A construction company that has just lost an adjudication under the Security of Payment Act does not have to simply pay up and stay quiet. In narrow but well established circumstances, the paying party can go to the Singapore courts to have the adjudicator’s decision set aside. This article explains what that application involves, when it succeeds, and what a director or business owner should expect if the company finds itself on the wrong end of an adjudication determination it believes was wrongly decided.
What the Application Is
An application to set aside an adjudication determination is a court application made by the losing party in a Security of Payment Act (SOPA) adjudication, asking the General Division of the High Court (or, for smaller claims, the State Courts) to declare the adjudicator’s decision invalid and unenforceable.
Adjudication under SOPA is designed to be fast and provisional. An adjudicator, usually a quantity surveyor, engineer or lawyer appointed through an authorised nominating body, decides a progress payment dispute within a matter of weeks based on written submissions, without a full trial. The determination is binding on an interim basis, on a “pay now, argue later” footing, so that cash keeps flowing down the construction chain while the underlying dispute is resolved later through litigation or arbitration.
Because adjudication is fast and largely done on the papers, the courts allow only a narrow safety valve for cases where the process itself went wrong, not for cases where a party simply disagrees with the adjudicator’s reasoning on the merits. Setting aside is that safety valve. It is not an appeal, and the court will not re-decide the payment dispute on its merits.
Legal Basis
The relevant legislation is the Building and Construction Industry Security of Payment Act 2004 (SOPA). Section 27 of the Act deals with enforcement of an adjudication determination, and it is under section 27, read together with the Singapore courts’ inherent supervisory jurisdiction, that a respondent applies to resist enforcement or to set the determination aside.
Where a respondent applies to set aside a determination, section 27 requires the unpaid adjudicated amount to be paid into court as security pending the outcome of the application. This reflects the “pay now, argue later” philosophy of the Act: a respondent cannot simply withhold payment indefinitely by filing a set-aside application.
The grounds on which a determination can actually be set aside are narrow and have been developed through case law, most notably the Court of Appeal’s decision in W Y Steel Construction Pte Ltd v Osko Pte Ltd [2013] SGCA 32, which confirmed that the courts apply a restrictive approach analogous to that used for setting aside arbitral awards. In summary, the recognised grounds are:
- the adjudicator lacked jurisdiction (for example, because there was no valid payment claim or payment response, or the application was made out of time);
- there was a breach of the rules of natural justice, such as the adjudicator deciding the dispute on a basis neither party had the chance to address, or a real risk of bias;
- the determination was induced or affected by fraud or corruption; or
- there was a failure to comply with a mandatory requirement of the Act itself.
Procedurally, such applications are brought as an Originating Application under the Rules of Court 2021 (the equivalent provision under the former Rules of Court 2014 was Order 95 Rule 3). If you cannot locate the precise current Rules of Court 2021 order and rule number for your matter, do not rely on a guess. Your Singapore Advocate and Solicitor will confirm the exact procedural provision that applies to your case and forum (State Courts or the General Division of the High Court, depending on the quantum involved).
Who Can Apply
In practice, it is almost always the respondent, the paying party under the construction contract, who applies to set aside an adjudication determination. This is typically the main contractor (where a subcontractor is the claimant) or the employer (where the main contractor is the claimant).
A claimant does not need to set aside a determination it has won. If the respondent does not comply, the claimant’s remedy is instead to apply for leave to enforce the determination as a judgment or order of court under section 27 of SOPA.
Only a party to the adjudication, or in limited cases a party directly affected by the determination, has standing to bring a set-aside application. The application is made in the company’s own name, so the board should authorise the step and instruct solicitors formally before proceedings are filed.
Step-by-Step Process
- Receive the adjudication determination. The clock starts running immediately. Do not wait to consult solicitors, since the claimant may move quickly to seek leave to enforce.
- Assess the grounds honestly. Disagreement with the adjudicator’s findings of fact or valuation is not a ground to set aside. Your solicitor will assess whether there is a genuine jurisdictional defect, natural justice breach, fraud, or non-compliance with the Act.
- Prepare and file the Originating Application together with a supporting affidavit setting out the facts and the specific ground(s) relied upon, in the court with jurisdiction over the amount in dispute.
- Pay the unpaid adjudicated amount into court as security, as required under section 27 SOPA, unless the court otherwise directs. Failure to do so will usually be fatal to the application.
- Serve the application on the claimant, who will typically file an affidavit in response defending the determination.
- Attend the hearing. These applications are usually dealt with on affidavit evidence and legal argument, without cross-examination of witnesses, and are heard far more quickly than a full trial.
- Receive the court’s decision: the application is dismissed (the determination stands and the security is released to the claimant), or the determination is set aside in whole or in part.
Documents Required
| Document | Purpose |
|---|---|
| Originating Application and supporting affidavit | Formally commences the set-aside proceedings and sets out the grounds relied upon |
| Copy of the adjudication determination | The decision being challenged |
| Payment claim and payment response | Establishes the scope of the dispute referred to adjudication and whether the adjudicator went beyond it |
| Adjudication application and adjudication response | Shows what submissions were actually before the adjudicator |
| Correspondence evidencing the alleged breach | Supports a natural justice, jurisdictional, or fraud argument, e.g. correspondence showing a point was never raised with the parties |
| Proof of payment into court (security) | Satisfies the section 27 SOPA requirement to pay the unpaid adjudicated amount into court |
| Company board resolution or director’s authorisation | Confirms the company has properly authorised the proceedings |
| ACRA business profile of the company | Confirms the company’s registered particulars for the court papers |
| Warrant to act / letter of engagement | Confirms the solicitor’s authority to act for the company |
Timeline and Costs
| Stage | Typical Timeframe | Typical Cost Considerations |
|---|---|---|
| Assessing grounds and preparing the application | Days, given the claimant may move quickly to enforce | Legal fees for urgent advice and drafting, which rise sharply with complexity |
| Filing and payment of security into court | At or shortly after filing | The full unpaid adjudicated amount must generally be paid into court |
| Exchange of affidavits | Several weeks | Legal fees for affidavit preparation and review |
| Hearing and decision | Typically a few months from filing, faster than a full trial | Court hearing fees, counsel’s fees for the hearing |
| Any further appeal | Additional months if either party appeals | Further legal fees; appeals in SOPA matters are limited |
Exact fees depend on the complexity of the dispute, the sums involved, and whether the matter is contested vigorously. Ask your panel law firm for a written costs estimate before instructing them, and budget separately for the security payment, which is not a cost but a sum the company must have available in cash.
What Happens After the Order
If the application fails, the determination stands, the security paid into court is released to the claimant, and the respondent remains liable to pay the adjudicated amount. The respondent’s substantive dispute about whether the money was really owed is not lost, however: because adjudication is only an interim mechanism, the respondent can still pursue the underlying dispute to a final resolution through litigation or arbitration, and recover any overpayment later if it succeeds.
If the application succeeds, the determination is set aside in whole or in part. The security paid into court is returned to the respondent (or adjusted if only part of the determination is set aside). The underlying payment dispute is not resolved by the set-aside order; the parties are usually left to pursue the dispute afresh, whether through a new adjudication application (if still within time), litigation, or arbitration, depending on their contract.
Either way, a set-aside application does not decide who is ultimately entitled to the money. It only decides whether the adjudicator’s determination was validly made.
Frequently Asked Questions
Can I set aside an adjudication determination simply because I think the adjudicator got the valuation wrong?
No. The courts will not set aside a determination merely because a party disagrees with the adjudicator’s assessment of the facts, the contract, or the valuation. The grounds are limited to jurisdictional error, breach of natural justice, fraud or corruption, and non-compliance with mandatory requirements of the Act.
Do I have to pay the adjudicated amount even while my set-aside application is pending?
Generally yes. Section 27 SOPA requires the unpaid adjudicated amount to be paid into court as security when applying to set aside a determination. This reflects the Act’s “pay now, argue later” approach and is a significant practical consideration before deciding whether to challenge a determination.
How long do I have to file a set-aside application?
There is no single fixed statutory countdown published for every scenario, but a respondent should act immediately upon receiving the determination, since the claimant may apply for leave to enforce it as a judgment within a short period. Delay can also weaken the merits of a natural justice argument. Speak to a Singapore Advocate and Solicitor as soon as the determination is received.
What is the difference between setting aside a determination and resisting enforcement of it?
They are closely related but distinct applications, both arising under section 27 SOPA. Setting aside asks the court to invalidate the determination itself. Resisting enforcement (or seeking a stay of enforcement) asks the court to prevent the determination from being converted into and executed as a court judgment, sometimes on narrower or different grounds, such as the claimant’s insolvency.
Does setting aside a determination mean I do not have to pay at all?
Not necessarily. Setting aside only removes the adjudicator’s interim decision. The underlying dispute over who owes what generally still needs to be resolved through litigation, arbitration, or a fresh adjudication application, unless the parties settle.
Can the claimant also challenge a determination it disagrees with?
Yes, though this is less common. A claimant dissatisfied with part of a determination may in some circumstances apply for an adjudication review (where available under the Act) rather than a court set-aside application, since the claimant is the party seeking to enforce, not resist, the determination.
Need Help With This Matter?
If your company is facing this situation, Raffles Corporate Services can assist with the groundwork: ACRA filings, compliance documentation, and coordinating with experienced Singapore law firms. For matters requiring court proceedings, we work with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice.
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This article is for general information only and does not constitute legal advice. For advice specific to your situation, please consult a qualified Singapore Advocate and Solicitor.
The Editorial Team, Raffles Corporate Services