borough of Lambeth (2002) - Try Construction Ltd v Eton Town House

Group Ltd (2003)

items for site preliminaries & site overheads are claimable where the contract clearly envisages such claims being made as part of the progress claim process

3. Contingent Sums

4. Retention Sums, etc

• Pre-condition : Must be –

1. Expressly provided for in construction contracts

claim process

2. Advance payment ; etc

• Extra-Contractual/Common Law Payment claims eg : 1. Quantum Meruit2. Under S71 Contracts Act 1950; etc

• Claims founded on implied terms contracts

2. Must fall within the scope of CIPAA• “Ex-gratia’ claims

• Miscellaneous issues eg. abortive work, etc

• Damages for breach of contract : Quasar Constructions NSW Pty Ltd v Demtech Pty Ltd (2004)

CONDITIONAL PAYMENT17

APPLICATION AND TYPES

DEFINITION AND FORMS UNDER S35(2) REASONS FOR S35 EFFECTS OF S35

PROHIBITION OF CONDITIONAL PAYMENT

(“Pay when paid”) (S35)

Generally apply to :-

1. Sub-contractors eg. Domestic, Nominated, etc.

2 Main Types :-

Type I – S35(2)(a) where :-

1. The obligation of payer to

To :-

1. Curb the pervasive unfair practices in industry

S35(1) :-

1. Renders void any conditional payment provision

( Pay when paid ) (S35)

• A (main contractor) pays B (subcontractor) when 3rd party C (employer) pays A :-Firma C-trade v Newcastle Protection & Indemnity (1990)

2. Consultants, sub-consultant

3. Others e.g. Suppliers, etc.

Type of clauses :-1 ‘P if id’

1. The obligation of payer to the payee

2. Is conditional on the payer having received payment from a 3rd party e.g. principal

industry

2. Improve the cash flow risk amongst parties

3. Improve cash flow especially down the

p

2. In a construction contract

3. Such provision must be in relation to payment

R th t l l

• Cases :-(1) Midland Expressway Ltd

v Carillion Construction Ltd (No.2)(2005) : “employer is entitled to be paid” = “employer is” “paid” clause is1. ‘Pay if paid’

2. ‘Pay when Paid’ 3. ‘Back to Back’

Effect : 1. Cash flow risk

transferred to sub-

Type II – S35(2)(b) where :-

1. The obligation of the payer to pay the payee

2 Is conditional upon the :

‘supply line’

4. Ensure that ‘one-sided’ contractual provisions regarding payment are not unilaterally imposed and enforced

Reverses the current legal position as decided in cases such as :

1. Pernas Otis v YTL2. Asiapools v IJM

paid , clause is prohibited    

(2) J B Leadbitter & Co. Ltd v Hygrove Holdings Ltd (2012) : “ contractor was to be paid sums due under thetransferred to sub-

contractors, etc.

2. Generally, literally construed by Courts

2. Is conditional upon the : - availability of funds, or - drawdown of the

payer’s financing facilities

and enforced

5. Ameliorate the effects of ‘economic’ duress in the industry

Practical effect : 1. All such express clauses

in existing contracts void and unenforceable

2. All such express clauses

paid sums due under the contract only when sufficient funds had been paid by another party into an escrow account”

(3) F T Company v F U Pte Ltd (2008) :will have to comply with

S35 to be effective

3. Default provisions of S36is effected.

Ltd (2008) : “pay when paid” clause

(4) O S Pte Ltd v O T Pte Ltd (2009)BUT “a contract which contains certain procedural requirements which requirerequirements which require the Claimant to serve a notice or take some steps before a payment claim is made is not repugnant” 

DEFAULT PROVISIONS IN ABSENCE OF TERMS OF PAYMENT (S36)

18

SCOPE : S36(1) MANNER OF VALUATION OF AMOUNT TO BE PAID

FREQUENCY OF PROGRESS PAYMENTS S36(3)

DUE DATE FOR PAYMENT UNDER S36(4)

Deals with default provisions on terms of payment in a ‘Construction Contract’

C

PURSUANT TO S36(1)

S36(1) : right to progress S36(2) : consultancy

Governing provision : S36(3)

Timetable : 1. For Construction

Work : Monthly

Governing provision : S36(4)

Due date for Payment :

1 Within 30 calendar

PURSUANT TO S36(2)

Covers : 1. Construction Work 2. Consultancy Services

Default Provisions : 1. Shall be applicable 2 Unless otherwise

S36(1) : right to progress payment at a value calculatedby reference to :

1. Contract Price : S36(1)(a) - % completion of the work

S36(2) : consultancy services, design & build contracts

Used where matters in S36(1)(a) to (d) are absent

Work : Monthly

2. For Consultancy Services: Monthly

3. For Supply Contracts: Upon

1. Within 30 calendar days

2. Time to run from date of receipt of invoice

2. Unless otherwise agreed by parties

The only clause in CIPAA where the term “progress payment” is found

work 2. Any other rate specified in

the Contract : S36(1)(b) 3. Any variation agreed by the

parties for a adjustment of 1 and 2 above: S36(1)(c) – variation has to be instructed per

By reference to : 1. Fees set by relevant

regulatory board : S36(2)(a), or

2. In absence of 1, ‘f i ’ bl

delivery of Supply Items

to be instructed per contract terms

4. Diminution in value / reasonable cost of rectifying defect / non-conformance : S36(1)(d) –

‘fair’ reasonable rates / prices prevailing in the construction industry. A claim for work to be valued on a fair & reasonable price has to be sufficientlyto be sufficiently particularised : S36(2)(b)

3. fees for architects & engineers can be computed per statutory

- Estimated reasonable cost, does not require Respondent to actually incur the cost, so long as there is a basis for making reasonable estimate

Cost of rectification

R d t i titl d t t

Set‐offs & Counterclaim

computed per statutory scale of fees published by the Board of Architects or Board of Engineers

making reasonable estimate of the eventual quantum

- The diminution in value, Respondent seeks a reduction on the basis that it represents a lower value

Respondent is entitled to set-offs in relation to defects & counterclaims, not set-offs for back charges or counterclaim for liquidated damages

5.0 IMPACT ON CONSTRUCTION INDUSTRY & CONTRACTING PARTIES ON 3RD PARTIES &PARTIES, ON 3 PARTIES & IMPACT OF CIPAA

IMPACT ON CONSTRUCTION INDUSTRY AND CONTRACTING PARTIES

19

CONSTRUCTION CONTRACTORSEMPLOYERSSUB-

CONTRACTORSINDUSTRY CONTRACTORSEMPLOYERS CONTRACTORS, ETC

• Alter the payment culture

• Change attitude towards payment issues

• Ameliorate the harsh and pervasive risk

• Generally as for contractorsculture

• Permit a more even allocation of payment risks

• Stop unfair and

payment issues

• Enforce a fairer allocation of risks despite dominant position

and pervasive risk allocation imposed on them by employers

• Allow receipt of regular and timely payment

contractors

• Allow enforcement of payment in the absence of express provisions in the sub-contract• Stop unfair and

pervasive practice of constricting cash flow in the supply line

• Improve quality of work f

• Compel mandatory payment of the amount due to the contractor with effective sanctions

f

• Improve their cash-flow

• Enable speedy resolution of payment disputes cheaply

• Develop a healthy and professional body/corpus of downstream suppliers/sub-and professionalism

• Minimise payment disputes from going to arbitration, litigation, etc

• Improve professional and good governance in administrating payments

• Eradicate the delinquent and recalcitrant

through adjudication

• Allow statutory mandated recovery of payment after adjudication

suppliers/subcontractors effectively supporting the upstream players/parties

employers

• Improve quality of work / finished products

j

• As for employers in regard to their obligations to their sub-contractors

IMPACT OF CIPAA ON THIRD PARTIES 20

CONSTRUCTION ADJUDICATORSCLAIMS

CONSULTANTS/ COURTSPROFESSIONALS ADJUDICATORSCONSULTANTS/ LAWYERS

COURTS

• Payment for consultancy work undertaken :

• New/increased opportunities :

• New work opportunities

• Need to maintain

• Need to be ‘educated’/updated on the

hil h1. Easier to receive; and

2. In time

3. remedies for default available through CIPAA

1. for adjudication support work

2. to become adjudicators

• For lawyers :

1 New/increased

competency, integrity and professionalism

• Statutory immunity against :

1 any action/suit

philosophy, aims/objectives, implementation, etc of adjudication

• Necessity to :CIPAA

• For valuation and certification role

1. Need to improve professionalism and

d ti

1. New/increased opportunities

2. For consequential litigation work eg. Applications for stays, enforcement, etc

1. any action/suit

2. provided acting in ‘good faith’

1. recognise the differences between adjudication and other ADR methods

2. give full effect to CIPAAgood practice

2. Default – Possible claims in :

- Breach of contract

Tort of Negligence

• Liability for default –possible claims for :

1. Breach of Contract

2. Tort of Negligence

• Must be prepared for an increase in adjudication –generated litigation

- Tort of Negligence

• Necessity to get P.I. insurance

• Opportunity to :

1 Become adjudicators1. Become adjudicators

2. Do adjudication support work

IMPACT OF CIPAA : MISCELLANEOUS ISSUES 21

MISCELLANEOUS ISSUES

CONTRACT ADMINISTRATION

CONTRACT DOCUMENTATION

• Terms of all construction contracts

1. Review and revised

2 To conform with CIPAA

• Contract administration issues that are affected by CIPAA are mainly :

1. Payment

• Owner’s compliance issues :

1. Availability of funds/cash-flow

2. Administration of payment process2. To conform with CIPAA

provisions

• Terms that contradict/depart from CIPAA to be removed/revised eg ;

2. Variations

• Necessity to ensure :

1. Claims are properly

process

3. Awareness and compliance with CIPAA

• Miscellaneous removed/revised eg ;

1. Conditional payment terms

2. Restricting right to adjudication

reviewed, processed, certified and honoured in compliance with CIPAA

2. Proper record/documents are generated and available

issues/challenges :

1. Adjudication of non-payment issues

2. Adjudication of complex and adjudication

3. Pre-conditions to adjudication, etc

• Terms of sub-contractors to

generated and available

3. Proper procedures are set and followed to obviate default

j pvalue wise sizeable disputes

3. Solvency of the parties

4. Possibility and effect of ‘evidence-ambush’be aligned with those of

Main Contractor to conform with provisions of CIPAA

• Good contract administration practices are adopted and followed

evidence-ambush

5. Consolidation of adjudication

6. Problems of claimants acting in consort

7. Attitude of the courts

6.0 PRINCIPAL COSTS

ADJUDICATION : PRINCIPAL COSTS

22

ADJUDICATION : PRINCIPAL COSTS

COSTS OF ADJUDICATION PROCEEDINGS

(S18 CIPAA)

COSTS OF DECISION

COSTS OF REFERENCE

MISCELLANEOUS (S18(1)

KLRCA OTHER JURISDICATION

• 2 categories :

1. Costs of reference; and

2. Cost of decision

• Nature :

- Parties’ costs involved in the adjudication proceedings

• The adjudicator :

1. shall order the “costs to follow the event’ (no discretion), and

• Nature :

- Adjudicator’s fees and costs (direct and indirect costs)

T

Fees & expenses as appointor & administrator of the matter

• SOPA (Singapore) Adjudicator has power to determine which

t h lldecision• Types :

1. fees of lawyers/ representatives

2. fees of expert witnesses,

2. fix the quantum of costs to be paid (has discretion)

• Effect :

1. Adjudicator has no

• Types :

1. Direct costs – fees and expenses of the Adjudicator

party shall pay cost of the adjudication & the amount of contribution by each party. The

advisors, etc

3. costs of meetings, venue, transcription (if any), etc

4. costs for the preparation and

discretion

2. So long as the party is successful, it can recover the costs

• S18(2) renders any

2. Indirect costs –fees/costs relating to the appointment of the Adjudicator by 3rd party or NB (A

p ycost of adjudication is limited to adjudication application fee & the adjudicator’spreparation and

defence of the claim

5. costs of documentation, investigation

• S18(2) renders any prior agreement between the parties as to the issue of costs that is inconsistent with S18(1), void

or NB (A Nominating Body)

the adjudicator s fee. No provision to award the successful party his costs (same

S )expenses

6. administrative costs

7. other incidental costs

as NSW)

23

TYPE OF DISPUTE

QUANTUM INVOLVED

COMPLEXITY OF THE DISPUTE

ADJUDICATOR’S FEES ARE

DETERMINED BYDETERMINED BY

ABILITY AND EXPERIENCE OF THE

3RD PARTY

EXPERIENCE OF THE ADJUDICATOR

SPECIALIST INPUT

ADJUDICATOR’S FEES AND EXPENSES (S19 CIPAA)

24

AGREEMENT ON ADVANCE SECURITYPARTIES LIABILITY ENTITLEMENT TO AGREEMENT ON FEES ADVANCE SECURITYPARTIES LIABILITY

FOR THE FEES FEES OR EXPENSES

APPOINTMENT APPOINTMENT • S19(4) : A mandatory

(see use of word • Entitled only upon delivering

the decision within the time • Parties liable under

S19(3) i.e. ‘Jointly APPOINTMENT

BY PARTIES BY KLRCA DIRECTOR

‘shall’).

• The quantum & timing to be directed : established by the adjudicator

period stated in S12(2)

• Failure to deliver : S19(6)

• Adjudicator not entitled to fees or expenses

• Exception :

and Severally’

• Release of adjudication decision subject to S19(5) i.e. contingent on ‘full’

• S19(1) : Parties and Adjudicator

• KLRCA’s standard fees adjudicator

• Amount –

1. reasonable proportion of total fees

p

1. When delay in delivery of decision due to failure of parties to comply with S19(5) i.e. deposit full payment with KLRCA or

contingent on full payment of fees and expenses to be deposited with Director of KLRCA

Adj di t h

and Adjudicator free to agree

• Failure to agree : S19(2) applies i.e. KLRCA’s

standard fees shall apply

• See S23(2) and 32(b)

fees

2. in ‘equal’ shares

3. to be deposited to Director of KLRCA

with KLRCA, or

2. Where legally challenged and struck down by courts

• Q : if the adjudicator produces an unenforceable decision, is

• Adjudicator may have a ‘lien’ over his decision

standard fees shall apply

,he entitled to his fees ? PC Harrington Contractors Ltd v Systech International Ltd (2012) - the conduct of the proceedings was “below the standards which are required” to enable the decision to be enforced. Adjudicator not entitled to his fees.

7.0 RIGHT TO ADJUDICATE

ADJUDICATION OF PAYMENT DISPUTES : RIGHT TO ADJUDICATE

25

WHO HAS THE DEFAULT IN PRE CONDITIONS

“DUE DATE” FOR WHO HAS THE RIGHT ? PAYMENTPRE-CONDITIONS PAYEMNT

• Only an “unpaid party” (S4 CIPAA)

• Not defined expressly in CIPAA

• Occurs where either :

- whole amount claimed

f l i d

• Construction contract under CIPAA must be valid- party who claims

payment of a sum

- which has not been paid

h ll tl

• To be decided by necessary implication

• Depends on 2 circumstances

- part of amount claimed is not paid by “due date”

• No payment certificate was issued per contract, th t hi h th

be valid

• “Non-paying” party fails to pay by “due date”

• Such default is for- wholly or partly

- under a construction contract

circumstancesthe amount which the contractor considers should have been certified had the certificate been promptly issued

Such default is for either whole or part of amount claimed

• Provided limitation has not set in

PRESENCE OF EXPRESS

DATE/PERIOD FOR PAYMENT IN

CONSTRUCTION

ABSENCE OF EXPRESS DATE/PERIOD FOR

PAYMENT IN CONSTRUCTION

CONSTRUCTION CONTRACT

CONTRACT

• Eg. CI30.1 PAM Contract 2006, CI28 6 JKR Form

• Default provisions of S36 CIPAA applicable CI28.6 JKR Form

203 & 203A i.e. S36(3) and 36(4)

26

STAGE 1 STAGE 4STAGE 3STAGE 2 STAGE 5

PRELIMINARY STAGE

INITIATION OF ADJUDICATION 

STAGE

APPOINTMENT OF 

ADJUDICATOR STAGE

CONDUCT OF ADJUDICATION PROCEEDINGS 

STAGE

POST‐DECISION STAGE

• S5 to 7

• 3 sub-stages :

• S21 to 23

• 2 sub-stages :

• S9-12, 14, 17, 19, 20 & 24-27

• Part IV, S15-17

• 3 sub-stages :

• S7 and 8

• 2 sub-stages :3 sub stages :

- making of payment claim

- payment response to claim

2 sub stages :

- selection of adjudicator

- appointment of adjudicator

• 3 sub-stages :

- commencement of adjudication proceedings

• 3 sub-stages :

- post publication of decision

- enforcement of decision

2 sub stages :

- decision to initiate adjudication

- which has not p

- decision of unpaid party

j- submissions

- determination

decision

- enforcement of other remedies

been paid

- initiation of adjudication process

MAKING OF CLAIM27

EFFECTCONTENTS

OF PAYMENT CLAIM

FORM OF PAYMENT

CLAIMNATUREGOVERNING

PROVISIONMODE OF SERVICE

TIMING OF SERVING

• S5 : Payment Claim consisting of :-

• Discretionary up to “Unpaid Party”

• Must be within Li it ti P i d

• S5(2) : “In Writing”

• Term not defined

• Reference to case

• S5(2)

• Use of “shall” connotes

d t

• Defines the jurisdiction of the Adjudicator

• S38

• 4 main forms as S38(a) to (d)

- S5(1)

- S5(2)

• “Unpaid” Party” may serve payment claim on “Non-Paying” party

Limitation Period (Limitation Act/ ordinance)

Reference to case law/ authorities for elucidation

• Use of word “shall” connotes mandatory requirement

mandatory requirement

• Detailed requirements :

(d)

o ay g pa ty

S5(2)(a) S5(2)(b) S5(2)(c) S5(2)(d)• Use of word ‘may’

makes it discretionary

• Amount claimed - broad basis of the

• Statement that Payment Claim is made under CIPAA 2012

• Describe the work or service (any

• Identify cause of action – money not

• Ultimately up to “unpaid Party”

computation in support of the amount claimed eg. quantity & rates if lump sum (% completed)

- to include payment

(a) Australia Position- alerts the party receiving the

payment claim to the possibility that adjudication proceedings may be triggered in the event that the payment claim is not settled :

( ystage completion payment?)

• To which payment relates

ypaid on due date

• Stipulate contract provision under which made

(a) Date of contract & to include payment certificate

• Due date for payment (a period from date of presentation of a payment certificate or from date of issue of a

payment claim is not settled : Leighton Contractors Pty Ltd v CampbelltownCatholic Club Ltd (2003)

(b) SingaporeNo need to declare : SungdoEngineering & Construction (S) Pt Ltd It l Pt Ltd

brief work description/project title

(b) Clauses on payment

(c) Clauses onfrom date of issue of a cert.) This is the date when the entitlement to be paid arises

(S) Pte Ltd v Italcor Pte Ltd (2010) & also in Lee Wee Lick Terence v Chua Say Eng(2012)

(c) Clauses on entitlement of payment on due date

RESPONSE TO CLAIM 28

MANNER OF SERVICEEFFECT

FORM OF PAYMENT

RESPONSE

TIME TO RESPOND

GOVERNING PROVISION

NON-PAYING PARTY’S OPTION

• S6 : Payment Response S6(3) : - • S6(2) : “In Writing” • Defines jurisdiction of• S38 S6 : Payment Response

is a statement of the non-paying (NP) party made in response to a payment claim issued by the unpaid party. If there is a set-off for defects, NP must assert

S6(3) :

• Within 10 working days

• Date from which time counted : From receipt of “Payment Claim”

• Mandatory requirement

S6(2) : In Writing

- Must be strictly adhered to : J L Pte Ltd v JM Pte Ltd (2009) : Respondent argues “writing” suggested the medium must allow itself to be immediately readable & that DVD did not qualify because it required both computer hardware & software before it could be read. Adjudicator di i d t ti “W iti ” i t d d t

• Defines jurisdiction of Adjudicator • 4 main types

S38(a) to (d)

NP must assert otherwise this would effectively preclude the adjudicator to consider this defence in the subsequent proceedings. Adjudicator has no power to allow

• If NP party fails to respond :-

- S6(4)

- deemed to have disputed entire payment claim

dismissed contention. “Writing” is extended to submission in any mode which can be reasonably accessed through a computer

• Presumably a mandatory requirement

• Term not defined

• Reference to case law/authorities for elucidationas o po e to a ocorrection because both payment claim & response are served before appointment.

• 4 sub-sections

• Person responding =

p y

- “Unpaid Party” (UP) can proceed to next stage ADMIT PAYMENT CLAIM DISPUTE AMOUNT CLAIM NO ACTION

• S6(1)

• Serve “Payment Response”

• S6(2)

• Either wholly or partly

• S6(4)

• Upon expiry of 10 working days per p g“Non-Paying” Party (NP Party)

• Pre-condition : Receipt of “Payment Claim” from “Unpaid Party” under S5

• Serve Payment Response on UP within 10 working days

• Either pay : - whole amount claimed, or - any amount as admitted

• Admission may not

y p y

• Serve “Payment Response” on UP within 10 working days

• Contents of Response : - amount disputed to show in broad

computational basis - reason for dispute

p p y g y pS6(3) from receipt of payment claim

• Deemed to have disputed the entire “Payment Claim”

• Dispute is crystallised, UP can proceed to next stage• Admission may not

necessarily bind the NP party in any potential arbitration or trial

• Payment together with payment response ? No, it is taken that NP

p(eg. Furnishing proof of payment set-offs, counterclaims due to contractor’s delay or defects)

• Late response :-- a nullity - no payment response to define

p g

• Halki Shipping Corporation v Sopex Oils Ltd (1998) : “There is a dispute once money is claimed unless & until the defendants admit that the sum is due & payable “

accepts liability. Payment of amount claimed is a separate process

adjudicator’s jurisdiction – S26(2) : adjudicator can proceed at NP or Respondent’s disadvantage as there are no defences

• Orange EBS Ltd v ABB Ltd (2003)

DECISION OF UNPAID PARTY 29

WHEN TO PRE- UNPAID NATURE OF

DECISION TO TIME BARS/ WHEN TO DECIDE ?

PRECONDITIONS PARTY’S

OPTIONS

DECISION TO INITIATE

ADJUDICATIONLIMITATIONS

• After 10 working days : S6(3)

• “Non-paying” party serves payment

• Give up claim

• Negotiate mediate

• S7(1)

• Discretionary : The

• S7(3)

6 years from the datey ( )

• Decision before this will be premature and invalid

response of ‘admitted’ amount only (S6(1))

• “Non-paying” party disputing amount

• Negotiate, mediate or settle claim

• Reject Non-paying party’s decision/ rejection/ inaction :

t lli

• Discretionary : The use of word ‘May’ indicates Discretionary

• ‘Unpaid Party’ to d id

• 6 years from the date of crystallisation of the dispute (the Long Stop)

• Within relevant period of limitation under :p g

claimed wholly/ partly (S6(2))

• “Non-paying” party fails to respond (S6(4))

crystallises a ‘Payment Dispute’

• Make decision how to resolve ‘Payment Dispute’

decide- Limitation Act

1953 (West Malaysia)

- Sabah Limitation Ordinance [Cap 72]

(S6(4))- Sarawak Limitation

Ordinance [Cap 49]

• Otherwise it is time-barred

INITIATE COMMENCEINITIATE ADJUDICATION

COMMENCE ARBITRATION COURT ACTION

• Right under S7 CIPAA

• Amount claimed

• Due date for t

• Under S37

• Can proceed tl• Provided by

Statutepayment concurrently

DECISION TO INITIATE ADJUDICATION 30

GOVERNING SUBJECT MATTERWHO CAN INITIATE ?RIGHT TO REFER

DISPUTE TOPROVISION SUBJECT MATTERWHO CAN INITIATE ? DISPUTE TO ADJUDICATION

• S7(1)

P id th t

• S7(1)

Eith• S7(2)• Only if a dispute

• Provides that :

- Dispute must arise from a ‘Payment Claim’ made under S5

• Either :

- ‘Unpaid Party’ - ‘Non-Paying Party’

• Depends on the nature of the Dispute

( )

• Right exercisable after 10 working days to serve payment response

B t ithi l t

y pexists

• The dispute must arise from a ‘Payment Claim’ under S5

- May be referred to adjudication

• Example

Payment claim : RM1

the Dispute

• Both Parties have equal right of reference

• How can an employer (owner) as a non-paying

• But within relevant Limitation period

• Otherwise it is not valid

u de S5

• Only 1 dispute to be adjudicated at a time (based on res judicata)

million

Payment response : disputed amount is RM400K

Di t i fi d t

party recover in his position as a claimant :-

- confined to back charges, materials supplied, defect rectification workDispute is confined to

RM400K & not RM1 million

- counterclaim for LD, diminution in value of works on a/c of defects are defence to a claim. They are not a premise forare not a premise for affording a claim as they are not “payment”

INITIATION OF ADJUDICATION31

PROCESS COMPLETED

NOTICE OF ADJUDICATION

PROCEDUREWHO CAN INITIATE ?

GOVERNING PROVISION

WHEN TO INITIATE

• S8(1) • S8(1) • Up to Claimant • S8(1) • S8(2)

REPRESENTATION S8(3)

• Counsel not ( )

• Either :

- ‘Unpaid Party’ or

- ‘Non-Paying’ party

• Within relevant limitation period

• Otherwise it is time-barred

Chase Oyster Bar Pty

• By Claimant serving “Notice of adjudication” on Respondent

• Alert Respondent to

( )

• When the Respondent receives the Notice of Adjudication

required, can be claim consultant & construction professional (QS)

• Counsel for complex & large

• Parties are known as :-

- Party initiating–‘Claimant’

- Opposing Party–‘R d t’

y yLtd v Hamo Industries Pty Ltd (2010) : Claimant failed to serve adjudication notice within 20-day period per NSW SOPA1999.

commence preparation of his case, that is natural justice to be afforded - Brodyn Pty Ltd v

Davenport (2004)

• An adjudicator can then be appointed as in S21

complex & large quantum claim

• Eg. S$116 million :-Claimant : 3 Lawyers, 6 Senior corporate personnel

‘Respondent’ Proceeded with Adjudication application. Adjudicator appointed, decision in his favour. Hd : Invalid because adjudication notice is j i di ti l N ti t

Respondent : 6 Lawyers, 6 Senior corporate personnel & consultantsRefer next slide

jurisdictional. Notice out of time & hence not valid.

Also, Steel v Beks : Claimant sent claim details to wrong fax number . Hd : Respondent did not receive payment claims or adjudication notice (no service). The subsequent adjudication

li ti dapplication and determination are invalid

NOTICE OF

32

ADJUDICATION

PURPOSE OF NOTICESTATUS OF NOTICECONTENTS OF NOTICEMODE OF SERVICEFORM

• S8(1)

• ‘Written’ form

• does not expressly state

• S38

• 4 modes (S38(a) to (d))

• State service is pursuant to S8(1)

- nature of dispute : (i) identify payment

claim & response

• Defines the arbitrator’s jurisdiction

• Watkin Jones & Son Ltd v Lidl UK

• To inform Respondent :

- of nature of dispute - of case against him

• To define remedy/expressly state to be signed

• good practice to do so

claim & response, eg. dates of documents

(ii) assert dispute is crystallised

- description of dispute :

Son Ltd v Lidl UK GmbH

To define remedy/ remedies sought

• To inform Appointing Authority to appoint a suitable adjudicator

specify amount Claimant considers to be in dispute

- remedy sought : (a) state amount

Claimant seeks to recover

(b) outline reasons for rejecting the whole or part of the counterclaim, set-off or defence

- any supporting document to enable Respondent to know the gravity of the case against him (unlikely to annex full contract documents, useful to tabulate heads of claim, quantum claimed)

8 0 APPOINTMENT OF8.0 APPOINTMENT OF ADJUDICATOR

MANNER OF APPOINTMENT OF ADJUDICATOR 33

PRE-CONDITIONS

METHODS OF S C O

BY THE BY DIRECTOR O C

GENERAL SELECTIONCONDITIONS SELECTION PARTIES OF KLRCA SELECTION CRITERIA

• S8(1) and (2) complied

• - receipt by Respondent of valid

• 2 valid methods :

- by the parties (S21(a))

• May be set by the parties and/or Director of KLRCA

• Need to :WHEN TOPRE-GOVERNINGp‘Notice of Adjudication’ from Claimant

• Mandatory requirements

(S21(a))- Director of KLRCA

(S21(b))

• Discretion given to parties to exercise either option

- be suitably qualified - willing and able to take

up appointment - declare as per requirements

of S24 : Duties and obligations of the adjudicator

A il bl ( d if h i hi hl

WHEN TO APPOINT ?

PREREQUISITE

GOVERNING PROVISION

• S21(b) • Within 5 working days of receipt of written request

• Upon written request by :

- either party • Available (no good if he is highly experienced but his calendar is congested)

• Agree to terms and fees

written request (S23(1))

e t e pa tyS21(b)(i)

- both parties S21(b)(ii)

EFFECT OF DEFAULTWHEN ?PROHIBITIONPRE-REQUISITE

GOVERNING PROVISION

• S21(a) • Need parties’ ‘agreement’ in

• Either party may propose suitable

• Against pre-agreed or named :

PROCEDURE

• Agreement must be made after reference

• Claimant may abandon claim

agreement in writing

p pcandidates to other to select from

• Claimant to initiate

- Adjudicator (dominant party cannot compel the other party to accept a candidate ahead of any dispute arising)

- Appointing Authority (other than KLRCA)

to adjudication

• Must be completed within 10 working days from receipt of ‘Notice of Adjudication’ by Claimant or

• Either party can request Director of KLRCA to select and appoint (S21(b)(i))

• Both parties can request Director of KLRCA to

(other than KLRCA)

• Freedom to appoint, should not limit to institutional list

Claimant or Respondent

select and appoint (S21(b)(ii)), need not wait for expiry of 10 working days under S21(a)

THE ADJUDICATOR34

JURISDICTION OF IMMUNITYPOWERS OF GOVERNING ELIGIBILITY CRITERIA/

ADJUDICATORIMMUNITYADJUDICATORPROVISIONS COMPETENCY

STANDARDS

• S 27(1) :

Limited to matter referred to

• Defined mainly by S25 & 26

• Depends on the appointer :

• S4 (Interpretation)

• S24, 25, 26, 27 &

• S34(1) :

- cannot be sued Limited to matter referred to adjudication by parties :-- under S5 : payment claim

and - under S6 : payment response

• S27(2) :

• Very wide

• No power to decide own jurisdiction/ Kompetenz-

- if Director of KLRCA set by KLRCA (S32(a))

- if parties set by them

S24, 25, 26, 27 & 34 : Duties & Obligations, Powers, Jurisdiction, Immunity, etc

cannot be sued for any act/ omission provided done in ‘good faith’

• S34(2) :

DEFINITION OF ADJUDICATOR

S27(2) : - jurisdiction can be extended - to any other matter - by written agreement

between parties - at any time

KompetenzKompetenzprinciple inapplicable (not found in S27)

• General requirements :

- suitably qualified - experienced - able and willing

( )

- cannot be compelled to give evidence in any subsequent arbitration/ court

• S27(3) : - adjudicator can opt to

proceed notwithstanding a jurisdiction challenge

- and complete adjudication subject to parties right :

able and willing - meet duties and

obligations under S24

- must ensure confidentiality (S25)

• S4

• Must be :

- an individual/ t l

proceedings

- subject to parties right :

1. to set aside decision under S15 or,

2. oppose application for enforcement under S28

(S25)

- available

natural person

- Not an artificial person eg. a company, etc.

APPOINTMENT OF ADJUDICATOR 35

GOVERNING PROVISIONS

METHODS OF APPOINTMENTPRE-CONDITIONS APPOINTMENT BY

THE PARTIESPROVISIONS APPOINTMENTPRE CONDITIONS THE PARTIES

• S21 to 24 • Selection either :

- by parties (S21(a)), or

• 2 main methods :

- by parties : S22, or

by Director of

ACCEPTANCE OF

OPTIONS AVAILABLE TO

NEGOTIATION OF FEES AND

NOTIFICATION OF ADJUDICATOR GOVERNING PROCEDURE

CONSEQUENCES OF REJECTION/

- by Director of KLRCA (S21(b))

- by Director of KLRCA : S23

OF APPOINTMENT

AVAILABLE TO NOMINEE

OF FEES AND TERMS

SELECTED (agreed by parties)

PROVISION (S22)OF REJECTION/

FAILURE TO RESPOND

• S21 and 24 • 3 steps :

- notification of adjudicator

• S22(1) :

- by whom : Claimant

• S22(2) :

- adjudicator to propose &

• 3 options :

- accept appointment

• Form : presumably “in writing”

• S22(3)

• Options : Discretionary :adjudicator

- negotiation of terms and fees

- acceptance of appointment

Claimant

- Form : “in writing”

- requirement : provide a copy of

negotiate with the parties

- time period : within 10 “working days” from receipt of notice

- reject appointment

- fail to respond

• Time limit : 10 “working days” (S22(2))

• Recipients : Claimant and Respondent.

• Content : together with declaration of

- Claimant might abandon claim, or

- Parties may proceed to

l t dby adjudicator ‘Notice of Adjudication” to the adjudicator

receipt of notice

Note : The parties would have satisfied themselves with adjudicator’s terms & fees b f tifi ti

(S22(2))

Note : Adjudicator needs to do conflict check & ensure availability, all within 10 days

declaration of S24

select and appoint another adjudicator (S21) or either party to request KLRCA to

i tbefore notification, otherwise it would be embarrassing if agreement cannot be reached on the terms & fees.

appoint (S21(b)(i) or (ii))

9.0 COMMENCEMENT OF PROCEEDINGS

COMMENCEMENT OF PROCEEDINGS 36

GOVERNING PROVISIONS FIRST STEP

FORMALISATION OF ADJUDICATOR’S AGREEMENTS

PRELIMINARY MEETING/

CONFERENCEAGREEMENTS CONFERENCE

• S21 : Appointment of adjudicator & decision

• S22 : Appointment of adjudicator by parties

• Calling of Preliminary Meeting

• Video conference with parties

FORM AND CONTENTSPRE-CONDITION WHEN ?

• S23 : Appointment of adjudicator by KLRCA Director

• S24 : Duties & obligations of the adjudicator

• Receipt of Adjudicator’s Notice of Acceptance

- by parties : S22(2)

• After expiry of 10 ‘Working days’ period stated in

- S22(2) or

• In Writing

• Contents :

f KLRCA i t t ill b• S25 : Powers of the adjudicator

- by parties : S22(2)

- Director of KLRCA : S23(2)

• Must be a valid notice under S22(2)/ 23(2) and S38 (service of notices and documents) complete with declaration of S24

- S22(2) or - S23(2)

• Preferably before service of Adjudication claim in S9

• Normally, latest at Preliminary Meeting/ Conference

- for KLRCA appointment : will be KLRCA’s Standard Terms and Conditions

- for party appointed : as negotiated

PARTICIPANTSPURPOSEWHEN ?GOVERNING PROVISION

• S25(f) : call for meetings with the parties

• After appointment under S22 or 23

• To sort out Agreement if still outstanding

• To clarify points relevant to appointment• Adjudicator : chair

• Claimant and • Preferably before service

of Adjudication Claim under S9

• To explain adjudication process

• To set time table for submissions

• To establish procedural matters

• To hear procedural submissions & discovery

• To give direction to parties’ experts on meeting & joint

representatives

• Respondent and representatives

g p p g jstatements

• To be briefed on the main points in the submissions

• To clarify, agree and establish any other matters relevant to proceedings and permitted especially under S25

ADJUDICATION CLAIM 37

GOVERNING PROVISION

FORMAT AND CONTENTS OF APPLICATION

SERVICE OF ADJUDICATION

CLAIMCHARACTERISTICS MODE OF SERVICE

APPLICATIONCLAIM

• S9 : Adjudication Claim • S38

• 4 Modes : S38(a) to (d)

• Must establish nexus between cause and effect

Must inform Respondent

• S9(1) & (2) : in writing

• Principally : - Nature & description of dispute - Remedy sought

Any supporting document • Must inform Respondent on the case he has to answer/defend

• Burden of Proof (to ‘Civil Standard’) on Claimant throughout

- Any supporting document

•

• Similar and consistent with Notice of Adjudication in S8(1)

• Cannot raise new issues not previously

Time & cost constraint

• Must not lead/include any ‘Evidence Ambush’

• Cannot raise new issues not previously raised in payment claim otherwise jurisdiction exceeded (S27(1)) : Jurisdiction of Adjudicator

• Format not stated, left to Claimant

• Short hearing

IF SERVICE IS LATEPARTIES SERVED WHEN ?PARTY INVOLVED

• Appears not to be fatal• Within 10 ‘Working• Original to Respondent : • S9(1) :

• Deals with key issue only

• Bundles of documents are important as documentary evidence. London & Amsterdam Properties Ltd vAppears not to be fatal

• Claimant can apply to adjudicator with reasons

• Adjudicator can extend time S25(p) ‘as reasonably required’ but

Within 10 Working days’

• Of receipt of adjudicator’s acceptance of appointment under :

g pS9(1)

• Copy to Adjudicator : S9(2)

S9(1) : Onus is on Claimant to ensure service (Steel v Beks (2010))

Properties Ltd v Waterman Properties Ltd (2004) - Referral Notice > 1000 pages

• Some > 90 arch lever filesthis should not cause undue prejudice to the Respondent

- S22(2)

- S23(2)

SUPPORTING DOCUMENTS 38

QUANTITY OF DOCUMENTS & SUBMISSIONDOCUMENTS

TIME & COST CONSTRAINT

Organised in such a way allowing tribunal to locate relevant matters efficiently :-

• Short hearing

• Ct. accepted tribunal to limit length of submission & volume of documents

• Exception : l

RELEVANT TERMS OF DOCUMENTS SETTING OUT - complex - enormous quantum

• However, there must not be any breach of natural justice

CONTRACTCONTRACT PARTICULARS

(1) - identify the contract - date contract made - parties to the contract - claimant & respondent

- contractual ground for (a) payment claim, (b) payment response in resisting

claimp- if a subcontract, the principal & employer

(2) Is it a main contract or sub-contract ? - description of work - principal document forming the contract - whether the subject contract falls within

definition of a construction contract under

claim

Terms :-

(a) lump sum or measurement contract

(b) terms allowing for recovery of site O/H & preliminaries, other cost & expensedefinition of a construction contract under

CIPAA

(3) - Annex notice of adjudication - proof of service or receipt to show proceeding

have been properly initiated

(4) - extract of the terms or conditions of contract

expense

(c) method of valuation of workdone, or goods supplied

(d) applicable rates & prices

(e) terms regulating :-( )relevant to the dispute

(5) Topical arrangement of documents : eg. separate volume for (a) calculation & data (b) parties’ correspondence chronologically (c) meeting minutes

back charges, set-offs, abatement, etc

(c) meeting minutes (d) invoices & receipts

ADJUDICATION RESPONSE39

CONSEQUENCE OF DEFAULT TO MEET

TIME FOR RESPONDENT TO RESPONDENT’S

OPTIONSNATUREGOVERNING PROVISION

PARTY INVOLVED TIME DEADLINESMAKE DECISIONOPTIONSPROVISION INVOLVED

• S10 : Adjudication Response

• If Respondent fails to serve adjudication response :

• S10(1) : The Respondent

• S10(1) :

within 10 working days from receipt

• 2 scenarios :

- original 10 working days

- S10(3) applies

- Claimant may proceed with adjudication

• Unless Adjudicator has

days from receipt of Adjudication Claim under S9(1) from Claimant

• Respondent may

g yperiod under S10(1); or

- any extended time under S25(p)

• 2 consequences :Unless Adjudicator has extended time vide S25(p)

• Respondent may apply to Adjudicator to extend times S25(p)

2 consequences :

- S10(3) : Claimant may proceed with adjudication

- S26 : Power of

KEEP QUIET/ FAIL TO RESPOND

RESPOND TO CLAIM

adjudicator not affected by Respondent’s non-compliance

- Adjudicator may

• Provisions of S10(1) to (3) apply

• 2 situations :

- fail to respond at all, or

- fail to respond within 10 working days stated in j y

draw an adverse inference and based on the Adjudication Claim

S10(1)

• Effect :

- S10(3) applies

- Claimant may proceed with adjudication

- Unless Adjudicator has extended time vide S25(p)

ADJUDICATION RESPONSE (AR)40

LIMITATIONS/ RESTRICTIONS

CONTENTSFORMATWHENPARTIES SERVED

MODE OF SERVICE RESTRICTIONSSERVED SERVICE

• S10(1) : Claimant is served

• S10(2) : within 10 working days of receipt of Adjudication Claim under S10(1)

• S38

• 4 methods (S38(a) to (d)

• Respondent is prohibited from :

- raising a defence of

ff

• Not stipulated

• Left to the Respondentoriginal AR

• Copy to Adjudicator (S10(2))

under S10(1) (S38(a) to (d)

• S10(1) :

Answer to Adjudication Claim with any supporting document

• Answer to Adjudication Claim may comprise :

1. set off 2. abatement 3. counter claim that gives

rise to a set-off

that had not been raised

Respondent

- jurisdictional issues/ challenges - permitted set-offs, abatements, etc (note : not counter-claim) - counter-claims giving rise to permitted “set-offs” etc

• Documents may comprise : - invoices - measurement records

site records

previously in the :

1. payment claim (if the Respondent is the payee)

2. payment response (if the Respondent is the payer)- site records

- daywork records, etc

• Cannot raise new issues/ matters not previously raised

NOTE :

Respondent to respond to each allegation of fact & liability

Eg (a) V O

Respondent is the payer)

before the dispute was referred to adjudication

- Except : unless the parties agree expressly i.e. can be• Eg. (a) V.O.

is the V.O. disputed or admitted ? If admitted extent of any residual liability for payment

(b) Claimant put forth argument on certain supposed facts

Whether this is disputed or agreed ? If agreed, extent of agreement

agree expressly i.e. can be consolidated (S14)

- must not lead/include any ‘Evidence Ambush’

• Limitations/Restrictions are g g

• Payment amount

Respondent alleges Claimant not entitled or Respondent accept whole or part of the claim but sum payable is reduced by counterclaim, or set-off (eg. Defects, materials & resources supplied, advance payments)

strictly enforced

ADJUDICATION REPLY41

EFFECTCONTENTSFORMATWHENPARTIES SERVED

MODE OF SERVICESERVED SERVICE

• S11(1) : Claimant serves

• S11(1) : within 5 working days of receipt of Adjudication Response under

• S38

• 4 methods (S38(a) to (d)

• Effect of exercise of both options i.e.

- to reply as S11

• Not stipulated

• Left to the Claimantoriginal reply

to Respondent and copy to Adjudicator with any

Response under S10(1)

(S38(a) to (d)

• S11(1) :

- reply to Adjudication Response

to reply as S11

- to keep quiet/fail to reply

are two-folded :

- signifies the end of

Claimant

with any supporting document (S11(2))

• Unique only to CIPAA not

p- any supporting document

• Reply to Adjudication Response may comprise :

- rebuttals d i l

- signifies the end of the “Submissions”

- signifies the beginning of the next stage i.e. ‘Determination’to CIPAA, not

found in UK or Singapore

- denials - admissions - challenges - answers, etc

to issues/matters raised

Determination Sub-stage

• If Claimant does not serve a reply, it cannot be assumed th t th Cl i t

• Documents to include only documents that support and constitute part of the reply

• Cannot raise new aspects/issues not

that the Claimant concedes to the points raised in the adjudication response

aspects/issues not previously raised or stated in the claim

DETERMINATION STAGE – CONDUCT OF ADJUDICATION PROCEEDINGS

42

PARTICULAR ISSUES

IMPORTANT CONSIDERATIONSMANNERPRE-

CONDITIONSAPPLICABLE PROVISIONS

CONDUCT OF PROCEEDINGS ISSUESCONSIDERATIONSCONDITIONSPROVISIONS PROCEEDINGS

• S20

• S24

S

• No jurisdiction issues

• In the event of

• By the Adjudicator who is the master of the proceeding

• Must :

- ensure confidentiality (S20)

d hi

• Effect of :

- S14 : Consolidation of adjudication

di

• As decided by Adjudicator but subject to statutory limitations

• S25

• S26

• S27

In the event of jurisdictional challenge, Adjudicator may decide to proceed : S27(3)

• Governing Provision S12(1)

• He can conduct adjudication :-

in the manner

- not exceed his jurisdiction at all times (S26 & 27)

• Must :

- allow parties to be personally represented

proceedings

- S17 : Withdrawal & recommencement of adjudication proceedings

S26 : power of

• Usual practice, involving adversariallyand inquisitorially

• S25 : He has power to :

• No grant of a stay of adjudication by High Court

• Satisfactory completion of the

- in the manner he considers appropriate

- within the powers given to him under S25

personally represented or by third party (S12(3))

- that Evidence Act 1950 is not strictly adhered to

i ‘ d f i h’ ll

- S26 : power of adjudicator not affected by non-compliances

- S37 : Relationship between dj di ti d

- call for meetings - order interrogatories

to be answered - use his specialist

skills and expertise - carry out

earlier stages i.e. ‘Submissions’ stage

S25

• Very wide power but statutorily defined by :

- S24 : Duties

- act in ‘good faith’ at all times

- ensure his continuing duty under S24 throughout the proceedings :

adjudication and other dispute resolution process

- carry out inspections, etc

• But needs to comply with S24 especially :

- ‘rules of natural’ j ti i i tand Obligations

- S25 : Powers

- Others : S20, 26, 27 etc

(a) no conflict of interest

(b) impartially, timely & avoid unnecessary expense

( ) l i h NJ

justice i.e. against bias and procedural fairness

- ensure independence, impartialit etc (c) comply with NJ

(d) independent & impartial

impartiality etc

10.0 JURISDICTION & JURISDICTIONAL CHALLENGES

JURISDICTION: AN INTRODUCTION (I) 43

DEFINITION SOURCES/LIMITS TO JURISDICTION

EFFECTS OF BREACHES OF JURISDICTION

• No definition in CIPAA

• “Riches and Dancaster”definition :-

- The word ‘jurisdiction; is

• Definition in : Chip Hup Hup KeeConstruction Pte Ltd v Ssangyong Engineering & Construction Co. Ltd

• Three Main Categories

- Statutory;

- By Agreement;

- By Law

• Two situations envisaged:

- Where adjudicator has no jurisdiction in the first place

- The word jurisdiction; is used to describe the nature and extent of the adjudicator’s task

- Jurisdiction is the

(2009)

- Competence of a tribunal to hear a matter

- By Law

• Statutory: Provisions found under the applicable Act e.g. S27 CIPAA

• By Agreement: Between the f /

- Where the adjudicator exceeds the limit or extent of his jurisdiction

• General effects:authority granted to a person so that he can exercise justice in respect of matters brought before him

“Si d ” d fi iti

parties to confer/limit jurisdiction of tribunal (adjudicator)

• By Law: Established by the Courts based on the facts and circumstances

- For the 1st scenario:

1. The Adjudication Decision isinvalid, non-binding and unenforceable

• “Simmonds” definition :-

Jurisdiction within the context of adjudication - is the power of the

adjudicator

2. Courts may set it aside/overturn the decisionas a whole

- For the 2nd scenario:

- to hear and decide

- a dispute referred to him

- issue his decision

1. Courts may enforce the partof the Decision that is valid, and

2. May refuse to enforce theremainder that is invalid

JURISDICTION : AN INTRODUCTION (II) 44

GENERAL RULEADJUDICATOR’S POWER TO INVESTIGATE/ DETERMINE

OWN JURISDICTIONPRACTICAL ISSUES

OWN JURISDICTION

EFFECTS OF BREACH OF KOMPETENZ-

OGENERAL RULE KOMPETENZ-

KOMPETENZ

• Adjudicator’s power to investigate his own jurisdiction :

- the “Kompetenz-

• In a dispute between 2 parties in a construction contract :-

(1) If an adjudicator is KOMPETENZKOMPETENZ

Kompetenz” principle

- provisions under CIPAA

- parties agreement

• Jurisdictional Challenges :

Ti i

validly appointed and attempts to answer that dispute :-

(a) his decision will be binding in accordance with

• Adjudicator can investigate any partial or full challenge to his jurisdiction

• French word for “Competence-Competence”

• It means :-

• Decision by the adjudicator would be challenged. It will be :-

- Timing

- Types

- Parties involved

- Effect

- Court’s role

acco da ce tCIPAA

(b) regardless of errors of fact, or procedure etc

(2) If the Adjudicator was

• However, in the ordinary case and without specific agreement by the parties, the adjudicator does not

The adjudicator has the necessary competence to rule on its own jurisdiction with respect to a

(a) non-binding

(b) unenforceable

(c) may set aside by the Courts

Adj dicator ma- Court s rolenot validly appointed, or he decided something other than the dispute that was referred to him :

(a) his decision would

have jurisdiction to decide his own jurisdiction i.e. “Kompetenz-Kompetenz doctrine does not apply

respect to a particular matter/dispute referred to it

• Can be given to adjudicator by :

• Adjudicator may not be able to collect his fees and expenses

(a) his decision would be unenforceable

(b) because it was made without jurisdiction

- agreement of parties, or

- statutorily

JURISDICTION : JURISDICTIONAL CHALLENGES (I) 45

TYPES CHALLENGER’S OPTIONSWHEN TO CHALLENGE ?

• Full challenge

• Partial challenge

• In relation to :

- the jurisdiction itself, or

• After the Adjudicator’s Appointment

• At the commencement of the Adjudication Proceedings

OPTION 1 OPTION 2 OPTION 3 OPTION 4

• Challenger can agree to refer the challenge to the

• Challenger can refer to another

• Challenger can seek declaration from the High

• Challenger reserves its position : - by setting out in

- extent/limit of Adjudicator’s jurisdiction

• During the course of the Adjudication Proceedings

• After the Decision – at Enforcement Stage

challenge to the same adjudicator and be bound by the result

• Condition : Agreement needed of :

another Adjudicator

• First adjudication does not stop but continues

from the High Court that the adjudicator lacks jurisdiction

• Question of time, costs and cooperation

by setting out in clear terms

- the grounds of its objections

• Having fully reserved its position :of :

- Opposing Party, and

- Adjudicator

• Effects : Challenger – bound by

• Condition : Agreement needed of opposing party

• Rarely used/ uncommon in

cooperation between Parties involved

• Normally : Adjudicator to adjourn

di ith

: - Challenger can

participate in the proceedings

- if required by the Adjudicator, make submissions on itsbound by

adjudicator’s decision

- cannot challenge it, or

- resist

uncommon in practice proceedings with

agreement of both parties pending resolution of issue by the court

submissions on its objections

• If the opposing party is ultimately successful in obtaining an adjudicationenforcement on

ground’s of adjudicator’s lack of jurisdiction

adjudication decision in its favourand seeks to enforce it : - Challenger can

challenge the validity of thevalidity of the decision

- on grounds of adjudicator’s lack of jurisdiction

JURISDICTION : JURISDICTIONAL CHALLENGES (II) 46

PROCEDURE IN INVESTIGATING JURISDICTIONAL

IDENTIFICATION OF THE DISPUTE

VALIDITY OF APPOINTMENT

EARLIER ADJUDICATION

DECISIONS : THEIR

OUSTING ADJUDICATOR’S JURISDICTIONCHALLENGES RELEVANCE JURISDICTION

• Third step of procedure : Determine if subsequent Adjudicator ‘trespasses’ onto the Decision of an earlier Adjudicator

• Second step of procedure ; Identify whether the Dispute falls within the ambit of the Act

• First step of procedure : Consider whether or not adjudicator’s

i t t i lid

• 4 step procedure, per Coulson :

- validity of the Adjudicator’s

• Final step of procedure : Determine if Adjudicator’s Jurisdiction hadearlier Adjudicator

• Factors to be considered :

- whether the two disputes were substantially similar or not ?

• Factors to be considered :

- what was the scope and extent of the Dispute in the Written Notice of Adjudication (i.e. under S5 & 6 of CIPAA) ?

appointment is valid under the Act

• Factors to be considered :

- was there a construction

Adjudicator s appointment

- identification of the Dispute

- relevance of earlier Adjudication Decisions

Jurisdiction had been ousted in other ways

• Methods of ousting :

- Express agreement- was there any material

overlap between the two disputes ?

- did the second decision alter, revise, modify or overrule the first

& 6 of CIPAA) ?

- had the Dispute crystallised between the parties prior to the Notice to Refer ?

- was the Dispute

construction contract ?

- was the contract ‘in writing’?

- were the parties to the Adjudication

- ousting of Adjudicator’s Jurisdiction in other ways

• Procedure much depends on :

agreement between the arties - Implied agreement between the parties

• Examples :decision ?

- were the adjudications part of a ‘serial’ adjudication or were they separate or distinct ?

preferred to Adjudication, a Single Dispute ?

- was there sufficient connection between the Dispute referred and the Adjudicator’s Decision

the Adjudication the correct parties in the construction contract ?

- was the appointment in accordance with

depends on :

- matter under investigation

- body/person undertaking the investigation

• Examples :

- Settlement of dispute by a ‘compromise’ agreement

- Compromise by - did the earlier

Adjudicator have jurisdiction to decide and was it challenged ?

Adjudicator s Decision accordance with the Act ?

- were all other relevant provisions of the Act vis-à-vis the appointment

li d ith ?

conduct/waiver

• Adjudicator has no right to unilaterally and without both parties’ consent to limit or oust his

complied with ? jurisdiction

JURISDICTION : GUIDELINES FROM CASE LAW 47

EFFECT OF ERROR ON EXTENT OF

AUTHORITY

SET-OFFS, ABATEMENTS,

COUNTER-CLAIMS, ETC

AUTHORITY OF ADJUDICATOR

EFFECT OF ERRORS

• Arises from the Notice of Adjudication

• S27(1) CIPAA from :

- payment claim under S5 d

• Errors of :

- procedure - fact, or - law

D t t th

• Adjudicator cannot consider a Respondent’s Claim of :

- Set-off - Abatement, or

• If the Adjudicator makes an error about the limit/ extent of his authority, the courts can take 2 options

S5, and

- payment response under S6

• Do not prevent the enforcement an Adjudicator’s Decision by Summary Judgment

• Unless these are to his jurisdiction

,- Defence

• Unless it has been previously raised/detailed in his Payment Response (S6)

• Option 1 : Overturn the Decision as a whole and deny enforcement

• Option 2 : Enforce only that part of the Decision that is valid

REPUDIATION OF CONTRACT

ADJUDICATOR’S DECISION

CONTRACT INTERPRETATION

that is valid

• In a situation where a question about the interpretation of the contract is raised

• Adjudicator has the :

- power to determine the meaning

• Disputes concerning :

- whether a party has failed to perform a contractual obligation eg. payment

• If the Adjudicator answers :

- the right question in the wrong way, the decision will be enforce even if it is wrong

of the contract terms

- even, if this means determining :

(1) whether there is a valid appointment of the adjudicator, and

- resulting in repudiation of contract

• Can be considered by the Adjudicator as a dispute under the contract

- the wrong question in the right way, the decision will not be enforced as there is no jurisdiction

(2) therefore his authority to act

JURISDICTION UNDER CIPAA 48

JURISDICTION UNDER S27LIMITS TO ADJUDICATOR’S AUTHORITY/JURISDICTION

UNDER CIPAA

PRINCIPAL GOVERNING PROVISIONS

P i i l P i i• Principal Provision S27 : Jurisdiction of adjudicator

• Others : S8(1), 12(5), 14, 15(d), 16, 17, 18(1), 21-26 &

S27(1) S27(2) S12 S18

• To determine only : - disputes on matters - referred to

• To determine : - any matters other

than those under

• S 12(2) & (4) : - the tenability of the

dispute

• S18(1) : to determine - costs of adjudication

proceedings28

• No definition of term “Jurisdiction’ in CIPAA

- referred to adjudication by the parties

- pursuant to S5& 6

• NB : Confined to only ‘Payment’ disputes

than those under S27(1)

- that the parties agree in writing

• NB : Wider – can extend to even ‘Non-Payment’ disputes

dispute - the liability of the

parties

• S12(5) : to determine - the amount payable - the party to whom

payable

proceedings - the costs to be paid

by the relevant party

- the time and manner of payment

SCOPE CHARACTERISTICS EXTENSION OF JURISDICTION

EFFECTS OF BREACH

• S27(1)

• Limited to ‘Payment dispute’ on matter referred to by parties under :

• Strict adherence to S27(1) : necessary as will be likely to be strictly construed

• ‘Kompetenz-

• Possible S27(2)

• Timing : only after commencement of proceedings

• Procedure : by

• Respondent may raise a jurisdictional challenge

• If jurisdiction is established to have been exceeded : - adjudication decision can

- payment claim of S5, and

- payment response of S6

• Exception : if expressly agreed to by Parties S27(2)

Kompetenz’ doctrine does not apply unless subject to S27(2)

• In interpretation & application, common law principles may apply in the event of a

• Procedure : by agreement in writing between the parties

• Scope : to disputes on matters beyond those referred to in S5 & 6

jbe challenged by ‘loser’

- it can be set aside in whole or in part on grounds (S15(d))

- the adjudication decision can be stayed (S16(1) & (2) S27(2)

• Very narrow in ambit

apply in the event of a ‘lacuna’

( )- application for enforcement

can be opposed (S28(1)

JURISDICTION : JURISDICTIONAL CHALLENGES UNDER CIPAA 49

GENERAL PROVISIONS OF S27(3)

ADJUDICATOR’S COURSE OF ACTION

OPTIONS EXERCISABLE OPTION 1 OPTION 2

• No express stipulations in CIPAA as to the : - types - timing • Adjudicator may in • Decision may be :- • Decision may be :-

• Application : in the event there is a Jurisdictional challenge and the adjudicator adopts Option 2 i e- form

• Must refer to common law principles.

his discretion : either - decide not to

proceed and complete the adjudication or

- not to proceed with the adjudication, or

- having

- to proceed with the adjudication, and

- to complete it (S12)

i.e.

- he decides to proceed, and

- complete the adjudication proceedings

adjudication, or - decide to

proceed and complete the adjudication

commenced, not to complete the adjudication

• Presumably, must notify the parties

f hi d i i

• Presumably, must notify the parties in writing of the ‘decision’ or can be implied by

ll i

• Pursuant to S27(3), there is ‘without prejudice’ :

- to the rights of any party - to apply to set aside the

adjudication decision of his decision preferably in writing

allowing proceedings to go on

• Governed by S27(3)

under S15, or - to oppose the application

to enforce the adjudication decision under S28(1)

• Question of whether the dj di t ill b titl d tadjudicator will be entitled to

his fees and expenses if the Jurisdictional challenge is upheld is not stipulated in CIPAA

11.0 MAKING & DELIVERY OF ADJUDICATION DECISION & POST-PUBLICATION OF DECISION

“DETERMINATION” - MAKING AND DELIVERY OF ADJUDICATION DECISION (I)

50

GOVERNING PROVISIONS

TIME FOR ADJUDICATOR TO DECIDE DISPUTE AND DELIVER

ADJUDICATION DECISION

CONDUCT OF THE ADJUDICATION - S12(1)

Refer next slide

WHERE S19(5) NOT COMPLIED WITH

WHERE S19(5) COMPLIED WITH

EFFECT OF FAILURE TO COMPLY WITH S12(2)

EFFECT OF COMPLIANCE WITH

S12(2)

• S12 – Adjudication & decision

• S13 – Effect of adjudication decisiondecision

• S19 – Adjudicator’s fees, expenses, etc

• Time periods of S12(2) not applicable

• Decision may be delivered after S19(5) is satisfied

(deliver = written decision served

• S12(3) Adjudication decision is void & unenforceable, cannot trigger suspension or reduce progress of the works to compel payment. Ritchie Brothers (PWC) Ltd v David Philip (Commercials) Ltd (2005)

• S13 ; Adjudication decision is binding

• Unless : - set aside by High Court S15, or

tt ttl d b(deliver written decision, served on the parties & KLRCA Director) • Adjudicator cannot collect fees and

expenses(S19(6))

• Parties may have to recommence adjudication

- matter settled byparties or

- dispute finally decided by arbitration/court

WHERE PARTIESWHERE ADJUDICATION WHERE PARTIES AGREE TO OTHERWISE

WHERE ADJUDICATION RESPONSE IS RECEIVED

WHERE ADJUDICATION RESPONSE/REPLY SERVED

• S12(2)(a)

• Time period: 45 Working

• S12(2)(b)

• Time period: 45 Working

• S12(2)(c)

• Form: Presumably “in Writing”Time period: 45 Working Days from:

- Adjudication Response, or- Adjudication Reply whichever is later

Time period: 45 Working Days from:

- Expiry of the period of 10‘Working days’ as prescribed for service

of response in S10(1)

Form: Presumably in Writing

• Preferably to be sent to Adjudicator before expiry of 45 working days stated in S12(2)(a) and (b)

Adjudicator:p ( ) • Adjudicator:- Cannot unilaterally extend

time under S12(2), onlyvide S12(2)(c)

51

CONDUCT OF THE ADJUDICATION - S12(1)

• Adjudicator is the master of the procedure, may conduct the adjudication in any manner which he “considers appropriate” alsoadjudication in any manner which he considers appropriate , also proceedings not subject to Evidence Act 1950

• Not unfettered :-- adjudicator to decide within prescribed time - must act independently & impartially

i ti l ith t i i t- in a timely manner without incurring unnecessary cost - comply with NJ

BOUND TO APPLY LAWBURDEN OF PROOF

• may inquire inquisitorially • terms of contract

• BOP lies with the alleging party

• SQ Pte Ltd v SR Pte Ltd (2009) - Claimant’s rates refused to be considered by adjudicator because rates have no basis, instead Respondent’s rates

• common law & statutory rights & obligations for issues like prolongation variation, liquidated damages & defects.

• it is statutory system operating alongside a were used because they were used by other subcontractor

contractual regime (Transgrid v Siemens Ltd & Anor (2004))

“DETERMINATION” – MAKING AND DELIVERY OF ADJUDICATION DECISION (II)

52

GOVERNING PROVISIONS ADJUDICATION DECISION• S12 and 13

• S18 – 20

• S24 – 27

NATURE RECEIPIENTS CONTENTS CORRECTION OF ERRORS MODE OF SERVICE

• Similar to an Arbitration Award but not so detailed

• Must comply with CIPAA provisions

• S12(4) and (5) & S18

• Prescribed contents:- Reasons (unless not

required by parties) - Adjudicated amount- Time and manner

• S38

• 4 Main Modes: S38(a) to (d) • S12(6)

• 3 Main Parties:- Claimant- Respondent- KLRCA Director SCOPE EFFECTTime and manner

this is to be paid- Costs of adjudicationproceedings (overriding any prioragreement)

• Any other matter to

• Send hard copy by registered post or recorded delivery, & soft copy by email

SCOPE EFFECT

• Not addressed in UK regime but case law permits : Bloor Construction (UK) Ltd v B & Ki kl d

• S12(8)

• Enforcement of adjudication decision not affected in any way• Any other matter to

render decision valid and enforceable eg. Complying with terms of the contract on period for payments, allow for set-off & counterclaims

• Not stipulated / prescribed

Bowner & Kirkland (London) Ltd (2000)

• Permissible under S12(7) (slip rule)

• Type of errors covered :- Computational

affected in any way

• Any correction so made is deemed to take effect from the date of original adjudication decision

FORMAT FORM

• S12(4)set off & counterclaims in the adjudicated amount.

• Sign & date - sign to signify final

decision & not a draft date : (a) whether

prescribed

• Up to discretion of adjudicator

- Computational- Typographical

• Method :- At request of any party- Adjudicator on his own volition

• To be “In Writing”

• Not defined

- date : (a) whether decision was made within time (b) time for judicial review or challenges run from date of decision

• No time limit (within a reasonable time

• Adjudicator cannot revisit substantive findings of law & fact

POST-PUBLICATION OF DECISION 53

PRELIMINARY MATTERS

“WINNER’S” OPTIONS

“LOSER’S” OPTIONS

ACCEPT THE DECISION

QUIET/ DO NOTHING

WHERE ‘LOSER’ COMPLIES WITH THE

DECISION

WHERE ‘LOSER’ DOES NOT COMPLY/

CHALLENGES

• Timing : following collection/ receipt of Decision

• Both parties to check and verify :

/

• Give effect to the decision i e • Settle the matter by

CHALLENGE THE DECISION

• Apply to High Court : - to set aside

• Risk of default on ‘Loser’

- accuracy/ completeness

- correctness - compliance with

CIPAA of Adjudication Decision

the decision i.e. pay the winner : - the

adjudicated amount

- within the time, and

yaccepting payment from winner : - per Adjudication

Decision, or - any agreed Settlement

Agreement

Decision (S15provides forgrounds of setting aside due to - jurisdiction - not independent

or impartial f il t b

• ‘Winner’ may be able to enforce Decision as provided for under CIPAADecision

• For errors that are : - computational - typographical

apply to Adjudicator for

- in the manner

stated in the Decision

• Alternatively, i d

- failure to observe NJ. Also, S24 – no conflict)

- for a ‘stay’ of Decision (S16(1)(a))

• Court may issue any of

under CIPAA

WHERE LOSER CHALLENGES IN

WHERE LOSER DOES NOT

COMPLY/KEEPSdjud cato ocorrection (S12(7))

• Decide on next course of action to take

- negotiate and - settle with

‘Winner’ a mutually agreed amount

• Resist/Challenge the application for - setting aside (see next

lid )

Court may issue any of the Orders (S16(2))

• Adjudication decision may be expected to be enforced even if it contains error of procedure, fact or law. A di UK Ltd M

‘HIGH COURT’ COMPLY/KEEPS QUIET

• Seek enforcement (S28)

• Seek Direct Payment from Principal (S30)slide)

- stay

• Seek enforcement (S28)

Arcadis UK Ltd v May & Baker Ltd (t/a Sanofi)(2013) : - adjudicators are not

legally trained - limited time to

produce decision & t di t b t ti l

from Principal (S30)

• Pursue Slowing Down/Suspension of Work (S29)

• Exercise all these remedies concurrently

to digest substantial amount of material

- cannot compare decision with detailed court judgement.

(S31)

PRINCIPLES TO CONSIDER FOR SETTING ASIDE OF ADJUDICATION DECISION

Case : Joinery Plus Ltd (in administration) v Laing Ltd (2003) :

Judge Anthony Thornton QC (English Technology & Construction Court) :

54

Judge Anthony Thornton QC (English Technology & Construction Court) :-

Principle 1 : The precise question giving rise to the dispute that has been referred to the adjudicator must be identified.

Principle 2 : If the adjudicator has answered the referred question, even if erroneously or in the wrong way, the resulting decision is both valid and enforceable. If, on the other hand, the adjudicator has answered the wrong question, the resulting decision is a nullity.

Principle 3 : In determining whether the error is within jurisdiction or is so great that it led to the wrong question being asked and to the decision being a llit th t h ld i f i t l d ibl i t t ti t th d i i d h th t th i thnullity, the court should give a fair, natural and sensible interpretation to the decision and, where there are reasons, to the reasons in the

light of the disputes that are the subject of the reference.

Principle 4 : A mistake which amounts to a slip in the drafting of the reasons may be corrected by the adjudicator within a reasonable time but this is a limited power that does not expand to jurisdictional errors or errors of law.

Principle 5 : In deciding whether an error goes to jurisdiction, it is pertinent to ask whether the error was relevant to the decision and whether it caused any prejudice to either partyany prejudice to either party.

Principle 6 : A wrong decision as to whether certain contract clauses applied; or as to whether a particular sum should be evaluated as part of, or should be included in the arithmetical computation of, the final contract sum in a dispute as to what the final contract sum, does not go to jurisdiction.

Principle 7 : Where the claim that was considered by the adjudicator is significantly different in its factual detail from the claim previously disputed and referred, the resulting decision was one made by reference to something not referred, was without jurisdiction and was unenforceable sincereferred, the resulting decision was one made by reference to something not referred, was without jurisdiction and was unenforceable since the adjudicator had asked and answered the wrong question.

CHALLENGING ADJUDICATION DECISION ON GROUNDS OF NATURAL JUSTICE

Case : Cantillon Ltd v Urvasco Ltd (2008)

Akenhead J (English Technology & Construction Court) :-

(a) It must first be established that the Adjudicator failed to apply the rules of natural justice.

(b) Any breach of the rules must be more than peripheral; they must be material breaches.

(c) Breaches of the rules will be material in cases where the adjudicator has failed to bring to the attention of the parties a point or issue which they ought to be given the opportunity to comment upon if it is one which is either decisive or of considerable potential importance to the outcome ofought to be given the opportunity to comment upon if it is one which is either decisive or of considerable potential importance to the outcome of the resolution of the dispute and is not peripheral or irrelevant.

(d) Whether the issue is decisive or of considerable potential importance or is peripheral or irrelevant obviously involves a question of degree which must be assessed by any judge in a case such as this.

(e) It is only if the adjudicator goes off on a frolic of his own, that is wishing to decide a case upon a factual or legal basis which has not been argued or put forward by either side, without giving the parties an opportunity to comment or, where relevant put in further evidence, that the type of breach of the rules of natural justice with which the case of Balfour Beatty Construction Company Ltd v The Camden Borough of Lambeth was concerned comes into play. It follows that, if either party has argued a particular point and the other party does not come back on the point, there is no breach of the rules of natural justice in relation thereto.

12.0 ENFORCEMENT

ENFORCEMENT OF DECISION : (I) 55

GOVERNING PROVISION

ENFORCEMENT OF REMEDIES THROUGH

CONSTRUCTION CONTRACT

ENFORCEMENT AS HIGH COURT’S

JUDGMENTPARTIES INVOLVED

CONCURRENT EXERCISE OF

REMEDIESCONTRACTJUDGMENT REMEDIES

• Applicable Provisions : S31

• Precondition : No stay of adjudication

• Part IV : S28 to 31 • Party who obtained adjudication decision in his favour : “Winner”

PRE-CONDITION PRE-CONDITION

y jdecision has been granted by High Court under S16

• Winner, may under S31(1) exercise : - any or

• Party against whom adjudication decision made : ‘Loser”

• Applicable Provision : S28 (procedure similar to an application in arbitration)

• Existence of a valid & subsisting construction contract

• Can only apply if construction

• Performance of work either : - reduce rate of

progress; or - suspend

completely any, or - all of the remedies

provided under CIPAA concurrently to enforce decision

• S31(2) : Remedies

• Procedure : - Winner ‘may’ apply to High court - for an order to enforce adjudication decision - as if it is an order/ judgment of the court

Note : In UK : Macob Civil Engineering Ltd v Morrison Construction Ltd (1999) : commenced proceedings in court & apply for summary judgment

construction contract had not been : - repudiated, or - terminated

Pursuant to S29

• Seek Direct Payment from Principal under S30

• S31(2) : Remedies provided under CIPAA are without prejudice to other right/remedies available : - in the Construction

- commenced proceedings in court & apply for summary judgment. Claimant to show :-(a) Respondent has “no real prospect of successful defending the claim”, & (b) no compelling reason why the case should be disposed at trial.

• Time Period : within applicable limitation period

• S28(2) High Court ‘may’ :

• Remedies can be exercised concurrently with : - any, or - all other

remedies in the Construction Contract, or

- any written law - including any

penalty provided under any written law

S28(2), High Court may : - make an order in regard of the decision either :

1. wholly, or 2. partly (if a claim item has not been argued before the adjudicator)

- make an order in respect of interest on adjudicated amount payable

• S28(3) : order made under S28(2) may be executed in accordance with the rules of

under S31

- order made under S28(2) may be executed in accordance with the rules of execution of Orders/Judgment of High Court

Note : In NSW, there is no provision for setting aside of adjudication determination, only to the judgment which has been entered for the purpose of enforcing an adjudication determination.

ENFORCEMENT OF DECISION : (II) 56

SUSPENDING/SLOWING WORK PERFORMANCE (as in Clause 16.1 of the FIDIC Conditions of Contract for

Construction (Red Book 1999))

OPTIONS EXERCISABLENATURE OF RIGHTRIGHT ACCRUES PRE-CONDITIONS

• To ‘Winner’

• S29• Receipt of a

Valid Decision’• Discretionary

• See use of word

• 2 main Options Exercisablein the alternative (see use of word ‘or’)

• If adjudicated amount not paid : - wholly/partly - after receipt of

decision under

• Construction contract still subsisting

• No stay granted under S16

‘may’

• But must be exercised with applicable period of

word or )

• Either : - suspend performance, or - reduce rate of progress of

performance

S12(6)under S16

• Procedure in S29(2) & (3) satisfied

period of limitation • Of either :

- Construction work, or - Construction consultancy

services

(as applicable) under(as applicable) under Construction contract

ENFORCEMENT OF DECISION : (III) 57

SUSPENDING/SLOWING WORK PERFORMANCE

PROCEDURE

SECOND STEPTYPE FIRST STEP

• 2 steps : • Contents of Notice : p- notification of

intention, and - follow-up action

• Steps are sequential in nature

- S29(2) - intention to

exercise either option

- if loser does not pay adjudicated

LOSER PAYS ADJUDICATED AMOUNT

LOSER FAILS TO PAY PER NOTICE

• Upon expiry of 14 calendar (not working) days period ‘Winner’ has right to exercise option : S29(3)

• Within 14 days stated in ‘Winner’s’ notice of S29(2)amount within 14

calendar (not working) days of receipt of notice

• Form of Notice : Presumably “In

right to exercise option : S29(3)

• Though no further notice is required under the Act, it may be useful to serve a notice declaring the commencement of suspension or reduction of the rate of progress of performance

S29(2)

• S29(3)(d) : - winner must resume

1. performance, or 2. rate of progress of

performance yWriting”

• Mode of Service : S38

• Recipient : “Loser”

• Consequences (S29(4)) : “Winner” : - not in breach of contract - entitled to under the contract

for : 1. fair and reasonable

EOT; and 2. any loss and

- time to do so : 1. within 10 working

days of payment by Winner

2. default to do so : possible “breach of y

expense incurred (site & head office overheads & profit due to prolongation. Also Respondent may omit remainder work depriving Claimant’s profit)

Entitlements to be pursued

pcontract”

• Some obligation arises if amount paid is determined by arbitration/court (S37(1))

• Entitlements to be pursued contractually : - presumably contractual

procedures need to be followed - no sanctions for default in

granting entitlements stated

ENFORCEMENT OF DECISION : (IV) 58

DIRECT PAYMENT

APPLICABLENATURE OF RIGHTRIGHT ACCRUES PRE-CONDITIONS

• To ‘Winner’ • Receipt of a • Discretionary • Only where there is the existence of a Principal (S4)

• S30

• If adjudicated amount not paid by ‘Loser’ : - wholly/partly

Valid Decision’

• Construction contract still subsisting

N t t d

• See use of word ‘may’

• But must be exercised with

li bl

existence of a Principal (S4) in the construction contract other than the ‘Winner’ and ‘Loser’

• Should cover : - wholly/partly - after receipt of

decision

• No stay granted under S16

• Existence of a Principal as defined in S4

applicable period of limitation

- domestic sub-contracts - nominated sub-contracts - other sub-contracts - other contractual arrangements

ti f i i i• Money must be

due or payable by Principal to ‘Loser’ S30(4)

satisfying provision

• Who is a Principal :-

Eg. Main contractor (C) -Employer/owner (R) (The Principal)• Procedures in

S30(1) to (3) are satisfied

(The Principal)

Sub-contractor (C) –subcontractor (R) Principal = main contractor

ENFORCEMENT OF DECISION : (V) 59

DIRECT PAYMENT

PROCEDURE

SECOND STEPTYPES FIRST STEP THIRD STEP

LOSER COMPLIES

WITH NOTICE

LOSER FAILS TO COMPLY

WITH NOTICE

• 3 steps : - request for

payment - notification by

Principal

• Request for payment

• S30(1)

• Party making : “Winner”

PRINCIPAL ACTS ON REQUEST

PRINCIPAL DOES NOT ACT

Principal - consequential

action by Principal

• Steps are sequential in nature

Winner

• Recipient : Principal

• Form : “In Writing”

• Mode of service : S38

• Time to act : - not stipulated - has to be reasonable but no sanction stated

• No sanction stipulated in CIPAA

• Possible action for Breach of Statutory Duty

• Matter considered settled

• S30(3) : - Principal shall pay

‘Winner’ direct 1. use of ‘shall’

connotes mandatory requirement but no

• Contents S38(1) : - request for

payment of adjudicated amount

- for direct payment

• Form of action : - S29(2) - service of notice on loser : 1. to show proof of payment, or 2 di t t

• ‘Winner’ to pursue other remedies

requirement but no sanctions stated

2. timing for payment : not stated but presumably in next certificate

3. only if Principal owes money tofrom Principal of

this amount

• Recommended contents : - details on the

decision

2. direct payment would be made after expiry of 10 working days of receipt of notice

owes money to ‘Loser’ S30(5)

- S30(4) : Principal may recover money so paid as a : 1. debt, or 2. set-off decision

- copy may be annexed

- preferably, time within such payment be made

from any money due or payable to the ‘Loser’

ENFORCEMENT OF OTHER REMEDIES 60

APPLICABLE PRE-CONDITIONS PARTY ENTITLEMENTS ENTITLEMENTS S ( )PROVISION

• Section 31 comprising

PRE CONDITIONS ENTITLED S31(1) S31(2)

• Party who obtained Adjudication Decision i hi f i th

• Remedies provided under CIPAA are

ith t j di t

• Receipt of a valid Adjudication D i i

• ‘Winner’ may exercise:

- Section 31(1)

- Section 31(2)

• Title: ‘Concurrent exercise of remedies’

in his favour i.e. the Winner’

without prejudice to other rights and remedies available in:- The Construction Contract or

Decision

• No ‘Stay’ granted under S16 by the High Court, or

• Decision not set

- Any, or

- Allof the remedies provided in CIPAA:

Contract, or- Any written law including any penalty provided under any written law

• Decision not set aside pursuant to S15

- Concurrently,- To enforce the Decision

• Nature of right: written law

• Very wide in scope and ambit

Discretionary (see use of word ‘may’)

13.0 CONFIDENTIALITY

CONFIDENTIALITY 61

GENERAL RULE DUTY UNDER S20 CIPAA

GOVERNING PROVISION UNDER CIPAA

EXCEPTIONS TO DUTY UNDER S20

• Adjudication proceedings • S20 : See next slideAdjudication proceedings are confidential & private

• Parties under duty of confidentiality are 1. Adjudicator 2. The parties, and

S20 : Confidentiality of adjudication

• The common law duty puts in a statutory form

See next slide

EXCEPTIONSEXTENT NATURE OF DUTY

2. The parties, and 3. The Appointing

Authority

statutory form

f f

EFFECT OF BREACH

• Prohibition from disclosure of any : - statement - admission, or - document

• Whether such is : d ( b i i &

• Presumably : mandatory

• See use of the word ‘shall not’

• “Another person”

• Disclosure may however be made in the situations expressly stated in the Act itself

• These are S20(a) to (d)

• Not stated expressly in CIPAA

• Party breaching may be liable for ‘breach of confidentiality’

- made (submissions & statements), or

- produced (all documents retrieved or collated including evidentiary & supporting documents) for the purpose of

Another person may mean any person, other than : - the other party, - the adjudicator, or - the appointing authority

• Burden of proof on party claiming the exception

) p padjudication

• Also include adjudication claim, response, reply, decision, directions, correspondences between parties

authority

• To another person

62

EXCEPTIONS TO DUTY UNDER S20

REQUIREMENT UNDER

CIPAA/LAWCONSENT NECESSITYIN PUBLIC

DOMAINNATURE OF

EXCEPTIONS

• S20(a)

• With the consent of the party

• Form of consent :

• S20(b)

• Where the information is already in the

• S20(c)

• Where disclosure is necessary for purpose :

• S20(d)

• Where disclosure is required for any purpose under :

• Prima facie : Extensive

• But limited when compared to : • Form of consent :

- preferably ‘in writing’

- but may be implied from conduct/waiver

already in the public domain eg. press report on the Respondent’s insolvency

Definition of ‘public

purpose : - of the enforcement

of the Adjudication Decision, or

- any proceedings in court or arbitration

- CIPAA (for purpose of regulating the quality of adjudication, also

p- S68 CCA 2002

(NZ) - S33 BCJ SPA

2004 (Singapore)

conduct/waiver • Definition of public domain’ - none in CIPAA - to be elicited

from authority

court or arbitration

• Disclosure to consultants & advisors

complaints against adjudicators, for feedback & subsequent

i i f threvision of the Act), or

- any ‘written law’

• For training purposes & p pfeedback after properly sanitised

14.0 IMMUNITY

IMMUNITY 63

DEFINITION/ FEATURES

KLRCA AND ITS OFFICERSPARTIES COVERED

GOVERNING PROVISION UNDER

CIPAAADJUDICATOR

C

• An exemption from legal liability

• Conferred on a person/ body

U ll d f

• S34 comprising : - S34(1) - S34(2)

• S34(1)

• 3 main categories : - the adjudicator - the appointing

authority (KLRCA)

SCOPE

• Usually on grounds of public policy’

• Normally by the State

• Extent : can be - completely/wholly; - limited/party

- officers of KLRCA

EXTENT CONDITION

• S34(1) • S34(1) • S34(1)

• Immunity against the institutional/maintenance of any : - legal action, or - legal suitin any Malaysian court

• For any : - act , or - omissionin the performance of : - KLRCA’s functions - officers’ functions

under CIPAA

• Immunity applies only if the act/omissions is done in “good faith”

• No Statutory definition of “good f ith” tunder CIPAA faith” : to use common law principle

SCOPE EXTENT CONDITION ADDITIONAL IMMUNITY

• S34(1)

• Immunity against the institutional/maintenance of any : - legal action, or - legal suit

• S34(1)

• For any : - act , or - omissionin the performance of his functions under

• S34(1)

• Immunity applies only if the act/omissions is done in “good faith”

• Good faith may require adjudicator to follow :

bl t d d f b h i

• S34(2)

• Adjudicator who has adjudicated dispute under CIPAA

• Cannot be forced to give any evidence in any : g

in any Malaysian court CIPAA

• Protection extends to action in contract or tort

- reasonable standards of behaviourof another ‘reasonable adjudicator’, and

- a standard of fair dealing expected of another ‘reasonable adjudicator’

e de ce a y- arbitration, or - court proceedings

in connection with the dispute that he has adjudicated

15.0 CONSOLIDATION OF PROCEEDINGSPROCEEDINGS

CONSOLIDATION OF PROCEEDINGS 64

ANTICIPATED PROCEDURE

PRE-CONDITIONS/

DEFINITION/ FEATURES

PURPOSES/ OBJECTIVES

EFFECT OF CONSOLIDATION

DIFFICULTIESPROCEDUREPRE-REQUISITESFEATURES OBJECTIVES CONSOLIDATION

• Term used to refer to procedure where in law :

t

• To save time, costs and effort

• For reasons of convenience

• Any determination/ decision by the adjudicator after consolidation :

SCENERIO 1 SCENERIO 2(1) Can only apply if

issues are inextricably linked

(2) Parties must feel that- two or more disputes/ cases

- may be ordered tobe tried/ determined at the same time

• To prevent duplication of proceedings

• To avoid separate & conflicting findings by different

- will bind all parties to the consolidated adjudication proceedings

- will be enforceable for or against them (as applicable) and the

• Consent of parties required : - to extend claim,

response & adjudication periods of original adjudications

• If different adjudicators had already been appointed to different adjudications

• Subsequent consolidation can only occur by the

(2) Parties must feel that they receive equal treatment. Difficult to achieve because adjudication is of short durations to accommodate all

PROVISION IN CIPAA

yadjudicators on the same matter

• To balance the parties’ interests

applicable) and the provisions of CIPAA will apply accordingly

- while the subsequent adjudications are being consolidated

occur by the withdrawal of claim (S17) from one or more adjudications

(3) Complication with timelines arising from availability of witness & experts

(4) Cooperation of a larger number of parties is difficult

• S14 : consolidation of adjudication proceedings

• Allows the consolidation of 2

EXISTENCE OF ADJUDICATION PROCEEDINGS

SIMILARITY OF DISPUTE

WRITTEN CONSENT

• Adjudication proceedings should have d

• The subject matter of the di t

• All parties to the

parties is difficult

(5) Differences in timelines for payment claim & response. Therefore, adjudication decision is delayed & will

or more adjudication proceedings

• To be adjudicated by the same adjudicator in the same proceedings’

commenced

• 3 main situations envisaged : - adjudication should have been

initiated (S8), or - adjudicators should have been

appointed (S21 to 23), or - adjudication proceedings should

dispute

• Being adjudicated in the different adjudication proceedings

• Must be ‘same’ i.e. similar e.g. payment etc.

adjudication proceedings intended to be consolidated - must give ‘consent’ - Form : not stated but

presumably ‘in writing’

affect others’ cash flow

same proceedings

• No specific procedure stated

j p ghave started

Setting aside Adjudication decisionsSetting aside Adjudication decisions

Limited grounds :1) Fraud/ bribery1) Fraud/ bribery2) Denial of natural justice3) Adjudicator not independent or impartial4) Adjudicator acted in excess of his jurisdiction4) Adjudicator acted in excess of his jurisdiction

Natural Justice and AdjudicationNatural Justice and Adjudication

• Principles of Natural Justice• Adjudicator must answer the questionj q• Each party must know the allegations madeE h h h i k• Each party must have the opportunity to know and respond to evidence 

Adjudication ProcessAdjudication Process

• Typical Sequence of Events• Typical Sequence of Events• A Dispute and Notice of Adjudication• Adjudicator Selection and Appointment• Claim & ResponseClaim & Response• Procedure during the Adjudication• The Decision

Role of the Parties

• Jurisdictional Challengesg• Extensions to the adjudication periodS b i i• Submissions

• Meetings & Oral Presentations• Experts & Other Assistance• Natural Justice• Natural Justice

Adjudicators Decision

• ContentContent• Reasons• Party Costs & Adjudicators Fees• Interest• Reaching a Decision & MistakesE f t• Enforcement

O er ieOverview

Introduction Introduction Purpose of a Decision Conducting an Adjudication Proceeding The Adjudication Decisionj Structure of the Determination Correction Correction Confidentiality

Introd ctionIntroduction Adjudicator’s written decision is an importantj p

document in the adjudication process. Decision to be made in writing with reasons Decision to be made in writing with reasons

unless the parties mutually agree in writingto dispense with itto dispense with it.

2 distinct purposes of a decision:-a) For immediate implementation in on goinga) For immediate implementation in on-going

project administration; andb) Longer term use possibly in court actionb) Longer term use possibly in court action

P rposes of a DecisionPurposes of a Decision2 broad applications:-pp

a) For immediate implementationa) For immediate implementation

• To resolve dispute in the construction process• Assist parties to avoid future claims and disputes

of similar nature• Assist parties with future payment certificates and

final account

P rpose of a DecisionPurpose of a Decisionb) For legal reasons:-

• An Adjudicator’s written decision becomes aprimary document for a party wishing to enforcethe decisionthe decision.

• Allows aggrieved party to prevent enforcement ofan adjudicator’s decision pending final resolutionan adjudicator s decision pending final resolutionby another dispute resolution process.

Cond cting Adj dication ProceedingsConducting Adjudication Proceedings An Adjudicator has limited time to reach a decision eg.

CIPAA requires adjudicator to decide disputes & deliverthe written decision within 45 working days (9 weeks) orany extended time thereof granted by the parties – fromany extended time thereof, granted by the parties fromservice of reply to adjudication response

Failure to meet the deadline - the decision is void andthe adjudicator forfeits his right to his fee!

Cond cting Adj dication ProceedingsConducting Adjudication Proceedings One of the 1st task of an adjudicator after

appointment is to review the nature of the issues involved.

Identify issues such as :o Whether the agreement is in writing;o Jurisdiction challenge;o Exemption

Po ers of the Adj dicator (CIPAA)Powers of the Adjudicator (CIPAA) (a) : Establish procedures in the conduct of the

diproceeding (b) : Decide on own jurisdiction and as to the scope

of any dispute referred to itof any dispute referred to it (c) : Conduct any meeting as he thinks fit, and only

bound by rules or procedures in the Contract & y pKLRCA guidelines

(d) : Take initiative in ascertaining facts and required f d i ifor a decision

(e) : Use his own specialist knowledge & expertise (f) : Decide on provisional relief eg interim and (f) : Decide on provisional relief eg interim and

conservatory measures

Po ers of the Adj dicator (CIPAA)Powers of the Adjudicator (CIPAA) (g) : Conduct any hearing and limiting the(g) y g g

hearing time; (h) : Inspection of site, work, materials or goods( ) p , , g

relating to dispute including opening upwork for inspection;

(i) : Inquisitorially take the initiative to ascertainthe facts and the law required for thedecision;

(j) : Issue any direction as may be necessary orexpedient;

Po ers of the Adj dicator (CIPAA)Powers of the Adjudicator (CIPAA) (k) : Order interrogatories to be answered;( ) g (l) : Order that any evidence be given under

oath or affirmation;; (m) : Order the discovery and production of

documents;; (n) : Set deadlines for production of

documents;; (o) : Appoint independent experts; (p) : Call for meeting with parties; (p) : Call for meeting with parties;

Po ers of the Adj dicator (CIPAA)Powers of the Adjudicator (CIPAA) (q) : Decide or declare on any matter

notwithstanding no certificate has beenissued in respect of the matter;

( ) A d fi i h & i t t d (r) : Award financing charges & interest; and (s) : extend time limit imposed on the parties

as reasonably requiredas reasonably required. (t) : Open up, review & revise any certificate,

decision determination instruction opiniondecision, determination, instruction, opinionor valuation of the parties or contractadministrator – of the parties?

Dealing with common incidents in a gproceeding A dj di t t b bl & illi t h dl An adjudicator must be able & willing to handle

difficult situations when it arises in a proceeding

Common incidents encountered:-o Challenges to jurisdictiono Intimidation

U bl d t tio Unmanageable documentation

Challenge to j risdictionChallenge to jurisdiction

Unlike in the Arbitration Act the principle of Kompetenz Unlike in the Arbitration Act, the principle of Kompetenz-Kompetenz does not apply. Therefore, an adjudicator is not able to determine his own jurisdiction

Adjudicator’s jurisdiction limited to matters referred to in adjudication

How to handle jurisdiction challenge? How to handle jurisdiction challenge?o Meet the parties to understand the rationale of the

challenge;o Record all things that transpired during the meeting;o Ask parties to submit;o Decide whether the challenge has merit If yes stay Ifo Decide whether the challenge has merit. If yes, stay. If

frivolous, continue.

IntimidationIntimidation A recalcitrant or unwilling party may be out to delay the process,

k i h ll h dj di ’ d i ito make spurious challenge to the adjudicator’s decision, use dilatory tactics to delay the process, canvassing confusing legal/ technical arguments or even threaten to walk out of the adjudication process.

An adjudicator must not be rattled by such antics. He must never An adjudicator must not be rattled by such antics. He must never show any anger or make off-the-cuff decisions in response to such tactics.

It is always a good practice to direct such arguments to be put in writing

Always make tri-party communication, not with only one party.

E cessi e doc mentationExcessive documentation This is usually associated with a situation of ambush

by the Claimant.

Ambush is an issue of denial of natural justice to oneparty where the swamping of excessive documents byth Cl i t ill l d t it ti h R d t ithe Claimant will lead to situation where Respondent isdenied adequate time to file the adjudication responsewithin the stipulated timewithin the stipulated time.

E cessi e doc mentation (cont)Excessive documentation (cont) To counter such unacceptable practice, an adjudicator

could:-o Set up timetable specifying deadlines, limits or length or

tit f itt d t L d d A t dquantity of written documents, London and AmsterdamProperties v Waterman [2004] BLR 170

o Disallow party to send documents in bits & pieces;o Disallow party to send documents in bits & pieces;o Fix deadline by which all documents must be submitted;o Ask parties to agree to an extension of time ifo Ask parties to agree to an extension of time if

adjudicator feels decision may not be able to meet thedeadline;

London and Amsterdam Properties v pWaterman [2004] BLR 179 Facts Facts The terms of appointment of an adjudicator had

provided inter alia that the Referral Notice should notprovided, inter alia, that the Referral Notice should notexceed 20 pages;

Claimant ignored this and served a Referral Notice in Claimant ignored this and served a Referral Notice inexcess of 1,000 pages;

The adjudicator decided that the reference did notjcomply with the said terms, he would receive the first20 pages as the “Referral” to found his jurisdiction anddirected the Respondent to limit its response to 20pages.

London and Amsterdam Properties v pWaterman [2004] BLR 179 Court held on this point Court held on this point The adjudicator was entitled to:

o Regard the shortened 20 page Referral as sufficientlyo Regard the shortened 20-page Referral as sufficiently compliant with the UK Scheme; and

o Receive the other documentation in the manner that he did

Structure of the DecisionStructure of the Decision

The Record The Reasons The Decision

The RecordThe Record

Recital of the Contract details: Recital of the Contract details:- Establish contract details; Appointment of the Adjudicator by the parties or by KLRCA; Appointment of the Adjudicator, by the parties or by KLRCA; Scope of the issues; Background facts; Actions, if any, taken by the adjudicator; Information your decision is based, i.e. payment claim,

payment response adjudication claim adjudication responsepayment response, adjudication claim, adjudication response and adjudication reply, if any.

Information obtained during the meeting with the parties.

The ReasonsThe Reasons

Required to give reasons for his decision unless Required to give reasons for his decision unlessdispensed with by the parties

Persuasive reasons help losing party to understand Persuasive reasons help losing party to understandhow it lost the case. Reasons must withstand scrutinyif the Decision is challenged.g

It must be clear, cogent and certain. From practical standpoint, some calculations andp p ,

explanations are essential to assist in theimplementation of the decision.

Assessing EvidenceAssessing Evidence

Deal with any claim systematically deciding first Deal with any claim systematically, deciding firstwhether the Claimant is entitled for the claim.

Unless the Respondent is liable to the Claimant for the Unless the Respondent is liable to the Claimant for theclaim, an adjudicator may not proceed to determinethe quantum of claim to award.q

First to determine liability requires references to thecontractual terms, implied terms by way of thecommon law or the statute, and other additionalagreements, whether written or oral.

Assessing EvidenceAssessing Evidence

Once the liability is established proceed to determine Once the liability is established, proceed to determinethe quantum to award to the parties.

Burden always on the claiming party to prove Popular Burden always on the claiming party to prove. PopularIndustries Ltd v Eastern Garment Manufacturing SdnBhd [1989] 3MLJ 360.[ ]

Standard of proof is on the balance of probability.

The DecisionThe Decision

Operative part of the adjudicator’s decision Operative part of the adjudicator’s decision. States the sum of money awarded to the Claimant i.e.

the adjudicated amountthe adjudicated amount. State the date the losing party is to pay the winning

party i e the payment due dateparty i.e. the payment due date.

The DecisionThe Decision

For interest on a principal sum awarded state the For interest on a principal sum awarded - state thedate of commencement, the rate and the rest.

Include the cost of the adjudication Usually “costs Include the cost of the adjudication. Usually costsfollow event” means the winning party is entitled to bepaid reasonable cost, i.e. party’s cost, adjudicator’s feep , p y , jand administrative fee of the appointing body.

Decision must be dated and signed but need not bewitnessed.

Award of InterestAward of Interest

A Adj di t i d t d i t t An Adjudicator is empowered to award interestand financing cost.

Interest refers to the award of post-decisioni t t i il t j d t d bt i t tinterest similar to judgment debt interestentitlement under the Court Rules.

CorrectionCorrection

Th Adj di t t ti t The Adjudicator may at any time correct anycomputational or typographical error, either on theadjudicator’s own initiative or at the request of anyadjudicator s own initiative or at the request of anyparty.

Enforcement of Adjudication Decision shall not beaffected in any way by a request for correctionaffected in any way by a request for correction.

C i d d h k ff f d Correction deemed to have taken effect from dateof original adjudication decision.

ConfidentialityConfidentiality

Adj di t d th ti (i l di Adjudicator and the parties (includingrepresentatives) are required to ensureconfidentiality of entire proceedingconfidentiality of entire proceeding.

C fid ti lit b lift d d th f ll i Confidentiality can be lifted under the followingexceptions:-

With t f ll tio With consent of all partieso If information is already in public domaino Disclosure is necessary for enforcement of decisiono Disclosure is necessary for enforcement of decisiono Disclosure is required for any purpose in any written law

If payment is not made after Adjudicator’s DecisionAdjudicator s Decision

1)  Can suspend or reduce progress of work, provided notice is given to losing party• Winner entitled to fair & reasonable EoT & recover 

any loss & expense incurredany loss & expense incurred2)  Winner has right to request direct payment from 

principal p p3)  Adjudicator’s decision enforceable as if judgment or 

order of the Court4) Wi i ll f h b4)  Winner can exercise any or all of the above 

concurrently or one after another

CostsCosts

• Costs follow the event – loser pays legal and other related costs of the winner1) Parties costs – lawyers, advisors,

documentation etcdocumentation, etc2) Adjudicator’s fees & costs3) Nominating body & Administrator – eg

KLRCAKLRCA

Architect’s role in CIPAAArchitect s role in CIPAA1) Be aware of CIPAA1) Be aware of CIPAA2) Understand the contract – CIPAA compliant3) Ensure all provisions of contract are capable of

i l t tiimplementation4) Have clear and workable payment terms in the contract5) Keep up to date records correspondence contract5) Keep up to date records, correspondence, contract

documents & drawings6) Update certificates – interim certs, EoT, CPC)7) Ensure right figures used in interim certs

8) Ensure work valued complies with quality or should beexcluded from paymentexcluded from payment

9) Have a systematic documentation process10) Usually Main Con vs Employer or Sub‐Con vs Main Con