Clx v Cly

• Jurisdiction: Singapore
• Judge: S Mohan J
• Judgment Date: 25 January 2022
• Docket Number: Originating Summonses Nos 433 of 2021 and 212 of 2021 (Summons No 2174 of 2021)
• Court: High Court (Singapore)

CLX

and

CLY and another and another matter

[2022] SGHC 17

S Mohan J

Originating Summonses Nos 433 of 2021 and 212 of 2021 (Summons No 2174 of 2021)

General Division of the High Court

Arbitration — Award — Recourse against award — Setting aside — Whether award was contrary to public policy

Arbitration — Award — Recourse against award — Setting aside — Whether award was induced or affected by fraud

Arbitration — Award — Recourse against award — Setting aside — Whether award was made in breach of rules of natural justice

Abuse of Process — Inconsistent positions — Principle of approbation and reprobation — Whether plaintiff was barred from setting aside award

Held, dismissing the application:

(1) While the doctrine of approbation and reprobation did not necessarily require the electing party to make a conscious choice between alternative rights and remedies, a party's election which gave rise to a prior position had to be reasonably clear to be effective. The doctrine extended to inconsistent positions taken against different parties in different proceedings. On the present facts, the doctrine did not apply because the plaintiff's overall conduct, notwithstanding the Third Party Contract, did not show a clear or unequivocal communication by the plaintiff of its intention to take the benefit of the Overhead Cranes pursuant to the award: at [42], [47] and [55].

(2) In order to set aside an award on grounds of fraud, the threshold for establishing fraud, which was rooted in dishonesty, was a high one. Strong and cogent evidence had to be adduced of a convincing case of fraud: at [57] and [58].

(3) In a case of fraud by perjury or concealment of evidence in an arbitration, the principles summarised in Bloomberry Resorts and Hotels Inc v Global Gaming Philippines LLC[2021] 3 SLR 725 would apply. The plaintiff failed to prove that the first defendant had deliberately concealed material information from the Arbitrator or given false evidence to mislead the Arbitrator. The Arbitrator had made no factual findings in the Rule 33 Decision that there was in fact damage or destruction to the Overhead Cranes or any cannibalisation of parts by the first defendant. Thus, the plaintiff could not rely on it as evidence that the Arbitrator had not been aware of the condition of the Overhead Cranes when he rendered the award: at [59], [62], [66] and [70].

(4) The plaintiff could not establish a convincing case of dishonesty or bad faith on the part of the first defendant. The plaintiff had no evidence that the first defendant had intentionally damaged the Overhead Cranes or cannibalised missing parts, and this could not be inferred from the alleged silence of the defendants. The plaintiff also could not establish that the first defendant deliberately concealed information from the Arbitrator regarding the condition of the Overhead Cranes or gave false evidence in the arbitration with the intention to mislead the Arbitrator. In any event, the first defendant had good reason not to disclose anything regarding the alleged actual state of the Overhead Cranes, because this was not put into issue in the arbitration: at [72] to [77] and [79] to [83].

(5) Where new evidence was being introduced to demonstrate fraud, the applicant would have to demonstrate why it was not available or could not have been obtained with reasonable diligence at the time of the arbitration. The current position in Singapore appeared to lean in favour of the requirement being applied in an unattenuated manner despite the allegation of fraud: at [94].

(6) The plaintiff failed to show that the information or evidence relating to the condition of the Overhead Cranes could not have been obtained with reasonable diligence. The plaintiff could reasonably have contemplated that the dismantling, relocation and storage of the Overhead Cranes might have caused damage and/or depreciation in value. It also had opportunities to seek further information or evidence regarding their condition, including by way of an inspection of the Overhead Cranes. There was no requirement for a “trigger” to indicate a possibility that the Overhead Cranes would be in a damaged or cannibalised state before the plaintiff was expected to advance the relevant pleadings or obtain evidence of the actual condition of the Overhead Cranes post-dismantling: at [95] and [98] to [103].

(7) There was no breach of the fair hearing rule. It was the plaintiff's duty to seek and adduce evidence, however slight, regarding the condition of the Overhead Cranes and to take all the relevant points in its pleadings and submissions if there was a basis for it. If it failed to do so, it could not be permitted, at the setting-aside stage and after the award had gone against it, to attempt to characterise its dissatisfaction with the outcome as a failure of natural justice: at [117] and [118].

(8) There was no basis for the award to be set aside on the grounds of it being contrary to public policy. The public policy objection was grounded on the same allegations as the fraud objection, which was rejected by the court. In any event, the arbitrator's lack of cognisance (if any) that there could have been some damage or deterioration to the condition of the Overhead Cranes could not be described as an “egregious” error of fact which resulted in the award being contrary to public policy: at [122].

Case(s) referred to

AKN v ALC [2016] 1 SLR 966 (folld)

AMEC Group Ltd v Thames Water Utilities Ltd [2010] EWHC 419 (TCC) (refd)

Aries Telecoms (M) Bhd v ViewQwest Pte Ltd [2018] 1 SLR 108 (refd)

BAZ v BBA [2020] 5 SLR 266 (folld)

BLB v BLC [2013] 4 SLR 1169 (refd)

Bloomberry Resorts and Hotels Inc v Global Gaming Philippines LLC [2021] 3 SLR 725 (folld)

BNX v BOE [2018] 2 SLR 215 (refd)

BVU v BVX [2019] SGHC 69 (folld)

BWG v BWF [2020] 1 SLR 1296 (refd)

China Machine New Energy Corp v Jaguar Energy Guatemala LLC [2020] 1 SLR 695 (refd)

Ching Chew Weng Paul v Ching Pui Sim [2011] 3 SLR 869 (refd)

Dongwoo Mann+Hummel Co Ltd v Mann+Hummel GmbH [2008] 3 SLR(R) 871; [2008] 3 SLR 871 (refd)

Goldbell Engineering Pte Ltd v Etiqa Insurance Pte Ltd [2022] SGHC 1 (refd)

MCST Plan No 1166 v Chubb Singapore Pte Ltd [1999] 2 SLR(R) 1035; [1999] 3 SLR 540 (refd)

PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA [2007] 1 SLR(R) 597; [2007] 1 SLR 597 (refd)

R Durtnell & Sons Ltd v Kaduna Ltd [2003] EWHC 517 (TCC) (refd)

Soh Beng Tee & Co Pte Ltd v Fairmount Development Pte Ltd [2007] 3 SLR(R) 86; [2007] 3 SLR 86 (refd)

Swiss Singapore Overseas Enterprises Pte Ltd v Exim Rajathi India Pvt Ltd [2010] 1 SLR 573 (folld)

Takhar v Gracefield Developments Ltd [2020] AC 450 (not folld)

Facts

The second defendant was the main contractor for the first defendant's development, and entered into a contract with the plaintiff subcontractor to undertake the design, supply, installation, testing and commissioning of overhead cranes (the “Overhead Cranes”) at the first defendant's premises. The second defendant subsequently assigned its rights and obligations under the contract to the first defendant. Disputes arose over whether the Overhead Cranes supplied by the plaintiff were defective. The first defendant commenced arbitration proceedings against the plaintiff, seeking rescission of the contract, a refund of sums paid to the plaintiff and/or damages for breach of contract. Upon a request for clarification by the arbitrator (the “Arbitrator”) after the hearing of the arbitration, the first defendant also sought an order for removal of the Overhead Cranes, at the plaintiff's cost.

The Arbitrator upheld the first defendant's rejection of the Overhead Cranes and its claim for rescission of the contract and ordered the plaintiff to: (a) refund the purchase price of the Overhead Cranes (along with other costs and expenses); and (b) remove the Overhead Cranes from the development. Subsequently, the plaintiff alleged that the Overhead Cranes had been discovered to be damaged and/or destroyed, with key parts missing and/or cannibalised by the first defendant.

The plaintiff submitted a request under r 33 of the Arbitration Rules of the Singapore International Arbitration Centre (6th Ed, 1 August 2016) for the Arbitrator to order that the first defendant be liable for the consequent depreciation in the value of the damaged and cannibalised Overhead Cranes. The first defendant in turn sought a clarification from the Arbitrator that the removal order be made on an “as is where is” basis. The Arbitrator rendered a further decision (the “Rule 33 Decision”) rejecting both parties' requests on the ground that he had no power to grant them. The first defendant subsequently obtained leave of court to enforce the award.

The plaintiff applied for the Arbitrator's award to be partially set aside on the grounds that it was induced or affected by fraud, that it was contrary to public policy, and that the first defendant's fraudulent conduct deprived the plaintiff of a reasonable and/or fair opportunity to defend itself against the first defendant's claim. The plaintiff also applied to set aside the leave order.

The defendants opposed the plaintiff's application. Among others, they argued that the plaintiff was barred from seeking to set aside the award because it had taken tangible steps to reap the benefits of the award by entering into a contract to reconfigure the dismantled Overhead Cranes and sell them to a third party (the “Third Party Contract”).

Legislation referred to

Arbitration Act (Cap 10, 2002 Rev Ed) ss 48(1), 48(1)(a)(vi), 48(3)

International Arbitration Act 1994 (2020 Rev Ed) s 24(a)

Sale of Goods Act (Cap 393, 1999 Rev Ed) s 36