Type: “I will SOP you! You have 7 days to pay up or respond!” Click send

Background

The Court of Appeal decision in Lee Wee Lick Terence (alias Li Weili Terence) v Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) and another appeal [2013] 1 SLR 401 (Chua Say Eng (CA)) is important for deciding several issues relevant to adjudication practitioners under the Building and Construction Industry Security of Payment Act (SOP Act). It is also important on a point which appears to be obiter. At paragraph [74] of the judgment, the Court of Appeal held:

“As for the mode of giving notice, Parliament has stopped short of requiring the information to be personally communicated to the respondent. This can be seen from the service requirements in s 37(1) of the Act: that provision states that documents "may be served" by personal delivery (s 37(1)(a)), by leaving the document at the respondent's usual or last known place of business (s 37(1)(b)), or by posting or faxing it to that place (s 37(1)(c)). Other modes of service may also be possible. ……” [emphasis added.]

On the face of it, the Court of Appeal seems to accept that the service regime under section 37 of the SOP Act is facultative and not mandatory. Is this the case, and if so, should this be good law?

Is service of documents by email valid under the SOP Act?

Under section 37 of the SOP Act, a document may be served by:

  1. delivering it to the person personally;
  2. leaving it during normal business hours at the usual place of business of the person;
  3. sending it by post or facsimile transmission to the usual or last known place of business of the person; or
  4. such other methods permitted by other law with respect to the service of documents.

Based on a literal reading of section 37 of the SOP Act, it appears that by the use of the word “may”, the regime for service of documents under the SOP Act is facultative, and not mandatory. Further, section 37(3) of the SOP Act provides that the methods prescribed under section 37 are in addition to, and do not limit or exclude, the provisions of any other law with respect to the service of documents.

Support for this interpretation can be found in case law from the Australian states of New South Wales and Victoria where the courts have construed service of documents by email under the relevant adjudication legislation to be permissible. In these cases, the courts held that adjudication legislation provided for a facultative, rather than mandatory regime. In coming to this conclusion, it appears that the Australian courts placed emphasis on the use of the word “may” in the service provisions and was also influenced by such service provisions allowing parties to agree contractually on the modes of service of documents, the latter of which is not found in the SOP Act.

In Singapore, there appears to be no reported decision on this issue that has fully considered the arguments in support for or against the above construction of section 37, save possibly for Chua Say Eng (CA) which appears to be obiter.

However, some guidance can be obtained from adjudication determinations. To the best of our knowledge, four adjudicators have had to deal with the issue of whether service of documents by email was valid under the SOP Act. Three of the adjudicators held that service by email was not valid under the SOP Act as the modes of service prescribed under the SOP Act were mandatory while one (he was a review adjudicator) gave a literal reading to section 37 and held that it was facultative, among other reasons.

Why the difference between the Australians and the Singaporeans? Is it because the equivalent adjudication legislations in the Australian states essentially permit parties to agree on the modes of service under the construction contract or the Australian Courts are simply interpreting the word “may” literally?

First, the SOP Act expressly prohibits parties from contracting out of the provisions of the SOP Act and there is no similar provision which provides for parties to agree on the modes of service of documents.

Secondly, email is not an expressly stated accepted mode of service under the SOP Act. Three of the adjudicators in the Singapore adjudications were of the view that an interpretation of section 37 that made compliance with prescribed modes of service mandatory, rather than facultative, was preferred because this would provide certainty to the manner by which documents are to be served under the SOP Act, given the strict and short timelines imposed under the SOP Act in respect of the adjudication process.

In short, the contractor, employer or consultant need not be worried that service of a payment claim will come on Facebook, Twitter, Weibo or a general email address. Otherwise, there could be chaos because one would not know where a payment claim could come from.

Thirdly, the use of the word “may” in section 37(1) must be seen in the context of section 37(3). As mentioned above, section 37(3) provides for the application of other methods of service provided for under the law. It is likely that this refers to section 48A of the Interpretation Act which provides for service of documents on individuals, partnerships and corporate bodies. The relevant section applicable to a corporate body provides for service of documents by delivering the document to the secretary or other like officer or by leaving the document at or sending it by pre-paid post to the registered office or principal office of the corporate body in Singapore. These other modes are in addition to the methods prescribed under section 37(1) and 37(2) of the SOP Act.

Therefore, section 37 of the SOP Act as a whole has provided for valid modes of service and should be strictly complied with. To the extent that email is not a prescribed mode of service under section 37 of the SOP Act read with section 48A of the Interpretation Act, it is invalid.

Interestingly, section 34E of the Building and Construction Authority Act and order 62 rule 6(1)(e) of the Rules of Court both permit service by way of email if certain pre-requisites are satisfied. Indeed, the one review adjudicator referred to earlier relied on the Building and Construction Authority Act (where email service is permissible) to argue that email service is permissible under section 37(3) of the SOP Act.

Several questions arise which remain to be tested in court:

  1. Is the review adjudicator correct in his use of the Building and Construction Authority Act to construe service provisions in a different Act, i.e. the SOP Act?
  2. Will there be chaos if section 37 is given a wide interpretation in that it is facultative and is not limited to merely importing the provisions of section 48A of the Interpretation Act?
  3. Was email service deliberately excluded as a valid means of service under the SOP Act or is it the case that the SOP Act should be amended to keep up with the times?

Conclusion

It is clear that adjudication is becoming increasingly prevalent and has become an important part of the building and construction industry. In this modern world, email communication is far faster, and probably more ubiquitous in Singapore compared to other modes of communication. It will not be surprising to find that many payment claims and payment responses are now delivered by way of email, and not some other mode. Even if a post or courier copy followed, it may not be on the same day.

Hence, the lack of absolute clarity on whether email service of documents under the SOP Act constitutes good service for the purposes of section 37 of the SOP Act can cause grief to stakeholders. One may be caught out with its payment response emailed to the claimant deemed as invalid service and hence no payment response for the purposes of adjudication. Further, if time started running from the delivery of the post copy and not the emailed copy, the parties may find themselves out of time for the purposes of adjudication. On the other hand, it seems unfair that such consequences should ensue if the other party clearly received the emailed document and could deal with it. Given the proliferation of adjudication cases, any clarity provided on this simple issue of service would be timely. Otherwise, the simple click of a mouse may lead to sleepless nights.