Anwar Siraj and Another v Teo Hee Lai Building Construction Pte Ltd

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 28 February 2007
• Neutral Citation: [2007] SGHC 29
• Docket Number: Suit No 348 of 2006 (Registrar's Appeal No 241 of 2006)
• Date: 28 February 2007
• Published date: 01 March 2007
• Year: 2007
• Plaintiff Counsel: G Raman (G R Law Corporation)
• Citation: [2007] SGHC 29
• Defendant Counsel: S Thulasidas (Ling Das & Partners)
• Court: High Court (Singapore)
• Subject Matter: Whether arbitrator concluding arbitration proceedings and publishing award on earlier disputes considered functus officio for purpose of hearing subsequent dispute,Whether subsequent dispute may not be referred to arbitration on ground that arbitrator functus officio,Contractual terms,Stay of court proceedings,Contract,Arbitration,Whether court should grant stay of proceedings in favour of arbitration,Whether architect having power at any time to issue further interim certificate correcting any error in earlier interim certificate,Dispute between owners of residential property and main contractor working on property over payments owing to main contractor and interim certificates issued by architect in connection therewith,Express terms

28 February 2007

Andrew Ang J:

1 This was an appeal from a decision of the assistant registrar ordering that the action brought by the plaintiffs in Suit No 348 of 2006 be stayed and referred to arbitration and that the plaintiffs pay the defendant costs in the sum of $2,500. I upheld the decision of the assistant registrar and the plaintiffs decided to take the matter further on appeal.

Background

2 The plaintiffs are a husband and wife, the owners of the residential property at No 2 Siglap View, Singapore 455810, comprised in Lot 425-292, Mukim 26 (hereinafter referred to as “the Property”). The defendant is a building and construction company incorporated in Singapore with its registered office at 314A Joo Chiat Road, Singapore 427565.

3 By a letter of award dated 29 December 1999 issued by the project architect Mr Tan Hock Beng, the defendant was appointed by the plaintiffs as the main contractor for the erection of a two-storey detached dwelling house with an attic, basement and swimming pool on the Property (such development thereon being hereinafter referred to as “the Project”).

4 The contract between the parties (“the Contract”) incorporated the Articles and Conditions of Building Contract in the Singapore Institute of Architects Lump Sum Contract (6^th Ed, August 1999) (hereinafter referred to as the “SIA Contract”) and, accordingly, Conditions in the SIA Contract are hereinafter referred to by their number as clauses of the Contract.

5 Disputes and differences arose between the parties on various issues including alleged delay, claims of alleged defects and quantum of payments due to the defendant.

6 In regard to the dispute over the payments due to the defendant, Interim Certificate No 11 issued by the architect on 12 January 2001 valued the work done by the defendant at $726,000 but Interim Certificate No 12 issued on 6 February 2001 reduced the sum to $712,294. According to the defendant, this was done without the issuance of a revision certificate setting out the nature of the revision and providing a detailed breakdown.

7 The disputes and differences between the parties resulted in the defendant issuing letters to the plaintiffs on 25 July 2001, 6 August 2001 and 16 August 2001 giving notice of their intention to refer the matters to arbitration.

8 On 12 January 2001, Mr John Ting Kang Chung (“Mr Ting”) was appointed the arbitrator by the President of the Singapore Institute of Architects.

9 Alleging incompetence and bias on the part of the arbitrator, the plaintiffs applied to the High Court in Originating Motion No 26 of 2002 for his removal and for the parties’ dispute to be heard by the High Court instead. Tay Yong Kwang J dismissed the application. The plaintiffs’ appeal to the Court of Appeal was also dismissed. The plaintiffs were therefore obliged to continue with the arbitration.

10 The arbitrator required each of the parties to pay a sum of $25,000 as further deposit to secure his fees and expenses. The defendant paid but the plaintiffs did not. On the application of the defendant, the arbitrator, by his directions of 21 November 2003, decided that he would not hear the claims or counterclaim of the plaintiffs as long as his direction to them to pay the $25,000 deposit went unheeded. It is pertinent to note that the plaintiffs failed to appear before the arbitrator for the hearing of the defendant’s application despite twice having been given the opportunity to do so.

11 The arbitrator then proceeded with the arbitration in the absence of the plaintiffs who had insisted that a number of matters had to be set right before they would appear.

12 Although under the Singapore Institute of Architects Arbitration Rules, the arbitrator is to make his award in writing within 60 days after close of the hearing, in this case it was not until 15 April 2005 that the arbitrator wrote to inform the parties that the award was ready for collection upon payment of his fees and expenses amounting to $199,178.40. Neither party collected the award. At least in the case of the defendant, it appeared that the award was not collected because of the quantum of the arbitrator’s fees.

13 On 20 January 2006, the architect for the Project issued his 13th Interim Certificate reducing the value of the defendant’s work substantially below what the architect had previously certified. On the basis of that Certificate, an amount of $348,000 would be payable to the plaintiffs, this being the amount by which the plaintiffs would have overpaid the defendant given the reduction in the value of the defendant’s work.

14 The plaintiffs brought the action herein for recovery of the said sum of $348,000. This resulted in the defendant successfully applying to the assistant registrar in Summons No 2800 of 2006 for a stay of proceedings in favour of arbitration. The assistant registrar’s decision led to the instant appeal which I heard and dismissed.

15 The plaintiffs’ submissions may be summarised thus:

(a) Having concluded the arbitration and published the award, the arbitrator is functus officio. There is no arbitrator to whom any reference may be made on the present claim by the plaintiffs. The plaintiffs are therefore justified in bringing this claim to the court.

(b) Under cl 31(4) of the Contract, the architect has power at any time, whether before or after completion, to issue a further Interim Certificate correcting any error in an earlier Interim Certificate (but not any Delay, Further Delay, or any other Certificate other than an Interim Certificate) or dealing with any matter of which he was not aware, or which should have been dealt with, at the time of the earlier Interim Certificate, or revising any decision or opinion on which the Interim Certificate was based. Clause 37(3)(i) of the Contract further provides as follows:

The power of the Architect to issue a further certificate under clause 31(4) of the Conditions shall continue until his Final Certificate notwithstanding the prior commencement of proceedings by way of arbitration or in the Courts, to which further certificate full effect shall be given by the Courts or an arbitrator until final award or judgment.

(c) Clause 37(11) specifically provides that none of the provisions of cl 37 shall be construed so as to limit or prevent either party from requesting the court to exercise its discretion to refuse a stay of proceedings in any case where a third party (in this case, the architect) is also involved directly or indirectly in a dispute with or between the parties to the contract.

(d) Section 12(2) of the Arbitration Act (Cap 10, 1985 Rev Ed) provides:

Where an agreement between any parties provides that disputes which may arise in the future between them shall be referred to arbitration and a dispute which so arises involves the question whether any such party has been guilty of fraud, the court shall, so far as may be necessary to enable that question to be determined by the court, have power to order that the agreement shall cease to have effect and power to give leave to revoke the authority of any arbitrator or umpire appointed by or by virtue of the agreement.

In view of the defendant accusing the architect of having issued Interim Certificate No 13 fraudulently, s 12(2) comes into play.

(e) Where the evidence is so clear-cut that the defendant does not have any valid defence, the court will not allow a stay.

(f) The defendant has not shown that it remains ready and willing to arbitrate.

16 On its part, the defendant submitted as follows:

(a) The architect’s issue of Interim Certificate No 13, almost five years after Interim Certificates No 11 and No 12, was in breach of cl 31(1) (read with the Appendix thereto) which requires Interim Certificates to be issued monthly. It was also issued some 4½ years after the appointment of the arbitrator. As such, Interim Certificate No 13 was null and void. Besides, Interim Certificate No 13 ignored the manner and form in which such certificate was to be issued.

(b) Interim Certificate No 13 was also issued under improper pressure or interference by the plaintiffs. (The defendant’s other allegation that the architect had issued Interim Certificate No 13 fraudulently in collusion with the plaintiffs was withdrawn by the defendant at the hearing before me.)

(c) Clause 37(1) sets out the parties’ agreement to refer disputes between them to arbitration. The dispute over Interim Certificate No 13 clearly falls within cl 37(1) and the plaintiffs’ action in Suit No 348 of 2006 is a wrongful attempt to bypass cl 37(1) and should be stayed.

(d) The arbitration before the arbitrator has not been concluded. The arbitrator is not functus officio.

17 I shall deal with the questions in the following order:

(a) Whether the dispute between the parties over Interim Certificate No 13 falls within cl 37(1).

(b) Whether the plaintiffs’ claim based on Interim Certificate No 13 is indisputable so that the court has the jurisdiction to decide the claim despite the parties’ agreement in cl 37(1) for disputes to be referred to arbitration. In this connection, I shall consider whether the defendant’s contention that the Interim Certificate No 13 was null and void for any of the reasons given prima facie discloses a bona fide defence.

(c) Whether cl 37(7) permits a party to apply to court for an order for repayment of sums allowed or overpaid instead of referring the dispute to arbitration as provided in cl 37(1).

(d) Whether the arbitrator is functus officio and, if so, whether for that reason the plaintiffs are entitled to bring their action in court.

(e) Whether the arbitration agreement should cease to have effect by reason of the defendant’s allegation of fraud against the architect.

(f) Whether the court should refuse a stay of proceedings on the plaintiffs’ contention that cl 37(11) applies.

(g) Whether the defendant was ready and willing to arbitrate.

(a) Whether the dispute falls within cl 37(1)

18 Clause...