Go Go Delicacy Pte Ltd v Carona Holdings Pte Ltd and Others

• Jurisdiction: Singapore
• Judgment Date: 28 September 2007
• Date: 28 September 2007
• Docket Number: Suit No 173 of 2007 (Registrar's Appeal No 162 of 2007)
• Court: High Court (Singapore)

Go Go Delicacy Pte Ltd

Plaintiff

and

Carona Holdings Pte Ltd and others

Defendant

[2007] SGHC 165

Lai Siu Chiu J

Suit No 173 of 2007 (Registrar's Appeal No 162 of 2007)

High Court

Arbitration–Stay of court proceedings–Whether parties required to file defence after applying for stay of court proceedings–Whether filing of defence before hearing of application for stay of court proceedings amounting to “step in the proceedings”–Other options available not amounting to “step in the proceedings”–Civil Procedure–Stay of proceedings–Majority of parties not party to agreement containing arbitration clause–Whether granting of stay of proceedings and compelling of all parties to arbitrate disputes possible–Civil Procedure–Stay of proceedings–Party to agreement serving 48-hour notice requiring other parties to file defence after other parties applied for stay of proceedings–Whether other parties required to file defence before hearing of stay of proceedings application

The plaintiff company dealt in various food products including retailing of meats and pre-packed sausages. The first to third defendants were Singapore-incorporated companies while the fourth and fifth defendants were directors of the first to third defendants. The plaintiff and the first defendant entered into a franchise agreement that was backdated (the “Franchise Agreement”).

The plaintiff sued the first defendant for breach of the Franchise Agreement. The second defendant was sued for return of moneys paid under the Franchise Agreement and related damages while the third defendant was sued for damages for spoilt or rotting food supplies delivered pursuant to the Franchise Agreement. The plaintiff's action against the fourth and fifth defendants was for damages on account of undue influence, duress and misrepresentation.

The writ of summons with the statement of claim was served on the defendants and the defendants' solicitors wrote to the plaintiff's solicitor requesting confirmation that the action would be stayed or struck out given that there was an arbitration clause in the Franchise Agreement. The plaintiff's solicitor replied, stating that while the plaintiff agreed to the matter being referred to arbitration in accordance with the arbitration clause, “surely [the defendants could] also waive that requirement” and allow the action to proceed in court, otherwise the plaintiff would amend its statement of claim accordingly. On the same day, the defendants wrote to say that as the plaintiff had agreed to refer the dispute to arbitration, the present action should be stayed or dismissed.

The plaintiff's solicitor then replied to express the hope that the matter could proceed in court. The defendants' solicitors replied that the plaintiff's solicitor's latest letter contradicted their earlier letter. The defendants' solicitors ended with a reminder that the defence was due to be filed. When there was no reply, the defendants applied for a stay of these proceedings (the “stay application”), with the fifth defendant filing an affidavit in support thereof.

Subsequently, the plaintiff's solicitor gave the defendants' solicitors 48 hours' notice for the defence to be filed. The defendants' solicitors stated that since they had made the stay application, it was not appropriate for the plaintiff to give the defendants the 48-hour notice. The plaintiff then applied for judgment in default of defence (the “judgment application”) and arranged for this application to be heard together with the defendants' stay application.

The assistant registrar dismissed the stay application and granted the judgment application. The defendants appealed.

Held, dismissing the appeal:

(1) A stay of the proceedings was not practical because only the first defendant was a signatory to the Franchise Agreement. A court could not compel non-parties to an agreement that contained an arbitration clause to arbitrate the dispute merely because one defendant was a party to the agreement: at [26].

(2) The fifth defendant's affidavit in support of the stay application deposed irrelevant factors, namely, the benefits of confidentiality in arbitration and the plaintiff's claims being frivolous, that did not assist the court in considering whether to grant the stay. If the latter was true, the defendants should have applied to strike out the plaintiff's action under O 18 r 19 (1) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed): at [29].

(3) Even if the defendants took the view that the decision inAustralian Timber Products Pte Ltd v Koh Brothers Building & Civil Engineering Contractor (Pte) Ltd [2005] 1 SLR (R) 168 (“Australian Timber”) - that an application to extend time to serve a defence would not constitute a “step in the proceedings” under s 6 of the Arbitration Act (Cap 10, 2002 Rev Ed) (“the Act”) - directly contradicted the Court of Appeal's decision in Samsung Corp v Chinese Chamber Realty Pte Ltd [2004] 1 SLR (R) 382 (“Samsung”), they should have been more proactive and explored other options: at [22] and [36].

(4) The options available to the defendants were not limited to: (a) filing a defence in compliance with the 48-hour notice, thereby taking the risk that it would amount to taking a “step in the proceedings” and be fatal to the stay application; or (b) not filing any defence and risk judgment in default being entered against the defendants. The defendants could have included, in the stay application, an additional prayer for an order not to compel them to file any defence pending the stay application. Another alternative was to apply to the duty registrar to bring forward the hearing date of the stay application or to postpone the hearing date of the judgment application to a date after the hearing of the stay application. Either of those alternatives would not have violated the spirit and the effect of the decision in Samsung, and did not amount to a “step in the proceedings”. They were also not inconsistent with the reasoning in Australian Timber or Yeoh Poh San v Won Siok Wan [2002] 2 SLR (R) 233: at [35], [36] and [41].

(5) The principle that applied in forum non conveniens challenges, viz, that a plaintiff who was aware that a defendant had filed an appeal against the refusal to order a stay should not insist on the filing of a defence pending the hearing of the appeal, also applied to an application for a stay on any grounds. When the question of a stay was put in issue, it should be determined before any further step was taken by either party in the action, particularly in the context of an arbitration clause where s 6 of the Act applied: at [39] and [40].

Australian Timber Products Pte Ltd v Koh Brothers Building & Civil Engineering Contractor (Pte) Ltd [2005] 1 SLR (R) 168; [2005] 1 SLR 168 (refd)

Chong Long Hak Kee Construction Trading Co v IEC Global Pte Ltd [2003] 4 SLR (R) 499; [2003] 4 SLR 499 (refd)

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