Can Enforcement Of An Adjudication Determination Be Stayed If The Enforcement Respondent Would Be Pushed Into Liquidation?

• Law Firm: Chancery Law Corporation
• Subject Matter: Real Estate and Construction, Construction & Planning
• Author: Mr Tian Luh Tan and Yap Xuan Wei
• Published date: 09 March 2023

In Wan Sern Metal Industries Pte Ltd v Hua Tian Engineering Pte Ltd [2023] SGHC 46, Kwek Mean Luck J dismissed an appeal for a stay for enforcement of adjudication determination. Kwek J noted that the appellant's third argument, on the basis that enforcement would push them into liquidation, was "an additional novel ground".

Facts. Wan Sern Metal Industries Pte Ltd ("WS") applied to stay the enforcement of the Adjudication Determination ("AD") awarded in favour of Hua Tian Engineering Pte. Ltd. ("HT") (at [1]).

The application was dismissed by the learned Assistant Registrar ("AR") below, and this was WS's appeal, based on the two limbs of W Y Steel Construction Pte Ltd v Osko Pte Ltd [2013] 3 SLR 380 ("W Y Steel") "and on an additional novel ground that the court may stay the enforcement of the AD on the basis that enforcement would push WS into liquidation." (at [2] - [3])

WS's appeal was dismissed on all three grounds (at [4]).

W Y Steel Test. The two limbs of W Y Steel are reproduced below (at [2]):

"2 The applicable legal principles are well-established and were not disputed by the parties. A stay of the enforcement of an adjudication determination may ordinarily be justified where (W Y Steel Construction Pte Ltd v Osko Pte Ltd [2013] 3 SLR 380 ("W Y Steel") at [70] and CEQ v CER [2020] SGHC 192 ("CEQ") at [9]) ("the W Y Steel test"):

(a) there is clear and objective evidence of the successful claimant's actual present insolvency; or

(b) the court is satisfied on a balance of probabilities that, if the stay were not granted, the money paid to the claimant would not ultimately be recovered if the dispute were resolved in the respondent's favour."

This test is concerned with the enforcement applicant's financial position, viz, whether the money paid to the enforcement applicant can be recovered in the event the winner was ultimately reversed.

This article will focus on WS's third ground, which is that the court may stay enforcement of the AD on the basis that enforcement would push WS into liquidation.

Pushing WS into liquidation. WS's argument is essentially "that enforcement of the AD would push it into liquidation, given its weak financial position" (at [27]).

This is the "reverse" of the W Y Steel test, given that it focusses on the enforcement respondent's financial position, rather than the enforcement applicant's.

WS tried to rely on W Y Steel's description of the Building and Construction Industry Security of Payment Act 2004 (2020 Rev Ed)...