Cjy v Cjz

• Judge: Andre Maniam JC
• Judgment Date: 26 March 2021
• Court: High Court (Singapore)
• Docket Number: Suit No 990 of 2020 (Registrar's Appeal No 11 of 2021)

CJY

and

CJZ and others

[2021] SGHC 69

Andre Maniam JC

Suit No 990 of 2020 (Registrar's Appeal No 11 of 2021)

General Division of the High Court

Arbitration — Stay of court proceedings —Employer engaging plaintiff construction company for construction project under contract providing for resolution of disputes by arbitration —Employer calling on performance bonds provided by plaintiff and its subcontractor pursuant to schedule of defects —Plaintiff commencing arbitration against employer pursuant to arbitration agreement claiming that calls on performance bonds were wrongful —Plaintiff subsequently commencing suit against employer's country manager and regional head of finance and project's architects and quantity surveyors —Whether there were common issues between arbitration and suit —Whether suit was to be stayed pending determination of arbitration

Held, dismissing the appeal:

(1) The following issues were common between the Arbitration and the Suit: (a) whether the Calls were wrongful; and (b) whether the plaintiff was responsible for the defects in the SOD, and associated rectification costs: at [19].

(2) Where there were overlapping (or potentially overlapping) court and arbitration proceedings, the court might exercise its case management powers to ensure the efficient and fair resolution of the dispute as a whole. In doing so, the court would consider the extent and nature of overlap between the arbitration and the suit, in terms of the parties, the issues, and the remedies: at [20] and [21].

(3) There was some overlap in parties: the plaintiff was also the claimant in the Arbitration and all the defendants were involved in the Project. In particular: the plaintiff's Notice of Arbitration was marked for the first defendant's attention; the plaintiff's Statement of Case also named all the other defendants as persons involved in the Project: at [22].

(4) Whether the Calls were wrongful, and whether it was open to the plaintiff to assert that, were matters that could not properly be decided in the absence of the Employer. However, it would not be appropriate to join the Employer as a party to the Suit because of the Arbitration Agreement: at [26].

(5) Even if the issues of defects were different between the Suit and the Arbitration, whether the Calls were wrongful would remain a common issue. Furthermore, since the Employer had contended that the Calls were justified because of the defects, in the context of justifying the Calls — whether in the Arbitration or the Suit — the issues of defects were the same: at [28] and [29].

(6) While the Employer had since produced a “Defects Scott Schedule” (“the DSS”), which made amendments and revisions to the SOD, that did not mean that the SOD was no longer relevant in the Arbitration. The Employer had continued to rely on the defects known at the time of the Calls (for which the SOD was the most current defects list) to justify the Calls. The correspondence in the Arbitration also showed that the Employer was allowed by the tribunal to add to the defects listed in the SOD to arrive at the DSS. It was unlikely for the Employer to have abandoned all (or the vast majority) of the defects it had originally pleaded and put forward a different list altogether in the DSS. In the Arbitration, it would be open to the plaintiff to attack the DSS by attacking the SOD: at [30] to [33], [35] and [36].

(7) Therefore, the issues in the Suit relating to the Calls, the SOD, and the estimated rectification costs, were all issues in the Arbitration and there was considerable overlap in the issues between the Suit and the Arbitration: at [23] and [37].

(8) There was an overlap in remedies. In both the Arbitration and the Suit, the plaintiff sought compensation for the Calls (which it alleged was wrongful). While the plaintiff had quantified its claim against the Employer in the Arbitration, and more generally claimed damages to be assessed in the Suit, there was in substance no difference: at [38] and [40].

(9) While the plaintiff had argued that it might recover more from the defendants in the Suit than from the Employer in the Arbitration, save for pointing to different measures of damages that would apply in the Suit and the Arbitration, it was never properly articulated by the plaintiff what additional damages the plaintiff might recover from the defendants. That was not meaningful if what could be (and had been) claimed was the same: at [39].

(10) If a plaintiff failed in its claim in arbitration, it could not then procure the opposite outcome from the court as that would be an impermissible collateral attack on the arbitral award, which was an abuse of process: at [41] and [42].

(11) A plaintiff's right to sue whoever he wanted and where he wanted, albeit a fundamental right, was not absolute. In appropriate cases, that right might be curtailed where it was necessary to prevent a plaintiff from circumventing the operation of an arbitration clause, holding him to his obligation to arbitrate where he had agreed to do so. The basis for granting a stay of court proceedings the outcome of which depended on the resolution of a related arbitration stemmed not from the mere existence of common issues, but from the fact that proper ventilation of the issues in the court proceedings was dependent on the resolution of the related arbitration: at [44].

(12) In this case, the plaintiff had agreed with the Employer to arbitrate disputes that included the common issues of the Calls, the SOD and rectification costs. The outcome of the Arbitration would have the effect of resolving the Suit because it was dispositive of the common issues, or at least pave the way for the Suit to be resolved as between the parties. If the plaintiff were to lose the Arbitration, it would be an abuse of process if it sought to procure the opposite outcome from the court. If the plaintiff were to win the Arbitration, it might not be open to the defendants to challenge any adverse finding from the Arbitration on the common issues, despite them not being parties to the Arbitration Agreement, for it would be contrary to the stance of seeking a stay of the Suit pending the Arbitration, especially for the first defendant, which had made the Stay Application. It would not make practical sense for the common issues to concurrently be fought over in arbitration and in court, and they ought first to be resolved in the Arbitration (which had been underway for more than three years now) in accordance with the Arbitration Agreement. Therefore, it was appropriate to stay the Suit as a whole pending the determination of the Arbitration, as it would hold the plaintiff to the Arbitration Agreement and ensure the efficient and fair resolution of the dispute as a whole: at [45], [46], [48] and [52].

[Observation: The obligation of confidentiality in relation to arbitrations was not absolute, and disclosure was permissible where it was reasonably necessary, where it was in the interests of justice, where it was reasonably necessary for the protection of the legitimate interests of an arbitration party, or where the public interest required disclosure: at [58].

In any event, the plaintiff's confidentiality objection in relation to the first defendant's affidavits was without merit. There was no reason why the first defendant could not have made the necessary disclosures which it did to protect the Employer's interests, when the Employer itself could have made those disclosures. It was also reasonably necessary for the court to be informed of the Arbitration, as it was not in the Employer's interests for issues in the Arbitration to be determined in its absence, and for its representative (the first defendant), the quantity surveyors and the architects to be embroiled in litigation over these issues. Moreover, it was in the interests of justice for the court to be informed of the Arbitration, so that the court could exercise its case management powers to ensure the efficient and fair resolution of the dispute as a whole: at [58] to [61].]

Case(s) referred to

AAY v AAZ [2011] 1 SLR 1093 (folld)

CKR Contract Services Pte Ltd v Asplenium Land Pte Ltd [2020] 5 SLR 665 (folld)

Goh Nellie v Goh Lian Teck [2007] 1 SLR(R) 453; [2007] 1 SLR 453 (folld)

John Forster Emmott v Michael Wilson & Partners Ltd [2008] 2 All ER (Comm) 193 (refd)

Lim Geok Lin Andy v Yap Jin Meng Bryan [2017] 2 SLR 760 (folld)

Myanma Yaung Chi Oo Co Ltd v Win Win Nu [2003] 2 SLR(R) 547; [2003] 2 SLR 547 (folld)

Ong Han Nam v Borneo Ventures Pte Ltd [2021] 1 SLR 1248 (folld)

Rex International Holding Ltd v Gulf Hibiscus Ltd [2019] 2 SLR 682 (folld)

Tan Woo Thian v PricewaterhouseCoopers Advisory Services Pte Ltd [2021] 1 SLR 1166 (refd)

Tomolugen Holdings Ltd v Silica Investors Ltd [2016] 1 SLR 373 (folld)

Facts

The “Employer” engaged the plaintiff company for a construction project (“the Project”) under a contract which provided for disputes between them to be resolved in arbitration (“the Arbitration Agreement”).

The defendants were involved in different capacities in the Project. The first defendant was the Employer's Singapore country manager and regional head of finance. The second to fifth defendants were, respectively, the quantity surveyors and architects engaged by the Employer for the Project.

On 28 April 2017, the architects issued a schedule of defects to the plaintiff (“the SOD”). On 18 May 2017, having regard to the SOD and the estimated costs of rectifying those defects, the Employer called on performance bonds provided by the plaintiff and its subcontractor (“the Calls”). The plaintiff tried but failed to recover the sums which the Employer had received from the Calls. Eventually, the plaintiff and the Employer reached a settlement on 14 May 2018 (“the Settlement”).

The plaintiff subsequently commenced arbitration against the Employer, claiming that the Calls were wrongful (“the Arbitration”). In its Defence in the Arbitration, the...