Kwan Im Tong Chinese Temple and Another v Fong Choon Hung Construction Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 06 February 1998
• Date: 06 February 1998
• Docket Number: Civil Appeal No 100 of 1997
• Court: Court of Appeal (Singapore)

Kwan Im Tong Chinese Temple and another

Plaintiff

and

Fong Choon Hung Construction Pte Ltd

Defendant

[1998] SGCA 7

Yong Pung How CJ

,

M Karthigesu JA

and

L P Thean JA

Civil Appeal No 100 of 1997

Court of Appeal

Civil Procedure–Stay of proceedings–Referral of dispute to arbitration–Whether principles to summary judgment proceedings applicable for stay–Basis of application for stay–Whether case constituted disputed or undisputed claim–Whether there was question fit to be referred to arbitration–Section 7 Arbitration Act (Cap 10, 1985 Rev Ed)

The appellants (“the employers”) engaged the respondent (“the contractor”) to construct their new temple premises. The contract provided for any dispute or difference concerning the contract to be referred to arbitration. The contractor sued the employers for a sum due being an interim payment certified by the architect. The employers applied for a stay of proceedings pursuant to s 7 of the Arbitration Act (Cap 10, 1985 Rev Ed) on the ground that they had a cross-claim for damages for defective works and for liquidated damages for delay in completion.

The judge below refused the stay. He applied principles exercisable by a court in applications for summary judgments and held that the employers had not adduced material facts with sufficient particularity in support of their cross-claim to demonstrate that they had a bona fide defence to the contractor's prima facie valid claim. The employers appealed.

Held, allowing the appeal:

(1) While the application of summary judgment principles in determining whether there was a dispute to be referred to arbitration was not wrong, it should not be an exhaustive means of weighing the claims. Applications of stay such as the present one related to a larger issue of jurisdiction: at [10].

(2) The basis on which the application for stay was brought was a contract where parties had chosen arbitration over the litigation process as the forum for the resolution of their disputes. The court should, save in obvious cases, adopt a holistic and common sense approach to see if there was a dispute. If the defendant, therefore, makes out aprima facie case of a dispute the court should not embark on an examination of the validity of the dispute as though it were an application for summary judgment: at [11] and [14].

(3) In evaluating the affidavit evidence before him, the judge below was prematurely attempting to try the claims. To consider whether there was a question fit to be referred to arbitration, the court could not properly conclude in the light of affidavit evidence alone that the claim was so unanswerable that there was nothing to arbitrate: at [15] and [16].

Channel Tunnel Group Ltd and France Manche SA v Balfour Beatty Construction Ltd [1993] AC 334; [1993] 1 All ER 664; [1993] 1 Lloyd's Rep 291 (folld)

Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) Ltd [1974] AC 689; [1973] 3 All ER 195 (refd)

Hayter v Nelson and Home Insurance Co [1990] 2 Lloyd's Rep 265 (refd)

Home and Overseas Insurance Co Ltd v Mentor Insurance Co (UK) Ltd (in liquidation) [1990] 1 WLR 153; [1989] 3 All ER 74; [1989] 1 Lloyd's Rep 473 (folld)

M Eregli, The [1981] 2 Lloyd's Rep 169 (refd)

Peak Construction Ltd v McKinney Foundations Ltd (1971) 69 LGR 1 (refd)

Uni-Navigation Pte Ltd v Wei Loong Shipping Pte Ltd [1992] 3 SLR (R) 595; [1993] 1 SLR 876 (folld)

Arbitration Act (Cap 10,1985 Rev Ed)s 7 (consd)

Rules of Court (Cap 322,R 5, 1997 Rev Ed)O 14

Khush Chopra (Khush Chopra) for the appellants

Charan Singh (Myintsoe Mohamed Yang & Selvaraj) for the respondent.

M Karthigesu JA

(delivering the grounds of judgment of the court):

1 The appellants, registered as Chinese Taoist temples (hereinafter referred to as “the employers”), engaged the respondents who are building contractors (hereinafter referred to as “the contractors”) to construct their new temple premises on Lot 2101 and 2099 Mukim 23 at Paya Lebar Road. On 4 November 1996, the contractors commenced an action in the Subordinate Courts for the sum of $55,590.42 being an interim payment duly certified by the architect. The employers applied to the High Court for a stay of the proceedings pursuant to s 7 of the Arbitration Act (Cap 10) on the ground that they had a cross-claim for damages for defective works and for liquidated damages for delay in completion. The High Court held that the court had a discretion under s 7 of the Arbitration Act whether to order a stay of legal proceedings; the discretion would not be exercised in favour of granting the stay where the party opposing the stay had shown cause to the contrary, as indeed the contractors had done in this case. A stay was therefore refused. The employers appealed against it. We allowed the appeal and now give our reasons. The High Court's judgment is reported at [1997] 1 SLR (R) 907.

Brief facts

2 The contract under which the contractors were engaged is not in the standard form supplied by the Singapore Institute of Architects. In the court below the employers were only able to produce the articles of agreement whereas before us they have sought to produce what is referred to in the articles as the appendix to the agreement. The...