Akrobat Pte Ltd v Enovate System Pte Ltd

• Jurisdiction: Singapore
• Judge: Theodore Tan
• Judgment Date: 24 March 2021
• Neutral Citation: [2021] SGDC 58
• Court: District Court (Singapore)
• Docket Number: District Court Suit No 2571 of 2020 (Summons No 16 of 2021)
• Published date: 03 August 2021
• Year: 2021
• Hearing Date: 12 March 2021,08 March 2021
• Plaintiff Counsel: Lim Muhammad Syafiq (ChangAroth Chambers LLC)
• Defendant Counsel: Tan Yong Yuen Jordan (Tito Isaac & Co LLP)
• Subject Matter: Arbitration,Stay of court proceedings,Court's discretion under Arbitration Act
• Citation: [2021] SGDC 58

Deputy Registrar Theodore Tan: Introduction

The present application for a stay of proceedings pending arbitration was brought by the Defendant, Enovate System Pte Ltd, pursuant to arbitration clauses contained in a number of subcontracts entered into with the Plaintiff, Akrobat Pte Ltd. After hearing the parties on 8 March 2021, I dismissed the application on 12 March 2021 with brief oral grounds. I now set out my full grounds of decision.

Background

Between 2017 and 2019, the Defendant engaged the Plaintiff as a subcontractor to perform various safety-related works across a number of construction projects. A total of eight subcontracts were entered into between the parties:

Project Title	Subcontract No.	Date of Letter of Award
C158A Canberra Station	ES/2018/0021	4 Jan 2018
C158A Canberra Station	ES/2019/0032	28 Nov 2019
Paya Lebar Central	ES/2017/0093	29 Sep 2017
Paya Lebar Central (Temporary Handrail)	ES/2018/0464	11 Nov 2018
Pei Chun Public School	ES/2018/0265	28 Aug 2018
Bijou	ES/2017/002, ES/2017/002 VO-16	10 Mar 2017 / 21 Dec 2018
C1685A Tuas Depot	ES/2018/004	16 Jan 2018
Toa Payoh Church	ES/2019/0057	20 Feb 2019

Each of these subcontracts comprised a number of documents including a Letter of Award, which specified that the Defendant’s Standard Conditions of Subcontract (“the Conditions”) and its appendices would form part of the contract between the parties.⁸

The Conditions were the Defendant’s standard form contract and appeared largely identical across the eight subcontracts. Two categories of provisions were relevant to the application. The first was the arbitration clause in cl 31 which read as follows:⁹ 31 Settlement of Disputes 31.1 Notwithstanding to [sic] any dispute or difference between [the Defendant] and [the Plaintiff] as to any matter arising under or out of or in connection with the Sub-Contract or as to any certificate, decision or instruction by the Main-Contractor / Architect / Superintending Officer shall be referred to and finally resolved by arbitration in Singapore.

The second category comprised the provisions governing payment found in cl 13 and its attendant sub-clauses. While the payment terms across the subcontracts were not fully identical, they were broadly similar and can be summarised as follows:¹⁰ (a) first, the Plaintiff was to submit its payment claims to the Defendant by the first day of each calendar month for work done in the previous month; (b) second, the Defendant was to issue a payment response in the form of a payment certificate within 21 days; and (c) third, the Defendant was to make payment within a fixed time, no later than 60 days under any of the subcontracts, from the date the Plaintiff submitted an original tax invoice. Aside from this general framework, cl 13.5 of the Conditions allowed the defendant to, by an interim progress payment certificate, omit or reduce the value of work not to its satisfaction in previous interim progress payment certificates.

Throughout the course of performing its obligations under the subcontracts, the Plaintiff submitted its payment claims to the Defendant. The Defendant’s staff then issued payment certificates to the Plaintiff. These payment certificates, which are central to the dispute between the parties, contained a number of signature boxes for the Defendant’s employees who had prepared, recommended, reviewed and approved them. While on their face the payment certificates had to be signed by six different employees of the Defendant, many of the payment certificates issued and sent to the Plaintiff were signed by a lesser number, if at all. The Plaintiff subsequently issued payment invoices to the Defendant based on these payment certificates.¹¹

Following the Defendant’s failure to make payment on payment invoices totalling S$137,952.50, the Plaintiff commenced legal proceedings. The Defendant then brought the present application for a stay of proceedings pending arbitration, relying on s 6(2) of the Arbitration Act (Cap 10, 2002 Rev Ed) (“AA”) and the arbitration clause in the subcontracts (see [4] above).

The parties’ cases The Defendant’s case

The Defendant contended that under the AA, a stay in favour of arbitration would only be denied in exceptional circumstances where an applicant remained ready and willing to arbitrate. The burden was on the party who wished to proceed in court (ie, the Plaintiff) to “show sufficient reason why the matter should not be referred to arbitration” (citing Maybank Kim Eng Securities Pte Ltd v Lim Keng Yong [2016] 3 SLR 431 (“Maybank”)).¹² Reference was also made to the three higher-order concerns identified by the Court of Appeal in Tomolugen Holdings Ltd and another v Silica Investors Ltd and other appeals [2016] 1 SLR 373¹³ (“Tomolugen”) which the courts seek to balance in determining whether a matter should be stayed pending arbitration.¹⁴

Here, there was no question that the Defendant was ready and willing to arbitrate and that the arbitration clauses in the subcontracts applied.¹⁵ There was a dispute between the parties on both liability and quantum. This was evidenced by the fact that some of the payment certificates issued by the Defendant to the Plaintiff were unsigned drafts. The Defendant’s position was that the payment certificates had to be signed by both parties in order to be valid, and that the Plaintiff could not have issued payment invoices on the unsigned payment certificates. The Defendant also raised an alternative argument in respect of Subcontract No. ES/2018/004 (see [2] above). According to the Defendant, there was a discrepancy in the percentage of works certified as completed by the Defendant and the percentage of works certified as completed by the main contractor which hired the Defendant. This was further evidence of a dispute between the parties as to the quantum payable for work done.¹⁶ In the circumstances, it would be consistent with the public policy favouring arbitration to stay proceedings.¹⁷

The Plaintiff’s case

The Plaintiff naturally opposed the Defendant’s application. It first raised a preliminary objection to the form of the Defendant’s affidavit filed in support of its application. The Plaintiff, citing Re Caplan Jonathan Michael QC [2013] 3 SLR 66 and The “Evpo Agsa” [1992] 1 SLR(R) 662 (“The Evpo Agsa”),¹⁸ took the view that the supporting affidavit should be rejected and/or accorded minimal weight as it was filed by the Defendant’s counsel, Mr Jordan Tan (“Mr Tan”).¹⁹

On the substantive merits of the application, the Plaintiff submitted that it was incumbent on the Defendant to first demonstrate a prima facie case of disputes which it failed to do. The Defendant’s claims were based on mere allegations that the unsigned payment certificates were drafts and did not constitute credible evidence. The payment claims had been sent by the Defendant’s own employees and there was nothing suggesting that they were drafts. In fact, the Defendant had previously made payment on invoices issued pursuant to unsigned payment certificates. As for Subcontract No. ES/2018/004, the Defendant’s claims similarly amounted to mere allegations without any credible evidence as the Defendant had never raised any issues about incomplete and/or defective works. To the extent that the Defendant took the position that certification of the Plaintiff’s works was subject to certification by the main contractor, this arrangement would have amounted to a “pay when paid” provision unenforceable under s 9 of the Building and Construction Industry Security of Payment Act (Cap 30B, 2006 Rev Ed) (“SOPA”).²⁰

The Plaintiff also argued that there were sufficient reasons for the matter not to be referred to arbitration. The Defendant’s allegations of disputes were only raised 1 to 2 years after the payment certificates had been issued to the Plaintiff and numerous requests for payments made. The Defendant also elected to file defence although this was unnecessary under s 6(1) of the AA. Further, the Defendant had been dilatory in its conduct of the matter.²¹

Issues to be determined

The main issue to be determined in this application was whether the present suit ought to be stayed pursuant to s 6 of the AA.

The Law

The law governing such applications is relatively well-settled. As mentioned by the Defendant, the court seeks to strike a balance between the three higher-order concerns identified by the Court of Appeal in Tomolugen: (a) a plaintiff’s right to choose whom he wants to sue and where; (b) the court’s desire to prevent a plaintiff from circumventing the operation of an arbitration clause; and (c) the court’s inherent power to manage its processes to prevent an abuse of process and ensure the efficient and fair resolution of disputes. These considerations apply whether the arbitration is governed by the International Arbitration Act (Cap 143A, 2002 Rev Ed) or the AA: see Maybank ([8] supra) at [22]–[23].

Specific to applications under s 6 of the AA, there is a rich body of case law that has developed concerning when a stay of proceedings in favour of arbitration should be granted which is helpfully summarised in the decision of the Assistant Registrar in Far East Square Pte Ltd v Yau Lee Construction (Singapore) Pte Ltd [2018] SGHCR 11 (“FES”), and I can do no better than to reproduce the relevant passages (at...