CKR Contract Services Pte Ltd v Asplenium Land Pte Ltd

• Jurisdiction: Singapore
• Judge: Ang Cheng Hock J
• Judgment Date: 27 April 2020
• Neutral Citation: [2020] SGHC 81
• Court: High Court (Singapore)
• Hearing Date: 03 February 2020,25 November 2019
• Docket Number: Originating Summons No 976 of 2019
• Plaintiff Counsel: Lee Sien Liang Joseph, Corinne Taylor, Qabir Singh Sandhu and Yap Pei Yin (LVM Law Chambers LLC)
• Defendant Counsel: Chuah Chee Kian Christopher, Kua Lay Theng, Chain Xiao Wei Edmund and Rachael Chong Rae-Hua (WongPartnership LLP)
• Subject Matter: Arbitration,Award,Recourse against award,Appeal under Arbitration Act
• Published date: 30 April 2020

Ang Cheng Hock J:

By this Originating Summons (“OS”), the plaintiff (“CKR”) seeks leave under s 49(3)(b) of the Arbitration Act (Cap 10, 2002 Rev Ed) (“the AA”) to appeal on a number of questions of law that are said to arise out of an arbitral award dated 3 July 2019. That award was issued in an arbitration involving CKR as claimant and the defendant (“Asplenium”) as respondent.

Background

A brief chronology of the relevant facts is as follows.

On 15 January 2013, CKR and Asplenium entered into a contract (“the Contract”) concerning the development of the “Seletar Park Residence”, a condominium project at Seletar Road (“the Project”).¹ Asplenium had engaged CKR as the main contractor to carry out building and construction works for the Project. Two points bear note in relation to the Contract: First, the Contract incorporated the Singapore Institute of Architects’ Articles and Conditions of Building Contract (Lump Sum Contract) 9th Edition (Reprint August 2011) (the “SIA Conditions”) and the Supplemental Articles and Conditions of Contract.² Second, pursuant to the Contract, a performance bond was procured by CKR in favour of Asplenium in the sum of S$8,806,383.80.³

On 24 October 2014, for reasons which are not directly relevant to the present judgment, Asplenium terminated CKR’s employment under the Contract. A replacement contract tender exercise was held and a new contractor was appointed to complete the Project.

On 4 November 2014, consequent to the termination of the Contract, Asplenium made a call on the performance bond for the full sum. While the call amount was subsequently reduced by Asplenium to around S$7.7 million, Asplenium made a second call on the performance bond for the remaining balance of around S$1.1 million on 17 December 2015.

On 10 November 2014, CKR commenced arbitration against Asplenium pursuant to the parties’ arbitration agreement in clause 37 of the SIA Conditions. The arbitration clause provided that any dispute between the parties arising out of the Contract was to be “referred to the arbitration and final decision of a person to be agreed by the parties”.⁴ CKR proposed the appointment of Mr Chow Kok Fong as the sole arbitrator, and Asplenium agreed.⁵ Mr Chow (hereafter referred to as the “arbitrator” or the “tribunal”) was accordingly appointed as the sole arbitrator.

On the application of CKR, the arbitration proceedings were bifurcated into two phases – a liability phase and a quantum phase. The liability phase of the arbitration ran from 10 November 2014 to 14 February 2018, and two awards were issued on this regard. The first of these two awards, Partial Award 1, was dated 11 October 2017. It set out the tribunal’s findings on liability. In essence, the arbitrator found that the Contract had been validly terminated by Asplenium.⁶ The second award, Partial Award 2, was dated 14 February 2018, pursuant to which Asplenium was awarded costs for the liability phase in the sum of S$4,162,000.⁷

The arbitration then proceeded to the quantum phase. The hearing took place from 20 August to 30 August 2018. The tribunal issued Partial Award 3 on 9 April 2019. Corrections to Partial Award 3 followed on 26 April 2019 and 15 May 2019. In Partial Award 3, the tribunal found that CKR was liable to Asplenium for sums due and liquidated damages arising from Asplenium’s valid termination of the Contract. However, in view of the amount already received by Asplenium pursuant to its call on the performance bond, the tribunal found that the net balance owing from Asplenium to CKR was S$6,405,536.34 (the “Award Sum”). This net balance reflected that Asplenium had been “over-paid” pursuant to the call on the performance bond, and the over-payment was therefore had to be repaid to CKR.⁸

Partial Award 4 was issued on 3 July 2019 to deal with costs related to the quantum phase (the “Quantum Costs Award”). The tribunal’s reasoning in the Quantum Costs Award was largely premised on the fact that Asplenium had issued a Calderbank letter on 6 August 2018 before the hearing of the quantum phase (the “Calderbank Offer”) which went unaccepted, and the fact that CKR had not achieved a more favourable outcome than what was offered in the Calderbank Offer.⁹

Calderbank letters have their genesis in the English Court of Appeal decision of Calderbank v Calderbank [1976] Fam 93 (CA). The crux of the decision, for present purposes, is that where a party receives a written offer to settle proceedings for a particular sum but refuses the offer, contests proceedings, and obtains a judgment for less than that particular sum, an adverse costs order may be made against him. The later English decision of Cutts v Head [1984] Ch 290 accepted from 302 to 312 that where a party had made a written offer to settle “without prejudice save as to costs”, that offer could be validly considered by the Court in determining the final costs order. A useful summary of these developments is set out by Lee Seiu Kin J in Ong & Ong Pte Ltd v Fairview Developments Pte Ltd [2014] 2 SLR 1285 from [32] to [35], but it suffices to note for present purposes that the Calderbank letter is an accepted part of Singapore law: Shi Fang v Koh Pee Huat [1996] 1 SLR(R) 906 at [54] to [55].

Under the terms of the Calderbank Offer, Asplenium had offered to pay CKR S$9.5 million in full and final settlement of “any and all claims, counterclaims, disputes, controversies and/or costs arising out of or in connection with the [Project], including, but not limited to the arbitration proceedings between [CKR and Asplenium]”.¹⁰

In their submissions to the arbitrator, the reference to “any and all claims, counterclaims … and/or costs” was contested between CKR and Asplenium. CKR contended that the Calderbank Offer related to:¹¹ the arbitration; HC/S 1274/2015, a claim in, inter alia, conspiracy commenced by CKR against Asplenium and eight other parties (“Suit 1274”) whilst the arbitration was ongoing; CA 179/2017, an appeal by CKR against a decision of the High Court in an interlocutory order made in relation to non-disclosure of privileged documents in favour of Asplenium and three other parties (“CA 179”) in the course of HC/S 37/2015, which was a claim in negligence against the quantity surveyor and quantity surveying firms that priced the replacement tender referred to at [4] above (“Suit 37”); and HC/S 349/2018, a claim in deceit against the architects working on the Project (“Suit 349”).

On the other hand, Asplenium contended that the Calderbank Offer related only to items [12(a)] to [12(c)] above. Asplenium argued that Suit 349 was not included within the ambit of the Calderbank Offer because Asplenium was not party to Suit 349 at all.¹²

In the Quantum Costs Award, the tribunal accepted that the Calderbank Offer related only to items [12(a)] to [12(c)] above. Observing that the Calderbank Offer sum of S$9.5 million was approximately S$3.1 million more than the Award Sum of around S$6.4 million, the tribunal determined that “this excess of $3.1 million suggests irresistibly that [CKR] would have been better off in accepting the Offer Sum”.¹³ The tribunal therefore found that CKR was entitled to costs of S$950,758.27, representing the proportion of costs for the quantum phase incurred up to 13 August 2018 (the last day for acceptance of the Calderbank Offer), but that Asplenium was entitled to S$826,540.88, representing the proportion of costs from 14 August 2018 (after the expiry of the Calderbank Offer) to the close of arbitration proceedings.¹⁴ The tribunal concluded the Quantum Costs Award by finding that the net costs of S$124,217.39 were payable to CKR.¹⁵

The Quantum Costs Award forms the subject matter for the present application.

I pause at this point to note the fairly extensive and protracted nature of the arbitration. Spanning a period of around five years, the bifurcated arbitration involved four Partial Awards, many days of hearing, and multiple rounds of submissions before the arbitrator. Apart from this present application, there also have been three earlier applications to the Court for leave to appeal against questions of law arising from the tribunal’s awards. The complexity of the matter undoubtedly engendered considerable costs on both sides. CKR’s failure to even respond to the Calderbank Offer perhaps regrettably extinguished an opportunity to resolve the dispute before costs continued to escalate.

The law on granting leave under the Arbitration Act to appeal questions of law

Section 49 of the AA governs appeals against an arbitral award. Section 49(1) of the AA provides that a party to arbitral proceedings may appeal to the Court “on a question of law arising out of an award made in the proceedings”.

The requirements before leave to appeal will be granted are rather uncontroversial and have been summarised by this Court in Ng Tze Chew Diana v Aikco Construction Pte Ltd [2019] SGHC 259 at [59] as follows: 59 In summary, the court must be satisfied that the following conditions are met before leave to appeal will be granted: (a) the appeal must be on a question of law (s 49(1) of the Act); (b) the determination of that question will substantially affect the rights of one or more of the parties to the arbitration (s 49(5)(a) of the Act); (c) the question was one which the arbitrator was asked to determine (s 49(5)(b) of the Act); (d) on the basis of the findings of fact in the award, the decision of the arbitrator on the question is obviously wrong, or the question is one of general public importance and the decision of the arbitral tribunal is at least open to serious doubt (s 49(5)(c) of the Act); and (e) despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the Court to determine the question (s 49(5)(d) of the Act).

[Emphasis in original]

The party seeking leave...