Cheung Teck Cheong Richard v LVND Investments Pte Ltd

• Jurisdiction: Singapore
• Judge: Ang Cheng Hock J
• Judgment Date: 05 February 2021
• Court: High Court (Singapore)
• Docket Number: Suit No 204 of 2020 (Registrar's Appeal No 112 of 2020)

Cheung Teck Cheong Richard and others

and

LVND Investments Pte Ltd

[2021] SGHC 28

Ang Cheng Hock J

Suit No 204 of 2020 (Registrar's Appeal No 112 of 2020)

General Division of the High Court

Arbitration — Agreement — Contract containing clause stating that parties agreed to resolve any disputes through mediation before referring dispute to arbitration or court proceedings — Whether such clause constituted arbitration agreement — Section 4(1) Arbitration Act (Cap 10, 2002 Rev Ed)

Arbitration — Agreement — Plaintiffs and defendant exchanging notices of arbitration, responses and correspondence in two attempted arbitrations — Whether parties entered into arbitration agreement through their correspondence — Section 4(1) Arbitration Act (Cap 10, 2002 Rev Ed)

Arbitration — Agreement — Plaintiffs asserting that there existed arbitration agreement between parties — Whether effective arbitration agreement was deemed to exist between parties — Section 4(6) Arbitration Act (Cap 10, 2002 Rev Ed)

Held, dismissing the appeals:

(1) Clause 20A.1 was not a valid arbitration agreement within the meaning of s 4(1) of the AA, as Clause 20A.1 did not objectively evince any intention by the parties to be bound to submit their disputes arising from the SPAs to arbitration. The clear text of Clause 20A.1 only stipulated that parties had a duty to consider mediation before referring their dispute to arbitration or court proceedings: at [29], [30] and [34].

(2) Independently of Clause 20A.1, the parties had separately concluded an arbitration agreement within the meaning of s 4(1) of the AA. Under s 4(1) of the AA, there were only three essential terms for an arbitration agreement to be formed: (a) the parties; (b) a defined legal relationship between these parties; and (c) that these parties intended to be bound to submit disputes arising from that defined legal relationship to arbitration. In this case, there was an unequivocal consensus between the parties on the essential terms, as it was repeatedly stated in the correspondence by both the plaintiffs and defendant that there was an arbitration agreement between them in respect of their dispute concerning the SPAs: at [35] and [38].

(3) The written record clearly recorded the agreement between the plaintiffs and the defendant to submit their disputes arising from the SPAs to arbitration. Thus, the requirement under s 4(3) of the AA for an arbitration agreement to be recorded in writing was also satisfied: at [43] and [44].

(4) The term “any other document in circumstances in which the assertion calls for a reply” under s 4(6) of the AA should be interpreted to refer only to documents made by a party pursuant to that party's substantive participation in the arbitral or legal proceeding and which were part of the record of those proceedings, because this interpretation better furthered the purpose of s 4(6) of the AA. Hence, a notice of arbitration (“NOA”) could fall within the term “any other document in circumstances in which the assertion calls for a reply” under s 4(6) of the AA: at [61] and [63].

(5) There was no duty on a party to respond to an NOA if it took the position that there was no arbitration agreement. However, if there was in fact a response, and that response evinced an intent to participate in the arbitration, and the party did not object to the assertion of the existence of the arbitration agreement in the NOA, then s 4(6) of the AA would operate to deem an “effective arbitration agreement”. If, on the other hand, the respondent did not respond to the NOA at all, then s 4(6) of the AA would not apply: at [62].

(6) Section 4(6) was satisfied in this case. This was because the plaintiffs made a clear assertion in the 1st NOA that there existed an arbitration agreement between the parties. The defendant did not disagree in its 12 separate responses to the 1st NOA that there was an agreement to arbitrate. The parties' disagreement was whether the Arbitration Rules of the Singapore International Arbitration Centre (6th Ed, 2016) (the “SIAC Rules”) would apply and whether the SIAC would administer the arbitration. The operation of s 4(6) of the AA would deem the existence of an “effective arbitration agreement” between the parties given the defendant's Responses to the plaintiffs' 1st NOA: at [64].

(7) There was no reason in principle why the doctrine of mistake could not apply, in appropriate cases, to vitiate an arbitration agreement under s 4 of the AA: at [76].

(8) In this case, there was no operative mistake on either the plaintiffs' or the defendant's part as to the effect of Clause 20A.1. The plaintiffs had also not demonstrated that the parties were labouring under a mistake that there was a separate, broader agreement to arbitrate the dispute arising under the SPAs on an ad hoc basis. Thus, the arbitration agreement concluded by the parties was not vitiated by common or mutual mistake: at [82] and [83].

(9) The court's discretion to refuse a stay under s 6(1) of the AA had to be exercised sparingly and in a principled way, and a stay would only be denied in exceptional circumstances. The present circumstances were not sufficiently exceptional to refuse a stay: at [92] to [95].

[Observation: There did not need to be a pre-existing arbitration agreement before s 4(6) of the AA could operate. The fulfilment of s 4(6) of the AA would satisfy not only s 4(3) but also s 4(1) of the AA: at [70] and [71].

Section 4(6) of the AA created an arbitration agreement that bound the parties even outside of the specific arbitral/legal proceedings in which the assertion and non-denial of the existence of the arbitration agreement was made: at [72].

For there to be detrimental reliance, the party had to act in a manner to give effect to the representation made. There would be no detrimental reliance if the party was merely responding to the representation made. This was the situation in this case, because all the defendant did was to respond to the plaintiffs' assertions of an arbitration agreement by pointing out that, although there was an agreement to arbitrate, the parties had not agreed to arbitration under the SIAC Rules and/or SIAC acting as the administering arbitral institution in the case of the 1st NOA, and to insist on 12 separate arbitrations in the case of the 2nd NOA. Thus, there was no reliance or detriment by the defendant in this case for the plaintiffs to be estopped from taking the position that there was no valid arbitration agreement: at [85] to [88].]

Case(s) referred to

Altco Ltd v Sutherland [1971] 2 Lloyd's Rep 515 (distd)

AQZ v ARA [2015] 2 SLR 972 (refd)

Bunga Melati 5, The [2016] 2 SLR 1114 (refd)

BXH v BXI [2020] 3 SLR 1368 (refd)

Chwee Kin Keong v Digilandmall.com Pte Ltd [2005] 1 SLR(R) 502; [2005] 1 SLR 502 (refd)

Dyna-Jet Pte Ltd v Wilson Taylor Asia Pacific Pte Ltd [2017] 3 SLR 267 (refd)

Gutnick v Indian Farmers Fertiliser Cooperative Ltd [2016] VSCA 5 (refd)

KVC Rice Intertrade Co Ltd v Asian Mineral Resources Pte Ltd [2017] 4 SLR 182 (refd)

Maybank Kim Eng Securities Pte Ltd v Lim Keng Yong [2016] 3 SLR 431 (refd)

Olivine Capital Pte Ltd v Chia Chin Yan [2014] 2 SLR 1371 (refd)

PP v Lam Leng Hung [2018] 1 SLR 659 (refd)

PT Prima International Development v Kempinski Hotels SA [2012] 4 SLR 98 (refd)

Rakna Arakshaka Lanka Ltd v Avant Garde Maritime Services (Pte) Ltd [2019] 2 SLR 131 (refd)

Sim Chay Koon v NTUC Income Insurance Co-operative Ltd [2016] 2 SLR 871 (refd)

Tan Cheng Bock v AG [2017] 2 SLR 850 (refd)

Tullio Planeta v Maoro Andrea G [1994] 2 SLR(R) 501; [1994] 2 SLR 489 (refd)

Wilson Taylor Asia Pacific Pte Ltd v Dyna-Jet Pte Ltd [2017] 2 SLR 362 (refd)

WSG Nimbus Pte Ltd v Board of Control for Cricket in Sri Lanka [2002] 1 SLR(R) 1088; [2002] 3 SLR 603 (refd)

Facts

The defendant was the developer of Macpherson Mall (“the Mall”). The 16 plaintiffs purchased 12 shop units in the Mall from the defendant pursuant to 12 different sale and purchase agreements (the “SPAs”). The plaintiffs claimed that the defendant had, through its agents and/or representatives, made fraudulent representations to the plaintiffs to induce the plaintiffs to purchase the respective shop units in the Mall. Each of the 12 SPAs contained a clause which stated that the parties agreed that, before they referred any dispute or difference relating to the SPA to arbitration or court proceedings, they “shall consider resolving the dispute or difference through mediation at the Singapore Mediation Centre …” (“Clause 20A.1”). In these legal proceedings, the defendant claimed that Clause 20A.1 was an arbitration clause, while the plaintiffs claimed that it was not.

The plaintiffs were initially represented by another set of solicitors (“former solicitors”). The plaintiffs commenced arbitration proceedings under the Singapore International Arbitration Centre (“SIAC”) against the defendant by way of a notice of arbitration dated 6 May 2019 (“1st NOA”). The 1st NOA highlighted Clause 20A.1 and stated that the plaintiffs elected to submit the dispute to arbitration “pursuant to Clause 20A.1”. The defendant issued 12 separate responses to the 1st NOA objecting to the plaintiffs' proposed arbitration under the SIAC (“Responses”). However, the Responses stated that the defendant agreed that the arbitration “should be seated in Singapore” and that the Arbitration Act (Cap 10, 2002 Rev Ed) (“AA”) applied. From 28 to 30 May 2019, the parties had extensive e-mail correspondence with the SIAC, wherein the parties made submissions to convince the SIAC court of their respective positions on whether the arbitrations could be administered by the SIAC. On 19 June 2019, the SIAC court found that it was not prima facie satisfied that the parties had agreed that SIAC should administer the arbitrations. The SIAC court thus terminated the 12 arbitrations.

On 28 June 2019, the plaintiffs issued a new notice of arbitration for ad hoc arbitration against the...