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The importance of construing the contractual clause in determining the operative date of a Payment Claim for the purpose of lodging an Adjudication Application?

In Lendlease Singapore Pte Ltd v M & S Management & Contracts Services Pte Ltd [2019] SGHC 139, the sole issue before the HC was whether the adjudication application (“AA”) was lodged out of time in breach of s 13(3)(a) of the SOPA.

The plaintiff main contractor engaged the defendant to supply general labour for a project pursuant to a contract. Under the contract, payment claims were to be made on the 20th day of each month. The contract also provided that if the 20th day was on a non-business day, the payment claim was to be served on the preceding business day.

On 18 January, the defendant served a payment claim (“PC”) on the plaintiff as 20 January 2019 happened to fall on a Sunday. The PC was nonetheless post-dated to 20 January 2019. The plaintiff then served its payment response on 8 February 2019, on the basis that the operative date of the payment claim was 18 January 2019 rather than 20 January 2019. Subsequently, the defendant served its notice of intention to apply for adjudication and proceeded to lodge its AA on 25 February 2019, counting from the operative date of the payment claim as 20 January 2019. An adjudication response was filed, where the plaintiff argued that the AA was lodged out of time. During adjudication, the adjudicator dismissed the plaintiff’s jurisdictional objection and determined that the AA was lodged within time.

The main issue of contention was therefore whether the operative date of the PC was 18 January 2019 or 20 January 2019. The Court found that the PC in the present case was served in accordance with the contractual terms, which specifically provided for the circumstances where the date of service of a payment claim falls on a Sunday. As such, it was held that the act of post-dating the payment claim did not have “any effect on the operative date of the payment claim”. On this basis, the HC found that the operative date of the PC was the date when the PC was served, i.e.18 January 2019. Given that the time for lodging the AA should run from 18 January 2019, the AA was lodged out of time. Accordingly, the adjudication determination was set aside.

It is noteworthy that the HC distinguished this case from Audi Construction. In Audi Construction, the contract provided for payment claims to be served on the 20th day of each month. Similarly, the payment claim was served on 18 November 2016 but post-dated to 20 November 2016, which was then held by the CA to be the operative date of the payment claim. Notwithstanding that, the HC clarified that the act of post-dating the payment claim in Audi Construction had an effect on the operative date of the payment claim because “there was no express contractual provision for the situation where the date for serving a payment claim falls on a Sunday”.

This case therefore emphasizes the importance of construing the contractual clause in question to determine the operative date of a payment claim. Where the contract specifically provides for the service date of a payment claim as well as its substitute in the event that the service date falls on a non-business day, the operative date of a payment claim will be the date of its service, regardless of any act of post-dating.

Disclaimer: This update is provided to you for general information and should not be relied upon as legal advice.