PAY NOW, ARGUE LATER VS. TRUE VALUE
In S&T (UK) Ltd v Grove Developments Ltd  EWCA Civ 2448 (“S&T”), the English Court of Appeal dealt with (albeit obiter) the issue of whether an employer is entitled to pursue a claim in adjudication to determine the correct value of works on the date of an interim application. The English Court of Appeal expressly highlighted that it was dealing with this issue in light of its importance to the profession and the industry, given that there were conflicting English High Court decisions on this point ( S&T).
Pay now, argue later. In summary, the English Court of Appeal held that even if an employer fails to provide a Payment Notice or a Pay Less Notice on time, the employer is entitled to adjudicate to determine the true value of an interim application ( S&T). However, the exercise of the above “right” to adjudicate is predicated on the employer first complying with his obligation to make payment under the relevant statute ( S&T).
If the employer has complied with the obligation, then upon adjudication, if an overpayment was made at an interim stage, as a consequence of the failure to provide a Payment Notice or Pay Less Notice, then the adjudicator can order a re-payment of the excess ( S&T).
Implications for Singapore. For claimants and respondents under the Building and Construction Industry Security of Payment Act (Cap. 30B, 2006 Rev. Ed.) (“SOPA”), S&T may seem irrelevant, given the differences between Singapore’s security of payment legislation and that in the United Kingdom.
However, S&T endorses the “pay now, argue later” mentality behind security of payment legislation, which is useful to cite for claimants to argue why the respondent should bear the full brunt of s. 15(3) SOPA; but it also accepts and endorses that the proposition that the court (and an adjudicator) can determine the “true value” of any certificate, notice or application, which might be useful to cite for respondents to submit why on adjudicators should take a stricter view of patent errors for “smash and grab” adjudications (though this remains untested).
Summary. For respondents in Singapore, S&T serves as another reminder of the importance of having a payment response in time. Even if you can go for a “true value” adjudication later (which we qualify is unclear in Singapore, bearing in mind s. 17(5) SOPA), the requirement to “pay now, argue later” will negatively impact a respondent’s cash-flow.
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