Bocotra Construction Pte Ltd and Others v Attorney General

JudgeKarthigesu JA
Judgment Date23 May 1995
Neutral Citation[1995] SGCA 51
Date23 May 1995
Subject MatterPreservation of property -Whether 'property' included choses in action,Arbitration,O 29 r 2(1) Rules of the Supreme Court 1990,Arbitrator's powers,Award,Civil Procedure,Interim declaration to preserve status quo pending final determination of proceedings,Words and Phrases,Whether arbitrator validly seised of counterclaim in arbitration,Arbitral tribunal,Power to order interim preservation of performance bond,Whether order properly made- s 27(1) Government Proceedings Act (Cap 121),r 18(g) Arbitration Rules of the Singapore International Arbitration Centre,Judgments and orders,Jurisdiction,Power of court to make interim declaration of rights against government,s 27 Government Proceedings Act (Cap 121),Enforceability and construction of bond not before arbitrator,Interim award,Proceedings against government,Arbitration Rules of the Singapore International Arbitration Centre r 18(g),'Property',Powers
Docket NumberCivil Appeal No 132 of 1994
Published date19 September 2003
Defendant CounselLee Seiu Kin and Lionel Yee (Attorney General's chambers)
CourtCourt of Appeal (Singapore)
Plaintiff CounselMichael Khoo, Josephine Low and Cheah Kok Lim (Michael Khoo and BB Ong) and Ho Chien Mien (Allen & Gledhill)

Cur Adv Vult

This is an appeal against the order of Goh Joon Seng J made on 25 July 1994. By this order, Goh Joon Seng J declared that an interim arbitration award dated 25 February 1994 in relation to the letter of guarantee No 957/88/875 made by Tun Mohamed Suffian (the arbitrator), was not binding on the respondent because the order was invalid or void. In a related matter, OS No 266 of 1994, which also came before this court of Appeal as CA 168/94, Goh Joon Seng J dismissed the appellants` application for declarations as to certain of their rights arising out of the same arbitration. The judgment of Goh Joon Seng J is reported at [1995] 1 SLR 567 . The factual background to both appeals is similar.

The facts

On 27 November 1987 the appellants entered into an agreement (the contract) with the Director-General of Public Works, whereby the Public Works Department (PWD) were appointed as contractors for the engineering survey and investigation, design, construction and maintenance of the then-proposed Central Expressway (CTE) Phase II from Bukit Timah Road to Chin Swee Road. The Director-General of Public Works represented in these proceedings by the Attorney General will be referred to as `the respondent`. The contract price was $312,888,888, including a contingency sum of $25m. The contract provided for the respondent to appoint a person (referred to as `the engineer` in the contract and hereinafter) who would be responsible for administering the contract and supervising the construction, completion and maintenance of the works. The engineer was also required to play a certifying role in relation to the performance of various specified contractual obligations.

By cl 9 of the conditions of contract, the appellants were required to provide a bank guarantee for the amount of $31,288,888.80, being 10% of the contract price, as security for their due performance of the works.
This was duly obtained from the Standard Chartered Bank (the bank). The bank guarantee (the guarantee) was interchangeably referred to by the parties as a performance bond. It provided under cl 4 that it would remain valid up to the date the engineer issues the maintenance certificate in accordance with cl 55 of the conditions. The guarantee was conditional upon a written claim being made by the government within six months from its expiry. The issue of the maintenance certificate itself was dependent on the issue of the completion certificate under cl 47(1) of the conditions. The material portions of cl 47(1) provided that the appellants may request the engineer to issue a completion certificate when they consider that the whole of the works has been substantially completed and has satisfactorily passed any final test that may be prescribed by the contract.

The works involved were scheduled to be completed on 25 January 1991.
This deadline was not met and a substantial portion of the works, including the CTE tunnels, was completed only by September 1991. The tunnels were opened for use on 21 September 1991. On 24 September 1991, the engineer issued a partial completion certificate under cl 47(3) of the conditions certifying completion of the bulk of the works, including the tunnels, with effect from 5 September 1991. To date, only this partial completion certificate has been issued. There were outstanding works left uncompleted by the appellants, such as the removal of the cofferdam in the Singapore River, construction of the river wall, completion of certain ramps, staircases and underpasses and other miscellaneous items. The maintenance certificate has not been issued.

Disputes had arisen between the parties in the meantime since April 1991 and these were referred to arbitration pursuant to cl 60 of the conditions.
On 19 January 1993, the parties appointed the arbitrator. On 12 February 1993, with the consent of the parties, he directed that rules (the rules) modelled on the Singapore International Arbitration Centre Rules would govern the conduct of the arbitration. By their points of claim, the appellants alleged that there were errors in the respondent`s tender documents relating to the highway alignments and flood level requirements as provided in the respondent`s drawings and specifications, and maladministration of the contract by the respondent. They contended that as the respondent had caused delays in their work, they would be entitled to an extension of time totalling 384 days as against only 73 days granted by the engineer. They also contended that the works were substantially completed on 15 August 1991, more than two weeks before the certified date of partial completion. For these reasons, the appellants claimed a sum of $138,448,900.

The respondent served the points of defence on 17 September 1993, disputing liability.
In November 1993, the respondent counterclaimed for the costs of remedial works owing to defects in the construction of the tunnels and liquidated damages for delay amounting to $87m. The appellants did not file any defence to the counterclaim, contending that the counterclaim was a nullity. They argued that the counterclaim was not within the primary reference to arbitration as the respondent had not referred the counterclaim to the engineer for his decision in accordance with cl 60 of the conditions. Consequently, the respondent indicated that the counterclaim would be referred to the engineer with a view to making it the subject of a separate reference to arbitration. The counterclaim which had been filed was, however, not withdrawn by the respondent from the ongoing arbitration proceedings.

By a letter dated 5 February 1994, the respondent notified the appellants and the bank of its intention to call for payment on the guarantee on 19 February 1994.
This was apparently actuated by the results of the respondent`s consulting engineers` report which confirmed breaches of contract by the appellants. Counsel for the appellants wrote to the arbitrator on 9 February 1994 requesting ex parte for an order restraining the respondent from making a call upon the guarantee until the matter could be heard by the arbitrator on 25 February 1994. On 14 February 1994, the arbitrator issued an ex parte interim order restraining the respondent from making a call upon the guarantee, thereby preserving the status quo between the parties until 25 February 1994.

Representations were immediately made by the respondent to the arbitrator, pointing out that he had no power to grant injunctions under the rules, the Arbitration Act (Cap 10) or at common law.
In particular, s 27(1) of the Government Proceedings Act (Cap 121) (the GPA) expressly precluded an injunction to be issued against the government in any proceedings to which it was a party. On 16 February 1994, the arbitrator withdrew his interim order dated 14 February 1994. After considering further written submissions by the appellants, the arbitrator directed on 18 February 1994 that the respondent `do preserve the bank guarantee dated 13 August 1988 by desisting from making a call on it ... otherwise it would cause injustice to the (appellants).` On 25 February 1994, the arbitrator made the following ruling after hearing the parties` submissions:

I hereby declare that the respondent is not entitled to demand or otherwise take any steps to call for payment of any sum under the letter of guarantee No 957/88/875 dated 13 August 1988 until such time as the respondent`s entitlement to make such or any call for payment under the said letter of guarantee has been determined in this arbitration.

The respondent filed an originating summons for, inter alia, a declaration that this interim declaratory order was invalid or void.
The arbitrator`s reasons for the order, delivered on 7 March 1994, disclosed two main considerations: first, he did not view the declaration as an injunction or an order of specific performance; it was `merely an order declaratory of the rights of the parties which the (Government Proceedings) Act allows a court to make.` Second, the money payable under the guarantee is `property or thing under the control of the PWD; and r 18(g) of SIAC Rules (sic) expressly allows an arbitrator to make an order for its preservation.`

The decision below

In the proceedings below, Goh Joon Seng J declared that the order of the arbitrator did not bind the PWD. The appellants contended on appeal that Goh Joon Seng J had erred in law on all the three grounds stated in his grounds of decision. The first contention was that Goh Joon Seng J had erred in finding that the arbitrator was not seised of any matters relating to the guarantee. Goh Joon Seng J found that only the points of claim and points of defence had been validly placed before him. The guarantee was obtained to secure due performance by the appellants of their contractual obligations. The intended call on the guarantee arose out of alleged breaches by the appellants which properly formed the subject matter of counterclaim. The learned judge stated:

These alleged breaches on the part of the (appellants) forming the subject matter of the counterclaim were thus not before the arbitrator. Neither had the enforceability and the construction of the bond been referred to the arbitrator for his decision. Accordingly he had no jurisdiction to grant the order of the 25 February 1994 for the interim preservation of the bond.

Second, it was contended that Goh Joon Seng J had erred in holding that an interim declaration was a relief unknown in law.
The order made purported to be merely declaratory of the parties` rights. In substance, however, the order was made to preserve the status quo pending the arbitrator`s eventual determination of the respondent`s entitlement to call on the guarantee. Goh Joon Seng J held that it was quite impossible to invent an interim declaration which did not finally determine the rights of the parties but was only meant to preserve the status quo, adopting Upjohn LJ`s...

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