Econ Piling Pte Ltd v Shanghai Tunnel Engineering Company Ltd

• Jurisdiction: Singapore
• Judgment Date: 26 August 2010
• Date: 26 August 2010
• Docket Number: Originating Summons No 235 of 2009
• Court: High Court (Singapore)

Econ Piling Pte Ltd and another (both formerly trading as Econ-NCC Joint Venture)

Plaintiff

and

Shanghai Tunnel Engineering Co Ltd

Defendant

[2010] SGHC 253

Judith Prakash J

Originating Summons No 235 of 2009

High Court

Arbitration–Award–Mistakes–Sub-contractor seeking clarification on points of partial award–Whether clarification request related to computational or clerical error–Section 43 (1) Arbitration Act (Cap 10, 2002 Rev Ed

Arbitration–Award–Remission–Arbitrator failing to give reasons for dismissal of one head under counterclaim–Whether arbitrator in error in failing to give reasons

Arbitration–Conduct of arbitration–Pleadings–Main contractor constituted by joint venture partnership–Scheme of arrangement affecting one partner–Main contractor omitting mention of scheme of arrangement in statement of case and counterclaim–Main contractor applying to stay or dismiss arbitration claim against partner affected by scheme of arrangement–Whether arbitrator misconducted himself by not according main contractor opportunity to make oral submissions in respect of application–Whether issues arising out of scheme of arrangement would only affect enforcement of arbitral award

Arbitration–Costs–Allowable–Sub-contractor amending pleadings–Main contractor incurring consequential costs–Arbitrator failing to take account of costs thrown away and incurred in application for costs–Whether arbitrator's erroneous application of law entitled main contractor to appeal

Building and Construction Law–Damages–Delay in completion–Sub-contractor claiming extension of time for late transfer and malfunctioning of transformer–Main contractor counterclaiming against subcontractor for liquidated damages for delay in completion and for recovery of contra charges–Whether defects liability period defined differently in main contract and subcontract–Whether commencement of defects liability period determined date of substantial completion–Whether cl 17.0 of letter of award between main contractor and subcontractor provided for liquidated damages–Whether delay and interruption had distinct legal meanings

Partnership–Partners and third parties–Main contractor constituted by joint venture partnership–Scheme of arrangement extinguishing claims against one partner–Whether compromise of partnership debts and liabilities of one partner under scheme of arrangement also discharged other partner in respect of those debts and liabilities

Res Judicata–Issue estoppel–Sub-contractor agreeing with main contractor in application for summary award on construction of cl 17.0 of letter of award as liquidated damages provision–Arbitrator dismissing application for summary award–Whether subcontractor estopped from changing position on interpretation of cl 17.0 of letter of award–Whether arbitrator functus officio with respect to issue of construction of cl 17.0 of letter of award

The appellants ( Econ Piling and NCCI respectively), while trading as Econ-NCC Joint Venture ( ENJV ), were the main contractors employed by the Land Transport Authority ( LTA ) under a contract dated 1 August 2002 for the construction of part of the Circle Line of the Mass Rapid Transit System ( Main Contract ). Under a Letter of Award dated 5 December 2002 ( LA ), the respondent ( STEC ) was employed by ENJV to perform bored tunnelling works in Phase 3 of the Main Contract ( Sub-Contract works ) for both north-bound ( NB ) and south-bound ( SB ) tunnels. Before STEC could carry out the boring works, ENJV was to complete certain preparatory works to enable STEC to lower the tunnel boring machine ( the Machine ) cradle into the launch shaft.

ENJV could not complete the preparatory works on schedule. This led to disputes over delay in the completion of the Sub-Contract works which STEC referred to arbitration by a sole arbitrator ( the Arbitrator ). STEC claimed, inter alia, that the progress of its works on the SB tunnel was delayed by 34 days as a result of the transfer of the SB Machine transformer to the NB Machine and the subsequent malfunction of a particular transformer ( Delaying Event 5 ). Relying on the testimony of both parties' experts on time and delays, ENJV contended that the 34-day duration of delay stated in the experts' Joint Statement on Time was merely expressing an interruption , ie, the period between the date of transfer of the transformer and the date of resumption of work. STEC also sought a declaration that the defects liability period ( DLP ) commenced on 8 March 2005. ENJV counterclaimed for, inter alia, $1m as liquidated damages, as well as 13 groups of costs incurred in respect of various items and services provided to STEC ( Contra Charges ). In respect of Group 9 of the Contra Charges, ENJV claimed $84,171.42 in costs for the supply of, inter alia, flatbed coupling and braked flatcars.

On 6 December 2005, STEC applied for a summary award in its favour in the sum of $5,910,000 which included $1m deducted by ENJV pursuant to cl 17.0 of the LA. For the purposes of the summary award, STEC agreed with ENJV that liquidated damages under that clause was capped at the sum of $1m. In an interim award dated 3 April 2006 ( Interim Award ) the Arbitrator found that ENJV had a bona fide and arguable claim for the sum of $1m, and dismissed STEC's application for a summary award. Subsequently, STEC amended its pleadings and averred that cl 17.0 of the LA did not set out any liquidated damages payable by it.

More than a year after completion of the hearing of the arbitration, ENJV applied by way of a letter dated 28 May 2008 for, inter alia, dismissal of the arbitration against the first appellant ( Econ Piling ) in order to give effect to a scheme of arrangement in respect of Econ Piling which was approved by the court in October 2004 ( the Scheme ). Under the Scheme, no creditor was allowed to commence any proceedings for, inter alia, the recovery of damages by arbitration, and any claim by any creditor who failed to lodge a timely proof of debt was extinguished.

The Arbitrator issued the Partial Award on 29 December 2008. In January 2009, STEC wrote to the Arbitrator to seek clarification and correction on the duration of delay for which STEC should be held liable and the date from which interest should be calculated ( Clarification Request ). ENJV contended that the Clarification Request was a request for the Arbitrator's interpretation of a specific part of the Partial Award, which request, under s 43 (1) (b) of the Arbitration Act (Cap 10, 2002 Rev Ed) ( the Act ), required ENJV's agreement. Such agreement was neither sought by STEC nor given by ENJV. STEC's position was that the Clarification Request was made under s 43 (1) (a) of the Act which did not require ENJV's agreement. On 28 January 2009, the Arbitrator issued the Correction Award.

In this appeal, the questions raised by ENJV related to the Arbitrator's findings that, inter alia: (a) substantial completion of the Sub-Contract works was effected on 8 March 2005 because the parties had accepted that the DLP under the terms of the Sub-Contract had commenced on that date; (b) in assessing the actual duration of delay in relation to Delaying Event 5, there was no legal difference between a delay and an interruption ; (c) on its true interpretation, cl 17.0 of the LA was not a liquidated damages provision; (d) the Scheme was not properly before him and issues arising out of the Scheme that might have an impact on the enforcement of the award were outside his purview; and (e) STEC's Clarification Request was made under s 43 (1) (a), not under s 43 (1) (b) of the Act.

The questions posed in relation to the DLP and substantial completion were whether the Arbitrator had erred in relying on the commencement of the DLP in determining the substantial completion of the Sub-Contract works; and whether the meaning and effect of the DLP in the Main Contract were the same as those of the DLP in the Sub-Contract.

The question pertaining to the actual duration in relation to Delaying Event 5 was whether the terms delay and interruption had distinct legal meanings.

The questions relating to cl 17.0 of the LA were whether the Arbitrator was functus officio with respect to the issue of construction of that clause and whether that clause should be construed as a liquidated damages provision. ENJV also posed the alternative question whether, having found STEC liable for 68 days of delay, the Arbitrator should have allowed ENJV to retain the $1m on the basis of his own interpretation of cl 17.0 of the LA as a retention clause.

The questions posed in respect of the Scheme were whether the Arbitrator had erred in failing to give effect to the Scheme, whether the compromise of the partnership debts and liabilities of Econ Piling also discharged its partners in respect of those debts and liabilities, whether any issues arising out of the Scheme would only affect the enforcement of the award and whether the Arbitrator had misconducted himself by not according ENJV the opportunity to make oral submissions in respect of ENJV's applications to stay or dismiss the arbitration claim against Econ Piling.

The question regarding the Clarification Request was whether the request was made under s 43 (1) (a) or s 43 (1) (b) of the Act.

Two other questions related to costs orders for which ENJV had applied and the Arbitrator's dismissal of all the heads under Group 9 of ENJV's claim for Contra Charges despite having found that only one head of claim should be dismissed. In relation to the costs orders which ENJV had applied for, the question posed was whether, in considering the costs of and occasioned by STEC's amendment to its pleadings, the Arbitrator should have taken account of ENJV's costs thrown away by STEC's abandonment of issues and ENJV's costs incurred in presenting the application for costs. As regards the Arbitrator's dismissal of Group 9 of ENJV's claim for Contra Charges, the...