Failing to Submit a Payment Response – The Extent of the Respondent’s Handicap

Following the Court of Appeal decisions in Audi Construction Pte Ltd v Kian Hiap Construction Pte Ltd [2018] 1 SLR 317 and Comfort Management Pte Ltd v OGSP Engineering Pte Ltd [2018] 1 SLR 979, it is settled that a respondent is precluded from relying on any reasons for withholding payment in its adjudication response which were not included in its payment response. Section 15(3) of the SOP Act was also amended to codify this position. Accordingly, the absence of a valid payment response – either due to the respondent’s late submission of the payment response, or complete failure to submit a payment response – significantly limits what the respondent can raise or argue in adjudication proceedings.

Nevertheless, the Court in Comfort Management confirmed that even in the absence of a payment response, the respondent is still entitled to make submissions before the adjudicator, provided that these submissions relate only to any patent errors in the material that is properly before the adjudicator. The Court further held that an adjudicator still has a duty to adjudicate: He must consider the true merits of a payment claim regardless of whether a payment response has been filed, and must be satisfied that the claimant has established a prima facie case that (i) the construction work that is the subject of the claim has been completed, and (ii) the value of the said works are as stated in the payment claim.

On this basis, respondents that have failed to validly submit a payment response have sought to not only rely on patent errors , but to also advance arguments that the claimant has failed to establish a prima facie basis for its claims. This naturally involves submissions on the nature and adequacy of the claimant’s supporting documents and/or evidence. However, the ambit of the arguments which the respondent can advance in the absence of a payment response may actually be narrower than this.

In this respect, the Court in Comfort Management stressed that there was a conceptual distinction between an adjudicator’s duty to adjudicate, and a respondent’s entitlement to make submissions before him. The Court therefore considered that notwithstanding the existence of such a duty, if a respondent has failed to file a payment response, the respondent is still only entitled to highlight patent errors. As such, a respondent that has failed to submit a payment response is, strictly speaking, not permitted to raise arguments in respect of whether the claimant has establish a prima facie case. The respondent is limited to only identifying patent errors (which the Court clarified as a narrow category of errors that are obvious, manifest, or otherwise easily recognisable), and no more.

It is hence imperative for respondents to ensure that they diligently submit their payment responses in response to the claimant’s monthly payment claims timeously, and to include all reasons for withholding payment in their payment responses, in order to avoid the severe restrictions and limitations they would face in adjudication proceedings.

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