Facade Solution v Mero Asia Pacific: Setting Aside Adjudication for Fraud under SOPA
The Singapore Court of Appeal dismissed Facade Solution Pte Ltd's appeal against the High Court's decision to set aside an adjudication determination made under the Building and Construction Industry Security of Payment Act in favor of Mero Asia Pacific Pte Ltd. The court found that Facade Solution had fraudulently misrepresented its control over 169 undelivered window panels during the adjudication proceedings, which was material to the adjudicator's determination. The court declined to sever the adjudication determination, affirming the High Court's decision to set it aside entirely.
1. Case Overview
1.1 Court
Court of Appeal of the Republic of Singapore1.2 Outcome
Appeal Dismissed
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal sets aside an adjudication determination due to Facade Solution's fraudulent misrepresentation regarding control over undelivered panels.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Facade Solution Pte Ltd | Appellant | Corporation | Appeal Dismissed | Lost | Chong Kuan Keong, Ernest Sia, Andy Yeo Yong Chuan, Gan Siu Min Cheryl, Tay Yi Ru Derek |
| Mero Asia Pacific Pte Ltd | Respondent | Corporation | Judgment Affirmed | Won | Neo Kim Cheng Monica, Oung Hui Wen Karen |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | No |
| Tay Yong Kwang | Justice of the Court of Appeal | No |
| Steven Chong | Justice of the Court of Appeal | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Chong Kuan Keong | Chong Chia & Lim LLC |
| Ernest Sia | Chong Chia & Lim LLC |
| Andy Yeo Yong Chuan | Chong Chia & Lim LLC |
| Gan Siu Min Cheryl | Chong Chia & Lim LLC |
| Tay Yi Ru Derek | Chong Chia & Lim LLC |
| Neo Kim Cheng Monica | Chan Neo LLP |
| Oung Hui Wen Karen | Chan Neo LLP |
4. Facts
- Facade Solution was engaged by Mero Asia Pacific as a subcontractor.
- The Sub-Contract was to fabricate, deliver and install 864 window panels.
- Facade Solution engaged Rontec to fabricate the window panels.
- A payment claim was issued for $830,938.73.
- The payment claim included payments for fabrication of 864 window panels and storage costs.
- 489 out of 864 window panels remained undelivered at the time of the Payment Claim.
- Facade Solution encountered difficulty securing delivery of 169 panels from Rontec.
- Facade Solution did not disclose its dispute with Rontec during adjudication proceedings.
- Rontec offered to sell the 169 panels directly to Mero Asia Pacific.
- Facade Solution claimed storage costs for materials in its warehouse, including the undelivered panels.
5. Formal Citations
- Facade Solution Pte Ltd v Mero Asia Pacific Pte Ltd, Civil Appeal No 44 of 2020, [2020] SGCA 88
6. Timeline
| Date | Event |
|---|---|
| Sub-Contract signed between Facade Solution Pte Ltd and Mero Asia Pacific Pte Ltd | |
| Facade Solution Pte Ltd issued Payment Claim | |
| Adjudication application commenced by Facade Solution Pte Ltd | |
| Facade Solution Pte Ltd purported to terminate the Fabrication Contract | |
| First day of adjudication proceedings | |
| Second day of adjudication proceedings | |
| Adjudication Determination issued | |
| Mero Asia Pacific Pte Ltd asked Facade Solution Pte Ltd to confirm delivery of undelivered panels | |
| Facade Solution Pte Ltd submitted additional claim for storage | |
| Rontec emailed Mero Asia Pacific Pte Ltd | |
| Mero Asia Pacific Pte Ltd visited Rontec’s factory in China | |
| Facade Solution Pte Ltd exercised a lien and suspended works | |
| Mero Asia Pacific Pte Ltd applied to set aside the AD | |
| High Court set aside the AD | |
| Appeal dismissed by Court of Appeal | |
| Detailed grounds of decision issued |
7. Legal Issues
- Fraud
- Outcome: The Court of Appeal held that the adjudication determination was obtained by fraudulent misrepresentation.
- Category: Substantive
- Sub-Issues:
- Misrepresentation
- Non-disclosure
- Dishonesty
- Setting Aside Adjudication Determination
- Outcome: The Court of Appeal affirmed the High Court's decision to set aside the adjudication determination.
- Category: Procedural
- Sub-Issues:
- Materiality of facts
- Fraud exception
- Common law power of the court
- Severance
- Outcome: The Court of Appeal declined to sever the adjudication determination.
- Category: Procedural
- Sub-Issues:
- Textual severability
- Substantial severability
- Public policy considerations
8. Remedies Sought
- Setting Aside Adjudication Determination
- Monetary Payment
9. Cause of Actions
- Breach of Contract
- Fraudulent Misrepresentation
10. Practice Areas
- Construction Litigation
- Commercial Litigation
- Arbitration
- Adjudication
- Fraudulent Misrepresentation
11. Industries
- Construction
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| W Y Steel Construction Pte Ltd v Osko Pte Ltd | High Court | Yes | [2013] 3 SLR 380 | Singapore | Cited for the purpose and guiding philosophy of the Building and Construction Industry Security of Payment Act and the tight timelines in which payment claims and responses must be filed. |
| Citiwall Safety Glass Pte Ltd v Mansource Interior Pte Ltd | Court of Appeal | Yes | [2015] 1 SLR 797 | Singapore | Cited for the purpose and guiding philosophy of the Building and Construction Industry Security of Payment Act and the power to set aside an adjudication determination. |
| Chuang Long Engineering Pte Ltd v Nan Huat Aluminium & Glass Pte Ltd | High Court | Yes | [2019] 4 SLR 901 | Singapore | Cited by the adjudicator to support the proposition that prefabricated materials are claimable even if undelivered. Distinguished by the Court of Appeal because the appellant did not have control over the undelivered panels. |
| QC Communications NSW Pty Ltd v CivComm Pty Ltd | New South Wales Supreme Court | Yes | [2016] NSWSC 1095 | Australia | Cited for the test to set aside a judgment on the basis of fraud. The Court of Appeal preferred the materiality requirement established in Royal Bank of Scotland plc v Highland Financial Partners LP and others [2013] 1 CLC 596 over the Opposite Verdict Requirement pronounced in QC Communications. |
| Lazarus Estates Ltd v Beasley | Queen's Bench | Yes | [1956] 1 QB 702 | England and Wales | Cited for the principle that fraud unravels everything. |
| Mansource Interior Pte Ltd v Citiwall Safety Glass Pte Ltd | High Court | Yes | [2014] 3 SLR 264 | Singapore | Cited for the principle that the court should not be prevented from intervening if it was later discovered that an adjudication determination was made as a result of fraudulent misrepresentations. |
| OGSP Engineering Pte Ltd v Comfort Management Pte Ltd | High Court | Yes | [2018] 3 SLR 1031 | Singapore | Cited for the principle that where an adjudication determination was obtained by fraud that did not pertain to the adjudicator, it may be set aside as the court would not allow its processes to be used to facilitate fraud. |
| Brodyn Pty Ltd (trading as Time Cost and Quality) v Davenport and another | New South Wales Court of Appeal | Yes | [2004] NSWCA 394 | Australia | Cited for the principle that if the determination is induced by fraud of the claimant in which the adjudicator is not involved, then the determination is not void but voidable and it is liable to be set aside by proceedings of the kind appropriate to judgments obtained by fraud. |
| Clone Pty Ltd v Players Pty Ltd (in liquidation receivers appointed) and others | Supreme Court of South Australia | Yes | [2012] SASC 12 | Australia | Cited for the principle that there is little or no public interest in allowing a litigant who has cheated justice to retain the fruits of his or her fraud. |
| United Overseas Bank Ltd v Bebe bte Mohammad | Court of Appeal | Yes | [2006] 4 SLR(R) 884 | Singapore | Cited for the principle that the hallmark of fraud is dishonesty. |
| Derry v Peek | House of Lords | Yes | (1889) 14 App Cas 337 | United Kingdom | Cited for the classic exposition of fraud. |
| Panatron Pte Ltd and another v Lee Cheow Lee and another | Court of Appeal | Yes | [2001] 2 SLR(R) 435 | Singapore | Cited for the classic exposition of fraud. |
| Wishing Star Ltd v Jurong Town Corp | Court of Appeal | Yes | [2008] 2 SLR(R) 909 | Singapore | Cited for the classic exposition of fraud. |
| Wee Chiaw Sek Anna v Ng Li-Ann Genevieve (sole executrix of the estate of Ng Hock Seng, deceased) and another | Court of Appeal | Yes | [2013] 3 SLR 801 | Singapore | Cited for the classic exposition of fraud. |
| Ser Kim Koi v GTMS Construction Pte Ltd | Court of Appeal | Yes | [2016] 3 SLR 51 | Singapore | Cited for the classic exposition of fraud. |
| Quoine Pte Ltd v B2C2 Ltd | Court of Appeal | Yes | [2020] 2 SLR 20 | Singapore | Cited for the objective test of knowledge. |
| Takhar v Gracefield Developments Ltd and others | UK Supreme Court | Yes | [2019] 2 WLR 984 | United Kingdom | Addressed the issue of whether there was a requirement for her to show that the expert evidence could not have been obtained with reasonable diligence at the trial. |
| Clone Pty Ltd v Players Pty Ltd (in Liquidation) (Receivers & Managers Appointed) & Ors | High Court of Australia | Yes | [2018] HCA 12 | Australia | Addressed the issue of whether there was a condition requiring an innocent party to establish that reasonable diligence was exercised prior to the judgment to discover the fraud. |
| Royal Bank of Scotland plc v Highland Financial Partners LP and others | English Court of Appeal | Yes | [2013] 1 CLC 596 | England and Wales | Cited for the pronouncement of materiality in relation to setting aside judgments on the ground of fraud. |
| Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) and another appeal | Court of Appeal | Yes | [2013] 1 SLR 401 | Singapore | Cited for the principle that in an action to set aside an adjudication determination, the court does not review the merits of the adjudicator’s determination. |
| L W Infrastructure Pte Ltd v Lim Chin San Contractors Pte Ltd and another appeal | Court of Appeal | Yes | [2013] 1 SLR 125 | Singapore | Cited in relation to setting aside arbitral awards on the ground of breach of natural justice where we held that the test for materiality should be whether it “could reasonably” rather than “would necessarily” have led to a difference in the arbitrator’s deliberations. |
| Rong Shun Engineering & Construction Pte Ltd v CP Ong Construction Pte Ltd | High Court | Yes | [2017] 4 SLR 359 | Singapore | Cited for the decision where the High Court severed part of an adjudication determination for jurisdictional error. The Court of Appeal found that Rong Shun was of no assistance to the appellant’s case. |
| Hip Foong Hong v H Neotia and Company | Privy Council | Yes | [1918] AC 888 | United Kingdom | Cited for the principle that fraud unravels all and the starting point is that an adjudication determination that was corrupted by fraudulent conduct would be tainted in its entirety, and the whole must fail. |
| Hansen Yuncken Pty Ltd v Ian James Ericson trading as Flea’s Concreting | Queensland Supreme Court | Yes | [2011] QSC 327 | Australia | Cited to illustrate what de minimis fraud might possibly mean, ie, fraud not sufficiently serious in nature to warrant the court’s sanction against the unaffected portions of an adjudication determination. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) | Singapore |
| Building and Construction Industry Security of Payment Amendment Act 2018 (No 47 of 2018) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Adjudication Determination
- Building and Construction Industry Security of Payment Act
- Payment Claim
- Sub-Contract
- Fraud
- Misrepresentation
- Undelivered Panels
- Severance
- Materiality
- Rontec
15.2 Keywords
- Adjudication
- Fraud
- Construction
- Security of Payment Act
- Singapore
- Building and Construction Industry
16. Subjects
- Construction Dispute
- Adjudication
- Fraud
- Contract Law
17. Areas of Law
- Building and Construction Law
- Contract Law
- Civil Procedure
- Fraud Law
- Construction Law
- Arbitration Law