Cheung Teck Cheong Richard and others v LVND Investments Pte Ltd

JurisdictionSingapore
JudgeSundaresh Menon CJ
Judgment Date10 August 2021
Neutral Citation[2021] SGCA 77
Docket NumberCivil Appeal No 204 of 2020
Subject MatterArbitration,Agreement
Published date13 August 2021
Hearing Date08 July 2021
Defendant CounselLee Eng Beng SC, Sim Chee Siong and Koh En Da Matthew (Rajah & Tann Singapore LLP)
CourtCourt of Appeal (Singapore)
Plaintiff CounselChan Wah Teck Jeffrey SC, Hannah Alysha binte Mohamed Ashiq and Uday Duggal (TSMP Law Corporation)
Steven Chong JCA (delivering the judgment of the court): Introduction

The history of this dispute as well as the exchange of correspondence reveal that both sides were at loggerheads on just about everything concerning the terms of an intended reference to arbitration for the resolution of the disputes between them. In the light of this conduct, a finding that the parties nonetheless made an ad hoc arbitration agreement which was independent of a clause in the contract that they had thought (incorrectly) was an arbitration agreement would intuitively appear to be questionable.

In Cheung Teck Cheong Richard and others v LVND Investments Pte Ltd [2021] SGHC 28 (“the GD”), the High Court judge (“the Judge”) explained his decision to affirm the decision of the Assistant Registrar (“the AR”) to stay the proceedings in favour of arbitration, finding that there was such an ad hoc arbitration agreement. He also expressed the view in obiter that s 4(6) of the Arbitration Act (Cap 10, 2002 Rev Ed) (“AA”) could operate to deem the formation of an arbitration agreement even if there was no such pre-existing arbitration agreement.

As we have indicated above, we are of the view that the Judge’s finding as to the existence of an ad hoc arbitration agreement cannot be upheld. This appeal thus raised an interesting point of law as to whether s 4(6) of the AA, if it applied on the instant facts, can be relied upon to deem the existence of an arbitration agreement notwithstanding the court’s finding that none existed as a matter of fact. For the reasons set out below, we decide the question in the negative. In our view, for parties who have not denied the existence of an arbitration agreement, s 4(6) of the AA serves the limited purpose of precluding them from relying on the absence of an agreement in writing to challenge the validity of such an arbitration agreement for the purposes of the AA. It cannot be construed to permit the creation or formation of a new arbitration agreement through the operation of its deeming effect.

Having set out our views in brief, we turn now to the facts, before elaborating on the reasons for our decision.

Facts Parties

The respondent, LVND Investments Pte Ltd (“the Developer”), is the developer of Macpherson Mall (“the Mall”). The 16 plaintiffs (“the Purchasers”) in HC/S 204/2020 (“the Suit”) had purchased 12 shop units in the Mall pursuant to 12 separate sale and purchase agreements (“the SPAs”) between 2013 and 2016. Of the 16 plaintiffs, nine of them had initially filed the present appeal. Pursuant to a consent order entered in CA/SUM 62/2021, a further four plaintiffs – co-owners of their respective units with some of the initial appellants – were added as parties to the appeal. Consequently, of the 16 plaintiffs below, 13 of them are parties to the appeal (“the Appellants”), who purchased a total of nine units under nine SPAs.

Background to the dispute

The underlying disputes between the Purchasers and the Developer arise out of allegations that the Developer had made fraudulent misrepresentations and suppressed material facts that induced the Purchasers into purchasing their respective units in the Mall. In particular, the Purchasers allege that the sizes of their units were smaller than the area that each of them had believed it was buying.

The first attempted arbitration

When the disputes arose, the Purchasers engaged a law firm (the “Former Solicitors”) who advised them to seek recourse through arbitration. The Former Solicitors took the view that cl 20A.1 of the SPAs (which was identical in each SPA) was an arbitration agreement. On 6 May 2019, the Former Solicitors issued a Notice of Arbitration (“the 1st NOA”) against the Developer to commence arbitration under the auspices of the Singapore International Arbitration Centre (“SIAC”). The Developer’s solicitors, Rajah & Tann Singapore LLP (“R&T”), issued 12 responses, each dated 21 May 2019, objecting to the proposed arbitration because the Developer did not agree (a) that the arbitration should be administered by the SIAC; (b) that the arbitration should be conducted according to the SIAC Rules; and (c) that the disputes should be consolidated in a single arbitration. On 19 June 2019, the Court of Arbitration of the SIAC found that it was “not prima facie satisfied that the parties ha[d] agreed that [the] SIAC shall administer these arbitrations, or on the application of the SIAC Rules in these references”. The SIAC accordingly terminated the arbitrations commenced by the 1st NOA. We refer to this as the “1st Attempted Arbitration”.

The second attempted arbitration

On 28 June 2019, the Purchasers’ Former Solicitors issued a second Notice of Arbitration (“the 2nd NOA”), constituting a request for the disputes to be referred to an arbitration to be commenced on an ad hoc basis in Singapore, and nominating a sole arbitrator. On 2 July 2019, in a letter from R&T to the Purchasers’ Former Solicitors, the Developer objected to what it regarded as an attempt “to consolidate different arbitrations” in a single ad hoc arbitration. Further correspondence followed. On 29 July 2019, the Purchasers’ Former Solicitors wrote to the President of the Court of Arbitration of the SIAC seeking the appointment of a single arbitrator. On 2 August 2019, R&T wrote to the SIAC stating the Developer’s position that no ad hoc arbitration had been validly commenced as it was a defective attempt to commence a single consolidated arbitration, and in any event, if all the Purchasers wanted to commence any arbitration there would have to be 12 different ad hoc arbitrations and 12 arbitrators would need to be appointed. It also disagreed with the Purchasers’ nomination of a sole arbitrator.

In September 2019, the Purchasers obtained different legal advice. They discharged the Former Solicitors and engaged their present counsel. On 3 February 2020, the Purchasers notified the SIAC that they did not wish to proceed against the Developer by way of the arbitration proceedings purportedly commenced by the 2nd NOA, and this attempt at arbitration was thus discontinued. We will refer to this as the “2nd Attempted Arbitration”.

Court proceedings

On 4 March 2020, the Purchasers filed the Suit claiming rescission of the SPAs or damages in lieu of rescission, as well as damages for any and all losses, costs and expenses suffered as a result of entering into the SPAs. On 25 March 2020, the Developer filed HC/SUM 1422/2020 seeking a stay of the Suit on the basis that the parties were bound by an arbitration agreement in cl 20A.1 of the SPAs, or, in the alternative, that the parties had entered into an arbitration agreement by their conduct.

On 10 June 2020, the AR held that cl 20A.1 of the SPAs was not an arbitration clause but found that the parties had entered into an arbitration agreement by their conduct. She ordered a stay of the Suit under s 6 of the AA. The parties then filed cross-appeals: (a) HC/RA 111/2020 (“RA 111”) was the Developer’s appeal against the AR’s finding that cl 20A.1 was not an arbitration agreement; and (b) HC/RA 112/2020 (“RA 112”) was the Purchasers’ appeal against the decision to stay the Suit and the costs orders made against them.

The decision below

The Judge dismissed the Developer’s appeal in RA 111, holding that cl 20A.1 of the SPAs was not an arbitration agreement within the definition of s 4(1) of the AA. He held that the clause “did not objectively evince any intention by the parties to be bound to submit their disputes arising from the SPAs to arbitration” [emphasis in original] (see the GD at [29]). All that cl 20A.1 required was that the parties consider mediation before referring the dispute to either “arbitration or court proceedings”. Clause 20A.1 also could not be read as giving rise to the right to elect for arbitration unilaterally – the only imperative in cl 20A.1 was in relation to considering mediation, and not the submission to either arbitration or litigation (at [33]). No appeal arises from the Judge’s dismissal of RA 111.

As for RA 112, the Judge identified five issues for his determination (see the GD at [24]): Did the parties conclude a valid and binding arbitration agreement, independent from cl 20A.1 of the SPAs? Did s 4(6) of the AA apply to the present case to deem an effective arbitration agreement between the parties? If there was a valid arbitration agreement, was this agreement vitiated by mistake? If there was no valid arbitration agreement, were the Purchasers estopped from taking the position that there was no valid arbitration agreement? If all the requirements for a stay under ss 6(1) and 6(2) of the AA were satisfied, should the court nonetheless exercise its discretion not to order a stay of the Suit?

In relation to the first issue, the Judge held that the parties did conclude a valid and binding arbitration agreement independent from cl 20A.1 of the SPAs (see the GD at [35]). In the Judge’s view, this was clear from the 1st and 2nd NOAs, and the attendant correspondence exchanged in the course of the 1st and 2nd Attempted Arbitrations (at [36]–[37]). The Judge also found that the agreement was recorded in writing as required by s 4(3) of the AA, read with s 4(4) of the AA (at [39]–[43]).

In relation to the second issue, the Judge also found that s 4(6) of the AA applied, and there was deemed to be an effective arbitration agreement as between the parties to the proceedings (see the GD at [45]). He found that there were two main sources of ambiguity in s 4(6) of the AA: (a) what constituted “any other document in circumstances in which the assertion calls for a reply”; and (b) what was meant by the deeming of an “effective arbitration agreement”. Applying the ejusdem generis principle of statutory interpretation, the Judge held that “any other document in circumstances in which the assertion calls for a reply” referred to a...

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1 firm's commentaries
2 books & journal articles
  • Conflict of Laws
    • Singapore
    • Singapore Academy of Law Annual Review No. 2021, December 2021
    • 1 de dezembro de 2021
    ...& Tann Singapore LLP [2022] SGCA 28 at [15], per Judith Prakash JCA. 55 Choice of Court Agreements Act 2016 (2020 Rev Ed) s 2(1)(b). 56 [2021] 2 SLR 890. 57 Cheung Teck Cheong Richard v LVND Investments Pte Ltd [2021] 2 SLR 890 at [30]–[32]. 58 [2021] SGHC 257. 59 6DM (S) Pte Ltd v AE Brand......
  • Arbitration
    • Singapore
    • Singapore Academy of Law Annual Review No. 2021, December 2021
    • 1 de dezembro de 2021
    ...of India v Vedanta Resources plc [2021] 2 SLR 354 at [29]. 106 Republic of India v Vedanta Resources plc [2021] 2 SLR 354 at [21]. 107 [2021] 2 SLR 890, on appeal from [2022] 3 SLR 502. 108 Section 4(6) of the Arbitration Act 2001 (2020 Rev Ed) and s 2A(6) of the International Arbitration A......

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