Cheng Poh Building Construction Pte Ltd v First City Builders Pte Ltd
| Jurisdiction | Singapore |
| Judge | Chao Hick Tin JA |
| Judgment Date | 04 March 2003 |
| Neutral Citation | [2003] SGCA 8 |
| Date | 04 March 2003 |
| Subject Matter | Stay of execution,Judgments and orders,Civil Procedure,Counterclaim arising out of separate transaction from that which forms subject matter of action |
| Docket Number | Civil Appeal No 89 of 2002 |
| Published date | 17 December 2003 |
| Defendant Counsel | Tang Gee Ni (Chia & Tang) |
| Court | Court of Appeal (Singapore) |
| Plaintiff Counsel | Intekhab Khan, Nicholas Narayanan (J Koh & Co) |
Delivered by Chao Hick Tin JA
1 This was an appeal against a decision of the High Court staying execution of a summary judgment granted in favour of the appellant-plaintiffs on the ground that the respondent-defendants had a counterclaim against the plaintiffs which surpassed the amount of the summary judgment. We heard the appeal on 19 February 2003 and allowed it, lifting the stay of execution. We now give our reasons.
The facts
2 The plaintiffs, Cheng Poh Construction Pte Ltd ("Cheng Poh"), were a Singapore incorporated company carrying on the business of a general contractor undertaking building construction and major upgrading works. The defendants, First City Builders Pte Ltd ("First City"), were also a Singapore incorporated company involved in the construction business.
3 First City were the main contractors of a part single/part three-storey building project at No. 51 Shipyard Road ("Shipyard Road project"). The employers were Comfort Resources Pte Ltd. Cheng Poh were appointed by First City as the sub-contractors in respect of the entire project for a lump sum of $1,895,250, excluding GST.
4 Pursuant to the terms of the main contract and the sub-contract, payments to Cheng Poh would be effected on a "back-to-back" basis. The employers would pay First City for works done in accordance with the certificates issued by the Architect. First City would then pay Cheng Poh the sums received from the employers less 5% as retention monies and less a further 5% as the profit of First City.
5 The Architect duly issued the certificates in respect of the Shipyard Road project and First City were paid by the employers accordingly. But First City, having paid Cheng Poh the sum of $603,735.08 in respect of the first seven certificates, refused to pay the remainder. Cheng Poh claimed against First City for $1,147,740.62, being the remaining sum due. First City admitted the claim, but alleged that they had a counterclaim which in total exceeded Cheng Poh’s claim and which they were entitled to set-off against Cheng Poh’s claim A part of the counterclaim related to this project and that part amounted to $565,958.62. But the other part of the counterclaim was in respect of other projects which had nothing to do with the Shipyard Road project, the details of which were as follows:-
Tuas Ave Project $130,118.83
Lorong Limau Project $543,361.04
Days Works(relating to these two projects) $ 84,682.52
_________
Total $758,162.39
6 On an application for summary judgment, the Senior Assistant Registrar granted Cheng Poh judgment for $580,782.00, being the difference between the claim of Cheng Poh and the portion of the counterclaim of First City arising out of the same project. In respect of this portion of the counterclaim by First City, leave to defend was given to the latter.
7 The judge dismissed First City’s appeal but ordered that there be a stay of execution on the judgment sum. He also ordered that costs be in the cause.
8 Cheng Poh appealed to the Court of Appeal only against that part of the decision which ordered a stay of execution and the consequential order on costs. From his written grounds of decision, the Judge took into consideration the following facts and circumstances in ordering a stay:-
(i) Both parties had been carrying out work for and supplying materials to each other and they had, in effect, been maintaining a very "loose and informal running account" between them, which allowed them to set-off each other’s claims.
(ii) First City’s business would suffer grave disruption if there was no stay because Cheng Poh had allowed their claims to be accumulated to such a large sum.
(iii) Any prejudice caused by a stay would not be significant because under the present case management in the High Court, the action would come up for hearing very soon.
Issue
9 The only issue raised before us was whether the judge, in ordering a stay of execution, had correctly exercised his discretion under the Rules of Court ("the Rules").
The Law
10 Order 14 r 3(2) of the Rules provides that the court, in granting a summary judgment, may "by order, and subject to such conditions, if any, as may be just, stay execution of any judgment given against a defendant … until after the trial of any counterclaim made or raised by the defendant in the action."
11 It is settled law that where claims and counterclaims arise out of the same transaction, and while the claims are admitted and the counterclaims are disputed, then so long as the counterclaims are plausible, the correct order to make would be that while judgment should be entered in respect of the claims, it should be stayed pending trial of the counterclaims: see Sheppards & Co v Wilkinson & Jarvis (1889) 6 TLR 13. But where a counterclaim does not arise from the same transaction, or is not connected therewith, different rules apply: e.g., Anglian Building Products Ltd v W&C French (Construction) Ltd (1978) 16 BLR 6 and AB Contractor Ltd v Flaherty Brothers Ltd (1978) 16 BLR 10.
12 In the Anglian Building Products case, suppliers of bridge beams issued a writ against a construction company for £88,664.75 for beams supplied for the construction of bridges over the M6 and M4 motorways. The construction company, while admitting that judgment should be awarded to the suppliers, contended that the execution of the judgment should be stayed as they had a counterclaim arising out of similar beams supplied for the M3 motorway. Lord Denning MR, delivering the main judgment for the Court of Appeal, held that the counterclaim in respect of the M3 could not be used as a ground for staying the action in respect of the beams supplied for the use in M4 and M6.
13 In AB Contractors, where the facts were quite similar to our present case, the plaintiff-contractors completed work at a building site called Winchester Way. There was a dispute between the plaintiffs and the defendants over measurement and/or pricing of the works. The plaintiffs issued a writ to claim for £18,839.58. At the O 14 proceeding, the defendants conceded that they were liable for £12,000. Judgment was accordingly entered for £12,000, with leave to defend in respect of the remaining portion of the claim. However, in their affidavit the defendants averred that they had a counterclaim against the plaintiffs for an amount exceeding the judgment sum in relation to works at another site at...
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